UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
Commission file Number 1-9457
SHELBY WILLIAMS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter.)
Delaware 62-0974443
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11-111 Merchandise Mart
Chicago, Illinois 60654
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(312) 527-3593
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 of 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 [ ]
At April 27, 1999, there were 8,761,417 shares of registrant's
common stock outstanding.
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PART I - FINANCIAL INFORMATION
SHELBY WILLIAMS INDUSTRIES, INC.
Consolidated Statements of Income
Three Months Ended
March 31, 1999 and 1998
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
1999 1998
_________ ________
<S> <C> <C>
Net sales $43,128 $38,484
Cost of goods sold 34,081 29,929
______ ______
Gross profit 9,047 8,555
Selling, general and
administrative
expenses 5,548 5,302
______ ______
3,499 3,253
Other deductions
(income):
Interest expense 46 125
Interest and dividend
income (107) (188)
Miscellaneous expense 22 18
______ ______
(39) (45)
______ ______
Income from continuing
operations before
income taxes 3,538 3,298
______ ______
Income taxes:
Current 1,256 1,202
Deferred 18 18
______ ______
1,274 1,220
______ ______
Income from continuing
operations 2,264 2,078
Income from discontinued
operations, net of taxes - 36
______ ______
Net income $ 2,264 $ 2,114
====== ======
Income per share (basic
and diluted):
Continuing operations $ 0.26 $ 0.22
Income from discontinued
operations, net of taxes - 0.01
Net income $ 0.26 $ 0.23
====== ======
Weighted average number of
common shares outstanding 8,786 9,296
______ ______
<FN>
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SHELBY WILLIAMS INDUSTRIES, INC.
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
March 31, 1999 December 31, 1998
_______________ _________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,282 $ 6,355
Accounts receivable, less
allowance for doubtful
accounts of $337 at
March 31, 1999 and
$375 at December 31,
1998 27,237 28,025
Inventories:
Raw materials 11,772 11,818
Work in process 5,072 5,492
Finished goods 6,463 5,234
______ ______
23,307 22,544
Prepaid expense 4,591 5,187
______ ______
Total current assets 61,417 62,111
Excess of cost over net assets
of acquired company 149 151
Property, plant and equipment
at cost:
Land and land improvements 2,560 2,560
Buildings and leasehold
improvements 20,980 20,974
Machinery and equipment 27,239 26,746
Construction in progress 43 -
______ ______
50,822 50,280
Less accumulated
depreciation and
amortization 24,896 24,295
______ ______
25,926 25,985
Other assets 1,153 1,386
______ ______
$ 88,645 $ 89,633
====== ======
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<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 5,415 $ 7,063
Customer deposits on
orders in process 6,033 5,717
Accrued liabilities 6,189 6,278
Income taxes 1,975 889
Current portion of long-
term debt 2,000 3,000
______ ______
Total current liabilities 21,612 22,947
Deferred income taxes 2,009 1,991
Stockholder's equity:
Common stock, $.05 par value;
authorized 30,000 shares;
issued 11,877 shares
(1998-11,876 shares) 594 593
Capital in excess of par value 10,135 10,128
Retained earnings 78,479 77,012
______ ______
89,208 87,733
Less common stock held in
treasury; 3,115 shares
at cost (1998-3,025) 24,184 23,038
______ ______
Total stockholders' equity 65,024 64,695
______ ______
$ 88,645 $ 89,633
====== ======
<FN>
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SHELBY WILLIAMS INDUSTRIES, INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1999 and 1998
(Unaudited)
(Amounts in thousands)
<CAPTION>
1999 1998
___________________________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,264 $ 2,114
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 681 611
Provision for losses on accounts
receivable 2 31
Change in assets and liabilities of
discontinued operations - 124
Change in assets and liabilities:
Accounts receivable 786 838
Inventories (763) (505)
Prepaid expenses 596 275
Accounts payable and accrued
liabilities (1,421) 775
Income taxes payable 1,086 689
Increase in deferred taxes 18 18
Other 233 (65)
_____ _____
Net cash provided by operating
activities 3,482 4,905
_____ _____
Cash flows from investing activities:
Proceeds from disposal of property,
plant and equipment 3 7
Capital expenditures (623) (1,608)
_____ _____
Net cash used by investing activities (620) (1,601)
_____ _____
Cash flows from financing activities:
Principal payments of long-term debt (1,000) (1,000)
Sale of common stock under stock
option plan 8 76
Purchase of common stock for the
treasury (1,146) (79)
Dividends declared and paid (797) (843)
_____ _____
Net cash used by financing activities (2,935) (1,846)
_____ _____
Net increase (decrease) in cash (73) 1,458
Cash and cash equivalents at beginning
of period 6,355 11,124
_____ _____
Cash and cash equivalents at end of
period $ 6,282 $12,582
====== ======
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 58 $ 141
Income taxes 170 535
_____ _____
$ 228 $ 676
====== ======
<FN>
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SHELBY WILLIAMS INDUSTRIES, INC.
