-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Pnmg6qBUdI7OliO7E9jLbO6AmXj1YTJh79VJISSve5QGzRCj3c9uqq3jpeUlU9Om ekL40aGKetKTe7qENLZjZQ== 0000230602-94-000016.txt : 19941116 0000230602-94-000016.hdr.sgml : 19941116 ACCESSION NUMBER: 0000230602-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIANGLE PACIFIC CORP CENTRAL INDEX KEY: 0000230602 STANDARD INDUSTRIAL CLASSIFICATION: 2400 IRS NUMBER: 942998971 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22138 FILM NUMBER: 94559766 BUSINESS ADDRESS: STREET 1: 16803 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75266-0100 BUSINESS PHONE: 2149313000 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 September 30, 1994 -------------------------------------------- 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) 931-3000 - --------------------------------------------------------------------------- (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. 14,662,609 Shares on September 30, 1994 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 September 30, 1994 and October 1, 1993 and for the three months ended September 30, 1994 and October 1, 1993 4 Consolidated Balance Sheets September 30, 1994 and December 31, 1993 5 Consolidated Statements of Cash Flows for the nine months ended September 30, 1994 and October 1, 1993 7 Consolidated Statement of Changes in Shareholders' Investment for the nine months ended September 30, 1994 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 PART II OTHER INFORMATION 17 SIGNATURES 18 PART I FINANCIAL INFORMATION Item I. Financial Statements Triangle Pacific Corp. and Subsidiaries Consolidated Financial Statements for the Nine Months ended September 30, 1994 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 statement of the results of the 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 December 31, 1993. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share data) Nine Months Ended Three Months Ended -------------------- ------------------- Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1994 1993 1994 1993 -------- -------- -------- -------- Net sales $ 301,864 $ 252,246 $ 104,236 $ 85,911 -------- -------- -------- -------- Costs and expenses: Cost of sales 222,158 195,193 76,060 67,637 Selling, general and administrative 42,125 32,613 14,405 10,067 Amortization of goodwill 1,140 1,215 380 405 Interest 14,235 15,016 4,713 5,115 -------- -------- -------- -------- 279,658 244,037 95,558 83,224 -------- -------- -------- -------- Income before income taxes and extraordinary items 22,206 8,209 8,678 2,687 Provision for income taxes 8,987 3,084 3,461 852 -------- -------- -------- -------- Net income before extraordinary items 13,219 5,125 5,217 1,835 Extraordinary items Loss from repayment of debt - (11,307) - (11,307) ________ ________ ________ ________ Net income (loss) $ 13,219 $ (6,182) $ 5,217 $ (9,472) ======== ======== ======== ======== Per share data: Net income before extraordinary items $ 0.90 $ 0.64 $ 0.35 $ 0.17 ======== ======== ======== ======== Net income (loss) $ 0.90 $ (0.77) $ 0.35 $ (0.88) ======== ======== ======== ======== Weighted avg. shares outstanding 14,659 8,069 14,663 10,792 Pro-forma income data: Net income before extraordinary items as reported $ 13,219 $ 5,125 $ 5,217 $ 1,835 Pro-forma adjustments re: 1993 recapitalization - 490 - 66 -------- -------- -------- -------- Pro-forma net income before extraordinary items $ 13,219 $ 5,615 $ 5,217 $ 1,901 ======== ======== ======== ======== Pro-forma net income before extraordinary items, per share $ 0.90 $ 0.38 $ 0.35 $ 0.13 ======== ======== ======== ======== Weighted avg. shares outstanding 14,659 14,647 14,663 14,647 The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 1994 1993 ASSETS --------- ------------ Current assets: Cash and cash equivalents $ 11,485 $ 785 Receivables (net of allowances of $2,456 and $3,323 respectively) 46,375 39,454 Inventories 68,832 64,072 Prepaid expenses 4,547 4,273 -------- -------- Total current assets 131,239 108,584 -------- -------- Property, plant and equipment Land 13,456 13,452 Buildings 44,098 43,382 Equipment, furniture and fixtures 77,321 65,759 -------- -------- 134,875 122,593 Less: accumulated depreciation 19,284 13,171 -------- -------- 115,591 109,422 Other assets: Goodwill 59,546 60,580 Trademark 30,133 30,733 Other 13,486 11,654 Deferred financing costs 7,066 8,126 -------- -------- Total assets $ 357,061 $ 329,099 ======== ======== 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) September 30, December 31, 1994 1993 LIABILITIES AND SHAREHOLDERS' INVESTMENT --------- ------------ Current liabilities: Current portion of long-term debt $ 1,451 $ 1,467 Accounts payable 17,233 13,336 Accrued liabilities 23,753 19,699 Income taxes payable 2,732 - -------- -------- Total current liabilities 45,169 34,502 -------- -------- Long-term debt, net of current portion 168,783 162,897 -------- -------- Deferred income taxes 41,798 43,653 -------- -------- Total liabilities 255,750 241,052 -------- -------- Shareholders' investment: Common stock - $.01 par value, authorized shares - 30,000,000 issued and outstanding shares 14,662,609 at September 30, 1994 and 14,647,607 at December 31, 1993 147 146 Additional paid-in capital 93,098 93,054 Retained earnings (deficit): Post June 8, 1992 8,066 (5,153) -------- -------- Total shareholders' investment 101,311 88,047 -------- -------- Total liabilities and shareholders' investment $ 357,061 $ 329,099 ======== ======== 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 -------------------- Sept. 30, Oct. 1, 1994 1993 Cash flows from operating activities: -------- -------- Net income (loss) $ 13,219 $ (6,182) Adjustments: Depreciation 6,113 5,898 Deferred income taxes (1,855) 2,262 Amortization of goodwill and trademark 1,740 1,815 Amortization of deferred financing costs 1,074 172 Amortization of original issue discount - 1,037 Extraordinary item-loss from repayment of debt - 11,307 Provision for doubtful accounts 609 390 Changes in assets and liabilities: Receivables (6,788) (10,856) Inventories (4,354) (18,016) Prepaid expenses (248) (1,252) Other assets 2,143 2,953 Accounts payable 3,747 313 Accrued liabilities 6,643 (2,185) Accrued liabilities - interest (3,171) (552) Income taxes payable 2,732 - Other liabilities - (5,193) -------- -------- Net cash provided by (used in) operating activities 21,604 (18,089) Cash flows from investing activities: -------- -------- Acquisition of Premier Wood Floors (5,123) - Proceeds from sale of property, plant & equipment 605 - Additions to property, plant & equipment (10,325) (3,459) Construction deposits (1,962) (4,292) -------- ------- Net cash used in investing activities (16,805) (7,751) Cash flows from financing activities: -------- -------- Long-term debt borrowings 7,048 18,500 Long-term debt payments (1,178) (217,395) Proceeds from senior notes issued - 160,000 Sales of common stock - 79,398 Refinancing costs (14) (14,740) Exercise of stock options 45 - -------- -------- Net cash provided by financing activities 5,901 25,763 -------- -------- Net increase (decrease) in cash $ 10,700 $ (77) Cash and cash equivalents, beginning of period 785 547 -------- -------- Cash and cash equivalents, end of period $ 11,485 $ 470 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 17,079 $ 14,147 Income taxes 4,982 45 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 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 (in thousands) Additional Retained Common Paid-In Earnings Stock Capital (Deficit) Total ------- ------- --------- ------- Balance, December 31, 1993 $ 146 $ 93,054 $ (5,153) $ 88,047 Net income - - 13,219 13,219 Exercise of stock options 1 44 - 45 ------- ------- ------- ------- Balance, September 30, 1994 $ 147 $ 93,098 $ 8,066 $101,311 ======= ======= ======= ======= 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 - 1993 RECAPITALIZATION: The Company filed, in August 1993, two registration statements with the Securities and Exchange Commission and sold to the public 7,939,750 shares of the Company's Common Stock and $160 million aggregate principal amount of 10- 1/2% Senior Notes due 2003 ("the Offerings"). The net proceeds of the Offerings together with borrowings under a new $90 million bank credit facility (the "New Credit Facility") were used (i) to repay the entire unpaid balance under the Company's previously-existing senior debt financing agreements, redeem certain previously outstanding debentures and pay related accrued interest, for a total of approximately $227 million, and (ii) for working capital and general corporate purposes. As a result of this repayment of debt the Company incurred an extraordinary loss of $11.3 million, net of tax, which was recorded in the third quarter of 1993, as a result of the original issue discount on certain of the repaid notes as well as the premium required to redeem the debentures. On June 14, 1993, the Company's Board of Directors approved a reclassification pursuant to which each share of Series A Common Stock was changed and converted into .67 of a share of Common Stock. The reclassification became effective upon completion of the