<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 September 30, 1995 Commission File Number 0-15506
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Schult Homes Corporation
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(Exact name of registrant as specified in its charter)
Indiana 35-1608892
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(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
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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
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The number of common shares outstanding, as of September 30, 1995 was 3,731,032.
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SCHULT HOMES CORPORATION
FORM 10-Q
PERIOD ENDED SEPTEMBER 30, 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
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 --- Inapplicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(1) Amended and Restated Articles of
Incorporation of the Company incorporated by
reference from fiscal year 1996 Form 10-K
(2) Bylaws of the Company incorporated by
reference from fiscal year 1996 Form 10-K
(3) Net Earnings per Share of the Company
incorporated by reference from fiscal year
1996 Form 10-K
(b) There were no reports on Form 8-K filed for the three
month period ended September 30, 1995.
2
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SCHULT HOMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND JULY 1, 1995
ASSETS
<TABLE>
<CAPTION>
SEPT. 30, 1995 JULY 1, 1995
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(unaudited) (audited)
(thousands of dollars)
<S> <C> <C>
Cash ........................................ $ 4,297 $ 4,566
Accounts receivable, less allowance for
doubtful accounts of $105 in September 1995
and $67 in July 1995........................ 15,135 14,154
Inventories (note 1)......................... 13,781 15,095
Other current assets......................... 4,427 4,603
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Total current assets...................... 37,640 38,418
Property, plant, and equipment............... 34,018 34,235
Other assets................................. 2,552 2,680
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Total assets.............................. $74,210 $75,333
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LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts payable....................... $11,741 $14,664
Accrued liabilities.......................... 23,759 20,977
Current portion of long-term debt............ 1,000 1,000
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Total current liabilities................. 36,500 36,641
Deferred income taxes........................ 3,025 3,025
Long-term debt............................... 1,142 3,695
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Total liabilities......................... 40,667 43,361
Shareholders' equity:
Common shares, no par value, 10,000,000
shares authorized, 3,731,032 shares issued
and outstanding in September 1995 and
3,746,032 in July 1995..................... 7,719 7,884
Retained earnings........................... 25,824 24,088
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Total shareholders' equity................ 33,543 31,972
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Total liabilities and shareholders'
equity................................... $74,210 $75,333
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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SCHULT HOMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR IN THOUSANDS, EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPT. 30, 1995 OCT. 1, 1994
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<S> <C> <C>
Net sales............................... $ 80,482 $ 71,908
Cost of goods sold...................... 64,062 58,584
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Gross profit......................... 16,420 13,324
Selling, general, and
administrative expenses................ 13,144 10,641
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Operating income..................... 3,276 2,683
Interest income......................... 7 2
Other income............................ 6 11
Interest expense........................ ( 54) ( 91)
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Income before income taxes........... 3,235 2,605
Income taxes:
Federal................................ 994 804
State.................................. 356 286
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Net income........................... $ 1,885 $ 1,515
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PER SHARE DATA: (NOTE 2)
Net income per common share............. $ 0.50 $ 0.40
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Dividends paid per common share......... $ 0.04 $ 0.04
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Average shares outstanding.............. 3,740,905 3,772,743
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</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
SEPT. 30, OCT. 1,
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income..............................................$ 1,885 $ 1,515
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plant and equipment................... 858 774
Changes in assets and liabilities:
Increase in accounts receivable...................... ( 981) ( 528)
(Increase) decrease in inventories................... 1,314 ( 27)
Decrease in other assets............................. 304 186
Decrease in trade accounts payable................... (2,923) (1,782)
Increase in accrued liabilities...................... 2,782 835
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Total adjustments....................................... 1,354 ( 542)
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Net cash provided by operating activities............. 3,239 973
Cash flows from investing activities:
Capital expenditures, net of retirements................ ( 641) (1,721)
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Net cash used in investing activities................. ( 641) (1,721)
