-----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, L/zodM8d718nKLpJ03ArVCGyT2NPyd5hhMM5WhJ7JmEP+JkPIU8aXFeh/P/jQ2qT Y8qa/q/sWA3MrRTdUhf+zA== 0000056151-00-000005.txt : 20000315 0000056151-00-000005.hdr.sgml : 20000315 ACCESSION NUMBER: 0000056151-00-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000314 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: 568403 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, 2000 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), 1,084,234 shares outstanding as of January 31, 2000. Index to Exhibits - Page 12 1 of 12 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, 2000 1999 Sales $10,966 $12,644 Costs and expenses: Cost of sales 9,618 11,294 Selling, general and administrative expenses 1,010 1,140 10,628 12,434 Operating income 338 210 Other: Interest income 55 48 Interest expense (17) (36) Equity in loss of retail sales partnership (103) (34) Income before income taxes 273 188 Provision for income taxes 96 61 (Note A) Net income $ 177 $ 127 Net income per share- basic and diluted $ 0.16 $ .11 (Note B) Weighted-average shares 1,098,124 1,110,934 outstanding- basic and diluted (Note B) Dividends per share $ - $ - STATEMENT OF SHARHOLDERS'EQUITY (Dollars in thousands) (Unaudited) Common Stock Additional Retained Shares Amount Paid-In Capital Earnings Total Balance, October 31, 1999 1,110,934 $750 $842 $11,049 $12,641 Purchase of treasury stock (26,700) (18) (20) (88) (126) Net income 177 177 ____________________________________________________ Balance, January 31, 2000 1,084,234 $732 $822 $11,138 $12,692 ===================================================== The accompanying notes are an integral part of these financial statements. -3-
KIT MANUFACTURING COMPANY BALANCE SHEETS (Dollars in thousands) (Unaudited)
January 31 October 31, 2000 1999 ASSETS Cash and cash investments $ 3,676 $ 4,731 Accounts receivable, net 3,245 4,947 Inventories: Raw materials 2,288 1,792 Work in process 700 654 Finished goods 1,620 8 Total inventories 4,608 2,454 Prepaids and other assets 782 269 Deferred income taxes 737 721 Total current assets 13,048 13,122 Property, plant and equipment, net 6,726 6,549 Other assets 84 90 Total assets $ 19,858 $ 19,761 LIABILITIES AND SHAREHOLDERS' EQUITY Line of credit $ 2,099 - Accounts payable 1,323 $ 2,538 Accrued payroll and related items 685 1,191 Accrued marketing programs 142 402 Accrued expenses 1,443 1,515 Total current liabilities 5,692 5,646 Deferred income taxes 1,474 1,474 Total liabilities 7,166 7,120 Commitments and contingencies Shareholders'equity Common stock issued and outstanding 732 750 1,084,234 (January 31, 2000) and 1,110,934 (October 31, 1999) shares. Additional paid-in capital 822 842 Retained earnings 11,138 11,049 Total shareholders' equity 12,692 12,641 Total liabilities and shareholders' $ 19,858 $ 19,761 equity 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, 2000 1999 Cash flow from operating activities: Cash received from customers $ 12,669 $ 13,339 Interest received 55 48 Cash paid to suppliers and employees (15,499) (14,555) Interest paid (17) (36) Net cash used in operating activities (2,792) (1,204) Cash flow from investing activities: Purchase of property, plant and equipment (236) (545) Disposal of property, plant and equipment - 8 Net cash used in investing activities (236) (537) Cash flow from financing activities: Proceeds from line-of-credit borrowings 4,087 6,430 Principal payments on line-of-credit (1,988) (3,647) borrowings Purchase of treasury stock (126) - Net cash provided by financing activities 1,973 2,783 Net decrease in cash (1,055) 1,042 Cash at beginning of period 4,731 3,230 Cash at end of period $ 3,676 $ 4,272 Reconciliation of net income to net cash used in operating activities: Net income $ 177 $ 127 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 59 159 Equity in loss of retail sales partnership 103 34 Changes in operating assets and liabilities: Accounts receivable 1,702 695 Inventories (2,154) (628) Prepaids and other assets (629) (211) Accounts payable and accruals (2,146) (1,442) Accrued income taxes 96 62 Net cash used in operating activities $(2,792) $(1,204) 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 conducted 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 Company's investment in and advances to the retail sales partnership as of January 31, 2000 and 1999 are ($93,000) and $52,000, respectively, and are included as a component of accrued liabilities and other assets, respectively. The condensed unaudited financial information of the partnership for the three-month periods ended January 31, 2000 and 1999 is as follows: January 31, January 31, 2000 1999 Condensed Statement of Income Information: Sales $1,075,000 $675,000 Costs and expenses 1,222,000 723,000 Net loss $ (147,000) $(48,000) - 6 - KIT MANUFACTURING COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note H - The Company evaluates the performance of its operating segments based on operating income or losses. Each segment records direct expenses related and allocable to its employees. The Company does not allocate income taxes, interest income, interest expense or the equity in the retail sales partnership to operating segments. Identifiable assets are primarily those directly used in the operations of each segment. No individual customer accounted for greater than 10% of net sales or accounts receivable for any period or period-end presented. Three Months Ended (Dollars in Thousands) January 31, 2000 1999 Sales Manufactured housing $ 6,071 $7,558 Recreational vehicles 4,895 5,086 Total sales $10,966 $12,644 ====== ======= Income