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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 September 27, 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
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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 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 - 5,965,890 shares as of October 27, 2003
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INDEX
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Page Number
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Earnings (Loss) -
Three and Nine Months Ended September 27, 2003 and
September 28, 2002........................................ 3
Condensed Consolidated Balance Sheets -
September 27, 2003, September 28, 2002 and
December 31, 2002......................................... 4
Condensed Consolidated Statement of Stockholders' Equity -
Nine Months Ended September 27, 2003...................... 5
Condensed Consolidated Statements of Cash Flows - Nine
Months Ended September 27, 2003 and September 28, 2002.... 6
Notes to Condensed Consolidated Financial Statements...... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation.......................... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.. 12
Item 4. Controls and Procedures..................................... 12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................ 13
Signatures................................................................ 14
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 Nine Months Ended
----------------------- -----------------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2003 2002 2003 2002
--------- --------- --------- ---------
Sales $ 44,951 $ 49,676 $ 138,548 $ 165,150
Cost of sales 36,186 38,416 109,150 128,586
--------- --------- --------- ---------
Gross margin 8,765 11,260 29,398 36,564
Selling, general and administrative expenses 7,084 7,141 20,993 22,909
Other (3,650) -- (3,650) --
--------- --------- --------- ---------
Operating income 5,331 4,119 12,055 13,655
Interest expense 276 525 904 1,194
--------- --------- --------- ---------
Earnings before income taxes and cumulative
effect of a change in accounting principle 5,055 3,594 11,151 12,461
Income tax expense 2,436 1,366 4,752 4,735
--------- --------- --------- ---------
Earnings before cumulative effect of a
change in accounting principle 2,619 2,228 6,399 7,726
Cumulative effect of a change in accounting
principle (net of tax benefit of $1,453) -- -- -- (26,727)
--------- --------- --------- ---------
Net earnings (loss) $ 2,619 $ 2,228 $ 6,399 $ (19,001)
========= ========= ========= =========
Net earnings per share of common stock before
cumulative effect of a change in accounting principle
Basic $ .63 $ .55 $ 1.55 $ 1.39
Diluted $ .62 $ .53 $ 1.53 $ 1.37
Net earnings (loss) per share of common stock after
cumulative effect of a change in accounting principle
Basic $ .63 $ .55 $ 1.55 $ (3.43)
Diluted $ .62 $ .53 $ 1.53 $ (3.43)
Shares used in computing earnings per share
Basic 4,127 4,059 4,120 5,547
Diluted 4,209 4,167 4,190 5,655
See accompanying notes to condensed consolidated financial statements
3
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Sept. 27, Sept. 28, Dec. 31,
2003 2002 2002
-------- -------- --------
Assets
------
Accounts receivable $ 23,021 $ 24,030 $ 18,542
Inventories 36,400 43,745 39,812
Other assets 2,326 5,308 1,040
-------- -------- --------
Current assets 61,747 73,083 59,394
Property, plant and equipment, net 35,846 39,586 38,705
Other long-term assets 1,087 2,022 2,366
-------- -------- --------
Total assets $ 98,680 $114,691 $100,465
======== ======== ========
Liabilities and Stockholders' Equity
------------------------------------
Current portion of bank debt $ 6,250 $ 5,000 $ 5,000
Accounts payable 6,177 6,457 5,642
Accrued liabilities 12,372 15,927 14,611
-------- -------- --------
Current liabilities 24,799 27,384 25,253
Bank debt 17,000 35,050 23,050
Deferred compensation 3,024 5,841 2,514
Other long-term liabilities 2,042 4,020 3,878
-------- -------- --------
Total liabilities 46,865 72,295 54,695
Stockholders' equity 51,815 42,396 45,770
-------- -------- --------
Total liabilities and stockholders' equity $ 98,680 $114,691 $100,465
======== ======== ========
See accompanying notes to condensed consolidated financial statements
4
Condensed Consolidated Statement of Stockholders' Equity (unaudited)
Chromcraft Revington, Inc.
