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: March 31, 1997
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, CT 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 March 31, 1997, 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 March 31, 1997 (Unaudited) and June 29, 1996
Consolidated Statements of Operations (Unaudited) for the 2
Three Months Ended March 31, 1997 and 1996 and
Nine Months Ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows (Unaudited) for the 3
Nine Months Ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Interim Financial 5
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature 8
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
March 31, June 29,
1997 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 663 $-
Accounts receivable (Net of allowance for
doubtful accounts of $182 and $231, respectively) 7,293 6,860
Inventories (Note B) 9,593 9,172
Deferred income taxes 713 713
Prepaid and other current assets 591 809
------- -------
Total current assets 18,853 17,554
PROPERTY AND EQUIPMENT - Net 34,622 35,167
EXCESS OF PURCHASE PRICE OVER NET
ASSETS ACQUIRED (Net of accumulated
amortization of $2,638 and $2,197, respectively) 20,671 21,109
OTHER ASSETS (Net of accumulated amortization
of $227 and $84, respectively) 1,281 215
------- -------
TOTAL $75,427 $74,045
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented $ -- $ 1,042
Current portion of long-term debt 2,500 2,115
Accounts payable 5,306 5,261
Accrued expenses and other liabilities 2,207 2,362
Income taxes payable 555 319
------- -------
Total current liabilities 10,568 11,099
LONG-TERM DEBT - Net of current portion 29,610 27,834
DEFERRED INCOME TAXES 3,278 3,278
OTHER LONG-TERM LIABILITIES 864 828
------- -------
Total liabilities 44,320 43,039
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; none issued
Common stock, $.01 par value; 10,000,000 shares 50 50
authorized; 5,041,544 issued and outstanding
Additional paid-in capital 28,162 28,162
Retained earnings 2,895 2,794
------- -------
Total stockholders' equity 31,107 31,006
------- -------
TOTAL $75,427 $74,045
======= =======
See notes to unaudited consolidated financial statements
1
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
Item 1. Financial Statements (Continued).
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET SALES $ 18,817 $ 19,135 $ 55,118 $ 56,111
COST OF GOODS SOLD 14,722 14,853 43,853 44,022
------- ------- ------- -------
GROSS PROFIT 4,095 4,282 11,265 12,089
------- ------- ------- -------
OPERATING EXPENSES:
Selling 1,132 1,071 3,174 3,091
General and Administrative 1,643 1,511 4,761 4,107
Restructuring charges -- 745 -- 998
Amortization of excess of purchase
price over net assets acquired 147 145 441 439
------- ------- ------- -------
Total operating expenses 2,922 3,472 8,376 8,635
------- ------- ------- -------
INCOME FROM OPERATIONS 1,173 810 2,889 3,454
OTHER (INCOME) EXPENSE:
Interest and deferred finance costs 699 791 2,275 2,428
Other (income) expense - net 8 6 12 (1)
------- ------- ------- -------
Other expense - net 707 797 2,287 2,427
INCOME BEFORE INCOME TAXES 466 13 602 1,027
PROVISION FOR INCOME TAXES 231 79 394 538
------- ------- ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS 235 (66) 208 489
EXTRAORDINARY ITEM (net of tax effect of $66)
(Write-off of finance charges as a result
of debt repayment) -- -- (107) --
NET INCOME (LOSS) $ 235 $ (66) $ 101 $ 489
==== ==== ==== ====
PER SHARE AMOUNTS:
Income (Loss) Before Extraordinary Item $ 0.05 $ (0.01) $ 0.04 $ 0.10
Net Income (Loss) $ 0.05 $ (0.01) $ 0.02 $ 0.10
==== ====== ==== ====
WEIGHTED AVERAGE SHARES
OUTSTANDING (primary and fully diluted) 5,041,544 5,041,544 5,041,544 5,041,544
========= ========= ========= =========
See notes to unaudited consolidated financial statements.
