-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kc2LC2avQVsWUos7E2UeP+81ZXqO2nvBTd4yBuz4lsT+NT2yKnJKtaZeInUo5IWR Gko731GbjyUWnK17IC4cBg== 0001068800-99-000090.txt : 19990317 0001068800-99-000090.hdr.sgml : 19990317 ACCESSION NUMBER: 0001068800-99-000090 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990130 FILED AS OF DATE: 19990316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FALCON PRODUCTS INC /DE/ CENTRAL INDEX KEY: 0000034339 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FURNITURE & FIXTURES [2590] IRS NUMBER: 430730877 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11577 FILM NUMBER: 99566085 BUSINESS ADDRESS: STREET 1: 9387 DIELMAN INDUSTRIAL DR CITY: ST LOUIS STATE: MO ZIP: 63132 BUSINESS PHONE: 3149919200 MAIL ADDRESS: STREET 1: 9387 DIELMAN INDUSTRIAL DRIVE CITY: ST LOUIS STATE: MO ZIP: 63132 FORMER COMPANY: FORMER CONFORMED NAME: FALCON PRODUCTS INC MISSOURI DATE OF NAME CHANGE: 19750211 10-Q 1 FALCON PRODUCTS, INC. 10-Q 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 quarterly period ended January 30, 1999 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 1-11577 FALCON PRODUCTS, INC. (Exact name of registrant as specified in its charter) DELAWARE 43-0730877 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 9387 DIELMAN INDUSTRIAL DRIVE 63132 ST. LOUIS, MISSOURI (Zip Code) (Address of principal executive offices) (314) 991-9200 (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 twelve months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- As of March 15, 1999, the registrant had 8,963,937 shares of common stock, $.02 par value, outstanding. PART I - FINANCIAL INFORMATION Item 1. - Financial Statements Falcon Products, Inc. and Subsidiaries -------------------------------------- Consolidated Statements of Earnings ----------------------------------- (Unaudited)
Thirteen Weeks Ended ------------------------------- January 30, January 31, (In thousands, except per share data) 1999 1998 ----------- ----------- Net sales $34,595 $28,060 Cost of sales 24,693 19,926 ------- ------- Gross margin 9,902 8,134 Selling, general and administrative expenses 6,613 5,348 ------- ------- Operating profit 3,289 2,786 Interest (expense)/income, net (289) 97 Minority interest in consolidated subsidiary 6 15 ------- ------- Earnings before income taxes 3,006 2,898 Income tax expense 1,142 1,116 ------- ------- Net earnings $ 1,864 $ 1,782 ======= ======= Basic and diluted earnings per share $ 0.21 $ 0.19 ======= ======= See accompanying notes to consolidated financial statements. /TABLE Falcon Products, Inc. and Subsidiaries -------------------------------------- Consolidated Balance Sheets --------------------------- (Unaudited)
(In thousands, except share data) January 30, October 31, 1999 1998 ----------- ----------- Assets - ------ Current assets: Cash and cash equivalents $ 4,542 $ 5,186 Accounts receivable, less allowances of $421 and $672, respectively 20,971 22,683 Inventories 26,736 24,877 Prepayments and other current assets 3,722 3,081 -------- -------- Total current assets 55,971 55,827 -------- -------- Property, plant and equipment: Land 2,116 2,116 Buildings and improvements 11,446 11,395 Machinery and equipment 32,784 32,154 -------- -------- 46,346 45,665 Less accumulated depreciation (18,520) (18,167) -------- -------- Total property, plant and equipment 27,826 27,498 -------- -------- Other assets, net of accumulated amortization: Goodwill 24,881 23,243 Other 5,287 5,406 -------- -------- Total other assets 30,168 28,649 Total Assets $113,965 $111,974 ======== ======== Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Accounts Payable $ 13,933 $ 11,695 Accrued liabilities 4,418 6,769 Current maturities of long-term debt 1,911 1,607 -------- -------- Total current liabilities 20,262 20,071 Long-term obligations: Long-term debt 17,479 17,208 Deferred income taxes 876 876 Minority interest in consolidated subsidiary 804 810 Other 912 1,063 -------- -------- Total liabilities 40,333 40,028 -------- -------- Stockholders' equity: Common stock, $.02 par value: authorized 20,000,000 shares; 198 198 9,915,117 shares issued Additional paid-in capital 47,376 47,376 Treasury stock, at cost (942,540 and 992,777 shares, respectively) (12,818) (13,557) Cumulative translation adjustment (299) (19) Retained earnings 39,175 37,948 -------- -------- Total stockholders' equity 73,632 71,946 -------- -------- Total Liabilities and Stockholders' Equity $113,965 $111,974 ======== ======== See accompanying notes to consolidated financial statements.
