<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-7753
DECORATOR INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1001433
- --------------------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10011 Pines Blvd., Pembroke Pines, Florida 33024
------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954)436-8909
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, Par Value $.20 Per Share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
Aggregate market value at March 14, 1997 of outstanding shares of Common Stock
other than shares held by officers, directors and their respective associates:
$25,858,918*
Number of shares outstanding at March 14, 1997: 2,375,513*
DOCUMENTS INCORPORATED BY REFERENCE
None
* Includes 29,832 shares issuable upon surrender of the outstanding $.10 par
Common Stock.
<PAGE>
NOTE:In this report, unless the context otherwise requires, Registrant or
Company means Decorator Industries, Inc. and its subsidiaries, herein sometimes
also called "Decorator Industries". References to a particular year or the
captions "For the Year" and "At Year End" refer to the fiscal periods as
follows:
1996 - 52 weeks ended December 28, 1996
1995 - 52 weeks ended December 30, 1995
1994 - 52 weeks ended December 31, 1994
1993 - 52 weeks ended January 1, 1994
1992 - 53 weeks ended January 2, 1993
PART I
ITEM 1. BUSINESS.
The Company is engaged in the production and sale of window coverings,
bedspreads, furniture and complementary products. The Haleyville Division
manufactures window coverings, bedspreads, furniture and complementary products
for sale to original equipment manufactured home builders and recreational
vehicle manufacturers. The Liberia Division manufactures draperies and
bedspreads for sale to hotels, motels and other installations nationwide as well
as original equipment manufactured home builders.
The Company has one industry segment and one class of products. The
business in which the Company is engaged is a competitive environment, and it
competes with manufacturers located throughout the country. However, no
reliable information is available to enable the Company to determine its
relative position among its competitors. The principal methods of competition
are price, design and service.
During 1996 one customer, Fleetwood Enterprises, accounted for
approximately 22% of the Company's total sales. In the event of the loss of
that customer, there would be a material adverse effect on the Company. That
customer operates in two industries, the manufactured housing industry and the
recreational vehicle industry. Further, purchasing decisions are made at each
individual plant of that customer. The Company services many of these plants
and considers each of these plants to be an independent customer.
The Company's backlog of orders at any given time is not material in amount
and is not significant in the business. No material portion of the Company's
sales or income is derived from customers in foreign countries.
The chief raw materials used by the Company are fabrics made from both
natural and man-made fibers. The raw materials are obtained primarily from
converters and mills. The Company is not dependent upon one or a very few
suppliers. Most of its suppliers are large firms with whom, in the opinion of
management, the Company enjoys good relationships. The Company has never
experienced any significant shortage in its supply of raw materials.
<PAGE>
The Company has no significant patents, licenses, franchises or
concessions. It owns certain trademarks and copyrights. Although the Company
believes the trademarks aid in identifying its products, it is unable to
evaluate the importance of the trademarks to its business. Expenditures for
research and development during 1996 and 1995 were not significant.
Compliance with federal, state and local environmental protection
provisions will have no material effect upon the capital expenditures, earnings
or competitive position of the Company.
The Company employs approximately 630 sales, production, warehouse and
administrative employees and also uses the services of independent sales
representatives.
RECENT DEVELOPMENTS
The Company has entered into an agreement under which it acquired the
business and certain assets of Specialty Window Coverings Corp., an Elkhart,
Indiana based manufacturer of pleated shades for the recreational vehicle
market. The acquisition was effective March 15, 1997. The agreement provides
for a cash payment of approximately $2.3 million at closing plus conditional
payments, based on earnings, of up to $2 million over the succeeding two years.
Specialty will continue to operate from its existing facilities, which are being
expanded from 20,000 to 35,000 square feet and which will be leased by the
Company from the former owners of Specialty. Specialty had net sales of
approximately $5 million in 1996. The Company will recognize goodwill of
approximately $1.3 million in connection with the acquisition.
On March 4, 1997, the Company further expanded its product line to include
furniture and cushions for the recreational vehicle market by having purchased
the assets of Action Design Interiors, also based in Elkhart, Indiana.
ITEM 2. PROPERTIES.
The Haleyville Division produces window coverings, bedspreads and furniture
from plants located in Haleyville, Alabama; Salisbury, North Carolina; Lakeland,
Florida; Bloomsburg, Pennsylvania; and Goshen and Elkhart, Indiana. The
Haleyville plant is a one story building owned by the Company, which contains
approximately 54,000 square feet of manufacturing, warehouse and office space.
The Salisbury plant is a one story building of approximately 22,500 square feet
of manufacturing, warehouse and office space which is leased by the Company
under a lease including renewal options through the year 2000. The Lakeland
plant, a one story building of approximately 7,500 square feet, is leased by the
Company for a term ending in December 1998. The Bloomsburg plant is a one story
building of approximately 42,000 square feet which is owned by the Company. The
Goshen plant is a two-story building containing approximately 35,000 square feet
of manufacturing, warehouse and office space. The building is leased for a term
ending August 31, 1998. The Elkhart building contains approximately 8,000
square feet of manufacturing, warehouse and office space and is leased for a
term ending February 28, 1999.
The Liberia Division manufactures draperies and bedspreads in facilities
located in Bossier City, Louisiana and Abbotsford, Wisconsin. The Bossier City
plant, which contains approximately 20,000 square feet of manufacturing,
warehouse and office space, is owned by the Company. The Abbotsford plant,
which contains approximately 21,600 square feet of manufacturing, warehouse and
office space, is leased for a term expiring November 30, 2006.
2
<PAGE>
The Company considers that its offices, plants, machinery and equipment are
well maintained, adequately insured and suitable for their purposes and that its
plants are adequate for the presently anticipated needs of the business.
The Company owns a one story building of approximately 12,800 square feet
in Thomasville, Georgia. This building was formerly used as a production
facility by the Haleyville Division and is currently vacant and available for
sale.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is listed and traded on the American Stock
Exchange, AMEX symbol DII.
Common Stock price information is set forth in the table below. Sales
prices prior to the third quarter of 1996 have been adjusted for the four-for-
three stock split in June 1996.
1996 Sales Prices 1995 Sales Prices
----------------- -----------------
High Low High Low
---- --- ---- ---
First Quarter 7 5-29/32 7-1/8 5-11/32
Second Quarter 8-5/8 6-27/32 7-19/32 6-9/32
Third Quarter 11-7/8 8-1/8 7-13/32 6-21/32
Fourth Quarter 13-5/8 10-1/8 6-3/4 6
As of March 14, 1997, the Company had 598 shareholders of record of its
Common Stock. Of this total, 433 were holders of the $.20 par value stock and
165 were holders of the old $.10 par value stock who had not yet exchanged their
stock for the $.20 par value stock in connection with the one-for-two reverse
stock split in July 1982. The $.20 par value stock to which the holders of the
old $.10 par value stock are entitled, together with the accrued cash dividends
thereon, are in the process of being escheated to the proper states as unclaimed
property.
Total cash dividend payments were $.28 per share in 1996 and $.27 per share
in 1995.
3
<PAGE>
DECORATOR INDUSTRIES, INC.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- --------------
OPERATIONS
- ----------
<S> <C> <C> <C> <C> <C>
Net Sales $38,649,687 $34,207,259 $33,246,590 $28,964,223 $23,605,290
Net Income 3,065,220 2,414,678 2,823,770 2,370,232 1,528,787
--------------------------------------------------------------------------------------
AT YEAR-END
- -----------
Total Assets 18,394,357 16,415,659 16,406,670 13,188,452 11,236,785
Long-term Obligations 549,433 587,084 629,450 431,260 68,475
Long-term Debt Ratio 4.03% 5.14% 5.30% 4.70% 1.10%
Working Capital 9,003,836 6,925,352 7,479,176 5,322,279 3,214,756
Working Capital Ratio 2.94 2.54 2.75 2.39 1.68
Stockholders' Equity 13,010,946 11,147,754 11,322,046 8,741,511 6,417,134
--------------------------------------------------------------------------------------
PER SHARE
- ---------
Net Income
Primary 1.31 0.93 1.07 0.94 0.63
Fully Diluted 1.22 0.87 0.98 0.82 0.56
Book Value $5.50 $4.67 $4.24 $3.44 $2.59
Cash Dividends Paid $0.28 (a) $0.27 $0.23 $0.15 --
</TABLE>
Note: Per share amounts, except for cash dividends, have been adjusted
for a four-for-three stock split effective June 17, 1996 and a two-
for-one stock split in April 1993.
(a) The quarterly dividend rate remained at $0.07 per share after the
four-for-three split in June 1996, effectively increasing the dividend
rate by 33%.
4
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND FINANCIAL RESOURCES:
The Company's financial condition continues to be strong, as evidenced by
the following statistical measures:
1) Working capital at December 28, 1996 was $9,003,836 compared to
$6,925,352 at December 30, 1995.
2) The current ratio was 2.94:1 at year-end 1996 compared to 2.54:1 at
year-end 1995.
3) The liquid ratio changed from 1.9:1 at year-end 1995 to 2.3:1 at year-
end 1996.
4) The long-term debt ratio continued to be minimal, at 4.0% as of
December 28, 1996 compared to 5.1% a year earlier.
Accounts receivable and inventories increased by 5% compared to a 13%
increase in net sales. These assets continue to be well managed.
Capital expenditures for 1996 were $418,557. Management projects that
capital expenditures in 1997 will exceed somewhat the amount spent in 1996. The
acquisition of the business and assets of Specialty Window Coverings Corp.,
referred to in "Recent Developments" in Item 1 of this report, will be funded
with the proceeds of the sale of short term investments.
Management does not foresee any events which will adversely affect its
liquidity during 1997 and, further, the Company's financial condition is more
than adequate to finance internal growth and additional acquisitions of
profitable, growing businesses.
RESULTS OF OPERATIONS:
The following table shows the percentage relationship to net sales of
certain items in the Company's Statement of Income:
1996 1995 1994
---- ---- ----
Net sales . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
Cost of products sold. . . . . . . . . . 74.1 75.3 71.8
Selling and administrative expenses. . . 14.5 14.5 15.2
Interest and investment income . . . . . (.8) (1.2) (.4)
Interest expense . . . . . . . . . . . . .1 .1 .2
Net income . . . . . . . . . . . . . . 7.9 7.1 8.5
1996 VS 1995
Fiscal 1996's net sales increased to $38,649,687, an increase of 13% over
fiscal 1995's net sales of $34,207,259. Sales to the manufactured housing
market increased 8% to $21,533,000; sales to the recreational market increased
by 32% to $8,696,000; and hospitality sales increased by 10% to $8,421,000. The
increase in sales to the recreational market is largely attributable to the
acquisition made in August 1995 of a supplier to the recreational vehicle
industry. Without this acquisition, sales to the recreational vehicle industry
would have shown a 7% increase.
Cost of products sold as a percentage of sales decreased in 1996 to 74.1%
from 75.3% in 1995. This improvement was accomplished by increasing
efficiencies in labor and materials.
5
<PAGE>
Selling and administrative expenses remained constant at 14.5% of sales in
both 1996 and 1995.
The increase in net income to $3,065,220, 7.9% of net sales in 1996, from
$2,414,678, 7.1% of net sales in 1995, is the result of the increased sales
volumes and the improved efficiencies in labor and materials.
Primary earnings per share were $1.31 in 1996 compared to $.93 in 1995, a
41% increase. This percentage was the result of the higher net income and fewer
average shares outstanding. The Company repurchased 346,863 shares of its
outstanding Common Stock during 1995 and 1996.
