<PAGE> 1
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 JUNE 30, 1997
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 333-16453
SHOP VAC CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 13-5609081
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2323 REACH ROAD, WILLIAMSPORT, PA 17701
(717) 326-0502
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes [x] No [ ]
Common Shares, No Par Value, Outstanding at June 30, 1997 -- 6,500 Class A
voting and 650,000 Class B non-voting.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SHOP VAC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(dollars in thousands)
<TABLE>
<CAPTION>
============================================================================================
Assets December 31, 1996 June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ........................ $ 21,141 $ 27,608
Receivables, less allowance for doubtful
accounts of $1,853 in 1996 and $2,140
in 1997 ....................................... 29,154 26,566
Inventories (note 2) ............................ 25,314 27,853
Prepaid expenses and other current assets ....... 3,222 3,530
Net current assets of discontinued operations ... 5,556 250
- --------------------------------------------------------------------------------------------
Total current assets ................................ 84,387 85,807
Property, plant, and equipment, net ............. 40,797 39,302
Other assets .................................... 6,452 6,046
- --------------------------------------------------------------------------------------------
Total Assets ........................................ $131,636 $131,155
============================================================================================
</TABLE>
(Continued)
1
<PAGE> 3
SHOP VAC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(dollars in thousands)
<TABLE>
<CAPTION>
===============================================================================================
Liabilities and Stockholders' Equity (Deficit) December 31, 1996 June 30, 1997
(Unaudited)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt ................ $ 4,297 $ 2,191
Accounts payable ................................ 20,688 22,170
Accrued expenses ................................ 26,278 23,371
- ----------------------------------------------------------------------------------------------
Total current liabilities ........................... 51,263 47,732
Long-term debt .................................. 106,100 105,062
Other liabilities ............................... 13,270 14,780
Stockholders' equity (deficit):
Common stock, Class A voting, no par,
20,000 shares authorized, 6,500 shares
issued. Class B non-voting, no par,
1,000,000 shares authorized, 650,000
shares issued ................................ 85 85
Paid in capital ................................. 110 110
Accumulated deficit ............................. (43,986) (40,089)
Foreign currency translation adjustment ......... 4,794 3,475
- ----------------------------------------------------------------------------------------------
Total stockholders' equity .......................... $ (38,997) $ (36,419)
- ----------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity .......... $ 131,636 $ 131,155
==============================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(Continued)
2
<PAGE> 4
SHOP VAC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
=================================================================================================
Three months ended Six months ended
June 30, June 30,
- -------------------------------------------------------------------------------------------------
1996 1997 1996 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales ................................. $48,238 $49,727 $96,929 $99,665
Cost of sales ............................. 35,227 35,484 71,862 72,192
- -------------------------------------------------------------------------------------------------
Gross profit .............................. 13,011 14,243 25,067 27,473
Selling, general and administrative expense 7,429 8,586 15,400 17,671
- -------------------------------------------------------------------------------------------------
Income from operations .................... 5,582 5,657 9,667 9,802
Interest expense, net ..................... 2,405 2,996 4,769 5,818
Other expense (income), net ............... 176 (34) 333 (65)
- -------------------------------------------------------------------------------------------------
Income before income taxes ................ 3,001 2,695 4,565 4,049
Income tax expense ........................ 386 9 761 152
- -------------------------------------------------------------------------------------------------
Net income (loss) ......................... $ 2,615 $ 2,686 $ 3,804 $ 3,897
=================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(Continued)
3
<PAGE> 5
SHOP VAC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows (Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
=========================================================================================
Six months ended
June 30,
- -----------------------------------------------------------------------------------------
1996 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ........................................ $ 3,804 $ 3,897
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization ........................ 3,323 3,003
Amortization included in interest expense ............ -- 292
Restructuring charges ................................ -- (918)
Changes in assets and liabilities:
Accounts and notes receivable ..................... (1,472) 1,745
Inventories ....................................... (2,099) (3,613)
Prepaid expenses and other current assets ......... (530) (717)
Other assets ...................................... 221 (100)
Accounts payable and accrued expenses ............. 3,412 4,563
Other liabilities ................................. (4,616) 1,639
- ------------------------------------------------------------------------------------------
Net cash provided (used) by continuing operations ............ 2,043 9,791
Net cash provided (used) by discontinued operations .......... (3,756) 1,619
- ------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities ............. (1,713) 11,410
- ------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures ................................. (237) (1,843)
- ------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities ............. (237) (1,843)
- ------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from revolving line-of-credit, net .............. 2,751 --
Proceeds from issuance of other long-term debt ........... 1,217 --
Long-term debt and capital lease payments ................ (2,965) (2,755)
- ------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities ............. 1,003 (2,755)
- ------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash ...................... 50 (345)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents ......... (897) 6,467
Cash and cash equivalents, beginning of year ................. 2,682 21,141
- ------------------------------------------------------------------------------------------
Cash and cash equivalents, end of quarter .................... 1,785 27,608
- ------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid for interest ................................... 4,769 4,779
Cash paid for income taxes ............................... 270 111
- ------------------------------------------------------------------------------------------
$ 5,039 $ 4,890
==========================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 6
SHOP VAC CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollars in thousands)
(1) The accompanying interim unaudited consolidated financial statements
include the accounts of Shop Vac Corporation and its wholly owned
subsidiaries (the "Company"). All intercompany accounts and transactions
are eliminated in consolidation.
