-----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, RoTBsTDtT7PvQoZgNalLOtgKiHPHsR3TkL62rBe1pGGz8+bESFCWHK0OS3UgpiJS UFjR1D1DSrOLopN3Q9kdRw== 0000940180-96-000585.txt : 19961115 0000940180-96-000585.hdr.sgml : 19961115 ACCESSION NUMBER: 0000940180-96-000585 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLY GEM INDUSTRIES INC CENTRAL INDEX KEY: 0000079209 STANDARD INDUSTRIAL CLASSIFICATION: MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430] IRS NUMBER: 111727150 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04087 FILM NUMBER: 96661940 BUSINESS ADDRESS: STREET 1: 777 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017-1401 BUSINESS PHONE: 2128321550 MAIL ADDRESS: STREET 1: PLY GEM INDUSTRIES INC STREET 2: 777 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017-1401 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL PLYWOOD CO INC DATE OF NAME CHANGE: 19680729 FORMER COMPANY: FORMER CONFORMED NAME: CRAFTMAN PLYWOOD CORP DATE OF NAME CHANGE: 19680212 FORMER COMPANY: FORMER CONFORMED NAME: CRAFTSMAN PLYWOOD CORP DATE OF NAME CHANGE: 19661006 10-Q 1 FORM 10-Q 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 September 30, 1996 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______ to __________ Commission file number 1-4087 ------ PLY GEM INDUSTRIES, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 11-1727150 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 777 Third Avenue, New York, New York 10017 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code 212-832-1550 ---------------------------- 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: Class Outstanding at November 1, 1996 - -------------------------------------- ------------------------------- Common stock, par value $.25 per share 14,000,597 Shares PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands)
ASSETS September 30, December 31, - ------ 1996 1995 ------------ ------------ (Unaudited) Cash and cash equivalents $ 4,586 $ 8,107 Accounts receivable, net of allowance of $4,190; $4,511 in 1995 51,016 33,020 Inventories 94,887 96,228 Prepaid and deferred income taxes 8,656 15,714 Other current assets 9,467 9,194 -------- -------- Total current assets 168,612 162,263 Property, plant and equipment - at cost net of accumulated depreciation and amortization of $60,397; $51,573 in 1995 87,274 81,832 Patents and trademarks, net of accumulated amortization of $9,836; $8,971 in 1995 14,503 15,334 Other intangible assets - net 14,786 15,507 Cost in excess of net assets acquired - net 21,984 23,081 Other assets 21,616 26,973 -------- -------- Total assets $328,775 $324,990 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Accounts payable and accrued expenses $ 68,468 $ 52,645 Accrued restructuring 1,182 4,480 Current maturities of long-term debt and capital leases 574 458 -------- -------- Total current liabilities 70,224 57,583 Long-term debt 87,329 93,135 Capital leases 7,466 7,106 Other liabilities 19,526 22,681 Stockholders' equity: Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued - - Common stock, $.25 par value; authorized 60,000,000 shares; issued 17,623,885; 17,463,072 in 1995 4,406 4,366 Additional paid-in capital 148,652 148,618 Retained earnings 60,393 53,246 Unrealized appreciation in marketable securities 238 - Less: Treasury stock-at cost (3,625,288 shares; 3,015,311 in 1995) 63,494 55,676 Unamortized restricted stock and note receivable 5,965 6,069 -------- -------- Total stockholders' equity 144,230 144,485 -------- -------- Total liabilities and $328,775 $324,990 stockholders' equity ======== ========
See accompanying notes to the consolidated financial statements. 2 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In Thousands Except per Share Data)
Quarter Ended ------------------------------ September 30, September 30, 1996 1995 -------------- -------------- Net sales $230,143 $210,973 Cost of goods sold 180,720 173,529 -------- -------- Gross profit 49,423 37,444 Selling, general and administrative expenses 34,103 30,738 -------- -------- Income from operations 15,320 6,706 Interest expense (1,729) (1,822) Other income (expense), net (667) (519) -------- -------- Income before income taxes 12,924 4,365 Income taxes 6,009 2,089 -------- -------- Net income $ 6,915 $ 2,276 ======== ======== Earnings per share: Primary $ .45 $ .16 Fully diluted .45 .16 Weighted average number of shares outstanding: Primary 16,347 14,458 Fully diluted 16,347 14,458 Cash dividends per share $ .03 $ .03
See accompanying notes to consolidated financial statements. 3 PLY GEM INDUSTRIES, INC., AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands Except per Share Data)
