-----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, LfLhqLebeIMW5UmGvwi6iqzam/BSb3J4xuoI9/doD8/JsCgGwh2NWqk16dTRMFvp 2un6UG8WiDpiNyC2s1q9DQ== 0000056151-98-000004.txt : 19980915 0000056151-98-000004.hdr.sgml : 19980915 ACCESSION NUMBER: 0000056151-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980914 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: 98708711 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, 1998 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, 1998. 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, 1998 1997 1998 1997 Sales $15,328 $20,811 $45,979 $60,534 Costs and expenses: Cost of sales 13,727 19,944 41,962 57,309 Selling, general and administrative expenses 1,485 1,590 4,097 5,675 15,212 21,534 46,059 62,984 Operating income (loss) 116 (723) (80) (2,450) Other income Interest income (expense), net - (18) 21 (86) Income (loss) before income taxes 116 (741) (59) (2,536) Expense (benefit) for income taxes (Note A) 42 (304) (38) (1,040) Net income (loss) $74 ($437) ($21) ($1,496) Shares outstanding (Note B) 1,110,934 1,110,934 1,110,934 1,110,934 Income (loss) before income taxes per share (Note B) $0.10 ($0.67) ($0.05) ($2.28) Net income (loss) per share (Note B) $0.07 ($0.39) ($0.02) ($1.35) 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, 1998 1997 ASSETS (Unaudited) Cash and cash investments $4,334 $3,673 Accounts receivable, net 4,284 4,533 Inventories: Raw materials 2,086 1,876 Work in process 672 907 Finished goods 946 619 Total inventories 3,704 3,402 Prepaids and income tax refunds receivable 1,508 2,632 Total current assets 13,830 14,240 Property, plant and equipment, net 6,842 6,844 Other assets 58 53 Total assets $20,730 $21,137 LIABILITIES AND SHAREHOLDERS' EQUITY Note payable to bank $1,385 Accounts payable 2,297 $2,697 Accrued payroll and related items 1,186 1,604 Accrued marketing programs 704 809 Accrued expenses 1,067 1,915 Total current liabilities 6,639 7,025 Deferred income taxes 1,487 1,487 Total liabilities 8,126 8,512 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 11,033 13,345 Net loss for period (21) (2,312) Balance at end of period 11,012 11,033 Total shareholders' equity 12,604 12,625 Total liabilities and shareholders' equity $20,730 $21,137 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, 1998 1997 Cash flows from operating activities: Cash received from customers $46,228 $63,806 Interest received 91 58 Cash received from operations 46,319 63,864 Cash paid to suppliers and employees 47,662 61,539 Interest paid 70 144 Income taxes (received) paid (1,266) 41 Cash disbursed for operations 46,466 61,724 Net cash provided by (used in) operating activities (147) 2,140 Cash flows from investing activities: Purchase of property, plant and equipment (793) (936) Changes in other current and non-current assets 215 23 Net cash used in investing activities (578) (913) Cash flows from financing activities: Proceeds from line-of-credit borrowings 12,428 12,374 Principal payments on line-of-credit borrowings (11,042) (12,374) Net cash provided by financing activities 1,386 0 Net increase in cash 661 1,227 Cash at beginning of year 3,673 2,281 Cash at end of period $4,334 $3,508 Reconciliation of net loss to net cash used in operating activities: Net loss ($21) ($1,496) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 471 500 Decrease in accounts receivable 249 3,200 Increase (decrease) in inventories (302) 3,813 Decrease in accounts payable and accrued liabilities (1,771) (2,796) Increase (decrease) in income taxes payable 1,227 (1,081) Net cash provided by (used in) operating activities ($147) $2,140 The accompanying notes are an integral part of these financial statements -5-
KIT MANUFACTURING COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note A - The provision or benefit 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. Options have not been included in the computations because their effect would not be dilutive. Note C - 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 D - The results of the period are not necessarily indicative of annual results due to seasonality of the business. Note E - Financial information contained herein is unaudited. Note F - 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 G - The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards (FAS) No. 130, "Reporting Comprehensive Income"; FAS 131, "Disclosures about Segments of an Enterprise and Related Information"; FAS 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits"; FAS 133, "Accounting for Derivative Instruments and Hedging Activities". Management does not anticipate that the adoption of these standards will have a significant effect on earnings or the financial position of the Company. - 6 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION - JULY 31, 1998 COMPARED TO OCTOBER 31, 1997 Under third