<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, 1999
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 (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
- --------------------------------------------------------------------------------
(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 JUNE 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
JUNE 30, 1999 and DECEMBER 31, 1998
(in thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
ASSETS 6/30/99 12/31/98
------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash & cash equivalents.................. $ 491 $ 1,590
Short-term investments................... 1
Accounts receivable, less allowances of
$746 in 1999 and $721 in 1998............ 17,461 14,725
Due from affiliates...................... 432 308
Inventories.............................. 18,132 17,339
Prepaid expenses......................... 76 187
Refundable income taxes.................. 371 111
Deferred income taxes.................... 320 320
------------- -----------
Total current assets......... 37,283 34,581
PROPERTY, PLANT AND EQUIPMENT, at cost..... 22,190 21,375
Accumulated depreciation................... 12,439 11,423
------------- -----------
Net property, plant and equipment... 9,751 9,952
INTANGIBLE ASSETS - net of amortization... 5,979 6,137
------------- -----------
$ 53,013 $ 50,670
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable......................... $ 4,743 $ 3,269
Accrued expenses........................... 2,833 2,952
------------- -----------
Total current liabilities........... 7,576 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......................... 25,575 24,624
Cumulative foreign currency translation adjustments (209) (246)
------------- -----------
Total shareholders' equity........... 31,762 30,774
------------- -----------
$ 53,013 $ 50,670
============= ===========
</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 except share and per share data-unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- -----------------------------
6/30/99 6/30/98 6/30/99 6/30/98
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
NET SALES.................................... $ 19,578 $ 14,485 $ 38,697 $ 29,586
COST OF SALES................................ 13,423 9,732 26,860 19,892
--------- --------- ---------- ----------
Gross profit............................ 6,155 4,753 11,837 9,694
--------- --------- ---------- ----------
OPERATING EXPENSES
Selling.................................... 3,318 2,585 6,669 5,460
General and administrative.................. 1,171 620 1,963 1,228
--------- --------- ---------- ----------
Total operating expenses................. 4,489 3,205 8,632 6,688
--------- --------- ---------- ----------
Income from operations..................... 1,666 1,548 3,205 3,006
--------- --------- ---------- ----------
OTHER INCOME (EXPENSE)
Interest income............................ 30 3 37 7
Interest expense........................... (213) (29) (429) (40)
Other, net................................. 90 2 4 5
--------- --------- ---------- ----------
Total other expense..................... (93) (24) (388) (28)
--------- --------- ---------- ----------
Income before income taxes................. 1,573 1,524 2,817 2,978
PROVISION FOR INCOME TAXES.................... 607 594 1,079 1,147
--------- --------- ---------- ----------
NET INCOME................................... $ 966 $ 930 $ 1,738 $ 1,831
========= ========= ========== ==========
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 $ 0.27 $ 0.26 $ 0.49 $ 0.51
========= ========= ========== ==========
</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
-------------------------------
6/30/99 6/30/98
----------- -----------
OPERATING ACTIVITIES
<S> <C> <C>
Net income........................................... $ 1,738 $ 1,831
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization..................... 1,174 900
