<PAGE>
<PAGE> 1
Page 1 of 13 Pages
Exhibit Index
at Page 12
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 27, 1994
-------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8044
-------------------------
HUNT MANUFACTURING CO.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 21-0481254
- --------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
230 South Broad Street, Philadelphia, PA 19102
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone no., including area code (215) 732-7700
--------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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
------- -------
As of April 5, 1994 there were outstanding 16,129,768 shares of the
registrant's common stock.
<PAGE>
<PAGE> 2
HUNT MANUFACTURING CO.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
---------------------
Item 1 - Financial Statements
--------------------
Condensed Consolidated Balance Sheets as of
February 27, 1994 and November 28, 1993 3
Condensed Consolidated Statements of Income -
Three Months Ended February 27, 1994 and
February 28, 1993 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended February 27, 1994 and
February 28, 1993 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
---------------------------------------------
PART II - OTHER INFORMATION
-----------------
Item 6 - Exhibits and Reports on Form 8-K 10
--------------------------------
Signatures 11
----------
Exhibit Index 12
-------------
Exhibit 11 - Computation of Per Share Earnings 13
----------------------------------------------
<PAGE>
<PAGE> 3
Part I - FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
HUNT MANUFACTURING CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
February 27, November 28,
1994 1993
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,034 $ 10,778
Accounts receivable, less allowance for doubtful
accounts: 1994, $2,763; 1993, $2,643 37,291 39,472
Inventories:
Raw materials 10,609 9,577
Work in proces 5,944 5,289
Finished goods 15,817 13,094
-------- --------
Total inventories 32,370 27,960
Deferred income taxes 3,901 -
Prepaid expenses and other current assets 1,852 2,632
-------- --------
Total current assets 83,448 80,842
Property, plant and equipment, at cost, less
accumulated depreciation and amortization:
1994, $43,908; 1993, $42,333 46,946 46,617
Intangible assets, net 26,591 27,019
Other assets 2,013 1,839
-------- --------
Total assets $158,998 $156,317
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilites:
Current portion of long-term debt $ 3,158 $ 3,158
Accounts payable 9,474 11,060
Accrued expenses:
Salaries, wages and commissions 6,628 8,412
Income taxes 5,943 4,992
Other 5,935 6,092
-------- --------
Total current liabilites 31,138 33,714
Long-term debt, less current porton 2,768 3,003
Deferred income taxes 4,336 1,230
Other non-current liabilites 1,793 2,103
-------- --------
Total liabilites 40,035 40,050
-------- --------
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000
shares (including 50,000 shares of Series A Junior
Participating Preferred); none issued - -
Common stock, $.10 par value, 20,000,000 shares
authorized; issued: 1994 - 16,128,580 shares;
1993 - 16,125,321 shares 1,613 1,613
Capital in excess of par value 6,208 6,158
Cumulatve translation adjustment (1,424) (1,495)
Retained earnings 112,566 110,290
-------- --------
118,963 116,566
Less cost of treasury stock:
1994 - 0 shares; 1993 - 18,634 shares - (299)
-------- --------
Total stockholders' equity 118,963 116,267
-------- --------
Total liabilites and stockholders' equity $158,998 $156,317
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 4
HUNT MANUFACTURING CO.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended
-----------------------------
February 27, February 28,
1994 1993
------------- -------------
<S> <C> <C>
Net sales $64,550 $57,117
Cost of sales 39,395 34,652
---------- ----------
Gross profit 25,155 22,465
Selling and shipping expenses 13,362 12,356
Administrative and general expenses 6,867 5,944
---------- ----------
Income from operations 4,926 4,165
Interest expense 71 118
Other expense, net 50 26
---------- ----------
Income before income taxes and cumulative
effect of accounting change 4,805 4,021
Provision for income taxes 1,802 1,488
---------- ----------
Income before cumulative effect of
accounting change 3,003 2,533
Cumulative effect of change in
accounting for income taxes 795 -
---------- ----------
Net income $ 3,798 $ 2,533
========== ==========
Average shares of common stock outstanding 16,114 16,098
========== ==========
Earnings per common share:
Income before cumulative effect of
accounting change $ .19 $ .16
Cumulative effect of change in accounting
for income taxes .05 -
---------- ----------
Net income per share $ .24 $ .16
========== ==========
Dividends per common share $ .09 $ .0875
