FORM 10-Q/A
AMENDMENT NO. 1
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, 1997
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 (X ) No ( )
The number of shares of the registrant's common stock outstanding as of
July 31, 1997, the latest practicable date, was 8,952,375 shares.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION> Three Months Six Months
Ended Ended
June 30 June 30
1997 1996 1997 1996
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . $43,787 $41,389 $73,962 $68,482
Cost of sales. . . . . . . . . . 24,065 22,841 40,877 38,134
Gross profit. . . . . . . . . . . 19,722 18,548 33,085 30,348
Operating expenses:
Selling, general, and 18,688 14,974 31,874 25,906
administrative expense . . . .
Operating interest expense. . . 0 212 0 234
Amortization expense . . . . . 153 129 296 261
Operating income . . . . . . . 881 3,233 915 3,947
Interest income (expense), net. . 186 (30) 406 (96)
Income before income taxes . . . 1,067 3,203 1,321 3,851
Income tax provision . . . . . . 416 1,284 515 1,583
Net income . . . . . . . . . . . $651 $1,919 $806 $2,268
Net income Per Share . . . . . . $.07 $.30 $.09 $.36
Weighted average number of
common shares and equivalent
outstanding . . . . . . . . . 9,037 6,408 9,119 6,330
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . $12,954 $18,982
Accounts receivable . . . . . . . . . . . . 9,984 8,621
Finance company accounts receivable . . . . 7,537 5,312
Refundable income taxes . . . . . . . . . . 1,174 1,725
Deferred income taxes . . . . . . . . . . . 609 794
Prepaids and other current assets . . . . . 1,112 1,377
Total current assets . . . . . . . . . . . . 33,370 36,811
Net property and equipment . . . . . . . . . 3,102 1,607
Intangible assets, net . . . . . . . . . . . 16,812 16,961
Deferred income taxes . . . . . . . . . . . . 1,463 1,313
Other . . . . . . . . . . . . . . . . . . . . 2,913 2,101
Total assets . . . . . . . . . . . . . . . . $57,660 $58,793
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities. . $11,701 $13,767
Due to stockholders . . . . . . . . . . . . 554 554
Total current liabilities . . . . . . . . . . 12,255 14,321
Long-term liabilities:
Warranty and retention. . . . . . . . . . . 8,040 7,128
Due to stockholders . . . . . . . . . . . . 848 1,108
Total long-term liabilities . . . . . . . . . 8,888 8,236
Common stockholders' equity . . . . . . . . . 36,517 36,236
Total liabilities and common
stockholders' equity . . . . . . . . . . . $57,660 $58,793
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)
1997 1996
<S> <C> <C>
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $806 $2,268
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 350
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (491)
Changes in operating assets and liabilities:
Accounts receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (996) (3,974)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . (2,066) 3,679
Warranty and retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912 961
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . (846) 2,793
Investing activities:
Consumer finance loans originated, net of collections . . . . . . . . . . . . . . . . . . . . . (2,225) (15,840)
Advances to "captive" insurance company and other . . . . . . . . . . . . . . . . . . . . . . . (512) -
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,660) (219)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,397) (16,059)
Financing activities:
Issuance of Common Stock, net of offering expenses . . . . . . . . . . . . . . . . . . . . . . . - 33,484
Common Stock special dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (8,600)
Preferred Stock redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (1,400)
Payments on notes receivable from officers for
treasury stock and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 -
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (795) -
Payments due to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (260) (4,387)
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . (785) 19,097
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . (6,028) 5,831
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 18,982 4,715
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,954 $10,546
Supplemental cash flow disclosure:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0 $738
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $90 $1,883
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 period ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. For
further information, refer to the consolidated financial statements included
in the Company's 1996 Annual Report on Form 10-K.
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. CONSUMER FINANCING
The following summarized condensed financial information for Marquise
Financial, the Company's consumer finance subsidiary, is before elimination
of intercompany transactions in consolidation:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . $0 $50
Financing receivables . . . . . . . . . . . . . 7,537 5,312
Other assets . . . . . . . . . . . . . . . . . 503 349
$8,040 $5,711
Liabilities and stockholder's equity:
Due to Diamond Exteriors, Inc. . . . . . . . . $7,772 $5,623
Other . . . . . . . . . . . . . . . . . . . . . 15 50
Total liabilities . . . . . . . . . . . . . . . 7,787 5,673
Total stockholder's equity . . . . . . . . . . 253 38
Total liabilities and stockholder's equity . . $8,040 $5,711
Results of operations for the three months and six months ended June 30, 1997
and 1996, respectively:
</TABLE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Financing income . . . . . . . . . . . . $335 $454 $574 $493
General and administrative expenses (1) . 643 490 992 667
Loss before tax benefit . . . . . . . . . 308 36 418 174
Income tax benefit . . . . . . . . . . . 120 15 163 70
Net loss . . . . . . . . . . . . . . . . $188 $21 $255 $104
(1) Includes interest expense paid to Diamond and provision for credit
losses.
</TABLE>
Cash flow for the six months ended June 30, 1997 and 1996, respectively:
<TABLE>
<CAPTION>
Six Months Ended June 30
1997 1996
(Unaudited)
<S> <C> <C>
Cash at beginning of period . . . . . . . . . . $50 $0
Net cash used in operating activities . . . . (255) (104)
Net cash used in investing activities . . . . (1,944) (16,444)
Net cash provided by financing activities . . 2,149 17,152
Cash at end of period . . . . . . . . . . . . $ 0 $604
</TABLE>
At June 30, 1997, Marquise Financial had approximately $1.1 million in
approved but not funded loan commitments.
3. Earnings per Share
At June 30, 1997 and 1996, the Company had 9,007,375 and 9,074,900
common shares, respectively, outstanding. During the second quarter 1997,
the Company purchased for treasury stock 72,300 common shares.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which establishes new standards for
reporting and presenting earnings per share and which is required to be
adopted in the fourth quarter 1997; earlier adoption is not permitted. At
that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive
effect of stock options will be excluded. The impact is not sufficient to
change the reported primary earnings per share for the second quarter and six
months ended June 30, 1997 and 1996. Similarly, the impact of Statement 128
on the calculation of fully diluted earnings per share will be negligible.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment No. 1 to this report to be
signed on its behalf by the undersigned thereunto duly authorized.
DIAMOND HOME SERVICES, INC.
By: /s/ Richard G. Reece
----------------------------------------
Richard G. Reece
Vice President and
Chief Financial Officer
(For the Registrant and as
Principal Financial Officer)
Date: September 30, 1997
