-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LDQgtTe3LhoN5PoBUck8Mgrr9EMFV0cVYDagmwBFAOKlYipKUh0HGkeslfSxa4w/ +ugSz7OW27MONQkhjPmW+Q== 0000002098-96-000006.txt : 19960814 0000002098-96-000006.hdr.sgml : 19960814 ACCESSION NUMBER: 0000002098-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACME UNITED CORP CENTRAL INDEX KEY: 0000002098 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 060236700 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07698 FILM NUMBER: 96610399 BUSINESS ADDRESS: STREET 1: 75 KINGS HIGHWAY CUTOFF CITY: FAIRFIELD STATE: CT ZIP: 06430 BUSINESS PHONE: 2033327330 FORMER COMPANY: FORMER CONFORMED NAME: ACME SHEAR CO DATE OF NAME CHANGE: 19710713 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM l0-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, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number Q4823 ACME UNITED CORPORATION ____________________________________________________________ (Exact name of registrant as specified in its charter) Connecticut 06-0236700 _______________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 75 Kings Highway Cutoff, Fairfield, Connecticut 06430 _______________________________________________ __________ (Address of principal executive offices) (Zip Code) (203) 332-7330 __________________________________________________ Registrant's telephone number, including area code _______________________________________________________________________________ Former name, former address and former fiscal year, if changed since last report 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 (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 [ ] Registrant had 3,337,620 shares outstanding as of August 13, 1996 of its $ 2.50 par value Common Stock. 2 PART 1 - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS ACME UNITED CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (ALL AMOUNTS IN THOUSANDS)
June 30 December 31 1996 1995 (Unaudited) _____________ _____________ ASSETS Current Assets: Cash and cash equivalents $ 114 $ 532 Accounts receivable 9,933 8,108 Inventories: Finished goods 7,472 9,942 Work in process 2,483 3,963 Raw materials & supplies 3,526 4,108 Prepaid expenses and other current assets 421 606 _____________ _____________ Total current assets 23,949 27,259 Plant, Property and Equipment: Land 454 491 Buildings 3,849 4,237 Machinery and equipment 15,373 15,736 _____________ _____________ Total plant, property and equipment 19,676 20,464 Less, accumulated depreciation 13,027 13,142 _____________ _____________ Net plant, property and equipment 6,649 7,322 Licensing agreements 980 1,170 Other assets 280 452 Goodwill 798 818 _____________ _____________ Total assets $ 32,656 $ 37,021 ============= ============= See notes to financial statements
3 ACME UNITED CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (ALL AMOUNTS IN THOUSANDS)
June 30 December 31 1996 1995 (Unaudited) _____________ _____________ LIABILITIES Current Liabilities: Accounts payable $ 2,704 $ 3,193 Notes payable due within one year 4,248 3,650 Restructuring reserve 1,124 1,198 Other accrued liabilities 2,950 3,243 _____________ _____________ Total current liabilities 11,026 11,284 Long term debt 14,092 14,880 Restructuring reserve 145 1,352 _____________ _____________ Total liabilities 25,263 27,516 STOCKHOLDERS' EQUITY Common stock, par value $2.50: authorized 8,000,000 shares; Issued 3,384,620, outstanding 3,337,620 8,461 8,461 Additional paid-in capital 2,145 2,145 Retained earnings (accumulated deficit) (1,797) 258 Translation adjustment (1,059) (1,002) Treasury Stock, 47,000 shares (357) (357) _____________ _____________ Total stockholders' equity 7,393 9,505 _____________ _____________ Total liabilities and stockholders' equity $ 32,656 $ 37,021 ============= ============= See notes to financial statements
4 ACME UNITED CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended Six months ended __________________________ _________________________ June 30 June 30 June 30 June 30 1996 1995 1996 1995 ____________ ____________ ____________ ____________ Net Sales $ 12,782 $ 14,470 $ 24,822 $ 27,368 Other income 46 15 172 38 ____________ ____________ ____________ ____________ 12,828 14,485 24,994 27,406 Costs and expenses: Cost of goods sold 10,191 10,290 19,313 19,566 Selling, general and administrative expense 3,420 3,387 6,742 6,732 Interest expense 410 496 838 953 ____________ ____________ ____________ ____________ 14,021 14,173 26,893 27,251 ____________ ____________ ____________ ____________ Income (loss) before income taxes (1,193) 312 (1,899) 155 Provision (benefit) for income taxes 46 70 156 (19) ____________ ____________ ____________ ____________ Net income (loss) $ (1,239) $ 242 $ (2,055) $ 174 ============ ============ ============ ============ Weighted average common and dilutive common equivalent shares 3,338 3,355 3,338 3,359 ============ ============ ============ ============ Net income (loss) per common share $ (.37) $ .07 $ (.62) $ .05 ============ ============ ============ ============ See notes to financial statements
