<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, 1999
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 (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 September 30, 1999, 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, 1999 and DECEMBER 31, 1998
(in thousands of dollars)
Unaudited Audited
9/30/99 12/31/98
--------- --------
ASSETS
CURRENT ASSETS:
Cash & cash equivalents............................. $ 723 $ 1,590
Short-term investments.............................. 407 1
Accounts receivable, less allowances of
$907 in 1999 and $721 in 1998...................... 19,446 14,725
Due from affiliates................................. 535 308
Inventories ........................................ 18,735 17,339
Prepaid expenses.................................... 164 187
Refundable income taxes............................. 212 111
Deferred income taxes............................... 320 320
------- -------
Total current assets............................ 40,542 34,581
PROPERTY, PLANT AND EQUIPMENT, at cost.................. 22,403 21,375
Accumulated depreciation................................ 12,901 11,423
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Net property, plant and equipment............... 9,502 9,952
INTANGIBLE ASSETS - net of amortization................. 5,901 6,137
------- -------
$55,945 $50,670
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................... $6,325 $ 3,269
Accrued expenses.................................... 3,425 2,952
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Total current liabilities....................... 9,750 6,221
LONG-TERM DEBT.......................................... 13,500 13,500
DEFERRED INCOME TAXES................................... 175 175
SHAREHOLDERS' EQUITY
Common stock, no-par value
Authorized shares - 10,000,000
Issued and outstanding shares -
3,568,385 in 1999 and 1998........................ 6,396 6,396
Retained earnings................................... 26,330 24,624
Cumulative foreign currency translation adjustments. (206) (246)
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Total shareholders' equity...................... 32,520 30,774
------- -------
$55,945 $50,670
======= =======
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 except share and per share data-unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- -----------------------
9/30/99 9/30/98 9/30/99 9/30/98
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES................................................. $ 20,653 $ 13,962 $ 59,350 $ 43,548
COST OF SALES............................................. 14,320 9,612 41,180 29,504
--------- --------- --------- ---------
Gross profit......................................... 6,333 4,350 18,170 14,044
--------- --------- --------- ---------
OPERATING EXPENSES
Selling................................................. 3,353 2,516 10,022 7,976
General and administrative.............................. 1,207 665 3,170 1,893
--------- --------- --------- ---------
Total operating expenses............................. 4,560 3,181 13,192 9,869
--------- --------- --------- ---------
Income from operations.................................. 1,773 1,169 4,978 4,175
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income......................................... 7 12 44 19
Interest expense........................................ (214) (35) (643) (75)
Other, net.............................................. 311 413 315 418
--------- --------- --------- ---------
Total other income (expense)......................... 104 390 (284) 362
--------- --------- --------- ---------
Income before income taxes.............................. 1,877 1,559 4,694 4,537
PROVISION FOR INCOME TAXES................................ 730 605 1,809 1,752
--------- --------- --------- ---------
NET INCOME................................................ $ 1,147 $ 954 $ 2,885 $ 2,785
========= ========= ========= =========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING............... 3,568,385 3,568,385 3,568,385 3,568,385
========= ========= ========= =========
NET INCOME PER COMMON SHARE - BASIC AND DILUTED........... $ 0.32 $ 0.27 $ 0.81 $ 0.78
========= ========= ========= =========
</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>
NINE MONTHS ENDED
-------------------------
9/30/99 9/30/98
--------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................................ $ 2,885 $ 2,785
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......................................... 1,713 1,305
Other.................................................................. 40 (71)
Changes in operating assets and liabilities:
Accounts receivable and due from affiliates......................... (4,948) (3,328)
Inventories......................................................... (1,396) (1,654)
Prepaid expenses and refundable income taxes........................ (78) 85
Accounts payable, accrued expenses and
income taxes payable............................................... 3,529 2,821
--------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......................... 1,745 1,943
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net........................... (1,027) (1,054)
Purchases of short-term investments....................................... (406) (390)
--------- ----------
NET CASH USED IN INVESTING ACTIVITIES............................... (1,433) (1,444)
FINANCING ACTIVITIES
Dividends paid........................................................... (1,179) (1,178)
Proceeds from notes payable.............................................. 1,500
--------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES................. (1,179) 322
--------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS.............................................. (867) 821
Cash and cash equivalents at beginning of period............................ 1,590 564
--------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................ $ 723 $ 1,385
========= ==========
</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
SEPTEMBER 30, 1999
(1) The Condensed Consolidated Balance Sheets, as of September 30, 1999 and
December 31, 1998, and the Condensed Consolidated Statements of Income and
Cash Flows for the periods ended September 30, 1999 and 1998, 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, 1998.
(2) The results of operations for the three-month period ended September 30,
1999 and 1998 are not necessarily indicative of the results to be expected
for the full year. Note that the 1999 periods reflect the results of
operations and cash flows for Minuteman PowerBoss, Inc., which was acquired
November 23, 1998.