Other............................................. 37 (28)
Changes in operating assets and liabilities:
Accounts receivable and due from affiliates.... (2,860) (4,693)
Inventories.................................... (793) (1,110)
Prepaid expenses and refundable income taxes (149) 80
Accounts payable, accrued expenses and
income taxes payable.......................... 1,355 2,428
----------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 502 (592)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net..... (815) (853)
Maturities of short-term investments................ 1 22
----------- ----------
NET CASH USED IN INVESTING ACTIVITIES... (814) (831)
FINANCING ACTIVITIES
Dividends paid..................................... (787) (786)
Proceeds from notes payable........................ 2 ,000
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (787) 1,214
----------- ----------
DECREASE IN CASH
AND CASH EQUIVALENTS.................. (1,099) (209)
Cash and cash equivalents at beginning of period...... 1,590 564
----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.......... $ 491 $ 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
JUNE 30, 1999
(1) THE CONDENSED CONSOLIDATED BALANCE SHEETS, AS OF JUNE 30, 1999 AND DECEMBER
31, 1998, AND THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND CASH
FLOWS FOR THE PERIODS ENDED JUNE 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 PERIODS ENDED JUNE 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
JUNE 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 JUNE 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:
<TABLE>
<CAPTION>
(000'S)
6-30-99 12-31-98
------- --------
<S> <C> <C>
FINISHED GOODS $ 8,925 $ 7,539
WORK IN PROCESS 7,650 8,257
RAW MATERIALS 4,682 4,552
------- --------
$21,257 $ 20,348
LESS LIFO AND OTHER RESERVES (3,125) (3,009)
------- --------
TOTAL AT LIFO COST $18,132 $ 17,339
======= ========
</TABLE>
4) THE COMPANY ENTERED INTO AN UNSECURED LINE OF CREDIT ARRANGEMENT FOR SHORT
TERM DEBT WITH A FINANCIAL INSTITUTION THAT EXPIRES NOVEMBER, 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) COMPREHENSIVE INCOME FOR THE SECOND QUARTER ENDED JUNE 30, 1999 INCREASED
TO $988,000 FROM $892,000 IN THE SECOND QUARTER, 1998. FOR THE SIX MONTHS
IN 1999, COMPREHENSIVE INCOME DECREASED TO $1,775,000 FROM $1,803,000 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
JUNE 30, 1999
RESULTS OF OPERATIONS:
RECORD NET SALES FOR THE SECOND QUARTER, 1999 INCREASED 35.2% OVER THE PRIOR
YEAR PERIOD AND REPRESENTED THE HIGHEST SALES QUARTER IN THE COMPANY'S HISTORY.
THESE SALES COMBINED WITH FIRST QUARTER SALES, THE PREVIOUS QUARTERLY RECORD,
RESULTED IN RECORD NET SALES FOR ANY SIX MONTH PERIOD OF $38,697,000 AND
REPRESENTED A 30.8% INCREASE OVER THE PRIOR YEAR. MUCH OF THESE SALES GAINS WERE
CONTRIBUTED BY POWERBOSS, ACQUIRED IN NOVEMBER, 1998, ALTHOUGH MINUTEMAN BRAND
SALES INCREASED DOMESTICALLY.
GROSS PROFIT INCREASED $1,402,000 OR 29.5% FOR THE SECOND QUARTER, 1999 OVER THE
SAME QUARTER IN 1998 DUE TO THE HIGHER SALES VOLUME COMBINED WITH THE POSITIVE
EFFECTS OF OUR PRICE INCREASE EARLIER THIS YEAR. LOWER MARGINS ON POWERBOSS
SALES CONTRIBUTED TO THE REDUCTION OF GROSS PROFIT PERCENTAGE AS A PERCENT OF
SALES. FOR THE SIX MONTH PERIOD IN 1999 GROSS PROFIT INCREASED $2,143,000 OR
22.1% OVER THE SIMILAR PERIOD IN 1998.
OPERATING PROFITS FOR THE CURRENT QUARTER WERE UP 7.6% OVER THE SAME QUARTER IN
1998. OPERATING EXPENSES FOR THE THREE MONTHS OF 1999 WERE $4,489,000 AS
COMPARED TO $3,205,000 FOR THE SAME PERIOD IN 1998 DUE TO HIGHER PROFESSIONAL
FEES, AMORTIZATION OF GOODWILL, AND INVESTMENTS IN ESTABLISHING POWERBOSS
BRANCHES.
INTEREST EXPENSE INCREASED $184,000 IN THE SECOND QUARTER OF 1999 OVER THE
SECOND QUARTER OF 1998 DUE TO THE INTEREST ON LONG-TERM DEBT RELATIVE TO THE
PURCHASE OF POWERBOSS. FOR THE SIX MONTHS OF 1999 INTEREST EXPENSE INCREASED
$389,000 OVER THE COMPARABLE PERIOD A YEAR EARLIER.