Offerings described above and has been reflected retroactively in the accompanying consolidated financial statements. Pro-forma figures for the periods on the Consolidated Statements Of Operations assume that the Offerings occurred on the first day of fiscal 1993. NOTE 2 -INVENTORIES: Inventories are valued at the lower of cost or market. The last-in, first-out (LIFO) method is used for certain lumber inventories and the first- in, first-out (FIFO) method is used for all other inventories. Inventories valued by the LIFO method were $20,835,000 at September 30, 1994 and $23,965,000 at December 31, 1993. Had all inventories been valued by the FIFO method, which approximates current cost, inventories would have been increased by $4,065,000 at September 30, 1994 and $5,138,000 at December 31, 1993. 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 (in thousands): September 30, December 31, 1994 1993 -------- ------------ Raw materials $ 37,815 $ 42,045 Work-in-process 4,041 3,125 Finished goods 26,976 18,902 -------- -------- Total $ 68,832 $ 64,072 ======== ======== NOTE 3 - LONG-TERM DEBT: Long-term debt consists of the following (in thousands): September 30, December 31, 1994 1993 -------- ----------- Mortgages payable $ 10,234 $ 4,364 Senior Notes, 10 1/2% due 8-1-2003 160,000 160,000 -------- -------- 170,234 164,364 Less: Current portion of long-term debt (1,451) (1,467) -------- -------- $ 168,783 $ 162,897 ======== ======== Letters of credit outstanding at September 30, 1994 and December 31, 1993 were $9.8 million under a facility pursuant to which they can be renewed or replaced. Senior Notes The Senior Notes are senior unsecured obligations of the Company with an aggregate principal of $160 million. The Senior Notes mature on August 1, 2003 and bear interest at an annual rate of 10 1/2%, payable in two equal semi-annual installments of $8,400,000 each, with each semi-annual period deemed to have 180 days. The Senior Notes were issued under an Indenture (the "Indenture") between the Company and a predecessor to Texas Commerce Bank National Association, as Trustee (the "Trustee"). The Senior Notes rank pari passu with all present and future senior indebtedness of the Company and senior to all present and future subordinated indebtedness of the Company. However, because borrowings under the New Credit Facility are secured by inventory and accounts receivable of the Company and the proceeds thereof, the Senior Notes are effectively subordinated to such borrowings to the extent of such security interest. The Senior Notes are not redeemable prior to August 1, 1998. Thereafter, the Senior Notes are redeemable at the option of the Company at redemption prices specified in the Indenture. The Senior Notes are not subject to any mandatory sinking fund requirements. Upon a "change of control" (as defined in the Indenture), the Company is required to offer to purchase all outstanding Senior Notes at 101% of the principal amount thereof, plus accrued interest to the date of repurchase. In addition, the Company may be required to offer to purchase the Senior Notes at 100% of the principal amount plus accrued interest with the net cash proceeds of certain sales or other dispositions of assets. The Indenture contains covenants which limit, among other things, the incurrence of additional indebtedness by the Company and its subsidiaries, the payment of dividends on or the purchase of the capital stock of the Company ("Restricted Payments"), the creation of liens on the assets of the Company and its subsidiaries, the creation of certain restrictions on the payment of dividends and other distributions by the Company's subsidiaries, the issuance of preferred stock by the Company's subsidiaries, and certain mergers, sales of assets and transactions with affiliates. Based on the Company's operations through September 30, 1994, the amount of Restricted Payments that the Company could make under the Indenture was $12,649,000. The Indenture specifies a number of events of default including, among others, the failure to make timely principal and interest payments or to perform the covenants contained therein. The Indenture contains a cross- default to other indebtedness of the Company aggregating more than $5,000,000 and certain customary bankruptcy and insolvency defaults. Upon the occurrence of an event of default under the Indenture, the Trustee or the holders of not less than 25% in principal amount of the outstanding Senior Notes may declare all amounts thereunder immediately due and payable, except that such amounts automatically become