SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended March 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 0-22048
STARCRAFT CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-1817634
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 1903
2703 College Avenue
Goshen, Indiana 46526
(Address of principal executive offices/zip code)
Registrant's telephone number, including area code: 219/533-1105
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 latest practicable date: May 9, 1997 - 4,118,600 shares
of Common Stock, without par value.
<PAGE>
STARCRAFT CORPORATION March 30, 1997
Form 10-Q
- INDEX -
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets - March 30, 1997 (Unaudited) 1
and September 29, 1996 (Audited)
Statements of Operations (Unaudited)
for the three months ended March 30, 1997 and
March 31, 1996 and the six
months ended March 30, 1997 and March 31, 1996 2
Statements of Cash Flows (Unaudited)
for the six months 3
ended March 30, 1997 and March 31, 1996
Notes to Financial Statements 4-6
Item 2. Management's Discussion and Analysis
of Financial Condition
and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
<TABLE>
<CAPTION>
BALANCE SHEETS March 30, 1997 September 29, 1996
-------------- ------------------
<S> <C> <C>
ASSETS (Dollars in Thousands)
Current Assets
Cash and cash equivalents ........................................ $ 631 $ 1,366
Trade receivables, less allowance for
doubtful accounts of $51,000 ..................................... 7,269 9,165
Manufacturers' rebates receivable ................................ 400 1,079
Recoverable income tax ........................................... 1,936 --
Inventories ...................................................... 11,757 11,508
Other ............................................................ 509 330
------- -------
Total current assets ......................................... 22,502 23,448
Property and Equipment, at cost
Land, buildings, and improvements ................................ 5,970 6,033
Machinery and equipment .......................................... 4,912 4,430
------- -------
10,882 10,463
Less accumulated depreciation .................................... 3,111 2,697
------- -------
7,771 7,766
Goodwill, at amortized cost ...................................... 6,481 5,140
Other assets ..................................................... 153 170
------- -------
$36,907 $36,524
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade .......................................... $ 6,684 $ 9,330
Accrued expenses:
Warranty ..................................................... 974 1,600
Compensation & related expenses .............................. 354 882
Taxes ........................................................ 1,170 1,280
Other ........................................................ 2,167 1,557
Current maturities of long-term debt ............................. -- 323
------- -------
Total current liabilities ........................................ 11,349 14,972
Long Term Debt, less current maturities ............................... 6,900 --
Shareholders' Equity
Preferred stock, no par value;
authorized 2,000,000 shares,
-0- shares issued
Common Stock, no par value;
10,000,000 shares authorized
4,118,600 shares issued as
of March 30, 1997 and September 29, 1996...................... 13,971 13,971
Additional paid-in capital ....................................... 1,008 1,008
Retained Earnings ................................................ 3,679 6,573
------- -------
Total shareholders' equity ................................... 18,658 21,552
------- -------
$36,907 $36,524
======= =======
</TABLE>
- 1 -
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
-------------------------------------- -----------------------------------
March 30, 1997 March 31, 1996 March 30, 1997 March 31, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Sales
Domestic .......................... $ 16,530 $ 16,563 $ 29,119 $ 30,544
Export .......................... 2,022 6,500 7,102 8,177
------------- ------------- ------------- --------------
18,552 23,063 36,221 38,721
Cost of Goods Sold ......................... 17,432 21,346 33,073 35,466
------------- ------------- ------------- --------------
Gross profit .......................... 1,120 1,717 3,148 3,255
Operating Expenses
Selling and promotion ................. 2,039 2,105 3,750 3,883
General and administrative ............ 1,638 1,569 3,429 3,187
Restructure charges.................... -- -- 750 --
------------- ------------- ------------- --------------
3,677 3,674 7,929 7,070
------------- ------------- ------------- --------------
Operating Loss .................... (2,557) (1,957) (4,781) (3,815)
Nonoperating (Expense) Income
Interest, net ......................... (85) (97) (145) (161)
Other income, net ..................... 58 50 109 89
------------- ------------- ------------- --------------
(27) (47) (36) (72)
------------- ------------- ------------- --------------
Loss Before Income Taxes ....... (2,584) (2,004) (4,817) (3,887)
