UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2000
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.)
16441 C.R. 38, P.O. Box 237, Goshen, Indiana 46528
(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 7, 2000
Class A 8,819,224
Class B 1,826,092
The index to Exhibits is at page 13 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 9 & 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Index to Exhibits 13
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,
2000 1999
--------------- ---------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents............... $207,923 $270,935
Accounts receivable, net................ 33,158,294 29,026,385
Refundable income taxes................. 1,385,000 1,385,000
Inventories............................. 36,523,830 38,552,339
Deferred income taxes................... 1,268,284 1,268,284
Other current assets.................... 383,156 436,381
--------------- ---------------
Total current assets............... 72,926,487 70,939,324
--------------- ---------------
Property, plant and equipment, at cost.... 60,771,799 59,072,394
Less, Accumulated depreciation and
amortization 22,518,476 21,608,302
--------------- ---------------
Property, plant and equipment, net. 38,253,323 37,464,092
--------------- ---------------
Intangible assets, net.................... 1,247,939 1,298,766
Other assets.............................. 857,998 880,246
--------------- ---------------
Total assets....................... $113,285,747 $110,582,428
=============== ===============
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,
2000 1999
--------------- ---------------
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-term debt.... $4,780,107 $4,805,107
Trade accounts payable.................. 10,913,150 12,001,927
Accrued income taxes.................... 2,775,693 947,776
Other accrued liabilities............... 7,937,879 10,530,737
--------------- ---------------
Total current liabilities.......... 26,406,829 28,285,547
Long-term debt............................ 38,144,430 35,319,246
Deferred income taxes..................... 2,128,452 2,128,452
--------------- ---------------
Total liabilities.................. 66,679,711 65,733,245
--------------- ---------------
Stockholders' equity...................... 46,606,036 44,849,183
--------------- ---------------
Total liabilities and stockholders'
equity........................... $113,285,747 $110,582,428
=============== ===============
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 End
March 31,
-------------------------------
2000 1999
--------------- ---------------
Revenues.................................. $71,781,085 $56,376,042
--------------- ---------------
Costs and expenses:
Cost of sales........................... 59,202,554 46,834,398
Selling, general and administrative..... 7,002,931 5,154,775
Interest................................ 879,493 339,004
--------------- ---------------
67,084,978 52,328,177
--------------- ---------------
Income before income taxes......... 4,696,107 4,047,865
Income taxes.............................. 1,887,000 1,650,000
--------------- ---------------
Net income......................... $2,809,107 $2,397,865
=============== ===============
Earnings per share:
Basic.............................. $.25 $.18
Diluted............................ .25 .18
Shares used in the computation of earnings
per share:
Basic.............................. 11,300,571 13,228,312
Diluted............................ 11,304,608 13,323,492
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 End
March 31,
-------------------------------
2000 1999
--------------- ---------------
Cash flows from operating activities:
Net income.............................. $2,809,107 $2,397,865
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization....... 964,183 771,076
Gain on disposal of equipment....... -- (2,317)
Changes in operating assets and
liabilities....................... (3,903,893) (3,076,920)
--------------- ---------------
Net cash provided by (used in)
operating activities................ (130,603) 89,704
--------------- ---------------
Cash flows from investing activities:
Additions to property, plant and
equipment............................. (1,702,587) (1,321,030)
Proceeds from disposal of property,
plant and equipment................... -- 3,325
Decrease in other assets................ 22,248 14,513
--------------- ---------------
Net cash (used in) investing
activities.......................... (1,680,339) (1,303,192)
--------------- ---------------
Cash flows from financing activities:
Proceeds from revolving line of credit
and other long-term debt.............. 22,707,632 22,569,011
Repayments of revolving line of credit
and other long-term debt.............. (19,907,448) (21,472,628)
Acquisiton of treasury stock............ (1,052,254) (2,975)
--------------- ---------------
Net cash provided by financing
activities.......................... 1,747,930 1,093,408
--------------- ---------------
Decrease in cash and cash equivalents..... (63,012) (120,080)
Cash and cash equivalents, beginning of
period.................................. 270,935 185,424
--------------- ---------------
Cash and cash equivalents, end of period.. $207,923 $65,344
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 6 of 13
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SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all of the information and financial statement disclosures
necessary for a fair presentation of consolidated financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. In the opinion of management, the information
furnished herein includes all adjustments necessary to reflect a fair
statement of the interim periods reported. All adjustments are of a normal
and recurring nature. The December 31, 1999 consolidated balance sheet data
was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
NOTE B - INVENTORIES
Inventories, which are stated at the lower of cost or market with cost
determined on the first-in, first-out method, consist of the following:
March 31, December 31,
2000 1999
------------ ------------
Raw materials.................$ 22,167,948 $ 23,687,824
Work-in-progress.............. 4,902,962 5,175,269
Finished goods................ 9,452,920 9,689,246
------------ ------------
$ 36,523,830 $ 38,552,339
============ ============
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 historically had favorable and
unfavorable quarterly adjustments resulting from annual physical inventories.
