<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
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
incorporation or organization) No.)
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 5, 1997
Class A 7,989,335
Class B 1,402,975
The index to Exhibits is at page 12 in the sequential numbering system.
Total number of pages: 13.
Page 1 of 13
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SUPREME INDUSTRIES, INC.
CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 3 & 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7 & 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 & 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Index to Exhibits 12
Page 2 of 13
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Part I. Financial Information
Item 1. Financial Statements
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, December 31,
1997 1996
----------- ------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents............... $4,771 $220,678
Accounts receivable, net................ 20,345,228 16,556,258
Inventories............................. 24,994,264 21,208,707
Deferred income taxes................... 1,043,066 1,043,066
Other current assets.................... 375,005 423,237
---------- ----------
Total current assets............... 46,762,334 39,451,946
---------- ----------
Property, plant and equipment, at cost.... 41,593,701 40,675,873
Less, Accumulated depreciation and
amortization.......................... 14,836,541 14,246,236
---------- ----------
Property, plant and equipment, net. 26,757,160 26,429,637
Intangible assets, net.................... 1,857,868 1,908,694
Other assets.............................. 1,049,509 1,038,747
---------- ----------
Total assets....................... $76,426,871 $68,829,024
=========== ===========
The accompanying notes are a part of the consolidated financial statements.
Page 3 of 13
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Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, Concluded
March 31, December 31,
1997 1996
------------ ------------
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-term debt.... $2,374,246 $2,355,955
Trade accounts payable.................. 9,578,264 6,778,942
Accrued income taxes.................... 1,194,240 959,240
Other accrued liabilities............... 5,155,103 5,914,315
----------- -----------
Total current liabilities.......... 18,301,853 16,008,452
Long-term debt............................ 19,696,682 16,108,780
Deferred income taxes..................... 890,234 890,234
----------- -----------
Total liabilities.................. 38,888,769 33,007,466
----------- -----------
Stockholders' equity:
Class A Common Stock, $.10 par value.... 802,157 801,277
Class B Common Stock, convertible into
Class A Common Stock on a one-for-one
basis, $.10 par value................. 140,297 140,297
Additional paid-in capital.............. 23,931,852 23,901,587
Retained earnings....................... 12,914,332 11,228,933
Treasury stock, at cost................. (250,536) (250,536)
----------- -----------
Total stockholders' equity......... 37,538,102 35,821,558
----------- -----------
Total liabilities and stockholders'
equity........................... $76,426,871 $68,829,024
=========== ===========
The accompanying notes are a part of the consolidated financial statements.
Page 4 of 13
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Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
--------------------------
1997 1996
--------------------------
Revenues................................... $44,173,303 $38,493,108
Costs and expenses:
Cost of sales............................ 37,036,681 32,659,515
Selling, general and administrative...... 3,949,378 3,584,052
Interest................................. 349,845 533,192
---------- ----------
41,335,904 36,776,759
---------- ----------
Income before income taxes.......... 2,837,399 1,716,349
Income taxes............................... 1,152,000 730,000
---------- ----------
Net income.......................... $1,685,399 $986,349
========== ==========
Earnings per share:
Primary............................. $.17 $.10
Fully diluted....................... .17 .10
Weighted average number of shares of
common stock and common stock equivalents:
Primary............................. 9,969,289 9,490,967
Fully diluted....................... 9,977,517 9,766,485
The accompanying notes are a part of the consolidated financial statements.
