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 the quarter ended Commission File No.
June 30, 1995 0-12392
RAWSON-KOENIG, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1957377
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2301 Central Parkway, Houston, Texas 77092
(Address of principal executive (Zip Code)
offices)
(713) 688-4414
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
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of the Registrant's common stock as of
June 30, 1995: 3,901,190 shares of common stock.
1
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Rawson-Koenig, Inc.
Condensed Balance Sheets
(Unaudited)
(in thousands)
June 30, December 31,
1995 1994
Assets
Current assets:
Cash and cash equivalents $ 185 $ 193
Accounts receivable, net 1,758 1,609
Inventories:
Raw materials 1,975 1,526
Work in process 1,396 1,265
Finished goods 698 774
Prepayments and other 124 164
Total current assets 6,136 5,531
Property, plant and equipment, at cost:
Land and building 3,384 3,305
Machinery and equipment 5,395 5,069
Accumulated depreciation
and amortization (5,044) (4,816)
Property, plant and equipment, net 3,735 3,558
Total assets $ 9,871 $ 9,089
The accompanying notes are an integral part of these
financial statements.
2
Rawson-Koenig, Inc.
Condensed Balance Sheets, continued
(Unaudited)
(in thousands, except share amounts)
June 30, December 31,
1995 1994
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 209 $ 204
Current portion of capital lease
obligation 31 30
Accounts payable 563 651
Accrued expenses 829 837
Income taxes payable 2 233
Total current liabilities 1,634 1,955
Long-term debt, less current portion 2,399 1,829
Capital lease obligation, less current
portion 11 27
Total liabilities 4,044 3,811
Shareholders' equity:
Preferred stock, $10 par value, 1,000,000
shares authorized, none issued
Common stock, no par, $1,000 stated value,
5,000,000 shares authorized, 3,901,190
shares issued and outstanding 1 1
Additional paid-in capital 4,529 4,529
Retained earnings 1,297 748
Total shareholders' equity 5,827 5,278
Total liabilities and shareholders'
equity $ 9,871 $ 9,089
The accompanying notes are an integral part of these
financial statements.
3
Rawson-Koenig, Inc.
Condensed Statements of Operations
(Unaudited)
(in thousands, except per share data and average shares outstanding)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Sales $ 4,893 $ 4,568 $ 9,810 $ 8,764
Cost of sales 3,807 3,692 7,585 6,964
Gross profit 1,086 876 2,225 1,800
Selling, general and
administrative expenses 735 526 1,395 1,027
Income from operations 351 350 830 773
Other income (expense):
Interest expense (49) (57) (94) (115)
Other, net 41 24 82 37
Income before income taxes 343 317 818 695
Income taxes:
Federal 91 69 229 122
State 17 14 40 34
Net income $ 235 $ 234 $ 549 $ 539
Net income per share $ .06 $ .06 $ .14 $ .14
Average shares outstanding 3,901,190 3,901,190 3,901,190 3,901,190
The accompanying notes are an integral part of these
financial statements.
4
Rawson-Koenig, Inc.
Condensed Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1995 1994
Cash flow from operating activities:
Net income $ 549 $ 539
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 231 227
Change in assets and liabilities, net (940) (182)
Total adjustments (709) 45
Net cash provided by (used in) operating
activities (160) 584
Cash flows from investing activities:
Purchase of property and equipment, net (408) (110)
Cash flows from financing activities:
Increase (decrease) in borrowings, net 560 (355)
Net increase (decrease) in cash and cash
equivalents (8) 119
Cash and cash equivalents at beginning
of period 193 167
Cash and cash equivalents at end
of period $ 185 $ 286
Supplemental cash flow disclosure:
Income taxes paid $ 500 $ 124
Interest paid $ 94 $ 115
The accompanying notes are an integral part of these
financial statements.
5
Rawson-Koenig, Inc.
Notes to Condensed Financial Statements
June 30, 1995 and 1994
(Unaudited)
1. Nature of Organization
Rawson-Koenig, Inc. (the "Registrant"), a Texas corporation, designs,
manufactures and markets certain equipment for light trucks. Its chief
products are truck tool boxes, truck service bodies, winches and truck
mounted cranes.
2. Basis for Preparation of the Condensed Financial Statements
The condensed financial statements for the three months and six months
ended June 30, 1995 and 1994, have been prepared by the Registrant and are
unaudited. Certain information and footnote disclosures, including
significant accounting policies, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have
beeen condensed or omitted; however, the Registrant believes that the
disclosures are adequate to make the information presented not misleading.
All the adjustments which are, in the opinion of management, necessary for a
fair statement of the results of the interim periods have been included.
These condensed financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Registrant's
latest Annual Report to Shareholders on Form 10-K.
3. Income Taxes
The provisions for federal and state income tax for the three months and
six months ended June 30, 1995 and 1994, were computed by applying the
estimated effective annual tax rate to income before income taxes.
