-----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, LzzN2ZM2NPz+ckB1xK4Hk4LI25bLuC4OcsXFwRinic22sXoooUjXIlhazaEN2vbc U3HAOtIANTyuVNuoi/didg== 0000950137-97-000434.txt : 19970221 0000950137-97-000434.hdr.sgml : 19970221 ACCESSION NUMBER: 0000950137-97-000434 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970211 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: 1934 Act SEC FILE NUMBER: 001-10532 FILM NUMBER: 97523266 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 FORM 10-Q 1 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 December 28, 1996 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 28, 1996 was 3,740,232. 2 SCHULT HOMES CORPORATION FORM 10-Q PERIOD ENDED DECEMBER 28, 1996 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 Item 3. Defaults upon Senior Securities --- Inapplicable Item 4. Submission of Matters to a Vote of Security Holders 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 December 28, 1996. 2 3 SCHULT HOMES CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 28, 1996 AND JUNE 29, 1996 ASSETS
DEC. 28, 1996 JUNE 29, 1996 -------------- ------------- (unaudited) (audited) (thousands of dollars) Cash ...................................................... $ 8,768 $ 9,033 Accounts receivable, less allowance for doubtful accounts of $65 in December 1996 and June 1996..................... 13,144 18,338 Inventories (note 1)....................................... 18,281 16,315 Deferred income taxes...................................... 5,424 5,424 ------- ------- Total current assets.................................... 45,617 49,110 Property, plant, and equipment............................. 37,937 36,192 Loans receivable from Saturn Housing, LLC.................. 4,049 2,634 Other assets............................................... 2,198 1,797 ------- ------- Total assets............................................ $89,801 $89,733 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Trade accounts payable..................................... $ 8,005 $18,628 Accrued liabilities........................................ 35,434 28,851 Current portion of long-term debt.......................... 274 710 ------- ------- Total current liabilities............................... 43,713 48,189 Deferred income taxes...................................... 2,751 2,751 Long-term debt............................................. 625 684 ------- ------- Total liabilities....................................... 47,089 51,624 Shareholders' equity: Common shares, no par value, 10,000,000 shares authorized, 3,740,232 shares issued and outstanding in December and 3,743,685 in June 1996................................... 7,934 7,921 Retained earnings......................................... 34,778 30,188 ------- ------- Total shareholders' equity.............................. 42,712 38,109 ------- ------- Total liabilities and shareholders' equity.............. $89,801 $89,733 ======= =======
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. 28, 1996 DEC. 30, 1995 DEC. 28, 1996 DEC. 30, 1995 ------------- ------------- ------------- ------------- Net sales........................ $ 85,640 $ 73,295 $178,667 $153,777 Cost of goods sold............... 68,197 58,944 140,707 123,006 -------- -------- -------- -------- Gross profit.................. 17,443 14,351 37,960 30,771 Selling, general, and administrative expenses......... 14,626 12,429 29,775 25,573 -------- -------- -------- -------- Operating income.............. 2,817 1,922 8,185 5,198 Interest income.................. 225 128 352 135 Other income..................... 15 6 20 12 Interest expense................. (14) (35) (41) (89) -------- -------- -------- -------- Income before income taxes.... 3,043 2,021 8,516 5,256 Income taxes: Federal......................... 942 631 2,615 1,625 State........................... 335 222 937 578 -------- -------- -------- -------- Net income.................... $ 1,766 $ 1,168 $ 4,964 $ 3,053 ======== ======== ======== ======== PER SHARE DATA: (note 2) - ---------------------------- Net income per common share...... $ 0.47 $ 0.31 $ 1.32 $ 0.81 Dividends paid per common share.. $ 0.05 $ 0.04 $ 0.10 $ 0.08 Average shares outstanding....... 3,743,444 3,736,332 3,743,978 3,738,970
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. 28, DEC. 30, DEC. 28, DEC. 30, 1996 1995 1996 1995 -------- -------- -------- ------- Cash flows from operating activities: Net income..........................................$ 1,766 $ 1,168 $ 4,964 $ 3,053 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of plant and equipment............... 933 858 1,876 1,716 Changes in assets and liabilities: Decrease in accounts receivable.................. 2,404 6,665 5,194 5,684 (Increase) in inventories........................ (1,854) (1,755) (1,966) (440) (Increase) decrease in other assets.............. 389 (3) (401) 280 (Decrease) in trade accounts payable............. (4,381) (5,114) (10,623) (8,038) Increase in accrued liabilities.................. 2,076 1,460 6,583 4,292 ------- ------- ------- ------- Total adjustments.............................. (433) 2,111 663 3,494 ------- ------- ------- ------- Net cash provided by operating activities............ 1,333 3,279 5,627 6,547 Cash flows from investing activities: Capital expenditures, net of retirements............ (1,982) (1,048) (3,621) (1,689) Loans to Saturn Housing, LLC........................ (893) (1,713) (1,415) (1,742) ------ ----- ------ ------- Net cash used in investing activities................ (2,875) (2,761) (5,036) (3,431) Cash flows from financing activities: Net borrowings (repayments) under line-of-credit.... - - - (2,300) Repayment of long-term debt......................... (174) (245) (495) (498) Proceeds from issuance of common stock.............. 13 11 13 11 Payment for repurchased shares...................... - - - (165) Dividends declared to common shareholders........... (187) (149) (374) (298) ------- ------- ------- ------- Net cash used in financing activities................ (348) (383) (856) (3,250) Net increase (decrease) in cash...................... (1,890) 135 (265) (134) Cash at beginning of the quarter..................... 10,658 4,297 9,033 4,566 ------- ------- ------- ------- Cash at end of the quarter...........................$ 8,768 $ 4,432 $ 8,768 $ 4,432 ======= ======= ======= ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest...........................................$ 14 $ 44 $ 41 $ 138 Income taxes.......................................$ 3,648 $ 2,409 $ 4,967 $ 2,978
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. 28, JUNE 29, 1996 1996 -------- ------- (thousands of dollars) Raw material........... $13,299 $12,524 Work in process........ 2,129 2,247 Finished goods......... 2,853 1,544 ------- ------- Total............... $18,281 $16,315 ======= =======
(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. (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 28, DEC 30, DEC 28, DEC 30, 1996 1995 1996 1995 ------- ------- ------- ------- Net sales................................. 100.0% 100.0% 100.0% 100.0% Cost of goods sold........................ 79.6 80.4 78.7 80.0 ----- ----- ----- ----- Gross profit........................... 20.4 19.6 21.3 20.0 Selling, general & administrative expenses 17.1 17.0 16.7 16.6 ----- ----- ----- ----- Operating income ...................... 3.3 2.6 4.6 3.4 Interest and other income................. 0.3 0.2 0.2 0.1 Interest expense.......................... (0.0) (0.0) (0.0) (0.1) ----- ----- ----- ----- Pre-tax income......................... 3.6 2.8 4.8 3.4 Income taxes.............................. 1.5 1.2 2.0 1.4 ----- ----- ----- ----- Net income ............................ 2.1 1.6 2.8 2.0 ===== ===== ===== =====
THREE MONTHS ENDED DECEMBER 28, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER 30, 1995. Net Sales in the second quarter of fiscal 1997 were $85.6 million, an increase of 16.8% from sales of $73.3 million in the second quarter of fiscal 1996. This was a record second quarter for the Company. This increase was due to utilization of our plant expansions and strong market conditions, combined with a broader product line offering in certain regions. Although sales are 6 7 difficult to predict in the third quarter due to the impact of weather conditions on sales and shipments, we believe we can increase our sales during the third quarter compared to last year, if strong market conditions continue. The average selling price per section increased by 0.8% from the same time a year earlier. Total sections sold in the second quarter of fiscal 1997 were 4,128, an increase of 568 sections (16.0%) from the prior year period. Multi-section homes represented 69.4% of the homes sold during the second quarter of fiscal 1997, compared to 62.8% in fiscal 1996. 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 1997 was $68.2 million, which represented an increase of $9.3 million (15.7%) from the second quarter of fiscal 1996, reflecting our increase in sales. Cost of goods sold as a percentage of net sales decreased from 80.4% in fiscal 1996 to 79.6% in fiscal 1997. This decrease in cost of goods sold as a percent of sales was due primarily to decreased material costs. Material costs decreased as a result of improved corporate purchasing procedures. The decrease in material costs as a percent of sales will depend on market conditions by region. Selling, General, and Administrative Expenses for the second quarter of fiscal 1997 were $14.6 million, which represented an increase of $2.2 million (17.7%) from fiscal 1996. As a percentage of net sales, these expenses increased to 17.1% from 17.0% in the prior year period. Warranty costs as a percent of sales decreased from the prior year period, however this was offset by higher corporate expenses including training and Total Quality Management costs. The Company earned an operating income of $2.8 million in the second quarter of fiscal 1997 or 3.3% of net sales. This compares to an operating income of $1.9 million or 2.6% of net sales in the prior year period. Interest and other income contributed $240,000 to earnings in the second quarter of fiscal 1997, compared to $134,000 in the prior year period. This 79.1% increase is the result of larger earnings available for investment. We don't expect this to continue due to utilization of cash for capital expenditures. Pre-tax income for the second quarter of fiscal 1997 was $3.0 million compared to $2.0 million in the prior year period. Net income in the second quarter of fiscal 