-----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, MuG5pzBS5wqSzXQCrHko2hBlw/tsBCpvG4uITauu0viLH+zUME00fB/S0q6W8KEY NUOMWNcBbaq6srn3t2Sd+Q== 0000894579-96-000056.txt : 19960814 0000894579-96-000056.hdr.sgml : 19960814 ACCESSION NUMBER: 0000894579-96-000056 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96611206 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 June 30, 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 August 9, 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 June 30, December 31, 1996 1995 ---- ---- (Unaudited) Cash and cash equivalents $ -- $ -- Accounts receivable, net 1,197 1,082 Inventory, net 2,954 4,083 Prepaid expenses and other current assets 72 114 --------- --------- Total current assets 4,223 5,279 Property and equipment, net 185 212 Goodwill, net 673 683 Deferred sample books, net 1,592 1,696 Other assets 32 40 --------- --------- $ 6,705 $ 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 June 30, December 31, 1996 1995 ---- ---- (Unaudited) Current Liabilities: Accounts payable $ 1,653 $ 1,901 Current portion of capitalized lease obligations 3 3 Current portion of long-term debt 325 400 Accrued compensation and employee benefits 547 449 Accrued expenses 452 381 --------- --------- Total current liabilities 2,980 3,134 Long-term debt 1,875 2,642 Accrued stock appreciation rights 356 356 Capital lease obligations, less current portion 2 3 Other liabilities 201 201 --------- --------- 5,414 6,336 Stockholders' equity: Common stock, no par value; authorized 12,000,000 shares, issued and outstanding 5,283,114 shares at June 30, 1996 and December 31, 1995 15,800 15,800 Additional paid-in capital 10 10 Accumulated deficit (14,519) (14,236) --------- --------- Total stockholders' equity 1,291 1,574 --------- --------- $ 6,705 $ 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 Six Months Ended June 30, June 30, ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $3,383 $3,608 $6,550 $7,003 Costs and expenses: Cost of sales 1,978 1,878 3,661 3,646 Selling, general and administrative 1,527 1,589 3,018 3,083 ------ ------ ------ ------ Operating income (loss) (122) 141 (129) 274 Other expense: Interest expense (70) (87) (142) (172) Other (17) (7) (10) (25) ------ ------ ------ ------ Income (loss) before income taxes (209) 47 (281) 77 Provision for income taxes -- (29) (2) (35) ------ ------ ------ ------ Net income (loss) $(209) $ 18 $(283) $ 42 ====== ====== ====== ====== Net income (loss) per common share $(0.04) $ 0.01 $(0.05) $ 0.01 ======= ====== ======= ====== Weighted average number of common shares outstanding 5,283,114 5,283,114 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 -- -- -- (283) (283) ----------- ------------- ----------- ------------ ------------ Balance at June 30, 1996 5,283,114 $ 15,800 $ 10 $ (14,519) $ 1,291 =========== ============= =========== =========== ===========
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) Six Months Ended June 30, ------------------------- 1996 1995 ---- ---- Operating activities: Net income (loss) $ (283) $ 42 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 29 33 Amortization of goodwill 10 10 Amortization of deferred sample books 607 429 Amortization of deferred debt commitment fee 8 11 (Increase) decrease in assets: Accounts receivable (115) (378) Inventory 1,129 (364) Prepaid expenses and other current assets 42 (136) Increase (decrease) in liabilities: Accounts payable (248) 848 Accrued compensation and employee benefits 98 (13) Accrued expenses 71 46 Other liabilities -- (47) --------- ---------- Net cash provided by operating activities 1,348 481 --------- --------- Investing activities: Acquisition of property and equipment (2) (46) Purchase of deferred sample books (503) (723) ---------- --------- Net cash used in investing activities (505) (769) ---------- --------- Financing activities: Net (payments) borrowings on bank debt (842) 341 Payment of deferred debt commitment fee -- (52) Principal payments on capital lease obligations (1) (1) --------- --------- Net cash (used for) provided by financing activities $ (843) $ 288 --------- --------- 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) Six Months Ended June 30, ------------------------- 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 $ 142 $ 201 Income taxes -- 45 The accompanying notes are an integral part of these consolidated financial statements. 