SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1995 Commission File Number 33-24317
JORDAN INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Illinois 36-3598114
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ArborLake Centre, Suite 550 60015
1751 Lake Cook Road, (Zip Code)
Deerfield, Illinois
(Address of Principal Executive Offices)
Registrant's telephone number, including Area Code:
(708) 945-5591
Former name, former address and former fiscal year, if changed since last
report: Not applicable.
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 twelve (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 ninety (90) days.
Yes X No
The aggregate market value of voting stock held by non-affiliates of
the Registrant is not determinable as such shares were privately placed and
there is currently no public market for such shares.
The number of shares outstanding of Registrant's Common Stock as of May
12, 1995: 93,501.0004.
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FORM 10-Q QUARTERLY REPORT
JORDAN INDUSTRIES, INC.
INDEX
Part I. Page No.
Financial Information
Condensed Consolidated Balance Sheets
at March 31, 1995, and December 31, 1994 3
Condensed Consolidated Statements of Operations
for the Three Months Ended March 31, 1995
and 1994 4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995
and 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II.
Other Information 12
Signatures 13
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
March 31, December 31,
1995 1994
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 23,753 $ 56,386
Accounts receivable, net 54,541 57,589
Inventories 85,167 76,157
Prepaid expenses and other current assets 8,221 7,053
Total Current Assets 171,682 197,185
Property, plant and equipment, net 74,593 70,403
Note receivable from affiliate 8,596 7,941
Goodwill, net 87,707 88,345
Other assets 35,630 35,571
Total Assets $378,208 $399,445
LIABILITIES AND NET CAPITAL DEFICIENCY
Current Liabilities:
Accounts payable $ 31,323 $ 42,225
Accrued liabilities 16,164 27,670
Advance deposits 4,292 1,999
Current portion of long-term debt 1,861 1,896
Total Current Liabilities 53,640 73,790
Long-term debt 384,475 380,966
Other non-current liabilities 2,023 2,048
Deferred income taxes 4,742 4,478
Minority interest 3,696 5,030
Net Capital Deficiency:
Common stock 1 1
Additional paid-in capital 2,972 2,972
Accumulated deficit (73,341) (69,840)
Total Net Capital Deficiency (70,368) (66,867)
Total Liabilities and Net Capital
Deficiency $378,208 $399,445
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED
March 31,
1995 1994
Net sales $100,151 $ 80,927
Cost of sales, excluding depreciation 62,227 50,935
Selling, general and administrative
expenses 27,131 21,170
Depreciation 2,818 2,355
Amortization of goodwill and other
intangibles 1,737 2,047
Management fees and other 634 270
Operating income 5,604 4,150
Other (income) and expenses:
Interest expense 10,533 9,959
Interest income (477) (294)
Total other expenses 10,056 9,665
Loss before income taxes and
minority interest (4,452) (5,515)
Benefit for income taxes (194) (1,604)
Loss before minority interest (4,258) (3,911)
Minority interest (542) 858
Net loss $ (3,716)$ (4,769)
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED
March 31,
1995 1994
Cash flows from operating activities:
Net loss $ (3,716) $ (4,769)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 4,920 4,402
Provision for (benefit) from deferred
income taxes 264 (3,325)
Minority interest (542) 858
Non-cash interest 2,573 2,299
Changes in operating assets and
liabilities net of effects from
acquisitions:
Increase in current assets (7,130) (3,527)
Decrease in current liabilities (17,107) (11,660)
Increase in non-current assets (1,525) (388)
Net cash used in operating activities (22,263) (16,110)
Cash flows from investing activities:
Capital expenditures (5,622) (2,551)
Notes receivable from affiliate (655) (2,748)
Acquisitions of minority interests and other (3,949) (1,052)
Acquisition of subsidiary - (14,016)
Net cash used in investing activities (10,226) (20,367)
Cash flows from financing activities:
Repayment of long-term debt (483) (521)
Other 339 (60)
Net cash used in financing activities (144) (581)
Net decrease in cash and cash equivalents (32,633) (37,058)
Cash and cash equivalents at beginning of
period 56,386 68,273
Cash and cash equivalents at end of period $ 23,753 $ 31,215
Cash paid during the period for:
Interest $ 14,737 $ 15,039
Income Taxes, net $ 881 $ 1,815
Non-cash investing activities:
Capital leases $ 1,386 $ 667
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
A. Organization
The unaudited condensed consolidated financial statements, which reflect all
adjustments that management believes necessary to present fairly the results
of interim operations, should be read in conjunction with the Notes to the
Consolidated Financial Statements (including the Summary of Significant
Accounting Policies) included in the Company's audited consolidated financial
statements for the year ended December 31, 1994, which are included in the
Company's Annual Report filed on Form 10-K for such year (the "1994 10-K").
