FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1995
Commission File Number 0-14827
NATIONAL SANITARY SUPPLY COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 31-1079482
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(State or other jurisdiction of (IRS Employer Identification
incorporation of organization) No.)
2900 Chemed Center, 255 E. 5th St., Cincinnati, OH 45202-4729
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(Address of principal executive offices) (Zip code)
(513) 762-6500
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(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Amount Date
- ----- ------ ----
Common Stock 6,072,726 Shares April 28, 1995
$1 Par Value
Page 1 of 9
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NATIONAL SANITARY SUPPLY COMPANY
Index
<TABLE>
<CAPTION>
Page No.
<S> <C>
Part I. Financial Information: --------
Item 1. Financial Statements:
Consolidated Balance Sheet--
March 31, 1995 and
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Income--
Three months ended
March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows--
Three months ended
March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . 7
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 8
</TABLE>
Page 2 of 9
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Part I. Financial Information
Item 1. Financial Statements
NATIONAL SANITARY SUPPLY COMPANY
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
(thousands, except share data) 1995 1994
- ----------------------------------- ----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,894 $ 1,713
Accounts receivable, less allowances
(1995- $1,459; 1994- $1,428) 41,195 41,655
Inventories 27,703 28,344
Deferred income taxes 1,885 1,831
Prepaid expenses and other current assets 1,567 1,527
---------- -----------
Total current assets 74,244 75,070
Properties and equipment, at cost, less
accumulated depreciation 21,828 21,851
Goodwill, less accumulated amortization 26,469 26,650
Other assets 701 501
---------- -----------
Total assets $ 123,242 $ 124,072
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,973 $ 21,538
Accrued liabilities 13,300 12,552
Loans payable to Chemed Corporation 11,242 13,721
Current portion of notes to Chemed Corporation 1,000 1,000
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Total current liabilities 47,515 48,811
Notes to Chemed Corporation 16,000 16,000
Deferred income taxes 398 441
Other noncurrent liabilities 1,144 1,259
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Total liabilities 65,057 66,511
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Stockholders' equity:
Preferred stock - 1,000,000 shares authorized,
$1 par value (none issued) - -
Common stock - 7,000,000 shares authorized,
$1 par value (issued: 1995- 6,503,406 shares;
1994- 6,396,756 shares) 6,504 6,397
Paid-in capital 26,213 25,312
Retained earnings 29,060 28,695
Treasury stock, at cost (1995- 430,852
shares; 1994- 373,783 shares) (3,592) (2,843)
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Total stockholders' equity 58,185 57,561
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Total liabilities and stockholders' equity $ 123,242 $ 124,072
========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
Page 3 of 9
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NATIONAL SANITARY SUPPLY COMPANY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
(thousands, except per share data) 1995 1994
- ---------------------------------- --------- ---------
<S> <C> <C>
Sales $ 80,793 $ 71,460
Cost of sales 55,331 49,199
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Gross profit 25,462 22,261
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Expenses and other income:
Operating expenses 23,261 20,556
Amortization of goodwill 218 218
Chemed interest, net 662 545
Other income, net (47) (117)
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Total expenses and other income 24,094 21,202
--------- ---------
Income before income taxes 1,368 1,059
Income taxes 609 485
--------- ---------
Net income $ 759 $ 574
========= =========
Earnings per share $ 0.13 $ 0.10
========= =========
Cash dividends paid per share $ 0.065 $ 0.060
========= =========
Average shares outstanding 6,050 5,937
========= =========
The accompanying notes are an integral part of the financial statements.
</TABLE>
Page 4 of 9
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NATIONAL SANITARY SUPPLY COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
(thousands of dollars) 1995 1994
- ---------------------------------------------- --------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 759 $ 574
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 845 797
Amortization of goodwill and deferred
charges 293 311
Deferred income tax provision (81) (300)
Provision for uncollectible accounts
receivable 271 193
Changes in operating assets and
liabilities, excluding amounts acquired
in business combinations:
Decrease in accounts receivable 189 567
Decrease in inventories 641 2,200
(Increase)/decrease in other assets 54 (108)
Increase/(decrease) in accounts payable 435 785
Decrease in other liabilities 643 (574)
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Net cash provided by operating activities 4,049 4,445
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CASH FLOWS FROM INVESTING ACTIVITIES
Business combinations (52) (432)
Capital expenditures (855) (1,197)
Other 33 73
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Net cash used by investing activities (874) (1,556)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from payable to Chemed Corporation (2,479) (1,714)
Principal payments on other long-term debt (11) (11)
Dividends paid (394) (355)
Proceeds from/(purchase of) common stock (110) 148
--------- --------
Net cash used by financing activities (2,994) (1,932)
Increase in cash and cash equivalents 181 957
Cash and cash equivalents at beginning of period 1,713 1,110
--------- --------
Cash and cash equivalents at end of period $ 1,894 $ 2,067
========= ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
Page 5 of 9
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NATIONAL SANITARY SUPPLY COMPANY
Notes to Consolidated Financial Statements
(unaudited)
NOTE A. The accompanying unaudited financial statements have been prepared in
accordance with Rule 10-01 of SEC Regulation S-X. Consequently, they do not
include all the disclosures required under generally accepted accounting
principles for complete financial statements. However, in the opinion of the
management of National Sanitary Supply Company ("National"), the financial
statements presented herein contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position, the
results of operations and cash flows of National and its subsidiaries for the
periods indicated. For additional information concerning the accounting
policies of National, refer to the consolidated financial statements included
in the 1994 Annual Report on Form 10-K filed with the SEC on March 28, 1995.