The Company is continuing to refine its costing procedures for valuation of
interim inventories in an effort to minimize book to physical inventory
adjustments.
NOTE C - INCOME TAXES
The effective income tax rate for the three months ended March 31, 2000 was
40.2% compared to 40.8% for the three months ended March 31, 1999.
Page 7 of 13
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NOTE D - EARNINGS PER SHARE
The number of shares used in the computation of basic and diluted earnings
per share are as follows:
Three Months Ended
March 31,
-------------------
2000 1999
-------- --------
Weighted average number of shares
outstanding (used in computation
of basic earnings per share) 11,301 13,228
Effect of dilutive stock options 4 95
-------- --------
Diluted shares outstanding (used
in computation of diluted
earnings per share) 11,305 13,323
======== ========
The computations of the number of common shares used in the determination of
basic and diluted earnings per share give retroactive recognition to the two
(2) 5% common stock dividends declared and paid in 1999, and the 5% common
stock dividend declared and paid in May 2000.
NOTE E - STOCK DIVIDEND
On May 1, 2000, the Company's Board of Directors declared a 5% common stock
dividend payable on May 22, 2000 to stockholders of record on May 15, 2000.
Page 8 of 13
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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, 2000 increased $15.4 million to
$71.8 million from $56.4 million for the quarter ended March 31, 1999. The
increased revenues relate primarily to the Company's large fleet customers
who accounted for approximately 82% of the increase.
Gross profit as a percentage of revenues increased to 17.5% for the quarter
ended March 31, 2000 compared to 16.9% for the quarter ended March 31, 1999.
Increases in material cost were offset by declines in both direct labor and
overhead costs. Benefiting labor costs were the large runs of like units
for the Company's major fleet customers. They are being built and delivered
primarily in the first and second quarters of 2000 while in 1999 a
significant number were delivered in the third quarter. While overhead costs
declined as a percentage of revenues in the quarter when compared to the
comparable prior year quarter, the workers compensation and group health
insurance components of overhead costs continue to show increases.
Selling, general and administrative expenses as a percentage of revenues
increased slightly to 9.8% for the quarter ended March 31, 2000 from 9.1% for
the quarter ended March 31, 1999. Contributing to this increase was the rise
in the fuel charge component of delivery expense.
Interest expense increased $540,489 to $879,493 for the quarter ended March
31, 2000 from $339,004 for the prior year comparable quarter. This increase
relates to the $17.1 million term loan used to finance the repurchase of
1,688,823 shares of Class A Common Stock completed in May of 1999.
Net income for the quarter ended March 31, 2000 was $2,809,107 compared to
$2,397,865 for the prior year comparable quarter. Basic and diluted earnings
per share were $.25 for the quarter ended March 31, 2000 compared to $.18 for
the quarter ended March 31, 1999.
Page 9 of 13
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Liquidity and Capital Resources
Net income of $2.8 million and funds available under the Company's revolving
credit agreement were adequate to finance operations during the quarter ended
March 31, 2000. Depreciation and amortization were the other significant
components of cash flow. The increase in accounts receivable of $4.1 million
in the quarter correlates directly with the significantly increased revenues.
