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.:
March 31, 1997 0-12392
RAWSON-KOENIG, INC.
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(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
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(Address of principal executive offices) (Zip Code)
(713) 688-4414
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(Registrant's telephone number, including area code)
N/A
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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:
--- ---
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of the Registrant's common stock as
of March 31, 1997: 3,901,190 shares of common stock.
-1-
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
Rawson-Koenig, Inc.
Condensed Balance Sheets
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 497 $ 334
Accounts receivable, net 1,629 1,269
Inventories:
Raw material 1,374 1,391
Work in process 1,417 1,554
Finished goods 702 996
Prepayments and other 124 107
------- -------
Total current assets 5,743 5,651
------- -------
Property, plant and equipment, at cost:
Land and buildings 3,825 3,815
Machinery and equipment 6,788 6,725
Accumulated depreciation and amortization (5,847) (5,702)
------- -------
Property, plant and equipment, net 4,766 4,838
------- -------
Total assets $10,509 $10,489
======= =======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
-2-
<PAGE>
Rawson-Koenig, Inc.
Condensed Balance Sheets, continued
(Unaudited)
(in thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities:
Current portion of long-term debt $ 232 $ 229
Accounts payable 787 685
Accrued expenses 417 858
Income taxes payable 151 79
------- -------
Total current liabilities 1,587 1,851
Long-term debt, less current portion 1,175 1,435
Deferred income taxes 54
------- -------
Total liabilities 2,816 3,286
------- -------
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 3,163 2,673
------- -------
Total shareholders' equity 7,693 7,203
------- -------
Total liabilities and shareholders' equity $10,509 $10,489
======= =======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
-3-
<PAGE>
Rawson-Koenig, Inc.
Condensed Statements of Operations
(Unaudited)
(in thousands, except per share data and average shares outstanding)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
Sales $ 5,411 $ 5,036
Cost of sales 3,990 3,868
--------- ---------
Gross profit 1,421 1,168
Selling, general and administrative expenses 806 736
--------- ---------
Income from operations 615 432
Other income (expense):
Interest expense (34) (44)
Other, net 6 4
--------- ---------
Income before income taxes 587 392
Income taxes:
Federal 82 112
State 15 19
--------- ---------
Net income $ 490 $ 261
========= =========
Net income per share $ .13 $ .07
========= =========
Average shares outstanding 3,901,190 3,901,190
========= =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
-4-
<PAGE>
Rawson-Koenig, Inc.
Condensed Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
------ ------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 490 $ 261
------ ------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 146 121
Change in assets and liabilities, net (142) 269
------ ------
Total adjustments 4 390
------ ------
Net cash provided by operating activities 494 651
Cash flows from investing activities:
Purchase of property and equipment, net ( 74) (138)
Cash flows from financing activities:
Decrease in borrowings, net (257) (692)
------ ------
Net increase (decrease) in cash and cash
equivalents 163 (179)
Cash and cash equivalents at beginning
of period 334 315
------ ------
Cash and cash equivalents at end
of period $ 497 $ 136
====== ======
Supplemental cash flow disclosure:
Income taxes paid $ - $ -
====== ======
Interest paid $ 36 $ 45
====== ======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
-5-
<PAGE>
Rawson-Koenig, Inc.
Notes to Condensed Financial Statements
March 31, 1997 and 1996
(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 ended March 31,
1997 and 1996, 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 been
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 to 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. Accrued Expenses:
At March 31, 1997, accrued expenses include $120,000 for potential
claims against the Registrant by its employees arising from injuries
incurred in the normal course of business prior to May 1, 1994. During
the quarter ended March 31, 1997, the liability for potential claims was
reduced from $400,000 to $120,000 which represents a decrease of $280,000.
This decrease was recorded in the financial statements as a reduction to
cost of sales in the quarter ended March 31, 1997. Included in the
$120,000 balance at March 31, 1997, is $45,000 that was paid in April 1997
to resolve a claim.
