-----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, V9AafYAivcq0vRmJ0w6/SZ0BLBn+5agPasAY5xGF5Qg+DlXFmZWv0ZHfPmARdkz8 g4yertfCaJpN8dOl1wK8QA== 0000912057-96-002525.txt : 19960216 0000912057-96-002525.hdr.sgml : 19960216 ACCESSION NUMBER: 0000912057-96-002525 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIREPLACE MANUFACTURERS INC CENTRAL INDEX KEY: 0000738992 STANDARD INDUSTRIAL CLASSIFICATION: HEATING EQUIPMENT, EXCEPT ELECTRIC & WARM AIR FURNACES [3433] IRS NUMBER: 953244946 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13746 FILM NUMBER: 96519599 BUSINESS ADDRESS: STREET 1: 2701 S HARBOR BLVD CITY: SANTA ANA STATE: CA ZIP: 92704 BUSINESS PHONE: 7145497782 10QSB 1 10QSB FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 / X / QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED DECEMBER 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-13746 FIREPLACE MANUFACTURERS, INCORPORATED (Exact Name of Registrant as specified in its charter) California 95-3244946 - ------------------------------- ---------------------------------- (State or other jurisdiction) (I.R.S. Employer I.D. No.) 2701 South Harbor Boulevard Santa Ana, California 92704 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (714) 549-7782 -------------- 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 proceeding 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 / / The number of shares outstanding of each of the Registrant's classes of Common Stock on December 31, 1995, was as follows: Common Stock, $0.01 Par Value per share - 3,552,500 Part I FINANCIAL INFORMATION The following comparative financial statements for the three and nine month periods ended December 31, 1995, have not been audited by independent public accountants; but, in the opinion of management, all adjustments necessary to present fairly the results of operations for the period have been included. The statements have been prepared by the company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. Operating results for the three and nine month periods ended December 31, 1995 are not necessarily indicative of the results that may be expected for the year ending March 31, 1996. It is suggested that the condensed financial statements be read in conjunction with the financial statements and accompanying notes included in the Company's 1995 Annual Report on Form 10-KSB. 2 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
DECEMBER 31 MARCH 31 1995 1995 ----------- ---------- ASSETS Current Assets: Cash and Cash Equivalents $ 155,107 $ 117,268 Trade accounts and notes receivable, less allowance for doubtful accounts of $189,000, at December 31, 1995, and $175,000 at March 31, 1995 4,172,843 2,460,725 Inventories (Note 2) 3,268,572 3,501,750 Prepaid expenses and other assets 195,702 147,302 Deferred Income Taxes 345,000 345,000 ----------- ---------- TOTAL CURRENT ASSETS 8,137,224 6,572,045 Property and Equipment at cost, Net (Note 3) 2,189,662 2,183,029 Due from related parties (Note 5) 161,454 204,236 Other Assets 98,276 28,864 ----------- ---------- $10,586,616 $8,988,174 ----------- ---------- ----------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Lines of Credit $2,530,925 $1,542,898 Accounts Payable 4,006,579 2,931,587 Current portion of long-term debt (Note 4) 117,664 116,807 Accrued Liabilities 656,875 1,208,182 ----------- ---------- TOTAL CURRENT LIABILITIES 7,312,043 5,799,474 Long-Term Debt, less current portion (Note 4) 1,020,235 997,562 Deferred Income Taxes 411,000 411,000 Preferred Stock: $1.00 par value, authorized 1,000,000 shares authorized; none issued or outstanding Common Stock: $.01 par value, authorized 10,000,000 shares; issued and outstanding 3,552,500 shares at December 31, 1995 and March 31, 1995 35,525 35,525 Additional Paid in capital 352,852 352,852 Common Stock Issued for Retirement: 32,950 shares at December 31, 1995 (14,105) Retained Earnings 1,469,066 1,391,761 ----------- ---------- TOTAL STOCKHOLDERS' EQUITY 1,843,338 1,780,138 ----------- ---------- $10,586,616 $8,988,174 ----------- ---------- ----------- ----------