Income Taxes .......................... (1,032) (775) (1,923) (1,516)
------------- ------------- ------------- --------------
NET LOSS .............................. $ (1,552) $ (1,229) $ (2,894) $ (2,371)
============== ============= =============== ==============
EARNINGS PER
COMMON SHARE ........................ $ (0.37) $ (0.30) $ (0.70) $ (0.57)
============== ============= =============== ==============
Common & Common Equivalent
Shares Outstanding....................... 4,118,600 4,136,000 $ 4,118,600 $ 4,152,400
============== ============ ============== =============
</TABLE>
- 2 -
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
STATEMENTS OF CASH FLOWS
6 Months Ended
March 30, 1997 March 31, 1996
-------------- --------------
Cash Flows From Operating Activities
Net income (loss) ................... $ (2,894) $ (2,371)
Adjustments to reconcile net cash
provided by operating activities:
Depreciation & amortization ..... 586 575
Change in assets and liabilities:
Decrease (increase) in:
Receivables ............ 2,765 (118)
Inventories ............ 2,007 713
Other .................. (2,115) (1,577)
Increase (decrease) in:
Accounts payable ....... (3,039) 121
Accrued expenses ....... (2,618) (1,033)
-------- --------
Net Cash (used in)
operating activities ......... (5,308) (3,690)
Cash Flows for Investing Activities
Purchase of property and equipment .. (513) (658)
Purchase of net assets of
National Mobility Corporation . (1,748) --
Other ............................... 257 (2)
-------- --------
Net cash (used in)
investing activities ........ (2,004) (660)
Cash Flows From (For) Financing Activities
Borrowings on revolving
credit agreements ................ 10,400 5,700
Repayments on revolving
credit agreements ................ (3,500) (1,500)
Repurchase of Common Stock .......... -- (164)
Borrowings (payments)
on long-term debt ................ (323) (299)
-------- --------
Net cash from financing
activities ................... 6,577 3,737
Increase (decrease) in
cash and cash equivalents ........... (735) (613)
Cash and cash equivalents,
beginning of period .............. 1,366 1,255
-------- --------
Cash and cash equivalents,
end of period .................... $ 631 $ 642
======== ========
- 3 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STARCRAFT CORPORATION
March 30, 1997
- --------------------------------------------------------------------------------
Note 1. Basis of Presentation
The accompanying unaudited financial statements of Starcraft
Corporation (the "Company") have been prepared pursuant to the
rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to those rules and
regulations. Reference is made to the Company's audited
financial statements set forth in its annual report on Form
10-K for its fiscal year ended September 29, 1996. Certain
1996 amounts were reclassified to be consistent with the 1997
classification.
In the opinion of the management of the Company, the unaudited
financial statements contain all adjustments (which include
only normally recurring adjustments) necessary for a fair
statement of the results of operations for the three month and
six month periods ended March 30, 1997, and the three month
and six month periods ended March 31, 1996. The results of
operations for six months ended March 30, 1997 are not
necessarily indicative of the results which may be expected
for the year ending September 28, 1997.
Note 2. Inventories
The composition of inventories is as follows (dollars in
thousands):
March 30, 1997 September 29, 1996
-------------- ------------------
Raw Materials $7,451 $7,126
Work in Process 1,884 1,786
Finished Goods 2,422 2,596
------- -------
$11,757 $11,508
======= =======
- 4 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
- --------------------------------------------------------------------------------
Note 3. Pledges, Assets and Long-Term Debt
The Company has a bank line of credit, last amended effective
January 31, 1997, totaling $15.0 million of which $6.9 million
and $0 million was outstanding at March 30, 1997 and September
29, 1996, respectively. Borrowings under this line of credit
bear interest at the prime rate of the lending bank or, at the
Company's option, LIBOR plus 1.25%, and are unsecured. This
facility expires in January 1999 and is subject to various
covenants as defined in the agreement, all of which were
complied with at March 30, 1997.
Note 4. Consignment Arrangements
The Company obtains vehicle chassis for modification from
major vehicle manufacturers ("OEMs") under the consignment and
restricted sale agreements. These agreements generally provide
that (i) the Company may not obtain certificates of origin or
other evidence of ownership of chassis, (ii) modifications
must conform to standards specified by the OEMs, and (iii)
modifications typically are performed only after a sale has
been negotiated with an OEM approved dealer. The Company
generally ships converted chassis only after dealer acceptance
has been approved by the OEM. The OEMs bill the dealer and
provide warranty for the chassis.
