<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, 1998
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 Number)
Incorporation or Organization)
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, 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
SEPTEMBER 30, 1998 and DECEMBER 31, 1997
(in thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
9/30/98 12/31/97
--------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash & Cash equivalents ........................ $ 1,385 $ 564
Short-term investments ......................... 548 158
Accounts receivable, less allowances of
$457 in 1998 and $328 in 1997 ................. 13,328 9,961
Due from affiliates ............................ 408 447
Inventories (Note 3) ........................... 13,050 11,396
Prepaid expenses ............................... 1 86
Deferred income taxes .......................... 500 500
-------- --------
Total Current Assets .................. 29,220 23,112
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost ............. 20,325 19,353
Accumulated depreciation ........................... 11,389 10,179
-------- --------
Net property, plant and equipment ..... 8,936 9,174
-------- --------
OTHER ASSETS ....................................... 194 207
-------- --------
$ 38,350 $ 32,493
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable .................................. $ 1,500 $ --
Accounts payable ............................... 3,670 1,312
Accrued expenses ............................... 2,165 1,802
Income taxes payable ........................... 197 97
-------- --------
Total Current Liabilities ............. 7,532 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............................... 24,469 22,862
Currency translation adjustments ............... (247) (176)
-------- --------
30,618 29,082
-------- --------
$ 38,350 $ 32,493
======== ========
</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
-------------------------- --------------------------
9/30/98 9/30/97 9/30/98 9/30/97
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES ................................... $ 13,962 $ 13,316 $ 43,548 $ 41,413
COST OF SALES ............................... 9,612 9,301 29,504 28,468
----------- ----------- ----------- -----------
Gross profit ........................... 4,350 4,015 14,044 12,945
----------- ----------- ----------- -----------
OPERATING EXPENSES
Selling...................................... 2,516 2,475 7,976 7,591
General and administrative................... 665 573 1,893 1,789
----------- ----------- ----------- -----------
Total operating expenses................ 3,181 3,048 9,869 9,380
----------- ----------- ----------- -----------
Income from operations .................... 1,169 967 4,175 3,565
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income ........................... 12 5 19 45
Interest expense .......................... (35) (24) (75) (32)
Other, net ................................ 413 39 418 55
----------- ----------- ----------- -----------
Total other income...................... 390 20 362 68
----------- ----------- ----------- -----------
Income before income taxes................. 1,559 987 4,537 3,633
PROVISION FOR INCOME TAXES .................. 605 347 1,752 1,387
----------- ----------- ----------- -----------
NET INCOME .................................. $ 954 $ 640 $ 2,785 $ 2,246
=========== =========== =========== ===========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING ....................... 3,568,385 3,568,385 3,568,385 3,568,385
=========== =========== =========== ===========
EARNINGS PER SHARE .......................... $ 0.27 $ 0.18 $ 0.78 $ 0.63
=========== =========== =========== ===========
</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
------------------
9/30/98 9/30/97
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ............................................. $ 2,785 $ 2,246
Adjustments to reconcile net income to net
cash provided (used) by operating
activities:
Depreciation and amortization ....................... 1,305 1,193
Other................................................ (71) (9)
Cash provided (used) due to changes in
Operating assets and liabilities:
Accounts receivable and due from affiliates ...... (3,328) (2,833)
Inventories....................................... (1,654) (4,276)
Prepaid expenses ................................. 85 22
Accounts payable, accrued expenses and
Income taxes payable ............................ 2,821 2,035
------- -------
NET CASH PROVIDED (USED) BY OPERATIONS ..... 1,943 (1,622)
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net ........ (1,054) (1,626)
Purchases of short-term investments .................... (390) -
Maturities of short-term investments.................... - 1,807
------- -------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES (1,444) 181
------- -------
FINANCING ACTIVITIES
Dividends paid......................................... (1,178) (1,178)
Proceeds from notes payable............................ 1,500 1,800
------- -------
CASH PROVIDED BY FINANCING ACTIVITIES ...... 322 622
------- -------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ................. 821 (819)
Cash and cash equivalents at beginning of period ......... 564 1,475
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. $ 1,385 $ 656
======= =======
</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, 1998
(1) The Condensed Consolidated Balance Sheets, as of September 30, 1998 and
December 31, 1997, and the Condensed Consolidated Statements of Income and
Cash Flows for the periods ended September 30, 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 September 30,
1998 and 1997 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, 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 September 30, 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>
9-30-98 12-31-97
(000's) (000's)
--------- --------
<S> <C> <C>
Finished Goods $3,907 $4,361
Work In Process 10,160 7,983
Raw Material 1,563 1,079
----- -----
$15, 630 $13,423
Less LIFO Reserve (2,580) (2,027)
----- ------
Total at LIFO Cost $13,050 $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, 1999.
