NPK » Topics » Liquidity and Capital Resources

This excerpt taken from the NPK 10-Q filed May 15, 2009.

Liquidity and Capital Resources

Net cash provided by operating activities was $40,935,000 and $12,940,000 for the three months ended April 5, 2009 and March 30, 2008, respectively. The principal factors contributing to the increase can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the current quarter were: net earnings of $10,854,000 and lower accounts receivable levels stemming from cash collections on customer sales. Of particular note during the prior quarter were: net earnings of $6,250,000, lower accounts receivable levels stemming from cash collections on customer sales, higher inventory levels in the Defense segment related to the inability to bill several lots of ammunition that were produced to specifications and accepted, but subsequently placed on hold, and lower payable levels in the Defense segment.

Net cash used by investing activities during the first three months of 2009 was $8,515,000, as compared to $2,596,000 used during the first three months of 2008. The change in investing activity cash flow is attributable to the increased net purchases of marketable securities stemming from increased cash provided by operating activities.

Cash flows from financing activities for the first three months of 2009 and 2008 primarily differed as a result of the $1.30 per share increase in the extra dividend paid during those periods.  

Working capital decreased by $25,042,000 to $222,585,000 at April 5, 2009, for the reasons stated above. The Company's current ratio was 5.0 to 1.0 at April 5, 2009, as compared to 5.8 to 1.0 at December 31, 2008.

The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The bulk of its marketable securities are invested in the tax exempt variable rate demand notes described above and in municipal bonds that are pre-refunded with escrowed U.S. Treasuries. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. Comparative yields during the first quarter of 2009 were lower than those in the first quarter of the preceding year, reflecting the seven federal funds rate reductions made during 2008. The lower yields, combined with the reduction in the Company’s investment holdings, served to decrease interest income. There can be no assurance that interest rates will not continue to decline. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

This excerpt taken from the NPK 10-Q filed Nov 7, 2008.

Liquidity and Capital Resources


Net cash provided by operating activities was $9,026,000 during the first nine months of 2008, as compared to $11,619,000 provided during the first nine months of 2007.  The principal factors behind the decrease in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows, combined with the increase in net earnings of $5,351,000.  Of particular note were increases in cash used to pay accrued liabilities and payables that were only partially offset by increases in cash received from collections of the higher levels of receivables at year-end.  Inventory was also a factor; although inventory levels as of the third quarter increased from year-end in both years, the increases from year-end 2006 to the third quarter 2007, the first full year of delivery of product under the 40mm Systems contract, was more dramatic than the increase from year-end 2007 to third quarter 2008.  


Net cash used by investing activities during the first nine months of 2008 was $2,528,000, as compared to $19,716,000 used during the first nine months of 2007. The change in investment activity cash flow is primarily attributable to the increased use in 2008 of proceeds from the “sale” (which includes tendering cash-like variable rate demand notes) and maturities of marketable securities to fund operating activities, offset by the absence in 2008 of the 2007 earnout payment made in connection with the 2006 acquisition of certain assets of Amron, LLC by the Company’s defense segment.



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Cash flows from financing activities for the first nine months of 2008 and 2007 primarily differed as a result of the $.05 and $.40 per share increases in the regular and extra dividends paid during those periods, respectively.  


Working capital increased by $228,000 to $227,232,000 at September 28, 2008.  The Company's current ratio was 5.2 to 1.0 at September 28, 2008, as compared to 4.0 to 1.0 at December 31, 2007.


As of September 28, 2008, there were approximately $560,000, $190,000, and $60,000 of open equipment/facilities purchase commitments to expand the product lines in the defense, housewares/small appliances, and absorbent products segments, respectively.  The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.


The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.


This excerpt taken from the NPK 10-Q filed Aug 8, 2008.

Liquidity and Capital Resources

Net cash provided by operating activities was $9,897,000 during the first six months of 2008, as compared to $17,992,000 provided during the first six months of 2007.  The principal factors behind the decrease in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows, combined with the increase in net earnings of $3,862,000.  Of particular note were increases in cash used to pay accrued liabilities and payables that were only partially offset by increases in cash received from the higher levels of receivables at year-end.  

Net cash provided by investing activities during the first six months of 2008 was $10,601,000, as compared to $24,773,000 used during the first six months of 2007. The change in investment activity cash flow is primarily attributable to the increased use in 2008



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of proceeds from the “sale” (which includes tendering cash-like variable rate demand notes) and maturities of marketable securities to fund operating activities, offset by the absence in 2008 of the 2007 earnout payment made in connection with the 2006 acquisition of certain assets of Amron, LLC by the Company’s defense segment.

Cash flows from financing activities for the first three months of 2008 and 2007 primarily differed as a result of the $.05 and $.40 per share increases in the regular and extra dividends paid during those periods, respectively.  

Working capital decreased by $11,012,000 to $215,992,000 at June 29, 2008.  The Company's current ratio was 5.4 to 1.0 at June 29, 2008, as compared to 4.0 to 1.0 at December 31, 2007.