2
</TABLE>
<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) Nine Months Ended
March 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 101 $ 489
Adjustments to reconcile net income to
net cash provided by operating activities:
Extraordinary item - write-off of finance charges 173
Depreciation and amortization 2,928 2,930
Write-down of property and equipment -- 27
Changes in operating assets and liabilities:
Accounts receivable - net (433) (295)
Inventories (421) 1,367
Prepaid expenses and other current assets 9 (23)
Accounts payable 45 (271)
Accrued income taxes and other liabilities 117 514
------- -------
Net Cash Provided by Operating Activities 2,519 4,738
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment -- 99
Purchases of property and equipment (1,802) (1,005)
Net Cash Used in Investing Activities (1,802) (906)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayment) under revolving credit facility 1,756 (1,478)
Net repayment (borrowings) under capital leases (100) 79
Net principal repayments of long-term debt (30,545) (2,823)
Proceeds from Refinancing 31,050 --
Refinancing Costs (1,173) --
------- -------
Net Cash Provided by (Used in) Financing Activities 988 (4,222)
------- -------
NET INCREASE (DECREASE) IN CASH 1,705 (390)
CHECKS NOT YET PRESENTED
AT BEGINNING OF PERIOD (1,042) (744)
------- -------
CASH (CHECKS NOT YET PRESENTED)
AT END OF PERIOD $ 663 $ (1,134)
======= =======
</TABLE>
See notes to unaudited 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 derived from Gibraltar's Annual Report on Form 10-K for
the year then ended. 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 unaudited 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 unaudited consolidated financial statements contain all
adjustments, consisting only of normal recurring adjustments, necessary
to present fairly the financial position of Gibraltar as of March 31,
1997, and the results of its operations and its cash flows for the
periods presented herein. Results for the nine months ended March 31,
1997 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) March 31, June 29,
1997 1996
(Unaudited)
Finished goods $5,579 $4,727
Work-in-process 1,308 1,395
Raw materials 2,310 2,739
Manufacturing supplies 396 311
----- -----
Total inventories $9,593 $9,172
===== =====
-4-
<PAGE>
C. NET INCOME (LOSS) PER SHARE
Income (Loss) per share is based on the weighted average number of
shares of common stock and common stock equivalents outstanding during
the period as calculated under the treasury stock method. Common stock
equivalents, which have an antidilutive effect on the computation for
any period, are not included as outstanding for the period.
Item 2. Management's Discussion and Analysis of Interim Financial Condition
and Results of Operations.
o Results of Operations:
Three Months Ended March 31, 1997 Compared to
Three Months Ended March 31, 1996
Net sales for the third quarter of fiscal 1997 were $18.8 million
compared with $19.1 million for the third quarter of fiscal 1996, a
decrease of $0.3 million or 1.7%. The decrease is primarily a result
of a loss of business with four major customers largely offset by
increased sales from new and existing customers.
Cost of goods sold expressed as a percentage of net sales increased to
78.2% in the third quarter of fiscal 1997 compared to 77.6% in the
corresponding period in fiscal 1996. The increase in the cost of
products sold over the comparable period in fiscal 1996 is primarily
attributable to a change in product mix.
Selling, General and Administrative expenses increased $193,000 or
7.5% in the third quarter of fiscal 1997 from $2.5 million for the
corresponding quarter of fiscal 1996, primarily as a result of
increases in marketing and sales activities, and administrative costs.
A restructuring charge of $745,000 was recorded in the prior year
third quarter consisting primarily of severance costs for divisional
personnel and expenses related to the move of the corporate office
from Charlotte, North Carolina to Westport, Connecticut.
Interest and deferred finance costs for the third quarter of fiscal
1997 decreased to $699,000 from $791,000 in the third quarter of
fiscal 1996, a decrease of $92,000 or 11.6%. This decrease is
primarily attributed to the Company's debt refinancing which was
completed September 25, 1996.
Nine Months Ended March 31, 1997 Compared to
Nine Months Ended March 31, 1996
Net sales decreased $1.0 million, or 1.8%, to $55.1 million during the
first nine months of fiscal 1997 from $56.1 million during the first
nine months of fiscal 1996, mainly as a result of a loss of business
with four major customers offset by increased sales from new and
existing customers.