immediately due and payable in the event of a bankruptcy or insolvency default. New Credit Facility The Company has entered into the New Credit Facility, which provides for up to $90 million of revolving loans for working capital and general corporate purposes and for letters of credit. Availability of borrowings under the New Credit Facility is based upon a formula related to inventory and accounts receivable. At September 30, 1994, the Company had no borrowings under the New Credit Facility and had $54.5 million of borrowing capacity under this facility. Borrowings under the New Credit Facility bear interest at the agent's prime rate plus 1% (8.75% at September 30, 1994) or, at the Company's option, at certain alternate floating rates and is secured by a pledge of the Company's inventory and accounts receivable. The New Credit Facility expires on August 4, 1996. The New Credit Facility contains covenants which restrict, among other things, the incurrence of additional indebtedness and rental obligations by the Company and its subsidiaries, the payment of dividends and other distributions in respect of the capital stock of the Company, the creation of liens on the assets of the Company and its subsidiaries, the creation of certain restrictions on the payment of dividends and other distributions by the Company's subsidiaries, the making of investments and capital expenditures by the Company and its subsidiaries, the creation of new subsidiaries by the Company, and certain mergers, sales of assets and transactions with affiliates. The New Credit Facility also contains certain financial covenants relating to the consolidated financial condition of the Company and its subsidiaries, including covenants relating to their net worth, the ratio of their earnings to their fixed charges, the ratio of their earnings to their interest expense, the ratio of their current assets to their current liabilities, and the ratio of their indebtedness to their total capitalization. At September 30, 1994, the Company was in compliance with all financial covenants. The New Credit Facility specifies a number of events of default including, among others, the failure to make timely payments of principal, fees, and interest, the failure to perform the covenants contained therein, the failure of representations and warranties to be true, the occurrence of a "change of control" (as defined in the New Credit Facility, to include, among other things, the ownership by any person or group of more than 25% or, (in the case of The TCW Group, Inc. and its affiliates, 40%) of the total voting securities of the Company), and certain impairments of the security for the New Credit Facility. The New Credit Facility also contains a cross-default to other indebtedness of the Company aggregating more than $2,000,000 and certain customary bankruptcy, insolvency and similar defaults. Upon the occurrence of an event of default under the New Credit Facility, at least three of the lenders holding at least 60% in amount of the principal indebtedness outstanding under the New Credit Facility may declare all amounts thereunder immediately due and payable, except that such amounts automatically become immediately due and payable in the event of certain bankruptcy, insolvency or similar defaults. The New Credit Facility generally prohibits the Company from prepaying the Senior Notes whether the prepayment would result from the redemption of the Senior Notes, an offer by the Company to purchase the Senior Notes following a change of control or a sale or other disposition of assets, or the acceleration of the due date for payment of the Senior Notes. Mortgages payable represent primarily various Industrial Revenue Bond (IRB) notes. In June 1994, the Company entered into an industrial revenue financing agreement in the amount of $7,000,000 with Mississippi Business Finance Corp., a public corporation in Mississippi, to finance the expansion of the Bruce Hardwood Floors plant in Port Gibson, Mississippi. The funds required were provided by a bank term loan which matures on June 28, 2001. Collateral for the loan is the plant and equipment at Port Gibson, Mississippi. The IRB notes vary in interest rate, with several notes dependent upon the prime rate. At September 30, 1994 and December 31, 1993 the interest rates ranged up to 9.0%. These notes are payable through 2001 and are collateralized by the related underlying assets. NOTE 4 - INCOME TAXES: The components of the deferred tax liability and assets are as follows (in thousands): September 30, December 31, 1994 1993 -------- ----------- Deferred Tax Liability: Property, plant and equipment $ 25,054 $ 28,429 Trademark 11,842 12,078 Other 7,855 7,123 -------- -------- $ 44,751 $ 47,630 ======== ======== Deferred Tax Asset: Tax carryforwards $ - $ 1,991 Other 2,953 1,986 -------- -------- $ 2,953 $ 3,977 ======== ======== The provision for income taxes consists of the following (in thousands): Nine Months Ended -------------------- September 30, October 1, 1994 1993 -------- -------- Current: Federal $ 6,737 $ - State and local 828 - -------- ------- $ 7,565 $ - ======== ======= Deferred: Federal $ 1,266 $ 2,747 State and local 156 337 -------- ------- $ 1,422 $ 3,084 ======== ======= Total $ 8,987 $ 3,084 ======== ======= The tax provision for the nine month periods ending September 30, 1994 and October 1, 1993 is 40.5 and 37.6% of pre-tax income, respectively. The factors causing the rate to vary from the U.S. Federal statutory rate are as follows (in thousands): Nine Months Ended --------------------- September 30, October 1, 1994 1993 -------- -------- Computed (expected) tax provision $ 7,772 $ 2,873 Increase from: State and local taxes 955 353 Amortization of goodwill 448 477 Other book to tax differences (net) (188) (619) ------- ------ $ 8,987 $ 3,084 ======= ====== MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Net sales for the nine months ended September 30, 1994 were $301.9 million compared to $252.2 million for the nine months ended October 1, 1993, representing a 19.7% increase. Net sales for all divisions increased which accounted for this growth over the same period last year. Net sales for the three months ended September 30, 1994 were $104.2 million compared to $85.9 million for the three months ended October 1, 1993, representing a 21.3% increase. Increased sales occurred in all divisions of the Company. GROSS PROFIT Gross profit for the nine months ended September 30, 1994 amounted to $79.7 million, or 26.4% of net sales, compared to $57.1 million, or 22.6% of net sales, in the same period in fiscal 1993. Gross profit for the three months ended September 30, 1994 amounted to $28.2 million, or 27.0% of net sales, compared to $18.3 million, or 21.3% of net sales, in the same period in fiscal 1993. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses amounted to $42.1 million for the nine months ended September 30, 1994 compared to $32.6 million for the nine months ended October 1, 1993. As a percent of net sales, selling, general and administrative expenses were 14.0% for the nine months ended September 30, 1994 compared to 12.9% for the same period in fiscal 1993. Selling, general and administrative expenses amounted to $14.4 million for the three months ended September 30, 1994 compared to $10.1 million for the three months ended October 1, 1993. As a percent of net sales, selling, general and administrative expenses were 13.8% for the three months ended September 30, 1994 compared to 11.7% for the same period in fiscal 1993. Increased spending in both the three month and nine month periods in 1994 compared to the same periods in 1993 are attributable to expanded advertising and marketing activities together with incentive compensation and retirement plan costs driven by higher sales and profitability. OPERATING INCOME Operating income for the nine months ended September 30, 1994 was $36.4 million compared to operating income of $23.2 million in the nine months ended October 1, 1993. The increased operating income in the first nine months of fiscal 1994 compared to the same period in fiscal 1993 was attributable to significantly higher net sales, together with improved operating efficiencies which generated increased operating profit margins, offset in part by higher selling, general and administrative expenses. Operating income for the three months ended September 30, 1994 was $13.4 million compared to operating income of $7.8 million in the three months ended October 1, 1993. This increase was also attributable to significantly higher net sales together with improved operating efficiencies which generated increased operating profit margins, offset in part by higher selling, general and administrative expenses. INTEREST EXPENSE Interest expense for the nine months ended September 30, 1994 was $14.2 million compared to $15.0 million for the nine months ended October 1, 1993. Interest expense for the three months ended September 30, 1994 was $4.7 million compared to $5.1 million for the three months ended October 1, 1993. NET INCOME Net income before extraordinary items for the first nine months of fiscal 1994 amounted