-----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, T9IVLbVWZO5LfgV7QngaUxP3bov9LTmx9C2PplswDToo5lzqZdr5wrVI6+9wUHbT PrqUPIigzCzxd9NDihzKJA== 0001026608-98-000021.txt : 19980505 0001026608-98-000021.hdr.sgml : 19980505 ACCESSION NUMBER: 0001026608-98-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980504 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: SEC FILE NUMBER: 001-07698 FILM NUMBER: 98608928 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 March 31, 1998 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 3,369,875 shares outstanding as of April 30, 1998 of its $ 2.50 par value Common Stock. PART 1 - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS ACME UNITED CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (ALL AMOUNTS IN THOUSANDS) ASSETS MARCH 31 DECEMBER 31 1998 1997 (UNAUDITED) (UNAUDITED) ----------- -----------
Current Assets: Cash and cash equivalents $ 21 $ 25 Accounts receivable, net 7,445 7,446 Inventories: Finished goods 7,325 7,658 Work in process 2,246 1,229 Raw materials and supplies 4,258 5,194 ----------- ----------- 13,829 14,081 Prepaid expenses and other current assets 1,004 176 ----------- ----------- Total current assets 22,299 21,728 Property, plant and equipment Land 415 420 Buildings 3,678 3,746 Machinery and equipment 15,962 15,528 ----------- ----------- 20,055 19,694 Less accumulated depreciation 12,996 12,929 ----------- ----------- 7,059 6,765 Other assets 807 837 Goodwill 522 527 ----------- ----------- Total assets $ 30,687 $ 29,857 =========== ===========
See notes to condensed consolidated financial statements ACME UNITED CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (ALL AMOUNTS IN THOUSANDS) MARCH 31 DECEMBER 31 1998 1997 (UNAUDITED) (UNAUDITED) ----------- ------------
LIABILITIES Current Liabilities: Accounts payable $ 4,392 $ 3,525 Notes payable 3,575 3,727 Restructuring liability 557 557 Other accrued liabilities 3,202 3,902 ----------- ----------- Total current liabilities 11,726 11,711 Long term debt 12,741 11,852 ----------- ----------- Total liabilities 24,467 23,563 STOCKHOLDERS' EQUITY Common stock, par value $2.50: Authorized-4,000,000 shares; Issued-3,481,495 shares in 1998 and 3,473,995 shares in 1997 8,704 8,685 Additional paid-in capital 2,249 2,238 Retained-earnings deficit (2,806) (2,714) Translation adjustment (1,238) (1,226) Treasury stock-111,620 shares (689) (689) ----------- ----------- Total stockholders' equity 6,220 6,294 ----------- ----------- Total liabilities and stockholders' equity $ 30,687 $ 29,857 =========== ===========
See notes to condensed consolidated financial statements ACME UNITED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED MARCH 31 1998 1997 ----------- -----------
Net sales $ 11,045 $ 10,880 Other income 53 885 ----------- ----------- 11,098 11,765 Costs and expenses: Cost of goods sold 8,222 7,700 Selling, general and administrative expenses 2,635 2,972 Interest expense 338 282 Restructuring and other charges --- 530 ----------- ----------- 11,195 11,484 ----------- ----------- (Loss) income before income taxes (97) 281 (Benefit) provision for income taxes (5) --- ----------- ----------- Net (loss) income (92) 281 Other comprehensive expenses- foreign currency translation (12) (123) ----------- ----------- Comprehensive (loss) income $ (104) $ 158 =========== =========== Basic (loss) earnings per share $ (.03) $ .08 =========== =========== Diluted (loss) earnings per share $ (.03) $ .08 =========== =========== Weighted average number of common shares outstanding-denominator for basic per share computation 3,368 3,369 Weighted average number of dilutive stock options outstanding --- 298 ----------- ----------- Denominator for diluted per share computation 3,368 3,667 =========== ===========
See notes to condensed consolidated financial statements ACME UNITED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (ALL AMOUNTS IN THOUSANDS) THREE MONTHS ENDED MARCH 31 1998 1997 ----------- -----------
Operating activities: Net (loss) income $ (92) $ 281 Adjustments to reconcile net (loss) income to net cash used by operating activities: Depreciation 263 202 Amortization 6 70 Increase in deferred income taxes 28 --- Gain on disposal of property, plant, and equipment (3) --- Change in operating assets and liabilities: Accounts receivable (410) (1,440) Inventories 255 (2,270) Prepaid expenses and other current assets (425) (210) Other assets 3 976 Accounts payable 869 1,602 Other accrued liabilities (692) 671 ----------- ----------- Net cash used by operating activities (198) (118) ----------- ----------- Investing activities: Capital expenditures (647) (388) Proceeds from sale of property, plant, and equipment 44 --- ----------- ----------- Net cash used by investing activities (603) (388) ----------- ----------- Financing activities: Net borrowings 767 678 Treasury Stock purchased --- (330) Common Stock issued for stock options exercised 30 9 ----------- ----------- Net cash provided by financing activities 797 357 ----------- ----------- Effect of exchange rate changes on cash --- (1) ----------- ----------- Net change in cash and cash equivalents (4) (150) Cash and cash equivalents at beginning of period 25 427 ----------- ----------- Cash and cash equivalents at end of period $ 21 $ 277 =========== ===========
