-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ZqPb9dSWi3XbRh5XRZvfEBDjQ0J5qv9OJB9zLwCBFnkIG8fpnxfA/UnomdKdw5Dr IFY2RNbsBubQGOTF1rUwPw== 0000892569-95-000219.txt : 19950517 0000892569-95-000219.hdr.sgml : 19950516 ACCESSION NUMBER: 0000892569-95-000219 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COAST DISTRIBUTION SYSTEM CENTRAL INDEX KEY: 0000728303 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLE SUPPLIES & NEW PARTS [5013] IRS NUMBER: 942490990 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09511 FILM NUMBER: 95538168 BUSINESS ADDRESS: STREET 1: 1982 ZANKER RD CITY: SAN JOSE STATE: CA ZIP: 95112 BUSINESS PHONE: 4084368611 MAIL ADDRESS: STREET 1: 1982 ZANKER RD CITY: SAN JOSE STATE: CA ZIP: 95112 FORMER COMPANY: FORMER CONFORMED NAME: COAST RV INC DATE OF NAME CHANGE: 19880619 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1995 ---------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ______________________ COMMISSION FILE NUMBER 1-9511 ----------------- THE COAST DISTRIBUTION SYSTEM - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) CALIFORNIA 94-2490990 - -------------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification of incorporation or organization) Number) 1982 ZANKER ROAD, SAN JOSE, CALIFORNIA 95112 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (408) 436-8611 ---------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ------------------------------------------------------------ (Former name, former address and former fiscal year, if changed, since last year) 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 XXX 90 days. YES XX . 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 latest practicable date. 5,098,338 shares of Common Stock as of May 10, 1995 Page 1 of 10 Pages Index to Exhibits on Sequentially Numbered Page 9 2 THE COAST DISTRIBUTION SYSTEM AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 31, 1995 and December 31, 1994
March 31, December 31, 1995 1994 --------- ------------ ASSETS (Unaudited) (Audited) ------ --------- ------------ CURRENT ASSETS Cash $ 333 $ 413 Accounts receivable - net 33,074 13,277 Inventories 50,117 42,578 Other current assets 3,023 2,598 -------- ------- Total current assets 86,547 58,866 PROPERTY, PLANT, AND EQUIPMENT - NET 6,064 5,450 OTHER ASSETS 21,431 21,641 -------- ------- $114,042 $85,957 ======== ======= LIABILITIES ----------- CURRENT LIABILITIES Current maturities of long-term obligations $ 3,483 $ 3,509 Accounts payable - trade 26,634 6,954 Other current liabilities 3,014 3,264 Short-term notes payable 6,396 3,012 -------- ------- Total current liabilities 39,527 16,739 LONG-TERM OBLIGATIONS Secured note payable to bank 25,613 21,035 Subordinated term note 9,334 9,334 Other long-term liabilities 2,458 2,456 -------- ------- 37,405 32,825 REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 615 671 SHAREHOLDERS' EQUITY Common stock, no par value; authorized: 10,000,000; issued and outstanding: 5,067,246 at March 31, 1995 and 5,066,848 at December 31, 1994 18,947 18,940 Cumulative translation adjustment (63) (69) Retained earnings 17,611 16,851 -------- ------- 36,495 35,722 -------- ------- $114,042 $85,957 ======== =======
The accompanying notes are an integral part of these statements. 2 3 THE COAST DISTRIBUTION SYSTEM AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands) Three months ended March 31, (Unaudited)
1995 1994 ---------- ---------- Net sales $ 44,355 $ 42,357 Cost of sales, including distribution costs 35,724 34,870 --------- --------- Gross Profit 8,631 7,487 Selling, general and administrative expenses 6,552 5,969 --------- --------- Operating income 2,079 1,518 Other income (expense) Equity in the net earnings of affiliate 245 278 Interest expense (1,035) (799) Other 21 2 --------- --------- (769) (519) --------- --------- Income before income taxes 1,310 999 Income tax expense 538 358 --------- --------- NET INCOME $ 772 $ 641 ========= ========= Income per common share $ .15 $ .14 ========= =========
The accompanying notes are an integral part of these statements. 3 4 THE COAST DISTRIBUTION SYSTEM AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Three months ended March 31, (Unaudited)
1995 1994 -------- -------- Cash flows from operating activities: Net income $ 772 $ 641 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 625 742 Equity in net earnings of affiliated companies (245) (278) Changes in assets and liabilities: (Increase) in accounts receivable (19,797) (19,472) (Increase) in inventories (7,539) (905) (Increase) in prepaids and other current assets (425) (55) Increase in accounts payable 19,680 13,959 Increase in note, accrueds, and other current liabilities 3,108 654 -------- -------- Total adjustments (4,593) (5,355) -------- -------- Net cash (used in) operating activities (3,821) (4,714) Cash flows from investing activities: Acquisition of businesses, net of cash acquired -- (2,751) Capital expenditures (817) (599) Decrease in other assets 33 266 -------- -------- Net cash used in investing activities (784) (3,084) Cash flows from financing activities: Net borrowings (repayments) under line-of-credit agreement 4,578 6,264 Net borrowings (repayments) of other long-term debt (25) 244 Issuance of Common Stock pursuant to Employee Stock Option Plans 7 23 Issuance of Common Stock in connection with acquisition of business -- 630 Issuance of preferred stock of subsidiary in connection with acquisition of business -- 723 Redemption of redeemable preferred stock of subsidiary (68) -- Dividends on preferred stock of subsidiary (12) (2) -------- -------- Net cash provided by financing activities 4,490 7,882 Effect of exchange rate changes on cash 35 (51) -------- -------- NET INCREASE (DECREASE) IN CASH (80) 33 Cash beginning of period 413 654 -------- -------- Cash end of period $ 333 $ 687 ======== ========
