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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the fiscal year ended Commission File Number
December 31, 1996 2-44764
BALTEK CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2646117
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Fairway Court, P.O. Box 195, Northvale, New Jersey 07647
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-767-1400
------------
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 par value
----------------------------
(Title of Class)
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 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 [ ]
The aggregate market value of the voting stock held by non affiliates on March
3, 1997 amounted to $6,739,000.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date, March 3, 1997: 2,523,261 shares,
Common Stock, $1.00 par value.
Documents incorporated by reference: Portions of the registrant's proxy
statement dated April 28, 1997 for use in connection with its 1997 annual
meeting of stockholders are incorporated by reference in Part III of this Annual
Report on Form 10-K to the extent set forth in items 10, 11, and 12 hereof.
PART I
Item 1. Business.
Principal Products
The registrant and its subsidiaries (hereinafter collectively
referred to as the "Company") mill and sell graded and finished balsa lumber in
standard sizes and balsa wood strips and blocks. "Standard sizes" of balsa
lumber are measured in boardfeet (12" x 12" x 1") for the English system of
measure or in cubic meters for the metric system of measure. Shipments to
Europe, (except the U.K.) and Japan are made in cubic meters while shipments to
the U.S. and the U.K. are in boardfeet. The Company, for production and
statistical purposes, converts all metric measurements into boardfeet, thus the
Company's "standard" is boardfeet. The Company also manufactures and sells
custom-made bonded panels, blocks and beams of balsa wood, and a flexible balsa
wood block mat called "Contourkore ."
Glued-up balsa blocks are marketed in two ways. A portion is
sold directly to customers in block or panel form, and the balance is shipped to
the Company's factory in Northvale, N.J. for further processing into Contourkore
and other products. Blocks and Contourkore are used by the Company's customers
to manufacture a variety of products by laminating metal or fiberglass
reinforced plastic skins to both sides of the balsa, thereby creating a sandwich
structure in which balsa is the core or center. The products manufactured by the
Company's customers include fiberglass boats, aircraft cargo pallets, aircraft
flooring, fiberglass storage and processing tanks and fiberglass tub and shower
bottoms. Balsa lumber is used mostly by the hobby industry to manufacture model
airplanes.
In addition, the Company sells a non-balsa continuous strand
fabric, imported from Holland and Japan and resold without further
manufacturing. This product is marketed as "Coremat" and "BaltekMat" to the
pleasure boat industry.
In September 1995 the Company entered into an agreement with
Alusuisse Airex AG of Sins, Switzerland, a division of Alusuisse, to become the
sole North American source of Airex(R) (a registered trademark of Airex AG) and
Airlite(TM) structural PVC foam products. These additional products, together
with its Balsa products, should solidify the Company's leadership as a complete
supplier to the composite structural core market and result in growth
opportunities for the future.
- 2 -
The Company is also in the aquaculture business, specifically
shrimp farming in Ecuador, South America. This operation consists of a hatchery,
a farm and a packing plant. Shrimp larvae are supplied by the hatchery to the
farm and after harvest, transferred to the packing plant for processing and
shipment to customers in the United States and Europe.
All of the Company's balsa and shrimp are produced in Ecuador.
The dependence on foreign countries for raw materials represents some inherent
risks. However, the Company, or its predecessors, have maintained uninterrupted
operations in Ecuador for over 50 years. The Company does not consider its
reliance on Ecuador to represent an undue business risk; in fact, the Company
believes that operating in Ecuador is one of its strengths, where quality raw
materials are produced at a reasonable cost in a atmosphere conducive to
business.
Principal Markets and Methods of Distribution
The Company's balsa products are sold throughout the United
States, Canada, Europe, Japan, and Australia to approximately 1,600 ultimate
users. The Company's salesmen are used extensively in the sale of its balsa
products. Approximately 40% of its balsa product sales are made by the Company
directly. The remainder of the sales are handled through regional distributors
in the United States, Europe, Canada, and Japan. Sales of Contourkore to
customers outside the United States are handled through a wholly-owned Foreign
Sales Corporation.
In 1996, approximately 32% of all the shrimp production was
sold to the U.S. market through food brokers; the balance was sold to the
European market.
Competitive Conditions
As part of their overall business, other companies, with
aggregate facilities and financial resources substantially greater than those of
the Company, manufacture and sell various natural and synthetic products for
nearly all the purposes for which balsa lumber and products are sold by the
Company. Some of these competitive products are produced and sold at a lower
cost than the Company's balsa lumber and products, and sales of these competing
products are substantially greater than the Company's sales of balsa lumber and
products.
The Company's shrimp business competes against many larger
companies which produce shrimp through similar methods in addition to fishing
for shrimp in the traditional method of trawling.
Material Customer
During the period ended December 31, 1995 and 1994, the
Company had sales to one customer in excess of 10% of the Company's consolidated
revenues; no customer accounted for more than 10% of revenues in 1996.
- 3 -
Backlog
As of December 31, 1996, the Company had a backlog of orders
believed to be firm in the total amount of $7,465,000 all of which is reasonably
expected to be filled within the current fiscal year.
As of December 31, 1995, the Company had a backlog of orders
believed to be firm in the total amount of $5,955,000.
Sources and Availability of Raw Materials
The Company acquires, partly from its own plantations and
partly from others, substantially all of its balsa wood from western and coastal
Ecuador, accessible by roads so that the balsa lumber can be transported by
truck to its sawmills. The Company considers the timber presently standing in
this area, combined with its planned plantation expansion program, to be ample
to supply all the Company's requirements in the foreseeable future. In addition
to the balsa produced in Ecuador, the Company also receives small quantities of
balsa from other Latin American countries. The resins, fiberglass and other
materials used in the Company's manufacturing processes are available from
numerous commercial sources. To date the Company has experienced no difficulty
in obtaining such materials needed for its operations.
