<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
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 0-15051
AMERICAN CONSUMER PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 34-1376833
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
31100 Solon Road, Solon, Ohio 44139
---------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (216) 248-7000
--------------
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, as amended, during the preceding 12 months (or for such shorter period
that 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.
Common Shares, $.10 per value 2,471,179 Shares
----------------------------- -------------------------------
(Class) (Outstanding at August 1, 1995)
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($ in 000's except per share data)
<TABLE>
<CAPTION>
13 Weeks 13 Weeks 26 Weeks 27 Weeks
Ended Ended Ended Ended
July 1, 1995 July 2, 1994 July 1, 1995 July 2,1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales ...................................... $25,402 $25,552 $51,402 $50,837
Cost of Goods Sold ............................. 18,456 18,952 38,182 38,051
------- ------- ------- -------
Gross Profit ................................... 6,946 6,600 13,220 12,786
Operating Expenses ............................. 6,093 5,693 11,822 11,283
Loss on Sale of Sharon Fastener Division ....... 2,428 -- 2,428 --
------- ------- ------- -------
Income (Loss) from Operations .................. (1,575) 907 (1,030) 1,503
Costs Associated With Abandoned
Business Combination ......................... -- 180 -- 370
Interest Expense ............................... 721 608 1,416 1,106
------- ------- ------- -------
Income (Loss) Before Income Taxes .............. (2,296) 119 (2,446) 27
Provision for Income Taxes ..................... (37) 47 (105) 10
------- ------- ------- -------
Net Income (Loss) .............................. ($2,259) $72 ($2,341) $17
======= ======= ======= =======
Net Income (Loss) Per Common Share ............. $ (.91) $ .03 $ (.94) $ .01
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
July 1, 1995 Dec. 31, 1994
------------ -------------
($ in 000's)
<S> <C> <C>
ASSETS
Current Assets:
Cash ............................................................... $103 $209
Accounts receivable, net of allowance for doubtful
accounts of $1,201,000 and $1,251,000, respectively .............. 15,305 15,255
Inventories ........................................................ 24,520 28,622
Prepaid expenses and other assets .................................. 2,106 2,176
------- -------
Total current assets ............................................. 42,034 46,262
------- -------
Property and Equipment, at cost:
Machinery and equipment ............................................ 25,221 29,641
Furniture and fixtures ............................................. 1,192 1,499
Leasehold improvements ............................................. 2,019 2,080
------- -------
28,432 33,220
Less-Accumulated depreciation ...................................... (19,928) (22,863)
------- -------
8,504 10,357
Other Assets:
Cost in excess of net tangible assets of acquired
businesses, net .................................................. 314 2,575
Deferred income taxes .............................................. 488 488
Deferred costs and other assets .................................... 210 248
------- -------
1,012 3,311
------- -------
Total assets ..................................................... $51,550 $59,930
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term obligations ......................... $402 $395
Accounts payable .................................................... 4,777 5,295
Accrued payroll and related expenses ................................ 2,520 2,965
Accrued expenses .................................................... 1,684 1,197
Accrued interest .................................................... 729 700
Accrued and deferred income taxes ................................... 300 503
------- -------
Total current liabilities ......................................... 10,412 11,055
------- -------
Long-term Obligations, net of current maturities .......................... 24,713 30,130
------- -------
Stockholders' Equity:
Series preferred stock, $.10 par value;
authorized 500,000 shares; none issued ............................ -- --
Common stock, $.10 par value; 5,000,000 authorized;
2,471,179 shares outstanding in 1995 and 1994, respectively ....... 247 247
Additional paid-in capital .......................................... 8,089 8,089
Foreign currency translation adjustment ............................. 55 34
Retained earnings ................................................... 8,034 10,375
------- -------
Total stockholders' equity ........................................ 16,425 18,745
------- -------
Total liabilities and stockholders'equity ......................... $51,550 $59,930
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in 000's)
<TABLE>
<CAPTION>
26 Weeks Ended 27 Weeks Ended
July 1, 1995 July 2, 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income (loss) .............................................. ($2,341) $ 17
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Loss on sale of Sharon Fastener division ..................... 2,428 --
Depreciation and amortization ................................ 1,704 1,640
Changes in assets and liabilities:
Accounts receivable ........................................ 23 (385)
Inventories ................................................. (590) (1,335)
