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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, 1996
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. [X]
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. [ ]
On March 7, 1997, the Registrant had outstanding 5,742,273 shares of common
stock. The aggregate market value of the voting stock held by nonaffiliates
of the Registrant was $86.2 million as of that date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of the Registrant dated April 1, 1997 are
incorporated by reference in Part III of this report.
INDEX
Page Number
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . 5
Item 4. Submission of Matters to a Vote of Security Holders . 5
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 8. Financial Statements and Supplementary Data . . . . . 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 10
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 . . . . . . . . . . . . . . . . 11
Item 13. Certain Relationships and Related Transactions . . . . 11
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
February 1992, 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") and Cochrane Furniture
Company, Inc. ("Cochrane Furniture").
Effective April 23, 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 of
2,500,000 shares of its common stock at $11.00 per share and restructured
its long-term debt. Chromcraft Revington had no operations prior to April 23,
1992. Chromcraft and Peters-Revington were both founded in 1946.
On April 3, 1995, Chromcraft Revington acquired Silver Furniture, a manufacturer
and importer of occasional tables, for $8,350,000 in cash, including acquisi-
tion expenses. Additional purchase consideration up to $3,000,000 is payable to
the former shareholders of Silver Furniture if certain financial and other
conditions are satisfied. At December 31, 1996, $2,000,000 of the additional
purchase consideration had been earned. The operations of Silver Furniture
are included in Chromcraft Revington's consolidated financial statements from
the date of acquisition. Additional financial information is included in Note 3
"Acquisition of Silver Furniture Co., Inc." to the consolidated financial
statements listed in Part IV, Item 14(a) (1) and (2).
On November 8, 1996, the Company acquired Cochrane Furniture, a manufacturer
of dining room, bedroom and upholstered furniture, for $3,483,000 in cash
(including acquisition related expenses) and the assumption of $38,756,000 of
Cochrane Furniture's liabilities. The operations of Cochrane Furniture are
included in Chromcraft Revington's consolidated financial statements from the
date of acquisition. Additional financial information is included in Note 2
"Acquisition of Cochrane Furniture Company, Inc." to the consolidated financial
statements listed in Part IV, Item 14(a) (1) and (2).
Chromcraft Revington and its subsidiaries (collectively the "Company") operate
in one business segment, the manufacture and sale of furniture. No material
amount of the Company's sales is dependent upon a single customer. Export
sales represent approximately 1% of total sales.
Chromcraft Corporation
Chromcraft products consist of mid-to-higher priced casual dining furniture
and medium priced commercial furniture.
Chromcraft casual dining furniture is designed for use in dining rooms, family
rooms, recreation rooms, kitchens and apartments without formal dining areas.
This product line consists primarily of coordinated dining suites in a
contemporary or traditional style that include laminated tables, wood and
glass-top tables, stationary and tilt-swivel chairs, pedestal chairs and bars-
tools. 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's casual dining furniture is sold
nationwide to general furniture retailers, department stores and specialty
retailers of casual furniture. Furniture is sold through an employee sales
force and independent representatives.
2
Chromcraft commercial furniture products include 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. Commercial furniture is marketed through a separate employee
sales force and independent representatives who sell to dealers and distributors
throughout the United States.
Chromcraft manufactures its casual dining and commercial furniture at its
Senatobia, Mississippi plant. Significant manufacturing operations at this
facility include metal fabricating, plating, powder-coat painting process,
wood finishing and chair foam production.
Peters-Revington Corporation
Peters-Revington products consist of moderately 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. These products are manufactured primarily from American
hardwoods, such as oak, cherry and maple. Many Peters-Revington table col-
lections include twelve or more pieces in matching styles. In addition,
different products incorporate the same design and styling themes, thereby
enabling consumers to coordinate several pieces of furniture for the same room.
Peters-Revington's products are sold through independent sales agents to a
broad customer base of approximately 2,900 accounts, primarily independent
furniture retailers.
Peters-Revington's products are manufactured at its Delphi, Indiana plant.
Significant manufacturing operations at this facility include cutting, shaping,
sanding, lacquering, finishing and final assembly of wood furniture.
Silver Furniture Co., Inc.
Silver Furniture designs, manufactures, imports and sells entry level-to-medium
priced occasional tables. Products are generally designed with a contemporary
appeal, utilizing special finishes and unique styling. Tables are constructed
using a variety of materials, including wood, medium density fiber board, glass
and metal. Many of the tables have swivel table tops or castered table bases.
Some of these tables manufactured using fiber board are finished with a textured
painted process. In 1995, Silver Furniture began using a gypsum-based hydro-
stone molding process to produce table bases in an assortment of shapes. Silver
Furniture sources its internally designed imported tables primarily from
factories located in the Far East and Mexico.
Silver Furniture tables are sold throughout the United States and Canada,
primarily to national and regional furniture chains, major independent furniture
stores and warehouse clubs. Silver Furniture's manufacturing and distribution
center is located in Knoxville, Tennessee.
Cochrane Furniture Company, Inc.
Cochrane Furniture manufactures and sells medium-priced wood dining room and
bedroom furniture. Dining room furniture includes tables, chairs, barstools,
buffets, chinas and serving pieces primarily in traditional and country styling.
Dining room tables are offered in solid wood or with a laminated table top with
solid wood edges. Bedroom furniture includes beds, dressers, night stands and
mirrors primarily in traditional styling. These products are manufactured at
Warrenton and Lincolnton, North Carolina.
3
Cochrane Furniture manufactures and sells upholstered sofas, loveseats, chairs
and sleepers under the Cochrane Furniture and Pem-Kay furniture brand names.
The Cochrane Furniture brand upholstery, styled in traditional or contemporary
patterns, is sold at mid-to-higher price points. Cochrane Furniture brand
upholstery is manufactured in Lincolnton, North Carolina. The Pem-Kay
upholstered furniture, styled in traditional patterns, is sold at entry level to
moderate price points. Pem-Kay upholstery is manufactured at Newton,
North Carolina.
