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 March 31, 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 0-23688
AMERICAN BUILDINGS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 63-0931058
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. BOX 800
STATE DOCKS ROAD
EUFAULA, ALABAMA 36027
(Address of principal executive offices)
(Zip Code)
(334) 687-2032
(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 (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 ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: MAY 1, 1996 - 5,988,498 SHARES.
<PAGE>
INDEX
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
Page Number
-----------
PART 1. Financial Information
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 2
Condensed Consolidated Statements of Income
for the Three Months Ended March 31, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1996 and 1995 4
Notes to Condensed Consolidated Financial Statements 5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. Other Information 9
ITEM 6. Exhibits and Reports on Form 8-K 11
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31,
1996 1995
----------- -----------
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash .................................................... $12,651 $ 17,100
Accounts receivable, net of allowance for doubtful
accounts of $2,695 and $2,589, respectively ........... 22,905 29,473
Inventories ............................................. 15,535 15,088
Other current assets .................................... 5,617 2,829
------- ---------
Total current assets .................................. 56,708 64,490
PROPERTY, PLANT AND EQUIPMENT, AT COST ..................... 63,227 61,454
Less accumulated depreciation ........................... 36,239 35,585
------- --------
26,988 25,869
RESTRICTED CASH ............................................ 1,156 4,100
DEFERRED INCOME TAXES ...................................... 2,057 2,057
OTHER ASSETS, NET .......................................... 5,537 4,827
------- --------
Total assets .......................................... $92,446 $101,343
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt .................... $ 970 $ 970
Accounts payable ........................................ 17,990 23,579
Accrued liabilities ..................................... 9,706 11,312
Accrued income taxes .................................... 911 1,513
------- --------
Total current liabilities ............................. 29,577 37,374
LONG-TERM DEBT, NET OF CURRENT MATURITIES .................. 7,760 7,760
OTHER NONCURRENT LIABILITIES ............................... 2,780 2,698
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 4,000 shares authorized,
no shares issued and outstanding ...................... -- --
Common stock, $.01 par value; 25,000 shares authorized,
6,245 shares and 6,237 shares issued
at March 31, 1996 and December 31, 1995, respectively . 62 62
Additional paid-in capital .............................. 30,171 30,082
Retained earnings ....................................... 25,683 24,438
------- --------
55,916 54,582
Less--Treasury stock, at cost (156 and 46 shares at
March 31, 1996 and December 31, 1995, respectively) ... (3,587) (1,071)
------- --------
Total stockholders' equity ............................ 52,329 53,511
------- --------
Total liabilities and stockholders' equity ............ $92,446 $101,343
======= ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
-------- --------
NET SALES ......................................... $ 48,180 $ 62,298
COSTS AND EXPENSES:
Cost of sales .................................. 40,688 51,538
Selling, general, and administrative ........... 5,643 6,242
-------- --------
46,331 57,780
OPERATING INCOME .................................. 1,849 4,518
INTEREST, NET ..................................... (175) 85
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES .......... 2,024 4,433
PROVISION FOR INCOME TAXES ....................... 779 1,685
-------- --------
NET INCOME ........................................ $ 1,245 $ 2,748
======== ========
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE ................................ $ .19 $ .42
======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING ......... 6,533 6,510
======== ========
See notes to condensed consolidated financial statements.
3
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................. $ 1,245 $ 2,748
-------- --------
Adjustments to reconcile net income to net cash (used for) provided by
operating activities:
Depreciation and amortization ....................................... 1,058 1,010
Changes in assets and liabilitites:
Accounts receivable, net ......................................... 6,568 (968)
Inventories ...................................................... (447) 4,029
Accounts payable ................................................. (5,589) (4,059)
Accrued liabilities and taxes .................................... (2,208) 1,928
Other working capital changes .................................... (2,788) (282)
Other, net ....................................................... (166) 71
-------- --------
Total adjustments ............................................. (3,572) 1,729
-------- --------
Net cash (used for) provided by operating activities .......... (2,327) 4,477
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash ............................................................ 2,944 2,558
Investment in China Joint Venture .......................................... (1,500) --
Proceeds from sales of fixed assets ........................................ 30 133
Proceeds from sales of nonoperating property, net .......................... 947 --
Additions to property, plant, and equipment ................................ (2,117) (1,904)
-------- --------
Net cash provided by investing activities ..................... 304 787
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt payments .................................................... -- (223)
Proceeds from issuance of common stock ..................................... 90 10
Treasury Stock Repurchase .................................................. (2,516) --
-------- --------
Net cash used for financing activities ........................ (2,426) (213)
-------- --------
NET (DECREASE) INCREASE IN CASH ............................................... (4,449) 5,051
CASH AT BEGINNING OF PERIOD ................................................... 17,100 4,978
-------- --------
CASH AT END OF PERIOD ......................................................... $ 12,651 $ 10,029
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ..................................................... $ 107 $ 267
======== ========
Cash paid for income taxes ................................................. $ 1,332 $ 1,109
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
1. The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
not misleading. In the opinion of management, the condensed consolidated
financial statements contain all adjustments necessary to present fairly
the financial position of the Company as of March 31, 1996 and the results
of its operations and cash flows for the three months ended March 31, 1996
and 1995. All such adjustments are of a normal recurring nature. The
results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the year ended
December 31, 1996. The accounting policies continue unchanged from December
31, 1995. For further information, refer to the Consolidated Financial
Statements and footnotes thereto included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.
