<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the Period Ended April 1, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
Commission file number 0-17237
SELFIX, INC.
(Exact name of registrant as specified in its Charter)
Delaware 36-2490451
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4501 West 47th Street 60632
Chicago, Illinois (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number including area code (312) 890-1010.
Securities registered pursuant to Section 12(b) of the Act: None
Name of Each Exchange
On Which Registered
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common, Par Value $0.01 Per Share
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- -----
Common shares, par value $0.01, outstanding as of April 18, 1995 - 3,603,637
<PAGE> 2
SELFIX, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
Part I. Financial Information
---------------------
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations
and Retained Earnings 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information 13
Signatures 14
</TABLE>
2
<PAGE> 3
FORM 10-Q
Selfix, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
April 1, December 31,
ASSETS 1995 1994
------------- ----------------
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 4,422 $ 4,859
Investments in marketable securities -- available for sale . . . . 946 944
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . 6,254 4,947
Notes receivable and other receivables . . . . . . . . . . . . . . . 99 1,773
Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . 125 381
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,401 5,650
Prepaid expenses and other current assets . . . . . . . . . . . . . 169 189
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 18,416 18,743
PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . 21,935 21,578
Less accumulated depreciation and amortization . . . . . . . . . 11,891 11,243
---------- ---------
10,044 10,335
LAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 131
---------- ---------
10,175 10,466
OTHER ASSETS
Restricted Cash - Industrial Revenue Bond. . . . . . . . . . . . -- 5
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1,372 1,536
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11
---------- ---------
Total other assets . . . . . . . . . . . . . . . . . . . . . . 1,383 1,552
---------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,974 $ 30,761
========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
PART I - FINANCIAL STATEMENTS
FORM 10-Q
Selfix, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
---------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations . . . . . . . . . . . $ 913 $ 992
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 1,656 1,921
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . 4,632 4,804
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 7,201 7,717
LONG-TERM OBLIGATIONS - net of current
maturities..... . . . . . . . . . . . . . . . . . . . . . . . . . 9,391 9,421
STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock - authorized 500,000 shares; . . . . . . . . . . . -- --
$.01 par value; none issued . . . . . . . . . . . . . . . . . .
Common stock - authorized 7,500,000 shares; $.01 par value;
issued and outstanding, 3,603,637 shares at April 1, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . 36 36
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . 9,360 9,360
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 4,254 4,500
Cumulative foreign currency translation adjustment . . . . . . . . (219) (222)
Unrealized net holding (losses) on available-for-sale securities . (49) (51)
------------ -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . 13,382 13,623
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . $ 29,974 $ 30,761
============ ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
PART I - FINANCIAL STATEMENTS
FORM 10-Q
Selfix, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(Dollars in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
April 1, 1995 March 26, 1994
------------- -----------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,742 $ 9,932
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . 7,333 6,410
----------- ----------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . 3,409 3,522
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 3,549 3,253
----------- ----------
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . (140) 269
Other income (expense)
Interest (expense) . . . . . . . . . . . . . . . . . . . . . . . . (201) (241)
Other income (expense) - net . . . . . . . . . . . . . . . . . . . 107 36
----------- ----------
(94) (205)
----------- ----------
Income (Loss) before income taxes . . . . . . . . . . . . . . . . (234) 64
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . 12 (70)
----------- ----------
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . (246) 134
Retained earnings at beginning of period . . . . . . . . . . . . . . 4,500 10,503
------------ ----------
Retained earnings at end of period . . . . . . . . . . . . . . . . . $ 4,254 $ 10,637
============ ==========
Net Income per common and common equivalent shares . . . . . . . . . $ (0.07) $ 0.04
Number of common and common equivalent shares . . . . . . . . . . . . 3,603,637 3,557,505
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
PART I - FINANCIAL STATEMENTS
FORM 10-Q
Selfix, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
April 1, 1995 March 26, 1994
----------------- ------------------
<S> <C> <C>
Cash flows from operating activities
Net income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ (246) $ 134
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation and amortization . . . . . . . . . . . . . . . . . 647 622
Amortization of intangible assets . . . . . . . . . . . . . . . 164 220
Deferred income taxes . . . . . . . . . . . . . . . . . . . . -- (66)
Provision for losses on accounts receivable . . . . . . . . . . 34 29
(Gain) on sale of fixed assets . . . . . . . . . . . . . . . . (11) (2)
Changes in assets and liabilities
