-----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, N8Z3N0TleJ/LlaGeF5+k3G9pGXG0b/TBxjhA2n+fBfJOBgR/m+w+spfrKGkcNsMt 4lFG8SMKnF8oUnwCwWUlwQ== 0000056151-99-000006.txt : 19990616 0000056151-99-000006.hdr.sgml : 19990616 ACCESSION NUMBER: 0000056151-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990615 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: 99646267 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 April 30, 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 April 30, 1999. Index to Exhibits - Page 12 1 of 12 Pages PART I FINANCIAL INFORMATION - 2 - KIT MANUFACTURING COMPANY CONDENSED STATEMENT OF OPERATIONS (Dollars in Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended Six Months Ended April 30, April 30, 1999 1998 1999 1998 Sales $16,184 $16,831 $28,828 $30,650 Costs and expenses: Cost of sales 14,472 15,317 25,767 28,235 Selling, general and administrative expenses 1,489 1,429 2,663 2,612 15,961 16,746 28,430 30,847 Operating income (loss) 223 85 398 (197) Other: Interest income 51 36 99 63 Interest expense (49) (31) (84) (41) Income (loss) before income taxes 225 90 413 (175) Provision (benefit) for income taxes 75 35 136 (73) (Note A) Net income (loss) $ 150 $ 55 $ 277 $ (102) Net income (loss) per share- basic and diluted $ 0.14 $ 0.05 $ 0.25 $ (0.09) (Note B) Weighted-average shares outstanding- basic and diluted 1,110,934 1,110,934 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) (Unaudited)
April 30, October 31, 1999 1998 ASSETS Cash and cash investments $ 3,409 $ 3,230 Accounts receivable, net 4,790 4,041 Inventories: Raw materials 1,623 1,758 Work in process 630 685 Finished goods 1,040 2,378 Total inventories 3,293 4,821 Prepaids and income tax refunds receivable 1,435 1,372 Total current assets 12,927 13,464 Property, plant and equipment, net 6,796 6,735 Other assets 135 152 Total assets $ 19,858 $ 20,351 LIABILITIES AND SHAREHOLDERS' EQUITY Note payable to bank $ 1,451 Accounts payable 1,779 $ 2,688 Accrued payroll and related items 1,170 1,587 Accrued marketing programs 43 718 Accrued expenses 1,390 1,610 Total current liabilities 5,833 6,603 Deferred income taxes 1,480 1,480 Total liabilities 7,313 8,083 Commitments and contingencies Shareholder'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 277 (357) Balance at end of period 10,953 10,676 Total shareholders' equity 12,545 12,268 Total liabilities and shareholders' equity $ 19,858 $ 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 six months ended April 30, 1999 1998 Cash flow from operating activities: Cash received from customers $ 28,079 $ 30,760 Interest received 99 62 Cash paid to suppliers and employees 28,824 32,770 Interest paid 84 41 Income taxes (received) paid 1 (1,267) Net cash used in operating activities (731) (722) Cash flow from investing activities: Purchase of property, plant and equipment (369) (782) Disposal of property, plant and equipment 18 3 Changes in other current and non-current assets (190) 365 Net cash used in investing activities (541) (414) Cash flow from financing activities: Proceeds from line-of-credit borrowings 11,046 7,217 Principal payments on line-of-credit borrowings (9,595) (5,772) Net cash provided by financing activities 1,451 1,445 Net increase in cash 179 309 Cash at beginning of year 3,230 3,673 Cash at end of period $ 3,409 $ 3,982 Reconciliation of net income (loss) to net cash Used in operating activities: Net income (loss) $ 277 $ (102) Adjustments to reconcile net income (loss) to Net cash used in operating activities: Depreciation 295 323 (Increase) decrease in accounts receivable (749) 109 Decrease (Increase) in inventories 1,528 (138) Decrease in accounts payable and accrued liabilities (2,218) (2,108) Increase in income taxes payable 136 1,194 Net cash used in operating activities $ (731) $ (722) 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) 131, "Disclosures about Segments of an Enterprise and Related Information". Management does not anticipate that the adoption of this standard will have a significant effect on earnings or the financial position of the Company. Note H - Registrant leases general executive and administrative offices in Long Beach, California. The lease has been renewed on these facilities through March 14, 2001. At that time, per the lease agreement, the lease may be renewed for another two years. - 6 - KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION - APRIL 30, 1999 COMPARED TO OCTOBER 31, 1998 Under second 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 increased $230,000 due to the increase in cash and decline in trade payables as result of the liquidation of inventories. The current ratio improved to 2.2:1 at April 30, 1999 compared to 2.0:1 at October 31, 1998. 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 their current obligations with their current assets. 