SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A-1
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended January 2, 2000
[ ] 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: February 4, 2000 - 4,202,928
shares of Common Stock, without par value.
<PAGE>
STARCRAFT CORPORATION January 2, 2000
Form 10-Q
The undersigned registrant hereby amends and restates Item 1. Financial
Statements, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations and Item 6. Exhibits and Reports on Form 8-K of the
previously filed Quarterly Report on Form 10-Q for the quarterly period ended
January 2, 2000. As more fully explained in Note 1 to the Notes to Consolidated
Financial Statements of Starcraft Corporation, the restatement was due to an
error in the method used to relieve inventory in the Conversion Vehicle Products
segment resulting in the overstatement of inventory and net income for the
period.
- INDEX -
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Balance Sheets - January 2, 2000 (Unaudited) 1
and October 3, 1999 (Audited)
Statements of Operations (Unaudited) for the three month 2
periods ended January 2, 2000 and December 27, 1998
Statements of Cash Flow (Unaudited) 3
for the three month periods ended January 2, 2000
and December 27, 1998
Notes to Financial Statements 4-8
Item 2. Management's Discussion and Analysis 9-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
<CAPTION>
BALANCE SHEETS January 2, 2000 October 3, 1999
--------------- ---------------
ASSETS (Dollars in Thousands)
Current Assets (As restated)*
<S> <C> <C>
Cash and cash equivalents....................... $ 133 $ 600
Trade receivables, less allowance for
doubtful accounts of $40 for 2000 and 1999. 20,339 16,608
Manufacturers' rebates receivable............... 539 468
Inventories ................................... 15,767 16,377
Other 582 530
--------------- --------------
Total current assets........................... 37,360 34,583
Property and Equipment
Land, buildings, and improvements............... 6,398 6,355
Machinery and equipment......................... 6,761 6,677
--------------- --------------
13,159 13,032
Less accumulated depreciation................... 5,461 5,168
--------------- --------------
7,698 7,864
Goodwill, at amortized cost.......................... $ 1,233 1,258
Other assets ................................... 77 76
--------------- --------------
$ 46,368 $ 43,781
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturity of long-term debt.............. $ 1,057 $ 1,057
Accounts payable, trade......................... 16,938 18,496
Accrued expenses:
Warranty.................................... 2,346 1,972
Compensation and related expenses........... 633 384
Taxes....................................... 869 1,014
Other.................................... 836 1,468
--------------- --------------
Total current liabilities....................... 22,679 24,391
Long Term Debt....................................... 16,436 13,506
Minority Interest in Subsidiary...................... 2,464 1,698
Shareholders' Equity
Preferred Stock, no par value;
authorized but unissued
2,000,000 shares
Common Stock, no par value;
10,000,000 shares authorized
4,202,928 shares issued as of January 2, 2000
and 4,176,928 as of October 3, 1999........ 14,194 14,144
Warrants (See Note 6)........................... -- --
Additional paid-in capital...................... 1,008 1,008
Accumulated deficit............................. (10,413) (10,966)
-------------- -------------
Total shareholders' equity................. 4,789 4,186
-------------- -------------
$ 46,368 $ 43,781
============== =============
</TABLE>
*See "Restatement of Quarterly Financial Statements" in Notes to
Financial Statements.
