<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, 1998
Commission File Number 0-15582
MINUTEMAN INTERNATIONAL, INC.
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(Exact Name of Registrant, as Specified in its Charter)
ILLINOIS 36-2262931
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(State or other Jurisdiction of (IRS 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
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On June 30, 1998, there were 3,568,385 shares of the Registrant's Common Stock
outstanding.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(in thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
6/30/98 12/31/97
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash & Cash equivalents........................ $ 355 $ 564
Short-term investments......................... 136 158
Accounts receivable, less allowances of
$404 in 1998 and $328 in 1997................. 14,731 9,961
Due from affiliates............................ 370 447
Inventories (Note 3)........................... 12,506 11,396
Prepaid expenses............................... 6 86
Deferred income taxes.......................... 500 500
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Total Current Assets.......................... 28,604 23,112
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PROPERTY, PLANT AND EQUIPMENT, at cost........... 20,206 19,353
Accumulated depreciation......................... 11,070 10,179
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Net property, plant and equipment............. 9,136 9,174
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OTHER ASSETS..................................... 198 207
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$37,938 $32,493
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable.................................. $ 2,000 $ --
Accounts payable............................... 3,083 1,312
Accrued expenses............................... 2,200 1,802
Income taxes payable........................... 356 97
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Total Current Liabilities..................... 7,639 3,211
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DEFERRED INCOME TAXES............................ 200 200
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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.............................. 23,907 22,862
Currency translation adjustments............... (204) (176)
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30,099 29,082
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$37,938 $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 SIX MONTHS ENDED
--------------------- ---------------------
6/30/98 6/30/97 6/30/98 6/30/97
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES......................................... $14,485 $14,003 $29,586 $28,097
COST OF SALES..................................... 9,732 9,435 19,892 19,167
--------- --------- --------- ---------
Gross profit.................................... 4,753 4,568 9,694 8,930
--------- --------- --------- ---------
OPERATING EXPENSES
Selling.......................................... 2,585 2,548 5,460 5,116
General and administrative....................... 620 615 1,228 1,216
--------- --------- --------- ---------
Total operating expenses........................ 3,205 3,163 6,688 6,332
--------- --------- --------- ---------
Income from operations........................... 1,548 1,405 3,006 2,598
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income.................................. 3 9 7 40
interest expense................................. (29) (8) (40) (8)
Other, net....................................... 2 6 5 16
--------- --------- --------- ---------
Total other income.............................. (24) 7 (28) 48
--------- --------- --------- ---------
Income before income taxes....................... 1,524 1,412 2,978 2,646
PROVISION FOR INCOME TAXES........................ 594 554 1,147 1,040
--------- --------- --------- ---------
NET INCOME........................................ $930 $858 $1,831 $1,606
========= ========= ========= =========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING....... 3,568,385 3,568,385 3,568,385 3,568,385
========= ========= ========= =========
EARNINGS PER SHARE................................ $0.26 $0.24 $0.51 $0.45
========= ========= ========= =========
</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
---------------------------
6/30/98 6/30/97
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<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................... $1,831 $1,606
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization.......................... 900 780
Other.................................................. (28) (8)
Cash provided (used) due to changes in
operating assets and liabilities:
Accounts receivable and due from affiliates.......... (4,693) (4,046)
Inventories.......................................... (1,110) (3,184)
Prepaid expenses..................................... 80 34
Accounts Payable, accrued expenses and
income taxes payable................................ 2,428 3,026
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NET CASH USED BY OPERATIONS..................... (592) (1,792)
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INVESTING ACTIVITIES
Purchases of property, plant and equipment, net........... (853) (1,380)
Maturities of short-term investments..................... 22 1,884
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CASH PROVIDED (USED) BY INVESTING ACTIVITIES (831) 504
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FINANCING ACTIVITIES
Proceeds from notes payable.............................. 2,000 1,500
Dividends paid........................................... (786) (786)
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CASH PROVIDED BY FINANCING ACTIVITIES 1,214 714
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DECREASE IN CASH
AND CASH EQUIVALENTS.............................. (209) (574)
Cash and cash equivalents at beginning of period.......... 564 1,475
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CASH AND CASH EQUIVALENTS AT END OF PERIOD............... $ 355 $ 901
========== ==========
</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, 1998
(1) The Condensed Consolidated Balance Sheets, as of June 30, 1998 and December
31, 1997, and the Condensed Consolidated Statements of Income and Cash
Flows for the periods ended June 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 periods ended June 30, 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
JUNE 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 June 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>
(000's)
6-30-98 12-31-97
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<S> <C> <C>
Finished Goods $4,447 $4,361
Work In Process 8,895 7,983
Raw Materials 1,482 1,079
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$14,824 $13,423
Less LIFO Reserve <2,318> <2,027>
------- --------
Total at LIFO Cost $12,506 $11,396
======= ========
</TABLE>
4) The Company entered into an unsecured Line of Credit arrangement for short
term debt with a financial institution that expires May, 1999. 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, 1998
RESULTS OF OPERATIONS:
Net sales for the second quarter, 1998 increased 3.4% over the prior year period
and represented the second highest sales quarter in the Company's history.
