-----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, MoKPSc/YoKM+ERgXC3soD4JGofrNXCQQSUTn/Qt1hqNGppklIddWTUUbh6dErpQr uq0BN+WQyCRFgFb+s9CLNA== 0000024104-97-000010.txt : 19971031 0000024104-97-000010.hdr.sgml : 19971031 ACCESSION NUMBER: 0000024104-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971030 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL MATERIALS CORP CENTRAL INDEX KEY: 0000024104 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 362274391 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03834 FILM NUMBER: 97703565 BUSINESS ADDRESS: STREET 1: 225 WEST WACKER STREET 2: SUITE 1800 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126617200 MAIL ADDRESS: STREET 1: 225 WEST WACKER STREET 2: SUITE 1800 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL URANIUM INC DATE OF NAME CHANGE: 19660830 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ending September 27, 1997 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 1-3834 CONTINENTAL MATERIALS CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-2274391 (State or other jurisdiction (I.R.S. Employer of Identification No.) incorporation or organization) 225 West Wacker Drive, Chicago, Illinois 60606 (Address of principal executive office) (Zip Code) (312) 541-7200 (Registrant's telephone number, including area code) (Former name, former address and former 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 Number of common shares outstanding at October 24, 1997 1,103,211 PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONTINENTAL MATERIALS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 27, 1997 and DECEMBER 28, 1996 (Unaudited) (000's omitted except share data)
SEPTEMBER 27, DECEMBER 28, ASSETS 1997 1996 Current assets: Cash and cash equivalents $ 842 $ 379 Receivables, net 17,427 14,584 Inventories: Finished goods 8,101 8,696 Work in process 1,755 1,800 Raw materials and supplies 5,296 4,688 Prepaid expenses 2,713 2,687 Total current assets 36,134 32,834 Property, plant and equipment, net 18,412 18,818 Other assets: Investment in mining partnership 600 600 Other 1,875 1,641 $ 57,021 $ 53,893 LIABILITIES Current liabilities: Bank loan payable $ 1,000 $ 400 Current portion of long-term debt 1,900 1,500 Accounts payable and accrued expenses 12,749 13,863 Income taxes 711 450 Total current liabilities 16,360 16,213 Long-term debt 7,350 6,500 Deferred income taxes 1,830 1,830 SHAREHOLDERS' EQUITY Common shares, $0.50 par value; authorized 3,000,000; issued 1,326,588 663 663 Capital in excess of par value 3,484 3,484 Retained earnings 30,304 28,173 Treasury shares, 223,377, at cost (2,970) (2,970) 31,481 29,350 $ 57,021 $ 53,893
See accompanying notes 2 CONTINENTAL MATERIALS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28,1996 (Unaudited) (000's omitted except per share amounts)
SEPTEMBER 27, SEPTEMBER 28, 1997 1996 Net sales $ 25,612 $ 21,718 Costs and expenses: Cost of sales (exclusive of depreciation, depletion and amortization) 19,677 16,058 Depreciation, depletion and amortization 881 666 Selling and administrative 3,214 3,142 23,772 19,866 Operating income 1,840 1,852 Interest (244) (112) Equity loss from mining partnership (30) (350) Other income 209 124 Income before income taxes 1,775 1,514 Provision for income taxes 622 464 Net income 1,153 1,050 Retained earnings, beginning of period 29,151 26,609 Retained earnings, end of period $ 30,304 $ 27,659 Net income per share $ 1.05 $ .95 Average shares outstanding 1,103 1,103
See accompanying notes 3 CONTINENTAL MATERIALS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996 (Unaudited) (000's omitted except per share amounts)
SEPTEMBER 27, SEPTEMBER 28, 1997 1996 Net sales $ 74,508 $ 66,694 Costs and expenses: Cost of sales (exclusive of depreciation, depletion and amortization) 57,749 50,387 Depreciation, depletion and amortization 2,636 1,995 Selling and administrative 10,503 9,924 70,888 62,306 Operating income 3,620 4,388 Interest (748) (441) Equity loss from mining partnership (87) (1,495) Other income 494 337 Income before income taxes 3,279 2,789 Provision for income taxes 1,148 948 Net income 2,131 1,841 Retained earnings, beginning of period 28,173 25,818 Retained earnings, end of period $ 30,304 $ 27,659 Net income per share $ 1.93 $ 1.66 Average shares outstanding 1,103 1,106
See accompanying notes 4 CONTINENTAL MATERIALS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996 (Unaudited) (000's omitted)
