-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qU/Ddg1hG+CVLrfUFGK8Wreh3LCeh3fCx0ajOvSYCEg8XksjLdOyPgs3SKRB3AVY PHCaOSy6Du+giHKHpMmZ7w== 0000950132-95-000180.txt : 19950517 0000950132-95-000180.hdr.sgml : 19950517 ACCESSION NUMBER: 0000950132-95-000180 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950516 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: 95540141 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 April 1, 1995 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 April 28,1995 - --------------------------------------- -------------------------------------- Common stock, par value $.25 per share 14,568,269 Shares 1 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands)
April 1, December 31, 1995 1994 ----------- ------------ (Unaudited) ASSETS - ------ Cash and cash equivalents $ 10,040 $ 14,403 Marketable securities 1,951 1,813 Accounts receivable, net of allowance of $6,560; $6,353 in 1994 35,902 42,243 Inventories 109,639 103,089 Prepaid and deferred income taxes 18,442 17,426 Prepaid expenses and other current assets 8,198 6,257 -------- -------- Total current assets 184,172 185,231 Funds held for construction 1,053 1,048 Property, plant and equipment - at cost net of accumulated depreciation and amortization of $45,954; $43,846 in 1994 79,977 77,084 Patents and trademarks, net of accumulated amortization of $8,112; $7,825 in 1994 16,183 16,464 Other intangible assets - net 16,318 16,586 Cost in excess of net assets acquired - net 24,280 24,647 Other assets 25,655 24,509 -------- -------- $347,638 $345,569 -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Accounts payable and accrued expenses $ 53,724 $ 60,805 Short-term borrowings 35 35 Accrued restructuring 10,854 13,413 Current maturities of long-term debt and capital leases 472 480 -------- -------- Total current liabilities 65,085 74,733 Long-term debt 94,930 79,501 Capital leases 7,146 7,159 Deferred income taxes and other liabilities 22,071 22,540 Stockholders' equity: Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued -- -- Common stock, $.25 par value; authorized 4,343 4,324 30,000,000 shares; issued 17,370,221; 17,296,195 in 1994 Additional paid-in capital 148,173 146,967 Retained earnings 59,107 62,397 Less: Treasury stock-at cost (2,808,795 shares; 2,745,319 in 1994) 52,163 50,954 Unamortized restricted stock 1,054 1,098 -------- -------- Total stockholders' equity 158,406 161,636 -------- -------- $347,638 $345,569 -------- --------
See accompanying notes to the financial statements. 2 PLY GEM INDUSTRIES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands Except per Share Data)
Quarter Ended ------------------- April 1, April 2, 1995 1994 -------- -------- Net sales $160,235 $163,412 Cost of goods sold 135,806 136,935 -------- -------- Gross profit 24,429 26,477 Selling, general and administrative expenses 26,150 25,129 -------- -------- Income (loss) from operations (1,721) 1,348 Amortization of goodwill and other intangibles (823) (1,184) Interest expense (1,478) (2,662) Investment and other income (expense) net (572) 126 -------- -------- Loss before income taxes (4,594) (2,372) Income tax benefit (1,929) (1,067) -------- -------- Net loss $ (2,665) $ (1,305) ========= ======== Loss per share: Primary $ (.18) $ (.11) Fully diluted (.18) (.11) Weighted average number of shares outstanding: Primary 14,448 11,490 Fully diluted 14,448 11,490 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 ----------------------------------------- April 1, April 2, 1995 1994 ------------------- -------------------- CASH FLOWS FROM OPERATING ACTIVITIES - ---------------------------------------- Net loss $ (2,665) $ (1,305) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization $ 3,394 $ 3,577 Restructuring (2,559) -- Provision for doubtful accounts 207 725 Changes in assets and liabilities: Accounts receivable 6,134 (9,861) Inventories (6,550) (17,233) Prepaid expenses and other current assets (2,957) (11,404) Accounts payable and accrued expenses (7,081) (2,413) Other (1,615) (11,027) 1,202 (35,407) ------- -------- -------- -------- Net cash used in operating activities (13,692) (36,712) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES - ---------------------------------------- Additions to property, plant and equipment (5,443) (3,311) Other 83 183 -------- -------- Net cash used in investing activities (5,360) (3,128) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES - ---------------------------------------- Purchase of treasury shares (1,209) -- Long-term borrowings 15,408 33,326 Cash dividends (440) (332) Other 930 (2,275) -------- -------- Net cash provided by financing activities 14,689 30,719 -------- -------- Net decrease in cash and cash equivalents (4,363) (9,121) Cash and cash equivalents at beginning of period 14,403 12,499 -------- -------- Cash and cash equivalents at end of period $ 10,040 $ 3,378 ======== ========
See accompanying notes to financial statement 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. Certain prior year items have been reclassified to conform to the 1995 presentation. 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 - 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 December 31, 1995 Balance at 1994 Activity April 1, 1995 ------------- ------------- -------------- Consolidation and closure of facilities, including $ 15,100 $ 2,600 $12,500 severance and related costs Other severance and related costs 3,900 900 3,000 Abandonment of certain information systems 1,300 -- 1,300 Other, including lease termination expenses and costs to execute the restructuring program 2,000 100 1,900 -------- -------- ------- $ 22,300 $ 3,600 $18,700 ======== ======== =======
NOTE 3 -The major classes of inventories were as follows:
(In Thousands) April 1, 1995 December 31, 1994 ------------- ----------------- Finished goods $ 56,578 $ 52,390 Work in process 11,300 18,002 Raw materials 41,761 32,697 -------- -------- $109,639 $103,089 -------- --------
NOTE 4 - 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. 5 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 5 - Supplemental cash flow information for the quarterly periods are as follows:
(In Thousands) April 1, 1995 April 2, 1994 ------------- -------------- Interest paid $1,430 $ 994 Income taxes paid 270 1,883
