I enclose for filing the Annual Report on Form 10-KSB of Mod-U-
Kraf Homes, Inc. for the year ended December 31, 1997. The
financial statements included in the Annual Report do not reflect
any change from the preceding year in any accounting principles or
practices or in the methods of application of those principles or
practices.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(Mark One)
[ X ] Annual report under Section 13 or 15(d) of the Securities
Exchange
Act of 1934 (Fee required)
For the fiscal year ended December 31, 1997
-------------------
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No fee required)
For the transition period from __________ to __________
Commission file number: 0 - 7 0 9 3
MOD-U-KRAF HOMES, INC.
----------------------------------------------
(Name of Small Business Issuer in Its Charter)
VIRGINIA 54-0893908
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
P. O. BOX 573, ROCKY MOUNT, VIRGINIA 24151
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
540 - 483 - 0291
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
NONE
------------
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK
----------------
(Title of Class)
Check whether the issuer: (1) filed all reports to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy
or information statements incorporated by reference in Part III of this Form
10-KSB.
[ X ]
State issuer's revenues for its most recent fiscal year. $16,072,448
-----------
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days.
$3,009,953 at March 17, 1998
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of March 16, 1998.
825,649 shares of Common Stock, $1 par value
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
Item 1. Description of Business
-----------------------
Mod-U-Kraf Homes, Inc. (the "Company"), was incorporated as a Virginia
corporation on August 19, 1971. It is engaged in the business of
manufacturing and selling custom-built sectionalized single family housing
units of its own design. The Company also customizes a commercial line of
products consisting of multi-family and diversified specialty structures.
The Company's sectionalized housing units, available in 58 standard
models, ranging in size from 705 square feet to 2,970 square feet for one
and two family dwellings, consist of two or more virtually complete sections
which are manufactured side by side on an assembly line. Various designs
are available, including Victorian, Cape Cod, vacation homes, two stories
and country homes. There are over 100 options to allow for custom choices.
Interior designs provide for great rooms, spacious kitchen-dining-living
areas, ample closets, and fireplaces. Multi-family projects can contain up
to 24,000 square feet and are custom designed to meet the needs of the
builder and as dictated by building site conditions (including inside and
outside painting and installation of kitchen cabinets and floor coverings).
After completion, the units are loaded on specially designed transporters
for delivery to the building site where they are off-loaded to a permanent
foundation previously prepared by the purchaser. After the sections are
off-loaded, either by crane or rollers, they are secured together by a "zip
up" procedure. The purchaser may then complete the sections by making
plumbing and electrical connections, carrying out final grading and
landscaping, and adding brick veneer, if desired. Prices on our products
can vary depending upon the region into which they are to be shipped. The
Company believes that when completely erected on a lot, landscaped and ready
for occupancy, its single family homes retail from $55,000 to $250,000 or
more depending on the cost of the lot. The prices of multi-family projects
can range up to $1,300,000 or more depending on the total size of the
project.
During the past several years, the Company, utilizing the manufactured
section concept, has increasingly entered into a new commercial building
market consisting of condominiums, town-house apartments, dental clinics,
medical office buildings, churches, motels and many other commercial
structures adaptable to the Company's manufacturing methods and
capabilities.
During 1997, the Company produced 347.5 units as compared to 280.5
units in 1996. Gross sales of $16,072,448 and $11,372,471 in 1997 and 1996
were comprised of 335.0 and 265.5 units sold, respectively.
The chief raw materials used in production are lumber and lumber
products, including plywood, moldings, door and window assemblies: general
building materials such as roofing, insulation, wallboard, fixtures and
hardware; and heating equipment and other appliances. These materials are
presently available at competitive prices through several suppliers serving
the area, and the Company has not experienced and does not foresee
dependency upon any single source of supply for raw material. The price of
lumber has been subject to significant fluctuations which may affect the
Company's profit margin and the prices it charges for its products. The
Company passes increased cost on to its customers by increasing sales prices
from time to time.
At March 1, 1998, the Company had a backlog of un-shipped orders for
70.0 units (representing approximately $3,125,458 in gross sales).
Comparable backlog figures at March 1, 1997 and 1996 were 58.0 units
(representing approximately $2,535,317 in gross sales) and 51.5 units
(representing approximately $1,956,834 in gross sales), respectively. The
Company believes that approximately 80% of the orders comprising the current
backlog are firm. The Company believes that 20% of the back log balance may
not be treated as firm due to a variety of factors, including unavailability
of financing for its customers, title defects or objections with respect to
land upon which customers expect to erect their homes, and weather
conditions which can affect delivery against contracts. The average delay
between booking and shipment of an order is approximately 75 days.
Company units are sold primarily in Virginia, Maryland, West Virginia
and North Carolina, although some sales have been made in South Carolina,
Kentucky, Ohio, Delaware, Tennessee, Pennsylvania and New Jersey. The
Company offers its products primarily to home builders, land developers and
realtors, although the company has acted as "turnkey" contractor in some
instances, selling several sectionalized homes directly to retail customers
and, depending on the contract, either "zipping-up" the units or completing
the entire home to final grade. Orders consist primarily of from one to
three homes, although larger orders are accepted if received.
The Company does not have long-term agreements with any customer and
does not have any single customer or large group of customers upon which a
material part of its business depends. Sales terms are flexible, varying
from cash 15 days prior to delivery to a completely secured sale with a
nominal down payment, in which the Company provides construction financing
pending sale of the units and disbursement of financing by the permanent
lender. The Company provides permanent financing in connection with a
small number of sales. (See Note 3 of Item 7, Financial Statements)
The Company does not have any material patents, licenses, franchises or
concessions, has not made any material expenditures for research and
development during the past three years and does not anticipate doing so.
The Company employs approximately 31 persons on its administrative and
office staff, 19 persons on its sales staff and 123 persons on its
production and delivery staff. None of its employees is represented by a
labor union. The Company's employment level has fluctuated, and will
continue to fluctuate with the demand for code-complying manufactured
housing. Production employment levels have been stable for the last two
years and are expected to remain stable with the new manufacturing facility
in operation.
