-----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, Fn0klzOA6nhdqMZvYwHWZe7XhQzeooPTkso5okMiX3zMrjNrdh9yifGABsisrk60 Fxz/6e+eHIgDK468DEpFkw== 0000894579-96-000043.txt : 19960518 0000894579-96-000043.hdr.sgml : 19960518 ACCESSION NUMBER: 0000894579-96-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELL NATIONAL CORP CENTRAL INDEX KEY: 0000075439 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 941451828 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00935 FILM NUMBER: 96568087 BUSINESS ADDRESS: STREET 1: 4209 VINELAND ROAD STREET 2: SUITE J I CITY: ORLANDO STATE: FL ZIP: 32811 BUSINESS PHONE: 4078490290 MAIL ADDRESS: STREET 1: 4209 VINELAND ROAD, SUITE J-1 CITY: ORLANDO STATE: FL ZIP: 32811 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC COAST HOLDINGS INC DATE OF NAME CHANGE: 19830303 10-Q 1 BELL-10Q.TXT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 -------------------------------------------- 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 number 0-935 ---------------- BELL NATIONAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-1451828 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 4209 Vineland Road, Suite J-1, Orlando, Florida 32811 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (407) 849-1090 -------------------------- - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 ----- ------ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No ----- ------ As of April 24, 1996, the number of shares of the registrant's common stock outstanding is 5,283,114. Part I - Financial Information ITEM 1. Financial Statements. BELL NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) ASSETS
March 31, December 31, 1996 1995 ---- ---- (Unaudited) Cash and cash equivalents $ -- $ -- Accounts receivable, net 1,251 1,082 Inventory, net 3,531 4,083 Prepaid expenses and other current assets 166 114 -------------- ------------- Total current assets 4,948 5,279 Property and equipment, net 200 212 Goodwill, net 678 683 Deferred sample books, net 1,679 1,696 Other assets 36 40 -------------- ------------- $ 7,541 $ 7,910 ============== ============= The accompanying notes are an integral part of these consolidated financial statements.
2 BELL NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31, 1996 1995 ---- ---- (Unaudited) Current Liabilities: Accounts payable $ 1,606 $ 1,901 Current portion of capitalized lease obligations 3 3 Current portion of long-term debt 400 400 Accrued compensation and employee benefits 538 449 Accrued expenses 469 381 -------------- ------------- Total current liabilities 3,016 3,134 Long-term debt 2,465 2,642 Accrued stock appreciation rights 356 356 Capital lease obligations, less current portion 3 3 Other liabilities 201 201 -------------- ------------- 6,041 6,336 Stockholders' equity: Common stock, no par value; authorized 12,000,000 shares, issued and outstanding 5,283,114 shares at March 31, 1995 and December 31, 1994 15,800 15,800 Additional paid-in capital 10 10 Accumulated deficit (14,310) (14,236) -------------- ------------- Total stockholders' equity 1,500 1,574 -------------- ------------- $ 7,541 $ 7,910 ============== ============= The accompanying notes are an integral part of these consolidated financial statements.
3 BELL NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, ---------------------------------- 1996 1995 ---- ---- Net sales $ 3,167 $ 3,395 Costs and expenses: Cost of sales 1,683 1,768 Selling, general and administrative 1,491 1,494 -------------- ------------- Operating income (7) 133 Other expense: Interest expense (72) (85) Other 5 (13) -------------- ------------- Income (loss) before income taxes (74) 30 Provision for income taxes -- (6) -------------- ------------- Net income (loss) $ (74) $ 24 =============== ============= Net income (loss) per common share $ (0.01) $ 0.00 ============== ============= Weighted average number of common shares outstanding 5,283,114 5,283,114 ============== ============= The accompanying notes are an integral part of these consolidated financial statements.
