-----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, EFSWlYHslyhcqOxvh5x40SMde0SIO9Q7/StThn0r175ZTogZ4t5IpsgG6MXnneh+ NWGv7WnVzoDdDGPrB/pjlg== 0000350846-96-000026.txt : 19961115 0000350846-96-000026.hdr.sgml : 19961115 ACCESSION NUMBER: 0000350846-96-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPREME INDUSTRIES INC CENTRAL INDEX KEY: 0000350846 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK & BUS BODIES [3713] IRS NUMBER: 751670945 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08183 FILM NUMBER: 96660452 BUSINESS ADDRESS: STREET 1: 65140 US 33 E STREET 2: PO BOX 237 CITY: GOSHEN STATE: IN ZIP: 46526 BUSINESS PHONE: 2196423070 MAIL ADDRESS: STREET 1: P O BOX 237 STREET 2: 65140 U S 33 EAST CITY: GOSHEN STATE: IN ZIP: 46526 FORMER COMPANY: FORMER CONFORMED NAME: EXPLORATION SURVEYS INC DATE OF NAME CHANGE: 19850813 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-8183 SUPREME INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 75-1670945 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) No.) 65140 U.S. 33 East, P.O. Box 237, Goshen, Indiana 46526 (Address of principal executive offices) Registrant's telephone number, including area code:(219) 642-3070 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 practicable date. Common Stock ($.10 Par Value) Outstanding at November 11,1996 Class A 8,012,781 Class B 1,402,976 The index to Exhibits is at page 13 in the sequential numbering system. Total number of pages: 14. Page 1 of 14 SUPREME INDUSTRIES, INC. CONTENTS Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets 3 & 4 Consolidated Statements of Income 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7 & 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Index to Exhibits 13 Page 2 of 14 Part I. Financial Information Item 1. Financial Statements Supreme Industries, Inc. and Subsidiaries Consolidated Balance Sheets September 30, December 31, 1996 1995 ------------- ------------ Assets (Unaudited) Current assets: Cash and cash equivalents.................. $110,789 $106,740 Accounts receivable, net................... 16,572,926 16,336,446 Inventories................................ 21,560,685 20,144,271 Deferred income taxes...................... 910,918 910,918 Other current assets....................... 386,769 448,665 ------------ ------------ Total current assets.................. 39,542,087 37,947,040 ------------ ------------ Property, plant and equipment: Land and improvements...................... 2,872,521 2,123,848 Buildings and improvements................. 12,275,091 9,028,195 Leasehold improvements..................... 4,909,293 4,845,816 Machinery and equipment.................... 20,033,448 17,885,788 ------------ ------------ 40,090,353 33,883,647 Less, Accumulated depreciation and amortization........................ 13,769,255 12,429,136 ------------ ------------ Property, plant and equipment, net.. 26,321,098 21,454,511 Intangible assets, net....................... 1,959,522 2,112,004 Other assets................................. 1,388,174 913,107 ------------ ------------ Total assets........................ $69,210,881 $62,426,662 ============ ============ The accompanying notes are a part of the consolidated financial statements. Page 3 of 14 Supreme Industries, Inc. and Subsidiaries Consolidated Balance Sheets, Concluded September 30, December 31, 1996 1995 ------------- ------------ Liabilities and Stockholders' Equity (Unaudited) Current liabilities: Current maturities of long-term debt....... $2,337,563 $2,609,815 Trade accounts payable..................... 5,768,321 6,343,766 Accrued income taxes....................... 1,140,486 138,682 Other accrued liabilities.................. 5,749,715 5,715,879 ------------ ------------ Total current liabilities............. 14,996,085 14,808,142 Long-term debt............................... 18,295,688 18,031,553 Deferred income taxes........................ 784,086 784,086 ------------ ------------ Total liabilities..................... 34,075,859 33,623,781 ------------ ------------ Stockholders' equity: Class A Common Stock, $.10 par value....... 801,276 673,861 Class B Common Stock, convertible into Class A Common Stock on a one-for-one basis, $.10 par value.................... 140,298 180,166 Additional paid-in capital................. 23,901,537 18,911,421 Retained earnings.......................... 10,448,397 9,193,919 Treasury stock, at cost, 13,757 shares of Class A Common Stock.................. (156,486) (156,486) ------------ ------------ Total stockholders' equity............ 35,135,022 28,802,881 ------------ ------------ Total liabilities and stockholders' equity.............................. $69,210,881 $62,426,662 ============ ============ The accompanying notes are a part of the consolidated financial statements. Page 4 of 14 Supreme Industries, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Revenues.................. $38,813,812 $37,436,575 $121,364,162 $129,242,377 Costs and expenses: Cost of sales........... 