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 OCTOBER 5, 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 7,354,556 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 October 5, 1997 and December 31, 1996 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1997 1996 ==================================================================================================================== <S> <C> <C> <C> <C> ASSETS CURRENT ASSETS: Cash and cash equivalents $ 89,869 $ 91,878 Marketable securities 123,023 136,159 Accounts receivable, net 15,862 21,826 Inventories: Finished goods $ 18,280 $ 8,470 Work in process 2,295 1,744 Raw materials 5,974 6,661 Supplies 1,064 27,613 945 17,820 -------- -------- Prepaid expenses 910 888 -------- -------- Total current assets 257,277 268,571 PROPERTY, PLANT AND EQUIPMENT: 19,915 17,256 Less allowance for depreciation 11,035 8,880 9,911 7,345 -------- -------- OTHER ASSETS 9,469 9,469 -------- -------- $275,626 $285,385 ======== ======== </TABLE> The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS October 5, 1997 and December 31, 1996 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1997 1996 ==================================================================================================================== <S> <C> <C> <C> <C> LIABILITIES CURRENT LIABILITIES: Accounts payable $ 10,930 $ 13,262 Federal and state income taxes 1,850 4,887 Accrued liabilities 21,925 20,387 -------- -------- Total current liabilities 34,705 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 920 903 Retained earnings 234,831 240,815 -------- -------- 243,192 249,159 Treasury stock, at cost 2,271 2,310 -------- -------- Total stockholders' equity 240,921 246,849 -------- -------- $275,626 $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 Nine Months ended October 5, 1997 and September 29, 1996 (Unaudited) (In thousands except per share data) <TABLE> <CAPTION> THREE MONTHS ENDED NINE MONTHS ENDED 1997 1996 1997 1996 ==================================================================================================================== <S> <C> <C> <C> <C> Net sales $ 24,917 $ 23,001 $ 59,734 $ 57,080 Cost of sales 16,646 16,065 42,600 42,169 --------------------- ---------------------- Gross profit 8,271 6,936 17,134 14,911 Selling and general expenses 6,121 5,512 14,552 13,666 --------------------- ---------------------- Operating profit 2,150 1,424 2,582 1,245 Other income, principally interest 2,249 2,005 7,037 6,054 Other, principally litgation judgments / settlements - - 550 476 --------------------- ---------------------- Earnings before provision for income taxes 4,399 3,429 10,169 7,775 Provision for income taxes 896 608 1,448 788 --------------------- ---------------------- Net earnings $ 3,503 $ 2,821 $ 8,721 $ 6,987 ===================== ====================== Weighted average common and common equivalent shares outstanding 7,359 7,355 7,359 7,355 ===================== ====================== Net earnings per common share $ 0.48 $ 0.38 $ 1.19 $ 0.95 ===================== ====================== 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 Nine Months ended October 5, 1997 and September 29, 1996 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1997 1996 ==================================================================================================================== <S> <C> <C> Cash flows from operating activities: Net earnings $ 8,721 $ 6,987 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for depreciation 1,357 1,367 Stock compensation expense 67 47 Changes in: Accounts receivable 5,964 21,759 Inventories (9,793) (1,406) Prepaid expenses (22) 659 Accounts payable and accrued liabilities (794) (3,348) Federal and state income taxes (3,037) (4,718) -------- -------- Net cash provided by operating activities 2,463 21,347 -------- -------- Cash flows from investing activities: Marketable securities purchased (60,023) (85,607) Marketable securities - maturities and sales 73,159 75,427 Acquisition of property, plant and equipment (2,917) (2,607) Other 26 7 -------- -------- Net cash provided by (used in) investing activities 10,245 (12,780) -------- -------- Cash flows from financing activities: Dividends paid (14,706) (14,700) Other (11) 21 -------- -------- Net cash used in financing activities (14,717) (14,679) -------- -------- Net decrease in cash and cash equivalents (2,009) (6,112) Cash and cash equivalents at beginning of period 91,878 91,448 -------- -------- Cash and cash equivalents at end of period $ 89,869 $ 85,336 ======== ======== </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 Net earnings per share are computed using the weighted average common shares outstanding during each period. - -------------------------------------------------------------------------------- The foregoing information for the periods ended October 5, 1997, and September 29, 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 Third Quarter 1997 and 1996 Net sales increased $1,916,000 from $23,001,000 to $24,917,000, primarily due to higher volume. Gross margins as a percentage of sales increased from 30% to 33%, 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. Other income, principally interest, 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 $970,000 from $3,429,000 to $4,399,000. The provision for income taxes increased from $608,000 to $896,000 and the effective income tax rate increased from 18% to 20%, as a result of increased earnings subject to tax. Net earnings increased $682,000 from $2,821,000 to $3,503,000, or 24%. 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 Nine Months 1997 and 1996 Net sales increased by $2,654,000 from $57,080,000 to $59,734,000, primarily due to a higher volume. Gross margins as a percentage of sales increased from 26% to 29%, primarily as a result of more favorable manufacturing variances. The accrual for unexpended advertising costs discussed in the Third Quarter comparison also applies to the first nine months. Other income, principally interest, 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 $2,394,000 from $7,775,000 to $10,169,000. The provision for income taxes increased from $788,000 to $1,448,000 and the effective income tax rate increased from 10% to 14%, as a result of increased earnings subject to tax. Net earnings increased $1,734,000 from $6,987,000 to $8,721,000, or 25%.
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 form 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 form Exhibit 3 (ii) of the Company's quarterly report on Form 10-Q for the quarter ended July 6, 1997 Exhibit 9 - Voting Trust Agreement - incorporated by reference form 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 form 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 form 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 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: November 4, 1997 /S/ M. J. Cohen --------------------------------------- M. J. Cohen, President (Principal operating officer) Date: November 4, 1997 /S/ R. F. Lieble --------------------------------------- R. F. Lieble, Treasurer (Principal accounting officer)
Exhibit Number Exhibit Description ------ ------------------- 11 Computation of Earnings per Share 27 Financial Data Schedule