-----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, HlYOShLj4a3/Wfi7tjK7MWFuAf+uusEAI1+9OgkQWj02TmHbuSw4OVod7VFyYV1W Wi6HEHtoyaI1n4yhMmF/Aw== 0000023341-96-000036.txt : 19961106 0000023341-96-000036.hdr.sgml : 19961106 ACCESSION NUMBER: 0000023341-96-000036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961104 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONGOLEUM CORP CENTRAL INDEX KEY: 0000023341 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 020398678 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13612 FILM NUMBER: 96653519 BUSINESS ADDRESS: STREET 1: 3705 QUAKERBRIDGE RD STE 211 STREET 2: PO BOX 3127 CITY: MERCERVILLE STATE: NJ ZIP: 08619-0127 BUSINESS PHONE: 6095843000 MAIL ADDRESS: STREET 1: 3705 QUAKERBRIDGE RD STE 211 STREET 2: PO BOX 3127 CITY: MERCERVILLE STATE: NJ ZIP: 08619-0127 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 __________________________ FORM 10-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 EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission File Number 1-13612 CONGOLEUM CORPORATION (Exact name of Registrant as specified in Its Charter) DELAWARE 02-0398678 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3705 Quakerbridge Road P.O. Box 3127 Mercerville, NJ 08619-0127 (Address of Principal Executive Offices, including Zip Code) Telephone number: (609) 584-3000 (Registrant's telephone number, including area code) 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 1, 1996 - ---------------------- ------------------------------- Class A Common Stock 4,645,500 Class B Common Stock 5,350,000 Page 1 of 13 Index to Exhibits at Page 12 CONGOLEUM CORPORATION Index Page PART I. FINANCIAL INFORMATION ---- Item 1. Financial Statements: Balance Sheets as of September 30, 1996 (unaudited) and December 31, 1995 3 Statements of Operations for the three and nine months ended September 30, 1996 and 1995 (unaudited) 4 Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 (unaudited) 5 Notes to Unaudited Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 Exhibit Index 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements CONGOLEUM CORPORATION BALANCE SHEETS
September 30, December 31, 1996 1995 (Unaudited) (Dollars in thousands) ASSETS Current assets: Cash and cash equivalents $ -- $ 40,103 Short-term investments 35,100 -- Accounts and notes receivable, net 28,820 16,755 Inventories 47,511 48,018 Prepaid expenses and other current assets 1,222 918 Deferred income taxes 4,210 4,210 ----------- ----------- Total current assets 116,863 110,004 Property, plant and equipment, net 77,863 74,208 Goodwill, net 12,791 13,115 Deferred income taxes 2,873 2,873 Other noncurrent assets 6,197 6,642 ----------- ----------- Total assets $ 216,587 $ 206,842 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank checks outstanding, less cash in bank $ 2,846 $ -- Accounts payable 14,564 21,397 Accrued expenses 32,591 29,634 Accrued income taxes 2,944 346 Deferred income taxes 2,072 2,072 ----------- ----------- Total current liabilities 55,017 53,449 Long-term debt 90,000 90,000 Other liabilities 17,629 17,601 Noncurrent pension liability 12,575 12,575 Accrued postretirement benefit obligation 10,615 10,615 ----------- ----------- Total liabilities 185,836 184,240 ----------- ----------- STOCKHOLDERS' EQUITY Preferred stock, par value $0.01; 1,000,000 shares authorized; none issued or outstanding -- -- Class A common stock,par value $0.01; 20,000,000 shares authorized, 4,650,000 shares issued; 4,645,500 and 4,650,000 outstanding as of September 30, 1996 and December 31, 1995 47 47 Class B common stock, par value $0.01; 5,350,000 shares authorized, issued and outstanding as of September 30, 1996 and December 31, 1995 53 53 Additional paid-in capital 55,172 55,172 Retained deficit (23,460) (31,658) Minimum pension liability adjustment (1,012) (1,012) Common stock held in treasury, at cost; 4,500 shares at September 30, 1996 and none at December 31, 1995 (49) -- ----------- ---------- Total stockholders' equity 30,751 22,602 ----------- ---------- Total liabilities and stockholders' equity $ 216,587 $ 206,842 =========== ========== The accompanying notes are an integral part of the condensed financial statements.