The Company owns and operates a shrimp farm and a shrimp
hatchery in Ecuador for the production of a steady and plentiful supply of
shrimp. The hatchery supplies substantially all of the larvae required by the
Company's ponds. The Company also owns a shrimp packing company in Ecuador,
thereby achieving complete vertical integration of the shrimp business.
Patents, Trademarks and Licenses
The Company features its registered trademark "Belcobalsa(R)"
for lumber, dimension stock, and bonded panels and blocks, "Contourkore(R)"
"LamPrep(R)" and "AL-600(R)" for the flexible wood block mat, "Durakore(R)", a
balsa hardwood composite, "D100(R) " for end-grain panels and "Decolite(R)" a
balsa composite panel used as an alternative to plywood, and low-density
laminate bulkers, marketed as "BaltekMat(R)" and "Firet Coremat(R)".
The Company also features "Airlite(TM)", a cross-linked PVC
foam, and "Airex(R)" (registered trademark of Airex AG) a linear foam.
- 4 -
Estimated Research Costs
The Company has incurred approximately $350,000 during 1996
for research and development, compared to expenditures of $415,000 in 1995 and
$447,000 in 1994. All expenditures are related to the balsa division and include
customer service activities. The Company continues to actively explore possible
new applications and new manufacturing processes for its products.
Environmental Impact
The Company has experienced no material impact upon its
capital expenditures, earnings or competitive position as a result of its
compliance with federal, state or local provisions relating to the protection of
the environment. Balsa is not a rainforest species, nor does it grow in the
rainforest. It is usually harvested within five years. The fast growth rate
makes balsa similar to short-cycle agricultural crops and an ideal tree species
for forest plantations.
Employees
The Company has approximately 994 employees in Ecuador, 127 in
the United States and 10 in Europe, aggregating 1,131 employees.
Seasonality
The Company's business is not seasonal.
Classes of Products
The following table sets forth the amount and percentage of
net sales represented by each of the Company's product classes in the three
years ended December 31, 1996 (dollars in thousands):
Balsa Wood
Year Products Shrimp Total
- ---- -------- ------ -----
1994 $32,833 $7,297 $40,130
82% 18% 100%
1995 $36,420 $9,364 $45,784
79% 21% 100%
1996 $38,630 $9,736 $48,366
80% 20% 100%
- 5 -
Segment Information
The Company is engaged in two lines of business, that of
manufacturing and supplying balsa wood and balsa wood products, laminate bulkers
and PVC foams, used principally as the core material in various industries, and
in the aquaculture business, namely shrimp farming in Ecuador.
Reference is made to the information set forth in Note 11 to
the Notes to Consolidated Financial Statements, Part II, Item 8 hereof, with
respect to assets and operating results for different business segments.
Foreign Operations
The Company, through its Ecuadorean subsidiaries, owns and
operates five woodworking plants and approximately 13,783 acres of forest land
in Ecuador. In addition, the Company owns and operates a shrimp farm on
approximately 2,000 acres, a shrimp hatchery and a shrimp packing plant.
At the Company's woodworking plants, rough balsa lumber is
received from independent loggers and then processed into finished lumber and
other manufactured products.
The Company's shrimp ponds are stocked with larvae. After
feeding, controlling the pond environment and monitoring the growth of the
shrimp for a period of approximately six months, the shrimp are harvested,
frozen, packed and sold for export.
The Company, through its European subsidiaries, operates sales
offices in France, the United Kingdom and Denmark.
Reference is made to the information set forth in Note 11 to
the Notes to Consolidated Financial Statements, Part II, Item 8 hereof, with
respect to assets and operating results by geographic areas.
Foreign Sales
Approximately 31% of the Company's net sales for the year
ended December 31, 1996 was derived from sales to customers outside the United
States.
No prediction can be made as to any future increase or
decrease of the Company's foreign business. The Company has experienced
differences in profitability between foreign and domestic sales due to the
changing value of the U.S. dollar in relation to the foreign currencies of
countries where its products are sold.
- 6 -
Item 2. Properties.
The Company owns or leases the properties indicated in the
following table:
Property and Location Status
- --------------------- ------
One story concrete and steel building containing the Company's principal offices
and the plant for manufacturing Contourkore(R) and other Balsa products, 85,000
square feet on 4-1/2 acres (Northvale, New Jersey). Leased
Approximately 16,000 square feet of warehouse space (Norwood, N.J.) Leased
Woodworking plant housed in several wood, concrete and steel buildings,
approximately 180,000 square feet (Guayaquil, Ecuador). Owned
Woodworking plant housed in several wood and concrete buildings, approximately
30,000 square feet on 7 acres of land (Guayaquil, Ecuador). Owned
13,783 acres of Timberland in Ecuador. Owned
2,000 acres of land for shrimp farming in Ecuador, including ten wood buildings
and one concrete building totaling approximately 11,000 square feet. Owned
Shrimp hatchery housed in several concrete buildings on 3.7 acres of land (San
Pablo, Ecuador). Owned
Shrimp packing plant housed in three concrete and steel buildings on 2.6 acres
of land (Duran, Ecuador). Owned
Woodworking plant housed in four concrete and steel buildings, 165,000 square
feet on approximately 28 acres of land (Santo Domingo de los Colorados,
Ecuador). Owned
Woodworking plant housed in one concrete and steel building, 62,000 square feet
on approximately 7 acres of land (Manta, Ecuador). Owned
- 7 -
Property and Location (continued) Status
- --------------------- ------
Woodworking plant housed in one wood building, 26,000 square feet on
approximately 8 acres of land (Quevedo, Ecuador). Owned
Maintenance facilities for the Balsa Raw Material Department in a concrete and
wood building, 16,875 square feet (Quevedo, Ecuador). Owned
Office space in concrete building, 7,100 square feet (Guayaquil, Ecuador). Owned
Office space in concrete building, 1,000 square feet (Croydon, U.K.). Leased
Office space in stone and wood building, 2,000 square feet (Paris, France). Leased
All of the above properties except the shrimp farming land, hatchery and packing
plant are used in the balsa wood business.