As of June 29, 2008, there were approximately $550,000, $370,000, and $160,000 of open equipment/facilities purchase commitments to expand the product lines in the defense, absorbent products, and housewares/small appliances segments, respectively.  The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

This excerpt taken from the NPK 10-Q filed May 9, 2008.

Liquidity and Capital Resources

 

Net cash provided by operating activities was $12,940,000 during the first three months of 2008, as compared to $19,153,000 provided during the first three months of 2007. The principal factors behind the decrease in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows, combined with the increase in net earnings of $6,250,000. Of particular note was the comparative change in cash used to fund inventories, which in largest part was due to the defense lots that were not billed referenced in the above discussion section. Increases in cash used to pay accrued liabilities and payables were offset by increases in cash received from the higher levels of receivables at year-end.

 




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Net cash used in investing activities during the first three months of 2008 was $2,596,000, as compared to $6,412,000 used during the first three months of 2007. The change in investment activity cash flow is primarily attributable to the absence in 2008 of the 2007 earnout payment made in connection with the 2006 acquisition of certain assets of Amron, LLC by the Company’s defense segment.

 

Cash flows from financing activities for the first three months of 2008 and 2007 primarily differed as a result of the $.05 and $.40 per share increases in the regular and extra dividends paid during those periods, respectively.

 

Working capital decreased by $21,307,000 to $205,697,000 at March 30, 2008. The Company’s current ratio was 4.9 to 1.0 at March 30, 2008, as compared to 4.0 to 1.0 at December 31, 2007.

 

As of March 30, 2008, there were approximately $1,100,000, $900,000, and $100,000 of open equipment/facilities purchase commitments to expand the product lines in the defense, absorbent products, and housewares/small appliances segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

 

This excerpt taken from the NPK 10-Q filed May 8, 2008.

Liquidity and Capital Resources

 

Net cash provided by operating activities was $17,992,000 during the first six months of 2007, as compared to $9,379,000 used during the first six months of 2006. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows, combined with the increase in net earnings of $6,438,000.

 

Net cash used in investing activities during the first six months of 2007 was $24,773,000, as compared to $1,745,000 used during the first six months of 2006. The change is attributable to two factors, one of which served to partially offset the other. First, more cash was used to purchase instruments classified as marketable securities in the current period than in the prior period. The second and partially offsetting factor was that, although cash was used in both periods in connection with the purchase of certain assets of Amron, LLC, smaller payments were made in the current period than in the prior period. (See Note H).

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of July 1, 2007 and December 31, 2006, $74,681,000 and $70,778,000 of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents. Part of the change reflected in investing activities is simply the timing of the tendering of these notes.

 

Cash flows from financing activities for the first six months of 2007 and 2006 primarily differed as a result of the $.03 and $1.65 per share increases in the regular and extra dividends paid during those periods, respectively.

 

Working capital decreased by $13,202,000 to $196,952,000 at July 1, 2007. The Company’s current ratio was 4.5 to 1.0 at July 1, 2007 and 4.3 to 1.0 at December 31, 2006.

 

As of July 1, 2007, there were approximately $2,420,000, $1,860,000, and $490,000, and of open equipment/facilities purchase commitments to expand the product lines in the defense, absorbent products, and housewares/small appliances segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.




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The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

 

This excerpt taken from the NPK 10-Q filed May 8, 2008.

Liquidity and Capital Resources

 

Net cash provided by operating activities was $11,619,000 during the first nine months of 2007, as compared to $17,841,000 used during the first nine months of 2006. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

 

Net cash used in investing activities during the first nine months of 2007 was $19,716,000, as compared to $11,846,000 provided during the first nine months of 2006. The change is attributable to two factors, one of which served to partially offset the other. First, more cash was used to purchase instruments classified as marketable securities in the current period than in the prior period. The second and partially offsetting factor was that, although cash was used in both periods in connection with the purchase of certain assets of Amron, LLC, smaller payments were made in the current period than in the prior period. (See Note H).

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of September 30, 2007 and December 31, 2006, $66,232,000 and $70,778,000 of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents. Part of the change reflected in investing activities is simply the timing of the tendering of these notes.

 

Cash flows from financing activities for the first nine months of 2007 and 2006 primarily differed as a result of the $.03 and $1.65 per share increases in the regular and extra dividends paid during those periods, respectively.

 

Working capital decreased by $3,564,000 to $206,590,000 at September 30, 2007. The Company’s current ratio was 4.2 to 1.0 at September 30, 2007 as compared to 4.3 to 1.0 at December 31, 2006.

 

As of September 30, 2007, there were approximately $2,980,000 and $1,420,000 of open equipment/facilities purchase commitments to expand the product lines in the defense and absorbent products segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 





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The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

 

 

This excerpt taken from the NPK 10-Q filed May 8, 2008.

Liquidity and Capital Resources

 

Net cash provided by operating activities was $19,153,000 during the first three months of 2007, as compared to $2,251,000 provided during the first three months of 2006. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows, combined with the increase in net earnings of $3,103,000.