Cochrane Furniture products are sold through independent representatives and
an employee sales force to national, regional and independent furniture stores.
Cochrane has in-store gallery showrooms at many of these retailers.
Raw Materials
The Company's 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. The Company
believes that supplies of raw materials are available in sufficient quantities
from an adequate number of suppliers. In 1996, the Company did not experience
any significant shortage of raw materials.
Inventory and Seasonal Requirements
The Company maintains a finished goods inventory for occasional, dining and
bedroom furniture in order to respond quickly to customer delivery needs. Most
upholstered and casual dining furniture is made to customer specifications
and, therefore, not carried in stock. The Company does maintain a limited
number of upholstered and casual dining furniture items for quick delivery
programs. The Company's sales have historically not been subject to material
seasonal fluctuations.
Competition
The Company encounters competition in the sale of all its products. Many of
the Company's competitors, some of which are larger and have greater financial
resources, produce a number of products which are not competitive with the
Company's products. In many cases, such companies do not disclose the portion
of their sales attributable to products similar to those manufactured by the
Company. It is, therefore, impractical to state with any certainty the
Company's relative position in a particular product line. The Company believes,
however, that it is the second largest manufacturer of casual dining furniture.
Competition in the Company's products is in the form of the quality of its
products, service and selling prices.
Backlog
The Company's backlog of sales orders was approximately $24.3 million at
December 31, 1996, as compared to approximately $18.6 million at December 31,
1995. The order backlog position at December 31, 1995 does not include Cochrane
Furniture's backlog. Order backlog at any particular time is not necessarily
indicative of the level of future shipments.
4
Environment
The Company 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
The Company and its subsidiaries employ a total of approximately 2,500 people.
Production employees at the Company's Knoxville, Tennessee location are
represented by a labor union. The Company considers its relations with its
employees to be good.
ITEM 2. PROPERTIES
The Company maintains its corporate offices in Delphi, Indiana.
Chromcraft leases approximately 51 acres underlying its 560,000 square foot
plant in Senatobia, Mississippi and owns an adjacent 49 acres. The lease is
annually renewable through 2061. Peters-Revington owns the 50 acres underlying
its 490,000 square foot plant in Delphi, Indiana and Silver Furniture owns the
10.5 acres underlying its 155,000 square foot plant in Knoxville, Tennessee.
Cochrane Furniture owns approximately 339 acres of land and has facilities
totalling 955,000 square feet in Lincolnton, Newton and Warrenton,
North Carolina.
The Company, through its subsidiaries, leases trucks, trailers and other
transportation equipment, warehouse space in Knoxville, Tennessee and showroom
facilities in High Point, North Carolina, Chicago, Illinois and San Francisco,
California.
Management believes the properties and equipment of its subsidiaries are well
maintained, in good operating condition, and adequate to support present
operations.
ITEM 3. LEGAL PROCEEDINGS
The Company 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.
5
Executive Officers Of Chromcraft Revington, Inc.
Michael E. Thomas 55 President, Chief Executive Officer and Director
since the Company's organization in 1992.
H. Martin Michael 55 Executive Vice President and Director since the
Company's organization in 1992. President of
Chromcraft since July, 1990.
Frank T. Kane 43 Vice President-Finance, Chief Financial Officer
and Secretary since the Company's organization
in 1992.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The following table sets forth the high and low sales prices of the Company's
common stock, as reported on the New York Stock Exchange since October 3, 1995
and on the NASDAQ Stock Market through October 2, 1995.
1996 1995
---------------- ----------------
High Low High Low
------ ------ ------ ------
First quarter 26 7/8 22 1/2 22 1/4 20 3/4
Second quarter 25 3/8 23 24 1/4 20
Third quarter 25 1/2 22 24 1/2 20 1/4
Fourth quarter 28 3/8 24 1/2 27 1/8 23 1/4
The Company commenced trading on the New York Stock Exchange on October 3, 1995
under the symbol CRC. The market quotations prior to the Company's listing on
the New York Stock Exchange reflect interdealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.
There were approximately 67 security holders of record of the Company's common
stock as of March 7, 1997.
The Company intends to retain cash for internal and external growth and develop-
ment of its business and currently does not anticipate paying cash dividends.
At December 31, 1996, unrestricted retained earnings available for dividends
were $25,957,000.
6
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
Year Ended December 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992(1)
--------- --------- --------- --------- ---------
OPERATING RESULTS
Sales $ 175,899 $ 152,609 $ 134,112 $ 126,329 $ 119,620
Cost of sales 128,217 111,787 96,567 92,173 88,023
--------- --------- --------- --------- ---------
Gross margin 47,682 40,822 37,545 34,156 31,597
Selling, general and
administrative expenses 24,235 20,478 18,316 17,706 18,620
--------- --------- --------- --------- ---------
Operating income 23,447 20,344 19,229 16,450 12,977
Interest expense, net 221 236 252 958 2,671
--------- --------- --------- --------- ---------
Earnings before income tax expense 23,226 20,108 18,977 15,492 10,306
Income tax expense 9,290 8,134 7,786 6,622 4,230
--------- --------- --------- --------- ---------
Net earnings $ 13,936 $ 11,974 $ 11,191 $ 8,870 $ 6,076
========= ========= ========= ========= =========
Earnings per share of common stock
Primary $ 2.36 $ 2.04 $ 1.91 $ 1.55 $ 1.07
========= ========= ========= ========= =========
Fully diluted $ 2.35 $ 2.03 $ 1.91 $ 1.55 $ 1.07
========= ========= ========= ========= =========
FINANCIAL POSITION (December 31,)
Working capital $ 40,343 $ 21,920 $ 17,466 $ 11,914 $ 10,722
Total assets 129,942 85,825 69,257 65,258 68,742
Total debt 20,200 1,500 - 6,554 17,538
Stockholders' equity 77,925 63,782 51,622 40,351 31,481
OTHER DATA
Operating income (% of sales) 13.3% 13.3% 14.3% 13.0% 10.8%
Depreciation and amortization $ 3,729 $ 3,853 $ 4,415 $ 4,767 $ 4,696
Capital expenditures $ 3,060 $ 5,514 $ 3,393 $ 3,049 $ 1,702
(1) In April 1992, Chromcraft Revington completed a merger pursuant to which
Chromcraft and Peters-Revington became wholly-owned subsidiaries of Chromcraft
Revington and concurrently completed its initial public offering of common
stock and restructured its long-term debt. Chromcraft Revington had no opera-
tions prior to April 1992. The combined results of Chromcraft and Peters-
Revington on a stand-alone basis have been included with Chromcraft Revington
for the period prior to April 1992. Earnings per share have been presented as
if Chromcraft Revington's common shares subsequent to the public offering in
April 1992 were outstanding during all of 1992.
