-----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, UfAYACudbFwSDQq/gshPy9me69xTMyG1sxNPQcr/Vlwv++C8JmkJxJzXoV+aT1SE TaY4P/X2e9+oLkg8hpwPCQ== /in/edgar/work/20000911/0000056151-00-000008/0000056151-00-000008.txt : 20000922 0000056151-00-000008.hdr.sgml : 20000922 ACCESSION NUMBER: 0000056151-00-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20000911 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: 720567 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 July 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), 1,027,334 shares outstanding as of July 31, 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 Nine Months Ended July 31, July 31, 2000 1999 2000 1999 Sales $13,559 $16,411 $39,433 $45,239 Costs and expenses: Cost of sales 12,585 14,468 35,887 40,234 Selling, general and administrative expenses 1,391 1,650 3,567 4,284 Equity in loss of retail sales partnership 135 13 264 42 Operating (loss) income (552) 280 (285) 679 Other: Interest income 75 18 177 117 Interest expense (53) (16) (128) (101) Gain on sale of property (Note J) 621 - 2,076 - Income before income taxes 91 282 1,840 695 Provision for income taxes (Note A) 38 170 745 311 Net income $ 53 $ 112 $ 1,095 $ 384 Net income per share- basic and diluted $0.05 $ 0.10 $ 1.02 $ 0.35 (Note B) Weighted-average shares 1,047,261 1,110,934 1,070,710 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 (83,600) (58) (65) (376) (499) Net income 1,095 1,095 _______ _____ _____ _______ _______ Balance, July 31, 2000 1,027,334 $692 $777 $11,768 $13,237 ======== ===== ===== ====== ======= The accompanying notes are an integral part of these financial statements. -3-
KIT MANUFACTURING COMPANY BALANCE SHEETS (Dollars in Thousands) (Unaudited)
July 31, October 31, 2000 1999 ASSETS Cash and cash investments $ 6,778 $ 4,731 Accounts receivable, net 4,123 4,947 Inventories: Raw materials 2,357 1,792 Work in process 552 654 Finished goods 560 8 Total inventories 3,469 2,454 Prepaids and other assets 344 269 Deferred income taxes 721 721 Total current assets 15,435 13,122 Property, plant and equipment, net 5,782 6,549 Other assets 265 90 Total assets $ 21,482 $ 19,761 LIABILITIES AND SHAREHOLDERS' EQUITY Line of credit $ 2,592 - Accounts payable 1,123 $ 2,538 Accrued payroll and related items 810 1,191 Accrued marketing programs 316 402 Accrued expenses 1,474 1,515 Income taxes payable 456 - Total current liabilities 6,771 5,646 Deferred income taxes 1,474 1,474 Total liabilities 8,245 7,120 Commitments and contingencies Shareholders'equity Common stock issued and outstanding 692 750 1,027,334 (July 31, 2000) and 1,110,934 (October 31, 1999) shares. Additional paid-in capital 777 842 Retained earnings 11,768 11,049 Total shareholders' equity 13,237 12,641 Total liabilities and shareholders' $ 21,482 $ 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 nine months ended July 31, 2000 1999 Cash flow from operating activities: Cash received from customers $ 38,132 $ 44,582 Interest received 177 118 Rental income - 58 Cash paid to suppliers and employees (40,607) (43,672) Interest paid (128) (101) Income taxes (paid) received (127) 438 Net cash (used in) provided by operating (2,553) 1,423 activities Cash flow from investing activities: Purchase of property, plant and equipment (389) (410) Proceeds from disposal of property, plant and equipment 2,921 25 Advances to retail sales partnership (25) - Net cash provided by (used in) investing 2,507 (385) activities Cash flow from financing activities: Proceeds from line-of-credit borrowings 12,855 14,355 Principal payments on line-of-credit (10,263) (14,355) borrowings Purchase of treasury stock (499) - Net cash provided by financing activities 2,093 -0- Net increase in cash 2,047 1,038 Cash at beginning of period 4,731 3,230 Cash at end of period $ 6,778 $ 4,268 Reconciliation of net income to net cash used in operating activities: Net income $ 1,095 $ 384 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 311 444 Gain on sale of property (2,076) - Equity in loss of retail sales partnership 264 42 Changes in operating assets and liabilities: Accounts receivable 824 (599) Inventories (1,015) 2,023 Prepaids and other assets (422) (83) Accounts payable and accruals (2,152) (1,537) Accrued income taxes 618 749 Net cash (used in) provided by operating $ (2,553) $1,423 activities The accompanying notes are an integral part of these financial statements.
