SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(MARK ONE) 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 October 1, 1994
_________ 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 0-3305
NCC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 62-0643336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 MAIN STREET, CORTLAND, NEW YORK 13045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 756-2841
Indicate by check mark whether 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 registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.
Yes ___X___ No _______
At October 1, 1994, there were outstanding 4,375,492 shares of
registrant's Common Stock, par value $1.00 per share.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
NCC INDUSTRIES, INC. AND SUBSIDIARY
BALANCE SHEETS
(UNAUDITED)
October 1, December 31,
1994 1993
ASSETS
Current assets
Cash $ 1,721,091 $ 442,085
Short-term investments 725,268 699,204
Accounts receivable, net 17,513,966 12,353,671
Inventories (Note 2) 40,967,741 48,116,383
Other current assets 2,072,009 2,328,419
Total Current Assets 63,000,075 63,939,762
Property, plant and equipment at cost, net 11,140,484 11,557,459
Bond issuance cost 83,672 101,244
Other assets 1,078,863 1,066,173
$75,303,094 $76,664,638
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and bank overdraft $16,232,370 $24,081,000
Accounts payable and accrued expenses 10,459,041 8,503,850
Current portion of long-term debt 445,000 445,000
Total Current Liabilities 27,136,411 33,029,850
Long term debt, less current portion 10,361,415 10,806,415
Other liabilities 2,811,421 2,673,387
Shareholder's equity 34,993,847 30,154,986
$75,303,094 $76,664,638
See notes to financial statements.
<PAGE>
- -2-
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
1994 1993 1994 1993
STATEMENTS OF INCOME
Net Sales
$32,895,829 $27,674,859 $94,528,993 $85,650,599
Cost and expenses
Cost of sales, shipping, selling,
general and administrative expenses
29,752,270 26,300,516 86,335,904 79,355,480
Interest expense
400,576 433,403 1,332,480 1,321,607
30,152,846 26,733,919 87,668,384 80,677,087
Income before taxes
2,742,983 940,940 6,860,609 4,973,512
Income taxes
Current
853,580 373,096 1,764,285 1,404,844
Deferred
168,842 ( 173,185) 254,363 ( 302,885)
Net Income
$ 1,720,561 $ 741,029 $ 4,841,961 $ 3,871,553
Income per common share
$0.39 $0.17 $1.11 $0.88
Weighted average shares used in
computing per share amounts
4,375,492 4,380,392 4,375,587 4,380,435
- -3-
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
1994 1993 1994 1993
STATEMENTS OF RETAINED EARNINGS
Retained earnings, beginning
$26,011,562 $22,409,445 $22,890,162 $19,278,921
Net income
1,720,561 741,029 4,841,961 3,871,554
Retained earnings, ending
$27,732,123 $23,150,474 $27,732,123 $25,150,474
See notes to financial statements.
<PAGE>
- -4-
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended Oct. 1, 1994 Ended Oct. 2, 1993
Cash flows from operating activities
Net income $ 4,841,961 $ 3,871,553
Adjustments to reconcile net income to net cash
used in operating activities
Depreciation 1,086,753 890,618
Amortization 17,572 19,996
Provision for losses on
accounts receivable 101,250 82,949
Loss from retirement of equipment 23,493 12,103
Net change in operating assets
and liabilities
Increase in accounts receivables ( 5,261,545) ( 358,613)
(Increase) decrease in inventory 7,148,642 ( 10,561,795)
Increase (decrease) in accounts
payable and accrued expenses 1,955,191 ( 668,751)
(Increase) in other assets ( 12,690) ( 875,869)
Increase (decrease) in other
liabilities 138,034 ( 353,908)
Decrease in other current assets 256,410 509,087
Net cash provided by (used in)
operating activities 10,295,071 ( 7,432,630)
Cash flows from investing activities
Purchase of plant & equipme nt ( 693,271) ( 2,569,523)
(Increase) decrease in investments ( 26,064) 892,088
Net cash used in investing
activities ( 719,335) ( 1,677,435)
See notes to financial statements.
<PAGE>
- -5-
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
Nine Months Nine Months
Ended Ended
Oct. 2, 1993 Oct. 2, 1994
Cash flows from financing activities
Long term debt repayments ($ 445,000) ($ 445,000)
Net borrowings (repayments) under notes payable,
and bank overdraft ( 7,848,630) 9,469,315
Treasury stock purchases ( 3,100) ( 2,025)
Net cash provided by (used in)
financing activities ( 8,296,730) 9,022,290
Net increase (decrease) in cash 1,279,006 ( 87,775)
Cash, beginning of year 442,085 658,948
Cash, end of quarter $ 1,721,091 $ 571,173
Supplemental disclosure of cash flow
information
Cash paid during the nine months
for interest $ 1,414,623 $ 1,102,050
Cash paid during the nine months
for income taxes $ 1,189,035 $ 1,545,559
See notes to financial statements.