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
STATEMENTS OF OPERATIONS
<CAPTION>
3 Months Ended
-----------------------------------------------
January 2, 2000 December 27, 1998
---------------- ------------------
(Dollars in thousands)
(As restated)*
<S> <C> <C>
Net Sales
Domestic .......................... $ 34,010 $ 11,331
Export .......................... 2,183 803
-------------- --------------
36,193 12,134
Cost of Goods Sold ......................... 29,188 11,176
-------------- --------------
Gross profit .......................... 7,005 958
Operating Expenses
Selling and promotion ................. 1,086 876
General and administrative ............ 2,064 1,646
------------- --------------
3,150 2,522
------------- --------------
Operating Income (Loss) 3,855 (1,564)
Nonoperating (Expense) Income
Interest expense (380) ( 287)
Other income net 31 31
------------- --------------
(349) (256)
------------- --------------
Income (Loss) before minority
interest and income taxes ......... 3,506 (1,820)
Minority interest in income
of subsidiary................... 2,765 --
------------- --------------
Income (Loss) before income taxes...... 741 (1,820)
Income Taxes.......................... 188 --
------------- --------------
NET INCOME (LOSS) ..................... $ 553 $ (1,820)
============= ==============
EARNINGS (LOSS) PER SHARE $ 0.13 $ (0.44)
============= ==============
EARNINGS (LOSS) PER SHARE
ASSUMING DILUTION $ 0.12 $ (0.44)
============= ==============
</TABLE>
*See "Restatement of Quarterly Financial Statements" in Notes to Financial
Statements.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
<TABLE>
STATEMENTS OF CASH FLOW
<CAPTION>
3 Months Ended
-----------------------------------------------
January 2, 2000 December 27, 1998
---------------- ------------------
(Dollars in Thousands)
(As restated)*
<S> <C> <C>
Operating Activities
Net Income (Loss) . . ................. $ 553 $ (1,820)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization ..... 318 295
Minority interest ................. 766 --
Change in operating
assets and liabilities:
Receivables ............. (3,802) 197
Inventories............... 610 (543)
Other .................... (52) (272)
Accounts payable ......... (1,558) 443
Accrued expenses ......... (154) (1,153)
------------- ---------------
Net Cash from
operating activities ........... (3,319) (2,853)
Investing Activities
Purchase of property and equipment (143) (249)
Other.................................. 15 (154)
------------- ---------------
Net cash from
investing activities .......... (128) (403)
Financing Activities
Borrowings on credit agreements ....... 3,275 2,182
Payments on credit agreement ....... (124) --
Payments on long-term debt ............ (121) (57)
Issuance of Common Stock............... -- --
-------------- ---------------
Net cash from financing
activities ..................... 2,980 2,125
Decrease in Cash and Cash
Equivalents ........................... (467) (1,131)
Cash and cash equivalents at
beginning of period................. 600 1,369
-------------- --------------
Cash and cash equivalents at
end of period....................... $ 133 $ 238
============== ==============
</TABLE>
*See "Restatement of Quarterly Financial Statements" in Notes to
Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STARCRAFT CORPORATION
January 2, 2000
Note 1. Restatement of Quarterly Financial Statements
Starcraft Corporation ("the Company") determined that an error
was made in the method used to relieve inventory in its
Conversion Vehicle Products segment.
The percentages established at the beginning of the year to
relieve inventory as units shipped were insufficient, primarily
with respect to certain option packages offered on conversion
vehicles.
The effects of the restatement for the error resulted in the
following impact on the Company's statement of operations for the
quarter ended January 2, 2000 and balance sheet as of January 2,
2000: (Dollars in thousands, except per share amounts)
Quarter Ended
1/2/00
---------------
Cost of Sales
Previous $ 28,687
As Restated 29,188
Net Income
Previous 1,054
As Restated 553
Earnings per Share
Previous 0.25
As Restated 0.13
Earnings per Share
Assuming Dilution
Previous 0.22
As Restated 0.12
Inventory
Previous 16,268
As Restated 15,767
Shareholders' Equity
Previous 5,290
As Restated 4,789
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STARCRAFT CORPORATION
January 2, 2000
Note 2. Basis of Presentation
The accompanying unaudited financial statements of 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
October 3, 1999.
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 period ended January 2, 2000
and the three month period ended December 27, 1998. The results of
operations for the three months ended January 2, 2000 are not
necessarily indicative of the results which may be expected for the
year ending October 1, 2000.
