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 29, 1997 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
----- -----
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, 1997
- --------------------- ---------------------------------
Common Stock 3,630,928 shares
<PAGE>
<TABLE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In thousands of dollars)
<CAPTION>
March 29, December 31,
1997 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 13,938 $ 33,658
Short-term investments 26,700 17,500
Accounts receivable, net 44,549 34,849
Inventories 88,419 81,058
Prepaid expenses & other current assets 6,801 8,660
-------- --------
TOTAL CURRENT ASSETS 180,407 175,725
Goodwill, net 24,227 24,510
Deferred income taxes 3,068 3,068
Other assets 10,187 9,779
Property, plant and equipment, net 112,153 111,884
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$ 330,042 $ 324,966
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 17,000 $ 10,250
Accounts payable 25,333 27,342
Accrued expenses 50,869 50,259
Current portion of long-term debt 1,156 1,156
-------- --------
TOTAL CURRENT LIABILITIES 94,358 89,007
Long-term debt 104,929 105,565
Other liabilities 50,045 49,735
Non-controlling interests 19,486 18,898
STOCKHOLDERS' EQUITY
Common stock, par value $0.01-authorized
15,000,000 shares, issued 4,607,902
shares 46 46
Additional paid-in capital 19,423 19,423
Retained earnings 56,611 56,920
Equity adjustment from translation (2,149) (1,921)
Minimum pension liability (877) (877)
Less cost of shares in treasury (11,830) (11,830)
-------- --------
61,224 61,761
-------- --------
$ 330,042 $ 324,966
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial
statements.
<PAGE>
<TABLE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
--------- ---------
<S> <C> <C>
Net sales $ 95,513 $ 89,905
Interest and other income 571 1,313
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96,084 91,218
Costs and expenses:
Cost of products sold 66,943 65,169
Selling, general and administrative
expenses 25,559 24,700
Interest 2,519 2,649
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95,021 92,518
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EARNINGS (LOSS) BEFORE
INCOME TAXES (BENEFIT) AND
NON-CONTROLLING INTERESTS 1,063 (1,300)
Income taxes (benefit) 436 (505)
Non-controlling interests (580) 585
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NET EARNINGS (LOSS) $ 47 $ (210)
======= ========
Earnings (loss) per common share $ .01 $ (.06)
======= ========
Dividends declared per common share $ .10 $ .10
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial
statements.
<PAGE>
<TABLE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands of dollars)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
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<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $ 47 $ (210)
Adjustments to reconcile net earnings
(loss) to net cash used by operating
activities:
Depreciation and amortization 3,680 3,239
Accounts and notes receivable (9,912) (10,854)
Inventories (7,753) (4,288)
Prepaid expenses and other current
assets 1,828 782
Accounts payable and accrued expenses (1,311) (9,518)
Non-controlling interests 580 (585)
Other (241) (337)
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NET CASH USED BY OPERATING ACTIVITIES (13,082) (21,771)
INVESTING ACTIVITIES
Investment in property, plant & equipment (3,623) (4,160)
Purchase of short-term investments (18,100)
Maturities of short-term investments 8,900
Business acquisitions (1,680)
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NET CASH USED BY INVESTING ACTIVITIES (12,823) (5,840)
FINANCING ACTIVITIES
Net short-term borrowings 6,750 12,000
Long-term borrowings 15,000
Payment on long-term debt (636) (16,084)
Purchase of treasury shares (371)
Proceeds from exercise of stock options 17
Dividends paid (363) (367)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 5,751 10,195
Effect of foreign exchange 434 487
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DECREASE IN CASH AND CASH EQUIVALENTS (19,720) (16,929)
Cash and cash equivalents at beginning of
period 33,658 39,297
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CASH AND CASH EQUIVALENTS AT END OF
QUARTER $ 13,938 $ 22,368
======= =======
</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 29, 1997
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 29, 1997 are not necessarily indicative
of the results that may be expected for the year ending December
31, 1997. 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, 1996.
Note B - Inventories
- --------------------
Inventory at March 29, 1997 and December 31, 1996 consisted of
the following:
<TABLE>
<CAPTION>
March 29, December 31,
1997 1996
----------- --------------
($000)
<S> <C> <C>
Finished goods $ 63,675 $ 55,356
Work-in-process 9,994 9,315
Raw materials and supplies 14,750 16,387
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$ 88,419 $ 81,058
======= =======
</TABLE>
Note C - Commitments and Contingencies
- --------------------------------------
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
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 29, 1997
Note D - Earnings Per Share
- ---------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 "Earnings Per Share", which simplifies the
calculation of earnings per share and is effective for both
interim and annual periods ending after December 15, 1997. The
Statement is not expected to have a material impact on the
Company's financial statements.
