UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from __________to __________
Commission File No. 1-6720
A. T. CROSS COMPANY
(Exact name of registrant as specified in its charter)
Rhode Island 05-0126220
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Albion Road, Lincoln, Rhode Island 02865
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (401) 333-1200
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, 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 issuer's classes
of common stock as of March 31, 1995:
Class A common stock - 14,725,302 shares
Class B common stock - 1,804,800 shares
PART I. FINANCIAL INFORMATION
<PAGE>
A. T. CROSS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31
1995 1994 1994
ASSETS (Thousands of Dollars)
CURRENT ASSETS
Cash and Cash Equivalents $ 13,645 $ 73,906 $ 15,690
Short-Term Investments 60,924 7,882 56,331
Accounts Receivable 21,877 22,197 37,436
Inventories - Note B 22,234 22,601 16,725
Other Current Assets 6,975 3,287 4,545
Total Current Assets 125,655 129,873 130,727
PROPERTY, PLANT AND EQUIPMENT 87,070 78,346 84,979
Less Allowances for Depreciation 52,903 46,998 51,029
34,167 31,348 33,950
INTANGIBLES AND OTHER ASSETS 15,671 16,745 15,692
$175,493 $177,966 $180,369
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable, Accrued Expenses and
Other Liabilities $ 23,360 $ 21,590 $ 26,599
Compensation and Related Taxes 4,831 5,500 5,158
Cash Dividends Payable 0 0 2,644
Contributions Payable to Employee
Benefit Plans 8,310 8,584 8,055
Income Taxes Payable 2,773 884 4,302
Total Current Liabilities 39,274 36,558 46,758
ACCRUED WARRANTY COSTS 4,984 4,684 4,909
SHAREHOLDERS' EQUITY
Common Stock, Par Value $1 Per Share:
Class A, Authorized 40,000,000 Shares;
15,200,302 Shares Issued and 14,725,302
Outstanding in 1995, 15,179,467 Shares
Issued and Outstanding in March 1994, and
15,194,293 Shares Issued and 14,719,293
Outstanding in December 1994 15,200 15,179 15,194
Class B, Authorized 4,000,000 Shares;
Issued and Outstanding 1,804,800 Shares 1,805 1,805 1,805
Capital in Excess of Par Value 10,798 10,138 10,722
Retained Earnings 109,513 109,523 107,959
Accumulated Foreign Currency
Translation Adjustment 1,225 79 328
138,541 136,724 136,008
Treasury Stock, at Cost (7,306) - (7,306)
Total Shareholders' Equity 131,235 136,724 128,702
$175,493 $177,966 $180,369
See notes to condensed consolidated financial statements.
<PAGE>
A. T. CROSS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
MARCH 31
1995 1994
(Thousands of Dollars
Except per Share Data)
Net Sales $35,407 $35,193
Cost of Goods Sold 17,810 18,507
17,597 16,686
Selling, General and Administrative Expenses 14,453 13,296
Service and Distribution Costs 1,021 1,105
Research and Development Expenses 628 468
Operating Income 1,495 1,817
Interest and Other Income 991 587
Income Before Income Taxes 2,486 2,404
Income Taxes 932 1,043
Net Income $ 1,554 $ 1,361
Net Income Per Share - Note C $0.09 $ 0.08
See notes to condensed consolidated financial statements.
<PAGE>
A. T. CROSS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31
1995 1994
(Thousands of Dollars)
Cash Provided By (Used In):
Operating Activities:
Net Cash Provided By Operating Activities $ 7,104 $ 14,157
Investing Activities:
Additions to Property, Plant and Equipment (2,088) (863)
Additional Acquisition Payment - (69)
Purchase of Short-Term Investments (4,856) (3,077)
Sale or Maturity of Short-Term Investments 263 13,508
Net Cash Provided By (Used In) Investing Activities (6,681) 9,499
Financing Activities:
Cash Dividends Paid (2,644) (2,709)
Other 83 62
Net Cash Used in Financing Activities (2,561) (2,647)
Effect of Exchange Rate Changes on
Cash and Cash Equivalents 93 75
Increase (Decrease) in Cash and Cash Equivalents (2,045) 21,084
Cash and Cash Equivalents at Beginning of Period 15,690 52,822
Cash and Cash Equivalents at End of Period $13,645 $73,906
See notes to condensed consolidated financial statements.
