SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended July 9, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to ________________
COMMISSION FILE NUMBER 0-314
Pulaski Furniture Corporation
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation)
54-0594965
(IRS employer identification number)
P.O. Box 1371, Pulaski, Virginia
(Address of principal executive offices)
24301
(Zip Code)
703-980-7330
(Registrant's telephone number)
Indicate by checkmark 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 (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:
2,837,082 shares of common stock outstanding as of August 18, 1995
<PAGE>
Pulaski Furniture Corporation
Index
PART I: Financial Statements
Consolidated Condensed Balance Sheets as of
July 9, 1995 and October 30, 1994 . . . . . . . . . . . . . . . . 2
Consolidated Condensed Statements of Income
Three 4-week periods ended July 9, 1995
and July 10, 1994 . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income
Nine 4-week periods ended July 9, 1995
and July 10, 1994 . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
Nine 4-week periods ended July 9, 1995
and July 10, 1994 . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . 6
Management's Discussion and Analysis of the
Consolidated Condensed Statements of Income . . . . . . . . . . . 7
Exhibit 3 - Computation of Earnings per Share . . . . . . . . . . 8
PART II: Other Information and Signatures . . . . . . . . . . . . . 10
<PAGE>
Pulaski Furniture Corporation
Consolidated Condensed Balance Sheets
(in thousands)
July 9, October 30,
1995 1994
ASSETS ---------- ----------
Current assets:
Cash and cash equivalents $ 486 $ 1,088
Short-term investments 15 65
Accounts receivable, net 24,297 33,428
---------- ----------
24,798 34,581
Inventories:
Raw materials 16,832 14,651
Work-in-process 6,024 6,049
Finished goods 39,354 27,020
---------- ----------
62,210 47,720
Less LIFO reserve (15,392) (13,777)
---------- ----------
46,818 33,943
Prepaid expenses 97 465
Deferred income tax 493 493
Recoverable income tax 218
---------- -----------
Total current assets 72,424 69,482
Investments and other assets 1,176 1,235
Property, plant and equipment, net 39,616 41,069
Cash surrender value of life insurance 973 964
---------- ----------
Total assets $ 114,189 $ 112,750
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses:
Accounts payable $ 7,512 $ 8,544
Notes payable 13,000 8,000
Wages and commissions 605 2,396
Taxes withheld from employees 541 579
---------- ----------
21,658 19,519
Federal and state income taxes 757
Current portion of long-term debt 2,000 2,004
---------- ----------
Total current liabilities 23,658 22,280
Long-term notes payable 30,829 31,398
Deferred income taxes 3,804 3,871
Deferred compensation 2,047 1,938
Shareholders' equity
Common stock 5,974 6,084
Retained earnings 48,112 47,529
Unamortized restricted stock (235) (350)
---------- ----------
Total shareholders' equity 53,851 53,263
---------- ----------
Total liabilities and shareholders' equity $ 114,189 $ 112,750
========== ==========
<PAGE>
Pulaski Furniture Corporation
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
Three 4-week periods ended
July 9, July 10, Incr
1995 1994 (Decr) %
--------- --------- -------- ----
Net sales $ 30,236 $ 27,691 $ 2,545 9.2%
Costs and expenses
Cost of sales 25,703 22,606 3,097 13.7
Selling & administrative 4,754 4,240 514 12.1
---------- ---------- --------
Operating income (loss) (221) 845 (1,066) (126.2)
Other income and expenses
Interest expense 695 357 338 94.7
Interest income (4) (8) 4 50.0
---------- ---------- --------
Total 691 349 342 98.0
Income (loss) before income taxes (912) 496 (1,408) (283.9)
Provision for taxes on income (310) 177 (487) (275.1)
---------- ---------- --------
Net income (loss) $ (602) $ 319 $ (921) (288.7)
========== ========== ========
Weighted average number
of shares outstanding:
Primary 2,862,050 2,888,454
Assuming full dilution 2,862,050 2,888,454
Earnings (loss) per share:
Primary $(0.21) $0.11
Assuming full dilution $(0.21) $0.11
Cash dividends per share: $0.15 $0.14
See accompanying notes to financial statements.
