0000350846-01-500023.txt : 20011112
0000350846-01-500023.hdr.sgml : 20011112
ACCESSION NUMBER: 0000350846-01-500023
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011105
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: 1774882
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
r10q-901.txt
THIRD QUARTER 10-Q
UNITED STATES
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 September 30, 2001
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.)
16441 C.R. 38, P.O. Box 237, Goshen, Indiana 46528
(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 October 29, 2001
Class A 8,887,417
Class B 1,917,394
Page 1 of 13
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
& 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9, 10
& 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Page 2 of 13
Part I. Financial Information
Item 1. Financial Statements
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, December 31,
2001 2000
-------------- -------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents...... $203,219 $184,004
Accounts receivable, net....... 21,149,948 25,566,117
Inventories.................... 29,502,818 31,815,470
Deferred income taxes.......... 1,315,298 1,315,298
Other current assets........... 993,803 670,524
-------------- ---------------
Total current assets.... 53,165,086 59,551,413
-------------- ---------------
Property, plant and equipment, at cost 67,946,629 66,836,744
Less, Accumulated depreciation
and amortization............. 28,541,059 25,442,612
-------------- ---------------
Property, plant and equipment,
net.......................... 39,405,570 41,394,132
-------------- ---------------
Intangible assets, net............... 977,796 1,095,456
Other assets......................... 976,060 932,514
-------------- ---------------
Total assets........... $94,524,512 $102,973,515
============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 3 of 13
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, Concluded
September 30, December 31,
2001 2000
--------------- ---------------
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-
term debt...................... $4,328,239 $5,181,761
Trade accounts payable........... 9,693,036 8,111,788
Accrued income taxes............. 1,014,164 1,148,415
Other accrued liabilities........ 8,357,289 9,874,302
--------------- ---------------
Total current liabilities 23,392,728 24,316,266
Long-term debt......................... 15,535,693 25,859,972
Deferred income taxes.................. 1,984,466 1,984,466
--------------- ---------------
Total liabilities....... 40,912,887 52,160,704
--------------- ---------------
Stockholders' equity.................... 53,611,625 50,812,811
--------------- ---------------
Total liabilities and
stockholders' equity... $94,524,512 $102,973,515
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 4 of 13
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------- ----------- ------------ ------------
2001 2000 2001 2000
----------- ----------- ------------ ------------
Revenues............ $52,580,066 $56,760,638 $167,790,621 $201,290,743
----------- ----------- ------------ ------------
Costs and expenses:
Cost of sales... 45,228,641 47,741,214 142,125,546 168,903,235
Selling, general
and
administrative.... 5,550,783 6,319,055 17,823,405 19,687,176
Interest............ 428,501 752,483 1,799,626 2,414,410
----------- ---------- ------------ ------------
51,207,925 54,812,752 161,748,577 191,004,821
----------- ---------- ------------ ------------
Income before income
taxes............. 1,372,141 1,947,886 6,042,044 10,285,922
Income taxes........ 506,000 776,000 2,401,000 4,129,000
----------- ---------- ------------ ------------
Net income.......... $866,141 $1,171,886 $3,641,044 $6,156,922
=========== ========== ============ ============
Earnings per share:
Basic...... $.08 $.11 $.34 $.55
Diluted.... .08 .11 .34 .55
Shares used in the computation of earnings per share:
Basic...... 10,798,384 11,105,846 10,812,758 11,187,470
Diluted.... 10,875,809 11,105,846 10,881,497 11,191,361
The accompanying notes are a part of the consolidated financial statements.
Page 5 of 13
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30,
-------------------------------
2001 2000
--------------- ---------------
Cash flows from operating activities:
Net income........................ $3,641,044 $6,156,922
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization. 3,392,916 3,122,785
Gain on disposal of equipment. (10,367) (3,644)
Changes in operating assets
and liabilities..... 5,900,289 6,096,157
--------------- ---------------
Net cash provided by operating
activities.............. 12,923,882 15,372,220
--------------- ---------------
Cash flows from investing activities:
Additions to property, plant and
equipment..................... (1,303,522) (6,879,339)
Proceeds from disposal of equipment. 27,196 ---
(Increase) decrease in other assets. (43,546) 56,330
-------------- ---------------
Net cash used in investing
activities............ (1,319,872) (6,823,009)
--------------- ---------------
Cash flows from financing activities:
Proceeds from revolving line of
credit and other long-term debt.. 46,724,607 79,533,511
Repayments of revolving line of
credit and other long-term debt.. (57,902,408) (86,615,939)
Acquisition of treasury stock...... (406,994) (1,480,701)
--------------- ---------------
Net cash used in financing
activities.................. (11,584,795) (8,563,129)
--------------- ---------------
Increase (decrease) in cash and cash
equivalents........................... 19,215 (13,918)
Cash and cash equivalents, beginning of
period................................ 184,004 270,935
--------------- ---------------
Cash and cash equivalents, end of
period................................ $203,219 $257,017
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 6 of 13
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore
do not include all of the information and financial statement
disclosures necessary for a fair presentation of consolidated financial
position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of
management, the information furnished herein includes all adjustments
necessary to reflect a fair statement of the interim periods reported.
