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 June 30, 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 CR 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 August 2, 2000
Class A 9,220,660
Class B 1,917,394
The index to Exhibits is at page 14 in the sequential numbering system.
Total number of pages: 14.
Page 1 of 14
</PAGE>
<PAGE>
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 & 9
Item 2. Management's Discussion and Analysis of 9, 10
Financial Condition and Results of & 11
Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Index to Exhibits 14
Page 2 of 14
</PAGE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
2000 1999
--------------- ---------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents............... $227,158 $270,935
Accounts receivable, net................ 31,164,240 29,026,385
Refundable income taxes................. 1,385,000
Inventories............................. 29,563,074 38,552,339
Deferred income taxes................... 1,268,284 1,268,284
Other current assets.................... 564,824 436,381
--------------- ---------------
Total current assets............... 62,787,580 70,939,324
--------------- ---------------
Property, plant and equipment, at cost....... 65,042,738 59,072,394
Less, Accumulated depreciation and
amortization..................... 23,509,732 21,608,302
--------------- ---------------
Property, plant and equipment, net. 41,533,006 37,464,092
--------------- ---------------
Intangible assets, net....................... 1,197,111 1,298,766
Other assets................................. 841,086 880,246
--------------- ---------------
Total assets....................... $106,358,783 $110,582,428
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 3 of 14
</PAGE>
<PAGE>
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, Concluded
June 30, December 31,
2000 1999
--------------- ---------------
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-term debt.... $5,101,572 $4,805,107
Trade accounts payable.................. 8,062,498 12,001,927
Accrued income taxes.................... 748,223 947,776
Other accrued liabilities............... 8,200,210 10,530,737
--------------- ---------------
Total current liabilities.......... 22,112,503 28,285,547
Long-term debt............................... 33,494,519 35,319,246
Deferred income taxes........................ 2,128,452 2,128,452
--------------- ---------------
Total liabilities.................. 57,735,474 65,733,245
--------------- ---------------
Stockholders' equity.......................... 48,623,309 44,849,183
--------------- ---------------
Total liabilities and stockholders'
equity......................... $106,358,783 $110,582,428
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 4 of 14
</PAGE>
<PAGE>
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ------------ ------------
Revenues..............$67,982,871 $66,485,606 $139,763,956 $122,861,648
----------- ----------- ------------ -----------
Costs and expenses:
Cost of sales....... 57,193,318 55,654,731 116,395,872 102,489,130
Selling, general and
administrative.... 6,365,189 5,563,378 13,368,121 10,718,152
Interest............ 782,435 599,618 1,661,927 938,622
----------- ----------- ------------ ------------
64,340,942 61,817,727 131,425,920 114,145,904
----------- ----------- ------------ ------------
Income before
income taxes.. 3,641,929 4,667,879 8,338,036 8,715,744
Income taxes.......... 1,466,000 1,825,000 3,353,000 3,475,000
----------- ----------- ------------ ------------
Net income...... $2,175,929 $2,842,879 $4,985,036 $5,240,744
=========== =========== ============ ============
Earnings per share:
Basic........... $.20 $.23 $.44 $.41
Diluted......... .20 .23 .44 .41
Shares used in the
computation of
earnings per share:
Basic........... 11,156,888 12,195,704 11,228,730 12,711,236
Diluted......... 11,158,489 12,296,266 11,248,964 12,813,768
The accompanying notes are a part of the consolidated financial statements.
Page 5 of 14
</PAGE>
<PAGE>
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
-------------------------------
2000 1999
--------------- ---------------
Cash flows from operating activities:
Net income.............................. $4,985,036 $5,240,744
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization.... 2,006,885 1,523,976
Gain on disposal of equipment.... --- (2,993)
Changes in operating assets and
liabilities.................... 1,638,458 (11,463,002)
--------------- ---------------
Net cash provided by (used in)
operating activities................ 8,630,379 (4,701,275)
--------------- ---------------
Cash flows from investing activities:
Additions to property, plant and
equipment............................. (5,974,145) (3,213,338)
Proceeds from disposal of property,
plant and equipment................... --- 3,325
Decrease in other assets................ 39,160 55,580
--------------- ---------------
Net cash (used in) investing
activities.......................... (5,934,985) (3,154,433)
--------------- ---------------
Cash flows from financing activities:
Proceeds from revolving line of credit
and other long-term debt.............. 51,799,015 67,070,742
Repayments of revolving line of credit
and other long-term debt.............. (53,327,276) (42,184,971)
Acquisition of treasury stock........... (1,210,910) (16,983,279)
--------------- ---------------
Net cash provided by (used in)
financing activities................ (2,739,171) 7,902,492
--------------- ---------------
Increase (decrease) in cash and cash
equivalents................................ (43,777) 46,784
Cash and cash equivalents, beginning of
period..................................... 270,935 185,424
--------------- ---------------
Cash and cash equivalents, end of period..... $227,158 $232,208
=============== ===============
Noncash investing and financing activities:
Common stock dividends.................. $2,693,761 $4,843,391
Conversion of Class B Common Stock to
Class A Common Stock --- 3,200
The accompanying notes are a part of the consolidated financial statements.
