<PAGE>
FORM 10Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
------------------------------------------
Commission file number 2-66564
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
SPINNAKER INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 06-0544125
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 N. PEARL ST., #2160, L.B. 100, DALLAS, TX 75201
(Address of principal executive offices) (Zip Code)
(214) 855-0322
(Registrant's telephone number, including area code)
N/A
(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 (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 Stock, as of the latest practicable date.
Common Stock, No Par Value 3,074,598 shares
Class Outstanding at June 30, 1996
Page 1 or 14
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SPINNAKER INDUSTRIES, INC.
- --------------------------
INDEX
- -------------------------------------------------------------------------------
PAGE
NUMBER
------
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income
for the Three Months and Six Months Ended
June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
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Page 2 of 14
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PART I - FINANCIAL INFORMATION
Item 1. - CONSOLIDATED FINANCIAL STATEMENTS
SPINNAKER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1996 December 31, 1995
------------- -----------------
(unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $ 2,779,000 $ 3,048,000
Accounts receivable (less allowance
of $1,003,000 and $1,234,000) 25,294,000 24,789,000
Inventories 32,725,000 27,041,000
Prepaid expenses and other 3,673,000 2,318,000
Deferred income taxes 1,234,000 1,234,000
------------- -------------
Total current assets 65,705,000 58,430,000
Property, plant and equipment
Land 584,000 583,000
Buildings and improvements 12,159,000 9,632,000
Machinery and equipment 47,651,000 45,372,000
Accumulated depreciation (6,620,000) (4,639,000)
------------- -------------
53,774,000 50,948,000
Goodwill, net 25,771,000 25,793,000
Other assets 2,408,000 2,413,000
------------- -------------
TOTAL ASSETS $ 147,658,000 $ 137,584,000
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 16,062,000 $ 12,699,000
Accrued liabilities 7,069,000 6,534,000
Current portion of long term debt 10,559,000 3,666,000
Working capital revolver 29,609,000 27,149,000
Other current liabilities 977,000 394,000
------------- -------------
Total current liabilities 64,276,000 50,442,000
Long term debt, less current portion 58,577,000 69,642,000
Deferred income taxes 7,164,000 7,164,000
Notes payable to related parties 1,678,000 1,583,000
Minority interest 1,881,000 1,691,000
Stockholders' equity
Common stock 3,124,000 3,124,000
Additional paid in capital 10,209,000 3,709,000
Retained earnings 861,000 341,000
Less: common stock in treasury (112,000) (112,000)
------------- -------------
Total stockholders' equity 14,082,000 7,062,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 147,658,000 $ 137,584,000
------------- -------------
------------- -------------
NOTE: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements which
are an integral part of these financial statements.
Page 3 of 14
<PAGE>
SPINNAKER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ----------------------------
(unaudited) (unaudited)
1996 1995 1996 1995
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 60,241,000 $ 26,685,000 $ 122,244,000 $ 52,646,000
Cost of sales (51,688,000) (23,056,000) (104,899,000) (45,416,000)
------------ ------------ ------------- ------------
Gross margin 8,553,000 3,629,000 17,345,000 7,230,000
Selling, general and administrative
expense (5,502,000) (2,507,000) (11,071,000) (5,006,000)
------------ ------------ ------------- ------------
Income from operations 3,051,000 1,122,000 6,274,000 2,224,000
Interest expense (2,334,000) (647,000) (4,657,000) (1,293,000)
Guarantee fee - - (375,000) -
Other income (expenss)-net (6,000) (5,000) (39,000) 28,000
------------ ------------ ------------- ------------
Income before income taxes
and minority interest 711,000 470,000 1,203,000 959,000
Income tax (provision) benefit (291,000) 73,000 (493,000) (114,000)
Minority interest (89,000) (84,000) (190,000) (158,000)
------------ ------------ ------------- ------------
Net income $ 331,000 $ 459,000 $ 520,000 $ 687,000
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Weighted average shares and
common stock equivalents outstanding 3,505,900 3,296,476 3,441,806 3,269,985
Net income per share $ 0.09 $ 0.14 $ 0.15 $ 0.21
</TABLE>
See accompanying notes to condensed consolidated financial statements which
are an integral part of these financial statements.
