Back to GetFilings.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
or
[ ] 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 1-13970
CHROMCRAFT REVINGTON, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 35-1848094
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1100 North Washington Street, Delphi, IN 46923
--------------------------------------------------------------------------
(Address, including zip code, of registrant's principal executive offices)
(765) 564-3500
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each
Title of each class exchange on which registered
---------------------------- ----------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
As of March 7, 2000, there were 9,745,348 shares of the registrant's
common stock ($.01 par value) outstanding. The aggregate market value
of the voting stock held by nonaffiliates of the registrant as of
March 7, 2000 was $31.2 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the annual shareholders meeting to
be held May 5, 2000 are incorporated by reference into Part III.
INDEX
Page Number
PART I -----------
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . . . 6
Executive Officers of the Registrant . . . . . . . . . . . . . . . 6
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 8
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . . . 11
Item 8. Financial Statements and Supplementary Data . . . . . . . 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . 11
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . 11
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . 11
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . 12
Item 13. Certain Relationships and Related Transactions . . . . . . 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART I
Item 1. Business
-----------------
General
Chromcraft Revington, Inc. ("Chromcraft Revington"), incorporated in
1992 under the laws of Delaware, is engaged in the design, manufacture
and sale of residential and commercial furniture through its wholly-
owned subsidiaries, Chromcraft Corporation ("Chromcraft"), Peters-
Revington Corporation ("Peters-Revington"), Silver Furniture Co., Inc.
("Silver Furniture"), Cochrane Furniture Company, Inc. ("Cochrane
Furniture") and Korn Industries, Incorporated ("Korn Industries").
Chromcraft Revington is headquartered in Delphi, Indiana.
In 1992, Chromcraft Revington acquired all of the outstanding common
stock of Chromcraft and Peters-Revington from Consolidated Furniture
Corporation (formerly Mohasco Corporation) pursuant to merger
agreements. Concurrently, Chromcraft Revington completed its initial
public offering and restructured its long-term debt. Chromcraft
Revington had no operations prior to 1992. Chromcraft, located in
Senatobia, Mississippi, manufactures casual dining and commercial
furniture. Peters-Revington, located in Delphi, Indiana, manufactures
occasional furniture. Chromcraft and Peters-Revington were both
founded in 1946.
On April 3, 1995, Chromcraft Revington acquired Silver Furniture, a
manufacturer and importer of occasional furniture. Silver Furniture
has manufacturing and warehousing operations in Knoxville, Tennessee.
On November 8, 1996, Chromcraft Revington acquired Cochrane Furniture,
a manufacturer of dining room, bedroom and upholstered furniture.
Cochrane Furniture has manufacturing facilities in Lincolnton and
Warrenton, North Carolina.
On September 2, 1999, CRI Corporation-Sumter, a wholly-owned
subsidiary of Chromcraft Revington, acquired Korn Industries for
$8,525,000 in cash, including acquisition-related expenses, and the
assumption of Korn Industries' liabilities. Korn Industries, based in
Sumter, South Carolina, manufactures and sells bedroom and dining room
furniture through its Sumter Cabinet Company ("Sumter Cabinet")
division. The operations of Korn Industries are included in
Chromcraft Revington's consolidated financial statements from its
acquisition date. Additional financial information is included in
Note 2 "Acquisition of Korn Industries, Incorporated" to the
consolidated financial statements.
Chromcraft Revington and its subsidiaries have several operating
segments which are aggregated into one reportable segment, in
accordance with Financial Accounting Standards Board Statement No.
131, "Disclosures about Segments of an Enterprise and Related
Information." No material amount of Chromcraft Revington's sales is
dependent upon a single customer. Sales outside of the United States
represent approximately 1% of total sales.
Products and Distribution
Occasional Furniture
Medium-priced occasional furniture, including tables, bookcases,
entertainment centers, library and modular wall units, curio cabinets
and home office furniture in traditional, contemporary and country
styles, are manufactured and sold under the Peters-Revington brand
name. Occasional furniture is manufactured primarily from American
hardwoods, such as oak, cherry and maple. Many Peters-Revington table
collections include twelve or more pieces in matching styles. In
addition, different pieces of occasional furniture incorporate the
same design and styling themes, thereby enabling consumers to
coordinate furniture for the same room. Peters-Revington's furniture
is sold in the United States and Canada through independent sales
representatives primarily to independent furniture retailers.
2
Entry level-to-medium priced occasional tables and entertainment
centers are designed, manufactured, imported and sold under the Silver
Furniture brand name. These products are generally designed with a
contemporary appeal, utilizing special finishes and unique styling.
Silver Furniture tables are constructed using a variety of materials,
including wood, medium-density fiber board, glass and metal.
Internally designed imported occasional tables and parts are sourced
mainly from factories located in the Far East and Mexico. Silver
Furniture occasional furniture is sold primarily in the United States
and Canada through company sales personnel to national and regional
furniture retailers and through independent sales representatives to
independent furniture retailers.
Bedroom Furniture
Solid wood bedroom furniture, primarily in oak, cherry, ash or maple,
is manufactured and sold at medium price points under the Cochrane
Furniture brand name and at mid-to-higher price points under the
Sumter Cabinet brand name. Bedroom furniture includes beds, dressers,
night stands, entertainment armoires and mirrors primarily in
traditional styling. Cochrane Furniture and Sumter Cabinet bedroom
furniture is sold through independent sales representatives to
regional and independent furniture retail stores.
In 1999, Silver Furniture began selling bedroom furniture imported
from the Far East. Silver Furniture's bedroom furniture is designed
internally, mainly in traditional styling, and is sold primarily at
medium price points through company sales personnel to national,
regional and independent furniture retailers.
Dining Room Furniture
Casual dining furniture is manufactured and sold under the Chromcraft
brand name. Casual dining furniture is designed for use in dining
rooms, family rooms, recreation rooms, kitchens and apartments without
formal dining areas. The product line consists primarily of
coordinated dining suites in a contemporary or traditional style that
include tables with laminated, wood or glass table tops, stationary
and tilt-swivel chairs, pedestal chairs and barstools. Chairs are
upholstered in a variety of fabrics and vinyls, while tables are
manufactured from metal, wood, glass, faux marble and other materials,
and come in a variety of shapes. Chromcraft competes at the medium-
to-higher price points in casual dining. Chromcraft's casual dining
furniture is sold in the United States through company sales personnel
and independent sales representatives to national, regional,
independent and specialty dining retail furniture stores.
Dining room furniture, primarily in oak, cherry, ash or maple, is
manufactured and sold at medium price points under the Cochrane
Furniture brand name and at mid-to-higher price points under the
Sumter Cabinet brand name. Dining room furniture includes a broad
line of tables, armed and side chairs, buffets, chinas and serving
pieces, mainly in traditional or country styling. Cochrane Furniture
dining room tables are offered in solid wood or a high pressure
laminate table top. Sumter Cabinet dining room tables feature solid
wood tops, leaves, and legs. Dining room furniture is sold primarily
in the United States through independent sales representatives to
regional and independent furniture retail stores.
Upholstered Furniture
Upholstered sofas, chairs and ottomans are manufactured and sold under
the Cochrane Furniture brand name. Upholstered furniture is styled in
traditional or contemporary patterns in a wide selection of fabrics
using a heat tempered coil seat construction to evenly distribute
body weight. Cochrane Furniture uses primarily hardwoods in the
construction of its furniture frames. Seat cushions are made with
high-density, high-resilience polyurethane foam, wrapped in polyester
fiber for consistent comfort. Cochrane Furniture's upholstered
furniture is sold primarily at medium price points. Upholstered
furniture is sold through independent sales representatives primarily
to independent furniture retail stores.