2. Inventories consisted of the following :
MARCH 31, DECEMBER 31,
1996 1995
-------- ------------
Raw materials .................. $13,379 $13,846
Work in process ................ 2,925 2,574
Finished goods ................. 518 328
------- -------
16,822 16,748
Allowance to state
inventories at LIFO cost ..... (1,287) (1,660)
======= =======
$15,535 $15,088
======= =======
3. Included in accrued liabilities are estimated insurance claims for the
self-insured portion of workers' compensation, property and casualty, and
health insurance plans totalling $3,993 and $3,483 at March 31, 1996 and
December 31, 1995, respectively.
5
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) - CONTINUED
4. On December 7, 1994, the Company closed a $9,700 industrial revenue bond
transaction with the Industrial Development Authority ("IDA") of
Mecklenburg County, Virginia, for the purpose of financing its new
manufacturing facility located in Virginia. The bonds bear interest at a
variable rate which averaged 3.6% for the first quarter of 1996 compared to
4.1% for the first quarter of 1995. Additionally, the Company pays a .25%
remarketing fee on the bond balance. The bonds mature December 1, 2004 and
are subject to mandatory sinking fund redemption of $970 per year and are
subject to mandatory redemption under certain circumstances. The Company
has secured its obligation with respect to the IDA bonds through the
issuance of a letter of credit. The carrying amount of the bonds is assumed
to approximate fair value due to the bonds' variable rate structure. The
balance of the IDA bonds including current portion was $8,730 at March 31,
1996 and December 31, 1995.
The balance in the restricted cash account is reduced as capital
expenditures are made related to the Virginia plant. This balance was
$1,156 as of March 31, 1996 and $4,100 as of December 31, 1995. These funds
are invested in highly liquid short-term investments.
5. On May 10, 1995, the Company and its lenders amended its revolving credit
facility and term loans to increase the maximum borrowings under the
revolver to $35 million, to lower the interest rate to prime plus 1% or
LIBOR plus 2.5% and to reduce certain other fees associated with this
facility. Also as part of this agreement, the outstanding principal
($4,167) of the term loan was repaid on that date from cash provided by
operations. There were no borrowings under the revoler at March 31, 1996.
6
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995
Net sales for the quarter ended March 31, 1996 decreased 23% to $48.2 million
from $62.3 million in the same period a year ago. Gross margins decreased to
15.6% in the current quarter compared to 17.3% in the corresponding quarter of
1995 primarily as a result of the lower net sales which was caused by a reduced
backlog coming into the year and the unusually severe winter weather in most
U.S. markets causing customers to delay shipment of their orders as construction
sites were not yet ready. Backlog at March 31, 1996 increased 28% to
approximately $72.0 million from $56.3 million at the end of 1995. Selling,
general and administrative expenses decreased by 10% to $5.6 million in the
first quarter of 1996 from $6.2 million in the first quarter of 1995 as a result
of cost reductions implemented by the Company in response to the lower first
quarter volume. As a percent of sales these expenses were 12% in 1996 compared
to 10% in the same period of 1995. Operating income declined 59% to $1.8 million
in the first quarter of 1996 compared to $4.5 million in the same quarter of
1995. The Company had net interest income for the quarter ended March 31, 1996
of $.2 million compared to net interest expense of $.1 for the comparable period
in 1995. This decrease in interest expense resulted primarily from the repayment
on May 10, 1995 of the Company's term loan. In addition to earning interest
income on its excess cash, the Company is currently earning interest on the
unused proceeds from its Industrial Revenue Bond transaction, which was closed
on December 7, 1994 in order to provide the financing for the construction of
its manufacturing facility in Virginia. These unused proceeds are invested in
highly liquid short-term investments and are included on the accompanying
Condensed Consolidated Balance Sheets as Restricted Cash. Net income for the
current quarter decreased 55% to $1.2 million from $2.7 million in the first
quarter of last year.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations from cash flow from
operations, bank borrowings and sales of its debt and equity securities.
