1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
(X) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
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.)
65140 U.S. 33 East, P.O. Box 237
Goshen, Indiana 46526
(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 October 31, 1995
Class A 5,795,922
Class B 1,637,882
The index to Exhibits is at page 11 in the sequential
numbering system. Total number of pages: 12 .
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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
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 & 9
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 9
Signatures 10
Index to Exhibits 11
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Part I. Financial Information
Item 1. Financial Statements
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, December 31,
1995 1994
Assets (Unaudited)
Current assets:
Cash and cash equivalents $114,320 $273,720
Accounts receivable, net 16,887,653 15,733,321
Inventories 19,622,956 19,715,520
Deferred income taxes 1,060,572 1,060,572
Other current assets 225,668 228,161
Total current assets 37,911,169 37,011,294
Property, plant and equipment:
Land and improvements 1,970,021 1,840,393
Buildings and improvements 8,397,530 7,511,881
Leasehold improvements 4,826,595 4,678,091
Machinery and equipment 16,923,836 14,398,281
32,117,982 28,428,646
Less, Accumulated depreciation
and amortization 11,998,099 10,963,180
Property, plant and equipment, net 20,119,883 17,465,466
Intangible assets, net 2,162,832 2,315,314
Other assets 700,000 800,000
Total assets $60,893,884 $57,592,074
The accompanying notes are a part of the consolidated financial statements.
4
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets, Concluded
September 30, December 31,
1995 1994
Liabilities and Stockholders' Equity (Unaudited)
Current liabilities:
Current maturities of long-term debt $3,007,756 $2,947,776
Trade accounts payable 5,421,386 7,401,498
Accrued income taxes payable 556,681 812,242
Other accrued liabilities 6,493,367 5,799,353
Total current liabilities 15,479,190 16,960,869
Long-term debt 18,712,389 19,747,322
Deferred income taxes 888,740 888,740
Total liabilities 35,080,319 37,596,931
Stockholders' equity:
Class A Common Stock, $.10 par value 580,826 571,499
Class B Common Stock, convertible into
Class A Common Stock on a one-for-one
basis, $.10 par value 163,788 171,515
Additional paid-in capital 11,014,233 10,953,544
Retained earnings 14,211,204 8,455,071
Treasury stock, at cost, 13,757 shares
of Class A Common Stock (156,486) (156,486)
Total stockholders' equity 25,813,565 19,995,143
Total liabilities and stockholders'
equity $60,893,884 $57,592,074
The accompanying notes are a part of the consolidated financial statements.
5
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues $37,436,575 $33,025,050 $129,242,377 $101,672,793
Costs and expenses:
Cost of sales 30,722,524 27,486,574 107,493,688 85,048,368
Selling, general
and administrative 3,463,637 3,015,884 10,610,986 8,763,142
Interest 497,953 394,273 1,437,570 1,210,465
34,684,114 30,896,731 119,542,244 95,021,975
Income before income
taxes 2,752,461 2,128,319 9,700,133 6,650,818
Income taxes 1,123,000 896,000 3,944,000 2,835,000
Net income $1,629,461 $1,232,319 $5,756,133 $3,815,818
Earnings per share:
Primary $.20 $.17 $.74 $.51
Fully diluted .20 .16 .69 .49
Weighted average number
of shares of common
stock and common stock
equivalents:
Primary 7,960,381 7,437,440 7,782,073 7,410,311
Fully diluted 8,516,167 8,001,605 8,496,700 7,966,097
The accompanying notes are a part of the consolidated financial statements.
6
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net income $5,756,133 $3,815,818
Depreciation and amortization 1,307,418 1,087,008
Amortization of intangibles 152,482 152,482
Decrease in other assets 100,000 -----
Gain on sale of equipment (17,807) (38,304)
Changes in operating assets and
liabilities (2,600,934) (3,816,698)
Net cash provided by operating
activities 4,697,292 1,200,306
Cash flows from investing activities:
Acquisition of a business ----- (1,142,102)
Additions to property, plant and
equipment (3,965,851) (5,711,110)
Proceeds from sale of property, plant
and equipment 21,823 84,792
Net cash used in investing activities (3,944,028) (6,768,420)
Cash flows from financing activities:
Proceeds from revolving line of credit
and other long-term debt 51,526,425 50,970,546
Repayments of revolving line of credit
and other long-term debt (52,501,378) (46,254,283)
Proceeds from exercise of stock options
and warrants 62,289 305,097
Net cash provided by (used in)
financing activities (912,664) 5,021,360
Decrease in cash and cash equivalents (159,400) (546,754)
Cash and cash equivalents, beginning of
period 273,720 642,339
Cash and cash equivalents, end of
period $114,320 $95,585
The accompanying notes are a part of the consolidated financial statements.