1995 VS 1994
Net sales in 1995 increased to $34,207,259 from $33,246,590, an increase of
3%. The Company's growth rate was negatively affected by a decline in the
recreational vehicle market and a slowing in the growth rate in the manufactured
housing market.
Cost of goods sold as a percentage of sales increased to 75.3% in 1995 from
71.8% in 1994. This increase was attributable to the tightening of margins in
certain markets caused by competitive pricing pressures.
Selling and administrative expenses decreased by $88,343 due to lower
accruals for performance and incentive bonuses.
The decrease in net income to $2,414,678 in 1995 from $2,823,770 in 1994
was attributable almost entirely to the increase in cost of goods sold.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and reports of independent certified public
accountants listed in Item 14(a) of this report are filed under this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning the directors and executive officers of the Company
is set forth below.
William A. Bassett, age 60, has been President and a director of the
Company since 1980, Chief Executive Officer since February 1993 and Chairman of
the Board since January 1994.
Michael K. Solomon, age 47, has been Vice President of the Company since
November 1994, Treasurer and Chief Financial Officer of the Company since 1985
and a director of the Company since 1987.
Jerome B. Lieber, age 76, has been Secretary and a director of the Company
since 1961. He is Senior Counsel to the law firm of Klett Lieber Rooney &
Schorling, a Professional Corporation, Pittsburgh, Pennsylvania, which serves as
general counsel to the Company. Mr. Lieber previously had been a senior partner
in that firm.
6
<PAGE>
Herbert Walker, age 83, has been a director of the Company since 1980. He
has been a management consultant since 1980 and served as a registered
representative of Harvest Financial Corp., a broker-dealer, since 1982.
Joseph N. Ellis, age 68, has been a director of the Company since 1993. He
founded LaSalle-Deitch Co., Inc., a distributor of products for the manufactured
housing and recreational vehicle industries, in 1963 and served as its
President, Chief Executive Officer and Chairman from 1971 until his retirement
in 1992. Mr. Ellis is currently a management consultant.
William H. Allen, Jr., age 61, was appointed to the Board of Directors on
February 28, 1995. He has been Vice Chairman of the Board of NationsBank N.A.
(South) since December 1995 and previously served as Chairman of the Board and
Chief Executive Officer of Intercontinental Bank. Mr. Allen is also a director
of American Bankers Life Insurance Company and Winsloew Furniture, Inc.
The Board of Directors is divided into three classes of directors with
staggered terms. One class is elected at each annual meeting of shareholders
for a three-year term. Subject to the provisions of any employment agreements
with the Company, the term of office of all executive officers is at the
discretion of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION.
The following table shows the compensation of the named executive officers
of the Company for each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
------------------- ------
Name and Fiscal Optioned All Other Com-
Principal Position Year Salary($) Bonus($) Other($)(1) Shares (#) pensation($)(2)
- ------------------ ---- --------- -------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William A. Bassett(3) 1996 236,156 156,000 * 33,333 34,745
Chairman of the Board, 1995 224,910 58,234 * --- 34,745
President and Chief 1994 209,100 78,689 49,637 13,333 21,577
Executive Officer
Michael K. Solomon 1996 107,000 28,940 27,106 13,333 ----
Vice President, Treasurer 1995 104,500 14,558 * --- ----
and Chief Financial Officer 1994 99,500 19,672 14,483 5,999 ----
</TABLE>
- --------------------
(1) Medical/dental reimbursement plan payments, country club memberships,
personal use of Company vehicles, and payments made in accordance with
Company policy for disqualifying sales of Common Stock acquired upon the
exercise of a qualified stock option. For 1996, payment to Mr. Solomon for
such sales was $18,059 and provided a net benefit to the Company of
$11,919. For 1994, payments to Messrs. Bassett and Solomon for such sales
were $47,884 and $8,833, respectively. All such sales during 1994 provided
a net benefit to the Company of $94,970. An asterisk indicates that the
total of other annual compensation for that year was less than 10% of
salary and bonus for that year.
(2) Premiums paid by the Company on life and long-term disability insurance
policies.
(3) The Company has an employment agreement with Mr. Bassett which provides for
an annual salary of not less than $214,200. The agreement expires July 1,
2004.
7
<PAGE>
The following table provides information on options granted to the named
executive officers in fiscal 1996 under the Company's 1995 Incentive Stock
Option Plan:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------- Potential Realizable Value of
Percent of Assumed Annual Rates of
Total Options Stock Price Appreciation for
Options Granted to Exercise Option Term (2)
Granted Employees Price Expiration ----------------------
Name (Shs)(1) in 1996 Per Share(1) Date 5% 10%
---- -------- ------------ ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
William A. 33,333 20.0% $7.50 5/3/06 $157,277 $398,432
Bassett
Michael K. 13,333 8.0 7.50 5/3/06 62,888 159,370
Solomon
</TABLE>
- --------------------
(1) As adjusted for the four-for-three stock split in June 1996. Options
heretofore granted under the 1995 Incentive Stock Option Plan have a ten
year term and vest 20% on the date of grant and 20% annually thereafter
through the fourth anniversary of the grant.
(2) Potential realizable value is based on the assumption that the market price
of the Common Stock appreciates at the annual rates shown (compounded
annually) from the date of grant until the end of the ten year option term.
Potential realizable value is shown net of exercise price. These numbers
are calculated based on the regulations promulgated by the Securities and
Exchange Commission and do not reflect the company's estimate of future
stock price growth.
The following table sets forth information concerning the exercise of stock
options during 1996 by the named executive officers and the value of their
unexercised, in-the-money stock options at the end of that fiscal year (December
28, 1996). All options outstanding at December 28, 1996, except for those
granted after 1995, were exercisable at any time prior to their respective
expiration dates.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Shares Acquired Value Optioned Shares Options at
Name on Exercise Realized($) at 12/28/96(#) 12/28/96($)(1)
- ---- --------------- ----------- --------------- --------------
<S> <C> <C> <C> <C>
William A. Bassett 26,666(2) 146,378 133,331 1,083,294
Michael K. Solomon 13,332(2) 83,388 45,998 357,978
</TABLE>
- -----------------
(1) Assumes a market value of $11.50 per share, which was the last reported
sale price on the American Stock Exchange on December 27, 1996.
(2) As adjusted for the four-for-three stock split in June 1996.
8
<PAGE>
Directors who are not employees of the Company are paid a fee of $10,000
per year for their services as directors.
The Company's medical and dental reimbursement plan provides reimbursement
to the corporate and certain divisional officers of the Company and their
dependents (as defined in Section 152 of the Internal Revenue Code) for their
medical and dental expenses. Benefits under the plan are limited to 10% of the
participant's compensation during the plan year. The plan also prohibits any
participant from receiving "double reimbursement", i.e. if a participant
receives reimbursement from another source, he or she must remit to the Company
benefits received under the plan.
The Company's 1984 Incentive Stock Option Plan, which expired February 22,
1994, authorized the granting to key employees of options to purchase up to
604,666 shares of the Company's Common Stock. The purchase price of optioned
shares is the fair market value of the Common Stock on the date of grant, and
the maximum term of the options is ten years; in the case of options granted to
employees who owned more than 10% of the outstanding Common Stock, however, the
purchase price was 110% of the fair market value of the Common Stock on the date
of grant and the term of the option was five years. The number of optioned
shares and the purchase price per share are subject to adjustment for stock
splits, stock dividends, reclassifications and the like.
On April 3, 1995 the Board of Directors adopted, and on June 5, 1995 the
stockholders approved, the Company's 1995 Incentive Stock Option Plan (the "1995
Plan") which has a term of ten years. The 1995 Plan authorizes the issuance of
up to 333,332 shares of Common Stock pursuant to stock options granted to key
employees of the Company. The purchase price of optioned shares must be the
fair market value of the Common Stock on the date of grant, and the maximum term
of the options is ten years; in the case of options granted to employees who own
more than 10% of the outstanding Common Stock, however, the purchase price must
be 110% of the fair market value of the Common Stock on the date of grant and
the term of the option cannot exceed five years. The number of shares that may
be issued under the 1995 Plan, the number of optioned shares and the purchase
price per share are subject to adjustment for stock splits, stock dividends,
reclassifications and the like.
9
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information concerning the common stockholding at March 14, 1997 of the
directors and named executive officers of the Company, and of the directors and
executive officers as a group, is set forth in the following table. Unless
otherwise indicated, each stockholder has sole voting and investment power with
respect to the shares listed.
Shares
Name or Group Beneficially owned Percent of Class (1)
- ------------- ------------------ --------------------
William A. Bassett 241,547 (2) 9.71%
Michael K. Solomon 62,663 (3) 2.60
Jerome B. Lieber 8,772 (4) ---
Herbert Walker 3,000 ---
Joseph N. Ellis 1,600 ---
William H. Allen, Jr. 2,500 ---
All directors and executive officers
as a group 320,082(5) 12.70
- ----------------------------
(1) Shares which the named stockholder has the right to acquire within 60 days
are deemed outstanding for the purpose of computing that stockholder's
percentage.
(2) Includes 113,331 optioned shares which may be acquired within 60 days.
(3) Includes 31,997 optioned shares which may be acquired within 60 days.
(4) Includes 3,226 shares held in a charitable trust as to which Mr. Lieber
disclaims beneficial ownership.
(5) Includes 145,328 optioned shares which may be acquired within 60 days.
Coury Investments, Ltd., a real estate and securities investment limited
partnership organized in Florida, informed the Company in mid-1993 that it then
beneficially owned 180,000 shares of the Company's Common Stock. The Company
has no further information regarding Coury's ownership of Common Stock.
FMR Corp. of Boston, Massachusetts, has furnished the Company a copy of its
Schedule 13G in which it reported that as of December 31, 1996 Fidelity
Management & Research Company, a wholly-owned subsidiary of FMR Corp. and a
registered investment adviser, had sole investment power with respect to 241,866
shares (10.18%) of the Company's Common Stock.
ZPR Investment Management Inc. of Orange City, Florida, a registered
investment adviser, has furnished the Company a copy of its Schedule 13G dated
January 10, 1997 in which it reported that it had sole voting power with respect
to 172,697 shares (7.27%) of the Company's Common Stock.
10
<PAGE>
Laifer Capital Management, Inc. of New York, New York has furnished the
Company a copy of its Schedule 13G dated February 7, 1996 in which it reported
beneficial ownership of a total of 98,400 shares of the Company's Common Stock,
including sole power to vote 72,400 shares, sole power to dispose of 65,000
shares and shared power to dispose of 33,400 shares. No further information has
been received from that company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
FINANCIAL STATEMENTS AND SCHEDULES
(1) Report of Independent Certified Public Accountants
(2) Consolidated Balance Sheet - December 28, 1996 and December 30,
1995
(3) Consolidated Statement of Income for the three fiscal years ended
December 28, 1996
(4) Consolidated Statement of Stockholders' Equity for the three
fiscal years ended December 28, 1996
(5) Consolidated Statement of Cash Flows for the three fiscal years
ended December 28, 1996
(6) Notes to Consolidated Financial Statements
(7) Report of Independent Certified Public Accountants on Financial
Statement Schedule
Schedule VIII - Valuation and Qualifying Accounts
All other schedules are omitted because they are not required or are
inapplicable or the information is included in the financial
statements or notes thereto.
