-----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, NU3/NsPRSPXCJ0h1rKnQYurqP7AKcrQxmncQWRruaMdBpKMc4yShCoAgxx++NFHt fTO1gchiTS23DhHqNfpoKw== 0000830524-00-000004.txt : 20000417 0000830524-00-000004.hdr.sgml : 20000417 ACCESSION NUMBER: 0000830524-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHASE CORP CENTRAL INDEX KEY: 0000830524 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 111797126 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09852 FILM NUMBER: 601946 BUSINESS ADDRESS: STREET 1: 26 SUMMER STREET STREET 2: STE 220 CITY: BRIDGEWATER STATE: MA ZIP: 02324 BUSINESS PHONE: 5082791789 MAIL ADDRESS: STREET 1: 26 SUMMER ST CITY: BRIDGEWATER STATE: MA ZIP: 02324 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C., 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended February 29, 2000 Commission File Number: 1-9852 CHASE CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 11-1797126 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 26 Summer St. Bridgewater, Massachusetts 02324 (Address of principal executive offices) (Zip Code) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Common Shares Outstanding as of March 31, 2000 3,972,502 PART 1: FINANCIAL INFORMATION
CHASE CORPORATION CONSOLIDATED BALANCE SHEET ASSETS Feb. 29, Aug.31, 2000 1999 (UNAUDITED) (AUDITED) CURRENT ASSETS Cash and cash equivalents $244,143 $185,269 Trade receivables,less allowance for doubtful accounts of $203,200 and $257,049 respectively 8,892,334 8,870,786 Note receivable from related party 107,582 107,582 Inventories(Note B) Finished and in process 3,571,066 2,041,496 Raw materials 4,980,131 5,407,813 8,551,197 7,449,309 Prepaid expenses & other curr assets 359,066 330,710 Deferred taxes 139,950 90,294 TOTAL CURRENT ASSETS 18,294,272 17,033,950 PROPERTY, PLANT AND EQUIPMENT Land and improvements 324,589 322,423 Buildings 3,520,234 3,587,304 Machinery & equipment 15,530,204 14,609,754 Construction in progress 1,257,327 835,445 20,632,354 19,354,926 Less allowance for depreciation 12,675,330 12,047,487 7,957,024 7,307,439 OTHER ASSETS Note receivable from related party Excess of cost over net assets of acquired businesses less amortization 8,976,744 9,304,559 Patents, agreements and trademarks less amortization 897,333 946,193 Cash surrender value of life ins. net 3,186,177 2,931,984 Deferred taxes 81,266 81,266 Investment in joint venture 1,085,026 1,044,797 Other 615,991 333,948 14,842,537 14,642,747 ----------- ----------- $41,093,833 $38,984,136 =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Feb. 29, Aug.31 2000 1999 (UNAUDITED) (AUDITED) CURRENT LIABILITIES Accounts payable $5,431,718 $4,387,943 Notes payable 1,849,264 1,576,477 Accrued expenses 1,882,895 2,456,838 Accrued pension expense - current 251,273 251,273 Income taxes (438,09) 53,008 Deferred compensation 31,717 41,999 Current portion of L.T. debt 2,553,501 2,540,457 --------- ---------- TOTAL CURRENT LIABILITIES 11,562,276 11,307,995 LONG-TERM DEBT, less current portion 6,722,409 6,508,471 Long-term deferred compensation obligations 612,470 338,582 ACCRUED PENSION EXPENSE 486,080 294,023 STOCKHOLDERS' EQUITY First Serial Preferred Stock, par value $1.00 a share authorized 100,000 shares; (issued-none) Common Stock. par value $.10 a share, Authorized 10,000,000 shares; issued and outstanding 5,011,673 shares at Feb. 29, 2000 and 4,994,928 shares at Aug. 31, 1999 respectively 501,167 499,493 Additional paid-in capital 3,569,065 3,466,834 Treasury Stock, 1,088,584 and 1,088,584 Feb. 29, 2000, and August 31, 1999, respectively. (4,687,565) (4,687,565) Cum. G/(L) on currency translation (167,746) (188,331) Retained earnings 22,495,677 21,444,634 ---------- ---------- 21,710,598 20,535,065 ---------- ---------- $41,093,833 $38,984,136 =========== ===========
See accompanying notes to the consolidated financial statements and accountants' review report.
