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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1997 Commission File
No. 0-1709
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RVM INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 31-1515410
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 10002, 861 E. Tallmadge Ave., Akron, OH 44310
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 630-4528.
NOT APPLICABLE
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(Former name, former address and former fiscal year, if changed from last
report)
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
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The number of shares outstanding of the issuer's classes of common stock as of
August 13, 1997 is:
Common stock shares 1,934,255
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RVM INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
1997
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ASSETS June 30 March 31
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Current assets:
Cash and cash equivalents $ 843,565 $ 468,572
Receivables:
Trade, net of allowance for doubtful
accounts of $155,000 and $112,000
in June and March 8,269,485 6,506,008
Related party 216,955 120,008
Inventories 8,990,150 8,677,160
(Excess of replacement or current cost
over stated values was $1,965,000
and $1,955,000 in June and March)
Deferred income taxes 479,375 413,500
Other current assets 212,735 211,648
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Total current assets 19,012,265 16,396,896
Property, plant and equipment, net 19,580,179 19,021,289
Funds held by trustees for capital expenditures 2,683,690 2,762,242
Other assets 384,625 386,948
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Total assets $41,660,759 $38,567,375
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See accompanying notes to the consolidated financial statements.
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RVM INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS, Continued
1997
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LIABILITIES AND SHAREHOLDERS' EQUITY June 30 March 31
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Current liabilities:
Accounts payable - trade $ 7,002,171 $ 6,151,924
- related parties 442,131 382,338
Accrued expenses and liabilities:
Compensation 756,390 746,156
Product warranty 540,000 540,000
Income taxes 458,169 94,750
Other 873,132 937,071
Current portion of long-term debt:
- other 5,671,770 5,161,863
- related parties 403,100 56,550
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Total current liabilities 16,146,863 14,070,652
Long-term debt 15,017,571 14,238,548
Notes payable - related parties 3,627,900 3,974,450
Deferred income taxes 562,800 227,500
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Total liabilities 35,355,134 32,511,150
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Commitments and contingent liabilities
Shareholders' equity:
Common stock, $.01 par value; authorized shares,
3,000,000; issued 1,934,255 shares at June 30
and March 31 19,343 19,343
Additional capital 4,773,369 4,985,020
Retained earnings 1,512,913 1,051,862
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Total shareholders' equity 6,305,625 6,056,225
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Total liabilities and shareholders' equity $41,660,759 $38,567,375
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See accompanying notes to the consolidated financial statements.
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RVM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Three Months Ended June 30
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1997 1996
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Net sales $ 18,865,416 $ 15,946,481
Cost of sales 15,828,067 14,020,544
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Gross profit 3,037,349 1,925,937
Selling, general and administrative expenses 1,523,711 1,414,683
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Income from operations 1,513,638 511,254
Other income 22,400 20,954
Interest expense (369,089) (312,017)
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Income before income taxes and cumulative
effect of accounting change 1,166,949 220,191
Provision for income taxes 705,898 134,200
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Income before cumulative effect of
accounting change 461,051 85,991
Cumulative effect of accounting change 211,651 0
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Net income 249,400 85,991
Reclassification of undistributed net
loss of S-corporations 211,651 140,738
Retained earnings, beginning of period 1,051,862 180,458
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Retained earnings, end of period $ 1,512,913 $ 407,187
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Pro forma income data:
Net income as reported $ 249,400 $ 85,991
Pro forma income tax benefit 77,691 52,073
Cumulative effect of accounting change 211,651 0
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Pro forma net income $ 538,742 $ 138,064
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Pro forma net income
per common share $ .28 $ .07
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See accompanying notes to the consolidated financial statements.
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RVM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30
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1997 1996
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Cash flows from operating activities:
Net Income ........................................................ $ 249,400 $ 85,991
Adjustments to reconcile net income to net cash provided
from (used for) operating activities:
Depreciation and amortization .................................. 377,123 325,566
Deferred income taxes .......................................... 269,425 3,200
Increase (decrease) in allowance for doubtful accounts ......... 43,292 (5,500)
Cumulative effect of accounting change ......................... 205,244 0
Increase (decrease) in cash from changes in:
Receivables .................................................... (1,903,716) (97,804)
Inventories .................................................... (312,990) 794,043
Other assets ................................................... (12,366) 97,636
Accounts payable ............................................... 910,042 (618,787)
Refundable and accrued income taxes ............................ 363,419 127,000
Accrued expenses and other current liabilities ................. (53,705) (19,853)
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Net cash provided from (used for) operating activities ......... 135,168 691,492
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Cash flows from investing activities:
Capital expenditures .............................................. (1,125,835) (2,250,959)
Grants (expended) received for capital expenditures ............... 0 375,000
Investment of proceeds and income from long-term debt with trustees (34,202) (37,972)
Sale of investments and release of funds held by trustees ......... 112,754 1,813,084
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Net cash provided from (used for) investing activities ......... (1,047,283) (100,847)
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Cash flows from financing activities:
Payments on long-term debt ........................................ (357,369) (887,992)
Proceeds from (payments on) notes payable - bank, net ............. 1,644,477 (1,249,441)
Proceeds from notes and accounts payable to related parties ....... 0 1,571,396
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Net cash provided from (used for) financing activities ......... 1,287,108 (566,037)
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Net increase (decrease) in cash and cash equivalents ................. 374,993 24,608
Cash and cash equivalents at beginning of year ....................... 468,572 471,161
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Cash and cash equivalents at end of period ........................... $ 843,565 $ 495,769
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See accompanying notes to the consolidated financial statements.
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RVM INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. The information in this report reflects all adjustments which are, in
the opinion of management, necessary for a fair statement of the
results for the interim periods presented for RVM Industries, Inc.