Nine Months Ended ------------------------------- September 30, September 30, 1996 1995 -------------- -------------- Net sales $584,240 $577,172 Cost of goods sold 471,609 480,717 -------- -------- Gross profit 112,631 96,455 Selling, general and administrative expenses 90,091 88,491 -------- -------- Income from operations 22,540 7,964 Interest expense (5,486) (5,070) Other income (expense), net (1,324) (1,505) -------- -------- Income before income taxes 15,730 1,389 Income taxes 7,296 750 -------- -------- Net income $ 8,434 $ 639 ======== ======== Earnings per share: Primary $ .58 $ .04 Fully diluted .58 .04 Weighted average number of shares outstanding: Primary 16,315 14,448 Fully diluted 16,315 14,448 Cash dividends per share $ .09 $ .09
See accompanying notes to consolidated financial statements. 4 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Nine Months Ended ------------------------------------------ September 30, September 30, 1996 1995 -------------------- -------------------- CASH FLOWS FROM OPERATING ACTIVITIES - ------------------------------------ Net income $ 8,434 $ 639 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization $ 11,311 $ 10,454 Provision for doubtful accounts 1,796 1,143 Changes in assets and liabilities: Accounts receivable (19,792) (11,300) Inventories 1,341 1,788 Prepaid and deferred income taxes 7,058 1,248 Prepaid expenses and other current assets (35) (1,456) Accounts payable and accrued expenses 15,823 (1,738) Restructuring (5,142) (8,386) Other 4,046 16,406 (1,803) (10,050) -------- -------- -------- -------- Net cash from (used in) operating activities 24,840 (9,411) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ Additions to property, plant and equipment (14,466) (23,256) Other 362 951 -------- -------- Net cash used in investing activities (14,104) (22,305) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ Purchase of treasury shares (8,818) (2,190) Net increase (decrease) in revolving note borrowings with original maturity of 90 days or less (5,450) 22,361 Cash dividends (1,287) (1,309) Other 1,298 1,233 -------- -------- Net cash provided (used) in financing activities (14,257) 20,095 -------- -------- Net decrease in cash and cash equivalents (3,521) (11,621) Cash and cash equivalents at beginning of period 8,107 14,403 -------- -------- Cash and cash equivalents at end of period $ 4,586 $ 2,782 ======== ========
See accompanying notes to consolidated financial statements. 5 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - The accompanying financial statements have been prepared without audit, 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. Certain prior year items have been reclassified to conform to the 1996 presentation. These statements include all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of financial position, results of operations and cash flows of the Company. The financial statements included herein should be read in conjunction with the financial statements and notes thereto included in the latest annual report on Form 10-K. In 1996 the Company changed its interim fiscal reporting periods to conform to calendar presentation. The change has no material effect on the interim comparisons. NOTE 2 - During 1994, the Company recorded a charge of approximately $29.1 million related to a restructuring program. The status of the components of the restructuring provision at the end of the period was:
(In Thousands) Balance at Balance at December 31, 1996 September 30, 1995 Activity 1996 ------------ -------- ------------- Consolidation and closure of facilities, including severance and related costs $7,779 $4,777 $ 3,002 Other, including lease termination expenses and costs to execute the restructuring program 235 150 85 ------ ------- ------- $8,014 $4,927 3,087 * ====== ====== =======
*The following amounts are included in the consolidated balance sheet at September 30, 1996 under the captions: "accrued restructuring" ($1.2 million), "other liabilities" ($1.2 million), "property, plant and equipment" (reduction of $ .2 million), "inventories" (reduction of $ .4 million), and "accounts receivable" (reduction of $.1 million). NOTE 3 -The major classes of inventories were as follows:
(In Thousands) September 30, 1996 December 31, 1995 ------------------ ----------------- Finished goods $52,797 $54,530 Work in process 12,403 12,508 Raw materials 29,687 29,190 ------- ------- $94,887 $96,228 ======= =======
6 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 4 - Earnings per share of common stock are computed by dividing net income by the weighted average number of common shares outstanding for the periods. The dilutive effect of stock options has been excluded from the calculations in 1995 as their effect would be anti-dilutive. Earnings per share for the three and nine months ended September 30, 1996 are calculated using the modified treasury stock method, which limits the assumed purchase of treasury shares to 20% of the outstanding common shares. NOTE 5 - Supplemental cash flow information for the nine month periods are as follows:
(In Thousands) September 30, 1996 September 30, 1995 ------------------ ------------------ Interest paid $5,302 $4,632 Income taxes paid 665 797