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 and Cochrane Furniture. The Company's operating results
include the operations of Cochrane Furniture, acquired November 8, 1996, and
Silver Furniture, acquired April 3, 1995, from the dates of their acquisition
(see Notes 2 and 3 to the consolidated financial statements listed in Part IV,
Item 14(a)(1) and (2)).
The following table sets forth the Company's results of operations for the
years ended December 31, 1996, 1995 and 1994 expressed as a percentage of the
Company's sales.
Year Ended December 31,
-------------------------
1996 1995 1994
----- ----- -----
Sales 100.0% 100.0% 100.0%
Cost of sales 72.9 73.3 72.0
----- ----- -----
Gross margin 27.1 26.7 28.0
Selling, general and administrative expenses 13.8 13.4 13.7
----- ----- -----
Operating income 13.3 13.3 14.3
Interest expense, net .1 .1 .2
----- ----- -----
Earnings before income tax expense 13.2 13.2 14.1
Income tax expense 5.3 5.4 5.8
----- ----- -----
Net earnings 7.9% 7.8% 8.3%
===== ===== =====
1996 compared to 1995
Consolidated sales for 1996 were $175,899,000, up 15.3% from 1995. Acquisi-
tions accounted for approximately three-fourths of the current year's sales
growth. Internal growth was primarily due to an increase in volume and modest
price increases. The sales increase in 1996 was led by higher sales of casual
dining and commercial office furniture. Occasional furniture sales were
slightly ahead of the prior year period. Recent product introductions of
wrought iron casual dining sets and curio cabinets contributed to higher sales
in 1996.
Gross margin increased $6,860,000 to $47,682,000, or 27.1% of sales, in 1996,
from $40,822,000, or 26.7% of sales, in 1995. The 1996 percentage improvement
was primarily due to a more favorable product sales mix and improved operating
efficiencies at the Company's Chromcraft and Silver Furniture subsidiaries.
The 1996 gross margin percentage increase was partially offset by the inclusion
of Cochrane Furniture operating results. Raw material prices remained fairly
stable during the year.
Selling, general and administrative expenses as a percentage of sales increased
to 13.8% from 13.4% in 1995. The percentage increase was due to higher
corporate related expenses and incentive compensation, and an increase in the
allowance for doubtful accounts. Corporate related expenses were higher in 1996
primarily due to an increase in compensation costs. The increase in the
allowance for doubtful accounts was due, in part, to discontinuing a receivable
factoring agreement which transferred the risk of credit loss to the factor.
Interest expense was $221,000 as compared to $236,000 in 1995. In 1996,
interest expense was primarily due to borrowings attributable to the Cochrane
Furniture acquisition, partially offset by interest income on short-term
investments. During 1996, the Company invested excess cash flow from opera-
tions in short-term investments. Interest rates on bank borrowings were lower
in 1996 as compared to 1995.
8
The effective tax rate in 1996 was 40.0% compared to 40.5% in 1995. The lower
effective tax rate in 1996 was due to a decrease in state income taxes.
Net earnings increased to $13,936,000, or $2.35 per share fully diluted, as
compared to $11,974,000, or $2.03 per share fully diluted, in 1995. Average
common shares used in the calculation of fully diluted earnings per share
included common stock equivalents (stock options) of 187,000 shares in 1996
and 180,000 in 1995.
1995 compared to 1994
Consolidated sales in 1995 increased 13.8% to $152,609,000 from $134,112,000 in
1994. The sales increase was mainly due to the Silver Furniture acquisition,
as well as an increase in shipments of Peters-Revington occasional furniture.
Higher sales at Peters-Revington were due, in part, to the introduction of a
new home office furniture product line. These sales increases were partially
offset by lower sales at Chromcraft, particularly in casual dining furniture,
primarily due to the weak retail environment. The Company increased selling
prices during 1995 to offset higher costs, particularly raw material costs, to
the extent possible in a competitive market.
Gross margin increased $3,277,000 to $40,822,000, or 26.7% of sales, in 1995,
from $37,545,000, or 28.0%, in 1994. The gross margin percentage decrease was
primarily attributable to the inclusion of Silver Furniture's operating results.
Selling, general and administrative expenses as a percentage of sales, for
1995, were 13.4% as compared to 13.7% for the year earlier period. The cost
percentage decrease was due primarily to a more favorable sales mix. In
addition, during 1995, higher catalog and related costs were offset by lower
incentive compensation.
Interest expense in 1995 was $236,000 as compared to $252,000 in 1994. In 1995,
interest income earned on short-term investments partially offset an increase
in interest expense due to higher average bank borrowings and interest rates.
Bank borrowings during 1995 were attributable to the Silver Furniture acquisi-
tion and the refinancing of Silver Furniture's bank indebtedness.
The effective tax rate in 1995 was 40.5% compared to 41.0% in 1994. The lower
effective tax rate in 1995 was due to a decrease in state income taxes.
Net earnings increased to $11,974,000 in 1995 as compared to $11,191,000 in
1994. Fully diluted earnings per share were $2.03 in 1995 and $1.91 in 1994.
Average common shares used in the calculation of fully diluted earnings per
share included common stock equivalents (stock options) of 180,000 in 1995
and 140,000 in 1994.
