-----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, Or3kAhKBm/AIVSJ3rxPEu7QUfCemAsmx7MQLEHYEa0Ya7P8yC9Ni+JQQsUfII4gw ajMFUCUAS4xsjtrcXJCKfQ== 0000230602-96-000012.txt : 19960813 0000230602-96-000012.hdr.sgml : 19960813 ACCESSION NUMBER: 0000230602-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960628 FILED AS OF DATE: 19960812 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: 96608267 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 June 28, 1996 -------------------------------------------- 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. 14,668,016 Shares on June 28, 1996 TRIANGLE PACIFIC CORP. AND SUBSIDIARIES INDEX PART I FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Statements of Operations for the six months ended June 28, 1996 and June 30, 1995 and for the three months ended June 28, 1996 and June 30, 1995 4 Consolidated Balance Sheets June 28, 1996 and December 29, 1995 5 Consolidated Statements of Cash Flows for the six months ended June 28, 1996 and June 30, 1995 7 Consolidated Statement of Changes in Shareholders' Investment for the six months ended June 28, 1996 . 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 Six Months ended June 28, 1996 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 December 29, 1995. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share data) Six Months Ended Three Months Ended --------------------- ---------------------- June 28, June 30, June 28, June 30, 1996 1995 1996 1995 --------- --------- -------- -------- Net sales $ 241,996 $ 223,801 $ 131,471 $ 116,609 -------- -------- -------- -------- Costs and expenses: Cost of sales 181,706 165,062 97,107 85,802 Selling, general and administrative 31,959 30,861 17,371 15,413 Amortization of goodwill 760 760 380 380 Interest 9,312 9,160 4,639 4,597 -------- -------- -------- -------- 223,737 205,843 119,497 106,192 -------- -------- -------- -------- Income before income taxes 18,259 17,958 11,974 10,417 Provision for income taxes 6,922 6,963 4,541 3,956 -------- -------- -------- -------- Net income $ 11,337 $ 10,995 $ 7,433 $ 6,461 ======== ======== ======== ======== Net income per share $ 0.76 $ 0.75 $ 0.50 $ 0.44 ======== ======== ======== ======== Weighted average shares outstanding 14,920 14,754 14,955 14,758 The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) June 28, December 29, 1996 1995 --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 4,006 $ 32,581 Receivables (net of allowances of $3,017 and $2,588, respectively) 68,985 50,406 Inventories 96,485 74,572 Prepaid expenses 5,604 4,735 -------- -------- Total current assets 175,080 162,294 -------- -------- Property, plant and equipment Land 15,329 15,855 Buildings 59,265 49,808 Equipment, furniture and fixtures 128,122 110,719 -------- -------- 202,716 176,382 Less: accumulated depreciation 35,763 30,540 -------- -------- 166,953 145,842 Other assets: Goodwill 71,850 55,090 Trademark 28,733 29,133 Other 2,609 1,468 Deferred financing costs 5,783 5,988 -------- -------- Total assets $ 451,008 $ 399,815 ======== ======== 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) June 28, December 29, 1996 1995 --------- ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Current portion of long-term debt $ 2,872 $ 3,210 Accounts payable 23,730 17,086 Accrued liabilities 37,253 28,601 Income taxes payable 3,041 - -------- -------- Total current liabilities 66,896 48,897 -------- -------- Long-term debt, net of current portion 201,839 183,044 -------- -------- Other long-term liabilities 2,908 - Deferred income taxes 39,099 38,973 -------- -------- Total liabilities 310,742 270,914 -------- -------- Shareholders' investment: Common stock - $.01 par value, authorized shares - 30,000,000 issued and outstanding shares - 14,668,016 at June 28, 1996 and 14,663,365 at December 29, 1995 147 147 Additional paid-in capital 93,128 93,100 Retained earnings 46,991 35,654 -------- -------- Total shareholders' investment 140,266 128,901 -------- -------- Total liabilities and shareholders' investment $ 451,008 $ 399,815 ======== ======== 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) Six