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Form 10-Q/A Amendment 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
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 0-14450
AEP INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Delaware 22-1916107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Phillips Avenue
South Hackensack, New Jersey 07606
(Address of principal executive offices) (Zip Code)
(201) 641-6600
(Registrant's telephone number, including area code)
Not Applicable
(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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares
Outstanding At
Class of Common Stock May 31, 1996
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$.01 Par Value 4,667,901
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AEP INDUSTRIES INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
UNAUDITED
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
April 30, April 30,
------------------------------- -------------------------------
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
NET SALES $ 55,821,000 $ 58,347,000 $ 110,591,000 $ 117,034,000
COST OF SALES 40,724,000 45,638,000 79,259,000 88,189,000
------------- ------------- ------------- -------------
Gross profit 15,097,000 12,709,000 31,332,000 28,845,000
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OPERATING EXPENSES
Delivery and Warehousing 4,546,000 3,846,000 8,901,000 8,243,000
Selling 3,411,000 3,000,000 6,783,000 6,344,000
General and Administrative 1,314,000 1,216,000 2,733,000 2,638,000
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Total operating expenses 9,271,000 8,062,000 18,417,000 17,225,000
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5,826,000 4,647,000 12,915,000 11,620,000
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OTHER INCOME (EXPENSE):
Interest expense (1,848,000) (425,000) (3,837,000) (828,000)
Other, net 27,000 448,000 139,000 511,000
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(1,821,000) 23,000 (3,698,000) (317,000)
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Income before provision for income taxes 4,005,000 4,670,000 9,217,000 11,303,000
PROVISION FOR INCOME TAXES 1,541,000 1,796,000 3,548,000 4,370,000
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Net income 2,464,000 2,874,000 5,669,000 6,933,000
Retained earnings, beginning of period 70,760,000 58,617,000 67,555,000 54,706,000
Cash dividends paid - 184,000 - 332,000
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Retained earnings, end of period $ 73,224,000 $ 61,307,000 $ 73,224,000 61,307,000
------------- ------------- ------------- -------------
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Net income per share of common stock $0.50 $0.39 $1.15 $0.94
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</TABLE>
The accompanying notes to financial statements are an integral part of
these statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1996 AS COMPARED TO THE THREE MONTHS ENDED
APRIL 30, 1995
NET SALES AND GROSS PROFIT
Net sales during the second quarter ended April 30, 1996, decreased 4% or
$2,526,000 to $55,347,000 compared to the same period in the prior year. This
decrease in net sales is a result of a 27% decrease in unit selling prices
partially offset by a 31% increase in sales volume.
The Company's gross profit for the second quarter of Fiscal 1996 amounted to
$15,097,000, a 19% increase from $12,709,000 in the prior fiscal year. The
gross profit improvement resulted from the 31% increase in sales volume, which
reduced per unit manufacturing costs, which was offset by increases in raw
material costs combined with additional manufacturing costs of approximately
$550,000 incurred by the simultaneous start-up of the Company's Pennsylvania
facility and close down of its New Jersey plant. The Company increased its
total plant manufacturing capacity by 17% from the same quarter in the prior
fiscal year, and such plants operated at 74% of total capacity.
OPERATING EXPENSES
Operating expenses for the second quarter ended April 30, 1996 increased by
$1,209,000 to $9,271,000 as compared to the same period in the prior fiscal
year. This 15% increase can be primarily attributed to the 31% increase in
sales volume during the period which resulted in increased selling, delivery and
warehousing costs of approximately $750,000. Additional costs of approximately
$250,000 were incurred during the period in the relocation of inventory from the
Company's New Jersey warehouse to its new facility in Pennsylvania.
INTEREST EXPENSE
Interest expense for the three months ended April 30, 1996, amounted to
$1,848,000, an increase of $1,423,000 from the same period in the prior year.
This increase in interest expense is due to the Company's new credit facility,
which replaced existing credit facilities and was used to finance the purchase
of shares of Common Stock for its treasury from its stockholders and its Chief
Executive Officer. These purchases were completed during the fourth quarter of
Fiscal 1995
OTHER INCOME
Other income for the three months ended April 30, 1996 amounted to $27,000. The
amount includes $12,000 in gains on sale of machinery and equipment and $15,000
of interest income earned for the period on corporate investments.
SIX MONTHS ENDED APRIL 30, 1996 AS COMPARED TO SIX MONTHS ENDED APRIL 30, 1995
NET SALES AND GROSS PROFIT
Net sales for the six months ended April 30, 1996 were $110,591,000, an decrease
of $6,443000 or 6% under the same period in the prior year. This decrease in
net sales is primarily the result of a 22% decrease in unit selling prices
offset by a 21% increase in sales volume.
The gross profit for the current six month period increased by $2,487,000 or 9%
to $31,332,000. The improvement in gross profit is primarily attributed to the
21% increase in sales volume offset by
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additional manufacturing costs relating to the start-up of the Company's
Pennsylvania facility and close down of its New Jersey plant. The Company
increased its total plant manufacturing capacity by 34% during the current six
month period when compared to the same period in the prior year. The Company
operated its plants at 73% of its capacity during the current period as compared
with 78% in the same period in the prior year.
OPERATING EXPENSES
Operating expenses for the current period increased 7%, or $1,192,000, to
$18,417,000 as compared to the same period in 1995. This increase can be
attributed to the 21% increase in the Company's sales volume for the period
which resulted in increased sales commissions earned and shipping and
warehousing charges incurred during the period.
INTEREST EXPENSE
Interest expense for the six months ended April 30, 1996, amounted to
$3,837,000, an increase of $3,009,000 from the same period in the prior year.
This increase in interest expense is due to the Company's new credit facility,
which replaced existing credit facilities and was used to finance the purchase
of shares of Common Stock for its treasury from its stockholders and its Chief
Executive Officer. These purchases were completed during the fourth quarter of
Fiscal 1995.
OTHER INCOME
Other income for the six months ended April 30, 1996 amounted to $139,000. The
amount includes $56,000 in gains on sale of machinery and equipment and $83,000
of interest and dividend income earned for the period on corporate investments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital amounted to $24,976,000 at April 30, 1996, as
compared to $15,030,000 at October 31, 1995. The increase in working capital
of $9,946,000 at April 30, 1996 can be primarily attributed to the reduction
in accounts payable which was funded by internally generated cash flow and
increased long-term debt. The remaining increases and decreases in
components of the Company's financial position reflect normal operating
activity.
The Company's future capital requirements relate principally to upgrading
existing equipment and facilities and promoting new and existing products in the
polyethylene film market. The Company will receive financing from the State of
Pennsylvania for its newly constructed facility in Wright Township, Pennsylvania
and believes that this borrowing combined with internally generated cash flow
plus the availability of the Company's credit facilities are sufficient to meet
its normal and additional capital requirements for the foreseeable future.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereto duly authorized.
AEP Industries Inc.
(Registrant)
By: s/a LAWRENCE R. NOLL
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Lawrence R. Noll
Vice President-Finance
and Secretary
