-----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, PhHKu3uMlQ1hTOaaXkSb7tTdXcm67KP2Y/FAytL3ylh6ye6fPHfFE+0FAxnh4dS9 /QjwAtBLPmSB15eAMj9ioQ== 0001042910-99-000639.txt : 19990518 0001042910-99-000639.hdr.sgml : 19990518 ACCESSION NUMBER: 0001042910-99-000639 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990403 FILED AS OF DATE: 19990517 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: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07753 FILM NUMBER: 99627572 BUSINESS ADDRESS: STREET 1: 10011 PINES BLVD SUITE 201 CITY: PEMBROKE PINES STATE: FL ZIP: 33024 BUSINESS PHONE: 3054368909 10-Q 1 QUARTERLY REPORT 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 April 3, 1999 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 May 7, 1999 ------------------- -------------------------- Common Stock, Par Value $.20 Per Share 3,445,396 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. - ------ -------------------- DECORATOR INDUSTRIES, INC. BALANCE SHEET
April 3, 1999 Jan. 2, 1999 ASSETS ------------- ------------ ------ (UNAUDITED) Current Assets: Cash and Cash Equivalents $1,503,963 $2,633,999 Short-term Investments 1,862,746 861,032 Accounts Receivable, less allowance for doubtful accounts ($124,753 and $111,706) 4,966,576 3,847,435 Inventories 5,012,951 5,725,226 Other Current Assets 375,163 349,394 ---------- ---------- Total Current Assets 13,721,399 13,417,086 ---------- ---------- Property and Equipment: Land, Buildings & Improvements 3,938,288 2,676,183 Machinery, Equipment, Furniture and Fixtures 4,235,432 4,124,579 ---------- ---------- Total Property and Equipment 8,173,720 6,800,762 Less: Accumulated Depreciation and Amortization 2,750,885 2,635,683 ---------- ---------- Net Property and Equipment 5,422,835 4,165,079 ---------- ---------- Goodwill, less accumulated amortization of $1,097,672 and $1,070,336 3,261,246 3,288,582 Other Assets 233,025 591,947 ========== ========== Total Assets $22,638,505 $21,462,694 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY - ---------------------------------- Current Liabilities: Accounts Payable $3,602,417 $2,869,889 Current Maturities of Long-term Debt 101,901 43,133 Accrued Expenses: Income Taxes 255,657 ------ Compensation 894,557 1,373,572 Other 818,653 886,331 ---------- ----------- Total Current Liabilities 5,673,185 5,172,925 ---------- ----------- Long-Term Debt 1,892,213 463,037 Deferred Income Taxes 278,000 267,000 ----------- ----------- Total Liabilities 7,843,398 5,902,962 ----------- ----------- Stockholders' Equity Common stock $.20 par value: Authorized shares, 10,000,000; Issued shares, 4,406,956 and 4,369,866 881,391 874,007 Paid-in Capital 1,413,575 1,396,914 Retained Earnings 17,213,621 16,756,377 ----------- ----------- 19,508,587 19,027,298 Less: Treasury stock, at cost: 977,572 and 812,500 shares 4,713,480 3,467,566 ---------- ----------- Total Stockholders' Equity 14,795,107 15,559,732 ---------- ----------- Total Liabilities and Stockholders' Equity $22,638,505 $21,462,694 =========== ===========
The accompanying notes are an integral part of the financial statements. 1 DECORATOR INDUSTRIES, INC. STATEMENT OF EARNINGS (UNAUDITED)
FOR THIRTEEN WEEKS ENDED: ------------------------------------------------------- April 3, 1999 April 4, 1998 ------------- ------------- Net Sales $13,211,871 100.00% $12,649,704 100.00% Cost of Products Sold 10,314,840 78.07% 9,663,191 76.39% ------------- ------------- Gross Profit 2,897,031 21.93% 2,986,513 23.61% Selling and Administrative Expenses 1,781,393 13.48% 1,662,130 13.14% ------------- ------------- Operating Income 1,115,638 8.45% 1,324,383 10.47% Other Income (Expense): Interest and Investment Income 17,906 0.13% 70,836 0.56% Interest Expense (4,528) -0.03% (3,324) -0.03% ------------- ------------- Earnings Before Income Taxes 1,129,016 8.55% 1,391,895 11.00% Provision for Income Taxes 426,000 3.23% 512,000 4.05% ============= ============= Net Income $703,016 5.32% $879,895 6.96% ============= ============= Earnings Per Share: Basic $0.20 $0.24 ===== ===== Diluted $0.19 $0.22 ===== ===== Weighted-Average Number of Shares Outstanding: Basic 3,526,904 3,655,994 Diluted 3,694,190 3,885,200
