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
For the quarterly period ended September 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 number 0-2977
------
General Magnaplate Corporation
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1641813
------------------------------- ------------------
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification No.
1331 U.S. Route 1, Linden, New Jersey 07036
------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 862-6200
--------------
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 issuer's classes of
common stock, as of October 27, 1995:
Common Stock, No Par Value 2,736,863
- -------------------------- ------------------
(Class) (Number of Shares)
<PAGE>
INDEX OF DOCUMENTS
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Accountants' Report
Balance Sheet - End of Current Quarter
Balance Sheet - End of Prior Fiscal Year
Statement of Income
Statement of Changes in Financial Position
Notes to Consolidated Financial Statements
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
In the registrant's Form 10-Q for the quarter ended 3/31/95 it was stated:
A. The California subsidiary was a party to a lawsuit filed by former owners of
an adjacent property who alleged damages arising from soil contamination to
their property by the Company and other parties. The lawsuit was settled on
October 20, 1992 by settlement conference, in order not to incur any
additional legal costs. The settlement, in the amount of $45,000, will be
paid by registrant in installments: $25,000 payable January 6, 1993, and the
remaining balance of $20,000 payable in three installments of $6,666 each to
be paid on January 6, 1994, January 6, 1995 and January 6, 1996.
B. In April, 1991, a claim was served on the Canadian subsidiary, General
Magnaplate Canada, Ltd., by Dynasurf International, Inc. for $170,000
representing the unpaid contract liability for the net assets acquired by the
Canadian subsidiary from the sellers, Carrigan Industries, Ltd. and Dynasurf
International, Inc. on January 2, 1990.
The Subsidiary has filed a counterclaim for environmental and other costs
which resulted from the seller not resolving certain environmental issues
warranted in the contract of purchase.
Further, a shareholder of Dynasurf International, Inc. has also filed a claim
for breach of oral contract of employment of $162,000 which the Company has
denied in their related statement of defense.
It is the opinion of management that the ultimate resolution of both claims
will not have a materially adverse effect on the Company's financial
statements.
ITEM 4 - Submission of Matters to a Vote of Security Holders - None
ITEM 5 - Other Information - Press Release - Enclosed
ITEM 6 - Exhibits and Reports on Form 8-K - None
<PAGE>
MAURIELLO, FRANKLIN & LoBRACE
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
45 SPRINGFIELD AVENUE, SPRINGFIELD, NEW JERSEY 07081
TELEPHONE (201) 379-5400 FAX (201) 379-3696
ACCOUNTANTS' REVIEW REPORT
To The Board of Directors of
General Magnaplate Corporation:
We have reviewed the accompanying balance sheet of General Magnaplate
Corporation and Wholly-Owned Subsidiaries as of September 30, 1995 and the
related consolidated statement of stockholders' equity for the three months
ended September 30, 1995 and the related consolidated statements of income and
cash flows for the three months ended September 30, 1995 and 1994, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of management of General
Magnaplate Corporation.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion on
the September 30, 1995 and 1994 statements.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to be
in conformity with generally accepted accounting principles.
Our review was made for the purpose of expressing limited assurance that
there are no material modifications that should be made to the financial
statements in order for them to be in conformity with generally accepted
accounting principles. The supplementary information for the three months ended
September 30, 1995 and 1994 included in the accompanying supplementary
information is presented for supplementary analysis purposes. Such information
has been subjected to the inquiry and analytical procedures applied in the
review of the basic financial statements, and we are not aware of any material
modifications that should be made thereto.
The balance sheet for the year ended June 30, 1995 was audited by us, and we
expressed an unqualified opinion on them in our report dated August 11, 1995. We
have not performed any auditing procedures on the balance sheet since August 11,
1995.
/s/ Mauriello, Franklin & LoBrace, P.C.
