INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS
FILED
ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDIND 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 LAST 90 DAYS. (X) YES ( )NO
AT MARCH 31, 1995, 390,707 SHARES OF COMMON STOCK OF THE
REGISTRANT WERE OUTSTANDING.
<TABLE>
Results of Operations
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
In thousands, except for share amounts
For the three months ended March
31,
1995 1994
_________
__________
<S> <C>
<C>
NET SALES 7,115,634
6,417,982
COST OF SALES 4,864,367
4,773,890
_________
__________
GROSS PROFIT 2,251,267
1,643,092
SG&A EXPENSES 1,541.1
1,383.0
_________
__________
OPERATING INCOME 710,135
260,137
OTHER INCOME(EXPENSE)
GAIN ON SALE OF ASSETS 374 1,318
INTEREST INCOME 32,796
10,572
INTEREST EXPENSE (20,578)
(17,214)
_________
__________
12,592
(5,324)
EARNINGS BEFORE
INCOME TAXES 722,727
254,813
INCOME TAXES 289,091
101,925
_________
__________
NET EARNINGS 433,636
152,888
RETAINED EARNINGS
AT BEGINNING OF
PERIOD 13,842,541
12,814,772
LESS: CASH DIVIDENDS
($.10 PER SHARE IN 1995
AND $.50 IN 1994) (39,079) 41,177
_________
__________
RETAINED EARNINGS
AT END OF PERIOD 14,237,098
12,926,483
EARNINGS APPLICABLE
TO COMMON STOCK 433,636
152,888
COMMON SHARES
WEIGHTED AVERAGE 390,812
411,523
EARNINGS PER SHARE $1.11 $0.37
CASH DIVIDENDS
DECLARED AND PAID $0.10 $0.10
</TABLE>
Note 1. Net sales were up by 10.9% for the first quarter of 1995
as compared to the same period of 1994.
Note 2. The consolidate financial data as of March 31, 1995 and
1994 and for the three month period ended March 31, 1995 and 1994
includes, in the opinion of management, all adjustments (none of
which were non-recurring) necessary for a fair presentation of such
periods. The consolidated financial data for the three months
ended March 31, 1995 is not necessarily indicative of the results
of operations that might be expected for the entire year ending
December 31, 1995.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
MARCH 31,
DECEMBER 31,
1995 1994
_________
__________
<S> <C>
<C>
CURRENT ASSETS
CASH IN BANKS 2,139,487
3,385,630
ACCOUNTS RECEIVABLE, NET 2,979,416 1,658,266
INVENTORIES
RAW MATERIALS 957,634
763,768
WORK IN PROCESS 42,301
38,740
FINISHED GOODS 2,982,978
2,834,659
REFUNDABLE INCOME TAX 226,523 226,523
PREPAID EXPENSES AND
OTHER CURRENT ASSETS 278,407 237,136
_________
__________
TOTAL CURRENT ASSETS 9,606,746 9,144,722
PROPERTY, PLANT AND
EQUIPMENT 29,557,107
29,406,435
LESS ACCUMULATED
DEPRECIATION 24,199,134
24,064,677
_________
__________
NET PROPERTY PLANT
AND EQUIPMENT 5,357,973
5,341,758
OTHER ASSETS 1,014,554
1,014,554
_________
__________
15,979,273
15,501,034
_________
__________
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31,
December 31,
1995
1994
_________
__________
<S> <C>
<C>
CURRENT LIABILITIES:
CURRENT INSTALLMENT
OF LONG TERM DEBT 150,000 153,591
ACCOUNTS PAYABLE TRADE 649,037 644,995
ACCRUED EXPENSES 778,432
555,346
INCOME TAXES 424,445
588,571
_________
__________
2,001,914
1,942,683
LONG-TERM DEBT,
EXCLUDING CURRENT
INSTALLMENT 737,500
775,000
OTHER LIABILITIES 4,748,995
4,683,370
_________
__________
TOTAL LIABILITIES 7,488,409
7,401,053
STOCKHOLDERS' EQUITY
COMMON STOCK AT $.20
PAR VALUE
AUTHORIZED 1,500,000
SHARES
ISSUED 863,995 SHARES
IN 1995 AND 1994 172,799 172,799
ADDITIONAL PAID IN
