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 March 31, 1998
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 Identification No.)
incorporation or organization)
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 April
30, 1998, the latest practicable date, was 8,507,375 shares.
PART I. FINANCIAL INFORMATION
This amendment is being filed to show the correct amounts for the line item
"Current Assets - Deferred income tax" in the "Condensed Consolidated Balance
Sheets."
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1998 1997
($ in thousands, except per
share data)
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . $28,876 $30,175
Cost of sales 16,189 16,812
Gross profit . . . . . . . . . . . . . . . . . . . . 12,687 13,363
Operating expenses:
Selling, general, and administrative expense . . 12,289 13,186
Operating interest expense . . . . . . . . . . . 55 0
Amortization expense . . . . . . . . . . . . . . 160 143
Operating income . . . . . . . . . . . . . . . . . . 183 34
Interest income, net . . . . . . . . . . . . . . . . 126 220
Income before income taxes . . . . . . . . . . . . . 309 254
Income tax provision . . . . . . . . . . . . . . . . 124 99
Net income . . . . . . . . . . . . . . . . . . . . . $185 $155
Net income per share:
Basic . . . . . . . . . . . . . . . . . . . . . $.02 $.02
Diluted . . . . . . . . . . . . . . . . . . . . $.02 $.02
Weighted average number of common shares
outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . 8,507,375 9,079,675
Diluted . . . . . . . . . . . . . . . . . . . . 8,507,375 9,192,000
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, 1998 December 31, 1997
(Unaudited)
(In thousands)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . $7,480 $9,966
Accounts receivable . . . . . . . . . . . . . . . . 7,554 6,630
Refundable income taxes . . . . . . . . . . . . . . 746 986
Prepaids and other current assets . . . . . . . . 2,293 1,959
Deferred income taxes . . . . . . . . . . . . . . . 1,338 872
Total current assets . . . . . . . . . . . . . . . . 19,411 20,413
Finance company accounts receivable, net . . . . . . 9,694 8,758
Net property and equipment . . . . . . . . . . . . . 5,808 5,546
Intangible assets, net . . . . . . . . . . . . . . . 16,363 16,514
Deferred income taxes . . . . . . . . . . . . . . . . 1,893 1,892
Other . . . . . . . . . . . . . . . . . . . . . . . . 4,479 3,466
Total assets . . . . . . . . . . . . . . . . . . . . $57,648 $56,589
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities
Due to bank . . . . . . . . . . . . . . . . . . . . $3,300 $2,050
Accounts payable and accrued liabilities . . . . . 9,617 10,070
Due to stockholders . . . . . . . . . . . . . . . . 554 554
Total current liabilities . . . . . . . . . . . . . . 13,471 12,674
Long-term liabilities:
Warranty and retention . . . . . . . . . . . . . . 9,355 9,161
Due to stockholders . . . . . . . . . . . . . . . . 399 544
Total long-term liabilities . . . . . . . . . . . . . 9,754 9,705
Common stockholders' equity . . . . . . . . . . . . . 34,423 34,210
Total liabilities and common stockholders'
equity . . . . . . . . . . . . . . . . . . . . . . $57,648 $56,589
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31
(In thousands)
1998 1997
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $185 $155
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 263 224
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (467) 64
Changes in operating assets and liabilities:
Accounts receivable and other assets . . . . . . . . . . . . . . . . . . . (1,752) 1,436
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . (453) (5,366)
Warranty and retention . . . . . . . . . . . . . . . . . . . . . . . . . . 194 340
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . (2,030) (3,147)
Investing activities:
Consumer finance loans originated, net of collections . . . . . . . . . . . (936) (1,529)
Advances to "captive" insurance company and other . . . . . . . . . . . . . . . (288) (542)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (365) (341)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . (1,589) (2,412)
Financing activities:
Borrowings on bank line of credit, net . . . . . . . . . . . . . . . . . . . . . 1,250 --
Payments on notes receivable from officers for treasury stock and other . . . . 28 212
Payments due to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . (145) (84)
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . 1,133 128
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . (2,486) (5,431)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 9,966 18,982
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . .
$7,480 $13,551
Supplemental cash flow disclosure:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55 $--
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $-- $52
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 period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the consolidated financial
statements included in the Company's 1997 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 finance subsidiary, is before elimination of inter-
company transactions in consolidation:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
(Unaudited)
<S> <C> <C>
ASSETS:
Cash $309 $23
Financing receivables, net 9,694 8,758
Other assets 1,007 1,046
Total assets $11,010 $9,827
LIABILITIES AND STOCKHOLDER'S EQUITY:
Due to Bank $3,300 $2,050
Due to Diamond Exteriors, Inc. 7,321 7,388
Other 129 147
Total liabilities 10,750 9,585
Total stockholder's equity 260 242
Total liabilities and stockholder's equity $11,010 $9,827
</TABLE>
Results of operations for the three months ended March 31, 1998 and 1997,
respectively:
<TABLE>
<CAPTION>
Three Months Ended
March 31
1998 1997
(Unaudited)
<S> <C> <C>
Financing income $375 $239
General and administrative expenses (1) 457 349
Loss before tax benefit 82 110
Income tax benefit 33 43
Net loss $49 $67
(1) Includes interest expense paid to Diamond and provision for credit losses.
</TABLE>
Cash flow for the three months ended March 31, 1998 and 1997, respectively:
<TABLE>
<CAPTION>
Three Months Ended March 31
1998 1997
(Unaudited)
<S> <C> <C>
Cash at beginning of period $23 $50
Net cash used in operating activities (82) (67)
Net cash used in investing activities (815) (1,700)
Net cash provided by financing activities 1,183 1,999
Cash at end of period $309 $282
</TABLE>
At March 31, 1998, Marquise Financial had approximately $2.0 million in
approved but not funded loan commitments.
3. SUBSEQUENT EVENT
On April 20, 1998, the Company acquired all of the issued and outstanding
capital stock of Reeves Southeastern Corporation for approximately $42 million
in cash and notes. In connection with the acquisition, the Company replaced its
$15 million unsecured bank line of credit with a $45 million secured bank line
of credit.
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.
/S/ Richard G. Reece
Date: June 4, 1998
By:_________________________
Richard G. Reece
Vice President and
Chief Financial Officer
(For the Registrant and as
Principal Financial Officer)