- 5 - KIT MANUFACTURING COMPANY NOTES TO 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 July 31, 2000 and 1999 are ($229,000) and $44,000, 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 nine-month periods ended July 31, 2000 and 1999 is as follows: Three Months Ended Nine Months Ended July 31, July 31, (Dollars in Thousands) 2000 1999 2000 1999 Condensed Statement of Income Information: Sales $466 $1,252 $3,356 $2,592 Costs and expenses 659 1,270 3,733 2,652 Net (loss)/profit $(193) $ (18) $ (377) $ (60) - 6 - KIT MANUFACTURING COMPANY NOTES TO 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 Nine Months Ended (Dollars in Thousands) July 31, July 31, 2000 1999 2000 1999 Sales Manufactured housing $5,385 $8,042 $17,679 $22,993 Recreational vehicles 8,174 8,369 21,754 22,246 Total sales $13,559 $16,411 $39,433 $45,239 ====== ====== ====== ====== Income/(loss) before income taxes Operating (loss) income Manufactured housing $ (268) $ 644 $194 $1,875 Recreational vehicles (284) (364) (479) (1,196) Total operating (loss) income(552) 280 (285) 679 Interest income 75 18 177 117 Interest expense (53) (16) (128) (101) Gain on sale of Property (Note J) 621 - 2,076 - Income before income taxes $91 $ 282 $ 1,840 $ 695 ===== ===== ===== ==== 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. During the quarter ended July 31, 2000, the Company repurchased 49,000 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. During June 2000, the Company sold land and buildings located in McPherson, Kansas for consideration of $1,285,000, resulting in a gain of $621,000. Therefore, the total gain resulting from these two sales is $2,076,000. - 7 - KIT MANUFACTURING COMPANY NOTES TO FINANCIAL STATEMENTS (Unaudited) 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. - 8 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION - JULY 31, 2000 COMPARED TO OCTOBER 31, 1999 Under third quarter market conditions, the Company borrowed on its line of credit to maintain 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 $1,417,000 primarily due to the sale of the Chino, California, and McPherson, Kansas properties. The current ratio increased slightly to 2.4:1 at July 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, working capital, and $1,408,000 unused line of credit, is considered to be adequate to provide for near term cash needs. RESULTS OF OPERATIONS - QUARTER ENDED JULY 31, 2000 COMPARED TO QUARTER ENDED JULY 31, 1999 Total sales for the quarter ended July 31, 2000 were $13,559,000, a 17% decrease from sales of $16,411,000 for the same quarter of the prior year.The decrease consisted of a 33% 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. 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. Cost of sales for the quarter ended July 31, 2000 was $12,585,000, a 13% decrease from cost of sales of $14,468,000 for the same quarter of the prior year, and a 5% increase as a percent of sales. The resulting decrease in gross profit margins compared to the third quarter of fiscal 1999 is chiefly attributed to increased sales of lower margin recreational vehicle products. Selling, general and administrative expenses decreased 16% during the quarter to $1,391,000, compared to $1,650,000 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 $75,000 compared to $18,000 in the same quarter of the prior year. The increase was due primarily to an increase in average balances of invested funds (from the proceeds of the sales of the Chino, California, and McPherson, Kansas properties), compared to the same quarter of the prior year. Interest expense for the current -9- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations quarter was $53,000 compared to $16,000 in the same quarter of the prior year. This change was primarily the result of an increase in average short-term borrowings. The net income for the three months ended July 31, 2000 was $53,000, or $0.05 per share, compared to net income of $112,000, or $0.10 per share, for the same quarter of the prior year. The sale of property in McPherson, Kansas contributed an after tax gain of $402,000 or $0.38 per share. RESULTS OF OPERATIONS - NINE MONTHS ENDED JULY 31, 2000 COMPARED TO NINE MONTHS ENDED JULY 31, 1999 Total sales for the nine months ended July 31, 2000 were $39,433,000, a 13% decrease from sales of $45,239,000 for the same period of the prior year. The decrease consisted of a 23% 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. Cost of sales for the nine months ended July 31, 2000 were $35,887,000, an 11% decrease from cost of sales of $40,234,000 for the same nine months of the prior year, and a 2% increase as a percent of sales. The dollar decline was due primarily to the decline in sales volume, while the increase as a percent of sales was due to sales of lower margin RV's. Selling, general and administrative expenses for the nine months ended July 31, 2000 decreased 17% to $3,567,000 compared to $4,284,000 for the same period of the prior year, and remained consistent at approximately 9% of sales. The dollar decrease was due primarily to the continued planned reductions in marketing and administrative costs. Interest income for the nine months ended July 31, 2000 was $177,000 compared to $117,000 for the same nine months of the prior year. Interest expense for the nine months ended July 31, 2000 was $128,000 compared to $101,000 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 an increase in average short-term borrowings. Net income for the nine months ended July 31, 2000 was $1,095,000, or $1.02 per share, compared to net income of $384,000, or $0.35 per share, for the same nine months of the prior year. The sale of properties in Chino, California, and McPherson, Kansas contributed an after tax gain of $1,255,000 or $1.17 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 July 31, 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 9/11/00 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer (Principal Executive Officer) DATE 9/11/00 /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 JUL-31-2000 6778000 0 4123000 35000 3469000 15435000 5782000 5503000 21482000 6771000 0 0 0 692000 0 21482000 13559000 13559000 12585000 14111000 0 0 53000 91000 38000 53000 0 0 0 53000 .05 .05
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