Delaware
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001-05558
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75-1277589
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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SIGNATURES
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·
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Net sales increased slightly from $30.8 million for the three months ended December 31, 2009 to $30.9 million for the three months ended December 31, 2010.
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Gross margin was 7.7% in the fourth quarter of 2010, a decrease from 11.8% in the fourth quarter of 2009. The decrease was primarily a result of higher prices on both resin and latex binders, as well as inefficiencies resulting from the relocation of the Wilen operation from Atlanta, Georgia to Bridgeton, Missouri.
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Selling, general and administrative expenses were $1.8 million lower in the fourth quarter of 2010 than in the fourth quarter of 2009. The decrease was primarily due to prior year expenses associated with the transition and hiring of executive level personnel, a decrease in self-insurance and environmental accruals, a decrease in stock-based compensation expense, and a decrease in management bonus accruals.
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During the fourth quarter of 2010, Katy reported expense from severance, restructuring and related charges of $0.3 million associated with the Company’s initiative to close our Wilen facility in Atlanta, Georgia and relocate the manufacturing and distribution functions to Bridgeton, Missouri. During the fourth quarter of 2009, Katy reported severance, restructuring and related charges of $0.1 million resulting from changes in the estimates of future expenses for our non-cancelable lease liability, as well as a $0.1 million impairment charge related to fixed assets at our Gemtex business unit.
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Other loss during the fourth quarter of 2010 consists of a reserve adjustment for a non-trade receivable. Other income during the fourth quarter of 2009 primarily consists of $0.4 million in proceeds from an insurance claim and $0.1 million in proceeds from the sale of property from one of our non-operating subsidiaries.
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Net sales decreased slightly from $141.2 million for the year ended December 31, 2009 to $141.0 million for the year ended December 31, 2010.
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Gross margin was 11.1% for the year ended December 31, 2010, versus 14.2% for the same period in 2009. Gross margin was impacted by an unfavorable variance in our LIFO adjustment of $1.1 million resulting from an increase in resin prices. Excluding the LIFO adjustment, gross margin would have decreased 2.2 percentage points from the prior year. The decrease was primarily a result of higher prices on both resin and latex binders, as well as inefficiencies resulting from the relocation of the Wilen operation from Atlanta, Georgia to Bridgeton, Missouri.
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Selling, general and administrative expenses were $5.1 million lower for the year ended December 31, 2010 than for the same period in 2009. The decrease was primarily due to prior year expenses associated with the transition and hiring of executive level personnel, a decrease in self-insurance accruals, a decrease in stock-based compensation expense, and a decrease in management bonus accruals.
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For the year ended December 31, 2010, Katy reported expense from severance, restructuring and related charges of $1.3 million associated with the Company’s initiative to close our Wilen facility in Atlanta, Georgia and relocate the manufacturing and distribution functions to Bridgeton, Missouri. Katy also reported a gain on the sale of assets of $0.2 million. For the year ended December 31, 2009, Katy reported severance, restructuring and related charges of $0.1 million resulting from changes in the estimates of future expenses for our non-cancelable lease liability, a $0.1 million impairment charge related to fixed assets at our Gemtex business unit, and a loss on sale or disposal of assets of $0.1 million.
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Other income during the year ended December 31, 2010 primarily consists of a $2.1 million gain recognized from a settlement of an existing obligation due to Pentland USA, Inc. (“Pentland”). Other income during the year ended December 31, 2009 primarily consists of $0.4 million in proceeds from an insurance claim and $0.1 million in proceeds from the sale of property from one of our non-operating subsidiaries.
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KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS - UNAUDITED
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(In thousands, except per share data)
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Three Months Ended December 31,
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Year Ended December 31,
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2010
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2009
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2010
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2009
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Net sales
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$ | 30,943 | $ | 30,816 | $ | 141,000 | $ | 141,196 | ||||||||
Cost of goods sold
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28,558 | 27,190 | 125,326 | 121,134 | ||||||||||||
Gross profit
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2,385 | 3,626 | 15,674 | 20,062 | ||||||||||||
Selling, general and administrative expenses
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4,337 | 6,096 | 20,764 | 25,914 | ||||||||||||
Impairment of long-lived assets
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- | 118 | - | 118 | ||||||||||||
Severance, restructuring and related charges
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275 | 92 | 1,277 | 92 | ||||||||||||
(Gain) loss on sale or disposal of assets
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(27 | ) | 30 | (216 | ) | 91 | ||||||||||
Operating loss
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(2,200 | ) | (2,710 | ) | (6,151 | ) | (6,153 | ) | ||||||||
Interest expense
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(385 | ) | (292 | ) | (1,639 | ) | (1,165 | ) | ||||||||
Other, net
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(234 | ) | 582 | 2,232 | 705 | |||||||||||
Loss before income tax (provision) benefit
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(2,819 | ) | (2,420 | ) | (5,558 | ) | (6,613 | ) | ||||||||
Income tax (provision) benefit
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(10 | ) | 74 | 491 | 495 | |||||||||||
Net loss
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$ | (2,829 | ) | $ | (2,346 | ) | $ | (5,067 | ) | $ | (6,118 | ) | ||||
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Net loss per share of common stock:
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Basic and diluted
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$ | (0.36 | ) | $ | (0.30 | ) | $ | (0.64 | ) | $ | (0.77 | ) | ||||
Weighted average common shares outstanding:
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Basic and diluted
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7,951 | 7,951 | 7,951 | 7,951 | ||||||||||||
Other Information:
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LIFO adjustment (income) expense
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$ | (377 | ) | $ | (2 | ) | $ | 338 | $ | (806 | ) | |||||
