UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
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 000-18291
U.S. HOME SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 75-2922239 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 750 State Highway 121 Bypass, Suite 170 Lewisville, Texas |
75067 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (214) 488-6300
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 check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of August 2, 2004, there were 7,887,323 shares of the registrant’s common stock, $0.001 par value, outstanding.
- i -
Consolidated Balance Sheets
| June 30, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 6,639,893 | $ | 1,980,634 | ||||
| Restricted cash |
1,674,365 | 749,732 | ||||||
| Accounts receivable, net |
4,772,925 | 2,508,088 | ||||||
| Notes receivable |
56,390 | 54,849 | ||||||
| Commission advances |
649,184 | 580,777 | ||||||
| Inventories |
3,420,914 | 2,781,842 | ||||||
| Prepaid expenses |
1,126,072 | 1,066,863 | ||||||
| Deferred income taxes |
248,260 | 248,260 | ||||||
| Finance receivables held for investment, net |
37,983,076 | 35,484,532 | ||||||
| Property, plant, and equipment, net |
8,105,414 | 7,398,696 | ||||||
| Goodwill |
7,357,284 | 7,357,284 | ||||||
| Other assets |
1,146,915 | 934,239 | ||||||
| Total assets |
$ | 73,180,692 | $ | 61,145,796 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Accounts payable |
$ | 5,842,588 | $ | 3,285,091 | ||||
| Customer deposits |
2,595,759 | 2,458,382 | ||||||
| Accrued wages, commissions, and bonuses |
1,335,239 | 1,026,338 | ||||||
| Federal and state taxes payable |
245,912 | 452,258 | ||||||
| Other accrued liabilities |
694,655 | 643,965 | ||||||
| Deferred income taxes |
261,707 | 261,707 | ||||||
| Deferred revenues |
190,707 | 128,500 | ||||||
| Long-term debt |
39,583,755 | 38,178,155 | ||||||
| Capital lease obligations |
559,911 | 645,619 | ||||||
| Total liabilities |
$ | 51,310,233 | $ | 47,080,015 | ||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock – $0.001 par value, 1,000,000 shares authorized, no shares outstanding |
— | — | ||||||
| Common stock – $0.001 par value, 30,000,000 shares authorized, 7,886,823 and 6,524,302 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
7,887 | 6,524 | ||||||
| Additional capital |
17,358,971 | 9,687,122 | ||||||
| Note receivable for stock issued |
(274,950 | ) | (274,950 | ) | ||||
| Retained earnings |
4,778,551 | 4,647,085 | ||||||
| Total stockholders’ equity |
21,870,459 | 14,065,781 | ||||||
| Total liabilities and stockholders’ equity |
$ | 73,180,692 | $ | 61,145,796 | ||||
See accompanying notes.
- 1 -
Consolidated Statements of Operations
(unaudited)
| Three-months ended June 30, | ||||||
| 2004 |
2003 | |||||
| (restated) | ||||||
| Revenues: |
||||||
| Remodeling contracts |
$ | 23,767,775 | $ | 19,731,601 | ||
| Gains from loan portfolio sales |
35,872 | 286,911 | ||||
| Interest income |
1,353,024 | 518,237 | ||||
| Other |
106,671 | 126,698 | ||||
| Total revenues |
$ | 25,263,342 | $ | 20,663,447 | ||
| Costs and expenses: |
||||||
| Cost of remodeling contracts |
$ | 11,937,565 | $ | 8,789,399 | ||
| Branch operations |
860,027 | 592,784 | ||||
| Sales, marketing and license fees |
8,339,279 | 6,721,381 | ||||
| Interest expense on financing of loan portfolios |
419,561 | 203,748 | ||||
| Provision for loan losses |
158,200 | 58,536 | ||||
| General and administrative |
2,891,914 | 2,708,217 | ||||
| Income from operations |
$ | 656,796 | $ | 1,589,382 | ||
| Interest expense |
66,627 | 45,277 | ||||
| Other income, net |
77,012 | 11,496 | ||||
| Income before income taxes |
667,181 | 1,555,601 | ||||
| Income taxes |
261,335 | 611,461 | ||||
| Net income |
$ | 405,846 | $ | 944,140 | ||
| Net income per common share |
||||||
| Basic |
$ | 0.06 | $ | 0.15 | ||
| Diluted |
$ | 0.06 | $ | 0.14 | ||
| Weighted average common shares outstanding |
||||||
| Basic |
6,608,883 | 6,469,997 | ||||
| Diluted |
6,977,392 | 6,747,278 | ||||
See accompanying notes.
