SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
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AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 28, 1999
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
(I.R.S. Employer Identification Number)
P. O. Box 1371, Pulaski, Virginia
(Address of principal executive offices)
24301
(Zip Code)
540-980-7330
(Registrant's telephone number)
<PAGE>
By Current Report on Form 8-K, dated February 28, 1999 and filed with the
Securities Exchange Commission on March 12, 1999 (the "Original Form 8-K"),
Pulaski Furniture Corporation (the "Registrant") reported the acquisition of
Dawson Heritage Furniture Company, Inc. ("DHFC"). Item 7 of the Original Form
8-K is hereby amended and restated in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Pages F1-F8 contain Audited Financial Statements of Dawson Heritage
Furniture Company, Inc., as of and for the year ended December 31, 1998.
(B) PRO FORMA FINANCIAL INFORMATION
Pages F9-F12 contain Unaudited Pro Forma Condensed Consolidated Financial
Information of Pulaski Furniture Corporation and its subsidiaries which
reflect the discussed acquisition.
(C) EXHIBITS
2 Asset Purchase Agreement dated as of February 24, 1999
(incorporated by reference to Exhibit 2.1 of Registrant's
Report on Form 8-K filed March 12, 1999).
23 Consent of Myers, Baker, Rife and Denham.
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 hereunto duly authorized.
May 7, 1999
PULASKI FURNITURE CORPORATION
BY: /s/ John G. Wampler, President
--------------------------------
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2 Asset Purchase Agreement dated February 24, 1999, by and among Dawson
Furniture Company, Inc., and Dawson Heritage Furniture Company, Inc.,
James S. Dawson, and Jack E. Dawson.
23 Consent of Myers, Baker, Rife and Denham.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
We have audited the accompanying balance sheet of Dawson Heritage Furniture
Company, Inc. (a corporation) as of December 31, 1998, and the related statement
of operations and retained earnings, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dawson Heritage Furniture
Company, Inc. as of December 31, 1998, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Myers, Baker, Rife and Denham
Certified Public Accountants
Webb City, Missouri
January 26, 1999
F-1
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Balance Sheet
December 31, 1998
ASSETS
Current assets
Cash $ 3,950,024
U.S. Treasury notes 4,776,239
Interest receivable 64,975
Trade accounts receivable, less allowance of $117,344 2,983,322
Due from shareholder 16,535
Inventories 2,580,902
Deferred taxes 123,000
Total current assets 14,494,997
Property, plant and equipment
Land 163,717
Office equipment 179,843
Autos and trucks 48,858
Manufacturing equipment 1,314,132
Leasehold improvements 116,906
Buildings 1,483,557
Total 3,307,013
Less accumulated depreciation 1,285,002
Net book value 2,022,011
Total assets $16,517,008
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable, trade $ 669,847
Sales tax payable 529
Payroll taxes payable 39,307
Income taxes payable 11,482
Accrued expenses 566,124
Total current liabilities 1,287,289
Deferred taxes 13,000
Stockholder's equity
Common stock, $1.00 par value;
authorized 30,000 shares, issued
and outstanding shares, 7,500 7,500
Retained earnings 15,209,219
Total stockholder's equity 15,216,719
Total liabilities and stockholder's equity $16,517,008
See accompanying Notes to Financial Statements.
F-2
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Statement of Operations and Retained Earnings
For the year ended December 31, 1998
Net sales $19,262,726
Cost of goods sold 14,594,825
Gross profit 4,667,901
Selling expense 415,517
General and administrative expenses 1,942,399
Operating income 2,309,985
Joint venture distribution of income (242,154)
Other income 526,599
Income before income taxes 2,594,430
Provision for income taxes 934,232
Net income 1,660,198
Retained earnings, beginning of year 13,549,021
Retained earnings, end of year $15,209,219
See accompanying Notes to Financial Statements.
F-3
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Statement of Cash Flows
For the year ended December 31, 1998
Cash flows from operating activities:
Net income (loss) $1,660,198
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 169,368
Provision for deferred income taxes (60,000)
(Gain)loss on asset disposal (21,017)
Changes in:
Interest receivable (11,742)
Accounts receivable, trade (687,877)
Due from shareholder (16,535)
Inventories (211,624)
Accounts payable 72,419
Sales tax payable 69
Payroll taxes payable 39,123
Income taxes payable (602,338)
Accrued expenses 107,320
Total adjustments (1,222,834)
Net cash provided by (used in) operating activities 437,364
Cash flows from investing activities:
Purchase of investments, net (249,850)
Purchase of property, plant and equipment, net (319,212)
Proceeds from sale of equipment 21,635
Net cash used in investing activities (547,427)
Net increase (decrease) in cash (110,063)
Cash, beginning of year 4,060,087
Cash, end of year $3,950,024
See accompanying Notes to Financial Statements.
