-----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, JexL0pb9zAhKw4rzdI3xawuQsaFMnteo5tuLyux4ZjLT5lUUjKzJfTqq6uAZYlnN pXrJcygI8Z0tCIg7BHlaQw== 0001042910-98-001135.txt : 19981118 0001042910-98-001135.hdr.sgml : 19981118 ACCESSION NUMBER: 0001042910-98-001135 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981003 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DECORATOR INDUSTRIES INC CENTRAL INDEX KEY: 0000027613 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390] IRS NUMBER: 251001433 STATE OF INCORPORATION: PA FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07753 FILM NUMBER: 98751384 BUSINESS ADDRESS: STREET 1: 10011 PINES BLVD SUITE 201 CITY: PEMBROKE PINES STATE: FL ZIP: 33024 BUSINESS PHONE: 3054368909 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, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-7753 DECORATOR INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-1001433 ------------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10011 Pines Blvd., Suite #201, Pembroke Pines, Florida 33024 - ------------------------------------------------------ ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (954) 436-8909 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. Yes X No ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of each class Outstanding at November 9, 1998 ------------------- ------------------------------- Common Stock, Par Value $.20 Per Share 3,568,822* *Includes 3,756 shares issuable upon surrender of the outstanding $.10 par Common Stock. PART I - FINANCIAL INFORMATION
Item 1. Financial Statements. - ------- --------------------- DECORATOR INDUSTRIES, INC. BALANCE SHEET October 3, 1998 Jan. 3, 1998 --------------- ------------ ASSETS (UNAUDITED) ------ Current Assets: Cash and cash equivalents $2,135,307 $3,157,861 Short-term investments 1,669,651 2,006,882 Accounts receivable, less allowance for doubtful accounts ($264,453 and $218,018) 5,184,540 3,643,503 Inventories 5,986,501 4,578,381 Other current assets 400,943 256,425 -------------------- ----------------- Total Current Assets 15,376,942 13,643,052 -------------------- ----------------- Property and equipment: Land, buildings & improvements 2,673,412 2,182,228 Machinery, equipment, furniture and fixtures 4,024,868 3,500,122 -------------------- ----------------- Total property and equipment 6,698,280 5,682,350 Less: accumulated depreciation and amortization 2,517,383 2,208,956 -------------------- ----------------- Net property and equipment 4,180,897 3,473,394 -------------------- ----------------- Goodwill, less accumulated amortization of $1,042,995 and $963,466 3,315,923 3,010,422 Other assets 191,677 174,400 ==================== ================= Total Assets $23,065,439 $20,301,268 ==================== ================= LIABILITIES & STOCKHOLDERS' EQUITY ---------------------------------- Current Liabilities: Accounts payable $4,478,177 $3,114,661 Current maturities of long-term debt 42,953 42,423 Accrued expenses: Income taxes 9,707 ------ Compensation 1,434,800 1,323,276 Other 633,705 756,442 -------------------- ----------------- Total Current Liabilities 6,599,342 5,236,802 -------------------- ----------------- Long-term debt 470,787 506,169 Deferred income taxes 251,000 211,000 -------------------- ----------------- Total Liabilities 7,321,129 5,953,971 -------------------- ----------------- Stockholders' Equity: Common stock $.20 par value: authorized shares, 10,000,000; issued shares, 4,345,033 and 3,463,840 869,007 692,794 Paid-in capital 1,344,686 1,513,280 Retained earnings 16,449,916 14,588,269 -------------------- ----------------- 18,663,609 16,794,343 Less: Treasury stock, at cost: 744,594 and 554,100 shares 2,919,299 2,447,046 -------------------- ----------------- Total Stockholders' Equity 15,744,310 14,347,297 -------------------- ----------------- Total Liabilities and Stockholders' Equity $23,065,439 $20,301,268 ==================== ================= The accompanying notes are an integral part of the financial statements. 1
DECORATOR INDUSTRIES, INC. STATEMENT OF EARNINGS (UNAUDITED)
