SEC File No. 33-85044-d
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31,1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File number 33-85044-d
NACO Industries, Inc.
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(Exact Name of Registrant as specified in its charter)
Utah 48-0836971
---- ----------
(State of Incorporation) (Federal I.R.S. No.)
395 West 1400 North, Logan, Utah 84341
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number 801-753-8020
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
As of August 31, 1997, the Registrant had 1,843,750 shares of Common
Stock and 165,412 shares of Preferred Stock outstanding.
Transitional Small Business Disclosure Format Yes No X
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
See attached Consolidated Financial Statements for August 31, 1997.
2
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NACO Industries, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1997
3
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PART 1 - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
NACO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
Aug. 31 November 30
------------------ ------------------
ASSETS 1997 1996
- ------ ------------------ ------------------
Current assets:
<S> <C> <C>
Cash $ 153,010 198,306
Accounts receivable, net of allowances
of $45,102 / $72,075 801,145 615,775
Inventory 688,391 668,501
Prepaid income taxes 9,300 48,600
Other current assets 141,438 72,202
------------------ ------------------
Total current assets 1,793,284 1,603,384
------------------ ------------------
Property and equipment:
Land 40,700 40,700
Buildings and improvements 591,343 526,329
Equipment and vehicles 2,341,362 2,033,174
Equipment construction in progress 140,363 93,130
------------------ ------------------
Total property and equipment 3,113,768 2,693,333
Accumulated depreciation (1,378,923) (1,195,036)
------------------ ------------------
Net property and equipment 1,734,845 1,498,297
------------------ ------------------
Other assets:
Intangible and other assets 107,055 105,907
------------------ ------------------
Total other assets 107,055 105,907
------------------ ------------------
Total assets $ 3,635,184 3,207,588
================== ==================
</TABLE>
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<TABLE>
NACO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
Aug. 31 November 30
------------------ ------------------
LIABILITIES: 1997 1996
- ------------
------------------ ------------------
Current liabilities:
<S> <C> <C>
Accounts payable $ 324,831 544,074
Accrued expenses 158,430 188,076
Line of credit 824,326 664,326
Current portion of long-term obligations 279,083 316,215
Payable to related party (14,321) 34,382
------------------ ------------------
Total current liabilities 1,572,349 1,747,073
Long-term liabilities:
Long-term obligations, less current portion 783,734 896,379
Deferred income taxes 79,100 79,100
------------------ ------------------
Total long-term liabilities 862,834 975,479
------------------ ------------------
Total liabilities 2,435,183 2,722,552
Stockholders' equity:
Common stock, $.01 par value; 10,000,000
shares authorized; 2,262,301 issued
(including 418,551 shares in treasury) 22,624 19,186
Preferred Stock, 7% Cumulative, convertible
$3.00 par value Shares authorized; 330,000.
shares issued 165,412 and 132,412,
respectively (including 1,667 shares in
treasury) (Aggregate liquidation preference
$992,472 andspectively) 496,236 397,236
Additional paid-in capital 990,853 152,819
Retained earnings (158,143) 57,364
------------------ ------------------
1,351,570 626,605
Less: treasury stock - at cost (151,569) (141,569)
------------------ ------------------
Total stockholders' equity 1,200,001 485,036
------------------ ------------------
Total liabilities and
stockholders' equity $ 3,635,184 3,207,588
================== ==================
</TABLE>
See Notes to Consolidated Financial Statements.