All adjustments are of a normal and recurring nature. The December 31,
2000 consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
NOTE B - INVENTORIES
Inventories, which are stated at the lower of cost or market with cost
determined using the first-in, first-out method, consist of the
following:
September 30, December 31,
2001 2000
_____________ ____________
Raw materials.................$ 18,193,266 $ 19,822,278
Work-in-progress.............. 3,811,727 5,384,975
Finished goods................ 7,497,825 6,608,217
____________ ____________
$ 29,502,818 $ 31,815,470
============ ============
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. The Company has historically had both
favorable and unfavorable quarterly adjustments resulting from periodic
physical inventories. The Company is continuing to refine its costing
procedures for valuation of interim inventories in an effort to
minimize book to physical inventory adjustments.
Page 7 of 13
NOTE C - INCOME TAXES
The effective income tax rate for the three months ended September 30,
2001 was 36.9% compared to 39.8% for the three months ended September
30, 2000. For the nine months ended September 30, 2001, the effective
income tax rate was 39.7% compared to 40.1% for the nine months ended
September 30, 2000. The changes are primarily the result of
fluctuations in taxable income and varying tax rates in the states in
which the Company transacts business.
NOTE D - EARNINGS PER SHARE
The number of shares used in the computation of basic and diluted
earnings per share are as follows (in Thousands):
Three Nine
Months Ended Months Ended
September 30, September 30,
_____________ _____________
2001 2000 2001 2000
Weighted average number of shares
outstanding (used in computation
of basic earnings per share) 10,798 11,106 10,813 11,187
Effect of dilutive stock options 78 -- 68 4
______ ______ ______ ______
Diluted shares outstanding (used
in computation of diluted
earnings per share) 10,876 11,106 10,881 11,191
====== ====== ====== ======
NOTE E - NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," effective January 1, 2001. The
Company's interest rate swap agreements are derivative instruments and
the changes in fair value of these financial instruments, which are
accounted for as cash flow hedges, are reported in other comprehensive
income until the hedged items affect earnings. Based on the Company's
derivative positions at September 30, 2001, the Company recorded a net
liability of $435,000 for the fair value of its derivative portfolio
with a corresponding charge to other comprehensive income.
Page 8 of 13
On July 20, 2001, the Financial Accounting Standards Board issued SFAS
No, 142, "Goodwill and Other Intangible Assets", which is effective for
fiscal years beginning after December 15, 2001. SFAS No. 142 primarily
addresses the accounting for goodwill and other intangible assets
subsequent to their acquisition. The most significant changes made by
SFAS 142 are (1) goodwill and indefinite lived intangible assets will
no longer be amortized, (2) goodwill will be tested for impairment at
least annually at the reporting unit level, (3) other intangible assets
deemed to have an indefinite life will be tested for impairment at
least annually, and (4) the amortization period of intangible assets
with finite lives will no longer be limited to forty years. Management
is in the process of assessing the impact that the adoption of SFAS No.
142 will have on the Company's results of operations and financial position.
NOTE F - RECLASSIFICATIONS
Certain items in the accompanying September 30, 2000 consolidated
financial statements have been reclassified to conform to the 2001
presentation. The reclassifications had no impact on stockholders'
equity, net income or cash flows as previously presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results of Operations
Revenues for the quarter ended September 30, 2001 decreased to $52.6
million from $56.8 million for the quarter ended September 30, 2000.
