UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-24804
Featherlite Mfg., Inc.
(Exact name of registrant as specified in its charter)
Minnesota 41-1621676
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Highways 63 & 9, P.O. Box 320, Cresco, IA 52136
(Address of principal executive offices) (Zip Code)
319/547-6000
(Registrant's telephone number, including area code)
-----
(Former name, former address and former fiscal year,
if changed since last report)
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.
[ X ] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
6,235,000 Shares as of November 12, 1996
<PAGE>
FEATHERLITE MFG., INC.
INDEX
Page No.
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Part I. Financial Information:
Item 1. Financial Statements (Unaudited)
Balance sheets
September 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . 3
Statements of Income
Three Months and Nine Months
Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows
Nine months Ended September 30, 1996 and 1995 . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . 8
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K .. . . . . . . . . . . . . . .12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
Part I: FINANCIAL INFORMATION
Item 1:
Featherlite Mfg., Inc.
Balance Sheets
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
(Note 1)
------------ ----------
<S> <C> <C>
Current Assets
Cash and equivalents $ 743 $ 811
Trade receivables 5,806 5,501
Refundable income taxes - 466
Inventories
Raw Materials 7,796 6,886
Work in process 6,750 3,329
Finished trailers/coaches 9,779 9,247
------ ------
Total inventories 24,325 19,462
Prepaid expenses 608 788
Deferred taxes 430 430
------ ------
Total current assets 31,912 27,458
------ ------
Property and equipment 17,334 16,115
Less accumulated depreciation (4,910) (3,781)
Property and equipment, net 12,424 12,334
------ ------
Other assets 9,697 6,293
------ ------
$ 54,033 $ 46,085
====== ======
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
Current maturities of long term
debt $ 1,068 $ 1,095
Other notes payable 1,191 657
Accounts payable 9,381 8,418
Accrued liabilities 5,015 1,928
------ ------
Total current liabilities 16,655 12,098
------ ------
Long Term Debt, net of current maturities
(Note 2) 16,547 15,194
Deferred grant income 351 384
Deferred taxes 456 456
Commitments and contingencies (Note 3)
Shareholders' equity (Note 4, 5 and 6) 20,024 17,953
------ ------
$ 54,033 $ 46,085
====== ======
</TABLE>
See Notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Featherlite Mfg., Inc.
Statements of Income
(Unaudited)
In thousands, except for per share data)
Three months Ended Nine months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 28,384 $ 16,164 $ 69,528 $ 51,774
Cost of Sales 24,446 13,984 59,869 43,752
------ ------ ------ ------
Gross profit 3,938 2,180 9,659 8,022
Selling and administrative expenses 3,248 2,561 8,582 7,209
------ ------ ------ ------
Income from operations 690 ( 381) 1,077 813
Other income (expense)
Interest (395) (194) (1,052) (497)
Airplane sales, net - - - 525
Grant and other income, net 44 39 419 895
------ ------ ------ ------
Total Other income, net (351) (155) (633) 923
------ ------ ------ ------
Income before taxes 339 (536) 444 1,736
Provision for income taxes 133 (204) 173 660
------ ------ ------ ------
Net income 206 (332) 271 1,076
====== ====== ====== ======
Net income per share $ 0.03 $ (0.05) $ 0.04 $ 0.18
------ ------ ------ ------
Weighted average shares outstanding 6,255 5,955 6,055 5,955
------ ------ ------ ------
</TABLE>
See Notes to financial statements
<PAGE>
Featherlite Mfg., Inc.
