SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to _______.
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, Long Beach, California 90807
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 595-7451
Securities registered pursuant to Section 12(b) of the Act:
Title of class: Common Stock, no par value
Name of each exchange on which registered: American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The approximate aggregate market value of voting stock held
by non-affiliates of Registrant was $7,924,017 as of January 12, 1996.
1,110,934
(Number of shares of Common Stock outstanding as of January 12,
1996)
Certain information called for by Parts I, II and IV is
incorporated by reference to the registrant's Annual Report to
shareholders for the fiscal year ended October 31, 1995 and the
information called for by Part III is incorporated by reference
to the registrant's definitive proxy statement to be filed with
the Commission within 120 days after October 31, 1995.
The Index to Exhibits appears on page 16.
35 pages in total.
1
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PART I
Item 1. Business
General
KIT Manufacturing Company ("Registrant") was
incorporated in California in 1947, as the successor to a business
founded in 1945. A description of Registrant's business during the
last fiscal year appears in the Registrant's Annual Report to
Shareholders for the fiscal year ended October 31, 1995, which is
incorporated herein by reference.
Principal Products Produced and Industry Segments
Registrant designs, manufactures and sells manufactured
housing (mobile homes) which are relocatable, factory-built
dwellings of single and double unit design. Constructed on wheel
undercarriages, they are towed by truck to locations where they
are set up and connected to utilities. Registrant
also produces recreational vehicles designed as short-period
accommodations for vacationers and travelers. These products are
travel trailers designed to be towed behind passenger vehicles and
fifth wheel travel trailers designed to be towed behind and
attached to special couplers in the beds of pickup trucks.
Set forth below are the percentages of revenues
contributed by each class of similar products for the last three
fiscal years:
Products Class
Fiscal Year Manufactured Recreational
Ended October 31, Housing Vehicles
1993 34% 66%
1994 30% 70%
1995 27% 73%
Certain information regarding industry segments is set
forth on page 28 of Registrant's Annual Report to Shareholders for
the fiscal year ended October 31, 1995, which is incorporated
herein by reference.
Method of Product Distribution
Registrant sells its products to approximately 289
dealers in 30 states, 32 dealers in Canada and 5 dealers in Japan.
Exclusive dealerships are not the pattern of the industry, and
virtually all dealers also sell competing products. Registrant
generally produces manufactured housing products only against orders
received from dealers. Recreational vehicles are built for inventory
particularly during the winter months in anticipation of greater
demand during the spring months. (See "Seasonal Considerations"
below.) Transportation charges are an important
2
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Item 1. Continued
factor in the cost of Registrant's products; therefore, distribu-
tion is generally a function of distance to the various markets and
competitive conditions within these markets. (See Item 2,
"Properties," for the locations of Registrant's principal
plants.)
Registrant is not dependent upon a single customer or a
few customers and no dealer or group of dealers accounts for a
substantial amount of Registrant's total sales.
Competitive Conditions
The recreational vehicle and manufactured housing
industries are highly competitive. Registrant believes that the
principal methods of competition in these industries are based upon
quality, price, styling, warranty and service of products being
offered. Registrant also believes that it competes favorably with
respect to these factors in the recreational vehicle group and has
recently taken action with respect to the manufactured housing
product line to ensure it remains competitive in the marketplace.
There are a large number of firms manufacturing and marketing
products similar to those of Registrant within the geographical
area in which Registrant's products are marketed. Several of the
manufacturers within these industries are larger than Registrant in
terms of total revenue and resources.
Backlog
Registrant does not consider the existence and level of
backlog at any given date to be a significant factor affecting its
business, except in establishing its production schedules. This is
primarily due to the fact that orders may be cancelled up until
the time the dealer takes delivery, although such cancellations
have not been significant to date. The dollar amount of backlog,
subject to the above described cancellation provision, was
$7,705,796 and $10,912,674 at October 31, 1995 and 1994,
respectively. All of the backlog existing at October 31, 1995 is
expected to be filled within the current fiscal year.
Sources and Availability of Raw Materials
Registrant purchases raw materials and components from
a number of alternative sources and is not dependent upon any
particular supplier.
Patents
Although Registrant's products are marketed under
various trade names, Registrant does not believe that patents,
trademarks, licenses, franchises and concessions are of material
importance to its business.
3
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Item 1. Continued
Research and Development
Registrant periodically revises and redesigns its
models in response to consumer demand. These revisions and
redesigns can be extensive, if necessary, in order to obtain
market acceptance. Registrant manufactures and sells manufactured
housing and recreational vehicles only and does not engage in new
product development.
Number of Employees
On October 31, 1995, Registrant had 967 employees at
its manufacturing plants and executive offices.
Seasonal Considerations
Registrant's sales and production volume traditionally
increase during the second and third quarters of the fiscal year.
During fiscal 1995, fifty-three percent of sales were achieved
during the second and third fiscal quarters.
Government Regulation
The manufacture and distribution of Registrant's manu-
factured housing and recreational vehicle products are subject to
governmental regulation in the United States and Canada at the
federal, state, provincial and local levels. Compliance with
those governmental regulations, including provisions regulating
the discharge of materials into the environment or otherwise
relating to the protection of the environment, is not expected to
have a material adverse effect on Registrant.
Business Risks
Demand for Registrant's products is dependent upon the
availability and cost of gasoline, available credit and economic
conditions. Credit and the economy favorably affected dealers and
retail purchasers of Registrant's recreational vehicle products
in fiscal 1995. The Registrant believes that the Midwestern
region has seen an increase in demand in fiscal 1995 due to the
continuing economic improvement.
4
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Item 1. Continued
Working Capital
Accounts receivable balances fluctuate generally with
the timing of shipments during the month since the majority of
sales are either on C.O.D. terms or are financed by dealers through
flooring arrangements with financial institutions. Recreational
vehicle finished goods inventory balances are subject to seasonal
variations. (See "Method of Product Distribution" and "Seasonal
Considerations" above.) A short delivery lead time exists for
the majority of recreational vehicle and manufactured housing raw
material purchases, thereby allowing Registrant to maintain low
levels of raw materials inventory. Registrant is a party to an
unsecured revolving credit agreement with a bank that provides
financing of seasonal working capital requirements.
5
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Item 2. Properties
Registrant leases general executive and administrative
offices in Long Beach, California. The lease expires on March 14,
1997. Registrant owns an 11,160 square foot building, situated
on 1.7 acres, housing operational offices in Caldwell, Idaho.
