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, 1997
Commission File Number: 00-19800
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, 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
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INDEX
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Page Number
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PART I. FINANCIAL INFORMATION
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Financial Statements
Consolidated Balance Sheets 1
As of September 30, 1997 (Unaudited) and June 28, 1997
Consolidated Statements of Operations (Unaudited) for the 2
Three Months Ended September 30, 1997 and 1996
Consolidated Statements of Cash Flows (Unaudited) for the 3
Three Months Ended September 30, 1997 and 1996
Notes to Consolidated Financial Statements (Unaudited) 4
Management's Discussion and Analysis of Interim Financial 6
Condition and Results of Operations
PART II. OTHER INFORMATION
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Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature 9
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
<TABLE>
<CAPTION>
September 30, June 28,
1997 1997
------------- --------
(Unaudited)
<S><C>
ASSETS
CURRENT ASSETS:
Cash .................................................... $ -- $ 110
Accounts receivable (Net of allowance for
doubtful accounts of $143 and $127, respectively) ..... 8,194 8,840
Inventories (Note B) .................................... 9,372 9,006
Deferred income taxes ................................... 412 412
Prepaid and other current assets ........................ 856 437
-------- --------
Total current assets ............................. 18,834 18,805
PROPERTY, PLANT AND EQUIPMENT - Net ....................... 34,187 34,544
EXCESS OF PURCHASE PRICE OVER NET
ASSETS ACQUIRED (Net of accumulated
amortization of $2,929 and $2,783, respectively) ........ 20,378 20,524
OTHER ASSETS (Net of accumulated amortization
of $182 and $137, respectively) ......................... 1,208 1,185
-------- --------
TOTAL ..................................................... $ 74,607 $ 75,058
======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented ................................ $ 286 $ --
Current portion of long-term debt ....................... 3,909 3,313
Accounts payable ........................................ 6,435 5,947
Accrued expenses ........................................ 1,524 2,775
Income taxes payable .................................... 796 692
-------- --------
Total current liabilities ........................ 12,950 12,727
LONG-TERM DEBT - Net of current portion ................... 26,634 27,382
DEFERRED INCOME TAXES ..................................... 2,964 3,028
OTHER LONG-TERM LIABILITIES ............................... 814 821
-------- --------
Total liabilities ................................. 43,362 43,958
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 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 ....................................... 3,033 3,019
Minimum pension liability in excess of unrecognized
prior service costs ............................... -- (131)
-------- --------
Total stockholders' equity ....................... 31,245 31,100
-------- --------
TOTAL ..................................................... $ 74,607 $ 75,058
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------
1997 1996
---- ----
<S><C>
NET SALES ........................................................... $ 19,328 $ 18,472
COST OF GOODS SOLD .................................................. 15,781 14,902
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GROSS PROFIT ........................................................ 3,547 3,570
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OPERATING EXPENSES:
Selling ........................................................... 1,077 991
General and administrative ........................................ 1,542 1,550
Amortization of excess of purchase price
over net assets acquired ........................................ 146 147
----------- -----------
Total operating expenses ...................................... 2,765 2,688
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INCOME FROM OPERATIONS .............................................. 782 882
----------- -----------
OTHER (INCOME) EXPENSE:
Interest expense ................................................. 707 896
Other (income) expense - net ..................................... (46) 3
----------- -----------
Other expense - net ........................................... 661 899
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INCOME (LOSS) BEFORE INCOME TAXES ................................... 121 (17)
PROVISION FOR INCOME TAXES .......................................... 107 49
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ............................. 14 (66)
EXTRAORDINARY ITEM (net of tax effect of $66)
(Write-off of finance charges as a result of debt repayment) ........ -- (107)
----------- -----------
NET INCOME (LOSS) $ ................................................. 14 $ (173)
----------- -----------
PER COMMON SHARE AMOUNTS:
Income (Loss) Before Extraordinary Item .......................... $ -- $ (0.02)
=========== ===========
Net Income (Loss) ................................................ $ -- $ (0.04)
=========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING (primary and fully diluted) .......................... 5,041,544 5,041,544
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------
1997 1996
---- ----
<S><C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................... $ 14 $ (173)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Extraordinary item - write-off of finance charges . -- 173
Depreciation and amortization ..................... 1,020 982
Gain on sale of property, plant and equipment ..... (47) --
Changes in operating assets and liabilities:
Accounts receivable - net ................ 646 (1,068)
Inventories .............................. (366) 169
Income taxes ............................. 40 (60)
Prepaid expenses and other assets ........ (487) (28)
Accounts payable ......................... 488 1,779
Accrued expenses and other liabilities ... (1,127) (195)
----------- -----------
Net Cash Provided by Operating Activities ......... 181 1,579
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment ........ 82 --
Purchases of property, plant and equipment ................. (507) (703)
----------- -----------
Net Cash Used in Investing Activities ............. (425) (703)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving credit
facility................................................... 1,150 (644)
Net principal repayments of long-term debt ................. (1,259) (29,266)
Proceeds from refinancing .................................. -- 31,050
Refinancing costs .......................................... -- (1,022)
Net repayments under capital leases ........................ (43) (21)
----------- -----------
Net Cash (Used in) Provided By Financing Activities (152) 97
----------- -----------
NET (DECREASE) INCREASE IN CASH ..................................... (396) 973
CASH (CHECKS NOT YET PRESENTED)
AT BEGINNING OF PERIOD ..................................... 110 (1,042)
----------- -----------
CHECKS NOT YET PRESENTED
AT END OF PERIOD ........................................... $ (286) $ (69)
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A. GENERAL
The consolidated balance sheet of Gibraltar Packaging Group, Inc. (the
"Company") and Subsidiaries (collectively, "Gibraltar") at June 28,
1997 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 28, 1997 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 September
30, 1997, and the results of their operations and their cash flows for
the periods presented herein. Results for the three months ended
September 30, 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) September 30, June 28,
1997 1997
------------- --------
(Unaudited)
Finished goods $5,073 $5,262
Work in process 1,462 1,160
Raw materials 2,400 2,160
Manufacturing supplies 437 424
------ ------
$9,372 $9,006
====== ======
C. NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common 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.
D. ADOPTION OF FAS 128
The Company will adopt the Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (FAS 128) in the second quarter of fiscal
1998, as required. The Company will continue to apply APB Opinion No.
