-----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, M530tu6RvbrbtufmphRJiWMuIHnGQSKT6ZBFRwW+uJrWt8cH38Q1phSarVjCbzWp qvlQ8oKMtabrqEjPaMKE6g== 0000892569-97-003211.txt : 19971117 0000892569-97-003211.hdr.sgml : 19971117 ACCESSION NUMBER: 0000892569-97-003211 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MODTECH INC CENTRAL INDEX KEY: 0000864601 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED WOOD BLDGS & COMPONENTS [2452] IRS NUMBER: 330044888 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18680 FILM NUMBER: 97718813 BUSINESS ADDRESS: STREET 1: 2830 BARRETT AVE STREET 2: PO BOX 1240 CITY: PERRIS STATE: CA ZIP: 92370 BUSINESS PHONE: 9099434014 MAIL ADDRESS: STREET 1: 2830 BARRETT AVENUE STREET 2: P O BOX 1240 CITY: PERRIS STATE: CA ZIP: 92370 10-Q 1 FORM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1997 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, 1997 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 executive (Zip Code) 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, 1997, there were 8,705,836 shares of the Registrant's Common Stock outstanding. 2 MODTECH, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997 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, 1996 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, 1996 1997 1996 1997 - ----------------------------------------------------------------------------------------------------------------------------- NET SALES $14,285,000 $39,805,000 $26,989,000 $98,711,000 COST OF SALES 12,164,000 31,235,000 23,026,000 78,923,000 ----------- ----------- ----------- ----------- Gross profit 2,121,000 8,570,000 3,963,000 19,788,000 OPERATING EXPENSES Selling, general & administrative 623,000 1,362,000 1,471,000 3,544,000 ----------- ----------- ----------- ----------- Income (loss) from operations 1,498,000 7,208,000 2,492,000 16,244,000 OTHER INCOME (EXPENSE) Interest expense, net (142,000) (274,000) (246,000) (823,000) Other - net 22,000 8,000 41,000 72,000 ----------- ----------- ----------- ----------- (120,000) (266,000) (205,000) (751,000) ----------- ----------- ----------- ----------- Income before income taxes 1,378,000 6,942,000 2,287,000 15,493,000 PROVISION FOR INCOME TAXES, (Benefit) 49,000 2,456,000 69,000 5,812,000 ----------- ----------- ----------- ----------- Net income 1,329,000 4,486,000 2,218,000 9,681,000 ----------- ----------- ----------- ----------- 5% Convertible preferred stock dividend -- -- (48,000) -- ----------- ----------- ----------- ----------- Net income available for common stock $ 1,329,000 $ 4,486,000 $ 2,170,000 9,681,000 =========== =========== =========== =========== Primary Earnings per share $ 0.14 $ 0.47 $ 0.24 $ 1.01 ----------- ----------- ----------- ----------- Weighted average shares outstanding 9,200,000 9,611,000 9,200,000 9,611,000 ----------- ----------- ----------- ----------- Fully diluted Earnings per share $ 0.14 $ 0.45 $ 0.24 $ 1.00 ----------- ----------- ----------- ----------- Weighted average shares outstanding 9,200,000 9,647,000 9,200,000 9,647,000 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these condensed financial statements. 4 MODTECH, INC. CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 31 SEPTEMBER 30 1996 1997 - --------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash $ 405,000 $ 515,000 Accounts receivable, net, including costs in excess of billings of $9,103,000 and $15,615,000 19,433,000 41,212,000 Inventories 4,167,000 5,561,000 Due from affiliates 799,000 1,289,000 Other current assets 137,000 237,000 ----------- ----------- Total current assets 24,941,000 48,814,000 PROPERTY AND EQUIPMENT, NET 8,888,000 9,003,000 OTHER ASSETS Deposits and other assets 200,000 135,000 ----------- ----------- 200,000 135,000 ----------- ----------- $34,029,000 $57,952,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 9,545,000 $ 12,800,000 Current portion of long-term debt 100,000 100,000 Billings in excess of costs 1,148,000 5,975,000 ------------ ------------ Total current liabilities 10,793,000 18,875,000 ------------ ------------ LONG-TERM DEBT 7,844,000 13,908,000 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, shares authorized, 20,000,000,000; issued and outstanding, 8,649,436 and 8,705,836 in 1996 and 1997 4,015,000 4,060,000 Additional paid-in capital 15,693,000 15,744,000 Retained earnings ( 4,316,000) 5,365,000 ------------ ----------- Total stockholders' equity 15,392,000 25,169,000 ------------ ----------- $34,029,000 $57,952,000 =========== ===========