Page 5 of 13
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Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
------------------------
1997 1996
------------------------
Cash flows from operating activities:
Net income.................................. $1,685,399 $986,349
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization........... 655,823 470,035
Amortization of intangibles and other
assets................................ 50,826 52,731
Loss on disposal of equipment........... 7,518 551
Changes in operating assets and
liabilities........................... (5,251,184) (4,630,280)
---------- ----------
Net cash (used in) operating activities... (2,851,618) (3,120,614)
---------- ----------
Cash flows from investing activities:
Additions to property, plant and
equipment................................. (1,027,814) (1,228,772)
Proceeds from disposal of property, plant
and equipment............................. 36,950 --
Increase in other assets.................... (10,762) (443,304)
---------- ----------
Net cash (used in) investing activities.... (1,001,626) (1,672,076)
---------- ----------
Cash flows from financing activities:
Proceeds from revolving line of credit
and other long-term debt.................. 17,221,848 17,299,716
Repayments of revolving line of credit and
other long-term debt...................... (13,615,655) (12,538,162)
Proceeds from exercise of stock options and
warrants.................................. 31,144 102,820
---------- ----------
Net cash provided by financing activities.. 3,637,337 4,864,374
---------- ----------
Increase (decrease) in cash and cash
equivalents................................. (215,907) 71,684
Cash and cash equivalents, beginning of
period...................................... 220,678 106,740
---------- ----------
Cash and cash equivalents, end of period...... $4,771 $178,424
========== ==========
The accompanying notes are a part of the consolidated financial statements.
Page 6 of 13
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SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying unaudited consolidated 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. All adjustments are of a normal and recurring
nature. The December 31, 1996 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,
1997 1996
------------ ------------
Raw materials................. $ 14,931,425 $ 12,076,089
Work-in-progress.............. 3,139,514 3,138,668
Finished goods................ 6,923,325 5,993,950
------------ ------------
$ 24,994,264 $ 21,208,707
============ ============
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. The Company has had favorable and unfavorable
adjustments in the third and fourth quarters 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 - INCOME TAXES
The effective income tax rate for the three months ended March 31, 1997 was
40.6% compared to 42.5% for the three months ended March 31, 1996. The
decrease is attributable to the Company's higher levels of income decreasing
the impact of items treated differently for financial statement purposes and
income tax return purposes and improved operations of the Company's Honduran
subsidiary, which is operating in a government free zone.
Page 7 of 13
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NOTE D - RECENT ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share."
The Company is required to initially adopt this pronouncement during its
quarter ending December 31, 1997, and will be required to then restate all
prior periods presented to conform with the new standard. SFAS No. 128 will
require the Company to make a dual presentation of basic and diluted earnings
per share on the face of its consolidated statement of income instead of
primary and fully diluted earnings per share. The Company has not determined
the impact SFAS No. 128 will have on historically reported earnings per share.
NOTE E - SUBSEQUENT EVENT
On May 1, 1997, the Board of Directors declared a 5% common stock dividend
payable on May 19, 1997, to shareholders of record on May 12, 1997. Earnings
per share and weighted average shares outstanding have been restated to
reflect the 5% stock dividend for all periods presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Revenues increased $5,680,195 to $44,173,303 for the quarter ended
March 31, 1997 from $38,493,108 for the quarter ended March 31, 1996. Net
income for the quarter ended March 31, 1997 increased $699,050 to $1,685,399
from $986,349 for the quarter ended March 31, 1996.
Both primary and fully diluted earnings per share increased seven cents to
$.17 for the quarter ended March 31, 1997 from $.10 for the quarter ended
March 31, 1996. Earnings per share in both periods have been restated to
reflect the 5% stock dividend payable to shareholders of record on
May 12, 1997.
The revenue increases were concentrated in the Company's dry freight product
lines which increased 16.6% over the comparable prior year quarter and in the
Company's StarTrans (trademark) bus lines which increased 18.7% over the
comparable prior year's quarter. The Company's large national accounts were
responsible for approximately 42.5% of the dry freight product sales increase.
The Company's Indiana and Pennsylvania manufacturing facilities accounted for
the largest increases while the balance of the manufacturing facilities were
running at or slightly ahead of the prior year.
The Company's gross profit percentage increased 1% to 16.2% for the quarter
ended March 31, 1997 from 15.2% for the quarter ended March 31, 1996. The
improvement in the gross profit percentage was entirely due to those items in
the overhead category that did not increase proportionately with the increase
in revenues. The Company's direct labor and raw material costs were
relatively unchanged as a percentage of revenues for the quarter ended
March 31, 1997 when compared to the quarter ended March 31, 1996.
Page 8 of 13
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Selling, general and administrative expenses increased $365,326 for the
quarter ended March 31, 1997 when compared to the quarter ended
March 31, 1996, but declined .4% as a percentage of revenues for the quarter
ended March 31, 1997 when compared to the comparable prior year's quarter.
