<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number 1-13970
CHROMCRAFT REVINGTON, INC.
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(Exact name of registrant as specified in its charter)
Delaware 35-1848094
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1100 North Washington Street, Delphi, IN 46923
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(Address, including zip code, of registrant's principal executive offices)
(765) 564-3500
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(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:
Common Stock, $.01 par value -- 10,701,748 shares as of April 30, 1999
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Table of Contents
Chromcraft Revington, Inc.
Page Number
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Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Earnings - Three
Months Ended April 3, 1999 and March 28, 1998 . . . . . . . 3
Condensed Consolidated Balance Sheets - April 3, 1999,
December 31, 1998 and March 28, 1998 . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows - Three
Months Ended April 3, 1999 and March 28, 1998 . . . . . . . 5
Notes to Condensed Consolidated Financial Statements -
April 3, 1999 . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2
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Part I. Financial Information
-----------------------------
Item 1. Financial Statements
<TABLE>
<CAPTION>
Condensed Consolidated Statements of Earnings (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Three Months Ended
----------------------
April 3, March 28,
1999 1998
-------- --------
<S> <C> <C>
Sales $ 61,898 $ 60,802
Cost of sales 46,383 45,488
-------- --------
Gross margin 15,515 15,314
Selling, general and administrative expenses 8,182 8,217
-------- --------
Operating income 7,333 7,097
Interest expense 84 153
-------- --------
Earnings before income tax expense 7,249 6,944
Income tax expense 2,881 2,771
-------- --------
Net earnings $ 4,368 $ 4,173
======== ========
Earnings per share of common stock
Basic $ .41 $ .37
======== ========
Diluted $ .39 $ .36
======== ========
Shares used in computing earnings per share
Basic 10,770 11,337
======== ========
Diluted 11,106 11,714
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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<TABLE>
<CAPTION>
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
April 3, March 28, December 31,
1999 1998 1998
-------- -------- --------
Assets
------
<S> <C> <C> <C>
Cash and cash equivalents $ 647 $ - $ -
Accounts receivable 30,022 32,097 26,884
Inventories 35,892 34,478 38,130
Deferred income taxes and other assets 4,605 2,916 4,713
-------- -------- --------
Current assets 71,166 69,491 69,727
Property, plant and equipment, net 37,285 37,191 37,094
Intangibles and other assets 21,695 23,493 22,824
-------- -------- --------
Total assets $130,146 $130,175 $129,645
======== ======== ========
Liabilities and Stockholders' Equity
------------------------------------
Accounts payable $ 6,844 $ 8,517 $ 6,939
Accrued liabilities 14,909 16,771 12,963
-------- -------- --------
Current liabilities 21,753 25,288 19,902
Revolving credit facility - 6,000 5,400
Deferred income taxes and other liabilities 7,837 5,187 7,226
-------- -------- --------
Total liabilities 29,590 36,475 32,528
-------- -------- --------
Stockholders' equity
Common stock and capital in excess of par value 8,411 18,009 9,340
Retained earnings 92,145 75,691 87,777
-------- -------- --------
Total stockholders' equity 100,556 93,700 97,117
-------- -------- --------
Total liabilities and stockholders' equity $130,146 $130,175 $129,645
======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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<TABLE>
<CAPTION>
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Three Months Ended
----------------------
April 3, March 28,
1999 1998
-------- --------
<S> <C> <C>
Operating Activities
Net earnings $ 4,368 $ 4,173
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 1,135 1,113
Deferred income taxes 184 (153)
Changes in assets and liabilities
Accounts receivable (3,138) (5,192)
Inventories 2,238 694
Accounts payable and accrued liabilities 1,851 4,168
Other 521 227
-------- --------
Cash provided by operating activities 7,159 5,030
-------- --------
Investing Activities
Capital expenditures (1,207) (651)
Proceeds from sales of property, plant and equipment 1,024 -
-------- --------
Cash used in investing activities (183) (651)
-------- --------
Financing Activities
Repayments under revolving credit facility (5,400) (3,000)
Proceeds from exercise of stock options 414 92
Repurchase of common stock (1,343) (1,471)
-------- --------
Cash used in financing activities (6,329) (4,379)
-------- --------
Net change in cash and cash equivalents 647 -
Cash and cash equivalents at beginning of period - -
-------- --------
Cash and cash equivalents at end of period $ 647 $ -
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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Notes to Condensed Consolidated Financial Statements (unaudited)
Chromcraft Revington, Inc.
