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 . . .June 30, 1996 . . .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 7,352,266 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 . . .
<TABLE>
<CAPTION>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
(Dollars in thousands)
1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 85,654 $ 91,448
Marketable securities 113,538 112,583
Accounts receivable, net 18,525 38,116
Inventories:
Finished goods $ 17,347 $ 14,787
Work in process 2,678 2,397
Raw materials 6,345 7,359
Supplies 1,232 27,602 1,062 25,605
------------- -------------
Prepaid expenses 1,107 1,753
------------- -------------
Total current assets 246,426 269,505
PROPERTY, PLANT AND EQUIPMENT: 18,587 16,646
Less allowance for depreciation 10,173 8,414 9,337 7,309
------------- -------------
OTHER ASSETS 8,113 8,113
------------- -------------
$262,953 $284,927
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
(Dollars in thousands)
1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 7,007 $ 13,717
Federal and state income taxes 553 5,224
Accrued liabilities 19,126 19,245
------------- -------------
Total current liabilities 26,686 38,186
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Common stock, $1 par value:
Authorized: 12,000,000 shares
Issued: 7,440,518 shares $ 7,441 $ 7,441
Paid-in capital 894 848
Retained earnings 230,263 240,797
------------- -------------
238,598 249,086
Treasury Stock, at cost 2,331 2,345
------------- -------------
Total stockholders' equity 236,267 246,741
------------- -------------
$262,953 $284,927
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months and Six Months ended June 30, 1996 and July 2, 1995
(Unaudited)
(In thousands except per share data) THREE MONTHS ENDED SIX MONTHS ENDED
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 16,970 $ 15,882 $ 34,079 $ 33,844
Cost of Sales 12,632 11,400 26,104 24,155
-------------------------- --------------------------
Gross profit 4,338 4,482 7,975 9,689
Selling and general expenses 3,880 3,948 8,154 8,726
-------------------------- --------------------------
Operating profit (loss) 458 534 (179) 963
Other income, principally interest 1,992 2,265 4,525 4,647
Interest expense - (128) - (265)
-------------------------- --------------------------
Earnings before provision for income taxes 2,450 2,671 4,346 5,345
Provision for income taxes:
Federal 172 157 137 268
State 42 17 43 33
-------------------------- --------------------------
Net earnings $ 2,236 $ 2,497 $ 4,166 $ 5,044
========================== ==========================
Weighted average common and common equivalent
shares outstanding 7,352 7,461 7,352 7,461
========================== ==========================
Net earnings per common and common equivalent
shares outstanding $ 0.31 $ 0.35 $ 0.57 $ 0.70
========================== ==========================
Cash dividends declared and paid per common share:
Regular $ - $ - $ 2.00 $ 1.95
Extra $ - $ - - 0.20
-------------------------- --------------------------
$ - $ - $ 2.00 $ 2.15
========================== ==========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months ended June 30, 1996 and July 2, 1995
(Unaudited)
(In thousands)
1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,166 $ 5,044
Adjustments to reconcile net earnings to cash
flows from operating activities:
Provision for depreciation 852 680
Stock compensation expense 401(k) 22 49
Changes in:
Accounts receivable 19,591 20,590
Inventories (1,997) (9,121)
Prepaid expenses 646 664
Accounts payable and accrued liabilities (6,829) (8,217)
Federal and state income taxes (4,671) (6,529)
------------- -------------
Total 11,780 3,160
------------- -------------
Cash flows from investing activities:
Marketable securities purchased (42,414) (31,921)
Marketable securities - maturities and sales 41,459 43,680
Acquisition of property, plant and equipment (1,964) (2,072)
Change in other assets 7 9
-------------
-------------
Total (2,912) 9,696
------------- -------------
Cash flows from financing activities:
Treasury stock transactions 39 23
Dividends paid (14,701) (15,777)
-------------
-------------
Total (14,662) (15,754)
------------- -------------
Change in cash and cash equivalents (5,794) (2,898)
Cash and cash equivalents at beginning of period 91,448 109,444
------------- -------------
Cash and cash equivalents at end of period $ 85,654 $106,546
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
NATIONAL PRESTO INDUSTRIES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A
Earnings per share are computed using the weighted average common shares
outstanding during each period, and in 1995 included common equivalent shares
assuming conversion of the convertible debenture. In 1995 earnings for
calculation of the per share data are adjusted to reflect addback of interest
expense on the convertible debenture.
