-----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, JC5NRArdLLgMB3tx/l6sm/eFNQsKuL65ZDSicWXQgE5QC5FkvXefcA+QhBxGUcTL bkuyRq80bJAzeuKi2BXG+g== 0000892569-96-002489.txt : 19961204 0000892569-96-002489.hdr.sgml : 19961204 ACCESSION NUMBER: 0000892569-96-002489 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961121 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MODTECH INC CENTRAL INDEX KEY: 0000864601 STANDARD INDUSTRIAL CLASSIFICATION: 2452 IRS NUMBER: 330044888 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18680 FILM NUMBER: 96670241 BUSINESS ADDRESS: STREET 1: 2830 BARRETT AVE STREET 2: PO BOX 1240 CITY: PERRIS STATE: CA ZIP: 92572 BUSINESS PHONE: 9099434014 MAIL ADDRESS: STREET 1: 2830 BARRETT AVENUE STREET 2: P O BOX 1240 CITY: PERRIS STATE: CA ZIP: 92572 10-Q 1 QUARTERLY REPORT FOR THE QUARTER ENDED 9/30/96 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended September 30, 1996 Commission File Number 000-18680 MODTECH, INC. CALIFORNIA 33-0044888 - - ------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2830 Barrett Avenue, Perris, CA 92572 - - ------------------------------- -------------------- (Address of principal (Zip Code) executive office) Registrant's telephone number: (909) 943-4014 (Former name, former address and former fiscal year, if changed since last report) 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 X No --- --- As of September 30, 1996, there were 6,429,166 shares of the Registrant's Common Stock outstanding. 2 MODTECH, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 PART I. STATEMENT REGARDING FINANCIAL INFORMATION The financial statements included herein have been prepared by MODTECH, INC. (The "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been omitted pursuant to such rules and regulations. However, the company believes that the financial statements, including the disclosures herein, are adequate to make the information presented not misleading. It is suggested that the financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual report on Form 10-K for the year ended December 31, 1995 as filed with the Securities and Exchange Commission. 3 MODTECH, INC. CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Nine Months Ended Months Ended September 30, September 30, ----------------------------- ----------------------------- 1995 1996 1995 1996 ----------- ----------- ----------- ----------- NET SALES $ 6,758,000 $14,285,000 $16,135,000 $26,989,000 COST OF SALES 5,800,000 12,164,000 13,784,000 23,026,000 ----------- ----------- ----------- ----------- Gross profit 958,000 2,121,000 2,351,000 3,963,000 OPERATING EXPENSES Selling, general & administrative 328,000 623,000 1,186,000 1,471,000 ----------- ----------- ----------- ----------- Income (loss) from operations 630,000 1,498,000 1,165,000 2,492,000 OTHER INCOME (EXPENSE) Interest expense, net (182,000) (142,000) (420,000) (246,000) Other - net 9,000 22,000 13,000 41,000 ----------- ----------- ------------ ----------- (173,000) (120,000) (407,000) (205,000) ----------- ----------- ----------- ----------- Income before income taxes 457,000 1,378,000 758,000 2,287,000 PROVISION FOR INCOME TAXES, (Benefit) 0 49,000 0 69,000 ----------- ----------- ----------- ----------- Net income 457,000 1,329,000 758,000 2,218,000 ----------- ----------- ----------- ----------- 5% Convertible preferred stock dividend - - - 48,000 ----------- ----------- ----------- ----------- Net income available for common stock $ 457,000 $ 1,329,000 $ 758,000 $ 2,170,000 =========== =========== =========== =========== Primary Earnings per share $ 0.07 $ 0.14 $ 0.12 $ 0.24 ----------- ----------- ----------- ----------- Weighted average shares outstanding 6,550,000 9,200,000 6,550,000 9,200,000 ----------- ----------- ----------- ----------- Fully diluted Earnings per share $ 0.07 $ 0.14 $ 0.12 $ 0.24 ----------- ----------- ----------- ----------- Weighted average shares outstanding 6,550,000 9,200,000 6,550,000 9,200,000 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these condensed financial statements. 