Cash flows from financing activities:
Repayment of long-term debt............................. (2,553) ( 248)
Payment for repurchased shares.......................... ( 165) -
Dividends declared to common shareholders............... ( 149) ( 151)
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Net cash used in financing activities................. (2,867) ( 399)
Net decrease in cash..................................... ( 269) (1,147)
Cash at beginning of the quarter......................... 4,566 1,774
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Cash at end of the quarter...............................$ 4,297 $ 627
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest...............................................$ 94 $ 91
Income taxes........................................... 569 1,023
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
SCHULT HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
SEPT. 30, JULY 1,
1995 1995
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(thousands of dollars)
<S> <C> <C>
Raw material........... $10,043 $11,165
Work in process........ 2,261 2,352
Finished goods......... 1,477 1,578
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Total............... $13,781 $15,095
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</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET EARNINGS PER COMMON SHARE
Net earnings 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
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SEP 30, OCT. 1,
1995 1994
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<S> <C> <C>
Net sales................................. 100.0% 100.0%
Cost of goods sold........................ 79.6 81.5
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Gross profit........................... 20.4 18.5
Selling, general & administrative expenses 16.3 14.8
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Operating income ...................... 4.1 3.7
Interest and other income................. 0.0 0.0
Interest expense.......................... (0.1) (0.1)
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Income before income taxes............. 4.0 3.6
Income taxes.............................. 1.7 1.5
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Net income ............................ 2.3 2.1
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</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE MONTHS ENDED
OCTOBER 1, 1994. NET SALES in the first quarter of fiscal 1996 were $80.5
million, which represented an increase of $8.6 million (11.9%) from the first
quarter of fiscal 1995. This increase in sales was due to utilization of our
plant expansions, strong market conditions and increased selling price.
6
<PAGE>
The average selling price per section increased by 2.5% from the same time a
year earlier. Total sections sold in the first quarter of fiscal 1996 were
3,851, an increase of 324 sections (9.2%) from the prior year period. Multi-
section homes represented 60.7% of the homes sold during the first quarter of
fiscal 1996, compared to 68.5% in fiscal 1995.
COST OF GOODS SOLD in the first quarter of fiscal 1996 was $64.1 million,
which represented an increase of $5.5 million (9.4%) from the first quarter of
fiscal 1995. Cost of goods sold as a percentage of net sales decreased from
81.5% in fiscal 1995 to 79.6% in fiscal 1996. This decrease in cost of goods
sold was principally due to decreased labor and material costs.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES for the first quarter of
fiscal 1996 were $13.1 million, which represented an increase of $2.5 million
(23.5%) from fiscal 1995. As a percentage of net sales, these expenses
increased to 16.3% from 14.8% 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 to reduce the warranty
service interval, which should not be reoccurring to this extent.
The Company earned an operating income of $3.3 million in the first quarter
of fiscal 1996 or 4.1% of net sales. This compares to an operating income of
$2.7 million or 3.7% of net sales in the prior year period.
Interest and other income contributed $13,000 to earnings in the first
quarter of fiscal 1996, compared to $13,000 in the first quarter of fiscal 1995.
Interest expense for the first quarter of fiscal 1996 was $54,000, compared to
$91,000 in the first quarter of fiscal 1995.
Net income in the current quarter was $1.9 million ($0.50 per common
share), compared to a net income of $1.5 million ($0.40 per common share) in the
first quarter of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
At the end of the current quarter, the Company had no outstanding
borrowings under its credit facility, which was a decrease of $2.3 million from
the balance at July 1, 1995. At the end of the quarter, total long-term debt was
$1.1 million, a decrease of $2.6 million compared to the balance at July 1,
1995.
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 quarter of fiscal 1996 were $641,000,
compared to $1,721,000 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.
7
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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
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(Registrant)
By:
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Fred A. Greenawalt
Chief Accounting Officer
By:
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Walter E. Wells
Chief Executive Officer & President
Date: November 6, 1995
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUL-02-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,297
<SECURITIES> 0
<RECEIVABLES> 15,135
<ALLOWANCES> 0
<INVENTORY> 13,781
<CURRENT-ASSETS> 37,640
<PP&E> 34,018
<DEPRECIATION> 0
<TOTAL-ASSETS> 74,210
<CURRENT-LIABILITIES> 36,500
<BONDS> 0
<COMMON> 7,719
0
0
<OTHER-SE> 25,824
<TOTAL-LIABILITY-AND-EQUITY> 74,210
<SALES> 80,482
<TOTAL-REVENUES> 80,482
<CGS> 64,062
<TOTAL-COSTS> 13,144
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 3,235
<INCOME-TAX> 1,350
<INCOME-CONTINUING> 1,885
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,885
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.50
</TABLE>
