-----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, BlqMDvT2e/Go1AcjvQECmvFiL3MrmiRUS87s849KrgJEOxrGyO13GXBa9OSTtzO2 hrpwMpz75O0DJPgN9Z9aRQ== 0000894579-96-000111.txt : 19961118 0000894579-96-000111.hdr.sgml : 19961118 ACCESSION NUMBER: 0000894579-96-000111 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96666052 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 September 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 November 11, 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
September 30, December 31, 1996 1995 ---- ---- (Unaudited) Cash and cash equivalents $ -- $ -- Accounts receivable, net 1,241 1,082 Inventory, net 2,939 4,083 Prepaid expenses and other current assets 26 114 -------------- ------------- Total current assets 4,206 5,279 Property and equipment, net 173 212 Goodwill, net 668 683 Deferred sample books, net 1,366 1,696 Other assets -- 40 -------------- ------------- $ 6,413 $ 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
September 30, December 31, 1996 1995 ---- ---- (Unaudited) Current Liabilities: Accounts payable $ 1,420 $ 1,901 Current portion of capitalized lease obligations -- 3 Current portion of long-term debt 400 400 Accrued compensation and employee benefits 547 449 Accrued expenses 383 381 -------------- ------------- Total current liabilities 2,750 3,134 Long-term debt 1,825 2,642 Accrued stock appreciation rights 356 356 Capital lease obligations, less current portion 1 3 Other liabilities 201 201 -------------- ------------- 5,133 6,336 Stockholders' equity: Common stock, no par value; authorized 12,000,000 shares, issued and outstanding 5,283,114 shares at September 30, 1996 and December 31, 1995 15,800 15,800 Additional paid-in capital 10 10 Accumulated deficit (14,530) (14,236) -------------- ------------- Total stockholders' equity 1,280 1,574 -------------- ------------- $ 6,413 $ 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 Nine Months Ended September 30, September 30, --------------------------- -------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net sales $ 3,093 $ 3,316 $ 9,643 $ 10,319 Costs and expenses: Cost of sales 1,544 1,723 5,205 5,369 Selling, general and administrative 1,411 1,555 4,429 4,638 ----------- ----------- ----------- ----------- Operating income 138 38 9 312 Other income (expense): Interest expense (57) (87) (199) (259) Other (92) (6) (102) (31) ----------- ------------ ----------- ----------- Income (loss) before income taxes (11) (55) (292) 22 Provision for income taxes -- -- (2) (35) ----------- ----------- ----------- ----------- Net income (loss) $ (11) $ (55) $ (294) $ (13) ============ ============ ============ ============ Net income (loss) per common share $ (0.01) $ (0.01) $ (.06) $ -- ============ ============ ============ ============ 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 -- -- -- (294) (294) ---------------- ------------- ----------- ----------- ----------- Balance at September 30, 1996 5,283,114 $ 15,800 $ 10 $ (14,530) $ 1,280 ================ ============= =========== =========== =========== 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)
Nine Months Ended September 30, ------------------------------- 1996 1995 ---- ---- Operating activities: Net (loss) income $ (294) $ (13) Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation 43 48 Amortization of goodwill 15 15 Amortization of deferred sample books 904 660 Amortization of deferred debt commitment fee 40 16 (Increase) decrease in assets: Accounts receivable (159) (210) Inventory 1,144 40 Prepaid expenses and other current assets 88 (89) Increase (decrease) in liabilities: Accounts payable (481) 444 Accrued compensation and employee benefits 98 (18) Accrued expenses 2 36 Other liabilities -- (53) ---------- ---------- Net cash provided by operating activities 1,400 876 ---------- --------- Investing activities: Acquisition of property and equipment (4) (57) Purchase of deferred sample books (574) (1,286) ---------- --------- Net cash used in investing activities (578) (1,343) ---------- --------- Financing activities: Net (repayments) borrowings on long-term bank debt (817) 521 Payment of deferred debt commitment fee -- (52) Principal payments on capital lease obligations (5) (2) ---------- --------- Net cash (used for) provided by financing activities $ (822) $ 467 ----------- --------- 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)
Nine Months Ended September 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 $ 199 $ 290 Income taxes -- 59 The accompanying notes are an integral part of these consolidated financial statements.