The accompanying notes are an integral part of the financial statements. 2 DECORATOR INDUSTRIES, INC. STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THIRTEEN WEEKS ENDED: April 3, 1999 April 4, 1998 ------------- ------------- Cash Flows From Operating Activities: Net Income $703,016 $879,895 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 156,833 134,270 Provision for Losses on Accounts Receivable 13,000 14,000 Loss on Disposal of Assets 3,833 1,725 Increase (Decrease) from Changes in: Accounts Receivable (878,122) (1,284,138) Inventory 712,275 (277,607) Prepaid Expenses 8,245 (211,508) Other Assets 358,922 (114,631) Accounts Payable 732,528 1,125,593 Accrued Expenses (291,036) (147,058) ------------- ------------ Net Cash Provided by Operating Activities 1,519,494 120,541 ------------- ------------ Cash Flows From Investing Activities: Capital Expenditures (1,391,086) (168,111) Short-term Investments (1,001,714) 389,252 Note Receivable --- 20,000 ----------------- ------------ Net Cash Provided by (Used in) Investing Activities (2,392,800) 241,141 ----------------- ------------ Cash Flows From Financing Activities: Long-term Debt Payments (12,056) (10,301) Proceeds from Debt on New Building 1,222,965 --- Dividend Payments (245,772) (205,386) Proceeds from Exercise of Stock Options 18,833 7,619 Issuance of Stock for Directors' Compensation 12,500 12,180 Purchase of Common Stock for Treasury (1,253,200) --- ----------------- ------------- Net Cash Used in Financing Activities (256,730) (195,888) Net Increase (Decrease) in Cash and Cash Equivalents (1,130,036) 165,794 Cash and Cash Equivalents at Beginning of Year 2,633,999 3,157,861 ================ ------------- Cash and Cash Equivalents at End of Period $1,503,963 $3,323,655 ================ ============= Supplemental Disclosures of Cash Flow Information: Cash Paid for: Interest $6,334 $6,541 Income Taxes $26,147 $31,897
The accompanying notes are an integral part of the financial statements. 3 DECORATOR INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS THIRTEEN WEEKS ENDED APRIL 3, 1999 AND APRIL 4, 1998 (UNAUDITED) NOTE 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position as of April 3, 1999, the changes therein for the thirteen week period then ended and the results of operations for the thirteen week periods ended April 3, 1999 and April 4, 1998. NOTE 2. The 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 2, 1999. The results of operations for the thirteen week periods ended April 3, 1999 and April 4, 1998 are not necessarily indicative of operating results for the full year. NOTE 3. INVENTORIES ----------- Inventories at April 3, 1999 and January 2, 1999 consisted of the following: April 3, 1999 January 2, 1999 ------------- --------------- Raw Material and Supplies $ 4,674,561 $ 5,462,938 In Process and Finished Goods 338,390 262,288 ============ =========== Total Inventory $ 5,012,951 $ 5,725,226 ============ =========== NOTE 4. EARNINGS PER SHARE ------------------ Basic earnings per share is computed by dividing net income by weighted-average number of shares outstanding. Diluted earnings per share includes the dilutive effect of stock options. In accordance with SFAS No. 128, the following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations. April 3, 1999 April 4, 1998 ------------- ------------- Numerator: Net income $ 703,016 $ 879,895 ========= ========= Denominator: Weighted-average number of common shares outstanding 3,526,904 3,655,994 Dilutive effect of stock options on net income 167,286 229,206 --------- -------------- 3,694,190 3,885,200 ========= ============== Diluted earnings per share: $0.19 $0.22 4 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 First Quarter 1999. April 3, 1999 January 2, 1999 ------------- --------------- Current Ratio 2:42 2:59 Quick Ratio 1:54 1:49 LT Debt to Total Capital 13.79% 3.45% Working Capital $8,048,214 $8,244,161 Days sales outstanding in accounts receivable were 34.2 days at April 3, 1999 compared to 35.3 days at April 4, 1998. Accounts receivable increased by more than 29%. Inventories were reduced by 12% during the quarter. A significant use of working capital was for the purchase of Common Stock for Treasury ($1,253,200) during the quarter. In February 1999, the construction of a new building in Goshen, Indiana was completed at a cost of approximately $1,240,000. This building replaced a leased facility. During 1999, the Company was awarded an industrial revenue bond in the amount of $1,500,000, the net proceeds of which will be used for the funding of this building and the purchase of equipment at this location. Cash and Short-Term Investments totaled $3,366,709 at April 3, 1999. Management does not foresee any events which will adversely affect its liquidity during 1999, 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: First First Quarter Quarter 1999 1998 ---- ---- Earnings Ratios --------------- Net sales 100.0% 100.0% Cost of products sold 78.1 76.4 Selling and administrative 13.5 13.1 Interest and investment income (0.1) (0.6) Interest expense 0.0 0.0 Income taxes 3.2 4.1 Net income 5.3 7.0 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. (Continued) - -------------------------------------------------------------------------------- Thirteen Week Period Ended April 3, 1999, (First Quarter 1999) compared to Thirteen Week Period