-----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, EuQukV8QhvGpczdIAcK5r/zu2Gl+2QYC9EDiI1lmt9zFaZs0A71c7KZzgkLGh3JN FOl/v5P8+QJ9hZYM7rq/yQ== 0000950116-95-000090.txt : 19950414 0000950116-95-000090.hdr.sgml : 19950414 ACCESSION NUMBER: 0000950116-95-000090 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950226 FILED AS OF DATE: 19950407 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNT MANUFACTURING CO CENTRAL INDEX KEY: 0000049146 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 210481254 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08044 FILM NUMBER: 95527595 BUSINESS ADDRESS: STREET 1: 230 S BROAD ST CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2157327700 MAIL ADDRESS: STREET 1: 230 S BROAD STREET CITY: PHILADELPHIA STATE: PA ZIP: 19102 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 26, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8044 HUNT MANUFACTURING CO. (Exact name of registrant as specified in its charter) Pennsylvania 21-0481254 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Commerce Square 2005 Market Street, Philadelphia, PA 19103 (Address of principal executive offices) (Zip Code) Registrant's telephone no., including area code (215) 656-0300 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 --- --- As of April 3, 1995 there were outstanding 15,965,222 shares of the registrant's common stock. 2 HUNT MANUFACTURING CO. INDEX Page ---- PART I - FINANCIAL INFORMATION --------------------- Item 1 - Financial Statements -------------------- Condensed Consolidated Balance Sheets as of February 26, 1995 and November 27, 1994 3 Condensed Consolidated Statements of Income - Three Months ended February 26, 1995 and February 27, 1994 4 Condensed Consolidated Statements of Cash Flows - Three Months Ended February 26, 1995 and February 27, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2 - Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations 7-9 --------------------------------------------- PART II - OTHER INFORMATION ----------------- Item 5 - Other Information 10 ----------------- Item 6 - Exhibits and Reports on Form 8-K 11 -------------------------------- Signatures 12 ---------- Exhibit Index 13 ------------- Exhibit 11 - Computation of Per Share Earnings 14 ---------------------------------------------- Exhibit 27 - Financial Data Schedule 15 ------------------------------------ 3 Part I - FINANCIAL INFORMATION Item 1. Financial Statements Hunt Manufacturing Co. Condensed Consolidated Balance Sheets (Unaudited) (In thousands except share and per share amounts)
February 26, November 27, ASSETS 1995 1994 ------------ ----------- Current assets: Cash and cash equivalents ................................................................. $ 7,186 $ 13,807 Accounts receivable, less allowance for doubtful accounts: 1995, $2,866; 1994, $2,510 .................................................... 41,582 41,390 Inventories: Raw materials ......................................................................... 11,786 10,501 Work in process ....................................................................... 6,409 5,807 Finished goods ........................................................................ 18,620 17,242 --------- --------- Total inventories ................................................................... 36,815 33,550 Deferred income taxes ..................................................................... 5,577 5,051 Prepaid expenses and other current asse ................................................... 1,614 1,520 --------- --------- Total current assets ................................................................ 92,774 95,318 Property, plant and equipment, at cost, less accumulated depreciation and amortization: 1995, $47,660; 1994, $46,163 ................................................................. 50,089 49,729 Intangible assets, net ......................................................................... 25,568 25,982 Other assets ................................................................................... 2,784 2,356 --------- --------- Total assets .................................................................. $ 171,215 $ 173,385 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ......................................................... $ 768 $ 1,003 Accounts payable .......................................................................... 9,213 9,782 Accrued expenses: Salaries, wages and commissions ......................................................... 3,448 5,742 Income taxes ............................................................................ 4,644 4,464 Insurance ............................................................................... 2,313 2,430 Compensated absences .................................................................... 1,699 1,741 Other ................................................................................... 5,230 5,553 --------- --------- Total current liabilities ........................................................... 27,315 30,715 Long-term debt, less current portion ........................................................... 