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 Quarter Ended . . April 6, 1997 . . 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 . . There were 7,354,097 shares of the Issuer's Common Stock outstanding as of the close of the period covered by this report. * 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 . . . <TABLE> <CAPTION> NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 6, 1997 and December 31, 1996 (Unaudited) (Dollars in thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> ASSETS CURRENT ASSETS: Cash and cash equivalents $ 86,086 $ 91,878 Marketable securities 134,736 136,159 Accounts receivable, net 10,357 21,826 Inventories: Finished goods $ 7,437 $ 8,470 Work in process 2,071 1,744 Raw materials 5,072 6,661 Supplies 1,277 15,857 945 17,820 --------------- ---------------- Prepaid expenses 925 888 ----------------- ----------------- Total current assets 247,961 268,571 PROPERTY, PLANT AND EQUIPMENT: 17,459 17,256 Less allowance for depreciation 10,367 7,092 9,911 7,345 --------------- ---------------- OTHER ASSETS 9,469 9,469 ================= ================= $264,522 $285,385 ================= ================= The accompanying notes are an integral part of the financial statements. </TABLE> <TABLE> <CAPTION> NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 6, 1997 and December 31, 1996 (Unaudited) (Dollars in thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> LIABILITIES CURRENT LIABILITIES: Accounts payable $ 7,523 $ 13,262 Federal and state income taxes 2,413 4,887 Accrued liabilities 19,828 20,387 ----------------- ----------------- Total current liabilities 29,764 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 912 903 Retained earnings 228,688 240,815 --------------- ---------------- 237,041 249,159 Treasury stock, at cost 2,283 2,310 --------------- ---------------- Total stockholders' equity 234,758 246,849 ================= ================= $264,522 $285,385 ================= ================= </TABLE> The accompanying notes are an integral part of the financial statements. <TABLE> <CAPTION> NATIONAL PRESTO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS Three Months ended April 6, 1997 and March 31, 1996 (Unaudited) (In thousands except per share data) THREE MONTHS ENDED ------------------ 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> Net sales $17,947 $ 17,109 Cost of sales 14,016 13,472 --------------- ----------------- Gross profit 3,931 3,637 Selling and general expenses 4,231 4,274 --------------- ----------------- Operating loss (300) (637) Other income, principally interest 2,555 2,057 Other, principally litgation judgments / settlements 550 476 --------------- ----------------- Earnings before provision for income taxes 2,805 1,896 Provision for income taxes 226 (34) --------------- ----------------- Net earnings $ 2,579 $ 1,930 =============== ================= Weighted average common shares outstanding 7353 7,351 =============== ================= Net earnings per common share $ 0.35 $ 0.26 =============== ================= Cash dividends declared and paid per common share $ 2.00 $ 2.00 =============== ================= </TABLE> The accompanying notes are an integral part of the financial statements. <TABLE> <CAPTION> NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months ended April 6, 1997 and March 31, 1996 (Unaudited) (Dollars in thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> Cash flows from operating activities: Net earnings $ 2,579 $ 1,930 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for depreciation 468 420 Stock compensation expense 16 14 Changes in: Accounts receivable 11,469 17,577 Inventories 1,963 297 Prepaid expenses (37) 308 Accounts payable and accrued liabilities (6,298) (6,570) Federal and state income taxes (2,474) (4,312) ----------------- ----------------- Net cash provided by operating activities 7,686 9,664 ----------------- ----------------- Cash flows from investing activities: Marketable securities purchased (17,341) (26,465) Marketable securities - maturities and sales 18,764 26,620 Acquisition of property, plant and equipment (217) (1,287) Change in other assets 2 3 ----------------- ----------------- Net cash used in investing activities 1,208 (1,129) ----------------- ----------------- Cash flows from financing activities: Dividends paid (14,706) (14,701) Other 20 26 ----------------- ----------------- Net cash used in financing activities (14,686) (14,675) ----------------- ----------------- Net decrease in cash and cash equivalents (5,792) (6,140) Cash and cash equivalents at beginning of period 91,878 91,448 ================= ================= Cash and cash equivalents at end of period $ 86,086 $ 85,308 ================= ================= </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 April 6, 1997, and March 31, 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 First Quarter 1997 and 1996 Net sales increased by $839,000 from $17,109,000 to $17,948,000, primarily due to higher volume. Gross margins as a percentage of sales increased from 21% to 22%, primarily as a result of more favorable manufacturing variances offset in part by a less favorable product mix. 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. Both years were favorably impacted by litigation judgments/settlements of a non-recurring nature. Earnings before provision for income taxes increased $909,000 from $1,896,000 to $2,805,000. The provision for income taxes increased from ($34,000) to $226,000 and the effective income tax rate increased from (2%) to 8%, as a result of increased earnings subject to tax. Net earnings increased $649,000 from $1,930,000 to $2,579,000, or 34%. The Company maintains adequate liquidity for all of its anticipated capital requirements. As of quarter-end, there were no material capital commitments outstanding. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 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: May 9, 1997 ____________________________/S/ M. J. COHEN M. J. Cohen, President Date: May 9, 1997 ____________________________/S/ R. F. LIEBLE R. F. Lieble, Treasurer (Principal accounting officer)