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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 June 28, 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 1-13970
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
----------------------------------------------------
(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 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 - 6,056,090 shares as of August 6, 2003
================================================================================
INDEX
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Page Number
-----------
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Earnings (Loss) - Three and Six
Months Ended June 28, 2003 and June 29, 2002............................... 3
Condensed Consolidated Balance Sheets - June 28, 2003,
June 29, 2002 and December 31, 2002........................................ 4
Condensed Consolidated Statement of Stockholders' Equity - Six
Months Ended June 28, 2003................................................. 5
Condensed Consolidated Statement of Stockholders' Equity - Six
Months Ended June 29, 2002................................................. 6
Condensed Consolidated Statements of Cash Flows - Six
Months Ended June 28, 2003 and June 29, 2002............................... 7
Notes to Condensed Consolidated Financial Statements....................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation........................................... 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk................... 13
Item 4. Controls and Procedures...................................................... 14
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.......................... 14
Item 6. Exhibits and Reports on Form 8-K............................................. 15
Signatures................................................................................. 15
PART I
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings (Loss) (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Three Months Ended Six Months Ended
--------------------- ---------------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
--------- --------- --------- ---------
Sales $ 44,166 $ 54,660 $ 93,597 $ 115,474
Cost of sales 34,568 42,848 72,964 90,170
--------- --------- --------- ---------
Gross margin 9,598 11,812 20,633 25,304
Selling, general and administrative expenses 6,732 7,772 13,909 15,768
--------- --------- --------- ---------
Operating income 2,866 4,040 6,724 9,536
Interest expense 304 542 628 669
--------- --------- --------- ---------
Earnings before income taxes and cumulative
effect of a change in accounting principle 2,562 3,498 6,096 8,867
Income tax expense 973 1,329 2,316 3,369
--------- --------- --------- ---------
Earnings before cumulative effect of a
change in accounting principle 1,589 2,169 3,780 5,498
Cumulative effect of a change in accounting
principle (net of tax benefit) -- -- -- (26,727)
--------- --------- --------- ---------
Net earnings (loss) $ 1,589 $ 2,169 $ 3,780 $ (21,229)
========= ========= ========= =========
Net earnings per share of common stock before
cumulative effect of a change in accounting principle
Basic $ .38 $ .54 $ .92 $ .87
Diluted $ .38 $ .52 $ .90 $ .86
Net earnings (loss) per share of common stock after
cumulative effect of a change in accounting principle
Basic $ .38 $ .54 $ .92 $ (3.37)
Diluted $ .38 $ .52 $ .90 $ (3.37)
Shares used in computing earnings per share
Basic 4,131 4,031 4,116 6,299
Diluted 4,177 4,178 4,180 6,407
See accompanying notes to condensed consolidated financial statements
3
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
June 28, June 29, December 31,
2003 2002 2002
-------- -------- --------
Assets
------
Accounts receivable $ 19,893 $ 24,444 $ 18,542
Inventories 40,187 43,909 39,812
Other assets 1,707 5,673 1,040
-------- -------- --------
Current assets 61,787 74,026 59,394
Property, plant and equipment, net 36,847 40,428 38,705
Deferred income taxes and other 2,616 1,772 2,366
-------- -------- --------
Total assets $101,250 $116,226 $100,465
======== ======== ========
Liabilities and Stockholders' Equity
------------------------------------
Current portion of bank debt $ 6,250 $ 5,000 $ 5,000
Accounts payable 5,638 8,337 5,642
Accrued liabilities 13,340 13,881 14,611
-------- -------- --------
Current liabilities 25,228 27,218 25,253
Bank debt 19,350 38,900 23,050
Deferred compensation 2,857 6,154 2,514
