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
September 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 October 31, 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
9/30/96 12/31/95
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<S> <C> <C>
ASSETS
Current Assets
Cash .............................................. $ 807,584 $ 841,056
Accounts receivable-net ........................... 5,196,059 5,350,211
Inventories ....................................... 12,379,765 12,875,203
Income tax receivable ............................. 199,646 0
Prepaid expenses other current assets ............. 1,826,083 1,662,498
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TOTAL CURRENT ASSETS .......................... 20,409,137 20,728,968
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Property, plant and equipment-net .................. 10,993,495 11,079,132
Timber and timberlands ............................. 6,633,956 6,338,152
Other assets ....................................... 663,019 670,244
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TOTAL ......................................... $38,699,607 $38,816,496
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable ..................................... $ 3,860,167 $ 4,424,783
Accounts payable .................................. 2,351,668 1,910,642
Income tax payable ................................ 0 9,952
Accrued expenses and other liabilities ............ 1,274,713 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 ..................... 7,754,613 8,287,574
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Obligation under capital lease ..................... 1,833,720 1,974,768
Long term debt ..................................... 273,333 17,910
Union employee termination benefits ................ 363,458 305,195
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TOTAL LIABILITIES ............................. 10,225,124 10,585,447
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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 ................................. 23,793,730 23,550,296
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TOTAL STOCKHOLDERS' EQUITY .................... 28,474,483 28,231,049
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TOTAL ......................................... $38,699,607 $38,816,496
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<CAPTION>
BALTEK CORPORATION
CONSOLIDATED BALANCE SHEETS
UNAUDITED AUDITED
9/30/96 12/31/95
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<S> <C> <C>
Note A: Classification of inventories are as follows:
Raw Materials .............................. $ 3,642,428 $ 3,913,332
Work-in-process ............................ 3,838,673 4,075,895
Finished goods ............................. 4,898,664 4,885,976
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TOTAL ..................................... $12,379,765 $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 NINE MONTH
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales ................................ $ 12,146,294 $ 11,042,217 $ 35,771,063 $ 33,682,682
Costs and expenses ....................... 11,609,863 10,430,040 34,682,890 31,079,209
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Income from operations .................. 536,431 612,177 1,088,173 2,603,473
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Other Income (Expense)
Interest expense ........................ (125,924) (165,704) (464,678) (376,883)
Foreign exchange gain (loss) ............ (52,333) (47,409) (318,073) (166,756)
Other ................................... 626 19,126 6,432 40,072
------------ ------------ ------------ ------------
Total Other Income (Expense) ............. (177,631) (193,987) (776,319) (503,567)
------------ ------------ ------------ ------------
Income before income taxes .............. 358,800 418,190 311,854 2,099,906
Income taxes ............................. 78,891 160,594 68,419 817,456
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NET INCOME ............................... 279,909 257,596 243,435 1,282,450
Retained earnings, beginning of the period 23,513,821 22,612,897 23,550,295 21,588,043
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Retained earnings, end of the period ..... $ 23,793,730 $ 22,870,493 $ 23,793,730 $ 22,870,493
============ ============ ============ ============
Average shares outstanding ............... 2,523,261 2,523,261 2,523,261 2,523,261
============ ============ ============ ============
Net income per common share .............. $ 0.11 $ 0.10 $ 0.10 $ 0.51
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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
SEPTEMBER 30, SEPTEMBER 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 ....................................... $ 279,909 $ 257,596 $ 243,435 $ 1,282,450
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................. 623,870 706,707 1,620,863 1,494,302
Foreign exchange loss (gain) ................... 52,333 47,409 318,073 166,756
Decrease (increase) in accounts receivable ..... (829,761) 966,154 161,935 712,055
