SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1998
Commission File No. 0-5128
SCOTT'S LIQUID GOLD-INC.
4880 Havana Street
Denver, CO 80239
Phone: 303-373-4860
Colorado 84-0920811
State of Incorporation I.R.S. Employer
Identification No.
Indicate by check mark whether the registrant (i) 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 (ii) has been subject to
such filing requirements for the past 90 days.
YES x NO ____
The Registrant had 10,097,400 common shares, $0.10 par value, its only
class of common stock, issued and outstanding on July 31,1998.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Scott's Liquid Gold-Inc. & Subsidiaries
Consolidated Statements of Operations (Unaudited)
<TABLE>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
Revenues:
<S> <C> <C> <C> <C>
Net sales $ 10,019,100 $ 11,853,800 $ 22,576,100 $ 26,178,600
Other income 152,000 144,200 346,300 253,800
10,171,100 11,998,000 22,922,400 26,432,400
Costs and Expenses:
Cost of sales 3,273,800 3,364,200 7,134,100 7,202,400
Advertising 4,755,300 4,677,000 10,849,400 9,768,500
Selling 2,190,100 1,914,900 4,492,400 4,004,700
General and administrative 1,799,900 1,515,700 3,599,700 3,281,800
Interest 300,300 330,500 600,700 662,600
12,319,400 11,802,300 26,676,300 24,920,000
Income (loss) before
income taxes (2,148,300) 195,700 (3,753,900) 1,512,400
Income tax expense (benefit) (794,800) 59,200 (1,389,000) 559,500
Net income (loss) $ (1,353,500) $ 136,500 $ (2,364,900) $ 952,900
Net income (loss) per
common share (Note 3) $ (0.13) $ 0.01 $ (0.23) $ 0.09
Diluted net income (loss)
per common share (Note 3) $ (0.13) $ 0.01 $ (0.23) $ 0.09
Weighted average number
of common shares
outstanding 10,097,400 10,080,900 10,097,400 10,080,900
Diluted weighted average
number of common
shares outstanding 10,097,400 10,186,900 10,097,400 10,186,900
</TABLE>
See Notes to Consolidated Financial Statements
Scott's Liquid Gold-Inc. & Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
Six Months
Ended June 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,364,900) $ 952,900
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 590,100 559,100
Compensation expense of employee stock plans - 81,300
Provision for doubtful accounts receivable 87,800 69,000
Change in assets and liabilities:
Receivables 2,545,100 (400,900)
Inventory 138,300 56,100
Prepaid expenses 133,700 154,000
Accounts payable and accrued expenses (1,073,000) 1,263,400
Total adjustments to net income 2,422,000 1,782,000
Net Cash Provided by Operating Activities 57,100 2,734,900
Cash flows from investing activities:
Purchase of property, plant and equipment (135,900) (148,800)
Proceeds from sale of discontinued operations - 100,000
Net change in assets of discontinued operations - (14,000)
Net Cash Used by Investing Activities (135,900) (62,800)
Cash flows from financing activities:
Proceeds from exercise of stock options 13,200 -
Proceeds from short-term borrowings - 135,300
Principal payments on short-term borrowings - (81,200)
Principal payments on long-term borrowings (20,600) (23,100)
Increase in bond sinking fund (522,400) (576,500)
Dividends paid (1,009,200) -
Net Cash Used by Financing Activities (1,539,000) (545,500)
Net Increase (Decrease) in Cash
and Cash Equivalents (1,617,800) 2,126,600
Cash and Cash Equivalents, beginning of period 8,201,900 4,749,200
Cash and Cash Equivalents, end of period $ 6,584,100 $ 6,875,800
Supplemental disclosures:
Cash paid during the period for:
Interest $ 593,000 $ 613,100
Interest paid by discontinued operations $ - $ 20,400
Income taxes $1,719,600 $ 159,800
</TABLE>
See Notes to Consolidated Financial Statements
Scott's Liquid Gold-Inc. & Subsidiaries
Consolidated Balance Sheets
<TABLE>
June 30, 1998 (Unaudited) and December 31, 1997
ASSETS
1998 1997
