<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995
Commission File Number 0-8822
Cavco Industries, Inc.
- - - - - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Arizona 86-0214910
- - - - - - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
301 East Bethany Home Road, Suite C-178 Phoenix, Arizona 85012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 265-0580
n/a
- - - - - - --------------------------------------------------------------------------------
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 /_/
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
<TABLE>
<CAPTION>
Class Shares Outstanding
----- ------------------
<S> <C>
Common Stock, $.05 Par Value 3,382,977
</TABLE>
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
PART I. Consolidated Financial Information Page No.
--------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1995 and September 30, 1994 3-4
Consolidated Statements of Earnings
Three months and six months ended March 31, 1995 and 1994 5
Consolidated Statements of Cash Flows
Six months ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-9
PART II. Other Information 10
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
2
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
----------- -------------
<S> <C> <C>
Current Assets
Cash $ 367,509 9,006,600
Accounts and notes receivable 10,101,789 6,192,576
Inventories
Manufacturing:
Raw materials 2,513,186 2,314,623
Work in process 889,505 823,582
Held for sale or lease 1,337,639 2,287,635
Real estate held for sale 5,571,701 4,524,240
----------- ----------
Total inventories 10,312,031 9,950,080
----------- ----------
Prepaid expenses 984,661 461,515
Deferred tax charge 480,369 480,369
----------- ----------
Total current assets 22,246,359 26,091,140
----------- ----------
Property, plant and equipment, at cost 13,534,585 12,164,077
Less accumulated depreciation 4,171,588 3,634,192
----------- ----------
Net property, plant and equipment 9,362,997 8,529,885
----------- ----------
Assets under lease 10,622,186 3,728,294
Less accumulated depreciation 345,441 133,617
----------- ----------
Net assets under lease 10,276,745 3,594,677
----------- ----------
Notes receivable, net of current portion 1,365,662 1,425,243
Investment in partnerships 2,516,954 1,321,724
Other assets 632,378 915,844
----------- ----------
$46,401,095 41,878,513
=========== ==========
</TABLE>
3
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
------------ -------------
<S> <C> <C>
Current liabilities
Notes payable $ 1,110,275 1,654,490
Current installments of long term debt 925,189 1,875,189
Accounts payable 5,031,771 5,092,187
Accrued expenses 8,183,047 6,472,376
Income taxes (221,220) 2,625,680
------------ ----------
Total current liabilities 15,029,062 17,719,922
------------ ----------
Long term debt, excluding current installments 10,139,895 5,413,980
Other liabilities 698,100 599,067
Stockholders' equity:
Common stock, $.05 par value; 8,000,000 shares
authorized; 3,382,977 shares issued and
outstanding 169,149 169,149
Capital in excess of par 312,054 312,054
Retained earnings 20,052,835 17,664,341
------------ ----------
Net stockholders' equity 20,534,038 18,145,544
------------ ----------
$ 46,401,095 41,878,513
============ ==========
</TABLE>
4
<PAGE> 5
CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
<TABLE>
<CAPTION>
Three Month Period Six Month Period
Ended March 31, Ended March 31,
1995 1994 1995 1994
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net sales 28,506,700 24,247,343 58,647,361 45,467,173
Cost of sales 23,522,468 20,243,721 47,620,645 37,944,211
---------- ---------- ---------- ----------
Gross profit 4,984,232 4,003,622 11,026,716 7,522,962
Selling, general and administrative 3,399,842 2,500,316 6,805,813 4,684,472
expenses
---------- ---------- ---------- ----------
Operating income 1,584,390 1,503,306 4,220,903 2,838,490
Other income (expense)
Interest income 82,398 35,609 211,108 62,347
Interest expense (125,678) (112,076) (191,619) (208,156)
Miscellaneous 42,716 45,565 70,282 214,888
---------- ---------- ---------- ----------
(564) (30,902) 89,771 69,079
---------- ---------- ---------- ----------
Income from continuing operations 1,583,826 1,472,404 4,310,674 2,907,569
before income taxes
Income taxes 627,800 589,560 1,726,500 1,164,060
---------- ---------- ---------- ----------
Income from continuing operations 956,026 882,844 2,584,174 1,743,509
Income from discontinued operations,
net of taxes of ($19,500) and $45,500
(3 mos), and ($130,500) and $94,500
(6 mos) in 1995 and 1994, respectively (29,265) 68,233 (195,680) 141,625
---------- ---------- ---------- ----------
Net income 926,761 951,077 2,388,494 1,885,134
========== ========== ========== ==========
Income per share from continuing .28 .26 .76 .52
operations
========== ========== ========== ==========
Income per share from discontinued (.01) .02 (.06) .04
operations
========== ========== ========== ==========
Net income per share .27 .28 .70 .56
========== ========== ========== ==========
</TABLE>
5
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Net cash used in operations $(3,181,843) (550,694)
Cash flows from investing activities:
Purchases of property, plant and equipment (1,349,340) (857,429)
Purchases of assets under lease (7,220,956) (2,749,565)
Proceeds from sales of assets under lease 414,729 248,892
Proceeds from collections on notes receivable 1,040,017 130,930
(Additions to) proceeds from investment in partnership (1,195,230) 13,089
----------- ----------
Net cash used in investing activities (8,310,780) (3,214,083)
----------- ----------
Cash flows from financing activities:
Borrowings under lines of credit 606,413 2,968,806
Repayments on lines of credit (1,150,627) (311,611)
Proceeds from long term borrowings 3,750,000 1,498,713
Repayment of long term debt (352,254) (1,254,571)
----------- ----------
Net cash provided by financing activities 2,853,532 2,901,337
----------- ----------
Decrease in cash (8,639,091) (863,440)
Cash at beginning of period 9,006,600 1,378,804
----------- ----------
Cash at end of period $ 367,509 515,364
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for -
Interest $ 167,844 571,586
=========== ==========
Income taxes $ 4,252,500 1,309,000
=========== ==========
</TABLE>
6
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements include the accounts of the Company
and its subsidiaries, Action Healthcare Management Services, Inc.
