<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
of the securities exchange act of 1934
For the transition period from ___________________ to ___________________
Commission file number 0-1489
BEST UNIVERSAL LOCK CO.
(Exact name of registrant as specified in its charter)
DELAWARE 91-0144790
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 50444, INDIANAPOLIS, INDIANA 46250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 849-2250
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 (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the registrant's classes of
common, as of July 18, 1997.
SERIES A COMMON STOCK 86,469 SHARES
SERIES B COMMON STOCK 300,000 SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX
Page No.
--------
Part I. Financial Information
- -------------------------------
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
three months ended June 30, 1997 and 1996 3
Condensed Consolidated Statements of Income for the
six months ended June 30, 1997 and 1996 4
Condensed Consolidated Balance Sheets at June 30, 1997
and December 31, 1996 5-6
Condensed Consolidated Statements of Shareholders'
Equity at June 30, 1997 and December 31, 1996 7
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1997 and 1996 8
Notes to Condensed Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. Other Information
- --------------------------
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
- ----------
2
<PAGE>
BEST LOCK COMPANIES
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. ( A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended June 30
------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
NET SALES $ 32,588,076 $ 30,410,905
COST OF GOODS SOLD 16,741,715 15,907,047
------------ ------------
GROSS MARGIN 15,846,361 14,503,858
OPERATING EXPENSES
Selling 8,403,635 8,084,088
Engineering, general and administrative 5,142,482 4,847,752
------------ ------------
Total operating expenses 13,546,117 12,931,840
------------ ------------
OPERATING INCOME 2,300,244 1,572,018
Interest expense (266,517) (278,229)
Other income, net 107,341 33,440
------------ ------------
INCOME before provision for income taxes 2,141,068 1,327,229
Provision for income taxes 925,496 583,535
------------ ------------
NET INCOME, Best Lock Corporation and Subsidiary 1,215,572 743,694
Minority interest in net income, Best Lock Corporation and Subsidiary (252,819) (159,535)
Corporate - Best Universal Lock Co. (expense) (42,530) (22,180)
------------- ------------
NET INCOME, Best Universal Lock Co. and Subsidiaries 920,223 561,979
Minority interest in net income, Best Universal Lock Co. and Subsidiaries (186,982) (94,638)
Corporate - Frank E. Best, Inc. income (expense) (617) 10,041
------------ ------------
NET INCOME, Frank E. Best, Inc. and Subsidiaries $ 732,624 $ 477,382
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Best Universal Lock Co.
Best Lock -------------------------- Frank E.
Earnings per common share, three months ended: Corporation Series A Series B Best, Inc.
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
June 30, 1997 $ 10.08 $ 2.56 $ 2.56 $ 2.69
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
June 30, 1996 $ 6.11 $ 1.56 $ 1.56 $ 1.73
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
Weighted average shares outstanding, three months ended:
June 30, 1997 120,649.45 59,592.91 300,000.00 272,386.47
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
June 30, 1996 121,653.85 60,739.31 300,000.00 275,408.89
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. ( A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------------
1997 1996
------------- -------------
<S> <C> <C>
NET SALES $ 65,638,007 $ 57,697,992
COST OF GOODS SOLD 34,143,462 31,343,152
------------ ------------
GROSS MARGIN 31,494,545 26,354,840
OPERATING EXPENSES
Selling 16,620,427 16,769,279
Engineering, general and administrative 10,328,472 9,555,929
------------ ------------
Total operating expenses 26,948,899 26,325,208
------------ ------------
OPERATING INCOME 4,545,646 29,632
Interest expense (533,104) (578,518)
Other income, net 171,958 114,992
------------ ------------
INCOME (LOSS) before provision for income taxes 4,184,500 (433,894)
Provision (benefit) for income taxes 1,788,959 (85,809)
------------ ------------
NET INCOME (LOSS), Best Lock Corporation and Subsidiary 2,395,541 (348,085)
Minority interest in net (income) loss, Best Lock Corporation and Subsidiary (498,268) 74,763
Corporate - Best Universal Lock Co. (expense) (50,447) (28,628)
------------ ------------
NET INCOME (LOSS), Best Universal Lock Co. and Subsidiaries 1,846,826 (301,950)
Minority interest in net (income) loss, Best Universal Lock Co. and Subsidiaries $ (340,637) $ 50,837
Corporate - Frank E. Best, Inc. income 21,340 31,107
------------ ------------
NET INCOME (LOSS), Frank E. Best, Inc. and Subsidiaries 1,527,529 (220,006)
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Best Universal Lock Co.
