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 June 27, 1999
[ ] 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: August 6, 1999 - 4,176,928
shares of Common Stock, without par value.
<PAGE>
STARCRAFT CORPORATION June 27, 1999
Form 10-Q
- INDEX -
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets - June 27, 1999 (Unaudited) 1
and September 27, 1998 (Audited)
Statements of Operations (Unaudited) for the three month 2
periods ended June 27, 1999 and June 28, 1998 and the
nine month periods ended June 27, 1999 and June 28, 1998
Statements of Cash Flow (Unaudited) for the nine month 3
periods ended June 27, 1999 and June 28, 1998
Notes to Financial Statements 4-7
Item 2. Management's Discussion and Analysis 8-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
<TABLE>
<CAPTION>
BALANCE SHEETS June 27, 1999 September 27, 1998
------------- ------------------
<S> <C> <C>
ASSETS (Dollars in Thousands)
Current Assets
Cash and cash equivalents .......................... $ 611 $ 1,369
Trade receivables, less allowance for
doubtful accounts of $40 for 1999and1998 . 10,264 6,160
Manufacturers' rebates receivable ............. 402 569
Recoverable income tax ........................ 0 417
Inventories ................................... 18,609 10,857
Other .............................................. 867 401
-------- --------
Total current assets ............................... 30,753 19,773
Property and Equipment
Land, buildings, and improvements ............. 6,256 5,927
Machinery and equipment ....................... 6,606 6,224
-------- --------
12,862 12,151
Less accumulated depreciation ...................... 5,060 4,305
-------- --------
7,802 7,846
Goodwill, at amortized cost ........................ $ 1,282 $ 1,355
Other assets ....................................... 593 41
-------- --------
$ 40,430 $ 29,015
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturity of long-term debt ............ $ 1,023 $ 1,023
Accounts payable, trade ............................ 17,549 8,244
Accrued expenses:
Warranty .................................. 1,715 1,766
Compensation and related expenses ......... 334 322
Taxes ..................................... 705 971
Other ..................................... 1,294 2,045
-------- --------
Total current liabilities .......................... 22,620 14,371
Long Term Debt ..................................... 13,346 10,777
Minority Interest in Equity of Subsidiary .......... 677 -0-
Deferred Income Taxes .............................. 331 331
Shareholders' Equity
Preferred Stock, no par value;
authorized but unissued
2,000,000 shares
Common Stock, no par value;
10,000,000 shares authorized
4,177,000 shares issued as of June 27,1999
and 4,133,600 as of September 27,1998 .... 14,144 14,016
Additional paid-in capital .................... 1,008 1,008
Retained earnings deficit ..................... (11,696) (11,488)
-------- --------
Total shareholders' equity ............... 3,456 3,536
-------- --------
$ 40,430 $ 29,015
======== ========
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
3 Months Ended 9 Months Ended
----------------------------- -----------------------------
June 27, 1999 June 28, 1998 June 27, 1999 June 28, 1998
------------- ------------- ------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net Sales
Domestic ............................. $ 26,092 $ 10,079 $ 52,216 $ 31,157
Export ............................... 2,020 1,741 6,669 8,546
-------- -------- -------- --------
28,112 11,820 58,885 39,703
Cost of Goods Sold ........................ 22,385 10,964 48,802 35,986
-------- -------- -------- --------
Gross profit ......................... 5,727 856 10,083 3,717
Operating Expenses
Selling and promotion ................ 1,258 982 3,211 3,537
General and administrative ........... 2,022 886 5,572 2,837
-------- -------- -------- --------
3,280 1,868 8,783 6,374
-------- -------- -------- --------
Operating Income (Loss) ................... 2,447 (1,012) 1,300 (2,657)
Nonoperating (Expense) Income
Interest expense ..................... (310) (197) (920) (572)
Other income (expense) net ........... 30 (72) 89 (10)
-------- -------- -------- --------
(280) (269) (831) (582)
-------- -------- -------- --------
Income(Loss) Before Income Taxes ..... 2,167 (1,281) 469 (3,239)
Income Taxes ......................... 0 0 0 0
-------- -------- -------- --------
Income (loss) before minority interest 2,167 (1,281) 469 (3,239)
Minority interest in income
of subsidiary ................. 677 0 677 0
-------- -------- -------- --------
NET INCOME (LOSS) ......................... $ 1,490 $ (1,281) $ (208) $ (3,239)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE ................. $ 0.36 $ (0.31) $ (0.05) $ (0.78)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE
ASSUMING DILUTION .................. $ 0.33 $ (0.31) $ (0.05) $ (0.78)
======== ======== ======== ========
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
9 Months Ended
------------------------------
June 27, 1999 June 28, 1998
------------- -------------
