FORM 10 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
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 0-20829
DIAMOND HOME SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3886872
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Church Street, Woodstock, Illinois 60098
(Address of principal executive offices, including zip code)
(815) 334-1414
(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 (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 ( ) No (X)
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date: 9,074,900 shares of
Common Stock outstanding as of July 31, 1996.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE> DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . $41,389 $31,134 $68,482 $53,496
Cost of sales . . . . . . . . 22,841 17,982 38,134 31,078
Gross profit . . . . . . . . 18,548 13,152 30,348 22,418
Operating expenses:
Selling, general, and
administrative expense . . 14,974 11,348 25,906 20,232
Operating interest expense . 212 - 234 -
Amortization expense . . . . 129 124 261 250
Operating income . . . . . . 3,233 1,680 3,947 1,936
Interest expense, net . . . . 30 152 96 338
Income before income taxes . 3,203 1,528 3,851 1,598
Income tax provision . . . . 1,284 634 1,583 705
Net income . . . . . . . . . $1,919 $894 $2,268 $893
Income Per Share . . . . . . $.30 $.14 $.36 $.14
Weighted average number of
common shares and
equivalent outstanding . . 6,408 6,250 6,330 6,250
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . $10,546 $4,715
Accounts receivable . . . . . . . . . . . . . 6,598 3,389
Finance company accounts receivable . . . . . 16,382 542
Prepaids and other current assets . . . . . . 746 567
Deferred Income Taxes . . . . . . . . . . . . 1,059 404
Total current assets . . . . . . . . . . . . . 35,331 9,617
Net property and equipment . . . . . . . . . . 1,523 1,437
Intangible assets, net . . . . . . . . . . . . 17,178 17,395
Deferred income taxes . . . . . . . . . . . . . 887 1,051
Other . . . . . . . . . . . . . . . . . . . . . 1,229 643
Total assets . . . . . . . . . . . . . . . . . $56,148 $30,143
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities . . $16,550 $13,077
Due to stockholders . . . . . . . . . . . . . 554 1,354
Income taxes . . . . . . . . . . . . . . . . 206 -
Total current liabilities . . . . . . . . . . . 17,310 14,431
Long-term liabilities:
Warranty and retention . . . . . . . . . . . 5,578 4,617
Due to stockholders . . . . . . . . . . . . . 1,275 4,862
Total long-term liabilities . . . . . . . . . . 6,853 9,479
Preferred stock, at redemption price . . . . . - 1,400
Common stockholders' equity . . . . . . . . . . 31,985 4,833
Total liabilities and common
stockholders' equity . . . . . . . . . . . . $56,148 $30,143
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net income . . . . . . . . . . . . . . . . . . $ 2,268 $ 893
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization . . . . . . . . 350 349
Deferred income taxes . . . . . . . . . . . . (491) (128)
Changes in operating assets and liabilities:
Accounts receivable and other assets . . . (3,974) (886)
Accounts payable and accrued expenses . . . 3,679 1,538
Warranty and retention . . . . . . . . . . . 961 1,068
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . 2,793 2,834
Investing activities:
Consumer finance loans originated . . . . . . (18,825) -
Consumer finance loans repaid . . . . . . . . 2,985 -
Capital expenditures(219)(525)
Net cash used in investing activities . . . . (16,059) (525)
Financing activities:
Issuance of Common Stock, net of
offering expenses . . . . . . . . . . . . 33,484 -
Common Stock dividend . . . . . . . . . . . . (8,600) -
Preferred Stock redemption . . . . . . . . . (1,400) -
Borrowings (Repayment) on bank line of
credit, net . . . . . . . . . . . . . . . . - (2,883)
Payments due to stockholders . . . . . . . . (4,387) (306)
Net cash provided by (used in)
financing activities . . . . . . . . . . . 19,097 (3,189)
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . 5,831 (880)
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . . 4,715 5,048
Cash and cash equivalents at end
of period . . . . . . . . . . . . . . . . . $10,546 $4,168
Supplemental cash flow disclosure:
Interest paid . . . . . . . . . . . . . . . . $738 $94
Income taxes paid . . . . . . . . . . . . . . $1,883 $934
See accompanying notes.
</TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(TABULAR AMOUNTS ARE IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
three-month and six-month periods ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1996. For further information, refer to the consolidated
financial statements included in the Company's Registration Statement on
Form S-1, as amended, dated June 19, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those
estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
Credit participation fees paid by Sears and its affiliates are
recognized in the period the receivables are placed with Sears and its
affiliates, without recourse to the Company, utilizing the discounted
present value of the contractual payment stream. Approximately 71% of the
total credit participation fee earned is received in cash during the first
three years.
