** **

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q/A**

 

**AMENDMENT NO. 1**

** **

**x****      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended March 31, 2012**

 

**OR**

** **

**o****         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 1-3834**

 

**CONTINENTAL MATERIALS CORPORATION**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                          | ** ** | **36-2274391**                       |
|-----------------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization)        |       | (I.R.S. Employer Identification No.) |
|                                                                  |       |                                 |
| **200 South Wacker Drive, Suite 4000,   Chicago, Illinois** | ** ** | **60606**                            |
| (Address of principal executive offices)                              |       | (Zip Code)                           |

 

**(312) 541-7200**

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large Accelerated Filer o                     |   | Accelerated Filer o         |
|-----------------------------------------------|--------|-----------------------------|
|                                          |   |                        |
| Non-Accelerated Filer o                       |   | Smaller reporting company x |
| (Do not check if a smaller reporting company) |   |                        |

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 or the Exchange Act). Yes o  No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.25 par value, shares outstanding at May 9, 2012:  1,634,674

 

**Explanatory Note**

 

The purpose of this Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2012 which was filed with the Securities and Exchange Commission on May 15, 2012 (the “Original Report”) is solely to correct typographical errors contained in the certifications of the Company’s Principal Executive Officer and Principal Financial Officer attached as Exhibits 31.1 and 31.2, respectively. Except for these corrections, no other changes have been made to any of the financial or other information contained in the Original Report. This Amendment No. 1 speaks as of the filing date of the Original Report and does not reflect events that have occurred subsequent to the filing date of the Original Report.

 

 

 

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PART I - FINANCIAL INFORMATION

**Item 1.   Financial Statements**

 

CONTINENTAL MATERIALS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2012 AND DECEMBER 31, 2011

(000’s omitted except share data)

 
| ** **                                                                             | ** ** | **MARCH 31,** | ** ** | ** **            | ** ** |
|----------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                             | ** ** | **2012**           | ** ** | **DECEMBER 31,** | ** ** |
| ** **                                                                             | ** ** | **(Unaudited)**    | ** ** | **2011**              | ** ** |
| ***ASSETS***                                                                           | ** ** | ** **         | ** ** | ** **            | ** ** |
| Current assets:                                                                        |       |               |       |                  |       |
| Cash and cash equivalents                                                              |       | $                  | 724        |                  | $          | 840 |   |
| Receivables, net                                                                       |       | 17,107             |       | 18,176                |       |
| Current portion of long-term note receivable —   related party                    |       | 35                 |       | 35                    |       |
| Receivable for insured losses                                                          |       | 239                |       | 439                   |       |
| Inventories:                                                                           |       |               |       |                  |       |
| Finished goods                                                                         |       | 8,918              |       | 7,477                 |       |
| Work in process                                                                        |       | 1,163              |       | 950                   |       |
| Raw materials and supplies                                                             |       | 8,588              |       | 8,970                 |       |
| Prepaid expenses                                                                       |       | 1,291              |       | 1,264                 |       |
| Cash deposit for self-insured claims                                                   |       | —             |       | 4,340                 |       |
| Deferred income taxes                                                                  |       | 1,739              |       | 1,624                 |       |
| Real Estate held for resale — related party                                       |       | 723                |       | 723                   |       |
| Total current assets                                                                   |       | 40,527             |       | 44,838                |       |
|                                                                                   |       |               |       |                  |       |
| Property, plant and equipment, net                                                     |       | 20,298             |       | 21,086                |       |
|                                                                                   |       |               |       |                  |       |
| Goodwill                                                                               |       | 7,229              |       | 7,229                 |       |
| Amortizable intangible assets, net                                                     |       | 225                |       | 242                   |       |
| Prepaid royalties                                                                      |       | 1,704              |       | 1,646                 |       |
| Deferred income taxes                                                                  |       | 477                |       | —                |       |
| Long-term note receivable — related party                                         |       | 317                |       | 317                   |       |
| Other assets                                                                           |       | 513                |       | 513                   |       |
|                                                                                   |       |               |       |                  |       |
|                                                                                   |       | $                  | 71,290     |                  | $          | 75,871 |   |
| ***LIABILITIES***                                                                      |       |               |       |                  |       |
| Current liabilities:                                                                   |       |               |       |                  |       |
| Current portion of long-term debt                                                      |       | $                  | 500        |                  | $          | 500 |   |
| Accounts payable and accrued expenses                                                  |       | 12,344             |       | 11,823                |       |
| Liability for unpaid claims covered by insurance                                       |       | 239                |       | 439                   |       |
| Total current liabilities                                                              |       | 13,083             |       | 12,762                |       |
|                                                                                   |       |               |       |                  |       |
| Revolving bank loan payable                                                            |       | 4,250              |       | 8,150                 |       |
| Long-term debt                                                                         |       | 3,658              |       | 3,783                 |       |
| Deferred income taxes                                                                  |       | —             |       | 179                   |       |
| Other long-term liabilities                                                            |       | 1,897              |       | 1,691                 |       |
| ***SHAREHOLDERS’   EQUITY***                                                      |       |               |       |                  |       |
| Common shares, $0.25 par value; authorized   3,000,000 shares; issued 2,574,264 shares |       | 643                |       | 643                   |       |
| Capital in excess of par value                                                         |       | 1,815              |       | 1,870                 |       |
| Retained earnings                                                                      |       | 61,946             |       | 62,999                |       |
| Treasury shares, 939,986 and 951,986, at cost                                          |       | (16,002            | )          | (16,206               | )          |
|                                                                                   |       | 48,402             |       | 49,306                |       |
|                                                                                   |       |               |       |                  |       |
|                                                                                   |       | $                  | 71,290     |                  | $          | 75,871 |   |

