<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 1997
------------------
OR
[ ] 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 33-64140
-------------
DAL-TILE INTERNATIONAL INC.
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3548809
- - -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
7834 Hawn Freeway, Dallas, Texas 75217
---------------------------------------
(Address of principal executive office)
(Zip Code)
(214)398-1411
-------------
(Registrant's telephone number, including area code)
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
--------- ----------
As of August 14, 1997, the registrant had outstanding 53,435,101 shares of
voting common stock, par value $0.01 per share.
<PAGE>
DAL-TILE INTERNATIONAL INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
----
Item 1 - Financial Statements (Unaudited) 3
Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 14
Page 2
<PAGE>
DAL-TILE INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS & SIX MONTHS ENDED JULY 4, 1997 AND JUNE 30, 1996
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------------- ----------------------------------
JULY 4, JUNE 30, JULY 4, JUNE 30,
1997 1996 1997 1996
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $173,742 $180,849 $341,151 $351,523
Cost of goods sold 100,133 95,515 184,350 183,455
--------------- -------------- -------------- --------------
Gross profit 73,609 85,334 156,801 168,068
Expenses:
Transportation 14,902 11,712 26,391 21,669
Selling, general and administrative 69,197 50,294 122,189 98,445
Provisions for merger integration charge -- -- -- 9,000
Amortization of intangibles 1,401 1,401 2,802 2,802
--------------- -------------- -------------- --------------
Total expenses 85,500 63,407 151,382 131,916
--------------- -------------- -------------- --------------
Operating income (loss) (11,891) 21,927 5,419 36,152
Interest expense 9,280 13,600 17,359 27,429
Interest income 67 551 206 1,136
Other (income) expense 132 1,008 (548) 491
--------------- -------------- -------------- --------------
Income (loss) before income taxes (21,236) 7,870 (11,186) 9,368
Income tax provision (7,433) 2,981 (3,915) 3,549
--------------- -------------- -------------- --------------
Net Income (loss) ($13,803) $4,889 ($7,271) $5,819
=============== ============== ============== ==============
Net Income (loss) per common share ($0.25) $0.10 ($0.13) $0.12
=============== ============== ============== ==============
Average outstanding common and
equivalent shares 55,144 46,795 55,327 46,795
=============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
PAGE 3
<PAGE>
DAL-TILE INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
JULY 4, 1997 AND JANUARY 3, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
JULY 4, JANUARY 3,
1997 1997
----------------- --------------------
ASSETS
<S> <C> <C>
Current Assets:
Cash -- $9,999
Trade accounts receivable 131,299 123,586
Inventories 179,328 142,413
Prepaid expenses 2,564 2,838
Other current assets 16,254 15,480
----------------- --------------------
Total current assets 329,445 294,316
Property, plant, and equipment, at cost 287,998 261,976
Less accumulated depreciation 62,356 58,350
----------------- --------------------
225,642 203,626
Goodwill, net of amortization 154,868 157,251
Finance costs, net of amortization 7,200 3,683
Tradename and other assets 35,276 29,621
----------------- --------------------
Total assets $752,431 $688,497
================= ====================
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
PAGE 4
<PAGE>
DAL-TILE INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
JULY 4, 1997 AND JANUARY 3, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
JULY 4, JANUARY 3,
1997 1997
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Trade accounts payable $38,983 $38,827
Accrued expenses 30,328 27,809
Bank overdrafts 8,306 --
Accrued interest payable 2,525 3,293
Current portion of long-term debt 3,952 32,823
Income taxes payable 2,556 2,342
Deferred income taxes 1,093 1,367
Other current liabilities 6,192 7,036
------------- -------------
Total current liabilities 93,935 113,497
Long-term debt 523,553 433,035
Other long-term liabilities 27,213 26,396
Commitments and contingencies
Stockholders' Equity:
Common stock, $.01 par value:
Authorized shares - 200,000,000; issued and
outstanding shares - 53,435,101 534 534
Additional paid-in capital 436,100 436,100
Accumulated deficit (267,921) (260,650)
Currency translation adjustment (60,983) (60,415)
------------- -------------
Total stockholders' equity 107,730 115,569
------------- -------------
Total liabilities and stockholders' equity $752,431 $688,497
============= =============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
PAGE 5
<PAGE>
DAL-TILE INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 4, 1997 AND JUNE 30, 1996
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------------
JULY 4, JUNE 30,
1997 1996
------------ ------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) ($7,271) $5,819
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 10,292 11,884
