-----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, HAGT7eFfKkmoxB6aZJZg6kQrfbjfbynhih3j860R5aT47EYNFRmc0VjAciDR3QiP sxDaNqFPw6aqg0Ff41UPjg== 0000350846-97-000010.txt : 19971114 0000350846-97-000010.hdr.sgml : 19971114 ACCESSION NUMBER: 0000350846-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 001-08183 FILM NUMBER: 97714111 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, 1997 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 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 November 4, 1997 Class A 8,435,156 Class B 1,473,124 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 8,9 & 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, 1997 1996 ------------- ------------ Assets (Unaudited) Current assets: Cash and cash equivalents................ $226,320 $220,678 Accounts receivable, net................. 18,401,421 16,556,258 Inventories.............................. 23,951,731 21,208,707 Deferred income taxes.................... 1,043,066 1,043,066 Other current assets..................... 457,705 423,237 ------------- ------------ Total current assets.................. 44,080,243 39,451,946 ------------- ------------ Property, plant and equipment, at cost..... 43,574,615 40,675,873 Less, Accumulated depreciation and amortization........................ 15,881,755 14,246,236 ------------- ------------ Property, plant and equipment, net.... 27,692,860 26,429,637 Intangible assets, net..................... 1,756,212 1,908,694 Other assets............................... 1,045,699 1,038,747 ------------- ------------ Total assets.......................... $74,575,014 $68,829,024 ============= ============ 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, 1997 1996 ------------- ------------ Liabilities and Stockholders' Equity (Unaudited) Current liabilities: Current maturities of long-term debt....... $2,582,825 $2,355,955 Trade accounts payable..................... 8,099,478 6,778,942 Accrued income taxes....................... 805,077 959,240 Other accrued liabilities.................. 6,968,540 5,914,315 ------------ ------------ Total current liabilities............... 18,455,920 16,008,452 Long-term debt............................... 12,639,401 16,108,780 Deferred income taxes........................ 890,234 890,234 ------------ ------------ Total liabilities....................... 31,985,555 33,007,466 ------------ ------------ Stockholders' equity: Class A Common Stock, $.10 par value....... 884,964 801,277 Class B Common Stock, convertible into Class A Common Stock on a one-for-one basis, $.10 par value.................... 154,678 140,297 Additional paid-in capital................. 31,726,397 23,901,587 Retained earnings.......................... 10,073,956 11,228,933 Treasury stock, at cost.................... (250,536) (250,536) ------------ ------------ Total stockholders' equity.............. 42,589,459 35,821,558 ------------ ------------ Total liabilities and stockholders' equity................................ $74,575,014 $68,829,024 ============ ============ 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, ----------- ----------- ------------ ------------ 1997 1996 1997 1996 ----------- ----------- ------------ ------------ Revenues................. $45,691,254 $38,813,812 $146,140,460 $121,364,162 Costs and expenses: Cost of sales.......... 38,648,059 32,463,802 121,564,238 101,438,274 Selling, general and administrative....... 3,909,345 3,852,095 12,328,511 11,388,268 Interest............... 299,194 367,429 1,062,419 1,148,212 ----------- ----------- ------------ ------------ 42,856,598 36,683,326 134,955,168 113,974,754 ----------- ----------- ------------ ------------ Income before income taxes...... 2,834,656 2,130,486 11,185,292 7,389,408 Income taxes............. 1,134,000 890,000 4,468,000 3,083,000 ----------- ----------- ------------ ------------ Net income.......... $1,700,656 $1,240,486 $6,717,292 $4,306,408 =========== =========== ============ ============ Earnings per share: Primary............. $.16 $.12 $.64 $.42 Fully diluted....... .16 .12 .64 .42 Weighted average number of shares of common stock and common stock equivalents: Primary............. 10,454,538 10,421,366 10,441,359 10,215,453 Fully diluted....... 10,456,272 10,421,366 10,453,664 10,366,122 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, ------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities: Net income................................. $6,717,292 $4,306,408 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortizatization...... 2,092,984 1,607,995 Gain on disposal of equipment.......... 11,679 (9,251) Changes in operating assets and liabilities.......................... (2,402,057) (1,219,638) ------------ ------------ Net cash provided by operating activities............................. 6,419,898 4,685,514 ------------ ------------ Cash flows from investing activities: Additions to property, plant and equipment................................ (3,268,554) (6,320,438) Proceeds from disposal of property, plant and equipment............................ 53,150 13,305 Increase in other assets................... (6,952) (391,948) ------------ ------------ Net cash (used in) investing activities.. (3,222,356) (6,699,081) ------------ ------------ Cash flows from financing activities: Proceeds from revolving line of credit and other long-term debt.............. 58,559,938 54,390,596 Repayments of revolving line of credit and other long-term debt.............. (61,802,447) (53,264,285) Proceeds from exercise of stock options and warrants............................. 