The agreements are secured by various credit arrangements with
the OEMs. The OEMs may require the Company to purchase chassis
in the event that the restricted sales agreements are
terminated. The Company has not been required to purchase any
chassis during the periods covered by the accompanying
financial statements. The Company pays the OEMs a nominal
carrying charge for the first 90 days. After 90 days the
carrying charges accelerate to approximate market interest
rates. Throughout the consignment period, the Company is
subject to the risk of decline in value of the consigned
chassis.
Consistent with the practice in its industry, the Company
accounts for chassis as consignment inventory. Accordingly,
the Company records chassis inventory and related obligations
only in the event they are required to purchase chassis from
the OEM. Provisions for decline in chassis value are
recognized when, in management's estimation, such provisions
are necessary. Provisions for decline in chassis value,
chassis inventory, and chassis sales are not material in the
accompanying financial statements.
At March 30, 1997, the Company had possession of chassis in
the aggregate amount of $43.0 million (of which $25.6 million
was over 90 days).
- 5 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
- --------------------------------------------------------------------------------
Note 5. Restructure Charges
In December 1996 the Company completed the consolidation of
its Imperial Automotive Group manufacturing operation into
Starcraft Automotive Group's manufacturing complex in Goshen,
Indiana. The consolidation reduced excess production capacity,
personnel count and fixed overhead expenses. The Company
recorded a $750,000 restructure charge in the first quarter of
fiscal year 1997 for employee termination and other costs
($62,000), leasehold asset write-offs ($256,000) and the
recognition of contractual lease obligations ($432,000). The
Company estimates it will realize annual overhead expense
reductions of approximately $1.1 million, primarily from
reduced facility costs and personnel reductions.
Note 6. Business Acquisition
The Company acquired substantially all of the assets and
liabilities of National Mobility Corporation of Elkhart,
Indiana effective February 28, 1997. National Mobility is one
of the nation's largest manufacturers of conversion vehicles
for the physically challenged with annual sales in excess of
$5 million and assets of $2.7 million. The acquisition has
been accounted for as a purchase. The operations of National
Mobility Corporation have been included in the income
statement starting March 1, 1997.
Note 7. Recently Adopted Accounting Standard
In February 1997 the Financial Accounting Standards Board
issued Statement 128, "Earnings Per Share," required to be
adopted in 1998. At that time, the Company will be required to
change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements
calculating primary earnings per share, the dilutive effect of
stock options, if any, will be excluded. The impact of
Statement 128 on both primary and fully diluted earnings per
share is not expected to be material.
- 6 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
STARCRAFT CORPORATION
================================================================================
RESULTS OF OPERATIONS
Comparison of the three months ended March 30, 1997
to the three months ended March 31, 1996
- --------------------------------------------------------------------------------
Net Sales Net sales decreased 19.6% in the second quarter of
1997 to $18.6 million primarily due to a decrease
of $4.5 million in export sales. Although domestic
sales dollars were comparable between periods, the
Company's domestic unit sales declined 22.0%
primarily due to a significant reduction in the
minivan conversion market. The Company believes
that the minivan conversion market has been
adversely impacted by the popularity of sport
utility vehicles. The unit decline was offset by a
26.0% increase in the average conversion sales
dollar per unit, mostly on full-size vans.
Prior year export sales in the quarter benefitted
from the delayed build of 1996 model year minivans
due to chassis availability issues from the first
quarter of fiscal year 1996.
Gross Profit For the second quarter of 1997, gross profit
decreased 34.8% to $1.1 million (6.0% of net
sales) from $1.7 million (7.4% of net sales) for
the second quarter of 1996.
Gross profit was adversely impacted by the fixed
overhead on the reduced sales volume and a
$380,000 increase in interest on consigned
chassis. The Company's chassis held over 90 days
increased primarily due to excess minivan chassis
from the decline in the market for this product.
Selling and Selling and promotion costs for the second quarter
Promotion of 1997 decreased 3.1% to $2.0 million (11.0% of
net sales) from $2.1 million (9.1% of net sales)
for 1996 primarily due to reduced salesmen
commissions on the lower export sales.
General and General and administrative expense increased 4.4%
Administrative to $1.6 million (8.8% of net sales) for the second
quarter of 1997 from $1.57 million (6.8% of net
sales) for the comparable period in 1996. The
increase is primarily due to the acquisition of
National Mobility Corporation.
