UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 June 29, 2014
o 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 incorporation or organization)
(I.R.S. Employer 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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Large accelerated filer
Accelerated filer
x
Non-accelerated filer
Smaller reporting company
There were 6,911,560 shares of the Issuer’s Common Stock outstanding as of August 1, 2014.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 29, 2014 and December 31, 2013
(Unaudited)
(Dollars in thousands)
2014
2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
20,021
22,953
Marketable securities
23,230
36,404
Accounts receivable, net
42,985
84,322
Inventories:
Finished goods
42,325
36,078
Work in process
57,139
49,690
Raw materials
11,142
6,746
Supplies
73
110,679
—
92,514
Deferred tax assets
8,083
Income tax receivable
6,043
213
Other current assets
17,532
19,584
Total current assets
228,573
264,073
PROPERTY, PLANT AND EQUIPMENT
165,266
155,872
Less allowance for depreciation
70,937
94,329
66,283
89,589
GOODWILL
11,485
INTANGIBLE ASSETS, net
18,874
24,698
NOTE RECEIVABLE
3,756
3,695
357,017
393,540
The accompanying notes are an integral part of the condensed consolidated financial statements.
2
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
CURRENT LIABILITIES:
Accounts payable
26,945
38,323
Accrued liabilities
16,135
15,907
Total current liabilities
43,080
54,230
DEFERRED INCOME TAXES
6,761
6,759
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock, $1 par value:
Authorized: 12,000,000 shares
Issued: 7,440,518 shares
7,441
Paid-in capital
5,486
4,998
Retained earnings
310,802
336,895
Accumulated other comprehensive income
11
8
323,740
349,342
Treasury stock, at cost
16,564
16,791
Total stockholders’ equity
307,176
332,551
3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Six Months Ended June 29, 2014 and June 30, 2013
(In thousands except per share data)
Three Months Ended
Six Months Ended
Net sales
88,312
101,396
174,866
184,586
Cost of sales
72,170
82,985
143,004
149,966
Gross profit
16,142
18,411
31,862
34,620
Selling and general expenses
6,440
5,426
12,735
11,110
Intangibles amortization
3,381
166
5,824
333
Operating profit
6,321
12,819
13,303
23,177
Other income
148
147
312
355
Earnings before provision for income taxes
6,469
12,966
13,615
23,532
Income tax provision
2,298
4,665
4,754
8,377
Net earnings
4,171
8,301
8,861
15,155
Weighted average shares outstanding:
Basic and diluted
6,929
6,905
6,925
6,904
Net earnings per share:
0.60
1.20
1.28
2.20
Comprehensive income:
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities
(1
)
(28
(20
Comprehensive income
4,170
8,273
8,864
15,135
Cash dividends declared and paid per common share*
0.00
5.05
* An accelerated payment was made in late December 2012 of the annual 2013 dividend. The acceleration was occasioned by the uncertainty over the federal income tax rates that would be in effect for 2013. In contrast, the annual 2014 dividend payment was made during the first quarter of 2014.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 29, 2014 and June 30, 2013
Cash flows from operating activities:
Adjustments to reconcile net earnings to net
cash provided by operating activities, net of acquisition related assets:
Provision for depreciation
4,713
4,181
Provision for doubtful accounts
360
86
Other
263
293
Changes in:
Accounts receivable
42,475
3,891
Inventories
(13,477
(20,278
2,080
(3,444
Accounts payable and accrued liabilities
(11,606
2,476
Federal and state income taxes
(5,826
(1,580
Net cash provided by operating activities
33,667
1,113
Cash flows from investing activities:
Marketable securities purchased
(1,208
(6,151
Marketable securities - maturities and sales
14,388
16,650
Acquisition of property, plant and equipment
(4,953
(13,425
Acquisition of businesses, net of cash acquired
(10,534
Sale of property, plant and equipment
300
Net cash used in investing activities
(2,007
(2,918
Cash flows from financing activities:
Dividends paid
(34,954
362
Net cash used in financing activities
(34,592
Net decrease in cash and cash equivalents
(2,932
(1,805
Cash and cash equivalents at beginning of period
37,437
Cash and cash equivalents at end of period
35,632
5
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
6
NOTE D – BUSINESS SEGMENTS In the following summary, operating profit represents earnings before other income, principally interest income and income taxes. The Company’s segments operate discretely from each other with no shared manufacturing facilities. Costs associated with corporate activities (such as cash and marketable securities management) and the assets associated with such activities are included within the Housewares/Small Appliances segment for all periods presented.