Ended April 4, 1998, (First Quarter 1998) - -------------------------------------------------------------- Net sales for the First Quarter 1999 were $13,211,871, compared to $12,649,704 for the same period in the previous year, a 4.4% increase. This increase was the result of growth in sales to the recreational vehicle market. Cost of products sold increased to 78.1% in the First Quarter 1999 compared to 76.4% a year ago. This increase is largely attributable to (1) a change in the product mix including the increased sales to recreational vehicle manufacturers and (2) productivity issues resulting in excessive labor costs and (3) market conditions which have resulted in a lowering of operating margins. Selling and administrative expenses were $1,781,393 in the First Quarter 1999 versus $1,662,130 in the First Quarter 1998. A portion of the increased expenses, approximately $40,000, results from the relocation of the Goshen facility during the quarter. Interest and investment income was $53,000 less in the First Quarter 1999 than the amount earned in the First Quarter 1998. The lower income in the current period was due to a market loss on investments versus a market gain a year ago and from smaller investable balances in the current quarter. Net income decreased to $703,016 from $879,895 for the same period a year ago but improved from $577,589 achieved in the prior quarter. Basic earnings per share decreased to 20 cents per share from 24 cents in the first quarter of last year. Year 2000 Issues The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs that have date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in system failure or miscalculations causing disruptions in operations, including, among other things, a temporary inability to process transactions, generate invoices, or engage in similar normal business activities. Based on management's assessment, the Company determined that it would be required to modify or replace portions of its software and hardware so that its computer systems will properly recognize dates beyond December 31, 1999. The majority of the Company's manufacturing processes are not dependent on computers. The Company presently believes that with modification or replacement of software and hardware, the Year 2000 issue can be mitigated. If such modifications and replacements are not made, or are not completed timely, the Year 2000 issue would not have a material adverse effect on the Company. The Company has created no formal contingency plans in the event that the Year 2000 readiness is not completed on schedule. However, the Company believes that this would cause only minor problems and delays. The Company plans to complete the Year 2000 project during the third quarter of fiscal 1999. The total cost incurred to date related to the Year 2000 project, which have been charged to expense, have not been material, and the Company does not anticipate that the expected remaining costs will be material. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. (Continued) - ------------------------------------------------------------------------------- The Company has initiated formal communications with all of its significant suppliers and large customers to determine the extent to which the Company is vulnerable to those third parties' failure to remedy their own Year 2000 issues. Failure on the part of these entities to timely remediate their Year 2000 issues could result in disruptions in the Company's supply of materials, disruptions in its customers' ability to conduct business and interruptions to the Company's daily operations. Management believes that its exposure to third party risk is minimal because it does not rely significantly on any one supplier or customer. There can be no guarantee, however, that the systems of other unrelated entities on which the Company's systems and operations rely will be corrected on a timely basis and will not have a material adverse effect on the Company. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 27.I - Financial data schedule, filed herewith. (b) No reports on Form 8-K were filed by the Company during the quarterly period ended April 3, 1999. 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: May 17, 1999 By: /s/ William A. Bassett . ------------------------- William A. Bassett, President Date: May 17, 1999 By: /s/ Michael K. Solomon ------------------------- Michael K. Solomon, Treasurer 7 EX-27.I 2 FDS --
5 3-MOS JAN-01-2000 JAN-03-1999 APR-03-1999 1,503,963 1,862,746 5,091,329 124,753 5,012,951 13,721,399 8,173,720 2,750,885 22,638,505 5,673,185 0 0 0 881,391 13,913,716 22,638,505 13,211,871 13,211,871 10,314,840 12,069,855 0 13,000 4,528 1,129,016 426,000 703,016 0 0 0 703,016 0.20 0.19
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