<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
(x) Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the Period Ended October 31, 1996
Commission file number 0-22502
- ------------------------------
National Picture & Frame Company
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3832862
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 Highway 82 West
Greenwood, MS 38930
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(601) 451-4800
- --------------------------------------------------------------------------------
(Registrant's telephone 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 (or for such shorter periods 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 practical date.
Common Stock, $.01 Par Value - 4,964,544 shares as of December 11, 1996
<PAGE> 2
NATIONAL PICTURE & FRAME COMPANY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- October 31, 1996 and April 30,
1996
Condensed consolidated statements of income -- three months and six
months ended October 31, 1996 and 1995
Condensed consolidated statements of cash flows -- six months ended
October 31, 1996 and 1995
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 6. Exhibits and Reports on Form 8-K
<PAGE> 3
PART I. FINANCIAL INFORMATION
NATIONAL PICTURE & FRAME COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
OCTOBER 31 APRIL 30
1996 1996
------------------------------------
(Unaudited) (Note)
(In Thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents $ 238 $ 198
Accounts receivable, net 12,913 12,739
Inventories (Note 2) 11,448 7,812
Other current assets 1,562 1,919
----------------------------------
Total current assets 26,161 22,668
Property, plant and equipment 23,428 20,608
Accumulated depreciation (5,091) (4,164)
----------------------------------
18,337 16,444
Other assets
Goodwill, net 9,607 9,752
Other intangibles, net 92 172
----------------------------------
Total assets $54,197 $49,036
==================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $5,970 $5,363
Accrued expenses 2,920 2,028
Current maturities of long-term debt 1,164 1,164
---------------------------------
Total current liabilities 10,054 8,555
Long-term debt, less current maturities 7,068 5,513
Deferred income taxes 1,396 1,396
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares - 5,000,000
Issued and outstanding shares - None
Common stock, $.01 par value:
Authorized shares - 20,000,000
Issued shares - 5,002,893 at October 31,1996 and 5,000,008 at April 30, 1996;
Outstanding shares - 4,962,823 at October 31,1996 and 4,959,938 at April 30, 1996. 50 50
Nonvoting common stock, $.01 par value:
Authorized shares - 500,000
Issued and outstanding shares - None
Additional paid-in capital 21,259 21,235
Retained earnings 14,704 12,621
---------------------------------
36,013 33,906
Less cost of stock held in Treasury (334) (334)
---------------------------------
Total stockholders' equity 35,679 33,572
---------------------------------
Total liabilities and stockholders' equity $54,197 $49,036
=================================
</TABLE>
Note: The balance sheet at April 30, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
1
<PAGE> 4
SEE ACCOMPANYING NOTES
NATIONAL PICTURE & FRAME COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
OCTOBER 31 OCTOBER 31
-------------------------------------------
1996 1995 1996 1995
------------------------------------------
(Unaudited)
(In Thousands except per share data)
<S> <C> <C> <C> <C>
Net sales $18,880 $17,843 $33,050 $30,675
Cost of sales 14,197 13,182 25,075 23,386
-------------------------------------------
4,683 4,661 7,975 7,289
Operating expenses:
Selling 1,117 1,091 2,018 1,867
General and administrative 1,001 1,045 2,133 1,867
Amortization of intangibles 108 89 216 178
-------------------------------------------
2,226 2,225 4,367 3912.00
-------------------------------------------
Operating income 2,457 2,436 3,608 3,377
Interest expense (130) (131) (248) (257)
-------------------------------------------
Income before income taxes 2,327 2,305 3,360 3,120
Income taxes 886 877 1,277 1,183
-------------------------------------------
Net income $1,441 $1,428 $2,083 $1,937
===========================================
Net income per share $ .29 $ .29 $ .42 $ .39
===========================================
Weighted average shares outstanding 4,962 4,972 4,961 4,985
===========================================
</TABLE>
See accompanying notes.
