FORM 10 - Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 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 1-7190
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IMPERIAL INDUSTRIES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 65-0854631
-------- ----------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1259 Northwest 21st Street, Pompano Beach, Florida 33069-4114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 917-4114
--------------
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 [X] NO [ ]
Indicate the number of shares of Imperial Industries, Inc. Common Stock
($.01 par value) outstanding as of May 3, 2004: 9,235,434
Total number of pages contained in this document: 30
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2004 and December 31, 2003 3
Consolidated Statements of Operations
Three Months Ended March 31, 2004 and 2003 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2004 and 2003 5
Notes to Consolidated Financial Statements 6-15
Item 2. Management's Discussion and Analysis of Results 16-22
Of Operations and Financial Condition
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 23
Item 4. Controls and Procedures 23-24
Part II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings 25
Item 6. Exhibits and Reports on Form 8 - K 26
Signatures 28
2
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31,
2004 2003
------------ ------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 1,487,000 $ 1,870,000
Trade accounts receivable (less
allowance for doubtful accounts of
$633,000 and $556,000 at March 31,
2004 and December 31, 2003, respectively) 6,913,000 5,702,000
Inventories 4,479,000 4,290,000
Deferred income taxes -- 157,000
Other current assets 420,000 444,000
------------ ------------
Total current assets 13,299,000 12,463,000
------------ ------------
Property, plant and equipment, at cost 4,423,000 4,228,000
Less accumulated depreciation (2,495,000) (2,397,000)
------------ ------------
Net property, plant and equipment 1,928,000 1,831,000
------------ ------------
Deferred income taxes 470,000 470,000
------------ ------------
Other assets 172,000 154,000
------------ ------------
$ 15,869,000 $ 14,918,000
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 5,943,000 $ 6,470,000
Current portion of long-term debt 450,000 425,000
Accounts payable 3,030,000 2,066,000
Obligation for Appraisal Rights 168,000 568,000
Payable to stockholders 261,000 261,000
Accrued expenses and other liabilities 770,000 478,000
Income taxes payable 113,000 22,000
------------ ------------
Total current liabilities 10,735,000 10,290,000
------------ ------------
Long-term debt, less current maturities 990,000 848,000
------------ ------------
Commitments and contingencies (Note 9) -- --
------------ ------------
Stockholders' equity:
Common stock, $.01 par value; 40,000,000
shares authorized; 9,235,434 issued at
March 31, 2004 and December 31, 2003, respectively 92,000 92,000
Additional paid-in-capital 13,924,000 13,924,000
Accumulated deficit (9,872,000) (10,236,000)
------------ ------------
Total stockholders' equity 4,144,000 3,780,000
------------ ------------
$ 15,869,000 $ 14,918,000
------------ ------------
The accompanying notes are an integral part of the consolidated financial
statements.
3
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Three Months Ended
March 31,
------------------------------
2004 2003
------------ ------------
(Unaudited)
Net Sales $ 11,923,000 $ 8,962,000
Cost of Sales 8,210,000 6,238,000
------------ ------------
Gross profit 3,713,000 2,724,000
Selling, general and
administrative expenses 2,993,000 2,747,000
------------ ------------
Operating income (loss) 720,000 (23,000)
------------ ------------
Other income (expense):
Interest expense (115,000) (97,000)
Miscellaneous income 27,000 66,000
------------ ------------
(88,000) (31,000)
------------ ------------
Income (loss) before income taxes 632,000 (54,000)
Income tax (expense) benefit (270,000) 21,000
------------ ------------
Net income (loss) $ 362,000 $ (33,000)
============ ============
Basic income (loss) per common share $ .04 $ --
============ ============
Diluted income (loss) per common share $ .04 $ --
============ ============
Weighted average shares outstanding 9,235,434 9,235,434
============ ============
Weighted average shares and
potentially dilutive shares outstanding 9,410,350 9,235,434
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
4
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended
March 31,
--------------------------
2004 2003
----------- -----------
(Unaudited)
Cash flows from operating activities:
Net income(loss) $ 362,000 $ (33,000)
----------- -----------
Adjustments to reconcile net income to net cash provided by:
Depreciation 116,000 105,000
Amortization 33,000 10,000
Provision for doubtful accounts 160,000 53,000
Provision for write-down of assets -- 16,000
Provision for deferred income tax expense (benefit) 157,000 (21,000)
Gain on disposal of fixed assets (3,000) (43,000)
Gain on disposal of assets held for sale (1,000)
(Increase) decrease in:
Accounts receivable (1,383,000) (266,000)
Inventory (189,000) 4,000
Prepaid expenses and other assets (25,000) (21,000)
Increase in:
Accounts payable 964,000 501,000
Accrued expenses and other liabilities 292,000 51,000
Income taxes payable 91,000 --
----------- -----------
Total adjustments to net income 212,000 389,000
----------- -----------
Net cash provided by
operating activities: 574,000 356,000
----------- -----------
Cash flows from investing activities:
Purchases of property, plant
and equipment (213,000) (172,000)
Proceeds received from sale of
property and equipment 3,000 19,000
Proceeds received from disposal of assets held for sale 14,000
Proceeds received from insurance settlement -- 47,000
----------- -----------
Net cash used in investing activities (196,000) (106,000)
----------- -----------
Cash flows from financing activities:
Decrease in notes payable
banks - net (527,000) (157,000)
Proceeds from issuance of long-term debt 248,000 122,000
Payment of Obligation for Appraisal Rights (400,000) --
Repayment of long-term debt (82,000) (152,000)
----------- -----------
Net cash used in
financing activities (761,000) (187,000)
----------- -----------
Net (decrease) increase in cash and
cash equivalents (383,000) 63,000
Cash and cash equivalents beginning of period 1,870,000 1,609,000
----------- -----------
Cash and cash equivalents end of period $ 1,487,000 $ 1,672,000
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the three months for
Interest $ 115,000 $ 97,000
=========== ===========
Income taxes $ 22,000 $ --
=========== ===========
Non-cash transactions:
Capital lease obligations $ -- $ 72,000
=========== ===========
Asset acquisitions financed $ 148,000 $ 50,000
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
5
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Interim Financial Statements
----------------------------
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form
10-Q and do not include all of the information and footnotes
required by auditing standards generally accepted in the United
States of America for complete financial statements. In the
opinion of management, all adjustments considered necessary for a
fair presentation have been included. Operating results for the
three months ended March 31, 2004 are not necessarily indicative
of the results that may be expected for the year ended December
31, 2004. The significant accounting principles used in the
preparation of these unaudited interim consolidated financial
statements are the same as those used in the preparation of the
annual audited consolidated financial statements. These statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2003.
