U.S. SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission file number 1-9792
Cavalier Homes, Inc.
(Exact Name of Registrant as Specified in Its charter)
Delaware 63-0949734
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Highway 41 North & Cavalier Road, Addison, Alabama 35540
(Address of Principal Executive Offices)
(Zip Code)
(205) 747-1575
(Registrant's Telephone Number, Including Area Code)
(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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
Class Outstanding at May 9, 1997
Common Stock $.10 Par Value 12,213,251 Shares
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<PAGE>
CAVALIER HOMES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information (Unaudited)
Consolidated Condensed Balance Sheets -
March 28, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income -
Thirteen Weeks ended March 28, 1997
and March 29, 1996 4
Consolidated Condensed Statements of Cash
Flows - Thirteen Weeks ended March 28, 1997
and March 29, 1996 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 5. Other Matters 12
Item 6. Exhibits 12
Signatures 14
Certain items in the report that follows are marked with an asterisk (*),
indicating that they are subject to the "Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995 found on page 13 of this
report.
-2-
<PAGE>
<TABLE>
<CAPTION>
CAVALIER HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
<S> <C> <C>
March 28, December 31,
ASSETS 1997 1996
CURRENT ASSETS:
Cash and cash equivalents $ 5,896 $ 24,529
Marketable securities available for sale - 1,097
Accounts receivable, less allowance for
losses of $800 21,128 3,046
Notes and installment contracts receivable - current 1,476 1,086
Inventories 13,447 12,394
Deferred income taxes 4,702 4,663
Other current assets 2,217 2,475
------------------- --------------------
Total current assets 48,866 49,290
------------------- --------------------
PROPERTY, PLANT AND EQUIPMENT (Net) 25,054 24,760
------------------- --------------------
INSTALLMENT CONTRACTS RECEIVABLE, less
allowance for credit losses of $1,053 (1997)
and $941 (1996) 39,187 34,504
------------------- --------------------
GOODWILL, less accumulated amortization of
$647 (1997) and $588 (1996) 3,068 3,126
------------------- --------------------
OTHER ASSETS 3,672 3,894
------------------- --------------------
$ 119,847 $ 115,574
=================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 997 $ 951
Accounts payable 10,917 7,916
Amounts payable under dealer incentive programs 8,063 10,937
Accrued wages and related withholdings 3,192 1,652
Accrued incentive compensation 1,756 2,615
Estimated warranties 7,000 7,000
Accrued insurance 1,710 2,023
Other accrued expenses 8,693 7,722
------------------- --------------------
Total current liabilities 42,328 40,816
------------------- --------------------
DEFERRED INCOME TAXES 1,053 1,035
------------------- --------------------
LONG-TERM DEBT 4,428 4,918
------------------- --------------------
STOCKHOLDERS' EQUITY:
Series A Junior Participating Preferred Stock, $.01 par value;
200,000 shares authorized, none issued
Preferred stock, $.01 par value;
300,000 shares authorized, none issued
Common stock, $.10 par value; authorized
15,000,000 shares; issued 12,213,251 (1997)
and 12,169,128 (1996) shares 1,221 1,217
Additional paid-in capital 31,566 31,057
Retained earnings 39,251 36,531
------------------- --------------------
Total stockholders' equity 72,038 68,805
------------------- --------------------
$ 119,847 $ 115,574
=================== ====================
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
CAVALIER HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
<S> <C> <C>
Thirteen Weeks Ended
March 28, March 29,
REVENUES: 1997 1996
Net sales $ 75,758 $ 74,784
Financial services 1,142 620
------------------- --------------------
76,900 75,404
------------------- --------------------
COST OF SALES 61,930 61,813
SELLING, GENERAL AND ADMINISTRATIVE:
Manufacturing 9,357 8,657
Financial services 646 359
------------------- --------------------
71,933 70,829
------------------- --------------------
OPERATING PROFIT 4,967 4,575
------------------- --------------------
OTHER INCOME(EXPENSE):
Interest expense:
Manufacturing (44) (16)
Financial services (102) (116)
Other, net 288 335
------------------- --------------------
