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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994 Commission file number 1-7088
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AMERICAN BUSINESS PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-1030529
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(State of Incorporation) (IRS Employer
Identification No)
2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia 30328
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 953-8300
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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 No X
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Common Stock, $2.00 par value 10,683,102 shares
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(Class) (Outstanding at March 31, 1994)
Page 1 of 8
Exhibit Index on Page 6
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PART I
FINANCIAL INFORMATION
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Item 1. Financial Statements
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The Consolidated Balance Sheets of the Company as of March 31, 1994, and
December 31, 1993 and the Consolidated Income Statements of the Company for the
three months ended March 31, 1994, and 1993, are incorporated herein by
reference to the Company's Quarterly Report to Shareholders for the three
months ended March 31, 1994, attached hereto as Exhibit 19. Set forth below
are the Consolidated Statements of Cash Flows of the Company for the three
months ended March 31, 1994, and 1993, along with certain notes to the
financial statements.
AMERICAN BUSINESS PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994, AND 1993 (UNAUDITED)
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<TABLE>
<CAPTION>
1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income from operations $ 3,661,000 $ 4,670,000
Adjustments to reconcile net income to net cash
provided by operating activities -5,284,000 -3,928,000
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Net cash (used) provided by operating activities -1,623,000 742,000
CASH FLOWS USED IN INVESTING ACTIVITIES
(Increase) in annuity contracts -7,467,000
Decrease in cash value of life insurance 1,602,000
Additions to plant and equipment -2,827,000 -3,973,000
Other 2,000 104,000
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Net cash used in investing activities -1,223,000 -11,336,000
CASH FLOWS USED BY FINANCING ACTIVITIES
Dividends paid -2,137,000 -2,004,000
Other -369,000 -297,000
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Net cash used by financing activities -2,506,000 -2,301,000
Net (decrease) in cash and cash equivalents -5,352,000 -12,895,000
Cash and cash equivalents at beginning year 30,151,000 30,024,000
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Cash and cash equivalents at end of period $24,799,000 $17,129,000
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</TABLE>
2
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AMERICAN BUSINESS PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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1. Unaudited Condensed Consolidated Financial Statements
The information contained in these condensed consolidated financial
statements and notes is unaudited, but in the opinion of management,
all adjustments necessary for a fair presentation of such information
have been made. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to
applicable rules and regulations of the Securities and Exchange
Commission. The condensed consolidated financial statements included
herein should be read in conjunction with the audited financial
statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
2. Consolidation Policy
The condensed consolidated financial statements include the accounts
of the Company and its subsidiaries, all of which are wholly-owned.
Intercompany balances and transactions have been eliminated.
3. Net Income Per Share
Net income per common share is based upon the weighted average number
of shares outstanding during each period: 10,682,195 and 10,686,076
for the three month periods ended March 3l, 1994, and March 31, 1993,
respectively.
4. Inventories
Inventories consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
<S> <C> <C>
Products finished or in process $24,449,000 $24,510,000
Raw materials 23,396,000 20,771,000
Supplies 626,000 406,000
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Total $48,471,000 $45,687,000
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</TABLE>
5. The Company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Post-employment Benefits", on January
1, 1994. The cumulative affect of this change on all periods
decreased net income $605,000 or $.06 per share.
3
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Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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1. Liquidity and Capital Resources
The current ratio increased to 2.8 to 1 at March 31, 1994, from 2.6 to
1 at December 31, 1993.
The Company does not anticipate incurring significant additional debt
and internal cash flows should be sufficient to generate funds for
normal operations.
2. Results of Operations
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Sales during the first quarter of 1994 increased by 19.5% over sales
for the same period of 1993. Without sales generated by operations
acquired in late 1993, the Company's revenues would have increased by
approximately 3% over the same period in 1993, resulting principally
from an increase in unit sales.
