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 June 30, 1996
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 Number)
0-15214
(Commission File Number)
623 E. Emory Road, P.O. Box 59043, Knoxville, Tennessee
37950-9043
(Address of principal executive offices)
(423) 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 12, 1996 there were 3,784,657 shares of common
stock outstanding.
<PAGE>
<TABLE>
PART I
ITEM 1
FINANCIAL INFORMATION
PLASTI-LINE, INC.
Consolidated Condensed Balance Sheets
June 30, 1996 (1996) and December 31, 1995 (1995)
(in thousands)
<CAPTION>
Assets 1996 1995
---- ----
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10 $ 10
Receivables, net 22,349 27,050
Inventories 30,169 31,564
Prepaid expenses 1,130 1,080
Deferred income taxes 1,876 1,876
------ ------
Total current assets 55,534 61,580
Net property and equipment 13,457 13,854
Goodwill 1,454 1,508
Other assets 218 208
------ ------
Total Assets $ 70,663 $ 77,150
====== ======
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
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<TABLE>
Liabilities and Stockholders' Equity
<CAPTION>
1996 1995
---- ----
(Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Current installments of long-term debt $ 745 $ 1,723
Accounts payable 10,720 14,660
Accrued liabilities 5,642 5,704
Income taxes payable 877 708
Customer deposits and deferred revenue 6,212 5,673
------ ------
Total current liabilities 24,196 28,468
Long-term debt, excluding
current installments 20,149 23,575
Deferred income taxes 1,123 1,123
Deferred liabilities 93 93
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
3,784,657 shares 4 4
Additional paid-in-capital 2,803 2,729
Notes receivable, common stock (169) (169)
Retained earnings 22,464 21,327
------ ------
Total Stockholders' Equity 25,102 23,891
------ ------
Total Liabilities and
Stockholders' Equity $ 70,663 $ 77,150
====== ======
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
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<TABLE>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Operations
(in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1996 July 2, 1995 June 30, 1996 July 2, 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 32,310 $ 22,512 $ 62,452 $ 42,568
Cost of sales 26,973 18,358 52,132 35,044
------ ------ ------ ------
Gross profit 5,337 4,154 10,320 7,524
Selling, general, and
administrative
expenses 3,799 3,720 7,592 6,814
------ ------ ------ ------
Operating income 1,538 434 2,728 710
Interest income 3 12 5 12
Interest expense 449 230 902 445
------ ------ ------ ------
Income before
income taxes 1,092 216 1,831 277
Income taxes 415 96 696 130
------ ------ ------ ------
Net income $ 677 $ 120 $ 1,135 $ 147
====== ====== ====== ======
Net income per share $ 0.18 $ 0.03 $ 0.30 $ 0.04
====== ====== ====== ======
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
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<TABLE>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Cash Flows
Six months ended June 30, 1996 (1996) and July 2, 1995
(1995)
(Unaudited)
(in thousands)
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,135 $ 147
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,061 804
Loss on sale of investments in marketable securities - 6
Provision for losses on accounts receivable 114 24
Decrease in net receivables 4,587 2,104
Decrease (increase) in inventories 1,395 (4,107)
Decrease (increase) in prepaid expenses (50) 208
Decrease in other assets (40) -
Increase (decrease) in accounts payable (3,940) 1,463
Increase (decrease) in accrued liabilities (55) 573
Increase in income taxes payable 169 158
Increase in customer deposits
and deferred revenue 539 2,554
------ ------
Net cash provided (used) by operating activities 4,915 3,934
------ ------
Cash flows from investing activities:
Purchases of property and equipment (580) (1,636)
Proceeds from the sale and maturity of investments - 593
------ ------
Net cash used by investing activities (580) (1,043)
------ ------
Cash flows from financing activities:
Net payments on line of credit (4,377) (2,957)
Principal payments on long-term debt (34) (33)
Proceeds from sales of common stock 76 26
Payments of notes receivable - common stock - 73
------ ------
Net cash provided (used) by financing activities (4,335) (2,891)
------ ------
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of year 10 10
------ ------
Cash and cash equivalents at end of period $ 10 $ 10
====== ======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 904 $ 356
Income taxes 588 25
Noncash transactions:
Amortization of compensation from restricted stock $ 7 $ 24
====== ======
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
<PAGE>
PLASTI-LINE, INC.
Notes to Consolidated Condensed Financial Statements
1.Condensed Consolidated Financial Statements
The consolidated condensed balance sheet as of June 30,
1996, and the consolidated condensed statements of
operations for the three and six months ended June 30,
1996 and July 2, 1995, and the consolidated condensed
statements of cash flows for the six months ended June
30, 1996 and July 2, 1995, 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 June 30, 1996, 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
consolidated condensed financial statements be read in
conjunction with the financial statements and notes
thereto included in the Company's 1995 Annual Report to
Stockholders. The results of operations for the period
ended June 30, 1996, 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 subsidiaries, American Sign
& Marketing Services, Inc., and Carter-Miot, Inc. All
significant intercompany accounts and transactions have
been eliminated.