These 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 statements. In the opinion of management, such
interim statements reflect all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods
presented. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the
audited consolidated financial statements and footnotes included in the
Company's Annual Report on Form 10-K dated March 21, 1997 for the year
ended December 31, 1996.
(2) Inventories are classified as follows:
<TABLE>
<CAPTION>
=========================================================================
December 31, 1996 June 30, 1997
(Unaudited)
- -------------------------------------------------------------------------
<S> <C> <C>
Raw materials ................ $11,778 $11,325
Work-in-process .............. 5,620 6,121
Finished goods ............... 7,916 10,407
- -------------------------------------------------------------------------
$25,314 $27,853
=========================================================================
</TABLE>
5
<PAGE> 7
SHOP VAC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales in the quarter were $49.7 million, an increase of $1.5 million or 3.1%
over the second quarter of 1996. Net sales in the first six months were $99.7
million, an increase of $2.7 million or 2.8% over the first six months of 1996.
Gross profit in the quarter totaled $14.2 million, an increase of $1.2 million
or 9.5% over the second quarter of 1996. Gross profit in the first six months
totaled $27.5 million, an increase of $2.4 million or 9.6% over the first six
months of 1996. The improvements in the quarter and the first six months were
due to a more favorable product mix, continued cost improvements and the sales
volume increases noted above.
Selling, general and administrative ("SG&A") expense in the quarter totaled $8.6
million, an increase of $1.2 million or 15.6% over the second quarter of 1996.
SG&A expenses in the first six months totaled $17.7 million, an increase of $2.3
million or 14.7% over the first six months of 1996. Increases in SG&A expenses
in the quarter and the first six months were primarily due to increased
advertising and anticipated expenditures for performance-based executive
incentive programs.
Income from operations in the quarter was $5.7 million, an increase of $100,000
or 1.3% over the second quarter of 1996. Income from operations in the first six
months totaled $9.8 million, an increase of $100,000 or 1.4% over the first six
months of 1996.
Interest expense was $3.0 million in the quarter, an increase of $600,000 or
24.6% over the second quarter of 1996. Interest expense in the first six months
was $5.8 million, an increase of $1.0 million or 22.0% over the first six months
of 1996. These increases were due to increases in average borrowings and rates
as a result of the issuance of the Senior Secured Notes in the fourth quarter of
1996.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997 cash and cash equivalents increased
from $21.1 million to $27.6 million due to cash flow provided by operating
activities of $11.4 million, less capital expenditures of $1.8 million and debt
reductions of $2.8 million.
6
<PAGE> 8
PART II - OTHER INFORMATION
ITEMS 1 - 5. NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27.1 Financial Data Schedule
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June 30, 1997.
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.
SHOP VAC CORPORATION
By / s / W. Earl Stogner
-----------------------------
W. EARL STOGNER
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: August 7, 1997
7
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 27,608
<SECURITIES> 0
<RECEIVABLES> 28,706
<ALLOWANCES> 2,140
<INVENTORY> 27,853
<CURRENT-ASSETS> 85,807
<PP&E> 98,900
<DEPRECIATION> 59,598
<TOTAL-ASSETS> 131,155
<CURRENT-LIABILITIES> 47,732
<BONDS> 105,062
0
0
<COMMON> 85
<OTHER-SE> (36,504)
<TOTAL-LIABILITY-AND-EQUITY> 131,155
<SALES> 99,665
<TOTAL-REVENUES> 99,665
<CGS> 72,192
<TOTAL-COSTS> 72,192
<OTHER-EXPENSES> 17,671
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,818
<INCOME-PRETAX> 4,049
<INCOME-TAX> 152
<INCOME-CONTINUING> 3,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,897
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