to $13.2 million compared to $5.1 million in the first nine months in fiscal 1993. The first nine months of fiscal 1994 benefited from higher net sales and operating income. Net income before extraordinary items for the three months ended September 30, 1994, amounted to $5.2 million compared to $1.8 million for the three months ended October 1, 1993. The 1994 period benefited from higher net sales and operating income. In the third quarter of 1993, a portion of the proceeds of the company's initial public offerings was used to repay $57.4 million of bank debt which had been recorded net of its original issue discount of $18.3 million. The retirement of that debt resulted in an extraordinary non-cash charge to earnings of $11.3 million. PRO-FORMA NET INCOME Net income before extraordinary items for the nine months ended September 30, 1994 was $13.2 million, or $.90 per share, versus pro-forma net income of $5.6 million, or $.38 per share for the same period in fiscal 1993. Net income before extraordinary items for the three months ended September 30, 1994 was $5.2 million, or $.35 per share, versus pro-forma net income of $1.9 million, or $.13 per share for the same period in fiscal 1993. Pro-forma figures for 1993 assume that the Company's third quarter 1993 public offerings of debt and equity securities occurred on the first day of fiscal 1993. The gross proceeds of the Company's initial public offerings of debt and equity were $160 million and $79.4 million, respectively. LIQUIDITY AND CAPITAL RESOURCES In August 1993, the Company completed two public offerings of 7,939,750 shares of the Company's Common Stock and $160 million aggregate principal amount of 10-1/2% Senior Notes due 2003. The net proceeds of the offerings, together with borrowings under a new $90 million bank credit facility were used (i) to repay the entire unpaid balance under the Company's previously existing senior debt financing agreements, redeem certain previously outstanding debentures and pay related accrued interest, for a total of approximately $227 million, and (ii) for working capital and general corporate purposes. As a result of this repayment of debt, the Company incurred an extraordinary loss of $11.3 million, net of tax, as a result of the original issue discount on certain of the repaid notes as well as the premium required to redeem the debentures. The New Credit Facility provides for up to $90 million of revolving credit loans for working capital and for letters of credit. Availability of borrowings under the New Credit Facility is based upon a formula related to inventory and accounts receivable. For the nine months ended September 30, 1994, cash increased by $10.7 million. Net cash provided by operating activities was $21.6 million and $7.0 million in cash was received from Industrial Revenue Bond Notes issued to finance the expansion of the Bruce Hardwood Floors plant in Port Gibson, Mississippi. Cash of $18.6 million was used primarily for additions to property, plant and equipment, the expansion of the Port Gibson plant, construction deposits relating to expansion of the Bruce Hardwood Floors plant in West Virginia, long-term debt payments and the acquisition of Premier Wood Floors on July 1, 1994 for approximately $5.1 million. On September 30, 1994, the Company had working capital of $86.1 million, or 24.1% of total assets, and $54.5 million of unused bank borrowing capacity. The Company believes that borrowing availability under the New 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. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits Exhibit No. 27 - Financial Data Schedule for the nine month interim period ended September 30, 1994. (Submitted only in EDGAR filing to Securities and Exchange Commission) b) No reports on Form 8-K have been filed during the quarter ended September 30, 1994. 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 14, 1994 By: /s/ M. Joseph McHugh ------------------ ----------------------------------- M. Joseph McHugh President and Chief Operating Officer (duly authorized officer) Date: November 14, 1994 By: /s/ Robert J. Symon ------------------ ----------------------------------- Robert J. Symon Executive Vice President, Treasurer and Chief Financial Officer (principal financial and accounting officer) 18 1 EX-27 2
5 QTR-3 DEC-30-1994 SEP-30-1994 11,485 0 48,831 2,456 68,832 131,239 134,875 19,284 357,061 45,169 168,783 147 0 0 101,164 357,061 301,864 301,864 222,158 222,158 42,656 609 14,235 22,206 8,987 13,219 0 0 0 13,219 .90 .90
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