<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
--------------------
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1997
Commission File Number 0-16072
DECORA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 68-0003300
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE MILL STREET
FORT EDWARD, NY 12828
(address of principal executive office) (Zip code)
Registrant's telephone number (518) 747-6255
(including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 30 days.
Yes [X] No [ ]
At November 7, 1997 there were 36,656,890 shares of Common Stock of the
registrant outstanding. This document consists of 16 pages.
<PAGE> 2
FORM 10-Q
DECORA INDUSTRIES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet as of
September 30, 1997 and March 31, 1997 3 - 4
Consolidated Statement of Income for the Six Months
and Quarters ended September 30, 1997 and 1996 5
Consolidated Statement of Cash Flows for the Six
Months ended September 30, 1997 and 1996 6
Notes to Unaudited Consolidated
Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II OTHER INFORMATION 13
SIGNATURES 16
</TABLE>
- 2 -
<PAGE> 3
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DECORA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
unaudited
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 527 $ 243
Accounts receivable, less allowances 5,525 6,168
Inventories 5,944 5,439
Prepaid expenses and other current assets 903 847
------- -------
Total current assets 12,899 12,697
Property and equipment, net 7,294 7,781
Notes receivable 850 1,468
Intangibles, net 10,714 10,924
Deferred income taxes 4,343 4,227
Other non-current assets, net 274 357
------- -------
Total Assets $36,374 $37,454
======= =======
</TABLE>
(continued)
See accompanying notes to unaudited consolidated financial statements.
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<PAGE> 4
FORM 10-Q
DECORA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(In thousands except per share data)
unaudited
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,766 $ 2,267
Accrued liabilities 2,352 1,867
Current portion of long-term debt 3,594 2,310
-------- --------
Total current liabilities 8,712 6,444
Long-term debt 13,003 16,507
-------- --------
Total liabilities 21,715 22,951
-------- --------
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000 shares
authorized at September 30, 1997 and March 31, 1997 - -
Common stock, $.01 par value; 45,000 shares authorized;
36,656 and 35,469 shares issued and outstanding at
September 30, 1997 and March 31, 1997, respectively 357 355
Additional paid-in capital 31,922 31,862
Accumulated deficit (17,620) (17,714)
-------- --------
Total shareholders' equity 14,659 14,503
-------- --------
Total Liabilities and Shareholders' Equity $ 36,374 $ 37,454
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
- 4 -
<PAGE> 5
FORM 10-Q
DECORA INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
unaudited
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 10,308 $ 12,904 $ 19,455 $ 23,042
Cost of goods sold 7,898 9,682 14,454 17,376
-------- -------- -------- --------
Gross profit 2,410 3,222 5,001 5,666
Marketing, general and
administrative expenses 1,226 1,467 2,567 2,729
Non-recurring charges 1,461 - 1,461 -
-------- -------- -------- --------
Operating (loss) income (277) 1,755 973 2,937
Interest expense 421 648 838 1,280
-------- -------- -------- --------
Income (loss) before taxes (698) 1,107 135 1,657
Provision (benefit) for income taxes (209) 29 41 60
-------- -------- -------- --------
Net income (loss) $ (489) $ 1,078 $ 94 $ 1,597
======== ======== ======== ========
Net income (loss) per common share $ (0.01) $ 0.03 $ 0.00 $ 0.05
======== ======== ======== ========
Average shares of common stock
used in computation of income (loss)
per share 35,719 35,469 35,699 34,969
======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
- 5 -
<PAGE> 6
FORM 10-Q
DECORA INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
unaudited
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 94 $ 1,597
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 1,246 1,106
Amortization of debt discount 33 76
Provision for notes receivable 789 -
Net change in deferred tax asset (116) -
Net changes in current assets and liabilities 895 (538)
------- -------
Net cash provided (used) by operating activities 2,941 2,241
------- -------
Cash flows from investing activities:
Purchase of fixed assets (466) (77)
------- -------
Net cash used by investing activities (466) (77)
------- -------
Cash flows from financing activities:
Repayment of debt (2,253) (1,862)
Proceeds from issuance of common stock 62 30
------- -------
Net cash provided by (used in) financing activities (2,191) (1,832)
------- -------
Net increase in cash and cash equivalents 284 332
Cash at beginning of period 243 188
------- -------
Cash at end of period $ 527 $ 520
======= =======
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
During the six months ended September 30, 1996, common stock in the amount of
$656 and notes payable in the amount of $874 were issued upon the conversion of
$1,642 of warrants held by a lender to purchase common stock in the Company's
subsidiary, Decora Incorporated.
