U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1995
/_/ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 0-18863
American Body Armor & Equipment, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 59-2044869
(State or Other Jurisdiction of (I.R.S. Employer ID #)
Incorporation or Organization)
85 Nassau Place, Yulee, Florida 32097
(Address of Principal Executive Offices)
(904)261-4035
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's class of
common equity, as of the latest practicable date: $.03 par value Common
Stock - 4,697,255 / $1.00 stated value Preferred Stock - 1,457,143
Transitional Small Business Disclosure Format
(Check one):
Yes _____ No X
<PAGE>
PART I
Item 1. Financial Statements
AMERICAN BODY ARMOR & EQUIPMENT, INC.
Three Months Ended March 31, 1995 and 1994
The accompanying condensed financial statements of the Company are
unaudited for the interim periods, but include all adjustments (consisting
only of normal recurring accruals) which management considers necessary
for the fair presentation of results as of March 31, 1995 and for the
three month periods ended March 31, 1995 and March 31, 1994.
Moreover, these condensed financial statements do not purport to contain
complete disclosure in conformity with generally accepted accounting
principles and should be read in conjunction with the financial statements
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994.
The results reflected for the three month period ended March 31, 1995 are
not necessarily indicative of the results for the entire year to end on
December 31, 1995.
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
BALANCE SHEET (UNAUDITED)
March 31,
ASSETS 1995
CURRENT ASSETS:
Cash and cash equivalents $ 95,854
Accounts receivable, net of allowance for
doubtful accounts of $95,322 1,528,104
Inventories
1,047,632
Prepaid expenses and other current assets 84,651
---------
Total current assets 2,756,241
PROPERTY, PLANT AND EQUIPMENT, net 520,963
REORGANIZATION VALUE IN EXCESS
OF AMOUNTS ALLOCABLE TO IDENTIFIABLE
ASSETS, net 3,814,574
OTHER ASSETS 61,883
----------
TOTAL ASSETS $7,153,661
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term borrowings and current
portion of long-term debt $1,302,018
Accounts payable, accrued expenses
and other current liabilities 1,254,797
---------
Total current liabilities 2,556,815
LONG-TERM DEBT AND CAPITALIZED
LEASE OBLIGATION, less current portion 58,366
----------
Total liabilities 2,615,181
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $1
stated value, 1,700,000 shares
authorized, 1,457,143 issued and
outstanding 1,457,143
Common stock, $.03 par value,
15,000,000 shares authorized;
4,697,255 shares issued and
outstanding 140,918
Additional paid-in capital 2,318,890
Retained earnings 621,529
----------
Total stockholders' equity 4,538,480
---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $7,153,661
==========
See notes to condensed financial statements
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
March 31, March 31,
1995 1994
(unaudited) (unaudited)
NET SALES $2,537,152 $2,639,978
COST AND EXPENSES:
Cost of sales 1,586,335 1,784,310
Selling, general and
administrative expenses 707,308 654,002
Interest expense, net 59,983 45,218
----------- ----------
INCOME BEFORE INCOME TAXES 183,526 156,448
INCOME TAXES 72,000 61,000
--------- ----------
NET INCOME $ 111,526 $ 95,448
========= =========
See notes to condensed financial statements
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
March 31,
March 31,
1995 1994
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $111,526 $ 95,448
Adjustments to reconcile net
income to cash used in operating
activities:
Depreciation 29,798 32,641
Deferred income taxes 72,000 61,000
Decrease (increase) in
accounts receivable 46,886 (561,560)
Decrease (increase) in
inventories (5,227) 19,226
Decrease (increase) in
prepaid expenses and
other assets 1,830 (24,038)
Increase (decrease) in accounts
payable, accrued liabilities
and other current liabilities (46,411) 269,140
--------- ---------
Net cash provided by (used in)
operating activities 210,402 (108,143)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (47,826) (7,254)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in Bank
line of credit & payments of
long-term debt (381,953) 101,912
--------- ---------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (219,377) (13,485)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 315,231 20,093
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 95,854 $ 6,608
========= ==========
See notes to condensed financial statements
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 1995
Basis of Presentation
The accompanying condensed financial statements are unaudited for the
periods, but include all adjustments (consisting only of normal recurring
accruals) which management considers necessary for the fair presentation
of results as of March 31, 1995 and for the three month periods ended
March 31, 1995 and March 31, 1994. Moreover, these condensed financial
statements do not purport to contain complete disclosure in conformity
with generally accepted accounting principles and should be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1994.
The results reflected for the three month period ended March 31, 1995 are
not necessarily indicative of the results for the entire year to end on
December 31, 1995.
Subsequent Event
On March 28, 1995 the Company declared a 3% semi-annual dividend on its $1
Stated Value Preferred Stock. This dividend is payable to holders of
record on March 31, 1995 and is payable on April 3, 1995. The total amount
of such dividend was $21,857.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the financial
statements and notes thereto included herein and the financial statements
and management's discussion and analysis of financial condition and
results of operations included in the Company's annual report on Form 10-
KSB for the year ended December 31, 1994.
Results of Operations
Three Months Ended March 31,1995 Compared to Three Months Ended March 31,
1994
Sales for the three months ended March 31, 1995, were $2,537,152,
representing a decrease of $102,825 compared to the same period in 1994.