50,609 891,305 ------------ ------------ Net cash provided by (used in) financing activities............................. (3,191,900) 2,017,616 ------------ ------------ Increase in cash and cash equivalents........... 5,642 4,049 Cash and cash equivalents, beginning of period.. 220,678 106,740 ------------ ------------ Cash and cash equivalents, end of period........ $226,320 $110,789 ============ ============ Noncash investing and financing activities: 5% Common Stock Dividend - November 1997... $4,486,549 ---- 5% Common Stock Dividend - May 1997........ 3,385,720 ---- Exchange of warrants for Class A Common Stock.................................... ---- 3,051,930 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 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, 1996 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, 1997 1996 ------------- ------------ Raw materials................. $ 13,063,097 $ 12,076,089 Work-in-progress.............. 3,143,742 3,138,668 Finished goods................ 7,744,892 5,993,950 ------------- ------------ $ 23,951,731 $ 21,208,707 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 had favorable and unfavorable adjustments in the third and fourth quarters 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 - INCOME TAXES The effective income tax rates for the three and nine months ended September 30, 1997 were 40.0% and 39.9%, respectively, compared to 41.8% and 41.7% for the three and nine months ended September 30, 1996. The decreases are attributable to the Company's higher levels of income decreasing the impact of items treated differently for financial statement purposes and income tax return purposes and improved operations of the Company's Honduran subsidiary, which is operating in a government tax free zone. Page 7 of 14 SUPREME INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONCLUDED. NOTE D - STOCK DIVIDEND On May 1, 1997, the Board of Directors declared a 5% common stock dividend payable on May 19, 1997, to shareholders of record on May 12, 1997. On October 29, 1997, the Board of Directors declared an additional 5% common stock dividend payable on November 17, 1997 to shareholders of record on November 10, 1997. Earnings per share and weighted average shares outstanding have been restated to reflect the 5% stock dividends for all periods presented. NOTE E - RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." The Company is required to initially adopt this pronouncement for the periods ending December 31, 1997, and will be required to then restate all prior periods presented to conform with the new standard. SFAS No. 128 will require the Company to make a dual presentation of basic and diluted earnings per share on the face of its consolidated statementof income instead of primary and fully diluted earnings per share. The Company has not determined the impact SFAS No. 128 will have on historically reported earnings per share. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" both of which the Company will be required to adopt in its financial statements for the year ending December 31, 1999. SFAS No. 130 will require the Company to report comprehensive income in its financial statements. Comprehensive income includes net income and certain transactions that are reported as a separate component of stockholder's equity. SFAS No. 131 specifies revised guidelines for determining operating segments and the type and level of information to be disclosed. The Company has not yet determined what changes in its disclosures, if any, will be required by SFAS No. 131. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations Revenues for the three months ended September 30, 1997 increased $6.9 million to $45.7 million from $38.8 million for the three months ended September 30, 1996. Revenues for the nine months ended September 30, 1997 increased $24.7 million to $146.1 million from $121.4 million for the nine months ended September 30, 1996. Page 8 of 14 Both primary and fully diluted earnings per share increased four cents to $.16 for the quarter ended September 30, 1997 from $.12 for the quarter ended September 30, 1996. Both primary and fully diluted earnings per share increased $.22 to $.64 for the nine months ended September 30, 1997. Earnings per share for all periods presented have been restated to reflect the 5% stock dividend declared in May and October 1997 (See Note D of Notes to Consolidated Financial Statements). Revenue increases for both the three months and nine months ended September 30, 1997 were concentrated in the Company's dry freight product lines and the StarTrans (trademark) Bus product lines. Sales of dry freight units shipped increased 16% for the quarter and 20% for the nine months ended September 30, 1997. Sales of StarTrans (trademark) units shipped increased 47% for the quarter and 42% for the nine months ended September 30, 1997. Revenues increased for both the three months and nine months ended September 30, 1997 at each of the Company's regional manufacturing facilities with the largest increases occurring in Indiana and Pennsylvania. The Company's gross profit percentage decreased 1% to 15.4% for the three months ended September 30, 1997 from 16.4% for the three months ended September 30, 