UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period
ended February 1, 2003
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
1-11577
FALCON PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
(314) 991-9200
(Registrant’s telephone number, including area code)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 twelve months, and (2) has been
subject to such filing requirements for the past 90 days. YES X NOAs of March 5, 2003, the registrant
had 8,996,910 shares of common stock, $.02 par value, outstanding.1
PART I — FINANCIAL
INFORMATION
Item 1. — Financial
Statements
Falcon Products, Inc.
and Subsidiaries
Consolidated Statements of Earnings
(Unaudited)
Thirteen Weeks Ended
--------------------------------
February 1, February 2,
(In thousands, except per share data) 2003 2002
------------- --------------
Net sales $ 65,134 $ 64,342
Cost of sales 50,346 49,433
------------- --------------
Gross margin 14,788 14,909
Selling, general and administrative expenses 10,819 11,530
Special and nonrecurring items - 639
------------- --------------
Operating profit 3,969 2,740
Interest expense, net 4,068 4,026
Minority interest in consolidated subsidiary 65 8
------------- --------------
Loss before income taxes (164) (1,294)
Income tax expense (benefit) 132 (415)
------------- --------------
Net loss $ (296) $ (879)
============= ==============
Basic and diluted loss per share $ (0.03) $ (0.10)
============= ==============
See accompanying notes to
consolidated financial statements.
2
Falcon Products, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
February 1, November 2,
Assets 2003 2002
- ------ ----------- -----------
Current assets:
Cash and cash equivalents $ 1,180 $ 1,646
Accounts receivable, less allowances
of $677 and $707, respectively 31,682 32,942
Inventories 60,190 57,117
Prepayments and other current assets 6,727 9,041
----------- -----------
Total current assets 99,779 100,746
----------- -----------
Property, plant and equipment:
Land 2,838 2,726
Buildings and improvements 20,326 19,962
Machinery and equipment 50,541 49,569
----------- -----------
73,705 72,257
Less: accumulated depreciation 32,852 31,375
----------- -----------
Net property, plant and equipment 40,853 40,882
----------- -----------
Other assets, net of accumulated amortization:
Goodwill 117,474 117,474
Other 14,027 14,475
----------- -----------
Total other assets 131,501 131,949
----------- -----------
Total Assets $ 272,133 $ 273,577
=========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 22,427 $ 20,841
Customer deposits 5,902 9,211
Accrued liabilities 12,371 16,376
Current maturities of long-term debt 16,139 15,359
----------- -----------
Total current liabilities 56,839 61,787
Long-term obligations:
Long-term debt 138,456 135,226
Minority interest in consolidated subsidiary 801 736
Other 14,303 14,828
----------- -----------
Total liabilities 210,399 212,577
----------- -----------
Stockholders' equity:
Common stock, $.02 par value: authorized 20,000,000 shares;
issued 9,915,117 shares 198 198
Additional paid-in capital 47,376 47,376
Treasury stock, at cost (918,207 and 1,012,918 shares, respectively) (10,511) (11,949)
Accumulated other comprehensive loss (6,065) (6,775)
Retained earnings 30,736 32,150
----------- -----------
Total stockholders' equity 61,734 61,000
----------- -----------
Total Liabilities and Stockholders' Equity $ 272,133 $ 273,577
=========== ===========
See accompanying notes to consolidated financial statements.
3
Falcon Products, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Thirteen Weeks Ended
----------------------------
(In thousands) February 1, February 2,
2003 2002
----------- -----------
Cash flows from operating activities:
Net loss $ (296) $ (879)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 2,298 2,114
Minority interest in consolidated subsidiary 65 8
Change in assets and liabilities:
Accounts receivable 1,396 5,217
Inventories (2,797) (3,931)
Prepayments and other current assets 2,314 (290)
Other assets (287) 428
Accounts payable and customer deposits (1,860) (3,501)
Accrued liabilities (3,978) (6,358)
Other liabilities (618) 26
----------- -----------
Cash used in operating activities (3,763) (7,166)
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment (723) (1,459)
----------- -----------
Cash used in investing activities (723) (1,459)
----------- -----------
Cash flows from financing activities:
Repayment of long-term debt (2,693) (2,072)
Proceeds from long-term debt 6,393 10,547
Common stock issuances 320 379
----------- -----------
Cash provided by financing activities 4,020 8,854
----------- -----------
Increase (decrease) in cash and cash equivalents (466) 229
Cash and cash equivalents-beginning of period 1,646 1,670
----------- -----------
Cash and cash equivalents-end of period $ 1,180 $ 1,899
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ 6,612 $ 7,024
=========== ===========
Cash paid for (refund of) taxes, net $ (3,740) $ 103
=========== ===========
See accompanying notes to consolidated financial statements.
