-----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, OcbZxe5/XGO1Hf5JHddIfNu5zEykBwjdepNTNP+WnerbpIM+xkzrrzYlDNCI+bW6 kZ5rFi+Q0swdAZvGei6X+Q== 0000950137-98-000779.txt : 19980227 0000950137-98-000779.hdr.sgml : 19980227 ACCESSION NUMBER: 0000950137-98-000779 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971227 FILED AS OF DATE: 19980226 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/A SEC ACT: SEC FILE NUMBER: 001-10532 FILM NUMBER: 98550470 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/A 1 AMENDED FORM 10-Q DATED 12/27/98 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 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 Identification No.) incorporation or organization) 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 December 27, 1997 was 4,475,875. 2 SCHULT HOMES CORPORATION FORM 10-Q/A PERIOD ENDED DECEMBER 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 Item 5. Other Information 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 December 27, 1997. (c) Amended Exhibit 27 filed in electronic format only. 2 3 SCHULT HOMES CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 27, 1997 AND JUNE 28, 1997 ASSETS
DEC. 27, 1997 JUNE 28, 1997 --------------- --------------- (unaudited) (audited) (thousands of dollars) Cash .............................................. $ 291 $ 4,735 Accounts receivable, net........................... 16,747 18,304 Inventories (note 1)............................... 20,628 20,558 Deferred income taxes.............................. 6,985 6,985 ------ ------- Total current assets............................ 44,651 50,582 Property, plant, and equipment..................... 50,245 44,252 Loans receivable from Saturn Housing, LLC.......... 2,691 2,691 Other assets....................................... 3,004 2,631 ------ ------- Total assets.................................... $100,591 $100,156 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Trade accounts payable............................. $ 10,202 $ 17,427 Accrued liabilities................................ 34,860 32,369 Current portion of long-term debt.................. 131 131 ------ ------- Total current liabilities....................... 45,193 49,927 Deferred income taxes.............................. 2,884 2,884 Long-term debt..................................... 3,494 555 ------ ------- Total liabilities............................... 51,571 53,366 Shareholders' equity: Common shares, no par value, 10,000,000 shares authorized, 4,475,875 and 4,505,741 shares issued and outstanding, respectively..................................... 7,625 8,238 Retained earnings................................. 41,395 38,552 ------ ------- Total shareholders' equity...................... 49,020 46,790 ------ ------- Total liabilities and shareholders' equity...... $100,591 $100,156 ======= =======
See accompanying notes to condensed consolidated financial statements. 3 4 SCHULT HOMES CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED DEC. 27, 1997 DEC. 28, 1996 DEC. 27, 1997 DEC. 28, 1996 ------------- ------------- ------------- ------------- Net sales...................... $ 86,489 $ 85,640 $175,626 $178,667 Cost of goods sold............. 70,534 68,197 141,250 140,707 -------- -------- -------- -------- Gross profit................ 15,955 17,443 34,376 37,960 Selling, general, and administrative expenses....... 14,496 14,626 29,158 29,775 -------- -------- -------- -------- Operating income............ 1,459 2,817 5,218 8,185 Interest income................ 176 225 319 352 Other income................... 14 15 27 20 Interest expense............... (11) (14) (21) (41) -------- -------- -------- -------- Income before income taxes.. 1,638 3,043 5,543 8,516 Income taxes: Federal...................... 524 942 1,750 2,615 State........................ 147 335 501 937 -------- -------- -------- -------- Net income.................. $ 967 $ 1,766 $ 3,292 $ 4,964 ======== ======== ======== ======== PER SHARE DATA: (note 2) - -------------------------- Basic earnings per share....... $ 0.21 $ 0.39 $ 0.72 $ 1.10 Diluted earnings per share..... $ 0.21 $ 0.39 $ 0.72 $ 1.10 Basic average shares outstanding................... 4,491,143 4,487,876 4,498,694 4,487,758 Diluted average shares outstanding................... 4,520,659 4,515,794 4,525,764 4,511,782 Dividends paid per common share......................... $ 0.05 $ 0.04 $ 0.10 $ 0.08
See accompanying notes to condensed consolidated financial statements. 4 5 SCHULT HOMES CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Dollars in thousands) (unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED DEC. 27, DEC. 28, DEC. 27, DEC. 28, 1997 1996 1997 1996 --------- --------- --------- --------- Cash flows from operating activities: Net income........................................................$ 967 $ 1,766 $ 3,292 $ 4,964 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of plant and equipment............................. 1,263 933 2,387 1,876 Changes in assets and liabilities: Decrease in accounts receivable............................... 1,097 2,404 1,557 5,194 (Increase) decrease in inventories............................ 1,253 (1,854) (70) (1,966) (Increase) in allowance for loans receivable from Saturn Housing LLC........................................... 880 250 1,005 250 (Increase) decrease in other assets........................... (282) 389 (221) (401) (Decrease) in trade accounts payable.......................... (2,503) (4,381) (7,224) (10,623) Increase in accrued liabilities............................... 413 2,076 2,490 6,583 -------- -------- -------- -------- Total adjustments........................................... 2,121 (183) (227) 913 -------- -------- -------- -------- Net cash provided by operating activities.......................... 