Decrease (increase) in inventories ............. (33,572) (1,508,737) 495,438 (3,285,136)
Decrease (increase) in prepaid expenses
and other current assets ..................... (66,535) (98,348) (257,135) (646,645)
Decrease (increase) in other assets ............ 14,644 15,440 24,707 22,885
Decrease (increase) in income taxes ............ 65,867 8,969 (121,020) (644,270)
Increase (decrease) in accounts payable
and accrued expenses ......................... 363,568 437,657 (23,546) 638,464
Increase (decrease) in deferred taxes .......... (5,763) (7,026) (17,288) (21,078)
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Net cash provided by operating activities ........ 464,560 825,821 2,445,462 (280,217)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions-net (including timber and
timberlands) ................................... (627,655) (822,788) (1,831,064) (1,994,025)
Other ............................................ 3,018 58,229 61,537 98,482
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Net cash used in investing activities ............ (624,637) (764,559) (1,769,527) (1,895,543)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable ........... (127,735) 797,833 (600,158) 1,993,354
Increase (decrease) in long term debt .......... (20,000) (195) 353,333 (25,493)
Principal payments under capital leases ........ (47,016) (43,629) (141,048) (130,887)
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Net cash from (used in) financing activities ..... (194,751) 754,009 (387,873) 1,836,974
----------- ----------- ----------- -----------
Effect of exchange rate changes on cash .......... (44,917) (50,475) (321,534) (137,292)
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Net increase (decrease) in cash .................. (399,745) 764,796 (33,472) (476,078)
CASH AT BEGINNING OF THE PERIOD .................. 1,207,329 455,341 841,056 1,696,215
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CASH AT THE END OF THE PERIOD .................... $ 807,584 $ 1,220,137 $ 807,584 $ 1,220,137
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ........................................ $ 118,535 $ 168,846 $ 341,221 $ 294,685
Income taxes paid ............................... $ 21,334 $ 34,093 $ 210,401 $ 1,323,441
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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 2.63:1 at September 30, 1996,
increased slightly from the ratio of 2.50:1 at December 31, 1995, due to changes
in current assets and current liabilities. 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 10% and 6% during the three and nine month periods
ended September 30, 1996, as compared to the same periods in 1995. Sales of all
the Company's products increased during the period. Sales of the Company's new
foam product are exceeding the market share goals estimated at the beginning of
1996. The Company is unable to forecast future sales trends due to the changing
commodity pricing of its shrimp product and the effect of economic pressures on
the pleasure boating industry, the largest user of the Company's balsa and foam
products.
Costs and expenses as a percentage of sales increased for the three and
nine month period ended September 30, 1996, as compared with the same period in
1995. The increases were due to inflationary pressures on costs at the Company's
production facility in Ecuador and expenses relating to the new foam product.
Income from operations declined during the three and nine months ended
September 30, 1996, as compared to the same periods in 1995. The decline was
principally due to reduced shrimp selling prices, start up expenses of 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 three and nine month periods
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.
For the reasons discussed above, the Company realized a net income of
$279,909 ($0.11 per share) and $243,435 ($0.10 per share) for the three and nine
month periods ended September 30, 1996, as compared to a net income of $257,596
($.10 per share) during the third quarter of 1995 and $1,282,450 ($0.51 per
share) for the nine months ended September 30, 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 September 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 third 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
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Date: October 31, 1996 Jacques Kohn
/s/Benson J. Zeikowitz
----------------------
Date: October 31, 1996 Benson J. Zeikowitz
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 807,584
<SECURITIES> 0
<RECEIVABLES> 4,495,313
<ALLOWANCES> 132,212
<INVENTORY> 12,379,765
<CURRENT-ASSETS> 20,409,137
<PP&E> 28,697,659
<DEPRECIATION> 17,704,164
<TOTAL-ASSETS> 38,699,607
<CURRENT-LIABILITIES> 7,754,613
<BONDS> 0
0
0
<COMMON> 2,523,261
<OTHER-SE> 25,951,222
<TOTAL-LIABILITY-AND-EQUITY> 38,699,607
<SALES> 35,771,063
<TOTAL-REVENUES> 35,771,063
<CGS> 27,684,654
<TOTAL-COSTS> 34,682,890
<OTHER-EXPENSES> 776,319
<LOSS-PROVISION> 40,262
<INTEREST-EXPENSE> 464,678
<INCOME-PRETAX> 311,854
<INCOME-TAX> 68,419
<INCOME-CONTINUING> 243,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 243,435
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
