SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission file number 2-44764
June 30, 1996
BALTEK CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 13-2646117
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Fairway Court, P.O. Box 195, Northvale, New Jersey 07647
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-767-1400
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Indicated by check mark whether the registrant (1) has filed all
annual, quarterly and other reports required to be filed with the Commission and
(2) has been subject to the filing requirements for at least the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding as of August 6, 1996 the last practicable date,
was 2,523,261, Common Stock, $1.00 par value.
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<CAPTION>
BALTEK CORPORATION
CONSOLIDATED BALANCE SHEETS
UNAUDITED AUDITED
6/30/96 12/31/95
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<S> <C> <C>
ASSETS
Current Assets
Cash .............................................. $ 1,207,329 $ 841,056
Accounts receivable-net ........................... 4,363,101 5,350,211
Inventories ....................................... 12,346,193 12,875,203
Income tax receivable ............................. 265,499 0
Prepaid expenses other current assets ............. 1,759,201 1,662,498
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TOTAL CURRENT ASSETS .......................... 19,941,323 20,728,968
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Property, plant and equipment-net .................. 11,011,992 11,079,132
Timber and timberlands ............................. 6,611,657 6,338,152
Other assets ....................................... 671,711 670,244
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TOTAL ......................................... $38,236,684 $38,816,496
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable ..................................... $ 3,987,890 $ 4,424,783
Accounts payable .................................. 1,968,285 1,910,642
Income tax payable ................................ 0 9,952
Accrued expenses and other liabilities ............ 1,282,551 1,736,574
Current portion of long term debt ................. 80,000 17,558
Current portion of obligation under
capital lease .................................... 188,065 188,065
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TOTAL CURRENT LIABILITIES ..................... 7,506,791 8,287,574
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Obligation under capital lease ..................... 1,880,736 1,974,768
Long term debt ..................................... 293,333 17,910
Union employee termination benefits ................ 361,250 305,195
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TOTAL LIABILITIES ............................. 10,042,110 10,585,447
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(Continued)
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<CAPTION>
BALTEK CORPORATION
CONSOLIDATED BALANCE SHEETS -- Continued
UNAUDITED AUDITED
6/30/96 12/31/95
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<S> <C> <C>
Stockholders' Equity:
Preferred stock $100 par; 5,000,000 shares
authorized and unissued
Common stock $1.00 par; 10,000,000 shares
authorized, 2,523,261 shares issued and
outstanding ...................................... 2,523,261 2,523,261
Additional paid-in-capital ........................ 2,157,492 2,157,492
Retained earnings ................................. 23,513,821 23,550,296
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TOTAL STOCKHOLDERS' EQUITY .................... 28,194,574 28,231,049
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TOTAL ......................................... $38,236,684 $38,816,496
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Note A: Classification of inventories are as follows:
Raw Materials .............................. $ 3,516,968 $ 3,913,332
Work-in-process ............................ 4,034,325 4,075,895
Finished goods ............................. 4,794,900 4,885,976
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TOTAL ..................................... $12,346,193 $12,875,203
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<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES
UNAUDITED STATEMENT OF CONSOLIDATED INCOME
AND RETAINED EARNINGS
FOR THE THREE MONTH FOR THE SIX MONTH
PERIOD ENDED PERIOD ENDED
JUNE 30, JUNE 30,
--------------------------------- ---------------------------------
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net Sales ............................... $ 11,912,514 $ 11,984,853 $ 23,624,769 $ 22,640,465
Costs and expenses ...................... 11,775,742 10,884,559 23,073,027 20,649,169
------------ ------------ ------------ ------------
Income from operations ................. 136,772 1,100,294 551,742 1,991,296
------------ ------------ ------------ ------------
Other Income (Expense)
Interest expense ....................... (161,038) (118,094) (338,754) (211,179)
Foreign exchange gain (loss) ........... (134,033) (149,941) (265,740) (119,347)
Other .................................. 291 10,979 5,806 20,946
------------ ------------ ------------ ------------
Total Other Income (Expense) ............ (294,780) (257,056) (598,688) (309,580)
------------ ------------ ------------ ------------
Income (loss) before income taxes ....... (158,008) 843,238 (46,946) 1,681,716
Income taxes ............................ (35,867) 330,851 (10,472) 656,862
------------ ------------ ------------ ------------
NET INCOME (LOSS) ....................... (122,141) 512,387 (36,474) 1,024,854
Retained earnings beginning of the period 23,635,962 22,100,510 23,550,295 21,588,043
------------ ------------ ------------ ------------
Retained earnings end of the period ..... $ 23,513,821 $ 22,612,897 $ 23,513,821 $ 22,612,897
============ ============ ============ ============
Average shares outstanding .............. 2,523,261 2,523,261 2,523,261 2,523,261
============ ============ ============ ============
Net income (loss) per common share ...... ($ 0.05) $ 0.20 ($ 0.01) $ 0.41
============ ============ ============ ============
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<TABLE>
<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTH FOR THE SIX MONTH
PERIOD ENDED PERIOD ENDED
JUNE 30, JUNE 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ................................ ($ 122,141) $ 512,387 ($ 36,474) $ 1,024,854
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................. 499,729 279,977 996,993 787,595
