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 June 30, 2003
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 0-49881
Catalina Lighting, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Florida | 59-1548266 | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| 18191 N.W. 68th Avenue Miami, Florida |
33015 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (305) 558-4777
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 ¨.
Indicate by checkmark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). Yes ¨ No x.
The number of shares of the registrant’s common stock, $.01 par value, outstanding as of the close of business on August 1, 2003 was 4,289,873.
CATALINA LIGHTING, INC. AND SUBSIDIARIES
INDEX
| PAGE NO. | ||||
| PART I FINANCIAL INFORMATION |
||||
| ITEM 1—Financial Statements: |
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| Condensed Consolidated Balance Sheets—June 30, 2003 and September 30, 2002 |
1 | |||
| Condensed Consolidated Statements of Operations—Three and nine months ended June 30, 2003 and 2002 |
3 | |||
| Condensed Consolidated Statements of Cash Flows—Nine months ended June 30, 2003 and 2002 |
4 | |||
| 6 | ||||
| ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 | |||
| ITEM 3—Quantitative and Qualitative Disclosures About Market Risk |
35 | |||
| 35 | ||||
| PART II OTHER INFORMATION |
||||
| 36 | ||||
| 36 | ||||
| 36 | ||||
| 37 | ||||
CATALINA LIGHTING, INC. AND SUBSIDIARIES
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CATALINA LIGHTING, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
| June 30, 2003 |
September 30, 2002 | |||||
| (Unaudited) | (Audited) | |||||
| Assets | ||||||
| Current assets |
||||||
| Cash and cash equivalents |
$ | 1,829 | $ | 2,657 | ||
| Restricted cash equivalents and short-term investments |
278 | — | ||||
| Accounts receivable, net of allowance for doubtful accounts of $722 and $446, respectively |
24,935 | 33,814 | ||||
| Inventories |
35,125 | 34,511 | ||||
| Other current assets |
5,041 | 5,660 | ||||
| Total current assets |
67,208 | 76,642 | ||||
| Property and equipment, net |
16,879 | 18,102 | ||||
| Goodwill, net |
28,282 | 28,282 | ||||
| Other intangible assets, net |
1,500 | 2,634 | ||||
| Other assets, net |
7,224 | 5,554 | ||||
| Total assets |
$ | 121,093 | $ | 131,214 | ||
(Continued on Page 2)
1
CATALINA LIGHTING, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (continued)
(In thousands, except share data)
| June 30, 2003 |
September 30, 2002 |
|||||||
| (Unaudited) | (Audited) | |||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 21,984 | $ | 29,498 | ||||
| Revolving credit facilities |
10,450 | 1,477 | ||||||
| Term loans |
14,283 | 3,154 | ||||||
| Current maturities of other long-term debt |
749 | 340 | ||||||
| Other current liabilities |
14,341 | 13,700 | ||||||
| Total current liabilities |
61,807 | 48,169 | ||||||
| Revolving credit facilities |
490 | 11,315 | ||||||
| Term loans |
— | 17,574 | ||||||
| Subordinated notes |
2,980 | 2,804 | ||||||
| Other long-term debt |
21 | 721 | ||||||
| Accrued pension and other liabilities |
4,610 | 4,959 | ||||||
| Total liabilities |
69,908 | 85,542 | ||||||
| Minority interest |
1,202 | 1,144 | ||||||
| Stockholders’ equity |
||||||||
| Preferred stock, $.01 par value; authorized 1,000,000 shares; none issued |
— | — | ||||||
| Common stock, $.01 par value; authorized 20,000,000 shares; issued 4,418,260 shares and 4,414,260 shares, respectively; outstanding 4,289,873 shares and 4,285,873 shares, respectively |
44 | 44 | ||||||
| Additional paid-in capital |
38,577 | 38,119 | ||||||
| Retained earnings |
12,369 | 7,623 | ||||||
| Deferred compensation |
(307 | ) | — | |||||
| Accumulated other comprehensive income |
1,761 | 1,203 | ||||||
| Treasury stock, at cost, 128,387 shares |
(2,461 | ) | (2,461 | ) | ||||
| 49,983 | 44,528 | |||||||
| $ | 121,093 | $ | 131,214 | |||||
See accompanying notes to condensed consolidated financial statements.
