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 June 28, 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 July 23, 1997
Common Stock, $.01 Par Value 5,712,173
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 4. Submission of Matters to a Vote of Security Holders . . . . 10
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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 Six Months Ended
-------------------- --------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
-------- -------- -------- --------
Sales $ 54,074 $ 39,922 $113,543 $ 82,213
Cost of sales 40,309 28,909 85,437 59,554
-------- -------- -------- --------
Gross margin 13,765 11,013 28,106 22,659
Selling, general and administrative expenses 8,008 5,680 15,851 11,479
-------- -------- -------- --------
Operating income 5,757 5,333 12,255 11,180
Interest income (expense), net (347) 19 (665) (5)
-------- -------- -------- --------
Earnings before income tax expense 5,410 5,352 11,590 11,175
Income tax expense 2,164 2,141 4,636 4,470
-------- -------- -------- --------
Net earnings $ 3,246 $ 3,211 $ 6,954 $ 6,705
======== ======== ======== ========
Earnings per share of common stock
Primary $ .55 $ .55 $ 1.17 $ 1.14
======== ======== ======== ========
Fully diluted $ .55 $ .55 $ 1.17 $ 1.14
======== ======== ======== ========
Average shares and equivalents outstanding
Primary 5,915 5,884 5,929 5,884
======== ======== ======== ========
Fully diluted 5,922 5,884 5,929 5,884
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
3
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
June 28, June 29, December 31,
1997 1996 1996
-------- -------- --------
Assets
------
Cash and cash equivalents $ - $ 652 $ -
Accounts receivable 28,420 21,537 29,784
Inventories 35,965 18,405 32,396
Deferred income taxes and other assets 3,739 1,562 4,688
-------- -------- --------
Current assets 68,124 42,156 66,868
Property, plant and equipment, net 38,783 22,839 39,498
Intangibles and other assets 23,233 23,384 23,576
-------- -------- --------
Total assets $130,140 $ 88,379 $129,942
======== ======== ========
Liabilities and Stockholders' Equity
------------------------------------
Accounts payable $ 8,316 $ 5,505 $ 9,900
Accrued liabilities 13,127 9,312 16,625
-------- -------- --------
Current liabilities 21,443 14,817 26,525
Revolving credit facility 19,800 - 20,200
Deferred income taxes and other liabilities 4,836 2,901 5,292
-------- -------- --------
Total liabilities 46,079 17,718 52,017
-------- -------- --------
Stockholders' equity
Common stock and capital in excess of par value 20,231 21,016 21,049
Retained earnings 63,830 49,645 56,876
-------- -------- --------
Total stockholders' equity 84,061 70,661 77,925
-------- -------- --------
Total liabilities and stockholders' equity $130,140 $ 88,379 $129,942
======== ======== ========
See accompanying notes to condensed consolidated financial statements.
4
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Six Months Ended
--------------------
June 28, June 29,
1997 1996
-------- --------
Operating Activities
Net earnings $ 6,954 $ 6,705
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 2,195 1,685
Deferred income taxes 770 (124)
Changes in assets and liabilities, net
Accounts receivable 1,364 (3,167)
Inventories (3,569) 1,523
Accounts payable and accrued liabilities (5,082) (2,734)
Other (321) (571)
-------- --------
Cash provided by operating activities 2,311 3,317
-------- --------
Investing Activities
Capital expenditures (1,093) (1,587)
Disposal of property, plant and equipment - 248
-------- --------
Cash used in investing activities (1,093) (1,339)
-------- --------
Financing Activities
Payments under revolving credit facility (400) (1,500)
Proceeds from stock options exercised - 174
Repurchase and cancellation of common stock (818) -
-------- --------
Cash used in financing activities (1,218) (1,326)
-------- --------
Net change in cash and cash equivalents - 652
Cash and cash equivalents at beginning of period - -
-------- --------
Cash and cash equivalents at end of period $ - $ 652
======== ========
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 six month period ended June 28, 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 Shares and Equivalents Outstanding
Average shares used in the calculation of fully diluted earnings per share
included common stock equivalents (stock options) of approximately 194,000
and 147,000 shares for the three months ended June 28, 1997 and June 29,
1996, respectively, and 194,000 and 150,000 shares for the six months ended
June 28, 1997 and June 29, 1996, respectively.
Note 3. Inventories
Inventories consisted of the following:
(in thousands)
----------------------------------
June 28, June 29, December 31,
1997 1996 1996
-------- -------- --------
Raw materials $ 11,937 $ 4,982 $ 10,622
Work-in-process 5,613 4,041 5,797
Finished goods 19,849 11,026 17,311
-------- -------- --------
Inventories at FIFO cost 37,399 20,049 33,730
LIFO reserve (1,434) (1,644) (1,334)
-------- -------- --------
$ 35,965 $ 18,405 $ 32,396
======== ======== ========
6
Note 4. Accrued Liabilities
Accrued liabilities consisted of the following:
(in thousands)
----------------------------------
June 28, June 29, December 31,
1997 1996 1996
-------- -------- --------
Employee benefit plans $ 3,733 $ 3,091 $ 5,890
Salaries, wages and commissions 1,464 1,128 1,628
Vacation and holiday pay 1,558 813 1,503
Workers' compensation plans 992 893 1,127
Advertising and promotion 1,438 736 1,383
Other accrued liabilities 3,942 2,651 5,094
-------- -------- --------
$ 13,127 $ 9,312 $ 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. Chromcraft Revington, Inc. (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
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
consolidated results of operations for the three and six months ended
June 28, 1997 and June 29, 1996 expressed as a percentage of sales.
