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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
(X) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
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 No. 1-8183
SUPREME INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1670945
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
65140 U.S. 33 East, P.O. Box 237
Goshen, Indiana 46526
(Address of principal executive
offices)
Registrant's telephone number, including area code: (219)642-3070
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 practicable date.
Common Stock ($.10 Par Value) Outstanding at May 3, 1996
Class A 7,177,731 shares
Class B 1,402,976 shares
The index to Exhibits is at page 10 in the sequential numbering system.
Total pages: 11
1 of 11
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SUPREME INDUSTRIES, INC.
CONTENTS
Pages
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets 3 & 4
Consolidated Condensed Statements of Income 5
Consolidated Condensed Statements of Cash Flows 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 8 & 9
Condition and Results of Operations
Part II. Other Information
Signatures 9
Index to Exhibits 10
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Part I. Financial Information
Item 1. Financial Statements
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, December 31,
1996 1995
----------------------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents............... $178,423 $106,740
Accounts receivable, net................ 19,314,203 16,336,446
Inventories............................. 22,670,297 20,144,271
Deferred income taxes................... 910,918 910,918
Other current assets.................... 486,459 448,665
----------------------------
Total current assets................. 43,560,300 37,947,040
----------------------------
Property, plant and equipment:
Land and improvements................... 2,147,783 2,123,848
Buildings and improvements.............. 9,343,330 9,028,195
Leasehold improvements.................. 4,872,923 4,845,816
Machinery and equipment................. 18,732,715 17,885,788
----------------------------
35,096,751 33,883,647
Less, Accumulated depreciation and
amortization....................... 12,884,054 12,429,136
----------------------------
Property, plant and equipment, net... 22,212,697 21,454,511
Intangible assets, net.................... 2,061,177 2,112,004
Other assets.............................. 1,354,505 913,107
----------------------------
Total assets......................... $69,188,679 $62,426,662
============================
The accompanying notes are a part of the consolidated financial statements.
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Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, Concluded
March 31, December 31,
1996 1995
-----------------------------
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-term debt.... $2,577,719 $2,609,815
Trade accounts payable.................. 7,883,812 6,343,766
Accrued income taxes.................... 708,593 138,682
Other accrued liabilities............... 4,321,788 5,715,879
-----------------------------
Total current liabilities............ 15,491,912 14,808,142
Long-term debt............................ 23,020,631 18,031,553
Deferred income taxes..................... 784,086 784,086
-----------------------------
Total liabilities.................... 39,296,629 33,623,781
-----------------------------
Stockholders' equity:
Class A Common Stock, $.10 par value.... 717,512 673,861
Class B Common Stock, convertible into
Class A Common Stock on a one-for-one
basis, $.10 par value................. 140,298 180,166
Additional paid-in capital.............. 19,010,458 18,911,421
Retained earnings....................... 10,180,268 9,193,919
Treasury stock, at cost, 13,757 shares
of Class A Common Stock............... (156,486) (156,486)
-----------------------------
Total stockholders' equity........... 29,892,050 28,802,881
-----------------------------
Total liabilities and stockholders'
equity............................. $69,188,679 $62,426,662
=============================
The accompanying notes are a part of the consolidated financial statements.
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Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
---------------------------
1996 1995
---------------------------
Revenues.................................... $38,493,108 $43,669,383
Costs and expenses:
Cost of sales............................. 32,659,515 37,405,360
Selling, general and administrative....... 3,584,052 3,267,471
Interest.................................. 533,192 483,285
---------------------------
36,776,759 41,156,116
---------------------------
Income before income taxes............. 1,716,349 2,513,267
Income taxes.............................. 730,000 1,023,000
---------------------------
Net income............................. $986,349 $1,490,267
===========================
Earnings per share:
Primary.................................. $.11 $.18
Fully diluted............................ .11 .17
Weighted average number of shares of
common stock and common stock
equivalents:
Primary................................ 9,039,016 8,215,488
Fully diluted.......................... 9,301,414 8,889,783
The accompanying notes are a part of the consolidated financial statements.
