-----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, KH+Q3nbBjKRL8yTjTlBHU+EwrA6ZoIdY8a/OLuPi7aOhokshiayZdQ1RwKNlGXN2 qCzzcTE9vbl3F0Lh/TG+PQ== 0000230602-95-000008.txt : 19950516 0000230602-95-000008.hdr.sgml : 19950516 ACCESSION NUMBER: 0000230602-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 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: 1934 Act SEC FILE NUMBER: 000-22138 FILM NUMBER: 95538725 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 March 31, 1995 -------------------------------------------- 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 March 31, 1995 TRIANGLE PACIFIC CORP. AND SUBSIDIARIES INDEX PART I FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Statements of Operations for the three months ended March 31, 1995 and April 1, 1994 4 Consolidated Balance Sheets March 31, 1995 and December 30, 1994 5 Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and April 1, 1994 7 Consolidated Statement of Changes in Shareholders' Investment for the three months ended March 31, 1995 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 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 Three Months ended March 31, 1995 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 30, 1994. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share data) Three Months Ended ---------------------- March 31, April 1, 1995 1994 ------- -------- Net sales $ 107,192 $ 90,710 -------- -------- Costs and expenses: Cost of sales 79,260 68,627 Selling, general and administrative 15,448 13,113 Amortization of goodwill 380 380 Interest 4,563 4,897 -------- -------- 99,651 87,017 -------- -------- Income before income taxes 7,541 3,693 Provision for income taxes 3,007 1,551 -------- -------- Net income $ 4,534 $ 2,142 ======== ======== Net income per share $ 0.31 $ 0.15 ======== ======== Weighted average shares outstanding 14,663 14,653 The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 30, 1995 1994 --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 20,844 $ 24,906 Receivables (net of allowances of $2,625 and $2,491 respectively) 44,419 43,303 Inventories 73,405 70,900 Prepaid expenses 3,879 3,934 -------- -------- Total current assets 142,547 143,043 -------- -------- Property, plant and equipment Land 12,003 12,003 Buildings 44,399 43,452 Equipment, furniture and fixtures 81,359 79,568 -------- -------- 137,761 135,023 Less: accumulated depreciation 23,300 21,110 -------- -------- 114,461 113,913 Other assets: Goodwill 56,237 56,617 Trademark 29,733 29,933 Other 13,301 13,237 Deferred financing costs 6,351 6,708 -------- -------- Total assets $ 362,630 $ 363,451 ======== ======== 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) March 31, December 30, 1995 1994 --------- ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Current portion of long-term debt $ 1,557 $ 1,527 Accounts payable 17,828 17,723 Accrued liabilities 22,101 28,112 Income taxes payable 2,738 1,327 -------- -------- Total current liabilities 44,224 48,689 -------- -------- Long-term debt, net of current portion 167,870 168,388 -------- -------- Deferred income taxes 39,108 39,480 -------- -------- Total liabilities 251,202 256,557 -------- -------- Shareholders' investment: Common stock - $.01 par value, authorized shares - 30,000,000 issued and outstanding shares - 14,662,609 at March 31, 1995 and December 30, 1994 147 147 Additional paid-in capital 93,098 93,098 Retained earnings 18,183 13,649 -------- -------- Total shareholders' investment 111,428 106,894 -------- -------- Total liabilities and shareholders' investment $ 362,630 $ 363,451 ======== ======== 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) Three Months Ended -------------------- March 31, April 1, 1995 1994 --------- -------- Cash flows from operating activities: Net income (loss) $ 4,534 $ 2,142 Adjustments: Depreciation 2,191 1,973 Deferred income taxes (372) 15 Amortization of goodwill and trademark 580 580 Amortization of deferred financing costs 357 358 Provision for doubtful accounts 117 207 Changes in assets and liabilities: Receivables (1,233) (1,282) Inventories (2,505) 1,565 Prepaid expenses 55 300 Other assets (41) (24) Accounts payable 105 1,280 Accrued liabilities (1,087) 442 Accrued liabilities - interest (4,925) (3,565) Income taxes payable 1,411 1,551 -------- -------- Net cash provided by (used in) operating activities (813) 5,542 -------- -------- Cash flows from investing activities: Additions to property, plant & equipment (2,739) (2,899) Construction deposits (22) (1,457) -------- ------- Net cash used in investing activities (2,761) (4,356) -------- -------- Cash flows from financing activities: Long-term debt payments (488) (396) Exercise of stock options - 41 Refinancing costs - (14) -------- -------- Net cash used in financing activities (488) (369) -------- -------- Net increase (decrease) in cash $ (4,062) $ 817 Cash and cash equivalents, beginning of period 24,906 785 -------- -------- Cash and cash equivalents, end of period $ 20,844 $ 1,602 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 8,955 $ 8,049 Income taxes 1,949 10 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 THREE MONTHS ENDED MARCH 31, 1995 (in thousands) Additional Common Paid-In Retained Stock Capital Earnings Total ------- ------- --------- ------- Balance, December 30, 1994 $ 147 $ 93,098 $ 13,649 $106,894 Net income - - 4,534 4,534 ------- ------- ------- ------- Balance, March 31, 1995 $ 147 $ 93,098 $ 18,183 $111,428 ======= ======= ======= ======= 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 -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 $21,186,000 at March 31, 1995 and $20,870,000 at December 30, 1994. Had all inventories been valued by the FIFO method, which approximates current cost, inventories would have been increased by $1,653,000 at March 31, 1995 and $2,069,000 at December 30, 1994. 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: March 31, December 30, 1995 1994 ------------------------- (in thousands) Raw materials $ 38,676 $ 39,092 Work-in-process 3,308 3,640 Finished goods 31,421 28,168 -------- -------- Total $ 73,405 $ 70,900 ======== ======== NOTE 2 - LONG-TERM DEBT: Long-term debt consists of the following: March 31, December 30, 1995 1994 ------------------------- (in thousands) Mortgages payable $ 9,427 $ 9,915 Senior Notes, 10 1/2% due 8-1-2003 160,000 160,000 -------- -------- 169,427 169,915 Less: Current portion of long-term debt (1,557) (1,527) -------- -------- $ 167,870 $ 168,388 ======== ======== Letters of credit outstanding at March 31, 1995 were $8.1 million and $9.8 million at December 30, 1994 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 amount 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 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 March 31, 1995, the amount of Restricted Payments that the Company could make under the Indenture was $17,707,000. 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. Credit Facility: The Company has entered into the 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 Credit Facility is based upon a formula related to inventory and accounts receivable. At March 31, 1995, the Company had no borrowings under the Credit Facility and had $58.9 million of borrowing capacity under this facility. Borrowings under the Credit Facility bear interest at the agent's prime rate plus 1% (10.0% at March 31, 1995) 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 Credit Facility expires on August 4, 1996. The 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 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 March 31, 1995, the Company was in compliance with all financial covenants. The 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 Credit Facility, to include, among other things, the ownership by any person or group of more than 25% or, (in case of The TCW Group, Inc. and its affiliates, 50%) of the total voting securities of the Company), and certain impairments of the security for the Credit Facility. The 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 Credit Facility, at least three of the lenders holding at least 60% in amount of the principal indebtedness outstanding under the 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 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. The IRB notes vary in interest rate, with several notes dependent upon the prime rate. At March 31, 1995 and December 30, 1994 the interest rates ranged up to 9.0%. These notes are payable through 2001 and are collateralized by the related underlying assets. NOTE 3 - INCOME TAXES: The components of the deferred tax liability and asset are as follows: March 31, December 30, 1995 1994 ------------------------ (in thousands) Deferred Tax Liability: Property, plant and equipment $ 22,532 $ 22,511 Trademark 11,685 11,764 Other 8,783 8,527 -------- -------- Total $ 43,000 $ 42,802 ======== ======== Deferred Tax Asset: Tax carryforwards $ - $ - Other 3,891 3,322 -------- -------- Total $ 3,891 $ 3,322 ======== ======== The provision for income taxes consists of the following: Three Months Ended -------------------- March 31, April 1, 1995 1994 -------------------- (in thousands) Current: Federal $ 3,147 $ 1,381 State and local 404 170 -------- ------- $ 3,551 $ 1,551 ======== ======= Deferred: Federal $ (484) $ - State and local (60) - -------- ------- $ (544) $ - ======== ======= Total $ 3,007 $ 1,551 ======== ======= The tax provision for the periods ending March 31, 1995 and April 1, 1994 is 39.9% and 42.0% of pre-tax income. The factors causing the rate to vary from the U.S. Federal statutory rate are as follows: Three Months Ended -------------------- March 31, April 1, 1995 1994 -------------------- (in thousands) Computed (expected) tax provision $ 2,639 $ 1,293 Increase from: State and local taxes 324 159 Amortization of goodwill 149 149 Change due to limitation of net operating loss carryforwards - - Other book to tax differences (net) (105) (50) ------- ------ $ 3,007 $ 1,551 ======= ====== MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Net sales for the three months ended March 31, 1995 were $107.2 million compared to $90.7 million for the three months ended April 1, 1994, representing a 18.2% increase. Net sales for all divisions increased. Cabinet Division sales were up 32.1% over those of the same period in 1994 due, in large measure, to increased sales to the multi-family housing sector which continues to experience strong growth. Hardwood Floors sales remained strong, but were tempered by weakening consumer confidence relative to large dollar purchases. Our average unit selling price declined slightly as some builders shifted to lower-priced products with heavy emphasis on unfinished strip versus prefinished products. GROSS PROFIT Gross profit for the three months ended March 31, 1995 amounted to $27.9 million, or 26.1% of net sales, compared to $22.1 million, or 24.3% of net sales in the same period in fiscal 1994. The improvement in gross profit resulted primarily from higher unit sales and to a lesser extent from increased prices. While lumber costs were slightly higher in the first quarter, the Company continues to benefit from improved plant efficiencies. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses amounted to $15.4 million for the three months ended March 31, 1995 compared to $13.1 million for the three months ended April 1, 1994. As a percent of net sales, selling, general and administrative expenses were 14.4% for the three months ended March 31, 1995 compared to 14.5% for the same period in fiscal 1994. OPERATING INCOME Operating income for the three months ended March 31, 1995 was $12.1 million compared to $8.6 million for the three months ended April 1, 1994. The increased operating income in the first quarter of 1995 compared to the same period in fiscal 1994 was attributable to significantly higher net sales and improved operating profit margins, offset in part by higher selling, general and administrative expenses. INTEREST EXPENSE Interest expense for the three months ended March 31, 1995 was $4.6 million compared to $4.9 million for the three months ended April 1, 1994. NET INCOME Net income for the three months ended March 31, 1995 amounted to $4.5 million, or $0.31 per share, compared to $2.1 million, or $0.15 per share, for the three months ended April 1, 1994. The 1995 period benefited from higher net sales and operating income. LIQUIDITY AND CAPITAL RESOURCES For the fiscal quarter ended March 31, 1995, cash decreased by $4.1 million. Cash used in operating activities was $.8 million. Cash of $2.7 million was used for additions to property, plant and equipment and $.5 million for long-term debt payments. On March 31, 1995, the Company had working capital of $98.3 million, or 27.1% of total assets, and $58.9 million of unused bank borrowing capacity. The Company believes that borrowing availability under the 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 three month interim period ended March 31, 1995. (Submitted only in EDGAR filing to Securities and Exchange Commission) b) No reports on Form 8-K have been filed during the quarter ended March 31, 1995. 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: May 15, 1995 By: /s/ M. Joseph McHugh ----------------- ----------------------------------- M. Joseph McHugh President and Chief Operating Officer (duly authorized officer) Date: May 15, 1995 By: /s/ Robert J. Symon ----------------- ----------------------------------- Robert J. Symon Executive Vice President, Treasurer and Chief Financial Officer (principal financial and accounting officer) EX-27 2
5 3-MOS DEC-29-1995 MAR-31-1995 20,844,000 0 47,044,000 2,625,000 73,405,000 142,547,000 137,761,000 23,300,000 362,630,000 44,224,000 0 147,000 0 0 111,281,000 362,630,000 107,192,000 107,192,000 79,260,000 79,260,000 15,711,000 117,000 4,563,000 7,541,000 3,007,000 4,534,000 0 0 0 4,534,000 .31 .31
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