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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For The Quarter Ended MARCH 31, 1995
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Commission file number 0-7024
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KIDDIE PRODUCTS, INC
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2149581
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Kiddie Drive, Avon, Massachusetts 02322-1171
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(Address of principal executive offices)
(Zip Code)
(508) 588-1220
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(Registrant's telephone number, including area code)
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 .
--- ---
The number of shares of Registrant's common stock
outstanding on April 30, 1995 was 2,251,434.
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KIDDIE PRODUCTS, INC.
INDEX
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PART I - FINANCIAL INFORMATION:
Condensed Balance Sheets Page 1
Condensed Statements of Income 2
Condensed Statements of Cash Flows 3
Notes to Condensed Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II - OTHER INFORMATION
Other information 6
SIGNATURES 6
</TABLE>
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<TABLE>
KIDDIE PRODUCTS, INC.
Condensed Balance Sheets
(Unaudited)
<CAPTION>
ASSETS
March 31, December 31,
1995 1994
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 674,560 $ 2,329,041
Accounts receivable, net 11,505,226 9,266,235
Inventories 12,512,000 10,413,835
Prepaid insurance, taxes, etc. 336,899 295,921
Current deferred taxes 624,500 624,500
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Total current assets 25,653,185 22,929,532
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PROPERTY, PLANT, AND EQUIPMENT:
Land 167,266 167,266
Building 3,737,861 3,737,861
Machinery and molds 5,565,545 5,413,075
Furniture and equipment 3,018,687 2,986,905
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Total 12,489,359 12,305,107
Less accumulated depreciation 6,609,864 6,381,854
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Property, plant, and equipment - net 5,879,495 5,923,253
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TOTAL ASSETS $31,532,680 $28,852,785
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $133,333 $133,333
Short-term borrowings 1,200,000 0
Accounts payable and accrued expenses 5,575,523 5,332,871
Federal and state income taxes payable 648,600 218,500
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Total current liabilities 7,557,456 5,684,704
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LONG-TERM DEBT - Less portion due currently 200,001 233,334
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DEFERRED INCOME TAXES 584,800 584,800
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STOCKHOLDERS' EQUITY:
Common stock 225,143 225,043
Paid-In capital 108,761 98,194
Retained earnings 22,856,519 22,026,710
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Total stockholders' equity 23,190,423 22,349,947
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $31,532,680 $28,852,785
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
page 1
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<TABLE>
KIDDIE PRODUCTS, INC.
Condensed Statements of Income for the
Three Months Ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
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<S> <C> <C>
INCOME:
Net sales $15,801,777 $13,495,210
Interest 8,697 10,495
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Total income 15,810,474 13,505,705
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COSTS AND EXPENSES:
Cost of products sold 9,256,243 7,580,120
Selling, general, and administrative expenses 5,157,790 4,635,575
Interest expense 13,433 7,854
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Total costs and expenses 14,427,466 12,223,549
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INCOME BEFORE TAXES ON INCOME 1,383,008 1,282,156
PROVISION FOR TAXES ON INCOME 553,200 487,300
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NET INCOME $ 829,808 $ 794,856
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PRIMARY AND FULLY DILUTED EARNINGS PER SHARE $0.36 $0.35
===== =====
AVERAGE NUMBER OF SHARES OUTSTANDING 2,330,923 2,248,260
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
page 2
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<TABLE>
KIDDIE PRODUCTS, INC.
Condensed Statements of Cash Flows for the
Quarter Ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 829,808 $ 794,856
Adjustments to reconcile net income to net cash
provided by (used for) operations:
Depreciation 253,750 200,970
Provision for doubtful accounts 25,147 0
Gain on disposal of equipment 0 (9,426)
Increase (decrease) arising from working
capital items:
Accounts receivable (2,264,138) (2,854,610)
Inventories (2,098,165) (1,321,892)
Prepaid insurance, taxes, etc. (40,978) (42,673)
Accounts payable and accrued expenses 242,653 1,809,403
Federal and state income taxes - net 430,100 484,994
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Net cash provided by (used for) operating activities (2,621,823) (938,378)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant, and equipment (209,992) (380,100)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued under stock option plans 10,667 0
Proceeds from short-term borrowings 1,200,000 0
Repayment of industrial revenue bonds (33,333) (33,333)
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1,177,334 (33,333)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,654,481) (1,351,811)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,329,041 2,712,267
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 674,560 $ 1,360,456
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 13,433 $ 7,854
=========== ===========
Income taxes $ 123,100 $ 2,000
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</TABLE>
See accompanying notes to condensed financial statements.
page 3
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KIDDIE PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Amounts in the accompanying balance sheet as of
December 31, 1994 are condensed from the Company's
audited balance sheet as of that date. All other
condensed financial statements are unaudited but, in
the opinion of the Company, contain all adjustments
(consisting of only normal recurring accruals)
necessary to present fairly the financial position as
of March 31, 1995, and the results of operations
and cash flows for the three months then ended and for
the three months ended March 31, 1994.