The following table sets forth certain information about the
property and facilities utilized by Registrant for manufacturing
and plant administrative purposes, and the property leased to
others (all property is owned by Registrant unless otherwise noted):
Approximate Approximate
Facility And Location Acres Square Feet
Recreational vehicle plants:
Caldwell, Idaho 54,400 (1)
Caldwell, Idaho 20.5 55,200
Caldwell, Idaho 20.5 53,000
McPherson, Kansas 18.6 47,400
McPherson, Kansas 9.1 67,600
Chino, California 10.0 47,700 (2)
Manufactured housing plants:
Caldwell, Idaho 9.5 64,000 (3)
Caldwell, Idaho 13.0 81,000 (4)
McPherson, Kansas 10.0 -0- (5)
(1)Production facility leased by Registrant during fiscal 1995.
Lease expires September 30, 1997.
(2)Available for lease by Registrant.
(3)New plant production facility completed in January 1994.
(4)Approximately 11,000-square foot warehouse added to production
facility during fiscal 1993.
(5)Production facility destroyed by a tornado on June 15, 1992;
replaced in Caldwell, Idaho in 1994.
6
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Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
7
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Information in response to this item is incorporated by
reference from the information appearing in Registrant's Annual
Report to Shareholders for the fiscal year ended October 31,
1995, at pages 20 and 33.
Item 6. Selected Financial Data
Information in response to this item is incorporated by
reference from the information appearing in Registrant's Annual
Report to Shareholders for the fiscal year ended October 31,
1995, at page 20.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Information in response to this item is incorporated by
reference from the information appearing in Registrant's Annual
Report to Shareholders for the fiscal year ended October 31,
1995, at page 25.
Item 8. Financial Statements and Supplementary Data
Information in response to this item is incorporated by
reference from the Financial Statements and the Notes to Financial
Statements in Registrant's Annual Report to Shareholders
for the fiscal year ended October 31, 1995, at pages 27 through
33 and pages 12 through 14 of this Form 10-K.
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
8
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to this item is incorporated
by reference from Registrant's definitive Proxy Statement to be
filed with the Commission within 120 days after the close of
Registrant's fiscal year.
Item 11. Executive Compensation
Information with respect to this item is incorporated
by reference from Registrant's definitive Proxy Statement to be
filed with the Commission within 120 days after the close of
Registrant's fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information with respect to this item is incorporated
by reference from Registrant's definitive Proxy Statement to be
filed with the Commission within 120 days after the close of
Registrant's fiscal year.
Item 13. Certain Relationships and Related Transactions
Information with respect to this item is incorporated
by reference from Registrant's definitive Proxy Statement to be
filed with the Commission within 120 days after the close of
Registrant's fiscal year.
9
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) (1) Financial Statements
Annual
Report
Page(s)
Balance Sheets at October 31, 1995 and
1994 27
Statements of Income for each of the three
years in the period ended October 31, 1995 28
Statements of Shareholders' Equity for each
of the three years in the period ended
October 31, 1995 29
Statements of Cash Flows for each of
the three years in the period ended
October 31, 1995 30
Notes To Financial Statements 31-33
Report of Independent Accountants 34
The financial statements and the Report of Independent
Accountants listed in the above index which are included in
Registrant's Annual Report to Shareholders for the fiscal year ended
October 31, 1995 are hereby incorporated by reference. With the
exception of the items referred to above and in Items 1, 5, 6, 7
and 8, Registrant's Annual Report to Shareholders for the fiscal
year ended October 31, 1995 is not to be deemed filed as part of
this report.
10
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Item 14. Continued
(a) (2) Financial Statement Schedules
FORM
10-K
PAGE
Report of Independent Accountants on
Schedules 12
Schedules:
For each of the three years in the
period ended October 31, 1995
II Valuation and Qualifying
Accounts 13
IX Short-Term Borrowings 14
Schedules other than those listed above are omitted for
the reason that they are not required or are not applicable, or
the required information is shown in the financial statements or
notes thereto. Columns omitted from schedules filed have been
omitted because the information is not applicable.
(a) (3) Exhibits
(3) Articles of Incorporation and By-Laws adopted by
Registrant.
(10) Material Contracts.
(A) 1. Incentive Bonus Plan.
(13) Annual report to security holders.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fiscal
quarter ended October 31, 1995.
11
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REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULES
To the Shareholders and Board of Directors
of KIT Manufacturing Company
Our report on the financial statements of KIT
Manufacturing Company has been incorporated by reference in this
Form 10-K from page 34 of the 1995 Annual Report to
Shareholders of KIT Manufacturing Company. In connection with
our audits of such financial statements, we have also audited the
related financial statement schedules listed in the index on
page 11 of this Form 10-K.
In our opinion, the financial statement schedules
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
December 11, 1995
12
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<TABLE>
KIT MANUFACTURING COMPANY
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended October 31, 1995, 1994 And 1993
Col. A Col. B Col. C Col. D Col. E
Additions
(1) (2)
Charged To Charged To
Balance At Costs Other Balance At
Beginning Of And Accounts - Deductions - End Of
Description Period Expenses Describe Describe Period
<CAPTION>
Allowance for doubtful accounts:
<S> <C> <C> <C> <C>
Year ended October 31, 1993 $44,000 $7,000 $2,000 (A) $49,000
Year ended October 31, 1994 $49,000 $7,000 $12,000 (A) $44,000
Year ended October 31, 1995 $44,000 $ - $ - $44,000
(A) Write-off of uncollectible accounts
</TABLE>
13
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<TABLE>
KIT MANUFACTURING COMPANY
SCHEDULE IX
SHORT-TERM BORROWINGS
For The Years Ended October 31, 1995, 1994 And 1993
Col. A Col. B Col. C Col. D Col. E Col. F
Balance At Maximum Amount Weighted Average Weighted Average
Category Of Aggregate End Of Weighted Average Outstanding Outstanding Interest Rate
Short-Term Borrowings Period Interest Rate During The Period(B) During The Period(C) During The Period(C)
Year ended October 31, 1993:
<S> <C> <C> <C> <C> <C>
Unsecured revolving
credit agreement (A) -0- * $2,200,000 $1,250,000 6.0%
Year ended October 31, 1994:
Unsecured revolving
credit agreement (A) -0- * $5,400,000 $2,159,000 6.4%
Year ended October 31, 1995:
Unsecured revolving
credit agreement (A) -0- * $1,300,000 $722,000 8.8%
(A)The Registrant is party to an unsecured revolving
credit agreement with a bank that provides financing
of seasonal working capital requirements. There are
no compensating balance requirements under the
agreement. Major provisions of the agreement include
interest at the bank's prime rate and certain minimum
requirements as to the Registrant's working capital
and debt to equity relationships. The maximum
borrowing permitted is the lesser of $7,500,000 or
the sum of 80% of eligible trade receivables and 50%
of inventories, less any commercial and standby
letters of credit outstanding up to a maximum of
$1,000,000.
