FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 30, 1996 Commission File Number 1-4773
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American Biltrite Inc.
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(Exact name of registrant as specified in its charter)
Delaware 04-1701350
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
57 River Street Wellesley Hills, Massachusetts 02181
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 617-237-6655
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None
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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 X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date covered by
this report.
Class Outstanding at May 1, 1996
- ---------------------------- --------------------------------
Common Stock, no par value 3,648,836 shares
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
($000)
<TABLE>
<CAPTION>
March 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 22,368 $ 39,297
Accounts receivable, net 41,520 30,708
Inventories 87,066 82,853
Prepaid expenses & other current assets 10,474 11,268
--------- ---------
TOTAL CURRENT ASSETS 161,428 164,126
Goodwill, net 25,032 23,579
Deferred income taxes 2,873 2,873
Other assets 8,462 8,614
Property, plant and equipment, net 105,713 104,295
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$ 303,508 $ 303,487
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 12,000
Accounts payable 25,740 $ 29,094
Accrued expenses 38,654 44,819
Current portion of long-term debt 1,209 3,207
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TOTAL CURRENT LIABILITIES 77,603 77,120
Long-term debt 108,884 107,712
Other liabilities 47,703 48,180
Non-controlling interests 12,083 12,679
STOCKHOLDERS' EQUITY
Common stock 19,469 19,469
Retained earnings 51,519 52,096
Equity adjustment from translation (1,964) (2,334)
Minimum pension liability (445) (445)
Less cost of shares in treasury (11,344) (10,990)
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57,235 57,796
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$ 303,508 $ 303,487
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
($000)
<TABLE>
<CAPTION>
Three Months Ended
March 30, April 1,
1996 1995
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<S> <C> <C>
Net sales $ 89,905 $ 89,691
Interest and other income 1,313 2,267
-------- --------
91,218 91,958
Costs and expenses:
Cost of products sold 64,756 62,162
Selling, general and administrative
expenses 25,113 21,679
Interest 2,649 2,156
-------- --------
92,518 85,997
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EARNINGS (LOSS) BEFORE
INCOME TAXES (BENEFIT) AND
NON-CONTROLLING INTERESTS (1,300) 5,961
Income taxes (benefit) (505) 2,531
Non-controlling interests 585 (1,411)
-------- --------
NET EARNINGS (LOSS) $ (210) $ 2,019
======== ========
Earnings (loss) per common share $ (.06) $ .53
======== ========
Dividends declared per common share $ .10 $ .0625
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
($000)
<TABLE>
<CAPTION>
Three Months Ended
March 30, April 1,
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $ (210) $ 2,019
Adjustments to reconcile net earnings (loss)
to net cash used by operating activities:
Depreciation and amortization 3,239 2,878
Accounts and notes receivable (10,854) (9,986)
Inventories (4,288) (8,900)
Prepaid expenses and other current assets 782 (236)
Accounts payable and accrued expenses (9,464) (8,854)
Non-controlling interests (585) 1,411
Other (391) 1,202
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NET CASH USED BY OPERATING
ACTIVITIES (21,771) (20,466)
INVESTING ACTIVITIES
Investment in property, plant and equipment (4,160) (2,223)
Sale of short-term investments, net 14,295
Business acquisitions (1,680)
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NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (5,840) 12,072
FINANCING ACTIVITIES
Net short-term borrowings 12,000
Long-term borrowings 15,000
Payment on long-term debt (16,084) (29)
Payment of Congoleum equity offering costs (732)
Net proceeds from Congoleum equity offering 56,219
Repurchase of Congoleum Class B shares (60,450)
Purchase of treasury shares (371)
Proceeds from exercise of stock options 17 11
Dividends paid (367) (223)
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NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 10,195 (5,204)
Effect of foreign exchange 487 (516)
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DECREASE IN CASH AND CASH EQUIVALENTS (16,929) (14,114)
Cash and cash equivalents at beginning of
period 39,297 19,701
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CASH AND CASH EQUIVALENTS AT END OF
QUARTER $ 22,368 $ 5,587
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 30, 1996
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited consolidated condensed financial
statements which include the accounts of American Biltrite Inc. and
its wholly-owned subsidiaries ("ABI") as well as entities over
which it has voting control have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01
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
adjustments) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March
30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1995.
Note B - Inventories
- --------------------
Inventory at March 30, 1996 and December 31, 1995 consisted of the
following:
<TABLE>
<CAPTION>
March 30, December 31,
1996 1995
-------- ------------
($000)
<S> <C> <C>
Finished goods $ 59,096 $ 54,629
Work-in-process 13,290 11,984
Raw materials and supplies 14,680 16,240
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$ 87,066 $ 82,853
======= =======
</TABLE>
Note C - Commitments and Contingencies
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ABI has recorded what it believes are adequate provisions for
environmental remediation and product-related liabilities. While
the company believes that its estimate of the future amount of
these liabilities is reasonable, the ultimate outcome of these
matters cannot be determined.
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
MANAGEMENTS' DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 30, 1996
Results of Operations
- ---------------------
The comments that follow compare the first quarter of 1996 results
of operations with the same period of 1995. In the 1995 first quarter,
the financial results of K&M Associates L.P. ("K&M") are not included
in that ABI did not acquire a majority position in K&M until April 1, 1995.
