-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Phy4iVz0lnJWTrCEPyLj6dXG8U7j3nm2RsLdFrwm9mVL2a6hY4xHR3MLHbLYhCm4 WE2sKvMKGI7tgy6wKSl+DQ== 0001005477-99-002293.txt : 19990514 0001005477-99-002293.hdr.sgml : 19990514 ACCESSION NUMBER: 0001005477-99-002293 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990403 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BILTRITE INC CENTRAL INDEX KEY: 0000004611 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 041701350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04773 FILM NUMBER: 99619859 BUSINESS ADDRESS: STREET 1: 57 RIVER STREET CITY: WELLESLEY HILLS STATE: MA ZIP: 02181 BUSINESS PHONE: 6172376655 MAIL ADDRESS: STREET 1: 57 RIVER STREET CITY: WELLESLEY HILLS STATE: MA ZIP: 02181 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN BILTRITE RUBBER CO INC DATE OF NAME CHANGE: 19730621 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Quarter Ended April 3, 1999 Commission File Number 1-4773 AMERICAN BILTRITE INC. (Exact name of registrant as specified in its charter) Delaware 04-1701350 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 57 River Street Wellesley Hills, Massachusetts 02481-2097 (Address of Principal Executive Offices) (781) 237-6655 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year if changed since 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 |_| Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date covered by this report. Title of Each Class Outstanding at May 10, 1999 - ------------------- --------------------------- Common 3,583,376 shares FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In thousands of dollars) April 3, December 31, 1999 1998 -------- -------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 43,673 $ 59,505 Accounts receivable, net 48,423 33,551 Inventories 79,819 69,722 Prepaid expenses & other current assets 8,818 9,199 -------- -------- TOTAL CURRENT ASSETS 180,733 171,977 Goodwill, net 22,060 22,332 Deferred income taxes 1,863 1,863 Other assets 16,146 16,097 Property, plant and equipment, net 123,979 123,770 -------- -------- $344,781 $336,039 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 4,950 Accounts payable 26,731 $ 20,596 Accrued expenses 52,207 50,328 Current portion of long-term debt 3,143 4,305 -------- -------- TOTAL CURRENT LIABILITIES 87,031 75,229 Long-term debt 111,020 114,101 Other liabilities 56,059 56,039 Noncontrolling interests 18,456 19,433 STOCKHOLDERS' EQUITY Common stock, par value $0.01-authorized 15,000,00 shares, issued 4,607,902 shares 46 46 Additional paid-in capital 19,423 19,423 Retained earnings 68,893 68,247 Accumulated other comprehensive loss (4,573) (4,906) Less cost of shares in treasury (11,574) (11,573) -------- -------- 72,215 71,237 -------- -------- $344,781 $336,039 ======== ======== See accompanying notes to consolidated condensed financial statements. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands of dollars) Three Months Ended April 3, April 4, 1999 1998 -------- -------- Net sales $106,987 $106,388 Interest and other income 484 248 -------- -------- 107,471 106,636 Costs and expenses: Cost of products sold 74,550 74,810 Selling, general and administrative expenses 27,527 27,192 Interest 2,403 2,115 -------- -------- 104,480 104,117 -------- -------- EARNINGS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 2,991 2,519 Income taxes 1,177 961 Noncontrolling interests (356) (233) -------- -------- NET EARNINGS $ 1,458 $ 1,325 ======== ======== Earnings per share: Basic $ .40 $ .36 ======== ======== Diluted $ .39 $ .35 ======== ======== Dividends declared per common share $ .125 $ .10 ======== ======== See accompanying notes to consolidated condensed financial statements. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands of dollars) Three Months Ended April 3, April 4, 1999 1998 -------- -------- OPERATING ACTIVITIES Net earnings $ 1,458 $ 1,325 Adjustments to reconcile net earnings to net cash used by operating activities: Depreciation and amortization 4,006 3,812 Accounts and notes receivable (15,017) (17,625) Inventories (10,279) (2,947) Prepaid expenses and other current assets 206 1,515 Accounts payable and accrued expenses 7,994 4,782 Noncontrolling interests 356 233 Other 20 215 -------- -------- NET CASH USED BY OPERATING ACTIVITIES (11,256) (8,690) INVESTING ACTIVITIES Investment in property, plant and equipment (3,762) (2,784) Purchase of short-term investments (9,200) Maturities of short-term investments 7,900 -------- -------- NET CASH USED BY INVESTING ACTIVITIES (3,762) (4,084) FINANCING ACTIVITIES Net short-term borrowings 4,950 4,800 Payments on long-term debt (4,243) (1,156) Purchase of treasury shares (1,689) Proceeds from exercise of stock options 13 Dividends paid (456) (364) -------- -------- NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (1,438) 3,293 Effect of foreign exchange 624 175 -------- -------- DECREASE IN CASH AND CASH EQUIVALENTS (15,832) (9,306) Cash and cash equivalents at beginning of period 59,505 19,306 -------- -------- CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 43,673 $ 10,000 ======== ======== See accompanying notes to consolidated condensed financial statements. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS April 3, 1999 Note A - Basis of Presentation The accompanying unaudited consolidated condensed financial statements which include the accounts of American Biltrite Inc. and its wholly-owned subsidiaries ("ABI") as well as entities over which it has voting control have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended April 3, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1998. Note B - Inventories Inventory at April 3, 1999 and December 31, 1998 consisted of the following (in thousands): April 3, December 31, 1999 1998 ------- ------- Finished goods $58,721 $50,683 Work-in-process 9,625 9,201 Raw materials and supplies 11,473 9,838 ------- ------- $79,819 $69,722 ======= ======= Note C - Commitments and Contingencies ABI has recorded what it believes are adequate provisions for environmental remediation and product-related liabilities. While the Company believes that its estimate of the future amount of these liabilities is reasonable, the ultimate outcome of these matters cannot be determined. Note D - Comprehensive Income As of January 1, 1998, the Company adopted Statement 130, Reporting Comprehensive Income. Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or shareholders' equity. Statement 130 requires foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS April 3, 1999 During the first quarter of 1999 and 1998, total comprehensive income amounted to $1,791,000 and $1,427,000, respectively. Note E - Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for the three months ended April 3, 1999 and April 4, 1998 (in thousands, except per share amounts): Three Months Ended April 3, April 4, 1999 1998 ------ ------ Numerator: Net income $1,458 $1,325 Denominator: Denominator for basic earnings per share: Weighted-average shares 3,646 3,637 Denominator for diluted earnings per share: Dilutive employee stock options 113 176 ------ ------ Weighted-average shares and assumed conversions 3,759 3,813 ====== ====== Basic earnings per share $ .40 $ .36 ====== ====== Diluted earnings per share $ .39 $ .35 ====== ====== Note F - Industry Segments Description of Products and Services The Company has four reportable segments: flooring products, tape products, jewelry and a Canadian division which produces flooring and rubber products. Congoleum represents the Company's flooring products segment, which manufactures vinyl and vinyl composition floor coverings with distribution primarily through floor covering distributors, retailers and contractors for commercial and residential use. The tape products segment consists of two production facilities in the United States and finishing and sales facilities in Belgium and Singapore. The FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS April 3, 1999 tape products segment manufactures paper, film, HVAC, electrical, shoe and other tape products for use in industrial and automotive markets. The jewelry segment reflects the results of K&M Associates L.P., a national costume jewelry supplier to the mass merchandiser markets. The Company's Canadian division produces flooring, rubber products, including materials used by footwear manufacturers, and other industrial products. Segment Profit and Assets Three Months Ended - ------------------------- April 3, April 4, (In thousands) 1999 1998 --------- --------- Revenues Revenues from external customers: Flooring products $ 65,162 $ 63,607 Tape products 21,603 21,085 Jewelry 10,537 12,180 Canadian division 9,685 9,516 --------- --------- Total revenues from external customers 106,987 106,388 --------- --------- Intersegment revenues: Flooring products 225 268 Tape products 60 49 Jewelry Canadian division 2,076 1,770 --------- --------- Total intersegment revenues 2,361 2,087 --------- --------- 109,348 108,475 Reconciling items Intersegment revenues (2,361) (2,087) --------- --------- Total consolidated revenues $ 106,987 $ 106,388 ========= ========= FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS April 3, 1999 Note F - Industry Segments continued Three Months Ended April 3, April 4, (In thousands) 1999 1998 ------- ------- Segment profit (loss) Flooring products $ 1,183 $ 672 Tape products 1,339 609 Jewelry (163) 765 Canadian division 851 818 ------- ------- Total segment profit 3,210 2,864 Reconciling items Corporate office loss (177) (312) Intercompany profit (42) (33) ------- ------- Total consolidated earnings before income taxes and other items $ 2,991 $ 2,519 ======= ======= April 3, April 4, 1999 1998 ------- ------- Segment assets Flooring products $238,448 $201,468 Tape products 56,711 54,033 Jewelry 18,053 22,898 Canadian division 22,853 22,152 -------- -------- Total segment assets 336,065 300,551 Reconciling items Corporate office assets 27,294 29,086 Intersegment accounts receivable (18,384) (19,855) Intersegment profit in inventory (194) (126) -------- -------- Total consolidated assets $344,781 $309,656 ======== ======== FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS April 3, 1999 Note G - Changes in Accounting Principles Effective January 1, 1999, the Company adopted the Accounting Standards Executive Committee of the AICPA Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." This Statement requires certain costs of internally developed software to be capitalized for years beginning after December 15, 1998. The adoption of this SOP did not have a material impact on the Company's financial statements. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS April 3, 1999 Results of Operations Net sales for the first quarter of 1999 were $107.0 million compared to $106.4 million for the first quarter of 1998. Sales for 1999 at K&M Associates L.P. ("K&M") were a little lower than in 1998. Sales for 1999 at all other locations were higher than in 1998. Interest and other income increased in the current quarter to $.5 million from $.2 million in last year's first quarter. The primary cause of this increase in 1999 is higher interest income at Congoleum Corporation ("Congoleum") from having funds available to invest during the quarter. Cost of products sold as a percentage of sales improved to 69.7% in the current quarter compared to 70.3% during the first quarter of 1998. This improvement in cost of sales resulted from lower raw material costs and higher manufacturing productivity. Selling, general and administrative expenses as a percentage of net sales remained unchanged at 25.7% in the current quarter compared to 25.6% during the first quarter of 1998. Net income for the first quarter of 1999 was $1,458,000 compared to $1,325,000 in last year's first quarter. All businesses of the Company generated higher profits in the current quarter compared to last year's first quarter except K&M which experienced a small loss in the current quarter. Liquidity and Capital Resources Cash and cash equivalents declined $15.8 million for the three months ended April 3, 1999 to $43.7 million. Working capital was $93.7 million, down from $96.7 million at year end 1998. The ratio of current assets to current liabilities at April 3, 1999 was 2.1 and at December 31, 1998 was 2.3. Cash used by operations was $11.3 million for 1999's first quarter and consists mainly of the seasonal increase in receivables and inventory. Capital expenditures in the current first quarter were $3.8 million and depreciation and amortization expense was $4.0 million. It is anticipated that total year capital spending will be in the range of $24 to $26 million. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS April 3, 1999 The Company has established a reserve for product related liabilities and an environmental reserve against which the costs of administration and remediation are and will be charged. Since legal proceedings tend to be unpredictable and costly, resolution of an environmental proceeding could possibly be material to the results of operations or cash flow for a particular quarterly or annual reporting period. Cash requirements for capital expenditures, working capital, debt service and the current authorization to repurchase $4.7 million of ABI's Common Stock and $3.1 million of Congoleum's Common Stock are expected to be financed from operating activities and borrowings under existing bank lines of credit which at ABI are presently $35.0 million and at Congoleum are $30.0 million. In 1996, the Company began the initial planning of a comprehensive initiative to address the impact of the Year 2000 on its information and equipment systems. The Company organized a Year 2000 oversight team to develop a strategy of evaluation, implementation, testing and contingency planning to address the Company's Year 2000 readiness. The evaluation phase involved performing a complete, company-wide inventory to identify all internal, general purpose and production