<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 September 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 October 20, 1996
----- ---------------------
Class A Common Stock, $1.00 par value 2,535,496
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
September 30, 1996 and December 31, 1995 4
Consolidated Statement of Income, for the
three months ended September 30, 1996
and 1995 5
Consolidated Statement of Income, for the
nine months ended September 30, 1996
and 1995 6
Consolidated Statement of Cash Flows for the
nine months ended September 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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<TABLE>
<CAPTION>
LIBERTY HOMES, INC.
CONSOLIDATED BALANCE SHEET
as of September 30, 1996 and December 31, 1995
ASSETS LIABILITIES
- ------ -----------
September 30, December 31, September 30, December 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Current assets: Current liabilities:
Cash and cash equivalents....... $ 8,345,000 $ 10,257,000 Accounts payable.............. $ 6,673,000 $ 2,573,000
Short-term investments.......... 13,650,000 15,600,000 Dividend payable.............. 300,000 306,000
Receivables..................... 13,495,000 7,328,000 Accrued compensation
Prepaid income taxes............ 182,000 -- and payroll taxes........... 2,692,000 2,024,000
Inventories..................... 11,451,000 10,618,000 Income taxes payable.......... -- 236,000
Deferred tax asset.............. 1,841,000 1,841,000 Other accrued liabilities..... 10,505,000 10,790,000
Prepayments and other........... 1,099,000 1,009,000 ------------ ------------
------------ ------------ Total current liabilities..... 20,170,000 15,929,000
Total current assets......... 50,063,000 46,653,000 ------------ ------------
------------ ------------
Deferred income taxes........... 2,226,000 2,280,000
------------ ------------
Contingent liabilities (see notes)
SHAREHOLDERS' EQUITY
--------------------
Capital Stock:
Class A, $1 par value
Authorized - 7,500,000 Shares
Property, plant and equipment: Issued and outstanding - 2,535,000
in 1996 and 2,621,000 in 1995 2,535,000 2,621,000
Land............................ 1,207,000 1,041,000 Class B, $1 par value
Buildings and improvements...... 22,637,000 20,823,000 Authorized - 3,500,000 Shares
Machinery and equipment......... 16,948,000 15,359,000 Issued and outstanding - 1,746,000
------------ ------------ in 1996 and 1,757,000 in 1995 1,746,000 1,757,000
40,792,000 37,223,000
Other capital................. 83,000 83,000
Less accumulated Retained earnings............. 48,399,000 46,457,000
depreciation................... 15,696,000 14,749,000 ------------ ------------
------------ ------------
25,096,000 22,474,000 52,763,000 50,918,000
------------ ------------ ------------ ------------
$ 75,159,000 $ 69,127,000 $ 75,159,000 $ 69,127,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
4
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended September 30, 1996 and 1995
------------
1996 1995
---- ----
Net sales $ 45,403,000 $ 41,675,000
Cost of sales 39,600,000 34,988,000
------------ -----------
Gross profit 5,803,000 6,687,000
Selling, general and administrative
expenses 3,796,000 3,849,000
------------ -----------
Operating income 2,007,000 2,838,000
Interest and other income 294,000 423,000
------------ -----------
Income before income taxes 2,301,000 3,261,000
Income tax expense 937,000 1,250,000
------------ -----------
Net income $ 1,364,000 $ 2,011,000
------------ -----------
------------ -----------
Share income per outstanding Common
Share, based upon weighted average
4,286,000 Common Shares outstanding
at September 30, 1996 and 4,452,000
Common Shares outstanding at
September 30, 1995 $ .32 $ .45
----- -----
----- -----
Cash dividend per share:
Class A Common Stock $ .07 $ .07
----- -----
----- -----
Class B Common Stock $ .07 $ .07
----- -----
----- -----
5
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the nine months ended September 30, 1996 and 1995
------------
1996 1995
---- ----
Net sales $ 129,605,000 $ 124,228,000
Cost of sales 112,781,000 106,734,000
------------- -------------
Gross profit 16,824,000 17,494,000
Selling, general and administrative
expenses 11,780,000 10,949,000
------------- -------------
Operating income 5,044,000 6,545,000
Interest and other income 1,390,000(a) 1,232,000
------------- -------------
Income before income taxes 6,434,000 7,777,000
Income tax expense 2,573,000 3,030,000
------------- -------------
Net income $ 3,861,000(a) $ 4,747,000
