Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________to__________________
Commission file number 1-7160
COACHMEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1101097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
601 EAST BEARDSLEY AVENUE, ELKHART, INDIANA 46514
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 219-262-0123
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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
At April 30, 1995:
Common Shares, without par value 7,440,251 shares outstanding
Rights to purchase Common Shares 7,440,251 rights outstanding
The index is at page 2 in the sequential numbering system
Page 1 of 13 pages
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COACHMEN INDUSTRIES, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Financial Statements:
Consolidated Balance Sheets-
March 31, 1995 and December 31, 1994....................3-4
Consolidated Statements of Income-
Three Months Ended March 31, 1995 and 1994.............. 5
Consolidated Statements of Cash Flows-
Three Months Ended March 31, 1995 and 1994.............. 6
Condensed Notes to Consolidated Financial Statements....7-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................9-12
PART II. OTHER INFORMATION.................................... 13
SIGNATURES..................................................... 13
Page 2 of 13 pages
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COACHMEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1995 1994
ASSETS
CURRENT ASSETS
Cash and temporary cash investments $ 8,991,859 $ 19,534,385
Investments 800,000 800,000
Trade receivables and current portion of
notes receivable, less allowance for
doubtful receivables 1995 - $711,000 and
1994 - $986,000 30,768,896 15,410,757
Other receivables 1,512,980 2,121,910
Inventories 53,251,111 48,152,342
Prepaid expenses and other 1,064,548 1,179,475
Deferred income taxes 1,954,000 1,954,000
Total current assets 98,343,394 89,152,869
PROPERTY AND EQUIPMENT, at cost
Land and improvements 4,880,471 4,646,331
Buildings and improvements 26,918,139 20,618,726
Machinery and equipment 9,139,432 8,316,127
Transportation equipment 8,093,014 6,978,543
Office furniture and fixtures 3,999,311 3,795,421
Total property and equipment, at cost 53,030,367 44,355,148
Less, Accumulated depreciation 25,841,450 25,144,558
Total net property and equipment 27,188,917 19,210,590
OTHER ASSETS
Notes receivable 286,130 288,767
Real estate held for sale, less
accumulated depreciation 3,458,793 3,458,883
Rental properties, less
accumulated depreciation 1,771,998 1,796,193
Unexpended industrial revenue bond
proceeds 930,222 3,337,122
Intangibles, less accumulated amortization
1995 - $138,086 and 1994 - $108,151 4,654,766 327,121
Deferred income taxes 1,493,000 1,493,000
Other 5,973,001 5,956,737
Total other assets 18,567,910 16,657,823
TOTAL ASSETS $144,100,221 $125,021,282
The accompanying notes are part of the consolidated financial statements.
Page 3 of 13 pages
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COACHMEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (CONT'D)
MARCH 31, DECEMBER 31,
1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,712,414 $ 1,530,553
Accounts payable, trade 23,650,343 20,398,679
Accrued wages, salaries and commissions 2,303,343 3,075,622
Accrued dealer incentives 2,210,993 2,071,042
Accrued warranty expense 3,519,907 2,710,068
Other accrued expenses 10,269,411 6,304,825
Accrued income taxes 3,171,123 1,728,200
Total current liabilities 47,837,534 37,818,989
LONG-TERM DEBT 12,941,124 7,023,394
OTHER 5,626,117 5,422,953
Total liabilities 66,404,775 50,265,336
SHAREHOLDERS' EQUITY
Common shares, without par value: authorized
30,000,000 shares; issued 1995 - 9,110,159
shares and 1994 - 9,073,696 shares 36,843,163 36,600,387
Additional paid-in capital 1,433,751 1,431,055
Retained earnings 55,044,097 52,359,629
Total shareholders' equity before
treasury shares 93,321,011 90,391,071
Less, Cost of shares reacquired for the
treasury 1995 - 1,674,116 shares and
1994 - 1,674,821 shares 15,625,565 15,635,125
Total shareholders' equity 77,695,446 74,755,946
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $144,100,221 $125,021,282
The accompanying notes are part of the consolidated financial statements.