Cost of goods sold as percentage of sales increased to 70.2% in 1994
from 69.4% in 1993 principally as a result of increased price competition
in the Company's major markets. Selling and administrative expenses
decreased to 23.3% of sales in 1994 compared to 23.9% in 1993 as a result
of the Company's continuing efforts to control expenses. Interest expense
increased to 1.7% of sales in 1994 from 1.1% in 1993 as a result of
incurring additional debt to finance two acquisitions in late 1993.
The effective income tax rate for the first quarter of 1994 increased to
39.3% compared to 34.3% in 1993 as a result of several factors including an
increase in the federal statutory rate, decreased levels of non-taxable
income and increased provisions for state income taxes.
4
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PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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a. Exhibits attached hereto:
Number Description
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19 Quarterly Report to Shareholders
for the three months ended March 31, 1994.
b. Reports on Form 8-K.
None
SIGNATURES
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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 BUSINESS PRODUCTS, INC.
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(Registrant)
DATE: May 13, 1994 /S/ W. C. Downer
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W. C. Downer, Vice President-Finance
(Chief Financial and Accounting
Officer and Duly Authorized Officer)
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AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF EXHIBITS
Number Description
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19 Quarterly Report to Shareholders
for the three months ended March 31, 1994
6
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EXHIBIT 19
(LOGO)
AMERICAN
BUSINESS
PRODUCTS
INC.
QUARTERLY REPORT TO SHAREHOLDERS
3 MONTHS ENDED MARCH 31, 1994
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AMERICAN BUSINESS PRODUCTS, INC.
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[LOGO]
TO OUR SHAREHOLDERS:
Sales advanced to a new record for the first quarter while a combination of
factors contributed to lower earnings. Even so, the quarterly earnings have been
exceeded only once in a first quarter in the history of the Company.
The increase of 19.5% in our sales set an all-time high at $140.7 million.
Income before the effect of mandated accounting charges (FASB 112) was $4.3
million or $.40 per share compared with $4.7 million or $.44 per share for the
first quarter last year. After giving effect to the non-cash charge, net income
was $3.7 million or $.34 per share. This one-time accounting charge must be
taken in 1994 by all companies providing post-employment benefits.
Factors affecting profits included severe weather in the East and Midwest
combined with the California earthquake, disrupting production at 23 of our 41
production facilities and resulting in unusual labor costs to fulfill customer
service commitments. Other factors were strong pricing competition for some
product lines and a higher federal tax rate. With more normal conditions and
moderate growth in the economy, we expect a good year.
At the annual meeting of shareholders yesterday, four directors were elected to
new three-year terms; Duane Ackerman, John Aderhold, Thomas Keller and Marvin
Schmalzried. Following a succession plan announced last December, W. J. Biggers
retired as Chairman of the Board; CEO, Thomas R. Carmody was elected to that
position; and Chief Operating Officer, Robert W. Gundeck was promoted from
Executive Vice President to President of the Company.
The Directors approved a regular quarterly dividend of $.20 per share payable
June 15 to shareholders of record June 1.
