-----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, QApT09bbB1GIPIUF7QqPYI2TB6ZdHs7Y1TJFPwWUX8tiszv2WlNbP7KIoBre3lvq ULgndzG+q8BkSd1mHAcK5A== 0000040643-97-000015.txt : 19970613 0000040643-97-000015.hdr.sgml : 19970613 ACCESSION NUMBER: 0000040643-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL HOUSEWARES CORP CENTRAL INDEX KEY: 0000040643 STANDARD INDUSTRIAL CLASSIFICATION: 3360 IRS NUMBER: 410919772 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07117 FILM NUMBER: 97603143 BUSINESS ADDRESS: STREET 1: P O BOX 4066 1536 BEECH STREET CITY: TERRE HAUTE STATE: IN ZIP: 47804 BUSINESS PHONE: 8122321000 MAIL ADDRESS: STREET 2: P O BOX 4066 1536 BEECH STREET CITY: TERRE HAUTE STATE: IN ZIP: 47804 10-Q 1 FIRST QUARTER REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 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 No. 1-7117 GENERAL HOUSEWARES CORP. (Exact name of Registrant as specified in its Charter) Delaware 41-0919772 (State or other jurisdiction of (IRS Employer incorporation or organization Identification No.) 1536 Beech Street 47804 Terre Haute, Indiana (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (812) 232- 1000 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 Registrant's classes of Common Stock as of the latest practicable date. Class of Common Stock Outstanding at May 9, 1997 $.33-1/3 Par Value 3,814,110 GENERAL HOUSEWARES CORP. INDEX PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Consolidated Condensed Statements of Income and Retained Earnings Three months ended March 31, 1997 and1996 Consolidated Condensed Balance Sheets March 31, 1997 and December 31, 1996 Consolidated Condensed Statements of Cash Flows Three months ended March 31, 1997 and 1996 Notes to Consolidated Condensed Financial Statements ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION ITEM 6. EXHIBITS SIGNATURES PART I FINANCIAL INFORMATION GENERAL HOUSEWARES CORP. & SUBSIDIARIES (Dollars in thousands except per share amounts) Consolidated Condensed Statement of Income and Retained Earnings (UNAUDITED) For the three months ended March 31 1997 1996 Net Sales $20,875 $24,602 Cost of goods sold 12,270 16,963 Gross profit 8,605 7,639 Selling, general and administrative expenses 9,095 10,747 Operating loss (490) (3,108) Interest expense, net 595 672 Loss from operations before income taxes (1,085) (3,780) Income taxes ( 391) (1,551) Net loss for the period ( 694) (2,229) Retained earnings, beginning of period 27,279 31,119 Less: Dividends ($.08 per common share in 1997 and 1996) 304 300 Retained earnings, end of period $26,281 $28,590 Earnings per common share: Net loss ($0.18) ($0.59) See notes to consolidated condensed financial statement. CONSOLIDATED CONDENSED BALANCE SHEET As of March 31, December 31, 1997 1996 (UNAUDITED) ASSETS Current Assets: Cash $ 2,926 $ 1,981 Accounts receivable, less allowances of $2,132 ($3,575 in 1996) 11,992 15,823 Inventories 20,640 18,513 Deferred tax asset 3,831 3,831 Other current assets 1,011 932 Income taxes refundable 385 --- Total current assets 40,785 41,080 Note receivable 2,645 2,707 Property, plant and equipment, net 13,096 13,420 Other assets 6,242 6,479 Patents and other intangible assets 4,089 4,195 Cost in excess of net assets acquired 27,041 27,398 $93,898 $95,279 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long term debt $ 2,190 $ 2,190 Notes payable 500 --- Accounts payable 3,064 3,932 Salaries, wages and related benefits 1,562 1,671 Accrued liabilities 3,801 3,288 Income taxes payable --- 379 Total current liabilities 11,117 11,460 Long term debt 30,453 30,575 Deferred liabilities 4,809 4,754 Stockholders equity: Preferred stock - $1.00 par value: Authorized - 1,000,000 shares Common stock - $.33-1/3 par value: Authorized - 10,000,000 shares Outstanding - 1997 - 4,101,848 and 1996 - 4,080,736 shares. 1,363 1,361 Capital in excess of par value 24,054 23,976 Treasury stock at cost - 1997 and 1996 - 277,760 shares (3,649) (3,649) Retained earnings 26,287 27,279 Cumulative translation adjustment (154) (95) Minimum pension liability (382) (382) Total stockholders' equity 47,519 48,490 $93,898 $95,279 See notes to consolidated condensed financial statements. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) For the three months ended March 31, 1997 1996 OPERATING ACTIVITIES: Net loss ($694) ($2,229) Adjustments to reconcile net loss to net cash provided by operating activities - Depreciation and amortization 1,630 1,352 Foreign exchange loss (6) --- Compensation related to stock awards --- 27 Decrease (increase) in operating assets: Accounts receivable 3,822 1,344 Inventory (2,140) 3,605 Other assets (233) 594 Increase (decrease) in operating liabilities: Accounts payable (863) 609 Salaries, wages and related benefits, accrued and deferred liabilities 427 2,293 Income taxes payable (refundable) (724) (2,668) Net cash provided by operating activity 1,219 4,927 INVESTING ACTIVITIES: Additions to property, plant and equipment (606) (1,084) Proceeds from sale of assets --- 1,205 Net cash (used for) provided by investing activities (606) 121 FINANCING ACTIVITIES: Debt borrowing (repayment) 385 (8,216) Note receivable activity 187 ---- Proceeds from stock options and employee purchases 80 82 Dividends paid (304) (300) Net cash provided by (used for) financing activities 348 (8,434) Net increase (decrease) in cash and cash equivalents 961 (3,386) Cash and cash equivalents at beginning of period 1,981 3,414 Effect of exchange rate on cash (16) (3) Cash and cash equivalents at end of period $ 2,926 $ 25 See notes to consolidated condensed financial statements. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Dollars in thousands) NOTE 1 - GENERAL The accompanying interim Consolidated Condensed Financial Statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, in the opinion of management, the financial statements included herein reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial information for the periods presented. The Consolidated Condensed Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1996 Annual Report on Form 10K. NOTE 2 - INVENTORIES March 31, December 31, 1997 1996 Raw materials $ 3,417 $ 2,873 Work in process 1,027 953 Finished goods 16,845 15,629 21,289 19,455 LIFO Reserve (649) (942) Total, net $20,640 $18,513 NOTE 3 - PROPERTIES March 31, December 31, 1997 1996 Land $ 648 $ 648 Buildings 6,899 6,890 Equipment 24,088 23,519 Total 31,635 31,057 Depreciation (18,539) (17,637) Total, net $13,096 $13,420 NOTE 4 - LOAN COVENANTS Terms of the Company's Bank Credit Agreement and Senior Notes Agreement require that the Company maintain certain minimum financial ratios. The Company was not in compliance with a fixed charges coverage ratio relative to the Bank Credit Agreement as of March 31, 1997 and the Company believes it is likely that it will not be in compliance with the fixed charges coverage ratios and dividend tests related to both the Bank Credit Agreement and Senior Notes as of the next measurement date. A waiver of the non-compliance and conditional waiver of the expected noncompliance extending through the next measurement date have been obtained for both the Bank Credit Agreement and the Senior Notes. The Company expects that no such further waivers will be required in subsequent quarters. NOTE 5 - EARNINGS PER SHARE The Company will adopt Statement of Financial Accounting Standards No. 128 "Earnings per Share" (SFAS No. 128) effective December 31, 1997. SFAS No. 128 requires presentation of "Basic" and "Diluted" earnings per share rather than "Primary" and "Fully Diluted" earnings per share for companies with complex capital structures. The Company does not anticipate a material change in earnings per share as a result of adopting SFAS No. 128. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands) Referring to the Company's financial condition as of March 31, 1997, as contrasted with December 31, 1996, inventories increased while accounts receivable decreased. The increase in inventories over year-end 1996 is a result of seasonal inventory build and first quarter sales below planned levels. The decrease in accounts receivable is also a result of sales below planned levels as well as the Company's seasonality in operations. Net sales for the three month period ended March 31, 1997 were $20,875, a decrease of 15% as compared to net sales for the same period in 1996. Contributing to the sales decline was the third quarter 1996 divestiture of the Company's cast iron cookware division (Sidney Division) and the Company's stamped and spun aluminum division which accounted for approximately $3.0 million of the first quarter 1996 net sales (accounts for 12% of the overall 15% sales decline). In addition, reduced sell-through at the retail level and more restrictive inventory management programs at certain retailers combined to reduce sales of the Company's cutlery and cookware