2
CATALINA LIGHTING, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
| Three Months Ended June 30, |
Nine Months Ended June 30, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net sales |
$ | 48,398 | $ | 53,351 | $ | 154,510 | $ | 163,463 | ||||||||
| Cost of sales |
37,742 | 42,910 | 121,205 | 131,329 | ||||||||||||
| Gross profit |
10,656 | 10,441 | 33,305 | 32,134 | ||||||||||||
| Litigation settlement |
— | 959 | — | 959 | ||||||||||||
| Selling, general and administrative expenses |
7,816 | 8,231 | 23,024 | 24,963 | ||||||||||||
| Operating income |
2,840 | 1,251 | 10,281 | 6,212 | ||||||||||||
| Other expenses: |
||||||||||||||||
| Interest expense |
(874 | ) | (1,789 | ) | (2,946 | ) | (5,751 | ) | ||||||||
| Gain (loss) on disposal of property and equipment, net |
13 | — | 32 | (963 | ) | |||||||||||
| Other income (expenses) |
(41 | ) | (72 | ) | (64 | ) | 101 | |||||||||
| Total other expenses |
(902 | ) | (1,861 | ) | (2,978 | ) | (6,613 | ) | ||||||||
| Income (loss) before income taxes |
1,938 | (610 | ) | 7,303 | (401 | ) | ||||||||||
| Income tax provision (benefit) |
679 | (201 | ) | 2,557 | (132 | ) | ||||||||||
| Net income (loss) |
$ | 1,259 | $ | (409 | ) | $ | 4,746 | $ | (269 | ) | ||||||
| Weighted average number of shares outstanding |
||||||||||||||||
| Basic |
5,559 | 3,371 | 5,557 | 3,241 | ||||||||||||
| Diluted |
5,787 | 3,371 | 5,791 | 3,241 | ||||||||||||
| Earnings (loss) per share |
||||||||||||||||
| Basic |
$ | 0.23 | $ | (0.12 | ) | $ | 0.85 | $ | (0.08 | ) | ||||||
| Diluted |
$ | 0.22 | $ | (0.12 | ) | $ | 0.82 | $ | (0.08 | ) | ||||||
See accompanying notes to condensed consolidated financial statements.
3
CATALINA LIGHTING, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Nine Months Ended June 30, |
||||||||
| 2003 |
2002 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income (loss) |
$ | 4,746 | $ | (269 | ) | |||
| Adjustments for non-cash items: |
||||||||
| Exchange loss (gain) |
(105 | ) | 33 | |||||
| Amortization to interest expense |
986 | 1,412 | ||||||
| Depreciation and other amortization |
2,406 | 4,736 | ||||||
| Deferred income tax (benefit) provision |
(1,667 | ) | (2,076 | ) | ||||
| Loss (gain) on disposition of property and equipment |
(32 | ) | 963 | |||||
| Non-cash compensation |
144 | — | ||||||
| Warrants issued for interest on subordinated notes |
— | 175 | ||||||
| Interest on subordinated notes added to principal |
— | 692 | ||||||
| Change in assets and liabilities |
2,375 | 2,757 | ||||||
| Net cash provided by operating activities |
8,853 | 8,423 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Capital expenditures |
(902 | ) | (599 | ) | ||||
| Proceeds from sale of property and equipment |
263 | 8,454 | ||||||
| Decrease (increase) in restricted cash equivalents and short-term investments |
— | 1,066 | ||||||
| Net cash (used in) provided by investing activities |
(639 | ) | 8,921 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Payments on other long-term debt |
(297 | ) | (737 | ) | ||||
| Payments on bonds payable |
— | (5,100 | ) | |||||
| Net payments on revolving credit facilities |
(1,904 | ) | (7,619 | ) | ||||
| Payments on term loans |
(6,925 | ) | (4,013 | ) | ||||
| Proceeds from issuance of common stock |
8 | — | ||||||
| Sinking fund redemption payments on bonds payable |
— | (515 | ) | |||||
| Net cash used in financing activities |
(9,118 | ) | (17,984 | ) | ||||
| Effect of exchange rate changes on cash |
76 | 68 | ||||||