<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)*
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30,
1995, or
[ ] 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 0-12130
________________
RAUCH INDUSTRIES, INC.
______________________________________________
(Exact name of registrant as specified in its charter)
North Carolina 56-0749456
______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
PO Box 609, Gastonia, North Carolina 28053-0609
____________________________________________________________
(Address of principal executive offices)
(Zip Code)
(704) 867-5333
__________________________________________________________________
(Registrant's telephone number, including area code)
____________________________________________________________________
(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
______ ______
Outstanding shares of $1.00 par value Common Stock of Registrant as
of September 30, 1995: 3,695,563
<PAGE>
RAUCH INDUSTRIES, INC.
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements:
Balance Sheets -- September 30, 1995, September 30, 1994
and December 31, 1994----------------------------------- 4
Statements of Income -- Three Months Ended
September 30, 1995 and September 30, 1994--------------- 5
Statements of Income -- Nine Months Ended
September 30, 1995 and September 30, 1994------------------- 6
Statement of Cash Flows -- Nine Months
Ended September 30, 1995 and September 30, 1994--------- 7
Notes to Financial Statements------------------------------ 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations---------------------------------------9-11
Part II. Other Information:
Item 1. Legal Proceedings-------------------------------------12
Item 2. Changes in Securities---------------------------------12
Item 3. Defaults Upon Senior Securities-----------------------12
Item 4. Submission of Matters to a Vote of Security
Holders--------------------------------------------12
Item 5. Other Information-------------------------------------12
Item 6. Exhibits and Reports on Form 8-K----------------------12
Signatures------------------------------------------------------- 13
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<PAGE>
RAUCH INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The condensed financial statements included herein have been
prepared by the registrant without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
accounting principles have been omitted pursuant to such rules and
regulations, although the registrant believes that the disclosures
herein are adequate to make the information presented not misleading.
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RAUCH INDUSTRIES, INC.
BALANCE SHEETS
9-30-95 9-30-94
(Unaudited) (Unaudited) 12-31-94
ASSETS
______
Current assets:
Cash and cash
equivalents $ -0- $ -0- $ 1,695,120
Accounts receivable 27,957,328 24,308,358 20,167,583
Recoverable from insurance
carrier 5,395,894 -0- 3,552,095
Inventories at LIFO 27,963,191 27,562,733 10,104,166
Prepaid expenses 403,587 600,971 355,943
Deferred income taxes 474,000 268,000 474,000
Refundable income taxes -0- -0- 432,431
Total current assets 62,194,000 52,740,062 36,781,338
Property and equipment, at cost 15,153,285 15,113,467 12,950,427
Less: accumulated depreciation 7,699,770 8,844,320 7,314,260
7,453,515 6,269,147 5,636,167
Other assets 385,951 128,382 326,822
Excess of cost over net assets
of companies acquired 3,195,833 -0- -0-
$73,229,299 $59,137,591 $42,744,327
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Current liabilities:
Cash overdraft $ 1,559,641 $ 1,494,692 $ -0-
Current portion of long-term
debt 1,200,000 716,820 661,820
Notes payable-bank 19,437,000 19,492,000 9,405,000
Accounts payable-trade 5,166,534 4,122,282 1,344,626
Accrued liabilities 2,097,015 1,327,416 834,477
Accrued income taxes 657,245 468,549 -0-
Total current liabilities 30,117,435 27,621,759 12,245,923
Long-term debt 11,600,000 4,500,000 4,375,000
Deferred income taxes 1,713,000 159,000 187,000
Stockholders' equity:
Common stock 3,754,490 3,754,490 3,754,490
Additional paid-in capital 3,151,572 3,151,572 3,151,572
Retained earnings 23,008,837 20,066,805 19,146,377
Treasury stock (116,035) (116,035) (116,035)
29,798,864 26,856,832 25,936,404
$73,229,299 $59,137,591 $42,744,327
-4-
<PAGE>
RAUCH INDUSTRIES, INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended September 30
1995 1994
Net sales $ 25,946,994 $ 23,191,623
Cost of sales 20,121,648 17,176,749
Selling, general and administrative 3,454,626 2,732,707
Income from operations 2,370,720 3,282,167
Interest expense (415,848) (232,627)
Other income 47,522 10,844
Gain from insurance settlement 4,358,993 -0-
3,990,667 (221,783)
Income before provision for
income tax 6,361,387 3,060,384
Provision for income tax 2,280,356 1,101,453
Net income $ 4,081,031 $ 1,958,931
Per Common Share:
Net income $ 1.10 $ 0.53
Weighted average number of shares
outstanding 3,695,563 3,695,563
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<PAGE>
RAUCH INDUSTRIES, INC.
STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended September 30
1995 1994
Net sales $ 32,840,034 $ 26,382,385
Cost of sales 25,104,916 19,604,602
Selling, general and administrative 6,965,286 5,268,271
Income from operations 769,832 1,509,512
Interest expense (785,473) (334,481)
Other income 107,163 58,568
Gain from insurance settlement 6,274,730 -0-
5,596,420 (275,913)
Income before provision for
income tax 6,366,252 1,233,599
Provision for income tax 2,282,057 437,849
Net income $ 4,084,195 $ 795,750
Per common share
Net income $ 1.11 $ 0.22
Weighted average number of shares
outstanding 3,695,563 3,695,563
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<PAGE>
RAUCH INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Nine Months Nine Months
Ended 9-30-95 Ended 9-30-94
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income......................... $ 4,084,195 $ 795,750
Adjustments to reconcile net income
to net cash used in
operating activities:
Depreciation..................... 379,201 393,248
Amortization..................... 74,415 -0-
Loss on sale of equipment........ 18,812 -0-
Deferred income taxes............ 1,526,000 -0-
Recoverable from insurance
carrier........................ (1,843,799) -0-
Changes in operating assets
and liabilities................ (18,913,251) (22,137,329)
(Increase) decrease in other
assets......................... (56,824) 246,417
Net cash used in operating
activities..................... (14,731,251) (20,701,914)
Cash flows from investing activities:
Purchase of property and equipment.. (2,223,194) (2,869,819)
Proceeds from sale of equipment..... 28,500 -0-
Acquisition of new business......... (4,000,000) -0-
Net cash used in investing
activities...................... (6,194,694) (2,869,819)
Cash flows from financing activities:
Payment of dividends................ (221,735) (209,536)
Increase in cash overdraft.......... 1,657,380 1,494,692
Payments on long-term debt.......... (411,820) (300,000)
Repayments of notes payable......... (16,599,000) (19,748,000)
Proceeds from notes payable......... 34,806,000 32,300,000
Net cash provided by financing
activities...................... 19,230,825 13,537,156
Net decrease in cash and
cash equivalent................. (1,695,120) (10,034,577)
Cash and cash equivalents
beginning of the period............. 1,695,120 10,034,577
Cash and cash equivalents
end of the period................... $ -0- $ -0-
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<PAGE>
NOTES TO FINANCIAL STATEMENTS:
Note A - Basis of Presentation
______________________________
The accompanying financial statements have been prepared in accordance
with the instructions to Form 10-Q. Although they are unaudited, the
Company believes that all adjustments necessary for a fair presentation
of the results of operations have been made.
Note B - Seasonal Nature of Business
____________________________________
The Company's business is seasonal in nature. Therefore, the results of
the operations for interim periods are not necessarily indicative of
the results for the fiscal year taken as a whole.
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
Net sales for the quarter ended September 30, 1995 were $25,946,994 as
compared to $23,191,623 for the quarter ended September 30, 1994. This
is an increase of $2,755,371 or 12%. As of April 1, 1995, the Company
acquired Rochard, Inc. ("Rochard"). Rauch began reporting the financial
condition and results of operations of Rochard and Rauch on a
consolidated basis as of that date. The Company's third quarter 1995
sales results, therefore, include Rochard's net sales for the quarter
of $1,258,755.
Selling, general and administrative expenses for the quarter were
$3,454,626 as compared to $2,732,707 for the third quarter of 1994.
This is an increase of $721,919 or 26%. Included in selling, general
and administrative expenses for the quarter is $682,126 associated with
Rochard's operations. Interest expense for the quarter was $415,848 as
compared to $232,627 for the comparable quarter of 1994. This is an
increase of $183,221 or 79%. Such increase is a result of increased
borrowings for operations and capital expenditures required due to the
Cramerton fire described below and for the Rochard acquisition.
Other income for the quarter ended September 30, 1995 was $47,522 as
compared to $10,844 for the same quarter of 1994. This income consists
primarily of rental, interest, and commission income.
On October 19, 1994, a fire destroyed the Company's warehousing and
manufacturing facility in Cramerton, North Carolina. The Company had
insurance on the building, equipment, and raw materials at replacement
value. Finished goods were insured at net selling price. During the
third quarter the Company settled with its insurance carrier on the
equipment portion of this claim. A gain of $4.36 million on this
portion of the claim is reported as income in the third quarter.
Net income for the quarter ended September 30, 1995 was $4,081,031, or
$1.10 per share, as compared to $1,958,931, or $.53 per share, for the
corresponding quarter in 1994 as the gain from the insurance settlement
described above more than offset cost increases from the Cramerton fire
as well as increases in payroll and benefits and other manufacturing
costs.
