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, 1996
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 $7,062,208 as of January 10, 1997.
1,110,934
(Number of shares of Common Stock outstanding as of January 10, 1997)
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, 1996 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, 1996.
The Index to Exhibits appears on page 16.
33 pages in total.
1
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PART I
Item 1. Business
General 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 on page 2 of Registrant's Annual
Report to Shareholders for the fiscal year ended October 31, 1996,
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
1994 30% 70%
1995 27% 73%
1996 22% 78%
Certain information regarding industry segments is set
forth on page 10 of Registrant's Annual Report to Shareholders for
the fiscal year ended October 31, 1996, which is incorporated
herein by reference.
Method of Product Distribution
Registrant sells its products to approximately 372
dealers in 34 states, 41 dealers in Canada and 1 dealer 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
<PAGE>
Item 1. Continued
factor in the cost of Registrant's products; therefore,
distribution 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
$8,247,330 and $7,705,796 at October 31, 1996 and 1995,
respectively. All of the backlog existing at October 31, 1996 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, 1996, Registrant had 990 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 1996, fifty-four percent of sales were achieved
during the second and third fiscal quarters.
Government Regulation
The manufacture and distribution of Registrant's
manufactured 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 1996. The Registrant believes that the
Midwestern region has seen an increase in demand in fiscal 1996
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
<PAGE>
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)
Production facility leased to third party during fiscal 1996.
(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
<PAGE>
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, 1996,
at pages 1 and 12.
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, 1996,
at page 11.
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, 1996,
at page 3.
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, 1996, at pages 4 through 9 and pages
12 through 14 of this Form 10-K.
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
8
<PAGE>
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, 1996 and
1995 4
Statements of Income for each of the three
years in the period ended October 31, 1996 5
Statements of Shareholders' Equity for each
of the three years in the period ended
October 31, 1996 5
Statements of Cash Flows for each of
the three years in the period ended
October 31, 1996 6
Notes To Financial Statements 7-9
Report of Independent Accountants 9
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, 1996 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, 1996 is not to be deemed filed as part of
this report.
10
<PAGE>
Item 14. Continued
(a) (2) Fnancial 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, 1996
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 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, 1996.
11
<PAGE>
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 9 of the 1996 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 20, 1996
12
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<TABLE>
KIT MANUFACTURING COMPANY
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended October 31, 1996, 1995 And 1994
<CAPTION>
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
Allowance for doubtful accounts:
<S> <C> <C> <C> <C>
Year ended October 31, 1994 $49,000 $7,000 $12,000 (A) $44,000
Year ended October 31, 1995 $44,000 $ - $ - $44,000
Year ended October 31, 1996 $44,000 $ - $1,000 (A) $43,000
</TABLE>
(A) Write-off of uncollectible accounts.
13
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<TABLE>
KIT MANUFACTURING COMPANY
SCHEDULE IX
SHORT-TERM BORROWINGS
For The Years Ended October 31, 1996, 1995 And 1994
<CAPTION>
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
Borrowings Period Interest Rate During The Period(B) During The Period(C) During The Period(C)
Year ended October 31, 1994:
Unsecured revolving
<S> <S> <C> <C> <C> <C>
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%
Year ended October 31, 1996:
Unsecured revolving
credit agreement (A) -0- * $1,600,000 $697,000 8.0%
(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. 13, 1997 /s/ John W.H. Hinricks Jan. 13, 1997
Dan Pocapalia John W.H. Hinricks
Chairman of the Board, Director
Chief Executive Officer
and President (Principal
Executive Officer)
/s/ John F. Zaccaro Jan. 13, 1997 /s/ Frank S. Chan Jan. 13, 1997
John F. Zaccaro Frank S. Chan
Director Director
/s/ Dale J. Gonzalez Jan. 13, 1997 /s/ Fred W. Chel Jan. 13, 1997
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 *
*Incorporated by reference
16
<PAGE>
(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.
*Incorporated by reference
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 management 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.