Competition in the housing industry is intense. The Company competes
not only with local, regional and national producers of manufactured
housing, including modular, panelized and mobile homes, but also with local,
regional and national home builders as well. Many of these competitors have
financial resources and productive facilities which far exceed those of the
Company. Moreover, five manufactured housing firms have plants located in
or near Rocky Mount, Virginia, and the Company must accordingly compete with
these firms for labor as well as sales.
To the extent weather conditions affect the construction or erection of
houses, the business of the Company can be seasonal, with a larger portion
of sales and shipments of its units occurring in the warmer months of the
year, generally from May through November, than during the winter months.
To the best of its knowledge, the Company is in compliance with all
applicable regulations and does not currently foresee that material capital
expenditures will be necessary to maintain such compliance or that future
compliance will significantly affect the earnings or competitive position of
the Company.
The marketing direction of the Company has recently developed two
thrusts. While the overall trend has been towards larger structures, the
Company has developed a series of smaller, lower-cost units to enable it to
compete for entry-level housing and governmental loan programs.
Improvements made in manufacturing facilities have put the Company in the
position to produce both large and smaller units efficiently.
The products of the Company are manufactured at two facilities in Rocky
Mount, Virginia. See Item 2, below. The existing plant has a production
capacity of 5 units per week and the new facility has a production capacity
of 15 units per week.
Item 2. Description of Property.
-----------------------
The Company's production and transportation office and manufacturing
plant are located in a one-story steel building, approximately 34 years old,
on State Highway 40, one mile east of Rocky Mount, Virginia. The building
is insulated and heated with a concrete floor and totals 20,000 square feet.
Production and transportation offices, located within the plant facility,
are air conditioned and contains approximately 1,000 square feet of floor
space. In 1982 there was a one story metal and wood plumbing and electrical
storage addition with 700 square feet and a one story metal and wood break
room addition, heated and air conditioned, with 700 square feet completed.
In 1984 construction was completed on a 7,200 square foot addition to the
plant. In 1988 a one story metal and wood addition containing a supply room
and a "Binks" paint booth was completed containing 1,600 square feet. In
1993 a one story metal building that was built in 1984 which has a concrete
floor and 16' overhead doors and has 3,600 square feet was converted to a
component manufacturing area. A small portion of the plant is used for
storage of materials which will not withstand exposure to the elements.
Total manufacturing area contains approximately 33,800 square feet of space.
Four enclosed storage buildings on the property adjacent to the
manufacturing plant are used to store materials. These buildings are wood
and metal construction with concrete floors and either three or four walls
enclosed. Total enclosed storage is 17,370 square feet.
The corporate headquarters building, including the engineering office,
which is located adjacent to the Rocky Mount plant, was completed and
occupied in December 1973 and contains over 7,800 square feet of office
space. The building was constructed in the Rocky Mount plant from seven
single modules completed in the plant with plant installation of wiring,
lighting, plumbing, carpet, vinyl, and rest rooms with ceramic walls and
floors.
The property is served by a rail siding. The property includes
approximately seven acres of land that provides for, in addition to the
plant buildings, storage buildings and corporate headquarters building, room
for employee and visitor parking, storage of completed sections pending
shipment and two sales models.
In October 1977, the Company purchased a 10-acre parcel adjacent to its
Rocky Mount facilities for possible future expansion. In March 1993, an
additional 16.92 acres were purchased adjacent to the 10 acre parcel. In
October 1994 the Company exchanged, at no cost, 20.229 acres of the total
26.92 acres for 17.983 acres in the Franklin County/Town of Rocky Mount,
Virginia Industrial Park. After the exchange, there are remaining 6.691
acres owned by the Company adjacent to its Rocky Mount facilities.
The 7 acre parcel that contains the manufacturing, storage and office
buildings are separated from the 6.691 acre parcel referred to above by a
rail line.
The Company's second manufacturing facility is located on 17.983 acres
in the Franklin County/Town of Rocky Mount, Virginia Industrial Park. The
facility is a steel building, insulated with a standing rib roof. The
104,325 square foot building has a 32'6" eave height and has a sprinkler
system throughout. There is 6,680 square feet of mezzanine for additional
storage and 800 square feet of office space inside the building. The size
of the building allows for storage of all materials for the construction of
the units, reducing damage to inventory due to movement and weather. The
entire floor area is covered by 6" of finished concrete. There are 10 large
doors of which 8 are designed for "drive" through and 2 are "dock" doors for
receiving materials. There are five 4 ton bridge cranes installed to assist
in the "off-line" production of various components such as floor systems,
walls, and roof systems. The entire building is heated by propane with an
air rotation system. To allow for future expansion of the building, an
additional 8,750 square feet of finished floor and grade beams have been
added to the building. Three storm water run-off retention ponds are
located on the property. All roof drains on the building have been "piped"
to those ponds. The remainder of the finished lot is covered by a 6"
compacted surface with approximately 42,000 square yards of high traffic
area underlaid with a surface retention fabric. The property is fenced for
security purposes.
The Company's transportation and delivery fleet consists of ten tractor
cabs and 57 trailers, all of which are owned by the Company. Four of the
tractor cabs were purchased in 1996 and were placed in service during the
first quarter of 1997. To plan for our increased production and more
demanding state transportation regulations, the Company ordered four
additional modular transporters in 1996 and placed in service in 1997.
The Company considers its properties and equipment generally to be well
maintained and in good condition, and adequate for the needs of its
business.
Item 3. Legal Proceedings.
------------------
None
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None
Item 5. Market for Common Equity and Related Stockholder Matters.
--------------------------------------------------------
The Corporation's common stock is traded in the over-the-counter
market. The number of shareholders as of March 16, 1998 was 393. The range
of bid and ask quotations and dividends declared for the last two calendar
years are listed below.
QUOTATIONS ON COMMON STOCK
1997 1996
-------------------------- --------------------------- Dividends
BID ASK BID ASK Declared
------------ ------------ ------------- ------------------------
High Low High Low High Low High Low
----- ----- ----- ----- ------ ----- ----- -----
First 7 4 7/8 10 5 3/4 3 1/2 -- 4 1/2 4 1/4 $0.03 $0.03
Second 7 1/2 7 10 9 4 1/8 3 1/2 4 7/8 4 1/8 $0.03 $0.03
Third 7 1/2 7 1/2 9 1/2 8 1/2 5 4 1/8 6 4 7/8 $0.03 $0.03
Fourth 7 1/2 5 7/8 9 1/2 7 1/2 5 -- 6 -- $0.03 $0.03
Source: Wheat, First Securities, Inc.