quarter market conditions, the Company borrowed on its line of credit to maintain its inventory levels to provide for anticipated fourth quarter sales. The Company's working capital decreased $24,000 due to the line of credit borrowings for inventory build-up. The current ratio was 2.1:1 at July 31, 1998 compared to 2.0:1 at October 31, 1997. The Company's liquidity position as reflected in the current ratio described above, capital resources, including excess plant capacity, working capital, and unused line of credit, are considered to be adequate to provide for near term cash needs. RESULTS OF OPERATIONS - QUARTER ENDED JULY 31, 1998 COMPARED TO QUARTER ENDED JULY 31, 1997 Total sales for the quarter ended July 31, 1998 were $15,328,000, a 26% decrease from sales of $20,811,000 for the same quarter of the prior year. The decrease consisted of an 11% increase in manufactured housing sales and a 41% decrease in recreational vehicle (RV) sales. Manufactured housing sales increased due to increased marketing efforts, more competitive product pricing, and continued offerings of a wide range of products. RV sales decreased due to the continued shift to sales of lower priced entry level products and the closure of the Kansas RV plant in April 1998. Cost of sales decreased 31% from the same quarter of the prior year and decreased 6% as a percent of sales due primarily to the decline in sales volume. The resulting increase in gross profit margins compared to the third quarter of fiscal 1997 is chiefly attributed to the cost containments associated with the successful introduction of the Company's new RV models for the entry level market. Selling, general and administrative expenses decreased 6% over the same quarter of the prior year and increased 2% as a percent of sales. This was due primarily to the continued planned reductions in marketing costs and overhead costs. Net interest expense for the current quarter was less than $1,000 compared to net interest expense of $18,000 in the same quarter of the prior year. This was a result of an increase in the average net short-term investments. The net income for the three months ended July 31, 1998 was $74,000, or $0.07 per share, compared to net loss of $437,000, or $0.39 per share, for the same quarter of the prior year. -7- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS - NINE MONTHS ENDED JULY 31, 1998 COMPARED TO NINE MONTHS ENDED JULY 31, 1997 Total sales for the nine months ended July 31, 1998 were $45,979,000, a 24% decrease from sales of $60,534,000 for the same period of the prior year. The decrease consisted of a 12% increase in manufactured housing sales and a 38% decrease in recreational vehicle (RV) sales. Manufactured housing sales increased due to increased marketing efforts, more competitive product pricing, and continued offerings of a wide range of products. RV sales decreased due to the continued shift to sales of lower priced entry level products and the closure of the Kansas RV plant in April 1998. Cost of sales decreased 27% from the same nine months of the prior year and decreased 3% as a percent of sales due primarily to the decline in sales volume. The resulting increase in gross profit margins compared to the prior year is chiefly attributed to the cost containments associated with the successful introduction of the Company's new RV models for the entry level market. Selling, general and administrative expenses decreased 28% over the same nine months of the prior year and remained equivalent as a percent of sales. This was due primarily to the continued planned reductions in marketing costs and overhead costs. Net interest income for the current nine months was $21,000 compared to net interest expense of $86,000 in the same nine months of the prior year. This was a result of an increase in the average net short-term investments and lower average borrowing levels due to a decline in material purchases. The net loss for the nine months ended July 31, 1998 was $21,000, or $0.02 per share, compared to net loss of $1,496,000, or $1.35 per share, for the same nine months of the prior year. -8- PART II OTHER INFORMATION Item 6 (a). See Index to Exhibits on page 10. Item 6 (b). Form 8-K was not required to be filed during the quarter ended July 31, 1998. - 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 7/31/98 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) DATE 7/31/98 /s/ Bruce K. Skinner Bruce K. Skinner Vice President and Treasurer (Principal Financial and Accounting 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 10Q AND IS QUALIFIED IN ITS INTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1000 3-MOS OCT-31-1998 MAY-1-1998 JUL-31-1998 4334 0 4284 0 3704 13830 6842 471 20730 6639 0 0 0 1592 0 20730 15328 15328 13727 15212 0 0 0 116 42 0 0 0 0 74 .07 .07
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