The accompanying notes are an integral part of these statements. 4 5 THE COAST DISTRIBUTION SYSTEM AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present the Company's financial position as of March 31, 1995 and the results of its operations and cash flows for the three months ended March 31, 1995 and 1994. The accounting policies followed by the Company are set forth in note A to the Company's financial statements in its Annual Report on Form 10-K for its fiscal year ended December 31, 1994. 2. The results of operations for the three-month periods ended March 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. 3. Earnings per share are based upon the average number of common and common equivalent (dilutive stock options and warrants) shares outstanding during each period (5,306,264 at March 31, 1995 and 5,185,775 at December 31, 1994). 4. The Company leases its corporate offices, warehouse facilities and data processing equipment. Those leases are classified as operating leases as they do not meet the capitalization criteria of FASB Statement No. 13. The office and warehouse leases expire over the next eight years and the equipment leases expire over the next five years. The minimum future rental commitments under noncancellable operating leases having an initial or remaining term in excess of one year as of December 31, 1994 are as follows:
Year Ending December 31, Equipment Facilities Total --------------------------------------------------------------- (dollars in thousands) 1995 $ 54 $ 2,741 $ 2,795 1996 11 2,683 2,694 1997 1 2,333 2,334 1998 -- 1,925 1,925 1999 -- 1,075 1,075 Thereafter -- 642 642 ---- ------- ------- $ 66 $11,399 $11,465 ==== ======= =======
5 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ Results of Operations - --------------------- Net sales increased by approximately $1,998,000 or 5% in the first quarter of 1995 as compared to the same quarter of 1994. This sales increase was due to (i) the acquisition and consolidation of The Coast Distribution System (Canada) Inc. ("Coast Canada") as of March 1, 1994, the full effects of which were not reflected in quarterly operating results until after the first quarter of 1994, and (ii) the addition, in the second quarter of 1994, of a new distribution center in Eau Claire, Wisconsin. Same center sales were relatively flat in the first quarter of 1995 as compared to the same period in 1994 due to a softening in the economy and poor weather conditions throughout the country. The Company's gross margin increased to 19.5% of net sales in the quarter ended March 31, 1995 as compared to 17.7% of net sales in the quarter ended March 31, 1994. This increase was due primarily to (i) increased sales of the Company's proprietary products, and (ii) price increases on selected products. Selling, general and administrative expenses increased as a percentage of net sales to 14.8% in the first quarter of 1995 from 14.1% for the same quarter of 1994. This increase was due primarily to increases in selling costs resulting from the promotion of the Company's proprietary products and the establishment of a national customer service center in San Jose, California. The Company maintains ownership positions of between 25% and 50% in several companies in related industries. The Company's ownership interests in these companies are accounted for under the equity method of accounting. Under this method, the Company includes in its operating results its pro rata share of the net income of these companies which is reported as "equity in net earnings of affiliates." The Company's equity in the net earnings of these companies is not cash, and the Company is dependent on the declaration of cash dividends by those companies to realize any current cash from these investments. No dividends were declared by those companies in the first quarter of 1995. The improvement in operating income for the first quarter of 1995, as compared to the first quarter of 1994, is primarily attributable to the increase in the Company's gross margin. In the first quarter of 1995, interest expense increased by $236,000, or 29.5%, as compared to the same period in 1994, as a result of increases in outstanding borrowings the proceeds of which were used to fund (i) a portion of the price paid by the Company for the remaining shares of Coast Canada that were acquired in March 1994, and (ii) increased working capital requirements as a result of the Company's expanded operations, both in Canada and the United States, where the Company opened new distribution centers, in Eau Claire, Wisconsin, Vancouver, British Columbia, and Anchorage, Alaska. The provision for income