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 quarterly period ended March 31, 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 0-4855
THE C. R. GIBSON COMPANY
INCORPORATED IN THE STATE OF DELAWARE 06-0361615
32 Knight Street, Norwalk, Connecticut 06856
Telephone number - (203) 847-4543
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 preceeding 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 the latest practicable date:
Common stock, $.10 par value: 7,435,284 shares as of May 2, 1995
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1
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
The C. R. Gibson Company Condensed Consolidated Statement of Income
(unaudited)(thousands of dollars except per share data)
Quarter Ended March 31,
-----------------------
1995 1994
---- ----
Net sales................................ $18,975 $16,811
Cost of goods sold....................... 11,503 10,088
------ ------
Gross profit............................. 7,472 6,723
Selling, general and administrative...... 5,394 5,206
Interest expense, net.................... 310 194
--- ---
Income from continuing operations before
income taxes ....................... 1,768 1,323
Provision for income taxes............... 677 492
--- ---
Income from continuing operations........ 1,091 831
----- ---
Discontinued operations
Loss from operations of The Rytex Company
(net of income tax benefits of $240
and $382, respectively)............. (468) (725)
Expected loss on disposal of The Rytex
Company, including provision of
$599 for operating losses during
phase-out period, net of income tax
benefit of $204..................... (1,022) --
------- -------
Loss from discontinued operations........ (1,490) (725)
------- -------
Net income (loss)............................. $ (399) $ 106
======= =======
Net income per common share - continuing
operations............................... $ 0.15 $ 0.11
Net loss per common share - discontinued
operations................................ $ (0.20) $ (0.10)
--------- ---------
Net income (loss) per common share............. $ (0.05) $ 0.01
--------- ---------
Weighted average shares outstanding............ 7,289,353 7,506,578
========= =========
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
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2
The C. R. Gibson Company
Condensed Consolidated Balance Sheet
(thousands of dollars)
March 31, Dec. 31,
1995 1994
--------- -----
(Unaudited) (*Note)
Assets
Current assets:
Cash and cash equivalents................ $ 425 $ 1,000
Accounts receivable, less allowance for
doubtful accounts ($302 and $288)........ 16,187 11,026
Inventories.............................. 19,508 18,988
Net assets of The Rytex Company held
for sale............................... 3,846 --
Prepaid expenses and other current assets 4,077 3,269
--------- -----
Total current assets................ 44,043 34,283
--------- -----
Property, plant, and equipment - net.......... 16,744 18,331
Other assets.................................. 3,863 6,469
--------- -----
Total assets........................ $ 64,650 $ 59,083
========= =========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Short-term borrowings................... $ 11,710 $ 4,630
Accounts payable........................ 3,859 5,307
Other liabilities....................... 4,650 3,761
--------- -----
Total current liabilities.......... 20,219 13,698
Long-term debt............................... 13,062 13,302
Other long-term liabilities.................. 1,327 1,360
--------- -----
Total liabilities.................. 34,608 28,360
--------- -----
Shareholders' Equity:
Common stock, $.10 par value:
Authorized - 10,000,000 shares
Issued - 7,755,216 shares
(7,755,216 - 1994).................. 776 776
Capital contributed in excess of par value 10,900 10,900
Retained earnings.......................... 21,535 22,232
Cumulative translation adjustment.......... (603) (596)
ESOP unearned compensation...................... (171) (243)
Treasury stock, at cost - 319,988 shares of
Common stock (313,023 shares in 1994). (2,395) (2,346)
--------- ------
Total shareholders' equity............ 30,042 30,723
--------- ------
Total liabilities and shareholders'
equity.............................. $ 64,650 $59,083
========= =========
*Note
- -----
The Balance Sheet as of December 31, 1994 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 Unaudited Condensed Consolidated Financial
Statements.
<PAGE>
3
The C. R. Gibson Company
Condensed Consolidated Statement of Cash Flows (unaudited)
(thousands of dollars)
Quarter Ended March 31,
1995 1994
---- ----
Operating Activities
Net income (loss)........................ $ (399) $ 106
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation......................... 500 816
Amortization......................... 276 763
Decrease in cash surrender value
of life insurance.................... -- 51
Changes in operating assets and
liabilities:
Accounts receivable............. (5,161) (3,103)
Inventories..................... (520) (478)
Prepaid and other current asset. (808) 532
Assets of The Rytex Company held
for sale...................... (1,274) --
Deferred promotion costs, net of
charges of $256 and $1,143...... (395) 200
Accounts payable and accrued
expenses...................... (559) (18)
Other........................... (7) (107)
------- --------
Net cash used in operating activities..... (8,347) (1,238)
------- --------
Investing Activities:
Purchases of property, plant and
equipment............................... 1,087 (1,043)
Other investing activities................ 153 (767)
------- --------
Net cash used in investing activities..... 1,240 (1,810)
------- --------
Financing Activities:
Repurchase of treasury stock.............. (49) (837)
Proceeds from lines of credit............. 7,080 4,370
Proceeds from repayment of ESOP Loan...... 72 71
Principal payments on lines of credit,
long-term debt, and capital lease
obligations............................. (145) (132)
Dividends paid............................ (298) (301)
Other..................................... (128) 56
------- --------
Net cash provided by financing activities. 6,532 3,227
------- --------
(Decrease) increase in cash and cash
equivalents............................. (575) 179
Cash and cash equivalents at beginning
of period............................... 1,000 794
------- --------
Cash and cash equivalents at end of
period.................................. $ 425 $ 973
======= =======
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
<PAGE>
4
The C. R. Gibson Company
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 1995
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited 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 three month period ended March 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1995. For further information, refer to the financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31,1994.
