FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
For the Quarter Ended January 31, 1995
Commission File Number 33-3466-A
Communication Cable, Inc.
Incorporated Under the Laws of North Carolina
I.R.S. Employer Identification Number 56-1433144
Communication Cable, Inc.
P.O. Box 1757
1378 Charleston Drive
Sanford, NC 27331
(919) 775-7775
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
Indicate by the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
Class Shares Outstanding
Common Stock, $1.00 par value 2,494,839
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Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
The following summary of financial information, which is unaudited,
reflects all adjustments (none of which were other than normal recurring
accruals) which are, in the opinion of management, necessary for a fair
statement of the information presented below for the balance sheet as of
January 31, 1995, the related statements of operations for the three months
ended January 31, 1995 and 1994, and the statement of cash flows for the
three months ended January 31, 1995 and 1994.
COMMUNICATION CABLE, INC.
CONDENSED STATEMENTS OF FINANCIAL CONDITION
January 31, October 31,
Assets 1995 1994
Current Assets: (Unaudited)
Cash (interest-bearing deposits) $ 1,524,090 $ 1,797,290
Accounts receivable:
Trade (less allowance for doubtful
accounts of $200,000 January 31,
1995 and October 31, 1994)
6,964,852 7,629,229
Other 68,658 95,123
Total accounts receivable 7,033,510 7,724,352
Inventories 10,082,879 9,148,240
Prepaid expenses 163,198 94,801
Deferred income taxes 196,495 196,495
Total current assets 19,000,172 18,961,178
Property, plant and equipment, net 8,296,929 8,450,256
Investment in sublease 348,994 350,933
Other assets 132,953 137,003
$27,779,048 $27,899,370
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 417,072 $ 417,072
Accounts payable, trade 3,138,314 3,160,336
Accrued salaries and wages 490,517 561,814
Income taxes (45,846) 88,025
Other accrued expenses 414,788 432,486
Total current liabilities 4,414,845 4,659,733
Long-term debt, excluding current installments 4,462,526 4,591,904
Deferred income taxes 630,969 630,969
Total liabilities $ 9,508,340 $ 9,882,606
Stockholders' equity:
Common stock with $1 par value; authorized
10,000,000 shares; 2,494,839 shares issued
and outstanding on January 31, 1995 and
October 31, 1994 $ 2,494,839 $ 2,494,839
Additional paid-in capital 16,750,853 16,750,853
Shareholder loan (16,695) (32,491)
Retained earnings (deficit) (958,289) (1,196,437)
Total stockholders' equity 18,270,708 18,016,764
$27,779,048 $27,899,370
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Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
COMMUNICATION CABLE, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
JANUARY 31,
1995 1994
Net Sales $12,754,209 $12,105,626
Cost of goods sold 10,181,083 9,344,261
Gross profit 2,573,126 2,761,365
Selling, general and
administrative expenses 2,293,848 2,037,614
Operating income 279,278 723,751
Other income (expense):
Interest expense (95,933)
(89,565)
Interest income 51,128 35,924
Expenses related to proposed merger (25,009) -
Other 4,537 13,277
(65,277) (40,364)
Earnings before income taxes 214,001 683,387
Income tax expense (benefit) (24,148) 255,590
Net earnings before cumulative
effective of change in
accounting principle 238,149 427,797
Cumulative effect of change in
accounting principle: (1) - 154,157
Net Earnings $ 238,149 $ 581,954
Earnings per share of common stock:
Earnings before cumulative effect
of change in accounting principle $ .09 $ .17
Cumulative effect of change in
accounting principle - .06
Net earnings $ .09 $ .23
Weighted average number of
common stock shares and
common stock equivalent
shares outstanding 2,570,548 2,567,661
(1) Adoption of Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes:
All share and per share data have been adjusted for the 8% stock dividend
which was paid April 30, 1994.
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Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
COMMUNICATION CABLE, INC.