The lease of the property at Northvale, New Jersey continues
until February 28, 2002, at an average annual rental of approximately $462,000.
The lease of the Company's office space in Paris continues until March 31, 1998
at an annual rental equivalent to approximately $27,000. The lease of the
Company's office in Croydon, U.K. runs until December 25, 2008 at an annual
rental of approximately $14,000.
All of the Company's properties, plants and equipment are
considered to be presently sufficient for their respective purposes.
Item 3. Legal Proceedings.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
There was no submission of matters to a vote of security
holders during the fourth quarter of 1996.
- 8 -
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters.
The Company's common stock trades on the NASDAQ National
Market tier of the NASDAQ Stock Market under the Symbol: BTEK. The following is
the bid price range for the last two years.
1996 1995
------------------------ ---------------------------
HIGH LOW HIGH LOW
1st Quarter $ 11.25 $ 8.25 $ 8.25 $ 6.25
2nd Quarter 11.13 8.63 9.00 7.00
3rd Quarter 9.50 7.63 10.25 7.50
4th Quarter 8.00 6.50 9.25 8.25
The Company had approximately 191 stockholders of record as of
March 3, 1997.
No cash dividends were paid during the past two years.
- 9 -
Item 6. Selected Financial Data.
(Dollars in thousands except per share amounts)
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
Net Sales $ 48,366 $ 45,784 $ 40,130 $ 32,370 $ 28,366
Income (loss) $ 450 $ 1,962 $ 1,212 $ 113 $ (543)
Income (loss) per $ .18 $ .78 $ .48 $ .04 $ (.22)
common share
Total Assets $ 39,315 $ 38,816 $ 34,541 $ 33,385 $ 30,646
Long Term $ 2,263 $ 2,298 $ 2,388 $ 2,616 $ 2,715
obligations (a)
Cash dividends de- -- -- -- -- --
clared per common
share
Average shares 2,523,261 2,523,261 2,523,261 2,523,261 2,523,261
outstanding
Note (a): Excluding deferred income taxes.
- 10 -
Management's Discussion and Analysis of
Item 7. Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital ratio (current assets divided by
current liabilities) increased in 1996 to 2.56:1 from 2.50:1, after decreasing
in 1995 from 2.97:1.
Cash was provided and used in varying amounts during the three
year period, principally as a result of changes in the elements of current
assets and current liabilities and in the amount of cash provided by net income.
Inventories increased in 1996 and 1995 but decreased in 1994. The increase in
1996 and 1995 was due to new products and inventory buildup for anticipated
increases in sales. The 1994 decrease was caused by greater sales than
anticipated.
Cash used in investing activities for the three year period
was due to increased investments in balsa plantations, replacement of old
equipment, reconstruction of the shrimp ponds and purchase of new equipment
required for the manufacture of the Company's new products. The Company has no
material commitments for capital expenditures.
In 1996 the Company borrowed $400,000 in the form of a five
year term loan to finance equipment purchases. The Company may continue to seek
financing for significant capital expenditures in the future. The Company's
working capital borrowings decreased in 1996 due to improved cash flow from
operations. The working capital debt increased in 1995 due to working capital
and investment requirements. In 1994 the company repaid debt of $1,887,000 from
funds generated by profits.
The Company had unused lines of credit of $2.5 million with a
domestic bank, $1.6 million with Ecuadorean banks and $0.7 million with European
banks. The Company expects that future operations and its unused lines of credit
will provide sufficient resources to support its planned expansion and to
maintain its favorable liquid position.
RESULTS OF OPERATIONS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
Total sales increased 6%, 14% and 24% in 1996, 1995 and 1994,
respectively. The gains in all three years were due to increased demands from
all industries using our balsa products together with increases in shrimp sales.
Balsa sales were favorably affected by the continuing recovery
of the pleasure boat industry. The pleasure boat industry represented
approximately 40% of the Company's 1996 balsa sales. Fluctuating interest rates
make it impossible to forecast short or long range trends in the boating
industry. The increases in balsa sales in all three years were due to volume
increases, and increased sales of value-added products. The Company continues to
explore and develop alternative applications for its balsa products.
Shrimp sales were $9,736,000, $9,364,000 and $7,297,000 in
1996, 1995 and 1994, respectively. The increases in all three years were the
result of increased yield at the Company's shrimp farm and increased worldwide
prices in 1995 and 1994. The Company's program to increase yields at its shrimp
farm commenced in the middle of 1993 and has proved successful. The program
should be concluded in 1997.
- 11 -
Cost of products sold as a percentage of sales increased in
1996 after remaining approximately the same in 1995 and 1994. The increase in
1996 was due to reduced shrimp selling prices, start-up expenses of the new form
product line and competitive pricing pressure. The Company's Ecuadorian
operations were affected in all three years in varying degrees by inflationary
pressures on operating expenses partially offset by currency devaluation and
operating efficiencies resulting from the 1994 and earlier restructuring.
Additionally, 1995 and 1994 benefitted from increased absorption of overhead
expenses due to increased production. The Company recorded a special charge of
$323,977 in 1994 associated with a decision to reduce costs by making
operational and personnel changes at the Company's factories in Ecuador. This
charge was effected within the year with no related reserve balance remaining at
year end.
Selling, general and administrative expenses as a percentage
of sales declined in 1996 by 1% to 20% and was approximately 21% in 1995 as in
1994. The slight decline in 1996 was due primarily to a better absorption of
fixed expenses as a result of increased sales. In 1995 and 1994 the Company
added sales personnel to market existing and new products and to support efforts
to develop new markets and applications.
These additions were offset by increased absorption of fixed expenses.
Sales and expenses were slightly affected in all three years
by the different exchange rates applied in translating the books of accounts of
the Company's European subsidiaries.
Interest expense increased all three years due to rising
interest rates in 1995 and 1994 and increased average borrowings during the
years ended December 31, 1996, 1995 and 1994.
