SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
AMENDMENT NO. 1
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _________________
Commission file number 0-8410
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HOSPOSABLE PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
New York 11-2236837
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(State or other jurisdiction of (I.R.S. Employer
Identification incorporation or organization) No.)
100 Readington Road Somerville, New Jersey 08876
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code 908-707-1800
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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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the latest practicable date.
Class Outstanding at September 30, 1996
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Common Stock, $.01 par Value 1,692,476
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH THREE MONTHS
ENDED SEPTEMBER 30, 1995
Sales for the three months ended September 30, 1996 were $10,533,883 as compared
with $10,096,938 in 1995, an increase of 4.3%. The increase resulted from higher
sales volume in the health care and airlaid wiper segments of the business due
to general business growth. This improved performance was partially offset by
lower sales volume of the airlaid roll goods product line. Selling price
movement did not factor in significantly in the sales change.
Cost of sales for the three months ended September 30, 1996 increased to 83.7%
of sales compared with 81.3% in 1995. The increase was due to several
operational matters including increased overhead spending, unfavorable material
usage and to volume variances associated with reduced activity, principally in
the airlaid roll goods business.
Gross profit decreased to 16.3% in the third quarter of 1996 compared to 18.7%
in 1995. This change is due to the previously mentioned operational issues.
Selling, general and administrative expenses for the third quarter of 1996
totalled $2,219,209 or 21.1% of sales as compared with $1,839,451 or 18.2% of
sales in 1995. This change is principally due to higher professional and
consulting fees, increased research and development spending and employee
separation costs.
Other income and expense resulted in an expense of $34,446 in the third quarter
of 1996 as compared with income of $18,606 in the third quarter of 1995. The
change was primarily due to the lower other income associated with the expiry of
the sales and marketing consulting agreement between the Company and G.H. Wood +
Wyant, Inc.
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The pre-tax loss of $541,178 in 1996 compares to a pre-tax profit of $62,292 in
1995, an unfavorable change of $603,470, which resulted from a reduced gross
profit margin performance in 1996 as well as higher selling, general and
administrative expenses.
The net loss for the three months ended September 30, 1996 amounted to $325,178
compared to net income of $43,036 in 1995. The net loss per share was $.19 in
1996 compared with net income per share of $.03 in 1995. The per share
calculation reflects a weighted average of 1,692,476 shares outstanding in both
1996 and 1995.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1995.
Sales for the nine months ended September 30, 1996 were $31,871,537 as compared
with $30,065,150 in 1995. The increase of $1,806,387 or 6.0% resulted from
general business growth in the health care and airlaid wiper segments of the
business, partially offset by lower sales in the airlaid roll goods product
line. Selling price movement did not factor in significantly into the change.
Cost of sales for the nine months ended September 30, 1996 increased to 83.1% of
sales in 1996 compared with 81.1% in 1995. The increase was due to operational
matters in both the second and third quarters of 1996. Issues include downtime,
unfavorable material usage and production volume variances and unfavorable labor
and overhead spending associated with the installation of machine enhancements.
Gross profit decreased to 16.9% of sales for the nine months ended September 30,
1996 as compared with 18.9% in 1995. The decrease was due to operational matters
in the second and third quarters mentioned above.
Selling, general and administrative expenses for the nine months ended September
30, 1996 amounted to $6,175,297 or 19.4% of sales compared with $5,268,409 or
17.5% of sales in 1995. The increase was due to higher research and development
expenditures as well as higher professional and consulting fees.
Other income and expense resulted in income of $96,021 for the nine months ended
September 30, 1996 compared with $57,898 in 1995. The principal components of
this change were slightly higher interest income and lower interest expense due
to the retirement of debt.
The pre-tax loss incurred for the nine months ended September 30, 1996 amounted
to $681,188 compared to a pre-tax profit of $479,587 in 1995. This unfavorable
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change was principally due to the gross profit shortfall in the second and third
quarters and higher selling, general and administrative expenses.
The net loss for the nine months ended September 30, 1996 amounted to $413,188
compared with net income of $299,087 in 1995. The net loss per share was $.24 in
1996 compared with net income per share of $.18 in 1995. The per share
calculation reflects a weighted average of 1,692,476 shares outstanding in both
1996 and 1995.
LIQUIDITY AND CAPITAL RESOURCES
Trade accounts receivable increased from $5,396,185 at December 31, 1995 to
$6,744,513 at September 30, 1996, a change of $1,348,328 or 25.0%. This change
is primarily due to a concentration of sales in the latter part of the third
quarter of 1996 and some general seasonal related slowness in collections.
Management believes that accounts receivable collections will improve during the
fourth quarter of 1996.
Marketable securities decreased from $1,362,233 at December 31, 1995 to $41,312
at September 30, 1996. This change was due to the sale of marketable securities
to support the working capital needs of the company.
Funds for the Company's current operations are derived from the sale of its
products and the ability, when necessary, to borrow on a secured line of credit
with First Fidelity Bank, N.A., New Jersey. At September 30, 1996, $1,320,000
was utilized by the Company for the short term financing of equipment. Equipment
term financing was subsequently established during October, 1996 and the secured
line of credit was replenished at that time.
The Company believes that it has adequate funds available to conduct and
continue to expand its business and that of its subsidiaries. In addition, the
Company believes that, if necessary, it will be able to make favorable financial
arrangements for any future capital requirements.
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HOSPOSABLE PRODUCTS, INC.
SIGNATURES
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.
HOSPOSABLE PRODUCTS, INC.
(Registrant)
Date: January 14, 1997 SIGNATURE: /c/ Joseph H. Weinkam, Jr.
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Joseph H. Weinkam, Jr.
President and
Chief Operating Officer
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