1
Page 1 of 31 Total Pages
Index to Schedules and
Exhibits are at Page 12 and 13
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 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 (IRS Employer
incorporation or organization) Identification Number)
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
--------------------------------------------------------
$1.00 par value common stock New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
NONE
----
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to the Form 10-K. _X_
The aggregate market value of the voting stock held by non-affiliates of the
registrant computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of February 26, 1999, was
$265,774,219.
The number of shares outstanding of each of the registrant's classes of common
stock, as of February 26, 1999, was 7,359,478.
<PAGE>
2
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into that part of this
Form 10-K designated to the right of the document title.
TITLE PART
----- ----
Proxy Statement dated April 2, 1999 Part III
Except as specifically incorporated herein by reference, the foregoing Proxy
Statement is not deemed filed as part of this report.
<PAGE>
3
PART I
ITEM 1. BUSINESS
A. DESCRIPTION OF BUSINESS
The business of National Presto Industries, Inc., and its consolidated
subsidiaries (the "Company") consists of a single business category.
The Company manufactures and distributes small electrical appliances
and housewares, including comfort appliances, pressure cookers and
canners, private label and premium sales products.
Electrical appliances and housewares sold by the Company include
pressure cookers and canners; the Presto(R) Control Master(R) single
thermostatic control line of fry pans in several sizes, griddles and
combination griddle/warmers and multi-purpose cookers; deep fryers of
various sizes; can openers, slicer/shredders, slicer/shredder/mixers;
electric heaters; corn poppers (hot air and microwave); microwave bacon
cookers; electronic toasters; coffeemakers; electric grills; electric
tea kettles; electric knives; bread slicing systems; electric knife
sharpeners; and timers.
Pressure cookers and canners are available in various sizes and are
fabricated of aluminum and, in the case of cookers, of stainless steel.
The Company believes it is one of the principal manufacturers of
pressure cookers in the United States.
For the year ended December 31, 1998, approximately 59% of consolidated
net sales were provided by cast products (fry pans, griddles, deep
fryers and electric multi-cookers), approximately 13% by motorized
nonthermal appliances (can openers, slicer/shredders, knife sharpeners,
electric knives, and bread slicing systems), and approximately 25% by
noncast/thermal appliances (stamped cookers and canners, stainless
steel cookers, electronic toasters, corn poppers (hot air and
microwave), coffeemakers, microwave bacon cookers, tea kettles, and
heaters). For the year ended December 31, 1997, approximately 56% of
consolidated net sales were provided by cast products, approximately
15% by motorized nonthermal appliances and approximately 25% by
noncast/thermal appliances. For the year ended December 31, 1996,
approximately 52% of consolidated net sales were provided by cast
products, approximately 15% by motorized nonthermal appliances and
approximately 28% by noncast/thermal appliances.
Wal-Mart Stores, Inc., accounted for 44%, 43% and 38% of consolidated
net sales for the years ended December 31, 1998, 1997 and 1996.
Products are sold directly to retailers throughout the United States
and also through independent distributors. Although the Company has
long established relationships with many of its customers, it does not
have long-term supply contracts with them. The loss of, or material
reduction in, business from any of the Company's major customers could
adversely affect the Company's business.
<PAGE>
4
The Company has a sales force of approximately ten employees that sell
to and service customers. In selected geographic areas sales are
handled by manufacturers' representatives who may handle other product
lines. Sales promotional activities include television, radio and
newspaper. The Company's business is highly competitive and seasonal,
with the normal peak sales period occurring in the fourth quarter of
the year prior to the holiday season. Many companies compete for sales
of housewares and small appliances, some of which are larger than the
Company and others which are smaller. Product competition extends to
special product features, product pricing, marketing programs, warranty
provisions, service policies and other factors. New product
introductions are an important part of the Company's sales to offset
the morbidity rate of other products and/or the effect of lowered
acceptance of seasonal products due to weather conditions. New products
entail unusual risks. Engineering and tooling costs are increasingly
expensive, as are components and finished goods that may not have a
ready market or achieve widespread consumer acceptance. High-cost
advertising commitments accompanying such new products or to maintain
sales of existing products may not be fully absorbed by ultimate
product sales. Initial production schedules, set in advance of
introduction, carry the possibility of excess unsold inventories. New
product introductions are further subject to delivery delays from
supply sources, which can impact availability for the Company's most
active selling periods.
Research and development costs related to new product development for
the years 1998, 1997 and 1996 were absorbed in operations for these
years and were not a material element in the aggregate costs incurred
by the Company.
Company products are generally warranted to the original owner to be
free from defects in material and workmanship for a period of two years
from date of purchase. The Company allows a sixty-day over-the-counter
initial return privilege through cooperating dealers. The Company
services its products through independent service providers throughout
the United States and the corporate service repair operation. The
Company's service and warranty programs are competitive with those
offered by other manufacturers in the industry.
The Company's products are manufactured in plants located at Jackson,
Mississippi and Alamogordo, New Mexico. The Company also purchases a
portion (14% in 1998) of its products from nonaffiliated companies in
the Pacific Rim countries.
The Company warehouses and distributes its products from a distribution
center located in Canton, Mississippi. Selective use is made of leased
tractors and trailers with backhauls scheduled on return trips carrying
goods consigned for internal corporate use.
The Company invests funds not currently required for business
activities. (See Footnote B (3) in the Notes to Consolidated Financial
Statements.) Income from financial management activities is included in
Other Income in the accompanying financial statements.
