<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 June 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 June 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 JUNE 30
----------- -------
ASSETS
1994 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $ 6,161 $ -0-
Accounts Receivable 1,549,003 1,259,435
Inventories 4,391,823 4,206,666
Refundable Income Taxes 1,230 -
Prepaid Expenses and Other 14,410 31,328
----------- -----------
TOTAL CURRENT ASSETS 5,962,627 5,497,429
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Buildings and Improvements 1,270,698 1,270,698
Machinery and Equipment 2,501,897 2,478,797
Land 65,000 65,000
----------- -----------
Sub-total 3,837,595 3,814,495
Less: Accumulated Depreciation (2,842,489) (2,901,151)
----------- -----------
NET PROPERTY, PLANT AND EQUIPMENT 995,106 913,344
----------- -----------
INTANGIBLE ASSETS 40,611 34,678
----------- -----------
TOTAL ASSETS $ 6,998,344 $ 6,445,451
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 723,194 $ 499,097
Current Portion of Long Term Debt 217,630 240,885
Accounts Payable 1,058,516 664,317
Accrued Expenses 381,123 431,373
----------- -----------
TOTAL CURRENT LIABILITIES 2,380,463 1,835,672
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 1,160,610 1,093,475
----------- -----------
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 5,070,704
----------- -----------
Sub-Total 5,351,032 5,375,281
Less: Treasury Stock (1,000,035) (1,048,431)
Deferred Compensation (1,020,072) (935,076)
----------- -----------
NET SHAREHOLDERS' EQUITY $ 3,330,925 $ 3,391,774
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 6,998,344 $ 6,445,451
----------- -----------
</TABLE>
2 OF 8
<PAGE> 3
M. H. RHODES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTH PERIOD SIX MONTH PERIOD
------------------ ----------------
JUNE 30 JUNE 30
1994 1995 1994 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $2,232,077 $1,809,534 $4,846,668 $4,147,526
COST OF GOODS SOLD 1,841,511 1,365,578 3,942,506 3,189,891
---------- ---------- ---------- ----------
GROSS PROFIT 390,566 443,956 904,162 957,635
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 438,551 398,221 910,199 849,667
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) (47,985) 45,735 (6,037) 107,968
INTEREST EXPENSE (38,566) (42,559) (71,160) (84,469)
OTHER INCOME, NET 1,860 1,077 5,221 1,494
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
INCOME TAX (84,691) 4,253 (71,976) 24,993
PROVISION (BENEFIT)
FOR INCOME TAX (2,203) 3,000 (3,181) 7,000
---------- ---------- ---------- ----------
NET INCOME (LOSS) (82,488) 1,253 (68,796) 17,993
TRANSLATION ADJUSTMENTS 1,625 5,542 (15,273) 6,253
BEGINNING RETAINED EARNINGS 4,983,958 5,063,909 4,987,164 5,046,458
---------- ---------- ---------- ----------
ENDING RETAINED EARNINGS 4,903,095 5,070,704 4,903,095 5,070,704
---------- ---------- ---------- ----------
AVERAGE SHARES OUTSTANDING 210,283 202,599 210,283 202,599
EARNINGS (LOSS) PER SHARE $ (.39) $ .01 $ (.33) $ .09
CASH DIVIDENDS PER SHARE $ - $ - $ - $ -
</TABLE>
3 OF 8
<PAGE> 4
M. H. RHODES, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTH PERIOD
ENDED JUNE 30
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1995
---------- ----------
<S> <C> <C>
Net Income(Loss) $ (68,795) $ 17,993
---------- ----------
Adjustments to reconcile net income(loss)
to net cash provided by operating
activities:
Depreciation 83,261 85,672
Amortization of deferred compensation 84,996 84,996
Gain on sale of fixed assets (2,945) -0-
Translation adjustments (15,273) 6,253
Amortization of other assets 11,507 8,432
Change in assets and liabilities:
Decrease in accounts receivable 288,168 289,568
Decrease (increase) in inventories (148,873) 185,157
Increase in prepaid expenses and other (44,825) (16,918)
Increase(decrease) in accounts payable 33,533 (394,199)
Increase(decrease) in accrued expenses (64,444) 49,348
Decrease in other noncurrent
liabilities (528) (1,816)
---------- ----------
Total adjustments 224,577 296,493
---------- ----------
Net cash provided by operating
activities 155,782 314,486
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (51,834) (4,274)
Proceeds from sale of plant, property and
equipment 2,945 -0-
---------- ----------
Net cash used in investing activities (48,889) (4,274)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from additional borrowings 4,760,488 4,000,563
Repayments of debt (5,060,404) (4,316,936)
Proceeds from State of Connecticut 400,000 -0-
---------- ----------
Net cash provided by (used in)
financing activities 100,084 (316,373)
---------- ----------
NET INCREASE (DECREASE) IN CASH 206,977 (6,161)
CASH, beginning of period 14,294 6,161
---------- ----------
CASH, end of period $ 221,271 $ -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 six month periods ended June 30, 1995
and 1994. (B) The financial position at June 30, 1995 and December
31, 1994 and (C) The cash flows for the six month periods ended
June 30, 1995 and 1994.
