SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For Quarter Ended June 30, 1995 Commission file number 0-14825
SEALRIGHT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 16-0876812
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7101 College Boulevard, Overland Park, Kansas 66210-1891
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 913-344-9000
_________________________________________________________________
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.
(1) Yes X No (2) Yes X No
As of June 30, 1995, Sealright Co., Inc. had 11,070,991 shares of
Common Stock outstanding. The market value of stock held by non-
affiliates is approximately $101,825,000.
SEALRIGHT CO., INC. AND SUBSIDIARIES
FORM 10-Q
August 4, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INTRODUCTORY COMMENTS
The Consolidated Financial Statements included herein have been
prepared by Management, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations, although Management believes that the
disclosures are adequate to enable a reasonable understanding of
the information presented. It is suggested that these Consolidated
Financial Statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual
Report on Form 10K, for the year ended December 31, 1994.
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<TABLE>
SEALRIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE PERIODS ENDED June 30, 1995 and 1994
(In Thousands Except Per Share Data)
(Unaudited)
<CAPTION>
Six Months
2nd Quarter Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $84,059 $80,421 $154,673 $148,973
Cost of Sales 66,378 60,071 123,872 114,167
Gross Profit 17,681 20,350 30,801 34,806
Selling, General & Admin. Expense 9,470 9,715 17,482 19,149
Operating Income 8,211 10,635 13,319 15,657
Interest Expense 1,353 826 2,500 1,808
Other 396 447 784 789
Income Before Income Taxes 6,462 9,362 10,035 13,060
Provision for Income Taxes 2,510 3,697 3,996 5,247
NET INCOME $ 3,952 5,665 $ 6,039 7,813
NET INCOME PER SHARE $ 0.36 $ 0.51 $ 0.54 $ 0.71
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 11,096 11,063 11,095 11,063
</TABLE>
<PAGE>
<TABLE>
SEALRIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and December 31, 1994
(In Thousands)
(Unaudited)
<CAPTION>
June 30, 1995 December 31, 1994
ASSETS
<S> <C> <C>
Current Assets
Cash $ 3,431 $ 1,057
Accounts Receivable 30,968 25,281
Inventories (Note 3) 52,549 46,969
Other Current Assets 2,845 2,003
Total Current Assets 89,793 75,310
Property, Plant & Equipment 242,616 232,233
Less: Accumulated Depreciation 91,811 83,685
Total Property, Plant and Equipment 150,805 148,548
Intangibles 16,423 17,516
TOTAL ASSETS $257,021 $241,374
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Maturities of Long-Term Debt $ 6,523 $ 6,791
Accounts Payable 18,725 15,929
Accrued Vacation 3,725 3,306
Accrued Workers' Compensation Reserve 2,290 2,473
Accrued Income Taxes 3,411 1,684
Accrued Liabilities 4,113 5,225
Total Current Liabilities 38,787 35,408
Long-Term Debt 82,461 74,135
Deferred Income Taxes 16,578 16,212
Post-Retirement Benefits 2,252 2,215
Pension Liability 512 512
Stockholders' Equity
Common Stock, Par Value $.10
Authorized 20,000,000 shares;
issued and outstanding 11,070,991
and 11,063,127 as of June 30,
1995 and December 31, 1994,
respectively 1,107 1,106
Paid-In Capital 14,899 14,747
Retained Earnings 100,425 97,039
Total Stockholders' Equity 116,431 112,892
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $257,021 $241,374
</TABLE>
<TABLE>
SEALRIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED June 30, 1995 and June 30, 1994
(In Thousands)
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 6,039 $ 7,813
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation & Amortization 9,642 8,590
Deferred Tax Provision 2,487 3,122
LIFO Reserve Provision 203 442
Changes in Assets and Liabilities:
Accounts Receivable, Net (5,687) (13,397)
Inventories (5,783) (4,766)
Accounts Payable 2,796 4,124
Other (1,824) 2,473
Total Adjustments $ 1,834 $ 588
Net Cash Provided By Operating Activities $ 7,873 $ 8,401