 

See notes to condensed consolidated financial statements.

 

2

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CONTINENTAL MATERIALS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND APRIL 2, 2011

(Unaudited)

(000’s omitted except per-share amounts)

 
| ** **                                                                | ** ** | **MARCH 31,   2012** | ** ** | **APRIL 2,   2011** | ** ** |
|---------------------------------------------------------------------------|------------|---------------------------|------------|--------------------------|------------|
|                                                                      |       |                      |       |                     |       |
| Net sales                                                                 |       | $                         | 24,396     |                     | $          | 24,768 |   |
|                                                                      |       |                      |       |                     |       |
| Costs and expenses:                                                       |       |                      |       |                     |       |
| Cost of sales (exclusive of depreciation,   depletion and amortization)   |       | 19,573                    |       | 20,476                   |       |
| Depreciation, depletion and amortization                                  |       | 1,068                     |       | 1,092                    |       |
| Selling and administrative                                                |       | 5,291                     |       | 4,821                    |       |
|                                                                      |       |                      |       |                     |       |
| Gain on disposition of property and equipment                             |       | 2                         |       | —                   |       |
|                                                                      |       | 25,930                    |       | 26,389                   |       |
|                                                                      |       |                      |       |                     |       |
| Operating loss                                                            |       | (1,534                    | )          | (1,621                   | )          |
|                                                                      |       |                      |       |                     |       |
| Interest expense, net                                                     |       | (134                      | )          | (193                     | )          |
| Amortization of deferred financing fees                                   |       | (51                       | )          | (51                      | )          |
| Other income, net                                                         |       | 10                        |       | 15                       |       |
|                                                                      |       |                      |       |                     |       |
| Loss from continuing operations before income   taxes                     |       | (1,709                    | )          | (1,850                   | )          |
|                                                                      |       |                      |       |                     |       |
| Benefit from income taxes                                                 |       | 656                       |       | 639                      |       |
|                                                                      |       |                      |       |                     |       |
| Net loss from continuing operations                                       |       | (1,053                    | )          | (1,211                   | )          |
|                                                                      |       |                      |       |                     |       |
| Loss from discontinued operation net of income tax   benefit of $0 and $0 |       | —                    |       | (2                       | )          |
|                                                                      |       |                      |       |                     |       |
| Net loss                                                                  |       | (1,053                    | )          | (1,213                   | )          |
|                                                                      |       |                      |       |                     |       |
| Retained earnings, beginning of period                                    |       | 62,999                    |       | 64,947                   |       |
| ** **                                                                | ** ** | ** **                | ** ** | ** **               | ** ** |
| Retained earnings, end of period                                          |       | $                         | 61,946     |                     | $          | 63,734 |   |
|                                                                      |       |                      |       |                     |       |
| Net (loss) per basic and diluted share:                                   |       |                      |       |                     |       |
| Continuing operations                                                     |       | $                         | (.64       | )                        | $          | (.75 | ) |
| Discontinued operation                                                    |       | —                    |       | —                   |       |
| Basic and diluted loss per share                                          |       | $                         | (.64       | )                        | $          | (.75 | ) |
|                                                                      |       |                      |       |                     |       |
| Average shares outstanding                                                |       | 1,634                     |       | 1,611                    |       |