(in thousands)
Housewares /SmallAppliances
Defense Products
Absorbent Products
Total
Quarter ended June 29, 2014
External net sales
21,949
50,367
15,996
4,408
13,200
(1,466
1,438
7,019
(2,136
Total assets
140,963
152,475
63,579
Depreciation and amortization
243
4,020
1,493
5,756
Capital expenditures
155
287
643
1,085
Quarter ended June 30, 2013
24,489
58,516
18,391
4,574
13,468
369
1,812
11,108
(101
176,646
132,073
61,533
370,252
275
540
1,418
2,233
164
4,715
2,777
7,656
Housewares/SmallAppliances
DefenseProducts
AbsorbentProducts
Six Months ended June 29, 2014
41,312
98,656
34,898
8,197
24,505
(840
2,382
13,046
(2,125
485
7,128
2,924
10,537
319
889
3,745
4,953
Six Months ended June 30, 2013
49,378
97,467
37,741
9,031
23,534
2,055
3,370
18,773
1,034
557
1,221
2,736
4,514
278
6,298
6,849
13,425
7
The carrying amount for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximates fair value due to the immediate or short-term maturity of these financial instruments.
The Company has classified all marketable securities as available-for-sale which requires the securities to be reported at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity. Highly liquid, tax-exempt variable rate demand notes with put options exercisable in three months or less are classified as marketable securities.
At June 29, 2014 and December 31, 2013, cost for marketable securities was determined using the specific identification method. A summary of the amortized costs and fair values of the Company’s marketable securities at the end of the periods presented is shown in the following table. All of the Company’s marketable securities are classified as Level 2, as defined by FASB ASC 820, with fair values determined using significant other observable inputs, which include quoted prices in markets that are not active, quoted prices of similar securities, recently executed transactions, broker quotations, and other inputs that are observable. There were no transfers into or out of Level 2 during the six months ended June 29, 2014.
(In Thousands)
MARKETABLE SECURITIES
AmortizedCost
Fair Value
GrossUnrealizedGains
GrossUnrealizedLosses
June 29, 2014
Tax-exempt Municipal Bonds
10,739
10,756
17
Variable Rate Demand Notes
12,474
Total Marketable Securities
23,213
December 31, 2013
20,813
20,825
18
15,579
36,392
Proceeds from maturities and sales of available-for-sale securities totaled $4,476,000 and $14,386,000 for the three month periods ended June 29, 2014 and June 30, 2013, and totaled $14,388,000 and $16,650,000 for the six months then ended, respectively. There were no gross gains or losses related to sales of marketable securities during the same periods. Net unrealized gains (losses) included in other comprehensive income were $(1,000) and $(43,000) before taxes for the three month periods ended June 29, 2014 and June 30, 2013, and were $5,000 and $(31,000) before taxes for the six month periods then ended, respectively. No unrealized gains or losses were reclassified out of accumulated other comprehensive income during the same periods.
The contractual maturities of the marketable securities held at June 29, 2014 are as follows: $8,533,000 within one year; $3,193,000 beyond one year to five years; $4,823,000 beyond five years to ten years, and $6,681,000 beyond ten years. All of the instruments in the beyond five year ranges are variable rate demand notes which can be tendered for cash at par plus interest within seven days. Despite the stated contractual maturity date, to the extent a tender is not honored, the notes become immediately due and payable.
The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of the acquisition date. The allocation differs from what was previously reported due to a final true up during the second quarter of 2014, the amount of which was not significant.
Receivables
1,498
Inventory
4,688
28
Property, plant and equipment
4,800
Total assets acquired
11,014
Less: Current liabilities assumed
480
Net assets acquired
10,534
The amount shown above for receivables represents the gross accounts receivable from the sales of goods, net of an allowance for doubtful accounts of $20,000.
9
The Company’s results of operations for the second quarter of 2014 includes revenue of $3,992,000 and earnings of $550,000 from the acquired facility, and revenue of $6,007,000 and earnings of $705,000 from the acquired facility from the date of acquisition through June 29, 2014. The following pro forma condensed consolidated results of operations has been prepared as if the acquisition had occurred as of January 1, 2013.