*Incorporated by reference
18
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KIT Manufacturing Company
1996 Annual Report
19
<PAGE>
<TABLE>
KIT Manufacturing Company
Financial Highlights
(Dollars in thousands except per share amounts)
<CAPTION>
1996 1995 1994 1993 1992
Operating Results for the
Year Ended October 31
<S> <C> <C> <C> <C> <C>
Sales $97,158 $101,462 $89,722 $59,122 $55,469
Net income 1,431(1) 1,349(2) 1,891(3) 33 1,458(4)
Per share $1.29(1) $1.21(2) $1.61(3) $0.02 $0.99(4)
Shares outstanding 1,110,934 1,110,934 1,177,283 1,472,389 1,472,389
Working capital $8,515 $8,427 $7,622 $10,832 $12,213
(1) Includes gain on business interruption claim of $373,000, net of
related income taxes, or $0.34 per share.
(2) Includes gain on business interruption claim of $423,000, net of
related income taxes, or $0.38 per share.
(3) Includes gain on involuntary conversion of plant facility and
equipment and business interruption claim 671,000, net of related income
taxes, or $0.57 per share.
(4) 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>
About the Company:
KIT Manufacturing Company produces manufactured
housing and recreational vehicles marketed by an
independent dealer network in 21 states in the West,
Midwest, South and Southeast sectors and Canada and Japan.
KIT homes are permanent living structures that are
built utilizing materials similar to conventional
housing. KIT recreational vehicle products are used
primarily for camping or vacation travel and provide
a variety of living accommodations.
20
<PAGE>
To Our Shareholders:
Operating income rose 19% in fiscal 1996 to $1,774,000 while sales
declined 4%. This improvement in earnings from operations was attributed
to operating efficiencies, coupled with a decline in certain expansion
costs in our newest RV and manufactured housing plants. The expansion
projects at the recreational vehicle and manufactured housing plants,
completed in the latter part of fiscal 1995, were designed to increase
operating capacity.
Net income rose 6% to $1,431,000, or $1.29 per share, in comparison
to net income in fiscal 1995 of $1,349,000, or $1.21 per share. Net
income for both fiscal years includes after-tax gains from a business
interruption claim of $373,000, or $.34 per share, in fiscal 1996 and
$423,000, or $.38 per share, in fiscal 1995. These gains are the result
of an insurance claim arising from the 1992 tornado damage to our
McPherson, Kansas manufacturing facility. This plant was closed in 1992.
Industry-wide recreational vehicle sales were impacted by economic
uncertainty during the third and forth quarters of fiscal 1996. Despite
this fact, KIT's RV sales rose in comparison to 1995. This was in large
part due to increased demand due to KIT's commitment to developing
innovative floor plans and interior designs, thereby providing the
retail consumer with value and quality. In addition, these continuing
improvements to our RV product lines have enabled the Company to expand
its dealer base by providing both the new and existing dealers with
products that remain competitive in the market place.
The manufactured housing division is currently in the process of
expanding its plant by approximately 40%. This expansion should be
completed sometime in March 1997. Management feels that the increased
capacity as well as the progress made through several operational
changes, should position KIT to take advantage of the expanding demand
for the KIT manufactured home in all of our sales regions.
The most recent National RV show in Louisville, Kentucky as well as
our annual manufactured housing "neighborhood" show in Boise, Idaho held
during the latter part of 1996 provided management with an optimistic
view of what lies ahead for fiscal 1997. Our recreational vehicle
p r oduct lines and our manufactured homes, with a multitude of
innovations, were well received by the dalers. Both of these shows
generated a significant amount of sales to the existing dealers and gave
us the opportunity to enhance our dealer network.
The Company remains in a strong financial position to take
advantage of anticipated current and future demand. KIT has no long term
debt and its line of credit remains unused at fiscal year end. In
addition, working capital increased from fiscal 1995 and current assets
remain at more than double current liabilities.
Fiscal 1997 will see the Company continue to concentrate on
providing new and existing dealers with high quality, innovative
products. First quarter operations will be affected by the severe
weather and flooding conditions on the West coast, however, management
feels confident in the coming fiscal year that the Company will remain
creative as well as competitive in our market territory.
