SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark one)
( X ) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarter ended October 2, 1994
Or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _______________
______________________________________________________________________________
Plasti-Line, Inc.
(Exact name of registrant as specified in its charter)
Tennessee
(State or other jurisdiction of incorporation or organization)
62-1218546
(I.R.S. Employer Identification No.)
0-15214
(Commission File No.)
623 E. Emory Road, P.O. Box 59043, Knoxville, Tennessee 37950-9043
(Address of principal executive offices)
(615) 938-1511
(Registrant's phone number including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
______________________________________________________________________________
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of November 16, 1994 there were 3,686,786 shares of common stock
outstanding.
______________________________________________________________________________
<TABLE>
PART I
ITEM 1
FINANCIAL INFORMATION
PLASTI-LINE, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
October 2, 1994 (1994) and January 2, 1994 (1993)
(in thousands)
<CAPTION>
Assets 1994 1993
(Unaudited) (Audited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 43 $ 10
Marketable securities 701 505
Receivables, net 11,854 13,634
Inventories 20,509 17,256 17,256
Prepaid expenses and other current assets 2,030 926
Deferred income taxes 1,200 1,200
Total current assets 36,333 33,531
Net property and equipment 12,228 11,747
Goodwill 4,018 4,111
Other assets 125 133
Total Assets $ 52,708 $ 49,522
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity 1994 1993
(Unaudited) (Audited)
<S> <C> <C>
Current installments of long-term debt $ 758 $ 745
Accounts payable 4,998 5,054
Accrued liabilities 3,084 3,250
Income taxes payable (150) 452
Customer deposits and deferred revenue 4,635 5,317
Total current liabilities 13,325 14,818
Deferred income taxes 1,012 1,012
Long-term debt, excluding current installments 10,980 6,536
Deferred liabilities 72 75
Total liabilities 25,389 22,441
Stockholders' equity:
Preferred stock, $.001 par value. Authorized
5,000,000 shares; issued none - -
Common stock, $.001 par value. Authorized
20,000,000 shares; issued 3,680,686 shares 4 4
Additional paid-in-capital 2,526 2,484
Notes receivable, common stock (124) (174)
Retained earnings 24,913 24,767
Total stockholders' equity 27,319 27,081
Total Liabilities
and Stockholders' Equity $ 52,708 $ 49,522
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
PLASTI-LINE, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Operations
Unaudited
(in thousands)
<CAPTION>
Three months ended Nine months ended
October 2 October 3 October 2 October 3
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $ 17,933 $ 23,192 $ 53,342 $ 68,440
Cost of sales 14,472 19,341 43,720 56,256
Gross profit 3,461 3,851 9,622 12,184
Selling, general and
administrative, other 3,176 2,467 8,872 8,126
Operating income 285 1,384 750 4,058
Interest income 17 9 19 73
Interest expense 192 146 484 569
Income before
income taxes 110 1,247 285 3,562
Income taxes 57 519 139 1,481
Net income $ 53 $ 728 $ 146 $ 2,081
Net income per share $ 0.01 $ 0.20 $ 0.04 $ 0.56
<FN>
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
PLASTI-LINE, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
Nine months ended October 2, 1994 (1994) and October 3, 1993 (1993)
Unaudited
(in thousands)
<CAPTION>
1994 1993
Cash flows from operating activities:
<S> <C> <C>
Net income $ 146 $ 2,081
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 1,380 1,149
(Gain) loss on sale of investments
in marketable securities 3 (4)
Gain on sale of property and equipment - (7)
Provision for losses on accounts receivable 83 131
Changes in assets and liabilities:
(Increase) decrease in net receivables 1,697 (3,548)
(Increase) decrease in inventories (3,253) 708
Increase in prepaid expenses and other assets (1,104) (149)
Increase (decrease) in accounts payable (56) 60
Decrease in accrued liabilities (166) (1,431)
Increase (decrease) in income tax payable (602) 472
Decrease in customer deposits
and deferred revenue (685) (644)
Net cash used by operating activities (2,557) (1,182)
Cash flows from investing activities:
Purchases of property and equipment (1,760) (1,361)
Investment in marketable securities (499) (147)
Proceeds from sales of property and equipment - 43
