FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 Commission File Number 0-3922
PATRICK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1057796
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
1800 South 14th Street, Elkhart, IN 46516
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (219) 294-7511
NONE
Former name, former address and former fiscal year, if changed since last
report.
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
Shares of Common Stock Outstanding as of November 1, 1996: 5,962,766
PATRICK INDUSTRIES, INC.
INDEX
Page No.
PART I: Financial Information
Unaudited Condensed Balance Sheets
September 30, 1996 & December 31, 1995 3
Unaudited Condensed Statements of Income
Three Months Ended September 30, 1996 & 1995, and
Nine Months Ended September 30, 1996 & 1995 4
Unaudited Condensed Statements of Cash Flows
Nine Months Ended September 30, 1996 & 1995 5
Notes to Unaudited Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II: Other Information 10
Signatures 11
PART I: FINANCIAL INFORMATION
PATRICK INDUSTRIES, INC. CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note)
SEPTEMBER 30 DECEMBER 31
1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,022,986 $ 1,349,709
Accounts Receivable, Net 28,638,535 20,427,355
Inventories 37,328,685 35,462,152
Other 145,168 387,782
Total Current Assets $ 68,135,374 $ 57,626,998
INTANGIBLE AND OTHER ASSETS $ 5,387,973 $ 5,239,766
PROPERTY AND EQUIPMENT $ 62,828,952 $ 56,189,860
LESS ACCUMULATED DEPRECIATION 25,144,730 23,140,702
$ 37,684,222 $ 33,049,158
Total Assets $ 111,207,569 $ 95,915,922
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current Maturities of Long-term Debt $ 700,000 $ 700,000
Accounts Payable 17,085,094 9,589,103
Accrued Expenses and Taxes Payable 4,850,390 4,057,446
Total Current Liabilities $ 22,635,484 $ 14,346,549
LONG-TERM DEBT, NET OF CURRENT MATURITIES $ 26,200,000 $ 26,200,000
DEFERRED COMPENSATION $ 1,031,428 $ 919,821
DEFERRED INCOME TAX CREDITS $ 1,544,269 $ 1,461,000
SHAREHOLDERS' EQUITY
Common Stock $ 21,767,744 $ 21,626,489
Retained Earnings 38,028,644 31,362,063
Total Shareholders' Equity $ 59,796,388 $ 52,988,552
Total Liabilities and Shareholders' Equity $ 111,207,569 $ 95,915,922
NOTE: The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date and condensed.
See accompanying notes to Unaudited Condensed Financial Statements.
</TABLE>
PATRICK INDUSTRIES, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $105,686,233 $ 94,125,637 $306,849,116 $273,716,121
COST AND EXPENSES
Cost of Goods Sold $ 91,206,330 $ 80,913,172 $266,172,613 $236,037,230
Warehouse and Delivery 3,920,554 3,436,484 10,903,550 9,981,814
Selling and Administrative 4,915,825 4,801,757 15,074,356 13,850,944
Financial Expenses, Net 236,539 316,132 823,347 1,025,514
$100,279,248 $ 89,467,545 $292,973,866 $260,895,502
INCOME BEFORE INCOME TAXES $ 5,406,985 $ 4,658,092 $ 13,875,250 $ 12,820,619
INCOME TAXES 2,122,300 1,816,000 5,441,500 5,000,000
NET INCOME $ 3,284,685 $ 2,842,092 $ 8,433,750 $ 7,820,619
EARNINGS PER COMMON SHARE $ .55 $ .48 $ 1.41 $ 1.32
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,973,212 5,947,431 5,968,790 5,943,991
See accompanying notes to Unaudited Condensed Financial Statements.
</TABLE>
PATRICK INDUSTRIES, INC.
UNAUDITED CONDENSED STATEMENTS OF
CASH FLOW
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 8,433,750 $ 7,820,619
Adjustment to Reconcile Net Income to Net Cash:
Depreciation and Amortization 3,357,973 2,472,907
Other (19,533) (142,038)
Change in Assets and Liabilities:
Decrease (Increase) in:
Accounts Receivable (8,211,180) (8,681,024)
Inventories (1,866,533) 2,153,155
Other 242,614 6,008
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 7,801,741 907,474
Income Taxes Payable and Deferred Taxes 563,117 242,508
Deferred Compensation 111,607 79,650
Net Cash Provided by Operating Activities $ 10,413,556 $ 4,859,259
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures $ (7,820,442) $ (8,833,410)
Acquisition of Assets of U.S. Door --- (3,346,596)
Change in Cash Held in Escrow --- 2,603,959
Other 90,558 373,810
Net Cash (Used in) Investing Activities $ (7,729,885) $ (9,202,237)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Borrowings Under Debt Agreements $ --- $ 18,000,000
Sale of Common Stock 174,724 25,703
Principal Payments on Debt --- (13,274,000)
Reacquisition of Common Stock (1,479,476) ---
Cash Dividends (714,912) (474,342)
Other 9,269 ---
Net Cash Provided by Financing Activities $ (2,010,395) $ 4,277,361
Increase (Decrease) in Cash and Cash Equivalents $ 673,277 $ (65,617)
CASH and CASH EQUIVALENTS, BEGINNING $ 1,349,709 $ 666,986
CASH and CASH EQUIVALENTS, ENDING $ 2,022,985 $ 601,369
CASH PAYMENTS FOR:
Interest $ 1,282,207 $ 1,127,842
Income Taxes $ 5,012,305 $ 4,879,992
See accompanying notes to Unaudited Condensed Financial Statements.