October 26, 1995
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
----------- -----------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents .................... $ 1,260,955 $ 369,276
Marketable securities (Note 1) ............... 3,772,822 4,128,758
Accounts receivable--trade, net of
allowance for doubtful accounts of
$134,000 (June 30, 1995-$106,000) .......... 1,300,805 1,328,954
Inventories (Note 1) ......................... 272,084 271,518
Prepaid expenses ............................. 162,412 170,141
Other current assets ......................... 135,930 292,814
----------- -----------
Total current assets ..................... $ 6,905,008 $ 6,561,461
Property, plant, and equipment, at
cost, net of accumulated
depreciation (Notes 1 and 2) ................. 5,354,006 5,427,711
Cash surrender value of officers' life
insurance, net ............................... 555,141 555,141
Note receivable - sale of land (Note 9) ........ 235,000 235,000
Other assets (Note 3) .......................... 166,834 143,763
----------- -----------
Total assets ............................... $13,215,989 $12,923,076
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Note payable--bank (Note 5) ................ $ 174,431 $ 177,544
Accounts payable ........................... 225,193 193,360
Accrued liabilities (Note 7) ............... 577,181 644,593
Corporate income taxes payable ............. 196,309 187,504
Dividends payable .......................... 138,691 -0-
------------ ------------
Total current liabilities ................ $ 1,311,805 $ 1,203,001
------------ ------------
Long-term liabilities:
Rent security deposit ...................... $ 7,877 $ 7,877
Accrued deferred compensation (Note 8) ..... 837,000 810,000
------------ ------------
Total long-term liabilities .............. $ 844,877 $ 817,877
------------ ------------
Total liabilities ........................ $ 2,156,682 $ 2,020,878
------------ ------------
Contingencies (Note 10)
Stockholders' equity:
Common stock--no par value
Authorized--5,000,000 shares
Issued and outstanding--2,736,863
shares (June 30, 1995--2,774,013
shares) .................................. $ 223,180 $ 223,180
Retained earnings .......................... 10,959,919 10,798,949
Foreign currency translation adjustment
(Note 1) ................................. (123,792) (119,931)
------------ ------------
Total stockholders' equity ............... $ 11,059,307 $ 10,902,198
------------ ------------
Total liabilities and
stockholders' equity ................... $ 13,215,989 $ 12,923,076
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Foreign
Currency
Common Retained Translation
Stock Earnings Adjustment
-------- ------------ ------------
<S> <C> <C> <C>
Balance,
July 1, 1995 .................. $223,180 $10,798,949 $ (119,931)
Add--net income .................. -0- 335,555 -0-
Less--foreign currency
translation adjustment ........ -0- -0- (3,861)
Less--dividends .................. -0- (138,691) -0-
Less--acquisition and
retirement of 7,150
shares of treasury stock ...... -0- (35,894) -0-
-------- ------------ ------------
Balance,
September 30, 1995 ............ $223,180 $10,959,919 $ (123,792)
======== ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Gross revenue:
Sales ........................................ $2,426,331 $2,228,448
Royalty income ............................... 41,398 20,371
Investment and other income, net ............. 144,336 186,166
---------- ----------
$2,612,065 $2,434,985
---------- ----------
Costs and expenses:
Cost of sales ................................ $ 986,569 $ 955,237
Selling and administration ................... 936,107 883,947
Depreciation and amortization ................ 155,306 153,287
Interest ..................................... 4,128 10,492
---------- ----------
$2,082,110 $2,002,963
---------- ----------
Income before corporate income taxes ........... $ 529,955 $ 432,022
Corporate income taxes (Notes 1 and 6) ......... 194,400 159,200
---------- ----------
Net income ..................................... $ 335,555 $ 272,822
========== ==========
Earnings per share (Note 1) .................... $ .12 $ .09
========== ==========
Weighted average shares outstanding ............ 2,742,656 2,956,194
========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................... $ 335,555 $ 272,822
----------- -----------
Adjustments to reconcile net
income to net cash provided by (used
in) operating activities:
Depreciation and amortization .............. $ 155,306 $ 153,287
Reserve for unrealized gain ................ (73,249) (150,675)
Deferred taxes ............................. (16,600) (8,000)
Allowance for doubtful accounts ............ 34,293 14,270
Accrued deferred compensation .............. 27,000 27,000
Foreign exchange translation adjustment .... (3,861) 28,836