Note 3. Inventories
The composition of inventories is as follows (dollars in thousands):
January 2, 2000 October 3, 1999
--------------- ---------------
(As Restated)*
Raw Materials $ 9,984 $ 10,844
Chassis 2,788 1,918
Work in Process 1,846 1,940
Finished Goods 1,149 1,675
--------------- ---------------
$ 15,767 $ 16,377
=============== ===============
*See "Restatement of Quarterly Financial Statements" in Notes to
Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
Note 4. Earnings Per Share
The computation of earnings per share and earnings per share assuming
dilution follows (in thousands, except per share amounts):
3 Months
-----------------------------------------
January 2, 2000 December 27, 1998
--------------- -----------------
(As restated)*
Earnings per share
Net income (loss) available
to common stockholders $ 553 ($1,820)
============= ===========
Weighted average common
shares outstanding 4,187 4,134
============= ===========
EARNINGS (LOSS) PER SHARE $ 0.13 ($ 0.44)
============= ===========
Earnings per share
Assuming dilution
Net income (loss) available
to common stockholders $ 553 ($1,820)
============= ===========
Weighted average common
shares outstanding 4,187 4,134
Add: Dilutive effects of
assumed exercises:
Incentive Stock Options 274
Warrants 259 (a)
Other 1 --
------------ -----------
Weighted average common
and dilutive potential common
shares outstanding 4,721 4,134
============ ===========
EARNINGS PER SHARE
ASSUMING DILUTION $ 0.12 ($ 0.44)
============ ===========
(a) Calculation does not reflect the effect of the employee stock
options and warrants outstanding since their effect is antidilutive.
*See "Restatement of Quarterly Financial Statements" in Notes to
Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
Note 5. Operating Segment Information.
The tables below present information about segments used by the chief
operating decision maker of the Company for the three month periods
ended January 2, 2000 and December 27, 1998. (Dollars in thousands)
3 Months
------------------------------------
January 2, 2000 December 27, 1998
--------------- -----------------
(As restated)*
Net sales by geographic region:
Conversion vehicle products:
Domestic $ 8,723 $ 10,114
Export:
Japan 1,197 267
Europe 446 520
Middle East 367 16
Other 173 --
OEM automotive supply:
Domestic 25,287 1,217
Export -- --
--------- --------
$ 36,193 $ 12,134
========= ========
Operating income (loss):
Conversion vehicle products ($ 1,798) ($ 799)
OEM automotive supply 3,015 ( 259)
-------- -------
$ 1,217 $ 1,058
======== =======
January 2, 2000 October 3, 1999
--------------- ---------------
Total Assets:
Conversion vehicle products $ 26,640 $25,155
OEM automotive supply 19,728 18,626
-------- -------
$ 46,368 $43,781
======== =======
*See "Restatement of Quarterly Financial Statements" in Notes to
Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
Note 6. Warrants / Related Party Transaction
On November 20, 1998 the Company issued warrants to purchase shares of
common stock to two individuals, both of whom are currently directors
and one of whom is an officer of the Company, as incentive for their
partial guarantee of the Company's long-term debt. The individuals can
each purchase up to 200,000 shares of common stock of the Company for
$2.20 per share which was the ten day average market price preceding
the date of issuance. The warrants have a five year term.