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 6,584,100 $ 8,201,900
Trade receivables (Note 2) 2,542,600 2,610,100
Other receivables 1,428,500 2,604,900
Inventories:
Finished goods 1,700,000 1,828,700
Raw materials 1,994,600 2,004,200
Prepaid expenses 403,800 537,500
Deferred tax assets 540,400 540,400
Total current assets 15,194,000 18,327,700
Property, plant and
equipment at cost 27,140,900 27,005,000
Less accumulated
depreciation 8,478,900 7,932,000
20,051,000 19,073,000
Other assets 148,300 191,500
$ 34,004,300 $ 37,592,200
</TABLE>
See Notes to Consolidated Financial Statements
<TABLE>
LIABILITIES & SHAREHOLDERS' EQUITY
1998 1997
Current liabilities:
<S> <C> <C>
Accounts payable $ 4,099,200 $ 1,681,100
Accrued expenses 1,873,300 3,975,400
Current maturities of
long-term debt 1,019,600 1,040,200
Total current liabilities 6,992,100 6,696,700
Long-term debt 7,455,400 7,977,800
Deferred income taxes 1,043,100 1,043,100
15,490,600 15,717,600
Shareholders' equity (Note 3):
Common stock 1,009,700 1,008,900
Capital in excess of par 4,820,600 4,808,200
Retained earnings 12,683,400 16,057,500
Shareholders' equity 18,513,700 21,874,600
$ 34,004,300 $ 37,592,200
</TABLE>
See Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 In the opinion of management, the financial information in this
report reflects all adjustments necessary for a fair presentation of the
results for the interim periods.
Note 2 Allowance for doubtful accounts at June 30, 1998 and December 31,
1997 were $724,200 and $635,700 respectively.
Note 3 Per share data was determined by using the weighted average number of
common shares outstanding. Common equivalent shares are considered for diluted
earnings per share only, unless they are anti-dilutive (as in 1998). Common
equivalent shares, determined using the treasury stock method, result from
stock options with exercise prices that are below the average market price of
the common stock.
At June 30, 1998 there were authorized 50,000,000 shares of the
Company's $.10 par value common stock and 20,000,000 shares of preferred stock
issuable in one or more series.
A reconciliation of the weighted average number of common shares outstanding
follows:
<TABLE>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Common shares outstanding,
beginning of the period 10,092,400 10,030,900 10,089,400 10,030,900
ESOP shares contributed - 50,000 - 50,000
Stock options exercised 5,000 - 8,000 -
Weighted average number
of common shares
outstanding 10,097,400 10,080,900 10,097,400 10,080,900
Incremental common
equivalent shares - 106,000 - 106,000
10,097,400 10,186,900 10,097,400 10,186,900
</TABLE>
Market Information
The high and low prices of Scott's Liquid Gold-Inc. common stock as traded on
the New York Stock Exchange were as follows:
Three Months Ended High Low
[S] [C] [C]
June 30, 1996 3 1-3/4
September 30, 1996 2-1/8 1-1/2
December 31, 1996 1-7/8 1-1/4
March 31, 1997 2-7/8 1-3/8
June 30, 1997 2-7/8 1-1/2
September 30, 1997 4-1/16 2
December 31, 1997 4-11/16 3-1/8
March 31, 1998 4-5/16 2-3/4
June 30, 1998 3-1/8 2
NYSE Symbol: SGD
Item 2. Management's Discussion and Analysis of Financial
Condition and Results Of Operations
Summary of Results as a Percentage of Net Sales
<TABLE>
(Audited) Six Months
Year Ended
Ended June 30,
31-Dec-97 1998 1997
<S> <C> <C> <C>
Net sales
Scott's Liquid Gold
household products 31.1% 35.9% 31.9%
Neoteric Cosmetics 68.9% 64.1% 68.1%
Total net sales 100.0% 100.0% 100.0%
Cost of sales 28.2% 31.6% 27.5%
Gross profit 71.8% 68.4% 72.5%
Other revenue 0.9% 1.5% 1.0%
72.7% 69.9% 73.5%
Operating expenses 53.1% 83.9% 65.1%
Interest 2.6% 2.6% 2.5%
55.7% 86.5% 67.6%
Income (loss)
before income taxes 17.0% (16.6%) 5.9%
</TABLE>
Six Months Ended June 30, 1998
Compared to Six Months Ended June 30, 1997
Consolidated net sales for the first half of 1998 were $22,576,100 vs.
