SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 31, 1995 Commission File Number 1-9852
CHASE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts 11-1797126
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
Suite 220
50 Braintree Hill Park
Braintree, Massachusetts 02184
(Address of principal executive offices) (Zip 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,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
Common Shares Outstanding as of June 30, 1995 4,459,848
PART 1: FINANCIAL INFORMATION
CHASE CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS May 31 Aug.31
1995 1994
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash $ 27,032 $ 211,041
Trade receivables,less allowance
for doubtful accounts of $138,108,
$100,500, respectively 5,496,639 4,341,944
Note receivable from related party 134,035 131,154
Inventories(Note B)
Finished and in process 2,609,393 1,632,759
Raw materials 2,215,201 2,159,124
----------- ----------
4,824,594 3,791,883
Prepaid expenses & other curr assets 300,700 185,657
Deferred federal taxes 283,243 268,200
----------- ----------
TOTAL CURRENT ASSETS 11,066,243 8,929,879
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 384,490 367,745
Buildings 2,396,162 2,388,447
Machinery & equipment 8,428,061 8,195,659
Construction in progress 928,009 898,127
---------- ----------
12,136,722 11,849,978
Less allowance for depreciation 7,628,422 6,991,545
---------- ----------
4,508,300 4,858,433
OTHER ASSETS
Note receivable from related party 261,820 362,821
Excess of cost over net assets of
acquired businesses less amortization 86,652 90,595
Patents, agreements and trademarks
less amortization 1,360,827 1,434,316
Cash surrender value of life ins. net 2,466,504 2,226,193
Deferred federal taxes 174,281 221,354
Other 7,000 11,027
--------- ----------
4,357,084 4,346,306
---------- ---------
$ 19,931,627 $18,134,618
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY May 31 Aug.31
1995 1994
(UNAUDITED) (AUDITED)
CURRENT LIABILITIES
Accounts payable $ 2,993,643 $ 2,164,553
Notes payable 14,592 0
Accrued expenses 1,877,611 2,146,913
Federal income taxes 26,906 159,606
Deferred compensation 502,216 502,216
Current portion of L.T. debt 678,957 554,896
---------- ----------
TOTAL CURRENT LIABILITIES 6,093,925 5,528,184
LONG-TERM DEBT, less current portion 3,290,258 2,897,976
Long-term deferred compensation
obligations 810,686 1,057,751
STOCKHOLDERS' EQUITY
First Serial Preferred Stock, par value
$1.00 a share authorized 100,000
shares; (issued-none)
Common Stock. par value $.10 a share,
(Note D)
Authorized 10,000,000 shares; issued
and outstanding 4,459,848 shares at
May 31, 1995 and 4,362,848 shares at
Aug. 31, 1994 respectively 445,985 436,285
Additional paid-in capital 2,677,908 2,555,658
Cum. G/(L) on currency translation (113,702) (116,929)
Retained earnings 6,726,567 5,775,693
---------- ----------
9,736,758 8,650,707
--------- ----------
$19,931,627 $18,134,618
See accompanying notes to the consolidated financial
statements and accountants' review report.
CHASE CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(UNAUDITED)
Nine Months Ended 3 Months Ended
May 31 May 31 May 31 May 31
1995 1994 1995 1994
Sales $ 23,817,965 $20,621,345 $ 8,694,676 $ 7,075,756
Comm. and other income 264,037 352,545 76,381 64,399
Interest 36,511 26,817 11,556 14,858
----------- ----------- ----------- ---------
24,118,513 21,000,707 8,782,613 7,155,013
Cost and Expenses
Cost of products sold(Note B) 16,292,604 13,780,223 6,107,029 4,754,644
Sell.,gen. and admin. expen. 5,483,388 5,107,772 1,922,179 1,713,188
Bad debt expense 45,000 142,500 15,000 49,500
Interest expense 252,519 140,492 85,638 53,376
----------- ----------- --------- ----------
22,073,511 19,170,987 8,129,846 6,570,708
Income before Income Taxes 2,045,002 1,829,720 652,767 584,305
Income Taxes* 743,500 732,000 257,300 242,200
----------- ----------- -------- ----------
Net Income $ 1,301,502 $ 1,097,720 $ 395,467 $ 342,105
=========== =========== ========= ==========
Income per share
of Common Stock
Primary $ 0.283 $ 0.247 $ 0.086 $ 0.077
=========== ========== ========= ==========
Fully Diluted $ 0.283 $ 0.246 $ 0.086 $ 0.077
=========== ========== ========= ==========
* State and local taxes previously included in administrative costs
have been reclassified to income tax expense.