 

Net cash used in investing activities during the first three months of 2007 was $6,412,000, as compared to $4,258,000 used during the first three months of 2006. The change in cash flow is primarily attributable to two factors, one of which served to partially offset the other. First, more cash was used to purchase instruments classified as marketable securities in the current period than in the prior period. The second and partially offsetting factor was that, although cash was used in both periods in connection with the purchase of certain assets of Amron, LLC, smaller payments were made in the current period than in the prior period. (See Note H).

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of April 1, 2007 and December 31, 2006, $68,484,000 and $70,778,000 of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents. Part of the change reflected in investing activities is simply the timing of the tendering of these notes.

 

Cash flows from financing activities for the first three months of 2007 and 2006 primarily differed as a result of the $.03 and $1.65 per share increases in the regular and extra dividends paid during those periods, respectively.         

 

Working capital decreased by $19,274,000 to $190,880,000 at April 1, 2007. The Company’s current ratio was 4.7 to 1.0 at April 1, 2007, as compared to 4.3 to 1.0 at December 31, 2006.

 

As of April 1, 2007, there were approximately $4,700,000, $600,000, and $560,000 of open equipment/facilities purchase commitments to expand the product lines in the defense, housewares/small appliances, and absorbent products segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.




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The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

 

These excerpts taken from the NPK 10-K filed Mar 17, 2008.
LIQUIDITY AND CAPITAL RESOURCES

 

Cash provided by operating activities was $38,032,000 during 2007 compared to $5,506,000 during the comparable period in the prior year. The principal factors behind the increase can be found in the changes in the components of working capital within the statement of cash flows, combined with the increase in net earnings of $10,663,000.

 

Cash used in investing activities was $32,096,000 during 2007 compared to $6,281,000 during 2006. The change in cash flow is primarily attributable to two factors, one of which served to partially offset the other. First, more cash was used to purchase instruments classified as marketable securities in 2007 than in 2006. The second and partially offsetting factor was that, although cash was used in both years in connection with the purchase of certain assets of Amron, LLC, smaller payments were made in 2007 than in 2006. (See Note L).

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of December, 31, 2007 and 2006, $67,471,000 and $70,778,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents.

 

Cash used in financing activities for 2007 and 2006 differed primarily as a result of the $.03 and $1.65 per share increases in the regular and extra dividends, respectively, paid during those years.

 

As a result of the foregoing factors, cash and cash equivalents decreased in 2007 by $19,981,000 to $26,715,000.

 

Working capital increased by $16,850,000 to $227,004,000 at December 31, 2007, reflecting the increased sales and production activities in the defense and absorbent segments and sales in the housewares/small appliances segment. The Company’s current ratio was 4.0 to 1.0 at fiscal 2007 year-end, compared to 4.3 to 1.0 at the end of fiscal 2006.

 

The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in these segments if the appropriate return on investment is projected.




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The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The bulk of its marketable securities are invested in the tax exempt variable rate demand notes described above and in bonds that are pre-refunded with escrowed U.S. Treasuries. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. Comparative yields during the first half of 2007 were higher than those in the proceeding year, and in turn, average yields for the full year exceeded those enjoyed in 2006, notwithstanding the federal funds rate reductions in the final four months of 2007. The higher yields served to increase interest income, despite the reduction in the Company’s investment holdings. There can be no assurance that interest rates will not decline. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies, and is not controllable by the Company.

 

LIQUIDITY AND CAPITAL RESOURCES



 



Cash provided by operating activities was $38,032,000 during 2007 compared to $5,506,000 during the comparable period in the prior year. The principal factors behind the increase can be found in the changes in the components of working capital within the statement of cash flows, combined with the increase in net earnings of $10,663,000.



 



Cash used in investing activities was $32,096,000 during 2007 compared to $6,281,000 during 2006. The change in cash flow is primarily attributable to two factors, one of which served to partially offset the other. First, more cash was used to purchase instruments classified as marketable securities in 2007 than in 2006. The second and partially offsetting factor was that, although cash was used in both years in connection with the purchase of certain assets of Amron, LLC, smaller payments were made in 2007 than in 2006. (See Note L).



 



Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of December, 31, 2007 and 2006, $67,471,000 and $70,778,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par
plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents.



 



Cash used in financing activities for 2007 and 2006 differed primarily as a result of the $.03 and $1.65 per share increases in the regular and extra dividends, respectively, paid during those years.



 



As a result of the foregoing factors, cash and cash equivalents decreased in 2007 by $19,981,000 to $26,715,000.



 



Working capital increased by $16,850,000 to $227,004,000 at December 31, 2007, reflecting the increased sales and production activities in the defense and absorbent segments and sales in the housewares/small appliances segment. The Company’s current ratio was 4.0 to 1.0 at fiscal 2007 year-end, compared to 4.3 to 1.0 at the end of fiscal 2006.



 



The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in these segments if the appropriate return on investment is projected.