NOTE 6 - The accumulated amortization of cost in excess of net assets acquired and other intangibles is $23,557,000 at April 1, 1995 and $22,975,000 at December 31, 1994. 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 April 1, 1995 approximately $2,500,000 of retained earnings was available for the payment of dividends in 1995. NOTE 8- Hoover Treated Wood Products, Inc.("Hoover"), a wholly-owned subsidiary of the Company, is a defendant, along with many other parties, in a number of commercial lawsuits, including a purported class action on behalf of certain Maryland homeowners, alleging property damage caused by alleged defects in certain pressure treated interior wood products. Hoover has not manufactured or sold these products since August 1988. The Company is also a defendant in some of these suits. The number of lawsuits pending, as of April 1, 1995, as well as the number of lawsuits filed in 1993 and 1994, have declined significantly from earlier periods. Most of the suits and claims have been resolved by dismissal or settlement. In those suits that remain pending, direct defense costs are being paid by either insurance carriers, under reservations of rights agreements, or out of insurance proceeds. Two actions have proceeded to trial against Hoover and resulted in jury verdicts against it. In one of these actions, judgment was entered in Hoover's favor by the court after a jury verdict against it and the plaintiff's petition to appeal the judgment entered in Hoover's favor was denied. Hoover is appealing the other judgment and believes that it has meritorious grounds for overturning it in whole or in part. Hoover and the Company have engaged in litigation with some of their insurers regarding coverage for these lawsuits and claims. Hoover has settled its coverage claims with a majority of its insurers and is negotiating settlements with others. Hoover and the Company believe they have meritorious claims for coverage from their remaining unsettled insurers and are seeking declaratory judgments confirming such coverage. The proceeds from settled insurance claims, along with the proceeds from a settlement of claims by Hoover against certain suppliers of materials used by it in the production of treated wood, are available for the settlement of the underlying property damage actions, including the jury verdict now on appeal. The Company believes that Hoover's remaining coverage disputes will be resolved within the next two years 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, considered its history of successful settlements with primary and excess insurers and consulted with counsel. 6 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Hoover and the Company are vigorously defending the underlying lawsuits which cannot be resolved on a reasonable basis and believe that they have meritorious defenses to those suits including, in the case of the Company, the defense that it has been improperly joined, as it did not manufacture or market the Hoover products at issue, and is not legally liable for the damage allegedly caused by them. In evaluating the effect of the lawsuits, a number of factors have been considered, including: the number and exposure posed by the pending lawsuits; the significant decline in the number of lawsuits filed in 1993 and to date; the availability of various legal defenses, including statutes of limitations; the existence of settlement protocols; an agreement indemnifying Hoover as to certain past and future claims; and Hoover's experience to date in settling with its insurance companies 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 adverse 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 APRIL 1, 1995 Results of Operations - --------------------- Net sales for the first quarter of 1995 were approximately $160.2 million, down slightly from the corresponding 1994 period. The decline was primarily due to the planned elimination of certain lower margin product lines during the first quarter of 1995. Gross profit, expressed as a percentage of net sales, was 15.2% for the first quarter of 1995 compared to 16.2% for the corresponding period in 1994. The lower margin in 1995 was primarily due to the absence of inventory wood price gains experienced in 1994 and higher raw material prices (particularly resin and glass) partially offset by lower conversion costs. Selling, general and administrative expenses, as a percent of net sales, were 16.3% for the 1995 first quarter compared to 15.4% for the corresponding period in 1994. The increase is primarily attributable to the absence of certain employment costs in the first quarter of 1994 associated with the creation of new management positions in the later part of 1994 and expenses incurred in the first quarter of 1995 associated with implementing the Company's business process redesign programs. The decrease in interest expense of approximately $1.2 million for the comparison periods is primarily due to the conversion of the Company's Subordinated Debentures in March 1994. The net loss for the first quarter of 1995 was $2.7 million compared with a net loss of $1.3 million for the first quarter of 1994. The higher loss experienced during the first quarter of 1995 resulted from the factors described above. Liquidity and Capital Resources - ------------------------------- The Company used $13.7 million in cash from operations during the first quarter of 1995 compared to $36.7 million in the corresponding 1994 period. The usage of cash is due to seasonal working capital needs. The significant improvement is due to slower working capital growth in 1995 than during 1994. Significant investing activities in the first quarter of 1995 include capital expenditures of $5.4 million primarily incurred by the Company's Windows, Doors and Siding subsidiaries. Significant first quarter 1995 financing activities related to the net increase in revolving credit borrowings of $15.4 million used principally to finance the working capital requirements and capital expenditures of the Company. The Company's current ratio was 2.8 to 1 at April 1, 1995 compared to 2.5 to 1 at December 31, 1994. Available bank credit facilities were approximately $62 million at April 1, 1995 8 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES April 1, 1995 PART II - OTHER INFORMATION All items are inapplicable except: Item 1. Legal Proceedings. See Note 8 to the consolidated financial statements. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit 27 - Financial Data Schedule (b) Reports - Dated January 6, 1995 reporting on a Receivables Purchase Agreement with Receivables Capital Corporation. 9 PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q April 1, 1995 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 16, 1995 /s/ Herbert P. Dooskin --------------- ---------------------------- Executive Vice President Principal Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 3-MOS DEC-31-1994 JAN-01-1995 APRIL-01-1995 10,040 1,951 42,462 6,560 109,639 184,172 125,931 45,954 347,638 65,085 102,076 4,343 0 0 154,063 347,638 160,235 160,235 135,806 0 0 207 1,478 (4,594) (1,929) (2,665) 0 0 0 (2,665) (.18) (.18)
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