See accompanying notes to the consolidated financial statements
and accountants' review report.
CHASE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
9 MONTHS ENDED MAY 31, 1995 AND 1994
Cummulative
Common Stock Additional Effect of Total
Shares Paid-In Retained Currency Shareholders
Issued Amount Capital Earnings Translation Equity
Balance @ Aug. 31, 1993 4,258,348 $ 425,835 $ 2,408,313 $ 4,422,573 $ (85,458) $ 7,171,263
Curr. translation adjmt. (45,679) (45,679)
Net Income for 9 months 1,097,720 1,097,720
Dividends paid in cash
$.06 a share on
common stock (255,501) (255,501)
---------- -------- ---------- ---------- ----------- ------------
Balance @ May 31, 1994 4,258,348 425,835 2,408,313 5,264,792 (131,137) 7,967,803
Curr. translation adjmt. 14,208 14,208
Exer.of stock options 104,500 10,450 147,345 157,795
Net income for 3 months 510,901 510,901
---------- -------- ---------- ---------- ----------- ------------
Balance @ Aug. 31, 1994 4,362,848 436,285 2,555,658 5,775,693 (116,929) 8,650,707
Curr. translation adjmt. 3,227 3,227
Exercise of stock options 97,000 9,700 122,250 131,950
Net income for 9 months 1,301,502 1,301,502
Dividends paid in cash
$.08 a share on
common stock (350,628) (350,628)
---------- -------- ---------- ---------- ----------- ------------
Balance @ May 31, 1995 4,459,848 $ 445,985 $ 2,677,908 $ 6,726,567 $ (113,702) 9,736,758
========== ======== ========== ========== =========== ============
See accompanying notes to the consolidated financial
statements and accountants' review report.
CHASE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
May 31 May 31
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,301,502 $ 1,097,720
Adjmts. to reconcile net income to net
cash provided by operating activities:
Depreciation 625,668 572,944
Amortization 77,707 7,654
(G)/L on sale of fixed asset 0 (95,739)
Provision for losses on accts. receivable 37,608 72,467
Change in assets and liabilities
Trade receivables (1,192,303) (1,175,445)
Inventories (1,032,711) (499,236)
Prepd. expenses & other curr. assets (115,043) (117,775)
Accounts payable 829,090 (389,026)
Accrued expenses (269,302) 156,457
Federal income taxes payable (132,700) 143,808
Deferred federal taxes 32,030 0
Deferred compensation (247,065) (219,498)
Other assets 4,027 7,935
------------ ------------
TOTAL ADJUSTMENTS (1,382,994) (1,535,454)
NET CASH FROM OPERATIONS (81,492) (437,734)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (275,810) (276,630)
Proceeds of equipment sale 0 550
Purchase of cash surrender value (240,311) (176,402)
Mortgage payments received 0 1,461
Proceeds from note receivable 98,120 86,944
Cum. effect of currency translation 3,227 (45,679)
------------ ------------
(414,774) (409,756)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt 4,350,000 6,441,000
Payments of principal on debt (3,833,657) (5,286,991)
Net borrowing under line-of-credit 14,592 66,760
Dividend paid (350,628) (255,501)
Cash received on option exercise 131,950
------------ ------------
312,257 965,268
NET CHANGE IN CASH (184,009) 117,778
CASH AT BEGINNING OF PERIOD 211,041 37,146
------------ ------------
CASH AT END OF PERIOD $ 27,032 154,924
============ $ ============
CASH PAID DURING PERIOD FOR:
Income taxes $ 580,147 $ 351,118
Interest $ 252,519 $ 140,491
See accompanying notes to the consolidated financial statements
and accountants' review report.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Chase Corporation
Braintree, Massachusetts
We have reviewed the consolidated balance sheet of Chase
Corporation and Subsidiary as of May 31, 1995, and the related
consolidated statements of operations, stockholders' equity, and
cash flows for the periods of nine months ended May 31, 1995 and
1994, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified
Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical procedures to
financial data, and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Chase
Corporation and Subsidiary as of August 31, 1994, and the related
statements of operations, stockholders' equity, and cash flows for
the year then ended (not presented herein); and in our report
dated November 2, 1994, we expressed an unqualified opinion on
those financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of August
31, 1994, is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.