For the past 81 consecutive quarters a quarterly dividend of $0.03 per share
of common stock has been declared. The Company presently expects to pay
dividends in the future as earnings permit. The quotations herein reflect
inter-dealer prices, without mark-up, mark-down or commission, and may not
represent actual transactions.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
1997 net sales of $16,072,448 were 41.33% higher than 1996 net sales of
$11,372,471. Our total units sold increased by 26.18% over last year. This
increase is due to the additional production from our new facility that went
into operation in August 1996.
Gross Profit percentage declined in 1997 to 21.52% from 24.15% in 1996
and 29.17% in 1995. This is also due to the start-up of our new production
facility. We have had increased manufacturing and payroll cost as we bring
production up to our desired level.
Despite the increase in production costs, selling, general and
administrative expenses (SG&A) continued to improve. SG&A as a percentage
of sales was 19.18% in 1997 compared to 21.30% and 23.20% for 1996 and 1995,
respectively. To date we have not had any significant increases in staffing
requirements or overhead expenses in the SG&A as we made the transition into
our new manufacturing facility. As volume increases, we anticipate adding
administrative staff as the increased workload requires.
Interest income has decreased due to the commitment of our cash to the new
plant startup.
On December 18, 1997, management of the Company determined to temporarily
suspend production at its Highway 40 facility. The suspension was required
by adverse weather conditions that delayed the Company in delivering new
units. As of March 30, 1998, production at that facility is expected to
remain suspended until the delivery backlog is reduced. Because the Company
continues production at its new facility, management does not believe that
the suspension will have a material adverse effect on the Company's results
of operations for 1998, although recognition of income may be delayed from
quarter to quarter. Assuming that the Company is able to resume normal
deliveries, revenues and profits should show a moderate increase in 1998 as
we continue to realize the benefits of our increased production capacity.
There were no other significant variances.
Capital Resources and Liquidity
Total funds generated were sufficient to meet the requirements for
plant and equipment, debt retirement and dividends. By virtue of the cash
and accounts receivable levels, the company feels that it has adequate
liquidity for continued successful operations.
The Company completed and put into operation our new manufacturing
facility in August 1996. The cost of the 104,000 sq. ft. facility,
including improvements and equipment was approximately $2,800,000 which
was financed by an Industrial Development Bond Issue. The debt associated
with this issue has a remaining life of 17 1/2 years and bears interest at
a variable rate based on variable, tax exempt bonds. At December 31, 1997,
the actual interest rate was 4.25%.
The Company believes that the effect of inflation on the results for
the periods presented is not material.
Item 7. Financial Statements.
---------------------
MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
December 31, 1997
C O N T E N T S
INDEPENDENT AUDITOR'S REPORT ON
THE FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Mod-U-Kraf Homes, Inc. and Subsidiary
Rocky Mount, Virginia
We have audited the accompanying consolidated balance sheets of Mod-U-Kraf
Homes, Inc. and Subsidiary as of December 31, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for
the years ended December 31, 1997, 1996 and 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Mod-U-Kraf Homes, Inc. and Subsidiary as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for the years ended
December 31, 1997, 1996 and 1995 in conformity with generally accepted
accounting principles.
CERTIFIED PUBLIC ACCOUNTANTS
Roanoke, Virginia
January 23, 1998
MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
ASSETS 1997 1996
CURRENT ASSETS
Cash and cash equivalents $ 589,992 1,077,270
Certificates of deposit - 200,000
Trade and other receivables 145,444 52,928
Inventories (Note 2) 2,253,063 2,289,696
Notes receivable(Note 3) 661,762 796,721
Income taxes receivable (Note 7) - 46,123
Prepaid expenses 44,886 43,390
--------- ---------
Total current assets 3,695,147 4,506,128
NOTES RECEIVABLE (Note 3) 176,168 192,906
PROPERTY AND EQUIPMENT(Note 4) 4,022,354 3,893,831
OTHER ASSETS
Deferred taxes (Note 7) 464,273 486,139
Cash surrender value of officers' life
insurance 137,878 116,227
Reimbursement account (Note 6) 160,242 152,706
Earnings on unused bond proceeds (Note 6) 113,612 105,474
Debt issue costs 69,350 73,310
Model Homes 236,017 91,220
--------- ---------
$9,075,041 $9,617,921
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt
(Note 6) $ 150,000 $ 150,000
Postretirement benefits (Note 5) 71,933 66,490
Accounts payable, trade and other
liabilities 366,310 525,228
Accrued compensation 161,512 201,121
Customer deposits 83,727 293,655
Income taxes payable (Note 7) 5,847 -
--------- ---------
Total current liabilities 839,329 1,236,494
POSTRETIREMENT BENEFITS(Note 5) 1,003,374 1,080,696
LONG-TERM DEBT (Note 6) 2,489,755 2,639,755
COMMITMENTS AND CONTINGENCIES (Notes 6
and 12) - -
--------- ---------
Total liabilities 4,332,458 4,956,945
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $1 par value,
2,000,000 shares authorized; 825,649
shares issued and outstanding $ 825,649 $ 825,649
Additional paid-in capital 459,671 459,671
Retained earnings 3,457,263 3,375,656
--------- ---------
4,742,583 4,660,976
--------- ---------
$ 9,075,041 $9,614,921
========= =========
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE> * * *
MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
---------- --------- ---------
Net sales $16,072,448 $11,372,471 $9,083,419
Cost of goods sold (Note 13) 12,613,342 8,625,822 6,433,361
---------- --------- ---------
Gross profit 3,459,106 2,746,649 2,650,058
Selling, general and
administrative expenses 3,082,660 2,423,006 2,107,624
---------- --------- ---------
Operating income 376,446 323,643 542,434
Postretirements benefits
expense (Note 5) 89,132 101,877 127,010
Non-operating income, net
(Note 11) 346 68,365 192,085
---------- --------- ---------
Income before income taxes 287,663 290,131 607,509
