SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 3, 1994 Commission file number 1-2451
NATIONAL PRESTO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0494170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3925 NORTH HASTINGS WAY
EAU CLAIRE, WISCONSIN 54703-3703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 715-839-2121
There were 7,336,824 shares of the Issuer's Common Stock outstanding as
the close of the period covered by this 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
PART I - FINANCIAL INFORMATION
National Presto Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
July 3, 1994 and December 31, 1993
(Unaudited)
(IN THOUSANDS)
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<CAPTION>
ASSETS JULY 3, 1994 DECEMBER 31, 1993
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 96,768 $115,496
Marketable securities and other short-
term investments (at cost plus accrued
interest which approx. market) 106,080 105,186
Accounts receivable, net 16,457 27,564
Inventories:
Finished goods $ 17,298 $ 13,543
Work-in-process 2,594 1,731
Raw materials 5,279 6,982
Supplies 1,108 26,279 1,286 23,542
Prepaid expenses 144 802
Total current assets 245,728 272,590
Property, plant and equipment 14,058 12,993
Less allowance for depreciation 9,670 4,388 9,145 3,848
Other assets 6,566 6,566
$256,682 $283,004
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The accompanying notes are an integral part of the financial statements.
National Presto Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
July 3, 1994 and December 31, 1993
(Unaudited)
(IN THOUSANDS)
LIABILITIES JULY 3, 1994 DECEMBER 31, 1993
Current liabilities:
Accounts payable $8,907 $21,321
Federal and State income taxes 1,683 5,431
Accrued liabilities 15,135 15,837
Total current liabilities 25,725 42,589
Long-term debt 5,103 5,103
STOCKHOLDERS' EQUlTY:
Common stock $7,441 $7,441
Paid-in capital 574 548
Retained earnings 220,561 230,087
228,576 238,076
Treasury stock, at cost 2,722 2,764
Total stockholders'
equity 225,854 235,312
$256,682 $283,004
The accompanying notes are an integral part of the financial statements.
National Presto Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
1994 vs. 1993
(IN THOUSANDS EXCEPT PER SHARE DATA)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
JULY 3, JULY 4, JULY 3, JULY 4,
1994 1993 1994 1993
Net sales $16,487 $14,275 $32,689 $36,645
Cost of sales 11,287 8,931 22,282 23,689
Gross profit 5,200 5,344 10,407 12,956
Selling and
general expense 4,050 3,609 8,204 8,866
Operating profit 1,150 1,735 2,203 4,090
Other income,
principally interest 1,585 1,638 3,238 3,384
Interest expense (128) (128) (256) (256)
Earnings before
provision for
income taxes 2,607 3,245 5,185 7,218
Provision for income taxes:
Federal 344 530 666 1,289
State 43 87 107 205
Net earnings $2,220 $2,628 $4,412 $5,724
Weighted average common
and common equivalent
shares outstanding 7,450 7,430 7,450 7,430
Net earnings per common
and common equivalent
shares outstanding $.30 $.36 $.61 $.79
Cash dividends
declared per common share:
Regular $1.90 $1.80
Extra - .75
Total - - $1.90 $2.55*
*Paid December 28, 1992 but applicable to 1993.
The accompanying notes are an integral part of the financial statements.
National Presto lndustries, lnc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Month Periods Ended July 3, 1994 and July 4, 1993
(Unaudited)
(IN THOUSANDS)
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 4,412 $ 5,724
Adjustments to reconcile net earnings to
cash flows from operating activities:
Provision for depreciatio 525 574
Stock compensation expense (401-K) 50 53
Changes in:
Accounts receivable 11,107 15,451
Inventories (2,737) 1,458
Accounts payable
and accrued expenses (13,116) (13,988)
Federal and state income taxes (3,748) (5,273)
Other 656 17
Total (2,851) 4,016
CASH FLOWS FROM INVESTING ACTIVITIES:
Marketable securities (894) (30,738)
Acquisition of property, plant and equipment (1,065) (458)
Proceeds from sale of property,
plant and equipment 2 -
Total (1,957) (31,196)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (13,938) -
Proceeds from exercise of stock option 10 -
Proceeds from sale of treasury stock 8 -
Total (13,920) -
Change in cash and cash equivalent (18,728) (27,180)
Cash and cash equivalent at beginning of period 115,496 126,801
Cash and cash equivalent at end of period $96,768 $99,621
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
NOTE A
Effective January 1, 1994 the Company adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The adoption of this statement did not have a material effect on the
consolidated financial statements.
