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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2005
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.
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(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
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(Address, including zip code, of registrant's principal executive offices)
(765) 564-3500
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(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 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares outstanding for each of the registrant's classes of common
stock, as of the latest practicable date:
Common Stock, $.01 par value - 6,090,596 shares as of October 28, 2005
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INDEX
Page
Number
------
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Earnings - Three and Nine
Months Ended October 1, 2005 and October 2, 2004........................................ 3
Condensed Consolidated Balance Sheets - October 1, 2005,
October 2, 2004 and December 31, 2004................................................... 4
Condensed Consolidated Statement of Stockholders' Equity - Nine
Months Ended October 1, 2005............................................................ 5
Condensed Consolidated Statements of Cash Flows - Nine
Months Ended October 1, 2005 and October 2, 2004........................................ 6
Notes to Condensed Consolidated Financial Statements.................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................................... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk................................ 13
Item 4. Controls and Procedures................................................................... 13
PART II. Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds............................... 13
Item 6. Exhibits.................................................................................. 13
SIGNATURES.............................................................................................. 14
2
PART I.
Item 1. Financial Statements
----------------------------
Condensed Consolidated Statements of Earnings (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------------- --------------------------
October 1, October 2, October 1, October 2,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Sales $ 40,836 $ 41,658 $ 128,896 $ 130,763
Cost of sales 31,887 32,361 99,156 100,885
---------- ---------- ---------- ----------
Gross margin 8,949 9,297 29,740 29,878
Selling, general and administrative expenses 6,720 5,881 20,301 20,342
---------- ---------- ---------- ----------
Operating income 2,229 3,416 9,439 9,536
Interest expense 342 204 660 590
---------- ---------- ---------- ----------
Earnings before income tax expense 1,887 3,212 8,779 8,946
Income tax expense 696 1,233 3,239 3,435
---------- ---------- ---------- ----------
Net earnings $ 1,191 $ 1,979 $ 5,540 $ 5,511
========== ========== ========== ==========
Earnings per share of common stock
Basic $ .28 $ .48 $ 1.30 $ 1.33
Diluted $ .27 $ .47 $ 1.28 $ 1.31
Shares used in computing earnings per share
Basic 4,322 4,155 4,253 4,132
Diluted 4,398 4,224 4,315 4,212
See accompanying notes to condensed consolidated financial statements.
3
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
October 1, October 2, Dec. 31,
2005 2004 2004
----------- ---------- ---------
Assets
------
Accounts receivable $ 22,257 $ 22,045 $ 18,133
Inventories 36,556 36,695 33,666
Prepaid expenses 2,660 2,065 1,971
----------- ---------- ---------
Current assets 61,473 60,805 53,770
Property, plant and equipment, net 30,664 33,107 32,490
Other long-term assets 804 823 776
----------- ---------- ---------
Total assets $ 92,941 $ 94,735 $ 87,036
=========== ========== =========
Liabilities and Stockholders' Equity
------------------------------------
Current portion of bank debt $ - $ 5,000 $ -
Accounts payable 5,072 5,624 5,093
Accrued liabilities 9,073 9,536 8,623
----------- ---------- ---------
Current liabilities 14,145 20,160 13,716
Bank debt 4,390 9,050 5,700
Deferred compensation 2,585 3,795 3,500
Other long-term liabilities 1,364 1,281 1,211
----------- ---------- ---------
Total liabilities 22,484 34,286 24,127
Stockholders' equity 70,457 60,449 62,909
----------- ---------- ---------
Total liabilities and stockholders' equity $ 92,941 $ 94,735 $ 87,036
=========== ========== =========
See accompanying notes to condensed consolidated financial statements.
4
Condensed Consolidated Statement of Stockholders' Equity (unaudited)
Nine Months Ended October 1, 2005
Chromcraft Revington, Inc.