Contributing to the dollar increase were the Company's additional product
lines and distribution facilities which were in operation for the entire
first quarter in 1997 while they were either nonexistent or just commencing
operations in the quarter ended March 31, 1996. Additionally, those items
that fluctuate directly with revenue were responsible for a portion of the
dollar increase.
Interest expense for the quarter ended March 31, 1997 declined $183,347 to
$349,845 from $533,192 for the quarter ended March 31, 1996. As a percentage
of revenues, interest expense decreased to .8% for the current quarter from
1.4% for the prior year quarter. The decline was due to improved management
of chassis pools with the major truck suppliers combined with lower
borrowings under the Company's credit facility.
Liquidity and Capital Resources
Cash flows from operations and funds available under the Company's revolving
credit agreement were adequate to finance operations and provide for capital
expenditures during the quarter ended March 31, 1997. Net income combined
with depreciation and amortization were the most significant factors
contributing to operating cash flows. As is normal in the first quarter,
both accounts receivable and inventories increased significantly from the
levels at December 31, 1996. Causing this increase were the Company's large
national fleet customers who require their orders be delivered in a specified
short time frame in the first six months of the year. The Company builds
inventory in advance to meet these stringent delivery requirements. The
$3.8 million inventory increase also lead to the $2.8 million increase in
accounts payable at March 31, 1997.
The major investing activities during the quarter were the construction of a
new painting facility, new production tooling for proprietary parts and
improvements on certain production lines all at the Company's Goshen, Indiana
manufacturing plant.
The only significant financing activity during the quarter was the use of
the Company's revolving credit agreement to finance operations and capital
expenditures. The Company had $9.4 million available under its revolving
credit agreement at March 31, 1997.
The Company anticipates that cash flows from operations and amounts available
under its revolving line of credit will be sufficient to meet the Company's
cash needs during 1997.
Page 9 of 13
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits:
Exhibit 11-Statement Regarding Computation of Per
Share Earnings
b) Reports on Form 8-K: None
Page 10 of 13
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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.
SUPREME INDUSTRIES, INC.
DATE: May 6, 1997 BY: /s/ROBERT W. WILSON
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.)
Page 11 of 13
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INDEX TO EXHIBITS
Exhibit No. Description Page
11 Statement Regarding Computation of Per Share
Earnings 13
Page 12 of 13
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EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
(Amounts in thousands, except per share data)
Three Months
Ended March 31,
1997 1996
------ ------
PRIMARY
Weighted average shares outstanding 9,859 8,981
Net effect of dilutive stock options
and warrants - based on the treasury
stock method using average market price 110 510
------- -------
TOTAL 9,969 9,491
======= =======
Net income $ 1,685 $ 986
======= =======
Net income per share $ .17 $ .10
======= =======
FULLY DILUTED
Weighted average shares outstanding 9,859 8,981
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 119 510
Dilutive effect of subordinated
convertible notes -- 275
------- -------
TOTAL 9,978 9,766
======= =======
Net income $ 1,685 $ 986
Interest expense reduction due to
assumed conversion of subordinated
convertible notes - net of tax -- 15
------- -------
Net income as adjusted $ 1,685 $ 1,001
======= =======
Net income per share $ .17 $ .10
======= =======
Page 13 of 13
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,771
<SECURITIES> 0
<RECEIVABLES> 20,775,228
<ALLOWANCES> 430,000
<INVENTORY> 24,994,264
<CURRENT-ASSETS> 46,762,334
<PP&E> 41,593,701
<DEPRECIATION> 14,836,541
<TOTAL-ASSETS> 76,426,871
<CURRENT-LIABILITIES> 18,301,853
<BONDS> 19,696,682
<COMMON> 942,454
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 76,426,871
<SALES> 44,173,303
<TOTAL-REVENUES> 44,173,303
<CGS> 37,036,681
<TOTAL-COSTS> 37,036,681
<OTHER-EXPENSES> 3,949,378
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 349,845
<INCOME-PRETAX> 2,837,399
<INCOME-TAX> 1,152,000
<INCOME-CONTINUING> 1,685,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,685,399
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