Liquidity and Capital Resources
The operating activities of the Company provided $9,528,000 of cash for the
year ended December 31, 1996, a decrease of $4,762,000 from the amount provided
in 1995. Cash generated from operations decreased in 1996 primarily due to a
reduction in Cochrane Furniture's trade accounts payable and an increase in
inventories and receivables. Cochrane Furniture's trade payables, assumed at
the acquisition date, were reduced in order to eliminate past due amounts and
to obtain discounts on the early payment of invoices. Higher inventories at
year end were primarily due to a planned increase in finished goods to provide
better service to customers. The increase in accounts receivable at December
31, 1996 was primarily due to a higher sales volume and an increase in the
average payment terms. The increase in working capital investment in 1996 was
partially offset by a year-over-year increase in net earnings.
9
The investing activities used $6,286,000 and $16,864,000 of cash during the
years ended December 31, 1996 and 1995, respectively, for acquisitions and
capital expenditures. In November 1996, the Company purchased Cochrane
Furniture, a manufacturer of dining room, upholstery and bedroom furniture.
The purchase price consisted of a cash payment to Cochrane Furniture stock-
holders and related acquisition expenses of $3,483,000 and the assumption of
Cochrane Furniture's liabilities. In April 1995, the Company purchased Silver
Furniture, a manufacturer and importer of occasional tables, for $8,350,000 in
cash at closing, including acquisition expenses. Additional purchase considera-
tion, up to $3,000,000, is payable to the former shareholders of Silver
Furniture if certain financial and other conditions are satisfied. To fund the
conditional payments, $3,000,000 was deposited with a bank escrow agent at the
closing. At December 31, 1996, $2,000,000 of the additional purchase
consideration was earned and added to goodwill.
Capital expenditures, primarily for warehouse buildings and equipment purchases,
were $3,060,000 for 1996, a decrease of $2,454,000 from 1995. Capital expendi-
tures in 1995 were primarily for a new manufacturing plant at Peters-Revington.
Capital expenditures in 1997 are expected to be approximately $4,000,000.
Financing activities used $3,242,000 of cash during 1996, primarily to reduce
bank indebtedness. In 1996, substantially all of the Cochrane Furniture bank
and other indebtedness, assumed at the acquisition date, was refinanced with
borrowings under the Company's revolving credit facility. The refinancing was
required under the Company's revolving credit agreement, which restricts
indebtedness outside of the facility. Financing costs were more favorable
under the facility as compared to the Cochrane Furniture indebtedness.
Financing activities provided $496,000 in cash during the year ended December
31, 1995. Silver Furniture's existing bank indebtedness of $1,190,000, at the
acquisition date, was refinanced by borrowings under the Company's bank
credit facility.
In December, 1995, the Company, to ensure that it has adequate resources for
reinvestment in its core businesses and for strategic acquisitions, expanded
its bank line of credit by entering into a new revolving credit facility with a
group of banks. The facility has a commitment level of $60,000,000 maturing on
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
$20,200,000 at December 31, 1996. These borrowings were at an average interest
rate of 5.95% at year-end 1996 and were based on the London Interbank Offered
Rate (LIBOR). At December 31, 1996, the Company had $6,118,000 of bank letters
of credit outstanding, which reduces availability under the facility. The
Company had approximately $33,682,000 in available credit at the end of 1996.
Management expects that cash flow from operations and availability under its
revolving credit facility will continue to be sufficient to meet future busi-
ness needs. The Company plans to grow its businesses internally and through
acquisitions. Accordingly, the Company plans to retain cash in the business
and currently does not anticipate paying cash dividends on its common stock.
In 1997, absent an acquisition, the Company expects to generate excess cash
flow from operations, which will be used to reduce bank indebtedness.
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.
10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" on pages 2 and 3 and "Common
Stock Beneficially Owned by Directors and Executive Officers" on pages 3 and 4
of the Company's Proxy Statement dated April 1, 1997 are incorporated herein by
reference, and have been omitted pursuant to Instruction G of Form 10-K since
the Company intends to file with the Commission a definitive Proxy Statement
pursuant to Regulation 14A not later than 120 days following the end of its
1996 fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Executive Compensation" on pages 5 through 7, "Compensa-
tion Committee Report on Executive Compensation" on pages 7 through 9 and
"Stock Performance Graph" on page 9 of the Company's Proxy Statement dated
April 1, 1997 are incorporated herein by reference, and have been omitted
pursuant to Instruction G of Form 10-K since the Company intends to file with
the Commission a definitive Proxy Statement pursuant to Regulation 14A not
later than 120 days following the end of its 1996 fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The sections entitled "Common Stock Beneficially Owned by Directors and
Executive Officers" on pages 3 and 4 and "Voting Securities and Principal Stock-
holders" on pages 1 and 2 of the Company's Proxy Statement dated April 1, 1997
are incorporated herein by reference, and have been omitted pursuant to
Instruction G of Form 10-K since the Company intends to file with the Commis-
sion a definitive Proxy Statement pursuant to Regulation 14A not later than 120
days following the end of its 1996 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
11
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 the Company are included
in this report on Form 10-K:
Page Reference
Consolidated Statements of Earnings for the years
ended December 31, 1996, 1995, and 1994 F-1
Consolidated Balance Sheets at December 31, 1996
and 1995 F-2
Consolidated Statements of Stockholders' Equity for
the years ended December 31, 1996, 1995, and 1994 F-3
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995, and 1994 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 the Company 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.
(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.
12
(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 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 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 City of Senatobia, Tate
County, Mississippi, the Board of Supervisors of Tate County, Mis-
sissippi, 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-K for the year ended December
31, 1992, is incorporated herein by reference.
(10.5) Form of Registrant's Executive Incentive Plan, filed as Exhibit
No. 10.5 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.
(10.7) Chromcraft Revington, Inc. Supplemental Executive Retirement Plan
effective May 1, 1993, filed as Exhibit No. 10.7 to Form 10-Q for
the quarter ended July 3, 1993, is incorporated herein by
reference.
13
(10.75) Supplemental Executive Retirement Plan Trust Agreement, dated April
16, 1993 between the Registrant and Bank One, Indianapolis, Na-
tional 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.