3,088 1,583 3,065 5,877 Cash flows from investing activities: Capital expenditures, net of retirements.......................... (5,293) (1,982) (8,380) (3,621) Loans to Saturn Housing, LLC...................................... (709) (1,143) (1,005) (1,665) -------- -------- -------- -------- Net cash used in investing activities.............................. (6,002) (3,125) (9,385) (5,286) Cash flows from financing activities: Net borrowings under line-of-credit............................... 1,500 - 1,500 - Proceeds from issuance of long-term debt.......................... 1,500 - 1,500 - Repayment of long-term debt....................................... (29) (174) (61) (495) Proceeds from issuance of common stock............................ 20 13 23 13 Payment for repurchased shares.................................... (578) - (636) - Dividends declared to common shareholders......................... (225) (187) (450) (374) -------- -------- -------- -------- Net cash provided by (used in) financing activities................ 2,188 (348) 1,876 (856) Net decrease in cash............................................... (726) (1,890) (4,444) (265) Cash at beginning of the quarter................................... 1,017 10,658 4,735 9,033 -------- -------- -------- -------- Cash at end of the quarter.........................................$ 291 $ 8,768 $ 291 $ 8,768 ======== ======== ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest.........................................................$ 8 $ 14 $ 61 $ 41 Income taxes.....................................................$ 3,312 $ 3,648 $ 4,112 $ 4,967
See accompanying notes to condensed consolidated financial statements. 5 6 SCHULT HOMES CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) INVENTORIES The components of inventories are as follows:
DEC. 27, JUNE 28, 1997 1997 -------- -------- (thousands of dollars) Raw material........... $16,785 $16,195 Work in process........ 2,280 2,308 Finished goods......... 1,563 2,055 ------- ------- Total............... $20,628 $20,558 ======= =======
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NET EARNINGS PER COMMON SHARE Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares and common share equivalents outstanding during the period. 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 SIX MONTHS ENDED ------------------ ---------------- DEC 27, DEC 28, DEC 27, DEC 28, 1997 1996 1997 1996 ------ ------ ------ ------ Net sales........................ 100.0% 100.0% 100.0% 100.0% Cost of goods sold............... 81.5 79.6 80.4 78.7 ------ ------ ------ ------ Gross profit.................. 18.5 20.4 19.6 21.3 Selling, general & administrative expenses........................ 16.8 17.1 16.6 16.7 ------ ------ ------ ------ Operating income.............. 1.7 3.3 3.0 4.6 Interest and other income........ 0.2 0.3 0.2 0.2 Interest expense................. (0.0) (0.0) (0.0) (0.0) ------ ------ ------ ------ Pre-tax income................ 1.9 3.6 3.2 4.8 Income taxes..................... 0.8 1.5 1.3 2.0 ------ ------ ------ ------ Net income.................... 1.1 2.1 1.9 2.8 ====== ====== ====== ======
6 7 THREE MONTHS ENDED DECEMBER 27, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER 28, 1996. Net Sales in the second quarter of fiscal 1998 were $86.5 million, an increase of 1.0% from sales of $85.6 million in the second quarter of fiscal 1997. The company recorded this modest increase in second quarter sales due to increased demand from our Hermiston, Oregon facility despite lower than expected consumer demand for manufactured homes in the Southwest and portions of the Great Plains States, principally, the areas served by our Buckeye, Arizona; Navasota, Texas; and Plainville, Kansas, facilities. The average selling price per section decreased by 4.1% from the same time a year earlier due to increased sales of lower priced "package" multi-section homes. Total sections sold in the second quarter of fiscal 1998 were 4,345, an increase of 217 sections (5.3%) from the prior year period. Modular home sales accounted for $15.1 million (17.5%) of the second quarter fiscal 1998 net sales; this compares to $13.5 million (15.8%) of the second quarter fiscal 1997 net sales. Multi-section homes represented 71.9% of the homes sold during the second quarter of fiscal 1998, compared to 69.4% 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 second quarter of fiscal 1998 was $70.5 million, which represented an increase of $2.3 million (3.4%) from the second quarter of fiscal 1997. Cost of goods sold as a percentage of net sales increased from 79.6% in fiscal 1997 to 81.5% in fiscal 1998. This increase in cost of goods sold as a percent of sales was due primarily to increased labor costs due to some facilities operating at less than optimal levels. Selling, General, and Administrative Expenses for the second quarter of fiscal 1998 were $14.5 million, which represented a decrease of $130,000 (0.9%) from fiscal 1997. As a percentage of net sales, these expenses decreased to 16.8% from 17.1% in the prior year period. This decrease was due to decreased warranty reserve expenses. The Company earned an operating income of $1.5 million in the second quarter of fiscal 1998 or 1.7% of net sales. This compares to an operating income of $2.8 million or 3.3% of net sales in the prior year period. Interest and other income contributed $190,000 to earnings in the second quarter of fiscal 1998, compared to $240,000 in the prior year period due to a lower amount of funds available for investing activity. Interest expense for the second quarter of fiscal 1998 was $11,000, compared to $14,000 in the second quarter of fiscal 1997. Pre-tax income for the second quarter of fiscal 1998 was $1.6 million compared to $3.0 million in the prior year period. Net income in the second quarter of fiscal 1998 was $1.0 million ($0.21 per common share), compared to a net