-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Fgh42L8Gtf7HWyE0yhOo7CbeMuNIfwMEgQqjUronB7P4Sn8t/9t+seSfJ33MjBn/ xHMhDr2DFa7gCjXwzdL5RQ== 0000950150-95-000290.txt : 19950530 0000950150-95-000290.hdr.sgml : 19950530 ACCESSION NUMBER: 0000950150-95-000290 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NONE 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: 95536901 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 March 31, 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 other 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 N/A (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 March 31, 1995 date was 2,914,799. 2 CALNETICS CORPORATION INDEX
Page Part I. Financial Information Number - - - - ------------------------------ ------ Item 1. Financial Statements Condensed Consolidated Statements of Income (Unaudited) Three Months and Nine Months Ended March 31, 1995 and 1994 . . . . . . 3 Condensed Consolidated Balance Sheets (Unaudited) March 31, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended March 31, 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 . . . . . . . . . . . . . . . 13 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Page 2 of 14 3 PART I - FINANCIAL INFORMATION CALNETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended March 31, March 31, -------------------------------- ------------------------------ 1995 1994 1995 1994 ---------- ----------- ----------- ----------- Net Sales $7,704,812 $4,099,606 $20,627,574 $11,694,159 Cost of Sales 5,712,942 3,230,080 15,466,800 9,136,369 ---------- ---------- ----------- ----------- Gross Profit 1,991,870 869,526 5,160,774 2,557,790 ---------- ---------- ----------- ----------- Selling, general and administrative expenses 1,370,015 618,884 3,672,210 1,880,638 Other expense, including interest 132,431 15,457 398,712 47,894 ---------- ---------- ----------- ----------- Total costs and expenses 1,502,446 634,341 4,070,922 1,928,532 Income from operations before income taxes 489,424 235,185 1,089,852 629,258 Provision for income taxes 209,721 99,800 460,944 262,800 ---------- ---------- ----------- ----------- Net income $ 279,703 $ 135,385 $ 628,908 $ 366,458 ========== ========== =========== =========== Earnings per common share and common share equivalent $ 0.09 $ 0.05 $ 0.21 $ 0.13 Weighted average common shares and common share equivalents outstanding 3,045,093 2,930,551 3,036,402 2,902,389 ========== ========== =========== ===========
No dividends were paid during the period set forth above. See accompanying notes to condensed consolidated financial statements. Page 3 of 14 4 e CALNETICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS
March 31, 1995 June 30, 1994 -------------- -------------- CURRENT ASSETS: Cash and cash equivalents $ 924,113 $ 1,853,091 Accounts receivable, net 4,788,270 4,254,797 Inventories 4,854,286 4,176,531 Prepaid expenses 261,925 148,397 Deferred income taxes 232,000 232,000 ----------- ----------- Total current assets 11,060,594 10,664,816 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT (at cost): Land 466,288 466,288 Buildings and improvements 2,182,992 2,177,356 Machinery and equipment 3,764,379 3,521,932 Furniture and fixtures 220,094 190,558 ----------- ----------- 6,633,753 6,356,134 Less--Accumulated depreciation and amortization 2,712,553 2,364,239 ----------- ----------- Property, plant and equipment, net 3,921,200 3,991,895 ----------- ----------- Deposits and other assets 207,545 174,776 Goodwill 1,488,926 1,545,289 ----------- ----------- Total assets $16,678,265 $16,376,776 =========== ===========
See accompanying notes to condensed consolidated financial statements. Page 4 of 14 5 CALNETICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 1995 June 30, 1994 -------------- ------------- CURRENT LIABILITIES: Current portion of long-term debt $ 371,913 $ 488,418 Accounts payable 2,624,254 1,880,127 Customer deposits 107,218 80,898 Accrued liabilities 785,233 1,229,961 Income taxes payable 110,967 195,966 ------------ ----------- Total current liabilities 3,999,585 3,875,370 ----------- ----------- LONG-TERM DEBT, net of current portion 5,802,692 6,284,524 ----------- ----------- DEFERRED INCOME TAXES 117,000 117,000 ----------- ----------- 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 March 31, 1995 and 2,893,799 at June 30, 1994 2,397,635 2,367,437 Retained earnings 4,361,353 3,732,445 ----------- ----------- Total shareholders' equity 6,758,988 6,099,882 ----------- ----------- Total liabilities and shareholders' equity $16,678,265 $16,376,776 =========== ===========
