UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1998
Commission File No. 0-5200
BONTEX, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0571303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE BONTEX DRIVE, BUENA VISTA, VIRGINIA 24416-1500
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 540-261-2181
Indicate by checkmark whether the registrant (1) has filed all reports 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 description and number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.
Class Outstanding at February 8, 1999
Common Stock - $.10 par value 1,572,824
<PAGE>
BONTEX, INC.
FORM 10-Q
FOR THE SECOND QUARTER ENDED DECEMBER 31, 1998
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997, June 30, 1998.............................3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS) AND CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
Six Months and Three Months Ended December 31, 1998 and 1997..........4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 1998 and 1997...........................5
CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS........6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................7-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................12
Item 6. Exhibits and Reports on Form 8-K.............................12
2
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BONTEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share and Per Share Data)
December 31 June 30,
(unaudited)
1998 1997 1998
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 366 $ 959 $ 517
Trade accounts receivable, less allowance for doubtful
accounts of $258 ($111 at December '97, $268 at June '98) 11,060 11,019 11,618
Other receivables 553 851 417
Inventories 7,065 7,133 6,436
Deferred income taxes 313 321 347
Income taxes refundable 130 7 56
Other current assets 555 925 338
--------- -------- --------
TOTAL CURRENT ASSETS 20,042 21,215 19,729
--------- -------- --------
Property, plant and equipment:
Land 381 370 369
Buildings and building improvements 5,809 5,298 5,575
Machinery, furniture and equipment 18,069 16,692 17,199
Construction in progress 864 968 781
--------- -------- --------
25,123 23,328 23,924
Less accumulated depreciation and amortization 12,872 12,077 11,882
--------- -------- --------
Net property, plant and equipment 12,251 11,251 12,042
Deferred income taxes 430 - 187
Other assets, at cost less applicable amortization 528 579 555
--------- -------- --------
TOTAL ASSETS $ 33,251 $ 33,045 $ 32,513
========= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Short-term borrowings $ 10,548 $ 8,733 $ 8,664
Accounts payable 6,508 6,911 7,133
Accrued expenses 1,590 2,010 1,520
Income taxes payable 31 378 41
Long-term debt due currently 1,285 595 1,364
--------- -------- --------
TOTAL CURRENT LIABILITIES 19,962 18,627 18,722
Long-term debt 2,226 2,667 2,256
Deferred income taxes 54 55 50
Other long-term liabilities 666 255 594
--------- -------- --------
TOTAL LIABILITIES 22,908 21,604 21,622
--------- -------- --------
Stockholders' equity:
Preferred stock of no par value. Authorized 10,000,000
shares; none issued - - -
Common stock of $.10 par value. Authorized 10,000,000
shares; issued and outstanding 1,572,824 shares 157 157 157
Additional capital 1,551 1,551 1,551
Retained earnings 8,023 9,384 8,898
Accumulated other comprehensive income 612 349 285
--------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 10,343 11,441 10,891
--------- -------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 33,251 $ 33,045 $ 32,513
========= ======== ========
</TABLE>
See accompanying condensed notes to unaudited condensed consolidated financial
statements.
3
<PAGE>
<TABLE>
<CAPTION>
BONTEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
AND CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Per Share Data)
(Unaudited)
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):
Six Months Ended Three Months Ended
December 31, December 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $ 18,384 $ 21,621 $ 9,667 $ 11,088
Cost of Sales 14,174 15,172 7,597 7,851
-------- -------- -------- ---------
Gross Profit 4,210 6,449 2,070 3,237
Selling, General and Administrative Expenses 4,897 5,738 2,558 3,088
-------- -------- -------- ---------
Operating Income (Loss) (687) 711 (488) 149
-------- -------- -------- ---------
Other (Income) Expense:
Interest expense 476 533 233 277
Interest income (2) (32) (1) -
Foreign currency exchange loss 37 106 7 51
Other, net (43) (29) (48) (30)
-------- -------- -------- ---------
Total Other Expense, Net 468 578 191 298
-------- -------- -------- ---------
Income (Loss) Before Income Taxes (1,155) 133 (679) (149)
Income Taxes (280) 93 (184) (32)
-------- -------- -------- ---------
Net income (loss) (875) 40 (495) (117)
Other Comprehensive Income (Loss)
Foreign currency translation adjustment 327 (114) (3) (61)
-------- -------- -------- ---------
Comprehensive Loss $ (548) $ (74) $ (498) $ (178)
======== ======== ======== =========
Net income (loss) per share $ (.56) $ .03 $ (.31) $ (.07)
======== ======== ======== =========
Condensed Consolidated Statements of Changes in Stockholders' Equity:
Stockholders' Equity beginning balance $ 10,891 $ 11,515 $ 10,841 $ 11,619
Net income (loss) (875) 40 (495) (117)
Other comprehensive income (loss)
Foreign currency translation adjustment 327 (114) (3) (61)
