-----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, RkCtR0SexDG5hJ0iB7HyHN2Wtge5OoiDI6AQxZoiD02Gjcby8sbyI4FfjflwFCs9 TnctKuI0SJZwK9+jBPktsQ== 0000898430-94-000864.txt : 19941122 0000898430-94-000864.hdr.sgml : 19941122 ACCESSION NUMBER: 0000898430-94-000864 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941111 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANTHONY INDUSTRIES INC CENTRAL INDEX KEY: 0000006720 STANDARD INDUSTRIAL CLASSIFICATION: 3949 IRS NUMBER: 952077125 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04290 FILM NUMBER: 94559549 BUSINESS ADDRESS: STREET 1: 4900 S EASTERN AVE STREET 2: SUITE 200 CITY: LOS ANGELES STATE: CA ZIP: 90040 BUSINESS PHONE: 2137242800 MAIL ADDRESS: STREET 1: 4900 S EASTERN AVE STREET 2: SUITE 200 CITY: LOS ANGELES STATE: CA ZIP: 90040 FORMER COMPANY: FORMER CONFORMED NAME: ANTHONY POOLS INC DATE OF NAME CHANGE: 19720317 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report under Section 13 of the Securities Exchange Act of 1934 For the Quarter Ended September 30, 1994 Commission File No. 1-4290 ANTHONY INDUSTRIES, INC. (exact name of registrant as specified in its charter) DELAWARE 95-2077125 (State of Incorporation) (I.R.S. Employer Identification No.) 4900 South Eastern Avenue Los Angeles, California 90040 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (213) 724-2800 Former name, former address and former fiscal year, if changed since last report: Not applicable 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 - Indicate the number of shares outstanding of each of the issuer's classes of common stock as of October 31, 1994. Common Stock, par value $1 11,248,386 Shares FORM 10-Q QUARTERLY REPORT PART - 1 FINANCIAL INFORMATION Item 1. Financial Statements STATEMENTS OF CONSOLIDATED INCOME (condensed) (In thousands except for per share figures) (Unaudited)
Three months ended Nine Months ended September 30 September 30 ------------------------------------------------- 1994 1993(a) 1994 1993(a) --------------------- ---------------------- Net sales $127,863 $113,963 $369,363 $324,806 Other income 101 276 1,194 1,096 -------- ----------- --------- ----------- 127,964 114,239 370,557 325,902 Costs and expenses Cost of products sold 93,387 83,537 271,735 239,710 Selling, G&A expenses 25,668 23,379 78,231 67,998 Interest expense 1,937 1,502 5,205 4,740 -------- ----------- --------- ----------- 120,992 108,418 355,171 312,448 Pretax income 6,972 5,821 15,386 13,454 Provision for income taxes 2,440 2,040 5,385 4,710 -------- ----------- --------- ----------- NET INCOME $4,532 $3,781 $10,001 $8,744 ======== =========== ========= =========== PER SHARE Net income $.40 $.34 $.88 $.78 Cash dividend $.11 $.105 $.33 $.315 Average shares outstanding 11,343 11,211 11,343 11,211
(a) Shares and per share figures have been retroactively adjusted for the 5% stock dividend paid in December 1993. See notes to financial statements. 2 CONSOLIDATED BALANCE SHEETS (condensed)
September 30 December 31 1994 1993 (Unaudited) ------------ ----------- (thousands) Assets ------ Current Assets Cash and cash equivalents $5,067 $5,860 Accounts receivable, less allowances of $4,838 in 1994 and $7,262 in 1993 105,660 90,056 Inventories Finished goods 68,302 55,322 Work in process 9,513 8,985 Raw materials 26,366 24,164 -------------- ------------ 104,181 88,471 Less LIFO reserve 6,524 6,096 -------------- ------------ 97,657 82,375 Deferred taxes 5,158 6,392 Prepaid expenses and other current assets 5,571 3,073 -------------- ------------ Total current assets 219,113 187,756 Property, Plant and Equipment 129,358 122,085 Less allowance for depreciation 78,422 71,991 -------------- ------------ 50,936 50,094 Intangibles, principally goodwill 16,020 15,829 Other 3,393 3,600 -------------- ------------ Total Assets $289,462 $257,279 ============== ============
See notes to financial statements. 3 CONSOLIDATED BALANCE SHEETS (condensed)
September 30 December 31 1994 1993 (Unaudited) -------------- ------------ (thousands) Liabilities and Shareholders' Equity ------------------------------------ Current Liabilities Bank loans $8,570 $6,288 Accounts payable 28,848 25,144 Accrued payroll and related 19,402 17,442 Other accruals 17,750 14,378 Current portion of long-term debt 6,949 6,724 -------------- ------------ Total current liabilities 81,519 69,976 Long-Term Debt 100,020 87,271 Deferred Taxes 11,284 11,376 Shareholders' Equity Preferred Stock $1 par value, authorized 12,500,000 shares, none issued Common Stock, $1 par value, authorized $40,000,000 shares, issued shares - 11,714,536 in 1994 and 11,681,393 in 1993 11,715 11,681 Additional paid-in capital 57,156 56,863 Retained earnings 37,188 30,895 Employee Stock Ownership Plan and stock option loans (3,850) (3,361) Treasury shares at cost, 469,681 shares (3,993) (3,993) Cumulative translation adjustments (1,577) (3,429) -------------- ------------ Total Shareholders' Equity 96,639 88,656 -------------- ------------ Total Liabilities and Shareholders' Equity $289,462 $257,279 ============== ============