4. Debt Agreement:
At March 31, 1997, the Registrant's $2,200,000 revolving line of credit
agreement with a bank had a balance of zero.
5. Income Taxes:
The provisions for federal and state income taxes for the three months
ended March 31, 1997 and 1996, were computed by applying the estimated
effective annual tax rate to income before income taxes.
-6-
<PAGE>
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 percentage increase
(decrease) of such items as compared to the corresponding prior year
period.
<TABLE>
<CAPTION>
Percentage of
Sales
Three Months Ended Percentage
March 31, Increase
1997 1996 (Decrease)
---- ---- ----------
<S> <C> <C> <C>
Sales 100.0 100.0 7.4
Cost of sales 73.7 76.8 3.2
Selling, general and
administrative expenses 14.9 14.6 9.5
Interest expense .6 .9 (22.7)
Other, net (.1) (.1) 50.0
----- -----
Income before income taxes 10.9 7.8 49.7
Income taxes 1.8 2.6 (26.0)
----- -----
Net income 9.1 5.2 87.7
===== =====
</TABLE>
Results of Operations
Sales increased approximately $375,000 (7.4%) during the three months
ended March 31, 1997, compared to the same period of 1996. The increase
resulted primarily from the Registrant's intensified marketing efforts and
a sales price increase that was effective in January 1997.
Cost of sales as a percentage of sales decreased from 76.8% to 73.7%
for the three months ended March 31, 1997, compared to the same period of
1996. The percentage decrease was primarily due to a reduction in the
accrued liability for potential claims arising from employee injuries
incurred in the normal course of business prior to May 1, 1994. (See Note
3 on Page 6.)
Selling, general and administrative expenses increased 9.5% for the
three months ended March 31, 1997, compared to the same period of 1996.
The increase was primarily due to increases in health insurance costs and
payroll-related expenses.
-7-
<PAGE>
Interest expense decreased 22.7% for the three months ended March 31,
1997, compared to the same period of 1996. The decrease was primarily due
to lower average borrowings during 1997.
Income taxes decreased 26.0% for the three months ended March 31, 1997,
compared to the same period of 1996, primarily due to the effects of the
$280,000 reduction in the accrued liability for potential claims arising
from employee injuries incurred in the normal course of business prior to
May 1, 1994.
Financial Condition
The Registrant generated approximately $494,000 in cash from operations
during the three months ended March 31, 1997. The Registrant plans to fund
future operations from cash on hand, cash from operations and use of its
credit facility, which had an available revolving line of credit of
$2,200,000 at March 31, 1997.
In addition to the revolving line of credit, the Registrant has an
agreement with a bank to borrow up to $1,000,000 to finance equipment
purchases. At March 31, 1997, there were no borrowings under this
agreement.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Number Description
------- ------------
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months ended March
31, 1997.
-8-
<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.
RAWSON-KOENIG, INC.
Date: April 24, 1997 /s/ Thomas C. Rawson
-----------------------
Thomas C. Rawson
Chairman of the Board
/s/ Catherine A. Rawson
-----------------------
Catherine A. Rawson
Principal Financial Officer
/s/ Leslie T. Horvath
-----------------------
Leslie T. Horvath
Controller
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 497
<SECURITIES> 0
<RECEIVABLES> 1,629
<ALLOWANCES> 0
<INVENTORY> 3,493
<CURRENT-ASSETS> 5,743
<PP&E> 10,613
<DEPRECIATION> 5,847
<TOTAL-ASSETS> 10,509
<CURRENT-LIABILITIES> 1,587
<BONDS> 1,175
0
0
<COMMON> 1
<OTHER-SE> 7,692
<TOTAL-LIABILITY-AND-EQUITY> 10,509
<SALES> 5,411
<TOTAL-REVENUES> 5,411
<CGS> 3,990
<TOTAL-COSTS> 3,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 587
<INCOME-TAX> 97
<INCOME-CONTINUING> 490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 490
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