4. Debt Agreement
Effective April 21, 1995, the Registrant amended and restated its Letter
Loan Agreement with its primary lender. The restated agreement extended the
maturity date of the line of credit to April 30, 1997, and reduced the
interest rate on amounts outstanding under the line of credit to the bank's
prime rate of interest (9% at June 30, 1995). Interest on the line of credit
remains payable monthly and the maximum amount of credit available under the
line remains at $2,200,000. The $826,000 balance outstanding under the line
at June 30, 1995, is included in long-term debt in the accompanying balance
sheet.
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Rawson-Koenig, Inc.
Notes to Condensed Financial Statements, continued
June 30, 1995 and 1994
(Unaudited)
4. Debt Agreement, continued
The restated agreement also lowered the rate of interest on the
Registrant's Fort Worth real estate loan to the bank's prime rate. The loan,
which had a balance of $268,134 at June 30, 1995, is payable in monthly
installments of $5,830 plus interest and matures in April 1999.
The restated agreement also amended the Registrant's "Advancing Term
Promissory Note". Under the restated agreement, the Registrant may borrow up
to $1,000,000 to finance equipment purchases through April 30, 1996. Any
borrowings outstanding under the agreement as of April 30, 1996, will be
converted to a five year term loan and will be due in equal monthly principal
payments plus interest at the bank's prime rate. As of June 30, 1995, there
were no amounts outstanding under this facility.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following table sets forth for the periods indicated (i) the
percentages which certain items reflected in the statements of operations
bear to total sales of the Registrant and (ii) the pecentage increase
(decrease) of such items as compared to the corresponding prior year period.
Percentage of Percentage of
Sales Sales
3 Months Ended Percentage 6 Months Ended Percentage
June 30, Increase June 30, Increase
1995 1994 (Decrease) 1995 1994 (Decrease)
Sales 100.0 100.0 7.1 100.0 100.0 11.9
Cost of sales 77.8 80.8 3.1 77.3 79.5 8.9
Selling, general
and administrative
expenses 15.0 11.6 39.7 14.2 11.7 35.8
Interest expense 1.0 1.2 (14.0) 1.0 1.3 (18.3)
Other income, net (.8) (.5) 70.8 (.8) (.4) 121.6
Income before
income taxes 7.0 6.9 8.2 8.3 7.9 17.7
Income taxes 2.2 1.8 30.1 2.7 1.7 72.4
Net income 4.8 5.1 .4 5.6 6.2 1.9
Results of Operations
Sales increased approximately $325,000 (7.1%) during the three months
ended June 30, 1995, and increased approximately $1,046,000 (11.9%) during
the six months ended June 30, 1995, compared to the same periods of 1994.
These increases resulted primarily from the Registrant's intensified
marketing efforts in several territories and an improvement in national light
truck sales.
Cost of sales as a percentage of sales decreased from 80.8% to 77.8% for
the three months ended June 30, 1994 and 1995, respectively, and decreased
from 79.5% to 77.3% for the six months ended June 30, 1994 and 1995,
respectively. These decreases were due primarily to Management's continued
program of upgrading manufacturing equipment and refining production methods.
8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, continued
Selling, general and admistrative expenses increased 39.7% for the three
months ended June 30, 1995, and increased 35.8% for the six months ended June
30, 1995, compared to the same periods of 1994. These increases were
primarily due to increases in insurance costs and payroll-related expenses.
Additionally, during the three months ended June 30, 1995, approximately
$160,000 of office improvements and repairs were incurred of which $80,000
was expensed.
Interest expense decreased 14.0% for the three months ended June 30,
1995, and decreased 18.3% for the six months ended June 30, 1995, compared to
the same periods of 1994. These decreases were primarily due to the lower
average borrowings during the first five months of 1995.
Income taxes increased 30.1% for the three months ended June 30, 1995,
and increased 72.4% for the six months ended June 30, 1995, compared to the
same periods of 1994. These increases were due primarily to the utilization
of alternative minimum tax credit carryforwards during 1994 that resulted in
a lower effective tax rate for 1994 compared to 1995.
Financial Condition
The Registrant used approximately $8,000 of cash in operations during the
six months ended June 30, 1995. The Registrant plans to fund future
operations from cash on hand, cash from operations and use of its credit
facility, which had an available line of credit of approximately $1,374,000
at June 30, 1995, based on the applicable borrowing base calculation.
In addition to the line of credit, the Registrant has an agreement with a
bank to borrow up to $1,000,000 to finance equipment purchases. At June 30,
1995, there were no amounts outstanding under this agreement.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the six months ended June 30,
1995.
9
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.
RAWSON-KOENIG, INC.
Date: July 28, 1995 /s/ Thomas C. Rawson
Thomas C. Rawson
Chairman of the Board
Date: July 28, 1995 /s/ Catherine A. Rawson
Catherine A. Rawson
Principal Financial Officer
Date: July 28, 1995 /s/ Leslie T. Horvath
Leslie T. Horvath
Controller
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