See notes to financial statements. 4 STATEMENTS OF CONSOLIDATED CASH FLOWS (condensed)
(Unaudited) Nine months ended September 30 ---------------------------- 1994 1993 ---------------------------- (thousands) Operating Activities Net income $10,001 $8,744 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,409 6,786 Deferred taxes 1,142 202 Changes in operating assets and liabilities: (Increase) in accounts receivable (15,604) (18,173) (Increase) in inventories (15,282) (6,608) (Increase) decrease in prepaid expense and other current assets (2,498) 602 Increase in accounts payable 3,704 5,847 Increase in payroll, taxes and other accruals 5,333 2,893 ----------- ----------- Net cash provided by (used in) operating activities (5,795) 293 ----------- ----------- Investing Activities Property, plant & equipment expenditures (7,561) (5,319) Disposals of property, plant & equipment 310 69 Other items, net 705 (182) ----------- ----------- Net cash used in investing activities (6,546) (5,432) Financing Activities Borrowings under long-term debt and revolving lines of credit 16,666 21,500 Payments of long-term debt and revolving lines of credit (3,692) (6,476) Dividends paid (3,708) (3,500) Net increase (decrease) in short-term bank loans 2,282 (3,237) ----------- ----------- Net cash provided by financing activities 11,548 8,287 ----------- ----------- Net increase (decrease) in cash and cash equivalents (793) 3,148 Cash and cash equivalents at beginning of year 5,860 2,123 ----------- ----------- Cash and cash equivalents at end of period $5,067 $5,271 =========== =========== Supplemental disclosure of cash flow information: Interest paid $4,001 $4,019 Income taxes paid 4,243 4,109 ----------- ----------- $8,244 $8,128 =========== ===========
See notes to financial statements. 5 NOTE 1 - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and nine month period ended September 30, 1994 are not necessarily indicative of the results that may be expected for the year ended December 31, 1994. For further information, refer to the Consolidated Financial Statements and Notes to Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. NOTE 2 - Borrowings On July 22, 1994, the Company increased its unsecured revolving credit facility from $60 million to $70 million and extended its due date one year to June 28, 1997. All other terms and conditions of the facility remained unchanged. The $70 million revolving credit line is subject to an agreement which, among other things, restricts amounts available for payment of cash dividends by the Company. As of September 30, 1994, retained earnings of $7.5 million were free of such restrictions. NOTE 3 - Adoption of Statement of Accounting Standards No. 115 for Cash Equivalents Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Under Statement 115, debt securities that the Company has both the positive intent and ability to hold to maturity may be carried at amortized cost. All of the Company's cash equivalents are debt securities and are classified as "hold-to-maturity." The adoption of Statement 115 had no effect on the Company's financial position or results from operations. NOTE 4 - Commitments and Contingencies The Company is subject to various legal actions and proceedings in the normal course of business. While the ultimate outcome of these matters cannot be predicted with certainty, management does not believe these matters will have a material adverse effect on the Company's financial position or results from operations. 6 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations A. Comparative third quarter results of operations Net income for the quarter rose 20% to $4.5 million, or 40 cents a share, from $3.8 million, or 34 cents a share in the year-earlier period. Sales advanced 12% to $127.9 million from $114.0 million in 1993. Sales for the Recreational Products Group rose 11%, to $86.3 million, from $77.9 million in the prior year. The $8.4 million increase is largely attributable to the extension of K2's, Shakespeare's and Stearns' brands into new products - particularly, in-line skates, fishing reels, kits and combos and wetsuits and rainwear - and to improved sales of Hilton activewear, K2 snowboards and Anthony swimming pools. Sales were also boosted by Girvin's Pro-flex