See accompanying notes to unaudited consolidated financial statements.
- 6 -
<PAGE> 7
FORM 10-Q
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Integration of Financial Statements Reported on Form 10-K
The accompanying unaudited condensed consolidated financial statements should be
read in conjunction with Decora Industries, Inc.'s (the "Company") audited
consolidated financial statements included in its Form 10-K for the fiscal year
ended March 31, 1997, filed with the Securities and Exchange Commission (File
No. 0- 16072) (the "Form 10-K"). In the opinion of the Company, the accompanying
unaudited financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the Company's financial position
as of September 30, 1997 and March 31, 1997, and the results of its operations
and cash flows for the periods presented. Certain reclassifications of prior
year amounts have been made to conform to the current year's presentation.
NOTE 2 - Inventories
Inventories at September 30, 1997 and March 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
------------- ---------
(In thousands)
<S> <C> <C>
Raw Materials $3,407 $3,194
Work-in-Process 1,425 1,035
Finished Goods 1,112 1,210
------ ------
$5,944 $5,439
====== ======
</TABLE>
NOTE 3 - Earnings per Share
The number of shares of common stock and common stock equivalents used in the
computation of net income (loss) per share for each period is the weighted
average number of common shares outstanding during the periods and, if dilutive,
common stock options, warrants and convertible securities which are considered
common stock equivalents.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 128, Earnings Per Share, which is
required to be adopted by the Company in the 3rd quarter of fiscal 1998 with all
prior periods being restated. The Company does not believe that adoption of such
Statement will have a significant impact on net income (loss) per share reported
for the quarter and six months ended September 30, 1997.
NOTE 4 - Non-Recurring Charges
In the quarter ended September 30, 1997, the Company incurred certain
non-recurring charges totaling $1,461,000 partially as a result of certain steps
the Company has taken subsequent to the acquisition of Konrad Hornschuch AG
("Hornschuch") on October 1, 1997(see Note 5, below). Of these total charges,
$531,000
- 7 -
<PAGE> 8
FORM 10-Q
was related to severance costs for U.S. work force reductions implemented as a
result of expected synergies with Hornschuch. An additional $789,000 was to
reserve against notes receivable which the Company obtained in fiscal 1995 and
fiscal 1996 in conjunction with the sale of previously discontinued operations.
This reserve is a result of concerns regarding the creditworthiness of the
borrowers and certain defaults on the notes. The remainder of the non-recurring
charges ($141,000) included the write-off of costs related to a previously
considered acquisition that was abandoned and the write-off of certain tooling
which is redundant with the tooling which will continue to be utilized by
Hornschuch (see Note 5).
NOTE 5 - Subsequent Event
On October l, 1997, a recently formed wholly-owned German subsidiary("Newco")
of Decora Industries, Inc (the "Company" or "Holdings") acquired 73.2 percent of
the voting stock (the "Shares") of Konrad Hornschuch AG("Hornschuch", a German
company) in privately negotiated transactions for total consideration of DM
61,582,280, or approximately $34,700,000. Shares of Hornschuch are currently
traded on the over-the-counter markets of the Frankfurt and Stuttgart stock
exchanges. The Company intends to purchase as many shares as possible of the
remaining 26.8 percent of the shares of Hornschuch as soon as practicable using
a combination of (i) open market purchases sufficient to reach a minimum of 75
percent voting control and (ii) a tender offer pursuant to German law to all
minority shareholders of Hornschuch which is anticipated to be completed within
18 months of the initial purchase of the Shares (the"Minority Tender Offer").
