<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, 1996
Commission File Number 0-8822
Cavco Industries, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Arizona 86-0214910
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(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
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n/a
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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
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<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, 1996 and September 30, 1995 3-4
Consolidated Statements of Earnings
Three months and six months ended March 31, 1996 and 1995 5
Consolidated Statements of Cash Flows
Six months ended March 31, 1996 and 1995 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. Submision 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,
1996 1995
----------- -----------
<S> <C> <C>
Current Assets
Cash $ 2,765,626 8,140,730
Accounts and notes receivable 11,779,781 4,185,533
Inventories
Manufacturing:
Raw materials 3,318,886 2,971,581
Work in process 869,745 807,949
Held for sale or lease 27,800 80,438
Real estate held for sale 7,480,098 6,133,089
----------- -----------
Total inventories 11,696,529 9,993,057
----------- -----------
Prepaid expenses 1,062,756 834,713
Deferred tax charge 552,981 552,981
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Total current assets 27,857,673 23,707,014
----------- -----------
Property. plant and equipment, at cost 14,949,767 14,285,539
Less accumulated depreciation 5,225,887 4,666,351
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Net property, plant and equipment 9,723,880 9,619,188
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Assets under lease 16,828,593 14,285,700
Less accumulated depreciation 895,121 596,007
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Net assets under lease 15,933,472 13,689,693
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Notes receivable, net of current portion 1,556,841 1,162,415
Investment in partnerships 2,896,927 2,534,703
Other assets 798,508 1,098,926
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$58,767,301 51,811,939
=========== ===========
</TABLE>
3
<PAGE> 4
CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
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<S> <C> <C>
Current liabilities
Notes payable $ 1,112,525 1,022,864
Current installments of long term debt 3,244,240 2,444,248
Accounts payable 5,121,428 5,009,125
Accrued expenses 7,549,434 6,939,129
Income taxes 184,784 42,418
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Total current liabilities 17,212,411 15,457,784
----------- -----------
Long term debt, excluding current installments 14,532,585 12,692,661
Deferred taxes and other liabilities 1,685,235 1,278,299
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 24,855,867 21,901,992
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Net stockholders' equity 25,337,070 22,383,195
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$58,767,301 51,811,939
=========== ===========
</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,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales $ 33,515,820 28,506,700 64,415,705 58,647,361
Cost of sales 27,373,648 23,522,468 51,729,632 47,620,645
-------------------------- ----------------------------
Gross profit 6,142,172 4,984,232 12,686,073 11,026,716
Selling, general and administrative
expenses 3,732,883 3,399,842 7,280,557 6,805,813
-------------------------- ----------------------------
Operating income 2,409,289 1,584,390 5,405,516 4,220,903
Other income (expense)
Interest income 137,058 82,398 214,098 211,108
Interest expense (438,090) (125,678) (781,983) (191,619)
Miscellaneous 53,003 42,716 103,817 70,282
-------------------------- ----------------------------
(248,029) (564) (464,068) 89,771
-------------------------- ----------------------------
Income from continuing operations
before income taxes 2,161,260 1,583,826 4,941,448 4,310,674
Income taxes 861,480 627,800 1,968,900 1,726,500
-------------------------- ----------------------------
Income from continuing operations 1,299,780 956,026 2,972,548 2,584,174
Loss from discontinued operations,
net of tax credit of ($19,500) for
3 mos in 1995, and ($6,800) and
($130,500) for 6 mos in 1996 and
1995, respectively (8,907) (29,265) (18,673) (195,680)
-------------------------- ----------------------------
Net income $ 1,290,873 926,761 2,953,875 2,388,494
========================== ============================
Income per share from continuing
operations $.38 .28 .88 .76
==== === === ===
Income per share from discontinued
operations -- (.01) (.01) (.06)
==== ==== ====
Net income per share $.38 .27 .87 .70
==== === === ===
</TABLE>
5
<PAGE> 6
CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Net cash used in operations $(4,353,885) (3,181,843)
Cash flows from investing activities:
Purchases of property, plant and equipment (893,396) (1,349,340)
Purchases of assets under lease (3,819,046) (7,220,956)
Proceeds from sales of property, plant and equipment 124,202 --
Proceeds from sales of assets under lease 596,142 414,729
Proceeds from collections on notes receivable 920,526 1,040,017
Additions to notes receivable (195,000) --
Additions to investment in partnerships (362,224) (1,195,230)
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Net cash used in investing activities (3,628,796) (8,310,780)
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Cash flows from financing activities:
Borrowings under lines of credit 1,934,239 606,413
Repayments on lines of credit (1,844,578) (1,150,627)
Proceeds from long term borrowings 4,000,000 3,750,000
Repayment of long term debt (1,482,084) (352,254)
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Net cash provided by financing activities 2,607,577 2,853,532
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Decrease in cash (5,375,104) (8,639,091)
Cash at beginning of period 8,140,730 9,006,600
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Cash at end of period $ 2,765,626 367,509
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for -
Interest $ 931,564 167,844
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Income taxes $ 1,426,534 4,252,500
=========== ===========
</TABLE>
6
<PAGE> 7
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 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, 1995, filed
with the Securities and Exchange Commission.
2. The number of shares used in computing earnings per common share for
all 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 occured in December 1994.
3. The results of operations for the six month period ended March 31, 1996
are not necessarily indicative of the results to be expected for the
full year.
