1
Page 1 of 34 Total Pages
Index to Schedules and
Exhibits are at Page 15 and 16
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, 1999 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
Title of each class on 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 the 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 29, 2000, was
$222,425,424.
The number of shares outstanding of each of the registrant's classes of common
stock, as of February 29, 2000, was 7,209,606.
<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 March 31, 2000 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 segment. 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 Control Master(R) heat control
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; electric heaters; corn
poppers (hot air and microwave); microwave bacon cookers; 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, 1999, approximately 61% of consolidated
net sales were provided by cast products (fry pans, griddles, grills,
deep fryers and multi- cookers), approximately 9% by motorized
nonthermal appliances (can openers, slicer/shredders, knife sharpeners,
electric knives, and bread slicing systems), and approximately 26% by
noncast/thermal appliances (stamped cookers and canners, stainless
steel cookers, corn poppers (hot air and microwave), coffeemakers,
microwave bacon cookers, tea kettles, and heaters). For the year ended
December 31, 1998, approximately 59% of consolidated net sales were
provided by cast products, approximately 13% by motorized nonthermal
appliances and approximately 25% by noncast/thermal appliances. 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, 1999, Wal-Mart Stores, Inc. accounted
for 46% and Target, Inc. accounted for 12% of consolidated net sales.
Wal-Mart Stores, Inc., accounted for 44% and 43% of consolidated net
sales for the years ended December 31, 1998 and 1997.
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 also sell other
product lines. Sales promotional activities are conducted through the
use of television, radio and newspaper advertising. 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
electrical 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 1999, 1998 and 1997 were absorbed in operations of 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 a 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 (12% in 1999) 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 back- hauls 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 invested funds is included in Other Income in
the accompanying financial statements.
<PAGE>
5
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, acquisitions and newly identified business activities.
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 by 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 remediation projects at the Eau Claire, Wisconsin, site had
been installed, were fully operational, and restoration activities had
been completed.
<PAGE>
6
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, 1999, it is believed that funds previously appropriated
by the government, together with existing corporate reserves, 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 the 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, 1999, the Company had 711 employees.
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 major 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. Buying practices of the Company's customers require
"just-in-time" delivery, necessitating that the Company carry large
finished goods inventories. The Company purchases components and raw
materials in advance of production requirements where such purchases
are necessary to ensure supply or provide advantageous long-term
pricing and/or costing.
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.
<PAGE>
7
ITEM 2. PROPERTIES (Owned Except Where Indicated)
The Company's Eau Claire facility is approximately 560,000 square feet.
Leases for 172,000 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 170,700 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 191,900 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 warehousing. During the
peak season, an addition 35,000 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>
8
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.)
NAME TITLE AGE
---------------- -------------------------- ------
Melvin S. Cohen Chairman of the Board 82
Maryjo Cohen President and Chief 47
Executive Officer
James F. Bartl Executive Vice President 59
and Secretary
Richard F. Anderl Vice President, Engineering 56
Neil L. Brown Vice President, Manufacturing 56
Larry R. Hoepner Vice President, Purchasing 58
Donald E. Hoeschen Vice President, Sales 52
Randy F. Lieble Chief Financial Officer 46
and Treasurer
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.
<PAGE>
9
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 and the additional
position of Chief Financial Officer in November 1999. He has been
associated with the registrant since 1977. Prior to becoming an
officer, he was Manager of Investments and Government Contracts.
<PAGE>
10
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>
1999 1998
--------------------------------------- ---------------------------------------
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 $42.8750 $35.1250 $ 2.00 $43.5000 $38.7500
Second Quarter -- 38.9375 34.1250 -- 43.3125 37.7500
Third Quarter -- 41.0000 35.5000 -- 41.6250 36.1250
Fourth Quarter -- 39.0000 34.1250 -- 43.3125 36.0625
--------------------------------------- ---------------------------------------
Full Year $ 2.00 $42.8750 $34.1250 $ 2.00 $43.5000 $36.0625
</TABLE>
Common stock of National Presto Industries, Inc., is traded on the New
York Stock Exchange under the symbol NPK. As of December 31, 1999, there were
828 stockholders of record. There were 814 stockholders of record as of February
29, 2000, the latest practicable date.
