<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15d OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal year ended
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-8777
Color Tile Employees Investment Plan
Full title of the plan and address of the plan, if
different from that of the issuer named below:
Color Tile, Inc.
515 Houston Street
Fort Worth, TX 76102
Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
<PAGE>
Color Tile Employees Investment Plan
Financial Statements and Additional Information
June 30, 1993 and 1992
<PAGE>
<TABLE><CAPTION>
Color Tile Employees Investment Plan
Table of Contents to Financial Statements and Additional Information
Page
Financial Statements:
<S> <C>
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits
December 31, 1993 and 1992 2
Statement of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1993 and 1992 3
Notes to Financial Statements 4-9
Additional Information:*
Schedule I Schedule of Assets Held for Investment Purposes 10
</TABLE>
* Other schedules required by Section 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA
have been omitted because they are not applicable.
<PAGE>
Report of Independent Accountants
January 3, 1994
To the Participants and Administrative Committee of the
Color Tile Employees Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
, and the related statements of changes in net assets available for benefits,
present fairly, in all material respects, the financial status of the Color Tile
Employees Investment Plan at June 30, 1993 and 1992, and the changes in its
financial status for the years then ended, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Plan's Administrative Committee; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by the Plan's
Administrative Committee, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As explained in Note 3, the financial statements include investments in real
estate, valued at $25,399,305, whose values have been estimated by the Plan's
Administrative Committee in accordance with the procedures described in the
Note. We have tested the procedures used by the Administrative Committee in
arriving at their estimate of fair value and have tested underlying
documentation. In the circumstances, we believe the procedures are reasonable
and the documentation appropriate. Because of the subjectivity inherent in any
estimate of fair value of real estate, and because the real estate related
assets underlying the Plan's investments are held for long-term operation and
appreciation and, thus, are not presently for sale, amounts ultimately realized
from the real estate related investments may vary significantly from the fair
values presented, and the differences could be material to the financial
statements.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I is presented for purposes of additional analysis and is not a
required part of the basic financial statements, but is additional information
required by ERISA. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
PRICE WATERHOUSE
Price Waterhouse
- 1-
<PAGE>
<TABLE><CAPTION>
Color Tile Employees Investment Plan
Statements of Net Assets Available for Benefits
June 30, 1993 and 1992
1993 1992
Assets
<S> <C> <C>
Investments, at fair value (Note 3) $ 27,306,240 $ 26,748,933
Receivables:
Rental income 709,200 608,566
Employer contributions 140,464 208,662
Employee contributions 128,434 110,536
Other 15,975 -
Total assets 28,300,313 27,676,697
Liabilities
Debt 9,771,937 9,784,502
Accounts payable to employer 219,078 169,735
Accrued interest payable 511,582 532,042
Income taxes payable 107,461 129,338
Deferred tax liability 34,365 -
Total liabilities 10,644,423 10,615,617
Net assets available for benefits $ 17,655,890 $ 17,061,080
</TABLE>
The accompanying notes are an integral
part of these financial statements.
- 2 -
<PAGE>
<TABLE><CAPTION>
Color Tile Employees Investment Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended June 30, 1993 and 1992
1993 1992
Additions to net assets attributed to:
Investment income:
<S> <C> <C>
Rental income from real estate $ 3,270,556 $ 3,168,609
Interest and dividend income 50,533 139,779
Realized gain on investment dispositions - 270,162
Net change in unrealized appreciation
(depreciation) of investments 438,290 (136,927)
Net investment income 3,759,379 3,441,623
Contributions:
Employer 745,985 874,441
Employee 1,601,798 1,748,499
Total additions 6,107,162 6,064,563
Deductions from net assets attributed to:
Withdrawal payments 3,606,813 2,802,918
Interest expense 1,747,188 1,879,604
Income tax expense 158,351 129,338
Total deductions 5,512,352 4,811,860
Increase in net assets
available for benefits 594,810 1,252,703
Net assets available for benefits:
Beginning of year 17,061,080 15,808,377
End of year $ 17,655,890 $ 17,061,080
</TABLE>
The accompanying notes are an integral
part of these financial statements.