 

See notes to condensed consolidated financial statements.

 

3

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CONTINENTAL MATERIALS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND APRIL 2, 2011

(Unaudited)

(000’s omitted)

 
| ** **                                               | ** ** | **MARCH 31,   2012** | ** ** | **APRIL 2,   2011** | ** ** |
|----------------------------------------------------------|------------|---------------------------|------------|--------------------------|------------|
|                                                     |       |                      |       |                     |       |
| Net cash used in operating activities                    |       | $                         | (185       | )                        | $          | (1,714 | ) |
|                                                     |       |                      |       |                     |       |
| Investing activities:                                    |       |                      |       |                     |       |
| Capital expenditures                                     |       | (257                      | )          | (326                     | )          |
| Loan to subsidiary executive                             |       | —                    |       | (336                     | )          |
| Cash proceeds from sale of property and equipment        |       | 11                        |       | —                   |       |
| Net cash used in investing activities                    |       | (246                      | )          | (662                     | )          |
|                                                     |       |                      |       |                     |       |
| Financing activities:                                    |       |                      |       |                     |       |
| (Repayment) borrowings on the revolving bank loan,   net |       | (3,900                    | )          | 2,750                    |       |
| Repayment of long term debt                              |       | (125                      | )          | (375                     | )          |
| Refund of cash deposit for self-insured claims           |       | 4,340                     |       | —                   |       |
| Net cash provided by financing activities                |       | 315                       |       | 2,375                    |       |
|                                                     |       |                      |       |                     |       |
| Net decrease in cash and cash equivalents                |       | (116                      | )          | (1                       | )          |
| Cash and cash equivalents:                               |       |                      |       |                     |       |
| Beginning of period                                      |       | 840                       |       | 1,032                    |       |
|                                                     |       |                      |       |                     |       |
| End of period                                            |       | $                         | 724        |                     | $          | 1,031 |   |
|                                                     |       |                      |       |                     |       |
| Supplemental disclosures of cash flow items:             |       |                      |       |                     |       |
| Cash paid during the three months for:                   |       |                      |       |                     |       |
| Interest, net                                            |       | $                         | 142        |                     | $          | 178 |   |
| Income taxes paid                                        |       | 244                       |       | —                   |       |

 

See notes to condensed consolidated financial statements.

 

4

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CONTINENTAL MATERIALS CORPORATION

SECURITIES AND EXCHANGE COMMISSION FORM 10-Q

NOTES TO THE QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED MARCH 31, 2012

(Unaudited)

 

1.               Basis of Presentation:

 

The unaudited interim condensed consolidated financial statements included herein are prepared pursuant to the Securities and Exchange Commission rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual consolidated financial statements have been omitted. The condensed consolidated balance sheet of the Company as of December 31, 2011 has been derived from the audited consolidated balance sheet of the Company as of that date. The interim condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest annual report on Form 10-K. In the opinion of management, the condensed consolidated financial statements include all adjustments (none of which were other than normal recurring adjustments) necessary for a fair statement of the results for the interim periods. Discontinued operations refer to the residual activity of Rocky Mountain Ready Mix (RMRM), a Colorado corporation sold by the Company on July 17, 2009.