ITEM 6. SELECTED FINANCIAL DATA
(in thousands except per share data)
<TABLE>
<CAPTION>
For the years ended December 31, 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $114,697 $107,073 $109,540 $106,008 $120,172
Net earnings 20,822 19,733 16,982 14,720 18,969
Net earnings per share 2.84 2.68 2.31 2.00 2.61
Total assets 299,393 294,762 291,870 285,385 284,927
Dividends paid per common share
applicable to current year $ 2.00 $ 2.00 $ 2.00 $ 2.00 $ 2.15
</TABLE>
<PAGE>
11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
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
historical results. 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.
1999 COMPARED TO 1998
Net sales increased by $7,624,000 from $107,073,000 to $114,697,000 or 7%. The
increase was due primarily to increased unit volume.
Gross profit for 1999 increased $611,000 from $36,220,000 to $36,831,000 or 32%
versus 34% as a percentage of net sales. The reduction of gross profit
percentage was largely caused by increased material costs.
Selling and general expenses decreased $834,000 largely due to a more favorable
bad debt experience. As a percentage of net sales, selling and general expenses
decreased from 17% to 15%.
Earnings before provision for income taxes increased $1,781,000 from $27,396,000
to $29,177,000. The provision for income taxes increased from $7,663,000 to
$8,355,000, which resulted in an effective income tax rate increase from 28% to
29%, as a result of increased earnings subject to tax. Net earnings increased
$1,089,000 from $19,733,000 to $20,822,000, or 6%.
The Company maintains adequate liquidity for all of its anticipated capital
requirements and dividend payments. As of year-end 1999, there were no material
capital commitments outstanding.
<PAGE>
12
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%.
YEAR 2000
The Year 2000 (Y2K) issue concerned the inability of certain computer-related
products and systems to operate correctly during the Year 2000. During 1997, the
Company began upgrading or replacing its affected products and systems to become
Y2K compliant. Additionally, the Company conducted an assessment of whether its
suppliers had any Y2K compliance issues. The Company has completed its Y2K
compliance efforts and has not experienced any major problems related to the Y2K
issue. However, the Company will continue to monitor events and information
related to the Y2K issue in order to take corrective action when, and if,
necessary.
The costs related to the Company's Y2K efforts were considered immaterial and
expensed in the year incurred. The Company does not expect to incur any material
costs in the future related to the Y2K issue.
<PAGE>
13
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 effect on the interest earned on
the Company's cash equivalents and investments, as these investments are
primarily municipal bonds. A majority of these bonds 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 change 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.
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-a 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
<PAGE>
14
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, 1999, 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 Proxy by reference.
<PAGE>
15
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,
1999 and 1998 F-1 & F-2
2. Consolidated Statements of Earnings -
Years ended December 31, 1999, 1998 and 1997 F-3
3. Consolidated Statements of Cash Flows -
Years ended December 31, 1999, 1998 and 1997 F-4
4. Consolidated Statements of Stockholders' Equity -
Years ended December 31, 1999, 1998 and 1997 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 October 3, 1999
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
<PAGE>
16
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 Re Computaton 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>
17
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
Chief Financial Officer
and 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, 2000
- ---------------------
<PAGE>
F-1
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 88,075 $114,565
Marketable securities 150,455 126,666
Accounts receivable $ 20,466 $ 16,290
Less allowance for doubtful accounts 450 20,016 450 15,840
------------ -----------
Inventories:
Finished goods 5,548 7,407
Work in process 2,409 1,822
Raw materials 8,486 5,860
Supplies 884 17,327 884 15,973
------------ -----------
Prepaid expenses 72 257
------------- ------------
Total current assets 275,945 273,301
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 176 172
Buildings 7,087 6,791
Machinery and equipment 17,065 15,012
------------ -----------
24,328 21,975
Less allowance for depreciation 12,019 12,309 11,411 10,564
------------ -----------
OTHER ASSETS 11,139 10,897
------------- ------------
$299,393 $294,762
============= ============
</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, 1999 DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $14,395 $11,447
Federal and state income taxes 6,064 6,216
Accrued liabilities 23,602 22,694
------------- ------------
Total current liabilities 44,061 40,357
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 1,033 990