- 3 -
<PAGE>
Color Tile Employees Investment Plan
Notes to Financial Statements
June 30, 1993 and 1992
Note 1 Description of the Plan
The Color Tile Employees Investment Plan (the "Plan") is a defined contribution
plan the purpose of which is to provide employees of Color Tile, Inc. (the
"Company") with a consistent investment program for their retirement and an
opportunity to participate in the long-term growth of the Company. Each
participant elects to defer between 2% and 5% of their gross salary which is
paid into the Plan as a salary reduction contribution for the account of the
participant. The Company makes quarterly contributions to the Plan equal to 50%
of the salary reduction contribution of each participant. Participant are not
subject to federal income tax on Company contributions to the Plan or any gains
from investments of the Plan until they make withdrawals from the Plan.
Administration of the Plan is the responsibility of an Administrative Committee
consisting of three individuals appointed by the Company's Board of Directors.
Participants enrolled in the Plan as of January 31, 1989 are fully vested in the
Company contribution portion of their accounts. Employees who commence
participation in the Plan after January 31, 1989 become 20% vested in the
Company contribution portion of their account for each year of service with the
Company, and become fully vested after five years of service.
Upon reaching age 59-1/2, upon death or disability, or upon termination of
employment, the accumulated benefits in a participant's account are to be paid
to the participant or his beneficiaries either in a lump sum or other mode of
settlement. Prior to these events, withdrawals can only be made in a
financial hardship situation. An employee may elect a limited withdrawal of
his Company and voluntary contributions that are not at contributions made
within twenty-four months preceding the withdrawal. Voluntary contributions
are available for withdrawal at any time. Forfeitures withdrawals occur from
the nonvested portion of the participants' account value from employer
contributions.
The above description provides only general information. Participants should
refer to the Summary Plan Description of the Plan document for a more complete
explanation of the Plan's provisions.
The Company has the right, under the Plan, to amend or terminate the Plan,
subject to provisions set forth in the Employee Retirement Income Security Act
of 1974 (ERISA). Amendment of the Plan may not deprive participants of their
vested interests or divert Plan assets from the exclusive benefit of the
participants or their beneficiaries. In the event of termination or partial
termination of the Plan, or upon complete discontinuance contributions, the
accounts of each participant shall be nonforfeitable. In the event of
termination of the Plan, the assets of the Plan shall be allocated to
participants and beneficiaries and distributed in accordance with the provisions
of Section 403(d)(2) of ERISA and any regulations promulgated thereunder,
provided however, the amounts deferred under Section 401(k) of the Code shall
not be distributed earlier than normal retirement age, death, disability,
separation from service, hardship or attainment of age 59-1/2. The Company
has no intentions of discontinuing the Plan at the present.
- 4 -
<PAGE>
Color Tile Employees Investment Plan
Notes to Financial Statements
June 30, 1993 and 1992
(continued)
Note 2 Summary of Significant Accounting Policies
Method of accounting - The Plan's financial statements are prepared on the
accrual basis of accounting.
Investment valuation - All securities investments are stated at fair value
as determined by quoted prices in an active market. Investments in real
estate are stated at estimated fair value (see Note 3).
Rental income - As of June 30, 1993, all real estate leases are classified as
operating leases. The accompanying statements of changes in net assets
available for benefits reflect rental income on a straight-line basis over the
term of the lease for all noncancelable future minimum lease payments.
Additional rental income is contingent upon the lessor's level of sales and
is recognized only upon the achievement of the defined sales levels.
Income taxes - The U.S. Treasury Department has informed the Administrative
Committee that the Plan and amendments to the Plan are qualified under
Section 401(a) of the Internal Revenue Code and is therefore exempt from
federal income taxes under Section 501(a) of the Code. The Internal Revenue
Service granted a favorable letter of determination to Plan in 1986. However,
in accordance with Section 501(b), the Plan is subject to income taxes on any
unrelated trade or business income earned on debt-financed property as defined
by the Internal Revenue Code. The income tax expense on the unrelated trade or
business income was $158,351 and $129,338 for the years ended June 30, 1993 and
1992, respectively, and was recorded as a liability of the Plan during the
respective fiscal years.