Earnings from investments may vary significantly from year to year
depending on interest yields on instruments meeting the Company's
investment criteria, and the extent to which funds may be needed for
internal growth and newly identified business activities.
<PAGE>
5
B. OTHER COMMENTS
1. SOURCES AND AVAILABILITY OF MATERIALS
Production levels at the Company's manufacturing plants may be affected
by vendor failure to deliver tooling, material and critical parts
within commitments. While recent years have witnessed virtual
elimination of these circumstances, there is no assurance against
recurrence.
Deliveries of new products, many of which have been sourced overseas,
could be delayed by labor or supply problems at vendors or in
transportation. As a consequence, these products may not be available
in sufficient quantities during the prime selling period. While there
has been no major incidence of such problems in recent years and the
Company has made every reasonable effort to prevent occurrence, there
is no assurance that such effort will be totally effective.
2. TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS HELD
In recent years, patents on new products have become more meaningful to
operating results. Trademarks and know-how are considered significant.
The Company's current and future success depends upon judicial
protection of its intellectual property rights ( patents, trademarks
and trade dress). Removal of that protection would expose the Company
to competitors who seek to take advantage of the Company's innovations
and proprietary rights. To date, the Company has vigorously protected
its rights and enjoyed success in all its intellectual property suits.
3. EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL AND OSHA REGULATIONS
In May 1986, the Company's Eau Claire, Wisconsin, site was placed on
the United States Environmental Protection Agency's (EPA) National
Priorities List (NPL) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA) because of alleged
hazardous waste deposited on the property. During July 1986, the
Company entered into an agreement with the EPA and the Wisconsin
Department of Natural Resources to conduct a remedial investigation and
feasibility study at the site. The remedial investigation was completed
in 1992, the feasibility study in 1994, and in May 1996 the final
record of decision (ROD) was issued for the site by the EPA. At year
end, all remaining remediation projects at the Eau Claire, Wisconsin
site had been installed, were fully operational, and restoration
activities had been completed.
In February 1988, the Company entered into an agreement with the
Department of the Army (the 1988 Agreement), pursuant to which the Army
agreed to fund environmental restoration activities related to the
site. As a result of the 1988 Agreement, a total of $27,000,000 has
been appropriated for environmental matters. Based on factors known as
of December 31, 1998, it is believed that the funds appropriated by the
government will be adequate to satisfy on-going remediation operations
and monitoring activities; however, should environmental agencies
require additional studies or remediation projects, it is possible that
existing funds could be inadequate.
Management believes that in the absence of any unforeseen future
developments, known environmental matters will not have any material
affect on the results of operations or financial condition of the
Company.
4. NUMBER OF EMPLOYEES OF THE COMPANY
As of December 31, 1998, the Company had 628 employees.
<PAGE>
6
5. INDUSTRY PRACTICES RELATED TO WORKING CAPITAL REQUIREMENTS
The major portion of the Company's commercial sales were made with
terms of 90 days or shorter. A small portion of the sales were made
with seasonal dating provisions.
Inventory levels increase in advance of the selling period for products
that are seasonal, such as pressure canners, heaters, and in
preparation for new product introductions. Inventory build-up also
occurs to create stock levels required to support the higher sales that
occur in the latter half of each year. With the buying practices of the
Company's customers continuing towards "just-in-time" practices, the
Company is required to carry larger finished goods inventories than
previously maintained. The Company purchases components and raw
materials in advance of production requirements where such purchases
are required to ensure supply or provide advantageous long-term
pricing.
6. BACKLOG
Shipment of most of the Company's products occurs within a relatively
short time after receipt of the order and, therefore, there is usually
no substantial order backlog. New product introductions may result in
order backlogs that vary from product to product and as to timing of
introduction.
C. INDUSTRY SEGMENTS
The Company operates in one business segment.
ITEM 2. PROPERTIES (OWNED EXCEPT WHERE INDICATED)
The Company's Eau Claire facility is approximately 560,000 square feet,
of which 428,000 square feet was dedicated to ordnance activities prior
to September 1993. Leases for 151,000 square feet of this area have
been entered into with outside tenants. The Company's corporate office
is also located in Eau Claire.
The Company manufactures products in Jackson, Mississippi and
Alamogordo, New Mexico.
The Jackson plant contains 283,000 square feet, of which 119,600 square
feet are used for warehousing.
The facility at Alamogordo contains 163,200 square feet, of which
24,800 square feet are used for warehousing. An additional 15,500
square feet has been leased for warehousing.
The Company has a 162,400 square foot building at Canton, Mississippi
which is used primarily for warehousing and distribution and some
activities for product service functions. An additional 72,000 square
feet has been leased in adjacent buildings for storage area. During
peak season, an additional 20,000 square feet has been leased.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various legal actions incidental to its
normal business operations. In the opinion of management such actions
will be resolved for amounts that in the aggregate will not be material
to the results of operations or financial condition of the Company.
See Item 1.B.3. for information regarding certain environmental
matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
7
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is provided with regard to the executive officers of
the registrant: (All terms of office are for one year or until their respective
successors are duly elected and qualified.)
NAME TITLE AGE
-----------------------------------------------------------
Melvin S. Cohen Chairman of the Board 81
Maryjo Cohen President and Chief Executive 46
Officer
James F. Bartl Executive Vice President 58
and Secretary
Richard F. Anderl Vice-President, Engineering 55
Neil L. Brown Vice President, Manufacturing 55
Larry R. Hoepner Vice President, Purchasing 57
Donald E. Hoeschen Vice-President, Sales 51
Randy F. Lieble Treasurer 45
Mr. Cohen was elected Chairman of the Board in May 1975. Prior to that
date he was President, a position that he again held from November 1986
to May 1989. Mr. Cohen is the father of Maryjo Cohen.