Translation losses varied greatly during the three year
period. Translation losses are caused by the relationship of the U.S. dollar to
the foreign currencies in the countries where the Company operates, and arise
when translating foreign currency balance sheets into U.S. dollars in order to
present consolidated financial statements. Management is unable to forecast the
impact of translation gains or losses on future periods due to the
unpredictability in the fluctuation of foreign exchange rates.
The effective income tax rate amounted to 31% in 1996, 21% in
1995, and 39% in 1994. Reconciliation of the effective rate with the U.S.
statutory rate is detailed in footnote 8 to the financial statements.
- 12 -
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of the registrant and
subsidiaries, and supplemental schedule are annexed hereto and made part hereof.
Changes in and Disagreements With Accountants
Item 9. on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Omitted from this Report since a definitive Proxy Statement,
pursuant to Regulation 14A containing the required information, will be filed
with the Commission not later than 120 days after the close of registrant's
fiscal year.
Item 11. Executive Compensation.
Omitted from this Report since a definitive Proxy Statement,
pursuant to Regulation 14A containing the required information, will be filed
with the Commission not later than 120 days after the close of the registrant's
fiscal year.
Security Ownership of Certain Beneficial
Item 12. Owners and Management.
Omitted from this Report since a definitive Proxy Statement,
pursuant to Regulation 14A containing the required information, will be filed
with the Commission not later than 120 days after the close of the registrant's
fiscal year.
Item 13. Certain Relationships and Related Transactions.
Inapplicable.
- 13 -
PART IV
Exhibits, Financial Statement
Item 14. Schedules, and Reports on Form 8-K
(a)(1) and (2) Consolidated Financial Statements
and Financial Statement
Schedule
See Index to Consolidated
Financial Statements and
Financial Statement
Schedule annexed hereto and
made part hereof.
(b) Reports on Form 8-K
No reports on Form 8-K were
filed by or on behalf of
the registrant for the
quarter ended December 31,
1996, the last quarter in
the period covered by this
Annual Report on Form 10-K.
(c) List of Exhibits
Exhibit No. Item Filing
- ----------- ---- ------
3 Articles of Incorporation Pre-Filed
(Bylaws)
10 Material Contracts None
21 Subsidiaries of Registrant Filed Herewith
27 Financial Data Schedule Filed Herewith
- 14 -
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BALTEK CORPORATION
Registrant
By /s/ Jacques Kohn
------------------------------
Jacques Kohn,
President
By /s/ Ronald Tassello
------------------------------
Ronald Tassello,
Comptroller (Principal
Financial officer and
Principal accounting
officer)
Dated: March 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
By /s/ Margot W. Kohn By /s/ Jacques Kohn
-------------------------------- -----------------------
Margot W. Kohn, Jacques Kohn,
Director Director
By /s/ Theodore Ness By /s/ Benson J. Zeikowitz
-------------------------------- -----------------------
Theodore Ness, Benson J. Zeikowitz,
Director Director
Dated: March 21, 1997
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
AS OF DECEMBER 31, 1996 AND 1995 AND
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
PREPARED FOR FILING AS PART OF THE
ANNUAL REPORT (FORM 10-K)
TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1996
**********
BALTEK CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
PREPARED FOR FILING AS PART OF THE ANNUAL REPORT
(FORM 10-K) TO THE SECURITIES AND EXCHANGE COMMISSION
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Income for Each of the Three Years
in the Period Ended December 31, 1996
Consolidated Statements of Stockholders' Equity
for Each of the Three Years in the Period Ended December 31, 1996
Consolidated Statements of Cash Flows for Each of the Three Years
in the Period Ended December 31, 1996
Notes to Consolidated Financial Statements for Each of the Three
Years in the Period Ended December 31, 1996
FINANCIAL STATEMENT SCHEDULE AS OF AND FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1996:
II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable regulations of
the Securities and Exchange Commission have been omitted because of the absence
of the conditions under which they are required or because the required
information called for is set forth in the consolidated financial statements or
notes thereto.
Deloitte &
Touche LLP
[GRAPHIC -- COMPANY LOGO]
____________________________________________________________
Two Hilton Court Telephone: (201) 631-7000
P.O. Box 319 Facsimile: (201) 631-7459
Parsippany, New Jersey 07054-0319
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Baltek Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Baltek
Corporation and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996. Our audits also
included the financial statement schedule listed in the accompanying index.
These financial statements and financial statement schedule are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Baltek Corporation and subsidiaries
as of December 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles. Also, in our opinion,
such 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.
/s/Deloitte & Touche LLP
March 11, 1997
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- -----------------------------------------------------------------------------------------
1996 1995
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................. $ 1,114,659 $ 841,056
Accounts receivable (less allowance for doubtful
accounts - 1996, $62,611; 1995, $92,759) ................ 4,820,544 5,350,211
Inventories (Note 3) ...................................... 13,713,660 12,875,203
Prepaid expenses .......................................... 308,850 287,861
Other ..................................................... 1,487,121 1,374,637
----------- -----------
Total current assets ............................. 21,444,834 20,728,968
PROPERTY, PLANT AND EQUIPMENT - Net (Notes 4 and 10) ........ 10,759,258 11,079,132
TIMBER AND TIMBERLANDS (Note 5) ............................. 6,445,828 6,338,152
OTHER ASSETS ................................................ 665,495 670,244
----------- -----------
TOTAL ASSETS ................................................ $39,315,415 $38,816,496
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable (Note 6) .................................... $ 3,600,000 $ 4,424,783
Accounts payable .......................................... 2,860,363 1,910,642
Income tax payable ........................................ -- 9,952
Accrued salaries, wages and bonuses payable ............... 596,139 927,739
Accrued expenses and other liabilities .................... 911,243 808,835
Current portion of long-term debt (Note 7) ................ 108,922 17,558
Current portion of obligation under capital lease (Note 10) 294,784 188,065
----------- -----------
Total current liabilities ........................ 8,371,451 8,287,574
OBLIGATION UNDER CAPITAL LEASE (Note 10) .................... 1,679,985 1,974,768
LONG-TERM DEBT (Note 7) ..................................... 276,620 17,910
UNION EMPLOYEE TERMINATION BENEFITS (Note 9) ................ 306,367 305,195
----------- -----------
Total liabilities ................................ 10,634,423 10,585,447
----------- -----------
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- -----------------------------------------------------------------------------------------
1996 1995
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par; 5,000,000 shares
authorized and unissued ................................. -- --
Common stock, $1.00 par; 10,000,000 shares authorized,
2,523,261 shares issued and outstanding ................. 2,523,261 2,523,261
Additional paid-in capital ................................ 2,157,492 2,157,492
Retained earnings ......................................... 24,000,239 23,550,296
----------- -----------
Total stockholders' equity ....................... 28,680,992 28,231,049
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................. $39,315,415 $38,816,496
=========== ===========
See notes to consolidated financial statements.
