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 April 4, 1998 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 02481-2097
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 781-237-6655
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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, 1998
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Common Stock 3,638,528 shares
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In thousands of dollars)
April 4, December 31,
1998 1997
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 10,000 $ 19,306
Short-term investments 9,200 7,900
Accounts receivable, net 47,849 30,254
Inventories 77,249 74,355
Prepaid expenses & other current assets 7,659 9,187
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TOTAL CURRENT ASSETS 151,957 141,002
Goodwill, net 23,149 23,421
Deferred income taxes 2,636 2,636
Other assets 12,044 12,171
Property, plant and equipment, net 119,870 120,456
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$ 309,656 $ 299,686
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 10,300 $ 5,500
Accounts payable 22,651 19,060
Accrued expenses 49,143 47,769
Current portion of long-term debt 4,156 1,156
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TOTAL CURRENT LIABILITIES 86,250 73,485
Long-term debt 89,097 93,253
Other liabilities 51,324 51,271
Non-controlling interests 16,564 16,332
STOCKHOLDERS' EQUITY
Common stock, par value $0.01-authorized
15,000,000 shares, issued 4,607,902 shares 46 46
Additional paid-in capital 19,423 19,423
Retained earnings 61,885 60,924
Equity adjustment from translation (2,657) (2,759)
Minimum pension liability (546) (546)
Less cost of shares in treasury (11,730) (11,743)
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66,421 65,345
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$ 309,656 $ 299,686
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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)
Three Months Ended
April 4, March 29,
1998 1997
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Net sales $ 106,388 $ 95,513
Interest and other income 248 571
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106,636 96,084
Costs and expenses:
Cost of products sold 74,810 66,943
Selling, general and administrative
expenses 27,192 25,559
Interest 2,115 2,519
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104,117 95,021
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EARNINGS BEFORE INCOME TAXES
AND NON-CONTROLLING INTERESTS 2,519 1,063
Income taxes 961 436
Non-controlling interests (233) (580)
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NET EARNINGS $ 1,325 $ 47
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Earnings per share:
Basic $ .36 $ .01
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Diluted $ .35 $ .01
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Dividends declared per common share $ .10 $ .10
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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)
(In thousands of dollars)
Three Months Ended
April 4, March 29,
1998 1997
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OPERATING ACTIVITIES
Net earnings $ 1,325 $ 47
Adjustments to reconcile net earnings to
net cash used by operating activities:
Depreciation and amortization 3,812 3,680
Accounts and notes receivable (17,625) (10,504)
Inventories (2,947) (7,753)
Prepaid expenses and other current assets 1,515 2,420
Accounts payable and accrued expenses 4,782 (1,311)
Non-controlling interests 233 580
Other 215 (241)
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NET CASH USED BY OPERATING ACTIVITIES (8,690) (13,082)
INVESTING ACTIVITIES
Investment in property, plant & equipment (2,784) (3,623)
Purchase of short-term investments (9,200) (18,100)
Maturities of short-term investments 7,900 8,900
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NET CASH USED BY INVESTING ACTIVITIES (4,084) (12,823)
FINANCING ACTIVITIES
Net short-term borrowings 4,800 6,750
Payments on long-term debt (1,156) (636)
Proceeds from exercise of stock options 13
Dividends paid (364) (363)
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NET CASH PROVIDED BY FINANCING
ACTIVITIES 3,293 5,751
Effect of foreign exchange 175 434
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DECREASE IN CASH AND CASH EQUIVALENTS (9,306) (19,720)
Cash and cash equivalents at beginning
of period 19,306 33,658
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CASH AND CASH EQUIVALENTS AT END OF
QUARTER $ 10,000 $ 13,938
======= =======
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
April 4, 1998
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 April 4,
1998 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1998. 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, 1997.
Note B - Inventories
Inventory at April 4, 1998 and December 31, 1997 consisted of the following:
April 4, December 31,
1998 1997
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($000)
Finished goods $ 54,217 $ 53,139
Work-in-process 10,994 9,422
Raw materials and supplies 12,038 11,794
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$ 77,249 $ 74,355
======== =======
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
April 4, 1998
Note D - Comprehensive Income
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires foreign currency translation adjustments, which
prior to adoption were reported separately in shareholders' equity, to be
included in other comprehensive income.