Results of operations for the interim periods are not necessarily indicative
of annual results of operations.
B. Inventories
Inventories are summarized as follows:
March 31, December 31,
1995 1994
Raw materials $17,775 $16,695
Work-in-process 8,648 6,193
Finished goods 58,744 53,269
$85,167 $76,157
C. Notes Receivable from Affiliate
At March 31, 1995, the Company had notes receivable from Cape Craftsmen,
Inc., a company that is controlled by the partners, principals, employees and
affiliates of The Jordan Company, of $8,596.
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JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
D. Accounting for Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of March
31, 1995 and 1994, are as follows:
March 31, March 31,
1995 1994
Deferred tax liabilities
Tax over book depreciation $ 7,293 $ 8,960
Other 1,495 496
Total deferred tax liabilities $ 8,788 $ 9,456
Deferred tax assets
NOL carryforwards $20,541 $ 29,000
Accrued interest on discount debentures 5,435 2,097
Other 4,267 682
Total deferred tax assets $30,243 $ 31,779
Valuation allowance for deferred
tax assets (26,197) (25,782)
Net deferred tax assets 4,046 5,997
Net deferred tax liabilities $ 4,742 $ 3,459
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the 1994 10-K and the financial statements and the related notes
thereto which are included elsewhere in this quarterly report.
Results of Operations
Summarized below are the net sales, operating income and operating margins
(as defined) for each of the Company's business segments for the first
quarter ended March 31, 1995 and 1994. This discussion reviews the foregoing
segment data and certain of the consolidated financial data for the Company.
QUARTER ENDED MARCH 31,
1995 1994
Net Sales:
Consumer Products $ 47,034 $40,459
Industrial Products and Equipment 35,183 27,588
Specialty Advertising and Calendars 17,934 12,880
Total $100,151 $80,927
Operating Income (a):
Consumer Products $ 2,085 $ 2,635
Industrial Products and Equipment 7,105 4,931
Specialty Advertising and Calendars 89 (1,059)
Total $ 9,279 6,507
Operating Margins (b):
Consumer Products 4.4% 6.5%
Industrial Products and Equipment 20.2 17.9
Specialty Advertising and Calendar 0.5 (8.2)
Consolidated 9.3 8.0
(a) Before corporate overhead of $3,675 and $2,357 for the three months
ended March 31, 1995 and 1994, respectively.
(b) Operating margin is operating income divided by net sales.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Consumer Products. As of March 31, 1995, the Consumer Products segment
consists of Sate-Lite, DACCO, Riverside and Welcome Home.
First quarter net sales increased $6.6 million or 16.3% compared to 1994.
The increase was due to increased aluminum scrap sales at DACCO, $.6 million,
automotive parts and colorant sales at Sate-Lite, $.3 million and $.2 million
respectively, books, bibles and contract distribution sales at Riverside, $.5
million, $1.7 million and $.7 million respectively, and 35 additional stores
at Welcome Home, $2.5 million.
First quarter operating income decreased $.6 million or 20.9% compared to
1994. Operating income increases at DACCO, $.2 million, Sate-Lite, $.2
million, and Riverside, $.1 million, were offset by a decline at Welcome
Home, ($1.0 million). Welcome Home's decrease in operating income was due
to 35 additional stores being open during their slowest part of the year.
The operating margin for the segment decreased to 4.4% from 6.5% due to the
operating losses recorded at Welcome Home.
Industrial Products and Equipment. The Industrial Products and Equipment
segment consists of Parsons, Dura-Line, Imperial, Scott, Gear, Hudson, AIM
and Cambridge.
First quarter net sales increased $7.6 million or 27.5% compared to 1994.
Increases in sales of Innerduct at Dura-Line, $5.5 million, permanent magnet
motors at Imperial, $.4 million, electronic connectors at AIM, $.6 million,
locks at Hudson, $.8 million, and gear boxes at Gear, $.4 million, were
partially offset by a decrease in electronic connectors at Cambridge ($.2
million).
