-----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, O6J+d5B+EoaL42zN6WZRMCy+yW2ZqAkucNS7W9Supn4jdE1UCgnacYgk7D3nlq5X sc1nMWknYWblHz9JUMCRdw== 0000950153-96-000549.txt : 19960814 0000950153-96-000549.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950153-96-000549 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAVCO INDUSTRIES INC CENTRAL INDEX KEY: 0000278166 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 860214910 STATE OF INCORPORATION: AZ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08822 FILM NUMBER: 96609850 BUSINESS ADDRESS: STREET 1: 301 E BETHANY HOME RD STE C-178 CITY: PHOENIX STATE: AZ ZIP: 85012 BUSINESS PHONE: 6022650580 MAIL ADDRESS: STREET 1: 301 EAST BETHANY HOME ROAD STREET 2: SUITE C-178 CITY: PHOENIX STATE: AZ ZIP: 85012 10-Q 1 QUARTERLY REPORT FORTHE QUARTER ENDED 6/30/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1996 Commission File Number 0-8822 Cavco Industries, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Arizona 86-0214910 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 301 East Bethany Home Road, Suite C-178 Phoenix, Arizona 85012 - --------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (602) 265-0580 ------------------- n/a - -------------------------------------------------------------------------------- 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 |_| APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Shares Outstanding ----- ------------------ Common Stock, $.05 Par Value 3,382,977 2 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES Index Page No. PART I. Consolidated Financial Information -------- Item 1. Financial Statements Consolidated Balance Sheets June 30, 1996 and September 30, 1995 3-4 Consolidated Statements of Earnings Three months and nine months ended June 30, 1996 and 1995 5 Consolidated Statements of Cash Flows Nine months ended June 30, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8-10 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 11 2 3 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets Assets
June 30, September 30, 1996 1995 ----------- ------------- Current Assets Cash $ 3,442,460 $ 8,140,730 Accounts and notes receivable 11,533,780 4,185,533 Inventories Manufacturing: Raw materials 3,280,946 2,971,581 Work in process 845,548 807,949 Held for sale or lease 27,800 80,438 Real estate held for sale 6,931,423 6,133,089 ----------- ----------- Total inventories 11,085,717 9,993,057 ----------- ----------- Prepaid expenses 502,010 834,713 Deferred tax charge 552,981 552,981 ----------- ----------- Total current assets 27,116,948 23,707,014 ----------- ----------- Property, plant and equipment, at cost 15,280,552 14,285,539 Less accumulated depreciation 5,512,654 4,666,351 ----------- ----------- Net property, plant and 9,767,898 9,619,188 equipment ----------- ----------- Assets under lease 19,394,552 14,285,700 Less accumulated depreciation 1,113,705 596,007 ----------- ----------- Net assets under lease 18,280,847 13,689,693 ----------- ----------- Notes receivable, net of current portion 1,486,369 1,162,415 Investment in partnerships 2,896,927 2,534,703 Other assets 666,289 1,098,926 =========== =========== $60,215,278 $51,811,939 =========== ===========
3 4 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets Liabilities and Stockholders' Equity
June 30, September 30, 1996 1995 ----------- ------------- Current liabilities Notes payable $ 1,034,158 1,022,864 Current installments of long term 3,241,041 2,444,248 debt Accounts payable 5,090,422 5,009,125 Accrued expenses 8,124,970 6,939,129 Income taxes 805,184 42,418 ----------- ---------- Total current liabilities 18,295,775 15,457,784 ----------- ---------- Long term debt, excluding current 13,522,816 12,692,661 installments Deferred taxes and other liabilities 1,928,307 1,278,299 Stockholders' equity: Common stock, $.05 par value; 8,000,000 shares authorized; 3,382,977 shares issued and outstanding 169,149 169,149 Capital in excess of par 312,054 312,054 Retained earnings 25,987,177 21,901,992 ----------- ---------- Net stockholders' equity 26,468,380 22,383,195 =========== ========== $60,215,278 51,811,939 =========== ==========
4 5 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Earnings
Three Month Period Nine Month Period Ended June 30, Ended June 30, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net sales 33,016,732 25,683,252 97,047,502 83,749,969 Cost of sales 27,085,791 21,768,451 78,505,064 68,909,972 ----------- ----------- ----------- ----------- Gross profit 5,930,941 3,914,801 18,542,438 14,839,997 Selling, general and administrative expenses 3,604,760 2,864,608 10,654,879 9,329,527 ----------- ----------- ----------- ----------- Operating income 2,326,181 1,050,193 7,887,559 5,510,470 Other income (expense) Interest income 118,369 59,880 332,467 217,973 Interest expense (391,471) (308,873) (1,153,078) (631,079) Miscellaneous 334,046 4,052 437,863 84,638 ----------- ----------- ----------- ----------- 60,944 (244,941) (382,748) (328,468) ----------- ----------- ----------- ----------- Income from continuing operations before income taxes 2,387,125 805,252 7,504,811 5,182,002 Income taxes 962,200 283,400 3,001,700 2,036,400 ----------- ----------- ----------- ----------- Income from continuing operations 1,424,925 521,852 4,503,111 3,145,602 Discontinued operations [see Note 4]: Loss from discontinued operations (50,544) (27,828) (174,855) (263,084) Loss on sale / disposal of Action (243,071) -- (243,071) -- ----------- ----------- ----------- ----------- Net income 1,131,310 494,024 4,085,185 2,882,518 =========== =========== =========== =========== Income per share from continuing operations .41 .16 1.32 .93 =========== =========== =========== =========== Loss per share from discontinued operations (.01) (.01) (.05) (.08) =========== =========== =========== =========== Loss per share from sale / disposal of Action (.07) -- (.07) -- =========== =========== =========== =========== Net income per share .33 .15 1.20 .85 =========== =========== =========== ===========
