-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CUAVG7ejmFX/2HQslg6ltbejCRPZi5KgtXUCIaIknYUisMYcCnVbc5mp9awACEcP 6FPB0j4sqOtKxbcY2v4ieQ== 0000021212-98-000005.txt : 19980514 0000021212-98-000005.hdr.sgml : 19980514 ACCESSION NUMBER: 0000021212-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COACHMEN INDUSTRIES INC CENTRAL INDEX KEY: 0000021212 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR HOMES [3716] IRS NUMBER: 351101097 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07160 FILM NUMBER: 98618895 BUSINESS ADDRESS: STREET 1: 601 E BEARDSLEY AVE STREET 2: P O BOX 3300 CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 2192620123 MAIL ADDRESS: STREET 1: 601 E BEARDSLEY AVE CITY: ELKHART STATE: IN ZIP: 46515 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (MARK ONE) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________________to__________________ Commission file number 1-7160 COACHMEN INDUSTRIES, INC. (Exact name of registrant as specified in its charter) INDIANA 35-1101097 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification number) 601 EAST BEARDSLEY AVENUE, ELKHART, INDIANA 46514 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 219-262-0123 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: At April 30, 1998: Common Shares, without par value 17,390,249 shares outstanding including an equivalent number of common share purchase rights. 1 COACHMEN INDUSTRIES, INC. INDEX Page No. PART I. FINANCIAL INFORMATION Financial Statements: Condensed Consolidated Balance Sheets- March 31, 1998 and December 31, 1997....................3-4 Condensed Consolidated Statements of Income- Three Months Ended March 31, 1998 and 1997.............. 5 Condensed Consolidated Statements of Cash Flows- Three Months Ended March 31, 1998 and 1997.............. 6 Notes to Condensed Consolidated Financial Statements.....7 Management's Discussion and Analysis of Financial Condition and Results of Operations........................8-11 PART II. OTHER INFORMATION.................................... 12 Item 6. Exhibits and Reports on Form 8-K SIGNATURES..................................................... 12 This Report contains certain statements that are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements include, but are not limited to statements related to the availability of gasoline, which can impact sales of recreational vehicles; availability of chassis, which are used in the production of many of the Company's recreational vehicle products; interest rates, which affect the affordability of the Company's products; and also on the state of the recreational vehicle and modular housing industries in the United States. Other factors affecting forward-looking statements include competition in these industries and the Company's ability to maintain or increase gross margins which are critical to the profitability whether there are or are not increased sales; and the Company's ability to make its software compliant with the year 2000. At times, the Company's actual performance differs materially from its projections and estimates regarding the economy, the recreational vehicle and housing industries and other key performance indicators. Readers of this Report are cautioned that reliance on any forward-looking statements involves risks and uncertainties. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There can be no assurance that the forward-looking statements contained in this Report will prove to be accurate. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's objectives will be achieved. 2 COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, DECEMBER 31, 1998 1997 ASSETS CURRENT ASSETS Cash and temporary cash investments $ 46,030,925 $71,427,918 Short-term investments 20,803,930 15,852,718 Trade receivables, less allowance for doubtful receivables 1998 - $1,152,000 and 1997 - $1,354,000 35,816,166 25,212,595 Other receivables 3,678,693 2,980,257 Refundable income taxes 1,761,000 1,761,000 Inventories 84,978,233 68,416,006 Prepaid expenses and other 1,546,197 1,247,973 Deferred income taxes 3,040,000 3,040,000 Total current assets 197,655,144 189,938,467 PROPERTY AND EQUIPMENT, at cost Land and improvements 10,640,807 9,041,817 Buildings and improvements 45,817,834 39,950,161 Machinery and equipment 17,630,309 16,874,788 Transportation equipment 12,496,782 10,159,168 Office furniture and fixtures 5,954,726 5,712,961 Total property and equipment, at cost 92,540,458 81,738,895 Less, Accumulated depreciation 36,731,636 35,137,268 Net property and equipment 55,808,822 46,601,627 OTHER ASSETS Real estate held for sale 4,089,603 4,188,063 Rental properties 1,417,592 2,000,218 Intangibles, less accumulated amortization 1998 - $550,498 and 1997 - $516,469 4,893,778 4,927,807 Deferred income taxes 569,000 569,000 Other 10,171,431 10,836,844 Total other assets 21,141,404 22,521,932 TOTAL ASSETS $274,605,370 $259,062,026 The accompanying notes are part of the condensed consolidated financial statements. 