142 203
------------------- --------------------
INCOME BEFORE INCOME TAXES 5,109 4,778
INCOME TAXES 2,023 1,907
------------------- --------------------
NET INCOME $ 3,086 $ 2,871
=================== ====================
NET INCOME PER SHARE $ .25 $ .24
=================== ====================
WEIGHTED AVERAGE SHARES OUTSTANDING 12,395,018 11,993,157
=================== ====================
</TABLE>
See Notes to Consolidated Condensed Financial Statements
-4-
<PAGE>
<TABLE>
<CAPTION>
CAVALIER HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(UNAUDITED)
<S> <C> <C>
Thirteen Weeks Ended
March 28, March 29,
1997 1996
OPERATING ACTIVITIES:
Net income $ 3,086 $ 2,871
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 1,019 860
Provision for credit losses and repurchase commitments 111 26
(Gain)loss on sale of property, plant and equipment (14) (4)
Equity in earnings of equity investments 14 (142)
Compensation related to issuance of stock options 37 -
Changes in assets and liabilities provided(used)
cash, net of effects of an acquisition in 1996:
Accounts receivable (18,082) (18,665)
Inventories (1,053) (2,032)
Accounts payable 3,001 4,547
Amounts payable under dealer incentive
programs (2,874) (652)
Estimated warranties - 330
Other assets and liabilities 2,626 2,011
------------------- --------------------
Net cash used in operating activities (12,129) (10,850)
------------------- --------------------
INVESTING ACTIVITIES:
Proceeds from the sale of property, plant and equipment 18 28
Net cash paid in connection with acquisition
of a subsidiary - (478)
Capital expenditures (1,251) (1,481)
Distribution from equity investments 248 194
Redemptions of marketable securities - 250
Purchases and originations of notes and
installment contracts (6,163) (3,720)
Principal collected on installment contracts 978 574
------------------- --------------------
Net cash used in investing activities (6,170) (4,633)
------------------- --------------------
FINANCING ACTIVITIES:
Payments on long-term debt (444) (279)
Cash dividends (365) (271)
Net proceeds from exercise of stock options 4 655
Net proceeds from dividend reinvestment and stock
purchase plans 471 -
------------------- --------------------
Net cash provided by(used in) financing
activities (334) 105
------------------- --------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (18,633) (15,378)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,529 21,005
------------------- --------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,896 $ 5,627
=================== ====================
</TABLE>
See Notes to Consolidated Condensed Financial Statements
-5-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
For the Thirteen Week Periods Ended March 28, 1997 and March 29, 1996
(Dollars in Thousands Except Per Share Amounts)
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements
have been prepared in compliance with Form 10-Q instructions
and thus do not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In the opinion of the Company,
these statements contain all adjustments necessary to present
fairly the Company's financial position as of March 28, 1997
and December 31, 1996, and the results of its operations and
cash flows for the thirteen week periods ended March 28, 1997
and March 29, 1996. All adjustments are of a normal recurring
nature.
The results of operations for the thirteen weeks ended March
28, 1997 are not necessarily indicative of the results to be
expected for the full year.
Inventories consist primarily of raw materials and are stated
at the lower of cost (first-in, first-out method) or market.
During February 1997, the Financial Accounting Standards
Board issued SFAS No. 128, Earnings per Share, which will
become effective for all financial statements issued for
periods ending after December 15, 1997, including interim
periods. SFAS No. 128 provides for the presentation of basic
and diluted earnings per share on the face of the financial
statements and supersedes Accounting Principles Board (APB)
Opinion No. 15, Earnings per Share. SFAS No. 128 requires the
restatement of earnings per share for prior periods presented
after its effective date. SFAS No. 128 does not have a
material effect upon the thirteen week periods ended March 28,
1997 and March 29, 1996. However, the impact on other prior
periods has not yet been determined.