5 6 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months Ended June 30, 1996 and 1995
1996 1995 ----------- ----------- Net cash provided by (used in) operations $ 877,505 (3,165,694) Cash flows from investing activities: Purchases of property, plant and equipment (1,288,170) (2,019,325) Purchases of assets under lease (6,694,052) (9,427,281) Proceeds from sales of assets under lease and property, plant and equipment 1,114,470 777,064 Proceeds from collections on notes receivable 1,190,186 1,388,239 Additions to notes receivable (616,117) -- Additions to investment in partnerships (798,334) (1,195,230) ----------- ----------- Net cash used in investing activities (7,092,017) (10,476,533) ----------- ----------- Cash flows from financing activities: Borrowings under lines of credit 2,608,996 7,367,792 Repayments on lines of credit (2,597,702) (7,958,241) Proceeds from long term borrowings 4,000,000 8,000,000 Repayment of long term debt (2,495,052) (529,438) ----------- ----------- Net cash provided by financing activities 1,516,242 6,880,113 ----------- ----------- Decrease in cash (4,698,270) (6,762,114) Cash at beginning of period 8,140,730 9,006,600 ----------- ----------- Cash at end of period $ 3,442,460 2,244,486 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the period for - Interest $ 1,212,812 708,774 =========== =========== Income taxes $ 1,721,834 4,541,233 =========== ===========
6 7 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements include the accounts of the Company and its subsidiaries, Action Healthcare Management Services, Inc. (Action), Sun Built Homes, Inc. (Sun Built) and National Security Containers, Inc. (NSC). The information reflected in the consolidated financial statements has not been examined by independent accountants and necessarily in some respects is based upon estimates which are subject to adjustment in annual closing of accounts. In the opinion of the Company, all adjustments (consisting of only normal recurring adjustments and primary eliminations of all significant intercompany transactions) necessary to present fairly the financial position and results of operations and cash flows for the periods presented have been included. These financial statements have been prepared in accordance with the instructions to the Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation in conformity with generally accepted accounting principles. These financial statements should be read in conjunction with the financial statements and related disclosures contained in the Corporation's Annual Report on Form 10-K for the year ended September 30, 1995, filed with the Securities and Exchange Commission. 2. The number of shares used in computing earnings per common share for all periods presented, based on the weighted average number of shares outstanding, was 3,382,977. The number of shares reflects a three-for-two stock split which occurred in December 1994. 3. The results of operations for the nine month period ended June 30, 1996 are not necessarily indicative of the results to be expected for the full year. 4. In June 1996, the Company made a decision to divest itself of its Action subsidiary. Certain items on the statement of earnings for the three month and nine month periods ended June 30, 1995 have been reclassified to reflect the elimination of the discontinued operations. Discontinued operations on the statements of earnings reflect results of Action and CVC Leasing, which was sold in August 1994. The statements also reflect the expected loss to be incurred upon the sale or disposal of Action. This loss is accrued and reflected in other liabilities on the consolidated balance sheet. A summary of discontinued operations follows:
3 mos-1996 3 mos-1995 9 mos-1996 9 mos-1995 ---------- ---------- ---------- ---------- Loss from operations of discontinued CVC (4,425) (8,640) (23,098) (334,820) Less applicable tax credit 9,300 3,500 9,300 134,000 Loss from operations of discontinued Action (92,619) (38,388) (268,857) (104,464) Less applicable tax credit 37,200 15,700 107,800 42,200 -------- ------- -------- -------- Loss from discontinued (50,544) (27,828) (174,855) (263,084) operations ======== ======= ======== ======== Loss on sale of Action, including provision of $65,445 for operating losses during phase-out period, less applicable tax credit of $162,100 (243,071) -- (243,071) -- ======== ======= ======== ========
7 8 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION THIRD QUARTER 1996 COMPARED TO THIRD QUARTER 1995 Below is a summary of third quarter operating results by business segment.