3
Commercial Furniture
Commercial furniture, sold under the Chromcraft brand name, includes
stationary and tilt-swivel office chairs, conference and meeting room
tables and lounge-area seating products for airports and other public
waiting areas. Chairs are offered in both contemporary and
transitional styles and are upholstered in various grades and colors
of fabric or leather. They include executive models with high backs,
management models, ergonomic computer task chairs and secretarial
models with no arm rests. Products are sold through company sales
personnel and independent sales representatives to office product
dealers, wholesalers/distributors and various contract customers.
Manufacturing
Manufacturing operations include cutting, shaping, sanding, finishing
and final assembly of wood furniture, metal fabricating, plating,
powder-coat painting, chair foam production for casual dining
furniture and cutting and sewing of upholstery fabric. Cochrane
Furniture and Sumter Cabinet also have rough mill operations and
woodworking plants which process green lumber into parts for internal
use.
Raw Materials
Major raw materials are wood, steel, fabrics, glass, medium-density
fiber board, wood finishing materials, cartons, foam for cushions and
paddings, and mechanisms. Suppliers are selected for their ability to
deliver high quality products on a timely basis and at competitive
prices. Chromcraft Revington believes that supplies of raw materials
are available in sufficient quantities from an adequate number of
suppliers. No significant shortages of raw materials were experienced
during 1999.
Inventory and Seasonal Requirements
Chromcraft Revington maintains a finished goods inventory for
occasional, dining room and bedroom furniture in order to respond
quickly to customer delivery needs. Most casual dining, upholstered
and commercial furniture is made to customer specifications and,
therefore, not carried in stock. A limited number of casual dining,
upholstered and commercial furniture items are maintained for quick
delivery programs. Sales have historically not been subject to
material seasonal fluctuations.
Competition
Chromcraft Revington encounters competition in the sale of all its
products. Many of Chromcraft Revington's competitors, some of which
are larger and have greater financial resources, produce a number of
products which are not competitive with Chromcraft Revington's
products. In many cases, such companies do not disclose the portion
of their sales attributable to products similar to those manufactured
by Chromcraft Revington. It is, therefore, impractical to state with
any certainty Chromcraft Revington's relative position in a particular
product line. Competition in Chromcraft Revington's products is in
the form of the quality of its products, service and selling prices.
Backlog
Chromcraft Revington's backlog of sales orders was approximately $27.0
million at December 31, 1999, as compared to approximately $21.4
million at December 31, 1998. Order backlog at any particular time is
not necessarily indicative of the level of future shipments.
4
Environment
Chromcraft Revington believes it is in compliance in all material
respects with all federal, state and local environmental laws and
regulations which impose limitations on the discharge of pollutants
into the air and water, and establish standards for the treatment of
hazardous wastes.
Employees
Chromcraft Revington employs a total of approximately 2,700 people.
Production employees at Silver Furniture's Knoxville, Tennessee
location are represented by a labor union under a collective
bargaining agreement. Chromcraft Revington considers its relations
with its employees to be good.
Item 2. Properties
-------------------
The following table summarizes Chromcraft Revington's facilities as of
December 31, 1999.
Square Type of Owned/
Location Feet Operations Furniture Leased
------------ ------- -------------- -------------- --------------
Delphi, IN 490,000 Manufacturing/ Occasional Owned
warehousing
Knoxville, TN 160,000 Manufacturing/ Occasional Owned
warehousing
Knoxville, TN 117,000 Warehousing Occasional Leased
(expires 2001)
Lincolnton, NC 368,000 Manufacturing/ Dining room/ Owned
warehousing bedroom
Lincolnton, NC 152,000 Manufacturing Upholstery Owned
Lincolnton, NC 159,000 Manufacturing/ Upholstery Owned
warehousing
Senatobia, MS 560,000 Manufacturing/ Casual dining/ Leased
warehousing commercial (expires 2061)
Sumter, SC 521,000 Manufacturing/ Dining room/ Owned
warehousing bedroom
Warrenton, NC 166,000 Manufacturing Dining room/ Owned
bedroom
Chromcraft Revington also leases trucks, trailers and other
transportation equipment and showroom facilities in High Point, North
Carolina and Chicago, Illinois. Management believes the properties
and equipment of its subsidiaries are well maintained, in good
operating condition and adequate to support present operations.
5
Item 3. Legal Proceedings
--------------------------
Chromcraft Revington is not a party to any lawsuits, other than
ordinary routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
Not applicable.
Executive Officers of Chromcraft Revington, Inc.
------------------------------------------------
Michael E. Thomas 58 President, Chief Executive Officer and
Director since Chromcraft Revington's
organization in 1992. Mr. Thomas is a
director of TEU Holdings, Inc., the
parent company of furniture retailer
This End Up. TEU Holdings, Inc. and its
subsidiaries filed for bankruptcy in 2000.
Frank T. Kane 46 Vice President-Finance, Chief Financial
Officer and Secretary since Chromcraft
Revington's organization in 1992.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
-------------------------------------------------------------
Chromcraft Revington's common stock is traded on the New York Stock
Exchange. The following table sets forth the high and low sales
prices of Chromcraft Revington's common stock, as reported on the New
York Stock Exchange, as adjusted for the two-for-one stock split
effective June 10, 1998.
1999 1998
-------------------- --------------------
High Low High Low
-------- -------- -------- --------
First quarter 17 7/8 14 18 11/16 13 13/16
Second quarter 17 14 1/8 20 1/16 17 1/2
Third quarter 14 3/4 11 7/8 19 5/16 13 11/16
Fourth quarter 12 13/16 10 1/8 18 1/4 14 3/4
As of March 7, 2000, there were approximately 57 security holders of
record of Chromcraft Revington's common stock. Chromcraft Revington
intends to retain cash for internal and external growth and
development of its business and currently does not anticipate paying
cash dividends. At December 31, 1999, unrestricted retained earnings
available for dividends were $25,814,000.
6
Item 6. Selected Financial Data
--------------------------------
(Dollars in thousands, except per share data)
Year Ended December 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
Operating Results
Sales $ 245,385 $ 236,744 $ 225,629 $ 175,899 $ 152,609
Cost of sales 188,411 176,988 169,802 128,217 111,787
--------- --------- --------- --------- ---------
Gross margin 56,974 59,756 55,827 47,682 40,822
Selling, general and
administrative expenses 34,340 31,964 30,200 24,235 20,478
--------- --------- --------- --------- ---------
Operating income 22,634 27,792 25,627 23,447 20,344
Interest expense 988 739 1,265 221 236
--------- --------- --------- --------- ---------
Earnings before income tax expense 21,646 27,053 24,362 23,226 20,108
Income tax expense 8,572 10,794 9,720 9,290 8,134
--------- --------- --------- --------- ---------
Net earnings $ 13,074 $ 16,259 $ 14,642 $ 13,936 $ 11,974
========= ========= ========= ========= =========
Earnings per share of common stock
Basic $ 1.25 $ 1.46 $ 1.28 $ 1.21 $ 1.05
========= ========= ========= ========= =========
Diluted $ 1.22 $ 1.41 $ 1.25 $ 1.19 $ 1.02
========= ========= ========= ========= =========
Shares used in computing earnings per share
Basic 10,448 11,137 11,418 11,474 11,453
Diluted 10,720 11,533 11,755 11,740 11,696
Financial Position (December 31,)
Total assets $ 159,135 $ 129,645 $ 126,144 $ 129,942 $ 85,825
Total debt 26,700 5,400 9,000 20,200 1,500
Stockholders' equity 99,770 97,117 90,906 77,925 63,782
Other Data
Depreciation and amortization $ 4,947 $ 4,534 $ 4,383 $ 3,729 $ 3,853
Capital expenditures 3,630 3,388 2,712 3,060 5,514
Silver Furniture, Cochrane Furniture and Korn Industries are included
in Chromcraft Revington's consolidated financial results from their
acquisition dates of April 3, 1995, November 8, 1996 and September 2,
1999, respectively.