Net cash (used for) provided by operations was ($2.3) million in the first
quarter of 1996 compared to $4.5 million in the first quarter of 1995. The
decrease for 1996 resulted primarily from decreased operating income and a
reduction in accounts payable and accrued liabilities from their year-end levels
as a result of the lower volume during the quarter.
Net cash provided by investing activities was $.3 million for the three months
ended March 31, 1996 and $.8 million for the three months ended March 31, 1995.
In the 1996 period, the Company applied $2.9 million of the proceeds of the
Industrial Revenue Bonds which were included in restricted cash at the beginning
of the year to the capital expenditures made for the Virginia manufacturing
facility. This amount exceeds total capital expenditures of $2.1 million for the
quarter as part of it represents a drawdown of the restricted cash balance for
expenditures made in late 1995. The Company increased its
7
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
investment in its joint venture in the People's Republic of China by $1.5
million during the first quarter of 1996 bringing its total capital investment
in the joint venture to $2.4 million. In 1995, the Company applied $2.6 million
of the restricted cash to capital expenditures made for the Virginia facility.
This amount exceeded total capital expenditures of $1.9 million for the quarter
as part of it represented a drawdown of the restriced cash balance for
expenditures made in late 1994.
Net cash used for financing activities was $2.4 million for the quarter ended
March 31, 1996 compared to $.2 million for the quarter ended March 31, 1995. In
1996, this was primarily the result of the repurchase in the open market of
110,000 shares of the Company's Common Stock pursuant to the Board of Directors
authorization made on October 3, 1995 to repurchase up to 300,000 shares of the
Company's Common Stock in the open market. The repurchase was made from excess
cash on hand. In 1995, long-term debt repayments of $.2 million were funded by
cash provided by operating activities.
The Company has budgeted approximately $11.7 million in capital expenditures in
1996 consisting of $5.5 million in existing facilities, primarily for machinery
and equipment, $3.5 million to increase capacity at its Polymer Coil Coaters
facility, and $2.7 million to complete the Virginia manufacturing facility
expansion and the Eufaula office expansion. The Company expects to be able to
fund its capital expenditures with cash provided by operations, the Industrial
Revenue Bonds for the Virginia facility, and from borrowings under its revolving
credit facility.
At March 31, 1996 and December 31, 1995, the Company's outstanding debt
(including current portion) was $8.7 million of Industrial Revenue Bonds which
are subject to mandatory sinking fund requirements of approximately $1.0 million
per year through December 1, 2004. There was no balance outstanding under the
revolving credit facility under which the Company may borrow up to $25 million.
The Company believes that cash generated from operations and borrowings under
the revolving credit facility will be sufficient to meet its working capital and
capital expenditure needs for the forseeable future. There can be no assurance
that liquidity would not be impacted by a decline in general economic conditions
and higher interest rates which would affect the Company's ability to obtain
external financing.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Statement re: Computation of earnings per share
(Exhibit 11)
b. The Company did not file any reports on Form 8-K during the three
months ended March 31, 1996.
9
<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.
AMERICAN BUILDINGS COMPANY
Date May 3, 1996 /s/ ROBERT T. AMMERMAN
------------ -------------------------------------------
Robert T. Ammerman
President and Chief Executive Officer
Date May 3, 1996 /s/ R. CHARLES BLACKMON, JR.
----------- -------------------------------------------
R. Charles Blackmon, Jr.
Vice President, Chief Financial Officer
10
<PAGE>
EXHIBIT 11
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
---------------------
1996 1995
------ -------
PRIMARY EARNINGS PER SHARE:
Net income ......................................... $1,245 $2,748
====== ======
Weighted average common shares outstanding ......... 6,179 6,226
Add -- Dilutive effect of outstanding options
(as determined by the application of the
treasury stock method) ........................... 354 284
------ ------
Weighted average common and common equivalent
shares outstanding ............................... 6,533 6,510
====== ======
Primary earnings per share:
Net income ........................................ $ .19 $ .42
====== ======
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND THE CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,651
<SECURITIES> 0
<RECEIVABLES> 25,600
<ALLOWANCES> 2,695
<INVENTORY> 15,535
<CURRENT-ASSETS> 56,708
<PP&E> 63,227
<DEPRECIATION> 36,239
<TOTAL-ASSETS> 92,446
<CURRENT-LIABILITIES> 29,577
<BONDS> 7,760
0
0
<COMMON> 62
<OTHER-SE> 52,267
<TOTAL-LIABILITY-AND-EQUITY> 92,446
<SALES> 48,180
<TOTAL-REVENUES> 48,180
<CGS> 40,688
<TOTAL-COSTS> 46,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 184
<INTEREST-EXPENSE> (175)
<INCOME-PRETAX> 2,024
<INCOME-TAX> 779
<INCOME-CONTINUING> 1,245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,245
<EPS-PRIMARY> .19
<EPS-DILUTED> 0
</TABLE>
