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
March 31, 1997
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 [ ]
Common share of stock outstanding as of May 6, 1997: 2,523,261 shares
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BALTEK CORPORATION
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996
Consolidated Statements of Operations and Retained Earnings for the
Three Months Ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows for the Three Months Ended March
31, 1997 and 1996
Notes to Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
ASSETS 1997 1996
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CURRENT ASSETS:
Cash and cash equivalents .......................................... $ 1,237,444 $ 1,114,659
Accounts receivable, net ........................................... 5,669,913 4,820,544
Inventories ........................................................ 12,318,190 13,713,660
Prepaid expenses ................................................... 374,369 308,850
Other .............................................................. 1,496,425 1,487,121
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Total current assets ...................................... 21,096,341 21,444,834
PROPERTY, PLANT AND EQUIPMENT, Net ................................... 10,518,789 10,759,258
TIMBER AND TIMBERLANDS ............................................... 6,521,598 6,445,828
OTHER ASSETS ......................................................... 657,325 665,495
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Total assets .............................................. $38,794,053 $39,315,415
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable ...................................................... $ 3,750,000 $ 3,600,000
Accounts payable ................................................... 2,226,120 2,860,363
Income tax payable ................................................. 36,890 --
Accrued salaries, wages and bonuses payable ........................ 355,151 596,139
Accrued expenses and other liabilities ............................. 937,183 911,243
Current portion of long-term debt .................................. 107,879 108,922
Current portion of obligation under capital lease .................. 318,425 294,784
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Total current liabilities ................................. 7,731,648 8,371,451
OBLIGATION UNDER CAPITAL LEASE ....................................... 1,582,650 1,679,985
LONG-TERM DEBT ....................................................... 250,432 276,620
UNION EMPLOYEE TERMINATION BENEFITS .................................. 319,444 306,367
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Total liabilities ......................................... 9,884,174 10,634,423
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BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)(continued)
March 31, December 31,
1997 1996
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STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par; 5,000,000 shares authorized and unissued
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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 .................................................. 24,229,126 24,000,239
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Total stockholders' equity ................................ 28,909,879 28,680,992
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................... $38,794,053 $39,315,415
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See notes to consolidated financial statements.
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BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three-Months
Ended March 31,
1997 1996
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NET SALES .................................. $ 13,266,647 $ 11,712,255
COST OF PRODUCTS SOLD ...................... 10,226,738 8,910,493
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES .................. 2,503,861 2,386,792
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Operating income ............... 536,048 414,970
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OTHER INCOME (EXPENSE):
Interest expense ........................ (133,344) (177,716)
Foreign exchange (loss) ................. (85,793) (131,707)
Other, net .............................. 274 5,515
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Total other income (expense) ... (218,863) (303,908)
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INCOME BEFORE INCOME TAXES ................. 317,185 111,062
INCOME TAX PROVISION ....................... 88,298 25,395
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NET INCOME ................................. 228,887 85,667
RETAINED EARNINGS, BEGINNING OF PERIOD ..... 24,000,239 23,550,295
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RETAINED EARNINGS, END OF PERIOD ........... $ 24,229,126 $ 23,635,962
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AVERAGE SHARES OUTSTANDING ................. 2,523,261 2,523,261
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NET INCOME PER COMMON SHARE ................ $ 0.09 $ 0.03
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See notes to consolidated financial statements.
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BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months
Ended March 31,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................ $ 228,887 $ 85,667
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ....................... 569,966 497,264
Foreign exchange loss ............................... 85,793 131,707
Deferred taxes ...................................... 4,190 (5,762)
(Increase) decrease in accounts receivable .......... (849,170) 113,452
Increase in income tax payable/receivable , net ..... 105,030 21,992
Decrease in inventories ............................. 1,395,470 487,914
Increase in prepaid expenses and other current assets (145,736) (275,484)
Decrease in other assets ............................ 4,036 7,024
Decrease in accounts payable and accrued expenses ... (821,140) (245,103)
Other ............................................... 13,321 51,663
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Net cash provided by operating activities .... 590,647 870,334
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net acquisitions of property, plant and equipment ..... (172,152) (301,516)
Increase in timber and timberlands .................... (233,102) (289,722)
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Net cash used in investing activities ........ (405,254) (591,238)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable .................. 150,000 (308,946)
(Payments) borrowings of long-term debt ............... (72,209) 393,333
Principal payments under capital lease ................ (73,694) (47,016)
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Net cash provided by financing activities .... 4,097 37,371
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EFFECT OF EXCHANGE RATE CHANGES ON CASH ................. (66,705) (134,033)
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<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (continued)
Three Months
Ended March 31,
1997 1996
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NET INCREASE IN
CASH AND CASH EQUIVALENTS ............................. 122,785 182,433
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ................................... 1,114,659 841,056
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CASH AND CASH EQUIVALENTS,
END OF PERIOD ......................................... $ 1,237,444 $ 1,023,489
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ............................................ $ 115,703 $ 131,481
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Income taxes ........................................ $ 1,353 $ 10,026
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See notes to consolidated financial statements.
