-----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, Fe0MCH3epfWI3DjfF08+NMmTTUfdiRPECv7IPJuQu0T3FNNJ0/F6nXwP9sGuDh9j z6eRUEU/cWemo2Jk1BYwGA== 0000056151-97-000004.txt : 19970912 0000056151-97-000004.hdr.sgml : 19970912 ACCESSION NUMBER: 0000056151-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19970909 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIT MANUFACTURING CO CENTRAL INDEX KEY: 0000056151 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS TRANSPORTATION EQUIPMENT [3790] IRS NUMBER: 951525261 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06257 FILM NUMBER: 97677226 BUSINESS ADDRESS: STREET 1: 530 E WARDLOW RD STREET 2: P O BOX 848 CITY: LONG BEACH STATE: CA ZIP: 90801 BUSINESS PHONE: 3105957451 MAIL ADDRESS: STREET 1: 530 EAST WARDLOW ROAD CITY: LONG BEACH STATE: CA ZIP: 90801 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended July 31, 1997 Commission file number 2-31520 KIT MANUFACTURING COMPANY (Exact name of registrant as specified in its charter) California 95-1525261 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 530 East Wardlow Road,P.O. Box 848,Long Beach,California 90801 Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (562) 595-7451 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. Common Stock (no par value), 1,110,934 shares outstanding as of July 31, 1997. Index to Exhibits - Page 11 1 of 11 Pages PART I FINANCIAL INFORMATION - 2 - KIT MANUFACTURING COMPANY STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended Nine Months Ended July 31, July 31, 1997 1996 1997 1996 Sales $20,811 $23,924 $60,534 $70,575 Costs and expenses Cost of sales 19,944 20,718 57,309 61,965 Selling, general and administrative expenses 1,590 2,413 5,675 6,939 21,534 23,131 62,984 68,904 Operating (loss) income (723) 793 (2,450) 1,671 Other (expense) income: Proceeds from business interruption claim 610 610 (Note I) Interest (expense) income, net (18) 12 (86) (15) (Loss) income before income taxes (741) 1,415 (2,536) 2,266 (Benefit) provision for income taxes (304) 589 (1,040) 929 Net (loss) income ($437) $826 ($1,496) $1,337 Shares outstanding (Note B) 1,110,934 1,110,934 1,110,934 1,110,934 Net (loss) income per share ($0.39) $0.74 ($1.35) $1.20 Dividends per share $ - $ - $ - $ - The accompanying notes are an integral part of these financial statements -3-
KIT MANUFACTURING COMPANY BALANCE SHEETS (Dollars in thousands)
July 31, October 31, 1997 1996 (Unaudited) ASSETS Cash and cash investments $3,508 $2,281 Accounts receivable, net 4,826 8,026 Inventories: Raw materials 2,130 3,424 Work in process 545 1,234 Finished goods 681 2,511 Total inventories 3,356 7,169 Prepaids and deferred income taxes 1,177 1,241 Income tax refund receivable 1,057 - Total current assets 13,924 18,717 Property, plant and equipment, net 6,843 6,319 Other assets 57 103 Total assets $20,824 $25,139 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $2,251 $3,685 Accrued payroll and related items 1,503 2,256 Accrued marketing programs 1,041 1,104 Accrued expenses 1,119 1,664 Income taxes payable - 24 Total current liabilities 5,914 8,733 Deferred income taxes 1,469 1,469 Total liabilities 7,383 10,202 Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, issued and outstanding 1,110,934 shares 1,592 1,592 Retained earnings: Balance at beginning of period 13,345 11,914 Net (loss) income for period (1,496) 1,431 Balance at end of period 11,849 13,345 Total shareholders' equity 13,441 14,937 Total liabilities and shareholders' equity $20,824 $25,139 The accompanying notes are an integral part of these financial statements -4-
KIT MANUFACTURING COMPANY STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
For the nine months ended July 31, 1997 1996 Cash flows from operating activities: Cash received from customers $63,664 $72,974 Rental income and insurance proceeds 142 Interest received 58 28 Cash received from operations 63,864 73,002 Cash paid to suppliers and employees 61,539 72,977 Interest paid 144 43 Income taxes paid 41 802 Cash disbursed for operations 61,724 73,822 Net cash provided by (used in) operating activities 2,140 (820) Cash flows from investing activities: Purchase of property, plant and equipment (936) (252) Changes in other current and non-current assets 23 68 Net cash used in investing activities (913) (184) Cash flows from financing activities: Proceeds from business interruption claim 610 Proceeds from line-of-credit borrowings 12,374 2,700 Principal payments on line-of-credit borrowings (12,374) (1,600) Net cash provided by financing activities 0 1,710 Net increase in cash 1,227 706 Cash at beginning of year 2,281 2,218 Cash at end of period $3,508 $2,924 Reconciliation of net income to net cash provided by (used in) operating activities: Net (loss) income ($1,496) $1,337 Adjustments to reconcile net income to net cash used in operating activities: Proceeds from business interruption claim (610) Depreciation 500 495 Decrease in accounts receivable 3,200 2,197 Decrease (increase) in inventories 3,813 (4,124) Decrease in accounts payable and accrued liabilities (2,796) (242) (Decrease) increase in income taxes (1,081) 127 Net cash provided by (used in) operating activities $2,140 ($820) The accompanying notes are an integral part of these financial statements -5-