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<PAGE> 6
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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, 1999, and the components of the
December 31, 1998 inventories, based on the physical count, both primarily
on a LIFO basis, were as follows:
9-30-99 12-31-98
(000's) (000's)
------- --------
Finished goods $ 9,250 $ 7,539
Work in process 7,850 8,257
Raw material 4,785 4,552
------- -------
$21,885 $20,348
Less LIFO & other reserves (3,150) (3,009)
------- -------
Total at LIFO cost $18,735 $17,339
======= =======
4) The Company entered into an unsecured Line of Credit arrangement for
short-term debt with a financial institution, which expires November, 2000.
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) Comprehensive income for the Third Quarter ended September 30, 1999
increased to $1,150,000 from $911,000 in the Third Quarter 1998. For the
nine months in 1999, comprehensive income increased to $2,925,000 from
$2,714,000 for the comparable period in 1998.
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<PAGE> 7
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SEPTEMBER 30, 1999
RESULTS OF OPERATIONS:
Record net sales in 1999 continued in the Third Quarter, increasing 47.9% over
the prior year period and representing the highest sales quarter in the
company's history. Record net sales for any nine month period of $59,350,000
increased 36.3% over the prior year. Sales by Minuteman PowerBoss, acquired in
November, 1998, contributed to the increases although sales of Minuteman brand
products increased dramatically over the prior year periods.
Gross profit increased $1,983,000 or 45.6% for the Third Quarter, 1999 over the
same quarter in 1998 due to the higher sales volume. Lower margins on PowerBoss
sales contributed to the reduction of gross profit percentage as a percent of
sales. For the nine month period in 1999 gross profit increased $4,126,000 or
29.4% over the similar period in 1998.
Operating profits for the current quarter were up 51.7% over the same quarter in
1998. Operating expenses for the three months of 1999 were $4,560,000 as
compared to $3,181,000 for the same period in 1998 due to higher professional
fees, amortization of goodwill, and investments in PowerBoss branches.
Interest expense increased $179,000 in the Third Quarter of 1999 over the Third
Quarter of 1998 due to the interest on long-term debt relative to the purchase
of PowerBoss. For the nine months of 1999 interest expense increased $568,000
over the comparable period a year earlier.
Other income, net decreased $102,000 in the Third Quarter of 1999 compared to
the Third Quarter of 1998. Other income, net in the Third Quarter 1999 related
primarily to the successful settlement of patent infringement litigation against
an industry competitor. Other income, net in the Third Quarter 1998 related
primarily to the gain recognized on the sale of our former Glendale, California
warehouse facility.
Net income for the Third Quarter ended September 30, 1999 increased 20.2% to
$1,147,000, or 32 cents per share, up from $954,000, or 27 cents per share in
the Third Quarter, 1998. For the nine months ended September 30, 1999, net
income was $2,885,000 or 81 cents per share, up from $2,785,000, or 78 cents per
share for the first nine months of 1998.
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<PAGE> 8
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
SEPTEMBER 30, 1999
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
The Company had working capital of $30.8 million at September 30, 1999 and $28.4
million at December 31, 1998. This represents a current ratio of 4.2 and 5.6 for
these periods, respectively.
Cash, cash equivalents, and short-term investments represented 3.7% and 5.6% of
this working capital at September 30, 1999 and December 31, 1998 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 1999.
The Company had shareholders' equity of $32.5 million at September 30, 1999 and
$30.8 million at December 31, 1998 which, when compared to total liabilities,
represented an equity to liability ratio of 1.4 and 1.5, 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
SEPTEMBER 30, 1999
(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, 1999.
Item 6(b):
The Company is pleased to announce that effective January 15, 2000, Jerome E.
Rau will assume the position as Chairman of the Board of Directors in addition
to his current duties as Chief Executive Officer. Gregory J. Rau, currently
Executive Vice-President, has accepted the position of President and Chief
Operating Officer of Minuteman International, Inc., effective the same date.
A Form 8-K was not filed for the Quarter ended September 30, 1999.
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 11-05-99
- -------------------------------- -----------------------
Jerome E. Rau Date
President and Director
(Principal Executive Officer)
/s/ Thomas J. Nolan 11-05-99
- -------------------------------- ------------------------
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-31-1999 DEC-31-1999
<PERIOD-START> JUL-1-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 723 723
<SECURITIES> 407 407
<RECEIVABLES> 19,981 19,981
<ALLOWANCES> 907 907
<INVENTORY> 18,735 18,735
<CURRENT-ASSETS> 40,542 40,542
<PP&E> 22,403 22,403
<DEPRECIATION> 12,901 12,901
<TOTAL-ASSETS> 55,945 55,945
<CURRENT-LIABILITIES> 9,750 9,750
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 26,124 26,124
<TOTAL-LIABILITY-AND-EQUITY> 55,945 55,945
<SALES> 20,653 59,350
<TOTAL-REVENUES> 20,653 59,350
<CGS> 14,320 41,180
<TOTAL-COSTS> 18,880 54,372
<OTHER-EXPENSES> (311) (315)
<LOSS-PROVISION> 61 161
<INTEREST-EXPENSE> 207 599
<INCOME-PRETAX> 1,877 4,694
<INCOME-TAX> 730 1,809
<INCOME-CONTINUING> 1,147 2,885
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,147 2,885
<EPS-BASIC> .32 .81
<EPS-DILUTED> .32 .81
</TABLE>