15, "Earnings Per Share" until the adoption of FAS 128. The new
standard specifies the computation, presentation and disclosure
requirements for earnings per share.
-4-
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
E. INCOME TAXES
On October 7, 1997, the Company agreed to settle the Internal Revenue
Services examination of the Company's income tax returns for the years
1992 through 1995. The settlement amount was fully reserved for by the
Company as of June 28, 1997.
-5-
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Three Months Ended September 30, 1997 Compared to
Three Months Ended September 30, 1996
In the first quarter of fiscal 1998 the Company attained net sales of $19.3
million compared with sales of $18.5 million in the first quarter of fiscal
1997. Sales increased 0.8 million or 4.6 % in the first quarter of fiscal 1998
in comparison to the corresponding period in fiscal 1997. The increase in sales
was primarily due to volume increases attributable to increased sales to new
and existing customers.
Cost of goods sold expressed as a percentage of net sales increased in the first
quarter of fiscal 1998 to 81.7% compared to 80.7% in the corresponding period of
fiscal 1997, primarily as a result of slightly higher material costs and
increased labor costs incurred to meet customer needs. Gross margin from
operations was 18.4% in the first quarter of fiscal 1998 in comparison to 19.3%
in the corresponding period in fiscal 1997.
Selling expenses increased $0.1 million or 8.7% in the first three months of
fiscal 1998, to $1.1 million from $1.0 million in the first three months of
fiscal 1997, primarily as a result of increases in marketing and sales efforts.
General and administrative expenses expressed as a percentage of net sales
decreased to 8.0% in the first quarter of fiscal 1998, compared with 8.4% in the
corresponding fiscal 1997 period. The Company continues its commitment to
evaluate and implement, as necessary, cost saving opportunities.
Interest expense for the first quarter of fiscal 1998 decreased to $0.7 million
from $0.9 million in the first quarter of fiscal 1997, a decrease of $0.2
million or 21.1%. The decrease is a result of overall lower net
borrowings as well as lower interest rates in fiscal 1998 as compared to the
prior year, attributable to the Company's debt refinancing which was completed
September 25, 1996.
The provision for income taxes as a percentage of pre-tax income for the three
months ended September 30, 1997 is 40.0%, which differs from the statutory rate
primarily as a result of non-deductible amortization in excess of purchase price
over net assets acquired. This compares with an effective tax rate of 37.8% in
the prior year.
During the first quarter of fiscal 1997 the Company recorded an extraordinary
after tax loss of $107,000 or $0.02 per common share reflecting the write-off of
unamortized finance costs of a previous refinancing.
Financial Condition:
Historically, the Company's liquidity requirements have been met by a
combination of funds provided by operations and its revolving credit agreements.
Outstanding bank borrowings net of existing cash balances increased $0.2 million
since June 28, 1997, to $30.8 million at September 30, 1997.
-6-
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The increase in net borrowings during the first quarter of fiscal 1998 is
primarily attributable to the Company's additional working capital requirements
and the acquisition of certain assets as discussed in the increase in capital
expenditures.
The Company's existing borrowing capacity consists of a $25 million term loan
and a $10 million revolving credit facility. The amount available under the
revolving credit facility is reduced by the amount of outstanding standby
letters of credit, which was $348,000 as of September 30, 1997. The Company had
available to it unused borrowing capacity of $2.6 million as of September
30,1997.
The credit facility provides for certain restrictions including sales of assets,
capital expenditures, payment of dividends and incurrence of subsidiary debt.
The most restrictive covenants require the maintenance of certain minimum levels
of interest coverage and debt ratios. The Company is in compliance with all of
the covenants as of September 30, 1997.
During the three months ended September 30, 1997, capital expenditures totaled
$0.5 million compared with $0.7 million in the corresponding quarter in fiscal
1997, and consisted primarily of additions to machinery and equipment and
building improvements. Gibraltar makes capital improvements to improve
efficiency and product quality and upgrades its equipment by purchasing or
leasing new or previously-used equipment.
Management believes that 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 1998. 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 October 24, 1997, Mr. Deke C. Abbott, Jr. came out of
retirement and rejoined the Company as Executive Vice-President and
Chief Operating Officer. Mr. Abbott had recently served as President
of Niemand Industries until his retirement in June of this year.
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, 1997.
-8-
<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 12, 1997 By: /s/ John W. Lloyd
---------------- -------------------
John W. Lloyd, Chief Financial Officer
Signing on behalf of the registrant and
as principal financial officer
-9-
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 8,337
<ALLOWANCES> 143
<INVENTORY> 9,372
<CURRENT-ASSETS> 18,834
<PP&E> 49,681
<DEPRECIATION> 15,494
<TOTAL-ASSETS> 74,607
<CURRENT-LIABILITIES> 12,950
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 31,195
<TOTAL-LIABILITY-AND-EQUITY> 74,607
<SALES> 19,328
<TOTAL-REVENUES> 19,328
<CGS> 15,781
<TOTAL-COSTS> 15,781
<OTHER-EXPENSES> 2,719
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 707
<INCOME-PRETAX> 121
<INCOME-TAX> 107
<INCOME-CONTINUING> 14
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