Cash Flows from Investing Activities:
Capital Expenditures $(11,224) $(20,773)
Proceeds from Disposal of Equipment 117 33
Short-Term Investments -- 10,500
Net Cash Used in
Investing Activities: $(11,107) $(10,240)
Cash Flows from Financing Activities:
Net Borrowings Under Revolving
Credit Agreement $ 11,500 $ 8,000
Proceeds from Common Stock Issued 152 --
Principal Payments of Long-Term Debt (3,391) (3,404)
Dividends Paid (2,653) (2,545)
Net Cash Provided by
Financing Activities $ 5,608 $ 2,051
Net Increase in Cash $ 2,374 $ 212
Cash, Beginning of Year 1,057 2,289
Cash, End of Six Months $ 3,431 $ 2,501
</TABLE>
<PAGE>
SEALRIGHT CO., INC. AND SUBSIDIARIES
10-Q
JUNE 30, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENT PRESENTATION
In the opinion of Management, the accompanying unaudited
consolidated financial statements contain normal interim
adjustments necessary to present fairly the financial position of
Sealright Co., Inc. and Subsidiaries as of June 30, 1995 and
December 31, 1994, and the results of their operations for the
quarters ended June 30, 1995 and 1994.
NOTE 2 - ACCOUNTING PRINCIPLES AND POLICIES
The accompanying financial statements have been prepared
consistent with the accounting principles and policies described
more fully in Note 1 of the Company's Annual Report for the year
ended December 31, 1994.
NOTE 3 - INVENTORIES
Inventories at June 30, 1995 and December 31, 1994, were:
<TABLE>
<CAPTION>
1995 1994
(In Thousands)
<S> <C> <C>
Inventories Carried on LIFO Basis
Raw Materials $20,043 $15,139
Work-In-Process 7,573 7,986
Finished Goods 18,920 17,139
$46,536 $40,264
LIFO Reserve (1,050) (355)
Inventories Carried on LIFO Basis $45,486 $39,909
Inventories Carried on Average or FIFO Basis 7,063 7,060
$52,549 $46,969
</TABLE>
Because the inventory determination under the LIFO method can only
be made at the end of each fiscal year based on the inventory
levels and costs at that time, interim LIFO determinations,
including those at June 30, 1995, must necessarily be based on
management's estimate of expected year-end inventory levels and
costs. Since estimates of future inventory levels and prices are
subject to many factors beyond the control of management, interim
financial results are subject to final year-end LIFO inventory
amounts. Accordingly, inventory components reported for the period
ending June 30, 1995, are estimates based on management's knowledge
of the Company's production cycle, the costs associated with this
cycle and the sales and purchasing volume of the Company.
NOTE 4 - STATEMENTS OF CASH FLOWS
Supplemental cash flow information is (in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Interest Paid (Net of Amount Capitalized) $ 2,140 $ 1,845
Income Taxes Paid 1,390 1,901
</TABLE>
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Net sales for the second quarter of 1995 were $84.1 million,
an increase of 4.5% over the second quarter 1994. Net sales
decreased in the Rigid Packaging Group, but were offset by an
increase in the Flexible Packaging Group of the Company. The net
increase is due to price increases in both groups of the business
as well as modest volume growth in flexible packaging.
The 4.3 percentage point decrease in the gross profit margin
is due to increased raw material costs and a less profitable mix of
business. Due to contractual agreements with certain customers,
raw material increases were not passed on to those customers until
late in the quarter. In addition, the decrease in unit volumes
during April and May resulted in lower levels of fixed overhead
cost coverage than in the prior year period.
Selling, general and administrative expense decreased from
12.1% of net sales in the second quarter of 1994 to 11.3% of net
sales for the second quarter of 1995. The significant decreases
were workers' compensation expense, relocation expenses,
developmental expenses, professional services and the Incentive
Compensation Plan expenses. In addition, efforts are ongoing to
control selling, general and administrative costs.
