<PAGE> 1
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
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ___________.
Commission File No. 0-1412
M. H. Rhodes, Inc
(Exact name of registrant as specified in its charter)
Delaware 06-0509270
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
99 Thompson Road, Avon, Connecticut 06001
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (203) 673-3281
Former name, address and fiscal year, if changed since last report
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
---
There were, as of September 30, 1995, 202,599 shares of Common Stock
outstanding.
1 OF 8
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
M.H. RHODES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
----------- ------------
ASSETS
1994 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $ 6,161 $ -0-
Accounts Receivable 1,549,003 1,299,013
Inventories 4,391,823 4,092,064
Refundable Income Taxes 1,230 -
Prepaid Expenses and Other 14,410 30,583
----------- -----------
TOTAL CURRENT ASSETS 5,962,627 5,421,660
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Buildings and Improvements 1,270,698 1,270,698
Machinery and Equipment 2,501,897 2,480,524
Land 65,000 65,000
----------- -----------
Sub-total 3,837,595 3,816,222
Less:Accumulated Depreciation (2,842,489) (2,929,893)
----------- -----------
NET PROPERTY, PLANT AND EQUIPMENT 995,106 886,329
----------- -----------
INTANGIBLE ASSETS 40,611 33,367
----------- -----------
TOTAL ASSETS $ 6,998,344 $ 6,341,356
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 723,194 $ 625,090
Current Portion of Long Term Debt 217,630 240,885
Accounts Payable 1,058,516 647,226
Accrued Expenses 381,123 321,798
----------- -----------
TOTAL CURRENT LIABILITIES 2,380,463 1,834,999
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 1,160,610 1,027,427
----------- -----------
OTHER NON-CURRENT LIABILITIES 126,346 124,530
----------- -----------
SHAREHOLDERS' EQUITY
Common Stock 300,880 300,880
Paid in Capital 3,697 3,697
Retained Earnings 5,046,455 4,990,832
----------- -----------
Sub-Total 5,351,032 5,295,409
Less: Treasury Stock (1,000,035) (1,048,431)
Deferred Compensation (1,020,072) (892,578)
----------- -----------
NET SHAREHOLDERS' EQUITY $ 3,330,925 $ 3,354,400
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 6,998,344 $ 6,341,356
----------- -----------
</TABLE>
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<PAGE> 3
M. H. RHODES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTH PERIOD NINE MONTH PERIOD
------------------ -----------------
SEPTEMBER 30 SEPTEMBER 30
1994 1995 1994 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $2,475,683 $1,988,850 $7,322,351 $6,136,376
COST OF GOODS SOLD 1,904,584 1,613,811 5,847,090 4,803,702
---------- ---------- ---------- ----------
GROSS PROFIT 571,099 375,039 1,475,261 1,332,674
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 478,049 419,748 1,388,248 1,269,415
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) 93,050 (44,709) 87,013 63,259
INTEREST EXPENSE (39,833) (38,420) (110,993) (122,889)
OTHER INCOME, (EXPENSE) NET 1,203 (553) 6,424 941
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
INCOME TAX 54,420 (83,682) (17,556) (58,689)
PROVISION (BENEFIT)
FOR INCOME TAX (5,385) 2,000 (8,566) 9,000
---------- ---------- ---------- ----------
NET INCOME (LOSS) 59,805 (85,682) (8,990) (67,689)
TRANSLATION ADJUSTMENTS 9,758 5,810 (5,516) 12,063
BEGINNING RETAINED EARNINGS 4,903,095 5,070,704 4,987,164 5,046,458
---------- ---------- ---------- ----------
ENDING RETAINED EARNINGS 4,972,658 4,990,832 4,972,658 4,990,832
---------- ---------- ---------- ----------
AVERAGE SHARES OUTSTANDING 210,283 202,599 210,283 202,599
EARNINGS (LOSS) PER SHARE $ .28 $(.42) $ (.04) $(.33)
CASH DIVIDENDS PER SHARE $ - $ - $ - $ -
</TABLE>
3 OF 8
<PAGE> 4
M. H. RHODES, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTH PERIOD
ENDED SEPTEMBER 30
------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1995
---- ----
<S> <C> <C>
Net Income(Loss) $ (8,990) $ (67,689)
----------- ----------
Adjustments to reconcile net income(loss)
to net cash provided by operating
activities:
Depreciation 165,025 114,414
Amortization of deferred compensation 127,494 127,494
Gain on sale of fixed assets (2,945) -0-
Translation adjustments (5,516) 12,063
Amortization of other assets 17,261 9,744
Change in assets and liabilities:
Decrease in accounts receivable 60,897 249,990
Decrease (increase) in inventories (428,566) 299,759
Increase in prepaid expenses and other (58,650) (16,173)
Increase(decrease) in accounts payable 169,320 (411,290)
Decrease in accrued expenses (155,304) (60,802)
Decrease in other noncurrent
liabilities (869) (1,816)
----------- ----------
Total adjustments (111,853) 323,383
----------- ----------
Net cash provided by (used in)
operating activities (120,843) 255,694
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (80,582) (6,140)
Proceeds from sale of plant, property and
equipment 2,945 -0-
----------- ----------
Net cash used in investing activities (77,637) (6,140)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from additional borrowings 6,978,221 5,997,444
Repayments of debt (7,194,035) (6,253,159)
Proceeds from State of Connecticut 400,000 -0-
----------- ----------
Net cash provided by (used in)
financing activities 184,186 (255,715)
----------- ----------
NET DECREASE IN CASH (14,294) (6,161)
CASH, beginning of period 14,294 6,161
----------- ----------
CASH, end of period $ -0- $ -0-
----------- ----------
</TABLE>
4 OF 8
<PAGE> 5
M. H. RHODES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES
1. In the opinion of the Company the accompanying unaudited condensed
consolidated financial statements contain all normal recurring accrual
adjustments necessary to present fairly (A) The results of operations for
the three and nine month periods ended September 30, 1995 and 1994. (B) The
financial position at September 30, 1995 and December 31, 1994 and (C) The
cash flows for the nine month periods ended September 30, 1995 and 1994.