Provision for losses on accounts receivable 10,343 2,736
Deferred income tax provision (6,398) 359
Foreign currency transaction loss (gain) (280) 145
Zero coupon note interest expense 8 5,930
Changes in operating assets and liabilities:
Trade accounts receivable (18,089) (7,191)
Inventories (36,857) (131)
Other assets (6,111) (2,558)
Trade accounts payable and accrued expenses 6,151 (21,233)
Accrued interest payable (767) (2,144)
Other liabilities (2,282) (9,313)
------------ ------------
Net cash used in operating activities (51,261) (15,697)
INVESTING ACTIVITIES
Expenditures for property, plant, and equipment, net (28,671) (11,188)
FINANCING ACTIVITIES
Borrowings under long-term debt 71,060 37,101
Borrowings under Term B facility 125,000 --
Repayment of long-term debt (9,589) (49,630)
Repayment of long-term debt from new credit facility (122,000) --
Fees and expenses associated with debt refinancing (2,824) --
------------ ------------
Net cash provided by (used in) financing activities 61,647 (12,529)
Effect of exchange rate changes on cash (20) 25
------------ ------------
Net decrease in cash (18,305) (39,389)
Cash at beginning of period 9,999 72,965
------------ ------------
Cash at end of period ($8,306) $33,576
============ ============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
PAGE 6
<PAGE>
DAL-TILE INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The operating results of Dal-Tile International Inc. and its consolidated
subsidiaries (the "Company") for the three and six months ended July 4,
1997 reflect the results of operations of Dal-Tile International Inc. and
its consolidated subsidiaries. Due to the company's 52/53 week accounting
cycle, the second quarter of 1997 ended on July 4, 1997.
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments,
consisting of normal recurring adjustments considered necessary for a fair
presentation of the financial position, results of operations, and cash
flow have been included. The results of operations for the six months
ended July 4, 1997 are not necessarily indicative of the results that may
be expected for the year ending January 2, 1998. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the January 3, 1997 annual report on Form 10-K of the Company.
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
2. EARNINGS PER SHARE
Earnings per share are based on the average number of shares of common
stock outstanding during each period and such shares issuable upon assumed
exercise of stock options, using the treasury stock method, adjusted for
stock splits.
3. INVENTORIES
Inventories consist of the following at July 4, 1997 and January 3, 1997
(In Thousands):
(Unaudited)
July 4, January 3,
1997 1997
---- ----
Raw materials $14,421 $12,660
Work-in-process 3,751 3,516
Finished goods 161,156 126,237
-------- ---------
$179,328 $142,413
======== ========
PAGE 7
<PAGE>
DAL-TILE INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. LONG-TERM DEBT
Long-term debt consists of the following at July 4, 1997 and January 3,
1997 (In Thousands):
July 4, January 3,
1997 1997
---- ---
(Unaudited)
Term Loan A $217,500 $275,000
Term Loan B 125,000 --
Revolving Credit Loan 167,000 176,000
Senior Secured Zero Coupon Notes 148 140
Other 17,857 14,718
-------- -------
527,505 465,858
Less current portion 3,952 32,823
-------- --------
$523,553 $433,035
========= ========
During the second quarter of 1997, the company amended its existing credit
facility (as amended, the "Amended Credit Facility") and entered into a
$125,000,000 Term B loan facility. The proceeds of the Term B loan were
used to repay $50 million of the Term A loan and $72 million of the
revolver under the Company's existing revolver credit facility. The
Company is required to make annual amortization payments starting in the
fourth quarter of 1998. Borrowings under the Amended Credit Facility bear
interest at variable rates and the Company is required to maintain certain
financial covenants as well as adhere to various affirmative and
restrictive covenants.
5. INCOME TAXES
The income tax provision reflects effective tax rates of 35% and 38% for
the three and six months ended July 4, 1997 and June 30, 1996,
respectively.
6. MERGER INTEGRATION CHARGES
In the first quarter of 1996, the Company recorded a pre-tax merger
integration charge of $9,000,000 for the closings of duplicative sales
centers, duplicative distribution centers, and certain manufacturing
facilities, as well as incurrence of severance costs associated with the
elimination of overlapping positions. The majority of the charge is
related to lease commitments on closed facilities and severance costs.
PAGE 8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the results of operations for the three and six
months ended July 4, 1997 compared with the three and six months ended June 30,
1996 for Dal-Tile International Inc. and its consolidated subsidiaries (the
"Company"). Due to the Company's 52/53 week accounting cycle, the second quarter
of 1997 ended on July 4, 1997. All references herein to the second quarter of
1997 are intended to include the Company's operations for the three-months
ending July 4, 1997.