Income Taxes For the second quarter of 1997, income tax credit
was recorded at an effective tax rate of 39.9%,
which approximates the 38.7% rate for the 1996
second quarter.
Earnings Earnings per share decreased to a $0.37 loss on
Per Share 4,118,600 average common shares outstanding for
the 1997 second quarter, from a loss of $0.30 on
4,136,000 average common shares outstanding for
the second quarter of 1996.
- 7 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
STARCRAFT CORPORATION
================================================================================
RESULTS OF OPERATIONS
Comparison of the six months ended March 30, 1997
to the six months ended March 31, 1996
- --------------------------------------------------------------------------------
Net Sales Net sales decreased 6.5% to $36.2 million for the
six months ended March 1997 from $38.7 million for
the same period in 1996. The $1.1 million decline
in 1997 export sales is primarily attributable to
reduced sales for the Japan market as a result of
the early build of 1997 models in the fourth
quarter of fiscal 1996.
Gross Profit For the six months ended March 1997, gross profit
decreased 3.3% to $3.1 million (8.7% of net sales)
from $3.3 million (8.4% of net sales) for the same
period in 1996 as a result of the lower sales
volume, offset somewhat by higher average unit
conversion pricing on full-size vans described
above.
Selling and Selling and promotion costs for the six months
Promotion ended March 1997 decreased 3.4% to $3.8 million
(10.4% of net sales) from $3.9 million (10.0% of
net sales) for the 1996 period due to the lower
sales volume.
General and General and administrative expense increased 7.6%
Administrative to $3.4 million (9.5% of net sales) for the six
months ended March 1997 from $3.2 million (8.2% of
net sales) for the 1996 period. The increase is
attributable to prior year amounts which were
favorably impacted by a change in estimate related
to certain accruals for the Company's retirement
plans.
Income Taxes Income tax credit was recorded at an effective tax
rate of 39.9% for 1997, approximately the 39.0%
rate for the 1996 period.
Earnings Earnings per share decreased to a $0.70 loss on
Per Share 4,118,600 average common shares outstanding for
the six months ended March 1997 from a $0.57 loss
on 4,152,400 average common shares outstanding for
the same period in 1996.
- 8 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
STARCRAFT CORPORATION
================================================================================
LIQUIDITY & CAPITAL RESOURCES
- --------------------------------------------------------------------------------
The Company has financed its operations in the first six months of 1997
primarily through bank borrowings.
The Company maintains a bank line of credit with a total credit of $15.0
million. Borrowings under the bank line bear interest at the prime rate of the
lending bank, or at the Company's option, LIBOR plus 1.25%. Borrowings at March
30, 1997 and September 29, 1996 were $6.9 million and $0, respectively. The bank
line, which was most recently amended in January 1997, expires in January 1999
and is subject to various covenants, all of which were complied with at March
30, 1997.
In addition to the bank line, the Company has entered into restricted sale
agreements with Ford Motor Credit Company, General Motors Acceptance Corporation
and Chrysler Financial Corporation pursuant to which the Company obtains van
chassis for 90 days at nominal interest rates. If the Company fails to match a
chassis with a dealer order within 90 days delivery of the chassis to the
Company, the interest under the restricted sale agreements increases to prime
rate plus 1%.
Accounts receivable decreased $1.9 million at March 30, 1997 from September 29,
1996 due to the reduction of international shipments in the second quarter.
International accounts receivable average a 45 day collection time. At March 30,
1997, international accounts receivable were $2.0 million versus $5.8 million at
September 29, 1996. Recoverable income tax increased due to the Company's
operating loss in the first six months of 1997.
Inventories increased to $11.8 million at March 30, 1997 compared to $11.5
million at September 29, 1996 due to the acquisition of National Mobility
Corporation. The increase in goodwill is also attributable to this acquisition.
The Company incurred expenditures of $513,000 for the six months ended March 30,
1997, primarily for miscellaneous plant improvements. In December 1996 the
Company completed the consolidation of its Imperial Automotive Group
manufacturing operation into Starcraft Automotive Group's manufacturing complex
in Goshen, Indiana. The consolidation is designed to enhance profitable growth
by reducing excess production capacity, personnel count and fixed overhead
expenses. The Company recorded a $750,000 restructure charge in the first
quarter of fiscal year 1997 for employee termination and other costs ($62,000),
leasehold asset write-offs ($256,000) and recognition of contractual lease
obligations $(432,000), all of which remain proper estimates as of March 30,
1997. The Company continues to estimate that it will realize annual overhead
expense reductions of approximately $1.1 million, primarily from reduced
facility costs and personnel reductions.
