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 APRIL 5, 1998 [] 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 7,356,804 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 April 5, 1998 and December 31, 1997 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1998 1997 - ------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> ASSETS CURRENT ASSETS: Cash and cash equivalents $ 94,578 $ 91,639 Marketable securities 127,734 140,651 Accounts receivable, net 9,403 20,242 Inventories: Finished goods $ 9,646 $ 9,058 Work in process 2,619 1,675 Raw materials 5,112 6,900 Supplies 940 18,317 1,000 18,633 -------- -------- Prepaid expenses 1,251 918 -------- -------- Total current assets 251,283 272,083 PROPERTY, PLANT AND EQUIPMENT: 20,535 20,008 Less allowance for depreciation 11,522 9,013 11,002 9,006 -------- -------- OTHER ASSETS 10,781 10,781 -------- -------- $271,077 $291,870 ======== ======== </TABLE> The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 5, 1998 and December 31, 1997 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1998 1997 - ------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> LIABILITIES CURRENT LIABILITIES: Accounts payable $ 9,538 $ 15,958 Federal and state income taxes 2,972 4,923 Accrued liabilities 21,190 21,791 -------- -------- Total current liabilities 33,700 42,672 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 955 925 Retained earnings 231,192 243,092 -------- -------- 239,588 251,458 Treasury stock, at cost 2,211 2,260 -------- -------- Total stockholders' equity 237,377 249,198 -------- -------- $271,077 $291,870 ======== ======== </TABLE> The accompanying notes are an integral part of the financial statements.
NATIONAL PRESTO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS Three Months ended April 5, 1998 and April 6, 1997 (Unaudited) <TABLE> <CAPTION> (In thousands except per share data) THREE MONTHS ENDED ------------------ 1998 1997 - ----------------------------------------------------------------------------------------------------- <S> <C> <C> Net sales $ 18,965 $ 17,947 Cost of sales 14,043 14,016 ------- ------- Gross profit 4,922 3,931 Selling and general expenses 4,232 4,231 ------- ------- Operating profit 690 (300) Other income, principally interest 2,469 2,555 Other, principally litigation judgments / settlements - 550 ------- ------- Earnings before provision for income taxes 3,159 2,805 Provision for income taxes 349 226 ------- ------- Net earnings $ 2,810 $ 2,579 ======= ======= Weighted average shares outstanding: Basic 7,355 7,353 ======= ======= Diluted 7,356 7,354 ======= ======= Net earnings per share: Basic $ 0.38 $ 0.35 ======= ======= Diluted $ 0.38 $ 0.35 ======= ======= 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 Three Months ended April 5, 1998 and April 6, 1997 (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> 1998 1997 - ------------------------------------------------------------------------------------------------------------------------ <S> <C> <C> Cash flows from operating activities: Net earnings $ 2,810 $ 2,579 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for depreciation 519 468 Stock compensation expense 54 16 Changes in: Accounts receivable 10,839 11,469 Inventories 316 1,963 Prepaid expenses (333) (37) Accounts payable and accrued liabilities (7,021) (6,298) Federal and state income taxes (1,951) (2,474) -------- -------- Net cash provided by operating activities 5,233 7,686 -------- -------- Cash flows from investing activities: Marketable securities purchased (33,140) (17,341) Marketable securities - maturities and sales 46,057 18,764 Acquisition of property, plant and equipment (526) (217) Other - 2 -------- -------- Net cash provided by investing activities 12,391 1,208 -------- -------- Cash flows from financing activities: Dividends paid (14,710) (14,706) Other 25 20 -------- -------- Net cash used in financing activities (14,685) (14,686) -------- -------- Net increase (decrease) in cash and cash equivalents 2,939 (5,792) Cash and cash equivalents at beginning of period 91,639 91,878 -------- -------- Cash and cash equivalents at end of period $ 94,578 $ 86,086 ======== ======== </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 April 5, 1998, and April 6, 1997, 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, 1997, is summarized from audited consolidated financial statements, but does not include all the disclosures contained therein and should be read in conjunction with the 1997 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 1998 and 1997 Net sales increased by $1,018,000 from $17,947,000 to $18,965,000, in large part due to the close out of the electric BBQ Grill. Gross margins as a percentage of sales increased from 22% to 26%, primarily due to higher efficiencies 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 1997 level primarily as a result of a lower rate of return on invested funds. Earnings before provision for income taxes increased $354,000 from $2,805,000 to $3,159,000. The provision for income taxes increased from $226,000 to $349,000 and the effective income tax rate increased from 8% to 11%, as a result of increased earnings subject to tax. Net earnings increased $231,000 from $2,579,000 to $2,810,000, or 9%. National Presto Industries, Inc. has studied its computer software and hardware to determine its exposure to the century date problem. The year 2000 date problem consists of a date format shortcoming where the year is represented by only two digits causing programs that perform arithmetic operations, comparisons, or sorting of date fields to yield incorrect results. The work to correct the year 2000 problem began in 1997 and is expected to be completed in twelve to sixteen months. The cost, which is considered immaterial, will be directly reflected in the Statement of Earnings as incurred.
The Company maintains adequate liquidity for all of its anticipated capital requirements. As of quarter-end, there were no material capital commitments outstanding. 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 those anticipated by some of the statements made above. 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.
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 July 6, 1997 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 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 7, 1998 /S/ M. J. Cohen ------------------------------------- M. J. Cohen, President (Principal operating officer) Date: May 7, 1998 /S/ R. F. Lieble ------------------------------------- R. F. Lieble, Treasurer (Principal accounting officer)
National Presto Industries, Inc. Exhibit Index Exhibit Number Exhibit Description ------ ------------------- 11 Computation of Earnings per Share 27 Financial Data Schedule