(unaudited)
(in thousands, except per share data)
Quarter Ended
June 30, 2013
106,380
175,501
193,701
8,368
8,581
15,350
Net earnings per share (basic and diluted)
1.21
1.24
2.22
Weighted average shares outstanding (basic and diluted)
The unaudited pro forma financial information presented above is not intended to represent or be indicative of what would have occurred if the transactions had taken place on the dates presented and is not indicative of what the Company’s actual results of operations would have been had the acquisitions been completed at the beginning of the periods indicated above. Further, the pro forma combined results do not reflect one-time costs to fully merge and operate the combined organization more efficiently, or anticipated synergies expected to result from the combination and should not be relied upon as being indicative of the future results that the Company will experience.
NOTE I – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, but does not expect the impact to be material.
10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, elsewhere in this Form 10-Q, in the Company’s 2013 Annual Report to Shareholders, in the Proxy Statement for the annual meeting held May 20, 2014, and in the Company’s press releases and oral statements made with the approval of an authorized executive officer 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 herein. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed herein and in the notes to consolidated financial statements, among the other 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; the benefit and risk of business acquisitions; competitive pressure on sales and pricing; increases in material, freight/shipping, or production cost which cannot be recouped in product pricing; delays or interruptions in shipping or production from machine issues; work or labor disruptions stemming from a unionized work force; changes in government requirements and funding of government contracts; failure of subcontractors or vendors to perform as required by contract; the efficient start-up and utilization of capital equipment investments; and political actions of federal and state governments which could have an impact on everything from the value of the U.S dollar vis-à-vis other currencies to the availability of affordable labor and energy. Additional information concerning these and other factors is contained in the Company’s Securities and Exchange Commission filings.
Comparison of Second Quarter 2014 and 2013
Readers are directed to Note D to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the quarters ended June 29, 2014 and June 30, 2013.
On a consolidated basis, sales decreased by $13,084,000 (13%), gross profit decreased by $2,269,000 (12%), selling and general expenses increased by $1,014,000 (19%), intangibles amortization increased by $3,215,000 (1,937%) and other income increased by $1,000 (1%). Earnings before the provision for income taxes decreased by $6,497,000 (50%), as did net earnings by $4,130,000 (50%). Details concerning these changes can be found in the comments by segment below.
Housewares/Small Appliance net sales decreased by $2,540,000 from $24,489,000 to $21,949,000, or 10%, primarily reflecting a decrease in shipments. Defense net sales decreased by $8,149,000 from $58,516,000 to $50,367,000, or 14%, primarily related to reduced shipments of 40mm ammunition and cartridge cases. Absorbent Products net sales decreased by $2,395,000 from $18,391,000 to $15,996,000, or 13%, and was largely attributable to a reduction of shipments due to the ongoing shift in the segment’s customer base.
Housewares/Small Appliance and Defense segments’ gross profits were essentially flat. Absorbent Products gross profit decreased $1,835,000 from a $369,000 profit to a $1,466,000 loss, primarily reflecting the decrease in sales mentioned above, increased material costs, and costs associated with the installation and startup of new capital equipment.
Selling and general expenses for the Housewares/Small Appliance segment increased $208,000, primarily reflecting increased benefit and self insurance accruals. Defense segment selling and general expenses increased by $606,000, primarily reflecting ongoing operational costs associated with the acquisition of substantially all of the assets from Chemring Energetic Devices, Inc.’s business, as described in Note H to the Consolidated Financial Statements in Part I of this Form 10-Q (“Tech Ord”), and increased employee compensation and benefit costs. Absorbent Products segment selling and general expenses increased $200,000, primarily reflecting the absence of the prior period’s favorable adjustments to the segment’s provision for bad debts and expenses classified as administrative that related to a royalty arrangement with an independent manufacturing facility. A description of the Company’s relationship with the facility can be found in Note S to the Company’s Consolidated Financial Statements for the year ended December 31, 2013 on Form 10-K.
Intangibles amortization increased by $3,215,000, primarily reflecting the amortization of the customer contract intangible asset corresponding to the quarter’s shipment of a portion of the backlog acquired from DSE, Inc., one of the Company’s competitors in the Defense segment. The asset acquisition is described in Note Q to the Company’s 2013 Consolidated Financial Statements on Form 10-K. For the quarter ended June 29, 2014, the Company recorded amortization expense of $3,179,000 associated with the customer contract intangible asset.
The above items were responsible for the change in operating profit.
Earnings before provision for income taxes decreased $6,497,000 from $12,966,000 to $6,469,000. The provision for income taxes decreased from $4,665,000 to $2,298,000, primarily reflecting a decrease in taxable earnings. Net earnings decreased $4,130,000 from $8,301,000 to $4,171,000, or 50%.
