SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO _____.
Commission File Number 1-11762
CONTEMPRI HOMES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 23-2441485
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Stauffer Industrial Park
Taylor, Pennsylvania 18517
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (717) 562-0110
Check whether the issuer (1) has filed all reports required 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 ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock ($.10 Par Value) Outstanding at October 31, 1996
Class A 9,680,672 shares
Class B 595,501 shares
<TABLE>
PART I. FINANCIAL INFORMATION
CONTEMPRI HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
SEPTEMBER 30 DECEMBER 31
1996 1995
ASSETS (UNAUDITED) (NOTE)
CURRENT ASSETS
Cash and cash equivalents $26,568 $336,243
Accounts receivable, net of allowance
for doubtful accounts of $122,000
in 1996 and $107,000 in 1995 1,356,529 490,353
Inventories, net 1,000,402 1,243,371
Other current assets 36,977 38,821
TOTAL CURRENT ASSETS 2,420,476 2,108,788
PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements 4,890 --
Machinery and equipment 4,376,151 4,339,961
4,381,041 4,339,961
Accumulated depreciation and
amortization (4,060,294) (3,962,194)
320,747 377,767
OTHER ASSETS
Intangible assets, net 2,287,162 2,361,434
Other assets 51,342 42,593
2,338,504 2,404,027
TOTAL ASSETS $5,079,727 $4,890,582
</TABLE>
See notes to condensed consolidated financial statements.
<TABLE>
CONTEMPRI HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
SEPTEMBER 30 DECEMBER 31
1996 1995
(UNAUDITED) (NOTE)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $1,933,934 $1,417,713
Accrued warranty costs 140,355 194,056
Accrued compensation and payroll 108,334 81,158
Accrued taxes other than income taxes 175,853 88,942
Other accrued liabilities 276,288 330,458
Current maturities of long-term debt 85,715 164,580
Outside services payable 283,712 112,744
Customer and carrier deposits 193,824 138,742
TOTAL CURRENT LIABILITIES 3,198,015 2,528,393
LONG-TERM DEBT 1,186,603 1,783,659
TOTAL LIABILITIES 4,384,618 4,312,052
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Preferred stock, $1 par value; authorized
1,000,000 shares; 755,000 issued and
outstanding in 1996, liquidation
preference $799,000 755,000 --
STOCKHOLDERS' EQUITY (DEFICIENCY)
Class A Common Stock,$.10 par value;
authorized 20,000,000 shares;
issued and outstanding 9,680,672
shares in 1996 and 1995 968,067 968,067
Class B Common Stock, convertible into
Class A Common Stock on a one-for-one
basis,$.10 par value; authorized
5,000,000 shares; issued and outstanding
595,501 shares in 1996 and 1995 59,550 59,550
Additional paid-in capital 18,070,504 18,070,504
Accumulated deficit (19,158,012) (18,519,591)
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (59,891) 578,530
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,079,727 $4,890,582
Note : The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date included in the Company's Annual Report on
Form 10-KSB.
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
CONTEMPRI HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
Revenues $3,114,933 $3,342,999 $9,364,107 $9,280,684
Cost and expenses:
Cost of sales 2,701,897 2,805,268 8,010,283 7,906,347
Selling, general
and administrative 672,553 622,085 1,850,205 1,848,514
Interest 43,783 76,874 142,040 220,587
3,418,233 3,504,227 10,002,528 9,975,448
NET LOSS (303,300) (161,228) (638,421) (694,764)
Net loss per share ($0.03) ($0.02) ($0.06) ($0.07)
Weighted average number of
shares of common stock
and common stock
equivalents 10,276,173 10,276,173 10,276,173 10,276,173
</TABLE>
<TABLE>
CONTEMPRI HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<S> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30
1996 1995
OPERATING ACTIVITIES
Net loss ($638,421) ($694,764)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 98,100 192,402
Amortization 74,272 72,600
Provision for losses on accounts receivable 45,009 6,000
Changes in operating assets and liabilities:
Accounts receivable (911,185) (390,681)
Inventories 242,969 401,183
Other current assets 1,844 (33,527)
Trade accounts payable 516,221 171,346
Accrued liabilities 13,643 373,720
Income taxes payable (7,427) (4,060)
Outside Services Payable 170,968 109,805
Customer and carrier deposits 55,082 (52,297)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (338,925) 151,727
INVESTING ACTIVITIES
Additions to property, plant and equipment (41,080) (96,914)
Disposition (Acquisition) of other assets (8,749) 10,159
NET CASH USED IN INVESTING ACTIVITIES (49,829) (86,755)
FINANCING ACTIVITIES
Proceeds from long-term obligations 79,079 50,733
Repayments of long-term obligations -- (531,113)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 79,079 (480,380)
NET DECREASE IN CASH AND CASH EQUIVALENTS (309,675) (415,408)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 336,243 898,539
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $26,568 $483,131
NONCASH FINANCING ACTIVITIES
Conversion of long-term notes to
redeemable preferred stock $755,000 --
See notes to condensed consolidated financial statements.
</TABLE>
CONTEMPRI HOMES, INC.
ITEM 1 - NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine month
period ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1995.
NOTE B - ACCOUNTING POLICY
Contempri Homes, Inc. commences manufacture of its modular homes upon receipt
of a written order and a partial payment by the customer. Revenue is
recognized when manufacturing of the modular home has been completed which is
also when risk of loss contractually passes to the buyer. Contempri does not
generally hold modular homes in inventory for sale in the ordinary course of
business.
