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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, 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 JULY 29, 1997
----- ---------------------
Class A Common Stock, $1.00 par value 2,262,296
Class B Common Stock, $1.00 par value 1,735,759
1 of 11
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INDEX
PART I - CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Pages
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General 3
Item 1. Consolidated Financial Statements -
Liberty Homes, Inc.
Consolidated Balance Sheet, as of
June 30, 1997 and December 31, 1996 4
Consolidated Statement of Income, for the
three months ended June 30, 1997
and 1996 5
Consolidated Statement of Income, for the
six months ended June 30, 1997
and 1996 6
Consolidated Statement of Cash Flows for the
six months ended June 30, 1997 and 1996 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 10
Signature 11
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 June 30, 1997 and December 31, 1996
ASSETS
June 30, December 31,
1997 1996
---- ----
Current assets:
Cash and cash equivalents....... $12,975,000 $11,174,000
Short term investments.......... 750,000 12,650,000
Receivables..................... 14,796,000 8,540,000
Prepaid income taxes............ 142,000 142,000
Inventories..................... 12,243,000 10,211,000
Deferred tax asset.............. 2,054,000 2,054,000
Prepayments and other........... 1,299,000 1,192,000
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Total current assets......... 44,259,000 45,963,000
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Property, plant and equipment:
Land............................ 1,195,000 1,195,000
Buildings and improvements....... 23,754,000 23,359,000
Machinery and equipment......... 18,074,000 17,413,000
----------- -----------
43,023,000 41,967,000
Less accumulated
depreciation................... 16,907,000 15,764,000
----------- -----------
26,116,000 26,203,000
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$70,375,000 $72,166,000
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----------- -----------
LIABILITIES
June 30, December 31,
1997 1996
---- ----
Current liabilities:
Accounts payable............... $ 6,122,000 $ 3,357,000
Dividend payable............... 280,000 295,000
Accrued compensation
and payroll taxes............ 1,983,000 2,098,000
Income taxes payable........... -- 31,000
Other accrued liabilities...... 9,172,000 12,010,00
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Total current liabilities.... 17,557,000 17,791,000
----------- -----------
Deferred income taxes............. 1,970,000 1,952,000
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Contingent liabilities (see notes)
SHAREHOLDERS' EQUITY
Capital Stock:
Class A, $1 par value
Authorized - 7,500,000 Shares
Issued and outstanding - 2,262,000
in 1997 and 2,477,000 in 1996 2,262,000 2,477,000
Class B, $1 par value
Authorized - 3,500,000 Shares
Issued and outstanding - 1,736,000
in 1997 and 1,746,000 in 1996 1,736,000 1,746,000
Other capital..................... 83,000 83,000
Retained Earnings................. 46,767,000 48,117,000
----------- -----------
50,848,000 52,423,000
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$70,375,000 $72,166,000
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4
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended June 30, 1997 and 1996
____________
1997 1996
---- ----
Net sales $46,188,000 $45,673,000
Cost of sales 40,381,000 39,598,000
----------- -----------
Gross profit 5,807,000 6,075,000
Selling, general and administrative
expenses 4,195,000 4,230,000
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Operating income 1,612,000 1,845,000
Interest and other income 175,000 802,000 (a)
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Income before income taxes 1,787,000 2,647,000
Income tax expense 719,000 1,040,000
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Net income $ 1,068,000 $ 1,607,000 (a)
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----------- -----------
Share income per outstanding Common
Share $.26 $.37 (a)
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Weighted average shares outstanding 4,138,000 4,291,000
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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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(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, 1997 and 1996
____________
1997 1996
---- ----
Net sales $81,319,000 $84,202,000
Cost of sales 71,705,000 73,181,000
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Gross profit 9,614,000 11,021,000
Selling, general and administrative
expenses 7,921,000 7,984,000
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Operating income 1,693,000 3,037,000
Interest and other income 465,000 1,096,000 (a)
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Income before income taxes and
minority interest 2,158,000 4,133,000
Income tax expense 846,000 1,636,000
----------- -----------
Net income $ 1,312,000 $ 2,497,000 (a)
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----------- -----------
Share income per outstanding Common
Share $.31 $.58 (a)
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---- ----
Weighted average shares outstanding 4,175,000 4,329,000
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Cash dividend per share:
Class A Common Stock $.14 $.14
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---- ----
Class B Common Stock $.14 $.14
---- ----
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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.
