<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d) of The Securities
Exchange Act of 1934
For the fiscal quarter ended June 1, 1996
Commission File Number 0-4173
DMI FURNITURE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 41-0678467
(State of incorporation) (IRS employer ID number)
One Oxmoor Place, 101 Bullitt Lane, Louisville, Kentucky 40222
(Address of principal executive offices)
Registrant's telephone number with area code: (502) 426-4351
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 _____
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the last practicable date.
CLASS - Common Stock, Par Value $.10 per Share
OUTSTANDING AT JUNE 1, 1996 - 3,002,312
<PAGE>
INDEX
Page
Part I. Financial Information
Consolidated Balance Sheets - June 1, 1996
and September 2, 1995 3, 4
Consolidated Statements of Operations - Three and Nine Months
Ended June 1, 1996 and June 3, 1995 5
Consolidated Statements of Cash Flows - Nine
Months Ended June 1, 1996 and
June 3, 1995 6, 7
Notes to Consolidated Financial Statements 8-10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11-13
Part II.Other Information 14-15
Index to Exhibits
11. Calculations of Earnings Per Share 16
27. Financial Data Schedule 17
<PAGE>
PART I. FINANCIAL INFORMATION
DMI FURNITURE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
ASSETS June 1, Sep. 2
------------- 1996 1995
---------- ----------
Current assets:
Cash $53 $69
Restricted cash for debt payments 143 226
Accounts receivable - net 7,353 10,748
Inventories (Note 4) 10,507 13,265
Other current assets 447 338
Current portion of deferred income taxes (Note 2) 790 925
---------- ----------
Total current assets 19,293 25,571
Property, plant and equipment - at cost (Note 1) 19,596 21,574
Less accumulated depreciation 8,642 9,553
---------- ----------
Net property, plant and equipment 10,954 12,021
Other assets:
Assets held for disposition (Note 7) 342 -
Intangible pension asset 558 558
Other 319 362
Deferred income taxes (Note 2) 200 -
---------- ----------
1,419 920
---------- ----------
$31,666 $38,512
---------- ----------
---------- ----------
See accompanying notes.
3
<PAGE>
DMI FURNITURE, INC.
CONSOLIDATED BALANCE SHEETS
(Continued)
(Amounts in thousands)
June 1, Sep. 2
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- ------------------------------------ ---------- ----------
Current liabilities:
Trade accounts payable $2,958 $3,135
Accrued liabilities (Note 7) 2,448 1,883
Accrued dividends on preferred
stock (Note 6) 77 389
Long-term debt due within one year 1,003 1,007
---------- ----------
Total current liabilities 6,486 6,414
Long-term liabilities:
Long-term debt 13,118 20,031
Accrued pension costs 1,059 905
Deferred compensation 396 434
Deferred income taxes (Note 2) 71 71
---------- ----------
14,644 21,441
Stockholders' equity:
Series C convertible preferred stock,
$2 par value, 2,020,000 authorized
and outstanding 4,040 4,040
Common stock 300 297
Additional paid-in capital 15,129 15,107
Retained deficit (8,909) (8,763)
Minimum pension liability (24) (24)
---------- ----------
Total stockholders' equity 10,536 10,657
---------- ----------
$31,666 $38,512
---------- ----------
---------- ----------
See accompanying notes.
4
<PAGE>
DMI FURNITURE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
June 1, June 3, June 1, June 3,
1996 1995 1996 1995
---------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Net sales $12,397 $14,775 $42,628 $50,949
Cost of sales 9,907 12,246 34,891 41,912
---------- ---------- ---------- --------
Gross profit 2,490 2,529 7,737 9,037
Selling, general and
administrative expenses 1,887 2,029 5,851 6,503
Plant closing reserve (Note 7) - - 995 -
---------- ---------- ---------- --------
Operating profit 603 500 891 2,534
Interest expense (net) (278) (470) (1,046) (1,407)
---------- ---------- ---------- --------
Income (loss) before benefit (provision) for income taxes 325 30 (155) 1,127
Benefit (provision) for income taxes (Note 2) (120) (11) 25 (417)
---------- ---------- ---------- --------
Net income (loss) (Note 7) $205 $19 ($130) $710
---------- ---------- ---------- --------
---------- ---------- ---------- --------
Earnings (loss) per common share (Notes 3 and 7) $.04 $.00 ($.04) $.12
---------- ---------- ---------- --------
---------- ---------- ---------- --------
</TABLE>
See accompanying notes.
