-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KFbZ+mtnf+8qNyT9HY7GIqKfm7YAQeJY4N/pVGWlpEBHqMcgtWrCcSAy3+IUu0/W q8sRN6PDpvySLUOSnbE87w== /in/edgar/work/0000916641-00-001752/0000916641-00-001752.txt : 20001121 0000916641-00-001752.hdr.sgml : 20001121 ACCESSION NUMBER: 0000916641-00-001752 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITH MIDLAND CORP CENTRAL INDEX KEY: 0000924719 STANDARD INDUSTRIAL CLASSIFICATION: [3272 ] IRS NUMBER: 541727060 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13752 FILM NUMBER: 773589 BUSINESS ADDRESS: STREET 1: ROUTE 28 STREET 2: P O BOX 300 CITY: MIDLAND STATE: VA ZIP: 22728 BUSINESS PHONE: 5404393266 MAIL ADDRESS: STREET 1: P.O. BOX 300 STREET 2: P.O. BOX 300 CITY: MIDLAND STATE: VA ZIP: 22728 10QSB 1 0001.txt SMITH MIDLAND 10-QSB DATED 9/30/00 U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended Commission File Number September 30, 2000 1-13752 -------------------------------- -------------------- SMITH-MIDLAND CORPORATION ------------------------- (Exact Name of Small Business Issuer as Specified in Its Charter) Delaware 54-1727060 ---------- ---------- (State of Incorporation) (I.R.S. Employer I.D. No.) 5119 Catlett Road, P.O. Box 300, Midland, Virginia 22728 --------------------------------------------------------- (Address of Principal Executive Offices) (540) 439-3266 ----------------------------------------- (Issuer's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 --- --- As of November 13, 2000, the Company had outstanding 3,050,798 shares of Common Stock, $.01 par value per share. SMITH-MIDLAND CORPORATION INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER -----------
Item 1. Financial Statements Consolidated Balance Sheets (Unaudited); 3 September 30, 2000 and December 31, 1999 Consolidated Statements of Operations 4 (Unaudited); Three months ended September 30, 2000 and 1999 Consolidated Statements of Operations 5 (Unaudited); Nine months ended September 30, 2000 and 1999 Consolidated Statements of Cash Flows 6 (Unaudited); Nine months ended September 30, 2000 and 1999 Notes to Consolidated Financial Statements (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial 10 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16
2 PART I - Financial Information Item 1. Financial Statements -------------------- SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)
September 30, December 31, Assets 2000 1999 ------ ---- ---- Current assets: Cash and cash equivalents $ 352,511 $ 374,190 Accounts receivable: Trade - billed, less allowances for doubtful accounts of $283,524 and $323,474 4,004,636 3,557,938 Trade - Cost in excess of billings -- 123,332 Inventories: Raw materials 540,826 493,979 Finished goods 1,310,693 1,013,958 Prepaid expenses and other assets 79,923 46,656 ----------- ----------- Total current assets 6,288,589 5,610,053 ----------- ----------- Property and equipment, net 2,613,348 2,608,145 ----------- ----------- Other assets: Note receivable, officer 638,347 638,347 Other 321,669 317,845 ----------- ----------- Total other assets 960,016 956,192 ----------- ----------- Total Assets $ 9,861,953 $ 9,174,390 =========== =========== Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Current maturities of notes payable $ 372,776 $ 228,025 Accounts payable - trade 1,558,021 1,690,853 Accrued expenses and other liabilities 1,331,403 1,324,021 Trade - Billings in excess of cost 294,987 -- Customer deposits 292,316 172,914 ----------- ----------- Total current liabilities 3,849,503 3,415,813 Notes payable - less current maturities 4,226,336 4,350,644 Notes payable - related parties 89,682 96,875 ----------- ----------- Total Liabilities 8,165,521 7,863,332 ----------- ----------- Stockholders' equity: Preferred stock, $.01 par value; authorized 1,000,000 shares, none outstanding -- -- Common stock, $.01 par value; authorized 8,000,000 shares, issued 3,091,718 shares, outstanding 3,050,798 shares 30,917 30,857 Additional capital 3,453,222 3,450,085 Treasury stock (102,300) (102,300) Retained earnings (deficit) (1,685,407) (2,067,584) ----------- ----------- Total Stockholders' Equity 1,696,432 1,311,058 ----------- ----------- Total Liabilities and Stockholders' Equity $ 9,861,953 $ 9,174,390 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 3 SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30, 2000 1999 ---------- ---------- Revenue $4,110,102 $3,690,595 Cost of goods sold 3,015,023 2,748,836 ---------- ---------- Gross profit 1,095,079 941,759 ---------- ---------- Operating expenses: General and administrative expenses 523,369 540,131 Selling expenses 153,578 126,855 ---------- ---------- Total operating expenses 676,947 666,986 ---------- ---------- Operating