FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(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, 1997.
- 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 0-5555
LIBERTY HOMES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1174256
(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. BOX 35, GOSHEN, INDIANA 46527
(Address of principal executive offices) (ZIP Code)
(219) 533-0431
(Registrant's telephone number, 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____
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Shares of Outstanding
Class at October 31, 1997
----- ----------------------
Class A Common Stock, $1.00 par value 2,262,296
Class B Common Stock, $1.00 par value 1,735,759
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INDEX
PART I - CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Pages
General 3
Item 1. Consolidated Financial Statements -
Liberty Homes, Inc.
Consolidated Balance Sheet, as of
September 30, 1997 and December 31, 1996 4
Consolidated Statement of Income, for the
three months ended September 30, 1997
and 1996 5
Consolidated Statement of Income, for the
nine months ended September 30, 1997
and 1996 6
Consolidated Statement of Cash Flows for the
nine months ended September 30, 1997
and 1996 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 9-10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
2
PART I - CONSOLIDATED FINANCIAL INFORMATION
GENERAL
The consolidated financial statements and footnotes thereto listed in the
Index on page 2 of this report have been prepared using generally accepted
accounting principles applied on a basis consistent with 1996. The results of
operations for the interim period presented are not necessarily indicative of
results to be expected for the year. The information included in this report
has not been examined prior to filing by an independent public accountant, and
is therefore, subject to any adjustments which may result from the year-end
examination of the Company's financial statements. The information furnished
herein reflects all adjustments (consisting of normal recurring adjustments)
which, in the opinion of management, are necessary for a fair presentation of
the results for the interim periods.
3
LIBERTY HOMES, INC.
CONSOLIDATED BALANCE SHEET
as of September 30, 1997 and December 31, 1996
ASSETS LIABILITIES
- ------ -----------
September 30, December 31, September 30, December 31,
1997 1996 1997 1996
------------- ------------ -------------- ------------
Current assets: Current liabilities:
Cash and cash equivalents... $13,591,000 $11,174,000 Accounts payable...... $ 7,306,000 $ 3,357,000
Short term investments...... 1,955,000 12,650,000 Dividend payable...... 280,000 295,000
Receivables................. 16,052,000 8,540,000 Accrued compensation
Prepaid income taxes........ 142,000 142,000 and payroll taxes... 2,614,000 2,098,000
Inventories................. 14,188,000 10,211,000 Income taxes payable.. -- 31,000
Deferred tax asset.......... 2,054,000 2,054,000 Other accrued liabilities 11,582,000 12,010,000
----------- ----------
Prepayments and other....... 1,211,000 1,192,000
----------- ----------- Total current liabilities 21,782,000 17,791,000
---------- -----------
Total current assets..... 49,193,000 45,963,000
----------- ---------- Deferred income taxes... 1,979,000 1,952,000
--------- ---------
Contingent liabilities (see notes)
SHAREHOLDERS' EQUITY
--------------------
Capital Stock:
Class A, $1 par value
Authorized - 7,500,000 Shares
Property, plant and equipment: Issued and outstanding - 2,262,000
in 1997 and 2,477,000 in 1996 2,262,000 2,477,000
Land........................ 1,195,000 1,195,000 Class B, $1 par value
Buildings and improvements.. 23,801,000 23,359,000 Authorized - 3,500,000 Shares
Machinery and equipment..... 18,247,000 17,413,000 Issued and outstanding - 1,736,000
---------- ---------- in 1997 and 1,746,000 in 1996 1,736,000 1,746,000
43,243,000 41,967,000
Other capital.................. 83,000 83,000
Less accumulated Retained earnings.............. 47,021,000 48,117,000
depreciation.............. 17,573,000 15,764,000 ------------ -----------
----------- ----------
25,670,000 26,203,000 Total shareholder's equity 51,102,000 52,423,000
----------- ---------- ------------ ------------
$74,863,000 $72,166,000 $ 74,863,000 $72,166,000
----------- ---------- ------------ ------------
----------- ---------- ------------ ------------
4
LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the three months ended September 30, 1997 and 1996
_______________
1997 1996
------ ------
Net sales $ 43,861,000 $ 45,403,000
Cost of sales 39,061,000 39,600,000
------------ ------------
Gross profit 4,800,000 5,803,000
Selling, general and administrative
expenses 4,012,000 3,796,000
------------ ------------
Operating income 788,000 2,007,000
Interest and other income
and expense 148,000 294,000
------------ ------------
Income before income taxes 936,000 2,301,000
Income tax expense 402,000 937,000
------------ ------------
Net income $ 534,000 $ 1,364,000
------------ ------------
------------ ------------
Share income per outstanding Common
Share $.13 $.32
----- -----
----- -----
Weighted average shares
outstanding 3,998,000 4,286,000
------------ ------------
------------ ------------
Cash dividend per share:
Class A Common Stock $.07 $.07
----- -----
----- -----
Class B Common Stock $.07 $.07
----- -----
----- -----
5
LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF INCOME
for the nine months ended September 30, 1997 and 1996
________________
1997 1996
------------ ------------
Net sales $125,180,000 $129,605,000
Cost of sales 110,766,000 112,781,000
------------ ------------
Gross profit 14,414,000 16,824,000
Selling, general and
administrative expenses 11,933,000 11,780,000
------------ ------------
Operating income & expense 2,481,000 5,044,000
Interest and other income
and expense 613,000 1,390,000(a)
------------ ------------
Income before income taxes 3,094,000 6,434,000
Income tax expense 1,248,000 2,573,000
------------ ------------
Net income $ 1,846,000 $3,861,000(a)
------------ ------------
------------ ------------
Share income per outstanding Common
Share $.45 $.89 (a)
----- -----
----- -----
Weighted average shares
outstanding 4,115,000 4,315,000
------------ ------------
------------ ------------
Cash dividend per share:
Class A Common Stock $.21 $.21
----- -----
----- -----
Class B Common Stock $.21 $.21
----- -----
----- -----
(a) Includes a $565,000 pretax gain on sale of an idle facility in other income
which results in $345,000 of net income after tax or $.08 per share during the
second quarter of 1997.