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<TABLE>
NACO INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three months ended Nine months ended
August 31 August 31
---------------------------------- ----------------------------------
1997 1996 1997 1996
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Sales, net $ 1,815,298 1,488,340 5,796,356 4,943,961
Cost of goods sold 1,236,670 866,258 3,724,261 2,847,281
-------------- -------------- --------------- --------------
Gross profit 578,628 622,082 2,072,095 2,096,680
Operating expenses:
Selling expenses 362,606 400,947 1,117,607 1,016,138
General and administrative expenses 340,091 276,178 986,968 827,018
-------------- -------------- --------------- --------------
Total operating expenses 702,697 677,125 2,104,575 1,843,156
-------------- -------------- --------------- --------------
Income (loss) from operations (124,069) (55,043) (32,480) 253,524
Other income (expense):
Interest income 603 491 1,322 1,997
Interest expense (46,705) (45,229) (156,512) (157,592)
-------------- -------------- --------------- --------------
Total other income (expense) (46,102) (44,738) (155,190) (155,595)
-------------- -------------- --------------- --------------
Income (loss) before income taxes (170,171) (99,781) (187,670) 97,929
Income tax expense (benefit) (900) (42,159) 0 27,000
-------------- -------------- --------------- --------------
Net income (loss) $ (169,271) (57,622) (187,670) 70,929
Adjustment for preferred dividends (17,335) (12,006) (34,468) (34,478)
-------------- -------------- --------------- --------------
Adjusted net to Common Stockholders (186,606) (69,628) (222,138) 36,451
-------------- -------------- --------------- --------------
Earnings (loss) per common share:
Primary:
Earnings (loss) from net income (0.10) (0.04) (0.11) 0.05
Dividends in arrears (0.01) (0.01) (0.02) (0.02)
============== ============== =============== ==============
Net Earnings (loss) $ ($0.11) ($0.05) ($0.13) $0.02
============== ============== =============== ==============
Fully Diluted:
Earnings (loss) from net income $ (0.11) (0.05) (0.13) 0.04
============== ============== =============== ==============
Weighted average number of common
shares outstanding:
Primary 1,722,057 1,500,000 1,722,057 1,500,000
============== ============== =============== ==============
Fully Diluted 2,033,723 1,752,824 2,033,723 1,752,824
============== ============== =============== ==============
</TABLE>
See Notes to Consolidated Financial Statements
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<TABLE>
NACO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine months ended
August 31 August 31
-----------------------------------------
1997 1996
------------------- -----------------
Cash flows from operating activities
<S> <C> <C>
Net income (loss) $ (187,670) 70,929
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation 183,887 161,441
Amortization 1,479 0
Deferred income taxes 0 (23,690)
(Increase) decrease in:
Accounts receivable, net (185,370) (54,911)
Inventory (19,890) 48,399
Taxes Receivable 39,300 120,226
Other (70,715) (87,186)
Increase (decrease) in:
Accounts payable (219,243) 266,121
Accrued expenses (29,646) (38,596)
Income taxes payable 0 200
------------------- -----------------
Net cash provided by (used in)
operating activities (487,868) 462,933
------------------- -----------------
Cash flows from investing activities
Net change property and equipment (420,435) (177,687)
Investment in intangible and other assets (1,148) 191,930
------------------- -----------------
Net cash provided by (used in) investing activities (421,583) 14,243
Cash flows from financing activities
Net change in line of credit 160,000 (120,244)
Payments on related party loan (48,703) (4,557)
Payments on long-term debt (214,301) (815,452)
Payment of Preferred Stock Dividends (27,837) 0
Proceeds from long-term loans 64,524 113,725
Proceeds from issuance of common stock 742,500 0
Proceeds from issuance of preferred stock 197,972 464,273
Purchase of treasury stock (10,000) 0
------------------- -----------------
Net cash provided by (used in) financing activities 864,155 (362,255)
------------------- -----------------
Increase (decrease) in cash (45,296) 114,921
Cash, beginning of period 198,306 133,481
------------------- -----------------
Cash, end of period $ 153,010 248,402
=================== =================
See Notes to Consolidated Financial Statements
Supplemental disclosures:
Income taxes paid $ 0 0
Interest Paid $ 148,153 162,252
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</TABLE>
<PAGE>
NACO INDUSTRIES, INC.
Notes to Consolidated Financial Statements (Unaudited)
August 31, 1997
NOTE A - BASIS OF PRESENTATION
Management has elected to omit substantially all footnotes to these unaudited
consolidated quarterly financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month and nine month periods ended August 31, 1997, are not necessarily
indicative of the results that may be expected for the fiscal year ending
November 30, 1997. These statements should be read in conjunction with the
consolidated financial statements and related notes in the Company's Annual
Report on Form 10-KSB for the year ended November 30, 1996.
