-----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, EjiVSL7DFuOOEkG28AjYkILNHMasJVIggJZgki5xbuT8rz5oinQS4y9+dqxvywS9 D4Jhesk5kq6mecP2zWekxQ== 0001116502-02-000624.txt : 20020514 0001116502-02-000624.hdr.sgml : 20020514 ACCESSION NUMBER: 0001116502-02-000624 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020330 FILED AS OF DATE: 20020514 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: 1934 Act SEC FILE NUMBER: 001-07753 FILM NUMBER: 02645425 BUSINESS ADDRESS: STREET 1: 10011 PINES BLVD SUITE 201 CITY: PEMBROKE PINES STATE: FL ZIP: 33024 BUSINESS PHONE: 3054368909 10-Q 1 decorator10q.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 March 30, 2002 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 3, 2002 ------------------- -------------------------- Common Stock, Par Value $.20 Per Share 2,785,690 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. - ------- --------------------- DECORATOR INDUSTRIES, INC. BALANCE SHEETS
March 30, 2002 Dec. 29, 2001 -------------- ------------- ASSETS (UNAUDITED) ------ CURRENT ASSETS: Cash and Cash Equivalents $ 2,890,681 $ 2,319,568 Accounts Receivable, less allowance for Doubtful accounts ($234,253 and $221,462) 3,532,281 3,525,377 Inventories 3,612,895 3,789,665 Other Current Assets 362,167 327,784 ----------- ----------- TOTAL CURRENT ASSETS 10,398,024 9,962,394 ----------- ----------- Property and Equipment: Land, Buildings & Improvements 4,241,458 4,240,777 Machinery, Equipment, Furniture and Fixtures 5,236,491 5,212,066 ----------- ----------- Total Property and Equipment 9,477,949 9,452,843 Less: Accumulated Depreciation and Amortization 4,197,528 4,045,789 ----------- ----------- Net Property and Equipment 5,280,421 5,407,054 ----------- ----------- Goodwill 2,731,717 2,731,717 Other Assets 295,411 264,351 ----------- ----------- TOTAL ASSETS 18,705,573 18,365,516 =========== =========== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable $ 2,406,009 $ 2,102,730 Current Maturities of Long-term Debt 110,843 105,441 Accrued Expenses: Income taxes 149,006 39,518 Compensation 622,800 764,305 Other 772,025 876,327 ----------- ----------- TOTAL CURRENT LIABILITIES 4,060,683 3,888,321 ----------- ----------- Long-Term Debt 1,572,677 1,604,245 Deferred Income Taxes 436,000 409,000 ----------- ----------- TOTAL LIABILITIES 6,069,360 5,901,566 ----------- ----------- Stockholders' Equity Common stock $.20 par value: Authorized shares, 10,000,000; Issued shares, 4,485,635 897,127 897,127 Paid-in Capital 1,425,501 1,425,437 Retained Earnings 18,521,485 18,300,698 ----------- ----------- 20,844,113 20,623,262 Less: Treasury stock, at cost: 1,678,516 and 1,669,948 shares 8,207,900 8,159,312 ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 12,636,213 12,463,950 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 18,705,573 18,365,516 =========== =========== The accompanying notes are an integral part of the financial statements.