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, 1996 1997 - ----------------------------------------------------------------------------------------------------------------------------- Operating activities Net income (loss) $ 2,219,000 $ 9,681,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 384,000 866,000 Loss (gain) on sale of equipment (5,000) -- Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (9,730,000) (21,779,000) (Increase) decrease in inventory (2,445,000) (1,394,000) (Increase) in prepaid expenses and other assets (45,000) (35,000) Increase (decrease) in accounts payable and accrued liabilities 5,246,000 3,255,000 Increase (decrease) billings in excess of earnings 1,243,000 4,827,000 (Increase) decrease in due from affiliates 500,000 (490,000) ----------- ----------- Net cash used in operating (2,633,000) (5,069,000) ----------- ----------- Investing activities: Proceeds from sale of equipment 12,000 -- Purchase of property and equipment (782,000) (981,000) ----------- ----------- Net cash used in investing activities (770,000) (981,000) ----------- ----------- Financing activities: (Payments) proceeds from long-term borrowing and revolving credit line 3,694,000 6,064,000 Conversion of stock warrants and options 697,000 96,000 Declared dividends (48,000) -- ----------- ----------- Net cash provided by financing activities 4,343,000 6,160,000 ----------- ----------- Increase, (Decrease) in cash 940,000 110,000 Cash and cash equivalents, at beginning of period 561,000 405,000 ----------- ----------- Cash and cash equivalents, at end of period $ 1,501,000 $ 515,000 =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 6 MODTECH, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1997 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, 1997 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 $22.75 per share. 4) On November 6, 1997 the Company announced that it sold 1,000,000 shares of common stock and that certain selling shareholders sold 1,012,500 shares of common stock at $20.00 per share. The shares sold by the selling shareholders include 262,500 shares granted to the underwriters to cover over allotments. The aggregate net proceeds to the company (before deducting expenses) are estimated to be $18,900,000. The net proceeds of the shares offered by Modtech will be used to reduce Modtech, Inc.'s outstanding bank indebtedness and for other general corporate purposes. Modtech will not receive any of the proceeds from the sale of shares by the selling shareholders. 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, 1996 1997 1996 1997 ------------------ ------------------ Net sales 100.0% 100.0% 100.0% 100.0% Gross profit 14.8 21.5 14.7 20.0 Selling, general and administrative 4.4 3.4 5.5 3.6 Income, (loss) from operations 10.5 18.1 9.2 16.5 Interest income (expense), net (1.0) (0.7) (0.9) (0.8) Income, (loss) before taxes on income 9.6 17.4 8.5 15.7
The net sales for the three months and nine months ended September 30, 1997 increased $25,520,000 or 179% and $71,722,000 or 266% respectively. The increase in revenue is principally attributable to the economic recovery of California and the California Class Size Reduction Program. Gross profit as a percentage of net sales for the three month ended September 30, 1997 increased to 21.5% from 14.9% and the nine months ended September 30, 1997 increased to 20.1% from 14.7% over the same periods in 1996. The increase was due to the increased volume, utilization of a previously idle facility and the realization of manufacturing efficiencies. Selling, general and administrative expense increased for the three months ended September 30, 1997 by $739,000, an increase of 119%. Costs for the nine months ended September 30, 1997 increased $2,073,000, an increase of 141%. The increase is due to the increase in sales volume. Due to increased volume and average amounts outstanding net interest expense for the three and nine months ended September 30, 1997 increased by $132,000 and 577,000 or 93% and 235%, 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, bank borrowings and its initial public offering. At September 30, 1997, the Company had $515,000 in cash. During the nine months ended September 30, 1997 the Company provided cash in its operating activities. The Company has a revolving loan commitment that will expire September 1998. The Company is entitled to borrow, from time to time up to $20,000,000 with actual borrowings limited to specified percentages of eligible accounts receivables, equipment and inventories. On September 30, 1997, $12,633,000 was outstanding under the loan. During the three and nine months ended September 30, 1997, certain directors, officers or employees exercised 27,000 and 56,400 common stock options for a total of $17,010 and $77,898 respectively. 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 27 -- Financial Data Schedule (b) Reports on From 8-K Attatched 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 13, 1997 by: /s/ Michael G. Rhodes --------------------- ----------------------------- Michael G. Rhodes Chief Operating Officer Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 515,000 0 41,212,000 0 5,561,000 48,814,000 9,003,000 0 57,952,000 18,875,000 13,908,000 0 0 25,169,000 0 57,952,000 98,711,000 98,711,000 78,923,000 78,923,000 3,544,000 0 823,000 15,493,000 5,812,000 9,681,000 0 0 0 9,681,000 1.01 1.00
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