(Increase) in accounts receivable . . . . . . . . . . . . . . . . (1,334) (2,219)
(Increase) in inventories . . . . . . . . . . . . . . . . . . . . (749) (831)
Decrease in refundable income taxes . . . . . . . . . . . . . . 256 139
(Increase) decrease in prepaid expenses and deposits . . . . . . 20 (86)
(Increase) decrease in other assets . . . . . . . . . . . . . . . -- (13)
Increase (decrease) in accounts payable . . . . . . . . . . . . . (265) 547
(Decrease) in accrued liabilities . . . . . . . . . . . . . . . . (175) (3)
(Increase) decrease in notes and other receivables . . . . . . . 1,676 (6)
------------ ---------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . 263 (1,669)
------------ ---------
Net cash provided by (used in) operations . . . . . . . . . . 17 (1,535)
Cash flows from investing activities
Purchase of property, plant and equipment (net) . . . . . . . . . . . (346) (966)
Decrease in Marketable Securities . . . . . . . . . . . . . . . . . -- 712
Restricted cash - Industrial Revenue Bond . . . . . . . . . . . . . . 5 568
------------ ---------
Net cash provided (used) by investing activities . . . . . . . (341) 314
Cash flows from financing activities
Payments on borrowings . . . . . . . . . . . . . . . . . . . . . . (102) (496)
Reduction of capital lease obligation . . . . . . . . . . . . . . . (6) (5)
Exercise of common stock options . . . . . . . . . . . . . . . . . -- 11
------------ ---------
Net cash used by financing activities . . . . . . . . . . . . . (108) (490)
------------ ---------
Effect of exchange rate changes on cash. . . . . . . . . . . . . . . (5) (3)
Net (decrease) in cash and cash equivalents . . . . . . . . . . (437) (1,714)
------------ ----------
Cash and cash equivalents at beginning of period . . . . . . . . . . 4,859 4,390
------------ ----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . $ 4,422 $ 2,676
============ ==========
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest and swap fees . . . . . . . . . . . . . . . . . . . . . $ 206 $ 248
Income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . $ (243) $ (143)
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
PART I - FINANCIAL STATEMENTS
FORM 10-Q
SELFIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
1. The condensed consolidated financial
statements included herein as of April 1,
1995 and for the thirteen weeks ended April
1, 1995 and March 26, 1994 are unaudited and,
in the opinion of the Company, reflect all
adjustments (which include normal recurring
accruals) necessary for the fair presentation
of the financial position and the results of
operations and cash flows.
2. These financial statements are presented in
accordance with the requirements of Form 10-Q
and, consequently, may not include all
disclosures normally required by generally
accepted accounting principles or those
normally in the Company's audited annual
financial statements. Accordingly, the
Company's audited consolidated financial
statements and notes thereto, included in its
Annual Report on Form 10-K, should be read in
conjunction with the accompanying condensed
consolidated financial statements.
3. The financial statements include certain
reclassifications of 1994 information which
were necessary to present the results of
operations and change in financial condition
on a consistent basis with 1995.
4. Inventories are summarized as follows:
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
------- ---------------
<S> <C> <C>
Finished Goods $3,131 $2,344
Work-in-Process 1,402 1,406
Raw Materials 1,868 1,900
------ -------
$6,401 $5,650
====== ======
</TABLE>
7
<PAGE> 8
PART I - FINANCIAL STATEMENTS
FORM 10-Q
SELFIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. The provision for income taxes for 1995
reflects the taxes on income of foreign
subsidiaries. The provision for income taxes
(benefit) for 1994 reflects the reduction of
the deferred tax valuation allowance due to a
change in estimate of the future realization
of net future tax deductions, as well as tax
benefits from foreign subsidiaries.
6. Earnings per share have been computed by
dividing net earnings (loss) for 1995 and
1994 by 3,603,637 and 3,557,505 of common
shares respectively. Common share
equivalents are not included in the
computation for 1995 since their effect under
the treasury stock method would be
anti-dilutive. Common share equivalents
included in the computation for 1994
represent shares issuable upon assumed
exercise of the stock option using the
treasury stock method.
7. At April 1, 1995, the Company has a
$3,000,000 line of credit all of which
remained undrawn.
8. During the third and fourth quarter of 1994,
the Company recorded a $1.7 million charge
relating to costs of severance and
termination benefits paid or accrued for a
change in the level and composition of
employees, termination of existing employee
arrangements, inventory adjustments and fixed
asset write-downs related to product lines to
be discontinued. As of December 31, 1994
approximately $.3 million of obsolete
inventory reserves and $.7 million of accrued
severance benefits remained on the Company's
books. The amount of cash paid for severance
benefits and obsolete inventory disposed of
in 1995 is detailed as follows:
<TABLE>
<CAPTION>
Obsolete Severance
Inventory Benefits
--------- --------
<S> <C> <C>
Balance at 12/31/94 $.3 million $.7 million
Charges to reserves .3 million .3 million
------------ ------------
Balance at 4/1/95 $ -- $.4 million
============ ===========
</TABLE>
8
<PAGE> 9
PART I - FINANCIAL STATEMENTS
FORM 10-Q
SELFIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)
The payouts will be substantially completed
by the end of 1995.
9. Subsequent event:
On May 5,1995, the Company bought back 58,162
shares of stock at a market price of $4.50
per share. The shares will be held as
treasury stock.
9
<PAGE> 10
Item 2 - Management's Discussion and Analysis of Results of Operations and
Financial Condition
In the discussion and analysis that follows, all references to
1995 and 1994 refer to the 13 week periods ended April 1, 1995 and
March 26, 1994, respectively.
