PEMBROKE PINES, Fla., Nov. 11 /PRNewswire-FirstCall/ -- Decorator Industries, Inc. today announced its operating results for the third quarter ended, September 29, 2008.
Decorator Industries, Inc. , a leading supplier of interior furnishings for the hospitality, manufactured housing ("MH") and recreational vehicle ("RV") industries, today reported a net loss of $407,290 or $0.14 per diluted share for the third quarter of fiscal 2008 compared with a net loss of $114,392 or $0.04 per diluted share in the third quarter of 2007. The net loss for the first nine months of fiscal 2008 was $1.9 million or $0.66 per diluted share compared with a loss of $142,721 or $0.05 cents per diluted share for the same period a year ago. The net loss for the nine months of 2008 includes a one time pre-tax charge of $1.4 million from the second quarter, related to the closing of certain facilities and the impairment of assets.
Net sales for the third quarter of fiscal 2008 were $9.3 million, down 17% from $11.2 million for the same period a year ago. Net sales for the first nine months of fiscal 2008 were $32.4 million a decline of 10% from $36.2 million in the first nine months of 2007.
Sales to Hospitality customers increased 56% to $4.9 million in the third quarter of 2008 from $3.1 million in the third quarter a year ago. For the first nine months of 2008, Hospitality sales increased by 44% to $13.7 million compared with $9.5 million in the first nine months of 2007. Hospitality sales for the nine months of 2008 included $2.2 million from our Superior Drapery acquisition on June 1, 2007 versus $763,316 for 2007.
Sales to MH customers increased 3% to $2.1 million in the third quarter of fiscal 2008, compared with last year's third quarter sales of $2.0 million. For the nine month period of fiscal 2008, MH sales increased by 14%, to $7.1 million compared with $6.2 million for the same period a year ago. MH sales for 2008 include sales from the Doris Lee acquisition on November 30, 2007 of $579,543 for the quarter and $2.1 million for the nine months. Sales to existing MH customers in 2008 declined by 25% in the third quarter and 19% for the nine months. The Manufactured Housing Institute reported that industry shipments decreased about 15% from last year's third quarter, resulting in a year-to-date decrease of about 10%.
Sales to RV customers decreased 61% to $2.3 million in the third quarter of fiscal 2008, compared with last year's sales for the same period of $6.1 million. For the first nine months of fiscal 2008, RV sales decreased 43% to $11.7 million compared with $20.5 million for the same period a year ago. The RV industry reported a 42% decline in total shipments from last year's third quarter, with towable shipments decreasing by 38% and motor home shipments decreasing by 61%. Total RV industry shipments for the first nine months of 2008 were down by 25%, with towable shipments decreasing 21% and motor home shipments decreasing 42%.
Mr. Johnson, President, stated:
"Our company was affected by the strong turbulence in the economy during the third quarter as the credit markets froze and the stock market plummeted. The MH and RV industries saw an immediate impact from this instability in the lack of funding for both the manufacturers as well as retail sales outlets. On a positive note, the hospitality industry continues to perform well based on a strong order backlog. To maintain this performance we will continue our aggressive sales effort to grow our market share in the face of and expected softening for the overall hospitality market in 2009.
"In our continued effort to cut costs, we closed two underperforming MH facilities during the third quarter and recently completed the consolidation of our Indiana RV facilities. The buildings associated with these operations have been placed on the market for sale. The savings from these actions will begin to be seen in the fourth quarter and fully realized in 2009. We continue to evaluate additional actions in an effort to cut costs and return the company to profitability.
"The operating loss of $635,466 for the third quarter of 2008 was largely caused by the drop in sales, led by the RV industry. The reduced RV sales caused significant labor inefficiencies, an increase of $111,000 in the RV related fabric reserves and $41,000 for RV bad debt write offs. The RV labor inefficiencies occurred even with a 24% reduction in our RV workforce during the quarter. The shutting down of the two MH locations during the quarter also caused some labor and material inefficiencies.
"Selling and administrative expenses were largely unchanged at $2.2 million from last year's third quarter. Decreases in our RV related expenses were offset by increased incentive compensation, staffing and advertising for the hospitality industry.
"Our financial condition remains strong with stockholders' equity of $14.0 million and funded debt to total capital of 19.6%. Accounts payable decreased significantly in the quarter due to the increased mix of hospitality business as well as reduced purchasing based on lower sales volumes. The swing in accounts payable adversely impacted cash flows from operations and increased our borrowings against the line to $2.6 million during the quarter.
"We are facing challenging times ahead but we have a proven management team that has faced this type of downturn before. In an effort to further diversify our business and improve performance, we plan to introduce a new program for 2009 in a related market that will utilize our existing manufacturing capacity. We are prepared to take whatever actions necessary to strengthen the company's financial position in an effort to grow the business and return the company to profitability."
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, AVAILABILITY OF FLOOR-PLAN CREDIT FOR RV AND MH RETAIL DEALERS, AVAILABILITY OF FINANCING FOR MANUFACTURERS, 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 THIRTY NINE WEEKS FOR QUARTERS ENDED: ENDED: Sept. 27, Sept. 29, Sept. 27, Sept. 29, 2008 2007 2008 2007 NET SALES $9,334,653 $11,240,119 $32,401,620 $36,158,771 COST OF PRODUCTS SOLD 7,785,917 9,242,306 27,159,748 29,980,616 GROSS PROFIT 1,548,736 1,997,813 5,241,872 6,178,155 SELLING AND ADMINISTRATIVE EXPENSES 2,184,202 2,176,488 8,344,805 6,398,066 OPERATING INCOME (LOSS) (635,466) (178,675) (3,102,933) (219,911) OTHER INCOME (EXPENSE) Interest, Investment and Other Income 12,504 24,336 47,114 79,827 Interest Expense (36,328) (26,053) (99,518) (68,637) EARNINGS (LOSS) BEFORE INCOME TAXES (659,290) (180,392) (3,155,337) (208,721) PROVISION FOR INCOME TAXES (252,000) (66,000) (1,212,000) (66,000) NET INCOME (LOSS) $(407,290) $(114,392) $(1,943,337) $(142,721) EARNINGS (LOSS) PER SHARE: BASIC $(0.14) $(0.04) $(0.66) $(0.05) DILUTED $(0.14) $(0.04) $(0.66) $(0.05) WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING BASIC 2,933,683 3,007,223 2,932,846 3,004,220 DILUTED 2,933,683 3,007,223 2,932,846 3,004,220 CONDENSED BALANCE SHEET Sept. 27, 2008 Dec. 29, 2007 CASH AND EQUIVALENTS $33,771 $17,544 ACCOUNTS RECEIVABLE 4,241,115 3,423,072 INVENTORIES 4,786,948 5,181,645 OTHER CURRENT ASSETS 3,119,663 868,371 TOTAL CURRENT ASSETS 12,181,497 9,490,632 NET PROPERTY AND EQUIPMENT 6,225,162 9,283,489 OTHER ASSETS 4,504,150 5,489,783 TOTAL ASSETS $22,910,809 $24,263,904 TOTAL CURRENT LIABILITIES $8,263,681 $5,577,253 LONG-TERM DEBT 645,000 1,409,000 DEFERRED TAXES - 866,000 STOCKHOLDERS' EQUITY 14,002,128 16,411,651 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $22,910,809 $24,263,904
