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 March 31, 2001
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 No. 1-8183
SUPREME INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1670945
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
16441 C.R. 38, P.O. Box 237, Goshen, Indiana 46528
(Address of principal executive offices)
Registrant's telephone number, including area code: (219) 642-3070
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.
Common Stock ($.10 Par Value) Outstanding at May 4, 2001
Class A 8,887,417
Class B 1,917,394
Page 1 of 13
SUPREME INDUSTRIES, INC.
CONTENTS
Page No.
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets 3 & 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7, 8
& 9
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9, 10
& 11
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security
Holders 12
Item 6 Exhibits and Reports on Form 8-K 12
Signatures 13
Page 2 of 13
Part I. Financial Information
Item 1. Financial Statements
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, December 31,
2001 2000
--------------- ---------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents........... $284,181 $184,004
Accounts receivable, net............ 24,775,243 25,566,117
Inventories......................... 31,147,665 31,815,470
Deferred income taxes............... 1,315,298 1,315,298
Other current assets................ 545,113 670,524
--------------- ---------------
Total current assets........... 58,067,500 59,551,413
--------------- ---------------
Property, plant and equipment, at cost... 67,184,467 66,836,744
Less, Accumulated depreciation
and amortization... 26,507,612 25,442,612
-------------- ---------------
Property, plant and equipment,
net................ 40,676,855 41,394,132
--------------- ---------------
Intangible assets, net................... 1,056,236 1,095,456
Other assets............................. 1,011,661 932,514
--------------- ---------------
Total assets................... $100,812,252 $102,973,515
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 3 of 13
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, Concluded
March 31, December 31,
2001 2000
--------------- ---------------
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-term debt.. $5,194,678 $5,181,761
Trade accounts payable................ 11,611,086 8,111,788
Accrued income taxes.................. 1,045,448 1,148,415
Other accrued liabilities............. 7,783,134 9,874,302
--------------- ---------------
Total current liabilities...... 25,634,346 24,316,266
Long-term debt........................... 21,821,939 25,859,972
Deferred income taxes.................... 1,984,466 1,984,466
--------------- ---------------
Total liabilities.............. 49,440,751 52,160,704
--------------- ---------------
Stockholders' equity...................... 51,371,501 50,812,811
--------------- ---------------
Total liabilities and
stockholders' equity... ..... $100,812,252 $102,973,515
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 4 of 13
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
-------------------------------
2001 2000
--------------- ---------------
Revenues.......................... $55,886,811 $73,962,394
--------------- ---------------
Costs and expenses:
Cost of sales........................ 47,256,176 61,383,863
Selling, general and administrative.. 5,995,498 7,002,931
Interest............................. 742,926 879,493
--------------- ---------------
53,994,600 69,266,287
--------------- ---------------
Income before income taxes...... 1,892,211 4,696,107
Income taxes.............................. 718,000 1,887,000
--------------- ---------------
Net income...................... $1,174,211 $2,809,107
=============== ===============
Earnings per share:
Basic.......................... $.11 $.25
Diluted................................... .11 .25
Shares used in the computation of
earnings per share:
Basic........................... 10,841,567 11,300,571
Diluted......................... 10,865,251 11,304,608
The accompanying notes are a part of the consolidated financial statements.
Page 5 of 13
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
-------------------------------
2001 2000
--------------- ---------------
Cash flows from operating activities:
Net income............................ $1,174,211 $2,809,107
Adjustments to reconcile net income
to net
cash provided by (used in)
operating activities:
Depreciation and amortization. 1,111,650 964,183
Gain on disposal of equipment (9,467) ---
Changes in operating assets
and liabilities. . 2,666,157 (3,903,893)
--------------- ---------------
Net cash provided by (used in)
operating activitie 4,942,551 (130,603)
--------------- ---------------
Cash flows from investing activities:
Additions to property, plant and
equipment.... ......... (371,982) (1,702,587)
Proceeds from disposal of property,
plant and equipment 26,296 ---
(Increase) decrease in other assets... (79,147) 22,248
--------------- ---------------
Net cash used in investing
activities.. ........... (424,833) (1,680,339)
--------------- ---------------
Cash flows from financing activities:
Proceeds from revolving line of credit
and other long-term debt............. 20,160,095 22,707,632
Repayments of revolving line of credit
and other long-term debt............. (24,185,211) (19,907,448)
Acquisition of treasury stock.......... (392,425) (1,052,254)
--------------- ---------------
Net cash provided by (used in)
financing activitie (4,417,541) 1,747,930
--------------- ---------------
Increase (decrease) in cash and cash
equivalents............ 100,177 (63,012)
Cash and cash equivalents, beginning of
period..... ......... 184,004 270,935
--------------- ---------------
Cash and cash equivalents, end of period.... $284,181 $207,923
=============== ===============
The accompanying notes are a part of the consolidated financial statements.