During the first quarter of 1998 and 1997, total comprehensive income (loss)
amounted to $1,427 and $(181).
Note E - Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share for the three months ended April 4, 1998 and March 29, 1997: (in
thousands, except per share amounts)
Three Months Ended
April 4, March 29,
1998 1997
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Numerator:
Net income $ 1,325 $ 47
====== ======
Denominator:
Denominator for basic earnings per share:
Weighted-average shares 3,637 3,630
Denominator for diluted earnings
per share:
Dilutive employee stock options 176 113
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Weighted-average shares and
assumed conversions 3,813 3,743
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Basic earnings per share $ .36 $ .01
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Diluted earnings per share $ .35 $ .01
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Note F - Reclassifications
For comparative purposes, certain prior years' amounts have been reclassified to
conform to the current year 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
April 4, 1998
Results of Operations
Net sales for the first quarter of 1998 were $106.4 million compared to $95.5
million for the first quarter of 1997, an increase of $10.9 million or 11.4%.
More than half of this sales increase was achieved by K&M Associates L.P.
("K&M") from sales to a major customer. K&M began servicing 1,700 additional
stores to this customer in the middle of 1997. Sales for 1998 at all other
locations were higher than in 1997.
Interest and other income decreased in the current quarter to $.2 million from
$.6 million in last year's first quarter. The primary cause of this decrease in
1998 is lower interest income at Congoleum Corporation ("Congoleum") from having
a reduced amount of free cash to invest during the quarter.
Cost of products sold as a percentage of sales remained unchanged at 70.3% in
the current quarter compared to 70.1% during the first quarter of 1997.
Selling, general and administrative expenses as a percentage of net sales
decreased to 25.6% in the current quarter from 26.8% 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 1998 was $1,325,000 compared to $47,000 in
last year's first quarter. All businesses of the Company were profitable during
the current quarter, particularly K&M where operations were profitable in the
current quarter compared to last year when they experienced a significant loss
during the 1997 quarter. Congoleum and the Tape Business generated slightly
lower profits than in 1997.
Liquidity and Capital Resources
Cash and cash equivalents, including short-term investments, declined $8.0
million for the three months ended April 4, 1998 to $19.2 million. Working
capital was $65.7 million, down from $67.5 million at year end 1997. The ratio
of current assets to current liabilities at April 4, 1998 was 1.8 and at
December 31, 1997 was 1.9. Cash used by operations was $8.7 million for 1998's
first quarter and consists mainly of the seasonal increase in receivables and
inventory.
Capital expenditures in the current first quarter were $2.8 million and
depreciation and amortization expense was $3.8 million. It is anticipated that
total year capital spending will be in the range of $22 to $26 million.
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
MANAGEMENTS' DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
April 4, 1998
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
million of Congoleum's Common Stock and $6.6 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 $24.0 million and at
Congoleum are $30.0 million.
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
AMERICAN BILTRITE INC. AND SUBSIDIARIES
April 4, 1998
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended April
4, 1998.
SIGNATURE
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 11, 1998 BY: /s/ Gilbert K. Gailius
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Gilbert K. Gailius
Vice President-Finance
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<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Apr-04-1998
<CASH> 10,000
<SECURITIES> 9,200
<RECEIVABLES> 47,849
<ALLOWANCES> 0
<INVENTORY> 77,249
<CURRENT-ASSETS> 151,957
<PP&E> 119,870
<DEPRECIATION> 0
<TOTAL-ASSETS> 309,656
<CURRENT-LIABILITIES> 86,250
<BONDS> 0
0
0
<COMMON> 46
<OTHER-SE> 66,375
<TOTAL-LIABILITY-AND-EQUITY> 309,656
<SALES> 106,388
<TOTAL-REVENUES> 106,636
<CGS> 74,810
<TOTAL-COSTS> 104,117
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,115
<INCOME-PRETAX> 2,519
<INCOME-TAX> 961
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,325
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
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