<TABLE>
<S> <C>
Thomas R. Carmody Robert W. Gundeck
Chairman and President and
Chief Executive Officer Chief Operating Officer
</TABLE>
<TABLE>
<CAPTION>
April 28, 1994
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FINANCIAL HIGHLIGHTS FIRST QUARTER
PERIOD ENDED MARCH 31 1994 1993
<S> <C> <C>
Net sales $140,715,000 $117,749,000
Net income 3,661,000 4,670,000
Net income per common share .34 .44
Dividends per common share .20 .1875
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</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENTS
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1994 1993
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<S> <C> <C>
QUARTER ENDED MARCH 31
Net Sales.................................................. $140,715,000 $117,749,000
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Cost of Goods Sold......................................... 98,790,000 81,753,000
Selling and Administrative Expenses........................ 32,773,000 28,092,000
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131,563,000 109,845,000
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Operating Income........................................... 9,152,000 7,904,000
Other Income (Expense)
Interest expense......................................... (2,366,000) (1,264,000)
Miscellaneous -- net..................................... 237,000 465,000
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Income Before Income Taxes and Cumulative Effect of Changes
in Accounting Principles................................. 7,023,000 7,105,000
Provision for Income Taxes................................. 2,757,000 2,435,000
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Income Before Cumulative Effect of Changes in Accounting
Principles............................................... 4,266,000 4,670,000
Cumulative Effect of Changes In Accounting Principles...... (605,000)
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Net Income................................................. $ 3,661,000 $ 4,670,000
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Per Common Share:
Income Before Cumulative Effect of Changes in Accounting
Principles............................................ $ .40 $ .44
Net Income............................................... .34 .44
Dividends Per Common Share................................. .20 .1875
Average Number of Common Shares Outstanding................ 10,682,195 10,686,076
(Unaudited)
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</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
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MARCH 31, DECEMBER 31,
1994 1993
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<S> <C> <C>
Current Assets
Cash and cash equivalents............................... $ 24,799,000 $ 30,151,000
Accounts receivable, less allowances of $2,277,000 and
$2,218,000........................................... 68,872,000 65,000,000
Inventories............................................. 48,471,000 45,687,000
Other................................................... 809,000 930,000
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Total Current Assets............................ 142,951,000 141,768,000
Plant And Equipment -- At Cost
Land.................................................... 5,940,000 5,940,000
Buildings and improvements.............................. 48,603,000 48,475,000
Machinery and equipment................................. 124,136,000 121,805,000
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178,679,000 176,220,000
Less accumulated depreciation........................... 85,292,000 81,772,000
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93,387,000 94,448,000
Intangible Assets From Acquisitions
Goodwill, less amortization of $1,872,000 and
$1,651,000........................................... 32,245,000 31,634,000
Other, less amortization of $3,398,000 and $3,173,000... 3,049,000 3,274,000
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35,294,000 34,908,000
Deferred Income Taxes..................................... 8,263,000 7,963,000
Other Assets.............................................. 21,565,000 23,105,000
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$301,460,000 $302,192,000
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Current Liabilities
Accounts payable........................................ $ 34,510,000 $ 36,241,000
Salaries and wages...................................... 8,534,000 8,530,000
Profit sharing contributions............................ 1,196,000 4,106,000
Income taxes............................................ 1,299,000 200,000
Current maturities of long-term debt.................... 6,253,000 6,253,000
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Total Current Liabilities....................... 51,792,000 55,330,000
Long-Term Debt And Capital Leases......................... 85,202,000 85,580,000
Supplemental Retirement Benefits.......................... 13,552,000 12,880,000
Postretirement Benefits................................... 22,289,000 21,309,000
Stockholders' Equity
Common stock -- $2 par value; authorized 50,000,000
shares, issued 10,774,484 shares..................... 21,549,000 21,549,000
Retained earnings....................................... 109,246,000 107,728,000
Foreign currency translation adjustment................. (433,000) (433,000)
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130,362,000 128,844,000
Less 91,382 and 92,391 shares of Common Stock in
treasury -- at cost.................................. 1,737,000 1,751,000
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128,625,000 127,093,000
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$301,460,000 $302,192,000
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(Unaudited)
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</TABLE>
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ABP SHAREHOLDER INFORMATION
ABP has a Dividend Reinvestment Plan which is open to all shareholders of ABP
common stock. This Plan allows the reinvestment of dividends on a regular
quarterly basis and accepts optional cash investments from $10 to $1,000 per
month. If you would like more information on this program, you can write to
Diana Coursey, Investor Relations, American Business Products, Inc., P.O. Box
105684, Atlanta, Georgia 30348.
If you have a change of address, need to transfer shares or have other questions
regarding your current ABP holdings you can contact Wachovia Bank of North
Carolina, P.O. Box 3001, Winston-Salem, NC 27102-3001 or call 1 (800) 633-4236.
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(LOGO) AMERICAN BUSINESS PRODUCTS, INC.
2100 RIVEREDGE PARKWAY
SUITE 1200
ATLANTA, GA. 30328
404-953-8300
MAILING ADDRESS:
P.O. BOX 105684
ATLANTA, GA. 30348
