<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
X Quarterly Report Pursuant to Section 13 or
- ----- 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996.
- or -
Transition Report Pursuant to Section 13 or
- ----- 15(d) of the Securities Exchange Act of 1934
For the Transition Period From ________ to _______.
Commission File Number 0-5555
LIBERTY HOMES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1174256
(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. BOX 35, GOSHEN, INDIANA 46527
(Address of principal executive offices) (ZIP Code)
(219) 533-0431
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Shares of Outstanding
Class at July 21, 1996
------- -----------------------
Class A Common Stock, $1.00 par value 2,540,496
Class B Common Stock, $1.00 par value 1,745,759
1 of 12
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INDEX
PART I - CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Pages
General 3
Item 1. Consolidated Financial Statements -
Liberty Homes, Inc.
Consolidated Balance Sheet, as of
June 30, 1996 and December 31, 1995 4
Consolidated Statement of Income, for the
three months ended June 30, 1996
and 1995 5
Consolidated Statement of Income, for the
six months ended June 30, 1996
and 1995 6
Consolidated Statement of Cash Flows for the
six months ended June 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 9-10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
2
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PART I - CONSOLIDATED FINANCIAL INFORMATION
GENERAL
The consolidated financial statements and footnotes thereto
listed in the Index on page 2 of this report have been prepared using
generally accepted accounting principles applied on a basis consistent with
1995. The results of operations for the interim period presented are not
necessarily indicative of results to be expected for the year. The
information included in this report has not been examined prior to filing by
an independent public accountant, and is therefore, subject to any
adjustments which may result from the year-end examination of the Company's
financial statements. The information furnished herein reflects all
adjustments (consisting of normal recurring adjustments) which, in the
opinion of management, are necessary for a fair presentation of the results
for the interim periods.
3
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LIBERTY HOMES, INC.
CONSOLIDATED BALANCE SHEET
as of June 30, 1996 and December 31, 1995
ASSETS
June 30, December 31,
1996 1995
----------- ------------
Current assets:
Cash and cash equivalents.............. $ 7,429,000 $ 10,257,000
Short-term investments................. 10,650,000 15,600,000
Receivables............................ 14,628,000 7,328,000
Prepaid income taxes................... 61,000 --
Inventories............................ 12,433,000 10,618,000
Deferred tax asset..................... 1,841,000 1,841,000
Prepayments and other.................. 1,188,000 1,009,000
----------- -----------
Total current assets................ 48,230,000 46,653,000
----------- -----------
Property, plant and equipment:
Land.................................. 1,207,000 1,041,000
Buildings and improvements............ 20,784,000 20,823,000
Machinery and equipment............... 16,815,000 15,359,000
----------- -----------
38,806,000 37,223,000
Less accumulated depreciation......... 15,156,000 14,749,000
----------- -----------
23,650,000 22,474,000
----------- -----------
$ 71,880,000 $ 69,127,000
------------ ------------
------------ ------------
LIABILITIES
June 30, December 31,
1996 1995
------------ ------------
Current liabilities:
Accounts payable....................... $ 6,286,000 $ 2,573,000
Dividend payable....................... 300,000 306,000
Accrued compensation
and payroll taxes..................... 2,215,000 2,024,000
Income taxes payable................... -- 236,000
Other accrued liabilities.............. 8,910,000 10,687,000
----------- -----------
Total current liabilities.............. 17,711,000 15,826,000
----------- -----------
Deferred income taxes..................... 2,244,000 2,280,000
----------- -----------
Contingent liabilities (see notes)
Minority Interest in Subsidiary........... 164,000 103,000
----------- -----------
SHAREHOLDERS' EQUITY
Capital Stock:
Class A, $1 par value
Authorized - 7,500,000 Shares
Issued and outstanding - 2,540,000
in 1996 and 2,621,000 in 1995 2,540,000 2,621,000
Class B, $1 par value
Authorized - 3,500,000 Shares
Issued and outstanding - 1,746,000
in 1996 and 1,757,000 in 1995 1,746,000 1,757,000
Other capital.......................... 83,000 83,000
Retained earnings ....................... 47,392,000 46,457,000
----------- -----------
51,761,000 50,918,000
----------- -----------
$ 71,880,000 $ 69,127,000