CHASE CORPORATION STATEMENT OF CONSOLIDATED OPERATIONS (UNAUDITED) Six Months Ended Three Months Ended Feb.29, Feb.28, Feb.29, Feb.28, 2000 1999 2000 1999 Sales $29,755,161 $21,926,465 $14,917,478 $10,414,555 Commissions and other inc. 260,349 153,488 145,758 68,970 Interest 329 30,132 225 10,152 ---------- ---------- ----------- ---------- 30,015,839 22,110,085 15,063,461 10,493,677 Cost and Expenses Cost of products sold (Note B) 20,852,507 14,541,827 10,650,082 7,085,275 Sell.,gen. and admin. expen. 5,541,804 4,573,283 2,852,408 2,205,245 Bad debt expense (11,327) 21,200 (20,327) 8,900 Interest expense 410,604 81,465 220,616 41,237 ---------- ---------- ---------- --------- 26,793,588 19,217,775 13,702,779 9,340,657 ---------- ---------- ---------- --------- Income before income taxes and minority interests and participations 3,222,251 2,892,310 1,360,682 1,153,020 Income taxes 1,087,000 1,122,500 455,500 429,200 --------- --------- --------- --------- Income before minority interests and participations 2,135,251 1,769,810 905,182 723,820 Income from minority interest 166,000 125,000 86,000 65,000 Minority participation in subsidary 99,633 44,815 ---------- --------- -------- --------- NET INCOME $2,301,251 $1,994,443 $ 991,182 $ 833,635 ========== ========== ========= ========= Net income per share of Common Stock Basic $ 0.589 $ 0.512 $ 0.253 $ 0.214 ========== ========= ========= ========= Fully Diluted $ 0.574 $ 0.502 $ 0.247 $ 0.210 ========== ========= ========= =========
See accompanying notes to the consolidated financial statements and accountants' review report.
CHASE CORPORATION CONSOLATED STAREMENTS OF STOCKHOLKERS' EQUITY (UNAUDITED) 6 MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999 Cummulative Common Stock Additional Effect of Total Shares Paid-In Treasury Stock Retained Currency Shareholders' Issued Amount Capital Shares Amount Earnings Translation Equity Balance @ Aug. 31, 1998 4,977,650 $ 497,765 $3,370,066 1,072,084 $(4,535,476) $ 17,330,039 $ (238,728) $16,423,666 Curr. translation adjmt. 33,980 33,980 Exer.of stock options 16,216 1,621 (1,621) - Compensatory stock issuan 49,248 49,248 Purchase of treasury stock 16,500 (152,089) (152,089) Net Income for 6 months 1,994,443 1,994,443 Dividends paid in cash $.28 a share on common stock (1,093,715) (1,093,715) ------------------------------------------------------------------------------------------------------ Balance @ Feb. 28, 1999 4,993,866 499,386 3,417,693 1,088,584 (4,687,565) 18,230,767 (204,748) 17,255,533 Curr. translation adjmt. 16,417 16,417 Exer.of stock options 1,062 107 (107) - Compensatory stock issuan 49,248 49,248 Net Income for 6 months 3,213,867 3,213,867 ------------------------------------------------------------------------------------------------------- Balance @ Aug. 31, 1999 4,994,928 499,493 3,466,834 1,088,584 (4,687,565) 21,444,634 (188,331) 20,535,065 Curr. translation adjmt. 20,585 20,585 Tax effect of non ISO stock issued 54,656 54,656 Exer. Of stock options 16,745 1,674 (1,674) Compensatory stock issuance. 49,249 49,249 Net income for 6 months 2,301,251 2,301,251 Dividends paid in cash $.32 a share on common stock (1,250,208) (1,250,208) -------------------------------------------------------------------------------------------------------- Balance @ Feb. 29, 2000 5,011,673 $ 501,167 $ 3,569,065 1,088,584 $ (4,687,565) $ 22,495,677 $ (167,746) $21,710,598
See accompanying notes to the consolidated financial starements and accountants' review report
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Six Months Ended Feb. 29, Feb. 28, CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999 Net Income $2,301,251 $1,994,443 Adjmts. to reconcile net income to net cash provided by operating activities: Income from joint venture (166,000) (145,002) Minority interest 0 (99,633) Depreciation 657,511 440,003 Amortization 376,676 95,447 Provision for losses on accts. receivable (53,849) 24,665 Stock issued for compensation 49,249 49,248 Tax effect of cashless option exercise 54,656 Deferred taxes (49,656) (14,500) Change in assets and liabilities Trade receivables 32,301 741,865 Inventories (1,101,888) (335,830) Prepd. expenses & other curr. assets (28,356) (3,783) Accounts payable 1,043,775 (58,090) Accrued expenses (381,886) (807,363) Income taxes payable (491,100) (486,966) Deferred compensation 263,606 111,475 ---------- ----------- TOTAL ADJUSTMENTS 205,039 (488,464) NET CASH FROM OPERATIONS 2,506,290 1,505,979 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (1,286,512) (1,991,238) Cash paid for investment (30,000) Investment in trusteed assets (282,043) (134,475) Purchase of cash surrender value (254,193) (254,066) Proceeds from note receivable 272,787 59,792 Dividend received from joint venture 155,771 ---------- ----------- (1,424,190) (2,319,987) CASH FLOWS FROM FINANCING ACTIVITIES Increase in long-term debt 5,900,000 0 Payments of principal on debt (1,173,018) (328,571) Net borrowing under line-of-credit (4,500,000) 1,002,932 Dividend paid (1,250,208) (1,093,714) Purchase of Common Shares for Treasury 0 (152,089) ---------- ----------- (1,023,226) (571,442) NET CHANGE IN CASH 58,874 (1,385,450) CASH AT BEGINNING OF PERIOD 185,269 2,296,384 ---------- ----------- CASH AT END OF PERIOD $244,143 $910,934 ========== =========== CASH PAID DURING PERIOD FOR: Income taxes $1,583,548 $1,709,978 Interest $318,420 $81,465