income 418,132 274,773 ---------- ---------- Other income (expense): Royalties 65,374 76,960 Interest expense (139,264) (154,597) Interest income 16,752 28,565 Other (38,423) (81,638) ---------- ---------- Total other income (expense) (95,561) (130,710) ---------- ---------- Income (loss) before income taxes 322,571 144,063 Income tax expense (benefit) -- -- ---------- ---------- Net income (loss) $ 322,571 $ 144,063 ========== ========== Basic and diluted earnings per share $ .11 $ .05 ========== ========== Weighted average common shares outstanding 3,050,798 3,044,798 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Nine Months Ended September 30, September 30, 2000 1999 ----------- ----------- Revenue $10,364,713 $11,472,031 Cost of goods sold 7,845,231 8,944,995 ----------- ----------- Gross profit 2,519,482 2,527,036 ----------- ----------- Operating expenses: General and administrative expenses 1,657,494 1,555,311 Selling expenses 343,799 407,580 ----------- ----------- Total operating expenses 2,001,293 1,962,891 ----------- ----------- Operating income 518,189 564,145 ----------- ----------- Other income (expense): Royalties 247,666 185,449 Interest expense (416,376) (407,986) Interest income 52,128 52,631 Other (19,430) (42,416) ----------- ----------- Total other income (expense) (136,012) (212,322) ----------- ----------- Income before income taxes 382,177 351,823 Income tax expense (benefit) -- -- ----------- ----------- Net income $ 382,177 $ 351,823 =========== =========== Basic and diluted earnings per share $ .13 $ .12 =========== =========== Weighted average common shares outstanding 3,049,988 3,044,798 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 5 SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 2000 1999 ------------ ---------- Cash flows from operating activities: Cash received from customers $ 10,703,402 $ 11,743,459 Cash paid to suppliers and employees (10,074,073) (10,797,333) Interest paid (416,376) (407,986) Other 32,698 (28,569) ------------ ------------ Net cash provided (absorbed) by operating activities 245,651 509,571 ------------ ------------ Cash flows from investing activities: Purchases of property and equipment (284,170) (495,683) Decrease (increase) in officer note receivable -- -- ------------ ------------ Net cash absorbed by investing activities (284,170) (495,683) ------------ ------------ Cash flows from financing activities: Proceeds from borrowings 561,823 105,969 Repayment of borrowings-related party (7,193) (5,517) Repayments of borrowings (541,380) (153,033) Proceeds from issuance of common stock, net 3,590 -- ------------ ------------ Net cash provided (absorbed) by financing activities 16,840 (52,581) Decrease (increase) in cash - restricted -- 387,462 ------------ ------------ Net increase (decrease) in cash and cash equivalents (21,679) 348,769 Cash and cash equivalents at beginning of period 374,190 207,661 ------------ ------------ Cash and cash equivalents at end of period $ 352,511 $ 556,430 ============ ============ Reconciliation of net income (loss) to net cash provided (absorbed) by operating activities: Net income $ 382,177 $ 351,823 Adjustments to reconcile net income to net cash provided (absorbed) by operating activities: Depreciation and amortization 278,574 250,541 Decrease (increase) in: Accounts receivable - billed (446,698) 233,660 Accounts receivable - unbilled 418,319 (6,150) Inventories (343,582) (74,512) Prepaid expenses and other assets (37,041) (96,523) Increase (decrease) in: Accounts payable - trade (132,832) (278,410) Accrued expenses and other liabilities (235,289) 96,317 Accrued expenses and other liabilities 7,382 270,673 Customer deposits 119,402 (141,531) ------------ ------------- Net cash provided (absorbed) by operating activities $ 245,651 $ 509,571 ============ =============
The accompanying notes are an integral part of these consolidated financial statements. 6 SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2000 (Unaudited) Basis of Presentation As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-QSB, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the consolidated financial statements and related notes included in the Smith-Midland Corporation's Annual Report on Form 10-KSB for the year ended December 31, 1999. In the opinion of the management of Smith-Midland Corporation (the "Company"), the accompanying financial statements reflect all adjustments of a normal recurring nature which were necessary for a fair presentation of the Company's results of operations for the three- and nine-month periods ended September 30, 2000 and 1999. The results disclosed in the consolidated statements of operations are not necessarily indicative of the results to be