The foregoing estimates of annual cost savings constitute forward-looking
information. In reviewing such information it should be kept in mind that total
actual cost savings may differ materially from those set forth above. This
forward-looking information is subject to important factors and was derived
utilizing numerous assumptions. Important assumptions and other important
factors that could cause actual cost savings to differ materially from the
estimates set forth above include achieving estimated staff reductions while
maintaining work flow in the functional areas affected and the assimilation of
Imperial production in Starcraft's facility without disruption to product
distribution. The failure of such assumptions to be realized may cause the
actual annual cost savings to differ materially from the estimates set forth
above.
- 9 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
STARCRAFT CORPORATION
================================================================================
LIQUIDITY & CAPITAL RESOURCES
- --------------------------------------------------------------------------------
The Company acquired National Mobility Corporation of Elkhart, Indiana in
February 1997. National Mobility is one of the nation's largest manufacturers of
conversion vehicles for the physically challenged with annual sales in excess of
$5 million and assets of $2.7 million. National Mobility will continue to
operate out of its Elkhart facilities under its current management.
For the six month period ended March 30, 1997, the Company financed its
operations needs, capital expenditures and acquisition of National Mobility
Corporation by borrowing $6.9 million on its bank credit line.
The Company believes that funds available from its bank line, and the continued
use of financing arrangements to manage its chassis inventory along with
improved cash flow from operations in the second half of 1997 will be sufficient
to satisfy the Company's working capital needs and to fund its expansion.
Seasonality and Trends
The Company's business tends to be seasonal, with stronger sales from March
through July. This seasonality may be influenced by a number of factors,
including atypical weather for any sales region. OEM programs, and the change in
the chassis supplier model year. The change in the chassis supplier model year
is typically during the first week of September.
The Company anticipates that the domestic market for conversion vans will
continue soft at least through the remainder of the fiscal year. The recent
labor strike at Chrysler Corporation will adversely impact the availability of
Dodge full size vans in the third quarter. In addition, Chrysler has announced
its 1998 model change over timetable which will restrict availability of chassis
from August 1997 to December 1997. For the six months ended March 30, 1997, 21%
of the Company's unit sales were related to Dodge chassis.
The foregoing paragraphs contain forward looking statements regarding cost
savings, adequacy of capital resources, seasonality and supply of, and demand
for, the Company's products, all of which are subject to a number of important
factors which may cause the Company's projections to be materially inaccurate.
Some of such factors are described in Item 7 of Part II of the Company's Form
10-K for the year ended September 29, 1996, under "Discussion of Forward-Looking
Information."
- 10 -
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of matters to a vote of Security Holders
(a) Annual meeting held February 25, 1997,
in Goshen, Indiana.
(b) Business conducted:
1) Election of Directors
--------------- Votes Cast ---------------
For Withheld
Kelly L. Rose 3,384,553 176,419
David J. Matteson 3,384,578 176,394
After election of above Directors, Board of
Directors consist of:
Kelly L. Rose
David J. Matteson
Allen H. Neuharth
Frank K. Martin
L. Craig Fulmer
2) Ratification of Auditors for fiscal year
ending September 28, 1997.
--------------- Votes Cast ---------------
For Against Abstain
Ernst & Young, LLP 3,544,647 11,625 4,700
3) Approval of 1997 Stock Incentive Plan
--------------- Votes Cast ---------------
For Against Abstain
2,549,509 361,415 17,355
- 11 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following are filed as exhibits to this report.
Exhibit No.
10(1) Third Amendment to Amended and Restated
Credit Agreement effective January 31, 1997
between Starcraft Corporation, Starcraft
Automotive Group, Inc., Imperial Automotive
Group, Inc. and Bank One, Indianapolis.
11 Computation of Earnings (Loss) per share.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
- 12 -
<PAGE>
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.
