-----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, LR16Mj6w50OnY6kr4U8f9oEBPDNy3HL6BXLPU5mS/bE58r1SdO961NoGN5Oo/Ror 5F/3rVZVX2Qe1mc2/WCFbw== /in/edgar/work/20000815/0001042910-00-001532/0001042910-00-001532.txt : 20000922 0001042910-00-001532.hdr.sgml : 20000921 ACCESSION NUMBER: 0001042910-00-001532 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20000815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DECORATOR INDUSTRIES INC CENTRAL INDEX KEY: 0000027613 STANDARD INDUSTRIAL CLASSIFICATION: [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: 703335 BUSINESS ADDRESS: STREET 1: 10011 PINES BLVD SUITE 201 CITY: PEMBROKE PINES STATE: FL ZIP: 33024 BUSINESS PHONE: 3054368909 10-Q 1 0001.txt 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 July 1, 2000 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 August 4, 2000 ------------------- ----------------------------- Common Stock, Par Value $.20 Per Share 3,140,365 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. - ------- --------------------- DECORATOR INDUSTRIES, INC. BALANCE SHEET
July 1, 2000 Jan. 1, 2000 ------------ ------------ ASSETS (UNAUDITED) ------ Current Assets: Cash and Cash Equivalents $ 1,284,128 $ 484,328 Short-term Investments -- 1,455,796 Accounts Receivable, less allowance for doubtful accounts ($223,789 and $158,996) 5,120,995 3,725,556 Inventories 6,852,365 5,739,303 Other Current Assets 652,814 372,258 ----------- ----------- Total Current Assets 13,910,302 11,777,241 Property and Equipment: Land, Buildings & Improvements 4,137,916 4,123,189 Machinery, Equipment, Furniture and Fixtures 5,135,342 4,808,280 ----------- ----------- Total Property and Equipment 9,273,258 8,931,469 Less: Accumulated Depreciation and Amortization 3,400,280 3,104,989 ----------- ----------- Net Property and Equipment 5,872,978 5,826,480 ----------- ----------- Goodwill, less accumulated amortization of $1,211,660 and $1,189,871 3,031,126 3,648,965 Other Assets 317,226 412,837 ----------- ----------- Total Assets $23,131,632 $21,665,523 =========== =========== LIABILITIES & STOCKHOLDERS' EQUITY ---------------------------------- Current Liabilities: Accounts Payable $ 4,687,195 $ 3,100,681 Current Maturities of Long-term Debt 102,791 103,871 Accrued Expenses: Income Taxes -- -- Compensation 936,965 1,278,660 Other 1,058,095 647,173 ----------- ----------- Total Current Liabilities 6,785,046 5,130,385 ----------- ----------- Long-Term Debt 1,760,064 1,814,169 Deferred Income Taxes 370,000 356,000 ----------- ----------- Total Liabilities 8,915,110 7,300,554 ----------- ----------- Stockholders' Equity Common stock $.20 par value: Authorized shares, 10,000,000; Issued shares, 4,444,997 and 4,408,831 888,999 881,766 Paid-in Capital 1,441,336 1,427,788 Retained Earnings 18,563,019 18,368,158 ----------- ----------- 20,893,354 20,677,712 Less: Treasury stock, at cost: 1,292,366 and 1,219,801 shares 6,676,832 6,312,743 ----------- ----------- Total Stockholders' Equity 14,216,522 14,364,969 ----------- ----------- Total Liabilities and Stockholders' Equity $23,131,632 $21,665,523 =========== ===========
The accompanying notes are an integral part of the financial statements. 1 DECORATOR INDUSTRIES, INC. STATEMENT OF EARNINGS (UNAUDITED)