See accompanying notes to the consolidated financial statements and accountants' review report. CHASE CORPORATION SECURITIES AND EXCHANGE COMMISSION NOTES TO CONSOLIDATED FINANCIAL STATEMENT April 13, 2000 Note A - Basis of Presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and all adjustments (consisting of nonrecurring accruals) have been made which are, in the opinion of Management, necessary to a fair statement of the results for the interim periods reported. The financial statements of Chase Corporation include the activities of its divisions and its foreign sales subsidiary. Note B - Inventories Certain divisions used estimated gross profit rates to determine the cost of goods sold. No significant adjustments have resulted from reconciling with the interim physical inventories as a result of using this method. Note C - Income per Share of Common Stock Income per share is based on the average number of shares and share equivalents outstanding during the period. The average number of shares outstanding used in determining basic per share results was 3,914,104 for the period of three months ended February 29, 2000. Earnings per share on a fully diluted basis were calculated on 4,014,104 common shares and share equivalents. Common share equivalents arise from the issuance of certain stock options. Note D - Review by Independent Public Accountant The financial information included in this form has been reviewed by an independent public accountant in accordance with established professional standards and procedures. Based upon such review, no adjustments or additional disclosures were recommended. Letter from the independent public accountant is included as a part of this report. INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors Chase Corporation Bridgewater, Massachusetts We have reviewed the consolidated balance sheet of Chase Corporation and Subsidiaries as of February 29, 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows for the periods of three and six months ended February 29, 2000, and February 28, 1999, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Chase Corporation. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Chase Corporation and Subsidiaries as of August 31, 1999, and the related statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated November 24, 1999, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of August 31, 1999, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /S/ LIVINGSTON & HAYNES, P.C. Wellesley, Massachusetts April 13, 2000 CHASE CORPORATION SECURITIES AND EXCHANGE COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net revenues for the second quarter and first half of fiscal 2000 increased by 44% and 36% respectively over comparable periods in fiscal 1999. While we continue to experience some growth within our Specialty Manufacturing segments, the majority of the increase was the result of our investments and acquisitions through the Electronic Manufacturing Services (EMS) segment. When comparing fiscal 1999 to the previous year, the revenues were about the same although the second quarter of fiscal 1999 was negatively affected by the loss of revenue from a terminated distribution agreement. During fiscal 1999, the Company acquired the remaining interest in its subsidiary, Sunburst EMS, and in May 1999 acquired RWA, Inc. Effective February 1, 2000 the Company acquired the assets of Netco Automation. These companies participate within the electronic manufacturing services industry. Therefore, the Company now has two reportable segments, Specialized Manufacturing and Electronic Manufacturing Services. Sales and Operating Profit by Segment ($-000) Electronic Specialized Manufacturing Manufacturing Services For the 6 Months ended 2/29/00: Sales $ 21,806 $ 7,929 Operating Profit $ 4,465 $ 475 During the first six months of fiscal 1999, the Electronic Manufacturing Services segment accounted for less than 10% of operating profit and of the assets of Chase Corporation. Cost of products sold increased in both the current quarter and year to date when compared to the previous period. To a large extent, this amount is volume related. For the first half as a percent of sales, there was an increase of 4%. This increase was largely due to some increases in raw materials, some selling price erosion associated with new contracts and product mix related to the continued increase in volume through our Electronic Manufacturing Services segment. When comparing the comparable period of fiscals 1999 and 1998, there was an increase of only 1%, which related mostly to raw material cost associated with a change in product mix. The Company's products associated with the Specialized Manufacturing segment are largely mature and some are highly competitive which could result in lower margins. Competitive pressure prevents us from being able to recover all our material price increases from our customers. Selling and administrative expenses are higher during the current year and are largely the result of acquisitions and volume increases. However, as a percent of sales, these expenses decreased by 2.2%. Our investments in personnel continue to support our ability to improve revenue and profitability. For the comparable six months during fiscal 1999, the expenses were also lower due to a reduction in certain warranty and