Page 4 of 14
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SPINNAKER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
-------------------------
(unaudited)
1996 1995
----------- -----------
Operating activities
Net income $ 520,000 $ 687,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,195,000 508,000
Sales of short-term investments, net - 4,000
Minority interest 190,000 158,000
Amortization of goodwill 509,000 -
Accrued interest on notes payable to related
parties 95,000 123,000
Changes in operating assets and liabilities
Accounts receivable (505,000) (1,065,000)
Inventories (5,684,000) (1,995,000)
Prepaid expenses and other assets (1,355,000) (505,000)
Accounts payable and accrued liabilities 3,898,000 2,948,000
Other current liabilities 583,000 (285,000)
----------- -----------
Net cash provided by operating activities 446,000 578,000
----------- -----------
Investing activities
Purchase of property, plant and equipment (4,014,000) (837,000)
Additions to other assets (660,000) -
Other 32,000 -
----------- -----------
Net cash used in investing activities (4,642,000) (837,000)
----------- -----------
Financing activities
Proceeds from working capital revolvers, net 2,460,000 278,000
Issuance of long term debt 8,500,000 28,000
Principal payments on long term debt (7,533,000) (463,000)
Issuance of common stock 500,000 -
Purchase of minority interest - (41,000)
----------- -----------
Net cash provided by (used in) financing activities 3,927,000 (198,000)
----------- -----------
Decrease in cash and cash equivalents (269,000) (457,000)
Cash and cash equivalents at beginning of period 3,048,000 484,000
----------- -----------
Cash and cash equivalents at end of period $ 2,779,000 $ 27,000
----------- -----------
----------- -----------
See accompanying notes to condensed consolidated financial statements which
are an integral part of these financial statements.
Page 5 of 14
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SPINNAKER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed consolidated financial statements include
Spinnaker Industries, Inc. and its operating subsidiaries, Central
Products Company (100% owned), Brown-Bridge Industries, Inc. (80.1%
owned) and Entoleter, Inc. (100.0% owned) (collectively the
"Registrant"). On October 4, 1995, Central Products Acquisition
Corporation acquired from Unisource Worldwide, Inc. and Alco Standard
Corporation ("Alco"), which is Unisource's parent, the assets and stock
of Central Products Company ("CPC"). The purchase price under the
agreement was approximately $80 million. Central Products Acquisition
Corporation, subsequently renamed Central Products Company, is a
wholly-owned subsidiary of Spinnaker Industries, Inc. and was formed to
acquire CPC, which manufactures and sells water-activated and
pressure-sensitive carton sealing tapes.
The acquisition was accounted for as a purchase with the purchase price
(subject to adjustment upon finalization of certain acquisition costs)
allocated to the assets acquired and the liabilities assumed.
The operating results of CPC are included in the consolidated statements
of operations for the three month and six month periods ended June 30,
1996. The following pro forma information, which is based on information
currently available to the Registrant, shows the results of the
Registrant's operations presented as though the purchase of CPC had been
made at the beginning of 1995.
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
------------------ ----------------
Net Sales $56,405,000 $113,376,000
Net Income $ 81,000 $ 306,000
Net Income Per Share $ 0.03 $ 0.10
2. 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 period ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant's
annual report on Form 10-K for the year ended December 31, 1995.
3. Of inventory values at June 30, 1996, and December 31, 1995, 48% are valued
using the last in, first out method (LIFO), 47% are valued using a specific
identification method with the
Page 6 of 14
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remaining inventories valued using the first-in, first-out method (FIFO).
Inventories consist of the following at June 30, 1996, and December 31,
1995:
1996 1995
----------- -----------
Finished goods $12,044,000 $ 8,291,000
Work-in-process 11,152,000 9,459,000
Raw materials 9,529,000 9,291,000
----------- -----------
Total $32,725,000 $27,041,000
----------- -----------
----------- -----------
4. The Registrant maintains short-term lines of credit with banks for working
capital needs at each subsidiary that aggregate $45.5 million. The
Registrant had cash advances of approximately $29.6 million outstanding
under the lines of credit as of June 30, 1996. Credit availability under
these lines of credit at June 30, 1996 was $8.8 million. At June 30,
1996, the interest rates in effect ranged from 9.25% to 10.75%. Credit
availability is subject to certain variables, such as the amount of
inventory and receivables eligible to be included in a borrowing base.
