-----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, G3mxQObfbheLfDqZVsRE4B6d0mK5dt0a3Rnwfk1aPXJCNuADrjuMZxMHxEfdduOb vPUvEiKRzpZkauJp72FSsw== 0000803349-97-000006.txt : 19971113 0000803349-97-000006.hdr.sgml : 19971113 ACCESSION NUMBER: 0000803349-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHULT HOMES CORP CENTRAL INDEX KEY: 0000803349 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 351608892 STATE OF INCORPORATION: IN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10532 FILM NUMBER: 97715437 BUSINESS ADDRESS: STREET 1: 221 US 20 WEST STREET 2: P O BOX 151 CITY: MIDDLEBURY STATE: IN ZIP: 46540 BUSINESS PHONE: 2198255881 10-Q 1 10-Q FOR QUARTER ENDED 09/27/97 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For Quarter Ended September 27, 1997 Commission File Number 0-15506 Schult Homes Corporation (Exact name of registrant as specified in its charter) Indiana 35-1608892 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 221 U.S. 20 West, Middlebury, Indiana 46540 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 219-825-5881 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 XX NO The number of common shares outstanding, as of September 27, 1997 was 4,504,235. SCHULT HOMES CORPORATION FORM 10-Q PERIOD ENDED SEPTEMBER 27, 1997 PART I. Financial Information Item 1. Financial Statements A. Schult Homes Corporation and Subsidiaries Condensed Consolidated Financial Statements B. Notes to the Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. Other Information Item 1. Legal Proceedings --- Inapplicable Item 2. Changes in Securities --- Inapplicable Item 3. Defaults upon Senior Securities --- Inapplicable Item 4. Submission of Matters to a Vote of Security Holders --- Inapplicable Item 5. Other Information --- Inapplicable Item 6. Exhibits and Reports on Form 8-K (a) Inapplicable (b) There were no reports on Form 8-K filed for the three month period ended September 27, 1997. SCHULT HOMES CORPORATION and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 27, 1997 and June 28, 1997 ASSETS
Sept. 27, 1997 June 28, 1997 (unaudited) (audited) (thousands of dollars) Cash ........................................ $ 1,017 $ 4,735 Accounts receivable, net.............. ...... 17,844 18,304 Inventories (note 1)......................... 21,881 20,558 Deferred income taxes....................... 6,985 6,985 Total current assets...................... 47,727 50,582 Property, plant, and equipment............... 46,215 44,252 Loans receivable from Saturn Housing, LLC.... 2,862 2,691 Other assets................................. 2,722 2,631 Total assets.............................. $99,526 $100,156 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Trade accounts payable...................... $12,705 $ 17,427 Accrued liabilities............................... 34,447 32,369 Current portion of long-term debt................. 131 131 Total current liabilities...................... 47,283 49,927 Deferred income taxes............................. 2,884 2,884 Long-term debt.................................... 522 555 Total liabilities.............................. 50,689 53,366 Shareholders' equity: Common shares, no par value, 10,000,000 shares authorized, 4,504,235 shares issued and outstanding in November 1997 and 4,505,741 in June 1997............................... 8,184 8,238 Retained earnings........................... 40,653 38,552 Total shareholders' equity................ 48,837 46,790 Total liabilities and shareholders' equity. $99,526 $100,156 ======= =======
See accompanying notes to condensed consolidated financial statements. SCHULT HOMES CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share) (unaudited)
Three Months Ended Sept. 27, 1997 Sept. 28, 1996 Net sales........................ $ 89,137 $ 93,027 Cost of goods sold............... 70,716 72,510 Gross profit.................. 18,421 20,517 Selling, general, and administrative expenses......... 14,662 15,149 Operating income.............. 3,759 5,368 Interest income.................. 143 126 Other income..................... 13 5 Interest expense................. ( 10) ( 27) Income before income taxes.... 3,905 5,472 Income taxes: Federal......................... 1,226 1,672 State........................... 354 602 Net income.................... $ 2,325 $ 3,198 ======== ======== PER SHARE DATA: (note 2) Net income per common share...... $ 0.51 $ 0.71 Dividends paid per common share.. $ 0.05 $ 0.04 Average shares outstanding....... 4,545,692 4,492,729
See accompanying notes to condensed consolidated financial statements. SCHULT HOMES CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Dollars in thousands) (unaudited)