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 5
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
February 27, February 28,
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,798 $ 2,533
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,215 1,975
Cumulative effect of change in accounting
for income taxes (795) -
Loss on disposals of property, plant and equipment 49 80
Payments relating to relocation and consolidation of
operations (63) (65)
Issuance of stock under management incentive bonus
and stock grant plans 184 48
Changes in operating assets and liabilities (4,425) (897)
Other, net - (101)
-------- --------
Net cash provided by operating activities 963 3,573
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (2,025) (2,320)
Other, net (22) (443)
-------- --------
Net cash used for investing activities (2,047) (2,763)
-------- --------
Cash flows from financing activities:
Payments on long-term debt, including
current maturities (235) (334)
Proceeds from exercise of stock options 93 58
Dividends paid (1,450) (1,408)
Other, net (68) 13
-------- --------
Net cash used for financing activities (1,660) (1,671)
-------- --------
Effect of exchange rate changes on cash - 40
-------- --------
Net decrease in cash and cash equivalents (2,744) (821)
Cash and cash equivalents, beginning of period 10,778 6,013
-------- --------
Cash and cash equivalents, end of period $ 8,034 $ 5,192
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 82 $ 148
Income taxes paid 843 1,116
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 6
HUNT MANUFACTURING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying condensed consolidated financial statements
and related notes are unaudited; however, in management's
opinion all adjustments (consisting primarily of normal
recurring accruals) necessary for a fair presentation of the
financial position at February 27, 1994 and the results of
operations and cash flows for the periods shown have been
made. Such statements are presented in accordance with the
requirements of Form 10-Q and do not include all disclosures
normally required by generally accepted accounting principles
or those normally made in the Form 10-K.
2. Certain marketing and administrative expenses are accrued or
deferred as of interim reporting dates to provide an
appropriate cost in the period.
3. The earnings per share are calculated based on the weighted
average number of common shares outstanding. Shares issuable
under outstanding stock option, stock grant and long-term
incentive compensation plans are common stock equivalents, but
are not used in computing earnings per share because the
dilutive effect would be less than 3%.
4. Effective November 29, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes." The adoption of SFAS No. 109 changes the
Company's method of accounting for income taxes from the
deferred method under Accounting Principles Board Opinion No.
11 to an asset and liability approach. The effect of adopting
SFAS No. 109 has been recognized immediately as the effect of
a change in accounting principle and increased net income in
the first quarter by $795, or $.05 per share. Prior financial
statements have not been restated. The increase in net income
results primarily from adjusting deferred tax balances to
current tax rates.
The significant components of deferred tax assets and
liabilities at November 29, 1993 consist of:
Assets Liabilities
------ -----------
Inventories $2,007 --
Accrued expenses 1,498 --
Allowance for doubtful accounts 958 --
Net Operating Loss Carryforwards-foreign 804 --
Pensions 385 --
Net Operating Loss Carryforwards-
State & Local 278 --
Depreciation & Amortization -- $5,283
------ ------
Subtotal $5,930 $5,283
Valuation Allowance (1,082) --
------ ------
Total $4,848 $5,283
====== ======
<PAGE>
<PAGE> 7
Item 2. Management's Discussions and Analysis of Financial Condition
and Results of Operations
------------------------------------------------------------
Financial Condition
- -------------------
For the first quarter of 1994, the Company's financial condition
remained strong. Working capital increased to $52.3 million at
February 27, 1994 from $47.1 million at November 28, 1993 (the
Company's fiscal year end) and the percentage of debt to equity
decreased to 5.0% from 5.3% at those respective dates. The
Company's current ratio also improved from 2.4 at November 28, 1993
to 2.7 at February 27, 1994. Net cash flows of $1.0 million
provided by operating activities in the first quarter of fiscal
1994, combined with available cash balances, were sufficient to
fund additions to property, plant and equipment of $2.0 million and
to pay cash dividends of $1.5 million.
Current assets increased $2.6 million to $83.4 million at the end
of the first quarter of fiscal 1994 from $80.8 million at the end
of fiscal 1993 primarily as a result of increases in inventories.