See accompanying notes to condensed consolidated financial statements. Page 5 of 14 6 CALNETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended March 31, ---------------------------- 1995 1994 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 628,908 $ 366,458 --------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for doubtful accounts 61,500 32,670 Depreciation and amortization 520,548 255,366 Loss (gain) on sale of property --- (760) Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (594,973) (129,016) Inventories (677,755) (86,097) Prepaid expenses (113,528) 68,397 Accounts payable 744,127 264,930 Customer deposits 26,320 (44,128) Accrued liabilities (444,728) 42,493 Income taxes payable ( 84,999) 17,801 --------- --------- Total adjustments (563,488) 421,656 --------- --------- Net cash provided by operating activities 65,420 788,114 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property, plant and equipment --- 4,000 Purchase of property, plant and equipment (393,490) (56,374) Deposits and other assets (32,769) (9,037) ---------- --------- Net cash used in investing activities (426,259) (61,411) --------- ---------
Page 6 of 14 7 CALNETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
Nine Months Ended March 31, ----------------------------- 1995 1994 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt $ (598,337) $(256,250) Increase in long-term notes receivable --- (42,887) Net proceeds from issuance of common stock 30,198 81,565 ---------- --------- Net cash used in financing activities (568,139) (217,572) ---------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (928,978) 509,131 CASH AND CASH EQUIVALENTS, beginning of period 1,853,091 342,723 ---------- --------- CASH AND CASH EQUIVALENTS, end of period $ 924,113 $ 851,854 ========== ========= Supplemental disclosures of cash flow information: Interest paid $ 398,712 $ 6,493 ========== ========= Income taxes paid $ 545,575 $ 245,000 ========== =========
See accompanying notes to condensed consolidated financial statements. Page 7 of 14 8 CALNETICS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) March 31, 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 March 31, 1995, and June 30, 1994, the results of its operations for the three and nine months ended March 31, 1995 and 1994 and the cash flows for the nine months ended March 31, 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, 1994 Form 10-K. The results of operations for the three and nine months ended March 31, 1995 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 1995. 2. Receivables. The following tabulation shows the elements of receivables:
March 31, 1995 June 30, 1994 -------------- ------------- Trade accounts receivable $5,013,054 $4,452,797 Less allowance for doubtful accounts 224,784 198,000 ---------- ---------- Total $4,788,270 $4,254,797 ========== ==========
Page 8 of 14 9 3. Income Taxes. Income taxes for the nine-month period ended March 31, 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 March 31, 1995 and June 30, 1994, long-term debt consisted of the following:
March 31, 1995 June 30, 1994 -------------- ------------- Term loans payable to banks, secured by inventory and receivables, interest at the banks' reference rate (9.00 percent at March 31, 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 $3,989,719 $4,500,000 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 5.65 percent at March 31, 1995) 1,440,000 1,470,000
Page 9 of 14 10 Long-term debt. (cont'd)
March 31, 1995 June 30, 1994 -------------- ------------- Loans payable to former API shareholders, unsecured, interest payable semi-annually at 7.50 percent, principal payable in four equal annual installments beginning June 1996 402,042 402,042 Mortgages payable to bank, secured by the related building and land, payable in monthly installments of $1,090 and $544 plus interest at one percent over the bank's prime rate, with balloon payments of $169,617 and $98,404 due March 1997 and April 1996, respectively 299,619 314,336 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 43,225 86,564 ---------- ---------- Total Long-term debt $6,174,605 $6,772,942 Current portion of long-term debt 371,913 488,418 ---------- ---------- Long-term portion $5,802,692 $6,284,524 ========== ==========
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 March 31, 1995, the Company was in compliance with all bank covenants. Page 10 of 14 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 General developments. On June 3, 1992, the Company completed a cash acquisition of substantially all of the assets of Plastic Science, Inc. ("PSI"), a manufacturer of plastic injection molding components located in Corona, California. The acquisition was accomplished through a subsidiary of the Company, Ny-Glass Plastics, Inc. ("Ny-Glass") which continued the business of PSI under the Ny-Glass name in Corona, California. At the time of the acquisition, Ny-Glass entered into a ten (10) year building lease with respect to the premises formerly occupied by PSI. In September 1992, the Ny-Glass division of the Company, located in Paramount, California, moved to Corona, California and consolidated with the Ny-Glass subsidiary. As of April 30, 1994, Calnetics acquired all of the capital stock of Agricultural Products, Inc. ("API") for $4,402,144 by payment of $4,000,102 in cash obtained from long-term bank financing, and $402,042 in unsecured notes payable