expected for any future periods. Principles of Consolidation The Company's accompanying consolidated financial statements include the accounts of Smith-Midland Corporation, a Delaware corporation, and its wholly owned subsidiaries: Smith-Midland Corporation, a Virginia corporation; Easi-Set Industries, Inc., a Virginia corporation; Smith-Carolina Corporation, a North Carolina corporation; Concrete Safety Systems, Inc., a Virginia corporation; and Midland Advertising & Design, Inc., a Virginia corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. Reclassifications Certain reclassifications have been made to the prior years' consolidated financial statements to conform to the 2000 presentation. Inventories Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or market. 7 SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Property and Equipment Property and equipment, net is stated at depreciated cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years ----- Buildings........................ 10-33 Trucks and automotive equipment.. 3-10 Shop machinery and equipment..... 3-10 Land improvements................ 10-30 Office equipment................. 3-10 Income Taxes The provision for income taxes is based on earnings reported in the financial statements. A deferred income tax asset or liability is determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax purposes. Deferred income tax expense is measured by the change in the deferred income tax asset or liability during the year. No provision for income taxes has been made for the three- and nine-month periods ended September 30, 2000 and 1999, as the Company does not expect to incur federal income tax expense for 2000 and did not incur federal income tax expense during 1999. Revenue Recognition The Company primarily recognizes revenue on the sale of its standard precast concrete products at shipment date, including revenue derived from any projects to be completed under short-term contracts. Installation services for precast concrete products, leasing and royalties are recognized as revenue as they are earned on an accrual basis. Licensing fees are recognized under the accrual method unless collectibility is in doubt, in which event revenue is recognized as cash is received. Certain sales of soundwall, architectural precast panels and SlenderwallTM concrete products are recognized upon completion of production and customer site inspections. Provisions for estimated losses on contracts are made in the period in which such losses are determined. 8 SMITH-MIDLAND CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Estimates The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Earnings Per Share Earnings per share is based on the weighted average number of shares of Common Stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilutive effect of securities that could share in earnings of an entity. For the three- and nine-month periods ended September 30, 2000 and 1999 there was no material dilutive effect on earnings per share. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General The Company generates revenues primarily from the sale, licensing, leasing, shipping and installation of precast concrete products for the construction, utility and farming industries. The Company's operating strategy has involved producing innovative and proprietary products, including SlenderwallTM, a patent-pending, lightweight, energy efficient concrete and steel exterior wall panel for use in building construction; J-J HooksTM Highway Safety Barrier, a patented, positive-connected highway safety barrier; Sierra Wall, a sound barrier primarily for roadside use; and transportable concrete buildings. In addition, the Company produces custom order precast concrete products with various architectural surfaces, typically used in commercial building construction, as well as utility vaults, farm products such as cattleguards, water and feed troughs. In 1998, the Company began work on a contract to renovate the Bradley Hall building at Rutgers University (the "Bradley Hall project"). This project, which was completed in October 1999, involved the design, production, and installation of Slenderwall panels by the Company. While executing the Bradley Hall project, the original structure was found to be not structurally sufficient to support the installation of the Slenderwall panels as originally designed. This led to cost overruns relating to re-design of the panels, production of the panels with additional steel and reinforcing, and installation costs. Management estimates that the cost overruns to the Company for the project are approximately $1.6 million and estimates that the total loss on the job before recovery on any claims