(B)Based on month-end balances.
(C)Based on the daily balances and interest rates
during the year.
*Not applicable.
</TABLE>
14
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ Dan Pocapalia
Dan Pocapalia
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the
dates indicated:
/s/ Dan Pocapalia Jan. 12, 1996 /s/ John W.H. Hinrichs Jan. 12, 1996
Dan Pocapalia John W.H. Hinrichs
Chairman of the Board, Director
Chief Executive Officer
and President (Principal
Executive Officer)
/s/ John F. Zaccaro Jan. 12, 1996 /s/ Frank S. Chan Jan. 12, 1996
John F. Zaccaro Frank S. Chan
Director Director
/s/ Dale J. Gonzalez Jan. 12, 1996 /s/ Fred W. Chel Jan. 12, 1996
Dale J. Gonzalez Fred W. Chel
Vice President - Treasurer Director
(Principal Financial and
Accounting Officer)
15
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INDEX TO EXHIBITS
EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
Sequential
Page
Number
(3) Articles of Incorporation and By-Laws adopted
by Registrant 17
(10) Material Contracts
(A) 1. Incentive Bonus Plan 18
(13) Annual Report to Shareholders 19-33
16
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(3) Articles of Incorporation and By-Laws
The amended and restated Articles of Incorporation
and By-Laws of the Registrant are hereby incorporated by
reference from the exhibits to Form 10-K (File No. 2-31520) as
filed for the fiscal year ended October 31, 1987.
17
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(10) Material Contracts
(A) 1. Incentive Bonus Plan
Registrant maintains an Incentive Bonus Plan under
which incentive bonuses may be paid to key manage- ment personnel
pursuant to individual agreements relating to the profitability of
the participant's area of responsibility. The amount of the bonus
paid generally increases as the profitability of the area of
responsibility increases. Time periods for which performance is
measured include fiscal quarters and in some cases fiscal years.
Payments are typically made within 75 days after the time period
for which performance is measured. The agreements are reviewed
annually and may be terminated at will by either party.
18
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ABOUT THE COVER
The two recreational vehicles on the cover represent KIT
Manufacturing Company's entry-level Sportsmaster series. On the
left is a typical travel trailer and on the right is a fifth
wheel model. The Sportsmaster series is very popular with
first-time buyers, looking for a quality product at an affordable
price.
ABOUT THE COMPANY
KIT Manufacturing Company produces recreational vehicles and
manufactured housing, marketed by an independent dealer network.
Recreational vehicles are used primarily for camping or
vacation travel and provide a variety of living accommodations.
They are manufactured in plants located in Caldwell, Idaho, and
McPherson, Kansas. RVs range from 16 to 36 feet in length, and
are distributed by 276 independent dealers throughout the
continental United States, Canada and Japan.
KIT homes are permanent living structures, built in single
and multi-sections, utilizing materials similar to conventional
housing. These factory-built homes can be manufactured with
greater efficiency and, therefore, at lower costs than site-built
houses. Living space ranges from 750 to 2,500 square feet. The
homes are built in Caldwell, Idaho, and are distributed through a
network of 50 dealers in nine Western states.
With corporate headquarters located in Long Beach,
California, KIT Manufacturing employs a total of approximately
1,000 persons.
19
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<TABLE>
Selected Financial Data
<CAPTION>
October 31, 1995 1994 1993 1992 1991
(Dollars in thousands except per share amounts)
FISCAL YEAR
<S> <C> <C> <C> <C> <C>
Sales $101,462 $89,722 $59,122 $55,469 $57,422
Net income 1,349 (1) 1,891(2) 33 1,458(3) 1
Cash dividends paid -0- -0- -0- -0- -0-
Capital expenditures 1,192 3,622 1,804 423 112
Depreciation 597 478 331 313 336
AT YEAR-END
Working capital $8,104 $7,622 $10,832 $12,213 $10,017
Current ratio 2.0:1 1.9:1 2.7:1 4.1:1 2.6:1
Property, plant and
equipment, net $6,388 $5,762 $3,965 $2,535 $2,512
Total assets 23,362 21,891 21,308 18,795 18,790
Long-term obligations -0- -0- -0- -0- -0-
Shareholders' equity 13,506 12,157 13,930 13,897 12,439
PER SHARE
Net income $1.21 (1) $1.61(2) $0.02 $0.99(3) $0.00
Shareholders' equity 12 11 9 9 8.45
(1) Includes gain on business interruption claims of $423,000, net of related
income taxes, or $0.38 per share.
(2) Includes gain on involuntary conversion of plant facility and equipment
and business interruption claims of $671,000, net of related income taxes, or
$0.57 per weighted average share.
(3) Includes gain on involuntary conversion of plant facility and equipment
of $1,118,000, net of related income taxes, or $0.76 per share.
</TABLE>
20
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TO OUR SHAREHOLDERS
We are pleased to report that KIT Manufacturing Company
reached over $100 million in sales during its 50th anniversary
year. This achievement was the result of the continued research
and development of new models that are high in value, quality and
trouble free. Also, our financial status, with an unused line of
credit and no long-term debt, is instrumental in KIT remaining
competitive in the marketplace.
For the year ended October 31, 1995,
your Company's sales increased 13% to a record $101,462,000 when
compared with sales of $89,722,000 for the prior year. Net
income was $1,349,000, or $1.21 per share, which compares to net
income of $1,891,000, or $1.61 per share, for last year. Net
income includes gains on involuntary conversion of plant facility
and equipment, and business interruption claims, net of related
income taxes, in the amounts of $423,000, or $.38 per share, for
fiscal 1995 and $671,000, or $.57 per share, for fiscal 1994.
These gains are the result of claims arising from the 1992
tornado damage at our McPherson, Kansas, manufacturing facility.