STARCRAFT CORPORATION
(Registrant)
May 11, 1997 By: /s/ Kelly L. Rose
-------------------------------------
Kelly L. Rose
Chairman of the Board and
Chief Executive Officer
By: /s/ Michael H. Schoeffler
-------------------------------------
Michael H. Schoeffler
President and Chief Financial Officer
- 13 -
THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
STARCRAFT CORPORATION formerly known as STARCRAFT AUTOMOTIVE CORPORATION,
an Indiana corporation (the "Parent"), STARCRAFT AUTOMOTIVE GROUP, INC., an
Indiana corporation ("Starcraft"), IMPERIAL AUTOMOTIVE GROUP, INC., an Indiana
corporation ("Imperial"), STARCRAFT SOUTHWEST, INC., an Indiana corporation
("Starcraft Southwest"), and BANK ONE, INDIANAPOLIS, National Association, a
national banking association (the "Bank"), agree as follows:
1. STATEMENT OF FACTS. This Third Amendment is made in the context of the
following agreed state of facts:
a. The Parent, Starcraft, Imperial, Starcraft Southwest (collectively,
the "Companies") and the Bank are parties to an Amended and Restated
Credit Agreement executed November 30, 1994, but with effect as of
December 1, 1994, as amended by amendments dated as of March 1,
1995, and as of January 31, 1996 (the Amended and Restated Credit
Agreement, as amended, being collectively referred to herein as the
"Agreement").
b. The Companies have requested that the Bank extend the maturity date
of the Revolving Loan from January 31, 1998, to January 31, 1999.
c. The Bank has agreed to such requests, subject to certain terms and
conditions, and the parties have executed this document (this "Third
Amendment") to give effect to their agreement.
2. DEFINITIONS. Terms used in this Third Amendment with their initial
letters capitalized are used as defined in the Agreement, unless otherwise
defined herein. Section 1 of the Agreement is amended by adding a new
definition, as follows:
o Third Amendment. "Third Amendment" means the written amendment to
this Agreement entitled "Third Amendment to Amended and Restated
Credit Agreement," dated with effect as of January 31, 1997.
3. EXTENSION OF THE REVOLVING LOAN. The Bank agrees to extend the maturity
date of the Revolving Loan from January 31, 1998, to January 31, 1999, pursuant
to the provisions of Section 2.a(iv) of the Agreement. The extension is
conditioned upon execution and delivery by the Parent of a promissory note in
the form of Exhibit "A" attached to this Third Amendment.
4. CANCELLATION OF THE LETTERS OF CREDIT. To evidence that the Chrysler
Letter of Credit (Parent) and the Chrysler Letter of Credit (Imperial) have each
been surrendered to the Bank for cancellation prior to the effective date of
this Third Amendment, Sections 2.c and 2.d of the Agreement are each hereby
deleted in their entirety, but the Sections which follow such deleted sections
are not renumbered.
Page 1 of 3 Pages
<PAGE>
5. AMENDMENT TO FINANCIAL COVENANT. Section 4.g(i) of the Agreement is
amended and restated in its entirety to read hereafter as follows:
(i) Net Worth. The Parent shall maintain its shareholder's equity
at a level of not less than $18,500,000.00 from the effective
date of the Third Amendment and until the last day of fiscal
year-end 1997, and at a level of not less than $19,500,000.00
on the last day of fiscal year 1997 and at all times
thereafter.
6. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness of
this Third Amendment, the Bank shall have received, each duly executed and in
form and substance satisfactory to the Bank, this Third Amendment and the
following:
a. The Revolving Note.
b. A certified copy of resolutions of the Board of Directors of each of
the Companies authorizing the execution and delivery of this Third
Amendment and any other document required under this Third Amendment
to which any of the Companies is a party.
c. A certificate signed by the Secretary of each of the Companies
certifying the name of the respective officer or officers authorized
to sign this Third Amendment and any other document required under
this Third Amendment to which any of the Companies is a party,
together with a sample of the true signature of each such officer.
d. Such other documents as may be reasonably required by the Bank.
7. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into this
Third Amendment, the Companies represent and warrant, as of the execution and
effective dates of this Third Amendment, that no Event of Default or Unmatured
Event of Default has occurred and is continuing and that the representations and
warranties contained in Section 3 of the Agreement are true and correct, except
that (a) the representations contained in Section 3.d shall refer to the latest
financial statements furnished to the Bank by the Companies pursuant to the
requirements of the Agreement, and (b) the representations contained in Section
3.k apply to the Companies and any Subsidiaries.