-9-
<PAGE>
The Company's accounts receivable at September 30, 1995 were $28.0
million as compared to $24.3 million at September 30, 1994. This is an
increase of $3.7 million. Rochard receivables at September 30, 1995
were $.6 million. The increase in non-Rochard receivables for the
period was due to increased shipments by the Company for the quarter
and for the first nine months of 1995. Inventories at September 30,
1995 were $28.0 million as compared to $27.6 million at the same time
in 1994. This is an increase of $.4 million. Rochard inventories of $.8
million offset a decline in parent company inventories attributable to
the aforementioned fire and increased shipments as compared with the
prior year.
Net property, plant and equipment increased by $1.2 million at
September 30, 1995 as compared to September 30, 1994. Acquisitions of a
manufacturing and warehouse facility in El Paso, Texas, along with the
purchase of new machinery and data processing equipment offset the $1.1
million in Cramerton property and equipment that was destroyed in the
fire described above.
On May 31, 1995 the Company signed a new loan agreement with its bank
giving it a $40 million revolving line of credit. The term portion of
the facility is in the amount of $12,800,000.
The revolving portion of the Company's bank facility gives the Company
funds on a short-term basis for its normal operations. The term loan
was used to refinance the Company's prior term facility and to provide
the Company with permanent working capital. Those loans account for the
difference in the current notes payable and long-term debt on the
balance sheet.
Accounts payable at September 30, 1994 were $5.2 million as compared to
$4.1 million at September 30, 1994. This is an increase of $1.1
million. Rochard payables at September 30, 1995 were $.3 million.
The Company remains strong financially. Working capital at September
30, 1995 was $32.1 million as compared to $25.1 million at September
30, 1994. Book value per common share at September 30, 1995 was
$8.06 as compared to $7.27 at September 30, 1994.
The Company derives over 90% of its revenue from the manufacture of
Christmas decorations. Approximately 90% of the Company's shipments
occur in the third and fourth quarters. Because of the highly seasonal
nature of its business, the Company's first and second quarters are
traditionally loss quarters. The Company's profits are generated during
the last six months of the calendar year.
-10-
<PAGE>
Total orders received at September 30, 1995 were approximately $58.6
million as compared to $57.2 million at the same time last year. As of
this date, total orders received have risen to approximately $60.1
million against $58.5 million at the same time last year. Rochard
orders included in the 1995 orders at September 30, 1995 and as of this
date were $3.1 million and $3.7 million, respectively.
Management has made plans to rent space needed by the Company for 1996
with a view to rebuilding as soon as possible. Although cost increases
have resulted from the fire at the Company's Cramerton facility and its
efforts to implement alternative shipping arrangements in response thereto,
the fire should not materially affect the Company's ability to ship
merchandise as usual in 1995 or 1996.
It is currently anticipated that funds generated internally from
operations and the short-term line of credit available to the Company
should be adequate to meet the working capital needs of the Company for
the balance of 1995, and the near future.
-11-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
__________________________
None
Item 2. Changes in Securities
______________________________
None
Item 3. Defaults Upon Senior Securities
________________________________________
None
Item 4. Submission of Matters to a Vote of Security Holders
____________________________________________________________
None
Item 5. Other Information
__________________________
None
Item 6. Exhibits and Reports on Form 8-K
_________________________________________
(a) None
(b) Reports on Form 8-K -
There were no reports on Form 8-K filed during the three
months ended September 30, 1995.
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<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.
Rauch Industries, Inc.
__________________________
Registrant
DATE November 14, 1995
_________________________
By: /s/Marshall A. Rauch
_____________________
Marshall A. Rauch
Chairman of the Board
DATE November 14, 1995
_______________________
By: /s/Donald G. Walser
____________________
Donald G. Walser
Executive Vice President-Finance,
Treasurer and Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000715817
<NAME> RAUCH INDUSTRIES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 28,162,328
<ALLOWANCES> (205,000)
<INVENTORY> 27,963,191
<CURRENT-ASSETS> 62,194,000
<PP&E> 15,153,285
<DEPRECIATION> 7,699,770
<TOTAL-ASSETS> 73,229,299
<CURRENT-LIABILITIES> 30,117,435
<BONDS> 0
<COMMON> 3,754,490
0
0
<OTHER-SE> 26,044,374
<TOTAL-LIABILITY-AND-EQUITY> 73,229,299
<SALES> 32,840,034
<TOTAL-REVENUES> 39,221,927
<CGS> 25,104,916
<TOTAL-COSTS> 32,070,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 785,473
<INCOME-PRETAX> 6,366,252
<INCOME-TAX> 2,282,057
<INCOME-CONTINUING> 4,084,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,084,195
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
<PAGE>
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