(Action), Sun Built Homes, Inc. (Sun Built) and National Security
Containers, Inc. (NSC).
The information reflected in the consolidated financial statements has
not been examined by independent accountants and necessarily in some
respects is based upon estimates which are subject to adjustment in
annual closing of accounts.
In the opinion of the Company, all adjustments (consisting of only normal
recurring adjustments and primary eliminations of all significant
intercompany transactions) necessary to present fairly the financial
position and results of operations and cash flows for the periods
presented have been included.
These financial statements have been prepared in accordance with the
instructions to the Form 10-Q and therefore do not include all
information and footnotes necessary for a fair presentation in conformity
with generally accepted accounting principles. These financial statements
should be read in conjunction with the financial statements and related
disclosures contained in the Corporation's Annual Report on Form 10-K for
the year ended September 30, 1994, filed with the Securities and Exchange
Commission.
2. The number of shares used in computing earnings per common share for both
quarters presented, based on the weighted average number of shares
outstanding, was 3,382,977. The number of shares reflects a three-for-two
stock split which occurred in December 1994.
3. The results of operations for the six month periods ended March 31, 1995
are not necessarily indicative of the results to be expected for the full
year.
4. Certain items on the statement of earnings for the three month and six
month periods ended March 31, 1994 have been reclassified to reflect the
elimination of discontinued operations of the Company's CVC Leasing
division.
7
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
SECOND QUARTER 1995 COMPARED TO SECOND QUARTER 1994
For the quarter ended March 31, 1995, the Company's net sales increased
$4,259,357 (18%) over the corresponding quarter of the previous year. The
primary source of the increase was the addition of a new manufacturing facility
added in May, 1993. Production at that facility and the other two facilities
reached a higher level than the preceding year. The increase in manufactured
housing sales is reflective of the overall growth experienced in the industry
over the past three years. With the addition of the new facility and expansion
of the existing facility, the Company is well positioned to continue to increase
its market share throughout the remainder of the year. The leasing operations
had sales of $1,414,534 during the quarter, their first year of operations.
Sales in the healthcare and development operations were comparable to the
previous year.
Gross profit margins increased to 17.5 percent compared to 16.5 percent for the
same quarter of the previous year. The gross margins of the manufacturing
operations increased to 19.2 percent from 18.8 percent the previous year
primarily due to the increased efficiencies of the higher sales volumes reported
above. The gross profit of the leasing operations fell slightly during the
second quarter to 39.4 percent due to the increase in the lease fleet.
Selling, general and administrative expenses (SG&A) in 1995 were $899,526 higher
than in 1994. Manufacturing operations incurred higher expenses due primarily to
the higher sales volumes stated above and increase in sales costs associated
with expanding the market. SG&A costs in the leasing operations were $480,425
for the quarter.
In 1995, net earnings from continuing operations were $926,761 or $.28 per share
compared to $951,077 or $.26 per share in 1994. The increase in earnings is due
to the increased sales volumes and gross profit margins mentioned above. The
Company has focused its efforts on the continued growth of the manufactured
operations and expansion of the leasing operations.
SIX MONTHS 1995 COMPARED TO THE SIX MONTHS 1994
For the six months ended March 31, 1995, the company's net sales increased
$13,180,188, or 29 percent over the same period of the previous year. Of this
increase, the manufacturing operations accounted for 81 percent. The
manufacturing facility added in May of 1993, along with increased production
levels at the previously existing facilities, are the primary reasons for the
increase. A new leasing entity was formed in 1994, which contributed the
remaining 19 percent increase.