FOR THIRTEEN WEEKS ENDED: FOR TWENTY-SIX WEEKS ENDED: ---------------------------------------------- -------------------------------------------- July 1, 2000 July 3, 1999 July 1, 2000 July 3, 1999 ------------ ------------ ------------ ------------ Net sales $12,698,229 100.00% $13,971,826 100.00% $25,783,687 100.00% $26,823,509 100.00% Cost of products sold 9,935,319 78.24% 10,812,044 77.38% 20,288,693 78.69% 20,798,321 77.54% ----------- ----------- ----------- ----------- Gross profit 2,762,910 21.76% 3,159,782 22.62% 5,494,994 21.31% 6,025,188 22.46% Selling and Administrative expenses 1,962,759 15.46% 1,824,736 13.06% 3,701,307 14.36% 3,570,245 13.31% ----------- ----------- ----------- ----------- Operating income 800,151 6.30% 1,335,046 9.56% 1,793,687 6.95% 2,454,943 9.15% Interest and investment income 24,623 (0.19%) 12,950 (0.09%) 43,260 (0.17%) 30,857 (0.12%) Interest expense (26,302) 0.20% (23,686) 0.17% (46,482) 0.18% (28,214) 0.11% ----------- ----------- ----------- ----------- Earnings before 798,472 6.29% 1,324,310 9.48% 1,790,465 6.94% 2,457,586 9.16% income taxes Provision for income taxes 301,000 2.37% 501,000 3.59% 673,000 2.61% 929,000 3.46% ----------- ----------- ----------- ----------- Continuing operations 497,472 3.92% 823,310 5.89% 1,117,465 4.33% 1,528,586 5.70% Discontinued operations: Income (loss) from operations, net of income tax provision (benefit) of $(9,000), $13,000, $(33,000) and $11,000 (16,267) (.13%) 21,369 .15% (55,315) (.21%) 19,109 .07% Loss on disposal, net of income tax benefit of $259,000 (422,481) (3.33%) (422,481) (1.64%) ---------- ----------- ---------- ----------- Net Income $ 58,724 0.46% $844,679 6.04% $ 639,669 2.48% $ 1,547,695 5.77% ========== =========== ========== =========== Earnings per share: Continuing Operations $ 0.16 $ 0.24 $ 0.35 $ 0.44 ========== =========== ========== =========== Discontinued Operations $ (0.14) $ 0.01 $ (0.15) $ 0.01 ========== =========== ========== =========== Basic $ 0.02 $ 0.25 $ 0.20 $ 0.45 ========== =========== ========== =========== Diluted $ 0.02 $ 0.24 $ 0.20 $ 0.43 =========== =========== =========== =========== Weighted-average number of shares outstanding: Basic 3,165,186 3,418,314 3,172,610 3,472,609 Diluted 3,199,699 3,575,523 3,211,131 3,634,857
The accompanying notes are an integral part of the financial statements. 2 DECORATOR INDUSTRIES, INC. STATEMENT OF CASH FLOWS (UNAUDITED)
FOR TWENTY-SIX WEEKS ENDED: July 1, 2000 July 3, 1999 ------------ ------------ Cash Flows From Operating Activities: Net income $ 639,669 $ 1,547,695 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 374,327 324,108 Write-off of goodwill 565,481 -- Provision for losses on accounts receivable 63,433 26,000 Deferred taxes (10,000) 14,000 (Gain) loss on disposal of assets (114) (1,137) (Increase) decrease in accounts receivable (1,458,872) (1,307,927) (Increase) decrease in inventories (1,113,062) 347,073 (Increase) decrease in prepaid expenses (256,556) 25,668 (Increase) decrease in other assets 96,566 122,083 Increase (decrease) in accounts payable 1,586,514 1,534,012 Increase (decrease) in accrued expenses 69,228 (129,611) ----------- ----------- Net Cash Provided by Operating Activities 556,614 2,501,964 ----------- ----------- Cash Flows From Investing Activities: Capital expenditures (360,483) (1,689,760) Proceeds from property dispositions 675 6,100 Short-term investments 1,455,796 (992,669) Net cash paid for acquisitions (9,498) (392,638) ----------- ----------- Net Cash Provided by (Used in) Investing Activities 1,086,490 (3,068,967) ----------- ----------- Cash Flows From Financing Activities: Long-term debt payments (55,185) (39,724) Dividend payments (444,809) (485,140) Proceeds on debt from new building -- 1,397,667 Proceeds from exercise of stock options 21,460 18,833 Purchase of common stock for treasury (384,770) (1,599,808) Issuance of stock for director's compensation 20,000 25,738 ----------- ----------- Net Cash Used in Financing Activities (843,304) (682,434) ----------- ----------- Net increase (decrease) in cash and cash equivalents 799,800 (1,249,437) Cash and cash equivalents at beginning of year 484,328 2,633,999 ----------- ----------- Cash and Cash Equivalents at End of Period $ 1,284,128 $ 1,384,562 =========== =========== Supplemental disclosures of cash flow information: Cash paid for: Interest $ 40,092 $ 25,268 Income taxes $ 569,545 $ 612,375 Cash flows from acquisitions: Purchase price $ 9,498 $ 392,638
The accompanying notes are an integral part of the financial statements. 3 DECORATOR INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS TWENTY-SIX WEEKS ENDED JULY 1, 2000 AND JULY 3, 1999 (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 July 1, 2000, the changes therein for the twenty-six week period then ended and the results of operations for the twenty-six week periods ended July 1, 2000 and July 3, 1999. 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 1, 2000. The results of operations for the twenty-six week periods ended July 1, 2000 and July 3, 1999 are not necessarily indicative of operating results for the full year. Certain numbers from prior periods have been reclassified for comparative purposes. NOTE 3. INVENTORIES Inventories at July 1, 2000 and January 1, 2000 consisted of the following: July 1, 2000 January 1, 2000 ------------ --------------- Raw Material and Supplies $ 6,278,612 $ 5,363,747 In Process and Finished Goods 573,753 375,556 ----------- ---------- Total Inventory $ 6,852,365 $ 5,739,303 ============ =========== 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.
Thirteen weeks ended: Twenty-six weeks ended: -------------------------- --------------------------- July 1, 2000 July 3, 1999 July 1, 2000 July 3, 1999 ------------ ------------ ------------ ------------ Numerator: Net income $ 58,724 $ 844,679 $ 639,669 $1,547,695 ========== ========== ========== ========== Denominator: Weighted-average number of common shares outstanding 3,165,186 3,418,314 3,172,610 3,472,609 Dilutive effect of stock options on net income 34,513 157,209 38,521 162,248 ---------- ---------- ---------- ----------- 3,199,699 3,575,523 3,211,131 3,634,857 ========== ========== ========== =========== Diluted earnings per share: $ 0.02 $ 0.24 $ 0.20 $ 0.43 ========== ========== ========== ===========
4 DECORATOR INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) TWENTY-SIX WEEKS ENDED JULY 1, 2000 AND JULY 3, 1999 (UNAUDITED) NOTE 5. DISCONTINUED OPERATIONS During the second quarter of the current year, the Company adopted a plan to dispose of its contract sewing operations through liquidation. At July 1, the net assets of these operations consisted primarily of goodwill ($565,481), inventories, machinery and equipment, and trade receivables. Included in the loss on disposal is a pretax provision of $60,000 for estimated operating losses during the phase-out period. 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 Second Quarter 2000.