(Dollars in thousands)
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 -- -- -- 6,399 -- 6,399
ESOP compensation expense -- 132 503 -- -- 635
Stock option compensation
expense -- 148 -- -- -- 148
Purchase of treasury stock
(168,700 shares) -- -- -- -- (2,226) (2,226)
Exercise of stock options
(103,800 shares) 1 1,088 -- -- -- 1,089
------------------------------------------------------------------------------
Balance at September 27, 2003 $ 77 $ 14,288 $(18,966) $ 76,762 $(20,346) $ 51,815
======== ======== ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements
5
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
Nine Months Ended
-----------------------
Sept. 27, Sept. 28,
2003 2002
-------- --------
Operating Activities
Net earnings (loss) $ 6,399 $(19,001)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Depreciation and amortization 3,412 3,621
Loss on disposal of property, plant, and equipment 11 97
Deferred income taxes 1,501 525
Non-cash gain on the resolution of a claim (3,650) --
Non-cash goodwill impairment loss -- 26,727
Non-cash ESOP expenses 635 504
Stock option compensation expense 148 107
Changes in assets and liabilities
Accounts receivable (4,479) (3,005)
Inventories 3,412 (150)
Other current assets (1,286) (196)
Accounts payable and accrued liabilities 67 4,081
Other 412 (496)
-------- --------
Cash provided by operating activities 6,582 12,814
-------- --------
Investing Activities
Capital expenditures (566) (1,321)
Proceeds on disposal of property, plant and equipment 2 124
-------- --------
Cash used in investing activities (564) (1,197)
-------- --------
Financing Activities
Net borrowing (repayment) under a bank revolving credit line (2,300) 16,300
Proceeds from a bank term loan -- 25,000
Principal payments on bank term loan (2,500) (1,250)
Purchase of common stock by ESOP -- (20,000)
Stock repurchases and related costs (2,226) (40,529)
Proceeds from exercise of stock options 1,008 655
-------- --------
Cash used in financing activities (6,018) (19,824)
-------- --------
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
6
Notes to Condensed Consolidated Financial Statements (unaudited)
Chromcraft Revington, Inc.
September 27, 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 nine month period ended September 27, 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. Other Income
--------------------
Operating income for the three and nine months ended September 27, 2003 included
a $3,650,000 non-cash gain on the resolution of a claim in connection with the
Company's earlier acquisition of a subsidiary.
Note 3. Inventories
--------------------
The components of inventories consisted of the following:
(In thousands)
------------------------------------
Sept. 27, Sept. 28, Dec. 31,
2003 2002 2002
-------- -------- --------
Raw materials $ 9,494 $ 13,256 $ 11,988
Work in process 6,634 7,292 7,396
Finished goods 22,407 25,431 22,437
-------- -------- --------
Inventories at FIFO cost 38,535 45,979 41,821
LIFO reserve (2,135) (2,234) (2,009)
-------- -------- --------
$ 36,400 $ 43,745 $ 39,812
======== ======== ========
Note 4. Bank Debt
------------------
Long term bank debt consisted of the following:
(In thousands)
------------------------------------
Sept. 27, Sept. 28, Dec. 31,
2003 2002 2002
-------- -------- --------
Term loan $ 18,750 $ 23,750 $ 21,250
Revolving credit line 4,500 16,300 6,800
-------- -------- --------
23,250 40,050 28,050
Less current portion of term loan 6,250 5,000 5,000
-------- -------- --------
$ 17,000 $ 35,050 $ 23,050
======== ======== ========
7
Note 5. Accrued Liabilities
----------------------------
Accrued liabilities consisted of the following:
(In thousands)
-----------------------------------
Sept. 27, Sept. 28, Dec. 31,
2003 2002 2002
--------- --------- --------
Salaries, wages and commissions $ 1,786 $ 1,650 $ 1,333
Health and benefit plans 1,553 1,842 1,922
Vacation and holiday pay 1,311 1,422 1,027
Workers' compensation plans 879 1,571 1,215
Profit sharing and bonus 650 1,945 2,450
Other 6,193 7,497 6,664
------- ------- -------
$12,372 $15,927 $14,611
======= ======= =======
Note 6. 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 $219,000 and $635,000 for the three
and nine months ended September 27, 2003, respectively, compared to $224,000 and
$504,000 for the three and nine months ended September 28, 2002, respectively.
