SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED July 6, 1997 [ ] 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 7,354,291 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 6, 1997 and December 31, 1996 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> ASSETS CURRENT ASSETS: 1997 1996 - ------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Cash and cash equivalents $ 76,678 $ 91,878 Marketable securities 143,776 136,159 Accounts receivable, net 8,128 21,826 Inventories: Finished goods $ 10,713 $ 8,470 Work in process 2,634 1,744 Raw materials 5,332 6,661 Supplies 1,096 19,775 945 17,820 -------- -------- Prepaid expenses 947 888 -------- -------- Total current assets 249,304 268,571 PROPERTY, PLANT AND EQUIPMENT: 18,943 17,256 Less allowance for depreciation 10,857 8,086 9,911 7,345 -------- -------- OTHER ASSETS 9,469 9,469 -------- -------- $266,859 $285,385 ======== ======== </TABLE> The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS July 6, 1997 and December 31, 1996 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> LIABILITIES CURRENT LIABILITIES: 1997 1996 - ------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> Accounts payable $ 7,627 $ 13,262 Federal and state income taxes 1,703 4,887 Accrued liabilities 20,123 20,387 -------- -------- Total current liabilities 29,453 38,536 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 916 $ 903 Retained earnings 231,327 $240,815 -------- -------- 239,684 $249,159 Treasury stock, at cost 2,278 $ 2,310 -------- -------- Total stockholders' equity 237,406 246,849 -------- -------- $266,859 $285,385 ======== ======== </TABLE> 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 6, 1997 and June 30, 1996 (Unaudited) (In thousands except per share data) <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED ---------------------- ---------------------- 1997 1996 1997 1996 -------- -------- -------- -------- <S> <C> <C> <C> <C> Net sales $ 16,870 $ 16,970 $ 34,817 $ 34,079 Cost of sales 11,938 12,632 25,954 26,104 -------- -------- -------- -------- Gross profit 4,932 4,338 8,863 7,975 Selling and general expenses 4,199 3,880 8,431 8,154 -------- -------- -------- -------- Operating profit (loss) 733 458 432 (179) Other income, principally interest 2,233 1,992 4,788 4,049 Other, principally litgation judgments / settlements -- -- 550 476 -------- -------- -------- -------- Earnings before provision for income taxes 2,966 2,450 5,770 4,346 Provision for income taxes 326 214 552 180 -------- -------- -------- -------- Net earnings $ 2,640 $ 2,236 $ 5,218 $ 4,166 ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding 7,359 7,355 7,359 7,355 ======== ======== ======== ======== Net earnings per common share $ 0.36 $ 0.31 $ 0.71 $ 0.57 ======== ======== ======== ======== Cash dividends declared and paid per common share $ -- $ -- $ 2.00 $ 2.00 ======== ======== ======== ======== </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 6, 1997 and June 30, 1996 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1997 1996 -------- -------- <S> <C> <C> Cash flows from operating activities: Net earnings $ 5,218 $ 4,166 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for depreciation 957 852 Stock compensation expense 49 22 Changes in: Accounts receivable 13,698 19,591 Inventories (1,955) (1,997) Prepaid expenses (59) 646 Accounts payable and accrued liabilities (5,899) (6,829) Federal and state income taxes (3,184) (4,671) -------- -------- Net cash provided by operating activities 8,825 11,780 -------- -------- Cash flows from investing activities: Marketable securities purchased (29,861) (42,414) Marketable securities - maturities and sales 22,244 41,459 Acquisition of property, plant and equipment (1,700) (1,964) Other 2 7 -------- -------- Net cash used in investing activities (9,315) (2,912) -------- -------- Cash flows from financing activities: Dividends paid (14,706) (14,701) Other (4) 39 -------- -------- Net cash used in financing activities (14,710) (14,662) -------- -------- Net decrease in cash and cash equivalents (15,200) (5,794) Cash and cash equivalents at beginning of period 91,878 91,448 -------- -------- Cash and cash equivalents at end of period $ 76,678 85,654 ======== ======== </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 Earnings per share are computed using the weighted average common shares outstanding during each period. NOTE B - NEW ACCOUNTING PRONOUNCEMENT The FASB has issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE, which