$26,178,600 for the first six months of 1997, a decrease of $3,602,500 or about
13.8%. Average selling prices for the first six months of 1998 were lower than
those of the first half of 1997 by $1,773,200, prices of household chemical
products being down by $997,600 (almost all of which related to Touch of
Scent), while average selling prices of cosmetics products were down by
$775,600.
During the first half of 1998, net sales of cosmetics products accounted for
64.1% of consolidated net sales compared to 68.1% for the first six months of
1997. Net sales of these products for those periods were $14,462,700 in 1998
compared to $17,835,300 in 1997, a decrease of $3,372,600 or 18.9%, which
occurred irrespective of an increase of almost $1.2 million in advertising
expenses during the first half of 1998 compared to 1997. A portion of the sales
decrease (about 23%) resulted from reduced average selling prices, primarily
attributable to promotions, and the balance (77%) was the result of a decrease
in the number of units sold. The Company notes that the foregoing comparisons
pit an average first half in 1998 (during which net sales approximated those of
1996) against an exceptional first quarter for skincare products in 1997.
Further, information supplied to the Company indicates that most producers of
alpha hydroxy acid skincare products have experienced recent decreases in sales
of those products, but, on average, the industry-wide decrease is lower than
that experienced by the Company. During the second half of 1998, the Company's
subsidiary, Neoteric Cosmetics, Inc., plans to introduce three new lines of
skincare products. Sales of two of these new products have commenced. One is
the Belleza Latina line designed for the Hispanic market, and the second is
Alpha Hydrox Retinol Night ResQ which is a retinol-based product manufactured
for Neoteric Cosmetics, Inc. by a third party. No new products were introduced
during the first half of 1998.
Sales of household chemical products for the first half of 1998 accounted for
35.9% of consolidated net sales compared to 31.9% for the same period of 1997.
These products are comprised of "Scott's Liquid Gold" for wood, a wood cleaner
which preserves as it cleans, and "Touch of Scent", a room air freshener.
During the six months ended June 30, 1998, sales of household chemical products
were $8,113,400 compared to $8,343,300 for the same six months of 1997, a
decrease of only $229,900. Sales of "Scott's Liquid Gold" for wood were up by
$1,127,900, an increase of just over 25%, a result of increased television
advertising, while sales of "Touch of Scent" were down by $1,357,800 (35.2%),
principally due to reduced average selling prices. As noted in the Company's
Report for the first quarter of this year, efforts to revitalize Touch of Scent
during the preceding year (1997) were less than satisfactory. Notwithstanding
the Company's introduction, near the end of 1996, of a new line of highly
decorative fixtures to dispense new, concentrated formulae contained in its
refill units, and the Company's more recent offers of price incentives for its
Touch of Scent product, the downtrend in sales of this product line has
continued into 1998. However, as a result of the aforementioned price
incentives, case sales of Touch of Scent for the first six months of 1998 have
only decreased by about 11% from those of the same period last year.