CAPITAL 898,036
898,036
RETAINED EARNINGS 14,237,098
13,842,541
__________
__________
15,307,933
14,913,376
LESS: TREASURY STOCK
AT COST, 473,288
SHARES IN 1995 AND
473,039 IN 1994 6,817,069
6,813,395
__________
__________
TOTAL STOCKHOLDERS'
EQUITY 8,490,864
8,099,981
__________
__________
TOTAL 15,979,273
15,501,034
</TABLE>
Note 2. The consolidate financial data as of March 31, 1995 and
1994 and for the three month period ended March 31, 1995 and 1994
includes, in the opinion of management, all adjustments (none of
which were non-recurring) necessary for a fair presentation of such
periods. The consolidated financial data for the three months
ended March 31, 1995 is not necessarily indicative of the results
of operations that might be expected for the entire year ending
December 31, 1995.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR THE THREE MONTHS ENDED MARCH
31,
(UNAUDITED)
1995
1994
_________
__________
<S> <C>
<C>
INCOME TAXES 424,445
588,571
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET EARNINGS 433,636
152,888
ADJUSTMENTS TO RECONCILE
NET EARNINGS TO NET CASH
USED IN OPERATING ACTIVITIES:
DEPRECIATION 134,458
117,831
GAIN ON DISPOSAL OF FIXED
ASSETS 0
(500)
CHANGE IN ASSETS AND
LIABILITIES:
INCREASE IN ACCOUNTS
RECEIVABLE, NET (1,321,150) (862,484)
(INCREASE) DECREASE
IN INVENTORIES (345,746)
400,943
(INCREASE) DECREASE
IN PREPAID EXPENSES
AND OTHER CURRENT
ASSETS (41,271)
193,196
INCREASE IN ACCOUNTS
PAYABLE 4,046
80,473
INCREASE IN ACCRUED
EXPENSES 223,086
178,076
INCREASE IN OTHER
LIABILITIES 65,625
0
INCREASE (DECREASE)
IN ACCRUED
INCOME TAXES (164,306)
10,705
_________
__________
TOTAL ADJUSTMENTS (1,445,262)
118,240
_________
__________
NET CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES (1,011,626)
271,128
CASH FLOWS FROM INVESTING
ACTIVITIES:
PROCEEDS FROM SALE
OF EQUIPMENT 0
500
ADDITIONS TO PLANT
AN EQUIPMENT (150,673)
(78,441)
_________
__________
(150,673)
(77,941)
_________
__________
CASH FLOWS FROM FINANCING
ACTIVITIES:
REPAYMENT OF SHORT-
TERM DEBT (3,591)
0
REPAYMENT OF LONG-
TERM DEBT (37,500)
(47,627)
CASH DIVIDENDS PAID (39,079) (41,177)
PROCEEDS FROM SALE OF
TREASURY STOCK 7,425
0
PURCHASE OF TREASURY
STOCK (11,099)
(15,911)
_________
__________
NET CASH USED IN
FINANCING ACTIVITIES: (83,844) (104,715)
_________
__________
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (1,246,143)
88,472
CASH AND CASH
EQUIVALENTS AS OF
BEGINNING OF PERIOD 3,385,630 2,061,779
_________
__________
CASH AND CASH EQUIVALENTS
AS OF END OF PERIOD 2,139,487 2,061,779
_________
__________
SUPPLEMENTAL INFORMATION:
CASH PAID DURING PERIOD FOR:
INTEREST 20,578
17,214
_________
__________
INCOME TAXES 455,334
93,219
_________
__________
</TABLE>
Form 10-Q
HOMASOTE COMPANY AND SUBSIDIARY
March 31, 1995
NOTE # 1
MANAGEMENT'S ANALYSIS OF MATERIAL CHANGE
BY QUARTER AS NOTED
RESULTS OF OPERATIONS
Net sales for the three month period ended March 31, 1995
were $7,116,634, as compared to $6,416,982 for the three month
period ended March 31, 1994, an increased 10.9%. This increase is
a result of the continuing improvement in the general economy, and
to management's restructuring of the Industrial sales department
into the Millboard sales department. The restructuring removes the
restriction of sales by department, and allows all Company salesmen
and agents to sell all products.