2. The Company has 7,500,000 shares of $.10 par value common
stock with 2,251,434 and 2,250,430 shares issued and
outstanding as of March 31, 1995 and December 31, 1994,
respectively.
On May 3, 1995 the Board of Directors authorized a $.17
per share annual cash dividend payable on June 1, 1995
to holders of record at the close of business on
May 15, 1995.
3. Earnings per share of common stock are computed on the
basis of the average number of shares and common share
equivalents outstanding during each quarter. Equivalents
had no material effect on the computation for the three
months ended March 31, 1994.
The number of common shares and equivalents for
computing primary earnings per share for the three
months ended March 31, 1995 and 1994 were 2,330,923 and
2,248,260, respectively. Fully diluted and primary
earnings per share were the same for three months ended
March 31, 1995 and 1994.
4. The results of operations for the three month period
ended March 31, 1995 and 1994 are not necessarily
indicative of the results to be expected for the full
year.
5. During March 1995, the Company borrowed various amounts
up to $2,500,000 under unsecured lines of credit totaling
$9,000,000 available from banks. As of March 31, 1995 a
balance of $1,200,000 remains outstanding. No other
short-term borrowings were incurred by the Company during
1994 or the first three months of 1995.
Page 4
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
Net sales for the first three months of 1995 increased 17.1% over the similar
period last year because of increased sales from new product introductions and
expanded retail distribution in domestic and foreign markets. The sales growth
would have been more had it not been for production delays and demand in excess
of capacity on some new items. The Company believes all substantial issues have
now been resolved.
Gross profit margins for the first three months of 1995 decreased by 2.4% from
the similar period of last year. The decrease was primarily due to air freight
shipments from overseas production facilities, licensing fees, and increased
sales of bulk items which are higher dollar value but lower margined products.
Selling, general, and administrative expenses for the first three months of
1995 increased by $522,000 or 11.3% over such expenses for the first three
months of 1994. The increase resulted from costs related to increased sales
volume, increased advertising expense, and increased packaging expense.
Selling, general and administrative expenses for the first three months of 1995
as a percent of sales decreased to 32.6% from 34.3% for the similar period in
1994. The decrease reflects the economies of scale provided by higher volume of
business.
Net working capital increased by $851,000 in the first three months primarily
due to profitable operations. Accounts receivable increased by $2,239,000 as a
result of increased sales and inventories increased by $2,098,000 in
anticipation of continued sales demand for new and existing products in the
second quarter. Cash decreased by $1,654,000 primarily resulting from increases
in accounts receivable and inventories which were partially offset by
short-term borrowings.
Unsecured lines of credit of $9,000,000, which are subject to annual renewal,
are available from banks. Amounts outstanding under these lines are payable
upon demand by the banks. During March 1995, the Company borrowed various
amounts up to $2,500,000 of which $1,200,000 remained outstanding as of March
31, 1995. The Company did not incur any other short-term borrowings during 1994
or during the first three months of 1995.
Sufficient liquidity exists and should continue to exist to enable the Company
to respond aggressively to continuing competition in its major markets.
Page 5
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PART II - OTHER INFORMATION
Items 1 through 5 - Not Applicable
Item 6: Exhibits and Reports on Form 8-K
(a) Not Applicable
(b) No reports on Form 8-K have been filed during the
past quarter covered by this report.
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.
KIDDIE PRODUCTS, INC.
----------------------------
Registrant
Date 5/12/95 /s/ Benjamin Peltz
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Benjamin Peltz, Senior Vice
President and Treasurer,
Duly Authorized Officer and
Principal Financial Officer
Page 6
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 674,560
<SECURITIES> 0
<RECEIVABLES> 11,690,226
<ALLOWANCES> 185,000
<INVENTORY> 12,512,000
<CURRENT-ASSETS> 25,653,185
<PP&E> 12,489,359
<DEPRECIATION> 6,609,864
<TOTAL-ASSETS> 31,532,680
<CURRENT-LIABILITIES> 7,557,456
<BONDS> 200,001
<COMMON> 225,143
0
0
<OTHER-SE> 22,965,280
<TOTAL-LIABILITY-AND-EQUITY> 31,532,680
<SALES> 15,801,777
<TOTAL-REVENUES> 15,810,474
<CGS> 9,256,243
<TOTAL-COSTS> 14,414,033
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,433
<INCOME-PRETAX> 1,383,008
<INCOME-TAX> 553,200
<INCOME-CONTINUING> 829,808
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 829,808
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
