SECURITES 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 November 30, 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 December 31, 1995 3,572,155
PART 1: FINANCIAL INFORMATION
CHASE CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS Nov.30 Aug.31
1995 1995
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash $ 9,740 $ 108,587
Trade receivables,less allowance
for doubtful accounts of $107,805,
$95,500 respectively 5,517,207 5,808,641
Note receivable from related party 207,836 207,166
Inventories(Note B)
Finished and in process 1,743,210 1,647,181
Raw materials 2,491,701 3,145,151
------------ -----------
4,234,911 4,792,332
Prepaid expenses & other curr assets 411,508 402,774
Deferred federal taxes 179,886 179,886
------------ -----------
TOTAL CURRENT ASSETS 10,561,088 11,499,386
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 384,490 384,490
Buildings 2,457,198 2,455,077
Machinery & equipment 9,670,987 9,568,270
Construction in progress 7,965 44,346
------------ -----------
12,520,640 12,452,183
Less allowance for depreciation 7,953,195 7,733,414
------------ -----------
4,567,445 4,718,769
OTHER ASSETS
Note receivable from related party 484,104 517,975
Excess of cost over net assets of
acquired businesses less amortization 84,023 85,337
Patents, agreements and trademarks
less amortization 1,311,234 1,335,822
Cash surrender value of life ins. net 1,465,015 1,397,822
Deferred federal taxes 5,080 58,205
Investment in joint venture 402,271 382,270
Other 7,000 7,000
------------ -----------
3,758,727 3,784,431
------------ -----------
$ 18,887,260 $ 20,002,586
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Nov.31 Aug.31
1995 1995
(UNAUDITED) (AUDITED)
CURRENT LIABILITIES
Accounts payable $ 1,894,264 $ 2,911,293
Notes payable 25,732 81,851
Accrued expenses 1,076,252 1,635,060
Accrued pension expense - current 384,556 384,556
Federal income taxes 149,182 (42,510)
Deferred compensation 302,216 302,216
Current portion of L.T. debt 1,198,865 1,208,726
------------ -----------
TOTAL CURRENT LIABILITIES 5,031,067 6,481,192
LONG-TERM DEBT, less current portion 6,627,026 6,464,260
Long-term deferred compensation
obligations 329,139 367,950
ACCRUED PENSION EXPENSE 363,840 284,832
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,
Authorized 10,000,000 shares; issued
and outstanding 3,572,155 shares at
Nov 30, 1995 and 4,459,848 shares at
Aug. 31, 1995 respectively 445,985 445,985
Additional paid-in capital 2,674,897 2,674,897
Treasury Stock, 1,037,693 shares at
November 30, 1995, and August 31, 1995 (3,990,400) (3,990,400)
Cum. G/(L) on currency translation (98,363) (79,030)
Retained earnings 7,503,069 7,352,900
------------ -----------
6,535,188 6,404,352
------------ -----------
$ 18,886,260 $ 20,002,586
============ ===========
See accompanying notes to the consolidated financial
statements and accountants' review report.
CHASE CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(UNAUDITED)
3 Months Ended
Nov.30 Nov.30
1995 1994
Sales $ 8,232,459 $ 7,833,974
Comm. and other income 110,320 79,709
Interest 15,902 12,357
----------- -----------
8,358,681 7,926,040
Cost and Expenses
Cost of products sold(Note B) 5,628,456 5,162,000
Sell.,gen. and admin. expen. 1,776,243 1,779,512
Bad debt expense 12,500 15,000
Interest expense 172,042 79,244
----------- -----------
7,589,241 7,035,756
Income before income taxes 769,440 890,284
Income taxes 282,000 336,900
----------- -----------
Income from operations 487,440 553,384
Income from minority interest 20,000
----------- -----------
$ 507,440 $ 553,384
=========== ===========
Income per share
of Common Stock
Primary $ 0.136 $ 0.121
=========== ===========
Fully Diluted $ 0.136 $ 0.121
=========== ===========
See accompanying notes to the consolidated financial statements
and accountants' review report.