Other long-term liabilities 3,681 4,028 3,878
-------- -------- --------
Total liabilities 51,116 76,300 54,695
Stockholders' equity 50,134 39,926 45,770
-------- -------- --------
Total liabilities and stockholders' equity $101,250 $116,226 $100,465
======== ======== ========
See accompanying notes to condensed consolidated financial statements
4
Condensed Consolidated Statement of Stockholders' Equity (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Capital in Unearned Total
Common Excess of ESOP Retained Treasury Stockholders'
Stock Par Value Shares Earnings Stock Equity
-------------------------------------------------------------------------
Balance at January 1, 2003 $ 76 $ 12,920 $(19,469) $ 70,363 $(18,120) $ 45,770
Net income -- -- -- 3,780 -- 3,780
ESOP compensation expense -- 80 336 -- -- 416
Stock option compensation
expense -- 99 -- -- -- 99
Purchase of treasury stock
(70,500 shares) -- -- -- -- (922) (922)
Exercise of stock options
(94,300 shares) 1 990 -- -- -- 991
----------------------------------------------------------------------
Balance at June 28, 2003 $ 77 $ 14,089 $(19,133) $ 74,143 $(19,042) $ 50,134
======== ======== ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements
5
Condensed Consolidated Statement of Stockholders' Equity (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
Capital in Unearned Total
Common Excess of ESOP Retained Treasury Stockholders'
Stock Par Value Shares Earnings Stock Equity
---------------------------------------------------------------------------------
Balance at January 1, 2002 $ 112 $ 11,908 $ -- $ 126,844 $ (18,120) $ 120,744
Net loss -- -- -- (21,229) -- (21,229)
ESOP compensation expense -- 83 197 -- -- 280
Stock option compensation
expense -- 58 -- -- -- 58
Repurchase and cancellation
of common stock
(3,695,418 shares) (37) -- -- (40,545) -- (40,582)
ESOP stock purchase
(2,000,000 shares) -- -- (20,000) -- -- (20,000)
Exercise of stock options
(89,080 shares) 1 654 -- -- -- 655
------------------------------------------------------------------------------
Balance at June 29, 2002 $ 76 $ 12,703 $ (19,803) $ 65,070 $ (18,120) $ 39,926
========= ========= ========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements
6
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Six Months Ended
---------------------
June 28, June 29,
2003 2002
-------- --------
Operating Activities
Net earnings (loss) $ 3,780 $(21,229)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Depreciation and amortization 2,280 2,443
Loss on disposal of property, plant, and equipment 6 100
Deferred income taxes (330) (180)
Non-cash goodwill impairment loss -- 26,727
Non-cash ESOP expenses 416 280
Stock option compensation expense 99 58
Changes in assets and liabilities
Accounts receivable (1,351) (3,419)
Inventories (375) (314)
Accounts payable and accrued liabilities (1,194) 4,564
Other (442) (346)
-------- --------
Cash provided by operating activities 2,889 8,684
-------- --------
Investing Activities
Capital expenditures (430) (983)
Proceeds on disposal of property, plant and equipment 2 119
-------- --------
Cash used in investing activities (428) (864)
-------- --------
Financing Activities
Net borrowing (repayment) under a bank revolving credit line (1,200) 18,900
Proceeds from a bank term loan -- 25,000
Principal payment on bank term loan (1,250) --
Purchase of common stock by ESOP -- (20,000)
Stock repurchase and related costs (922) (40,582)
Proceeds from exercise of stock options 911 655
-------- --------
Cash used in financing activities (2,461) (16,027)
-------- --------
Decrease in cash and cash equivalents -- (8,207)
Cash and cash equivalents at beginning of period -- 8,207
-------- --------
Cash and cash equivalents at end of period $ -- $ --
======== ========
See accompanying notes to condensed consolidated financial statements
7
Notes to Condensed Consolidated Financial Statements (unaudited)
Chromcraft Revington, Inc.
June 28, 2003
Note 1. Basis of Presentation
------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles 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 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 six month period ended June 28, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003.
The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all information and
footnotes required by generally accepted accounting principles 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, 2002.