-------- -------- -------- ---------
Stockholders' Equity, ending balance $ 10,343 $ 11,441 $ 10,343 $ 11,441
======== ======== ======== =========
</TABLE>
See accompanying condensed notes to unaudited condensed consolidated financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
BONTEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(unaudited)
Six Months Ended
December 31,
1998 1997
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 19,608 $ 24,001
Cash paid to suppliers and employees (20,033) (23,920)
Interest received 10 52
Interest paid (494) (579)
Income taxes paid, net of refunds 24 174
-------- --------
Net cash used in operating activities (885) (272)
-------- --------
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment (426) (943)
-------- --------
Net cash used in investing activities (426) (943)
-------- --------
Cash Flows from Financing Activities:
Increase in short-term borrowings, net 1,408 906
Long-term debt incurred 108 192
Principal payments on long-term debt (304) (218)
-------- --------
Net cash provided by financing activities 1,212 880
-------- --------
Effect of Exchange Rate Changes on Cash (52) (79)
-------- --------
Net Decrease in Cash and Cash Equivalents (151) (414)
Cash and Cash Equivalents at Beginning of Year 517 1,373
-------- --------
Cash and Cash Equivalents at End of Year $ 366 $ 959
======== ========
Reconciliation of Net Income (Loss) to Net Cash Used in
Operating Activities:
Net income (loss) $ (875) $ 40
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 682 648
Provision for bad debts 120 59
Deferred income taxes (242) (126)
Change in assets and liabilities:
Decrease in trade accounts and other receivables 829 1,972
Increase in inventories (206) (1,915)
Increase in other assets (312) (919)
Decrease in accounts payable and accrued expenses (852) (483)
Increase (decrease) in income taxes (80) 396
Increase in other liabilities 51 56
-------- --------
Net cash used in operating activities $ (885) $ (272)
======== ========
</TABLE>
See accompanying condensed notes to unaudited condensed consolidated financial
statements.
5
<PAGE>
BONTEX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997 AND JUNE 30, 1998
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements have
been prepared by Bontex, Inc. and its subsidiaries ("Bontex" or the "Company")
in accordance with generally accepted accounting principles for interim
financial reporting information and the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all material
reclassifications and adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation of the results of operations,
financial position and cash flows for each period shown, have been included.
Operating results for interim periods are not necessarily indicative of the
results for the full year. The unaudited condensed consolidated financial
statements and condensed notes are presented as permitted by Form 10-Q and do
not contain certain information included in the Company's annual consolidated
financial statements and notes. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended June 30, 1998.
2. The last in, first out (LIFO) method of inventory pricing is used by the
Company in the United States. Inventories of the European subsidiaries are
valued at the lower of cost or market using the first-in, first-out (FIFO) and
weighted average bases. Inventories are summarized as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1998 1997 1998
(Dollars in Thousands)
<S> <C> <C> <C>
Finished goods $ 3,799 $ 3,661 $ 3,782
Raw Materials 2,719 3,166 2,117
Supplies 786 627 786
------- -------- --------
Inventories at FIFO and weighted average cost 7,304 7,454 6,685
LIFO reserves (239) (321) (249)
------- -------- --------
$ 7,065 $ 7,133 $ 6,436
======= ======== ========
</TABLE>
3. Business segment information related to the North American and European
operations follows:
<TABLE>
<CAPTION>
North American European Eliminations Consolidated
Operations Operations
<S> <C> <C>
Six Months Ended December 31, 1998
Net Sales $ 7,707 $ 10,862 $ (185) $ 18,384
Net Loss (571) (304) - (875)
Six Months Ended December 31, 1997
Net Sales $ 8,987 $ 12,872 $ (238) $ 21,621
Net Income (Loss) (314) 354 - 40
</TABLE>
4. Net income per share calculations are based on the weighted average number of
shares outstanding of 1,572,824 shares for all periods.
6
<PAGE>
BONTEX, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX MONTHS AND QUARTER ENDED DECEMBER 31, 1998
(Unaudited)
Except for historical data set forth herein, the following discussion contains
forward-looking statements within the meaning of the Private Securities
Litigation Act of 1995. Forward-looking statements include, for example,
statements about future results of operations or market conditions and involve
risks, uncertainties and assumptions. Actual results may differ materially from
these forward-looking statements. Factors that could cause or contribute to
those differences include, but are not limited to, the global economic crisis
emanating from Southeast Asia, excessive worldwide footwear inventories, a
shrinking domestic market for Bontex products, decreased sales to key customers,
increased competition from non-woven materials, the Year 2000 problem, the
increase in the relative prices of Bontex's products due to foreign currency
devaluations, increased pulp and latex prices, and capital illiquidity resulting
from the breach of loan ratios.
