<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 1, 1995 Commission File Number 0-15506
--------
Schult Homes Corporation
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(Exact name of registrant as specified in its charter)
Indiana 35-1608892
-------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
221 U.S. 20 West, Middlebury, Indiana 46540
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 219-825-5881
------------
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 XX NO
--------- --------
The number of common shares outstanding, as of April 1, 1995 was 3,755,014.
<PAGE>
SCHULT HOMES CORPORATION
FORM 10-Q
PERIOD ENDED APRIL 1, 1995
PART I. Financial Information
Item 1. Financial Statements
A. Schult Homes Corporation and Subsidiaries Condensed
Consolidated Financial Statements
B. Notes to the Condensed Consolidated Financial Statements
C. Exhibit 27
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. Other Information
Item 1. Legal Proceedings --- Inapplicable
Item 2. Changes in Securities --- Inapplicable
Item 3. Defaults upon Senior Securities --- Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders ---
Inapplicable
Item 5. Other Information
As of April 20, 1995, the Company has been
reorganized into two operating units the
Manufactured Housing unit and the Modular Housing
unit.
Item 6. Exhibits and Reports on Form 8-K ---
There was a Form 8-K filed on February 17, 1995,
reporting the Company was authorized by The Board of
Directors to purchase up to 350,000 of its common
shares on the open market, from time to time, until
further notice. As of May 1, 1995, the Company had
repurchased 45,000 of its common shares.
2
<PAGE>
SCHULT HOMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995 AND JULY 2, 1994
ASSETS
<TABLE>
<CAPTION>
APR. 1, 1995 JULY 2, 1994
-------------- --------------
(unaudited) (audited)
(thousands of dollars)
<S> <C> <C>
Cash ...................................................... $ 1,062 $ 1,774
Accounts receivable, less allowance for doubtful accounts
of $37 in April 1995 and $64 in July 1994................. 13,178 13,717
Inventories (note 1)....................................... 14,943 13,697
Deferred income taxes...................................... 4,281 3,553
------- -------
Total current assets.................................... 33,464 32,741
Property, plant, and equipment............................. 33,964 32,204
Goodwill, net.............................................. 805 882
Other assets............................................... 1,214 1,551
------- -------
Total assets............................................ $69,447 $67,378
------- -------
------- -------
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Trade accounts payable..................................... $ 8,955 $13,613
Accrued liabilities........................................ 22,604 19,257
Current portion of long-term debt.......................... 994 994
------- -------
Total current liabilities............................... 32,553 33,864
Deferred income taxes...................................... 2,766 2,766
Long-term debt............................................. 3,646 2,390
------- -------
Total liabilities....................................... 38,965 39,020
Common shareholders' equity:
Common shares, no par value, 10,000,000 shares authorized,
3,755,014 shares issued and outstanding in April 1995
and 3,767,616 in July 1994............................... 7,969 8,042
Retained earnings......................................... 22,513 20,316
------- -------
Total common shareholders' equity....................... 30,482 28,358
------- -------
Total liabilities and common shareholders' equity....... $69,447 $67,378
------- -------
------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
SCHULT HOMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
APR. 1, 1995 APR. 2, 1994 APR. 1, 1995 APR. 2, 1994
------------ ------------ ------------ ------------
(13 WEEKS) (13 WEEKS) (39 WEEKS) (40 WEEKS)
<S> <C> <C> <C> <C>
Net sales......................... $ 69,707 $ 59,674 $212,141 $186,137
Cost of goods sold................ 57,189 48,764 173,557 150,766
-------- -------- -------- --------
Gross margin................... 12,518 10,910 38,584 35,371
Selling, general, and
administrative expenses.......... 11,780 9,812 33,812 29,257
-------- -------- -------- --------
Operating income............... 738 1,098 4,772 6,114
Interest income................... 3 6 8 70
Other income...................... 11 17 38 30
Interest expense.................. ( 71) - ( 232) -
-------- -------- -------- --------
Income before income taxes..... 681 1,121 4,586 6,214
Income taxes:
Federal.......................... 218 352 1,433 1,916
State............................ 75 123 504 684
-------- -------- -------- --------
Net income..................... $ 388 $ 646 $ 2,649 $ 3,614
-------- -------- -------- --------
-------- -------- -------- --------
PER SHARE DATA: (NOTE 2)
- ----------------------------
Net income per common share....... $ 0.10 $ 0.17 $ 0.70 $ 0.96
-------- -------- -------- --------
-------- -------- -------- --------
Dividends paid per common share... $ 0.04 $ 0.04 $ 0.12 $ 0.10
-------- -------- -------- --------
-------- -------- -------- --------
Average shares outstanding........ 3,781,019 3,770,200 3,776,145 3,767,490
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
SCHULT HOMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
APR. 1, APR. 2, APR. 1, APR. 2,
1995 1994 1995 1994
-------- -------- -------- --------
(13 WEEKS) (13 WEEKS) (39 WEEKS) (40 WEEKS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 388 $ 646 $ 2,649 $ 3,614
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plant and equipment.............. 726 696 2,263 1,920
Amortization of goodwill......................... 25 26 77 77
Changes in assets and liabilities:
(Increase) decrease in accounts receivable...... (2,980) (4,682) 539 (2,196)
Increase in inventories......................... ( 782) (3,532) (1,245) (3,051)
(Increase) decrease in other assets............. 10 ( 425) ( 391) ( 356)
Increase (decrease) in trade accounts payable... 615 2,582 (4,658) (1,713)
Increase in accrued liabilities................. 2,978 3,900 3,347 3,062
------- ------- ------- -------
Total adjustments.................................. 592 (1,435) ( 68) (2,257)
------- ------- ------- -------
Net cash provided by (used in) operating activities 980 ( 789) 2,581 1,357
Cash flows from investing activities:
Capital expenditures............................... (1,310) (3,274) (4,023) (7,945)
------- ------- ------- -------
Net cash used in investing activities............ (1,310) (3,274) (4,023) (7,945)
Cash flows from financing activities:
Proceeds from issuance of long term debt........... 1,500 4,000 2,000 4,000
Repayment of long-term debt........................ ( 249) ( 144) ( 745) ( 375)
Issuance of common stock........................... 301 109 312 121
Payment for treasury stock......................... ( 385) - ( 385) -
Dividends paid to common shareholders.............. ( 151) ( 150) ( 452) ( 376)
------- ------- ------- -------
Net cash provided by financing activities........ 1,016 3,815 730 3,370
Net increase (decrease) in cash..................... 686 ( 248) ( 712) (3,218)
Cash at beginning of the quarter.................... 376 648 1,774 3,618
------- ------- ------- -------
Cash at end of the quarter.......................... $ 1,062 $ 400 $ 1,062 $ 400
------- ------- ------- -------
------- ------- ------- -------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.......................................... $ 68 $ 95 202 182
Capitalized interest.............................. - 95 - 162
Income taxes...................................... 150 61 3,391 4,552
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
SCHULT HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
(1) INVENTORIES
The components of inventories are as follows:
APR. 1, JULY 2,
1995 1994
---------------------------
(thousands of dollars)
<S> <C> <C>
Raw material........... $10,867 $10,180
Work in process........ 2,402 2,120
Finished goods......... 1,674 1,397
------- -------
Total............... $14,943 $13,697
------- -------
------- -------
</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET INCOME PER COMMON SHARE
Net income per common share is calculated by dividing net income by the
weighted average number of common shares and common share equivalents
outstanding during the period.
(3) INTERIM FINANCIAL STATEMENTS
The Company's quarterly sales and operating results are principally
affected by the seasonal nature of the Company's business. Historically, the
Company's sales and operating results are at their lowest levels in the fiscal
third quarter, when weather conditions have an adverse impact on both orders
and shipments. In the opinion of Company management, the interim financial
statements reflect all adjustments, consisting only of normal recurring
accruals, which are necessary for a fair statement of the results for the
interim periods presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth selected items of the Company's statement
of operations as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
APR. 1, APR. 2, APR. 1, APR. 2,
1995 1994 1995 1994
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net sales............................. 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.................... 82.0 81.7 81.8 81.0
----- ----- ----- -----
Gross margin....................... 18.0 18.3 18.2 19.0
Selling, general and administrative
expenses............................. 16.9 16.4 15.9 15.7
----- ----- ----- ----
Operating income .................. 1.1 1.9 2.3 3.3
Interest and other income............. 0.0 0.0 0.0 0.0
Interest expense...................... 0.1 0.0 0.1 0.0
----- ----- ----- ----
Income before income taxes......... 1.0 1.9 2.2 3.3
Income taxes.......................... 0.4 0.8 1.0 1.4
----- ----- ----- ----
Net income ........................ 0.6 1.1 1.2 1.9
----- ----- ----- ----
----- ----- ----- ----
</TABLE>
6
<PAGE>
THREE MONTHS ENDED APRIL 1, 1995 COMPARED TO THREE MONTHS ENDED APRIL 2,
1994. NET SALES in the third quarter of fiscal 1995 were $69.7 million, which
represented an increase of $10.0 million (16.8%) from the third quarter of
fiscal 1994. This increase in sales was due to utilization of our fiscal 1994
plant expansions. The average selling price per section increased by 2.4% from
the same time a year earlier, principally due to new HUD energy standards and
general price increases. Total sections sold in the third quarter of fiscal 1995
were 3,394, an increase of 418 sections (14.0%) from the prior year period.
Multi-section homes represented 65.7% of the homes sold during the third quarter
of fiscal 1995, compared to 64.9% in fiscal 1994.
COST OF GOODS SOLD in the third quarter of fiscal 1995 was $57.2 million,
which represented an increase of $8.4 million (17.3%) from the third quarter of
fiscal 1994. Cost of goods sold as a percentage of net sales increased from
81.7% in fiscal 1994 to 82.0% in fiscal 1995. This increase in cost of goods
sold was principally due to increased labor costs attributable to the startup of
two new plants in Etna Green, Indiana and Navasota, Texas.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES for the third quarter of
fiscal 1995 were $11.8 million, which represented an increase of $2.0 million
(20.1%) from fiscal 1994. As a percentage of net sales, these expenses
increased to 16.9% from 16.4% in the prior year period. This was principally the
result of increased warranty service costs. This increase was caused by an
effort to reduce the backlog of warranty service and the warranty service
interval.