Note 2. Inventories
--------------------
The components of inventories consisted of the following:
(In thousands)
------------------------------------
June 28, June 29, December 31,
2003 2002 2002
-------- -------- --------
Raw materials $ 10,280 $ 12,326 $ 11,988
Work in process 6,376 7,197 7,396
Finished goods 25,666 26,620 22,437
-------- -------- --------
Inventories at FIFO cost 42,322 46,143 41,821
LIFO reserve (2,135) (2,234) (2,009)
-------- -------- --------
$ 40,187 $ 43,909 $ 39,812
======== ======== ========
Note 3. Bank Debt
------------------
Long term bank debt consisted of the following:
(In thousands)
------------------------------------
June 28, June 29, December 31,
2003 2002 2002
-------- -------- --------
Term loan $ 20,000 $ 25,000 $ 21,250
Revolving credit line 5,600 18,900 6,800
-------- -------- --------
25,600 43,900 28,050
Less current portion of term loan 6,250 5,000 5,000
-------- -------- --------
$ 19,350 $ 38,900 $ 23,050
======== ======== ========
8
Note 4. Accrued Liabilities
----------------------------
Accrued liabilities consisted of the following:
(In thousands)
-----------------------------------
June 28, June 29, December 31,
2003 2002 2002
-------- -------- --------
Salaries, and wages commissions $ 1,561 $ 1,465 $ 1,333
Health and benefit plans 1,525 1,990 1,922
Vacation and holiday pay 1,188 1,123 1,027
Workers' compensation plans 944 1,460 1,215
Profit sharing and bonus 357 1,528 2,450
Other 7,765 6,315 6,664
-------- -------- --------
$ 13,340 $ 13,881 $ 14,611
======== ======== ========
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 the loan from the Company. As the ESOP loan is
repaid, shares are released and allocated to ESOP accounts of active employees
based on the proportion of the loan and related interest paid in the year.
Unearned ESOP shares are reported as a reduction of stockholders' equity as
reflected in the Condensed Consolidated Statements 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, was $200,000 and $416,000 for the three
and six months ended June 28, 2003, respectively, compared to $242,000 and
$280,000 for the three and six months ended June 29, 2002, respectively. The
ESOP shares were as follows:
(In thousands)
-----------------------------------
June 28, June 29, December 31,
2003 2002 2002
-------- -------- --------
Allocated shares 53 -- 53
Shares committed to be released 34 20 --
Unearned ESOP shares 1,913 1,980 1,947
-------- -------- --------
Total ESOP shares 2,000 2,000 2,000
======== ======== ========
Unearned ESOP shares, at cost $ 19,133 $ 19,803 $ 19,469
======== ======== ========
Fair value of unearned ESOP shares $ 23,893 $ 27,030 $ 25,407
======== ======== ========
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 (stock options) of approximately
46,000 and 64,000 for the three and six months ended June 28, 2003,
respectively, and 147,000 and 108,000 for the three and six months ended June
29, 2002, respectively.