<PAGE>
A. T. CROSS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
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 months ended March 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1995. The Company typically records its highest sales and earnings in
the fourth quarter. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1994.
NOTE B - Inventories
The components of inventory at March 31, 1995 and December 31, 1994 were as
follows:
March 31 December 31
1995 1994
Finished goods $12,952 $ 9,612
Work in process 4,465 2,832
Raw materials 4,817 4,281
$22,234 $16,725
NOTE C - Net Income Per Share
Net income per share has been determined based upon the weighted average
number of Class A and Class B common shares outstanding of 16,527,823 and
16,935,455 for the first quarter ended March 31, 1995 and 1994,
respectively. Common stock equivalents related to outstanding stock
options have not been included in the calculations of earnings per share
because the result is not dilutive.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Results of Operations
Net sales for the first quarter ended March 31, 1995 were essentially flat
compared to the first quarter of 1994. Domestic writing instruments sales
of $14.8 million were 3.0% greater than last year, while foreign sales of
$16.9 million improved 2.7% over 1994. Domestic writing instrument sales
were favorably affected by higher Townsend sales, the Company's wide-girth
product line. This impact of Townsend sales was offset somewhat by a slow-
down in orders from customers anticipating the introduction of the
Company's new lower-priced Solo line which will begin sales in the second
quarter. The increase in foreign sales was largely due to favorable
exchange rates against the dollar. Leather sales of $3.6 million were down
15.5% from last year due to the consolidation of major department store
companies.
The gross profit margin for the first quarter of 1995 was 49.7%, as
compared to 47.4% in 1994. The gross margin improvement was due in part to
the price increase implemented on July 1, 1994 and to lower average costs
this year as compared to the same period in 1994.
Selling, general and administrative expenses increased 8.7% to $14.5
million in the first quarter of 1995 as a result of planned increases in
Marketing support expenditures and the effect of the weaker U.S. dollar
when translating foreign operations' expenses. Research and Development
expenses were 34.2% higher than the first quarter of 1994 because of new
product development projects. The Company expects an increase in R&D
expenditures in 1995 in excess of 50%.
Interest and other income rose 68.8% for the first three months of 1995 due
to an increase in interest income as a result of higher interest rates.
The effective income tax rate for the first quarter of 1995 was 37.5% as
compared to 43.4% for the first quarter of last year. The Company
implemented a reorganization of certain of its European operations at the
end of 1994 to lower its overall effective corporate income tax rate.
Liquidity and Sources of Capital
Cash, cash equivalents and short-term investments increased $2.5 million
from December 31, 1994 to $74.6 million at March 31, 1995. Most of this
increase, and the corresponding decrease in accounts receivable, resulted
from cash collected in January 1995 from customers who took advantage of
the 1994 promotion that allowed qualifying domestic customers to defer
payments on their 1994 purchases. This promotion was similar to programs
that have been offered in past years. Cash available for domestic
operations approximated $18.6 million while cash held off-shore
approximated $56.0 million. The Company has available a $50 million line
of credit with Fleet National Bank which provides an additional source of
working capital on a short-term basis. The highest amount borrowed as of
December 31, 1994 and March 31, 1995 was $2.0 million.
The increase in inventory since December 31, 1994 is in support of a number
of recent and forthcoming new product introductions.
<PAGE>
PART II. OTHER INFORMATION
Item 6. No reports have been filed on Form 8-K pursuant to item 6(b) and no
other items are applicable for three months ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
A. T. CROSS COMPANY
Date: May 9, 1995 By: JOHN E. BUCKLEY
John E. Buckley
Executive Vice President
Chief Operating Officer
Date: May 9, 1995 By: MICHAEL EL-HILLOW
Michael El-Hillow
Vice President, Finance, Treasurer
Chief Financial Officer
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<PERIOD-END> MAR-31-1995
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<RECEIVABLES> 23,705
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<PP&E> 87,070
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<OTHER-SE> 114,230
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