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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 1996
Commission File Number: 0-19800
GIBRALTAR PACKAGING GROUP, INC.
(Exact name of registrant as specified in its charter)
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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 December 31, 1996, there were 5,041,544 shares of the Company's
common stock, par value $ 0.01 per share, issued and outstanding.
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1
As of December 31, 1996 (Unaudited) and June 29, 1996
Consolidated Statements of Operations (Unaudited) for the 2
Three Months Ended December 31, 1996 and 1995 and
Six Months Ended December 31, 1996 and 1995
Consolidated Statements of Cash Flows (Unaudited) for the 3
Six Months Ended December 31, 1996 and 1995
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 4. Submission of Matters to a Vote of Security Holders 7
Item 6. Exhibits and Reports on Form 8-K 7
Signature 8
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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>
December 31, June 29,
1996 1996
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Accounts receivable (Net of allowance for $ 7,451 $ 6,860
doubtful accounts of $189 and $ 231, respectively)
Inventories (Note B) 9,827 9,172
Deferred income taxes 713 713
Prepaid and other current assets 439 809
Total current assets 18,430 17,554
PROPERTY AND EQUIPMENT - Net 34,891 35,167
EXCESS OF PURCHASE PRICE OVER NET 20,816 21,109
ASSETS ACQUIRED (Net of accumulated
amortization of $2,491 and $2,197, respectively)
OTHER ASSETS (Net of accumulated amortization 1,273 215
of $147 and $84, respectively)
TOTAL $75,410 $74,045
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented $ 285 $ 1,042
Current portion of long-term debt 2,500 2,115
Accounts payable 5,630 5,261
Accrued expenses and other liabilities 2,296 2,362
Income taxes payable 326 319
Total current liabilities 11,037 11,099
LONG-TERM DEBT - Net of current portion 29,342 27,834
DEFERRED INCOME TAXES 3,278 3,278
OTHER LONG-TERM LIABILITIES 881 828
Total liabilities 44,538 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 2,660 2,794
Total stockholders' equity 30,872 31,006
TOTAL $75,410 $74,045
</TABLE>
See notes to unaudited consolidated financial statements.
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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 Six Months Ended
December 31, December 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $ 17,805 $ 17,867 $ 36,301 $ 36,976
COST OF GOODS SOLD 14,233 14,075 29,131 29,169
GROSS PROFIT 3,572 3,792 7,170 7,807
OPERATING EXPENSES:
Selling 999 1,047 2,042 2,020
General and Administrative 1,592 1,640 3,118 2,849
Amortization of excess of purchase
price over net assets acquired 147 147 294 294
Total operating expenses 2,738 2,834 5,454 5,163
INCOME FROM OPERATIONS 834 958 1,716 2,644
OTHER (INCOME) EXPENSE:
Interest and deferred finance costs 680 849 1,576 1,637
Other (income) expense - net 1 (15) 4 (7)
Other expense - net 681 834 1,580 1,630
INCOME BEFORE INCOME TAXES 153 124 136 1,014
PROVISION FOR INCOME TAXES 114 40 163 459
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS 39 84 (27) 555
EXTRAORDINARY ITEM (net of tax effect of $66)
(Write-off of finance charges as a result of debt repayment) -- -- (107) --
NET INCOME (LOSS) $ 39 $ 84 $ (134) $ 555
PER SHARE AMOUNTS:
Income (Loss) Before Extraordinary Item $ .01 $ .02 $ (.01) $ .11
Net Income (Loss) $ .01 $ .02 $ (.03) $ .11
WEIGHTED AVERAGE SHARES
OUTSTANDING (primary and fully diluted) 5,041,544 5,041,544 5,041,544 5,041,544
</TABLE>
See notes to unaudited consolidated financial statements.
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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) Six Months Ended
December 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (134) $ 555
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1980 1,950
Gain on property and equipment -- (2)
Changes in operating assets and liabilities:
Accounts receivable - net (591) 752
Inventories (655) 1,104
Prepaid expenses and other current assets 318 61
Accounts payable 369 (908)
Accrued income taxes and other liabilities (6) (736)
Net Cash Provided by Operating Activities 1,281 2,776
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment -- 99
Purchases of property and equipment (1,296) (747)
Net Cash Used in Investing Activities (1,296) (648)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility 850 (1,034)
Net repayment under capital leases (83) 89
Net principal repayments of long-term debt (28,824) (1,882)
Proceeds from Refinancing 29,950 --
Refinancing Costs (1,121) --
Net Cash Provided by (Used in) Financing Activities 772 (2,827)
NET INCREASE (DECREASE) IN CASH 757 (699)
CHECKS NOT YET PRESENTED
AT BEGINNING OF PERIOD (1042) (744)
CHECKS NOT YET PRESENTED
AT END OF PERIOD $ (285) $ (1,443)
</TABLE>
See notes to unaudited consolidated financial statements.
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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 December
31, 1996, and the results of its operations and its cash flows for the periods
presented herein. Results for the six months ended December 31, 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) December 31, June 29,
1996 1996
(Unaudited)
Finished goods $5,430 $4,727
Work-in-process 1,399 1,395
Raw materials 2,626 2,739
Manufacturing supplies 372 311
Total inventories $9,827 $9,172
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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 Recent Developments:
On January 6, 1997, Ms. Lisa Schneider was appointed Corporate
Controller of Gibraltar Packaging Group, Inc. effective January 21,
1997.
o Results of Operations:
Three Months Ended December 31, 1996 Compared to
Three Months Ended December 31, 1995
Net sales for the second quarter of fiscal 1997 were $17.8 million and
consistent with the second quarter net sales of $17.9 million in fiscal
1996.
