-----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, IGdyo2LhgqyzUxnGe06zalsu+0sFuy3qbGJB/bkXYaH0RIZ332+uL9k8o4okruXj h2RG9mKbDoLWBndUfBXYwQ== 0000230602-97-000016.txt : 19971118 0000230602-97-000016.hdr.sgml : 19971118 ACCESSION NUMBER: 0000230602-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971003 FILED AS OF DATE: 19971117 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIANGLE PACIFIC CORP CENTRAL INDEX KEY: 0000230602 STANDARD INDUSTRIAL CLASSIFICATION: LUMBER & WOOD PRODUCTS (NO FURNITURE) [2400] IRS NUMBER: 942998971 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22138 FILM NUMBER: 97722619 BUSINESS ADDRESS: STREET 1: 16803 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75266-0100 BUSINESS PHONE: 9729313000 MAIL ADDRESS: STREET 1: 16803 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75266-0100 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 3, 1997 -------------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------- -------------------- Commission File Number: 0-22138 --------------------------------------------------- Triangle Pacific Corp. - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - --------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 94-2998971 - --------------------------------------------------------------------------- (I.R.S. Employer Identification No.) 16803 Dallas Parkway, Dallas, Texas 75248 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (214) 887-2000 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) - --------------------------------------------------------------------------- (Former name, former address and former fiscal year if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 14,720,040 Shares on October 3, 1997 TRIANGLE PACIFIC CORP. AND SUBSIDIARIES INDEX PART I FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Statements of Operations for the nine months ended October 3, 1997 and September 27, 1996 and for the three months ended October 3, 1997 and September 27, 1996 4 Consolidated Balance Sheets October 3, 1997 and January 3, 1997 5 Consolidated Statements of Cash Flows for the nine months ended October 3, 1997 and September 27, 1996 7 Consolidated Statement of Changes in Shareholders' Investment for the nine months ended October 3, 1997 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 PART II OTHER INFORMATION 14 SIGNATURES 15 PART I FINANCIAL INFORMATION Item I. Financial Statements Triangle Pacific Corp. and Subsidiaries Consolidated Financial Statements for the Nine Months ended October 3, 1997 The consolidated financial statements included herein have been prepared by the Company without audit. They contain all adjustments which are, in the opinion of the management, necessary to a fair presentation of financial position and results of operations for the interim periods. The operating results for the interim periods are not necessarily indicative of results to be expected for a full year. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company's Form 10-K as of January 3, 1997. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share data) Nine Months Ended Three Months Ended --------------------- ---------------------- Oct. 3, Sept. 27, Oct. 3, Sept. 27, 1997 1996 1997 1996 --------- --------- -------- -------- Net sales $ 486,249 $ 384,937 $ 165,795 $ 142,941 -------- -------- -------- -------- Costs and expenses: Cost of sales 367,789 289,892 125,310 108,186 Selling, general and administrative 61,052 50,012 19,991 18,053 Amortization of goodwill 2,047 1,250 780 490 Interest 16,958 14,605 5,972 5,293 -------- -------- -------- -------- 447,846 355,759 152,053 132,022 -------- -------- -------- -------- Income before income taxes 38,403 29,178 13,742 10,919 Provision for income taxes 15,071 11,079 5,327 4,157 -------- -------- -------- -------- Net income $ 23,332 $ 18,099 $ 8,415 $ 6,762 ======== ======== ======== ======== Net income per share $ 1.52 $ 1.21 $ 0.55 $ 0.45 ======== ======== ======== ======== Weighted average shares outstanding 15,300 14,958 15,424 15,023