Condensed Statements of Cash Flow
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine months Ended
September 30
1996 1995
---- ----
<S> <C> <C>
Cash provided (used) by operating activities
Net income $ 271 $ 1,076
Non cash adjustments, net 984 (498)
(Increase) in working capital, net (840) (5,303)
------ ------
Net cash provided by (used for) operating activities 415 (4,725)
------ ------
Cash provided by (used for) investing activities
Acquisition of business 317 -
Additions to property and equipment, net (965) (2,325)
Additions to aircraft for resale - (3,860)
Proceeds from sale of aircraft - 4,226
------ ------
Net cash provided by (used for) investing activities (648) (1,959)
------ ------
Cash provided (used for) Financing Activities
Distributions for taxes - (305)
Change in short term debt (766) -
Change in long term debt and grants 931 4,617
------ ------
Net cash provided by (used for) financing activities 165 4,312
------ ------
Net cash and cash equivalent increase (decrease) (68) (2,372)
Cash and cash equivalents, begin of period 811 2,799
------ ------
Cash and cash equivalents, end of period $ 743 $ 427
======= ========
Non-cash Investing and Financing Activities
Fair market value of assets acquired, excluding cash $ 6,186
Excess of purchase price over net assets acquired 3,139
Liabilities assumed (7,842)
Issuance of common stock (1,800)
-------
Cash and equivalents acquired $ 317
=======
</TABLE>
See Notes to financial statements
<PAGE>
FEATHERLITE MFG., INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 1: Basis of Presentation
The accompanying condensed financial statements have been prepared, without
audit, in accordance with the instructions of Form 10-Q and therefore do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Financial information as of December
31, 1995 has been derived from the audited financial statements of the Company,
but does not include all disclosures required by generally accepted accounting
principles.
It is the opinion of management that the unaudited condensed financial
statements include all adjustments, consisting of normal recurring accruals,
necessary to fairly state the results of operations for the nine month periods
ended September 30, 1996 and 1995. The results of interim periods are not
necessarily indicative of results to be expected for the year. For further
information refer to the financial statements and notes to financial statements
included in the Company's Form 10-K Annual Report for the year ended December
31, 1995.
Note 2: Long-term Debt
The Company has a Credit Agreement with a bank that provides a working capital
line of credit. The agreement includes covenants requiring maintenance of
defined levels of working capital, tangible net worth and cash flow and to limit
leverage and capital expenditures. During the nine months ended September 30,
1996 the Company requested and received permission from the lender to be below
the cash flow requirements and to exceed the leverage limits defined by the
agreement for the period. There was $9.5 million borrowed against this line of
credit as of September 30, 1996.
Note 3: Commitments and Contingencies.
Pursuant to dealer inventory floor plan financing arrangements, the Company may
be required, in the event of default by a financed dealer, to repurchase
products from financial institutions or to reimburse the institutions for unpaid
balances including finance charges plus costs and expenses. The Company was
contingently liable under the arrangement for a maximum of $5,600,000 at
September 30, 1996 and $3,500,000 at December 31, 1995.
The Company has guaranteed certain notes payable by Featherlite Credit
Corporation (a related party) to a financial institution in the aggregate amount
of $30,000 at September 30, 1996 and $190,000 at December 31, 1995.
Also, the Company is self-insured for a portion of certain health benefit and
workers' compensation insurance claims. The Company's maximum annual claim
exposure under these programs is approximately $2.0 million, including $670,000
accrued for estimated unpaid claims at September 30, 1996 and $550,000 at
December 31, 1995. The Company has obtained an irrevocable standby letter of
credit in the amount of $675,000 in favor of the workers compensation claim
administrator.
<PAGE>
Note 4: Shareholders' Equity
Shareholders' equity may be further detailed as follows (Dollars in thousands)
Sept. 30 Dec. 31,
1996 1995
---- ----
Common Stock - without par value;
authorized - 40,000 shares;
issued - 6,255,000 shares* $ 14,220 $ 12,420
Additional paid-in capital 4,061 4,061
Retained earnings 1,743 1,472
-------- ---------
Total Shareholders' equity $ 20,024 $ 17,953
========== ==========
* As discussed in Note 6, on July 1, 1996, the Company issued 300,000 shares of
unregistered common stock with an estimated value of $1.8 million to acquire the
assets of Vantare International, Inc. An additional 100,000 shares are held in
escrow pending the attainment of certain defined net earnings for 1996.
Note 5: Stock Option Plan
The Board of Directors granted stock options to certain employees and directors
in the total amount of 249,380 shares at June 30, 1996 and 159,168 at December
31, 1995, pursuant to the stock option plan established by the Company in July
1994. These shares were granted at a prices ranging from $5.50-$9.00 per share,
and are exercisable at varying dates not to exceed 10 years from the date of
grant.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 123, Accounting for Stock-Based Compensation, which
establishes new standards for stock based employee compensation plans for years
beginning after December 31, 1995. The Company is not required to and has not
adopted Statement No. 123; however, beginning in 1996, it must present pro forma
net income and earnings per share as if Statement No. 123 had been adopted. At
September 30, 1996 and December 31, 1995, the market value of the company's
stock was less than the option share price for a substantial portion of the
options, and therefore, no compensation expense related to these options has
been computed.
