-----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, MnYR/2XUYOVpzQojQAnJd3x1upF20gXK80/c64FBEDHTZgG/X5F+0fS2gbpe6sz5 PIqAcz/3RB8GPSGRZftvVQ== /in/edgar/work/20000614/0000056151-00-000006/0000056151-00-000006.txt : 20000919 0000056151-00-000006.hdr.sgml : 20000919 ACCESSION NUMBER: 0000056151-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIT MANUFACTURING CO CENTRAL INDEX KEY: 0000056151 STANDARD INDUSTRIAL CLASSIFICATION: [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: 655007 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 0001.txt 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 April 30, 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), 1,076,334 shares outstanding as of April 30, 2000. Index to Exhibits - Page 13 1 of 13 Pages PART I FINANCIAL INFORMATION 2 - KIT MANUFACTURING COMPANY STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended Six Months Ended April 30, April 30, 2000 1999 2000 1999 Sales $14,908 $16,184 $25,874 $28,828 Costs and expenses: Cost of sales 13,684 14,472 23,302 25,767 Selling, general and administrative expenses 1,166 1,493 2,176 2,633 Equity in loss/(income) of retail sales partnership 26 (4) 129 30 Operating income 32 223 267 398 Other: Interest income 47 51 102 99 Interest expense (58) (49) (75) (84) Gain on Sale of Property (Note 1,455 - 1,455 - J) Income before income taxes 1,476 225 1,749 413 Provision for income taxes (Note A) 611 75 707 136 Net income $ 865 $ 150 $ 1042 $ 277 Net income per share- basic and diluted $0.80 $ 0.14 $ 0.96 $ 0.25 (Note B) Weighted-average shares 1,082,806 1,110,934 1,090,491 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 (34,600) (23) (26) (127) (176) Net income 1,042 1,042 ____________________________________________________ Balance, April 30, 2000 1,076,334 $727 $816 $11,964 $13,507 ===================================================== The accompanying notes are an integral part of these financial statements. -3-
KIT MANUFACTURING COMPANY BALANCE SHEETS (Dollars in Thousands) (Unaudited)
April 30, October 31, 2000 1999 ASSETS Cash and cash investments $ 5,370 $ 4,731 Accounts receivable, net 4,417 4,947 Inventories: Raw materials 2,196 1,792 Work in process 677 654 Finished goods 1,323 8 Total inventories 4,196 2,454 Prepaids and other assets 881 269 Deferred income taxes 721 721 Total current assets 15,585 13,122 Property, plant and equipment, net 6,449 6,549 Other assets 163 90 Total assets $ 22,197 $ 19,761 LIABILITIES AND SHAREHOLDERS' EQUITY Line of credit $ 2,733 - Accounts payable 1,631 $ 2,538 Accrued payroll and related items 936 1,191 Accrued marketing programs 69 402 Accrued expenses 1,430 1,515 Income taxes payable 417 - Total current liabilities 7,216 5,646 Deferred income taxes 1,474 1,474 Total liabilities 8,690 7,120 Commitments and contingencies Shareholders'equity Common stock issued and outstanding 727 750 1,076,334 (April 30, 2000) and 1,110,934 (October 31, 1999) shares. Additional paid-in capital 816 842 Retained earnings 11,964 11,049 Total shareholders' equity 13,507 12,641 Total liabilities and shareholders' $ 22,197 $ 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 six months ended April 30, 2000 1999 Cash flow from operating activities: Cash received from customers $ 24,948 $ 28,033 Interest received 102 99 Rental income - 46 Cash paid to suppliers and employees (28,135) (29,007) Interest paid (74) (84) Income taxes paid (128) (1) Net cash used in operating activities (3,287) (914) Cash flow from investing activities: Purchase of property, plant and equipment (298) (376) Proceeds from disposal of property, plant and equipment 1,667 18 Net cash used in investing activities 1,369 (358) Cash flow from financing activities: Proceeds from line-of-credit borrowings 9,123 11,046 Principal payments on line-of-credit borrowings (6,390) (9,595) Purchase of treasury stock (176) - Net cash provided by financing activities 2,557 1,451 Net increase in cash 639 179 Cash at beginning of period 4,731 3,230 Cash at end of period $ 5,370 $ 3,409 Reconciliation of net income to net cash used in operating activities: Net income $ 1,042 $ 273 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 186 296 Gain on sale of property (1,455) Equity in loss of retail sales partnership 129 30 Changes in operating assets and liabilities: Accounts receivable 530 (749) Inventories (1,742) 1,528 Prepaids and other assets (857) (215) Accounts payable and accruals (1,699) (2,216) Accrued income taxes 579 139 Net cash used in operating activities $ (3,287) $(914) 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. Certain amounts in prior period financial statements have been reclassified to conform to current period presentation. 