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DECORATOR INDUSTRIES, INC. STATEMENTS OF EARNINGS (UNAUDITED) FOR THIRTEEN WEEKS ENDED: ------------------------------------------------------ March 30, 2002 March 31, 2001 -------------- -------------- Net Sales $ 8,918,133 100.00% $ 8,052,955 100.00% Cost of Products Sold 7,013,399 78.64% 6,587,384 81.80% ----------- ----------- Gross Profit 1,904,734 21.36% 1,465,571 18.20% Selling and Administrative Expenses 1,404,517 15.75% 1,539,739 19.12% ----------- ----------- Operating Income (Loss) 500,217 5.61% (74,168) -0.92% Other Income (Expense): Interest and Investment Income 12,694 0.14% 3,917 0.05% Interest Expense (7,770) -0.09% (23,483) -0.29% ----------- ----------- Earnings (Loss) Before Income Taxes 505,141 5.66% (93,734) -1.16% Provision for Income Taxes (Benefit) 200,000 2.24% (25,000) -0.31% ----------- ----------- NET EARNINGS (LOSS) 305,141 3.42% (68,734) -0.85% =========== =========== EARNINGS PER SHARE: Basic $0.11 $(0.02) ===== ======= Diluted $0.11 $(0.02) ===== ======= Weighted-Average Number of Shares Outstanding: Basic 2,812,826 2,793,772 Diluted 2,820,594 2,825,352
The accompanying notes are an integral part of the financial statements. 2 DECORATOR INDUSTRIES, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THIRTEEN WEEKS ENDED: March 30, 2002 March 31, 2001 -------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings (Loss) $ 305,141 ($ 68,734) Adjustments to Reconcile Net Earnings (Loss) to Net Cash Provided by Operating Activities: Depreciation and amortization 159,165 189,274 Provision for Losses on Accounts Receivable 12,500 37,000 Deferred Taxes 22,000 47,000 Loss on Disposal of Assets -- 42 (Increase) Decrease from Changes in Accounts Receivable (19,404) (151,494) (Increase) Decrease from Changes in Inventories 176,770 573,380 (Increase) Decrease from Changes in Prepaid Expenses (29,383) (289,610) (Increase) Decrease from Changes in Other Assets (31,060) (231,519) Increase (Decrease) from Changes in Accounts Payable 303,279 266,932 Increase (Decrease) from Changes in Accrued Expenses (136,319) (203,054) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 762,689 169,217 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures (32,532) (64,309) ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (32,532) (64,309) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term Debt Payments (26,165) (25,906) Dividend Payments (84,355) (83,794) Issuance of Stock for Directors' Compensation 10,000 10,000 Purchase of Common Stock for Treasury (58,524) -- ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (159,044) (99,700) Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year 571,113 5,208 2,319,568 307,819 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,890,681 $ 313,027 =========== =========== Supplemental Disclosures of Cash Flow Information: Cash Paid for: Interest $ 7,873 $ 21,493 Income Taxes $ 68,721 $ 33,217
The accompanying notes are an integral part of the financial statements. 3 DECORATOR INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS THIRTEEN WEEKS ENDED MARCH 30, 2002 AND MARCH 31, 2001 (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 March 30, 2002, the changes therein for the thirteen week period then ended and the results of operations for the thirteen week periods ended March 30, 2002 and March 31, 2001. 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 accounting principles generally accepted within the United States of America. For additional information, reference is made to the Company's annual report on Form 10-K for the year ended December 29, 2001. The results of operations for the thirteen week periods ended March 30, 2002 and March 31, 2001 are not necessarily indicative of operating results for the full year. NOTE 3. INVENTORIES Inventories at March 30, 2002 and December 29, 2001 consisted of the following: March 30, 2002 December 29, 2001 -------------- ----------------- Raw Material and Supplies $3,289,399 $3,475,824 In Process and Finished Goods 323,496 313,841 ---------- ---------- Total Inventory $3,612,895 $3,789,665 ========== ========== 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. March 30, 2002 March 31, 2001 -------------- -------------- Numerator: Net earnings (loss) $ 305,141 ($ 68,734) =========== =========== Denominator: Weighted-average number of common shares outstanding 2,812,826 2,793,772 Dilutive effect of stock options on net income 7,768 31,580 ----------- ----------- 2,820,594 2,825,352 =========== =========== Diluted earnings per share: $ 0.11 $ (0.02) =========== =========== 4 DECORATOR INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) THIRTEEN WEEKS ENDED MARCH 30, 2002 AND MARCH 31, 2001 (UNAUDITED) NOTE 5. ADOPTION OF STATEMENT 142 ------------------------- In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets", in the period of initial application and thereafter, goodwill amortization expense is to be excluded from net earnings, as illustrated in the following reconciliation.