(10.95) Supplemental Retirement Benefits Agreement, dated August 21, 1992,
between the Registrant and H. Martin Michael, filed as Exhibit No.
10.95 to Form 10-K for the year ended December 31, 1992, is
incorporated herein by reference.
(21.1) Subsidiaries of the Registrant.
(23.1) Consent of Independent Auditors.
(24.1) Powers of Attorney.
(27.0) Financial Data Schedule.
(b) Reports on Form 8-K.
During the fourth quarter of 1996, the Registrant filed Current Reports on
Form 8-K dated November 4, 1996 and November 8, 1996 reporting the
acquisition of Cochrane Furniture Company, Inc.
14
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 31, 1997 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 Director, President and March 31, 1997
Michael E. Thomas Chief Executive Officer
*H. Martin Michael Director and Executive
H. Martin Michael Vice President
/s/ Frank T. Kane Vice President-Finance March 31, 1997
Frank T. Kane (principal accounting and
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 31, 1997
Michael E. Thomas, Attorney-in-fact*
15
CONSOLIDATED STATEMENTS OF EARNINGS
CHROMCRAFT REVINGTON, INC.
(In thousands, except per share data)
Year Ended December 31,
--------------------------------------
1996 1995 1994
--------- --------- ---------
Sales $ 175,899 $ 152,609 $ 134,112
Cost of sales 128,217 111,787 96,567
--------- --------- ---------
Gross margin 47,682 40,822 37,545
Selling, general and administrative expenses 24,235 20,478 18,316
--------- --------- ---------
Operating income 23,447 20,344 19,229
Interest expense, net 221 236 252
--------- --------- ---------
Earnings before income tax expense 23,226 20,108 18,977
Income tax expense 9,290 8,134 7,786
--------- --------- ---------
Net earnings $ 13,936 $ 11,974 $ 11,191
========= ========= =========
Earnings per share of common stock
Primary $ 2.36 $ 2.04 $ 1.91
========= ========= =========
Fully diluted $ 2.35 $ 2.03 $ 1.91
========= ========= =========
Average shares and equivalents outstanding
Primary 5,893 5,867 5,845
Fully diluted 5,924 5,906 5,854
See accompanying notes to the consolidated financial statements
F - 1
CONSOLIDATED BALANCE SHEETS
CHROMCRAFT REVINGTON, INC.
(In thousands, except share data)
December 31,
-----------------------
1996 1995
--------- ---------
ASSETS
Cash and cash equivalents $ - $ -
Accounts receivable, less allowances of $1,781 and $980 29,784 18,370
Inventories 32,396 19,928
Deferred income taxes 3,935 578
Other assets 753 595
--------- ---------
Current assets 66,868 39,471
Property, plant and equipment, at cost,
less accumulated depreciation 39,498 22,627
Goodwill and tradenames, less accumulated amortization
of $5,363 and $4,644 21,902 21,621
Other assets 1,674 2,106
--------- ---------
Total assets $ 129,942 $ 85,825
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 9,900 $ 7,568
Accrued liabilities 16,625 9,983
--------- ---------
Current liabilities 26,525 17,551
Revolving credit facility 20,200 1,500
Deferred income taxes 2,203 1,868
Other liabilities 3,089 1,124
--------- ---------
Total liabilities 52,017 22,043
--------- ---------
Stockholders' equity
Preferred stock, $1.00 par value,
authorized 100,000 shares, none issued or outstanding - -
Common stock, $.01 par value, authorized 20,000,000 shares,
issued and outstanding 5,742,273 and 5,729,273 shares 57 57
Capital in excess of par value 20,992 20,785
Retained earnings 56,876 42,940
--------- ---------
Total stockholders' equity 77,925 63,782
--------- ---------
Total liabilities and stockholders' equity $ 129,942 $ 85,825
========= =========
See accompanying notes to the consolidated financial statements
F - 2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CHROMCRAFT REVINGTON, INC.
(Dollars in thousands)
Common Stock Capital in Total
---------------------- Excess of Retained Stockholders'
Shares Amount Par Value Earnings Equity
--------- ------ ---------- --------- -----------
Balance at January 1, 1994 5,712,424 $ 57 $ 20,519 $ 19,775 $ 40,351
Exercise of stock options 5,616 - 80 - 80
Net earnings 11,191 11,191
--------- ------ ---------- --------- ----------
Balance at December 31, 1994 5,718,040 57 20,599 30,966 51,622
Exercise of stock options 11,233 - 186 - 186
Net earnings 11,974 11,974
--------- ------ ---------- --------- ----------
Balance at December 31, 1995 5,729,273 57 20,785 42,940 63,782
Exercise of stock options 13,000 - 207 - 207
Net earnings 13,936 13,936
--------- ------ ---------- --------- -----------
Balance at December 31, 1996 5,742,273 $ 57 $ 20,992 $ 56,876 $ 77,925
========= ====== ========== ========= ===========
See accompanying notes to the consolidated financial statements
F - 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
CHROMCRAFT REVINGTON, INC.