Contributions and deposits - Participants' deposits and the matching Company
contributions are recorded in the period that the participants' deposits are
withheld from their compensation. Matching Company contributions are calculated
assuming participants are 100% vested. Upon termination or withdrawal of a less
than 100% vested participant, the nonvested portion of the Company contribution
is applied towards future Company contributions.
Benefits - The Plan recognizes benefits payable to participants at the point
the benefit has been paid. Form 5500 recognizes benefits payable as a
liability to the Statement of Net Assets Available for Benefits. Benefits
payable for claims processed and approved for payment by the Plan at June 30,
1993 and 1992 are $935,714 and $1,501,050, respectively.
Expenses of the Plan - Costs incurred in purchasing, selling and valuation of
securities or other assets of the Plan are paid for by the Plan. All other
expenses, including accounting, clerical, reporting, printing and postage, are
paid by the Company.
- 5 -
<PAGE>
Color Tile Employees Investment Plan
Notes to Financial Statements
June 30, 1993 and 1992
(continued)
Note 3 Investments
Investments at June 30, 1993 and 1992, including individual investments in
excess of 5% of the Plan's total assets, consisted of the following:
<TABLE>
1993 1992
<S> <C> <C> <C> <C>
Cost Fair Value Cost Fair Value
Securities:
Tandy Corporation, 60,856
shares common stock $ 63,142 $ 1,825,680 $ 63,142 $ 1,490,972
Real estate (45 and 44
properties, respectively) 22,330,635 25,399,305 21,105,635 24,070,723
Short-term money market fund
Texas Commerce Bank,
Fort Worth 81,255 81,255 1,187,238 1,187,238
$ 22,475,032 $ 27,306,240 $ 22,356,015 $ 26,748,933
</TABLE>
In fiscal year 1993, the Plan financed the construction of a retail store which
is leased to the Company under a long-term noncancelable lease. Total
capitalized costs of the store amounted to $1,225,000, which approximates its
fair market value.
The investment in the real estate is primarily determined using the income
capitalization approach. Under this method, the present value of the future
minimum rent under the lease term, including renewal options, estimated
percentage rent and estimated residual value of land has been discounted to
obtain the present worth or current value of the properties. The Administrative
Committee believes the Company's valuation technique represents a good faith
estimate of the fair value of the properties.
Note 4 Gains and Losses on Investments
The Plan realized a gain of $270,162 on the sale of Color Tile, Inc.'s 12-3/8%
senior notes for the year ended June 30, 1992.
The net change in unrealized appreciation (depreciation) in securities was
$334,708 and ($136,927) for the year ended June 30, 1993 and 1992, respectively.
The net change in unrealized appreciation of real estate was $103,582 for the
year ended June 30, 1993.
- 6 -
<PAGE>
Color Tile Employees Investment Plan
Notes to Financial Statements
June 30, 1993 and 1992
(continued)
Note 5 Debt
Debt consisted of the following at June 30, 1993 and 1992:
<TABLE><CAPTION>
1993 1992
<S> <C> <C>
14% note, payable monthly in graduated
installments through November 2001,
secured by 28 real estate properties $ 8,318,887 $ 8,804,291
9.75% note, payable in monthly installments
of $10,594 through February 1, 2003,
with the remaining balance due in 2003,
secured by one real estate property and
related rental income 986,890 -
14.5% note, payable monthly in graduated
installments through September 1993,
secured by 16 real estate properties 166,160 980,211
Draw on line of credit agreement; $500,000
credit line ($200,000 unused at June 30,
1993) bearing interest at the Citibank
prime rate plus 1/2%; the line of credit
matures in October 1994; secured by
23,756 shares of Tandy Corporation
common stock 300,000 -
$ 9,771,937 $ 9,784,502
</TABLE>
The 14.5% and 14% notes are subject to additional interest in excess of the
stated rates. The additional interest is equal to the contingent rental amounts
(Note 6) paid on the real estate which collateralizes the notes and totaled
$406,662 and $417,481 for the years ended June 30, 1993 and 1992, respectively.