The transaction will be accounted for as a purchase and operating results of
Hornschuch will be included from October 1, 1997.
Hornschuch is a leader in the manufacture and sale of self-adhesive consumer
decorative products including d-c fix and Noblessa decorative products.
Hornschuch employs approximately 760 persons and its revenues for calender year
1996 were DM 202,044,414, or approximately $115,000,000. Along with its
self-adhesive products, Hornschuch also markets a full line of complementary
table coverings and other decorative kitchen and table oriented products and in
addition to its market presence in Europe, Hornschuch has distribution
capabilities in Eastern Europe, Russia, the Middle East and the Far East with
over 80 sales, marketing and distribution representatives worldwide. Hornschuch
also manufacturers decorative and functional films for use by OEMs in the
automotive, building , furniture, handbag, shoe and interior decoration markets.
The purchase of the Shares and a portion of the transaction costs were funded
from (i) a senior term loan of approximately $21,000,000 from a German bank
("the "Bank Loan") repayable September 30, 2004, (which includes a commitment to
fund approximately 33 percent of the Company's cash needs to complete the
Minority Tender Offer) and (ii) a subordinated loan of $18,000,000 (the
"Subordinated Loan") from a pension fund of an unrelated company (the "Pension
Fund"). The Company also raised $750,000 through the private placement of common
stock to an institutional investment fund. From the Pension Fund loan proceeds,
$2,900,000 was used to repay existing subordinated debt of Decora Manufacturing
which had been due and payable on April 15, 1998 and $15,100,000 of such
proceeds was applied towards the purchase of the Shares. Other closing costs
associated with the transaction of approximately $2,930,000 US, which included
commitment fees, legal, accounting and investment banking fees as well as other
expenses, were either paid or accrued at closing. The Subordinated Loan bears
interest at 13.00% with the first cash interest payment commencing in September
1998 and with the first principal payment of $6,000,000 due in September 2003.
The Bank Loan bears interest at LIBOR plus 2.50% and requires quarterly interest
payments beginning in December 1997 with the first principal payment of
approximately $1,700,000 due in March 1999.
- 8 -
<PAGE> 9
FORM 10-Q
As part of the Subordinated Loan, the Pension Fund received several warrants to
purchase common stock of the Company, including a warrant to purchase Series A
Convertible Preferred Shares ("Series A Preferred Stock") (collectively,
the"Warrants"). The Warrants provide the Pension Fund with a right to purchase
17.5% of the common stock of the Company on a fully diluted basis, exercisable
at $l.00 for each share of common stock. A warrant to purchase the Series A
Preferred Stock was issued in lieu of a common stock warrant because the Company
did not have sufficient shares of authorized, but unissued, common stock. Any
increase in authorized shares requires both Board of Directors and shareholders
approval. The Company's Board of Directors has authorized an increase in its
authorized shares sufficient to allow conversion of the Series A Preferred Stock
to common stock (the "Additional Common Stock"). A proposal to reverse split the
common stock of the Company on a one-for-five basis and to decrease the
authorized shares to 20,000,000 will be presented to the Company's shareholders
for approval at a special meeting to be held on December 18, 1997. If approved,
there will be sufficient authorized shares for the Additional Common Stock.
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<PAGE> 10
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This quarterly report on Form 10-Q (the "10-Q") includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
All statements other than statements of historical facts, including, without
limitation, the statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and located elsewhere herein
regarding industry prospects and the Company's financial position are
forward-looking statements. Although the Company believes that the expectations
reflected in such forward looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Important
factors that could cause actual results to differ materially from the Company's
expectations are disclosed in the 10-Q and in the Company's Form 10-K for the
year ended March 31, 1997, including, without limitation, in conjunction with
the forward-looking statements included in this 10-Q.