Page 6 of 13
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all of the information and financial statement disclosures
necessary for a fair presentation of consolidated financial position,
results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, the
information furnished herein includes all adjustments necessary to
reflect a fair statement of the interim periods reported. All adjustments
are of a normal and recurring nature. The December 31, 2000 consolidated
balance sheet data was derived from audited financial statements, but does
not include all disclosures required by generally accepted accounting
principles.
NOTE B - INVENTORIES
Inventories, which are stated at the lower of cost or market with cost
determined on the first-in, first-out method, consist of the following:
March 31, December 31,
2001 2000
------------ -------------
Raw materials.................$ 19,367,874 $ 19,822,278
Work-in-progress.............. 4,868,149 5,384,975
Finished goods................ 6,911,642 6,608,217
------------ ------------
$ 31,147,665 $ 31,815,470
The valuation of raw materials, work-in-progress and finished goods
inventories at interim dates is based upon a gross profit percentage
method and bills of materials. The Company has historically had favorable
and unfavorable quarterly adjustments resulting from annual physical
inventories. The Company is continuing to refine its costing procedures
for valuation of interim inventories in an effort to minimize book to
physical inventory adjustments.
Page 7 of 13
NOTE C - INCOME TAXES
The effective income tax rate for the three months ended March 31, 2001
was 37.9% compared to 40.2% for the three months ended March 31, 2000.
The decline is primarily the result of fluctuations in taxable income and
varying tax rates in the states in which the Company transacts business.
NOTE D - EARNINGS PER SHARE
The number of shares used in the computation of basic and diluted earnings
per share are as follows (in Thousands):
Three Months Ended
March 31,
------------------
2001 2000
------- -------
Weighted average number of shares
outstanding (used in computation
of basic earnings per share) 10,842 11,301
Effect of dilutive stock options 23 4
------ ------
Diluted shares outstanding (used
in computation of diluted
earnings per share) 10,865 11,305
====== ======
NOTE E - NEW ACCOUNTING PRONOUNCEMENT
The Company adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," effective January 1, 2001. SFAS No. 133 requires
the Company to recognize all derivatives on the balance sheet at fair value.
If the derivative is a hedge, depending on the nature of the hedge, changes
in the fair value of the derivative will either be offset against the change
in fair value of the hedged assets, liabilities, or firm commitments through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. Any ineffective portion of a derivative's change in
fair value will be immediately recognized in earnings and any derivatives that
are not hedges must be adjusted to fair value through income. The Company's
interest rate swap agreements are derivative instruments and the changes in
fair value of these financial instruments, which are cash flow hedges, are
reported
in
Page 8 of 13
other comprehensive income. Based on the Company's derivative positions at
March 31, 2001, the Company recorded a net liability of $223,000 for the fair
value of its derivative portfolio and a corresponding charge to other
comprehensive income.
NOTE F - RECLASSIFICATIONS
Certain items in the accompanying March 31, 2000 consolidated financial
statements have been reclassified to conform to the 2001 presentation. The
reclassifications had no impact on stockholders' equity, net income or cash
flows as previously presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Revenues for the quarter ended March 31, 2001 decreased $18.1 million to $55.9
million from $74.0 million for the quarter ended March 31, 2000. Included in
revenues and cost of sales for the quarter ended March 31, 2001 are purchased
chassis. Comparable amounts for the quarter ended March 31, 2000 have been
reclassified to conform with this presentation. The Company's large national
fleet customers accounted for approximately 80% of the decreased revenues.
The quarter-to-quarter reduction in fleet revenue was a combination of fewer
orders and the change in the timing of fleet shipments in 2001 compared to
2000.
Gross profit as a percentage of revenues decreased to 15.4% for the quarter
ended March 31, 2001 compared to 17.0% for the quarter ended March 31, 2000.
