<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 March 31, 1997.
- 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 May 2, 1997
----- ---------------------
Class A Common Stock, $1.00 par value 2,450,496
Class B Common Stock, $1.00 par value 1,740,759
1 of 10
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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
March 31, 1997 and December 31, 1996 4
Consolidated Statement of Income, for the
three months ended March 31, 1997
and 1996 5
Consolidated Statement of Cash Flows for the
three months ended March 31,
1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 8-9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
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 1996. 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 March 31, 1997 and December 31, 1996
ASSETS
March 31, December 31,
1997 1996
---- ----
Current assets:
Cash and cash equivalents . . . . . . . $ 4,449,000 $11,174,000
Short term investments. . . . . . . . . 6,750,000 12,650,000
Receivables . . . . . . . . . . . . . . 13,637,000 8,540,000
Prepaid income taxes. . . . . . . . . . 142,000 142,000
Inventories . . . . . . . . . . . . . . 14,644,000 10,211,000
Deferred tax asset. . . . . . . . . . . 2,054,000 2,054,000
Prepayments and other . . . . . . . . . 1,924,000 1,192,000
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Total current assets. . . . . . . . 43,600,000 45,963,000
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Property, plant and equipment:
Land. . . . . . . . . . . . . . . . . . 1,195,000 1,195,000
Buildings and improvements. . . . . . . 23,690,000 23,359,000
Machinery and equipment . . . . . . . . 18,037,000 17,413,000
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42,922,000 41,967,000
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Less accumulated
depreciation. . . . . . . . . . . . . 16,366,000 15,764,000
----------- -----------
26,556,000 26,203,000
----------- -----------
$70,156,000 $72,166,000
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----------- -----------
LIABILITIES
Current liabilities:
Accounts payable. . . . . . . . . . . . $ 7,204,000 $ 3,357,000
Dividend payable. . . . . . . . . . . . 294,000 295,000
Accrued compensation
and payroll taxes. . . . . . . . . . 1,865,000 2,098,000
Income taxes payable. . . . . . . . . . -- 31,000
Other accrued liabilities . . . . . . . 6,719,000 12,010,000
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Total current liabilities. . . . . . 16,082,000 17,791,000
----------- -----------
Deferred income taxes . . . . . . . . . 1,970,000 1,952,000
----------- -----------
Contingent liabilities (see notes)
SHAREHOLDERS' EQUITY
Capital Stock:
Class A, $1 par value
Authorized - 7,500,000 Shares
Issued and outstanding - 2,460,000
in 1997 and 2,477,000 in 1996
Class B, $1 par value . . . . . . . . . 2,460,000 2,477,000
Authorized - 3,500,000 Shares
Issued and outstanding - 1,741,000
in 1997 and 1,746,000 in 1996 . . . 1,741,000 1,746,000
Other capital. . . . . . . . . . . . . . . . 83,000 83,000
Retained earnings. . . . . . . . . . . . . . 47,820,000 48,117,000
----------- -----------
52,104,000 52,423,000
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$70,156,000 $72,166,000
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4
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended March 31, 1997 and 1996
------------
1997 1996
---- ----
Net sales $35,131,000 $38,529,000
Cost of sales 31,324,000 33,583,000
----------- -----------
Gross profit 3,807,000 4,946,000
Selling, general and administrative
expenses 3,726,000 3,754,000
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Operating income 81,000 1,192,000
Interest and other income 290,000 294,000
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Income before income taxes 371,000 1,486,000
Income tax expense 127,000 596,000
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Net income $ 244,000 $ 890,000
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Share income per outstanding Common
Share $.06 $.20
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Weighted average shares outstanding 4,211,000 4,351,000
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----------- -----------
Cash dividend per share:
Class A Common Stock $.07 $.07
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----------- -----------
Class B Common Stock $.07 $.07
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5
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three months ended March 31, 1997 and 1996
---------------
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 244,000 $ 890,000
Adjustment to reconcile net income
to net cash used in
operating activities -
Depreciation 602,000 550,000
Deferred income taxes 18,000 (24,000)
Changes in assets and liabilities:
Receivables (5,097,000) (5,470,000)
Refundable (prepaid) income taxes -- (572,000)
Inventories (4,433,000) (3,821,000)
Prepayments and other (732,000) (102,000)
Accounts payable 3,847,000 6,283,000
Other current liabilities (5,525,000) (4,528,000)
Income taxes payable (31,000) (236,000)
----------- -----------
Net cash used in operating activities (11,107,000) (7,030,000)
----------- -----------
Cash flows provided by (used in)
investing activities -
Additions to property, plant
and equipment (955,000) (1,341,000)
Redemption of short-term investments 5,900,000 700,000
----------- -----------
Net cash provided by (used in) investing
activities 4,945,000 (641,000)
----------- -----------
Cash flows used in financing activities -
Cash dividends paid (294,000) (306,000)
Retirement of common stock (269,000) (847,000)
----------- -----------
Net cash used in financing activities (563,000) (1,153,000)
----------- -----------
Net decrease in cash and cash equivalents (6,725,000) (8,824,000)
Cash and cash equivalents at beginning
of period 11,174,000 10,257,000
----------- -----------
Cash and cash equivalents at
end of period $ 4,449,000 $ 1,433,000
----------- -----------
----------- -----------
Supplemental disclosures of cash flow
information - cash paid during
the period for income taxes $ 821,000 $ 1,427,000
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6
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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
March 31, 1997 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.
7
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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 March 31, 1997 and
December 31, 1996 were $11,199,000 and $23,824,000, respectively. Working
capital as of March 31, 1997 and December 31, 1996 was $27,518,000 and
$28,172,000, respectively. The change of these items has been caused by
accounts receivable and inventory increases as the Company's operations expand
over the normal year end base, the payment of 1996 dealer incentive programs,
and by the funding of various property, plant and equipment projects. Also
during the three months ended March 31, 1997, at a cost of $269,000, the Company
repurchased a total of 22,000 shares of common stock under the program initiated
in 1994 and amended in 1996 to acquire up to 500,000 shares of its common stock.
Net sales for the first quarter of 1997 were $35,131,000 a decrease of
$3,398,000 from the same quarter of 1996. Net income for the quarter was
$244,000 which was a $646,000 decrease from the same quarter 1996. Revenue and
earnings decreased due to the reduction in the number of homes shipped, caused
by severe weather conditions in certain areas of the country and a downturn in
the industry. Continued start-up costs at the Tuscumbia, Alabama facility,
which opened in December 1996, also caused some of the earnings decline.
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
8
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or ability of retail customers to purchase, such as cost, availability of credit
and unemployment, have an immediate effect on the Company's operations.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule
No reports on Form 8-K for January, February or March, 1997 have been
filed.
9
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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 May 15, 1997
------------------
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,199,000
<SECURITIES> 0
<RECEIVABLES> 13,637,000
<ALLOWANCES> 0
<INVENTORY> 14,644,000
<CURRENT-ASSETS> 43,600,000
<PP&E> 42,922,000
<DEPRECIATION> 16,366,000
<TOTAL-ASSETS> 70,156,000
<CURRENT-LIABILITIES> 16,082,000
<BONDS> 0
0
0
<COMMON> 4,201,000
<OTHER-SE> 47,903,000
<TOTAL-LIABILITY-AND-EQUITY> 70,156,000
<SALES> 35,131,000
<TOTAL-REVENUES> 35,131,000
<CGS> 31,324,000
<TOTAL-COSTS> 3,726,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 371,000
<INCOME-TAX> 127,000
<INCOME-CONTINUING> 244,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 244,000
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
