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 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
- 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
periods ended January 2, 2000
and December 27, 1998 2
Statements of Cash Flow (Unaudited)
for the three month
periods ended January 2, 2000
and December 27, 1998 3
Notes to Financial Statements 4-6
Item 2. Management's Discussion and Analysis 7-8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
<TABLE>
<CAPTION>
BALANCE SHEETS January 2, 2000 October 3, 1999
--------------- ---------------
ASSETS (Dollars in Thousands)
Current Assets
<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 ...................................... 16,268 16,377
Other ............................................ 582 530
-------- --------
Total current assets ......................... 37,861 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
-------- --------
$ 46,869 $ 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
Additional paid-in capital ....................... 1,008 1,008
Retained earnings deficit ........................ (9,912) (10,966)
-------- --------
Total shareholders' equity .................. 5,290 4,186
-------- --------
$ 46,869 $ 43,781
======== ========
</TABLE>
- 1 -
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 Months Ended
-------------------------------------
January. 2, 2000 December. 27, 1998
---------------- ------------------
(Dollars in thousands)
Net Sales
<S> <C> <C>
Domestic ...................... $ 34,010 $ 11,331
Export ........................ 2,183 803
-------- --------
36,193 12,134
Cost of Goods Sold ................. 28,687 11,176
-------- --------
Gross profit .................. 7,506 958
Operating Expenses
Selling and promotion ......... 1,086 876
General and administrative .... 2,064 1,646
-------- --------
3,150 2,522
-------- --------
Operating Income (Loss) ....... 4,356 (1,564)
Nonoperating (Expense) Income
Interest expense .............. (380) (287)
Other income (expense) net .... 31 31
-------- --------
(349) (256)
-------- --------
Income(Loss) Before Minority
Interest and Income Taxes 4,007 (1,820)
Minority Interest in Income
of Subsidiary .......... 2,765 0
Income Taxes .................. 188 0
-------- --------
NET INCOME (LOSS) ............. $ 1,054 $ (1,820)
======== ========
EARNINGS (LOSS) PER SHARE ..... $ 0.25 $ (0.44)
======== ========
EARNINGS (LOSS) PER SHARE
ASSUMING DILUTION ...... $ 0.22 $ (0.44)
======== ========
</TABLE>
- 2 -
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STARCRAFT CORPORATION
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
3 Months Ended
----------------------------------
January 2, 2000 December 27, 1998
--------------- -----------------
(Dollars in Thousands)
Operating Activities
<S> <C> <C>
Net Income (Loss) .................. $ 1,054 $(1,820)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization .. 318 295
Minority interest .............. 766 0
Change in operating
assets and liabilities:
Receivables ........... (3,802) 197
Inventories ........... 109 (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) 0
Payments on long-term debt ......... (221) (57)
Issuance of Common Stock ........... 50 0
------- -------
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>
- 3 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STARCRAFT CORPORATION
January 2, 2000
- --------------------------------------------------------------------------------
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 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 2. Inventories
The composition of inventories is as follows (dollars in
thousands):
January 2, 2000 October 3, 1999
--------------- ---------------
Raw Materials $ 10,485 $ 10,844
Chassis 2,788 1,918
Work in Process 1,846 1,940
Finished Goods 1,149 1,675
-------- --------
$ 16,268 $ 16,377
======== ========
- 4 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
- --------------------------------------------------------------------------------
Note 3. 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
--------------------------------------
January 2, 2000 December 27, 1998
--------------- -----------------
<S> <C> <C>
Earnings per share
Net income (loss) available
to common stockholders $ 1,054 ($1,820)
======= =======
Weighted average common
shares outstanding 4,187 4,134
======= =======
EARNINGS (LOSS) PER SHARE $ 0.25 ($ 0.44)
======= =======
Earnings per share
Assuming dilution
Net income (loss) available
to common stockholders $ 1,054 ($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 $ 0.22 ($ 0.44)
======= =======
</TABLE>
(a) Calculation does not reflect the effect of the employee stock options
and warrants outstanding since their effect is antidilutive.