NOTE B - INVENTORY
Inventory consists of the following:
Aug. 31, Nov. 30,
1997 1996
-------- -------
Raw Materials $270,906 242,388
Work In Process 9,549 3,750
Finished goods 407,936 422,363
-------- -------
Total $688,391 668,501
NOTE C - DIVIDENDS
Dividends on the preferred stock are cumulative at 7%. At Aug. 31, 1997, the
cumulative amount of dividends accrued was $34,468. Of this amount $34,468 was
in arrears.
NOTE D - EARNINGS PER SHARE
Primary earnings per common share are calculated by dividing adjusted net income
by the average shares of Common Stock of the Company and Common Stock
equivalents outstanding during the period. Net income has been adjusted for
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dividends in arrears as of Aug. 31, 1997. Common Stock equivalents represent
certain outstanding stock options and warrants. During the period the market
price did not exceed the option price for the outstanding options and warrants
and therefore no dilution occurred.
The calculation of fully diluted earnings per share of Common Stock assumes the
diluting effect of the Company's Cumulative Preferred Stock.
NOTE E - CONSULTING AGREEMENTS, WARRANTS AND OPTIONS
In September 1996 the Company entered into an agreement with Extol International
Corporation ("Extol") to provide investor relations and financial consulting
services to the Company. As part of this agreement, Extol has the right to
purchase for $100, a warrant to purchase 50,000 shares of the Company's Common
Stock at $3.50 per share. This warrant is exercisable for five (5) years from
the date of issuance, and will carry "piggyback" registration rights. Extol has
agreed to take common stock in lieu of cash payments for services. These
services have been accrued for, but shares have not been issued at the period
end.
NOTE F - COMMON STOCK
On March 5, 1997, the Company entered into an offshore securities subscription
agreement with Britannia Holdings Ltd. of England and on March 5, 1997, the
Company sold 343,750 Units for an aggregate purchase price of $825,000. The sale
was made without registration under the Securities Act of 1933 in reliance upon
Regulation S. Each Unit consists of one share of Common Stock and forty-four one
hundredth (.44) of a warrant to purchase an additional share of Common Stock at
an exercise price of $3.50 per share. The Warrant will expire in three years,
subject to extension as described below. The Warrants are currently callable by
the Registrant anytime after its Common Stock trades for a bid price of $7.50 or
higher for 30 trading days in a row.
The Company also granted Britannia Holdings Ltd. a 12 month option to purchase
an additional 343,750 Units in connection with the sale of the above Units. If
the Purchaser purchases all of the Units subject to the Option, the Registrant
will extend the exercise period of all of the Warrants issued as part of Units
(including the Units issued on March 5, 1997) from 3 years to 7 years, and
increase the call price on such Warrants from $7.50 to $15.00.
As part of the consideration for the stock agreement, the Company has agreed to
credit additional shares of common stock to Britannia Holdings LTD of England if
the Company does not establish a market for NACO Common Stock that trades for at
least $6.00 per share for any 10 consecutive days within twenty-four months
after March 5, 1997.
A finders fee of 10% was paid to James Czirr who is an employee of Extol and is
a member of the board of directors of the Company.
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NOTE G - PREFERRED STOCK
On March 7, 1996, the Company initiated an offering of Units exempt from
registration under the Securities Act of 1933. The offering consisted of 175,000
Units at an offering price of $6.00 per Unit. Each Unit consists of one share of
Series 1 Class A 7% Cumulative Convertible Preferred Stock a Warrant to purchase
one share of Common Stock at an exercise price of $3.75 per common share. The
offering was made on a "best efforts" basis and continued until June 30, 1997.
Selling commissions equal to 10% of the offering price of the Units was paid to
placement agents participating in the offering.
Through June 30, 1997, the Company sold 52,000 units and received net proceeds
of $280,800.
During the quarter the Company purchased 1,667 shares of preferred stock from a
former employee that has been recorded as treasury stock.
NOTE H - New Accounting Standards
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128
"Earnings Per Share", and SFAS No. 129 "Disclosure of Information about Capital
Structure". Both statements are effective for financial statements for periods
ending after December 15, 1997. SFAS No. 128 specifies the computation,
presentation and disclosure requirements for earnings per share for entities
with publicly-held common stock or potential common stock. Early adoption of
SFAS No. 128 is not permitted. SFAS No. 129 requires an entity to explain the
permanent rights and privileges of outstanding securities. The Company believes
that adoption of these statements will not have a material affect on its
earnings per share disclosures.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income.