(2) Description of Business and Summary of Significant Accounting Policies
----------------------------------------------------------------------
The Company and its subsidiaries are primarily involved in the
manufacture and sale of exterior and interior finish wall coatings
and mortar products for the construction industry, as well as the
sale of building materials from other manufacturers. Sales of the
Company's products are made to customers located primarily in
Florida and other parts of the Southeastern United States through
distributors and Company-owned distribution facilities.
a) Basis of presentation
---------------------
The consolidated financial statements herein contain the
accounts of the Company and its wholly-owned subsidiaries. All
material intercompany accounts and transactions have been
eliminated in consolidation. The Company has adopted SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. For the three month periods ended March 31, 2004 and
2003, the Company has determined that it continues to operate in a
single operating segment.
b) Concentration of Credit Risk
----------------------------
Concentration of credit risk with respect to trade accounts
receivable are limited due to the large number of entities
comprising the Company's customer base. Trade accounts receivable
represent amounts due from building materials dealers, contractors
and sub-contractors, located principally in the Southeastern
United States who have purchased products on an unsecured open
account basis. At March 31, 2004, accounts
6
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(2) Description of Business and Summary of Significant Accounting Policies
(continued)
----------------------------------------------------------------------
aggregating to $706,000, or approximately 9.4% of total gross
trade accounts receivable, were deemed to be ineligible for
borrowing purposes under the Company's borrowing agreement with
its commercial lender, compared to $537,000, or approximately
8.6%, of total gross trade receivables outstanding at December 31,
2003. (See Note (4)- Notes Payable). The allowance for doubtful
accounts at March 31, 2004 of $633,000 is considered sufficient to
absorb any losses which may arise from uncollectible accounts
receivable.
The Company places its cash with commercial banks. At March
31, 2004, the Company had cash balances with banks in excess of
Federal Deposit Insurance Corporation insured limits. Management
believes the credit risk related to these deposits is minimal.
c) Inventories
-----------
Inventories are stated at the lower of cost or market (net
realizable value), on a first-in, first-out basis. Finished goods
include the cost of raw materials, freight in, direct labor and
overhead.
d) Property, plant and equipment
-----------------------------
Property, plant and equipment is stated at cost, less
accumulated depreciation. Depreciation is computed on the
straight-line basis over the estimated useful lives of the
depreciable assets. Expenditures for maintenance and repairs are
charged to expense as incurred, while expenditures which extend
the useful life of assets are capitalized. Differences between the
proceeds received on the sale of property, plant and equipment and
the carrying value of the assets on the date of sale is credited
to or charged against net income, as applicable.
e) Income Taxes
------------
The Company utilizes the liability method for determining its
income taxes. Under this method, deferred taxes and liabilities
are recognized for the expected future tax consequences of events
that have been recognized in the consolidated financial statements
or income tax returns. Deferred tax assets and liabilities are
measured using the enacted tax rates expected to apply to taxable
income in the years in which temporary differences are expected to
be realized or settled; valuation allowances are provided against
tax assets that are not likely to be realized.
7
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(2) Description of Business and Summary of Significant Accounting Policies
(continued)
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f) Earnings per share of stock
---------------------------
Basic earnings per share is computed by dividing net
income by the weighted-average number of shares of common stock
outstanding each period. Diluted earnings per share is computed by
dividing net income by the weighted-average number of shares of
common stock and common stock equivalents outstanding during each
period. (See Note (8) - Earnings Per Share).
g) Cash and cash equivalents
-------------------------
The Company has defined cash and cash equivalents as those
highly liquid investments with original maturities of three months
or less, and are stated at cost. Included in cash and cash
equivalents at both March 31, 2004 and December 31, 2003 are
short-term time deposits of $123,000. Also included in cash and
cash equivalents at March 31, 2004 and December 31, 2003 are
$590,000 and $947,000,respectively, of customer payments that are
required to be remitted to the Company's commercial lender upon
their bank clearance under the terms of the Company's line of
credit. Such amounts, when applied, will reduce the outstanding
balance on the line of credit, resulting in greater borrowing
availability.
h) Revenue recognition policy
--------------------------
Revenue from sales transactions, net of discounts and
allowances, is recorded upon delivery of inventory to the
customer.
i) Purchase rebates
----------------
The Company has an arrangement with a buying group
organization providing for inventory purchase rebates ("vendor
rebates") based principally upon achievement of certain volume
purchasing levels during the year. The Company accrues the
estimated receipt of vendor rebates as part of its cost of sales
for products sold based on progress towards earning the vendor
rebates taking into consideration cumulative purchases throughout
the year. Substantially all vendor rebate receivables are
collected within three months immediately following fiscal
year-end. While management believes the Company will continue to
receive consideration from the buying group in 2004 and
thereafter, there can be no assurance that the buying group will
continue to provide a comparable amount of vendor rebates in the
future.
