[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 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 6,849,256 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 July 1, 2001 and December 31, 2000 (Unaudited) (Dollars in thousands) 2001 2000 - -------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 78,736 $ 79,624 Marketable securities 116,441 143,205 Accounts receivable, net 8,493 10,023 Inventories: Finished goods $ 23,964 $ 21,056 Work in process 6,917 2,416 Raw materials 5,435 6,968 Supplies 836 37,152 867 31,307 -------- -------- Prepaid expenses 239 47 -------- -------- Total current assets 241,061 264,206 PROPERTY, PLANT AND EQUIPMENT: 28,192 26,278 Less allowance for depreciation 14,921 13,271 12,984 13,294 -------- -------- OTHER ASSETS 14,207 11,207 -------- -------- $268,539 $288,707 ======== ======== The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS July 1, 2001 and December 31, 2000 (Unaudited) (Dollars in thousands) 2001 2000 - -------------------------------------------------------------------------------- LIABILITIES CURRENT LIABILITIES: Accounts payable $ 10,179 $ 16,014 Federal and state income taxes 1,154 3,108 Accrued liabilities 23,934 24,425 -------- -------- Total current liabilities 35,267 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 1,019 1,027 Retained earnings 243,255 254,381 -------- -------- 251,715 262,849 Treasury stock, at cost 18,443 17,689 -------- -------- Total stockholders' equity 233,272 245,160 -------- -------- $268,539 $288,707 ======== ======== The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS Three Months and Six Months ended July 1, 2001 and July 2, 2000 (Unaudited) (In thousands except per share data) <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED -------------------- --------------------- 2001 2000 2001 2000 - -------------------------------------------------------------------------- --------------------- <S> <C> <C> <C> <C> Net sales $ 17,251 $ 20,399 $ 36,896 $ 38,906 Cost of sales 14,089 14,741 30,868 28,561 -------- -------- -------- -------- Gross profit 3,162 5,658 6,028 10,345 Selling and general expenses 4,183 4,936 8,727 8,696 -------- -------- -------- -------- Operating profit (loss) (1,021) 722 (2,699) 1,649 Other income, principally interest 2,131 2,587 4,649 5,238 -------- -------- -------- -------- Earnings before provision for income taxes 1,110 3,309 1,950 6,887 Provision (benefit) for income taxes (269) 461 (679) 1,021 -------- -------- -------- -------- Net earnings $ 1,379 $ 2,848 $ 2,629 $ 5,866 ======== ======== ======== ======== Weighted average shares outstanding: Basic 6,861 7,038 6,869 7,097 ======== ======== ======== ======== Diluted 6,862 7,039 6,870 7,098 ======== ======== ======== ======== Net earnings per share: Basic $ 0.20 $ 0.40 $ 0.38 $ 0.83 ======== ======== ======== ======== Diluted $ 0.20 $ 0.40 $ 0.38 $ 0.83 ======== ======== ======== ======== Cash dividends declared and paid per common share $ -- $ -- $ 2.00 $ 2.10 ======== ======== ======== ======== </TABLE> The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months ended July 1, 2001 and July 2, 2000 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 2001 2000 -------- -------- <S> <C> <C> Cash flows from operating activities: Net earnings $ 2,629 $ 5,866 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for amortization and depreciation 2,109 1,269 Other 87 136 Changes in (net of acquisition): Accounts receivable 3,578 9,120 Inventories (4,191) (10,624) Prepaid expenses (175) (29) Accounts payable and accrued liabilities (9,920) (7,639) Federal and state income taxes (1,954) (3,900) -------- -------- Net cash used in operating activities (7,837) (5,801) -------- -------- Cash flows from investing activities (net of acquisition): Marketable securities purchased (19,852) (30,625) Marketable securities - maturities and sales 46,616 32,887 Acquisition of property, plant and equipment (1,968) (2,219) Acquisition of business (net of cash acquired) (3,494) -- Other 251 5 -------- -------- Net cash provided by investing activities 21,553 48 -------- -------- Cash flows from financing activities: Dividends paid (13,755) (14,995) Purchase of treasury stock (908) (6,492) Other 59 (2) -------- -------- Net cash used in financing activities (14,604) (21,489) -------- -------- Net decrease in cash and cash equivalents (888) (27,242) Cash and cash equivalents at beginning of period 79,624 88,075 -------- -------- Cash and cash equivalents at end of period $ 78,736 $ 60,833 ======== ======== </TABLE> 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. - -------------------------------------------------------------------------------- The foregoing information for the periods ended July 1, 2001, and July 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 Second Quarter 2001 and 2000 Net sales decreased by $3,148,000 from $20,399,000 to $17,251,000 or 15%, resulting from the shipment of fewer units. Gross profit for 2001 decreased $2,496,000 from $5,658,000 to $3,162,000 or 28% versus 18% 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 $2,199,000 from $3,309,000 to $1,110,000. The provision for income taxes decreased from $461,000 of expense to a benefit of $269,000, which resulted in an effective income tax rate decrease from 14% to a taxable benefit of 24%, as a result of the tax benefit generated from the operating loss being greater than the taxes due on investment income. Net earnings decreased $1,469,000 from $2,848,000 to $1,379,000, or 52%. 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. Comparison First Six Months 2001 and 2000 Net sales decreased by $2,010,000 from $38,906,000 to $36,896,000 due primarily to decreased unit volume. Gross profit for 2001 decreased $4,317,000 from $10,345,000 to $6,028,000 or 27% versus 16% 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 accrual for unexpended advertising costs discussed in the Second Quarter comparison also applies to the first six months. 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 $4,937,000 from $6,887,000 to $1,950,000. The provision for income taxes decreased from an expense of $1,021,000 to a benefit of $679,000, which resulted in an effective income tax rate decrease from 15% to a taxable benefit of 35%, as a result of the tax benefit generated from the operating loss being greater than the taxes due on investment income. Net earnings decreased $3,237,000 from $5,866,000 to $2,629,000, or 55%.
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 July 1, 2001, 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: None 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: July 31, 2001 /S/ M. J. Cohen ----------------------------------------- M. J. Cohen, President (Principal operating officer) Date: July 31, 2001 /S/ R. F. Lieble ----------------------------------------- R. F. Lieble, Chief Financial Officer and Treasurer (Principal accounting officer)
Exhibit Number Exhibit Description ------- ------------------- 11 Computation of Earnings per Share