Federal and state income tax
expense (Note 7) 106,978 112,468 228,685
---------- --------- ---------
Net income $ 180,685 $ 177,663 $ 378,824
========== ========= =========
Earnings per share $ .22 $ .22 $ .46
======== ========= ========
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE> * * *
MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1997, 1996, and 1995
Common Additional Total Total
Stock Paid-in Retained Stockholders
($1 Par) Capital Earnings Equity
--------- ---------- ---------- -----------
Balance, December 31,
1994 813,649 440,421 3,016,965 4,271,035
Net income - - 378,824 378,824
Dividends paid
($.12 per share) - - ( 98,718) ( 98,718)
Issuance of 12,000
shares of
common stock 12,000 19,250 - 31,250
------- ------- --------- ---------
Balance, December 31,
1995 $825,649 $459,671 $3,297,071 $4,582,391
Net income - - 177,663 177,663
Dividends paid
($.12 per share) - - (99,078) (99,078)
------- ------- --------- ---------
Balance, December 31,
1996 $825,649 $459,671 $3,375,656 $4,660,976
Net income - - 180,685 180,685
Dividends paid
($.12 per share) - - (99,078) (99,078)
------- ------- --------- ---------
Balance, December 31
1997 $825,649 $459,671 $3,457,263 $4,742,583
======= ======= ========= =========
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE> * * *
MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
--------- --------- ---------
OPERATING ACTIVITIES
Net income $ 180,685 $ 177,663 $ 378,204
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 474,246 286,333 163,912
Deferred taxes 21,866 22,100 ( 9,631)
Loss (gain) on sale
of equipment ( 4,706) 170 993
Increase in cash value of
life insurance ( 21,651) ( 20,787) ( 15,517)
Adjustment to post-
retirement benefits ( 71,879) ( 59,002) ( 47,303)
Change in certain current
assets and liabilities:
(Increase) decrease in:
Trade and other
receivables ( 92,516) 10,938 92,295
Inventories 36,633 ( 989,580) ( 161,811)
Income tax receivable 46,123 ( 46,123) -
Prepaid expenses ( 1,496) 1,566 3,808
(Decrease) increase in:
Accounts payable,
trade and other
liabilities ( 158,918) 168,522 ( 28,859)
Accrued compensation ( 39,609) ( 30,905) ( 2,769)
Customer deposits ( 209,928) 270,340 ( 125,234)
Income taxes payable 5,847 ( 60,364) 23,322
--------- --------- ---------
Net cash provided
by operating
activities 19,880 ( 269,129) 273,030
--------- --------- ---------
INVESTING ACTIVITIES
Proceeds from sale of
equipment 8,200 - -
Purchase of property and
equipment, net of debt
incurred 1996 $1,554,961:
1995 $1,311,484; 1994 $-0- ( 602,303) ( 379,746) ( 201,250)
Principal received on notes
receivable 852,984 820,271 1,675,875
Notes receivable arising
from sales ( 701,287) ( 706,246) (1,092,480)
Decrease (increase) in
certificates of deposit 200,000 489,000 ( 389,000)
Sale (purchase) of U.S.
Treasury Note - - 204,935
---------- --------- ---------
Net cash provided by
(used in) investing
activities ( 242,409) 223,279 198,080
---------- --------- ---------
FINANCING ACTIVITIES
Proceeds from sale of
common stock - - 31,250
Payments on long-term debt ( 150,000) ( 150,000) -
Cash dividends paid ( 99,078) ( 98,078) ( 98,718)
Funding of reimbursement
account ( 7,536) ( 7,190) ( 145,516)
Earnings on unused
bond proceeds ( 8,138) ( 47,350) ( 58,124)
---------- --------- ---------
Net cash used in
financing activities ( 264,752) ( 303,618) ( 271,108)
---------- --------- ---------
Increase in cash and
cash equivalents ( 487,278) ( 349,468) 200,002
CASH AND CASH EQUIVALENTS
Beginning 1,077,270 1,426,738 1,226,736
--------- --------- ---------
Ending $ 589,992 $1,077,270 $1,426,738
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash payments for:
Income taxes, net of
refunds received $ 33,142 $ 218,955 $ 214,783
========= ========= =========
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE> * * *
MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business:
------------------
The Company is engaged in the business of manufacturing
and selling sectionalized building units of its own
design. The Company also customizes a commercial line of
products consisting of multi-family and diversified
specialty structures. The units are sold primarily to
home builders, land developers and realtors in Virginia,
Maryland, West Virginia and North Carolina.
Principles of Consolidation:
---------------------------
The consolidated financial statements include the accounts
of the Company's wholly-owned subsidiary, Mountain Resort
Building Systems, Inc. All significant intercompany
accounts and transactions have been eliminated.
Concentrations of credit risk:
-------------------------------
In some cases, the Company provides short-term construction
financing which is generally limited to 78 to 80 percent of
the estimated fair market value of the completed property.
The Company retains a security interest in the property
until the contract is paid. The Company's exposure to loss
on these contracts is limited to the difference between the
receivable and the value of the collateral. The Company
has not experienced any significant loss on the previous
sales of repossessed collateral.
Cash and Cash Equivalents:
-------------------------
For purposes of reporting cash flows, the Company
considers most highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Certificates of deposit, regardless of maturity, are not
considered cash equivalents.
The Company maintains its cash accounts in commercial
banks located in Virginia. Accounts in each bank are
guaranteed by the Federal Deposit Insurance Corporation
(FDIC) up to $100,000 per bank. A portion of the
Company's cash balance is uninsured at year end.
Valuation of Trade Receivables:
------------------------------
Trade receivables are stated at face amount with no
allowance for doubtful accounts because probable
uncollectible accounts are immaterial.
Inventories:
-----------
Raw materials are stated at the lower of cost (determined
on a first-in, first-out basis) or market. Work in
progress and finished goods are stated at the lower of
average cost determined on a standard cost basis) or
market. Land and units held for sale are stated at the
lower of cost (determined on a specific property basis) or
market.
Depreciation:
------------
Depreciation is provided principally on the straight-line
method over the estimated useful lives of the depreciable
assets for financial reporting purposes. Statutory methods
and lives are used for income tax purposes.