On a consolidated basis, cost of goods sold was $7,134,100 during the first
half of 1998 compared to $7,202,400 for the same period of 1997, a decrease of
$68,300 (less than 1.0%, but on a decrease in sales of 13.8%). As a percentage
of consolidated net sales for the first six months of 1998, cost of goods sold
was 31.6% compared to 27.5% in 1997. But for the decrease in average selling
prices, consolidated cost of goods sold for the first half of 1998 would have
been 29.3% instead of 31.6%. The balance of the cost increase was essentially
due to changes in the mix of products sold, household chemical products being
more costly to produce relative to their selling prices than the Company?s
skincare products, and to on-going (fixed) manufacturing costs.
Advertising expenses for the first six months of 1998 were $10,849,400 compared
to $9,768,500 for the comparable six months of 1997, an increase of $1,080,900
or 11.1%. Advertising expenses applicable to household chemicals decreased
during the first half of 1998 compared to the first half of 1997 by $106,600,
or 3%. Advertising expenses for Liquid Gold increased by $2,265,900, whereas
expenses to advertise Touch of Scent decreased by $2,372,500. Advertising
expenses for Alpha Hydrox were $1,187,500 higher during the six months ended
June 30, 1998 than in the comparable period of 1997, an increase of 19.2%.
During the remainder of 1998, the Company intends to spend (what it considers
to be) adequate amounts to advertise its products, but it expects to spend
significantly less than it spent during the first half of the year. Regardless
of year to year or quarter to quarter changes in expenditures to advertise its
products, the Company has, in the past, made clear that, as a matter of sound
business judgment, it must continue to advertise aggressively whenever it is
fiscally responsible to do so because (i) the markets for skincare products,
furniture polish, and air fresheners are highly competitive and, accordingly,
the Company's brand names, particularly Alpha Hydrox and Scott's Liquid Gold,
need to be kept in front of the consuming public; and (ii) television
advertising currently is the best option available to the Company in its on-
going attempt to increase the sales levels of its cosmetic and household
chemical products. Sustaining the Company's advertising program is highly
dependent upon sales of its skincare products.
Selling expenses for the first six months of 1998 were $4,492,400 compared to
$4,004,700 for the comparable quarter of 1997, an increase of $487,700 or
12.2%. That amount was accounted for by increases in coupon costs and slotting
allowances (up $317,600), salaries and fringe benefits (up $104,400) and
promotional merchandise (up $148,100); and by various other net increases (up
and down) of $78,000; all offset by a decrease in brokerage commissions of
$160,400.
Administrative expenses for the first half of 1998 were $3,599,700 compared to
$3,281,800 for the comparable period of 1997, an increase of $317,900 or 9.7%.
Such increase was attributable to the following: litigation which caused legal
and professional fees to increase by $222,700; salaries, wages and fringe
benefits which, in the aggregate, increased by $61,600; property taxes and
depreciation which, together, increased by $46,600; all offset by a net
decrease in other administrative expenses, none of which, standing alone, was
material, of $13,000. It is noted that $284,300 of the increase of $317,900 in
administrative expenses during the first half of 1998 compared to 1997 occurred
during the second quarter of the current year. Legal and professional fees
amounted to $567,700 for the first six months of 1998 and will continue to
increase during the third quarter due to on-going litigation.
Interest expense for the first six months of 1998 was lower than that of the
comparable six months of 1997 by $61,900, a decrease of 9.3%, which essentially
was due to the outstanding indebtedness at June 30, 1997 of $2 million to the
U.S. Army. Such indebtedness was repaid at the end of 1997.
Other income increased by $92,500 during the six months ended June 30, 1998
compared to the same period of 1997, an increase of 36.4%, due to interest
earned on the Company's increased cash reserves.
During the first quarter of 1998 and 1997, expenditures for research and
development were not material (under 1% of revenues).
Three Months Ended June 30, 1998
Compared to Three Months Ended June 30, 1997
Consolidated net sales for the second quarter of 1998 were $10,019,100 vs.