NOTE 6 - The accumulated amortization of cost in excess of net assets acquired and other intangible assets are $21,766,000 at September 30, 1996 and $19,917,000 at December 31, 1995. NOTE 7 - The Company's loan agreements with its banks require the Company to maintain a specified leverage ratio, fixed charge ratio and tangible net worth levels and maintain certain financial ratios, among its provisions. Under the most restrictive of these covenants, at September 30, 1996 approximately $1,500,000 of retained earnings was available for the payment of dividends in 1996. NOTE 8- Hoover Treated Wood Products, Inc. ("Hoover"), a wholly-owned subsidiary of the Company, is a defendant in a number of lawsuits alleging damage caused by alleged defects in certain pressure treated interior wood products. Hoover has not manufactured or sold these products since August, 1988. The number of lawsuits pending has declined significantly from earlier periods. Most of the suits have been resolved by dismissal or settlement with settlements being paid out of insurance proceeds or other third party recoveries. Hoover and the Company are vigorously defending those suits which remain pending and defense and indemnity costs are being paid out of insurance proceeds and proceeds from a settlement by Hoover with suppliers of material used in the production of interior treated wood. Hoover and the Company have engaged in coverage litigation with their insurers and have settled their coverage claims with a majority of the insurers. The Company believes that the remaining coverage disputes will be resolved on a satisfactory basis and a substantial amount of additional coverage will be available to Hoover. In reaching this belief, it has analyzed Hoover's insurance coverage and the status of the coverage litigation, considered its history of settlements with primary and excess insurers and consulted with counsel. Hoover has recorded a receivable at September 30, 1996 (included in other assets) for approximately $9.7 million for the estimated proceeds and recoveries related to insurance matters discussed above and recorded an accrual for the same amount (included in other liabilities) for its estimated cost to resolve those matters not presently covered by existing settlements with insurance carriers and suppliers. 7 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 8 - (Continued) - -------------------- In evaluating the effect of the lawsuits, a number of factors have been considered, including: the litigation history, the significant decline in the number of cases, the availability of various legal defenses and the likely availability of proceeds from additional insurance. Based on its evaluation, the Company believes that the ultimate resolution of the lawsuits and the insurance claims will not have a material effect upon the financial position of the Company. 8 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1996 When used in this discussion, the words "believes", "anticipates", "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company, in this report, as well as the Company's periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. Results of Operations - --------------------- The Company reported significantly better operating results for the third quarter of 1996 when compared with the third quarter of 1995. On a net sales increase of approximately 9%, net income tripled to $6.9 million up from $2.3 million for the same quarter a year ago. Operating income increased almost two and one-half times to $15.3 million from $6.7 million for the quarterly comparison periods. Similar gains were experienced for the nine month comparison periods. The primary reasons for the improvements are discussed below. Net sales for the third quarter of 1996, which were the highest in the Company's history, totaled $230.1 million, an increase of about 9% over the same period in 1995. Third quarter sales growth was driven primarily by the Company's Windows, Doors and Siding and Specialty Woods businesses which experienced double digit growth for the quarter. Approximately 80% of the consolidated sales growth was attributed to unit volume increases and the remainder to increases in average selling prices. For the nine months ended September 30, 1996, net sales were $584.2 million, as compared with $577.2 million for the corresponding period in 1995. Gross profit, expressed as a percentage of sales, was 21.5% in the third quarter of 1996 compared with 17.7% for the same period in 1995. Gross profit dollars increased approximately $12 million or 32% for the comparison period. Gross profit for the nine months of 1996 was 19.3%, as compared with 16.7% in 1995. The significant improvement was primarily attributable to lower raw material costs, particularly PVC resin and glass, improved manufacturing efficiencies and process improvements. Selling, general and administrative expenses, as a percentage of sales, for the third quarter and first nine months of 1996 were essentially flat compared to the 1995 comparison periods. 