3. CONSUMER FINANCING
The Company's consumer finance subsidiary, Marquise Financial, began
operations on November 20, 1995. Marquise Financial provides consumer
financing through direct consumer loans to customers of the Company.
Finance receivables are payable through monthly installments and may be
secured or unsecured. Marquise Financial's first billings for monthly
installments to consumers occurred on January 9, 1996. Interest income
from finance receivables is recognized using the interest method. Accrual
of interest income on finance receivables is suspended when a loan is
contractually delinquent for 90 days or more and resumes when the loan
becomes contractually current. No interest income was recorded during
1995. Provisions for credit losses are charged to income in amounts
sufficient to maintain the allowance at a level considered adequate to
cover the losses of principal and interest in the existing portfolio. It
is Marquise Financial's policy to charge-off finance receivables when they
are 210 days past due.
The following summarized condensed financial information for Marquise
Financial is before eliminations of intercompany transactions in
consolidation:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
Cash . . . . . . . . . . . . . . . . . . . $ 604 -
Financing receivables . . . . . . . . . . . 16,382 $542
Other current assets . . . . . . . . . . . 58 95
Intangibles, net . . . . . . . . . . . . . 142 122
$17,717 $669
LIABILITIES AND STOCKHOLDER'S EQUITY:
Due to Diamond . . . . . . . . . . . . . . $17,545 $442
Other . . . . . . . . . . . . . . . . . . . 52 3
Total Liabilities . . . . . . . . . . . . . 17,597 445
Total stockholder's equity . . . . . . . . 120 224
Total liabilities and stockholder's equity $17,717 $669
Results of operations for the three months ended and six months ended
June 30, 1996, respectively:
Financing income . . . . . . . . . . . . . $454 $493
General and administrative expenses . . . . 490 667
Loss before tax benefit . . . . . . . . . . (36) (174)
Income tax benefit . . . . . . . . . . . . 15 70
Net loss . . . . . . . . . . . . . . . . . $21 $104
Cash flow for the six months ended June 30, 1996:
Net cash used in operating activities . . . ($104)
Net cash used in investing activities . . . (16,444)
Net cash provided by financing activities . 17,152
Cash at June 30, 1996 . . . . . . . . . . . $604
</TABLE>
4. STOCK OPTIONS
The Company has reserved 620,000 shares of Common Stock in respect to
the 1996 Incentive Stock Option Plan. On June 19, 1996, the Company issued
270,000 options to purchase Common Stock at an exercise price of $13 per
share. At June 30, 1996, 67,500 options to purchase Common Stock were
exercisable. At June 30, 1996, no options to purchase Common Stock were
exercised or cancelled.
5. COMMON STOCK OFFERING
In June 1996, the Company issued 2,824,950 shares of common stock
(including underwriters' over-allotment option) at $13 per share in its
initial public offering. Proceeds from the offering, net of underwriting
commissions and related expenses totaling $3.3 million, were $33.5
million. Following the offering, the Company had 9,074,900 common shares
issued and outstanding.
A portion of the offering proceeds were used to pay a $8.6 million
special dividend to pre-offering stockholders.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SECOND QUARTER 1996 COMPARED TO SECOND QUARTER 1995
Net sales
Net sales increased $10.3 million, or 32.9%, from $31.1 million for
the second quarter 1995 to $41.4 million for the second quarter 1996.
Approximately 53.8% of the increase in net sales was attributable to
roofing and gutter products and services, net sales of which increased
$5.5 million to $25.8 million for the second quarter 1996. Approximately
30.0% of the increase in net sales was attributable to fencing products
and services, net sales of which increased $3.1 million to $9.5 million
for the second quarter 1996. Approximately 6.3% of the increase in net
sales was attributable to garage door and entry door products and
services, net sales of which increased $640 thousand to $5.1 million for
the second quarter of 1996. The balance, 9.9% of the increase in net
sales, was due to credit participation fee income of $559 thousand from
Sears and its affiliates , which was payable beginning January 1, 1996, on
installed sales financed by Sears and its affiliates during the quarter,
and interest income of $454 thousand on receivables financed by the
Company's newly-formed consumer finance subsidiary, Marquise Financial.
The second quarter increases in net sales were due primarily to an
increase in the number of installations as the Company increased the
average number of its sales associates during the comparative periods from
600 to 698 and, to a lesser extent, increased selling prices; and, new in
1996, credit participation fee and finance income.