Note 1. 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 three month period ended April 3, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
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, 1998.
Note 2. Two-For-One Stock Split
The Company effected a two-for-one stock split in the form of a 100% stock
dividend to stockholders of record on May 27, 1998. The additional shares were
distributed to stockholders on June 10, 1998. All references to the number of
shares outstanding and per share amounts in the condensed consolidated financial
statements and notes reflect the stock split.
Note 3. Shares Used in Computing Earnings per Share
Weighted average shares used in the calculation of diluted earnings per share
included dilutive potential common shares (stock options) of approximately
336,000 and 377,000 for the three months ended April 3, 1999 and March 28, 1998,
respectively.
Note 4. Inventories
The components of inventory consisted of the following:
(In thousands)
-----------------------------------
April 3, March 28, December 31,
1999 1998 1998
-------- -------- --------
Raw materials $ 12,110 $ 12,445 $ 12,502
Work in process 6,543 6,565 6,097
Finished goods 18,943 17,126 21,181
-------- -------- --------
Inventories at FIFO cost 37,596 36,136 39,780
LIFO reserve (1,704) (1,658) (1,650)
-------- -------- --------
$ 35,892 $ 34,478 $ 38,130
======== ======== ========
6
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Note 5. Accrued Liabilities
Accrued liabilities consisted of the following:
(In thousands)
------------------------------------
April 3, March 28, December 31,
1999 1998 1998
-------- -------- --------
Employee benefit plans $ 3,314 $ 3,863 $ 4,114
Income taxes payable 2,156 2,663 -
Salaries, wages and commissions 1,943 2,235 1,837
Vacation and holiday pay 1,481 1,744 1,263
Workers' compensation plans 1,343 1,225 1,158
Other accrued liabilities 4,672 5,041 4,591
-------- -------- --------
$ 14,909 $ 16,771 $ 12,963
======== ======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The following table sets forth the results of operations of Chromcraft
Revington, Inc. (the "Company") for the three months ended April 3, 1999 and
March 28, 1998 expressed as a percentage of sales.
Three Months Ended
----------------------
April 3, March 28,
1999 1998
-------- --------
Sales 100.0 % 100.0 %
Cost of sales 75.0 74.8
-------- --------
Gross margin 25.0 25.2
Selling, general and
administrative expenses 13.2 13.5
-------- --------
Operating income 11.8 11.7
Interest expense .1 .3
-------- --------
Earnings before income tax expense 11.7 11.4
Income tax expense 4.6 4.5
-------- --------
Net earnings 7.1 % 6.9 %
======== ========
Three Months Ended April 3, 1999 Compared to Three Months Ended March 28, 1998.
-------------------------------------------------------------------------------
Sales
Consolidated sales for the first quarter of 1999 increased 1.8% to $61,898,000
from $60,802,000 for the prior year period. The sales increase for 1999 was due
to higher shipments of occasional, dining and bedroom furniture, partially
offset by lower shipments of upholstered and commercial furniture. The first
quarter sales increase for bedroom furniture was particularly strong as compared
to the year earlier period.
7
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Sales were lower at Cochrane Furniture's upholstered furniture division due, in
part, to the repositioning of the product line, which included reducing the
number of products offered. Commercial furniture sales were lower in 1999 due,
in part, to a general softening in demand in the office furniture industry.
Gross Margin
Gross margin as a percentage of sales was 25.0% for the quarter ended April 3,
1999 as compared to 25.2% for the quarter ended March 28, 1998. The decrease in
the gross margin for 1999 was mainly a result of labor inefficiencies primarily
due to employee attrition resulting from tight labor markets. The gross margin
decline was partially offset by continued margin improvement at the Company's
Cochrane Furniture subsidiary. Overall, raw material costs remained at
approximately the same level as compared to a year ago.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales were 13.2%
for the first quarter of 1999 as compared to 13.5% for the same period last
year. The decrease in selling, general and administrative expenses as a
percentage of sales for the three months ended April 3, 1999 as compared to the
prior year quarter was primarily due to lower payroll related costs.
Interest Expense
Interest expense during the first three months of 1999 was $84,000 as compared
to $153,000 during the same period last year. The decrease in interest expense
was primarily due to lower average bank borrowings.