NOTE B -- INVENTORIES
The components of inventories are as follows (in thousands):
March 31, December 31,
1995 1994
--------- -----------
Raw materials................. $ 6,185 $ 5,914
Work in process............... 3,783 3,657
Finished goods................ 9,540 9,417
--------- --------
$ 19,508 $ 18,988
========= ========
NOTE C -- NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed by dividing net income by
the weighted average number of common shares outstanding during each
period.
<PAGE>
5
NOTE D -- SALE OF THE RYTEX COMPANY
On March 14, 1995, the Company determined to seek a buyer for its
subsidiary, The Rytex Company ("Rytex"). The assets of Rytex consist
primarily of the inventory, net property, plant and equipment, deferred
promotional costs and certain capitalized leases. The remaining assets and
liabilities at the balance sheet date consist of cash, accounts receivable,
certain prepaid items, accounts payable and other liabilities. The
following table summarizes the net assets of Rytex held for sale as of
March 31, 1995.
March 31,
1995
--------
Inventories....................................... $1,084
Machinery & equipment, net........................ 1,455
Deferred promotional costs........................ 1,671
Liabilities....................................... (364)
------
Net assets of Rytex............................... $3,846
======
The net assets of Rytex held for sale have been classified as current
assets in the accompanying consolidated balance sheets as of March 31,
1995.
Management estimates the sale of Rytex will result in a net loss of
$1,490,000 after provision for various expenses and fees. This amount also
includes the estimated result of discontinued operations during 1995.
The consolidated statements of operations have been restated for all prior
periods to report the net results of Rytex as loss from discontinued
operations. Rytex reported sales of $2,518,000 for the quarter ended
March 31, 1995 compared to $2,762,000 for the quarter ended March 31, 1994.
<PAGE>
6
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
On March 14, 1995, the Company determined to seek a buyer for the Rytex
subsidiary. The consolidated statements of operations have been restated
for all prior periods to report the net results of The Rytex Company as
loss from discontinued operations.
Net sales for the quarter ended March 31, 1995 increased by 12.9% to
$18,975,000 from $16,811,000 for the same quarter last year. For the
three-month period ended March 31, 1995, the Company reported a net loss of
$399,000 from net income of $106,000 for the same period last year due to
the loss from discontinued operations. Income from continuing operations
increased 31.3% to $1,091,000 from $831,000 for the same period last year.
Gross profit as a percent of sales for the quarter ended March 31, 1995
decreased slightly from 1994 levels. This is primarily due to higher costs
associated with raw material purchases.
Selling, general and administrative expenses for the quarter ended
March 31, 1995 amounted to $5,394,000 as compared to $5,206,000 for the
corresponding period in 1994. The increase is generally associated with
the increased sales volume.
Interest expense, net for the three-month period increased to $310,000 in
1995 from $194,000 in 1994. This increase is principally due to higher
borrowing levels as a result of funding the working capital needs of the
Rytex operation as well as increased interest rates.
The effective tax rate from continuing operations was 38.3% for the quarter
ended March 31, 1995 compared to 37.2% for the prior year period.
The ratio of current assets to current liabilities was 2.2 to 1 at the end
of the first quarter of 1995, compared to 2.5 to 1 at December 31, 1994.
Working capital amounted to $23,824,000 at March 31, 1995 compared to
$20,585,000 at December 31, 1994. This increase is principally
attributable to the reclassification of Rytex fixed and other assets to
current assets held for sale.
In January 1995, the Employee Stock Ownership Plan purchased 150,000 shares
of the Company's Common Stock at a cost of $1,050,000.
There were no significant changes in capitalization of the Company during
the periods presented, nor has the Company entered into any significant
financial arrangement not reflected in the financial statements. The
Company expects that available cash and existing lines of credit will be
sufficient to meet its normal operating requirements.
<PAGE>
7
PART II
- -------
Item 6.
(a) Exhibits
--------
No. Description
--- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
A Current Report on Form 8-K dated January 23, 1995 reporting
under Item 5.
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.
The C. R. Gibson Company
(registrant)
By: /s/ James M. Harrison
----------------------------
James M. Harrison,
Executive Vice President and
Chief Financial Officer
May 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated sheet of The C. R. Gibson Company as of March 31, 1995
and its condensed consolidated statement of income for the three months then
ended and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> MAR-31-1995 MAR-31-1994
<CASH> 425 1,000
<SECURITIES> 0 0
<RECEIVABLES> 16,489 11,314
<ALLOWANCES> 302 288
<INVENTORY> 19,508 18,988
<CURRENT-ASSETS> 44,043 34,283
<PP&E> 36,203 37,290
<DEPRECIATION> 19,459 18,959
<TOTAL-ASSETS> 64,560 59,083
<CURRENT-LIABILITIES> 20,219 13,698
<BONDS> 13,062 13,302
<COMMON> 30,042 30,723
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 64,650 59,083
<SALES> 18,975 16,811
<TOTAL-REVENUES> 18,975 16,811
<CGS> 11,503 10,088
<TOTAL-COSTS> 11,503 10,088
<OTHER-EXPENSES> 5,394 5,206
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 310 194
<INCOME-PRETAX> 1,768 1,323
<INCOME-TAX> 677 492
<INCOME-CONTINUING> 1,091 831
<DISCONTINUED> (1,490) (725)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (399) 106
<EPS-PRIMARY> (0.05) 0.01
<EPS-DILUTED> (0.05) 0.01
</TABLE>