Falcon Products, Inc. and Subsidiaries -------------------------------------- Consolidated Statements of Stockholders' Equity ----------------------------------------------- Thirteen Weeks Ended January 30, 1999, and January 31, 1998 ----------------------------------------------------------- (Unaudited)
(In thousands) Additional Cumulative Total Common Paid-in Treasury Translation Retained Stockholders' Stock Capital Stock Adjustments Earnings Equity ------ ---------- -------- ----------- -------- ------------- Balance, November 1, 1997 $198 $47,376 $ (6,855) $(727) $33,272 $73,264 Net earnings -- -- -- -- 1,782 1,782 Exercise of stock options -- -- 132 -- (106) 26 Issuance of stock to Employee Stock Purchase Plan -- -- 31 -- -- 31 Translation adjustments -- -- -- (253) -- (253) Cash dividends -- -- -- -- (370) (370) Treasury stock purchases -- -- (2,975) -- -- (2,975) Issuance of stock for business acquisition -- -- 149 -- -- 149 ---- ------- -------- ----- ------- ------- Balance, January 31, 1998 $198 $47,376 $ (9,518) $(980) $34,578 $71,654 ==== ======= ======== ===== ======= ======= Balance, October 31, 1998 $198 $47,376 $(13,557) $ (19) $37,948 $71,946 Net earnings -- -- -- -- 1,864 1,864 Exercise of stock options -- -- 73 -- (26) 47 Issuance of stock to Employee Stock Purchase Plan -- -- 574 -- (226) 348 Translation adjustments -- -- -- (280) -- (280) Cash dividends -- -- -- -- (359) (359) Treasury stock purchases -- -- -- -- -- -- Issuance of stock for business acquisition -- -- 92 -- (26) 66 ---- ------- -------- ----- ------- ------- Balance, January 30, 1999 $198 $47,376 $(12,818) $(299) $39,175 $73,632 ==== ======= ======== ===== ======= ======= See accompanying notes to consolidated financial statements.
Falcon Products, Inc. and Subsidiaries -------------------------------------- Consolidated Statements of Cash Flows ------------------------------------- (Unaudited)
Thirteen Weeks Ended --------------------------- January 30, January 31, (In thousands) 1999 1998 ----------- ----------- Cash flows from operating activities: Net earnings $ 1,864 $ 1,782 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 688 920 Translation adjustments (280) (253) Minority interest in consolidated subsidiary (6) (15) Change in assets and liabilities Accounts receivable, net 1,712 3,181 Inventories (1,859) (314) Prepayments and other current assets (641) (315) Other assets, net (1,928) (259) Accounts payable 2,207 (3,385) Accrued liabilities (2,322) (5,294) Other liabilities (151) - ------- ------- Net cash used in operating activities (716) (3,952) ------- ------- Cash flows from investing activities: Additions to property, plant and equipment, net (605) (1,176) ------- ------- Net cash used in investing activities (605) (1,176) ------- ------- Cash flows from financing activities: Additions to (repayment of) long-term debt, net 575 (190) Common stock issuances 461 206 Cash dividends (359) (370) Treasury stock purchases - (2,975) ------- ------- Net cash provided by (used in) financing activities 677 (3,329) ------- ------- Net decrease in cash and cash equivalents (644) (8,457) Cash and cash equivalents-beginning of period 5,186 16,294 ------- ------- Cash and cash equivalents-end of period $ 4,542 $ 7,837 ======= ======= Supplemental Cash Flow Information: Cash paid for interest $ 291 $ 42 ======= ======= Cash paid for income taxes $ 1,817 $ 3,116 ======= ======= See accompanying notes to consolidated financial statements.