3 CONGOLEUM CORPORATION STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1996 1995 1996 1995 (In thousands, except per share amounts) Net sales $ 71,900 $ 64,813 $ 200,398 $ 196,737 Cost of sales 46,931 46,596 135,552 137,061 Selling, general and administrative expenses 16,492 13,711 47,279 41,969 -------- -------- --------- --------- Income from operations 8,477 4,506 17,567 17,707 Other income (expense): Interest income 497 337 1,186 999 Interest expense (2,044) (2,044) (6,126) (6,136) Other income 393 180 1,057 1,286 Other expense (64) (28) (134) (177) -------- -------- --------- --------- Income before income taxes 7,259 2,951 13,550 13,679 Provision for income taxes 2,867 1,206 5,352 5,594 -------- -------- --------- --------- Net income $ 4,392 $ 1,745 $ 8,198 $ 8,085 ======== ======== ========= ========= Primary earnings per common share $ .44 $ .17 $ .82 $ .81 ======== ======== ========= ========= Weighted average number of common shares and equivalent shares outstanding 9,997 10,000 9,999 10,030 ======== ======== ========= ========= The accompanying notes are an integral part of the condensed financial statements.
4 CONGOLEUM CORPORATION STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, ----------------- 1996 1995 (In thousands) Cash flows from operating activities: Net income $ 8,198 $ 8,085 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 6,569 6,430 Provision for doubtful accounts 450 242 Deferred income taxes -- 646 Loss on disposition of assets 7 14 Changes in certain assets and liabilities: Accounts and notes receivable (12,515) (8,454) Inventories 507 (2,322) Prepaid expenses and other assets (303) (93) Accounts payable (6,833) (4,505) Accrued expenses 5,555 (5,295) Other liabilities 27 323 --------- --------- Net cash provided (used) by operating activities 1,662 (4,929) --------- --------- Cash flows provided (used) by investing activities: Capital expenditures (9,462) (5,582) Purchase of short-term investments (35,100) (12,500) Maturities of short-term investments -- 32,000 --------- --------- Net cash provided (used) by investing activities (44,562) 13,918 --------- --------- Cash flows from financing activities: Payment of equity offering costs -- (911) Proceeds from equity offering -- 56,219 Purchase of class B shares -- (60,450) Purchase of treasury stock (49) -- Bank checks outstanding, less cash in bank 2,846 -- --------- --------- Net cash provided (used) by financing activities 2,797 (5,142) --------- --------- Net increase/(decrease) in cash and cash equivalents (40,103) 3,847 Cash and cash equivalents: Beginning of period 40,103 14,818 --------- --------- End of period $ -- $ 18,665 ========= ========= The accompanying notes are an integral part of the condensed financial statements.