(In thousands, except share data)
Capital in Unearned Total
Common Excess of ESOP Unearned Retained Treasury Stockholders'
Stock Par Value Shares Compensation Earnings Stock Equity
------- ---------- -------- ------------ -------- -------- -------------
Balance at January 1, 2005 $ 77 $ 15,121 $(18,062) $ - $ 86,119 $(20,346) $ 62,909
Net earnings - - - - 5,540 - 5,540
ESOP compensation expense - 162 508 - - - 670
Issuance of restricted stock
award - 598 - (598) - - -
Amortization of unearned
compensation - - - 99 - - 99
Stock option compensation
expense - 85 - - - - 85
Purchase of treasury stock
(65,987 shares) - (100) - - - (654) (754)
Exercise of stock options
(165,381 shares) 2 1,906 - - - - 1,908
------- ---------- -------- ------------ -------- -------- -------------
Balance at October 1, 2005 $ 79 $ 17,772 $(17,554) $ (499) $ 91,659 $(21,000) $ 70,457
======= ========== ======== ============ ======== ======== =============
See accompanying notes to condensed consolidated financial statements.
5
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Nine Months Ended
-------------------------------
October 1, October 2,
2005 2004
----------- ------------
Operating Activities
Net earnings $ 5,540 $ 5,511
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities
Depreciation expense 2,643 2,841
Loss on disposal of equipment 230 -
Deferred income taxes 372 (278)
Non-cash ESOP compensation expense 670 758
Stock compensation expense 184 149
Changes in operating assets and liabilities
Accounts receivable (4,124) (4,277)
Inventories (2,890) (5,827)
Prepaid expenses (1,216) (1,024)
Accounts payable and accrued liabilities 429 154
Other (571) 576
----------- ------------
Cash provided by (used in) operating activities 1,267 (1,417)
----------- ------------
Investing Activities
Capital expenditures, net (1,047) (787)
----------- ------------
Cash used in investing activities (1,047) (787)
----------- ------------
Financing Activities
Net borrowing under an unsecured bank revolving loan facility 4,390 -
Net borrowing (repayment) under a secured bank revolving credit line (1,450) 5,750
Principal payments on a bank term loan (4,250) (3,750)
Stock repurchase from related party (754) -
Exercise of stock options 1,844 204
------------ -------------
Cash provided by (used in) financing activities (220) 2,204
----------- ------------
Change in cash - -
Cash at beginning of period - -
----------- ------------
Cash at end of period $ - $ -
=========== ============
See accompanying notes to condensed consolidated financial statements.
6
Notes to Condensed Consolidated Financial Statements (unaudited)
Chromcraft Revington, Inc.
Note 1. Basis of Presentation
-----------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statement presentation.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended October 1, 2005 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005.
The balance sheet at December 31, 2004 has been derived from the audited
financial statements at that date but does not include all information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in Chromcraft Revington's annual report on Form 10-K
for the year ended December 31, 2004.
Note 2. Inventories
-------------------
Inventories consisted of the following:
(In thousands)
---------------------------------------------
October 1, October 2, Dec. 31,
2005 2004 2004
------------- ----------- ------------
Raw materials $ 11,855 $ 10,932 $ 10,980
Work-in-process 6,508 6,847 6,374
Finished goods 20,968 21,317 18,851
------------- ----------- ------------
39,331 39,096 36,205
LIFO reserve (2,775) (2,401) (2,539)
------------- ----------- ------------
$ 36,556 $ 36,695 $ 33,666
============= =========== ============
Note 3. Accrued Liabilities
---------------------------
Accrued liabilities consisted of the following:
(In thousands)
---------------------------------------------
October 1, October 2, Dec. 31,
2005 2004 2004
------------- ----------- ------------
Employee benefit plans $ 2,174 $ 2,912 $ 2,703
Salaries, wages and bonuses 1,125 885 817
Deferred compensation 1,054 161 166
Commissions 917 936 804
Property taxes 738 868 868
Other accrued liabilities 3,065 3,774 3,265
------------- ----------- ------------
$ 9,073 $ 9,536 $ 8,623
============= =========== ============
7
Note 4. Bank Debt
-----------------
In September 2005, the Company entered into an unsecured revolving loan facility
("Facility") with a bank that allows the Company to borrow up to $35,000,000.
The Facility replaced a secured multi-bank credit agreement. The interest rate
under the Facility is determined at the time of borrowing, at the Company's
option, at either the bank's prime rate, or a rate based on the Federal Funds
rate or the London Interbank Offered Rate. A commitment fee, of up to .25% per
annum, is payable on the unused portion of the credit line. The interest rate on
borrowings outstanding as of October 1, 2005 was approximately 4.75%.
The Facility requires compliance with certain financial loan covenants related
to net worth, interest coverage and debt leverage. At October 1, 2005, the
Company had approximately $28,700,000 in unused availability under the Facility.