4 MODTECH, INC. CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 31 SEPTEMBER 30 1995 1996 ----------- ------------ ASSETS CURRENT ASSETS Cash $ 561,000 $ 1,501,000 Accounts receivable, net, including costs in excess of billings of $1,454,000 and $3,432,000 4,623,000 14,353,000 Inventories 646,000 3,091,000 Note receivable from affiliates 483,000 - Due from affiliates 765,000 986,000 Other current assets 125,000 122,000 ----------- ----------- Total current assets 7,203,000 20,053,000 PROPERTY AND EQUIPMENT, NET 7,516,000 7,907,000 OTHER ASSETS Notes Receivable from affiliates 238,000 - Deposits and other assets 197,000 245,000 ----------- ----------- 435,000 245,000 ----------- ----------- $15,154,000 $28,205,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 2,061,000 $ 7,307,000 Current portion of long-term debt - 100,000 Billings in excess of costs 760,000 2,003,000 ----------- ----------- Total current liabilities 2,821,000 9,410,000 ----------- ----------- LONG-TERM DEBT 3,590,000 7,184,000 ----------- ----------- STOCKHOLDERS' EQUITY Convertible preferred stock, Series A, shares authorized, 5,000,000, issued and outstanding 2,850,000 in 1995 2,685,000 - Common stock, shares authorized, 20,000,000,000; issued and outstanding, 3,053,350 and 6,429,166 in 1995 and 1996 1,055,000 2,363,000 Additional paid-in capital 13,619,000 15,693,000 Retained earnings (8,616,000) (6,445,000) ----------- ----------- Total stockholders' equity 8,743,000 11,611,000 ----------- ----------- $15,154,000 $28,205,000 =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 5 MODTECH, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED -------------------------------- SEPTEMBER 30, SEPTEMBER 30, 1995 1996 ------------ ------------ Operating activities Net income $ 758,000 $ 2,219,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 336,000 384,000 Loss (gain) on sale of equipment (41,000) (5,000) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (2,461,000) (9,730,000) (Increase) decrease in inventory 242,000 (2,445,000 (Increase) in prepaid expenses and other assets 79,000 (45,000) Increase (decrease) in accounts payable and accrued liabilities 866,000 5,246,000 Increase (decrease) billings in excess of earnings 297,000 1,243,000 (Increase) decrease in due from affiliates (440,000) 500,000 ----------- ----------- Net cash used in operating (364,000) (2,633,000) ----------- ----------- Investing activities: Proceeds from sale of equipment 46,000 12,000 Purchase of property and equipment (175,000) (782,000) ----------- ----------- Net cash used in investing activities (129,000) (770,000) ----------- ----------- Financing activities: (Payments) proceeds from long-term borrowing and revolving credit line 2,097,000 3,694,000 Conversion of stock warrants and options - 697,000 Declared dividends - (48,000) ----------- ----------- Net cash provided by financing activities 2,022,000 4,343,000 ----------- ----------- Increase, (Decrease) in cash 1,529,000 940,000 Cash and cash equivalents, at beginning of period 836,000 561,000 ----------- ----------- Cash and cash equivalents, at end of period $ 2,365,000 $ 1,501,000 =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 6 MODTECH, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1996 1) Management Opinion In the opinion of management, the condensed financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods presented. The results of operations for the three and nine months ended September 30, 1996 are not necessarily indicative of the results to be expected for the full fiscal year. 2) Taxes on Income Certain items of income and expense are recorded on different bases for financial statement and income tax reporting. Deferred state income taxes have been provided for the effects of these temporary differences. 3) Earnings Per Share Earnings per share is computed on the basis of the weighted average number of common equivalent shares outstanding during each year. It is assumed that all dilutive stock options are exercised at the grant date and that the proceeds are used to purchase shares of the Company's common stock at the public market price of $8.00 per share. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth certain items in the Consolidated Statements of Income as a percent of net sales.
