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 OCTOBER 5, 1997
[ ] 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 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
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_____
There were 7,354,556 shares of the Issuer's Common Stock outstanding as of the
close of the period covered by this report.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 5, 1997 and December 31, 1996
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996
====================================================================================================================
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 89,869 $ 91,878
Marketable securities 123,023 136,159
Accounts receivable, net 15,862 21,826
Inventories:
Finished goods $ 18,280 $ 8,470
Work in process 2,295 1,744
Raw materials 5,974 6,661
Supplies 1,064 27,613 945 17,820
-------- --------
Prepaid expenses 910 888
-------- --------
Total current assets 257,277 268,571
PROPERTY, PLANT AND EQUIPMENT: 19,915 17,256
Less allowance for depreciation 11,035 8,880 9,911 7,345
-------- --------
OTHER ASSETS 9,469 9,469
-------- --------
$275,626 $285,385
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 5, 1997 and December 31, 1996
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996
====================================================================================================================
<S> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 10,930 $ 13,262
Federal and state income taxes 1,850 4,887
Accrued liabilities 21,925 20,387
-------- --------
Total current liabilities 34,705 38,536
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 920 903
Retained earnings 234,831 240,815
-------- --------
243,192 249,159
Treasury stock, at cost 2,271 2,310
-------- --------
Total stockholders' equity 240,921 246,849
-------- --------
$275,626 $285,385
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months and Nine Months ended October 5, 1997 and September 29, 1996
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
1997 1996 1997 1996
====================================================================================================================
<S> <C> <C> <C> <C>
Net sales $ 24,917 $ 23,001 $ 59,734 $ 57,080
Cost of sales 16,646 16,065 42,600 42,169
--------------------- ----------------------
Gross profit 8,271 6,936 17,134 14,911
Selling and general expenses 6,121 5,512 14,552 13,666
--------------------- ----------------------
Operating profit 2,150 1,424 2,582 1,245
Other income, principally interest 2,249 2,005 7,037 6,054
Other, principally litgation judgments / settlements - - 550 476
--------------------- ----------------------
Earnings before provision for income taxes 4,399 3,429 10,169 7,775
Provision for income taxes 896 608 1,448 788
--------------------- ----------------------
Net earnings $ 3,503 $ 2,821 $ 8,721 $ 6,987
===================== ======================
Weighted average common and common
equivalent shares outstanding 7,359 7,355 7,359 7,355
===================== ======================
Net earnings per common share $ 0.48 $ 0.38 $ 1.19 $ 0.95
===================== ======================
Cash dividends declared and paid per common share $ - $ - $ 2.00 $ 2.00
===================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended October 5, 1997 and September 29, 1996
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996
====================================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 8,721 $ 6,987
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 1,357 1,367
Stock compensation expense 67 47
Changes in:
Accounts receivable 5,964 21,759
Inventories (9,793) (1,406)
Prepaid expenses (22) 659
Accounts payable and accrued liabilities (794) (3,348)
Federal and state income taxes (3,037) (4,718)
-------- --------
Net cash provided by operating activities 2,463 21,347
-------- --------
Cash flows from investing activities:
Marketable securities purchased (60,023) (85,607)
Marketable securities - maturities and sales 73,159 75,427
Acquisition of property, plant and equipment (2,917) (2,607)
Other 26 7
-------- --------
Net cash provided by (used in) investing activities 10,245 (12,780)
-------- --------
Cash flows from financing activities:
Dividends paid (14,706) (14,700)
Other (11) 21
-------- --------
Net cash used in financing activities (14,717) (14,679)
-------- --------
Net decrease in cash and cash equivalents (2,009) (6,112)
Cash and cash equivalents at beginning of period 91,878 91,448
-------- --------
Cash and cash equivalents at end of period $ 89,869 $ 85,336
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - EARNINGS PER SHARE
Net earnings per share are computed using the weighted average common shares
outstanding during each period.
- --------------------------------------------------------------------------------
The foregoing information for the periods ended October 5, 1997, and September
29, 1996, 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, 1996, is summarized from
audited consolidated financial statements, but does not include all the
disclosures contained therein and should be read in conjunction with the 1996
Annual Report. Interim results for the period are not indicative of those for
the year.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Comparison Third Quarter 1997 and 1996
Net sales increased $1,916,000 from $23,001,000 to $24,917,000,
primarily due to higher volume.
Gross margins as a percentage of sales increased from 30% to 33%,
primarily as a result of more favorable manufacturing variances.
