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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 March 31, 2000.
- 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)
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<S> <C>
INDIANA 35-1174256
(State of Incorporation) (IRS Employer Identification No.)
P.O. BOX 35, GOSHEN, INDIANA 46527
(Address of principal executive offices) (ZIP Code)
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(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.
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<CAPTION>
Shares of Outstanding
Class at May 1, 2000
- ----- ----------------------
<S> <C>
Class A Common Stock, $1.00 par value 2,192,008
Class B Common Stock, $1.00 par value 1,706,247
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1 of 10
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INDEX
PART I - CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
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Pages
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General 3
Item 1. Consolidated Financial Statements -
Liberty Homes, Inc.
Consolidated Balance Sheet, as of
March 31, 2000 and December 31, 1999 4
Consolidated Statement of Income, for the
three months ended March 31, 2000 and 1999 5
Consolidated Statement of Cash Flows for the
three months ended March 31, 2000 and 1999 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
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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 1999. The
results of operations for the interim period presented are not necessarily
indicative of results to be expected for the year. 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, 2000 and December 31, 1999
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<CAPTION>
March 31, December 31,
ASSETS 2000 1999
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,761,000 $10,555,000
Short term investments 485,000 6,535,000
Receivables 17,906,000 10,248,000
Inventories 17,439,000 15,327,000
Deferred tax asset 2,240,000 2,240,000
Income taxes refundable 1,127,000 715,000
Prepayments and other 1,859,000 1,988,000
-------------- --------------
Total current assets 46,817,000 47,608,000
-------------- --------------
Property, plant and equipment:
Land 1,928,000 1,926,000
Buildings and improvements 28,766,000 28,241,000
Machinery and equipment 21,179,000 20,742,000
-------------- --------------
51,873,000 50,909,000
Less accumulated depreciation 24,087,000 23,429,000
-------------- --------------
27,786,000 27,480,000
-------------- --------------
Total assets $74,603,000 $75,088,000
============== ==============
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<CAPTION>
March 31, December 31,
LIABILITIES 2000 1999
----------- ---- ----
<S> <C> <C>
Current liabilities:
Accounts payable $6,982,000 $2,216,000
Dividend payable 273,000 273,000
Accrued compensation & payroll taxes 2,360,000 2,479,000
Other accrued liabilities 6,574,000 10,837,000
--------------- --------------
Total current liabilities 16,189,000 15,805,000
Deferred income taxes 2,420,000 2,420,000
--------------- --------------
Minority interest in subsidiaries 1,389,000 1,341,000
--------------- --------------
Contingent liabilities (see notes)
SHAREHOLDER'S EQUITY
Capital Stock:
Class A, $1 par value
Authorized-7,500,000 Shares
Issued & outstanding-2,198,000
in 2000 & in 1999 2,198,000 2,198,000
Class B, $1 par value
Authorized-3,500,000 Shares
Issued & outstanding-1,706,000
in 2000 & in 1999 1,706,000 1,706,000
Other capital 83,000 83,000
Retained earnings 50,618,000 51,535,000
--------------- --------------
54,605,000 55,522,000
--------------- --------------
Total liabilities and stockholder's equity $74,603,000 $75,088,000
=============== ==============
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4
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended March 31, 2000 and 1999
------------
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<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net sales $36,276,000 $44,350,000
Cost of sales 33,152,000 38,541,000
------------- -------------
Gross profit 3,124,000 5,809,000
Selling, general and administrative
expenses 4,350,000 4,919,000
------------- -------------
Operating income (loss) (1,226,000) 890,000
Interest and other income 234,0000 291,000
------------- -------------
Income (loss) before minority interest (992,000) 1,181,000
and income taxes
Minority interest (48,000) (133,000)
Income tax (expense) benefit 397,000 (449,000)
------------- -------------
Net income (loss) $(643,000) $599,000
============= =============
Share income (loss) per outstanding Common
Share - basic and fully diluted $(0.16) $0.15
======= =====
Weighted average shares outstanding 3,904,000 3,937,000
============= =============
Cash dividend per share:
Class A Common Stock $0.07 $0.07
===== =====
Class B Common Stock $0.07 $0.07
===== =====
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5
