-----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, KioksiLneu3bGilGInxD6Vo2zN4fRUg0laEKCRvD3hEI3IBC4mybfc/INh8aJ/x/ zpeHCNIcRraQzKLB/ebipw== 0000950148-95-000695.txt : 19951130 0000950148-95-000695.hdr.sgml : 19951130 ACCESSION NUMBER: 0000950148-95-000695 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951103 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALNETICS CORP CENTRAL INDEX KEY: 0000277376 STANDARD INDUSTRIAL CLASSIFICATION: 3089 IRS NUMBER: 952303687 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08767 FILM NUMBER: 95587113 BUSINESS ADDRESS: STREET 1: 20401 PRAIRIE ST CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8188869819 MAIL ADDRESS: STREET 1: 20401 PRAIRIE STREET CITY: CHATSWORTH STATE: CA ZIP: 91311 10-Q 1 FORM 10-Q 1 UNITED STATES 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 Ended September 30, 1995 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: 0-8767 CALNETICS CORPORATION (Exact name or registrant as specified in its charter) CALIFORNIA 95-2303687 (State or jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
20401 PRAIRIE STREET, CHATSWORTH, CALIFORNIA 91311 (Address of principle executive offices) (zip code) (818) 886-9819 Registrant's telephone number, including area code NA (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 --- --- Number of shares outstanding of each of the issuer's classes of common stock, as of the September 30, 1995 date was 2,914,799. 2 CALNETICS CORPORATION INDEX
Part I. Financial Information Page Number ----------- Item 1. Financial Statements Condensed Consolidated Statements of Income (Unaudited) Three Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets (Unaudited) September 30, 1995 and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Page 2 of 13 3 PART I - FINANCIAL INFORMATION CALNETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended September 30 ---------------------------- 1995 1994 ---- ---- Net sales $8,771,275 $6,647,171 Cost of sales 6,807,579 5,057,370 ---------- ---------- Gross profit 1,963,696 1,589,801 ---------- ---------- Selling, general and administrative expenses 1,332,273 1,166,887 Other expense, net, including interest 124,519 127,221 ---------- ---------- Total costs and expenses 1,456,792 1,294,108 Income from operations before income taxes 506,904 295,693 Provision for income taxes 210,700 126,000 ---------- ---------- Net income $ 296,204 $ 169,693 ========== ========== Earnings per common share and common share equivalent $ 0 .10 $ 0.06 Weighted average common shares and common share equivalents outstanding 3,066,881 3,011,900 ========== ========== No dividends were paid during the period set forth above.
See accompanying notes to condensed consolidated financial statements. Page 3 of 13 4 CALNETICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS
September 30, 1995 June 30, 1995 ------------------ ------------- CURRENT ASSETS: Cash and cash equivalents $ 1,395,646 $ 1,580,974 Accounts receivable, net 4,474,667 4,448,526 Inventories 5,123,544 4,962,037 Prepaid expenses 228,548 312,996 Deferred income taxes 272,000 272,000 ----------- ----------- Total current assets 11,494,405 11,576,533 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT (at cost): Land 466,288 466,288 Buildings and leasehold improvements 2,204,992 2,204,992 Machinery and equipment 3,994,894 3,752,505 Furniture and fixtures 234,793 224,251 ----------- ----------- 6,900,967 6,648,036 Less--Accumulated depreciation and amortization 2,928,619 2,776,164 ----------- ----------- Property, plant and equipment, net 3,972,348 3,871,872 ----------- ----------- Deposits and other assets 202,246 201,205 Goodwill 1,455,268 1,472,968 ----------- ----------- Total assets $17,124,267 $17,122,578 =========== ===========
See accompanying notes to condensed consolidated financial statements. Page 4 of 13 5 CALNETICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1995 June 30, 1995 ------------------ ------------- CURRENT LIABILITIES: Current portion of long-term debt $ 295,097 $ 338,000 Accounts payable 2,848,209 2,650,651 Customer deposits 120,088 150,004 Accrued liabilities 808,713 1,145,300 Income taxes payable 145,721 58,193 ----------- ----------- Total current liabilities 4,217,828 4,342,148 ----------- ----------- LONG-TERM DEBT, net of current portion 5,381,089 5,551,284 ----------- ----------- DEFERRED INCOME TAXES 93,000 93,000 ----------- ----------- SHAREHOLDERS' EQUITY: Preferred stock: authorized- 2,000,000 shares, none issued --- --- Common stock, no par value: Authorized - 20,000,000 shares; Issued and outstanding -- 2,914,799 at September 30, 1995 and June 30, 1995 2,397,635 2,397,635 Retained earnings 5,034,715 4,738,511 ----------- ----------- Total shareholders' equity 7,432,350 7,136,146 ----------- ----------- Total liabilities and shareholders' equity $17,124,267 $17,122,578 =========== ===========