Days sales outstanding were 38 for both the quarters ended March 31, 2000 and
March 31, 1999. The decrease in inventory of $2.0 million is also attributed
to the increase in revenues.
The Company has spent $1.7 million on capital expenditures for the quarter
ended March 31, 2000. The Company is currently in the process of purchasing
its North Carolina leased facility for $2.1 million, two distribution
facilities to service the Northern and Central Ohio markets for $.9 million
and a St. Louis distribution facility for $.4 million. These purchases are
expected to be completed in the second and third quarters of fiscal 2000.
The principal financing activity during the quarter was the use of the
Company's revolving credit agreement to finance operations, capital
expenditures and the Company's previously announced stock repurchase program
to repurchase up to 500,000 shares of class A common stock in open market
purchases or privately negotiated transactions through June 30, 2000. The
Company has purchased 217,535 shares at an average cost of $5.19 per share
through April 17, 2000.
The Company anticipates that cash flows from operations and funds available
under the Company's revolving credit agreement will be sufficient to meet the
Company's cash needs during 2000.
Forward-Looking Statements
This report contains forward-looking statements, other than historical facts,
which reflect the view of the Company's management with respect to future
events. Although management believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that the
expectations reflected in such forward-looking statements are reasonable, and
it can give no assurance that such expectations will prove to have been
correct. Important factors that could cause actual ressults to differ
materially from such expectations include, without limitation, limitations on
the availability of chassis on which the Company's product is dependent,
availability of raw materials and severe interest rate increases. The
Company assumes no obligation to update the forward-looking statements or to
update the reasons actual results could differ from those contemplated by
such forward-looking statements.
Page 10 of 13
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Supreme Industries, Inc.'s annual meeting of stockholders was held on
April 27, 2000. Below is a summary of matters voted upon at that meeting.
a) The following individuals were elected Directors by the
holders of the Company's Class A Common Stock by a vote
of 7,529,012 to 404,661 with no abstentions:
Rice M. Tilley, Jr.
Rick L. Horn
H. Douglas Schrock
The following individuals were elected Directors by the
holders of the Company's Class B Common Stock by a vote
of 1,826,092 to 0 with no abstentions:
William J. Barrett
Robert J. Campbell
Thomas Cantwell
Herbert M. Gardner
Omer G. Kropf
Robert W. Wilson
b) PricewaterhouseCoopers LLP was ratified as the Company's
independent auditors by a vote of 7,884,118 to 23,231
with 26,324 abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits:
Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K: None
Page 11 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 11, 2000 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 12 of 13
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SUPREME INDUSTRIES, INC.
FORM 10-Q
INDEX TO EXHIBITS
Sequential
Number Assigned Numbering System
in Regulation S-K Page Number
Item 601 Description of Exhibit of Exhibit
- ----------------- ---------------------- ----------------
(2) No exhibit.
(3) No exhibit.
(4) No exhibit.
(10) No exhibit.
(11) No exhibit.
(15) No exhibit.
(18) No exhibit.
(19) No exhibit.
(22) No exhibit.
(23) No exhibit.
(24) No exhibit.
(27) Financial data schedule.
(99) No exhibit.
Page 13 of 13
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 207,923
<SECURITIES> 0
<RECEIVABLES> 33,767,294
<ALLOWANCES> 609,000
<INVENTORY> 36,523,830
<CURRENT-ASSETS> 72,926,487
<PP&E> 60,771,799
<DEPRECIATION> 22,518,476
<TOTAL-ASSETS> 113,285,747
<CURRENT-LIABILITIES> 26,406,829
<BONDS> 38,144,430
0
0
<COMMON> 1,260,586
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 113,285,747
<SALES> 71,781,085
<TOTAL-REVENUES> 71,781,085
<CGS> 59,202,554
<TOTAL-COSTS> 59,202,554
<OTHER-EXPENSES> 7,002,931
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 879,493
<INCOME-PRETAX> 4,696,107
<INCOME-TAX> 1,887,000
<INCOME-CONTINUING> 2,809,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,809,107
<EPS-BASIC> 0.25
<EPS-DILUTED> 0.25
</TABLE>