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
NET SALES ............................ $ 48,366,127 $ 45,783,629 $ 40,129,579
COST OF PRODUCTS SOLD ................ 36,986,131 32,759,376 28,784,739
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ............ 9,617,327 9,743,221 8,509,343
SPECIAL CHARGE (Note 12) ............. -- -- 323,977
------------ ------------ ------------
Operating income .......... 1,762,669 3,281,032 2,511,520
------------ ------------ ------------
OTHER INCOME (EXPENSES):
Interest expense (Notes 6, 7 and 10) (602,254) (530,231) (452,352)
Foreign exchange loss .............. (514,035) (307,716) (96,001)
Interest income .................... 5,064 36,669 28,047
Other .............................. 2,513 10,969 --
------------ ------------ ------------
Total ..................... (1,108,712) (790,309) (520,306)
------------ ------------ ------------
INCOME BEFORE INCOME TAXES ........... 653,957 2,490,723 1,991,214
INCOME TAX PROVISION (Note 8) ........ 204,014 528,470 778,756
------------ ------------ ------------
NET INCOME ........................... $ 449,943 $ 1,962,253 $ 1,212,458
============ ============ ============
NET INCOME PER COMMON SHARE .......... $ 0.18 $ 0.78 $ 0.48
============ ============ ============
See notes to consolidated financial statements.
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
Additional
Common Stock, Paid-in Retained
$1 Par Capital Earnings
----------- ----------- -----------
BALANCE, DECEMBER 31, 1993 ..... $ 2,523,261 $ 2,157,492 $20,375,585
Net income - 1994 ............ -- -- 1,212,458
----------- ----------- -----------
BALANCE, DECEMBER 31, 1994 ..... 2,523,261 2,157,492 21,588,043
Net income - 1995 ............ -- -- 1,962,253
----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 ..... 2,523,261 2,157,492 23,550,296
Net income - 1996 ............ -- -- 449,943
----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 ..... $ 2,523,261 $ 2,157,492 $24,000,239
=========== =========== ===========
See notes to consolidated financial statements.
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------------------------
1996 1995 1994
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................. $ 449,943 $ 1,962,253 $ 1,212,458
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................ 2,330,124 1,905,415 1,839,453
Foreign exchange loss .................................... 514,035 307,716 96,001
Deferred taxes ........................................... (8,399) (68,107) (20,404)
Decrease (increase) in accounts receivable ............... 572,203 (432,057) (829,872)
(Decrease) increase in income tax payable/receivable ..... (46,121) (702,623) 854,250
(Increase) decrease in inventories ....................... (838,457) (3,471,987) 844,158
Increase in prepaid expenses and other current assets .... (122,416) (124,577) (143,782)
Decrease (increase) in other assets ...................... 12,705 (12,050) 4,451
Increase in accounts payable and accrued expenses ........ 661,564 324,813 1,219,862
Other .................................................... 1,329 100,011 (20,675)
----------- ----------- -----------
Net cash provided by (used in) operating activities 3,526,510 (211,193) 5,055,900
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net acquisitions of property, plant and equipment .......... (1,245,208) (1,626,255) (859,662)
Increase in timber and timberlands ......................... (811,893) (1,205,006) (1,055,691)
----------- ----------- -----------
Net cash used in investing activities ............. (2,057,101) (2,831,261) (1,915,353)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in notes payable ....................... (824,911) 2,691,892 (1,673,709)
Borrowings (payments) of long-term debt .................... 304,342 (23,863) (66,134)
Principal payments under capital lease ..................... (188,064) (174,517) (147,748)
----------- ----------- -----------
Net cash (used in) provided by financing activities (708,633) 2,493,512 (1,887,591)
----------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH ...................... (487,173) (306,217) (75,538)
----------- ----------- -----------
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------------------------
1996 1995 1994
----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS .................................. 273,603 (855,159) 1,177,418
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR .......................................... 841,056 1,696,215 518,797
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF YEAR ................................................ $ 1,114,659 $ 841,056 $ 1,696,215
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ................................................. $ 448,863 $ 268,808 $ 407,383
=========== =========== ===========
Income taxes ............................................. $ 256,379 $ 1,388,134 $ 56,690
=========== =========== ===========
See notes to consolidated financial statements.
BALTEK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
Baltek Corporation is a multinational manufacturing and marketing company.
The Company's lines of business are supplying core materials (principally
balsa products) to various composite industries, manufacturing and selling
balsa lumber and other balsa wood products, and farming and processing
shrimp. The Company reported its sales in two segments in 1996: the balsa
segment, including all balsa sales and other materials sold to the
composite industry (80%), and the shrimp segment (20%).
The principal market for the Company's core materials and balsa products
is in the United States, while the shrimp market is divided between the
United States and Europe.
The balsa and shrimp products are produced in Ecuador, South America. The
supply of raw materials has been without interruption for over 50 years.
The balsa and shrimp identifiable assets located at various facilities in
Ecuador are included in the Company's consolidated balance sheet and total
approximately $22 million at December 31, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Cash and Cash Equivalents - Cash equivalents consist of short-term highly
liquid investments with maturities of three months or less when purchased.