9
Certain options to purchase shares of common stock were outstanding during the
second quarter and first six months of 2003 and 2002, but were not included in
the computation of diluted earnings per share because the options' exercise
prices were greater than the average market price of the common shares during
those periods and, therefore, their effect would be antidilutive. Options
excluded from the computation of diluted earnings per share and their weighted
average exercise prices were as follows:
2003 2002
------------------- -------------------
Average Average
Exercise Exercise
Shares Price Shares Price
------- -------- ------- --------
Second quarter 347,163 $ 14.15 106,038 $ 17.38
First six months 223,060 $ 15.26 190,560 $ 15.66
Note 7. Stock Based Compensation
---------------------------------
The Company has two stock-based compensation plans. The Company accounts for
those plans under the recognition and measurement principles of Accounting
Principles Board 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 following table summarizes the pro forma effects assuming compensation cost
for such awards had been recorded based upon the estimated fair value (in
thousands, except per share data):
Three Months Ended Six Months Ended
---------------------- ----------------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
-------- -------- -------- --------
Net earnings (loss), as reported $ 1,589 $ 2,169 $ 3,780 $(21,229)
Add: Stock-based employee compensation
expense included in reported net earnings
(loss), net of related tax effects 30 31 61 36
Deduct: Total stock-based employee
compensation expense determined under
fair-value based method for all awards
net of related tax effects (124) (165) (531) (223)
-------- -------- -------- --------
Pro forma net earnings (loss) $ 1,495 $ 2,035 $ 3,310 $(21,416)
======== ======== ======== ========
Earnings (loss) per share
Basic - as reported $ .38 $ .54 $ .92 $ (3.37)
Basic - pro forma $ .36 $ .50 $ .80 $ (3.40)
Diluted - as reported $ .38 $ .52 $ .90 $ (3.37)
Diluted - pro forma $ .36 $ .49 $ .80 $ (3.40)
10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
------------------------------------------------------------------------
General
-------
Chromcraft Revington designs, manufactures and sells residential and commercial
furniture through its wholly owned subsidiaries Chromcraft Corporation,
Peters-Revington Corporation, Silver Furniture Co., Inc., Cochrane Furniture
Company, Inc. and Korn Industries, Incorporated.
The following table sets forth the Condensed Consolidated Statements of Earnings
(Loss) of Chromcraft Revington for the three and six months ended June 28, 2003
and June 29, 2002 expressed as a percentage of sales.
Three Months Ended Six Months Ended
-------------------- ---------------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
----- ----- ----- -----
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 78.3 78.4 78.0 78.1
----- ----- ----- -----
Gross margin 21.7 21.6 22.0 21.9
Selling, general and
administrative expenses 15.2 14.2 14.9 13.6
----- ----- ----- -----
Operating income 6.5 7.4 7.1 8.3
Interest expense .7 1.0 .6 .6
----- ----- ----- -----
Earnings before income taxes and
cumulative effect of a change in
accounting principle 5.8 6.4 6.5 7.7
Income tax expense 2.2 2.4 2.5 2.9
----- ----- ----- -----
Earnings before cumulative effect of
a change in accounting principle 3.6 4.0 4.0 4.8
Cumulative effect of a change in
accounting principle -- -- -- (23.1)
----- ----- ----- -----
Net earnings (loss) 3.6 % 4.0 % 4.0 % (18.3)%
===== ===== ===== =====
Three and Six Months Ended June 28, 2003 Compared to Three and Six Months
Ended June 29, 2002
-------------------------------------------------------------------------
Consolidated sales for the three months ended June 28, 2003 decreased 19.2% to
$44,166,000 compared to $54,660,000 for the three months ended June 29, 2002.
For the first six months of 2003, consolidated sales were $93,597,000, an 18.9%
decrease from sales of $115,474,000 for the same period last year. The 2003
sales decline was primarily due to the ongoing weak economic environment, and
increased import competition, mainly from the Pacific Rim. Shipments of all
residential furniture categories were lower for the second quarter and first
half of 2003 compared to the same periods last year. Commercial furniture
shipments were lower for the second quarter compared to the second quarter of
2002. For the first six months of 2003, commercial furniture shipments were
higher as compared to the prior year period. In general, selling prices for the
first six months of 2003 were at approximately the same level as compared to the
prior year period.
Gross margin as a percentage of sales was 21.7% and 22.0% for the three and six
month periods ended June 28, 2003, respectively, compared to 21.6% and 21.9% for
the three and six month periods ended June 29, 2002, respectively. The Company
has maintained its gross margin percentage on a lower sales volume primarily due
to cost reductions, which were due, in part, to sourcing of low-cost
labor-intensive furniture components from the Pacific Rim.