<PAGE>
Pulaski Furniture Corporation
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
Nine 4-week periods ended
July 9, July 10, Incr
1995 1994 (Decr) %
--------- --------- -------- ----
Net sales $110,495 $ 92,742 $17,753 19.1%
Costs and expenses
Cost of sales 90,334 74,563 15,771 21.2
Selling & administrative 15,534 14,180 1,354 9.5
---------- ---------- --------
Operating income 4,627 3,999 628 15.7
Other income and expenses
Interest expense 1,818 1,048 770 73.5
Interest income (19) (41) 22 53.7
---------- ---------- --------
Total 1,799 1,007 792 78.6
Income before income taxes
and cumulative effect of
accounting change 2,828 2,992 (164) (5.5)
Provision for taxes on income 963 1,068 (105) (9.8)
---------- ---------- --------
Income before cumulative
effect of accounting change 1,865 1,924 (59) (3.1)
Cumulative effect of change
in accounting for income taxes 396
---------- ---------- --------
Net income $ 1,865 $ 2,320 $ (455) (19.6)
========== ========== ========
Weighted average number
of shares outstanding:
Primary 2,861,932 2,890,246
Assuming full dilution 2,861,932 2,890,246
Earnings per share before cumulative
effect of accounting change:
Primary $0.65 $0.66
Assuming full dilution $0.65 $0.66
Earnings per share of cumulative
effect of accounting change:
Primary $0.14
Assuming full dilution $0.14
Earnings per share after cumulative
effect of accounting change:
Primary $0.65 $0.80
Assuming full dilution $0.65 $0.80
Cash dividends per share: $0.45 $0.42
See accompanying notes to financial statements.
<PAGE>
Pulaski Furniture Corporation
Consolidated Statements of Cash Flows
Nine 4-week periods ended
July 9, July 10,
1995 1994
------------ ------------
OPERATING ACTIVITIES
Net income $ 1,865,043 $ 1,924,129
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for depreciation 3,438,046 2,622,669
Provision for deferred income taxes (67,500) (67,500)
Provision for deferred compensation 109,435 213,505
Proportionate share in loss of
investee company 58,902 4,067
Changes in operating assets and liabilities:
Decrease in trade receivables 9,130,714 7,589,344
Increase in inventories (12,875,765) (9,007,221)
Decrease in prepaid expenses 368,832 166,457
Decrease in accounts payable and
other accrued expenses (2,859,854) (2,038,065)
Decrease in federal and state
income taxes payable (975,021) (1,006,205)
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (1,807,168) 401,180
INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,984,567) (11,416,870)
Sale of investments 50,000 142,000
Increase in cash surrender value (9,704) (143,505)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (1,944,271) (11,418,375)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 4,941 153,941
Payment of dividends (1,281,727) (1,200,020)
Increase (decrease) in notes payable 5,000,000 (2,000,000)
Increase (decrease) in long-term debt (573,824) 11,491,944
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,149,390 8,445,865
------------ ------------
Decrease in cash and cash equivalents (602,049) (2,571,330)
Cash and cash equivalents at beginning of period 1,088,322 2,697,707
------------ ------------
Cash and cash equivalents at end of period $ 486,273 $ 126,377
============ ============
See accompanying notes to financial statements.
<PAGE>
Pulaski Furniture Corporation
Notes to Consolidated Condensed Financial Statements
See notes to financial statements included in the Corporation's 10-K for the
year ended October 30, 1994, for information concerning accounting policies,
long-term debt, stock options and other financial matters.
On February 11, 1992, the Financial Accounting Standards Board issued
Statement No. 109, "Accounting for Income Taxes." Under the new rules,
deferred taxes are recognized using the liability method, whereby tax rates
are applied to cumulative temporary differences based on when and how they
are expected to affect the tax return. Deferred tax assets and liabilities
are adjusted for tax rate changes. The Corporation adopted the new method
in the quarter ending January 23, 1994, and has shown the initial application
as a cumulative effect of a change in accounting principle. The Corporation
has determined that adoption of Statement 109 decreased the deferred tax
liability by approximately $396,000 but had no cash impact. There have been
no material changes in financial matters since October 30, 1994.
In the opinion of the Corporation, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal accruals) necessary to present fairly the financial position as of
July 9, 1995 and October 30, 1994, and the results of operations and
cash flows for the three and nine 4-week periods ended July 9, 1995 and
July 10, 1994.
The results of operations for the three and nine 4-week periods ended July
9, 1995 and July 10, 1994 are not necessarily indicative of the results
to be expected for the full year.
<PAGE>
Pulaski Furniture Corporation
Management's Discussion and Analysis of the
Consolidated Condensed Statements of Income
Comparison of Third Quarter 1995 to Third Quarter 1994 and Three Quarters of
1995 to Three Quarters of 1994 (See pages 3 and 4 for dollar and percent
changes.)