KIT MANUFACTURING COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note A - The benefit or provision for income taxes is calculated using the Company's estimated annual effective tax rate. Note B - Per share amounts are based on the weighted average number of common shares outstanding. Common stock equivalents have not been included in the computations because their effect would not be dilutive. Note C - During the period reported on, there were no sales of securities. Note D - In the opinion of management, all material adjustments which are necessary for a fair statement of financial position, results of operations and cash flows have been included in these financial statements. Note E - The results of the period are not necessarily indicative of annual results due to seasonality of the business. Note F - Financial information contained herein is unaudited. Note G - The Company is contingently liable to various financial institutions on repurchase agreements in connection with wholesale inventory financing. In general, inventory is repurchased by the Company upon default by a dealer with a financing institution and then resold through normal distribution channels. In addition, the Company is contingently liable to financial institutions for letters of credit which were established to satisfy the self-insured workers' compensation regulations of the states in which the Company conducts manufacturing operations. Management does not expect that losses, if any, from the contingencies described above will be of material importance to the financial condition or earnings of the Company. Note H -In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings Per Share. FAS 128 specifies the computation, presentation, and disclosure requirements for EPS. FAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. Management has assessed that the impact of adopting this standard will have no effect on EPS. Note I - During the third quarter of fiscal 1996, the Company received $610,000 in insurance proceeds on a business interruption claim relative to the 1992 tornado damage at the McPherson, Kansas manufactured housing facility. - 6 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION -JULY 31, 1997 COMPARED TO OCTOBER 31, 1996 Under third quarter market conditions, the Company continued to borrow on its line of credit to maintain inventory levels to provide for the anticipated third quarter sales. The Company's working capital decreased $1,974,000 due primarily to decreases in accounts receivable, inventories and accounts payable. The current ratio was 2.4:1 at July 31, 1997 and 2.1:1 at October 31, 1996. The Company's liquidity position as reflected in the current ratio described above, capital resources, including excess plant capacity, working capital, and line of credit, are considered to be adequate to provide for near term anticipated growth. RESULTS OF OPERATIONS - QUARTER ENDED JULY 31, 1997 COMPARED TO QUARTER ENDED JULY 31, 1996 Total sales for the quarter ended July 31, 1997 were $20,811,000, a 13 percent decrease from sales of $23,924,000 for the same quarter of the prior year. The decrease consisted of a 20 percent decrease in recreational vehicle sales and an increase of 11 percent in manufactured housing sales. RV sales saw a decrease as a result of a slowing in retail market conditions and an increase in competitive pricing pressures. Manufactured housing is continuing to experience the results of a general resurgence in the housing market in our sales territories. Cost of sales decreased 4 percent from the same quarter of the prior year due primarily to the decline in sales but increased 10 percent as a percent of sales. The decrease in gross profit margins is chiefly attributed to increased sales of lower margin recreational vehicles in the third quarter. Selling, general and administrative expenses decreased 34 percent over the same quarter of the prior year and declined more than 