-----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, AF2F8XchW8bqioKb6amT2F06Gvw9wPyREVaZVyNBOgbCLRhTq6vK9jEbooFP8mY/ GmGOhagWmHuYFt6WZHQ2zw== 0000056151-99-000004.txt : 19990309 0000056151-99-000004.hdr.sgml : 19990309 ACCESSION NUMBER: 0000056151-99-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990131 FILED AS OF DATE: 19990308 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: 99559546 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 January 31, 1999 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 January 31, 1999. 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 January 31, 1999 1998 Sales $12,644 $13,819 Costs and expenses: Cost of sales 11,294 12,918 Selling, general and administrative expenses 1,174 1,183 12,468 14,101 Operating income (loss) 176 (282) Interest income, net 12 17 Income (loss) before income taxes 188 (265) Provision(benefit) for income taxes 61 (108) (Note A) Net income (loss) $127 ($157) Net income (loss) per share - basic and diluted $0.11 ($0.14) (Note B) Shares outstanding - basic and diluted 1,110,934 1,110,934 (Note B) Dividends per share $ - $ - The accompanying notes are an integral part of these financial statements -3-
KIT MANUFACTURING COMPANY BALANCE SHEETS (Dollars in thousands)
January 31, October 31, 1999 1998 ASSETS (Unaudited) Cash and cash investments $4,272 $3,230 Accounts receivable, net 3,346 4,041 Inventories: Raw materials 1,988 1,758 Work in process 772 685 Finished goods 2,689 2,378 Total inventories 5,449 4,821 Prepaids and income tax refunds receivable 1,518 1,372 Total current assets 14,585 13,464 Property, plant and equipment, net 7,113 6,735 Other assets 121 152 Total assets $21,819 $20,351 LIABILITIES AND SHAREHOLDERS' EQUITY Note payable to bank $2,783 Accounts payable 1,672 $2,688 Accrued payroll and related items 1,190 1,587 Accrued marketing programs 900 718 Accrued expenses 1,399 1,610 Total current liabilities 7,944 6,603 Deferred income taxes 1,480 1,480 Total liabilities 9,424 8,083 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 10,676 11,033 Net income (loss) for period 127 (357) Balance at end of period 10,803 10,676 Total shareholders' equity 12,395 12,268 Total liabilities and shareholders' equity $21,819 $20,351 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 three months ended January 31, 1999 1998 Cash flows from operating activities: Cash received from customers $13,339 $13,874 Interest received 48 27 Cash received from operations 13,387 13,901 Cash paid to suppliers and employees 14,381 16,196 Interest paid 36 10 Cash disbursed for operations 14,417 16,206 Net cash used in operating activities (1,030) (2,305) Cash flows from investing activities: Purchase of property, plant and equipment (352) (685) Changes in other current and non-current assets (359) 299 Net cash used in investing activities (711) (386) Cash flows from financing activities: Proceeds from line-of-credit borrowings 6,430 1,655 Principal payments on line-of-credit borrowings (3,647) 0 Net cash provided by financing activities 2,783 1,655 Net increase (decrease) in cash 1,042 (1,036) Cash at beginning of year 3,230 3,673 Cash at end of period $4,272 $2,637 Reconciliation of net income (loss) to net cash used in operating activities: Net income (loss) $127 ($157) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 158 162 Decrease in accounts receivable 695 55 Increase in inventories (628) (2,599) (Decrease) increase in accounts payable and accrued liabilities (1,442) 344 Increase (decrease) in income taxes payable 60 (110) Net cash used in operating activities ($1,030) ($2,305) 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. 131, "Disclosures about Segments of an Enterprise and Related Information". 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 - JANUARY 31, 1999 COMPARED TO OCTOBER 31, 1998 Under first quarter market conditions, the Company borrowed on its line of credit to maintain its inventory levels to provide for anticipated second quarter sales. The Company's working capital decreased $220,000 due to the line of credit borrowings for the inventory build-up. The current ratio was 1.8:1 at January 31, 1999 compared to 2.0:1 at October 31, 1998. 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 JANUARY 31, 1999 COMPARED TO QUARTER ENDED JANUARY 31, 1998 Total sales for the quarter ended January 31, 1999 were $12,644,000, a 9% decrease from sales of $13,819,000 for the same quarter of the prior year. The decrease consisted of an 18% increase in manufactured housing sales and a 31% 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 closure of the Kansas RV plant in April 1998. Cost of sales decreased 13% from the same quarter of the prior year and decreased 4% as a percent of sales. The resulting increase in gross profit margins compared to the first quarter of fiscal 1998 is chiefly attributed to the material and labor cost containments associated with the controls over recreational vehicle and manufactured housing production. Selling, general and administrative expenses decreased less than 1% and remained at approximately 9% of sales in comparison to the same quarter of the prior year. This was due primarily to the continued controls over marketing and overhead costs. Net interest income for the current quarter was $12,000 compared to net interest income of $17,000 in the same quarter of the prior year. This was a result of an increase in the average net short-term borrowings. The net income for the three months ended January 31, 1999 was $127,000, or $0.11 per share, compared to net loss of $157,000, or $0.14 per share, for the same quarter of the prior year. The Company has instituted a program to determine whether its computer information systems are able to interpret dates beyond the year 1999 (the "Year 2000 Compliance Program") and has implemented programming modifications to its main operational and financial reporting systems that will address these issues. All modified programming is currently operational. The Company believes that its present computer information systems software and hardware is Year 2000 compliant and - -7- intends to obtain certification of such for any future purchases of computer software and hardware. The Company is also in the process of evaluating non-information technology systems, which would include telephone equipment, time- keeping equipment and surveillance equipment. The Company expects this evaluation to be completed by early 1999. The Company is in the process of contacting its major suppliers, service vendors and customers regarding Year 2000 compliance and anticipates that this phase of the Year 2000 Compliance Program will be completed early in fiscal 1999. The total cost of the Year 2000 Compliance Program is not expected to be material to the Company's financial position or results of operations. To date, the Company has spent less than $25,000 on Year 2000 compliance. The Company believes that the cost of ensuring Year 2000 compliance for its own operational and financial systems will be less than $50,000. Although management believes the Company has an adequate plan to be Year 2000 compliant, there can be no assurance that this program will ultimately be successful. The Company believes that it has sufficient resources to implement new and modified computer systems and programming to address the Year 2000 issue, and, accordingly, has not to date identified the need for any contingency planning. However, the Company's ongoing assessment of its financial and operations systems and non-information technology systems may reveal the need for contingency planning in the future. To date, based on the progress of the "Year 2000 Compliance Program", management believes the Company's computer information systems will be capable of interpreting dates beyond the year 1999 before fiscal year end. Also, management does not anticipate any Year 2000 problems within its non-information technology systems nor from its suppliers, service vendors and customers based on the data gathered during the compliance program testwork completed. -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 January 31, 1999. - 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 1/31/99 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) DATE 1/31/99 /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 Form 10Q and is qualified in its entirety by reference to such financial statements 3-MOS OCT-31-1999 JAN-31-1999 4,272,000 0 3,346,000 37,000 5,449,000 14,585,000 7,113,000 6,045,000 21,819,000 7,943,000 0 0 0 773,000 819,000 21,819,000 12,644,000 12,644,000 11,162,000 12,455,000 0 0 (12,000) 189,000 62,000 127,000 0 0 0 127,000 0.11 0.11
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