-----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, Lr17O3L085cQEtUNBFk0GYCrZ+MOYKceidoEEMO0Lzy4YgJM6nODKR+J1sPdioKg 47rdmV3lusv7Hzb9VCT6KQ== 0000793500-97-000002.txt : 19970514 0000793500-97-000002.hdr.sgml : 19970514 ACCESSION NUMBER: 0000793500-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL SANITARY SUPPLY CO CENTRAL INDEX KEY: 0000793500 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 311079482 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14827 FILM NUMBER: 97601645 BUSINESS ADDRESS: STREET 1: 225 E FIFTH STREET 2: 2900 CHEMED CENTER CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137626500 MAIL ADDRESS: STREET 1: 255 E FIFTH STREET STREET 2: 2900 CHEMED CENTER CITY: CINCINNATI STATE: OH ZIP: 45202 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1997 Commission File Number 0-14827 NATIONAL SANITARY SUPPLY COMPANY - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 31-1079482 - ------------------------------------------------------------------------------ (State or other jurisdiction of (IRS Employer Identification incorporation of organization) No.) 255 E. 5th St, Suite 2900 Cincinnati, OH 45202-4790 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (513) 762-6500 - ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) 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 --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Amount Date - ----- ------ ---- Common Stock 6,221,556 Shares April 30, 1997 $1 Par Value Page 1 of 9 NATIONAL SANITARY SUPPLY COMPANY Index
Page No. Part I. Financial Information: -------- Item 1. Financial Statements: Consolidated Balance Sheet-- March 31, 1997 and December 31, 1996 . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Statement of Income-- Three months ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . 4 Consolidated Statement of Cash Flows-- Three months ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . 7 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 8
Page 2 of 9 Part I. Financial Information Item 1. Financial Statements NATIONAL SANITARY SUPPLY COMPANY CONSOLIDATED BALANCE SHEET (Unaudited)
March 31, December 31, (thousands, except share data) 1997 1996 - ----------------------------------- ----------- ------------ ASSETS Current assets: Cash $ 2,032 $ 1,425 Accounts receivable, less allowances (1997- $1,043; 1996- $1,071) 34,684 34,856 Inventories 26,335 27,614 Deferred income taxes 2,349 2,366 Prepaid expenses and other current assets 1,872 1,088 ---------- ----------- Total current assets 67,272 67,349 Properties and equipment, at cost, less accumulated depreciation 22,376 21,992 Goodwill, less accumulated amortization 25,894 25,872 Other assets 1,072 771 ---------- ----------- Total assets $ 116,614 $ 115,984 ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 20,195 $ 19,424 Accrued liabilities 12,125 13,349 Loans payable to Chemed Corporation 1,112 540 Current portion of notes to Chemed Corporation 9,000 1,000 ---------- ----------- Total current liabilities 42,432 34,313 Notes to Chemed Corporation 6,000 14,000 Deferred income taxes 817 849 Other noncurrent liabilities 1,339 1,298 ---------- ----------- Total liabilities 50,588 50,460 ---------- ----------- Stockholders' equity: Preferred stock - 1,000,000 shares authorized, $1 par value (none issued) - - Common stock - 7,000,000 shares authorized, $1 par value (issued: 1997- 6,708,738 shares; 1996- 6,601,918 shares) 6,709 6,644 Paid-in capital 28,347 27,658 Retained earnings 35,628 35,499 Treasury stock, at cost (1997- 511,523 shares; 1996- 463,986 shares) (4,658) (4,277) ---------- ----------- Total stockholders' equity 66,026 65,524 ---------- ----------- Total liabilities and stockholders' equity $ 116,614 $ 115,984 ========== ===========
The accompanying notes are an integral part of the financial statements. Page 3 of 9 NATIONAL SANITARY SUPPLY COMPANY CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended March 31, ----------------------------- (thousands, except per share data) 1997 1996 - ---------------------------------- --------- --------- Sales $ 74,349 $ 77,277 Cost of sales 49,491 52,412 --------- --------- Gross profit 24,858 24,865 --------- --------- Expenses and other income: Operating expenses 23,198 22,759 Amortization of goodwill 226 222 Chemed Corporation interest 371 430 Other income, net (50) (54) --------- --------- Total expenses and other income 23,745 23,357 --------- --------- Income before income taxes 1,113 1,508 Income taxes 488 676 --------- --------- Net income $ 625 $ 832 ========= ========= Earnings per share $ 0.10 $ 0.14 ========= ========= Cash dividends paid per share $ 0.080 $ 0.075 ========= ========= Average shares outstanding 6,181 6,123 ========= ========= The accompanying notes are an integral part of the financial statements.
