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UNITED STATES 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 QUARTERLY PERIOD ENDED
MARCH 31, 1996
COMMISSION FILE NUMBER 0-26142
BELMONT HOMES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSISSIPPI 64-0834574
- - ------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
HIGHWAY 25 SOUTH, INDUSTRIAL PARK DRIVE
BELMONT, MISSISSIPPI 38827 (601) 454-9217
-------------------------- --------------
(Address, including zip code of (Registrant's telephone number,
principal executive offices) including area code)
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
---- -----
At May 7, 1996, 6,255,000 shares of the Registrant's $.10 Par Value
Common Stock were outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BELMONT HOMES, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1996 1995
------- -------
<S> <C> <C>
Net sales $51,445 $25,275
Cost of sales 43,430 21,453
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Gross profit 8,015 3,822
Selling, general and administrative 3,808 1,669
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Income from operations 4,207 2,153
Interest income (expense), net 63 (223)
------- -------
Income before income taxes 4,270 1,930
Income tax expense 1,628 664
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Net income 2,642 1,266
Preferred stock dividends - (20)
------- -------
Net income applicable to common stock $ 2,642 $ 1,246
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Net income per common share $ .43 $ .36
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Weighted average common shares outstanding 6,074 3,500
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</TABLE>
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BELMONT HOMES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
Unaudited
March 31, December 31,
--------- ------------
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,735 $ 2,055
Certificates of deposit 7,544 6,717
Accounts receivable, net 12,901 7,302
Inventories 8,270 7,425
Prepaid and other 1,281 1,355
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Total current assets 32,731 24,854
Property, plant and equipment, net 15,736 14,812
Goodwill and other assets, net 10,257 10,402
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$58,724 $50,068
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LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities:
Current portion of long-term debt $ 215 $ 4,600
Accounts payable 7,324 3,665
Accrued expenses 7,048 5,552
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Total current liabilities 14,587 13,817
Long-term debt 408 6,919
Deferred income taxes 284 284
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Total liabilities 15,279 21,020
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Shareholders' equity:
Common stock 625 545
Additional paid-in capital 26,763 15,088
Retained earnings 19,550 16,908
Adjustment to predecessor basis (3,493) (3,493)
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Total shareholders' equity 43,445 29,048
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$58,724 $50,068
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</TABLE>
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BELMONT HOMES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,642 $ 1,265
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 391 199
Changes in operating assets and liabilities:
Accounts receivable (5,599) (2,358)
Inventories (845) (675)
Prepaid and other 111 560
Accounts payable 3,659 1,712
Accrued expenses 1,496 428
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Net cash provided by operating activities 1,855 1,131
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Cash flows from investing activities:
Additions to property, plant and equipment (1,207) (1,640)
Certificates of deposit (827) -
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Net cash used by investing activities (2,034) (1,640)
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Cash flows from financing activities:
Repayment of long-term debt (10,896) (135)
Proceeds from sale of common stock net of
offering costs 11,755 -
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Net cash provided (used) by financing activities 859 (135)
Net increase (decrease) in cash and equivalents 680 (644)
Cash and equivalents at beginning of year 2,055 5,331
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Cash and equivalents end of period $ 2,735 $ 4,687
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</TABLE>
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BELMONT HOMES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
In June 1993 Belmont Homes, Inc. ("Belmont"), which was 43% owned by
shareholders of BHI, Inc. (Predecessor) and 57% owned by new investors, acquired
through the issuance of debt and equity securities, substantially all of the
assets and liabilities of Predecessor for a purchase price of $15,541. This
transaction was accounted for using the purchase method of accounting including
the computational guidelines contained in EITF Issue No. 88-16.
In August 1995 Belmont incorporated Delta Homes, Inc., a wholly-owned
subsidiary and purchased for $450 a production facility in Clarksdale,
Mississippi.
In October 1995 Belmont acquired, in a transaction accounted for using
the purchase method of accounting, all the outstanding common stock of Spirit
Homes, Inc. ("Spirit") for $9,800 of cash and debt.
In January 1996 the Company completed the sale of 800 shares of its
common stock raising net proceeds of approximately $11,800 which were used to
retire substantially all long-term debt.
The condensed consolidated financial statements include the accounts of
Belmont Homes, Inc. and its wholly-owned subsidiaries from incorporation or
acquisition date (collectively, the "Company") and have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with Generally Accepted Accounting
Principles have been omitted. The condensed financial statements should be read
in conjunction with the Company's audited financial statements and notes
thereto.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments that are necessary for a fair presentation, have
been included in the condensed consolidated financial statements for the
interim periods ended March 31, 1996 and 1995. The results of operations for
the three month period are not indicative of the results of operations to be
expected for the full year ending December 31, 1996 or any other interim
period.
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(2) Inventories
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- -----------
<S> <C> <C>
Raw materials $ 5,173 $ 4,670
Work-in-process 563 580
Finished homes 2,534 2,175
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$ 8,270 $ 7,425
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</TABLE>
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
Of Operations
Results Of Operations
The following table sets forth for the periods indicated information
derived from the Company's condensed financial statements expressed as a
percentage of net sales:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1996 1995
----- -----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 84.4 84.9
----- -----
Gross profit 15.6 15.1
Selling, general and administrative 7.4 6.6
----- -----
Income from operations 8.2 8.5
Interest income (expense), net .1 (.9)
Income taxes 3.2 2.6
----- -----
Net income 5.1 5.0
----- -----
</TABLE>
Three Months Ended March 31, 1996 Compared To Three Months Ended March 31, 1995
Net sales for the three months ended March 31, 1996 increased by 104%
to $51.4 million from $25.3 million for the three months ended March 31, 1995.
