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, 1996 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, 1996.
Index to Exhibits - Page 10
1 of 10 Pages
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PART I
FINANCIAL INFORMATION
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KIT Manufacturing Company
STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
January 31,
1996 1995
<S> <C> <C>
Sales $17,971 $21,851
Costs and
Cost of sales 16,017 19,643
Selling, general and
administrative 1,943 1,793
17,960 21,436
Operating income 11 415
Other income
Interest income, net - 29
Income before income taxes 11 444
Provision for income taxes
(Note A) 4 182
Net income $7 $262
Average shares outstanding
(Note B) 1,110,934 1,110,934
Net income per share
(Note B) $0.01 $0.24
Dividends per share $ - $ -
The accompanying notes are an integral part of these financial statements
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<TABLE>
KIT MANUFACTURING COMPANY
BALANCE SHEETS
(Dollars in thousands)
<CAPTION> January 31, October
1996 1995
ASSETS (Unaudited)
<S> <C> <C>
Cash and cash $1,451 $2,218
Accounts receivable, net 6,135 7,350
Inventories:
Raw materials 3,200 2,543
Work in process 1,238 1,055
Finished goods 3,252 2,069
Total inventories 7,690 5,667
Prepaids and deferred income 1,479 1,589
Total current assets 16,755 16,824
Property, plant and equipment, net 6,321 6,388
Other assets 164 90
Total assets $23,240 $23,302
LIABILITIES AND SHAREHOLDERS'
Note payable to bank $1,200
Accounts payable 3,727 $3,954
Accrued payroll and related 1,167 2,203
Accrued marketing programs 1,018 741
Accrued expenses 1,153 1,309
Income taxes payable 63 190
Total current 8,328 8,397
Deferred income taxes 1,399 1,399
Total liabilities 9,727 9,796
Commitments and contingencies
Shareholders' equity
Common stock and additional paid-in capital,
issued and outstanding 1,110,934 shares 1,592 1,592
Retained earnings:
Balance at beginning of period 11,914 10,565
Net income for period 7 1,349
Balance at end of period 11,921 11,914
Total shareholders' equity 13,513 13,506
Total liabilities and shareholders' equity $23,240 $23,302
The accompanying notes are an integral part of these financial statements
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<TABLE>
KIT MANUFACTURING COMPANY
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
For the 3 months ended
January 31,
1996 1995
Cash flows from operating activities:
<S> <C> <C>
Cash received from customers $19,186 $21,840
Interest received 6 37
Cash received from operations 19,192 21,877
Cash paid to suppliers and employees 20,633 25,332
Interest paid 7 8
Income taxes paid 190 132
Cash disbursed for operations 20,830 25,472
Net cash used in operating activities (1,638) (3,595) Net cash used in operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment (110) (181)
Changes in other current and non-current assets (219) (140)
Net cash used in investing activities (329) (321)
Cash flows from financing activities:
Proceeds from line-of-credit borrowings 1,200 700
Net cash provided by financing activities 1,200 700
Net decrease in cash (767) (3,216)
Cash at beginning of year 2,218 4,625
Cash at end of period $1,451 $1,409 Cash at end of period
Reconciliation of net income to net cash used in operating activities:
Net income $7 $262
Adjustments to reconcile net income to net cash used in operating
Depreciation 169 136
(Increase) decrease in accounts 1,215 (11)
Increase in inventories (2,023) (2,757)
Decrease in accounts payable and accrued liabilities (820) (1,275)
Increase (decrease) in income taxes payable (186) 50
Net cash used in operating activities ($1,638) ($3,595) Net cash used in operating activities
The accompanying notes are an integral part of these financial statements
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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.
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KIT MANUFACTURING COMPANY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION - JANUARY 31, 1996 COMPARED TO OCTOBER 31, 1995
Under first quarter market conditions, the Company borrowed on its
line of credit to increase its inventories to prepare for the spring
selling season. The Company's working capital remained unchanged due
to the increase in inventories and a decrease in accounts receivable
due to the decrease in sales. The current ratio was 2.0:1 at January
31, 1996 and at October 31, 1995.
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, 1996 COMPARED TO
QUARTER ENDED JANUARY 31, 1995
Total sales for the quarter ended January 31, 1996 were $17,971,000,
an 18% decrease from sales of $21,851,000 for the same quarter of the
prior year. The decrease consisted of a 49% decrease in manufactured
housing sales and a 1% decrease in recreational vehicle sales. RV
sales saw an decrease as a result of dealers adjusting their
inventories from prior year levels. Manufactured housing sales
declined due to extremely bad weather conditions not encountered
during the previous comparable quarter causing a significant slowdown
in retail sales.
Cost of sales decreased 18% from the same quarter of the prior year
due primarily to the decline in sales volume, but decreased 1% as a
percent of sales. The increase in gross profit margins is chiefly
attributed to increased sales of higher margin RV s compared to the
first quarter of fiscal 1995.
Selling, general and administrative expenses increased 8% over the
same quarter of the prior year and rose 3% as a percent of sales. The
increase was due to increases in marketing costs.
Net interest expense for the current quarter increased in comparison
to net interest income in the same quarter of the prior year. This was
a consequence of a decrease in the average net short-term investments.
Net income for the three months ended January 31, 1996 was $7,000, or
$0.01 per share, compared to net income of $262,000, or $0.24 per
share, for the same quarter of the prior year.
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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, 1996.
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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 3/11/96 /S/ Dan Pocapalia
Dan Pocapalia
Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
DATE 3/11/96 /s/ Dale J. Gonzalez
Dale J. Gonzalez
Senior Vice President and Treasurer
(Principal Financial and Accounting Officer)
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KIT MANUFACTURING COMPANY
INDEX TO EXHIBITS
Item:
(27) Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC
FORM 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 1451
<SECURITIES> 0
<RECEIVABLES> 6179
<ALLOWANCES> (44)
<INVENTORY> 7690
<CURRENT-ASSETS> 16755
<PP&E> 11441
<DEPRECIATION> (5120)
<TOTAL-ASSETS> 23240
<CURRENT-LIABILITIES> 8328
<BONDS> 0
0
0
<COMMON> 1592
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23240
<SALES> 17971
<TOTAL-REVENUES> 17971
<CGS> 16017
<TOTAL-COSTS> 17960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11
<INCOME-TAX> 4
<INCOME-CONTINUING> 7
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