3 COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONT'D) MARCH 31, DECEMBER 31, 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 2,258,519 $ 2,258,519 Accounts payable, trade 28,342,350 22,818,303 Accrued wages, salaries and commissions 4,158,364 4,876,790 Accrued dealer incentives 4,252,197 3,226,255 Accrued warranty expense 6,059,666 6,013,528 Accrued income taxes 4,306,526 1,529,543 Accrued insurance 3,183,365 2,319,518 Other liabilities 7,977,433 6,633,762 Total current liabilities 60,538,420 49,676,218 LONG-TERM DEBT 11,032,632 12,591,144 OTHER 6,693,661 6,658,872 Total liabilities 78,264,713 68,926,234 SHAREHOLDERS' EQUITY Common shares, without par value: authorized 60,000,000 shares; issued 1998 - 20,768,343 shares and 1997 - 20,689,214 shares 88,261,484 87,519,740 Additional paid-in capital 3,035,198 3,012,596 Retained earnings 121,416,613 115,984,289 Treasury shares, at cost: 1998 - 3,386,462 Shares and 1997 - 3,387,648 shares (16,372,638) (16,380,833) Total shareholders' equity 196,340,657 190,135,792 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $274,605,370 $259,062,026 The accompanying notes are part of the condensed consolidated financial statements. 4 COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1998 1997 Net sales $175,637,459 $158,105,811 Cost of goods sold 152,261,070 137,770,440 Gross profit 23,376,389 20,335,371 Operating expenses: Selling and delivery 9,066,279 8,330,879 General and administrative 6,775,098 6,007,899 15,841,377 14,338,778 Operating income 7,535,012 5,996,593 Nonoperating income (expense): Interest expense (465,160) (356,256) Investment income 1,128,083 992,464 Gain on sale of properties, net 5,034 9,456 Other, net 873,446 93,777 1,541,403 739,441 Income before income taxes 9,076,415 6,736,034 Income taxes 2,777,000 2,317,000 Net income $ 6,299,415 $ 4,419,034 Earnings per common share: Basic $ .36 $ .26 Diluted $ .36 $ .25 Number of common shares used in the computation of earnings per share: Basic 17,339,620 17,202,020 Diluted 17,633,166 17,433,965 Cash dividends per common share $ .05 $ .05 The accompanying notes are part of the condensed consolidated financial statements. 5 COACHMEN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by (used in) operating activities $(6,180,627) $ 11,269,442 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from: Sale of short-term investments 31,291,922 - Sale of properties 111,262 113,707 Acquisitions of: Short-term investments (36,352,312) - Property and equipment (4,365,594) (3,951,450) Businesses (9,001,812) - Other 322,705 410,906 Net cash (used in) investing activities (17,993,829) (3,426,837) CASH FLOWS FROM FINANCING ACTIVITIES Payments of long-term debt (1,558,512) (1,557,610) Issuance of common shares under stock option and stock purchase plans 741,744 214,927 Tax benefit from stock options exercised 461,322 35,440 Cash dividends paid (867,091) (860,030) Net cash (used in) financing activities (1,222,537) (2,167,273) Increase (decrease) in cash and temporary cash investments (25,396,993) 5,675,332 CASH AND TEMPORARY CASH INVESTMENTS Beginning of period 71,427,918 66,448,901 End of period $ 46,030,925 $ 72,124,233 Noncash investing and financing activities: Liabilities assumed in acquisitions of businesses $ 795,000 $ - The accompanying notes are part of the condensed consolidated financial statements. 6 COACHMEN INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated balance sheet data as of December 31, 1997 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. 2. In the opinion of management, the information furnished herein includes all adjustments of a normal and recurring nature necessary to reflect a fair statement of the interim periods reported. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year. 3. Inventories consist of the following: March 31, December 31, 1998 1997 Raw material $ 24,779,920 $ 19,437,977 Work-in-process 9,754,803 9,327,308 Finished goods 50,443,510 39,650,721 Total $ 84,978,233 $ 68,416,006 4. The Company was contingently liable at March 31, 1998 to banks and other financial institutions on repurchase agreements in connection with financing provided by such institutions to most of the Company's independent dealers in connection with their purchase of the Company's recreational vehicle products. These agreements provide for the Company to repurchase its products from the financing institution in the event that they have repossessed them upon a dealer's default. The risk of loss resulting from these agreements is spread over the Company's numerous dealers and is further reduced by the resale value of the products repurchased. The Company is involved in various legal proceedings which are ordinary litigations incidental to the industry and which are covered in whole or in part by insurance. Management believes that any liability which may result from these proceedings will not be significant. 5. On February 3, 1998, the Company acquired certain assets and the operations of three retail recreational vehicle dealerships, two located in Florida and one in Georgia. The assets acquired consisted of new and used unit inventories, real and personal property, parts inventories, tools and supplies and other miscellaneous items. The purchase price, which aggregated $9.8 million and approximated the fair value of the acquired assets, consisted of $9.0 million in cash and the balance in the assumption of certain liabilities of the sellers. The acquisitions were accounted for as a purchase and the operating results of the acquired businesses are included in the Company's consolidated financial statements from the date of acquisition. Pro forma financial information has not been presented as it is not materially different from the Company's historical results. 7 COACHMEN INDUSTRIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's financial condition, results of operations and cash flows during the periods included in the accompanying condensed consolidated financial statements. A summary of the changes in the principal items included in the condensed consolidated statements of income is shown below. Comparison of Three Months Ended March 31, 1998 and 1997 Increases (Decreases) Amount Percentage Net sales $ 17,531,648 11.1% Cost of goods sold 14,490,630 10.5 Selling and delivery expenses 735,400 8.8 General and administrative expenses 767,199 12.8 Interest expense 108,904 30.6 Investment income 135,619 13.7 Gain on sale of properties, net (4,422) * Other, net 779,669 * Income before income taxes 2,340,381 34.7 Income taxes 460,000 19.9 Net income 1,880,381 42.6 * Not meaningful 8 NET SALES Consolidated net sales for the quarter ended March 31, 1998 were $175,637,459, an increase of 11.1% over $158,105,811 reported in the same quarter of 1997. The Company's vehicle segment, which includes the parts and supply businesses, experienced a sales increase of 12.2%. Although unit sales of towable products increased from the 1997 period, unit sales of motorized products posted the largest sales gains. The Company's housing segment experienced a 4.9% increase in net sales for the quarter compared to last year's first quarter. This increase would have been higher if weather conditions had not delayed delivery of many sold homes. While the RV segment was up in the number of units sold, the Housing segment was nearly unchanged in the number of units sold compared to the first quarter of 1997. Both RV and housing segments experienced increases in the average sales price per unit. COST OF GOODS SOLD Cost of goods sold increased 10.5% or $14,490,630 for the three months ended March 31, 1998. The increase is substantially in line with the increase in net sales. Cost of goods sold as a percentage of net sales was 86.7% for the 1998 quarter and 87.1% for the 1997 quarter. This percentage decrease is attributable to the 1997 capacity start-up costs incurred in the RV segment which were absorbed in the prior period. For both quarters, the favorable gross margins for the RV segment were offset by lower gross margins for the housing segment. The housing segment continued experiencing lower gross margins in 1998 attributable to the implementation of a 7-day work week production schedule at the Company's largest housing facility, though there has been an improvement in the costs associated with this transition. OPERATING EXPENSES As a percentage of net sales, operating expenses, which include selling, delivery, general and administrative expenses, were 9.0% and 9.1% for the quarters ended March 31, 1998 and 1997, respectively. Selling expenses were 4.8% both periods, while delivery expenses decreased .1%. General and administrative expenses were 3.9% of net sales for the first quarter of 1998 and 3.8% of net sales for the first quarter of 1997. INTEREST EXPENSE Interest expense was $465,160 and $356,256 for the quarters ended March 31, 1998 and 1997, respectively. The increase was primarily the result of a smaller estimated increase in cash surrender value for the Company's investment in life insurance contracts in 1998 than in 1997. These life insurance contracts have been purchased to fund obligations under deferred compensation agreements with executives and other key employees. The interest costs associated with deferred compensation obligations and with the borrowings against the cash value of the insurance policies are partially offset by the increases in cash surrender values. 