<TABLE>
<CAPTION>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------
FORM 10-Q
(Mark One)
<S> <C>
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 29, 1996
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 0-20686
UNIROYAL TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0341868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 N. Tamiami Trail, Suite 900
Sarasota, FL 34236
(Address of principal executive offices) (Zip Code)
(941) 361-2100
(Registrant's telephone number, including area code)
Not applicable (Former name, former address and former fiscal year, if changed since last report)
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 .
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.
Total number of shares of outstanding stock as of January 31, 1997
Common stock 13,249,001
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
December 29, September 29,
1996 1996
------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 439 $ 2,023
Trade accounts receivable (less estimated reserve for
doubtful accounts of $358 and $369, respectively) 23,603 25,094
Inventories (Note 2) 37,578 33,170
Prepaid expenses and other current assets 1,488 1,507
Deferred income taxes 7,408 7,408
------------ ------------
Total current assets 70,516 69,202
Property, plant and equipment - net 64,201 63,984
Property, plant and equipment held for sale 11,307 10,832
Note receivable 5,000 5,000
Reorganization value in excess of amounts allocable
to identifiable assets - net 8,100 8,288
Deferred income taxes 1,982 1,485
Other assets 12,032 11,995
----------- -----------
TOTAL ASSETS $ 173,138 $ 170,786
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 29, September 29,
1996 1996
------------ -------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 648 $ 659
Trade accounts payable 15,463 16,549
Accrued expenses:
Compensation and benefits 9,318 10,166
Interest 772 2,861
Taxes, other than income 1,673 1,939
State income taxes 232 259
Other 6,900 7,621
----------- ------------
Total current liabilities 35,006 40,054
Long-term debt 82,864 72,116
Other liabilities 14,998 15,117
----------- ------------
Total liabilities 132,868 127,287
----------- ------------
Commitments and contingencies (Note 5)
Stockholders' equity (Note 4):
Preferred stock - par values $0.01; 1,000 shares authorized: Series B -
20 and 35 shares issued and outstanding, respectively
(redemption value of $150,000 per share) 3,000 5,250
Common stock - par value $0.01; 35,000,000 shares
authorized: 13,266,708 and 13,233,912 shares issued
or to be issued, respectively 133 133
Additional paid-in capital 52,517 52,517
Deficit (15,380) (14,401)
----------- ------------
40,270 43,499
Less treasury stock at cost - 50,843 shares - -
----------- ------------
Total stockholders' equity 40,270 43,499
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 173,138 $ 170,786
=========== ============
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
Three Months Three Months
Ended Ended
December 29, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 46,027 $ 46,676
Costs and expenses:
Costs of goods sold 36,447 38,250
Selling and administrative 6,503 6,889
Amortization of reorganization value in excess of
amounts allocable to identifiable assets 188 192
Depreciation and other amortization 2,038 2,487
Excess facility expense 11 236
Reorganization professional fees subsequent to
effective date 100 148
Strike settlement and training expense - 650
------------ -------------
Income (loss) before interest and income taxes 740 (2,176)
Interest expense (2,200) (2,549)
------------ -------------
Loss before income taxes (1,460) (4,725)
Income tax benefit (Note 3) 481 1,721
------------ -------------
Net loss $ (979) $ (3,004)
============ =============
Net loss per common share and common stock equivalent (Note 6):
Primary and fully diluted $ (0.07) $ (0.23)
============ =============
Average number of shares used in computation 13,228,613 13,088,380
============ =============
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Three Months
Ended Ended
December 29, December 31,
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (979) $ (3,004)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 2,038 2,487
Deferred tax benefit (497) (1,738)
Amortization of reorganization value in excess of
amounts allocable to identifiable assets 188 192
Amortization of Senior Secured Notes discount 27 23
Amortization of refinancing and debt issuance costs 101 119
Other 49 46
Changes in assets and liabilities:
Decrease in trade accounts receivable 1,491 5,035
Increase in inventories (4,408) (2,918)
Decrease in prepaid expenses and
other assets (207) (416)
Decrease in trade accounts payable (1,086) (1,862)
Decrease in accrued expenses (3,951) (2,607)
Increase (decrease) in other liabilities (119) 499
----------- ------------
Net cash used in operating activities (7,353) (4,144)
----------- ------------
INVESTING ACTIVITIES - Purchases of property, plant and
equipment (Note 7) (2,691) (1,786)
----------- ------------
FINANCING ACTIVITIES:
Decrease in term loans (177) (143)
Increase in revolving loan balance 10,887 5,870
Redemption of Series B Preferred Stock (2,250) -
----------- ------------
Net cash provided by financing activities 8,460 5,727
----------- ------------
Net decrease in cash (1,584) (203)
Cash and cash equivalents at beginning of period 2,023 291
----------- ------------
Cash and cash equivalents at end of period $ 439 $ 88
=========== ============
See notes to condensed financial statements.