NOTE B
Earnings per share are computed using the weighted average common shares
outstanding during each period, including common equivalent shares assuming
conversion of the convertible debenture. Earnings for calculation of the per
share data are adjusted to reflect addback of interest expense on the
convertible debenture.
- --------------------------------------------------------------------------------
The foregoing information for the periods ended July 3, 1994, and July 4, 1993,
is unaudited; however, in the opinion of management of the Registrant, it
reflects all the adjustments, which were of a normal recurring nature, necessary
for a fair statement of the results for the interim periods. The condensed
consolidated balance sheet as of December 31, 1993, is summarized from audited
consolidated financial statements, but does not include all the disclosures
contained therein and should be read in conjunction with the 1993 Annual Report.
Interim results for the period are not indicative of those for the year.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Comparison Second Quarter 1994 and 1993
Net sales increased by $2,212,000 from $14,275,000 to $16,487,000, primarily due
to increased unit volume sales by the Company's commercial division. Gross
profit as a percentage of sales decreased from 37% to 32% due to a less
favorable product mix, less favorable manufacturing plant variances and the
elimination of storage revenue.
The company accrues unexpected advertising costs budgeted for the year against
each quarter's sales. Major advertising commitments are incurred in advance of
the expenditures and the timing of sales through dealers and distributors to the
ultimate customer does not permit specific identification of the customers'
purchases to the actual time an advertisement appears. Advertising charges
included in selling expense in each quarter represents that percentage of the
annual advertising budget associated with that quarter's shipments. Revisions to
this budget results in periodic changes to the accrued liability for committed
advertising expenditures.
Earnings before provision for income taxes decreased $638,000 from $3,245,000 to
$2,607,000, or 20%. The provision for income taxes decreased from $617,000 to
$387,000 and the effective income tax rate decreased from 19% to 15%, as a
result of decreased earnings subject to tax. Net earnings decreased $408,000
from $2,628,000 to $2,220,000, or 16%.
The Company maintains adequate liquidity for all of its anticipated capital
requirements. As of quarter-end, there were no material capital commitments
outstanding.
Comparison of the Six Months 1994 and 1993
Net sales for the first six months of 1994 decreased $3,956,000 from $36,645,000
to $32,689,000, or 11% due primarily to decreased unit volume sales by the
Company's commercial division. Factors contributing to the year-to-year sales
change include ongoing customer adoptions/refinement of inventory management
procedures such as just in time, changes in customers' promotional timing, and
the absence of shipments (previously disclosed) to a major customer. The first
six months of 1994 was also affected by the lack of sustaining contributions
from the prior year's new product introductions.
Gross profit for 1994 decreased $2,549,000 due to the volume reduction, less
favorable manufacturing plant variances, and the elimination of storage revenue.
Gross margins as a percentage of sales decreased from 35% to 32%.
The accrual for unexpected advertising costs discussed in the Second Quarter
comparison also applied to the first six months.
Earnings before provision for income taxes decreased $2,033,000 from $7,218,000
to $5,185,000, or 28%. The provision for income taxes decreased from $1,494,000
to $773,000 and the effective income tax rate decreased from 21% to 15%, as a
result of decreased earnings subject to tax. Net earnings decreased $1,312,000
from $5,724,000 to $4,412,000, or 23%.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Statement Regarding Computation of Per Share Earnings
(b) There were no reports on Form 8-K filed 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.
NATIONAL PRESTO INDUSTRIES, INC.
Date: August 2, 1994 /S/ M.S. COHEN
M.S. Cohen, Chairman of the Board
Date: August 2, 1994 /S/ M.J. COHEN
M.J. Cohen, President
(Chief Executive, Operating and
Financial Officer)
EXHIBIT 11
National Presto Industries Inc. and Subsidiaries
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
July 3, 1994 and July 4,1993
(IN THOUSANDS EXCEPT PER SHARE DATA)
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QUARTER ENDED SIX MONTHS ENDED
JULY 3, JULY 4, JULY 3, JULY 4,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Earnings $2,220 $2,628 $4,412 $5,724
Add interest expense related to convertible
debenture, net of income taxes 80 80 160 160
Adjusted net earnings (1) $2,300 $2,708 $4,572 $5,884
Weighted average common shares outstanding 7,336 7,334 7,336 7,334
Common equivalent shares from the assumed
debenture conversion 114 96 114 96
Adjusted common and common
equivalent shares (2) 7,450 7,430 7,450 7,430
Net earnings per common and common equivalent
shares outstanding (1/2) $.30 $.36 $.61 $.79
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