by the Company is approximately $1.45 million, which has been booked in its entirety as of December 31, 1999. In 1999, the general contractor filed claims on the Company's behalf in the amount of $1.1 million. As of September 30, 2000, $497,000 of the contract claim has been included in accounts receivable. The Company is currently involved in litigation over this matter, and there can be no assurance that the loss will not exceed the $1.45 million estimate or that the Company will be able to collect any of its claim. The Company believes that, based on prior experience in claims settlement, it will ultimately collect the recorded claim receivable. This Form 10-QSB contains forward-looking statements which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements and the results for the three and nine months ended September 30, 2000 are not necessarily indicative of the results for the Company's operations for the year ending December 31, 2000. Factors that might cause such a difference include, but are not limited to, product demand, the impact of competitive products and pricing, capacity and supply constraints or difficulties, general business and economic conditions, the effect of the Company's accounting policies and other risks detailed in the Company's Annual Report on Form 10-KSB and other filings with the Securities and Exchange Commission. 10 Results of Operations Three months ended September 30, 2000 compared to the three months ended September 30, 1999 For the three months ended September 30, 2000, the Company had total revenue of $4,110,102 compared to total revenue of $3,690,595 for the three months ended September 30, 1999, an increase of $419,507, or 11%. Total product sales were $3,578,211 for the three months ended September 30, 2000 compared to $3,052,211 for the same period in 1999, an increase of $526,000, or 17%. The increase was primarily due to increased sales in architectural precast products, SlenderwallTM and highway safety barrier, offset, in part, by decreased soundwall sales in the 2000 period compared to the 1999 period. The increase in architectural precast and SlenderwallTM sales is a result of the extremely active commercial building activity in the markets served by Smith-Midland. Shipping and installation revenue was $531,891 for the three months ended September 30, 2000 and $638,384 for the same period in 1999, a decrease of $106,493, or 17%. The decrease was attributable to lower installation activity during the three-month period in 2000, compared to the same period in 1999. Total cost of goods sold for the three months ended September 30, 2000 was $3,015,023, an increase of $266,187, or 10%, from $2,748,836 for the three months ended September 30, 1999. Total cost of goods sold, as a percentage of total revenue however, decreased to 73.3% for the three months ended September 30, 2000, from 74.5% for the three months ended September 30, 1999 mainly due to normal year-to-year variations in the Company's operations and product mix. For the three months ended September 30, 2000, the Company's general and administrative expenses decreased $16,762 to $523,369 from $540,131 during the same period in 1999. The 3% decrease is attributed in part to lower professional fees offset by higher legal fees and insurance costs. Selling expenses for the three months ended September 30, 2000 increased $26,722, or 21%, to $153,577 from $126,855 for the three months ended September 30, 1999, resulting primarily from increased salary expenses due to higher commissions for the 2000 period and increased costs for preparing contract bids. The Company's operating income for the three months ended September 30, 2000 was $418,132 compared to operating income of $274,773 for the three months ended September 30, 1999, an increase of $143,359, or 52%. The increased operating income was a result of the higher sales in the current year and the slightly improved gross profit margin, which was partially offset by increased operating expenses. Royalty income totaled $65,374 for the three months ended September 30, 2000, compared to $76,960 for the same three months in 1999. The decrease of $11,586, or 15%, was primarily due to a decrease in product sales by the Company's licensees. Interest expense was $139,264 for the three months ended September 30, 2000, 11 compared to $154,597 for the three months ended September 30, 1999. The decrease of $15,333, or 10%, was due to a lower average interest rate during the 2000 period partially offset by an increase in the average debt outstanding. Net income was $322,571 for the three months ended September 30, 2000, compared to net income of $144,063 for the same period in 1999. The basic and diluted net income per share