5 CONGOLEUM CORPORATION NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) 1. BASIS OF PRESENTATION - -------------------------- The condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with Rule 10-01 of Regulation S-X and have not been audited by the Company's independent accountants. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles for complete financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. The preparation of condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation of the Company's financial position have been included. The results of operations for the nine months ended September 30, 1996 are not necessarily indicative of the results to be expected for a full year. These condensed financial statements should be read in conjunction with the Company's audited financial statements which appear in the Company's Annual Report to Stockholders for the period ended December 31, 1995. 2. INVENTORIES - ---------------- A summary of the major classifications of inventories is as follows:
September 30, December 31, 1996 1995 ------------ ----------- Finished goods $ 34,300 $ 34,122 Work-in-process 4,853 4,298 Raw materials and supplies 8,358 9,598 ---------- ---------- $ 47,511 $ 48,018 ========== ==========
If the FIFO (first-in, first-out) method of inventory accounting had been used, inventories would have been approximately $1,171 lower and $226 higher than reported at September 30, 1996 and December 31, 1995, respectively. 6 3. EARNINGS PER SHARE - ----------------------- Earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding. For the three and nine months ended September 30, 1996, common stock equivalents have been included in the weighted average number of shares of common stock outstanding and amount to approximately 2,000 and 1,000 shares respectively. For the three months ended September 30, 1995, common stock equivalents have not been included in the weighted average number of shares of common stock outstanding since the effect would be antidilutive. For the nine months ended September 30, 1995, common stock equivalents have been included in the weighted average number of shares of common stock outstanding and amounted to approximately 30,000 shares. 4. COMMITMENTS AND CONTINGENCIES - ---------------------------------- Certain legal and administrative claims are pending or have been asserted against the Company, which are considered incidental to its business. Among these claims, the Company is a named party in several actions associated with waste disposal sites and asbestos-related claims. These actions include possible obligations to remove or mitigate the effects on the environment of wastes deposited at various sites, including Superfund sites. The amount of such future cost is indeterminable due to such unknown factors as the magnitude of clean-up costs, the timing and extent of the remedial actions that may be required, the determination of the Company's liability in proportion to other potentially responsible parties, and the extent to which costs may be recoverable from insurance. The contingencies also include claims for personal injury and/or property damage. The Company records a liability for environmental remediation and asbestos-related claim costs when a clean-up program or claim payment becomes probable and the costs can be reasonably estimated. As assessments and clean-ups progress, these liabilities are adjusted based upon progress in determining the timing and extent of remedial actions and the related costs and damages. The extent and amounts of the liabilities can change substantially due to factors such as the nature or extent of contamination, changes in remedial requirements and technological improvements. Estimated insurance recoveries related to these liabilities are reflected in other non-current assets. Although the outcome of these matters could result in significant expenses or judgments, management does not believe that their disposition will have a material adverse effect on the financial position or results of operations of the Company. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Three and nine months ended September 30, 1996 as compared to three and nine months ended September 30, 1995. Net sales for the third quarter of 1996 were $71.9 million as compared to $64.8 million for the third quarter of 1995, an increase of $7.1 million or 10.9%. Year-to-date net sales were $200.4 million, an increase of $3.7 million or 1.9% from the first nine months of 1995. The increase in third quarter sales over year earlier levels was primarily due to sales to new customers. Shipments to the manufactured housing segment and sales of residential sheet goods also contributed to the increase. Gross profit for the third quarter of 1996 was $25.0 million, up $6.8 million from $18.2 million in the third quarter of 1995, reflecting improved gross profit margins and the increase in sales. Gross profit as a percent of sales in the third quarter of 1996 was 34.7%, compared to 28.1% in the third quarter of 1995. Increased volume, improved efficiency, and more moderate raw material costs all contributed to the improvement in gross margin. Year-to-date gross profit was $64.8 million (32.4% of sales), up from $59.7 million (30.3% of sales) in the first nine months of 1995. Selling, general, and administrative costs increased by $2.8 million or 20.3% to $16.5 million in the third quarter of 1996 from $13.7 million in the third quarter of 1995. As a percent of sales, selling, general, and administrative costs were 22.9% for the third quarter of 1996 and 21.1% for the third quarter of 1995. Increased expenses for marketing, expanded distribution and new product development were the major reasons for the increase. Year-to-date selling, general and administrative expenses were $47.3 million (23.6% of sales) up from $42.0 million (21.3% of sales) in the same period one year earlier. Income from operations for the third quarter of 1996 was $8.5 million (11.8% of net sales), compared to $4.5 million (7.0% of net sales) for the third quarter of 1995, an increase of $4.0 million, or 88.2%. The increase resulted from the higher sales and improved gross profit margins, partly offset by increased selling, general, and administrative costs. Income from operations for the nine months ended September 30, 1996 totaled $17.6 million, $0.1 million lower than the same period in 1995. Net income for the third quarter of 1996 was $4.4 million, compared to $1.7 million for the third quarter of 1995, an increase of $2.6 million, reflecting the higher income from operations. For the nine months ended September 30, 1996, net income was $8.2 million, $0.1 million higher than net income in the first nine months of 1995. Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents, including short-term investments at September 30, 1996 were $35.1 million, a decrease of $5.0 million from December 31, 1995. Working capital at September 30, 1996 was $61.8 million, up from $57.8 million one year earlier. The ratio 8 of current assets to current liabilities at September 30, 1996 was 2.1, and the ratio of debt to total capital was .42. Net cash provided by operations during the nine months ended September 30, 1996 was $1.7 million and capital expenditures totaled $9.5 million. Capital expenditures are anticipated to be approximately $14 to $15 million in 1996 and approximately $20 million in 1997. During 1996, the Company's Board of Directors authorized the repurchase of $5 million of the Company's Class A common stock and $10 million of its 9% senior notes. At September 30, 1996, $49 thousand had been expended on stock repurchases and nothing had been expended on note repurchases pursuant to these authorizations. The Company has recorded what it believes are adequate provisions for environmental remediation and product-related li abilities, including provisions for testing for potential remediation of conditions at its own facilities. While the Company believes its estimate of the future amount of these liabilities is reasonable, that such amounts will not have a material adverse impact on the Company's financial position or results of operations, and that they will be paid over a period of five to ten years, the timing and amount of such payments may differ significantly from the Company's assumptions. Although the effect of future government regulation could have a significant effect on the Company's costs, the Company is not aware of any pending legislation which could have a material adverse effect on its results of operations or financial position. There can be no assurances that such costs could be passed along to its customers. The Company's principal sources of liquidity are net cash provided by operating activities and borrowings under its Amended and Restated Financing Agreement. The Company believes that these sources will be adequate to fund working capital requirements, debt service payments, stock and note repurchases, and planned capital expenditures through the foreseeable future. 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults Upon Senior Securities: None Item 4. Submission of Matters to a Vote of Security Holders: None Item 5. Other Information: None Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits: 11 Computation of Per Share Earnings (b) Reports on Form 8-K: None 10 CONGOLEUM CORPORATION SIGNATURE 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. CONGOLEUM CORPORATION (Registrant) Date: November 4, 1996 By: /s/ Howard N. Feist ------------------------- (signature) Howard N. Feist III Sr. Vice President - Finance (Principal Financial & Accounting Officer) 11 EXHIBIT INDEX Page Exhibit Number Number - ------------------- ------ ------ Computation of Income Per Common Share 11 13 12 EX-11 2 EXHIBIT 11 Congoleum Corporation Computation of Income Per Common Share (Amounts in thousands, except per share data) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 -------- -------- -------- -------- Primary Earnings Per Common Share - --------------------------------- Income per common and common equivalent share $ 4,392 $ 1,745 $ 8,198 $ 8,085 ======== ======== ======== ======== Weighted average common shares outstanding 9,995 10,000 9,998 10,000 Effect of assumed exercise of dilutive stock options 2 -- 1 30 -------- -------- -------- -------- Weighted average common and common equivalent shares 9,997 10,000 9,999 10,030 ======== ======== ======== ======== Income per common and common equivalent share $ 0.44 $ 0.17 $ 0.82 $ 0.81 ======== ======== ======== ======== Fully Diluted Earnings Per Common Share: - --------------------------------------- Income per common and common equivalent share $ 4,392 $ 1,745 $ 8,198 $ 8,085 ======== ======== ======== ======== Weighted average common shares outstanding 9,995 10,000 9,998 10,000 Effect of assumed exercise of dilutive stock options 4 -- 1 37 -------- -------- -------- -------- Weighted average common and common equivalent shares 9,999 10,000 9,999 10,037 ======== ======== ======== ======== Income per common and common equivalent share $ 0.44 $ 0.17 $ 0.82 $ 0.81 ======== ======== ======== ======== Computed based on the treasury stock method
13 EX-27 3
5 This schedule contains summary financial information extracted from the consolidated balance sheets and statements of operations as reported in the form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 0 35,100 28,820 0 47,511 116,863 77,863 0 216,587 55,017 90,000 0 0 100 30,651 216,587 200,398 202,641 135,552 135,552 47,279 0 6,126 13,550 5,352 8,198 0 0 0 8,198 .82 .82
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