Income Tax Expense
The Company's effective tax rate was 39.7% for the three months ended April 3,
1999 and 39.9% for the three months ended March 28, 1998. The decrease in the
Company's effective tax rate for 1999 was due to lower state income taxes.
Liquidity and Capital Resources
The operating activities of the Company provided $7,159,000 of cash for the
three months ended April 3, 1999 an increase of $2,129,000 from the amount
provided in the prior year period. The increase in cash generated from
operating activities during the first quarter of 1999 as compared to the prior
year period was due, in part, to a decrease in working capital investment and
higher earnings. The Company's working capital investment in inventories
decreased $2,238,000 in the first quarter 1999 as compared to a $694,000
decrease in the prior year first quarter.
8
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The investing activities used $183,000 and $651,000 of cash during the three
months ended April 3, 1999 and March 28, 1998, respectively. Capital
expenditures, primarily for machinery and data processing equipment, were
$1,207,000 for the quarter ended April 3, 1999 as compared to $651,000 during
the year ago period. The Company expects capital expenditures to be
approximately $4,800,000 for the year ending December 31, 1999. During the
first quarter of 1999, the Company received sale proceeds of $1,024,000 in
connection with the sale of land, building and equipment.
Financing activities used $6,329,000 of cash during the three months ended April
3, 1999 as compared to $4,379,000 for the prior year period. Cash used in
financing activities during the first quarter of 1999 was primarily to reduce
bank indebtedness under a revolving credit facility and to acquire shares of the
Company's common stock under a stock repurchase plan. During the first three
months of 1999, the Company purchased 88,600 shares of common stock for
$1,343,000. At April 3, 1999, the Company had unused capacity under its bank
revolving credit facility, after reduction for outstanding letters of credit, of
$58,349,000.
Year 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Company has
determined that it will be required to modify or replace portions of its
computer software and hardware systems so that they will properly utilize dates
beyond December 31, 1999. The Company estimates that the Year 2000 project will
be completed by the end of the third quarter 1999. The Company expects to spend
approximately $341,000 during the second and third quarters of 1999, primarily
for hardware and operating system replacement, for Year 2000 compliance. Most
of these expenditures will be capitalized and funded through operating cash
flow.
The Company has received information from significant suppliers or third party
service providers on their plans to address the Year 2000 issue. While the
Company expects a successful resolution of all issues, there can be no
assurances that the Company's systems or the systems of other companies on which
the Company's systems rely will be timely converted or that the failure to
convert by another company would not have an adverse effect on the operations of
the Company. The Company has initiated development of contingency plans in the
event of a business interruption due to the Year 2000 issue, including the
identification of alternate suppliers and manual workarounds.
Forward-Looking Statements
Certain matters included in this discussion are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Certain forward-looking statements are contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations," including
expenditures to address, and the impact of, Year 2000 computer issues. These
forward looking statements can be generally identified as such because the
context of the statements includes words such as "plans," "may," "estimates" and
"expects" or words of similar import. All forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those reported or expected as of the date of this report.
Among the risks and uncertainties that could cause actual results to differ
materially from those reported or anticipated are (i) general economic
9
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conditions, (ii) cyclical nature of the furniture industry, and (iii)
competition in the furniture industry.
Part II. Other Information
--------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three months
ended April 3, 1999.
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: May 14, 1999 /s/ Frank T. Kane
------------ ----------------------------
Frank T. Kane
Vice President - Finance
(Duly Authorized Officer and
Chief Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-03-1999
<CASH> 647
<SECURITIES> 0
<RECEIVABLES> 31,169
<ALLOWANCES> 1,147
<INVENTORY> 35,892
<CURRENT-ASSETS> 71,166
<PP&E> 73,785
<DEPRECIATION> 36,500
<TOTAL-ASSETS> 130,146
<CURRENT-LIABILITIES> 21,753
<BONDS> 0
0
0
<COMMON> 108
<OTHER-SE> 100,448
<TOTAL-LIABILITY-AND-EQUITY> 130,146
<SALES> 61,898
<TOTAL-REVENUES> 61,898
<CGS> 46,383
<TOTAL-COSTS> 54,565
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 7,249
<INCOME-TAX> 2,881
<INCOME-CONTINUING> 4,368
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,368
<EPS-PRIMARY> .41
<EPS-DILUTED> .39
</TABLE>
