Delaware
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001-05558
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75-1277589
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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o
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Written communications pursuant to Rule 425 under the Securities Act
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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Item 2.02
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Results of Operations and Financial Condition.
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Item 9.01
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Financial Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit No.
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Description
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99.1
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Press release issued by the Company on August 15, 2011.
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Exhibit No.
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Description
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Press release issued by the Company on August 15, 2011.
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·
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Net sales in the second quarter of 2011 were $35.7 million, a decrease of $3.0 million, or 7.7%, compared to the same period in 2010. The majority of the decrease was a result of volume shortfall in our Continental and Glit business units, partially due to one less shipping day in the second quarter of 2011 than in the second quarter of 2010.
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·
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Gross margin was 10.9% in the second quarter of 2011, a decrease from 14.4% in the second quarter of 2010. Gross margin was impacted by an unfavorable variance in our LIFO adjustment of $0.5 million resulting from inventory fluctuations and increased resin prices. Excluding the LIFO adjustment, gross margin decreased 2.0 percentage points from the second quarter of 2010. The decrease was primarily a result of increased raw material costs.
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·
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Selling, general and administrative expenses were $5.0 million for the second quarter of 2011 compared to $5.9 million in the second quarter of 2010. The decrease was a result of cost-cutting efforts including, but not limited to, headcount reductions and the elimination of management bonus accruals.
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·
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Net sales for the six months ended July 1, 2011 were $68.6 million, a decrease of $3.9 million, or 5.4%, compared to the same period in 2010. The majority of the decrease was a result of volume shortfall in our Continental and Glit business units, partially due to four less shipping days in the first half of 2011 than in the first half of 2010 due to inclement weather shutdowns.
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·
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Gross margin was 11.7% for the six months ended July 1, 2011, a decrease of 1.5 percentage points from the same period a year ago. Gross margin was impacted by an unfavorable variance in our LIFO adjustment of $0.1 million resulting from inventory fluctuations and increased resin prices. Excluding the LIFO adjustment, gross margin decreased 1.3 percentage points from the first half of 2010. The decrease was primarily a result of increased raw material costs.
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·
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Selling, general and administrative expenses were $10.0 million for the first half of 2011, a $2.0 million reduction from the same period a year ago. The decrease was a result of cost-cutting efforts including, but not limited to, a reduction in supervisor salary expenses, headcount reduction and the elimination of management bonus accruals, as well as decreases in stock-based compensation expense due to our lower stock price and the reversal of prior years’ compensation expense as a result of cancelled unvested stock options during the six months ended July 1, 2011.
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Three Months Ended
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Six Months Ended
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July 1,
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July 2,
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July 1,
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July 2,
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|||||||||||||
2011
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2010
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2011
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2010
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Net sales
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$ | 35,669 | $ | 38,634 | $ | 68,578 | $ | 72,473 | ||||||||
Cost of goods sold
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31,773 | 33,067 | 60,588 | 62,904 | ||||||||||||
Gross profit
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3,896 | 5,567 | 7,990 | 9,569 | ||||||||||||
Selling, general and administrative expenses
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5,029 | 5,941 | 10,005 | 11,974 | ||||||||||||
Loss on disposal of assets
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85 | 255 | 10 | 255 | ||||||||||||
Operating loss
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(1,218 | ) | (629 | ) | (2,025 | ) | (2,660 | ) | ||||||||
Interest expense
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(453 | ) | (576 | ) | (855 | ) | (865 | ) | ||||||||
Other, net
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110 | 2,259 | 75 | 2,360 | ||||||||||||
(Loss) income before income tax benefit
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(1,561 | ) | 1,054 | (2,805 | ) | (1,165 | ) | |||||||||
Income tax benefit
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257 | 479 | 248 | 512 | ||||||||||||
Net (loss) income
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$ | (1,304 | ) | $ | 1,533 | $ | (2,557 | ) | $ | (653 | ) | |||||
Net loss per share of common stock:
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Basic
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$ | (0.16 | ) | $ | 0.19 | $ | (0.32 | ) | $ | (0.08 | ) | |||||
Diluted
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$ | (0.16 | ) | $ | 0.06 | $ | (0.32 | ) | $ | (0.08 | ) | |||||
Weighted average common shares outstanding:
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Basic
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7,951 | 7,951 | 7,951 | 7,951 | ||||||||||||
Diluted
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7,951 | 27,052 | 7,951 | 7,951 | ||||||||||||
Other Information:
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LIFO adjustment expense
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$ | 627 | $ | 118 | $ | 634 | $ | 502 |
July 1,
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December 31,
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Assets
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2011
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2010