Retained earnings 254,218 248,115
------------ -----------
262,692 256,546
Treasury stock, at cost, 230,912 shares
in 1999 and 81,040 shares in 1998 7,360 2,141
------------ -----------
Total stockholders' equity 255,332 254,405
------------- ------------
$299,393 $294,762
============= ============
</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, 1999 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross sales $ 116,723 $ 108,861 $ 111,423
Less freight, discounts, etc 2,026 1,788 1,883
---------------------------------------
Net sales 114,697 107,073 109,540
Cost of sales 77,866 70,853 73,999
---------------------------------------
Gross profit 36,831 36,220 35,541
Selling and general expenses 17,067 17,901 23,337
---------------------------------------
Operating profit 19,764 18,319 12,204
Other income, principally interest 9,413 9,077 9,236
Other, principally litigation judgments -- -- 550
---------------------------------------
Earnings before provision for income taxes 29,177 27,396 21,990
Provision for income taxes 8,355 7,663 5,008
---------------------------------------
Net earnings $ 20,822 $ 19,733 $ 16,982
=======================================
Weighted average shares outstanding:
Basic 7,343 7,357 7,354
=======================================
Diluted 7,344 7,358 7,355
=======================================
Net earnings per share:
Basic $ 2.84 $ 2.68 $ 2.31
=======================================
Diluted $ 2.84 $ 2.68 $ 2.31
=======================================
</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, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 20,822 $ 19,733 $ 16,982
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 2,296 2,098 2,051
Deferred income taxes 202 (42) (1,143)
Stock compensation expense 187 184 72
Changes in:
Accounts receivable (4,176) 4,402 1,584
Inventories (1,354) 2,660 (813)
Prepaid expenses 185 661 (30)
Accounts payable and accrued liabilities 3,856 (3,608) 4,100
Federal and state income taxes (152) 1,293 36
-------------------------------------------
Net cash provided by operating activities 21,866 27,381 22,839
-------------------------------------------
Cash flows from investing activities:
Marketable securities purchased (92,665) (51,471) (183,921)
Marketable securities - maturities and sales 68,876 65,456 179,429
Acquisition of property, plant and equipment (4,151) (3,656) (4,021)
Changes in other assets (334) (74) 140
-------------------------------------------
Net cash used in investing activities (28,274) 10,255 (8,373)
-------------------------------------------
Cash flows from financing activities:
Dividends paid (14,719) (14,710) (14,705)
Purchase of treasury stock (5,363) -- --
-------------------------------------------
Net cash used in financing activities (20,082) (14,710) (14,705)
-------------------------------------------
Net increase (decrease) in cash and cash equivalents (26,490) 22,926 (239)
Cash and cash equivalents at beginning of year 114,565 91,639 91,878
-------------------------------------------
Cash and cash equivalents at end of year $ 88,075 $ 114,565 $ 91,639
===========================================
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes $ 8,305 $ 5,914 $ 6,103
===========================================
</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 share and per share data)
<TABLE>
<CAPTION>
For the years ended December 31, 1999, 1998, 1997
- ---------------------------------------------------------------------------------------------------------------
Common Paid-in Retained Treasury
Stock Capital Earnings Stock Total
----- ------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance January 1, 1997 $ 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
Net earnings -- -- 20,822 -- 20,822
Dividends paid, $2.00 per share -- -- (14,719) -- (14,719)
Purchase of treasury stock - 155,000 shares -- -- -- (5,363) (5,363)
Other -- 43 -- 144 187
------------------------------------------------------------------
Balance December 31, 1999 $ 7,441 $ 1,033 $ 254,218 $ (7,360) $ 255,332
==================================================================
</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 and Alamogordo, New
Mexico. A portion of its products are imported from nonaffiliated companies
in the Pacific Rim countries. The Company's operations are in one industry
segment.
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 $88,333,000 and $114,345,000 at December 31, 1999 and 1998.
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, 1999 and
1998, cost approximated market value for all securities using the
specific identification method. The contractual maturities of the
marketable securities held at December 31, 1999 were $58,429,000 in
2000, $68,628,000 in 2001, $18,303,000 in 2002,$3,699,000 in 2003 and
$1,396,000 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 $6,876,000, $6,856,000
and $12,998,000 in 1999, 1998 and 1997.
(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.
(9) Reclassifications: Certain reclassifications have been made to the
1998 and 1997 financial statements to conform with the 1999 financial
statement presentation.