income of $1.8 million ($0.39 per common share) in the second quarter of fiscal 1997. SIX MONTHS ENDED DECEMBER 27, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER 28, 1996. Net Sales in the first six months of fiscal 1998 were $175.6 million, which represented a decrease of $3.0 million (1.7%) from the first six months of fiscal 1997. Again, this decrease was due to lower than expected demand for manufactured homes in the Southwest and portions of the Great Plains States, principally, the areas served by our Navasota, Texas and Plainville, Kansas facilities. The average selling price per section decreased by 4.2% from the same time a year earlier due to increased sales of lower priced "package" multi-section homes. Total sections sold in the first six months of fiscal 1998 were 8,772, an increase of 226 sections (2.6%) from the prior year period. Modular home sales accounted for $28.2 million (16.1%) of the first six months of fiscal 1998 net sales; this compares to $26.4 million (14.8%) of the first six months of fiscal 1997 net sales. Multi-section homes represented 72.5% of the homes sold during the first six months of fiscal 1998, compared to 68.9% 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 six months of fiscal 1998 was $141.3 million, which represented an increase of $543,000 (0.4%) from the first six months of fiscal 1997. Cost of goods sold as a percentage of net sales increased from 78.7% in fiscal 1997 to 80.4% in fiscal 1998. Again, 7 8 this increase was due primarily to increased labor costs due to some facilities operating at less than optimal levels. Selling, General, and Administrative Expenses for the first six months of fiscal 1998 were $29.2 million, which represented an decrease of $617,000 (2.1%) from fiscal 1997. As a percentage of net sales, these expenses decreased to 16.6% from 16.7% in the prior year period. Again, warranty reserve costs decreased from the prior year period, however this was offset by higher marketing costs associated with the competitiveness in certain markets. The Company earned an operating income of $5.2 million in the first six months of fiscal 1998 or 3.0% of net sales. This compares to an operating income of $8.2 million or 4.6% of net sales in the prior year period. Interest and other income contributed $346,000 to earnings in the first six months of fiscal 1998, compared to $372,000 in the prior year period due to a lower amount of funds available for investing activity. Pre-tax income for the first six months of fiscal 1998 was $5.5 million compared to $8.5 million in the prior year period. Net income in the first six months of fiscal 1998 was $3.3 million ($0.72 per common share), compared to a net income of $5.0 million ($1.10 per common share) in the first six months of fiscal 1997. LIQUIDITY AND CAPITAL RESOURCES At the end of the current quarter, the Company had $1.5 million of outstanding borrowings under its credit facility, compared to zero borrowing at June 28, 1997. At the end of the quarter, total long-term debt was $3,494,000, an increase of $2,939,000 compared to the balance at June 28, 1997. The Company has a bank commitment eventually 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. The company loaned to Saturn Housing LLC $1 million during the first six months of fiscal 1998. The funds were needed by Saturn to cover its operating losses during this period and the allowance for loan losses was increased by the same amount. The Company has continued and intends to continue to advance funds with the expectation that Saturn would eventually become profitable. Schult has the option, under its loan agreement with Saturn, to convert up to $1.4 million from debt to units of membership in Saturn, which it has not exercised. Schult is providing management services to Saturn pursuant to a management contract. Capital expenditures for the first six months of fiscal 1998 were $8,380,000, compared to $3,621,000 from the prior year period. This increase was due to the completion of our expansion in Buckeye, Arizona and expansions costs for our Etna Green, Indiana second manufacturing line. In the opinion of management, there are no material environmental or legal contingent liabilities. 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 current 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 Schult'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. Schult has also 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 proven. We are aware that unpredictable events can and do occur and cannot assure anyone that adverse events will not take 8 9 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 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On October 23, 1997, the annual meeting of shareholders was held. Directors elected were Walter E. Wells, Ervin L. Bontrager, Francis M. Kennard, Robert J. Deputy, John P. Guequierre, Todd Goodwin and Donald R. Pletcher. The number of votes cast was 3,261,869, of which 3,213,808 were for the election of all directors, 360 against. There were 47,701 abstentions. ITEM 5. OTHER INFORMATION. The year 2000 issues have been addressed and will be resolved by the end of calendar year 1998. The costs to resolve these issues will be under $100,000. On January 5, 1998, Schult Homes entered into a merger agreement with Oakwood Homes Corporation, in which holders of Schult Homes common stock will receive $22.50 for each share held. Form 8-K filed January 6, 1998 is incorporated herein by reference. 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: February 25, 1998 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS JUN-27-1998 SEP-27-1997 DEC-27-1997 291 0 16,747 0 20,628 44,651 50,245 0 100,591 45,193 3,494 0 0 7,625 41,395 100,591 175,626 175,626 141,250 29,158 0 0 (21) 5,543 2,251 3,292 0 0 0 3,292 .72 .72
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