1996. Increased direct labor was responsible for the decline in gross profit. The increase is attributable to the following: (1) labor incurred at four of the Company's production facilities to take the annual physical inventories, both production and sales were lost during the shut down for the physical inventory, (2) Start-up and training of initial production runs on three new labor intensive product lines (armored trucks, trolleys and service vans). Manufacturing overhead expenses declined 1.1% and 1.3% as a percentage of revenues for the three months and nine months ended September 30, 1997 from the comparable prior year periods, which generally occurs with increased sales volume. Raw material costs for both the three months and nine months ended September 30, 1997 were within .5% of the prior year comparable periods. Selling, general and administrative expenses as a percentage of revenues declined to 8.6% and 8.4% for the three months and nine months ended September 30, 1997, respectively, from 10.0% and 9.4% for the comparable prior year periods. The decrease in the percentages is the result of increased sales volumes. Interest expense declined to $299,194 for the three months ended September 30, 1997 from $367,429 from the prior year comparable quarter and to $1,062,418 for the nine months ended September 30, 1997 from $1,148,212 for the comparable prior year period. Interest expense for the nine months ended September 30, 1996 was reduced by $.2 million for interest capitalized in accordance with Statement of Financial Accounting Standards No. 34. Page 9 of 14 The Company has entered into a contract to purchase software that will enable it to handle transactions in the year 2000, process more efficiently the increased volume of transactions as well as provide better operating information. The Company's management personnel have begun training on the new software and anticipates a successful implementation in advance of the year 2000. Liquidity and Capital Resources Cash flows from operations was adequate to finance operations, reduce debt and provide for capital expenditures during the nine months ended September 30, 1997. Net income of $6.7 million and depreciation and amortization of $2.1 million were the primary factors contributing to positive cash flow. The increases in accounts receivable of $1.8 million and inventories of $2.7 million were a result of the increases in revenue for both the three months and nine months ended September 30, 1997. Both days sales outstanding and inventory turn improved slightly when compared to the period ended September 30, 1996. The increase in inventories was partially financed by a $1.1 million increase in accounts payable. The major investing activities for the nine months ended September 30, 1997 were the acquisition of plant and equipment to increase the Company's capacity in response to greater demand for existing and new product lines. The major additions completed during the nine months were a new paint facility, production tooling for proprietary parts and improved laminating capabilities all in Goshen, Indiana. The Company also upgraded its paint facility in Jonestown, Pennsylvania. In anticipation of continued increased demand for the Company's existing and new products further expansion has begun in Goshen, Indiana; Jonestown, Pennsylvania; Cleburne, Texas and Griffin, Georgia. The increased capacity will be available early in 1998. The approximate $3.0 million of planned capital expenditures will be financed through operating cash flow and use of the revolving credit facility. For the nine months ended September 30, 1997, the Company has reduced long-term debt by $3.2 million as a result of strong operating cash flows. The Company believes cash flows from operations and amounts available under its revolving line of credit will be sufficient to finance operations during the balance of 1997 and the next fiscal year. 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, 1997 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, 1997 1996 PRIMARY Weighted average shares outstanding 10,358 9,709 Net effect of dilutive stock options and warrants - based on the treasury stock method using average market price 83 367 Net effect of subordinated convertible notes --- 139 ------- ------- TOTAL 10,441 10,215 ======= ======= Net income $ 6,717 $ 4,306 ======= ======= Net income per share $ .64 $ .42 ======= ======= FULLY DILUTED Weighted average shares outstanding 10,358 9,709 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 96 367 Dilutive effect of subordinated convertible notes --- 290 -------- -------- TOTAL 10,454 10,366 ======== ======== Net income $ 6,717 $ 4,306 Interest expense reduction due to assumed conversion of subordinated convertible notes - net of tax --- 23 -------- -------- Net income as adjusted $ 6,717 $ 4,329 ======== ======== Net income per share $ .64 $ .42 ======== ======== Note: The above share and per share data have been restated for the 5% stock dividends declared on May 1, 1997 and October 29, 1997. Page 14 of 14 EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 226,320 0 18,831,421 430,000 23,951,731 44,080,243 43,574,615 15,881,755 74,575,014 18,455,920 12,639,401 1,039,642 0 0 0 74,575,014 146,140,460 146,140,460 121,564,238 121,564,238 12,328,511 0 1,062,419 11,185,292 4,468,000 6,717,292 0 0 0 6,717,292 0.64 0.64
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