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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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Form 10-Q
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(Mark One)
( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended March 30, 1997
Or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
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Commission file number 0-15214
Plasti-Line, Inc.
(Exact name of registrant as specified in its charter)
Tennessee
(State or other jurisdiction of incorporation or organization)
62-1218546
(I.R.S. Employer Identification Number)
623 E. Emory Road, P.O. Box 59043, Knoxville, Tennessee 37950-9043
(Address of principal executive offices)
(423) 938-1511
(Registrant's phone number including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
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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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X
No
As of May 14, 1997, there were 3,813,797 shares of common stock outstanding.
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PART I
ITEM 1 FINANCIAL INFORMATION
PLASTI-LINE, INC.
Consolidated Condensed Balance Sheets
March 30, 1997 and December 29, 1996
(in thousands)
Assets Mar. 30, 1997 Dec. 29, 1996
------ ---- ----
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 10 $ 10
Receivables, net 15,464 22,870
Inventories 26,902 27,331
Prepaid expenses 1,238 754
Deferred income taxes 1,337 1,337
------ ------
Total current assets 44,951 52,302
Net property and equipment 13,248 13,260
Goodwill 1,378 1,403
Other assets $ 322 $ 279
------ ------
Total Assets $ 59,899 $ 67,244
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
Liabilities and Stockholders' Equity Mar. 30, 1997 Dec. 29, 1996
------------------------------------ ---- ----
(Unaudited) (Audited)
Current liabilities:
Current installments of long-term debt $ 745 $ 745
Accounts payable 6,081 8,096
Accrued liabilities 5,222 6,116
Income taxes payable 393 83
Customer deposits and deferred revenue 14,003 11,509
------ ------
Total current liabilities 26,444 26,549
Long-term debt, excluding current installments 4,297 12,220
Deferred income taxes 1,196 1,196
Deferred liabilities 77 77
Stockholders' equity:
Preferred stock, $.001 par value. Authorized
5,000,000 shares; issued none - -
Common stock, $.001 par value. Authorized
20,000,000 shares, issued 3,811,797 shares 4 4
Additional paid-in-capital 2,868 2,859
Notes receivable, common stock (126) (136)
Retained earnings 25,139 24,475
------ ------
Total Stockholders' Equity 27,885 27,202
------ ------
Total Liabilities and
Stockholders' Equity $ 59,899 $ 67,244
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Operations
For the three months ended March 30, 1997 and March 31, 1996
(in thousands, except per share data)
(Unaudited)
Mar.30,1997 Mar.31,1996
---- ----
Net sales $ 28,533 $ 30,142
Cost of sales 23,485 25,159
------ ------
Gross profit 5,048 4,983
Selling, general, and administrative expenses 3,758 3,793
------ ------
Operating income 1,290 1,190
Interest income 2 -
Interest expense 186 451
------ ------
Income before income taxes 1,106 739
Income taxes 443 281
------ ------
Net income $ 663 $ 458
====== ======
Net income per share $ 0.17 $ 0.12
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Cash Flows
Three months ended March 30, 1997 and March 31, 1996
(in thousands)
(Unaudited)
Mar.30,1997 Mar.31,1996
---- ----
Cash flows from operating activities:
Net income $ 663 $ 458
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization 596 515
Provision for losses on accounts receivable - 52
Decrease in net receivables 7,406 2,743
Decrease (increase) in inventories 429 (1,436)
Increase in prepaid expenses (484) (694)
Decrease in accounts payable (2,015) (43)
Increase (decrease) in accrued liabilities (894) 1,702
Decrease (increase) in other assets (63) 65
Increase (decrease) in income taxes payable 310 (259)
Increase (decrease) in customer deposits
and deferred revenue 2,494 (33)
------ ------
Net cash provided by operating activities 8,442 3,070
------ ------
Cash flows from investing activities:
Purchases of property and equipment (539) (255)
------ ------
Net cash used by investing activities (539) (255)
------ ------
Cash flows from financing activities:
Principal payments on long-term debt (7,923) (2,877)
Proceeds from sales of common stock 10 62
Payments of notes receivable - common stock 10 -
------ ------
Net cash used by financing activities (7,903) (2,815)
------ ------
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of year 10 10
------ ------
Cash and cash equivalents at end of period $ 10 $ 10
====== ======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 198 $ 463
Income taxes 132 259
====== ======
Noncash transactions:
Amortization of compensation from
restricted stock $ 1 $ 4
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
PLASTI-LINE, INC.