7 BELL NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 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 and six months ended June 30, 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 the Company 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. Six Months Ended June 30, 1996 The Company had net sales of $6,550,000, cost of goods sold of $3,661,000, selling, general and administrative expenses of $3,018,000 and an operating loss of $129,000 during the first six months of 1996. The operating loss was increased by interest expense of $142,000, other expense of $10,000 and income taxes of $2,000, resulting in a net loss of $283,000. Six Months Ended June 30, 1995 The Company had net sales of $7,003,000, cost of goods sold of $3,646,000, selling, general and administrative expenses of $3,083,000 and operating income of $274,000 during the first six months of 1995. Operating income was reduced by interest expense of $172,000, other expense of $25,000, income taxes of $35,000 resulting in net income of $42,000. Comparison Of Six Months 1996 Results to 1995 Sales for the first six months of 1996 decreased by $453,000 compared to the corresponding period in 1995. This first six months of 1996 decrease is identifiable to sales declines in upholstery fabric of $251,000, drapery fabric of $180,000, Warner fabric of $170,000, wallpaper of $57,000 and other of $42,000, offset by an increase in multipurpose fabric of $224,000 in comparison to the same period of the prior year. The gross profit for the first six months of 1996 was 44.1% compared to 47.9% for the same period in 1995. In the second quarter of 1996 a reserve approximating 2.0% of the six month margin drop- off was booked. The reserve relates to expenditures made in 1995 but not 8 recognized until the second quarter of 1996. Further review is required to accurately determine the final accounting for these items. The remaining gross profit percentage decrease results from a change in product mix due to a larger segment of sales from the drapery manufacturing and outlet store areas. Selling, general and administrative costs for the first six months of 1996 were $65,000 lower than the same period of 1995. Reduced sales management salaries of $20,000, administrative supplies and maintenance of $15,000, administrative salaries of $10,000 and various other of $20,000 account for the decrease in the first six months of 1996 versus 1995. Interest expense decreased by $30,000 for the first six months of 1996 due to the lower debt balance in comparison to the same period of the prior year. Other expenses, primarily the foreign currency exchange, were $15,000 lower in the first six months of 1996 versus 1995. Also in the first six months of 1996 provisions for income taxes were $33,000 lower than in 1995 due to lack of profitability in the period. The net loss of $283,000 in the first six months of 1996 compared to net income of $42,000 for the same period in 1995 resulted in a loss per share of $0.05 for the first six months of 1996 compared to earnings per share of $0.01 for the same period on 1995. Quarter Ended June 30, 1996 The Company had net sales of $3,383,000, cost of goods sold of $1,978,000, selling, general and administrative expenses of $1,527,000 and an operating loss of $122,000 during the second quarter of 1996. The operating loss together with interest expense of $70,000 and other expense of $17,000 resulted in a net loss of $209,000. Quarter Ended June 30, 1995 The Company had net sales of $3,608,000, cost of goods sold of $1,878,000, selling, general and administrative expenses of $1,589,000 and operating income of $141,000 during the second quarter of 1995. Operating income was reduced by interest expense of $87,000, other expense of $7,000 and income taxes of $29,000 resulting in net income of $18,000. Comparison of Second Quarter 1996 Results to 1995 Sales for the second quarter of 1996 decreased by $225,000 compared to the corresponding period in 1995. The second quarter 1996 decrease is identifiable to Warner fabric of $121,000, upholstery fabric of $71,000, drapery fabric of $59,000, sample books and lengths of $41,000, wallpaper of $22,000 and other of $15,000, offset by an increase in multipurpose fabric of $104,000 in comparison to the same period of the prior year. The gross profit for the second quarter of 1996 was 41.5% compared to 47.9% for the same period in 1995. In the second quarter of 1996 a reserve approximating 4.0% of the six month margin drop- off was booked. The reserve relates to expenditures made in 1995 but not recognized until the second quarter of 1996. Further review is required to accurately determine the final accounting for these items. The remaining gross profit percentage decrease results from a change in the product mix due to the larger segment of sales from the drapery manufacturing and outlet store areas. 9 Selling, general and administrative costs for the second quarter of 1996 were $62,000 lower than the same period of 1995. Reduced sales management salaries of $17,000, administrative supplies and maintenance of $15,000, administrative salaries of $10,000, and various other of $20,000 account for the decrease in the second quarter of 1996 versus 1995. Interest expense decreased by $17,000 for the second quarter of 1996 due to the lower debt balance in comparison to the same period of the prior year. Other expenses were $10,000 higher in the second quarter of 1996 versus 1995. Also in the second quarter of 1996 provisions for income taxes were $29,000 lower than in 1995 due to the lack of profitability in the period. The net loss of $209,000 in the second quarter of 1996 compared to the net income of $18,000 for the same period in 1995 resulted in a loss per share of $0.04 for the second quarter of 1996 compared to earnings per share of $0.01 for the same period of 1995. 10 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 six months of 1996, the Company generated $1,348,000 of cash from operations compared to $481,000 during the first six months of 1995. Greater cash was generated from operations in 1996 primarily as a result of a significant decrease in working capital during the first six months of 1995. Accounts receivable, inventory, prepaid expenses and other current assets decreased in net by $1,056,000 in 1996 due to efforts in reducing inventory levels. The decrease in current assets was slightly offset by a decrease in current liabilities (excluding the current portion of debt and capital lease obligations) of $79,000 in 1996. The operating cash generated in the first six months of 1996 was used to purchase $503,000 of sample book inventory, purchase $2,000 of equipment and to pay down bank debt by $842,000. During the first half of 1995, the Company generated $481,000 of cash from operations compared to $196,000 during the first half of 1994. Greater cash was generated from operations in 1995 primarily as a result of an increase in working capital during the first half of 1994 compared to relatively no change in working capital in the first half of 1995. Accounts receivable, inventory and prepaid expenses and other current assets increased by $878,000 in 1995. The increase in current assets was offset by an increase in current liabilities (excluding the current portion of debt and capital lease obligations) of $881,000 in 1995. The increase in current liabilities was primarily the result of an increase in accounts payable balance at June 30, 1995 compared to December 31, 1994. The operating cash generated in 1995 and borrowing in long term bank debt of $341,000 was used to purchase $723,000 of inventory sample books, purchase property and equipment of $46,000 and pay bank refinancing and associated costs of $52,000. Management believes that cash to be provided by operations and funds available under its line of credit will be sufficient to fund the Company's 1996 cash needs. The Company has entered into discussions with the bank to extend the termination date, modify the amortization of the term debt, reset the financial ratio covenants and waive violations of certain financial covenants. Management can make no assertion as to the outcome of these discussions. 11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports (a) Exhibits 27.0 Financial Data Schedule 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. BELL NATIONAL CORPORATION -------------------------------------------- (Registrant) Date: August 12, 1996 /s/ Alexander M. Milley -------------------------------------------- Alexander M. Milley, Chairman of the Board and Secretary Date: August 12, 1996 /s/ Thomas R. Druggish -------------------------------------------- Thomas R. Druggish, Chief Financial Officer (Principal Financial Officer and Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JUN-30-1996 0 0 1,197,000 77,000 2,954,000 4,223,000 185,000 912,000 6,705,000 2,980,000 0 0 0 15,800,000 (14,509,000) 6,705,000 6,550,000 6,550,000 3,661,000 6,679,000 10,000 0 142,000 (281,000) 2,000 (283,000) 0 0 0 (283,000) (0.05) (0.05)
-----END PRIVACY-ENHANCED MESSAGE-----