<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1995
Commission File No. 0-16032
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Melamine Chemicals, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 64-0475913
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Highway 18 West Donaldsonville, Louisiana 70346
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(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 473-3121
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NOT APPLICABLE
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filled 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 of 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
--- ---
5,450,300 shares of Melamine Chemicals, Inc. common stock $.01 par value per
share were outstanding on October 23, 1995. Registrant has no other class of
common stock outstanding.
(This document contains 9 sequentially
numbered pages including exhibits,
indices, and financial statements,
notes to financial statements and
schedules. The exhibit index to this
document is located at page 8.)
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Part I. Financial Information
MELAMINE CHEMICALS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 6,437,912 5,458,494
Receivables:
Trade (net of allowance for doubtful debts of
$150,000 at September and June) 7,807,167 9,571,751
Income tax refund 312,985 401,770
Other 172,661 177,847
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Total receivables 8,292,813 10,151,368
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Inventories:
Finished goods 3,434,000 590,000
Supplies 212,796 208,683
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Total inventories 3,646,796 798,683
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Prepaid expenses:
Spare parts 2,489,250 2,239,262
Other 297,359 68,449
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Total prepaid expenses 2,786,609 2,307,711
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Deferred income taxes 1,610,161 1,610,161
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Total current assets 22,774,291 20,326,417
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Plant and equipment, at cost 44,634,311 43,730,930
Less accumulated depreciation 21,113,742 20,192,617
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Net plant and equipment 23,520,569 23,538,313
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Other assets 422,281 424,355
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$ 46,717,141 44,289,085
====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,662,388 3,775,475
Accrued expenses 714,391 750,924
Amounts due to related parties 2,127,046 1,780,110
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Total current liabilities 7,503,825 6,306,509
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Deferred income taxes 6,198,532 5,888,013
Stockholders' equity:
Preferred stock of $1 par value.
Authorized 2,000,000 shares; none issued 0 0
Common stock of $.01 par value. Authorized
20,000,000 shares; issued and outstanding 5,450,300 at
September and June 54,503 54,503
Additional paid-in capital 16,798,970 16,798,970
Retained earnings 16,161,311 15,241,090
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Total stockholders' equity 33,014,784 32,094,563
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$ 46,717,141 44,289,085
====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
MELAMINE CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
SEPTEMBER 30,
1995 1994
---------- ---------
<S> <C> <C>
Net sales $ 11,057,335 9,390,789
Cost of sales 8,941,794 7,832,014
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Gross profit 2,115,541 1,558,775
Selling, general and administrative expenses 748,507 750,492
Research and development costs 57,263 59,373
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Operating profit 1,309,771 748,910
Other income (expense):
Interest income 68,441 5,476
Interest expense 0 (41,448)
Miscellaneous (24,946) 30,918
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Earnings before income taxes 1,353 743,856
Income tax expense 433,045 267,788
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Net earnings $ 920,221 476,068
================================================================================================
Earnings per common share:
Primary $ .17 .09
================================================================================================
Fully diluted $ .17 .09
================================================================================================
Weighted average shares 5,450,300 5,450,100
================================================================================================
Dividends per common share $ 0.00 0.00
================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
MELAMINE CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
SEPTEMBER 30, 1995
1995 1994
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 920,221 476,068
Adjustments to reconcile net earnings
to net cash provided (used) by operating
activities:
Depreciation 921,125 887,224
Increase in deferred income taxes 310,519 230,757
Change in assets and liabilities:
Decrease (increase) in:
Receivables 1,858,555 2,415,179
Inventories (2,848,113) (784,727)
Prepaid expenses (478,898) (1,004,103)
Increase (decrease) in:
Accounts payable 886,913 223,538
Accrued expenses (36,533) 44,440
Amounts due to related parties 346,936 (253,360)
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Cash provided by operating activities 1,880,725 2,235,016
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Cash flows from investing activities:
Capital expenditures (903,381) (385,711)
Decrease (increase) in other assets 2,074 (4,194)
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Cash used by investing activities (901,307) (389,905)
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Cash flows from financing activities:
Repayment of note payable 0 (2,000,000)
Proceeds from exercise of stock options 0 1,575
Principal payments under capital lease obligation 0 (17,498)
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Cash used by financing activities 0 (2,015,923)
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Increase (decrease) in cash and cash equivalents 979,418 (170,812)
Cash and cash equivalents at beginning of period 5,458,494 357,821
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Cash and cash equivalents at end of period $ 6,437,912 187,009
===============================================================================================
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Income taxes $ 0 0
===============================================================================================
Interest $ 0 45,062
===============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the three-month periods ended
September 30, 1995 and 1994 have not been audited by independent accountants,
but in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the consolidated
balance sheet, consolidated statement of operations and consolidated statement
of cash flows at the dates and for the periods indicated have been made.
Results of operations for interim periods are not necessarily indicative of
results of operations for the respective full years.
2. CONTINGENCIES
Various legal actions are pending against the Company which seek relief or
damages including actions seeking contribution to cleaning costs of two
Superfund sites by plaintiff parties identified by the United States
Environmental Protection Agency. While the final outcome of these matters
cannot be predicted with certainty at this time, management believes, after
consulting with counsel, that the ultimate liability, if any, will not have a
material effect on the consolidated financial position and results of
operations of the Company.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
During the first quarter of fiscal 1996, the Company's cash position
continued to improve. The cash balance increased by $979,000 since the end of
fiscal 1995. This improvement was caused primarily by earnings during the
first quarter.