</TABLE>
<PAGE>
UNIROYAL TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For the Three Months Ended
December 29, 1996 and December 31, 1995
1. BASIS OF PRESENTATION
The interim Condensed Consolidated Financial Statements of Uniroyal
Technology Corporation and its wholly owned subsidiaries UTCMI Corp.
and ULC Corp. (the "Company") are unaudited and should be read in
conjunction with the Company's audited financial statements and notes
thereto for the fiscal years ended September 29, 1996, October 1, 1995
and October 2, 1994. The Company's fiscal year ends on the Sunday
following the last Friday in September.
Certain reclassifications were made to the prior year financial
statements to conform to current period presentations. In the opinion
of the Company, all adjustments necessary for a fair presentation of
such Condensed Consolidated Financial Statements have been included.
Such adjustments consist only of normal recurring items. Interim
results are not necessarily indicative of results for a full year. The
interim Condensed Consolidated Financial Statements and notes thereto
are presented as permitted by the Securities and Exchange Commission
and do not contain certain information included in the Company's annual
Financial Statements and notes thereto.
2. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 29, September 29,
1996 1996
------------ -------------
<S> <C> <C>
Raw materials and supplies $ 20,165 $ 17,058
Work in process 3,322 4,400
Finished goods 14,091 11,712
----------- -----------
Total $ 37,578 $ 33,170
=========== ===========
</TABLE>
3. INCOME TAXES
The income tax benefit for the three months ended December 29, 1996 and
December 31, 1995 were calculated through the use of the estimated
income tax rates based on annualized income.
4. STOCKHOLDERS' EQUITY
On December 16, 1996 the Company redeemed 15 shares of Series B
Preferred Stock for $2,250,000.
On February 4, 1997 the Company redeemed the remaining 20 shares
of Series B Preferred Stock for $3,000,000.
On December 18, 1996, the Board designated a new series of preferred
stock of the Company termed Series C Junior Participating Preferred
Stock, $.01 par value ("Series C Preferred") and reserved 450 shares of
the Series C Preferred for issuance. At the same time, the Board
declared a dividend of a right to acquire 1/100,000 of a share of
Series C Preferred to the holder of each share of common stock (the
"Rights") under a Shareholder Rights Plan. The Rights will trade with
the common stock and be detachable from the common stock and
exercisable only in the event of an acquisition of or grant of the
right to acquire 15% or more of the common stock by one party or common
group or a tender offer or exchange offer to acquire 15% or more of the
common stock.
During the three months ended December 29, 1996, the Board of Directors
declared a dividend of $105,000 for the period July 1, 1996 through
September 30, 1996 on the Series B Preferred Stock equal to 8% per
annum of the redemption price for the shares of Series B Preferred
Stock ($150,000 per share). Pursuant to the Company's Amended and
Restated Certificate of Incorporation, the dividends were paid by the
delivery of 32,796 shares of the Company's common stock. Such dividends
declared were charged to additional paid-in capital.
On January 1, 1997 the Board of Directors declared a dividend of
$98,000 for the period October 1, 1996 through December 31, 1996 on the
Series B Preferred Stock equal to 8% per annum of the redemption price
for the outstanding shares of Series B Preferred Stock ($150,000 per
share). Pursuant to the Company's Amended and Restated Certificate of
Incorporation, the dividends were paid by the delivery of 33,136 shares
of the Company's common stock in January 1997. Such dividends declared
were charged to additional paid-in capital.
On February 4, 1997 the Board of Directors declared a dividend of
$17,000 on the 20 shares of Series B Preferred Stock redeemed on
February 4, 1997 equal to 8% per annum of the redemption price for the
shares of Series B Preferred Stock ($150,000 per share). Pursuant to
the Company's Amended and Restated Certificate of Incorporation, the
dividends were paid by the delivery of 5,637 shares of the Company's
common stock. Such dividends declared were charged to additional
paid-in capital.