Page 6 of 14
</PAGE>
<PAGE>
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
--------------------------------------------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all of the information and financial statement disclosures
necessary for a fair presentation of consolidated financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. In the opinion of management, the information
furnished herein includes all adjustments necessary to reflect a fair
statement of the interim periods reported. All adjustments are of a normal
and recurring nature. The December 31, 1999 consolidated balance sheet data
was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
NOTE B - INVENTORIES
--------------------
Inventories, which are stated at the lower of cost or market with cost
determined on the first-in, first-out method, consist of the following:
June 30, December 31,
2000 1999
------------ ------------
Raw materials.................$ 16,265,358 $ 23,687,824
Work-in-progress.............. 4,547,463 5,175,269
Finished goods................ 8,750,253 9,689,246
------------ ------------
$ 29,563,074 $ 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 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 book to physical inventory adjustments.
NOTE C - INCOME TAXES
---------------------
The effective income tax rate for the three months ended June 30, 2000 was
40.3% compared to 39.1% for the three months ended June 30, 1999. The
effective income tax rate for the six months ended June 30, 2000 was 40.2%
compared to 39.9% for the six months ended June 30, 1999.
Page 7 of 14
</PAGE>
<PAGE>
NOTE D - EARNINGS PER SHARE
---------------------------
The number of common shares used in the computation of basic and diluted
earnings per share are as follows:
Three Months Six Months
Ended June 30, Ended June 30,
--------------- ---------------
2000 1999 2000 1999
------ ------ ------ ------
(In Thousands)
Weighted average number of common
shares outstanding (used in
computation of basic
earnings per share) 11,157 12,196 11,229 12,711
Effect of dilutive stock
options and warrants 1 100 20 103
------ ------ ------ ------
Diluted shares outstanding
(used in computation of
diluted earnings per share) 11,158 12,296 11,249 12,814
====== ====== ====== ======
The computations of the number of common shares used in the determination of
basic and diluted earnings per share give retroactive recognition to the 5%
common stock dividend paid on May 22, 2000 (see Note F).
NOTE E - DEBT
-------------
On May 31, 2000, the Company signed an amendment extending its credit
agreement to April 30, 2003. In addition, the amount available under its
revolving credit agreement was increased to $20,000,000 from July 1, to
January 31 and increasing to $27,000,000 during the period each year from
February 1 through June 30. The limits had previously been $18,000,000 and
$25,000,000. The larger facility is to accomodate the Company's large fleet
orders that normally occur during the first and second quarters.
NOTE F - COMMON 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 14
</PAGE>
<PAGE>
NOTE G - RECENTLY ISSUED ACCOUNTING STANDARDS
---------------------------------------------
In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial
Statements"; SAB 101 outlines the basic criteria that must be met to
recognize revenue, and provides guidelines for disclosure related to revenue
recognition policies. This guidance is required to be implemented in the
fourth quarter of 2000. The Company is currently reviewing this guidance in
order to determine the impact, if any, on its consolidated financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
-------------------------------------------------------------------
Results of Operations
---------------------
Revenues for the quarter ended June 30, 2000 increased 2.2% to $68.0 million
from $66.5 million for the quarter ended June 30, 1999 while revenues for the
six months ended June 30, 2000 increased 13.8% to $139.8 million from $122.9
million for the comparable prior year period. The Company's large national
fleet customers accounted for approximately 53% of the increased revenues for
the six months ended June 30, 2000. The Company completed delivery of its
large fleet orders during the first and second quarters of 2000. In
contrast, the 1999 fleet orders were delivered primarily in the second and
third quarters. The Company experienced revenue growth at each of its truck
body manufacturing plants during the six months ended June 30, 2000.