The Facility expires September 20, 2008.
Long term bank debt consisted of the following:
(In thousands)
---------------------------------------------
October 1, October 2, Dec. 31,
2005 2004 2004
------------- ----------- ------------
Unsecured bank revolving loan facility $ 4,390 $ - $ -
Secured bank credit agreement
Term loan - 5,500 4,250
Revolving credit line - 8,550 1,450
------------- ----------- ------------
4,390 14,050 5,700
Less current portion of term loan - 5,000 -
------------- ----------- ------------
$ 4,390 $ 9,050 $ 5,700
============= =========== ============
Note 5. Employee Stock Ownership Plan
-------------------------------------
Chromcraft Revington sponsors a leveraged employee stock ownership plan ("ESOP")
that covers substantially all employees who have completed six months of
service. Chromcraft Revington makes annual contributions to the ESOP Trust equal
to the ESOP Trust's repayment of its loan to the Company. As the ESOP loan is
repaid, shares are released and allocated to ESOP accounts of active employees
based on the proportion of debt service paid in the year. Chromcraft Revington
accounts for its ESOP in accordance with AICPA Statement of Position 93-6,
Accounting for Employee Stock Ownership Plans. Accordingly, unearned ESOP shares
are reported as a reduction of stockholders' equity as reflected in the
Condensed Consolidated Statement of Stockholders' Equity of the Company. As
shares are committed to be released, Chromcraft Revington reports compensation
expense equal to the current market price of the shares, and the shares become
outstanding for earnings per share computations. ESOP compensation expense, a
non-cash charge, for the three and nine months ended October 1, 2005 was
$238,000 and $670,000, respectively, compared to $299,000 and $758,000,
respectively, for the prior year periods. ESOP shares consisted of the
following:
(In thousands)
---------------------------------------------
October 1, October 2, Dec. 31,
2005 2004 2004
------------- ----------- ------------
Allocated shares 184 120 184
Committed to be released shares 51 57 -
Unearned ESOP shares 1,755 1,823 1,806
------------- ----------- ------------
Total ESOP shares 1,990 2,000 1,990
============= =========== ============
Unearned ESOP shares, at cost $ 17,555 $ 18,231 $ 18,062
============= =========== ============
Fair value of unearned ESOP shares $ 23,839 $ 23,427 $ 22,216
============= =========== ============
8
Note 6. Earnings per Share of Common Stock
------------------------------------------
Weighted average shares used in the calculation of diluted earnings per share
included dilutive potential common shares, primarily stock options, of
approximately 76,000 and 62,000 for the three and nine months ended October 1,
2005, respectively, and 69,000 and 80,000 for the three and nine months ended
October 2, 2004, respectively.
Note 7. Stock Based Compensation
--------------------------------
The Company has two stock-based compensation plans. The Company accounts for
these plans under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock Issued to Employees, and related interpretations and
discloses the fair value of options granted as permitted by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
("Statement No. 123"). The estimated per share grant-date weighted average fair
value of stock options granted during the nine months ended October 1, 2005 was
$4.92 compared to $5.34 for the prior year period. The estimated per share
grant-date weighted average fair value of stock options granted during the three
months ended October 2, 2004 was $5.28. There were no stock option grants during
the third quarter of 2005. The following table illustrates the effect on net
earnings and earnings per share if the Company had applied the fair value
recognition provisions of Statement No. 123 to stock-based employee compensation
for the three and nine months ended October 1, 2005 and October 2, 2004.
(In thousands, except per share data)
-------------------------------------------------------------
Three Months Ended Nine Months Ended
---------------------------- --------------------------
October 1, October 2, October 1, October 2,
2005 2004 2005 2004
----------- ---------- ---------- ----------
Net earnings, as reported $ 1,191 $ 1,979 $ 5,540 $ 5,511
Add: Stock-based employee compensation
expense included in reported net earnings,
net of related tax effects 75 30 116 91
Deduct: Total stock-based employee
compensation expense determined under
fair-value based method for all awards,
net of related tax effects (101) (130) (327) (471)
----------- ---------- ---------- ----------
Pro forma net earnings $ 1,165 $ 1,879 $ 5,329 $ 5,131
=========== ========== ========== ==========
Earnings per share
Basic - as reported $ .28 $ .48 $ 1.30 $ 1.33
Basic - pro forma $ .27 $ .45 $ 1.25 $ 1.24
Diluted - as reported $ .27 $ .47 $ 1.28 $ 1.31
Diluted - pro forma $ .26 $ .45 $ 1.24 $ 1.23
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------
Overview
--------
For the last several years the North American furniture industry has been
increasingly competitive. Foreign manufacturers, primarily in China and other
Asian countries, have a substantial labor and overhead cost advantage as
compared to furniture manufacturers in North America. We expect these
competitive industry conditions to continue.