for the current three month period was $.11 compared $.05 per share for the three months ended September 30, 1999. Nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 For the nine months ended September 30, 2000, the Company had total revenue of $10,364,713 compared to total revenue of $11,472,031 for the nine months ended September 30, 1999, a decrease of $1,107,318, or 10%. Total product sales were $8,633,337 for the nine months ended September 30, 2000, compared to $9,141,418 for the same period in 1999, a decrease of $508,081, or 6%. The decrease resulted primarily from lower sales of Slenderwall(TM), soundwall, and transportable building sales during the 2000 period, partially offset by increased sales of architectural precast products. Shipping and installation revenue was $1,731,376 for the nine months ended September 30, 2000 and $2,330,613 for the same period in 1999, a decrease of $599,237, or 26%. The decrease is attributable to decreased installation revenue related to SlenderwallTM and architectural precast contracts in the 2000 period, as compared to the 1999 period, as well as lower shipping revenues due to the lower overall sales volume. Total cost of goods sold for the nine months ended September 30, 2000 was $7,845,231, a decrease of $1,099,764, or 12%, from $8,944,995 for the nine months ended September 30, 1999, mainly as a result of the lower sales volume. The cost of goods sold as a percentage of total revenue decreased to 75.7% for the nine months ended September 30, 2000, from 78.0% for the nine months ended September 30, 1999, due in part to recognition of $362,000 of Bradley Hall project costs for which only $97,000 of revenues were recorded in the 1999 period. For the nine months ended September 30, 2000, the Company's general and administrative expenses increased $102,183, or 7%, to $1,657,494, from $1,555,311 during the same period in 1999. The increase was primarily attributed to increased costs for personnel recruitment, legal services and insurance. Selling expenses for the nine months ended September 30, 2000 decreased $63,781, or 16%, to $343,799 from $407,580 for the nine months ended September 30, 1999. The decrease was due in part to reduced salary expenses from staff vacancies during the 2000 period as compared to the 1999 period. The Company's operating income for the nine months ended September 30, 2000 was $518,189, compared to operating income of $564,145 for the nine months ended September 30, 1999, a decrease of $45,956, or 8%. The lower operating 12 income for the current nine month period resulted from the reduced sales volume experienced in the first two quarters of the fiscal year. Royalty income totaled $247,666 for the nine months ended September 30, 2000, compared to $185,449 for the same nine months in 1999. The increase of $62,217, or 34%, was due to increased start-up license fees and increased building and barrier royalties based on increased sales activity by the Company's licensees in the 2000 period as compared to the 1999 period. Interest expense was $416,376 for the nine months ended September 30, 2000, compared to $407,986 for the nine months ended September 30, 1999. The increase of $8,390, or 2%, was due to higher levels of debt outstanding in the 2000 period but with lower average interest rates. Net income was $382,177 for the nine months ended September 30, 2000, compared to net income of $351,823 for the same period in 1999. Net income per share for the current nine month period was $.13 compared to net income per share of $.12 for the nine months ended September 30, 1999 with 3,049,988 weighted average shares outstanding in the 2000 period versus 3,044,798 in the 1999 period. Liquidity and Capital Resources The Company has financed its capital expenditures, operating requirements and growth to date primarily with proceeds from operations, its initial public offering and bank and other borrowings. The Company had $4,688,794 of indebtedness at September 30, 2000, of which $372,776 was scheduled to mature within twelve months. In June 1998, the Company successfully restructured substantially all of its debt into one $4,000,000 note with First International Bank ("FIB"), formerly the First National Bank of New England. The Company closed on this loan on June 25, 1998. The Company obtained a twenty three year term on this note at 1.5% above prime, secured by equipment and real estate. The term of the note improved the Company's current debt ratio and debt service. In addition to paying off current debt of approximately $3.0 million, the Company received approximately $832,000 in restricted funds, to be used only for plant expansion and new equipment. Such funds were fully expended by June 30, 1999. The