See accompanying notes to condensed consolidated financial statements. Page 5 of 13 6 CALNETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended September 30, --------------------------- 1995 1994 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 296,204 $ 169,693 --------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for doubtful accounts 13,000 10,500 Depreciation and amortization 174,958 191,561 Changes in operating assets and liabilities: Accounts receivable (39,141) 324,308 Inventories (161,507) (452,074) Prepaid expenses 84,448 (21,875) Deposits and other assets (1,041) (29,462) Accounts payable 197,558 25,785 Customer deposits (92,416) 2,735 Accrued liabilities (274,087) (419,142) Income taxes payable 87,528 (24,367) --------- --------- Total adjustments (10,700) (392,031) --------- --------- Net cash provided by (used in) operating activities 285,504 (222,338) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (257,734) (94,906) --------- --------- Net cash used in investing activities (257,734) (94,906) --------- ---------
Page 6 of 13 7 CALNETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
Three Months Ended September 30, --------------------------- 1995 1994 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt $ (213,098) $ (57,966) Net proceeds from issuance of common stock --- 7,190 ---------- ---------- Net cash used in financing activities (213,098) (50,776) ---------- ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS (185,328) (368,020) CASH AND CASH EQUIVALENTS, beginning of period 1,580,974 1,853,091 ---------- ---------- CASH AND CASH EQUIVALENTS, end of period $1,395,646 $1,485,071 ========== ========== Supplemental disclosures of cash flow information: Cash paid for interest expense $ 119,962 $ 98,778 ========== ========== Cash paid for income taxes $ 124,000 $ 150,000 ========== ==========
See accompanying notes to condensed consolidated financial statements. Page 7 of 13 8 CALNETICS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) September 30, 1995 1. General In the opinion of the management of the Company, the accompanying condensed unaudited financial statements contain all adjustments, consisting of only normal recurring accruals, necessary to present fairly the financial position at September 30, 1995, the results of its operations for the three months ended September 30, 1995 and 1994 and the cash flows for the three months ended September 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements that would have been prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures in these financial statements are adequate to make the information presented therein not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's June 30, 1995 Form 10-K. The results of operations for the three months ended September 30, 1995 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 1996. 2. Receivables. The following tabulation shows the elements of receivables:
September 30, 1995 June 30, 1995 ------------------ ------------- Trade accounts receivable $4,750,682 $4,711,541 Less allowance for doubtful accounts 276,015 263,015 ---------- ---------- $4,474,667 $4,448,526 ========== ==========
Page 8 of 13 9 3. Income Taxes. Income taxes for the three-month period ended September 30, 1995 were computed using the effective tax rate estimated to be applicable for the full fiscal year. This rate is subject to ongoing evaluation and review by management. 4. Long-term debt. At September 30, 1995 and June 30, 1995, long-term debt consisted of the following:
September 30, 1995 June 30, 1995 ------------------ ------------- Term loans payable to banks, secured by inventory and receivables, interest at the banks' reference rate (8.75 percent at September 30, 1995) plus .75 percent, due in various monthly install- ments of principal and interest through July 1, 1999, with balloon payments totaling $1,458,462 due on August 1, 1999 $3,399,977 $3,683,316 Industrial revenue bond payable, principal due in annual sinking fund installments ranging from $15,000 to $130,000 through December 2021, plus interest due monthly based on the Issuers Weekly Adjustable Interest Rates for Revenue Bonds (totaling 4.7 percent at September 30, 1995),secured by a standby letter of credit issued by a bank with an annual fee of 1.25 percent 1,455,000 1,455,000
Page 9 of 13 10 Long-term debt. (cont'd)
September 30, 1995 June 30, 1995 ------------------ ------------- Loans payable to former Agricultural Products, Inc's shareholders, unsecured, interest payable semi-annually at 7.50 percent, principal payable in four equal annual installments beginning June 1996 402,042 402,042 Mortgage payable to bank, secured by the related building and land, payable in monthly installments of $1,665 plus interest at .75 percent over the bank's prime rate, with a balloon payment of $201,415 due March 5, 2000 289,669 294,663 Equipment term notes payable to banks, secured by the related equipment, due in equal monthly installments of principal and interest ranging from $214 to $780, interest at rates ranging from 1.0 percent over the bank's prime rate to 11.87 percent through October 1998 129,498 54,263 ---------- ---------- $5,676,186 $5,889,284 Current portion of long-term debt 295,097 338,000 ---------- ---------- Long-term portion $5,381,089 $5,551,284 ========== ==========