EXHIBITS
3A Articles of Incorporation as amended to date, filed as Exhibit 3A
to Form 10-K for the fiscal year ended December 28, 1985 and
incorporated herein by reference.
3B.1 By-laws as amended to date, filed as Exhibit 3B.1 to Form 10-Q
for the quarter ended July 2, 1988 and incorporated herein by
reference.
11
<PAGE>
10E Lease dated February 9, 1984 between the registrant, as lessee,
and Leon and Eleanor Bradshaw covering property at 500 North Long
Street, Salisbury, North Carolina, filed as Exhibit 10(b)(4)(iv)
to Registration Statement No. 2-92853 and incorporated herein by
reference.
10H Lease Agreement dated December 13, 1983 covering property at 101
West Linden Street, Abbotsford, Wisconsin, and assignment thereof
to the registrant, as lessee, dated October 2, 1985, filed as
Exhibit 10H to Form 10-K for the fiscal year ended December 28,
1985 and incorporated herein by reference.
10H.1 Lease Modification Agreement dated May 20, 1988 regarding Exhibit
10H, filed as Exhibit 10H.1 to Form 10-K for the fiscal year
ended December 31, 1988 and incorporated herein by reference.
10H.2 Lease Modification Agreement dated September 30, 1996 regarding
Exhibit 10H, filed herewith.
10K.1 1984 Incentive Stock Option Plan, as amended to date, filed as
Exhibit 10K.1 to Form 10-Q for the quarter ended October 3, 1987
and incorporated herein by reference.*
10M.1 Medical and Dental Reimbursement Plan, as amended to date, filed
as Exhibit 10M.1 to Form 10-K for the fiscal year ended January
3, 1987 and incorporated herein by reference.*
10T Employment Agreement dated August 2, 1994 between the registrant
and William Bassett, filed as Exhibit 10T to Form 10-Q for the
quarter ended July 2, 1994 and incorporated herein by reference.*
10U 1995 Incentive Stock Option Plan, filed as Exhibit 10U to Form
10-K for the fiscal year ended December 30, 1995 and incorporated
herein by reference.*
10V Purchase and Sale Agreement dated March 14, 1997 between the
registrant and Specialty Window Coverings Corp., filed herewith.
11L Statement re computation of fully diluted income per share, filed
herewith.
24D Consent of Accountants, filed herewith.
27 Financial Data Schedule, filed herewith.
- ------------
*Management contract or compensatory plan.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the last quarter of
1996.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DECORATOR INDUSTRIES, INC.
(Registrant)
By: /s/ Michael K. Solomon
-----------------------------------
Michael K. Solomon
Vice President
Dated: March 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Title Signature Date
- ---- ----- --------- ----
<S> <C> <C> <C>
William A. Bassett Chairman, President, /s/ William A. Bassett March 21, 1997
Chief Executive ------------------------
Officer and
Director
Michael K. Solomon Vice President, Treasurer, /s/ Michael K. Solomon March 21, 1997
Principal Financial ------------------------
and Accounting
Officer, and
Director
Jerome B. Lieber Director /s/ Jerome B. Lieber March 21, 1997
------------------------
Herbert Walker Director /s/ Herbert Walker March 21, 1997
------------------------
Joseph N. Ellis Director /s/ Joseph N. Ellis March 21, 1997
------------------------
William H. Allen, Jr. Director /s/ William H. Allen, Jr. March 21, 1997
------------------------
</TABLE>
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders
Decorator Industries, Inc.
We have audited the accompanying consolidated balance sheets of Decorator
Industries, Inc. and subsidiaries as of December 28, 1996 and December 30, 1995
and the related consolidated statements of income and stockholders' equity and
cash flows for each of the three fiscal years in the period ended December 28,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Decorator Industries, Inc. as of December 28, 1996 and December 30, 1995, and
the results of their operations and their cash flows for each of the three
fiscal years in the period ended December 28, 1996 in conformity with generally
accepted accounting principles.
/s/ Louis Plung & Company
LOUIS PLUNG & COMPANY
Certified Public Accountants
Pittsburgh, Pennsylvania
February 8, 1997
F-1
<PAGE>
DECORATOR INDUSTRIES, INC
BALANCE SHEET
Fiscal Year End
1996 1995
---- ----
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $4,714,356 $5,269,772
Short-term Investments 2,539,613 14,607
Accounts Receivable, less allowance for
doubtful accounts ($232,302 and $229,722 ) 2,972,572 2,776,039
Note Receivable 80,000 80,000
Inventories 3,083,004 3,005,383
Prepaid Expenses 117,269 126,373
Prepaid and Deferred Income Taxes 136,000 159,000
---------- ----------
Total Current Assets 13,642,814 11,431,174
---------- ----------
PROPERTY & EQUIPMENT:
Land 130,408 130,408
Buildings & Improvements 2,224,605 2,205,800
Equipment 3,042,968 2,740,656
---------- ----------
Total Property & Equipment 5,397,981 5,076,864
Less: Accumulated Depreciation and Amortization 2,249,848 1,988,557
---------- ----------
Net Property & Equipment 3,148,133 3,088,307
---------- ----------
EXCESS OF COST OVER NET ASSETS ACQUIRED
less accumulated amortization of $874,225 and
$815,438 1,402,818 1,461,605
NOTE RECEIVABLE 60,000 140,000
OTHER ASSETS 140,592 294,573
---------- ----------
TOTAL ASSETS $18,394,357 $16,415,659
---------- ----------
---------- ----------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $2,624,552 $2,751,329
Current Maturities of long-term debt 41,685 41,032
Accrued Expenses:
Income taxes 63,397 60,873
Compensation 1,443,921 1,072,321
Other 465,423 580,267
---------- ----------
Total Current Liabilities 4,638,978 4,505,822
---------- ----------
LONG-TERM DEBT 549,433 587,083
DEFERRED INCOME TAXES 195,000 175,000
---------- ----------
Total Liabilities 5,383,411 5,267,905
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock $.20 par value:
Authorized shares, 5,000,000 ;
Issued shares, 2,725,462 and 2,644,855 545,094 528,973
Paid-in capital 1,546,152 1,692,185
Retained Earnings 12,478,625 12,228,865
---------- ----------
14,569,871 14,450,023
Less: Treasury Stock, at cost:
369,087 and 853,143 shares 1,558,925 3,302,269
---------- ----------
Total Stockholders' Equity 13,010,946 11,147,754
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $18,394,357 $16,415,659
---------- ----------
---------- ----------
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
DECORATOR INDUSTRIES, INC.
STATEMENT OF INCOME
For the Year
------------
1996 1995 1994
---- ---- ----
INCOME:
Net Sales $38,649,687 $34,207,259 $33,246,590
----------- ----------- -----------
----------- ----------- -----------
COST AND EXPENSES:
Cost of products sold 28,626,094 25,760,666 23,881,370
Selling and administrative 5,611,222 4,961,007 5,049,350
Interest and dividend income (305,370) (420,329) (129,668)
Interest expense 38,521 47,237 61,768
---------- ---------- ----------
Total costs and expenses 33,970,467 30,348,581 28,862,820
---------- ---------- ----------
Income before income taxes 4,679,220 3,858,678 4,383,770
Income taxes 1,614,000 1,444,000 1,560,000
--------- --------- ---------
NET INCOME $3,065,220 $2,414,678 $2,823,770
----------- ----------- -----------
----------- ----------- -----------
TOTAL PRIMARY EARNINGS PER SHARE $1.31 $ .93 $1.07
----- ----- -----
----- ----- -----
FULLY DILUTED EARNINGS PER SHARE $1.22 $ .87 $ .98
----- ----- -----
----- ----- -----
Average Number of shares
Outstanding:
Primary 2,333,972 2,585,568 2,629,295
Fully diluted 2,511,610 2,790,177 2,894,269
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
DECORATOR INDUSTRIES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
----- ------- -------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1994 $ 512,917 $ 1,354,844 $ 7,965,077 $(1,091,327) $ 8,741,511
Transactions for 1994
Net Profit 2,823,770 2,823,770
Issuance of stock for
Exercise of options 9,800 115,509 (61,782) 63,527
Stock option tax
benefit 149,475 149,475
Dividends Paid (456,237) (456,237)
--------- ---------- ---------- ---------- ----------
Balance at
December 31, 1994 522,717 1,619,828 10,332,610 (1,153,109) 11,322,046
Transactions for 1995
Net Profit 2,414,678 2,414,678
Issuance of stock for
exercise of options 6,256 60,903 (11,019) 56,140
Stock option tax
benefit 11,454 11,454
Purchase of common
stock for treasury (2,138,141) (2,138,141)
Dividends Paid (518,423) (518,423)
--------- ---------- ---------- ---------- ----------
Balance at
December 30, 1995 528,973 1,692,185 12,228,865 (3,302,269) 11,147,754
Transactions for 1996
Net Profit 3,065,220 3,065,220
Issuance of stock for
exercise of options 16,122 148,839 165,012
Stock option tax
benefit 18,000 18,000
Purchase of common
stock for treasury (769,829) (769,829)
Dividends Paid (613,922) (613,922)
Record stock split (312,872) (2,201,539) 2,513,172 (1,290)
--------- ---------- ---------- ---------- ----------
Balance at
December 28, 1996 $ 545,095 $ 1,546,152 $12,478,624 $(1,558,926) $13,010,945
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
DECORATOR INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For The Year
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Income (Loss) $3,065,220 $2,414,678 $2,823,770
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 412,172 380,100 347,100
Provision for losses on accounts receivable 40,000 72,374 45,000
Deferred Taxes 43,000 40,000 (87,000)
(Gain) loss on disposal of assets (264) (623) 505
Increase (decrease) from changes in:
Accounts receivable (236,533) (148,611) 107,838
Inventory (77,621) (248,624) (374,199)
Short-term investments (2,525,006) 2,131,725 (1,017,642)
Prepaid expenses 9,104 (28,103) (2,729)
Other assets 153,981 (18,914) (54,146)
Accounts payable (126,777) 366,474 161,190
Accrued expenses 259,280 (252,875) 307,554
---------- ---------- ----------
Net cash provided by operating activities 1,016,556 4,707,601 2,257,241
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (418,557) (462,704) (1,005,241)
Proceeds from property dispositions 5,609 33,477 8,940
Note receivable 80,000 80,000 155,000
Net cash paid for acquisition --- (471,926) ---
---------- ---------- ----------
Net cash used in investing activities (332,948) (821,153) (841,301)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long term debt payments (36,997) (53,740) (101,093)
Proceeds from debt on new building --- --- 269,046
Dividend payments (613,922) (518,423) (456,235)
Proceeds from exercise of stock options 165,012 56,139 63,525
Stock option tax benefit 18,000 11,454 149,475
Purchase of common stock for treasury (769,829) (2,138,141) ---
Cash in lieu of fractional shares (1,288) --- ---
---------- ---------- ----------
Net cash used in financing activities (1,239,024) (2,642,711) (75,282)
Net increase (decrease) in cash and cash equivalents (555,416) 1,243,737 1,340,658
Cash and cash equivalents at beginning of year 5,269,772 4,026,035 2,685,377
---------- ---------- ----------
Cash and cash equivalents at end of period $4,714,356 $5,269,772 $4,026,035
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
INTEREST $29,393 $43,899 $32,139
INCOME TAXES $1,568,476 $1,460,794 $1,507,575
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all subsidiary companies. All significant intercompany accounts and
transactions have been eliminated in consolidation.