Ms. Cohen was elected Treasurer in September 1983, to the additional
positions of Vice-President in May 1986, President in May 1989 and
Chief Executive Officer in May 1994. She has been associated with the
registrant since 1976. Prior to becoming an officer, she was Associate
Resident Counsel and Assistant to the Treasurer. Ms. Cohen is the
Daughter of Melvin S. Cohen.
Mr. Bartl was elected Secretary in May 1978 and the additional position
of Executive Vice President in November 1998. He has been associated
with the registrant since 1969. Prior to becoming an officer, he was
Resident Counsel and Director of Industrial Relations, positions he
continues to hold.
Mr. Anderl was elected Vice-President in May 1989. He has been
associated with the registrant since 1963 and prior to becoming an
officer, he was Director of Engineering.
Mr. Brown was elected Vice-President in November 1997. He has been
associated with the registrant since 1966. Prior to becoming an
officer, he was Director of Manufacturing.
Mr. Hoepner was elected Vice-President in November 1998. He has been
associated with the registrant since 1966. Prior to becoming an
officer, he was Director of Purchasing.
Mr. Hoeschen was elected Vice President in May 1997. He has been
associated with the registrant since 1971. Prior to becoming an
officer, he was Director of Sales.
Mr. Lieble was elected Treasurer in November 1995. He has been
associated with the registrant since 1977. Prior to becoming an
officer, he was Manager of Investments and Government Contracts.
<PAGE>
8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
RECORD OF DIVIDENDS PAID AND MARKET PRICE OF COMMON STOCK
<TABLE>
<CAPTION>
1998 1997
------------------------------------------------------------------------------
Applicable Market Price Applicable Market Price
Dividends Paid --------------------- Dividends Paid ---------------------
per Share High Low per Share High Low
------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $2.00 $43.5000 $38.7500 $2.00 $40.5000 $35.8750
Second Quarter - 43.3125 37.7500 - 40.3750 35.8750
Third Quarter - 41.6250 36.1250 - 43.0000 36.7500
Fourth Quarter - 43.3125 36.0625 - 44.1875 36.5000
------------------------------------- ---------------------------------------
Full Year $2.00 $43.5000 $36.0625 $2.00 $44.1875 $35.8750
</TABLE>
Common stock of National Presto Industries, Inc., is traded on the New
York Stock Exchange under the symbol NPK. As of December 31, 1998, there were
868 stockholders of record. There were 866 stockholders of record as of February
26, 1999, the latest practicable date.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands except per share data)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $107,073 $109,540 $106,008 $120,172 $128,070
Net earnings 19,733 16,982 14,720 18,969 21,455
Net earnings per share 2.68 2.31 2.00 2.61 2.92
Total assets 294,762 291,870 285,385 284,927 291,036
Long-term debt -- -- -- -- 5,103
Dividends paid per common share
Applicable to current year 2.00 2.00 2.00 2.15 1.90
</TABLE>
<PAGE>
9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
1998 COMPARED TO 1997
Net sales decreased by $2,467,000 from $109,540,000 to $107,073,000 or 2%.
Gross margins for 1998 increased $679,000 from $35,541,000 to $36,220,000 or 34%
versus 32% as a percentage of sales in 1998 and 1997. This increase was
primarily the result of increased operating efficiencies and cost savings.
Selling and general expenses decreased $5,436,000 largely due to reduced
advertising expense. As a percentage of net sales, selling and general expenses
decreased from 21% to 17%.
Earnings before provision for income taxes increased $5,406,000 from $21,990,000
to $27,396,000. The provision for income taxes increased from $5,008,000 to
$7,663,000, which resulted in an effective income tax rate increase from 23% to
28%, as a result of increased earnings subject to tax. Net earnings increased
$2,751,000 from $16,982,000 to $19,733,000, or 16%.
The Company maintains adequate liquidity for all of its anticipated capital
requirements and dividend payments. As of year-end 1998, there were no material
capital commitments outstanding.
Forward-looking statements in this Annual 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. In addition
to the factors discussed above, among the other 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.
1997 COMPARED TO 1996
Net sales increased by $3,532,000 from $106,008,000 to $109,540,000 due to
increased unit volume primarily as a result of new product introductions.
Gross margins for 1997 increased $1,886,000 from $33,621,000 to $35,507,000 due
to the volume increase. As a percentage of sales, gross margins were 32% in both
years.
Selling and general expenses were relatively unchanged.
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 in the
Company's portfolio of short-term marketable securities.
<PAGE>
10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION (CONTINUED)
Both years were favorably impacted by litigation judgments/settlements of a
nonrecurring nature.
Earnings before provision for income taxes increased $2,816,000 from $19,174,000
to $21,990,000. The provision for income taxes increased from $4,454,000 to
$5,008,000 as a result of increased earnings subject to tax. The effective
income tax rate was 23% in both years. Net earnings increased $2,262,000 from
$14,720,000 to $16,982,000, or 15%.