$11,853,800 for the three months ended June 30, 1997, a decrease of $1,834,700
or about 15.5%. Average selling prices for the second quarter of 1998 were
lower than those of the second quarter of 1997 by $422,800, prices of household
chemical products being down by $163,600 (all of which related to Touch of
Scent), while average selling prices of cosmetics products were down by
$259,200.
During the second quarter of 1998, net sales of cosmetics products accounted
for 62.9% of consolidated net sales compared to 66.8% for the second quarter of
1997. Net sales of these products for those periods were $6,306,600 in 1998
compared to $7,917,800 in 1997, a decrease of $1,611,200 or 20.4%, which
occurred irrespective of comparable advertising during the second quarter of
both years. A portion of the sales decrease (16.1%) resulted from reduced
average selling prices, primarily attributable to promotions, and the balance
(83.9%) was the result of a decrease in the number of units sold, largely with
regard to the Company's basic products, alpha hydroxy acid creams, lotions and
face wash. The Company notes that the foregoing comparisons pit an average
second quarter in 1998 against an exceptional second quarter for skincare
products in 1997.
Sales of household chemical products for the second quarter of 1998 accounted
for 37.1% of consolidated net sales compared to 33.2% for the same quarter of
1997. These products are comprised of "Scott's Liquid Gold" for wood, and
"Touch of Scent." During the three months ended June 30, 1998, sales of
household chemical products were $3,712,500 compared to $3,936,000 for the
second quarter of 1997, a decrease of $223,500 or 5.7%. Sales of "Scott's
Liquid Gold" for wood were up by $184,700, an increase of 7.8%, a result of
increased television advertising, while sales of "Touch of Scent" were down by
$408,200 (26.1%), principally due to reduced average selling prices. See
discussion of the six months ended June 30, 1998 and 1997 for discussions of
declines in Touch of Scent sales.
On a consolidated basis, cost of goods sold was $3,273,800 during the second
quarter of 1998 compared to $3,364,200 for the same quarter of 1997, a decrease
of $90,400 or 2.7% (on a decrease in sales of 15.5%). As a percentage of
consolidated net sales for the second quarter of 1998, cost of goods sold was
32.7% compared to 28.4% in 1997, an increase of about 15%. But for the decrease
in average selling prices, cost of goods sold for the second quarter of 1998
would have been 31.4% instead of 32.7%. The balance of the cost increase was
essentially due to changes in the mix of products sold, household chemical
products being more costly to produce relative to their selling prices than the
Company's skincare products and to on-going (fixed) manufacturing costs.
Advertising expenses for the second quarter of 1998 were $4,755,300 compared to
$4,677,000 for the comparable three months of 1997, an increase of $78,300 or
1.7%. Advertising expenses applicable to household chemicals increased during
the second quarter of 1998 compared to the second quarter of 1997 by $162,900,
or 12.6%. Advertising expenses for Liquid Gold increased by $584,200, whereas
expenses to advertise Touch of Scent were lower by $421,300. Advertising
expenses for Alpha Hydrox decreased by $84,600 during the quarter ended June 30,
1998 than in the comparable quarter of 1997, a decrease of 2.5%. See discussion
of the six months ended June 30, 1998 and 1997 for the Company's philosophy
regarding advertising.
Selling expenses for the second quarter of 1998 were $2,190,100 compared to
$1,914,900 for the comparable quarter of 1997, an increase of $275,200 or 14.4%.
That increase resulted from an increase of $107,700 in coupon costs and slotting
allowances, $63,300 in salaries and fringe benefits, $128,000 in promotional
samples and $47,900 which related to a variety of other selling expenses, none
of which, by itself, was material, all offset by a decrease of $71,700 in
freight and brokerage.
Administrative expenses for the second quarter of 1998 were $1,799,900 compared
to $1,515,700 for the second quarter of 1997, an increase of $284,200 or 18.8%.
