-----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, G+7aY7GK19xFi3dPrUHQOZC1svLTisygxolmtsbLC7DBPrtoaVgwg197lGWyiMQ0 Hn1SBb/dfYsBPlh5GBCuBw== 0000719866-00-000006.txt : 20000922 0000719866-00-000006.hdr.sgml : 20000922 ACCESSION NUMBER: 0000719866-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 DATE AS OF CHANGE: 20000907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCTIC CAT INC CENTRAL INDEX KEY: 0000719866 STANDARD INDUSTRIAL CLASSIFICATION: 3790 IRS NUMBER: 411443470 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18607 FILM NUMBER: 702161 BUSINESS ADDRESS: STREET 1: 600 BROOKS AVE SOUTH STREET 2: P O BOX 810 CITY: THIEF RIVER FALLS STATE: MN ZIP: 56701 BUSINESS PHONE: 2186818558 FORMER COMPANY: FORMER CONFORMED NAME: ARCTCO INC DATE OF NAME CHANGE: 19940224 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter ended June 30, 2000 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-18607 ARCTIC CAT INC. (Exact name of registrant as specified in its charter) Minnesota 41-1443470 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 601 Brooks Avenue South, Thief River Falls, Minnesota 56701 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (218) 681-8558 Indicate by check mark whether the registrant (1) has filed all reports required 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 At August 10, 2000, 16,681,475 shares of Common Stock and 7,560,000 shares of Class B Common Stock of the Registrant were outstanding. Part I - Financial Information Arctic Cat Inc. CONSOLIDATED BALANCE SHEETS (unaudited) June 30, March 31, ASSETS 2000 2000 CURRENT ASSETS Cash and equivalents $ 28,923,000 $ 60,028,000 Short-term investments 28,439,000 48,249,000 Accounts receivable, less allowances 37,159,000 18,348,000 Inventories 88,479,000 61,669,000 Prepaid expenses 1,839,000 2,880,000 Deferred income taxes 18,544,000 18,975,000 ___________ ___________ Total current assets 203,383,000 210,149,000 PROPERTY AND EQUIPMENT - at cost Machinery, equipment and tooling 76,143,000 71,936,000 Land, buildings and improvements 17,147,000 16,861,000 __________ __________ 93,290,000 88,797,000 Less accumulated depreciation 54,470,000 52,411,000 __________ __________ 38,820,000 36,386,000 __________ __________ $242,203,000 $246,535,000 ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 29,597,000 $ 27,318,000 Accrued expenses 45,462,000 49,777,000 Income tax payable 14,000 982,000 ___________ __________ Total current liabilities 75,073,000 78,077,000 DEFERRED INCOME TAXES 5,787,000 5,900,000 COMMITMENTS AND CONTINGENCIES - - SHAREHOLDERS' EQUITY Preferred stock, par value $1.00; 2,050,000 shares authorized; none issued - - Preferred stock - Series A Junior Participating, par value $1.00; 450,000 shares authorized; none issued - - Common stock, par value $.01; 37,440,000 shares authorized, shares issued and outstanding; 17,157,975 at June 30, 2000; 17,327,975 at March 31, 2000 171,000 173,000 Class B common stock, par value $.01; 7,560,000 shares authorized, issued, and outstanding 76,000 76,000 Retained earnings 161,096,000 162,309,000 ____________ ___________ 161,343,000 162,558,000 ____________ ___________ $242,203,000 $246,535,000 ============ =========== The accompanying notes are an integral part of these statements. Arctic Cat Inc. CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) Three Months Ended June 30, ___________________________ 2000 1999 _______ ______ Net sales $85,961,000 $86,928,000 Cost of goods sold 64,387,000 65,213,000 __________ __________ Gross profit 21,574,000 21,715,000 Selling, general and administrative expenses 19,619,000 19,600,000 __________ __________ Operating profit 1,955,000 2,115,000 Other income Interest income 1,107,000 770,000 __________ __________ Earnings before income taxes 3,062,000 2,885,000 Income tax expense 1,010,000 1,024,000 __________ __________ Net earnings $2,052,000 $1,861,000 ========== ========== Net earnings per share Basic $0.08 $0.07 Diluted $0.08 $0.07 ========== ========== Weighted average shares outstanding Basic 24,807,000 25,952,000 Diluted 24,903,000 25,983,000 ========== ========== The accompanying notes are an integral part of these statements. Arctic Cat Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended June 30, ___________________________ 2000 1999 Cash flows from operating activities ________ _______ Net earnings $2,052,000 $1,861,000 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation 2,065,000 2,553,000 Deferred income taxes 318,000 (699,000) Changes in operating assets and liabilities: Trading securities 19,805,000 21,592,000 Accounts receivable (18,811,000) (13,778,000) Inventories (26,810,000) (27,999,000) Prepaid expenses 1,041,000 468,000 Accounts payable 2,279,000 6,072,000 Accrued expenses (4,315,000) (683,000) Income taxes (968,000) (3,312,000) Net cash used in __________ __________ operating activities (23,344,000) (13,925,000) Cash flows from investing activities Additions of property and equipment (4,499,000) (476,000) Sale and maturity of available-for-sale securities 5,000 5,000 Net used in investing __________ __________ activities (4,494,000) (471,000) Cash flows from financing activities Dividends paid (1,487,000) (1,557,000) Repurchase of common stock (1,780,000) (5,572,000) Net cash used in __________ __________ financing activities (3,267,000) (7,129,000) __________ __________ Net decrease in cash and equivalents (31,105,000) (21,525,000) Cash and equivalents at the beginning of period 60,028,000 51,413,000 __________ __________ Cash and equivalents at the end of period $28,923,000 $29,888,000 ========== ========== Supplemental disclosure of cash payments for income taxes $ 650,000 $ 3,474,000 ========== ========== The accompanying