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SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended November 29, 1998.
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0-2331
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GLASSMASTER COMPANY
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(Exact name of small business issuer as specified in its charter)
South Carolina 57-0283724
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(State or other jurisdiction of (IRS Employer
Incorporation of organization Identification No.)
PO Box 788, Lexington SC 29071
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, including area code: 803-359-2594
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No Change
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant:
(1) Has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months
YES X NO
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(2) Has been subject to such filing requirements for the past 90 days
YES X NO
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Common shares outstanding November 29, 1998: 1,627,896 par value $0.03
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Glassmaster Company
Consolidated Comparative Balance Sheet
(Thousands)
<TABLE>
<CAPTION>
November 29, 1998 August 31, 1998
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(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 69 $ 143
Accounts Receivable (Net of Reserve) 3,208 3,373
Other Current Receivables 24 7
Inventories:
Raw Materials $ 2,097 $ 1,714
Work in Process 513 478
Finished Products 1,128 3,738 958 3,150
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Prepaid Expenses and Other Current Assets 238 81
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Total Current Assets 7,277 6,754
Fixed Assets (Net of Dep'n)
Property and Equipment (at cost) 6,092 6,185
Other Assets
CSV Life Insurance and Other Unamortized Assets 584 533
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Total Assets $13,953 $13,472
======= =======
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 1,948 $ 1,602
Accrued Expenses 229 259
Accrued Income Taxes 0 17
Notes & Mortgages Payable 2,457 1,882
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Total Current Liabilities 4,634 3,760
Long Term Liabilities
Notes & Mtges, Due After One Year $ 5,155 $ 5,272
Deferred Income Taxes 591 5,746 591 5,863
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Total Liabilities 10,380 9,623
Stockholders' Equity
Capital Stock (Authorized 5,000,000 Shares $0.03
Par - 1,627,896 (1999), 1,627,896 (1998)
Shares Issued and Outstanding $ 49 $ 49
Paid-In Capital 1,355 1,355
Donated Capital 124 124
Retained Earnings 2,045 3,573 2,321 3,849
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Total Liabilities and Equity $13,953 $13,472
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</TABLE>
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\
Glassmaster Company
Consolidated Comparative Income Statement
(In thousands except per share amounts)(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 29, 1998 November 30, 1997
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<S> <C> <C>
Net Sales $5,252 $5,587
Cost of Sales 4,762 4,620
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Gross Profit 490 967
Costs and Expenses:
Selling 262 275
General and Administrative 246 257
Other Income and Expense - Net 237 228
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Total Costs and Expenses 745 760
Income From Operations (255) 207
Interest Expense 158 149
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Income Before Income Taxes (413) 58
Income Taxes (137) 13
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Net Income $ (276) $ 45
====== ======
Net Income Per Share (1,620,096 Shares) 0.03
(Basic and Diluted)
Net Income Per Share (1,627,896 Shares) (0.17)
(Basic and Diluted)
Dividends Paid Per Share $ 0.00 $ 0.00
====== ======
</TABLE>
3
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Glassmaster Company
Consolidated Statement of Cash Flows
(Thousands)(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 29, 1998 November 30, 1997
----------------- -----------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $(276) $ 45
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation 234 201
Amortization 2 2
Increase in Deferred Income Taxes (137) 0
Changes in Operating Assets & Liabilities:
Decrease (Increase) in Receivables 148 (412)
Decrease (Increase) in Inventories (587) (675)
Decrease (Increase) in Prepaid Expenses &
Other Current Assets (74) (187)
Increase (Decrease) in Accounts Payable 346 778
Increase (Decrease) in Accrued Expenses (47) 85
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Net Cash Provided (Used) By Operating Activities (391) (163)
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Cash Flows From Investing Activities
Additional Investment in Fixed Assets 141 263
Additional Investment in Other Assets 0 0
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Net Cash Used By Investing Activities 141 263
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Cash Flows From Financing Activities
Proceeds from Exercise of Stock Options 0 0
Proceeds from Short-Term Borrowings 0 0
Repayment of Short-Term Borrowings (73) (49)
Proceeds from Long-Term Obligations 0 0
Repayment of Long-Term Obligations (117) (115)
Net Increase (Decrease) in Short-Term Revolving
Lines of Credit 648 502
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Net Cash Provided (Used) By Financing Activities 458 338
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Net Increase (Decrease) In Cash (74) (88)
Cash At Beginning of Period 143 119
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Cash At End of Period $ 69 $ 31
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Supplemental Disclosures of Cash Flow Information
Cash Paid For:
Interest (Net of Amount Capitalized) $ 157 $ 148
Income Taxes 17 12
</TABLE>
4
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Glassmaster Company
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended November 29,
1998 are not necessarily indicative of the results that may be expected for the
year ended August 31, 1999. For further information, refer to the Consolidated
Financial Statements and Notes to Financial Statements included in the Company's
Annual Report on Form 10-KSB for the year ended August 31, 1998. Certain prior
year amounts may have been reclassified to conform with the 1999 presentation.