The Statement is effective for fiscal years beginning after December 15, 1997.
The adoption of SFAS No. 130 will require reporting unrealized gains and losses
on future investments in debt and equity securities in comprehensive income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 establishes standards for
reporting information about segments in annual financial statements and requires
selected information about operating segments in interim financial reports
issued to stockholders. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. Operating
segments are defined as components of an enterprise about which separate
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financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. SFAS No. 131 requires reporting segment profit or loss certain
specific revenue and expense items and segment assets. It also requires
reconciliation of total segment revenues, total segment profit or loss, total
segment assets and other amounts disclosed for segments to corresponding amounts
reported in the financial statements. This Statement is effective for fiscal
years beginning after December 15, 1997. The Company=s reportable operating
segments are not expected to change as a result of the adoption of SFAS No. 131.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
NACO Industries, Inc., (NACO or the Company) is a manufacturing company that
produces and sells polyvinyl chloride (PVC) products. The Company's primary line
of business consists of PVC pipe fittings and valves, which are sold throughout
the United States through wholesale distributors to irrigation, industrial,
construction and utility industries. The Company manufactures and sells
fabricated fittings (4" through 36" in diameter), as well as molded fittings (4"
though 10" in diameter). Pipe fittings produced by the Company include tees,
reducers, elbows, couplers, end caps, and bolted repair couplers. NACO also
manufacturers and sells PVC valves (4" through 12" in diameter). NACO
Composites, Inc., a wholly owned subsidiary of NACO produces related and
non-related composite products.
RESULTS OF OPERATIONS
The Company's fiscal year ends on November 30. In the following discussion the
quarters ended August 31, 1997, and August 31, 1996, are the 3rd quarter of
fiscal years ending November 30, 1997, and November 30, 1996, and are referred
to herein as 3Q97 and 3Q96, respectively. The nine months ended August 31, 1997,
and August 31, 1996, are referred to herein as 9M97 and 9M96 respectively.
GENERAL DISCUSSION OF QUARTERS OPERATING RESULTS.
During the 3Q97, the Company had an operating loss before tax of $(162,307)
compared to operating loss before tax of $(99,781) for 3Q96. The quarter of June
to August is typically a slow quarter during the year due to the seasonality of
the agricultural market. The first and third quarters of the Company's fiscal
year are typically the slowest quarters for the Company, and the fourth quarter
can be slow depending on weather conditions. For the nine months ended August
31, 1997, (9M97), the Company sustained an operating loss before tax of
$(179,806) compared to an operating profit before tax of $70,929 for 9M96. The
decline in profitability between the two periods is primarily a result of
continuing low margins on composite products during the 3Q97 and 9M97. Also
during 3Q97, a larger percentage of total sales were in the sewer product line
which has an overall lower margin than the rest of the plastic product lines.
SALES
Net sales increased by 21.9% to $1,815,298 for 3Q97 compared to net sales of
$1,488,340 in 3Q96 due mainly to increased volume. Plastic sales in 3Q97
increased $86,041 or 6.0% compared to 3Q96. The increased volume was due mainly
to increased sales in the sewer product line during 3Q96. An increased effort to
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market the sewer product line has been made to level out production during the
seasonally off months of other product lines. Also the increased volume was due
partly to the addition of large diameter fittings from 27" to 36" to the
Company's product line. Composite products sales in 3Q97 increased $240,916 or
363% over 3Q96 primarily as a result of the acquisition of the assets of Draeger
Manufacturing and the Company's new facilities for NACO Composites Inc.
Composite sales increased to 16.9% of total revenues in 3Q97 compared to 4.5% in
3Q96. Net sales increased $852,395 or 17.2% to $5,796,356 for 9M97 compared to
net sales of $4,943,961 for 9M96 due mainly to the addition of large diameter
fittings to the product line and to increased composite sales as explained
above.