NOTE C - SEGMENT INFORMATION
The Company operates in one business segment: the manufacture of modular
homes. All of Contempri's operations are located within the United States.
Contempri had no sales to customers located outside the United States in
excess of 1% of revenue. During the first nine months of 1996, two customers
accounted for 12.7% and 10.2% of total revenues, respectively. At September
30, 1996, the Company's receivables from these customers were
approximately 11.9% and 5.5% of total accounts receivable, respectively.
NOTE D - INVENTORIES
Inventories, which are stated at cost (determined on the first-in, first-out
method), consist of the following:
<TABLE>
<S> <C> <C>
September 30 December 31
1996 1995
(Unaudited)
Raw materials $ 655,635 $ 389,549
Work-in-progress 60,000 91,592
Finished goods 284,767 762,230
$1,000,402 $1,243,371
</TABLE>
NOTE E - INCOME TAXES
The Company uses the asset and liability approach to account for income taxes
required by Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS No. 109), whereby deferred income taxes are provided
for temporary differences between the carrying values of assets and
liabilities for financial reporting and income tax purposes using the
enacted rates at which the differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The Company does not anticipate a provision or
(benefit) for income taxes during 1996.
NOTE F - SUPPLEMENTAL CASH FLOW INFORMATION
The Company has received or paid the following items:
<TABLE>
<S> <C> <C>
Nine Months Ended September 30
1996 1995
Interest Paid $131,098 $106,443
Income Tax Paid 7,427 4,060
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Revenues were $9,364,107 for the nine months ended September 30, 1996,
compared with $9,280,684 for the same period of 1995, while the net loss was
$638,421 compared to a net loss of $694,764 for the same period of 1995.
The loss per share was $0.06 in 1996 versus $0.07 for the first nine months of
1995. For the three month period ended September 30, 1996 revenues were
$3,114,933 compared with $3,342,999 for the same period of 1995, while the
net loss was $303,300 compared to a net loss of $161,228 for the same
period of 1995. The loss per share was $0.03 in 1996 versus a loss per share
of $0.02 third quarter of 1995.
The Company's revenues decreased in the third quarter of 1996 by $228,066 or
6.8% while on a year-to-date basis revenues increased by $83,423 or 0.9%.
The Company's gross margin and gross margin percentage were both lower for
the quarter. Gross profit for the quarter was $413,036 or 13.2% compared
to $537,731 or 16.1% for the same period of 1995. Gross profit year to
date was $1,353,824 or 14.5% compared to $1,374,337 or 14.8% for the same
period of 1995. The quarter's gross margin percentage decrease of 2.9% is
mainly attributable to increased raw material costs. Raw material
costs as a percentage of sales amounted to 57.6% for the quarter compared
to 54.9% for the same period of 1995 for an increase of 2.7%. This increase
resulted from higher market prices paid for wood and wood based components.
Raw material costs as a percentage of sales amounted to 56.0% for the
first nine months of 1996 compared to 55.4% for the same period of 1995 or
an increase of 0.6%.
Selling, general and administrative costs increased $50,448 for the quarter
from $622,085 to $672,553. Year to date selling, general and administrative
costs increased $1,691 from $1,848,514 to $1,850,205.
Interest expense was $43,783 for the third quarter of 1996 compared to
$76,874 for the same period of 1995, while year-to-date interest expense was
$142,040 compared to $220,587 for the same period of the prior year. These
decreases were the direct result of the elimination of interest associated
with the $1,050,000 of indebtedness related to the sale and subsequent
leaseback of the manufacturing facility in the fourth quarter of 1995.
Financial Condition
Although the outlook for the future has greatly improved, there can be no
assurances that the Company will be able to extend the terms of existing
obligations, obtain additional financing or increase sales, gross margins and
operating efficiencies in order to generate additional cash flows and capital
resources. The return to profitability and continued operations of the
Company are dependent upon achieving these goals.
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company is a defendant in various legal actions that arose out of the
normal course of business. It is management's opinion, based on their
evaluation and discussion with counsel, that the ultimate outcome of these
matters will not have a material adverse effect on the Company's financial
position nor its results of operations.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits - None
b) Reports on Form 8-K - No reports on Form 8-K have been filed during the
quarter ended September 30, 1996.
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.
CONTEMPRI HOMES, INC.
Date: November 4, 1996 By: /s/Stephen Bassett
Stephen Bassett, President,
Principal Executive and
Operating Officer
Date: November 4, 1996 By: /s/ Peter P. Borsuk
Peter P. Borsuk, Vice President
of Finance, Treasurer and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 26,568
<SECURITIES> 0
<RECEIVABLES> 1,478,529
<ALLOWANCES> 122,000
<INVENTORY> 1,000,402
<CURRENT-ASSETS> 2,420,476
<PP&E> 4,381,041
<DEPRECIATION> (4,060,294)
<TOTAL-ASSETS> 5,079,727
<CURRENT-LIABILITIES> 3,198,015
<BONDS> 1,186,603
<COMMON> 1,027,617
755,000
0
<OTHER-SE> (1,087,508)
<TOTAL-LIABILITY-AND-EQUITY> 5,079,727
<SALES> 9,364,107
<TOTAL-REVENUES> 9,364,107
<CGS> 8,010,283
<TOTAL-COSTS> 8,010,283
<OTHER-EXPENSES> 1,850,205
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142,040
<INCOME-PRETAX> (638,421)
<INCOME-TAX> 0
<INCOME-CONTINUING> (638,421)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (638,421)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
