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 2, 1995
Or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
0-15214
(Commission File Number)
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 Number)
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 11, 1995 there were 3,686,708 shares of common stock outstanding.
<TABLE>
PART I
FINANCIAL INFORMATION
ITEM 1
PLASTI-LINE, INC.
Consolidated Condensed Balance Sheets
July 2, 1995 (1995) and January 1, 1995 (1994)
(in thousands)
<CAPTION>
<S> <C> <C>
Assets 1995 1994
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 10 $ 10
Marketable securities - 599
Receivables, net 13,882 16,010
Inventories 23,320 19,213
Prepaid expenses 1,471 1,679
Deferred income taxes 1,869 1,869
Total current assets 40,552 39,380
Net property and equipment 12,790 11,947
Other assets 112 123
Total Assets $ 53,454 $ 51,450
See accompanying notes to consolidated condensed financial statements.
Liabilities and Stockholders' Equity 1995 1994
(Unaudited) (Audited)
Current liabilities:
Current installments of long-term debt $ 745 $ 745
Accounts payable 8,213 6,750
Accrued liabilities 4,651 4,078
Income taxes payable 112 (46)
Customer deposits and deferred revenue 7,058 4,504
Total current liabilities 20,779 16,031
Long-term debt, excluding current installments 9,014 12,004
Deferred income taxes 987 987
Deferred liabilities 75 75
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 3,684,786 shares 4 4
Additional paid-in-capital 2,597 2,571
Notes receivable, common stock (79) (152)
Retained earnings 20,077 19,930
Total Stockholders' Equity 22,599 22,353
Total Liabilities and Stockholders' Equity $ 53,454 $ 51,450
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<TABLE>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Operations
(in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
July 2, 1995 July 3, 1994 July 2, 1995 July 3, 1994
<S> <C> <C> <C> <C>
Net sales $ 22,512 $ 19,438 $ 42,568 $ 35,409
Cost of sales 18,358 16,057 35,044 29,248
Gross profit 4,154 3,381 7,524 6,161
Selling, general, and
administrative expenses 3,720 3,075 6,814 5,696
Operating income 434 306 710 465
Interest income 12 - 12 2
Interest expense 230 171 445 292
Income before income taxes 216 135 277 175
Income taxes 96 66 130 82
Net income $ 120 $ 69 $ 147 $ 93
Net income per share $ 0.03 $ 0.02 $ 0.04 $ 0.03
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<TABLE>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Cash Flows
Six months ended July 2, 1995 (1995) and July 3, 1994 (1994)
(Unaudited)
(in thousands)
<CAPTION>
1995 1994
Cash flows from operating activities:
<S> <C> <C>
Net income $ 147 $ 93
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 804 908
Loss on sale of investments in marketable securities 6 3
Provision for losses on accounts receivable 24 22
Changes in assets and liabilities:
Decrease (increase) in net receivables 2,104 (384)
Increase in inventories (4,107) (1,557)
Decrease (increase) in prepaid expenses 208 (791)
Increase in accounts payable 1,463 258
Increase in accrued liabilities 573 123
Increase (decrease) in income taxes payable 158 (616)
Increase (decrease) in customer deposits
and deferred revenue 2,554 (1,082)
Net cash provided (used) by operating activities 3,934 (3,023)
Cash flows from investing activities:
Purchases of property and equipment (1,636) (818)
Investment in marketable securities - (499)
Proceeds from the sale and maturity of investments 593 300
Net cash used by investing activities (1,043) (1,017)
Cash flows from financing activities:
Net borrowings under line of credit (2,957) 4,105
Principal payments on long-term debt (33) (33)
Proceeds from sales of common stock 26 54
Payments of notes receivable - common stock 73 17
Net cash provided (used) by financing activities (2,891) 4,143
Net increase in cash and cash equivalents - 103
Cash and cash equivalents at beginning of year 10 10
Cash and cash equivalents at end of period $ 10 $ 113
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 356 $ 348
Income taxes $ 25 $ 629
Noncash transactions:
Amortization of compensation from restricted stock $ 24 $ 35
</TABLE>
See accompanying notes to consolidated condensed financial statements.
PLASTI-LINE, INC.
Notes to Consolidated Condensed Financial Statements
1. Condensed Consolidated Financial Statements
The consolidated condensed balance sheet as of July 2, 1995, the consolidated
condensed statements of operations for the three and six months ended
July 2, 1995 and July 3, 1994, and the consolidated condensed statements of
cash flows for the six months ended July 2, 1995 and July 3, 1994 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 2, 1995 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. These consolidated condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's 1994 Annual Report to
Stockholders. The results of operations for the period ended July 2, 1995 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:
(in thousands)
July 2, 1995 January 1, 1995
Finished goods $ 16,501 $ 13,625
Work-in-process 2,564 1,818
Raw materials 7,102 5,763
Less: LIFO inventory reserve (2,847) (1,993)
Total net inventory $ 23,320 $ 19,213
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 2, 1995 were 3,684,000.
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 2, 1995
(1995 Quarter) compared to the consolidated results of operations for the
three months ended July 3, 1994 (1994 Quarter):
The Company's sales in the current three month period increased 15.8% to
$22,512,000 from $19,438,000 for the same period last year. The sales
increase is primarily due to increased sales to both fast food and automotive
customers.