administrative related costs associated with a large bridge construction contract and the elimination of the need to further adjust values of certain investments. The Company will continue to be focused on improving certain costs while continuing to provide quality products and services to the marketplace. Interest expense increased to $411,000 as compared to $81,000 and $139,000 respectively against the 1999 and 1998 fiscal years. The increase is associated with the borrowing required to complete our investments and acquisitions. During the prior periods the Company received the benefit of a large cash dividend declared and paid by our joint venture partner, The Stewart Group, Inc. The Company continues to benefit from solid earnings and low borrowing rates from its financial institutions. A significant amount of our improvement this fiscal period as compared to last year were related to the financial benefits received from the investments concluded during the end of fiscal 1999. The Converting group performed well during the current period as sales to the wire and cable market continued strong. During the first six months, the Company was able to replace sales lost through a terminated distribution agreement with sales of our own value added products and these sales also added to our improved profitability. Management will continue its approach of seeking to maximize and expand its current businesses, while at the same time seeking future opportunities through selective acquisitions. When comparing fiscal 1999 vs. 1998, while revenue remained somewhat constant, reduction in certain costs associated with a large bridge construction project and the demonstration of the need to further adjust the value of certain investments assisted in our profit improvements. The effective tax rates for the periods to date are lower than the effective tax rates. In both years the Company received the benefit of solid export sales through our Chase Export Corporation subsidiary. Also, effective January 1999, Chase acquired 100% ownership of Sunburst EMS that enabled us to consolidate its losses for income tax purposes. The income from minority interest relates to our equity position ownership in The Stewart Group, Inc., Toronto, Canada. Minority participation in subsidiary during the prior year represented the Company's 49.9% equity in the losses of Sunburst EMS. In January 1999, the Company acquired 100% ownership of Sunburst EMS. Liquidity & Sources of Capital The ratio of current assets to current liabilities was 1.6 at the end of the second quarter of fiscal 2000 as compared to 1.5 at the prior year-end. Long-term Debt increased by $200,000 while total liabilities increased by $900,000. Most of the increase is associated with the increase to inventory related to our improving sales along with our recent acquisition of Netco Automation as of February 1, 2000. The Company had $3,540,000 in available credit at February 29, 2000 under its credit arrangements with its bank and plans to utilize this means to help finance its interim needs during the year. Current financial resources and anticipated funds from operations are expected to be adequate to meet requirements for funds in the year ahead. Forward-Looking Information From time to time, the Company may publish, verbally or in written form, forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. In fact, this Form 10-Q (or any other periodic reporting documents required by the 1934 Act) may contain forward-looking statements reflecting the current views of the Company concerning potential future events or developments. The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements. In order to comply with the terms of the "safe harbor," the Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company's business include, but are not limited to, the following: uncertainties relating to economic conditions; uncertainties relating to government and regulatory policies; uncertainties relating to customer plans and commitments; the pricing and availability of equipment, materials and inventories; technological developments; performance issues with key suppliers and subcontractors; worldwide political stability and economic growth; regulatory uncertainties; delays in testing of new products; rapid technology Changes and the highly competitive environment in which the Company operates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits Reg. S-K Item 601 Subsection Description of Exhibit State Page Number Pursuant to reg. S-K item 601 no exhibits are required. (b) Reports on Form 8-K No 8-K reports were filed during the six months ended February 29, 2000. No financial statements were filed during the six months ended February 29, 2000. 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. CHASE CORPORATION /s/ Peter R. Chase Peter R. Chase, President & CEO Dated: April 13, 2000 EX-27 2
5 This schedule contains summary financial information extracted from SEC Form 10-Q and is qualified in its entirety by reference to such financial statements. 6-MOS AUG-31-2000 FEB-29-2000 244,143 0 9,095,534 203,200 8,551,197 18,294,272 20,632,354 12,675,330 41,093,833 11,562,276 0 0 0 501,167 21,209,431 41,093,833 29,755,161 30,015,510 20,852,507 20,852,507 0 (11,327) 410,604 3,222,251 1,087,000 2,301,251 0 0 0 2,301,251 0.59 0.57
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