The Company earned an operating income of $0.7 million in the third quarter
of fiscal 1995 or 1.1% of net sales. This compares to an operating income of
$1.1 million or 1.9% of net sales in the prior year period.
Interest and other income contributed $14,000 to earnings in the third
quarter of fiscal 1995, compared to $23,000 in the third quarter of fiscal 1994.
Interest expense for the third quarter of fiscal 1995 was $71,000. There was no
interest expense for the third quarter of fiscal 1994. This was due to the
capitalization of interest related to our capital expansion program.
Net income in the current quarter was $388,000 ($0.10 per common share),
compared to a net income of $646,000 ($0.17 per common share) in the third
quarter of fiscal 1994.
NINE MONTHS ENDED APRIL 1, 1995 COMPARED TO NINE MONTHS ENDED APRIL 2,
1994. NET SALES in the first nine months of fiscal 1995 were $212.1 million,
which represented an increase of $26.0 million (14.0%) from the first nine
months of fiscal 1994. This increase in sales was due to utilization of our
fiscal 1994 plant expansions and increased selling price. The average selling
price per section increased by 4.5% from the same time a year earlier,
principally due to new HUD energy standards and general price increases. Total
sections sold in the first nine months of fiscal 1995 were 10,294, an increase
of 852 sections (9.0%) from the prior year period. Multi-section homes
represented 66.1% of the homes sold during the first nine months of fiscal 1995,
compared to 63.7% in fiscal 1994.
COST OF GOODS SOLD in the first nine months of fiscal 1995 was $173.6
million, which represented an increase of $22.8 million (15.1%) from the first
nine months of fiscal 1994. Cost of goods as a percentage of net sales in
fiscal 1995 was 81.8%, compared to 81.0% in fiscal 1994. This increase was
primarily due to start-up costs associated with three plant expansions.
Progress has been made in dealing with these start-up problems and further
progress is expected in the future.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES for the first nine months of
fiscal 1995 were $33.8 million, which represented an increase of $4.6 million
(15.6%) from the first nine months of fiscal 1994. As a percentage of net
sales, these expenses increased to 15.9% from 15.7% in the prior year period.
This was principally the result of increased dealer volume rebate and warranty
service costs.
7
<PAGE>
The Company earned an operating income of $4.8 million in the first nine
months of fiscal 1995 or 2.3% of net sales. This compares to an operating
income of $6.1 million or 3.3% of net sales in the prior year period.
Interest and other income contributed $46,000 to earnings in the first nine
months of fiscal 1995, compared to $100,000 in the first nine months of fiscal
1994. Interest expense for the first nine months of fiscal 1995 was $232,000.
There was no interest expense for the first nine months of fiscal 1994. This
was due to capitalization of interest related to our capital expansion program.
Net income for the first nine months of fiscal 1995 was $2.6 million ($0.70
per common share), which compares to a net income of $3.6 million ($0.96 per
common share) for the first nine months of fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
At the end of the current quarter, the Company had $2.0 million of
outstanding borrowings under its credit facility, which was an increase of $2.0
million from the balance at July 2, 1994. At the end of the quarter, total
long-term debt was $3.6 million an increase of $1.3 million compared to the
balance at July 2, 1994.
The Company's unsecured credit facility expiring January 31, 1997 permits
borrowings of up to $10,000,000. The Company has access to additional bank
financing up to $3,000,000 for seasonal use, if needed.
Capital expenditures for the first nine months of fiscal 1995 were
$4,023,000, compared to $7,945,000 from the prior year period.
The Company expects that funds generated from operations combined with
funds available under long-term secured financing arrangements and its revolving
credit facility will be adequate to support its capital expenditure needs and
required debt amortization.
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.
SCHULT HOMES CORPORATION
--------------------------------------
(Registrant)
By: /s/ FRED A. GREENAWALT
--------------------------------------
Fred A. Greenawalt
Chief Accounting Officer
By: /s/ WALTER E. WELLS
--------------------------------------
Walter E. Wells
Chief Executive Officer & President
Date: May 12, 1995
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> APR-01-1995
<CASH> 1,062
<SECURITIES> 0
<RECEIVABLES> 13,178
<ALLOWANCES> 0
<INVENTORY> 14,943
<CURRENT-ASSETS> 33,464
<PP&E> 33,964
<DEPRECIATION> 0
<TOTAL-ASSETS> 69,447
<CURRENT-LIABILITIES> 32,553
<BONDS> 3,646
<COMMON> 7,969
0
0
<OTHER-SE> 22,513
<TOTAL-LIABILITY-AND-EQUITY> 69,447
<SALES> 212,141
<TOTAL-REVENUES> 212,141
<CGS> 173,557
<TOTAL-COSTS> 33,812
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 232
<INCOME-PRETAX> 4,586
<INCOME-TAX> 1,937
<INCOME-CONTINUING> 2,649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,649
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
</TABLE>