8. REAFFIRMATION OF THE AGREEMENT. Except as amended by this Third
Amendment, all terms and conditions of the Agreement shall continue unchanged
and in full force and effect and the Obligations of the Company shall continue
to be secured and guaranteed as therein provided until payment and performance
in full of all Obligations.
Page 2 of 3 Pages
<PAGE>
IN WITNESS WHEREOF, the Companies and the Bank, by their respective duly
authorized officers, have executed this Third Amendment to Amended and Restated
Credit Agreement as of this day of March, 1997, but with effect as of January
31, 1997.
Attest: STARCRAFT CORPORATION
/s/ Lisbeth Pfiefier By: /s/ Michael H. Schoeffler
- ------------------------------ --------------------------------
LeBeth Pfiefier Michael H. Schoeffler
Executive Secretary President
(printed name and title) (printed name and title)
Attest: IMPERIAL AUTOMOTIVE GROUP, INC.
/s/ Lisbeth Pfiefier By: /s/ Michael H. Schoeffler
- ------------------------------ --------------------------------
LeBeth Pfiefier Michael H. Schoeffler
Executive Secretary President
(printed name and title) (printed name and title)
Attest: STARCRAFT AUTOMOTIVE GROUP, INC.
/s/ Lisbeth Pfiefier By: /s/ Michael H. Schoeffler
- ------------------------------ --------------------------------
LeBeth Pfiefier Michael H. Schoeffler
Executive Secretary President
(printed name and title) (printed name and title)
Attest: STARCRAFT SOUTHWEST, INC.
/s/ Lisbeth Pfiefier By: /s/ Michael H. Schoeffler
- ------------------------------ --------------------------------
LeBeth Pfiefier Michael H. Schoeffler
Executive Secretary President
(printed name and title) (printed name and title)
BANK ONE, INDIANAPOLIS,
National Association
By: /s/ Steven J. Leibold
--------------------------------
Steven J. Leibold,
Vice President
Page 3 of 3 Pages
Exhibit 11
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
3 Months 6 Months
---------------------------------- --------------------------------
Mar. 30, 1997 Mar. 31, 1996 Mar. 30, 1997 Mar. 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary
Average shares outstanding 4,119 4,136 4,119 4,152
Net effect of dilutive stock options - based
on the treasury stock method using
average market price -- -- -- --
Total 4,119 4,136 4,119 4,152
======== ======== ======= =======
Net loss ($1,552) ($1,229) (2,894) (2,371)
======== ======== ======= =======
Per share amount ($0.37) ($0.30) ($0.70) ($0.57)
======== ======== ======= =======
Fully Diluted
Average shares outstanding 4,119 4,136 4,119 4,152
Net effect of dilutive stock options - based
on the treasury stock method using the
higher of the average market price for the
period or the market price at the end of
the period -- -- -- --
Total 4,119 4,136 4,119 4,152
======== ======== ======= =======
Net loss ($1,552) ($1,229) (2,894) (2,371)
======== ======== ======= =======
Per share amount ($0.37) ($0.30) ($0.70) ($0.57)
======== ======== ======= =======
</TABLE>
NOTE: Average shares outstanding used for earnings per share included in the
Company's financial statements do not reflect the effect of the stock
options granted since their effect is antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's unaudited consolidated financial statements for the six months
ended March 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000906473
<NAME> Starcraft Corporation
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> MAR-30-1997
<EXCHANGE-RATE> 1,000
<CASH> 631
<SECURITIES> 0
<RECEIVABLES> 7,720
<ALLOWANCES> 51
<INVENTORY> 11,757
<CURRENT-ASSETS> 22,502
<PP&E> 10,882
<DEPRECIATION> 3,111
<TOTAL-ASSETS> 36,907
<CURRENT-LIABILITIES> 11,349
<BONDS> 6,900
<COMMON> 14,979
0
0
<OTHER-SE> 3,679
<TOTAL-LIABILITY-AND-EQUITY> 36,907
<SALES> 36,221
<TOTAL-REVENUES> 36,221
<CGS> 33,073
<TOTAL-COSTS> 33,073
<OTHER-EXPENSES> 7,179
<LOSS-PROVISION> 750
<INTEREST-EXPENSE> 36
<INCOME-PRETAX> (4,817)
<INCOME-TAX> (1,923)
<INCOME-CONTINUING> (2,894)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,894)
<EPS-PRIMARY> (0.70)
<EPS-DILUTED> (0.70)
</TABLE>