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 April 30, 2000 and 1999 are ($119,000) and $56,000, 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 and six-month periods ended April 30, 2000 and 1999 is as follows: Three Months Ended Six Months Ended April 30, April 30, (Dollars in Thousands) 2000 1999 2000 1999 Condensed Statement of Income Information: Sales $1,815 $666 $2,890 $1,341 Costs and expenses 1,852 660 3,074 1,383 Net (loss)/profit $ (37) $ 6 $ (184) $ (42) - 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 or interest expense 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 Six Months Ended (Dollars in Thousands) April 30, April 30, 2000 1999 2000 1999 Sales Manufactured housing $6,224 $7,393 $12,295 $14,951 Recreational vehicles 8,684 8,791 13,579 13,877 Total sales $14,908 $16,184 $25,874 $28,828 ====== ====== ====== ====== Income/(loss) before income taxes Operating income Manufactured housing $ 129 $ 572 461 $1230 Recreational vehicles (97) (349) (194) (832) Total operating income 32 223 267 398 Interest income 47 51 102 99 Interest expense (58) (49) (75) (84) Gain on sale of Property (Note J) 1,455 - 1,455 - Income before income taxes 1,476 225 $ 1,749 $ 413 ===== ===== ===== ==== 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. During the quarter ended April 30, 2000, the Company repurchased 7,900 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 $1,455,000. - 7 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations Note K - On December 15, 1998, the Company was named as a defendant in a lawsuit filed by one of its former dealers seeking damages for breach of contract. In May of 2000, a jury awarded the plaintiff $250,000 in damages. The verdict is currently under appeal. The outcome of the appeal is not known at this time but the Company intends to defend its position vigorously. The Company was served on May 16, 2000 with a class-action lawsuit filed by certain former employees. The suit arose as a result of the closure of our plant facilities in McPherson, Kansas and the plaintiff's contention that the Company failed to provide a 60-day advance termination notice as required under federal law. The Company believes that it has substantial defenses to this action but is unable to assess the merits of the case since it has just recently been filed and no discovery has occurred. Note L - During February 2000, the Company entered into a sales agreement to sell land and buildings located in McPherson, Kansas for consideration of $1,200,000. The transaction is scheduled to close on June 30, 2000. - 8 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION - APRIL 30, 2000 COMPARED TO OCTOBER 31, 1999 Under second quarter market conditions, the Company borrowed on its line of credit to increase its inventory levels to provide for anticipated third quarter sales and to pay down certain current liabilities, including accounts payable. The Company's working capital increased $893,000 primarily due to the sale of the Chino, California property. The current ratio decreased slightly to 2.2:1 at April 30, 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 the proceeds from the planned sale of the Kansas property, working capital, and $1,267,000 unused line of credit, are considered to be adequate to provide for near term cash needs. The decrease in accounts payable of $907,000 from $2,538,000 at October 31, 1999 compared to $1,631,000 at April 30, 2000 was due to the build- up of recreational vehicle inventory in anticipation of second quarter sales. RESULTS OF OPERATIONS - QUARTER ENDED APRIL 30, 2000 COMPARED TO QUARTER ENDED APRIL 30, 1999 Total sales for the quarter ended April 30, 2000 were $14,908,000, an 8% decrease from sales of $16,184,000 for the same quarter of the prior year. The decrease consisted of a 16% decrease in manufactured housing sales and a 1% decrease in recreational vehicle (RV) sales. The decrease in sales continues to be affected by industry-wide excess inventory levels, lenders' tightened credit standards, and rising interest