Note 6: Acquisition of Business
In July, 1996 the Company acquired all the assets of Vantare International,
Inc., a privately held manufacturer of luxury motorcoaches, in exchange for
300,000 restricted shares of the Company's common stock (not including 100,000
shares held in escrow pending the attainment of certain defined net earnings for
1996) with a value of approximately $1.8 million and the assumption of certain
liabilities. This acquisition was accounted for as a purchase and, accordingly,
the results of operations of Vantare have been included in the Company's
financial statements beginning on the date of acquisition. The Company recorded
intangible assets in the amount of $3.1 million, including goodwill, tradenames
and certain other rights, which are being amortized over 20 years. If the
additional 100,000 shares held in escrow are issued, goodwill and shareholders'
equity will be increased by $600,000.
The following unaudited pro forma summary presents the consolidated results of
operations of the Company for the nine months ended September 30, 1996 as if the
business combination had occurred on December 31, 1995 (in thousands, except for
per share data):
1996
----
Revenue $ 81,708
Net earnings 59
Earnings per share $ .01
========
The pro forma results do not necessarily represent results which would have
occurred if the business combination had taken place at the date assumed above.
<PAGE>
Item 2:
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion pertains to the Company's results of
operations and financial condition for the three and nine month periods ended
September 30, 1996 and 1995.
Results of Operations
Three months ended September 30, 1996 and 1995
Net sales of $28.4 for the three months ended September 30, 1996
increased by $12.2 million or 75% over the same period in 1995 which had sales
of $16.2 million. This growth was led by increases of 18.8% in Featherlite and
Econolite trailer sales as well as added Diamond D trailer sales and sales of
Vantare and Featherlite motorcoaches totaling $9.4 million.On a product line
basis, livestock and utility trailers were both up over 50% during the quarter
and horse and commercial trailer sales each increased by over 15%. Car trailer
and race car transporter sales were down about 10% compared to 1995. There was a
2 to 5% price increase on July 1, 1996 but only a small portion of the sales for
the quarter included this increase.
Gross margin for the quarter increased to $3.9 million in 1996 from
$2.2 million in 1995. As a percentage of sales, gross margin for the quarter was
13.9% in 1996 compared of 13.5% in 1995. Material costs were higher during the
quarter due primarily to a larger material cost percentage for motorcoaches than
trailers, which absorbed the positive effect on margins of declining aluminum
costs. Labor and overhead costs improved slightly as a percentage of sales.
Selling and administration expenses in 1996 decreased as a percentage
of sales to 11.4% in 1996 compared with 15.8% in 1995. These expenses increased
by $687,000 to $3.2 million in 1996, including $259,000 related to Vantare, from
$2.5 million in the third quarter of 1995.
Interest expense in 1996 increased by $200,000 due to higher average
borrowings for working capital and aircraft in 1996.
Nine months ended September 30, 1996 and 1995
Net sales of $69.9 million for the nine months ended September 30, 1996
increased by 34.3% from $51.8 million in 1996. This increase includes a 12%
increase in the sale of Featherlite and Econolite trailers plus the added sales
of Diamond D trailers (which was acquired in the 4th quarter of 1995) and
Vantare motorcoaches (which was acquired in the 3rd quarter of 1996).
Significant gains have occurred in 1996 in sales of horse and livestock
trailers, which are each up more than 19%, and increased sales of snowmobile and
other recreational/utility trailers and the drop frame delivery and moving vans
which are each up over 39% in 1996. Car trailer and race car transporter sales
are down about 3% compared to last year. Motorcoach sales of $8.3 million in
1996 have resulted primarily from the acquisition of Vantare in July 1996.
Gross margin increased to $9.7 million in the first nine months of 1996
from $8.0 million in 1995. As a percentage of sales, gross margin for the nine
months was 13.9% compared to 15.5% for the comparable period in 1995. The margin
decrease for the comparable quarter of 1995 was primarily due to the following
factors: a $425,000 inventory adjustment occurring in the second quarter and
increased material costs of motorcoaches, including the cost of used trade-ins.
