FORM 10-Q. - QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 2, 2000
[ ] 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 1-2451
NATIONAL PRESTO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0494170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3925 NORTH HASTINGS WAY
EAU CLAIRE, WISCONSIN 54703-3703
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 715-839-2121
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_____
There were 7,054,862 shares of the Issuer's Common Stock outstanding as of the
close of the period covered by this report.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 2, 2000 and December 31, 1999
(Unaudited)
(Dollars in thousands)
2000 1999
- ----------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 82,677 $ 88,075
Marketable securities 136,120 150,455
Accounts receivable, net 9,483 20,016
Inventories:
Finished goods $ 9,950 $ 5,548
Work in process 3,528 2,409
Raw materials 5,592 8,486
Supplies 977 20,047 884 17,327
--------- ---------
Prepaid expenses 63 72
---------- ----------
Total current assets 248,390 275,945
PROPERTY, PLANT AND EQUIPMENT: 25,431 24,328
Less allowance for depreciation 12,638 12,793 12,019 12,309
--------- ---------
OTHER ASSETS 11,139 11,139
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$ 272,322 $ 299,393
========== ==========
The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 2, 2000 and December 31, 1999
(Unaudited)
(Dollars in thousands)
2000 1999
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 7,782 $ 14,395
Federal and state income taxes 3,078 6,064
Accrued liabilities 23,139 23,602
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Total current liabilities 33,999 44,061
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Common stock, $1 par value:
Authorized: 12,000,000 shares
Issued: 7,440,518 shares $ 7,441 $ 7,441
Paid-in capital 1,031 1,033
Retained earnings 242,240 254,218
---------- ----------
250,712 262,692
Treasury stock, at cost 12,389 7,360
---------- ----------
Total stockholders' equity 238,323 255,332
---------- ----------
$ 272,322 $ 299,393
========== ==========
The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months ended April 2, 2000 and April 4, 1999
(Unaudited)
(In thousands except per share data) THREE MONTHS ENDED
------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------
Net sales $ 18,507 $ 21,610
Cost of sales 13,820 15,436
---------- ----------
Gross profit 4,687 6,174
Selling and general expenses 3,760 4,511
---------- ----------
Operating profit 927 1,663
Other income, principally interest 2,651 2,377
---------- ----------
Earnings before provision for income taxes 3,578 4,040
Provision for income taxes 560 760
---------- ----------
Net earnings $ 3,018 $ 3,280
========== ==========
Weighted average shares outstanding:
Basic 7,155 7,360
========== ==========
Diluted 7,156 7,361
========== ==========
Net earnings per share:
Basic $ 0.42 $ 0.45
========== ==========
Diluted $ 0.42 $ 0.45
========== ==========
Cash dividends declared and paid per common share $ 2.10 $ 2.00
========== ==========
The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months ended April 2, 2000 and April 4, 1999
(Unaudited)
(Dollars in thousands)
2000 1999
- ---------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 3,018 $ 3,280
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 619 533
Stock compensation expense 98 66
Changes in:
Accounts receivable 10,533 4,337
Inventories (2,720) 1,273
Prepaid expenses 9 49
Accounts payable and accrued liabilities (7,076) (4,882)
Federal and state income taxes (2,986) (3,090)
----------- -----------
Net cash provided by operating activities 1,495 1,566
----------- -----------
Cash flows from investing activities:
Marketable securities purchased (19,875) (52,402)
Marketable securities - maturities and sales 34,210 30,079
Acquisition of property, plant and equipment (1,103) (841)
Other -- 108
----------- -----------
Net cash provided by (used in) investing activities 13,232 (23,056)
----------- -----------
Cash flows from financing activities:
Dividends paid (14,995) (14,719)
Purchase of treasury stock (5,128) --
Other (2) 24
----------- -----------
Net cash used in financing activities (20,125) (14,695)
----------- -----------
Net decrease in cash and cash equivalents (5,398) (36,185)
Cash and cash equivalents at beginning of period 88,075 114,565
----------- -----------
Cash and cash equivalents at end of period $ 82,677 $ 78,380
=========== ===========
The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - EARNINGS PER SHARE
The Company's basic net earnings per share amounts have been computed by
dividing net earnings by the weighted average number of outstanding common
shares. The Company's diluted net earnings per share is computed by dividing net
earnings by the weighted average number of outstanding common shares and common
share equivalents relating to stock options, when dilutive.
NOTE B - TREASURY STOCK
During the First Quarter of 2000, 157,800 shares of the Company's common stock
were reacquired as treasury stock.