Sincerely,
Dan Pocapalia
Chairman, President and
Chief Executive Officer
21
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Recreational Vehicles
KIT is one of the largest manufacturers of travel trailers and
fifth-wheels in the United States. This position is the result of 52
years of delivering the highest quality and value to our customers. In a
recent survey of all recreational vehicle dealers by the RVDA, KIT
ranked as one of the highest rated manufacturers in the United States on
product design, floor plans, construction and service.
T h e baby-boomer generation along with younger families are
discovering the affordability and comfort of recreational vehicle
travel. The Company's philosophy of uncompromising quality control
standards has driven KIT to new heights in retail customer loyalty from
the oldest to the newest members of RV lifestyle.
KIT's RV products incorporate high quality, reliable name-brand
appliances, interior components and accessories. In our 1997 product
lines, the Company introduced many new innovations in our models in
response to our customers' requests. In addition to the new interiors
introduced in the 1996 models, the 1997 floor plans have been further
enhanced. Because of these changes, KIT has been able to significantly
improve the size of its dealer network.
KIT produces a wide range of recreational vehicle products in its
manufacturing facilities in Caldwell, Idaho and McPherson, Kansas. KIT
RV s measure from 17 to 39 feet in length, are more than eight feet wide
and provide sleeping accommodations from 2 to 10 persons.
KIT produces its travel trailers and fifth-wheels under the brand
names of Road Ranger, Companion, Sportsmaster and Patio Hauler.
T h e entry level Sportsmaster brand continues to move up
dramatically in the market place, offering many quality features as
standard equipment.
The Road Ranger and Companion name lines, with over thirty floor
plans, are in the mid-priced market. These models feature a wide range
of features for the consumer. Road Ranger Elite and Companion Cordova
models are our high-end product offering. These models provide the
largest living and storage areas in their price range. They appeal to
the discerning buyer and offer a vast selection of features as standard
equipment.
Designed for adventure, the Patio Hauler features a cargo area for
hauling off-road vehicles and other sporting equipment. The cargo area
then converts to an enclosed patio when the "toys" are removed. The five
available floor plans all feature the patio concept as well as provide
the buyer with a separate, fully appointed living area away from the
patio.
Retail prices for the more than 30 KIT floor plans range from
$11,000 to $48,000. This range covers approximately 80 percent of the
travel trailer and fifth-wheel market.
More than 300 independent dealers now distrbute KIT recreational
vehicles to the retail consumer throughout the continental United
States, Canada and Japan. KIT provides its dealer network system with
national media advertising, sales literature, training and special
support programs, along with its national reputation for product quality
and service.
RV use is a flourishing source of recreation and relaxation for
many Americans regardless of age or economic background. Over the past
52 years, KIT has supplied this growing market with the quality and
affordability that fulfills the desires of people who enjoy this type
of comfort and convenience. The Company continues to strive for
excellence in its products and service in its quest to make the RV
experience a most enjoyable one for its many satisfied customers.
Manufactured Housing
T h e manufactured housing division continues its profitable
operations. Value pricing coupled with a continuing emphasis on reducing
operating costs has had a positive effect on the financial results of
the housing products division.
M a nufactured housing builds both single and multi-sectioned
dwellings designed to be transported to a prepared homesite.
Multi-sectioned homes offer the appearance and living space of
traditional site-built housing and have become the dominant portion of
our sales. KIT homes are built in a controlled environment which
minimizes the variables inherent in outdoor construction. By
standardizing models we can build homes with greater efficiency, and
consequently at lower cost, than site-built homes with the same
features.
The manufactured housing division continues to aggressively develop
new products that incorporate innovative floor plans, modern colors and
functional design. KIT manufactured homes are distributed from
production facilities in Caldwell, Idaho through a network of
approximately 63 dealers located in 9 Western states.
KIT's homes are marketed in five product lines. The Oakcrest 14'
wide home offers gracious, convenient living in modest floor space. The
Royal Oaks home appeals to buyers with an interest in deluxe
entry-level housing. Our Sierra homes are generally larger and provide a
wide array of styles and custom features. The Golden State line, our
most elegant series of homes, provides outstanding value for individuals
who place a premium on comfort and luxury. Introduced in 1994, the
Briercrest was designed specifically with subdivision application in
mind as the home is sold with an attached garage and is basement
applicable. Living space in the 52 available floor plans range from
about 530 to more than 2,500 square feet. Retail prices, exclusive of
land costs, range from approximately $20,000 to $120,000.