The average cost of aluminum used, which peaked in the third and fourth quarters
of 1995, was less in the first nine months of 1996 than in the same period of
1995. Labor and overhead costs are higher than a year ago due to increased
average labor rates and overhead costs related to the expansion completed at the
end of the first quarter in 1995. The overhead cost increases related to the
expansion have been substantially offset by increased volume and improved
efficiency.
<PAGE>
Selling and administrative expenses decreased as a percentage of sales
to 12.3% in 1996 compared with 13.9% in 1995. They increased by $1.4 million in
1996 to $7.2 million in 1995. This increase in 1996 mainly reflects sales and
other personnel added throughout 1995 to improve product exposure and to build a
larger sales organization to support higher sales volume and expanded dealer
network. The acquisition of Vantare increased selling and administrative
expenses by $259,000 in 1996.
Interest expense increased in 1996 by $555,000 from 1995 as the result
of increased levels of borrowings for working capital and aircraft in 1996.
Borrowings against the line of credit were reduced in the first half of 1995 as
a portion of the proceeds from the initial public offering were available to
finance 1995 working capital increases. Other income decreased by $1.0 million
in 1996 over 1995, substantially due to the non-recurrence in 1996 of a $750,000
development grant received in 1995 for working capital and operating costs
related to the facilities expansion and additional sales of aircraft in 1995
which realized gains of $525,000. Other income in 1996 includes a litigation
settlement.
The provision for income taxes in 1996 reflects an effective federal
and state income tax rate of 39% in 1996 and 38% in 1995. The 1996 increase
reflects higher anticipated state income taxes.
Looking Forward
The statements made in this Form 10Q quarterly report which are forward
looking in time involve risks and uncertainties discussed here and in the
Company's Form 10K and other filings with the SEC, including but not limited to:
product demand and acceptance of new products in each segment of the Company's
markets, fluctuations in the price of aluminum, competition, facilities
utilization and aircraft purchases and sales.
Sales are expected to continue to remain strong for the remainder of
1996 in nearly all product groups. The Vantare acquisition on July 1 will add
significant luxury motorcoach sales in the last quarter of 1996 and into 1997.
Increases in livestock trailer sales are expected to continue as cattle prices
have improved. Significant additional sales are expected during the last half of
the year from the sale of private label snowmobile trailers to Polaris dealers.
Continued growth is expected in drop frame delivery and moving van sales which
the company introduced in late 1995. These sales are expected to substantially
replace sales of semi-flat bed trailers which the Company has discontinued due
to lower profit margins. In July, price increases ranging from 2 to 5% were
announced for new orders received. The total sales backlog at September 30, 1996
was approximately $32 million, including $16.6 million in Vantare orders,
compared with $8.7 million at June 30, 1995 and $7.2 million at December 31,
1995. About $15 million of this backlog will be delivered in 1996.
Continued decreases in the average cost of aluminum will have a
positive impact on gross margins. The Company has obtained commitments from
suppliers to provide, at an agreed upon fixed price, substantial portions of its
total aluminum requirements for the remainder of 1996 and much of 1997. However,
the overall gross margin percentage may not improve as future Vantare sales
will include a significant amount of used coach sales which have a low gross
margin and offset the effect of new coach sales which have a higher average
margin. However the effect of this on overall operating income should be more
than offset by lower than average sales and administration costs related to the
Vantare operation.
Sales and administration expenses are expected to increase at a lower
rate than sales growth as much of the organizational growth occurred in 1995.
Also, the addition of Vantare will not result in a significant increase in sales
and administration expense, except for amortization of intangibles as discussed
in Note 6 to financial statements. Interest expense will likely remain higher
than 1995 as the average level of debt is expected to be greater in 1996 than
1995. No significant amount of grant income will be realized in 1996.
<PAGE>
Liquidity and Capital Resources
During the nine months ended September 30, 1996, the Company's operations used
net cash of $68,000, including $415,000 provided by operating activities,
$317,000 provided by the acquisition of a business, net of $965,000 used for
capital expenditures and $165,000 provided by increased borrowings. At September
30, 1996, cash and cash equivalents totaled $743,000.