During the second quarter of 1997 the Company incurred a $24.7 million pre-tax
charge primarily for the write-down of trade accounts receivable and
inventories. The $24.7 million charge is comprised of $8.4 million in cost of
sales and $16.3 million in selling, general and administrative expenses.
Earnings for the quarter, excluding the $24.7 million charge, have been
adversely affected by increased transportation costs and revenue declines
resulting from systems integration delays and sales center consolidation. The
Company believes these factors will continue to adversely affect performance for
the remainder of 1997.
Net Sales
Net sales for the second quarter decreased to $173.7 million in 1997, from
$180.8 million in 1996, a decrease of $7.1 million or 3.9%. Net sales for the
six months ended July 4, 1997 decreased to $341.2 million from $351.5 million
for the six months ended June 30, 1996, a decrease of $10.3 million or 2.9%. The
decrease in net sales was due principally to the negative impact on
Company-operated sales centers caused by the delay in systems integration and
the consolidation of duplicative sales centers since the second quarter of 1996
from the American Olean Acquisition ("AO Acquisition"). The sales center
distribution channel carries a more extensive product offering and has more
complex service requirements and consequently has been most impacted by the
delays in system integration. Increases in net sales from home centers and the
independent distributor channels partially offset the sales center declines.
Gross Profit
Gross profit decreased $11.7 million, or 13.7%, to $73.6 million in the second
quarter of 1997 from $85.3 million in the second quarter of 1996. Gross profit
decreased to $156.8 million for the six months ended July 4, 1997, from $168.1
million for the six months ended June 30, 1996, a decrease of $11.3 million or
6.7%. The decrease in gross profit is due in part to a $8.4 million charge taken
during the second quarter of 1997 for overstocked and potentially unsalable
inventories. Gross profit was also negatively impacted by adjustments of $5.6
million from the Company's LIFO (Last-in, First out) method of valuing
inventories. The Company expects temporary reductions in production capacity,
implemented to improve inventory management, to negatively impact gross margins
in the second half of 1997.
Gross margin decreased in the second quarter of 1997 to 42.4% from 47.2% in the
second quarter of 1996. Gross margin (excluding the $8.4 million charge taken in
the second quarter of 1997) was 47.2% for the three months ended July 4, 1997
and June 30, 1996. Gross margin decreased for the six months ended July 4, 1997
to 46.0% from 47.8% for the comparable period in 1996. Excluding the $8.4
million charge, gross margin increased to 48.4% for the six months ended July 4,
1997 from 47.8% for the same period in 1996. In 1996, gross margin was impacted
by the high cost manufacturing facilities which were closed in March 1996. The
closing of the Company's high cost facilities in 1996 contributed to the
increase in gross margins for the six months ended July 4, 1997; such increase
was offset in part by the Company's LIFO adjustments.
PAGE 9
<PAGE>
Expenses
Expenses increased to $85.5 million in the second quarter of 1997 from $63.4
million in the second quarter of 1996. Expenses in 1997 include a $16.3 million
charge in the second quarter primarily to reserve for uncollectible receivables
and termination of computer leases. Expenses (excluding the $16.3 million charge
taken in the second quarter of 1997) increased to $69.2 for the second quarter
of 1997 from $63.4 for the same period in 1996. For the full year, expenses
increased to $151.4 million for the six months ended July 4, 1997 from $131.9
million for the six months ended June 30, 1996. Expenses, excluding the $16.3
million charge in 1997 and a $9.0 million merger integration charge in the first
quarter of 1996, increased to $135.1 for the six months ended July 4, 1997 from
$122.9 for the six months ended June 30, 1996. The increases are due to the
continued distribution and operating costs resulting from the delay in systems
integration and the consolidation of eleven distribution centers to three
mega-distribution centers.
Expenses as a percent of sales in the second quarter (excluding the charge)
increased to 39.8% in 1997 from 35.1% in 1996. For the six months, expenses as a
percent of sales (excluding the 1997 and 1996 charges) increased to 39.6% in
1997 from 35.0% in 1996. Expenses as a percent of sales have increased as a
result of lower sales and increased expenses.
Merger Integration Charges
In the first quarter of 1996, the Company recorded a pre-tax non-recurring
merger integration charge of $9.0 million for the closing of duplicative sales
centers, consolidation of the Company's distribution system, manufacturing
facility closings and severance costs associated with the elimination of
overlapping positions. The majority of the charge is related to lease
commitments on closed facilities and severance costs.
