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 September 29, 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 November 12, 1996 there were 3,785,157 shares of
common stock outstanding.
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PART I
ITEM 1
FINANCIAL INFORMATION
PLASTI-LINE, INC.
Consolidated Condensed Balance Sheets
September 29, 1996 (1996) and December 31, 1995 (1995)
(in thousands)
Assets
------
1996 1995
--------- --------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10 $ 10
Receivables, net 23,356 27,050
Inventories 28,476 31,564
Prepaid expenses 948 1,080
Deferred income taxes 1,876 1,876
------ ------
Total current assets 54,666 61,580
Net property and equipment 13,209 13,854
Goodwill 1,428 1,508
Other assets 212 208
------ ------
Total Assets $ 69,515 $ 77,150
====== ======
See accompanying notes to consolidated condensed financial
statements.
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Liabilities and Stockholders' Equity
------------------------------------
1996 1995
---------- ---------
(Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Current installments of
long-term debt $ 745 $ 1,723
Accounts payable 10,336 14,660
Accrued liabilities 6,395 5,704
Income taxes payable 896 708
Customer deposits and
deferred revenue 7,539 5,673
------ ------
Total current liabilities 25,911 28,468
Long-term debt, excluding current
installments 16,218 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 3,785,157 shares 4 4
Additional paid-in-capital 2,804 2,729
Notes receivable, common stock (139) (169)
Retained earnings 23,501 21,327
------ ------
Total Stockholders' Equity 26,170 23,891
------ ------
Total Liabilities and
Stockholders' Equity $ 69,515 $ 77,150
====== ======
See accompanying notes to consolidated condensed financial
statements.
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<CAPTION>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Operations
(in thousands, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
Sept.29,1996 Oct.1,1995 Sept.29,1996 Oct.1,1995
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net sales $ 33,960 $ 22,402 $ 96,412 $ 64,970
Cost of sales 27,797 18,560 79,929 53,604
------ ------ ------ ------
Gross profit 6,163 3,842 16,483 11,366
Selling, general, and
administrative expenses 4,074 3,448 11,666 10,262
------ ------ ------ ------
Operating income 2,089 394 4,817 1,104
Interest income 3 12 7 24
Interest expense 419 204 1,320 649
------ ------ ------ ------
Income before income taxes 1,673 202 3,504 479
Income taxes 636 92 1,331 222
------ ------ ------ ------
Net income $ 1,037 $ 110 $ 2,173 $ 257
====== ====== ====== ======
Net income per share $ 0.27 $ 0.03 $ 0.57 $ 0.07
====== ====== ====== ======
See accompanying notes to consolidated condensed financial
statements.
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<CAPTION>
PLASTI-LINE, INC.
Consolidated Condensed Statements of Cash Flows
Nine months ended September 29, 1996 (1996) and October 1, 1995 (1995)
(Unaudited)
(in thousands)
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,173 $ 257
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,616 1,210
Loss on sale of investments in
marketable securities - 6
Provision for losses on accounts receivable 169 53
Decrease in net receivables 3,525 697
Decrease (increase) in inventories 3,088 (8,362)
Decrease in prepaid expenses 132 147
Increase in other assets (41) -
Increase (decrease) in accounts payable (4,324) 812
Increase in accrued liabilities 691 1,385
Increase in income taxes payable 188 237
Increase in customer deposits
and deferred revenue 1,866 5,862
------ ------
Net cash provided (used) by operating activities 9,083 2,304
------ ------
Cash flows from investing activities:
Purchases of property and equipment (854) (2,163)
Proceeds from the sale and maturity of investments - 593
------ ------
Net cash used by investing activities (854) (1,570)
------ ------
Cash flows from financing activities:
Net payments on line of credit (8,289) (793)
Principal payments on long-term debt (46) (49)
Proceeds from sales of common stock 70 26
Payments of notes receivable - common stock 36 82
----- ------
Net cash used by financing activities (8,229) (734)
------ ------
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 $ 1,344 $ 649
Income taxes 1,109 37
Noncash transactions:
Amortization of compensation
from restricted stock $ 5 $ 24
====== ======
See accompanying notes to consolidated condensed
financial statements.