2
<PAGE> 5
NATIONAL PICTURE & FRAME COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
OCTOBER 31
---------------------------------
1996 1995
---------------------------------
(Unaudited)
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $2,083 $1,937
Depreciation and amortization 1,152 947
Changes in operating assets and liabilities (1,954) (2,037)
-------------------------------
1,281 847.00
INVESTING ACTIVITIES
Purchase of property, plant and equipment (2,820) (1,764)
FINANCING ACTIVITIES
Net change in revolving loans
Principal on capital lease obligations 2,081 1,085
Purchase of treasury stock (526) (48)
Issuance of common stock through Employee -- (220)
Stock Discount Purchase Plan 24 --
-------------------------------
1,579 817
-------------------------------
Increase (Decrease) in cash and cash equivalents 40 (100)
Cash and cash equivalents at beginning of period 198 336
-------------------------------
Cash and cash equivalents at end of period $ 238 $ 236
===============================
</TABLE>
See accompanying notes.
3
<PAGE> 6
National Picture & Frame Company
Notes to Condensed Consolidated Financial Statements (unaudited)
October 31, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q 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 accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
six month periods ended October 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended April 30, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the National Picture & Frame Company and subsidiary's
annual report on Form 10-K for the year ended April 30, 1996.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
1996 1996
----------------------
(In Thousands)
<S> <C> <C>
Raw materials $ 4,180 $3,628
Work-in-process 1,761 1,213
Finished goods 5,507 2,971
-------------------
$11,448 $7,812
===================
</TABLE>
3. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
The Company adopted FASB Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of", during the
quarter ended July 31,1996, and the effect was not material.
4
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Historically, the Company has generated a greater proportion of its net sales
and profits, and increased working capital needs, in the second and third
quarters of each fiscal year as the Company's retail customers expand frame
inventories for increased winter holiday demand. This seasonal pattern
combined with the effects of new product introductions and the timing of
customer orders can cause the Company's results of operations to vary
significantly from quarter to quarter.
The following discussion and analysis compares the results of operations of the
Company for the three- and six- month periods ended October 31, 1996 to the
three- and six- month periods ended October 31, 1995.
RESULTS OF OPERATIONS
The following table shows, for the periods indicated, information derived from
the condensed consolidated statements of income of the Company expressed as a
percentage of net sales for such periods.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET SALES
----------------------------------------------------------------
THREE MONTHS SIX MONTHS
ENDED OCTOBER 31 ENDED OCTOBER 31
1996 1995 1996 1995
----------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 75.2 73.9 75.9 76.2
----------------------------------------------------------------
24.8 26.1 24.1 23.8
Operating expenses
Selling 5.9 6.1 6.1 6.1
General and administrative 5.3 5.9 6.4 6.1
Amortization of intangibles .6 .5 0.7 0.6
----------------------------------------------------------------
11.80 12.50 13.20 12.80
----------------------------------------------------------------
Operating income 13.0 13.6 10.9 11.0
Interest expense (0.7) (0.7) (0.7) (0.8)
----------------------------------------------------------------
Income before income taxes 12.3 12.9 10.2 10.2
Income taxes 4.7 4.9 3.9 3.9
----------------------------------------------------------------
Net income 7.6% 8.0% 6.30% 6.30%
================================================================
</TABLE>
Net Sales. Net sales increased by $1.0 million, or 5.8% for the three months
ended October 31, 1996 and $2.4 million or 7.7% for the six months ended
October 31, 1996 compared to the same periods ended October 31, 1995.
Substantially all the increase was from sales of products by its wholly owned
subsidiary, Universal Cork, Inc. which was acquired in a purchase transaction
on April 24, 1996.
Gross Profit. Gross profit increased by $0.02 million or 0.5% for the three
months ended October 31, 1996 and $0.7 million or 9.4% for the six months ended
October 31, 1996 compared to the same periods ended October 31, 1995. As a
percentage of sales, gross profit decreased from 26.1% to 24.8% for the
5
<PAGE> 8
three months ended October 31, 1996 and increased from 23.8% to 24.1% for the
six months ended October 31, 1996 as compared to the same periods last year.
The changes were primarily the result of product mix.