hardware and software systems, as well any embedded logic devices used to control equipment or facilities, that required modification to become Year 2000 compliant. In addition to the Company's internal assessment, the Company communicated with all its distributors and all key third party suppliers of goods and services to determine their states of Year 2000 readiness, implementation of Year 2000 compliant systems and related contingency plans. In the second quarter of 1997, the Company began the implementation and testing phase of replacing or modifying system hardware, software and devices. As of March 1999, the Company has completed work on 85% of the systems identified as requiring modification. The Company anticipates that substantially all of its systems will be Year 2000 compliant by the beginning of the fourth quarter of 1999. Costs directly associated with achieving Year 2000 compliance, including modifying computer software or converting to new programs, consist of payments to third parties as well as an allocation of the payroll and benefits of its employees based on the amount of their time devoted to this activity. These costs are expensed as incurred. Costs for new hardware are capitalized in accordance with the Company's fixed asset policy, and any equipment retired is written off. FORM 10-Q PART I. FINANCIAL INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS April 3, 1999 The following table summarizes the Company's direct Year 2000 compliance expenditures (actual and planned) by year: (In thousands) 1997 1998 1999 ---- ---- ---- Expenses paid to third parties $307 $462 $376 Allocated payroll costs 457 533 251 Capital expenditures 120 415 196 In addition to work undertaken explicitly to achieve Year 2000 compliance, the Company has replaced or upgraded a number of systems in the ordinary course of business where the replacement or upgrade will, in addition to its primary benefits, also provide Year 2000 compliance. These costs are either capitalized or expensed in accordance with generally accepted accounting principles. The following table summarizes the Company's actual or planned expenditures on systems improvements undertaken for reasons unrelated to the Year 2000, but also serving to achieve Year 2000 compliance: (In thousands) 1997 1998 1999 ---- ---- ---- Expenses paid to third parties $118 $473 $780 Allocated payroll costs 74 279 198 Capital expenditures 244 470 382 The costs of achieving Year 2000 compliance, and of improving the Company's systems, are being funded through operating cash flow. With respect to embedded logic devices used to monitor or control equipment or facilities, the Company has completed a survey of allocations and identified 21 devices which must be modified or replaced. The Company expects to complete modification or replacement of these devices by the end of the third quarter of 1999 at an estimated aggregate cost of $0.3 million. Although the Company believes it has taken all of the necessary steps to ensure that the Company will be Year 2000 compliant, there can be no assurances that the Company will be able to complete all of the modifications in the required time frame, that all third parties will be Year 2000 compliant, or that unforeseen Year 2000 issues will not arise. Management currently believes the worst case scenario with any reasonable probability is that a small number of vendors, who are not critical to the operation of the Company's business, will be unable to supply materials for a short time after January 1, 2000, and that minor additional systems modifications not identified during evaluation or testing will be identified and corrected in a matter of days. The Company does not anticipate any disruption of service to its customers. The Company is currently preparing contingency plans for the various potential disruptions that could occur in spite of its own efforts and representations from its distributors and suppliers. FORM 10-Q PART II. OTHER INFORMATION AMERICAN BILTRITE INC. AND SUBSIDIARIES April 3, 1999 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K There were no reports on Form 8-K filed for the three months ended April 3, 1999. SIGNATURE 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. AMERICAN BILTRITE INC. ---------------------- (Registrant) Date: May 12, 1999 BY: /s/ Gilbert K. Gailius ----------------------- Gilbert K. Gailius Vice President-Finance EX-27 2 FDS --
5 1,000 3-MOS DEC-31-1999 JAN-01-1999 APR-03-1999 43,673 0 48,423 0 79,819 180,733 123,979 0 344,781 87,031 0 0 0 46 72,169 344,781 106,987 107,471 74,550 104,480 0 0 2,403 2,991 1,177 0 0 0 0 1,458 .40 .39
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