Per share data has been adjusted, where applicable, for the two-for-
one common stock split distributed June 10, 1998.
7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
--------------------------------------------------------------------
General
Chromcraft Revington designs, manufactures and sells residential and
commercial furniture through its wholly-owned subsidiaries, Chromcraft,
Peters-Revington, Silver Furniture, Cochrane Furniture and Korn
Industries. Chromcraft Revington's operating results include the
operations of Korn Industries, acquired September 2, 1999, from the
date of its acquisition (see Note 2 to the consolidated financial
statements).
The following table sets forth the results of operations of Chromcraft
Revington for the years ended December 31, 1999, 1998 and 1997
expressed as a percentage of sales.
Year Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
Sales 100.0% 100.0% 100.0%
Cost of sales 76.8 74.8 75.3
-------- -------- --------
Gross margin 23.2 25.2 24.7
Selling, general and
administrative expenses 14.0 13.5 13.3
-------- -------- --------
Operating income 9.2 11.7 11.4
Interest expense .4 .3 .6
-------- -------- --------
Earnings before income tax expense 8.8 11.4 10.8
Income tax expense 3.5 4.5 4.3
-------- -------- --------
Net earnings 5.3% 6.9% 6.5%
======== ======== ========
1999 compared to 1998
Consolidated sales increased 3.6% for the year ended December 31, 1999
to $245,385,000 from $236,744,000 for the year ended December 31,
1998. The increase in sales was primarily due to higher shipments of
bedroom and dining room furniture, partially offset by lower shipments
of upholstered, commercial and occasional furniture. The increase in
bedroom and dining room shipments was due, in part, to the Korn
Industries acquisition, which was completed September 2, 1999. The
decrease in upholstered furniture shipments was primarily attributable
to the repositioning of the product line price points and styling.
Commercial furniture shipments were lower for 1999, as compared to
1998, due, in part, to a general softening in demand in the office
furniture industry. Shipments of occasional furniture at Silver
Furniture declined principally due to competitive price pressure.
Gross margin was $56,974,000, or 23.2% of sales, in 1999 as compared
to $59,756,000, or 25.2% of sales, in 1998. Factors which contributed
to the decrease in gross margin percentage included: manufacturing
inefficiencies at Chromcraft due to a product mix change and employee
attrition resulting from the tight labor market; unabsorbed fixed
overhead due to the lower sales volume at Chromcraft and Silver
Furniture; a $400,000 writedown of discontinued inventory at
Chromcraft; and the inclusion of Korn Industries' operating results.
Selling, general and administrative expenses increased to $34,340,000,
or 14.0% of sales, for 1999 from $31,964,000, or 13.5% of sales, for
1998. The percentage increase was primarily due to a $1,000,000
charge for employee termination and severance costs at Chromcraft.
Interest expense increased to $988,000 in 1999 as compared to $739,000
in 1998. The increase was due to higher average bank borrowings
during 1999 attributable to the Korn Industries acquisition and the
8
refinancing of Korn Industries' bank indebtedness under Chromcraft
Revington's revolving credit facility. Weighted average interest rates
were slightly lower in 1999 as compared to 1998.
Chromcraft Revington's effective tax rate was 39.6% and 39.9% for the
years ended December 31, 1999 and 1998, respectively. The decrease in
the effective tax rate for 1999 was due to lower state income taxes.
Diluted earnings per share were $1.22 in 1999 and $1.41 in 1998.
Average common shares used in the calculation of diluted earnings per
share included dilutive potential common shares (stock options) of
272,000 in 1999 and 396,000 in 1998. Weighted average shares
outstanding for 1999 decreased 6.2% as compared to 1998. During 1999,
Chromcraft Revington purchased, under a stock repurchase program,
845,500 shares of its common stock.
1998 compared to 1997
Consolidated sales for the year ended December 31, 1998 increased 4.9%
to $236,744,000 from $225,629,000 reported in 1997. The sales
increase was primarily due to higher shipments of occasional, bedroom
and commercial furniture, partially offset by lower upholstered
furniture sales. Upholstered furniture sales were lower in 1998 as
compared to the prior year period primarily due to the elimination of
low margin and nonprofitable products. Dining room furniture sales
were at approximately the same level as compared to the prior year.
The consolidated sales increase in 1998 was primarily due to higher
unit volume.
Gross margin as a percentage of sales increased to 25.2% from 24.7% in
1997. The percentage increase in 1998 was primarily due to the
improved operating results at Cochrane Furniture, as a result of cost
containment and improved manufacturing processes. The gross margin
improvement was partially offset by manufacturing inefficiencies at
Chromcraft and higher employee health care costs. The manufacturing
inefficiencies were primarily due to start-up costs incurred for new
product introductions and employee attrition resulting from tight
labor market conditions.
Selling, general and administrative expenses increased $1,764,000 to
$31,964,000, or 13.5% of sales, in 1998 from $30,200,000, or 13.3% of
sales, in 1997. The higher cost percentage in 1998 was mainly due to
an increase in incentive compensation.
Interest expense for the year ended December 31, 1998 was $739,000 as
compared to $1,265,000 for the prior year period. The decrease in
interest expense for 1998 was primarily due to lower average bank
borrowings. Weighted average interest rates were slightly lower in
1998 as compared to 1997.
Chromcraft Revington's effective tax rate was 39.9% for the years
ended December 31, 1998 and 1997.
Diluted earnings per share increased 12.8% to $1.41 in 1998 as
compared to $1.25 in 1997. Average common shares used in the
calculation of diluted earnings per share included dilutive potential
common shares (stock options) of 396,000 in 1998 and 337,000 in 1997.
Weighted average shares outstanding for 1998 decreased 2.5% as
compared to the prior year period. During 1998, Chromcraft Revington
retired 590,548 shares of its common stock acquired under a share
repurchase program.
Liquidity and Capital Resources
Operating activities provided $14,757,000 of cash for the year ended
December 31, 1999, a decrease of $2,228,000 from the amount provided
in 1998. Cash generated from operations decreased in 1999 primarily
due to a reduction in Korn Industries' trade accounts payable and
lower earnings during 1999. Korn Industries' trade payables, assumed
9
at the acquisition date, were reduced in order to eliminate past due
amounts and to obtain discounts on the early payment of invoices.
The investing activities used $10,971,000 and $3,337,000 during the
years ended December 31, 1999 and 1998, respectively. On September 2,
1999, CRI Corporation-Sumter, a wholly-owned subsidiary of Chromcraft
Revington, acquired Korn Industries, a manufacturer of bedroom and
dining room furniture. Investing activities for 1999 include the cash
payment to Korn Industries' stockholders and related acquisition
expenses of $8,525,000.
Capital expenditures, primarily for machinery and data processing
equipment purchases, were $3,630,000 during 1999 and $3,388,000 during
1998. Capital expenditures in 2000 are expected to be approximately
$5,000,000. During 1999, Chromcraft Revington received cash proceeds
of $1,184,000 in connection with several asset disposals.
Financing activities used $2,638,000 of cash during 1999. During the
year, Chromcraft Revington borrowed $21,300,000 under its bank
revolving credit facility in connection with the Korn Industries
acquisition and the repurchase of Chromcraft Revington's common stock.
As part of the acquisition, Korn Industries' bank indebtedness of
$13,517,000 was refinanced with borrowings under Chromcraft
Revington's revolving credit facility, which restricts indebtedness
outside of the facility. Financing costs were more favorable under
the facility as compared to the Korn Industries indebtedness. During
1999, Chromcraft Revington purchased, under its share repurchase
program, 845,500 shares of its common stock for $12,079,000.