notes are an integral part of these statements. Arctic Cat Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE A--BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Regulation S - X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2000, and the results of operations and the cash flows for the three month periods ended June 30, 2000 and 1999. Results of operations for the three months ended June 30, 2000 are not necessarily indicative of results for the full year. Preparation of the Company's consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from those estimates. NOTE B--NET EARNINGS PER SHARE The Company's basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company's diluted net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options, when dilutive. Options to purchase 936,021 and 1,543,271 shares of common stock with weighted average exercise prices of $12.00 and $11.04 were outstanding during the three months ended June 30, 2000 and 1999, but were excluded from the computation of common share equivalents because they were anti-dilutive. NOTE C--SHORT-TERM INVESTMENTS Short-term investments consist of the following: June 30, March 31, 2000 2000 ___________ __________ Trading securities $16,590,000 $36,395,000 Available-for-sale debt securities 11,849,000 11,854,000 ___________ __________ $28,439,000 $48,249,000 =========== ========== NOTE D--INVENTORIES Inventories consist of the following: June 30, March 31, 2000 2000 ___________ __________ Raw materials and sub-assemblies $14,495,000 $20,669,000 Finished goods 41,359,000 15,607,000 Parts, garments and accessories 32,625,000 25,393,000 ___________ __________ $ 88,479,000 $ 61,669,000 =========== ========== NOTE E--ACCRUED EXPENSES Accrued expenses as of June 30, 2000 consisted of marketing, $10,730,000, warranties, $12,838,000, PWC exit costs, $9,545,000 and other $12,349,000. Accrued expenses as of June 30, 1999 consisted of marketing, $10,305,000, warranties, $8,036,000 and other $14,220,000. Accrued expenses as of March 31, 2000 consisted of marketing, $12,158,000, warranties, $11,097,000, PWC exit costs, $10,893,000 and other $15,629,000. NOTE F--DISCONTINUED PERSONAL WATERCRAFT BUSINESS AND RELATED COSTS On October 7, 1999, the Company announced that it was exiting the personal watercraft (PWC) business effective September 30, 1999 and recorded a charge of $21,462,000. The charge included $8,961,000 for consumer incentives to aid Company dealers in the disposition of their current inventory. Additionally, the Company analyzed all long-lived watercraft assets in connection with this exit that indicated an impaired carrying value. The Company expects to utilize a portion of these assets in other production areas. All long-lived assets with no alternative use, totaling $3,480,000, were taken out of service and written off. Costs to dispose as well as any gain on sale of long-lived assets are expected not to be significant. The Company also analyzed inventories and determined a charge of $2,835,000 to reduce the current carrying value to a net realizable value. The Company will not produce additional PWC units beyond the completed production of the 1999 model. Therefore, the Company identified inventories of $2,451,000 that will not be used beyond September 30, 1999 and were written off. The Company also accrued $2,400,000 relating to other dealer matters. The Company has written off certain PWC technology of $700,000. The remaining $635,000 represent charges for other costs. The Company anticipates the majority of the PWC exit plan will conclude by September 30, 2001. The approximate net sales of the watercraft product line was $184,000 for the three month period ended June 30, 2000. During the period ending June 30, 2000, activity within the consumer incentives and other exit costs were $1,334,000 and $13,000. The remaining accrued expenses, included within the balance sheet caption accrued expenses, for these items at June 30, 2000 were $5,000,000 and $3,911,000. There were no adjustments to the initial recorded accrual in conjunction with the PWC exit plan for the period ending June 30, 2000. NOTE G--OTHER MATTERS Dividend Declaration On July 27, 2000, the Company's Board of Directors declared a regular quarterly cash dividend of $0.06 per share, payable on September 1, 2000 to shareholders of record on August 18, 2000. Share Repurchase The Company invested $14,411,000, $18,493,000 and $8,392,000 during 2000, 1999 and 1998 to repurchase and cancel 1,500,800, 2,049,114, and 834,900 shares pursuant to two Board of Directors' authorizations for the repurchase of up to 4,500,000 shares and an additional $30,000,000 of shares. Cumulative shares repurchased through June 30, 2000 under these authorizations totaled 5,166,722 for a total of $48,933,688 and the Company has approximately $25,000,000 remaining under its current authorization. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Arctic Cat Inc. (the "Company") designs, engineers, manufactures and markets snowmobiles and all-terrain vehicles (ATVs) under the Arctic Cat brand name, as well as related parts, garments and accessories principally through its facilities in Thief River Falls, Minnesota. The Company markets its products through a network of independent dealers located throughout the contiguous United States and Canada, and through distributors representing dealers in Alaska, Europe, the Middle East, Asia and other international markets. The Arctic Cat brand name has existed for more than 30 years and is among the most widely recognized and respected names in the snowmobile industry. The Company trades on the Nasdaq National Market under the symbol ACAT. Results of Operations THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1999. Net sales were down slightly from the first quarter last year, as the Company continues to cycle out the discontinuation of its personal watercraft (PWC) business. The Company anticipates growth in the ATV business will more than offset the weather-related decrease in snowmobile sales and as a result the Company expects record-breaking revenues in fiscal 2001. Net sales for the quarter decreased 1.1% to $85,961,000 from $86,928,000 for the same quarter in fiscal 2000. This decrease is due to a 27.9% decrease in snowmobile unit volume as discussed above, and a $1,480,000 decrease in discontinued personal watercraft sales. Offsetting these decreases is a 204.5% ATV unit volume increase or a $24,130,000 increase. Based on ATV orders received from dealers, the Company continues to expect to outpace the ATV industry's double digit growth again this year. Parts, garments and accessories sales decreased 16.5% primarily due to lower sales of generators related to last year's successful one-time Y2K sales program. Gross profits were essentially flat at $21,574,000 compared to $21,715,000 for the same quarter of fiscal 2000. As a percent of net sales, the gross profit percentage for the quarter was 25.1% versus 25.0% for the same quarter last year. Operating expenses for the quarter were flat at $19,619,000 compared to $19,600,000 for the same quarter of fiscal 2000. As a percent of net sales, operating expenses were 22.8% versus 22.5% for the same quarter last year. Interest income increased 43.8% to $1,107,000 for the quarter compared to $770,000 for the first quarter last year due to increased average cash balances and higher interest rates. Net earnings for the first quarter of fiscal 2001 were $2,052,000 or $0.08 per share on a diluted basis, as compared to net earnings of $1,861,000 or $0.07 per diluted share, for the first quarter of fiscal 2000. Liquidity and Capital Resources The seasonality of the Company's snowmobile production cycle and the lead time between the commencement of snowmobile and ATV production in the early spring and commencement of shipments late in the first quarter have resulted in significant fluctuations in the Company's working capital requirements during the year. Historically, the Company has financed its working capital requirements out of available cash balances at the beginning and end of the production cycle and with short-term bank borrowings during the middle of the cycle. Cash and short-term investments were $57,362,000 at June 30, 2000. The Company's cash balances traditionally peak early in the fourth quarter and then decrease as working capital requirements increase when the Company's snowmobile and spring ATV production cycles begin. The Company's investment objectives are first, safety of principal and second, rate of return. The Company believes that cash generated from operations and available cash will be sufficient to meet its working capital, regular quarterly dividend, share repurchase program, and capital expenditure requirements for the short and long-term basis. Line of Credit The Company has an unsecured credit agreement with a bank for the issuance of up to $75,000,000 of documentary and stand-by letters of credit and for working capital. Total working capital borrowings under the credit agreement are limited to $30,000,000. Forward Looking Statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. This 10-Q contains forward- looking statements that reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words "aim", "believe", "expect", "anticipate", "intend", "estimate", and other expressions that indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to: product mix and volume; competitive pressure on sales and pricing; increase in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines from Suzuki; warranty expenses; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings in excess of insured amounts; environmental and product safety regulatory activity; effects of the weather; overall economic conditions; and consumer demand and confidence. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company is subject to certain market risk relating to changes in interest rates and foreign currency exchange rates. Information regarding foreign currency exchange rates is discussed within "Management's Discussion and Analysis -- Inflation and Exchange Rate" in the 2000 Annual Report on 10-K. Interest rate market risk is managed for cash and short-term investments by investing in a diversified frequently maturing portfolio consisting of municipal bonds and money market funds that experience minimal volatility. The carrying amount of available-for-sale debt securities approximate related fair value and the associated market risk is not deemed to be significant. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ________________________________________ (a) Exhibits 27.1 financial data schedule (b) There were no reports on Form 8-K filed during the quarter ended June 30, 2000. SIGNATURES 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. ARCTIC CAT INC. Date: August 14, 2000 By /s/Christopher A. Twomey ________________ _________________________ Christopher A. Twomey Chief Executive Officer Date: August 14, 2000 By /s/Timothy C. Delmore ________________ _________________________ Timothy C. Delmore Chief Financial Officer EX-27 2 0002.txt
5 3-MOS MAR-31-2001 JUN-30-2000 28,923,000 28,439,000 38,242,000 1,083,000 88,479,000 203,383,000 93,290,000 54,470,000 242,203,000 75,073,000 0 0 0 247,000 161,096,000 242,203,000 85,961,000 85,961,000 64,387,000 64,387,000 0 383,000 0 3,062,000 1,010,000 2,052,000 0 0 0 2,052,000 $0.08 $0.08
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