FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995
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 No. 1-7117
General Housewares Corp.
(Exact name of Registrant as specified in its Charter)
Delaware 41-0919772
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1536 Beech Street 47804
Terre Haute, Indiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (812) 232-1000
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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 or No
Indicate the number of shares outstanding of each of the
Registrant's classes of Common Stock as of the latest practicable
date.
Class of Common Stock Outstanding at Oct 31, 1995
$.33 1/3 Par Value 3,754,155
GENERAL HOUSEWARES CORP.
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Statements of Income
and Retained Earnings
Three months and nine months ended
September 30, 1995 and 1994
Consolidated Condensed Balance Sheets
September 30, 1995 and December 31, 1994
Consolidated Condensed Statements of Cash Flows
Nine months ended September 30, 1995 and 1994
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I FINANCIAL INFORMATION
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands except per share amounts)
Consolidated Condensed Statements of
Income and Retained Earnings
(Unaudited)
For the three months For the nine months
ended September 30, ended September 30,
1995 1994 1995 1994
Net sales $30,529 $25,908 $83,383 $62,388
Cost of goods sold 20,013 16,421 54,276 39,764
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Gross profit 10,516 9,487 29,107 22,624
Selling, general and
administrative
expenses 8,649 7,356 25,273 19,548
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Operating income 1,867 2,131 3,834 3,076
Interest expense,
net 842 379 2,226 982
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Income from
operations
before income
taxes 1,025 1,752 1,608 2,094
Income taxes 420 718 664 859
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Net income for
the period 605 1,034 944 1,235
Retained earnings,
beginning
of period 29,770 28,042 30,029 28,368
Less: Dividends
($.08 per common
share per quarter
in 1995 and 1994) 299 265 897 792
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Retained earnings,
end of period $30,076 $28,811 $30,076 $28,811
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------- ------- ------- -------
Earnings per common share:
Net income $0.16 $0.31 $0.25 $0.37
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------- ------- ------- -------
See notes to consolidated condensed financial statements.
PART I FINANCIAL INFORMATION
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands)
Consolidated Condensed Balance Sheets
As of
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 53 $ 2,993
Accounts receivable, less
allowances of $3,246
($5,312 in 1994) 19,933 16,854
Inventories 33,948 20,841
Deferred tax asset 2,078 2,184
Other current assets 900 905
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Total current assets 56,912 43,777
Property, plant & equipment, net 13,623 13,001
Other assets 6,802 7,455
Patents and other intangible
assets 3,977 4,294
Cost in excess of net assets
acquired 29,246 29,831
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$110,560 $98,358
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-------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 900 $ -
Current maturities of long-term
debt 1,173 1,122
Deferred payment obligation - 2,382
Accounts payable 4,204 3,544
Salaries, wages and related
benefits 3,379 2,525
Accrued liabilities 3,752 2,729
Income taxes payable 248 1,141
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Total Current Liabilities 13,656 13,443
Long-term debt 42,133 30,809
Deferred liabilities 3,883 3,851
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Stockholders' equity:
Preferred stock - $1.00 par value:
Authorized - 1,000,000 shares
Common stock - $.33-1/3 par value:
Authorized - 10,000,000 shares
Outstanding - 1995 - 3,997,694
and 1994 - 3,966,705 shares 1,332 1,324
Capital in excess of
par value 23,057 22,708
Treasury stock at cost - 1995
and 1994 - 243,760 shares (3,216) (3,216)
Retained earnings 30,076 30,029
Cumulative translation
adjustment 14 (215)
Minimum pension liability (375) (375)
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Total stockholders' equity 50,888 50,255
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$110,560 $98,358
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-------- -------
See notes to consolidated condensed financial statements.
GENERAL HOUSEWARES CORP. & SUBSIDIARIES
(Dollars in thousands)
Consolidated Condensed Statements of Cash Flows
(Unaudited)
For the nine months
ended September 30,
1995 1994
Cash flows from operating activities:
Net income $ 944 $1,235
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation and amortization 3,168 2,759
Foreign exchange loss 97 -
Compensation related to
stock awards 95 45
Increase in deferred liabilities 138 44
(Increase) decrease in assets:
Accounts receivable (3,059) (5,309)
Inventory (13,054) (5,053)
Other assets 540 384
Increase (decrease) in operating
liabilities:
Accounts payable 655 1,289
Salaries, wages & related
benefits 854 267
Accrued liabilities 1,050 587
Income taxes payable (893) (350)
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Net cash used for operating
activities (9,465) (4,102)
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Cash flows from investing activities:
Additions to property, plant
and equipment (2,654) (1,813)
Payments for acquisitions - (5,815)
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Net cash used for investing
activities (2,654) (7,628)
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Cash flows from financing activities:
Increase in current maturities - 2,653
Payment of deferred obligation (2,811) 1,363
Increase in notes payable 900 -
Collection of notes receivable - 886
Long-term debt borrowing 11,707 6,695
Proceeds from stock options and
employee purchases 262 200
Dividends paid (896) (792)
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Net cash provided by financing
activities 9,162 11,005
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Net decrease in cash and cash
equivalents (2,957) (725)
Cash and cash equivalents at
beginning of year 2,993 785
Effect of exchange rate on cash 17 -
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Cash and cash equivalents at end
of period $ 53 $ 60
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------- -------
See notes to consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
Note 1 - General
The accompanying interim Consolidated Condensed Financial
Statements have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations.