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The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The bulk of its marketable securities are invested in the tax exempt variable rate demand notes described above and in bonds that are pre-refunded with escrowed U.S. Treasuries. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. Comparative yields during the first half of 2007 were higher than those in the proceeding year, and in turn, average yields for the full year exceeded those enjoyed in 2006, notwithstanding the federal funds rate reductions in the final four months of 2007. The higher yields served to increase interest income, despite the reduction in the
Company’s investment holdings. There can be no assurance that interest rates will not decline. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies, and is not controllable by the Company.



 



This excerpt taken from the NPK 10-Q filed Oct 9, 2007.

Liquidity and Capital Resources

 

Cash provided by operating activities was $2,251,000 during the first three months of 2006, as compared to $1,056,000 provided during the first three months of 2005. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

 

Net cash used in investing activities during the first three months of 2006 was 4,258,000, as compared to $1,341,000 provided during the first three months of 2005. The change is attributable primarily to the acquisition of Amron, LLC which occurred during the first quarter of 2006. (See Note H.)

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of April 2, 2006 and 2005, $36,236,000 and $39,444,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents.

 

Cash flows from financing activities for the first three months of 2006 and 2005 primarily differed as a result of the $.45 per share increase in the extra dividend paid during those periods.

 

Working capital decreased by $27,316,000 to $185,405,000 at April 2, 2006. The Company’s current ratio was 6.2 to 1.0 at April 2, 2006, as compared to 6.3 to 1.0 at December 31, 2005.

 

As of April 2, 2006, there were approximately $700,000 of open equipment purchase commitments to expand the product line in its absorbent products segment. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.





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The Company may have additional plant closing costs stemming from its 2001-2002 plant closing (see Note D) but is not aware of any such costs. Plant closing activities are relatively unique and infrequent for the Company; therefore, these activities possess inherent risk that changes in previously recorded estimates could occur. On October 9, 2006, the Company decided to consolidate its adult incontinence production capabilities and, as a result, began the process of relocating its adult incontinence manufacturing equipment from its Marietta, Georgia facility to its Eau Claire, Wisconsin facility. The Company estimated the total cost of the relocation activities to be $1,019,000, including $829,000 for the disassembly, transportation, installation of machinery and equipment and other related costs and $190,000 for one-time termination benefits to affected employees.

 

This excerpt taken from the NPK 10-Q filed Oct 9, 2007.

Liquidity and Capital Resources

 

Cash used in operating activities was $17,841,000 during the first nine months of 2006, as compared to $12,053,000 used during the first nine months of 2005. The principal factors behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

 

Net cash provided by investing activities during the first nine months of 2006 was $11,846,000, as compared to $11,179,000 during the first nine months of 2005. The change is attributable to two factors, one of which served to partially offset the other. First, more instruments matured and were placed in cash equivalents during the review period than in the prior year’s period. The second and partially offsetting factor was the larger cash outlay experienced in the current review period stemming from the acquisition of Amron, LLC (see Note H) compared to the prior year’s level of cash outlays for equipment used in the expansion of the absorbent products segment and modification of the Jackson, Mississippi plant to a warehousing and shipping facility.

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of October 1, 2006 and December 31, 2005, $49,983,000 and $39,444,000 of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents. Part of the change reflected in investing activities is simply the timing of the tendering of these notes.

 

Cash flows from financing activities for the first nine months of 2006 and 2005 primarily differed as a result of the $.45 per share increase in the extra dividend paid during those periods.

 

Working capital decreased by $16,439,000 to $196,282,000 at October 1, 2006. The Company’s current ratio was 4.2 to 1.0 at October 1, 2006, as compared to 6.3 to 1.0 at December 31, 2005.

 

As of October 1, 2006, there were approximately $5,980,000, $1,050,000, and $890,000 of open equipment/facilities purchase commitments to expand the product lines in the defense, absorbent products, and housewares/small appliances segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

 




16

 

The Company may have additional plant closing costs stemming from its 2001-2002 plant closing (see Note D), but is not aware of any such costs. Plant closing activities are relatively unique and infrequent for the Company; therefore, these activities possess inherent risk that changes in previously recorded estimates could occur. On October 9, 2006, the Company decided to consolidate its adult incontinence production capabilities and, as a result, began the process of relocating its adult incontinence manufacturing equipment from its Marietta, Georgia facility to its Eau Claire, Wisconsin facility. The Company estimated the total cost of the relocation activities to be $1,019,000, including $829,000 for the disassembly, transportation, installation of machinery and equipment and other related costs and $190,000 for one-time termination benefits to affected employees.

 

This excerpt taken from the NPK 10-Q filed Oct 9, 2007.

Liquidity and Capital Resources

 

Cash used in operating activities was $9,379,000 during the first six months of 2006, as compared to $5,535,000 during the first six months of 2005. The principal factors behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

 

Net cash used in investing activities during the first six months of 2006 was $1,745,000, as compared to $6,938,000 provided during the first six months of 2005. The change is attributable primarily to the acquisition of Amron, LLC which occurred during the first quarter of 2006. (See Note H.)