Statements of Cash Flows
(UNAUDITED)
For the three month periods ended January 31, 1995 and 1994
1995 1994
Cash flows from operating activities:
Net earnings $ 238,149 $ 581,954
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation 293,991 258,002
Amortization of notes payable discounts 5,253 5,641
Deferred income taxes - (42,858)
Decrease in accounts receivable 690,842 233,604
Increase in inventories (934,639) (362,515)
Increase in prepaid expenses (68,397) (45,508)
Increase (decrease) in accounts payable (22,022) 454,667
Decrease in accrued expenses (222,866) (11,409)
Decrease in other assets 4,050 4,050
Total adjustments (253,788) 493,674
Net cash provided (used) by
operating activities (15,639) 1,075,628
Cash flows from investing activities:
Capital expenditures (140,665) (345,384)
Decrease in investment in sublease 1,939 -
Decrease in equipment held for resale - 44,800
Net cash used by investing activities (138,726) (300,584)
Cash flows from financing activities:
Repayment of debt (134,631) (134,932)
Proceeds from issuance of common stock
and repayment of Stockholder loan 15,796 44,396
Net cash used by financing activities (118,835) (90,536)
Net increase (decrease) in cash (273,200) 684,508
Cash at beginning of period 1,797,290 3,329,924
Cash at end of period $1,524,090 $4,014,432
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ 126,853 $ 93,760
Cash paid during the period for income taxes $ 109,723 $ 77,994
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Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
FOR THE THREE MONTH PERIOD ENDED JANUARY 31, 1995
Results of Operation
Net sales for the first quarter ended January 31, 1995, were $12,754,209
compared to $12,105,626 for the same period in 1994. The increase in sales
is due to increases in raw material prices which the Company has passed
through to its customers in the form of increased selling prices. The
average price of copper, one of the Company's principal raw materials,
increased by approximately 16% during the first quarter of 1995 and by
approximately 64% compared to its price at the beginning of the first
quarter of 1994.
Net earnings for the first quarter ended January 31, 1995, was $238,149 or
$.09 per share compared to net earnings before cumulative effect of change
in accounting principle for the first quarter ended January 31, 1994, of
$427,797 or $.17 per share. The first quarter ended January 31, 1995,
included an income tax benefit of approximately $103,000 or $.04 per share
for expenses totaling $279,085 incurred in the prior fiscal year related to
the proposed merger with Kuhlman which terminated January 10, 1995. On
November 1, 1993, the Company adopted SFAS 109, "Accounting For Income
Taxes", which required that deferred taxes be adjusted for the effects of
changes in tax laws and tax rates. In the first quarter ended January 31,
1994, the cumulative effect of this change in accounting principle
increased net earnings by $154,157 or $.06 per share. Net earnings for the
first quarter ended January 31, 1994, were $581,954 or $.23 per share.
The gross margin for the first quarter ended January 31, 1995, decreased to
20.2% from 22.8% for the first quarter of 1994. First quarter margins and
earnings were negatively impacted as "sticker shock" slowed demand as a result
of six-year highs in copper prices and increases in other raw material
prices. The Siler City division, which is one of our stronger performing
divisions, experienced decreased demand and price pressure for its TVRO
cables, which are used for satellite dishes, as the market attempts to sort
out the players in the telecommunications industry. TVRO products represented
approximately 10% of Fiscal 1994 net sales. The introduction of the smaller
satellite dish and its potential impact on the satellite TV market has created
buyer hesitation. The Aerospace Systems division's first quarter earnings
were negatively impacted by delays in shipping military products, as well as
the ongoing lower level of military sales.
Management considers the negative pressures experienced in the first
quarter to be temporary in nature. Raw material prices are beginning to
show signs of stabilizing. Once the TV and telecommunication industries
sort out the technologies to be used, CCI expects to supply cables to the
resulting markets. The decline in the military market will be offset by
shifts to commercial products in the long term.
On the positive side, our Intercomp division is setting new sales records
as a result of developing some specialty cables. The Texarkana division
has experienced strong bookings for its "Category" cables and has improved
plant efficiency by upgrading its product offerings.
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PART II OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
No voting by security holders during the quarter for which this
report is filed.
Item 6: Exhibits and Reports on Form 8-K
No Report on Form 8-K was filed by Registrant during the quarter
for which this report is filed.
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.
COMMUNICATION CABLE, INC.
(Registrant)
Date: March 8, 1995 (Signature of James R. Fore)
James R. Fore
President, Principal
Executive Officer
Date: March 8, 1995 (Signature of William B. Cooper)
William B. Cooper
Secretary-Treasurer, and
Vice President of Finance
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