(In thousands)
Year Ended December 31,
-------------------------------------------
1996 1995 1994
--------- --------- ---------
OPERATING ACTIVITIES
Net earnings $ 13,936 $ 11,974 $ 11,191
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 3,729 3,853 4,415
Deferred income taxes (8) (452) (829)
Changes in assets and liabilities, net of effect of
acquired companies
Accounts receivable (960) (1,834) (219)
Inventories (1,837) (75) (2,397)
Accounts payable (5,886) 2,180 (1,031)
Accrued liabilities 736 (1,499) 640
Other (182) 143 116
--------- --------- ---------
Cash provided by operating activities 9,528 14,290 11,886
--------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures (3,060) (5,514) (3,393)
Disposal of property, plant and equipment 257 - 59
Investment in acquired companies (3,483) (9,350) -
Funds held in escrow - (2,000) -
--------- --------- ---------
Cash used in investing activities (6,286) (16,864) (3,334)
--------- --------- ---------
FINANCING ACTIVITIES
Net borrowing (repayment) under revolving credit facilities 18,700 1,500 (6,554)
Refinance indebtedness of acquired companies (22,149) (1,190) -
Proceeds from exercise of stock options 207 186 80
--------- --------- ---------
Cash provided (used) in financing activities (3,242) 496 (6,474)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents - (2,078) 2,078
Cash and cash equivalents at beginning of year - 2,078 -
--------- --------- ---------
Cash and cash equivalents at end of year $ - $ - $ 2,078
========= ========= =========
See accompanying notes to the consolidated financial statements
F - 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHROMCRAFT REVINGTON, INC.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Chromcraft Revington, Inc. operates through its wholly-owned subsidiaries,
Chromcraft Corporation, which manufactures and sells casual dining furniture
and commercial furniture, Peters-Revington Corporation, which manufactures and
sells occasional wood furniture, Silver Furniture Co., Inc., which manufac-
tures, imports and sells occasional furniture tables and Cochrane Furniture
Company, Inc., which manufactures and sells dining room, bedroom and
upholstered furniture. Products are sold primarily through furniture dealers
throughout the United States and Canada.
Consolidation
The consolidated financial statements include the accounts of Chromcraft
Revington, Inc. and its subsidiaries (together, the "Company"), after elimina-
tion of intercompany accounts and transactions. Certain previously reported
amounts have been reclassified to conform to the 1996 presentation.
Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and assump-
tions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with original maturities of
three months or less to be cash equivalents.
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 70% and 100% of total inventories at December 31, 1996
and 1995, 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 principally over 40 years. The
Company reviews the carrying value of goodwill whenever changes in circum-
stances indicate that the carrying amount may not be recoverable. When factors
indicate that the recoverability of goodwill should be evaluated, the Company
uses an estimate of the acquired business' undiscounted cash flows in
determining whether an impairment loss is required.
F - 5
Deferred Income Taxes
Deferred income taxes are recognized for the future tax consequences attribut-
able 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 of Common Stock
Earnings per share of common stock is calculated using the weighted-average
number of shares and common stock equivalents (stock options) outstanding
during the year. If the ending market price for common stock is higher than
the average market price for the period, the ending market price is used in
determining incremental shares in the calculation of fully diluted earnings
per share to reflect maximum potential dilution.
Stock Options
The Company applies Accounting Principles Board Opinion No. 25 in accounting
for stock options and discloses the fair value of options granted as permitted
by Statement of Financial Accounting Standards No. 123.
Financial Instruments
The carrying amounts reported in the balance sheets for accounts receivable,
accounts payable and borrowings under a bank revolving credit facility approxi-
mate their fair values. Concentration of credit risk with respect to trade
accounts receivable is limited due to the large number of entities comprising
the Company's customer base.
NOTE 2. ACQUISITION OF COCHRANE FURNITURE COMPANY, INC.
On November 8, 1996, the Company acquired Cochrane Furniture Company, Inc.
("Cochrane Furniture") for $3,483,000 in cash (including acquisition related
expenses) and the assumption of $38,756,000 of Cochrane Furniture's
liabilities. Cochrane Furniture is a manufacturer of dining room, bedroom
and upholstered furniture.
The operations of Cochrane Furniture are included in the Consolidated
Statements of Earnings from the date of acquisition. 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.
The following unaudited pro forma results of operations for the year ended
December 31, 1996 gives effect to the Cochrane Furniture acquisition as if it
had occurred on January 1, 1996. The unaudited pro forma results of operations
for the year ended December 31, 1995 combine the operating results of Cochrane
Furniture for the fiscal year ended March 30, 1996 and the Company's operating
results for the year ended December 31, 1995 and gives effect to the Cochrane
Furniture acquisition as if it had occurred at the beginning of the period.
Operating results of Cochrane Furniture for the quarter ended March 30, 1996
are included in each of the unaudited pro forma results of operations.
(In thousands, except
per share data)
-----------------------
1996 1995
--------- ---------
Sales $ 245,658 $ 238,307
Net earnings 11,409 8,034
Earnings per share of common stock
Primary 1.94 1.37
Fully diluted 1.93 1.36
F - 6
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 Cochrane Furniture acquisition been consummated as of the above dates,
nor is it necessarily indicative of future operating results.
NOTE 3. ACQUISITION OF SILVER FURNITURE CO., INC.
On April 3, 1995, the Company acquired Silver Furniture Co., Inc. ("Silver
Furniture"), a manufacturer and importer of occasional furniture tables, for
$8,350,000 in cash (including acquisition expenses). Additional purchase
consideration up to $3,000,000 is payable to the former shareholders of Silver
Furniture if certain financial and other conditions are satisfied. To fund the
conditional payments, $3,000,000 was deposited with a bank escrow agent at the
closing. The escrow account is included in long-term other assets on the
Consolidated Balance Sheets at December 31, 1996 and 1995. Any additional
consideration paid to the former shareholders of Silver Furniture will be re-
flected as goodwill. At December 31, 1996 additional purchase consideration
of $2,000,000 had been earned and reclassified to goodwill.
The operations of Silver Furniture are included in the Consolidated Statements
of Earnings from the date of acquisition. The transaction was accounted for
as a purchase and the excess cost over fair value of the net assets acquired
is being amortized on a straight-line basis over a 20-year period. The
unaudited pro forma results of operations for the years ended December 31, 1995
and 1994, assuming the purchase of Silver Furniture had been consummated as of
the beginning of the respective periods, are as follows:
(In thousands,
except per share data)
----------------------
1995 1994
--------- ---------
Sales $ 159,774 $ 164,278
Net earnings 12,114 11,946
Earnings per share of common stock
Primary 2.06 2.04
Fully diluted 2.05 2.04
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 Silver Furniture acquisition been consummated as of the above dates, nor is
it necessarily indicative of future operating results.