YEAR 2000
The year 2000 (Y2K) issue is the result of computer programs using a two-digit
format to indicate the year in any date. Computer systems with such software
will be unable to interpret dates beyond the year 1999, thus causing computer
errors which could lead to disruptions in operations. In 1997 the Company began
the work necessary to address its Y2K exposure and focused primarily on two
areas:
INTERNAL SYSTEMS: During 1997, the Company began upgrading or replacing its
affected programs or systems to become Y2K compliant, and expects this effort to
be completed by March 31, 1999. Additionally, the Company is in the process of
conducting full scale year 2000 et seq. simulations of mission critical systems
to verify the efficacy of the upgrades and replacements. Those simulations
should be completed by September 30, 1999. The conversion costs have been
expensed as incurred, and are not considered material. At this time, the Company
believes it is unnecessary to adopt a contingency plan.
EXTERNAL (SUPPLIER) SYSTEMS: The Company has contacted suppliers of products and
services to assess whether the suppliers are Y2K compliant or to monitor their
progress toward Y2K compliance. The vast majority of the Company's key suppliers
have responded that they either are or will be Y2K compliant prior to the year
2000. However, there can be no absolute assurance that suppliers and others will
timely resolve their own Y2K compliance issues. Additionally, a small number of
the Company's suppliers have provided inadequate responses as to their Y2K
readiness, and as a result, the Company is implementing a contingency plan to
address potential interruption of supplied products or services. The contingency
plan includes use of alternate suppliers and/or stockpiling of certain supplied
items. Costs-to-date for the external compliance program have also been
immaterial.
ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's interest income is affected by changes in the general level of
U.S. interest rates. Changes in U.S. interest rates could affect the interest
earned on the Company's cash equivalents and investments. Currently, changes in
U.S. interest rates would not have a material affect on the interest earned on
the Company's cash equivalents and investments. A majority of these cash
equivalents and investments earn a fixed rate of interest while the remaining
portion earn interest at a variable rate. The Company uses sensitivity analysis
to determine its exposure to changes in interest rates. The Company does not
anticipate that exposure to interest rate market risk will have a material
impact on the Company due to the nature of the Company's investments.
<PAGE>
11
ITEM 8 . FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
A. The consolidated financial statements of National Presto
Industries, Inc. and its subsidiaries and the related Report
of Independent Certified Public Accountants are contained on
pages F-1 through F-12 of this report.
B. Quarterly financial data is contained in Note L in Notes to
Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A listing of the Executive Officers of the Registrant is included in
Part I. See Note following Item 13 for information relating to
Directors of the Company.
ITEM 11. EXECUTIVE COMPENSATION
See Note following Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See Note following Item 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Note following.
NOTE: Within 120 days after the close of the registrant's fiscal year ended
December 31, 1998, the registrant intends to file a definitive proxy statement
pursuant to regulation 14A. Pursuant to the Rules and Regulations of the
Securities Exchange Act of 1934, the information required for Items 10, 11, 12
and 13 has been omitted and is incorporated herein from the Proxy by reference.
<PAGE>
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. The following consolidated financial statements of National
Presto Industries, Inc., and its subsidiaries and the related
Report of Independent Certified Public Accountants are included
in this report:
Form 10-K
Page Reference
--------------
1. Consolidated Balance Sheets - December 31,
1998 and 1997 F-1 & F-2
2. Consolidated Statements of Earnings -
Years ended December 31, 1998, 1997 and 1996 F-3
3. Consolidated Statements of Cash Flows -
Years ended December 31, 1998, 1997 and 1996 F-4
4. Consolidated Statements of Stockholders' Equity -
Years ended December 31, 1998, 1997 and 1996 F-5
5. Notes to Consolidated Financial Statements F-6 thru F-11
6. Report of Independent Certified Public Accountants F-12
B. The following Schedules and Exhibits are included
in this report:
Schedule II - Valuation and Qualifying Accounts F-13
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
<PAGE>
13
Exhibit 11 - Statement Re Computation of Per Share
Earnings F-14
Exhibit 21 - Parent and Subsidiaries F-15
Exhibit 23.1 - Consent of Grant Thornton LLP F-16
Exhibit 27 - Financial Data Schedule F-17
All other Schedules and Exhibits for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted. Columns omitted from
schedules filed have been omitted because the information is not
applicable.
C. Reports on Form 8-K:
No reports on Form 8-K were filed during the last quarter of the
period covered by this Form 10-K.
<PAGE>
14
SIGNATURE
Pursuant to the Requirements of Section 13 or 14 (d) 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.