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of July 2, 2006, and December 31, 2005, $35,783,000 and $39,444,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents. Part of the change reflected in investing activities is simply the timing of the tendering of these notes.

 

Cash flows from financing activities for the first six months of 2006 and 2005 primarily differed as a result of the $.45 per share increase in the extra dividend paid during those periods.

 

Working capital decreased by $22,247,000 to $190,474,000 at July 2, 2006. The Company’s current ratio was 5.3 to 1.0 at July 2, 2006, as compared to 6.3 to 1.0 at December 31, 2005.

 

As of July 2, 2006, there were approximately $4,360,000 and $680,000 of open equipment/facilities purchase commitments to expand the product lines in the defense and absorbent products segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

 

The Company may have additional plant closing costs stemming from its 2001-2002 plant closing (see Note D) but is not aware of any such costs. Plant closing activities are relatively unique and infrequent for the Company; therefore, these activities possess inherent risk that changes in previously recorded estimates could occur. On October 9, 2006, the Company decided to consolidate its adult incontinence production capabilities and, as a result, began the process of relocating its adult incontinence manufacturing equipment from its Marietta, Georgia facility to its Eau Claire, Wisconsin facility. The Company estimated the total cost of the relocation activities to be $1,019,000, including $829,000 for the disassembly, transportation, installation of machinery and equipment and other related costs and $190,000 for one-time termination benefits to affected employees.

 




16

 

This excerpt taken from the NPK 10-K filed Aug 27, 2007.
LIQUIDITY AND CAPITAL RESOURCES

 

Cash provided by operating activities was $5,506,000 during 2006 compared to $22,337,000 during the comparable period in the prior year. The principal factors behind the increase can be found in the changes in the components of working capital within the statement of cash flows.

 

Cash used in investing activities was $6,281,000 during 2006 compared to $33,574,000 cash provided during 2005. The change in cash flow is primarily attributable to two factors. First, fewer marketable securities were converted into cash and cash equivalents during 2006 than in 2005, either as a result of tendering of demand instruments with put options or through the maturity of securities. The second contributing factor was the larger cash outlay experienced in 2006 stemming from the acquisition of Amron, LLC (see Note L) compared to the cash outlays in 2005 for equipment used in the expansion of the absorbent products segment and modification of the Jackson, Mississippi plant to a warehousing and shipping facility.

 

Based on the accounting profession’s 2005 interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s income portfolio. As of December, 31, 2006 and 2005, $70,778,000 and $39,444,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers, and thus provide the liquidity of cash equivalents.

 

Cash used in financing activities for 2006 and 2005 differed primarily as a result of the $.45 per share increase in the extra dividend paid during those years.

 

As a result of the foregoing factors, cash and cash equivalents decreased in 2006 by $15,327,000 to $46,696,000.

 

Working capital decreased by $2,567,000 to $210,154,000 at December 31, 2006, reflecting an increase in payroll and advertising liabilities stemming from the acquisition of Amron, the increased production activities in the defense and absorbent segments and sales in the housewares/small appliances segment. The Company’s current ratio was 4.3 to 1.0 at fiscal 2006 year-end, compared to 6.3 to 1.0 at the end of fiscal 2005.

 

The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 




14

 

The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate increases over the past several quarters, partially offset by the reduction in the Company’s investment holdings, currently has resulted in increased levels of interest income for the Company. There can be no assurance that interest rates will not decline. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies, and is not controllable by the Company.

 

This excerpt taken from the NPK 10-K filed Aug 24, 2007.
LIQUIDITY AND CAPITAL RESOURCES

 

Cash provided by operating activities was $22,337,000 during 2005 compared to $5,779,000 during the comparable period in the prior year. The principal factors behind the increase can be found in the changes in the components of working capital and the pension charge element within the statement of cash flows.

 

Cash provided by investing activities was $33,574,000 during 2005 compared to $13,144,000 used during 2004. The change in cash flow is primarily attributable to two factors. First, more marketable securities were converted into cash and cash equivalents during 2005 than in 2004, either as a result of tendering of demand instruments with put options or through the maturity of securities. Second, payments for fixed asset additions were higher during 2004 than in 2005, reflecting the timing of payments for the equipment for the absorbent product expansion and the modification of the Jackson, Mississippi plant to a warehousing and shipping facility.

 

Based on the accounting profession’s latest interpretation of cash equivalents under FASB Statement No. 95, the company’s variable rate demand notes which had previously been included in cash and cash equivalents on the 2005 and 2004 consolidated financial statements, were reclassified as marketable securities. (See Note R of the Notes to Consolidated Financial Statements, infra). This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), and subsequent reclassification has resulted in a presentation of the Company’s consolidated balance sheet that the Company believes understates the true liquidity of the Company’s portfolio. As of December 31, 2005, the portfolio included $39,444,000 of variable rate demand notes classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7 day period for cash to the notes’ trustees or remarketers and thus provide the liquidity of cash equivalents.

 

Cash used in financing activities for 2005 and 2004 increased primarily as a result of the $.50 per share increase in the extra dividend paid during those years.

