<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15D OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1995 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO _______
Commission File Number
- ----------------------
1-10471
CRAFTMADE INTERNATIONAL, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2057054
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
2700 112th Street, Grand Prairie, Texas 75050
- --------------------------------------- --------
(Address of principal executive offices) Zip Code
Registrants' telephone number, including area code (214) 647-8099
--------------
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 (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 .
---------- ----------
3,299,469 shares of Common Stock were outstanding as of October 20, 1995.
<PAGE> 2
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
Index to Quarterly Report on Form 10-Q
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of
Income for the three months
ended September 30, 1995 and 1994.
Condensed Consolidated Balance Sheets as of
September 30, 1995 and June 30, 1995.
Condensed Consolidated Statement of Changes in
Shareholders' Equity for the three months
ended September 30, 1995.
Condensed Consolidated Statements of Cash
Flows for the three months ended September 30,
1995 and 1994.
Notes to Condensed Consolidated Financial
Statements.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE> 3
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------------------
September 30, September 30,
1994 1995
------------- ------------
<S> <C> <C>
Net Sales $ 9,654,830 $ 9,426,323
Cost of goods sold 6,050,274 6,013,086
----------- -----------
Gross profit 3,604,556 3,413,237
----------- -----------
Selling, general and
administrative expenses 2,134,505 2,095,533
Interest expense, net 113,883 153,661
Depreciation and amortization 67,530 42,959
----------- -----------
Total Expenses 2,315,918 2,292,153
----------- -----------
Income before income taxes 1,288,638 1,121,084
Provision for income taxes 467,791 338,763
----------- -----------
Net income $ 820,847 $ 782,321
=========== ===========
Earnings per common share $ .24 $ .24
=========== ===========
Cash dividends declared
per common share $ .01 $ .01
=========== ===========
Weighted average shares
outstanding 3,478,204 3,304,435
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 4
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30,
June 30, 1995
1995 (Unaudited)
------------ -------------
<S> <C> <C>
Current assets:
Cash $ 268,703 $ 373,275
Accounts receivable - trade,
net of allowance 6,383,071 6,510,493
Inventory 8,605,483 10,141,279
Prepaid expenses and other
current assets 1,462,990 1,413,382
------------ ------------
Total current assets 16,720,247 18,438,429
------------ ------------
Property and equipment, net 396,758 371,397
------------ ------------
Other assets:
Goodwill, net 282,857 268,946
Other assets 230,773 202,411
------------ ------------
Total other assets 513,630 471,357
------------ ------------
$ 17,630,635 $ 19,281,183
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 5
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30,
June 30, 1995
1995 (Unaudited)
-------------- ---------------
<S> <C> <C>
Current liabilities:
Payable to bank $ 7,480,000 $ 7,980,000
Accounts payable - trade and
commissions 346,303 425,758
Income taxes payable 136,961 456,147
Other accrued liabilities 101,987 104,359
------------- ---------------
Total current liabilities 8,065,251 8,966,264
------------- ---------------
Shareholders' equity:
Series A cumulative, convertible,
callable preferred stock, $1.00
par value, 2,000,000 shares
authorized; 32,000 shares issued 32,000 32,000
Common stock, $.01 par value,
15,000,000 shares authorized,
4,092,483 shares issued 40,925 40,925
Additional paid-in capital 7,024,265 7,024,265
Retained earnings 7,528,338 8,277,873
------------- ---------------
14,625,528 15,375,063
Less: treasury stock, 801,414
common shares at cost and
32,000 preferred shares at cost (5,060,144) (5,060,144)
------------- ---------------
Total shareholders' equity 9,565,384 10,314,919
------------- ---------------
$ 17,630,635 $ 19,281,183
============= ===============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 6
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Series A Additional
Voting Preferred Paid-in Retained
Common Stock Stock Capital Earnings Treasury Stock Total
------------ ---------- ----------- --------- -------------- --------
Shares Amount Amount
--------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of June 30, 1995 4,092,483 $ 40,925 $ 32,000 $ 7,024,265 $ 7,528,338 ($ 5,060,144) $ 9,565,384
Cash Dividends - - - - (32,786) - (32,786)
Net Income for the three months
ended September 30, 1995 - - - - 782,321 - 782,321
---------- -------- -------- ----------- ----------- ----------- ------------
4,092,483 $ 40,925 $ 32,000 $ 7,024,265 $ 8,277,873 ($ 5,060,144) $ 10,314,919
========== ======== ======== =========== =========== =========== ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 7
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------
September 30, September 30,
1994 1995
-------------- -------------
<S> <C> <C>
Net cash provided by (used for)
operating activities $ 304,034 $ (360,220)
------------ ------------
Cash flows from investing activities:
Net additions to equipment (20,539) (1,827)
------------ ------------
Cash flows from financing activities:
Net proceeds from
revolving line of credit 225,000 500,000
Proceeds from exercise of stock
options 21,000 -
Cash dividends (34,761) (32,786)
Other financing activities (6,306) (595)
------------ ------------
Net cash provided by
financing activities 204,933 466,619
------------ ------------
Net increase in cash 488,428 104,572
Cash at beginning of period 116,311 268,703
------------ ------------
Cash at end of period $ 604,739 $ 373,275
============ ============
</TABLE>
Supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-----------------------------
September 30, September 30,
1994 1995
------------- ------------
<S> <C> <C>
Cash paid during the period for:
Interest $ 113,883 $ 153,661
============= ============
Income taxes $ 93,934 $ -
============= ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OF CRAFTMADE INTERNATIONAL, INC.