Model Homes:
-----------
Model homes consist of manufactured units at cost plus site
preparation and completion costs. All costs except the
manufactured unit are amortized over the estimated useful
life of the model, typically five years. The manufactured
units are transferred to inventory and sold at the conclusion
of their useful life.
Income Taxes:
------------
Income taxes are provided for the tax effects of
transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes related
primarily to differences from current recognition of
deferred compensation for financial reporting purposes and
deferred recognition for income tax purposes. The deferred
taxes represent the future tax return consequences of those
differences, which will either be taxable or deductible when
the assets and liabilities are recovered or settled.
Recognition of Income:
---------------------
Revenue is recognized for cash-in-advance sales when
production of the unit is complete. Revenue is recognized
for sales on account when the unit is delivered.
<PAGE> * * *
Estimates:
---------
Management uses estimates and assumptions in preparing
financial statements. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities and the reported
revenues and expenses.
Earnings Per Share:
------------------
Primary and fully diluted earnings per common share are
based on the weighted average number of shares of common
stock outstanding and common stock equivalents of dilutive
stock options. The weighted average number of actual
shares outstanding was 825,649 for 1997 and 1996, and
821,649 for 1995.
Advertising costs:
-----------------
Advertising costs, which consist primarily of newspaper and
yellow page advertisements, brochures and signage are
expensed as incurred
Reclassification:
----------------
For comparability, the amounts presented for 1996 and 1995
have been reclassified, where appropriate, to conform to
the presentation used for 1997.
Note 2. Inventories
The components of inventories are as follows:
1997 1996
----------- -----------
Raw materials $ 779,048 $ 1,054,192
Work-in-process 227,072 262,091
Finished goods 847,411 696,586
Land and units held
for sale 399,532 276,827
----------- -----------
$ 2,253,063 $ 2,289,696
=========== ===========
Total general and administrative costs incurred and the
portion of those costs remaining in inventory are as
follows:
1997 1996 1995
-------- -------- --------
General and
administrative
costs:
Incurred $ 983,821 $ 865,408 $ 740,046
======== ======== ========
Remaining in
inventory $ 60,997 $ 49,853 $ 22,432
======== ======== ========
Note 3. Notes Receivable
Notes receivable consist of the following:
1997 1996
-------- --------
Various mortgage notes receivable,
interest ranging from 8% to 10%,
payable in various monthly install-
ments and balloon payments due at
various dates through August 1999.
Secured by deeds of trust on
certain real estate. $ 164,172 $ 169,990
Credit line deed of trust notes
receivable, interest ranging from
0% to 10.5%, payable at various
dates through 1998. Secured by
deeds of trust on certain real estate. 647,370 782,329
Other Notes 9,513 14,808
Note receivable from the President, pay-
able in annual principal installments of
$5,625 plus interest at 5.03%, secured
by common stock of the Company. 16,875 22,500
--------- ---------
837,930 989,627
Less current portion (661,762) ( 796,721)
--------- ---------
$ 176,168 $ 192,906
========== ==========
<PAGE> * * *
Note 4. Property and Equipment
Major classes of property and equipment are as follows:
1997 1996
--------- --------
Land and improvements $ 774,774 $ 773,539
Buildings 2,948,351 2,940,628
Manufacturing equipment 2,055,831 1,623,065
Other furniture, fixtures
and equipment 716,198 432,515
--------- ---------
6,495,154 5,769,747
Less accumulated depreciation $2,518,808 $2,085,797
--------- ---------
3,976,346 3,683,950
Construction in process 46,008 209,881
--------- ---------
$4,022,354 $3,893,831
========= =========
Maintenance and repairs expense incurred amounted to
$219,212, $176,605 and $134,405 for 1997, 1996, and
1995, respectively.
Note 5. Postretirement Benefits
The Company is obligated under postretirement benefits
agreements with two former officers as follows:
1997 1996
--------- ----------
Present value of deferred
compensation benefits payable to
the widow of O.Z. Oliver, former
Treasurer and Chairman of the Board,
at $6,311 monthly until the earlier
of her death or September 2006,
discounted at 8.50%. $ 466,315 $ 500,797
Present value of deferred
compensation benefits payable to
Robert K. Fitts, former President
and Chairman of the Board, at
$5,560 monthly until his death
after which the benefits are payable
to his spouse, Mary L. Fitts until
the earlier of her death or July
2007, discounted at 8.50%. 475,793 500,903
Postretirement benefits other than
pensions. Details are presented below. 133,199 145,486
--------- ---------
1,075,307 1,147,186
Less current portion 71,933 66,490
--------- ---------
$1,003,374 $1,080,696
========= =========
The Company is obligated to pay a fixed monthly amount
for health care coverage to the above payees. The
Company is also obligated to pay up to $10,000 annually
in premiums for a life insurance policy assigned to the
former President.
The Company accounts for these obligations in a manner
similar to that described in Statement of Financial Accounting
Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other than Pensions" under which such costs are
recognized as incurred rather that when paid. The statement
is not required to be applied to benefits payable to selected
employees under terms of individual contracts. However, it is
management's opinion that adoption of the standard is preferable
for financial reporting purposes.
<PAGE> * * *
Note 6. Long-term Debt
On July 12, 1995, the IDA of Franklin County, VA issued
bonds in the amount of $3,000,000 to finance the
construction of a manufacturing facility. The Series 1995
Variable Rate Demand Industrial Revenue Bonds are secured
by the Company's Irrevocable Letter of Credit with Crestar
Bank. The letter of credit agreement subjects the Company
to certain financial and operating covenants, all of which
the Company was in compliance with at year end. Crestar
Bank holds a first lien and security interest on the new
facility. The bonds are payable in equal annual principal
amounts of $150,000 through 2015. The interest rate was 4.25,
4.1 and 4.95 percent at December 31, 1997, 1996 and 1995,
respectively.
