<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For Quarter ended: March 31, 1995 Commission File Number: I-9403
PORTAGE INDUSTRIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 39-1150850
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1325 Adams Street, Portage, Wisconsin 53901
(Address of principal executive offices) (Zip Code)
(608)-742-7123
(Registrant's telephone number, including area code)
N/A
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required 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. [x] Yes [ ] No
Indicated the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
2,266,725 Common Shares outstanding at March 31, 1995
<PAGE> 2
PORTAGE INDUSTRIES CORPORATION
INDEX
Page No.
--------
Part I Financial Information
Balance Sheet - March 31, 1995
and December 31, 1994 1 - 2
Statement of Operations - Quarter and
Three Months Ended March 31, 1995
and March 31, 1994 3
Statement of Cash Flows - Three
Months Ended March 31, 1995
and March 31, 1994 4
Notes to Financial Statements 5 - 6
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7 - 8
Part II Other Information
Item 6: Reports on Form 8-K 9
Signatures 9
<PAGE> 3
PART I - FINANCIAL INFORMATION
PORTAGE INDUSTRIES CORPORATION
BALANCE SHEET
(In thousands)
March 31, December 31,
1995 1994
--------- -----------
ASSETS
------
Current assets
Cash and cash equivalents $ 20 $ 137
Accounts receivable, net 3,243 3,026
Inventories (Note 2) 3,832 3,359
Other current assets 337 282
-------- --------
Total current assets 7,432 6,804
-------- --------
Property, plant and equipment 12,557 12,352
Less accumulated depreciation 7,026 6,793
-------- --------
Net property, plant and equipment 5,531 5,559
-------- --------
Goodwill 4,134 4,134
Less accumulated amortization 1,231 1,205
-------- --------
Net goodwill 2,903 2,929
-------- --------
Other assets 104 109
-------- --------
Total assets $15,970 $15,401
======== ========
See notes to financial statements
Page 1
<PAGE> 4
PORTAGE INDUSTRIES CORPORATION
BALANCE SHEET
(In thousands)
March 31, December 31,
1995 1994
-------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable (Note 3) $ 900 $ 800
Current portion of long-term debt (Note 3) 550 550
Accounts payable 4,177 3,906
Accrued expenses:
Compensation 181 304
Deferred Income Taxes 203 203
Other 248 161
------- -------
Total current liabilities 6,259 5,924
Long-term debt (Note 3) 2,250 2,250
Deferred income taxes 215 215
------- -------
Total liabilities 8,724 8,389
------- -------
Stockholders' equity
Preferred stock, $.25 par value,
1,000,000 shares authorized, none issued -- --
Common stock, $.01 par value,
10,000,000 shares authorized,
2,266,725 shares issued and
outstanding 23 23
Additional paid-in capital 7,889 7,889
Accumulated deficit (666) (900)
------- -------
Total stockholders' equity 7,246 7,012
------- -------
Total liabilities
and stockholders' equity $15,970 $15,401
======= =======
See notes to financial statements
Page 2
<PAGE> 5
PORTAGE INDUSTRIES CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
------------------
1995 1994
---- ----
Net sales $8,133 $7,632
Cost of sales 6,977 6,803
------ ------
Gross profit 1,156 829
Selling and administrative expenses 686 552
Interest Expense - net 58 106
Other (Income) Expense - net 9 7
------ ------
Income before income taxes 403 164
Income tax provision 169 62
------ ------
Net income $ 234 $ 102
====== ======
Income per common share .10 .04
Weighted average shares outstanding 2,267 2,267
See notes to financial statements
Page 3
<PAGE> 6
PORTAGE INDUSTRIES CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Year To Date Ended
March 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 234 $ 102
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 233 261
Amortization of goodwill 26 26
Other 5 7
Effects of changes in certain
assets and liabilities:
Accounts receivable (217) (90)
Inventories (473) (52)
Accounts payable 271 (181)
Accrued expenses (36) (220)
Other (55) 162
-------- --------
Net cash provided by (used in)
operating activities (12) 15
--------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment (205) (67)
-------- --------
Net cash used in investing
activities (205) (67)
-------- --------
Cash flows from financing activities:
Increase (decrease) in short-term
borrowings 100 (200)
Stock options exercise proceeds 0 46
-------- --------
Net cash (used in)
financing activities 100 (154)
-------- --------
Net Decrease (117) (206)
Cash and cash equivalents:
Beginning of year 137 274
-------- --------
End Period $ 20 $ 68
======== ========
</TABLE>
Page 4
<PAGE> 7
PORTAGE INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of Presentation
The financial information for the quarters ended March 31, 1995
and 1994 is unaudited; however, such information reflects normal
recurring adjustments which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.
The year-end balance sheet data was derived from audited
financial statements; but does not include all disclosures required
by generally accepted accounting principles.
Note 2: Inventories
Inventories are stated at the lower of Last-in, First-out (LIFO) cost
or market. The composition is as follows:
<TABLE>
<CAPTION>
($000 omitted)
March 31, December 31,
1995 1994
------- ---------
<S> <C> <C>
Raw materials $ 2,144 $ 2,402
Finished goods and work in process 1,938 1,207
------- ---------
Total $ 4,082 $ 3,609
Excess of current cost
over LIFO cost 250 250
------- -------
Net $ 3,832 $ 3,359
------- -------
</TABLE>
Page 5
<PAGE> 8
Note 3: Notes Payable, Long-Term Debt and Current Maturities Thereof
Notes payable represents line of credit borrowings against a
$1,500,000 demand line of credit with interest at 1% over the
banks reference rate (a total of 10% at March 31, 1995). The
maximum allowable borrowings under the line of credit may not
exceed 75% of the eligible accounts receivable.