Cost of goods sold for the second quarter of fiscal 1997 increased
$158,000, or 1.1% compared with the second quarter of fiscal 1996. The
increase was primarily a result of increased labor incurred to meet
customer requirements.
Selling, General and Administrative Expenses decreased by $96,000, or
3.6% in the second quarter of fiscal 1997. The second quarter of fiscal
1996 included a charge for severance pay that did not recur in the
second quarter of fiscal 1997. This was partially offset by an increase
in administrative costs and the cost of filling positions not staffed
in the prior year.
Interest and deferred finance costs for the second quarter of fiscal
1997 decreased to $680,000 from $849,000 in the second quarter of
fiscal 1996, a decrease of $169,000 or 19.9%. This decrease is
attributable to both lower borrowings and lower interest rates related
to the Company's debt refinancing which was completed September 25,
1996.
Six Months Ended December 31, 1996 Compared to
Six Months Ended December 31, 1995
Net sales decreased $675,000, or 1.8%, to $36.3 million for the six
months ended December 31, 1996, compared with $36.9 million for the six
months ended December 31, 1995, mainly as a result of a loss of
business with three major customers.
Cost of goods sold of $29.1 million for the six months ended December
31, 1996, remained consistent with $29.1 million for the six months
ended December 31, 1995. The reduction in cost of
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sales in fiscal 1997 attributable to the decrease in net sales for the
same period was partially offset by higher costs required to meet
customer delivery requirements.
Selling, General and Administrative Expenses increased by $0.3 million
in the six months ended December 31, 1996. An increase in
administrative costs and the cost of filling positions not staffed in
the prior year were partially offset by a charge for severance pay in
the first six months of fiscal 1996 that did not recur in the first six
months of fiscal 1997.
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.
The income tax provision of $163,000 represents 37.9% of the income
before taxes and includes a non-deductible goodwill amortization of
$294,000. This compares with an effective tax rate of 35.1% for the six
months ended December 31, 1995.
Interest and deferred finance costs for the first six months of fiscal
1997 decreased $61,000, or 3.7%, as compared to the first six months of
fiscal 1996. This decrease is a direct result of lower borrowings as
well as lower interest rates due to the refinancing as discussed under
the quarterly comparison.
o 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 credit
facility. The terms include initial interest rates that are more than 3
percent lower than the Company had been recently paying. Both
facilities bear interest rates based on Harris Bank's prime rate or the
London Interbank Offered Rate ("LIBOR"). At December 31, 1996, the
interest rate for the term loan was 8.1% based on the LIBOR rate, and
the effective interest rate for the revolving credit facility was 8.1%.
The Company was in full compliance with all loan covenants at December
31, 1996.
Outstanding bank borrowings increased $1.9 million to $31.8 million
during the six months ended December 31, 1996. The increase in bank
borrowings is primarily attributable to additional working capital
requirements resulting from the cost of refinancing, the acquisition of
certain assets as discussed in the increase in capital expenditures and
an increase in accounts receivable and inventory relative to meeting
customer requirements.
During the six months ended December 31, 1996, capital expenditures
totaled $1.3 million as compared with $0.7 million in the corresponding
period in fiscal 1996, and consist 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.
Management believes that existing cash balances, funds generated by
operations, and borrowings available under its current 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.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Stockholder's on November 7, 1996 a
total of 4,309,925 shares, or 85.4%, of outstanding shares were
represented and entitled to vote.
(a) The following members were elected to the Board of Directors:
FOR WITHHOLD
David G. Chandler 4,298,522 11,403
Edgar D. Jannotta, Jr 4,251,322 58,603
John W. Lloyd 4,260,534 49,391
Walter E. Rose 4,260,534 49,391
Robert G. Shaw 4,145,622 164,303
John D. Strautnieks 4,260,634 49,291
(b) The following proposal was approved:
Ratification of Deloitte & Touche LLP as the independent
auditors for the Company for the 1997 fiscal year.
Affirmative Votes: 4,305,823
Negative Votes: 2,488
Abstain: 1,614
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
December 31, 1996.
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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: February 14 , 1997 By: /s/ John W. Lloyd
John W. Lloyd, Chief Financial Officer
Signing on behalf of the registrant and
as principal financial officer
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,640
<ALLOWANCES> 189
<INVENTORY> 9,827
<CURRENT-ASSETS> 18,430
<PP&E> 47,974
<DEPRECIATION> 13,083
<TOTAL-ASSETS> 75,410
<CURRENT-LIABILITIES> 11,037
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 30,822
<TOTAL-LIABILITY-AND-EQUITY> 75,410
<SALES> 36,301
<TOTAL-REVENUES> 36,301
<CGS> 29,131
<TOTAL-COSTS> 29,131
<OTHER-EXPENSES> 5,458
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,576
<INCOME-PRETAX> 136
<INCOME-TAX> 163
<INCOME-CONTINUING> (27)
<DISCONTINUED> 0
<EXTRAORDINARY> (107)
<CHANGES> 0
<NET-INCOME> (134)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
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