Page 4 of 9 NATIONAL SANITARY SUPPLY COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, -------------------------- (thousands of dollars) 1997 1996 - ---------------------------------------------- --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 625 $ 832 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 845 829 Amortization of goodwill and deferred charges 376 331 Deferred income tax provision (15) (88) Provision for losses on accounts receivable 141 163 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Decrease in accounts receivable 206 4,162 Decrease in inventories 1,362 3,666 Increase in other assets (838) (287) Increase/(decrease) in accounts payable 771 (1,705) Decrease in other liabilities (1,178) (1,689) --------- -------- Net cash provided by operating activities 2,295 6,214 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Business combinations (505) (10) Capital expenditures (1,219) (793) Other 14 36 --------- -------- Net cash used for investing activities (1,710) (767) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from/(payments on)loans payable to Chemed Corporation 572 (4,428) Principal payments on other long-term debt (5) (12) Dividends paid (496) (459) Purchase of common stock (49) (60) --------- -------- Net cash provided by/(used for)financing activities 22 (4,959) --------- -------- Increase in cash equivalents 607 488 Cash and cash equivalents at beginning of period 1,425 1,491 --------- -------- Cash and cash equivalents at end of period $ 2,032 $ 1,979 ========= ======== The accompanying notes are an integral part of the financial statements.
Page 5 of 9 NATIONAL SANITARY SUPPLY COMPANY Notes to Consolidated Financial Statements (unaudited) NOTE A. The accompanying unaudited financial statements have been prepared in accordance with Rule 10-01 of SEC Regulation S-X. Consequently, they do not include all the disclosures required under generally accepted accounting principles for complete financial statements. However, in the opinion of the management of National Sanitary Supply Company ("National"), the financial statements presented herein contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position, the results of operations, and cash flows of National and its subsidiaries for the periods indicated. For additional information concerning the accounting policies of National, refer to the consolidated financial statements included in the 1996 Annual Report on Form 10-K filed with the SEC on March 28, 1997. NOTE B. Earnings per common share are computed on the basis of the weighted average number of shares of common stock outstanding during the respective periods. The dilution that would result from shares issuable under National's Stock Incentive Plans is not material. NOTE C. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share, effective for reporting periods ending after December 15, 1997. Adoption of SFAS 128 in December 1997 will not impact the Company's reported earnings per share. Page 6 of 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- National Sanitary Supply Company reported net income for the first quarter ended March 31, 1997 of $625,000, a 25% decrease from net income of $832,000 reported in the prior-year first quarter. Earnings per share of $.10 in the first quarter of 1997 decreased 29% from earnings per share of $.14 reported in the comparable prior-year quarter. Sales of $74,349,000 for the first quarter of 1997 were 4% below sales of $77,277,000 in the first quarter of 1996. National's unfavorable first-quarter sales and earnings comparisons reflect a combination of factors. First, as expected, the loss of a large fast-food customer during 1996 continued to temper our sales and earnings comparisons during the first quarter, since the first quarter of 1996 was the last quarter in which we still benefited from sales to this customer. Second, deflationary pricing in our paper product lines unfavorably impacted sales growth and profitability. Third, there was one less billing day in the first quarter of 1997 than in 1996. Tight control over operating