<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
Commission File Number 0-15582
MINUTEMAN INTERNATIONAL, INC.
- ------------------------------------------------------------
(Exact Name of Registrant, as Specified in its Charter)
ILLINOIS 36-2262931
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(State or other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
111 SOUTH ROHLWING ROAD ADDISON, IL 60101
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(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (630) 627-6900
No Change
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(Former Name, Address, or Fiscal Year, if Changed Since Last
Reports)
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, and
(2) has been subject to such filing requirements for
the past 90 days.
Yes XXXX No
------------ ------------
On June 30, 1997, there were 3,568,385 shares of the Registrant's Common Stock
outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 and DECEMBER 31, 1996
(in thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
6/30/97 12/31/96
ASSETS --------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash & Cash equivalents.................. $901 $1,475
Short-term investments................... 257 2,141
Accounts receivable, less allowances of
$427 in 1997 and $351 in 1996........... 12,690 8,957
Due from affiliates...................... 669 356
Inventories (Note 3)..................... 11,775 8,591
Prepaid expenses......................... 104 138
Deferred income taxes.................... 440 440
--------- --------
Total Current Assets............... 26,836 22,098
--------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost..... 19,183 17,803
Accumulated depreciation................... 9,927 9,155
--------- --------
Net property, plant and equipment.. 9,256 8,648
--------- --------
OTHER ASSETS............................... 213 222
--------- --------
$36,305 $30,968
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable............................ $1,500 $ --
Accounts payable......................... 3,813 1,061
Accrued expenses......................... 1,713 1,762
Income taxes payable..................... 414 91
--------- --------
Total Current Liabilities.......... 7,440 2,914
--------- --------
DEFERRED INCOME TAXES...................... 200 200
--------- --------
SHAREHOLDERS' EQUITY
Common stock, no-par value
Authorized shares - 10,000,000
Issued and outstanding shares -
3,568,385 in 1997 and 1996.............. 6,396 6,396
Retained earnings........................ 22,404 21,585
Currency translation adjustments......... (135) (127)
--------- --------
28,665 27,854
--------- --------
$36,305 $30,968
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 3
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars-unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
6/30/97 6/30/96 6/30/97 6/30/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES..................... $14,003 $12,127 $28,097 $24,962
COST OF SALES................. 9,435 8,174 19,167 16,925
--------- --------- --------- ---------
Gross profit................ 4,568 3,953 8,930 8,037
--------- --------- --------- ---------
OPERATING EXPENSES
Selling...................... 2,548 2,122 5,116 4,350
General and administrative... 615 496 1,216 1,066
--------- --------- --------- ---------
Total operating expenses... 3,163 2,618 6,332 5,416
--------- --------- --------- ---------
Income from operations....... 1,405 1,335 2,598 2,621
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income.............. 9 6 40 20
Interest expense............. (8) 0 (8) 0
Other, net................... 6 1 16 433
--------- --------- --------- ---------
Total other income......... 7 7 48 453
--------- --------- --------- ---------
Income before income taxes... 1,412 1,342 2,646 3,074
PROVISION FOR INCOME TAXES.... 554 522 1,040 1,181
--------- --------- --------- ---------
NET INCOME.................... $858 $820 $1,606 $1,893
========= ========= ========= =========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING.. 3,568,385 3,568,385 3,568,385 3,568,385
========= ========= ========= =========
EARNINGS PER SHARE............ $0.24 $0.23 $0.45 $0.53
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
MINUTEMAN INTERNATIONAL,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars-unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
6/30/97 6/30/96
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income....................................... $1,606 $1,893
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization.................. 780 714
Other.......................................... (8) 2
Cash provided (used) due to changes in
operating assets and liabilities:
Accounts receivable and due from affiliates.. (4,046) (2,425)
Inventories.................................. (3,184) (1,277)
Prepaid expenses............................. 34 (65)
Accounts payable, accrued expenses and
income taxes payable........................ 3,026 1,909
------- -------
NET CASH PROVIDED (USED) BY OPERATIONS... (1,792) 751
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net.. (1,380) (648)
Maturities of short-term investments............. 1,884 200
------- -------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 504 (448)
------- -------
FINANCING ACTIVITIES
Proceeds from notes payable...................... 1,500 --
Dividends paid................................... (786) (714)
------- -------
CASH PROVIDED (USED) BY FINANCING ACTIVITIES 714 (714)
------- -------
DECREASE IN CASH
AND CASH EQUIVALENTS.................. (574) (411)
Cash and cash equivalents at beginning of period.. 1,475 812
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....... $901 $401
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(1) The Condensed Consolidated Balance Sheets, as of June 30, 1997 and
December 31, 1996, and the Condensed Consolidated Statements of Income
and Cash Flows for the periods ended June 30, 1997 and 1996, in the
opinion of the Company, reflect all adjustments (which, except as
noted below, include only normal recurring adjustments) necessary to
present fairly the financial position, the results of operations and
cash flows, as of/and for the periods then ended. Certain information
and footnote disclosures normally included in Financial Statements,
prepared in accordance with generally accepted accounting principles
have been condensed or omitted, pursuant to S.E.C. rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed Financial Statements be read in
conjunction with the Financial Statements and the Notes, thereto,
included in the Company's Annual Report on Form 10-K, for the
year-ended December 31, 1996.
