FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended January 31, 1995 Commission file number 2-31520
KIT MANUFACTURING COMPANY
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-1525261
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
530 East Wardlow Road, P.O. Box 848, Long Beach, California 90801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 595-7451
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. Common
Stock (no par value), 1,110,934 shares outstanding as of January 31, 1995.
1 of 12 Pages
<PAGE>
PART I
FINANCIAL INFORMATION
-2-
<PAGE>
KIT MANUFACTURING COMPANY
STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
Three Months Ended
January 31,
1995 1994
Sales $21,851 $15,301
----------- ----------
Costs and expenses
Cost of Sales 19,643 13,403
Selling, general and
administrative expense 1,793 1,449
Interest income, net (29) (17)
----------- ----------
21,407 14,835
----------- ----------
Income before income taxes 444 466
Provision for income taxes
(Note A) 182 191
----------- ----------
Net income $262 $275
=========== ==========
Weighted average shares outstanding
(Note B) 1,110,934 1,383,041
============ ==========
Net income per share
(Note B) $0.24 $0.20
============ ==========
Dividends per share $ - $ -
============ ==========
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
KIT MANUFACTURING COMPANY
BALANCE SHEETS
(Dollars in thousands)
January 31, October 31,
1995 1994
----------- -----------
ASSETS (Unaudited)
Cash and cash investments $1,409 $4,625
Accounts receivable, net 5,606 5,564
Notes and other receivables 547 577
Inventories:
Raw materials 3,141 2,317
Work in process 1,026 1,038
Finished goods 2,683 737
---------- ---------
Total inventories 6,850 4,092
Prepaids and deferred income taxes 1,325 1,190
---------- ---------
Total current assets 15,737 16,048
Property, Plant & Equipment, net 5,770 5,762
Other Assets 124 81
---------- ---------
Total Assets $21,631 $21,891
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable to bank $700
Accounts Payable 3,514 $4,486
Accrued Payroll and Related Items 1,518 2,005
Accrued Marketing Programs 760 592
Accrued Expenses 1,204 1,185
Income Taxes Payable 208 158
--------- --------
Total Current Liabilities 7,904 8,426
Deferred Income Taxes 1,308 1,308
--------- --------
Total Liabilities 9,212 9,734
--------- --------
-4-
<PAGE>
Commitments and Contingencies
Shareholders' Equity:
Common Stock and additional paid-in capital,
issued and outstanding 1,110,934 shares in
1995 and 1994 (Note B) 1,592 1,592
Retained earnings:
Balance at beginning of period 10,565 8,674
Net income for period 262 1,891
--------- --------
Balance at end of period 10,827 10,565
--------- --------
Total shareholders' equity 12,419 12,157
--------- --------
Total liabilities and
shareholders' equity $21,631 $21,891
========= ========
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
KIT MANUFACTURING COMPANY
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the three months ended
January 31,
1995 1994
------------ -----------
Cash flows from operating activities:
Cash received from customers $21,840 $14,327
Interest received 37 47
------------ -----------
Cash received from operations 21,877 14,374
------------ -----------
Cash paid to suppliers and employees 25,332 20,103
Interest paid 8 30
Income taxes paid 132 32
------------ -----------
Cash disbursed for operations 25,472 20,165
------------ -----------
Net cash used in operating activities (3,595) (5,791)
------------ -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (181) (1,143)
Changes in other current and non-current
assets (140) (242)
------------ -----------
Net cash used in investing activities (321) (1,385)
------------ -----------
Cash flows from financing activities:
Funds used to repurchase common stock (3,615)
Proceeds from line-of-credit borrowings 700 6,400
Principal payments on line-of-credit (2,000)
borrowings ------------ ----------
Net cash provided by financing activities 700 785
------------ ----------
Net decrease in cash (3,216) (6,391)
Cash at beginning of year 4,625 8,484
------------ ----------
Cash at end of period $1,409 $2,093
============ ==========
-6-
<PAGE>
Reconciliation of net income to net cash
used in operating activities:
Net income $262 $275
----------- ---------
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation 136 92
Increase in accounts receivable (11) (974)
Increase in inventories (2,758) (5,040)
Decrease in accounts payable (1,275) (304)
Increase in income taxes payable 50 160
----------- --------
Net cash used in operating activities ($3,595) ($5,791)
=========== ========
The accompanying notes are an integral part of these financial statements
-7-
<PAGE>
KIT MANUFACTURING COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note A - The provision or benefit for income taxes is
calculated using the Company's estimated annual effective tax rate.
Note B - Per share amounts are based on the weighted average
number of common shares outstanding. Common stock equivalents have not been
included in the computations because their effect would not be dilutive.
Note C - During the period reported on, there were no sales of securities.
Note D - In the opinion of management, all material adjustments which are
necessary for a fair statement of financial position, results of operations
and cash flows have been included in these financial statements.
Note E - The results of the period are not necessarily indicative of annual
results due to seasonality of the business.
Note F - Financial information contained herein is unaudited.
Note G - The Company is contingently liable to various financial
institutions on repurchase agreements in connection with wholesale inventory
financing. In general, inventory is repurchased by the Company upon default
by a dealer with a financing institution and then resold through normal
distribution channels. In addition, the Company is contingently liable to
financial institutions for letters of credit which were established to satisfy
the self-insured workers' compensation regulations of the states in which the
Company conducts manufacturing operations.