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BALTEK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The information included in the accompanying interim financial statements
is unaudited. In the opinion of management, all adjustments, consisting of
normal recurring accruals necessary for a fair presentation of the results
of operations, financial position and cash flows for the interim periods
presented have been reflected herein. The results of operations for the
interim periods are not necessarily indicative of the results to be
expected for the entire year. The statements should be read in conjunction
with the accounting policies and notes to consolidated financial
statements included in the Company's 1996 Annual Report on Form 10-K.
2. INVENTORIES
Inventories are summarized as follows:
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Raw materials .............. $ 4,088,281 $ 4,718,296
Work-in-process ............ 4,146,548 4,250,538
Finished goods ............. 4,083,361 4,744,826
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$12,318,190 $13,713,660
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3. NEW ACCOUNTING STANDARD
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." This
Statement establishes standards for computing and presenting earnings per
share ("EPS") and applies to all entities with publicly held common stock.
This Statement replaces the presentation of primary and fully diluted EPS
with a presentation of basic and diluted EPS, respectively. Basic EPS
excludes dilution and is computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding
for the period. Similar to fully diluted EPS, diluted EPS reflects the
potential dilution of securities that could share in the earnings. This
Statement is not expected to have a material effect on Baltek's reported
EPS amounts. This Statement is effective for Baltek's consolidated
financial statements for the year ended December 31, 1997.
******
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The Company's working capital ratio of 2.73:1 at March 31, 1997, increased
slightly from the ratio of 2.56:1 at December 31, 1996 due primarily to
increases in accounts receivable and decreases in accounts payable. 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 12% during the three month period ended March 31, 1997, as
compared to the same period in 1996. Sales improved in both the Balsa and Shrimp
segments during the period. 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 products.
Cost of products sold as a percentage of sales increased slightly in the first
quarter of 1997 as compared to the first quarter of 1996, due primarily to
competitive pricing pressure offset by an increase in the selling price of the
Company's shrimp products.
Selling , general and administrative expenses as a percentage of sales declined
in the first quarter of 1997 as compared to the first quarter of 1996. The
decline was due to a better absorption of fixed expenses as a result of
increased sales.
Income from operations improved during the quarter ended March 31, 1997 as
compared to the same period in 1996. The increase is attributable to both higher
volume and prices in the Shrimp segment and higher sales volume in the Balsa
segment.
Interest expense decreased due to lower interest rates partially offset by
increased borrowings for working capital. Foreign exchange losses were $85,793
in the three month period of 1997, as compared to a loss of $131,707 in the same
period of 1996. Foreign exchange gains and losses are caused by the relationship
of the U.S. Dollar to the foreign currencies in the countries where the company
has operations, and 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.
The provision for income taxes was at the rate of 28% and 22% of pre-tax
earnings for the quarters ended March 31, 1997 and 1996 respectively.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
11. An exhibit showing the computation of per-share earnings is
omitted because the computation can be clearly determined from
the material contained in this Quarterly Report on Form 10-Q.
27. Financial Data Schedule.
(B) Reports on Form 8-K:
No report has been filed during the three months ended March 31, 1997.
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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)
Date: May 6, 1997 /s/Jacques Kohn
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Jacques Kohn
President
Date: May 6, 1997 /s/Ronald Tassello
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Ronald Tassello
Controller
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM BALTEK CORPORATION AND
SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS, AND RELATED EXHIBITS FOR THE
THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,237,444
<SECURITIES> 0
<RECEIVABLES> 5,734,098
<ALLOWANCES> 64,185
<INVENTORY> 12,318,190
<CURRENT-ASSETS> 21,096,341
<PP&E> 28,917,431
<DEPRECIATION> 18,398,642
<TOTAL-ASSETS> 38,794,053
<CURRENT-LIABILITIES> 7,731,648
<BONDS> 0
0
0
<COMMON> 2,523,261
<OTHER-SE> 26,386,618
<TOTAL-LIABILITY-AND-EQUITY> 38,794,053
<SALES> 13,266,647
<TOTAL-REVENUES> 13,266,647
<CGS> 10,226,738
<TOTAL-COSTS> 12,730,599
<OTHER-EXPENSES> 218,863
<LOSS-PROVISION> 19,570
<INTEREST-EXPENSE> 133,344
<INCOME-PRETAX> 317,185
<INCOME-TAX> 88,298
<INCOME-CONTINUING> 228,887
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 228,887
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