Domestic law enforcement sales increased by 22% while U.S. Government
agency sales decreased. In addition, International law enforcement and
military sales increased by over 124%. While it is quite usual for the
mix of Domestic versus International sales to change from quarter to
quarter, the primary cause for the increase in International sales relates
to one large order. The increase in Domestic law enforcement sales
results from the Company's efforts to continue to expand its Domestic
distribution network. U.S. Government agency sales were negatively
impacted by reduced sales on a multi year supply contract for a large
government agency. These reduced sales are due, in large part, to a
recent change in personnel at the government agency. The Company expects
the U.S. Government agency sales to increase in the latter part of the
second quarter and also in the third quarter.
Gross profit on sales for 1995 increased by $95,000 compared to the prior
year, primarily due to a decrease in the cost of sales in the first
quarter, compared to the prior year, of $197,976. The gross profit margin
(sales less manufacturing costs for materials, labor and overhead as a
percent of total sales) increased to 37.4% for the 1995 period from 32.4%
in 1994. This large increase in gross profit margin reflects a change in
the mix of sales between the periods and positive manufacturing variances
(better utilization of labor and materials). For the full year of 1994,
the gross profit margin was 31.8%.
Selling, General and Administrative Expenses for the 1995 period were
$707,308 (27.9% of sales) compared to $654,002 (24.8% of sales) in the
1994 period. The increase in actual dollar amount of selling, general and
administrative expenses between the periods, amounted to $53,306 or 8% and
consisted primarily of increased research and development expenses.
Interest expense of $59,983 for the 1995 period is almost $15,000 higher
than the prior year period. The increase is primarily a result of higher
interest rates and payments related to the confirmation of the Company's
Bankruptcy reorganization.
Income tax expense for the three month period ended March 31, 1995
represents a deferred tax expense amounting to 39% of pre-tax income.
This tax rate reflects the statutory rate plus state taxes. The Company's
operating loss carry forward, amounting to approximately $5 million,
results in no taxes being currently payable. The entire amount of income
tax expense for the period reduces the Company's deferred tax asset and
related valuation reserve resulting in a reduction in the intangible asset
"Reorganization Value in Excess of Amounts Allocable to Identifiable
Assets".
For the first quarter of 1995, pre tax income and net income amounted to
$183,526 and $111,526 respectively compared to $156,448 and $95,448 for
the 1994 period. This change reflects the increase in gross profit margin
between the periods, as discussed above, being partially offset by the
increase in selling, general and administrative expenses in relation to
sales and higher interest costs.
Financial Condition
The Company's backlog of open orders amounted to approximately $1,304,000
at May 5, 1995 compared to $1,205,000 at December 31, 1994 and $2,450,000
at May 6, 1994. Management believes that a backlog of approximately four
weeks production provides reasonable production scheduling without causing
unacceptable delivery delays for customers.
As of March 31, 1995, the interest rate on the outstanding loans was the
Banks Reference Rate plus 2.0% (11%). The Financing Agreement expires on
June 30, 1996. As of March 31, 1995, the Company was indebted to LaSalle
Business Credit, Inc. ("LaSalle") in the aggregate amount of $1,287,351,
and had additional availability from which to borrow in the amount of
$343,097 compared to $1,668,061 and $295,377 respectively, at December 31,
1994. As collateral for this loan, LaSalle holds a security interest in
virtually all of the assets of the Company.
As of March 31, 1995 the Company had working capital of $199,426 which
reflects continued improvement from the December 31, 1994 working capital
amounts of $40,332. This improvement reflects the Company's continued
profitability and the impact of regaining vendor credit for material
purchases.
The Company anticipates that continuing profitable operations and
utilization of its line of credit borrowing capacity and vendor credit
will enable the Company to meet its liquidity and working capital
requirements during the next year. Such requirements include generating
sufficient cash to make payments required under the Plan of Reorganization
and to pay dividends on and meet the intended redemption schedule on the
outstanding Preferred Stock.
<PAGE>
PART II
Item 1. Legal Proceedings
No reportable events during the quarter. Reference is provided to the
information contained in Item 3 of the Company's Annual Report on Form 10-
KSB for the period ended December 31, 1994.
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 Items
None
Item 6. Exhibits & Reports on Form 8-K
a. Exhibits:
(27) Financial Data Schedule
b. The Company filed no reports on Form 8-K during the quarter
ended March 31, 1995.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN BODY ARMOR & EQUIPMENT, INC.
May 12, 1995
/s/ Jonathan M. Spiller
Jonathan M. Spiller
President and Chief Executive Officer
/s/ Carol T. Burke
Carol T. Burke
Controller
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF AMERICAN BODY ARMOUR & EQUIPMENT, INC. AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 95,854
<SECURITIES> 0
<RECEIVABLES> 1,528,104
<ALLOWANCES> 95,322
<INVENTORY> 1,047,632
<CURRENT-ASSETS> 2,756,241
<PP&E> 520,963
<DEPRECIATION> 152,177
<TOTAL-ASSETS> 7,153,661
<CURRENT-LIABILITIES> 2,556,815
<BONDS> 58,366
<COMMON> 140,918
1,457,143
0
<OTHER-SE> 2,318,890
<TOTAL-LIABILITY-AND-EQUITY> 7,153,661
<SALES> 2,537,152
<TOTAL-REVENUES> 2,537,152
<CGS> 1,586,335
<TOTAL-COSTS> 707,308
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 95,322
<INTEREST-EXPENSE> 59,983
<INCOME-PRETAX> 183,526
<INCOME-TAX> 72,000
<INCOME-CONTINUING> 111,526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,526
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not applicable in light of Company Restructuring.
</FN>
</TABLE>