July 1, 2000 January 1, 2000 ------------ --------------- Current Ratio 2:05 2:30 Quick Ratio 1:04 1:18 LT Debt to Total Capital 11.02% 11.21% Working Capital $7,125,256 $6,646,856
Days sales outstanding in accounts receivable were 35.8 days at July 1, 2000 compared to 32.9 days at July 3 , 1999. Working capital increased by $478,400 and was used for the purchase of Common Stock for Treasury ($384,770) and capital expenditures ($360,483) during 2000. Cash and Short-Term Investments totaled $1,284,128 at July 1, 2000. Management does not foresee any events which will adversely affect its liquidity during 2000. On April 19, 2000 the Company signed an agreement for a $5,000,000 revolving line of credit. With this credit line in place and the Company's cash balances the financial condition is more than adequate to finance internal growth and the 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:
Second Second Quarter Quarter YTD YTD 2000 1999 2000 1999 ---- ---- ---- ---- Earnings Ratios Net sales 100.0% 100.0% 100.0% 100.0% Cost of products sold 78.24 77.38 78.69 77.54 Selling and administrative 15.46 13.06 14.36 13.31 Interest and investment income (0.19) (0.09) (0.17) (0.12) Interest expense 0.20 0.17 0.18 0.11 Income taxes 2.37 3.59 2.61 3.46 Discontinued operations (3.46) 0.15 (1.85) 0.07 Net income 0.46 6.04 2.48 5.77
6 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations. (Continued) ------------- Thirteen Week Period Ended July 1, 2000 (Second Quarter 2000) compared to Thirteen Week Period Ended July 3, 1999 (Second Quarter 1999) - --------------------------------------- --------------------- Net sales for the Second Quarter 2000 were $12,698,229, compared to $13,971,826 for the same period the previous year, a 9.1% decrease. This decrease was largely the result of the continued slowdown in the manufactured housing market and a slight decrease in sales to the recreational vehicle industry. The Company's sales to the hospitality market increased during this period. Cost of products sold increased to 78.2% in the Second Quarter 2000 compared to 77.4% a year ago. This increase is attributable to increased material and labor costs and fixed expenses for manufactured housing being absorbed over a smaller sales volume. Selling and administrative expenses were $1,962,759 in the Second Quarter 2000 versus $1,824,736 in the Second Quarter 1999. This increase is attributable to the increased commission cost associated with the hospitality market. Net income decreased to $58,724 from $844,679 for the same period a year ago. As discussed in Note 5 of the financial statements, the current quarter's income was decreased by a charge of $438,748 (net of tax) for the discontinued operations of a business unit. Earnings per share from continued operations decreased to 16 cents per share or $497,472 from 24 cents and $823,310 in the second quarter of last year. Twenty-six Week Period Ended July 1, 2000 (First Six Months of 2000) compared to Twenty-six Week Period Ended July 3, 1999 (First Six Months of 1999) - --------------------------------------------------------------------- Net sales for the first six months 2000 were $25,783,687, down from $26,823,509 in the prior year, a 3.9% decrease. The decrease comes from the ongoing slowdown in the manufactured housing market, caused by an excess dealer inventory. Cost of products sold increased to 78.7% in the first six months of 2000 compared to 77.5% a year ago. The increase is the result of allocating the fixed expenses for manufactured housing over a smaller sales volume. Selling and administrative expenses were $3,701,307 in the first six months of 2000 versus $3,570,245 in the first six months of 1999. This increase is attributable to the increased commission cost associated with the hospitality market. Net income for the six months decreased to $639,669 or 20 cents per share (diluted) compared to $1,547,695 or 43 cents per share (diluted) in the same period of 1999. As discussed in Note 5 of the financial statements, net income was reduced by $477,796 (net of tax) due to the discontinuance of contract sewing operations. 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits: --------- 27N - Financial data schedule, filed herewith. (b) No reports on Form 8-K were filed by the Company during the quarterly period ended July 1, 2000. 8 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: August 4, 2000 By: /s/ William A. Bassett -------------- --------------------------- William A. Bassett, President Date: August 4, 2000 By: /s/ Michael K. Solomon -------------- --------------------------- Michael K. Solomon, Treasurer 9 EX-27.(N) 2 0002.txt FDS --
5 6-MOS DEC-30-2000 JAN-02-2000 JUL-01-2000 1,284,128 0 5,344,784 223,789 6,852,365 13,910,302 9,273,258 3,400,280 23,131,632 6,785,046 0 0 0 888,999 13,327,523 23,131,632 25,783,687 25,783,687 20,288,693 23,883,307 0 63,433 46,482 1,790,465 673,000 1,117,465 (477,796) 0 0 639,669 0.20 0.20
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