The record sales were achieved mainly through our expanded
dealer network system and demand for the Company's products. KIT
is continuously and aggressively developing "partnerships" with
high quality dealers to represent KIT products in 21 states as
well as in Canada and Japan.
Net income during the year was impacted by several
non-recurring items. Additional costs were incurred in
developing new product lines, which included the start-up of a
new production facility. Also, two manufactured housing plants
were consolidated to reduce overhead costs and increase
production efficiency. This plant expansion and consolidation
are now completed and the associated costs are behind us.
Additional manufacturing capacity was required due to
continued demand for the Company's RV products. Therefore, KIT
leased a 54,000 square foot manufacturing facility in Caldwell,
Idaho, and the first RV units came off-line during June of 1995.
In addition, the travel trailer which can be pulled by smaller,
lightweight vehicles. We have also developed the Patio Hauler RV
which includes a space for transporting larger items and at the
destination converts into a screened-in porch. Furthermore, our
entry-level product line, the Sportsmaster, introduced in 1993,
continues to gain market share and favorable acceptance by price
conscious buyers.
We are continuing to make inroads in the marketplace with
the introduction of our 1996 models. Dealers commented favorably
with regard to the changes and additions to our product lines.
Our RV models, with new floor plans, colors and designs, were
well received at the National RV Show in Louisville, Kentucky, in
December 1995. Last October we introduced our new manufactured
housing models in a created "neighborhood" setting in Boise,
Idaho. Both shows were very successful in selling KIT products,
and increased our ability to sign up new, quality dealerships.
Management is optimistic about fiscal 1996. The plant
expansion and consolidation are behind us and we can more
effectively focus on enhancing our bottom line profit. KIT will
continue to build products of high quality and value which meet
the needs of the retail consumer. The Company will continue to
concentrate on expanding its market penetration and enhancing its
market share. We are confident in our ongoing ability to be
innovative and remain competitive in the marketplace.
21
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50 YEARS OF INNOVATION
Dan Pocapalia, Chairman, President and Chief Executive Officer of
KIT Manufacturing, co-founded the Company after World War II. He
has been closely associated with the Company ever since.
The first "plant" was a latticed-front fruit stand in Pico
Rivera, California, where the "teardrop" trailer was born in
1945. The original plans called for building 60 trailers. This
was subject to KIT obtaining a U.S. Government Priority Number,
which was a big challenge for the fledgling enterprise. The name
"KIT" was established to be synonymous with the marketing plan to
sell small teardrop trailers as kits, to be assembled by the
buyers. A change in marketing strategy resulted in the teardrop
being produced, assembled and sold as a completed unit.
The KIT Kamper's grand debut was in February of 1946 at the
Gilmore Stadium Show in Los Angeles. The Company had managed to
get enough material to build 12 show models. The shortage of
available material caused KIT to utilize war surplus aluminum for
the exterior and, out of necessity, to use fiberglass fenders.
This had not been done before. The show results were fantastic,
with about 500 orders booked. The orders exceeded everyone's
expectations and people lined up outside the plant to buy a KIT
Kamper_the desirable and affordable recreation alternative.
Training a work force to build the pre-sold units was only
one of the many problems facing this young company. An immediate
decision was required in determining how to distribute
this new and exciting trailer. KIT management decided to enter
into an agreement with the Sackett-Nicholson Corporation of Long
Beach, California, as the sole distributor for the KIT Kamper.
During these early years, several nationally known companies
got their start with KIT, to mention a few: Zeiman Manufacturing
Company's first job was building the KIT Kamper chassis;
Manchester Tank fabricated the butane tanks; Hehr Manufacturing
Company supplied windows; Davidson Plywood Company's first load
of paneling arrived at KIT in a rented utility trailer pulled
behind a Model A Ford; and Kaiser Aluminum Company delivered the
first aluminum milled at its Trentwood, Washington, plant to KIT.
During the first full year (1946), 3,500 KIT Kampers were
produced and delivered. In January of 1947, the Company moved to
a 100,000 square foot manufacturing facility in the Long Beach
Harbor area. Shortly thereafter, KIT was in production with its
larger 8x14 foot travel trailer. The demand for the trailers
exceeded production. Also, KIT trailers were given as prizes on
Queen for a Day radio programs and the Soap Box Derby. A few
years later, another tremendous growth potential came from the
federal government that needed trailers as temporary housing.
In 1969, KIT Manufacturing Company went public in the
over-the-counter market and moved to the American Stock Exchange
in March of 1970 under the symbol KIT.
After going public, the Company expanded to 14 manufacturing
facilities nationwide. Today, KIT manufactures its products in
McPherson, Kansas, and Caldwell, Idaho.
The traditions and direction of KIT that began in the humble
setting of a fruit stand in Pico Rivera, California, have
propelled the Company into a multi-state operation that has a
prominent place among manufacturers of RVs and manufactured
housing in the United States. Throughout the 50 year history of
the Company, the philosophy of building high quality products at
an affordable price has been the driving force behind KIT. This
principle will continue to be a major part of our business for
the benefit of our current and future dealers and customers.
22
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RECREATIONAL VEHICLES
KIT Manufacturing Company is a predominant manufacturer of travel trailers
and fifth wheels in the United States. This is the result of delivering the
highest quality and value to our customers for the last 50 years.
Every year KIT intorduces new innovations in the design and floor plans of
its models in response to customer requests. KIT's RV products incorporate
reliable name-brand appliances, high quality interior components and acces-
sories, as well as radial tires, rubber roofs, and fiberglass insulation
throughout. Some of the many interior features include: an entertainment
center with AM/FM cassette stereo, abundance of storage, large skylights in
the bath and living areas, queen-size bed, double-door LPG/electric refriger-
ator, eye-level microwave overn, ducted air conditioning and heating system,
and large double porcelain sink. Several models have slide-out features for
interior expansion of the living room and master bedroom. Awnings are
available on all products and can be converted into an enclosed patio.
KIT produces a wide range of recreational vehilces in its manufacturing
facilities in Caldwell, Idaho, and McPherson, Kansas. The product lines
include the Sportsmaster, Road Ranger, Companion and Patio Hauler. KIT
RVs measure from 16 to 36 feet in length, and provide sleeping accommodations
for 2 to 10 people. KIT offers over 50 different floor plans with retail
prices ranging between $9,500 and $45,000.
