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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-7163
AMERICAN FILTRONA CORPORATION
(Registrant)
Virginia 54-0574583
(State of incorporation) (I.R.S. employer
identification no.)
3951 WESTERRE PARKWAY, SUITE 300
RICHMOND, VIRGINIA 23233
(Executive offices) (Zip code)
Registrant's telephone number: 804-346-2400
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 at least the past 90 days. Yes. X No.
Number of shares of common stock outstanding as of May 4, 1995:
3,732,942
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AMERICAN FILTRONA CORPORATION
INDEX
Page No.
Part I. Financial Information
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Income 4
Condensed Consolidated Statement of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Statements 6
Part II. Other Information 7
Signatures 7
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PART I. FINANCIAL INFORMATION
AMERICAN FILTRONA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1995 (Unaudited) and December 31, 1994
<TABLE>
<S> <C> <C>
1995 1994
ASSETS
Current assets
Cash, including short-term
investments $ 30,310,524 $ 30,522,492
Accounts receivable 19,626,274 17,349,786
Inventories 19,073,615 17,106,615
Prepaid expenses 1,020,865 1,347,460
Total current assets 70,031,278 66,326,353
Property, plant and equipment 25,550,865 25,996,544
Other assets
Excess cost over net assets of
businesses acquired 5,333,433 5,433,259
Notes receivable 2,350,455 2,350,455
Other assets 361,111 386,995
8,044,999 8,170,709
$103,627,142 $100,493,606
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 15,410,986 $ 15,118,379
Accrued expenses 4,092,077 3,811,432
Income taxes 1,522,709 380,889
Total current liabilities 21,025,772 19,310,700
Other liabilities
Notes payable 1,300,000 1,300,000
Deferred income taxes 139,328 151,328
Other liabilities 795,137 657,408
Special charges 597,011 709,226
2,831,476 2,817,962
Shareholders' equity
Common stock, $1 par value 3,732,942 3,736,042
Additional capital 711,502 812,452
Retained earnings 76,597,452 75,085,671
Cumulative translation adjustment (1,272,002) (1,269,221)
79,769,894 78,364,944
$103,627,142 $100,493,606
</TABLE>
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AMERICAN FILTRONA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three-Month Periods Ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<S> <C> <C>
1995 1994
Revenues
Net sales $44,632,733 $36,199,273
Investment income 290,573 166,038
44,923,306 36,365,311
Costs and expenses
Cost of products sold 35,808,297 29,154,235
Selling, research,
administrative and
general 5,293,742 4,498,611
41,102,039 33,652,846
Income before income taxes 3,821,267 2,712,465
Income taxes 1,375,000 975,000
Income from continuing
operations 2,446,267 1,737,465
Discontinued operations,
net of income taxes - 1,619,909
Net income $ 2,446,267 $ 3,357,374
Average shares outstanding 3,736,044 3,743,277
Earnings per share
Continuing operations $ .65 $ .46
Discontinued operations - .43
Net income $ .65 $ .89
Dividends per share $ .25 $ .24
</TABLE>
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AMERICAN FILTRONA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three-Month Periods Ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<S> <C> <C>
1995 1994
Operating
Income from continuing operations $ 2,446,267 $ 1,737,465
Reconciling items
Depreciation and amortization 1,504,452 1,135,247
Deferred income taxes (12,000) (2,341)
Special charges (112,215) -
Increase (decrease) from noncash
working capital (2,201,822) 1,435,163
Other - net 146,331 (84,542)
1,771,013 4,220,992
Investing
Acquisitions and dispositions of
property, plant and equipment (944,446) (4,100,569)
Financing
Issuance of common stock 34,075 160,118
Purchase of common stock (138,125) -
Dividends paid (934,485) (898,433)
(1,038,535) (738,315)
Net cash (used) by continuing
operations (211,968) (617,892)
Net cash (used) by discontinued
operations - (827,752)
Net (decrease) in cash
and short-term investments $ (211,968) $(1,445,644)
</TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements include all adjustments (consisting only of normal
recurring accruals) which the Company considers necessary to
present fairly the financial position, results of operations, and
cash flows for the interim periods.
The results of operations for the three-month period ended
March 31, 1995 are not necessarily indicative of the results
to be expected for the entire year.
The financial statements have been prepared in accordance with
instructions to Form 10-Q and, therefore, do not include all
information and notes necessary for a fair presentation in
conformity with generally accepted accounting principles. For
additional information regarding significant accounting policies
and other financial data see the Company's December 31, 1994 Form
10-K.
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NOTE B. INVENTORIES
At March 31, 1995 and December 31, 1994 inventories consisted of
(in thousands):
<TABLE>
<S> <C> <C>
1995 1994
FIFO
Finished products $ 9,284 $ 7,813
Work in process 1,652 1,546
Raw materials 9,789 9,242
20,725 18,601
Less excess of FIFO over LIFO
inventory value 1,651 1,494
$19,074 $17,107
</TABLE>
Inventories stated at LIFO approximated $9,256 (1994 - $8,135).
NOTE C. DISCONTINUED OPERATIONS
In April, 1994 the Company completed the sale of its industrial
filtration segment effective as of March 31, 1994 for a cash
sales price of $15,875,000. The gain on disposal was reflected
in the 1994 second quarter. For the 1994 first quarter net sales
were $4,788,000 and income from operations was $120,000, net of
applicable taxes of $100,000. In addition the 1994 first quarter
included required recognition of tax credits amounting to
$1,500,000 related to the disposition which were reversed when
the gain was reported in the second quarter.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
BALANCE SHEET
The Company maintained its strong financial condition and
liquidity. Cash and short-term investments represented 29% of
total assets at March 31, 1995 compared to 30% at December 31,
1994. The ratio of current assets to current liabilities was 3.3
at March 31, 1995 compared to 3.4 at December 31, 1994.
INCOME STATEMENT
Comparison Between Three-Month Periods Ended March 31, 1995 and
1994
Net sales increased 23% between the first quarters of each year.
The bonded fibers segment increase was led by very strong growth
in writing instrument and medical diagnostic test kit components
along with modest growth in tobacco filters. Plastic products
segment sales increased substantially as each of the established
companies contributed to the very strong growth aided by the Tri-
Lite Plastics companies acquired in mid-1994. Investment income
increased 75% as a result of the higher level of investments
and improved yields.
Costs and expenses increased 22%. Cost of products sold
increased at about the same rate as sales, while selling,
research, administrative and general expenses increased at a
lesser rate.
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Bonded fibers segment operating earnings increased substantially
as a result of the higher sales and improved operating
efficiencies, particularly at the conventional filter facility.
The plastic products segment also posted substantially higher
earnings as improved operating results of each of the five
established plastic extrusion companies boosted by the Tri-Lite
companies more than offset poor results at the Canadian flexible
packaging company. The combination of these factors produced a
41% increase in pretax income.
Income taxes increased 41% in proportion to the higher level of
income. Therefore, income from continuing operations and related
earnings per share also increased 41%.
In the 1994 first quarter the discontinued industrial filtration
segment reported income of $1,600,000 or 43 cents per share
including tax credits of $1,500,000 or 40 cents per share related
to the disposition. The sale was completed in April, 1994
effective as of March 31, 1994. See Note C for additional
information.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K -- There were no reports on Form 8-K
filed for the three months ended March 31, 1995.
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.
AMERICAN FILTRONA CORPORATION
(Registrant)
Date May 4, 1995 /s/ John D. Barlow, Jr.
John D. Barlow, Jr.
Vice President-Finance
(Chief Financial Officer)
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<PERIOD-END> MAR-31-1995
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