Selling Expenses. Selling and marketing expenses increased by $0.03 million or
2.4% for the three months ended October 31, 1996 and $0.15 million or 8.1% for
the six months ended October 31, 1996 compared to the same periods ended
October 31, 1995. As a percentage of net sales, selling and marketing expenses
decreased to 5.9% from 6.1% for the three months ended October 31,1996 and
remained the same at 6.1% for the six months ended October 31, 1996 as
compared to the same periods ended October 31, 1995.
General and Administrative Expenses. General and administrative expenses
decreased by $0.04 million, or 4.2%, for the three months ended October 31,
1996 and increased $0.27 million or 14.2% for the six months ended October 31,
1996 compared to the same periods ended October 31, 1995. The timing of
several quarter specific charges relating to shareholder communication and
corporate filings were the main contributors to the periods changes and net
increase for the six month period.
Interest Expenses. Interest expenses remained the same at $0.13 million for
the three months ended October 31, 1996 and decreased to $0.25 million from
$0.26 million for the six months ended October 31, 1996 compared to the same
periods ended October 31, 1995 as a result decreased cost of funds.
Income Taxes. Income taxes increased $0.01 million to $0.89 million for the
three months ended October 31, 1996 and $0.10 million to $1.28 million for the
six months ended October 31,1996 compared to $0.88 million and $1.18 million
for the same periods ended October 31, 1995. The estimated effective tax rate
remained relatively constant at approximately 38%.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations were $1.3 million for the six month period ended
October 31,1996 as compared to $0.8 million for the six months ended October
31,1995. The $0.8 million net increase from financing activities along with
the increases from operations funded the increase in capital expenditures.
The Company has credit agreements with two banks. The primary credit facility
from the first bank provides borrowings up to $25 million for working capital,
capital expenditures and other corporate purposes and is limited in
availability based on inventories, receivables and capital expenditures.
Borrowings under the primary facility bears interest at the lower of the bank's
prime rate less 1.50% to 1.00% or LIBOR plus 1.50% to 2.00% with the actual
rate being dependent on the level of funded indebtedness the Company. At
October 31, 1996, $6.8 million was available under the $10.0 million working
capital portion of the facility. No funds had been borrowed against the $15.0
million capital loan portion of the facility. The Company's credit agreement
with a second bank provided a long term loan of $5 million payable over 60
months. At October 31, 1996 the remaining balance was $4.4 million.
The Company's current ratio was 2.6 to 1 at October 31, 1996 and April 30,
1996.
The forward-looking statements in the report contain projections that
could be adversely affected by significant changes in National Picture &
Frame Company's operating environment and marketplace. These factors
could include, but are not limited to, a decrease in demand for framed
wall decor, loss of market share by major retail customers, cutbacks in
overall consumer spending, increasing prices of raw materials such as wood
and polystyrene and higher labor cost.
6
<PAGE> 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three
months ended October 31, 1996. The exhibits filed as part of this
report are listed below.
Exhibit No. Description
- ----------- -----------
10.14 Employment Agreement, dated
November 7, 1996, by and between
the Company and Jesse C. Luxton.
10.15 Employment Agreement, dated
November 7, 1996, by and between
the Company and Richard
A. Beattie.
10.16 Employment Agreement, dated
November 7, 1996, by and
between the Company and Billy
D. Moore.
10.17 Employment Agreement, dated
November 7, 1996, by and between
the Company and M. Wesley
Jordan, Jr.
10.18 Employment Agreement, dated
November 7, 1996, by and between
the Company and Robert T.
Littlejohn.
10.19 Employment Agreement, dated
November 7, 1996, by and between
the Company and John Barlow.
10.20 Employment Agreement, dated
November 7, 1996, by and between
the Company and Tom Walburgh.
27 Financial Data Schedule
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.
NATIONAL PICTURE & FRAME COMPANY
By: /s/ M. Wesley Jordan, Jr.