32,463,802 30,722,524 101,438,274 107,493,688 Selling, general and administrative........ 3,852,095 3,463,637 11,388,268 10,610,986 Interest................ 367,429 497,953 1,148,212 1,437,570 ------------ ------------ ------------ ------------ 36,683,326 34,684,114 113,974,754 119,542,244 ------------ ------------ ------------ ------------ Income before income taxes.............. 2,130,486 2,752,461 7,389,408 9,700,133 Income taxes.............. 890,000 1,123,000 3,083,000 3,944,000 ------------ ------------ ------------ ------------ Net income.......... $1,240,486 $1,629,461 $4,306,408 $5,756,133 ============ ============ ============ ============ Earnings per share: Primary............. $.13 $.18 $.46 $.67 Fully diluted....... .13 .18 .46 .63 Weighted average number of shares of common stock and common stock equivalents: Primary............... 9,452,486 8,756,419 9,265,717 8,560,280 Fully diluted......... 9,452,486 9,367,784 9,402,378 9,346,370 The accompanying notes are a part of the consolidated financial statements. Page 5 of 14 Supreme Industries, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, ------------------------- 1996 1995 ------------ ------------ Cash flows from operating activities: Net income................................. $4,306,408 $5,756,133 Depreciation and amortization.............. 1,607,995 1,459,900 (Increase) decrease in other assets........ (88,835) 100,000 Gain on disposal of equipment.............. (9,251) (17,807) Changes in operating assets and liabilities (1,130,803) (2,600,933) ------------ ------------ Net cash provided by operating activitities........................ 4,685,514 4,697,293 ------------ ------------ Cash flows from investing activities: Additions to property, plant and equipment. (6,320,438) (3,965,851) Proceeds from disposal of property, plant and equipment............................ 13,305 21,823 Increase in other assets................... (391,948) --- ------------ ------------ Net cash (used in) investing activities.......................... (6,699,081) (3,944,028) ------------ ------------ Cash flows from financing activities: Proceeds from revolving line of credit and other long-term debt................. 54,390,596 51,526,425 Repayments of revolving line of credit and other long-term debt..................... (53,264,285) (52,501,378) Proceeds from exercise of stock options and warrants................................. 891,305 62,288 ------------ ------------ Net cash provided by (used in) financing activities................ 2,017,616 (912,665) ------------ ------------ Increase (decrease) in cash and cash equivalents................................ 4,049 (159,400) Cash and cash equivalents, beginning of period..................................... 106,740 273,720 ------------ ------------ Cash and cash equivalents, end of period..... $110,789 $114,320 ============ ============ Noncash investing and financing activities: Conversion of convertible notes to shares of Class A Common Stock.................. 1,134,428 --- Conversion of Class B Common Stock to Class A Common Stock..................... 39,868 7,727 Exchange of warrants for Class A Common Stock.................................... 3,051,930 --- The accompanying notes are a part of the consolidated financial statements. Page 6 of 14 SUPREME INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all of the information and financial statement disclosures necessary for a fair presentation of consolidated financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, the information furnished herein includes all adjustments necessary to reflect a fair statement of the interim periods reported. All adjustments are of a normal and recurring nature. The December 31, 1995 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. NOTE B - INVENTORIES Inventories, which are stated at the lower of cost or market with cost determined on the first-in-first-out method, consist of the following: September 30, December 31, 1996 1995 ------------- ------------ Raw materials................. $ 11,810,241 $11,599,585 Work-in-progress.............. 3,279,631 3,113,990 Finished goods................ 