11
Selling, general and administrative expenses as a percentage of sales were 15.2%
and 14.9% for the three and six months ended June 28, 2003, respectively,
compared to 14.2% and 13.6% for the three and six months ended June 29, 2002,
respectively. The increase for 2003 was primarily due to fixed costs being
spread over a lower sales volume.
Interest expense for the three and six months ended June 28, 2003 was $304,000
and $628,000, respectively, compared to $542,000 and $669,000 for the three and
six months ended June 29, 2002, respectively. The decrease in interest expense
for 2003 was primarily due to lower average bank borrowings during the periods.
Chromcraft Revington's effective income tax rate was 38% for the three and six
months ended June 28, 2003 as well as the three and six months ended June 29,
2002.
The Company adopted Financial Accounting Standards Board Statement No. 142,
"Goodwill and Other Intangible Assets" effective January 1, 2002 and recorded a
one time non-cash transition charge of $26,727,000 (net of tax benefit) for
impairment of goodwill in the first quarter of 2002. The loss was recorded as a
cumulative effect of a change in accounting principle.
Earnings per share on a diluted basis was $.38 and $.90 for the three and six
month periods ended June 28, 2003 as compared to diluted earnings per share
before an accounting change of $.52 and $.86 for the three and six month periods
ended June 29, 2002. The number of weighted average shares outstanding used in
the calculation of diluted earnings per share was 4,180,000 for the six month
period ended June 28, 2003 compared to 6,407,000 for the same period last year.
The lower average number of shares outstanding in the first half of 2003, as
compared to the prior year period, was primarily due to the purchase of
5,695,418 shares of Company common stock by Chromcraft Revington and its
employee stock ownership plan that was completed on March 15, 2002.
Liquidity and Capital Resources
-------------------------------
Operating activities provided $2,889,000 of cash during the six months ended
June 28, 2003, as compared to $8,684,000 for the same period last year. The
decrease in cash flow from operating activities in 2003 was primarily due to
lower cash earnings and an increase in working capital investment.
Investing activities used $428,000 of cash for net capital expenditures during
the first six months of 2003 as compared to $864,000 during the same period last
year. Chromcraft Revington expects capital expenditures in 2003 to be less than
$1,250,000.
Financing activities for the six months ended June 28, 2003 used cash to reduce
bank indebtedness and to acquire shares of Chromcraft Revington common stock.
During the first six months of 2003 Chromcraft Revington purchased, under a
stock repurchase plan, 70,500 shares of its common stock for $922,000. In
addition, stock option exercises provided $911,000 of cash in the first half of
2003.
Financing activities for the first six months of 2002 used cash to purchase
5,695,418 shares of common stock by Chromcraft Revington and its employee stock
ownership plan that was completed on March 15, 2002. The funds required to pay
for the common stock purchase were obtained from bank borrowings and available
cash.
Management expects that cash flow from operations and availability under its
bank revolving credit line will continue to be sufficient to meet future
liquidity needs. At June 28, 2003, Chromcraft Revington had approximately
$32,600,000 in unused availability under its bank revolving credit line.
Critical Accounting Policies
----------------------------
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" to Form 10-K for the year ended December 31, 2002.
12
2003 Outlook
------------
Current business conditions remain difficult. Sales order trends at the
beginning of the third quarter have not improved from the second quarter level.
As a result, the Company expects third quarter sales and earnings to be lower
compared to the same period in 2002.
Chromcraft Revington's strategy is to operate as a low-cost, high quality
manufacturer of residential and commercial furniture. To achieve this goal, the
Company has increased imports of low-cost labor-intensive furniture components
and finished furniture from the Pacific Rim to supplement the Company's domestic
furniture manufacturing. Using this blended approach of domestic manufacturing
and selective importing, the Company is better able to control the quality of
furniture and service to its customers.