C. INVENTORIES:
The amount of inventories valued on the LIFO basis is $16,443,000 and
$15,089,000 as of December 31, 1999 and 1998. Under LIFO, inventories are
valued at approximately $10,876,000 and $10,590,000 below current cost
determined on a first-in, first-out (FIFO) basis at December 31, 1999 and
1998. 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
---- ----- -------- ---------
1999 $ (286,000) $ 177,000 $ 0.02
1998 1,353,000 (838,000) (0.11)
1997 (1,345,000) 834,000 0.11
This information is provided for comparison with companies using the FIFO
basis.
D. ACCRUED LIABILITIES:
At December 31, 1999 accrued liabilities consisted of payroll $2,590,000,
insurance $14,442,000, environmental $3,642,000 and other $2,928,000. 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.
E. TREASURY STOCK:
The Board of Directors has authorized corporate reacquisition of up to
750,000 common shares of the Company stock. During 1999, 155,000 shares
were reacquired. No shares were reacquired in 1998 or 1997. 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
10,000; 11,500; and 7,500 shares of common stock with a weighted average
exercise price of $39.43, $39.45 and $39.54 were outstanding at December
31, 1999, 1998 and 1997, 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 10,000 shares
at a weighted average price of $39.43 per share were outstanding at
December 31, 1999. Stock options for 11,500 shares at a weighted average
price of $39.45 per share were outstanding at December 31, 1998. There were
1,250 shares exercisable at $39.43 at December 31, 1999 and 1,500 shares
exercisable at $39.45 at December 31, 1998. 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 (75%) of
interest bearing securities with the balance in corporate stocks,
principally National Presto Industries, Inc. common stock.
<TABLE>
<CAPTION>
(In thousands)
Pension Benefits
-----------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
NET PERIODIC COST:
Service cost $ 368 $ 290 $ 264
Interest cost 693 603 564
Expected return on assets (649) (616) (604)
Amortization of transition amount (104) (211) (210)
Amortization of prior service cost 228 228 227
Actuarial loss 177 98 28
-----------------------------------
Net periodic benefit cost $ 713 $ 392 $ 269
===================================
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $ 9,210 $ 8,333
Service cost 368 290
Interest cost 693 603
Special termination benefits -- 18
Actuarial loss (421) 481
Benefits and expenses paid (738) (515)
-----------------------
Benefit obligation at end of year 9,112 9,210
-----------------------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year 7,954 7,527
Employer contributions 466 438
Actual return on plan assets 384 504
Benefits and expenses paid (738) (515)
-----------------------
Fair value of plan assets at end of year 8,066 7,954
-----------------------
</TABLE>
<PAGE>
F-9
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
RECONCILIATION OF FUNDED STATUS:
Funded status $(1,046) $(1,256)
Unrecognized actuarial loss 2,157 2,490
Unrecognized prior service cost 1,267 1,494
Unrecognized net transition obligation (291) (395)
-----------------------
Prepaid benefit $ 2,087 $ 2,333
=======================
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
Discount rate 7.75% 6.75%
Expected return on plan assets 8.00% 8.00%
Rate of compensation increase 5.00% 4.63%
</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 $187,000 in
1999, $184,000 in 1998, and $72,000 in 1997.
I. INCOME TAXES:
The following table summarizes the provision for income taxes:
(Dollars in thousands) 1999 1998 1997
---- ---- ----
Current:
Federal $ 6,817 $ 6,355 $ 5,201
State 1,336 1,350 950
-------------------------------------
8,153 7,705 6,151
-------------------------------------
Deferred:
Federal 169 (39) (979)
State 33 (3) (164)
-------------------------------------
202 (42) (1,143)
-------------------------------------
Total tax provision $ 8,355 $ 7,663 $ 5,008
=====================================
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:
Percent of Pre-tax Income
-------------------------
1999 1998 1997
---- ---- ----
Statutory rate 35.0% 35.0% 35.0%
State tax 3.0% 3.2% 2.3%
Tax exempt interest and dividends -9.2% -10.8% -13.8%
Other -0.2% 0.6% -0.7%
--------------------------------------
Effective rate 28.6% 28.0% 22.8%
======================================
<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)
--------------
1999 1998
---- ----
Insurance $ 5,546 $ 5,109
Environmental 1,371 1,373
Pension (1,265) (1,095)
Other 2,041 2,508
-------------------------
$ 7,693 $ 7,895
=========================
J. CONCENTRATIONS:
For the year ended December 31, 1999, two customers accounted for 46% and
12% of net sales One customer accounted for 44% and 43% of net sales for
the years ended December 31, 1998 and 1997.