RESULTS OF OPERATIONS
The results of operations for the first six months of fiscal 1999 reflect
operating and net losses. During the first six months, the Company generated a
consolidated operating loss of $687,000, and a net loss of $875,000 or $.56 per
share. The fluctuation in foreign currency exchange rates resulted in a $440,000
translation increase in net sales.
Seasonality generally exists in that the first half of each fiscal year is
typically lower in volume than the second half, which is largely due to
customer's purchasing cycles, scheduled vacations, shutdowns, and holidays.
Gross profit as a percentage of net sales (i.e., Gross Margin) for the first six
months of fiscal 1999 decreased compared to the same period last year from 30.0
to 22.9 percent. This decrease in profit margins is primarily attributed to the
decline in sales, which is a result of the financial situation in Asia and South
America, the continued contraction of the domestic market for Bontex related
products, the increased usage of non-woven materials, and the overall decline in
footwear sales, especially in the athletic category, and resulting excess
worldwide inventories. Competitive pricing pressures have resulted in lower
selling prices, which also have had a negative impact on profit margins.
The cost of pulp is expected to remain stable during the remainder of fiscal
year 1999. It is difficult to predict future raw material costs, and there can
be no assurance that raw material prices will not have an adverse impact on the
Company's operations or competitive position in the future. Bontex plans to
continue a long standing practice of reducing costs by utilizing technology in
raw materials, equipment and processes improvements.
Selling, General & Administrative (SG&A) expenses as a percent of net sales
increased from 26.5 percent to 26.6 percent, as compared to the corresponding
prior year. The increased SG&A percentage is mainly due to the higher
professional fees and the decrease in sales. Overall, consolidated SG&A expenses
declined $841,000 or 14.7 percent, while sales decreased 15 percent. Bontex
continues to implement additional measures in an effort to reduce total SG&A
costs.
Due to certain customer credit situations, the Company's provision for bad debts
increased to $120,000 for the period July 1, 1998, through December 31, 1998, as
compared to the prior year period's $59,000.
Interest charges in fiscal 1999 have decreased as a result of lower interest
rates, which have more than offset increased interest expense on greater
borrowings then in the prior fiscal period. Foreign currency exchange losses
have decreased as a result, in part, of the Company's Risk Management Program
and more stable currency exchange rates in the currencies in which that the
Company transacts business.
7
<PAGE>
Other comprehensive income, foreign currency translation adjustment, of $327,000
for the six months ended December 31, 1998, primarily reflects the weakening of
the U.S. Dollar verses the Belgian Franc.
FINANCIAL CONDITION
Consolidated stockholders' equity decreased $548,000 from June 30, 1998, and
totaled $10.3 million at December 31, 1998. Financial ratios at December 31,
1998, decreased from June 30, 1998, because of the negative operating results.
The fluctuation in foreign currency exchange rates resulted in a translation
increase of $1.4 million in consolidated total assets as compared to December
31, 1997.
Cash balances reflect financing and hedging positions at European Operations.
Trade Accounts Receivables decreased by $558,000 from June 30, 1998, to $11.1
million, and is primarily because of the decrease in consolidated net sales.
The $629,000 increase from June 30, 1998, in inventories to $7.1 million mainly
corresponds to the closure of pulp future contracts during December, and higher
finished goods inventory levels due to decreased sales.
Other current assets increased $217,000 to $555,000 from June 30, 1998,
primarily due to increased pulp future contract deposits.
The $1.2 million increase from June 30, 1998, in PP&E is largely due to capital
additions at European Operations.
Accounts Payable, accrued expenses and short-term borrowings increased $1.3
million from June 30, 1998, which primarily corresponds to increased current
liabilities resulting from negative operating cash flows.
Management believes that existing credit facilities will be sufficient to meet
future operating and capital requirements based on present circumstances. As of
December 31, 1998, however, Bontex USA was not in compliance with certain
financial ratios of its secured debt agreement, under which certain current and
noncurrent assets are pledged as collateral. Bontex is seeking waivers from such
requirements, but there can be no assurance that Bontex will be able to obtain
such waivers. Accordingly, Bontex has classified $560,000 of long-term debt as
current. If Bontex cannot obtain waivers of the breaches of its loan ratios, and
it were unable to obtain refinancing, Bontex might have difficulty in obtaining
funds to meet operating and capital requirements, which could cause a material
adverse impact on its financial condition and results of operations.