FISCAL YEAR
The Company's fiscal year is a 52-53 week period ending the Saturday
nearest to December 31, which results in every sixth year containing 53
weeks. Fiscal years 1996, 1995 and 1994 were 52-week periods ending
December 28, 1996, December 30, 1995 and December 31, 1994.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
PROPERTY AND DEPRECIATION
Buildings and equipment are stated at cost, and depreciated on both
straight-line and accelerated methods over estimated useful lives.
Leasehold improvements are capitalized and amortized over the assets'
estimated useful lives or remaining terms of leases, if shorter. Equipment
is depreciated over 3-10 years, buildings over 20-30 years and leasehold
improvements over 5-10 years.
EXCESS OF COST OVER NET ASSETS ACQUIRED
The excess of investment costs over the fair value of net assets related to
the Haleyville Manufacturing division acquired in April, 1973 and the
Liberia Manufacturing division acquired in October, 1985 are being
amortized over a period of 40 years. Paragon Interiors, acquired in
August, 1995 is being amortized also over a period of 40 years.
Amortization of $58,786 was charged to income during fiscal year ended
12/28/96, $56,417 in fiscal year ended 12/30/95, and $54,724 in fiscal year
ended 12/31/94.
The Company evaluates the impairment of goodwill on the basis of whether
goodwill is recoverable from the projected undiscounted net income before
goodwill amortization of the related assets.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments with a maturity of three months or
less at the time of purchase to be cash equivalents.
Cash and cash equivalents consist of the following:
1996 1995
---- ----
General Funds $1,116,347 $4,054,772
Demand Notes 2,805,000 1,215,000
Repurchase agreements 743,009 ----
--------- ---------
$4,714,356 $5,269,772
--------- ---------
--------- ---------
The demand notes are guaranteed by letters-of-credit.
F-6
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
SHORT-TERM INVESTMENTS
Short-term investments are categorized as trading securities. The
estimated fair values of the company's trading securities, which are the
amounts reflected in the balance sheet, are based on quoted market prices.
An unrealized gain of $25,204 is included in income for year ended December
28, 1996 compared to a realized gain of $125,601 for the year ended
December 30, 1995.
DEFERRED INCOME TAXES
The Company accounts for income taxes in accordance with the Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes," which
requires the recognition of deferred tax liabilities and assets at
currently enacted tax rates for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
PER SHARE INFORMATION
Per share amounts of common stock are based on the average number of common
shares outstanding during each period.
Fully diluted earnings per share were computed based on the assumption that
the stock options were exercised. The dilutive effect of the stock options
was determined using the "treasury stock" method.
CREDIT RISK
The Company sells into three different markets, each primarily, on thirty
day terms. Within each market the Company's customers are spread over a
wide geographic area. As such the Company believes that it does not have
an abnormal concentration of credit risk within any one market or any one
geographic area.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Marketable securities are carried at fair value. All other financial
instruments are carried at amounts believed to approximate fair value.
STOCK SPLIT
The Company declared a four-for-three stock split effective June 17, 1996.
Per share and share data have been adjusted to reflect this stock split.
(2) INVENTORIES
Inventories consisted of the following classifications:
1996 1995
---- ----
Raw materials & supplies $2,854,066 $2,814,309
In process & finished goods 228,938 191,075
------- -------
$3,083,004 $3,005,383
--------- ---------
--------- ---------
F-7
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(3) NOTES RECEIVABLE
Notes receivable consist of the following:
Fiscal Year-end
---------------
1996 1995
---- ----
The note is receivable in monthly
installments of $6,667, plus interest
at 8%. The note is secured by the
land and building sold during 1993. $140,000 $220,000
Less current portion 80,000 80,000
------ ------
Long-term portion $ 60,000 $140,000
------ ------
------ ------
Maturities of notes receivable are as follows:
Fiscal Year Ending Amount
------------------ ------
1997 80,000
1998 60,000
------
TOTAL $140,000
-------
-------
(4) LEASES
The Company leases certain buildings and equipment used in its operations.
Building leases generally provide that the company bear the cost of
maintenance and repairs and other operation expenses. Rent expense was
$248,286 in 1996, $209,958 in 1995, and $229,191 in 1994.
Commitments under these leases extend through November, 2006, and are as
follows:
1997 $ 209,085
1998 143,795
1999 90,564
2000 90,564
Thereafter 309,737
(5) COMMITMENTS
The Company has commitments under certain employment and non-compete
agreements entered into with individuals in management positions. The
commitments under these agreements are payable $214,200, $214,200, and
$214,200, respectively, from 1997 through 1999 and $963,900 thereafter.
(6) SIGNIFICANT CUSTOMERS
Sales to one customer accounted for 22.5%, 25.1%, and 31.3% of Company
sales in 1996, 1995, and 1994, respectively. This customer, Fleetwood
Enterprises, operates in two industries, the Manufactured Housing Industry
and the Recreational Vehicle Industry. Further, purchasing decisions are
made at each individual plant of that customer. The Company services many
of these plants and considers each of these plants to be an independent
customer.
F-8
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(7) LONG TERM-DEBT AND CREDIT ARRANGEMENTS
Long-term debt consists of the following:
1996 1995
---- ----
Note payable in monthly payments of
$2,088 at 4% interest. Term is 15 years.
This note is secured by the first mortgage
on the Bloomsburg, PA building. $215,372 $230,137
Bond payable in monthly installments
thru November, 2008. The interest
rate is variable and is currently less
than 4%. This bond is secured by the
Company's Bloomsburg, PA property. 375,746 397,978
------- -------
591,118 628,115
Less amount due within one year 41,685 41,032
------- -------
$ 549,433 $ 587,083
--------- ---------
--------- ---------
Principal payments on long-term debt for the five years subsequent to
December 28, 1996 are as follows:
1997 $42,000
1998 42,000
1999 43,000
2000 43,000
2001 44,000
F-9
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(8) STOCK OPTIONS
At December 28, 1996 the Company had options outstanding under two fixed
stock option plans, which are described below. The Company applies APB
Opinion 25 and related interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for its fixed stock
option plans. Had compensation cost for the Company's two fixed stock
option plans been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of FASB 123, the
Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below:
1996 1995 1994
---- ---- ----
Pro forma net income $3,007,470 $2,414,678 $2,787,965
Pro forma earnings per share:
Primary $1.29 $0.93 $1.06
Fully diluted $1.20 $0.87 $0.96
During the initial phase-in period of FASB 123 the pro forma disclosure may
not be representative of the impact on net income in future years.
Under the 1984 Incentive Stock Option Plan which expired in 1994, the
Company granted options to its employees for up to 604,666 shares (less the
number of shares issued under the 1979 plan). Under the 1995 Incentive
Stock Option Plan, the Company may grant options to its key employees for
up to 333,332 shares of common stock. Under both plans, the exercise price
of the option equals the fair market price of the Company's stock on the
date of the grant and an option's maximum term is 10 years. During 1996
options to purchase 166,662 shares under the 1995 Incentive Stock Option
Plan were granted. The options granted in1996 vest 20% each year starting
with the date of the grant.
The fair value of each option grant is estimated on the date of grant using
the Flexible Binomial options-pricing method with the following
weighted-average assumptions used for the grants in 1996, 1995, and 1994,
respectively: dividend yield of 3.6 percent for all years; expected
volatility of 49.6 percent for all years; risk-free interest rate of 6.4
percent for all years; and expected life of 3.7 years for all grants.
A summary of the status of the Company's outstanding stock options as of
December 28, 1996, December 30, 1995, and December 31, 1994, and changes
during the years ending on those dates is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 258,954 $1.86 315,320 $1.81 442,121 $1.43
Granted 166,662 $7.50 - - 20,665 $7.88
Exercised 100,360 $1.64 56,366 $1.56 147,466 $1.52
Forfeited - - - - - -
------- ------- -------
Outstanding at year-end 325,256 $4.82 258,954 $1.86 315,320 $1.81
------- ------- -------
------- ------- -------
Options exercisable at year-end 191,926 258,954 315,320
Weighted-average fair value of $2.63
options granted during the year
The following information applies to fixed stock options outstanding at December 28, 1996:
Number outstanding 325,256
Range of exercise prices $.89 to $7.88
Weighted-average exercise price $4.82
Weighted-average remaining contractual life 6.9 years
</TABLE>
F-10
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(9) INCOME TAXES
A summary of income taxes is as follows:
1996 1995 1994
---- ---- ----
Current:
Federal $1,350,000 $1,169,000 $1,400,000
State 221,000 235,000 247,000
Deferred (Benefit) 43,000 40,000 (87,000)
--------- --------- ---------
Total $1,614,000 $1,444,000 $1,560,000
---------- ---------- ----------
---------- ---------- ----------
Temporary differences between the financial statement carrying amounts and
tax bases of assets and liabilities that give rise to net deferred income
tax liability relate to the following:
1996 1995
---- ----
Property and equipment,
due to differences
in depreciation $ 166,000 $ 129,000
Installment sale of land
& building 29,000 46,000
Inventories, due to
additional cost recorded
for income tax purposes (11,000) (10,000)
Accounts receivable, due
to allowance for doubtful
accounts (88,000) (87,000)
Accrued liabilities, due to
expenses not yet deductible
for income tax purposes (37,000) (62,000)
------- -------
Net deferred income tax (asset) liability $ 59,000 $ 16,000
------ ------
------ ------
The net deferred income tax liability is presented in the balance sheets as
follows:
1996 1995
---- ----
Current Asset $ 136,000 $ 159,000
Long-term Liability 195,000 175,000
F-11
<PAGE>
DECORATOR INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(9) INCOME TAXES (Continued)
The effective income tax rate varied from the statutory Federal tax rate as
follows:
1996 1995 1994
---- ---- ----
Federal statutory rate 34.0% 34.0% 34.0%
State income
taxes, net of
federal income
tax benefit 3.3 4.2 3.8
Other (2.8) (.8) (2.2)
------ ------ ------
Effective income tax rate 34.5% 37.4% 35.6%
----- ----- -----
----- ----- -----
(10) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1996 QUARTER QUARTER QUARTER QUARTER YEAR
---- ------- ------- ------- ------- ----
<S> <C> <C> <C> <C> <C>
Net Sales $9,439,498 $10,540,139 $9,601,465 $9,068,585 $38,649,687
Gross Profit 2,336,564 2,833,395 2,539,800 2,313,834 10,023,593
Net Income 622,726 910,548 813,487 718,459 3,065,220
Earnings per
Common share:
Primary .27 .39 .35 .30 1.31
Fully Diluted .25 .37 .31 .29 1.22
Average Common
Shares
Outstanding:
Primary 2,307,885 2,326,990 2,345,963 2,354,930 2,333,972
Fully Diluted 2,482,231 2,478,501 2,543,939 2,541,768 2,511,610
FIRST SECOND THIRD FOURTH
1995 QUARTER QUARTER QUARTER QUARTER YEAR
---- ------- ------- ------- ------- ----
Net Sales $8,275,431 $8,749,072 $8,560,400 $8,622,356 $34,207,259
Gross Profit 2,232,103 2,243,625 1,922,047 2,048,818 8,446,593
Net Income 680,445 677,283 524,753 532,197 2,414,678
Earnings per
Common share:
Primary .26 .26 .20 .21 .93
Fully Diluted .24 .24 .19 .20 .87
Average Common
Shares
Outstanding:
Primary 2,660,425 2,596,021 2,571,030 2,514,792 2,585,568
Fully Diluted 2,897,181 2,797,437 2,767,058 2,699,463 2,790,177
</TABLE>
F-12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
The Board of Directors
and Stockholders
Decorator Industries, Inc.
