UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|
For the Quarter Ended |
Commission File Number |
SPARTAN MOTORS, INC.
(Exact Name of Registrant as Specified in Its Charter)
|
Michigan |
38-2078923 |
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1165 Reynolds Road |
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Registrant's Telephone Number, Including Area Code: (517) 543-6400
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
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.
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Outstanding at |
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Common stock, $.01 par value |
12,286,128 shares |
SPARTAN MOTORS, INC.
INDEX
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Page |
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FORWARD-LOOKING STATEMENT |
3 |
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PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements: |
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Condensed Consolidated Balance Sheets - June 30, 2004 |
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Condensed Consolidated Statements of Operations - |
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Condensed Consolidated Statements of Operations - |
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Condensed Consolidated Statements of Shareholders' |
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Condensed Consolidated Statements of Cash Flows - |
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Notes to Condensed Consolidated Financial Statements |
11 |
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Item 2. |
Management's Discussion and Analysis of Financial |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
23 |
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Item 4. |
Controls and Procedures |
24 |
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PART II. OTHER INFORMATION |
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Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity |
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Item 4. |
Submission of Matters to a Vote of Security Holders |
25 |
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Item 6. |
Exhibits and Reports on Form 8-K |
26 |
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SIGNATURES |
28 |
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EXHIBIT INDEX |
30 |
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FORWARD-LOOKING STATEMENTS
This Form 10-Q contains statements that are not historical facts. These statements are called "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve important known and unknown risks, uncertainties and other factors and can be identified by phrases using "estimate," "anticipate," "believe," "project," "expect," "intend," "predict," "potential," "future," "may," "should" and similar expressions or words. Our future results, performance or achievements may differ materially from the results, performance or achievements discussed in the forward-looking statements. There are numerous factors that could cause actual results to differ materially from the results discussed in forward-looking statements, including, among others:
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• |
Changes in existing products liability, tort or warranty laws or the introduction of new laws, regulations or policies that could affect our business practices: these laws, regulations or policies could impact our industry as a whole, or could impact only those portions in which we are currently active, for example, laws regulating the design or manufacture of emergency vehicles or regulations issued by the National Fire Protection Association; in either case, our profitability could be injured due to an industry-wide market decline or due to our inability to compete with other companies that are unaffected by these laws, regulations or policies. |
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• |
Changes in environmental regulations: these regulations could have a negative impact on our earnings; for example, laws mandating greater fuel efficiency could increase our research and development costs, increase the cost of components and lead to the temporary unavailability of engines. |
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• |
Rapidly rising steel and component costs and the Company's limited ability to mitigate such cost increases based upon its supply contracts or to recover such cost increases with increases in selling prices of its products: such increases in costs could have a negative impact on our earnings. |
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• |
Changes in economic conditions, including changes in interest rates, financial market performance and our industry: these types of changes can impact the economy in general, resulting in a downward trend that impacts not only our business, but all companies with which we compete; or, the changes can impact only those parts of the economy upon which we rely in a unique fashion, including, by way of example: |
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• |
Factors that impact our attempts to expand internationally, such as the introduction of trade barriers in the United States or abroad. |
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• |
Changes in relationships with major customers: an adverse change in our relationship with major customers would have a negative impact on our earnings and financial position. |
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• |
Armed conflicts and other military actions: the considerable political and economic uncertainties resulting from these events could adversely affect our order intake and sales, particularly in the motorhome market. |
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• |