--------------------------------
(registrant)
By: /S/ Randy F. Lieble
---------------
Randy F. Lieble
Treasurer
(Principal Accounting Officer)
By: /S/ Richard N. Cardozo By: /S/ Melvin S. Cohen
------------------ ---------------
Richard N. Cardozo Melvin S. Cohen
Director Chairman of the Board
By: /S/ John M. Sirianni By: /S/ James F. Bartl
------------------ --------------
John M. Sirianni James F. Bartl
Director Executive Vice President,
Secretary and Director
By: /S/ Michael J. O'Meara By: /S/ Maryjo Cohen
------------------ ---------------
Michael J. O'Meara Maryjo Cohen
Director President and Chief Executive
Officer and Director
Date: March 24, 1999
<PAGE>
F-1
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $114,565 $ 91,639
Marketable securities 126,666 140,651
Accounts receivable $ 16,290 $ 20,692
Less allowance for doubtful accounts 450 15,840 450 20,242
-------- --------
Inventories:
Finished goods 7,407 9,058
Work in process 1,822 1,675
Raw materials 5,860 6,900
Supplies 884 15,973 1,000 18,633
-------- --------
Prepaid expenses 257 918
-------- --------
Total current assets 273,301 272,083
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 172 172
Buildings 6,791 6,796
Machinery and equipment 15,012 13,040
-------- --------
21,975 20,008
Less allowance for depreciation 11,411 10,564 11,002 9,006
-------- --------
OTHER ASSETS 10,897 10,781
-------- --------
$294,762 $291,870
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
F-2
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 11,447 $ 15,958
Federal and state income taxes 6,216 4,923
Accrued liabilities 22,694 21,791
-------- --------
Total current liabilities 40,357 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 990 925
Retained earnings 248,115 243,092
-------- --------
256,546 251,458
Treasury stock, at cost, 81,040 shares
in 1998 and 85,537 shares in 1997 2,141 2,260
-------- --------
Total stockholders' equity 254,405 249,198
-------- --------
$294,762 $291,870
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
F-3
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross sales $ 108,861 $ 111,423 $ 107,878
Less freight, discounts, etc 1,788 1,883 1,870
-----------------------------------
Net sales 107,073 109,540 106,008
Cost of sales 70,853 73,999 72,387
-----------------------------------
Gross profit 36,220 35,541 33,621
Selling and general expenses 17,901 23,337 23,263
-----------------------------------
Operating profit 18,319 12,204 10,358
Other income, principally interest 9,077 9,244 8,341
Other, principally litigation judgments - 550 476
Interest expense - (8) (1)
-----------------------------------
Earnings before provision for income taxes 27,396 21,990 19,174
Provision for income taxes 7,663 5,008 4,454
-----------------------------------
Net earnings $ 19,733 $ 16,982 $ 14,720
===================================
Weighted average shares outstanding:
Basic 7,357 7,354 7,352
===================================
Diluted 7,358 7,355 7,353
===================================
Net earnings per share:
Basic $ 2.68 $ 2.31 $ 2.00
===================================
Diluted $ 2.68 $ 2.31 $ 2.00
===================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
F-4
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 19,733 $ 16,982 $ 14,720
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 2,098 2,051 1,967
Deferred income taxes (42) (1,143) (1,772)
Stock compensation expense 184 72 85
Changes in:
Accounts receivable 4,402 1,584 16,290
Inventories 2,660 (813) 7,785
Prepaid expenses 661 (30) 865
Accounts payable and accrued liabilities (3,608) 4,100 687
Federal and state income taxes 1,293 36 (337)
-----------------------------------------
Net cash provided by operating activities 27,381 22,839 40,290
-----------------------------------------
Cash flows from investing activities:
Marketable securities purchased (51,471) (183,921) (117,868)
Marketable securities - maturities and sales 65,456 179,429 94,292
Acquisition of property, plant and equipment (3,656) (4,021) (2,003)
Changes in other assets (74) 140 421
-----------------------------------------
Net cash used in investing activities 10,255 (8,373) (25,158)
-----------------------------------------
Cash flows from financing activities:
Dividends paid (14,710) (14,705) (14,702)
Net increase (decrease) in cash and cash equivalents 22,926 (239) 430
Cash and cash equivalents at beginning of year 91,639 91,878 91,448
-----------------------------------------
Cash and cash equivalents at end of year $ 114,565 $ 91,639 $ 91,878
=========================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ -- $ 8 $ 1
=========================================
Income taxes $ 5,914 $ 6,103 $ 6,565
=========================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
F-5
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands except per share data)
<TABLE>
<CAPTION>
For the years ended December 31, 1998, 1997, 1996
- -------------------------------------------------------------------------------------------------------
Common Paid-in Retained Treasury
Stock Capital Earnings Stock Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1996 $ 7,441 $ 848 $ 240,797 $ (2,345) $ 246,741
Net earnings -- -- 14,720 -- 14,720
Dividends paid, $2.00 per share -- -- (14,702) -- (14,702)
Other -- 55 0 35 90
---------------------------------------------------------------------
Balance December 31, 1996 7,441 903 240,815 (2,310) 246,849
Net earnings -- -- 16,982 -- 16,982
Dividends paid, $2.00 per share -- -- (14,705) -- (14,705)
Other -- 22 -- 50 72
---------------------------------------------------------------------
Balance December 31, 1997 7,441 925 243,092 (2,260) 249,198
Net earnings -- -- 19,733 -- 19,733
Dividends paid, $2.00 per share -- -- (14,710) -- (14,710)
Other -- 65 -- 119 184
---------------------------------------------------------------------
Balance December 31, 1998 $ 7,441 $ 990 $ 248,115 $ (2,141) $ 254,405
=====================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
F-6
NATIONAL PRESTO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF OPERATIONS:
The Company manufactures and distributes small electrical appliances and
housewares. Products are sold directly to retail outlets throughout the
United States and also through independent distributors. These products are
manufactured in plants located at Jackson, Mississippi; Alamogordo, New
Mexico; and a portion of its products are imported from nonaffiliated
companies in the Pacific Rim countries.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(1) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
In preparation of the Company's consolidated financial statements,
management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and related revenues
and expenses. Actual results may differ from the estimates used by
management.
(2) PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of National Presto Industries, Inc. and its
subsidiaries, all of which are wholly-owned. All material intercompany
accounts and transactions are eliminated.
(3) CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES: The Company
considers all highly liquid marketable securities with a maturity of
one week or less to be cash equivalents. Cash equivalent securities
totaled $114,345,000 and $92,418,000 at December 31, 1998 and 1997.