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LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three months ended March 31, 2000 and 1999
---------------
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<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (643,000) $ 599,000
Adjustment to reconcile net income
to net cash used in operating activities -
Depreciation 658,000 656,000
Deferred income taxes -- (33,000)
Minority interest 48,000 133,000
Changes in assets and liabilities:
Receivables (7,658,000) (9,952,000)
Inventories (2,112,000) (2,599,000)
Prepayments and other 129,000 (473,000)
Accounts payable 4,766,000 4,353,000
Other current liabilities (4,383,000) (3,199,000)
Income taxes receivable/payable (412,000) (1,136,000)
------------- --------------
Net cash used in operating activities (9,607,000) (11,651,000)
------------- --------------
Cash flows provided by (used in) investing activities --
Additions to property, plant and equipment (964,000) (1,327,000)
Redemption of (investment in) short-term investments 6,050,000 (1,000,000)
------------- --------------
Net cash provided by (used in) investing activities 5,086,000 (2,327,000)
------------- --------------
Cash flows used in financing activities -
Cash dividends paid (273,000) (274,000)
Minority interest contributed capital -- 11,000
Retirement of common stock -- (258,000)
------------- --------------
Net cash used in financing activities (273,000) (521,000)
------------- --------------
Net decrease in cash and cash equivalents (4,794,000) (14,499,000)
------------- --------------
Cash and cash equivalents at beginning of period 10,555,000 18,441,000
------------- --------------
Cash and cash equivalents at end of period $ 5,761,000 $ 3,942,000
============== ==============
Supplemental disclosures of cash flow information - cash
paid during the period for income taxes $ 19,000 $ 1,822,000
============== ==============
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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, 2000 will not have a
significant impact on the financial condition of the Company.
Other Contingencies -- Letters of Credit totaling $500,000 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.
Liquidity and Capital Resources
Cash, cash equivalents and short term investments as of March 31,
2000 and December 31, 1999 were $6,246,000 and $17,090,000, respectively.
Working capital as of March 31, 2000 and December 31, 1999 was $30,628,000
and $31,803,000, 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. Although the Company continues its Common Stock
Repurchase Program efforts, no shares were repurchased during the quarter.
Results of Operations
Net sales for the first quarter of 2000 were $36,276,000, a decrease
of $8,074,000 from the same quarter of 1999. The sales activity of the
Company followed the industry trend during the first quarter. Statistics
comparing the first quarter of 2000 to the same period in 1999 and reported
by the National Conference of States on Building Codes and Standards show for
the industry a 22% drop in homes shipped and a 20% drop in floors shipped.
This downturn in sales was caused, in part, by an overproduction of homes by
the industry relative to retail sales in prior periods. Additionally, the
industry has seen a tightening of credit on both the wholesale and retail
financing of our homes. This tightening has been caused by the decision of
several major financing companies to cease doing business in the manufactured
housing industry along with a reluctance by the secondary market to purchase
retail contracts of the finance companies thus causing a sharp increase
8
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in interest rates for our retail customers. Comparatively, the Company
experienced a 22% drop in homes shipped, a 19% drop in floors shipped and an
18% decline in net sales. The reduction in sales had an adverse effect on net
income for the first quarter of 2000. The Company had a net loss of $643,000
for the first quarter of 2000 compared to net income of $599,000 for the same
quarter in 1999.
Outlook and Risk Factors
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 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.
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, 2000 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 - Chief Financial Officer
(Principal Financial and
Accounting Officer)
Dated May 15, 2000
------------
10
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,246,000
<SECURITIES> 0
<RECEIVABLES> 17,906,000
<ALLOWANCES> 0
<INVENTORY> 17,439,000
<CURRENT-ASSETS> 46,817,000
<PP&E> 51,873,000
<DEPRECIATION> 24,087,000
<TOTAL-ASSETS> 74,603,000
<CURRENT-LIABILITIES> 16,189,000
<BONDS> 0
0
0
<COMMON> 3,904,000
<OTHER-SE> 50,701,000
<TOTAL-LIABILITY-AND-EQUITY> 74,603,000
<SALES> 36,276,000
<TOTAL-REVENUES> 36,276,000
<CGS> 33,152,000
<TOTAL-COSTS> 4,350,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,040,000)
<INCOME-TAX> (397,000)
<INCOME-CONTINUING> (643,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (643,000)
<EPS-BASIC> (.16)
<EPS-DILUTED> (.16)
</TABLE>