</TABLE>
PATRICK INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Registrant, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly financial position as of
September 30, 1996, and December 31, 1995, and the results of operations and
cash flows for the three months and the nine months ended September 30, 1996
and 1995.
2. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in Registrant's December 31, 1995
audited financial statements. The results of operations for the three
months and nine months periods ended September 30, 1996 and 1995 are not
necessarily indicative of the results to be expected for the full year.
3. The inventories on September 30, 1996 and December 31, 1995 consist of the
following classes:
September 30 December 31
1996 1995
Raw Materials $22,965,977 $23,105,916
Work in Process 1,071,624 877,805
Finished 3,276,241 3,197,561
Total Manufactured Goods $27,313,842 $27,181,282
Distribution Products 10,014,843 8,280,870
TOTAL INVENTORIES $37,328,685 $35,462,152
The inventories are stated at the lower of cost, First-In, First-Out (FIFO)
method, or market.
4. The earnings per common share for the three months and nine months ended
September 30, 1996 and 1995 have been computed based on the weighted average
number of shares of common stock. The weighted average number of shares
outstanding was 5,973,212 for the three months and 5,968,790 for the nine
months ended September 30, 1996 and 5,947,431 for the three months and
5,943,991 for the nine months ended September 30, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
GENERAL
The economy and the industries served by the Registrant improved starting in
1992 as net sales increased annually from $184 million in 1992 to over $362
million in 1995. In the first nine months of 1996, the Registrant continued its
growth with record sales for the period.
The following table sets forth the percentage relationship to net sales of
certain items in the Registrant's Statements of Income:
Three Months Nine Months
Ended September 30 Ended September 30
1996 1995 1996 1995
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 86.3 86.0 86.7 86.2
Gross Profit 13.7 14.0 13.3 13.8
Warehouse and Delivery 3.7 3.7 3.6 3.7
Selling, General
& Administrative 4.7 5.1 4.9 5.1
Operating Income 5.3 5.2 4.8 5.0
Net Income 3.1 3.0 2.8 2.9
RESULTS OF OPERATIONS
Quarter Ended September 30, 1996 Compared to Quarter Ended September 30,
1995
Net Sales. Net sales increased by $11.6 million, or 12.3%, from $94.1
million for the quarter ended September 30, 1995 to $105.7 million in the
quarter ended September 30, 1996. This sales increase was attributable to an
almost 9% increase in units shipped by the Manufactured Housing industry,
which represents approximately 69% of Registrant's sales. The Registrant's
sales to the Recreational Vehicle industry were higher in this years third
quarter because the industry, which represents approximately 16% of
Registrant's sales, was experiencing a slight increase in units shipped of
the units that utilize Registrant's products.
Gross Profit. Gross profit increased by approximately $1.3 million, or
9.6%, from $13.2 million in the third quarter of 1995, to $14.5 million in the
same quarter of 1996. As a percentage of sales, gross profit was lower by 0.3%.
Warehouse and Delivery Expenses. Warehouse and delivery expenses increased
by $0.48 million, or 14%. This is the same percentage to net sales as the third
quarter of 1995. The increase in dollars is due to increased sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by only $114,000, or 2.4%, in the 1996 third
quarter. As a percentage of net sales, these expenses decreased from 5.1% to
4.7% in the third quarter of 1996 compared to 1995.
Operating Income. Operating income increased by $669,000 because of the
increased sales and the operating expenses remaining steady or lower as
percentages of sales. As a percentage of sales, operating income was increased
from 5.2% to 5.3% in the 1996 third quarter.
Interest Expense. Interest expense decreased by almost $80,000. The
Registrant's borrowing levels were slightly lower during most of the 1996 third
quarter compared to 1995, and temporary investments were higher.
Net Income. Net income increased by $443,000 from $2.8 million in 1995 to
$3.3 million in 1996 for the third quarter ended September 30. This increase
from 3.0% of sales to 3.1% is attributable to the factors described above.