Prepaid expenses and other assets .......................... 680 107
Accounts payable and accrued expenses ....................... (711) (754)
Accrued and deferred income taxes ........................... (203) 26
Deferred costs and other ................................... 10 26
------- ------
Net cash provided by (used for) operating activities ....... 1,000 (658)
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of Sharon Fastener division, net of escrow
and transaction costs ......................................... 5,802 --
Capital expenditures ............................................ (1,498) (2,661)
------- ------
Net cash provided by (used in) investing activities ........ 4,304 (2,661)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving line of credit ....................... 12,324 13,740
Repayments under revolving line of credit ...................... (17,600) (10,200)
Repayment of other long-term obligations ........................ (134) (162)
------- ------
Net cash provided by (used for) financing activities ...... (5,410) 3,378
------- ------
Net increase (decrease) in cash ............................ (106) 59
Cash at beginning of period ............................... 209 109
------- ------
Cash at end of period ...................................... $ 103 $ 168
======= ======
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the period for:
Interest .................................................. $ 1,392 $1,017
Income taxes ............................................. 96 (18)
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
AMERICAN CONSUMER PRODUCTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Company has, in its opinion, included all the adjustments
(consisting only of normal adjustments and accruals) necessary for a fair
presentation of the Company's financial position, the results of operations and
the cash flows for each period. The consolidated financial statements and notes
thereto have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission and should be read in conjunction with the
financial statements and notes for the three years ended December 31, 1994
included in the Company's 1994 Annual Report (Form 10-K).
Because of seasonal factors, the earnings for the quarter ended July 1, 1995
should not be taken as an indication of earnings for all or any part of the
balance of the year.
2. The Company maintains its accounts on a 52-53 week year. The six month
period ended July 1, 1995 contained 26 weeks. The six month period ended July
2, 1994 contained 27 weeks. The quarters ended July 1, 1995 and July 2, 1994
each contained 13 weeks.
3. Earnings per share have been calculated using the weighted average
number of shares outstanding during each period. This calculation also assumes
that outstanding shares were increased by shares issuable upon exercise of
options as to which average market price exceeds the exercise price, less
shares which could have been purchased with related proceeds. The average for
the 13 weeks ended July 1, 1995 was 2,483,000 shares and for the 13 weeks ended
July 2, 1994 was 2,472,000 shares. The average for the 26 weeks ended July 1,
1995 was 2,485,000 shares and for the 27 weeks ended July 2, 1994 was 2,472,000
shares.
4. Inventories at July 1, 1995 and December 31, 1994 consisted of:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(in thousands)
<S> <C> <C>
Raw Materials ................................. $ 4,349 $ 6,224
Work in Process and Finished Goods ............ 22,116 23,056
------- -------
26,465 29,280
LIFO Reserve .................................. (1,945) (658)
------- -------
$24,520 $28,622
======= =======
</TABLE>
5. On June 23, 1995, the Company sold substantially all of the assets of
its Sharon Fastener division (the "Division") for approximately $7,000,000 cash
and the assumption of approximately $90,000 of the Division's obligations. The
proceeds received at closing of $6,300,000 were applied to reduce outstanding
indebtedness under the Company's revolving credit facility. The sale resulted
in a pretax loss of $2,428,000 ($2,331,000 after tax).
In connection with the sale of assets, the Company entered into a sales
representation agreement with the buyer under which ACPI will continue to serve
as a sales representative for Sharon Fastener.
The terms of the Company's credit agreement with National City Bank of
Cleveland and National Bank of Detroit require a reduction in the maximum
borrowings under the revolving credit facility as a result of the sale of the
Division. The amount of the reduction is based upon the amount of the sale
proceeds and the borrowing availability previously generated by the assets
sold. The maximum borrowings under the credit agreement have been reduced from
$35,000,000 to $32,650,000 as of the closing and will be further reduced to
approximately $30,000,000 by September 30, 1995.
6. An agreement entered into in March 1994 providing for a combination
with Curtis Industries, Inc., was terminated by the parties and the combination
abandoned in July 1994. Consulting, legal and other expenses related to the
terminated business combination were $180,000 for the 13 weeks ended July 2,
1994 and $370,000 for the 27 weeks ended July 2, 1994.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL POSITION
(All comparisons are, unless otherwise noted, to the comparable period in 1994)
A. CONSOLIDATED RESULTS OF OPERATIONS
Net Sales for the 13 weeks ended July 1, 1995 decreased $150,000 (0.6%)
compared to the 13 weeks ended July 2, 1994. Net Sales for the 26 weeks ended
July 1, 1995 increased $565,000 (1.1%) over the 27 weeks ended July 2, 1994.