Three Months Ended Sept. 27, Sept. 28, 1997 1996 Cash flows from operating activities: Net income..........................................$ 2,325 $ 3,198 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of plant and equipment............... 1,110 943 Changes in assets and liabilities: Decrease in accounts receivable.................. 460 2,790 Increase in inventories.......................... (1,323) ( 112) (Increase) decrease in other assets.............. 61 ( 790) Decrease in trade accounts payable............... (4,721) (6,242) Increase in accrued liabilities.................. 2,077 4,507 Total adjustments.............................. (2,336) 1,096 Net cash provided by (used in) operating activities.. ( 11) 4,294 Cash flows from investing activities: Capital expenditures, net of retirements........... (3,073) (1,639) Loans to Saturn Housing, LLC....................... ( 322) ( 522) Net cash used in investing activities................ (3,395) (2,161) Cash flows from financing activities: Repayment of long-term debt........................ ( 33) ( 321) Proceeds from issuance of common shares............ 3 - Payment for repurchased shares..................... ( 57) - Dividends declared to common shareholders.......... ( 225) ( 187) Net cash provided by (used in) financing activities.. ( 312) ( 508) Net increase (decrease) in cash...................... (3,718) 1,625 Cash at beginning of the quarter..................... 4,735 9,033 Cash at end of the quarter...........................$ 1,017 $10,658 ======= ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest...........................................$ 53 $ 27 Income taxes.......................................$ 799 $ 1,319
See accompanying notes to condensed consolidated financial statements. SCHULT HOMES CORPORATION and SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) INVENTORIES The components of inventories are as follows:
Sept. 27, June 28, 1997 1997 (thousands of dollars) Raw material........... $15,804 $16,195 Work in process........ 2,508 2,308 Finished goods......... 3,569 2,055 Total............... $21,881 $20,558
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NET EARNINGS PER COMMON SHARE Net earnings per common share is calculated by dividing net income by the weighted average number of common shares and common share equivalents outstanding during the period. Net earnings per common share have been restated to reflect the Company's six-for-five stock split on February 28, 1997. (3) INTERIM FINANCIAL STATEMENTS The Company's quarterly sales and operating results are principally affected by the seasonal nature of the Company's business. Historically, the Company's sales and operating results are at their lowest levels in the fiscal third quarter, when weather conditions have an adverse impact on both orders and shipments. In the opinion of Company management, the interim financial statements reflect all adjustments, consisting only of normal recurring accruals, which are necessary for a fair statement of the results for the interim periods presented. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth selected items of the Company's statement of operations as a percentage of net sales for the periods indicated.
Percentage of Net Sales Three Months Ended Sept. 27, Sept. 28, 1997 1996 Net sales................................... 100.0% 100.0% Cost of goods sold.......................... 79.3 77.9 Gross profit............................. 20.7 22.1 Selling, general & administrative expenses.. 16.5 16.3 Operating income ........................ 4.2 5.8 Interest and other income................... 0.2 0.1 Interest expense............................ (0.0) (0.0) Income before income taxes............... 4.4 5.9 Income taxes................................ 1.8 2.5 Net income .............................. 2.6 3.4 ===== =====
THREE MONTHS ENDED SEPTEMBER 27, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 28, 1996. Net Sales in the first quarter of fiscal 1998 were $89.1 million, an decrease of 4.2% from sales of $93.0 in the first quarter of fiscal 1997. This decline is attributable primarily to lower sales in the Texas market, the nation's largest, where manufactured home retailers have been engaged in aggressive expansion. Based on their experience obtaining sufficient units to meet demand in 1996, many Texas manufactured home retailers built up inventory levels last winter to ensure they would have units available in the spring and summer of 1997. However, while each dealer was increasing inventory, the number of retail locations in Texas also continued to proliferate. In the first quarter of fiscal 1998, total inventory on retail dealer lots in Texas reached a point where it was greater than demand was likely to absorb in the immediate future. Dealers began to adjust inventory by reducing their orders to manufacturers, including the Company. As a result, our order volume from the Texas market declined. While dealer inventory levels have declined and new orders in Texas are increasing, there may be some residual effect in the second quarter as the phenomenon works its way through the system. The average selling price per section decreased by 2.7% from the same time a year earlier due to increased sales of lower priced "package" multi-section homes. Total sections sold in the first quarter of fiscal 1998 were 4,426, an increase of 8 sections (0.2%) from the prior year period. Multi-section homes represented 73.2% of the homes sold during the first quarter of fiscal 1998, compared to 68.5% in fiscal 1997. The Company is uncertain whether the increased proportional sales of multi-section homes will continue because it is subject to regional preferences and economic conditions. Cost of Goods Sold in the first quarter of fiscal 1998 was $70.7 million, which represented