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 September 30, 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.
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(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1001433
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10011 PINES BLVD., SUITE 201, PEMBROKE PINES, FL 33024
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(Address of principal executive offices) (zip code)
954-436-8909
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(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 .
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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 November 8, 1995
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Common Stock, $.20 par value 1,916,120 shares*
*Includes 23,413 shares issuable upon surrender of the outstanding $.10 par
common stock.
PART 1- FINANCIAL INFORMATION
DECORATOR INDUSTRIES, INC.
BALANCE SHEET
SEPTEMBER 30, 1995 DECEMBER 31,1995
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(UNAUDITED)
ASSETS
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CURRENT ASSETS:
Cash and Cash Equivalents $2,810,312 $4,026,035
Short-term Investments 2,367,457 2,146,322
Accounts Receivable 3,464,228 2,566,063
Note Receivable 80,000 80,000
Inventories 3,081,137 2,639,650
Prepaid Expenses 152,429 98,270
Prepaid and Deferred Income Taxes 201,000 201,000
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Total Current Assets 12,156,563 11,757,350
PROPERTY & EQUIPMENT 5,004,164 4,577,845
Less: Accumulated Depreciation
and Amortization 1,993,347 1,779,706
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Net Value of Property and Equipment 3,010,817 2,798,139
EXCESS OF COST OVER NET ASSETS ACQUIRED 1,476,302 1,355,522
NOTE RECEIVABLE 160,000 220,000
OTHER ASSETS 321,608 275,659
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TOTAL ASSETS $17,125,290 $16,406,670
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LIABILITIES & STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts Payable $3,045,896 $2,276,518
Accrued Expenses - Income Taxes 66,837 140,402
- Compensation 946,883 1,361,386
- Other 345,273 447,463
Current Maturities of Long-term Debt 40,820 52,405
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Total Current Liabilities 4,445,709 4,278,174
LONG-TERM DEBT 597,346 629,450
DEFERRED INCOME TAXES 177,000 177,000
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Total Liabilities 5,220,055 5,084,624
STOCKHOLDERS' EQUITY:
Common Stock 528,373 522,717
Additional Capital 1,677,768 1,619,828
Retained Earnings 11,828,200 10,322,610
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14,034,341 12,475,155
Less: Treasury Stock, at Cost 2,129,106 1,153,109
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Total Stockholders' Equity 11,905,235 11,322,046
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $17,125,290 $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 39 WEEKS ENDED:
Sept. 30, 1995 Oct. 1, 1994 Sept. 30, 1995 Oct. 1, 1994
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NET SALES $8,560,400 $8,212,517 $25,584,903 $25,106,975
Costs and expenses:
Cost of products sold 6,638,353 5,900,665 19,187,128 18,018,076
Selling and administrative 1,160,341 1,294,332 3,698,496 3,803,941
Interest & Investment Income (98,403) (49,327) (348,371) (126,052)
Interest Expense 12,356 15,231 40,169 47,508
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TOTAL COST AND EXPENSES 7,712,647 7,160,901 22,577,422 21,743,473
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Income before income taxes 847,753 1,051,616 3,007,481 3,363,502
Income Taxes 323,000 361,000 1,125,000 1,220,000
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NET INCOME $524,753 $690,616 $1,882,481 $2,143,502
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PRIMARY EARNINGS
PER SHARE $0.27 $0.34 $0.96 $1.09
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FULLY DILUTED EARNINGS
PER SHARE $0.25 $0.32 $0.89 $0.99
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Average number of
shares outstanding:
Primary 1,928,277 2,004,937 1,956,874 1,960,823
Fully diluted 2,075,299 2,185,702 2,115,424 2,167,620
The accompanying notes are an integral part of the financial statements.
2
DECORATOR INDUSTRIES, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
For 39 Weeks Ended:
SEPTEMBER 30, 1995 OCTOBER 1, 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,882,481 $2,143,502
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 283,957 259,362
Provision for losses on accounts receivable 39,500 45,337
Deferred Taxes 0 4,183
(Gain) loss on disposal of assets (2,062) 0
Increase (decrease) from changes in:
Accounts receivable (802,387) (737,234)
Inventory (317,626) (290,851)
Short-term investments (221,125) (1,050,632)
Prepaid expenses (54,159) (115,930)
Other assets (45,949) (59,132)
Accounts payable 661,041 274,973
Accrued expenses (855,477) 179,787
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Net cash provided by (used in) operating activities 768,194 653,365
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (274,926) (886,076)
Proceeds from property dispositions 6,049 0
Note receivable 60,000 135,000
Net cash paid for acquisition (432,083) 0
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Net cash used in investing activities (640,960) (751,076)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt payments (46,663) (76,807)
Proceeds from debt on new building 0 269,046
Dividend payments (386,892) (313,745)
Proceeds from exercise of stock options 52,577 75,528
Stock option tax benefit 3,000 107,000
Purchase of common stock for treasury (964,979) 0
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Net cash provided by financing activities (1,342,957) 61,022
Net increase in cash and cash equivalents (1,215,723) (36,689)
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 $2,810,312 $2,648,688
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Supplemental disclosures of cash flow information:
SEPTEMBER 30, 1995 OCTOBER 1, 1994
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Interest $32,348 $21,554
Income taxes $1,187,284 $1,282,835
The accompanying notes are an integral part of the financial statements.
