FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -----------------------------------
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
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 No. 1-7117
General Housewares Corp.
(Exact name of Registrant as specified in its Charter)
Delaware 41-0919772
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1536 Beech Street 47804
Terre Haute, Indiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (812) 232-1000
- -----------------------------------
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 or No
Indicate the number of shares outstanding of each of the Registrant's classes
of Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at July 28, 1995
$.33 1/3 Par Value 3,988,565
<PAGE>
GENERAL HOUSEWARES CORP.
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Statements of Income
and Retained Earnings
Three months and six months ended
June 30, 1995 and 1994
Consolidated Condensed Balance Sheets
June 30, 1995 and December 31, 1994
Consolidated Condensed Statements of Cash Flows
Six months ended June 30, 1995 and 1994
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I FINANCIAL INFORMATION
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands except per share amounts)
Consolidated Condensed Statements of
Income and Retained Earnings
(Unaudited)
<TABLE>
<CAPTION> For the three months For the six months
ended June 30, ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $25,084 $18,033 $52,074 $36,480
Cost of goods sold 16,186 11,732 33,483 23,343
------- ------- ------- -------
Gross profit 8,898 6,301 18,591 13,137
Selling, general and
administrative expenses 7,947 5,782 16,624 12,192
------- ------- ------- -------
Operating income 951 519 1,967 945
Interest expense, net 728 334 1,384 603
------- ------- ------- -------
Income from operations
before income taxes 223 185 583 342
Income taxes 96 77 244 141
------- ------- ------- -------
Net income for the period 127 108 339 201
Retained earnings, beginning
of period 29,942 28,198 30,029 28,368
Less: Dividends ($.08 per
common share per quarter
in 1995 and 1994) 299 264 598 527
------- ------- ------- -------
Retained earnings, end of
period $29,770 $28,042 $29,770 $28,042
------- ------- ------- -------
------- ------- ------- -------
Earnings per common share:
Net income $0.03 $0.03 $0.09 $0.06
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
PART I FINANCIAL INFORMATION
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands)
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
As of
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 75 $ 2,993
Accounts receivable, less
allowances of $3,309
($5,312 in 1994) 14,424 16,854
Inventories 30,710 20,841
Deferred tax asset 2,078 2,184
Other current assets 1,246 905
-------- -------
Total current assets 48,533 43,777
Property, plant & equipment, net 13,267 13,001
Other assets 7,022 7,455
Patents and other intangible
assets 4,082 4,294
Cost in excess of net assets
acquired 29,238 29,831
-------- -------
$102,142 $98,358
-------- -------
-------- -------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes Payable $ 900 $ 0
Current maturities of long-term
debt 1,033 1,122
Deferred payment obligation - 2,382
Accounts payable 3,108 3,544
Salaries, wages and related
benefits 2,563 2,525
Accrued liabilities 3,520 2,729
Income taxes payable 231 1,141
-------- -------
Total Current Liablities 11,355 13,443
Long-term debt 36,586 30,809
Deferred liabilities 3,837 3,851
-------- -------
Stockholders' equity:
Preferred stock - $1.00 par value:
Authorized - 1,000,000 shares
Common stock - $.33-1/3 par value:
Authorized - 10,000,000 shares
Outstanding - 1995 - 3,988,565
and 1994 - 3,966,705 shares 1,332 1,324
Capital in excess of par value 22,976 22,708
Treasury stock at cost - 1995
and 1994 - 243,760 shares (3,216) (3,216)
Retained earnings 29,770 30,029
Cumulative translation
adjustment (123) (215)
Minimum pension liability (375) (375)
-------- -------
Total stockholders' equity 50,364 50,255
-------- -------
$102,142 $98,358
-------- -------
-------- -------
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands)
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 339 $ 201
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation and amortization 2,397 1,980
Foreign exchange loss 40 -
Compensation related to
stock awards 30 30
Increase in deferred liabilities 92 30
Decrease (increase) in assets:
Accounts receivable 2,444 1,091
Inventory (9,848) (5,176)
Other assets (11) 186
(Decrease) increase in operating
liabilities:
Accounts payable (438) (63)
Salaries, wages & related
benefits 38 (23)
Accrued liabilities 707 751
Income taxes payable (910) (851)
------- -------
Net cash used for operating
activities (5,120) (1,844)
------- -------
Cash flows from investing activities:
Additions to property, plant
and equipment (1,731) (1,396)
------- -------
Net cash used for investing
activities (1,731) (1,396)
------- -------
Cash flows from financing activities:
Payment of deferred obligation (2,382) -
Increase in notes payable 900 -
Collection of notes receivable - 884
Long-term debt borrowing 5,760 1,999
Proceeds from stock options and
employee purchases 246 111
Dividends paid (598) (527)
------- -------
Net cash provided by financing
activities 3,926 2,467
------- -------
Net decrease in cash and cash
equivalents (2,925) (773)
Cash and cash equivalents at
beginning of year 2,993 785
Effect of exchange rate on cash 7 -
------- -------
Cash and cash equivalents at end
of period $ 75 $ 12
------- -------
------- -------
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
Note 1 - General
The accompanying interim Consolidated Condensed Financial Statements have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, in the opinion of
management, the financial statements included herein reflect all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the financial information for the periods presented. The interim Consolidated