5
<PAGE>
DMI FURNITURE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
NINE MONTHS ENDED
--------------------------
June 1, June 3,
1996 1995
----------- ----------
Cash flows from operating activities:
Net income (loss) (Note 7) ($130) $710
Adjustments to reconcile net income to
net cash provided (used) by
operating activities:
Depreciation and amortization 766 749
Deferred income taxes (Note 2) (65) 374
Pension costs 154 (67)
Deferred compensation (38) (55)
Changes in assets and liabilities:
Accounts receivable 3,253 472
Inventories 2,758 (786)
Other assets 229 (20)
Trade accounts payable (177) (671)
Accrued liabilities (Note 7) 565 (372)
---------- ----------
Total adjustments 7,445 (376)
---------- ----------
Net cash provided by
operating activities 7,315 334
---------- ----------
Cash flows provided (used) by
investing activities:
Capital expenditures (311) (466)
Payments received on notes receivable 142 107
---------- ----------
Cash used by investing
activities (169) (359)
---------- ----------
See accompanying notes.
6
<PAGE>
DMI FURNITURE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(Amounts in thousands)
(Unaudited)
NINE MONTHS ENDED
--------------------------
June 1, June 3,
1996 1995
------------ ----------
Cash flows provided (used) by
financing activities:
Borrowings from line of credit $11,948 $19,073
Payments on line of credit (18,150) (18,200)
Payments on long term debt (715) (841)
Cash dividends on preferred stock (328) (303)
Proceeds from stock options exercised - 90
---------- ----------
Cash used by
financing activities (7,245) (181)
---------- ----------
Decrease in cash (99) (206)
Cash- beginning of period 295 446
---------- ----------
Cash- end of period $196 $240
---------- ----------
---------- ----------
Cash paid for:
Interest $1,089 $1,377
---------- ----------
---------- ----------
Income taxes $156 $59
---------- ----------
---------- ----------
See accompanying notes.
7
<PAGE>
DMI FURNITURE, INC.
Notes to Consolidated Financial Statements
(1) FINANCIAL STATEMENTS AND ORGANIZATION
The consolidated financial statements include DMI Furniture, Inc. and its
wholly owned subsidiary, DMI Management, Inc. ("Company"). The financial
statements included herein at June 1, 1996 and for the three and nine months
ended June 1, 1996 and June 3, 1995 are unaudited but include all adjustments
which are, in the opinion of management, necessary to a fair presentation of the
results of operations and financial position for the periods covered herein.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's latest annual report on
Form 10-K.
The results of operations for the interim periods are not necessarily an
indication of the results to be expected for the full 1996 fiscal year. The
nine month period ended June 3, 1995 included 40 weeks as compared to 39 weeks
for the period ended June 1, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The specific useful lives of property, plant, and equipment are as follows:
Building and Leasehold Improvements 8 - 35 yrs.
Machinery and Equipment 3 - 13 yrs.
(2) INCOME TAXES
Income tax expense (benefit) consisted of the following (in thousands):
Three Months Ended Nine Months Ended
Jun. 1, Jun. 3, Jun. 1, Jun. 3,
1996 1995 1996 1995
---- ---- ---- ----
Current $7 $1 $40 $35
Deferred 113 10 (65) 382
---- ---- ---- ----
Total $120 $11 $(25) $417
---- ---- ---- ----
8
<PAGE>
The provision for income taxes differs from that computed at the federal
statutory corporate tax rate as follows (in thousands):
Three Months Ended Nine Months Ended
Jun. 1, Jun. 3, Jun. 1, Jun. 3,
1996 1995 1996 1995
---- ---- ---- ----
Tax at 34% statutory
rate $110 $10 $(53) $383
State income taxes 10 1 28 34
---- ---- ---- ----
Income Taxes $120 $11 $(25) $417
---- ---- ---- ----
---- ---- ---- ----
(3) EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of
common and common equivalent shares outstanding during the period, and assumes
the conversion of the Series C Preferred Stock into common stock. For the nine
month period June 1, 1996, since the effect of the assumption of the conversion
of the Series C Preferred Stock into common stock would be anti-dilutive, those
common equivalent shares were not included in the calculation of earnings per
common share. See Exhibit 11 for more information.