4 BELL NATIONAL CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Dollars in Thousands) (Unaudited)
Common Stock Additional Accum- Total ---------------------------- Paid-in ulated Stockholders' Shares Dollars Capital Deficit Equity ------ ------- ------- ------- ------ Balance at December 31, 1995 5,283,114 $ 15,800 $ 10 $ (14,236) $ 1,574 Net income -- -- -- (74) (74) ----------- ------------- ----------- ------------ ------------ Balance at March 31, 1996 5,283,114 $ 15,800 $ 10 $ (14,310) $ 1,500 =========== ============= =========== =========== =========== The accompanying notes are an integral part of these consolidated financial statements.
5 BELL NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Three Months Ended March 31, ---------------------------- 1996 1995 ---- ---- Operating activities: Net income (loss) $ (74) $ 24 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 14 16 Amortization of goodwill 5 5 Amortization of deferred sample books 290 193 Amortization of deferred debt commitment fee 4 4 (Increase) decrease in assets: Accounts receivable (169) (221) Inventory 552 (33) Prepaid expenses and other current assets (52) (103) Increase (decrease) in liabilities: Accounts payable (295) 383 Accrued compensation and employee benefits 89 (8) Accrued expenses 88 25 Other liabilities -- (66) --------- -------- Net cash provided by operating activities 452 285 --------- ------- Investing activities: Acquisition of property and equipment (2) (12) Purchase of deferred sample books (273) (613) ---------- ------- Net cash used in investing activities (275) (625) ---------- ------- Financing activities: Net proceeds (repayments) on long-term debt (177) 340 ---------- ------- Net cash provided by financing activities $ (177) $ 340 ---------- ------- The accompanying notes are an integral part of these consolidated financial statements.
6 BELL NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Dollars in thousands) (Unaudited)
Three Months Ended March 31, ---------------------------- 1996 1995 ---- ---- Net decrease in cash and cash equivalents $ -- $ -- Cash and cash equivalents at beginning of period -- -- ---------- --------- Cash and cash equivalents at end of period $ -- $ -- ========== ========= Supplemental Disclosure of Cash Flow Information Cash paid during the year for: Interest $ 73 $ 81 Income taxes -- 31 The accompanying notes are an integral part of these consolidated financial statements.
7 BELL NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1996 (Unaudited) Note 1. The Company General. The information contained in this report is unaudited but, in management's opinion, all adjustments necessary for a fair presentation have been included and were of a normal and recurring nature. The results for the three months ended March 31, 1996 are not necessarily indicative of results to be expected for the entire year. These financial statements and notes should be read in conjunction with Bell National Corporation's (the "Company") Annual Report on Form 10-K for the year ended December 31, 1995. Bell National Corporation's wholly owned subsidiary Payne Fabrics, Inc. ("Payne") is a designer and distributor of decorative drapery and upholstery fabrics. Payne was acquired by Bell National Corporation on June 15, 1990. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The Company's revenues and expenses result from the operations of Payne Fabrics, Inc. Quarter Ended March 31, 1996 The Company had net sales of $3,167,000, cost of goods sold of $1,683,000, selling, general and administrative expenses of $1,491,000 and an operating loss of $7,000 during the first quarter of 1996. The operating loss was increased by interest expense of $72,000 and reduced by other income of $5,000 resulting in a net loss of $74,000. Quarter Ended March 31, 1995 The Company had net sales of $3,395,000, cost of goods sold of $1,768,000, selling, general and administrative expenses of $1,494,000 and operating income of $133,000 during the first quarter of 1995. Operating income was reduced by interest expense of $85,000, other expense of $18,000 and income taxes of $6,000 resulting in net income of $24,000. Comparison Of First Quarter 1996 Results To 1995 The sales for the first quarter of 1996 decreased by $228,000 compared to the corresponding period in 1995. All fabric categories experienced declines with the exception of multipurpose which has benefited from increased product introductions recently. Sales continue to be weak in most markets and management does not expect a dramatic