The audit referred to in our opinion dated February 8, 1997 of the
financial statements as of December 28, 1996 and for each of the three fiscal
years then ended includes the related supplemental financial schedule as listed
in Item 14(a), which, when considered in relation to the basic financial
statements, presents fairly in all material respects the information shown
therein.
/s/ Louis Plung & Company
LOUIS PLUNG & COMPANY
Certified Public Accountants
Pittsburgh, Pennsylvania
February 8, 1997
F-13
<PAGE>
DECORATOR INDUSTRIES, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
(1) (2)
Charged to Charged to
Balance at Costs Other Balance at
Beginning and Accounts Deductions End
Description of Period Expenses Described Describe of Period
- ----------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
ALLOWANCE FOR DOUBTFUL
ACCOUNTS
1996 $229,722 $ 40,000 -0- $ 37,420(A) $232,302
1995 199,659 72,374 -0- 42,311(A) 229,722
1994 212,005 45,000 -0- 57,346(A) 199,659
</TABLE>
(A) Write-off bad debts
F-14
<PAGE>
DECORATOR INDUSTRIES, INC.
Form 10-K For Fiscal Year Ended December 28, 1996
Commission File No. 1-7753
EXHIBIT INDEX
Sequentially
Exhibit No. Document Numbered Page
- ----------- -------- -------------
3A Articles of Incorporation as amended
to date*
3B.1 By-laws as amended to date*
10E Lease dated February 9, 1984 between
Registrant, as lessee, and Leon and
Eleanor Bradshaw covering property at
500 North Long Street, Salisbury, North
Carolina*
10H Lease Agreement dated December 13, 1983
covering property at 101 West Linden Street,
Abbotsford, Wisconsin, and assignment
thereof to the registrant, as lessee, dated
October 2, 1985*
10H.1 Lease Modification Agreement dated May 20,
1988 regarding Exhibit 10H*
10H.2 Lease Modification Agreement dated
September 30, 1996 regarding Exhibit 10H
10K.1 1984 Incentive Stock Option Plan, as amended
to date*
10M.1 Medical and Dental Reimbursement Plan, as
amended to date*
10T Employment Agreement dated August 2, 1994
between the registrant and William Bassett*
10U 1995 Incentive Stock Option Plan*
10V Purchase and Sale Agreement dated March 14,
1997 between the registrant and Specialty
Windows Corp.
11L Statement re computation of fully diluted
income per share
24D Consent of Accountants
27 Financial Data Schedule
___________________________
*Incorporated by reference
<PAGE>
LEASE MODIFICATION AGREEMENT
This Lease Modification Agreement is made and entered into this 30th day of
September, 1996, between ANTHONY P. KEDROWSKI (the "Lessor") and DECORATOR
INDUSTRIES, INC., a Pennsylvania corporation licensed to do business as a
foreign corporation in Wisconsin (the "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor is the owner of certain real property located in Clark
County, Wisconsin, of which Lessee is presently a tenant under Lease Agreement
dated December 31, 1983, and Assignment thereof from Liberia Manufacturing
Corporation effective October 1, 1985, as modified by a Lease Modification
Agreement dated May 20, 1988 (the "Lease"); and
WHEREAS, Lessee has requested Lessor to promptly build an addition to said
premises for additional storage space increasing the size of the building not
less than 2,400 square feet (the "Addition"), which Lessor has agreed to do upon
the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals, of the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the parties do hereby agree as follows:
1. Lessor will, at his sole cost and expense, proceed promptly to
construct an Addition containing not less than 2,400 square feet to
the said premises, which does not provide for heat or electricity
except for minimal lighting, to be built in accordance with the plans
and specifications attached hereto and made a part hereof. The
materials and workmanship to be incorporated in the Addition are to be
new and of first quality. The Addition shall become part of the
leased premises.
2. The Lessor agrees to complete the Addition in accordance with this
Lease Modification Agreement and the plans and specifications on or
before December 1, 1996, to the satisfaction of the Lessee ("Full
Completion").
3. Upon the first day of the month following Full Completion of the
Addition, Lessee shall pay to Lessor as rent for said leased premises
the sum of $4,316.67 per month and the sum of $4,316.67 on or before
the first day of each and every consecutive month thereafter during
the term of this Lease Modification Agreement.
<PAGE>
Exhibit 10H.2
4. The Term of this Lease Modification shall be for ten (10) years
commencing December 1, 1996 or the first day of the month following
full completion of the Addition to the satisfaction of Lessee.
5. In the event the Lessee provides written notice to Lessor that it
requires heat and electricity in the Addition suitable for its
manufacturing operations, the Lessor shall promptly provide same at
its sole cost and expense.
6. After the premises have been fully assessed for real estate tax
purposes to include the Addition, Lessee shall pay to Lessor within
ninety (90) days following submission of paid bills therefore, all
increases in annual real estate taxes on the leased premises in excess
of $8,200.
7. During the construction of the Addition, Lessor shall do all things
necessary to permit Lessee to have the complete and full enjoyment of
the leased premises without disruption, dust or dirt affecting
Lessee's inventory or property or any other obstruction or hindrance
whatsoever.
8. Except as modified hereby, the Lease shall continue in full force and
effect. In addition to any other obligation which Lessor has to
repair in the Lease, Lessor shall be obligated to make all
replacements or repairs to the Addition.
IN WITNESS WHEREOF, the parties have caused these presents to be signed and
sealed the day and year first above written.
WITNESS:
/s/ Anthony P. Kedrowski (SEAL)
- ----------------------------- -------------------------------
Anthony P. Kedrowski
ATTEST: DECORATOR INDUSTRIES, INC.
By /s/ William A. Bassett
- ----------------------------- ----------------------------
Secretary President
(SEAL)
<PAGE>
PURCHASE AND SALE AGREEMENT
AGREEMENT dated March 14, 1997, between SPECIALTY WINDOW COVERINGS CORP. an
Indiana corporation, with its principal office in Elkhart, Indiana ("Seller")
and joined in and consented to by THOMAS CRIPE and THOMAS M. HINES, sole
shareholders of Seller ("Shareholders")
A
N
D
DECORATOR INDUSTRIES, INC., a Pennsylvania corporation with its principal office
in Pembroke Pines, Broward County, Florida ("Buyer");
WITNESSETH:
WHEREAS, Seller and Shareholders desire to sell and Buyer wishes to
purchase certain of the business and assets, free and clear of any and all
liabilities, of Seller on the terms and conditions hereinafter set forth in this
Purchase and Sale Agreement ("Agreement");
NOW, THEREFORE, in consideration of their respective undertakings
hereunder, the parties hereto, each intending to be legally bound, do covenant,
warrant and agree as follows:
1. PURCHASE AND SALE OF PURCHASE ASSETS
1.1 PURCHASE AND SALE. On March 15, 1997, the Effective Date, and
subject to the terms and conditions contained herein, Seller hereby sells,
assigns, transfers and delivers to Buyer, and Buyer hereby purchases and accepts
from Seller, all of Seller's assets and property rights of every kind and
description whatsoever, personal, tangible or intangible, as a going concern
("Purchase Assets") with the exception of the following assets:
(a) Treasury stock, the corporate seal, minute books, charter
documents, capital stock record books and such of the other
books and records as have to do with the organization,
existence and share capitalization of Seller;
<PAGE>
(b) Rights which accrue or will accrue to Seller under this
Agreement;
(c) Cash; and
(d) Retained inventory in the amount of approximately One
Hundred Twenty-five Thousand Dollars ($125,000) ("Retained
Inventory"), the amount to be finally determined promptly
after the Effective Date and set forth on Appendix I. Buyer
will buy at cost from Seller on an as needed basis from the
Retained Inventory to fulfill customer orders with payment
to be made by the 15th of the next succeeding month.
Without in any way limiting the scope of the assets being
transferred to Buyer hereunder, said assets include all security deposits,
accounts receivable, machinery, equipment and vehicles (including those listed
on Appendix II), fixtures, stock in trade, inventories of merchandise (raw,
processed and finished materials), supplies, tools, furniture, designs and
drawings, patents, trade marks, options, contractual rights, franchises, trade
names and corporate names (including "Specialty Window Coverings"; Seller shall
change its corporate name at the Closing to a dissimilar name), know-how, trade
secrets, customer lists and all other tangible assets of Seller (other than the
excluded assets referred to above) whether or not carried at value on the books
of Seller and whether or not in the possession of Seller or others.
Title to all assets to be conveyed pursuant hereto shall be good
and marketable, free and clear of any and all liabilities, obligations, liens,
claims, security interests and encumbrances whatsoever, except the liabilities
hereinafter specifically assumed by Buyer.
1.2 CLOSING; BILL OF SALE; ETC.
(a) The closing of the transactions provided for in this
Agreement ("Closing") shall take place at the office of the
Buyer, Suite 201, 10011 Pines Boulevard, Pembroke Pines,
Florida 33024, or at such other place as Seller and Buyer
shall mutually agree, at 10 o'clock a.m., local time, on or
before April 6, 1997, or at such other date as may be
mutually agreed upon in writing by Seller and Buyer.
(b) At the Closing, Seller shall deliver to Buyer the following
instruments of conveyance in recordable form:
(i) Bill of Sale substantially in the form of Exhibit
1.2(b)(i) hereto;
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<PAGE>
(ii) Assignment of Trademarks and trade names substantially
in the form of Exhibit 1.2(b)(ii) hereto.
(c) Seller agrees to execute and deliver to Buyer such
additional instruments, bills of sale, assignments and the
like, as may be reasonably requested by Buyer, in order to
more fully perfect in Buyer title to the Purchase Assets.
2. LIABILITIES OF SELLER ASSUMED BY BUYER.
2.1 At the Closing, but effective as of the Effective Date, Seller
shall assign and transfer to Buyer its rights, liabilities and obligations and
Buyer shall assume, pursuant to an assignment and assumption agreement
substantially in the form of Exhibit 2.1 hereto for purchase orders commitments
and contracts for inventory.
2.2 Buyer will not assume, or in any way be liable or responsible for
any debts, claims, demands, liabilities or obligations of Seller or Shareholders
(whether or not referred to in any Exhibit and/or appendix hereto), except as
specifically provided in Section 2.1 above, and Seller and Shareholders
represent, warrant and agree that Buyer shall not be or become liable for any
debts, claims, demands, liabilities or obligations of Seller or Shareholders not
expressly assumed in Section 2.1 of any kind whatsoever, whether fixed or
contingent, known or unknown. Without limiting the generality of the foregoing,
Buyer shall not assume (i) any purchase or sale commitments, contracts, leases,
licenses, permits, supply arrangements or any other agreements or arrangements
to which Seller is a party or by which it is bound, not terminable by Buyer
within thirty (30) days, without premium or penalty, except as set forth on
Exhibit 2.2 hereto, or unless Buyer at Closing expressly assumes any of same in
writing; (ii) any liability or obligation of Seller for any personal injury or
property damage claim heretofore or hereafter made for occurrences prior to the
Effective Date; (iii) any liability or obligation of Seller for any claim
heretofore or hereafter made in respect of any express or implied
representation, warranty, agreement or guarantee made (or claimed to have been
made) by Seller, or imposed or asserted to be imposed by operation of law, in
respect of any product sold or committed to be sold by Seller at any time on or
before the Effective Date; or (iv) any unpaid taxes; interest and/or penalties
due or owing by Seller to any taxing or governmental authority for all periods
prior to the Effective Date.