Certain amounts from the 1996 periods have been reclassified
to conform to the 1997 period presentation. These
reclassifications had no effect on results of operations or
stockholders' equity.
Net income per share is computed by dividing net earnings by
the weighted average number of shares of common stock
outstanding during the thirteen week periods after giving
effect to the equivalent shares which are issuable upon the
exercise of stock options determined by the treasury stock
method in accordance with APB No. 15.
2. SUPPLEMENTAL CASH FLOW DISCLOSURES
Thirteen Weeks Ended
March 28, March 29,
1997 1996
Cash paid for: Interest $ 153 $ 121
Income taxes $ 289 $ 333
3. CREDIT ARRANGEMENTS
The Company has a $23,000 revolving, warehouse and term-loan
agreement (the "Credit Facility") with its primary bank, whose
president is a director of the Company. The Credit Facility
contains a revolving line of credit which provides for
borrowings (including letters of credit) of up to 80% and 50%
of the Company's eligible (as defined) accounts receivable and
inventories, respectively, up to a maximum of $5,000. Interest
is payable under the revolving line of credit at the bank's
prime rate (8.25% at March 28, 1997).
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<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
For the Thirteen Week Periods Ended March 28, 1997 and March 29, 1996
(Dollars in Thousands Except Per Share Amounts)
3. CREDIT ARRANGEMENTS - Continued
The warehouse and term-loan agreement contained in the Credit
Facility provide for borrowings of up to 80% of the Company's
eligible (as defined) installment sale contracts, up to a
maximum of $18,000. Interest on term notes is fixed for a
period of five years from issuance at a rate based on the
weekly average yield on five-year treasury securities averaged
over the preceding 13 weeks, plus 2%, and floats for the
remaining two years at a rate (subject to certain limits)
equal to the bank's prime rate plus .75%. The warehouse
component of the Credit Facility provides for borrowings of up
to $2,000 with interest payable at the bank's prime rate plus
1%. However, in no event may the aggregate outstanding
borrowings under the warehouse and term-loan agreement exceed
$18,000.
The Credit Facility contains certain restrictive covenants,
which limit the aggregate of dividend payments and purchases
of treasury stock to 50% of consolidated net income for the
two most recent years. Amounts outstanding under the Credit
Facility are secured by the accounts receivable and
inventories of the Company, loans purchased and originated by
Cavalier Acceptance Corporation ("CAC"), the Company's wholly
owned finance subsidiary, and the capital stock of certain of
the Company's consolidated subsidiaries. The bank's commitment
under the Credit Facility will expire in April of 1998.
As of March 28, 1997, the Company had $3,465 borrowed under
the Credit Facility. During April 1997, the Company borrowed
an additional $6,000 under the Credit Facility.
4. STOCKHOLDERS' EQUITY
A five-for-four stock split of the Company's common stock
which was effected in the form of a 25% stock dividend was
distributed on November 15, 1996 to stockholders of record on
October 31, 1996. All historical dividends and earnings per
share amounts have been adjusted for the stock split.
Cash dividends were paid during this quarter and the previous
three quarters as follows (all amounts are per share):
Split Adjusted
Record Date Payment Date Dividend Paid
January 31, 1997 February 14, 1997 $ .030
October 31, 1996 November 15, 1996 $ .030
July 31, 1996 August 15, 1996 $ .024
April 30, 1996 May 15, 1996 $ .024
5. COMMITMENTS AND CONTINGENCIES
It is a customary practice in the manufactured housing
industry to enter into repurchase and other recourse
agreements with lending institutions which have provided
wholesale floor plan financing to dealers. Substantially all
of the Company's sales are made to dealers located primarily
in the southeast, southwest and midwest regions of the United
States pursuant to repurchase agreements with lending
institutions. These agreements generally provide for
repurchase of the Company's products from the lending
institutions for the balance due them in the event of
repossession upon a dealer's default. Although the Company is
contingently liable for approximately $88,000 at March 28,
1997, such contingency is reduced by the resale value of the
homes which may be required to be repurchased. Losses under
these agreements have not been significant in the past, and
management expects no material loss in excess of the allowance
provided of $800. *
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- --------
* See Safe Harbor Statement on page 13.