- --------------------------------------------------------------------------------
The foregoing information for the periods ended April 2, 2000, and April 4,
1999, is unaudited; however, in the opinion of management of the Registrant, it
reflects all the adjustments, which were of a normal recurring nature, necessary
for a fair statement of the results for the interim periods. The condensed
consolidated balance sheet as of December 31, 1999, is summarized from audited
consolidated financial statements, but does not include all the disclosures
contained therein and should be read in conjunction with the 1999 Annual Report.
Interim results for the period are not indicative of those for the year.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward looking statements in this Quarterly Report are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. There are certain important factors that could cause results
to differ materially from historical results. Investors are cautioned that all
forward looking statements involve risks and uncertainty. The factors that could
cause actual results to differ materially are the following: consumer spending
and debt levels; interest rates; continuity of relationships with and purchases
by major customers; product mix; competitive pressure on sales and pricing, and
increases in material or production cost which cannot be recouped in product
pricing. Additional information concerning those and other factors is contained
in the Company's Securities and Exchange Commission filings, including but not
limited to the Form 10-K, copies of which are available from the Company without
charge.
Comparison First Quarter 2000 and 1999
Net sales decreased by $3,103,000 from $21,610,000 to $18,507,000
due primarily to decreased unit volume.
Gross margins as a percentage of sales decreased from 29% to 25%
due largely to increased material costs.
The Company accrues unexpended advertising costs budgeted for the
year against each quarter's sales. Major advertising commitments are incurred in
advance of the expenditures, and the timing of sales through dealers and
distributors to the ultimate customer does not permit specific identification of
the customers' purchase to the actual time an advertisement appears. Advertising
charges included in selling expense in each quarter represent that percentage of
the annual advertising budget associated with that quarter's shipments.
Revisions to this budget result in periodic changes to the accrued liability for
committed advertising expenditures.
Other income, principally interest, increased from the 1999 level
primarily as a result of a higher rate of return on invested funds in the
Company's portfolio of short-term marketable securities.
Earnings before provision for income taxes decreased $462,000 from
$4,040,000 to $3,578,000. The provision for income taxes decreased from $760,000
to $560,000 and the effective income tax rate decreased from 19% to 16%, as a
result of decreased earnings subject to tax. Net earnings decreased $262,000
from $3,280,000 to $3,018,000, or 8% and earnings per share decreased from $.45
to $.42.
The Company maintains adequate liquidity for all of its
anticipated capital requirements. As of quarter-end, there were no material
capital commitments outstanding.
Item 7A.
QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's interest income is affected by changes in the
general level of U.S. interest rates. Changes in U.S. interest rates could
affect the interest earned on the Company's cash equivalents and investments.
Currently, changes in U.S. interest rates would not have a material affect on
the interest earned on the Company's cash equivalents and investments, as these
investments are primarily municipal bonds. A majority of these bonds earn a
fixed rate of interest while the remaining portion earn interest at a variable
rate. The Company uses sensitivity analysis to determine it's exposure to
changes in interest rates. The Company does not anticipate that exposure to
interest rate market risk will have a material impact on the Company due to the
nature of the Company's investments.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3 (i) - Restated Articles of Incorporation -
incorporated by reference from Exhibit 3 (i)
of the Company's quarterly report on Form
10-Q for the quarter ended July 6, 1997
(ii) - By-Laws - incorporated by reference from
Exhibit 3 (ii) of the Company's quarterly
report on Form 10-Q for the quarter ended
October 3, 1999
Exhibit 9 - Voting Trust Agreement - incorporated by
reference from Exhibit 9 of the Company's
quarterly report on Form 10-Q for the
quarter ended July 6, 1997
Exhibit 10.1 - 1988 Stock Option Plan - incorporated by
reference from Exhibit 10.1 of the Company's
quarterly report on Form 10-Q for the
quarter ended July 6, 1997
Exhibit 10.2 - Form of Incentive Stock Option Agreement
under the 1988 Stock Option Plan -
incorporated by reference from Exhibit 10.2
of the Company's quarterly report on Form
10-Q for the quarter ended July 6, 1997
Exhibit 11 - Statement regarding computation of per share
earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
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.
NATIONAL PRESTO INDUSTRIES, INC.
--------------------------------
Date: May 3, 2000 /S/ M. J. Cohen
-----------------------------------------
M. J. Cohen, President
(Principal operating officer)
Date: May 3, 2000 /S/ R. F. Lieble
-----------------------------------------
R. F. Lieble, Chief Financial Officer and
Treasurer (Principal accounting officer)
National Presto Industries, Inc.
Exhibit Index
Exhibit
Number Exhibit Description
- ------ -------------------
11 Computation of Earnings per Share
27 Financial Data Schedule