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 JUNE 30, 1995, 384,285 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 For the six months
ended ended
June 30, June 30,
1995 1994
--------- --------- ---------- ----------<S>
<C> <C> <C> <C>
NET SALES 6,328,621 6,700,519 13,444,255 13,117,501
COST OF SALES 4,707,028 5,003,448 9,571,394 9,777,339
--------- --------- ---------- ----------
GROSS PROFIT 1,621,593 1,697,071 3,872,861 3,340,162
SG&A EXPENSES 1,446,120 1,539,942 2,987,252 2,922,897
--------- --------- ---------- ----------
OPERATING INCOME 175,473 157,129 885,609 417,265
OTHER INCOME(EXPENSE)
GAIN ON SALE
OF ASSETS 1,303 1,758 1,677 3,074
INTEREST INCOME 45,382 15,586 78,178 26,160
INTEREST EXPENSE (20,170) (19,101) (40,748) (36,135)
--------- --------- ---------- ----------
26,515 (1,757) 39,107 (7,081)
EARNINGS BEFORE
INCOME TAXES 201,988 155,372 924,716 410,184
INCOME TAXES 80,796 62,149 369,886 164,074
--------- --------- ---------- ----------
NET EARNINGS 121,192 93,223 554,830 246,110
RETAINED EARNINGS
AT BEGINNING OF
PERIOD 14,237,100 12,926,482 13,842,541 12,814,772
LESS: CASH
DIVIDENDS PAID (46,114) (39,621) (85,193) (80,798)
---------- ---------- ---------- ----------
RETAINED EARNINGS
AT END OF PERIOD 14,312,178 12,980,084 14,312,178 12,980,084
---------- ---------- ---------- ----------
EARNINGS APPLICABLE
TO COMMON STOCK 121,192 93,223 554,830 246,110
COMMON SHARES
WEIGHTED AVERAGE 386,165 400,066 388,172 405,128
402,313
EARNINGS PER SHARE 0.31 0.23 1.43 .61
CASH DIVIDENDS PER SHARE
DECLARED AND PAID 0.12 0.10 0.22 0.20
</TABLE>
Note 1. Net sales were down by 5.5% for the third quarter of 1995
as compared to the same period of 1994.
Note 2. The consolidated financial data as of June 30, 1995 and
1994 and for the three and six month periods ended June 30, 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 six months ended June 30, 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
June 30, December 31,
1995 1994
------------ -----------
<S> <C> <C>
CURRENT ASSETS
CASH IN BANKS 1,359,414 3,385,630
ACCOUNTS RECEIVABLE, NET 2,679,464 1,658,266
INVENTORIES
RAW MATERIALS 1,182,762 763,768
WORK IN PROCESS 69,349 38,740
FINISHED GOODS 2,641,434 2,834,659
PREPAID AND DEFERRED
INCOME TAXES 585,784 226,523
PREPAID EXPENSES AND
OTHER ASSETS 514,575 237,136
------------ -----------
TOTAL CURRENT ASSETS 9,032,782 9,144,722
------------ -----------PROPERTY AND
EQUIPMENT 29,965,525 29,406,435
LESS ACCUMULATED
DEPRECIATION 24,303,000 24,064,677
------------ -----------
NET PROPERTY AND
EQUIPMENT 5,662,525 5,341,758
OTHER ASSETS 1,014,554 1,014,554
------------ -----------
15,709,861 15,501,034
------------ -----------
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS EQUITY
June 30, December 31,
1995 1994
------------ -----------
<S> <C> <C>
CURRENT LIABILITIES
CURRENT INSTALLMENT OF
LONG-TERM DEBT 150,000 153,591
ACCOUNTS PAYABLE TRADE 809,852 644,995
ACCRUED EXPENSES 776,085 555,346
INCOME TAXES - 588,751
------------ -----------
1,735,937 1,942,683
LONG-TERM DEBT,
EXCLUDING CURRENT
INSTALLMENT 700,000 775,000
OTHER LIABILITIES 4,814,620 4,683,370
------------ -----------
TOTAL LIABILITIES 7,250,557 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 14,312,178 13,842,541
------------ -----------
15,383,013 14,913,376
LESS TREASURY STOCK AT COST,
479,710 SHARES IN 1995 AND
473,039 SHARES IN 1994 6,923,709 6,813,395
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 8,459,304 8,099,981
TOTAL 15,709,861 15,501,034
</TABLE>
Note 2. The consolidated financial data as of June 30, 1995 and
1994 and for the three and six-month periods ended June 30, 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 six months ended June 30, 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 JUNE 30,
(UNAUDITED)
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FOR OPERATING
ACTIVITIES:
NET EARNINGS 554,830 246,110
ADJUSTMENTS TO RECONCILE
NET EARNINGS TO NET
CASH USED IN OPERATING
ACTIVITIES:
DEPRECIATION 268,957 237,153
GAIN ON DISPOSAL OF FIXED
ASSETS (1,000) (500)
CHANGES IN ASSETS AND
LIABILITIES:
INCREASE IN ACCOUNTS
RECEIVABLE, NET (1,021,198) (612,242)
(INCREASE) DECREASE IN
INVENTORIES (269,579) 782,769
INCREASE IN PREPAID
AND DEFERRED INCOME TAXES (359,261) (94,263)
INCREASE IN PREPAID AND
OTHER CURRENT ASSETS (277,439) (74,724)
INCREASE (DECREASE) IN
ACCOUNTS PAYABLE 164,857 (325,545)
INCREASE IN ACCRUED EXPENSES 220,739 541,905
INCREASE IN OTHER LIABILITIES 131,250 -
DECREASE IN ACCRUED INCOME
TAXES (588,751) (33,384)
------------ -----------
TOTAL ADJUSTMENTS (1,718,224) 421,169
------------ -----------
NET CASH PROVIDED BY (USED)
IN OPERATING ACTIVITIES (1,163,394) 667,279
------------ -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
PROCEEDS FROM SALES OF
EQUIPMENT 1,000 500
ADDITIONS TO PLANT AND
EQUIPMENT (589,725) (96,296)
------------ -----------
NET CASH USED IN OPERATING
ACTIVITIES (588,725) (95,796)
------------ -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
REPAYMENT OF SHORT-
TERM DEBT (3,591) -
REPAYMENT OF LONG-
TERM DEBT (75,000) (95,407)