("the Company"). All adjustments other than those described in this
report are, in the opinion of management, of a normal and recurring
nature. These consolidated financial statements include the accounts
of RVM's wholly owned subsidiaries: Ravens, Inc. ("Ravens"), Albex
Aluminum, Inc. ("Albex") and Signs and Blanks, Inc. ("SABI"). All
significant intercompany accounts and transactions have been
eliminated.
2. Earnings per common share are based on net income divided by the
weighted average number of common and common stock equivalent shares
outstanding. Loss per common share is based on net loss divided by the
weighted average number of common shares outstanding. The weighted
average number of common shares outstanding was 1,934,255 in 1997 and
1,943,525 in 1996.
3. Inventories consist of the following:
June 30, 1997 March 31, 1997
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Raw materials $5,707,466 $5,314,901
Work in process 641,053 430,650
Finished goods 2,641,631 2,931,609
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$8,990,150 $8,677,160
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The reserve to reduce the carrying value of inventories from current
cost to the LIFO basis amounted to approximately $1,965,000 at June 30
and $1,955,000 at March 31.
4. On April 1, 1997, Albex and SABI changed their fiscal year ends from
December 31 to March 31 to conform with the March 31 year ends of RVM
and Ravens. $211,651 is the cumulative effect of this accounting
change and is equivalent to the net loss for Albex and SABI for the
quarter ended March 31, 1997. If the fiscal year ends had changed
effective April 1, 1996, the net income for the quarter ended June
30, 1996 would have decreased by $97,796. RVM's net income for the
quarter ended June 30, 1997 includes a net loss of $273,218 for Albex
and SABI compared to a net loss of $140,738 for the quarter ended
June 30, 1996. Albex and SABI were S-corporations until March 31,
1997. The undistributed net loss was reclassified from accumulated
deficit to additional capital.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
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5. Business Segment Information:
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Ravens Albex SABI Eliminations Consolidated
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Three months ended June 30, 1997
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Sales to customers $ 12,730,008 $ 3,195,204 $ 2,940,204 $ 18,865,416
Intersegment sales 0 1,960,087 (141) $ (1,959,946) 0
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Net sales $ 12,730,008 $ 5,155,291 $ 2,940,063 $ (1,959,946) $ 18,865,416
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Income (loss) from operations $ 1,318,368 $ (17,817) $ 245,155 $ (32,068) $ 1,513,638
Three months ended June 30, 1996
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Sales to customers $ 11,072,804 $ 1,871,546 $ 3,002,131 $ 15,946,481
Intersegment sales 0 1,192,664 103 $ (1,192,767) 0
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Net sales $ 11,072,804 $ 3,064,210 $ 3,002,234 $ (1,192,767) $ 15,946,481
============ ============ ============ ============ ============
Income (loss) from operations $ 504,757 $ (145,897) $ 154,084 $ (1,690) $ 511,254
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RVM INDUSTRIES, INC.
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1997
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash from operating and financing activities was used mainly for capital
expenditures on Albex's aluminum billet casting facility in the three months
ended June 30, 1997. Working capital increased to $2,865,402 at June 30 from
$2,326,244 at March 31. Accounts receivable - trade and accounts payable - trade
increased mainly due to a higher level of sales by Ravens in May and June 1997
than in February and March 1997.
The Company could have borrowed approximately $1,234,000 more than the amount
owed under various lines of credit at June 30, 1997. Although no assurances are
possible, the Company believes that its cash resources, credit arrangements, and
internally generated funds will be sufficient to meet its operating and capital
expenditure requirements for existing operations and to service its debt in the
next 12 months and foreseeable future. Cautionary statements: Demand for the
Company's products is subject to changes in general economic conditions and in
the specific markets in which the Company competes. The Company's liquidity
could be adversely affected if Albex is not successful in completing the casting
facility and generating sufficient sales of billet.
The Company's sales order backlog for new trailers was approximately $4,500,000
and $5,700,000 at June 30 and May 31, 1997, respectively. The Company is not
projecting that sales of trailers will continue at the same pace as the first
quarter during the remainder of the year ended March 31, 1998.
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MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 Compared to the
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Three Months Ended June 30, 1996
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Net sales increased 18.3% mainly due to increased volume of trailer sales by
Ravens and aluminum extrusion sales by Albex. The gross profit margin increased
to 16.1% from 12.1% due to improvements at all of the subsidiaries. Ravens
benefitted from higher sales and the closure of the utility trailer division
which generated losses in the prior year. Albex increased sales and operating
efficiencies in 1997 compared to 1996 when its production facility was relocated
from Elizabeth, West Virginia to Canton, Ohio. SABI increased its gross profit
on slightly lower sales by concentrating on more profitable customers and
lowering costs. Selling, general and administrative expenses decreased to 8.1%
from 8.9% of net sales as net sales increased at a greater rate than selling,
general and administrative expenses. Interest expense increased mainly due to
more debt outstanding during the quarter ended June 30, 1997 versus the quarter
ended June 30, 1996.
The provision for income taxes includes $261,000 for the establishment of
deferred income tax assets and liabilities as of April 1, 1997 when Albex and
SABI converted from S-corporations to C-corporations. The pro forma income tax
benefit is the amount that would have been recorded if Albex and SABI had been
taxed as C-corporations, based on the tax laws in effect during those periods.
See Note 4 to the consolidated financial statements for an explanation of the
cumulative effect of accounting change.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. Item
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18 Letter Regarding Change in Accounting Principles
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
June 30, 1997.
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.
RVM INDUSTRIES, INC.
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(Registrant)
By: /S/John J. Stitz
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John J. Stitz
principal financial officer
and principal accounting officer
Date: August 14, 1997
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