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 APRIL 5, 1998
[] 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 7,356,804 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
April 5, 1998 and December 31, 1997
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 94,578 $ 91,639
Marketable securities 127,734 140,651
Accounts receivable, net 9,403 20,242
Inventories:
Finished goods $ 9,646 $ 9,058
Work in process 2,619 1,675
Raw materials 5,112 6,900
Supplies 940 18,317 1,000 18,633
-------- --------
Prepaid expenses 1,251 918
-------- --------
Total current assets 251,283 272,083
PROPERTY, PLANT AND EQUIPMENT: 20,535 20,008
Less allowance for depreciation 11,522 9,013 11,002 9,006
-------- --------
OTHER ASSETS 10,781 10,781
-------- --------
$271,077 $291,870
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 5, 1998 and December 31, 1997
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 9,538 $ 15,958
Federal and state income taxes 2,972 4,923
Accrued liabilities 21,190 21,791
-------- --------
Total current liabilities 33,700 42,672
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 955 925
Retained earnings 231,192 243,092
-------- --------
239,588 251,458
Treasury stock, at cost 2,211 2,260
-------- --------
Total stockholders' equity 237,377 249,198
-------- --------
$271,077 $291,870
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months ended April 5, 1998 and April 6, 1997
(Unaudited)
<TABLE>
<CAPTION>
(In thousands except per share data) THREE MONTHS ENDED
------------------
1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 18,965 $ 17,947
Cost of sales 14,043 14,016
------- -------
Gross profit 4,922 3,931
Selling and general expenses 4,232 4,231
------- -------
Operating profit 690 (300)
Other income, principally interest 2,469 2,555
Other, principally litigation judgments / settlements - 550
------- -------
Earnings before provision for income taxes 3,159 2,805
Provision for income taxes 349 226
------- -------
Net earnings $ 2,810 $ 2,579
======= =======
Weighted average shares outstanding:
Basic 7,355 7,353
======= =======
Diluted 7,356 7,354
======= =======
Net earnings per share:
Basic $ 0.38 $ 0.35
======= =======
Diluted $ 0.38 $ 0.35
======= =======
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
Three Months ended April 5, 1998 and April 6, 1997
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,810 $ 2,579
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 519 468
Stock compensation expense 54 16
Changes in:
Accounts receivable 10,839 11,469
Inventories 316 1,963
Prepaid expenses (333) (37)
Accounts payable and accrued liabilities (7,021) (6,298)
Federal and state income taxes (1,951) (2,474)
-------- --------
Net cash provided by operating activities 5,233 7,686
-------- --------
Cash flows from investing activities:
Marketable securities purchased (33,140) (17,341)
Marketable securities - maturities and sales 46,057 18,764
Acquisition of property, plant and equipment (526) (217)
Other - 2
-------- --------
Net cash provided by investing activities 12,391 1,208
-------- --------
Cash flows from financing activities:
Dividends paid (14,710) (14,706)
Other 25 20
-------- --------
Net cash used in financing activities (14,685) (14,686)
-------- --------
Net increase (decrease) in cash and cash equivalents 2,939 (5,792)
Cash and cash equivalents at beginning of period 91,639 91,878
-------- --------
Cash and cash equivalents at end of period $ 94,578 $ 86,086
======== ========
</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
The Company's basic net earnings per share amounts have been computed by
dividing net earnings by the weighted average number of outstanding common
shares. The Company's diluted net earnings per share is computed by dividing net
earnings by the weighted average number of outstanding common shares and common
share equivalents relating to stock options, when dilutive.
- --------------------------------------------------------------------------------
The foregoing information for the periods ended April 5, 1998, and April 6,
1997, 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, 1997, is summarized from audited
consolidated financial statements, but does not include all the disclosures
contained therein and should be read in conjunction with the 1997 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 First Quarter 1998 and 1997
Net sales increased by $1,018,000 from $17,947,000 to $18,965,000, in
large part due to the close out of the electric BBQ Grill.
Gross margins as a percentage of sales increased from 22% to 26%,
primarily due to higher efficiencies at the Company's manufacturing facilities.
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, decreased from the 1997 level
primarily as a result of a lower rate of return on invested funds.
Earnings before provision for income taxes increased $354,000 from
$2,805,000 to $3,159,000. The provision for income taxes increased from $226,000
to $349,000 and the effective income tax rate increased from 8% to 11%, as a
result of increased earnings subject to tax. Net earnings increased $231,000
from $2,579,000 to $2,810,000, or 9%.
National Presto Industries, Inc. has studied its computer software and
hardware to determine its exposure to the century date problem. The year 2000
date problem consists of a date format shortcoming where the year is represented
by only two digits causing programs that perform arithmetic operations,
comparisons, or sorting of date fields to yield incorrect results. The work to
correct the year 2000 problem began in 1997 and is expected to be completed in
twelve to sixteen months. The cost, which is considered immaterial, will be
directly reflected in the Statement of Earnings as incurred.
<PAGE>
The Company maintains adequate liquidity for all of its anticipated
capital requirements. As of quarter-end, there were no material capital
commitments outstanding.
Forward looking statements in this Quarterly Report are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. There are certain important factors that could cause results to differ
materially from those anticipated by some of the statements made above.
Investors are cautioned that all forward looking statements involve risks and
uncertainty. The factors that could cause actual results to differ materially
are the following: consumer spending and debt levels; interest rates; continuity
of relationships with and purchases by major customers; product mix; competitive
pressure on sales and pricing, and increases in material or production cost
which cannot be recouped in product pricing. Additional information concerning
those and other factors is contained in the Company's Securities and Exchange
Commission filings, including but not limited to the Form 10-K, copies of which
are available from the Company without charge.
<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 from 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 from 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
from 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
from 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
from 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: May 7, 1998 /S/ M. J. Cohen
-------------------------------------
M. J. Cohen, President
(Principal operating officer)
Date: May 7, 1998 /S/ R. F. Lieble
-------------------------------------
R. F. Lieble, Treasurer
(Principal accounting officer)
<PAGE>
National Presto Industries, Inc.
Exhibit Index
Exhibit
Number Exhibit Description
------ -------------------
11 Computation of Earnings per Share
27 Financial Data Schedule
EXHIBIT 11
National Presto Industries, Inc.
Exhibit 11
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.
(IN THOUSANDS EXCEPT PER SHARE DATA)
First Quarter
-------------
1998 1997
---- ----
Net Earnings (1) $ 2,810 $ 2,579
======================
Weighted average common shares outstanding (2) 7,355 7,353
Common share equivalents relating to stock options 1 1
Adjusted common and common equivalent ----------------------
shares for computation (3) 7,356 7,354
======================
Net earnings per share:
Basic (1/2) $ 0.38 $ 0.35
======================
Diluted (1/3) $ 0.38 $ 0.35
======================
<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> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> APR-05-1998
<CASH> 94,578
<SECURITIES> 127,734
<RECEIVABLES> 9,403
<ALLOWANCES> 0
<INVENTORY> 18,317
<CURRENT-ASSETS> 251,283
<PP&E> 20,535
<DEPRECIATION> 11,522
<TOTAL-ASSETS> 271,077
<CURRENT-LIABILITIES> 33,700
<BONDS> 0
0
0
<COMMON> 7,441
<OTHER-SE> 229,936
<TOTAL-LIABILITY-AND-EQUITY> 271,077
<SALES> 18,965
<TOTAL-REVENUES> 18,965
<CGS> 14,043
<TOTAL-COSTS> 14,043
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,159
<INCOME-TAX> 349
<INCOME-CONTINUING> 2,810
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,810
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