More than 275 independent dealers distribute KIT recreational vehicles to
retail consumers throughout the continental United States, Canada and Japan.
KIT provides its dealer network with national media advertising, sales
literature, training, and special support programs.
RV use is a flourishing source of recreation and relaxation for many people
regardless of age or economic background. As in the past 50 years, KIT
continues to strive for excellence in making the RV lifestyle a most
enjoyable experience for its satisfied customers.
23
<PAGE>
MANUFACTURED HOUSING
KIT's Manufactured Housing Division build single and multi-sectioned
residences designed to be transported to a prepared homesite. Multi-sec-
tional homes offer the appearance and living space of traditional site-built
housing.
KIT manufactures the homes in a controlled environment which minimizes the
variable inherent in outdoor construction. By standardizing models, KIT
buildes homes with greater efficiency and, consequently, at lower cost than
site-built homes with the same features. KIT distributes its manufactured
homes from production facilities in Caldwell, Idaho, through a network of
approximately 50 dealers located in 9 western states.
KIT markets several product lines to meet diverse customer demands. The
Sea Crest home offers gracious, convenient living in a modest floor space.
Sierra double and triple-wide homes, generally larger, provide an array of
styles and custom features. The KIT Special home offers spacious elegance
in a popular double-section configuration. The Golden State line provides
outstanding value for individuals who place a premium on comfort and luxury.
Finally, designed specifically with subdivision application in mind, the
Briercrest home comes ready to attach a site-built garage.
Living space in the 40 available floor plans ranges from 750 to over 2,500
square feet. Retail prices, exclusive of land costs, range from $25,000 to
$115,000. Most modesl include walk-in closets, spacious open areas, and
Roman tubs with separate showers.
As the nation continues to search for affordable, single-familty housing,
KIT stands ready to provide quality, attractive, energy-efficient homes at
affordable prices.
24
<PAGE>
Management's Discussion and Analysis of Results
of Operations and Financial Condition
Results of Operations
Fiscal 1995 Compared to Fiscal 1994
Sales increased 13% to $101.5 million compared
to the prior year. Net income decreased to $1,349,000,
or $1.21 per share, compared to $1,891,000, or $1.61
per share, in 1994. Net income in 1995 and 1994 includes
an after-tax gain from insurance proceeds on business
interruption claims and an after tax-gain on an involuntary
conversion of plant facility of $423,000, or $0.38 per
share and $671,000, or $0.57 per share, respectively.
Both divisions implemented modest price increases in
1995 and 1994 to counter cost increases in raw material
costs. Operating revenue in the manufactured housing
division fell due to increased sales of lower margin
homes and a temporary increase in operating costs as
the division went through a consolidation.
Recreational vehicle division sales increased
18% to $74.2 million. Product line innovations and
new models resulted in an overall increase in RV
shipments of 10% to 5,516 units. Travel trailer shipments
rose 19% to 3,196 units, with the model mix tending toward
low-priced units. Fifth-wheel model shipments increased
to 2,320 units from 2,318 shipped last year. Management
of the Company believes that the trend in sales of
low-priced units will continue in fiscal 1996.
Manufactured housing sales rose 1% to $27.3 million.
This increase reflected a 16% increase in shipments of
single-section homes to 116 units and a decline in
shipments of 3% in multi-section homes to 665 floors.
Total unit shipments decreased to 781 units in fiscal
1995.
Gross profit as a percent of sales declined to 9.2%
in comparison to 10.6% in 1994. The primary reasons for
the decrease was an increase in sales of lower margin RV's
and manufactured housing. Also, costs increased due to
start-up of the new RV plant and consolidation of the
manufactured housing plants.
Selling, general and administrative expenses decreased
5% to 7.8% of sales in comparison to fiscal 1994 as the
Company continued to hold down these costs.
Net interest income of $42,000 as compared to $16,000
in 1994 was the result of lower average borrowing levels
than fiscal 1994.
Fiscal 1994 Compared to Fiscal 1993
Sales increased 52% to $89.7 million compared to fiscal
1993. Net income increased to $1,891,000, or $1.61 per share,
compared to $33,000, or $0.02 per share, in fiscal 1993. Net
income in 1994 includes an after tax-gain on an involuntary
conversion of plant facility and equipment of $481,000, or
$0.41 per weighted average share, and an after-tax gain from
insurance proceeds on business interruption claims of $190,000,
or $0.16 per weighted average share.
Recreational vehicle division sales increased 61% to $62.8
million to an overall increase in RV shipments of 50% to 5,009
units. Travel trailer shipments rose 56% to 2,691 units.
Fifth-wheel model shipments increased 44% to 2,318 units from
1,609 shipped in 1993.
Manufactured housing sales rose 34% to $26.9 million. Total
unit shipments increased 33% to 785 units in fiscal 1994.
Gross profit as a percent of sales increased to 10.6% in
comparison to 10.2% in 1993. The primary reason for the
improvement was an increase in sales of higher margin RV's over
fiscal 1993.
Selling, general and administrative expenses decreased 2% to
8.3% of sales in comparison to fiscal 1993.
Net interest income of $16,000 as compared to $222,000 in
fiscal 1993 was the result of lower average cash balances and
higher average borrowing levels than 1993.
Liquidity and Capital Resources
The financial position of the Company continues to remain
strong. The current ratio at fiscal year end 1995 rose to 2.0
from 1.9 in fiscal 1994 due to an increase in receivables and
inventories.
In addition to funding capital requirements with available
funds, the Company, through financing activities, funds seasonal
working capital requirements with cash from periodic borrowings
on its unsecured revolving line of credit. See Note 4 of the
Notes to Financial Statements for discussion of the line of
credit. There were no borrowings against the line of credit at
fiscal year-end 1995 or 1994.
The Company believes that available funds, supplemented as
needed with funds available on its line of credit, will provide
it with sufficient resources to meet present and reasonably
foreseeable working capital requirements and other cash needs.