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Current assets:
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Cash
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$ | 483 | $ | 1,319 | ||||
Accounts receivable, net
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16,842 | 13,541 | ||||||
Inventories, net
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18,963 | 16,450 | ||||||
Other current assets
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1,614 | 1,512 | ||||||
Total current assets
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37,902 | 32,822 | ||||||
Other assets:
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Goodwill
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665 | 665 | ||||||
Intangibles, net
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3,316 | 3,530 | ||||||
Other
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2,771 | 3,160 | ||||||
Total other assets
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6,752 | 7,355 | ||||||
Property and equipment
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99,066 | 100,524 | ||||||
Less: accumulated depreciation
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(78,488 | ) | (77,807 | ) | ||||
Property and equipment, net
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20,578 | 22,717 | ||||||
Total assets
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$ | 65,232 | $ | 62,894 | ||||
Liabilities and stockholders' equity
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Current liabilities:
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Accounts payable
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$ | 15,796 | $ | 11,594 | ||||
Book overdraft
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695 | 1,257 | ||||||
Accrued expenses
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11,927 | 12,322 | ||||||
Payable to related party
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1,500 | 500 | ||||||
Current maturities of long-term debt
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6,588 | 1,275 | ||||||
Revolving credit agreement
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16,891 | 15,432 | ||||||
Total current liabilities
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53,397 | 42,380 | ||||||
Long-term debt, less current maturities
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- | 6,169 | ||||||
Other liabilities
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5,437 | 5,306 | ||||||
Total liabilities
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58,834 | 53,855 | ||||||
Stockholders' equity:
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Convertible preferred stock
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108,256 | 108,256 | ||||||
Common stock
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9,822 | 9,822 | ||||||
Additional paid-in capital
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27,110 | 27,385 | ||||||
Accumulated other comprehensive loss
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(1,214 | ) | (1,405 | ) | ||||
Accumulated deficit
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(116,139 | ) | (113,582 | ) | ||||
Treasury stock
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(21,437 | ) | (21,437 | ) | ||||
Total stockholders' equity
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6,398 | 9,039 | ||||||
Total liabilities and stockholders' equity
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$ | 65,232 | $ | 62,894 |
Six Months Ended
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July 1,
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July 2,
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2011
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2010
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Cash flows from operating activities:
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Net loss
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$ | (2,557 | ) | $ | (653 | ) | ||
Depreciation and amortization
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2,587 | 3,459 | ||||||
Amortization of debt issuance costs
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169 | 363 | ||||||
Stock-based compensation
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(587 | ) | 25 | |||||
Loss on sale or disposal of assets
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10 | 0 | ||||||
Gain on settlement of existing obligation
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0 | (2,100 | ) | |||||
(378 | ) | 1,094 | ||||||
Changes in operating assets and liabilities:
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Accounts receivable
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(3,268 | ) | (4,019 | ) | ||||
Inventories
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(2,448 | ) | 97 | |||||
Other assets
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322 | (2,892 | ) | |||||
Accounts payable
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4,178 | 1,301 | ||||||
Accrued expenses
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(399 | ) | (169 | ) | ||||
Payable to related party
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1,000 | - | ||||||
Other
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60 | (2,805 | ) | |||||
(555 | ) | (8,487 | ) | |||||
Net cash used in operating activities
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(933 | ) | (7,393 | ) | ||||
Cash flows from investing activities:
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Capital expenditures
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(133 | ) | (389 | ) | ||||
Proceeds from sale of assets
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81 | - | ||||||
Net cash used in investing activities
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(52 | ) | (389 | ) | ||||
Cash flows from financing activities:
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Net borrowings
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1,680 | 8,059 | ||||||
Decrease in book overdraft
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(562 | ) | (515 | ) | ||||
Proceeds from term loans
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- | 8,182 | ||||||
Repayments of term loans
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(857 | ) | (6,999 | ) | ||||
Direct costs associated with debt facilities
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(264 | ) | (557 | ) | ||||
Net cash (used in) provided by financing activities
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(3 | ) | 8,170 | |||||
Effect of exchange rate changes on cash
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152 | 85 | ||||||
Net (decrease) increase in cash
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(836 | ) | 473 | |||||
Cash, beginning of period
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1,319 | 747 | ||||||
Cash, end of period
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$ | 483 | $ | 1,220 | ||||
Reconciliation of free cash flow to GAAP Results:
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Net cash used in operating activities
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$ | (933 | ) | $ | (7,393 | ) | ||
Capital expenditures
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(133 | ) | (389 | ) | ||||
Free cash flow
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$ | (1,066 | ) | $ | (7,782 | ) |