 

As a result of the foregoing factors, cash and cash equivalents increased in 2005 by $44,507,000 to $62,023,000.

 

Working capital decreased by $2,041,000 to $212,721,000 at December 31, 2005, reflecting an increase in the current income tax liability stemming from the increase in current year earnings. The Company’s current ratio was 6.3 to 1.0 at fiscal 2005 year-end, compared to 6.5 to 1.0 at the end of fiscal 2004.

 

The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

 

The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate increases over the past several quarters, partially offset by the reduction in the Company’s investment holdings, currently has resulted in increased levels of interest income for the Company. There can be no assurance that interest rates will not decline. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies, and is not controllable by the Company.

 




Page 13

 

This excerpt taken from the NPK 8-K filed Aug 11, 2006.

Liquidity and Capital Resources

        Cash used in operating activities was $8,122,000 during the first six months of 2006, as compared to $7,035,000 used during the first six months of 2005. The principal factors behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

        Net cash used in investing activities during the first six months of 2006 was $6,663,000, as compared to $1,925,000 provided during the first six months of 2005. The change is attributable primarily to the acquisition of Amron, LLC which occurred during the first quarter of 2006. (See Note I.)


Page 13



        Cash flows from financing activities for the first six months of 2006 and 2005 primarily differed as a result of the $.45 per share increase in the extra dividend paid during those periods.

        Working capital decreased by $22,061,000 to $184,810,000 at July 2, 2006. The Company’s current ratio was 4.4 to 1.0 at July 2, 2006, as compared to 5.1 to 1.0 at December 31, 2005.

        As of July 2, 2006, there were approximately $4,360,000 and $680,000 of open equipment/facilities purchase commitments to expand the product lines in the defense and absorbent products segments, respectively. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

        The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

        The Company may have additional plant closing costs stemming from its 2001-2002 plant closing (see Note D) but is not aware of any such costs. However, plant closing activities of this nature are unique and infrequent for the Company; therefore, these activities possess inherent risk that errors in the estimation process could occur. Subject to the foregoing estimation risk, no major plant closing related expenses are expected in 2006.

CRITICAL ACCOUNTING POLICIES

        The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The Company reviewed the development and selection of the critical accounting policies and believes the following are the most critical accounting policies that could have an effect on the Company’s reported results. These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.


Page 14



Inventories:   New housewares/small appliance product introductions are an important part of the Company’s sales to offset the morbidity rate of other housewares/small appliance products and/or the effect of lowered acceptance of seasonal products due to weather conditions. New products entail unusual risks and have occasionally in the past resulted in losses related to obsolete inventory as a result of low or diminishing demand for a product. The Company did not have any major new product introductions or morbidity issues in the current period and, accordingly, did not record a reserve for obsolete product. In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory.

Insurance:   The Company is subject to product liability claims in the normal course of business and is self-insured for health care costs. The Company insures for product liability claims and retains a self-insured retention insurance accrual in the Company’s financial statements. The Company utilizes historical trends and other analysis to assist in determining the appropriate accrual. An increase in the number or magnitude of claims could have a material impact on the Company’s financial condition.

Environmental:   In May 1986, the Company’s Eau Claire, Wisconsin, site was placed on the United States Environmental Protection Agency’s National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 because of hazardous waste deposited on the property. By December 31, 1998, all remediation projects had been installed, were fully operational, and restoration activities had been completed and accrued liabilities established for the expected cost of the activity. The Company believes its accrued liability reserve will be adequate to satisfy ongoing remediation operations and monitoring activities; however, should environmental agencies require additional studies or remediation projects, it is possible the existing accrual could be inadequate. The Company’s current environmental liability is based upon estimates of the future costs to maintain and operate remediation projects and monitor their results based upon historical costs incurred for such activities.

NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note G for information related to the effect of adopting new accounting pronouncements on the Company’s consolidated financial statements.

This excerpt taken from the NPK 8-K filed May 12, 2006.

Liquidity and Capital Resources

        Cash provided by operating activities was $3,508,000 during the first three months of 2006, as compared to $444,000 used during the first three months of 2005. The principal factors behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

        Net cash used in investing activities during the first three months of 2006 was $8,723,000, as compared to $1,208,000 provided during the first three months of 2005. The change is attributable primarily to the acquisition of Amron, LLC which occurred during the first quarter of 2006. (See Note I.)


Page 11





        Cash flows from financing activities for the first three months of 2006 and 2005 primarily differed as a result of the $.45 per share increase in the extra dividend paid during those periods.

        Working capital decreased by $27,130,000 to $179,741,000 at April 2, 2006. The Company’s current ratio was 4.9 to 1.0 at April 2, 2006, as compared to 5.1 to 1.0 at December 31, 2005.

        As of April 2, 2006, there were approximately $700,000 of open equipment purchase commitments to expand the product line in its absorbent products segment. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

        The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

        The Company may have additional plant closing costs but is not aware of any such costs. However, plant closing activities of this nature are unique and infrequent for the Company; therefore, these activities possess inherent risk that errors in the estimation process could occur. Subject to the foregoing estimation risk, no major plant closing related expenses are expected in 2006.