F-4
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Notes to Financial Statements
December 31, 1998
Note 1 - Summary of Significant Accounting Policies
This summary of significant accounting policies of Dawson Heritage
Furniture Company, Inc. (the Company) is presented to assist in understanding
the Company's financial statements. The financial statements and notes are
representations of the Company's management who are responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Nature of operations - The Company manufactures a diverse line of wooden
furniture and cabinets in facilities located in Webb City and Carl Junction,
Missouri. These products are sold to retailers for nationwide distribution.
Cash and cash equivalents - For purposes of the statement of cash flows,
the Company considers all short-term debt securities purchased with a maturity
of three months or less to be cash equivalents.
Investments - Investments consist of U.S. Treasury Notes and are classified
as "available for sale". These investments are carried in the financial
statements at cost, which approximates fair value.
Inventories - Inventories are stated at the lower of cost or market. Cost
is determined by the first-in, first-out method and market represents the lower
of replacement cost or estimated net realizable value. Inventories consisted
of the following:
Raw materials $ 898,187
Work in process 121,715
Finished goods 1,552,612
$2,572,514
Property, Plant and Equipment - Property, plant and equipment are carried at
cost. Depreciation of property, plant and equipment is computed by use of
accelerated methods based on the following estimated lives:
Office equipment 5-10 years
Autos and trucks 3-7 years
Manufacturing equipment 5-10 years
Leasehold improvements 10-40 years
Buildings 7-40 years
When assets are retired, or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any gain or loss
is reflected in current operations.
Maintenance and repairs are charged to operations when incurred. Costs of
betterments and renewals are capitalized and depreciated over their estimated
useful lives.
F-5
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Notes to Financial Statements
December 31, 1998
(Continued)
Note 1 - Summary of Significant Accounting Policies (continued)
Revenue recognition - Revenue from sales is recognized when merchandise is
placed with a common carrier for delivery. An allowance is made for anticipated
returns against trade receivables.
Income Taxes - Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related to the differences between the basis of the Company's
assets and liabilities for financial reporting and income taxes under the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes".
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates. Any adjust-
ments applied to estimated amounts are recognized in the year in which such
adjustments are determined.
Note 2 - Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". A summary of the provision for income taxes
follows:
Currently payable $994,232
Deferred (benefit) (60,000)
Provision for income taxes $934,232
Net deferred tax assets and liabilities in the accompanying balance sheet
include the following components:
Deferred tax assets - short-term:
Temporary differences - principally Section
263A expenses, allowance for doubtful accounts
and other accrued expenses $123,000
Deferred tax liabilities - long-term:
Temporary differences - principally asset
depreciation and amortization $13,000
F-6
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Notes to Financial Statements
December 31, 1998
(Continued)
Note 2 - Income Taxes (continued)
A reconciliation of financial statement income to taxable income follows:
Income before income taxes $2,586,042
Book to tax adjustments:
Accelerated depreciation (36,158)
Bad debts 117,344
IRC Sec. 263A Inventory adjustment 21,624
Obsolete inventory allowance 66,000
Gain on asset disposal in excess of book 3,335
Other adjustments 1,125
Income subject to Federal and state income tax $2,759,312
Note 3 - Profit Sharing Retirement Plan
The Company sponsors a pension and profit sharing plan covering substantially
all full-time employees. Contributions are determined by the Company each year,
however, contributions can not exceed 15% of each covered employees salary.
Contributions totaled $220,060 in 1998.
Note 4 - Accrued Expenses
Profit sharing payable $220,060
Sales commissions payable 95,000
Joint venture distribution payable 242,154
Other payables 8,910
$566,124
Note 5 - Supplemental Disclosures of Cash Flow Information
Cash paid during the year for income taxes $1,596,570
Note 6 - Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of temporary cash investments and trade
accounts receivable.
a) The Company maintains its cash balances in one financial institution
located in Webb City, Missouri. The balances are insured by the Federal
Deposit Insurance Corporation up to $100,000. At December 31, 1998, the
Company's uninsured cash balances total $4,661,000.
b) One major customer, J.C. Penney, represents 47% of the Company's sales
and approximately 42% of its year-end receivable balance.
c) Concentration of credit risk with respect to the remaining trade
receivables is limited due to the large number of customers comprising
the Company's remaining customer base and their dispersion across
different geographic locations. The Company performs ongoing credit
evaluations of its customers' financial condition and generally requires
no collateral.
F-7
<PAGE>
Dawson Heritage Furniture Company, Inc.