Following is a summary of long term debt of Registrant at June 30, 1996,
and December 31, 1995:
1996 1995
----------- ------------
Spinnaker Bridge Loan - due December 30, $ 8,500,000 $ -
1996, if not paid, will convert to a
five-year term loan. Bears interest at
the greater of LIBOR plus 5% or treasury
plus 5% for 90 days, incrementally
increasing 0.25% for each 90-day period
thereafter. Interest is payable in
arrears July 15 and October 15, 1996, and
January 15, 1997.
Spinnaker convertible subordinated 7% note 7,000,000 -
due the earlier of April 5, 1997, or, if
the bridge loan is converted, six months
after the maturity of the converted bridge
loan. Interest is payable in arrears each
September 30 and March 31 during the term
of the note.
Spinnaker convertible subordinated 7% note 7,250,000 -
due the earlier of April 5, 1998, or the
first anniversary after the payment of the
$7.0 million subordinated note. Interest
is payable in arrears each September 30
and March 31 during the term of the note.
Page 7 of 14
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1996 1995
----------- ------------
Spinnaker promissory note, interest free 5,000,000 -
to September 1996, and at an interest rate
of 8% thereafter, principal payments of
$1,000,000 due December 1998 and
$4,000,000 due December 1999 (unless
senior debt still outstanding, then
$4,000,000 due December 2000).
Brown-Bridge Term Loan - secured by the 5,441,000 6,691,000
assets of Brown-Bridge at an interest rate
of prime plus 1.25%, payable over five
years maturing in 1999.
Entoleter Mortgage Note - payable on 980,000 992,000
demand in 1997 and secured by certain real
property of Entoleter.
Central Products Term Loan A - interest 18,875,000 19,625,000
rate is 9%, principal payments due
quarterly ranging from $375,000 to
$1,500,000 maturity in September 2000.
Central Products Term Loan B - interest 16,000,000 16,000,000
rate is 10%, $2,000,000 principal payments
due quarterly beginning December 2000.
Spinnaker subordinated note comprised of a - 25,000,000
$15 million subordinated convertible note
and a $10 million subordinated convertible
note, both due to Alco. ($15 million note
is carried at an 8% interest rate, $10
million note carried at an 11% interest
rate)
Central Products subordinated promissory - 5,000,000
note due to Alco, interest free to
September 1996, and at an interest rate of
8% thereafter, principal payment of
$1,000,000 due December 1998 and
$4,000,000 due December 1999 (unless
senior debt is still outstanding, then
$4,000,000 due December 2000)
----------- -----------
Sub-Total 69,046,000 73,308,000
Less: Current Maturities 10,559,000 3,666,000
----------- -----------
Total Long Term Debt 58,487,000 69,642,000
Long Term Capital Lease relating
to Brown Bridge Industries 90,000 -
----------- -----------
Total Long Term Debt and Capital Leases $58,577,000 $69,642,000
----------- -----------
----------- -----------
On April 5, 1996, the Registrant refinanced the $25 and $5 million
subordinated notes and in connection with the refinancing borrowed
$8,500,000 ("Bridge Loan") from the bank.
Page 8 of 14
<PAGE>
Concurrently with the closing of the Bridge Loan, the Registrant paid Alco
$7.5 million. The unpaid balance of the original $25 million subordinated
notes, together with a $750,000 balance owed on a warehouse facility
acquired from Alco was restructured into a series of new convertible
subordinated notes aggregating $20.25 million ("Convertible Notes"). In
May 1996, $6.0 million of the Convertible Notes was converted into common
stock of the Registrant at a conversation price of approximately $35 per
share.
5. The Directors of the Registrant declared a 3-for-2 stock split of the
Registrant's common shares, effective as of December 29, 1995. All
presentations of shares outstanding and amounts per share have been
restated to reflect the stock split.
Earnings per share is based on the weighted average number of common and
common equivalent shares outstanding during each year, after giving effect
to the 3-for-2 stock split. Fully diluted earnings per share did not
differ significantly from primary earnings per share in any period
presented.
