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, 1997
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 (562)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, 1997.
Index to Exhibits - Page 10
1 of 10 Pages
<PAGE>
PART I
FINANCIAL INFORMATION
- 2 -
<PAGE>
<TABLE>
KIT Manufacturing Company
STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
January 31,
1997 1996
<S> <C> <C>
Sales $16,589 $17,971
Cost of sales 15,257 16,017
Selling, general and
administrative 1,887 1,943
17,144 17,960
Operating (loss) (555) 11
Other income
Interest income, net 9 -
(Loss) income before income (546) 11
(Benefit) provision for
(Note A) (224) 4
Net (loss) income ($322) $7
Shares outstanding
(Note B) 1,110,934 1,110,934
Net (loss) income per share
(Note B) ($0.29) $0.01
Dividends per share $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
<TABLE>
KIT MANUFACTURING COMPANY
BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
January 31, October
1997 1996
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash $2,415 $2,281
Accounts receivable, net 4,908 8,026
Inventories:
Raw materials 3,650 3,424
Work in process 1,162 1,234
Finished goods 5,751 2,511
Total inventories 10,563 7,169
Prepaids and deferred income 1,806 1,241
Total current assets 19,692 18,717
Property, plant and equipment, net 6,673 6,319
Other assets 107 103
Total assets $26,472 $25,139
LIABILITIES AND SHAREHOLDERS' EQUITY
Note payable to bank $3,300
Accounts payable 3,458 $3,685
Accrued payroll and related 1,231 2,256
Accrued marketing programs 1,383 1,104
Accrued expenses 1,016 1,664
Income taxes payable 24
Total current liabilities 10,388 8,733
Deferred income taxes 1,469 1,469
Total liabilities 11,857 10,202
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 13,345 11,914
Net (loss) income for (322) 1,431
Balance at end of period 13,023 13,345
Total shareholders' equity 14,615 14,937
Total liabilities and shareholders' equity $26,472 $25,139
</TABLE>
The accompanying notes are an integral part of these financial statements
-4-
<PAGE>
<TABLE>
KIT MANUFACTURING COMPANY
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
(Unaudited)
For the 3 months
1997 1996
Cash flows from operating activities:
<S> <C> <C>
Cash received from customers $19,708 $19,186
Interest received 15 6
Cash received from operations 19,723 19,192
Cash paid to suppliers and employees 21,990 20,633
Interest paid 7 7
Income taxes paid 35 190
Cash disbursed for operations 22,032 20,830
Net cash used in operating activities (2,309) (1,638) Net cash used in operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment (699) (110)
Changes in other current and non-current (158) (219)
Net cash used in investing activities (857) (329)
Cash flows from financing activities:
Proceeds from line-of-credit borrowings 3,300 1,200
Net cash provided by financing activities 3,300 1,200
Net increase (decrease) in cash 134 (767)
Cash at beginning of year 2,281 2,218
Cash at end of period $2,415 $1,451 Cash at end of period
Reconciliation of net (loss) income to net cash used in operating activities:
Net (loss) income ($322) $7
Adjustments to reconcile net (loss) income to net cash used in
operating activities
Depreciation 169 169
Decrease in accounts receivable 3,118 1,215
Increase in inventories (3,394) (2,023)
Decrease in accounts payable and accrued (1,621) (820)
Decrease in income taxes payable (259) (186)
Net cash used in operating activities ($2,309) ($1,638) Net cash used in operating activities
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<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.
- 6 -
<PAGE>
KIT MANUFACTURING COMPANY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION - JANUARY 31, 1997 COMPARED TO OCTOBER 31, 1996
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 decreased $680,000 due
to the decrease in accounts receivable because of the decline in sales
during the first quarter. The current ratio was 1.9:1 at January 31,
1997 and 2.1:1 at October 31, 1996.
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, 1997 COMPARED TO
QUARTER ENDED JANUARY 31, 1996
Total sales for the quarter ended January 31, 1997 were $16,589,000,
an 8% decrease from sales of $17,971,000 for the same quarter of the
prior year. The decrease consisted of a 37% increase in manufactured
housing sales and a 20% decrease in recreational vehicle sales. RV
sales saw a decrease as a result of dealers adjusting their
inventories because of a significant slowdown in retail activity due
to extremely bad weather conditions in the Northwestern sales region.
In addition, because of the increase in competitive market conditions,
p r i ce reductions were implemented. Manufactured housing sales
increased due to increased marketing efforts and more competitive
product pricing. Also, this division s sales were favorably impacted
by a wider range of product offerings and an overall increase in the
dealer base.
Cost of sales decreased 5% from the same quarter of the prior year due
primarily to the decline in sales volume, but increased 3% as a
percent of sales. The decline in gross profit margins compared to the
first quarter of fiscal 1996 is chiefly attributed to competitive
pricing moves in both the RV and manufactured housing divisions.
Selling, general and administrative expenses decreased 3% over the
same quarter of the prior year and rose 1% as a percent of sales. The
increase was due to increases in marketing costs.
Net interest income for the current quarter increased in comparison to
net interest expense in the same quarter of the prior year. This was a
consequence of an increase in the average net short-term investments.
The net loss for the three months ended January 31, 1997 was $322,000,
or $0.29 per share, compared to net income of $7,000, or $0.1 per
share, for the same quarter of the prior year.
-7-
<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, 1997.
- 8 -
<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 2/28/97 /s/ Dan Pocapalia
Dan Pocapalia
Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
DATE 2/28/97 /s/ Dale J. Gonzalez
Dale J. Gonzalez
Senior Vice President and Treasurer
(Principal Financial and Accounting Officer)
- 9 -
<PAGE>
KIT MANUFACTURING COMPANY
INDEX TO EXHIBITS
Item:
(27) Financial Data Schedule
- 10 -
<PAGE>
<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-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 2,415,000
<SECURITIES> 0
<RECEIVABLES> 4,908,000
<ALLOWANCES> 43,000
<INVENTORY> 10,563,000
<CURRENT-ASSETS> 19,692,000
<PP&E> 12,279,000
<DEPRECIATION> 5,606,000
<TOTAL-ASSETS> 26,472,000
<CURRENT-LIABILITIES> 10,388,000
<BONDS> 0
0
0
<COMMON> 1,592,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 26,472,000
<SALES> 16,589,000
<TOTAL-REVENUES> 16,589,000
<CGS> 15,257,000
<TOTAL-COSTS> 17,135,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (546,000)
<INCOME-TAX> (224,000)
<INCOME-CONTINUING> (322,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (322,000)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