a decrease of 2.5% from the first quarter of fiscal 1997, reflecting our decrease in sales. Cost of goods sold as a percentage of net sales increased from 77.9% in fiscal 1997 to 79.3% in fiscal 1998. This percentage increase in cost of goods sold was primarily due to increased labor and material costs. The percentage increase in labor was due to retooling for the introduction of new products at our Milton, Pennsylvania facility and the startup of expanded capacity at our Buckeye, Arizona facility which caused some disruption of productivity as the plant came on line and new personnel were trained. Material costs increased as a result of a shift in demand toward our lower margin "package" products. The increase in material costs will depend on market conditions by region, and labor costs should stabilize. Selling, General, and Administrative Expenses for the first quarter of fiscal 1998 were $14.7 million, which represented a decrease of $487,000 (3.2%) from fiscal 1997. As a percentage of net sales, these expenses increased to 16.5% from 16.3% when compared to the prior year period. This increase resulted from increased marketing costs relating to the competitiveness in the market resulting from softness in the Texas market. The Company earned an operating income of $3.8 million in the first quarter of fiscal 1998 or 4.2% of net sales. This compares to an operating income of $5.4 million or 5.8% of net sales in the prior year period. Interest and other income contributed $156,000 to earnings in the first quarter of fiscal 1998, compared to $131,000 in the first quarter of fiscal 1997. Interest expense for the first quarter of fiscal 1998 was $10,000, compared to $27,000 in the first quarter of fiscal 1997. Net income in the current quarter was $2.3 million ($0.51 per common share), compared to a net income of $3.2 million ($0.71 per common share) in the first quarter of fiscal 1997. We expect to earn a return on our investments of expanded capacity in Buckeye, Arizona and retooling of our Milton, Pennsylvania facility. With those factors working in or favor and an improvement in market conditions, we hope we can exceed on the sales and earnings records we achieved in fiscal 1997. LIQUIDITY AND CAPITAL RESOURCES During of the current quarter, the Company had no borrowings under its credit facility which remained unchanged from the balance at June 28, 1997. At the end of the quarter, total long-term debt was $522,000, an increase of $159,000 compared to the balance at June 28, 1997. The Company's has a bank commitment for an unsecured credit facility which permits borrowings of up to an aggregate of the lower of $15.0 million, or a borrowing base computed by applying certain factors to the value of the Company's receivables and inventories. Capital expenditures for the first quarter of fiscal 1998 were $3,073,000, compared to $1,639,000 from the prior year period. This increase was due to the completion of our expansion in Buckeye, Arizona. The Company expects that funds generated from operations combined with funds available under long-term secured financing arrangements and its revolving credit facility, will be adequate to support its capital expenditure needs and required debt amortization. RISK FACTORS Forward-looking statements are made only as of the date made, based upon factors known to management at the time. There are significant changes occurring in the market for manufactured homes, with a few large competitors announcing their intent to purchase or establish retail sales centers owned by the manufacturer. We cannot predict the effect this will have in the long run, but it may have a short-term adverse effect on the Company's sales. We have assumed that raw material prices will not increase significantly, that employee relations continue to be favorable, that weather conditions will not unusually restrict delivery of homes or adversely affect sales, that orders on hand are not canceled by dealers, and that no unusual workers' compensation or other legal claim adversely affects the corporation. General economic conditions, rising interest rates, and consumer uncertainty or lack of confidence may result in delayed purchases of homes. The Company has assumed that the current generation of retirees and the emerging generation of retirees will have the same interest in purchasing manufactured homes, an assumption which has not yet been tested and may not be appropriate. We are aware that unpredictable events can and do occur and cannot assure anyone that adverse events will not take place. The manufacture and sale of housing is a complex and difficult business, with significant adverse risks beyond our control. We do not intend to update statements made in this report. PART II. OTHER INFORMATION None 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. Schult Homes Corporation (Registrant) By: Fred A. Greenawalt Chief Accounting Officer By: Walter E. Wells Chief Executive Officer & President Date: November 11, 1997 EX-27 2 1ST FDS
5 3-MOS JUN-27-1998 SEP-27-1997 1,017 0 17,844 0 21,881 47,727 46,215 0 99,526 47,283 522 0 0 8,184 40,653 99,526 89,137 89,137 70,716 14,662 0 0 (10) 3,905 1,580 2,325 0 0 0 2,325 0.51 0.51
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