Financing activities used $13,648,000 of cash during the year ended
December 31, 1998, primarily to acquire shares of Chromcraft
Revington's common stock and reduce bank indebtedness. During 1998,
Chromcraft Revington acquired 590,548 shares of common stock purchased
for $10,196,000 under its share repurchase program.
Chromcraft Revington has a revolving credit facility with a commitment
level of $60,000,000 that matures December 20, 2000. The interest
rate under the facility is determined at the time of each borrowing
and is based on one of a variety of floating rate indices or a bank
prime lending rate. Total borrowings under the facility were
$26,700,000 at December 31, 1999. Unused capacity under the revolving
credit facility, after reduction for outstanding letters of credit,
equaled $30,868,000 at the end of 1999. Management expects that a new
long-term bank agreement will be in place before the present facility
expires.
Management expects that cash flow from operations and availability
under bank financing arrangements will continue to be sufficient to
meet future business needs. Chromcraft Revington plans to grow its
businesses internally and through acquisitions. Accordingly,
Chromcraft Revington plans to retain cash in the business and
currently does not anticipate paying cash dividends on its common
stock. In 2000, absent further acquisitions, Chromcraft Revington
expects to generate excess cash flow from operations, which will be
used to reduce bank indebtedness, to repurchase Chromcraft Revington
common stock, or for general corporate purposes.
Year 2000 Issue
---------------
Chromcraft Revington and its subsidiaries have not experienced any
significant Year 2000 conversion issues. Chromcraft Revington plans
to continue to monitor its internal systems, significant suppliers and
third party service providers for potential disruptions.
Recently Issued Accounting Standards
------------------------------------
The Financial Accounting Standards Board has issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" and
Statement No. 137, "Accounting for Derivative Instruments and Hedging
10
Activities - Deferral of the Effective Date of FASB Statement 133."
Statement No. 133 applies to all derivative instruments, including
certain derivative instruments embedded in other contracts, and for
hedging activities. The Statement will require Chromcraft Revington
to recognize all derivatives on the balance sheet at fair value.
Statement No. 137 has deferred the effective date of Statement No. 133
until the fiscal year beginning after June 15, 2000. Chromcraft
Revington does not expect the adoption of this Statement to have a
significant effect on its results of operations or financial position.
Forward-Looking Statements
--------------------------
Certain matters included in this Annual Report on Form 10-K are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements can be generally identified as such because the context of
the statements includes words such as "plans," "may," "anticipates,"
and "expects" or words of similar import. All forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those reported or
expected as of the date of this report. Among the risks and
uncertainties that could cause actual results to differ materially
from those reported or anticipated are (i) general economic
conditions, (ii) cyclical nature of the furniture industry, and (iii)
competition in the furniture industry.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------
Not applicable.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The financial statements and schedule are listed in Part IV, Items
14(a) (1) and (2).
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
--------------------------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
------------------------------------------------------------
The sections entitled "Election of Directors" on page 3 and "Common
Stock Beneficially Owned by Directors and Executive Officers" on pages
4 and 5 of Chromcraft Revington's Proxy Statement, expected to be
dated April 5, 2000, are incorporated herein by reference, and have
been omitted pursuant to Instruction G of Form 10-K since Chromcraft
Revington intends to file with the Securities and Exchange Commission
a definitive Proxy Statement pursuant to Regulation 14A not later than
120 days following the end of its 1999 fiscal year.
Item 11. Executive Compensation
--------------------------------
The sections entitled "Executive Compensation" on pages 6 through 9,
"Compensation Committee Report on Executive Compensation" on pages 9
through 11 and "Stock Performance Graph" on page 12 of Chromcraft
Revington's Proxy Statement, expected to be dated April 5, 2000, are
incorporated herein by reference, and have been omitted pursuant to
Instruction G of Form 10-K since Chromcraft Revington intends to file
with the Securities and Exchange Commission a definitive Proxy
Statement pursuant to Regulation 14A not later than 120 days following
the end of its 1999 fiscal year.
11
Item 12. Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
The sections entitled "Common Stock Beneficially Owned by Directors
and Executive Officers" on pages 4 and 5 and "Voting Securities and
Principal Stockholders" on pages 1 and 2 of Chromcraft Revington's
Proxy Statement, expected to be dated April 5, 2000, are incorporated
herein by reference, and have been omitted pursuant to Instruction G
of Form 10-K since Chromcraft Revington intends to file with the
Securities and Exchange Commission a definitive Proxy Statement
pursuant to Regulation 14A not later than 120 days following the end
of its 1999 fiscal year.
Item 13. Certain Relationships and Related Transactions
--------------------------------------------------------
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------
(a) 1. and 2. List of Financial Statements and Financial Statement Schedule:
The following Consolidated Financial Statements of Chromcraft Revington are
included in this report on Form 10-K:
Page Reference
--------------
Consolidated Statements of Earnings for the years ended
December 31, 1999, 1998 and 1997 F-1
Consolidated Balance Sheets at December 31, 1999 and 1998 F-2
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1999, 1998 and 1997 F-3
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-4
Notes to Consolidated Financial Statements F-5
Independent Auditors' Report F-13
Quarterly Financial Information (unaudited) F-14
The following consolidated financial statement schedule of
Chromcraft Revington is included in response to Item 14(d):
Schedule II - Valuation and Qualifying Accounts S-1
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and,
therefore, have been omitted.
12
(a) 3. Listing of Exhibits
(3)(i) Certificate of Incorporation of the Registrant, as amended,
filed as Exhibit No. 3.1 to Form S-1, registration number
33-45902, as filed with the Securities and Exchange
Commission on February 21, 1992, is incorporated herein
by reference.
(3)(ii) By-laws of the Registrant, filed as Exhibit No. 3.2 to
Form S-1, registration number 33-45902, as filed with the
Securities and Exchange Commission on February 21, 1992,
is incorporated herein by reference.
(4.7) Credit Agreement, dated December 20, 1995, among the
Registrant, the Banks party thereto and NBD Bank N.A.,
as agent for the Banks, filed as Exhibit No. 4.7 to
Form 10-K for the year ended December 31, 1995, is
incorporated herein by reference.
(10.1) Lease, dated February 15, 1962, between the Board of
Supervisors of Tate County, Mississippi as Landlord and
Chromcraft Corporation as Tenant, filed as Exhibit No.
10.1 to Form S-1, registration number 33-45902, as filed
with the Securities and Exchange Commission on February
21, 1992, is incorporated herein by reference.
(10.3) Form of Registration Rights Agreement between the
Registrant and 399 Venture Partners, Inc., formerly
Citicorp Investments, Inc., filed as Exhibit No. 10.3 to
Form S-1, registration number 33-45902, as filed with the
Securities and Exchange Commission on February 21, 1992,
is incorporated herein by reference.
(10.12) Contract, dated April 3, 1961, between the City of
Senatobia, Tate County, Mississippi, the Board of
Supervisors of Tate County, Mississippi and Chromcraft
Corporation, filed as Exhibit No. 10.12 to Form S-1, Pre-
Effective Amendment No. 1, registration number 33-45902,
as filed with the Securities and Exchange Commission on
March 17, 1992, is incorporated herein by reference.
(10.13) Lease, dated September 9, 1966, between the Board of
Supervisors of Tate County, Mississippi as Landlord and
Chromcraft Corporation as Tenant, filed as Exhibit No.
10.13 to Form S-1, Pre-Effective Amendment No. 1,
registration number 33-45902, as filed with the
Securities and Exchange Commission on March 17, 1992, is
incorporated herein by reference.
(10.14) Contract, dated May 5, 1969, between the Board of
Supervisors of Tate County, Mississippi and Chromcraft
Corporation, filed as Exhibit No. 10.14 to Form S-1, Pre-
Effective Amendment No. 1, registration number 33-45902,
as filed with the Securities and Exchange Commission on
March 17, 1992, is incorporated herein by reference.