RESULTS OF CONTINUING OPERATIONS AND FORWARD LOOKING INFORMATION
SIX MONTHS ENDED SEPTEMBER 30, 1997 VS. SIX MONTHS ENDED SEPTEMBER 30, 1996
Net sales of the Company were $19,455,000 for the six months ended September 30,
1997 compared to $23,042,000 for the six months ended September 30, 1996, a
decrease of 16%. Such decrease resulted primarily from a 19% decrease in sales
to the Company's principal customer, Rubbermaid, as a result of continued
inventory reductions of Con-Tact(R) products by Rubbermaid and the continued
efforts by retailers and wholesalers to minimize inventory levels throughout the
distribution chain and to deliver on a just-in-time basis based on consumer
demand. Sell-through of the Company's product by Rubbermaid was also negatively
impacted by increased shelf space given to non-adhesive shelf lining products
which are not manufactured by the Company. As a result, net sales to Rubbermaid
were $3,950,000 less than the same period in the prior year. International sales
during the first six months increased by $101,000, or 9.5% over the prior year
period. Sales of non-core and industrial products during the six months ended
September 30, 1997 declined by $127,000 reflecting reduced sales of the
Company's thin film products which offset increased sales of the Company's
Wearlon(R) coating products and Cobra(R) industrial tape products.
Gross profit for the six months ended September 30, 1997 was $5,001,000 versus
gross profit in the prior year's period of $5,666,000, a decrease of $665,000.
While sales volumes declined, gross margins were favorably impacted by a more
favorable sales mix including increased sales of the Company's Wearlon(R)
coating products. As a result, the gross profit margin for the most recent six
month period was 25.7% versus a gross profit margin of 24.6% in the prior year
period.
Operating income of the Company for the six months ended September 30, 1997 was
$973,000 versus operating income of $2,937,000 for the prior year period.
Marketing, general and administrative expenses were lower during the six months
ended September 30, 1997 versus the prior year by $162,000 as a result of cost
saving measures implemented in the prior year. These savings were offset by the
reduced gross profit noted above and by non-recurring charges of $1,461,000 (see
Note 4 to the unaudited financial statements).
- 10 -
<PAGE> 11
FORM 10-Q
Interest expense decreased from $1,280,000 during the first six months of fiscal
1997 to $838,000 during the first six months of fiscal 1998 as a result of lower
borrowings and lower overall interest rates on outstanding debt. As a result of
this and the factors noted above, income before taxes for the six months ended
September 30, 1997 was $135,000 versus income before taxes of $1,657,000 for the
first half of fiscal 1997. Net income for the six months ended September 30,
1997 was $94,000, or $0.00 per share, as compared with net income of $1,597,000,
or $0.05 per share, for the six months ended September 30, 1996. Lower net
income is due to the reduced income before taxes and a higher provision for
taxes as a percent of income before taxes. The Company anticipates that its cash
payments for taxes during fiscal 1998 will remain at historical levels due to
the use of net operating loss carry forwards to offset taxable income. The first
half of fiscal 1998 tax provision reflects what management expects to be the
"effective" tax rate going forward following the release of the remaining net
operating loss valuation allowance in fiscal 1997. Refer to Note 8 of the
Company's Form 10-K for the fiscal year ended March 31, 1997 for further
details.
QUARTER ENDED SEPTEMBER 30, 1997 VERSUS QUARTER ENDED SEPTEMBER 30, 1996
Net sales for the quarter ended September 30, 1997 were $10,308,000 versus
$12,904,000 for the quarter ended September 30, 1996. Net sales to the Company's
most significant customer, Rubbermaid, were 26% lower than in the same quarter
of the prior year reflecting inventory reductions at Rubbermaid. International
sales during the quarter increased $430,000.