2 percent as a percent of sales. The decrease was due to a decrease in marketing costs. Net interest expense of $18,000 as compared to net interest income of $12,000 was the result of a significant increase in the average net short-term borrowings. The Company maintained its inventories at a level lower than the prior year's quarter but sales for the quarter were slower than the same period in fiscal 1996. The net loss for the three months ended July 31, 1997 was $437,000, or $0.39 per share, compared to net income of $826,000, or $0.74 per share, for the same quarter of the prior year. The quarter ended July 31, 1996 includes a gain on a business interruption claim of $373,000, net of related income taxes, or $0.34 per share. -7- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS - NINE MONTHS ENDED JULY 31, 1997 COMPARED TO NINE MONTHS ENDED JULY 31, 1996 Total sales for the nine months ended July 31, 1997 were $60,534,000, a 14 percent decrease from sales of $70,575,000 for the same quarter of the prior year. The decrease consisted of a 23 percent decrease in recreational vehicle sales and a 20 percent increase in manufactured housing sales. RV sales both in the Midwestern and Western sales regions saw a decrease due to a significant decline in consumer demand during the severe winter and spring weather conditions. In addition, extreme price competion in the third quarter caused many potential dealers to shift their inventory demands. The manufactured housing sales increase was chiefly the result of a rise in consumer demand for manufactured homes as well as an increase in the number of dealers in our retail network. Cost of sales decreased 8 percent from the same period of the prior year due to the 14 percent decline in sales, but increased 7 percent as a percent of sales. The decline in gross profit margins is chiefly attributable to increased sales of lower margin recreational vehicle units in comparison to the same period in fiscal 1996. Selling, general and administrative expenses decreased 18 percent over the same period of the prior year and declined less than one percent as a percent of sales. The decrease was primarily due to decreases in marketing costs. Net interest expense increased 473 percent over the same period in fiscal 1996. This was a consequence of a significant increase in the average net short-term borrowing. The net loss for the six months ended July 31, 1997 was $1,496,000, or $1.35 per share, compared to net income of $1,337,000, or $1.20 per share, for the same period of the prior year. Fiscal 1996 year to date net income includes a gain on a business interruption claim of $373,000, net of related income taxes, or $0.34 per share. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings Per Share. FAS 128 specifies the computation, presentation, and disclosure requirements for EPS. FAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. Management has assessed that the impact of adopting this standard will have no effect on EPS. In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement No. 130, "Reporting Comprehensive Income" to be effective in 1998. This Statement establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Management has not assessed the impact of adopting this standard. Also in June 1997, FASB issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information" to be effective in 1998. This Statement requires that public business enterprises report certain information about operating segments in complete sets of financial statements of the enterprise and in condensed financial statements of interim periods issued to shareholders. Management has not assessed the impact of adopting this standard. -8- PART II OTHER INFORMATION Item 6 (a). See Index to Exhibits on page 11. Item 6 (b). Form 8-K was not required to be filed during the quarter ended July 31, 1997. - 9 - 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. KIT MANUFACTURING COMPANY (Registrant) DATE September 9, 1997 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) - 10 - KIT MANUFACTURING COMPANY INDEX TO EXHIBITS Item: (27) Financial Data Schedule - 11 - EX-27 2
5 This schedule contains summary financial information extracted from SEC Form 10-Q and is qualified in its entirety by reference to such financial statements. 3-MOS OCT-31-1997 JUL-31-1997 451,000 3,057,000 4,783,000 43,000 3,356,000 13,864,000 11,674,000 5,742,000 20,764,000 5,914,000 0 0 0 1,592,000 0 20,764,000 20,811,000 20,811,000 19,944,000 19,944,000 1,608,000 0 39,000 (741,000) (304,000) (437,000) 0 0 0 (437,000) (0.39) (0.39)
-----END PRIVACY-ENHANCED MESSAGE-----