3. PURCHASE PRICE AND PAYMENT.
3.1 As consideration for the purchase of the Purchase Assets and the
undertakings of Seller hereunder, Buyer shall pay Seller as follows:
(a) Two Hundred Eighty Thousand Dollars ($280,000) upon
execution of this Agreement to be held in escrow by the
attorneys for Buyer and Seller
3
<PAGE>
pursuant to an Escrow Agreement substantially in the form of
Exhibit 3.1(a).
(b) On the Closing, the sum of Two Million Eight Hundred
Thousand Dollars ($2,800,000) adjusted for the following:
(i) less the amount of the escrow in 3.1(a) above;
(ii) less the amount of the Retained Inventory;
(iii) less the inventory reserve in the amount of
approximately Three Hundred Eighty-seven Thousand
Dollars ($387,000) ("Inventory Reserve") as set
forth on Appendix III promptly after the Effective
Date;
(iv) the amount by which the actual inventory taken on
March 15, 1997 less the Retained Inventory and the
Inventory Reserve is more or less than $560,521;
and
(v) the amount by which Accounts Receivable on the
Effective Date are more or less than $216,346;
(c) On the Additional Consideration Dates, Buyer shall pay to
Seller (or if the Seller has been liquidated, to a joint
bank account designated by Seller for the benefit of the
Shareholders) additional consideration not to exceed an
aggregated total of One Million Five Hundred Thousand and
00/100s Dollars ($1,500,000). If the Purchase Price,
Additional Consideration, adjustments, purchase of Retained
Inventory and bonus to Shareholders in the aggregate exceeds
Three Million Eight Hundred Thousand Dollars ($3,800,000),
such excess may be paid in Buyer's stock at the option of
Buyer. Seller shall be entitled to receive additional
consideration ("Additional Consideration") based upon the
Profit of the business of Specialty ("Specialty") determined
on the basis of generally accepted accounting principles,
consistently applied, calculated before federal and state
income taxes, inter Company charges, management fees or
corporate overhead of Buyer, but after bonuses, interest
charges for loans or advances by Buyer calculated at two
percent (2%) above the "Prime Rate" as quoted in the WALL
STREET
4
<PAGE>
JOURNAL, allocable share of bank charges and fees of
certified public accountants and attorneys (percentage of
such costs to sales shall not exceed the percentage of such
costs to sales of Seller for the year ending December 31,
1996), and, in addition, shall include extraordinary
attorneys' fees incurred by Specialty and not by Buyer or
its other subsidiaries and depreciation of fixed assets used
by Specialty (which annual charge shall not exceed $32,353
on existing fixed assets, plus depreciation on new fixed
assets, maintenance, operating and insurance costs, rent and
real estate taxes attributable to the existing building and
the building being built and to be leased by Specialty, plus
a charge for expenses paid by Buyer on behalf of Specialty
provided such payment is no greater than would have been
paid by Specialty, during the 12-month periods ending April
4, 1998 and April 3, 1999 ("Periods of Operation").
For the purpose of this Section 3.1(b), the term Specialty,
shall mean the subsidiary, division or other entity to be
formed or used by Buyer for the purpose of operating the
business of Seller with the assets being purchased
hereunder. Buyer may withdraw from working capital sums
equal to the quarterly profit of Specialty. At its option
Buyer shall lend funds to Specialty for operations.
Interest shall be charged by Buyer on the amount by which
Specialty's operating account is in excess of a negative
$150,000.
The Additional Consideration shall be determined as follows:
An amount equal to that which Profits, as determined above,
for each of the 12 month periods exceeds the $250,000
threshold amount shall be paid as Additional Consideration.
Profit of less than $250,000 for the 12 months ending April
4, 1998 will be considered a deficiency to be added to the
threshold amount for the 12 months ending April 3, 1999.
Notwithstanding anything herein to the contrary, the
aggregate Additional Consideration shall not exceed
$1,500,000.
The Additional Consideration shall be separately determined
for each of the above Periods of Operation and shall be paid
on May 18, 1998 and May 17, 1999 ("Additional Consideration
Dates").
5
<PAGE>
All calculations of Profit shall be prepared in accordance
with the provisions hereof and in accordance with generally
accepted accounting principles applied on a consistent
basis. No additional employees will be hired without the
written mutual approval of Buyer and Seller. No bonuses or
increases or decreases in compensation shall be made which
are inconsistent with past practices without the written
mutual approval of Buyer and Seller. The Seller shall be
entitled to receive copies of the calculations of Profit so
prepared by Buyer. In the event of any disagreement by
Seller with respect to any determination of Profit, Seller
may, at its cost, designate its present Certified Public
Accountants to attempt to adjust such disagreement with
Buyer's Certified Public Accountant; in the event Seller's
and Buyer's Certified Public Accountants cannot amicably
adjust such disagreement, then Seller's and Buyer's
Certified Public Accountants shall designate a third
independent Certified Public Accountant, acceptable to both
of them. to arbitrate the disagreement, and the decision of
such arbitrator thereon shall be final and binding on the
parties. All fees and expenses relating to the services of
the arbitrator shall be paid by the party against whom the
arbitrator's decision is made, or pro rated in accordance
with a determination which is allocated between the parties.
3.2 The Purchase Price shall be allocated among the Purchase Assets
in accordance with the allocation statement (the "Allocation Statement")
attached hereto as Exhibit 3.2 which parties acknowledge is in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").
Buyer and Seller each agree to prepare and file on a timely basis the Internal
Revenue Service Form 8594, setting forth an allocation of such Purchase Price,
pursuant to the Allocation Statement. Buyer and Seller further agree to report
this transaction for federal income tax purposes in accordance with the
Allocation Statement and each party agrees to act in accordance with such
Allocation Statement in the course of any tax audit, tax review or tax
litigation concerning such party and relating thereto. Neither Seller nor
Buyer will assert that the allocation set forth in the Allocation Statement was
not separately bargained for at arm's length and in good faith.
No later than ten (10) days prior to the filing of their
respective Forms 8594 relating to this transaction, each party shall deliver to
the other party a copy of its Form 8594.
6
<PAGE>
4. FINANCIAL STATEMENTS.
4.1 Seller has heretofore submitted to Buyer its Financial Statements
for the fiscal year ended December 31, 1996, certified by the President of
Seller, attached as Appendix IV hereto. Said Financial statement was prepared
by Seller in accordance with generally accepted accounting principles, applied
on a consistent basis. In the preparation of said Financial statement:
(a) only non-contested, bona fide fully collectible accounts
receivable incurred in the ordinary course of business was
included, less normal allowance for doubtful accounts.
Seller shall prepare a detailed list of all such receivables
as of the Effective Date, in conformity with the foregoing,
which list shall be delivered to Buyer promptly after the
Effective Date as Appendix V hereto;
(b) inventory of merchandise which is of quality, usable and
saleable in the normal course of the business of Seller,
valued at its cost or market, whichever is lower, and the
value of all items heretofore written off or not presently
specified or deemed by Seller to be obsolete or below
standard shall be excluded. Representatives of Seller and
Buyer shall take inventory commencing March 15, 1997, and
shall prepare a list and value thereof as Appendix VI to
this Agreement promptly after the Effective Date.
4.2 In the event of any disagreement by Buyer with respect to any
determination of the inventory and/or accounts receivable, Buyer may, at its
cost, designate its present Certified Public Accountants to attempt to adjust
such disagreement with Seller's Certified Public Accountants; in the event
Seller's and Buyer's Certified Public Accountants cannot amicably adjust such
disagreement, then Seller's and Buyer's Certified Public Accountants shall
designate a third independent Certified Public Accountant, acceptable to both of
them, to arbitrate the disagreement, and the decision of such arbitrator thereon
shall be final and binding on the parties. All fees and expenses relating to
the services of the arbitrator shall be paid by the party against whom the
arbitrator's decision is made, or pro rated in accordance with a determination
which is allocated between the parties.
5. ADJUSTMENTS.
5.1 Buyer shall have the right of Adjustment and setoff (i) against
the Additional Consideration to be paid pursuant to Section 3 for claims made by
reason of any breach of any covenant, representation or warranty of Seller and
Shareholders for all sums in excess of $10,000 in the aggregate; and (ii) by an
amount equal
7
<PAGE>
to any of the accounts receivable conveyed to Buyer by Seller which are not
collected by January 3, 1998. Accounts receivable not collected by Buyer as
above provided shall be assigned to Seller.
5.2 Buyer shall pay Shareholders a bonus equal to the Reserve
Inventory less the sum of such inventory and inventories acquired by Buyer
pursuant to Seller's purchase orders, commitments and contracts not used by
Buyer by January 3, 1998. Payments will be made no later than March 15, 1998.
5.3 Inventories not used by Buyer by January 3, 1998 but used by
Buyer prior to January 2, 1999 shall be paid for no later than March 15, 1999.
Any remaining inventory shall be returned to Seller which will be permitted to
dispose of said inventory provided Seller and/or Shareholders do not make
drapes, window blinds or shades and does not sell such inventory to Specialty's
customers. Specialty shall have the right of first refusal to purchase such
inventory.
6. COVENANTS, REPRESENTATION AND WARRANTIES OF SELLER AND SHAREHOLDERS.
Seller and Shareholders represent and warrant to Buyer now and as of
the Effective Date and the Closing Date as follows:
6.1 Seller has, and upon the execution and delivery of this Agreement
by the parties hereto, will on the Effective Date and Closing Date, transfer to
Buyer good, indefeasible and marketable title to all the Purchase Assets, free
and clear of any and all liabilities, obligations, liens, claims, charges,
pledges, title retention or other security arrangements, encumbrances or other
interests of third parties of any nature whatsoever, except as expressly assumed
by Buyer pursuant to Section 2 above.
6.2 The Seller is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; the Seller
has all requisite corporate power to enter into this agreement and to perform
its obligations hereunder; and the Seller has all requisite corporate power and
authority to own, lease and operate its properties as now owned, leased and
operated, to carry on its business as now being conducted and is duly qualified
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary.
6.3 The execution, delivery and performance by Seller of this
Agreement and the transactions contemplated hereunder have been and will on the
Effective and Closing Date be duly authorized by all necessary corporate action
on its part, and Seller has and on the Effective Date will have full right and
power to sell, assign, transfer and deliver the Purchase Assets to Buyer as
provided hereunder.
6.4 This Agreement has been duly executed by the Seller and is a
valid, legally binding and enforceable obligation of the Seller, except as the
same may be limited or otherwise affected by
8
<PAGE>
applicable bankruptcy, insolvency or other laws affecting creditors' rights or
contractual obligations generally.
6.5 The trademarks and trade names set forth on Exhibit 1.2(b)(ii)
are and will on the Effective Date and Closing Date be owned by Seller and
Seller has no knowledge of any claim which questions the ownership or validity
thereof.
6.6 Except as set forth in Exhibit 6.6 hereto, no license, permit,
order, adoption, consent or approval of any governmental or regulatory body
(collectively, the "Permits") is or will on the Effective Date and Closing Date
be required to conduct the business being acquired by Buyer hereunder as the
same is now being conducted. All Permits which are material to the conduct of
the business being acquired by Buyer hereunder are and will on the Effective
Date and Closing Date be in full force and effect assignable to Buyer and no
proceeding is pending or threatened to revoke or limit any such Permit.