Recently Issued Accounting Standards
------------------------------------
The Financial Accounting Standards Board recently issued Statement No. 149,
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities"
that amends and clarifies financial accounting and reporting for derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under Statement No. 133 "Accounting for
Derivative Instruments and Hedging Activities." This Statement is effective for
contracts entered into or modified after June 30, 2003. The Financial Accounting
Standards Board also recently issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity" that
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Chromcraft Revington does not expect the adoption of these statements to
have a significant effect on its results of operation or its financial position.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------
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" or words of similar import.
Forward-looking statements are not guarantees of results or performance 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 the risks and uncertainties that could cause actual results or outcomes to
differ materially from those reported, expected or anticipated are general
economic conditions, decline in new home or commercial office construction, the
cyclical nature of the furniture industry, import and domestic competition in
the furniture industry, change in interest rates, changes in relationships with
customers, customer acceptance of existing and new products, delays and
disruptions in the shipment of Chromcraft Revington's products, international
conflicts and other factors that generally affect its business.
The Company does not undertake any obligation to update or revise publicly any
forward-looking statements to reflect information, developments, events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events or circumstances.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------
Borrowings under Chromcraft Revington's bank agreement bear interest at a
variable rate and, therefore, are subject to changes in interest rates. The
Company supplements its domestic manufacturing by sourcing parts and finished
furniture primarily from the Pacific Rim. These purchases are payable in U.S.
dollars and, therefore, the Company has no material foreign exchange rate risk
exposure.
13
Item 4. Controls and Procedures
--------------------------------
(a) Evaluation of disclosure controls and procedures. Chromcraft Revington's
principal executive officer and principal financial officer have concluded
that the Company's disclosure controls and procedures (as defined in Rule
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended), based on their evaluation of these controls and procedures as of
the end of the period covered by this Form 10-Q, are effective.
Chromcraft Revington's management, including its principal executive
officer and principal financial officer, does not expect that the Company's
disclosure controls and procedures or its internal controls will prevent
all error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of
the control.
Over time, controls may become inadequate because of changes in conditions,
or the degree of compliance with the policies or procedures may
deteriorate. The design of any system of controls also is based, in part,
upon certain assumptions about the likelihood of future events, and there
can only be reasonable assurance that any design will succeed in achieving
its stated goals under all potential future conditions.
(b) Changes in internal controls. There have been no significant changes in
Chromcraft Revington's internal controls or in other factors that could
significantly affect these controls subsequent to the date of the
evaluation.
Part II
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
(a) Chromcraft Revington held its annual meeting of stockholders on May 1,
2003.
(b) All director nominees were elected to serve until the next annual meeting
of stockholders and until their successors are duly elected and qualified.
Set forth below are the votes cast for each director.
Votes Votes
Directors For Withheld
------------------- --------- --------
Stephen D. Healy 4,998,889 691,118
David L. Kolb 5,198,889 491,118
Larry P. Kunz 5,198,889 491,118
Theodore L. Mullet 5,198,889 491,118
Michael E. Thomas 4,998,889 691,118
Warren G. Wintrub 5,198,889 491,118
14
(c) Set forth below is the vote tabulation regarding the ratification of the
appointment of KPMG LLP as the independent auditors of the Company for
the fiscal year ending December 31, 2003.
Votes Cast
----------------------------
For Against Abstain
--------- ----------- -----------
5,656,282 32,100 1,625
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
3(iii) By-laws of the Registrant, as amended May 1, 2003 (filed
herewith).
31.1 Certification of Chief Executive Officer required pursuant to
Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended.
31.2 Certification of Chief Financial Officer required pursuant to
Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended.
32.1 Certification of Chief Executive 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).
32.2 Certification of 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).
(b) Reports on Form 8-K
On April 24, 2003, Chromcraft Revington, Inc. filed a report on Form
8-K, announcing first quarter 2003 operating results.
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: August 7, 2003 By: /s/ Frank T. Kane
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Frank T. Kane
Vice President-Finance
(Duly Authorized Officer and Principal
Accounting and Financial Officer)
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