FOR THIRTEEN WEEKS ENDED: FOR THIRTY-NINE WEEKS ENDED: -------------------------------------------- -------------------------------------------------- October 3, 1998 September 27, 1997 October 3, 1998 September 27, 1997 -------------------- ---------------------- -------------------- -------------------- Net sales $13,210,272 $11,051,332 $39,569,202 $32,215,233 Cost of products sold 10,415,178 8,505,711 30,777,968 24,237,010 ---------------- --------------- ---------------- --------------- Gross profit 2,795,094 2,545,621 8,791,234 7,978,223 Selling and Administrative expenses 1,688,577 1,535,182 5,037,211 4,585,469 ---------------- --------------- ---------------- --------------- Operating income 1,106,517 1,010,439 3,754,023 3,392,754 Interest and investment income 26,444 93,516 175,930 269,558 Interest expense (3,446) (3,355) (9,648) (21,037) ---------------- --------------- ---------------- --------------- Earnings before 1,129,515 1,100,600 3,920,305 3,641,275 income taxes Provision for income taxes 418,000 356,000 1,417,000 1,286,000 ---------------- --------------- ---------------- --------------- Income from continuing operations 711,515 744,600 2,503,305 2,355,275 Loss on discontinued operations, less applicable income tax of ------ (108,400) ------ (136,918) $66,000 and $83,000 ---------------- --------------- ---------------- --------------- Net income $711,515 $636,200 $2,503,305 $2,218,357 ================ =============== ================ =============== Earnings per share: Continuing operations $0.20 $0.20 * $0.69 $0.64 * ===== ===== ===== ===== Basic $0.20 $0.17 * $0.69 $0.60 * ===== ===== ===== ===== Diluted $0.19 $0.16 * $0.64 $0.56 * ===== ===== ===== ===== Weighted-average number of shares outstanding: Basic 3,639,427 3,734,516 * 3,651,533 3,718,047 * Diluted 3,918,213 3,989,620 * 3,917,363 3,983,744 *
* Restated to reflect the five-for-four stock split effective July 21, 1998. The accompanying notes are an integral part of the financial statements. 2 DECORATOR INDUSTRIES, INC. STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THIRTY-NINE WEEKS ENDED: October 3, 1998 Sept. 27, 1997 --------------- -------------- Cash Flows From Operating Activities: Net income $2,503,305 $2,218,357 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 416,472 380,648 Provision for losses on accounts receivable 36,000 (4,000) Deferred taxes (13,000) 21,000 (Gain) loss on disposal of assets (4,806) (4,125) (Increase) decrease in accounts receivable (1,577,038) (827,967) (Increase) decrease in inventories (1,408,120) (752,961) (Increase) decrease in prepaid expenses (151,518) (242,450) (Increase) decrease in other assets (17,277) (26,954) Increase (decrease) in accounts payable 1,363,516 1,060,589 Increase (decrease) in accrued expenses (1,506) 108,579 ----------------------- -------------------- Net Cash Provided by Operating Activities 1,146,028 1,930,716 ----------------------- -------------------- Cash Flows From Investing Activities: Capital expenditures (1,050,928) (442,939) Proceeds from property dispositions 11,290 4,375 Short-term investments 337,231 (246,696) Note receivable 60,000 60,000 Net cash paid for acquisitions (385,030) (3,288,720) ----------------------- -------------------- Net Cash Used in Investing Activities (1,027,437) (3,913,980) ----------------------- -------------------- Cash Flows From Financing Activities: Long-term debt payments (34,852) (30,801) Dividend payments (663,220) (584,512) Cash in lieu of fractional shares ------ (1,133) Proceeds from exercise of stock options 7,619 25,504 Stock option tax benefit ------ 25,000 Purchase of common stock for treasury (488,192) (211,595) Issuance of stock for director's compensation 37,500 22,092 ----------------------- -------------------- Net Cash Used in Financing Activities (1,141,145) (755,445) Net (decrease) in cash and cash equivalents (1,022,554) (2,738,709) Cash and cash equivalents at beginning of year 3,157,861 4,714,356 ======================= ==================== Cash and Cash Equivalents at End of Period $2,135,307 $1,975,647 ======================= ==================== Supplemental disclosures of cash flow information: Cash paid for: Interest $27,364 $19,701 Income taxes $1,410,237 $1,181,883 Cash flows from acquisitions: Purchase price $385,030 $3,300,096 Less: deferred portion of purchase price ------ ($11,376) Cash used for acquisitions $385,030 $3,288,720