Percent Percent of Net Sales of Net Sales -------------------- -------------------- Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 1995 1996 1995 1996 ------ ------- ------ ------ Net sales 100.0% 100.0% 100.0% 100.0% Gross profit 14.2 14.8 14.6 14.7 Selling, general and administrative 4.9 4.3 7.4 5.5 Income, (loss) from operations 9.3 10.5 7.2 9.2 Interest income (expense), net (2.7) (0.9) (2.6) (0.9) Income, (loss) before taxes on income 6.8 9.6 4.7 8.5
The net sales for the three months ended September 30, 1996 increased $7,527,000 or 111%. Net sales for the nine months ended September 30, 1996, increased 10,854,000 or 67%. The increases were primarily due to the economic recovery of California and the implementation of California's class size reduction program. Gross profit as a percentage of net sales for the three month ended September 30, 1996 increased 0.6% and the nine months ended September 30, 1996 gross profit percentage increased 0.1%. The slight increases were due to product mix. Selling, general and administrative expense increased for the three months ended September 30, 1996 by $295,000, an increase of 90%. Costs for the nine months ended September 30, 1996 increased $285,000, an increase of 24%. The increase is due to the increase in sales volume. Due to decreased interest rates and average amounts outstanding net interest expense for the three and nine months of 1996 decreased $40,000 and $174,000 or 22% and 41%, respectively. The Company continues to borrow under its revolving line of credit to support its accounts receivable and work-in-progress inventories. See "Liquidity and Capital Resources". Inflation In the past, the Company has not been adversely affected by inflation because it has been generally able to pass along to its customers increases in the costs of labor and materials. 8 Liquidity and Capital Resources Operating Activities To date, the Company has generated cash to meet its needs from operations, borrowings, private financing and its initial public offering. At September 30, 1996, the Company had $1,501,000 in cash. During the nine months ended September 30, 1996 the Company used cash to decrease its borrowings and trade payables as well as finance trade receivables. The Company has a revolving loan commitment that will expire September 1998. The Company is entitled to borrow, from time to time up to $10,000,000 with actual borrowings limited to specified percentages of eligible accounts receivables, equipment and inventories. On September 30, 1996, $5,284,000 was outstanding under the loan agreement. During the quarter certain directors and officers of the company as well as other option holders exercised 60,000 options for a total of $161,900. Investing Activities During the three months ending September 30, 1996, the Company had negligible investment activity. Management believes that the Company's existing product lines and manufacturing capacity will enable the Company to generate sufficient cash through operations, supplemented by periodic use of its existing bank line of credit, to finance the Company's business at current levels over the next 12 months. Additional cash resources may be required if the company is able to expand its business beyond current levels. For example, it will be necessary for the company to construct or acquire additional manufacturing facilities in order for the Company to compete effectively in new market areas or states which are beyond a 300 mile radius from one of its production facilities. The construction or acquisition of new facilities would require significant additional capital. For these reasons, among others, the Company may need additional debt or equity financing in the future. There can be, however, no assurance that the Company will be successful in obtaining such additional financing, or that any such financing will be available on terms acceptable to the Company. 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 -- Financial Data Schedule (b) Reports on From 8-K Attached 10 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. MODTECH, INC. Date: November 5, 1995 By: /s/ MICHAEL G. RHODES ----------------------- Michael G. Rhodes Chief Operating Officer Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 SEP-30-1996 1,501,000 0 14,353,000 0 3,091,000 20,053,000 7,907,000 0 28,205,000 9,410,000 7,184,000 0 0 11,611,000 0 28,205,000 26,989,000 26,989,000 23,026,000 23,026,000 1,471,000 0 246,000 2,287,000 69,000 2,218,000 0 0 0 2,218,000 .24 .24
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