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 July 3, 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 August 16, 1994 there were 3,682,061 shares of common stock
outstanding.
______________________________________________________________________________
<PAGE>
<TABLE>
PART I
ITEM 1
FINANCIAL INFORMATION
PLASTI-LINE, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
July 3, 1994 (1994) and January 2, 1994 (1993)
(in thousands)
<CAPTION>
Assets 1994 1993
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 113 $ 10
Marketable securities 701 505
Receivables, net 13,996 13,634
Inventories 18,813 17,256
Prepaid expenses 1,717 926
Deferred income taxes 1,200 1,200
Total current assets 36,540 33,531
Net property and equipment 11,722 11,747
Goodwill 4,049 4,111
Other assets 130 133
Total Assets $ 52,441 $ 49,522
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity 1994 1993
(Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Current installments of long-term debt $ 758 $ 745
Accounts payable 5,312 5,054
Accrued liabilities 3,373 3,250
Income taxes payable (164) 452
Customer deposits and deferred revenue 4,239 5,317
Total current liabilities 13,518 14,818
Deferred income taxes 1,012 1,012
Long-term debt, excluding current installments 10,595 6,536
Deferred liabilities 71 75
Total liabilities 25,196 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 3,688,061 shares 4 4
Additional paid-in-capital 2,536 2,484
Notes receivable, common stock (157) (174)
Retained earnings 24,862 24,767
Total stockholders' equity 27,245 27,081
Total Liabilities and Stockholders' Equity $ 52,441 $ 49,522
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
PLASTI-LINE, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Operations
Unaudited
(in thousands, except per share data)
<CAPTION>
Three months ended Six months ended
July 3, 1994 July 4, 1993 July 3, 1994 July 4, 1993
<S> <C> <C> <C> <C>
Net sales $ 19,438 $ 27,126 $ 35,409 $ 45,248
Cost of sales 16,057 21,931 29,248 36,915
Gross profit 3,381 5,195 6,161 8,333
Selling, general and
administrative, other 3,075 3,090 5,696 5,659
Operating income 306 2,105 465 2,674
Interest income - 24 2 64
Interest expense 171 232 292 423
Income before
income taxes 135 1,897 175 2,315
Income taxes 66 782 82 962
Net income $ 69 $ 1,115 $ 93 $ 1,353
Net income per share $ 0.02 $ 0.30 $ 0.03 $ 0.36
<FN>
See accompanying notes to condensed financial statements.
</TABLE>
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<TABLE>
PLASTI-LINE, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
Six months ended July 3, 1994 (1994) and July 4, 1993 (1993)
Unaudited
(in thousands)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 93 $ 1,353
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 908 756
(Gain) loss on sale of investment in
marketable securities 3 (4)
Gain on sale of property and equipment - (7)
Provision for losses on accounts receivable 22 78
Change in assets and liabilities:
Increase in net receivables (384) (5,462)
(Increase) decrease in inventories (1,557) 316
Increase in prepaid expenses and other assets (791) (35)
Increase (decrease) in accounts payable 258 (682)
Increase (decrease) in accrued liabilities 123 (936)
Increase (decrease) in income tax payable (616) 594
Decrease in customer deposits
and deferred revenue (1,082) (746)
Net cash used by operating activities (3,023) (4,775)
Cash flows from investing activities:
Purchases of property and equipment (818) (914)
Investment in marketable securities (499) (247)
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 (1,017) 348
Cash flows from financing activities:
Net borrowings under line-of-credit 4,105 4,428
Principal payments on long-term debt (33) (32)
Proceeds from sales of common stock 54 63
Proceeds from repayments of
notes receivable, common stock 17 17
Net cash provided by financing activities 4,143 4,476
Net increase in cash and cash equivalents 103 49
Cash and cash equivalents at beginning of year 10 10
Cash and cash equivalents at end of the period $ 113 $ 59
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 348 $ 369
Income taxes 639 342
Noncash transactions:
Amortization of compensation from restricted stock $ 35 $ 36
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PLASTI-LINE, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements
1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheet as of July 3, 1994, the condensed
statements of operations for the three months ended July 3, 1994 and July
4, 1993 and the six months ended July 3, 1994 and July 4, 1993, and the
consolidated statements of cash flows for the six months ended July 3, 1994
and July 4, 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 July 3, 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 July 3, 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: July 3, January 2,
1994 1994
Finished goods $ 15,201 $ 14,098
Work-in-process 2,442 1,696
Raw materials 4,261 4,437
Less LIFO inventory reserve (3,091) (2,975)
Total net inventory $ 18,813 $ 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 July 3, 1994 were 3,706,862.
