-----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, LdxvbTfG/B3uc62Ugn2prByjUrPtjcqVYZRl49lerYQ2NbU7Y1bCtSX/Sjy7r+GI wYKCC7dYOYlQNJStxgF9MQ== 0000940180-97-000457.txt : 19970515 0000940180-97-000457.hdr.sgml : 19970515 ACCESSION NUMBER: 0000940180-97-000457 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE 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: 97603867 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 MARCH 31, 1997 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 MAY 8, 1997 - --------------------------------------- ------------------------------- COMMON STOCK, PAR VALUE $.25 PER SHARE 13,926,978 SHARES PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS)
MARCH 31, DECEMBER 31, ASSETS 1997 1996 - ------ ----------- ----------- (UNAUDITED) CASH AND CASH EQUIVALENTS $ 5,979 $ 9,924 ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $3,235; $3,039 IN 1996 39,027 28,003 INVENTORIES 107,886 92,983 PREPAID AND DEFERRED INCOME TAXES 11,571 10,905 OTHER CURRENT ASSETS 14,284 12,975 -------- -------- TOTAL CURRENT ASSETS 178,747 154,790 PROPERTY, PLANT AND EQUIPMENT - AT COST NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF $66,113; $62,757 IN 1996 94,286 90,681 PATENTS AND TRADEMARKS, NET OF ACCUMULATED AMORTIZATION OF $10,053; $9,776 IN 1996 13,523 13,793 OTHER INTANGIBLE ASSETS - NET 14,587 14,794 COST IN EXCESS OF NET ASSETS ACQUIRED - NET 21,252 21,618 OTHER ASSETS 17,549 17,771 -------- -------- TOTAL ASSETS $339,944 $313,447 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------- ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 64,215 $ 66,768 CURRENT MATURITIES OF LONG-TERM DEBT AND CAPITAL LEASES 1,404 1,380 -------- -------- TOTAL CURRENT LIABILITIES 65,619 68,148 LONG-TERM DEBT 104,241 73,166 CAPITAL LEASES 8,910 9,231 OTHER LIABILITIES 17,325 17,119 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 17,685,211; 17,676,450 IN 1996 4,421 4,419 ADDITIONAL PAID-IN CAPITAL 149,600 149,226 RETAINED EARNINGS 60,519 61,993 LESS: TREASURY STOCK-AT COST (3,766,383 SHARES; 3,687,954 IN 1996) 65,009 63,936 UNAMORTIZED RESTRICTED STOCK AND NOTE RECEIVABLE 5,682 5,919 -------- -------- TOTAL STOCKHOLDERS' EQUITY 143,849 145,783 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $339,944 $313,447
======== ======== SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS. 2 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA)
QUARTER ENDED ---------------------- MARCH 31, MARCH 31, 1997 1996 ---------- ---------- NET SALES $162,812 $142,018 COST OF GOODS SOLD 135,998 121,504 -------- -------- GROSS PROFIT 26,814 20,514 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 26,575 23,397 -------- -------- INCOME (LOSS) FROM OPERATIONS 239 (2,883) INTEREST EXPENSE (1,668) (1,824) OTHER EXPENSE, NET (484) (46) -------- -------- LOSS BEFORE INCOME TAXES (1,913) (4,753) INCOME TAX BENEFIT (861) (2,115) -------- -------- NET LOSS $ (1,052) $ (2,638) ======== ======== LOSS PER SHARE: PRIMARY $ (.08) $(.18) FULLY DILUTED (.08) (18) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: PRIMARY 13,857 14,324 FULLY DILUTED 13,857 14,324 CASH DIVIDENDS PER SHARE $ .03 $.03
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 3 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
QUARTER ENDED ----------------------------------------- MARCH 31, MARCH 31, 1997 1996 -------------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES - ---------------------------------------- NET LOSS $ (1,052) $ (2,638) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION $ 4,214 $ 3,835 PROVISION FOR DOUBTFUL ACCOUNTS 587 461 CHANGES IN ASSETS AND LIABILITIES: ACCOUNTS RECEIVABLE (11,611) (9,991) INVENTORIES (14,903) (8,246) PREPAID AND DEFERRED INCOME TAXES (667) (1,866) OTHER CURRENT ASSETS (1,308) (1,394) ACCOUNTS PAYABLE AND ACCRUED EXPENSES (2,238) 372 OTHER 106 (25,820) (1,484) (18,313) -------- -------- ------- -------- NET CASH USED IN OPERATING ACTIVITIES (26,872) (20,951) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT (6,969) (3,945) OTHER - 101 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (6,969) (3,844) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ PURCHASE OF TREASURY SHARES (1,073) (2,158) NET CHANGE IN REVOLVING NOTE BORROWINGS WITH ORIGINAL MATURITY OF 90 DAYS OR LESS 31,160 26,367 CASH DIVIDENDS (421) (441) OTHER 230 547 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 29,896 24,315 -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS (3,945) (480) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,924 8,107 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,979 $ 7,627 ======== ========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 4 PLY GEM INDUSTRIES, 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. THESE STATEMENTS INCLUDE ALL ADJUSTMENTS, CONSISTING ONLY OF NORMAL RECURRING ACCRUALS, CONSIDERED NECESSARY FOR A FAIR PRESENTATION OF FINANCIAL POSITION AND RESULTS OF OPERATIONS. 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. NOTE 2 - THE MAJOR CLASSES OF INVENTORIES WERE AS FOLLOWS:
(IN THOUSANDS) MARCH 31, 1997 DECEMBER 31, 1996 -------------- ----------------- Finished goods $ 61,908 $53,833 Work in process 12,000 9,724 Raw materials 33,978 29,426 -------- ------- $107,886 $92,983 ======== =======