Nine Months Ended September 30, 1996 Compared to Nine Months Ended September
30, 1995
Net Sales. Net sales increased by $33.1 million, or 12.1%, from $273.7
million for the nine months ended September 30, 1995, to $306.8 million in the
nine months ended September 30, 1996. This sales increase was attributable to
an almost 10% increase in the first nine months in units shipped by the
Manufactured Housing industry, which represents approximately 69% of
Registrant's sales. The Registrant's sales to the Recreational Vehicle
industry were higher in this years first nine months because the industry,
which represents approximately 16% of Registrant's sales, was experiencing a
slight increase in units shipped of the units that utilize Registrants products.
Gross Profit. Gross profit increased by approximately $3.0 million, or
8.0%, from $37.7 million in the first nine months of 1995, to $40.7 million in
the same period of 1996. As a percentage of sales, gross profit was lower by
0.5%.
Warehouse and Delivery Expenses. Warehouse and delivery expenses increased
by approximately $921,000, or 9.2%. This is 0.1 % less as a percentage of net
sales than the nine months period of 1995. The increase in dollars is due to
increased sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1.2 million, or 8.8%, in the 1996 first
nine months. As a percentage of net sales, these expenses decreased from 5.1%
to 4.9% in the first nine months of 1996 compared to 1995.
Operating Income. Operating income increased by approximately $852,000
because of the increased sales and the operating expenses remaining steady or
lower as percentages of sales. As a percentage of sales, operating income
decreased from 5.0% to 4.8% in the 1996 first nine months.
Interest Expense. Interest expense decreased by approximately $202,000.
The Registrant's borrowing levels were slightly lower during the first nine
months of 1996 compared to 1995, and temporary investments were higher.
Net Income. Net income increased by approximately $613,000 from $7.8
million in 1995 to $8.4 million in 1996 for the nine months ended September 30.
This increase is attributable to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's primary capital requirements are to meet working capital
needs, support its capital expenditure plans and meet debt service requirements.
The Registrant, in September, 1995, issued to an insurance company in a
private placement, $18,000,000 of senior unsecured notes. The ten year notes
bear interest at 6.82%, with semi-annual interest payments beginning in 1996 and
seven annual principal repayments beginning September 15, 1999. These funds
were used to reduce existing bank debt and for working capital needs.
The Registrant has a bank financing agreement (the Credit Agreement) with
NBD Bank, N.A. The Credit Agreement provided for a $10 million term loan with a
maturity in February, 1999 and a credit revolver loan of up to $13 million with
maturity in February 1997. In September, 1995 with funds from the insurance
company private placement, the Registrant prepaid the term loan in full and paid
the revolver outstanding balance. On October 31, 1995 the bank financing
agreement was amended reducing the credit revolver loan availability to
$5,000,000. Pursuant to the Credit Agreement, the Registrant is required to
maintain certain financial ratios, all of which are currently complied with.
The Registrant believes that cash generated from operations and borrowings
under its credit agreements will be sufficient to fund its working capital
requirements and ordinary capital expenditures as currently contemplated.
SEASONALITY
Manufacturing operations in the Manufactured Housing and Recreational
Vehicle industries historically have been seasonal and are generally at the
highest levels when the climate is temperate. Accordingly, the Registrant's
sales and profits are generally highest in the second and third quarters.
INFLATION
The Registrant does not believe that inflation had a material effect on
results of operations for the periods presented.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule
(b) There were no Reports filed on Form 8-K during this period.
SIGNATURES
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.
PATRICK INDUSTRIES, INC.
(Registrant)
Date November 12, 1996 /S/Mervin D. Lung
Mervin D. Lung
(Chairman of the Board)
Date November 12, 1996 /S/David D. Lung
David D. Lung
(President)
Date November 12, 1996 /S/Keith V. Kankel
Keith V. Kankel
(Vice President Finance)
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Patrick
Industries, Inc.'s Form 10-Q and is qualified in its entirety by reference to
such Form 10-Q filing.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,022,986
<SECURITIES> 0
<RECEIVABLES> 28,768,535
<ALLOWANCES> (130,000)
<INVENTORY> 37,328,685
<CURRENT-ASSETS> 68,135,374
<PP&E> 62,828,952
<DEPRECIATION> (25,144,730)
<TOTAL-ASSETS> 111,207,569
<CURRENT-LIABILITIES> 22,635,484
<BONDS> 0
0
0
<COMMON> 21,767,744
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 111,207,569
<SALES> 306,849,116
<TOTAL-REVENUES> 306,849,116
<CGS> 266,172,613
<TOTAL-COSTS> 292,150,519
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 823,347
<INCOME-PRETAX> 13,875,250
<INCOME-TAX> 5,441,500
<INCOME-CONTINUING> 8,433,750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,433,750
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.41
</TABLE>
