UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
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 number 1-13970
CHROMCRAFT REVINGTON, INC.
(Exact name of Registrant as specified in its charter)
Delaware 35-1848094
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
1100 North Washington Street, Delphi, IN 46923
(Address, including zip code, of Registrant's principal executive offices)
(765) 564-3500
(Registrant's telephone number, including area 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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding for each of the Registrant's classes of
common stock as of the latest practicable date:
Outstanding at
Class April 25, 1997
Common Stock, $.01 Par Value 5,742,273
TABLE OF CONTENTS
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows . . . . . . 5
Notes to Condensed Consolidated Financial Statements . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 7
Part II. Other Information
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Three Months Ended
------------------------
March 29, March 30,
1997 1996
--------- ---------
Sales $ 59,469 $ 42,291
Cost of sales 45,128 30,645
--------- ---------
Gross margin 14,341 11,646
Selling, general and administrative expenses 7,843 5,799
--------- ---------
Operating income 6,498 5,847
Interest expense, net 318 24
--------- ---------
Earnings before income tax expense 6,180 5,823
Income tax expense 2,472 2,329
--------- ---------
Net earnings $ 3,708 $ 3,494
========= =========
Earnings per share of common stock
Primary $ .62 $ .59
========= =========
Fully diluted $ .62 $ .59
========= =========
Average common shares and equivalents outstanding
Primary 5,943 5,883
========= =========
Fully diluted 5,943 5,883
========= =========
See accompanying notes to condensed consolidated financial statements.
3
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
March 29, March 30, December 31,
1997 1996 1996
--------- --------- ---------
Assets
Cash and cash equivalents $ - $ 2,596 $ -
Accounts receivable 30,563 20,236 29,784
Inventories 33,227 18,851 32,396
Deferred income taxes and other assets 3,706 1,238 4,688
--------- --------- ---------
Current assets 67,496 42,921 66,868
Property, plant and equipment, net 39,229 22,578 39,498
Intangibles and other assets 23,378 23,549 23,576
--------- --------- ---------
Total assets $ 130,103 $ 89,048 $ 129,942
========= ========= =========
Liabilities and Stockholders' Equity
Accounts payable $ 9,305 $ 6,048 $ 9,900
Accrued liabilities 16,833 12,757 16,625
--------- --------- ---------
Current liabilities 26,138 18,805 26,525
Revolving credit facility 17,500 - 20,200
Deferred income taxes and other liabilities 4,832 2,967 5,292
--------- --------- ---------
Total liabilities 48,470 21,772 52,017
--------- --------- ---------
Stockholders' equity
Common stock and capital in excess of par value 21,049 20,842 21,049
Retained earnings 60,584 46,434 56,876
--------- --------- ---------
Total stockholders' equity 81,633 67,276 77,925
--------- --------- ---------
Total liabilities and stockholders' equity $ 130,103 $ 89,048 $ 129,942
========= ========= =========
See accompanying notes to condensed consolidated financial statements.
4
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Three Months Ended
------------------------
March 29, March 30,
1997 1996
--------- ---------
Operating Activities
Net earnings $ 3,708 $ 3,494
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 1,100 838
Deferred income taxes 489 (45)
Changes in assets and liabilities, net
Accounts receivable (779) (1,866)
Inventories (831) 1,077
Accounts payable and accrued liabilities (387) 1,254
Other 37 (232)
--------- ---------
Cash provided by operating activities 3,337 4,520
--------- ---------
Investing Activities
Capital expenditures (637) (650)
Disposal of property, plant and equipment - 226
--------- ---------
Cash used in investing activities (637) (424)
--------- ---------
Financing Activities
Payments under revolving credit facility (2,700) (1,500)
--------- ---------
Cash used in financing activities (2,700) (1,500)
--------- ---------
Net change in cash and cash equivalents - 2,596
Cash and cash equivalents at beginning of period - -
--------- ---------
Cash and cash equivalents at end of period $ - $ 2,596
========= =========
See accompanying notes to condensed consolidated financial statements.
5
Notes to Condensed Consolidated Financial Statements (unaudited)
Chromcraft Revington, Inc.
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q 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 statement
presentation.
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 three month period ended
March 29, 1997 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1997.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Registrant's annual report on
Form 10-K for the year ended December 31, 1996.
Note 2. Average Common Shares and Equivalents Outstanding
Average common shares used in the calculation of primary and fully
diluted earnings per share included common stock equivalents (stock
options) of approximately 201,000 and 154,000 shares for the three
months ended March 29, 1997 and March 30, 1996, respectively.