The Company's cash equivalents and marketable securities are diversely
invested, principally in A-rated or higher tax exempt bonds issued by
entities throughout the United States.
The Company has classified all cash equivalents and marketable
securities as available for sale, which requires the securities to be
reported at fair value, with unrealized gains and losses reported as a
separate component of stockholders' equity. At December 31, 1998 and
1997, cost approximated market value for all securities using the
specific identification method. The contractual maturities of the
marketable securities held at December 31, 1998 were $49,236,000 in
1999, $49,041,000 in 2000, $23,961,000 in 2001, $1,116,000 in 2002,
$1,871,000 in 2003 and $1,441,000 with indeterminate maturities.
(4) INVENTORIES: Inventories are stated at the lower of cost or market
with cost being determined principally on the last-in, first-out
(LIFO) method.
(5) PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are
stated at cost. For machinery and equipment, all amounts that are
fully depreciated have been eliminated from both the asset and
allowance accounts. Depreciation is provided in amounts sufficient to
relate the costs of depreciable assets to operations over their
service lives, which are estimated at fifteen to forty years for
buildings and three to seven years for machinery and equipment.
(6) REVENUE RECOGNITION: The Company recognizes revenues when product is
shipped. The Company provides for its 60-day over-the-counter return
privilege and warranties at the time of shipment.
<PAGE>
F-7
(7) ADVERTISING: The Company's policy is to expense advertising as
incurred for the year. Advertising expense was $6,856,000, $12,998,000
and $11,956,000 in 1998, 1997 and 1996.
(8) STOCK OPTIONS: The intrinsic value method is used for valuing stock
options issued, which means compensation expense is recognized for
options issued to employees when the option price is less than the
market price of the stock on the date the option is issued.
C. INVENTORIES:
The amount of inventories valued on the LIFO basis is $15,089,000 and
$17,633,000 as of December 31, 1998 and 1997. Under LIFO, inventories are
valued at approximately $10,590,000 and $11,943,000 below current cost
determined on a first-in, first-out (FIFO) basis at December 31, 1998 and
1997. The Company uses the LIFO method of inventory accounting to improve
matching of costs and revenues.
The following table describes that which would have occurred if LIFO
inventories had been valued at current cost determined on a FIFO basis:
Increase (Decrease)
-------------------
Cost of Net Earnings
Year Sales Earnings Per Share
---- ----- -------- ---------
1998 $ 1,353,000 $(838,000) $ (0.11)
1997 (1,345,000) 834,000 0.11
1996 926,000 (574,000) (0.08)
This information is provided for comparison with companies using the FIFO
basis.
D. ACCRUED LIABILITIES:
At December 31, 1998 accrued liabilities consisted of payroll $2,467,000,
insurance $13,304,000, environmental $3,646,000 and other $3,277,000. At
December 31, 1997 accrued liabilities consisted of payroll $2,291,000,
insurance $12,285,000, environmental $3,641,000 and other $3,574,000.
E. TREASURY STOCK:
The Board of Directors has authorized corporate reacquisition of up to
750,000 common shares of the Company stock. No shares were reacquired in
1998, 1997, or 1996. Treasury shares have been used for the exercise of
stock options and to fund the Company's 401(K) contributions (see note H).
F. NET EARNINGS PER COMMON SHARE:
Basic net earnings per share amounts have been computed by dividing net
earnings by the weighted average number of outstanding common shares.
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. Options to purchase
11,500; 7,500; and 3,000 shares of common stock with a weighted average
exercise price of $39.45, $39.54 and $41.28 were outstanding at December
31, 1998, 1997 and 1996, but were excluded from the computation of common
share equivalents because their exercise prices were greater than the
average market price of the common shares.
<PAGE>
F-8
G. STOCK OPTION PLAN:
The National Presto Industries, Inc. Stock Option Plan reserves 100,000
shares of common stock for key employees. Stock options for 11,500 shares
at a weighted average price of $39.45 per share were outstanding at
December 31, 1998. Stock options for 7,500 shares at a weighted average
price of $39.54 per share were outstanding at December 31, 1997. There were
1500 shares exercisable at $39.45 at December 31, 1998 and 1000 shares
exercisable at $39.54 at December 31, 1997. The pro forma effect of
accounting for stock options using the fair value method is immaterial.
H. RETIREMENT PLANS:
PENSION PLANS:
The Company has pension plans which cover the majority of employees.
Pension benefits are based on an employee's years of service and
compensation near the end of those years of service. The Company's funding
policy has been to contribute such amounts as necessary, computed on an
actuarial basis, to provide the plans with assets sufficient to meet the
benefits to be paid to plan members. Plan assets consist primarily (66%) of
interest bearing securities with the balance in corporate stocks,
principally National Presto Industries, Inc. common stock.