 

2.               Income taxes are accounted for under the asset and liability method that requires deferred income taxes to reflect the future tax consequences attributable to differences between the tax and financial reporting bases of assets and liabilities. Deferred tax assets and liabilities recognized are based on the tax rates in effect in the year in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, based on available positive and negative evidence, it is “more likely than not” (greater than a 50% likelihood) that some or all of the net deferred tax assets will not be realized.

 

The Company has established a valuation reserve related to the carry-forward of all charitable contributions deductions arising from prior years and the portion of contributions in 2012 that the Company believes it will be unable to utilize prior to the expiration of their carry-forward periods. At January 1, 2011, the Company also established a valuation reserve of $1,474,000 against the carry-forward of the long-term capital loss related to the sale of the stock of RMRM due to the uncertainty that the Company will be able to generate offsetable long-term capital gains prior to the expiration of the carry-forward period. For Federal purposes, net operating losses can be carried forward for a period of 20 years while alternative minimum tax credits can be carried forward indefinitely. For state purposes, net operating losses can be carried forward for periods ranging from 5 to 20 years for the states that the Company is required to file in. California Enterprise Zone credits can be carried forward indefinitely while Colorado credits can be carried forward for 7 years.

 

The Company’s income tax returns are subject to audit by the Internal Revenue Service (IRS) and state tax authorities. The amounts recorded for income taxes reflect the Company’s tax positions based on research and interpretations of complex laws and regulations. The Company accrues liabilities related to uncertain tax positions taken or expected to be taken in its tax returns. The IRS has completed examinations for periods through 2007 and is currently examining the 2008 and 2009 periods. Various state income tax returns also remain subject to examination.

 

3.               Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

 

Level 1   Quoted prices in active markets for identical assets or liabilities.

 

Level 2          Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3          Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability including assumptions about risk.

 

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying balance sheet.

 

Cash and Cash Equivalents: The carrying amount approximates fair value and was valued as level 1.

 

5

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Notes Receivables with Related Parties: It was not practical to estimate the fair value of long-term receivables and payables with related parties. The terms of the amounts reflected in the balance sheet at March 31, 2012 are more fully discussed in the 10-K for the fiscal year ended December 31, 2011.

 

Notes Payable and Long-term Debt: Fair value is estimated based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities and determined through the use of a discounted cash flow model. The carrying amount of long-term debt represents a reasonable estimate of the corresponding fair value as the Company’s debt is held at variable interest rates and was valued as level 2.

 

4.               During September 2011, the FASB issued Accounting Standards Update (ASU) 2011-08 which is effective for fiscal years beginning after December 15, 2011 although early adoption is allowed. The ASU allows an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The ASU expands upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The adoption of ASU 2011-8 did not have an impact on the profit or loss of the Company during 2011 or the first quarter of 2012.

 

There are currently no other significant prospective accounting pronouncements that are expected to have a material effect on the Company’s consolidated financial statements.

 

5.               Operating results for the first three months of 2012 are not necessarily indicative of performance for the entire year due to the seasonality of most of our products. Historically, sales of the Evaporative Cooling segment are higher in the first and second quarters, sales of the Concrete, Aggregates and Construction Supplies (CACS) segment are higher in the second and third quarters and sales of the Heating and Cooling segment are higher in the third and fourth quarters. The sales of the Door segment are more evenly spread throughout the year. The economic recession and financial market turmoil that began in the latter part of 2008 has had a significant detrimental effect on the construction industry in general and on our construction related businesses in particular since that time and is expected to continue to do so for the foreseeable future.

 

6.               There is no difference in the calculation of basic and diluted earnings per share (EPS) for the three months ended March 31, 2012 and April 2, 2011 as the Company does not have any dilutive instruments.

 

7.               The Company operates primarily in two industry groups, Heating, Ventilation and Air Conditioning (HVAC) and Construction Products. Within each of these two industry groups, the Company has identified two reportable segments: the Heating and Cooling segment and the Evaporative Cooling segment in the HVAC industry group and the CACS segment and the Door segment in the Construction Products industry group.