to the API shareholders. API owns two plants, consisting of 50,000 square feet in Ontario, California and 30,000 square feet in Winter Haven, Florida. API's executive offices are located on site with the plant in Ontario, California. Financial condition. There were no significant changes in current assets or current liabilities of the Company between March 31, 1995,the end of the third quarter, and June 30, 1994, except for (1) increases in receivables and inventory, partially offset by an increase in accounts payable, all attributable to sales increases and (2) the voluntary payment of $250,000, representing six monthly installments, of one of the Company's long term bank loans, the payment of which was in addition to the regular scheduled monthly payments. Page 11 of 14 12 Liquidity and Capital Resources. At March 31, 1995, the Company's working capital was $7,061,009, compared to $4,159,765 at the same time a year ago, representing an increase of $2,901,244 primarily due to the acquisition by the Company of API as of April 30, 1994. 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. As of March 31, 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 1995. Certain loan agreements limit capital expenditures to $700,000 in 1995 and $500,000 in 1996 and thereafter. The Company continues to experience increases in raw material resin costs and, in turn, is increasing selling prices. Profit margins could be affected if the Company's competition fails to increase their selling prices. Results of Operations. Three months ended March 31, 1995 compared to three months ended March 31, 1994 Net sales for the three-month period ended March 31, 1995 increased 88% from $4,099,606 in the same period in 1994, to $7,704,812 in 1995; the increase is partially attributed to the acquisition by the Company of API in the fourth quarter of fiscal 1994. Cost of sales as a percentage of sales decreased to 74.1%, during the period January 1, 1995 to March 31, 1995, as compared to 78.8% for the same period in the prior year. The improvement is primarilay attributed to the inclusion of the more favorable profit margins of API resulting from its acquisition by the Company. Selling, general and administrative expenses for the three month period ended March 31, 1995 increased to $1,370,015 as compared with $618,884 for the same period in the prior year, an increase of 121%; the increase due primarily to the API acquisition. Page 12 of 14 13 Net income for the current three-month period was $279,703 as compared with $135,385, for the same period in the prior year, after provisions for income taxes of $209,721 and $99,800 for the three months ended March 31, 1995 and 1994, respectively. Earnings per common share and common share equivilant increased to $0.09 from $0.05 per share for the three months ended March 31, 1995 and 1994, respectively. The increase in net income is attributed primarily to the acquisition of API in the fourth quarter of fiscal 1994. Nine Months ended March 31, 1995 compared to nine months ended March 31, 1994 Net sales for the nine-month period ended March 31, 1995 increased 76.4% from $11,694,159 in 1994, to $20,627,574 in 1995; the increase is attributed primarily to the acquisition of API in the fourth quarter of fiscal 1994. Cost of sales as a percentage of sales decreased to 75%, during the period July 1, 1994 to March 31, 1995, as compared to 78.1% for the same period in the prior year. The improvement is primarily attributed to the inclusion of the more favorable profit margins of API resulting from its acquisition by the Company. Selling, general and administrative expenses increased to $3,672,210 for the nine-month period ended March 31, 1995 as compared with $1,880,638 for the same period in the prior year. The increase is mainly attributed to the acquisition of API in April, 1994. Net income for the current nine-month period was $628,908 as compared with $366,458, for the nine-month period ended March 31, 1994 after provisions for income taxes of $460,944 and $262,800 for the nine months ended March 31, 1995 and 1994, respectively. The improvement in net income was primarily attributed to the acquisition of API in the fourth quarter of fiscal 1994. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K None. 27.1 Financial Data Schedule Page 13 of 14 14 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. CALNETICS CORPORATION (Registrant) Dated: April 26, 1995 /s/ Clinton G. Gerlach ------------------------------- Clinton G. Gerlach President Dated: April 26, 1995 /s/ Teresa S. Louie ------------------------------- Teresa S. Louie Treasurer
Page 14 of 14 EX-27.1 2 FINANCIAL DATA SCHEDULE FOR PERIOD ENDING 3-31-95
5 1 U.S. DOLLARS 9-MOS JUN-30-1995 MAR-31-1995 1 924,113 0 5,013,054 224,784 4,854,286 11,060,594 8,751,079 4,829,879 16,678,167 3,999,585 5,919,692 2,397,635 0 0 4,361,353 16,678,167 20,627,574 20,627,574 15,466,800 19,077,510 0 61,500 398,712 1,089,852 460,944 0 0 0 0 628,908 .21 .21
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