SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 4, 1995 .
------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0-2331
------------
GLASSMASTER COMPANY
- - ----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0283724
- - ------------------------------------------ -----------------------
(State or other jurisdiction of (IRS Employer
Incorporation of organization Identification No.)
PO Box 788, Lexington SC 29071
- - ------------------------------------------ -----------------------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, including area code: 803-359-2594
---------------------------
No Change
- - ----------------------------------------------------------------------------
(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
YES X NO
----- -----
(2) Has been subject to such filing requirements for the past 90 days
YES X NO
----- -----
Common shares outstanding June 4, 1995: 1,601,737 par value $0.03
-----------------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Glassmaster Company
Consolidated Comparative Balance Sheet
(Thousands)
June 4, 1995
(Unaudited) August 31, 1994
------------------ ------------------
ASSETS
Current Assets:
Cash $ 120 $ 91
Accounts Receivable (Net of Reserve) 4,391 2,910
Other Current Receivables 172 364
Inventories:
Raw Materials $ 1,925 $ 1,176
Work in Process 526 399
Finished Products 681 3,132 407 1,982
Prepaid Expenses and Other Current Assets ------- 57 ------- 8
-------- -------
Total Current Assets 7,872 5,355
Fixed Assets (Net of Dep'n)
Property and Equipment (at cost) 5,580 4,339
Other Assets
CSV Life Insurance and Other Unamortized Assets 235 284
-------- -------
Total Assets $13,687 $ 9,978
======== =======
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 2,424 $ 1,424
Accrued Expenses 423 438
Accrued Income Taxes (86) 224
Deferred Income Taxes 28 28
Notes & Mortgages Payable 3,741 1,942
-------- -------
Total Current Liabilities 6,530 4,056
Long Term Liabilities
Notes & Mtges, Due After One Year $ 3,265 $ 2,546
Deferred Income Taxes 433 3,698 263 2,809
------- -------- ------- ------
Total Liabilities 10,228 6,865
Stockholders' Equity
Capital Stock (Authorized 5,000,00 Shares $0.03
Par - 1,601,737 (1995), 1,582,329 (1994)
Shares Issued and Outstanding $ 48 $ 48
Paid-In Capital 1,323 1,264
Donated Capital 124 124
Retained Earnings 1,964 3,459 1,677 3,113
------- -------- ------- -------
Total Liabilities and Equity $13,687 $ 9,978
======== =======
Glassmaster Company
Consolidated Comparative Income Statement
(In thousands except per share amounts)(Unaudited)
Three Months Ended Nine Months Ended
June 4, May 29, June 4, May 29,
1995 1994 1995 1994
-------------------- -------------------
Net Sales $ 6,531 $ 6,301 $18,400 $17,070
Cost of Sales 5,615 4,937 15,311 13,420
-------- ------- ------- -------
Gross Profit 916 1,364 3,089 3,650
Expenses:
Selling 297 261 902 775
General and Administrative 285 235 855 671
Other Income and Expense - Net 243 308 776 822
-------- ------- ------- -------
Total Expenses 825 804 2,533 2,268
Income From Operations 91 560 556 1,382
Interest Expense 151 105 396 301
-------- ------- -------- -------
Income Before Income Taxes and
Extraordinary Item (60) 455 160 1,081
Income Taxes (19) 174 64 400
-------- ------- -------- -------
Income Before Extraordinary Item (41) 281 96 681
Extraordinary Gain - Storm Damage
(Net of Income Taxes of $170,772) 0 0 287 0
-------- ------- -------- -------
Net Income $ (41) $ 281 $ 383 $ 681
======== ======= ======== =======
Net Income Per Share (1,577,329 Shares) $ 0.18 $ 0.43
Net Income Per Share (1,601,737 Shares) $ (0.03) $ 0.24
Dividends Paid Per Share $ 0.00 $ 0.00 $ 0.06 $ 0.05
========= ======= ======== =======
Glassmaster Company
Consolidated Statement of Cash Flows
(Thousands)(Unaudited)
Nine Months Ended
June 4, 1995 May 29, 1994
-------------- --------------
Cash Flows From Operating Activities
Net Income $ 383 $ 681
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation 551 385
Amortization 6 15
Loss on Disposal of Assets 45 45
Increase in Deferred Income Taxes 171 0
Changes in Operating Assets & Liabilities:
Decrease (Increase) in Receivables (1,317) (1,044)
Decrease (Increase) in Inventories (1,149) (408)
Decrease (Increase) in Prepaid Expenses &
Other Current Assets (21) (4)
Increase (Decrease) in Accounts Payable 1,140 142
Increase (Decrease) in Accrued Expenses (466) 335
-------- --------
Net Cash Provided (Used) By Operating Activities (657) 147
-------- --------
Cash Flows From Investing Activities
Additional Investment in Fixed Assets 1,835 442
Disposal of Fixed Assets - Net Book Value (42) 0
Increase (Decrease) in CSV Life Insurance (1) 9
Additional Investment in Other Assets 3 0
Payment of Dividend 96 79
-------- --------
Net Cash Used By Investing Activities 1,891 530
-------- --------
Cash Flows From Financing Activities
Proceeds from Exercise of Stock Options 13 16
Proceeds from Conversion of Debentures to Common Stock 47 0
Proceeds from Short-Term Borrowings 648 100
Repayment of Short-Term Borrowings (599) (167)
Proceeds from Long-Term Obligations 1,430 116
Repayment of Long-Term Obligations (712) (391)
Net Increase (Decrease) in Short-Term Revolving
Line of Credit 1,750 739
-------- --------
Net Cash Provided By Financing Activities 2,577 413
-------- --------
Net Increase (Decrease) In Cash 29 30
Cash At Beginning of Period 91 115
-------- --------
Cash At End of Period $ 120 $ 145
======== ========
Supplemental Disclosures of Cash Flow Information
Cash Paid For:
Interest (Net of Amount Capitalized) $ 436 $ 332
Income Taxes 375 129
Glassmaster Company
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the nine-month period ended June 4, 1995 are not necessarily indicative of
the results that may be expected for the year ended August 31, 1995. For
further information, refer to the Consolidated Financial Statements and Notes
to Financial Statements included in the Company's Annual Report on Form 10-
KSB for the year ended August 31, 1994. Certain prior year amounts may have
been reclassified to conform with the 1995 presentation.