8
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(2) Description of Business and Summary of Significant Accounting Policies
(continued)
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j) Stock based compensation
------------------------
The Company measures compensation expense related to the grant
of stock options and stock-based awards to employees in accordance
with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," under which
compensation expense, if any, is generally based on the difference
between the exercise price of an option, or the amount paid for an
award, and the market price or fair value of the underlying common
stock at the date of the award.
Pursuant to the transition rules under SFAS No. 123, as
amended by SFAS No. 148 "Accounting for Stock-Based Compensation
Transition and Disclosure" the Company has elected to use the
intrinsic value method of accounting for employee awards, stock
based compensation awards. Accordingly, the Company has not
recognized compensation expense for its noncompensatory employee
stock options.
The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair
value-recognition provisions of Financial Standards Board (FASB)
Statement No. 123, Accounting for Stock-Based Compensation, to
stock-based employee compensation:
Three Months Ended
March 31,
2004 2003
----------- --------
Net income (loss) available to
common stockholders, as reported $ 362,000 $(33,000)
Deduct: Total stock-based employee
compensation expense determined
under fair-value-based method for
all awards, net of related tax effects -- --
----------- --------
Pro-forma net income (loss) $ 362,000 $(33,000)
=========== ========
Income (loss) per share:
Basic as reported $ .04 $ --
Basic pro-forma $ .04 $ --
Diluted as reported $ .04 $ --
Diluted pro-forma $ .04 $ --
k) Accounting estimates
--------------------
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America, requires management to make estimates and assumptions
9
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(2) Description of Business and Summary of Significant Accounting Policies
(continued)
-----------------------------------------------------------------------
k) Accounting estimates (continued)
--------------------
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
l) Fair Value of Financial Instruments
-----------------------------------
The carrying amount of the Company's financial instruments,
principally notes payable, long-term debt and obligation for
appraisal rights, approximates fair value based on discounted cash
flows and because the borrowing rates are similar to the current
rates offered to the Company.
(3) Inventories
-----------
At March 31, 2004 and December 31, 2003 inventories consisted
of:
2004 2003
---------- ----------
Raw Materials $ 539,000 $ 667,000
Finished Goods 3,630,000 3,353,000
Packaging materials 310,000 270,000
---------- ----------
$4,479,000 $4,290,000
========== ==========
(4) Notes Payable
-------------
At March 31, 2004 and December 31, 2003, notes payable
represent amounts outstanding under a $7,000,000 line of credit
from a commercial lender to the Company's subsidiaries. The line
of credit is collateralized by the subsidiaries' accounts
receivable and inventory, bears interest at prime rate plus 1/2%
(4.50% at March 31, 2004), expires June 19, 2005, and is subject
to annual renewal.
At March 31, 2004, the line of credit limit available for
borrowing based on eligible receivables and inventory aggregated
$7,000,000, of which $5,943,000 was outstanding. The average
amounts outstanding for the three months periods ended March 31,
2004 and 2003 were $6,055,000 and $5,623,000, respectively.
10
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(5) Long-Term Debt and Current Installments of Long-Term Debt
---------------------------------------------------------
Included in long-term debt at March 31, 2004, are four
mortgage loans, collateralized by real property, in the aggregate
amount of $679,000, less current installments aggregating $50,000.
During 2000, the Company acquired certain assets and assumed
certain liabilities of seven building materials distributors. In
connection with certain of these acquisitions, the Company issued
uncollateralized 8% promissory notes in the aggregate amount of
$850,000 as partial consideration. At March 31, 2004, all but one
remaining note payable of $128,000 was paid and the remaining note
payable was classified as a current liability.
Other long-term debt in the aggregate amount of $633,000,
less current installments of $272,000, relates principally to
equipment financing. The notes bear interest at various rates
ranging from 3.10% to 11.4%.
(6) Income Taxes
------------
At March 31, 2004, the net deferred tax asset of approximately
$470,000 consisted of the tax effect of goodwill written off
during 2002.
In the three months ended March 31, 2004 and 2003, the Company
recognized income tax expense of $270,000 and a tax benefit of
$21,000, respectively.
(7) Capital Stock
-------------
(a) Common Stock
------------
At March 31, 2004 and December 31, 2003, the Company had
outstanding 9,235,434 shares of common stock with a $.01 par value
per share ("Common Stock"). The holders of common stock are
entitled to one vote per share on all matters, voting together
with the holders of preferred stock, if any. In the event of
liquidation, holders of common stock are entitled to share ratably
in all the remaining assets of the Company, if any, after
satisfaction of the liabilities of the Company and the
preferential rights of the holders of any outstanding preferred
stock.
(b) Preferred Stock
---------------
The authorized preferred stock of the Company consists of
5,000,000 shares, $.01 par value per share. The preferred stock is
issuable in series, each of which may vary, as determined by the
Board of Directors, as to the designation and number of
11
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(7) Capital Stock (continued)
-------------
(b) Preferred Stock (continued)
---------------
shares in such series, the voting power of the holders thereof,
the dividend rate, redemption terms and prices, the voluntary and
involuntary liquidation preferences, and the conversion rights and
sinking fund requirements, if any, of such series. At March 31,
2004 and December 31, 2003, there were no shares of preferred
stock outstanding.
(c) Stock Option Plans
------------------
The Company has two stock option plans, the Directors' Stock
Option Plan (the "Directors Plan") and the 1999 Employee Stock
Option Plan (the "Employee Plan")(collectively, the "1999 Plans").