Months Ended -------------------- June 28, June 30, 1996 1995 --------- -------- Cash flows from operating activities: Net income $ 11,337 $ 10,995 Adjustments: Depreciation 5,473 4,456 Deferred income taxes (431) (785) Amortization of goodwill and trademark 1,160 1,160 Amortization of deferred financing costs 436 714 Provision for doubtful accounts 303 379 Changes in assets and liabilities: Receivables (11,934) (8,993) Inventories (7,695) (3,776) Prepaid expenses (600) (621) Other assets (458) 168 Accounts payable 4,844 725 Accrued liabilities 1,754 (845) Accrued liabilities - interest (13) (801) Income taxes payable 3,782 (66) -------- -------- Net cash provided by operating activities 7,958 2,710 -------- -------- Cash flows from investing activities: Additions to property, plant & equipment (5,390) (4,547) Proceeds from sale of property, plant & equipment 1,524 - Acquisition of Hartco - Stock (36,140) - Acquisition of Hartco - Notes (5,012) - -------- ------- Net cash used in investing activities (45,018) (4,547) -------- -------- Cash flows from financing activities: Long-term debt borrowings 10,000 - Long-term debt payments (1,543) (800) Exercise of stock options 28 2 Reimbursement of construction deposits - 1,780 -------- -------- Net cash provided by financing activities 8,485 982 -------- -------- Net (decrease) in cash and cash equivalents $ (28,575) $ (855) Cash and cash equivalents, beginning of period 32,581 24,906 -------- -------- Cash and cash equivalents, end of period $ 4,006 $ 24,051 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 8,900 $ 9,507 Income taxes 3,587 7,798 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, December 29, 1995 $ 147 $ 93,100 $ 35,654 $128,901 Net income - - 11,337 11,337 Exercise of stock options - 28 - 28 ------ ------- ------- ------- Balance, June 28, 1996 $ 147 $ 93,128 $ 46,991 $140,266 ======= ======= ======= ======= 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 HARTCO FLOORING COMPANY On June 28, 1996, the Company acquired all of the outstanding shares of Hartco Flooring Company ("Hartco"), formerly a wholly-owned subsidiary of Premark International, Inc. The total value of the acquisition was $63 million, consisting of $36.1 million in cash and the balance representing the assumption of 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 $17.5 million and has been recorded as goodwill, which is being amortized on a straight-line basis over 40 years. The accompanying consolidated statements of operations do not reflect any operations of Hartco since the acquisition occurred on June 28, 1996. The operations of Hartco will be reflected by the Company in periods subsequent to June 28, 1996. The net purchase price was allocated as follows: (in thousands) Net working capital $ 13,589 Net property, plant and equipment 22,717 Other assets 712 Goodwill 17,530 Other non-current liabilities (18,408) ------- Cash paid for Hartco $ 36,140 ======= The unaudited proforma results below assume the acquisition occurred at the beginning of the six-month interim periods ended June 28, 1996 and June 30, 1995 (in thousands, except per share data): June 28, June 30, 1996 1995 -------- -------- Net sales $ 282,415 $ 258,087 Net income 11,671 10,957 Net income per share $ 0.78 $ 0.74 The above proforma results include adjustments to give effect to amortization of goodwill, interest expense on acquisition debt and certain other adjustments, together with related income tax effects. The proforma results above are not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of January 1, 1996 and 1995, nor are they necessarily indicative of future operating results. 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 $39,804,000 at June 28, 1996 and $21,154,000 at December 29, 1995. Had all inventories been valued by the FIFO method, which approximates current cost, inventories would have been increased by $2,307,000 at June 28, 1996 and $2,071,000 at December 29, 1995. 