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 28, 1996
Commission file number 1-13970
CHROMCRAFT REVINGTON, INC.
(Exact name of Registrant as specified in its charter)
Delaware 35-1848094
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1100 North Washington Street, Delphi, IN 46923
(Address of Registrant's principal executive offices)
(317) 564-3500
(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.
Yes X No
The number of shares outstanding for each of the
Registrant's classes of common stock as of the latest
practicable date:
Outstanding at
Class October 25, 1996
Common Stock, $.01 Par Value 5,740,273
<PAGE>
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Table of Contents
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information
Item 6. Exhibits 10
Signatures 10
2 <PAGE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 40,789 $ 39,163 $ 123,002 $ 112,383
Cost of sales 29,621 28,881 89,175 82,263
----------- ----------- ----------- -----------
Gross margin 11,168 10,282 33,827 30,120
Selling, general and
administrative expenses 5,373 5,274 16,852 15,095
----------- ----------- ----------- -----------
Operating income 5,795 5,008 16,975 15,025
Interest income (expense), net 25 (107) 20 (149)
----------- ----------- ----------- -----------
Earnings before income
tax expense 5,820 4,901 16,995 14,876
Income tax expense 2,328 1,985 6,798 6,025
----------- ----------- ----------- -----------
Net earnings $ 3,492 $ 2,916 $ 10,197 $ 8,851
=========== =========== =========== ===========
Earnings per share
of common stock $ .59 $ .50 $ 1.73 $ 1.51
=========== =========== =========== ===========
Average common shares
and equivalents outstanding 5,889 5,866 5,886 5,863
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3 <PAGE>
<PAGE>
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
<TABLE>
<CAPTION>
September 28, September 30, December 31,
Assets 1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash and cash equivalents $ 561 $ - $ -
Accounts receivable 24,454 21,902 18,370
Inventories 21,285 18,492 19,928
Deferred income taxes and other assets 1,492 1,551 1,173
----------- ----------- -----------
Current assets 47,792 41,945 39,471
Property, plant and equipment, net 22,891 22,265 22,627
Intangibles and other assets 23,284 23,747 23,727
----------- ----------- -----------
Total assets $ 93,967 $ 87,957 $ 85,825
=========== =========== ===========
Liabilities and Stockholders' Equity
Accounts payable $ 6,431 $ 7,485 $ 7,568
Accrued liabilities 10,522 10,275 9,983
----------- ----------- -----------
Current liabilities 16,953 17,760 17,551
Revolving credit facility - 6,625 1,500
Deferred income taxes and other liabilities 2,861 2,913 2,992
----------- ----------- -----------
Total liabilities 19,814 27,298 22,043
----------- ----------- -----------
Stockholders' equity
Common stock and capital in excess of par value 21,016 20,842 20,842
Retained earnings 53,137 39,817 42,940
----------- ----------- -----------
Total stockholders' equity 74,153 60,659 63,782
----------- ----------- -----------
Total liabilities and stockholders' equity $ 93,967 $ 87,957 $ 85,825
=========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4 <PAGE>
<PAGE>
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
September 28, September 30,
1996 1995
----------- -----------
Operating Activities
<S> <C> <C>
Net earnings $ 10,197 $ 8,851
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 2,654 2,823
Deferred income taxes (187) (320)
Changes in assets and liabilities, net
Accounts receivable (6,084) (5,366)
Inventories (1,357) 1,361
Other current assets (324) (540)
Accounts payable and accrued liabilities (598) 1,040
Other (230) 94
----------- -----------
Cash provided by operating activities 4,071 7,943
----------- -----------
Investing Activities
Capital expenditures (2,435) (4,292)
Disposal of property, plant and equipment 251 -
Investment in acquired company - (8,350)
Funds held in escrow - (3,000)
----------- -----------
Cash used in investing activities (2,184) (15,642)
----------- -----------
Financing Activities
Borrowings (payments) under revolving credit facility (1,500) 6,625
Refinance acquired company indebtedness - (1,190)
Proceeds from stock options exercised 174 186
----------- -----------
Cash provided (used) in financing activities (1,326) 5,621
Net change in cash and cash equivalents 561 (2,078)
Cash and cash equivalents at beginning of period - 2,078
----------- -----------
Cash and cash equivalents at end of period $ 561 $ -
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5 <PAGE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
Chromcraft Revington, Inc.
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statement
presentation.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended
September 28, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Registrant's annual report on
Form 10-K for the year ended December 31, 1995.