The 1999 Plans provide for options to be granted at generally no
less than the fair market value of the Company's Common stock at
the grant date. Options granted under the 1999 Plans have a term
of up to 10 years and are exercisable six months from the grant
date. The 1999 Plans are administered by the Board's Compensation
and Stock Option Committee (the "Committee"), which is comprised
of three outside directors. The Committee determines who is
eligible to participate and the number of shares for which options
are to be granted. A total of 600,000 and 200,000 shares are
reserved for issuance under the Employee and Directors' Plans,
respectively.
During the three months ended March 31, 2004 the Company
granted options to 25 employees to purchase 117,500 shares at $.31
per share for a five year period under the Employee Plan. As of
March 31, 2004, options for 92,500 shares were available for
future grants under the Employee Plan. No shares are currently
available for future grant under the Directors' Plan.
(8) Earnings Per Share
------------------
Below is a reconciliation between basic and diluted earnings
(loss) per common share under FAS 128 for the three months ended
March 31, 2004 and 2003 (in thousands except per share amounts):
2004 2003
------------------------------------------- -----------------------------------------
Income Shares Per Share Income Shares Per Share
------------------------------------------- -----------------------------------------
Net income (loss) $362,000 $ (33) $ -
Basic earnings (loss)
per share $362,000 9,235 $ .04 $ (33) 9,235 $ -
------------------------------------------- -----------------------------------------
Effect of dilutive
securities:
Options/Warrants $ - 175 $ - $ - - $ -
------------------------------------------- -----------------------------------------
Diluted earnings (loss)
per common share $362,000 9,410 $ .04 $ (33) 9,235 $ -
------------------------------------------- -----------------------------------------
12
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(8) Earnings Per Share (continued)
------------------
For the three months ended March 31, 2004 and 2003, 195,000
and 590,000 options and warrants were excluded from the diluted
earnings per share computations, respectively, because they were
anti-dilutive.
(9) Commitments and Contingencies
-----------------------------
(a) Contingencies
-------------
As of May 10, 2004, the Company's subsidiary Acrocrete,
together with other parties, are defendants in 54 lawsuits pending
in various Southeastern states, brought by homeowners, homeowner
associations, contractors and subcontractors, or their insurance
companies, claiming moisture intrusion damage as a result of the
use of Exterior Insulation Finish Wall Systems ("EIFS"), on single
and multi-family residences. The Company's insurance carriers have
accepted coverage under a reservation of rights for 44 of these
claims and are providing a defense. Acrocrete expects its
insurance carriers will accept coverage for the other 10 recently
filed lawsuits. Acrocrete is vigorously defending all of these
cases and believes it has meritorious defenses, counter-claims and
claims against third parties. Acrocrete is unable to determine the
exact extent of its exposure or outcome of this litigation.
The allegations of defects in EIFS are not restricted to
Acrocrete products used in an EIFS application, but rather are an
industry-wide issue. There never has been any defect proven
against Acrocrete. The alleged failure of these products to
perform has generally been linked to improper application and the
failure of adjacent building materials such as windows, roof
flashing, decking and the lack of caulking.
As insurance markets for moisture intrusion type coverage have
all but disappeared, the Company was forced on March 15, 2004 to
renew its existing products liability coverage with an exclusion
for EIFS exposure. The Company's management is evaluating the
creation of a self-insurance fund for these types of any future
claims, and believes that with existing coverage covering all
potential claims for goods sold prior to March 15, 2004, for the
foreseeable future any uninsured claims should not have a material
adverse effect on the Company's financial position. Sales of
products used in EIFS applications are believed to represent less
than 20% of the Company's revenues.
On June 15, 1999, the Company's subsidiary Premix was served
with a complaint captioned Mirage Condominium Association, Inc. v.
Premix, in the Eleventh Judicial Circuit in and for Miami-Dade
County, Florida, Case No: 97-27544 (CA-11). The lawsuit raises a
number of allegations against 12 separate defendants involving
alleged construction defects, which as to Premix alleged that
13
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(9) Commitments and Contingencies (continued)
-----------------------------
(a) Contingencies (continued)
-------------
certain materials, purportedly provided by Premix to the
Developers/Contractor and used to anchor balcony railings to the
structure were defective. Premix believes it has meritorious
defenses to these claims. The Company's insurance carrier has not
made a decision regarding coverage to date. Since the inception of
this matter in 1999 the insurance carrier has retained defense
counsel on behalf of Premix and is paying defense costs. Premix
expects the insurance carrier to eventually accept coverage. As
discovery is not yet completed, Premix is unable to determine the
exact extent of its exposure or the outcome of this litigation,
however the Company believes that its ultimate exposure, if any,
is not material.
Premix, Acrocrete and Just-Rite are engaged in other legal
actions and claims arising in the ordinary course of its business,
none of which is believed to be material to the Company.
On April 23, 1999, certain dissenting preferred stockholders
owning shares of the Company's preferred stock filed a petition
for appraisal in the Delaware Chancery Court to determine the fair
value of the shares at December 31, 1998, the effective date of
the Company's merger with a wholly owned subsidiary. On April 30,
2003, the Company reached a settlement with the dissenting
preferred stockholders. (See Note (10) of the Consolidated
Financial Statements.)
In March 2003, Just-Rite instituted litigation against a
former employee, employed at the Company's Gulfport, Mississippi
distribution facility, and others, due to alleged violations by
the employee of his non-compete agreements related to the
acquisition of the business at that location. The litigation
against the former employee seeks to enjoin further violations of
his non-compete agreement and for damages resulting from such
actions. In connection with the litigation, Just-Rite discontinued
payments on a promissory note with a remaining balance in the
aggregate amount of $128,000, issued as partial consideration for
the acquisition of the Gulfport, Mississippi facility. The
beneficial holders of the promissory note (the former employee and
the other former owner) have initiated claims against Just-Rite
for payment of the obligation. In February 2004, the court entered
an order ruling that the former employee had violated the terms of
a preliminary injunction barring him from his further competing
against Just-Rite and ordered that certain sanctions be imposed.