full-suspension mountain bikes, a business purchased in late 1993. Sales of alpine skis, mainly in Europe, declined reflecting the lagging economies in that market. Sales of the Industrial Products Group advanced 15%, to $41.6 million, from $36.1 million in the prior year. Higher demand for Simplex building products, particularly Thermo-ply, Barricade, and Finestone, sharply higher sales of fiberglass light poles and distribution poles and interest in specialty paperweaving monofilaments contributed to the sales improvement. Cost of sales as a percent of sales declined slightly from the year ago period. Process improvement has continued to drive down the costs of manufacturing, but this gain was tempered in the third quarter by significant raw material cost increases in the manufacture of paper-based building products. A percentage of these cost increases have since been passed on. Selling, general and administrative expenses, as a percent of sales decreased slightly. Interest expense, while benefiting slightly from lower interest rates rose $435,000 on $15.7 million of higher average borrowings. The additional debt was incurred to finance the growth in new product sales and the acquisition of Girvin Inc. in the fourth quarter of 1993. Pretax income increased $1.2 million reflecting the impact of the higher sales volumes and efficiencies described above. B. Comparative Nine- Month Results of Operations Net sales for the nine months ended September 30, 1994 increased $44.6 million to $369.4 million as compared with the prior year. Net income of $10.0 million, or 88 cents a share, increased from the $8.7 million, or 78 cents a share reported in 1993. Net sales of the Recreational Products Group increased 14% to $242.6 million from $213.2 million in the 1993 period. Worldwide shipments of K2 snowboards and K2 Exotech in-line skates accounted for a large portion of the increase. Swimming pool sales and the remodel business increased in virtually all regions of the country during the period. New product sales of active apparel, rainwear and wetsuits accounted for the overall sales increases at Hilton and Stearns. Sales of the Group also benefited from the inclusion of Girvin's Pro-flex mountain bikes and accessories. The Industrial Products Group reported sales of $126.8 million, up 14% 7 from prior year's total of $111.6 million. The improvement was due to sales gains in the residential and industrial building products, fiberglass light and distribution poles and technical paperweaving monofilaments. Cost of sales as a percent of sales was comparable to the prior year's period. The current year included a continuation of costs incurred in the development of cap skis, for sale under the K2, Olin and Pre brands, a product development program which commenced in late 1993. Cost of sales was also impacted by the higher unit cost of the manufactured cap skis. Significant raw material cost increases were incurred during the latter part of the period in the manufacture of paper-based building products. However, price increases initiated in September have partially offset these higher costs. Cost reductions achieved through process improvement offset the remaining cost increases described above. The increase in selling, general and administrative expenses were primarily volume-related. Higher average borrowings of $13.6 million, incurred to finance the seasonal working capital requirements of the growth in sales of existing and new products, increased interest expense by $675,000. A reduction in worldwide interest rates, principally in the first quarter, produced a benefit of $210,000. Pretax income increased $1.9 million reflecting the net effect of the increased volume and manufacturing efficiencies, previously described, reduced by the nonrecurring cap ski conversion costs, higher raw material building product costs and higher cost cap skis. C. Financial Condition Cash used by operations for the nine months ended September 30, 1994 was $5.8 million as compared with $293,000 provided in the prior year. The larger cash usage reflected the increased seasonal working capital requirements required to fund the higher sales, the new products and the new Pro-flex and Girvin mountain bike and component business. Consistent with prior years, the allowance for doubtful items decreased as a result of a seasonal reduction in the allowance for volume discounts. 8 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10(i) Amendment dated October 20, 1994 to amended and related employment agreement dated as of December 31, 1991 between the Company and B. I. Forester, filed as Exhibit 10(a) to Form 10-K for the year ended December 31, 1991 and incorporated herein by reference. 