---------------------------------
M. Wesley Jordan, Jr.
Vice President-Finance
(principal financial officer and
principal accounting officer)
7
<PAGE> 1
EX-10.14
November 7, 1996
Mr. Jesse C. Luxton
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear Jesse:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the second anniversary of such
Change of Control or (y) the first anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph are not intended to be
duplicative of severance payments that you may otherwise be entitled to receive
pursuant to Section 5(b)(i) of your Employment Agreement, dated as of April 30,
1993, by and between you and the Company (the "Employment Agreement"); and
therefore the amounts payable to you pursuant to this paragraph will be reduced
by the amount of any severance payments you otherwise receive pursuant to your
Employment Agreement.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then notwithstanding anything in
your Employment Agreement to the contrary, your cash bonus for such fiscal year
shall be equal to 50% of your base salary for such fiscal year. If a Change of
Control does not occur during the Company's fiscal year ended April 30, 1997,
then notwithstanding anything in your Employment Agreement to the contrary,
your cash bonus for such fiscal year shall equal the greater of (a) 16 2/3% of
your base salary for such fiscal year and (b) the Bonus (as defined in your
Employment Agreement) otherwise payable to you pursuant to your Employment
Agreement for such fiscal year.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of
<PAGE> 2
November 7, 1996
Page 2
which the stockholders of the Company which possess the voting power (under
ordinary circumstances) to elect a majority of the Company's board of directors
as of the date hereof cease to own a sufficient amount of the Company's
outstanding capital stock possessing the voting power (under ordinary
circumstances) to elect a majority of the Company's board of directors.
The provisions of this letter agreement shall constitute
binding and enforceable contractual obligations of the parties hereto. This
letter agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same binding agreement. Except as
expressly amended or modified hereby, your Employment Agreement will and does
remain in full force and effect.
Very truly yours,
NATIONAL PICTURE & FRAME COMPANY
By: ______________________________
Its: ______________________________
Agreed to and Accepted:
________________________________
Jesse C. Luxton
<PAGE> 1
EX-10.15
November 7, 1996
Mr. Richard A. Beattie
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear Richard:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the second anniversary of such
Change of Control or (y) the first anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph are not intended to be
duplicative of severance payments that you may otherwise be entitled to receive
pursuant to Section 5(b)(i) of your Employment Agreement, dated as of April 30,
1993, by and between you and the Company (the "Employment Agreement"); and
therefore the amounts payable to you pursuant to this paragraph will be reduced
by the amount of any severance payments you otherwise receive pursuant to your
Employment Agreement.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then notwithstanding anything in
your Employment Agreement to the contrary, your cash bonus for such fiscal year
shall be equal to 40% of your base salary for such fiscal year. If a Change of
Control does not occur during the Company's fiscal year ended April 30, 1997,
then notwithstanding anything in your Employment Agreement to the contrary,
your cash bonus for such fiscal year shall equal the greater of (a) 13 1/3% of
your base salary for such fiscal year and (b) the Bonus (as defined in your
Employment Agreement) otherwise payable to you pursuant to your Employment
Agreement for such fiscal year.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of
<PAGE> 1
EX-10.16
November 7, 1996
Mr. Billy D. Moore
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear Billy:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the second anniversary of such
Change of Control or (y) the first anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph are not intended to be
duplicative of severance payments that you may otherwise be entitled to receive
pursuant to Section 5(b)(i) of your Employment Agreement, dated as of April 30,
1993, by and between you and the Company (the "Employment Agreement"); and
therefore the amounts payable to you pursuant to this paragraph will be reduced
by the amount of any severance payments you otherwise receive pursuant to your
Employment Agreement.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then notwithstanding anything in
your Employment Agreement to the contrary, your cash bonus for such fiscal year
shall be equal to 40% of your base salary for such fiscal year. If a Change of
Control does not occur during the Company's fiscal year ended April 30, 1997,
then notwithstanding anything in your Employment Agreement to the contrary,
your cash bonus for such fiscal year shall equal the greater of (a) 13 1/3% of
your base salary for such fiscal year and (b) the Bonus (as defined in your
Employment Agreement) otherwise payable to you pursuant to your Employment
Agreement for such fiscal year.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of
<PAGE> 1
EX-10.17
November 7, 1996
Mr. M. Wesley Jordan, Jr.
