<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: June 30, 1995 Commission File Number: I-9403
------------------- ----------
PORTAGE INDUSTRIES CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 39-1150850
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1325 Adams Street, Portage, Wisconsin 53901
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(Address of principal executive offices) (Zip Code)
(608)-742-7123
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(Registrant's telephone number, including area code)
N/A
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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.
2,269,100 Common Shares outstanding at June 30, 1995
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<PAGE> 2
PORTAGE INDUSTRIES CORPORATION
Page No.
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Part I Financial Information
Balance Sheet - June 30, 1995
and December 31, 1994 1 - 2
Statement of Operations - Quarter and
Six Months Ended June 30, 1995
and June 30, 1994 3
Statement of Cash Flows - Six
Months Ended June 30, 1995
and June 30, 1994 4
Notes to Financial Statements 5 - 6
Part II Other Information 7 - 8
Item 4: Submission of Matters to a Vote of 9
Security Holders
Item 6: Reports on Form 8-K 9
Signatures 9
<PAGE> 3
PART I - FINANCIAL INFORMATION
PORTAGE INDUSTRIES CORPORATION
BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ----------
ASSETS
------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 14 $ 137
Accounts receivable, net 3,713 3,026
Inventories (Note 2) 3,911 3,359
Other current assets 374 282
------- -------
Total current assets 8,012 6,804
------- -------
Property, plant and equipment 12,663 12,352
Less accumulated depreciation 7,307 6,793
------- -------
Net property, plant and equipment 5,356 5,559
------- -------
Goodwill 4,134 4,134
Less accumulated amortization 1,257 1,205
------- -------
Net goodwill 2,877 2,929
------- -------
Other assets 98 109
------- -------
Total assets $16,343 $15,401
======= =======
</TABLE>
See notes to financial statements
Page 1
<PAGE> 4
PORTAGE INDUSTRIES CORPORATION
BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities
Notes payable (Note 3) $ 900 $ 800
Current portion of long-term debt (Note 3) 550 550
Accounts payable 4,593 3,906
Accrued expenses:
Compensation 204 304
Deferred Income Taxes 203 203
Other 120 161
------- -------
Total current liabilities 6,570 5,924
Long-term debt (Note 3) 2,250 2,250
Deferred income taxes 215 215
------- -------
Total liabilities 9,035 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,
issued and outstanding 2,269,100
and 2,266,725 respectively 23 23
Additional paid-in capital 7,894 7,889
Accumulated deficit (609) (900)
------ -------
Total stockholders' equity 7,308 7,012
------- -------
Total liabilities
and stockholders' equity $16,343 $15,401
======= =======
</TABLE>
See notes to financial statements
Page 2
<PAGE> 5
PORTAGE INDUSTRIES CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ --------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $8,643 $7,825 $16,776 $15,457
Cost of sales 7,742 6,709 14,719 13,512
------ ------ ------ ------
Gross profit 901 1,116 2,057 1,945
Selling and administrative expenses 729 654 1,415 1,206
Interest Expense - net 62 77 120 183
Other (Income) Expense - net 13 103 22 110
------ ------ ------ ------
Income before income taxes 97 282 500 446
Income tax provision 40 107 209 169
------ ------ ------ ------
Net income (loss) $ 57 $ 175 $ 291 $ 277
====== ====== ====== ======
Net income per common share .03 .08 .13 .12
Weighted average shares outstanding 2,269 2,266 2,269 2,266
</TABLE>
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
June 30,
-----------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 291 $ 277
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 514 529
Amortization of goodwill 52 52
Other 11 (20)
Effects of changes in certain
assets and liabilities:
Accounts receivable (687) (907)
Inventories (552) 208
Accounts payable 687 53
Accrued expenses (141) (256)
Other (92) 122
-------- --------
Net cash provided by (used in)
operating activities 83 58
-------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment (311) (151)
-------- --------
Net cash used provided by (used in)
investing activities (311) (151)
-------- --------
Cash flows from financing activities:
Increase (decrease) in short-term
borrowings 100 (200)
Stock options exercise proceeds 5 47
-------- --------
Net cash (used in) provided by
financing activities 105 (153)
-------- --------
Net Increase (Decrease) (124) (246)
Cash and cash equivalents:
Beginning of year 137 274
-------- --------
End Period $ 14 $ 28
======== ========
</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 June 30, 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)
June 30, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Raw materials $ 2,620 $ 2,402
Finished goods and work in process 1,541 1,207
---------- ------------
Total $ 4,161 $ 3,609
Excess of current cost
over LIFO cost 250 250
---------- ------------
Net $ 3,911 $ 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 1/2% over
the banks reference rate (a total of 9.5% at June 30, 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 (4.35% at June 30, 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):
<TABLE>
<S> <C>
1995 $ 550
1996 550
1997 550
1998 550
1999 600
--------
$2,800
</TABLE>
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 June 30, 1995, compared with the
quarter ended June 30, 1994.