(10.15) Contract and Lease Agreement, dated April 17, 1972,
between Tate County, Mississippi as Landlord and
Chromcraft Corporation as Tenant, filed as Exhibit No.
10.15 to Form S-1, Pre-Effective Amendment No. 1,
registration number 33-45902, as filed with the
Securities and Exchange Commission on March 17, 1992, is
incorporated herein by reference.
Executive Compensation Plans and Arrangements
---------------------------------------------
(10.4) Chromcraft Revington, Inc. 1992 Stock Option Plan, as
amended, filed as Exhibit No. 10.4 to Form 10-Q for the
quarter ended June 27, 1998, is incorporated herein by
reference.
13
(10.51) Chromcraft Revington, Inc. Short Term Executive Incentive
Plan, effective January 1, 1998, filed as Exhibit No.
10.51 to Form 10-K for the year ended December 31, 1998,
is incorporated herein by reference.
(10.55) Chromcraft Revington, Inc. Long Term Executive Incentive
Plan, effective January 1, 1998, filed as Exhibit 10.55
to Form 10-K for the year ended December 31, 1998, is
incorporated herein by reference.
(10.6) Chromcraft Revington Directors Deferred Compensation
Plan, effective January 1, 1999, filed as Exhibit 10.6 to
Form 10-K for the year ended December 31, 1998, is
incorporated herein by reference.
(10.7) Chromcraft Revington, Inc. Supplemental Executive
Retirement Plan, as amended and restated, effective
December 3, 1998, filed as Exhibit 10.7 to Form 10-K for
the year ended December 31, 1998, is incorporated herein
by reference.
(10.75) Supplemental Executive Retirement Plan Trust Agreement,
dated April 16, 1993, between the Registrant and Bank
One, Indianapolis, National Association, filed as Exhibit
No. 10.75 to Form 10-Q for the quarter ended July 3,
1993, is incorporated herein by reference.
(10.8) Employment Agreement, dated March 31, 1992, between the
Registrant and Michael E. Thomas, filed as Exhibit No.
10.8 to Form 10-K for the year ended December 31, 1992,
is incorporated herein by reference.
(10.85) Supplemental Retirement Benefits Agreement, dated August
21, 1992, between the Registrant and Michael E. Thomas,
filed as Exhibit No. 10.85 to Form 10-K for the year
ended December 31, 1992, is incorporated herein by
reference.
(10.9) Employment Agreement, dated March 31, 1992, between
the Registrant and H. Martin Michael, filed as Exhibit
No. 10.9 to Form 10-K for the year ended December 31,
1992, is incorporated herein by reference.
--------------------
(21.1) Subsidiaries of the Registrant (filed herewith).
(23.1) Consent of Independent Auditors (filed herewith).
(24.1) Powers of Attorney (filed herewith).
(27.0) Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K
Amendments No. 1 and 2 to the Current Report on Form 8-K dated
September 2, 1999, reporting financial information on the
acquisition of Korn Industries, Incorporated, were filed with
the Securities and Exchange Commission on November 12, 1999.
(c) Exhibits
The response to this portion of Item 14 is submitted as a
separate section of this report.
14
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Chromcraft Revington, Inc. has duly caused this
annual report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
Chromcraft Revington, Inc.
----------------------------
(Registrant)
Date: March 28, 2000 By: /s/ Michael E. Thomas
-------------- ----------------------------
Michael E. Thomas, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of Chromcraft Revington, Inc. and in the capacities and on the date
indicated.
Signatures Title Date
--------------------- -------------------------- --------------
/s/ Michael E. Thomas President, Chief Executive March 28, 2000
--------------------- Officer and Director --------------
Michael E. Thomas
/s/ Frank T. Kane Vice President - Finance March 28, 2000
----------------- (principal accounting and --------------
Frank T. Kane financial officer)
*Bruce C. Bruckmann Director
-------------------
Bruce C. Bruckmann
*David L. Kolb Director
-------------------
David L. Kolb
*Larry P. Kunz Director
-------------------
Larry P. Kunz
*M. Saleem Muqaddam Director
-------------------
M. Saleem Muqaddam
*Warren G. Wintrub Director
-------------------
Warren G. Wintrub
By: /s/ Michael E. Thomas March 28, 2000
------------------------- --------------
Michael E. Thomas, Attorney-in-fact*
15
Consolidated Statements of Earnings
Chromcraft Revington, Inc.
(In thousands, except per share data)
Year Ended December 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------
Sales $ 245,385 $ 236,744 $ 225,629
Cost of sales 188,411 176,988 169,802
--------- --------- ---------
Gross margin 56,974 59,756 55,827
Selling, general and administrative expenses 34,340 31,964 30,200
--------- --------- ---------
Operating income 22,634 27,792 25,627
Interest expense 988 739 1,265
--------- --------- ---------
Earnings before income tax expense 21,646 27,053 24,362
Income tax expense 8,572 10,794 9,720
--------- --------- ---------
Net earnings $ 13,074 $ 16,259 $ 14,642
========= ========= =========
Earnings per share of common stock
Basic $ 1.25 $ 1.46 $ 1.28
========= ========= =========
Diluted $ 1.22 $ 1.41 $ 1.25
========= ========= =========
Shares used in computing earnings per share
Basic 10,448 11,137 11,418
Diluted 10,720 11,533 11,755
See accompanying notes to the consolidated financial statements
F-1
Consolidated Balance Sheets
Chromcraft Revington, Inc.
(In thousands, except share data)
December 31,
----------------------
1999 1998
--------- ---------
Assets
Cash $ 1,148 $ -
Accounts receivable, less allowances of $1,266 and $1,211 29,574 26,884
Inventories 50,450 38,130
Other assets 3,642 4,713
--------- ---------
Current assets 84,814 69,727
Property, plant and equipment, at cost, less
accumulated depreciation 44,480 37,094
Goodwill and tradenames, less accumulated amortization
of $7,933 and $6,969 28,932 21,296
Other assets 909 1,528
--------- ---------
Total assets $ 159,135 $ 129,645
========= =========
Liabilities and Stockholders' Equity
Accounts payable $ 8,200 $ 6,939
Accrued liabilities 15,851 12,963
Revolving credit facility 26,700 -
--------- ---------
Current liabilities 50,751 19,902
Revolving credit facility - 5,400
Deferred compensation 5,824 3,413
Other liabilities 2,790 3,813
--------- ---------
Total liabilities 59,365 32,528
--------- ---------
Stockholders' equity
Common stock, $.01 par value, 20,000,000 shares
authorized 10,939,048 and 10,795,788 shares issued 109 108
Capital in excess of par value 10,274 9,232
Retained earnings 100,851 87,777
--------- ---------
111,234 97,117
Less cost of 806,900 shares held in treasury in 1999 (11,464) -
--------- ---------
Total stockholders' equity 99,770 97,117
--------- ---------
Total liabilities and stockholders' equity $ 159,135 $ 129,645
========= =========
See accompanying notes to the consolidated financial statements
F-2
Consolidated Statements of Stockholders' Equity
Chromcraft Revington, Inc.