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
For the Thirteen Week Periods Ended March 28, 1997 and March 29, 1996
(Dollars in Thousands Except Per Share Amounts)
5. COMMITMENTS AND CONTINGENCIES - Continued
The Company's workmen's compensation, product liability and
general liability insurance coverages are provided under
incurred loss, retrospectively rated premium plans. Under
these plans, the Company incurs insurance expenses based upon
various rates applied to current payroll costs and sales.
Annually, such insurance expenses are adjusted by the carrier
for loss experience factors subject to minimum and maximum
premium calculations. At March 28, 1997, the Company was
contingently liable for future retrospective premium
adjustments up to a maximum of $7,300 in the event that
additional losses are reported related to prior periods.
The Company is a party to various legal proceedings
incidental to its business. In the opinion of management, the
ultimate liability, if any, with respect to these proceedings
is not presently expected to materially affect the financial
position or results of operations of the Company; however, the
ultimate resolution of these matters could result in losses in
excess of current estimates. *
-8-
- --------
* See Safe Harbor Statement on page 13.
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 28, 1997
General
The principal business of the Company since its inception has been the design
and production of manufactured homes. In the first quarter of 1992, the Company,
through its wholly owned subsidiary, CAC, commenced retail installment sale
financing operations, and by the end of 1993 these operations had become
significant enough to require segment reporting by the Company.
The Company's business is cyclical and seasonal and is influenced by many of the
same economic and demographic factors that affect the housing market as a whole.
According to the Manufactured Housing Institute, the manufactured housing
industry has posted gains in shipments for 1992, 1993, 1994, 1995 and 1996 of
24%, 21%, 20%, 12% and 7%, respectively. The greatest gains have occurred in the
southeastern United States, which have posted gains in shipments for 1992, 1993,
1994, 1995 and 1996 of 34%, 25%, 21%, 15% and 14%, respectively. The Company
conducts a substantial portion of its business in the southeastern United States
and attributes the strong shipment growth to a reduction of alternative housing,
increased availability of retail financing, increased consumer confidence and
continuing strength in the national economy. Given the cyclical and seasonal
nature of the Company's business, there can be no assurance that these trends
will continue. Industry shipments for the first quarter of 1997 have declined
slightly from levels experienced in the first quarter of 1996; however, the
Company believes it is too early to determine whether this decline is indicative
of future trends in shipments.
The Company has increased its production capacity to better take advantage of
the growth in the industry, increasing the number of manufacturing facilities
from four facilities at the end of 1992 to thirteen at the end of 1996.
