-----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, Tz4fLsf6f1DO1LrGXENcAskRaDpYAXLZWRPa5tRFNQpZWYT6/oMkhV8BADg3FEIy vaF08yq0pXM52yIWz/vxfA== 0000025793-96-000005.txt : 19960515 0000025793-96-000005.hdr.sgml : 19960515 ACCESSION NUMBER: 0000025793-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROSS A T CO CENTRAL INDEX KEY: 0000025793 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 050126220 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06720 FILM NUMBER: 96563585 BUSINESS ADDRESS: STREET 1: ONE ALBION RD CITY: LINCOLN STATE: RI ZIP: 02865 BUSINESS PHONE: 4013331200 MAIL ADDRESS: STREET 1: ONE ALBION ROAD STREET 2: 50 KENNEDY PLAZA CITY: LINCOLN STATE: RI ZIP: 02865 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the quarterly period ended March 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________ to __________ Commission File No. 1-6720 A. T. CROSS COMPANY (Exact name of registrant as specified in its charter) Rhode Island 05-0126220 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) One Albion Road, Lincoln, Rhode Island 02865 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (401) 333-1200 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, 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 March 31, 1996: Class A common stock - 14,755,677 shares Class B common stock - 1,804,800 shares PART I. FINANCIAL INFORMATION A. T. CROSS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31 December 31 1996 1995 1995 ASSETS (Thousands of Dollars) CURRENT ASSETS Cash and Cash Equivalents $ 20,552 $ 13,645 $ 32,469 Short-Term Investments 30,409 60,924 21,427 Accounts Receivable 27,411 21,877 48,017 Inventories-Note B 37,481 22,234 29,465 Other Current Assets 5,559 6,975 3,765 TOTAL CURRENT ASSETS 121,412 125,655 135,143 PROPERTY, PLANT AND EQUIPMENT 97,440 87,070 95,589 Less Allowances for Depreciation 59,193 52,903 57,352 38,247 34,167 38,237 INTANGIBLES AND OTHER ASSETS 15,837 15,671 15,982 $175,496 $175,493 $189,362 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable, Accrued Expenses and Other Liabilities $ 18,375 $ 23,360 $ 30,155 Compensation and Related Taxes 4,545 4,831 5,309 Cash Dividends Payable 0 0 2,648 Contributions Payable to Employee Benefit Plans 10,061 8,310 9,443 Income Taxes Payable 3,981 2,773 4,884 TOTAL CURRENT LIABILITIES 36,962 39,274 52,439 ACCRUED WARRANTY COSTS 5,284 4,984 5,209 SHAREHOLDERS' EQUITY Common Stock, Par Value $1 Per Share: Class A, Authorized 40,000,000 Shares; Issued 15,251,777 Shares and Outstanding 14,755,677 Shares in March 1996, Issued 15,200,302 Shares and Outstanding 14,725,302 Shares in March 1995 and Issued 15,243,316 Shares and Outstanding 14,747,216 Shares in December 1995 15,252 15,200 15,243 Class B, Authorized 4,000,000 Shares; Issued and Outstanding 1,804,800 Shares 1,805 1,805 1,805 Additional Paid-In Capital 11,427 10,798 11,320 Retained Earnings 112,401 109,513 110,743 Accumulated Foreign Currency Translation Adjustment (22) 1,225 216 140,863 138,541 139,327 Treasury Stock, at Cost (7,613) (7,306) (7,613) TOTAL SHAREHOLDERS' EQUITY 133,250 131,235 131,714 $175,496 $175,493 $189,362 See notes to condensed consolidated financial statements. A. T. CROSS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31 1996 1995 (Thousands of Dollars Except per Share Data) Net Sales $36,053 $35,407 Cost of Goods Sold 18,153 17,810 Gross Profit 17,900 17,597 Selling, General and Administrative Expenses 14,516 14,453 Research and Development Expenses 646 673 Service and Distribution Costs 911 1,021 Operating Income 1,827 1,450 Interest and Other Income 722 1,036 Income Before Income Taxes 2,549 2,486 Income Taxes 892 932 Net Income $ 1,657 $ 1,554 Net Income Per Share - Note C $0.10 $ 0.09 See notes to condensed consolidated financial statements. A. T. CROSS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31 1996 1995 (Thousands of Dollars) Cash Provided By (Used In): Operating Activities $ 1,519 $ 7,104 Investing Activities: Additions to Property, Plant and Equipment (1,857) (2,088) Purchase of Short-Term Investments (14,659) (4,856) Sale or Maturity of Short-Term Investments 5,677 263 Net Cash Used In Investing Activities (10,839) (6,681) Financing Activities: Cash Dividends Paid (2,648) (2,644) Other 115 83 Net Cash Used In Financing Activities (2,533) (2,561) Effect of Exchange Rate Changes on Cash and Cash Equivalents (64) 93 Decrease in Cash and Cash Equivalents (11,917) (2,045) Cash and Cash Equivalents at Beginning of Period 32,469 15,690 Cash and Cash Equivalents at End of Period $ 20,552 $ 13,645 See notes to condensed consolidated financial statements. A. T. CROSS COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1996 NOTE A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. The Company typically records its highest sales and earnings in the fourth quarter. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. NOTE B - Inventories The components of inventory at March 31, 1996 and December 31, 1995 were as follows: March 31 December 31 1996 1995 Finished goods $ 19,676 $ 14,499 Work in process 9,267 7,837 Raw materials 8,538 7,129 $ 37,481 $ 29,465 NOTE C - Net Income Per Share Net income per share has been determined based upon the weighted average number of Class A and Class B common shares outstanding of 16,555,892 and 16,527,823 for the first quarter ended March 31, 1996 and 1995, respectively. Common stock equivalents related to outstanding stock options have not been included in the calculations of earnings per share because the result is not dilutive. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Results of Operations Net sales for the first quarter ended March 31, 1996 increased 1.8% compared to the first quarter of 1995. Domestic writing instrument sales of $15.6 million were 4.7% greater than last year, while foreign sales of $17.3 million improved 2.1% over 1995. Contributing to the increase in both domestic and foreign writing instrument sales is the growing popularity of the Townsend line, a wider-girth writing instrument, and the initial favorable response to Solo Classic, a lower priced line of writing instruments introduced for the first time in 1995. Domestic sales also benefited from the March launch of the new Metropolis line, a contemporary styled product featuring polished lacquered caps and fluted-metal barrels, offered generally in the upper price range of the Company's well established Century line. The foreign sales increase is partly attributable to the launch of the redesigned Century line in Europe, the Middle East and Africa, as well as to strong sales of Townsend and Solo Classic. Leather sales were $3.2 million, down 11.7% from last year as major retailers were balancing first quarter inventories in response to low 1995 holiday sell-through. A 1996 price increase had a favorable effect on sales as well. The gross profit margin for the first quarter of 1996 was 49.6%, about even with 1995. Selling, general and administrative expenses for the first quarter of 1996 were also about even with the prior year. Research and Development expenses were 4.0% lower than the same period of 1995 due to the timing of projects under development. Service and Distribution costs were 10.8% less than last year. This was due largely to timing of expenditures and, to a lesser extent, to somewhat lower costs of product repairs under the Company's warranty. Interest and other income decreased 30.3% for the first three months of 1996 due to lower interest income. Both average investable funds and interest rates were lower than in the first quarter of 1995. The effective income tax rate for the first quarter of 1996 was 35.0% as compared to 37.5% for the same period last year, primarily due to relatively higher domestic sourced income compared to foreign sourced income in 1996. Liquidity and Sources of Capital Cash, cash equivalents and short-term investments decreased $2.9 million from December 31, 1995 to $51.0 million at March 31, 1996. Accounts receivable decreased from year-end by $20.6 million to $27.4 million as cash was collected in January 1996 from customers who took advantage of the 1995 promotion that allowed qualifying domestic customers to defer payments on certain 1995 purchases. This promotion was similar to programs that have been offered in past years. Cash available for domestic operations approximated $3.0 million while cash held off-shore approximated $48.0 million. The Company has available a $50 million line of credit with Fleet National Bank which provides an additional source of working capital on a short-term basis. The Company also has available a $7 million multi- currency credit arrangement with a bank to meet short-term foreign currency needs. There were no outstanding amounts under either agreement as of March 31, 1996 or December 31, 1995. Inventory of $37.5 million increased $8.0 million since December 31, 1995. The higher inventory is the result of new product introductions and expanded packaging variations. It is the Company's intention to meet certain stringent inventory turnover ratios once the new products have established themselves in the market place and the ordering patterns become more predictable. Also, more of the materials used in the Company's newer products are foreign sourced and require longer lead times, resulting in the need for higher inventory levels of these materials. PART II. OTHER INFORMATION Item 6. No reports have been filed on Form 8-K pursuant to item 6(b) and no other items are applicable for three months ended March 31, 1996. SIGNATURES 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. A. T. CROSS COMPANY Date: May 14, 1996 By: JOHN E. BUCKLEY John E. Buckley Executive Vice President Chief Operating Officer Date: May 14, 1996 By: MICHAEL EL-HILLOW Michael El-Hillow Vice President, Finance, Treasurer Chief Financial Officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS INCLUDED IN A. T. CROSS COMPANY FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 MAR-31-1996 50,961 0 29,280 1,869 37,481 121,412 97,440 59,193 175,496 36,962 0 0 0 17,057 116,193 175,496 36,053 36,779 18,153 0 16,032 41 4 2,549 892 1,657 0 0 0 1,657 .10 .10
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