9 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1996 Results of Operations - (Continued) - ----------------------------------- The Company's effective tax rate in the third quarter of 1996 was 46.5%, which compares with 47.9% in the third quarter of 1995. The effective tax rate for first nine months of 1996 and 1995 was 46.4% and 54.0% respectively. The lower effective tax rates for the comparison periods are due primarily to the lower proportion of non-deductible amortization to income before taxes. Liquidity and Capital Resources - ------------------------------- The Company generated $24.8 million in cash from operations during the first nine months of 1996 compared to usage of $9.4 million in the corresponding 1995 period. The significant improvement is due to improved operating results and improved management of working capital. Significant investing activities in the first nine months of 1996 include capital expenditures of $14.5 million, compared to $23.3 million for the corresponding 1995 period, primarily incurred by the Company's Windows, Doors and Siding subsidiaries. Significant first nine months of 1996 financing activities related to the net decrease in revolving credit borrowings of $5.5 million and purchase of treasury shares of $8.8 million. The Company's current ratio of 2.4 to 1 at September 30, 1996 was substantially the same as it was at the end of 1995. The Company has a revolving credit facility with a syndicate of eleven banks which provides financing through February 1999. Availability under this facility was approximately $67 million at September 30, 1996. The Company anticipates that internally generated funds from operations, existing cash balances and the Company's existing credit facility should be sufficient to satisfy its cash requirements for the next operating cycle. 10 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES September 30, 1996 PART II - OTHER INFORMATION All items are inapplicable except: Item 1. Legal Proceedings. See Note 8 to the consolidated financial statements. Item 5. Other information On August 2, 1995, the Company engaged the investment banking firm Bear, Stearns & Co. Inc. to explore strategic alternatives for the intent of maximizing shareholders value, including the possible sale of the Company. On July 16, 1996 the Company announced the conclusion of the Bear, Stearns & Co. Inc. engagement with respect to the aforesaid. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit 11 - Schedule of computation of net income per share Exhibit 27 - Financial Data Schedule (b) Reports - No reports on Form 8-K were filed during the quarter ended September 30, 1996. 11 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q September 30, 1996 S I G N A T U R E S 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. Ply Gem Industries, Inc. ------------------------ (Registrant) Date: November 13, 1996 /s/ Herbert P. Dooskin ------------------- ------------------------ Executive Vice President Principal Financial Officer 12 EX-11 2 COMPUTATION OF NET INCOME PER SHARE Exhibit 11 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE Three and Nine Months Ended September 30,
Three months ended Nine months ended September 30, 1996 September 30, 1996 ------------------------ ------------------------ Fully Fully Primary Diluted Primary Diluted ----------- ----------- ----------- ---------- Weighted average number of common shares outstanding during the period......... 13,915,000 13,915,000 14,139,000 14,139,000 Excess of weighted average number of shares issuable upon exercise of employee stock options over 20% of shares outstanding at end of the period.... 2,432,000 2,432,000 2,176,000 2,176,000 ---------- ----------- ----------- ----------- Weighted average number of shares....... 16,347,000 16,347,000 16,315,000 16,315,000 ========== =========== =========== =========== Proceeds available to repay debt: From exercise of options, including tax benefits, at average market price.......................... $36,903,000 $71,419,000 From exercise of options, including tax benefits, at end of period market price............ $37,431,000 $69,657,000 ----------- ----------- ----------- ----------- $36,903,000 $37,431,000 $71,419,000 $69,657,000 ----------- ----------- ----------- ----------- Interest saved, net of taxes............ 377,000 382,000 971,000 1,095,000 Net income as reported.................. 6,915,000 6,915,000 8,434,000 8,434,000 ----------- ----------- ----------- ----------- Adjusted net income.................... $ 7,292,000 $ 7,297,000 $ 9,405,000 $ 9,529,000 =========== =========== =========== =========== Per share............................... $.45 $.45 $.58 $.58 =========== =========== =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1995 JAN-01-1996 SEP-30-1996 4,586 0 55,206 4,190 94,887 168,612 147,671 60,397 328,775 70,224 94,795 0 0 4,406 0 328,775 584,240 584,240 471,609 0 0 1,796 5,486 15,730 7,296 8,434 0 0 0 8,434 0.58 0.58
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