CRITICAL ACCOUNTING POLICIES

        The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The Company reviewed the development and selection of the critical accounting policies and believes the following are the most critical accounting policies that could have an effect on the Company’s reported results. These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.

Inventories: New housewares/small appliance product introductions are an important part of the Company’s sales to offset the morbidity rate of other housewares/small appliance products and/or the effect of lowered acceptance of seasonal products due to weather conditions. New products entail unusual risks and have occasionally in the past resulted in losses related to obsolete inventory as a result of low or diminishing demand for a product. The Company did not have any major new product introductions or morbidity issues in the current period and, accordingly, did not record a reserve for obsolete product. In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory.


Page 12





Insurance: The Company is subject to product liability claims in the normal course of business and is self-insured for health care costs. The Company insures for product liability claims and retains a self-insured retention insurance accrual in the Company’s financial statements. The Company utilizes historical trends and other analysis to assist in determining the appropriate accrual. An increase in the number or magnitude of claims could have a material impact on the Company’s financial condition.

Environmental: In May 1986, the Company’s Eau Claire, Wisconsin, site was placed on the United States Environmental Protection Agency’s National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 because of hazardous waste deposited on the property. By December 31, 1998, all remediation projects had been installed, were fully operational, and restoration activities had been completed and accrued liabilities established for the expected cost of the activity. The Company believes its accrued liability reserve will be adequate to satisfy ongoing remediation operations and monitoring activities; however, should environmental agencies require additional studies or remediation projects, it is possible the existing accrual could be inadequate. The Company’s current environmental liability is based upon estimates of the future costs to maintain and operate remediation projects and monitor their results based upon historical costs incurred for such activities.

NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note G for information related to the effect of adopting new accounting pronouncements on the Company’s consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company’s interest income on cash equivalents and marketable securities is affected by changes in interest rates in the United States. Cash equivalents include money market funds and 7-day variable rate demand notes which are highly liquid instruments with interest rates set every 7 days that can be tendered to the remarketer upon 7 days notice for payment of principal and accrued interest amounts. The 7 day tender feature of these variable rate demand notes are further supported by an irrevocable letter of credit from highly rated U.S. banks. To the extent a bond is not remarketed at par plus accrued interest, the difference is drawn from the bank’s letter of credit. The Company’s investments are held primarily in fixed and variable rate municipal bonds with an average life of less than one year. Accordingly, changes in interest rates have not had a material effect on the Company, and the Company does not anticipate that future exposure to interest rate market risk will be material. The Company uses sensitivity analysis to determine its exposure to changes in interest rates.


Page 13





        The Company has no history of, and does not anticipate in the future, investing in derivative financial instruments. Most transactions with international customers are entered into in U.S. dollars, precluding the need for foreign currency cash flow hedges. The Company’s manufacturing contracts with its foreign suppliers contain provisions to share the impact of fluctuations in the exchange rate between the U.S. dollar and the Hong Kong dollar above and below a fixed range contained in the contracts. All transactions with the foreign suppliers were within the exchange rate range specified in the contracts during 2006, 2005, and 2004. There is no similar provision applicable to the Chinese Yuan which until 2005 had been tied to the U.S. Dollar. To the extent there are further revaluations of the Yuan vis-à-vis the U.S. Dollar, the cost of products secured via purchase orders issued subsequent to the revaluation may be affected.




















Page 14




This excerpt taken from the NPK 10-K filed Mar 16, 2006.
LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities was $19,087,000 during 2005 compared to $4,806,000 during the comparable period in the prior year. The principal factors behind the increase can be found in the changes in the components of working capital and the pension charge element within the statement of cash flows.

Cash used in investing activities was $10,940,000 during 2005 compared to $35,870,000 during 2004. The decrease in cash used is primarily attributable to two factors. First, more marketable securities matured and were placed in cash equivalents during 2005 than in 2004, and second, payments for fixed asset additions were higher during 2004 than in 2005, reflecting the timing of payments for the equipment for the absorbent product expansion and the modification of the Jackson, Mississippi plant to a warehousing and shipping facility.

Cash used in financing activities for 2005 and 2004 increased primarily as a result of the $.50 per share increase of the extra dividend paid during those years.

As a result of the foregoing factors, cash and cash equivalents decreased by $3,257,000 to $101,467,000.

Working capital decreased by $1,901,000 to $206,871,000 at December 31, 2005, reflecting an increase in the current income tax liability stemming from the increase in current year earnings. The Company’s current ratio was 5.1 to 1.0 at fiscal 2005 year-end, compared to 5.3 to 1.0 at the end of fiscal 2004.

The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate increases over the past several quarters, partially offset by the reduction in the Company’s investment holdings, currently has resulted in increased levels of interest income for the Company. There can be no assurance that interest rates will not decline. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies, and is not controllable by the Company.

This excerpt taken from the NPK 10-Q filed Aug 11, 2005.