- 5 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
STARCRAFT CORPORATION
- --------------------------------------------------------------------------------
Note 4. 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.
<TABLE>
<CAPTION>
3 Months
----------------------------------
January 2, 2000 December 27, 1998
--------------- -----------------
<S> <C> <C>
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 0
OEM automotive supply:
Domestic 25,287 1,217
Export -- --
-------- --------
$ 36,193 $ 12,134
======== ========
Operating income (loss):
Conversion vehicle products ($ 1,297) ($ 799)
OEM automotive supply 3,015 (259)
-------- --------
$ 1,718 ($ 1,058)
======== ========
January 2, 2000 October 3, 1999
Total Assets:
Conversion vehicle products $ 27,141 $ 25,155
OEM automotive supply 19,728 18,626
-------- --------
$ 46,869 $ 43,781
======== ========
</TABLE>
- 6 -
<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
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 $7.5 million (20.7% 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.
- 7 -
<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 established 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.
- 8 -
<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.
----------
10.1 First Amendment to Starcraft Corporation
1997 Stock Incentive Plan.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
- 9 -
<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)
February 7, 2000 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
- 10 -
FIRST AMENDMENT TO
STARCRAFT CORPORATION
1997 STOCK INCENTIVE PLAN
I.
Pursuant to Section 12 of the Starcraft Corporation 1997 Stock
Incentive Plan (the "Plan"), Section 4 of the Plan is amended and restated in
its entirety to read as follows:
4. Stock Subject to the Plan. The maximum number of shares
with respect to which options and restricted share awards
may be made under this Plan is 500,000 shares of Common
Stock, which shall be authorized but unissued shares of the
Corporation. Subject to Section 7 hereof, the shares for
which awards may be granted under the Plan shall not exceed
that number. If any option shall expire or terminate for any
reason without having been exercised in full, or if any
restricted share grant is forfeited in whole or in part, the
unpurchased or forfeited shares subject thereto shall
(unless the Plan shall have terminated) become available for
other Awards under the Plan.
II.
This First Amendment to the Starcraft Corporation 1997 Stock Incentive
Plan shall become effective when it shall have been approved by the requisite
vote of the holders of the voting Common Stock of the Company.
III.
All other terms and provision of the Plan shall remain in full force
and effect.
EXECUTED and EFFECTIVE as of this 10th day of November, 1999.
STARCRAFT CORPORATION
/s/ Kelly L. Rose
-------------------------------
Kelly L. Rose, Chairman and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's unaudited consolidated financial statements for the three months
ended January 2, 2000 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> 3-MOS
<FISCAL-YEAR-END> OCT-1-2000
<PERIOD-START> OCT-4-1999
<PERIOD-END> JAN-2-2000
<EXCHANGE-RATE> 1.000
<CASH> 133
<SECURITIES> 0
<RECEIVABLES> 20,379
<ALLOWANCES> 40
<INVENTORY> 16,268
<CURRENT-ASSETS> 37,861
<PP&E> 13,159
<DEPRECIATION> 5,461
<TOTAL-ASSETS> 46,869
<CURRENT-LIABILITIES> 22,679
<BONDS> 16,436
0
0
<COMMON> 14,194
<OTHER-SE> (8,904)
<TOTAL-LIABILITY-AND-EQUITY> 46,869
<SALES> 36,193
<TOTAL-REVENUES> 36,193
<CGS> 28,687
<TOTAL-COSTS> 28,687
<OTHER-EXPENSES> 3,150
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 380
<INCOME-PRETAX> 1,242
<INCOME-TAX> 188
<INCOME-CONTINUING> 1,054
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,054
<EPS-BASIC> 0.25
<EPS-DILUTED> 0.22
</TABLE>