6,470,813 5,430,696 ------------- ------------ $ 21,560,685 $ 20,144,271 ============= ============ The valuation of raw materials, work-in-progress and finished goods inventories at interim dates is based upon a gross profit percentage method and bills of materials. Since 1989 the Company has had favorable adjustments in the fourth quarter resulting from the annual physical inventories. The Company is continuing to refine its costing procedures for valuation of interim inventories in an effort to minimize the annual book to physical inventory adjustments. NOTE C - LONG TERM DEBT On February 20, 1996, the Company amended its revolving credit agreement to extend the expiration two years to April 30, 1999. In addition, the revolving credit line was increased from $12.0 million to $20.0 million for the period each year from February 1 through June 30, and the credit line was increased from $12.0 million to $14.0 million for all other months of the year. On April 10, 1996, the Company closed on a $3.2 million Industrial Revenue Bond with the California Statewide Communities Development Authority. The proceeds were used to purchase the Company's California manufacturing facility. The variable interest rate bonds are amortized over 15 years. The interest rate (3.8% at the end of September) is determined by the remarketing agent based on comparable tax-exempt obligations. Page 7 of 14 NOTE D - STOCK DIVIDEND On November 29, 1995, the Board of Directors declared a 10% common stock dividend payable on December 22, 1995, to stockholders of record on December 15, 1995. Earnings per share and weighted average shares outstanding for all periods in 1995 have been restated to reflect the 10% stock dividend. NOTE E - INCOME TAXES For the three-month and nine-month periods ended September 30, 1996, the Company's wholly-owned subsidiary in Honduras reported a net loss which for tax purposes is a net operating loss carryforward. The Company has established a valuation allowance for the deferred tax asset attributable to the net operating loss carryforward of the Honduran subsidiary. The valuation allowance has increased the Company's effective tax rate by approximately 1% for the three-months and nine-month periods ended September 30, 1996 versus same periods in 1995. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations Revenues for the nine months ended September 30, 1996 decreased $7,878,215 to $121,364,162 while revenues for the three months ended September 30, 1996 increased $1,377,237 to $38,813,812 compared to the corresponding periods in 1995. Net income for the nine months ended September 30, 1996 decreased $1,449,725 to $4,306,408 while net income for the three months ended September 30, 1996 decreased $388,975 to $1,240,486 compared to the corresponding periods in 1995. The decrease in revenues for the nine months ended September 30, 1996 can be attributed to the following areas. Regionally, the Company's large Northeastern and Midwestern markets were not nearly as strong as in 1995. Additionally, sales were restricted by the lack of availability of smaller chassis used in the Company's Iner-City (trademark) product line. Revenues were also negatively impacted by a decline in overall fleet business and the absence of a significant Government Service Administration contract that did not repeat in 1996. The Company's shuttle bus business for 1996 is also less than 1995 because of delays in the awarding of municipal contracts and decreases in the number of municipal contracts let for bid. The Company's business has begun to strengthen as evidenced by the increase in sales in the third quarter over the comparable prior year period. Page 8 of 14 The Company's gross profit percentage declined .4% for the nine months ended September 30, 1996 to 16.4% and declined 1.5% to 16.4% for the three months ended September 30, 1996. The Company has experienced decreases in material costs in both the nine months and quarter ended September 30, 1996. These decreases have been offset by increases in both direct labor and overhead costs. While the decline in overall volume has caused the overhead expenses to increase as a percentage of revenues due to fixed expenses that do not vary with volume, other factors have contributed to the increase. The Company is incurring start-up expenses at its new production facilities to produce fiberglass reinforced plywood and hardwood flooring. While some benefit may be realized in the fourth quarter from the hardwood flooring facility, the major benefits from both facilities will not be realized until 1997. The Company has also incurred costs in connection with the start-up of three new distribution facilities as well as the development of two new major product lines. The Freedom One product line serves the transportation needs of those in wheelchairs while Pro Fleet Conversions meets the needs of a wide variety of users needing customized van or pickup trucks for commercial use. Selling, general and administrative expenses as a percentage of revenues increased 1.2% to 9.4% for the nine months ended September 30, 1996 and increased .6% to 9.9% for the three months ended September 30, 1996 compared to the corresponding periods in 1995. The increase can be principally attributed to the expenses of the Company's sales force at its new distribution facilities and its two new product lines. The Company has also increased