Net sales for 1995 increased $.8 million (8%) as compared to last year. The
increase in sales is due to a combination of increased sales of the home
improvement product line and increased sales at the Company's Canadian
subsidiary. These increases were somewhat mitigated by small sales decreases
at the Company's other foreign subsidiaries and a slight decrease in export
sales.
Cost of goods as a percentage of sales increased to 68.3% from 64.5% for the
comparable period last year. The increase is associated with higher material
costs primarily due to increased cost of resin, a reduction in overhead
absorption resulting from lower inventory levels and an unfavorable gross
margin change resulting from sales mix shifts.
The Company expects that material costs will continue to adversely impact gross
profit margins over the balance of the year. Additionally, the Company is
continuing to evaluate product line profitability to determine whether to
continue providing certain lines to customers.
As a percentage of sales, 1995 operating expenses increased to 33.0% from 32.8%
due to increased marketing and selling salaries and benefits resulting from
staff additions. Also contributing to the increases were increased marketing
and selling expense for trade shows, travel and entertainment and other accrued
marketing and selling expenses.
This increase was slightly mitigated by reduced amortization expense associated
with the write-down of certain intangible assets in the second half of fiscal
year 1994 as well as the expiration of certain non-compete and consulting
agreements in 1995. Advertising expenses were also lower
10
<PAGE> 11
due to decreased promotional activity in the home organization line.
Additionally, general and administrative salaries and benefits decreased as a
result of headcount reductions.
Interest expense decreased compared to 1994 due to the non-renewal of a swap
agreement at one of the Company's subsidiaries as well as the reduction in debt
associated with scheduled repayments of principal.
Other income increased due to a foreign exchange gain this year compared to an
exchange loss in 1994, and an increase in interest income associated with
increased investments and larger cash balances compared to the same period in
1994.
Income tax expense increased compared to the tax benefit last year due to the
absence of a deferred tax benefit in 1995, tax expense compared to tax benefits
at the Company's foreign subsidiaries, and the absence of a reduction in the
deferred tax valuation allowance recorded last year.
Since December 31, 1994, accounts receivable and inventories increased due to
the increase in volume in 1995 compared to the fourteen week period ended
December 31, 1994. These increases were financed by a reduction in cash and
cash equivalents, a receipt of refundable income taxes and the reduction in
notes receivable and other accounts receivable related to the receipt of the
settlement payment from a patent infringement lawsuit. The settlement was
recorded in other income in 1994.
Net fixed assets and other assets decreased due to normal depreciation and
amortization expense.
Current liabilities decreased due to a reduction in accrued liabilities
associated with the payment of severance benefits recorded in the second half
of 1994, reduced levels of accounts payable and lower current maturities of
long-term debt obligations.
11
<PAGE> 12
Long-term obligations decreased due to scheduled repayments of principal.
Sales of the Company's products are generally lower in the first half of the
calendar year than in the remaining half of the calendar year. Net earnings
vary proportionately more than the variation in sales due to the affect of the
fixed costs. Results of operation for the thirteen weeks ended April 1, 1995
are not necessarily indicative of the results to be expected for the fifty-two
week period ending December 30, 1995.
As of April 1, 1995 the Company's working capital was $11.2 million.
Management believes that this capital is adequate to finance forseeable future
needs. It may be necessary, however, to borrow on a short-term basis against a
line of credit during the remainder of the year. The Company has a line of
credit of $3.0 million all of which remains undrawn.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - Not Applicable
ITEM 3. Default Upon Senior Securities - Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders - Not Applicable
ITEM 5. Other Information - On April 1, 1995 Charles F. Veselits,
Vice President and Treasurer, retired.
ITEM 6. A. Exhibits and Reports There were no reports on Form 8-K filed
during the thirteen weeks ended
April 1, 1995.
13
<PAGE> 14
SIGNATURE PAGE
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.
SELFIX, INC.
By: /s/ James E. Winslow
------------------------------
James E. Winslow
Senior Vice President
Chief Financial Officer
Dated: May 12, 1995
14
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<EXCHANGE-RATE> 1
<CASH> 4,422
<SECURITIES> 946
<RECEIVABLES> 7,708
<ALLOWANCES> 1,454
<INVENTORY> 6,401
<CURRENT-ASSETS> 18,416
<PP&E> 22,066
<DEPRECIATION> 11,891
<TOTAL-ASSETS> 29,974
<CURRENT-LIABILITIES> 7,201
<BONDS> 9,391
<COMMON> 36
0
0
<OTHER-SE> 13,346
<TOTAL-LIABILITY-AND-EQUITY> 29,974
<SALES> 10,742
<TOTAL-REVENUES> 10,742
<CGS> 7,333
<TOTAL-COSTS> 7,333
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 34
<INTEREST-EXPENSE> 201
<INCOME-PRETAX> (234)
<INCOME-TAX> 12
<INCOME-CONTINUING> (246)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (246)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