The increase in inventories was principally attributable to the
purchase of inventories relating to an exclusive distribution
agreement with Schwan-STABILO(R) and stocking in anticipation of
promotional sales expected in the second and third quarters of
fiscal 1994. Inventories of new products also accounted for a
portion of the increase. The increase in inventories was partially
offset by a decrease in net accounts receivable of $2.2 million which
was principally attributable to lower sales in the first quarter of
fiscal 1994 as compared with those in the fourth quarter of fiscal 1993.
Current liabilities decreased to $31.1 million at the end of the
first quarter of fiscal 1994 from $33.7 million at the end of
fiscal 1993, primarily as a result of decreases in accounts payable
and accrued salaries, wages and commissions. The decrease in
accounts payable to $9.5 million at February 27, 1994 from $11.1
million at November 28, 1993 was largely the result of the timing
of the payment of the year-end balance. The decrease of $1.8
million in accrued salaries, wages and commissions, from $8.4
million at the end of fiscal 1993 to $6.6 million at February 27,
1994, was largely the result of payment of incentive compensation
in the first quarter of fiscal 1994 which had been accrued at the
end of fiscal 1993.
The Company currently has line-of-credit agreements with three
banks totaling $45 million. There were no borrowings under these
line-of-credit agreements at February 27, 1994. Management
believes that cash expected to be generated from operations and
available cash balances combined with these credit agreements are
sufficient to meet the Company's currently anticipated working
capital and other investing and financing needs, and if additional
resources are needed, management believes that the Company could
obtain funds at competitive costs. Management also expects that
1994 expenditures for additions to property, plant and equipment to
increase capacity and productivity will be moderately higher than
the $10.3 million expended for such purposes in fiscal 1993.
<PAGE>
<PAGE> 8
Results of Operations
- ---------------------
Net Sales
- ---------
Net sales in the first quarter of fiscal 1994 grew by 13% to $64.6
million from $57.1 million in the first quarter of fiscal 1993.
This increase was primarily due to higher unit volume, as average
selling prices decreased as a result of continued competitive
pressures. Selling prices have decreased approximately 1% as
compared with prices in the first quarter of 1993. Management
believes that this pressure on selling prices will continue.
Office products sales increased 16.4% to $37.4 million in the first
quarter of fiscal 1994 from $32.1 million in the first quarter of
fiscal 1993. This increase was the result of higher sales in all
of the Company's major office product lines: office furniture (up
18.3%), mechanical and electromechanical products (up 17.2%) and
desktop accessories and supplies (up 11.6%). The sales growth in
office furniture was due to broadened distribution, while the
increase in sales of mechanical and electromechanical products
resulted from higher sales of Boston(R) brand products. New products
sales, including sales of products under the Company's new
distribution agreement with Schwan-STABILO(R) accounted for most of
the sales growth in desktop accessories and supplies. Export sales
of office products were up 9.1% in the first quarter of fiscal 1994
from the first quarter of fiscal 1993 level due, in part, to higher
sales in the Far East, Europe and Latin America.
Sales of art/craft products grew 8.7% to $27.2 million in the first
quarter of fiscal 1994 from $25.0 million in the first quarter of
fiscal 1993. Mounting and laminating products were renamed
"presentation graphics" in the first quarter to better describe an
expanded product offering in this major product class. Higher
sales of presentation graphics products (up 19.2%) were partially
offset by lower sales of art supplies (down 5%) and hobby/craft
products (down 8.2%). The sales increase in presentation graphics
products resulted from higher sales of Seal(R) brand mounting and
laminating equipment and Bienfang(R) brand foam board. The decrease
in sales of art supplies was largely the result of lower sales of
Bienfang(R) brand paper products, while decreases in sales of X-Acto(R)
brand products accounted for most of the hobby/craft sales decline.
Export sales of art/craft products grew 2.8% in the first quarter
of fiscal 1994. After adjusting for the exchange effect of a
weaker Canadian dollar, export sales of art/craft products
increased by 5.6% due to higher sales in Canada (up 7.2%, after
adjusting for the exchange effect). Foreign sales of art/craft
products were up 8.1% in the first quarter of fiscal 1994 due
primarily to higher sales of presentation graphics products in the
United Kingdom.