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------------ ------------
4
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended June 30, 1996 and 1995
____________
1996 1995
----------- -----------
Net sales $45,673,000 $43,407,000
Cost of sales 39,598,000 37,122,000
----------- ----------
Gross profit 6,075,000 6,285,000
Selling, general and administrative
expenses 4,230,000 3,713,000
---------- ----------
Operating income 1,845,000 2,572,000
Interest and other income 820,000(a) 430,000
---------- ----------
Income before income taxes and
minority interest 2,665,000 3,002,000
Minority interest in income of
consolidated subsidiary 18,000 --
Income tax expense 1,040,000 1,168,000
---------- ----------
Net income $ 1,607,000(a) $1,834,000
---------- ----------
---------- ----------
Share income per outstanding Common
Share, based upon weighted average
4,291,000 Common Shares outstanding
at June 30, 1996 and 4,496,000 Common
Shares outstanding at June 30, 1995 $.37 $.41
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------ -------
Cash dividend per share:
Class A Common Stock $.07 $.07
------ -------
------ -------
Class B Common Stock $.07 $.07
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(a) Includes a $565,000 pretax gain on sale of an idle facility in other
income which results in $345,000 of net income after tax or $.08 per share
during the second quarter of 1996.
5
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the six months ended June 30, 1996 and 1995
____________
1996 1995
----------- -----------
Net sales $84,202,000 $82,553,000
Cost of sales 73,181,000 71,746,000
----------- -----------
Gross profit 11,021,000 10,807,000
Selling, general and administrative
expenses 7,984,000 7,100,000
----------- -----------
Operating income 3,037,000 3,707,000
Interest and other income 1,157,000(a) 809,000
----------- -----------
Income before income taxes and
minority interest 4,194,000 4,516,000
Minority interest in income of
consolidated subsidiary 61,000 --
Income tax expense 1,636,000 1,780,000
----------- ------------
Net income $ 2,497,000(a) $ 2,736,000
----------- ------------
----------- ------------
Share income per outstanding Common
Share, based upon weighted average
4,329,000 Common Shares outstanding
at June 30, 1996 and 4,508,000 Common
Shares outstanding at June 30, 1995 $.58 $.61
------- -----
------- -----
Cash dividend per share:
Class A Common Stock $.14 $.14
------- -----
------- -----
Class B Common Stock $.14 $.14
------- -----
------- -----
(a) Includes a $565,000 pretax gain on sale of an idle facility in other
income which results in $345,000 of net income after tax or $.08 per share
during the second quarter of 1996.
6
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
_______________
1996 1995
----------- -----------
Cash flows from operating activities:
Net income $ 2,497,000 $ 2,736,000
Adjustment to reconcile net income
to net cash used in
operating activities -
Depreciation 950,000 539,000
Gain on sale of idle facility (565,000) --
Deferred income taxes (36,000) (98,000)
Minority interest in net income 61,000 --
Changes in assets and liabilities:
Receivables (7,300,000) (4,617,000)
Prepaid income taxes (61,000) 967,000
Inventories (1,815,000) (1,510,000)
Prepayments and other (179,000) (191,000)
Trade accounts payable 3,713,000 3,380,000
Other liabilities (1,822,000) 1,385,000
Dividends Payable (6,000) (6,000)
----------- -----------
Net cash from (used in)operating activities (4,563,000) 2,585,000
----------- -----------
Cash flows provided by (used in)
investing activities -
Proceeds from sale of idle facility 1,029,000 --
Additions to property, plant
and equipment (2,590,000) (3,962,000)
Redemption of short-term investments 4,950,000 425,000
----------- -----------
Net cash provided by (used in) investing
activities 3,389,000 (3,537,000)
----------- -----------
Cash flows used in financing activities -
Cash dividends paid (601,000) (627,000)
Retirement of common stock (1,053,000) (372,000)
----------- -----------
Net cash used in financing activities (1,654,000) (999,000)
----------- -----------
Net (decrease) in cash and
cash equivalents (2,828,000) (1,951,000)
Cash and cash equivalents at beginning
of period 10,257,000 8,069,000
---------- ----------
Cash and cash equivalents at
end of period $ 7,429,000 $ 6,118,000
----------- ------------
----------- ------------
Supplemental disclosures of cash flow
information - cash paid during
the period for income taxes $ 1,830,000 $ 911,000
----------- ------------
----------- ------------
7
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OTHER INFORMATION
SHORT TERM INVESTMENTS:
Short term investments consist primarily of certificates of deposits
with original maturities greater than 90 days.