Results of Operations
The following tables set forth, for the periods and dates indicated, certain
financial and operating data including, as applicable, the percentage of net
sales or total revenue:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME SUMMARY For the Quarter Ended
---------------------------------------------------------------------------
(Dollars in Thousands) March 28, 1997 March 29, 1996 Difference
------------------------ ------------------------ -----------------------
Net Sales $ 75,758 100.0% $ 74,784 100.0% $ 974 1.3%
Cost of Sales 61,930 81.7% 61,813 82.7% 117 0.2%
----------- ----------- ----------- ----------- -----------
Gross Profit on Sales $ 13,828 18.3% $ 12,971 17.3% $ 857 6.6%
=========== =========== ===========
Net Sales $ 75,758 $ 74,784 $ 974 1.3%
Financial Services 1,142 620 522 84.2%
----------- ----------- -----------
Total Revenue $ 76,900 100.0% $ 75,404 100.0% 1,496 2.0%
=========== =========== ===========
Selling, General and Administrative $ 10,003 13.0% $ 9,016 12.0% $ 987 10.9%
Operating Profit $ 4,967 6.5% $ 4,575 6.1% $ 392 8.6%
Net Income $ 3,086 4.0% $ 2,871 3.8% $ 215 7.5%
</TABLE>
<TABLE>
<S> <C> <C>
OPERATING DATA SUMMARY For the Quarter Ended
-----------------------------------------
(Dollars in Thousands) March 28, 1997 March 29, 1996
--------------- ---------------
Installment Loan Originations $ 5,863 $ 3,720
Capital Expenditures $ 1,251 $ 1,481
Home Shipments 3,084 3,139
Floor Section Shipments 4,475 4,447
Independent Exclusive Dealers 122 88
Home Manufacturing Facilities 13 11
</TABLE>
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<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 28, 1997
Net Sales. The Company believes the modest increase in net sales of
approximately $1.0 million is attributable to the Company's marketing programs
and the increase in multi-section homes sold during the current period over the
comparable period in the previous year which were mitigated by slowing industry
shipments as previously discussed. During the thirteen week period ended March
28, 1997, the percentage of single-section homes sold fell by 7.5% to 55%, which
was offset by the increase in multi-section home sales of 6.3% to 45% of homes
sold, resulting in a 1% increase in the number of floor sections shipped during
the current period of 4,475 floor sections compared to 4,447 floor sections for
the comparable period from the previous year.
Gross Profit on Sales. The increase in gross profit on sales (derived by
deducting cost of sales from net sales) of $857,000 during the current thirteen
week period over the comparable period from the previous year is primarily
attributable to the increase in sales, improved manufacturing efficiencies and a
reduction in material cost as a result, in part, of aggressive purchasing
programs and improved pricing of lumber products.
Financial Services Revenue. The increase in financial services revenue
(primarily interest income on retail installment contracts) during the current
thirteen week period of $522,000 or 84.2%, over the comparable period in the
previous year is primarily attributable to the growth of the Company's
installment contracts loan portfolio to $41.3 million, an increase of 84.8%.
Selling, General and Administrative. The growth in selling, general and
administrative expense during the current thirteen week period of $987,000, over
the previous year's comparable period is primarily attributable to the increase
in sales combined with increased expenses due to the addition of personnel and
increased administrative expenses consistent with the addition of two
manufacturing facilities.
Net Income. The increase in net income during the current thirteen week period
of $215,000 or 7.5% over the previous year's comparable period is primarily
attributable to the increase in sales volume, manufacturing efficiencies and
reduced material cost as discussed in the preceding paragraphs. Net income per
share during the current thirteen week period was $.25 compared to $.24 from the
previous year's comparable period. (Net income per share has been adjusted for
all previous stock splits.)
Liquidity and Capital Resources
The following table sets forth certain items relating to the measurement of
liquidity and capital resources from the Company's consolidated condensed
financial statements for the dates indicated:
<TABLE>
<S> <C> <C>
BALANCE SHEET SUMMARY Balances as of
-----------------------------------------
(Dollars in Thousands) March 28, 1997 December 31, 1996
--------------- ---------------
Cash and Cash Equivalents $ 5,896 $ 24,529
Working Capital $ 6,538 $ 8,473
Current Ratio 1.2 to 1 1.2 to 1
Long-Term Debt $ 4,428 $ 4,918
Ratio of Long-Term Debt to Equity 1 to 16 1 to 14
Installment Loan Portfolio $ 41,416 $ 36,531
</TABLE>
Although earnings for the period increased, working capital decreased primarily
due to capital expenditures and originations of installment contracts by CAC.
-10-
<PAGE>
PART I.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 28, 1997
The increase in accounts receivable from December 31, 1996 to March 28, 1997, is
a normal seasonal occurrence. As is customary for the Company, most of its
manufacturing operations are idle during the final two weeks of the year for
vacations, holidays and reduced product demand, and during this time, the
Company collects the majority of its outstanding receivables.