(4) INVENTORIES
Inventories were comprised of the following at June 1, 1996 and
September 2, 1995:
June 1, 1996 September 2,1995
------------ ----------------
Finished Products 5,551,000 $7,115,000
Work in Process 524,000 785,000
Raw Materials 4,432,000 5,365,000
----------- -----------
$10,507,000 $13,265,000
----------- -----------
----------- -----------
(5) OTHER MATTERS
The Company is subject to proceedings relating to six facilities identified
for remedial action under federal and state environmental statutes. The
proceedings are based on allegations that hazardous substances generated by the
Company and several hundred other waste generators were disposed of at the
facilities and seek to allocate or recover costs associated with site
investigation and cleanup, which costs could be substantial. The Company has
established a reserve reflecting its estimate of probable environmental
liabilities in connection with the proceedings based on presently available
information provided by steering committees of participants or regulatory
authorities with respect to each site. The reserve does not include any
potential insurance recoveries. As of June 1, 1996 the Company has accrued
approximately
9
<PAGE>
$148,000 for these potential environmental liabilities. The ultimate costs
of the Company's environmental liabilities cannot be estimated with
certainty, primarily due to several uncertain factors at one of the sites
subject to legal proceedings. These factors principally are the level of
contamination, the selection of remedial methods, the stage of investigation
at the site, and the determination of the Company's liability in proportion
to owner/operators of the site and other responsible parties. Due to the
limited nature of the Company's involvement in these proceedings, the
availability of certain defenses, and the involvement of many other parties
with substantial financial resources in the proceedings, the Company does not
anticipate, based on currently available information, that potential
environmental liabilities arising from these proceedings are likely to exceed
the amount of the Company's reserve by an amount that would have a material
effect on the Company's financial condition, results of operations or cash
flows. Expenses for the year to date were not material.
(6) DIVIDENDS
The dividends on Series C Preferred Stock accrued in a fiscal year are not
payable until the following fiscal year.
(7) PLANT CLOSING
On September 29, 1995 the Company announced its plan to permanently close
its Gettysburg, Pennsylvania manufacturing plant and consolidate the production
of that plant into its Huntingburg, Indiana facilities by December 31, 1995, and
close its Gettysburg warehouse during 1996. Consolidation of production in the
Indiana facilities should result in lower manufacturing overhead and plant
administrative costs in future periods. The Company recorded a pre-tax charge
of approximately $995,000 in the first quarter of fiscal 1996 related to this
closing. The charge includes book provisions of: $160,000 related to the
recording of property, plant, and equipment at net realizable value; $100,000
for recording certain inventory items at net realizable value; $145,000 for a
pension curtailment loss; $125,000 for severance pay; and approximately $465,000
for costs to be incurred after operations cease and that are associated with the
closing as well as expected future occupancy related costs. The severance pay
accrual related to the termination of certain salaried and support staff
personnel based upon the terms of a pre-existing post-employment severance plan.
None of the above referenced costs relate to the relocation or consolidation of
production into the Company's Huntingburg, Indiana facility.
Net current assets and liabilities associated with the Gettysburg,
Pennsylvania facilities as of June 1, 1996 are immaterial to the financial
position of the Company. The carrying amount of net long-term assets to be
disposed of as of June 1, 1996 are approximately $342,000 and management's
expectations are that such assets should be disposed of within the next 33
months. All severance related payments have been made as of June 1, 1996.
Other amounts included in accrued liabilities associated with the plant closing
as of June 1, 1996 total approximately $249,000.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenue - Net sales for the third quarter of fiscal 1996 decreased $2,378,000
or 16% over the third quarter of fiscal 1995. This decrease was the result
of decreased sales of residential desks, computer desks, accent furniture
and chairs and bedroom furniture, partially offset by an increase in office
furniture sales and sales to outside trade customers of lumber and
fabricated wood parts by the Company's sawmill/dimension parts plant.
Office furniture sales increased 17%; sales to outside trade customers of
lumber and fabricated wood parts by the Company's sawmill/dimension parts
plant increased 9%; sales of residential desks, computer desks, accent
furniture and chairs decreased 51%; and bedroom furniture sales decreased
16%. The decreases were primarily the result of a weak retail furniture
environment and because in last year's third quarter a significant drop ship
import order commenced for a major customer and that program did not repeat
itself in this year's third quarter.