The Company is aggressively defending all of the lawsuits and
claims described above, and while the Company does not believe
14
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
-continued-
(9) Commitments and Contingencies (continued)
-----------------------------
(a) Contingencies (continued)
-------------
these outstanding claims will have a material adverse effect on
the Company's financial position, given the uncertainty and
unpredictability of litigation, there can be no assurance of this.
(b) Lease Commitments
-----------------
At March 31, 2004, the Company has certain property, plant
and equipment under long-term operating leases. The Company will
pay aggregate annual rent of approximately $1,019,000 for its
current operating leases. The leases expire at various dates
ranging from August 2004, to August 31, 2009. Comparable
properties at equivalent rentals are available for replacement of
these facilities if any leases are not extended. The Company does
not expect to incur any material relocation expenses.
(10) Obligation for Appraisal Rights
-------------------------------
On April 30, 2003, the Company and former holders of 81,100
shares of Preferred Stock who elected appraisal rights in
connection with the Company's 1998 Merger ("Dissenting
Stockholders") reached a settlement (the "Settlement"). In
accordance with the Settlement, the Company paid the Dissenting
Stockholders $12.00 per share in cash ($973,200) and issued a 5.6%
promissory note (the "Note") for $10.00 per share ($811,000) due
May 1, 2006. The principal balance of the Note would be reduced to
$7.00 per share ($567,700) in the event the Company prepays the
Note in full prior to November 1, 2004. If the Note is not paid in
full prior to November 1, 2004, the interest rate will increase
from 5.6% to 8.0%. The Company satisfied the cash due at closing
of the Settlement from cash on hand and borrowings from its
amended line of credit with its commercial lender based on an
increase to its inventory borrowing base. On March 29, 2004 the
Company paid $400,000 related to the Note. At March 31, 2004 and
December 31, 2003, based on management's intention to prepay the
Note in full prior to November 1, 2004, the obligation for
Appraisal Rights was classified as a short-term liability and
recorded at $168,000 and $568,000, at March 31, 2004 and December
31, 2003, respectively, on the accompanying consolidated balance
sheets.
15
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
-----------------------------------------------------------------------
General
-------
The Company's business is related primarily to the
level of construction activity in the Southeastern United
States, particularly the states of Florida, Georgia,
Mississippi and Alabama. The majority of the Company's
products are sold to contractors, subcontractors and building
materials dealers located principally in these states who
provide building materials for the construction of
residential, commercial and industrial buildings and swimming
pools. The level of construction activity is subject to
population growth, inventory of available housing units,
government growth policies and construction funding, among
other things. Although general construction activity has
remained strong in the Southeastern United States during the
last several years, the duration of recent economic conditions
and the magnitude of their effect on the construction industry
are uncertain and cannot be predicted.
Special Note Regarding Forward-Looking Statements
-------------------------------------------------
This Form 10-Q contains certain forward looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the financial
condition, results of operations and business of the Company,
and its subsidiaries, including statements made under
Management's Discussion and Analysis of Financial Condition
and Results of Operations. These forward looking statements
involve certain risks and uncertainties. No assurance can be
given that any of such matters will be realized. Factors that
may cause actual results to differ materially from those
contemplated by such forward looking statements include, among
others, many of which are beyond the Company's control, the
following: realization of tax benefits; impairment of
long-lived assets, including goodwill; the ability to collect
account or note receivables when due or within a reasonable
period of time after they become due and payable; the cost of
capital and related fees may increase; the outcome of any
current or future litigation; the adequacy or availability of
insurance coverage for certain types of future product damage
claims; the competitive pressure in the industry; unexpected
product shortages; general economic and business conditions;
the ability to implement and the effectiveness of business
strategy and development plans; quality of management;
business abilities and judgment of personnel; changes in
accounting policies and practices, as may be adopted by
regulatory agencies as well as the Financial Accounting
Standards Board; availability of qualified personnel; and
labor and employee benefit costs.
These risks are not exhaustive. The Company operates
in a continually changing business environment, and new risks
emerge from time to time. The Company cannot predict such
risks nor can the Company assess the impact, if any, of such
risks on its business or the extent to which any risk, or
16
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
-----------------------------------------------------------------------
Special Note Regarding Forward-Looking Statements (continued)
-------------------------------------------------
combination of risks may cause actual results to differ from
those projected in any forward-looking statements.
These forward-looking statements speak only as of the
date of this document. The Company does not undertake any
obligation to update or revise any of these forward-looking
statements to reflect events or circumstance occurring after
the date of this document or to reflect the occurrence of
unanticipated events.
Overview
--------
The Company's net sales for the three months ended
March 31, 2004 increased approximately 33.0% in 2004 as
compared to the same quarter in 2003. Demand for products sold
by the Company was strong in the first quarter of 2004
primarily due to continuing strength in the new housing and
commercial construction markets in the Company's trade area in
the Southeastern United States and market share gains in
selected territories. Management expects the strength in new
construction activity to remain strong in the Company's
principal markets during 2004 absent changes in general
economic conditions.
The Company's gross margins improved slightly in the
first quarter of 2004 compared to the same period in 2003.
Selling, general and administrative expenses increased in the
first quarter of 2004 compared to the same period in 2003, due
primarily to higher payroll and delivery expenses related to
servicing the increased sales. The Company expects these costs
will continue to reflect comparative year-to-year increases
because of higher sales.