------------- -------------
------------- -------------
Share income per outstanding Common
Share, based upon weighted average
4,315,000 Common Shares outstanding
at September 30, 1996 and 4,489,000
Common Shares outstanding at
September 30, 1995 $ .89(a) $1.06
----- -----
----- -----
Cash dividend per share:
Class A Common Stock $ .21 $ .21
----- -----
----- -----
Class B Common Stock $ .21 $ .21
----- -----
----- -----
(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 nine months ended September 30, 1996 and 1995
---------------
1996 1995
-------- --------
Cash flows from operating activities:
Net income $ 3,861,000 $ 4,747,000
Adjustment to reconcile net income
to net cash used in operating activities -
Depreciation 1,490,000 966,000
Gain on sale of idle facility (565,000) - -
Deferred income taxes (54,000) (73,000)
Changes in assets and liabilities:
Receivables (6,167,000) (5,423,000)
Prepaid income taxes (182,000) 589,000
Inventories (833,000) (1,520,000)
Prepayments and other (90,000) (146,000)
Accounts payable 4,100,000 3,310,000
Accrued liabilities 383,000 3,040,000
Income taxes payable (236,000) - -
Dividends payable (6,000) (10,000)
----------- -----------
Net cash from operating activities 1,701,000 5,480,000
----------- -----------
Cash flows provided by (used in)
investing activities -
Proceeds from sale of idle facility 1,029,000 - -
Additions to property, plant
and equipment (4,576,000) (7,705,000)
Redemption (purchase) of short-term
investments 1,950,000 2,025,000
----------- -----------
Net cash used in investing activities (1,597,000) (5,680,000)
----------- -----------
Cash flows used in financing activities -
Cash dividends paid (901,000) (937,000)
Retirement of common stock (1,115,000) (976,000)
----------- -----------
Net cash used in financing activities (2,016,000) (1,913,000)
----------- -----------
Net decrease in cash and
cash equivalents (1,912,000) (2,113,000)
Cash and cash equivalents at beginning
of period 10,257,000 8,069,000
----------- -----------
Cash and cash equivalents at
end of period $ 8,345,000 $ 5,956,000
----------- -----------
----------- -----------
Supplemental disclosures of cash flow
information - cash paid during
the period for income taxes $ 3,045,000 $ 2,514,000
----------- -----------
----------- -----------
7
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
September 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
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cash, cash equivalents and short term investments as of September 30, 1996
and December 31, 1995 were $21,995,000 and $25,857,000, respectively. Working
capital as of September 30, 1996 and December 31, 1995 was $30,077,000 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 nine months ended September 30, 1996 at a
cost of 1,115,000, the Company repurchased a total of 97,000 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 third quarter of 1996 were $45,403,000, an increase of
$3,728,000 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 September 30, 1996 was $1,364,000
which was a $647,000 decrease from the same quarter 1995. The decrease results
principally from continuing start-up costs of the second Wisconsin Plant, a
reduction in sales volume in a key market area, increased material costs and
decreased interest income.
9
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As sales backlogs in the mobile home 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 products. Any changes affecting the desire or ability of retail customers
to purchase, such as cost, availability of credit and unemployment, 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 July, August or September, 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 -
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Dated November 14, 1996
---------------------
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 21,995,000
<SECURITIES> 0
<RECEIVABLES> 13,495,000
<ALLOWANCES> 0
<INVENTORY> 11,451,000
<CURRENT-ASSETS> 50,063,000
<PP&E> 40,792,000
<DEPRECIATION> 15,696,000
<TOTAL-ASSETS> 75,159,000
<CURRENT-LIABILITIES> 20,170,000
<BONDS> 0
0
0
<COMMON> 4,281,000
<OTHER-SE> 48,482,000
<TOTAL-LIABILITY-AND-EQUITY> 75,159,000
<SALES> 129,605,000
<TOTAL-REVENUES> 129,605,000
<CGS> 112,781,000
<TOTAL-COSTS> 11,780,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,434,000
<INCOME-TAX> 2,573,000
<INCOME-CONTINUING> 3,861,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,861,000
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
</TABLE>