The Company has elected to follow APB 25 and related interpretations
in accounting for its warrants. Under APB 25 no compensation expense
has been recognized because the exercise price of the Company's
warrants has equaled the market price of the underlying stock on the
date of grant. Proforma information regarding net income and earnings
per share is required by FASB Statement No. 123, "Accounting for
Stock-Based Compensation," (FAS 123") and has been determined as if
the Company had accounted for its warrants issued in 1999 under the
fair value method of FAS 123. The fair value was estimated as of the
date of grant using a Black-Sholes option pricing model using a risk
free interest rate of 4.8%, a 0% dividend yield, a volatility factor
of 58% and an expected life of 3 years. The Company's proforma net
income was $146,000 or $0.04 earnings per share, $0.03 earnings per
share assuming dilution, for fiscal year 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
STARCRAFT CORPORATION
RESULTS OF OPERATIONS
Comparison of the three months ended January 2, 2000 (First
Quarter Fiscal Year 2000) to the three months ended December
27, 1998 (First Quarter Fiscal Year 1999)
Net sales for the quarter ended January 2, 2000 rose $24.1 million to $36.2
million from $12.1 million for the quarter ended December 27, 1998. This growth
is primarily from the OEM automotive supply segment. Automotive supply sales in
the fiscal 2000 quarter were $25.3 million resulting from two fully operational
customer contracts while the prior year quarter sales of $1.2 million were
generated from a contract in a start up phase. Export sales, primarily from the
conversion vehicle segment increased to $2.2 million in the fiscal 2000 quarter
due to chassis availability and customer order timing for the Japanese market.
Gross profit increased to $7.0 million (19.4% of sales) for the quarter ended
January 2, 2000 from $1.0 million (7.9% of sales) for the quarter ended December
27, 1998. The increase in gross profit is attributable to the sales growth and a
higher margin on the OEM automotive supply segment compared to the conversion
vehicle segment. Selling and promotion expense increased due to higher
commissions on the sales growth. The $418,000 increase in general and
administrative expense in the fiscal 2000 quarter is due to the OEM automotive
supply segment supporting an additional plant operation.
Interest expense increased to $380,000 for the fiscal 2000 first quarter from
$287,000 for the fiscal 1999 first quarter. The increase is due to higher
borrowings levels required to fund the working capital growth from the higher
sales levels. Minority interest results from the Company owning 50% of the OEM
automotive supply segment. Income taxes for the fiscal 2000 quarter were
$188,000 resulting from various state tax obligations. The Company does not have
federal income tax expense at this time due to existing tax credit carry
forwards generated from prior year losses.
<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 OEM automotive supply segment is dependent on
specific long-term customer contracts. The business tends to be seasonable with
stronger 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.
The Company eliminated much excess production capacity and reduced overhead in
the last several years to address the decline in revenue. In 1997, the Company
began a plan to diversify both its product base and target markets as it
acquired National Mobility Corporation. In 1998, the Company continued to pursue
its cost reduction and diversification strategy with the introduction of the
shuttle bus product and the start-up of the OEM automotive supply business. The
Company plans to continue to develop these new products and to increase its
offerings in the vehicle conversion commercial market.
LIQUIDITY AND CAPITAL RESOURCES
Funds available under the Company's revolving credit agreement were adequate to
finance operations and provide for capital expenditures during the three months
ended January 2, 2000.
Operations used $3.3 million of cash in the first three months of fiscal 2000
compared to a usage of cash of $2.9 million in the fiscal 1999 period. Trade
receivables at January 2, 2000 are 22% higher than October 3, 1999 primarily due
to the increased OEM Automotive Supply business. The accounts payable declined
$1.6 million in the fiscal 2000 first quarter primarily due to satisfaction of
chassis obligations from the Company's European business.
The Company spent $143,000 on capital expenditures during the three months ended
January 2, 2000 primarily for computer equipment.
The Company's use of cash for operations and investing activities was financed
by bank debt. As of January 2, 2000, bank debt was $17.5 million.
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
2000.
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 was required to achieve certain net tangible asset or profitability
levels and by which reports establishing compliance with the exception were
required to 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 related to the
Company's 10-K for fiscal 1999 filed in December, 1999. The Company met the
terms of the conditional listing. Effective January 20, 2000, the conditional
listing was terminated and the Company was granted continued listing on the
NASDAQ Small Cap Market.
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, and the prospects of Management's operating
strategies, 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 October 3,
1999, 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 (Restated)
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
<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)
October 23, 2000 By: /s/ Richard J. Mullin
--------------------------------
Richard J. Mullin
Chief Financial Officer
<PAGE>