Salaries, fringe benefits and legal fees accounted for $273,200 of the increase
in administrative expenses.
Interest expense for the second quarter of 1998 was lower than that of the
comparable quarter of 1997 by $30,200, a decrease of 9.1%, which essentially was
due to the payment at the end of 1997 of $2 million then owed to the U.S. Army.
Other income increased by $7,800 during the quarter ended June 30, 1998 compared
to the same quarter of 1997, an increase of 5.4%, due to a slight increase in
interest earned on the Company's cash reserves.
During the second quarter of 1998 and 1997, expenditures for research and
development were not material (under 1% of revenues).
Liquidity and Capital Resources
On July 29, 1994, the Company consummated a $12 million bond issuance to finance
the expansion of the Company's Denver facilities. Interest on the $12 million
bond issue is payable semi-annually beginning on January 1, 1995 at the rate of
10% per annum. (The January 1 and July 1, 1998 interest payments were made in a
timely manner. There is no reason to believe that the interest payment due on
January 1, 1999 will not be made as is required by the Bond Indenture.) A
sinking fund payment of $1 million is required annually. Sinking fund payments
for 1995 through 1997 were made as required. Currently, the Company is
voluntarily paying $183,300 each month to the Trustee to cover future interest
and sinking fund payments. The Trustee, at the Company's request, holds such
moneys in accounts to which the Company has no access.
During the first half of 1998, the Company's working capital decreased by
$3,429,100, and concomitantly, its current ratio (current assets divided by
current liabilities) decreased from 2.7:1 at December 31, 1997 to 2.2:1 at June
30, 1998. This decrease in working capital is attributable to a net loss in the
first half of $2,364,900, a reduction in long-term debt of $522,400, and a
dividend payment, based upon the Company's 1997 performance, of $1,009,200
(equal to $0.10 a share, paid in March, 1998); all offset by depreciation in
excess of capital additions of $411,000, a decrease in other assets of $43,200,
and exercises of stock options of $13,200. At June 30, 1998, the ratio of
consolidated funded debt to consolidated net worth was .4:1.
At June 30, 1998, trade accounts receivable were substantially the same as those
of December 1997. The Company's average collection period remained at under 30
days. The decrease in other receivables during the six months ended June 30,
1998 relates to previous settlement of the Company's environmental lawsuit with
the United States Army. Accounts payable increased from the end of 1997 through
June of 1998 by $2,418,100 largely due to the unpaid advertising at the end of
the period whereas there was no unpaid advertising at the end of last year.
Accrued liabilities decreased from December 31, 1997 through June 30, 1998 by
$2,102,100 primarily due to the payment of 1997 income taxes and accrued profit
sharing and bonus expenses.
Legal Proceedings
The Company's 1997 Annual Report describes a patent infringement suit which was
filed in May of 1996 in the United States District Court for the District of
Delaware against Neoteric Cosmetics, Inc. (and others) by TriStrata Technology,
Inc. Neoteric Cosmetics is the Company's wholly owned subsidiary which
manufactures and sells skincare products under the name Alpha Hydrox. Certain
defendants in this lawsuit, including the Company, are cooperating with one
another in matters of common interest to defend against this action. The
Company expects that, in or about the fourth quarter of this year, the Court
will determine whether to adopt the defendants' interpretations or those of the
plaintiff regarding the scope of the claims of the patents involved in the
case.
On July 24, 1998, a jury unanimously found in favor of Scott's Liquid
Gold-Inc., Neoteric Cosmetics, Inc., and the Company?s Chairman, Jerome J.
Goldstein, in a lawsuit filed in the United States District Court for the
District of Colorado by Leslee Brooks (a daughter of Mr. Goldstein), her
husband, Dr. Norman Brooks (a California dermatologist), and a related
corporation. The jury found that there was no liability as to each claim of the
plaintiffs. The plaintiffs asked the jury to award $21 million at the trial.