CASH DIVIDENDS PAID (85,193) (80,798)
PROCEEDS FROM SALE OF
TREASURY STOCK 2,975 3,000
PURCHASE OF TREASURY
STOCK (113,289) (243,049)
------------ -----------
NET CASH USED IN
FINANCING ACTIVITIES: (274,098) (416,254)
------------ -----------
NET INCREASE (DECREASE)
IN CASH AND CASH (2,026,217) 155,229
EQUIVALENTS AS OF
BEGINNING OF PERIOD 3,385,560 2,061,779
------------ -----------
CASH AND CASH EQUIVALENTS
AS OF END OF PERIOD 1,359,413 2,217,008
------------ -----------
SUPPLEMENTAL INFORMATION:
CASH PAID DURING PERIOD FOR:
INTEREST 40,748 36,315
------------ -----------
INCOME TAXES 911,864 295,719
------------ -----------
</TABLE>
FORM 10-Q
HOMASOTE COMPANY AND SUBSIDIARY
JUNE 30, 1995
NOTE # 1
MANAGEMENT'S ANALYSIS OF MATERIAL CHANGE
BY QUARTER AS NOTED
RESULTS OF OPERATIONS
Net sales increased by 2.5% for six-month period ended June
30, 1995 as compared to June 30, 1994, and decreased 5.5% for the
three-month period ended June 30, 1995, as compared to the same
period ended June 30, 1994. these changes are due to a slowing
down of the economy and a resultant decrease in demand for Homasote
products in the three-month period ended June 30, 1995, as compared
to the three-month period ended March 31, 1995.
The cost of sales, as a percentage of sales, was 74.4% and
71.2%, respectively for the three and six-month periods ended June
30, 1995, as compared to 74.7% and 74.5%, respectively for the
three and six-month periods ended June 30, 1994. This 3% decrease
in the cost of sales as a percentage of the three-month period
ended March 31, 1995 is attributable to the efficiencies created by
increased production levels brought about by increasing demand for
Homasote products during the first quarter of 1995. Demand for
Homasote products slowed during the second quarter of 1995,
decreasing net sales and slowing production levels.
Net earnings increased 30.0% from $93,223 to $121,192
respectively, for the three month periods ended June 30, 1995 and
1994, and 125.44% from $246,110 to $554,830 respectively, for the
six month periods ended June 30, 1995 and 1994. This increase in
net earnings is attributed to a reduced cost of goods sold,
Millboard sales department restructuring and the economic
improvement.
Interest income increased by 191.2% and 198.9% respectively,
for the three and six month periods ended June 30, 1995, as
compared to the same periods ended June 30, 1994. These increases
are increased by 5.6% and 12.2% respectively for the three and six
month periods ended June 30, 1995, as compared to 1994, due to
increasing interest rates on a reduced balance of outstanding debt.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures for new and improved facilities and
equipment was $590,000 in 1995 and $190,000 in 1994. Capital
expenditures are financed primarily through internally generated
funds and debt, and are expected to be approximately $500,000 for
the remaining six (6) 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 June 30, 1995, the Company had $850,000
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 of $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 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, financial covenants with a waiver. As of the
latest balance sheets date of June 30, 1995, the Company os in
compliance with the load covenants.
On June 23, 1995, the Company made a short-term loan to Warren
L. Flicker, President and COO of Homasote Company in the amount of
$656,000, for the purpose of purchasing principal residence and
obtaining a mortgage. Interest is due monthly, at a rate of 6% or
at the federal short-term lending rate, whichever is greater, with
the entire amount of the loan is due in full 90 days. As of the
latest balance sheet date of June 30, 1995, the entire balance of
$656,000 was outstanding. The effect of this transaction as well
as that of the normal business operation is reflected in the
reduction in cash of $2.0 million and the increase in accounts
receivable of $1.0 million, from December 31, 1994 to June 30,
1995.
OTHER DEVELOPMENTS
During 1994, demand for wastepaper, the primary raw material
for the Companys' 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 a result, effective the third quarter of
1994, the Company began purchasing wastepaper at current prevailing
market rates.
INFLATION AND THE ECONOMY
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
JUNE 30, 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 SIX MONTHS ENDED FOR JUNE 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,359
<SECURITIES> 0
<RECEIVABLES> 2,679
<ALLOWANCES> 30
<INVENTORY> 3,894
<CURRENT-ASSETS> 9,033
<PP&E> 29,966
<DEPRECIATION> 243039
<TOTAL-ASSETS> 15,710
<CURRENT-LIABILITIES> 1,736
<BONDS> 0
<COMMON> 388
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,710
<SALES> 13,444
<TOTAL-REVENUES> 13,524
<CGS> 9,571
<TOTAL-COSTS> 2,987
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 925
<INCOME-TAX> 370
<INCOME-CONTINUING> 555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 555
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.43
</TABLE>