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Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
---------------------------
1996 1995
---------------------------
Cash flows from operating activities:
Net income............................... $986,349 $1,490,267
Depreciation and amortization............ 470,035 431,176
Amortization of intangibles and other
assets................................. 52,731 50,827
(Gain) loss on disposal of equipment..... 551 (2,894)
Changes in operating assets and
liabilities............................ (4,630,280) (7,599,745)
---------------------------
Net cash used in operating
activities........................ (3,120,614) (5,630,369)
---------------------------
Cash flows from investing activities:
Additions to property, plant and
equipment.............................. (1,228,772) (1,210,424)
Proceeds from sale of property, plant
and equipment.......................... --- 2,894
Increase in intangible and other assets.. (443,304) ---
----------------------------
Net cash used in investing
activities........................ (1,672,076) (1,207,530)
----------------------------
Cash flows from financing activities:
Proceeds from revolving line of credit
and other long-term debt............... 17,299,716 20,400,531
Repayments of revolving line of credit
and other long-term debt............... (12,538,162) (13,744,304)
Proceeds from exercise of stock options
and warrants........................... 102,820 ---
----------------------------
Net cash provided by financing
activities........................ 4,864,374 6,656,227
----------------------------
Increase (decrease) in cash and cash
equivalents.............................. 71,684 (181,672)
Cash and cash equivalents, beginning of
period................................... 106,740 273,720
----------------------------
Cash and cash equivalents, end of period... $178,424 $92,048
============================
The accompanying notes are a part of the consolidated financial statements.
6 of 11
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SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A -BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore
do not include all of the information and financial statement disclosures
necessary for a fair presentation of consolidated financial position, results
of operations and cash flows in conformity with generally accepted
accounting principles. In the opinion of management, the information
furnished herein includes all adjustments necessary to reflect a fair
statement of the interim periods reported. The December 31, 1995 condensed
consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
NOTE B - INVENTORIES
Inventories, which are stated at the lower of cost or market with cost
determined on the first-in-first-out method, consist of the following:
March 31, December 31,
1996 1995
----------- -----------
Raw materials.................. $14,091,781 $11,599,585
Work-in-progress............... 3,148,712 3,113,990
Finished goods................. 5,429,804 5,430,696
----------- ------------
$22,670,297 $20,144,271
=========== ============
The valuation of raw materials, work-in-progress and finished goods
inventories at interim dates is based upon a gross profit percentage method
and bills of materials. Since 1989 the Company has had favorable
adjustments in the fourth quarter resulting from the annual physical
inventories. The Company is continuing to refine its costing procedures for
valuation of interim inventories in an effort to minimize the annual book to
physical inventory adjustments.
NOTE C - LONG TERM DEBT
On February 20, 1996 the Company amended its revolving credit agreement to
extend the expiration two years to April 30, 1999. In addition, the
revolving credit line was increased from $12.0 million to $20.0 million for
the period each year from February 1 through June 30. The limit was
increased from $12.0 million to $14.0 million for all other months of the
year. Interest on outstanding borrowings under the revolving line of credit
is payable monthly based on the bank's prime rate or certain basis points
above the LIBOR rate depending on the pricing option selected and the
Company's leverage ratio, as defined. The revolving line of credit also
requires a commitment fee of 3/16% per annum based upon the annualized
average unused portion.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Revenues for the quarter ended March 31, 1996 decreased $5,176,275 to
$38,493,108 from $43,669,383 for the quarter ended March 31, 1995. Net
income for the quarter ended March 31, 1996 decreased $503,918 to $986,349
from $1,490,267 for the quarter ended March 31, 1995.
The revenue decrease was attributed to a significant decline in fleet
revenues. This decline was the result of delayed chassis deliveries due to
labor disputes at the chassis manufacturer. The second quarter of 1996 will
benefit from the delayed deliveries. The Company also experienced generally
softer market conditions in the Northeastern, Midwestern and Southwestern
markets, however as the second quarter begins, the Company has seen signs
of improved conditions in these areas. The severe weather conditions
encountered in the Company's large Northeastern market was also a major
cause for the revenue decline.
The Company's gross profit improved .9% for the quarter ended March 31, 1996
when compared to the quarter ended March 31, 1995. Contributing to the
improvement was a decline in material costs as a percentage of revenues when
compared to the prior year's comparable quarter. The decline in material
costs resulted from realizing the full benefit of price increases implemented
throughout 1995 and from favorable raw material pricing experienced during
the first quarter of 1996. Partially offsetting this material cost decline
were increases in both direct labor and overhead as a percentage of revenues
when compared to the prior year's comparable quarter. The increases in
direct labor were caused by expenses in preparation for fleet deliveries that
won't occur until the second quarter. The increase in the overhead expense
as a percentage of revenues was caused by the fixed nature of certain
components of the overhead pool when related to lower revenues in the current
year's quarter. It is anticipated that both direct labor and overhead as a
percentage of revenues will improve in the second quarter of 1996 in
correlation with the deliveries of the delayed fleet orders as well as
higher overall revenues.