 

The Heating and Cooling segment produces and sells gas-fired wall furnaces, console heaters and fan coils from the Company’s wholly-owned subsidiary, Williams Furnace Co. of Colton, California (WFC). The Evaporative Cooling segment produces and sells evaporative coolers from the Company’s wholly-owned subsidiary, Phoenix Manufacturing, Inc. of Phoenix, Arizona (PMI). Sales of these two segments are nationwide, but are concentrated in the southwestern United States. Concrete, Aggregates and Construction Supplies are offered from numerous locations along the Southern Front Range of Colorado operated by the Company’s wholly-owned subsidiaries collectively referred to as Transit Mix Concrete Co. (TMC). Doors are fabricated and sold along with the related hardware from Colorado Springs and Pueblo, Colorado through the Company’s wholly-owned subsidiary, McKinney Door and Hardware, Inc. of Pueblo, Colorado (MDHI). Sales of these two segments are highly concentrated in the Southern Front Range area in Colorado although door sales are also made throughout the United States.

 

In addition to the above reporting segments, an “Unallocated Corporate” classification is used to report the unallocated expenses of the corporate office which provides treasury, insurance and tax services as well as strategic business planning and general management services. Expenses related to the corporate information technology group are allocated to all locations, including the corporate office. An “Other” classification is used to report a real estate operation and the activity of the new business venture, Williams EcoLogix, Inc. The Company purchased the residence of and made a loan to an executive of one of the Company’s subsidiaries in connection with his relocation. The residence is classified as “Real estate held for resale — related party” on the condensed consolidated balance sheet. The residence and the loan receivable are included in the assets of the “Other” classification. The related party loan is secured by marketable securities and bears interest at 5%.

 

The Company evaluates the performance of its segments and allocates resources to them based on a number of criteria including operating income, return on investment and other strategic objectives. Operating income is determined by deducting operating expenses from all revenues. In computing operating income, none of the following has been added or deducted: unallocated corporate expenses, interest, other income or loss or income taxes.

 

6

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The following table presents information about reported segments for the three months ended March 31, 2012 and April 2, 2011 along with the items necessary to reconcile the segment information to the totals reported in the financial statements (amounts in thousands):

 
| ** **                                        | ** ** | **Construction Products**                                  | ** ** | **HVAC Products** | ** ** | ** **                             | ** ** | ** **                  | ** ** | ** **                | ** ** |
|---------------------------------------------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|----------------------------------------|------------|-----------------------------|------------|---------------------------|------------|
| **Quarter ended   March 31, 2012** | ** ** | **Concrete,   Aggregates &   Construction   Supplies** | ** ** | **Doors**              | ** ** | **Combined   Construction   Products** | ** ** | **Heating   and   Cooling** | ** ** | **Evaporative   Cooling** | ** ** | **Combined   HVAC   Products** | ** ** | **Unallocated   Corporate** | ** ** | **Other** | ** ** | **Total** | ** ** |
|                                              |       |                                                            |       |                   |       |                                   |       |                        |       |                      |       |   |   |   |   |   |   |   |   |
| Revenues   from external customers                |       | $                                                               | 6,743      |                   | $          | 2,930                                  |       | $                           | 9,673      |                      | $          | 8,866 |   | $ | 5,768 |   | $ | 14,634 |   | $ | 3 |   | $ | 86 |   | $ | 24,396 |   |
| Depreciation,   depletion and amortization        |       | 805                                                             |       | 33                     |       | 838                                    |       | 100                         |       | 98                        |       | 198 |   | 32 |   | — |   | 1,068 |   |
| Operating   income (loss)                         |       | (1,765                                                          | )          | 59                     |       | (1,706                                 | )          | 499                         |       | 369                       |       | 868 |   | (627 | ) | (69 | ) | (1,534 | ) |
| Segment   assets                                  |       | 29,994                                                          |       | 5,888                  |       | 35,882                                 |       | 16,124                      |       | 14,658                    |       | 30,782 |   | 3,484 |   | 1,142 |   | 71,290 |   |
| Capital   expenditures                            |       | 76                                                              |       | 8                      |       | 84                                     |       | 109                         |       | 60                        |       | 169 |   | 4 |   | — |   | 257 |   |
|                                                   |            |                                                                 |            |                        |            |                                        |            |                             |            |                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

