<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 1, 2000
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 -- 9,713,248 shares as of May 1, 2000
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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 1, 2000 and April 3, 1999 . . . . . . . 3
Condensed Consolidated Balance Sheets - April 1, 2000,
December 31, 1999 and April 3, 1999 . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows - Three
Months Ended April 1, 2000 and April 3, 1999 . . . . . . . 5
Notes to Condensed Consolidated Financial Statements -
April 1, 2000 . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2
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Part I. Financial Information
-----------------------------
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Three Months Ended
----------------------
April 1, April 3,
2000 1999
-------- --------
Sales $ 73,740 $ 61,898
Cost of sales 55,625 46,383
-------- --------
Gross margin 18,115 15,515
Selling, general and administrative expenses 9,639 8,182
-------- --------
Operating income 8,476 7,333
Interest expense 478 84
-------- --------
Earnings before income tax expense 7,998 7,249
Income tax expense 3,139 2,881
-------- --------
Net earnings $ 4,859 $ 4,368
======== ========
Earnings per share of common stock
Basic $ .49 $ .41
======== ========
Diluted $ .49 $ .39
======== ========
Shares used in computing earnings per share
Basic 9,911 10,770
======== ========
Diluted 10,006 11,106
======== ========
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 1, April 3, December 31,
2000 1999 1999
-------- -------- --------
Assets
------
<S> <C> <C> <C>
Cash $ - $ 647 $ 1,148
Accounts receivable 35,513 30,022 29,574
Inventories 51,082 35,892 50,450
Other assets 3,463 4,605 3,642
-------- -------- --------
Current assets 90,058 71,166 84,814
Property, plant and equipment, net 44,099 37,285 44,480
Intangibles and other assets 29,580 21,695 29,841
-------- -------- --------
Total assets $163,737 $130,146 $159,135
======== ======== ========
Liabilities and Stockholders' Equity
------------------------------------
Accounts payable $ 10,883 $ 6,844 $ 8,200
Accrued liabilities 19,530 14,909 15,851
Revolving credit facility 23,400 - 26,700
-------- -------- --------
Current liabilities 53,813 21,753 50,751
Deferred compensation and other liabilities 8,943 7,837 8,614
-------- -------- --------
Total liabilities 62,756 29,590 59,365
Stockholders' equity 100,981 100,556 99,770
-------- -------- --------
Total liabilities and stockholders' equity $163,737 $130,146 $159,135
======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Three Months Ended
----------------------
April 1, April 3,
2000 1999
-------- --------
Operating Activities
Net earnings $ 4,859 $ 4,368
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 1,567 1,135
Deferred income taxes 244 184
Changes in assets and liabilities
Accounts receivable (5,939) (3,138)
Inventories (632) 2,238
Accounts payable and accrued liabilities 6,066 1,851
Other 511 521
-------- --------
Cash provided by operating activities 6,676 7,159
-------- --------
Investing Activities
Capital expenditures (876) (1,207)
Proceeds from sales of property, plant and equipment - 1,024
-------- --------
Cash used in investing activities (876) (183)
-------- --------
Financing Activities
Net repayments under revolving credit facility (3,300) (5,400)
Proceeds from exercise of stock options - 414
Repurchase of common stock (3,648) (1,343)
-------- --------
Cash used in financing activities (6,948) (6,329)
-------- --------
Net change in cash (1,148) 647
Cash at beginning of period 1,148 -
-------- --------
Cash at end of period $ - $ 647
======== ========
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 1, 2000 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000.
The balance sheet at December 31, 1999 has been derived from the
audited financial statements at that date but does not include all
information and footnotes required by generally accepted accounting
principles for complete financial statements. For further
information, refer to the consolidated financial statements and
footnotes thereto included in Chromcraft Revington's annual report on
Form 10-K for the year ended December 31, 1999.