6
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
_______________
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 1,312,000 $ 2,497,000
Adjustment to reconcile net income
to net cash used in
operating activities -
Depreciation 1,143,000 950,000
Gain on sale of idle facility -- (565,000)
Deferred income taxes 18,000 (36,000)
Changes in assets and liabilities:
Receivables (6,256,000) (7,300,000)
Prepaid income taxes -- (61,000)
Inventories (2,032,000) (1,815,000)
Prepayments and other (107,000) (179,000)
Trade accounts payable 2,765,000 3,713,000
Other liabilities (2,984,000) (1,761,000)
Dividends payable (15,000) (6,000)
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Net cash used in operating activities (6,156,000) (4,563,000)
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Cash flows provided by (used in)
investing activities -
Proceeds from sale of idle facility -- 1,029,000
Additions to property, plant
and equipment (1,056,000) (2,590,000)
Redemption of short-term investments 11,900,000 4,950,000
----------- -----------
Net cash provided by investing
activities 10,844,000 3,389,000
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Cash flows used in financing activities -
Cash dividends paid (573,000) (601,000)
Retirement of common stock (2,314,000) (1,053,000)
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Net cash used in financing activities (2,887,000) (1,654,000)
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Net increase (decrease) in cash and
cash equivalents 1,801,000 (2,828,000)
Cash and cash equivalents at beginning
of period 11,174,000 10,257,000
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Cash and cash equivalents at
end of period $12,975,000 $ 7,429,000
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Supplemental disclosures of cash flow
information - cash paid during
the period for income taxes $ 831,000 $ 1,830,000
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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, 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.
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, 1997 and
December 31, 1996 were $13,725,000 and $23,824,000, respectively. Working
capital as of June 30, 1997 and December 31, 1996 was $26,702,000 and
$28,712,000, respectively. The decrease of cash, cash equivalents and short
term investments 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, 1997, the Company repurchased a total of
225,000 shares of common stock under the program initiated in 1994 and
subsequently amended to acquire up to 600,000 shares of its common stock.
Net sales for the second quarter of 1997 were $46,188,000, an increase
of $515,000 from the same quarter of 1996. The Company's unit volume during
the 1997 quarter followed the national market trend and was down slightly.
An increase in average sales value offset the unit volume drop and total
sales remain relatively the same. Net income for the quarter ended June 30,
1997 was $1,068,000 which was a decrease of $539,000 from the same quarter in
1996. The 1996 quarter included $345,000 of net income from the sale of an
idle plant in Thomasville, Georgia. Also, the 1997 quarter was impacted by
the start-up costs of our new Tuscumbia, Alabama plant, which began
operations in December 1996. These start-up costs, lower
9
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interest income in the 1997 quarter and income from the sale of the Thomasville,
Georgia plant account for the variance in income between the two quarters.
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.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Finanical Data Schedule
A form 8-K was filed on June 10, 1997 to report a modification to the
Company's Stock Repurchase Program which increases the total shares the
Company may repurchase under the program which began in November, 1994 to
600,000 shares.
10
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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 13, 1997
------------------------
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,725,000
<SECURITIES> 0
<RECEIVABLES> 14,796,000
<ALLOWANCES> 0
<INVENTORY> 12,243,000
<CURRENT-ASSETS> 44,259,000
<PP&E> 43,023,000
<DEPRECIATION> 16,907,000
<TOTAL-ASSETS> 70,375,000
<CURRENT-LIABILITIES> 17,557,000
<BONDS> 0
0
0
<COMMON> 3,998,000
<OTHER-SE> 46,850,000
<TOTAL-LIABILITY-AND-EQUITY> 70,375,000
<SALES> 81,319,000
<TOTAL-REVENUES> 81,319,000
<CGS> 71,705,000
<TOTAL-COSTS> 7,921,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,158,000
<INCOME-TAX> 846,000
<INCOME-CONTINUING> 846,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 846,000
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
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