The Company's strategy is to focus its brands on attractive niche markets and to
service the fragmented furniture industry with product selection and service.
Key elements in this strategy are to maintain a low-cost operating structure to
ensure that the Company's products are a value to customers; utilize
build-to-demand and custom configuration capability to offer product variety and
speed of delivery; as well as, maintain a hybrid manufacturing
9
and offshore sourcing model to supply diverse styles required to serve each
niche market. Using this hybrid approach of domestic manufacturing and global
sourcing, the Company believes it is better able to control the quality of
furniture and service to its customers. Chromcraft Revington's competitiveness
is influenced by transportation costs, timely delivery of furniture to retailers
and product differentiation.
The Company has several different furniture brands, some of which have been
impacted more severely than others by competition. Chromcraft Revington closely
monitors market activity and, depending on business conditions, asset impairment
and restructuring charges could occur in the future. Also, the Company's
manufacturing operations have experienced inflationary price increases in raw
materials and other costs. The Company is seeking ways to mitigate this impact
through product engineering, offshore sourcing of low-cost components, use of
alternative raw materials, and other productivity improvements. Due to the
competitive environment, the Company may not be able to pass through significant
cost increases to its customers.
Results of Operations
---------------------
The following table sets forth the Condensed Consolidated Statements of Earnings
of Chromcraft Revington for the three and nine months ended October 1, 2005 and
October 2, 2004 expressed as a percentage of sales.
Three Months Ended Nine Months Ended
--------------------------- --------------------------
October 1, October 2, October 1, October 2,
2005 2004 2005 2004
----------- ----------- ---------- ----------
Sales 100.0 % 100.0% 100.0% 100.0%
Cost of sales 78.1 77.7 76.9 77.2
----------- ----------- --------- --------
Gross margin 21.9 22.3 23.1 22.8
Selling, general and administrative expenses 16.4 14.1 15.8 15.5
----------- ----------- --------- --------
Operating income 5.5 8.2 7.3 7.3
Interest expense 0.9 0.5 0.5 0.5
----------- ----------- --------- --------
Earnings before income taxes 4.6 7.7 6.8 6.8
Income tax expense 1.7 3.0 2.5 2.6
----------- ----------- --------- --------
Net earnings 2.9 % 4.7% 4.3% 4.2%
=========== =========== ========= ========
Consolidated sales for the third quarter ended October 1, 2005 of $40,836,000
represented a 2.0% decrease from $41,658,000 reported for the same quarter last
year. Shipments of dining room, bedroom and occasional furniture for the third
quarter of 2005 were lower as compared to the same period last year primarily
due to relative competitiveness. The sales decrease in these product categories
was partially offset by higher shipments of upholstered and commercial
furniture. Upholstered furniture shipments were higher in the third quarter of
2005 due to new product introductions as compared to the prior year period.
Shipments of commercial furniture, mainly in seating, were higher for the three
months ended October 1, 2005 primarily due to an improved business environment
in the office furniture industry.
Consolidated sales for the nine months ended October 1, 2005 decreased 1.4% to
$128,896,000 from $130,763,000 for the same period last year. Shipments of
dining room and bedroom furniture for 2005 were lower as compared to the prior
year period primarily due to relative competitiveness. The sales decrease in
these product categories was partially offset by higher shipments of
upholstered, commercial and occasional furniture. Sales of upholstered furniture
were higher in 2005 primarily due to new product introductions and increased
shipments of coordinated room packages of occasional and upholstered furniture.
Commercial furniture shipments, mainly in seating, were higher for the first
nine months of 2005 as compared to the same period last year primarily due an
improved business environment in the office furniture industry. Shipments of
occasional furniture for the nine months ended October 1, 2005 were up slightly
as compared to the prior year period primarily due to new product introductions.
Selling prices for the first nine months of 2005 were slightly higher compared
to the prior year period.
