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<PAGE> 1
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 April 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: 1-4338
EAC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
New York 21-0702336
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
22 BLACKSTONE AVENUE, BRANFORD, CT 06405
(Address of principal executive offices) (Zip Code)
(203) 315-8020
(Issuer's telephone number, including area code)
Check whether the Issuer (1) 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 issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1997
Common Stock, par value $.10 per share 2,311,687 shares
<PAGE> 2
- INDEX -
<TABLE>
<CAPTION>
PAGE(S)
<S> <C> <C>
PART I. Financial Information:
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets - April 30, 1997 (Unaudited)
and January 31, 1997 3.
Consolidated Condensed Statements of Operations (Unaudited) -
Three Months Ended April 30, 1997 and 1996 4.
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Three Months Ended April 30, 1997 and 1996 5.
Notes to Interim Consolidated Condensed Financial Statements (Unaudited) 6.
ITEM 2. Management's Discussion and Analysis or Plan of Operation 7.
PART II. Other Information 9.
SIGNATURES 10.
EXHIBITS:
Exhibit 11 - Earnings Per Share
Exhibit 27 - Financial Data Schedule
</TABLE>
Page 2.
<PAGE> 3
PART I. FINANCIAL INFORMATION:
ITEM I. FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
EAC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
- ASSETS -
APRIL 30, January 31,
1997 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 443,451 $ 594,412
Notes and accounts receivable - net of allowance for doubtful accounts
of $45,566 at April 30, and January 31, 1997, respectively 805,921 666,379
Inventories 367,520 300,238
Prepaid taxes and expenses 65,743 50,907
------------ ------------
TOTAL CURRENT ASSETS 1,682,635 1,611,936
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, NET 682,146 710,166
------------ ------------
OTHER ASSETS:
Costs in excess of net assets acquired - net 445,669 453,601
Deferred income taxes 510,000 510,000
Other assets 29,182 29,182
------------ ------------
984,851 992,783
------------ ------------
$ 3,349,632 $ 3,314,885
============ ============
<CAPTION>
- LIABILITIES AND SHAREHOLDERS' EQUITY -
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 367,714 $ 247,152
Accrued expenses 536,962 579,441
Long-term liabilities - current portion 90,342 223,770
Income taxes payable -- 5,161
------------ ------------
TOTAL CURRENT LIABILITIES 995,018 1,055,524
------------ ------------
LONG-TERM LIABILITIES - NET OF CURRENT PORTION 518,040 440,734
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTE 3)
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value; 20,000,000 shares authorized,
2,319,285 shares issued 231,929 231,929
Capital in excess of par value 10,504,380 10,504,380
Accumulated deficit (8,849,135) (8,867,082)
------------ ------------
1,887,174 1,869,227
Less: Common stock in treasury, 7,598 shares at cost (50,600) (50,600)
------------ ------------
1,836,574 1,818,627
------------ ------------
$ 3,349,632 $ 3,314,885
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 3.
<PAGE> 4
<TABLE>
<CAPTION>
EAC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Three Months
Ended April 30,
----------------------------------------
1997 1996
----------- -----------
<S> <C> <C>
NET SALES $ 1,742,656 $ 1,705,804
----------- -----------
COSTS AND EXPENSES:
Cost of products sold 1,240,253 1,194,225
Selling, general and administrative expenses 476,036 549,253
----------- -----------
TOTAL COSTS AND EXPENSES 1,716,289 1,743,478
----------- -----------
OPERATING INCOME (LOSS) 26,367 (37,674)
----------- -----------
OTHER INCOME (EXPENSES):
Interest expense (10,556) (143)
Interest and other income 2,136 22,485
----------- -----------
(8,420) 22,342
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 17,947 (15,332)
Income taxes, net of operating loss carryforwards -- --
----------- -----------
NET INCOME (LOSS) $ 17,947 $ (15,332)
=========== ===========
INCOME (LOSS) PER SHARE (NOTE 2) $ .01 $ (.01)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 4.