Gross Profit
Gross profit increased $5.4 million, or 41.0%, from $13.1 million, or
42.2% of net sales, for the second quarter 1995 to $18.5 million, or 44.8%
of net sales, for the second quarter 1996. The increased gross profit
resulted from an increased number of installations, increase in balance of
sales to higher margin products and services, primarily fencing, the
credit participation fee income from Sears and its affiliates and interest
income from Marquise Financial. The license fee incurred to Sears
increased $992 thousand, or 29.6%, from $3.4 million, or 10.8% of net
installed sales, for the second quarter 1995 to $4.4 million, or 10.8% of
net installed sales, for the second quarter 1996. The dollar increase in
the license fee incurred to Sears for the second quarter 1996 was due to
the increase in sales volume. Sears and the Company entered into a new
three-year license agreement effective January 1, 1996. Among other
things, the license agreement provides for a fixed license fee, at the
March 1995 license fee rate, to be charged during the term of the license
agreement. Gross profit before the Sears license fee, credit participation
fee and interest income increased $5.4 million, or 32.6%, from $16.5
million, or 53.0% of net sales, for the second quarter 1995 to $21.9
million, or 54.2% of net sales, for the second quarter 1996. The unit
costs of materials, installation labor and warranty expense remained
relatively constant during the quarterly period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $3.7 million,
or 31.9%, from $11.3 million in the second quarter 1995 to $15.0 million
in the second quarter 1996 and, as a percentage of net sales, decreased
from 36.4% to 36.2%. The dollar increase in selling, general and
administrative expenses resulted primarily from expenses associated with
increased sales volume, the increased number of sales associates and
expenses related to the hiring of personnel to support the expansion of
the infrastructure of the Company's core sales and installation business
including the expansion of Marquise Financial. Direct advertising expense
increased $491 thousand, or 28.6%, from $1.7 million for the second
quarter 1995 to $2.2 million for the second quarter 1996; as a percentage
of net sales, however, direct advertising expense decreased from 5.5% for
the second quarter 1995 to 5.3% for the second quarter 1996, reflecting
improved utilization of sales leads primarily due to the increase in sales
associates. Selling commission expense increased $892 thousand, or 27.8%,
from $3.2 million in the second quarter 1995 to $4.1 million in the second
quarter 1996; as a percentage of net installed sales, however, selling
commission expense decreased from 10.3% in the second quarter 1995 to 9.9%
in the second quarter 1996. Sales representatives are compensated on a
variable commission basis depending upon the type and gross profit of
product sold. Performance-based compensation paid to officers and
regional, sales and production managers increased $342 thousand, or
59.4%, from $576 thousand in the second quarter 1995 to $918 thousand in
the second quarter 1996, primarily due to the increase in operating
income. Management fees incurred to Globe increased from $146 thousand in
the second quarter 1995 to $180 thousand in the second quarter 1996. The
management fee agreement between the Company and Globe was terminated June
20, 1996. The balance of selling, general and administrative expenses,
primarily sales lead-generation activities, administrative, field
operations and Marquise Financial payrolls and related costs and general
expenses, increased $1.9 million, or 32.8%, from $5.7 million, or 18.3% of
net sales, in the second quarter 1995 to $7.6 million, or 18.3% of net
sales, in the second quarter 1996. The dollar increase was primarily due
to increased expenses relating to support personnel and services required
to manage the Company's expanding infrastructure and captive finance
subsidiary, Marquise Financial.
Operating Interest Expense
Operating interest expense was $212 thousand for the second quarter
1996. Operating interest expense relates to bank borrowings required to
finance a portion of Marquise Financial receivables.
Amortization of Intangibles
Amortization of intangibles increased from $124 thousand in the
second quarter 1995 to $129 thousand in the second quarter 1996. The
amortization expense relates primarily to goodwill incurred in connection
with the September 1994 stock repurchase from management.
Interest Expense, Net
Net interest expense decreased $122 thousand from $152 thousand in
the second quarter 1995 to $30 thousand in the second quarter 1996, as
interest income from invested excess operating cash partially offset the
interest expense related to the notes payable to certain of the Company's
senior managers in connection with the September 1994 stock repurchase
from management. $3.2 million of notes payable to senior managers was
repaid in June 1996.
Income Tax Provision
The Company's income tax provision increased from $634 thousand, or an
effective rate of 41.5%, for the second quarter 1995 to $1.3 million, or
an effective rate of 40.1%, for the second quarter 1996. The difference in
the effective income tax rate and the federal statutory rate (34%) is due
primarily to amortization of intangibles which are not deductible for
income tax purposes and the effect of state income taxes.