<TABLE>
<CAPTION>
(In thousands)
Pension Benefits
-------------------------------------------
1998 1997 1996
-------------------------------------------
<S> <C> <C> <C>
NET PERIODIC COST:
Service cost $ 290 $ 264 $ 276
Interest cost 603 564 623
Expected return on assets (616) (604) (711)
Amortization of transition amount (211) (210) (244)
Amortization of prior service cost 228 227 218
Actuarial loss 98 28 70
Settlement charge -- -- 21
-------------------------------------------
Net periodic benefit cost $ 392 $ 269 $ 253
===========================================
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $ 8,333 $ 7,338
Service cost 290 264
Interest cost 603 564
Special termination benefits 18 35
Actuarial loss 481 634
Benefits and expenses paid (515) (502)
------------------------------
Benefit obligation at end of year 9,210 8,333
------------------------------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year 7,527 7,664
Employer contributions 438 --
Actual return on plan assets 504 365
Benefits and expenses paid (515) (502)
------------------------------
Fair value of plan assets at end of year 7,954 7,527
------------------------------
</TABLE>
<PAGE>
F-9
<TABLE>
<CAPTION>
1998 1997
---- ----
RECONCILIATION OF FUNDED STATUS:
<S> <C> <C>
Funded status $ (1,256) $ (806)
Unrecognized actuarial loss 2,490 1,994
Unrecognized prior service cost 1,494 1,722
Unrecognized net transition obligation (395) (606)
------------------------------
Prepaid benefit cost $ 2,333 $ 2,304
==============================
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
<S> <C> <C>
Discount rate 6.75% 7.00%
Expected return on plan assets 8.00% 8.00%
Rate of compensation increase 4.63% 4.50%
</TABLE>
401(k) PLAN:
The 401(k) retirement plan covers substantially all employees. At its
discretion, the Company will match up to 50% (25% prior to 1998) of the
first 4% contributed by employees to the plan. The matching contribution
can be made with either cash or common stock. Contributions made from the
treasury stock, including the Company's cash dividends, totaled $184,000 in
1998, $72,000 in 1997, and $85,000 in 1996.
I. INCOME TAXES:
The following table summarizes the provision for income taxes:
<TABLE>
<CAPTION>
(Dollars in thousands) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 6,355 $ 5,201 $ 5,306
State 1,350 950 920
----------------------------------------
7,705 6,151 6,226
----------------------------------------
Deferred:
Federal (39) (979) (1,620)
State (3) (164) (152)
----------------------------------------
(42) (1,143) (1,772)
----------------------------------------
Total tax provision $ 7,663 $ 5,008 $ 4,454
========================================
</TABLE>
The effective rate of the provision for income taxes as shown in the
Consolidated Statements of Earnings differs from the applicable statutory
federal income tax rate for the following reasons:
<TABLE>
<CAPTION>
Percent of Pre-tax Income
-------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0%
State tax 3.2% 2.3% 2.6%
Tax exempt interest and dividends -10.8% -13.8% -14.1%
Other 0.6% -0.7% -0.3%
--------------------------------------
Effective rate 28.0% 22.8% 23.2%
======================================
</TABLE>
<PAGE>
F-10
Deferred tax assets and liabilities are recorded based on the differences
between the tax basis of assets and liabilities and their carrying amounts
for financial reporting purposes. The tax effects of the cumulative
temporary differences resulting in a deferred tax asset are as follows at
December 31:
(In thousands)
--------------
1998 1997
---- ----
Insurance $ 5,109 $ 4,717
Environmental 1,373 1,360
Pension (1,095) (1,067)
Other 2,508 2,843
-------------------------
$ 7,895 $ 7,853
=========================
J. CONCENTRATIONS:
One customer accounts for 44%, 43% and 38% of net sales for the years ended
December 31, 1998, 1997 and 1996.
Production levels at commercial plants may be affected by vendor failure to
deliver tooling, material, and critical parts within commitments. While
recent years have witnessed virtual elimination of these circumstances,
there is no assurance against recurrence. Deliveries of new products, some
of which have been sourced overseas, could be delayed by labor or supply
problems at the vendors or in transportation. As a consequence, these
products may not be available in sufficient quantities during the prime
selling period. While there has been no major incidence of such problems
and the Company has made every reasonable effort to prevent occurrence,
there is no assurance that such effort will be totally effective.
K. RISKS AND UNCERTAINTIES:
ENVIRONMENTAL:
At year end, all remaining remediation projects at the Eau Claire,
Wisconsin site had been installed, were fully operational, and restoration
activities had been completed. Based on factors known as of December 31,
1998, it is believed that funds previously appropriated by the government
will be adequate to satisfy on-going remediation operations and monitoring
activities; however, should environmental agencies require additional
studies or remediation projects, it is possible that existing funds could
be inadequate. Management believes that in the absence of any unforeseen
future developments, known environmental matters will not have any material
affect on the results of operations or financial condition of the Company.
YEAR 2000:
The Year 2000 (Y2K) issue relates to limitations in computer systems and
applications that may prevent proper recognition of the year 2000. The
potential effect of the Year 2000 issue on the Company and its business
partners will not be fully determinable until the year 2000 and thereafter.
If Year 2000 modifications are not properly completed either by the Company
or entities with whom the Company conducts business, the Company's revenues
and financial condition could be adversely impacted.
<PAGE>
F-11
L. INTERIM FINANCIAL INFORMATION (UNAUDITED):
The following represents unaudited financial information for 1998, 1997,
and 1996:
(In thousands)
--------------
Net Gross Net Earnings
Quarter Sales Profit Earnings Per Share
----- ------ -------- ---------
1998
First $ 18,965 $ 4,922 $ 2,810 $ 0.38
Second 16,294 4,710 2,760 0.38
Third 24,306 8,181 3,735 0.50
Fourth 47,508 18,407 10,428 1.42
-----------------------------------------------------
Total $ 107,073 $ 36,220 $ 19,733 $ 2.68
=====================================================
1997
First $ 17,947 $ 3,931 $ 2,579 $ 0.35
Second 16,870 4,932 2,640 0.36
Third 24,917 8,271 3,503 0.48
Fourth 49,806 18,407 8,260 1.12
-----------------------------------------------------
Total $ 109,540 $ 35,541 $ 16,982 $ 2.31
=====================================================
1996
First $ 17,109 $ 3,637 $ 1,930 $ 0.26
Second 16,970 4,338 2,236 0.31
Third 23,001 6,936 2,821 0.38
Fourth 48,928 18,710 7,733 1.05
-----------------------------------------------------
Total $ 106,008 $ 33,621 $ 14,720 $ 2.00
=====================================================
The Company's operations are in one industry segment.