The Company had cash, cash equivalents and restricted
cash of $1,487,000 as of March 31, 2004 compared to $1,870,000
at December 31, 2003. In the first quarter, the Company
prepaid $400,000 of the remaining $568,000 note due to the
former preferred stockholders. Management believes that
available liquidity plus expected operating cash flows will
meet the Company's regular cash needs in 2004, including the
cash requirements associated with its regular capital
expenditures program and the remaining balance due on the note
payable to the former preferred stockholders. In addition, the
Company is continuing its evaluation of a plant modernization
capital expenditure project for its manufacturing facilities
to enhance its manufacturing efficiency and productivity. New
financing would be required for these capital expenditures,
which is expected to aggregate approximately $1,000,000 in
2004. There can be no assurance that funds would be available
on terms acceptable to the Company, or available at all, to
fund this capital project.
17
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
-----------------------------------------------------------------------
Results of Operations
---------------------
Three Months Ended March 31, 2004 compared to 2003
--------------------------------------------------
Net sales for the three months ended March 31, 2004
increased $2,961,000, or approximately 33.0% compared to the
same period in 2003. The increase in sales and greater demand
for Company products is principally due to the current
strength in the new housing and commercial construction
markets in the Company's trade areas compared to the same
period last year.
Gross profit as a percentage of net sales for the
first quarter of 2004 was approximately 31.1% compared to
30.4% in 2003. The Company generated improved gross profit
margins from sales derived from its distribution facilities
with the aid of increases in purchase discounts and vendor
rebates resulting from improved programs with its suppliers in
the first quarter of 2004 compared to the same period in 2003.
The improved margins from the distribution facilities more
than offset the adverse affect of cost increases of raw
materials and higher insurance costs associated with
manufacturing expenses included in cost of sales for its
manufactured products in the first quarter of 2004 compared to
2003. The comparative gross profit margins for the 2004 and
2003 periods reflect similar competitive conditions in the
Company's markets for the sales of both its manufactured and
distributed products.
The Company is continuing its efforts to emphasize
the sales of its higher gross profit margin manufactured
products through its distribution facilities and other
distributors and to decrease reliance on sales of products
purchased from other manufacturers from which it generally
realizes lower gross profit margins.
Selling, general and administrative expenses as a
percentage of net sales for the three months ended March 31,
2004 were approximately 25.1% compared to 30.7% in 2003. The
percentage decrease was primarily the result of certain fixed
costs being absorbed over higher sales volume. However,
selling, general and administrative expenses increased
$246,000 in the first quarter of 2004, or approximately 9.0%
compared to the same period in 2003, prior to the off-set of a
$102,000 reduction in such expenses related to a former
distribution facility closed in December, 2003. For the
quarter ended March 31, 2004 the resulting adjusted increase
in selling, general and administrative expenses of $348,000
was primarily attributable to an increase of $218,000 in
payroll and related costs, and a $50,000 increase in delivery
costs, necessary to service the increased sales. In addition,
the Company increased its provision for bad debt expense
$107,000 in the first quarter of 2004, and as a result,
increased its allowance for doubtful accounts $77,000
subsequent to December 31, 2003 related to the increase in
18
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
-----------------------------------------------------------------------
Three Months Ended March 31, 2004 compared to 2003 (continued)
--------------------------------------------------
sales and receivables. Decreases in other operating expenses
off-set the increase in these expenses.
A substantial portion of the Company's costs are
fixed in nature. Accordingly, operating income is affected
materially by fluctuations in net sales. The significant
increase in net sales in the first quarter of 2004 compared to
the same period in 2003 had a favorable impact on operating
income. As a result of the above factors and the operating
leverage gained from the increase in sales, the Company
generated operating income of $720,000 in the first quarter of
2004 compared to an operating loss of $(23,000) in the same
quarter last year.
Interest expense increased $18,000 in the first
quarter of 2004, or approximately 18.6%, compared to 2003. The
increase in interest expense was primarily due to a greater
amount of interest bearing debt outstanding in 2004 compared
to 2003.
Miscellaneous income, net of expenses, decreased
$39,000 in the first quarter of 2004, compared to the same
period in 2003. The decrease in miscellaneous income in 2004
is attributed primarily to the Company recognizing greater
gains from the disposal of certain equipment in the first
quarter of 2003 compared to the same period in 2004.
In the first quarter of 2004, the Company recognized
income tax expense of $270,000 compared to an income tax
benefit of $21,000 for the same period in 2003.
After giving effect to the above factors, for the
three months ended March 31, 2004 the Company had net income
of $362,000, or $.04 per fully diluted share, for 2004,
compared to a net loss of $33,000 for the same period in 2003.
Liquidity and Capital Resources
-------------------------------
At March 31, 2004, the Company had working capital of
approximately $2,564,000 compared to working capital of
$2,173,000 at December 31, 2003.
As of March 31, 2004, the Company had cash and cash
equivalents of $1,487,000, which included customer payments in
the amount of $590,000 that are required to be remitted to the
Company's commercial lender upon their bank clearance under
the terms of the Company's line of credit. Upon remittance of
such amount, the outstanding balance of the line of credit
will be reduced by such amount and will increase the
availability for future borrowing under the line.
19
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
-----------------------------------------------------------------------
Sources and Uses of Cash
------------------------
The Company's operations provided approximately
$574,000 and $356,000 of net cash from operations for the
first three months of 2004 and 2003, respectively. The
increase in cash flow in the first quarter of 2004 was
primarily attributable to net income of $362,000 and the
favorable impact of increases in accounts payable and accrued
expenses, which in aggregate, more than offset increases in
accounts receivable and inventory associated with increased
sales.
The net expenditures for investing activities in the
first quarter of 2004 were $196,000 compared to $106,000 in
2003. The increases in expenditures in 2004 compared to 2003
were primarily the result of a greater amount of purchases of
equipment and vehicles to upgrade and improve the Company's
job-site delivery capability to its customers. In 2003, the
Company realized the benefit of proceeds of $47,000 received
from an insurance settlement. The Company is presently
considering a plant modernization program for its
manufacturing facilities which would require material capital
commitments during the remainder of 2004.