6. The Registrant in April 1996, issued approximately 187,500 shares of
Class A Common Stock upon the exercise of Class A Warrants held by J.
Boyle and Ned N. Fleming III, the Registrant's Chairman and Chief
Executive Officer and President, respectively.
The Directors of the Registrant declared a stock dividend, an effective
split of its common stock, record date of August 5, 1996, and a
distribution date of August 16, 1996. See Registrant's Information
Statement dated July 23, 1996.
The Registrant will issue one share of, no par, new common stock (now
referred to as "Common Stock") for each outstanding share of its existing
common stock (now referred to as "Class A Common Stock"). The Common Stock
will have a 1/10th vote per share, compared to one vote per share for
Class A Common Stock.
Approximately 3,075,000 shares of each class of stock will be outstanding
after the split.
7. The Registrant has identified possible environmental issues related to
portions of its land in Hamden, Connecticut. The appropriate regulatory
agencies have been notified, but to date no action has been required by
any regulatory agency.
8. Certain reclassifications have been made to conform prior period data to
the current year's presentation.
Page 9 of 14
<PAGE>
ITEM-2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ACQUISITIONS
On October 4, 1995 Central Products Acquisition Corporation, a wholly-owned
subsidiary of the Registrant, acquired from Alco Standard Corporation the
assets and stock of CPC, which manufactures and sells water-activated and
pressure sensitive carton sealing tapes. (See Note 1 to Notes to Condensed
Consolidated Financial Statements).
SALES
Net sales were $60,241,000 for the three-month period ended June 30, 1996,
versus $26,685,000 for the comparable 1995 period, an increase of $33,556,000.
The acquisition of CPC accounted for $31,395,000 of the increase with the
balance attributable to Brown-Bridge. For the first six months of 1996 net
sales increased $69,598,000. Of the increase, $63,372,000 relates to the
acquisition of CPC and the remainder is attributable to increased activity at
Brown Bridge as a result of postage stamp stock contracts for the U.S. Postal
Service's pressure-sensitive stamps. Partially offsetting these increases are
lower sales at Entoleter.
COST OF SALES
Cost of sales for the three month period ended June 30, 1996, increased by
$28,632,000 compared with the corresponding period in 1995. The addition of CPC
accounted for approximately $26,054,000 of the net increase. The remainder of
the increase is directly attributable to increased sales volume at Brown-Bridge.
Gross margins for the three and six month periods ended June 30, 1996 did not
vary significantly from the comparable 1995 periods. However, due to high
volume from new business, particularly for stock to produce pressure sensitive
stamps, Brown-Bridge has been unable to internally silicon-coat all of the
pressure-sensitive liner required to support the increased business. This
forces the company to purchase (outsource) coated liner material and pay a
premium price compared to the cost of internally manufacturing. These cost
premiums affected margins by approximately $800,000 and $1,050,000,
respectively, for the three and six month periods ending June 30, 1996. Brown
Bridge is in the process of adding a flexible silicon and adhesive coater which
will increase capacity allowing it to satisfy all of its silicon-coated liner
requirements. The new coater is expected to become operational in the fourth
quarter of 1996, immediately eliminating the outsourcing penalties.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses ("SG&A") increased by $2,995,000
for the three month period ended June 30, 1996, compared to the corresponding
1995 period. An increase of approximately $3,238,000 is attributable to the
acquisition of CPC offset by lower expenses at Brown Bridge ($373,000) and
slightly higher expenses at Entoleter and Corporate. For the six months ended
June 30, 1996, SG&A increased by $6,065,000 versus the comparable 1995 period.
Page 10 of 14
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An increase of approximately $6,197,000 is related to the addition of CPC,
offset by lower Brown Bridge expenses.
INTEREST EXPENSE
Interest expense for the three and six month periods ended June 30, 1996
increased by $1,687,000 and $3,364,000, respectively, when compared with the
corresponding periods for 1995. The increase is attributable to the additional
debt incurred in the acquisition of CPC (interest expense related to this debt
was $1,746,000 for three months and $3,502,000 for six months ended June 30,
1996.) These increases were partially reduced by lower interest expense at
Brown Bridge through the reduction of outstanding principal when compared to
1995.