Note B - Average Common Shares and Equivalents Outstanding
Average common shares used in the calculation of earnings per share
included common stock equivalents (stock options) of approximately
149,000 and 150,000 shares for the three and nine months ended
September 28, 1996, respectively, and 136,000 and 138,000 shares for
the three and nine months ended September 30, 1995, respectively.
Note C - Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
-----------------------------------------------
September 28, September 30, December 31,
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Raw materials $ 5,799 $ 5,088 $ 5,905
Work-in-process 4,052 3,999 3,926
Finished goods 13,078 10,463 11,459
----------- ----------- -----------
Inventories at FIFO cost 22,929 19,550 21,290
LIFO reserve (1,644) (1,058) (1,362)
----------- ----------- -----------
$ 21,285 $ 18,492 $ 19,928
=========== =========== ===========
</TABLE>
6 <PAGE>
<PAGE>
Note D - Accrued Liabilities
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
---------------------------------------------
September 28, September 30, December 31,
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Employee benefit plans $ 3,709 $ 2,972 $ 2,949
Salaries, wages and commissions 1,519 1,488 1,199
Vacation and holiday compensation 983 926 928
Workers' compensation plans 869 1,002 1,002
Other accrued liabilities 3,442 3,887 3,905
----------- ----------- -----------
$ 10,522 $ 10,275 $ 9,983
=========== =========== ===========
</TABLE>
Note E - Subsequent Event
On November 8, 1996, Chromcraft Revington, Inc. (the "Company") acquired
Cochrane Furniture Company, Inc. ("Cochrane"), a manufacturer of dining
room, bedroom and upholstered furniture. The transaction is estimated
to be valued at approximately $27,000,000, which includes the assumption
of Cochrane's debt. Cochrane will operate as a wholly-owned subsidiary
of the Company under the name Cochrane Furniture Company, Inc. Cochrane,
headquartered in Lincolnton, North Carolina, had sales of approximately
$86,000,000 for the fiscal year ended March 30, 1996. The operations of
Cochrane will be included in the consolidated results of the Company from
the date of acquisition.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Three and Nine Months Ended September 28, 1996 versus Three and Nine
Months Ended September 30, 1995.
- - ----------------------------------------------------------------------
Chromcraft Revington, Inc. manufactures and sells residential and
commercial furniture through its wholly-owned subsidiaries Chromcraft
Corporation ("Chromcraft"), Peters-Revington Corporation ("Peters-
Revington") and Silver Furniture Co., Inc. ("Silver Furniture"). The
following table sets forth the consolidated results of operations for
the three and nine months ended September 28, 1996 and September 30,
1995 expressed as a percentage of sales.
7 <PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 72.6 73.7 72.5 73.2
----------- ----------- ----------- -----------
Gross margin 27.4 26.3 27.5 26.8
Selling, general and
administrative expenses 13.2 13.5 13.7 13.4
----------- ----------- ----------- -----------
Operating income 14.2 12.8 13.8 13.4
Interest income (expense), net .1 (.3) - (.1)
----------- ----------- ----------- -----------
Earnings before
income tax expense 14.3 12.5 13.8 13.3
Income tax expense 5.7 5.1 5.5 5.4
----------- ----------- ----------- -----------
Net earnings 8.6 % 7.4 % 8.3 % 7.9 %
=========== =========== =========== ===========
</TABLE>
Operating results of Silver Furniture are included in the consolidated
financial statements of the Company since April 3, 1995, the
acquisition date.
Sales
Consolidated sales for the third quarter of 1996 increased 4.2% to
$40,789,000 from $39,163,000 for the third quarter of 1995. The sales
increase was due to higher sales at each of the Company's
subsidiaries. For the nine months ended September 28, 1996,
consolidated sales increased 9.4% to $123,002,000 from $112,383,000
for the first nine months of 1995. The sales increase for the first
nine months of 1996 as compared to the year-earlier period was
primarily due to the inclusion of Silver Furniture's operating
results.
The Company's incoming order rate for the third quarter was slightly
below last year's period and the sales order backlog entering the
fourth quarter was at approximately the same level as the prior year.
Cost of Sales
Cost of sales as a percentage of sales was 72.6% and 72.5% for the
three and nine month periods ended September 28, 1996, respectively,
as compared to 73.7% and 73.2% for the corresponding periods of the
prior year. The cost percentage decrease for the third quarter was
primarily due to a more favorable product sales mix and improved
operating margins at Silver Furniture due, in part, to spreading fixed
overhead costs over a higher sales volume.