Net sales for the first nine months of fiscal 1996 decreased $8,321,000 or
16% from the first nine months of fiscal 1995. This decrease was the result of
decreased sales of residential desks, computer desks, accent furniture and
chairs and bedroom furniture, partially offset by an increase in office
furniture sales. Office furniture sales increased 3%; sales to outside trade
customers of lumber and fabricated wood parts by the Company's sawmill/dimension
parts plant decreased 3%; sales of residential desks, computer desks, accent
furniture and chairs decreased 26%; and bedroom furniture sales decreased 23%.
The decreases were primarily the result of a weak retail furniture environment
and because in last year's third quarter a significant drop ship import order
commenced for a major customer and that program did not repeat itself in this
year's third quarter. In addition, the first nine months of fiscal 1995 included
40 weeks as compared to 39 weeks during the current year period.
Gross Margin - The Company's gross margin in the third quarter of fiscal 1996
was 20.1% compared to 17.1% in the third quarter of fiscal 1995. This increase
in gross margin was primarily the result of: higher margin product sales mix;
lower overall production and warehousing overhead expenses as a result of the
success of the Company's asset consolidation program; lower material costs; and
improved operations at the Company's internal supplier plants.
The Company's gross margin in the first nine months of fiscal 1996 was
18.2% compared to 17.7 % in the first nine months of fiscal 1995. This increase
is the result of the reasons cited above.
Selling, General and Administrative (S,G&A) Expense - For the third quarter of
fiscal 1996, S,G&A expense amounted to $1,887,000 or 15.2% of sales compared to
$2,029,000 or 13.7% of sales for the third fiscal quarter of 1995. This
increase as a percentage of sales is the result of the 16% sales decrease
mentioned above and the semi-fixed nature of many S,G&A expenses.
For the first nine months of fiscal 1996, S,G&A expense amounted to
$5,851,000 or 13.7% of sales compared to $6,503,000 or 12.8% of sales for the
first nine months of fiscal 1995. This increase as a percentage of sales is the
result of the 16% sales decrease mentioned above and the semi-fixed nature of
many S,G&A expenses.
11
<PAGE>
Interest Expense - For the third quarter of fiscal 1996, net interest was
$278,000 compared to $470,000 for the third quarter of fiscal 1995. This
decrease was the result of a lower interest rate spread charged by the Company's
lending bank as well as lower bank debt balances than in the previous year due
to the success of the Company's asset consolidation program.
For the first nine months of fiscal 1996, net interest was $1,046,000
compared to $1,407,000 for the first nine months of fiscal 1995. This
decrease was the result of the reasons cited above.
On September 29, 1995 the Company announced its plan to permanently close
its Gettysburg, Pennsylvania manufacturing plant and consolidate the production
of that plant into its Huntingburg, Indiana facilities by December 31, 1995, and
close its Gettysburg warehouse during 1996. Consolidation of production in the
Indiana facilities should result in lower manufacturing overhead and plant
administrative costs in future periods. The Company recorded a pre-tax charge
of approximately $995,000 in the first quarter of fiscal 1996 related to this
closing. The charge includes book provisions of: $160,000 related to the
recording of property, plant, and equipment at net realizable value; $100,000
for recording certain inventory items at net realizable value; $145,000 for a
pension curtailment loss; $125,000 for severance pay; and approximately $465,000
for costs to be incurred after operations cease and that are associated with the
closing as well as expected future occupancy related costs. The severance pay
accrual related to the termination of certain salaried and support staff
personnel based upon the terms of a pre-existing post-employment severance plan.
None of the above referenced costs relate to the relocation or consolidation of
production into the Company's Huntingburg, Indiana facility.
Net current assets and liabilities associated with the Gettysburg,
Pennsylvania facilities as of June 1, 1996 are immaterial to the financial
position of the Company. The carrying amount of net long-term assets to be
disposed of as of June 1, 1996 are approximately $342,000 and management's
expectations are that such assets should be disposed of within the next 33
months. All severance related payments have been made as of June 1, 1996.
Other amounts included in accrued liabilities associated with the plant closing
as of June 1, 1996 total approximately $249,000.
Liquidity and Capital Resources - Demands for funds relate to payments for
raw materials and other operating costs, debt obligations, accrued preferred
stock dividends and capital expenditures. The Company's ability to generate
cash adequate to meet short and long term needs is dependent on the collection
of accounts receivable and from its ability to borrow funds. The Company's days
of sales outstanding of accounts receivable averaged 50 days for the first nine
months of fiscal 1996 compared to 52 days for the nine months of fiscal 1995.