before income taxes Operating income Manufactured housing $ 332 $ 658 Recreational vehicles (97) (482) Total operating income 235 176 Interest income 55 48 Interest expense (17) (36) Income before income taxes $ 273 $ 188 ===== ==== Note I - On September 14, 1999, the Board of Directors authorized the Company to repurchase up to 100,000 common shares on the open market during a period of not more than 12 months. The 100,000 common shares authorized for repurchase represent 9% of the outstanding common stock of the Company. The Company plans to purchase the shares from time to time, depending on market conditions. During the quarter ended January 31, 2000 the Company repurchased 26,700 common shares. Note J - During February 2000, the Company sold land and buildings located in Chino, California for consideration of $1,685,000, resulting in a gain of $1,484,000. - 7 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION - JANUARY 31, 2000 COMPARED TO OCTOBER 31, 1999 Under first quarter market conditions, the Company borrowed on its line of credit to increase its inventory levels to provide for anticipated second quarter sales. The Company's working capital decreased $43,000 due to theline of credit borrowings for the inventory build-up. The current ratio remained at 2.3:1 at January 31, 2000 compared to 2.3:1 at October 31, 1999. The current ratio is the result of dividing current assets by current liabilities. It is a financial measure that indicates the ability of a company to pay its current obligations with its current assets. The Company's liquidity position as reflected in the current ratio described above, capital resources, including excess plant capacity, working capital, and $1,901,000 unused line of credit, are considered to be adequate to provide for near term cash needs. RESULTS OF OPERATIONS - QUARTER ENDED JANUARY 31, 2000 COMPARED TO QUARTER ENDED JANUARY 31, 1999 Total sales for the quarter ended January 31, 2000 were $10,966,000, a 13% decrease from sales of $12,644,000 for the same quarter of the prior year. The decrease consisted of a 20% decrease in manufactured housing sales and a 4% decrease in recreational vehicle (RV) sales. The decline in manufactured housing sales was caused by excess open units and repossessions in the marketplace as a result of a number of manufacturers over producing. In addition, although there was also a decline in RV sales this division continues to improve its selling margins and operating results through improved production cost controls and efficiencies. Also, strategically planned marketing continues to increase sales of a wide range of high margin travel trailers. Cost of sales for the quarter ended January 31, 2000 was $9,618,000, a 15% decrease from $11,294,000 for the same quarter of the prior year, and a 2% decrease as a percent of sales. The resulting increase in gross profit margins compared to the first quarter of fiscal 1999 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 7% during the quarter to $1,076,000, compared to $1,162,000 for the same period of the prior year. The decrease was due primarily to the continued controls over marketing and overhead costs. Interest income for the current quarter was $55,000 compared to $48,000 in the same quarter of the prior year. This was due to an increase in average short-term investments in conjunction with higher average rates of return. Interest expense for the current quarter was $17,000 compared to $36,000 in the same quarter of the prior year. This change was the result of a decrease in average borrowings. The net income for the three months ended January 31, 2000 was $177,000, or $0.16 per share, compared to net income of $127,000, or $0.11 per share, for the same quarter of the prior year. -8- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations The Company instituted a program to determine whether its computer information systems were able to interpret dates beyond the year 1999 (the "Year 2000 Compliance Program") and implemented programming modifications to its main operational and financial reporting systems to address these issues. The Company also contacted its major suppliers, service vendors and customers regarding Year 2000 compliance and to date, has not been alerted to any Year 2000 compliant issues as a result of these inquiries. The total cost of the Year 2000 Compliance Program was approximately $50,000. Although management believes the Company adequately addressed Year 2000 compliant issues, there can be no assurance that such problems will not be identified in the future. However, the Company believes that it has sufficient resources and that any such problems subsequently identified will not be material to the Company's financial position or results of operations. -9- PART II OTHER INFORMATION Item 6 (a). See Index to Exhibits on page 12. Item 6 (b). Form 8-K was not required to be filed during the quarter ended January 31, 2000. - 10 - 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 1/31/00 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) DATE 1/31/00 /s/ Bruce K. Skinner Bruce K. Skinner Vice President and Treasurer (Principal Financial and Accounting Officer) - 11 - KIT MANUFACTURING COMPANY INDEX TO EXHIBITS Item: (27) Financial Data Schedule -12 - 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-31-2000 JAN-31-2000 3,676,000 0 3,245,000 35,000 4,608,000 19,858,000 6,726,000 6,547,000 19,858,000 5,692,000 0 0 0 1,554,000 0 19,858,000 10,966,000 10,966,000 9,618,000 10,731,000 103,000 0 17,000 273,000 96,000 177,000 0 0 0 177,000 .16 .16
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