Gross profit as a percentage of revenues for the quarter ended June 30, 2000
was 15.9% compared to 16.3% for the quarter ended June 30, 1999. On a year
to date basis, gross profit for the six months ended June 30, 2000 was 16.7%
compared to 16.6% for the six months ended June 30, 1999. The decline in
gross profit during the second quarter of 2000 was primarily attributable to
increased material and overhead costs. Increases in the price of aluminum as
well as fiberglass and resin caused the material costs to go up while
increases in workers compensation, group health and dental insurance caused
overhead costs to go up. Increased material costs as a percentage of
revenues for the six months ended June 30, 2000 were offset by improvements
in direct labor, and to a lesser extent overhead resulting in a slight
increase in gross profit. These improvements are a result of the $16.9
million increase in revenue for the current period when compared to last year.
Page 9 of 14
</PAGE>
<PAGE>
Selling, general and administrative expenses were 9.4% of revenues for the
three months ended June 30, 2000 compared to 8.4% for the three months ended
June 30, 1999. For the six months ended June 30, 2000, selling, general and
administrative expenses were 9.6% of revenues compared to 8.7% for the six
months ended June 30, 1999. Significant items contributing to the increases
were compensation costs, depreciation of the Company's new operating software
and consulting and training costs associated with the new operating software.
Interest expense for the three months ended June 30, 2000 increased $182,817
to $782,345 or .25% of revenues compared to the quarter ended June 30, 1999
while on a year-to-date basis interest expense increased $723,305 to
$1,661,927 or .43% of revenues when compared to the six months ended June 30,
1999. The increase in interest expense relates primarily to the term loan in
the original amount of $17.1 million used to finance the purchase of
1,688,823 shares of Class A common stock completed in May 1999 and to a
lesser extent increased pool chassis interest.
Net income for the three months ended June 30, 2000 was $2,175,929 compared
to $2,842,879 for the three months ended June 30, 1999 while for the six
months ended June 30, 2000 net income was $4,985,036 compared to $5,240,744
for the six months ended June 30, 1999. Both basic and diluted earnings per
share were $.20 for the three months ended June 30, 2000 compared to $.23 for
the prior year quarter while for the six months ended June 30, 2000 both
basic and diluted earnings per share were $.44 compared to $.41 for the
comparable prior year period. Earnings per share increased for the first
six months of 2000 even though net income was down slightly due to the fewer
number of shares outstanding.
Liquidity and Capital Resources
-------------------------------
Net income of $5.0 million and funds available under the Company's revolving
credit agreement were adequate to finance operations, provide for capital
expenditures and fund the Company's stock repurchase program during the six
months ended June 30, 2000. Depreciation and amortization of $2.0 million
were the other significant components of cash flow. The increase of $2.1
million in accounts receivable correlates with the significantly higher
revenues. Days sales outstanding at June 30, 2000 increased to 42 from 41 at
June 30,1999. Inventories declined $9.0 million during the six months ended
June 30, 2000 as the Company completed delivery of its large fleet orders.
The decline of $3.9 million in accounts payable during the six months ended
June 30, 2000 correlates with the decline in inventory.
Page 10 of 14
</PAGE>
<PAGE>
Capital expenditures for the six months ended June 30, 2000 were $6.0
million. The Company acquired its previously leased North Carolina plant for
$2.1 million, a distribution facility in the Cleveland area for $.6 million,
a distribution facility in St. Louis for $.4 million and land to construct a
distribution facility in the Columbus, Ohio area for $.2 million. The
balance of the expenditures were for manufacturing equipment and facility
improvements at the Company's manufacturing facilities.
The principal financing activity was the purchase of $1.2 million of the
Company's Class A common stock in open market transactions and the use of the
Company's revolving credit agreement.
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 results 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 11 of 14
</PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
------- ---------------------------------
a) Exhibits:
Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K: None
Page 12 of 14
</PAGE>
<PAGE>
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: August 10, 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 13 of 14
</PAGE>
<PAGE>
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.
(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 14 of 14
</PAGE>
<PAGE>