ESOP shares consisted of the following:
(In thousands)
-----------------------------------
Sept. 27, Sept. 28, Dec. 31,
2003 2002 2002
--------- --------- --------
Allocated shares 53 -- 53
Shares committed to be released 50 36 --
Unearned ESOP shares 1,897 1,964 1,947
------- ------- -------
Total ESOP shares 2,000 2,000 2,000
======= ======= =======
Unearned ESOP shares, at cost $18,966 $19,636 $19,469
======= ======= =======
Fair value of unearned ESOP shares $23,542 $25,998 $25,407
======= ======= =======
Note 7. 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
82,000 and 70,000 for the three and nine months ended September 27, 2003,
respectively, and 108,000 and 108,000 for the three and nine months ended
September 28, 2002, respectively.
Certain options to purchase shares of common stock were outstanding during the
third quarter and first nine 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
8
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
------ ------- ------ -------
Third quarter 200,560 $ 15.56 138,900 $ 16.61
First nine months 215,560 $ 15.35 138,900 $ 16.61
Note 8. 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 Nine Months Ended
-------------------- --------------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2003 2002 2003 2002
--------- --------- --------- ---------
Net earnings (loss), as reported $ 2,619 $ 2,228 $ 6,399 $(19,001)
Add: Stock-based employee
compensation expense included
in reported net earnings (loss),
net of related tax effects 31 30 92 66
Deduct: Total stock-based employee
compensation expense determined
under fair-value based method for
all awards net of related tax effects (98) (95) (629) (318)
------- ------- ------- --------
Pro forma net earnings (loss) $ 2,552 $ 2,163 $ 5,862 $(19,253)
======= ======= ======= ========
Earnings (loss) per share
Basic - as reported $ .63 $ .55 $ 1.55 $ (3.43)
Basic - pro forma $ .62 $ .53 $ 1.42 $ (3.47)
Diluted - as reported $ .62 $ .53 $ 1.53 $ (3.43)
Diluted - pro forma $ .61 $ .53 $ 1.41 $ (3.47)
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.
9
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.
The following table sets forth the Condensed Consolidated Statements of Earnings
(Loss) of Chromcraft Revington for the three and nine months ended September 27,
2003 and September 28, 2002 expressed as a percentage of sales.
Three Months Ended Nine Months Ended
--------------------- ---------------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2003 2002 2003 2002
--------- --------- --------- ---------
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 80.5 77.3 78.8 77.9
-------- -------- -------- --------
Gross margin 19.5 22.7 21.2 22.1
Selling, general and
administrative expenses 15.7 14.4 15.1 13.9
Other (8.1) -- (2.6) --
-------- -------- -------- --------
Operating income 11.9 8.3 8.7 8.2
Interest expense .6 1.1 .7 .7
-------- -------- -------- --------
Earnings before income taxes
and cumulative effect of a
change in accounting principle 11.3 7.2 8.0 7.5
Income tax expense 5.5 2.7 3.4 2.8
-------- -------- -------- --------
Earnings before cumulative 5.8 4.5 4.6 4.7
effect of a change in
accounting principle
Cumulative effect of a change
in accounting principle -- -- -- (16.2)
-------- -------- -------- --------
Net earnings (loss) 5.8 % 4.5 % 4.6 % (11.5)%
======== ======== ======== ========
Three and Nine Months Ended September 27, 2003 Compared to Three and Nine Months
Ended September 28, 2002
--------------------------------------------------------------------------------
Consolidated sales for the three months ended September 27, 2003 decreased 9.5%
to $44,951,000 compared to $49,676,000 for the prior year period. For the first
nine months of 2003, consolidated sales decreased 16.1% to $138,548,000 compared
to sales of $165,150,000 for the same period last year. The 2003 sales decline
was primarily due to import competition and a weak economic environment.
Shipments of dining room, bedroom, occasional and commercial furniture were
lower for the three and nine months ended September 27, 2003, as compared to the
prior year periods. Shipments of upholstered furniture were slightly higher in
the third quarter as compared to the same period in 2002. For the first nine
months of 2003, upholstered furniture shipments were lower as compared to the
prior year period. In general, selling prices for the first nine months of 2003
were at approximately the same level as compared to the prior year period.
Gross margin decreased $2,495,000 to $8,765,000, or 19.5% of sales, for the
three months ended September 27, 2003 from $11,260,000, or 22.7% of sales, for
the same period in 2002. Gross margin decreased $7,166,000 to $29,398,000, or
21.2% of sales, for the nine months ended September 27, 2003 from $36,564,000,
or 22.1% of sales, for the same period in 2002. Gross margin in the 2003 periods
decreased by $950,000 for an inventory write down for slow moving bedroom
furniture. The impact of the inventory write down was partially offset by lower
workers compensation expense of $244,000 and
10
$868,000 for the three and nine month periods in 2003, respectively, as compared
to prior year periods. Excluding these items, the gross margin percentage
decrease in 2003 was primarily due to reduced production levels which impacted
fixed cost absorption.