Operating Income (loss)
Operating income decreased to a loss of $11.9 million in the second quarter of
1997 from income of $21.9 million for the same period in 1996. Operating income
(excluding the $24.7 million second quarter 1997 charge) decreased to $12.8 in
the second quarter of 1997 compared to $21.9 for the same period in 1996. The
company had operating income of $5.4 million for the six months ended July 4,
1997 as compared to $36.2 for the six months ended June 30, 1997. For the full
year (excluding the charges in 1997 and 1996) operating income decreased to
$30.1 million in 1997 from $45.2 million in 1996. The decrease in operating
income is due principally to decreased sales, increased costs related to the
delay in systems integration and increased transportation costs resulting from
the consolidation of the distribution centers.
Interest Expense (Net)
Interest expense (net) decreased to $9.3 million in the second quarter of 1997
from $13.6 million in 1996 and $17.4 million for the six months ended July 4,
1997 from $27.4 million in 1996. Interest expense (net) decreased as a result of
interest savings from the refinancing of the Company's debt concurrent with the
Company's initial public offering which occurred in the third quarter of 1996.
PAGE 10
<PAGE>
Income Taxes
The income tax provision reflects effective tax rates of 35% and 38% for the
three and six months ended July 4, 1997 and June 30, 1996, respectively.
Net Income (Loss)
As a result of the $24.7 million charge, the company had a net loss in the
second quarter of 1997 of $13.8 million as compared to net income of $4.9
million in the second quarter of 1996. Net income in the second quarter of 1997,
excluding the $24.7 million charge, was $2.3 million. The company had a net loss
of $7.3 million for the six months ended July 4, 1997 as compared to net income
of $5.8 million for the six months ended June 30, 1996. Net income (excluding
the charges in 1997 and 1996) decreased to $8.8 million in 1997 from $11.4
million in 1996.
Liquidity and Capital Resources
Historically, the Company's principal sources of cash have been from operating
activities and bank borrowings. Cash used in operating activities was $51.3
million for the six months ended July 4, 1997 and $15.7 million for the same
period in 1996. Cash was used in 1997 principally to fund increases in
inventories and trade accounts receivable.
Inventories have increased as a result of multiple inventory systems which
limited the management of inventories between sales centers and distribution
centers. Inventories have also been impacted by lower sales and new product
introductions. The Company recently completed the conversion to one fully
integrated system which will improve inventory management. In addition,
production levels have been temporarily reduced, which is expected to improve
inventory management but will negatively impact gross margins, in the second
half of 1997. Trade accounts receivable have increased due to extended terms
granted to customers and limited access by sales centers personnel to certain
customer account information. Systems improvements have begun to provide sales
center personnel improved and more timely data to monitor customer accounts. The
company is implementing more stringent credit policies and a combination of
centralized and decentralized collection responsibilities. Although progress is
being made in inventory and accounts receivable management, there is no
certainty that additional writedowns will not be required in the second half of
1997.
During the second quarter, the Company completed a new $125 million Term B loan
facility which made certain modifications to its existing credit facility (as
amended, the "Amended Credit Facility"). The proceeds of the new term loan were
used to repay $50 million of the Term A loan and $72 million of the revolver
under the Company's existing revolver credit facility. Total availability as of
July 4, 1997 under the Company's revolving credit facility was $83 million.
Loans under the Amended Credit Facility bear interest initially at LIBOR plus 1
3/4%. The Company is required to make minimal annual amortization payments in
respect to the new term loan starting in the fourth quarter of 1998 with final
maturity on December 31, 2003. The Amended Credit Facility includes an
additional financial covenant and is being secured by certain assets of the
Company. The Company believes cash flow from operating activities, together with
borrowings available under the Amended Credit Facility, will be sufficient to
fund future working capital needs, capital expenditures, and debt service
requirements of the Company in the foreseeable future.
PAGE 11
<PAGE>
Expenditures for property, plant and equipment were $28.7 million for the six
months ended July 4, 1997. The expenditures were used to fund modifications and
startup costs of the recently acquired floor tile plant in Mt. Gilead, North
Carolina, floor tile expansion in Mexico, routine capital improvements and the
integration of management information systems after the AO Acquisition. Capital
expenditures during the second half of 1997 will be comprised of the continued
integration of management information systems and the completion of expanded
manufacturing capacity in El Paso, Texas and Dallas, Texas. The Company's
ability to continue to expand its manufacturing facilities in the future will be
dependent on cash generated from operations and borrowings under the Amended
Credit Facility.