5. COMMITMENTS AND CONTINGENCIES
Bankruptcy Proceedings
Notwithstanding the confirmation and effectiveness of the Plan of
Reorganization (the "Plan") of the Company's predecessors (the
"Predecessor Companies"), the United States Bankruptcy Court for the
Northern District of Indiana, South Bend Division (the "Bankruptcy
Court") continues to have jurisdiction to, among other things, resolve
disputed prepetition claims and to resolve other matters that may arise
in connection with or relate to the Predecessor Companies' Plan. The
Company has resolved, through negotiation or through dismissal by the
Bankruptcy Court, approximately $38,000,000 in disputed claims. A total
of 9,768,683 such shares have been issued to the holders of unsecured
claims against the Predecessor Companies in settlement of the allowed
unsecured claims against the estates of the Predecessor Companies and
to the Company's ESOP. The Company retained 50,843 shares of common
stock which are included in treasury stock. The remaining shares are
being held pending resolution of certain retiree medical claims.
Litigation
Uniroyal Retiree Benefits, Inc. ("URBI"), an organization that is
unaffiliated with the Company, administers a medical, prescription drug
and life insurance program for certain retired employees of the
Predecessor Companies and certain affiliates of the Predecessor
Companies. This program is funded by the Company in accordance with
terms of an agreement entered into by and between the predecessors of
URBI and the Company in connection with the Predecessor Companies'
Plan. The Company has disputes with URBI concerning the eligibility of
certain participants in URBI's medical plan and the level of payments
due. URBI had filed a complaint with the Bankruptcy Court claiming the
Company had breached its agreement relating to funding URBl's
operations. The Company filed counterclaims against URBI claiming
breach of contract, fraud, negligent misrepresentation, unjust
enrichment, declaratory judgment and clarification or reformation of
contract. The Bankruptcy Court ruled in favor of URBI with respect to
certain matters and in favor of the Company with respect to other
matters. The effect to the Company was a net judgment against the
Company of approximately $211,000. URBI filed an additional complaint
with the Bankruptcy Court concerning payments due in Fiscal 1996. The
Bankruptcy Court then ordered the Company to increase its monthly
payments to URBI to approximately $160,000 through September 1996. The
Company has agreed to continue payments at that level through February
1997. The Company filed an appeal of the Bankruptcy Court's December
20, 1995 ruling with the United States District Court for the Northern
District of Indiana, South Bend Division. Such appeal is still pending.
The Company has agreed in principle with URBI to settle the foregoing
litigation on a level of funding to reflect URBI's current program
needs.
The Company is also engaged in litigation arising from the ordinary
course of business. Management believes the ultimate outcome of such
litigation will not have a material adverse effect upon the Company's
results of operations, cash flows or financial position.
Environmental Factors
The Company is subject to a wide range of federal, state and local laws
and regulations designed to protect the environment and worker health
and safety. The Company's management emphasizes compliance with these
laws and regulations. The Company has instituted programs to provide
guidance and training and to audit compliance with environmental laws
and regulations at Company owned or operated facilities. The Company's
policy is to accrue environmental and cleanup-related costs of a
non-capital nature when it is probable both that a liability has been
incurred and that the amount can be reasonably estimated.
<PAGE>
Claims arising from real property owned by the Company are not affected
by a settlement agreement entered into in connection with the
Predecessor Companies' Plan with the United States Environmental
Protection Agency, the United States Department of the Interior, and
the States of Wisconsin and Indiana. In connection with the acquisition
of a manufacturing facility in South Bend, Indiana, the Company assumed
costs of remediation of soil and ground water contamination which the
Company estimates will cost not more than $1,000,000 over a
five-to-seven year period. The Company has placed $1,000,000 in an
escrow account to be used for such remediation in accordance with the
terms of the purchase agreement.
The Company has established a reserve for clean-up costs, including
environmental remediation costs, related to the Ensolite Sale and the
Company's planned exit from its Mishawaka, Indiana leased manufacturing
facility. The Company estimates the cost for all such clean-up costs to
be approximately $610,000; however, the ultimate cost will depend on
the extent of contamination found as the project progresses. The
Company expects the clean-up to be substantially completed within one
year.
Based on information available as of December 29, 1996, the Company
believes that the costs of known environmental matters either have been
adequately provided for or are unlikely to have a material adverse
effect on the Company's operations, cash flows or financial position.