Investments are carried at cost, which approximates market.
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from Baltek's operations in foreign
countries are calculated based on their reporting currencies. As a result
of this, amounts related to changes in assets and liabilities reported on
the consolidated statement of cash flows will not necessarily agree to
changes in the corresponding balances on the consolidated balance sheets.
The effect of exchange rate changes on cash balances held in foreign
currencies is reported on a separate line below cash flows from financing
activities.
Inventories - Inventories are valued at the lower of cost or market. Cost
is determined by use of the first-in, first-out (FIFO) method.
Property - Property, plant and equipment is stated at cost. Depreciation
is provided for depreciable assets over their estimated useful lives using
various accepted depreciation methods. The assets under capital leases and
leasehold improvements are amortized over their useful lives, or the life
of the lease, whichever is shorter. The cost of major improvements to
existing facilities is capitalized. The cost of repairs, maintenance and
replacements which do not significantly improve or extend the life of the
respective assets is charged to expense as incurred.
Income Taxes - Taxes on current income are provided by the Company and
each subsidiary as prescribed by local tax laws. The Company follows the
practice of comprehensive interperiod income tax allocation. Deferred tax
assets and liabilities 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.
Timber and Timberlands - Timberlands are carried at cost. Deferred
cultivation costs represent the cost of preparing, clearing and seeding
the Company's balsa wood plantations. Amortization of deferred cultivation
costs is based on units of production. Timber carrying costs, which
include the regular maintenance and overseeing of timberlands, are
expensed as incurred.
Foreign Currency Translation - The financial statements of the Company's
foreign subsidiaries are remeasured into U.S. dollars, the Company's
functional currency, in accordance with Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation." The majority of the
foreign exchange gains and losses relate to the manufacturing process in
Ecuador, and such amounts are separately stated in the accompanying
consolidated statements of income.
Foreign Currency Risk Management - The Company uses foreign currency
forward contracts to reduce currency exchange rate risk on firm commitment
purchases denominated in foreign currencies. Gains or losses resulting
from these contracts are deferred and are included in the purchase price
of the materials. The maximum term of these contracts is less than one
year.
Concentrations of Credit Risk - Baltek's principal products, balsa lumber
and related end products, as well as shrimp products, are sold to a number
of markets, including boating, transportation, military, hobby, and the
retail food industry. Baltek's products are sold throughout the United
States, Canada, Europe, Japan and Australia to approximately 1,600
ultimate users. Credit risk related to Baltek's trade receivables is
limited due to the large number of customers in differing industries and
geographic areas.
Research and Development - Research and development costs are charged to
expense as incurred. Research and development expenditures, including
customer service activities, charged to operations were $350,333, $414,675
and $447,311 in 1996, 1995 and 1994, respectively.
Income Per Common Share - Income per common share amounts are computed
based on the weighted average number of shares outstanding during the
period. The weighted average number of common shares outstanding was
2,523,261 in 1996, 1995 and 1994.
Use of Estimates - In conformity with generally accepted accounting
principles, the Company's financial statements include the use of
estimates and assumptions which have been developed by management based on
available facts and information. Actual results could differ from those
estimates.
Revenue Recognition - The Company generally recognizes revenues when goods
are shipped.
Reclassifications - Certain amounts in prior year financial statements
have been reclassified to conform with the current year presentation.
3. INVENTORIES
Inventories of the balsa and shrimp segments are summarized as follows:
1996 1995
----------- -----------
Raw materials ...................... $ 4,718,296 $ 3,913,332
Work-in-process .................... 4,250,538 4,075,895
Finished goods ..................... 4,744,826 4,885,976
----------- -----------
Inventories ........................ $13,713,660 $12,875,203
=========== ===========
Included in the above amounts are inventories relating to the Company's
shrimp operations of $1,159,914 and $1,337,154 at December 31, 1996 and
1995, respectively.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is comprised of the following:
1996 1995
----------- -----------
Land ............................................. $ 125,311 $ 125,311
Shrimp properties ................................ 14,745,215 14,166,327
Buildings and improvements ....................... 1,334,589 1,309,330
Machinery and equipment .......................... 9,146,164 9,034,964
Leasehold improvements ........................... 793,956 677,817
Assets under capital leases ...................... 2,498,719 2,498,719
Construction-in-progress ......................... 173,954 5,000
----------- -----------
Total ............................................ 28,817,908 27,817,468
Less accumulated depreciation and amortization ... 18,058,650 16,738,336
----------- -----------
Property, plant and equipment - net .............. $10,759,258 $11,079,132
=========== ===========
Shrimp properties consist principally of shrimp ponds, a hatchery and a
packing plant.
Accumulated amortization related to the asset under capital lease at
December 31, 1996 and 1995 was $1,207,727 and $957,851, respectively.
5. TIMBER AND TIMBERLANDS
Timber and Timberlands are comprised of the following:
1996 1995
---------- ----------
Timberlands .............................. $2,839,820 $2,897,973
Deferred cultivation costs ............... 3,606,008 3,440,179
---------- ----------
Timber and Timberlands ................... $6,445,828 $6,338,152
========== ==========
6. NOTES PAYABLE
Notes payable under various agreements consist of the following:
1996 1995
---------- ----------
U.S. Bank loan, with interest at prime
(8.25% at December 31, 1996) ....................... $2,150,000 $ --
Bank loan - France, with interest at 11.5% ........... -- 4,783
Ecuadorean bank loans, payable in U.S. dollars,
due within one year from the origination date,
with interest rates between 8% and 9% in 1996 and
9% and 17% in 1995 ................................. 1,450,000 4,420,000
---------- ----------
Notes payable ........................................ $3,600,000 $4,424,783
========== ==========
The U.S. Bank loan represents borrowings under an unsecured revolving line
of credit with a domestic bank. The maximum credit limit under the line is
$4,600,000, with interest at the bank's prime rate. This line of credit,
which is renewable annually, expires on May 31, 1997. The Company was in
compliance with all related loan covenants at December 31, 1996.