The Company has entered an agreement of sale to purchase
the facility from the IDA. The Company's obligation under
the Agreement of Sale is equal to the required principal
and interest payments on the bonds and is payable in
monthly installments currently estimated at $22,750. The
monthly payments are deposited into a Reimbursement
Account with Crestar Bank and used to pay all principal,
interest and fees related to the Bonds. The Company also
agreed to maintain an additional required deposit in the
reimbursement account equal to 55 days of interest at 15.0
percent on the bonds. The Reimbursement Account balance
was follows:
1997 1996
---- ----
Required prepaid interest deposit $ 67,811 $ 67,811
Unused monthly principal deposits 75,000 75,000
Earnings 17,431 9,895
-------- --------
$160,242 $ 152,706
======== ========
The Company's policy is to reflect the balance of the
reimbursement account as an asset until the funds are used
by the trustee for payment of bond obligations, at which
time the Company reduces its obligations under the asset
sale agreement.
As of December 31, 1997, $2,939,755 of the bond proceeds
have been drawn from the trustee. The Company's
obligation under the asset sale agreement is reflected at
the amount of bond proceeds that have been drawn less
cumulative payments of $300,000. Any unused proceeds and
related earnings at July 12, 1998 will be used for early
retirement of bonds.
Amounts earned on bond proceeds prior to their being drawn
from the trustee are to be applied to principal reduction
in the future. These earnings amounted to $113,612 and
$105,474 at December 31, 1997 and 1996, respectively.
Debt issue costs will be amortized over the term of the
debt.
Note 7. Income Taxes
The provision for income taxes consists of the following
components:
1997 1996 1995
--------- -------- --------
Current tax expense $ 85,112 $ 90,368 $ 238,316
Deferred tax expense(benefit) 21,866 22,100 ( 9,631)
------- ------- -------
$106,978 $112,468 $228,685
======== ======== ========
Deferred tax expense (benefit) results from temporary difference in
the recognition of revenue and expense for tax and financial
reporting purposes. The sources of the differences and the tax
effect of each are as follows:
1997 1996 1995
-------- -------- ---------
Differing cost basis of
property and equipment $ 4,394 $ 8,067 $( 24,248)
Amounts expensed when
incurred, deducted when paid:
Deferred Compensation 27,314 32,959 18,285
Warranty & accrued vacation ( 8,675) ( 4,658) ( 1,437)
Other, net ( 1,167) ( 3,268) ( 2,231)
-------- ------- --------
$ 21,866 $ 22,100 $( 9,631)
======== ======= ========
<PAGE> * * *
The provision for income taxes differs from amounts computed by
applying the statutory Federal income tax rate to income before taxes
for the following reasons:
1997 1996 1995
--------------- --------------- --------------
Percent Percent Percent
of of of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
-------- ------ -------- ------ -------- ------
Tax expense at
federal rate $ 97,805 34.0% $ 98,645 34.0% $206,553 34.0%
Increase (decrease)
in taxes from:
State taxes, net
of federal tax
effect 11,507 4.0% 11,605 4.0% 24,300 4.0%
Other, net ( 2,334) (0.08%) 2,218 1.0% ( 2,168) (0.4%)
-------- ----- -------- ----- -------- ----
$106,978 37.2% $112,468 39.0% $228,685 37.6%
======== ===== ======== ===== ======== =====
Note 8. Fair Value of Financial Instruments
The methods used to estimate the fair value of each
material class of financial instruments are as follows:
Cash and cash equivalents, trade receivables and payables
and customer deposits:
---------------------------------------------------
The carrying amount is a reasonable estimate of the fair
value because of the short maturity of these instruments.
Notes Receivable:
----------------
Fair values are estimated by discounting the future cash
flows using the current rates at which similar loans would
be made with similar credit ratings and for the same
remaining maturities. Carrying values approximate fair values.
Debt:
----
The interest rate on the long-term debt is reset weekly to
reflect current market rates. Consequently, the carrying
value of debt approximates fair value.
Note 9. Profit Sharing Plan and Trust
The Company has a contributory profit-sharing plan
complying under Section 401(k) and certain other
provisions of the Internal Revenue Code. The plan covers
a majority of all employees meeting minimum eligibility
requirements. Participants may elect to have before-tax
(salary reduction) contributions to be made to the plan on
their behalf. The Company matches such before-tax
contributions in the proportion determined by the Board of
Directors at its discretion on an annual basis.
Additionally, the Company may at the Board's
discretion make an additional contribution based on the
Company's pre-tax earnings. The Company's total
contributions to the plan were $46,134, $40,142, and
$53,010 for 1997, 1996 and 1995, respectively.
<PAGE> * * *
Note 10. Non-operating Income
Non-operating income is composed of the following:
1997 1996 1995
-------- -------- --------
Interest income $ 108,421 $ 130,119 $ 175,971
Interest expense,
net of earnings
on debt proceeds ( 115,550) (64,603) ( 4,867)
Other, net 7,478 2,849 20,981
-------- -------- --------
$ 349 $ 68,365 $ 192,085
======== ======== ========
Note 11. Commitments and Contingencies
Litigation:
----------
The Company is co-defendant in a suit seeking damages in the
amount of $350,000 for breach of warranty and improper
workmanship in the manufacture of a modular home. Management
and counsel are of the opinion that the Company will be
successful in its defense against this claim.
Employment Contracts:
--------------------
The Company is obligated under employment contracts with
the President and Vice President. Combined base annual
compensation under the contracts is approximately
$140,000. The contracts provide for payment of incentive
compensation based on certain percentages of pretax income
of the Company, exclusive of any extraordinary items.
Death Benefit:
-------------
The Company is obligated to provide a death benefit to the
estate of the Vice President in the amount of $35,000. The
Company has recognized a liability in the amount of
$16,796, the estimated present value of this obligation
discounted at 8.50 percent. The Company is carrying a
term life insurance policy in the amount of $35,000, the
purpose of which is to fund the death benefit.
Sales and Service Tax Audit:
---------------------------
The Company has undergone an audit of its West Virginia
sales and service tax returns. The West Virginia
Department of Revenue has assessed the Company an
additional tax of $117,999 and related interest. The
Company's attorneys have filed a Petition for Reassessment
with the State. In the opinion of the Company's legal
counsel, the Company's chances of success on the current
assessments are favorable.
Note 12. Related Party Transactions
In the normal course of business, the Company makes
purchases from a supplier owned by a director of the
Company. Purchases from this supplier totaled $760,598,
$662,539 and $462,654 for 1997, 1996 and 1995,
respectively.