Note 2. 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 95,000 and 336,000 for the three months ended April 1,
2000 and April 3, 1999, respectively. Stock options to purchase 472,160
shares of common stock at an average price of $12.70 per share and
105,064 shares at an average price of $18.09 per share were outstanding
during the first quarter of 2000 and 1999, respectively, but were not
included in the computation of diluted earnings per share because the
options' exercise prices were greater than the average market price of
the common shares for those periods and, therefore, the effect would
be antidilutive.
6
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Note 3. Inventories
The components of inventory consisted of the following:
(In thousands)
------------------------------------
April 1, April 3, December 31,
2000 1999 1999
-------- -------- --------
Raw materials $ 18,125 $ 12,110 $ 18,521
Work in process 8,429 6,543 8,069
Finished goods 26,661 18,943 25,866
-------- -------- --------
Inventories at FIFO cost 53,215 37,596 52,456
LIFO reserve (2,133) (1,704) (2,006)
-------- -------- --------
$ 51,082 $ 35,892 $ 50,450
======== ======== ========
Note 4. Accrued Liabilities
Accrued liabilities consisted of the following:
(In thousands)
------------------------------------
April 1, April 3, December 31,
2000 1999 1999
-------- -------- --------
Employee benefit plans $ 4,653 $ 3,314 $ 5,434
Income taxes payable 2,567 2,156 -
Salaries, wages and commissions 2,562 1,943 1,907
Vacation and holiday pay 1,583 1,481 1,162
Workers' compensation plans 1,614 1,343 1,451
Other accrued liabilities 6,551 4,672 5,897
-------- -------- --------
$ 19,530 $ 14,909 $ 15,851
======== ======== ========
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
Chromcraft Revington designs, manufactures and sells residential and
commercial furniture through its wholly owned subsidiaries Chromcraft
Corporation ("Chromcraft"), Peters-Revington Corporation ("Peters-
Revington"), Silver Furniture Co., Inc. ("Silver Furniture"), Cochrane
Furniture Company, Inc. ("Cochrane Furniture") and Korn Industries,
Incorporated ("Korn Industries").
7
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The following table sets forth the results of operations of Chromcraft
Revington for the three months ended April 1, 2000 and April 3, 1999
expressed as a percentage of sales.
Three Months Ended
----------------------
April 1, April 3,
2000 1999
-------- --------
Sales 100.0 % 100.0 %
Cost of sales 75.4 75.0
-------- --------
Gross margin 24.6 25.0
Selling, general and administrative expenses 13.1 13.2
-------- --------
Operating income 11.5 11.8
Interest expense .7 .1
-------- --------
Earnings before income tax expense 10.8 11.7
Income tax expense 4.2 4.6
-------- --------
Net earnings 6.6 % 7.1 %
======== ========
The operations of Korn Industries, acquired September 2, 1999, are
included in the Condensed Consolidated Statements of Earnings from the
date of acquisition.
Three Months Ended April 1, 2000 Compared to Three Months Ended April 3, 1999
-----------------------------------------------------------------------------
Sales
Consolidated sales for the three months ended April 1, 2000 increased
19.1% to $73,740,000 from $61,898,000 for the three months ended April
3, 1999. The increase in sales for the first three months of 2000 was
primarily due to the inclusion of Korn Industries. For the first
quarter of 2000, shipments of bedroom and commercial furniture were
higher, while shipments of occasional, dining room and upholstered
furniture were slightly lower as compared to the first quarter last
year.
In general, selling prices for the first three months of 2000 were
slightly higher as compared to the prior year period.
Gross Margin
Gross margin as a percentage of sales was 24.6% for the three months
ended April 1, 2000 as compared to 25.0% for the three months ended
April 3, 1999. The decrease in the gross margin percentage for the
first quarter of 2000 was due to the inclusion of Korn Industries'
operating results and a lower margin at the Company's Chromcraft
subsidiary primarily due to unabsorbed fixed overhead as a result of
the lower sales volume. The gross margin percentage decrease was
partially offset by continued margin improvement at Cochrane
Furniture.
8
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Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales
for the three months ended April 1, 2000 remained at approximately the
same level as compared to the prior year period at 13.1% and 13.2%,
respectively.
