SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended July 13, 1997
[ ] 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 0-314
Pulaski Furniture Corporation
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation)
54-0594965
(IRS employer identification number)
One Pulaski Square
P.O. Box 1371, Pulaski, Virginia
(Address of principal executive offices)
24301
(Zip Code)
540-980-7330
(Registrant's telephone number)
Indicate by checkmark 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:
2,789,527 shares of common stock outstanding as of August 15, 1997
Pulaski Furniture Corporation
Index
PART I: Financial Statements
Consolidated Condensed Balance Sheets as of
July 13, 1997 and November 3, 1996 . . . . . . . . . . . . . . . 2
Consolidated Condensed Statements of Income
Three 4-week periods ended July 13, 1997
and July 7, 1996 . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income
Nine 4-week periods ended July 13, 1997
and July 7, 1996 . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
Nine 4-week periods ended July 13, 1997
and July 7, 1996 . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . 6
Management's Discussion and Analysis of the
Consolidated Condensed Statements of Income . . . . . . . . . . . 7
Exhibit 3 - Computation of Earnings per Share . . . . . . . . . . 8
PART II: Other Information and Signatures . . . . . . . . . . . . . 10
Pulaski Furniture Corporation
Consolidated Condensed Balance Sheets
(in thousands)
July 13, November 3,
1997 1996
ASSETS ---------- ----------
Current assets:
Cash and cash equivalents $ 239 $ 2,397
Short-term investments 11 11
Accounts receivable, net 26,845 39,473
---------- ----------
27,095 41,881
Inventories:
Raw materials 13,240 16,323
Work-in-process 5,129 6,635
Finished goods 35,811 33,874
---------- ----------
54,180 56,832
Less LIFO reserve (14,649) (15,054)
---------- ----------
39,531 41,778
Prepaid expenses 1,532 655
Recoverable income tax 2,921 0
Deferred income tax 600 600
---------- -----------
Total current assets 71,679 84,914
Property, plant and equipment, net 36,958 38,340
Cash surrender value of life insurance 525 1,082
---------- ----------
Total assets $ 109,162 $ 124,336
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses:
Accounts payable $ 7,378 $ 9,380
Notes payable 13,000 16,000
Wages and commissions 696 2,731
Taxes withheld from employees 666 683
---------- ----------
21,740 28,794
Federal and state income taxes 0 1,349
Current portion of long-term debt 2,000 2,000
---------- ----------
Total current liabilities 23,740 32,143
Long-term notes payable 26,896 27,851
Deferred income taxes 4,077 4,145
Deferred compensation 2,610 2,519
Shareholders' equity
Common stock 4,990 5,031
Retained earnings 47,146 52,804
Unamortized restricted stock (297) (157)
---------- ----------
Total shareholders' equity 51,839 57,678
---------- ----------
Total liabilities and shareholders' equity $ 109,162 $ 124,336
========== ==========
Pulaski Furniture Corporation
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
Three 4-week periods ended
July 13, July 7, Incr
1997 1996 (Decr) %
--------- --------- -------- ----
Net sales $ 30,054 $ 30,173 $ (119) (0.4)%
Costs and expenses
Cost of sales 33,222 24,844 8,378 33.7
Selling & administrative 5,080 4,812 268 5.6
Non-recurring charges 222 0 222 100.0
---------- ---------- --------
Operating income (loss) (8,470) 517 (8,987) (1738.3)
Other income and expenses
Interest expense 530 428 102 23.8
Interest income (9) 1 (10) 1000.0
---------- ---------- --------
Total 521 429 92 21.4
Income (loss) before income taxes (8,991) 88 (9,079) (10317.0)
Provision for taxes on income (3,246) 29 (3,275) (11293.1)
---------- ---------- --------
Net income (loss) $ (5,745) $ 59 $(5,804) (9837.3)
========== ========== ========
Weighted average number
of shares outstanding:
Primary 2,812,255 2,807,348
Assuming full dilution 2,812,582 2,807,348
Earnings (loss) per share:
Primary $(2.04) $ 0.02
Assuming full dilution $(2.04) $ 0.02
Cash dividends per share: $0.17 $0.16
See accompanying notes to financial statements.