During the three months ended March 31, 2004, the
Company used net cash of approximately $761,000 in its
financing activities, compared to using $187,000 in 2003. In
2004, the Company increased its long-term borrowing for
purchases of equipment and facility improvements by $248,000,
compared to increased borrowing of $122,000 for similar items
in 2003. In the first quarter of 2004, Company decreased its
borrowings $1,009,000, compared to a decrease of $309,000 in
the same quarter last year.
Future Commitments and Funding Sources
--------------------------------------
At March 31, 2004, the Company's contractual cash
obligations, with initial or remaining terms in excess of one
year, remained generally unchanged compared to December 31,
2003. (See Notes 5 and 9 in the accompanying consolidated
financial statements for additional information regarding our
debt and commitments.)
The Company's principal source of short-term
liquidity is existing cash on hand and the utilization of a
$7,000,000 line of credit with a commercial lender. The
maturity date of the line of credit is June 19, 2005, subject
to annual renewal. Premix, Acrocrete and Just-Rite borrow on
the line of credit, based upon and collateralized by, their
eligible accounts receivable and inventory. Generally,
accounts not collected within 120 days are not eligible
accounts receivable under the Company's borrowing agreement
with its commercial lender. At March 31, 2004, $5,943,000 had
been borrowed against the line of credit. Based on eligible
receivables and inventory, the Company had, under its line of
credit, total available
20
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
-----------------------------------------------------------------------
Future Commitments and Funding Sources (continued)
--------------------------------------
borrowing, (including the amount outstanding of $5,943,000) of
approximately $7,000,000 at March 31, 2004.
Trade accounts receivable represent amounts due from
subcontractors, contractors and building materials dealers
located principally in Florida, Georgia, Mississippi and
Alabama who have purchased products on an unsecured open
account basis and through Company owned warehouse distribution
outlets. As of March 31, 2004, the Company owned and operated
ten distribution outlets. Accounts receivable, net of
allowance, at March 31, 2004 was $6,913,000 compared to
$5,702,000 at December 31, 2003. The increase in receivables
of $1,211,000, or approximately 21.2%, was primarily related
to increased sales in the first quarter of 2004, particularly
sales for the month of March 2004 as compared with the month
of December 2003 (34.2%), and some slowness in payments by
certain customers in 2004 compared to 2003.
As a result of the consummation of the December 31,
1998 merger, the Company agreed to pay $733,000 in cash to its
former preferred stockholders. At March 31, 2004, the Company
had paid $685,000 of such cash amount. Amounts payable to such
stockholders at March 31, 2004 results from their
non-compliance with the condition for payments.
Holders representing 81,100 preferred shares elected
dissenters' rights under Delaware law. On April 30, 2003, the
Company and the dissenting preferred stockholders ("Dissenting
Stockholder") reached a settlement (the "Settlement") whereby
the Company paid the Dissenting Stockholders $12.00 per share
in cash ($973,200) and issued a 5.6% promissory note (the
"Note") for $811,000 due May 1, 2006. The principal balance of
the Note would be reduced to $567,700 in the event the Company
prepays the Note in full prior to November 1, 2004. If not
paid by November 2004 the interest rate will increase from
5.6% to 8.0%. The Company satisfied the cash due at closing
from cash on hand and borrowings from its amended line of
credit with its commercial lender. At March 31, 2004, based on
management's intention to prepay the Note in full prior to
November 1, 2004, and a $400,000 prepayment of the Note made
on March 29, 2004, the appraisal rights obligation was
recorded at $167,700 and classified as a short-term liability.
At March 31, 2004, the Company has paid the holders
of the Subordinated Debentures tendering their bonds an
aggregate of $808,000. Amounts payable to stockholders at
March 31, 2004 and December 31, 2003 on the Company's
consolidated balance sheets includes $213,000 payable to
former debenture holders who have not yet tendered their
Debentures as required by the terms of such instrument.
The Company presently is focusing its efforts on
enhancing customer service, increasing operating productivity
21
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
-----------------------------------------------------------------------
Future Commitments and Funding Sources (continued)
--------------------------------------
through reducing costs and expenses and improving working
capital. The Company expects to incur various capital
expenditures aggregating approximately $400,000 during the
next twelve months to upgrade and maintain its equipment and
delivery fleet to support its distribution facilities and
improve customer service. The Company expects to finance
approximately $300,000 of these expenditures from various
lenders with the balance funded by cash derived from
operations.
Effective March 15, 2004 the Company was forced to
renew its products liability coverage with an exclusion for
EIFS exposure. Based on past experience for these types of
claims, the Company does not expect any of these types of
uninsured claims that may be alleged in the future to have a
material effect on the Company's financial position within the
next 18 to 24 months. Due to the uncertainty and
unpredictability of litigation there can be no assurances as
to when or if any future uninsured claims may be filed. See
Note (9).
The Company believes its cash on hand and the
maintenance of its borrowing arrangement with its commercial
lender will provide sufficient cash to meet current
obligations for its operations and support the cash
requirements of its regular capital expenditure program in
2004. The Company's regular capital expenditure program
consists primarily of the routine replacement of equipment and
delivery fleet described above.
In addition, the Company is evaluating various types
of alternative capital projects to expand and enhance its
manufacturing capabilities to more effectively serve its
customer base, to gain production efficiencies and provide the
opportunity to broaden its manufactured product lines and
enter new markets. The Company is assessing the merits and
assumptions of these alternative projects, and the completion
date of any such project, if adopted, is uncertain. The
Company is presently seeking funds to first commence the
capital project for modernization of its equipment at its
Winter Springs, Florida manufacturing facility. Management
believes the modernization project for the Winter Springs
manufacturing facility could represent approximately
$1,000,000 in capital expenditures. There can be no assurance
that funds would be available on terms acceptable to the
Company, if available at all, to fund these capital projects.