NOTE 4. INVENTORIES
Inventories at December 31, 1996 and 1995 consisted of the following:
(In thousands)
-----------------------
1996 1995
--------- ---------
Raw materials $ 10,622 $ 5,905
Work-in-process 5,797 3,926
Finished goods 17,311 11,459
--------- ---------
Inventories at FIFO cost 33,730 21,290
LIFO reserve (1,334) (1,362)
--------- ---------
$ 32,396 $ 19,928
========= =========
F - 7
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1996 and 1995 consisted of
the following:
(In thousands)
-----------------------
1996 1995
--------- ---------
Land $ 1,886 $ 746
Buildings and improvements 30,588 18,179
Machinery and equipment 35,404 30,296
Leasehold improvements 436 328
Construction in progress 171 428
--------- ---------
68,485 49,977
Less accumulated depreciation and amortization (28,987) (27,350)
--------- ---------
$ 39,498 $ 22,627
========= =========
NOTE 6. ACCRUED LIABILITIES
Accrued liabilities at December 31, 1996 and 1995 consisted of the following:
(In thousands)
-----------------------
1996 1995
--------- ---------
Employee benefit plans $ 5,890 $ 2,949
Salaries, wages and commissions 1,628 1,199
Vacation and holiday pay 1,503 928
Workers' compensation plans 1,127 1,002
Advertising and promotion 1,383 620
Other accrued liabilities 5,094 3,285
--------- ---------
$ 16,625 $ 9,983
========= =========
NOTE 7. INCOME TAXES
Components of the provision for income taxes for the years ended December 31,
1996, 1995 and 1994 were as follows:
(In thousands)
-----------------------------------
1996 1995 1994
-------- -------- --------
Current:
Federal $ 7,902 $ 7,432 $ 7,557
State 1,396 1,154 1,058
-------- -------- --------
9,298 8,586 8,615
-------- -------- --------
Deferred:
Federal (4) (385) (677)
State (4) (67) (152)
-------- -------- --------
(8) (452) (829)
-------- -------- --------
Total provision for income taxes $ 9,290 $ 8,134 $ 7,786
======== ======== ========
F - 8
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, 1996, 1995 and 1994 is
summarized below:
(In thousands)
--------------------------------
1996 1995 1994
-------- -------- --------
Tax expense, at U.S. statutory rate $ 8,129 $ 7,038 $ 6,642
State taxes, net of federal benefit 915 874 863
Amortization of goodwill 222 222 222
Other, net 24 - 59
-------- -------- --------
Total provision for income taxes $ 9,290 $ 8,134 $ 7,786
======== ======== ========
The tax effects of temporary differences that give rise to significant portions
of net deferred tax assets (liabilities) at December 31, 1996 and 1995 are
summarized below:
(In thousands)
--------------------
1996 1995
-------- --------
Deferred tax assets:
Accounts receivable $ 688 $ 359
Accrued vacation and holiday pay 616 351
Other accrued liabilities 3,817 1,864
Net operating loss carryforwards 901 -
-------- --------
Total gross deferred tax assets 6,022 2,574
-------- --------
Deferred tax liabilities:
Inventories (173) (1,334)
Property, plant and equipment (3,068) (1,772)
Other (1,049) (758)
-------- --------
Total gross deferred tax liabilities (4,290) (3,864)
-------- --------
Net deferred tax assets (liabilities) $ 1,732 $ (1,290)
======== ========
In connection with the acquisition of Cochrane Furniture Company, Inc., the
Company acquired certain net operating loss carryforwards with expiration
dates through 2010.
Chromcraft Corporation and Peters-Revington Corporation have received notifica-
tion from the parent of a former consolidated tax group of which they were
previously members that, following an audit by the Internal Revenue Service
("IRS") of income tax returns of the former consolidated tax group, the IRS has
issued a revenue agent's report asserting that certain interest expense deduc-
tions should be recharacterized as non-deductible dividend distributions. A
protest has been filed with the IRS by the former parent on behalf of the
members of the former consolidated tax group. Chromcraft Corporation and
Peters-Revington Corporation have a contractual right of indemnification
against the former parent for any liability for federal and state income taxes
assessed against them for the periods covered in the revenue agent's report.
NOTE 8. REVOLVING CREDIT FACILITY
The Company has an unsecured revolving loan facility ("Facility") with a group
of banks that allows the Company to borrow up to $60,000,000 for working
capital requirements, capital expenditures and acquisitions. At December 31,
1996, the Company had $33,682,000 in availability under the Facility. The
interest rate under the Facility is determined at the time of borrowing, at the
Company's option, at either the bank prime rate or a rate based on the certifi-
cate of deposit rate, the Fed Funds rate, or the London Interbank Offered Rate
(LIBOR). The weighted-average interest rate on borrowings outstanding as of
F - 9
December 31, 1996 and 1995 was 5.95% and 6.0875%, respectively. A commitment
fee, of up to .20% per annum, is payable on the unused portion of the credit
line. The Company had outstanding letters of credit under the Facility of
$6,118,000 and $2,091,000 at December 31, 1996 and 1995, respectively. The
Facility expires December 20, 2000.
The Facility requires compliance with certain financial loan covenants related
to net worth, interest and fixed charge coverages and debt leverage. At
December 31, 1996, unrestricted retained earnings available for dividends
were $25,957,000.
NOTE 9. STOCK OPTIONS
The Company's 1992 Stock Option Plan (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
550,000 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 the Company's common shares as of the date of grant. Non-ISO's vest
and are at exercise prices determined by the compensation committee of the
Board of Directors. At December 31, 1996 and 1995, there were 21,431 and
48,931 shares, respectively, available for future grants.