This, on top of the first quarter which was our highest quarter ever, resulted
in record net sales for any six month period of $29,586,000 and represented a
5.3% increase over the prior year. These results were attained even though
hampered by a decline in international business for the quarter of 21%
due primarily to the economic and currency turmoil experienced in the Pacific
Rim.
For the three months ended June 30, 1998, gross profit dollars and gross profit
percentage increased as compared with last year as the result of the increased
sales volume combined with the positive effects of our price increase. Gross
profit for the six months ended June 30, 1998, increased 8.6% to $9,694,000 as
compared to 1997.
Operating profits were up 10.2% for the Second Quarter ended June 30, 1998, as
compared to the Second 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
six months of 1998 were $6,688,000 as compared to $6,332,000 for the same period
in 1997 and this increase was due to the cost of new product introductions and
higher promotional expenses aimed at gaining market share.
Interest income was $3,000 for the Second Quarter ended 1998, and $7,000 for the
first six months of 1998, as compared with $9,000 and $40,000, respectively, for
the comparable periods of 1997. 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 $29,000 for
the Second Quarter ended 1998 and $40,000 for the first six months of 1998.
Interest expense for the Second Quarter of 1997 and the first six months of 1997
was $8,000. Other income, net was $2,000 for the Second Quarter ended 1998, and
$5,000 for the first six months of 1998 compared to other income, net of $6,000
and $16,000, respectively, for the comparable periods of 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)
JUNE 30, 1998
Net income for the Second Quarter ended June 30, 1998 increased 8.4% to $930,000
or 26 cents per share, up from $858,000, or 24 cents per share in the Second
Quarter, 1997. For the six months ended June 30, 1998, net income was $1,831,000
or 51 cents per share, up from $1,606,000 or 45 cents per share for the first
half of 1997.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
The Company had working capital of $21.0 million at June 30, 1998 and $19.9
million at December 31, 1997. This represents a current ratio of 3.7 and 7.2
for these periods, respectively.
Cash, cash equivalents, and short-term investments represented 2.3% and 3.6% of
this working capital at June 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 decrease is due primarily to significantly
higher sales during the second quarter of 1998.
The Company had shareholders' equity of $30.1 million at June 30, 1998 and $29.1
million at December 31, 1997 which, when compared to total liabilities,
represented an equity to liability ratio of 3.8 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
JUNE 30, 1998
(4) Submission of Matters to a Vote of Security Holders:
On April 28, 1998 the annual shareholders meeting was held, at which time
the following were voted on and approved:
1. The following were elected Directors for 1998:
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 1998.
Item 6(b):
A Form 8-K was not filed for the Quarter ended June 30, 1998.
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<PAGE> 10
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
JUNE 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)
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<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-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 355 355
<SECURITIES> 136 136
<RECEIVABLES> 15,101 15,101
<ALLOWANCES> 404 404
<INVENTORY> 12,506 12,506
<CURRENT-ASSETS> 28,604 28,604
<PP&E> 20,206 20,206
<DEPRECIATION> 11,070 11,070
<TOTAL-ASSETS> 37,938 37,938
<CURRENT-LIABILITIES> 7,639 7,639
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 23,703 23,703
<TOTAL-LIABILITY-AND-EQUITY> 37,938 37,938
<SALES> 14,485 29,586
<TOTAL-REVENUES> 14,485 29,586
<CGS> 9,732 19,892
<TOTAL-COSTS> 12,937 26,580
<OTHER-EXPENSES> (2) (5)
<LOSS-PROVISION> 34 87
<INTEREST-EXPENSE> 26 33
<INCOME-PRETAX> 1,524 2,978
<INCOME-TAX> 594 1,147
<INCOME-CONTINUING> 930 1,831
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 930 1,831
<EPS-PRIMARY> .26 .51
<EPS-DILUTED> .26 .51
</TABLE>