Best Lock -------------------------- Frank E.
Earnings (loss) per common share, six months ended: Corporation Series A Series B Best, Inc.
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
June 30, 1997 $ 19.86 $ 5.14 $ 5.14 $ 5.61
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
June 30, 1996 $ (2.86) $ (0.84) $ (0.84) $ (0.80)
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Weighted average shares outstanding, six months ended:
June 30, 1997 120,651.64 59,614.99 300,000.00 272,397.62
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
June 30, 1996 121,653.85 60,739.31 300,000.00 275,408.89
------------ ----------- ----------- -----------
------------ ----------- ----------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
- -------------------------------------------------------------------------------
June 30 December 31
1997 1996
------------ -------------
CURRENT ASSETS
Cash and cash equivalents $ 1,900,270 $ 2,099,876
Trade receivables
Direct 15,575,310 15,453,983
Sales representatives and other 3,051,225 2,486,882
Allowance for uncollectible accounts (254,735) (244,866)
Estimated refundable income taxes 50,953 51,632
Current portion of notes receivable 12,045 64,909
Inventories 14,375,937 13,779,015
Prepaid income taxes 2,703,401 3,224,592
Prepaid expenses and other 304,751 490,872
----------- -----------
Total current assets 37,719,157 37,406,895
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land and buildings 13,997,582 13,989,015
Machinery and equipment 27,539,692 27,557,030
Tooling 8,761,287 8,536,128
Furniture, fixtures and other 12,522,447 12,255,748
Construction work-in-progress 1,206,100 184,311
----------- -----------
64,027,108 62,522,232
Less - accumulated depreciation (38,228,358) (35,634,924)
----------- -----------
Total property, plant and equipment 25,798,750 26,887,308
----------- -----------
OTHER ASSETS
Long-term notes receivable 3,303,799 3,303,799
Other assets 1,096,083 1,188,736
----------- -----------
Total assets $ 67,917,789 $ 68,786,738
----------- -----------
----------- -----------
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
June 30 December 31
1997 1996
------------ -----------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of retirement benefit obligations $ 1,343,307 $ 1,364,671
Trade accounts payable 2,903,665 2,685,231
Customer advances 1,852,845 1,849,175
Accrued liabilities
Income taxes 938,493 929,850
Property and other taxes 926,437 876,670
Payroll and vacation 3,207,254 4,413,772
Accrued medical claims 765,000 750,000
Accrued warranty 723,289 998,835
Other 574,099 1,167,936
----------- -----------
Total current liabilities 13,234,389 15,036,140
----------- -----------
LONG-TERM DEBT 14,000,000 15,000,000
RETIREMENT BENEFIT OBLIGATION 3,021,007 3,213,399
DEFERRED INCOME TAXES 2,321,729 2,305,265
----------- -----------
Total liabilities 32,577,125 35,554,804
----------- -----------
MINORITY INTEREST IN SUBSIDIARIES 9,789,835 9,549,301
----------- -----------
COMMON STOCK REDEEMABLE UNDER STOCK BONUS PLAN 1,868,537 1,868,537
----------- -----------
SHAREHOLDERS' EQUITY
Capital stock
Series A common stock, no par value, 100,000 shares authorized;
59,536.31 shares outstanding 1,102,579 1,102,579
Series B common stock, no par value,
300,000 shares authorized and outstanding 1 1
----------- -----------
Total capital stock 1,102,580 1,102,580
Accumulated earnings 35,205,007 33,312,959
Cumulative translation adjustment (193,374) (181,052)
Common stock redeemable under Stock Bonus Plan (1,868,537) (1,868,537)
Treasury stock (10,563,384) (10,551,854)
----------- -----------
Total shareholders' equity 23,682,292 21,814,096
----------- -----------
Total liabilities and shareholders' equity 67,917,789 68,786,738
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
------------ ------------
<S> <C> <C>
CAPITAL STOCK
Series A common stock, no par value,
100,000 shares authorized; 59,536.31 shares outstanding $ 1,102,579 $ 1,102,579
Series B common stock, no par value,
300,000 shares authorized and outstanding 1 1
------------ ------------
