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 1, 2001
[ ] 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 6,881,479 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 1, 2001 and December 31, 2000
(Unaudited)
(Dollars in thousands)
2001 2000
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 65,577 $ 79,624
Marketable securities 136,435 143,205
Accounts receivable, net 6,271 10,023
Inventories:
Finished goods $ 20,793 $ 21,056
Work in process 4,877 2,416
Raw materials 6,603 6,968
Supplies 903 33,176 867 31,307
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Prepaid expenses 165 47
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Total current assets 241,624 264,206
PROPERTY, PLANT AND EQUIPMENT: 27,350 26,278
Less allowance for depreciation 14,151 13,199 12,984 13,294
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OTHER ASSETS 14,256 11,207
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$ 269,079 $ 288,707
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The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 1, 2001 and December 31, 2000
(Unaudited)
(Dollars in thousands)
2001 2000
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 10,817 $ 16,014
Federal and state income taxes 1,876 3,108
Accrued liabilities 23,609 24,425
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Total current liabilities 36,302 43,547
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 1,021 1,027
Retained earnings 241,876 254,381
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250,338 262,849
Treasury stock, at cost 17,561 17,689
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Total stockholders' equity 232,777 245,160
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$ 269,079 $ 288,707
=========== ===========
The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months ended April 1, 2001 and April 2, 2000
(Unaudited)
(In thousands except per share data)
THREE MONTHS ENDED
------------------
2001 2000
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Net sales $ 19,645 $ 18,507
Cost of sales 16,779 13,820
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Gross profit 2,866 4,687
Selling and general expenses 4,544 3,760
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Operating profit (loss) (1,678) 927
Other income, principally interest 2,518 2,651
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Earnings before provision for income taxes 840 3,578
Provision for income taxes (benefit) (410) 560
----------- -----------
Net earnings $ 1,250 $ 3,018
=========== ===========
Weighted average shares outstanding:
Basic 6,878 7,155
=========== ===========
Diluted 6,879 7,156
=========== ===========
Net earnings per share:
Basic $ 0.18 $ 0.42
=========== ===========
Diluted $ 0.18 $ 0.42
=========== ===========
Cash dividends declared and paid per common share $ 2.00 $ 2.10
=========== ===========
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 1, 2001 and April 2, 2000
(Unaudited)
(Dollars in thousands)
2001 2000
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Cash flows from operating activities:
Net earnings $ 1,250 $ 3,018
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 1,276 619
Other 63 98
Changes in (net of acquisition):
Accounts receivable 5,800 10,533
Inventories (215) (2,720)
Prepaid expenses (101) 9
Accounts payable and accrued liabilities (9,607) (7,076)
Federal and state income taxes (1,232) (2,986)
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Net cash provided by (used in) operating activities (2,766) 1,495
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Cash flows from investing activities (net of acquisition):
Marketable securities purchased (5,073) (19,875)
Marketable securities - maturities and sales 11,843 34,210
Acquisition of property, plant and equipment (1,126) (1,103)
Acquisition of business (4,750) --
Other 250 --
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Net cash provided by investing activities 1,144 13,232
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Cash flows from financing activities:
Dividends paid (13,755) (14,995)
Purchase of treasury stock -- (5,128)
Other 59 (2)
----------- -----------
Net cash used in financing activities (13,696) (20,125)
----------- -----------
Net decrease in cash and cash equivalents (15,318) (5,398)
Cash and cash equivalents at beginning of period 80,895 88,075
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Cash and cash equivalents at end of period $ 65,577 $ 82,677
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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 - ACQUISITION
On February 24, 2001, the Company acquired the outstanding stock of a supplier
to the defense industry for cash. For the year ended December 31, 2000, this
Company's sales were approximately $10,900,000.
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The foregoing information for the periods ended April 1, 2001, and April 2,
2000, 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, 2000, is summarized from audited
consolidated financial statements, but does not include all the disclosures
contained therein and should be read in conjunction with the 2000 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 2001 and 2000
Net sales increased by $1,138,000 from $18,507,000 to $19,645,000 or
6%, resulting from the shipment of more units. The sales rise reflects sales
conditions peculiar to the first period, as well as as sales from the Company's
recently acquired defense business (the AMTEC Corporation acquired on February
24, 2001).
Gross profit for 2001 decreased $1,821,000 from $4,687,000 to
$2,866,000 or 25% versus 15% as a percentage of net sales. The reduction of
gross profit percentage reflected the inability to pass on increased cost and
less favorable manufacturing efficiencies experienced at the Company's
manufacturing facilities.
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, decreased from the 2000 level as a
result of a lower level of invested funds and a lower rate of return on the
Company's portfolio of short-term marketable securities.
Earnings before provision for income taxes decreased $2,738,000 from
$3,578,000 to $840,000. The provision for income taxes decreased from $560,000
to a benefit of $410,000, which resulted in an effective income tax rate
decrease from 16% to a taxable benefit of 49%, as a result of the tax benefit
generated from the operating loss being greater than the taxes due on investment
income. Net earnings decreased $1,768,000 from $3,018,000 to $1,250,000, or 59%.
The Company maintains adequate liquidity for all of its anticipated
capital requirements and dividend payments. 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 on cash equivalents and investments is
affected by changes in interest rates in the United States. The Company's
investments are held primarily in municipal bonds, a majority of which earn a
fixed rate of interest, while the remaining bonds earn a variable interest rate.
The Company uses sensitivity analysis to determine its exposure to changes in
interest rates. Through December 31, 2000, changes in these rates have not had a
material effect on the Company, and the Company does not anticipate that future
exposure to interest rate market risk will be material.
The Company has no history of, and does not anticipate in the future,
investing in derivative financial instruments. Most transactions with
international customers are entered into in U.S. dollars, precluding the need
for foreign currency hedges. Any transactions that are currently entered into in
foreign currency are not deemed material to the financial statements. Thus, the
exposure to foreign exchange market risk is not material.
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
(b) Reports on Form 8-K:
February 5, 2001 - Advised of a strategy shift in the sourcing
of products by Target, Inc. Advised of a
disappointment in the Christmas sales of
the Presto Pizzazz(TM) pizza oven.
February 27, 2001 - Advised that the Registrant finalized the
acquisition of AMTEC Corporation of
Janesville, Wisconsin.
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 2, 2001 /S/ M. J. Cohen
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M. J. Cohen, President
(Principal operating officer)
Date: May 2, 2001 /S/ R. F. Lieble
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R. F. Lieble, Chief Financial Officer and
Treasurer (Principal accounting officer)
National Presto Industries, Inc.
Exhibit Index
Exhibit
Number Exhibit Description
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11 Computation of Earnings per Share