<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 SEPTEMBER 30, 1997
COMMISSION FILE NUMBER 0-15582
MINUTEMAN INTERNATIONAL, INC.
----------------------------------------------------------------------
(Exact name of Registrant, as specified in its charter)
ILLINOIS 36-2262931
----------------------------------------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
111 SOUTH ROHLWING ROAD ADDISON, IL 60101
----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (630) 627-6900
NO CHANGE
----------------------------------------------------------------------
(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 September 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
SEPTEMBER 30, 1997 and DECEMBER 31, 1996
(in thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
ASSETS 9/30/97 12/31/96
--------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash & Cash equivalents............... $ 656 $ 1,475
Short-term investments............. 334 2,141
Accounts receivable, less allowances of
$461 in 1997 and $351 in 1996....... 11,574 8,957
Due from affiliates............. 572 356
Inventories (Note 3)................... 12,867 8,591
Prepaid expenses.................. 116 138
Deferred income taxes............... 440 440
------- -------
Total Current Assets............. 26,559 22,098
------- -------
PROPERTY, PLANT AND EQUIPMENT, at cost........ 19,429 17,803
Accumulated depreciation............. 10,334 9,155
------- -------
Net property, plant and equipment.. 9,095 8,648
------- -------
OTHER ASSETS........................ 208 222
------- -------
$35,862 $30,968
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable................... $1,800 $ -
Accounts payable............. 3,050 1,061
Accrued expenses.............. 1,683 1,762
income taxes payable............ 216 91
------- -------
Total Current Liabilities...... 6,749 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................. 22,653 21,585
Currency translation adjustments...... (136) (127)
------- -------
28,913 27,854
------- -------
$35,862 $30,968
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-1-
<PAGE> 3
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars-unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------- --------------------
9/30/97 9/30/96 9/30/97 9/30/96
--------- ------- --------- --------
<S> <C> <C> <C> <C>
NET SALES.......................... $13,316 $12,607 $41,413 $37,569
COST OF SALES...................... 9,301 8,689 28,468 25,614
--------- --------- --------- ---------
Gross profit..................... 4,015 3,918 12,945 11,955
--------- --------- --------- ---------
OPERATING EXPENSES
Selling.......................... 2,475 2,278 7,591 6,628
General and administrative....... 573 578 1,789 1,644
--------- --------- --------- ---------
Total operating expenses....... 3,048 2,856 9,380 8,272
--------- --------- --------- ---------
Income from operations........... 967 1,062 3,565 3,683
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income.................. 5 6 45 26
Interest expense................. (24) - (32) -
Other, net....................... 39 42 55 475
--------- --------- --------- ---------
Total other income............. 20 48 68 501
--------- --------- --------- ---------
Income before income taxes....... 987 1,110 3,633 4,184
PROVISION FOR INCOME TAXES......... 347 407 1,387 1,588
--------- --------- --------- ---------
NET INCOME......................... $640 $703 $2,246 $2,596
========= ========= ========= =========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING............... 3,568,385 3,568,385 3,568,385 3,568,385
========= ========= ========= =========
EARNINGS PER SHARE................. $0.18 $0.20 $0.63 $0.73
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE> 4
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars-unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------
9/30/97 9/30/96
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income.............................................. $2,246 $2,596
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization......................... 1,193 1,079
Other................................................. (9) (2)
Cash provided (used) due to changes in
operating assets and liabilities:
Accounts receivable and due from affiliates.......... (2,833) (2,506)
Inventories.......................................... (4,276) (83)
Prepaid expenses..................................... 22 (44)
Accounts payable, accrued expenses and
income taxes payable................................ 2,035 1,131
------- -------
NET CASH PROVIDED (USED) BY OPERATIONS......... (1,622) 2,171
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net......... (1,626) (773)
Purchases of short-term investments..................... 0 (622)
Maturities of short-term investments.................... 1,807 200
------- -------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES... 181 (1,195)
------- -------
FINANCING ACTIVITIES
Dividends paid......................................... (1,178) (1,070)
Proceeds from notes payable............................ 1,800 --
------- -------
CASH PROVIDED (USED) BY FINANCIAL ACTIVITIES... 622 (1,070)
------- -------
DECREASE IN CASH
AND CASH EQUIVALENTS............................. (819) (94)
Cash and cash equivalents at beginning of period......... 1,475 812
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............. $656 $718
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE> 5
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(1) The Condensed Consolidated Balance Sheets, as of September 30, 1997 and
December 31, 1996, and the Condensed Consolidated Statements of Income and
Cash Flows for the periods ended September 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 September 30, 1997 and
1996 are not necessarily indicative of the results to be expected for
the full year.