The Company's primary business segment is the production and sale of
manufactured housing. In 1992, the Company began the operations of CAC to fund
installment sale contracts to the retail customers of the Company's Independent
Exclusive Dealers. As the operations of CAC expanded, in February 1994 the
Company entered into a Credit Facility with its primary lender (see footnote 3
to the consolidated condensed financial statements included herein) to provide
additional funds for CAC's growth. As of March 28, 1997, the Company's portfolio
of installment sale contracts had grown to approximately $41.3 million and had
been funded primarily with internally generated working capital, borrowings
under the Credit Facility and a portion of the net proceeds from an offering of
the Company's common stock during 1994.
Since entering into the Credit Facility, the Company has had aggregate
borrowings as of March 28, 1997 of $5.7 million (an additional $6 million was
borrowed in April 1997) in order to continue to fund the operations of CAC and
to reduce the interest rate risk of the Company's loan portfolio. The Company
expects to continue to borrow funds under the Credit Facility to finance the
continuing operations and growth of CAC.* On March 14, 1996, the Company
executed an amendment to the Credit Facility which increased the maximum
available borrowings under the warehouse and term-loan agreements contained in
the Credit Facility to $18 million from the previous limit of $8 million. The
amendment increased the total amount of available borrowings under the Credit
Facility (including the revolving line of credit) to $23 million from $13
million. In addition to the increase in available borrowings under the Credit
Facility, the interest rate on prospective borrowings under the term-loan
portion of the agreement was reduced by .40%. As the operations of CAC continue
to expand, the Company anticipates that it will be able to increase its
borrowing capacity.*
The Company's capital expenditures were approximately $1.3 million for the
thirteen weeks ended March 28, 1997 as compared to $1.5 million for the
comparable period of 1996. Capital expenditures during these periods included
normal property, plant and equipment additions and replacements.
The Company's growth strategy includes the continued expansion of the financial
services segment of its business. Accordingly, it is likely that the Company
will incur additional debt, or other forms of financing, in order to continue to
fund such growth.* The Company believes that existing cash and investment
balances and funds available under the Credit Facility, together with cash
provided by operations, will be adequate to fund the Company's operations and
expansion plans for the next twelve months.* In order to provide additional
funds for continued pursuit of the Company's growth strategies and for
operations over the longer term, the Company may incur, from time to time,
additional short and long-term bank indebtedness and may issue, in public or
private transactions, its equity and debt securities, the availability and terms
of which may depend upon market and other conditions.* There can be no assurance
that such possible additional financing will be available on terms acceptable to
the Company.
-11-
- --------
* See Safe Harbor Statement on page 13.
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
March 28, 1997
ITEM 5 OTHER MATTERS
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
The exhibits required to be filed with this report are listed
below. The Company will furnish upon request the exhibit
listed upon the receipt of $15.00 per exhibit, plus $.50 per
page, to cover the cost to the Company of providing the
exhibit.
(a) (3) Articles of Incorporation and By-laws.
(i) The Amended and Restated Certificate of
Incorporation of the Company, filed as
Exhibit 3(a) to the Company's Annual Report
on Form 10-K for the year ended December 31,
1993, is incorporated herein by reference.
(ii) The Certificate of Designation of
Series A Junior Participating Preferred
Stock of Cavalier Homes, Inc. as filed with
the Office of the Delaware Secretary of
State on October 24, 1996 and filed as
Exhibit A to Exhibit 4 to the Company's
Registration Statement on form 8-A filed on
October 30, 1996, is incorporated herein by
reference.
(iii) The By-laws of the Company, as
amended, filed as Exhibit (b) to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1993, are
incorporated herein by reference.
(4)
(i) Articles four, six, seven, nine and ten
of the Company's Amended and Restated
Certificate of Incorporation, as amended,
included in Exhibit 3(a) above.