GROSS MARGIN
Gross margin as a percentage of sales for 3Q97 was 31.9% compared to 41.8% for
3Q96. Gross margin as a percentage of sales for 9M97 was 35.8% compared to 42.4%
for 9M97. The decrease in gross margin is mainly due to the higher percentage of
sales from the composite product lines. Gross margin on composites was 16.8% or
$51,754 for 3Q97 and .8% or $6,963 for 9M97 primarily as a result of startup
costs, increased manufacturing overhead expenses associated with the new
facilities, and a large contract that was acquired as part of the acquisition of
Draeger Manufacturing that was bid at a price below the Company's actual costs
to produce the products. The new facilities were acquired to provide the Company
with sufficient manufacturing facilities for the planned growth in this segment
of its business. The contract acquired in connection with the acquisition was
completed in 2Q97 and bidding procedures with checks and balances have been
updated to improve operations which management believes has and will continue to
improve margins on composite products in future quarters. Gross margins on
composite products have improved from 5.7% and (18.8%) in the first and second
quarter, respectively, to 16.8% for 3Q97. There can be no assurance, however,
that gross margins will continue to improve. The gross margin on plastic sales
for 3Q97 was 34.9% compared to 43.4% for 3Q96. The decrease in part is due to
the increase in sales of product within the sewer product line which inherently
has a lower gross margin than most of the other product lines. The company also
experienced lower margins on these sales because of costs incurred to gear up
for higher volumes of sewer line products. The Company believes that gross
margin as a percentage of sales will improve as sales of composites increase in
the future and as production moves up the learning curve on the sewer product
line. There can be no assurance, however, that gross margins will improve or
that they will return to levels previously obtained by the Company in the past.
Gross margins could be adversely affected by lower than anticipated growth,
increased overhead expenses, increased competition, a decline in sales, lower
than anticipated sales prices, and higher than anticipated costs of labor and
materials.
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SELLING
Selling expenses were $362,606 or 20.0% of net sales for 3Q97 compared to
$400,947 or 26.9% for 3Q96. Salaries increased $8,151 mainly due to the addition
of a salesman for composite products, and an approximate 5% increase in salaries
in September of 1996. Commissions increased $16,703 mainly due to increased
sales. Advertising expense decreased $28,511 mainly to catalogs being printed
and distributed in 3Q96 and no similar expense in 3Q97. Warranty expense
decreased $10,874 due mainly to improvements in products with high warranty
expense. Selling expenses were $1,117,607 or 19.3% of net sales for 9M97
compared to $1,016,138 or 20.6% for 9M96. For 9M97 salaries increased $61,726
mainly for the same reasons as above. Freight expense increased $48,696 due
mainly to increased sales and the mix of sales on which a portion of the freight
is typically paid by the Company. Commission increased $26,868 mainly due to
increased sales.
GENERAL AND ADMINISTRATIVE
General and administrative expenses were $330,091 or 18.2% of net sales for 3Q97
compared to $276,178 or 18.6% of net sales for 3Q96. Salaries increased $13,783
or 11.2% from 3Q96 to 3Q97 mainly due to annual pay increases given in September
1996 and to the addition of one accounting clerk in 2Q97. Outside labor
increased $9,421 from $32,333 to $41,754 due mainly to NSF qualifying costs, SEC
filings and sales of stock. Employee benefits were up 43.8% or $4,564 from 3Q96
to 3Q97 mainly due to several management personnel having completed a year of
employment during 1996 making them eligible for benefits. Insurance expenses
were up $12,395 mainly due to the addition of the composite facility. General
and administrative expenses were $976,968 or 16.9% of net sales for 9M97
compared to $827,018 or 16.7% for 9M96. Salaries increased $51,189 from 9M96 to
9M97 mainly due to annual pay increases given in September 1996 and to the
addition of one accounting clerk in 2Q97. Outside labor, employee benefits and
insurance also increased as explained above.
INTEREST EXPENSE
Interest expense for 3Q97 was $48,841 or 2.7% of net sales compared to $45,229
or 3.0% of net sales for 3Q96. Interest expense for 9M97 was $158,648 or 2.7% of
net sales compared to $157,592 or 3.2% of sales for 9M96. Interest expense
decreased as a percentage of revenues mainly due to increased sales volume. The
effective interest rate (interest expense divided by the average debt balance
for the period) for 9M97 and 9M96 were 11.45% and 11.79% respectively.