The accompanying notes are an integral part of the financial statements. 3 DECORATOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THIRTY-NINE WEEKS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997 (UNAUDITED) NOTE 1. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position as of October 3, 1998, the changes therein for the thirty-nine week period then ended and the results of operations for the thirty-nine week periods ended October 3, 1998 and September 27, 1997. NOTE 2. The consolidated financial statements included in the Form 10-Q are presented in accordance with the requirements of the form and do not include all of the disclosures required by generally accepted accounting principles. For additional information, reference is made to the Company's annual report on Form 10-K for the year ended January 3, 1998. The results of operations for the thirty-nine week periods ended October 3, 1998 and September 27, 1997 are not necessarily indicative of operating results for the full year. NOTE 3. INVENTORIES ----------- Inventories at October 3, 1998 and January 3, 1998 consisted of the following: October 3, 1998 January 3, 1998 --------------- --------------- Raw Material and Supplies $5,635,457 $ 4,343,132 In Process and 351,044 Finished Goods 235,249 ============== =============== Total Inventory $5,986,501 $4,578,381 ============== =============== NOTE 4. EARNINGS PER SHARE ------------------ The Company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" in 1997. SFAS No. 128 simplifies the computation of earnings per share ("EPS") previously required in Accounting Principles Board (APB) Opinion No. 15, "Earnings Per Share," by replacing primary and fully diluted EPS with basic and diluted EPS. Under SFAS No. 128, basic EPS is calculated by dividing net income by the weighted-average common shares outstanding during the period. Diluted EPS reflects the potential dilution to basic EPS that could occur upon conversion or exercise of securities, options, or other such items, to common shares using the treasury stock method based upon the weighted-average fair value of the Company's common shares during the period. SFAS No. 128 was required to be adopted by the Company in its year-end 1997 Annual Report, and earnings per share for prior periods have been restated in accordance with SFAS No. 128. 4 DECORATOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THIRTY-NINE WEEKS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997 (UNAUDITED) NOTE 5. ACQUISITIONS ------------ The cash payments for acquisitions of $385,030 represents the additional consideration due for the acquisitions of Specialty Window Coverings and Southern Interiors, Inc., which were made in March 1997 and May 1997, respectively. Additional consideration may be due Specialty after April 3, 1999 and Southern after July 1, 1999 and July 1, 2000. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations. -------------- FINANCIAL CONDITION - ------------------- The Company's financial condition, as measured by the following ratios, continues to be strong at the end of the Third Quarter. October 3, 1998 January 3, 1998 --------------- --------------- Current Ratio 2:33 2:61 Quick Ratio 1:42 1:73 LT Debt to Total Capital 3.06% 3.71% Working Capital $8,777,600 $8,406,250 The Company is constructing a new facility in Goshen, Indiana to replace a leased facility. This facility will be funded with long-term debt. The expansion of the Bloomsburg, Pennsylvania facility was finalized in the third quarter. This expansion has been funded by working capital. Cash and Short-term Investments totaled $3,804,958 at October 3, 1998. Inventories have increased by $1,408,120 during 1998. The increase results in part from the inventory required to support the higher revenues and also from seasonal requirements. Management expects these inventories to be somewhat reduced by year end. Management does not foresee any events which will adversely affect its liquidity during 1998, and, further, the Company's financial condition is more than adequate to finance internal growth and any additional acquisitions of businesses. RESULTS OF OPERATIONS - --------------------- The following tables show the percentage relationship to net sales of certain items in the Company's Statement of Earnings and net sales dollars by market:
Third 39 Third 39 Quarter Weeks Quarter Weeks 1998 1998 1997 1997 ---- ---- ---- ---- Earnings Ratios --------------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of products sold 78.8 77.8 77.0 75.2 Selling and administrative 12.8 12.7 13.9 14.2 Interest and investment income (0.2) (0.4) (0.9) (0.8) Interest expense 0.0 0.0 0.1 0.1 Income taxes 3.2 3.6 3.2 4.0 Income from continuing operations 5.4 6.3 6.7 7.3 Loss on discontinued operations 1.0 0.4 Net income 5.4 6.3 5.7 6.9 Net Sales by Market (in thousands) ---------------------------------- Manufactured housing $ 5,476 $ 15,769 $ 4,534 $ 14,072 Recreational vehicles 5,587 16,094 4,221 10,892 Hospitality 2,147 7,706 2,296 7,251 ============ ============ ============ ============ Net sales - total $ 13,210 $ 39,569 $ 11,051 $ 32,215 ============ ============ ============ ============
6 Thirteen Week Period Ended October 3, 1998, (Third Quarter 1998) compared to Thirteen Week Period Ended September 27, 1997, (Third Quarter 1997) - ------------------------------------------------------------------- Net sales for the Third Quarter 1998 were $13,210,272, compared to $11,051,332 for the same period the previous year, a 19.5% increase. Net sales to the recreational vehicle and manufactured housing markets increased by 32.4% and 20.8% respectively, with hospitality sales declining by 6.5%. Cost of products sold increased to 78.8% in the Third Quarter 1998 compared to 77.0% a year ago. The increase is the result of higher costs associated with the growth of existing businesses. Selling and administrative expenses decreased to 12.8% in 1998 compared to 13.9% in 1997. The favorable variance can be attributed to the increased sales from existing and acquired businesses. Net income increased 11.8% to $711,515 from $636,200 for the same period a year ago. Basic earnings per share rose to 20 cents per share from 17 cents in the third quarter of last year. Thirty-nine Week Period Ended October 3, 1998, (First Nine Months of 1998) compared to Thirty-nine Week Period Ended September 27, 1997, (First Nine Months - -------------------------------------------------------------------------------- of 1997) - -------- Net sales for the first nine months 1998 were $39,569,202, compared to $32,215,233 for the same period the previous year, a 22.8% increase. Net sales to all markets reflected increases with the largest increase coming from sales to the recreational vehicle market. Sales from comparable operations accounted for $3,915,472, or almost 53%, of the increase; the remaining increase of $3,438,497 is attributed to the acquisitions made in 1997. Cost of products sold increased to 77.8% in the Third Quarter 1998 compared to 75.2% a year ago. The increase is the result of higher cost of products sold percentages attributable to the acquired businesses and from the higher costs associated with the growth of existing businesses. Selling and administrative expenses were $5,037,211 in the first nine months of 1998 versus $4,585,469 in the first nine months of 1997. Most of the increase is attributable to the selling and administrative expenses of the acquired businesses. As a percentage of sales, selling and administrative expenses decreased to 12.7% in 1998 compared to 14.2% in 1997. The favorable variance can be attributed to the increased sales from existing and acquired businesses. Income from continuing operations increased 6% to $2,503,305 from $2,355,275 in the first nine months of 1997. Basic earnings per share rose to 69 cents per share from 60 cents in the first nine months of last year. 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. - ------- --------------------------------- (a) Exhibits: -------- 27G Financial data schedule, filed herewith. (b) No reports on Form 8-K were filed by the Company during the quarterly period ended October 3, 1998. 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. DECORATOR INDUSTRIES, INC. (Registrant) Date: November 12, 1998 By: /s/ William A. Bassett ----------------- -------------------------- William A. Bassett, President Date: November 12, 1998 By: /s/ Michael K. Solomon ----------------- -------------------------- Michael K. Solomon, Treasurer 8 EX-27.G 2 FDS --
5 9-MOS JAN-02-1999 JAN-03-1998 OCT-03-1998 2,135,307 1,669,651 5,448,993 264,453 5,986,501 15,376,942 6,698,280 2,517,383 23,065,439 6,599,342 0 0 0 869,007 14,875,303 23,065,439 39,569,202 39,569,202 30,777,968 35,612,897 0 36,000 9,648 3,920,305 1,417,000 2,503,305 0 0 0 2,503,305 0.69 0.64
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