(ii) Article II, Sections 1 through 11;
Articles III, Sections 1 and 2; Article IV,
Sections 1 and 2; Article VI, Sections 1
through 6; Article VIII, Sections 1 through
3; Article IX, Section 1 of the Company's
By-laws, included in Exhibit 3(c) above.
(iii) Rights Agreement between Cavalier
Homes, Inc. and ChaseMellon Shareholder
Services, LLC, filed as Exhibit 4 to the
Company's Current Report on Form 8-K dated
October 30, 1996, is incorporated herein by
reference.
(10) (i) Amendment to Cavalier Homes, Inc. 1996
Key Employee Stock Incentive Plan.
(ii) Amendment to Cavalier Homes, Inc.
Executive Incentive Compensation Plan.
(11) Computation of Net Income per Common Share.
(27) Article 5 - Financial Data Schedule for
Form 10-Q submitted as exhibit 27 as an
EDGAR filing only.
(b) The Company did not file a Current Report on Form
8-K during the quarter ended March 28, 1997.
-12-
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
March 28, 1997
Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:
With the exception of historical factual information, the matters and statements
discussed, made or incorporated by reference in this Quarterly Report on Form
10-Q (including statements regarding trends in the industry and the business and
growth and financing strategies of the Company), as well as those statements
specifically designated with an asterisk (*), constitute forward-looking
statements, contain the words "believes," "anticipates," "expects," and words of
similar import, are based upon current expectations and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements and words involve known and unknown assumptions,
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements or words. Such assumptions, risks, uncertainties and
factors include those associated with general economic and business conditions;
manufactured housing and retail consumer financing industry trends, cyclicality
and seasonality; availability of consumer and dealer financing; changes and
volatility in interest rates; the sufficiency of reserves established for
installment contract receivables; warranty, product liability and other
litigation arising in the course of the Company's manufacturing and financial
services business; contingent repurchase and guaranty obligations; dependence on
key personnel; demographic changes; competition; raw material and labor costs
and availability; import protection and regulation; relationships with and
dependence on customers, distributors or dealers; changes in the business
strategy or development plans of the Company; the availability, terms and
deployment of capital; changes in or the failure to comply with government
regulations; and the inability or failure to identify or consummate successful
acquisitions or to assimilate the operations of any acquired businesses with
those of the Company. The Company expressly disclaims any obligation to update
any forward-looking statements as a result of developments occurring after the
filing of this report.
-13-
<PAGE>
PART II.
CAVALIER HOMES, INC. AND SUBSIDIARIES
Other Information
March 28, 1997
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.
Cavalier Homes, Inc.
Registrant
Date: May 9, 1997 /s/ David A. Roberson
--------------------------- ---------------------
David A. Roberson - President
and Chief Executive Officer
Date: May 9, 1997 /s/ Michael R. Murphy
--------------------------- ---------------------
Michael R. Murphy -
Chief Financial Officer (Principal
Financial and Accounting Officer)
-14-
<PAGE>
<TABLE>
<CAPTION>
PART II. - EXHIBIT 11
CAVALIER HOMES, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(Dollars in Thousands Except Per Share Amounts)
<S> <C> <C>
Thirteen Weeks Ended
March 28, March 29,
1997 1996
PRIMARY AND FULLY DILUTED
Net Income $ 3,086 $ 2,871
=================== ====================
SHARES:
Primary
Average common shares outstanding 12,189,992 11,344,148
Dilutive effect if stock options
were exercised 205,026 649,009
------------------- --------------------
Average common shares outstanding
as adjusted (primary) 12,395,018 11,993,157
=================== ====================
Fully Diluted
Average common shares outstanding 12,395,018 11,993,157
Additional dilutive effect if
stock options were excercised
(fully) 17,002 56,776
------------------- --------------------
Average common shares outstanding
as adjusted (fully diluted) 12,412,020 12,049,933
=================== ====================
Primary and Fully Diluted Net
Income per Common Share $ .25 $ .24
=================== ====================
</TABLE>
-15-
Exhibit 10(i)
AMENDMENT TO
CAVALIER HOMES, INC.