Falcon Products, Inc. and Subsidiaries -------------------------------------- Notes to Consolidated Financial Statements ------------------------------------------ Thirteen Weeks Ended January 30, 1999 ------------------------------------- Note 1. - Interim Results The financial statements contained herein are unaudited. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for fair presentation of the results of the interim periods presented. Reference is made to the footnotes to the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended October 31, 1998, filed with the Securities and Exchange Commission. Note 2. - Business Acquisition The Company's results for the first quarter of 1999 include Howe Furniture Corporation and its subsidiaries ("Howe") for the thirteen week period. Howe was acquired during March 1998, and therefore Howe's results of operation are not included in the reported results for the first quarter of 1998. Note 3. - Comprehensive Income In June 1997, the Financial Accounting Standards Board (FASB) adopted Statements of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income", which is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources; it includes all changes in equity during the period except those resulting from investments by owners and distribution to owners. Comprehensive income is the total of all components of comprehensive income and other comprehensive income, including net income. Other comprehensive income refers to revenues, expenses, gains and losses that under GAAP are excluded from net income. Effective November 1, 1998, the Company adopted SFAS No. 130. For the Company, the only element of other comprehensive income is cumulative translation adjustments, arising from the translation of certain balance sheet accounts from local currency to functional currency. For quarters ended January 30, 1999, and January 31, 1998, comprehensive income was $1.6 million and $1.5 million, respectively. Item 2. - Management's Discussion and Analysis of Results of Operations ------------------------------------------------------------- and Financial Condition - ----------------------- The information contained in this Item 2 includes statements regarding matters which are not historical facts (including statements as to the Company's plans, beliefs or expectations) that are forward- looking statements within the meaning of the federal securities laws. Because such forward-looking statements involve certain risks and uncertainties, the Company's actual results and the timing of certain events could differ materially from those discussed herein. RESULTS OF OPERATIONS General The following table sets forth, for the periods presented, certain information relating to the operations of the Company, expressed as a percentage of net sales:
Thirteen Weeks Ended -------------------------- January 30, January 31, 1999 1998 ----------- ----------- Net sales 100.0% 100.0% Cost of sales 71.4 71.0 Gross margin 28.6 29.0 Selling, general and administrative expenses 19.1 19.1 Operating profit 9.5 9.9 Interest (expense) income, net (0.8) 0.3 Minority interest in consolidated subsidiary 0.0 0.1 Earnings before income taxes 8.7 10.3 Income tax expense 3.3 3.9 Net earnings 5.4 6.4
Thirteen weeks ended January 30, 1999, compared to the thirteen weeks ended January 31, 1998. Net earnings were $1.9 million in the first quarter of fiscal 1999, and $1.8 million in 1998. Net earnings per share were $.21 in 1999, and $.19 in 1998, an increase of 10.5%. Net sales for the first quarter of 1999 were $34.6 million, an increase of 23.1% over the 1998 first quarter net sales of $28.1 million. The increase was primarily due to additional sales related to the Howe acquisition which were partially offset by lower casegoods sales in the lodging market. This was following the Company's previous decision to exit the hotel casegoods market. Cost of sales was $24.7 million for the 1999 first quarter, an increase of 24.1% from $19.9 million in the first quarter of 1998. The overall increase is a result of the increased sales volume. Gross margin increased to $9.9 million for the first quarter of 1999, a 22.2% increase from $8.1 million in the same quarter of 1998. Gross margin as a percentage of net sales decreased to 28.6% in 1999 from 29.0% in 1998. The lower gross margin percentage during the first quarter of 1999 was due primarily to operating inefficiencies at the City of Industry, California manufacturing facility caused by lower volume. Selling, general and administrative expenses were $6.6 million in the first quarter of 1999, compared to $5.3 million in the first quarter of 1998, a 24.5% increase. The increase is primarily attributable to the Howe acquisition. Selling, general and administrative expenses as a percentage of net sales were 19.1% for the first quarter of 1999 and 1998. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital at January 30, 1999, was $35.7 million and its ratio of current assets to current liabilities was 2.8 to 1.0, compared with $35.8 million and 2.8 to 1.0 at October 31, 1998. The Company has a $20.0 million unsecured revolving line of credit agreement with a commercial bank. The revolving line of credit bears interest at a floating rate based on LIBOR, the Federal Funds Rate, or the Prime Rate, at the Company's election, plus a spread. The spread is determined by a leverage ratio, as defined in the agreement. The interest rate on the revolving credit facility is currently Prime minus 2%. The outstanding amounts under the agreement were $17.5 million and $16.9 million as of January 30, 1999 and October 31, 1998, respectively. The Company expects that it will meet its ongoing working capital and capital requirements from available cash reserves and available borrowings under its revolving credit facility. The Company's operating cash flows constitute its primary source of liquidity. PART II - OTHER INFORMATION Item 1. - Legal Proceedings ----------------- From time to time, the Company is subject to legal proceedings and other claims arising in the ordinary course of its business. The Company maintains insurance coverage against potential claims in an amount it believes to be adequate. There are no material pending legal proceedings, other than routine litigation incidental to the business, to which the Company is a party or of which any of the Company's property is the subject. Item 2. - Changes in Securities --------------------- None. Item 3. - Defaults Upon Senior Securities ------------------------------- None. Item 4. - Submission of Matters to a Vote of Security Holders --------------------------------------------------- None. Item 5. - Other Information ----------------- None. Item 6. - Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Exhibit 11 - Computation of Earnings Per Share (b) Reports on Form 8-K None. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March 16, 1999 /s/ Franklin A. Jacobs ---------------------- Franklin A. Jacobs Chief Executive Officer and Chairman of the Board Date: March 16, 1999 /s/ Michael J. Dreller ---------------------- Michael J. Dreller Vice President and Chief Financial Officer EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT NO. 11 Falcon Products, Inc. and Subsidiaries -------------------------------------- COMPUTATION OF EARNINGS PER SHARE (Unaudited)
(In thousands, except per share amounts) Thirteen Weeks Ended -------------------------- January 30, January 31, 1999 1998 ----------- ----------- Basic Earnings Per Share: - ------------------------- Average number of common shares outstanding 8,958 9,348 ====== ====== Net earnings $1,864 $1,782 ====== ====== Earnings per share $ 0.21 $ 0.19 ====== ====== Diluted Earnings Per Share: - --------------------------- Average number of common shares outstanding 8,958 9,348 Assumed exercise of options (treasury stock method) 84 186 ------ ------ Shares for diluted computation 9,042 9,534 ====== ====== Net earnings $1,864 $1,782 ====== ====== Earnings per share $ 0.21 $ 0.19 ====== ======
EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from SEC Form 10-Q for the quarterly period ended January 30, 1999 and is qualified in its entirety by reference to such statements. 1,000 3-MOS OCT-30-1999 JAN-30-1999 4,542 0 20,971 421 26,736 55,971 27,826 18,520 113,965 20,262 0 198 0 0 73,434 113,965 34,595 34,595 24,693 24,693 0 0 289 3,006 1,142 1,864 0 0 0 1,864 0.21 0.21
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