Proceeds from the sale and maturity of investments 300 1,466
Net cash provided (used) by
investing activities (1,959) 1
Cash flows from financing activities
Net borrowings under line-of-credit 4,509 1,304
Principal payments on long-term debt (52) (48)
Proceeds from sales of common stock 42 112
Proceeds from repayments of notes
receivable, common stock 50 19
Net cash provided by financing activities 4,549 1,387
Net increase in cash and cash equivalents 33 206
Cash and cash equivalents at beginning of year 10 10
Cash and cash equivalents at end of the period $ 43 $ 216
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest 465 574
Income taxes 849 1,176
Noncash transactions:
Amortization of compensation from
restricted stock $ 44 $ 54
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
PLASTI-LINE, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements
1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheet as of October 2, 1994, the
condensed statements of operations for the three months ended October 2,
1994 and October 3, 1993 and the nine months ended October 2, 1994 and
October 3, 1993, and the consolidated statements of cash flows for the nine
months ended October 2, 1994 and October 3, 1993, have been prepared by
the Company, without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and changes in cash
flows at October 2, 1994 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's 1993
Annual Report to Stockholders. The results of operations for the period
ended October 2, 1994 are not necessarily indicative of the operating
results for the full year.
2. Principles of Consolidation
The financial statements include the accounts of the Company and its wholly
owned subsidiary, American Sign & Marketing Services, Inc. All significant
intercompany accounts and transactions have been eliminated.
3. Inventories
Inventories consist of the following: October 2, January 2,
1994 1994
Finished goods $ 15,770 $ 14,098
Work-in-process 1,806 1,696
Raw materials 6,096 4,437
Less LIFO inventory reserve (3,163) (2,975)
Total net inventory $ 20,509 $ 17,256
Inventories are stated at the lower-of-cost or market. Cost is determined
by the last-in, first-out method (LIFO).
4. Earnings Per Share
Net income per common share is based on the weighted average number of
common and common equivalent shares outstanding in each period. For
purposes of computing common equivalent shares outstanding, shares relating
to options have been calculated using the treasury stock method for the
portion of each period for which the options were outstanding and using the
fair value of the Company's stock for each of the respective periods.
The weighted average number of common and common stock equivalent shares
outstanding at October 2, 1994 were 3,699,088.
5. Reclassifications
Certain reclassifications have been made to the 1993 financial statements
to conform to the 1994 presentation.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A. Consolidated results of operations for the three months ended October 2,
1994 (1994 Quarter) compared to the consolidated results of operations for
the three months ended October 3, 1993 (1993 Quarter):
The Company's sales in the current three month period decreased 22.7% to
$17,933,000 from $23,192,000 for the same period last year. The sales
decrease is due to lower sales to the Company's automotive, fast food and
bank customers. The reduction is primarily due to the non-recurrence of a
number of significant sign changeouts.
The Company's gross profit margin increased to 19.3% in the 1994 Quarter
versus 16.6% during the 1993 Quarter. The increase was primarily due to
a favorable sales mix combined with cost savings from improved manufacturing
performance at both the Knoxville and Florence manufacturing facilities.
Selling, general, and administrative expenses were $3,176,000 for the 1994
Quarter versus $2,467,000 for the 1993 Quarter,an increase of 28.7%.
The increase is primarily a result of the costs of a Company-wide business
process reengineering project.
Operating income was $285,000 and $1,384,000 for the 1994 and 1993
Quarters, respectively, a 79.4% decrease. The lower income was due to both
the decreased sales volume and the costs of the business process
reengineering project.
Interest expense increased to $192,000 for the 1994 Quarter from $146,000
in the 1993 Quarter. This was primarily a result of higher average debt
balances in the 1994 Quarter.