Total capital stock 1,102,580 1,102,580
------------ ------------
ACCUMULATED EARNINGS
Balance at beginning of year 33,312,959 31,080,417
Net income - (six months ended June 30, 1997
and twelve months ended December 31, 1996) 2,054,829 2,925,320
Cash dividends (see below) - (478,268)
Additional minimum liability for pension (162,781) (214,510)
------------ ------------
Balance at end of year 35,205,007 33,312,959
------------ ------------
COMMON STOCK REDEEMABLE UNDER STOCK BONUS PLAN (1,868,537) (1,868,537)
------------ ------------
CUMULATIVE TRANSLATION ADJUSTMENT (193,374) (181,052)
------------ ------------
TREASURY STOCK
Balance at beginning of year (10,551,854) (10,386,881)
Shares purchased (11,530) (164,973)
------------ ------------
Balance at end of period (10,563,384) (10,551,854)
------------ ------------
Total shareholders' equity $ 23,682,292 $ 21,814,096
------------ ------------
------------ ------------
Cash dividends per share
Preferred $ - $ -
Series A common - 1.68
Series B common - 1.11
------------ ------------
------------ ------------
Series B common - 1.10
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 64,944,969 $ 54,696,581
Cash paid to suppliers and employees (60,898,867) (55,399,091)
Interest received 249,761 140,718
Interest paid (562,149) (676,276)
Income taxes refunded (paid) (1,269,419) 1,390,651
------------ ------------
Net cash provided by operating activities 2,464,295 152,583
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (1,640,134) (730,790)
------------ ------------
Net cash used in investing activities (1,640,134) (730,790)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings against secured line of credit 3,900,000 25,000,000
Payments on secured line of credit (4,900,000) (24,380,843)
Purchase of treasury stock (15,530) -
------------ ------------
Net cash provided by (used in)
financing activities (1,015,530) 619,157
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (8,237) (4,719)
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (199,606) 36,231
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,099,876 1,389,827
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,900,270 $ 1,426,058
------------ ------------
------------ ------------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income (loss) $ 1,846,826 $ (301,950)
Adjustments-
Depreciation and amortization 2,835,416 2,733,028
Provision for losses on accounts receivable 96,655 51,326
Loss on sale of property, plant and equipment 15,321 66,821
Minority interest related to current year earnings (loss) 498,268 (74,763)
Deferred income taxes 537,655 1,142,688
Changes in assets and liabilities-
(Increase) decrease in
Accounts and notes receivable (630,557) (3,042,506)
Refundable income taxes 680 853,928
Inventories (600,671) 917,492
Prepaid expenses 91,121 (23,538)
Other assets (69,720) (65,059)
Increase (decrease) in
Accounts payable, customer advances and accrued liabilities (1,746,291) (1,027,769)
Income taxes payable 8,842 (453,720)
Retirement benefit obligation (213,756) (623,395)
Additional minimum liability for pension (205,494) -
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,464,295 $ 152,583
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
8
<PAGE>
BEST LOCK COMPANIES
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have not been
audited by independent accountants. In the opinion of the Company's management,
the financial statements reflect all adjustments necessary to fairly present the
results of operations for the three and six month periods ended June 30, 1997
and 1996, the Company's financial position at June 30, 1997 and December 31,
1996, and the cash flows for the six-month periods ended June 30, 1997 and 1996.
These adjustments are of a normal recurring nature. Inventory values at interim
reporting dates are based upon estimates of the annual adjustments for taking
physical inventory and for the change in cost of LIFO inventories.
Certain notes and other information have been omitted from the interim
financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
Company's 1996 Form 10-K.