25
<PAGE>
<TABLE>
Industry Segment Information
<CAPTION>
October 31, 1995 1994 1993
(Dollars in thousands)
SALES
<S> <C> <C> <C>
Manufactured housing $27,304 $26,908 $20,050
Recreational vehicles 74,158 62,814 39,072
Total sales $101,462 $89,722 $59,122
INCOME (LOSS) BEFORE INCOME TAXES
Operating income (loss)
Manufactured housing ($53) $1,196 $1,665
Recreational vehicles 1,545 808 (1,929)
Total operating income (loss) 1,492 2,004 (264)
Interest income, net 42 16 222
Gain on involuntary conversion of plant
and equipment 779
Gain on business interruption
claims 701 312
Income (loss) before income taxes $2,235 $3,111 ($42)
IDENTIFIABLE ASSETS
Manufactured housing $6,467 $8,413 $5,381
Recreational vehicles 16,895 13,478 15,927
Total assets $23,362 $21,891 $21,308
DEPRECIATION
Manufactured housing $232 $171 $90
Recreational vehicles 365 307 241
Total depreciation $597 $478 $331
CAPITAL EXPENDITURES
Manufactured housing $241 $3,025 $1,422
Recreational vehicles 951 597 382
Total capital expenditures $1,192 $3,622 $1,804
Operating income represents income before net interest income, gain on
involuntary conversion of plant facility and equipment,gain on business
interruption claims and income taxes. Non-direct operating expenses are
allocated to industry segments based on a percentage of sales.
Identifiable assets, depreciation and capital expenditures are those
items that are used in the operations in eacheach industry segment, with
jointly used items being allocated based on a percentage of sales.
</TABLE>
26
<PAGE>
<TABLE>
Balance Sheets
<CAPTION>
October 31, 1995 1994
ASSETS
Current Assets
<S> <C> <C>
Cash and cash investments $2,218,000 $4,625,000
Accounts receivable, net of allowance for
doubtful accounts of $44,000 in 1995 and 1994 7,350,000 5,564,000
Notes and other receivables 0 577,000
Inventories 5,667,000 4,092,000
Prepaids and deferred income taxes 1,589,000 1,190,000
Total Current Assets 16,824,000 16,048,000
Property, Plant and Equipment, at cost
Land 492,000 492,000
Buildings and improvements 6,898,000 6,460,000
Machinery and equipment 3,942,000 3,169,000
Construction in progress 8,000 37,000
11,340,000 10,158,000
Less accumulated
depreciation (4,952,000) (4,396,000)
6,388,000 5,762,000
Other Assets 90,000 81,000
$23,302,000 $21,891,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Liabilities
Accounts payable
$3,954,000 $4,486,000
Accrued payroll and payroll related
liabilities 2,203,000 2,005,000
Accrued marketing
programs 741,000 592,000
Accrued expenses 1,309,000 1,185,000
Income taxes payable 190,000 158,000
Total Current Liabilities 8,397,000 8,426,000
Deferred Income Taxes 1,399,000 1,308,000
9,796,000 9,734,000
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $1 par value; authorized 1,000,000
shares; none issued
Common stock, without par value; authorized
5,000,000 shares;issued and outstanding
1,110,934 shares in 1995 and 1994 750,000 750,000
Additional paid-in capital 842,000 842,000
Retained earnings 11,914,000 10,565,000
Total Shareholders' Equity 13,506,000 12,157,000
$23,302,000 $21,891,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
27
<PAGE>
<TABLE>
Statements of Income
<CAPTION>
For the Years Ended October 31, 1995 1994 1993
<S> <C> <C> <C>
Sales $101,462,000 $89,722,000 $59,122,000
Costs and expenses
Cost of sales 92,098,000 80,246,000 53,078,000
Selling, general and administrative
expenses 7,872,000 7,472,000 6,308,000
99,970,000 87,718,000 59,386,000
Operating income (loss) 1,492,000 2,004,000 (264,000)
Other income
Interest income, net 42,000 16,000 222,000
Gain on involuntary conversion of
plant facility and equipment 779,000
Gain on business interruption
claims 701,000 312,000
Income (loss) before income taxes 2,235,000 3,111,000 (42,000)
Provision (benefit) for income
taxes 886,000 1,220,000 (75,000)
Net income $1,349,000 $1,891,000 $33,000
Net income per share $1.21 $1.61 $0.02
Weighted average shares
outstanding 1,110,934 1,177,283 1,472,389
The accompanying notes are an integral part of these financial statements.
</TABLE>
28
<PAGE>
<TABLE>
Statements of Shareholders' Equity
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1992 1,472,389 994,000 $1,115,000 $11,788,000 $13,897,000
Net income 33,000 33,000
Balance, October 31, 1993 1,472,389 994,000 1,115,000 11,821,000 13,930,000
Net income 1,891,000 1,891,000
Repurchase of Common Stock (361,455) (244,000) (273,000)(3,147,000) (3,664,000)
Balance, October 31, 1994 1,110,934 750,000 842,000 10,565,000 12,157,000
Net income 1,349,000 1,349,000
Balance, October 31, 1995 1,110,934 $750,000 $842,000 $11,914,000 $13,506,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
29
<PAGE>
<TABLE>
Statements of Cash Flows
<CAPTION>
For the Years Ended October 31, 1995 1994 1993
Cash Flows From Operating Activities:
<S> <C> <C> <C>
Cash received from customers $100,449,000 $87,480,000 $58,350,000
Interest received 87,000 116,000 262,000
Cash received from operations 100,536,000 87,596,000 58,612,000
Cash paid to suppliers and employees 101,061,000 84,133,000 57,406,000
Interest paid 45,000 100,000 40,000
Income taxes paid 908,000 837,000 14,000
Cash disbursed for operations 102,014,000 85,070,000 57,460,000
Net cash provided by (used in)
operating activities (1,478,000) 2,526,000 1,152,000
Cash Flows From Investing Activities:
Purchase of property, plant and
equipment, net (1,251,000) (3,622,000) (1,804,000)
Insurance proceeds from involuntary
conversion of plant facility and
equipment and business interruption
claims 701,000 1,259,000 219,000
Changes in other current and
non-current assets (379,000) (358,000) (348,000)
Net cash used in investing activities (929,000) (2,721,000) (1,933,000)
Cash Flows From Financing Activities:
Funds used to repurchase common stock (3,664,000)
Proceeds from line-of-credit
borrowings 2,800,000 9,800,000 2,800,000
Principal payments on line-of-credit
borrowings (2,800,000) (9,800,000) (2,800,000)
Net cash used in financing activities -0- (3,664,000) -0-
Net decrease in cash (2,407,000) (3,859,000) (781,000)
Cash at beginning of year 4,625,000 8,484,000 9,265,000
Cash at end of year $2,218,000 $4,625,000 $8,484,000
Reconciliation of Net Income to Net Cash Provided by (Used In) Operating
Activities:
Net income 1,349,000 1,891,000 33,000
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation 597,000 478,000 331,000
Gain on involuntary conversion of
plant facility
and equipment and business
interruption claims (701,000) (1,091,000)
Increase in accounts and notes
receivable (1,209,000) (1,151,000) (772,000)
(Increase) decrease in inventories (1,575,000) 41,000 (920,000)
Increase in accounts payable and
accruals 29,000 2,225,000 2,457,000
Increase in income taxes payable 32,000 133,000 23,000
Net cash provided by (used in)
operating activities $(1,478,000) $2,526,000 $1,152,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
30
<PAGE>
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Cash and Cash Investments
The Company places its temporary cash investments, all of
which are considered cash equivalents, in high quality financial
instruments. The Company also maintains deposits at financial
institutions in amounts in excess of federally insured limits.