5 ACME UNITED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (ALL AMOUNTS IN THOUSANDS)
Six months ended __________________________ June 30 June 30 1996 1995 ____________ ____________ Cash flows from operating activities: Net income (loss) $ (2,055) $ 174 Adjustments: Depreciation 594 706 Amortization 224 281 Deferred tax (credits) - (256) Loss (Gain) on sale of property, plant and equipment 19 (6) (Gain) on disposition of trademarks and tradename (98) - Changes in assets and liabilities: Accounts receivable (2,183) (2,609) Inventory 3,541 (1,248) Prepaid expenses and other current assets 260 145 Other assets 157 46 Accounts payable (448) 60 Income taxes payable (18) 133 Other liabilities (1,257) (162) ____________ ____________ Total adjustments 791 (2,910) ____________ ____________ Net cash used by operations (1,264) (2,736) ____________ ____________ Cash flow from investing activities: Capital expenditures (294) (538) Proceeds from sales of business and property, plant and equipment 1,061 6 ____________ ____________ Net cash provided (used) by investing activities 767 (532) ____________ ____________ Cash flows from financing activities: Net borrowings 96 3,160 ____________ ____________ Net cash provided by financing activities 96 3,160 ____________ ____________ Effect of exchange rate changes on cash (17) 11 ____________ ____________ Net change in cash and cash equivalents (418) (97) Cash and cash equivalents at beginning of period 532 450 ____________ ____________ Cash and cash equivalents at end of period $ 114 $ 353 ============ ============ See notes to financial statements
6 ACME UNITED CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company's management, the accompanying condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position as of June 30, 1996 and December 31, 1995, the results of its operations for the three and six month periods ended June 30, 1996 and 1995, and cash flows for the six months ended June 30, 1996 and 1995. The financial statements reflect all recurring adjustments but do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the annual Form 10-K filing. Please refer to the Company's annual report for the year ended December 31, 1995 for such disclosures. 2. The results of operations for the three and six month periods ended June 30, 1996 are not necessarily indicative of the results to be expected for the full year. 3. Net income (loss) per share is based on the weighted average number of common shares and dilutive common equivalent shares (common stock options) outstandingduring each period. No effect has been given to stock options outstanding as no dilutive effect would result from such inclusion. 4. On May 1, 1996, the Company sold all assets of its Altenbach subsidiary, excluding accounts receivable. The buyer purchased all fixed assets, inventory and intangible assets, including the Altenbach tradename. In exchange, the buyer paid $960,000, assumed all lease obligations, employed substantially all Altenbach employees and assumed responsibility for their employee related social costs, including pensions. This transaction is not expected to have an impact on the Company's earnings as the costs related to the restructuring of operations in Germany, including the sale of the assets of the Altenbach operations, were accrued for in 1995. 5. At June 30, 1996 the Company was in default of one of the provisions of its domestic revolving credit line and obtained a waiver of such default from the lender. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Sales Consolidated net sales for the quarter ended June 30, 1996 were $12,782,000, compared with $14,470,000 for the same period last year, a decline of $1,688,000. Of this decline, $975,000 resulted from the divestiture of the Altenbach business in Germany. Net sales were $24,822,000 for the first half of 1996, compared with net sales of $27,368,000 for the same period of 1995, a decline of $2,546,000. Of this decline, $1,221,000 was attributed to Altenbach. Domestic Consumer net sales totaled $5,425,000 in the second quarter of 1996, compared with $5,474,000 in the second quarter of 1995, a decline of 1%. Solid sales growth was achieved for the first aid product line. Ordering delays and highly competitive bid pricing resulted in direct school sales below last year's level. For the first six months of 1996, consumer net sales of $9,889,000 were 2% higher than net sales of $9,727,000 for the similar period in 1995. Net sales of medical products of $3,648,000 in the second quarter of 1996 compares with $4,159,000 in the second quarter of 1995. Net sales of medical products of $7,369,000 for the first half of 1996 compares with $8,506,000 for the first half of 1995. The sales decline in 1996 was primarily the result of a volume decline in the low margin custom tray market. Net sales from foreign operations were $4,058,000 in the second quarter of 1996 as compared with $5,515,000 in the second quarter of 1995. Of the decline of $1,457,000, $975,000 resulted from the divestiture of Altenbach. Net sales from foreign operations were $8,125,000 for the first half of 1996 compared with $10,209,000 for the first half of 1995. Of the decline of $2,084,000, $1,221,000 resulted from the divestiture of Altenbach. Gross Profit Margin For the second quarter of 1996, the Company reported a reduced gross profit margin of 20.3% compared to 28.9% in the same quarter of 1995. The gross profit margin for the first half of 1996 was 22.2% compared with a 28.5% gross profit margin for the first half of 1995. The loss of margin was due to the effects of excess manufacturing capacity, related restructuring costs, and the reduction in production in order to get inventory levels more in line with the sales volume. Restructuring costs associated with closing the Bridgeport manufacturing and warehouse operations accounted for $608,000 of the gross profit margin decline in the second quarter of 1996 and $1,062,000 of the decline in the first half of 1996. The manufacturing plant closure was completed four months ahead of schedule, accelerating charges into the first half of the year. The product lines were transferred to a lower cost and more efficient facility in Fremont, North Carolina, where production is now starting. The closing of the Bridgeport warehouse was announced in the second quarter of 1996. Effective September 9, 1996 the Bridgeport facility, which currently has 37 employees, will be closed in order to further reduce costs and improve efficiency. 8 Net Income A net loss of $1,239,000, or 37 cents per share, for the second quarter of 1996 compared with a net profit of $242,000, or seven cents per share, for the second quarter of 1995. For the first half of 1996, the net loss was $2,055,000, or 62 cents per share. This compares with net income of $174,000, or five cents per share, for the first half of 1995. The second quarter loss included $124,000 of severance costs, $608,000 of restructuring costs associated with closing the Bridgeport, Connecticut manufacturing and warehouse operations, and $51,000 of loss incurred by the Altenbach operation. The first half loss included $289,000 of severance costs, $1,062,000 of restructuring costs, and $271,000 of loss incurred by the Altenbach operation. Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $33,000 and $10,000 for the three and six month period ended June, 30 1996 as compared with the same period in 1995. Severance costs amounted to $126,000 and $289,000 for the three and six month periods ended June 30, 1996, respectively. Excluding these severance charges, the Company reduced its selling, general and administrative costs by $279,000 or 4.1% for the six month period ended June 30, 1996. Interest Expense Interest expense decreased by $86,000 and $115,000 for the three and six month periods ended June 30, 1996 as compared with 1995, which is attributable to lower average bank borrowings. Provision for Income Taxes The provision for income taxes for the three and six month periods ended June 30, 1996 was $46,000 and $156,000 as compared to $70,000 and ($19,000) for 1995. The consolidated effective tax rates are based on income (loss) before taxes in the various countries of operation and the statutory rates and laws in effect. Liquidity and Capital Commitments The Company has placed major emphasis on the reduction of inventory, debt and interest expense. Company-wide debt as of June 30, 1996 has decreased by $3,856,000 from June 30, 1995. Of the decrease, $1,512,000 was in the U.S. All future debt reduction, along with normal payments for taxes and capital expenditures, is expected to be funded by inventory reduction and cash generated from operations. In the U.S., the Company has a $13,000,000 revolving line of credit which expires in May 1998. The revolving line is an asset-based agreement with various percentages applied to inventory, receivables and fixed assets. At June 30, 1996 the Company had an available line of $12,192,000 with $1,834,000 unused. The Company's foreign subsidiaries have overdraft arrangements which expire at various times during 1996. 9 The Company's working capital, current ratio and long term debt to equity ratio are as follows:
June 30, 1996 December 31, 1995 _________________ _________________ Working capital $12,923,000 $15,975,000 Current ratio 2.17 to 1 2.42 to 1 Long term debt to equity ratio 1.91 1.57
PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No Form 8-K was filed by the Company during the three months ended June 30, 1996. 10 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. ________________________________________ ACME UNITED CORPORATION (Registrant) Date: August 13, 1996 /s/ Cheryl Kendall ________________________________________ Cheryl Kendall Vice President - Chief Financial Officer Date: August 13, 1996 /s/ Richard L. Windt ________________________________________ Richard L. Windt Vice President - Corporate Controller EX-27 2
5 3-MOS DEC-31-1996 JUN-30-1996 113514 0 9469941 199753 13480985 956675 19676603 13027262 32655599 11025305 14092104 0 0 8461550 (1068360) 32655599 12782365 12828077 10191120 10191120 0 37025 410212 (1192713) 46114 (1238827) 0 0 0 (1238827) (.37) (.37)
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