The Company has a working capital line of credit with its primary lender. This
line has a borrowing limit of $12.0 million and an interest rate of prime. The
maturity date of this line is July 31, 1997, but is in the process of being
extended for another year. The Company is required by the lender to maintain
defined levels of working capital, tangible net worth and cash flow and to limit
leverage and capital expenditures. During the nine months ended September 30,
1996, the Company requested and received permission from the lender to be below
the cash flow requirements and to exceed the leverage limit defined by the
agreement for the period. Borrowings under the line are secured by substantially
all the assets of the Company and guarantees of certain shareholders under
defined circumstances. There was $9.5 million borrowed against this line as of
September 30, 1996.
The Company believes that its current cash balances, cash flow generated from
operations and available borrowing capacity will be sufficient to fund
operations and capital requirements for the next year. However, the Company is
in the process of negotiating a $3.5 million line of credit with a finance
company to provide financing for new and used motorcoaches manufactured or
acquired by its Vantare division.
Operating activities in the nine months ended September 30, 1996 provided cash
of $415,000. Net income from operations provided cash of $271,000. This amount
was increased by adjustments for depreciation of $1,141,000 and reduced by other
non-cash items in an aggregate amount of $157,000. Net changes in receivables,
inventories and other working capital items used cash of $840,000, excluding the
effect of the Vantare acquisition which increased receivables, inventory and
prepaids by $5,780,000 and increased accounts payable and accruals by
$6,146,000. An inventory decrease of $624,000 was offset by a $1,464,000 net
decrease in accounts receivable, prepaids, accounts payable and accruals.
Increased expenditures for working capital items may be required to support
increased sales levels throughout the next year.
Investing activities in the nine months ended September 30, 1996 used cash of
$966,000 for plant and other improvements. The Company also made a non-cash
acquisition of the assets of Vantare International, Inc. as of July 1, 1996. In
connection with this purchase which is described in Note 6 to financial
statements, the Company received cash and cash equivalents in the amount of
$317,000 and property and equipment valued at $407,000. The facility used by
Vantare is leased.
Financing activities provided net cash of $165,000 after borrowing an additional
$1,900,000 on the line of credit and repaying $1,735,000 of aircraft and other
debt. In connection with the purchase of the assets of Vantare International,
Inc. as of July 1, 1996, which is discussed in Note 6 to financial statements,
the Company issued 300,000 shares of common stock with an approximate value of
$1,800,000 and assumed notes payable and long-term debt of $1,697,000.
<PAGE>
As discussed in Note 2 to financial statements, the Company is contingently
liable under certain dealer floor plan and retail financing arrangements and has
guaranteed certain notes payable of Featherlite Credit Corporation, a related
company. These contingent liabilities total approximately $ 5.6 million at
September 30, 1996. Also, the Company is self-insured for a portion of certain
health benefit and workers' compensation insurance claims. At September 30,
1996, the Company's maximum annual claim exposure under these programs is
approximately $1.8 million. The Company has obtained an irrevocable standby
letter of credit in the amount of $675,000 in favor of the workers compensation
claim administrator.
The Company plans to expand certain of its facilities in the remainder of 1996
or 1997, including a 16,000 square foot facility to be located in Mocksville,
North Carolina for sales and service of race car transporters and motorcoaches.
This facility will be held under an operating lease with an individual who is
also a Featherlite dealer. The Company intends to expand its Vantare motorcoach
production, service and office facilities in Sanford, Florida. This expansion
will cost approximately $600,000 and, upon completion, it will be leased from
Seminole County Port Authority, the present owner of the Vantare facility. The
Company will provide interim financing on this project until it is completed and
purchased by the Port Authority. The Company has made a commitment to the City
of Cresco to construct a hanger facility at a cost of approximately $300,000 as
part of a pending airport expansion project in 1997 or 1998. If completed the
facility will be owned by the City and leased to the Company at a nominal cost
for at least 20 years.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on Page following signatures
(b) Form 8-K. The Registrant filed reports on Form 8-K during the
three months ended September 30, 1996 as follows.
On July 11, 1996 a Form 8-K report was filed to report the
acquisition of the assets of Vantare International, Inc.
On September 13, 1996 Amendment No. 1 to the Form 8-K filed on
July 11, 1996 to include the following financial statements of
the business acquired and pro forma financial information.