(Dollars in Thousands)
<S> <C> <C>
Operating Activities
Net Income (Loss) .................... $ (208) $(3,239)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization ...... 929 780
Minority interest in
Equity of Subsidiary ............. 677 0
Change in operating
assets and liabilities:
Receivables .................... (3,520) 2,484
Inventories .................... (7,752) (6,422)
Other .......................... (466) (152)
Accounts payable ............... 9,305 4,738
Accrued expenses ............... (1,056) (1,380)
------- -------
Net Cash from
operating activities .............. (2,091) (3,191)
Investing Activities
Purchase of property and equipment. (854) (517)
Other ............................. (510) 41
------- -------
Net cash from
investing activities ............. (1,364) (476)
Financing activities
Borrowings on credit agreements.... 8,233 8,804
Repayments on credit agreements.... (5,014) (5,500)
Payments on long-term debt ........ (650) 0
Issuance of Common Stock .......... 128 0
------- -------
Net cash from financing
activities ............... 2,697 3,304
Decrease in Cash and Cash
Equivalents ....................... (758) (363)
Cash and cash equivalents at
beginning of period ............... 1,369 608
------- -------
Cash and cash equivalents at
end of period ..................... $ 611 $ 245
======= =======
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STARCRAFT CORPORATION
June 27, 1999
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 27, 1998.
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 nine month periods ended
June 27, 1999 and June 28, 1998. The results of operations for the
nine months ended June 27, 1999 are not necessarily indicative of the
results which may be expected for the year ending October 3, 1999.
Note 2. Inventories
The composition of inventories is as follows (dollars in thousands):
June 27, 1999 September 27, 1998
Raw Materials ............ $10,770 $ 4,631
Raw Chassis .............. 4,074 2,006
Work in Process........... 2,078 2,584
Finished Goods............ 1,687 1,636
------- -------
$18,609 $10,857
======= =======
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
Note 3. Long-Term Debt
On October 30, 1998, the Company entered into a $14 million credit
agreement with a lending institution. The agreement is subject to
renewal in November 2001. Revolving advances under the agreement are
limited to specified percentages of eligible receivables and
inventories and are subject to a maximum limit of $9.2 million. The
credit agreement also includes a $4.8 million term loan which is
payable in monthly principal installments of $57,000 beginning
December 1, 1998. The note matures in November 2001 at which time any
remaining principal balance is due. The revolving borrowings bear
interest of either 1/2% over prime or 3% over the Eurodollar rate. The
term note bears interest at either 3/4% over prime or 3.5% over the
Eurodollar rate. The borrowings are secured by substantially all of
the Company's assets. There is a fee of .25% of the average unused
portion of the maximum borrowing amount. Pursuant to the agreement,
the company must, among other things, maintain a minimum level of
tangible net worth of $(350,000) as of June 27, 1999 and $700,000 as
of October 3, 1999. Additionally, the Company must generate earnings
before income taxes, depreciation and amortization (EBITDA) of at
least $1,518,000 and $410,000 for the fiscal quarters ending June 27,
1999 and October 3, 1999, respectively. If these minimum levels are
not maintained, any outstanding balances become payable upon demand of
the lending institution. In order to maintain the minimum levels of
tangible net worth and EBITDA through 1999, the Company needs to
achieve operating results substantially consistent with its 1999
operating plan. The Company is in compliance with its financial
covenants as of June 27, 1999.
On November 23, 1998, the Company entered into an amended credit
agreement with its former primary lender. The agreement called for all
borrowings over $3 million to be paid is payable in monthly principal
installments of $36,000 beginning December 1, 1998. The note matures
in November 2001 at which time any remaining principal balance is due.
The note bears interest at 2% over the bank's prime rate and is
subordinate to the $14 million credit agreement described above. The
note is partially guaranteed by two individuals, both of whom are
currently directors and one of whom is an officer of the Company.
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
Note 4. Consignment Arrangements (Continued)
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 June 27, 1999, the Company had possession of chassis in the
aggregate amount of $21.0 million (of which $2.1 million was over 90
days).
Note 5. Tecstar
Tecstar is a joint venture company between Starcraft Corporation and
an engineering firm located in Detroit, Michigan. Starcraft
Corporation currently owns 51% of Tecstar, which will decline to 50%
once certain financing obligations are terminated.