Operating income for the three and nine months ended September 27, 2003 included
a $3,650,000 non-recurring non-cash gain on the resolution of a claim in
connection with the Company's earlier acquisition of a subsidiary.
Selling, general and administrative expenses decreased $57,000 to $7,084,000, or
15.7% of sales, for the three months ended September 27, 2003 from $7,141,000,
or 14.4% of sales, for the same period in 2002. The cost percentage increase was
primarily due to an increase in advertising and related expenses and fixed costs
spread over a lower sales volume.
Selling, general and administrative expenses decreased $1,916,000 to
$20,993,000, or 15.1% of sales, for the nine months ended September 27, 2003
from $22,909,000, or 13.9% of sales, for the same period in 2002. The lower
expense in 2003 was due, in part, to reduced incentive compensation of
$1,071,000. The higher cost percentage for the first nine months of 2003 was
primarily due to fixed costs spread over a lower sales volume.
Interest expense for the three and nine months ended September 27, 2003 was
$276,000 and $904,000, respectively, compared to $525,000 and $1,194,000 for the
same periods in 2002, respectively. The decrease in interest expense for 2003
was primarily due to lower bank borrowings. Bank debt was reduced in 2003 from
excess cash flow generated from operations.
Chromcraft Revington's effective income tax rate was 48.2% and 42.6% for the
three and nine months ended September 27, 2003, respectively, compared to 38.0%
for the same periods in 2002, respectively. The effective income tax rate was
higher in 2003 due to additional income tax expense of $515,000 for a change in
the estimate of the tax basis of certain acquired assets.
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 $.62 and $1.53 for the three and nine
month periods ended September 27, 2003, respectively, as compared to diluted
earnings per share before an accounting change of $.53 and $1.37 for the same
periods in 2002, respectively. The $3,650,000 non-cash gain on the resolution of
a claim in connection with the Company's earlier acquisition of a subsidiary
added $.54 to earnings per share on a diluted basis in 2003.
The number of weighted average shares outstanding used in the calculation of
diluted earnings per share was 4,190,000 for the nine month period ended
September 27, 2003 compared to 5,655,000 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 $6,582,000 of cash during the nine months ended
September 27, 2003, as compared to $12,814,000 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 $564,000 of cash for net capital expenditures during
the first nine months of 2003 as compared to $1,197,000 during the same period
last year. Chromcraft Revington expects capital expenditures in 2003 to be less
than $1,000,000.
Financing activities for the first nine months of 2003 used $4,800,000 of cash
to reduce bank indebtedness and $2,226,000 of cash to acquire 168,700 shares of
Chromcraft Revington common stock. In addition, stock option exercises provided
$1,008,000 of cash in 2003.
11
Financing activities for the first nine months of 2002 used cash to purchase and
cancel 3,695,418 shares of Chromcraft Revington common stock. In addition,
during 2002, the Company's employee stock ownership plan trust purchased
2,000,000 shares of Chromcraft Revington common stock. The funds required to pay
for these common stock purchases 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 September 27, 2003, Chromcraft Revington had approximately
$38,100,000 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" in the Company's Form 10-K for the year ended December
31, 2002.
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 "plans" 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 such risks and uncertainties are general economic conditions; import and
domestic competition in the furniture industry; cyclical nature of the furniture
industry; changes in relationships with customers; customer acceptance of
existing and new products; delays or disruptions in the shipment of Chromcraft
Revington's products; new home and office construction; international conflict
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.
12
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 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
31.1 Certification of Chief Executive Officer required pursuant
to Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended (filed herewith).
31.2 Certification of Chief Financial Officer required pursuant
to Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended (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).
(b) Reports on Form 8-K
On July 23, 2003, Chromcraft Revington, Inc. filed a report on Form
8-K, announcing second quarter 2003 operating results.
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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.
---------------------------------------
(Registrant)
Date: November 6, 2003 By: /s/ Frank T. Kane
---------------- ---------------------------------------
Frank T. Kane
Vice President-Finance
(Duly Authorized Officer and Principal
Accounting and Financial Officer)
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