6.7 Seller's relationship with its customers, employees and suppliers
in connection with the business being acquired by Buyer hereunder are and will
on the Closing Date be consistent with a commercially reasonable business
relationship in all material respects. No employee, supplier or customer,
individually or in the aggregate, material to such business, has or have
indicated any intention to terminate or modify any of such relationships.
Seller agrees to cooperate with Buyer to preserve for the benefit of Buyer the
relationships with Seller's employees, customers and suppliers and others having
business relations with it with respect to the business being acquired by Buyer.
It is understood and agreed that certain present employees of Seller may be
employed by Buyer after the Effective Date. Seller agrees that it will release
any of such employees so employed from any obligations any of them may then have
to serve as a director, officer and/or employee of Seller.
6.8 There are and will on the Effective Date be no unpaid taxes,
interest and/or penalties due, and Buyer is not assuming and Seller will
indemnify Buyer for any liability for any unpaid taxes, interest and/or
penalties due or owing, by Seller to any taxing or governmental authority as of
the Effective Date (including any sales taxes in respect of sales made through
the Effective Date).
6.9 Seller does not maintain any employee plans other than a health
plan as set forth in Exhibit 6.9.
6.10 Seller is not a party to nor threatened with any litigation or
judicial, administrative or arbitration proceeding.
6.11 The machinery, equipment, office equipment, fixtures, trucks and
autos presently being used in the business which is being acquired by Buyer
hereunder are and will on the Effective Date be in good operating condition and
repair, ordinary wear and tear excepted, and Seller has not received any notice
that any of the same is in violation of any existing law or any health,
pollution, safety or other ordinance, code or regulation.
9
<PAGE>
6.12 Except for losses, claims, damages and expenses adequately
covered by Seller's insurance and which losses, claims, damages and expenses are
disclosed on Exhibit 6.12, there are not (a) any liabilities of Seller, fixed or
contingent, asserted or unasserted, arising out of or based upon incidents
occurring on or before the date hereof with respect to any product liability,
breach of warranty or any similar claim that relates to any product sold by
Seller to others on or before the date hereof, or (b) any liabilities of Seller,
fixed or contingent, asserted or unasserted, arising out of or based upon
incidents occurring on or before the date hereof with respect to any claims for
the breach of any express or implied product warranty, outstanding recalls or
any other similar claim that relates to any product sold or manufactured by
Seller on or before the date hereof, or any product defects which could give
rise to any such liabilities, claims, or recalls. Exhibit 6.12 contains a
complete listing of product liability and breach of warranty claims against
Seller to the date hereof. Buyer shall notify Seller of any warranty claims
under this Section 6.12 and shall, to the extent possible, attempt to follow
Seller's policy in settling such claims.
6.13 Seller shall maintain all existing casualty and liability
insurance ("Insurance") until date of Closing. A list of such Insurance is
attached as Exhibit 6.13.
6.14 There is not pending or threatened any labor dispute, strike or
work stoppage involving employees of Seller which affects or which may affect
the business of Seller or which may interfere with its continued operations.
There is not pending or threatened any charge or complaint against Seller by the
National Labor Relations Board or any representative thereof. There have been no
strikes, walkouts or work stoppages involving employees of Seller in the last
three years.
6.15 Seller and the real properties referred to in Section 9(a) are in
compliance with all applicable federal, state and local laws and regulations
concerning the environment and occupational safety, including without
limitation, the United States Toxic Substances Control Act, the United States
Comprehensive Environment Response and Liability Act of 1980 (CERCLA), the
United States Resource Conservation Recovery Act (RCRA), the United States Clean
Water and Clear Air Acts and the Americans with Disability Act. There are no
environmental liens on any of the Purchase Assets or real properties of Seller
or Shareholders. No governmental actions have been taken or, to the best
knowledge of Seller and Shareholders, are in process. A list of all
environmental investigations, reports, studies, audits or technical reviews
which are in the possession of Seller or Shareholders or, to their knowledge in
relation to the real properties referred to in Section 9(a), is contained in
Exhibit 6.15. Seller or Shareholders shall furnish copies of all such
environmental materials listed in Exhibit 6.15 to Buyer on or before the
Effective Date.
6.16 None of the information and documents furnished or to be
furnished by Seller to Buyer or any of its representatives in
10
<PAGE>
connection with the execution, delivery and closing of this Agreement is or will
be on the Effective Date and Closing Date or thereafter be false or misleading
or contains or will contain any untrue statement of a fact or omits or will omit
to state any fact required to be stated to make the statements therein not
misleading.
7. REPRESENTATION AND WARRANTIES OF BUYER.
7.1 Buyer is and will on the Effective Date and Closing Date be a
corporation validly organized, existing and in good standing under the laws of
the Commonwealth of Pennsylvania.
7.2 The execution, delivery and performance by Buyer of this
Agreement and the transactions contemplated hereunder have been and will on the
Effective Date and Closing Date be duly authorized by all necessary corporation
action on its part, and Buyer has the full right and power to purchase and
receive the Purchase Assets from Seller as provided hereunder. This Agreement
constitutes the valid and binding obligation of Buyer enforceable in accordance
with its terms.
8. INVESTIGATION BY BUYER.
During the period from the date of this Agreement to three (3) years
after the Closing Date, Buyer shall be given free access to the offices, plants,
records, files, stock books, minute books, books of account and copies of tax
returns of the Seller and Seller's Public Accountants work papers for the
purpose of conducting an investigation of its financial condition, corporate
status, liabilities, contracts, business operations, property and title thereto,
litigation patents, trademarks, copyrights and all other matters relating to its
business, properties and assets, through its employees or independent public
accountants or outside business consultants, provided, however, that such
investigation shall be conducted in a manner that does not unreasonably
interfere with its normal operations and employee relationships. The Seller
shall cause its personnel to assist Buyer in making such investigation and shall
cause its counsel, accountants, engineers, employees and other representatives
to be available to Buyer for such purposes. During such investigation Buyer
shall have the right to make copies of such records, files, tax returns and
other materials as it may deem advisable. If this Agreement is not consummated
as provided herein, Buyer and its representatives shall treat all information
obtained in such investigation as confidential and shall return to the Seller
all copies made by Buyer and its representatives of material belonging to the
Seller.
9. ADDITIONAL AGREEMENTS AT CLOSING.
At Closing, the parties shall enter into the following agreements:
(a) Two (2) lease agreements for real property owned solely by
the Shareholders in fee simple without liens or other
encumbrances except mortgages, which provide Tenant non-
11
<PAGE>
disturbance clauses, in form similar to that attached as
Exhibit 9(a) for the 20,000 square foot building at 1655
Gateway Court, Elkhart, Indiana 46514, and the 15,000 square
foot adjacent building being built, each providing, INTER
ALIA, for a five (5) year term at a rental of $2.40 per
square foot. The Lease shall provide for two 5-year
options, the first at a rental rate of $2.60 per square
foot, and the second at a rental rate of $3.00 per square
foot. The Lease shall contain a right of first refusal and
an option to buy at $800,000.
(b) An Employment Agreement with each Shareholder for a term of
two (2) years at an annual salary of Sixty Thousand and
00/100s Dollars ($60,000) payable monthly, plus existing
medical insurance, which employment agreements are made a
part hereof and marked Exhibit 9(b).
(c) An Agreement by Seller and Shareholders not to compete for a
term of five (5) years after the expiration of the term of
the Employment in 9(b) above. The agreement shall be in the
form attached hereto, made a part hereof and marked Exhibit
9(c). The agreement not to compete by Seller and
Shareholders is a condition precedent to Buyer's entering
into this Purchase and Sale Agreement, forms a part of the
consideration being paid by Buyer therefor and is subject to
a right of setoff by Buyer in the event of a breach of
default hereunder.
10. CONDUCT OF BUSINESS PENDING CLOSING.
During the period from the date hereof to the Effective Date, Seller
shall conduct its operations according to its ordinary and usual course of
business and shall maintain its records and books of account in a manner that
fairly and correctly reflects its income, expenses and liabilities in accordance
with generally accepted accounting principles consistently applied, using the
accounting methods previously used by Seller. During such period Seller shall
not without the written consent of Buyer:
(a) Pay or incur any obligation or liability, absolute or
contingent, other than current liabilities incurred in the
ordinary and usual course of business;
(b) Incur any increased indebtedness for borrowed money (except
for endorsement, for collection or for deposit, of
negotiable instruments received in the ordinary and usual
course of
12
<PAGE>
business), assume, guarantee, endorse or otherwise as
accommodation become responsible for obligations of any
other individual, firm or corporation, or make any loans or
advances to any individual, firm or corporation;
(c) Declare or pay any dividends or make any payment or
distribution to stockholders as such, issue any capital
stock or purchase or otherwise acquire for value any of its
outstanding capital stock or grant options, warrants or
rights to purchase any shares of its capital stock;
(d) Mortgage, pledge or subject to lien or other encumbrance any
of its properties or assets;
(e) Sell or transfer any of its properties or assets except in
the ordinary course of business, or cancel, release or
assign any indebtedness owed to it or any claims held by it;
(f) Make any material change in its insurance, advertising,
franchise or sales representation commitments or
arrangements, or enter into (i) any sales agency agreement
not subject to termination without liability on notice of 60
days or less; (ii) any contract for the purchase or sale of
any materials, products or supplies other than such
contracts incurred in the ordinary and usual course of
business; (iii) any contract which contains an escalator,
renegotiation or redetermination clause or which commits it
for a fixed term; (iv) any management or consultation
agreement; (v) any lease, license or royalty agreement; or
(vi) any other agreement not in the usual and ordinary
course of business:
(g) Increase in any manner the compensation of any of its
officers or executive employees, or pay or agree to pay any
pension or retirement allowance to any of such officers or
employees; or
(h) Take any action which would materially interfere with the
ability of Seller to perform or which, would materially
prevent performance of this Agreement.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER.
The obligations of the Seller under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
13
<PAGE>
11.1 The representations and warranties of the Buyer herein contained
shall be true and correct on and as of the Effective Date, with the same force
and effect as though made on and as of such date, except as affected by the
transactions contemplated hereby.
11.2 The Buyer shall have performed all obligations and agreements
and complied with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Effective Date and Closing
Date.
11.3 The Seller shall have received an opinion of counsel for the
Buyer, dated the Closing Date, satisfactory in form and substance to the Seller
and its counsel, to the effect that:
(a) the Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and
authority to own, lease and operate its property, to carry
on its business and to enter into this Agreement and perform
its obligations hereunder.
(b) The execution, delivery and performance of this Agreement by
the Buyer and the consummation of the transactions
contemplated hereby have been duly and effectively
authorized and ratified by all necessary corporate action on
the part of the Buyer.
(c) This Agreement has been duly executed by the Buyer and is a
valid, legally binding and enforceable obligation of the
Buyer, except as the same may be limited or otherwise
affected by applicable bankruptcy, insolvency or other laws
affecting creditors' rights or contractual obligations
generally.
12. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions.
12.1 The representations and warranties of the Seller herein
contained shall be true and correct on and as of the Effective Date with the
same force and effect as though made on and as of such date, except as affected
by transactions contemplated hereby.
12.2 The Seller shall have performed all obligations and agreements
and complied with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Effective Date and Closing
Date.