Factors that we have discussed in previous public reports and other documents filed with the Securities and Exchange Commission. |
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This list provides examples of factors that could affect the results described by forward-looking statements contained in this Form 10-Q. However, this list is not intended to be exhaustive; many other factors could impact our business and it is impossible to predict with any accuracy which factors could result in which negative impacts. Although we believe that the forward-looking statements contained in this Form 10-Q are reasonable, we cannot provide you with any guarantee that the anticipated results will be achieved. All forward-looking statements in this Form 10-Q are expressly qualified in their entirety by the cautionary statements contained in this section and you are cautioned not to place undue reliance on the forward-looking statements contained in this Form 10-Q. In addition to the risks listed above, other risks may arise in the future, and we disclaim any obligation to update information contained in any forward-looking statement.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SPARTAN MOTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
____________________________________
|
|
June 30, 2004 |
|
December 31, 2003 |
||
|
|
(Unaudited) |
|
(Audited) |
||
|
ASSETS |
|
|
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|
|
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|
|
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Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
22,667,592 |
|
$ |
18,480,770 |
|
Marketable securities |
|
2,798,768 |
|
|
- |
|
Accounts receivable, less allowance for |
|
|
|
|
|
|
doubtful accounts of $355,000 in 2004 |
|
|
|
|
|
|
and $408,000 in 2003 |
|
27,385,640 |
|
|
19,604,058 |
|
Inventories |
|
31,401,906 |
|
|
26,588,065 |
|
Deferred tax benefit |
|
2,826,347 |
|
|
3,326,847 |
|
Taxes receivable |
|
1,442,774 |
|
|
957,879 |
|
Other current assets |
|
765,384 |
|
|
1,440,744 |
|
Total current assets |
|
89,288,411 |
|
|
70,398,363 |
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
|
16,210,318 |
|
|
14,783,965 |
|
Goodwill |
|
4,543,422 |
|
|
4,543,422 |
|
Deferred tax benefit |
|
1,617,000 |
|
|
1,617,000 |
|
Other assets |
|
11,665 |
|
|
39,344 |
|
Total assets |
$ |
111,670,816 |
|
$ |
91,382,094 |
SPARTAN MOTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
____________________________________
|
June 30, 2004 |
December 31, 2003 |
|||||||||
|
(Unaudited) |
(Audited) |
|||||||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||||
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Current liabilities: |
|
|
|
|
|
|||||
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Accounts payable |
$ |
29,198,067 |
|
$ |
15,066,541 |
|||||
|
Accrued warranty |
|
2,490,496 |
|
|
2,538,204 |
|||||
|
Accrued compensation and related taxes |
|
2,768,719 |
|
|
2,746,117 |
|||||
|
Accrued vacation |
|
1,148,487 |
|
|
1,020,437 |
|||||
|
Deposits from customers |
|
9,181,130 |
|
|
6,796,949 |
|||||
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Other current liabilities and accrued expenses |
|
2,399,762 |
|
|
2,093,642 |
|||||
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Current portion of long-term debt |
|
10,006 |
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|
- |
|||||
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Total current liabilities |
|
47,196,667 |
|
|
30,261,890 |
|||||
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|||||
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Long-term debt, less current portion |
|
138,047 |
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- |
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Shareholders' equity: |
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|||||
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Preferred stock, no par value: 2,000,000 |
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shares authorized (none issued) |
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- |
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- |
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Common stock, $.01 par value: 23,900,000 |
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shares authorized, issued 12,278,678 and |
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12,198,112 shares in 2004 and 2003, respectively |
|
122,787 |
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|
121,981 |
|||||
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Additional paid in capital |
|
33,167,260 |
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32,228,967 |
|||||
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Retained earnings |
|
31,047,287 |
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|
28,769,256 |
|||||
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Accumulated other comprehensive loss |
|
(1,232 |
) |
|
- |
|||||
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Total shareholders' equity |
|
64,336,102 |
|
|
61,120,204 |
|||||
|
Total liabilities and shareholders' equity |
$ |
111,670,816 |
|
$ |
91,382,094 |
|||||
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
____________________________________
|
Three Months Ended June 30, |
||||||||||||
|
2004 |
2003 |
|||||||||||
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Sales |
$ |
78,205,924 |
|
$ |
55,116,986 |
|
||||||
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Cost of products sold |
|
66,793,246 |
|
|
48,088,270 |
|
||||||
|
Gross profit |
|
11,412,678 |
|
|
7,028,716 |
|
||||||
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|
|
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|
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|
||||||
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Operating expenses: |
|
|
|
|
|
|
||||||
|
Research and development |
|
1,840,231 |