"Unaudited" The accompanying notes are an integral part of these financial statements. 3 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER DECEMBER 1995 1994 ---------- ---------- Net Sales $8,854,277 $7,376,107 ---------- ---------- 8,854,277 7,376,107 Cost of Sales 7,278,665 5,983,447 ---------- ---------- Gross Margin 1,575,612 1,392,660 Selling, General, and Administrative Expenses 1,252,628 1,216,477 ---------- ---------- Operating Income (Loss) 322,984 176,183 Interest and Other Expense 101,567 72,162 ---------- ---------- Earnings (Loss) before income taxes 221,417 104,021 Provision for Income Taxes 88,567 41,621 ---------- ---------- NET EARNINGS (LOSS) 132,850 62,400 ---------- ---------- ---------- ---------- Earnings (loss) per common share 0.04 0.02 ---------- ---------- ---------- ---------- Weighted average number of common shares and common share equivalents outstanding 3,552,500 3,552,500 ---------- ---------- ---------- ----------
"Unaudited" The accompanying notes are an integral part of these financial statements. 4 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED DECEMBER DECEMBER 1995 1994 ----------- ----------- Net Sales $22,351,818 $21,345,078 ----------- ----------- 22,351,818 21,345,078 Cost of Sales 18,628,429 16,599,528 ----------- ----------- Gross Margin 3,723,389 4,745,550 Selling, General, and Administrative Expenses 3,321,006 3,738,670 ----------- ----------- Operating Income (Loss) 402,383 1,006,880 Interest and Other Expense 273,541 215,912 ----------- ----------- Earnings (Loss) before income taxes 128,842 790,968 Provision for Income Taxes 51,537 316,400 ----------- ----------- NET EARNINGS (LOSS) 77,305 474,568 ----------- ----------- ----------- ----------- Earnings (loss) per common share 0.02 0.13 ----------- ----------- ----------- ----------- Weighted average number of common shares and common share equivalents outstanding 3,552,500 3,552,500 ---------- ---------- ---------- ----------
"Unaudited" The accompanying notes are an integral part of these financial statements. 5 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER DECEMBER 1995 1994 ----------- --------- CASH FLOW (LOSS) FROM OPERATING ACTIVITIES Net earnings (loss) $132,850 62,400 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 106,875 123,355 Deferred income taxes 37,030 (275) Loss (gain) on sale of property and equipment 30,208 Changes in operating assets and liabilities: Trade accounts and notes receivable (414,369) 535,681 Inventories (142,323) (215,398) Prepaid expenses and other assets (78,420) (14,845) Accounts payable and accrued liabilities 439,345 (405,574) Due from officer/stockholders and affiliates 2,990 (72,460) ----------- --------- Net cash provided by (used in) operating activities 114,186 12,884 ----------- --------- CASH FLOW (LOSS) FROM INVESTING ACTIVITIES Purchases of property and equipment (149,695) (154,616) Proceeds from sale of property and equipment 7,000 ----------- --------- Net cash provided by (used in) investing activities (142,695) (154,616) ----------- --------- CASH FLOW (LOSS) FROM FINANCING ACTIVITIES Proceeds from long-term debt Payments on long-term debt (29,593) (41,766) Net proceeds (payments) from revolving credit line 121,566 359,176 Purchase of common stock issued for retirement (14,105) ----------- --------- Net cash provided by (used in) financing activities 77,868 317,410 ----------- --------- Net increase (decrease) in cash and cash equivalents 49,359 175,678 Cash and cash equivalents at beginning of period 105,748 11,764 ----------- --------- Cash and cash equivalents at end of period $155,107 $187,442 ----------- --------- ----------- ---------
"Unaudited" The accompanying notes are an integral part of these financial statements. 6 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER DECEMBER 1995 1994 ---------- ---------- CASH FLOW (LOSS) FROM OPERATING ACTIVITIES Net earnings (loss) $77,305 474,568 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 386,444 383,969 Deferred income taxes 0 (4,275) Loss (gain) on sale of property and equipment 30,208 Changes in operating assets and liabilities: Trade accounts and notes receivable (1,712,118) (897,866) Inventories 233,178 (1,138,641) Prepaid expenses and other assets (117,812) (6,326) Accounts payable and accrued liabilities 523,685 1,154,545 Due from officer/stockholders and affiliates 42,782 (106,280) ---------- ---------- Net cash provided by (used in) operating activities (536,328) (140,306) ---------- ---------- CASH FLOW (LOSS) FROM INVESTING ACTIVITIES Purchases of property and equipment (430,285) (607,945) Proceeds from sale of property and equipment, net 7,000 ---------- ---------- Net cash provided by (used in) investing activities (423,285) (607,945) ---------- ---------- CASH FLOW (LOSS) FROM FINANCING ACTIVITIES Proceeds from long-term debt 23,530 Payments on long-term debt (54,069) Net proceeds (payments) from revolving credit line 988,027 874,923 Common stock issued for Retirement (14,105) ---------- ---------- Net cash provided by (used in) financing activities 997,452 820,854 ---------- ---------- Net increase (decrease) in cash and cash equivalents 37,839 72,603 Cash and cash equivalents at beginning of period 117,268 114,839 ---------- ---------- Cash and cash equivalents at end of period $155,107 $187,442 ---------- ---------- ---------- ----------