2. The results for the six month period ended June 30, 1995 are not
necessarily indicative of the results for the entire year.
3. Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
------------ --------
<S> <C> <C>
Raw Materials and Component Parts.. $1,260,740 $1,331,037
Work in Process.................... 2,666,695 2,413,652
Finished Goods..................... 464,388 461,977
---------- ----------
TOTAL......................... $4,391,823 $4,206,666
---------- ----------
</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 June 30,
1994 financial statements in order to make their presentation
comparable to that of June 30, 1995.
5 OF 8
<PAGE> 6
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
New orders for the second quarter of 1995 increased 3% compared to the
second quarter of 1994. Second quarter 1995 orders for photocontrols
increased 19% over the same period in 1994. Orders for the new
electronic photocontrol line experienced a large increase in the latter
part of the second quarter. Electronic photocontrol orders remain strong
for the start of the third quarter. The total backlog on June 30, 1995
was $3,989,000 compared to $4,393,000 for June 30, 1994. Although the
backlog increased 20% from the first quarter, the total backlog on June
30, 1995 was 9% below the comparable period for 1994. The principal
reason for this was the high level of blanket orders during the first
quarter of 1994.
Net sales for the second quarter of 1995 were $1,810,000, a decrease of
19% compared to the second quarter of 1994. The timer and switch line
incurred the largest decrease of 21% as a reflection of the softening
in the orders from the original equipment manufacturers' (OEM) segment.
Cost of goods sold as a percentage of net sales favorably decreased to
75% in the second quarter of 1995 compared to 83% in the second quarter
of 1994. The principal reasons for this were: (1) Higher margin
products shipped during the second quarter of 1995 compared to the same
quarter in 1994; (2) Employee furloughs; (3) Lower depreciation from
reduced capital expenditures and (4) One time non-recurring customer
reimbursement for special tooling projects.
Selling, general and administrative expenses for the second quarter of
1995 increased to 22% of net sales as compared to 20% for the second
quarter of 1994. Total dollars expensed decreased compared to 1994
continuing a trend from the first quarter. However, selling, general
and administrataive percent of net sales increased as a result of fixed
expenses not decreasing in proportion with the sales decline.
Interest expense increased in the second quarter of 1995 compared to
the same quarter of 1994 due to a high bank prime rate which increased
borrowing costs on the line of credit and the Employee Stock Ownership
Plan (ESOP) loan.
On a consolidated basis, M. H. Rhodes, Inc. had net income of $1,253
for the second quarter of 1995 as compared to a net loss of $82,000 for
the second quarter of 1994. The contributing factor to this was cost
reductions.
Financial Condition as of June 30, 1995
Working capital for the six month period ending June 30, 1995
increased $81,000 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: August 5, 1995
8 of 8
<PAGE> 9
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,259,435
<ALLOWANCES> 0
<INVENTORY> 4,206,666
<CURRENT-ASSETS> 5,497,429
<PP&E> 3,814,495
<DEPRECIATION> 2,901,151
<TOTAL-ASSETS> 6,445,451
<CURRENT-LIABILITIES> 1,835,672
<BONDS> 0
<COMMON> 300,880
0
0
<OTHER-SE> 3,090,894
<TOTAL-LIABILITY-AND-EQUITY> 6,445,451
<SALES> 4,147,526
<TOTAL-REVENUES> 4,147,526
<CGS> 3,189,891
<TOTAL-COSTS> 3,189,891
<OTHER-EXPENSES> 849,667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,469
<INCOME-PRETAX> 24,993
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 17,993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,993
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