NET INCOME FOR THE SECOND QUARTER ENDED JUNE 30, 1999 INCREASED 3.9% TO
$966,000, OR 27 CENTS PER SHARE, UP FROM $930,000, OR 26 CENTS PER SHARE IN THE
SECOND QUARTER, 1998. FOR THE SIX MONTHS ENDED JUNE 30, 1999 NET INCOME WAS
$1,738,000, OR 49 CENTS PER SHARE, DOWN FROM $1,831,000, OR 51 CENTS PER SHARE
FOR THE FIRST HALF 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)
JUNE 30, 1999
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION:
THE COMPANY HAD WORKING CAPITAL OF $29.7 MILLION AT JUNE 30, 1999 AND $28.4
MILLION AT DECEMBER 31, 1998. THIS REPRESENTS A CURRENT RATIO OF 4.9 AND 5.6 FOR
THESE PERIODS, RESPECTIVELY.
CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS REPRESENTED 1.7% AND 5.6% OF
THIS WORKING CAPITAL AT JUNE 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 SECOND QUARTER OF 1999.
THE COMPANY HAD SHAREHOLDERS' EQUITY OF $31.8 MILLION AT JUNE 30, 1999 AND $30.8
MILLION AT DECEMBER 31, 1998 WHICH, WHEN COMPARED TO TOTAL LIABILITIES,
REPRESENTED AN EQUITY TO LIABILITY RATIO OF 1.5 FOR BOTH PERIODS.
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, 1999
(4) SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
ON APRIL 20, 1999 THE ANNUAL SHAREHOLDERS MEETING WAS HELD, AT WHICH TIME
THE FOLLOWING WERE VOTED ON AND APPROVED:
1. THE AMENDMENT OF THE CORPORATE BYLAWS TO INCREASE THE SIZE OF THE BOARD
OF DIRECTORS FROM FIVE TO SIX MEMBERS.
2. THE FOLLOWING WERE ELECTED DIRECTORS FOR 1999:
JEROME E. RAU TYLL NECKER
FREDERICK W. HOHAGE FRANK R. REYNOLDS
JAMES C. SCHRADER, JR. GREGORY J. RAU
3. THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 1999.
ITEM 6(B):
A FORM 8-K WAS NOT FILED FOR THE QUARTER ENDED JUNE 30, 1999.
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<PAGE> 10
MINUTEMAN INTERNATIONAL, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
JUNE 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 8/6/99
- -------------------------------- -----------------------
JEROME E. RAU DATE
PRESIDENT AND DIRECTOR
(PRINCIPAL EXECUTIVE OFFICER)
/s/ Thomas J. Nolan 8/6/99
- -------------------------------- ------------------------
THOMAS J. NOLAN DATE
CHIEF FINANCIAL OFFICER,
SECRETARY & TREASURER
(PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER)
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-1-1999 JAN-1-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 491 491
<SECURITIES> 0 0
<RECEIVABLES> 17,893 17,893
<ALLOWANCES> 746 746
<INVENTORY> 18,132 18,132
<CURRENT-ASSETS> 37,283 37,283
<PP&E> 22,190 22,190
<DEPRECIATION> 12,439 12,439
<TOTAL-ASSETS> 53,013 53,013
<CURRENT-LIABILITIES> 7,576 7,576
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 25,366 25,366
<TOTAL-LIABILITY-AND-EQUITY> 53,013 53,013
<SALES> 19,578 38,697
<TOTAL-REVENUES> 19,578 38,697
<CGS> 13,423 26,860
<TOTAL-COSTS> 17,912 35,492
<OTHER-EXPENSES> (90) (4)
<LOSS-PROVISION> 39 100
<INTEREST-EXPENSE> 183 392
<INCOME-PRETAX> 1,573 2,817
<INCOME-TAX> 607 1,079
<INCOME-CONTINUING> 966 1,738
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 966 1,738
<EPS-BASIC> .27 .49
<EPS-DILUTED> .27 .49
</TABLE>
