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 quarter ended July 1, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-7753
DECORATOR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1001433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10011 PINES BLVD., SUITE 201, PEMBROKE PINES, FL 33024
(Address of principal executive offices) (zip code)
305-436-8909
(Registrant's telephone number, including area code)
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 _____.
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 August 7, 1995
- ----- -----------------------------
Common Stock, $.20 par value 1,929,167 shares*
*Includes 23,661 shares issuable upon surrender of the outstanding $.10 par
common stock.
PART 1 - FINANCIAL INFORMATION
DECORATOR INDUSTRIES, INC.
BALANCE SHEET
July 1, 1995 December 31, 1994
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ASSETS (UNAUDITED)
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CURRENT ASSETS:
Cash and Cash Equivalents $ 3,175,010 $ 4,026,035
Short-term Investments 2,308,682 2,146,332
Accounts Receivable 3,167,769 2,566,063
Note Receivable 80,000 80,000
Inventories 2,877,708 2,639,650
Prepaid Expenses 246,712 98,270
Prepaid and Deferred Income Taxes 201,000 201,000
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Total Current Assets 12,056,881 11,757,350
PROPERTY & EQUIPMENT 4,750,488 4,577,845
Less: Accumulated Depreciation and Amortization 1,917,038 1,779,706
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Net Value of Property and Equipment 2,833,450 2,798,139
EXCESS OF COST OVER NET ASSETS ACQUIRED 1,328,160 1,355,522
NOTE RECEIVABLE 180,000 220,000
OTHER ASSETS 264,487 275,659
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TOTAL ASSETS $16,662,978 $16,406,670
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LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
CURRENT LIABILITIES:
Accounts Payable $ 2,967,257 $ 2,276,518
Accrued Expenses - Income Taxes 102,348 140,402
- Compensation 864,572 1,361,386
- Other 397,831 447,463
Current Maturities of Long-term Debt 40,820 52,405
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Total Current Liabilities 4,372,828 4,278,174
LONG-TERM DEBT 609,439 629,450
DEFERRED INCOME TAXES 177,000 177,000
----------- -----------
Total Liabilities 5,159,267 5,084,624
STOCKHOLDERS' EQUITY:
Common Stock 527,173 522,717
Additional Capital 1,667,156 1,619,828
Retained Earnings 11,438,488 10,332,610
----------- -----------
13,632,817 12,475,155
Less: Treasury Stock, at Cost 2,129,106 1,153,109
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Total Stockholders' Equity 11,503,711 11,322,046
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $16,662,978 $16,406,670
----------- -----------
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The accompanying notes are an integral part of the financial statements.
1.
DECORATOR INDUSTRIES, INC.
STATEMENT OF INCOME (UNAUDITED)
FOR 13 WEEKS ENDED: FOR 26 WEEKS ENDED:
July 1, 1995 July 2, 1994 July 1, 1995 July 2, 1994
------------ ------------ ------------ ------------
NET SALES $8,749,072 $9,035,652 $17,024,503 $16,894,458
Costs and expenses:
Cost of products sold 6,505,447 6,535,090 12,548,775 12,117,411
Selling and administrative 1,269,880 1,269,321 2,538,155 2,509,609
Interest & Investment Income (115,718) (19,027) (249,968) (76,725)
Interest Expense 12,180 17,534 27,813 32,277
---------- ---------- ----------- -----------
TOTAL COST AND EXPENSES 7,671,789 7,802,918 14,864,775 14,582,572
---------- ---------- ----------- -----------
Income before income taxes 1,077,283 1,232,734 2,159,728 2,311,886
Income Taxes 400,000 450,000 802,000 859,000
---------- ---------- ----------- -----------
NET INCOME $ 677,283 $ 782,734 $ 1,357,728 $ 1,452,886
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
PRIMARY EARNINGS PER SHARE $ 0.35 $ 0.40 $ 0.69 $ 0.75
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
FULLY DILUTED EARNINGS PER SHARE $ 0.32 $ 0.36 $ 0.64 $ 0.67
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Average number of shares outstanding:
Primary 1,947,021 1,961,320 1,971,172 1,938,766
Fully diluted 2,098,083 2,145,706 2,135,487 2,158,580
The accompanying notes are an integral part of the financial statements.
2.
DECORATOR INDUSTRIES, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
For 26 Weeks Ended:
JULY 1, 1995 JULY 2, 1994
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,357,729 $ 1,452,886
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 187,407 168,542
Provision for losses on accounts receivable 17,000 19,000
Deferred Taxes 0 (15,200)
(Gain) loss on disposal of assets 980 0
Increase (decrease) from changes in:
Accounts receivable (618,706) (489,370)
Inventory (238,058) (359,133)
Short-term investments (162,350) (1,028,455)
Prepaid expenses (148,442) (89,137)
Other assets 11,172 (18,612)
Accounts payable 690,739 941,218
Accrued expenses (584,500) (75,205)
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Net cash provided by (used in) operating activities 512,971 506,534
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (198,385) (795,770)
Proceeds from property dispositions 2,049 0
Note receivable 40,000 90,000
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Net cash used in investing activities (156,336) (705,770)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long term debt payments (31,596) (53,930)
Proceeds from debt on new building 0 269,046
Dividend payments (251,850) (212,896)
Proceeds from exercise of stock options 40,765 73,215
Stock option tax benefit 0 41,000
Purchase of common stock for treasury (964,979) 0
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Net cash provided by financing activities (1,207,660) 116,435
Net increase in cash and cash equivalents (851,025) (82,801)
Cash and cash equivalents at beginning of year 4,026,035 2,685,377
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Cash and cash equivalents at end of period $ 3,175,010 $ 2,602,576
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Supplemental disclosures of cash flow information:
JULY 1, 1995 JULY 2, 1994
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Interest $ 21,871 $ 17,900
Income taxes $ 840,774 $ 868,095
The accompanying notes are an integral part of the financial statements.