(In thousands, except share data)
Total
Capital in Stock-
Common Excess of Retained Treasury holders'
Stock Par Value Earnings Stock Equity
--------- --------- --------- --------- ---------
Balance at January 1, 1997 $ 115 $ 20,934 $ 56,876 $ - $ 77,925
Repurchase and cancellation
of stock (141,600 shares) (1) (1,894) (1,895)
Exercise of stock options
(25,590 shares) - 234 234
Net earnings 14,642 14,642
--------- --------- --------- --------- ---------
Balance at December 31, 1997 114 19,274 71,518 - 90,906
Repurchase and cancellation
of stock (590,548 shares) (6) (10,190) (10,196)
Exercise of stock options
(17,800 shares) - 148 148
Net earnings 16,259 16,259
--------- --------- --------- --------- ---------
Balance at December 31, 1998 108 9,232 87,777 - 97,117
Repurchase and cancellation
of stock (38,600 shares) - (615) (615)
Exercise of stock options
(181,860 shares) 1 1,657 1,658
Purchase of treasury stock
(806,900 shares) (11,464) (11,464)
Net earnings 13,074 13,074
--------- --------- --------- --------- ---------
Balance at December 31, 1999 $ 109 $ 10,274 $ 100,851 $ (11,464) $ 99,770
========= ========= ========= ========= =========
See accompanying notes to the consolidated financial statements
F-3
Consolidated Statements of Cash Flows
Chromcraft Revington, Inc.
(In thousands)
Year Ended December 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------
Operating Activities
Net earnings $ 13,074 $ 16,259 $ 14,642
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation and amortization 4,947 4,534 4,383
Deferred income taxes 531 893 1,782
Changes in assets and liabilities, net
of effects of acquired company
Accounts receivable 1,435 21 2,879
Inventories (1,831) (2,958) (2,776)
Accounts payable (4,030) (1,511) (1,450)
Accrued liabilities 72 293 (3,955)
Other 559 (546) (39)
--------- --------- ---------
Cash provided by operating activities 14,757 16,985 15,466
--------- --------- ---------
Investing Activities
Investment in acquired company (8,525) - -
Capital expenditures (3,630) (3,388) (2,712)
Proceeds from disposals of property, plant
and equipment 1,184 51 107
--------- --------- ---------
Cash used in investing activities (10,971) (3,337) (2,605)
--------- --------- ---------
Financing Activities
Net borrowing (repayment) under revolving
credit facility 21,300 (3,600) (11,200)
Refinance indebtedness of acquired company (13,517) - -
Repurchase of common stock (12,079) (10,196) (1,895)
Proceeds from exercise of stock options 1,658 148 234
--------- --------- ---------
Cash used in financing activities (2,638) (13,648) (12,861)
--------- --------- ---------
Increase in cash 1,148 - -
Cash at beginning of the year - - -
--------- --------- ---------
Cash at end of the year $ 1,148 $ - $ -
========= ========= =========
See accompanying notes to the consolidated financial statements
F-4
Notes to Consolidated Financial Statements
Chromcraft Revington, Inc.
December 31, 1999
Note 1. Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of
Chromcraft Revington, Inc. and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated.
Chromcraft Revington manufactures and sells residential and commercial
furniture. Products are sold primarily through furniture dealers
throughout the United States and Canada. Chromcraft Revington has
several operating segments which are aggregated into one reportable
segment, in accordance with Financial Accounting Standards Board
Statement No. 131, "Disclosures about Segments of an Enterprise and
Related Information."
Use of Estimates
The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Inventories
All inventories (materials, labor and overhead) are valued at the
lower of cost or market. Inventories valued using the last-in, first-
out (LIFO) basis represent approximately 64% and 70% of total
inventories at December 31, 1999 and 1998, respectively. Remaining
inventories are valued using the first-in, first-out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment is stated on the basis of cost.
Depreciation is computed principally by the straight-line method for
financial reporting purposes and by accelerated methods for tax
purposes.
Revenue Recognition
Revenue from sales is recognized when the goods are shipped to the
customer.
Intangibles
Intangible assets are stated on the basis of cost. The excess of
purchase price over the fair value of net assets acquired (goodwill)
and tradenames are being amortized on a straight-line basis over
periods ranging from 15 to 40 years. Chromcraft Revington reviews the
carrying value of goodwill whenever changes in circumstances indicate
that the carrying amount may not be recoverable. When factors
indicate that the recoverability of goodwill should be evaluated,
Chromcraft Revington uses an estimate of the undiscounted cash flows
of the acquired businesses in determining whether an impairment loss
is required.
F-5
Deferred Income Taxes
Deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Earnings per Share
Basic earnings per share is calculated based on the average number of
common shares outstanding. Diluted earnings per share include
dilutive potential common shares (stock options).
Stock Options
Chromcraft Revington applies Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and related Interpre-
tations in accounting for stock options and discloses the fair value
of options granted as permitted by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation."
Financial Instruments
The carrying amounts reported in the balance sheets for accounts
receivable, accounts payable and borrowings under a bank revolving
credit facility approximate their fair values. Concentration of
credit risk with respect to trade accounts receivable is limited due
to the large number of entities comprising Chromcraft Revington's
customer base.
Note 2. Acquisition of Korn Industries, Incorporated
On September 2, 1999, CRI Corporation-Sumter, a wholly-owned
subsidiary of Chromcraft Revington, Inc., acquired all of the
outstanding common stock of Korn Industries, Incorporated ("Korn
Industries") for $8,525,000 in cash (including acquisition-related
expenses) and the assumption of Korn Industries' liabilities. Korn
Industries is headquartered in Sumter, South Carolina and manufactures
and sells bedroom and dining room furniture through its Sumter Cabinet
Company division. The operations of Korn Industries are included in
the Consolidated Statements of Earnings commencing on September 2,
1999. The transaction was accounted for as a purchase and the
purchase price has been allocated to assets acquired and liabilities
assumed based on their fair market values at the date of acquisition.
Goodwill and other intangibles are being amortized on a straight-line
basis over periods ranging from 15 to 25 years.
The following unaudited pro forma results of operations for the year
ended December 31, 1999 give effect to the Korn Industries acquisition
as if it had occurred on January 1, 1999. The unaudited pro forma
results of operations for the year ended December 31, 1998 combine the
operating results of Korn Industries for the fiscal year ended
November 28, 1998 and Chromcraft Revington's operating results for the
F-6
year ended December 31, 1998 and give effect to the Korn Industries
acquisition as if it had occurred at the beginning of the period.
(In thousands,
except per share data)
----------------------
1999 1998
--------- ---------
Sales $ 281,168 $ 291,395
Net earnings 11,280 14,310
Earnings per share of common stock
Basic 1.08 1.28
Diluted 1.05 1.24
The pro forma information is presented for comparative purposes only
and is not necessarily indicative of the operating results that would
have occurred had the acquisition been consummated as of the above
dates, nor is it necessarily indicative of future operating results.