its trade show and advertising presence, updated its literature on existing product lines and developed literature for its new product lines. The effective tax rate (income taxes as a percent of pretax income) is approximately 1% greater for the 1996 periods compared to the 1995 periods. This increase is attributed to the valuation allowance established for the deferred tax asset which arises from the current year's tax loss carryforward of the Honduran subsidiary. The decline in net income for the quarter ended and nine months ended September 30, 1996 was caused by the factors discussed above. Liquidity and Capital Resources Cash flows from operating activities were $4.7 million for both the nine months ended September 30, 1996 and 1995. Inventories increased $1.4 million reflecting the slightly higher revenues experienced in the quarter as well as the need to carry additional chassis in inventory to support the sales of mid-sized buses and handicap vans. The major capital expenditure during the nine months ended September 30, 1996 was $3.5 million for the purchase and renovation of a California manufacturing plant consisting of 19 acres and a 94,000 square feet facility. The facility was financed with a $3.2 million floating rate industrial revenue bond. Page 9 of 14 Other major expenditures during the nine months were for the Company's patented fiberglass reinforced panel ("FRP") machine, the Honduran hardwood flooring plant and the purchase of land and construction of a new distribution facility to service the Louisville - Cincinnati area. The distribution facility and the hardwood flooring facility are complete and the "FRP" machine is scheduled to be complete in the first quarter of 1997. Proceeds from the exercise of warrants and stock options were $.9 million during the nine months ended September 30, 1996. Prior to the expiration date of the Company's 1993 Callable Warrants on June 9, 1996, 278,687 of such warrants were exercised for cash, 2,141,705 were exchanged for Class A Common Stock (on a 5 Warrants for 1 Class A Common Share basis) and 60,370 warrants expired. The Company believes cash flow from operating activities and funds available under the Company's revolving credit agreement will continue to be sufficient to finance the balance of 1996 operations and planned capital expenditures. The Company had $5 million available under its revolving credit agreement at September 30, 1996. The ratio of current assets to current liabilities was 2.6 to 1.0 at September 30, 1996. Page 10 of 14 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a) Exhibits: Exhibit 11-Statement Regarding Computation of Per Share Earnings b) Reports on Form 8-K: None Page 11 of 14 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. SUPREME INDUSTRIES, INC. DATE: November 12, 1996 BY: /s/ROBERT W. WILSON Robert W. Wilson Executive Vice President, Treasurer, Chief Financial Officer and Director (Principal Financial and Accounting Officer) (Signing on behalf of the Registrant and as Principal Financial Officer.) Page 12 of 14 INDEX TO EXHIBITS Exhibit No. Description Page 11 Statement Regarding Computation of Per Share Earnings 14 Page 13 of 14 EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS SUPREME INDUSTRIES, INC. AND SUBSIDIARIES (Amounts in thousands, except per share data) Nine Months Ended September 30, ------------------- 1996 1995 ------ ------ PRIMARY Weighted average shares outstanding 8,806 8,159 Net effect of dilutive stock options and warrants - based on the treasury stock method using average market price 333 401 Dilutive effect of subordinated convertible notes 127 -- ------ ------ TOTAL 9,266 8,560 ====== ====== Net income $4,306 $5,756 ====== ====== Net income per share $ .46 $ .67 ====== ====== FULLY DILUTED Weighted average shares outstanding 8,806 8,159 Net effect of dilutive stock options and warrants - based on the treasury stock method using the period-end market price, if higher than the average market price 333 575 Dilutive effect of subordinated convertible notes 263 612 ------ ------ TOTAL 9,402 9,346 ====== ====== Net income $4,306 $5,756 Interest expense reduction due to assumed conversion of subordinated convertible notes - net of tax 23 100 ------ ------ Net income as adjusted $4,329 $5,856 ====== ====== Net income per share $ .46 $ .63 ====== ====== Note: Share and per share data for 1995 have been restated for the 10% stock dividend declared on November 29, 1995. Page 14 of 14 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 9 MOS DEC-31-1996 SEP-30-1996 110,789 0 17,002,926 430,000 21,560,685 39,542,087 40,090,353 13,769,255 69,210,881 14,996,085 18,295,688 841,574 0 0 0 69,210,881 121,364,162 121,364,162 101,438,274 101,438,274 11,388,268 0 1,148,212 7,389,408 3,083,000 4,306,408 0 0 0 4,306,408 0.46 0.46
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