Interest expense for the second quarter of 1995, compared to
the second quarter of 1994, increased 63.8%. This increase is
primarily the result of higher indebtedness incurred to complete
the construction of the DeSoto plant, a planned build up in raw
material inventories in advance of higher prices, and a 48%
reduction of capitalized interest compared to second quarter, 1994.
For the year-to-date, net sales have increased over 1994 by
$5.7 million, or 3.8%. Lower sales, caused by a decline in unit
volume in the Rigid Packaging Group were more than offset by higher
sales in the Flexible Packaging Group. The higher sales by the
Flexible Packaging Group represented several key customers buying
heavily in advance of price increases which, as market conditions
allowed, were limited to a pass through of escalating raw material
costs.
The gross profit margin decrease of 3.5 percentage points is
attributable to competitive forces and contract pricing primarily
in Flexible Packaging, which delayed and limited the Company's
ability to pass on increased material costs. Reduced unit volume
in the Rigid Packaging Group also negatively affected margins.
Selling, general and administrative expenses have decreased,
both in terms of dollars and as a percent of net sales. S.G.&A. as
a percent of net sales has decreased from 12.9% in 1994 to 11.3% in
1995. The significant decreases are reductions in workers'
compensation expenses, the non-recurrence of NLEA costs,
development costs and professional services and the Incentive
Compensation Plan. Additionally, ongoing efforts to control all
other selling, general and administrative costs have been
effective.
Interest expense for the first six months of 1995 has
increased $.7 million over the comparable 1994 period. This
increase is attributable to higher debt, in combination with lower
capitalized interest of $.2 million.
The Company has been identified as a potentially responsible
party (PRP) at several locations by the Environmental Protection
Agency. The effect on Company operations is not expected to be
material due to the minimal quantities of the Company's wastes
involved at the sites and because other corporations included as
primary PRP's at each location have resources available to satisfy
their potential obligations.
Liquidity and Capital Resources
During the first six months of 1995, cash provided by
operating activities was $7.9 million. Accounts receivable and
inventory levels rose 15.6% over December 31, 1994 necessitating
additional funding needs for this increase. Compared to the first
six months of 1994, investment in new equipment and facilities has
decreased approximately 49% as the construction of the new DeSoto
manufacturing facility has been completed. Of the Company's $40
million line of credit $30 million has been drawn, leaving an
unused balance of $10.0 million as of June 30, 1995. For the
balance of 1995, it is anticipated that any additional borrowings
will be minimal.
<PAGE>
PART II - OTHER INFORMATION
Item 1.) Legal Proceeding
None
Item 2.) Changes in Securities
None
Item 3.) Defaults Upon Senior Securities
None
Item 4.) Submission of Matters to a Vote of Securities Holders
None
Item 5.) Other Materially Important Events
On July 27, 1995, Charles F. Marcy was named
President and Chief Executive Officer, effective
August 14, 1995. Mr. Marcy will succeed Marvin W.
Ozley, who will remain a member of the Board of
Directors.
Item 6.) Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
<PAGE>
SALES OF UNREGISTERED SECURITIES
None
<PAGE>
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.
SEALRIGHT CO., INC.
Date: August 9, 1995 /s/ Marvin W. Ozley
By: Marvin W. Ozley
Chairman of the Board
Date: August 9, 1995 /s/ John T. Carper
By: John T. Carper
Vice President
Finance & CFO
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000712964
<NAME> SEALRIGHT CO., INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,431
<SECURITIES> 0
<RECEIVABLES> 31,304
<ALLOWANCES> 336
<INVENTORY> 52,549
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<CURRENT-LIABILITIES> 38,787
<BONDS> 82,461
<COMMON> 1,107
0
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<OTHER-SE> 115,324
<TOTAL-LIABILITY-AND-EQUITY> 257,021
<SALES> 154,673
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<OTHER-EXPENSES> 18,103
<LOSS-PROVISION> 163
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<INCOME-PRETAX> 10,035
<INCOME-TAX> 3,995
<INCOME-CONTINUING> 6,039
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