The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) October 3, January 3, 1997 1997 --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 5,667 $ 19,638 Receivables (net of allowances of $3,627 and $3,053, respectively) 76,546 59,236 Inventories 123,476 95,096 Prepaid expenses 4,904 3,713 -------- -------- Total current assets 210,593 177,683 -------- -------- Property, plant and equipment Land 16,372 15,537 Buildings 63,108 56,274 Equipment, furniture and fixtures 154,415 133,197 -------- -------- 233,895 205,008 Less: accumulated depreciation 50,329 40,258 -------- -------- 183,566 164,750 Other assets: Goodwill 107,273 70,986 Trademarks 29,274 28,333 Other 5,257 2,921 Deferred financing costs 4,673 5,290 -------- -------- Total assets $ 540,636 $ 449,963 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) (in thousands) October 3, January 3, 1997 1997 ---------- ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Current portion of long-term debt $ 3,985 $ 2,437 Accounts payable 27,356 18,520 Accrued liabilities 42,148 40,226 Income taxes payable 5,878 1,991 -------- -------- Total current liabilities 79,367 63,174 -------- -------- Long-term debt, net of current portion 239,537 190,604 Other long-term liabilities 3,935 2,331 Deferred income taxes 39,375 39,217 -------- -------- Total liabilities 362,214 295,326 -------- -------- Shareholders' investment: Common stock - $.01 par value, authorized shares - 30,000,000 issued and outstanding shares - 14,720,040 at October 3, 1997 and 14,686,558 at January 3, 1997 147 147 Additional paid-in capital 93,665 93,212 Retained earnings 84,610 61,278 -------- -------- Total shareholders' investment 178,422 154,637 -------- -------- Total liabilities and shareholders' investment $ 540,636 $ 449,963 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Nine Months Ended -------------------- Oct. 3, Sept. 27, 1997 1996 --------- -------- Cash flows from operating activities: Net income $ 23,332 $ 18,099 Adjustments: Depreciation 10,839 8,644 Deferred income taxes 169 (693) Amortization of goodwill and trademark 2,660 1,850 Amortization of deferred financing costs 704 667 Provision for doubtful accounts 779 365 Changes in assets and liabilities: Receivables (11,624) (11,574) Inventories (15,117) (11,205) Prepaid expenses (1,148) (709) Other assets (983) 263 Accounts payable 6,942 4,438 Accrued liabilities 2,702 5,120 Accrued liabilities - interest (3,999) (4,166) Income taxes payable 3,887 4,321 Long-term liabilities 104 - -------- -------- Net cash provided by operating activities 19,247 15,420 -------- -------- Cash flows from investing activities: Additions to property, plant & equipment (18,801) (9,085) Proceeds from sale of property, plant & equipment - 3,095 Acquisition of Hartco Flooring - (36,140) Acquisition of KREDA Bonds - (5,012) Acquisition of Robbins Hardwood Flooring (55,627) - Acquisition of Bruce Floor Care Products Trademark (1,550) - -------- ------- Net cash used in investing activities (75,978) (47,142) -------- -------- Cash flows from financing activities: Long-term debt borrowings 45,900 6,400 Long-term debt payments (3,592) (2,337) Exercise of stock options 66 28 Stock incentive bonus shares issued 386 - -------- -------- Net cash provided by financing activities 42,760 4,091 -------- -------- Net (decrease) in cash and cash equivalents $ (13,971) $ (27,631) Cash and cash equivalents, beginning of period 19,638 32,581 -------- -------- Cash and cash equivalents, end of period $ 5,667 $ 4,950 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 19,367 $ 17,648 Income taxes 11,081 7,467
The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' INVESTMENT (in thousands) Additional Common Paid-In Retained Stock Capital Earnings Total ------- ------- --------- ------- Balance, January 3, 1997 $ 147 $ 93,212 $ 61,278 $154,637 Net income - - 23,332 23,332 Exercise of stock options - 67 - 67 Stock incentive bonus shares issued - 386 - 386 ------ ------- ------- ------- Balance, October 3, 1997 $ 147 $ 93,665 $ 84,610 $178,422 ======= ======= ======= =======