DECORATOR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRTY-NINE WEEKS ENDED SEPTEMBER 30, 1995 AND OCTOBER 1, 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 September 30, 1995, the
changes therein for the thirty-nine week period then ended and the
results of operations for the thirty-nine week periods ended September
30, 1995 and October 1, 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 thirty-nine week
periods ended September 30, 1995 and October 1, 1994 are not
necessarily indicative of operating results for the full year.
NOTE 3. INVENTORIES
Inventories at September 30, 1995 and December 31, 1994 consisted of
the following:
September 30, 1995 December 31, 1994
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Raw material and
Supplies $2,952,193 $2,458,934
In process and
Finished Goods 128,944 180,716
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$3,081,137 $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.
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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 remains
strong during the Third Quarter.
September 30, 1995 December 31, 1994
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Current Ratio 2.73 2.75
Quick Ratio 2.04 2.13
LT Debt to Total Capital 4.91% 5.35%
Working Capital $7,710,854 $7,479,176
On 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 $482,083, including the assumption of liabilities. This
purchase was funded from working capital.
Cash and Short-Term Investments total $5,177,769. 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:
First First
Third Nine Third Nine
Quarter Mos. Quarter Mos.
1995 1995 1994 1994
---- ---- ----- ----
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 77.5 75.0 71.8 71.8
Selling and administrative 13.6 14.5 15.8 15.2
Interest and investment income (1.1) (1.4) (.6) (.5)
Interest expense .1 .2 .2 .2
Income taxes 3.8 4.4 4.4 4.9
Net income 6.1 7.4 8.4 8.5
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THIRTEEN-WEEK PERIOD ENDED SEPTEMBER 30, 1995, (THIRD QUARTER 1995) COMPARED TO
THIRTEEN-WEEK PERIOD ENDED OCTOBER 1, 1994, (THIRD QUARTER 1994)
Net sales for the Third Quarter were $8,560,400 compared with $8,212,517 for the
same period of 1994. The Third Quarter revenues were affected unfavorably by
the recent slowdown in the Recreational Vehicle Market which has resulted in
lower revenues for this segment of the Company's business.
Cost of goods sold as a percentage of sales increased to 77.5% compared to 71.8%
for the Third Quarter 1994. This increase is a function of higher costs for
certain materials and labor and lower prices in certain markets.
Selling and administrative expenses were $1,160,341 in the Third Quarter 1995
compared to $1,294,332 a year ago, a decrease of $133,991. Most of the decrease
is attributable to lower accruals for performance and incentive bonuses.
Net income in the Third Quarter was $524,753 or 27 cents per share (primary),
compared with $690,616, or 34 cents per share (primary), in the same period a
year ago. Earnings have been impacted due primarily to lower margins in certain
of the Company's markets, and a small loss at its new acquisition in Goshen,
Indiana.
THIRTY-NINE WEEK PERIOD ENDED SEPTEMBER 30, 1995, (FIRST NINE MONTHS 1995)
COMPARED TO THIRTY-NINE WEEK PERIOD ENDED OCTOBER 1, 1994, (FIRST NINE MONTHS
1994)
For the nine months ended September 30, 1995, net sales were $25,584,903
compared with $25,106,975 in the same period in the prior year. Revenues have
been affected unfavorably by a slowness in the Recreational Vehicle Market in
1995.
Cost of goods sold increased to 75.0% from 71.8% in the previous year. This
increase is attributable to lower prices in certain markets.
Net income was $1,882,481, or 96 cents per share (primary), compared to
$2,143,502, or $1.09 per share (primary) in the same period of 1994.
6
PART II - OTHER INFORMATION
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 September 30, 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
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William Bassett, President
By: /s/ Michael K. Solomon
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Date: November 8, 1995 Michael K. Solomon, Treasurer
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