3.
DECORATOR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWENTY-SIX WEEKS ENDED JULY 1, 1995 AND JULY 2, 1994
(UNAUDITED)
NOTE 1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly
the Company's financial position as of July 1, 1995, the changes therein
for the twenty-six week period then ended and the results of operations
for the thirteen week periods ended July 1, 1995 and July 2, 1994.
NOTE 2. The consolidated financial statements included in the Form 10-Q are
presented in accordance with the requirements of the form and do not
include all of the disclosures required by generally accepted accounting
principles. For additional information, reference is made to the
Company's annual report on Form 10-K for the year ended December 31,
1994. The results of operations for the twenty-six week periods ended
July 1, 1995 and July 2, 1994 are not necessarily indicative of
operating results for the full year.
NOTE 3. INVENTORIES
Inventories at July 1, 1995 and December 31, 1994 consisted of the
following:
July 1, 1995 December 31, 1994
------------ -----------------
Raw material and Supplies $2,816,466 $2,458,934
In process and Finished Goods 61,242 180,716
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$2,877,708 $2,639,650
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NOTE 4. EARNINGS PER SHARE
The excess of shares assumed to be issued under the stock option
plans over shares that could be purchased with the proceeds based on the
higher average or period ending market prices, was sufficient to cause
fully diluted earnings per share to be different from primary earnings
per share as shown in the consolidated statement of income.
4.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's financial condition as measured by the following ratios was
virtually unchanged during the Second Quarter.
July 1, 1995 December 31, 1994
------------ -----------------
Current Ratio 2.76 2.75
Quick Ratio 2.10 2.13
LT Debt to Total Capital 5.05% 5.35%
Working Capital $7,684,053 $7,479,176
These ratios were maintained despite the use of $432,798 of cash to
repurchase common stock.
Effective August 7, 1995 the Company purchased the business and assets of
Paragon Interiors, a manufacturer of draperies and bedspreads for the
manufactured housing and recreational vehicle markets, located in Goshen,
Indiana. The total purchase price was approximately $500,000 including the
assumption of liabilities. This purchase was funded from working capital.
Cash and Short-Term Investments total $5,483,692. These cash balances and
borrowing capacity keep the company well-positioned to take advantage of
internal growth or additional acquisition opportunities that might arise.
RESULTS OF OPERATIONS:
The following table shows the percentage relationship to net sales of certain
items in the Company's Statement of Income:
Second First Second First
Quarter Half Quarter Half
1995 1995 1994 1994
------- ----- ------- -----
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 74.4 73.7 72.3 71.7
Selling and administrative 14.5 14.9 14.0 14.9
Interest and investment income (1.3) (1.5) (.2) (.5)
Interest expense .1 .2 .2 .2
Income taxes 4.6 4.7 5.0 5.1
Net income 7.7 8.0 8.7 8.6
5.
THIRTEEN-WEEK PERIOD ENDED JULY 1, 1995, (SECOND QUARTER 1995) COMPARED TO
THIRTEEN-WEEK PERIOD ENDED JULY 2, 1994, (SECOND QUARTER 1994)
Net sales for the Second Quarter were $8,749,072 compared with $9,035,652 for
the same period of 1994. Net income in the Second Quarter was $677,283, or 35
cents per share (primary), compared with $782,734, or 40 cents per share
(primary), in the same period a year ago.
This quarter's performance was affected unfavorably by (1) a decline in
revenue largely attributable to weaker demand in the recreational vehicle
market and (2) an increase in the cost of goods sold, specifically material
and labor costs. Programs have been implemented which are ongoing that are
targeted at reducing these costs.
TWENTY-SIX WEEK PERIOD ENDED JULY 1, 1995, (FIRST HALF 1995) COMPARED TO
TWENTY-SIX WEEK PERIOD ENDED JULY 2, 1994, (FIRST HALF 1994)
For the six months ended July 1, 1995, net sales were $17,024,503 compared
with $16,894,458 in the same period in the prior year. Net income was
$1,357,728, or 69 cents per share (primary), compared to $1,452,886, or 75
cents per share (primary) in the same period of 1994.
6.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of stockholders held June 5, 1995, the
stockholders approved the 1995 Incentive Stock Option Plan by a vote
of 910,542 shares in favor, 228,910 shares against, and 16,683 shares
abstaining. There were 602,293 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
None
(b) No reports on form 8-K were filed by the Company during the
fiscal quarter ended July 1, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DECORATOR INDUSTRIES, INC.
(Registrant)
By: /s/ William Bassett
-----------------------------
William Bassett, President
By: /s/ Michael K. Solomon
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Date: August 10, 1995 Michael K. Solomon, Treasurer
7.