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear Wes:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the first anniversary of such Change
of Control or (y) the four month anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph will be reduced by the amount
of any cash severance payments you otherwise receive from the Company.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then your cash bonus for such
fiscal year shall be equal to 30% of your base salary for such fiscal year. If
a Change of Control does not occur during the Company's fiscal year ended April
30, 1997, then your cash bonus for such fiscal year shall equal the greater of
(a) 10% of your base salary for such fiscal year and (b) your Formula Bonus (as
defined below) for such fiscal year. Your "Formula Bonus" shall be equal to:
(30% of your base salary for such fiscal year multiplied by [(EBIT Growth
(Bonus) - 110%) x 10]). For purposes of this letter agreement, "EBIT Growth
(Bonus)" has the meaning accorded to such term in the Employment Agreements,
dated as of April 30, 1993, by and between the Company and each of Jesse
Luxton, Billy Moore, Richard Beattie and Robert Littlejohn.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of which the stockholders of the Company which
possess the voting power (under ordinary circumstances) to elect a majority of
the Company's board of directors as of the date hereof cease
<PAGE> 1
EX-10.18
November 7, 1996
Mr. Robert T. Littlejohn
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear Bob:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the second anniversary of such
Change of Control or (y) the first anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph are not intended to be
duplicative of severance payments that you may otherwise be entitled to receive
pursuant to Section 5(b)(i) of your Employment Agreement, dated as of April 30,
1993, by and between you and the Company (the "Employment Agreement"); and
therefore the amounts payable to you pursuant to this paragraph will be reduced
by the amount of any severance payments you otherwise receive pursuant to your
Employment Agreement.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then notwithstanding anything in
your Employment Agreement to the contrary, your cash bonus for such fiscal year
shall be equal to 30% of your base salary for such fiscal year. If a Change of
Control does not occur during the Company's fiscal year ended April 30, 1997,
then notwithstanding anything in your Employment Agreement to the contrary,
your cash bonus for such fiscal year shall equal the greater of (a) 10% of your
base salary for such fiscal year and (b) the Bonus (as defined in your
Employment Agreement) otherwise payable to you pursuant to your Employment
Agreement for such fiscal year.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of
<PAGE> 2
November 7, 1996
Page 2
which the stockholders of the Company which possess the voting power (under
ordinary circumstances) to elect a majority of the Company's board of directors
as of the date hereof cease to own a sufficient amount of the Company's
outstanding capital stock possessing the voting power (under ordinary
circumstances) to elect a majority of the Company's board of directors.
The provisions of this letter agreement shall constitute
binding and enforceable contractual obligations of the parties hereto. This
letter agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same binding agreement. Except as
expressly amended or modified hereby, your Employment Agreement will and does
remain in full force and effect.
Very truly yours,
NATIONAL PICTURE & FRAME COMPANY
By: ______________________________
Its: ______________________________
Agreed to and Accepted:
________________________________
Robert T. Littlejohn
<PAGE> 1
EX-10.19
November 7, 1996
Mr. John Barlow
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear John:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the first anniversary of such Change
of Control or (y) the four month anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph will be reduced by the amount
of any cash severance payments you otherwise receive from the Company.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then your cash bonus for such
fiscal year shall be equal to 20% of your base salary for such fiscal year. If
a Change of Control does not occur during the Company's fiscal year ended April
30, 1997, then your cash bonus for such fiscal year shall equal the greater of
(a) 6 2/3% of your base salary for such fiscal year and (b) your Formula Bonus
(as defined below) for such fiscal year. Your "Formula Bonus" shall be equal
to: (20% of your base salary for such fiscal year multiplied by [(EBIT Growth
(Bonus) - 110%) x 10]). For purposes of this letter agreement, "EBIT Growth
(Bonus)" has the meaning accorded to such term in the Employment Agreements,
dated as of April 30, 1993, by and between the Company and each of Jesse
Luxton, Billy Moore, Richard Beattie and Robert Littlejohn.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of which the stockholders of the Company which
possess the voting power (under ordinary circumstances) to elect a majority of
the Company's board of directors as of the date hereof cease
<PAGE> 2
November 7, 1996
Page 2
to own a sufficient amount of the Company's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the Company's board of directors.