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, principally interest, increased from the 1996 level
primarily as a result of a higher rate of return on a higher level of invested
funds.
Earnings before provision for income taxes increased $970,000 from
$3,429,000 to $4,399,000. The provision for income taxes increased from $608,000
to $896,000 and the effective income tax rate increased from 18% to 20%, as a
result of increased earnings subject to tax. Net earnings increased $682,000
from $2,821,000 to $3,503,000, or 24%.
The Company maintains adequate liquidity for all of its anticipated
capital requirements. As of quarter-end, there were no material capital
commitments outstanding.
<PAGE>
Comparison of the First Nine Months 1997 and 1996
Net sales increased by $2,654,000 from $57,080,000 to $59,734,000,
primarily due to a higher volume.
Gross margins as a percentage of sales increased from 26% to 29%,
primarily as a result of more favorable manufacturing variances.
The accrual for unexpended advertising costs discussed in the Third
Quarter comparison also applies to the first nine months.
Other income, principally interest, increased from the 1996 level
primarily as a result of a higher rate of return on a higher level of invested
funds.
Both years were favorably impacted by litigation judgments /
settlements of a non-recurring nature.
Earnings before provision for income taxes increased $2,394,000 from
$7,775,000 to $10,169,000. The provision for income taxes increased from
$788,000 to $1,448,000 and the effective income tax rate increased from 10% to
14%, as a result of increased earnings subject to tax. Net earnings increased
$1,734,000 from $6,987,000 to $8,721,000, or 25%.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3 (I) - Restated Articles of Incorporation -
incorporated by reference form Exhibit 3 (i)
of the Company's quarterly report on Form
10-Q for the quarter ended July 6, 1997
(ii) - By-Laws - incorporated by reference form
Exhibit 3 (ii) of the Company's quarterly
report on Form 10-Q for the quarter ended
July 6, 1997
Exhibit 9 - Voting Trust Agreement - incorporated by
reference form Exhibit 9 of the Company's
quarterly report on Form 10-Q for the
quarter ended July 6, 1997
Exhibit 10.1 - 1988 Stock Option Plan - incorporated by
reference form Exhibit 10.1 of the Company's
quarterly report on Form 10-Q for the
quarter ended July 6, 1997
Exhibit 10.2 - Form of Incentive Stock Option Agreement
under the 1988 Stock Option Plan
incorporated by reference form Exhibit 10.2
of the Company's quarterly report on Form
10-Q for the quarter ended July 6, 1997
Exhibit 11 - Statement regarding computation of per share
earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
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: November 4, 1997 /S/ M. J. Cohen
---------------------------------------
M. J. Cohen, President
(Principal operating officer)
Date: November 4, 1997 /S/ R. F. Lieble
---------------------------------------
R. F. Lieble, Treasurer
(Principal accounting officer)
<PAGE>
Exhibit
Number Exhibit Description
------ -------------------
11 Computation of Earnings per Share
27 Financial Data Schedule
The following presents the computation of per share earnings reflecting the
assumption that the granted shares under the 1988 Stock Option Plan will be
exercised.
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
Third Quarter First Nine Months
-------------------- --------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Earnings (1) $ 3,503 $ 2,821 $ 8,721 $ 6,987
==================== ====================
Weighted average common shares outstanding 7,354 7,352 7,354 7,352
Common equivalent shares from the assumed
exercise of stock options 5 3 5 3
Adjusted common and common equivalent -------------------- --------------------
shares for computation (2) 7,359 7,355 7,359 7,355
==================== ====================
Net earnings per common and common
equivalent shares outstanding (1/2) $ 0.48 $ 0.38 $ 1.19 $ 0.95
==================== ====================
</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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> OCT-05-1997
<CASH> 89,869
<SECURITIES> 123,023
<RECEIVABLES> 15,862
<ALLOWANCES> 0
<INVENTORY> 27,613
<CURRENT-ASSETS> 257,277
<PP&E> 19,915
<DEPRECIATION> 11,035
<TOTAL-ASSETS> 275,626
<CURRENT-LIABILITIES> 34,705
<BONDS> 0
0
0
<COMMON> 7,441
<OTHER-SE> 233,480
<TOTAL-LIABILITY-AND-EQUITY> 275,626
<SALES> 59,734
<TOTAL-REVENUES> 59,734
<CGS> 42,600
<TOTAL-COSTS> 42,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,169
<INCOME-TAX> 1,448
<INCOME-CONTINUING> 8,721
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,721
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 0
</TABLE>