The results for the three and six months ended June 30, 1997 are not
necessarily indicative of future financial results.
The condensed consolidated financial statements for each parent company in
the Best Lock Companies (the Company) include their respective subsidiaries as
indicated below:
<TABLE>
<CAPTION>
Percent Owned
Parent Company Subsidiaries as of June 30, 1997
-------------- ------------ -------------------
<S> <C> <C>
Frank E. Best, Inc. Best Universal Lock Co. 83%
(Best)
Best Universal Lock Best Lock Corporation 79%
Co. (Universal)
Best Lock Best Universal Locks Limited (Canada) 100%
Corporation (Lock or the Company)
</TABLE>
9
<PAGE>
2. INCOME TAXES
The effective tax rate for the second quarter of 1997 was 43.2 percent, compared
with 44.0 percent for the second quarter of 1996. The decrease relates
primarily to a decrease in state tax expense. The effective tax rates for the
six months ended June 30, 1997 and 1996 were 42.8 percent and (19.8),
respectively. The change is due to an increase in nondeductible items and the
opposing impact these items have on the tax rate (increases income tax expense
in 1997, but decreases the tax benefit in 1996). The effective tax rates are
higher than the U.S. Federal statutory rate of 34% due to a higher tax rate in
Canada and state income taxes.
3. FINANCING ARRANGEMENTS
The Company entered into a $25.0 million line of credit agreement on
February 15, 1995, which was amended effective May 1, 1997, December 31, 1996
and December 31, 1995. The agreement expires on May 1, 1999 and bears interest
at a variable rate, based upon the prime rate or LIBOR, at the Company's
election. The line of credit is secured by a blanket lien on all accounts and
notes receivable, inventory, machinery and equipment, and intangible assets with
a negative pledge on real estate. The agreement contains financial covenants
including those relating to debt service coverage, tangible net worth, and
liabilities to tangible net worth. As of June 30, 1997 and December 31, 1996,
the Company was in compliance with all required covenants.
4. RECLASSIFICATIONS
Certain reclassifications have been made to the statement of income and
balance sheet for the prior periods to conform to the current period
presentation.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Since Frank E. Best, Inc. and Best Universal Lock Co. are non-operating parents
of Best Lock Corporation, a discussion of Best Lock Corporation's business is
necessary in order to understand the character and development of the total
enterprise. As the variations between the financial statements of these three
companies are not significant, the discussion and analysis of Best Lock
Corporation is representative of all. The following, therefore, is a discussion
of the business of Best Lock Corporation (the Company).
ANALYSIS OF RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
Sales for the second quarter of 1997 were $2.2 million higher than the same
period of 1996. Higher sales from the distribution division (BLS) to end users
accounted for the majority of the increase, mainly due to higher sales of
electronic access control products. Sales from the manufacturing division (BLM)
to independent distributors and Authorized Contract Construction Dealers were
flat compared to the same period of 1996.
The gross margin on sales improved to 48.6% of sales, compared to 47.7% in the
prior year. Margins were impacted favorably by $252,000 in the second quarter of
1997 due to a change in the Company's method for accounting for vacation
benefits. Prior to 1997, vacation was earned in one year and taken in the next.
Effective in 1997, vacation will be earned and taken in the same year.
Operating income increased $728,000 to 7.1% of sales from 5.2% for the same
period in 1996, mainly due to the higher sales and improved gross margin
percentage. Selling, general and administrative, and engineering expenses
increased $614,000 in the second quarter of 1997 over the second quarter of
1996. Expenditures that increased in the second quarter of 1997 over the prior
year were salaries, wages and fringe benefits ($1.4 million), repairs and
maintenance ($136,000), rent ($125,000), and seminars and training ($120,000).
These higher expenses were offset by lower professional fees of approximately
$770,000 and the change in the method for accounting for vacation, described
above, which lowered selling, general and administrative, and engineering
expenses by $368,000 during the second quarter of 1997. This change will result
in a one-time benefit to cost of goods sold and selling, general and
administrative, and engineering expenses of the Company of approximately $2.2
million for the year.