As the nation continues to search for solutions to the problem of
a f f ordable, single-family housing, KIT stands ready to provide
attractive, energy-efficient homes at competitive prices.
22
<PAGE>
KIT Manufacturing Company
Management's Discussion And Analysis of Results of Operations and
Financial Condition
Results of Operations
Fiscal 1996 Compared to 1995
Sales declined 4% to $97.2 million compared to the prior year. Net
income increased to $1,431,000, or $1.29 per share, compared to
$1,349,000, or $1.21 per share, in 1995. Net income in 1996 and 1995
i n cludes after-tax gains from insurance proceeds on a business
interruption claim of $373,000, or $0.34 per share and $423,000, or
$0.38 per share, respectively. Both divisions implemented modest price
increases in 1996 and 1995 to counter cost increases in raw material
costs. Operating income in the manufactured housing division rose
significantly due a major decrease in operating costs as the division
completed a consolidation of two operating plants.
Recreational vehicle division sales increased 2% to $75.6 million.
Despite an overall decrease in RV shipments of 5% to 5,229 units,
fifth-wheel model shipments rose to 2,501 units from 2,320 shipped last
year. Travel trailer shipments declined 15% to 2,732 units, however the
model mix moved toward higher priced units. Management of the Company
believes that the trend in sales of higher priced units will continue in
fiscal 1997.
Manufactured housing sales declined 21% to $21.6 million. This
decrease reflected a 49% decline in shipments of single-section homes to
59 units and a 22% decrease in shipments of multi-section homes to 519
units. Total unit shipments decreased 26% to 578 homes in fiscal 1996.
Gross profit as a percent of sales increased to 11% in comparison
to 9.2% in 1995. The primary reasons for the increase were an increase
in operating efficiencies, improved sales volume and a decline in
start-up costs at the new RV plant and a decline in manufactured housing
costs due to the plant consolidation.
Selling, general and administrative expenses rose 13% to 9.2% of
sales in comparison to fiscal 1995. The Company increased its selling
costs in RV's in order to maintain market share as competition
increased.
Net interest expense of $13,000 as compared to net interest income
of $42,000 in 1995 was the result of higher average borrowing levels as
the Company maintained its inventories at a higher average level than in
fiscal 1995.
Fiscal 1995 Compared to 1994
Sales increased 13% to $101.5 million compared to fiscal 1994. Net
income decreased to $1,349,000, or $1.21 per share, compared to
$1,891,000, or $1.61 per share, in fiscal 1994. Net income in 1995 and
1994 includes an after tax-gain from insurance proceeds on a business
interruption claim and an after-tax gain on an involuntary conversion of
plant facility and equipment of $423,000 or $.38 per share, and
$671,000, or $0.57 per share, respectively.
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. Fifth-wheel model shipments increased to 2,320 units
from 2,318 shipped in 1994.
Manufactured housing sales rose 1% to $27.3 million. 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 were an increase
in sales of lower margin RV's over fiscal 1994 and an increase in
start-up and plant consolidation costs.
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 fiscal
1994 was the result of lower average borrowing levels than in 1994.
Liquidity and Capital Resources
The financial position of the Company continues to remain strong.
The current ratio at fiscal year end 1996 rose to 2.1 from 2.0 in fiscal
1995 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 1996 or 1995.
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.