FACTORS AFFECTING FUTURE RESULTS
The Company's operating results are subject to certain inherent risks that could
adversely affect the Company's operating results and its ability to operate
profitably. If cash generated by operations, or available from current debt and
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equity financing sources is not sufficient to meet the Company's working capital
and operational requirements, this will likely have a material adverse effect on
the Company's operating results. In addition, the Company's operating results
also could be adversely affected by increased competition in the markets,
competitors offering products at prices below the Company's prices,
manufacturing delays and inefficiencies associated with expanding the Company's
manufacturing capacity, adverse weather conditions, changes in economic
conditions in its markets, unanticipated expenses or events and other factors
discussed in this report.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of liquidity have been cash from operations, credit
facilities and equity financing. Cash used in operating activities was $497,868
in 9M97. Accounts receivable were up $196,734 due to increased sales and some
delay in payment by customers in connection with the Company's initial sale of
sewer line products. Accounts payable are down $229,243 mainly because payables
are mostly current at the present time and were extended at year end Nov. 30,
1996 due to cash flow shortages.
Cash as of the end of 3Q97 was $153,010, down $45,296 from the end of the
Company's previous fiscal year.
The Company at quarter end was current in all of its financial obligations to
lending institutions and near current to its trade vendors. Subsequent to the
quarter end the Company's bank line of credit was renewed by the Company's bank
for $1.1 million dollars. The Company has available $275,000 on the line. In
addition, the Company continues to address cash flows by controlling inventory
levels, increasing the sales effort, and reducing expenses.
The Company believes that its capital resources on hand at August 31, 1997,
together with anticipated revenues from sales and its current lending
arrangements will be sufficient to satisfy its working capital requirements for
the remainder of the fiscal year. However, the Company may require additional
debt or equity financing in the first part of its next fiscal year to meet its
working capital requirements during the first quarter when its sales are
typically low because of the seasonality of the business and to fund the growth
of its business. In addition the Company may require such additional financing
if the Company's operating results are lower than currently anticipated. The
Company is currently reviewing various options for obtaining additional debt or
equity financing. There can be no assurance, however, that the Company will be
able to obtain any required financing on terms favorable to the Company, if at
all.
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FORWARD LOOKING STATEMENTS
Information contained in this Report contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
which can be identified by the use of forward-looking terminology such as "may,"
"will," "should," "expect," "anticipate," "estimate," or "continue" or the
negative thereof or other variations thereon or comparable terminology. These
forward-looking statements are subject to risk and uncertainties that include,
but are not limited to, those identified in this report, described from time to
time in the Company's other Securities and Exchange Commission filings, or
discussed in the Company's press releases. Actual results may vary materially
from expectations.
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PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders (the "Annual
Meeting") on August 27, 1997. The following items of business were considered at
the Annual Meeting:
A. Election of Directors
Shares
Name Voted For
---- ---------
Verne Bray 1,468,829
James C. Czirr 1,468,829
Dr. Peter Heilmary 1,468,829
Jeffrey J. Kirby 1,468,829
Kenneth Nordlund 1,468,829
B. Proposal to Adopt the NACO Industries Stock Incentive Plan
A proposal to approve the Company's Stock Incentive Plan was
presented at the annual meeting and such proposal was approved by the
shareholders of the Company. The number of shares voted for the
proposal was 1,468,829. There were no votes cast against the proposal
or any abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27.1 Financial Data Schedule
b) Reports for Form 8-K
None
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SIGNATURES
The unaudited interim consolidated financial statements furnished by management
reflect all adjustments that are, in the position of management, necessary for a
fair presentation of financial position and results of operation.
In accordance with to the requirements of the Securities Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NACO Industries, Inc.
Registrant
By /s/ Verne E. Bray October 8, 1997
--- ----- -- ---- ------- -- ----
Verne E. Bray Date
President
By /s/ Jeffrey J. Kirby October 8, 1997
--- ------- -- ----- ------- -- ----
Jeffrey J. Kirby Date
Principal Financial Officer
18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
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