The purpose of Tecstar is to provide engineering, test validation and
production services to manufacture second stage vehicles for the
automotive OEM companies. The company's strategy is to set-up
production facilities near OEM assembly plants and manufacture
vehicles which are sold directly to the OEM. The vehicles are marketed
by the OEM and are distributed through the OEM distribution channels.
Tecstar, which was started in January 1998, currently has three
vehicle programs with facilities beginning operations in Shreveport,
Louisiana and Arlington, Texas.
Starcraft Corporation consolidated Tecstar into its 1998 financial
statements. In accordance with ARB#51, Starcraft Corporation
recognized 100% of Tecstar's start-up loss during the year. As Tecstar
became cumulatively profitable in the quarter ended June 27, 1999, the
Company recorded minority interest in equity of subsidiary.
Starcraft Corporation is required to provide up to $2 million of
financing to Tecstar. All significant joint venture actions require
approval of both Starcraft and the engineering firm.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
Note 6. Earnings Per Share
The computation of earnings per share and earnings per share assuming
dilution follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
3 Months 9 Months
------------------------------ --------------------------------
June 27, 1999 June 28, 1998 June 27, 1999 June 28, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings per share
Net income (loss) available
to common stockholders $ 1,490 ($1,281) ($ 208) ($3,239)
======= ======= ======== =======
Weighted average common
shares outstanding 4,173 4,134 4,152 4,134
======= ======= ======== =======
EARNINGS (LOSS) PER SHARE $ 0.36 ($ 0.31) ($ 0.05) ($ 0.78)
======= ======= ======== =======
Earnings per share
Assuming dilution
Net income (loss) available
to common stockholders $ 1,490 ($1,281) ($ 208) ($3,239)
======= ======= ======== =======
Weighted average common
shares outstanding 4,173 4,134 4,152 4,134
Add: Dilutive effects of
assumed exercises:
Incentive Stock Options 180
Warrants 177 (a) (a) (a)
------- ------- -------- -------
Weighted average common
and dilutive potential common
shares outstanding 4,530 4,134 4,152 4,134
======= ======= ======== =======
EARNINGS PER SHARE
ASSUMING DILUTION $ 0.33 ($ 0.31) ($ 0.05) ($ 0.78)
======= ======= ======== =======
</TABLE>
(a) Calculation does not reflect the effect of the employee stock options
and warrants outstanding since their effect is antidilutive.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
STARCRAFT CORPORATION
================================================================================
RESULTS OF OPERATIONS
Comparison of the three months ended June 27, 1999 (Third
Quarter Fiscal Year 1999) to the three months ended
June 28, 1998 (Third Quarter Fiscal Year 1998)
- --------------------------------------------------------------------------------
Net Sales
Domestic sales increased 159% to $26.0 million in the third quarter of 1999. The
start-up of the Tecstar operations accounted for $10.4 million of the increase.
Domestic sales of the conversion vehicle division increased 37.5% compared to an
industry increase of 5.3% as reported by the Recreational Vehicle Industry
Association. The 1998 quarter was adversely impacted by production constraints
from shortages of key raw material parts. The shuttle bus operation contributed
$1.8 million of incremental sales in the 1999 quarter.
Export sales increased $279,000 to $2.0 million in the 1999 quarter primarily
due to improved OEM chassis flow.
Gross Profit
Gross profit increased to $5.7 million (20.4% of sales) in the 1999 third
quarter from $900,000 (7.2% of sales) in the 1998 period. The increase in gross
margin dollars and as a percent of sales is attributable to improved margin in
the vehicle conversion division from cost reduction efforts and incremental
margin from Tecstar sales.
Selling and promotion expense
Selling and promotion expense increased approximately $276,000 to $1.3 million
in the 1999 quarter compared to $1.0 million in fiscal 1998 primarily due to
increased sales commissions on the higher domestic conversion vehicle sales
volume.
General and Administrative Expense
General and administrative expense increased approximately $1.1 million to $2.0
million for the 1999 quarter from $900,000 in fiscal 1998. The start-up of the
Tecstar facilities accounted for $826,000 of the increase.
Interest Expense
Interest expense increased to $310,000 in the fiscal 1999 third quarter from
$197,000 in fiscal 1998 primarily due to higher borrowing levels from the
Tecstar start-up investment and higher interest rates under the new lending
facility.
Income Taxes
No income taxes were recorded for either period as the Company does not have a
tax credit carry-back to utilize.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
STARCRAFT CORPORATION
================================================================================
RESULTS OF OPERATIONS
Comparison of the nine months ended June 27, 1999
to the nine months ended June 28, 1998
- --------------------------------------------------------------------------------
Net Sales
Domestic sales increased 67.6 % to $52.2 million in the fiscal 1999 period. The
increase is primarily attributable to incremental sales generated by the new
Tecstar operations. The Company's conversion vehicle sales increased 2.0% in the
nine month 1999 period and sales from the shuttle bus business increased $4.7
million.