23
<PAGE>
<TABLE>
KIT Manufacturing Company
Balance Sheets
<CAPTION>
October 31, 1996 1995
ASSETS
Current Assets
<S> <C> <C>
Cash and cash investments $2,281,000 $2,218,000
Accounts receivable, net of allowance for doubtful
accounts of $43,000 in 1996 and $44,000 in 1995 8,026,000 7,350,000
Inventories 7,169,000 5,667,000
Prepaids and deferred income taxes 1,241,000 1,589,000
Total Current Assets 18,717,000 16,824,000
Property, Plant and Equipment, at cost
Land 492,000 492,000
Buildings and improvements 6,856,000 6,898,000
Machinery and equipment 4,233,000 3,942,000
Construction in progress 175,000 8,000
11,756,000 11,340,000
Less accumulated depreciation (5,437,000) (4,952,000)
6,319,000 6,388,000
Other Assets 103,000 90,000
$25,139,000 $23,302,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $3,685,000 $3,954,000
Accrued payroll and payroll related liabilities 2,256,000 2,203,000
Accrued marketing programs 1,104,000 741,000
Accrued expenses 1,664,000 1,309,000
Income taxes payable 24,000 190,000
Total Current Liabilities 8,733,000 8,397,000
Deferred Income Taxes 1,469,000 1,399,000
10,202,000 9,796,000
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 1996 and 1995 750,000 750,000
Additional paid-in capital 842,000 842,000
Retained earnings 13,345,000 11,914,000
Total Shareholders' Equity 14,937,000 13,506,000
$25,139,000 $23,302,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
<TABLE>
KIT Manufacturing Company
Statements of Income
<CAPTION>
For the Years Ended October 31, 1996 1995 1994
<S> <C> <C> <C>
Sales $97,158,000 $101,462,000 $89,722,000
Costs and expenses
Cost of sales 86,473,000 92,098,000 80,246,000
Selling, general and administrative
expenses 8,911,000 7,872,000 7,472,000
95,384,000 99,970,000 87,718,000
Operating income 1,774,000 1,492,000 2,004,000
Other income
Interest (expense) income, net (13,000) 42,000 16,000
Gain on involuntary conversion of plant
facility and equipment 779,000
Gain on business interruption claim 620,000 701,000 312,000
Income before income taxes 2,381,000 2,235,000 3,111,000
Provision for income taxes 950,000 886,000 1,220,000
Net income $1,431,000 $1,349,000 $1,891,000
Net income per share $1.29 $1.21 $1.61
Shares outstanding 1,110,934 1,110,934 1,177,283
</TABLE>
<TABLE>
Statements of Shareholders' Equity
<CAPTION>
Common Stock Additional Retained
Shares Amount Paid-In Capital Earnings Total
<S> <C> <C> <C> <C> <C>
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
Net income 1,431,000 1,431,000
Balance, October 31, 1996 1,110,934 $750,000 $842,000 $13,345,000 $14,937,000
The accompanying notes are an integral part of these financial
statements.
</TABLE>
25
<PAGE>
<TABLE>
KIT Manufacturing Company
Statements of Cash Flows
<CAPTION>
For the Years Ended October 31, 1996 1995 1994
Cash Flows From Operating Activities:
<S> <C> <C> <C>
Cash received from customers $96,711,000 $100,449,000 $87,480,000
Interest received 53,000 87,000 116,000
Cash received from operations 96,764,000 100,536,000 87,596,000
Cash paid to suppliers and employees 95,593,000 101,061,000 84,133,000
Interest paid 66,000 45,000 100,000
Income taxes paid 1,073,000 908,000 837,000
Cash disbursed for operations 96,732,000 102,014,000 85,070,000
Net cash provided by (used in) operating activities 32,000 (1,478,000) 2,526,000
Cash Flows From Investing Activities:
Purchase of property, plant and equipment, net (434,000) (1,251,000) (3,622,000)
Insurance proceeds from involuntary conversion of
plant facility and equipment and business
interruption claim 620,000 701,000 1,259,000
Changes in other current and non-current assets (155,000) (379,000) (358,000)
Net cash provided by (used in) investing activities 31,000 (929,000) (2,721,000)
Cash Flows From Financing Activities:
Funds used to repurchase common stock (3,664,000)
Proceeds from line-of-credit borrowings 4,900,000 2,800,000 9,800,000
Principal payments on line-of-credit borrowings (4,900,000) (2,800,000) (9,800,000)
Net cash used in financing activities (3,664,000)
Net increase (decrease) in cash 63,000 (2,407,000) (3,859,000)
Cash and cash investments at beginning of year 2,218,000 4,625,000 8,484,000
Cash and cash investments at end of year $2,281,000 $2,218,000 $4,625,000
Reconciliation of Net Income to Net Cash Provided by
(Used in) Operating Activities:
Net income $1,431,000 $1,349,000 $1,891,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 670,000 597,000 478,000
Gain on involuntary conversion of plant facility
and equipment and business interruption claims (620,000) (701,000) (1,091,000)
Increase in accounts and notes receivable (676,000) (1,209,000) (1,151,000)
(Increase) decrease in inventories (1,501,000) (1,575,000) 41,000
Increase in accounts payable and accruals 894,000 29,000 2,225,000
(Decrease) increase in income taxes payable (166,000) 32,000 133,000
Net cash provided by (used in) operating activities $32,000 $(1,478,000) $2,526,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
KIT Manufacturing Company
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
p r o perty, 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
r e n ewals are charged to expense as incurred; expenditures for
betterments and major renewals are capitalized.