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PLASTI-LINE, INC.
Notes to Consolidated Condensed Financial Statements
1.Condensed Consolidated Financial Statements
The consolidated condensed balance sheet as of September
29, 1996, and the consolidated condensed statements of
operations for the three and nine months ended September
29, 1996 and October 1, 1995, and the consolidated
condensed statements of cash flows for the nine months
ended September 29, 1996 and October 1, 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 September 29, 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 September 29, 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:
September 29, 1996 December 31, 1995
------------------ -----------------
(in thousands)
Finished goods $ 19,610 $ 22,008
Work-in-process 4,168 4,289
Raw materials 6,761 7,330
Less: LIFO inventory reserve (2,063) (2,063)
------ ------
Total net inventory $ 28,476 $ 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 September 29, 1996, were
3,803,375.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A. Consolidated results of operations for the three months
ended September 29, 1996 (1996 Quarter), compared to the
consolidated results of operations for the three months
ended October 1, 1995 (1995 Quarter):
The Company's sales in the third quarter of 1996 increased
51.6% to $33,960,000 from $22,402,000 for the same period
last year. Higher sales to McDonald's, mainly due to the
successful introduction of the Triview drive-thru menuboard
system, combined with increased volumes to Burger King,
represent the food service sales gains versus 1995.
Automotive sales remain strong largely due to sales from the
General Motors Chevrolet facilities identification program
under which we are assisting in the reidentification of
Chevrolet dealerships across the country.
The Company's gross profit margin during the 1996 Quarter
(18.1%) was higher than the margin during the 1995 Quarter
(17.2%). The increase is primarily due to a favorable
sales mix combined with increased sales volume.
Selling, general, and administrative expenses were
$4,074,000 for the 1996 Quarter versus $3,448,000 for the
1995 Quarter, a 18.2% 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 3.4
percentage points versus the 1995 Quarter to 12.0% of sales.
Operating income was $2,089,000 and $394,000 for the 1996
and 1995 Quarters, respectively. Net income for the quarter
was $1,037,000 as compared to $110,000 for the third quarter
of 1995. Net income per share for the quarter was $0.27 as
compared to $0.03 for the third quarter of 1995. The
increases are primarily a result of higher sales.
Net interest expense increased to $416,000 for the 1996
Quarter compared to $192,000 in the 1995 Quarter. This was
primarily the result of higher average debt balances.
B. Consolidated results of of operations for the nine months
ended September 29, 1996, as compared to the consolidated
results of operations for the nine months ended October 1,
1995:
Net sales were $96,412,000 for the first nine months of 1996
as compared to $64,970,000 for the first nine months of
1995, a 48.4% increase. The increase is due to sales from
our new subsidiary, Carter-Miot, Inc., as well as higher
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 third quarter of 1996 (17.1%) is relatively flat
compared to the margin for the same period in 1995 (17.5%).
The slight decrease in margin percent to sales is primarily
due to unfavorable manufacturing performance at the Company's
Knoxville and California plants.
Selling, general and administrative expenses for the first
nine months of 1996 were $11,666,000 as compared to
$10,262,000 for the same period in 1995, an increase of
13.7%.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 12.1% as compared to
17.5% for 1995. The decrease in percent to sales 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.
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Operating income for the first nine months of 1996 was
$4,817,000 as compared to $1,104,000 during the same period
in 1995, an increase of $3,713,000. The increase is
primarily due to higher sales.
Net interest expense increased to $1,313,000 for the first
nine months of 1996 as compared to $625,000 for the same
period in 1995. This was primarily the result of higher
average debt balances.
Liquidity and Capital Resources
The Company has working capital of $28,755,000, a decrease
of $4,357,000 from the amount of working capital at
December 31, 1995, primarily due to decreases in net
receivables and inventories. Funds of $9,083,000 were
provided by operating activities. Decreases in receivables
and inventories were the primary source of funds.
Investing activities used $854,000 as a result of property
and equipment purchases. Financing activities used
$8,229,000 primarily as a result of payments on the
Company's line of credit.
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.
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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
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 September 29, 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)
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