<PAGE> 5
<TABLE>
<CAPTION>
EAC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Three Months
Ended April 30,
-----------------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 17,947 $ (15,332)
Adjustments to reconcile net income (loss) to cash provided from operating activities:
Depreciation and amortization 40,502 43,686
Amortization of deferred rental income -- (18,817)
Change in assets and liabilities:
(Increase) decrease in accounts and notes receivable (139,542) 45,780
(Increase) decrease in inventories (67,282) 71,167
(Increase) in prepaid expenses and other assets (10,292) (23,447)
Increase in accounts payable, accrued expenses and accrued income taxes 167,224 46,090
--------- ---------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 8,557 149,127
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,550) (75,237)
--------- ---------
NET CASH (USED BY) INVESTING ACTIVITIES (4,550) (75,237)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term debt (8,032) --
Payments of long-term debt (146,936) (8,258)
--------- ---------
NET CASH (USED BY) FINANCING ACTIVITIES (154,968) (8,258)
--------- ---------
NET (DECREASE ) INCREASE IN CASH AND CASH EQUIVALENTS (150,961) 65,632
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 594,412 628,380
--------- ---------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 443,451 $ 694,012
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 5.
<PAGE> 6
EAC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of EAC Industries,
Inc. (the "Company") and its subsidiaries, contain all
adjustments necessary (consisting of normal recurring accruals
or adjustments only) to present fairly the Company's financial
position as of April 30, 1997 and the results of its operations
and cash flows for the three month periods ended April 30, 1997
and 1996.
The accounting policies followed by the Company are set forth in
Note 2 to the Company's consolidated financial statements
included in its Annual Report on Form 10-KSB for the year ended
January 31, 1997, which is incorporated herein by reference.
Specific reference is made to this report for a description of
the Company's securities and the notes to consolidated financial
statements.
The results of operations for the three month period ended April
30, 1997 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2 - EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share has been computed on the basis of the
weighted average number of common shares and common equivalent
shares outstanding during each period presented.
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128 - Earnings Per Share, which pronouncement
changes the method for calculating earnings per share. SFAS 128
requires presentation of "basic " and "diluted" earnings per
share as opposed to "primary" and "fully diluted" earnings per
share, and is effective for periods ending after December 15,
1997. Early adoption is not permitted. Management does not
believe that SFAS 128 will result in earnings per share that is
materially different from that currently reported.
NOTE 3 - CONTINGENCY:
Goodren has withdrawn from participating in the District 65
Union Pension Plan (the "Plan"). This withdrawal resulted in the
assessment of a withdrawal liability owed to the Plan by
Goodren. During the year ended January 31, 1995, the Company
accrued a reserve for an estimated liability of $560,000 which
counsel to the Company believed would be payable over a period
of approximately 22 years beginning approximately one year from
the withdrawal date. In March of 1996, the Company signed an
agreement with the Plan whereby they will make quarterly
payments of $7,548. On September 30, 1996, the Company and
Goodren entered into a Settlement Agreement with the Trustees of
the union pension plan whereby Goodren's pension fund liability
was reduced to $360,000 payable in 80 equal quarterly payments
of $8,752 including annual interest at a rate of 8%. The Company
has applied for a hardship case pursuant to the Settlement
Agreement, whereby the Company would reduce its quarterly
obligations to $3,000 until such time as the Company is out of
hardship. Goodren is also potentially liable to the Internal
Revenue Service ("IRS") for excise taxes of approximately $5,000
under paragraph 4971 of the Internal Revenue Code.
Page 6.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION:
INTRODUCTION:
EAC Industries, Inc., the Company, is a holding company with three
operating subsidiaries: Goodren Products Corporation ("Goodren"),
Athena Packaging, Inc. ("Athena") and Flexible Printed Products,
Inc. ("Flexible"). Goodren designs and provides point-of-purchase
advertising displays and wall decorations on semi-durable plastic.
Athena produces printed, laminated embossed and hot-stamped
labels, wraps, seals and decals for the cosmetics, pharmaceutical
and health and beauty aids industries. Flexible produces and
prints on plastic, pre-cure in-mold heat transfer labels for the
identification and decoration of rubber and silicone hoses, belts
and tire patches.