- 4 -
<PAGE> 6
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 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>
9-30-97 12-31-96
(000's) (000's)
------- --------
<S> <C> <C>
Finished Goods $4,190 $3,136
Work in Process 9,117 6,374
Raw Materials 1,650 1,053
------- --------
$14,957 $10,563
Less LIFO Reserve (2,090) (1,972)
------- --------
Total at LIFO Cost $12,867 $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.
-5-
<PAGE> 7
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SEPTEMBER 30, 1997
RESULTS OF OPERATIONS:
The Company achieved record net sales of $13,316,000 for the three months ended
September 30, 1997, compared with $12,607,000 for the same period of last year.
The increase was fueled by strong dealer demand both domestically and
internationally. Response to our product introductions was strong as were
sales across most product lines. For the first nine months of 1997 record net
sales increased 10.2% to $41,413,000 from $37,569,000 for 1996.
While gross profit for the current quarter and year were up compared to last
year due to higher sales volume, as a percent of sales the current quarter and
year continued to lag behind last year. This was due primarily to the Company
not having raised prices since early 1996 and absorbing vendor price increases.
The Company recently announced a price increase to help offset this decline,
the positive effects of which should be evident in early 1998.
Operating expenses were $3,048,000 for the Third Quarter ended September 30,
1997, as compared to $2,856,000 for the Third Quarter, 1996. This 6.7%
increase was due to higher personnel expenses. Operating expenses for the
first nine months of 1997 were $9,380,000 as compared to $8,272,000 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
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, the reorganization should improve profitability in the
years to come.
Interest income was $5,000 for the Third Quarter ended 1997, and $45,000 for
the first nine months of 1997, as compared with $6,000 and $26,000
respectively, for the comparable periods of 1996. This decrease for the
quarter is attributable to a decrease in funds available for investment.
Interest expense related to short term borrowings under the aforementioned Line
of Credit was $24,000 for the quarter and $32,000 for the first nine months of
1997. There was no interest expense for the first nine months of 1996. Other
-6-
<PAGE> 8
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
SEPTEMBER 30, 1997
income, net was $39,000 for the Third Quarter ended 1997, and $55,000 for the
first nine months of 1997 compared to other income, net of $42,000 and $475,000
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.
Net income for the Third Quarter ended September 30, 1997 decreased 9.0% to
$640,000 or 18 cents per share, down from $703,000, or 20 cents per share in
the Third Quarter, 1996. For the nine months ended September 30, 1997, net
income was $2,246,000 or 63 cents per share, down 13.5% from $2,596,000 or 73
cents per share for the first nine months of 1996.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
The Company had working capital of $19.8 million at September 30, 1997 and
$19.2 million at December 31, 1996. This represents a current ratio of 3.9 and
7.6 for these periods, respectively.
Cash, cash equivalents, and short-term investments represented 5.0% and 18.8%
of this working capital at September 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 third 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 $28.9 million at September 30, 1997 and
$27.9 million at December 31, 1996 which, when compared to total liabilities,
represented an equity to liability ratio of 4.2 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.
- 7 -
<PAGE> 9
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
SEPTEMBER 30, 1997
(4) Submission of Matters to a Vote of Security Holders:
No matters were submitted to vote of security holders during the Quarter
ended September 30, 1997
ITEM 6(b):
A Form 8-K was not filed for the Quarter ended September 30, 1997.
- 8 -
<PAGE> 10
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
SEPTEMBER 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 10/31/97
- -------------------------------- -----------------------
Jerome E. Rau Date
President and Director
(Principal Executive Officer)
/s/ Thomas J. Nolan 10/31/97
- -------------------------------- -----------------------
Thomas J. Nolan Date
Chief Financial Officer,
Secretary & Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Loss provision for doubtful accounts is included in total costs.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 656 656
<SECURITIES> 334 334
<RECEIVABLES> 12,146 12,146
<ALLOWANCES> 461 461
<INVENTORY> 12,867 12,867
<CURRENT-ASSETS> 26,559 26,559
<PP&E> 19,429 19,429
<DEPRECIATION> 10,334 10,334
<TOTAL-ASSETS> 35,862 35,862
<CURRENT-LIABILITIES> 6,749 6,749
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 22,517 22,517
<TOTAL-LIABILITY-AND-EQUITY> 35,862 35,862
<SALES> 13,316 41,413
<TOTAL-REVENUES> 13,316 41,413
<CGS> 9,301 28,468
<TOTAL-COSTS> 12,349 37,848
<OTHER-EXPENSES> (39) (55)
<LOSS-PROVISION> 53 122
<INTEREST-EXPENSE> 19 (13)
<INCOME-PRETAX> 987 3,633
<INCOME-TAX> 347 1,387
<INCOME-CONTINUING> 640 2,246
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 640 2,246
<EPS-PRIMARY> .18 .63
<EPS-DILUTED> .18 .63
</TABLE>