March 30, 2002 March 31, 2001 -------------- -------------- Reported net earnings (loss) $ 305,141 ($ 68,734) Add back: goodwill amortization (after tax) -- 21,411 ----------- ---------- Adjusted net earnings (loss) $ 305,141 ($ 47,323) =========== ========== Basic earnings per share Reported net earnings (loss) $ 0.11 $ (0.02) Goodwill amortization -- .01 ----------- ---------- Adjusted net earnings (loss) $ 0.11 $ (0.01) =========== ========== Diluted earnings per share Reported net earnings (loss) $ 0.11 $ (0.02) Goodwill amortization -- .01 ----------- ---------- Adjusted net earnings (loss) $ 0.11 $ (0.01) =========== ==========
5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. CAUTIONARY STATEMENT: THIS QUARTERLY REPORT ON FORM 10-Q MAY CONTAIN STATEMENTS RELATING TO FUTURE EVENTS, INCLUDING RESULTS OF OPERATIONS, THAT ARE CONSIDERED "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEF AS TO FUTURE EVENTS AND, BY THEIR VERY NATURE, ARE SUBJECT TO RISKS AND UNCERTAINTIES WHICH MAY RESULT IN ACTUAL EVENTS DIFFERING MATERIALLY FROM THOSE ANTICIPATED. IN PARTICULAR, FUTURE OPERATING RESULTS AND FUTURE LIQUIDITY WILL BE AFFECTED BY THE LEVEL OF DEMAND FOR RECREATIONAL VEHICLES, MANUFACTURED HOUSING AND HOTEL/MOTEL ACCOMMODATIONS AND MAY BE AFFECTED BY CHANGES IN ECONOMIC CONDITIONS, INTEREST RATE FLUCTUATIONS, COMPETITIVE PRODUCTS AND PRICING PRESSURES WITHIN THE COMPANY'S MARKETS, THE COMPANY'S ABILITY TO CONTAIN ITS MANUFACTURING COSTS AND EXPENSES, AND OTHER FACTORS. FORWARD-LOOKING STATEMENTS BY THE COMPANY SPEAK ONLY AS OF THE DATE MADE, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE SUCH STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. FINANCIAL CONDITION - ------------------- The Company's financial condition, as measured by the following ratios, continues to be strong at the end of the First Quarter 2002. March 30, 2002 December 29, 2001 ---------------- -------------- Current Ratio 2.56 2.56 Quick Ratio 1.67 1.59 LT Debt to Total Capital 11.07% 11.40% Working Capital $6,337,341 $6,074,073 Days sales outstanding in accounts receivable were 35.2 days at March 30, 2002 compared to 38.9 days at March 31, 2001, and accounts receivable increased by 0.2%. Inventories decreased by 4.7% during the quarter. Management does not foresee any events which will adversely affect its liquidity during 2002. At the quarter end, the Company had no borrowings against its $5,000,000 revolving line of credit. With the available borrowing capacity and the Company's cash balances, the financial condition is more than adequate to finance internal growth and the acquisitions of businesses. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. (continued) 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 2002 2001 -------- -------- Earnings Ratios --------------- Net sales 100.0% 100.0% Cost of products sold 78.6 81.8 Selling and administrative 15.8 19.1 Interest and investment income (0.1) (0.1) Interest expense 0.1 0.3 Income taxes (benefit) 2.2 (0.3) Net earnings (loss) 3.4 (0.8) THIRTEEN WEEK PERIOD ENDED MARCH 30, 2002, (FIRST QUARTER 2002) COMPARED TO THIRTEEN WEEK PERIOD ENDED MARCH 31, 2001, (FIRST QUARTER 2001) Net sales for the First Quarter 2002 were $8,918,133, compared to $8,052,955 for the same period in the previous year, a 10.7% increase. The Company experienced increased sales in the recreational vehicle and manufactured housing markets, while sales decreased in the hospitality market. Cost of products sold decreased to 78.6% in the First Quarter 2002 compared to 81.8% a year ago. This improvement was the result of better material utilization and improved labor efficiencies. Selling and administrative expenses were $1,404,517 in the First Quarter 2002 versus $1,539,739 in the First Quarter 2001. This decrease resulted from a reduction in the administrative workforce, lower commissions from reduced hospitality sales, and the change in accounting for goodwill (see Note 5). Interest expense decreased to $7,770 in the First Quarter 2002 from $23,483 in the First Quarter 2001 because of reduced borrowings and lower interest rates. Net income increased to $305,141 in the First Quarter of 2002 compared to a net loss of $68,734 in the First Quarter of 2001. This increase is largely the result of increased sales, better material utilization, improved labor efficiencies and reduced administrative expenses. 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: --------- None. (b) No reports on Form 8-K were filed by the Company during the quarterly period ended March 30, 2002. 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: May 13, 2002 By: /s/ William A. Bassett ------------ ------------------------- William A. Bassett, President Date: May 13, 2002 By: /s/ Michael K. Solomon ------------ ------------------------- Michael K. Solomon, Treasurer 9 -----END PRIVACY-ENHANCED MESSAGE-----