7 BELL NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 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 nine months ended September 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. The Company'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. Nine Months Ended September 30, 1996 The Company had net sales of $9,643,000, cost of goods sold of $5,205,000, selling, general and administrative expenses of $4,429,000 and operating income of $9,000 during the first nine months of 1996. Operating income was reduced by interest expense of $199,000, other expense of $102,000 and income taxes of $2,000 resulting in a net loss of $294,000. Nine Months Ended September 30, 1995 The Company had net sales of $10,319,000, cost of goods sold of $5,369,000, selling, general and administrative expenses of $4,638,000 and operating income of $312,000 during the first nine months of 1995. Operating income was reduced by interest expense of $259,000, other expense of $31,000, income taxes of $35,000 resulting in a net loss of $13,000. Comparison of Nine Months 1996 Results to 1995 Sales for the first nine months of 1996 decreased by $676,000 compared to the corresponding period in 1995. The first nine months of 1996 decrease is identifiable to declines in upholstery fabric of $433,000, Warner Fabric $252,000, samples $114,000, other of $110,000 and drapery of $77,000, offset by an increase in multipurpose fabric of $310,000 in comparison to the same period of the prior year. The gross profit for the first nine months of 1996 was 46.0% compared to 48.0% for the same period in 1995. In the second quarter of 1996 a reserve approximating 1.4% of the nine months margin drop-off was booked. The remaining gross profit percentage decrease results from a change in product mix due to a larger segment of sales from the drapery manufacturing area and fixed manufacturing costs becoming a larger component of overall costs with decreased revenue. 8 Selling, general and administrative costs for the first nine months of 1996 were $209,000 lower than the same period of 1995. Reduced sampling expenses in the sales and marketing area account for most of this decrease. Interest expense decreased by $60,000 in 1996 primarily due to a lower debt balance in comparison to the same period of the prior year. Other expenses were $71,000 higher in the first nine months of 1996 versus 1995. This includes $25,000 of accelerated debt amortization with the remainder falling into other categories. The net loss of $294,000 in the first nine months of 1996 compared to a net loss of $13,000 for the same period of 1995 resulted in a loss per share of $0.06 for the first nine months of 1996 compared to $0.00 for the same period in 1995. Quarter Ended September 30, 1996 The Company had net sales of $3,093,000, cost of goods sold of $1,543,000, selling, general and administrative expenses of $1,414,000 and operating income of $136,000 during the third quarter of 1996. Operating income was reduced by interest expense of $58,000, other expense of $91,000 and income taxes of $(2,000) resulting in a net loss of $11,000. Quarter Ended September 30, 1995 The Company had net sales of $3,316,000, cost of goods sold of $1,723,000, selling, general and administrative expenses of $1,555,000 and operating income of $38,000 during the third quarter of 1995. Operating income was reduced by interest expense of $87,000, other expense of $6,000 resulting in a net loss of $55,000. Comparison of Third Quarter 1996 Results to 1995 Sales for the third quarter of 1996 decreased by $223,000 compared to the corresponding period in 1995. The third quarter 1996 decrease is identifiable to declines in upholstery fabric of $157,000, Warner Fabric $81,000, samples $55,000, other of $53,000, offset by an increase in multipurpose fabric of $85,000 and draperies of $38,000 in comparison to the same period of the prior year. The gross profit for the third quarter of 1996 was 50.1% compared to 48.0% for the same period in 1995. Selling general and administrative costs for the third quarter of 1996 were $144,000 lower than the same period of 1995. This is mostly related to reduced sampling expenses in the sales and marketing area. Interest expense decreased by $30,000 in the third quarter of 1996 primarily due to a lower debt balance in comparison to the same period of the prior year. Other expenses were $86,000 higher in the third quarter of 1996 versus 1995. This includes $27,000 of accelerated amortization with the remainder falling into other categories. The net loss of $11,000 in the third quarter of 1996 compared to a net loss of $55,000 for the same period of 1995 resulted in a loss per share of $0.01 for the third quarter of 1996 compared to a similar loss of $0.01 for the same period in 1995. 9 Liquidity and Capital Resources Available Resources. 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. 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. 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 nine months of 1996 the Company generated $1,400,000 of cash from operations compared to $876,000 during the corresponding period in 1995. The larger cash flow from operations in 1996 resulted from a decrease in inventory somewhat offset by a decrease in accounts payable. The cash generated from operations in 1996 was used to purchase $574,000 of deferred sample book inventory, purchase $4,000 of equipment and to pay down bank debt by $817,000. During the first nine months of 1995, the Company generated $876,000 of cash from operations compared to $499,000 during the corresponding period in 1994. Greater cash was generated from operations in 1995 primarily as a result of an increase in account payable and accrued expenses during the first nine months of 1995 compared to a decrease in accounts payable and accrued expenses in the first nine months of 1994 partially offset by lower earnings in 1995. Accounts receivable, inventory and prepaid expenses and other current assets increased by $259,000 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 $462,000 in 1995. The increase in current liabilities was primarily the result of an increase in accounts payable balance at September 30, 1995 compared to December 31, 1994. The operating cash generated in 1995 and borrowing on long term bank debt of $521,000 was used to purchase $1,286,000 of inventory sample books, purchase property and equipment of $57,000 reduce capitalized lease obligations by $2,000 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 assertions as to the outcome of these discussions. 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: November 11, 1996 /s/ Alexander M. Milley -------------------------------------------- Alexander M. Milley, Chairman of the Board and Secretary Date: November 11, 1996 /s/ Thomas R. Druggish -------------------------------------------- Thomas R. Druggish, Chief Financial Officer (Principal Financial Officer and Accounting Officer) 11 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: November 11, 1996 /s/ Alexander M. Milley -------------------------------------------- Alexander M. Milley, Chairman of the Board and Secretary Date: November 11, 1996 /s/ Thomas R. Druggish -------------------------------------------- Thomas R. Druggish, Chief Financial Officer (Principal Financial Officer and Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 SEP-30-1996 0 0 1,241,000 94,000 2,939,000 4,206,000 173,000 926,000 6,413,000 2,750,000 0 0 0 15,800,000 (14,520,000) 6,413,000 9,643,000 9,643,000 5,205,000 9,634,000 102,000 0 199,000 (292,000) 2,000 (294,000) 0 0 0 (294,000) (0.06) (0.06)
-----END PRIVACY-ENHANCED MESSAGE-----