UNITED STATES
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 the quarterly period ended: September 30, 1996
Commission File Number: 0-19800
GIBRALTAR PACKAGING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0496290
(State of incorporation) (IRS Employer
Identification Number)
274 Riverside Avenue
Westport, Connecticut 06880
(Address of principal executive offices) (Zip Code)
(203) 227-0400
(Registrant's telephone number, including area code)
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. [X] Yes [ ] No
As of September 30, 1996, there were 5,041,544 shares of the Company's
common stock, par value $0.01 per share, issued and outstanding.
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1
As of September 30, 1996 (unaudited) and June 29, 1996
Consolidated Statements of Income (unaudited) 2
Three months ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows (unaudited) 3
Three months ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial 5
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 6. Exhibits and Reports on Form 8-K 6
<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
<TABLE>
<CAPTION>
September 30, June 29,
1996 1996
------------ --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash
Accounts receivable (net of allowance for $ 7,928 $ 6,860
doubtful accounts of $166 and $231)
Inventories (Note B) 9,003 9,172
Deferred income taxes 713 713
Prepaid and other current assets 629 809
--------- ---------
Total current assets 18,273 17,554
PROPERTY AND EQUIPMENT - Net 35,086 36,167
EXCESS OF PURCHASE PRICE OVER NET 20,963 21,109
ASSETS ACQUIRED (Net of accumulated
amortization of $2,344 and $2,197)
OTHER ASSETS (Net of accumulated amortization 1,220 215
of $399 and $84) -------- --------
TOTAL $75,542 $74,045
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented $ 69 $ 1,042
Current portion of long-term debt 2,500 2,115
Accounts payable 7,040 5,261
Income taxes payable 259 319
Accrued expenses and other liabilities 2,167 2,362
------- -------
Total current liabilities 12,035 11,099
LONG-TERM DEBT - Net of current portion 28,568 27,834
DEFERRED INCOME TAXES 3,278 3,278
OTHER LONG-TERM LIABILITIES 828 828
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 4,000,000 shares
authorized; none issued
Common stock, $.01 par value; 10,000,000 shares
authorized; 5,041,544 issued and outstanding 50 50
Additional paid-in capital 28,162 28,162
Retained earnings 2,621 2,794
--------- --------
Total stockholders' equity 30,833 31,006
-------- -------
TOTAL $75,542 $74,045
======= =======
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued).
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C> <C>
NET SALES $ 18,496 $ 19,109
COST OF GOODS SOLD 14,898 15,094
---------- ---------
GROSS PROFIT 3,598 4,015
---------- ----------
OPERATING EXPENSES:
Selling 1,043 973
Administrative 1,526 1,209
Amortization of excess of purchase price
over net assets acquired 147 147
----------- -----------
Total operating expenses 2,716 2,329
---------- ---------
INCOME FROM OPERATIONS 882 1,686
OTHER EXPENSE:
Interest and deferred finance costs 896 788
Other expense 3 8
------------- -------------
Other expense 899 796
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (17) 890
PROVISION FOR INCOME TAXES 49 419
------------ -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS (66) 471
EXTRAORDINARY ITEM (net of tax effect of $66)
(Writeoff of finance charges as a result of debt repayment) (107)
-----------
NET INCOME (LOSS) $ (173) $ 471
========== ==========
PER SHARE AMOUNTS:
Income (Loss) Before Extraordinary Item $ (0.01) $ 0.09
=========== ==========
Net Income (Loss) $ (0.03) $ 0.09
=========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,041,544 5,041,544
========= =========
</TABLE>
2
See notes to consolidated financial statements.
<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued).
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands) Three Months Ended
September 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (173) $ 471
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 981 970
Loss on sale of fixed assets 19
Changes in operating assets and liabilities:
Accounts receivable - net (1,068) (464)
Inventories 169 234
Refundable income taxes 274
Prepaid expenses and other current assets 146 (10)
Accounts payable 1,779 220
Accrued income taxes and other liabilities (255) (341)
----------- ----------
Net Cash Provided by Operating Activities 1,579 1,373
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 5
Purchases of property and equipment (703) (594)
----------- ----------
Net Cash Used in Investing Activities (703) (589)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreement 456 185
Borrowings under capital leases (20) 104
Refinancing Costs (1,022)
Repayment of Debt (29,267) (941)
Proceeds from Refinancing 29,950
--------- ---------
Net Cash Provided By Financing Activities 97 (652)
------------ ----------
NET INCREASE IN CASH 973 132
CHECKS NOT YET PRESENTED
AT BEGINNING OF PERIOD (1,042) (744)
---------- ----------
CHECKS NOT YET PRESENTED
AT END OF PERIOD $ (69) $ (612)
=========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued).
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. GENERAL
The consolidated balance sheet of Gibraltar Packaging Group, Inc.