Comparison of First Six Months 2014 and 2013
Readers are directed to Note D to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the first six months ended June 29, 2014 and June 30, 2013.
On a consolidated basis, sales decreased by $9,720,000 (5%), gross profit decreased by $2,758,000 (8%), selling and general expenses increased by $1,625,000 (15%), intangibles amortization increased by $5,491,000 (1,649%) and other income decreased by $43,000 (12%). Earnings before the provision for income taxes decreased by $9,917,000 (42%), as did net earnings by $6,294,000 (42%). Details concerning these changes can be found in the comments by segment below.
Housewares/Small Appliance net sales decreased by $8,066,000 from $49,378,000 to $41,312,000, or 16%, primarily reflecting a decrease in shipments. Defense net sales increased by $1,189,000 from $97,467,000 to $98,656,000, or 1%, reflecting increases in unit sales of non 40mm ammunition, offset by decreases in sales of 40mm ammunition and cartridge cases. Absorbent Products net sales decreased by $2,843,000 from $37,741,000 to $34,898,000, or 8%, and was largely attributable to the ongoing shift in the segment’s customer base.
Housewares/Small Appliance gross profit decreased $834,000 from $9,031,000 to $8,197,000, or 9%, primarily reflecting the decrease in sales mentioned above, offset in part by an adjustment to the warranty accrual. Defense gross profit increased $971,000 from $23,534,000 to $24,505,000, or 4%, primarily attributable to the increase in sales mentioned above, augmented by an improved product mix. Absorbent Products gross profit decreased $2,895,000 from a $2,055,000 profit to an $840,000 loss, primarily reflecting the decrease in sales mentioned above, increased material costs, cost associated with the installation of new capital equipment, and the absence of the prior year’s insurance settlement of $553,000.
Selling and general expenses for the Housewares/Small Appliance segment increased $154,000, primarily reflecting increased benefits cost and self insurance accruals. Defense segment selling and general expenses increased by $1,207,000, primarily reflecting ongoing operational costs associated with the acquisition of Tech Ord mentioned above and increased employee compensation and benefits costs. Absorbent Products segment selling and general expenses increased $264,000, primarily reflecting the absence of the prior period’s favorable adjustments to the segment’s expenses classified as administrative that related to a royalty arrangement with an independent manufacturing facility. A description of the Company’s relationship with the facility can be found in Note S to the Company’s Consolidated Financial Statements for the year ended December 31, 2013 on Form 10-K.
Intangibles amortization increased by $5,491,000, primarily reflecting the amortization of the customer contract intangible asset corresponding to the first six months’ shipment of a portion of the backlog acquired from DSE, Inc., one of the Company’s competitors in the Defense segment. The asset acquisition is described in Note Q to the Company’s 2013 Consolidated Financial Statements on Form 10-K. For the six months ended June 29, 2014, the Company recorded amortization expense of $5,398,000 associated with the customer contract intangible asset.
12
Earnings before provision for income taxes decreased $9,917,000 from $23,532,000 to $13,615,000. The provision for income taxes decreased from $8,377,000 to $4,754,000, primarily reflecting a decrease in taxable earnings. Net earnings decreased $6,294,000 from $15,155,000 to $8,861,000, or 42%.
Liquidity and Capital Resources
Net cash provided by operating activities was $33,667,000 and $1,113,000 for the six months ended June 29, 2014 and June 30, 2013, respectively. The principal factors contributing to the increase can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the first six months of 2014 were net earnings of $8,861,000, which included total non-cash depreciation and amortization expenses of $10,537,000, a decrease in accounts receivable levels stemming from cash collections on customer sales, and a decrease in deposits made with raw material suppliers included in other current assets. These were partially offset by a decrease in payable and accrual levels and an increase in inventory levels. Of particular note during the first six months of 2013 were net earnings of $15,155,000, which included total non-cash depreciation and amortization expenses of $4,514,000; increases in inventory levels and deposits made with raw material suppliers included in other current assets, partially offset by a decrease in accounts receivable levels stemming from cash collections on customer sales, and a net decrease in payable and accrual levels.
Net cash used in investing activities was $2,007,000 during the first six months of 2014 compared to $2,918,000 used in investing activities during the first six months of 2013. The change in investing activity cash flow is primarily attributable to the acquisition of substantially all of the assets from Chemring Energetic Devices, Inc.’s business located in Clear Lake, South Dakota and the real property owned by Technical Ordnance Realty, LLC during the first quarter of 2014 mentioned above; an increase in net proceeds from marketable securities activity; and a decrease in the acquisition of property, plant, and equipment.