Income Taxes
The Company follows Statement of Financial Accounting Standards 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.
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
f o unders. Total weighted average common shares outstanding were
1,110,934 for fiscal 1996 and 1995, and 1,177,283 for fiscal 1994.
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 $230,000 in 1996, $195000 in
1995, and $168,000 in 1994.
Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
Stock Options
In October 1995, the Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation ("SFAS 123") which is effective for transactions entered
into in fiscal years that begin after December 15, 1995. The Company is
currently studying the effects of adopting SFAS 123.
2. Involuntary Conversion of Plant Facility and Equipment and Business
Interruption Claim
In mid-June, 1992, the McPherson, Kansas manufactured housing plant
f a cility 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. A gain of $779,000 was
recorded by the Company in 1994, representing the difference between
insurance proceeds and the net book value of those items destroyed by
the tornado. The Company has also recorded gains in 1996, 1995 and 1994
of $620,000, $701,000 and $312,000, respectively, for a business
interruption claim 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.
27
<PAGE>
KIT Manufacturing Company
Notes to Financial Statements
3. Stock Options
During June 1994, the Company granted to five officers of the Company,
options to purchase up to 96,944 shares of the Company's common stock,
at 100% of the then fair value, or $10.38 per share. Also in June 1994,
the Company granted to one such officer an additional option to purchase
up to 35,056 shares of the Company's common stock, at 110% of the then
fair value, or $11.41 per share. Options granted vest in four equal
annual installments beginning one year after the date of the grant. The
options to purchase the 96,944 shares of the Company's common stock
remain outstanding (subject to termination of employment, death or
permanent disability of the holder, as set forth in the option
agreements) for a period of 10 years from the date of grant. The option
to purchase the 35,056 additional shares of the Company's common stock
remains outstanding (subject to termination of employment, death or
permanent disability of the holder, as set forth in the option
agreements) for a period of 5 years from the date of grant. On October
31, 1996 and 1995, total unexercised options were 132,000, of which
66,000 and 33,000 options, respectively, were exercisable.
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, 1996, 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
i n ventories, 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 1996, 1995 and 1994 were $66,000, $45,000
and $100,000, 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, 1996 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, 1996 and 1995 was
approximately $15,644,000 and $15,350,000, respectively.
In addition, the Company is contingently liable to financial
institutions for standby letters of credit totalling $748,000 and
$415,000 as of October 31, 1996 and 1995, respectively. These letters of
c r e d i t 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
The components of the provision (benefit) for income taxes are
as follows (dollars in thousands):
<CAPTION>
October 31, 1996 1995 1994
Current:
<S> <C> <C> <C>
Federal $712,000 $724,000 $783,000
State 195,000 216,000 187,000
907,000 940,000 970,000
Deferred:
Federal 47,000 (19,000) 195,000
State (4,000) (35,000) 55,000
43,000 (54,000) 250,000
$950,000 $886,000 $1,220,000
</TABLE>
<TABLE>
The sources of deferred taxes were as follows:
October 31, 1996 1995 1994
<CAPTION>
<S> <C> <C> <C>