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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, 1994 consolidated balance sheet data was derived
from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Certain items on the 1994 consolidated statement of income have
been reclassified to conform to the 1995 presentation. The
reclassifications had no impact on net income as previously
reported.
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:
September 30, December 31,
1995 1994
Raw materials $ 10,945,064 $ 11,718,902
Work-in-progress 2,756,858 2,716,238
Finished goods 5,921,034 5,280,380
$ 19,622,956 $ 19,715,520
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. Since 1989 the
Company has had favorable adjustments in the fourth quarter
resulting from the annual physical inventories. The Company is
continuing to refine its costing procedures for valuation of
interim inventories in an effort to minimize the annual book to
physical inventory adjustments.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
Revenues for the nine months ended September 30, 1995 increased
$27,569,584 to $129,242,377 while revenues for the three months
ended September 30, 1995 increased $4,411,525 to $37,436,575
when compared to the same periods in 1994. Net income for the
nine months ended September 30, 1995 increased $1,940,315 to
$5,756,133 while net income for the three months ended September
30, 1995 increased $397,142 to $1,629,461 when compared to the
same periods in 1994.
The increase in revenues reflects continuing strong demand for
the Company's diversified product lines in all market areas.
The acquisition of Murphy Body Company in August 1994 provided
the Company with expanded refrigerated product lines, however
these new product lines were a small percentage of the revenue
growth. The real contribution of the Murphy acquisition has
been the additional capacity provided for the Company's existing
refrigerated product lines.
Gross profit as a percentage of revenues was 16.8% and 16.4% for
the nine months ended September 30, 1995 and 1994, respectively.
Gross profit as a percentage of revenues was 17.9% and 16.8% for
the quarters ended September 30, 1995 and 1994, respectively.
The gross profit improvement is due to selling price increases
implemented during the past twelve months and improved direct
labor efficiency.
The increase in net income for the three months and nine months
ended September 30, 1995, when compared to the same periods in
1994, can be directly attributed to the increase in revenues for
the periods.
Liquidity and Capital Resources
Funds generated by operating activities were sufficient to
finance operations and capital expenditures and to service debt
obligations for the nine months ended September 30, 1995.
Availability under the Company's revolving credit agreement was
$2.8 million at September 30, 1995.
The ratio of current assets to current liabilities was 2.4 to 1
at September 30, 1995 compared to 2.2 to 1 at December 31, 1994.
Capital expenditures were $3,965,851 for the nine months ended
September 30, 1995. Major expenditures during the period were
for the construction of the Company's patented Fiberglass
Reinforced Panel (FRP) machine and the building to house it, the
construction of a Company-owned hardwood flooring facility in
Honduras and the purchase of property in Rhode Island for a
sales/distribution facility servicing the New England area.
These expenditures were funded with cash provided by operating
activities.
9
For the nine months ended September 30, 1995 operating
activities provided $4.7 million of cash compared to last year's
period ended September 30, 1994 when operating activities
provided $1.2 million of cash. The increase in cash provided
during the 1995 period as compared with the same period in 1994
resulted from the strong growth in earnings.
The Company believes cash flow from operations and funds
available from outside financing sources will be sufficient to
finance the balance of 1995 operations and planned capital
expenditures.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 11-Statement Regarding Computation of Per
Share Earnings
b) Reports on Form 8-K: None
10
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: 11-09-95 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)
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INDEX TO EXHIBITS
Exhibit No. Description Page No.
11 Statement Regarding Computation of
Per Share Earnings 12
12
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
(Amount in thousands, except per share data)
Nine Months
Ended September 30,
1995 1994
PRIMARY
Average shares outstanding 7,417 7,213
Net effect of dilutive stock
options and warrants - based
on the treasury stock method
using average market price 365 197
TOTAL 7,782 7,410
Net income $ 5,756 $ 3,816
Net income per share $ .74 $ .51
FULLY DILUTED
Average shares outstanding 7,417 7,213
Net effect of dilutive stock
options and warrants - based
on the treasury stock method
using the period-end market
price, if higher than the
average market price 524 197
Net effect of subordinated
convertible notes 556 556
TOTAL 8,497 7,966
Net income $ 5,756 $ 3,816
Interest expense reduction due to
assumed conversion of subordinated
convertible notes - net of tax 100 97
Net income as adjusted $ 5,856 $ 3,913
Net income per share $ .69 $ .49