14
<PAGE>
12.3 The Buyer shall have received an opinion of counsel for the
Seller, dated the Closing Date, in form and substance satisfactory to the Buyer
and its counsel, to the effect that:
(a) the Seller is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation; the Seller has all requisite corporate power
to enter into this Agreement and to perform its obligations
hereunder; and the Seller has all requisite corporate power
and authority to own, lease and operate its properties as
now owned, leased and operated, to carry on its business as
now being conducted and is duly qualified in each
jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes
such qualification necessary.
(b) The execution, delivery and performance of this Agreement by
the Seller and the consummation of the transactions
contemplated hereby have been duly and effectively
authorized by all necessary corporate action on the part of
the Seller.
(c) This Agreement has been duly executed by the seller and is a
valid, legally binding and enforceable obligation of the
Seller, except as the same may be limited or otherwise
affected by applicable bankruptcy, insolvency or other laws
affecting creditors' rights or contractual obligations
generally.
(d) There are no actions, suits or proceedings pending or, to
the best of its knowledge, threatened against or affecting
the Seller at law or in equity or before or by any United
States, state, municipal or other governmental or
non-governmental department, commission, board, bureau,
agency, or instrumentality, nor does such counsel know of
any facts which would provide a basis for any such action,
suit or proceeding.
(e) There are no material controversies pending or, to the best
of its knowledge, threatened between the Seller and any of
its employees.
(f) The documents and instruments delivered by the Seller on the
Closing Date are effective to sell, convey and assign good
and marketable title to the assets and property to be
purchased by the Buyer hereunder and assign to Buyer all of
the Seller's rights under the
15
<PAGE>
contracts and other agreements to be transferred and
assigned hereunder.
13. TERMINATION.
13.1 This Agreement may be terminated by Buyer under any of the
following circumstances by notice given to Seller on or before the Effective
Date:
(a) The Seller shall suffer any loss from fire, flood, explosion
or other casualty which substantially affects the conduct of
their business or, irrespective of insurance, the value of
their assets.
(b) Buyer shall learn of any fact or condition with respect to
the business, properties, assets or earnings of the Seller
which is materially at variance with one or more of the
warranties or representations of the Seller set forth in
this Agreement.
(c) Seller shall have failed to obtain prior to Closing any
Certificates or consents of third parties required
hereunder.
14. INDEMNIFICATION.
14.1 Seller and Shareholders shall indemnify and hold harmless Buyer
from and against and in respect of (i) any and all liabilities and obligations
to any creditors of the Seller or arising out of any transaction entered into by
Seller or other facts or circumstances arising prior to the Effective Date and
not expressly assumed by Buyer pursuant to Section 2, including without
limitation (a) claims arising under the Bulk Sales Act, (b) product liability
and breach of warranty claims with respect to inventory sold, manufactured or
shipped by Seller prior to the Effective Date, (ii) any and all loss, damage or
deficiency resulting from any misrepresentations, breach of warranty or
non-fulfillment of any covenant or agreement on the part of Seller under this
Agreement and (iii) all actions, suits, proceedings, demands ' assessments,
judgments, costs and expenses (including reasonable attorneys' fees) incident to
the foregoing.
14.2 Seller shall indemnify and hold Buyer harmless from and against
and in respect of liability to third parties or with respect to clean-up,
removal or abatement of hazardous material resulting from dumping, violation of
environmental laws or other condition existing on the Effective Date, including
reasonable attorneys' fees, costs and expenses.
14.3 Buyer shall indemnify and hold harmless Seller from and against
and in respect of any and all liabilities and obligations of Buyer arising out
of any transaction entered into by Buyer after the Effective Date, any and all
loss, damage or deficiency resulting from any misrepresentations, breach of
16
<PAGE>
warranty or nonfulfillment of any covenant or agreement on the part of Buyer
under this Agreement and any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including reasonable attorneys,
fees) incident to the foregoing.
14.4 No indemnification pursuant to Sections 14.1 and 14.2 shall be
required to be made unless written notice of a request for indemnification is
given on or before April 3, 1999.
15. BOOKS AND RECORDS.
The Parties shall each have the right, at their own expense, at any
time or from time to time after Closing, during reasonable business hours upon
reasonable notice, to inspect and make copies of or extracts from any of the
books and records relating to the business of Seller being acquired hereunder in
the possession of the other, including, without limitation, all books and
records relating to the Purchase Assets being acquired and the liabilities being
assumed by Buyer hereunder.
16. FINDERS' FEES.
The Parties each represent and warrant to the other that they have not
retained any broker or other representative or agreed to pay any fee or
commission to any agent, finder or broker, either in the nature of a finder's,
originator's or broker's fee or otherwise in connection with the subject matter
of this Agreement and the transactions contemplated hereunder.
17. COSTS.
Except as otherwise provided herein, the Parties agree that each of
them shall bear their own direct and indirect expenses, including attorneys' and
accountants' fees, incurred in connection with the negotiation and preparation
of this Agreement and the consummation and performance of the transactions
contemplated hereby.
18. APPORTIONMENTS.
18.1 All pay and other employee benefits attributable to employees of
Seller whom Buyer employs will be prorated over the period covered thereby
between the parties.
18.2 All other costs and expenses shall be prorated over the period
covered thereby between the parties.
18.3 Any amounts due from Seller in respect of such apportionment
shall be paid on the Closing Date.
19. ARBITRATION.
In the event of any dispute between the parties hereto respecting any
matter or thing having to do with this Agreement or the terms and provisions and
the payments required hereunder, the matter in dispute shall be submitted to an
expedited arbitration in
17
<PAGE>
the City of Indianapolis, State of Indiana, under the rules then in force of the
American Arbitration Association before a panel of three arbitrators, with
pre-arbitration discovery permitted. Judgment on any award rendered in favor of
either party shall be final and binding and may be entered into any court having
jurisdiction thereof from which there shall be no appeal. No arbitrator shall
have the power to alter, disregard or amend any of the provisions of this
Agreement. The costs, expenses and reasonable attorneys' fees of the successful
party incurred in connection with any such arbitration shall be included as part
of any such award. If the arbitrator shall determine that, under the
circumstances, it would be unfair or unreasonable for one party to bear all such
costs and expenses, the arbitrator may award a different allocation with respect
to the responsibility for the payment of such costs and expenses.
20. NOTICES.
Any notice, request or other communication to be given by either party
hereunder to the other shall be in writing and shall be given by certified or
registered mail, postage prepaid, return receipt requested, addressed (until
another address is supplied to the other party by the addressee) as follows:
If give by Buyer to:
Thomas M. Hines
3119 Cherrytree Lane
Elkhart, Indiana 40514
and
Thomas Cripe
1431 Kilbourn
Elkhart, Indiana 46314
with a copy to:
Rebecca Butler, Esquire
221 W. Lexington Avenue
Elkhart, IN 46514
If given by Seller to:
Decorator Industries, Inc.
10011 Pines Blvd., Suite 201
Pembroke Pines, FL 33024
Attention: William Bassett, President
18
<PAGE>
with a copy to:
Jerome B. Lieber, Esquire
KLETT LIEBER ROONEY & SCHORLING
40th Floor, One Oxford Centre
Pittsburgh, PA 15219
and shall be deemed delivered at the close of business on the date shown on the
receipt therefor as the date of the delivery to or rejection by the addressee
thereof.
21. MISCELLANEOUS
21.1 This Agreement shall not be assignable by either party hereto
without the written consent of the other party except that Buyer may assign this
Agreement, in whole or in part, to a wholly-owned subsidiary of Buyer without
the consent of Seller provided that Buyer shall continue to be bound hereby.
21.2 This Agreement shall be governed, interpreted, construed and
enforced in accordance with the internal laws of the State of Indiana.
21.3 The respective representations and warranties of the parties to
this Agreement shall survive the Closing Date.
21.4 On the Effective Date, Seller shall discontinue using the name
Specialty Window Coverings Corp. Seller shall cooperate and use its best
efforts to permit Buyer to use Seller's name as of the date hereof.
21.5 At any time and from time to time after the Closing Date, upon
request of Buyer, Seller and Shareholders will do, execute, acknowledge and
deliver, and will cause to be done, executed, acknowledged and delivered,
without further consideration, all such further acts, deeds, assignments,
transfers, conveyances, powers-of-attorney and assurances as may reasonably be
requested for the satisfactory consummation of the transactions contemplated
hereunder, including the aiding and assisting in the collection and reduction to
possession of any of the Purchase Assets to be sold, transferred, assigned and
delivered to Buyer as provided herein.
21.6 This Agreement, including the Appendices and Exhibits,
constitutes the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof. This
Agreement shall not be modified, amended or changed in any respect except in
writing duly signed by the authorized officers of the parties hereto.
19
<PAGE>
21.7 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall have the force and effect of
any original.
ATTEST: SPECIALTY WINDOW COVERINGS CORP.
/s/ Thomas Cripe By: /s/ Thomas M. Hines
- ----------------------------- --------------------------
Secretary President
WITNESS:
/s/ Rebecca F. Butler /s/ Thomas M. Hines
- ----------------------------- ------------------------------
Thomas M. Hines
/s/ Rebecca F. Butler /s/ Thomas Cripe
- ----------------------------- ------------------------------
Thomas Cripe
ATTEST: DECORATOR INDUSTRIES, INC.
/s/ Michael K. Solomon By: /s/ William A. Bassett
- ----------------------------- ------------------------------
Treasurer President
20
<PAGE>
DECORATOR INDUSTRIES, INC.
COMPUTATION OF FULLY DILUTED INCOME PER SHARE OF COMMON STOCK
FOR THE FIVE FISCAL YEARS ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income $3,605,220 $2,414,678 $2,823,770 $2,370,232 $1,528,787
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Average number of
common shares
outstanding 2,333,972 2,585,568 2,629,295 2,530,471 2,419,783
Dilutive effect of
stock options on
net income 177,638 204,609 264,974 361,791 301,415
------- ------- ------- ------- -------
2,511,610 2,790,177 2,894,269 2,892,262 2,721,198
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Fully diluted
earnings per
share:
Net income $1.22 $.87 $.98 $.82 $.56
----- ---- ---- ---- ----
----- ---- ---- ---- ----
</TABLE>
NOTE: Per share amounts and shares outstanding have been adjusted for a
four-for-three stock split effective June 17, 1996 and a two-for-one stock split
in April 1993.
EXHIBIT 11-L
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Registration Statement No.
33-47895 on Form S-8 and the Prospectus included therein of our reports dated
February 8, 1997 included in the Annual Report on Form 10-K of Decorator
Industries, Inc. for the fiscal year ended December 28, 1996.
/s/ Louis Plung & Company
LOUIS PLUNG & COMPANY
Certified Public Accountants
Pittsburgh, Pennsylvania
March 21, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-30-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> MAR-01-1997
<CASH> 1298
<SECURITIES> 0
<RECEIVABLES> 7481
<ALLOWANCES> 192
<INVENTORY> 10434
<CURRENT-ASSETS> 19742
<PP&E> 20148
<DEPRECIATION> 9351
<TOTAL-ASSETS> 31085
<CURRENT-LIABILITIES> 7279
<BONDS> 11542
0
3990
<COMMON> 314
<OTHER-SE> 7960
<TOTAL-LIABILITY-AND-EQUITY> 31085
<SALES> 29344
<TOTAL-REVENUES> 29656
<CGS> 22526
<TOTAL-COSTS> 22821
<OTHER-EXPENSES> 4132
<LOSS-PROVISION> 52
<INTEREST-EXPENSE> 561
<INCOME-PRETAX> 2090
<INCOME-TAX> 794
<INCOME-CONTINUING> 1296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1296
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