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: June 28, December 29, 1996 1995 ------------------------- (in thousands) Raw materials $ 50,794 $ 42,088 Work-in-process 6,698 3,625 Finished goods 38,993 28,859 -------- -------- Total $ 96,485 $ 74,572 ======== ======== NOTE 3 - LONG-TERM DEBT: Long-term debt consists of the following: June 28, December 29, 1996 1995 ------------------------------- (in thousands) Senior Notes, 10 1/2% due 8-1-2003 $ 160,000 $ 160,000 Capitalized lease obligations 18,272 19,547 Industrial revenue bonds 16,439 6,707 Revolving note - Bank 10,000 - -------- -------- 204,711 186,254 Less: Current portion of long-term debt (2,872) (3,210) -------- -------- $ 201,839 $ 183,044 ======== ======== Letters of credit outstanding were $20.4 million at June 28, 1996 and $9.7 million at December 29, 1995, under a facility pursuant to which they can be renewed or replaced. On June 28, 1996, in connection with the acquisition of Hartco Flooring Company, the Company acquired $10,000,000, floating interest rate, City of Somerset, Kentucky, Industrial Revenue Bonds, due in full on August 1, 2009. These bonds were used to finance the Somerset, Kentucky hardwood flooring plant and are collateralized by a $10,000,000 letter of credit. NOTE 4 - INCOME TAXES: The components of the deferred tax liability and asset are as follows: June 28, December 29, 1996 1995 ------------------------ (in thousands) Deferred Tax Liability: Property, plant and equipment $ 26,075 $ 24,229 Trademark 11,177 11,449 Other 9,471 7,250 -------- -------- Total $ 46,723 $ 42,928 ======== ======== Deferred Tax Asset: Other $ 7,624 $ 3,955 -------- -------- Total $ 7,624 $ 3,955 ======== ======== The provision for income taxes consists of the following: Six Months Ended -------------------- June 28, June 30, 1996 1995 -------------------- (in thousands) Current: Federal $ 6,232 $ 6,831 State and local 1,152 856 -------- ------- $ 7,384 $ 7,687 ======== ======= Deferred: Federal $ (457) $ (645) State and local (5) (79) -------- ------- $ (462) $ (724) ======== ======= Total $ 6,922 $ 6,963 ======== ======= The tax provision for the periods ending June 28, 1996 and June 30, 1995 is 37.9% and 38.8% of pre-tax income respectively. The factors causing the rate to vary from the U.S. Federal statutory rate are as follows: Six Months Ended -------------------- June 28, June 30, 1996 1995 -------------------- (in thousands) Computed (expected) tax provision $ 6,391 $ 6,285 Increase (decrease) from: State and local taxes 744 772 Amortization of goodwill 266 299 Foreign sales (176) - Other book to tax differences, net (303) (393) ------- ------ $ 6,922 $ 6,963 ======= ====== MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Net sales for the six months ended June 28, 1996 were $242.0 million compared to $223.8 million for the six months ended June 30, 1995, representing a 8.1% increase. Net sales for the three months ended June 28, 1996 were $131.5 million compared to $116.6 million for the three months ended June 30, 1995, representing a 12.7% increase. Flooring Division sales were up 19% over the comparable period in 1995. Cabinet Division sales in the second quarter of 1996, without the impact of the decline in sales from the discontinued Beltsville Building Products unit were up 11.8% over those of the same period in 1995. GROSS PROFIT Gross profit for the six months ended June 28, 1996 amounted to $60.3 million, or 24.9% of net sales, compared to $58.7 million, or 26.3% of net sales in the same period in 1995. Gross profit for the three months ended June 28, 1996 was $34.4 million or 26.1% of net sales compared to $30.8 million or 26.4% of net sales in the same period in 1995. However, gross profit margins improved over the first quarter of 1996. The major improvement was generated by the Flooring Division, which benefited from higher unit prices and improved overhead absorption resulting from higher unit sales. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses amounted to $32.0 million or 13.2% of net sales for the six months ended June 28, 1996 compared to $30.9 million or 13.8% of net sales for the six months ended June 30, 1995. Selling, general and administrative expenses amounted to $17.4 million or 13.2% of net sales for the three months ended June 28, 1996 compared to $15.4 million or 13.2% of net sales for the three months ended June 30, 1995. OPERATING INCOME Operating income for the six months ended June 28, 1996 was $27.6 million compared to $27.1 million for the six months ended June 30, 1995. Operating income for the three months ended June 28, 1996 was $16.6 million compared to $15.0 million in the same period in 1995. INTEREST EXPENSE Interest expense for the six months ended June 28, 1996 was $9.3 million compared to $9.2 million for the six months ended June 30, 1995. Interest expense for the three months ended June 28, 1996 was $4.6 million, the same as the three month period ended June 30, 1995. NET INCOME Net income for the six months ended June 28, 1996 was $11.3 million or $0.76 per share compared to $11.0 million or $0.75 per share for the six months ended June 30, 1995. Net income for the three months ended June 28, 1996 was $7.4 million or $0.50 per share compared to $6.5 million or $0.44 per share for the three months ended June 30, 1995. LIQUIDITY AND CAPITAL RESOURCES For the six months ended June 28, 1996, cash decreased by $28.6 million due principally to the cash used to purchase the stock of Hartco Flooring Company (See Note 1 of Notes to Consolidated Financial Statements). At June 28, 1996, the Company had working capital of $108.2 million, or 24.0% of total assets, and $59.6 million of unused bank borrowing capacity. 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. This report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q, including, without limitation, statements contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations 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 six month interim period ended June 28, 1996. (Submitted only in EDGAR filing to Securities and Exchange Commission) b) No reports on Form 8-K have been filed during the quarter ended June 28, 1996. 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: August 12, 1996 By: /s/ M. Joseph McHugh ----------------- ----------------------------------- M. Joseph McHugh President and Chief Operating Officer (duly authorized officer) Date: August 12, 1996 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 SIX MONTHS ENDED THREE MONTHS ENDED ---------------------- ---------------------- JUNE 28, JUNE 30, JUNE 28, JUNE 30, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net Income $11,337,000 $10,995,000 $ 7,433,000 $ 6,461,000 ========== ========== ========== ========== Shares outstanding beginning of period 14,663,365 14,662,609 14,668,016 14,662,609 Weighted average number of shares issued from exercise of stock options 3,284 756 - 756 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding 14,666,649 14,663,365 14,668,016 14,663,365 Shares issuable from assumed exercise of stock options, reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 253,156 90,526 287,158 94,571 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding as adjusted 14,919,805 14,753,891 14,955,174 14,757,936 ========== ========== ========== ========== Primary income per common and common equivalent share $ 0.76 $ 0.75 $ 0.50 $ 0.44 ========== ========== ========== ========== Assuming full dilution: Weighted average number of shares outstanding 14,666,649 14,663,176 14,668,016 14,663,365 Shares issuable from assumed exercise of stock options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 318,677 97,417 318,677 97,417 ---------- ---------- ---------- ---------- Weighted average number of shares outstanding as adjusted 14,985,326 14,760,593 14,986,693 14,760,782 ========== ========== ========== ========== Fully diluted income per common and common equalivalent share $ 0.76 $ 0.75 $ 0.50 $ 0.44 ========== ========== ========== ========== 13 EX-27 2
5 6-MOS JAN-03-1997 JUN-28-1996 4,006,000 0 72,002,000 3,017,000 96,485,000 175,080,000 202,716,000 35,763,000 451,008,000 66,896,000 0 0 0 147,000 140,119,000 451,008,000 241,996,000 241,996,000 181,706,000 181,706,000 32,416,000 303,000 9,312,000 18,259,000 6,922,000 11,337,000 0 0 0 11,337,000 0.76 0.76
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