Increase (decrease) in cash resulting
from changes in current assets and
liabilities:
Marketable securities ................... 429,185 (1,121,221)
Accounts receivable ..................... (6,144) 4,490
Inventories ............................. (566) (709)
Other current assets .................... 26,837 124,615
Accounts payable and accrued
liabilities ........................... (35,579) 37,607
Corporate income taxes payable .......... 64,276 100,174
----------- -----------
Total adjustments ....................... $ 600,898 $ (790,326)
----------- -----------
Net cash provided by (used in)
operating activities ....................... $ 936,453 $ (517,504)
----------- -----------
</TABLE>
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant,
and equipment, net ........................... $ (79,791) $ (137,683)
Additions to patents and trademarks ............ (976) (1,295)
Collection of note receivable-sale of land ..... 75,000 -0-
----------- -----------
Net cash used in investing activities ........ $ (5,767) $ (138,978)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in long-term debt .................... $ (3,113) $ (19,929)
Acquisition of treasury stock .................. (35,894) -0-
----------- -----------
Net cash used in financing activities ........ $ (39,007) $ (19,929)
----------- -----------
INCREASE (DECREASE) IN CASH ...................... $ 891,679 $ (676,411)
Cash and cash equivalents,
beginning of period .......................... 369,276 1,332,266
----------- -----------
Cash and cash equivalents,
end of period ................................ $ 1,260,955 $ 655,855
=========== ===========
Supplementary data:
Interest paid .................................. $ 4,128 $ 10,492
Corporate income taxes paid .................... $ 146,224 $ 67,028
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
GENERAL MAGNAPLATE CORPORATION
AND
WHOLLY-OWNED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note l -- Summary of Significant Accounting Policies
Corporate Income Taxes
Taxes are provided based on income reported for financial statement
purposes, including deferred taxes which are principally provided due to
temporary differences between financial and tax reporting of certain revenue
and expense items.
Company Earnings Per Share
Earnings per share of common stock have been computed based on the
weighted average number of shares outstanding during the period.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Foreign Currency Translation Adjustment
Assets and liabilities of the subsidiary operating in Canada are
translated into U.S. dollars using the exchange rate in effect at the balance
sheet date. Results of operations are translated using the average exchange
rate prevailing throughout the period. The effects of exchange rate
fluctuations on translating foreign currency assets and liabilities into U.S.
dollars are included as part of the Foreign Currency Translation Adjustment
component of shareholders' equity, while gains and losses resulting from
foreign currency transactions are generally included in income.
Segment Information
The Company is in one line of business. It provides synergistic coatings
and other related services to its customers' products.
<PAGE>
Note 2 -- Property, Plant and Equipment
Property, plant and equipment are as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
----------- -----------
<S> <C> <C>
Land ................................... $ 805,350 $ 805,350
Buildinqs .............................. 3,366,208 3,366,208
Building improvements .................. 3,015,980 3,007,478
Factory machinery ...................... 5,110,818 5,064,890
Office equipment ....................... 832,336 822,687
Transportation equipment ............... 242,636 224,440
----------- -----------
Total .................................. $13,373,328 $13,291,053
Less--accumulated
depreciation ......................... 8,019,322 7,863,342
----------- -----------
Net .................................... $ 5,354,006 $ 5,427,711
=========== ===========
</TABLE>
Note 3 -- Other Assets
Other assets are as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
-------- --------
<S> <C> <C>
Patents and trademarks, at
cost, net of accumulated
amortization ............................... $ 30,759 $ 30,414
Unamortized deferred mortgage
fees ........................................ -0- 1,178
Deferred income taxes ........................ 136,075 112,171
-------- --------
$166,834 $143,763
======== ========
</TABLE>
Note 4 -- Note Payable - Bank
The Company maintains an unsecured line of credit of $500,000 with Bank One,
Racine, NA which expires October 31, 1995. As of September 30, 1995 and June 30,
1995, the Company owed $-0- against the line. Interest is charged at the
prevailing prime business rate.