<PAGE>
<PAGE> 9
Gross Profit
- ------------
The Company's gross profit margin decreased to 39.0% of net sales
in the first quarter of fiscal 1994 from 39.3% in the first quarter
of fiscal 1993, primarily due to the lower selling prices discussed
above. These lower prices were partially offset by the favorable
effect of higher unit volume and operating improvements.
Selling, Shipping, Administrative and General Expenses
- ------------------------------------------------------
Selling and shipping expenses decreased to 20.7% of net sales for
the first quarter of fiscal 1994 from 21.6% in the first quarter of
fiscal 1993, due primarily to lower salesforce commissions expense
as a result of changes in customer sales mix.
Administrative and general expenses increased 15.5%, or $.9
million, in the first quarter of fiscal 1994 compared to the same
period in fiscal 1993, largely as a result of higher management
incentive compensation and employee fringe benefit expenses. The
increase in management incentive compensation is attributable to
the improvement in profitability while the increase in employee
fringe benefits relates primarily to retirement benefit plans.
Provision for Income Taxes
- --------------------------
The effective tax rate increased to 37.5% for the first quarter of
fiscal 1994 from the 37.0% incurred in the first quarter of fiscal
1993. This increase was primarily the result of a higher corporate
statutory income tax rate enacted in August of 1993.
Accounting Change
- -----------------
In the first quarter of fiscal 1994 the Company adopted the
provisions of SFAS No. 109, "Accounting for Income Taxes," the
cumulative effect of which increased net income by $.8 million, or
$.05 per share.
<PAGE>
<PAGE> 10
PART II - OTHER INFORMATION
-----------------
Item 6. - Exhibits and Reports on Form 8-K
---------------------------------
(a) Exhibits
--------
11. Computation of Per Share Earnings
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the registrant during
the fiscal quarter to which this report relates.
<PAGE>
<PAGE> 11
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.
HUNT MANUFACTURING CO.
Date April 11, 1994 By /s/ William E. Chandler
----------------------- --------------------------------
William E. Chandler
Senior Vice President, Finance
(Principal Financial and
Accounting Officer)
Date April 11, 1994 By /s/ Ronald J. Naples
----------------------- --------------------------------
Ronald J. Naples
Chairman of the Board and
Chief Executive Officer
<PAGE>
<PAGE> 12
EXHIBIT INDEX
Page
----
Exhibit 11 - Computation of Per Share Earnings 13
---------------------------------
<PAGE>
<PAGE>
<PAGE> 13
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
February 27, 1994 February 28, 1993
----------------- -----------------
<S> <C> <C>
Income before cumulative effect of accounting change $3,003 $2,533
Cumulative effect of change in accounting for income taxes 795 -
--------- ---------
Net income $3,798 $2,533
========= =========
PRIMARY PER SHARE EARNINGS
- --------------------------
Average number of common shares outstanding 16,114 16,098
Add - common equivalent shares representing
shares issuable upon exercise of stock
options and stock grants 189 115
--------- ---------
Average shares used to calculate primary per share earnings 16,303 16,213
========= =========
Primary per share earnings before change in accounting for
income taxes $0.18 $0.16
Cumulative effect of change in accounting for income taxes 0.05* -
--------- ---------
Net primary per share earnings $0.23 $0.16
========= =========
FULLY DILUTED PER SHARE EARNINGS
- --------------------------------
Average number of common shares outstanding 16,114 16,098
Add - common equivalent shares representing shares
issuable upon exercise of stock options and
stock grants 274 141
--------- ---------
Average shares used to calculate fully diluted per share earnings 16,388 16,239
========= =========
Fully diluted per share earnings before change in accounting
for income taxes $0.18 $0.16
Cumulative effect of change in accounting for income taxes 0.05* -
--------- ---------
Net fully diluted per share earnings $0.23 $0.16
========= =========
</TABLE>
* The per share amounts pertaining to the cumulative effect of change in
accounting for income taxes in 1994 were computed using the weighted
average number of common shares outstanding for the first quarter.
<PAGE>