SEPTEMBER 27, SEPTEMBER 28, 1997 1996 Net cash provided by operating activities $ 848 $ 3,878 Investing activities: Capital expenditures (2,157) (2,073) Proceeds from sale of property and equipment 9 63 Investment in mining partnership (87) (745) Net cash used in investing activities (2,235) (2,755) Financing activities: Borrowings (repayments) under revolving credit facility 600 (1,400) Long-term borrowings 2,000 -- Repayment of long-term debt (750) (511) Payment to acquire treasury stock -- (286) Net cash provided (used) by financing activities 1,850 (2,197) Net increase (decrease) in cash and cash equivalents 463 (1,074) Cash and cash equivalents: Beginning of year 379 1,074 End of period $ 842 $ -- Supplemental disclosures of cash flow items: Cash paid during the nine months for: Interest $ 834 $ 500 Income taxes 893 490
See accompanying notes 5 CONTINENTAL MATERIALS CORPORATION SECURITIES AND EXCHANGE COMMISSION FORM 10-Q NOTES TO THE QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS QUARTER ENDED SEPTEMBER 27, 1997 (Unaudited) 1.The unaudited interim consolidated financial statements included herein are prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual financial statements have been omitted. The interim financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of management, the consolidated financial statements include all adjustments (none of which were other than normal recurring adjustments) necessary for a fair statement of the results for the interim periods. 2.During the second quarter, as allowed by the current credit agreement, the Company elected to convert $2,000,000 of qualifying capital expenditures purchased with funds from the revolving credit facility to the term loan with a corresponding decrease in the revolving credit facility and a proportional increase in the term-loan amortization. 3.The provision for income taxes is based upon the estimated effective tax rate for the year. 4.Operating results for the first nine months of 1997 are not necessarily indicative of performance for the entire year. Historically, sales of construction materials are higher in the second and third quarters. Overall, sales of heating and air-conditioning products have not shown strong seasonal fluctuations in recent years although product mix has historically yielded higher gross profit margins in the fourth quarter. (See Note 12 of Notes to Consolidated Financial Statements in the Company's 1996 Annual Report.) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation Financial Condition (See pages 2 and 5) Operations for the first nine months of 1997 provided $848,000 in cash compared to $3,878,000 in 1996. The decrease in cash provided is attributed to higher receivable balances and reduced accrued expense and payables balances. The increase in receivables is the result of higher sales volume in the construction materials segment as well as an earlier preseason program initiated by Phoenix Manufacturing. The decrease in accrued expenses is the result of timing of payments. The Company estimates that its short-term line of credit (of which $1,000,000 was outstanding at September 27, 1997) will be adequate to meet its cash requirements for the foreseeable future. See also the discussion of the line of credit in Note 2 of the accompanying Notes to the Quarterly Consolidated Financial Statements. Historically, the Company's borrowings against the short-term line peak during the second quarter and decline over the remainder of the year. Operations - Comparison of Quarter Ended September 27, 1997 to Quarter Ended September 28, 1996 (See page 3) Consolidated net sales increased $3,894,000 (17.9%) as the construction materials segment showed strong growth. Sales of this segment were up $3,893,000 (34.9%) due to the acquisition of Transit Mix of Pueblo during the last quarter of 1996 and continued strength in construction activity in the Colorado Springs, Colorado area. The heating and air-conditioning segment sales activity was in line with the prior year. Consolidated cost of sales (exclusive of depreciation and depletion) as a percentage of sales increased from 73.9% to 76.8% attributed mainly to product mix in the heating and air- conditioning segment. Depreciation, depletion and amortization increased $215,000 (32.2%) mainly due to the acquisition of Transit Mix of Pueblo in the last quarter of 1996. Selling and administrative expenses increased slightly while declining as a percentage of sales from 14.5% to 12.5%. The dollar increase is due to higher sales levels while the decline in percentage is due to the fixed nature of many of the costs. Equity loss from mining partnership was reduced by $320,000. Production at