<PAGE>
Note 5--Note Payable - Bank
This obligation is as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------- ---------
<S> <C> <C>
Note payable Bank One, Racine, NA
in the original amount of $260,000
secured by a first mortgage on Racine,
Wisconsin real estate and payable in
equal monthly installments of $2,955
commencing November 1, 1990 and
continuing until October 1, 1995 at
which time the note balance is due in
full. Interest is computed at the bank's
base lending rate plus .4% per annum
subject to a floor of 7% and a ceiling
of 13% per annum. $174,431 $177,544
-------- --------
$174,431 $177,544
Less--debt due within one year 174,431 177,544
-------- --------
Total long-term debt $ -0- $ -0-
======== ========
</TABLE>
Note 6--Corporate Income Taxes
Components of corporate income taxes are as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Current:
Federal ........................ $ 185,700 $ 137,300
State .......................... 25,300 29,900
Foreign ........................ -0- -0-
--------- ---------
$ 211,000 $ 167,200
--------- ---------
Deferred:
Federal ........................ $ (12,900) $ (6,200)
State .......................... (3,700) (1,800)
Foreign ........................ -0- -0-
--------- ---------
$ (16,600) $ (8,000)
--------- ---------
Total ............................ $ 194,400 $ 159,200
========= =========
</TABLE>
<PAGE>
A reconciliation of the provision for corporate income taxes compared with
the amounts at the US statutory tax is as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Based on U.S. statutory federal
tax rate of 34% ........................ $ 180,181 $ 146,887
Increase (decrease) in taxes
resulting from:
State taxes, net of federal
tax benefit ........................ 14,256 18,569
Foreign loss carryover ............... -0- (6,256)
Non-deductible expenses .............. (37) -0-
--------- ---------
Total .................................... $ 194,400 $ 159,200
========= =========
Effective tax rate ....................... 36.7% 36.8%
</TABLE>
The Canadian subsidiary has available unused tax benefits in the form of
operating loss carryforwards of approximately U.S. $225,000 to reduce future
Canadian taxable income. These carryforwards principally expire in 1999 and
2002. Due to their uncertainty of realization, these tax benefits have been
reflected net of a 100% valuation allowance.
<PAGE>
Note 7 -- Accrued Liabilities
Accrued liabilities are as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
-------- --------
<S> <C> <C>
Compensation ................................... $253,035 $375,276
Payroll, sales, and property taxes ............. 109,262 73,247
401-K plan contribution ........................ 64,176 44,014
Environmental and other costs .................. 150,708 152,056
-------- --------
$577,181 $644,593
======== ========
</TABLE>
Note 8 -- Employee Benefits
The Company maintains a 401(k) savings plan which covers all full time U.S.
employees. The Company matches 50% of voluntary pre-tax employee participant
contributions up to 4% of compensation as well as providing discretionary
contributions based on compensation for all employees. Employer discretionary
contributions, which are forfeited due to employee termination prior to the full
seven year vesting period, revert back to the Company. Total expense under the
plan was $14,254 in 1995 and $13,287 in 1993.
Pursuant to employment contracts and letter agreements with officers and key
employees, the Company maintains non-qualified incentive compensation plans
which are based on the realization of pre-tax income and royalty income. Total
expense under these plans was $106,775 in 1995 and $70,677 in 1994.
In addition the Company is obligated to provide a non-qualified retirement
pension to its chief executive officer. Such obligation provides a monthly
benefit or $7,100 and is payable for a period of fifteen years to the officer,
or to his wife in the event of his death. The Company is accruing the present
value of its obligation over the active term of employment of the officer.
Note 9 -- Sale of Land to Related Party
On June 30, 1995 the Texas real estate subsidiary sold 7 acres of unimproved
land in Carrollton, Texas to a limited partnership controlled by a shareholder
of the Company at an independently appraised price of $310,000.
The Company received cash of $75,000 in July 1995 and an installment note
receivable of $235,000 secured by a deed of trust on the Texas real estate. The
note bears interest of 6.83% per annum collectible annually for three years.