Sales for 1995 include price increases implemented to offset increases in the
costs of some of the raw materials used in manufacturing the Company's products.
Gross Profit for the second quarter of 1995 increased $346,000 (5.2%) to
$6,946,000 and increased $434,000 (3.4%) to $13,220,000 for the 26 weeks ended
July 1, 1995. The gross profit percentage increased from 25.8% in the second
quarter of 1994 to 27.3% in the second quarter of 1995. The gross profit
percentage increased from 25.2% in the 27 weeks ended July 2, 1994 to 25.7%
in the 26 weeks ended July 1,1995. The increases in the gross profit
percentagein thesecond quarterand the 26 week period primarily resulted from
reductions in distribution costs, with a significant portion of the reductions
occurring in the Sharon Fastener division.
Operating Expenses increased by $400,000 (7.0%) to $6,093,000 for the 13 weeks
ended July 1, 1995 and increased by $539,000 (4.8%) to $11,822,000 for the 26
weeks ended July 1, 1995. These increases were primarily due to increases in
expenditures for the development of new key cutting technology.
On June 23, 1995, the Company sold substantially all of the assets of its
Sharon Fastener division (the "Division") for approximately $7,000,000 cash and
the assumption of approximately $90,000 of the Division's obligations. The
proceeds received at closing of $6,300,000 were applied to reduce outstanding
indebtedness under the Company's revolving credit facility. The sale resulted
in a pretax loss of $2,428,000 ($2,331,000 after tax).
In connection with the sale of assets, the Company entered into a sales
representation agreement with the buyer under which ACPI will continue to serve
as a sales representative for Sharon Fastener.
Income from Operations decreased $2,482,000 for the second quarter of 1995 and
decreased $2,533,000 for the 26 weeks ended July 1, 1995.
An agreement entered into in March 1994 providing for a combination with Curtis
Industries, Inc. was terminated by the parties and the combination abandoned
in July 1994. Consulting, legal and other expenses related to the terminated
business combination were $180,000 for the 13 weeks ended July 2, 1994 and
$370,000 for the 27 weeks ended July 2, 1994.
Interest Expense increased $113,000 for the quarter ended July 1,1995 and
increased $310,000 for the 26 weeks ended July 1,1995. These increases are
primarily attributable to increases in the prime rate, on which a substantial
portion of the Company's interest costs are based.
6
<PAGE> 7
The effective income tax rate decreased from 39.5% in the second quarter of
1994 to 1.6% in the second quarter of 1995 and decreased from 37.0% in the 27
weeks ended July 2, 1994 to 4.3% in the 26 weeks ended July 1, 1995. This
decrease in the effective tax rate was primarily attributable to the write-off
of cost in excess of net tangible assets of acquired businesses in connection
with the sale of the Sharon Fastener division, which is not deductible for tax
purposes.
The Company generated a Net Loss of $2,259,000 in the second quarter of 1995 as
compared to Net Income of $72,000 in the first quarter of 1994. For the 26
weeks ended July 1, 1995, the Company generated a Net Loss of $2,341,000 as
compared to Net Income of $17,000 in the 27 weeks ended July 2, 1994.
The table below presents the Company's operating results without the loss on
sale of Sharon Fastener, for comparative purposes.
<TABLE>
<CAPTION>
13 Weeks 13 Weeks 26 Weeks 27 Weeks
Ended Ended Ended Ended
July 1, 1995 July 2, 1994 July 1, 1995 July 2, 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales ................................... $25,402 $25,552 $51,402 $50,837
Gross Profit ................................ 6,946 6,600 13,220 12,786
Income from Operations....................... 853 907 1,398 1,503
Income (Loss) Before Income Taxes............ 132 119 (18) 27
Net Income (Loss)............................ $ 72 $ 72 $ (10) $ 17
</TABLE>
B. FINANCIAL CONDITION
Working capital decreased $3,585,000 from year-end to $31,622,000 at July 1,
1995. Long-term borrowings decreased by $5,417,000 at July 1, 1995 as compared
to December 31, 1994. These decreases are primarily the result of the sale of
the Sharon Fastener division.