INVENTORIES:
Inventories, consisting primarily of raw materials, are stated at the
lower of cost or market, with cost determined on a first-in, first-out
basis.
CONTINGENT LIABILITIES:
Repurchase Obligations
The Company is contingently liable under terms of repurchase
agreements with various financial institutions which provide for the
repurchase of its homes sold to dealers under floor plan financing
arrangements upon dealer default. The Company's exposure to loss under
such agreements is reduced by the resale of the repurchased home. The
Company believes any losses incurred under outstanding repurchase
agreements in excess of the accruals established as of June 30, 1996 will
not have a significant impact on the financial condition of the Company.
Other Contingencies
Letters of Credit totaling $4,325,000 have been issued to the
Company's insurance carriers who have underwritten the Company's insurance
programs.
REVENUE RECOGNITION:
The Company recognizes revenue when the product is shipped to
independent dealers.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cash, cash equivalents and short term investments as of June 30,
1996 and December 31, 1995 were $18,079,000 and $25,857,000,
respectively. Working capital as of June 30, 1996 and December 31,
1995 was $30,519,000 and $30,827,000, respectively. The decrease of
these items has been caused by accounts receivable and inventory
increases as the Company's operations expand over the normal year end
base, and by the funding of various property, plant and equipment
projects. Also during the six months ended June 30, 1996, the
Company repurchased a total of 92,000 shares of common stock under
the program initiated in 1995 to acquire up to 300,000 shares of its
common stock.
Net sales for the second quarter of 1996 were $45,673,000, an
increase of $2,266,000 from the same quarter of 1995. The volume in
a key market area has fallen sharply and the Company's sales dropped
accordingly. The decline has been more than offset by the combined
increased sales from the Company's two new plants. Net income for
the quarter ended June 30, 1996 was $1,607,000 which was a decrease
of $227,000 from the same quarter in 1995. The decrease results
principally from continuing start up costs of the second plant in
Wisconsin, a reduction in sales volume in the key market area,
increased material costs and decreased interest income. Partially
offsetting these items was the gain recognized on the sale of the
Company's idle Thomasville, Georgia facility during the quarter.
9
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As sales backlogs in the manufactured housing industry are
traditionally short and as dealer inventories do not normally
fluctuate substantially, the orders that the Company receives are
indicative of the day-to-day retail sales activity of its product.
Any changes affecting the desire or ability of retail customers to
purchase, such as cost, credit availability and employment, have an
immediate effect on the Company's operations.
10
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are filed as part of this report, and no reports
on Form 8-K for April, May or June, 1996 have been filed.
11
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SIGNATURE
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.
LIBERTY HOMES, INC.
--------------------
Registrant
By /s/ Marc A. Dosmann
-------------------
Marc A. Dosmann
Vice President -
(Principal Financial and
Accounting Officer)
Dated August 14, 1996
------------------
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,079,000
<SECURITIES> 0
<RECEIVABLES> 14,628,000
<ALLOWANCES> 0
<INVENTORY> 12,433,000
<CURRENT-ASSETS> 48,230,000
<PP&E> 38,806,000
<DEPRECIATION> 15,156,000
<TOTAL-ASSETS> 71,880,000
<CURRENT-LIABILITIES> 17,711,000
<BONDS> 0
0
0
<COMMON> 4,286,000
<OTHER-SE> 47,475,000
<TOTAL-LIABILITY-AND-EQUITY> 71,880,000
<SALES> 84,202,000
<TOTAL-REVENUES> 84,202,000
<CGS> 73,181,000
<TOTAL-COSTS> 7,984,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,133,000
<INCOME-TAX> 1,636,000
<INCOME-CONTINUING> 2,497,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,497,000
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
</TABLE>