"Unaudited" The accompanying notes are an integral part of these financial statements. 7 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS SELECTED FINANCIAL DATA 1. BASIS OF PRESENTATION The consolidated financial statements include the accounts of the Company and its presently inactive, wholly-owned subsidiary (Financial Industries of California, Inc.). All material inter-company transactions have been eliminated. All adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations have been included. 2. INVENTORIES Inventories are comprised of:
DECEMBER 31 MARCH 31 1995 1995 ----------- ---------- Raw Materials $2,095,817 $2,399,143 Work in Progress 238,367 221,878 Finished Goods 934,388 880,729 ----------- ---------- TOTAL $3,268,572 $3,501,750 ----------- ---------- ----------- ----------
3. PROPERTY AND EQUIPMENT The Company's investment in property and equipment, at cost, less related accumulated depreciation and amortization is summarized below:
DECEMBER 31 MARCH 31 1995 1995 ----------- ---------- Machinery and Equipment 3,523,788 3,399,171 Tools, Dies and Molds 2,740,543 2,537,057 Furniture, Fixtures, and Vehicles 628,229 596,591 Buildings and Leasehold Improvements 155,496 140,243 Research and Development Equipment 274,907 256,825 ----------- ---------- $7,322,963 $6,929,887 Accumulated Depreciation and Amortization 5,133,301 4,746,858 ----------- ---------- $2,189,662 $2,183,029 ----------- ---------- ----------- ----------
8 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 4. LONG-TERM DEBT Long-Term debt is summarized as follows;
DECEMBER 31 MARCH 31 1995 1995 ----------- ---------- Equipment term loans payable to bank, bearing interest at the bank's prime rate plus 1% due in monthly principal amounts from $4,294 to $7,292 plus interest, through March 1999. $ 547,553 $ 504,585 Notes payable to a finance company, bearing interest at 8.75% due in monthly principal and interest payments of $2,550 through March 2000. $ 107,846 $ 119,784 Unsecured subordinated note payable, bearing interest at 14%, principal payments due quarterly increasing from $2,500 to $40,000 through December 2000. $ 482,500 $ 490,000 ---------- ---------- $1,137,899 $1,114,369 Less current portion $ 117,664 $ 116,807 ---------- ---------- $1,020,235 $ 997,562 ---------- ---------- ---------- ----------
5. RELATED PARTY TRANSACTIONS On December 31, 1995, advances to officer stockholders and affiliates totaling $161,454 are outstanding, this represents a decrease of $42,782 from the period ended March 31, 1995. Principal payments on these advances will be due in semiannual installments over the next three years, with interest on the notes ranging from 7% to 10%. In the event that the amounts are not repaid, the principal and interest due will be charged to these individuals as compensation expense over the remaining repayment period. 9 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (1) LIQUIDITY AND CAPITAL RESOURCES The Company has lines of credit with a bank for an aggregate $3,350,000 with an interest rate of .75 percent above prime, payable monthly. At December 31, 1995, $2,530,925 was owed under the lines of credit compared to $1,542,898 at March 31, 1995. The line of credit agreements contain restrictive covenants which require maintenance of working capital and other financial ratios, prohibit the payment of dividends and have certain other limitations. The Company was in compliance with all but one of these restrictive covenants as of December 31, 1995 and has received a waiver from the bank covering these items. Accounts receivable (before allowance for doubtful accounts) at December 31, 1995, were $4,361,843 compared to $2,635,725 at March 31, 1995. This 65.5% increase is primarily due to an increase in sales for the three months ended December 31, 1995 from the three months ended March 31, 1995 