PART I-FINANCIAL INFORMATION
March 31, 1999
Item 1. Financial Statements
On July 14, 1998, the Company's Board of Directors approved management's
plan to discontinue the Company's distribution operations of textile and
floor covering products manufactured by outside suppliers. Of the two
businesses comprising these operations, one was sold and one was liquidated.
The plan was completed in December, 1998. During the second quarter 1998,
the Company recorded a loss on the disposition of these operations of
$9,698,000, or $7,081,000 after taxes, including a provision for losses
prior to disposal, which is summarized below:
Reduction of inventory value $ 4,706,000
Reduction of property to net realizable value 2,198,000
Reduction of accounts receivable and prepaids value 629,000
Other liabilities 1,445,000
Losses through disposition 720,000
______________________________________________________________________
Total 9,698,000
Income tax benefit 2,617,000
______________________________________________________________________
$ 7,081,000
______________________________________________________________________
The operating results of the discontinued operations for the three months
ended March 31, 1998, are summarized as follows:
Net sales $ 3,534,000
Income before income taxes 58,000
Income taxes 22,000
Net income 36,000
Net income per share (basic and diluted) 0.01
The consolidated financial statements of the Company have been restated to
reflect the results of operations and net assets of these operations as a
discontinued operation in accordance with generally accepted accounting
principles. The losses recorded on the disposition of these operations
were not materially different from those incurred on the actual amounts
realized in the sale and liquidation process.
The attached unaudited statements include all adjustments which are, in
the opinion of management, necessary to a fair statement of the results for
the interim periods presented. Except as indicated above, all such
adjustments are of a normal recurring nature. The statements are as
follows:
Consolidated Statements of Income for three months ended
March 31, 1999 and 1998.
Consolidated Balance Sheets at March 31, 1999 and December 31,
1998.
Consolidated Statements of Cash Flows for three months ended
March 31, 1999 and 1998.
Operating Segment information follows (amounts in thousands):
Three Months Ended
March 31, 1999 March 31, 1998
____________________________________
Segment revenue:
Hotel and foodservice furniture $ 34,417 $ 28,193
Healthcare and university furniture 3,926 6,005
Wallcoverings 4,785 4,286
_______________________________________________________________________
Net sales $ 43,128 $ 38,484
_______________________________________________________________________
Segments profit (loss):
Hotel and foodservice furniture $ 3,138 $ 2,577
Healthcare and university furniture (271) 177
Wallcoverings 610 481
_______________________________________________________________________
3,477 3,235
Interest income, net 61 63
_______________________________________________________________________
Income from continuing operations
before income taxes $ 3,538 $ 3,298
_______________________________________________________________________
Item 2. Managements' Discussion and Analysis of Financial Condition
and Results of Operations
Material Changes in Financial Condition
Capital expenditures during the quarter ended March 31, 1999,
amounted to $.6 million. The Company plans to expend approximately $6
million in 1999 for additional automated machinery and facilities
expansion including a state-of-the-art aluminum production facility and
a new wood-finishing system. The current ratio at March 31, 1999 stood
at 2.8-to-one. There was no long term debt.