<PAGE>
- -6-
NCC INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of manage-
ment, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.
Operating results for the nine month period ended October 1, 1994 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1994. The balance sheet at December 31, 1993
has been derived from the audited balance sheet at that date. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
2. Inventory:
a) Inventories at October 1, 1994 are stated at the lower of cost
(first-in, first-out) or market (generally realizable net
amount), and are obtained from the perpetual inventory
records of the Company. No physical inventory was taken.
b) Inventories consist of:
October 1, December 31,
1994 1993
(unaudited)
Raw Materials $ 7,744,328 $ 7,110,600
Work in process 9,091,219 10,916,850
Finished goods 24,132,194 30,088,933
Total $40,967,741 $48,116,383
3. Net income per share:
Per share amounts are based on the weighted average number
of shares outstanding during the period.
4. Short-term investments are principally money market funds, government
or other agencies securities and are held for sale. As of October 1,
1994, market approximates cost.
<PAGE>
-7-
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of O perations.
Results of Operations
Net sales for the third quarter of 1994 were 18.9% higher than the
the third quarter of 1993 due to higher volume of shipments in both
branded and unbranded products and higher average prices received
on shipments of branded products. Net sales for the first nine
months of 1994 were 10.4% higher than the first nine months of 1993
due to increased demand for Registrant's products during the second
and third quarter of 1994.
Because of the sales mixture achieved, average revenue per unit
sold increased 2.7% in the third quarter of 1994 as
compared to the third quarter of 1993 and increased 3.1% for the
first nine months of 1994 as compared to the first nine months of
1993.
Unit volume increased by 16.9% in the third quarter of 1994 as
compared to the third quarter of 1993 due to an increased demand
for Registrant's products. Unit volume increased by 7.1% in the
first nine months of 1994 as compared to the first nine months of
1993 because of an increased demand for Registrant's products
during the second and third quarters.
Cost of sales as a percentage of sales decreased in the third
quarter and the first nine months of 1994 as compared to the third
quarter and the first nine months of 1993 because of higher
shipments of branded products during the third quarter which carry
higher margins. These higher margins. Shipping, selling, and general
and administrative expenses were consistent as a percentage of sales
in the third quarter and the first nine months of 1994 as compared
to the third quarter and the first nine months of 1993. Advertising
expenses were lower as a percentage to sales for the third quarter
and the first nine months of 1994 as compared to the third quarter
and the first nine months of 1993 due to the nonrecurrence in 1994
of expenditures related to a national advertising campaign promoting
one of Registrant's brands, which commenced in the first quarter of
1993. Interest expense was consistent during the third quarter and
the first nine months of 1994 as compared to the third quarter and
the first nine months of 1993 due primarily to lower average
borrowings being offset by higher interest rates.
As a result of the aforementioned items, net income increased 132%
and 25% in the third quarter and the first nine months of 1994,
respectively, as compared to the third quarter and the first nine
months of 1993.
<PAGE>
-8-
Financial Condition
Net cash flows provided by operating activities increased during
the first nine months of 1994 as compared with the first nine
months of 1993, primarily due to increases in funds provided by
(used by) inventory of approximately $18,000,000. Inventory
increases due primarily to lower-than-anticipated shipments
in the third quarter of 1993 were reversed in 1994 because
of higher shipments. Cash flows provided by net income were
offset by increases in accounts receivable of approximately
$5,000,000.
Net cash flows provided by operations during the first nine months
of 1994 were used to reduce short term debt under the Registrant's
lines of credit and to purchase equipment. As a result of the above,
working capital increased approximately $5,000,000 during the first
nine months of 1994 and the current ratio improved from 1.9:1, at
December 31, 1993 to 2.3:1, at October 1, 1994. Registrant's
Debt/Equity ratios also improved from 1.5:1 to 1.2:1 during the
same period.
Registrant had available credit lines of $46,000,000 at
October 1, 1994. Of such available lines, Registrant had
utilized $22,500,000 and had $23,500,000 in unused lines as of
October 1, 1994. Subsequently, Registrant has allowed an unused
credit line to expire and has elected to not renew. In order to
finance its capital and other corporate expenditures, Registrant
expects to continue to use cash from operations and its available
lines of credit.
<PAGE>
- -9-
NCC INDUSTRIES, INC.
PART II - OTHER INFORMATION
(No applicable items)
<PAGE>
- -11-
SIGNATURES
Pursuant to the requirements to 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.
NCC INDUSTRIES, INC.
Date ________________ By: _____________________________
Peter Muehlbauer
Vice President, Finance
Date ________________ By: _____________________________
Frank Magrone
President