The Company's average days of inventory on hand averaged 86 days for the first
nine months of fiscal 1996 compared to 96 days for the first nine months of
fiscal 1995. This decrease is due to the success of the inventory reduction
program initiated in the fourth quarter of fiscal 1995. The program instituted
changes to the Company's production and procurement procedures intended to
shorten production runs, and reduce delivery lead times and safety stock levels
and thereby enable the Company to reduce inventories of raw materials,
work-in-process, and finished goods. The Company's order backlog at June 1,
1996 was approximately $11,320,000, a 13% decrease from approximately
$13,025,000 at the same time last year. This decrease is primarily due to a
significant drop ship import order in 1995 that did not repeat itself in the
current year.
12
<PAGE>
Key elements of the Consolidated Statements of Cash Flows:
Nine Months
1996 1995
---- ----
Net cash provided by operating activities $7,457,000 $334,000
Cash used for investing activities (311,000) (359,000)
---------- ---------
Net cash flows from operating and investing
activities 7,146,000 (25,000)
Cash used by financing activities (7,245,000) (181,000)
---------- ---------
Net change in cash and cash equivalents $(99,000) $(206,000)
---------- ---------
---------- ---------
During the first nine months of fiscal 1996 , the Company provided cash
flows from operating activities of $7,457,000 compared to cash flows provided of
$334,000 the previous year primarily due to the success of the Company's
inventory reduction program and improved accounts receivable collection cycle
and lower sales levels. Investing activities required $311,000 during the first
nine months of fiscal 1996 and $359,000 during the first nine months of fiscal
1995 primarily for capital expenditures. Financing activities used $7,245,000
during the first nine months of fiscal 1996 primarily in reduction of debt
compared to funds used of $181,000 the same nine month period of the previous
year.
The Company is subject to proceedings relating to six facilities identified
for remedial action under federal and state environmental statutes. At each
site, several hundred parties have been named as potentially responsible parties
("PRPs") or identified as potentially responsible for remediation, and the group
of PRPs undertaking remediation includes many companies, including "Fortune 500"
companies, believed to have substantial financial resources. The Company has
paid a portion of the costs of preliminary investigation and remediation at
three sites, and has settled claims against it made by PRPs at two sites. The
Company has established a reserve reflecting its estimate of probable
environmental liabilities based on presently available information provided by
steering committees of participants or regulatory authorities with respect to
each site. The amount of the reserve currently totals approximately $148,000
and does not include any potential insurance recoveries. The ultimate costs of
the Company's environmental liabilities cannot be estimated with certainty,
primarily due to several uncertain factors at one of the sites subject to legal
proceedings. These factors principally are the level of contamination, the
selection of remedial methods, the stage of investigation at the site, and the
determination of the Company's liability in proportion to owner/operators of the
site and other responsible parties. Due to the limited nature of the Company's
involvement in these proceedings, the availability of certain defenses, and the
involvement of many other parties with substantial financial resources in the
proceedings, the Company does not anticipate, based on currently available
information, that potential environmental liabilities arising from these
proceedings are likely to exceed the amount of the Company's reserve by an
amount that would have a material effect on the Company's financial condition,
results of operations or cash flows. For further information regarding the
Company's involvement in environmental proceedings, see Item 3 Legal
Proceedings.
The Company does not believe any events are probable which would materially
change its present liquidity position, which is adequate to satisfy known
demands for funds for operations and to pay bank and other debt.
13
<PAGE>
PART II. OTHER INFORMATION
Item 3. Legal Proceedings
The Company is subject to proceedings relating to six facilities
identified for remedial action under federal and state environmental statutes.
At each site, several hundred parties have been named as potentially responsible
parties ("PRPs") or identified as potentially responsible for remediation, and
the group of PRPs undertaking remediation includes many companies, including
"Fortune 500" companies, believed to have substantial financial resources. The
Company has paid a portion of the costs of preliminary investigation and
remediation at three sites, has settled claims against it made by PRPs at two
sites, and has established a reserve for future liabilities associated with the
proceedings.
