-----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, JcQwmraHCHa7TcZ/u6f9HmALHBQ/FG0YpefOOjkxzdf4alNa8MZbWKvq9FPxBr09 6BUBL200SFkxMRMV+ZQD/g== 0000002098-96-000007.txt : 19961118 0000002098-96-000007.hdr.sgml : 19961118 ACCESSION NUMBER: 0000002098-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96664178 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 September 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 November 14, 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)
September 30 December 31 1996 1995 (Unaudited) _____________ _____________ ASSETS Current Assets: Cash and cash equivalents $ 429 $ 532 Accounts receivable 9,632 8,108 Inventories: Finished goods 6,075 9,942 Work in process 1,064 3,963 Raw materials & supplies 3,190 4,108 Prepaid expenses and other current assets 465 606 _____________ _____________ Total current assets 20,855 27,259 Plant, Property and Equipment: Land 454 491 Buildings 3,849 4,237 Machinery and equipment 15,609 15,736 _____________ _____________ Total plant, property and equipment 19,912 20,464 Less, accumulated depreciation 13,311 13,142 _____________ _____________ Net plant, property and equipment 6,601 7,322 Licensing agreements 882 1,170 Other assets 666 452 Goodwill 790 818 _____________ _____________ Total assets $ 29,794 $ 37,021 ============= ============= See notes to the financial statements
3 ACME UNITED CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (ALL AMOUNTS IN THOUSANDS)
September 30 December 31 1996 1995 (Unaudited) _____________ _____________ LIABILITIES Current Liabilities: Accounts payable $ 1,676 $ 3,193 Notes payable due within one year 3,511 3,650 Restructuring reserve 882 1,198 Other accrued liabilities 3,665 3,243 _____________ _____________ Total current liabilities 9,734 11,284 Long term debt 12,994 14,880 Restructuring reserve 145 1,352 _____________ _____________ Total liabilities 22,873 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) (2,282) 258 Translation adjustment (1,046) (1,002) Treasury Stock, 47,000 shares (357) (357) _____________ _____________ Total stockholders' equity 6,921 9,505 _____________ _____________ Total liabilities and stockholders' equity $ 29,794 $ 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 Nine months ended ____________________________ ____________________________ September 30 September 30 September 30 September 30 1996 1995 1996 1995 _____________ _____________ _____________ _____________ Net Sales $ 13,281 $ 13,838 $ 38,103 $ 41,205 Other income 49 14 221 52 _____________ _____________ _____________ _____________ 13,330 13,852 38,324 41,257 Costs and expenses: Cost of goods sold 9,807 10,021 29,120 29,587 Selling, general and administrative expense 3,700 3,444 10,442 10,176 Interest expense 361 526 1,199 1,479 _____________ _____________ _____________ _____________ 13,868 13,991 40,761 41,242 _____________ _____________ _____________ _____________ Income (loss) before income taxes (538) (139) (2,437) 15 Provision (benefit) for income taxes (53) 27 103 8 _____________ _____________ _____________ _____________ Net income (loss) $ (485) $ (166) $ (2,540) $ 7 ============= ============= ============= ============= Weighted average common and dilutive common equivalent shares 3,338 3,338 3,338 3,338 ============= ============= ============= ============= Net income (loss) per common share $ (.15) $ (.05) $ (.76) $ .00 ============= ============= ============= ============= See notes to financial statements
5 ACME UNITED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (ALL AMOUNTS IN THOUSANDS)
Nine months ended ____________________________ September 30 September 30 1996 1995 _____________ _____________ Cash flows from operating activities: Net income (loss) $ (2,540) $ 7 Adjustments: Depreciation 859 1,021 Amortization 330 421 Deferred tax (credits) - (424) (Gain) on sale of property, plant and equipment (25) (23) (Gain) on disposition of trademarks and tradename (98) - Changes in assets and liabilities: Accounts receivable (1,826) (2,270) Inventory 6,702 171 Prepaid expenses and other current assets 127 116 Other assets (241) 217 Accounts payable (1,479) (466) Income taxes payable 92 300 Other liabilities (843) (483) _____________ _____________ Total adjustments 3,598 (1,420) _____________ _____________ Net cash provided (used) by operations 1,058 (1,413) _____________ _____________ Cash flow from investing activities: Capital expenditures (507) (783) Proceeds from sales of business and property, plant and equipment 1,108 38 _____________ _____________ Net cash provided (used) by investing activities 601 (745) _____________ _____________ Cash flows from financing activities: Net borrowings (1,745) 1,896 _____________ _____________ Net cash (used) provided by financing activities (1,745) 1,896 _____________ _____________ Effect of exchange rate changes on cash (17) (8) _____________ _____________ Net change in cash and cash equivalents (103) (270) Cash and cash equivalents at beginning of period 532 450 _____________ _____________ Cash and cash equivalents at end of period $ 429 $ 180 ============= ============= 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 September 30, 1996 and December 31, 1995, the results of its operations for the three and nine month periods ended September 30, 1996 and 1995, and cash flows for the nine months ended September 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 nine month periods ended September 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) outstanding during each period. No effect has been given to stock options outstanding as no dilutive effect would result from such inclusion. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Sales Consolidated net sales for the quarter ended September 30, 1996 were $13,281,000, compared with $13,838,000 for the same period last year, a decline of $557,000. Of this decline, $1,393,000 resulted from the divestiture of the Altenbach business in Germany. Excluding Altenbach from the prior year, sales increased $836,000 or 7% in the third quarter of 1996 as compared with the third quarter of 1995. The revenue growth was due to an increase in the U.S. and Canadian product sales. Net sales were $38,103,000 for the first nine months of 1996, compared with net sales of $41,205,000 for the same period of 1995, a decline of $3,102,000. Of this decline, $2,615,000 was attributed to Altenbach. Excluding Altenbach from the prior year, sales decreased by $487,000 or 1% for the nine months as compared with the same period last year. Domestic Consumer net sales totaled $6,325,000 in the third quarter of 1996, compared with $5,268,000 in the third quarter of 1995, an increase of 20%. Solid sales growth was achieved for the first aid and ruler product lines. Sales for the first aid product line increased by 65% and the ruler product line by 28% for the third quarter of 1996 as compared with the third quarter of 1995. For the first nine months of 1996, consumer net sales of $16,214,000 were 8% higher than net sales of $14,995,000 for the same period in 1995. Net sales of medical products were $3,707,000 in the third quarter of 1996 as compared with $3,992,000 in the third quarter of 1995. Net sales of medical products were $11,076,000 for the first nine months of 1996 as compared with $12,498,000 for the first nine months of 1995. The sales decline in 1996 was primarily the result of a volume decline in the low margin custom tray market. However, the company has entered into a contract to supply disposable medical instruments to the Asian market with sales beginning in the fourth quarter of 1996. Net sales from foreign operations were $3,547,000 in the third quarter of 1996 as compared with $4,987,000 in the third quarter of 1995. Excluding Altenbach from the prior year, sales decreased $47,000 or 1% for the third quarter of 1996 as compared with the same period of last year. While sales were soft in the United Kingdom and Germany, the Canadian operation recorded a 10% sales increase over the third quarter of 1995. Net sales from foreign operations were $11,672,000 for the first nine months of 1996 compared with $15,195,000 for the similar period in 1995. Of the decline of $3,523,000, $2,615,000 resulted from the divestiture of Altenbach. Gross Profit Margin For the third quarter of 1996, the Company reported a reduced gross profit margin of 26.2% compared to 27.6% in the same quarter of 1995. The gross profit margin for the first nine months of 1996 was 23.6% compared with a 28.2% gross profit margin for the same period in 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 bring inventory levels more in line with the current sales volume. 8 Net Income A net loss of $ 485,000, or 15 cents per share, for the third quarter of 1996 compared with a net loss of $166,000, or five cents per share, for the third quarter of 1995. For the first nine months of 1996, the net loss was $2,540,000, or 76 cents per share. This compares with net income of $7,000 for the first nine months of 1995. Excluding the severance and restructuring costs, the company realized a profit on a continuing business basis for the third quarter of 1996 of $194,000 or six cents per share. The third quarter loss included $580,000 of severance costs and $99,000 of restructuring costs. The nine month loss included $869,000 of severance costs, $926,000 of restructuring costs, and $271,000 of loss incurred by the Altenbach operation. On a continuing business basis (excluding Altenbach, severance and restructuring costs), the net loss for the nine months of 1996 was $474,000 or 14 cents per share. Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $256,000 and $266,000 for the three and nine month periods ended September 30, 1996 as compared with the same periods in 1995. Severance costs amounted to $580,000 and $869,000 for the three and nine month periods ended September 30, 1996, respectively. Excluding these severance charges, the Company reduced its selling, general and administrative costs by $324,000 or 9% for the quarter ended September 30, 1996, and $603,000 or 6% for the nine month period ended September 30, 1996 as compared with the same periods in 1995. Interest Expense Interest expense decreased by $165,000 and $280,000 for the three and nine month periods ended September 30, 1996, respectively, as compared with 1995, which is attributable to lower average bank borrowings. Provision for Income Taxes The provision (benefit) for income taxes for the three and nine month periods ended September 30, 1996 was ($53,000) and $103,000 as compared to $27,000 and $8,000 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 September 30, 1996 has decreased by $4,261,000 or 21% from September 30, 1995. Company-wide inventory levels as of September 30, 1996 have decreased by $8,445,000 or 45% from September 30, 1995 (excluding Altenbach) 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. 9 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 September 30, 1996 the Company had an available line of $11,107,000 with $1,207,000 unused. The Company's foreign subsidiaries have overdraft arrangements which expire at various times during 1996. The Company's working capital, current ratio and long term debt to equity ratio are as follows: September 30, 1996 December 31, 1995 __________________ _________________ Working capital $11,121,000 $15,975,000 Current ratio 2.14 to 1 2.42 to 1 Long term debt to equity ratio 1.88 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 September 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: November 14, 1996 ________________________________________ Cheryl Kendall Vice President - Chief Financial Officer Date: November 14, 1996 ________________________________________ Richard L. Windt Vice President - Corporate Controller EX-27 2
5 3-MOS DEC-31-1996 SEP-30-1996 428795 0 9499527 215742 10328842 20854897 11911275 13310600 29793571 9734382 12993504 0 0 8461550 (1540865) 29793571 13280786 13329649 9708472 9708472 0 36302 360795 (538312) (52994) (485318) 0 0 0 (485318) (.15) (.15)
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