-----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, SLk8R0i6Xd1EXJ5Lmt9ucrmCUyBsK+M+9LdKVdNiU4bc4NAXYFdYgc1mSdn5kjhA sBTzNx40SOsP3GMB+wDiFg== 0000912057-96-016617.txt : 19960809 0000912057-96-016617.hdr.sgml : 19960809 ACCESSION NUMBER: 0000912057-96-016617 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13746 FILM NUMBER: 96605732 BUSINESS ADDRESS: STREET 1: 2701 S HARBOR BLVD CITY: SANTA ANA STATE: CA ZIP: 92704 BUSINESS PHONE: 7145497782 10-Q 1 FORM 10-Q FORM 10-Q 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 JUNE 30, 1996 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 June 30, 1996, was as follows: Common Stock, $0.01 Par Value per share - 3,353,750 Part I FINANCIAL INFORMATION The following comparative financial statements for the three month period ended June 30, 1996, 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 month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending March 31, 1997. It is suggested that the condensed financial statements be read in conjunction with the financial statements and accompanying notes included in the Company's 1996 Annual Report on Form 10-KSB. 2 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
JUNE 30 MARCH 31 1996 1996 ------------ ----------- ASSETS Current Assets: Cash and Cash Equivalents $119,000 $136,000 Trade accounts and notes receivable, less allowance for doubtful accounts of $228,000, at June 30, 1996, and $239,000 at March 31, 1996 3,851,000 3,273,000 Inventories (Note 2) 2,710,000 2,735,000 Prepaid expenses and other assets 90,000 101,000 Deferred Income Taxes 314,000 314,000 ---------- ---------- TOTAL CURRENT ASSETS 7,084,000 6,559,000 Property and Equipment at cost, Net (Note 3) 2,042,000 2,104,000 Other Assets 95,000 120,000 ---------- ---------- $9,221,000 $8,783,000 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Lines of Credit $2,475,000 $2,263,000 Accounts Payable 2,569,000 2,647,000 Current portion of long-term debt (Note 4) 235,000 235,000 Accrued Liabilities 989,000 717,000 ---------- ---------- TOTAL CURRENT LIABILITIES 6,268,000 5,862,000 Long-Term Debt, less current portion (Note 4) 848,000 904,000 Deferred Income Taxes 369,000 369,000 ---------- ---------- TOTAL LONG TERM LIABILITES 1,217,000 1,273,000 Preferred Stock: $1.00 par value, authorized 1,000,000 shares; none issued or outstanding Common Stock: $.01 par value, authorized 10,000,000 shares; issued and outstanding 3,353,750 shares at June 30, 1996 and 3,475,450 at March 31, 1996 34,000 35,000 Additional Paid in capital 199,000 309,000 Retained Earnings 1,608,000 1,436,000 Notes Receivable From Officers/Stockholders (Note 5) (105,000) (132,000) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 1,736,000 1,648,000 ---------- ---------- $9,221,000 $8,783,000 ---------- ---------- ---------- ----------
"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 JUNE 30 JUNE 30 1996 1995 ----------- ----------- Net Sales $8,706,000 $6,199,000 Cost of Sales 6,781,000 5,305,000 ---------- ---------- Gross Margin 1,925,000 894,000 Selling, General, and Administrative Expenses 1,549,000 949,000 ---------- ---------- Operating Income (Loss) 376,000 (55,000) Interest and Other Expense 89,000 78,000 ---------- ---------- Earnings (Loss) before income taxes 287,000 (133,000) Provision for Income Taxes 115,000 (53,000) ---------- ---------- NET EARNINGS (LOSS) 172,000 (80,000) ---------- ---------- ---------- ---------- Earnings (loss) per common share $0.05 ($0.02) ---------- ---------- ---------- ---------- Weighted average number of common shares and common share equivalents outstanding 3,353,750 3,552,500 ---------- ---------- ---------- ---------- "Unaudited" The accompanying notes are an integral part of these financial statements. 4 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30 June 30 1996 1995 --------- ---------- CASH FLOW (LOSS) FROM OPERATING ACTIVITIES Net earnings (loss) $172,000 ($80,000) Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 146,000 138,000 Deferred income taxes 0 (53,000) Loss (gain) on sale of property and equipment Changes in operating assets and liabilities: Trade accounts and notes receivable (578,000) (350,000) Inventories 25,000 13,000 Prepaid expenses and other assets 36,000 (29,000) Accounts payable and accrued liabilities 194,000 25,000 -------- -------- Net cash provided by (used in) operating activities (5,000) (336,000) -------- -------- CASH FLOW (LOSS) FROM INVESTING ACTIVITIES Purchases of property and equipment (84,000) (211,000) Reduction in notes receivable from officers/stockholders 27,000 34,000 Proceeds from sale of property and equipment 0 -------- -------- Net cash provided by (used in) investing activities (57,000) (177,000) -------- -------- CASH FLOW (LOSS) FROM FINANCING ACTIVITIES Proceeds from (payments on) long-term debt (56,000) 83,000 Net proceeds from (payments on) revolving credit line 212,000 428,000 Repurchase of common stock (111,000) -------- -------- Net cash provided by (used in) financing activities 45,000 511,000 -------- -------- Net increase (decrease) in cash and cash equivalents (17,000) (2,000) Cash and cash equivalents at beginning of period 136,000 117,000 -------- -------- Cash and cash equivalents at end of period $119,000 $115,000 -------- -------- -------- --------