In order to conserve cash flows, acquisitions of property, plant and equipment
have been reduced by approximately $500,000 during the current period compared
to the prior year period. Short-term borrowings have increased $1.9 million
since June 30, 1998, to cover the decrease in accounts payable and increase in
inventories and other assets. The Company is working to reduce the level of
finished goods inventories during the remainder of fiscal 1999.
FINANCIAL INSTRUMENTS
The Company utilizes derivatives and other financial instruments in the normal
course of business. By their nature, all such instruments involve risk, and the
Company's maximum potential loss may exceed amounts recorded in the balance
sheet.
The Company is exposed to a variety of market risks, including the effects of
changes in foreign currency exchange rates, interest rates and commodity prices.
In the past, the Company has primarily used such derivative financial
instruments for the purpose of hedging only currency and interest rates
exposures. For further information concerning the aforementioned financial
instruments, refer to the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended June 30,
1998.
8
<PAGE>
As part of the Company's Risk Management Program, the Company has explored
various alternatives to manage its exposure to highly volatile pulp prices, the
primary raw material for the Company's products. Historically, the Company's
primary and only available method of hedging its exposure to pulp price changes
was through forward purchasing and other purchase contracts. In connection with
purchasing pulp for future manufacturing requirements, the Company has entered
into a number of pulp futures, as deemed appropriate, to reduce the effects of
price fluctuations.
In accordance with hedge accounting, gains or losses are recorded as a component
of the underlying inventory purchase, because these contracts effectively meet
the risk reduction and correlation criteria. Gains or losses on hedges that are
terminated prior to the execution of the inventory purchase are recorded in
inventory until the inventory is sold. The table below provides certain
information regarding the Company's pulp inventory and futures contracts that
are sensitive to changes in pulp prices. For inventory, the table presents the
carrying amount and estimated fair value at December 30, 1998. For futures
contracts, all of which mature within the next year, the table presents the
notional amounts and estimated fair value at December 31, 1998.
Balance Sheet Commodity Pulp Position and Related Derivatives Held for Other
Than Trading (dollars in thousands) at December 31, 1998:
Carrying Amount Estimated Fair Value
Pulp Inventory $ 1,920 $ 1,920
Related Derivatives Expected Maturity Estimated Fair Value
Pulp Futures $ 816 $ 613
Market risk is defined as the risk of loss arising from adverse changes in
market rates and prices. The disclosures provide certain forward-looking
information concerning potential exposures to market risk. By its nature, such
forward-looking information is an estimate of what could occur in the future and
is dependent on model characteristics and assumptions. As a result, actual gains
or losses will differ from those reported. The above value at risk disclosure
does not fully reflect the potential net market risk exposure because other
market risk exposures may exist in other transactions and other financial
instruments.
FINANCIAL SITUATION IN ASIA
Asia is currently in a financial and economic crisis. During the previous
several months, the currencies of a number of key Asian countries, including
Korea, Indonesia and Thailand, have devalued, resulting in an economic slowdown.
Asia is the largest market for Bontex type products, as over 68 percent of the
world's footwear is manufactured in Asia. Over the previous three years,
approximately a third of the Company's consolidated sales have been derived from
customers in Asia. The economic slowdown in Asia has decreased the sale of
Bontex type products there. The overall strength of the U.S. dollar and the
currency devaluations in Asia have resulted in additional pressure on earnings,
in part by increasing the relative prices of Bontex products versus Asian
competitors. Accordingly, the deteriorating situation in Asia will continue to
negatively affect the Company's operations, and the economic crisis may further
spread to other markets, including South America.
In assessing the overall impact of the situation in Asia, management believes
sales and profits will decrease in the near term, because of, among other
things, falling demand for footwear products sold in Asia. Management cannot at
this time accurately quantify the adverse impact of the situation in Asia on the
Company's sales and profitability. Management's assessment is based on a number
of relevant sources, including information from key customers, current sales
trends, and other industry sources.
9
<PAGE>
REFOCUSING
Management has recently implemented a dual focused approach composed of a
definitive Sales Action Plan and a Cost Reduction Program, the effects of which
management believes should become more evident during the second half of fiscal
1999. In an effort to increase sales, the Company has established three primary
sales initiatives: augment its product line for footwear-related products,
broaden its product and market range and refine its marketing approach in a
number of key markets. The Company's initiatives include plans to increase sales
of non-footwear segments by developing several products that complement its
existing manufacturing capabilities without significant capital investment or
process modifications.