1997 was a record second quarter of $1.8 million ($0.47 per common share), compared to a net income of $1.2 million ($0.31 per common share) in the second quarter of fiscal 1996. We are uncertain whether this 51.2% increase in earning will continue. SIX MONTHS ENDED DECEMBER 28, 1996 COMPARED TO SIX MONTHS ENDED DECEMBER 30, 1995. Net Sales in the first six months of fiscal 1997 were $178.7 million, which represented an increase of $24.9 million (16.2%) from the first six months of fiscal 1996. Again, this increase was due to utilization of our plant expansions and strong market conditions, combined with a broader product line offering in certain regions. The average selling price per section increased by 0.8% from the same time a year earlier. Total sections sold in the first six months of fiscal 1997 were 8,546, an increase of 1,135 sections (15.3%) from the prior year period. Multi-section homes represented 68.9% of the homes sold during the first six months of fiscal 1997, compared to 61.7% in fiscal 1996. 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 1997 was $140.7 million, which represented an increase of $17.7 million (14.4%) from the first six months of fiscal 1996. Cost of goods sold as a percentage of net sales decreased from 80.0% in fiscal 1996 to 78.7% in fiscal 1997. This decrease was due primarily to decreased material costs. Again, the decrease in material costs as a percent of sales was a result of improved corporate purchasing procedures. Selling, General, and Administrative Expenses for the first six months of fiscal 1997 were $29.8 million, which represented an increase of $4.2 million (16.4%) from fiscal 1996. As a 7 8 percentage of net sales, these expenses increased to 16.7% from 16.6% in the prior year period. Again, warranty costs as a percent of sales decreased from the prior year period, however this was offset by higher dealer volume rebates and corporate expenses including training and Total Quality Management costs. The Company earned an operating income of $8.2 million in the first six months of fiscal 1997 or 4.6% of net sales. This compares to an operating income of $5.2 million or 3.4% of net sales in the prior year period. Interest and other income contributed $372,000 to earnings in the first six months of fiscal 1997, compared to $147,000 in the prior year period. This increase is the result of larger earnings available for investment. We don't expect this to continue at such a high rate due to utilization of cash for capital expenditures. Pre-tax income for the first six months of fiscal 1997 was $8.5 million compared to $5.3 million in the prior year period. Net income in the first six months of fiscal 1997 was $5.0 million ($1.32 per common share), compared to a net income of $3.1 million ($0.81 per common share) in the first six months of fiscal 1996. We are uncertain whether this increase in earning will continue. LIQUIDITY AND CAPITAL RESOURCES At the end of the current quarter, the Company had no outstanding borrowings under its credit facility, which remained unchanged from the balance at June 29, 1996. At the end of the quarter, total long-term debt was $625,000, a decrease of $59,000 compared to the balance at June 29, 1996. The Company's unsecured credit facility expiring January 31, 2000 permits borrowings of up to $10,000,000. Capital expenditures for the first six months of fiscal 1997 were $3,621,000, compared to $1,689,000 from the prior year period. 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. We are aware that materials prices may increase, and have assumed that we will have no undue difficulty passing on those costs without adversely affecting sales. We have also assumed that employee relations continue to be favorable, that orders on hand are not canceled by dealers, and that no unusual workers' compensation or other legal claim adversely affects the corporation. In the short term, weather factors are often more significant in winter, and may severely restrict shipment and manufacture of houses. New housing starts have declined recently, and Schult is experiencing soft markets in certain regions along with the rest of the industry. Rising interest rates may adversely affect financing and sales, and uncertainty about rates continues. 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 many unforeseen events and conditions beyond the control of manufacturers. We do not intend to update statements made in this report. 8 9 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES On January 23, 1997, the Company announced a six-for-five stock split. The additional shares will be distributed on February 28, 1997 to shareholders of record as of the close of business on February 14, 1997. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On October 24, 1996, 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 shareholders also approved the 1996 Directors' Deferred Compensation Plan. 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 11, 1997 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. 6-MOS JUN-28-1997 JUN-29-1996 DEC-28-1996 1 8,768 0 13,209 65 18,281 45,617 37,937 0 89,801 43,713 625 0 0 7,934 34,778 89,801 178,667 178,667 140,707 29,775 0 0 (41) 8,516 3,552 4,964 0 0 0 4,964 1.32 1.32
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