0000898430-95-001594.txt : 19950829 0000898430-95-001594.hdr.sgml : 19950829 ACCESSION NUMBER: 0000898430-95-001594 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE SROS: PSE 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: 95563518 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 10-Q FOR JUNE 30, 1995 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 June 30, 1995 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 July 31, 1995. Common Stock, par value $1 16,474,128 Shares 1 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 Six months ended June 30 ended June 30 ------------------- -------- -------- 1995 1994(a) 1995 1994(a) -------- -------- -------- -------- Net sales $159,419 $131,765 $304,437 $241,500 Cost of products sold 117,047 95,295 226,759 178,348 -------- -------- -------- -------- Gross profit 42,372 36,470 77,678 63,152 Selling expenses 17,254 15,309 34,731 29,466 General and administrative expenses 13,372 12,488 25,960 23,097 -------- -------- -------- -------- Operating income 11,746 8,673 16,987 10,589 Interest expense 2,715 1,694 5,547 3,268 Other (income) (468) (725) (786) (1,093) -------- ------- -------- -------- Income before taxes 9,499 7,704 12,226 8,414 Provision for income taxes 3,135 2,695 3,775 2,945 -------- -------- -------- -------- NET INCOME $ 6,364 $ 5,009 $ 8,451 $ 5,469 ======== ======== ======== ======== PER SHARE Net income $.48 $.42 $.67 $.46 Cash dividend $.11 $.105 $.22 $.21 Average shares outstanding 13,127 11,903 12,626 11,903
-------- (a) Shares and per share figures have been retroactively adjusted for the 5% stock dividend paid in December 1994. See notes to consolidated condensed financial statements. 2 CONSOLIDATED BALANCE SHEETS (condensed)
June 30 December 31 1995 1994 (Unaudited) ----------- ----------- (thousands) Assets ------ Current Assets Cash and cash equivalents $ 2,790 $ 7,700 Accounts receivable, less allowances of $8,037 in 1995 and $8,425 in 1994 124,694 111,154 Inventories Finished goods 81,808 66,900 Work in process 12,640 8,788 Raw materials 29,702 32,216 -------- -------- 124,150 107,904 Less LIFO reserve 6,723 6,162 -------- -------- 117,427 101,742 Deferred taxes 6,255 7,928 Prepaid expenses and other current assets 5,766 4,324 -------- -------- Total current assets 256,932 232,848 Property, Plant and Equipment 142,272 131,459 Less allowance for depreciation 84,230 79,095 -------- -------- 58,042 52,364 Intangibles, principally goodwill 17,604 15,825 Other 3,342 3,377 -------- -------- Total Assets $335,920 $304,414 ======== ========
See notes to consolidated condensed financial statements. 3 CONSOLIDATED BALANCE SHEETS (condensed)
June 30 December 31 1995 1994 (Unaudited) ___________ ___________ (thousands) Liabilities and Shareholders' Equity ____________________________________ Current Liabilities Bank loans $ 34,621 $ 18,341 Accounts payable 26,671 26,858 Accrued payroll and related 19,414 18,697 Other accruals 19,151 15,788 Current portion of long-term debt 366 2,918 ________ ________ Total current liabilities 100,223 82,602 Long-Term debt 49,222 109,921 Deferred taxes 12,414 12,895 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 - 16,955,187 in 1955 and 12,322,851 in 1994 16,955 12,323 Additional paid-in capital 129,858 66,973 Retained earnings 34,327 28,994 Employee Stock Ownership Plan and stock option loans (3,833) (3,937) Treasury shares at cost, 481,059 shares (4,189) (4,189) Cumulative translation adjustments 943 (1,168) -------- -------- Total Shareholders' Equity 174,061 98,996 -------- -------- Total Liabilities and Shareholder's Equity $335,920 $304,414 ======== ========
See notes to consolidated condensed financial statements. 4 STATEMENTS OF CONSOLIDATED CASH FLOWS (condensed) (Unaudited) Six months ended June 30 ------------------------ 1995 1994 ------------------------ (thousands) Operating Activities Net income $ 8,451 $ 5,469 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,436 4,878 Deferred taxes 1,163 1,013 Changes in operating assets and liabilities: Increase in accounts receivable (13,040) (8,808) Increase in inventories (14,375) (7,915) Increase in prepaid expense and other current assets (1,295) (939) Increase (decrease) in accounts payable (718) 2,886 Increase in payroll, taxes and other accruals 3,817 5,001 -------- ------- Net cash provided by (used in) operating activities (10,561) 1,585 -------- ------- Investing Activities Property, plant & equipment expenditures (10,611) (4,391) Disposals of property, plant & equipment 82 41 Other items, net (251) 1,039 -------- ------- Net cash used in investing activities (10,780) (3,311) Financing Activities Borrowings under long-term debt and revolving lines of credit 9,000 8,747 Payments of long-term debt and revolving lines of credit (72,961) (3,686) Dividends paid (3,118) (2,471) Net proceeds from stock offering 67,230 Net increase (decrease) in short-term bank loans 16,280 (889) -------- ------- Net cash provided by financing activities 16,431 1,701 -------- ------- Net decrease in cash and cash equivalents (4,910) (25) Cash and cash equivalents at beginning of year 7,700 5,860 -------- ------- Cash and cash equivalents at end of period $ 2,790 $ 5,835 ========= ======= Supplemental disclosure of cash flow information: Interest paid $ 5,739 $ 3,159 Income taxes paid 2,583 1,932 -------- ------- $ 8,322 $ 5,091 ========= ======= See notes consolidated condensed 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 six month period ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. 