Accrued warranty costs $(52,000) $(59,000) $(70,000)
Workers' compensation reserves 31,000 (35,000) (58,000)
State income and franchise taxes 7,000 70,000 (75,000)
Involuntary conversion of plant
facility & equipment 325,000
Inventory cost capitalization (16,000) (121,000) 81,000
Accelerated depreciation 70,000 92,000 47,000
Product liability reserves and other 3,000 (1,000)
$43,000 $(54,000) $250,000
</TABLE>
28
<PAGE>
KIT Manufacturing Company
Notes to Financial Statements
<TABLE>
6. Income Taxes Continued
Reconciliation of the effective tax rates and the U.S. statutory tax rate is summarized as follows:
<CAPTION>
October 31, 1996 1995 1994
<S> <C> <C> <C>
Statutory tax rate 34.0% 34.0% 34.0%
State tax provision, net of
federal tax effect 4.1 5.3 (1.0)
Tax exempt interest (.3) (.4) (1.0)
Other 2.1 .7 1.1
39.9 39.6 39.2
</TABLE>
<TABLE>
The components of the deferred tax asset and liability are as follows:
<CAPTION>
October 31, 1996 1995
Deferred tax asset:
<S> <C> <C>
Allowance for doubtful accounts $20,000 $20,000
Inventory adjustment 138,000 122,000
Accrued expenses 592,000 573,000
State income taxes 97,000 104,000
$847,000 $819,000
Deferred tax liability:
Accelerated depreciation $374,000 $304,000
Involuntary conversion of plant
facility and equipment 1,095,000 1,095,000
$1,469,000 $1,399,000
</TABLE>
The Company did not record a valuation allowance against the deferred
tax asset in fiscal 1996 or 1995.
<TABLE>
7. Inventories
Inventories are summarized as follows:
<CAPTION>
October 31, 1996 1995
<S> <C> <C>
Raw material $3,413,000 $2,543,000
Work in process 1,230,000 1,055,000
Finished goods 2,526,000 2,069,000
$7,169,000 $5,667,000
</TABLE>
The excess of current replacement cost over last-in, first-out cost was
$1,234,000 at October 31, 1996 and $1,308,000 at October 31, 1995.
8. Industry Segment Information
Information about the Company's operations within industry segments
for the years ended October 31, 1996, 1995 and 1994 is presented on
page 10.
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, 1996 and 1995 and the related statements of
income, shareholders equity, and cash flows for each of the three years
in the period ended October 31, 1996. 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 examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also 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, 1996 and 1995 and the results of
its operations and its cash flows for each of the three years in the
period ended October 31, 1996, in conformity with generally accepted
accounting principles.
Los Angeles, California Coopers & Lybrand, LLP
December 20, 1996
29
<PAGE>
<TABLE>
KIT Manufacturing Company
Industry Segment Information
<CAPTION>
October 31, 1996 1995 1994
(Dollars in thousands)
SALES
<S> <C> <C> <C>
Manufactured housing $21,580 $27,304 $26,908
Recreational vehicles 75,578 74,158 62,814
Total sales $97,158 $101,462 $89,722
INCOME BEFORE INCOME TAXES
Operating income
Manufactured housing $933 $(53) $1,196
Recreational vehicles 841 1,545 808
Total operating income 1,774 1,492 2,004
Interest income (expense), net (13) 42 16
Gain on involuntary conversion of
plant and equipment 779
Gain on business interruption claim 620 701 312
Income before income taxes $2,381 $2,235 $3,111
IDENTIFIABLE ASSETS
Manufactured housing $7,207 $6,447 $8,413
Recreational vehicles 17,932 16,855 13,478
Total assets $25,139 $23,302 $21,891
DEPRECIATION
Manufactured housing $234 $232 $171
Recreational vehicles 436 365 307
Total depreciation $670 $597 $478
CAPITAL EXPENDITURES
Manufactured housing $127 $253 $3,025
Recreational vehicles 307 998 597
Total capital expenditures $434 $1,251 $3,622
</TABLE>
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 each industry segment, with
jointly used items being allocated based on a percentage of sales.