Thereafter the note shall be collected in (5) equal annual principal
installments of $47,000 commencing July 1, 1999 with the final collection due
July 1, 2004 plus interest of 6.83% per annum.
Note 10 -- Contingencies
Litigation
In April, 1991, a claim was served on the Canadian subsidiary, General
Magnaplate Canada, Ltd., by Dynasurf International, Inc. for $170,000
representing the unpaid contract liability for the net assets acquired by the
Canadian subsidiary from the sellers, Carrigan Industries, Ltd. and Dynasurf
International, Inc. on January 2, 1990.
The Subsidiary has filed a counterclaim for environmental and other costs
incurred which resulted from the seller not resolving certain environmental
issues warranted in the contract of purchase.
Further, a shareholder of Dynasurf International, Inc. has also filed a claim
for breach of oral contract of employment for $162,000 which the Company has
denied in their related statement of defense. It is the opinion of management
that the ultimate resolution of both claims will not have a materially adverse
effect on the Company's financial statements.
Environmental
The Company is subject to extensive U.S. and Canadian federal, state,
provincial and local environmental laws and regulations. These laws, which are
constantly changing, regulate the storage and discharge of chemical materials
into the environment. The Company has received various communications from
regulatory authorities concerning certain environmental matters and believes
that the costs of these matters are not reasonably likely to have a material
adverse effect an the Company's consolidated financial condition, results of
operations, or liquidity.
Concentrations of Credit Risk
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of its cash, marketable securities and trade
receivables.
The Company's cash and marketable securities are in high-quality securities
placed with a wide array of institutions with high credit and investment
ratings. This investment policy limits the Company's exposure to concentrations
of credit risk.
The trade receivable balances, reflecting the Company's diversified sources
of revenue, are dispersed across many different geographic areas. As a
consequence, concentrations of credit risk are limited. The Company routinely
assesses the financial strength of its customers and generally does not require
collateral to support its credit sales.
Note 11 -- Related Party Transactions
The Company was charged legal and computer consulting services by two outside
directors of the Company in the ordinary course of business as follows: 1995 -
$8,906 and 1994 - $19,772.
<PAGE>
Item 2A - Management's Discussion and Analysis of Financial Position:
Financial Condition
Liquidity and Capital Resources
Three-Months ended September 1995
Cash and cash equivalents increased by $1,260,955 from June 30, 1995 to
September 30, 1995, while net cash increased $891,679 from the $676,411 decrease
reported the same period last year. Of this, $936,453 net cash was provided by
the operating activities of the first three months, $5,767 was used by investing
activities and $39,007 was used by financing activities. During the three
months, the registrant's investment activities comprised $80,767 used for
additions to property, plant and equipment, and for additions to patents and
trademarks. $75,000 was provided by the collection of a note receivable on the
sale of land. The use of cash for financing activities was primarily made up by
the acquisition of treasury stock.
In September of 1995 a $.05 per share dividend was declared and is payable in
the second quarter.
Working capital of $5,593,203 decreased $234,743 during the three months and
the working capital ratio decreased to 5.26 to 1 from 5.45 to 1 at June 30,
1995.
Stockholders' equity per share at September 30, 1995 increased 2.8% to $4.04
per share compared with $3.93 per share at June 30, 1995. During the first three
months, 7,150 shares held in the treasury at the cost of $35,894 were retired
and canceled.
Management believes that internal cash flow and/or incomes from marketable
securities are expected to be sufficient to provide the capital resources
necessary to support future operating needs, and does not anticipate any
material expenditures that will have significant impact on future cash flows.
<PAGE>
Item 2B - Management's Discussion and Analysis of Results of Operations:
Quarter -- September 30, 1995 compared with September 30, 1994:
Sales rose this quarter as reflected in the current period sales of
$2,426,331, an increase of $197,883 or 8.9% from the same quarter last year.
Sales at all locations increased during the three-month period and Management
expects this positive trend to continue through the remainder of the year.