5. Reclassifications
Certain reclassifications have been made to the 1993 financial statements
to conform to the 1994 presentation.
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A. Consolidated results of operations for the three months ended July 3, 1994
(1994 Quarter) compared to the consolidated results of operations for the
three months ended July 4,1993 (1993 Quarter):
The Company's sales in the current three month period decreased 28.3% to
$19,438,000 from $27,126,000 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 decreased to 17.4% in the 1994 Quarter
versus 19.2% during the 1993 Quarter. The decrease was primarily due to an
unfavorable sales mix and lower sales volume.
Selling, general, and administrative expenses were $3,075,000 for the 1994
Quarter versus $3,090,000 for the 1993 Quarter. The decrease is primarily
due to a reduction in costs caused by the sales volume decrease discussed
above. This was only partially offset as a result of the costs of a
Company-wide business process reengineering project.
Operating income was $306,000 and $2,105,000 for the 1994 and 1993
Quarters, respectively, an 85.5% decrease. This was due to decreased sales
volume.
Interest expense decreased to $171,000 for the 1994 Quarter from $232,000
in the 1993 Quarter. This was primarily a result of lower interest rates
and lower average principal balances.
B. Consolidated results of operations for the six months ended July 3, 1994,as
compared to the consolidated results of operations for the six months ended
July 4, 1993.
Net sales were $35,409,000 in the first six months of 1994 as compared to
$45,248,000 in the first six months of 1993, a 21.7% decrease. The
decrease in sales is due to lower sales to automotive, fast food, and
banking customers. The reduction is primarily due to the non-recurrence of
a number of significant sign changeouts. The Company continues to enjoy
strong market share positions in the current markets served.
Cumulative gross profit as a percentage of sales at the end of the second
quarter of 1994 decreased to 17.4% from 18.4% at the end of the same period
in 1993. The decrease was primarily due to an unfavorable sales mix and
lower sales volume.
Selling, general, and administrative expenses for the first six months of
1994 were $5,696,000 as compared to $5,659,000 during the same period in
1993, an increase of $37,000. The slight 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 six months of 1994 of $465,000 was
$2,209,000 lower than the same period in 1993. This was due to the
decrease in sales volume.
Interest expense of $292,000 for the first six months of 1994 was $131,000
lower than the same period of 1993. This was primarily a result of lower
interest rates and lower average principal balances.
<PAGE>
Liquidity and Capital Resources
The Company's cash, cash equivalents, and marketable securities of $814,000 at
July 3, 1994 increased $299,000 from the January 2, 1994 balance. The
increase was due to increased investments in marketable securities.
At July 3, 1994, the Company had working capital of $23,022,000, an increase
of $4,309,000 from January 2, 1994. Funds in the amount of $3,023,000 were
used by operating activities during the current six month period. Increases
in inventory to support second half sales along with lower customer deposits
and deferred revenue were the primary uses of cash. Investing activities used
$1,017,000 during the first six months of 1993. Capital expenditures and
marketable security purchases were the primary uses of investing funds.
Financing activities provided $4,143,000 of cash. Net borrowings on the
revolving line of credit provided the majority of funds from financing
activities.
The Company's future capital expenditures 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.
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.
<PAGE>
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
(a) Plasti-Line, Inc.'s 1994 Annual Meeting of Shareholders was held
April 19, 1994.
(b) Proxies were solicited by the Board of Directors pursuant to
Regulation 14 under the Securities Exchange Act of 1934.
There was no solicitation in opposition to the Board's
nominees for election to the Board of Directors listed in the
proxy. The following nominees were elected to one-year terms
on the Board of Directors:
James R. Martin, Richard A. Banfield, Howard L. Clark, Jr., John
F. Daly, James G. Hanes, III, James A. Haslam, III, J. Hoyle
Rymer, and James F. Smith, Jr.
(c) The vote on the election of each of the above was:
For 3,307,319 shares
Against -
Abstain -
The total number of shares of Plasti-Line, Inc. common stock,
$.001 par value, outstanding as of April 19, 1994, the record
date for the Annual Meeting, was 3,685,936 shares.
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
July 3, 1994.
<PAGE>
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)
August 16, 1994
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0 0
0 0
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