change in the recent declining sales trend. The gross profit percentage decreased by 1.0% from 47.9% in 1995 to 46.9% in 1996 as a result of a change in the mix of products sold. Drapery manufacturing and outlet store sales which have 8 lower margins account for a larger segment of sales in the first quarter of 1996 than they did in the same period in 1995. The resulting $143,000 decrease in gross profit during the first quarter of 1996 compared to 1995, was partially offset by a decrease in selling, general and administrative expenses of $3,000. As a result of the above, 1996 operating income decreased by $140,000 during the first quarter of 1996 compared to 1995. Interest expense decreased $13,000 from $85,000 in 1995 to $72,000 in 1996 as a result of a lower average bank debt balance. Other expense decreased from $18,000 in 1995 to an income of $5,000 in 1996. The Company had a net loss of $74,000 in the first quarter of 1996 compared to net income of $24,000 for the same period in 1995. The earnings (loss) per share in the first quarter of 1996 was $(0.01) and $0.00 in 1995. Liquidity and Capital Resources Available Resources. In connection with the bank loan agreement, the Company instituted a cash management system whereby the net cash generated by operations is immediately used to reduce bank debt. The immediate reduction of outstanding bank debt provides the Company with a greater reduction in interest expense than could be offset with interest income from alternative investments. In the absence of a bank agreement requiring such a system, the Company would continue to use excess funds to immediately reduce bank debt. A review of the financial statements, summary data, working capital and discussion of liquidity must take into consideration the fact that the Company does not maintain any cash balances in any of its accounts by design. Working capital needs, when they arise, are met by daily borrowings. Future Needs For and Sources of Capital. During the first quarter of 1996, the Company generated $452,000 of cash from operations. Although the Company experienced a loss of $74,000 in the period, there were $313,000 of non-cash expenses included in the loss, primarily amortization of deferred sample books. These two items, together with decreased current assets of $331,000 and decreased liabilities of $118,000 created the cash from operations. These funds were used to purchase $2,000 of fixed assets, $273,000 of sample books and to pay down bank debt by $177,000. During the first quarter of 1995, the Company generated $285,000 of cash from operations. Net income of $24,000 together with $218,000 of non-cash expenses included in the net income, primarily amortization of deferred sample books, together with increased current assets of $291,000 and increased liabilities of $334,000 created the cash from operations. These funds, with additional borrowing of $340,000, were used to purchase $12,000 of fixed assets and $613,000 of sample books. On May 1, 1995 the Company entered into a Revolving Credit Agreement with Bank One, Dayton, National Association ("Revolving Agreement"). The terms provide for a total loan facility of $4,152,000 consisting of a term loan of $1,025,000 payable in seven quarterly 9 installments of $100,000 and a balloon payment of $325,000 due on June 1, 1997. The remaining portion of the Revolving Agreement consists of a revolving line of credit, which matures on June 1, 1998. Borrowings under the revolving line of credit are based on a percentage of Payne's eligible accounts receivable and eligible inventory, as defined. The Revolving Agreement is collateralized by all of the assets of Payne, guaranteed by the Company and subject to restrictive covenants. PART II. OTHER INFORMATION -none- 10 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. BELL NATIONAL CORPORATION -------------------------------------------- (Registrant) Date: May 15, 1996 /s/ Alexander M. Milley -------------------------------------------- Alexander M. Milley, Chairman of the Board and Secretary Date: May 15, 1996 /s/ Thomas R. Druggish -------------------------------------------- Thomas R. Druggish, Chief Financial Officer (Principal Financial Officer and Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 MAR-31-1996 0 0 1,251,000 77,000 3,531,000 4,948,000 200,000 897,000 7,541,000 3,016,000 0 0 0 15,800,000 (14,300,000) 7,541,000 3,167,000 3,167,000 1,683,000 3,174,000 (5,000) 0 72,000 (74,000) 0 (74,000) 0 0 0 (74,000) (0.01) (0.01)
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