Cost of goods sold decreased $0.2 million or 0.4% for the nine months
ended March 31, 1997 compared with the corresponding period in fiscal
1996. The gross profit margin as a percentage of
-5-
<PAGE>
net sales decreased to 20.4% in the first nine months of fiscal 1997
compared to 21.5% in the corresponding period in fiscal 1996. The
decrease in gross profit margin which was attributed primarily to a
change in product mix was partially offset by cost reductions.
Selling, General and Administrative expenses expressed as a percentage
of net sales increased to 14.4% in the first nine months of fiscal
1997, compared with 12.8% in the first nine months of fiscal 1996. The
increase is primarily attributable to additional administrative costs
and the cost of filling positions not staffed in the prior year.
For the nine months ended March 31, 1996 a pre-tax charge of $998,000
was recorded consisting primarily of severance costs for divisional
personnel and expenses related to the move of the corporate office.
Interest and deferred finance costs for the first nine months of
fiscal 1997 decreased to $2.3 million from $2.4 million in the first
nine months of fiscal 1996, a decrease of $0.1 million or 6.3%. The
decrease is a direct result of overall lower borrowings as well as
lower interest rates in the current year as compared to the prior
year, as discussed in the quarterly comparison.
The income tax provision of $394,000 for the nine months ended March
31, 1997 represents 37.8% of the income before taxes plus
non-deductible goodwill amortization of $441,000. This compares with
an effective tax rate of 36.7% for the nine months ended March 31,
1996.
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.
o Liquidity and Capital Resources:
On September 25, 1996, the Company refinanced its debt. 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 credit
facility (the "credit agreement"). The terms include initial interest
rates that are more than 3 percent lower than the Company had been
paying under its previous credit facilities. Both facilities bear
interest rates based on Harris Bank's prime rate or the London
Interbank Offered Rate ("LIBOR"). At March 31, 1997, the interest rate
for the term loan was 7.97% based on the LIBOR rate, and the effective
interest rate for the revolving credit facility was 8.12%.
The Company amended its credit agreement on March 31, 1997 to revise
certain of its financial covenants. Covenants relating to minimum
interest coverage and debt ratio were relaxed, and a fixed charge
coverage test was added. The Company was in full compliance with
all loan covenants at March 31, 1997.
Outstanding bank borrowings net of existing cash balances increased
$0.5 million to $31.4 million during the nine months ended March 31,
1997. The increase in net borrowings is primarily attributable to
additional working capital requirements, the cost of refinancing, and
the acquisition of certain assets as discussed in the increase in
capital expenditures.
During the nine months ended March 31, 1997, capital expenditures
totaled $1.8 million as compared with $1.0 million in the
corresponding period in fiscal 1996, and consisted primarily of a
building expansion and additions to equipment. 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.
-6-
<PAGE>
Management believes that existing cash balances, funds generated by
operations, and borrowings available under its current credit facility
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.
-7-
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Effective April 10, 1997, Mr. John J. Kubinsky left the company. Prior to
his departure Mr. Kubinsky served as President of GB Labels.
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 March 31, 1997.
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: May 15, 1997 By: /s/ John W. Lloyd
John W. Lloyd, Chief Financial Officer
Signing on behalf of the registrant and
as principal financial officer
-8-
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-29-1996
<PERIOD-END> MAR-31-1997
<CASH> 663
<SECURITIES> 0
<RECEIVABLES> 7,475
<ALLOWANCES> 182
<INVENTORY> 9,593
<CURRENT-ASSETS> 18,853
<PP&E> 48,480
<DEPRECIATION> 13,858
<TOTAL-ASSETS> 75,427
<CURRENT-LIABILITIES> 10,568
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 31,057
<TOTAL-LIABILITY-AND-EQUITY> 75,427
<SALES> 55,118
<TOTAL-REVENUES> 55,118
<CGS> 43,853
<TOTAL-COSTS> 43,853
<OTHER-EXPENSES> 8,388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,275
<INCOME-PRETAX> 602
<INCOME-TAX> 394
<INCOME-CONTINUING> 208
<DISCONTINUED> 0
<EXTRAORDINARY> (107)
<CHANGES> 0
<NET-INCOME> 101
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.02
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