products. Partially offsetting these declines was the continued growth of the Company's kitchen and household tool product line. First quarter 1997 gross profit increased $966 or 12.6% from the first quarter of 1996. Gross profit as a percent of sales increased from 31.1% in the first quarter of 1996 to 41.2% in the first quarter of 1997. The increase is primarily a result of the favorable change in sales mix from the divested Sidney Division lines to the kitchen/household tool lines. In addition, the divested Sidney Division and an inventory reduction program spurred substantial unfavorable manufacturing variances in the first quarter of 1996. Selling, general and administrative expenses for the three month period ended March 31, 1997, were $9,095 as compared to $10,747 for the same period in 1996. Of this decline, $1,075 is directly related to accruals established in the first quarter of 1996 related to the pending sale of the Sidney Division including write-down of the net book value of the operating facility based on the expected sale price, expenses associated with a pension curtailment and future warranty costs to be covered by the Company among other costs related to the exit. Strategic initiatives in conjunction with the divestiture of the Sidney Division were also made in the first quarter of 1996. These initiatives included a realignment of sales, marketing and administrative staff to focus efforts on the Company's high growth and high potential businesses resulting in $660 of additional first quarter 1996 charges and $491 of expenses recorded in the first three months of 1996 to cover the cost of closing three under-performing manufacturer's retail outlet stores operated by the Company. On a comparable basis, without the aforementioned unusual items. first quarter 1997 selling, general and administrative expenses increased by approximately $575 over the comparable period in 1996. The increase is due primarily to investments in customer service initiatives (including warehouse improvements and information systems upgrades) and the building of brand equity in certain product lines. The operating loss for the first three months of 1997 was $490 as compared to a loss of $3,108 for the same period in 1996. Interest expense for the first quarter of 1997 was $595 as compared to $672 for the same period in 1996. The reduction in interest expense is due primarily to working capital reductions from the first quarter of 1996. The net loss of $694 in the first quarter of 1997 represents a $1,535 improvement over the net loss of $2,229 in 1996. Related quarterly loss per share improved from $.59 for the three months ended March 31, 1996 to $.18 in the same period of 1997. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11a. Primary Earnings Per Share Reports on Form 8-K. There were no reports on Form 8-K filed for the three months ended March 31, 1997. EXHIBIT 11 COMPUTATION OF PRIMARY EARNINGS PER SHARE (Dollars in thousands except per share amounts) For the three months ended March 31, 1997 1996 Net income ($694) ($2,229) Shares: Weighted average number of shares of common stock outstanding 3,804,085 3,761,315 Shares assumed issued (less shares assumed purchased for treasury) on stock option agreements 2,559 3,615 Rounding 356 70 3,807,000 3,765,000 Net Income per Common Share ($0.18) ($0.59) 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. GENERAL HOUSEWARES CORP. Dated: May 9, 1997 /s/ Robert L. Gray Vice President Corporate Development, Chief Financial Officer and Treasurer /s/ Mark S. Scales Vice President Corporate Controller Chief Accounting Officer EX-11 2 PRIMARY EARNINGS PER SHARE EXHIBIT 11 COMPUTATION OF PRIMARY EARNINGS PER SHARE For the three months ended March 31, 1997 1997 1996 Net (loss) income ($694) ($2,229) Shares: Weighted average number of shares of common stock outstanding 3,804,085 3,761,315 Shares assumed issued (less shares purchased for treasury) on stock option agreements 2,559 2,559 Rounding 356 70 3,807,000 3,765,000 Net (loss) income per Common Share $(0.18) $(0.59)
EX-27 3 ART 5 FDS FOR 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000040643 FINANCIAL DATA SCHEDULE U.S. DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-97 1 2,926 0 11,992 3,575 20,640 40,785 31,635 18,539 93,898 11,117 0 0 0 1,363 47,519 93,898 20,875 20,875 12,270 12,270 9,095 0 595 (1,085) (391) (694) 0 0 0 (694) (0.18) (0.18)
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