However, in the opinion of management, the financial statements
included herein reflect all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the
financial information for the periods presented. The interim
Consolidated Condensed Financial Statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's 1994 Annual Report on Form
10-K.
Note 2 - Inventories
September 30, December 31,
1995 1994
Inventories consisted of:
Raw materials $ 5,361 $ 4,293
Work in process 4,482 2,292
Finished goods 26,150 16,064
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$35,993 $22,649
LIFO Reserve (2,045) (1,808)
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Total $33,948 $20,841
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Note 3 - Properties
September 30, December 31,
1995 1994
Land $ 674 $ 674
Buildings 4,245 4,245
Equipment 30,836 28,129
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Total 35,755 33,048
Less Depreciation 22,132 20,047
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Total, net $13,623 $13,001
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in thousands)
Referring to the Company's financial condition as of September
30, 1995 as contrasted with December 31, 1994, inventories,
accounts receivable and current liabilities have all increased.
The increase in inventories is due to Company-wide goals of
improving customer service in the fourth quarter of 1995 coupled
with sales below forecast in the third quarter of 1995. The
increase in accounts receivable and current liabilities reflect
the seasonal nature of the Company's business as sales and
purchasing activity both peak in the late third/early fourth
quarter of the year.
Net sales for the three month period ended September 30, 1995
were $30,529, an increase of 18% over net sales of $25,908 for
the same period in 1994. Net sales for the nine month period
ended September 30, 1995 were $83,383, an increase of 34% over
net sales of $62,388 for the same period in 1994. The increases
stem primarily from acquisitions made in the third and fourth
quarters of 1994 as well as market penetration in certain of the
Company's product lines -- predominately kitchen tools and
imported cutlery. Revenue increases tied to acquisitions
represent approximately $5,000 and $16,500 of the sales growth
for the three month and nine month periods ended September 30,
1995, respectively. Third quarter 1995 gross profit increased
from $9,487 in 1994 to $10,516, primarily due to increased sales
volume. As a percentage of sales, gross profit in the third
quarter of 1995 dropped 2% from the same period in 1994. This
decrease is primarily a result of an unfavorable sales mix.
Gross profit for the nine months ended September 30, 1995 was
$29,107, an increase of $6,483 over gross profit for the same
period in 1994. This increase is also due primarily to increased
sales volume. Gross profit margin percentage for the nine month
period decreased slightly from the prior year due primarily to an
unfavorable sales mix.
Selling, general and administrative expenses for the three month
period ended September 30, 1995 were $8,649 as compared to $7,356
in the prior year three month period. These same expenses were
$25,273 and $19,548 for the nine months ended September 30, 1995
and 1994, respectively. Increased selling, general and
administrative costs were due primarily to 1994 acquisitions which
accounted for $962 and $3,616 of increased costs in the three and
nine months ended September 30, 1995, respectively. Increased
environmental remediation costs were primarily responsible for the
remainder of the three month increase. Increased environmental
remediation costs, increased incentive payments to former owners
of the kitchen tool product line (under an agreement which expires
in the fourth quarter of 1995) and costs related to streamlining
manufacturing and distribution locations accounted for the
remainder of the nine month increase. That increase was partially
offset by a favorable reserve adjustment, which related to
cooperative advertising; it represented a change in the estimated
number and amount of advertising commitments that customers would
utilize and deduct from future payments.
Operating income for the three month period ended September 30,
1995 decreased by $264 from the same period in 1994. Operating
income in the first nine months of 1995 increased by $758 over
the same period in 1994. Interest expense for the third quarter
of 1995 was $842 as compared to $379 for the same period of 1994.
For the first nine months of 1995, interest expense increased
from $982 to $2,226. Increased debt related to the 1994
acquisitions and working capital needs to support improved
customer service were primarily responsible for the increases in
interest expense. Net income for the third quarter of 1995 was
$605 as compared to $1,034 for the same period last year; related
quarterly earnings per share dropped from $0.31 in 1994 to $0.16
in 1995. Net income for the first nine months of 1995 was $944
as compared to $1,235 for the same period of last year and
related earnings per share dropped from $0.37 to $0.25. Year-to-date earnings
per share were calculated on 3,769 weighted average
shares as compared to 3,333 for the same period last year,
reflecting additional shares issued in connection with the 1994
acquisition activity.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - There were no reports on Form 8-K
filed for the three months ended September 30, 1995.
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.
GENERAL HOUSEWARES CORP.
Dated: November 7, 1995 By /s/Robert L. Gray
--------------------------------
Robert L. Gray
Vice President Finance
and Treasurer
By /s/Mark S. Scales
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Mark S. Scales
Corporate Controller
Chief Accounting Officer
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
11. Statement of Computation of Earnings per share included
herein as Exhibit 11.
27. Financial Data Schedule.