The provisions of this letter agreement shall constitute
binding and enforceable contractual obligations of the parties hereto. This
letter agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same binding agreement.
Very truly yours,
NATIONAL PICTURE & FRAME COMPANY
By: ______________________________
Its: ______________________________
Agreed to and Accepted:
________________________________
John Barlow
<PAGE> 1
EX-10.20
November 7, 1996
Mr. Tom Walburgh
National Picture & Frame Company
1500 Commerce Street
Greenwood, MS 38930
Re: Employment Matters.
Dear Tom:
In the event a Change of Control (as defined below) occurs
during the Company's fiscal year ended April 30, 1997 and, prior to the second
anniversary of such Change of Control, (i) your employment with National
Picture & Frame Company (the "Company") is terminated, (ii) your duties or
responsibilities to the Company are substantially diminished or (iii) you are
required to perform your duties and responsibilities to the Company at a
location more than 50 miles from the current location of the Company's
corporate headquarters (each, a "Termination Event"), then you shall be
entitled to a severance package equal to your base salary from the date of such
Termination Event through the later of (x) the first anniversary of such Change
of Control or (y) the four month anniversary of such Termination Event. The
amounts payable to you pursuant to this paragraph will be reduced by the amount
of any cash severance payments you otherwise receive from the Company.
In addition, if a Change of Control occurs during the
Company's fiscal year ended April 30, 1997, then your cash bonus for such
fiscal year shall be equal to 20% of your base salary for such fiscal year. If
a Change of Control does not occur during the Company's fiscal year ended April
30, 1997, then your cash bonus for such fiscal year shall equal the greater of
(a) 6 2/3% of your base salary for such fiscal year and (b) your Formula Bonus
(as defined below) for such fiscal year. Your "Formula Bonus" shall be equal
to: (20% of your base salary for such fiscal year multiplied by [(EBIT Growth
(Bonus) - 110%) x 10]). For purposes of this letter agreement, "EBIT Growth
(Bonus)" has the meaning accorded to such term in the Employment Agreements,
dated as of April 30, 1993, by and between the Company and each of Jesse
Luxton, Billy Moore, Richard Beattie and Robert Littlejohn.
For purposes of this letter agreement, "Change of Control"
means any (i) consolidation or merger of the Company with or into another
entity or entities (whether or not the Company is the surviving entity), (ii)
any sale or transfer by the Company of all or substantially all of its assets
or (iii) any sale, transfer or issuance or series of sales, transfers and/or
issuances of shares of the Company's capital stock by the Company or the
stockholders thereof as a result of which the stockholders of the Company which
possess the voting power (under ordinary circumstances) to elect a majority of
the Company's board of directors as of the date hereof cease
<PAGE> 2
November 7, 1996
Page 2
to own a sufficient amount of the Company's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the Company's board of directors.
The provisions of this letter agreement shall constitute
binding and enforceable contractual obligations of the parties hereto. This
letter agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same binding agreement.
Very truly yours,
NATIONAL PICTURE & FRAME COMPANY
By: ______________________________
Its: ______________________________
Agreed to and Accepted:
________________________________
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 238
<SECURITIES> 0
<RECEIVABLES> 12,913
<ALLOWANCES> 0
<INVENTORY> 11,448
<CURRENT-ASSETS> 26,161
<PP&E> 23,428
<DEPRECIATION> 5,091
<TOTAL-ASSETS> 54,197
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<BONDS> 0
50
0
<COMMON> 0
<OTHER-SE> 35,629
<TOTAL-LIABILITY-AND-EQUITY> 54,197
<SALES> 33,050
<TOTAL-REVENUES> 33,050
<CGS> 25,075
<TOTAL-COSTS> 25,075
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 248
<INCOME-PRETAX> 3,360
<INCOME-TAX> 1,277
<INCOME-CONTINUING> 2,083
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<NET-INCOME> 2,083
<EPS-PRIMARY> .42
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</TABLE>