Cash flows from financing activities for the first six months of 2014 and 2013 primarily differed as a result of an accelerated payment made in late December 2012 of the annual 2013 dividend. The acceleration was occasioned by the uncertainty over the federal income tax rates that would be in effect in 2013. In contrast, the annual 2014 dividend payment was made during the first quarter of 2014.
Working capital decreased by $24,350,000 during the first six months of 2014 to $185,493,000 at June 29, 2014 for the reasons stated above. The Company’s current ratio was 5.3 to 1.0 at June 29, 2014 and 4.9 to 1.0 at December 31, 2013.
The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in these segments per existing authorized projects and for additional projects if the appropriate return on investment is projected.
The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The bulk of its marketable securities are invested in the tax exempt variable rate demand notes described above and in municipal bonds that are pre-refunded with escrowed U.S. Treasuries. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings.
13
Critical Accounting Policies
The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The Company reviewed the development and selection of the critical accounting policies and believes the following are the most critical accounting policies that could have an effect on the Company’s reported results. These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.
14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s interest income on cash equivalents and marketable securities is affected by changes in interest rates in the United States. Cash equivalents primarily consist of money market funds. Based on the accounting profession’s interpretation of cash equivalents under FASB ASC Topic 230, the Company’s seven-day variable rate demand notes are classified as marketable securities rather than as cash equivalents. The demand notes are highly liquid instruments with interest rates set every seven days that can be tendered to the trustee or remarketer upon seven days notice for payment of principal and accrued interest amounts. The seven-day tender feature of these variable rate demand notes is further supported by an irrevocable letter of credit from highly rated U.S. banks. To the extent a bond is not remarketed at par plus accrued interest, the difference is drawn from the bank’s letter of credit. The Company has had no issues tendering these notes to the trustees or remarketers. Other than a failure of a major U.S. bank, there are no risks of which the Company is aware that relate to these notes in the current market. The balance of the Company’s investments is held primarily in fixed and variable rate municipal bonds with a weighted average life of 0.8 years. Accordingly, changes in interest 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 uses sensitivity analysis to determine its exposure to changes in interest rates.
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 cash flow hedges. As the majority of the Housewares/Small Appliance segment’s suppliers are located in China, periodic changes in the U.S. dollar and Chinese Renminbi (RMB) exchange rates do have an impact on that segment’s product costs. It is anticipated that any potential material impact from fluctuations in the exchange rate will be to the cost of products secured via purchase orders issued subsequent to the revaluation.
ITEM 4. CONTROLS AND PROCEDURES
The Company’s management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “1934 Act”) as of June 29, 2014. The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of that date.
There were no changes to internal controls over financial reporting during the quarter ended June 29, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note G to the Consolidated Financial Statements set forth under Part I - Item 1 above.
Item 6. Exhibits
Exhibit 3(i)
Restated Articles of Incorporation - incorporated by reference from Exhibit 3 (i) of the Company’s annual report on Form 10-K for the year ended December 31, 2005
Exhibit 3(ii)
By-Laws - incorporated by reference from Exhibit 3 (ii) of the Company’s current report on Form 8-K dated July 6, 2007
Exhibit 9.1
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 9.2
Voting Trust Agreement Amendment - incorporated by reference from Exhibit 9.2 of the Company’s annual report on Form 10-K for the year ended December 31, 2008
Exhibit 10.1
Incentive Compensation Plan - incorporated by reference from Exhibit 10.1 of the Company’s quarterly report on Form 10-Q for the quarter ended July 4, 2010
Exhibit 10.2
Form of Restricted Stock Award Agreement - incorporated by reference from Exhibit 10.2 of the Company’s quarterly report on Form 10-Q for the quarter ended July 4, 2010
Exhibit 31.1
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101
The following financial information from National Presto Industries, Inc.’s Quarterly Report on Form 10-Q for the period ended June 29, 2014, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements.*
*The XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
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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.
/s/ Maryjo Cohen
Maryjo Cohen, Chair of the Board,
President, Chief Executive Officer
(Principal Executive Officer), Director
/s/ Randy F. Lieble
Randy F. Lieble, Director, Vice President,
Chief Financial Officer (Principal
Financial Officer), Treasurer
Date: August 8, 2014
National Presto Industries, Inc.Exhibit Index
ExhibitNumber
Exhibit Description
31.1
Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101