Item 2. Management's Discussion and Analysis
RESULTS OF OPERATIONS
Consolidated sales for the first quarter ended November 29, 1998 (1999
fiscal year) were $5,251,795, a decrease of 6% when compared to sales of
$5,586,429 during the first quarter of the 1998 fiscal year. The decline in
first quarter sales is due to a 6% decrease in sales by the Monofilament
Division and a 37% decrease in sales by the Composites Division when compared to
the prior year period. Composites Division sales have been negatively impacted
during efforts to transition the mix of products sold toward recently developed
product lines. Products with low gross margins and limited growth potential have
been discontinued during the last several months in favor of products with
higher margins and better long-term growth potential such as the Glassmaster
Composites Modular Building System(TM). The future success of this division will
depend to what extent these new products are accepted by customers in the
markets they are intended to serve. Glassmaster Controls Company sales increased
by 1.5% during the first quarter when compared to prior year first quarter
sales.
Gross profit realized during the first quarter declined by almost 50%
to $490,000 due to the decrease in sales and an unfavorable mix of product
shipments at Monofilament. Gross profit as a percent of sales declined to 9.3%
of sales this year versus 17.3% of sales in last year's first quarter. The
company anticipates gross profit margins to improve during the next quarter in
conjunction with a return to a more favorable mix of product sales.
Selling, G&A, and Other expenses were $745,392 during the first quarter
compared with $760,071 during the prior year first quarter and increased to
14.2% of sales this year versus 13.6% of sales last year due to lower sales
levels. Interest expense increased to 3% of sales at $157,664 in this year's
first quarter versus 2.7% of sales and $149,253 during the prior year first
quarter. Higher average borrowings during this year's first quarter accounts for
the increase in interest costs.
Net Consolidated Income (Loss) during the current year first quarter
was ($276,019) compared with $44,772 last year. Earnings Before Income Taxes
declined from $57,336 during the prior year first quarter to ($412,649) this
year due to the lower sales and gross profit.
5
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Item 2. Management's Discussion and Analysis (Cont'd)
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were ($391,000) during the first
quarter of the 1999 fiscal year compared with ($163,000) during the prior year
first quarter. The decline in cash provided from operating activities is
primarily due to operating losses caused by the decline in sales and an
unfavorable mix of products sold.
Cash used by investing activities during the first quarter was $141,000
compared to $263,000 during last year's first quarter. A reduced investment in
fixed assets this year compared to the prior year period accounts for the
decrease in cash used by investing activities.
Net cash provided by financing activities was $458,000 in this year's
first quarter compared with $338,000 last year. The increase can be attributed
to higher net borrowings under the company's revolving lines of credit due to
operating losses incurred during this year's first quarter compared with an
operating profit recognized during last year's first quarter.
As of the date of this report no new material commitments for capital
additions are planned and the company anticipates that its cash requirements
during the remainder of the 1999 fiscal year will be provided from operations
and from borrowings under existing and committed credit lines.
PART II - OTHER INFORMATION
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits.
Exhibit No. Description
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27 November 29, 1998 Financial Data Schedule
b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter
ended November 29, 1998.
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Glassmaster Company
Lexington SC
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLASSMASTER COMPANY
Date January 13, 1999 /s/ Raymond M. Trewhella
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Raymond M. Trewhella
(President and
Principal Executive Officer)
Date January 13, 1999 /s/ Steven R. Menchinger
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Steven R. Menchinger
(Treasurer, Controller, and
Principal Financial Officer)
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EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule
8
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED NOVEMBER 29, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> NOV-29-1998
<CASH> 69
<SECURITIES> 0
<RECEIVABLES> 3,261
<ALLOWANCES> 53
<INVENTORY> 3,738
<CURRENT-ASSETS> 7,277
<PP&E> 12,393
<DEPRECIATION> 6,301
<TOTAL-ASSETS> 13,953
<CURRENT-LIABILITIES> 4,634
<BONDS> 5,155
0
0
<COMMON> 49
<OTHER-SE> 3,524
<TOTAL-LIABILITY-AND-EQUITY> 13,953
<SALES> 5,252
<TOTAL-REVENUES> 5,252
<CGS> 4,762
<TOTAL-COSTS> 4,762
<OTHER-EXPENSES> 745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 158
<INCOME-PRETAX> (413)
<INCOME-TAX> (137)
<INCOME-CONTINUING> (276)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (276)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
[ARTICLE] 5
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED MAY 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[RESTATED]
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] AUG-31-1998
[PERIOD-START] SEP-01-1997
[PERIOD-END] MAY-31-1998
[CASH] 109
[SECURITIES] 0
[RECEIVABLES] 4,311
[ALLOWANCES] 77
[INVENTORY] 3,246
[CURRENT-ASSETS] 7,849
[PP&E] 12,086
[DEPRECIATION] 5,898
[TOTAL-ASSETS] 14,480
[CURRENT-LIABILITIES] 7,549
[BONDS] 2,609
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 49
[OTHER-SE] 3,722
[TOTAL-LIABILITY-AND-EQUITY] 14,480
[SALES] 6,655
[TOTAL-REVENUES] 6,655
[CGS] 5,608
[TOTAL-COSTS] 5,608
[OTHER-EXPENSES] 843
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 166
[INCOME-PRETAX] 38
[INCOME-TAX] 6
[INCOME-CONTINUING] 32
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 32
[EPS-PRIMARY] 0.02
[EPS-DILUTED] 0.02
</TABLE>