4
Falcon Products, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Thirteen Weeks Ended February 1, 2003
Note 1 – Interim Results
The financial statements contained herein are unaudited. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of the interim periods presented. Reference is made to the notes to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended November 2, 2002, filed with the Securities and Exchange Commission.
Note 2 – Special and
Nonrecurring Items
During the first quarter of 2002, the Company recorded a pre-tax charge of $0.6 million, $0.4 million after-tax, for special and nonrecurring items. This charge was a result of the Company executing its strategic initiative to close its Statesville, North Carolina facility and transfer production into the Company’s other plants. The initiative was announced during the third quarter of 2001.
A summary of 2003 activity related to
the strategic initiative is as follows:
Thirteen Weeks Ended
In thousands February 1, 2003
----------------
Liability - November 2, 2002 $ 250
Cash paid for real estate exit and other costs (105)
-------
Liability - February 1, 2003 $ 145
=======
Note 3 - Inventories
Inventories consisted of the following:
February 1, November 2,
In thousands 2003 2002
----------- -----------
Raw materials....................... $ 38,228 $ 37,759
Work in process..................... 12,641 10,641
Finished goods...................... 9,321 8,717
--------- ---------
$ 60,190 $ 57,117
========= =========
5
Note 4 – Earnings
Per Share
The following table reconciles net loss and weighted average shares outstanding to the amounts used to calculate basic and diluted loss per share:
Thirteen Weeks Ended
---------------------------------
In thousands, February 1, February 2,
except per-share data 2003 2002
----------- -----------
Net loss $ (296) $ (879)
======= =======
Weighted average shares outstanding 9,048 8,931
Assumed exercise of options - -
------- -------
Weighted average diluted shares outstanding $ 9,048 $ 8,931
======= =======
Basic loss per share $ (0.03) $ (0.10)
======= =======
Diluted loss per share $ (0.03) $ (0.10)
======= =======
Basic loss per share was computed by dividing net loss by the weighted average shares of common stock outstanding during the period. Diluted loss per share is calculated assuming the options issued and outstanding were exercised. For the first quarter of 2003 and 2002, the outstanding options were not included in the computation of diluted loss per share, if the exercise price was greater than the average market price or if the shares were antidilutive.
Note 5– Comprehensive Income (Loss)
Comprehensive income (loss) includes, in addition to net loss, the change in stockholders’ equity during the period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity except those resulting from investments by owners and distributions to owners.
Thirteen Weeks Ended
-------------------------------
February 1, February 2,
In thousands 2003 2002
----------- -----------
Net loss $ (296) $ (879)
Translation adjustments 710 (43)
Cash flow hedge - 85
------ ------
Comprehensive income (loss) $ 414 $ (837)
====== ======
Note 6 – Recently
Issued Accounting Standards
In July 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 146 “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 replaces EITF Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.
In December 2002, the FASB issued SFAS No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure,” an amendment to FASB Statement No. 123. SFAS No. 148 provides
6
alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for fiscal years ended after December 15, 2002. The Company plans to continue to account for stock-based employee compensation under the intrinsic value based method and to provide disclosure of the impact of the fair value based method on reported income.
Note 7 – Derivative Instruments
The Company uses interest rate swap agreements to manage the relative mix of the Company’s debt between fixed and variable rate instruments. At February 1, 2003, the Company had no interest rate swap agreements.
Note 8 – Guarantor Subsidiaries
The
Company has a senior secured credit facility (the “Senior Secured Credit
Facility”) with a group of financial institutions. All of the Company’s domestic
subsidiaries have guaranteed the Senior Secured Credit Facility. A first priority security
interest in substantially all of the Company’s properties and assets of its domestic
subsidiaries, including a pledge of all of the stock of the Company’s domestic
subsidiaries and 66% of the stock of its foreign subsidiaries, secures the Senior Secured
Credit Facility.