Manufacturing Leasing 1996 1995 1996 1995 ----------- ----------- ---------- ---------- Net Sales 31,338,060 24,474,728 1,678,672 1,208,524 Cost of Sales 26,032,072 21,141,316 1,053,719 627,135 ----------- ----------- ---------- ---------- Gross Margin 5,305,988 3,333,412 624,953 581,389 S, G & A Expenses 2,827,583 2,350,459 777,177 514,149 ----------- ----------- ---------- ---------- Profit (Loss) from Ops 2,478,405 982,953 (152,224) 67,240 ----------- ----------- ---------- ---------- Other Income (Expense): Interest Income 46,264 1,975 72,105 57,905 Interest Expense (165,648) (243,079) (225,823) (65,794) Miscellaneous 331,808 73,264 2,238 (69,212) ----------- ----------- ---------- ---------- 212,424 (167,840) (151,480) (77,101) ----------- ----------- ---------- ---------- Pretax Earnings (Loss) 2,690,829 815,113 (303,704) (9,861) =========== =========== ========== ==========
Manufacturing: Sales for the third quarter increased $6,863,332, a 28 percent over the prior year. Gross margins in 1996 returned to a more favorable level, 16.9%, compared to 13.6% in 1995. During this quarter in 1995 the Company had a special seasonal sales promotion on some low margin models. Selling, general and administrative expenses continue to decrease as a percent of sales, as the Company strives to control these costs. Interest income increased as the Company generated bank interest from investment of short term funds. The Company was also able to reduce its interest expense, as it did not need to draw on its line of credit. Miscellaneous income reflects a $271,888 net gain recognized on a sale of marketable securities. Leasing: Revenues in the leasing segment increased $470,148 from 1995, reflecting a 39 percent increase. The overall revenue increase resulted from expanded lease fleet. Gross margins for the quarter decreased from 48.1% in 1995 to 37.2 % in 1996. Gross margins are influenced by the level of sales during the period. Sales of units typically provide lower gross margins than rental income. In 1996, revenues included approximately $478,000 of sales, compared to $292,000 in 1995. In addition, 1996 margins were negatively affected by lower fleet utilization rates, due primarily to the growth of the lease fleet. In November 1995, NSC purchased a large quantity of containers from a company, which were on lease at the time of acquisition but were returned to fleet in January 1996. Selling, general and administrative expenses increased due to the addition of three new branches. Interest income resulting from finance lease sales increased during the quarter. The $160,029 increase in interest expense is due to $4,000,000 of additional debt incurred to fund expansion of the lease fleet. Miscellaneous income for 1996 compares favorable to the expense shown for the same period last year, which included losses on sales of trucks, as the Company replaced its fleet of delivery vehicles. 8 9 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued) Overall: In 1996, net income from continuing operations was $1,424,925, or $.41 per share, compared to $521,852, or $.16 per share in 1995. Discontinued operations provided losses of $293,615 ($.08 per share) in 1996 and $27,828 ($.01 per share) in 1995. Net income for the quarter was $1,131,310, or $.33 per share, compared with $494,024, or $.15 per share for the prior year. Increased sales volumes, improved gross margins and continued cost control led to the improved earnings. NINE MONTHS 1996 COMPARED TO NINE MONTHS 1995 Below is a summary of operating results by business segment for the nine months ended June 30.