The Company has a note receivable from the President (Note 3)
and is obligated under deferred compensation agreements to
two former employees (Note 5).
Item 8. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure.
---------------------------------------------------------------
None
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
-------------------------------------------------------------
The Company's Board of Directors is composed of the following
five members.
Name Age Director Since
------ ----- ----------------
Edwin J. Campbell . . . . . . . . 68 1978
Dale H. Powell . . . . . . . . . 64 1980
W. Curtis Carter . . . . . . . . 79 1991
Bobbie L. Oliver . . . . . . . . . 65 1994
Mary L. Fitts . . . . . . . . . . 58 1994
EDWIN J. CAMPBELL was Vice President of Sales and Marketing of the
Company from 1977 until 1990, and has been Corporate Secretary since March,
1990. He has been Vice President since October, 1990.
DALE H. POWELL was Vice President-Operations of the Company from 1980 to
March 1990, when he became President and Chairman of the Board. Mr. Powell
was Secretary of the Company from March 1988 until March 1990.
W. CURTIS CARTER, presently retired, was an Officer and Director of
Stuart Lumber Corporation in Stuart, Virginia for 24 years until the company
was sold to the Masonite Corporation in 1977. He remained with Masonite in
accounting and other capacities until his retirement in 1988.
BOBBIE L. OLIVER is the wife of the late O. Z. Oliver, Co-founder and
former Board Chairman of Mod-U-Kraf Homes, Inc. She is the largest
shareholder of the Company and is managing real estate and rental properties
in Southwest Virginia. She is the Sister-In-Law of Dale H. Powell and the
Sister of Mary L. Fitts.
MARY L. FITTS, Real Estate Investor, has been owner and operator of an
apartment complex since 1983. She is the wife of Robert K. Fitts, co-
founder of the Company. She is the Sister-In-Law of Dale H. Powell and the
Sister of Bobbie L. Oliver.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
The Company's directors, executive officers and owners of more than 10%
Company's shares are required under the Securities Exchange Act of 1934 to
file report of ownership and changes in ownership with the Securities
Exchange Commission. Copies of these reports must also be furnished to the
Company. Based solely on review of the copies of such reports furnished to
the Company through the date hereof, or written representations that no
reports were required; the Company believes that during 1997, all filing
requirements applicable to its officers, directors and 10% shareholders were
met.
Item 10. Executive Compensation.
----------------------
The following table presents information relating to total compensation
of the Chief Executive Officer of the Company during the periods indicated.
SUMMARY COMPENSATION TABLE
Annual Compensation
All
Name and (1) Other (2)
Principal Position Year Salary Bonus Compensation
Dale H. Powell 1997 $75,000 $ 9,651 $14,511
President and
Chairman of the 1996 $75,000 $20,322 $15,278
Board
1995 $75,000 $18,542 $16,221
(1) Bonus is calculated on the prior years' earnings in accordance with
Mr. Powell's employment agreement.
(2) Consists of $13,207 of premiums paid by the Company on a "split-dollar"
insurance policy for 1997, 1996 and 1995, and $1,304, $2,071 and $3,014 of
Company contributions to Mr. Powell's profit-sharing plan account for 1997,
1996 and 1995 respectively.
Employment Agreement
Under an Employment Agreement with the Company, effective January 1,
1991, Dale H. Powell will be paid an annual base salary of $75,000, subject
to annual review by the Board of Directors. In addition to the base salary,
Mr. Powell will be paid incentive compensation equal to 3% of the income of
the Company before federal and state income taxes, and before the payment of
any dividends or extraordinary non-recurring items or expenses.
Compensation of Directors
Outside directors are paid a fee of $250.00 for each meeting of the
Board of Directors attended.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
The Company's only authorized equity is common stock, $1 par value
("Common Stock"), each share of which has one vote on all matters. There
were outstanding and entitled to vote 825,649 shares of Common Stock on the
Record Date.
The following table presents certain information as of the Record Date
regarding beneficial ownership of Common Stock by the directors and nominees
for directors, officers and directors as a group, and all owners of more
than 5% of the Common Stock.
Amount and Nature
Name of Beneficial of Beneficial Percent
Owner Ownership Owned
------------------ --------------------- -------
Edwin J. Campbell 33,892(1) 4.10%
Dale H. Powell 68,800 8.33
W. Curtis Carter 36,720 4.45
Bobbie L. Oliver 173,406 21.00
Mary L. Fitts 66,000(2) 7.99
All officers and directors
as a group(8 persons) 379,730 45.99
Robert K. Fitts 78,547(3) 9.51
P. O. Box 82
Boones Mill, VA 24065
(1) Includes shares held in various fiduciary capacities and owned by
or with certain relatives.
(2) Includes 66,000 shares with respect to which voting and investment
power is shared with Robert K. Fitts
(3) Includes 12,547 shares with respect to which Mr. Fitts has sole
voting and investment power and 66,000 shares with respect to
which such power is shared with Mary L. Fitts.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Pursuant to a settlement agreement between the Company and the Estate of
O. Z. Oliver, deferred compensation benefits of $75,726 were paid to Mr.
Oliver's widow, Bobbie L. Oliver, during 1997. In addition, $2,561 was paid
in 1997 to Mrs. Oliver for health insurance premiums. Mrs. Oliver, a
director, is a Sister In Law to Dale H. Powell, President and Chairman of
the Board of the Company and a Sister to Mary L. Fitts.
Pursuant to a settlement agreement between the Company and Robert K.
Fitts, deferred compensation benefits of $66,724 and a sum of $10,000 in
premiums for life insurance policies assigned to Mr. Fitts were paid to Mr.
Fitts in 1997. In addition, $6,000 was be paid in 1997 to Mr. Fitts for
health insurance premiums for Mr. Fitts and Mary L. Fitts, his spouse. Mr.
Fitts' spouse, Mary L. Fitts, a director, is a Sister of Bobbie L. Oliver
and a Sister-In-Law to Dale H. Powell, President and Chairman of the Board
of the Company.