The
Company’s senior subordinated notes are fully and unconditionally (as well as jointly
and severally) guaranteed on an unsecured, senior subordinated basis by each subsidiary of
the Company (the “Guarantor Subsidiaries”) other than Howe A/S, Falcon Products
(Shenzhen) Limited, Falcon Mimon, a.s., Falcon De Juarez, S.A. de C.V. and Industrial
Mueblera Shelby Williams, S.A. de C.V. (the “Non-Guarantor Subsidiaries”). Each
of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by the
Company, except for Falcon Mimon, a.s., and Epic Furniture Group which are owned 87.4% and
80%, respectively.
The
following condensed consolidating financial statements of the Company include the combined
accounts of the Company and its Guarantor Subsidiaries and the combined accounts of the
Non-Guarantor Subsidiaries. Given the size of the Non-Guarantor Subsidiaries, relative to
the Company and its Guarantor Subsidiaries on a consolidated basis, separate financial
statements of the respective Company and its Guarantor Subsidiaries are not presented
because management has determined that such information is not material in assessing the
Company and its Guarantor Subsidiaries.
7
Falcon Products, Inc.
Consolidating Statement of Earnings
For the Thirteen Weeks Ended February 1, 2003
In thousands Parent Total Total
Company Guarantor Non-Guarantor Eliminations Total
-------------------------------------------------------------------------
Net sales $ - $ 62,357 $ 6,489 $ (3,712) $ 65,134
Cost of sales - 48,244 5,814 (3,712) 50,346
Selling, general and administrative expenses - 10,200 619 - 10,819
--------------------------------------------------------------------------
Operating profit - 3,913 56 - 3,969
Equity in earnings (loss) of subsidiary (296) - - 296 -
Interest expense, net - 4,027 41 - 4,068
Minority interest in consolidated subsidiary - 65 - - 65
--------------------------------------------------------------------------
Earnings (loss) before income taxes (296) (179) 15 296 (164)
Income tax expense - 126 6 - 132
--------------------------------------------------------------------------
Net income (loss) $ (296) $ (305) $ 9 $ 296 $ (296)
==========================================================================
Falcon Products, Inc.
Consolidating Statement of Earnings
For the Thirteen Weeks Ended February 2, 2002
In thousands Parent Total Total
Company Guarantor Non-Guarantor Eliminations Total
-------------------------------------------------------------------------
Net sales $ - $ 61,461 $ 7,973 $ (5,092) $ 64,342
Cost of sales - 47,352 7,173 (5,092) 49,433
Selling, general and administrative expenses - 10,911 619 - 11,530
Special and nonrecurring items - 639 - - 639
-------------------------------------------------------------------------
Operating profit - 2,559 181 - 2,740
Equity in earnings (loss) of subsidiary (879) - - 879 -
Interest expense, net - 3,997 29 - 4,026
Minority interest in consolidated subsidiary - 8 - - 8
-------------------------------------------------------------------------
Earnings (loss) before income taxes (879) (1,446) 152 879 (1,294)
Income tax expense (benefit) - (554) 139 - (415)
-------------------------------------------------------------------------
Net earnings (loss) $ (879) $ (892) $ 13 $ 879 $ (879)
=========================================================================
8
Falcon Products, Inc.
Consolidating Balance Sheet
As of February 1, 2003
In thousands Parent Total Total
Company Guarantor Non-Guarantor Eliminations Total
-------------------------------------------------------------------------
Assets
Cash and cash equivalents $ - $ 147 $ 1,033 $ - $ 1,180
Accounts receivable - 28,389 3,293 - 31,682
Inventories - 52,985 7,205 - 60,190
Other current assets - 5,647 1,080 - 6,727
-------------------------------------------------------------------------
Total current assets - 87,168 12,611 - 99,779
Property, plant and equipment, net - 25,885 14,968 - 40,853
Investment in subsidiaries 61,734 - - (61,734) -
Goodwill and other assets - 131,452 49 - 131,501
-------------------------------------------------------------------------
Total assets $61,734 $244,505 $ 27,628 $(61,734) $ 272,133
=========================================================================
Liabilities and Stockholders' Equity
Current liabilities $ - $ 51,701 $ 5,138 $ - $ 56,839
Long-term debt - 136,967 1,489 - 138,456
Other long-term liabilities - 14,841 263 - 15,104
Intercompany payable (receivable) - (9,235) 9,235 - -
-------------------------------------------------------------------------
Total liabilities - 194,274 16,125 - 210,399
Total stockholders' equity 61,734 50,231 11,503 (61,734) 61,734
-------------------------------------------------------------------------
Total liabilities and stockholders' equity $61,734 $244,505 $ 27,628 $(61,734) $ 272,133
=========================================================================
9
Falcon Products, Inc.