| ** **                                       | ** ** | **Construction Products**                                  | ** ** | **HVAC Products** | ** ** | ** **                             | ** ** | ** **                  | ** ** | ** **                | ** ** |
|--------------------------------------------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|----------------------------------------|------------|-----------------------------|------------|---------------------------|------------|
| **Quarter ended   April 2, 2011** | ** ** | **Concrete,   Aggregates &   Construction   Supplies** | ** ** | **Doors**              | ** ** | **Combined   Construction   Products** | ** ** | **Heating   and   Cooling** | ** ** | **Evaporative   Cooling** | ** ** | **Combined   HVAC   Products** | ** ** | **Unallocated   Corporate** | ** ** | **Other** | ** ** | **Total** | ** ** |
|                                             |       |                                                            |       |                   |       |                                   |       |                        |       |                      |       |   |   |   |   |   |   |   |   |
| Revenues   from external customers               |       | $                                                               | 7,354      |                   | $          | 3,113                                  |       | $                           | 10,467     |                      | $          | 8,395 |   | $ | 5,817 |   | $ | 14,212 |   | $ | 3 |   | $ | 86 |   | $ | 24,768 |   |
| Depreciation,   depletion and amortization       |       | 825                                                             |       | 33                     |       | 858                                    |       | 105                         |       | 113                       |       | 218 |   | 16 |   | — |   | 1,092 |   |
| Operating   income (loss)                        |       | (1,675                                                          | )          | 200                    |       | (1,475                                 | )          | 77                          |       | 481                       |       | 558 |   | (687 | ) | (17 | ) | (1,621 | ) |
| Segment   assets (a)                             |       | 32,289                                                          |       | 5,827                  |       | 38,116                                 |       | 19,600                      |       | 11,967                    |       | 31,567 |   | 5,106 |   | 1,082 |   | 75,871 |   |
| Capital   expenditures (b)                       |       | 197                                                             |       | 13                     |       | 210                                    |       | 26                          |       | 85                        |       | 111 |   | 5 |   | — |   | 326 |   |
|                                                  |            |                                                                 |            |                        |            |                                        |            |                             |            |                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(a)    Segment assets are as of December 31, 2011.

(b)    Capital expenditures are presented on the accrual basis of accounting.

 

There are no differences in the basis of segmentation or in the basis of measurement of segment profit or loss from the last annual report.

 

8.               Identifiable amortizable intangible assets as of March 31, 2012 include a restrictive land covenant and customer relationships. Collectively, these assets were carried at $225,000, net of $495,000 accumulated amortization. The pre-tax amortization expense for intangible assets during the quarter ended March 31, 2012 was $17,000 compared to $33,000 for the quarter ended April 2, 2011.

 

Based upon the intangible assets recorded on the balance sheet at March 31, 2012, amortization expense for the next five years is estimated to be as follows: 2012 — $65,000; 2013 — $58,000; 2014 — $52,000; 2015 — $45,000 and 2016 — $21,000.

 

9.               During the first quarter of 2012, the Company provided a letter of credit to replace the $4,340,000 of cash deposited for self-insured claims with the Company’s insurance carrier.

 

10.         The Company issued a total of 12,000 shares to the eight eligible board members effective January 6, 2012 as full payment for their 2012 retainer fee. The shares were issued under the 2010 Non-Employee Directors Stock Plan.

 

11.         The Company is involved in litigation matters related to its business, principally product liability matters related to the gas-fired heating products and fan coil products in the Heating and Cooling segment. In the Company’s opinion, none of these proceedings, when concluded, will have a material adverse effect on the Company’s consolidated results of operations, cash flows or financial condition as the Company has established adequate accruals for matters that are probable and estimable. The Company does not accrue estimated amounts for future legal costs related to the defense of these matters but rather expenses them as incurred.