3,559 3,559 Deferred income taxes .......................................................................... 5,039 4,331 Other non-current liabilities .................................................................. 4,686 5,546 --------- --------- Total liabilities ............................................................. 40,599 44,151 --------- --------- Stockholders' equity: Preferred stock, $.10 par value, authorized 1,000,000 shares (including 50,000 shares of Series A Junior Participating Preferred); none issued ................................................... -- -- Common stock, $.10 par value, 40,000,000 shares authorized; issued: 1995 -16,152,322 shares; 1994 - 16,130,068 shares ................................................................ 1,615 1,613 Capital in excess of par value ............................................................ 6,426 6,217 Cumulative translation adjustment ......................................................... (313) (639) Retained earnings ......................................................................... 124,034 122,518 --------- --------- 131,762 129,709 Less cost of treasury stock: 1995 - 98,900 shares; 1994 - 29,945 shares .................................................... (1,146) (475) --------- --------- Total stockholders' equity .................................................... 130,616 129,234 --------- --------- Total liabilities and Stockholders' Equity ................................. $ 171,215 $ 173,385 ========= =========
See accompanying notes to condensed consolidated financial statements. 4 Hunt Manufacturing Co. Condensed Consolidated Statements of Income (Unaudited) (In thousands except per share amounts)
Three months ended -------------------------- February 26, February 27, 1995 1994 ------------ ------------ Net sales ................................................................. $ 70,530 $ 64,550 Cost of sales ............................................................. 44,888 39,395 -------- -------- Gross profit ........................................................... 25,642 25,155 Selling and shipping expenses ............................................. 13,905 13,362 Administrative and general expenses ................................................................. 6,513 6,867 -------- -------- Income from operations .................................................. 5,224 4,926 Interest expense .......................................................... 28 71 Other expense (income), net ............................................... (75) 50 -------- -------- Income before income taxes and cumulative effect of accounting change ......................................... 5,271 4,805 Provision for income taxes ................................................ 1,924 1,802 -------- -------- Income before cumulative effect of accounting change ................................................... 3,347 3,003 Cumulative effect of change in accounting for income taxes ......................................... -- 795 -------- -------- Net income ............................................................. $ 3,347 $ 3,798 ======== ======== Average shares of common stock outstanding ...................................................... 16,118 16,114 ======== ======== Earnings per common share: Income before cumulative effect of accounting change ................................................... $ 0.21 $ 0.19 Cumulative effect of change in accounting for income taxe ......................................... -- 0.05 -------- -------- Net income per share ...................................................... $ 0.21 $ 0.24 ======== ======== Dividends per common share ................................................ $ 0.095 $ 0.090 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 Hunt Manufacturing Co. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Three Months Ended ------------------------------ February 26, February 27, 1995 1994 ------------- ----------- Cash flows from operating activities: Net income ............................................................................. $ 3,347 $ 3,798 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................................................... 2,250 2,215 Cumulative effect of change in accounting for income taxes ............................................................... -- (795) Deferred income taxes ............................................................. 184 -- Loss on disposal of property, plant and equipment ................................. 26 49 Payments relating to relocation and consolidation of operations .................................................................... (18) (63) Issuance of stock under management incentive bonus and stock grant plans ......................................................... 152 184 Changes in operating assets and liabilities ....................................... (7,811) (4,425) --------- --------- Net cash provided by (used for) operating activities ......................... (1,870) 963 --------- --------- Cash flows from investing activities: Additions to property, plant and equipment .......................................... (2,002) (2,025) Other, net .......................................................................... -- (22) --------- --------- Net cash used for investing activities ....................................... (2,002) (2,047) --------- --------- Cash flows from financing activities: Payments on long-term debt, including current maturities ............................ (234) (235) Purchases of treasury stock ......................................................... (1,189) -- Proceeds from exercise of stock options ............................................. 274 93 Dividends paid ...................................................................... (1,530) (1,450) Other, net .......................................................................... (46) (68) --------- --------- Net cash used for financing activities ....................................... (2,725) (1,660) --------- --------- Effect of exchange rate changes on cash ................................................ (24) -- --------- --------- Net decrease in cash and cash equivalents .............................................. (6,621) (2,744) Cash and cash equivalents, beginning of period ......................................... 13,807 10,778 --------- --------- Cash and cash equivalents, end of period ............................................... $ 7,186 $ 8,034 ========= ========= Supplemental disclosures of cash flow information: Interest paid ....................................................................... $ 94 $ 82 Income taxes paid ................................................................... 1,579 843
See accompanying notes to condensed consolidated financial statements. 6 Hunt Manufacturing Co. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The accompanying condensed consolidated financial statements and related notes are unaudited; however, in management's opinion all adjustments (consisting primarily of normal recurring accruals) necessary for a fair presentation of the financial position at February 26, 1995 and the results of operations and cash flows for the periods shown have been made. Such statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by generally accepted accounting principles or those normally made in the Form 10-K. 2. The earnings per share are calculated based on the weighted average number of common shares outstanding. Shares issuable under outstanding stock option, stock grant and long-term incentive compensation plans are common stock equivalents, but are not used in computing earnings per share because the dilutive effect would be less than 3%. 3. Effective November 29, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes." The adoption of SFAS No. 109 changed the Company's method of accounting for income taxes from the deferred method under Accounting Principles Board Opinion No. 11 to an asset and liability approach. The effect of adopting SFAS No. 109 was recognized immediately as the effect of a change in accounting principle and increased net income in the first quarter of fiscal 1994 by $795,000 or $.05 per share. The increase in net income results primarily from adjusting deferred tax balances to current tax rates. 7 Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations Financial Condition In the first quarter of fiscal 1995, the Company's working capital position showed improvement compared to the Company's 1994 fiscal year end, increasing to $65.5 million at February 26, 1995 from $64.6 million at November 27, 1994. The Company also continued to reduce its percentage of debt to equity (down to 3.3% from 3.5%) and increase its current ratio (up to 3.4 from 3.1) at those respective dates. Cash flows of $1.9 million were used for operating activities in the first quarter of fiscal 1995 due primarily to a reduction of current liabilities combined with an increase in inventories, discussed below. Available cash balances were used to fund additions to property, plant and equipment of $2.0 million, pay cash dividends of $1.5 million and to purchase approximately 86,000 shares of the Company's common stock for $1.2 million for use in the Company's various compensation plans. At the end of the first quarter of fiscal 1995, current assets decreased to $92.8 million from $95.3 million at the end of fiscal 1994 largely as a result of a $6.6 million decrease in cash attributable, in part, to the uses of cash mentioned in the discussion of cash flows above. Inventories grew from $33.6 million at November 27, 1994 to $36.8 million at February 26, 1995, primarily as a result of lower than anticipated sales of certain office products, such as mechanical and electromechanical products, but also due to higher inventories needed to service increases in sales of presentation graphics products and office furniture. In addition, there was an increase in some raw material purchases in advance of future supplier price increases. Current liabilities of $27.3 million at the end of the first quarter of fiscal 1995 decreased from $30.7 million at the end of fiscal 1994. This was largely attributable to a decrease in accrued salaries, wages and commissions from $5.7 million at fiscal year end 1994 to $3.4 million at the end of the first fiscal quarter of 1995 largely as a result of the payment of incentive compensation in the first quarter of fiscal 1995 which had been accrued at the end of fiscal 1994. There were no borrowings under the Company's line-of-credit agreements of $45 million at February 26, 1995. Management expects that cash generated from operations, other available cash, and credit agreements will be sufficient to meet the Company's currently anticipated working capital and other investing and financing needs. Results of Operations Net Sales Record first quarter net sales of $70.5 million for fiscal 1995 grew 9.3% from $64.6 million in the first quarter of fiscal 1994. This increase was primarily driven by higher unit volume as prices remained essentially unchanged. 