Consolidating Balance Sheet
As of November 2, 2002
In thousands Parent Total Total
Company Guarantor Non-Guarantor Eliminations Total
------------------------------------------------------------------------
Assets
Cash and cash equivalents $ - $ 378 $ 1,268 $ - $ 1,646
Accounts receivable - 29,695 3,247 - 32,942
Inventories - 49,276 7,841 - 57,117
Other current assets - 8,236 805 - 9,041
------------------------------------------------------------------------
Total current assets - 87,585 13,161 - 100,746
Property, plant and equipment, net - 26,338 14,544 - 40,882
Investment in subsidiaries 61,000 - - (61,000) - -
Goodwill and other assets - 131,949 - - 131,949
------------------------------------------------------------------------
Total assets $ 61,000 $ 245,872 $ 27,705 $ (61,000) $ 273,577
========================================================================
Liabilities and Stockholders' Equity
Current liabilities $ - $ 56,263 $ 5,524 $ - $ 61,787
Long-term debt - 133,834 1,392 - 135,226
Other long-term liabilities - 15,394 170 - 15,564
Intercompany payable (receivable) - (9,126) 9,126 - -
------------------------------------------------------------------------
Total liabilities - 196,365 16,212 - 212,577
Total stockholders' equity 61,000 49,507 11,493 (61,000) 61,000
------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 61,000 $ 245,872 $ 27,705 $ (61,000) $ 273,577
========================================================================
10
Falcon Products, Inc.
Consolidating Statement of Cash Flows
For the Thirteen Weeks Ended February 1, 2003
In thousands Parent Total Total
Company Guarantor Non-Guarantor Eliminations Total
-------------------------------------------------------------------------
Cash used in operating activities $ - $ (3,580) $ (183) $ - $ (3,763)
-------------------------------------------------------------------------
Cash flows from investing activities
Additions to property, plant and equipment, net - (574) (149) - (723)
Cash received from parent (320) 320 - - -
-------------------------------------------------------------------------
Cash used in investing activities (320) (254) (149) - (723)
-------------------------------------------------------------------------
Cash flows from financing activities
Common stock issuances 320 - - - 320
Additions to long-term debt, net - 3,603 97 - 3,700
-------------------------------------------------------------------------
Cash provided by financing activities 320 3,603 97 - 4,020
-------------------------------------------------------------------------
Decrease in cash and cash equivalents $ - $ (231) $ (235) $ - $ (466)
=========================================================================
Falcon Products, Inc.
Consolidating Statement of Cash Flows
For the Thirteen Weeks Ended February 2, 2002
In thousands Parent Total Total
Company Guarantor Non-Guarantor Eliminations Total
-------------------------------------------------------------------------
Cash provided by (used in) operating activities $ - $ (9,103) $ 1,937 $ - $ (7,166)
-------------------------------------------------------------------------
Cash flows from investing activities
Additions to property, plant and equipment, net - (487) (972) - (1,459)
Cash received from parent (379) 379 - - -
-------------------------------------------------------------------------
Cash used in investing activities (379) (108) (972) - (1,459)
-------------------------------------------------------------------------
Cash flows from financing activities
Common stock issuances 379 - - - 379
Additions to long-term debt, net - 8,544 (69) - 8,475
-------------------------------------------------------------------------
Cash provided by (used in) financing activities 379 8,544 (69) - 8,854
-------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents $ - $ (667) $ 896 $ - $ 229
=========================================================================
11
Item 2. — Management’s Discussion and Analysis of Results of Operations and Financial Condition
Certain information presented herein includes “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. However, there can be no assurance that the Company’s actual results will not differ materially from
its expectations. The matters referred to in forward-looking statements may be affected by risks and uncertainties affecting the Company’s business.