Substantially, all assets of the Company are pledged as
collateral for its borrowings.
On May 17, 1994 the Company refinanced its $3,350,000
Industrial Revenue Bond which now has an adjustable interest
rate (4.45% at March 31, 1995). The interest rate and
interest periods are variable. The 1994 Industrial Bond
Series requires the Company to maintain a letter of credit
which includes covenants requiring, among other financial
covenants, a current ratio ranging from 0.9:1 to 1.0:1 at
various dates and tangible net worth of $2,900,000 plus 70% of
the net earnings from May 17, 1994 to the date of
determination.
Future scheduled maturities of long-term debts are due each
November 1 as follows (in thousands):
1995 $ 550
1996 550
1997 550
1998 550
1999 600
------
$2,800
Page 6
<PAGE> 9
PORTAGE INDUSTRIES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
The following represents management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying financial
statements.
Results of operations for the quarter ended March 31, 1995, compared with the
quarter ended March 31, 1994.
Net sales for the first quarter of 1995 were $8,133,000, up $501,000
or 7% compared to the quarter ended March 31, 1994. The increase in
sales was a result of increased business with existing customers in
extrusion and new business in our light gauge thermoforming division.
Gross profit as a percentage of net sales increased from 11% in the
first quarter of 1994 to 14% for the same period in 1995. This
increase was the result of better mix of higher margin business in
extrusion and by the additional business in our light gauge
thermoforming division. Continued efficiencies and cost-cutting
measures in manufacturing also contributed to this increase.
Selling, general and administrative expenses for the first quarter
increased $134,000 compared to the same period in 1994. The increase
was primarily related to commissions on increased sales for the period
and the addition of a new sales person.
Interest expense declined $48,000 or 45% from $106,000 in the first
quarter of 1994 to $58,000 for the same period in 1995. This decline
in interest was primarily the result of the Company refinancing its
Industrial Revenue Bond with more favorable interest rates.
Primarily as a result of increased sales of higher margin business and
continued cost control measures, net income for the first quarter of
1995 was $234,000 or ten cents per share versus $102,000 or four cents
per share for 1994.
Page 7
<PAGE> 10
Liquidity and Capital Resources
The Company's liquidity continues to improve in 1995. The current
ratio at March 31, 1995 was 1.19 to 1.0 as compared to 1.15 to 1.0 at
December 31, 1994. Working capital increased $293,000 during the
first quarter of 1995.
Accounts receivable, which were $3,243,000 at March 31, 1995 and
$3,026,000 at December 31, 1994 represent 37 days' sales outstanding
at March 31, 1995 and 27 days' at December 31, 1994. Sales are
generally made with 30-day terms, and the Company has stressed the
importance of effective credit and collection procedures.
Accounts payable have increased $271,000 primarily due to the increase
of days sales outstanding in receivables.
Inventories have increased $473,000 since December 31, 1994, primarily
due to raw material price increases.
The Company increased its borrowings on the line of credit by $100,000
during the first quarter of 1995 primarily due to the increase in days
sales outstanding in receivables and due to capital expenditures made
in the amount of $205,000.
The Company's line of credit terms are described in Note 3 to the
accompanying financial statements.
The Company has not paid dividends since becoming publicly-held in
1987. At the present time management does not expect to pay dividends
in the foreseeable future, as earnings will be reinvested in the
business. Also, as discussed in Note 3 of Notes to Financial
Statements, a letter of credit agreement, to which the Company is a
party supporting the Industrial Revenue Bonds, contains certain
financial covenants which may effectively restrict the payment of
dividends. (See Note 3 of Notes to Financial Statements.)
Page 8
<PAGE> 11
PART II OTHER INFORMATION
Item 6: Exhibits and reports on Form 8-K
a) Exhibits - None
b) No current report on Form 8-K was filed during the
three-month period ended March 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PORTAGE INDUSTRIES CORPORATION
------------------------------
(Registrant)
By Anthony J. Lisauskas May 4, 1995
---------------------------------- -----------
Anthony J. Lisauskas Date
Chief Executive Officer
and President
By Mark E. Showers May 4, 1995
---------------------------------- -----------
Mark E. Showers Date
Controller and Secretary/Treasurer
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 20
<SECURITIES> 0
<RECEIVABLES> 3,243
<ALLOWANCES> 0
<INVENTORY> 3,832
<CURRENT-ASSETS> 7,432
<PP&E> 12,557
<DEPRECIATION> 7,026
<TOTAL-ASSETS> 15,970
<CURRENT-LIABILITIES> 6,259
<BONDS> 2,250
<COMMON> 23
0
0
<OTHER-SE> 7,223
<TOTAL-LIABILITY-AND-EQUITY> 15,970
<SALES> 8,133
<TOTAL-REVENUES> 8,133
<CGS> 6,977
<TOTAL-COSTS> 6,977
<OTHER-EXPENSES> 695
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> 403
<INCOME-TAX> 169
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