Note 3. Inventories
Inventories at December 31, 1999 and 1998 consisted of the following:
(In thousands)
----------------------
1999 1998
--------- ---------
Raw materials $ 18,521 $ 12,502
Work-in-process 8,069 6,097
Finished goods 25,866 21,181
--------- ---------
Inventories at FIFO cost 52,456 39,780
LIFO reserve (2,006) (1,650)
--------- ---------
$ 50,450 $ 38,130
========= =========
Note 4. Property, Plant and Equipment
Property, plant and equipment at December 31, 1999 and 1998 consisted
of the following:
(In thousands)
----------------------
1999 1998
--------- ---------
Land $ 2,208 $ 2,013
Buildings and improvements 32,869 29,923
Machinery and equipment 46,986 39,323
Leasehold improvements 862 768
Construction in progress 239 662
--------- ---------
83,164 72,689
Less accumulated depreciation and amortization (38,684) (35,595)
--------- ---------
$ 44,480 $ 37,094
========= =========
F-7
Note 5. Accrued Liabilities
Accrued liabilities at December 31, 1999 and 1998 consisted of the following:
(In thousands)
----------------------
1999 1998
--------- ---------
Employee benefit plans $ 5,434 $ 4,114
Salaries, wages and commissions 1,907 1,837
Vacation and holiday pay 1,162 1,263
Workers' compensation plans 1,451 1,158
Other accrued liabilities 5,897 4,591
--------- ---------
$ 15,851 $ 12,963
========= =========
Note 6. Income Taxes
Components of the provision for income taxes for the years ended
December 31, 1999, 1998 and 1997 were as follows:
(In thousands)
-----------------------------------
1999 1998 1997
--------- --------- ---------
Current:
Federal $ 7,029 $ 8,666 $ 6,683
State 1,012 1,235 1,255
--------- --------- ---------
8,041 9,901 7,938
--------- --------- ---------
Deferred:
Federal 502 738 1,517
State 29 155 265
--------- --------- ---------
531 893 1,782
--------- --------- ---------
Total provision for income taxes $ 8,572 $ 10,794 $ 9,720
========= ========= =========
A reconciliation of the provision for income taxes included in the
Consolidated Statements of Earnings and the amount computed by applying
the U.S. Federal income tax rate for the years ended December 31, 1999,
1998 and 1997 is summarized below:
(In thousands)
-----------------------------------
1999 1998 1997
--------- --------- ---------
Tax expense, at U.S. statutory rate $ 7,577 $ 9,469 $ 8,527
State taxes, net of federal benefit 682 1,030 967
Non-deductible amortization of goodwill 253 222 222
Other, net 60 73 4
--------- --------- ---------
Total provision for income taxes $ 8,572 $ 10,794 $ 9,720
========= ========= =========
F-8
The tax effects of temporary differences that give rise to significant
portions of net deferred tax assets (liabilities) at December 31, 1999
and 1998 are summarized below:
(In thousands)
----------------------
1999 1998
--------- ---------
Deferred tax assets attributable to:
Accounts receivable $ 794 $ 680
Assets held for sale - 525
Accrued vacation and holiday pay 486 471
Deferred compensation 2,965 1,181
Net operating loss carryforwards 3,407 841
Other 2,209 1,859
--------- ---------
Total gross deferred tax assets 9,861 5,557
--------- ---------
Deferred tax liabilities attributable to:
Inventories (3,744) (1,010)
Property, plant and equipment (5,630) (4,254)
Other (1,266) (1,258)
--------- ---------
Total gross deferred tax liabilities (10,640) (6,522)
--------- ---------
Net deferred tax liabilities $ (779) $ (965)
========= =========
Balance sheet classifications of deferred taxes at December 31, 1999
and 1998 were as follows:
(In thousands)
----------------------
1999 1998
--------- ---------
Deferred tax assets, current $ - $ 1,231
Deferred tax liability, current (562) -
Deferred tax liability, noncurrent (217) (2,196)
--------- ---------
Net deferred tax liability $ (779) $ (965)
========= =========
In connection with the acquisitions of Cochrane Furniture and Korn
Industries, Chromcraft Revington acquired certain federal and state
net operating loss carryforwards with expiration dates through 2010
and 2018, respectively.
Note 7. Revolving Credit Facility
Chromcraft Revington has an unsecured revolving loan facility (the
"Facility") with a group of banks that allows it to borrow up to
$60,000,000 for working capital requirements, capital expenditures and
acquisitions. At December 31, 1999, Chromcraft Revington had
$30,868,000 in availability under the Facility. The interest rate
under the Facility is determined at the time of borrowing, at
Chromcraft Revington's option, at either the bank prime rate or a rate
based on the certificate of deposit rate, the Fed Funds rate, or the
London Interbank Offered Rate (LIBOR). The weighted average interest
rate on borrowings outstanding as of December 31, 1999 and 1998 was
5.12% and 5.51%, respectively. A commitment fee, of up to .20% per
annum, is payable on the unused portion of the credit line.
Chromcraft Revington had outstanding letters of credit under the
Facility of $2,432,000 and $1,718,000 at December 31, 1999 and 1998,
respectively. The Facility expires December 20, 2000. Chromcraft
Revington expects to have a new long-term bank agreement in place
before the present facility expires.
The Facility requires compliance with certain financial loan covenants
related to net worth, interest and fixed charge coverages and debt
leverage. At December 31, 1999, unrestricted retained earnings
available for dividends were $25,814,000.
F-9
Note 8. Earnings Per Share of Common Stock
Weighted average shares used in the calculation of diluted earnings
per share included dilutive potential common shares (stock options) of
approximately 272,000, 396,000 and 337,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
Stock options to purchase 138,426 shares of common stock at an average
price of $16.85 per share and 58,000 shares at $19.78 per share were
outstanding during 1999 and 1998, respectively, but were not included
in the computation of diluted earnings per share because the options'
exercise prices were greater than the average market price of the
common shares for those years and, therefore, the effect would be
antidilutive.
Note 9. Stockholders' Equity
Chromcraft Revington is authorized to issue up to 100,000 shares of
$1.00 par value preferred stock, none of which is outstanding.
Chromcraft Revington effected a two-for-one stock split in the form of
a 100% stock dividend to stockholders of record on May 27, 1998. The
additional shares were distributed to stockholders on June 10, 1998.
All references to the number of shares outstanding and per share
amounts, where applicable, in the consolidated financial statements
and notes reflect the stock split.
Chromcraft Revington has entered into a Registration Rights Agreement
dated April 23, 1992 (the "Agreement") between Chromcraft Revington
and 399 Venture Partners, Inc., which owned 5,695,418 shares or 56.2%
of Chromcraft Revington's outstanding common stock at December 31,
1999. The Agreement permits 399 Venture Partners, Inc. and trans-
ferees, as defined, to request certain registration rights under the
Securities Act of 1933 for all or part of their shares of common stock
under certain conditions. In connection with such registrations as
may occur, Chromcraft Revington will be obligated for the payment of
all registration expenses incurred in the performance of, or compliance
with, this Agreement, subject to certain limitations set forth therein.
Note 10. Employee Benefit Plans
Chromcraft Revington sponsors a number of tax-qualified defined
contribution retirement and savings plans. Employees may be eligible
to participate in one or more of these plans. Company contributions
to these plans are based on either a percentage of an employee's
compensation or a matching portion of the employee's contributions.
The cost of these plans was $1,299,000 in 1999, $1,188,000 in 1998 and
$1,113,000 in 1997.
Chromcraft Revington also provides supplemental retirement benefits
and "make up" benefits to key executives of Chromcraft Revington whose
benefits are reduced by Internal Revenue Service Code restrictions.
Contributions and expenses under these arrangements were $390,000 in
1999, $338,000 in 1998 and $305,000 in 1997.
Note 11. Stock Options
Chromcraft Revington's 1992 Stock Option Plan, as amended, (the
"Plan") provides for the granting of either incentive stock options
("ISO's") or stock options which do not qualify as incentive stock
options ("non-ISO's"). The total number of shares of common stock
which may be issued under stock options granted pursuant to the Plan
is 1,800,000 shares. ISO's granted under the Plan vest over no
greater than a 10-year period, and are granted at exercise prices no
less than the fair market value of Chromcraft Revington's common
shares as of the date of grant.
F-10
Non-ISO's vest and are at exercise prices as determined by the
compensation committee of the Board of Directors. At December 31,
1999 and 1998, there were 605,606 and 643,170 shares, respectively,
available for future grants.