Page 4 of 13 pages
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COACHMEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS
ENDED MARCH 31,
1995 1994
Net sales $131,770,379 $ 93,635,237
Cost of goods sold 115,208,267 81,524,099
Gross profit 16,562,112 12,111,138
Operating expenses:
Selling and delivery 6,482,492 4,866,151
General and administrative 4,627,614 3,964,554
Total operating expenses 11,110,106 8,830,705
Operating income 5,452,006 3,280,433
Nonoperating income (expense):
Interest expense (728,332) (359,526)
Interest income 171,405 71,728
Gain on sale of property, net 18,592 74,631
Other, net 172,793 246,519
Total nonoperating income (expense) (365,542) 33,352
Income before income taxes 5,086,464 3,313,785
Income taxes 1,883,000 693,000
Net income $ 3,203,464 $ 2,620,785
Net income per common share $ .43 $ .36
Weighted average number of
common shares outstanding 7,415,985 7,340,130
Cash dividends per common share $ .07 $ .06
The accompanying notes are part of the consolidated financial statements.
Page 5 of 13 pages
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COACHMEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS
ENDED MARCH 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by (used in)
operating activities $(2,234,613) $ 2,715,789
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of property and equipment, real
estate held for sale and rental
properties 482,079 768,340
Sale of investments 13,888 1,629,661
Acquisitions of property and equipment (5,155,669) (1,423,900)
Acquisition of a business, net of
cash acquired (4,654,877) -
Collections on notes receivable, net 2,637 1,151,062
Unexpended industrial revenue bond proceeds 2,406,900 -
Other 165,931 (88,617)
Net cash provided by (used in) investing
activities (6,739,111) 2,036,546
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of short-term borrowings (900,000) -
Payments of long-term debt (392,582) (365,112)
Cash dividends paid (518,996) (440,454)
Proceeds from sale of common shares 242,776 126,111
Net cash used in financing activities (1,568,802) (679,455)
Increase (decrease) in cash and temporary
cash investments (10,542,526) 4,072,880
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 19,534,385 2,200,911
End of period $ 8,991,859 $ 6,273,791
Non-cash investing and financing activities:
Liabilities assumed in acquisition of a business $ 8,757,472
Long-term debt issued in conjunction with
acquisition of a business $ 6,141,129
The accompanying notes are part of the consolidated financial statements.
Page 6 of 13 pages
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COACHMEN INDUSTRIES, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet data as of December 31, 1994 was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
2. In the opinion of management, the information furnished herein
includes all adjustments of a normal and recurring nature necessary
to reflect a fair statement of the interim periods reported. The
results of operations for the three-month period ended March 31,
1995 are not necessarily indicative of the results to be expected
for the full year.
3. Inventories consist of the following:
March 31, December 31,
1995 1994
Raw material $ 19,772,058 $ 15,751,077
Work in-process 6,246,748 5,053,551
Finished goods 27,232,305 27,347,714
Total inventories $ 53,251,111 $ 48,152,342
4. The provision for income taxes consists of the following:
March 31, March 31,
1995 1994
Federal $ 1,726,000 $ 629,000
State 157,000 64,000
Total provision $ 1,883,000 $ 693,000
At December 31, 1993, the Company had net deferred tax assets not
previously reinstated to the balance sheet of approximately $1.3
million. During the three months ended March 31, 1994, the Company
recognized additional net deferred tax assets of approximately $.5
million. The federal and state income tax provisions for the quarter
ended March 31, 1994 were reduced by corresponding credits for
deferred income taxes, representing the reduction of the valuation
allowance to recognize deferred income tax assets.
5. The Company was contingently liable at March 31, 1995 to banks and
other financial institutions on repurchase agreements in connection
with financing provided by such institutions to most of the
Company's independent dealers in connection with their purchase of
the Company's recreational vehicle products. These agreements
provide for the Company to repurchase its products from the
financing institution in the event that they have repossessed them
upon a dealer's default. The risk of loss resulting from these
agreements is spread over the Company's numerous dealers and is
further reduced by the resale value of the products repurchased.
Page 7 of 13 pages
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The Company is involved in various legal proceedings which are
ordinary litigations incidental to the industry and which are
covered in whole or in part by insurance. Management believes that
any liability which may result from these proceedings will not be
significant.
6. On January 3, 1995, the Company acquired all of the outstanding
capital stock of Georgie Boy Mfg., Inc., ("Georgie Boy") a
manufacturer of Class A motorhomes. The purchase price aggregated
$12.8 million and consisted of $6.7 million in cash and a $6.1
million promissory note payable to the seller. The promissory note
bears interest at the prime rate, payable monthly, with annual
principal installments of $1,000,000 commencing January 3, 1996 with
the balance due January 3, 2001.