("Company") and Subsidiaries (collectively, "Gibraltar") at June 29,
1996 has been taken from Gibraltar's audited financial statements at
that date. All other consolidated financial statements contained herein
have been prepared by Gibraltar and are unaudited. The financial
statements should be read in conjunction with the financial statements
for the year ended June 29, 1996 and the notes thereto contained in
Gibraltar's Annual Report on Form 10-K for the year then ended.
The accompanying consolidated financial statements have been prepared
in accordance with Rule 10-01 of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange
Commission and do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. However, in the opinion of management, the accompanying
consolidated financial statements contain all adjustments necessary to
present fairly the financial position of Gibraltar as of September 30,
1996 and June 29, 1996, and the results of its operations and its cash
flows for the periods presented herein. Results for the three months
ended September 30, 1996 are not necessarily indicative of the results
to be expected for the full fiscal year.
B. INVENTORIES
A summary of inventories by components is as follows:
(In thousands) September 30, 1996 June 29, 1996
------------------ -------------
(Unaudited)
Finished goods $ 4,699 $ 4,727
Work-in-process 1,463 1,395
Raw materials 2,532 2,739
Manufacturing supplies 309 311
-------- --------
Total inventory $ 9,003 $ 9,172
======== =======
4
<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)
C. NET INCOME PER SHARE
Earnings per share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the year
as calculated under the treasury stock method.
D. STOCK OPTION PLAN
Effective August 1, 1996 the Board of Directors authorized a Stock
Option Plan and designated 300,000 shares of common stock to be
available for granting. The Board further granted under this plan
incentive stock options for an aggregate of 225,000 shares at the
market price at the date of grant, or $4.00 per share. Such options
vest, generally, over a period of four years from the grant date.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations:
Three Months Ended September 30, 1996 Compared to
Three Months Ended September 30, 1995
Net sales for the first quarter of fiscal 1997 of $18,496,000 declined
by $613,000 or 3.2 % from the first quarter of the prior fiscal year,
mainly as a result of loss of business with three major customers.
Cost of goods sold decreased $196,000 or 1.3%. The reduction due to
lower sales was partially offset by higher costs required to meet
customer delivery requirements.
Selling, General and Administration Expense increased by $387,000 as a
result of increased selling costs, staffing of administrative positions
in the current year not staffed in the prior year, and relocation costs
at Corporate.
Interest expense exceeded last year's first quarter by $108,000, the
effect of lower borrowings being more than offset by higher interest
rates.
The income tax provision of $49,000 represents 37.7% of the pretax
profit prior to non-deductible goodwill amortization. This compares
with $419,000 in the prior year representing a comparable rate of
40.4%.
During the first quarter of fiscal 1997 the Company recorded an
extraordinary after-tax loss of $107,000 reflecting the write-off of
unamortized finance costs of a previous refinancing.
Liquidity and Capital Resources:
On September 25, 1996 the Company completed its refinancing. The new
facility with Harris Trust and Savings Bank consists of a seven year
$25 million term loan and a five year $10 million revolving
5
<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)
credit facility. The terms include initial interest rates that are more
than 3 percent lower than the Company had been recently paying.
During the three months ended September 30, 1996, capital expenditures
totaled $0.7 million. In order to accommodate continued growth,
Gibraltar makes capital improvements to improve efficiency and product
quality. Gibraltar frequently upgrades its equipment by purchasing or
leasing equipment.
Management believes that existing cash balances, funds generated by
operations, and borrowings available under its current or future credit
facilities will be sufficient to meet working capital, and capital
expenditure requirements in fiscal 1997 and for the foreseeable future.
Nevertheless, Gibraltar may require or choose to obtain additional
capital through public or private debt or equity offerings or
additional bank borrowings to fund future developments.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None.
(b) Reports on Form 8-K:
Gibraltar did not file any reports on Form 8-K during the quarter
ended September 30, 1996.
6
<PAGE>
SIGNATURE
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.
GIBRALTAR PACKAGING GROUP, INC.
Date: November 14, 1996 By: /s/ John W. Lloyd
------------------------------- ------------------------------------
John W. Lloyd, Chief Financial Officer
Signing on behalf of the registrant and
as principal financial officer
7
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 8,094
<ALLOWANCES> 166
<INVENTORY> 9,003
<CURRENT-ASSETS> 18,273
<PP&E> 47,383
<DEPRECIATION> 12,297
<TOTAL-ASSETS> 75,542
<CURRENT-LIABILITIES> 12,035
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 30,783
<TOTAL-LIABILITY-AND-EQUITY> 75,542
<SALES> 18,496
<TOTAL-REVENUES> 18,496
<CGS> 14,898
<TOTAL-COSTS> 14,898
<OTHER-EXPENSES> 2,719
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 896
<INCOME-PRETAX> (17)
<INCOME-TAX> 49
<INCOME-CONTINUING> (66)
<DISCONTINUED> 0
<EXTRAORDINARY> (107)
<CHANGES> 0
<NET-INCOME> (173)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