It is not known at this time whether the plaintiffs will file an appeal in
this case. As described in the Company's 1997 Annual Report, this lawsuit
involves a claim for compensation by the Brooks relating to Alpha Hydrox
products.
Forward-Looking Statements
This report may contain "forward-looking statements" within the meaning of U.S.
federal securities laws. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements and the Company's performance inherently involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Factors that would cause or contribute to such
differences include, but are not limited to, continued acceptance of the
Company's products in the marketplace; the degree of success of any new product
or product line introduction by the Company; competitive factors; the need for
effective advertising of the Company's products; limited resources available
for such advertising; new competitive products and/or technological changes;
dependence upon third party vendors and upon sales to major customers; changes
in the regulation of the Company's products, including applicable environmental
regulations; adverse developments in pending litigation; the loss of any
executive officer; and other matters discussed in the Company's periodic
filings with the Securities and Exchange Commission.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Please see "Legal Proceedings" in Item 2 of Part I of this Report which
information is incorporated herein by this reference. These two legal
proceedings have been previously reported in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 and in the Company's quarterly
report on Form 10-Q for the quarter ended March 31, 1998.
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
On May 6, 1998, the Company held its 1998 Annual Meeting of
Shareholders. At that meeting, the seven existing directors were
nominated and re-elected as directors of the Company. These seven
persons constitute all members of the Board of Directors of the
Company. These directors and the votes for and withheld for each of
them were as follows:
<TABLE>
For Withheld
<S> <C> <C>
Jerome J. Goldstein 9,043,059 138,226
Mark E. Goldstein 9,072,059 109,226
Carolyn J. Anderson 9,077,898 103,387
Barry Shepard 8,978,148 203,137
Dennis H. Field 9,079,459 101,826
James F. Keane 9,089,348 91,937
Michael J. Sheets 9,088,348 92,937
</TABLE>
In addition, at the 1998 Annual Meeting, the Company's shareholders
approved and ratified the Company's 1997 Stock Option Plan for
employees who are not executive officers of the Company. The votes at
the 1998 Annual Meeting with respect to such Plan were as follows:
For Against Abstain Broker Non-Votes
8,800,567 304,984 75,734 -0-
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
The following Reports were filed by the Company on Form 8-K
during the Second Quarter of 1998:
a. A current report on Form 8-K dated April 27, 1998 reporting
an event under Item 5, Other Events.
b. A current report on Form 8-K dated May 11, 1998 reporting
an event under Item 5, Other Events.
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.
SCOTT'S LIQUID GOLD-INC.
August 11, 1998 BY: Mark E. Goldstein
Date President
August 11, 1998 BY: Barry Shepard, Treasurer
Date Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Scott's
Liquid Gold-Inc. 1998 Second Quarter 10-Q and is qualified in its entirety by
reference to such 10-Q filing.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,584,100
<SECURITIES> 0
<RECEIVABLES> 4,695,300
<ALLOWANCES> 724,200
<INVENTORY> 3,694,600
<CURRENT-ASSETS> 15,194,000
<PP&E> 27,140,900
<DEPRECIATION> 8,478,900
<TOTAL-ASSETS> 34,004,300
<CURRENT-LIABILITIES> 6,992,100
<BONDS> 12,000,000
0
0
<COMMON> 1,009,700
<OTHER-SE> 17,504,000
<TOTAL-LIABILITY-AND-EQUITY> 34,004,300
<SALES> 10,019,100
<TOTAL-REVENUES> 10,171,100
<CGS> 3,273,800
<TOTAL-COSTS> 12,019,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300,300
<INCOME-PRETAX> ( 2,148,300)
<INCOME-TAX> ( 794,800)
<INCOME-CONTINUING> ( 1,353,500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ( 1,353,500)
<EPS-PRIMARY> ( .13)
<EPS-DILUTED> ( .13)
</TABLE>