of $3,494,479 or 65.2%. The current ratio has dropped slightly as of December 31, 1995 to 1.11:1 from 1.13:1 at March 31, 1995. The Company believes that based on historical seasonality during the fourth quarter this ratio may not improve throughout the rest of fiscal year ended March 31, 1996. The Company has made capital additions of $430,285 in the nine months ended December 31, 1995. The Company anticipates purchases to decrease throughout the rest of fiscal year ended March 31, 1996. (2) RESULTS OF OPERATION Sales for the nine months ended December 31, 1995 increased by 4.7% from the same nine month period in 1994. This increase is due to a number of new gas fireplace models introduced subsequent to December 31, 1994, coupled with a marketing plan which has broadened the Company's customer base. Sales for the three months ended December 31, 1995 increased by 20% from the same three month period in 1994, in addition to the reasons given above for the increase during the nine months ended December 31, 1995 a sales program which offered substantial discounts over 1994 prices was heavily utilized by customers during the three months ended December 31, 1996. Cost of sales as a percent of sales increased for the nine months ended December 31, 1995 to 83.3% from 77.8% for the same period in 1994. Cost of sales as a percent of sales increased for the three months ended December 31, 1995 to 82.2% from 81.1% for the same period in 1994. These increases are due to higher than anticipated labor and materials cost related to the introduction of new products into manufacturing, and lower selling prices in competitive markets. Selling, general, and administrative expenses were 14.9% of sales for the nine months ended December 31, 1995 compared to 17.5% for the same period in 1994. Selling, general and administrative expenses were 14.1% of sales for the three months ended December 31, 1995 compared to 16.5% for the same period in 1994. These decreases were due to cost cutting attempts on the part of management including a decrease in bonus' which are tied to net income. Interest and other expense as a percent of sales increased slightly by .2% in the nine months ended December 31, 1995 and .3% for the three months ended December 31, 1995 from the same period for 1994. These increases are due primarily to increased borrowings on a higher available line of credit. Borrowing has increased to fund the higher materials and labor costs experienced during the nine and three months ended December 31, 1995. Net income decreased by 1.9% of sales for the nine months ended December 31, 1995 compared to the same period in 1994. This decrease is due to the higher cost of goods sold experienced during the nine months ended December 31, 1995. Net income increased by .7% of sales for the three months ended December 31, 1995 compared to the same period in 1994. This increase is related to the increased sales and offset by the sales program which offered substantial discounts over 1994 prices. PART II - OTHER INFORMATION Items 1, 2, 3, 4, & 5 are inapplicable. 10 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ITEM 6 (a) Exhibits (11) Earnings Per Share: Earnings per common share and common share equivalents are based on the weighted average number of shares and common share equivalents outstanding during the year. Weighted average number of shares outstanding during the period 3,552,500 Number of common shares equivalents and warrants outstanding, calculated under treasury stock method, using the average market price ---------- 3,552,500 ---------- ---------- (12) Financial statements furnished to security holders. None furnished this quarter. Other Exhibits are omitted because they are inapplicable. (b) Reports on Form 8-K No Form 8-K was filed during this quarter. 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. Date: December 12, 1995 FIREPLACE MANUFACTURERS, INC. BY: WILLARD P. HARRIS ------------------------------- Willard P. Harris Chief Executive Officer JANE ANN IOVINE ------------------------------- Jane Ann Iovine Vice President of Finance 11 EX-27 2 EXHIBIT 27 - FDS
5 9-MOS MAR-31-1996 APR-01-1995 DEC-31-1995 155,107 0 4,172,843 189,000 3,268,572 8,137,224 7,322,963 5,133,301 10,586,616 7,312,043 0 0 0 35,525 1,807,813 10,586,616 22,351,818 22,351,818 18,628,429 21,949,435 273,541 0 0 221,417 88,567 132,850 0 0 0 132,850 .04 .04
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