8 Net Sales, continued The increase in sales resulted from a 13.3% increase in sales of art/craft products, which grew to $30.8 million from first quarter of fiscal 1994 sales of $27.2 million, and a 6.4% increase in sales of office products, which grew to $39.8 million compared to the first quarter of fiscal 1994 sales of $37.4 million. The growth in sales of presentation graphics products had the most impact on the increase in art/craft sales for the first quarter of fiscal 1995. Sales of these products increased 20.9% from the first quarter of fiscal 1994 largely due to higher sales in Europe, growth in the digital imaging market and increases in sales of certain mounting and laminating products. Sales of hobby/craft products increased 13.9% in the first quarter aided by some new craft products but were offset by an 8.1% decrease in sales of art supplies resulting chiefly from lower sales of the Company's X-Acto(R) brand products. First quarter fiscal 1995 export sales of art/craft products were down 2.7% compared to the first quarter of fiscal 1994 largely as a result of the currency exchange effect of a weaker Canadian dollar. Excluding this effect, export sales of these products for the first quarter were flat. Foreign sales of art/craft products (predominantly presentation graphics in Europe) increased 36.1% in the first quarter of fiscal 1995 compared to the same period of fiscal 1994. Some of this increase is a result of the exchange effect of a stronger British pound. Office products sales increases in the first quarter of fiscal 1995 were attributable to significant increases in sales of office furniture (up 25.4%) and desktop accessories and supplies (up 16.6%) compared to the first quarter of fiscal 1994. These increases were partially offset by a decrease in sales of mechanical and electromechanical products (down 9%). The increase in furniture sales was primarily a result of higher sales of Bevis(R) brand furniture, particularly computer-related furniture, folding tables and bookcases. A full quarter of sales of Schwan-STABILO(R) highlighter markers in fiscal 1995, compared to a partial quarter of sales in fiscal 1994, was the primarily cause of the increase in sales of desktop accessories and supplies. (Sales resulting from the Company's acquisition of distribution rights to these products started in February 1994.) The decrease in sales of mechanical and electromechanical products in the first quarter of fiscal 1995 versus the first quarter of fiscal 1994 was a result of several factors, the most significant of which was the timing of orders and promotional activities from retail customers such as office products superstores. Export sales of office products grew by 4.9% in the first quarter of fiscal 1995 primarily as a result of higher sales in Canada. Some of the effect of this increase was offset by the negative currency exchange impact of a weaker Canadian dollar. 9 Gross Profit The Company's gross profit margin decreased to 36.4% of net sales in the first quarter of fiscal 1995 from 39.0% in the first quarter of fiscal 1994. This decrease was the result of the convergence of several factors: sales mix, particularly higher sales of lower margin products such as certain office furniture and presentation graphics products, higher raw material costs and flat selling prices. Higher costs for commodities such as wood, paper, styrene plastic and packaging materials have had the greatest impact on raw material cost increases. Management expects these raw material price increases to continue in 1995, but also anticipates some flexibility in the Company's ability to raise its own selling prices later in the fiscal year as most of the Company's competitors face the same cost increases. Selling, Shipping, Administrative and General Expenses Selling and shipping expenses decreased to 19.7% of net sales for the first quarter of fiscal 1995 from 20.7% in the first quarter of fiscal 1994 largely due to the implementation of process improvements which have resulted in both lower commissions and transportation costs. First quarter of fiscal 1995 administrative and general expenses were down 5.2% compared to the first quarter of fiscal 1994 as a result of lower management incentive compensation expenses, lower fringe benefits and a reduction in consulting fees. Interest Expense Interest expense decreased to $28,000 for the first quarter of fiscal 1995 from $71,000 for the first quarter of fiscal 1994 due to reductions in long-term debt. Provision for Income Taxes The effective tax rate of the Company decreased to 36.5% for the first quarter of fiscal 1995 from the 37.5% rate incurred in the first quarter of fiscal 1994. This decrease was largely a result of lower state and local effective tax rates and profitability improvements by the European operations, which could be offset through the use of net operating loss carryforwards. Accounting Change In the first fiscal quarter of 1994, the Company adopted the provisions of SFAS No. 109, "Accounting for Income Taxes," the cumulative effect of which increased net income by $.8 million, or $.05 per share in that period. 