During the first quarter of fiscal 1996, the Company incurred capital
expenditures of approximately $903,000. Capital expenditures are expected to
total approximately $3.0 million for the year. These expenditures are expected
to be funded out of operations, and any shortfall can be funded from the
Company's $7.5 million lines of credit.
The level of trade receivables at September 30, 1995 was lower than at June
30, 1995 because of:
1. Sales in the first quarter of fiscal 1996 were lower than in the fourth
quarter of fiscal 1995; and
2. The first quarter of fiscal 1996 had a smaller percentage of sales to
foreign customers where the terms tend to be longer than to domestic
customers.
Results of Operations
The results for the three-month periods ended September 30, 1995 and 1994
follow:
<TABLE>
<CAPTION>
Quarter Ended
September 30,
-------------
1995 1994
---- ----
<S> <C> <C>
Sales:
Millions of pounds 20.7 23.0
Average price/pound 53.4c. 40.8c.
Production:
Millions of pounds 27.8 25.4
Cost of sales/pound 43.2c. 34.0c.
</TABLE>
5
<PAGE> 6
Sales volume was less than the prior year because the Company held back the
sales volume to increase the inventory level in anticipation of a maintenance
shut down scheduled during the second quarter of fiscal 1996.
Sales prices in the first quarter of fiscal 1995 were 31% higher than the
year before and 6% higher than the immediately preceding quarter. These
increases reflect the impact of improving economies worldwide. Sales prices in
the next few quarters are expected to increase further but not at the same pace
as during the last five fiscal quarters.
The cost of sales per pound in the three-months ended September 30, 1995
was 27% higher than the same period last year. The increase was due almost
entirely to higher raw material prices. Raw material prices for the second
quarter of fiscal 1996 are about 10% lower than the first fiscal quarter.
However, the Company's raw material supplier has indicated that raw material
prices will increase the cost of production back to the first quarter level in
the third and fourth quarters of fiscal 1996. The Company will attempt to
offset any raw material price increases by further increasing sales prices, but
the ultimate success of this effort is impossible to predict.
Miscellaneous income decreased for the quarter ended September 30, 1995 as
compared to the same period in the prior year. The decrease is due mainly to a
currency exchange loss in fiscal 1996 as compared to a currency exchange gain
in fiscal 1995.
Interest expense for the three-months ended September 30, 1995 decreased as
compared to the same periods in the prior year. The decrease is due to the
decreased level of borrowing in fiscal 1996 as compared to fiscal 1995.
Interest income increased in the first quarter of fiscal 1996 as compared to
the same period in fiscal 1995. The increase is due to the increase in the
cash balance in fiscal 1996 as compared to fiscal 1995.
The tax rate in fiscal 1996 is expected to be 32% rather than the 36% rate
in fiscal 1995. The reduction in the rate is due to the expected benefit of
the Company's foreign sales corporation.
An annual maintenance shut down is planned during the second quarter of
fiscal 1996. It is expected that the M-II plant will be shut down for about
five weeks, and the M-I plant will be shut down for about two weeks. The cost
of sales is expected to increase by approximately 5c. per pound during this
quarter because there will be less production pounds over which to spread fixed
and semi-fixed costs. This cost of sales increase will be offset somewhat by
the lower raw material cost which is expected to save about 2c. per pound.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments during the quarter ended
September 30, 1995.
Item 6. Exhibits and reports on Form 8-K.
A. Page 8 of this report is the index for those exhibits required to be
filed as part of this report.
B. A Form 8-K was filed on October 16, 1995 with the press release
announcing results of operation for the first quarter of fiscal 1996.
6
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Exchange act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Melamine Chemicals, Inc.
-----------------------------------------
(Registrant)
Date: October 23, 1995 /s/ Fred Huber
-----------------------------------------
Fred Huber
President & Chief Executive Officer
Date: October 23, 1995 /s/ Wayne D. DeLeo
-----------------------------------------
Wayne D. DeLeo
Vice President & Chief Financial Officer
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C>
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
8
<PAGE> 1
EXHIBIT 11
COMPUTATION OF NET EARNINGS AND SHARES
USED IN ARRIVING AT NET EARNINGS PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Primary and Fully Diluted
-------------------------
Three Months Ended
September 30, 1995
------------------
<S> <C>
Earnings:
- --------
Net earnings $ 920,221
---------------
Less: Dividends on preferred stock --
---------------
Net earnings applicable to common stock $ 920,221
===============
Computation of weighted number of
shares outstanding:
- --------------------
Shares outstanding on a diluted basis 5,516,414
===============
</TABLE>
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000816955
<NAME> MELAMINE CHEMICALS, INC
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,437,912
<SECURITIES> 0
<RECEIVABLES> 8,442,813
<ALLOWANCES> 150,000
<INVENTORY> 3,646,796
<CURRENT-ASSETS> 22,774,291
<PP&E> 44,634,311
<DEPRECIATION> 21,113,742
<TOTAL-ASSETS> 46,717,141
<CURRENT-LIABILITIES> 7,503,825
<BONDS> 0
<COMMON> 54,503
0
0
<OTHER-SE> 32,960,281
<TOTAL-LIABILITY-AND-EQUITY> 46,717,141
<SALES> 11,057,335
<TOTAL-REVENUES> 11,057,335
<CGS> 8,941,794
<TOTAL-COSTS> 8,941,794
<OTHER-EXPENSES> 24,946
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,353,266
<INCOME-TAX> 433,045
<INCOME-CONTINUING> 920,221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 920,221
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