/s/Livingston & Haynes, P.C.
Wellesley Hills, Massachusetts
July 7, 1995
CHASE CORPORATION SECURITIES AND EXCHANGE COMMISSION
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
July 12, 1995
Note A - Basis of Presentation
The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with the instructions to Form 10-Q and all adjustments
(consisting of nonrecurring accruals) have been made which are, in the
opinion of Management, necessary to a fair statement of the results for the
interim periods reported. The financial statements of Chase Corporation
include the activities of its divisions and its foreign sales subsidiary.
Note B - Inventories
Certain divisions used estimated gross profit rates to determine the cost of
goods sold. No significant adjustments have resulted from reconciling with the
interim physical inventories as a result of using this method.
Note C - Income per Share of Common Stock
Income per share is based on the average number of shares and share equivalents
outstanding during the period. The average number of shares and share
equivalents outstanding used in determining primary and fully diluted per
share results was 4,606,323 for the period of three months ended May 31, 1995.
Common share equivalents arise from the issuance of certain stock options.
Note D - Change in Common Stock
On October 24, 1994, the president of the corporation exercised an option to
purchase 20,000 shares of common stock. In January 1995, two former
directors of the corporation exercised their options to purchase 77,000
shares of common stock. Effectively, these transactions increased the number
of shares issued and outstanding to the amount of 4,459,848.
Note E - Review by Independent Public Accountant
The financial information included in this form has been reviewed by an
independent public accountant in accordance with established professional
standards and procedures such review no adjustments or additional disclosures
were recommended.
Letter from the independent public accountant is included as a part of this
report.
CHASE CORPORATION SECURITIES AND EXCHANGE COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net revenues increased 15% for the nine months ended May 31,
1995 versus the same period last year. Third quarter revenues
were up 23% when compared to the similar period last year. These
increases are primarily due to the May 1994 product line
acquisition from Haartz-Mason, Inc. and improved sales within our
power cable tape markets.
The increase in the cost of products sold for the third
quarter and nine months of the current year over the same period
last year is largely volume related. As a percent of sales,
during the period to date there has been an increase of about
1.6% largely the result of increased raw material costs that were
somewhat offset by the absorptions of certain fixed manufacturing
costs resulting from higher sales. Competitive pressures prevent
the Company from recovering all of its increased product costs
from customers through higher selling prices.
Selling and administrative expenses during the current year
were higher than the prior year as a result of increased sales
but as a percent sales decreased by 1.7%.
The bad debt expense last year was higher as a result of
losses on certain accounts that had been previously affected by a
difficult economic environment. It is currently anticipated that
fiscal 1995 will reflect historic levels of bad debts.
Interest expense increased during the comparable periods
over the prior year due to increased borrowing required to fund
capital expenditures and certain product line acquisitions. This
increased borrowing is also at increased rates of interest, the
result of the higher bank base lending rates.
The sales increase during the quarter and period to date was
the primary reason for the increase to income before taxes and
net income. During fiscal 1994, gains of $96,000 and $56,000 to
income before taxes and net income were related to the sale of
assets during the second quarter of the Company results.
The effective tax rate when compared to the applicable tax
rate for 1995 is lower because of increased export sales through
our Chase Export Corporation subsidiary and the tax benefits
received from the exercise of certain non-qualified stock
options.
Liquidity and Sources of Capital
The ratio of current assets to current liabilities was 1.8
at the end of the third quarter of 1995, compared to 1.6 at the
prior year end. The improved ratio is largely the result of
increased sales and the accounts receivable and inventory
associated with the higher level of sales.
Long-term debt increased by about $400,000 from the prior
year end primarily because of cash required to finance the
additional receivables and inventory associated with increased
sales.
The Company had $2,640,000 in unused available credit at May
31, 1995 under its credit arrangement with its bank and plans to
continue to utilize this means to help finance its interim needs
during the year. Current financial resources and anticipated
funds from operations are expected to be adequate to meet
requirements for funds in the year ahead.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
Reg. S-K
Item 601
Page
Subsection Description of Exhibit Status Number
Pursuant to reg. S-K item 601 no
exhibits are required.
(B) Reports on Form 8-K
No 8-K reports were filed during the three months ended
May 31, 1995.
No financial statements were filed during the three
months ended May 31, 1995.
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.
CHASE CORPORATION
Peter R.Chase, President & CEO
Dated: July 13, 1995