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, 1994. NOTE 2 - Summary of Significant Accounting Policies The Company maintains its books using a 52/53 week year ending on the last Sunday of December. For purposes of the consolidated financial statements, the year-end is stated as December 31. The year ended 1994 consisted of 52 weeks and each of the quarters consisted of 13 weeks. The year ended December 31, 1995 will consist of 53 weeks with the additional week included in the first quarter ended March 31, 1995. NOTE 3 - Borrowings and Other Financial Instruments The $85 million credit facility and the $40 million 364-day unsecured revolving short-term facility are subject to an agreement which, among other things, restricts amounts available for payment of cash dividends by the Company. As of June 30, 1995, retained earnings of $9.1 million were free of such restrictions. NOTE 4 - Stock Offering On June 1, 1995, the Company completed its previously announced public offering of 4.6 million primary shares of its common stock. The net proceeds of $67.2 million were used to reduce amounts outstanding under the $85 million credit facility ("Credit Facility"). The Company may reborrow amounts repaid under the Credit Facility for general corporate purposes, which may include the financing of product sales growth, the development of new products and strategic acquisitions. On a proforma basis, assuming the offering had been completed on January 1, 1994, earnings per share were 41 cents for the 1995 second quarter versus 33 cents for the year earlier quarter and 59 cents for the 1995 six month period versus 40 cents for the corresponding year-ago period. 6 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations A. Comparative Second Quarter Results of Operations Net sales for the three months ended June 30, 1995 increased 21.0% to $159.4 million compared to $131.8 in the year-earlier period. Net income for the second quarter of 1995 increased by 27.1% to $6.4 million or 48 cents a share, from $5.0 million, or 42 cents a share in the corresponding 1994 period. Net Sales. Net sales in the sporting goods and other recreational products group increased 24.4% to $107.6 million from $86.5 million in the prior year quarter. The increase in sales was broad based. Worldwide growth of in-line skates and snowboards fueled K2 sales. Strong sales of new Shakespeare fishing reels, kits and combos along with Stearns flotation devices, raingear, wetsuits and other new products also contributed to the quarter's performance. Sales of ProFlex full-suspension mountain bikes doubled while new model introductions of activewear to the ad specialty business improved Hilton's sales. The recently acquired Dana Design backpack business also provided sales gains. Partially offsetting these gains were lower second quarter ski shipments. Net sales of the industrial products group advanced 14.3% to $51.8 million from $45.3 million in the prior year quarter. The increase was primarily due to the Simplex products business, which experienced sales gains from virtually all product lines. Sales also benefited from improvements in paperweaving monofilaments and fiberglass light pole products. Gross Profit. Gross profit increased 16.2% to $42.4 million in the second quarter of 1995 compared to $36.5 million in the second quarter of 1994, primarily reflecting higher sales levels. Gross profit in 1995 as a percentage of net sales was adversely affected by higher lightpole manufacturing costs and increased costs of recycled corrugated scrap paper, partially offset by price increases. Costs and Expenses. In the second quarter of 1995, selling expenses increased 12.7% to $17.3 million from $15.3 million in the same quarter of 1994, however, as a percentage of net sales decreased to 10.8% from 11.6%. General and administrative expenses increased 7.1% to $13.4 million in the second quarter of 1995 compared to $12.5 million in the year-earlier period. As a percentage of net sales, general and administrative expenses decreased to 8.4% from 9.5%. Operating Income. Operating income grew by 35.4% to $11.7 million, or 7.4% of net sales, in the second quarter of 1995 compared to $8.7 million or 6.6% of net sales, in the comparable 1994 period. The percentage increase in the second quarter of 1995 was attributable to the reduction of selling, general and administrative expenses as a percentage of net sales, partially reduced by the reduction in gross profit margin percentage. Interest Expense. Interest expense rose $1.0 million in the second quarter of 1995 compared to the second quarter of 1994. Higher average borrowings of $29.8 million resulted in $0.6 million of additional interest in the quarter and $0.4 million reflected higher rates. 