Gross profit for the quarter ended September 30, 1997 was $2,410,000 versus
gross profit of $3,222,000 for the same quarter in the prior year. Gross profit
was lower as a result of reduced sales and manufacturing volumes which resulted
in unfavorable overhead absorption variances and a decline in gross margin
percentage from 25.0% in the prior year period to 23.4% in the current year
quarter. Marketing, general and administrative expenses were $241,000 lower in
the quarter ended September 30, 1997 versus the prior year quarter while the
Company recognized non-recurring charges during the current year quarter of
$1,461,000 as discussed above, resulting in a $698,000 loss before taxes for the
fiscal 1998 second quarter versus income before taxes of $1,107,000 for the
prior year period. Interest expense of $421,000 was $227,000 lower than the
prior year quarter amount of $648,000 due to lower average borrowings and rates
in the current year quarter. The lower pre-tax income for the recent quarter was
partially offset by an income tax benefit resulting in a net loss for the
quarter ended September 30, 1997 of $489,000 or $0.01 per share, as compared to
net income for the quarter ended September 30, 1996 of $1,078,000, or $0.03 per
share.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased from $6,253,000 as of March 31, 1997 to
$4,187,000 as of September 30, 1997, a net change of $2,066,000. Of this
decrease, $1,500,000 resulted from the reclassification of convertible debt
which is due in May 1998 from long term to current portion of long term debt.
Accounts receivable and inventories together decreased by $138,000 reflecting
lower sales volumes at the end of the period while timing differences resulted
in a $56,000 increase of prepaid expenses and other current assets and a
$499,000 increase in accounts payable. Accrued liabilities increased by $485,000
primarily as a result of accruals established for restructuring costs noted
above (see Note 4 to the unaudited
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FORM 10-Q
consolidated financial statements). Cash balances increased from $243,000 as of
March 31, 1997 to $527,000 as of September 30, 1997 and are limited by certain
debt covenants as to use.
On September 26, 1997, the Company extended the maturity of its revolving lines
of credit with Fleet Bank to August 31, 1999. Additionally, on October 1, 1997,
the Company borrowed approximately $39 million in order to complete the
acquisition of 73.2% of the common stock of Konrad Hornschuch AG (see Note 5 to
the unaudited financial statements) and to refinance the $2,900,000 subordinated
debt payment which had been due on April 15, 1998.
Capital expenditures for the six months ended September 30, 1997 were $466,000
which was consistent with historical averages. Plans for the remainder of the
fiscal year are likely to result in expenditures for the full year of
approximately $1,000,000 for the U.S. operations while the company's recently
acquired European operations are likely to invest an additional $1,500,000 -
$2,000,000.
Management believes that short term liquidity needs will be satisfied through
its existing lines of credit, through cash flow generated by operations and
through the establishment of additional lines of credit, if required.
Additionally, the Company is evaluating alternative financing sources which may
be required to repay the $1,500,000 note which is convertible into common stock
and is due in May 1998. Other routine requirements of the Company are likely to
be met in the future through operations and existing credit facilities.
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FORM 10-Q
DECORA INDUSTRIES, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A description of the Company's legal proceedings is included in the Company's
Annual Report on Form 10-K for the year ended March 31, 1997 and its Quarterly
Report on Form 10-Q for its quarter ended June 30, 1997. Except as set forth
below, there have been no new material developments in the Company's existing
litigation.
Decora Incorporated, doing business as Decora Manufacturing v. North America
Decorative Products, Inc. and North American Decorative Products, Inc. v. Decora
Manufacturing, Case No.-CV-0561, pending in the United States District Court,
Northern District of New York. Decora filed suit on North American Decorative
Products, Inc. ("Norwall") in the Northern District of New York asserting claims
for breach of contract, breach of the implied covenant of good faith and fair
dealing and breach of a Trade Secret and Confidentiality Agreement. In addition
to injunctive relief and an accounting, the Company seeks to recover $665,432
plus other compensatory damages to be proven at trial and punitive damages. On
or about July 16, 1997, Norwall filed its First Amended Answer and asserted
counterclaims against the Company for breach of supply agreements with the
Company, breach of the covenant of good faith and fair dealing implied in the
two supply agreements, copyright infringement and unfair competition. In
addition to injunctive relief and an accounting, Norwall seeks recovery of
$2,850,000, plus other compensatory damages to be proven at trial and punitive
damages. The Court has set July 8, 1998 discovery cut-off, and a November 23,
1998 trial date. The parties intend to explore a settlement in the near future.