The Ecuadorian bank loans are unsecured. At December 31, 1996, unused
lines of credit available under Ecuadorian borrowing arrangements amounted
to approximately $1,550,000, and under European borrowing arrangements
amounted to approximately $772,000.
The credit facilities discussed above do not require compensating balances
or the payment of commitment fees. The weighted average interest rate on
borrowings outstanding at December 31, 1996 and 1995 was 8.5% and 14.0%,
respectively. The carrying amount of the notes payable approximates their
fair value based on the short-term nature and the terms of the loans.
7. LONG-TERM DEBT
Long-term debt consists of the following:
1996 1995
---------- ----------
Equipment loan, payable in equal monthly
principal installments of $6,667 through
January 2001, plus interest at prime
(8.25% at December 31, 1996) ..................... $ 333,333 $ --
Other notes, with interest rates between
5% and 6%, due at various dates through 1999 ..... 52,209 35,468
--------- ---------
385,542 35,468
Less current portion ............................... (108,922) (17,558)
--------- ---------
Long-term debt ..................................... $ 276,620 $ 17,910
========= =========
The equipment loan payable is secured by certain machinery and equipment
at the Company's Northvale, New Jersey facilities. The carrying amount of
the loan payable approximates its fair value due to the variable interest
rate of the loan.
The aggregate maturities of long-term debt at December 31, 1996 are as
follows:
1997 $ 108,922
1998 99,476
1999 83,811
2000 80,000
2001 13,333
---------
$ 385,542
=========
8. INCOME TAXES
Income (loss) before income taxes is comprised of:
1996 1995 1994
----------- ----------- -----------
Domestic ............ $ 989,628 $ 1,717,492 $ 2,242,143
Foreign ............. (335,671) 773,231 (250,929)
----------- ----------- -----------
Total ............... $ 653,957 $ 2,490,723 $ 1,991,214
=========== =========== ===========
The provision (benefit) for income taxes consists of the following:
1996 1995 1994
--------- --------- ---------
Federal:
Current ................ $ 171,716 $ 519,517 $ 770,788
Deferred ............... (8,399) (68,107) (20,404)
State .................... 33,081 87,885 94,649
Foreign .................. 7,616 (10,825) (66,277)
--------- --------- ---------
Total .................... $ 204,014 $ 528,470 $ 778,756
========= ========= =========
The reconciliation between the Company's effective tax rate and the statutory
Federal tax rate is as follows:
1996 1995 1994
---- ---- ----
Statutory Federal tax rate .......................... 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting from:
Foreign income - effect of rates
differing from statutory rates, effect
of nontaxable exchange gains and losses,
and foreign losses producing no current benefit ... 11.4 (11.8) 0.5
Refunds and reversal of current valuation allowance . (17.6) (6.4) (1.4)
State and local taxes, net of Federal income
tax benefit ....................................... 3.3 2.3 3.1
Other - net ......................................... (0.9) 2.1 1.9
---- ---- ----
Effective tax rate .................................. 31.2% 21.2% 39.1%
==== ==== ====
In 1996, the Company included the income from the reversal of a current
valuation allowance in the tax provision. In 1995, the Company utilized
foreign tax credit carryforwards of $140,000, for which a full valuation
allowance had been recorded in prior years. The effect of the reversal of
the valuation allowance has been included in the tax provision for 1995.
As a result of various incentives provided by the Ecuadorian government,
the effective foreign tax rate is lower than the U.S. Federal statutory
tax rate.
Significant components of the Company's deferred tax assets and
liabilities are as follows:
1996 1995
--------- ---------
Current assets (liabilities):
Inventory capitalization ................... $ 91,727 $ 77,448
Unexpired insurance ........................ (86,626) (80,171)
Other - net ................................ 2,268 24,746
--------- ---------
Total current asset, net ..................... $ 7,369 $ 22,023
========= =========
Noncurrent assets:
Capital lease .............................. 226,999 203,946
Foreign tax loss carryforwards ............. 67,352 52,770
Less valuation allowance ..................... (67,352) (52,770)
--------- ---------
Total noncurrent asset, net .................. $ 226,999 $ 203,946
========= =========
As of December 31, 1996 and 1995, the Company had a full valuation
allowance recorded against its foreign tax loss carryforwards related to
certain European locations. Management believes that it is more likely
than not that these carryforwards, the majority of which are available
until the year 2000, will expire unutilized.
The total current and noncurrent amounts presented above are included in
other assets (current and noncurrent) in the consolidated financial
statements.
The Company does not accrue Federal income taxes on the equity in the
undistributed earnings of its foreign subsidiaries, which amounted to
approximately $5,658,000 at December 31, 1996, because such earnings are
permanently reinvested. It is not practicable to estimate the tax
liability that might arise if these earnings were remitted.
9. EMPLOYEE BENEFIT PLANS
The Company has a profit-sharing plan under which an annual contribution
may be paid from accumulated profits at the discretion of the Board of
Directors for the benefit of eligible employees upon their retirement.
Contributions to this plan by the Company amounted to approximately
$180,000 and $327,000 in 1996 and 1995, respectively. There were no
contributions to the plan by the Company in 1994. Additionally, the plan
allows for all participants to defer between 2 percent and 10 percent of
salary. Amounts deferred are paid to the trustee of the plan. The plan
does not provide for matching Company contributions.
Certain employees of the Company's Ecuadorian subsidiary companies are
covered by termination and retirement plans incorporated under statutory
requirements of labor laws and collective bargaining agreements. Included
in the accompanying consolidated balance sheets are union employee
termination benefits which approximate unpaid vested benefits under such
plans. The amount of benefits to be received by an employee is established
by the collective bargaining agreements and is based on length of service
and compensation. Provisions of approximately $64,000, $111,000 and
$63,000 were charged to income during 1996, 1995 and 1994, respectively.