KATY INDUSTRIES, INC. BALANCE SHEETS - UNAUDITED
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(In thousands)
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Assets
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December 31,
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Current assets:
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2010
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2009
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Cash
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$ | 1,319 | $ | 747 | ||||
Accounts receivable, net
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13,541 | 12,831 | ||||||
Inventories, net
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16,450 | 16,195 | ||||||
Other current assets
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1,512 | 1,144 | ||||||
Total current assets
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32,822 | 30,917 | ||||||
Other assets:
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Goodwill
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665 | 665 | ||||||
Intangibles, net
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3,530 | 4,010 | ||||||
Other
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3,160 | 2,830 | ||||||
Total other assets
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7,355 | 7,505 | ||||||
Property and equipment
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100,524 | 101,435 | ||||||
Less: accumulated depreciation
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(77,807 | ) | (73,417 | ) | ||||
Property and equipment, net
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22,717 | 28,018 | ||||||
Total assets
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$ | 62,894 | $ | 66,440 | ||||
Liabilities and stockholders' equity
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Current liabilities:
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Accounts payable
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$ | 12,094 | $ | 10,476 | ||||
Book overdraft
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1,257 | 1,285 | ||||||
Accrued expenses
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12,322 | 16,866 | ||||||
Current maturities of long-term debt
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1,275 | 6,899 | ||||||
Revolving credit agreement
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15,432 | 8,856 | ||||||
Total current liabilities
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42,380 | 44,382 | ||||||
Long-term debt, less current maturities
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6,169 | - | ||||||
Other liabilities
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5,306 | 8,739 | ||||||
Total liabilities
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53,855 | 53,121 | ||||||
Stockholders' equity:
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Convertible preferred stock
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108,256 | 108,256 | ||||||
Common stock
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9,822 | 9,822 | ||||||
Additional paid-in capital
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27,385 | 27,246 | ||||||
Accumulated other comprehensive loss
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(1,405 | ) | (2,053 | ) | ||||
Accumulated deficit
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(113,582 | ) | (108,515 | ) | ||||
Treasury stock
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(21,437 | ) | (21,437 | ) | ||||
Total stockholders' equity
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9,039 | 13,319 | ||||||
Total liabilities and stockholders' equity
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$ | 62,894 | $ | 66,440 | ||||
KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED
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(In thousands)
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Year Ended December 31,
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2010
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2009
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Cash flows from operating activities:
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Net loss
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$ | (5,067 | ) | $ | (6,118 | ) | ||
Depreciation and amortization
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6,645 | 6,834 | ||||||
Write-off and amortization of debt issuance costs
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470 | 382 | ||||||
Impairment of long-lived assets
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- | 118 | ||||||
Stock-based compensation
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(66 | ) | 560 | |||||
(Gain) loss on sale or disposal of assets
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(216 | ) | 91 | |||||
Gain on settlement of existing obligation
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(2,100 | ) | - | |||||
(334 | ) | 1,867 | ||||||
Changes in operating assets and liabilities:
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Accounts receivable
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(673 | ) | 1,080 | |||||
Inventories
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(166 | ) | 3,792 | |||||
Other assets
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(428 | ) | 1,152 | |||||
Accounts payable
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1,584 | 78 | ||||||
Accrued expenses
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(2,067 | ) | (590 | ) | ||||
Other
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(3,126 | ) | (2,284 | ) | ||||
(4,876 | ) | 3,228 | ||||||
Net cash (used in) provided by operating activities
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(5,210 | ) | 5,095 | |||||
Cash flows from investing activities:
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Capital expenditures
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(942 | ) | (1,948 | ) | ||||
Proceeds from sale of assets
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351 | 3 | ||||||
Net cash used in investing activities
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(591 | ) | (1,945 | ) | ||||
Cash flows from financing activities:
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Net borrowings (repayments) on revolving loans
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6,529 | (365 | ) | |||||
Decrease in book overdraft
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(28 | ) | (1,004 | ) | ||||
Proceeds from term loans
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8,182 | - | ||||||
Repayments of term loans
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(7,637 | ) | (1,529 | ) | ||||
Direct costs associated with debt facilities
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(775 | ) | - | |||||
Net cash provided by (used in) financing activities
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6,271 | (2,898 | ) | |||||
Effect of exchange rate changes on cash
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102 | (188 | ) | |||||
Net increase in cash
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572 | 64 | ||||||
Cash, beginning of period
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747 | 683 | ||||||
Cash, end of period
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$ | 1,319 | $ | 747 | ||||
Reconciliation of free cash flow to GAAP Results:
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Net cash (used in) provided by operating activities
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$ | (5,210 | ) | $ | 5,095 | |||
Capital expenditures
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(942 | ) | (1,948 | ) | ||||
Free cash flow
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$ | (6,152 | ) | $ | 3,147 | |||