Cash provided by financing activities was $61.6 million for the first half of
1997, which reflects borrowings under the Company's revolving credit facility
and the $125 million Term B loan facility.
The Company is involved in various judicial and administrative proceedings
relating to environmental matters. The Company is currently engaged in
environmental investigation and remediation programs at certain sites relating
to activities prior to the AO Acquisition in December 1995 and prior to January
9, 1990 when AEA Investors Inc., a privately held corporation headquartered in
New York, arranged for Dal-Tile International Inc. to acquire all of the
outstanding capital stock of Dal-Tile Corporation, its affiliated companies and
certain related assets (the "AEA Acquisition"). The Company maintains a reserve
for remediation relating to environmental conditions and activities existing
prior to the AEA Acquisition, and is entitled to indemnification with respect to
certain expenditures incurred in connection with environmental matters. It does
not expect the ultimate liability with respect to such investigation and
remediation activities to have a material effect on the Company's liquidity and
financial condition. In addition, with respect to the investigation and
remediation programs relating to environmental conditions and activities prior
to the AO Acquisition, the Company believes that, based on currently available
information and the terms and conditions of Armstrong World Industries (AWI's)
indemnification obligations under the AO Acquisition Agreement (as defined), any
liability of AO that is reasonably likely to arise with respect to such sites
would not result in a material adverse effect on the Company.
The United States is a party to the General Agreement on Tariffs and Trade
("GATT"). Under GATT, the United States currently imposes import duties on
ceramic tile from non-North American countries at 17%, to be reduced ratably to
8 1/2% by 2005. Accordingly, GATT may stimulate competition from non-North
American manufacturers who now export, or who may seek to export, ceramic tile
to the United States. The Company cannot predict with certainty the effect that
GATT may have on the Company's operations.
Effects of Inflation
The Company believes it has generally been able to increase selling prices and
productivity to offset increases in costs resulting from inflation in the U.S.
and Mexico. Inflation has not had a material impact on the Company's results of
operations during the six months ended July 4, 1997 and June 30, 1996.
Approximately 90% of the Company's inventory is valued using the LIFO inventory
accounting method. Therefore, current costs are reflected in cost of sales
rather than in inventory balances. The impact of inflation in Mexico has not had
a significant impact on the six months ended July 4, 1997 operating results,
however, the future impact is uncertain at this time.
PAGE 12
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of the Company held on May 8, 1997, the
shareholders of the Company approved the following proposals:
To elect ten directors to serve the ensuing year and until their
respective successors shall have been duly elected and qualified.
Directors For Against
--------- --- -------
Charles J. Pilliod, Jr. 34,146,113 66,950
Howard I. Bull 34,147,413 65,650
Douglas D. Danforth 34,146,813 66,250
Drew Lewis 34,147,413 65,650
George A. Lorch 34,146,413 66,650
Vincent Mai 34,147,413 65,650
Frank A. Riddick III 34,146,413 66,650
Robert J. Shannon 34,146,413 66,650
Henry F. Skelsey 34,147,213 65,850
John M. Goldsmith 34,147,413 65,650
To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending January 2, 1998.
For Against Abstain
--- ------- -------
34,206,588 21,975 3,500
Item 5. Other Information
Cautionary Statement for purposes of "Safe Harbor Provisions" of
the Private Securities Litigation Reform Act of 1995.
Certain statements contained in this filing are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements are subject to risks, uncertainties
and other factors which could cause actual results to differ materially
from future results expressed or implied by such forward looking
statements. Potential risks and uncertainties include, but are not
limited to, the impact of competitive pressures and changing economic
conditions on the Company's business and its dependence on residential
and commercial construction activity, the fact that the Company is
highly leveraged, currency fluctuations and other factors relating to
the Company's foreign manufacturing operations, the impact of pending
reductions in tariffs and custom duties, systems integration issues and
environmental laws and other regulations.
PAGE 13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
--------
27 Financial Data Schedule
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed during the quarter ended July 4,
1997.
PAGE 14
<PAGE>
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.
DAL-TILE INTERNATIONAL INC.
---------------------------
(Registrant)
Date:
August 18, 1997 /s/ Richard D. Sewell
- - --------------- -----------------------------------
Vice President Finance
<TABLE> <S> <C>
<PAGE>
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