Manufacturing Leasing 1996 1995 1996 1995 ----------- ----------- ---------- ---------- Net Sales 90,888,162 80,049,213 6,159,340 3,700,756 Cost of Sales 75,012,401 66,884,760 3,492,663 2,025,212 ----------- ----------- ---------- ---------- Gross Margin 15,875,761 13,164,453 2,666,677 1,675,544 S, G & A Expenses 8,449,967 7,877,457 2,204,912 1,452,070 ----------- ----------- ---------- ---------- Profit (Loss) from Ops 7,425,794 5,286,996 461,765 223,474 ----------- ----------- ---------- ---------- Interest Income 127,686 38,257 204,781 179,716 Interest Expense (477,851) (565,285) (675,227) (65,794) Miscellaneous 423,810 133,074 14,053 (48,436) ----------- ----------- ---------- ---------- Other Income (Expense) 73,645 (393,954) (456,393) 65,486 ----------- ----------- ---------- ---------- Pretax Earnings (Loss) 7,499,439 4,893,042 5,372 288,960 =========== =========== ========== ==========
Manufacturing: Year to date sales for 1996 increased $10,838,949, or 13.5 percent over the same period for 1995. The increase is a result of continued growth experienced in the industry. Gross margins improved to 17.5 percent compared to 16.5 percent in 1995, as the Company focused efforts on cost control. Selling, general and administrative expenses have decreased as a percent of sales. Interest income and interest expense both took favorable turns, with the Company able to take advantage of improved cash flow. In 1996, miscellaneous income reflected an increase of $290,736. During the year the Company sold an investment in marketable securities for a net gain of $271,888. Leasing: Total revenues in the leasing segment increased $2,458,584 between 1996 and 1995, reflecting 66 percent growth. Growth occured in both sales and leasing areas. The Company opened three new branch locations and closed two others during fiscal 1996. The new locations contributed approximately $421,000 of revenues. The Company is now better positioned in regions with forecasted industry growth. Gross margins are relatively comparable between years (43.3% for 1996, 45.3% for 1995). Selling, general and administrative expenses increased due to the three new branches, but show a favorable decline as a percent of sales. The $609,433 increase in interest expense is due to $4,000,000 in additional borrowings needed to expand the Company's lease fleet. 9 10 CAVCO INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued) Overall: In 1996, net income from continuing operations was $4,503,111, or $1.32 per share, compared to $3,145,602, or $.93 per share in 1995. Discontinued operations provided losses of $417,926 ($.12 per share) in 1996 and $263,084 ($.08 per share) in 1995. Net income for the nine months was $4,085,185, or $1.20 per share, compared with $2,882,518, or $.85 per share for the prior year. Increased sales volumes, improved gross margins and continued cost control led to the improved earnings. The Company has focused its efforts to develop and enhance its core businesses: manufacturing and leasing. We are poised to take advantage of favorable industry trends. We plan to increase and diversify our manufacturing capabilities during 1997 and investigate opportunities for adding additional facilities. We continue to expand our lease fleet in our present locations and evaluate locations for new leasing offices. LIQUIDITY AND CAPITAL RESOURCES The Company finished the nine months ended June 30, 1996 with cash of $3,442,460 and working capital of $8,821,173. On an interim basis, the Company uses internally generated funds for the expansion of the lease fleet, which causes fluctuations in cash and working capital. To help fund the $6.7 million in lease fleet purchases, the Company borrowed $800,000 from its corporate lines of credit to temporarily meet capital needs. The Company received $4,000,000 in proceeds from its long term lending source. The Company will use this finance source to continue to expand the lease fleet throughout the remainder of the year and into next year. Overall during the nine month period, the Company borrowed $6,608,996 from lines of credit and long term debt and repaid $5,092,754. In addition to approximately $6.7 million spent in lease fleet expansion, the Company also spent approximately $1.2 million on additions to property, plant and equipment. Approximately $565,000 was invested in land and building construction for one of the leasing locations. Another $212,000 was used to upgrade the manufacturing facility for NSC, and slightly over $150,000 was invested in computer equipment and software. The Company invested another $798,000 into various opportunities for developing a manufactured housing subdivisions. The Company increased its finance lease and notes receivable by $616,000 and collected $1.2 million on notes receivable during the period. During the past several years, inflation has not had a significant impact on the Company's operations. The Company has demonstrated its ability to reduce the manufacturing costs of its products through engineering changes and effective price negotiations, and has been able to adjust the selling price of its products in reaction to changing prices. Except for expansion of the lease fleet, capital expenditures for the remainder of the year are expected to be only those necessary for normal replacement of machinery and equipment. The Company believes that its existing cash, available line of credit, and cash generated from operations will be sufficient to meet capital expenditure and debt service requirements. 10 11 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits EX-27 Financial Data Schedule - Nine months ended June 30, 1996 (b) Reports on Form 8-K The Company did not file any Form 8-K's during the quarter ended June 30, 1996. There has not been any additional information with respect to items listed in the Index, related to the periods being reported, which has not been previously reported or which, in the opinion of management, is of significance to the investors. 11 12 SIGNATURES 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. Cavco Industries, Inc. ----------------------------------------- (Registrant) Date August 9, 1995 /s/ Robert Ward ----------------------------------------- (Signature) Robert Ward, Vice President, Treasurer and Chief Financial Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR QUARTER ENDED JUNE 30, 1996. U.S. DOLLARS 9-MOS SEP-30-1996 OCT-01-1995 JUN-30-1996 1 3,442,460 0 11,696,791 163,011 11,085,717 27,116,948 15,280,552 5,512,654 60,215,278 18,295,775 13,522,816 0 0 169,149 26,299,231 60,215,278 92,782,863 97,047,502 76,390,783 78,505,064 10,654,879 163,011 1,153,078 7,504,811 3,001,700 4,503,111 (417,926) 0 0 4,085,185 1.20 1.20
-----END PRIVACY-ENHANCED MESSAGE-----