The accompanying notes to consolidated financial statements are an integral part of this statement. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - ACQUISITION OF RESIDENTIAL FLOORING DIVISION OF ROBBINS, INC. AND SEARCY FLOORING, INC. On March 28, 1997, Robbins Hardwood Flooring Inc., a newly formed wholly- owned subsidiary of Triangle Pacific Corp., acquired from Robbins Inc. and it's affiliate Searcy Flooring, Inc., substantially all the assets and assumed certain liabilities (primarily IRB financing and trade payables) associated with their residential flooring operations. The purchase price was $64.2 million consisting of $55.7 in cash and the balance in assumed liabilities. The acquisition has been accounted for using the purchase method of accounting, and accordingly, the purchase price has been allocated to the assets purchased and the liabilities assumed based upon the fair values at the date of acquisition. The excess of the purchase price over the fair values of the net assets acquired was $36.9 million and has been recorded as goodwill, which is being amortized on a straight-line basis over 40 years. Sales and earnings for the residential flooring operations acquired by Robbins Hardwood Flooring Inc., are included in the reported results for the period since the acquisition on March 28, 1997. The net purchase price was allocated as follows: (in thousands) Net working capital $ 14,661 Net property, plant and equipment 11,295 Other assets 2,923 Goodwill 36,941 Other non-current liabilities (10,193) ------- Cash paid for Robbins Hardwood Flooring $ 55,627 ======= NOTE 2 -INVENTORIES: Inventories are valued at the lower of cost or market. The last-in, first-out (LIFO) method is used for certain inventories and the first-in, first-out (FIFO) method is used for all other inventories. Inventories valued by the LIFO method were $57,884,000 at October 3, 1997 and $35,311,000 at January 3, 1997. Had all inventories been valued by the FIFO method, which approximates current cost, inventories would have been increased by $7,706,000 at October 3, 1997 and $2,851,000 at January 3, 1997. Raw materials inventories include purchased parts and supplies to be used in manufactured products. Work-in-process and finished goods inventories include material, labor and overhead costs incurred in the manufacturing process. The major components of inventories are as follows: October 3, January 3, 1997 1997 ------------------------- (in thousands) Raw materials $ 61,428 $ 50,873 Work-in-process 10,314 7,259 Finished goods 51,734 36,964 -------- -------- Total $ 123,476 $ 95,096 ======== ======== NOTE 3 - LONG-TERM DEBT: Long-term debt consists of the following: October 3, January 3, 1997 1997 ------------------------- (in thousands) Senior Notes, 10 1/2% due 8-1-2003 $ 160,000 $ 160,000 Capitalized lease obligations 15,575 16,996 Industrial revenue bonds 22,047 16,045 Revolving note - Bank 45,900 - -------- -------- 243,522 193,041 Less: Current portion of long-term debt (3,985) (2,437) -------- -------- $ 239,537 $ 190,604 ======== ======== Letters of credit outstanding were $17.8 million at October 3, 1997 and $15.0 million at January 3, 1997, under a facility pursuant to which they can be renewed or replaced. NOTE 4 - INCOME TAXES: The components of the deferred tax liability and asset are as follows: October 3, January 3, 1997 1997 ------------------------ (in thousands) Deferred Tax Liability: Property, plant and equipment $ 28,153 $ 27,824 Trademark 10,788 11,022 Other 6,186 7,338 -------- -------- Total $ 45,127 $ 46,184 -------- -------- Deferred Tax Asset: Other $ 5,752 $ 6,967 -------- -------- Total $ 5,752 $ 6,967 -------- -------- Net Deferred Tax Liability $ 39,375 $ 39,217 ======== ======== The provision for income taxes consists of the following: Nine Months Ended -------------------------- October 3, September 27, 1997 1996 -------------------------- (in thousands) Current: Federal $ 10,837 $ 9,530 State and local 2,450 1,848 -------- ------- $ 13,287 $ 11,378 ======== ======= Deferred: Federal $ 1,573 $ (324) State and local 211 25 -------- ------- $ 1,784 $ (299) ======== ======= Total $ 15,071 $ 11,079 ======== ======= The tax provision for the periods ending October 3, 1997 and September 27, 1996 was 39.2% and 38.0% of pre-tax income, respectively. The factors causing the rate to vary from the U.S. Federal statutory rate are as follows: Nine Months Ended --------------------------- October 3, September 27, 1997 1996 --------------------------- (in thousands) Computed (expected) tax provision $ 13,441 $ 10,213 Increase (decrease) from: State and local taxes 1,717 1,226 Amortization of goodwill 514 437 Foreign sales (323) (270) Other book to tax differences, net (278) (527) ------- ------- Total $ 15,071 $ 11,079 ======= ======= MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Net sales for the nine months ended October 3, 1997 were $486.2 million compared to $384.9 million for the nine months ended September 27, 1996, representing a 26.3% increase. Results for the first nine months of 1997 included Hartco Flooring Company, which was acquired on June 28, 1996, and Robbins Hardwood Flooring Inc., which acquired the Robbins Residential Flooring Operations on March 28, 1997. Net sales for the three months ended October 3, 1997 were $165.8 million compared to $142.9 million for the three months ended September 27, 1996. Flooring Division sales for the third quarter of 1997 were $120.6 million compared to $95.0 in the third quarter of 1996, an increase of 27.0%. The Flooring Division unit sales for the third quarter of 1997 increased by 19.6% over the third quarter of 1996. The third quarter of 1997 includes the results of Robbins Hardwood Flooring, Inc., which acquired the Robbins Residential Flooring operations on March 28, 1997. Cabinet Division sales for the quarter ended October 3, 1997 were $45.2 million compared to $48.0 million in the third quarter of 1996. Unit sales declined 13.0%, while the average unit selling price increased 8.3%. The higher unit selling price is confirmation that we continue to be more selective in accepting orders. Operating margins increased over prior year levels. GROSS PROFIT Gross profit for the nine months ended October 3, 1997 amounted to $118.5 million or 24.4% of net sales, compared to $95.0 million, or 24.7% of net sales in the same period in 1996. Gross profit for the three months ended October 3, 1997 was $40.5 million or 24.4% of net sales compared to $34.8 million or 24.3% of net sales in the same period in 1996. Lumber costs in the third quarter of 1997 increased 7.8%, bringing the total increase for the nine months of 1997 to 31.1%. An unfavorable lumber purchase price variance and a larger LIFO provision during the third quarter of 1997 were major factors which impacted gross profit margins in the third quarter of 1997. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses amounted to $61.1 million, or 12.6% of net sales for the nine months ended October 3, 1997 compared to $50.0 million, or 13.0% of net sales for the nine months ended September 27, 1996. Selling, general and administrative expenses amounted to $20.0 million, or 12.1% of net sales, for the three months ended October 3, 1997 compared to $18.1 million, or 12.6% of net sales for the three months ended September 27, 1996. In absolute terms, this expense increased $1.9 million. The higher spending was primarily for advertising, marketing and selling expenses which now include the Robbins operation. Administrative expenses have remained relatively constant for the quarter and declined as a percentage of sales. OPERATING INCOME Operating income for the nine months ended October 3, 1997 was $55.4 million compared to $43.8 million for the nine months ended September 27, 1996, an increase of 26.4%. Operating income for the three months ended September 27, 1996 was $19.7 million compared to $16.2 million for the three months ended September 27, 1996, and increase of 21.6%. INTEREST EXPENSE Interest expense for the nine months ended October 3, 1997 was $17.0 million compared to $14.6 million for the nine months ended September 27, 1997. Interest expense for the three months ended October 3, 1997 was $6.0 million compared to $5.3 million for the three months ended September 27, 1996. NET INCOME Net income for the nine months ended October 3, 1997 was $23.3 million or $1.52 per share, an increase of 28.9% over net income of $18.1 million or $1.21 per share for the nine months ended September 27, 1996. Net income for the three months ended October 3, 1997, increased 24.4% to $8.4 million or $0.55 per share, compared to $6.7 million or $0.45 per share for the three months ended September 27, 1996. LIQUIDITY AND CAPITAL