Note 3. Inventories
Inventories consisted of the following:
(in thousands)
-----------------------------------
March 29, March 30, December 31,
1997 1996 1996
--------- --------- ---------
Raw materials $ 10,916 $ 5,751 $ 10,622
Work in process 5,510 3,883 5,797
Finished goods 18,185 10,728 17,311
--------- --------- ---------
Inventories at FIFO cost 34,611 20,362 33,730
LIFO reserve (1,384) (1,511) (1,334)
--------- --------- ---------
$ 33,227 $ 18,851 $ 32,396
========= ========= =========
6
Note 4. Accrued Liabilities
Accrued liabilities consisted of the following:
(in thousands)
-----------------------------------
March 29, March 30, December 31,
1997 1996 1996
--------- --------- ---------
Employee benefit plans $ 3,654 $ 2,966 $ 5,890
Income taxes payable 1,998 2,335 422
Salaries, wages and commissions 2,046 1,421 1,628
Vacation and holiday pay 1,916 1,262 1,503
Workers' compensation plans 1,265 985 1,127
Advertising and promotion 1,605 835 1,383
Other accrued liabilities 4,349 2,953 4,672
--------- --------- ---------
$ 16,833 $ 12,757 $ 16,625
========= ========= =========
Note 5. Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share," which is effective for
financial statements for periods ending after December 15, 1997.
Statement No. 128 supersedes current accounting standards for the
computation, presentation and disclosure requirements for earnings per
share. The Company will adopt Statement No. 128 during the fourth
quarter of 1997 and, based on current circumstances, does not believe
the effect of the adoption will be material.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
Chromcraft Revington, Inc. (the "Company") manufactures and sells
residential and commercial furniture through its wholly-owned
subsidiaries Chromcraft Corporation, Peters-Revington Corporation,
Silver Furniture Co., Inc. and Cochrane Furniture Company, Inc.
("Cochrane Furniture"). The following table sets forth the Company's
results of operations for the three months ended March 29, 1997 and
March 30, 1996 expressed as a percentage of sales.
Three Months Ended
----------------------
March 29, March 30,
1997 1996
--------- ---------
Sales 100.0 % 100.0 %
Cost of sales 75.9 72.5
--------- ---------
Gross margin 24.1 27.5
Selling, general and administrative expenses 13.2 13.7
--------- ---------
Operating income 10.9 13.8
Interest expense, net .5 -
--------- ---------
Earnings before income tax expense 10.4 13.8
Income tax expense 4.2 5.5
--------- ---------
Net earnings 6.2 % 8.3 %
========= =========
7
The Company's operating results for the three months ended March 29,
1997 include the operations of Cochrane Furniture, which was acquired
by the Company as of November 8, 1996. For further information, refer
to the Registrant's Current Report on Form 8-K dated November 8, 1996
reporting the acquisition of Cochrane Furniture.
Three Months Ended March 29, 1997 Compared to Three Months Ended March 30, 1996.
- - --------------------------------------------------------------------------------
Sales
Consolidated sales for the first quarter of 1997 increased 40.6% to
$59,469,000 from $42,291,000 for the first quarter of 1996. The increase
in sales for the first three months of 1997 was primarily due to the
inclusion of Cochrane Furniture. On a comparable basis, excluding the
Cochrane Furniture operations, sales for the first quarter were slightly
lower than the prior year period as a result of a decrease in sales of
occasional furniture due to the sluggish retail sales environment.
Cost of Sales
Cost of sales as a percentage of sales was 75.9% for the quarter ended
March 29, 1997 as compared to 72.5% for the quarter ended March 30,
1996. The percentage increase was primarily attributable to the
inclusion of Cochrane Furniture's operating results. Raw material
prices remained fairly stable during the current quarter.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales
were 13.2% for the first quarter of 1997 as compared to 13.7% for the
same period last year. The decrease in selling, general and administrative
expenses as a percentage of sales for the three months ended March 29, 1997
as compared to the prior year quarter was primarily due to the inclusion
of Cochrane Furniture's operating results.
Interest Expense, Net
Interest expense during the first three months of 1997 was $318,000 as
compared to $24,000 during the same period last year. Interest expense
for the first quarter of 1997 was attributable to the Cochrane Furniture
indebtedness.
Income Tax Expense
The Company's effective tax rate was 40.0% for each of the three month
periods ended March 29, 1997 and March 30, 1996.
8
Liquidity and Capital Resources
The operating activities of the Company provided $3,337,000 of cash
for the three months ended March 29, 1997 as compared to $4,520,000
for the three months ended March 30, 1996. The decrease in cash
generated from operating activities during the first quarter of 1997
as compared to the prior year period was primarily due to an increase
in working capital investment.
The investing activities used $637,000 during the first three months
of 1997 as compared to $424,000 during the year ago period. Capital
expenditures for the quarter ended March 29, 1997 were primarily for
equipment purchases. The Company expects capital expenditures to be
approximately $4,000,000 for the year ending December 31, 1997.
Financing activities used $2,700,000 of cash for the three months
ended March 29, 1997 to reduce bank indebtedness under a revolving
credit facility. In 1997, absent an acquisition, the Company plans to
use excess cash flow to reduce bank indebtedness. At March 29, 1997,
the Company had approximately $37,098,000 in availability under its
bank revolving credit facility.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
Amendment No. 1 to the Current Report on Form 8-K dated November
8, 1996 was filed with the Securities and Exchange Commission on
January 23, 1997, reporting financial information on the acquisition
of Cochrane Furniture Company, Inc.
9
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.
CHROMCRAFT REVINGTON, INC.
--------------------------
(Registrant)
Date: May 9, 1997 /s/ Frank T. Kane
--------------------------
Frank T. Kane
Vice President - Finance
(Duly Authorized Officer and
Chief Financial Officer)
10