Item 2. Management's Discussion and Analysis
RESULT OF OPERATIONS
Net sales for the third quarter ended June 4, 1995 were $6,530,810, an
increase of approximately 4% when compared to the third quarter of the 1994
fiscal year. Year-to-date sales of $18,400,279 are 8% ahead of last year's
nine-month period sales of $17,070,554. The increase in third quarter sales
can be attributed to a 35% increase in sales by the Company's wholly-owned
subsidiary, Glassmaster Controls Co. ("Controls"). Monofilament Division
sales were unchanged when compared with the prior year quarter and Industrial
Products Division sales decreased by approximately 7% versus last year's
third quarter sales. Year-to-date sales have increased when compared to the
prior year due to a 26% increase in sales by Controls and a 7% increase in
sales at Monofilament. Industrial Products year-to-date sales have decreased
by 9% when compared to last year's nine-month period. Customer orders for
current period shipments as of the end of the third quarter are 63% ahead of
the prior year at Controls while orders on hand are 4% lower at Industrial
Products and 35% less than the prior year at Monofilament.
Gross profit margins from third quarter sales were 14% compared to 21.6%
during the third quarter of the prior fiscal year and 18.6% in the second
quarter of this fiscal year. Year-to-date gross profit has declined from
21.4% of last year's sales to 16.8% of sales through the first nine months of
the current fiscal year. The decrease in profit margins during the third
quarter can be attributed primarily to increases in raw material costs at
each of the operating divisions. Producers of engineering resins have raised
prices consistently since January 1, 1995. These price increases had a
particularly negative impact on Monofilament gross margins due to the
inability to raise selling prices along some product lines because of pricing
committments to certain customers on shipments through July, 1995.
Adjustments to selling prices will have been made along all product lines by
the end of the fiscal year attempting to pass along these higher costs.
Year-to-date gross margins have been impacted by the aforementioned material
cost increases and by manufacturing inefficiencies at Controls that resulted
from the relocation to a new facility during the first and second quarters.
Selling expenses are slightly higher this year to date as a percent of sales
compared to last year primarily due to increased product delivery costs at
Monofilament and increased advertising at Industrial Products. General and
Administrative and Other expenses are higher due to increased costs
associated with employee benefit plans. Interest Expense has increased 31%
year to date compared to last year due to higher average interest rates and
additional debt at Controls necessary to finance building and equipment
acquisitions and provide additional working capital required.
Third quarter Income (Loss) Before Taxes and Extraordinary Items was
($60,214) this year compared to $454,667 last year with year-to-date totals
of $160,126 this year and $1,081,748 last year. The Provision for Income
Taxes was $63,934 through the first nine months of this fiscal year compared
to $400,620 last year. The Net Consolidated Loss for the third quarter was
($40,717) versus last year's third quarter net income of $280,960. Year-to-
date Net Income of $383,253 this year compares to $681,128 last year.
LIQUIDITY AND CAPITAL RESOURCES
The working capital of the company improved by $255,000 during the third
quarter primarily due to the conversion of short-term revolver debt to long-
term debt at Controls. Working Capital as of the end of the third quarter
totaled $1,343,000, an increase of $119,000 compared to the prior year third
quarter. The company has invested approximately $1.8 million in buildings,
equipment, and tooling during the current fiscal year primarily to add
productive capacity at Monofilament and Controls. These capital additions
have been funded primarily by additional long-term debt ($1.4 million) with
the balance funded by working capital generated by operations.
Increases in outstanding Accounts Receivable ($1.3 million) and Inventories
($1.2 million) during the first three quarters of this fiscal year led to a
net increase in Operating Assets and Liabilities of $1.8 million (see
Consolidated Statement of Cash Flows). This increased working capital
requirement has been funded primarily by short-term revolving credit
facilities secured by receivables and inventories. In South Carolina, the
Receivables and Inventory Financing Agreement provides for a revolving line
of credit of up to $4.0 million. As of June 4, 1995, total borrowings
against this credit line were $2.5 million. In Michigan, Glassmaster
Controls Company has in place a similar revolving credit line of up to
$500,000 and is secured by accounts receivable. As of June 4, 1995,
borrowings outstanding against this line of credit were $75,000.
The Company currently anticipates that its cash requirements during the
remainder of this fiscal year will be provided by operating activities and
from existing and committed credit facilities.
Glassmaster Company
Lexington SC
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits.
Exhibit No. 27 - Financial Data Schedule
b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter
ended June 4, 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.
GLASSMASTER COMPANY
Date: July 12, 1995 Raymond M. Trewhella
--------------------------------
Raymond M. Trewhella
(President and
Principal Executive Officer)
Date: July 12, 1995 Steven R. Menchinger
--------------------------------
Steven R. Menchinger
(Treasurer, Controller, and
Principal Financial Officer)
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule