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 the Quarter Ended November 30, 1996 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, 1996 3,809,630
PART 1: FINANCIAL INFORMATION
CHASE CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS Nov.30 Aug.31
1996 1996
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash $ 32,262 $ 191,429
Trade receivables,less allowance
for doubtful accounts of $136,225 and
$127,500 respectively 5,625,868 5,770,152
Note receivable from related party 209,650 208,966
Inventories(Note B)
Finished and in process 2,453,535 1,073,226
Raw materials 1,498,063 2,599,427
---------- ----------
3,951,598 3,672,653
Prepaid expenses & other curr assets 248,028 272,626
Deferred federal taxes 148,886 148,886
---------- -----------
TOTAL CURRENT ASSETS 10,216,292 10,264,712
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 322,423 322,423
Buildings 1,758,550 1,758,538
Machinery & equipment 9,888,272 9,839,816
Construction in progress 18,884 4,639
---------- ----------
11,988,129 11,925,416
Less allowance for depreciation 7,936,018 7,741,587
---------- -----------
4,052,111 4,183,829
OTHER ASSETS
Note receivable from related party 274,488 309,042
Excess of cost over net assets of
acquired businesses less amortization 78,765 80,080
Patents, agreements and trademarks
less amortization 1,216,967 1,237,160
Cash surrender value of life ins. net 1,714,018 1,658,288
Deferred federal taxes 7,978 18,978
Investment in joint venture 2,058,110 2,027,735
Other 7,000 7,000
---------- -----------
5,357,326 5,338,283
---------- -----------
$19,625,729 $19,786,824
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Nov.31 Aug.31
1996 1996
(UNAUDITED) (AUDITED)
CURRENT LIABILITIES
Accounts payable $ 2,590,570 $ 2,370,616
Notes payable 62,951 -
Accrued expenses 1,666,849 2,049,718
Accrued pension expense - current 389,322 389,322
Federal income taxes (8,115) 67,261
Deferred compensation 258,000 302,216
Current portion of L.T. debt 1,087,219 1,223,178
---------- -----------
TOTAL CURRENT LIABILITIES 6,046,796 6,402,311
LONG-TERM DEBT, less current portion 4,241,313 4,481,071
Long-term deferred compensation
obligations 209,321 217,539
ACCRUED PENSION EXPENSE 313,270 227,968
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 4,847,323 shares at
Nov 30, 1996 and 4,676,397 shares at
Aug. 31, 1996 respectively 484,732 467,640
Additional paid-in capital 3,017,293 2,815,216
Treasury Stock, 1,037,693 shares at
November 30, 1996, and August 31, 1996 (3,990,400)(3,990,400)
Cum. G/(L) on currency translation (93,940) (108,100)
Retained earnings 9,397,344 9,273,579
---------- -----------
8,815,029 8,457,935
---------- -----------
$19,625,729 $19,786,824
========== ===========
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
1996 1995
Sales $ 9,003,995 $ 8,232,459
Comm. and other income 79,502 110,320
Interest 10,573 15,902
----------- -----------
9,094,070 8,358,681
Cost and Expenses
Cost of products sold(Note B) 5,930,575 5,628,456
Sell.,gen. and admin. expen. 2,039,379 1,776,243
Bad debt expense 9,000 12,500
Interest expense 105,498 172,042
---------- -----------
8,084,452 7,589,241
Income before income taxes 1,009,618 769,440
Income taxes 376,700 282,000
---------- -----------
Income from operations 632,918 487,440
Income from minority interest 62,375 20,000
---------- -----------
$ 695,293 $ 507,440
========== ===========
Income per share
of Common Stock
Primary $ 0.178 $ 0.136
========== ===========
Fully Diluted $ 0.178 $ 0.136
========== ===========
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, 1996 AND NOVEMBER 30, 1995
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.31,1995 4,459,848 $445,985 $2,674,897 1,037,693 (3,990,400) $7,352,900 $ (79,030) $6,404,352
Curr. translation adjmt. (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.31,1995 4,459,848 445,985 2,674,897 1,037,693 (3,990,400) 7,503,069 (98,363) 6,535,188
Curr. translation adjmt. (9,737) (9,737)
Exer.of stock options 216,549 21,655 84,069 105,724
Compensatory stock issuance. 56,250 56,250
Net income for 9 months 1,770,510 1,770,510
---------- -------- ---------- ---------- ----------- ---------- -------- ---------
Balance @ Aug.31,1996 4,676,397 467,640 2,815,216 1,037,693 (3,990,400) 9,273,579 (108,100) 8,457,935
Curr.translation adjmt. 14,160 14,160
Exer.of stock options 170,926 17,092 177,468 194,560
Compensatory stock issuance. 24,609 24,609
Net income for 3 months 695,293 695,293
Dividends paid in cash
$.15 a share on
common stock (571,528) (571,528)
---------- -------- ---------- ---------- ----------- --------- ---------- ----------
Balance @ Nov.30,1996 4,847,323 $484,732 $3,017,293 1,037,693$(3,990,400) $9,397,344 $(93,940) $8,815,029
========= ======== ========== ========= ========== ========== ========= ==========
See accompanying notes to the consolidated financial
statements and accountants' review report.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ened
Nov. 30 Nov. 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 695,293 $ 507,440
Adjmts. to reconcile net income to net
cash provided by operating activities:
(Gain) on sale of fixed assets
Depreciation 194,431 219,781
Amortization 26,023 25,902
Provision for losses on accts. receivable 8,725 12,305
Stock issued for compensation 24,609
Tax effect of cashless option exercise 194,560
Deferred federal taxes 11,000 53,125
Change in assets and liabilities
Trade receivables 135,559 279,129
Inventories (278,945) 557,421
Prepd. expenses & other curr. assets 24,598 (8,734)
Accounts payable 219,954 (1,017,029)
Accrued expenses (297,566) (479,800)
Federal income taxes payable (75,376) 191,692
Deferred compensation (52,434) (38,811)
Other assets
--------- ----------
TOTAL ADJUSTMENTS 135,138 (205,019)
NET CASH FROM OPERATIONS 830,431 302,421
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (67,228) (68,457)
Purchase of cash surrender value (55,730) (66,193)
Proceeds from note receivable 33,870 33,201
Cum. effect of currency translation 14,160 (19,333)
Investment in joint venture (30,375) (20,001)
Proceeds of Sale of Fixed Assets
-------- ----------
(105,303) (140,783)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt 1,200,000 1,500,000
Payments of principal on debt (1,575,717) (1,347,095)
Net borrowing under line-of-credit 62,950 (56,119)
Dividend paid (571,528) (357,271)
Cash received on option exercise
--------- ---------
(884,295) (260,485)
NET CHANGE IN CASH (159,167) (98,847)
CASH AT BEGINNING OF PERIOD 191,429 108,587
---------- ----------
CASH AT END OF PERIOD $ 32,262 $ 9,740
=========== ==========
CASH PAID DURING PERIOD FOR:
Income taxes $ 262,729 $ 4,000
Interest $ 105,498 $ 172,042
See accompanying notes to the consolidated financial statements.
CHASE CORPORATION SECURITIES AND EXCHANGE COMMISSION
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
January 9, 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
3,903,674 for the period of three months ended November 30, 1996. Earnings per
share on a fully diluted basis are calculated on 3,907,130 common shares and
share equivalents. Common share equivalents arise from the issuance of certain
stock options.
Note D - Stock Issued for Compensation
The Company issued 100,000 shares of common stock restricted as to sale to
its president. The fair market value of the stock at time of grant is being
amortized over the eight year vesting period. The restriction on sale is
removed at the end of nine years subject to certain service requirements.
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. Based upon such review, no adjustments or additional
disclosures were recommended.
Letter from the independent public accountant is included as a part of this
report.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
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, 1996, and the
related consolidated statements of operations, stockholders'
equity, and cash flows for the periods of three months ended
November 30, 1996 and 1995, 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, 1996, and the related
statements of operations, stockholders' equity, and cash flows for
the year then ended (not presented herein); and in our report
dated October 16, 1996, 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, 1996, 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, Massachusetts
January 8, 1997
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
Reg. S-K
Item 601
Subsection Description of Exhibit State Page 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, 1996.
No financial statements were filed during the three
months ended November 30, 1996.
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: January 9, 1997