The cost of sales, as a percentage of sales, was 68.4% for
the three month period ended March 31, 1995, as compared to 74.4%
for the three month period ended march 31, 1994. This 6% decrease
in the cost of sales as a percentage of sales from 1994 to 1995 is
attributable to the efficiencies created by increased production
levels brought about by increased demand for Homasote products.
Net earnings before income taxes increased 183.6%, from
$153,000 to $ 434,000, for the three month periods ended March 31,
1995, and 1994. This increase is attributed to a reduced cost
of goods sold, Millboard sales department restructuring and the
economic improvement.
Interest income increased by 210.2% for the three month
period ended March 31, 1995, as compared to the same period ended
March 31, 1994, due to the increasing rate of interest on a greater
amount of assets held for investment. Interest expense increased
by 19.5% for the three month period ended March 31, 1995 as
compared to 1994, due to increasing interest rates.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures for new and improved facilities and
equipment were $151,000 in 1995 and $190,000 in 1994. Capital
expenditures are financed primarily through internally generated
funds and debt, and are expected to be approximately $ 750,000 for
the remaining nine (9) months of 1995. In February 1992,
the Company renegotiated with its bank, short term and long term
lines of credit in the amounts of $1.0 million and $2.5 million
respectively. As of December 31, 1994, the Company had $887,500
outstanding against the long-term line of credit for the purposes
of consolidating existing debt, equipment renovation and other
working capital requirements. The short term line of credit was
retired in February 1993 with a payment in the amount $0.5
Million.
Repayment of borrowing on the $2.5 million line of credit began in
March 1993, with the first of 35 monthly installment payments. The
last in final payment against this long-term line of credit is
due in February 1996. Loans outstanding under this line of credit
are subject to Financial Covenants relating to cash flow, working
capital, net worth and the environment. The bank, at their option,
may remedy default under any of the financial covenants with a
waiver. As of the latest balance sheet date of March 31, 1995,
the Company is in compliance with the loan covenants.
OTHER DEVELOPMENTS
During 1994, demand for wastepaper, the primary raw
material
for Homasote Company products, surpassed the supply for the first
time. This situation is due primarily to demand by new industries
created to handle the volume of wastepaper generated by mandated
municipal recycling, and as a result, effective September 29,
1994, the Company began purchasing wastepaper at current
prevailing market rates.
INFLATION AND ECONOMY
While the economic outlook has improved significantly, as
evidenced by increased demand for Homasote products by the
construction, housing and packaging industries, the Company will
continue to maintain a policy of constantly monitoring such factors
as demand and costs, and adjusting prices as these factors and the
economic condition warrant.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1991, the Financial Accounting Standards Board issued a
statement that will change the method of disclosure and accounting
for financial instruments. FAS No. 107, 'Disclosures about the
Fair Value of Financial Instruments', is effective for financial
statements issued for the fiscal years ending after December 15,
1995. It requires the Company to disclose the fair value of
certain on-and off-balance-sheet financial instruments in the
audited financial statements. Statement 107 is not expected to
have an adverse effect on the operating results of future periods
or on the financial position of the Company.
Part 2
OTHER INFORMATION
March 31, 1995
ITEM 9
EXHIBITS AND REPORTS ON FORM 8-K
(b) REPORTS ON FORM 8-K - THERE ARE NO REPORTS ON
FORM 8-K FILED FOR THE THREE MONTHS ENDED MARCH 31,
1995.
OTHER INFORMATION
ALL OTHER SCHEDULES ARE OMITTED AS THE REQUIRED
INFORMATION
IS INAPPLICABLE AR THE INFORMATION IS PRESENTED IN
THE
CONSOLIDATED FINANCIAL STATEMENTS OR RELATED NOTES.
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 thereto authorized.
HOMASOTE COMPANY
(Registrant)
5/12/95 Neil F Bacon, Treasurer
Date (Chief Financial
Officer)
(Signature)
