<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, 1998.
- 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.
<TABLE>
<CAPTION>
Shares of Outstanding
Class at May 1, 1998
----- --------------
<S> <S>
Class A Common Stock, $1.00 par value 2,257,096
Class B Common Stock, $1.00 par value 1,730,759
</TABLE>
1 of 10
<PAGE>
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, 1998 and December 31, 1997 4
Consolidated Statement of Income, for the
three months ended March 31, 1998
and 1997 5
Consolidated Statement of Cash Flows for the
three months ended March 31, 1998
and 1997 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
<PAGE>
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 1997. 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
<PAGE>
LIBERTY HOMES, INC.
CONSOLIDATED BALANCE SHEET
as of March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
ASSETS LIABILITIES
March 31, December 31, March 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Current assets: Current liabilities:
Cash and cash equivalents....... $11,093,000 $15,797,000 Accounts payable.............. $ 7,023,000 $ 2,340,000
Short term investments.......... 300,000 5,250,000 Dividend payable.............. 279,000 279,000
Receivables..................... 15,483,000 8,303,000 Accrued compensation
Inventories..................... 14,638,000 11,982,000 and payroll taxes............ 2,808,000 2,276,000
Deferred tax asset.............. 2,206,000 2,206,000 Income taxes payable.......... -- 170,000
Prepayments and other........... 1,553,000 1,450,000 Other accrued liabilities..... 7,543,000 12,302,000
----------- ----------- ----------- -----------
Total current assets.......... 45,273,000 44,988,000 Total current liabilities... 17,653,000 17,367,000
----------- ----------- ----------- -----------
Deferred income taxes............ 2,102,000 2,154,000
----------- -----------
Contingent liabilities (see notes)
SHAREHOLDERS' EQUITY
Capital Stock:
Class A, $1 par value
Authorized-7,500,000 Shares
Property, plant and equipment: Issued & outstanding-2,257,000
in 1998 & 2,262,000 in 1997 2,257,000 2,262,000
Land............................ 1,323,000 1,280,000 Class B, $1 par value
Buildings and improvements...... 25,524,000 24,921,000 Authorized-3,500,000 Shares
Machinery and equipment......... 18,644,000 18,463,000 Issued & outstanding-1,731,000
----------- ----------- in 1998 & 1,731,000 in 1997 1,731,000 1,731,000
45,491,000 44,664,000
Other capital.................... 83,000 83,000
Less accumulated Retained earnings................ 48,140,000 47,885,000
depreciation..................... 18,798,000 18,170,000 ----------- -----------
----------- -----------
26,693,000 26,494,000 52,211,000 51,961,000
----------- ----------- ----------- -----------
$71,966,000 $71,482,000 $71,966,000 $71,482,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
4
<PAGE>
LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended March 31, 1998 and 1997
____________
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net sales $42,886,000 $35,131,000
Cost of sales 37,546,000 31,324,000
----------- -----------
Gross profit 5,340,000 3,807,000
Selling, general and administrative
expenses 4,542,000 3,726,000
----------- -----------
Operating income 798,000 81,000
Interest and other income 193,000 290,000
----------- -----------
Income before income taxes 991,000 371,000
Income tax expense 411,000 127,000
----------- -----------
Net income $ 580,000 $ 244,000
----------- -----------
----------- -----------
Share income per outstanding Common
Share $.15 $.06
----------- -----------
----------- -----------
Weighted average shares outstanding 3,990,000 4,211,000
----------- -----------
----------- -----------
Cash dividend per share:
Class A Common Stock $.07 $.07
----------- -----------
----------- -----------
Class B Common Stock $.07 $.07
----------- -----------
----------- -----------
</TABLE>
5
<PAGE>
LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three months ended March 31, 1998 and 1997
_______________
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 580,000 $ 244,000
Adjustment to reconcile net income
to net cash used in
operating activities -
Depreciation 628,000 602,000
Deferred income taxes (52,000) 18,000
Changes in assets and liabilities:
Receivables (7,180,000) (5,097,000)
Inventories (2,656,000) (4,433,000)
Prepayments and other (103,000) (732,000)
Accounts payable 4,683,000 3,847,000
Other current liabilities (4,227,000) (5,525,000)
Income taxes payable (170,000) (31,000)
----------- ------------
Net cash used in operating activities (8,497,000) (11,107,000)
----------- ------------
Cash flows provided by (used in)
investing activities -
Additions to property, plant
and equipment (827,000) (955,000)
Redemption of short-term investments 4,950,000 5,900,000
----------- ------------
Net cash provided by investing activities 4,123,000 4,945,000
----------- ------------
Cash flows used in financing activities -
Cash dividends paid (279,000) (294,000)
Retirement of common stock (51,000) (269,000)
----------- ------------
Net cash used in financing activities (330,000) (563,000)
----------- ------------
Net decrease in cash and cash equivalents (4,704,000) (6,725,000)
Cash and cash equivalents at beginning
of period 15,797,000 11,174,000
----------- ------------
Cash and cash equivalents at
end of period $11,093,000 $ 4,449,000
----------- ------------
----------- ------------
Supplemental disclosures of cash flow
information - cash paid during
the period for income taxes $ 700,000 $ 821,000
----------- ------------
----------- ------------
</TABLE>
6
<PAGE>
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, 1998 will not have a significant impact on the financial
condition of the Company.
Other Contingencies
Letters of Credit totaling $3,325,000 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
<PAGE>
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, 1998
and December 31, 1997 were $11,393,000 and $21,047,000, respectively.
Working capital as of March 31, 1998 and December 31, 1997 was $27,620,000
and $27,621,000, respectively. The decrease of cash has been caused by
accounts receivable and inventory increases as the Company's operations
expand over the normal year end base, the payment of 1997 dealer volume
incentive programs, and by the funding of various property, plant and
equipment projects. Also during the three months ended March 31, 1998, at a
cost of $51,000, the Company repurchased a total of 5,200 shares of common
stock under the program initiated in 1994 to acquire up to 700,000 shares of
its common stock.
Net sales for the first quarter of 1998 were $42,886,000, an increase of
$7,755,000 from the same quarter of 1997. Net income for the quarter was
$580,000, which was a $336,000 increase from the same quarter of 1997.
Improvements in both revenue and net income were primarily the result of
increased home shipments. Also, in the first quarter of 1997, start-up costs
of the Tuscumbia, Alabama plant had a negative inpact on income.
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
8
<PAGE>
operations.
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 January, February or March, 1998 have been filed.
9
<PAGE>
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
Vice President -
(Principal Financial and
Accounting Officer)
Dated May 15, 1998
------------------
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,393,000
<SECURITIES> 0
<RECEIVABLES> 15,483,000
<ALLOWANCES> 0
<INVENTORY> 14,638,000
<CURRENT-ASSETS> 45,273,000
<PP&E> 45,491,000
<DEPRECIATION> 18,798,000
<TOTAL-ASSETS> 71,966,000
<CURRENT-LIABILITIES> 17,653,000
<BONDS> 0
0
0
<COMMON> 3,988,000
<OTHER-SE> 48,223,000
<TOTAL-LIABILITY-AND-EQUITY> 71,966,000
<SALES> 42,886,000
<TOTAL-REVENUES> 42,886,000
<CGS> 37,546,000
<TOTAL-COSTS> 4,542,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 991,000
<INCOME-TAX> 411,000
<INCOME-CONTINUING> 580,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 580,000
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