NOTE B. Cash equivalents include highly liquid investments with maturities of
three months or less when purchased.
NOTE C. Earnings per common share are computed on the basis of the weighted
average number of shares of common stock outstanding during the respective
periods. The dilution that would result from shares issuable under National's
1986 and 1988 Stock Incentive Plans is not material.
Page 6 of 9
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Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
National Sanitary Supply Company's sales for the first quarter ended March 31,
1995 were $80,793,000, a 13% increase over sales of $71,460,000 in the first
quarter of 1994. Net income for the first quarter of 1995 was $759,000, a 32%
increase over net income of $574,000 reported in the prior-year first quarter.
Earnings per share of $.13 for the first quarter of 1995 increased 30% over
earnings per share of $.10 reported in the comparable prior-year quarter.
During the first quarter most of National's locations recorded double-digit
sales growth. Improved pricing in plastic and paper product categories, the
debut of a new full-line product catalog, new product introductions, and a
stronger economy fueled rapid sales growth during the quarter. National's
first quarter 1995 gross profit margin of 31.5% increased from 31.2% in the
first quarter of 1994, primarily the result of a slower growth in certain
overhead costs as a % of sales.
Operating expenses increased 13% during the first quarter of 1995 over the prior
year reflecting the additional sales volume and National's continued investment
in programs that will improve market share. For example, investments continue
to be made in the Midwest operating group in anticipation of future expansion
into new geographic markets. Additionally, National is investing in new sales
and training programs designed to enhance market penetration and improve selling
efficiencies.
The effective tax rate declined from 45.8% during the first quarter of 1994 to
44.5% during the first quarter of 1995, primarily due higher profits in states
with lower tax rates and spreading the same year-to-year level of nontax-
deductible goodwill over more income.
Liquidity and capital resources
- -------------------------------
Management believes that the company's cash flow from operations and other
sources of liquidity are sufficient for its needs. There were no material
changes in the Company's financial position during the first quarter of 1995.
Page 7 of 9
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
<TABLE>
<CAPTION>
SK 601
Exhibit No. Ref. No. Description Page No.
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<C> <C> <S> <S>
1 (11) Statement re: E-1
Computation of
Earnings Per Share
2 (27) Financial Data Schedule E-2
</TABLE>
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended March 31, 1995.
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.
National Sanitary Supply Company
--------------------------------
(Registrant)
Date May 10, 1995 By /s/Paul C. Voet
------------------ ----------------------------------
Paul C. Voet
President and
Chief Executive Officer
Date May 10, 1995 By /s/Gary H. Sander
------------------ ----------------------------------
Gary H. Sander
Vice President,
Treasurer and
Chief Financial Officer
Page 8 of 9
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EXHIBIT 11
NATIONAL SANITARY SUPPLY COMPANY
<F1>
COMPUTATION OF EARNINGS PER SHARE (a)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
(thousands, except per share data) March 31,
- ---------------------------------- ----------------------
1995 1994
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<S> <C> <C>
Computation of Earnings Per Common
and Common Equivalent Share
Net Income $ 759 $ 574
======= =======
Average Number of Shares of
Common Stock Outstanding 6,050 5,937
Incremental Effect of
Unexercised Stock Options 87 108
------- -------
Average Number of Shares of
Common Stock and Common Stock
Equivalents Outstanding 6,137 6,045
======= =======
Earnings per Common and Common
Equivalent Share $ 0.12 $ 0.09
======= =======
Computation of Earnings Per Common
Share Assuming Full Dilution
Net Income $ 759 $ 574
======= =======
Average Number of Shares of
Common Stock Outstanding 6,050 5,937
Incremental Effect of
Unexercised Stock Options 88 108
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Average Number of Shares of
Common Stock assuming
Full Dilution 6,138 6,045
======= =======
Earnings Per Common Share
Assuming Full Dilution $ 0.12 $ 0.09
======= =======
(a) This calculation is submitted in accordance with the Securities Exchange
Act of 1934. Because the incremental effect of unexercised stock options
results in dilution of less than 3%, the per share data presented in the
consolidated statement of income excludes the impact of common stock
equivalents.
</TABLE>
E-1
Page 9 of 9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-Q FOR
THE QUARTER ENDED MARCH 31, 1995 FOR NATIONAL SANITARY SUPPLY COMPANY AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000793500
<NAME> NATIONAL SANITARY SUPPLY CO
<MULTIPLIER> 1,000
<CAPTION>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,894
<SECURITIES> 0
<RECEIVABLES> 37,111
<ALLOWANCES> (1,459)
<INVENTORY> 27,703
<CURRENT-ASSETS> 74,244
<PP&E> 41,666
<DEPRECIATION> (19,838)
<TOTAL-ASSETS> 123,242
<CURRENT-LIABILITIES> 47,515
<BONDS> 16,000
<COMMON> 6,504
0
0
<OTHER-SE> 51,681
<TOTAL-LIABILITY-AND-EQUITY> 123,242
<SALES> 80,793
<TOTAL-REVENUES> 80,793
<CGS> 55,331
<TOTAL-COSTS> 55,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 271
<INTEREST-EXPENSE> 662
<INCOME-PRETAX> 1,368
<INCOME-TAX> 609
<INCOME-CONTINUING> 759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 759
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