Pulaski Furniture Corporation
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
Nine 4-week periods ended
July 13, July 7, Incr
1997 1996 (Decr) %
--------- --------- -------- ----
Net sales $100,798 $106,663 $(5,865) (5.5)%
Costs and expenses
Cost of sales 89,640 86,745 2,895 3.3
Selling & administrative 15,994 15,841 153 1.0
Non-recurring charges 222 0 222 100.0
---------- ---------- --------
Operating income (loss) (5,058) 4,077 (9,135) (224.1)
Other income and expenses
Interest expense 1,579 1,569 10 0.6
Interest income (18) (8) (10) (125.0)
---------- ---------- --------
Total 1,561 1,561 0 0.0
Income (loss) before income taxes (6,619) 2,516 (9,135) (363.1)
Provision for taxes on income (2,390) 819 (3,209) (391.8)
---------- ---------- --------
Net income (loss) $ (4,229) $ 1,697 $(5,926) (349.2)
========== ========== ========
Weighted average number
of shares outstanding:
Primary 2,817,430 2,838,884
Assuming full dilution 2,818,000 2,838,884
Earnings (loss) per share:
Primary $(1.50) $0.60
Assuming full dilution $(1.50) $0.60
Cash dividends per share: $0.51 $0.48
See accompanying notes to financial statements.
Pulaski Furniture Corporation
Consolidated Statements of Cash Flows
Nine 4-week periods ended
July 13, July 7,
1997 1996
------------ ------------
OPERATING ACTIVITIES
Net income (loss) $(4,229,327) $ 1,697,494
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Provision for depreciation and amortization 3,277,059 3,352,298
Provision for deferred income taxes (67,500) (67,500)
Provision for deferred compensation 91,301 40,508
Changes in operating assets and liabilities:
Decrease in trade receivables 12,628,558 10,230,780
(Increase) decrease in inventories 2,248,067 (1,912,905)
(Increase) decrease in prepaid expenses (877,077) 327,320
Increase in recoverable income taxes (2,921,340) 0
Decrease in accounts payable and
other accrued expenses (4,053,960) (3,326,271)
Decrease in federal and state
income taxes payable (1,348,685) (43,070)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,747,096 10,298,654
INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,643,252) (1,993,583)
Sale of investments 0 3,600
(Increase) decrease in cash surrender value 556,964 (11,863)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (1,086,288) (2,001,846)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 486,219 440,722
Repurchase of common stock (920,000) (1,570,812)
Payment of dividends (1,429,293) (1,355,290)
Decrease in notes payable (3,000,000) (4,000,000)
Payments on long-term debt (955,202) (1,535,714)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (5,818,276) (8,021,094)
------------ ------------
Increase (decrease) in cash and cash equivalents (2,157,468) 275,714
Cash and cash equivalents at beginning of period 2,396,850 1,721,546
------------ ------------
Cash and cash equivalents at end of period $ 239,382 $ 1,997,260
============ ============
See accompanying notes to financial statements.
Pulaski Furniture Corporation
Notes to Consolidated Condensed Financial Statements
See notes to financial statements included in the Corporation's 10-K for the
year ended November 3, 1996, for information concerning accounting policies,
long-term debt, stock options and other financial matters.
In the opinion of the Corporation, the accompanying unaudited consolidated
condensed financial statements contain all adjustments necessary to present
fairly the financial position as of July 13, 1997 and November 3, 1996, and
the results of operations and cash flows for the three and nine 4-week
periods ended July 13, 1997 and July 7, 1996.
The results of operations for the three and nine 4-week periods ended July
13, 1997 and July 7, 1996 are not necessarily indicative of the results
to be expected for the full year.
On July 28, 1997, the Corporation announced that it would record pre-tax
charges, in the third quarter of 1997, totaling approximately $9.2 million
($5.9 million after taxes, or $2.10 per share). These charges relate to the
elimination of the Corporation's domestic seating line and related inven-
tories, the discontinuance of certain other products, the divestiture of
Craftique, Inc. and the re-evaluation of the product mix of the Corporation's
major manufacturing facilities to assure that each factory has the correct
products for its manufacturing capabilities. Of the charges, approximately
$9.0 million is included in cost of sales for inventory write-downs, with
the remaining charges related to assets no longer being used.
Pulaski Furniture Corporation
Management's Discussion and Analysis of the
Consolidated Condensed Statements of Income
Comparison of Third Quarter 1997 to Third Quarter 1996 and Three Quarters of
1997 to Three Quarters of 1996 (See pages 3 and 4 for dollar and percent
changes.)