10
Gross margin as a percentage of sales was 21.9% and 23.1% for the three and nine
months ended October 1, 2005 compared to 22.3% and 22.8% for the three and nine
months ended October 2, 2004, respectively. The gross margin percentage decrease
in the third quarter of 2005 was primarily due to an unfavorable sales mix as
compared to the prior year period.
Selling, general and administrative expenses for the three months ended October
1, 2005 increased $839,000 to $6,720,000, or 16.4% of sales, from $5,881,000, or
14.1% of sales, for the year ago period. The increase was primarily due to
higher compensation related expenses and bad debt expense.
Selling, general and administrative expenses for the nine months ended October
1, 2005 were $20,301,000, or 15.8% of sales, as compared to $20,342,000, or
15.5% of sales, for the same period last year. Included in selling, general and
administrative expenses for first nine months of 2004 was a $1,100,000 charge to
reflect a supplemental retirement benefit to the former President and Chief
Executive Officer of the Company. Excluding this expense from the 2004 period,
selling, general and administrative expenses for the nine months ended October
1, 2005 were higher than the prior year period primarily due to increased
compensation related expenses and bad debt expense.
Interest expense for the three and nine months ended October 1, 2005 was
$342,000 and $660,000, respectively, as compared to $204,000 and $590,000,
respectively, for the same periods in 2004. Interest expense in 2005 included
the write off of $161,000 of unamortized bank financing fees associated with a
multi-bank credit facility that was replaced in the third quarter of 2005.
Chromcraft Revington's effective income tax rate was 36.9% for the three and
nine months ended October 1, 2005 as compared to 38.4% for the prior year
periods. The decrease in the effective tax rate for 2005 was primarily due to an
estimated tax deduction on qualified domestic production activities under a
provision of the American Jobs Creation Act of 2004.
Net earnings for the three and nine months ended October 1, 2005 were $1,191,000
and $5,540,000, respectively, as compared to $1,979,000 and $5,511,000,
respectively, for the prior year periods. Factors contributing to the earnings
change are outlined in the above discussion.
Financial Condition, Liquidity and Capital Resources
----------------------------------------------------
Operating activities provided $1,267,000 of cash during the nine months ended
October 1, 2005 as compared to $1,417,000 of cash used in the same period last
year. The increase in cash was primarily due to a lower investment in working
capital in 2005 as compared to the prior year period. The Company uses cash in
the first nine months of the year to support a seasonal build in working
capital, primarily in accounts receivables and inventories.
Investing activities used $1,047,000 of cash for capital expenditures during the
first nine months of 2005 as compared to $787,000 spent during the same period
last year. Chromcraft Revington expects capital expenditures in 2005 to be less
than $1,500,000.
Financing activities for the first nine months of 2005 used cash to reduce bank
indebtedness by $1,310,000 and $754,000 to repurchase Company common stock. In
addition, cash of $1,844,000 was generated from stock option exercises in the
first nine months of 2005. Financing activities for the first nine months of
2004 provided cash of $2,204,000, primarily from bank borrowings.
In September 2005, the Company entered into an unsecured revolving loan facility
("Facility") with a bank that allows the Company to borrow up to $35,000,000.
The Facility replaced a secured multi-bank credit agreement. The interest rate
under the Facility is determined at the time of borrowing, at the Company's
option, at either the bank's prime rate, or a rate based on the Federal Funds
rate or the London Interbank Offered Rate. The interest rate on borrowings
outstanding as of October 1, 2005 was approximately 4.75%. The Facility expires
on September 20, 2008.
On March 30, 2005, the Company purchased 65,987 shares of Chromcraft Revington
common stock from the former President and Chief Executive Officer of the
Company. The purchase price of $864,000, or $13.093 per share, was determined
based upon an average of the high and low selling prices of the Company's common
stock during a period
11
of five consecutive trading days as reported by the American Stock Exchange.
This share repurchase in 2005 is reflected net of related compensation expense
of $110,000.
Management expects that cash flow from operations and availability under its
bank revolving loan facility will be sufficient to meet future liquidity needs.
At October 1, 2005, the Company had approximately $28,700,000 in unused
availability under its bank revolving loan facility. Chromcraft Revington
expects to generate excess cash flow in 2005 which will be used to reduce bank
indebtedness, repurchase its common stock, pursue selective strategic
acquisitions or for general corporate purposes.