loan is guaranteed, in part, by the U.S. Department of Agriculture Rural Business- Cooperative Service. Under the terms of the note, the Company's unfinanced fixed asset expenditures are limited to $300,000 per year for a five year period. In addition, FIB will permit chattel mortgages on purchased equipment not to exceed $200,000 on an annual basis so long as the Company is not in default. The Company was also granted a $500,000 operating line of credit by FIB. This commercial revolving promissory note, which carries a variable interest rate of 1% above prime, was recently renewed and is now scheduled to terminate on May 1, 2001. On December 20, 1999, the Company secured an additional term loan of $500,000 from FIB. The term loan is payable in monthly installments over a five year period and carries an interest rate of 1.75% above prime. Capital spending totaled $284,170 in the nine month period ended September 30, 13 2000, which was a decrease of 43% from $495,683 in the comparable period of the prior year, primarily from the completion, in 1999, of a 16,000 square foot plant addition to the Company's facility in Midland, Virginia. This plant addition was financed with restricted funds received in 1998 as part of the $4,000,000 FIB loan as mentioned above. Planned capital expenditures for 2000 are limited as stated above by the FIB loan agreement. No other significant cash commitments for capital expenditures are planned in 2000. As a result of the Company's substantial debt burden, the Company is especially sensitive to changes in the prevailing interest rates. Fluctuations in such interest rates may materially and adversely affect the Company's ability to finance its operations either by increasing the Company's cost to service its current debt, or by creating a more burdensome refinancing environment, if interest rates should increase. The Company's cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 45 to 75 days after the products are produced. This payment schedule has resulted in liquidity problems for the Company because it must bear the cost of production for its products long before it receives payment. In the event cash flow from operations, collection of claims, and existing credit facilities are not adequate to support operations, the Company would be required to obtain alternative sources of both short-term and long-term financing, for which there can be no assurance of obtaining. Other Comments The Company services the construction industry primarily in areas of the United States where construction activity is inhibited by adverse weather during the winter. As a result, the Company traditionally experiences reduced revenues from December through March and realizes the substantial part of its revenues during the other months of the year. The Company typically experiences lower profits, or losses, during the winter months, and must have sufficient working capital to fund its operations at a reduced level until the spring construction season. Management believes that the Company's operations have not been materially affected by inflation. 14 PART II - Other Information Item 1. Legal Proceedings. ----------------- Reference is made to Item 3 of the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999 and Item 1 of the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2000 for information as to reported legal proceedings. Item 2. Changes in Securities and Use of Proceeds. None. ----------------------------------------- Item 3. Defaults Upon Senior Securities. None. ------------------------------- Item 4. Submission of Matters to a Vote of Security Holders. None. --------------------------------------------------- Item 5. Other Information. None. ----------------- Item 6. Exhibits and Reports on Form 8-K. -------------------------------- A. The following Exhibit is filed herewith: Exhibit No. Title ---------- ----- 27 Financial Data Schedule B. Report on Form 8-K. None. 15 SIGNATURES ---------- In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SMITH-MIDLAND CORPORATION Date: November 20, 2000 By: /s/ Rodney I. Smith ------------------------------------- Rodney I. Smith Chairman of the Board, Chief Executive Officer and President (principal executive officer) Date: November 20, 2000 By: /s/ Robert E. Albrecht, Jr. ------------------------------ Robert E. Albrecht, Jr. Chief Financial Officer (principal financial officer) 16
EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 352,511 0 4,004,636 283,524 1,851,519 6,288,589 7,974,300 5,360,952 9,861,953 3,849,503 0 0 0 30,917 1,665,515 9,861,953 10,364,713 10,664,507 7,845,231 10,282,330 0 0 416,376 382,177 0 382,177 0 0 0 382,177 .13 .13
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