(a) Financial Statements of Business Acquired
(1) Audited Financial Statements of Vantare
International, Inc. as of December 31, 1995 and for
the year then ended, consisting of:
(A) Independent Auditors' Report
(B) Balance Sheet
(C) Statement of Operations and Accumulated
Deficit
(D) Statement of Cash Flows
(E) Notes to Financial Statements
(1) Unaudited Financial Statements of Vantare
International, Inc. as of June 30, 1996 and for the
six month periods ended June 30, 1996 and June 30,
1995, consisting of:
(A) Balance Sheets
(B) Statements of Operations and
Accumulated Deficit
(C) Statements of Cash Flows
(D) Notes to Financial Statements
(b) Pro Forma Financial information
(2) Pro Forma Combined Consolidated Financial
Information consisting of:
(A) Pro forma combined consolidated
balance sheet as of June 30, 1996
(B) Pro forma consolidated statements of
income for the six month period
ended June 30, 1996 and the year ended
December 31, 1995
(C) Notes to Pro forma Consolidated
Financial Statements
<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.
FEATHERLITE MFG., INC.
(Registrant)
Date: November 12, 1996 /S/ CONRAD D. CLEMENT
Conrad D. Clement
President & CEO
Date: November 12, 1996 /S/ JEFFERY A. MASON
Jeffery A. Mason
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10.1 Agreement dated August 1, 1996 between the Company and Dolton
Aluminum
10.2 Agreement dated August 1, 1996 between the Company and Alumax
Extrusions Inc.
27 Financial Data Schedule (filed in electronic format only)
Exhibit 10.1
DOLTON
ALUMINUM COMPANY, INC.
14200 Cottage Grove Avenue o Dolton, Illinois 60419 o (708) 841-8390
FIXED-PRICE PURCHASE AND SALE AGREEMENT
This Agreement ("Agreement") dated July 22, 1996 is between Dolton Aluminum
Company, Inc. ("Seller") and FEATHERLITE TRAILERS ("Buyer").
Seller desires to sell certain goods to Buyer and Buyer desires to purchase
certain goods from Seller.
NOW, THEREFORE, in consideration of these premises and the following mutual
agreements, the parties agree as follows:
1. Seller will sell to Buyer, and Buyer will purchase from Seller, the aluminum
extrusions identified on Schedule A, B and C attached hereto ("Product"),
subject to the terms contained in this Agreement and the attached Schedule A, B
and C. The quantity, delivery dates, and prices, for Product are also set forth
on Schedule A, B and C.
2. This Agreement shall have a term from the date hereof to August 31, 1997.
This Agreement may not be canceled by either party prior to the termination date
without the prior written consent of the other. Buyer acknowledges that Seller
intends to rely on this Agreement in fixing the prices and delivery dates of its
raw material purchases necessary to fulfill this Agreement and as such, Buyer
agrees to pay for the quantity specified on Schedule A, B and C whether or not
Buyer places specific orders with Seller as specified in Item 3 below.
3. Buyer agrees to place specific firm orders with Seller for the Product at
least 28 days prior to the requested ship date which shall specify the number of
pounds, feet, or pieces of specific aluminum extrusion shapes. Seller will
attempt to respond to Buyer's order requests with less than 28 day lead time but
shall be under no obligation to do so. Seller is required to manufacture and
ship only product for which Seller has timely received specific firm orders.
4. Seller's obligations hereunder are subject to Seller's credit approval with
respect to each shipment and to the availability of financial information on
Buyer which, in the Seller's opinion, is adequate to demonstrate the Buyer's
financial condition, ability to pay for shipments in accordance with agreed
terms of payment, and ability to support the volume of credit extended by the
Seller.
Payment terms for the Product shall be as set forth in Schedule A, B
and C. Seller's obligation to continue shipments of Product is conditioned upon
Buyer satisfying its payment obligations under this Item 4 in full within the
time period specified.
5. Either party's failure, at any time or times hereafter, to require strict
performance by the other party of any provision of this Agreement shall not
constitute a waiver, or affect or diminish the right thereafter to demand strict
compliance and performance of this Agreement.
<PAGE>
SCHEDULE A
Material Description: This Agreement covers custom and standard extrusions
currently being supplied or quoted to FEATHERLITE TRAILERS ("Buyer") by dolton
Aluminum Company, Inc. ("Seller") with specific pounds/pieces/feet by specific
shape to be supplied by Buyer.
Quantity: Three hundred thousand (300,000) pounds per calendar month for a total
of 1,500,000 pounds.
Delivery Period: August, 1996 through December, 1996.