Net Income
The Company's net income increased $1.0 million from $894 thousand in
the second quarter 1995 to $1.9 million in the second quarter 1996.
FIRST SIX MONTHS 1996 COMPARED TO FIRST SIX MONTHS 1995
Net Sales
Net sales increased $15.0 million, or 28.0%, from $53.5 million for
the first six months of 1995 to $68.5 million for the first six months of
1996. Approximately 57.8% of the increase in net sales was attributable to
roofing and gutter products and services, net sales of which increased
$8.7 million to $44.7 million for the first six months of 1996.
Approximately 28.8% of the increase in net sales was attributable to
fencing products and services, net sales of which increased $4.3 million
to $13.1 million for the first six months of 1996. Approximately 3.8% of
the increase in net sales was attributable to garage door and entry door
products and services, net sales of which increased $558 thousand to $9.3
million for the first six months of 1996. The balance, 9.6% of the
increase in net sales, was due to credit participation fee income of $941
thousand from Sears and its affiliates, which was payable beginning
January 1, 1996, on installed sales financed by Sears and its affiliates
during the first six months, and interest income of $493 thousand on
receivables financed by the Company's newly-formed consumer finance
subsidiary, Marquise Financial. The increases in net sales were due
primarily to an increase in the number of installations as the Company
increased the average number of its sales associates during the
comparative periods from 566 to 675 and increased selling prices in the
first three months of the year; and, new in 1996, credit participation fee
and finance income.
Gross Profit
Gross profit increased $7.9 million, or 35.4%, from $22.4 million, or
41.9% of net sales, for the first six months of 1995 to $30.3 million, or
44.3% of net sales, for the first six months of 1996. The increased gross
profit resulted from an increased number of installations, increased
selling prices in the first three months of the year, increase in balance
of sales to higher margin products and services, primarily fencing, the
credit participation fee from Sears and its affiliates and interest income
from Marquise Financial, partially offset by the increase, in the first
quarter 1996, in the Sears license fee. The license fee incurred to Sears
increased $1.6 million, or 29.6%, from $5.5 million, or 10.3% of net
installed sales, for the first six months 1995 to $7.1 million, or 10.6%
of net installed sales, for the first six months of 1996. The increase in
the license fee incurred to Sears for the first six months of 1996 was due
to the increase in sales volume and an increase in the composite license
fee rates related to the shift in balance of sales. Sears and the Company
entered into a new three-year license agreement effective January 1, 1996.
Among other things, the license agreement provides for a fixed license
fee, at the March 1995 license fee rate, to be charged during the term of
the license agreement. Gross profit before the Sears license fee, credit
participation fee and interest income increased $8.1 million, or 29.1%,
from $27.9 million, or 52.2% of net sales, for the first six months of
1995 to $36.1 million, or 53.8% of net sales, for the first six months of
1996. The unit costs of materials, installation labor and warranty expense
remained relatively constant during the first six month period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $5.7
million, or 28.0%, from $20.2 million in the first six months 1995 to
$25.9 million in the first six months 1996 and, as a percentage of net
sales, remained constant at 37.8%. The dollar increase in selling,
general and administrative expenses resulted primarily from the expenses
associated with the increased sales volume, the increased number of sales
associates and expenses related to the hiring of personnel to support the
expansion of the infrastructure of the Company's core sales and
installation business including the expansion of Marquise Financial.
Direct advertising expense increased $556 thousand, or 17.6%, from $3.2
million for the first six months 1995 to $3.7 million for the first six
months 1996; as a percentage of net sales, however, direct advertising
expense decreased from 5.9% for the first six months 1995 to 5.4% for the
first six months 1996, reflecting improved utilization of sales leads
primarily due to the increase in the number of sales associates. Selling
commission expense increased $1.2 million, or 21.6%, from $5.5 million in
the first six months 1995 to $6.7 million in the first six months 1996; as
a percentage of net installed sales, selling commission expense decreased
from 10.4% in the first six months 1995 to 9.9% in the first six months
1996. Sales representatives are compensated on a variable commission
basis depending upon the type and gross profit of product sold.