AND SUBSIDIARIES
SEPTEMBER 30, 1995
(Unaudited)
Note 1 - BASIS OF PREPARATION AND PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and include all adjustments which are, in the opinion of management, necessary
for a fair presentation. The condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading;
however, it is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto which are incorporated by
reference in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995. The financial data for the interim periods may not necessarily
be indicative of results to be expected for the year.
<PAGE> 9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
Net sales decreased $228,507, to $9,426,323 for the three month period ended
September 30, 1995 from $9,654,830 for the same period last year. This 2.4%
decrease was primarily the result of a decrease in sales in the lamp division
of $334,970 this quarter over the same period last year due to a shift in the
industry to special finishes that require longer production times. This
decrease was partially offset by a 2.0% increase in fan sales as this industry
begins to recover from winter and spring seasons marked by weak housing starts
and inclement weather.
Gross profit for the three month period ended September 30 decreased to
$3,413,237 or 36.2% of net sales in 1995 from $3,604,556 or 37.3% of net sales
in 1994. This decrease was primarily attributable to an increase in costs of
certain raw materials associated with the manufacture of its products incurred
during fiscal 1995, partially offset by a price increase to the Company's
customers implemented during May 1995.
Total selling, general and administrative expenses were $2,095,533, or 22.2% of
net sales, for the first quarter ended September 30, 1995, compared to
$2,134,505, or 22.1% of net sales, for the same three month period last year.
This decrease of $38,972 was primarily attributable to decreases in sales
commissions and certain other costs directly correlated to sales and decreases
in salaries and related payroll costs from a decrease in the Company's
workforce.
Interest expense increased $39,778, to $153,661 for the three months ended
September 30, 1995 from $113,833 for the same three month period in 1994. This
increase was due primarily to the increase in the bank's prime lending rate and
increases in indebtedness required to finance the Company's current growth.
Liquidity and Capital Resources
The Company's cash increased $104,572, from $268,703 at June 30, 1995 to
$373,275 at September 30, 1995. The Company used $360,220 in cash from
operations. This use of cash was primarily due to increases in inventory of
$1,535,796, partially offset by net income and certain expenses not requiring
cash. The overall increase in inventory is primarily attributable to
purchasing based on historical requirements to meet anticipated sales growth.
The cash used by investing activities of $1,827 related to the purchase of
computer equipment.
<PAGE> 10
The cash provided by financing activities of $466,619 was primarily the result
of $500,000 in additional borrowings on the Company's line of credit, partially
offset by the payment of cash dividends totaling $32,786.
The Company currently has a $10,000,000 line of credit with a remaining
availability of $2,020,000 at September 30, 1995. The Company's management
believes that this line of credit, combined with cash flow from operations, is
adequate to fund the Company's current operating needs and its projected growth
over the next twelve months.
<PAGE> 11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
not applicable
Item 2. Changes in Securities
not applicable
Item 3. Defaults Upon Senior Securities
not applicable
Item 4. Submission of Matters to a Vote of Security
Holders
not applicable
Item 5. Other Information
not applicable
Item 6. Exhibits and Reports of Form 8-K
a). Exhibits
27 Financial Data Schedule
b). Reports on Form 8-K
none
<PAGE> 12
SIGNATURE
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.
CRAFTMADE INTERNATIONAL, INC.
(Registrant)
Date October 20, 1995 JAMES R. RIDINGS
---------------- -------------------
JAMES R. RIDINGS
President and Chief
Executive Officer
<PAGE> 13
INDEX TO EXHIBITS
Exhibit Description
------- -----------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 373
<SECURITIES> 0
<RECEIVABLES> 6,510
<ALLOWANCES> 0
<INVENTORY> 10,141
<CURRENT-ASSETS> 18,438
<PP&E> 371
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,281
<CURRENT-LIABILITIES> 8,966
<BONDS> 0
<COMMON> 41
0
32
<OTHER-SE> 15,302
<TOTAL-LIABILITY-AND-EQUITY> 19,281
<SALES> 9,426
<TOTAL-REVENUES> 9,426
<CGS> 6,013
<TOTAL-COSTS> 6,013
<OTHER-EXPENSES> 2,138
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154
<INCOME-PRETAX> 1,121
<INCOME-TAX> 339
<INCOME-CONTINUING> 782
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 782
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