Management does not expect that losses, if any, from the contingencies
described above will be of material importance to the financial condition
or earnings of the Company.
Note H - During the first quarter of fiscal 1994, the Company repurchased
361,455 shares of common stock for $10.00 per share from the family of one of
the founders of KIT who died in 1989.
-8-
<PAGE>
<PAGE>
KIT MANUFACTURING COMPANY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION - JANUARY 31, 1995 COMPARED TO OCTOBER 31, 1994
Under first quarter market conditions, the Company borrows on its line of
credit to increase inventory levels to provide for anticipated second quarter
seasonal sales increases. Because of this, the Company's working capital
increased $211,000 due to an increase in inventories and a decrease in current
liabilities. The current ratio remained at 2.0:1 at January 31, 1995 in
comparison to 1.9:1 at October 31, 1994.
The Company's liquidity position as reflected in the current ratio described
above, capital resources, including excess plant capacity, working capital, and
line of credit, are considered to be adequate to provide for near term
anticipated growth.
RESULTS OF OPERATIONS - QUARTER ENDED JANUARY 31, 1995 COMPARED TO QUARTER
ENDED JANUARY 31, 1994
Total sales for the quarter ended January 31, 1995 were $21,851,000, a 43
percent increase from sales of $15,301,000 for the same quarter of the
prior year. The increase consisted of a 52 percent increase in manufactured
housing sales and a 39 percent increase in recreational vehicle sales. RV
sales in the Midwestern region have seen a significant increase in consumer
demand for the entry-level RV product. The Western region recreational vehicle
sales are up due to increased demand in both the low-end and mid-price point
markets. The manufactured housing sales increase was primarily the result of
the gain in manuafacturing capacity from the new production facility in
Caldwell, Idaho.
Cost of sales increased 47 percent from the same quarter of the prior year due
to the 43 percent increase in sales volume, and increased more than two
percent as a percent of sales. The decline in gross profit margins is chiefly
attributed to increases in production costs at the new production facility not
offset by increases in product sales prices.
Selling, general and administrative expenses increased 24 percent over the
same quarter of the prior year, however, declined one percent as a percent of
sales. The decrease was due in large part to stringent cost saving measures
instituted by the Company in the areas of marketing and administrative expenses.
Net interest income for the current quarter increased 68 percent from the same
quarter of the prior year. This was a consequence of a significant decrease in
the average net short-term borrowings. In the first quarter of 1994, the
Company used its available cash to expand its plant facilities and repurchase
its common stock thereby increasing its average short-term borrowings.
Net income for the three months ended January 31, 1995 was $262,000, or $0.24
per share, compared to net income of $275,000, or $0.20 per weighted average
share, for the same quarter of the prior year.
-9-
<PAGE>
<PAGE>
PART II
OTHER INFORMATION
Item 6 (a).
See Index to Exhibits on page 10.
Item 6 (b).
Form 8-K was not required to be filed during the quarter ended
January 31, 1995.
-10-
<PAGE>
<PAGE>
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.
KIT MANUFACTURING COMPANY
---------------------------------
(Registrant)
DATE: March 13, 1995 By: /s/ Dan Pocapalia
-----------------------------
Dan Pocapalia
Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
DATE: March 13, 1995 By: /s/ Dale J. Gonzalez
-----------------------------
Dale J. Gonzalez
Senior Vice President and Treasurer
(Principal Financial and Accounting
Officer)
-11-
<PAGE>
<PAGE>
KIT MANUFACTURING COMPANY
INDEX TO EXHIBITS
Item:
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession Not applicable
(4) Instruments defining the rights of security
holders, including indentures Not applicable
(11) Statement re computation of per share
earnings Not applicable
(15) Letter re unaudited interim financial
information Not applicable
(18) Letter re change in accounting principles Not applicable
(19) Previously unfiled documents Not applicable
(20) Report furnished to security holders Not applicable
(23) Published report regarding matters
submitted to vote of security holders Not applicable
(24) Consents of experts and counsel Not applicable
(25) Power of attorney Not applicable
(27) Financial Data Schedule
(28) Additional exhibits Not applicable
-12-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly financial statements for the quarter ended January 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> JAN-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,064,000
<SECURITIES> 345,000
<RECEIVABLES> 6,197,000
<ALLOWANCES> 44,000
<INVENTORY> 6,850,000
<CURRENT-ASSETS> 15,737,000
<PP&E> 10,302,000
<DEPRECIATION> 4,533,000
<TOTAL-ASSETS> 21,631,000
<CURRENT-LIABILITIES> 8,228,000
<BONDS> 0
<COMMON> 750,000
0
0
<OTHER-SE> 11,669,000
<TOTAL-LIABILITY-AND-EQUITY> 21,631,000
<SALES> 21,851,000
<TOTAL-REVENUES> 21,851,000
<CGS> 19,643,000
<TOTAL-COSTS> 21,407,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> 444,000
<INCOME-TAX> 182,000
<INCOME-CONTINUING> 262,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,000
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