The acquisition was accounted for using the purchase method and the
operating results of Georgie Boy have been included in the Company's
1995 consolidated financial statements since the date of
acquisition. The excess of the purchase price over the acquired
tangible and intangible net assets of approximately $4.4 million
was charged to goodwill and is being amortized on a straight-line
basis over forty years. The purchase price allocation is based on
preliminary estimates and is subject to adjustment as additional
information becomes available in 1995. Unaudited pro forma financial
information for 1994, as if this acquisition had occurred on
January 1, 1994, is as follows:
Pro Forma
Three Months Ended
March 31, 1994
(Unaudited)
Net sales $115,648,232
Pro forma net income 3,075,476
Pro forma net income per share .42
The unaudited pro forma data shown above is not necessarily
indicative of the consolidated results that would have occurred
had the acquisition taken place on January 1, 1994, nor are they
necessarily indicative of the results that may occur in the
future.
Page 8 of 13 pages
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COACHMEN INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition, results of
operations and cash flows during the periods included in the accompanying
consolidated financial statements.
A summary of the changes in the principal items included in the consolidated
statements of income is shown below.
Comparison of
Three Months Ended
March 31, 1995 and 1994
Increases (Decreases)
Net sales $ 38,135,142 40.7%
Cost of goods sold 33,684,168 41.3
Selling and delivery expense 1,616,341 33.2
General and administrative expense 663,060 16.7
Interest expense 368,806 102.6
Interest income 99,677 139.0
Gain on sale of property, net (56,039) (75.1)
Other, net (73,726) (29.9)
Income before income taxes 1,772,679 53.5
Income taxes 1,190,000 171.7
Net income 582,679 22.2
Page 9 of 13 pages
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NET SALES
Consolidated net sales for the quarter ended March 31, 1995 were
$131,770,379, an increase of 40.7% over the $93,635,237 reported for the
corresponding quarter last year. The Company's vehicle segment, which
includes the parts and supply group of companies, experienced a net sales
increase of 39.1% and the Company's housing segment had a net sales increase
of 54.2%. Vehicle segment sales for the 1995 quarter were boosted by the
inclusion of the sales of Georgie Boy Mfg., Inc. ("Georgie Boy"), a
manufacturer of Class A motorhomes, since its acquisition on January 3, 1995.
In addition, the 1994 quarter included the sales of Southern Ambulance
Builders, Inc. which was sold April 29, 1994. After eliminating the net sales
of both Georgie Boy from the first quarter of 1995 and the net sales of
Southern Ambulance from the first quarter of 1994, the Company's vehicle
segment experienced a net sales increase of 20.6%. Both vehicles and housing
experienced increases in unit sales and unit sales prices, as well as
increases in market share.
COST OF GOODS SOLD
Cost of goods sold increased 41.3% or $33,684,168 for the first quarter of
1995 over 1994. The increase is generally in line with the increase in net
sales. The slightly higher increase than the increase in net sales is
substantially due to the increase in motorized sales as a result of the
acquisition of Georgie Boy. Motorized products generally have a higher cost
of goods manufactured as a percentage of net sales due to the chassis cost.
SELLING AND DELIVERY EXPENSE
As a percentage of net sales, selling and delivery expenses were 4.9% and
5.2% for 1995 and 1994, respectively. Delivery expenses decreased $53,801 or
.1% of net sales. An increase in net sales usually leads to more efficient
utilization of transportation equipment. In addition, these expenses
fluctuate with sales mix, as well as changes in geographical areas to which
products are delivered. Selling expenses decreased .2% as a percentage of net
sales. This decrease was primarily the result of increased demand for the
Company's products, a focus on reducing selling expenses where practical and
concentration on competitive pricing.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $4,627,614 or 3.5% of net sales for
the 1995 three months compared to $3,964,554 or 4.2% for the corresponding
1994 three months. A decrease in the percent usually accompanies an increase
in net sales due to the fixed nature of the expenses in this category. The
most substantial portion of the increase in dollars is in administrative
salaries and payroll taxes due to the acquisition of Georgie Boy, All
American Homes in North Carolina (assets acquired in September, 1994) and the
start-up of a new manufacturing facility for All American Homes in Tennessee,
all subsequent to the first quarter of 1994.