CHASE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
3 MONTHS ENDED NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
Cummulative
Common Stock Additional Effect of Total
Shares Paid-In Treasury Stock Retained Currency Shareholders
Issued Amount Capital Shares Amount Earnings Translation Equity
Balance @ Aug.31,1994 4,362,848 $436,285 $2,555,658 $5,775,693 $ (116,929) $8,650,707
Curr. translation adjmt. (8,025) (8,025)
Exer.of stock options 20,000 2,000 28,200 30,200
Net Income for 3 months 553,384 553,384
Dividends paid in cash
$.08 a share on
common stock (350,628) (350,628)
---------- -------- ---------- ---------- ------- ---------- ----------- ----------
Balance @ Nov. 31, 1994 4,382,848 438,285 2,583,858 5,978,449 (124,954) 8,875,638
Curr. translation adjmt. 45,924 45,924
Exer.of stock options 77,000 7,700 182,570 190,270
Purch.of treasury stock 1,302,693 (5,009,431) (5,009,431)
Sale of treasury stock (91,531) (265,000) 1,019,031 927,500
Net income for 9 months 1,374,451 1,374,451
---------- -------- ---------- ---------- ---------- ---------- -------- ----------
Balance @ Aug. 31, 1995 4,459,848 445,985 2,674,897 1,037,693 (3,990,400) 7,352,900 (79,030) 6,404,352
Curr. translation adjustment (19,333) (19,333)
Net income for 3 months 507,440 507,440
Dividends paid in cash
$.10 a share on
common stock (357,271) (357,271)
---------- -------- ---------- ---------- ---------- ---------- --------- ----------
Balance @ Nov. 30, 1995 4,459,848 $445,985 $2,674,897 1,037,693 $(3,990,400)$7,503,069 $ (98,363)$6,535,188
========== ======== ========== ===================== ========== ========== ==========
See accompanying notes to the consolidated financial statements
and accountants' review report.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
Nov. 30 Nov. 30
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 507,440 $ 553,384
Adjmts. to reconcile net income to net
cash provided by operating activities:
Depreciation 219,781 197,513
Amortization 25,902 25,902
Provision for losses on accts. receivable 12,305 15,094
Deferred federal taxes 53,125
Change in assets and liabilities
Trade receivables 279,129 (669,244)
Inventories 557,421 (556,020)
Prepd. expenses & other curr. assets (8,734) (117,464)
Accounts payable (1,017,029) 286,528
Accrued expenses (479,800) (321,796)
Federal income taxes payable 191,692 184,254
Deferred compensation (38,811) (82,355)
Other assets 4,027
------------ ------------
TOTAL ADJUSTMENTS (205,019) (1,033,561)
NET CASH FROM OPERATIONS 302,421 (480,177)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (68,457) (122,694)
Purchase of cash surrender value (66,193) (67,800)
Mortgage payments received 0 602
Proceeds from note receivable 33,201 32,543
Cum. effect of currency translation (19,333) (8,023)
Investment in joint venture (20,001)
------------ ------------
(140,783) (165,372)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt 1,500,000 1,900,000
Payments of principal on debt (1,347,095) (943,730)
Net borrowing under line-of-credit (56,119)
Dividend paid (357,271) (350,628)
Cash received on option exercise 30,200
------------ ------------
(260,485) 635,842
NET CHANGE IN CASH (98,847) (9,707)
CASH AT BEGINNING OF PERIOD 108,587 211,041
------------ ------------
CASH AT END OF PERIOD $ 9,740 $ 201,334
============ ============
CASH PAID DURING PERIOD FOR:
Income taxes $ 4,000 $ 46,647
Interest $ 172,042 $ 79,244
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 November 30, 1995, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the periods of three months
ended November 30, 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 objectives 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, 1995, 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 9, 1995, 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, 1995, 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
January 9, 1995
CHASE CORPORATION SECURITIES AND EXCHANGE COMMISSION
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
January 11, 1996
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 per share results
was 3,743,745 for the period of three months ended November 30, 1995. Common
share equivalents arise from the issuance of certain stock options.
Note D - 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 5% to $8,359,000, an increase of $433,000 when
compared to the first quarter of 1994. This increase is primarily the
result of the steady growth of sales of conformal coatings by the HumiSeal
division and of shielding tapes produced by the Webster facility of the
Chase & Sons division. These increases were somewhat offset by the
reduction of product sales related to the commercial construction market.
When compared to 1993, the increase of $1,005,000 also related to the
improvement of revenues of both HumiSeal and our Webster operation.
The cost of products sold increased in the most recent quarter over
the same quarter last year and to a large extent this is volume related.
These costs were also affected by increased material costs and changes in
product mix. As a percent of sales, the increase was 2.5%. The Company's
products are largely mature and some are highly competitive which result in
low margins. Competitive pressure prevents us from being able to recover
all our material price increases from our customers.
Selling and administrative expenses during the current year were about
the same while as a percent of sales decreased by 1%.
Interest expense increased during the comparable periods as a result
of increased borrowing related to recent acquisitions and the stock
repurchase in July 1995.
The increased interest expense and changes in product mix when
compared to last year were the primary reasons for the reduction of income
before taxes and net income.
During the first quarter of both 1995 and 1994, the effective tax rate
was somewhat lower than the applicable tax rate primarily as a result of
export sales through our Chase Export Corporation subsidiary.
Liquidity and Sources of Capital
The ratio of current assets to current liabilities was 2.1 at the end
of the first quarter of 1995, compared to 1.8 at the prior year end. The
improved ratio is largely the result of a reduction to payables that were
associated with increased sales during the last quarter of fiscal 1995.
While Long-Term Debt increased $163,000 from the prior year end, total
liabilities decreased $1,247,000 primarily as a result of positive cash
flow from operations.
The Company had $1,440,000 in unused available credit at November 30,
1995 under its credit arrangement with its bank and plans 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
November 30, 1995.
No financial statements were filed during the three months
ended November 30, 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
/s/ PETER R. CHASE
Peter R. Chase, President & CEO
Dated: Januaary 11, 1996