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:
As of December 31, 1998, all 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,
1999, it is believed that funds previously appropriated by the government,
together with existing corporate reserves, 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.
The Company has completed its Y2K compliance efforts and has not
experienced any major problems related to the Y2K issue. However, the
Company will continue to monitor events and information related to the Y2K
issue in order to take corrective action when, and if, necessary.
<PAGE>
F-11
L. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standard Board Statement No. 133 "Accounting for
Derivative Instruments and Hedging Activities" is effective for fiscal
years beginning after June 15, 2000 as amended by SFAS137. SFAS 133
requires entities to recognize all derivatives in their financial
statements as either assets or liabilities measured at fair value. The
Statement also specifies new methods of accounting for derivatives used in
risk management strategies (hedging activities), prescribes the items and
transactions that may be hedged, and specifies detailed criteria required
to qualify for hedge accounting. The adoption of this standard is not
expected to have a material effect on the consolidated financial statements
of the Company.
L. INTERIM FINANCIAL INFORMATION (UNAUDITED):
The following represents unaudited financial information for 1999, 1998,
and 1997:
<TABLE>
<CAPTION>
(In thousands)
--------------
Net Gross Net Earnings
Quarter Sales Profit Earnings Per Share
----- ------ -------- ---------
<S> <C> <C> <C> <C>
1999
First $ 21,610 $ 6,174 $ 3,280 $ 0.45
Second 18,762 5,919 3,133 $ 0.43
Third 25,071 7,910 3,744 $ 0.51
Fourth 49,254 16,828 10,665 $ 1.45
-------------------------------------------------------
Total $ 114,697 $ 36,831 $ 20,822 $ 2.84
=======================================================
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
=======================================================
</TABLE>
<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, 1999 and
1998, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1999. 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 auditing standards
generally accepted in the United States. 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, 1999 and
1998, and the consolidated results of their operations and their consolidated
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
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, 1999. In our opinion, this schedule represents fairly, in all material
respects, the information required to be set forth therein.
/S/ Grant Thornton LLP
Minneapolis, Minnesota
February 16, 2000
<PAGE>
F-13
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1999, 1998 and 1997
<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
----------- --------- ------------- -------------- ---------
<S> <C> <C> <C> <C>
Deducted from assets:
Allowance for doubtful accounts:
Year ended December 31, 1999 $ 450 $ (283) $ (283) $ 450
============================================================
Year ended December 31, 1998 $ 450 $ 1,536 $ 1,536 $ 450
============================================================
Year ended December 31, 1997 $ 450 $ 148 $ 148 $ 450
============================================================
</TABLE>
Notes:
(A) Amounts charged (credited) to selling and general expenses
(B) Principally bad debts written off, net of recoveries
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)
-----------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net earnings (1) $ 20,822 $ 19,733 $ 16,982
===================================
Weighted average common shares outstanding (2) 7,343 7,357 7354
Common share equivalents relating to stock options 1 1 1
Adjusted common and common equivalent -----------------------------------
shares for computation (3) 7,344 7,358 7,355
===================================
Net earnings per share:
Basic (1/2) $ 2.84 $ 2.68 $ 2.31
===================================
Diluted (1/3) $ 2.84 $ 2.68 $ 2.31
===================================
</TABLE>
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)
EXHIBIT 23.1
AUDITORS' CONSENT
We have issued our report dated February 16, 2000, 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, 1999. 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 16, 2000
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> $88,075
<SECURITIES> 150,455
<RECEIVABLES> 20,466
<ALLOWANCES> 450
<INVENTORY> 17,327
<CURRENT-ASSETS> 275,945
<PP&E> 24,328
<DEPRECIATION> 12,019
<TOTAL-ASSETS> 299,393
<CURRENT-LIABILITIES> 44,061
<BONDS> 0
0
0
<COMMON> 7,441
<OTHER-SE> 247,891
<TOTAL-LIABILITY-AND-EQUITY> 299,393
<SALES> 114,697
<TOTAL-REVENUES> 114,697
<CGS> 77,866
<TOTAL-COSTS> 77,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (283)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 29,177
<INCOME-TAX> 8,355
<INCOME-CONTINUING> 20,822
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,822
<EPS-BASIC> 2.84
<EPS-DILUTED> 2.84
</TABLE>