The Company's Cost Reduction Program consists of a number of critical steps to
reduce its cost structure, especially concerning overhead and capacity issues.
To that end, the Company has taken steps effective February 1, 1999, in an
attempt to reduce costs by approximately $1.3 million on an annualized basis
once fully implemented through the rationalization of 14 percent of its U.S.
staff, the listing for sale of the Newark warehouse facility, and other
measures to reduce overhead. Costs to be incurred as a result of these actions
are not considered material to the financial statements, and accordingly, no
related accruals were made as of December 31, 1998.
YEAR 2000 READINESS
Over the past two years, Bontex has invested approximately $175,000 in
information and non-information technology (IT) systems to improve data
efficiency and address the Company's Year 2000 systems exposure. The Year 2000
issue relates to computer programs using two digits rather than four to define
the applicable year. Inability to process data properly due to this phenomenon
may result in systems failures. The project to address the Company's Year 2000
systems exposure is substantially complete with approximately $25,000 remaining
to be invested. The IT systems, originally expected to be completed in November
1998, are now estimated to be completed during fiscal 1999, while an external
vendor completes customized software programs. The IT systems software has been
tested, and, with the exception of the customized software discussed above, all
software appears to operate as intended. Testing of non-IT systems is underway,
with all testing and modification, if necessary, estimated to be completed by
July 1999.
Bontex is in the process of assessing the Year 2000 readiness of its major
customers and vendors. The review is substantially complete with no material
risks identified. Major customers and vendors who have not responded, however,
could suffer disruptions from the Year 2000 problem. Furthermore, even if the
systems of Bontex's major customers and vendors are Year 2000 compliant, their
operations may suffer disruptions as a result of the Year 2000 problems of the
outside parties on which they rely. Therefore, there can be no assurances that
the Year 2000 will not significantly affect the Company's third parties.
The Company is currently in the process of formulating a contingency plan to
maintain operations in the event of its most likely worse-case Year 2000
scenario. Bontex intends to complete the plan before the end of 1999. Bontex
expects that the contingency plan will provide, if necessary, for manual
processing of accounting and financial information. The contingency plan,
however, would be unable to mitigate extreme Year 2000 effects, such as power or
communications failures, interrupted deliveries from major suppliers, or
decreased sales resulting from regional or worldwide recessions or disruptions
in the operations of major customers. Therefore, there can be no assurance that
the date change from 1999 to 2000 will not materially affect the Company's
operations and financial results.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," was issued in June 1998. This
Statement addresses the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. The
Statement will be effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. Future adoption of this Statement could have a
material impact on the Company's consolidated financial position, or results of
operations. The Company is currently in process of reviewing the impacts of this
Statement.
10
<PAGE>
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," is effective for periods after December 15, 1997. Interim
information for SFAS No. 131 is presented in Note 3 of Condensed Notes to
Condensed Consolidated Financial Statements.
11
<PAGE>
PART II. OTHER INFORMATION
BONTEX, INC.
FORM 10-Q
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
Item 1. Legal Proceedings
There have been no material changes from the information previously
reported under "Legal Proceedings" in Part II, Item 1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
12
<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.
BONTEX, INC.
(Registrant)
February 16, 1999 /s/James C. Kostelni
- - ------------------------------ -----------------------------------------
(Date) James C. Kostelni
Chairman of the Board
and President
February 16, 1999 /s/Charles W. J. Kostelni
- - ------------------------------ -----------------------------------------
(Date) Charles W. J. Kostelni
Corporate Controller
and Secretary
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Bontex,
Inc.'s unaudited condensed consolidated financial statements for the six months
ended December 31, 1998, as set forth in the Company's Quarterly Report on Form
10-K and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1998
<CASH> 366
<SECURITIES> 0
<RECEIVABLES> 11,318
<ALLOWANCES> 258
<INVENTORY> 7,065
<CURRENT-ASSETS> 20,042
<PP&E> 25,123
<DEPRECIATION> 12,872
<TOTAL-ASSETS> 33,251
<CURRENT-LIABILITIES> 19,962
<BONDS> 2,226
157
0
<COMMON> 0
<OTHER-SE> 10,186
<TOTAL-LIABILITY-AND-EQUITY> 33,251
<SALES> 18,384
<TOTAL-REVENUES> 18,429
<CGS> 14,174
<TOTAL-COSTS> 19,071
<OTHER-EXPENSES> 37
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 476
<INCOME-PRETAX> (1,155)
<INCOME-TAX> (280)
<INCOME-CONTINUING> (875)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (875)
<EPS-PRIMARY> (.56)
<EPS-DILUTED> (.56)
</TABLE>