7
Three Months Ended Six Months Ended
-------------------- --------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
-------- -------- -------- --------
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 74.6 72.4 75.2 72.4
-------- -------- -------- --------
Gross margin 25.4 27.6 24.8 27.6
Selling, general and administrative expenses 14.8 14.2 14.0 14.0
-------- -------- -------- --------
Operating income 10.6 13.4 10.8 13.6
Interest expense, net .6 - .6 -
-------- -------- -------- --------
Earnings before income tax expense 10.0 13.4 10.2 13.6
Income tax expense 4.0 5.4 4.1 5.4
-------- -------- -------- --------
Net earnings 6.0 % 8.0 % 6.1 % 8.2 %
======== ======== ======== ========
The Company's operating results for the three and six months ended June 28,
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 and Six Months Ended June 28, 1997 Compared to Three and Six Months
Ended June 29, 1996.
- - -------------------------------------------------------------------------
Sales
Consolidated sales for the three and six months ended June 28, 1997 increased
35.4% and 38.1%, respectively, as compared to the prior year periods
primarily due to the acquisition of Cochrane Furniture. Without the benefit
of this acquisition, sales for the second quarter and first half of 1997 were
slightly lower than the corresponding periods last year from a decrease in
occasional furniture shipments due to a weak retail sales environment.
Excluding Cochrane Furniture, the Company's sales order rate entering the
third quarter of this year was slightly behind the year ago level.
Cost of Sales
Cost of sales as a percentage of sales was 74.6% and 75.2% for the three and
six month periods ended June 28, 1997, respectively, as compared to 72.4% for
each of the three and six month periods ended June 29, 1996. The cost
percentage increase for the second quarter and first half of 1997 was
primarily attributable to the inclusion of Cochrane Furniture's operating
results.
8
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales were
14.8% and 14.0% for the second quarter and six months ended June 28, 1997,
respectively, as compared to 14.2% and 14.0% for the second quarter and six
months ended June 29, 1996, respectively. Excluding Cochrane Furniture, the
cost percentage for the three months ended June 28, 1997 was higher over the
comparable period last year mainly as a result of an increase in the
allowance for doubtful accounts.
Interest Income (Expense), Net
The Company incurred interest expense during the second quarter of 1997 of
$347,000 as compared to earning interest income of $19,000 during the second
quarter a year ago. For the six months ended June 28, 1997, interest expense
was $665,000 as compared to $5,000 for the first six months of 1996.
Interest expense for the second quarter and first half of 1997 was
attributable to the Cochrane Furniture indebtedness. The Company had no
bank borrowings during the second quarter of 1996 and excess cash was
invested in short-term investments.
Income Tax Expense
The Company's effective tax rate was 40.0% for each of the three and six
month periods ended June 28, 1997 and June 29, 1996.
Liquidity and Capital Resources
The operating activities of the Company provided $2,311,000 of cash during
the six months ended June 28, 1997 as compared to $3,317,000 during the six
months ended June 29, 1996. The decrease in cash flow from operating
activities during the first half of 1997 as compared to the prior year period
was primarily due to an increase in working capital investment.
The investing activities used $1,093,000 of cash during the first half of
1997 as compared to $1,339,000 during the year ago period primarily for
capital expenditures. The Company expects additions to property, plant and
equipment to be approximately $3,500,000 for the year ending December 31, 1997.
Financing activities used $1,218,000 of cash during the first six months of
1997 to reduce bank indebtedness under the Company's bank revolving credit
facility and to acquire shares of the Company's common stock. In February
1997, the Company's board of directors approved the repurchase of up to
200,000 shares of the Company's common stock. During the second quarter of
1997, the Company retired 30,100 shares of common stock purchased for
$818,000. For the year earlier period, cash used in financing activities was
primarily used to repay bank indebtedness under the Company's revolving
credit facility. At June 28, 1997, the Company had approximately $35,000,000
in availability under its bank revolving credit facility.
9
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
- - -------------------------------------------------------------
(a) The Company held its annual meeting of stockholders on May 2, 1997.
(b) At the annual meeting, the holders of the common stock of the
Company elected seven directors to serve until the next annual
meeting of stockholders and until their successors are duly elected
and qualified. Set forth below are the votes cast for each director.
Directors For Withheld
------------------ --------- --------
Bruce C. Bruckmann 5,356,998 13,709
David L. Kolb 5,356,998 13,709
Larry P. Kunz 5,356,998 13,709
H. Martin Michael 5,356,998 13,709
M. Saleem Muqaddam 5,356,798 13,909
Michael E. Thomas 5,356,998 13,709
Warren G. Wintrub 5,356,998 13,709
Item 6. Exhibits and Reports on Form 8-K
- - ------------------------------------------
(a) Exhibits
None
(b) Reports on Form 8-K
None
10
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: August 8, 1997 /s/ Frank T. Kane
--------------------------
Frank T. Kane
Vice President - Finance
(Duly Authorized Officer and
Chief Financial Officer)
11