NOTE B
Update to Footnote L to the 1995 Annual Report -- During the second quarter the
Army entered into an agreement with the Company obligating the additional
$15,000,000 in environmental restoration funds for the Eau Claire, Wisconsin,
site. As of this filing, the Company has been reimbursed from these funds for
the $10,300,000 in environmental costs it had previously advanced.
- ------------------------------------------------------------------------
The foregoing information for the periods ended June 30, 1996, and July 2, 1995,
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, 1995, is summarized from audited
consolidated financial statements, but does not include all the disclosures
contained therein and should be read in conjunction with the 1995 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 1996 and 1995
Net sales increased by $1,088,000 from $15,882,000 to $16,970,000,
primarily due to new product introductions.
Gross margins as a percentage of sales decreased from 28% to 26%,
primarily due to a less favorable product mix.
The Company accrues unexpended 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' purchase to the actual time an advertisement appears. Advertising
charges included in selling expense in each quarter represent that percentage of
the annual advertising budget associated with that quarter's shipments.
Revisions to this budget result in periodic changes to the accrued liability for
committed advertising expenditures.
Other income decreased from the 1995 level primarily as a result of
lower interest income stemming from reduced yields on a lower level of invested
funds.
Earnings before provision for income taxes decreased $221,000 from
$2,671,000 to $2,450,000. The provision for income taxes increased from $174,000
to $214,000, and the effective income tax rate increased from 7% to 9%, as a
result of a larger proportion of earnings subject to tax. Net earnings decreased
$261,000 from $2,497,000 to $2,236,000, or 10%.
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 First Six Months 1996 and 1995
Net sales increased by $235,000 from $33,844,000 to $34,079,000,
primarily due to new product introductions.
Gross profit as a percentage of sales decreased from 29% to 23%,
primarily due to a combination of a less favorable product mix and less
favorable manufacturing variances.
The accrual for unexpended advertising costs discussed in the Second
Quarter comparison also applies to the first six months.
Other income decreased from the 1995 level primarily as a result of
lower interest income stemming from reduced yields on a lower level of invested
funds, offset in part by the first quarter recognition of income from concluded
legal matters ($476,000).
Earnings before provision for income taxes decreased $999,000 from
$5,345,000 to $4,346,000, or 19%. The effective income tax rate decreased from
6% to 4%, as a result of decreased earnings subject to tax. Net earnings
decreased $878,000 from $5,044,000 to $4,166,000, or 17%.
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: July 30, 1996 /S/ M. J. COHEN
-------------- ---------------
M. J. Cohen, President
(Chief Executive, Operating and
Financial Officer)
Date: July 30, 1996 /S/ R. F. LIEBLE
------------- ----------------
R. F. Lieble, Treasurer
<TABLE>
<CAPTION>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Three Months and Six Months Ended June 30, 1996 and July 2, 1995
(Unaudited)
(In thousands except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings $ 2,236 $ 2,497 $ 4,166 $ 5,044
Add interest expense related to convertible
debenture, net of income taxes - 80 - 160
------------- ------------- ------------- -------------
Adjusted net earnings (1) $ 2,236 $ 2,577 $ 4,166 $ 5,204
============= ============= ============= =============
Weighted average common shares outstanding 7,352 7,339 7,352 7,339
Common equivalent shares from the assumed
debenture conversion - 122 - 122
------------- ------------- ------------- -------------
Adjusted common and common equivalent shares (2) 7,352 7,461 7,352 7,461
============= ============= ============= =============
Net earnings per common and common equivalent
shares outstanding (1/2) $ 0.31 $ 0.35 $ 0.57 $ 0.70
============= ============= ============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL
PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 85,654
<SECURITIES> 113,538
<RECEIVABLES> 18,525
<ALLOWANCES> 0
<INVENTORY> 27,602
<CURRENT-ASSETS> 246,426
<PP&E> 18,587
<DEPRECIATION> 10,173
<TOTAL-ASSETS> 262,953
<CURRENT-LIABILITIES> 26,686
<BONDS> 0
0
0
<COMMON> 7,441
<OTHER-SE> 228,826
<TOTAL-LIABILITY-AND-EQUITY> 262,953
<SALES> 34,079
<TOTAL-REVENUES> 34,079
<CGS> 26,104
<TOTAL-COSTS> 26,104
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,346
<INCOME-TAX> 180
<INCOME-CONTINUING> 4,166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,166
<EPS-PRIMARY> .57
<EPS-DILUTED> 0
</TABLE>
