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Decorator Industries, Inc. (Amex: DII), a leading supplier of interior furnishings for the hospitality, manufactured housing ("MH") and recreational vehicle ("RV") industries, today reported a net loss of $1,061,000 or $0.36 per diluted share for the second quarter of fiscal 2008 compared with net income of $64,000 or $0.02 per diluted share in the second quarter of 2007. The net loss for the first six months of fiscal 2008 was $1,536,000 or $0.52 per diluted share compared with a loss of $28,000 or $0.01 cents per diluted share for the same period a year ago. The net loss for the second quarter and six months of 2008 included a one time pre-tax charge of $1,430,000 related to the scheduled closing of certain facilities and the impairment of assets.
Net sales for the second quarter of fiscal 2008 were $12,563,000, down 1% from $12,671,000 for the same period a year ago. Net sales for the first six months of fiscal 2008 were $23,067,000, a decline of 7% from $24,919,000 in the first half of 2007.
Mr. Johnson, President, stated:
"Sales to our Hospitality customers increased 60% to $5,489,000 in the second quarter of 2008 from $3,425,000 in the second quarter a year ago. For the first six months of 2008 Hospitality sales increased by 38% to $8,782,000 compared with $6,374,000 in the first six months of 2007. Hospitality sales for 2008 included sales from our Superior Drapery acquisition on June 1, 2007 of $1,014,000 for the second quarter and $1,438,000 for the six months versus $230,000 for both periods of 2007.
"Sales to our MH customers increased 14% to $2,571,000 in the second quarter of fiscal 2008, compared with last year's second quarter sales of $2,248,000. For the six month period of fiscal 2008 our MH sales increased by 19%, to $4,962,000 compared with $4,162,000 for the same period a year ago. MH sales for 2008 include sales from our Doris Lee acquisition on November 30, 2007 of $786,000 for the quarter and $1,531,000 for the six months. Sales to our existing MH customers in 2008 declined by 20% in the second quarter and 18% for the six months. The Manufactured Housing Institute reported that industry shipments decreased about 11% from last year's second quarter, resulting in a year to date decrease of about 7%.
"Sales to our RV customers decreased 36% to $4,503,000 in the second quarter of fiscal 2008, compared with last year's sales for the same period of $6,998,000. For the first six months of fiscal 2008 our RV sales decreased 35% to $9,323,000 compared with $14,383,000 for the same period a year ago. The RV industry reported a 22% decline in total shipments from last year's second quarter, with towable shipments decreasing by 18% and motor home shipments decreasing by 41%. Total RV industry shipments for the first six months of 2008 were down by 17%, with towable shipments decreasing 14% and motor home shipments decreasing 33%.
"Our efforts to grow our sales in the hospitality industry have begun to produce results. Unfortunately this is being offset by the continued deterioration of the MH and RV industries due to high fuel prices, the credit crisis and low consumer confidence.
"We have begun a process of closing underperforming facilities in an effort to return the Company to profitability. The buildings associated with these operations have been placed on the market for sale. This will be an ongoing process through the remainder of 2008 and we will continue to reevaluate our plan and make alterations as changes in our business environment dictate.
"The operating loss of $1,709,601 for the second quarter of 2008 included the one time charge of $1,430,000 related to the write off of impaired assets and the closing of underperforming facilities. The second quarter was also impacted by $200,000 of inventory write downs, an unusually high charge to the bad debt reserve of $126,000, and higher labor costs related to the reduced RV sales volumes.
"Selling and administrative expenses increased to $3,906,527 from $2,149,300 for the second quarter of last year. Selling and administrative expenses increased by $201,227 in the second quarter, net of the pre-tax charges of $1,430,000 and bad debt charge of $126,000. This increase was related to the acquisition of Superior Drapery, increased commission expense and incentive compensation from higher hospitality sales volumes.
"Due to the current losses the Board of Directors has decided to suspend the quarterly dividend and will consider reinstating payment of the dividend when the Company returns to consistent profitability.
"The company's financial condition remains strong with the funded debt to total capitalization ratio of only 14.6%. The balance sheet will improve further when the Company sells the idled facilities.
"These are challenging times and we have been required to make difficult decisions in an effort to further strengthen the company's financial position for the future. Management believes we have made the right decisions that will return the company to profitability in the most efficient manner. We will continue to seek all opportunities to grow the business while also working on reducing costs in all levels of the business."