The estimated per share weighted-average fair value of stock options granted
during 1996 and 1995 was $11.28 and $11.39, 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:
1996 1995
------ ------
Expected life (years) 7 7
Interest rate 6.2% 6.3%
Volatility 30.0% 32.2%
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)
-----------------------------------------
1996 1995
------------------- -------------------
As Pro As Pro
Reported Forma Reported Forma
-------- -------- -------- --------
Net earnings $ 13,936 $ 13,670 $ 11,974 $ 11,913
Earnings per share of common stock
Primary 2.36 2.33 2.04 2.03
Fully diluted 2.35 2.31 2.03 2.02
F - 10
A summary of the Company's stock option activity, and related information for
the three years ended December 31, 1996 follows:
Weighted-
Average
Number Exercise
of Shares Price
--------- ---------
1994
Outstanding at beginning of year 330,500 $ 12.63
Granted 86,000 $ 23.18
Exercised (5,616) $ 11.00
Outstanding at end of year 410,884 $ 14.86
Exercisable 133,334 $ 13.02
1995
Granted 68,160 $ 24.01
Exercised (11,233) $ 13.08
Cancelled (10,591) $ 16.36
Outstanding at end of year 457,220 $ 16.24
Exercisable 230,077 $ 14.71
1996
Granted 27,500 $ 24.48
Exercised (13,000) $ 11.00
Outstanding at end of year 471,720 $ 16.86
Exercisable 323,098 $ 15.73
Significant option groups outstanding at December 31, 1996 and related weighted-
average price and remaining life information follows:
Grant Options Options Exercise Remaining
Date Outstanding Exercisable Price Life (Years)
--------- ----------- ----------- -------- ------------
4-15-92 230,460 180,668 $ 11.00 5.3
2-19-93 63,600 63,600 $ 19.00 6.1
1-11-94 77,000 57,750 $ 23.25 7.0
All other 100,660 21,080 $ 25.79 8.8
NOTE 10. EMPLOYEE BENEFIT PLANS
The Company 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 per-
centage of an employee's compensation or a matching portion of the employee's
contributions. The cost of these plans was $1,034,000 in 1996, $1,110,000 in
1995 and $1,052,000 in 1994.
The Company also provides supplemental retirement benefits and "make up"
benefits to key executives of the Company whose benefits are reduced by
Internal Revenue Service Code restrictions. Contributions and expenses under
these arrangements were $221,000 in 1996, $225,000 in 1995 and $189,000 in 1994.
F - 11
NOTE 11. REGISTRATION RIGHTS AGREEMENT
The Company has entered into a Registration Rights Agreement dated April 23,
1992 (the "Agreement") between the Company and 399 Venture Partners, Inc.,
which owned 2,847,709 shares or 49.6% of the Company's outstanding common
stock at December 31, 1996. The Agreement permits 399 Venture Partners, Inc.
and transferees, 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, the
Company 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 12. SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid during the years ended December 31, 1996, 1995 and 1994 was
$180,000, $245,000 and $269,000, respectively. Income taxes paid during the
years ended December 31, 1996, 1995 and 1994 were $9,054,000, $8,277,000 and
$8,957,000, respectively.
NOTE 13. RENTAL COMMITMENTS
The Company leases certain showroom facilities and transportation equipment
under non-cancellable operating leases. The future minimum lease payments under
non-cancellable leases for the years ending December 31, 1997, 1998, 1999, 2000
and 2001 are $1,209,000, $1,026,000, $514,000, $6,000 and $0, respectively. It
is expected that, in the normal course of business, leases that expire will be
renewed or replaced.
Rental expense was $1,248,000, $921,000 and $890,000 for the years ended
December 31, 1996, 1995 and 1994, 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 esti-
mates 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, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996, 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, present fairly, in all material
respects, the information set forth therein.
KPMG Peat Marwick LLP
Indianapolis, Indiana
February 4, 1997
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
--------- --------- --------- --------- ----------
1996
Sales $ 42,291 $ 39,922 $ 40,789 $ 52,897 $ 175,899
Gross margin 11,646 11,013 11,168 13,855 47,682
Operating income 5,847 5,333 5,795 6,472 23,447
Net earnings 3,494 3,211 3,492 3,739 13,936
Earnings per share of common stock
Primary .59 .55 .59 .63 2.36
Fully diluted .59 .55 .59 .63 2.35
1995
Sales $ 36,600 $ 36,620 $ 39,163 $ 40,226 $ 152,609
Gross margin 10,347 9,491 10,282 10,702 40,822
Operating income 5,465 4,552 5,008 5,319 20,344
Net earnings 3,285 2,650 2,916 3,123 11,974
Earnings per share of common stock
Primary .56 .45 .50 .53 2.04
Fully diluted .56 .45 .50 .53 2.03
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, 1996
Allowance for doubtful accounts $ 980 $ 760 $ 640(a) $ (599)(c) $ 1,781
Reserve for excess and obsolete
inventory (d) $ - $ 150 $ 2,973 $ - $ 3,123
Year ended December 31, 1995
Allowance for doubtful accounts $ 689 $ 393 $ 51(b) $ (153)(c) $ 980
Year ended December 31, 1994
Allowance for doubtful accounts $ 743 $ 92 $ - $ (146)(c) $ 689
(a) Represents the allowance for doubtful accounts associated with the
Cochrane Furniture acquisition
(b) Represents the allowance for doubtful accounts associated with the Silver
Furniture acquisition
(c) Represents charge offs, net of recoveries, to the allowance for doubtful
accounts
(d) Represents the reserve for excess and obsolete inventory associated with
the Cochrane Furniture 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
(a) A 100% owned subsidiary of Silver Furniture Co., Inc.
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 on Form
S-8 of Chromcraft Revington, Inc. of our report dated February 4, 1997,
relating to the consolidated balance sheets of Chromcraft Revington, Inc. and
subsidiaries as of December 31, 1996 and 1995, 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, 1996, which report appears in the December 31, 1996 annual
report on Form 10-K of Chromcraft Revington, Inc.
KPMG Peat Marwick LLP
Indianapolis, Indiana
March 26, 1997
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, 1996, and any and all amend-
ments 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 14, 1997 Bruce C. Bruckmann, Director
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, 1996, and any and all amend-
ments 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 14, 1997 David L. Kolb, Director
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, 1996, and any and all amend-
ments 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 12, 1997 Larry P. Kunz, Director
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, 1996, and any and all amend-
ments 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 15, 1997 H. Martin Michael, Director
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, 1996, and any and all amend-
ments 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 12, 1997 M. Saleem Muqaddam, Director
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, 1996, and any and all amend-
ments 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 11, 1997 Warren G. Wintrub, Director