- ----------------------------------------------------------------------------
The decrease in sales for the three quarters of 1997 as compared to the
three quarters of 1996 was due largely to the lower demand for the Corpor-
ation's furniture. Demand improved in the third quarter as compared with
the first two quarters of 1997. The changes discussed in the Notes are
expected to result in a decrease in sales of approximately 5% on an
annualized basis.
Excluding the charges discussed in the Notes, cost of sales as a percentage
of sales, for the 1997 quarter was 80.4% compared with 82.3% for the comp-
arable 1996 quarter. The decrease was due primarily to better control of
manufacturing expenses. Excluding the charges discussed in the Notes, cost
of sales as a percentage of sales, for the three quarters of 1997 was 80.0%
compared with 81.3% for the three quarters of 1996. The decrease was due
primarily to a higher gross margin resulting from higher average selling
prices and better cost control.
The increase in selling and administrative expenses as a percentage of sales
for the three quarters of 1997 was due primarily to the lower sales volume.
The higher interest expense in the third quarter of 1997 was due to higher
levels of outstanding debt.
The decline in net income for the third quarter and three quarters of 1997
as compared to the comparable periods of 1996 was due primarily to the
charges discussed in the Notes. Excluding the effect of the charges, net
income for the third quarter and three quarters of 1997 was slightly higher
than the comparable periods of 1996, due primarily to the higher gross
margins discussed above.
Capital Resources and Liquidity
- --------------------------------
Working capital provided by (used in) operations was approximately $(928,000)
for the three quarters ended July 13, 1997 compared to $5,023,000 for the
three quarters ended July 7, 1996. Net working capital decreased by approx-
imately $4,832,000 during the first three quarters of 1997 compared with a
decrease of $957,000 in the first three quarters of 1996.
Through the third quarter of 1997, the Corporation's average amount of
outstanding indebtedness for borrowed money was $39,455,760. The weighted
average rate of interest on such indebtedness was approximately 5.5% per
annum.
Pulaski Furniture Corporation
Part I - Exhibit 3
Computation of Earnings Per Share
Three 4-week periods ended
July 13, July 7,
1997 1996
------------ ------------
PRIMARY:
Average shares outstanding 2,789,527 2,783,579
Dilutive stock options - based
on treasury stock method
using average market price 2,228 4,495
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 20,500 19,274
------------ ------------
TOTAL 2,812,255 2,807,348
------------ ------------
Net income (loss) $(5,744,907) $ 59,379
============ ============
Net income (loss) per share: $(2.04) $ 0.02
======= =======
FULLY DILUTED:
Average shares outstanding 2,789,527 2,783,579
Dilutive stock options - based on
treasury stock method using the
greater of year-end market value
or average market value 2,555 4,495
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 20,500 19,274
------------ ------------
TOTAL 2,812,582 2,807 348
------------ ------------
Net income (loss) per share: $(2.04) $ 0.02
======= =======
Pulaski Furniture Corporation
Part I - Exhibit 3 (continued)
Computation of Earnings Per Share
Nine 4-week periods ended
July 13, July 7,
1997 1996
------------ ------------
PRIMARY:
Average shares outstanding 2,802,673 2,822,431
Dilutive stock options - based
on treasury stock method
using average market price 1,985 5,141
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 12,772 11,312
------------ ------------
TOTAL 2,817,430 2,838,884
------------ ------------
Net income (loss) $(4,229,327) $ 1,697,494
============ ============
Net income (loss) per share: $(1.50) $ 0.60
======= =======
FULLY DILUTED:
Average shares outstanding 2,802,673 2,822,431
Dilutive stock options - based on
treasury stock method using the
greater of year-end market value
or average market value 2,555 5,141
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 12,772 11,312
------------ ------------
TOTAL 2,818,000 2,838,884
------------ ------------
Net income (loss) per share: $(1.50) $ 0.60
======= =======
Pulaski Furniture Corporation
Part II - Other Information
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.
PULASKI FURNITURE CORPORATION
Date: August 15, 1997 /s/ John G. Wampler
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John G. Wampler
President and Chief Operating Officer
/s/ Jason A. Gibbs
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Jason A. Gibbs, Chief Financial Officer
(Principal Accounting Officer)