<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 MARCH 31, 1998
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 Number)
Incorporation or Organization)
111 SOUTH ROHLWING ROAD, ADDISON, IL 60101
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(Address of Principal Executive Offices) (Zip Code)
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 March 31, 1998, 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
MARCH 31, 1998 and DECEMBER 31, 1997
(in thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
ASSETS 3/31/98 12/31/97
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash & Cash equivalents.......................... $ 1,140 $ 564
Short-term investments........................... 311 158
Accounts receivable, less allowances of
$382 in 1998 and $328 in 1997................... 13,150 9,961
Due from affiliates.............................. 524 447
Inventories (Note 3)............................. 12,787 11,396
Prepaid expenses................................. 43 86
Deferred income taxes............................ 500 500
-------- --------
Total Current Assets.................... 28,455 23,112
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost............. 19,711 19,353
Accumulated depreciation........................... 10,626 10,179
-------- --------
Net property, plant and equipment....... 9,085 9,174
-------- --------
OTHER ASSETS....................................... 202 207
-------- --------
$ 37,742 $ 32,493
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable.................................... $ 1,800 $ --
Accounts payable................................. 3,483 1,312
Accrued expenses................................. 2,023 1,802
Income taxes payable............................. 636 97
-------- --------
Total Current Liabilities............... 7,942 3,211
-------- --------
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 1998 and 1997...................... 6,396 6,396
Retained earnings................................ 23,370 22,862
Currency translation adjustments................. (166) (176)
-------- --------
29,600 29,082
-------- --------
$ 37,742 $ 32,493
======== ========
</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
---------------------
3/31/98 3/31/97
--------- ---------
<S> <C> <C>
NET SALES............................... $15,101 $14,094
COST OF SALES........................... 10,160 9,732
--------- ---------
Gross profit......................... 4,941 4,362
--------- ---------
OPERATING EXPENSES
Selling.............................. 2,875 2,568
General and administrative........... 608 601
--------- ---------
Total operating expenses.......... 3,483 3,169
--------- ---------
Income from operations............... 1,458 1,193
--------- ---------
OTHER INCOME (EXPENSE)
Interest income...................... 4 31
Interest expense..................... (11) --
Other, net........................... 3 10
--------- ---------
Total other income (expense)...... (4) 41
--------- ---------
Income before income taxes........... 1,454 1,234
PROVISION FOR INCOME TAXES.............. 553 486
--------- ---------
NET INCOME.............................. $901 $748
========= =========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING................... 3,568,385 3,568,385
========= =========
EARNINGS PER SHARE...................... $0.25 $0.21
========= =========
</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>
THREE MONTHS ENDED
--------------------
3/31/98 3/31/97
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................. $ 901 $ 748
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization.......................... 452 401
Other.................................................. 10 (12)
Cash provided (used) due to changes in
operating assets and liabilities:
Accounts receivable and due from affiliates........... (3,266) (2,727)
Inventories........................................... (1,391) (2,359)
Prepaid expenses...................................... 43 46
Accounts payable, accrued expenses and
income taxes payable................................. 2,931 2,680
------- -------
NET CASH USED BY OPERATIONS........................ (320) (1,223)
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net....... (358) (546)
Purchases of short-term investments................... (153) ---
Maturities of short-term investments.................. --- 1,042
------- -------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES....... (511) 496
------- -------
FINANCING ACTIVITIES
Dividends paid......................................... (393) (393)
Proceeds from notes payable............................ 1,800 ---
------- -------
CASH PROVIDED (USED) BY FINANCING ACTIVITIES....... 1,407 (393)
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS................................. 576 (1,120)
Cash and cash equivalents at beginning of period........ 564 1,475
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............ $1,140 $ 355
======= =======
</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
MARCH 31, 1998
(1) The Condensed Consolidated Balance Sheets, as of March 31, 1998 and
December 31, 1997, and the Condensed Consolidated Statements of Income
and Cash Flows for the periods ended March 31, 1998 and 1997, 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, 1997.