Liquidity and Capital Resources

        Cash used in operating activities was $7,035,000 during the six months of 2005, as compared to $4,563,000 used during the first six months of 2004. The principal factors behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statement of Cash Flows.

        Net cash flows from Investing activities during the first six months of 2005 increased by $23,345,000 over the prior period. The increase is attributable to two factors. First, more instruments matured and were placed in cash equivalents during the review period than in the prior year’s period, and second, payments for fixed asset additions were higher during the first six months of 2004 than in the comparable 2005 period, reflecting the timing of payments for the equipment for the absorbent product expansion and the modification of the Jackson, Mississippi plant to a warehousing and shipping facility.

        Cash flows from financing activities for the first six months of 2005 and 2004 primarily differed as a result of the $.50 per share increase in the extra dividend paid during those periods.



Page 13




        Working capital decreased by $11,711,000 to $197,061,000 at July 3, 2005. The Company’s current ratio was 6.0 to 1.0 at July 3, 2005, compared to 5.3 to 1.0 at December 31, 2004.

        As of July 3, 2005, there were approximately $5,600,000 of open equipment purchase commitments to expand the product line in its absorbent products segment. The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as well as continue to make capital investments in these segments if the appropriate return on investment is projected.

        The Company has substantial liquidity in the form of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not controllable by the Company.

        The Company may have additional plant closing costs but is not aware of any such costs. However, plant closing activities of this nature are unique and infrequent for the Company; therefore, these activities possess inherent risk that errors in the estimation process could occur. Subject to the foregoing estimation risk, no major plant closing related expenses are expected in 2005.

CRITICAL ACCOUNTING POLICIES
        The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The Company reviewed the development and selection of the critical accounting policies and believes the following are the most critical accounting policies that could have an effect on the Company’s reported results. These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.

Inventories:   New housewares/small appliance product introductions are an important part of the Company’s sales to offset the morbidity rate of other housewares/small appliance products and/or the effect of lowered acceptance of seasonal products due to weather conditions. New products entail unusual risks and have occasionally in the past resulted in losses related to obsolete inventory as a result of low or diminishing demand for a product. The Company did not have any major new product introductions or morbidity issues in the current period and, accordingly, did not record a reserve for obsolete product. In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory.








Page 14




Insurance:   The Company is subject to product liability claims in the normal course of business and is self-insured for health care costs. The Company insures for product liability claims and retains a self-insured retention insurance accrual in the Company’s financial statements. The Company utilizes historical trends and other analysis to assist in determining the appropriate accrual. An increase in the number or magnitude of claims could have a material impact on the Company’s financial condition.

Environmental:   In May 1986, the Company’s Eau Claire, Wisconsin, site was placed on the United States Environmental Protection Agency’s National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 because of hazardous waste deposited on the property. By December 31, 1998, all remediation projects had been installed, were fully operational, and restoration activities had been completed and accrued liabilities established for the expected cost of the activity. The Company believes its accrued liability reserve will be adequate to satisfy ongoing remediation operations and monitoring activities; however, should environmental agencies require additional studies or remediation projects, it is possible the existing accrual could be inadequate. The Company’s current environmental liability is based upon estimates of the future costs to maintain and operate remediation projects and monitor their results based upon historical costs incurred for such activities.

NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note H for information related to the effect of adopting new accounting pronouncements on the Company’s consolidated financial statements.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company’s interest income on cash equivalents and marketable securities is affected by changes in interest rates in the United States. Cash equivalents include money market funds and 7-day variable rate demand notes which are highly liquid instruments with interest rates set every 7 days that can be tendered to the remarketer upon 7 days notice for payment of principal and accrued interest amounts. The 7 day tender feature of these variable rate demand notes are further supported by an irrevocable letter of credit from highly rated U.S. banks. To the extent a bond is not remarketed at par plus accrued interest, the difference is drawn from the bank’s letter of credit. The Company’s investments are held primarily in fixed and variable rate municipal bonds with an average life of less than one year. Accordingly, changes in interest rates have not had a material effect on the Company, and the Company does not anticipate that future exposure to interest rate market risk will be material. The Company uses sensitivity analysis to determine its exposure to changes in interest rates.

        The Company has no history of, and does not anticipate in the future, investing in derivative financial instruments. Most transactions with international customers are entered into in U.S. dollars, precluding the need for foreign currency cash flow hedges. The Company’s manufacturing contracts with its foreign suppliers contain provisions to share the impact of fluctuations in the exchange rate between the U.S. dollar and the Hong Kong dollar above and below a fixed range contained in the contracts. All transactions with the foreign suppliers were within the exchange rate range specified in the contracts during 2005, 2004, and 2003. The impact of the revaluation of the Chinese yuan is not known at this point in time; however, the revaluation could result in a cost increase on future product purchases.



Page 15




ITEM 4.    CONTROLS AND PROCEDURES

        The Company’s management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

        There have been no changes in internal controls over financial reporting during the fiscal quarter ended July 3, 2005, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
















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