Gross profit margins increased to 18.8 percent compared to 16.6 percent reported
for the prior year's six month period. The margins remained comparable in the
manufacturing operations (17.5 percent in 1995, compared to 17.8 percent in
1994), however, the leasing operations achieved a 43.9 percent gross profit
margin in 1995.
8
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CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
Selling, general and administrative expenses (SG&A) were $6,805,813 in 1995, an
increase of $2,121,341 over the comparable period of 1994. Manufacturing
operations accounted for 53 percent of the increase, primarily due to the
increased growth and sales volumes , as discussed above. The remaining increase
was due to the expansion of the leasing operations in 1995.
In 1995, net earnings from continuing operations were $2,388,494, or $.76 per
share, compared with $1,885,134 , or $.52 per share for the same period of the
previous year. The increase is the result of the higher sales volumes and
improved profit margins.
LIQUIDITY AND CAPITAL RESOURCES
The Company finished the six months ended March 31, 1995 with cash of $367,509
and working capital of $7,217,297. Net cash flow from operations was negative
due primarily to a $4.5 million increase in accounts receivable - largely due to
the increased sales volumes generated. On an interim basis, the Company uses
internally generated funds for the expansion of the lease fleet, which causes
fluctuations in cash and working capital. To help fund the $7.2 million in lease
fleet purchases, the Company borrowed $3,750,000 from its corporate line of
credit to temporarily meet capital needs. The Company is currently arranging a
line of credit to fund fleet purchases on a more permanent basis. The Company
will continue to expand the lease fleet throughout the remainder of the year.
Uses of cash during the period include the repayment of approximately $352,000
of long term debt, and $1,150,000 of notes payable. Notes payable increases for
the period include approximately $600,000, which was used to purchase additional
land for the real estate development division. An additional $1.3 million was
used for property, plant and equipment primarily used to modify one of the
manufacturing facilities to improve productivity and expand capacity. The
Company invested another $1.2 million in the limited liability corporation (LLC)
which is developing a manufactured housing subdivision. The Company is a 50
percent partner in the LLC and accounts for its investment on the equity
method.
Capital expenditures for the manufacturing, development and healthcare
operations for the remainder of the year are expected to be only those necessary
for normal replacement of machinery and equipment. The Company believes that its
existing cash, available line of credit, and cash generated from operations will
be sufficient to meet capital expenditure and debt service requirements.
9
<PAGE> 10
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
1. (a) The Company's annual shareholders meeting was held February 28,
1995.
(b) The meeting involved the election of directors. Holders of
2,170,924 shares were present at the meeting, which constituted a
quorum. All five prior directors - Al R. Ghelfi, Ruth Smith, Robert
Wold, Steve Kleeman, and William R. Blandin - were re- elected.
The company did not solicit proxies. All shares present voted in favor of the
five directors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule - Six months ended March 31, 1995
(b) Reports on Form 8-K
The Company did not file and Form 8-K's during the six month period ended March
31,1995.
There has not been any additional information with respect to items listed in
the Index, related to the periods being reported, which has not been previously
reported or which , in the opinion of management, is of significance to the
investors.
10
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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.
Cavco Industries, Inc.
----------------------------------
(Registrant)
May 15, 1995 /s/ ROBERT WARD
Date ______________________________ ___________________________________
(Signature)
Robert Ward, Vice President, Treasurer and
Chief Financial Officer
11
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CAVCO INDUSTRIES, INC.
COMMISSION FILE NUBER 0-8822
EXHIBIT INDEX
MARCH 31, 1995 FORM 10-Q
<TABLE>
<CAPTION>
No. Title
- - - - - - --- -----
<S> <C>
27 Fiancial Data Schedule
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 367,509
<SECURITIES> 61,599
<RECEIVABLES> 10,200,953
<ALLOWANCES> 99,164
<INVENTORY> 10,312,031
<CURRENT-ASSETS> 22,246,359
<PP&E> 13,534,585
<DEPRECIATION> 4,171,588
<TOTAL-ASSETS> 46,401,095
<CURRENT-LIABILITIES> 15,029,062
<BONDS> 10,139,895
<COMMON> 169,149
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 46,401,095
<SALES> 58,647,361
<TOTAL-REVENUES> 58,928,751
<CGS> 47,620,645
<TOTAL-COSTS> 54,426,458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191,619
<INCOME-PRETAX> 4,310,674
<INCOME-TAX> 1,726,500
<INCOME-CONTINUING> 2,584,174
<DISCONTINUED> (195,680)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,388,494
<EPS-PRIMARY> .70
<EPS-DILUTED> 0
</TABLE>