Management believes that credit risk related to its investments
is limited due to the quality of the investments and the
Company's policy which limits credit exposure to any one
financial institution.
Valuation of Inventories
Inventories are stated at the lower of cost (last-in,
first-out for material and first-in, first-out for labor and
overhead) or market.
Depreciation and Amortization
For financial reporting purposes, depreciation and
amortization of property, plant and equipment is generally
provided for on a straight-line basis, using estimated useful
lives of 10 years for land improvements, 20 to 33-1/3 years for
buildings and improvements, 3 to 10 years for equipment and lease
terms for leasehold improvements. Upon sale or disposition of
assets, any gain or loss is included in the statement of income.
Expenditures for maintenance, repairs and minor renewals are
charged to expense as incurred; expenditures for betterments and
major renewals are capitalized.
Income Taxes
The Company adopted, effective November 1, 1993, Statement
of Financial Accounting Standard No. 109, "Accounting for Income
Taxes," (SFAS 109), which requires the recognition of deferred
tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference
between the financial statement and tax bases of assets and
liabilities using enacted rates in effect for the year in which
the differences are expected to reverse.
The cumulative effect of adopting SFAS 109 in 1994 was not
material to the financial statements and, accordingly, has been
included in the income tax provision. Prior years' financial
statements have not been restated.
Income Per Share
Income per share amounts are based on the weighted average
number of common shares outstanding during the year. During
fiscal 1994, the Company repurchased 361,455 common shares from
the family of one of its founders. Total weighted average common
shares outstanding were 1,110,934 for fiscal 1995, 1,177,283 for
fiscal 1994, and 1,472,389 for fiscal 1993.
Insurance
The Company is self-insured for workers' compensation for
its plant locations, officers and directors, and product
liability. The Company has recognized an estimated potential
liability for incurred but not reported claims. The Company
recognized experience refunds from its medical insurance carrier
amounting to $195,000 in 1995, $168,000 in 1994, and $0 in 1993.
<TABLE>
2. Inventories
Inventories are summarized as follows:
<CAPTION>
October 31, 1995 1994
<S> <C> <C>
Raw material $2,543,000 $2,317,000
Work in process 1,055,000 1,038,000
Finished goods 2,069,000 737,000
$5,667,000 $4,092,000
The excess of current replacement cost over last-in, first-out
cost was $1,308,000 at October 31, 1995 and $1,225,000 at
October 31, 1994.
</TABLE>
31
<PAGE>
3. Involuntary Conversion of Plant Facility and Equipment and
Business Interruption Claims
In mid-June, 1992, the McPherson, Kansas manufactured
housing plant facility was destroyed by a tornado. In addition,
all of the manufacturing equipment and inventories were lost to
water and wind damage. The storm also destroyed the finished
goods inventory of the RV manufacturing plant in the same
location. Gains of $779,000 and $1,834,000 were recorded by the
Company in 1994 and 1992, representing the difference between
insurance proceeds and the net book value of those items
destroyed by the tornado. The Company has also recorded a gain in
1995 of $701,000 and $312,000 in 1994 for business interruption
claims relative to this matter. The insurance proceeds were used
to construct the new manufactured housing plant in Caldwell,
Idaho, which became operational in February 1994. At fiscal
year-end 1995, the Company still had pending business
interruption claims related to this matter, the recovery of which
is uncertain.
4. Bank Credit Line
The Company is party to an unsecured revolving credit
agreement with a bank that provides financing of seasonal working
capital requirements. There are no compensating balance
requirements under the agreement. Major provisions of the
agreement include interest at the lesser of the bank's prime rate
or market rate, and certain minimum requirements as to the
Company's working capital and debt-to-equity relationships. At
October 31, 1995, there was no outstanding balance on the
revolving credit line, and the maximum borrowing permitted was
the lesser of $7,500,000 or the sum of 80% of eligible trade
receivables and 50% of inventories, less any commercial and
standby letters of credit outstanding up to a maximum of
$1,000,000. Interest costs charged to expense for the fiscal
years 1995, 1994 and 1993 were $45,000, $100,000 and $31,000,
respectively. In fiscal 1994, the Company capitalized $40,000 of
interest cost to buildings and improvements.
5. Commitments and Contingencies
The Company was contingently liable at October 31, 1995 to
various financial institutions on repurchase agreements in
connection with wholesale inventory financing. In general,
inventory is repurchased by the Company upon customer default
with a financing institution and then resold through normal
distribution channels. The total value of finished units subject
to such agreements as of October 31, 1995 and 1994 was
approximately $15,350,000 and $12,905,000, respectively.
In addition, the Company is contingently liable to financial
institutions for standby letters of credit totalling $415,000 and
$799,000 as of October 31, 1995 and 1994, respectively. These
letters of credit 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.