7 B. Comparative Six-Month Results of Operations Net sales for the six months ended June 30, 1995 increased $62.9 million to $304.4 million as compared with the prior year period. Net income of $8.5 million, or 67 cents a share, advanced from $5.5 million, or 46 cents a share, reported in 1994. Net Sales. In the sporting goods and other recreational products group, net sales increased 29.4% to $202.3 million from $156.3 million in the 1994 period. The improvement was mainly attributable to worldwide shipments of K2 Exotech in- line skates and snowboards and sales of new Shakespeare fishing rods, reels, and kits and combos. New product introductions at Hilton Active Apparel and Stearns largely accounted for the overall sales increases in these businesses. Shipments of Proflex full-suspension mountain bikes and Girvin accessories significantly improved from the prior year period. Dana Design, a recently acquired backpack business also contributed to the sales growth, although to a lesser extent. The Industrial Products Group reported sales of $102.1 million, up 19.8% from prior year's total of $85.2 million. The increase was primarily due to sales gains in residential and industrial building products. Fiberglass light poles and paperweaving monofilaments sales growth also contributed to the period. Gross Profit. Gross profit improved 23.0% to $77.7 million in the first six month of 1995 compared to $63.2 in the corresponding year-ago period, although as a percentage of net sales it decreased to 25.5% from 26.1% a year ago. Increased costs of recycled corrugated scrap paper, only partially offset by price increases, and higher manufacturing costs in the fiberglass light pole business unfavorably impacted the 1995 gross profit margin percentage. Costs and Expenses. Selling expenses increased 17.9% to $34.7 million for the 1995 six month period from $29.5 million in the same period in 1994, although as a percentage of net sales declined to 11.4% from 12.2%. The percentage decrease was mainly volume related. General and administrative expenses increased 12.4% to $26.0 million for the six months ended June 30, 1995 compared to $23.1 million in the same prior year period. There was a decrease as a percentage of net sales to 8.5% in 1995 compared to 9.6% in 1994. Operating Income. Operating income increased by 60.4% to $17.0 million, or 5.6% of net sales, in the six months ended June 30, 1995 compared to $10.6 million, or 4.4% of net sales, in the comparable 1994 period. The percentage increase resulted from reduced selling, general and administrative expenses as a percentage of sales and volume-related earnings increase of many of the Company's businesses. Interest Expense. Interest expense increased by $2.3 million in the six months ended June 30, 1995 compared to the same year-ago period. Higher average borrowings of $32.9 million accounted for $1.4 million of the interest expense increase and higher interest rates accounted for $0.9 million of the remainder. Higher borrowings were necessary to finance the seasonal working capital requirements that support higher sales volume. 8 Income Taxes. The provision for income taxes for the six months ended June 30, 1995 has been reduced as a result of a $0.3 million foreign tax settlement. C. Financial Condition The Company's operations used $10.6 million of cash during the six month period ended June 30, 1995 whereas the comparable period in 1994 provided cash of $1.6 million. The recent increased use of cash has been primarily due to financing higher levels of accounts receivable and inventories arising from the growth of new seasonal products and the recent acquisitions of Dana Design and Wilderness Experience. Net cash used for investment activities increased to $10.8 million in the first six months of 1995 from $3.3 million in the first six months of 1994. The increase in cash used in the 1995 period is attributable to capital expenditures to increase manufacturing capacity and improve manufacturing efficiencies, principally in the industrial products group, and the purchases of the Dana Design and Wilderness Experience businesses. Net cash provided by financing activities during the six month period ended June 30, 1995 was $16.4 million from $1.7 million in the six month period ended June 30, 1994. The increase in cash was due to net proceeds from the stock offering that was completed on June 1, 1995 offset by repayments of long-term debt plus an increase in short-term seasonal borrowings. Consistent with prior years, the allowance for doubtful items decreased as a result of a seasonal reduction in the allowance for volume discounts. The Company anticipates its cash need in 1995 will be provided from operations and borrowings under its Credit Line and Short-Term Facility and other existing credit lines. 9 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (c) At the Annual Meeting of the Stockholders of the Company held May 4, 1995, the following action was taken: (1) Amend the Certificate of Incorporation to permit a Board of Directors consisting of from six to nine directors: 9,000,865 votes for, 1,369,372 votes against, 149,606 votes abstaining; (2) Election of directors: Abraham L. Gray, 10,440,221 votes for, 79,622 votes withheld: Hugh V. Hunter, 10,437,979 votes for, 81,864 votes withheld; Richard M. Rodstein, 10,433,719 votes for, 86,124 votes withheld. (3) Ratification of Ernst & Young as the Company's independent auditors: 10,414,491 votes for, 40,017 votes against, 65,335 votes abstaining. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule, Article 5 (b) Report on Form 8-K There were no reports on Form 8-K filed during the quarter ended June 30, 1995. 10 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: August 11, 1995 /s/ Bernard I. Forester ---------------------------- B.I. Forester Chairman and Chief Executive Date: August 11, 1995 /s/ John J. Rangel ------------------------------- John J. Rangel Senior Vice President - Finance 11 EX-27 2 SECOND QUARTER ARTICLE 5
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 2,790 0 132,731 (8,037) 117,427 256,932 142,272 84,230 335,920 100,223 0 16,955 0 0 157,106 335,920 304,437 305,223 226,759 226,759 59,775 916 5,547 12,226 3,775 8,451 0 0 0 8,451 .67 .67