(2) The results of operations for the periods ended June 30, 1997 and
1996 are not necessarily indicative of the results to be expected for
the full year.
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<PAGE> 6
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(3) It is the Company's policy to take an annual physical inventory, in
conjunction with the preparation of the Annual Financial Statements.
At times, other than year-end, it is necessary to estimate the
breakdown of raw materials, work-in-process, and finished goods
inventories. The estimate for the period ended June 30, 1997, and the
components of the December 31, 1996 inventories, based on the physical
count, both primarily on a LIFO basis, were as follows:
<TABLE>
<CAPTION>
(000's)
6-30-97 12-31-96
------- --------
<S> <C> <C>
Finished Goods $4,210 $3,136
Work In Process 8,580 6,374
Raw Materials 1,250 1,053
------- --------
$14,040 $10,563
Less LIFO Reserve (2,265) (1,972)
------- --------
Total at LIFO Cost $11,775 $8,591
======= ========
</TABLE>
4) In May 1997 the Company renewed an unsecured Line of Credit arrangement
for short term debt with a financial institution that was entered into in
June 1995. Under the terms of this agreement the Company may borrow up to
$5 million on such terms that the Company and financial institution may
mutually agree to. There are no requirements for compensating balances or
restrictions of any kind involved in this arrangement.
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<PAGE> 7
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1997
RESULTS OF OPERATIONS:
The Company achieved record sales for the second quarter 1997 and representing
an increase of 15.5% over the same period a year ago. Sales were especially
strong both in North America and internationally and were aided by promotional
initiatives instituted to gain market share. Response to our product
introductions were strong as were sales across most product lines, in
particular carpet care equipment, automatic scrubbers and chemical products.
For the first six months of 1997, record net sales increased 12.6% to
$28,097,000 from $24,962,000.
For the three months ended June 30, 1997, gross profit increased $615,000 as
compared with last year as the result of the increased sales volume. Gross
profit for the six months ended June 30, 1997, increased 11.1% to $8,930,000 as
compared to 1996.
Operating profits were up 5.2% for the Second Quarter ended June 30, 1997, as
compared to the Second Quarter, 1996. This was a due primarily to the increase
from gross profit but was offset by the higher operating expenses. Operating
expenses for the first six months of 1997 were $6,332,000 as compared to
$5,416,000 for the same period in 1996 due to higher promotional expenses aimed
at gaining market share, increased personnel expenses and the costs associated
with our investment in establishing Multi-Clean as a separate division to
handle our entire line of chemical cleaning products. While this investment
will hamper profits the remainder of this year chemical sales have already
begun to improve and the reorganization should improve profitability in the
years to come.
Interest income was $9,000 for the Second Quarter ended 1997, and $40,000 for
the first six months of 1997, as compared with $6,000 and $20,000,
respectively, for the comparable periods of 1996. This increase for the
quarter is attributable to an increase in funds available for investment.