Price: $1.095 per pound for solid aluminum extrusions, add $.060 per pound for
hollows.
Packaging: Standard - Bare Bundle.
Tolerance: Aluminum Association standards to apply.
FOB: FEATHERLITE TRAILERS, Cresco, IA.
Total Dollar Value of Contract: Approximately $1,642,500.
Terms: Net 45 days.
By: Gary Ihrke By: Drago H. Kahanu
Title: VP of Operations Title: VP Sales and Marketing
Signature: /S/ GARY IHRKE Signature: /S/ DRAGO H. KAHANU
FEATHERLITE TRAILERS DOLTON ALUMINUM COMPANY, INC.
(BUYER) (SELLER)
Dated: 8/1/96 Dated:
<PAGE>
SCHEDULE B
Material Description: This Agreement covers custom and standard extrusions
currently being supplied or quoted to FEATHERLITE TRAILERS ("Buyer") by Dolton
Aluminum Company, Inc. ("Seller") with specific pounds/pieces/feet by specific
shape to be supplied by Buyer.
Quantity: One hundred sixty-five thousand (165,000) pounds per calendar month
for a total of 1,980,000 pounds.
Delivery Period: Jan, 1997 through December, 1997.
Price: $1.135 per pound for solid aluminum extrusions, add $.060 per pound for
hollows.
Packaging: Standard - Bare Bundle.
Tolerance: Aluminum Association standards to apply.
FOB: FEATHERLITE TRAILERS, Cresco, IA.
Total Dollar Value of Contract: Approximately $2,247,300.
Terms: Net 45 days.
By: Gary Ihrke By: Drago H. Kahanu
Title: VP of Operations Title: VP Sales and Marketing
Signature: /S/ GARY IHRKE Signature: /S/ DRAGO H. KAHANU
FEATHERLITE TRAILERS DOLTON ALUMINUM COMPANY, INC.
(BUYER) (SELLER)
Dated: 8/1/96 Dated:
<PAGE>
SCHEDULE C
Material Description: This Agreement covers custom and standard extrusions
currently being supplied or quoted to FEATHERLITE TRAILERS ("Buyer") by Dolton
Aluminum Company, Inc. ("Seller") with specific pounds/pieces/feet by specific
shape to be supplied by Buyer.
Quantity: One hundred fifty thousand (150,000) pounds per calendar month for a
total of 1,800,000 pounds.
Price: A conversion price of $.370 per pound for solid aluminum extrusions (add
$.060 per pound for hollows) plus the price of P1020 Ingot (for the appropriate
time period).
Packaging: Standard - Bare Bundle.
Tolerance: Aluminum Association standards to apply.
FOB: FEATHERLITE TRAILERS, Cresco, IA.
Total Dollar Value of Contract: Not finalized.
Terms: Net 45 days.
By: Gary Ihrke By: Drago H. Kahanu
Title: VP of Operations Title: VP Sales and Marketing
Signature: /S/ GARY IHRKE Signature: /S/ DRAGO H. KAHANU
FEATHERLITE TRAILERS DOLTON ALUMINUM COMPANY, INC.
(BUYER) (SELLER)
Dated: 8/1/96 Dated:
Exhibit 10.2
ALUMAX 2700 International Drive
EXTRUSIONS INC. Suite 200
West Chicago, IL 60185
August 1, 1996 708/584-1000
Via Facsimile (319) 547-6099 FAX 708/584-1243
Mr. Conrad D. Clement, President
Featherlite Manufacturing, Inc.
Box 320
Cresco, IA 52136
Dear Mr. Clement:
This will confirm that Alumax Transportation Products agrees to supply 1,980,000
pounds of aluminum extrusions for shipment from 1-97 - 12/97 on contract number
ATP0022. Pricing during this time frame will be firm at 1.135 per pound.
Based upon your commitment, Alumax Transportation Products has taken the
necessary actions to provide a firm price for the duration of this agreement.
Therefore, it is expected that shipments of finished product will occur in a
timely manner, which in this case equates to approximately 165,000 pounds on a
monthly basis.
In the event you are unable to fulfill the volume commitment in the agreed upon
period of time, you will be invoiced for the unused portion of the contract. You
may choose at that time to re-hedge the contract.
We believe that this covers the essence of our agreement. We would request that
you acknowledge receipt and forward a signed copy of this agreement for our
files.