Recently Issued Accounting Standards
------------------------------------
In November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 151, Inventory Costs ("Statement
No. 151"). Statement No. 151 amends Accounting Research Bulletin No. 43, Chapter
4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs and wasted material. Statement No. 151
requires that those items be recognized as current-period charges and requires
that allocation of fixed production overhead to the cost of conversion be based
on the normal capacity of the production facilities. Statement No. 151 is
effective for fiscal years beginning after June 15, 2005. The Company does not
expect the adoption of Statement No. 151 to have a material impact on the
Company's financial condition or results of operations.
In December 2004, FASB issued Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payments ("Statement No. 123(R)"). Statement No.
123(R) replaces FASB Statement No. 123 and supersedes Accounting Principles
Board Opinion No. 25. Statement No. 123(R) will require the fair value of all
stock awards, including options, issued to employees to be recorded as an
expense over the related vesting period. Statement No. 123(R) also requires the
recognition of compensation expense for the fair value of any unvested stock
option awards existing at the date of adoption as the stock options vest. The
Securities and Exchange Commission ("Commission") amended FASB's compliance
dates for Statement No.123(R). The Commission's new rule allows a calendar
year-end company to delay compliance with Statement No. 123(R) until the first
quarter of 2006. The Company has not determined the impact of Statement No.
123(R).
Forward-Looking Statements
--------------------------
Certain information and statements contained in this report are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements can be generally identified as such
because they include future tense or dates, or are not historical or current
facts, or include words such as "expects", "may", "anticipates", "believes" or
words of similar import. Forward-looking statements are not guarantees of
performance or outcomes and are subject to certain risks and uncertainties that
could cause actual results or outcomes to differ materially from those reported,
expected or anticipated as of the date of this report.
Among such risks and uncertainties that could cause actual results or outcomes
to differ materially from those reported, expected or anticipated are general
economic conditions, import and domestic competition in the furniture industry,
market interest rates, consumer confidence levels, cyclical nature of the
furniture industry, consumer and business spending, changes in relationships
with customers, customer acceptance of existing and new products, new home and
existing home sales, raw material cost and availability, freight cost, and other
factors that generally effect business.
The Company does not undertake any obligation to update or revise publicly any
forward-looking statements to reflect information, events or circumstances after
the date of such statements or to reflect the occurrence of anticipated or
unanticipated events or circumstances.
12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
------------------------------------------------------------------
Borrowings under Chromcraft Revington's bank revolving loan facility bear
interest at a variable rate and, therefore, are subject to changes in interest
rates. A one-percentage point fluctuation in market interest rates would not
have a material impact on net earnings in 2005.
The Company purchases certain raw materials and finished furniture, primarily
from China. These purchases are fixed price contracts payable in U.S. dollars
and, therefore, the Company has no material foreign exchange rate risk exposure.
Item 4. Controls and Procedures
-------------------------------
Chromcraft Revington's principal executive officer and principal financial
officer have concluded, based upon their evaluation, that the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended), are effective as of the end of the
period covered by this Form 10-Q.
There have been no significant changes in Chromcraft Revington's internal
control over financial reporting that occurred during the quarter covered by
this Form 10-Q that may have materially affected, or are reasonably likely to
materially affect, Chromcraft Revington's internal control over financial
reporting.
PART II.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
-------------------------------------------------------------------
The following table represents information with respect to shares of Chromcraft
Revington common stock repurchased by the Company during the three months ended
October 1, 2005.
Purchase of Equity Securities
-----------------------------
Maximum number
Total number of (or approximate dollar
shares purchased value) of shares
Total number Average as part of that may yet be
of shares price paid publicly announced purchased under the
Period purchased per share plans or programs plans or programs
---------- ------------ ---------- ------------------ ---------------------
July 3, 2005 to July 30, 2005 - - - 702,965
July 31, 2005 to August 27, 2005 - - - 702,965
August 28, 2005 to October 1, 2005 - - - 702,965
Item 6. Exhibits
31.1 Certification of Chief Executive Officer required pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2 Certification of Chief Financial Officer required pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1 Certifications of Chief Executive Officer and Chief Financial
Officer required pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Chromcraft
Revington, Inc. has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chromcraft Revington, Inc.
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(Registrant)
Date: November 4, 2005 By: /s/ Frank T. Kane
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Frank T. Kane
Vice President-Finance
(Duly Authorized Officer and Principal
Accounting and Financial Officer)
14