Revenues for the nine months ended September 30, 2001 decreased $33.5
million to $167.8 million from $201.3 million for the nine months ended
September 30, 2000. The 2001 third quarter revenue decrease reflects
the impact that the general slowing of the economy has had on our core
business with truck dealers and distributors. The economic slowdown
also negatively impacted the nine-month revenues, accounting for
approximately 41% of the nine-month decrease. The remaining 59%
reduction resulted from fewer orders from our national fleet customers
through the first nine months of 2001 compared to the first nine months
of 2000. Based on current backlog and recent order levels, we believe
that revenues in the fourth quarter of 2001 will be similar to those
experienced in the third quarter of 2001. Included in revenues and
cost of sales for the quarter and nine months ended September 30, 2001
are purchased chassis. Comparable amounts for the quarter and nine
months ended September 30, 2000 have been reclassified to conform with
this presentation.
Page 9 of 13
Gross profit as a percentage of revenues decreased to 14.0% and 15.3%
for the quarter and nine months ended September 30, 2001 compared to
15.9% and 16.1% for the comparable periods ended September 30, 2000.
For both the three-month and nine-month comparisons, pricing pressures
in the marketplace continued to adversely affect the Company's material
cost as a percentage of revenues. However, this was partially
mitigated by the favorable results of cost savings initiatives
implemented to control costs in the areas of direct labor and overhead.
Selling, general and administrative expenses as a percentage of
revenues decreased to 10.6% for the quarter ended September 30, 2001
from 11.1% for the quarter ended September 30, 2000. For the nine
months ended September 30, 2001, selling, general and administrative
expenses were 10.6% of revenues compared to 9.8% for the nine months
ended September 30, 2000. The decreases of $.8 million and $1.9
million for the three and nine months ended September 30, 2001 in
selling, general and administrative expenses is related to the
Company's continuing effort to manage and control costs as well as
placing less reliance on outside consulting services related to the
implementation of new operating software.
Interest expense decreased $323,982 to $428,501 for the quarter ended
September 30, 2001 from $752,483 for the prior year comparable quarter.
For the nine months ended September 30, 2001, interest expense
decreased $614,784 to $1,799,626 from $2,414,410 for the nine months
ended September 30, 2000. The interest expense reduction reflects the
debt reduction the Company has been able to achieve primarily as a
result of improved days sales outstanding and inventory management.
Net income for the three months ended September 30, 2001 was $866,141
compared to $1,171,886 for the quarter ended September 30, 2000 while
for the nine months ended September 30, 2001 net income was $3,641,044
compared to $6,156,922 for the nine months ended September 30, 2000.
Basic and diluted earnings per share were $.08 for the three months
ended September 30, 2001 compared to $.11 for the prior year quarter
while for the nine months ended September 30, 2001 basic and diluted
earnings per share were $.34 compared to $.55 for the comparable prior
year period.
Page 10 of 13
Liquidity and Capital Resources
Cash flows from operating activities were the major sources of funds
for operations, capital expenditures and to service debt during the
first nine months of 2001. The largest components of cash provided by
operations were decreased accounts receivable of $4.4 million, net
income of $3.6 million, depreciation and amortization of $3.4 million
and decreased inventories of $2.3 million.
The Company invested $1.3 million in property, plant and equipment
during the first nine months of 2001 compared to $6.9 million during
the first nine months of 2000. This reduction reflects the Company's
efforts to limit 2001 capital expenditures to no more than the
estimated 2001 annual depreciation and amortization expenses of $4.0
million, assuming no plant purchases or acquisitions.
The significant financing activity which used cash was an $11.2 million
reduction in long-term debt.
The Company believes that cash flows generated from operations and
funds available under the Company's revolving line of credit will be
sufficient to meet the Company's cash needs during the remainder of
2001.
Forward-Looking Statements
This report contains forward-looking statements, other than historical
facts, which reflect the view of the Company's management with respect
to future events. Although management believes that the expectations
reflected in such forward-looking statements are reasonable, it can
give no assurance that the expectations reflected in such forward-
looking statements are reasonable, and it can give no assurance that
such expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from such
expectations include, without limitation, limitations on the
availability of chassis on which the Company's product is dependent,
availability of raw materials and severe interest rate increases. The
Company assumes no obligation to update the forward-looking statements
or to update the reasons actual results could differ from those
contemplated by such forward-looking statements.
Page 11 of 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits: None
b) Reports on Form 8-K: A Report on Form 8-K
dated October 9, 2001 was filed by the Company
on October 12, 2001, to report a change in
the Company's certifying accountant.
Page 12 of 13
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 5, 2001 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 13 of 13