taxes increased by $180,000 or 50.3% in 1995 as compared to 1994 due to (i) the increase in pre-tax earnings in the first quarter of 1995, and (ii) a higher effective tax rate in Canada due to increased earnings in Provinces which impose higher rates of tax on income. Liquidity and Capital Resources - ------------------------------- The Company finances its working capital requirements for its domestic operations primarily with borrowings under a long-term revolving bank credit facility and internally generated funds. Under that credit facility, the Company may borrow up to the lesser of (i) $32,000,000, or (ii) an amount equal 6 7 to 80% of its eligible accounts receivable and 50% of its eligible inventory (the "borrowing base"). At May 9, 1995, outstanding borrowings under the revolving credit facility were approximately $28,446,000. The working capital requirements for the Company's operations in Canada are financed primarily with borrowings under a separate revolving credit facility and internally generated funds. Under that credit facility, the Company may borrow up to the lesser of (i) C$10,000,000 for the period February 1 through July 5 of each year, and C$6,000,000 during the period July 6 through January 31 of each year, or (ii) an amount equal to 80% of the eligible accounts receivable and 25% of the eligible inventory of Coast Canada. At May 9, 1995, outstanding borrowings under the revolving credit facility were approximately C$7,648,000. The Company believes that available credit under the revolving credit facilities, together with internally generated funds, will be sufficient to enable the Company to meet its working capital requirements for the foreseeable future. The increases in accounts receivable, inventory, accounts payable and bank borrowings at March 31, 1995, as compared to December 31, 1994, are primarily the result of increases in product sales to customers and increases in inventories to meet customer demand that typically occur in the latter part of the first quarter in anticipation of increased consumer usage, in the spring and summer, of recreational vehicles and boats and a concomitant increase in demand for the repair and replacement parts and accessories which the Company distributes. Seasonality and Inflation - ------------------------- Sales of recreational vehicle and boating parts, supplies and accessories are seasonal. The Company has significantly higher sales during the six-month period from April through September than it does during the remainder of the year. Because a substantial portion of the Company's expenses are fixed, operating income declines and the Company sometimes incurs losses and must rely more heavily on borrowings to fund operating requirements in the months when sales are lower. Generally, the Company has been able to pass inflationary price increases on to its customers. However, inflation also may cause or may be accompanied by increases in gasoline prices and interest rates. Such increases, or even the prospect of increases in the price or shortages in the supply of gasoline, can adversely affect the purchase and usage of recreational vehicles, which can result in a decline in the demand for the Company's products. PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K AND EXHIBITS --------------------------------------------- (a) Exhibits. --------- Exhibit 11.1 Computation of Fully Diluted Earnings Per Share for the Quarter Ended March 31, 1995. Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K. -------------------- No Reports on Form 8-K were filed during the quarter ended March 31, 1995. 7 8 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. Dated: May 11, 1995 THE COAST DISTRIBUTION SYSTEM By: /s/ SANDRA A. KNELL ----------------------------- Sandra A. Knell Executive Vice President and Chief Financial Officer S-1 9 INDEX TO EXHIBITS
Sequentially Exhibit Numbered Page - ------- ------------- Exhibit 11.1 Computation of Fully Diluted Per Share Earnings for the Quarter Ended March 31, 1995 10 Exhibit 27 Financial Data Schedule 11
EX-11.1 2 COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE 1 EXHIBIT 11.1 THE COAST DISTRIBUTION SYSTEM Computation of Fully Diluted Earnings Per Share Quarter Ended March 31, 1995
Weighted Average Number of Shares ---------------- I. Weighted Average Shares Outstanding 5,066,848 II. Common Stock Equivalents 114,416 III. Other Dilutive Securities 125,000 --------- Average Number of Common and Common Equivalent Shares 5,306,264 ========= Net Earnings $ 772,000 After-tax interest on convertible debt 16,000 Dividend paid on preferred stock of subsidiary (12,000) ---------- Earnings available to common shareholders $ 776,000 Divided by Shares 5,306,264 ---------- $ 0.15 =======
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF, AND THE STATEMENT OF INCOME FOR THE PERIOD ENDED MARCH 31, 1995 INCLUDED IN REGISTRANT'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET AND STATEMENT OF INCOME AND THE NOTES THERETO. 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 333 0 33,074 0 50,117 86,547 6,064 0 114,042 39,527 37,405 18,947 615 0 17,548 114,042 44,355 44,355 35,724 42,276 769 0 1,035 1,310 538 772 0 0 0 772 .15 .15
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