----------------------------------------------------------------------------
The increase in sales for the 1995 third quarter was due primarily to the
additional capacity added by the Corporation's new factory and to higher
average selling prices. The increase in sales for the three quarters of
1995 was due primarily to the additional capacity, higher average selling
prices, and to increased demand in the first two quarters of 1995.
The higher cost of sales, as a percentage of sales, for the third quarter
and three quarters of 1995 was due to the operating inefficiencies of
reduced production, primarily in the third quarter. Production was
reduced because of the industrywide slowdown in household furniture sales.
The decrease in selling and administrative expenses, as a percentage of
sales, for the three quarters of 1995 was due to lower expenses in the two
preceding quarters. The decrease in earnings for the 1995 third quarter
was due primarily to a decrease in demand resulting from the industrywide
slowdown in household furniture sales. The decrease in demand required
substantial production downtime. Demand for the Corporation's products has
improved, but substantial downtime is still scheduled in most facilities.
Interest expense increased in 1995 due to the higher levels of outstanding
debt and to higher interest rates.
Capital Resources and Liquidity
--------------------------------
Working capital provided by operations was $5,404,000 for the three quarters
ended July 9, 1995 compared to $4,483,000 for the three quarters ended July
10, 1994. Net working capital increased by $1,564,000 during the first three
quarters of 1995 compared with an increase of $3,415,000 in the first three
quarters of 1994.
During the third quarter of 1995, the Corporation's average amount of
outstanding indebtedness for borrowed money was $39,766,307. The weighted
average rate of interest on such indebtedness was approximately 6.3% per
annum.
<PAGE>
Pulaski Furniture Corporation
Part I - Exhibit 3
Computation of Earnings Per Share
Three 4-week periods ended
July 9, July 10,
1995 1994
------------ ------------
PRIMARY:
Average shares outstanding 2,837,882 2,852,947
Dilutive stock options - based
on treasury stock method
using average market price 8,593 22,265
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 15,575 13,242
------------ ------------
TOTAL 2,862,050 2,888,454
------------ ------------
Net income (loss) $ (601,829) $ 318,528
============ ============
Net income (loss) per share: $(0.21) $ 0.11
======= =======
FULLY DILUTED:
Average shares outstanding 2,837,882 2,852,947
Dilutive stock options - based on
treasury stock method using the
greater of year-end market value
or average market value 8,593 22,265
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 15,575 13,242
------------ ------------
TOTAL 2,862,050 2,888,454
------------ ------------
Net income (loss) per share: $(0.21) $ 0.11
======= =======
<PAGE>
Pulaski Furniture Corporation
Part I - Exhibit 3 (continued)
Computation of Earnings Per Share
Nine 4-week periods ended
July 9, July 10,
1995 1994
------------ ------------
PRIMARY:
Average shares outstanding 2,843,474 2,855,379
Dilutive stock options - based
on treasury stock method
using average market price 9,322 27,351
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 9,136 7,516
------------ ------------
TOTAL 2,861,932 2,890,246
------------ ------------
Net income before cumulative effect
of accounting change $ 1,865,043 $ 1,528,037
Cumulative effect of accounting change 396,092
------------ ------------
Net income after cumulative effect
of accounting change $ 1,865,043 $ 1,924,129
============ ============
Net income per share:
Before cumulative effect of accounting change $ 0.65 $ 0.52
Cumulative effect of accounting change 0.14
------- -------
After cumulative effect of accounting change $ 0.65 $ 0.66
======= =======
FULLY DILUTED:
Average shares outstanding 2,843,474 2,855,379
Dilutive stock options - based on
treasury stock method using the
greater of year-end market value
or average market value 9,322 27,351
Dilutive shares under Employee
Stock Purchase Plan - based
on average shares issuable 9,136 7,516
------------ ------------
TOTAL 2,861,932 2,890,246
------------ ------------
Net income per share:
Before cumulative effect of accounting change $ 0.65 $ 0.52
Cumulative effect of accounting change 0.14
------- -------
After cumulative effect of accounting change $ 0.65 $ 0.66
======= =======
<PAGE>
Pulaski Furniture Corporation
Part II - Other Information
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PULASKI FURNITURE CORPORATION
Date: August 18, 1995 /s/ Bernard C. Wampler
---------------------------------------
Bernard C. Wampler
(Chairman and Chief Executive Officer)
/s/ Jason A. Gibbs
---------------------------------------
Jason A. Gibbs, Controller
(Principal Accounting Officer)
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<ALLOWANCES> 0
<INVENTORY> 46818
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<PP&E> 84182
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<BONDS> 30829
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<CGS> 25703
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<INCOME-PRETAX> (912)
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<NET-INCOME> (602)
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