1996 KEY EMPLOYEE STOCK INCENTIVE PLAN
As directed by the Board of Directors of Cavalier Homes, Inc. ( the
"Company") at its meeting held on January 17,1997, the 1996 Key Employee Stock
Incentive Plan, as amended from time to time, is hereby further amended in order
to provide for Section 3.1 thereof to read in its entirety as follows:
Section 3.1. THE COMMITTEE. The Plan shall be administered by
the Committee, except that any action taken with respect to grants and
awards of securities to and other acquisitions of securities by
Insiders under the Plan shall be taken by the Committee only if all of
the members of the Committee meet the definition of a "non-employee
director" under Rule 16b-3(b)(3) under the Exchange Act or if such
grant, award or other acquisition transaction is otherwise structured
to be exempt from the provisions of Section 16(b) of the Exchange Act
and the rules promulgated thereunder. If all of the members of the
Committee are not "non-employee directors," such action shall be taken
by a committee or subcommittee of two (2) or more members, all of whom
are "non-employee directors," or such transaction otherwise shall be
structured to be exempt from the provisions of Section 16(b) of the
Exchange Act and the rules promulgated thereunder. Any action taken
with respect to Named Executive Officers for purposes of meeting the
Performance-based Exception shall be taken by the Committee only if all
of the members of the Committee are "outside directors" within the
meaning of Code Section 162(m), subject to any applicable transition
rules under Code Section 162(m). If all of the members of the Committee
are not "outside directors," such action shall be taken by a committee
or subcommittee of two (2) or more members, all of whom are "outside
directors."
------------------
Barry B. Donnell
-16-
Exhibit 10(ii)
AMENDMENT TO
CAVALIER HOMES, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
As directed by the Board of Directors of Cavalier Homes, Inc. (the
"Company") at its meeting held on January 17, 1997, the Company's Executive
Incentive Compensation Plan, as amended from time to time, is hereby further
amended in order to provide for Sections 3.2 and 3.6 to read in their entirety
as follows:
Section 3.2. "Committee" means those individuals, not less
than two, who are Outside Directors or Disinterested Directors, as
applicable in the particular case for purposes of Section 162(m) of the
Code or Rule 16b-3 of the Exchange Act, and who are (a) members of the
Compensation Committee of the Company's Board of Directors or (b)
otherwise designated by such Board of Directors.
Section 3.6. "Disinterested Director" means a person who is a
"non-employee director" as defined under Rule 16b-3(b)(3) promulgated
by the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, or any successor definition adopted by the
said Commission.
------------------
Barry B. Donnell
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789863
<NAME> CAVALIER HOMES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-28-1997
<EXCHANGE-RATE> 1
<CASH> 5,896,000
<SECURITIES> 0
<RECEIVABLES> 21,128,000
<ALLOWANCES> 800,000
<INVENTORY> 13,447,000
<CURRENT-ASSETS> 48,866,000
<PP&E> 25,054,000
<DEPRECIATION> 9,939,000
<TOTAL-ASSETS> 119,847,000
<CURRENT-LIABILITIES> 42,328,000
<BONDS> 0
0
0
<COMMON> 1,221,000
<OTHER-SE> 70,817,000
<TOTAL-LIABILITY-AND-EQUITY> 119,847,000
<SALES> 75,758,000
<TOTAL-REVENUES> 76,900,000
<CGS> 61,930,000
<TOTAL-COSTS> 61,930,000
<OTHER-EXPENSES> 10,003,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 146,000
<INCOME-PRETAX> 5,109,000
<INCOME-TAX> 2,023,000
<INCOME-CONTINUING> 3,086,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,086,000
<EPS-PRIMARY> 0.250
<EPS-DILUTED> 0.250
</TABLE>