(2) The results of operations for the three month period ended March 31,
1998 and 1997 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
MARCH 31, 1998
(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 March 31, 1998, and
the components of the December 31, 1997 inventories, based on the
physical count, both primarily on a LIFO basis, were as follows:
<TABLE>
<CAPTION>
(000's) (000's)
3-31-98 12-31-97
------- --------
<S> <C> <C>
Finished Goods $4,800 $4,361
Work in Process 8,596 7,983
Raw Materials 1,379 1,079
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$14,775 $13,423
Less LIFO Reserve (1,988) (2,027)
------- --------
Total at LIFO Cost $12,787 $11,396
======= ========
</TABLE>
4) The Company entered into an unsecured Line of Credit arrangement for
short-term debt with a financial institution, which expires May, 1998.
Under the terms of this agreement the Company may borrow up to $5 million
on terms mutually agreeable to the Company and financial institution.
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
MARCH 31, 1998
RESULTS OF OPERATIONS:
The Company achieved record sales for the First Quarter, 1998 representing an
increase of 7.1% over the same period a year ago. Sales were especially strong
in North America and were aided by promotional initiatives instituted to gain
market share. The impact of the strong dollar adversely affected
international sales as they were down slightly during this current quarter.
Response to our product introductions was strong as was sales across most
product lines, in particular carpet care equipment, burnishers and chemical
products.
Gross profit dollars and gross profit percentage for the current quarter were
up compared to last year due to higher sales volume combined with the positive
effects of a price increase effective November, 1997, offset in part by an
unfavorable product mix.
Operating profits for the current quarter were up 22.2% over the same quarter
in 1997. The 13.3% increase in gross profit more than offset the 9.9% increase
in operating expenses. Operating expenses for the first three months of 1998
were $3,483,000 as compared to $3,169,000 for the same period in 1997 due to
higher promotional expenses, increased personnel expenses, and the costs
associated with our fully-operational Multi-Clean division, which was only in
the start-up phase during the First Quarter, 1997.
Net interest income was $4,000 for the First Quarter ended 1998, as compared
with $31,000 for the comparable period of 1997. This decrease is attributable
to a decrease in investable funds. Interest expense related to short term
borrowings under the aforementioned Line of Credit was $11,000 for the First
Quarter, 1998. There was no interest expense for the first three months of
1997. Other income was $3,000 for the First Quarter of 1998 compared to
$10,000 for the First Quarter of 1997.
Net income for the First Quarter ended March 31, 1998 increased 20.5% to
$901,000 or 25 cents per share, up from $748,000 or 21 cents per share in the
First Quarter, 1997.
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<PAGE> 8
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
MARCH 31, 1998
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
The Company had working capital of $20.5 million at March 31, 1998 and $19.9
million at December 31, 1997. This represents a current ratio of 3.6 and 7.2
for these periods, respectively.
Cash, cash equivalents, and short-term investments represented 7.1% and 3.6% of
this working capital at March 31, 1998 and December 31, 1997 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 increase is due primarily to the line of
credit borrowing.
The Company had shareholders' equity of $29.6 million at March 31, 1998 and
$29.1 million at December 31, 1997 which, when compared to total liabilities,
represented an equity to liability ratio of 3.6 and 8.5, 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
MARCH 31, 1998
(4) Submission of Matters to a Vote of Security Holders:
No Matters were submitted to vote of security holders during the Quarter
ended March 31, 1998.
ITEM 6(b):
A Form 8-K was not filed for the Quarter ended March 31, 1998.
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.
________________________________ _______________________
Jerome E. Rau Date
President and Director
(Principal Executive Officer)
________________________________ ________________________
Thomas J. Nolan Date
Chief Financial Officer,
Secretary & Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Loss provision for doubtful accounts is included in total costs.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1140
<SECURITIES> 311
<RECEIVABLES> 13674
<ALLOWANCES> 382
<INVENTORY> 12787
<CURRENT-ASSETS> 28455
<PP&E> 19711
<DEPRECIATION> 10626
<TOTAL-ASSETS> 37742
<CURRENT-LIABILITIES> 7942
<BONDS> 0
0
0
<COMMON> 6396
<OTHER-SE> 23204
<TOTAL-LIABILITY-AND-EQUITY> 37742
<SALES> 15101
<TOTAL-REVENUES> 15101
<CGS> 10160
<TOTAL-COSTS> 13643
<OTHER-EXPENSES> (3)
<LOSS-PROVISION> 53
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 1454
<INCOME-TAX> 553
<INCOME-CONTINUING> 901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 901
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
