-----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, C5CqGmXqzWb31F5p5RWiSoTOTgiXZGbWFCJ/xoHOtGchAplGPCDlK6Tpqbko/u+T DDGrZatog3E4IwTA9U16QA== 0000056151-99-000007.txt : 19990915 0000056151-99-000007.hdr.sgml : 19990915 ACCESSION NUMBER: 0000056151-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990914 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: 99710756 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 July 31, 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 July 31, 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 Nine Months Ended July 31, July 31, 1999 1998 1999 1998 Sales $16,411 $15,328 $45,239 $45,979 Costs and expenses: Cost of sales 14,468 13,727 40,234 41,962 Selling, general and administrative expenses 1,650 1,485 4,284 4,097 16,118 15,212 44,518 46,059 Operating income (loss) 293 116 721 (80) Other Interest income 18 29 117 91 Interest expense (16) (29) (101) (70) Equity in loss of retail sales partnership (13) - (42) - Income (loss) before income taxes 282 116 695 (59) Provision (benefit) for income 170 42 311 (38) taxes (Note A) Net income (loss) $ 112 $ 74 $ 384 $ (21) Net income (loss) per share- basic and diluted $ 0.10 $ 0.07 $ 0.35 $ (0.02) (Note B) Weighted-average shares 1,110,934 1,110,934 1,110,934 1,110,934 outstanding- basic and diluted (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)
July 31 October 31, 1999 1998 ASSETS Cash and cash investments $ 4,268 $ 3,230 Accounts receivable, net 4,640 4,041 Inventories: Raw materials 1,785 1,758 Work in process 628 685 Finished goods 385 2,378 Total inventories 2,798 4,821 Prepaids and income tax refunds 1,191 1,372 receivable Total current assets 12,897 13,464 Property, plant and equipment, net 6,676 6,735 Other assets 121 152 Total assets $ 19,694 $ 20,351 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 2,407 $ 2,688 Accrued payroll and related items 927 1,587 Accrued marketing programs 442 718 Accrued expenses 1,289 1,610 Income taxes payable 496 - Total current liabilities 5,561 6,603 Deferred income taxes 1,480 1,480 Total liabilities 7,041 8,083 Commitments and contingencies Shareholders'equity Common stock and additional paid-in capital, Issued and outstanding 1,110,934 1,592 1,592 shares Retained earnings: Balance at beginning of period 10,677 11,033 Net income (loss) for period 384 (357) Balance at end of period 11,061 10,676 Total shareholders' equity 12,653 12,268 Total liabilities and shareholders' $ 19,694 $ 20,351 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, 1999 1998 Cash flow from operating activities: Cash received from customers $ 44,641 $ 46,228 Interest received 117 91 Cash paid to suppliers and employees 43,631 47,662 Interest paid 101 70 Income taxes received (438) (1,266) Net cash provided by (used in) operating 1,464 (147) activities Cash flow from investing activities: Purchase of property, plant and equipment (476) (1,126) Disposal of property, plant and equipment 103 333 Changes in other current and non-current (54) 215 assets Net cash used in investing activities (427) (578) Cash flow from financing activities: Proceeds from line-of-credit borrowings 14,355 12,428 Principal payments on line-of-credit (14,355) (11,042) borrowings Net cash provided by financing activities 0 1,386 Net increase in cash 1,038 661 Cash at beginning of year 3,230 3,673 Cash at end of period $ 4,268 $ 4,334 Reconciliation of net income (loss) to net cash Used in operating activities: Net income (loss) $ 384 $ (21) Adjustments to reconcile net income (loss) to Net cash used in operating activities: Depreciation 444 471 (Increase) decrease in accounts receivable (599) 249 Decrease (Increase) in inventories 2,023 (302) Decrease in accounts payable and accrued (1,537) (1,771) liabilities Increase in income taxes payable 749 1,227 Net cash provided by (used in) operating $ 1,464 $ (147) activities 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 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 - JULY 31, 1999 COMPARED TO OCTOBER 31, 1998 Under third quarter market conditions, the Company liquidated its line of credit through sales of finished goods. The Company's working capital increased $475,000 due to the increase in cash and decline in trade payables as result of the liquidation of inventories. The current ratio improved to 2.3:1 at July 31, 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 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 unused line of credit, are considered to be adequate to provide for near term cash needs. RESULTS OF OPERATIONS - QUARTER ENDED JULY 31, 1999 COMPARED TO QUARTER ENDED JULY 31, 1998 Total sales for the quarter ended July 31, 1999 were $16,411,000, a 7% increase from sales of $15,328,000 for the same quarter of the prior year. The increase consisted of a 21% increase in manufactured housing sales and a 3% 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. The RV modest sales decline was due to the the model year changeover. Cost of sales for the quarter ended July 31, 1999 was $14,468,000, a 5% increase from $13,727,000 for the same quarter of the prior year, and a 1% decrease as a percent of sales . The resulting increase in gross profit margins compared to the third 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 12% during the quarter to $1,663,000 compared to $1,485,000 for the same period of the prior year. The increase was a result of the increase in sales as these expenses for the comparable quarters remained at approximately 10% of sales. This was due primarily to the continued controls over marketing and overhead costs. Interest income for the current quarter was $18,000 compared to $29,000 in the same quarter of the prior year. This was due to a decrease in average short-term investments in conjunction with lower average rates of return. Interest expense for the current quarter was $16,000 compared to $29,000 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 July 31, 1999 was $112,000, or $0.10 per share, compared to net income of $74,000, or $0.07 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 - NINE MONTHS ENDED JULY 31, 1999 COMPARED TO NINE MONTHS ENDED JULY 31, 1998 Total sales for the nine months ended July 31, 1999 were $45,239,000, a 2% decrease from sales of $45,979,000 for the same period of the prior year. The decrease consisted of a 21% increase in manufactured housing sales and an 18% 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 nine months ended July 31, 1999 were $40,234,000, a 4% decrease from $41,962,000 for the same nine months of the prior year, and a 2% 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 nine months ended July 31, 1999 increased 5% to $4,284,000 compared to $4,097,000 for the same period of the prior year, and remained at approximately 9% of sales. This was due primarily to the continued planned controls in marketing costs and overhead costs. Interest income for the nine months ended July 31, 1999 was $117,000 compared to $91,000 for the same nine months of the prior year. Interest expense for the nine months ended July 31, 1999 was $101,000 compared to $70,000 for the same period of the prior year. This was a result of an increase in average short-term investments during the current period along with an increase in average borrowings. Net income for the nine months ended July 31, 1999 was $384,000, or $0.35 per share, compared to a net loss of $21,000, or $0.02 per share, for the same nine 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 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 or 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 July 31, 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 7/31/99 /s/ Dan Pocapalia Dan Pocapalia Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) DATE 7/31/99 /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. 3-MOS OCT-31-1999 JUL-31-1999 4268000 0 4640000 37000 2798000 12897000 6676000 6323000 19694000 5561000 0 0 0 1592000 0 19694 16411000 16411000 14468000 16118000 0 0 16000 282000 170000 112000 0 0 0 112000 .10 .10
-----END PRIVACY-ENHANCED MESSAGE-----