Gross Profit
Gross profit increased to $10.1 million (17.1% of sales) in the 1999 fiscal
second quarter from $3.7 million (9.4% of sales) in the 1998 period. The
increase is attributable to the incremental sales generated by Tecstar and cost
reductions implemented in the conversion vehicle business.
Selling and promotion expense
Selling and promotion expense decreased approximately $300,000 to $3.2 million
in the 1999 period compared to $3.5 million in fiscal 1998. The reduction in
dollars is due to reduced advertising spending and less fixed sales person
salaries from prior year cost reduction efforts.
General and Administrative Expense
General and administrative expense increased to $5.6 million for the 1999 period
from $2.8 million in fiscal 1998. The increase is primarily attributable to
expenses incurred in the start-up of Tecstar.
Interest Expense
Interest expense increased by approximately $348,000 in the fiscal 1999 period.
The increase is due to higher borrowing levels and higher interest rates on the
bank credit lines.
Income Taxes
No income taxes were recorded for either period as the Company does not have a
tax credit carry-back to utilize.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
STARCRAFT CORPORATION
================================================================================
SEASONALITY AND TRENDS
The Company's sales and profits are dependent on the automotive markets in the
United States and overseas, primarily Japan and Europe, and the OEM's ability to
supply vehicle chassis. The business tends to be seasonal with stronger domestic
sales in March through July and is influenced by a number of factors including
atypical weather for any sales region and OEM programs affecting the price,
supply and delivery of vehicle chassis.
Sales of the conversion vehicle market have significantly declined over the past
few years. Conversion inventory on dealer lots has decreased for the entire
industry relative to prior year levels. The Company believes dealers are
stocking fewer conversion products because of the growing availability of
additional vehicle models such as sport utility vehicles and factory minivans
and a general concern by dealers of the future of the conversion industry. The
OEM's have recently increased their advertising support and dealer training
efforts to support vehicle conversion products.
The Company plans to continue to diversify its products and markets in an effort
to stabilize sales. The vehicle conversion business will continue to be the core
business of the Company, as additional strategies have been implemented in an
attempt to reduce the cyclicality and seasonality of the Company's sales. In
1998 the Company started Tecstar, a joint venture to supply conversion vehicles
directly to the OEM's, and entered the commercial shuttle bus business as a
start to its diversification strategy.
Tecstar completed the start-up of its Shreveport, Louisiana facility and began
production shipments in November 1998. Tecstar's Arlington, Texas facility began
production in April 1999.
The Company has reviewed its information systems for compatibility with year
2000. It has plans in place to replace software deemed incompatible with year
2000 in a timely manner and does not anticipate any material adverse effect from
year 2000 compatibility issues. The implementation strategy more fully described
in the Company's 10-K is being executed as planned as of June 27, 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
STARCRAFT CORPORATION
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
Operations used $2.1 million of cash in the first nine months of fiscal 1999
compared to a usage of cash of $3.2 million in the fiscal 1998 period. Trade
receivables at June 27, 1999 are 67% higher than September 27, 1998 primarily
due to incremental Tecstar business. The $7.8 million increase in inventory
during the period is due to $4.1 million of inventory at the new Tecstar
facilities and a $2.1 million increase in chassis inventory to accommodate
increased export business. Accounts payable significantly increased from
September 27, 1998 due to the new Tecstar operations ($5.3 million), chassis
($2.1 million) and short-term financing on a commercial contract ($1.2 million).
Capital expenditures for the 1999 year-to-date period were $854,000 primarily
for start-up of the Tecstar plants.
The Company's use of cash for operations and investing activities was financed
by bank debt. At the end of June 1999, bank debt was $14.4 million.