3.Inventories
Inventories consist of the following:
June 30, 1996 December 31, 1995
------------- -----------------
(in thousands)
Finished goods $ 21,101 $ 22,008
Work-in-process 3,831 4,289
Raw materials 7,300 7,330
Less: LIFO inventory reserve (2,063) (2,063)
------ ------
Total net inventory $ 30,169 $ 31,564
====== ======
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 June 30, 1996, were
3,801,458.
<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 June 30, 1996 (1996 Quarter), compared to the
consolidated results of operations for the three months
ended July 2, 1995 (1995 Quarter):
The Company's sales in the second quarter of 1996 increased
43.5% to $32,310,000 from $22,512,000 for the same period
last year. Second quarter 1996 sales were higher than prior
year due to sales of $3,093,000 from our new subsidiary,
Carter-Miot, Inc., as well as stronger volume across all of
our businesses. Sales for the Company's Plasti-Line East
operations were particularly stronger in the fast food and
automotive customer groups.
The Company's gross profit margin during the 1996 Quarter
(16.5%) was lower than the margin during the 1995 Quarter
(18.5%). The decrease is primarily due to an unfavorable
sales mix and unfavorable manufacturing performance at the
Company's Knoxville and California plants
Selling, general, and administrative expenses were
$3,799,000 for the 1996 Quarter versus $3,720,000 for the
1995 Quarter, a 2.1% increase. The increase is primarily
due to the addition of our Carter-Miot subsidiary as well as
the impact of the higher sales. Expenses decreased 4.8
percentage points versus the 1995 Quarter to 11.7% of sales.
Operating income was $1,538,000 and $434,000 for the 1996
and 1995 Quarters, respectively. The 254.4% increase is due
to sales from our new subsidiary as well as the increase in
sales volume
Net income for the quarter was $677,000 as compared to
$120,000 for the second quarter of 1995. Net income per
share for the quarter was $0.18 as compared to $0.03 for the
second quarter of 1995.
Net interest expense increased to $446,000 for the 1996
Quarter compared to $218,000 in the 1995 Quarter. This was
primarily the result of higher average debt balances.
B. Consolidated results of operations for the six months
ended June 30, 1996, as compared to the consolidated results
of operations for the six months ended July 2, 1995:
Net sales were $62,452,000 for the first six months of 1996
as compared to $42,568,000 for the first six months of 1995,
a 46.7% increase. The increase is due to sales from our
new subsidiary, Carter-Miot, Inc., with $6,321,000 in 1996.
In addition, all other business units recorded stronger
sales. Sales volumes were particularly strong in the
automotive and fast food customer groups of the Company's
Plasti-Line East operations.
Cumulative gross profit as a percentage of sales at the end
of the second quarter of 1996 (16.5%) is lower than the
margin for the same period in 1995 (17.7%). The decrease is
primarily a result of an unfavorable sales mix as well as
unfavorable manufacturing performance at the Company's
Knoxville and California plants.
Selling, general and administrative expenses for the first
six months of 1996 were $7,592,000 as compared to $6,814,000
for the same period in 1995, an increase of 11.4%. The
increase is due to the expenses of the Company's new
subsidiary, Carter-Miot as well as the impact of higher
sales volume. Selling, general and administrative expenses
as a percentage of sales for 1996 is 12.2% as compared to
16.0% for 1995. The decrease is due to non-recurring
expenses incurred in 1995 in regard to a company-wide
business reengineering project which was finished in the
fourth quarter of 1995.
<PAGE>
Operating income for the first six months of 1996 was
$2,728,000 as compared to $710,000 during the same period in
1995, an increase of $2,018,000. The increase is primarily
due to higher sales.
Net interest expense increased to $897,000 for the first six
months of 1996 as compared to $433,000 for the same period
in 1995. This was primarily the result of higher average
debt balances combined with higher variable interest rates
in 1996.
Liquidity and Capital Resources
The Company has working capital of $31,338,000, a decrease
of $1,774,000 from the amount of working capital at
December 31, 1995, primarily due to a decrease in net
receivables. Funds of $4,915,000 were provided by
operating activities. Decreases in receivables was the
primary source of funds.
Investing activities used $580,000 as a result of property
and equipment purchases. Financing activities used
$4,335,000 primarily as a result of decreased net borrowings
under the Company's line of credit during the 1996 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.
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.
<PAGE>
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 1996 Annual Meeting of Stockholders was held
on April 16, 1996.
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
James R. Martin
J. Hoyle Rymer
James F. Smith, Jr.
H. Mitchell Watson, Jr.
The vote on the election of the above was at least:
For 3,188,068 shares
Against - shares
Abstain 93,754 shares
Withheld 501,335 shares
c) A proposal was made to amend the 1991 Stock
Incentive Program to increase the number of shares
available for issue.
The vote on the proposal was:
For 2,828,065 shares
Against 336,335 shares
Abstain 1,810 shares
Withheld 619,947 shares
The total number of shares of Plasti-Line, Inc. common stock, $.001 par value,
outstanding as of March 14, 1996, the record date for the Annual Meeting was
3,783,157 shares.
Item 5. Other Information:
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 June 30, 1996.
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 13, 1996
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</TABLE>