Performance-based compensation paid to officers and regional, sales and
production managers increased $468 thousand, or 58.3%, from $803 thousand
in the first six months 1995 to $1.3 million in the first six months 1996,
primarily due to the increase in operating income. Management fees
incurred to Globe increased from $256 thousand in the first six months
1995 to $311 thousand in the first six months 1996. The management fee
agreement between the Company and Globe was terminated June 20, 1996. The
balance of selling, general and administrative expenses, primarily sales
lead-generation activities, administrative, field operations and Marquise
Financial payrolls and related costs and general expenses, increased $3.4
million, or 32.5%, from $10.5 million, or 19.6% of net sales, in the first
six months 1995 to $13.9 million, or 20.2% of net sales, in the first six
months 1996. The increase was primarily due to increased expenses
relating to support personnel and services required to manage the
Company's expanding infrastructure and captive finance subsidiary,
Marquise Financial.
Operating Interest Expense
Operating interest expense was $234 thousand for the first six months
1996. Operating interest expense relates to bank borrowings required to
finance a portion of Marquise Financial's receivables.
Amortization of Intangibles
Amortization of intangibles increased from $250 thousand in the first
six months 1995 to $261 thousand in the first six months 1996. The
amortization expense relates primarily to goodwill incurred in connection
with the September 1994 stock repurchase from management.
Interest Expense, Net
Net interest expense decreased $242 thousand from $338 thousand in
the first six months 1995 to $96 thousand in the first six months 1996, as
interest income from invested excess operating cash partially offset the
interest expense related to notes payable to certain of the Company's
senior managers in connection with the September 1994 stock repurchase
from management. $4 million of notes payable to senior managers was
repaid during the first six months 1996.
Income Tax Provision
The Company's income tax provision increased from $705 thousand, or
an effective rate of 44.1%, for the first six months 1995, to $1.6
million, or an effective rate of 41.1%, for the first six months 1996.
The difference in the effective income tax rate and federal statutory rate
(34%) is due primarily to amortization of intangibles which are not
deductible for income tax purposes and the effect of state income taxes.
Net Income
The Company's net income increased $1.4 million from $893 thousand in
the first six months 1995 to $2.3 million in the first six months 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs have been to fund the growth of
the Company, the September 1994 stock repurchase from management, and,
more recently, to fund the operations of the Company's captive finance
subsidiary, Marquise Financial. The Company's primary sources of
liquidity have been cash flow from operations, borrowings under its bank
credit facility, and, in June 1996, from the net proceeds of its initial
public offering of stock. The Company's core sales and installation
business is not capital intensive. Capital expenditures for 1994, 1995
and the first six months 1996 were approximately $573 thousand, $888
thousand and $219 thousand, respectively. Capital expenditures for 1996
are expected to approximate $1.2 million, primarily related to ongoing
upgrading of computer hardware and software. Future requirements for
capital expenditures are expected to be funded by cash flow from
operations. The Company believes that it has sufficient operating cash
flow, working capital base, available bank credit facility as well as
additional bank financing currently being pursued by the Company with
respect to Marquise Financial, to meet all of its obligations for the
foreseeable future, including ongoing funding for Marquise Financial and
for the development and expansion of complementary product lines and
services.
In June 1996, the Company issued 2,824,950 shares of Common Stock
(including underwriters' over-allotment option) at $13 per share in its
initial public offering. Proceeds from the offering, net of underwriting
commissions and related expenses totaling $3.3 million, were $33.5
million. A portion of the offering proceeds was used to pay a $8.6
million special dividend to pre-offering stockholders, repay all
borrowings aggregating $11.9 million under the bank line of credit (used
to finance Marquise Financial receivables) and repay $3.2 million of notes
to senior managers related to the September 1994 stock repurchase.
At June 30, 1996, the Company had approximately $10.5 million in cash
and cash equivalents and net working capital of $18.0 million. At
June 30, 1996, the Company had available $15 million in bank line of
credit and a debt to equity ratio of 17.4: 1.
The Company's results of operations may fluctuate from year to year
or quarter to quarter due to a variety of factors. The Company expects
lower levels of sales and profitability during the period from mid-
November through mid-March, impacting the first and fourth quarter of each
year. The Company believes that this seasonality is caused by winter
weather in certain of the Company's markets located in the northeastern
and north central U.S. and rainy weather, each of which limits the
Company's ability to install exterior home improvement products.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
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.
DIAMOND HOME SERVICES, INC.
Date: August 13, 1996
By: /s/ Richard G. Reece
---------------------------------
Richard G. Reece
Vice President and
Chief Financial Officer
(For the Registrant and as
Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,546,000
<SECURITIES> 0
<RECEIVABLES> 22,980,000
<ALLOWANCES> 0
<INVENTORY> 0
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0
0
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</TABLE>