In addition to the above notes, the Plan has available a $500,000 line of credit
from which no amount has been drawn at June 30, 1993. In August 1993, the Plan
renewed this $500,000 line of credit and drew down $500,000 to fund payments for
participant withdrawals and terminations. The outstanding balance on the line of
credit bears interest at the Citibank prime rate plus one percent. The line of
credit matures in August 1994 and is secured by 37,100 shares of Tandy
Corporation common stock.
- 7 -
<PAGE>
Color Tile Employees Investment Plan
Notes to Financial Statements
June 30, 1993 and 1992
(continued)
Maturities of debt, for each respective year, ending June 30 are as follows:
<TABLE>
<S> <C>
1994 $ 757,739
1995 978,282
1996 777,768
1997 891,930
1998 1,022,941
Thereafter 5,343,277
$ 9,771,937
</TABLE>
Note 6 Party-in-Interest Transactions
The Plan leases all of its real estate (retail outlets) to Color Tile, Inc., the
employer of the participants of the Plan, under long-term noncancelable leases
which include certain renewal options. The Plan earned $3,270,556 and
$3,168,609 in rental income from these leases for the years ended June 30, 1993
and 1992, respectively. Of these amounts, $406,662 and $417,481 represented
rental income which was contingent upon the lessee's gross sales.
Future minimum rental income is as follows:
Year ending June 30, Amount
<TABLE>
<S> <C>
1994 $ 2,814,157
1995 2,814,157
1996 2,800,729
1997 2,372,288
1988 2,169,559
Thereafter 9,441,565
$ 22,412,455
</TABLE>
During 1992, Color Tile, Inc. repurchased the senior notes held by the Plan as
investments. This repurchase was made at market value based on an open market
and resulted in a realized gain of $270,162 to the Plan.
- 8 -
<PAGE>
Color Tile Employees Investment Plan
Notes to Financial Statements
June 30, 1993 and 1992
(continued)
Note 7 Net Asset Value Per Unit (unaudited)
The Plan assigns units to allocate the total assets of the Plan to the
participants. In accordance with the Plan agreement, the net asset value per
unit to be distributed in the event of retirement, termination of employment
or withdrawal is calculated as the previous quarter's ending total units
divided into the current quarter's ending net assets. The total number of
units allocated and the net asset value per unit for each of the following
quarters, as calculated by the Plan, are:
Net asset Number
Quarter ending: value per unit of units
<TABLE>
<S> <C> <C>
June 30, 1991 $ 465.63 32,634
September 30, 1991 484.08 32,056
December 31, 1991 504.27 31,913
March 31, 1992 516.43 31,616
June 30, 1992 518.26 31,868
September 30, 1992 534.25 30,234
December 31, 1992 552.16 29,554
March 31, 1993 563.75 29,749
June 30, 1993 577.08 29,484
</TABLE>
- 9 -
<PAGE>
Color Tile Employees Investment Plan
Item 30a For 5500 - Schedule of Assets
Held for Investment Purposes Additional Information
June 30, 1993 Schedule I
<TABLE><CAPTION>
Identity of Cost Current
Issue, Borrower Description of Investment of Asset Value
or Lessor
<S> <C> <C> <C>
Tandy Corporation 60,856 shares of common stock $ 63,142 $ 1,825,680
Real estate * 45 properties, leased
to Color Tile, Inc. 22,330,635 25,399,305
Texas Commerce
Bank,Fort Worth Short-term money market fund 81,255 81,255
Total investments $22,475,032 $ 27,306,240
</TABLE>
* Party-in-interest
- 10 -
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed by the undersigned thereunto duly
authorized.
COLOR TILE EMPLOYEES
INVESTMENT PLAN
Dated: January 10, 1993 By: DANIEL J. GILMARTIN
Daniel J. Gilmartin
Administrative Committee Member