<PAGE>
F-12
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Stockholders and Board of Directors
National Presto Industries, Inc.
We have audited the accompanying consolidated balance sheets of
National Presto Industries, Inc. and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Presto Industries, Inc. and subsidiaries as of December 31, 1998 and
1997, and the consolidated results of their operations and their consolidated
cash flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
We have also audited Schedule II of National Presto Industries, Inc.
and subsidiaries for each of the three years in the period ended December 31,
1998. In our opinion, this schedule presents fairly, in all material respects,
the information required to be set forth therein.
/S/ Grant Thornton LLP
Minneapolis, Minnesota
February 19, 1999
<PAGE>
F-13
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
(In thousands)
--------------
Column A Column B Column C Column D Column E
Balance at Balance at
Beginning End
Description of Period Additions(A) Deductions(B) of Period
----------- --------- ------------ ------------- ---------
Deducted from assets:
Allowance for doubtful accounts:
<S> <C> <C> <C> <C>
Year ended December 31, 1998 $ 450 $ 1,536 $ 1,536 $ 450
===========================================================
Year ended December 31, 1997 $ 450 $ 148 $ 148 $ 450
===========================================================
Year ended December 31, 1996 $ 450 $ (46) $ (46) $ 450
===========================================================
</TABLE>
Notes:
(A) Amounts charged (credited) to selling and general expenses
(B) Principally bad debts written off, net of recoveries
F-14
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
The following presents the computation of per share earnings reflecting the
assumption that convertible debentures are converted.
<TABLE>
<CAPTION>
(IN THOUSANDS
EXCEPT PER SHARE DATA)
----------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net earnings (1) $ 19,733 $ 16,982 $ 14,720
================================
Weighted average common shares outstanding (2) 7,357 7,354 7,352
Common share equivalents relating to stock options 1 1 1
Adjusted common and common equivalent
shares for computation (3) --------------------------------
7,358 7,355 7,353
================================
Net earnings per share:
Basic (1/2) $ 2.68 $ 2.31 $ 2.00
================================
Diluted (1/3) $ 2.68 $ 2.31 $ 2.00
================================
</TABLE>
F-15
EXHIBIT 21
PARENT AND SUBSIDIARIES
(Included in the Consolidated Financial Statements and Wholly-owned)
National Presto Industries, Inc.
Eau Claire, Wisconsin (A Wisconsin Corporation)
Its Subsidiaries:
National Holding Investment Company
Wilmington, Delaware (A Delaware Corporation)
Its Subsidiaries:
Presto Manufacturing Company
Jackson, Mississippi (A Mississippi Corporation)
Its Division:
Presto Products Manufacturing Company
Alamogordo, New Mexico
Century Leasing and Liquidating, Inc.
Minneapolis, Minnesota (A Minnesota Corporation)
Its Subsidiary:
Presto Export, Inc. (Inactive)
Minneapolis, Minnesota (A Minnesota
Corporation)
Jackson Sales and Storage Company
Jackson, Mississippi (A Mississippi Corporation)
Canton Sales & Storage Company
Canton, Mississippi (A Mississippi Corporation)
Presto Export, Ltd.
Christiansted, St. Croix, U.S. Virgin Islands
(A Virgin Islands Corporation)
National Defense Corporation
Eau Claire, Wisconsin (A Wisconsin Corporation)
NPI Export Corporation (Inactive)
Minneapolis, Minnesota (A Minnesota Corporation)
F-16
EXHIBIT 23.1
AUDITORS' CONSENT
We have issued our report dated February 19, 1999, accompanying the
consolidated financial statements and schedule included in the Annual Report of
National Presto Industries, Inc. and subsidiaries on Form 10-K for the year
ended December 31, 1998. We hereby consent to the incorporation by reference of
said report in the Registration Statement of National Presto Industries, Inc.
and subsidiaries on Form S-8 (File No. 33-46711, effective March 27, 1992).
/S/ Grant Thornton LLP
Minneapolis, Minnesota
February 19, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
F-17
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 114,565
<SECURITIES> 126,666
<RECEIVABLES> 16,290
<ALLOWANCES> 450
<INVENTORY> 15,973
<CURRENT-ASSETS> 273,301
<PP&E> 21,975
<DEPRECIATION> 11,411
<TOTAL-ASSETS> 294,762
<CURRENT-LIABILITIES> 40,357
<BONDS> 0
0
0
<COMMON> 7,441
<OTHER-SE> 246,964
<TOTAL-LIABILITY-AND-EQUITY> 294,762
<SALES> 107,073
<TOTAL-REVENUES> 107,073
<CGS> 70,853
<TOTAL-COSTS> 70,853
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,536
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 27,396
<INCOME-TAX> 7,663
<INCOME-CONTINUING> 19,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,733
<EPS-PRIMARY> 2.68
<EPS-DILUTED> 2.68
</TABLE>