- -----------------------------------------------------------------------------
Net sales for the quarter ended June 30, 1995, were $8,643,000, up
$818,000 or 10% compared to the quarter ended June 30, 1994. Total
shipments of extruded products in pounds were lower in the second
quarter compared to the same period in 1994. The primary reasons for
the increase in net sales was the additional business in Light Gauge
Thermoforming, change in the company's product mix and rising raw
material prices.
Net sales for the six month period were $16,776,000, up $1,319,000 or
9% compared to the same period in 1994. This increase is also due to
the reasons mentioned above.
Gross margin for the quarter, as a percentage of net sales, was 10.4%
compared to 14.3% for 1994. The decrease is primarily due to several
new projects that came on board in the second quarter that the company
invested extensive Sample and Development Costs, and due to the lower
number of pounds processed and shipped during the period.
Six month gross margin as a percentage of net sales was 12.3% in 1995
compared to 12.6% for 1994 primarily due to the above mentioned
reasons.
Selling, general and administrative expenses increased $75,000 for the
quarter and $209,000 for the six month period in 1995 as compared to
the same periods in 1994, which primarily relates to commissions on
increased sales dollars and the addition of a new sales person.
Interest and other expense decreased 58% for the quarter and 52% for
the first 6 months of 1995 as compared to 1994. This decline was
primarily the result of the Company refinancing its Industrial Revenue
bond in May of 1994 with more favorable interest rates.
Net income for the second quarter was $57,000 or three cents per share
versus $175,000 or eight cents for the same period in 1994. For the
six months ended June 30, 1995, net income was $291,000 or thirteen
cents per share, compared to $277,000 or twelve cents ended June 30,
1994.
Page 7
<PAGE> 10
Liquidity and Capital Resources at June 30, 1995
The Company's working capital increased $562,000 since December 31,
1994 and its current ratio has improved from 1.19 to 1.0 at June 30,
1994 to 1.22 to 1.0 at June 30, 1995.
Accounts receivable, which were $3,713,000 at June 30, 1995 and
$3,026,000 at December 31, 1994 represents 40 days' sales outstanding
at June 30, 1995 and 26 days at December 31, 1994. Sales are
generally made with 30-day terms, however, certain customers have
extended us beyond terms.
Inventory quantities have decreased since December 31, 1994, however,
inventory dollars have increased by $552,000. The increase is
primarily related to a shift in product mix and increased raw material
prices.
Accounts payable have increased $687,000 since December 31, 1994,
primarily due to the increase in days' sales outstanding in
receivables.
The Company increased its borrowings on the line of credit by $100,000
primarily due to the increase in days sales outstanding in receivables
and due to capital expenditures made in the amount of $311,000.
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 4: Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of the Company was held on June 16,
1995. Proxies were solicited by management of the Company, pursuant
to Regulation 14 under the Securities Exchange Act of 1934; there was
no solicitation in opposition of management's nominees as listed in
the proxy statement and all such nominees were elected pursuant to the
vote of shareholders. Directors elected were Robert L. Lestina, Jr.,
Robert C. Hazzard, Anthony J. Lisauskas and Paul N. Erickson.
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 June 30, 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 8/4/95
------------------------------- ---------------
Anthony J. Lisauskas Date
Chief Executive Officer
and President
By Mark E. Showers 8/4/95
------------------------------- ---------------
Mark E. Showers Date
Controller and
Secretary/Treasurer
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 3713
<ALLOWANCES> 0
<INVENTORY> 3911
<CURRENT-ASSETS> 8012
<PP&E> 12663
<DEPRECIATION> 7307
<TOTAL-ASSETS> 16343
<CURRENT-LIABILITIES> 6570
<BONDS> 2250
<COMMON> 23
0
0
<OTHER-SE> 7285
<TOTAL-LIABILITY-AND-EQUITY> 16343
<SALES> 16776
<TOTAL-REVENUES> 16776
<CGS> 14719
<TOTAL-COSTS> 14719
<OTHER-EXPENSES> 1437
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120
<INCOME-PRETAX> 500
<INCOME-TAX> 209
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