RESOURCES For the nine months ended October 3, 1997, cash decreased by $14.0 million. Cash used for the acquisition of Robbins Hardwood Flooring Inc. was $55.6 million, cash used for additions to property, plant and equipment was $18.8 million, cash used for the acquisition of the Bruce Floor Care Products Trademark was $1.6 million, and long-term debt payments were $3.6 million. Bank borrowings of $45.9 million and cash provided by operating activities of $19.2 million were used to offset these expenditures. The Company believes that borrowing availability under its Credit Facility and cash generated from operations will be adequate to fund working capital requirements, debt service payments and the planned capital expenditures for the foreseeable future. Except for the statements of historical fact, this Form 10-Q, including, without limitation, this "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contains "forward-looking statements" which involve risks and uncertainties which are detailed from time to time in documents filed by the Company with the SEC. The Company can give no assurance that such statements will prove to have been correct. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits Exhibit No. 11 - Statement re-computation of per share earnings 27 - Financial Data Schedule for the nine month interim period ended October 3, 1997. (Submitted only in EDGAR filing to Securities and Exchange Commission) b) No reports on Form 8-K have been filed during the quarter ended October 3, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRIANGLE PACIFIC CORP. Date: November 17, 1997 By: /s/ M. Joseph McHugh ----------------- ----------------------------------- M. Joseph McHugh President and Chief Operating Officer (duly authorized officer) Date: November 17, 1997 By: /s/ Robert J. Symon ----------------- ----------------------------------- Robert J. Symon Executive Vice President, Treasurer and Chief Financial Officer (principal financial and accounting officer) EXHIBIT 11 TRIANGLE PACIFIC CORP. COMPUTATION OF NET INCOME PER SHARE NINE MONTHS ENDED THREE MONTHS ENDED ---------------------- ---------------------- OCT. 3, SEPT. 27, OCT. 3, SEPT. 27, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net Income $23,332,000 $18,099,000 $ 8,415,000 $ 6,762,000 ========== ========== ========== ========== Shares outstanding beginning of period 14,686,558 14,663,365 14,716,640 14,668,016 Weighted average number of shares issued from exercise of stock options 2,672 3,740 1,133 - Weighted average number of shares issued from stock bonuses 22,689 - - - ---------- ---------- ---------- ---------- Weighted average number of shares outstanding 14,711,919 14,667,105 14,717,773 14,668,016 Shares issuable from assumed exercise of stock options and stock warrants, reduced by the number of shares which could have been purchased with the proceeds from exercise of such options and warrants 588,539 290,636 706,688 354,725 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding as adjusted 15,300,458 14,957,741 15,424,461 15,022,741 ========== ========== ========== ========== Primary income per common and common equivalent share $ 1.52 $ 1.21 $ 0.55 $ 0.45 ========== ========== ========== ========== Assuming full dilution: Weighted average number of shares outstanding 14,711,919 14,667,105 14,717,773 14,668,016 Shares issuable from assumed exercise of stock options and stock warrants reduced by the number of shares which could have been purchased with the proceeds from exercise of such options and warrants 776,273 373,545 776,273 373,545 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding as adjusted 15,488,192 15,040,650 15,494,046 15,041,561 ========== ========== ========== ========== Fully diluted income per common and common equivalent share $ 1.51 $ 1.20 $ 0.54 $ 0.45 ========== ========== ========== ==========
14 EX-27 2
5 9-MOS JAN-02-1998 OCT-03-1997 5,667,000 0 80,173,000 3,627,000 123,476,000 210,593,000 233,895,000 50,329,000 540,636,000 79,367,000 0 0 0 147,000 178,275,000 540,636,000 165,795,000 165,795,000 125,310,000 125,310,000 20,263,000 508,000 5,972,000 13,742,000 5,327,000 8,415,000 0 0 0 8,415,000 0.55 0.55
-----END PRIVACY-ENHANCED MESSAGE-----