is effective for financial statements issued after December 15, 1997. Early adoption of the new standard is not permitted. The new standard eliminates primary and fully diluted earnings per share and requires presentation of basic and diluted earnings per share together with disclosure of how the per share amounts were computed. The adoption of this new standard is not expected to have a material impact on the disclosure of earnings per share in the financial statements. - ------------------------------------------------------------------------ The foregoing information for the periods ended July 6, 1997, and June 30, 1996, 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, 1996, is summarized from audited consolidated financial statements, but does not include all the disclosures contained therein and should be read in conjunction with the 1996 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 Comparison Second Quarter 1997 and 1996 Net sales decreased $100,000 from $16,970,000 to $16,870,000. Gross margins as a percentage of sales increased from 26% to 29%, primarily as a result of more favorable manufacturing variances. 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. Both other income, principally interest and net earnings increased from the 1996 level primarily as a result of a higher rate of return on a higher level of invested funds. Earnings before provision for income taxes increased $516,000 from $2,450,000 to $2,966,000. The provision for income taxes increased from $214,000 to $326,000 and the effective income tax rate increased from 9% to 11%, as a result of increased earnings subject to tax. Net earnings increased $404,000 from $2,236,000 to $2,640,000, or 18%. The Company maintains adequate liquidity for all of its anticipated capital requirements. As of quarter-end, there were no material capital commitments outstanding.
Comparison of the First Six Months 1997 and 1996 Net sales increased by $738,000 from $34,079,000 to $34,817,000, primarily due to a higher volume. Gross margins as a percentage of sales increased from 23% to 26%, primarily as a result of more favorable manufacturing variances offset in part by a less favorable product mix. The accrual for unexpended advertising costs discussed in the Second Quarter comparison also applies to the first six months. Both other income, principally interest and net earnings increased from the 1996 level primarily as a result of a higher rate of return on a higher level of invested funds. Both years were favorably impacted by litigation judgments / settlements of a non-recurring nature. Earnings before provision for income taxes increased $1,424,000 from $4,346,000 to $5,770,000. The provision for income taxes increased from $180,000 to $552,000 and the effective income tax rate increased from 4% to 10%, as a result of increased earnings subject to tax. Net earnings increased $1,052,000 from $4,166,000 to $5,218,000, or 25%.
PART II - OTHER INFORMATION Item 4. Submission of matters to a vote of security holders On May 20, 1997, the Registrant held its Annual Meeting of Stockholders at which time the nominees proposed by the Board were re-elected to three year terms. The results of the vote on the Board of Directors election was as follows: Against Abstentions or and Broker Nominee For Withheld non-votes ------- --- -------- --------- Melvin S. Cohen 6,374,533 57,304 76,670 MaryJo Cohen 6,412,283 18,754 76,670 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 3 (i) - Restated Articles of Incorporation (ii) - By-Laws Exhibit 9 - Voting Trust Agreement Exhibit 10.1 - 1988 Stock Option Plan Exhibit 10.2 - Form of Incentive Stock Option Agreement under 1988 Stock Option Plan Exhibit 11 - Statement Re computation of per share earnings Exhibit 27 - Financial Data Schedule (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: August 8, 1997 /S/ M. J. COHEN M. J. Cohen, President (Principal operating officer) Date: August 8, 1997 /S/ R. F. LIEBLE R. F. Lieble, Treasurer (Principal accounting officer)
Exhibit Number Exhibit Description ------ ------------------- + 3 (i) Restated Articles of Incorporation + 3 (ii) By-Laws + 9 Voting Trust Agreement + 10.1 * 1988 Stock Option Plan + 10.2 * Form of Incentive Stock Option Agreement under 1988 Stock Option Plan + 11 Statement Re computation of per share earnings + 27 Financial Data Schedule + Filed with this report * Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14 (C) of Form 10-K