In 1988 the Company was named out of over one thousand customers at the
Keystone Sanitation Company landfill (the "Keystone Site") in Union Township,
Pennsylvania, as one of 31 PRPs potentially responsible for remediation of this
site. After the Company provided the EPA with information concerning the
nature of the substances allegedly contributed by the Company, which the Company
believes did not include the principal hazardous substances of concern at the
site identified in the remedial investigation, the EPA did not name the Company
in an Administrative Order issued on June 28, 1991, requiring twelve other PRPs
to undertake remedial action at the Keystone Site. On September 27, 1993, the
United States filed a lawsuit in federal court for the Middle District of
Pennsylvania against eleven PRPs, who are challenging the EPA's proposal for
remedial action at the Keystone Site. On August 11, 1994, the Company was
named, along with over 250 PRPs, as a third-party defendant by the original PRP
defendants. The Company is participating with other third-party defendants in
settlement negotiations and in filing a fourth-party complaint joining 589
additional parties in the litigation. Based on a court-directed production of
information, the Company was assessed a preliminary allocation of liability of
approximately 1.35% by a consultant. The EPA has estimated the cost of its
preferred remediation alternative for the Keystone Site to be $9.2 million. The
parties have estimated that the total site costs will be approximately $14
million, including $3 million for off-site contamination which EPA believes may
require remediation, even though the anticipated cost has not been determined.
DMI believes it has a reasonable basis upon which to dispute, and has disputed,
both the volume of material attributed to it, and the allegation that material
contributed by DMI requires any remediation. In addition, DMI believes that a
significant share of the liability at the site can be expected to be assigned to
the owners and operators of the site, which would reduce DMI's share of the
potential liability. Several million dollars in assets of the original
owner/operator of the site and related parties are currently frozen pursuant to
a court order, and successor liability claims are pending against a national
waste management company that acquired the site from the owner/operators.
In addition to the environmental proceedings noted above, the Company
is a defendant in various other lawsuits arising in the normal course of
business that, in management's opinion, are not material to the results of
operations or financial position of the Company or are adequately covered by
insurance.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
11. Calculations of earnings per share.
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
Form 8-K dated as of May 14, 1996 relating to a press
release to announce that an investor group including two DMI executive
officers agreed to purchase a majority of the Company's outstanding Series C
Preferred Stock is herein incorporated by reference. On June 27, 1996 the
term of the agreement to purchase the Preferred Stcok was extended from July
1, 1996 to August 15, 1996.
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.
DMI FURNITURE, INC.
(Registrant)
Date: July 16, 1996 /s/Joseph G. Hill
--------------------
Joseph G. Hill
Vice President-Finance,
Chief Financial Officer,
Secretary & Treasurer
15
<PAGE>
EXHIBIT 11.
DMI FURNITURE, INC.
CALCULATIONS OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- -----------------------------
June 1, June 3, June 1, June 3,
1996 1995 1996 1995
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss) (Note 7) $205,000 $19,000 ($130,000) $710,000
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Average shares of common stock
and common equivalents
outstanding:
Average common shares
outstanding 3,002,312 2,970,026 2,992,703 2,970,026
Common stock equivalents--
dilutive options and convertible
preferred stock (a) 2,724,169 2,751,614 - 2,755,622
----------- ------------ ------------ ------------
Average shares of common
stock and common stock
equivalents outstanding 5,726,481 5,721,640 2,992,703 5,725,648
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Earnings (loss) per common share (Notes 3 and 7) $.04 $.00 ($.04) $.12
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
</TABLE>
(a) For the nine month period ended June 1, 1996, since the effect of the
assumption of the conversion of the Series C Preferred Stock into common
stock would be anti-dilutive, those common equivalent shares were not
included in the calculation of earnings per common share.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-03-1995
<PERIOD-END> JUN-01-1996
<CASH> 196
<SECURITIES> 0
<RECEIVABLES> 7,572
<ALLOWANCES> 219
<INVENTORY> 10,507
<CURRENT-ASSETS> 19,293
<PP&E> 19,596
<DEPRECIATION> 8,642
<TOTAL-ASSETS> 31,666
<CURRENT-LIABILITIES> 6,486
<BONDS> 13,118
0
4,040
<COMMON> 300
<OTHER-SE> 6,196
<TOTAL-LIABILITY-AND-EQUITY> 31,666
<SALES> 42,088
<TOTAL-REVENUES> 42,628
<CGS> 34,386
<TOTAL-COSTS> 34,891
<OTHER-EXPENSES> 6,771
<LOSS-PROVISION> 75
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</TABLE>