rates. In addition, although there was also a decline in RV sales, this division, with its successful product lines now available will continue to focus on the expansion of its market share. Also, strategically planned marketing continues to increase sales of a wide range of high margin travel trailers. Cost of sales for the quarter ended April 30, 2000 was $13,684,000, a 5% decrease from $14,472,000 for the same quarter of the prior year, and a 2% increase as a percent of sales. The resulting decrease in gross profit margins compared to the second quarter of fiscal 1999 is chiefly attributed to labor cost increases associated with recreational vehicle production. Selling, general and administrative expenses decreased 22% during the quarter to $1,166,000, compared to $1,493,000 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 $47,000 compared to $51,000 in the same quarter of the prior year. This change was due primarily to lower average rates of return on investments. Interest expense for the current -9- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations quarter was $58,000 compared to $49,000 in the same quarter of the prior year. This change was the result of an increase in average short- term interest rates. The net income for the three months ended April 30, 2000 was $865,000, or $0.80 per share, compared to net income of $150,000, or $0.14 per share, for the same quarter of the prior year. The sale of property in Chino, California contributed an after tax gain of $853,000 or $0.79 per share. RESULTS OF OPERATIONS - SIX MONTHS ENDED APRIL 30, 2000 COMPARED TO SIX MONTHS ENDED APRIL 30, 1999 Total sales for the six months ended April 30, 2000 were $25,874,000, a 10% decrease from sales of $28,828,000 for the same period of the prior year. The decrease consisted of an 18% decrease in manufactured housing sales and a 2% decrease in recreational vehicle (RV) sales. The decrease in sales continues to be affected by industry-wide excess inventory levels, lenders' tightened credit standards, and rising interest rates. The RV division continues to improve its selling margins and operating results through improved production cost controls and efficiencies. In addition, strategically planned marketing continues to increase sales of a wide range of high margin travel trailers. Cost of sales for the six months ended April 30, 2000 were $23,302,000, a 10% decrease from $25,767,000 for the same six months of the prior year, and a 1% increase as a percent of sales. This was due primarily to the decline in sales volume, coupled with relatively unchanged overhead costs. Selling, general and administrative expenses for the six months ended April 30, 2000 decreased 17% to $2,176,000 compared to $2,633,000 for the same period of the prior year, and decreased to approximately 8% of sales. This was due primarily to the continued planned reductions in marketing and administrative costs. Interest income for the six months ended April 30, 2000 was $102,000 compared to $99,000 for the same six months of the prior year. Interest expense for the six months ended April 30, 2000 was $75,000 compared to $84,000 for the same period of the prior year. This was a result of an increase in the average net short-term investments during the current period along with a decrease in average borrowings. Net income for the six months ended April 30, 2000 was $1,042,000, or $0.96 per share, compared to net income of $277,000, or $0.25 per share, for the same six months of the prior year. The sale of property in Chino, California contributed an after tax gain of $853,000 or $0.78 per share. -10- 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 April 30, 2000. - 11 - 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 6/14/00 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer (Principal Executive Officer) DATE 6/14/00 /s/ Bruce K. Skinner Bruce K. Skinner Vice President and Treasurer (Principal Financial and Accounting Officer) - 12 - KIT MANUFACTURING COMPANY INDEX TO EXHIBITS Item: (27) Financial Data Schedule -13- EX-27 2 0002.txt
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 APR-30-2000 5370000 0 4417000 35000 4196000 15585000 6449000 6402835 22197000 7216000 0 0 0 727000 0 22197000 14908000 14908000 13684000 14876000 0 0 58000 1476000 611000 865000 0 0 0 865000 .80 .80
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