The estimated per share weighted average fair value of stock options
granted during 1999, 1998 and 1997 was $6.02, $7.85 and $6.36,
respectively, on the date of grant. The fair value of stock options
on the date of grant was estimated using the Black-Scholes model with
the following weighted average assumptions:
1999 1998 1997
--------- --------- ---------
Expected life (years) 6 6 7
Interest rate 5.0% 5.7% 6.3%
Volatility 27.2% 27.8% 28.0%
The following table summarizes the pro forma effects assuming compensation
cost for such awards had been recorded based upon the estimated fair value:
(In thousands, except per share data)
--------------------------------------------------------------------------
1999 1998 1997
---------------------- ---------------------- ----------------------
As Pro As Pro As Pro
Reported Forma Reported Forma Reported Forma
--------- --------- --------- --------- --------- ---------
Net earnings $ 13,074 $ 12,622 $ 16,259 $ 15,875 $ 14,642 $ 14,345
Earnings per share
of common stock
Basic 1.25 1.21 1.46 1.43 1.28 1.26
Diluted 1.22 1.18 1.41 1.38 1.25 1.22
A summary of Chromcraft Revington's stock option activity and related
information for the three years ended December 31, 1999 follows:
Weighted
Average
Number Exercise
of Shares Price
--------- ---------
1997
Outstanding at beginning of year 943,440 $ 8.43
Granted 42,862 $ 14.16
Exercised (25,590) $ 8.46
Cancelled (1,170) $ 13.09
Outstanding at end of year 959,542 $ 8.68
Exercisable 803,770 $ 7.95
1998
Granted 58,000 $ 19.78
Exercised (17,800) $ 7.25
Outstanding at end of year 999,742 $ 9.35
Exercisable 861,310 $ 8.38
1999
Granted 47,064 $ 16.00
Exercised (181,860) $ 6.98
Cancelled (9,500) $ 18.32
Outstanding at end of year 855,446 $ 10.12
Exercisable 791,228 $ 9.74
F-11
Significant option groups outstanding at December 31, 1999 and related
weighted average price and remaining life information follows:
Options Outstanding Options Exercisable
---------------------- ----------------------
Grant Number Exercise Number Exercise Remaining
Date of Shares Price of Shares Price Life (Years)
------- --------- --------- --------- --------- ---------
4-15-92 310,960 $ 5.50 310,960 $ 5.50 2.3
2-19-93 86,100 $ 9.50 86,100 $ 9.50 3.1
1-11-94 138,000 $ 11.63 138,000 $ 11.63 4.0
All other 320,386 $ 14.12 256,168 $ 13.96 6.9
Note 12. Supplemental Cash Flow Information
Interest paid during the years ended December 31, 1999, 1998 and 1997
was $873,000, $774,000 and $1,081,000, respectively. Income taxes
paid during the years ended December 31, 1999, 1998 and 1997 were
$7,334,000, $10,062,000 and $8,510,000, respectively.
Note 13. Rental Commitments
Chromcraft Revington leases certain showroom facilities and trans-
portation equipment under non-cancelable operating leases. The
future minimum lease payments under non-cancelable leases for the
years ending December 31, 2000, 2001, 2002, 2003 and 2004 are
$1,442,000, $1,242,000, $1,060,000, $924,000 and $704,000,
respectively. It is expected that, in the normal course of business,
leases that expire will be renewed or replaced.
Rental expense was $1,825,000, $1,919,000 and $1,932,000 for the years
ended December 31, 1999, 1998 and 1997, respectively.
F-12
Independent Auditors' Report
The Board of Directors and Stockholders
Chromcraft Revington, Inc.:
We have audited the consolidated financial statements of Chromcraft
Revington, Inc. and subsidiaries as listed in item 14(a) (1) and (2).
In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as
listed in item 14(a) (1) and (2). These consolidated financial
statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Chromcraft Revington, Inc. and subsidiaries as of December 31, 1999
and 1998, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
KPMG LLP
Indianapolis, Indiana
February 2, 2000
F-13
Quarterly Financial Information (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
-------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------- --------- --------- --------- ---------
1999
Sales $ 61,898 $ 55,881 $ 59,279 $ 68,327 $ 245,385
Gross margin 15,515 13,847 13,527 14,085 56,974
Operating income 7,333 6,182 5,822 3,297 22,634
Net earnings 4,368 3,692 3,365 1,649 13,074
Earnings per share
of common stock
Basic .41 .35 .33 .16 1.25
Diluted .39 .34 .32 .16 1.22
1998
Sales $ 60,802 $ 57,500 $ 56,337 $ 62,105 $ 236,744
Gross margin 15,314 14,307 14,477 15,658 59,756
Operating income 7,097 6,639 6,736 7,320 27,792
Net earnings 4,173 3,883 3,913 4,290 16,259
Earnings per share
of common stock
Basic .37 .35 .35 .39 1.46
Diluted .36 .33 .34 .38 1.41
--------------------
Operating results for the quarter ended December 31, 1999 include a
non-recurring pre-tax charge of $1.5 million ($.09 per share on a
diluted basis) for employee termination costs, the writing down of
discontinued inventory and other related costs at Chromcraft
Revington's Chromcraft subsidiary.
F-14
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Chromcraft Revington, Inc.
(In thousands)
Additions
----------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Classification of Period Expenses Accounts Deductions of Year
-------------- --------- --------- --------- ---------- ---------
Year ended December 31, 1999
Allowance for doubtful
accounts $ 1,211 $ 246 $ 277(c) $ (468)(a) $ 1,266
Year ended December 31, 1998
Allowance for doubtful
accounts $ 1,462 $ 328 $ - $ (579)(a) $ 1,211
Year ended December 31, 1997
Allowance for doubtful
accounts $ 1,781 $ 169 $ - $ (488)(a) $ 1,462
Reserve for excess and obsolete
inventory (b) $ 3,123 $ - $ - $ (3,123) $ -
(a) Represents charge-offs, net of recoveries, to the allowance for
doubtful accounts.
(b) Represents the reserve for excess and obsolete inventory
associated with the Cochrane Furniture acquisition.
(c) Represents the allowance for doubtful accounts associated with the
Korn Acquisition.
S-1
EXHIBIT (21.1)
SUBSIDIARIES OF THE REGISTRANT
The Registrant owns all of the issued and outstanding shares of
capital stock of each of the following corporations:
Chromcraft Corporation, a Delaware corporation
Peters-Revington Corporation, a Delaware corporation
Silver Furniture Co., Inc., a Tennessee corporation
Silver Furniture Manufacturing Co., Inc., a Tennessee
corporation (a)
Cochrane Furniture Company, Inc., a North Carolina corporation
CRI Capital Corporation, a Delaware corporation
CRI Corporation-Sumter, a Delaware corporation
Korn Industries, Incorporated, a South Carolina corporation (b)
(a) A 100% owned subsidiary of Silver Furniture Co., Inc.
(b) A 100% owned subsidiary of CRI Corporation-Sumter
EXHIBIT (23.1)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Chromcraft Revington, Inc.:
We consent to incorporation by reference in the registration statement
(No. 33-48728) on Form S-8 of Chromcraft Revington, Inc. of our report
dated February 2, 2000, relating to the consolidated balance sheets of
Chromcraft Revington, Inc. and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of earnings, stockholders'
equity, and cash flows and consolidated financial statement schedule for
each of the years in the three-year period ended December 31, 1999, which
report appears in the December 31, 1999, annual report on Form 10-K of
Chromcraft Revington, Inc.
KPMG LLP
Indianapolis, Indiana
March 28, 2000
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints FRANK T. KANE and MICHAEL E.
THOMAS, or either of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign
the Chromcraft Revington, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and any and all amendments
thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Dated: March 23, 2000 Bruce C. Bruckmann, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints FRANK T. KANE and MICHAEL E.
THOMAS, or either of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign
the Chromcraft Revington, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and any and all amendments
thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Dated: March 17, 2000 David L. Kolb, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints FRANK T. KANE and MICHAEL E.
THOMAS, or either of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign
the Chromcraft Revington, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and any and all amendments
thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Dated: March 7, 2000 Larry P. Kunz, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints FRANK T. KANE and MICHAEL E.
THOMAS, or either of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign
the Chromcraft Revington, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and any and all amendments
thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Dated: March 10, 2000 M. Saleem Muqaddam, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints FRANK T. KANE and MICHAEL E.
THOMAS, or either of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign
the Chromcraft Revington, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and any and all amendments
thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Dated: March 7, 2000 Warren G. Wintrub, Director