On October 30, 1998, the Company entered into a $14 million credit agreement
with a lending institution. The agreement is subject to renewal in November
2001. Revolving advances under the agreement are limited to specified
percentages of eligible receivables and inventories and are subject to a maximum
limit of $9.2 million. The credit agreement also includes a $4.8 million term
loan which is payable in monthly principal installments of $57,000 beginning
December 1, 1998. The note matures in November 2001 at which time any remaining
principal balance is due. The revolving borrowings bear interest of either 1/2%
over prime or 3% over the Eurodollar rate. The term note bears interest at
either 3/4% over prime or 3.5% over the Eurodollar rate. The borrowings are
secured by substantially all of the Company's assets. There is a fee of .25% of
the average unused portion of the maximum borrowing amount. Pursuant to the
agreement, the company must, among other things, maintain a minimum level of
tangible net worth of $(350,000) as of June 27, 1999 and $700,000 as of October
3, 1999. Additionally, the Company must generate earnings before income taxes,
depreciation and amortization (EBITDA) of at least $1,518,000 and $410,000 for
the fiscal quarters ending June 27, 1999 and October 3, 1999, respectively. If
these minimum levels are not maintained, any outstanding balances become payable
upon demand of the lending institution. In order to maintain the minimum levels
of tangible net worth and EBITDA through 1999, the Company needs to achieve
operating results substantially consistent with its 1999 operating plan. The
Company is in compliance with its financial covenants as of June 27, 1999.
On November 23, 1998, the Company entered into an amended credit agreement with
its former primary lender. The agreement called for all borrowings over $3
million to be paid with proceeds from the $14 million refinancing described
above. The remaining $3 million is payable in monthly principal installments of
$36,000 beginning December 1, 1998. The note matures in November 2001 at which
time any remaining principal balance is due. The note bears interest at 2% over
the bank's prime rate and is subordinate to the $14 million credit agreement
described above. The note is partially guaranteed by two individuals, both of
whom are currently directors and one of whom is an officer of the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
STARCRAFT CORPORATION
================================================================================
In addition to the availability of bank financing, the Company has restricted
sales agreements with General Motors Acceptance Corporation, DaimlerChrysler
Financial Corporation and Ford Motor Credit Company. Pursuant to these
agreements, the Company obtains vehicle chassis from the OEM's for 90 days at
nominal rates. If the Company fails to match a chassis with a dealer order
within 90 days after delivery of the chassis to the Company, carrying charges
increase to prime rate plus 1%.
The Company believes that future cashflows from operations, funds available
under its bank revolving credit agreements, and the continued use of OEM
financing arrangements to manage its chassis inventory will be sufficient to
satisfy its anticipated operating needs and capital improvements for fiscal
1999.
On June 23, 1999, the Company was placed on a conditional listing for the Nasdaq
Small Cap Market as it continued to work to meet the Market's net tangible asset
requirements. The terms of the conditional listing establish dates by which
Starcraft must achieve certain net tangible asset or profitability levels and by
which reports establishing compliance with the exception must be provided to
Nasdaq and filed with the SEC. The first such report was provided to Nasdaq by
July 21, 1999 and the latest report relates to the Company's 10-K for fiscal
1999 to be filed by December 31, 1999. The conditional listing will expire on
December 31, 1999. The Company meets the terms of the conditional listing as of
the date of this report. If the Company meets the Nasdaq listing requirements,
it will continue to be listed on the Nasdaq Small Cap Market. The Company
expects that it will meet these conditions, although it can provide no assurance
to that effect. If at some future date the company's securities should cease to
be listed on the Nasdaq Small Cap Market, they may continue to be listed on the
OTC-Bulletin Board.
The foregoing discussion contains forward looking statements regarding cost
savings, adequacy of capital resources, seasonality and supply of, and demand
for, the Company's products, the prospects of Management's operating strategies,
and the likelihood of maintaining compliance with Nasdaq listing standards, 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 the Company's Form 10-K for the year ended September 27, 1998,
under the subsection entitled "Discussion of Forward-Looking Information" which
is incorporated herein by reference.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following are filed as exhibits to this report.
Exhibit No.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
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)
August 10, 1999 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's unaudited consolidated financial statements for the nine months
ended June 27, 1999 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> 9-MOS
<FISCAL-YEAR-END> OCT-3-1999
<PERIOD-START> OCT-3-1999
<PERIOD-END> SEP-28-1998
<EXCHANGE-RATE> 1.000
<CASH> 611
<SECURITIES> 0
<RECEIVABLES> 10,304
<ALLOWANCES> 40
<INVENTORY> 18,609
<CURRENT-ASSETS> 30,753
<PP&E> 12,862
<DEPRECIATION> 5,060
<TOTAL-ASSETS> 40,430
<CURRENT-LIABILITIES> 22,620
<BONDS> 13,346
<COMMON> 14,144
0
0
<OTHER-SE> (10,688)
<TOTAL-LIABILITY-AND-EQUITY> 40,430
<SALES> 58,885
<TOTAL-REVENUES> 58,885
<CGS> 48,802
<TOTAL-COSTS> 48,802
<OTHER-EXPENSES> 8,783
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 920
<INCOME-PRETAX> (208)
<INCOME-TAX> 0
<INCOME-CONTINUING> (208)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (208)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