Despite an improvement in material cost, overall gross profit declined due to
lower revenues, the fixed nature of certain overhead expenses and a 33.8%
increase in utility costs as a result of higher electrical and natural gas
prices.
Selling, general and administrative expenses as a percentage of revenues
increased to 10.7% for the quarter ended March 31, 2001 from 9.5% for the
quarter ended March 31, 2000. The reduced revenues adversely impacted this
area due to the fixed nature of certain general and administrative expenses.
Page 9 of 13
Interest expense decreased $136,567 to $742,926 for the quarter ended
March 31, 2001 from $879,493 for the prior year comparable quarter.
The interest expense reduction resulted from the reduction of long-term
debt which began during the second quarter of 2000 and continued through
the first quarter of 2001.
Net income for the three months ended March 31, 2001 was $1,174,211
compared to $2,809,107 for the three months ended March 31, 2000.
Basic and diluted earnings per share were $.11 for the quarter ended
March 31, 2001 compared to $.25 for the quarter ended March 31, 2000.
Liquidity and Capital Resources
Cash flows from operating activities and proceeds from the Company's
revolving credit agreement were the major sources of funds for
operations, capital expenditures and debt servicing during the first
quarter of 2001. The largest components of cash provided by operations
were increased accounts payable of $3.5 million, net income of $1.2
million and depreciation and amortization of $1.1 million. The increase
in accounts payable is a result of changing the Company's check run
dates from the 10th, 20th and 30th of each month to the 5th, 15th and
25th. This change was implemented to facilitate quicker month-end
closings and resulted in five additional days of accounts payable at
March 31, 2001.
The Company invested $.4 million in property, plant and equipment during
the first quarter of 2001 compared to $1.7 million during the first three
months of 2000. This reduction is a result of the Company's efforts to
limit 2001 capital expenditures to no more than the estimated 2001 annual
depreciation and amortization expenses of $4.0 million, assuming no plant
purchases or acquisitions.
The significant financing activities which used cash during the Company's
first quarter of 2001 included a $3.0 million net reduction in the components
of the Company's revolving credit agreement, a $1.0 million reduction of term
debt and $.4 million used to purchase 127,575 shares of treasury stock.
The Company believes that cash flows generated from operations and funds
available under the Company's revolving line of credit will be sufficient
to meet the Company's cash needs during 2001.
Page 10 of 13
Forward-Looking Statements
This report contains forward-looking statements, other than historical
facts, which reflect the view of the Company's management with respect to
future events. Although management believes that the expectations
reflected in such forward-looking statements are reasonable, it can give
no assurance that the expectations reflected in such forward-looking
statements are reasonable, and it can give no assurance that such
expectations will prove to have been correct. Important factors that
could cause actual results to differ materially from such expectations
include, without limitation, limitations on the availability of chassis
on which the Company's product is dependent, availability of raw materials
and severe interest rate increases. The Company assumes no obligation to
update the forward-looking statements or to update the reasons actual
results could differ from those contemplated by such forward-looking
statements.
Page 11 of 13
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Supreme Industries, Inc.'s annual meeting of stockholders was held on
May 2, 2001. Below is a summary of matters voted upon at that meeting.
a) The following individuals were elected Directors by the
holders of the Company's Class A Common Stock by a vote
of 7,129,714 to 564,254 with no abstentions:
Rick L. Horn
Rice M. Tilley, Jr.
H. Douglas Schrock
The following individuals were elected Directors by the
holders of the Company's Class B Common Stock by a vote
of 1,917,394 to 0 with no abstentions:
William J. Barrett
Robert J. Campbell
Thomas Cantwell
Herbert M. Gardner
Omer G. Kropf
Robert W. Wilson
b) The Company's 2001 Stock Option Plan was ratified by a
vote of 7,200,428 to 2,384,101 with 26,833 abstaining.
c) PricewaterhouseCoopers LLP was ratified as the
Company's independent auditors by a vote of 8,786,398
to 809,937 with 15,027 abstaining.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits: None
b) Reports on Form 8-K: None
Page 12 of 13
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.
SUPREME INDUSTRIES, INC.
DATE: May 10, 2001 BY: /s/ROBERT W. WILSON
Robert W. Wilson
Executive Vice President,
Treasurer, Chief Financial Officer
and Director (Principal Financial
and Accounting Officer)
(Signing on behalf of the Registrant
and as Principal Financial Officer.)
Page 13 of 13