See notes to condensed consolidated financial statements ACME UNITED CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of Management, the accompanying condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position as of March 31, 1998 and December 31, 1997 and the results of its operations and cash flows for the three month periods ended March 31, 1998 and 1997. However, the financial statements do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the Company's annual report on Form 10-K. Please refer to the Company's annual report on Form 10-K for the year ended December 31, 1997 for such disclosures. The condensed balance sheet as of December 31, 1997 was derived from the audited financial statements as of that date. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year. 2. The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") as of its December 31, 1997 year-end. As such, per share amounts for the first quarter of 1997 as presented herein reflect the adoption of SFAS. Such adoption did not have a significant impact. 3. As of January 1, 1998, the Company adopted SFAS 130, "Reporting Comprehensive Income". The adoption of this Statement had no impact on the Company's net income or shareholders' equity. Under SFAS 130 the Company's foreign currency translation adjustments, which are reported separately in shareholders' equity, are also required to be included in the determination of other comprehensive income or loss. The prior year financial statements have been reclassified to conform to the requirements of SFAS 130. 4. The Company has been involved in certain environmental matters. Additionally, the Company has been involved in numerous legal actions relating to the use of certain latex products, which the Company distributes, but does not manufacture. The Company is one of many defendants. Based on information available, the Company does not expect a significant impact on the financial position, future operations or cash flows of the Company, relating to these matters. The Company is in the process of making a complete assessment of the impact of the Year 2000. In the U.S., the Company implemented a new information system in 1997, which should address any computer system issues related to the Year 2000. The Company has established a Year 2000 Task Force to fully evaluate the company-wide impact of the Year 2000. The Task Force is in the process of identifying all issues, and determining an action plan for testing and validating all systems. Management believes that the Year 2000 issue will not materially affect future financial results, or cause reported financial results not to be necessarily indicative of future operating results or future financial condition. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net Sales Traditionally, the Company's sales are stronger in the second and third quarters, and weaker in the first and fourth quarters of the fiscal year. Consolidated net sales for the quarter ended March 31, 1998 were $11,045,000, compared to $10,880,000 for the same period last year, an increase of $165,000, or 2%. Sales for the first quarter of 1997 included $965,000 for product lines that were sold to Seton Healthcare International Limited ("Seton") in 1997. Sales for the first quarter of 1998 of $440,000 were associated with the Rotex division of Esselte Canada which the Company purchased in December 1997. Net sales for the first quarter of 1998 adjusted for the Seton sale and Rotex purchase were $690,000, or 7%, higher than the first quarter of 1997 similarly adjusted. Domestic consumer net sales totaled $5,505,000 in the first quarter of 1998, compared to $4,575,000 in the first quarter of 1997, an increase of $930,000, or 20%. The sales growth was due to an increase in the core business and product line expansion. Net sales from foreign operations were $2,966,000 in the first quarter of 1998 compared to $2,491,000 in the first quarter of 1997. The sales increase of $475,000, or 19%, was primarily due to sales from the Rotex products. Net sales of medical products were $2,574,000 in the first quarter of 1998 compared to $3,814,000 in the first quarter of 1997, a decrease of $1,240,000. The revenue decline was primarily due to the sale of the Seton product line, and reduced sales to the Asian market. Gross Profit Margin For the quarter the Company reported a gross profit margin of 29.4% in 1998 compared to 32.6% in 1997. The margin for the consumer business declined slightly from 23.5% for the first quarter of 1997 to 22.9% for the first quarter of 1998. The margin for the medical business declined from 39.9% in the first quarter of 1997 to 34.3% for the first quarter of 1998. The decline was due primarily to sales mix. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses of $2,635,000 for the first quarter of 1998 decreased $337,000, or 11%, compared with the first quarter of 1997. The first quarter of 1997 included $162,000 of non-recurring charges. Excluding the non-recurring charges, SG&A expense in the first quarter of 1998 declined by $175,000 due to headcount reductions in the United Kingdom, and the elimination of certain expenses incurred in 1997 associated with the product lines sold to Seton. Net (Loss) Income The Company reported a net loss for the first quarter of 1998 of $92,000, or $.03 per share, compared to a net income in the first quarter of 1997 of $281,000, or $.08 per share. The first quarter of 1997 included a gain on the sale of marketing rights to Seton offset by one-time charges; an increase in net income of $157,000 was recognized. FINANCIAL CONDITION Liquidity and Capital Resources During the first quarter of 1998, the total debt increased by $737,000 compared to total debt at December 31, 1997. The increase supported capital expenditures and increased sales growth. For the remainder of 1998, cash generated from operating activities is expected to be sufficient to reduce debt and fund capital expenditures. The Company's current debt and line of credit arrangements coupled with cash expected from operating activities are considered adequate to meet liquidity needs for the remainder of 1998. The Company's working capital, current increase supported capital expenditures and increased sales growth. For the remainder of 1998, cash generated from operating activities is expected to be sufficient to reduce debt and fund capital expenditures. The Company's current debt and line of credit arrangements coupled with cash expected from operating activities are considered adequate to meet liquidity needs for the remainder of 1998. The Company's working capital, current ratio and long term debt to equity ratio follow: March 31, 1998 December 31, 1997 -------------- ----------------- Working capital $10,573,000 $10,017,000 Current ratio 1.90 to 1 1.86 to 1 Long term debt to equity ratio 2.05 1.88 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS none ITEM 2. CHANGES IN SECURITIES none ITEM 3. DEFAULT UPON SENIOR SECURITIES none ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A. The Annual Meeting was held on April 27, 1998. B. The following individuals were elected Directors at the Meeting and comprise the entire Board. Votes Votes Votes for against withheld --------- ----------- --------- David W. Clark, Jr. 3,020,482 208,108 141,285 George R. Dunbar 3,020,408 208,182 141,285 Richmond Y. Holden,Jr. 3,012,982 215,608 141,285 Walter C. Johnsen 3,020,482 208,108 141,285 Wayne R. Moore 3,020,408 208,182 141,285 Gary D. Penisten 3,020,482 208,108 141,285 James L.L. Tullis 3,020,482 208,108 141,285 Henry C. Wheeler 3,020,408 208,182 141,285 C. The Amendment to the Non-Salaried Director Stock Option Plan was approved with 1,786,876 shares voting for the Plan, 302,127 shares voting against the Plan, 104,302 votes withheld and 1,176,570 shares not voted. D. The Amendment to the Employees' Stock Option Plan was approved with 1,562,150 shares voting for the Plan, 526,956 shares voting against the Plan, and 104,199 votes withheld and 1,176,570 shares not voted. ITEM 5. OTHER INFORMATION none ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. A. Form 8-K was filed by the Company on March 6, 1998. A second Form 8-K was filed by the Company on April 6, 1998 and revised on April 17, 1998. 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: April 30, 1998 /s/ Cheryl L. Kendall ----------------------------- Cheryl L. Kendall Vice President and Chief Financial Officer Date: April 30, 1998 /s/ Richard L. Windt ----------------------------- Richard L. Windt Vice President/Corporate Controller EX-27 2
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 MAR-31-1998 21 0 7,670 225 13,829 22,299 20,055 12,996 30,687 11,726 0 0 0 8,704 (2,484) 30,687 11,045 11,098 8,222 10,857 0 0 338 (97) (5) (92) 0 0 0 (92) (.03) (.03)
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