6. LOSS PER COMMON SHARE
The computations of primary and fully diluted loss per common share for
the three months ended December 29, 1996 and December 31, 1995 are
based on the weighted average number of common shares issued and
outstanding (or to be issued pursuant to the Predecessor Companies'
Plan) less the average number of shares held in treasury for the
period. Primary and fully diluted loss per common share for the three
months ended December 29, 1996 and December 31, 1995 do not include the
assumed conversion of the Series B Preferred Stock nor the exercise of
the warrants and the employee stock options since their inclusion would
have been anti-dilutive. The convertible preferred stock issued to the
PBGC, the warrants and stock options are considered to be common stock
equivalents.
7. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information are as follows:
Payments for income taxes and interest expense were (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
December 29, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Income tax payments $ 30 $ 67
Interest payments 4,338 4,449
</TABLE>
The purchases of property, plant and equipment and net cash used in
financing activities for the three months ended December 31, 1995 do
not include $642,000 related to property held under capitalized leases.
The Company did not enter into any capital lease agreements during the
three months ended December 29, 1996.
Net cash used in financing activities for the three months ended
December 29, 1996 and December 31, 1995 do not include dividends
declared on the Series B Preferred Stock since they were paid with the
issuance of 32,796 and 57,573 shares, respectively, of the Company's
common stock.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
First Quarter Fiscal 1997 Compared with
the First Quarter Fiscal 1996
Net Sales. The Company's net sales decreased in the first quarter of Fiscal 1997
by approximately 1% to $46,027,000 from $46,676,000 in the first quarter of
Fiscal 1996. During Fiscal 1996 the Company sold its Ensolite specialty foams
division. Included in the first quarter of Fiscal 1996 are net sales of Ensolite
of approximately $5,434,000. Excluding such sales from the prior period amounts,
net sales of the Company's continuing businesses increased by approximately 12%
in the first quarter of Fiscal 1997 compared to the first quarter of Fiscal
1996. This increase is attributable to increased net sales of the Company's
adhesives and sealants products in anticipation of the Company's move of the
Specialty Adhesives Segment, as well as certain other Company operations, to its
South Bend, Indiana facility during the second quarter of Fiscal 1997 and to
generally lower sales of the Company's specialty adhesives and sealants products
during the first three months of Fiscal 1996 due to the timing of customer
orders. Also contributing to the increase were increased unit volume sales of
the Company's Coated Fabrics Segment's new automotive product line in the first
quarter of Fiscal 1997. This new product line was introduced in Fiscal 1995.
Net sales by the High Performance Plastics Segment increased approximately 1% in
the first quarter of Fiscal 1997 to $25,304,000 from $24,998,000 in the first
quarter of Fiscal 1996. The increase was principally due to increased unit
volume sales of Polycast mil-spec and specialty acrylic sheet. This increase was
partially offset by decreased unit volume sales of certain of Royalite's
specialty thermoplastic sheet products due to the timing of customer orders.
Net sales by the Coated Fabrics Segment increased in the first quarter of Fiscal
1997 approximately 8% to $14,838,000 from $13,776,000 in the first quarter of
Fiscal 1996. The increase was principally due to increased sales prices for, and
unit volume of, product sales to the automotive industry. Increased sales to the
automotive industry resulted from the Company's new product line introduced in
Fiscal 1995. Net sales of the segment's Naugahyde vinyl coated fabrics were
comparable in the first quarter of Fiscal 1997 and Fiscal 1996.
Net sales by the Specialty Adhesives Segment decreased in the first quarter of
Fiscal 1997 by approximately 26% to $5,885,000 from $7,902,000 in the first
quarter of Fiscal 1996. During Fiscal 1996 the Company sold its Ensolite
specialty foams division. Included in the first quarter of Fiscal 1996 are net
sales of Ensolite of approximately $5,434,000. Excluding such sales from the
prior period amounts, net sales of the Specialty Adhesives Segment increased by
approximately 138% in the first quarter of Fiscal 1997 compared to the first
quarter of Fiscal 1996. This increase is attributable to increased net sales of
the Company's adhesives and sealants products in anticipation of the Company's
move of the Specialty Adhesives Segment, as well as certain other Company
operations, to its South Bend, Indiana facility during the second quarter of
Fiscal 1997 and to generally lower sales of the Company's specialty adhesives
and sealants products during the first three months of Fiscal 1996 due to the
timing of customer orders. The move to the South Bend, Indiana facility will
halt production of the Company's adhesives and sealants products for
approximately four weeks during the second quarter of Fiscal 1997.