the mine was halted in February 1996 and only carrying costs remain. The partners continue their efforts to sell the project. During 1996, the Financial Accounting Standards Board (FASB) issued a new pronouncement, Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per share," which is relevant to the Company's operations. The statement is effective for financial statements for both interim and annual periods ending after December 15, 1997. Earlier application is not permitted. The Company intends to adopt SFAS No. 128 at year end 1997. Its effect is not expected to be material to earnings per share. The FASB also issued pronouncements, SFAS No. 130, "Reporting comprehensive income," and SFAS No. 131, "Disclosures about segments of an enterprise and related information" which are relevant to the Company's operations. These statements are effective for fiscal years beginning after December 15, 1997. The Company has not yet fully evaluated these pronouncements but does not believe their effect will be material. 7 Operations - Comparison of Nine Months Ended September 27, 1997 to Nine Months Ended September 28, 1996 (See page 4) Net sales increased $7,814,000 (11.7%) as sales in the construction materials segment rose $8,148,000 (26.5%) due to the reasons noted above. Unfavorable weather conditions during the height of Phoenix Manufacturing's selling season were mainly responsible for the decline in the heating and air- conditioning segment. Consolidated cost of sales (exclusive of depreciation and depletion) as a percentage of sales increased from 75.5% to 77.5% attributable to the events described above. Depreciation, depletion and amortization increased $641,000 (32.1%) due to the reason noted above. Selling and administrative expenses increased $579,000 (5.8%) while the percentage of sales declined from 14.9% to 14.1%. The dollar increase is attributable to the higher sales volume while the percentage decline is due to the fixed nature of many of the expenses. The prior year equity loss from mining partnership includes a first quarter write-down in the carrying value of the investment of $628,000. Historically, the Company has experienced operating losses during the first quarter. The subsequent quarters have historically improved over the first quarter's operating results. This trend is expected to continue as sales of construction materials are generally higher in the second and third quarters while sales of heating and air-conditioning products, although not showing strong seasonality, experience product mix changes that yield higher gross profits in the fourth quarter. 8 PART II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11: Computation of per share earnings Exhibit 27: Financial data schedule (b) Registrant filed no reports on Form 8-K during the quarter ended September 27, 1997 SIGNATURE Pursuant to the requirement 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. CONTINENTAL MATERIALS CORPORATION Date: October 24, 1997 By: /S/ Joseph J. Sum Joseph J. Sum, Vice President and Chief Financial Officer 9 EX-11 2 EXHIBIT 11 Computation of Per Share Earnings For the three and nine months ended September 27, 1997 and September 28, 1996 (Unaudited) (000's omitted except per share data)
Three Months Ended Nine Months Ended September September September September 27, 1997 28, 1996 27, 1997 28, 1996 Primary Earnings Per Share: Net Income $ 1,153 $ 1,050 $ 2,131 $ 1,841 Weighted Average Shares Outstanding: Common Shares 1,103 1,103 1,103 1,106 Common Stock Equivalents 31 16 30 10 Total 1,134 1,119 1,133 1,116 Primary Earnings Per Share $ 1.02 $ .94 $ 1.88 $ 1.65 Fully Diluted Earnings Per Share: Net Income $ 1,153 $ 1,050 $ 2,131 $ 1,841 Weighted Average Shares Outstanding: Common Shares 1,103 1,103 1,103 1,106 Common Stock Equivalents 33 18 33 18 Total 1,136 1,121 1,136 1,124 Fully Diluted Income Per Share $ 1.01 $ .94 $ 1.88 $ 1.64 Notes: Primary and fully diluted amounts are not reflected on the face of the Consolidated Statements of Operations and Retained Earnings because they differ from basic earnings per share by less than 3%. Therefore, basic earnings per share are presented on the face of the statements.
EX-27 3
5 1,000 9-MOS JAN-03-1998 SEP-27-1997 842 0 17,427 0 15,152 36,134 18,412 0 57,021 16,360 0 0 0 663 30,818 57,021 74,508 74,508 57,749 70,888 (407) 0 748 3,279 1,148 2,131 0 0 0 2,131 1.93 1.93 Net of allowance for doubtful accounts Net of accumulated depreciation and depletion Exclusive of depreciation, depletion and amortization
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