In the normal course of business, the Company makes purchases from a
supplier owned by J. Dillard Powell, the recently deceased brother of Dale
Powell and a director of the Company until his death. The supplier was
acquired by Mr. Powell in 1989. Prior to that time, the supplier had been a
long time vendor of the Company. Purchases from this supplier totaled
$760,598 for 1997.
Item 13. Exhibits, Lists And Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(3) Exhibits:
3.1(a) Articles of Incorporation (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended December 31,
1983 and incorporated herein by reference)
3.1(b) Amendment to Articles of Incorporation dated November 2, 1989
(filed as an exhibit to Registrant's Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein by
reference)
3.2(a) By-Laws (filed as an exhibit to the Registrant's Form 10-K
for the fiscal year ended December 31, 1990 and incorporated
herein by reference)
3.2(b) Amendment to By-Laws dated January 19, 1994 (filed as an
exhibit to the Registrant's Form 10-KSB for the fiscal year
ended December 31, 1993 and incorporated herein by reference)
3.2(c) Amendment to By-Laws dated February 8, 1995
3.2(d) Amendment to By-Laws dated February 4, 1998
10.1 1983 Mod-U-Kraf Homes, Inc. Incentive Stock Option Plan
(filed as an exhibit to Registrant's Form 10-K for the fiscal
year ended December 31, 1983 and incorporated herein by
reference)
10.3(a) Settlement Agreement, dated as of March 24, 1990, between
Registrant and Robert K. Fitts (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended Dec. 31,
1989 and incorporated herein by reference)
10.3(b) Settlement Agreement, dated as of September 13, 1990, between
Registrant and the Estate of O.Z. Oliver (filed as an exhibit
to Registrant's Form 8-K filed Sept. 15, 1990 and
incorporated herein by reference)
10.4(a) Employment Agreement, dated November 21, 1990, between
Registrant and Dale H. Powell (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended Dec.31, 1990
and incorporated herein by reference)
10.4(b) Employment Agreement, dated November 21, 1990, between
Registrant and Edwin J. Campbell (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended Dec. 31,
1990 and incorporated herein by reference)
21 Subsidiaries
27 Financial Data Schedule
(b) Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MOD-U-KRAF HOMES, INC.
(Registrant)
March 26, 1998 By s/Dale H. Powell
-------------------------
Dale H. Powell, President and
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
March 26, 1998 s/Dale H. Powell
-------------------------
Dale H. Powell, President and
Chairman of the Board (Principal
Executive officer)
March 26, 1998 s/Edwin J. Campbell
-------------------------
Edwin J. Campbell, Vice President,
Corporate Secretary and Director
March 26, 1998 s/Steven T. Montgomery
-------------------------
Steven T. Montgomery, Controller
(Principal Financial and Accounting
Officer)
March 26, 1998 s/W. Curtis Carter
-------------------------
W. Curtis Carter, Director
March 26, 1998 s/Bobbie L. Oliver
-------------------------
Bobbie L. Oliver, Director
March 26, 1998 s/Mary L. Fitts
-------------------------
Mary L. Fitts, Director
Mod-U-Kraf Homes, Inc.
Exhibit Index
Exhibit No. Description
3.1(a) Articles of Incorporation (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended December 31,
1983 and incorporated herein by reference)
3.1(b) Amendment to Articles of Incorporation dated November 2, 1989
(filed as an exhibit to Registrant's Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein by
reference)
3.2(a) By-Laws (filed as an exhibit to the Registrant's Form 10-K
for the fiscal year ended December 31, 1990 and incorporated
herein by reference)
3.2(b) Amendment to By-Laws dated January 19, 1994 (filed as an
exhibit to the Registrant's Form 10-KSB for the fiscal year
ended December 31, 1993 and incorporated herein by reference)
3.2(c) Amendment to By-Laws dated February 8, 1995
3.2(d) Amendment to By-Laws dated February 4, 1998
10.1 1983 Mod-U-Kraf Homes, Inc. Incentive Stock Option Plan
(filed as an exhibit to Registrant's Form 10-K for the fiscal
year ended December 31, 1983 and incorporated herein by
reference)
10.3(a) Settlement Agreement, dated as of March 24, 1990, between
Registrant and Robert K. Fitts (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended Dec. 31,
1989 and incorporated herein by reference)
10.3(b) Settlement Agreement, dated as of September 13, 1990, between
Registrant and the Estate of O.Z. Oliver (filed as an exhibit
to Registrant's Form 8-K filed Sept. 15, 1990 and
incorporated herein by reference)
10.4(a) Employment Agreement, dated November 21, 1990, between
Registrant and Dale H. Powell (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended Dec.31, 1990
and incorporated herein by reference)
10.4(b) Employment Agreement, dated November 21, 1990, between
Registrant and Edwin J. Campbell (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended Dec. 31,
1990 and incorporated herein by reference)
21 Subsidiaries
27 Financial Data Schedule
Exhibit 3.2(c)
Mod-U-Kraf Homes, Inc.
Resolution Passed at Board of
Directors Meeting February 8, 1995
Resolved that the Board of Directors hereby finds it to be in the best
interest of the corporation that its By-Laws be amended by deleting Article
II, Section 1 and substituting therefore the following:
Article II
Board of Directors
Section 1. Election. The Board of Directors shall be chosen at the annual
meeting of the shareholders, to hold office until removed or until the next
annual meeting of the shareholders and until their successors are elected.
The number of directors shall be six (6). Directors need not be
stockholders.
Exhibit 3.2(d)
Mod-U-Kraf Homes, Inc.
Resolution Passed at Board of
Directors Meeting February 4
Resolved that the Board of Directors hereby finds it to be in the
best interest of the Corporation that its By-Laws be amended by
deleting Article II, Section I and substituting the following:
Article II
Board of Directors
Section 1. Election. The Board of Directors shall be chosen at the
annual meetings of the stockholders, to hold office until removed
or until the next annual meeting of the stockholders and until
their successors are elected. The number of Directors shall be no
less than four (4) nor more than six (6). Directors need not be
stockholders.
Exhibit 21
Mod-U-Kraf Homes, Inc.
Subsidiaries
Name of Subsidiary Jurisdiction of
Incorporation
- -------------------------------------- -----------------------
Mountain Resort Building Systems, Inc. Virginia
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