7
<PAGE> 8
CAVCO INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Second Quarter 1996 Compared to Second Quarter 1995
For the quarter ended March 31, 1996, the Company's net sales were $33,515,820,
representing an increase of $5,009,120 (17.6%) over the same quarter of the
previous year. Sales by segment are as follows: $29,648,772 for manufactured
housing, $2,229,771 for the leasing division, $1,462,896 for Sun Built, and
$174,381 for Action. Manufactured housing sales increased $3,506,292 (13.4%),
reflecting the continued growth experienced in the industry. The leasing
division improved sales by $815,237 (57.6%), assisted by three additional branch
locations.
Consolidated gross margin increased from 17.5% in 1995 to 18.3% in 1996.
Improved margins were experienced in both the manufactured housing and leasing
segments.
Selling, general and administrative expenses increased $333,041 (10%), but are
decreasing as a percent of sales. Interest expense increased $312,412 primarily
due to the leasing operations.
In 1996, net earnings from continuing operations were $1,299,780, or $.38 per
share for the quarter, compared to $956,026, or $.28 per share for the same
quarter of the previous year. The increased earnings are due to increased sales
volumes and improved gross margins mentioned above.
Six Months 1996 Compared to Six Months 1995
For the six months ended March 31, 1996, the Company's net sales increased
$5,768,344 (9.8%) over the same period of the previous year. Sales by segment
are as follows: $56,217,213 for manufactured housing (a 4.6% increase),
$4,480,668 for the leasing division (a 79.8% increase), $3,332,889 for Sun Built
(a 82.5% increase), and $384,935 for Action (a 33.7% decrease).
Consolidated gross margin increased from 18.8% in 1995 to 19.7% in 1996. Gross
margin in manufactured housing increased from 16.5% to 17.8%, while the leasing
segment improved its gross margin from 43.9% to 45.6%.
Selling, general and administrative expenses increased $474,744 (7%), but are
decreasing as a percent of sales. Interest expense increased $590,364 primarily
due to the leasing operations.
In 1996, net earnings from continuing operations were $2,972,548, or $.88 per
share compared to $2,584,174, or $.76 per share for the previous year. The
increased earnings are due to increased sales volumes and improved gross margins
mentioned above. The Company has continued its efforts to focus on its core
businesses to ensure long term success in the future.
8
<PAGE> 9
Liquidity and Capital Resources
The Company finished the six months ended March 31, 1996 with cash of $2,765,626
and working capital of $10,645,262. Net cash flow from operations was negative
due primarily to a $7.9 million increase in accounts receivable in the
manufacturing and leasing operations. The cash and working capital positions
tend to fluctuate due to the expansion of the lease fleet.
The Company borrowed $1,934,239 from its lines of credit during the six month
period. The Company used $800,000 to temporarily fund some of the lease fleet
expansion and the increase in receivables, while Sun Built used $1,134,239 from
its line for additions to real estate held for sale. The Company also received
$4,000,000 from its long term funding source. Uses of cash during the period
include $3,819,046 for additions to the lease fleet, $362,224 for additions to
investment in partnerships, and $893,396 for purchases of property, plant and
equipment. The Company also repaid $1,844,578 on its lines of credit and
$1,482,084 of long term debt.
The Company continues to expand its lease fleet, and has $3,000,000 available to
draw from its long term funding source. Other capital expenditures 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 lines of credit, and cash generated from operations will be
sufficient to meet capital expenditure and debt service requirements.
Management is currently exploring various opportunities for the Company to
divest itself of its Action Healthcare Management Services, Inc. subsidiary.
This will enable the Company to better focus on its core businesses.
During the past several years, inflation has not had a significant impact on the
Company's operations. The Company has demonstrated its ability to reduce the
manufacturing costs of its products through engineering changes and effective
price negotiations, and has been able to adjust the selling price of its product
in reaction to changing costs.
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 on February 27,
1996.
(b) The meeting involved the election of directors. Holders of 2,155,380
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. A sixth director,
Brent Ghelfi, was also elected.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EX-27 Financial Data Schedule - Six months ended March 31, 1996
(b) Reports on Form 8-K
The Company did not file any Form 8-K's during the six month
period ended March 31, 1996.
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
investors.
10
<PAGE> 11
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)
Date May 14, 1996 /s/ Robert Ward
----------------- --------------------------------------
(Signature)
Robert Ward, Vice President, Treasurer
and Chief Financial Officer
11
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<MULTIPLIER> 1
<CASH> 2,765,626
<SECURITIES> 0
<RECEIVABLES> 11,985,792
<ALLOWANCES> 206,011
<INVENTORY> 11,696,529
<CURRENT-ASSETS> 27,857,673
<PP&E> 14,949,767
<DEPRECIATION> 5,225,887
<TOTAL-ASSETS> 58,767,301
<CURRENT-LIABILITIES> 17,212,411
<BONDS> 1,679,399
0
0
<COMMON> 169,149
<OTHER-SE> 25,167,921
<TOTAL-LIABILITY-AND-EQUITY> 58,767,301
<SALES> 60,969,813
<TOTAL-REVENUES> 64,415,705
<CGS> 50,150,583
<TOTAL-COSTS> 51,729,632
<OTHER-EXPENSES> 7,280,557
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 781,983
<INCOME-PRETAX> 4,941,448
<INCOME-TAX> 1,968,900
<INCOME-CONTINUING> 2,972,548
<DISCONTINUED> (18,673)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,953,875
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>