The number of homes sold during the quarter increased 87% to 2,486 homes from
1,333 in the first quarter of 1995. Of this increase, 65% resulted from the
sale of homes at Spirit which was acquired by the Company in
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October 1995 with the balance due to the addition of the Company's fourth and
fifth plants in March and August 1995, respectively. Multi-sectional homes
increased to 23% of homes sold during the first quarter of 1996 from 17.8% in
the same quarter of 1995. The average price of a home sold increased 9.1% to
$20,690 in 1996 from $18,960 in 1995 due, in part, to the higher mix of
multi-sectional homes and the higher price for the Spirit single-section homes.
Cost of sales includes costs of raw materials, direct labor, service
and warranty expense, insurance and payroll taxes. Cost of sales during the
first quarter of 1996 increased 102% to $43.4 million from $21.4 million for
the first quarter of 1995. Cost of raw materials and direct labor, which are
two of the largest components of cost of sales, increased to $33.0 million and
$5.6 million, respectively, for the first quarter of 1996 from $17.0 million
and $2.4 million, respectively, for the first quarter of 1995 primarily as a
result of increased sales volume. As a percentage of net sales, cost of sales
for the first quarter of 1996 decreased to 84.4% from 84.9% in the first
quarter of 1995, due to decreases in material costs which were offset in part
by increased direct labor and warranty costs.
Selling, general and administrative expenses for the first quarter of
1996 increased by 128% to $3.8 million from $1.7 million in the first quarter
of 1995. As a percentage of net sales, selling, general and administrative
expense increased to 7.4% for the first quarter of 1996 from 6.6% for the first
quarter of 1995 as a result of higher selling and promotional costs, due in
part to the higher percentage of such costs for sales at Spirit Homes, and to
higher legal and professional costs associated with the Company's continuing
acquisition program.
Net interest income was $63 thousand for the first quarter of 1996
compared with net interest expense of $223 thousand for the first quarter of
1995. In January 1996 the Company used a portion of the net proceeds of a
secondary public offering of stock to retire $10.9 million of interest bearing
debt.
Liquidity And Capital Resources
Cash and equivalents including certificates of deposit were $10.3
million at March 31, 1996 compared to $8.8 million at year end December 31,
1995.
In January 1996 the Company raised approximately $11.8 million in net
cash proceeds from the secondary sale of 800 thousand shares of stock to the
public. Approximately $10.9 million of these proceeds were used to retire all
but $623 thousand of interest bearing debt. As a result of these transactions,
net cash provided by financing activities for the first quarter of 1996 was
$859 thousand compared with a $135 thousand use of cash during the first
quarter of 1995.
Net cash provided by operating activities was $1.9 million for the
first quarter of 1996 compared to $1.1 million for the first quarter of 1995.
Accounts receivable are funded by approved dealer floor-plan financing and
usually are collected within 15 days. All homes are
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manufactured against orders, and currently, no homes are produced for
inventory.
The Company utilized $1.2 million for the purchase of property, plant
and equipment during the first quarter of 1996 compared with $1.6 million
during the first quarter of 1995. Expenditures during 1996 were for the
addition of two plants at Spirit Homes while the expenditures in 1995 were for
the completion of the Company's fourth plant at Belmont.
The Company plans to continue its current growth strategy of acquiring
or constructing new manufacturing facilities when necessitated by consumer
demand. In order to provide any additional funds necessary for the continued
pursuit of this growth strategy, the Company may incur, from time to time,
additional short- and long-term bank indebtedness, including mortgage loans and
industrial revenue bond financing, and may issue, in public or private
transactions, equity and debt securities, the availability and terms of which
will depend upon market and other conditions.
The Company's backlog at March 31, 1996 was approximately $29 million
compared to $17.6 million at March 31, 1995. The Company considers its order
backlog to be firm orders and has had limited cancellation experience to date.
PART II--OTHER INFORMATION
Item 6.
(a) Exhibits
27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K for the three
months ended March 31, 1996.
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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.
BELMONT HOMES, INC.
Date: May 7, 1996 /s/ Jerold Kennedy
------------------------
President And CEO
Date: May 7, 1996 /s/ William A. Sheffield
------------------------
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,735
<SECURITIES> 7,544
<RECEIVABLES> 12,938
<ALLOWANCES> 37
<INVENTORY> 8,270
<CURRENT-ASSETS> 32,731
<PP&E> 17,498
<DEPRECIATION> 1,762
<TOTAL-ASSETS> 58,724
<CURRENT-LIABILITIES> 14,587
<BONDS> 0
0
0
<COMMON> 625
<OTHER-SE> 42,820
<TOTAL-LIABILITY-AND-EQUITY> 58,724
<SALES> 51,445
<TOTAL-REVENUES> 51,445
<CGS> 43,430
<TOTAL-COSTS> 43,430
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> 4,270
<INCOME-TAX> 1,628
<INCOME-CONTINUING> 2,642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,642
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.00
</TABLE>
