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 JUNE 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 July 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> <C>
JUNE 30 DECEMBER 31
1996 1995
ASSETS (UNAUDITED) (NOTE)
CURRENT ASSETS
Cash and cash equivalents $73,908 $336,243
Accounts receivable, net of allowance
for doubtful accounts of $77,000
in 1996 and 107,000 in 1995 2,260,449 490,353
Inventories, net 757,276 1,243,371
Other current assets 17,473 38,821
TOTAL CURRENT ASSETS 3,109,106 2,108,788
PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements 4,890 --
Machinery and equipment 4,364,090 4,339,961
4,368,980 4,339,961
Accumulated depreciation and amortization (4,027,594) (3,962,194)
341,386 377,767
OTHER ASSETS
Intangible assets, net 2,311,919 2,361,434
Other assets 53,994 42,593
2,365,913 2,404,027
TOTAL ASSETS $5,816,405 $4,890,582
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
CONTEMPRI HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
JUNE 30 DECEMBER 31
1996 1995
(UNAUDITED) (NOTE)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $1,826,575 $1,417,713
Accrued warranty costs 156,298 194,056
Accrued compensation and payroll 99,226 81,158
Accrued taxes other than income taxes 117,572 88,942
Other accrued liabilities 437,058 330,458
Current maturities of long-term debt 106,981 164,580
Customer and carrier deposits 402,230 251,486
TOTAL CURRENT LIABILITIES 3,145,940 2,528,393
LONG-TERM DEBT 1,672,056 1,783,659
<S> <C> <C>
TOTAL LIABILITIES 4,817,996 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
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 (18,854,712) (18,519,591)
TOTAL STOCKHOLDERS' EQUITY 998,409 578,530
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,816,405 $4,890,582
</TABLE>
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>
CONTEMPRI HOMES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1996 1995 1996 1995
Revenues $3,697,141 $3,187,404 $6,249,174 $5,937,685
Cost and expenses:
Cost of sales 3,015,962 2,486,376 5,221,302 5,101,079
Selling, general
and administrative 669,953 609,543 1,264,736 1,226,429
Interest 54,370 75,816 98,257 143,713
3,740,285 3,171,735 6,584,295 6,471,221
NET LOSS (43,144) 15,669 (335,121) (533,536)
Net loss per share ($0.00) ($0.00) ($0.03) ($0.05)
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>
SIX MONTHS ENDED JUNE 30
1996 1995
OPERATING ACTIVITIES
Net loss ($335,121) ($533,536)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 65,400 128,268
Amortization 38,114 48,400
Write-off of intangible asset -- --
Provision for losses on accounts receivable -- 6,000
Changes in operating assets and liabilities:
Accounts receivable (1,770,096) (63,671)
Inventories 486,095 325,522
Other current assets 21,348 (7,586)
Trade accounts payable 408,862 120,499
Accrued liabilities 122,967 161,873
Income taxes payable (7,427) (4,060)
Customer and carrier deposits 150,744 (92,911)
<S> <C> <C>
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (819,114) 88,798
INVESTING ACTIVITIES
Additions to property, plant and equipment (29,019) (85,736)
Disposition of other assets 8,371
NET CASH USED IN INVESTING ACTIVITIES (29,019) (77,365)
FINANCING ACTIVITIES
Proceeds from long-term obligations 585,798 50,733
Repayments of long-term obligations -- (624,721)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 585,798 (573,988)
NET DECREASE IN CASH AND CASH EQUIVALENTS (262,335) (562,555)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 336,243 898,539
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $73,908 $335,984
NONCASH FINANCING ACTIVITIES
Conversion of long-term notes to
redeemable preferred stock $755,000 --
See notes to consolidated financial statements.
</TABLE>
CONTEMPRI HOMES, INC.
ITEM 1 - NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 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 six month period ended June 30, 1996 are not necessarily indicative of
the results thatmay 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 half of 1996, two customers
accounted for 15.8% and 11.5% of total revenues. At June 30, 1996, the
Company's receivables from these customers were approximately 27.5% and 9.4%
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>
June 30 December 31
1996 1995
(Unaudited)
Raw materials $ 492,316 $ 389,549
Work-in-progress 60,000 91,592
Finished goods 204,960 762,230
$ 757,276 $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>
Six Months Ended June 30
1996 1995
Interest Paid $91,498 $50,981
Income Tax Paid 7,427 8,235
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Revenues were $6,249,174 for the six months ended June 30, 1996, compared
with $5,937,685 for the same period of 1995, while the net loss was $335,121
compared to a net loss of $533,536 for the same period of 1995. The loss per
share was $0.03 in 1996 versus $0.05 for the first six months of 1995. For
the three month period ended June 30, 1996 revenues were $3,697,141
compared with 3,187,404 for the same period of 1995, while the net loss was
$43,144 compared to net income of $15,669 for the same period of 1995. The
loss per share was less than $0.01 in 1996 versus income per share of less
than $0.01 for the second quarter of 1995.