The Company's gross profit margin increased to 18.5% in the 1995 Quarter
versus 17.4% in the 1994 Quarter. The increase is primarily due to a
favorable sales mix and higher sales volume.
Selling, general and administrative expenses were $3,720,000 for the 1995
Quarter versus $3,075,000 for the 1994 Quarter. The increase is primarily the
result of the costs of a Company-wide business reengineering project and
increased sales volumes.
Operating income was $434,000 and $306,000 for the 1995 and 1994 Quarters,
respectively, a 41.8% increase. The increase was primarily due to higher
margins and increased sales volumes.
Net interest expense increased to $218,000 for the 1995 Quarter from $171,000
in the 1994 Quarter. This was primarily the result of higher average debt
balances combined with higher variable interest rates in the 1995 Quarter.
B. Consolidated results of operations for the six months ended July 2, 1995
as compared to the consolidated results of operations for the six months ended
July 3, 1994:
Net sales were $42,568,000 for the first six months of 1995 as compared to
$35,409,000 in the first six months of 1994, a 20.2% increase. The increase
in sales is due to higher sales to automotive and fast food customers.
Cumulative gross profit as a percentage of sales at the end of the second
quarter of 1995 (17.7%) was relatively flat as compared to the same period in
1994 (17.4%).
Selling, general and administrative expenses for the first six months of 1995
were $6,814,000 as compared to $5,696,000 during the same period in 1994, an
increase of $1,118,000. The increase is primarily the result of the costs of
a Company-wide business process reengineering project and increased sales
volumes.
Operating income for the first six months of 1995 of $710,000 was $245,000
higher than the same period in 1994. The increase is primarily due to the
increase in sales volume.
Net interest expense increased to $433,000 for the first six months of 1995 as
compared to $290,000 for the same period in 1994. This was primarily the
result of higher average debt balances combined with higher variable interest
rates in 1995.
Liquidity and Capital Resources
The Company's cash, cash equivalents, and marketable securities decreased
$599,000 from the January 1, 1995 balance to $10,000 at July 2, 1995. The
decrease is due to the sale of investments in U.S. Government and U.S.
Governmental Agency obligations.
The Company has working capital of $19,773,000, a decrease of $3,576,000 from
the amount of working capital at January 1, 1995 primarily due to increases in
customer deposits. Funds of $3,934,000 were provided by operating activities.
Increases in accounts payable and customer deposits as well as a decrease in
net receivables were the primary sources of funds.
Investing activities used $1,043,000 as a result of property and equipment
purchases offset by the sale of marketable securities. Financing activities
used $2,891,000 primarily as a result of decreased net borrowings under the
Company's line of credit during the 1995 Quarter.
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
during 1995 and 1996.
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. Sales have normally accelerated in the second, third, and fourth
quarters corresponding with accelerating construction schedules.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Default Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
a) Plasti-Line, Inc.'s 1995 Annual Meeting of Stockholders was held
April 18, 1995.
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:
Howard L. Clark, Jr.
James G. Hanes, III
James A. Haslam, III
Donald F. Johnstone
Jame R. Martin
J. Hoyle Rymer
James F. Smith, Jr.
H. Mitchell Watson, Jr.
The vote on the election of each of the above was:
Howard L Clark, Jr.
For 3,293,927
Against -
Abstain 22,211
Individual Non-Votes 337,358
Broker Non-Votes 30,790
James G. Hanes, III
For 3,309,422
Against -
Abstain 6,716
Individual Non-Votes 337,358
Broker Non-Votes 30,790
James A. Haslam, III
For 3,307,872
Against -
Abstain 6,716
Individual Non-Votes 337,358
Broker Non-Votes 30,790
Donald F. Johnstone
For 3,308,422
Against -
Abstain 7,716
Individual Non-Votes 337,358
Broker Non-Votes 30,790
James R. Martin
For 3,307,672
Against -
Abstain 8,466
Individual Non-Votes 337,358
Broker Non-Votes 30,790
J. Hoyle Rymer
For 3,309,422
Against -
Abstain 6,716
Individual Non-Votes 337,358
Broker Non-Votes 30,790
James F. Smith, Jr.
For 3,307,872
Against -
Abstain 8,266
Individual Non-Votes 337,358
Broker Non-Votes 30,790
H. Mitchell Watson, Jr.
For 3,308,422
Against -
Abstain 7,716
Individual Non-Votes 337,358
Broker Non-Votes 30,790
c) A proposal to adopt and approve the 1995 Plasti-Line, Inc. Equity
Compensation Plan for Non-Employee Directors.
The vote on the election of the above was:
For 3,205,018
Against 110,259
Abstain 861
Individual Non-Votes 337,358
Broker Non-Votes 30,790
The total number of shares of Plasti-Line, Inc. common stock, $.001 par value,
outstanding as of March 14, 1995, the record date for the Annual Meeting, was
3,684,286 shares
Item 5. Other Information:
Not applicable
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 2, 1995.
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
______________________________________
Mark J. Deuschle
Vice-President of Finance
(Authorized Officer and Principal Financial Officer)
August 15, 1995
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-2-1995
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<ALLOWANCES> 107
<INVENTORY> 23320
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<PP&E> 30094
<DEPRECIATION> 17304
<TOTAL-ASSETS> 53434
<CURRENT-LIABILITIES> 20779
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<OTHER-SE> 22595
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<CGS> 18358
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</TABLE>