Webb City, Missouri
Notes to Financial Statements
December 31, 1998
(Continued)
Note 7 - Related Pary Transactions
The following transactions occurred between the Company and related parties:
a) The Company rents a facility in Webb City, Missouri, from a shareholder in
the amount of $25,000 annually. The lease expires December 31, 2002.
b) The Company purchased approximately $1,782,115 of inventory from American
Midwest Furniture Company in 1998. The Company and American Midwest
Furniture Company have a common stockholder. Accounts payable include
$401,520 due to American Midwest Furniture Company at December 31, 1998.
c) The Company transferred company owned vehicles to shareholders in 1998.
These vehicles were transferred at estimated trade-in value. An amount of
$16,535 was recorded as due from shareholder and a gain on the disposal
of these assets in the amount of $15,917 was recorded on the Company's
financial statements.
Note 8 - Subsequent Event
The Company has reached terms of an asset sales agreement with Pulaski
Furniture Corporation. The Company will sell substantially all of the assets,
except for cash and investments, and liabilities to Pulaski Furniture Corp-
oration. This agreement, valued at approximately $14,800,000, is expected to
close February 28, 1999.
Per the agreement, Pulaski and the Company agreed to share the Company's
profits from November 1, 1998 through the date of closing. The portion of
income due to Pulaski Furniture Corporation at December 31, 1998 is $242,154.
The Company has entered an agreement to build a 200' x 500' x 14' metallic
building on land adjacent to the production facilities for a total price of
$826,664.
Note 9 - Year 2000 Issues - Unaudited
The Company anticipates no issues involving Y2K and no material expenditures
are necessary for continuing operations.
F-8
<PAGE>
The following Unaudited Pro Forma Condensed Consolidated Financial Statements
have been prepared using the purchase method of accounting for the Dawson
Heritage Furniture Company, Inc. ("DHFC") acquisition, whereby the total cost
is allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their respective fair values as of the acquisition date.
For purposes of the Unaudited Pro Forma Condensed Consolidated Financial
Statements, such allocations have been made based uponcurrently available
information and management's estimates.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to
the acquisition of DHFC as if the transaction had occurred on January 24, 1999.
The Unaudited Pro Forma Condensed Consolidated Financial Statements of Income
give effect to the acquisition of DHFC as if the transaction had occurred at
the beginning of the periods presented.
The Unaudited Pro Forma Condensed Consolidated Statement of Income for the
year ended November 1, 1998 is based on the respective audited financial
statements for the fiscal year ended November 1, 1998 of the Registrant and
the fiscal year ended December 31, 1998 of DHFC.
The Unaudited Pro Forma Condensed Consolidated Statement of Income for the
quarter ended January 24, 1999 is based on the respective unaudited financial
statements for the quarter ended January 24, 1999 of the Registrant and the
fourth fiscal quarter ended December 31, 1998 of DHFC.
The Unaudited Pro Forma Condensed Consolidated Financial Statements do not
purport to represent what the results of operations or financial position of
the Registrant would actually have been if the acquisition had occurred on
such dates or to project the results of operations or financial position of
the Registrant for any future date or period.
F-9
<PAGE>
PULASKI FURNITURE CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
1/24/99 12/31/98
Pulaski DHFC Adjustments Pro Forma
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 182 $ 8,726 $ (6,874) a,c $ 2,034
Accts receivable (net) 32,036 2,983 (804) a 34,215
Inventories 39,389 2,581 155 a 42,125
Prepaid expenses 462 82 544
Other 687 123 (123) b 810
-------- -------- ---------- ---------
Total current assets 72,756 14,495 (7,646) 79,606
Property, plant and
equipment (net) 34,718 2,022 2,966 b 39,706
Other 2,064 0 2,064
Goodwill 0 0 6,982 b 6,982
-------- -------- ---------- ---------
Total assets $109,538 $ 16,517 $ 2,303 $ 128,358
======== ======== ========== =========
LIABILITIES AND
STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable, trade $ 8,171 $ 670 $ 540 a $ 9,381
Short-term notes payable 6,000 0 6,000
Current portion of long term debt 2,000 0 2,000
Wages and commissions 1,012 95 1,017
Payroll taxes payable 620 39 659
Income taxes payable 663 11 674
Other accrued expenses 1,464 472 (7) a 1,929
-------- -------- ---------- ---------
Total current liabilities 19,930 1,287 533 21,750
Long-term debt 23,330 0 17,000 a 40,330
Deferred compensation 2,792 0 2,792
Deferred income taxes 3,509 13 (13) b 3,509
-------- -------- ---------- ---------
Total liabilities 49,561 1,300 17,520 68,381
Stockholder's equity
Common stock 6,964 8 (8) b 6,964
Restricted stock (742) 0 (742)
Retained earnings 53,755 15,209 (15,209) b 53,755
-------- -------- ---------- ---------
Total stockholder's equity 59,977 15,217 (15,217) 59,977
-------- -------- ---------- ---------
Total liabilities and
stockholder's equity $109,538 $ 16,517 $ 2,303 $ 128,358
======== ======== ========== =========
</TABLE>
a - Reflects impact of the sources and uses of funds related to Pulaski's cash
and debt from the financing of the DHFC acquistion.
b - Reflects the estimated allocation of the purchase price for the acquisition
of DHFC's identifiable assets and liabilities based upon estimates of their
fair value, with the remainder allocated to goodwill.
c - Cash and investments were excluded per the asset purchase agreement.