NOTE 3 - Loss per share of common stock are based on the weighted average number of shares outstanding during each of the periods. Common stock equivalents were not used because the results would be anti-dilutive. In February 1997, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share", which is effective for financial statements for both interim and annual periods ending after December 15, 1997. Early adoption of the new standard is not permitted. The new standard eliminates primary and fully diluted earnings per share and requires presentation of basic and diluted earnings per share together with disclosure of how the per share amounts were computed. The new standard would have had no effect on the Company's first quarter loss per share. 5 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 4 - Supplemental cash flow information for the quarterly periods are as follows:
(In Thousands) March 31, 1997 March 31, 1996 -------------- -------------- Interest paid $1,484 $1,412 Income taxes paid 830 154
NOTE 5 - The accumulated amortization of cost in excess of net assets acquired and other intangible assets are $22,930,000 at March 31, 1997 and $22,357,000 at December 31, 1996. NOTE 6 - 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 March 31, 1997 approximately $2,500,000 of retained earnings was available for the payment of dividends in 1997. NOTE 7 - Hoover Treated Wood Products, Inc. ("Hoover"), a wholly-owned subsidiary of Ply Gem Industries, Inc. ("Ply Gem"), 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 Ply Gem are vigorously defending the 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 products. Hoover and Ply Gem have engaged in coverage litigation with their insurers and have settled their coverage claims with a majority of the insurers. Ply Gem 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 March 31, 1997 for approximately $8.5 million for the estimated proceeds and recoveries related to insurance matters discussed above and recorded an accrual for the same amount for its estimated cost to resolve those matters not presently covered by existing settlements with insurance carriers and suppliers. 6 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 7 - 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. 7 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 1997 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 --------------------- Net sales for first quarter of 1997 were $162.8 million, an increase of approximately 15% over 1996 first quarter sales of $142.0 million. The sales growth was driven by strong demand for the Company's products, particularly in its Windows, Doors and Siding and Specialty Woods businesses. Approximately three-quarters of the consolidated sales growth was attributed to unit volume increases and the remainder to increases in average selling prices. Sales for the first quarter of 1996 were impacted by a harsh winter. Gross margins increased to 16.5% in 1997 from 14.4% in 1996 for the quarterly comparison periods. Gross profit for the first quarter of 1997 increased 31% to $26.8 million, as compared to prior year's gross profit of $20.5 million. Substantially all of the Company's businesses reported higher gross profit for the quarterly comparison periods. The significant improvement resulted primarily from improved productivity, lower unit freight costs and product mix. Selling, general and administrative expenses, as a percentage of net sales, were 16.3% for the first three months of 1997, approximately even with the comparison quarter. The Company recorded first quarter 1997 income from operations of $239,000 compared with an operating loss of $2.9 million reported in the first quarter of 1996. The significant improvement in income from operations in 1997 resulted primarily from revenue growth and improved operating results in the Company's businesses. 8 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 1997 Liquidity and Capital Resources ------------------------------- The Company used $26.9 million in cash from operations during the first quarter of 1997 compared to $21.0 million in the corresponding 1996 period. The usage of cash was due to a planned inventory increase at one of the Company's subsidiaries in anticipation of strong demand for its products in the second and third quarters of 1997. Significant investing activities in the first quarter of 1997 include capital expenditures of $7.0 million primarily for expanded capacity in one of the Company's Windows, Doors and Siding subsidiaries. Significant first quarter 1997 financing activities related to the net increase in revolving credit borrowings of $31.2 million used principally to finance the seasonal working capital requirements and capital expenditures of the Company. The Company's current ratio improved to 2.7 to 1 at March 31, 1997 compared to 2.3 to 1 at December 31, 1996. 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 $54 million at March 31, 1997. 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 over the next twelve months. 9 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES March 31, 1996 PART II - OTHER INFORMATION All items are inapplicable except: Item 1. Legal Proceedings. See Note 7 to the consolidated financial statements. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit 27 - Financial Data Schedule (b) Reports: None 10 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q March 31, 1997 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: May 14, 1997 /s/ Herbert P. Dooskin --------------------------- ----------------------- Executive Vice President Principal Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1997 MAR-31-1997 5,979 0 42,262 3,235 107,886 178,747 160,339 66,113 339,944 65,619 113,151 0 0 4,421 139,428 339,944 162,812 162,812 135,998 0 0 587 1,668 (1,913) (861) (1,052) 0 0 0 (1,052) (.08) (.08)
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