Page 10 of 13 pages
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INTEREST EXPENSE
Interest expense was $728,332 in 1995 compared to $359,526 the prior year.
This increase is primarily due to increases in long-term debt from the
acquisition of Georgie Boy, the start-up of All American Homes in North
Carolina and the economic development bond obtained for construction of the
All American Homes Tennessee facility. There has also been a general increase
in interest rates subsequent to the 1994 quarter.
INTEREST INCOME
Interest income increased $99,677 for the 1995 quarter compared to 1994. The
amount is indicative of the increase in cash and temporary cash investments
in 1995 over the 1994 quarter. This increase in cash and temporary cash
investments was basically generated from operating activities throughout 1994.
GAIN ON THE SALE OF PROPERTY, NET
The net gain on sale of property for the first quarter of 1995 was $56,039
lower than in 1994. This variance was substantially the result of the sale
of miscellaneous small properties located in the State of Indiana during the
1994 quarter.
OTHER, NET
Other income, net, represented income in the amount of $172,793 and $246,519
for the first three months of 1995 and 1994, respectively. The decrease from
1994 was due to the gain on sale of common stock investments in the 1994
quarter.
INCOME TAXES
During the first quarter of 1995, the effective income tax rate was 37.0%
compared to an effective income tax rate of 20.9% for the same quarter in
1994. As a result of available federal tax loss carryforwards, no federal
income tax provision was recorded in 1993 and net deferred tax assets were
fully reserved for by a valuation allowance. During the first quarter of
1994, the effective federal tax rate was low due to the reduction of the
federal tax provision by a deferred tax credit of approximately $.5 million,
resulting from the elimination of the remaining valuation allowance.
Page 11 of 13 pages
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LIQUIDITY AND CAPITAL RESOURCES
The Company generally relies on funds from operations as its primary source
of liquidity. In addition, the Company maintains an unsecured committed line
of credit, which totaled $20 million at March 31, 1995, to meet its seasonal
working capital needs. At March 31, 1995, there were no borrowings against
this line of credit. The Company experienced a net cash use of $10,542,526
for the 1995 quarter, principally from investing activities. This consisted
mainly of the acquisition of property and equipment for start-up of the All
American Homes, Tennessee modular housing division and the January 3, 1995
acquisition of Georgie Boy. Operating activities consumed cash due primarily
to a substantial increase in accounts receivable resulting from the increase
in net sales. This was partially offset by cash provided by an increase in
accounts payable and a decrease in inventories. Cash flows from operating
activities reflect the operations of Georgie Boy from January 3, 1995. All
assets and liabilities of Georgie Boy acquired are excluded from operating
cash flows. Financing activities also consumed cash for dividends, payments
of long-term debt and the repayment of short-term borrowings assumed with the
acquisition of Georgie Boy. At March 31, 1995, the working capital decreased
$.8 million from December 31, 1994 to $50.5 million.
Page 12 of 13 pages
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
A Current Report on Form 8-K was filed on January 16, 1995 relating
to the Company's acquisition of the outstanding capital stock of Georgie Boy
Mfg., Inc. on January 3, 1995.
A Current Report on Form 8-K/A was filed on April 23, 1995
pursuant to the requirements of Item 7, Financial Statements and
Exhibits, relating to the Company's acquisition of the outstanding
capital stock of Georgie Boy Mfg., Inc. on January 3, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
COACHMEN INDUSTRIES, INC.
(Registrant)
Date May 12, 1995 GARY L. GROOM
Gary L. Groom, Executive Vice
President - Finance (Principal
Financial Officer)
Date May 12, 1995 WILLIAM M. ANGELO
William M. Angelo, Corporate
Controller (Principal Accounting
Officer)
Page 13 of 13 pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of income and consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000021212
<NAME> COACHMEN INDUSTRIES, INC.
<MULTIPLIER> 1000
<S> <C>
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<PERIOD-END> MAR-31-1995
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<RECEIVABLES> 32,993
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<TOTAL-ASSETS> 144,100
<CURRENT-LIABILITIES> 47,838
<BONDS> 12,941
<COMMON> 21,218
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<OTHER-SE> 56,478
<TOTAL-LIABILITY-AND-EQUITY> 144,100
<SALES> 131,770
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