The financial information presented herein includes: (i)
Consolidated condensed balance sheets as of April 30, 1997 and
January 31, 1997; (ii) Consolidated condensed statements of
operations for the three month periods ended April 30, 1997 and
1996 and (iii) Consolidated condensed statements of cash flows for
the three month periods ended April 30, 1997 and 1996.
RESULTS OF OPERATIONS:
Sales for the three-month period ended April 30, 1997 were
$1,743,000 as compared to $1,706,000 for the comparable period of
the prior year, reflecting an increase of $37,000 or 2.2%. Cost of
sales as a percentage of sales remained relatively consistent for
the three-month period ended April 30, 1997 at $1,240,000 (71% of
sales) as compared to $1,194,000 (70% of sales) for the comparable
period of the prior year.
Selling, general and administrative expenses decreased from
$549,000 (32% of sales) for the three-month period ended April 30,
1996 to $476,000 (27% of sales) for the three-month period ended
April 30, 1997. The Company believes that this decrease is due to
the monitoring of costs more effectively.
For the three months ended April 30, 1996 the Company reflected a
net loss of $15,332. For the three months ended April 30, 1997 the
Company reflected net income of $17,947. This increase in earnings
was primarily due to the increase in sales and reduced operating
overhead as mentioned above.
LIQUIDITY AND CAPITAL RESOURCES:
At April 30, 1997, the Company's working capital was $688,000
compared to working capital of $556,000 at its year ended January
31, 1997. Cash amounted to $443,000 at April 30, 1997 compared to
$594,000 at January 31, 1997.
The Company is anticipating capital expenditures of approximately
$200,000, during the next year, in order to expand the operations
of Goodren, Athena and Flexible. Management believes that these
expenditures can be funded from existing resources.
The Company believes that its cash flows from operations will be
sufficient to meet its financial requirements over the next twelve
months.
Page 7.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED):
OTHER:
This report contains forward-looking statements and information
that is based on management's beliefs and assumptions, as well as
information currently available to management. When used in this
document, the words "anticipate," "estimate," "expect," "intend"
and similar expressions are intended to identify forward-looking
statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be
correct. Such statements are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should the underlying assumptions
prove incorrect, actual results may vary materially from those
anticipated, estimated or expected. Among the key factors that may
have a direct bearing on the Company's operating results are
fluctuations in the economy, the degree and nature of competition,
the risk of delay in product developmemt and release dates and
acceptance of, and demand for, the Company's products.
Page 8.
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports
(a) Exhibits:
(11) Computation of Earnings per Common Share
(27) Financial Data Schedule
Page 9.
<PAGE> 10
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.
EAC INDUSTRIES, INC.
----------------------------------------
Registrant
/s/ Peter B. Fritzsche
Date: June 10, 1997 ----------------------------------------
Peter B. Fritzsche
Chief Executive Officer and Principal
Accounting Officer
Page 10.
<PAGE> 1
<TABLE>
<CAPTION>
EAC INDUSTRIES, INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
For The Three Months
Ended April 30,
-------------------------------------------
1997 1996
----------- -----------
<S> <C> <C>
NET INCOME (LOSS) $ 17,947 $ (15,332)
========== ===========
SHARES:
Weighted average shares outstanding 2,311,687 2,311,687
Other - options, warrants etc. -- --
----------- -----------
2,311,687 2,311,687
PRIMARY EARNINGS (LOSS) PER SHARE $ .01 $ (.01)
========== ===========
</TABLE>
- Exhibit 11 -
Page 11.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<CASH> 443,451
<SECURITIES> 0
<RECEIVABLES> 851,487
<ALLOWANCES> 45,566
<INVENTORY> 367,520
<CURRENT-ASSETS> 1,682,635
<PP&E> 1,722,648
<DEPRECIATION> 1,040,502
<TOTAL-ASSETS> 3,349,632
<CURRENT-LIABILITIES> 995,018
<BONDS> 0
0
0
<COMMON> 231,929
<OTHER-SE> 1,604,645
<TOTAL-LIABILITY-AND-EQUITY> 3,349,632
<SALES> 1,742,656
<TOTAL-REVENUES> 1,742,656
<CGS> 1,240,253
<TOTAL-COSTS> 1,240,253
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,556
<INCOME-PRETAX> 17,947
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,947
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
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