Results of Operations
General
The following table sets forth, for the periods presented, certain information relating to the operating
results of the Company, expressed as a percentage of net sales:
Thirteen Weeks Ended
-----------------------------
February 1, February 2,
2003 2002
----------- -----------
Net sales 100.0% 100.0%
Cost of sales 77.3 76.8
----------- -----------
Gross margin 22.7 23.2
Selling, general and administrative expenses 16.6 17.9
Special and nonrecurring items - 1.0
----------- -----------
Operating profit 6.1 4.3
Interest expense, net 6.2 6.3
Minority interest in consolidated subsidiary 0.1 -
----------- -----------
Loss before income taxes (0.2) (2.0)
Income tax expense (benefit) 0.2 (0.6)
----------- -----------
Net loss (0.4)% (1.4)%
=========== ===========
Thirteen weeks ended February 1, 2003 compared to the thirteen weeks ended February 2, 2002
The Company reported a net loss of $0.3 million, or $0.03 per diluted share and $0.9 million, or $0.10 per diluted share in the first quarter of 2003 and 2002,
respectively. Excluding the special and nonrecurring item, the net loss was $0.5 million, or $0.05 per diluted share, in the first quarter of 2002.
Weighted average shares outstanding were 9.0 million and 8.9 million shares in the first quarter of 2003 and 2002, respectively.
During the first quarter of 2002, the Company recorded a pre-tax charge of $0.6 million, $0.4 million
after-tax, for special and nonrecurring items. This charge was a result of the Company executing its manufacturing strategy,
which included the closure of its Statesville, North Carolina facility and the transfer of production into the Company’s other plants.
12
Net sales for the first quarter of 2003 were $65.1 million, an increase of 1.2% from the 2002 first quarter net sales of $64.3 million.
The increase is a result of increases in both the food service and contract office markets partially offset by a decline in the hospitality market and a decline due
to the Company’s decision to discontinue business with certain large buying groups. The increase in the food service market is primarily the result of additional sales related to Boston
Market’s remodeling program. The decrease in the hospitality market reflects the continued weak market conditions, which has led to a decline in new
construction and a deferral of refurbishments.
Cost of sales was $50.3 million for the first quarter of 2003, an increase of 1.8% from $49.4 million in the first quarter of 2002. Gross margin
decreased to $14.8 million for the first quarter of 2003, from $14.9 million in the same quarter of 2003. Gross margin as a percentage of net sales decreased
to 22.7% in 2003, compared to 23.2% in 2002. The decrease in gross margin and gross margin as a percentage of net sales is mainly the result of pricing pressures, primarily in the hospitality market, and a negative product mix. The negative impact of product mix and pricing pressures was
partially offset by the Company’s cost saving initiatives and the additional sales volume.
Selling, general and administrative expenses were $10.8 million in the first quarter of 2003,
compared to $11.5 million in the first quarter of 2002. Selling, general and administrative expenses as a
percentage of net sales were 16.6% for the first quarter of 2003, compared to 17.9% for the first quarter of 2002. The decrease is a result of significant
cost reduction activities initiated by the Company during 2002 and continued into 2003.
In the first quarter of 2003, the Company recorded income tax expense of $0.1 million on a
loss before income taxes of $0.2 million due to non-deductible permanent tax items and state, local and foreign taxes.
Liquidity and Capital Resources
The Company’s net working capital at February 1, 2003 was $59.1 million compared with $54.3
million at November 2, 2002. The Company’s ratio of current assets to current liabilities increased to 1.8 to 1.0 at February 1, 2003 from 1.6 to 1.0
at November 2, 2002.
Cash used in operating activities was $3.8 million and $7.2 million in the first quarter of 2003 and
2002, respectively. The cash used in the first quarter of 2003 was mainly for the purchase of inventory and the payment of interest offset by an income tax refund.
Inventories were $60.2 million at February 1, 2003, compared with $57.1 million at November 2, 2002, a 5.4% increase. During the first three months of 2003 and
2002, the Company incurred $0.7 million and $1.5 million, respectively, for capital expenditures. Cash provided by financing activities was $4.0 million and
$8.9 million in the first quarter of 2003 and 2002, respectively.