Interest expense related to short term borrowings under the aforementioned Line
of Credit was $8,000 for the Second Quarter ended 1997. There was no interest
expense for the First Quarter of 1997 and the first six months of 1996. Other
income, net was $6,000 for the Second Quarter ended 1997, and $16,000 for the
first six months of 1997 compared to other income, net of $1,000 and $433,000,
respectively, for the comparable periods of 1996. Included in 1996 income is
the gain recognized on the sale of the remaining portion of our former St. Paul
manufacturing facility during the First Quarter.
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<PAGE> 8
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
JUNE 30, 1997
Net income for the Second Quarter ended June 30, 1997 increased 4.6% to
$858,000 or 24 cents per share, up from $820,000, or 23 cents per share in
the Second Quarter, 1996. For the six months ended June 30, 1997, net income
was $1,606,000 or 45 cents per share, down 15.2% from $1,893,000 or 53 cents
per share for the first half of 1996.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
The Company had working capital of $19.4 million at June 30, 1997 and $19.2
million at December 31, 1996. This represents a current ratio of 3.6 and 7.6
for these periods, respectively.
Cash, cash equivalents, and short-term investments represented 6.0% and 18.8%
of this working capital at June 30, 1997 and December 31, 1996 which, when not
in use, is invested in bank certificates of deposit, Euro dollar certificate
investments, and a managed portfolio of high quality variable rate notes and
tax-exempt seven day bonds. This decrease is due primarily to significantly
higher sales during the second quarter of 1997 causing higher receivables and
the use of cash to replenish inventories which were lower than normal at year
end.
The Company had shareholders' equity of $28.7 million at June 30, 1997 and
$27.9 million at December 31, 1996 which, when compared to total liabilities,
represented an equity to liability ratio of 3.8 and 8.9, respectively.
The Company has more than sufficient capital resources and is in a strong
financial position to meet business and liquidity needs as they arise. The
Company foresees no unusual future events that will materially change the
aforementioned summarization.
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<PAGE> 9
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
JUNE 30, 1997
(4) Submission of Matters to a Vote of Security Holders:
On April 25, 1997 the annual shareholders meeting was held, at which time
the following were voted on and approved:
1. The following were elected Directors for 1997:
Jerome E. Rau Tyll Necker
Frederick W. Hohage Frank R. Reynolds
James C. Schrader, Jr.
2. The appointment of Ernst & Young LLP as the Company's independent
auditors for 1997.
3. To amend the Articles of Incorporation in regards to Director
liability.
Item 6(b):
A Form 8-K was not filed for the Quarter ended June 30, 1997.
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<PAGE> 10
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
JUNE 30, 1997
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.
MINUTEMAN INTERNATIONAL, INC.
/s/ Jerome E. Rau 8/11/97
- -------------------------------- ------------------------
Jerome E. Rau Date
President and Director
(Principal Executive Officer)
/s/ Thomas J. Nolan 8/11/97
- -------------------------------- ------------------------
Thomas J. Nolan Date
Chief Financial Officer,
Secretary & Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 901 901
<SECURITIES> 257 257
<RECEIVABLES> 13,359 13,359
<ALLOWANCES> 427 427
<INVENTORY> 11,775 11,775
<CURRENT-ASSETS> 26,836 26,836
<PP&E> 19,183 19,183
<DEPRECIATION> 9,927 9,927
<TOTAL-ASSETS> 36,305 36,305
<CURRENT-LIABILITIES> 7,440 7,440
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 22,269 22,269
<TOTAL-LIABILITY-AND-EQUITY> 36,305 36,305
<SALES> 14,003 28,097
<TOTAL-REVENUES> 14,003 28,097
<CGS> 9,435 19,167
<TOTAL-COSTS> 12,598<F1> 25,499<F1>
<OTHER-EXPENSES> (6) (16)
<LOSS-PROVISION> 29 69
<INTEREST-EXPENSE> (1) (32)
<INCOME-PRETAX> 1,412 2,646
<INCOME-TAX> 554 1,040
<INCOME-CONTINUING> 858 1,606
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 858 1,606
<EPS-PRIMARY> .24 .45
<EPS-DILUTED> .24 .45
<FN>
<F1>Loss provision for doubtful accounts is included in total costs.
</FN>
</TABLE>