The effective tax rate for the second quarter of 1997 was 43.2 percent, compared
with 44.0 percent for the second quarter of 1996. The decrease relates
primarily to a decrease in state tax expense.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Sales for the six months ended June 30, 1997 increased by $7.9 million, or 13.8%
over the prior year. Higher sales from the manufacturing division (BLM) to
independent distributors and Authorized Contract Construction Dealers accounted
for approximately $2.4 million of the increase. The remainder of the increase
resulted from higher sales from the distribution division (BLS) to end users.
11
<PAGE>
The gross margin on sales for the first six months of 1997 was 48.0% of sales,
compared to 45.7% of sales for the first six months of 1996. The change in the
method for accounting for vacation, described above, positively impacted margins
by $420,000 during the first six months of 1997. Higher absorption of fixed
costs in the BLM division, due to increased sales, also contributed to the
increased margin percentage.
Operating income increased to 6.9% of sales in the six months ended June 30,
1997, from .1% of sales in the six months ended June 30, 1996. The higher sales
and improved gross margin were the main reasons for the increase. Selling,
general and administrative, and engineering expenses were $624,000 higher for
the six month period, compared to the prior year, due to higher expenditures for
salaries and wages, commissions, and seminars and training of approximately
$320,000, $100,000 and $375,000, respectively. In addition, the Company began
leasing personal computers in late 1996 that had previously been purchased. The
impact of this change resulted in approximately $200,000 in additional rent
expense during the first six months of 1997. These higher expenses were offset
by a decrease in professional fees of approximately $400,000 in the six months
ended June 30, 1997.
The effective tax rates for the six months ended June 30, 1997 and 1996 were
42.8 percent and (19.8), respectively. The change is due to an increase in
nondeductible items and the opposing impact these items have on the tax rate
(increases income tax expense in 1997, but decreases the tax benefit in 1996).
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity continues to be strong for the first six months of 1997.
Working capital at June 30, 1997 increased by approximately $2.1 million from
December 31, 1996 and the current ratio increased to 2.9:1 at June 30, 1997 from
2.5:1 at December 31, 1996. Despite the increased working capital needs of the
business, the Company was able to invest $1.6 million in capital additions,
reduce borrowings by $1.0 million, and reduce the debt to net worth ratio from
55% to 48%. Inventory turns declined slightly to 4.9 in the first six months of
1997, compared to 5.7 in the first six months of 1996. Capital spending is
projected to total approximately $4.0 million for the year. The Company plans
to meet its 1997 working capital and capital expenditure requirements through
funds from operations and from its existing credit facility.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's Form 10-K for the year ended
December 31, 1996. There have been no new legal proceedings initiated during
the quarter, nor has there been a change in status or termination of any
previously reported legal proceeding.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE.
12
<PAGE>
SIGNATURE
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.
BEST UNIVERSAL LOCK CO.
-----------------------
(Registrant)
Date: August 6, 1997 By:
------------------ /s/ Stephen J. Cooper
-----------------
Treasurer
/s/ Paula J. Tinkey
---------------
Controller
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,900,270
<SECURITIES> 0
<RECEIVABLES> 18,638,580
<ALLOWANCES> 254,735
<INVENTORY> 14,375,937
<CURRENT-ASSETS> 37,719,157
<PP&E> 6,402,7108
<DEPRECIATION> 38,228,358
<TOTAL-ASSETS> 67,917,789
<CURRENT-LIABILITIES> 13,234,389
<BONDS> 14,000,000
0
0
<COMMON> 1,102,580
<OTHER-SE> 22,579,712
<TOTAL-LIABILITY-AND-EQUITY> 67,917,789
<SALES> 65,638,007
<TOTAL-REVENUES> 65,638,007
<CGS> 34,143,462
<TOTAL-COSTS> 61,092,361
<OTHER-EXPENSES> 909,861
<LOSS-PROVISION> 96,655
<INTEREST-EXPENSE> 533,104
<INCOME-PRETAX> 3,736,679
<INCOME-TAX> 1,788,959
<INCOME-CONTINUING> 1,846,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,846,826
<EPS-PRIMARY> 5.14
<EPS-DILUTED> 5.14
</TABLE>