The Company has a $25.0 million revolving line of credit agreement with a group of financial
institutions. The revolving line of credit bears interest at the Company’s option, at the Prime Rate, Federal Funds Rate or LIBOR adjusted for a spread
based on the Company’s leverage ratio. At February 1, 2003, the Company had $17.4 million outstanding under this revolving line of credit. In addition,
approximately $4.8 million of the total commitment under the revolving line of credit is currently used to support outstanding standby letters of credit.
13
The Company must comply with certain covenants, under its credit agreement, including limitations relating to the payment
of dividends, the maintenance of specific ratios and minimum levels of EBITDA.
The Company’s most restrictive debt covenant is the consolidated leverage
ratio (“Leverage Ratio”), defined in the credit agreement as the ratio of total
debt to the last twelve months of EBITDA. The maximum Leverage Ratio is 5.50
at February 1, 2003. The maximum Leverage Ratio decreases to 5.25 at May 3, 2003
and 5.00 at November 1, 2003. At February 1, 2003, the Company’s Leverage Ratio is
5.49.
EBITDA is defined as earnings before interest,
income taxes, depreciation and amortization. EBITDA is commonly used to analyze
companies on the basis of operating performance, leverage and liquidity. EBITDA
is not intended to represent cash flow for the period, nor has it been presented
as an alternative to operating income as an indicator of operating performance
and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. As calculated by the definitions in the credit agreement, EBITDA for
the last twelve months was $28.2 million. EBITDA for the first quarter of 2003
and 2002 was $5.9 million and $5.2 million, respectively, a 12.7% increase.
Item 3. – Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to
market risk from changes in interest rates and foreign exchange rates. The Company’s net exposure to interest rate risk consists
of floating-rate instruments based on LIBOR.
Item 4. – Controls and Procedures
The Company’s chief executive
officer and chief financial officer have reviewed the Company’s disclosure
controls and procedures within 90 days prior to the filing of this report. Based
upon this review, each such officer has concluded that the Company’s
disclosure controls and procedures are effective in ensuring that material
information related to the Company is made known to them by others responsible
for reporting such material information within the Company.
There were no significant changes in the Company’s internal controls or in any other factors that could significantly affect such controls subsequent to the date that the Company carried out its evaluation.
PART II — OTHER INFORMATION
Item 1. — Legal Proceedings
From time to time, the Company is subject to legal proceedings and other claims arising in the ordinary course of its business. The Company maintains insurance coverage against potential claims in an amount it believes to be adequate. There are no material pending legal proceedings, other than routine litigation incidental to the business, to which the Company is a party or of which any of the Company’s property is the subject.
Item 2. — Changes in Securities and Use of Proceeds
None.
Item 3. — Defaults Upon Senior Securities
None.
14
Item 4. — Submission of Matters to a Vote of Security Holders
None.
Item 5. — Other Information
None.
Item 6. — Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Delaware | 43-0730877 | |||
| (State or other jurisdiction of | (I.R.S. Employer | |||
| incorporation or organization) | Identification Number) | |||
| 9387 Dielman Industrial Drive | 63132 | |||
| St. Louis, Missouri | (Zip Code) | |||
| (Address of principal executive offices) | ||||
15
Chief Executive Officer
Certification
I, Franklin A. Jacobs certify that:
| Date: March 5, 2003 | /s/ Franklin A. Jacobs Franklin A. Jacobs Chief Executive Officer and Chairman of the Board | ||
| Date: March 5, 2003 | /s/ Michael J. Dreller Michael J. Dreller Vice President and Chief Financial Officer | ||
| 1. |
|
| 2. |
|
| 3. |
|
| 4. |
|
| a) |
|
| b) |
|
| c) |
|
| 5. |
|
| a) |
|
| b) |
|
Date: March 5, 2003
| 6. |
|
16
Chief Financial Officer
Certification
I, Michael J. Dreller certify that:
/s/ Franklin A. Jacobs Franklin A. Jacobs Chairman of the Board, Chief Executive Officer and Director |
| 1. |
|
| 2. |
|
| 3. |
|
| 4. |
|
| a) |
|
| b) |
|
| c) |
|
| 5. |
|
| a) |
|
| b) |
|
Date: March 5, 2003
| 6. |
|
17
/s/ Michael J. Dreller Michael J. Dreller Vice President, Finance and Chief Financial Officer |