 

In November 2010, the Company filed a lawsuit against an insurance company with regard to a business interruption claim and property damages resulting from an incident that lead to the cessation of operations at the Pikeview Quarry in December of 2008. The litigation is currently in the discovery process. No recovery has been recorded in the Company’s financial statements and all related costs have been expensed to date. During the first quarter of 2012 and 2011, the Company incurred expenses of $134,000 and $136,000, respectively, related to this litigation. The Company expects that the ongoing cost of the litigation will be significant.

 

The Company is also involved in a lawsuit to recover a receivable. There has been no significant change since the discussion in the Form 10-K filed with the Securities and Exchange Commission for the fiscal 2011 year.

 

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**Item 4.        Controls and Procedures**

 

(a)                      Evaluation of Disclosure Controls and Procedures.

 

The Company’s Chief Executive Officer and Chief Financial Officer, with the participation of management, have evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act) as of March 31, 2012. The Chief Executive Officer and Chief Financial Officer, based on that valuation, concluded that our disclosure controls and procedures were effective and were reasonably designed to ensure that all material information relating to the Company (including its subsidiaries) required to be disclosed in this quarterly report is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

 

(b)                     Changes in Internal Control Over Financial Reporting.

 

The Company continually reassesses its internal control over financial reporting and makes changes as deemed prudent. During the quarter ended March 31, 2012, there were no material weaknesses identified in our review of internal control over financial reporting and no significant changes in the Company’s internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

**Item 6.    Exhibits**

 

| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 3                    |       | Registrant’s   Restated Certificate of Incorporation dated May 28, 1975, as amended on   May 24, 1978, May 27, 1987 and June 3, 1999 filed as   Exhibit 3 to Form 10-K for the year ended January 1, 2005,   incorporated by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 3a                   |       | Registrant’s   By-laws, as amended September 19, 1975 filed as Exhibit 6 to   Form 8-K for the month of September 1975, incorporated herein by   reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 31.1                 |       | Certification   of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) and   Rule 13a-14(d)/15d-14(d) of the Securities Exchange Act of 1934, as   adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 31.2                 |       | Certification   of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) and   Rule 13a-14(d)/15d-14(d) of the Securities Exchange Act of 1934, as   adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 32                   |       | Certification   of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.   Section 1350, as adopted pursuant to Section 906 of the Sarbanes -   Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 95                   |       | Mine   Safety Disclosures incorporated by reference from Exhibit 95 to the   Original Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 101                  |       | The   following financial information from Continental Materials Corporation   Quarterly Report on Form 10-Q for the fiscal quarter ended   March 31, 2012 filed with the SEC on May 15, 2012, formatted in   Extensible Business Reporting Language (XBRL); (i) the Condensed   Consolidated Balance Sheets as of March 31, 2012 and December 31,   2011; (ii) the Condensed Consolidated Statements of Operations and   Retained Earnings for the fiscal three months ended March 31, 2012 and   April 2, 2011; (iii) the Condensed Consolidated Statements of Cash   Flows for the fiscal three months ended March 31, 2012 and April 2,   2011; and (iv) Notes to Quarterly Condensed Consolidated Financial   Statements incorporated by reference from Exhibit 101 to the Original Report.* |

 

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|   |   | *   - Pursuant to Rule 406T of Regulation S-T, the XBRL related information   in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be   deemed to be “filed” for purposes of Section 18 of the Exchange Act, or   otherwise subject to the liability of that section, and shall not be deemed   part of a registration statement, prospectus or other document filed under   the Securities Act or the Exchange Act, except as shall be expressly set   forth by specific reference in such filings. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 
|   |                    | CONTINENTAL   MATERIALS CORPORATION |
|--------|-------------------------|-------------------------------------|
|   |                    |                                |   |
|   |                    |                                |   |
| Date:  | February 8,   2013 |                                | By: | /s/   Joseph J. Sum |
|   |                    |                                | Joseph   J. Sum, Vice President |
|   |                    |                                | and   Chief Financial Officer |
|        |                         |                                     |  |  |

 

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