F-10
<PAGE>
PULASKI FURNITURE CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the quarter ended January 24, 1999
(in thousands except per share data)
<TABLE>
<CAPTION>
Pulaski DHFC Adjustments Pro Forma
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 40,942 $ 6,415 $ (953) a $ 46,404
Cost of sales 32,997 4,863 (928) a,c 36,931
-------- -------- ---------- ---------
7,945 1,552 (25) 9,473
Selling, general and
administrative expenses 5,690 674 77 d 6,441
-------- -------- ---------- ---------
2,255 878 (102) 3,032
Other income:
Interest income 14 133 147
Miscellaneous 198 20 (242) b (24)
-------- -------- ---------- ---------
212 153 (242) 123
Other deductions:
Interest expense 471 0 237 e 708
Miscellaneous 0 242 (242) b 0
-------- -------- ---------- ---------
471 242 (5) 708
Income before income taxes 1,996 789 (338) 2,447
Income taxes 705 284 (125) g 864
-------- -------- ---------- ---------
Net income $ 1,291 $ 505 $ (213) $ 1,583
======== ======== ========== =========
Basic earnings per share $0.45 $0.55
Diluted earnings per share $0.45 $0.55
Weighted average number of
shares outstanding:
Basic 2,880,409 2,880,409
Diluted 2,891,096 2,891,096
</TABLE>
a - Eliminates intercompany sales and cost of sales.
b - Eliminates intercompany joint venture income/expenses.
c - Adjusts for pro forma depreciation based on the fair value adjustment to
assets acquired.
d - Records pro forma goodwill amortization expense.
e - Records pro forma interest expense based on $17 million in additional
borrowings at 6.06%.
g - Reflects pro forma income taxes assuming an effective rate of 35.3%.
F-11
<PAGE>
PULASKI FURNITURE CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the year ended November 1, 1998
(in thousands except per share data)
<TABLE>
<CAPTION>
Pulaski DHFC Adjustments Pro Forma
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $172,360 $ 19,263 $ (953) a $ 190,669
Cost of sales 135,342 14,595 (928) a,c 149,008
-------- -------- ---------- ---------
37,018 4,668 (25) 41,661
Selling, general and
administrative expenses 25,244 2,358 469 d 28,071
-------- -------- ---------- ---------
11,774 2,310 (494) 13,590
Other income:
Interest income 56 430 487
Miscellaneous 13 96 109
-------- -------- ---------- ---------
70 527 596
Other deductions:
Interest expense 1,805 0 1,030 e 2,835
Miscellaneous 148 242 (242) b 148
-------- -------- ---------- ---------
1,953 242 788 2,983
Income before income taxes 9,890 2,594 (1,280) 11,204
Income taxes 3,493 934 (472) g 3,955
-------- -------- ---------- ---------
Net income $ 6,397 $ 1,660 $ (808) $ 7,249
======== ======== ========== =========
Basic earnings per share $2.27 $2.57
Diluted earnings per share $2.25 $2.55
Weighted average number of
shares outstanding:
Basic 2,819,838 2,819,838
Diluted 2,840,076 2,840,076
</TABLE>
a - Eliminates intercompany sales and cost of sales.
b - Eliminates intercompany joint venture expenses.
c - Adjusts for pro forma depreciation based on the fair value adjustment to
assets acquired.
d - Records pro forma goodwill amortization expense.
e - Records pro forma interest expense based on $17 million in additional
borrowings at 6.06%.
g - Reflects pro forma income taxes assuming an effective rate of 35.3%.
F-12
<PAGE>
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-67941) pertaining to the Pulaski Furniture Corporation 1996
Salaried Employees' Stock Purchase Plan of our report dated January 26,1999,
with respect to the financial statements of Dawson Heritage Furniture
Company, Inc. for the year ended December 31, 1998, included in the Current
Report Form 8-K/A of Pulaski Furniture Corporation, filed with the Securities
and Exchange Commission.
/s/ Myers, Baker, Rife and Denham
Certified Public Accountants
Webb City, Missouri
May 7, 1999