10. LEASES
The Company leases its office space and plant facilities in Northvale, New
Jersey under a long-term capital lease agreement which expires in 2002.
The lease provides that the Company pay all real estate taxes, maintenance
and insurance relating to the facilities.
Rent expense under operating leases relates principally to office
buildings and amounted to $122,135, $53,343 and $51,210 in 1996, 1995 and
1994, respectively.
Future minimum lease payment obligations, as of December 31, 1996, for the
capital lease described above, as well as operating leases, are summarized
below. The operating leases are for space at the Company's offices in
England and France and warehouse space in New Jersey.
Capital Operating
Year Lease Leases
- ---- ------------- -----------
1997 $ 430,765 $ 99,158
1998 448,565 21,163
1999 466,365 14,437
2000 469,926 14,437
2001 487,726 14,437
Remainder 81,881 101,059
------------- -----------
Minimum lease payments 2,385,228 $ 264,691
Less amounts representing interest 410,459
============= ===========
Capital lease obligation $ 1,974,769
============
11. SEGMENT INFORMATION
The Company and its subsidiaries operate primarily in two segments, as a
manufacturer and supplier of balsa wood products used principally as a
core material in various industries, and in the shrimp farming business.
Information about the Company's operations by segment is as follows:
(In Thousands)
1996 1995 1994
-------- -------- --------
Revenues from unaffiliated customers
Balsa segment .................................. $ 38,630 $ 36,420 $ 32,833
Shrimp segment ................................. 9,736 9,364 7,297
-------- -------- --------
Total revenues ................................. $ 48,366 $ 45,784 $ 40,130
======== ======== ========
Operating income
Balsa segment .................................. $ 2,383 $ 2,776 $ 2,639
Shrimp segment ................................. 999 2,327 1,572
General corporate expenses ..................... (1,619) (1,822) (1,699)
-------- -------- --------
Total operating income ......................... $ 1,763 $ 3,281 $ 2,512
======== ======== ========
Income before income taxes
Balsa segment .................................. $ 1,947 $ 2,608 $ 2,618
Shrimp segment ................................. 921 2,187 1,496
General corporate expenses ..................... (1,619) (1,822) (1,699)
-------- -------- --------
Operating income after exchange gain/loss ...... 1,249 2,973 2,415
Interest expense ............................... (602) (530) (452)
Other income - net ............................. 7 48 28
-------- -------- --------
Income before income taxes ..................... $ 654 $ 2,491 $ 1,991
======== ======== ========
Identifiable assets
Balsa segment .................................. $ 30,318 $ 29,647 $ 26,048
Shrimp segment ................................. 8,997 9,170 8,493
-------- -------- --------
Total identifiable assets ...................... $ 39,315 $ 38,817 $ 34,541
======== ======== ========
(In Thousands)
1996 1995 1994
-------- -------- --------
Capital expenditures, net, including timberlands
and capital leases
Balsa segment .................................. $ 1,524 $ 2,169 $ 1,424
Shrimp segment ................................. 579 694 492
-------- -------- --------
Total capital expenditures ..................... $ 2,103 $ 2,863 $ 1,916
======== ======== ========
Depreciation expense
Balsa segment .................................. $ 851 $ 778 $ 754
Shrimp segment ................................. 760 736 708
-------- -------- --------
Total depreciation expense ..................... $ 1,611 $ 1,514 $ 1,462
======== ======== ========
Information pertaining to the Company's operations in different geographic
areas is as follows:
(In Thousands)
1996 1995 1994
------- ------- -------
Revenues from unaffiliated sources
United States - domestic ................ $33,473 $32,453 $29,780
United States - export .................. 8,856 7,534 5,062
Ecuador ................................. 123 87 87
Europe .................................. 5,914 5,710 5,201
------- ------- -------
Total revenues .......................... $48,366 $45,784 $40,130
======= ======= =======
Transfers between geographic areas
United States ........................... $ 2,248 $ 2,167 $ 1,628
Ecuador ................................. 18,083 17,781 13,227
------- ------- -------
Total transfers ......................... $20,331 $19,948 $14,855
======= ======= =======
(In Thousands)
1996 1995 1994
-------- -------- --------
Operating income (loss)
United States ..................... $ 1,762 $ 2,422 $ 3,412
Ecuador ........................... 107 1,055 (656
Europe ............................ (106) (196) (244)
-------- -------- --------
Total operating income ............ $ 1,763 $ 3,281 $ 2,512
======== ======== ========
Identifiable assets
United States ..................... $ 14,264 $ 12,576 $ 10,792
Ecuador ........................... 21,543 22,732 20,370
Europe ............................ 3,508 3,509 3,379
-------- -------- --------
Total identifiable assets ......... $ 39,315 $ 38,817 $ 34,541
======== ======== ========
Transfers between geographic areas are at prices which permit the recovery
of manufacturing costs and a reasonable operating profit. The majority of
export sales from the Company's United States operations were to
unaffiliated customers in Europe.
Sales to one customer from the Balsa segment amounted to approximately 13%
of total revenues in 1995 and 1994. No customer accounted for more than
10% of revenues in 1996.
12. SPECIAL CHARGE
In 1994, the Company recorded a special charge of $323,977, associated
with a decision to reduce costs by making personnel changes at the
Company's mills in Ecuador. This charge was comprised primarily of
severance payments for 68 employees. This action was effected within 1994
and no related liability remained by year-end 1994.
******
Schedule II
BALTEK CORPORATION AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions of Year
----------- ------- -------- ---------- -------
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful
accounts receivable $ 92,759 $ 70,380 $ 100,528 $ 62,611
=========== =========== ========== ===========
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful
accounts receivable $ 75,985 $ 97,176 $ 80,402 $ 92,759
=========== =========== =========== ===========
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful
accounts receivable $ 145,955 $ 74,312 $ 144,282 $ 75,985
=========== =========== =========== ===========