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.
- 5 -
<PAGE> 7
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SEPTEMBER 30, 1998
RESULTS OF OPERATIONS:
Record net sales for the Third Quarter, 1998 increased 4.9% over the prior year
period and represented the highest Third Quarter sales amount in the Company's
history. This continued our record-setting sales levels for the current year,
resulting in record net sales for any nine-month period of $43,548,000 and
represented a 5.2% increase over the prior year. These results were hampered by
a decline in international business for the quarter of 14% due primarily to the
economic and currency turmoil experienced in the Pacific Rim.
For the three months ended September 30, 1998, gross profit dollars and gross
profit percentage increased as compared with last year as the result of
increased sales volume combined with the positive effects of selective price
increases made at the beginning of this year. Gross profit for the nine months
ended September 30, 1998, increased 8.5% to $14,044,000 as compared to 1997.
Operating profits were up 20.9% for the Third Quarter ended September 30, 1998,
as compared to the Third Quarter, 1997. This was due primarily to the increase
from gross profit and the reduction in operating expenses as a percentage of
sales, representing continued cost containment. Operating expenses for the first
nine months of 1998 were $9,869,000 as compared to $9,380,000 for the same
period in 1997 and this increase was due to the cost of new product
introductions and marketing initiatives aimed at gaining market share.
Interest income was $12,000 for the Third Quarter ended September 30, 1998, and
$19,000 for the first nine months of 1998, as compared with $5,000 and $45,000
respectively, for the comparable periods of 1997. 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 $35,000 for the quarter and $75,000 for the first nine months of 1998, as
compared with $24,000 and $32,000 respectively, for the comparable periods of
1997.
- 6-
<PAGE> 8
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
SEPTEMBER 30, 1998
Other income, net was $413,000 for the Third Quarter ended September 30, 1998,
and $418,000 for the first nine months of 1998 compared to other income, net of
$39,000 and $55,000 respectively, for the comparable periods of 1997. Included
in 1998 income is the gain recognized on the sale of our former Glendale,
California warehouse facility during the Third Quarter.
Record net income for the Third Quarter ended September 30, 1998 increased 49.1%
to $954,000 or 27 cents per share, up from $640,000 or 18 cents per share in the
Third Quarter, 1997. For the nine months ended September 30, 1998, net income
was $2,785,000 or 78 cents per share, up 24.0% from $2,246,000 or 63 cents per
share for the first nine months of 1997.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
The Company had working capital of $21.7 million at September 30, 1998 and $19.9
million at December 31, 1997. This represents a current ratio of 3.9 and 7.2 for
these periods, respectively.
Cash, cash equivalents, and short-term investments represented 8.9% and 3.6% of
this working capital at September 30, 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 an increase in
cash, cash equivalents, and short-term investments during the Third Quarter of
1998.
The Company had shareholders' equity of $30.6 million at September 30, 1998 and
$29.1 million at December 31, 1997 which, when compared to total liabilities,
represented an equity to liability ratio of 4.0 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.
- 7 -
<PAGE> 9
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
SEPTEMBER 30, 1998
(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, 1998.
Item 6(b):
A Form 8-K was not filed for the Quarter ended September 30, 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)
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JUL-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1998
<CASH> 1,385 1,385
<SECURITIES> 548 548
<RECEIVABLES> 13,736 13,736
<ALLOWANCES> 457 457
<INVENTORY> 13,050 13,050
<CURRENT-ASSETS> 29,220 29,220
<PP&E> 20,325 20,325
<DEPRECIATION> 11,389 11,389
<TOTAL-ASSETS> 38,350 38,350
<CURRENT-LIABILITIES> 7,532 7,532
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 24,222 24,222
<TOTAL-LIABILITY-AND-EQUITY> 38,350 38,350
<SALES> 13,962 43,548
<TOTAL-REVENUES> 13,962 43,548
<CGS> 9,612 29,504
<TOTAL-COSTS> 12,793 39,373
<OTHER-EXPENSES> (413) (418)
<LOSS-PROVISION> 52 137
<INTEREST-EXPENSE> 23 56
<INCOME-PRETAX> 1,559 4,537
<INCOME-TAX> 605 1,752
<INCOME-CONTINUING> 954 2,785
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 954 2,785
<EPS-PRIMARY> .27 .78
<EPS-DILUTED> .27 .78
</TABLE>