STATEMENTS CONTAINED IN THIS RELEASE THAT ARE NOT HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS THAT COULD DIFFER MATERIALLY FROM ACTUAL RESULTS. PRIMARY FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER FROM THOSE IN THE FORWARD-LOOKING STATEMENTS ARE THE LEVEL OF DEMAND FOR RECREATIONAL VEHICLES, MANUFACTURED HOUSING AND HOTEL/MOTEL ACCOMMODATIONS, THE GENERAL ECONOMIC CONDITIONS, INTEREST RATE FLUCTUATIONS, THE AVAILABILITY OF CONSUMER CREDIT, FUEL PRICES, COMPETITIVE PRODUCTS AND PRICING PRESSURES WITHIN THE COMPANY'S MARKETS, THE COMPANY'S ABILITY TO CONTAIN ITS MANUFACTURING COSTS AND EXPENSES, AND OTHER FACTORS.
DECORATOR INDUSTRIES, INC., FOUNDED IN 1953, DESIGNS MANUFACTURES AND SELLS INTERIOR FURNISHING PRODUCTS, PRINCIPALLY DRAPERIES, CURTAINS, SHADES, BLINDS, VALANCE BOARDS, BEDSPREADS, COMFORTERS, PILLOWS, CUSHIONS AND TRAILER TENTS. DECORATOR IS A LEADING SUPPLIER TO THE MANUFACTURED HOUSING AND RECREATIONAL VEHICLE MARKETS AND IS A GROWING SUPPLIER TO THE LODGING INDUSTRY.
(DIIG) THE UNAUDITED FIGURES ARE AS FOLLOWS CONDENSED STATEMENT OF INCOME FOR QUARTERS ENDED: FOR TWENTY SIX WEEKS ENDED: June 28, 2008 June 30, 2007 June 28, 2008 June 30, 2007 NET SALES $12,563,069 $12,671,235 $23,066,967 $24,918,652 COST OF PRODUCTS SOLD 10,366,143 10,421,302 19,373,831 20,738,310 GROSS PROFIT 2,196,926 2,249,933 3,693,136 4,180,342 SELLING AND ADMINISTRATIVE EXPENSES 3,906,527 2,149,300 6,160,603 4,221,578 OPERATING INCOME (LOSS) (1,709,601) 100,633 (2,467,467) (41,236) OTHER INCOME (EXPENSE) Interest, Investment and Other Income 15,161 32,290 34,610 55,491 Interest Expense (33,089) (19,323) (63,190) (42,584) EARNINGS (LOSS) BEFORE INCOME TAXES (1,727,529) 113,600 (2,496,047) (28,329) PROVISION FOR INCOME TAXES (667,000) 50,000 (960,000) - NET INCOME (LOSS) $(1,060,529) $63,600 $(1,536,047) $(28,329) EARNINGS (LOSS) PER SHARE: BASIC $(0.36) $0.02 $( 0.52) $( 0.01) DILUTED $(0.36) $0.02 $( 0.52) $( 0.01) WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING BASIC 2,928,299 3,004,209 2,932,427 3,002,719 DILUTED 2,928,299 3,024,121 2,932,427 3,002,719 CONDENSED BALANCE SHEET June 28, 2008 December 29, 2007 CASH AND EQUIVALENTS $18,536 $17,544 ACCOUNTS RECEIVABLE 4,632,621 3,423,072 INVENTORIES 5,186,621 5,181,645 OTHER CURRENT ASSETS 1,406,746 868,371 TOTAL CURRENT ASSETS 11,244,524 9,490,632 NET PROPERTY AND EQUIPMENT 8,995,900 9,283,489 OTHER ASSETS 4,045,523 5,489,783 TOTAL ASSETS $24,285,947 $24,263,904 TOTAL CURRENT LIABILITIES $8,353,213 $5,577,253 LONG-TERM DEBT 675,000 1,409,000 DEFERRED TAXES 878,000 866,000 STOCKHOLDERS' EQUITY 14,379,734 16,411,651 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $24,285,947 $24,263,904
SOURCE Decorator Industries, Inc.
http://www.decoratorindustries.com
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