The terms of the Company's credit agreement with National City Bank of
Cleveland and National Bank of Detroit require a reduction in the maximum
borrowings under the revolving credit facility as a result of the sale of the
Sharon Fastener division. The amount of the reduction is based upon the amount
of the sale proceeds and the borrowing availability previously provided by the
assets sold. The maximum borrowings under the credit agreement have been
reduced from $35,000,000 to $32,650,000 and will be further reduced to
approximately $30,000,000 by September 30, 1995. As of July 1, 1995, the
Company had $6,100,000 available under the revolving line of credit. Based
upon the reductions to be effected by September 30, 1995 as a result of the
sale of the Sharon Fastener division, the availability at July 1, 1995 would
have been approximately $4,500,000. The line of credit bears interest at the
base rate plus 3/8% and is secured by accounts receivable, inventories and
equipment.
The Company's liquidity is primarily affected by the levels of working capital
and capital expenditures, in both the short-term and long-term. No significant
changes are anticipated in the amount of working capital. Capital expenditures
for 1995 are anticipated to continue to increase as a result of the placement
of the Company's newly designed key cutting equipment and the ongoing
installation and development of new computer systems. The Company's scheduled
repayments of long-term obligations for the remainder of 1995 and for 1996 are
approximately $260,000 and $408,000, respectively. The Company believes that
it has adequate capital available to meet its current operating needs and
anticipated capital requirements.
7
<PAGE> 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
a) The Company's 1995 Annual Meeting of Stockholders was held on May
4, 1995.
b) Proxies were solicited by Company management pursuant to
Regulation 14 under the Securities Exchange Act of 1934.
c) Proposals approved by the stockholders at the annual meeting were
as follows:
1) There was no solicitation in opposition to management's
nominees as listed in the proxy statement, and all such
nominees were elected pursuant to the vote of stockholders
The nominees that were elected were Stephan W. Cole, Richard
F. Bern, Jeffrey A. Cole, Malvin E. Bank and Frank W. Hulse.
(The vote reported below was the same for each nominee.)
2) Grants of options to acquire Common Shares of the Corporation
to the directors of the Corporation.
3) Ratification of the appointment of Arthur Andersen LLP as
independent auditors for 1995.
There were no other matters voted upon.
The votes on the above proposals were:
<TABLE>
<CAPTION>
ABSTENTIONS AND
VOTES FOR VOTES AGAINST BROKER NON-VOTES
--------- ------------- ----------------
<S> <C> <C> <C>
1) 2,192,687 0 17,774
2) 2,115,630 94,706 125
3) 2,205,899 1,562 3,000
</TABLE>
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibit (27) - Financial Data Schedule
b) Reports on Form 8-K - In a report filed on Form 8-K dated July
10, 1995, the Company reported the sale of substantially all
of the assets of its Sharon Fastener division.
SIGNATURE
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.
AMERICAN CONSUMER PRODUCTS, INC.
Date: August 15, 1995 By: /s/ Joel M. Falck
-------------------------
Joel M. Falck
Vice President - Finance
(Authorized Officer and Chief
Accounting Officer)
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE 26 WEEKS ENDED JULY 1, 1995 AND THE
CONSOLIDATED BALANCE SHEET AS OF JULY 1, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 103
<SECURITIES> 0
<RECEIVABLES> 15,305
<ALLOWANCES> 1,201
<INVENTORY> 24,520
<CURRENT-ASSETS> 42,034
<PP&E> 28,432
<DEPRECIATION> 19,928
<TOTAL-ASSETS> 51,550
<CURRENT-LIABILITIES> 10,412
<BONDS> 24,713
<COMMON> 247
0
0
<OTHER-SE> 16,178
<TOTAL-LIABILITY-AND-EQUITY> 51,550
<SALES> 51,402
<TOTAL-REVENUES> 51,402
<CGS> 38,182
<TOTAL-COSTS> 38,182
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,416
<INCOME-PRETAX> (2,446)
<INCOME-TAX> (105)
<INCOME-CONTINUING> (2,341)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,341)
<EPS-PRIMARY> (.94)
<EPS-DILUTED> (.94)
</TABLE>