30
<PAGE>
<TABLE>
KIT Manufacturing Company
Selected Financial Data
<CAPTION>
October 31, 1996 1995 1994 1993 1992
(Dollars in thousands except per share amounts)
FISCAL YEAR
<S> <C> <C> <C> <C> <C>
Sales $97,158 $101,462 $89,722 $59,122 $55,469
Net income $1,431(1) $1,349(2) $1,891(3) $33 $1,458(4)
Cash dividends paid $ $ $ $ $
Capital expenditures $434 $1,251 $3,622 $1,804 $423
Depreciation $670 $597 $478 $331 $313
AT YEAR-END
Working capital $9,984 $8,427 $7,622 $10,832 $12,213
Current ratio 2.1:1 2.0:1 1.9:1 2.7:1 4.1:1
Property, plant and equipment, net $6,319 $6,388 $5,762 $3,965 $2,535
Total assets $25,139 $23,302 $21,891 $21,308 $18,795
Long-term obligations $ $ $ $ $
Shareholders' equity $14,937 $13,506 $12,157 $13,930 $13,897
PER SHARE
Net income $1.29(1) $1.21(2) $1.61(3) $0.02 $0.99(4)
Shareholders' equity $13.45 $12.16 $10.94 $9.46 $9.44
(1) Includes gain on a business interruption claim of $373,000, net of
related income taxes, or $0.34 per share.
(2) Includes gain on a business interruption claim of $423,000, net of
related income taxes, or $0.38 per share.
(3) Includes gain on involuntary conversion of plant facility and equipment
and a business interruption claim of $671,000, net of related income taxes, or $0.57 per share.
(4) 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>
31
<PAGE>
<TABLE>
KIT Manufacturing Company
Quarterly Statistics
(Dollars in thousands except per share amounts)
(Unaudited)
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
Fiscal 1996
<S> <C> <C> <C> <C>
Sales $17,971 $28,679 $23,924 $26,584
Gross profit 1,954 3,450 3,206 2,075
Income before income taxes 11 839 1,415 116
Net income 7 503 826(1) 95
Net income per share $0.01 $0.45 $0.74(1) $0.09
Fiscal 1995
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(2) 273 140
Net income per share $0.24 $0.61(2) $0.25 $0.11
(1) Includes gain on a business interruption claim of $373,000, net of
related income taxes, or $0.34 per share.
(2) Includes gain on a business interruption claim of $423,000, net of
related income taxes, or $0.38 per share.
</TABLE>
<TABLE>
Market Prices of Common Stock
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
Fiscal 1996
<S> <C> <C> <C> <C>
High 14 1/4 16 1/4 15 1/4 13 7/8
Low 11 10 1/4 10 1/8 10 1/4
Fiscal 1995
High 12 3/4 12 12 5/8 12 1/4
Low 10 9 7/8 10 10 1/4
KIT common stock is traded on the American Stock Exchange. The above table
reflects the high and low sales prices for each quarterly fiscal period in the past two
years. There are approximately 346 shareholders of record on January 10, 1997.
</TABLE>
32
<PAGE>
Corporate Information
Directors Stock Registrar and Transfer Agent
Dan Pocapalia ChaseMellon Shareholder Services,LLC
Chairman of the Board, Ridgefield Park, New Jersey
President and Chief Executive
Officer of KIT
Fred W. Chel Legal Counsel
Business Consultant, O'Melveny & Myers
Custom Fibreglass Los Angeles, California
Manufacturing Company
Frank S. Chan, Jr.
Certified Public Accountant, Partner, Accountants
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 10-K
A copy of the Company's current
annual report filed
John F. Zaccaro with the Securities and Exchange
President and Executive Producer, Commission (SEC) on FORM 10-K,
The International Health and exclusive of exhibits, will be
Health and Medical Film Festival, Inc. furnished to shareholders without
charge upon written request to
Marlyce A. Faldetta, Corporate
Officers Secretary, KIT Manufacturing
Company, Post Office Box 848,
Dan Pocapalia Long Beach, California 90801.
Chairman of the Board, President
and Chief Executive Officer
Executive Offices
Dale J. Gonzalez KIT Manufacturing Company
Senior Vice President and Treasurer 530 East Wardlow Road, P.O. Box 848
Long Beach, California 90801
Gerald R. Wannamaker
Executive Vice President - Operations
Matthew S. Pulizzi Annual Meeting of Shareholders
Vice President - Customer Relations Tuesday, March 11, 1997, 9:00 A.M.
Long Beach Marriott
Marlyce A. Faldetta 4700 Airport Plaza Drive
Corporate Secretary Long Beach, California
33
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SEC FORM 10K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
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0 0
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