27 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended September 30, 1994. 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. ANTHONY INDUSTRIES, INC. (registrant) Date: November 11, 1994 /s/ Bernard I. Forester ----------------------- B.I. Forester Chairman and Chief Executive Date: November 11, 1994 /s/ John J. Rangel ------------------ John J. Rangel Senior Vice President - Finance 9 EXHIBIT 10(i) - - ------------- AMENDMENT dated as of October 20, 1994 between Anthony Industries, Inc. (the "Company") and B. I. Forester ("Forester"). Section 4 of the Agreement dated as of December 31, 1991 between the Company and Forester is hereby amended to read in full as follows: "Unless the Employment Period is terminated by the Company for cause pursuant to Section 5(a)(i)(y) hereof, commencing with the first day of the month following the month in which Forester (a) attains age 65 or (b) is no longer employed by the Company on a full-time basis, whichever later occurs, and continuing monthly thereafter during Forester's lifetime, the Company shall pay to Forester an amount equal to (i) 4.6% of Average Accounting Base Compensation (as defined herein), reduced by (ii) the monthly amount received by Forester under the Company's Pension Plan (the "Pension Plan"), or, if Forester receives a lump sum distribution under the Pension Plan, the monthly amount he would have received if his benefit thereunder were being paid as a qualified joint and 50% survivor annuity. If at the time of his death, Forester is receiving or would be (assuming he had left full-time employment as of the date of death) entitled to receive payments pursuant to the preceding sentence, the Company shall pay to Forester's widow (provided that Forester shall not have filed a written notice with the Company to the contrary) a monthly benefit in an amount equal to (i) 4.6% of Average Accounting Base Compensation less (ii) any monthly amount received by Forester's widow under the Pension Plan or, if Forester received a lump sum distribution under the Pension Plan, the monthly amount she would have received under a qualified joint and 50% survivor annuity, commencing on the first day of the month following the month in which Forester dies and ending on the earlier of (x) the date of Forester's widow's death and (y) the completion of a five-year period. For purposes of this Agreement, Average Accounting Base Compensation shall mean the average of the highest three calendar years of Accounting Base Compensation, and Accounting Base Compensation for a calendar year shall mean the sum of Forester's Basic Compensation and incentive compensation awarded in respect of such calendar year. Notwithstanding the 10 foregoing provisions of this Section 4, if Forester terminates the Employment Period in accordance with Section 5(a)(ii) hereof, or if the Company breaches this Agreement, the Company shall pay to Forester within 7 days after the Date of Termination (as defined in Section 5(a)(ii) hereof) or the date of Breach (as defined in Section 6 hereof), as the case may be, in lieu of all payments otherwise due under this Section 4, an amount equal to the Lump-sum Equivalent (as defined herein). The Lump-sum Equivalent shall mean an amount equal to 114.696 times the monthly amount otherwise payable to Forester under this Section 4, which amount shall be reduced (a) if Forester has not yet attained age 65 as of the Date of Termination or the Date of Breach, as the case may be, by discounting said amount at the rate of 7.5% compounded annually for the period beginning with the first complete month from the date of payment until the first day of the month following the month in which Forester will attain age 65, or (b) if Forester has attained age 66 as of the Date of Termination or the Date of Breach, as the case may be, by reducing the amount of 114.696 to an amount which is twelve times the average of the male and female immediate annuity factors found in the GAM 83 Table, using a 7.5% interest rate, for a person whose age is Forester's age as of the Date of Termination or the Date of Breach, as the case may be." ANTHONY INDUSTRIES INC. By /s/ John J. Rangel --------------------------------- John J. Rangel Senior Vice President - Finance /s/ B. I. Forester ------------------------------------- B.I. Forester 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1994 SEP-30-1994 5,067 0 110,498 (4,838) 97,657 219,113 129,358 78,422 289,462 81,519 0 11,715 0 0 84,924 289,462 369,363 370,557 271,735 271,735 77,155 1,076 5,205 15,386 5,385 10,001 0 0 10,001 0 .88 .88
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