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 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. (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 6,416,982
COST OF SALES 4,864,367 4,773,890
--------- ---------
GROSS PROFIT 2,251,267 1,643,092
SG&A EXPENSES 1,541,132 1,382,955
--------- ---------
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 PAID
($.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 380,812 411,523
EARNINGS PER SHARE 1.11 0.37
CASH DIVIDENDS PER SHARE
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 consolidated financial data as of March 31, 1995 and
1994 and for the three month periods 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
PREPAID AND DEFERRED
INCOME TAXES 226,523 226,523
PREPAID EXPENSES AND
OTHER ASSETS 278,407 237,136
------------ -----------
TOTAL CURRENT ASSETS 9,606,746 9,144,722
------------ -----------PROPERTY AND
EQUIPMENT 29,557,107 29,406,435
LESS ACCUMULATED
DEPRECIATION 24,199,134 24,064,677
------------ -----------
NET PROPERTY 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 424,445 588,751
------------ -----------
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 SHARES 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 consolidated financial data as of March 31, 1995 and
1994 and for the three periods 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 STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FOR 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 - (500)
CHANGES 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 4,042 80,473
INCREASE IN ACCRUED EXPENSES 233,086 178,076
INCREASE IN OTHER LIABILITIES 65,625 -
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 SALES OF
EQUIPMENT - 500
ADDITIONS TO PLANT AND
EQUIPMENT (150,673) (78,441)
------------ -----------
NET CASH USED IN OPERATING
ACTIVITIES (150,673) (77,941)
------------ -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
REPAYMENT OF SHORT-
TERM DEBT (3,591) -
REPAYMENT OF LONG-
TERM DEBT (37,500) (47,627)
CASH DIVIDENDS PAID (39,079) (41,177)
PROCEEDS FROM SALE OF
TREASURY STOCK 7,425 -
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 (1,246,143) 88,472
EQUIVALENTS AS OF
BEGINNING OF PERIOD 3,385,630 2,061,779
------------ -----------
CASH AND CASH EQUIVALENTS
AS OF END OF PERIOD 2,139,487 2,150,251
------------ -----------
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 increase of 10.9%. This increase is a
result of the continuing improvement in the general economy, and to
the restructuring of the Industrial sales department into the
Millboard sales department. The restructuring removes restrictions
on sales by departments, 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 was $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 March 31, 1995, the Company had $887,500
outstanding against the long-term line of credit for the purposes
of consolidating 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 of $0.5 million.
Repayment of the borrowing on the $2.5 million line of credit began
in March 1993, with the first of 35 monthly installment payments.
The final payment against this long-term line of credit is due in
February 1996. Loans outstanding under the 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 the Companys' products, surpassed 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 THE ECONOMY
While the economic outlook has improved significantly, as
evidenced by increased demand for the Companys' 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 those 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 Market 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 NINE MONTHS ENDED FOR MARCH 30,1995.
OTHER INFORMATION
ALL OTHER SCHEDULES ARE OMITTED, AS THE REQUIRED
INFORMATION IS INAPPLICABLE OR THE INFORMATION IS
PRESENTED IN THE CONSOLIDATED FINANCIAL STATEMENTS OR
RELATED NOTES.
Pursuant of 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)
2/02/96 Neil F Bacon, Treasurer
Date (Chief Financial Officer)
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,139
<SECURITIES> 0
<RECEIVABLES> 2,979
<ALLOWANCES> 60
<INVENTORY> 3,983
<CURRENT-ASSETS> 9,607
<PP&E> 29,557
<DEPRECIATION> 24,199
<TOTAL-ASSETS> 15,979
<CURRENT-LIABILITIES> 2,002
<BONDS> 0
<COMMON> 391
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,979
<SALES> 7,116
<TOTAL-REVENUES> 7,149
<CGS> 4,864
<TOTAL-COSTS> 1,541
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 723
<INCOME-TAX> 289
<INCOME-CONTINUING> 434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 434
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
</TABLE>