Foreign exchange loss (gain) ................... 134,033 149,941 265,740 119,347
Decrease (increase) in accounts receivable ..... 878,244 (337,696) 991,696 (254,099)
Decrease (increase) in inventories ............. 41,096 (1,774,728) 529,010 (1,776,399)
Decrease (increase) in prepaid expenses
and other current assets ..................... 84,884 (505,646) (190,600) (548,297)
Decrease (increase) in other assets ............ 3,039 3,177 10,063 7,445
Decrease (increase) in income taxes ............ (208,879) (359,961) (186,887) (653,239)
Increase (decrease) in accounts payable
and accrued expenses ......................... (142,011) 722,921 (387,114) 200,807
Increase (decrease) in deferred taxes .......... (5,762) (7,026) (11,525) (14,052)
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Net cash provided by operating activities ........ 1,162,231 (1,316,654) 1,980,901 (1,106,038)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions-net (including timber and
timberlands) ................................... (612,171) (546,383) (1,203,409) (1,171,237)
Other ............................................ 6,856 27,918 58,519 40,253
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Net cash used in investing activities ............ (605,314) (518,465) (1,144,889) (1,130,984)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable ........... (163,477) 1,524,558 (472,423) 1,195,521
Increase (decrease) in long term debt .......... (20,000) (1,203) 373,333 (25,298)
Principal payments under capital leases ........ (47,016) (43,629) (94,032) (87,258)
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Net cash from (used in) financing activities ..... (230,492) 1,479,726 (193,121) 1,082,965
----------- ----------- ----------- -----------
Effect of exchange rate changes on cash .......... (142,584) (111,131) (276,617) (86,817)
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Net increase (decrease) in cash .................. 183,840 (466,524) 366,273 (1,240,874)
CASH AT BEGINNING OF THE PERIOD .................. 1,023,489 921,865 841,056 1,696,215
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CASH AT THE END OF THE PERIOD .................... $ 1,207,329 $ 455,341 $ 1,207,329 $ 455,341
=========== =========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ........................................ $ 91,205 $ 75,129 $ 222,686 $ 125,839
Income taxes paid ............................... $ 179,041 $ 674,254 $ 189,067 $ 1,289,348
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital ratio of 2.66:1 at June 30, 1996
increased slightly from the ratio of 2.50:1 at December 31, 1995 due partly to
decreases in accounts receivable, inventories, short term debt and accrued
expenses. Unused lines of bank credit and the Company's working capital are
considered by management, to be sufficient to support operations and fixed asset
acquisitions for the immediate future.
RESULTS OF OPERATIONS
Sales increased 4% during the six month period ended June 30, 1996 but
declined slightly in the second quarter of 1996 as compared to the same periods
in 1995. The decline in the second quarter was mostly due to decreased shrimp
prices. The Company is unable to forecast future sales trends due to the
changing commodity pricing of its shrimp product and the effect of economical
pressures on the pleasure boating industry, the largest user of the Company's
balsa products.
Costs and expenses as a percentage of sales, increased during the three
and six months ended June 30, 1996 as compared to the same periods in 1995. The
increases were mostly due to inflationary pressures on costs at the Company's
production facility in Ecuador and expenses relating to the new foam product
production.
Income from operations declined during the three and six month periods
ending June 30, 1996 as compared to the same periods in 1995. The decline was
principally due to reduced shrimp selling prices, start up expenses related to
the Company's new foam product line and price reduction pressure on the
Company's balsa products. Shrimp selling prices declined by approximately 20%
during the current period.
Foreign exchange losses increased in the six month period of 1996, and
are caused by the relationship of the U. S. Dollar to the foreign currencies in
the countries where the company has operations. The gains or losses arise when
translating foreign currency balance sheets into U. S. Dollars for the purpose
of presenting consolidated financial statements. Management is unable to
forecast the impact of translation gains or losses on future periods due to the
unpredictability of foreign exchange rates.
Interest expenses increased during the current periods due to higher
interest rates and increased borrowings for working capital and fixed asset
acquisitions.
For the reasons discussed above, the Company realized net losses of
$122,141 ($0.05 per share) and $36,474 ($0.01 per share) for the three and six
month periods ended June 30, 1996, as compared to net incomes of $512,387 ($0.20
per share) and $1,024,854 ($0.41 per share) for the same periods in 1995.
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BALTEK CORPORATION AND SUBSIDIARIES
NOTE REGARDING UNAUDITED STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
Information furnished in our Form 10-Q for the quarter June 30, 1996 reflects
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods. The adjustments that were made
consisted of only normal recurring accruals.
********************************
No Form 8-K was filed in the second quarter of 1996.
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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.
BALTEK CORPORATION
(Registrant)
/s/Jacques Kohn
Date: August 6, 1996 --------------------------
(Signature)
/s/Benson J. Zeikowitz
Date: August 6, 1996 --------------------------
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,207,329
<SECURITIES> 0
<RECEIVABLES> 4,479,909
<ALLOWANCES> 116,808
<INVENTORY> 12,387,289
<CURRENT-ASSETS> 19,941,323
<PP&E> 28,374,032
<DEPRECIATION> 17,362,040
<TOTAL-ASSETS> 38,236,684
<CURRENT-LIABILITIES> 7,506,791
<BONDS> 0
0
0
<COMMON> 2,523,261
<OTHER-SE> 25,671,313
<TOTAL-LIABILITY-AND-EQUITY> 38,236,684
<SALES> 23,624,769
<TOTAL-REVENUES> 23,624,769
<CGS> 18,281,859
<TOTAL-COSTS> 23,073,027
<OTHER-EXPENSES> 598,688
<LOSS-PROVISION> 19,451
<INTEREST-EXPENSE> 338,754
<INCOME-PRETAX> (46,946)
<INCOME-TAX> 10,472
<INCOME-CONTINUING> (36,474)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,474)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