Royalty and investment and other income for the first quarter were $41,398 and
$144,336 compared with $20,371 and $186,166 from last year's first quarter. The
$21,027 increase in royalty income is a direct result of a renewal of a
previously expired license, addition of new licenses by existing licensees and
higher sales volume. Negotiations are continuing to take place regarding
potential new licensees. Although, investment income is down slightly this is
attributable to a stronger cash position, and a switch to a high yield, fixed
income investment portfolio which is less susceptible to extreme market
fluctuations.
Reflecting the above, gross revenue for the latest quarter of this year of
$2,612,065 increased $177,080 or 7.3 % from the same quarter last year.
Total costs and expenses were $2,082,110 in the first quarter an increase of
$79,147 or 3.9% from the same period last year. Management has successfully
stabilized costs in direct proportion to revenue and continues to monitor
spending.
Income before corporate income taxes was $529,955 in this year's first
quarter, an increase of $97,933 or 22.7% from the $432,022 achieved in last
year's first quarter. Corporate income taxes and the effective tax rate for the
period were $194,400 and 36.7% respectively, compared with $159,200 and 36.8% in
the first quarter of last year.
Based on the above, net income in the first quarter of this year of $335,555
increased $62,733 or 23.0% from the $272,822 in the same period last year.
Earnings per share were up 33% in this year's first quarter (or $.12 compared
to $.09 in last year's first quarter). In the first three months 7,150 shares of
treasury stock were retired and canceled, resulting in a weighted average of
shares outstanding of 2,742,656 compared with 2,956,194 for the same period last
year.
Management believes the existing legal matters as detailed in note 10 to the
consolidated financial statements will have no significant impact on future
earnings.
The Russian joint venture is on hold pending financing from world banking
sources which are still under consideration.
Continuing discussions are in progress with principals & partners in Beijing,
China regarding a future joint venture.
No other significant financial matters are expected in future months that
will have an adverse impact on earnings.
<PAGE>
ITEM 5 - OTHER INFORMATION
Press Release
November 9, 1995 GENERAL MAGNAPLATE CORPORATION
Three Months Report to Shareholders -- September 30, 1995
---------------------------------------------------------
Gross revenues rose 9% over the prior year's first quarter, indicating the
steady increase we expect to continue into 1996. Gross income before taxes
increased by 22.7%. Stockholders equity rose from $3.93 to $4.04 and working
capital is now 5.26 to 1.
Earnings per share increased by 33% in this quarter, from $0.09 last year to
$0.12 for this period.
Condensed Statement of Income for Three Months Ended September 30
-----------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Gross Revenue ............................ $2,612,065 $2,434,985
Income Before Taxes ...................... 529,955 432,022
Net Income ............................... 335,555 272,822
Net Income Per Share ..................... .12 .09
Average Shares Outstanding ............... 2,742,656 2,956,194
</TABLE>
<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 MAGNAPLATE CORPORATION
------------------------------
(Registrant)
DATE 11/10/95
---------------
/s/ Candida C. Aversenti
- ------------------------------
Candida C. Aversenti
President
DATE 11/10/95
---------------
/s/ Susan E. DeFalco
- ------------------------------
Susan E. DeFalco
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 1,260,955
<SECURITIES> 3,772,822
<RECEIVABLES> 1,434,805
<ALLOWANCES> 134,000
<INVENTORY> 272,084
<CURRENT-ASSETS> 6,905,008
<PP&E> 13,373,328
<DEPRECIATION> 8,019,322
<TOTAL-ASSETS> 13,215,989
<CURRENT-LIABILITIES> 1,311,805
<BONDS> 0
<COMMON> 223,180
0
0
<OTHER-SE> 11,059,307
<TOTAL-LIABILITY-AND-EQUITY> 13,215,989
<SALES> 2,426,331
<TOTAL-REVENUES> 2,612,065
<CGS> 986,569
<TOTAL-COSTS> 2,082,110
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 34,293
<INTEREST-EXPENSE> 4,128
<INCOME-PRETAX> 529,955
<INCOME-TAX> 194,400
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 335,555
<EPS-PRIMARY> .12
<EPS-DILUTED> 0
</TABLE>
