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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1994
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Commission file number 1-6687
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JOHNSTON INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 11-1749980
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Thirteenth Street, Columbus, Georgia 31901
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(Address of principal executive offices) (Zip Code)
(706) 641-3140
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(Registrant's telephone number, including area code)
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(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 XX No
...... ......
At December 31, 1994, the number of outstanding shares of $.10 par value
common stock was 10,567,279.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the second quarter of fiscal 1995 were $44,197,000
compared to $38,295,000 in the prior year, an increase of 15%. For the
six-month period of fiscal 1995, net sales were $84,970,000 compared to
$73,990,000 in fiscal 1994, also an increase of 15%. The sales increase was
primarily a result of unit sales and product mix changes. Sales in the
upholstery, furniture and home products markets were up $4,769,000 for the
quarter, an increase of 24%, and up $10,552,000 for the six months, an increase
of 30%. The remainder of the sales increase was mainly in the automotive
segment of our markets. At December 31, 1994, our sales order backlog was
$52,592,000 compared to $40,945,000 the prior year, a 28% increase. In view of
this very strong sales order backlog we look forward to sustaining our sales
level over the second half of the fiscal year.
The increased sales volume has significantly increased productivity
through higher utilization of plant and equipment. This increased volume,
coupled with certain price increases, has enabled the Company to maintain its
gross margin for the six-month period in spite of increases in raw material
costs.
Selling, general and administrative expenses decreased slightly in the
second quarter to $3,386,000 compared to $3,412,000 in the prior year. For
the six-month period of the current year, the expense was $6,766,000 compared
to $6,556,000 in the prior year, an increase of $210,000. The most
significant element of this increase was expenses related to a new line of
decorative and home furnishing products at our Southern Phenix facility.
Depreciation and amortization expense for the quarter increased
$350,000 and $695,000 for the six-month period. These increases reflect the
recent increased level of capital expenditures.
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The increase in income from operations of $855,000 from $2,970,000
for the three months ended December 31, 1993, to $3,825,000 for the three
months ended December 31, 1994, reflects the results of the higher level of
product sales. This was also true for the six-month period where the income
from operations increased from $5,061,000 in fiscal 1994, to $7,441,000 in
fiscal 1995, an increase of $2,380,000, a 47% increase.
Interest expense was $933,000 for the quarter compared to $733,000
for the same period in the prior year. For the six-month period interest
expense increased from $1,361,000 in fiscal 1994 to $1,778,000 in fiscal 1995,
an increase of $417,000. This increase was attributable to the increased level
of borrowing under the Company's loan agreements and a significant increase in
interest rates.
The Company's earnings of equity investments for the quarter were
$1,001,000 compared with a loss of $458,000 for the same period in the prior
year. Jupiter National, Inc., 49% owned by the Company, reported increased
income for the current quarter from Wellington Sears, its wholly owned
subsidiary, and an increase in the market value of its portfolio investments.
In fiscal 1995, the income was $1,040,000 for the six-month period compared to
$1,579,000 for the same period in fiscal 1994. This decrease was caused by a
decline in the market price of Jupiter National, Inc.'s, investment in Zoll
Medical. Jupiter National carries its closed-end venture capital company
portfolio investments at market or fair value. In 1992, the Company entered
into a 50%/50% partnership with an English company for the purpose of joint
manufacture and sale of certain specialized textile products. The company
estimated Tech Textiles to have a three-year start-up phase and at December 31,
1994 it is performing to the Company's expectations.
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In January 1995, the Company purchased an additional 89,300 shares of
Jupiter National, Inc., which increased the Company's ownership interest from
49.6% to 54.2%. As a result, Jupiter National is now a majority owned
subsidiary of the Company, whose results will be consolidated with the
financial statements of the Company as of January 1995. As a result of this
transaction, the anticipated impact on the Company's future net income is not
expected to be material.
Liquidity and Capital Resources
Working capital at December 31, 1994, was $24,486,000 and the current
ratio was 1.97 to 1.
At December 31, 1994, the Company had available $35,000,000 under a
revolving credit agreement, $4,000,000 under a term loan agreement, and
$10,000,000 under its open lines of credit with several banks, and had
$44,750,000 borrowed under the various credit facilities.
During January 1995, the Company restructured it loan facilities
ending with a $45,000,000 revolving credit agreement and a $10,000,000 line of
credit; the $4,000,000 term debt facility which will be repaid on March 31,
1995, as per agreement. Current debt is $47,600,000.
Although Jupiter is a more highly leveraged company than Johnston,
management believes that funds generated from operations and funds available
under borrowing arrangements of the combined companies are sufficient for the
current operations of the businesses.
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JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
undersigned has duly caused this report to be filed on its behalf by the
undersigned hereto duly authorized.
JOHNSTON INDUSTRIES, INC.
DATED: May 15, 1995 BY John W. Johnson
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John W. Johnson
Vice President
Chief Financial Officer