Note E - Reclassifications
- --------------------------
Certain amounts in 1996 have been reclassified to conform to the
1997 presentation.
<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 29, 1997
Results of Operations
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Net sales for the first quarter of 1997 were $95.5 million
compared to $89.9 million for the first quarter of 1996, an
increase of $5.6 million or 6.2%. Congoleum Corporation's
("Congoleum") sales performance in the current first quarter
accounts for the increase over last year with sales at ABI's
Tape and Canadian operations being at the same sales levels as
last year and at K&M Associates L.P. ("K&M") sales were lower
than last year. At Congoleum, the sales increase was due to
generally stronger demand in the residential and manufactured
housing segments than in the first quarter of 1996. Sales to new
customers and earlier shipments of Congoleum's spring season new
product introductions contributed to the sales increase. Lower
sales at K&M reflect a continuation of a very weak retail sales
environment.
Interest and other income decreased in the current quarter to $.6
million from $1.3 million in last year's first quarter. A
combination of factors accounted for this decrease including
lower royalty and other income at Congoleum and K&M and at ABI
foreign exchange conversion losses and lower incentive payments
from Hillside Industries.
Cost of products sold as a percentage of net sales decreased to
70.1% in the current quarter from 72.5% last year and is due
primarily to increased manufacturing efficiency resulting from
higher production volume to support increased sales levels at
Congoleum.
Selling, general and administrative expenses as a percentage of
net sales decreased to 26.8% in the current quarter from 27.5%
last year and is primarily the result of higher sales volume
levels experienced in the current quarter which more than offset
related selling expense increases.
Net income for the first quarter of 1997 was $47,000 compared to
a net loss of $210,000 in last year's first quarter. On a
comparative basis, Congoleum results are profitable compared to a
loss in last year's first quarter, ABI operations are not as
favorable as last year and K&M losses in the current quarter
exceed last year's losses.
<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 29, 1997
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents, including short-term investments,
declined $10.5 million for the three months ended March 29, 1997
to $40.6 million. Working capital was $86.0 million, down from
$86.7 million at year end 1996. The ratio of current assets to
current liabilities at March 29, 1997 was 1.9 and at December 31,
1996 was 2.0. Cash used by operations was $13.1 million for
1997's first quarter and consists mainly of the seasonal increase
in receivables and inventories.
Capital expenditures in the current first quarter were $3.6
million and depreciation and amortization expense was $3.7
million. It is anticipated that total year capital spending will
be in the range of $23 to $25 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 to repurchase $4.7 million
of ABI's Common Stock, $4.9 million of Congoleum's Common Stock
and $7.2 million of Congoleum's 9% senior notes are expected to
be financed from operating activities and borrowings under
existing bank lines of credit which at ABI are presently $34.0
million and at Congoleum are $30.0 million. During 1996, 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 29, 1997
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
-------------------
There were no reports on Form 8-K filed for the three
months ended March 29, 1997.
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.
----------------------
(Registrant)
Date: May 8, 1997 BY: /s/ Gilbert K. Gailius
------------------------
Gilbert K. Gailius
Vice President-Finance
<PAGE>
<TABLE>
FORM 10-Q
PART II. OTHER INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
March 29, 1997
Item 6. Exhibits
- ------------------
(11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Three Months Ended
March 29,
1997
---------
(000's omitted, except per share data)
<S> <C>
Primary:
Average shares outstanding 3,630
Net effect of dilutive
stock options-based on
the treasury stock method
using average market price 113
------
Totals 3,743
======
Net income $ 47
======
Per share amount $ .01
======
Fully diluted:
Average shares outstanding 3,630
Net effect of dilutive
stock options-based on
the treasury stock method
using quarter end price 139
------
Totals 3,769
======
Net income $ 47
======
Per share amount $ .01
======
</TABLE>
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> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 13,938
<SECURITIES> 26,700
<RECEIVABLES> 44,549
<ALLOWANCES> 0
<INVENTORY> 88,419
<CURRENT-ASSETS> 180,407
<PP&E> 112,153
<DEPRECIATION> 0
<TOTAL-ASSETS> 330,042
<CURRENT-LIABILITIES> 94,358
<BONDS> 104,929
0
0
<COMMON> 46
<OTHER-SE> 61,178
<TOTAL-LIABILITY-AND-EQUITY> 330,042
<SALES> 95,513
<TOTAL-REVENUES> 96,084
<CGS> 66,943
<TOTAL-COSTS> 66,943
<OTHER-EXPENSES> 25,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,519
<INCOME-PRETAX> 1,063
<INCOME-TAX> 436
<INCOME-CONTINUING> 47
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