The Company's revenues increased in the second quarter of 1996 by $509,737 or
16.0% while on a year to date basis revenues increased by $311,489 or 5.2%.
These increases are attributable to the late spring production of a large
multi-family housing project.
The Company's gross margin and gross margin percentage were slightly lower
for the quarter. Gross profit for the quarter was $681,179 or 18.4% compared
to $701,028 or 22.0% for the same period of 1995. Gross profit year to date
was $1,027,872 or 16.5% compared to $836,606 or 14.1% for the same period of
1995. The year to date gross margin percentage improvement of 2.4% for the
year is mainly attributable to a reduction in workmen's compensation premiums.
Raw material costs as a percentage of sales amounted to 55.4% for the quarter
compared to 53.4% for the same period of 1995 for an increase of 2.0%. This
increase resulted from higher market prices paid for wood and wood based
components. Raw material costs as a percentage of sales amounted to 55.2%
for the first six months of 1996 compared to 55.6% for the same period of 1995
or an improvement of 0.4%.
Selling, general and administrative costs increased $60,410 for the quarter
from $609,543 to $669,953. Year to date selling, general and administrative
costs increased $38,307 from $1,226,429 to $1,264,736. The quarter and year
to date increases in selling, general and administrative are attributable to
increased sales commission rates, introduction of new marketing programs and
fleet maintenance costs.
Interest expense was $54,370 for the second quarter of 1996 compared to
$75,816 for the same period of 1995, while year to date interest expense was
$98,257 compared to $143,713 for the same period of the prior year. These
decreases were the direct result of reduced credit line borrowings.
Financial Condition
On April 8, 1996, the Company was able to reduce its long-term debt
obligations by entering into an agreement to convert $755,000 of long-term
debt by issuing 755,000 shares of Preferred Stock - Class A with a redemption
value of $799,000. Holders of the Preferred Stock are entitled to cash
payments in redemption of such shares equal to twenty percent (20%) of the
Company's net profit, after tax, increased by depreciation and decreased by
debt repayment and capital expenditures. In the event the Company defaults
on its redemption payment obligation, each holder has a right to exchange
each share of non-redeemed stock to debt and to record a judgment with respect
thereto. The Preferred Stock is not entitled to payment of dividends.
On April 22, 1996 the Company amended the Warrant Agreement covering its
outstanding Common Stock Warrants to reduce the exercise price from $0.75
per share to $0.25 per share. This reduction brings the exercise price more
closely in line with the current market price of the Company's Class A Common
Stock.
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 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of Contempri Homes, Inc. was held on June 28, 1996. Below
is a summary of that meeting.
a) The following individual was elected Director by the holders of the
Company's Class A Common Stock by a vote of 5,413,008 for and 50,433
withheld:
H. Douglas Schrock
The following individuals were elected Directors by the holders of the
Company's Class B Common Stock by a vote of 595,501 to 0 with no abstentions:
Herbert M. Gardner
William J. Barrett
Stephen Bassett
Peter Borsuk
b) J. H. Cohn & Company was ratified as the Company's independent auditors by
a vote of 6,001,513 to 50,133 with 7,296 abstentions.
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 June 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: August 9, 1996 By: /s/Stephen Bassett
Stephen Bassett, President,
Principal Executive and
Operating Officer
Date: August 9, 1996 By: /s/ Peter P. Borsuk
Peter P. Borsuk, Vice President
of Finance, Treasurer and Chief
Financial Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000897926
<NAME> CONTEMPRI HOMES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 73,908
<SECURITIES> 0
<RECEIVABLES> 2,337,449
<ALLOWANCES> 77,000
<INVENTORY> 757,276
<CURRENT-ASSETS> 3,109,106
<PP&E> 4,368,980
<DEPRECIATION> (4,027,594)
<TOTAL-ASSETS> 5,816,405
<CURRENT-LIABILITIES> 3,145,940
<BONDS> 1,672,056
<COMMON> 1,027,617
755,000
0
<OTHER-SE> (784,208)
<TOTAL-LIABILITY-AND-EQUITY> 5,816,405
<SALES> 6,249,174
<TOTAL-REVENUES> 6,249,174
<CGS> 5,221,302
<TOTAL-COSTS> 5,221,302
<OTHER-EXPENSES> 1,264,736
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98,257
<INCOME-PRETAX> (335,121)
<INCOME-TAX> 0
<INCOME-CONTINUING> (335,121)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (335,121)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