The ability of the Company to maintain and improve
its long-term liquidity is primarily dependent on the
Company's ability to successfully maintain profitable
operations.
22
Item 3 Quantitative and Qualitative disclosures About Market Risks
-----------------------------------------------------------
Residential and Commercial Construction Activity
------------------------------------------------
The Company's sales depend heavily on the strength of
residential and commercial construction activity in the
Southeastern United States. The strength of these markets
depends on many factors beyond the Company's control. Some of
these factors include interest rates, employment levels,
availability of credit, prices of raw materials and consumer
confidence. Downturns in the markets that the Company serves,
or in the economy generally, could have a material adverse
effect on the Company's operating results and financial
condition. Reduced levels of construction activity may result
in intense price competition among building materials
suppliers, which may adversely affect the Company's gross
margins.
The Company's first quarter revenues and, to a lesser
extent, its fourth quarter revenues are typically adversely
affected by winter construction cycles and weather patterns in
colder climates as the level of activity in the new
construction and home improvement markets decreases during
these periods. Because much of the Company's overhead and
expenses remain relatively fixed throughout the year, Company
profits also tend to be lower during the first and fourth
quarters.
Exposure to Interest Rates
--------------------------
The Company had four variable rate mortgages totaling
$679,000 at March 31, 2004. The mortgages bear interest at
prime plus 1% and are due March 2009. In addition, the
Company's $7,000,000 line of credit from a commercial lender
bears an interest rate of prime plus 1/2%. A significant
increase in the prime rate could have a material adverse
effect on the Company's operating results and financial
condition.
Item 4 Controls and Procedures
-----------------------
a. Evaluation of disclosure controls and procedures
The Company has established disclosure controls and
procedures to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made
known to the officer who certifies the Company's financial
reports, as well as to other members of senior management and
the Board of Directors.
The Company's management, under the supervision of
the Company's Chief Executive Officer ("CEO")/Chief Financial
Officer ("CFO"), has evaluated the effectiveness of the
Company's disclosure controls and procedures as defined in
Securities and Exchange Commission ("SEC") Rule 13a-15(e) as
of the end of the period covered by this report. Management
has concluded that the Company's disclosure controls and
23
Item 4 Controls and Procedures (continued)
-----------------------
a. Evaluation of disclosure controls and procedures
(continued)
procedures are effective to ensure that information the
Company is required to disclose in reports that it files or
submits under the Securities Exchange Act is communicated to
management, including the CEO/CFO, as appropriate, to allow
timely decisions regarding required disclosure and is
recorded, processed, summarized, and reported within the time
periods specified in the SEC's rules and forms.
b. Changes in internal controls
There were no significant changes in the Company's
internal controls or in other factors that could significantly
affect the Company's internal controls subsequent to the
evaluation date.
24
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
PART II. Other Information
Item 1. Legal Proceedings
-----------------
See notes to Consolidated Financial Statements,
Note 10 (a), set forth in Part I Financial Information.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
25
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
PART II. Other Information - continued
Item 6. Exhibits and Reports on Form 8-K
Exhibit No. Description
2.1 Agreement and Plan of Merger, by and between Imperial Industries, Inc.
and Imperial Merger Corp. dated October 12, 1998 (Incorporated by
reference to Form S-4 Registration Statement, Exhibit 2).
3.1 Certificate of Incorporation of the Company, (Incorporated by reference
to Form S-4 Registration Statement, Exhibit 3.1).
3.2 Amendment to Certificate of Incorporation of the Company (Incorporated
by reference to Form 10-K dated December 31, 2001, Exhibit 3.2).
3.3 By-Laws of the Company, (Incorporated by reference to Form S-4
Registration Statement, Exhibit 3.2).
10.1 Consolidating, Amended and Restated Financing Agreement by and between
Congress Financial Corporation and Premix-Marbletite Manufacturing Co.,
Acrocrete, Inc. and Just-Rite Supply, Inc. dated January 28, 2000.
(Incorporated by reference to Form 10-K dated December 31, 1999, File
No. 1-7190, Exhibit 10-1).
10.2 Employee Stock Option Plan (Incorporated by reference to Form 10-K
dated December 31, 2000, Exhibit 10.4).
10.3 Directors Stock Option Plan (Incorporated by reference to Form 10-K
dated December 31, 2000, Exhibit 10.5).
10.4 Form of Promissory Note issued in Settlement of Preferred Stock
Dissenters Rights. (Incorporated by reference to Form 10-Q dated March
31, 2003, Exhibit 10.4)
10.5 Amendment No. 3 to Consolidating, Amended and Restated Financing
Agreement by and between Congress Financial Corporation and
Premix-Marbletite Manufacturing Co., Acrocrete, Inc. and Just-Rite
Supply, Inc. dated April 22, 2003. (Incorporated by reference to Form
10-Q dated March 31, 2003, Exhibit 10.5)
31.1 Certification Pursuant to Rule 15-d-14(a)
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
A Form 8-K was filed on March 31, 2004 announcing the issuance of a
press release setting forth a summary of the
26
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
PART II. Other Information - continued
(b) Reports on Form 8-K (continued)
-------------------
Company's sales and operating results for the year ended December 31,
2003.
27
IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
IMPERIAL INDUSTRIES, INC.
By: /S/ Howard L. Ehler, Jr.
-------------------------
Howard L. Ehler, Jr.
Chief Executive Officer/
Chief Financial Officer
By: /S/ Betty Jean Murchison
-------------------------
Betty Jean Murchison
Chief Accounting Officer/
Assistant Vice President
May 13, 2004
28