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 APRIL 30, 1999 COMPARED TO QUARTER ENDED APRIL 30, 1998 Total sales for the quarter ended April 30, 1999 were $16,184,000, a 4% decrease from sales of $16,831,000 for the same quarter of the prior year. The decrease consisted of a 26% increase in manufactured housing sales and a 19% 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 continued shift to sales of lower priced entry level products and the closure of the Kansas RV plant in April 1998. Cost of sales for the quarter ended April 30, 1999 was $14,472,000, a 6% decrease from $15,317,000 for the same quarter of the prior year, and and a 2% decrease as a percent of sales . The resulting increase in gross profit margins compared to the second 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 increased less than 1% during the quarter to $1,489,000 compared to $1,429,000 for the same period of the prior year. These expenses for the comparable quarters remained at approximately 9% of sales. This was due primarily to the continued controls over marketing and overhead costs. Interest income for the current quarter was $51,000 compared to $36,000 in the same quarter of the prior year. Interest expense for the current quarter was $49,000 compared to $31,000 in the same quarter of the prior year. These changes were the result of an increase in average short-term investments along with an increase in average borrowings. The net income for the three months ended April 30, 1999 was $150,000, or $0.14 per share, compared to net income of $55,000, or $0.05 per share, for the same quarter of the prior year. -7- KIT MANUFACTURING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS -SIX MONTHS ENDED APRIL 30, 1999 COMPARED TO SIX MONTHS ENDED APRIL 30, 1998 Total sales for the six months ended April 30, 1999 were $28,828,000, a 6% decrease from sales of $30,650,000 for the same period of the prior year. The decrease consisted of a 22% increase in manufactured housing sales and a 25% 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 continued shift to sales of lower priced entry level products and the closure of the Kansas RV plant in April 1998. Cost of sales for the six months ended April 30, 1999 were $25,767,000, a 9% decrease from $28,235,000 for the same six months of the prior year, and a 3% decrease as a percent of sales. This was due primarily to the decline in sales volume. The resulting increase in gross profit margins compared to the prior year is chiefly attributed to the cost containments associated with the successful introduction of the Company's new RV models for the entry level market. Selling, general and administrative expenses for the six months ended April 30, 1999 increased 2% to $2,663,000 compared to $2,612,000 for the same period of the prior year, and remained at approximately 9% of sales. This was due primarily to the continued planned reductions in marketing costs and overhead costs. Interest income for the six months ended April 30, 1999 was $99,000 compared to $63,000 for the same six months of the prior year. Interest expense for the six months ended April 30, 1999 was $84,000 compared to $41,000 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 borrowings. Net income for the six months ended April 30, 1999 was $277,000, or $0.25 per share, compared to a net loss of $102,000, or $0.09 per share, for the same six months 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 intends to intends to obtain certification of such for any future purchases of computer software and hardware. The Company has evaluated its non-information technology systems, which would include telephone equipment, time-keeping equipment and surveillance equipment. The Company has determined that these systems are Year 2000 compliant. -8- 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 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. In the unlikely event that the Year 2000 Compliance Program is unsuccessful on some level (hardware or software), the Company's personal Computer system (which has been tested and proven Year 2000 compliant) can assume all of the necessary duties to ensure that the records and the computerized activitiy of the Company will continue unobstructed. -9- 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 April 30, 1999. - 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 4/30/99 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) DATE 4/30/99 /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. 6-MOS OCT-31-1999 APR-30-1999 3,409,000 0 4,790,000 37,000 3,293,000 12,927,000 6,796,000 6,177,000 19,858,000 5,833,000 0 0 0 1,592,000 0 19,858,000 28,828,000 28,828,000 25,767,000 28,430,000 0 0 84,000 413,000 136,000 277,000 0 0 0 277,000 0.25 0.25
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