B. Consolidated results of operations for the nine months ended October 2,
1994 as compared to the consolidated results of operations for the nine
months ended October 3, 1993.
Net sales were $53,342,000 in the first nine months of 1994 as compared to
$68,440,000 in the first nine months of 1993, a 22.1% decrease. The
decrease in sales is primarily attributable to sales reductions across all
major customer groups, particularly for our bank and fast food customers.
These customers have not experienced the level of image changeouts that
occurred in 1993.
Cumulative gross profit as a percentage of sales at the end of the third
quarter of 1994 increased to 18.0% from 17.8% at the end of the same period
in 1993. The increase was primarily due to an improved sales mix combined
with performance improvements at both the Knoxville and Florence
manufacturing facilities.
Selling, general, and administrative expenses for the first nine months of
1994 were $8,872,000 as compared to $8,126,000 during the same period in
1993, a 9.2% increase of $746,000. The increase in expense is primarily the
result of the costs of a Company-wide business process reengineering
project which were partially offset by the reduction in other selling,
general and administrative costs due to decreased sales volume.
Operating income for the first nine months of 1994 of $750,000 was
$3,308,000 lower than the same period in 1993, a 81.5% decrease.
This was due to lower sales volume along with the costs of the business
reengineering project.
Interest expense of $484,000 for the first nine months of 1994 was
$85,000 lower than the same period of 1993, a 14.9% decrease.
This was primarily a result of lower interest rates and lower average
principal balances.
Liquidity and Capital Resources
The Company's cash, cash equivalents, and marketable securities of $744,000 at
October 2, 1994 increased $229,000 from the January 2, 1994 balance. The
increase was due to increased investments in marketable securities.
At October 2, 1994, the Company had working capital of $23,012,000, an
increase of $4,299,000 from January 2, 1994. Funds in the amount of
$2,557,000 were used by operating activities during the current nine month
period. Increases in inventory to support fourth quarter sales was the
primary use of cash.
Investing activities used $1,959,000 during the first nine months of 1993.
Capital expenditures and marketable security purchases were the primary uses
of investing funds. Financing activities provided $4,549,000 of cash. Net
borrowings on the revolving line of credit provided the majority of funds from
financing activities.
The Company's future capital expenditures for fiscal 1995 will relate
principally to the acquisition of new machinery and equipment and furniture
and fixtures designed to increase productivity and factory efficiency.
The Company believes its cash generated from operations and funds available
under the existing line of credit are sufficient for all planned operating
and capital requirements through the fiscal year 1995.
Seasonality
The Company's sales exhibit limited seasonality, with sales in the first
quarter generally being the lowest and fourth quarter sales the highest.
First quarter sales tend to be relatively lower because of weather constraints
which slow down customer's construction schedules and their pattern of sign
purchases.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None.
b) No reports on Form 8-K were filed during the quarter ended
October 2, 1994.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLASTI-LINE, INC.
Registrant
/s/ Mark J. Deuschle
Vice-President of Finance
(Authorized Officer and Chief Accounting Officer)
November 16, 1994
<TABLE> <S> <C>
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<PERIOD-TYPE> QTR-3 3-MOS
<FISCAL-YEAR-END> JAN-01-1995 JAN-01-1995
<PERIOD-END> OCT-02-1994 OCT-02-1994
<CASH> 0 43
<SECURITIES> 0 701
<RECEIVABLES> 0 11967
<ALLOWANCES> 0 113
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0 0
0 0
<OTHER-SE> 0 27315
<TOTAL-LIABILITY-AND-EQUITY> 0 27319
<SALES> 17933 53342
<TOTAL-REVENUES> 17950 53361
<CGS> 14472 43720
<TOTAL-COSTS> 14472 43720
<OTHER-EXPENSES> 3147 8789
<LOSS-PROVISION> 29 83
<INTEREST-EXPENSE> 192 484
<INCOME-PRETAX> 110 285
<INCOME-TAX> 57 139
<INCOME-CONTINUING> 53 146
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 53 146
<EPS-PRIMARY> .01 .04
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</TABLE>