Selling, General and Administrative Expenses
8 <PAGE>
<PAGE>
Selling, general and administrative expenses as a percentage of sales
were 13.2% and 13.7% for the third quarter and nine months ended
September 28, 1996, respectively, as compared to 13.5% and 13.4% for
the third quarter and nine months ended September 30, 1995,
respectively. The cost percentage decrease for the three months ended
September 28, 1996 as compared to the prior year quarter was primarily
due to lower selling related costs. For the nine months ended
September 28, 1996, the cost percentage increase as compared to the
prior year was due, in part, to the inclusion of Silver Furniture's
operating results.
Interest Income (Expense), Net
The Company earned interest income of $25,000 during the third quarter
of 1996 as compared to incurring interest expense of $107,000 during
the third quarter a year ago. For the nine months ended September 28,
1996, the Company earned interest income of $20,000 as compared to
incurring interest expense of $149,000 for the first nine months of
1995. The Company had no bank borrowings during the second and third
quarters of 1996 and excess cash was invested in short-term
investments.
Income Tax Expense
The Company's effective tax rate for the three and nine month periods
ended September 28, 1996 was 40.0% as compared to 40.5% for the same
periods of 1995. The lower effective tax rate for 1996 was primarily
due to a decrease in state income taxes.
Liquidity and Capital Resources
The operating activities of the Company provided $4,071,000 of cash
for the first nine months of 1996 as compared to $7,943,000 in the
year ago period. The decrease in cash flow in 1996 was primarily
attributable to an increase in working capital investment.
Inventories at September 28, 1996 increased $2,793,000 from a
year ago, primarily to provide better service to customers through
an increase in finished goods inventory. Accounts receivable
at September 28, 1996 were $2,552,000 higher as compared to the
prior year, primarily due to an increase in sales volume and in
the average payment term days. Cash flow from higher earnings
partially offset the increase in working capital investment.
The investing activities used $2,184,000 of cash during the first nine
months of 1996 as compared to $15,642,000 in the year ago period. The
higher investing activities in 1995 were primarily due to the purchase
of Silver Furniture for $8,350,000 in cash at the closing and the
deposit of $3,000,000 in a bank escrow account to fund conditional
purchase consideration.
Capital expenditures for the first nine months of 1996 were primarily
used to increase finished goods warehouse capacity and for equipment
purchases. For the full year 1996, the Company expects to spend
9 <PAGE>
<PAGE>
approximately $3,000,000 on capital expenditures as compared to
$5,514,000 spent in 1995.
Cash used in financing activities for the nine months ended September
28, 1996 was primarily used to repay bank indebtedness under the
Company's revolving credit facility. For the year-earlier period,
borrowings under the revolving credit facility were used to finance
the acquisition of Silver Furniture.
For the first nine months of 1996, the Company generated excess cash
flow of $561,000. The Company plans to retain cash in the business
for use in internal growth and acquisitions. At September 28,
1996, the Company had no bank debt outstanding and approximately
$57,300,000 in availability under its bank revolving credit facility.
Part II. Other Information
------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
On November 4, 1996, the Registrant filed a current report on Form
8-K reporting the signing of a definitive merger agreement pursuant
to which the Company will acquire Cochrane Furniture Company, Inc.
Included as exhibits to the filing were the Agreement and Plan of
Merger by and among Chromcraft Revington, Inc., CRI Acquisition
Corporation and Cochrane Furniture Company, Inc., dated October 10,
1996; the News Release of Chromcraft Revington, Inc. dated October
10, 1996; and audited financial statements of Cochrane Furniture
Company, Inc. as of March 30, 1996 and April 1, 1995 and for the
fiscal years then ended.
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.
CHROMCRAFT REVINGTON, INC.
--------------------------
(Registrant)
Date: November 12, 1996 /s/ Frank T. Kane
--------------------------
Frank T. Kane
Vice President - Finance
(Duly Authorized Officer and
Chief Financial Officer)
10 <PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-28-1996
<CASH> 561
<SECURITIES> 0
<RECEIVABLES> 25,669
<ALLOWANCES> 1,215
<INVENTORY> 21,285
<CURRENT-ASSETS> 47,792
<PP&E> 51,893
<DEPRECIATION> 29,002
<TOTAL-ASSETS> 93,967
<CURRENT-LIABILITIES> 16,953
<BONDS> 0
0
0
<COMMON> 57
<OTHER-SE> 74,096
<TOTAL-LIABILITY-AND-EQUITY> 93,967
<SALES> 123,002
<TOTAL-REVENUES> 123,002
<CGS> 89,175
<TOTAL-COSTS> 106,027
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (20)
<INCOME-PRETAX> 16,995
<INCOME-TAX> 6,798
<INCOME-CONTINUING> 10,197
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,197
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.73
</TABLE>