Notes to Consolidated Condensed Financial Statements
1. Condensed Consolidated Financial Statements
The consolidated condensed balance sheet as of March 30, 1997, and the
consolidated condensed statements of operations and cash flows for the three
months ended March 30, 1997 and March 31, 1996, have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in cash flows at March 30,
1997, and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's 1996 Annual Report to
Stockholders. The results of operations for the period ended March 30, 1997, are
not necessarily indicative of the operating results for the full year.
2. Principles of Consolidation
The financial statements include the accounts of the Company and its wholly
owned subsidiaries, American Sign & Marketing Services, Inc., and Plasti-Line
Columbia, Inc. All significant intercompany accounts and transactions have been
eliminated.
3. Inventories
Inventories consist of the following: March 30, 1997 December 29, 1996
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(in thousands)
Finished goods $ 21,309 $ 20,006
Work-in-process 3,244 4,397
Raw materials 5,735 6,314
------ ------
30,288 30,717
Less: LIFO inventory reserve (3,386) (3,386)
------ ------
Total net inventory $ 26,902 $ 27,331
====== ======
Inventories are stated at the lower-of-cost or market. Cost is determined by the
last-in, first-out method (LIFO).
4. Earnings Per Share
Net income per common share is based on the weighted average number of common
and common equivalent shares outstanding in each period. For purposes of
computing common equivalent shares outstanding, shares relating to options have
been calculated using the treasury stock method for the portion of each period
for which the options were outstanding and using the fair value of the Company's
stock for each of the respective periods.
The weighted average number of common and common stock equivalent shares
outstanding at March 30, 1997 were 3,826,000.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Consolidated results of operations for the three months ended March 30, 1997
(1997 Quarter) compared to the consolidated results of operations for the
three months ended March 31, 1996 (1996 Quarter):
The Company's sales in the first quarter of 1997 decreased 5.3% to $28,533,000
from $30,142,000 for the same period last year. First quarter 1997 sales were
lower than prior year primarily due to the timing of new program start-up and
reimage activity in 1997.
The Company's gross profit margin during the 1997 Quarter (17.7%) was higher as
compared to the margin during the 1996 Quarter (16.5%). The increase was
primarily the result of manufacturing cost reductions, as well as a favorable
sales mix with strong margins from both automotive and financial services
customers.
Selling, general, and administrative expenses were $3,758,000 for the 1997
Quarter versus $3,793,000 for the 1996 Quarter, a $35,000 decrease. Increased
research and development costs were offset by lower selling, general, and
administrative expenses. Expenses as a percent of sales increased slightly to
13.2% for the 1997 Quarter from 12.6% in the 1996 Quarter.
Operating income was $1,290,000 and $1,190,000 for the 1997 and 1996 Quarters,
respectively. The increase is primarily due to the higher gross profit discussed
above.
Net interest expense decreased to $184,000 for the 1997 Quarter compared to
$451,000 in the 1996 Quarter. Lower average net borrowings on the Company's
line of credit resulted in the decrease.
Net income for the quarter was $663,000 as compared to $458,000 for the 1997
Quarter, an increase of 44.8%. Net income per share for the quarter was $0.17 as
compared to $0.12 for the 1996 Quarter, an increase of 41.7%.
Liquidity and Capital Resources
The Company further strengthened its financial position by its continued
management of receivables and inventories. As a result of the Company's
continued focus on working capital management, the Company enjoyed strong cash
flow during the quarter with long-term debt decreasing by $7.9 million from the
end of 1996.
Cash flow provided from operations was $8,442,000 primarily due to a decrease of
$7,246,000 from the amount of working capital at December 29, 1996. The decrease
is primarily a result of a reduction in accounts receivable.
Investing activities used $539,000 as a result of capital expenditures.
Financing activities used $7,923,000 primarily as a result of payments on the
Company's line of credit.
The Company's future capital expenditures will relate principally to the
acquisition of new machinery and equipment and furniture and fixtures designed
to increase productivity and factory efficiency. The Company believes the cash
generated from its operations and funds available under the existing line of
credit are sufficient for planned operating and capital requirements.
In addition, the Company intends to finance a new manufacturing facility in
Columbia, South Carolina, through the issuance of approximately $5.0 million in
Industrial Revenue Bonds in 1997.
Seasonality
The Company's sales exhibit limited seasonality, with sales in the first
quarter generally being the lowest and fourth quarter sales the highest.
First quarter sales tend to be relatively lower because of weather
constraints which slow down customer's construction schedules and their
pattern of sign purchases. Sales have normally accelerated in the second,
third, and fourth quarters, corresponding with accelerating construction
schedules.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Default Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter ended
March 30, 1997.
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.
PLASTI-LINE, INC.
By: /s/ Mark J. Deuschle
______________________________________
Name: Mark J. Deuschle
Title: Vice-President of Finance
Dated: May 14, 1997