10 Item 5 - Other Information On April 6, 1995, the Company announced that Ronald J. Naples, Chairman and Chief Executive Officer, intends to relinquish his Chief Executive Officer title after the Company's annual shareholder meeting on April 19. He will continue as Chairman of the Board to assist in the transition to new leadership, expected to be completed by mid-summer. Mr. Naples will remain available to the Company in an advisory capacity for a period after stepping down as Chairman. The Company's President, Robert B. Fritsch, will assume Chief Executive Officer duties while the search for a new Chief Executive Officer is underway. Gordon A. MacInnes, a long-time board member and chairman of the board's Executive Committee, is expected to succeed Mr. Naples as Chairman of the Board. 11 Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 11. Computation of Per Share Earnings 27. Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the registrant during the fiscal quarter to which this report relates. 12 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. HUNT MANUFACTURING CO. Date April 6, 1995 By /s/ William E. Chandler ----------------------------------- William E. Chandler Senior Vice President, Finance (Principal Financial and Accounting Officer) Date April 6, 1995 By /s/ Ronald J. Naples ----------------------------------- Ronald J. Naples Chairman of the Board and Chief Executive Officer 13 EXHIBIT INDEX Page ---- Exhibit 11 - Computation of Per Share Earnings 14 Exhibit 27 - Financial Data Schedule 15
EX-11 2 EXHIBIT 11 14 Exhibit 11 Computation of Per Share Earnings (Unaudited) (In thousands except per share amounts)
Three Months Ended -------------------------- February 26, February 27, 1995 1994 ----------- ----------- Income before cumulative effect of accounting change ........................................................ $ 3,347 $ 3,003 Cumulative effect of change in accounting for income taxes .............................................. -- 795 ------- ------- Net income .................................................................. $ 3,347 $ 3,798 ======= ======= Primary per share earnings - -------------------------- Average number of common shares outstanding .............................................................. 16,118 16,114 Add - common equivalent shares representing shares issuable upon exercise of stock options and stock grants ......................................................... 87 189 ------- ------- Average shares used to calculate primary per share earnings ............................................... 16,205 16,303 ======= ======= Primary per share earnings before change in accounting for income taxes .................................................................... $ 0.21 $ 0.18 ======= ======= Cumulative effect of change in accounting for income taxes .............................................. -- 0.05 * ------- ------- Net primary per share earnings .............................................. $ 0.21 $ 0.23 ======= ======= Fully diluted per share earnings - -------------------------------- Average number of common shares outstanding .............................................................. 16,118 16,114 Add - common equivalent shares representing shares issuable upon exercise of stock options and stock grants ......................................................... 89 274 ------- ------- Average shares used to calculate fully diluted per share earnings ......................................... 16,207 16,388 ======= ======= Fully diluted per share earnings before change in accounting for income taxes ............................................................. $ 0.21 $ 0.18 ======= ======= Cumulative effect of change in accounting for income taxes .............................................. -- 0.05 * ------- ------- Net fully diluted per share earnings ........................................ $ 0.21 $ 0.23 ======= =======
* The per share amounts pertaining to the cumulative effect of a change in accounting for income taxes in 1994 were computed using the weighted average number of common shares outstanding for the first quarter.
EX-27 3 FINANCIAL DATA SCHEDULE
5 0000049146 HUNT MANUFACTURING CO. 1,000 U.S. DOLLAR 3-MOS DEC-03-1995 NOV-28-1994 FEB-26-1995 .00001 7,186 0 44,448 (2,866) 36,815 92,774 97,749 (47,660) 171,215 27,315 3,559 1,615 0 0 129,001 171,215 70,530 70,530 44,888 44,888 20,114 229 28 5,271 1,924 3,347 0 0 0 3,347 .21 .21
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