Net sales for the first quarter of 1996 were $89.9 million compared
to $89.7 million last year. Congoleum Corporation ("Congoleum") sales
reflect a decrease of $9.1 million from last year and are offset by the
inclusion of K&M in the current quarter and small sales gains in
ABI's Tape and Canadian operations. The sales decline at Congoleum was
due to several factors. First was the extremely weak retail demand in the
quarter. Second was the continued decline in purchases by Color Tile, Inc.,
a major retailer operating under Chapter 11 bankruptcy protection.
Third was the timing of Congoleum's Spring season new product introductions,
which occurred later in 1996 than in 1995, resulting in a greater proportion
of shipments in early April as opposed to late March. Fourth was a decline
in sales in Canada resulting from changes of Congoleum's distribution in
that country which have not yet been completed.
The net loss for the first quarter of 1996, $.2 million, is attributable
to a loss at Congoleum, based on its sales decline described earlier, and
a loss at K&M which is experiencing a continuation of the weak retail
environment. All other divisions of the Company achieved profit levels
during the quarter comparable to 1995's first quarter.
Interest and other income decreased in the current quarter to $1.3 million
from $2.3 million last year. Key factors accounting for this reduction are
lower royalty income at Congoleum and at ABI lower incentive payments from
Hillside Industries.
Cost of products sold as a percentage of sales in the current quarter
increased to 72.0% from 69.3% last year. This increase is due to the lower
sales volume and reduced gross profit margin at Congoleum. Gross margins
declined as a result of decreased production volumes, which more than
offset declines in raw material costs from the first quarter of 1995 levels.
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
MANAGEMENTS' DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 30, 1996
Selling, general and administrative expense as a percentage of sales
increased to 27.9% in the current quarter compared to 24.2% last year.
Two major factors account for this increase and are the effect of the
substantial sales decline at Congoleum and the inclusion in the current
quarter of expenses at K&M where these expenses historically have been
higher than those experienced at ABI and Congoleum.
Interest expense increased to $2.6 million in the current quarter compared
to $2.2 million last year. This increase is due to increased borrowings
at ABI to finance the acquisition of additional partnership interest in
K&M, and at K&M to finance a portion of its working capital.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents declined $16.9 million for the three months ended
March 30, 1996 to $22.4 million. Working capital was $83.8 million, down
from $87.0 million at December 31, 1995. The ratio of current assets to
current liabilities at March 30, 1996 and December 31, 1995 was 2.1. Cash
used by operations was $21.8 million for the first quarter of 1996 and
consists mainly of the seasonal increase in receivables and inventories.
Capital expenditures in the current first quarter were $4.2 million and
depreciation and amortization expense was $3.2 million. It is anticipated
that total year 1996 capital spending will be in the range of $18 - 20
million.
The Company has established a reserve for product related liabilities
and an environmental reserve against which the costs of administration and
remediation are and will be charged. Since legal proceedings tend to be
unpredictable and costly, resolution of an environmental proceeding could
possibly be material to the results of operations or cash flow for a
particular quarterly or annual reporting period.
Cash requirements for capital expenditures, working capital, debt service
and the current authorization of $5.1 million to purchase ABI Common Stock,
are expected to be financed from operating activities and borrowings under
existing bank lines of credit which at ABI are presently $24.0 million and at
Congoleum are $30.0 million. During the current quarter, ABI entered into
a $30.0 million note purchase and private shelf agreement with an insurance
company and drew down $15.0 million. There is $15.0 million remaining in
the shelf facility for future financing requirements.
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
March 30, 1996
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
--------
The following exhibit is included herein:
(11) Statement re: computation of earnings per share
(b) Reports on Form 8-K
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There were no reports on Form 8-K filed for the three months
ended March 30, 1996.
SIGNATURE
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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.
AMERICAN BILTRITE INC.
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(Registrant)
Date: May 9, 1996 BY:/s/Gilbert K. Gailius
---------------------
Gilbert K. Gailius
Vice President-Finance
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
MARCH 30, 1996
Item 6. Exhibits
- ------------------
(11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
April 1,
1995
-------
(000's omitted, except per share data)
<S> <C>
Primary:
Average shares outstanding 3,572
Net effect of dilutive
stock options-based on
the treasury stock method
using average market price 247
-----
Totals 3,819
=====
Net income $ 2,019
=====
Per share amount $ .53
=====
Fully diluted:
Average shares outstanding 3,572
Net effect of dilutive
stock options-based on
the treasury stock method
using average market price 247
-----
Totals 3,819
=====
Net income $ 2,019
=====
Per share amount $ .53
=====
Note: There was no dilutive effect from stock options in 1996.
Weighted average shares outstanding for the three months
ended March 30, 1996 were 3,670,608.
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-30-1996
<CASH> 22,368
<SECURITIES> 0
<RECEIVABLES> 41,520
<ALLOWANCES> 0
<INVENTORY> 87,066
<CURRENT-ASSETS> 161,428
<PP&E> 105,713
<DEPRECIATION> 0
<TOTAL-ASSETS> 303,508
<CURRENT-LIABILITIES> 77,603
<BONDS> 108,884
0
0
<COMMON> 19,469
<OTHER-SE> 37,766
<TOTAL-LIABILITY-AND-EQUITY> 303,508
<SALES> 89,905
<TOTAL-REVENUES> 91,218
<CGS> 64,756
<TOTAL-COSTS> 64,756
<OTHER-EXPENSES> 25,113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,649
<INCOME-PRETAX> (1,300)
<INCOME-TAX> (505)
<INCOME-CONTINUING> (210)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (210)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