Interest Expense
Interest expense during the first three months of 2000 was $478,000 as
compared to $84,000 for the first three months of 1999. The increase
in interest expense for 2000 was primarily due to higher average bank
borrowings during the period attributable to the Korn Industries
acquisition and the repurchase of Chromcraft Revington's common stock.
Income Tax Expense
Chromcraft Revington's effective tax rate was 39.3% and 39.7% for the
three month periods ended April 1, 2000 and April 3, 1999, respectively.
The decrease in the effective tax rate for 2000 was due to lower state
income taxes.
Liquidity and Capital Resources
Operating activities provided $6,676,000 of cash during the three
months ended April 1, 2000 as compared to $7,159,000 during the three
months ended April 3, 1999. The decrease in cash generated from
operating activities during the first three months of 2000 as compared
to the prior year period was primarily due to an increase in working
capital investment. Accounts receivable increased $5,939,000 during
the first quarter of 2000 as compared to an increase of $3,138,000
during the same period last year. The increase was primarily due to
the higher sales volume. Inventories increased $632,000 during the
three months ended April 1, 2000 as compared to a decrease of
$2,238,000 during the first three months of 1999. The increased
inventory level reflected a planned buildup of inventory at Korn
Industries. The working capital investment in accounts receivable and
inventories was partially offset by an increase in payables and
accruals during the first quarter of this year.
Investing activities used $876,000 and $183,000 of cash during the
three months ended April 1, 2000 and April 3, 1999, respectively.
Capital expenditures were $876,000 for the three months ended April 1,
2000 as compared to $1,207,000 during the year ago period. Chromcraft
Revington expects capital expenditures to be approximately $5,000,000
for the year ending December 31, 2000. During the first three months
of 1999, Chromcraft Revington received cash proceeds of $1,024,000 in
connection with several asset disposals.
Financing activities used $6,948,000 and $6,329,000 of cash during the
three months ended April 1, 2000 and April 3, 1999, respectively, to
reduce bank indebtedness under a revolving credit facility and to
acquire shares of Chromcraft Revington's common stock. During the
9
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first three months of 2000, Chromcraft Revington purchased, under a
stock repurchase plan, 408,900 shares of its common stock for
$3,648,000. During the same period last year, 88,600 shares of common
stock were purchased for $1,343,000. At April 1, 2000, Chromcraft
Revington had unused capacity under its revolving credit facility,
after reduction for outstanding letters of credit, of $33,908,000.
The revolving credit facility matures December 20, 2000. Management
expects that a new long-term bank agreement will be in place before
the present facility expires.
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." These forward-looking statements can be
generally identified as such because the context of the statements
includes words such as "plans," "may," "anticipates," "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 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
No reports on Form 8-K were filed during the three months ended
April 1, 2000.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Chromcraft Revington, Inc. has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Chromcraft Revington, Inc.
----------------------------
(Registrant)
Date: May 16, 2000 /s/ Frank T. Kane
------------ ----------------------------
Frank T. Kane
Vice President - Finance
(Duly Authorized Officer and
Chief Financial Officer)
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> APR-01-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 37,133
<ALLOWANCES> 1,620
<INVENTORY> 51,082
<CURRENT-ASSETS> 90,058
<PP&E> 83,997
<DEPRECIATION> 39,898
<TOTAL-ASSETS> 163,737
<CURRENT-LIABILITIES> 53,813
<BONDS> 0
0
0
<COMMON> 109
<OTHER-SE> 100,872
<TOTAL-LIABILITY-AND-EQUITY> 163,737
<SALES> 73,740
<TOTAL-REVENUES> 73,740
<CGS> 55,625
<TOTAL-COSTS> 65,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 478
<INCOME-PRETAX> 7,998
<INCOME-TAX> 3,139
<INCOME-CONTINUING> 4,859
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,859
<EPS-BASIC> .49
<EPS-DILUTED> .49
</TABLE>