<PAGE>
Income (Loss) Before Interest And Income Taxes. Income before interest and
income taxes for the first quarter of Fiscal 1997 was $740,000, compared to a
loss of $2,176,000 for the first quarter of Fiscal 1996. The increase in income
before interest and taxes was primarily due to the overall increased net sales
of the Company's continuing businesses. Also contributing to the increase was
the impact of the Company's decision effective in Fiscal 1996 to dispose of the
Coated Fabrics Segment's Port Clinton, Ohio manufacturing operation. As a result
of that decision, in Fiscal 1996 the Company established reserves associated
with long-lived assets to be disposed of in accordance with Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). In
accordance with SFAS No. 121, during the first quarter of Fiscal 1997 the
Company did not incur depreciation expense on the long-lived assets to be
disposed of. In addition, during the first quarter of Fiscal 1997, the Company
reduced the reserves established in connection with the Ensolite Sale as a
result the Company's performance under the toll manufacturing arrangement with
Rubatex as well as the reduction of reserves established to clean up and exit
the Mishawaka, Indiana manufacturing facility and move to the Company's South
Bend, Indiana manufacturing facility based on the refinement of management's
estimates of such costs.
The High Performance Plastics Segment's income before interest and income taxes
for the first quarter of Fiscal 1997 increased to $1,345,000 from $833,000 in
the first quarter of Fiscal 1996. The increase was due primarily to the increase
in net sales of Polycast acrylic products and the inclusion in the prior period
of a $650,000 reserve established in settlement of a strike by Polycast
employees. Partially offsetting these increases was the effect of the lower net
sales of the Royalite Thermoplastic products division.
The Coated Fabrics Segment's loss before interest and income taxes decreased in
the first quarter of Fiscal 1997 to $1,042,000 from $1,927,000 in the first
quarter of Fiscal 1996 primarily due to the overall increase in net sales. Also
contributing to the decrease was the impact of the Company's decision effective
in Fiscal 1996 to dispose of the segment's Port Clinton, Ohio manufacturing
operation. As a result of that decision, in Fiscal 1996 the Company established
reserves associated with long-lived assets to be disposed of in accordance SFAS
No. 121. In accordance with SFAS No. 121, during the first quarter of Fiscal
1997 the Company did not incur depreciation expense on the long-lived assets to
be disposed of. In addition in the first quarter of Fiscal 1996 the segment
incurred increased scrap costs and manufacturing inefficiencies in the
production of products for an automotive customer. Partially offsetting these
amounts were increased production costs incurred in the first quarter of Fiscal
1997 as a result of a raw materials supplier's decision to exit its business. As
a result, the segment incurred additional costs to qualify its products using
comparable raw materials available from other supply sources.
The Specialty Adhesives Segment's income before interest and income taxes in the
first quarter of Fiscal 1997 was $785,000 compared to a loss of $890,000 in the
first quarter of Fiscal 1996. The increase was primarily due to the 138%
increase in net sales of the segment's specialty adhesives and sealants products
in the first quarter of Fiscal 1997 compared to the first quarter of Fiscal
1996. Also contributing to the increase was the reduction in the first quarter
of Fiscal 1997 of reserves established in connection with the Ensolite sale
based on the Company's performance under the toll manufacturing arrangement with
Rubatex as well as the reduction of reserves established to clean up and exit
the Mishawaka, Indiana manufacturing facility and move to the Company's South
Bend, Indiana manufacturing facility based on the refinement of management's
estimates of such costs.
<PAGE>
Approximately $160,000 of other expenses incurred in the first quarter of Fiscal
1997 were not allocated to any segment of the Company's business. There were not
such unallocated amounts in the first quarter of Fiscal 1996.
Amortization of reorganization value in excess of amounts allocable to
identifiable assets was $188,000 and $192,000 in the first quarter of Fiscal
1997 and Fiscal 1996, respectively,
Interest Expense. Interest expense in the first quarter of Fiscal 1997 decreased
to $2,200,000 from $2,549,000 in the first quarter of Fiscal 1996. The decrease
is primarily due to the interest income earned by the Company on the $5.0
million 11.75% note issued by RBX, Inc. as part of the Ensolite Sale in June
1996.
Income Tax Benefit. Income tax benefit in the first quarter of Fiscal 1997 was
$481,000 as compared to an income tax benefit of $1,721,000 in the first quarter
of Fiscal 1996. The provisions for income tax benefit were calculated through
the use of the estimated income tax rates based on annualized income.