6
LIBERTY HOMES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine months ended September 30, 1997 and 1996
_______________
1997 1996
---- -----
Cash flows from operating activities:
Net income 1,846,000 $ 3,861,000
Adjustment to reconcile net income
to net cash used in operating activities -
Depreciation 1,809,000 1,490,000
Gain on sale of idle facility -- (565,000)
Deferred income taxes 27,000 (54,000)
Changes in assets and liabilities:
Receivables (7,512,000) (6,167,000)
Prepaid income taxes -- (182,000)
Inventories (3,977,000) (833,000)
Prepayments and other (19,000) (90,000)
Accounts payable 3,949,000 4,100,000
Accrued liabilities 88,000 383,000
Income taxes payable (31,000) (236,000)
Dividends payable (15,000) (6,000)
----------- ----------
Net cash provided by (used in) operating activities (3,835,000) 1,701,000
----------- ----------
Cash flows provided by (used in)
investing activities -
Proceeds from sale of idle facility -- 1,029,000
Additions to property, plant
and equipment (1,276,000) (4,576,000)
Redemption (purchase) of short-term
investments 10,695,000 1,950,000
----------- ----------
Net cash provided by (used in) investing activities 9,419,000 (1,597,000)
----------- ----------
Cash flows used in financing activities -
Cash dividends paid (853,000) (901,000)
Retirement of common stock (2,314,000) (1,115,000)
----------- ----------
Net cash used in financing activities (3,167,000) (2,016,000)
----------- ----------
Net increase (decrease)in cash and
cash equivalents 2,417,000 (1,912,000)
Cash and cash equivalents at beginning
of period 11,174,000 10,257,000
----------- ----------
Cash and cash equivalents at
end of period $13,591,000 $ 8,345,000
----------- ----------
----------- ----------
Supplemental disclosures of cash flow
information - cash paid during
the period for income taxes $ 1,170,000 $ 3,045,000
----------- ----------
----------- ----------
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SHORT TERM INVESTMENTS:
Short term investments consist primarily of certificates of deposits with
original maturities greater than 90 days.
INVENTORIES:
Inventories, consisting primarily of raw materials, are stated at the lower
of cost or market, with cost determined on a first-in, first-out basis.
CONTINGENT LIABILITIES:
Repurchase Obligations
The Company is contingently liable under terms of repurchase agreements
with various financial institutions which provide for the repurchase of its
homes sold to dealers under floor plan financing arrangements upon dealer
default. The Company's exposure to loss under such agreements is reduced by the
resale of the repurchased home. The Company believes any losses incurred under
outstanding repurchase agreements in excess of the accruals established as of
September 30, 1997 will not have a significant impact on the financial condition
of the Company.
Other Contingencies
Letters of Credit totaling $3,325,000 have been issued to the Company's
insurance carriers who have underwritten the Company's insurance programs.
REVENUE RECOGNITION:
The Company recognizes revenue when the product is shipped to independent
dealers.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cash, cash equivalents and short term investments as of September
30, 1997 and December 31, 1996 were $15,546,000 and $23,824,000,
respectively. Working capital as of September 30, 1997 and December
31, 1996 was $27,411,000 and $28,172,000, respectively. The decrease
of these items has been caused by accounts receivable and inventory
increases as the Company's operations expand over the normal year end
base, and by the funding of various property, plant and equipment
projects. Also during the nine months ended September 30, 1997 at a
cost of $2,314,000, the Company repurchased a total of 225,000 shares
of common stock under the program initiated in 1994 and subsequently
amended to acquire up to 600,000 shares of its common stock.
Net sales for the third quarter of 1997 were $43,861,000, a
decrease of $1,542,000 from the same quarter of 1996. The Company's
unit volume and sales during the 1997 quarter followed the national
market trend and was down. Net income for the quarter ended September
30, 1997 was $534,000 which was a $830,000 decrease from the same
quarter of 1996. The decrease in net income is the result of
increased costs at the new Alabama plant, a decrease in Company net
sales and a decrease in interest income.
As sales backlogs in the manufactured housing industry are
traditionally short and as dealer inventories do not normally
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fluctuate substantially, the orders that the Company receives are
indicative of the day-to-day retail sales activity of its products.
Any changes affecting the desire or ability of retail customers to
purchase, such as cost, availability of credit and unemployment, have
an immediate effect on the Company's operations.
10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 27. FINANCIAL DATA SCHEDULE
No reports on Form 8-K for July, August or September, 1997 have
been filed.
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SIGNATURE
---------
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.
LIBERTY HOMES, INC.
---------------------
Registrant
By /s/ MARC A. DOSMANN
---------------------
Marc A. Dosmann
Vice President -
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Dated November 14, 1997
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