expenses and aggressive market- ing programs helped to mitigate the impact of these factors. National's first quarter 1997 gross profit margin of 33.4% increased 1.2% point from 32.2% in the first quarter of 1996 reflecting the loss of low-margin sales to the large fast-food customer. Operating expenses increased 2% during the first quarter of 1997 compared with the prior year reflecting the loss of the large fast-food account as well as tight control over expenses. The decrease in interest expense from Chemed Corporation ("Chemed") from $430,000 in the first quarter of 1996 to $371,000 in the first quarter of 1997 reflects a reduction in Chemed debt. From March 31, 1996 to March 31, 1997 Chemed debt decreased $2,449,000. The effective tax rate decreased from 44.8% during the first quarter of 1996 to 43.8% during the first quarter of 1997, primarily due to lower profits in states with higher tax rates. Liquidity and capital resources - ------------------------------- The decrease in inventories reflects a continuing objective to consolidate vendors in key product lines and a reduction in inventories at certain sales branch locations. The reduction in accrued liabilities primarily reflects the payment of 1996 incentive-oriented programs. Management believes that the company's cash flow from operations and other sources of liquidity are sufficient for its needs. Page 7 of 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits --------
SK 601 Exhibit No. Ref. No. Description Page No. - ----------- -------- ----------- -------- 1 (11) Statement re: E-1 Computation of Earnings Per Share 2 (27) Financial Data Schedule E-2
(b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the quarter ended March 31, 1997. 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. National Sanitary Supply Company -------------------------------- (Registrant) Date May 15, 1997 By /s/Paul C. Voet ------------------ ---------------------------------- Paul C. Voet President and Chief Executive Officer Date May 15, 1997 By /s/Gary H. Sander ------------------ ---------------------------------- Gary H. Sander Senior Vice President, Treasurer, and Chief Financial Officer Page 8 of 9 EX-11 2 EXHIBIT 11 NATIONAL SANITARY SUPPLY COMPANY COMPUTATION OF EARNINGS PER SHARE (a) (UNAUDITED)
Three Months Ended (thousands, except per share data) March 31, - ---------------------------------- ------------------------- 1997 1996 ------- ------- Computation of Earnings Per Common and Common Equivalent Share Net Income $ 625 $ 832 ======= ======= Average Number of Shares of Common Stock Outstanding 6,181 6,123 Incremental Effect of Unexercised Stock Options 73 65 ------- ------- Average Number of Shares of Common Stock and Common Stock Equivalents Outstanding 6,254 6,188 ======= ======= Earnings per Common and Common Equivalent Share $ 0.10 $ 0.13 ======= ======= Computation of Earnings Per Common Share Assuming Full Dilution Net Income $ 625 $ 832 ======= ======= Average Number of Shares of Common Stock Outstanding 6,181 6,123 Incremental Effect of Unexercised Stock Options 73 100 ------- ------- Average Number of Shares of Common Stock assuming Full Dilution 6,254 6,223 ======= ======= Earnings Per Common Share Assuming Full Dilution $ 0.10 $ 0.13 ======= ======= (a) This calculation is submitted in accordance with the Securities Exchange Act of 1934. Because the incremental effect of unexercised stock options results in dilution of less than 3%, the per share data presented in the consolidated statement of income excludes the impact of common stock equivalents.
E-1 Page 9 of 9 EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10Q FOR THE FIRST QUARTER ENDED MARCH 31, 1997 FOR NATIONAL SANITARY SUPPLY COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000793500 NATIONAL SANITARY SUPPLY CO 1000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 2,032 0 32,446 (1,043) 26,335 67,272 46,399 (24,023) 116,614 42,432 6,000 0 0 6,709 59,317 116,614 74,349 74,349 49,491 49,491 0 141 374 1,113 488 625 0 0 0 625 .10 .10
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