"Unaudited" The accompanying notes are an integral part of these financial statements. 5 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 (Fireplace 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: JUNE 30 MARCH 31 1996 1996 ---------- ----------- Raw Materials $1,617,000 $1,643,000 Work in Progress 316,000 316,000 Finished Goods 777,000 776,000 ---------- ---------- TOTAL $2,710,000 2,735,000 ---------- ---------- ---------- ---------- 3. PROPERTY AND EQUIPMENT The Company's investment in property and equipment, at cost, less related accumulated depreciation and amortization is summarized below: JUNE 30 MARCH 31 1996 1996 ----------- ----------- Machinery and Equipment $3,556,000 $3,528,000 Tools, Dies and Molds 2,800,000 2,761,000 Furniture, Fixtures, and Vehicles 654,000 637,000 Buildings and Leasehold Improvements 92,000 92,000 Research and Development Equipment 282,000 282,000 ---------- ---------- $7,384,000 $7,300,000 Accumulated Depreciation and Amortization 5,342,000 5,196,000 ---------- ---------- $2,042,000 $2,104,000 ---------- ---------- ---------- ---------- 6 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS SELECTED FINANCIAL DATA 4. LONG-TERM DEBT Long-Term debt is summarized as follows:
JUNE 30 MARCH 31 1996 1996 ----------- ---------- Equipment term loans payable to bank, bearing interest at the bank's prime rate plus 1% due in monthly principal amounts from $7,000 to $8,000 plus interest, through March 1999. $508,000 $555,000 Notes payable to a finance company, bearing interest at 8.75% due in monthly principal and interest payments of $2,500 through March 2000. $97,000 $104,000 Unsecured subordinated note payable, bearing interest at 14%, principal payments due quarterly increasing from $2,500 to $40,000 through December 2000. $478,000 $480,000 ----------- ---------- $1,083,000 $1,139,000 Less current portion $235,000 $235,000 ----------- ---------- $848,000 $904,000 ----------- ---------- ----------- ----------
5. RELATED PARTY TRANSACTIONS On June 30, 1996, advances to officers/stockholders totaling $105,000 are outstanding, this represents a decrease of $27,000 from the period ended March 31, 1996. Principal payments on these advances will be due in semiannual installments over the next three years, with interest on the notes ranging from 8% 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. During fiscal year 1996 the Company entered into a monthly operating lease of equipment with H&H Equities Incorporated. H&H Equities Incorporated is wholly owned by Willard P. Harris and John D. Hornsby, members of the Company's Board of Directors. The monthly lease payments are $3,872 and totaled $30,976 in fiscal year 1996. 7 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 $3,500,000 with an interest rate of .75 percent above prime, payable monthly. At June 30, 1996 $2,475,000 was owed under the lines of credit compared to $2,263,000 at March 31, 1996. 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 of these restrictive covenants as of June 30, 1996. Accounts receivable (before allowance for doubtful accounts) at June 30, 1996 were $4,079,000 compared to $3,512,000 at March 31, 1996. This 16.1% increase is primarily due to an increase in sales for the three months ended June 30, 1996 from the three months ended March 31, 1996 of $2,329,000 or 36.5%. The current ratio has increased slightly as of June 30, 1996 to 1.13:1 from 1.12:1 at March 31, 1996. The Company does not anticipate a material change in this ratio during fiscal year ending March 31, 1997. The Company has made capital additions of $84,000 during the three months ended June 30, 1996. The Company anticipates purchases of approximately $600,000 during the fiscal year ending March 31, 1997. (2) RESULTS OF OPERATION Sales for the three months ended June 30, 1996 increased by 40% from the same three month period in 1995. This increase is explained in part by a surge in the manufactured housing industry which resulted in a 19% increase in the number of fireplaces sold to 27,090 from 22,764. Additionally there was a $49 increase in selling price per unit for the quarter ended June 30, 1996 compared to the quarter ended June 30, 1995, a number of factors affected the selling price, the Company decreased the number of special discounts available to customers, raised the price of the product and increased sales of non fireplace items such as pipe, accessories and logsets. Cost of sales as a percent of sales decreased for the three months ended June 30, 1996 to 77.9% from 85.6% for the same period in 1995. This decrease is due to higher selling prices coupled with an improved steel purchasing program. Selling, general, and administrative expenses were 17.8% of sales for the three months ended June 30, 1996 compared to 15.3% for the same period in 1995. This increase is due to additional accruals for legal fees and bad debts which were recorded in the three months ended June 30, 1996. Interest and other expense as a percent of sales decreased .3% for the three months ended June 30, 1996 from the same period in 1995. This decrease is due to interest on additional borrowings offset against a higher level of sales. Net income increased by 3.3% of sales for the three months ended June 30, 1996 compared to the same period in 1995. This increase is related to the increased sales and offset by the higher legal and bad debt accruals. 8 FIREPLACE MANUFACTURERS, INC., AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS PART II - OTHER INFORMATION Items 1, 2, 3, 4, & 5 are inapplicable. 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 3,353,750 Number of common shares equivalents and warrants outstanding, calculated under treasury stock method, using the average market price ---------- 3,353,750 ---------- ---------- (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 and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 8, 1996 FIREPLACE MANUFACTURERS, INC. BY: WILLARD P. HARRIS ------------------------ Willard P. Harris Chief Executive Officer JANE ANN IOVINE ------------------------ Jane Ann Iovine Vice President of Finance 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS MAR-31-1997 APR-01-1996 JUN-30-1996 119,000 0 4,079,000 228,000 2,710,000 7,084,000 7,384,000 5,342,000 9,221,000 6,268,000 0 0 0 34,000 1,702,000 9,221,000 8,706,000 8,706,000 6,781,000 8,330,000 0 0 89,000 287,000 115,000 172,000 0 0 0 172,000 .05 .05
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