9 INVESTMENT INCOME Investment income increased $135,619 for the 1998 quarter from 1997. Investment income is indicative of the amounts of cash and temporary cash investments, as well as, short-term investments in 1998 compared to 1997. GAIN ON THE SALE OF PROPERTIES, NET The net gain on the sale of properties for the quarter ended March 31, 1998 was $5,034 while the comparative quarter in 1997 was a gain of $9,456. This classification represents the net result of the amount of gain or loss recognized upon the disposition of various small properties. OTHER, NET Other income, net, represents income of $873,446 for the 1998 first quarter and $93,777 for the 1997 first quarter. The larger amount in 1998 is principally attributed to the recognition of $762,000 of key-man life insurance proceeds during the quarter. INCOME TAXES For the first quarter ended March 31, 1998, the effective tax rate was 30.6% compared to a first quarter tax rate of 34.4% in 1997. The Company's effective tax rate fluctuates based upon the states where sales occur and also with the level of export sales. The first quarter of 1998 was also impacted by the amount of nontaxable income realized from the recognition of key-man life insurance proceeds. LIQUIDITY AND CAPITAL RESOURCES The Company generally relies on funds from operations as its primary source of liquidity. In addition, the Company maintains an unsecured committed line of credit, which totaled $30 million at March 31, 1998, to meet its seasonal working capital needs. At March 31, 1998, there were no borrowings against this line of credit. For the three months ended March 31, 1998, the major uses of cash were investing and operating activities. The significant investing activities were purchases, net of sales, of short-term investments, the acquisition of three businesses (recreational vehicle retail stores) and capital expenditures. Property and equipment acquisitions consumed cash during the quarter primarily from the construction of an All American Homes manufacturing facility in the state of Ohio and the purchase of an existing recreational vehicle manufacturing facility in Indiana. The significant uses of cash in operating activities were the increase in receivables, due the increase in net sales, and the increase in inventories. Inventories were increased in anticipation of the seasonal selling patterns. The negative cash flow from financing activities was primarily for cash dividends and repayment of long-term debt. 10 At March 31, 1998, working capital decreased to $137.1 million from $140.3 million at December 31, 1997. The $7.7 million increase in current assets at March 31, 1998 versus December 31, 1997, was primarily due to increased receivables and inventories. The larger increase in current liabilities of $10.9 million is substantially due to increased trade payables, accrued income taxes and other accrued liabilities, including insurance. 11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 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. COACHMEN INDUSTRIES, INC. (Registrant) s/s: GARY L. GROOM Date: May 13, 1998 _______________________________ Gary L. Groom, Executive Vice President - Finance (Principal Financial Officer) s/s: WILLIAM M. ANGELO Date: May 13, 1998 _______________________________ William M. Angelo, Corporate Controller (Principal Accounting Officer) 12 EX-27 2
5 This schedule contains summary financial information extracted from the consolidated statement of income and consolidated balance sheet and is qualified in its entirety by reference to such financial statements. 0000021212 COACHMEN INDUSTRIES, INC. 1000 3-MOS 3-MOS DEC-31-1998 DEC-31-1997 MAR-31-1998 MAR-31-1997 46,031 72,124 20,804 500 42,408 37,205 1,152 1,007 84,978 61,300 197,655 176,040 92,540 73,104 36,732 30,664 274,605 241,828 60,538 50,483 11,033 13,291 71,889 70,904 0 0 0 0 124,452 100,578 274,605 241,828 175,637 158,106 175,637 158,106 152,261 137,771 168,102 152,109 (1,541) (739) 91 80 465 356 9,076 6,731 2,777 2,317 6,299 4,419 0 0 0 0 0 0 6,299 4,419 .36 .26 .36 .25 RESTATED
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