First quarter operating income increased $2.2 million or 44.1% compared to
1994. Operating income increases at Dura-Line, $1.2 million, Parsons, $.1
million, Scott, $.2 million, Gear, $.1 million, Hudson, $.4 million, AIM, $.3
million, and Cambridge, $.1 million were offset by a decline at Imperial,
($.2 million). Imperial's decrease in operating income was due to decreased
sales of higher margin elevator motors. The operating margin increased from
17.9% to 20.2%. This was primarily due to the higher sales noted above.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Specialty Advertising and Calendars. The Specialty Advertising and Calendars
segment consists of JII/SPAI, Beemak, Valmark, and Pamco.
First quarter net sales increased $5.1 million or 39.2% compared to 1994. The
first quarter of 1995 included $3.6 million in sales from Pamco which was
acquired in the second quarter of 1994. Excluding Pamco, net sales increased
$1.5 million or 10.9% as compared to 1994. The increased sales were recorded
at Beemak,$.9 million, and Valmark, $.6 million.
Excluding Pamco's operating income of $.8 million in 1995, first quarter
operating income increased $.3 million in comparison with 1994. Operating
income increases at Valmark, $.1 million, and Beemak, $.2 million, were the
result of increased sales levels. Excluding Pamco, operating margin
increased to (4.1)% as compared to (8.2)% in 1994.
Consolidated Results: (See Condensed Consolidated Statements of Operations.)
First quarter operating income increased $1.5 million or 35.0% compared to
1994 due to a higher gross profit and lower amortization expense. First
quarter interest expense increased from $10.0 million to $10.5 million due
to higher debt levels. First quarter interest income increased from $.3
million to $.5 million due to higher interest rates. Primarily as a result
of higher operating income, higher interest income, partially offset by
higher interest expense, the Company incurred a net loss of $3.7 million in
the first quarter of 1995 as compared to a net loss of $4.8 million in 1994.
Liquidity and Capital Resources. The Company had $118.0 million of working
capital at March 31, 1995, compared to $123.4 million at the end of 1994.
The decrease in working capital was due to lower cash balances, lower
accounts receivable, and higher advanced deposits, offset by higher
inventories, higher prepaid expenses and other current assets, lower accounts
payable, and lower accrued liabilities.
The Company's net cash used in operating activities for the three months
ended March 31, 1995 increased $6.2 million versus the same period in 1994.
This increase was due to an increase in current assets, ($3.6 million), a
decrease in current liabilities ($5.4 million), an increase in non-current
assets ($1.1 million), and lower minority interest ($1.4 million), partially
offset by a lower net loss, $1.1 million, higher depreciation and
amortization, $.5 million, lower benefit for deferred income taxes, $3.6
million, and higher non-cash interest, $.3 million.
The net cash used in investing activities for the three months ended March
31, 1995, decreased $10.1 million versus the same period in 1994. This
decrease was due to the absence of an acquisition, $14.0 million, lower
advances to affiliates, $2.1 million, partially offset by higher capital
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
expenditures,($3.1 million),and an increase in acquisitions of minority
interest of ($2.9 million).
The net cash used in financing activities for the three months ended March
31, 1995 decreased $.4 million versus the same period in 1994. This decrease
was due to lower other cash flows, $.4 million.
None of the subsidiaries require significant amounts of capital spending to
sustain its current operations or to achieve projected growth.
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PAGE 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
27. EDGAR Financial Data Schedule
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PAGE 13
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.
JORDAN INDUSTRIES, INC.
May 12, 1994 By: /s/ Thomas C. Spielberger
Vice President, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of
Operations, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 23,753
<SECURITIES> 0
<RECEIVABLES> 55,752
<ALLOWANCES> 1,211
<INVENTORY> 85,167
<CURRENT-ASSETS> 171,682
<PP&E> 138,994
<DEPRECIATION> 64,401
<TOTAL-ASSETS> 378,208
<CURRENT-LIABILITIES> 53,640
<BONDS> 386,336
<COMMON> 1
0
0
<OTHER-SE> (70,368)
<TOTAL-LIABILITY-AND-EQUITY> 378,208
<SALES> 100,151
<TOTAL-REVENUES> 100,151
<CGS> 62,227
<TOTAL-COSTS> 94,547
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,533
<INCOME-PRETAX> (4,452)
<INCOME-TAX> (194)
<INCOME-CONTINUING> (3,716)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,716)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