The term loans and notes payable include certain restrictive financial and non-financial covenants, including certain cash restrictions and limitations on payment of cash dividends and redemption of stock. At September 30, 1995, the Company was in compliance with all bank covenants. Page 10 of 13 11 5. Earnings per common share and common share equivalent. Earnings per common share and common share equivalent are based on the weighted average number of shares of common stock and common stock equivalents (dilutive stock options) outstanding during the related periods. The weighted average number of common stock equivalent shares includes shares issuable upon the assumed exercise of stock options less the number of shares assumed purchased with the proceeds available from such exercise. Fully diluted net income per share does not differ materially from net income per common share and common share equivalent. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial condition. There were no significant changes in current assets or current liabilities of the Company between September 30, 1995, the end of the first quarter, and June 30, 1995. Liquidity and Capital Resources. At September 30, 1995, the Company's working capital was $7,276,577, compared with $6,881,050 at the same time a year ago. The Company has a working capital agreement with a bank under which the Company may borrow up to $2,000,000 on an unsecured basis and as of September 30, 1995, the entire amount of $2,000,000 was available under this credit arrangement, which expires on November 30, 1995. The Company has no immediate plans for any significant capital expenditures and the Company believes that its available funds and internally generated cash from operations will be sufficient to meet its working capital needs in fiscal 1996. Certain loan agreements limit capital expenditures to $500,000 in the fiscal year ending June, 1996 and thereafter. During the past year the Company experienced increases in raw material resin prices, which at this time appear to have stabilized; however, the availability of polycarbonate resin continues to remain in short supply. If these conditions worsen, it could affect a portion of the sales of our Manchester Plastics Co., Inc. ("Manchester") subsidiary. Page 11 of 13 12 Results of Operations. Three Months ended September 30, 1995 compared to three months ended September 30, 1994 Net sales increased 32% from $6,647,171 for the three month period ended September 30, 1994 to $8,771,275 for the three month period ended September 30, 1995. The increase in revenue was attributed to the improved performance of all subsidiaries, and particularly that of Agricultural Products, Inc. ("API"). Cost of sales as a percentage of sales increased from 76.1% during the the three month period ended September 30, 1994 to 77.6% for the three month period ended September 30, 1995. The increase is primarily attributed to the increase in plastic resin prices at API and Manchester. Selling, general and administrative expenses increased to $1,332,273 as compared with $1,166,887 for the same period in the prior year, an increase of 14%. Net income for the current three-month period was $296,204 as compared with $169,693, after provisions for income taxes of $210,700 and $126,000 for the three months ended September 30, 1995 and 1994, respectively. Earnings per share increased to $0.10 from $0.06 per share for the three months ended September 30, 1995 and 1994, respectively. The increase in net income was attributed to the improved performance of all subsidiaries, particularly that of API. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K None. 27.1 Financial Data Schedule Page 12 of 13 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. CALNETICS CORPORATION (Registrant) Dated: November 1, 1995 /s/ Clinton G. Gerlach -------------------------------------- Clinton G. Gerlach President Dated: November 1, 1995 /s/ Teresa S. Louie -------------------------------------- Teresa S. Louie Treasurer Page 13 of 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 1 3-MOS JUN-30-1996 JUL-01-1995 SEP-30-1995 1,395,646 0 4,750,682 276,015 5,123,544 11,494,405 6,900,967 2,928,619 17,124,267 4,217,828 5,474,089 2,397,635 0 0 5,034,715 17,124,267 8,771,275 8,771,275 6,807,579 8,126,852 0 13,000 124,519 506,904 210,700 0 0 0 0 296,204 .10 .10
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