Condensed Financial Statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
1994 Annual Report on Form 10-K.
Note 2 - Inventories
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Inventories consisted of:
Raw materials $ 4,862 $ 4,293
Work in process 4,206 2,292
Finished goods 23,686 16,064
------- -------
$32,754 $22,649
LIFO Reserve (2,044) (1,808)
------- -------
Total $30,710 $20,841
------- -------
------- -------
</TABLE>
Note 3 - Properties
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Land $ 674 $ 674
Buildings 4,245 4,245
Equipment 29,920 28,129
------- -------
Total 34,839 33,048
Less Depreciation (21,572) (20,047)
------- -------
Total, net $13,267 $13,001
------- -------
------- -------
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in thousands)
Referring to the Company's financial condition as of June 30, 1995 as
contrasted with December 31, 1994, inventories have increased while accounts
receivable and current liabilities have decreased. The increase in
inventories is attributable to the programmed leveling of production over the
entire year, coupled with Company-wide goals of improving customer service in
the second half of 1995. The decrease in accounts receivable is due to
seasonal factors. Current liabilities are down due to the payment of an
amount contractually due former owners of a business acquired in 1994.
Net sales for the three month period ended June 30, 1995 were $25,084, an
increase of 39% over net sales of $18,033 for the same period in 1994. Net
sales for the six month period ended June 30, 1995 were $52,074, an increase
of 43% over net sales of $36,480 for the same period in 1994. The increases
are due in large part to acquisitions made in the second half of 1994, as well
as increased market penetration in certain of the Company's product lines --
predominantly kitchen tools and imported cutlery. Second quarter gross profit
rose from $6,301 in 1994 to $8,898 due primarily to increased sales volume.
Gross profit percentage for the quarter rose slightly due to a favorable sales
mix. Gross profit for the first six months of 1995 rose from $13,137 in 1994
to $18,591, due primarily to increased sales volume. Selling, general and
administrative expenses were 37% and 36% higher in the second quarter of 1995
and the six months ended June 30, 1995, respectively, as compared to the same
periods in 1994. The increase reflects costs associated with increased sales,
$388 of increased goodwill amortization ($194 in the second quarter) related
to the 1994 acquisitions and $225 of expenses incurred (all in the second
quarter) as a result of revised estimates concerning environmental remediation
projects in progress. These costs were partially offset by favorable reserve
adjustments.
Operating income in the second quarter of 1995 increased by $432 over the same
period in 1994, representing a 1% increase as a percentage of sales.
Operating income in the first half of 1995 increased by $1,022 over the same
period in 1994, also representing a 1% increase as a percentage of sales.
Interest expense for the second quarter of 1995 was $728 as compared to $334
for the second quarter of 1994. For the first six months of 1995, interest
expense increased from $603 to $1,384. Acquisitions made in 1994 and working
capital needs to support improved customer service goals have increased the
level of borrowings in 1995 as compared to the first six months of 1994. This
increased debt load, along with higher interest rates, have caused the
increase in interest expense. Net income for the second quarter of 1995 was
$127 as compared to $108 for the same period last year; related quarterly
earnings per share remained at $.03. Net income for the first six months of
1995 was $339 as compared to $201 for the same period last year and related
earnings per share rose from $.06 to $.09. Year-to-date earnings per share
were calculated on 3,770 weighted average shares as compared to 3,336 for the
same period last year, reflecting additional shares issued in connection with
the 1994 acquisition activity.
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual meeting of Stockholders of General Housewares Corp. was
held on May 2, 1995.
(b) Proxies were solicited by the directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended. There was no
solicitation in opposition to management's nominees as listed in the proxy
statement, and all of such nominees were elected pursuant to the vote of the
stockholders.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the three months ended June 30, 1995.
<PAGE>
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.
GENERAL HOUSEWARES CORP.
Dated: July 28, 1995 By /s/Robert L. Gray
--------------------------------
Robert L. Gray
Vice President Finance
and Treasurer
By /s/Mark S. Scales
--------------------------------
Mark S. Scales
Corporate Controller
Chief Accounting Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
11. Statement of Computation of Earnings per share included herein as
Exhibit 11.
27. Financial Data Schedule.
EXHIBIT 11
GENERAL HOUSEWARES CORP.
Computation of Primary Earnings Per Share
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1995 1994
<S> <C> <C>
Net income $ 339 $ 201
Shares:
Weighted average number of shares of
common stock outstanding 3,741,220 3,296,994
Shares assumed issued (less shares
assumed purchased for treasury) on
stock option agreements 29,016 39,391
Rounding (236) (385)
---------- ----------
3,770,000 3,336,000
---------- ----------
---------- ----------
Earnings per Common Share:
Net Income $0.09 $0.06
---------- ----------
---------- ----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Apr-01-1995
<PERIOD-END> Jun-30-1995
<CASH> 75
<SECURITIES> 0
<RECEIVABLES> 17,733
<ALLOWANCES> 3,309
<INVENTORY> 30,710
<CURRENT-ASSETS> 48,533
<PP&E> 34,839
<DEPRECIATION> 21,572
<TOTAL-ASSETS> 102,142
<CURRENT-LIABILITIES> 11,355
<BONDS> 0
<COMMON> 1,332
0
0
<OTHER-SE> 49,032
<TOTAL-LIABILITY-AND-EQUITY> 102,142
<SALES> 25,084
<TOTAL-REVENUES> 25,084
<CGS> 16,186
<TOTAL-COSTS> 16,186
<OTHER-EXPENSES> 7,947
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 728
<INCOME-PRETAX> 223
<INCOME-TAX> 96
<INCOME-CONTINUING> 127
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 127
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