GUARANTEE FEE
As part of the acquisition of CPC, the Registrant's parent (Lynch Corporation)
agreed to guarantee a $25,000,000 note to Alco at a rate of 0.5% of the
principal amount per month ($125,000). This guarantee ended on March 31, 1996,
upon the completion of the refinancing of the Alco notes.
INCOME TAXES
The 1996 and 1995 income tax provision provides for federal and state income
taxes at an effective rate of 41%. The 1995 income tax provision for the three
months ended June 30, 1995 was reduced by $279,000 due to the reversal of the
Registrant's valuation allowance related to net deferred tax assets.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Registrant generated $446,000 in net cash provided by operating activities
for the six months ended June 30, 1996, compared to $578,000 in the
corresponding period for 1995. The decrease in cash from operations is
primarily attributable to inventory growth, partially financed through
increases in accounts payable and accrued liabilities. Net working capital
at June 30, 1996 was $1,429,000 versus $7,988,000 at December 31, 1995, a
decrease of $6,559,000. This decrease is directly attributable to the current
classification of a $7.0 million subordinated note due April 5, 1997. Cash
utilized in investing activities were for the capital improvements at Brown
Bridge, principally a silicon and adhesive coater, and the acquisition of a
warehouse facility in Brighton, Colorado utilized by CPC.
At June 30, 1996, total debt of the Registrant was $100,423,000 versus
$102,040,000 at December 31, 1995, a decrease of $1,617,000. The
Registrant's subsidiaries have credit facilities available for future use,
including revolving credit agreements with maximum availability of
$45,500,000 and current availability of $8,833,000 at June 30, 1996 (See Note
4 to Condensed Consolidated Financial Statements). Borrowings under these
credit facilities totaled $29,609,000 at June 30, 1996. Interest on all
outstanding borrowings bear interest at variable rates related to the prime
interest or the lender's base rate. At June 30, 1996, the interest rates in
effect ranged from 7% to 10.75%. Credit
Page 11 of 14
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availability under the lines of credit are subject to certain variables, such
as the amount of inventory and receivables eligible to be included in the
borrowing base.
In connection with the acquisition of CPC, the Registrant and CPC issued
subordinated notes to the seller in the amounts of $25 million and $5 million,
respectively. On April 5, 1996, the Registrant refinanced these notes and in
connection with this transaction borrowed $8,500,000 from a bank. The
outstanding principal of this bank loan bears interest at an adjustable rate
(approximately 10.5%) and converts into a five-year term loan if it is not
paid in full on the December 1996 due date. Concurrently with the closing of
the bridge loan, the Registrant paid Alco $7.50 million, of which $5.5 million
was a principal payment on the $25 million subordinated notes, approximately
$1 million related to accrued interest, and $1 million was applied toward the
purchase price of a warehouse facility. The unpaid balance of the original
$25 million subordinated notes, together with the balance due on the warehouse
facility was restructured into a series of new convertible subordinated notes
aggregating $20.25 million ("Convertible Notes"). In May 1996, $6.0 million of
the Convertible Notes were converted into common stock of the Registrant at a
conversation price of approximately $35 per share.
During 1996, the Registrant intends to pursue actively various alternatives
to refinance the indebtedness of the Registrant and its subsidiaries in order
to pay off the $8,500,000 loan before it converts into a term loan, to simplify
the Registrant's capital structure, to remove restrictions imposed by various
lenders and to reduce the administrative burdens resulting from having multiple
lenders. Such refinancing could result in a charge to earnings related to the
early extinguishment of the existing debt. As of the date of this filing, the
Registrant has not entered into any definitive agreements or arrangements
regarding the terms of any financing and there can be no assurance that such
financing will be available on terms satisfactory to the Registrant.
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Registrant was held on June 6, 1996,
at which Annual Meeting the shareholders were asked to elect seven directors to
serve until the next Annual Meeting of Shareholders.