The Company and its subsidiaries are defendants in pending actions which, in the
opinion of management of the Company, are not material to the Company's
financial condition or results of operations. Although no assurances can be
given regarding the ultimate outcome of such matters, the Company has accrued
amounts for defense and settlement costs which the Company considers adequate.
ITEM 2. CHANGES IN SECURITIES.
Not Applicable.
ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES
Not Applicable.
ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS.
Not Applicable
ITEM 5. OTHER INFORMATION
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<PAGE> 14
FORM 10-Q
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
1. Stock Purchase Agreement by and between Baden-Wurttenbergische Bank AG
and Newco dated as of September 3, 1997, as amended(1)
2. Stock Purchase Agreement by and between der Kunz Holding GmbH & Co. KG
and Newco dated as of August 18, 1997, as amended(1)
3. Certificate of Designation of Series A Preferred Stock of Holdings
dated September 26, 1997(1)
4. Note and Warrant Purchase Agreement, dated as of September 26, 1997
among Decora, Incorporated (dba Decora Manufacturing) ("Borrower"),
Holdings, Dorrance Street Capital Advisors, LLC ("Agent") and Textron
Master Trust ("Purchaser")(1)
5. Common Warrant Certificate with respect to 2,136,534 shares of Holdings
Common Stock, dated September 29, 1997 issued by Holdings to
Purchaser(1)
6. Preferred Warrant Certificate with respect to 69,557 shares of Holdings
Series A Stock, dated September 29, 1997 issued by Holdings to
Purchaser(1)
7. Contingent Common Warrant Certificate with respect to an indeterminate
number of shares of Holdings Common Stock, dated September 29, 1997
issued by Holdings to Purchaser(1)
8. 13% Senior Subordinated Note due 2005, dated September 29, 1997 issued
by Borrower in the principal amount of $18,000,000 to Purchaser(1)
9. Intercreditor Subordination Agreement, dated September 26, 1997, among
Fleet Bank, Purchaser, Borrower and Holdings(1)
10. Assignment, Pledge and Security Agreement dated September 26, 1997 of a
$15,207,000 note to Fleet Bank from Borrower(1)
11. First Amendment to March 27, 1997 Note dated September 26, 1997, by and
between Fleet Bank and Borrower regarding a $1,000,000 note(1)
12. Second Amendment to Loan and Security Agreement dated September 26,
1997 by and between Fleet Bank and Borrower regarding a $3,354,167
note(1)
13. Credit and Reimbursement Agreement Modification Agreement No. 2 dated
September 26, 1997, by and between Borrower and Fleet Bank in
connection with a letter of credit issued by Fleet Bank
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<PAGE> 15
FORM 10-Q
in favor of Mellon Bank, FSB, as Trustee, concerning the issuance of
$2,460,000 industrial revenue development bond(1)
14. Sixth Amendment to Secured Revolving Line of Credit Agreement dated
September 26, 1997 by and between Fleet Bank and Borrower regarding a
note of up to $6,000,000(1)
15. Note and Loan and Security Agreement Amendment No. 4 dated September
26, 1997 by and between Borrower and Fleet Bank regarding a $5,169,000
note(1)
16. Promissory Note in the amount of $15,207,000 dated September 30, 1997
by Holdings to Borrower(1)
17. Loan Agreement dated September 29, 1997 among Newco, Holdings and
Dresdner Bank AG(1)
--------------------
(1) Incorporated by reference to Form 8-K dated October 1, 1997.
(b) Reports on Form 8-K
1. Form 8-K dated October 1, 1997 reporting the acquisition of 73.2% of the
stock of Konrad Hornschuch AG.
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<PAGE> 16
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DECORA INDUSTRIES, INC.
(REGISTRANT)
BY /s/ TIMOTHY N. BURDITT
-----------------------------
TIMOTHY N. BURDITT
EVP ADMINISTRATION & FINANCE
DATED: November 13, 1997
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS AT AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
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0
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