We appreciate your confidence in Alumax Transportation Products and look forward
to the successful completion of this contract.
Best Regards, ACCEPTED:
/S/ JOSEPH M. VALVO /S/ GARY IHRKE
Joseph M. Valvo Vice President of Operations
Inside Sales Manager Featherlite Mfg., Inc.
cc: J. Brunick
M.S. Czachorski
T. Horonzy
B. Kasten
S. Kavanaugh
Ted Smothers
<PAGE>
ALUMAX 2700 International Drive
EXTRUSIONS INC. Suite 200
West Chicago, IL 60185
August 1, 1996 708/584-1000
Via Facsimile (319) 547-6099 FAX 708/584-1243
Mr. Conrad D. Clement, President
Featherlite Manufacturing, Inc.
Box 320
Cresco, IA 52136
Dear Mr. Clement:
This will confirm that Alumax Transportation Products agrees to supply 1,500,000
pounds of aluminum extrusions for shipment from 8-96 - 12-96 on contract number
ATP0021. Pricing during this time frame will be firm at 1.095 per pound.
Based upon your commitment, Alumax Transportation Products has taken the
necessary actions to provide a firm price for the duration of this agreement.
Therefore, it is expected that shipments of finished product will occur in a
timely manner, which in this case equates to approximately 300,000 pounds on a
monthly basis.
In the event you are unable to fulfill the volume commitment in the agreed upon
period of time, you will be invoiced for the unused portion of the contract. You
may choose at that time to re-hedge the contract.
We believe this covers the essence of our agreement. We would request that you
acknowledge receipt and forward a signed copy of this agreement for our files.
We appreciate your confidence in Alumax Transportation Products and look forward
to the successful completion of this contract.
Best Regards, ACCEPTED:
/S/ JOSEPH M. VALVO /S/ GARY IHRKE
Joseph M. Valvo Vice President of Operations
Inside Sales Manager Featherlite Mfg., Inc.
cc: J. Brunick
M.S. Czachorski
T. Horonzy
B. Kasten
S. Kavanaugh
Ted Smothers
<PAGE>
ALUMAX 2700 International Drive
EXTRUSIONS INC. Suite 200
West Chicago, IL 60185
Via Facsimile 319/547-6099 708/584-1000
FAX 708/584-1243
August 6, 1996
Mr. Gary Ihrke
Featherlite Manufacturing, Inc.
Box 320
Cresco, IA 52136
Dear Mr. Ihrke:
This will serve as an addendum to our contract number ATP0022.
Shipments over and above the 165,000 pounds per month that has a locked price of
$1.135 per pound will be billed on a formula basis. That price will be
established using the prior month's Metals Week average monthly "transaction
price" plus .370 cents per pound (i.e., the average monthly "transaction price"
for the month of February plus .370 per pound equals the base price for the
month of March, the average monthly "transaction price" for the month of March
plus .370 cents equals the base price for the month of April, etc.).
We believe that this covers the essence of our agreement. We would request that
you acknowledge receipt and forward a signed copy of this agreement for our
files.
We appreciate your confidence in Alumax Transportation Products and look forward
to the successful completion of the contract.
Best Regards, ACCEPTED:
/S/ JOSEPH M. VALVO /S/ GARY IHRKE
Joseph M. Valvo Vice President of Operations
Inside Sales Manager Featherlite Mfg., Inc.
cc: J. Brunick
M.S. Czachorski
T. Horonzy
B. Kasten
S. Kavanaugh
Ted Smothers
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 743
<SECURITIES> 0
<RECEIVABLES> 5806
<ALLOWANCES> 0
<INVENTORY> 24,325
<CURRENT-ASSETS> 31,912
<PP&E> 17,334
<DEPRECIATION> (4,910)
<TOTAL-ASSETS> 54,033
<CURRENT-LIABILITIES> 16,655
<BONDS> 16,547
0
0
<COMMON> 14,220
<OTHER-SE> 5,804
<TOTAL-LIABILITY-AND-EQUITY> 54,033
<SALES> 69,528
<TOTAL-REVENUES> 69,528
<CGS> 59,869
<TOTAL-COSTS> 68,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 395
<INCOME-PRETAX> 444
<INCOME-TAX> 173
<INCOME-CONTINUING> 271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