Set forth below is the (i) list of nominees elected at the Meeting, all of whom
were serving as Directors prior to the Meeting, and (ii) the shares vested as
indicated for each nominee:
Name For Abstain
---- --- -------
Richard J. Boyle 2,818,547 -
Philip Wm. Colburn 2,818,097 450
Robert E. Dolan 2,818,097 450
Ned N. Fleming, III 2,818,547 -
Mario J. Gabelli 2,818,097 450
Joseph P. Rhein 2,818,097 450
Anthonie C. van Ekris 2,818,097 450
Page 12 of 14
<PAGE>
ITEM 5 - OTHER INFORMATION
The Registrant has given notice to terminate its management agreement with
Boyle, Fleming, George & Co., on August 31, 1996, with the intent of having
Messrs. Boyle and Fleming, Chairman and Chief Executive Officer and
President, respectively, enter into employment arrangements with the
Registrant. Negotiations between the Registrant and Messrs. Boyle and
Fleming are continuing. The Registrant is also negotiating to acquire the
approximately 19.9% minority interest in its Brown-Bridge Industries
Subsidiary. The terms of any such acquisition, which may involve cash
payments, issuance of Registrant stock and/or other arrangements, have not
been agreed to and there can be no assurance this transaction will ultimately
be consummated.
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
11. Statement of Computation of Per Share Earnings.
(B) REPORTS ON FORM 8-K
1. Current Report on Form 8-K/A(6) was filed on April 9, 1996 (amending
Current Report on Form 8-K, dated October 18, 1995) and updated Item
5 to reflect the status of the Registrant's financial obligation to
Alco Standard Corporation incurred in connection with the acquisition
of Central Products Company.
2. Current Report on Form 8-K/A(7) was filed on June 10, 1996, which
amended Item 7 to reflect changes in the following pro forma
information related to the acquisition of Central Products Company.
(a) Pro Forma Combined Condensed Statements of Income for the Nine
Months ended September 30, 1995, and the Year Ended December 31,
1994.
(b) Notes to Pro Forma Condensed Statements of Income - Spinnaker
Industries, Inc.
Page 13 of 14
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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.
SPINNAKER INDUSTRIES, INC.
(Registrant)
/s/ James W. Toman
----------------------------------
James W. Toman, Controller
Date: August ___, 1996
Page 14 of 14
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EXHIBIT INDEX
Sequential
Exhibit Page No.
- ------- ----------
11. Statement of Computation of Per Share Earnings 15
<PAGE>
Exhibit 11 - Computation of Per Share Earnings
Three Months Ended Six Months Ended
June 30 June 30
------------------- ----------------
1996 1995 1996 1995
------ ------ ------ ------
Primary
Average shares outstanding 2,985 2,716 2,870 2,716
Net effect of dilutive stock options --
based on the treasury stock method
using average market price 531 581 572 554
------ ------ ------ ------
Total 3,516 3,297 3,442 3,270
------ ------ ------ ------
------ ------ ------ ------
Net Income $ 331 $ 459 $ 520 $ 687
------ ------ ------ ------
------ ------ ------ ------
Per Share Amount $ 0.09 $ 0.14 $ 0.15 $ 0.21
------ ------ ------ ------
------ ------ ------ ------
Fully diluted
Average shares outstanding 2,985 2,716 2,870 2,716
Net effect of dilutive stock options --
based on the treasury stock method
using the period-end market price, if
higher than average market price 534 620 582 610
------ ------ ------ ------
Total 3,519 3,336 3,452 3,326
------ ------ ------ ------
------ ------ ------ ------
Net Income $ 331 $ 459 $ 520 $ 687
------ ------ ------ ------
------ ------ ------ ------
Per share amount $ 0.09 $ 0.14 $ 0.15 $ 0.21
------ ------ ------ ------
------ ------ ------ ------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,779
<SECURITIES> 0
<RECEIVABLES> 26,297
<ALLOWANCES> 1,003
<INVENTORY> 32,725
<CURRENT-ASSETS> 65,705
<PP&E> 60,394
<DEPRECIATION> 6,620
<TOTAL-ASSETS> 147,658
<CURRENT-LIABILITIES> 64,276
<BONDS> 0
0
0
<COMMON> 3,124
<OTHER-SE> 10,958
<TOTAL-LIABILITY-AND-EQUITY> 147,658
<SALES> 60,241
<TOTAL-REVENUES> 60,241
<CGS> 51,688
<TOTAL-COSTS> 5,502
<OTHER-EXPENSES> 6
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,334
<INCOME-PRETAX> 711
<INCOME-TAX> 291
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 331
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