2. The results for the nine month period ended September 30, 1995 are not
necessarily indicative of the results for the entire year.
3. Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1994 1995
---- ----
<S> <C> <C>
Raw Materials & Component Parts.... $1,260,740 $1,335,014
Work in Process.................... 2,666,695 2,174,713
Finished Goods..................... 464,388 582,337
---------- ----------
TOTAL......................... $4,391,823 $4,092,064
---------- ----------
</TABLE>
4. The earnings (loss) per share is calculated by dividing net income by the
weighted average of the outstanding shares. The weighted average of shares
outstanding is calculated by adding the number of shares outstanding each
day of the period and dividing by the number of days in the period.
5. The consolidated financial statements include the accounts of M. H.
Rhodes, Inc. and its 96% owned subsidiary, M. H. Rhodes (Canada) Limited.
Certain reclassifications have been made to the September 30, 1994
financial statements in order to make their presentation comparable to that
of September 30, 1995.
5 OF 8
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
New orders for the third quarter of 1995 decreased 13% compared to the third
quarter of 1994. Third quarter 1995 Photocontrol orders were 39% above the
same period in 1994 as orders for the new electronic photocontrol continued to
gain momentum from the second quarter through the third. Timer and Switch
third quarter orders were down 27% from the same period in 1994 as original
equipment manufacturers (OEM's) curtailed their order patterns to control
inventories. The total backlog on September 30, 1995 was $3,808,000 compared
to $4,005,000 for September 30, 1994 or a decrease of 5%. The principal reason
for this was a reflection of the Timer & Switch customer order level.
Net sales for the third quarter of 1995 were $1,988,850, a decrease of 20%
compared to the third quarter of 1994. The principal reason for this was the
24% decrease in the 1995 Timer & Switch line shipments from the same comparable
period in 1994. As in the second quarter, this decrease is a reflection of the
softening of customer orders from the original equipment manufacturers' (OEM)
segment.
Cost of goods sold as a percentage of net sales increased to 81% for the third
quarter of 1995 as compared to 77% for the same quarter of 1994. The principal
reason for this was that fixed manufacturing expenses could not decrease in
proportion to the variable expenses resulting from a 20% sales decline.
Consequently, the fixed manufacturing expenses were incurred over a reduced
sales base.
Selling, general and administrative expenses increased to 21% of net sales for
the third quarter of 1995 from 19% of net sales in the same quarter of 1994,
although the 1995 dollars expensed were 12% lower than the 1994 dollars
expensed. The principal reason for this was that the majority of selling,
general and administrative expenses are fixed at the current sales volume.
Interest expense decreased slightly as a result of the Line of Credit principal
decreasing.
On a consolidated basis for the quarter ending September 30, 1995, M.H.
Rhodes, Inc. had a net loss of $86,000 as compared to a net income of $60,000
for the same period in 1994. Lower 1995 third quarter customer shipments
contributed to the net loss compared to the third quarter in 1994.
Financial Condition as of September 30, 1995
Working capital for the nine month period ending September 30, 1995 increased
$6,000 over the December, 1994 level. Working capital was generated through
operations that exceeded working capital used for debt repayment.
6 of 8
<PAGE> 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - 27
b. Reports on Form 8-K
None
7 of 8
<PAGE> 8
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.
M. H. RHODES, INC.
By: /S/ ALLAN D. SPRINGER
------------------
Allan D. Springer
Its Vice President of
Finance and Chief
Financial Officer
Dated: October 24, 1995
8 of 8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,299,013
<ALLOWANCES> 0
<INVENTORY> 4,092,064
<CURRENT-ASSETS> 5,421,660
<PP&E> 3,816,222
<DEPRECIATION> 2,929,893
<TOTAL-ASSETS> 6,341,356
<CURRENT-LIABILITIES> 1,834,999
<BONDS> 0
<COMMON> 300,880
0
0
<OTHER-SE> 3,053,520
<TOTAL-LIABILITY-AND-EQUITY> 6,341,356
<SALES> 6,136,376
<TOTAL-REVENUES> 6,136,376
<CGS> 4,803,702
<TOTAL-COSTS> 4,803,702
<OTHER-EXPENSES> 1,269,415
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,889
<INCOME-PRETAX> (58,689)
<INCOME-TAX> 9,000
<INCOME-CONTINUING> (67,689)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,689)
<EPS-PRIMARY> (.33)
<EPS-DILUTED> 0
</TABLE>