Liquidity and Capital Resources
For the first quarter of Fiscal 1997, operating activities used $7,353,000 in
cash as compared to $4,144,000 used during the first quarter of Fiscal 1996. The
increase in cash used in operations for the first quarter of Fiscal 1997
resulted primarily from increased inventories and trade accounts receivable and
was partially offset by the decreased net loss.
Net cash used in investing activities for the first quarter of Fiscal 1997 was
$2,691,000 as compared to $1,786,000 during the first quarter of Fiscal 1996.
The net cash was used during each of the periods presented to purchase property,
plant and equipment. The Company does not have any significant specific
commitments for the purchase of property, plant and equipment.
Net cash provided by financing activities was $8,460,000 during the first
quarter of Fiscal 1997 as compared to $5,727,000 provided during the first
quarter of Fiscal 1996. The principal source of cash during the first quarter of
Fiscal 1997 and Fiscal 1996 was borrowings under the Company's revolving line of
credit. This increase was partially offset by the redemption of 15 shares of the
Series B Preferred Stock for $2,250,000 and the contractual repayment of capital
lease obligations.
The Company on December 29, 1996, had approximately $439,000 in cash and cash
equivalents as compared to approximately $2,023,000 at September 29, 1996.
Working capital at December 29, 1996 was $35,510,000 compared to $29,148,000 at
September 29, 1996. The Company had outstanding borrowings of $10,886,000 under
its $25,000,000 revolving credit facility (subject to a borrowing base
limitation, approximately $20,000,000 at December 29, 1996). The principal use
of cash during the first quarter of Fiscal 1997 was to pay the semi-annual
interest payment on the Company's Senior Secured Notes. The Company believes
that cash from its operations and its ability to borrow under the revolving
credit facility mentioned above provide it sufficient liquidity to finance its
existing level of operations and meet its debt service obligations. However,
there can be no assurance that the Company's operations together with amounts
available under the revolving credit facility will continue to be sufficient to
finance its existing level of operations and meet its debt service obligations.
The Company's ability to meet its debt service and other obligations depends on
its future performance, which in turn, is subject to general economic conditions
and to financial, business and other factors, including factors beyond the
Company's control. If the Company is unable to generate sufficient cash flow
from operations, it may be required to refinance all or a portion of its
existing debt or obtain additional financing. There can be no assurance that the
Company will be able to obtain such refinancing or additional financing.
<PAGE>
Effects of Inflation
The markets in which the Company sells products are competitive. In particular,
the Company has encountered in connection with its sales of coated fabrics to
the automotive industry and its sales of acrylics to the aerospace industry,
effective resistance to price increases generally. Thus, in an inflationary
environment the Company may not in all instances be able to pass through to
consumers general price increases in which event the Company's operations may be
materially impacted if such conditions were to occur. The Company has not in the
past been adversely impacted by general price inflation.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
(a) The Company knows of no material pending legal proceedings to
which the Company or any of its subsidiaries is a party or of
which any of their property is the subject other than routine
litigation incidental to the Company's business.
(b) No legal proceedings were terminated during the three months
ended December 29, 1996, other than routine litigation incidental
to the Company's business.
Item 2. Changes in Securities
None.
Item 3. Default upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<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.
DATE: February 7, 1997 By: /s/ George J. Zulanas, Jr.
---------------- --------------------------
George J. Zulanas, Jr.
Vice President, Treasurer and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Condensed
Consolidated Balance Sheet as of December 29, 1996 and the Condensed
Consolidated Statement of Operations for the the three month period ended
December 29, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000890096
<NAME> Uniroyal Technology Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> DEC-29-1996
<CASH> 439
<SECURITIES> 0
<RECEIVABLES> 23,961
<ALLOWANCES> 358
<INVENTORY> 37,578
<CURRENT-ASSETS> 70,516
<PP&E> 106,928
<DEPRECIATION> 31,420
<TOTAL-ASSETS> 173,138
<CURRENT-LIABILITIES> 35,006
<BONDS> 82,864
0
3,000
<COMMON> 133
<OTHER-SE> 37,137
<TOTAL-LIABILITY-AND-EQUITY> 173,138
<SALES> 46,027
<TOTAL-REVENUES> 46,027
<CGS> 36,447
<TOTAL-COSTS> 45,287
<OTHER-EXPENSES> 8,840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,200
<INCOME-PRETAX> (1,460)
<INCOME-TAX> (481)
<INCOME-CONTINUING> (979)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (979)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