- 2 -
Consolidated Statements of Operations
(unaudited)
| Six-months ended June 30, | ||||||
| 2004 |
2003 | |||||
| (restated) | ||||||
| Revenues: |
||||||
| Remodeling contracts |
$ | 41,744,664 | $ | 33,915,229 | ||
| Gains from loan portfolio sales |
107,479 | 426,428 | ||||
| Interest income |
2,652,546 | 755,153 | ||||
| Other |
176,788 | 251,349 | ||||
| Total revenues |
$ | 44,681,477 | $ | 35,348,159 | ||
| Costs and expenses: |
||||||
| Cost of remodeling contracts |
$ | 20,910,209 | $ | 15,604,092 | ||
| Branch operations |
1,636,708 | 1,200,022 | ||||
| Sales, marketing and license fees |
15,278,936 | 12,442,595 | ||||
| Interest expense on financing of loan portfolios |
850,802 | 262,117 | ||||
| Provision for loan losses |
313,248 | 65,034 | ||||
| General and administrative |
5,427,715 | 5,111,151 | ||||
| Income from operations |
$ | 263,859 | $ | 663,148 | ||
| Interest expense |
140,760 | 100,539 | ||||
| Other income, net |
93,127 | 15,102 | ||||
| Income before income taxes |
216,226 | 577,711 | ||||
| Income taxes |
84,760 | 228,599 | ||||
| Net income |
$ | 131,466 | $ | 349,112 | ||
| Net income per common share |
||||||
| Basic |
$ | 0.02 | $ | 0.05 | ||
| Diluted |
$ | 0.02 | $ | 0.05 | ||
| Weighted average common shares outstanding |
||||||
| Basic |
6,568,195 | 6,486,441 | ||||
| Diluted |
6,961,423 | 6,727,004 | ||||
See accompanying notes.
- 3 -
Consolidated Statements of Stockholders’ Equity
(unaudited)
| U.S. Home Systems Common Stock |
Additional |
Retained |
Note Receivable |
Total |
||||||||||||||||
| Shares |
Amount |
|||||||||||||||||||
| Balance at December 31, 2003 |
6,524,302 | $ | 6,524 | $ | 9,687,122 | $ | 4,647,085 | $ | (274,950 | ) | $ | 14,065,781 | ||||||||
| Issuance of common stock |
5,234 | 6 | 27,178 | — | — | 27,184 | ||||||||||||||
| Net loss |
— | — | — | (274,380 | ) | — | (274,380 | ) | ||||||||||||
| Balance at March 31, 2004 |
6,529,536 | $ | 6,530 | $ | 9,714,300 | $ | 4,372,705 | $ | (274,950 | ) | $ | 13,818,585 | ||||||||
| Issuance of common stock |
1,357,287 | $ | 1,357 | $ | 7,644,671 | — | — | $ | 7,646,028 | |||||||||||
| Net income |
— | — | — | $ | 405,846 | — | $ | 405,846 | ||||||||||||
| Balance at June 30, 2004 |
7,886,823 | $ | 7,887 | $ | 17,358,971 | $ | 4,778,551 | $ | (274,950 | ) | $ | 21,870,459 | ||||||||
See accompanying notes.
- 4 -
Consolidated Statements of Cash Flows
(unaudited)
| Six months ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| (restated) | ||||||||
| Operating Activities |
||||||||
| Net income |
$ | 131,466 | $ | 349,112 | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
938,020 | 676,490 | ||||||
| Net provision for loan losses and bad debts |
359,147 | 73,541 | ||||||
| Gain from loan portfolio sales |
(107,479 | ) | (426,428 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Finance receivables held for sale: |
||||||||
| Sales of loan portfolios |
731,053 | 8,039,719 | ||||||
| Purchases of finance receivables for sale |
(623,574 | ) | (5,967,991 | ) | ||||
| Accounts receivable |
(2,310,736 | ) | (915,183 | ) | ||||