0000056151-95-000007.txt : 19950914 0000056151-95-000007.hdr.sgml : 19950914 ACCESSION NUMBER: 0000056151-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19950912 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: 1934 Act SEC FILE NUMBER: 001-06257 FILM NUMBER: 95572887 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 FOR 3RD QTR 1995 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, 1995 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 (310) 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, 1995. Index to Exhibits - Page 11 1 of 11 Pages -------------------------------------------------------------------------------- PART I FINANCIAL INFORMATION - 2 - -------------------------------------------------------------------------------- KIT MANUFACTURING STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended Six Months Ended July 31, July 31, 1995 1994 1995 1994 Sales $27,537 $26,383 $75,813 $66,680 Costs and expenses Cost of sales 25,236 23,460 68,541 58,934 Selling, general and administrative expenses 2,027 2,254 5,965 5,976 ------ ------ ------ ------ 27,263 25,714 74,506 64,910 Operating income 274 669 1,307 1,770 Other income (expense) Proceeds from business interruption claim 200 701 (Note I) Interest income (expense), net (7) (35) 36 (60) ------ ------ ------ ------ Income before income taxes 467 634 2,044 1,710 Provision for income taxes (Note A) 194 260 838 706 ------ ------ ------ ------ Net income $273 $374 $1,206 $1,004 ====== ====== ====== ====== Weighted average shares outstanding (Note B) 1,110,934 1,110,93 1,110,934 1,200,297 ========= ======== ========= ========= Net income per share (Note B) $0.25 $0.34 $1.09 $0.84 ===== ===== ===== ===== Dividends per share $ - $ - $ - $ - ====== ====== ====== ====== The accompanying notes are an integral part of these financial statements -3-
-------------------------------------------------------------------------------- KIT MANUFACTURING COMPANY BALANCE SHEETS (Dollars in thousands)
July October 1995 1994 ASSETS (Unaudited) Cash and cash $ 809 $4,625 Accounts receivable, net 7,691 5,564 Notes and other receivables 67 577 Inventories: Raw materials 3,474 2,317 Work in process 1,211 1,038 Finished goods 2,570 737 ------ ------ Total inventories 7,255 4,092 Prepaids and deferred income 1,586 1,190 ------ ------ Total current assets 17,408 16,048 Property, plant and equipment 6,058 5,762 Other assets 97 81 ------ ------ Total assets $23,563 $21,891 ====== ====== LIABILITIES AND SHAREHOLDERS' Note payable to bank $1,000 Accounts payable 3,666 $4,486 Accrued payroll and related 2,005 2,005 Accrued marketing programs 615 592 Accrued expenses 1,095 1,185 Income taxes payable 511 158 ------ ------ Total current liabilities 8,992 8,426 Deferred income taxes 1,308 1,308 ------ ------ Total liabilities 10,200 9,734 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 10,565 8,674 Net income for period 1,206 1,891 ------ ------ Balance at end of period 11,771 10,565 ------ ------ Total shareholders' equity 13,363 12,157 ------ ------ Total liabilities and shareholders' equity $23,563 $21,891 ====== ====== 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, ------------------------- 1995 1994 Cash flows from operating activities: ---- ---- Cash received from customers $74,392 $63,672 Interest received 75 77 ------ ------ Cash received from operations 74,467 63,749 ------ ------ Cash paid to suppliers and employees 77,998 65,100 Interest paid 39 138 Income taxes paid 809 387 ------ ------ Cash disbursed for operations 78,846 65,625 ------ ------ Net cash used in operating activities (4,379) (1,876) ------ ------ Cash flows from investing activities: Purchase of property, plant and equipment (764) (629) Changes in other current and non-current assets (374) (154) ------ ------ Net cash used in investing activities (1,138) (783) ------ ------ Cash flows from financing activities: Funds used to repurchase common stock (3,615) Proceeds from business interruption claim 701 Proceeds from line-of-credit borrowings 2,800 9,500 Principal payments on line-of-credit borrowings (1,800) (9,500) ------ ------ Net cash provided by (used in)financing activities 1,701 (3,615 ------ ------ Net decrease in cash (3,816) (6,274) Cash at beginning of year 4,625 8,484 ------ ------ Cash at end of period $ 809 $2,210 ====== ====== ---------------------------------------------------------------------------------- Reconciliation of net income to net cash used in operating activities: Net income $1,206 $1,004 Adjustments to reconcile net income to net cash used in operating activities: Proceeds from business interruption claim (701) Depreciation 431 338 Increase in accounts receivable (1,616) (3,009) Increase in inventories (3,163) (1,153) (Decrease)increase in accounts payable and accrued liabilities (565) 625 Increase in income taxes payable 29 319 ------ ------ Net cash used in operating activities ($4,379) ($1,876) ====== ====== 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. Common stock equivalents have not been included in the computations because their effect would not be dilutive. Note C - During the period reported on, there were no sales of securities. Note D - 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 E - The results of the period are not necessarily indicative of annual results due to seasonality of the business. Note F - Financial information contained herein is unaudited. Note G - 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 H - During the first quarter of fiscal 1994, the Company repurchased 361,455 shares of common stock for $10.00 per share from the family of one of the founders of KIT who died in 1989. Note I - During the second quarter of fiscal 1995, the Company received $501,000 in insurance proceeds on a business interruption claim relative to the 1992 tornado damage at the McPherson, Kansas manufactured housing facility and during the third quarter the Company received an additional $200,000 in insurance proceeds from the same business interruption claim. - 6 - -------------------------------------------------------------------------------- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION - JULY 31, 1995 COMPARED TO OCTOBER 31, 1994 Under third quarter market conditions, the Company continued to borrowed on its line of credit to maintain inventory levels to provide for the third quarter increase in sales. The Company's working capital increased $894,000 due primarily to an increase in inventories and an increase in accounts receivable due to an increase in sales. The current ratio was 1.9:1 at April 30, 1995 and at October 31, 1994. The Company's liquidity position as reflected in the current ratio described above, capital resources, including excess plant capacity, working capital, and line of credit, are considered to be adequate to provide for near term anticipated growth. RESULTS OF OPERATIONS - QUARTER ENDED JULY 31, 1995 COMPARED TO QUARTER ENDED JULY 31, 1994 Total sales for the quarter ended July 31, 1995 were $27,537,000, a four percent increase from sales of $26,383,000 for the same quarter of the prior year. The increase consisted of a ten percent increase in manufactured housing sales and a two percent increase in recreational vehicle sales. RV sales saw an increase as a result of demand for the entry-level Sportmaster product. However, Western regional RV sales are down due to lackluster retail sales causing dealers to adjust their inventories. Manufactured housing sales are experiencing competitive pricing pressures resulting in lower margins and rising selling costs. Cost of sales increased eight percent from the same quarter of the prior year due primarily to the four percent increase in sales volume, and increased three percent as a percent of sales. The decline in gross profit margins is chiefly attributed to production costs at our new recreational vehicle production facility in Caldwell, Idaho and sales of lower margin RV's and manufactured homes. Selling, general and administrative expenses decreased 10 percent over the same quarter of the prior year and declined one percent as a percent of sales. The decrease was due to a reduction in insurance expense. Net interest expense for the quarter decreased 79 percent in comparison to net interest expense in the same quarter of the prior year. This was a consequence of a significant decrease in the average net short-term borrowing. Net income for the three months ended July 31, 1995 was $273,000, or $0.25 per share, compared to net income of $374,000, or $0.34 per weighted average share, for the same quarter of the prior year. Net income for the quarter ended July 31, 1995 included an after tax gain on a business interruption claim of $117,000, or $0.11 per share. -7- -------------------------------------------------------------------------------- RESULTS OF OPERATIONS - NINE MONTHS ENDED JULY 31, 1995 COMPARED TO NINE MONTHS ENDED JULY 31, 1994 Total sales for the nine months ended July 31, 1995 were $75,813,000, a 14 percent increase from sales of $66,680,000 for the same quarter of the prior year. The increase consisted of a 15 percent increase in manufactured housing sales and a 13 percent increase in recreational vehicle sales. RV sales in the Midwestern region saw an increase as a result of consumer demand for our entry-level RV product. The Western region recreational vehicle sales are down for the nine months due to lackluster retail sales in 1995 causing dealers to adjust their inventories. The manufactured housing sales increase was chiefly the result of an increase in manufacturing capacity from the new production facility in Caldwell, Idaho. However, manufactured housing in the Northwest is experiencing increased competitive pricing pressures resulting in lower margins and rising selling costs. Cost of sales increased 16 percent from the same period of the prior year due principally to the 14 percent increase in sales volume, and increased two percent as a percent of sales. The decline in gross profit margins is chiefly attributed to production costs at the new RV production facility and increased sales of lower margin recreational vehicles and manufactured homes. Selling, general and administrative expenses decreased less than one percent over the same period of the prior year due and declined one percent as a percent of sales. The decrease was primarily due to a reduction in insurance costs. Net interest income for the current quarter as opposed to net interest expense in the same period of the prior year, increased 159 percent. This was a consequence of a significant decrease in the average net short-term borrowing. In the first nine months of 1994, the Company used its available cash to expand its plant facilities and repurchase its common stock thereby increasing its average short-term borrowings. Net income for the nine months ended July 31, 1995 was $1,206,000, or $1.09 per share, compared to net income of $1,004,000, or $0.84 per weighted average share, for the same period of the prior year. Net income for the nine months ended July 31, 1995 included an after-tax gain from a business interruption claim of $414,000, or $0.37 per share. -8- -------------------------------------------------------------------------------- PART II OTHER INFORMATION Item 6 (a). See Index to Exhibits on page 11. Item 6 (b). Form 8-K was not required to be filed during the quarter ended July 31, 1995. - 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 s interruption claim relative to the 1992 tornado damage atDATE September 11, 1995 /s/ Dan Pocapalia ------------------ ------------------------------------- Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) DATE September 11, 1995 /s/ Dale J. Gonzalez ------------------ -------------------------------------- Dale J. Gonzalez Senior 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 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from SEC Form 10Q and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS OCT-31-1995 APR-30-1995 1000 0 6753 44 8681 17602 10496 4648 23599 9522 0 1592 0 0 11501 23599 26425 26425 23662 23662 1619 0 8 1136 462 674 0 0 0 674 .61 0