The Company purchased 90,000 shares of its common stock in the
quarter ended March 31, 1999, for $1.1 million at an average repurchase
price of $12.74 per share. These repurchases were made to be used for
proper corporate purposes as authorized and unissued shares. The Company's
Board of Directors has authorized the repurchase of an additional 330,000
shares of common stock. The Company may purchase these shares from time
to time, depending on market conditions, in the open market or privately
negotiated transactions.
There has been no significant change to management's assessment of
the Company's Year 2000 readiness as discussed in the 1998 Annual Report.
This is a Year 2000 readiness disclosure entitled to protection as
provided in the Year 2000 Information and Readiness Discloure Act.
Material Changes in Results of Operation
Aided by continuing strong demand in the Company's core segment
(hotel and foodservice furniture) and despite weakness in the healthcare
and university furniture segment, net sales for the quarter ended March
31, 1999 advanced 12.1% to $43.1 million compared to $38.5 million for the
corresonding period in 1998. The effect of price changes during the
quarter was negligible; however, the combination of a shift in product mix
toward more upholstered products (which traditionally carry lower gross
margins) and the decline in revenue in the healthcare and university
furniture segment impacted gross margins which narrowed to 21.0% of sales
compared with 22.2% of sales a year ago. The close scrutiny of selling
general and administrative expenses continued, enabling these expenses as
a percentage of sales to decline from 13.8% to 12.9%. Income from
continuing operations increased 9.0% to $2.3 million from $2.1 million.
Earnings per share from continuing operations were $0.26 as compared
with $0.22 which represents a gain of 18.2%. Average shares outstanding
were 8.8 million, down from 9.3 million, which reflects the Company's
on-going stock repurchase program.
The Company's backlog of unshipped orders at March 31, 1999, was
$36.9 million vs $34.2 million at the beginning of the year.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
This report, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, and other sections, contains
forward-looking statements that are subject to risks and uncertainties and
which reflect management's current beliefs and estimates of future economic
circumstances, industry conditions, year 2000 readiness, Company performance
and financial results. Forward-looking statements include the information
concerning possible or assumed future results of operations of our Company
and those statments preceded by, followed by or that include the words
"future," "position," "anticipate," "expect," "believe," "may," "will,"
"plan," "further improve," "outlook," "should" or similar expressions.
For these statements, we claim the protection of the safe harbor for forward-
looking statements contained in the Private Securities Litigation Reform Act
of 1995. You should understand that many factors, including availability
and price of raw materials, product pricing, competitive environment and
related domestic and international market conditions, operating efficiencies
and actions of domestic and foreign governements, could affect the future
results of the Company and could cause those results to differ materially
from those expressed in our forward-looking statements.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27 Financial Data Schedule (EDGAR only).
B. Reports on Form 8-K
No reports have been filed on Form 8-K during this
quarter.
<PAGE>
SHELBY WILLIAMS INDUSTRIES, INC.
SIGNATURES
Pursuant to the requirement 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.
SHELBY WILLIAMS INDUSTRIES, INC.
(Registrant)
April 27, 1999 S/Robert P. Coulter
________________________________
Robert P. Coulter
President and Director
(Principal Operating Officer)
April 27, 1999 S/Sam Ferrell
________________________________
Sam Ferrell
Vice President of Finance, Treasurer
and Assistant Secretary
(Principal Financial Officer)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S>
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1999
<PERIOD-TYPE> 3-mos
<CASH> 6,282
<SECURITIES> 0
<RECEIVABLES> 27,574
<ALLOWANCES> 337
<INVENTORY> 23,307
<CURRENT-ASSETS> 61,417
<PP&E> 50,822
<DEPRECIATION> 24,896
<TOTAL-ASSETS> 88,645
<CURRENT-LIABILITIES> 21,612
<BONDS> 0
0
0
<COMMON> 594
<OTHER-SE> 64,430
<TOTAL-LIABILITY-AND-EQUITY> 88,645
<SALES> 43,128
<TOTAL-COSTS> 34,081
<OTHER-EXPENSES> 5,548
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46
<INCOME-PRETAX> 3,538
<INCOME-TAX> 1,274
<INCOME-CONTINUING> 2,264
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,264
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