<TABLE>
6. Income Taxes
<CAPTION>
The components of the provision (benefit) for income taxes are
as follows:
October 31, 1995 1994 1993
Current:
<S> <C> <C> <C>
Federal $724,000 $783,000 $17,000
State 216,000 187,000 18,000
940,000 970,000 35,000
Deferred:
Federal (19,000) 195,000 (98,000)
State (35,000) 55,000 (12,000)
(54,000) 250,000 (110,000)
$886,000 $1,220,000 $(75,000)
The sources of deferred taxes were as follows:
October 31, 1995 1994 1993
Accrued warranty costs $(59,000) $(70,000) $(25,000)
Worker's compensation
reserves (35,000) (58,000) 37,000
State income and franchise
taxes 70,000 (75,000) (5,000)
Involuntary conversion of plant facility and
equipment 325,000
Inventory cost
capitalization (121,000) 81,000 (135,000)
Accelerated
depreciation 92,000 47,000
Product liability reserves
and other (1,000) 18,000
$(54,000) $250,000 $(110,000
</TABLE>
32
<PAGE>
<TABLE>
Reconciliation of the effective tax rates and the U.S. statutory
tax rate is summarized as follows:
<CAPTION>
October 31, 1995 1994 1993
<S> <C> <C> <C>
Statutory tax rate 34.0% 34.0% (34.0)%
State tax provision, net of
federal tax effect 5.3 5.1 9.4
Tax exempt interest -0.4 -1 -167.2
Other 0.7 1.1 13.2
39.6% 39.2% (178.6)%
</TABLE>
<TABLE>
The components of the deferred tax asset and liability are as
follows:
<CAPTION>
October 31, 1995 1994
Deferred tax asset:
<S> <C> <C>
Allowance for doubtful accounts $20,000 $20,000
Inventory adjustment 122,000
Accrued expenses 573,000 549,000
State income taxes 104,000 105,000
$819,000 $674,000
Deferred tax liability:
Accelerated depreciation $304,000 $210,000
Deferred gain on involuntary
conversion of plant and
equipment 1,095,000 1,098,000
$1,399,000 $1,308,000
The Company did not record a valuation allowance against the
deferred tax asset in fiscal 1995 or 1994.
</TABLE>
7. Industry Segment Information
Information about the Company's operations within industry
segments for the years ended October 31, 1995, 1994 and 1993 is
presented on page 9.
33
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors of KIT Manufacturing
Company:
We have audited the accompanying balance sheets of KIT
Manufacturing Company as of October 31, 1995 and 1994 and the
related statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended October 31,
1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of KIT Manufacturing Company as of October 31, 1995 and 1994 and
the results of its operations and its cash flows for each of
the three years in the period ended October 31, 1995, in
conformity with generally accepted accounting principles.
Los Angeles, California
December 11, 1995
<TABLE>
Quarterly Statistics
<CAPTION>
(Dollars in thousands except per share amounts)
(Unaudited)
First Second Third Fourth
Fiscal 1995 Quarter Quarter Quarter Quarter Fiscal 1995
<S> <C> <C> <C> <C>
Sales $21,851 $26,425 $27,537 $25,649
Gross profit 2,208 2,763 2,301 2,092
Income before income
taxes 444 1,136 467 188
Net income 262 674(1) 273 140
Net income per share $0.24 $0.61(1) $0.25 $0.11
Fiscal 1994
Sales $15,301 $24,996 $26,383 $23,042
Gross profit 1,898 2,925 2,923 1,730
Income before income
taxes 466 610 634 1,401
Net income 275 355 374 887
net income per share $0.20 $0.32 $0.34 $0.75
(1) Includes gain on business interruption claims of $423,000, net of
related income taxes, or $0.38 per share.
(2) Includes gain on involuntary conversion of plant facility and
equipment and business interruption claims of $671,000,net of related
income taxes, or $0.57 per weighted average share.
</TABLE>
34
<PAGE>
Corporate Information
Directors Stock Registrar and Transfer Agent
Dan Pocapalia
Chairman of the Board, First Interstate Bank of California
President and Chief Executive 707 Wilshire Boulevard
Officer of KIT Los Angeles, California
(800) 522-6645
Fred W. Chel
Business Consultant,
Custom Fibreglass Manufacturing Legal Counsel
Company O'Melveny & Myers
Los Angeles, California
Frank S. Chan, Jr.
Certified Public Accountant, Accountants
Partner, Frank S. Chan & Company Coopers & Lybrand L.L.P.
Los Angeles, California
John W. H. Hinrichs
Senior Vice President & Cashier,
Farmers & Merchants Bank
of Long Beach Form 10K
A copy of the Company's current
John F. Zaccaro annual report filed with the
President and Executive Producer, Securities and Exchange Commission
The International Health and (SEC) on Form 10-K, exclusive of
Medical Film Festival, Inc. exhibits, will be furnished to
written request to Marlyce A.
Faldetta, Corporate Secretary, KIT
Manufacturing Company, Post Office
Box 848,Long Beach, California 90801
Officers
Dan Pocapalia
Chairman of the Board, President and
Chief Executive Officer Securities Information
Kit Manufacturing Company's common
Dale J. Gonzalez stock is traded on the American
Senior Vice President and Stock Exchange under the symbol KIT.
Treasurer The following table reflect the high
and low sales prices for each
quarterly fiscal period
Gerald R. Wannamaker in the past two years. There were
Executive Vice President-Operations approximately 420 shareholders of
record as of January 12, 1996.
Matthew S. Pulizzi High Low
Vice President - Customer
Relations Fiscal 1995
1st Quarter 12 3/4 10
Marlyce A. Faldetta 2nd Quarter 12 9 7/8
Corporate Secretary 3rd Quarter 12 5/8 10
4th Quarter 12 1/4 10 1/4
Executive Offices
KIT Manufacturing Company
530 East Wardlow Road, Fiscal 1994
Post Office Box 848 1st Quarter 10 1/8 8 3/4
Long Beach, California 90801 2nd Quarter 10 5/8 8 1/4
(310) 595-7451 3rd Quarter 14 3/4 9 3/4
4th Quarter 19 1/2 11 1/4
Annual Meeting of Shareholders
Tuesday, March 12, 1996, 9:00 A.M.
Long Beach Marriott
4700 Airport Plaza Drive
Long Beach, California
35
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from SEC Form 10K and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<CASH> 2218000
<SECURITIES> 0
<RECEIVABLES> 7350000
<ALLOWANCES> (44000)
<INVENTORY> 5667000
<CURRENT-ASSETS> 16824000
<PP&E> 11340000
<DEPRECIATION> (4952000)
<TOTAL-ASSETS> 23302000
<CURRENT-LIABILITIES> 8397000
<BONDS> 0
0
0
<COMMON> 750000
<OTHER-SE> 842000
<TOTAL-LIABILITY-AND-EQUITY> 23302000
<SALES> 101462000
<TOTAL-REVENUES> 101462000
<CGS> 92098000
<TOTAL-COSTS> 99970000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45000
<INCOME-PRETAX> 2235000
<INCOME-TAX> 886000
<INCOME-CONTINUING> 1349000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1349000
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
</TABLE>