Selling, general and administrative expenses increased $316,581 to $3,584,052
from $3,267,471 for the quarter ended March 31, 1996 when compared to the
quarter ended March 31, 1995. The increases resulted from updating the
Company's sales literature, increased promotional and show expenses as well
as increased advertising in trade publications.
The decline in net income for the quarter to 2.6% of revenues from 3.4% of
revenues for the prior year's comparable quarter is due to the factors
discussed above.
Liquidity and Capital Resources
Net income and funds available under the Company's revolving credit agreement
were sufficient to finance the 1996 first quarter operations, finance capital
expenditures and service debt obligations. Availability under the Company's
revolving credit agreement was $2.7 million at March 31, 1996.
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The ratio of current assets to current liabilities was 2.8 to 1 at March 31,
1996 compared to 2.4 to 1 at December 31, 1995. Capital expenditures were
$1.2 million for the quarter ended March 31, 1996. These expenditures were
funded with borrowings under the Company's revolving credit agreement.
During the first quarter 1996, the Company amended its revolving credit
agreement to extend the expiration two years to April 1999. In addition,
the revolving credit line was increased from $12.0 million to $20.0 million
for the period each year from February 1 through June 30. The increase is
necessary to fund operations during the building of fleet inventory which is
built in advance of specific delivery deadlines. The revolver limit was
increased from $12.0 million to $14.0 million for all other months of the
year due to the overall growth of the Company.
The Company anticipates that cash flow from operations and funds available
from outside financing will be sufficient to finance operations and planned
capital expenditures the balance of 1996.
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
11 - Statements Regarding Earnings Per Share
b) Reports on Form 8-K - None
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.
SUPREME INDUSTRIES, INC.
Date: May 13, 1996 By:/s/Robert W. Wilson
Executive Vice President, Treasurer,
Chief Financial Officer and Director
(Principal Financial and Accounting
Officer)
Signing on behalf of the Registrant
and as Principal Financial Officer)
9 of 11
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INDEX TO EXHIBITS
Exhibit No. Description Page
11 Computation of Earnings Per Share 11
10 of 11
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EXHIBIT 11.1-- STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
SUPREME INDUSTRIES, INC.
(Amounts in thousands, except per share data)
Three Months Ended March 31,
----------------------------
1996 1995
------ ------
PRIMARY
Average shares outstanding 8,553 8,159
Net effect of dilutive stock options
and warrants - based on the treasury
stock method using average market
price 486 57
------ ------
TOTAL 9,039 8,216
====== ======
Net income $ 986 $1,490
====== ======
Net income per share $ .11 $ .18
====== ======
FULLY DILUTED
Average shares outstanding 8,553 8,159
Net effect of dilutive stock options
and warrants - based on the treasury
stock method using the period-end
market price, if higher than the
average market price 486 120
Net effect of subordinated convertible
notes 262 611
------ ------
TOTAL 9,301 8,890
====== ======
Net income $ 986 $1,490
Interest expense reduction due to
assumed conversion of subordinated
convertible notes - net of tax 15 34
------ ------
Net income as adjusted $1,001 $1,524
====== ======
Net income per share $ .11 $ .17
====== ======
11 of 11
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 178,423
<SECURITIES> 0
<RECEIVABLES> 19,744,203
<ALLOWANCES> 430,000
<INVENTORY> 22,670,297
<CURRENT-ASSETS> 43,560,300
<PP&E> 35,096,751
<DEPRECIATION> 12,884,054
<TOTAL-ASSETS> 69,188,679
<CURRENT-LIABILITIES> 15,491,912
<BONDS> 23,020,631
<COMMON> 857,810
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 69,188,679
<SALES> 38,493,108
<TOTAL-REVENUES> 38,493,108
<CGS> 32,659,515
<TOTAL-COSTS> 32,659,515
<OTHER-EXPENSES> 3,584,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 533,192
<INCOME-PRETAX> 1,716,349
<INCOME-TAX> 730,000
<INCOME-CONTINUING> 986,349
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 986,349
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