|
|
1,853,752 |
|
||||||
|
Selling, general and administrative |
|
6,038,768 |
|
|
5,536,469 |
|
||||||
|
Operating income (loss) |
|
3,533,679 |
|
|
(361,505 |
) |
||||||
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|
|
|
|
|
||||||
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Other income (expense): |
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|
|
|
|
|
||||||
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Interest expense |
|
(103,029 |
) |
|
(117,024 |
) |
||||||
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Interest and other income |
|
158,179 |
|
|
128,508 |
|
||||||
|
Earnings (loss) from continuing operations before taxes |
|
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|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
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Taxes on income |
|
1,322,020 |
|
|
(128,901 |
) |
||||||
|
Net earnings (loss) from continuing operations |
|
2,266,809 |
|
|
(221,120 |
) |
||||||
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|
|
|
|
|
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||||||
|
Discontinued operations: |
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|
|
|
|
||||||
|
Gain on disposal of Carpenter, including applicable income |
|
|
|
|
|
|
||||||
|
tax benefit of $914,000 |
|
- |
|
|
955,178 |
|
||||||
|
Net earnings |
$ |
2,266,809 |
|
$ |
734,058 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Basic net earnings per share: |
|
|
|
|
|
|
||||||
|
Net earnings (loss) from continuing operations |
$ |
0.18 |
|
$ |
(0.02 |
) |
||||||
|
Gain from discontinued operations: |
|
|
|
|
|
|
||||||
|
Gain on disposal of Carpenter |
|
- |
|
|
0.08 |
|
||||||
|
Basic net earnings per share |
$ |
0.18 |
|
$ |
0.06 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Diluted net earnings per share: |
|
|
|
|
|
|
||||||
|
Net earnings (loss) from continuing operations |
$ |
0.18 |
|
$ |
(0.02 |
) |
||||||
|
Gain from discontinued operations: |
|
|
|
|
|
|
||||||
|
Gain on disposal of Carpenter |
|
- |
|
|
0.08 |
|
||||||
|
Diluted net earnings per share |
$ |
0.18 |
|
$ |
0.06 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Basic weighted average common shares outstanding |
|
12,268,000 |
|
|
12,122,000 |
|
||||||
|
Diluted weighted average common shares outstanding |
|
12,665,000 |
|
|
12,122,000 |
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Cash dividends per common share |
$ |
0.08 |
|
$ |
0.05 |
|
||||||
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
____________________________________
|
|
Six Months Ended June 30, |
|
||||
|
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
|
|
|
Sales |
$ |
140,311,023 |
|
$ |
115,534,426 |
|
|
Cost of products sold |
|
119,639,621 |
|
|
98,922,081 |
|
|
Gross profit |
|
20,671,402 |
|
|
16,612,345 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
3,628,690 |
|
|
3,602,351 |
|
|
Selling, general and administrative |
|
11,703,623 |
|
|
10,806,923 |
|
|
Operating income |
|
5,339,089 |
|
|
2,203,071 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
|
(206,247 |
) |
|
(168,802 |
) |
|
Interest and other income |
|
264,102 |
|
|
261,678 |
|
|
Earnings from continuing operations before taxes on income |
|
5,396,944 |
|
|
2,295,947 |
|
|
|
|
|
|
|
|
|
|
Taxes on income |
|
1,804,060 |
|
|
427,564 |
|
|
Net earnings from continuing operations |
|
3,592,884 |
|
|
1,868,383 |
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Gain on disposal of Carpenter |
|
- |
|
|
1,465,306 |
|
|
Net earnings |
$ |
3,592,884 |
|
$ |
3,333,689 |
|
|
|
|
|
|
|
|
|
|
Basic net earnings per share: |
|
|
|
|
|
|
|
Net earnings from continuing operations |
$ |
0.29 |
|
$ |
0.16 |
|
|
Gain from discontinued operations: |
|
|
|
|
|
|
|
Gain on disposal of Carpenter |
|
- |
|
|
0.12 |
|
|
Basic net earnings per share |
$ |
0.29 |
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per share: |
|
|
|
|
|
|
|
Net earnings from continuing operations |
$ |
0.28 |
|
$ |
0.15 |
|
|
Gain from discontinued operations: |
|
|
|
|
|
|
|
Gain on disposal of Carpenter |
|
- |
|
|
0.12 |
|
|
Diluted net earnings per share |
$ |
0.28 |
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding |
|
12,245,000 |
|
|
12,090,000 |
|
|
Diluted weighted average common shares outstanding |
|
12,614,000 |
|
|
12,445,000 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per common share |
$ |
0.08 |
|
$ |
0.05 |
|
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
____________________________________
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2004 |
12,198,112 |
|
$ 121,981 |
|
$ 32,228,967 |
|
$ 28,769,256 |
|
$ - |
|
$ 61,120,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from exercise |
|
|
|
|
|
|
|
|
|
|
|
|
|
of stock options, |
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax benefit |
119,466 |
|
1,195 |
|
1,042,545 |
|
- |
|
- |
|
1,043,740 |
|
|
Dividends paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and constructive |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
- |
|
- |
|
- |
|
3,592,884 |
|
- |
|
3,592,884 |
|
|
Other comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss on |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2004 |
12,278,678 |
|
$ 122,787 |
|
$ 33,167,260 |
|
$ 31,047,287 |
|
($ 1,232 |
) |
$ 64,336,102 |
|
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
____________________________________
|
|
Six Months Ended June 30, |
|
||||
|
|
2004 |
|
2003 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net earnings from continuing operations |
$ |
3,592,884 |
|
$ |
1,868,383 |
|
|
Adjustments to reconcile net earnings to net cash |
|
|
|
|
|
|
|
provided by operating activities: |
|
|
|
|
|
|
|
Depreciation |
|
1,118,122 |
|
|
1,006,748 |
|
|
Loss (gain) on sales of property, plant and equipment |
|
1,871 |
|
|
(6,100 |
) |
|
Tax benefit from stock options exercised |
|
149,000 |
|
|
232,000 |
|
|
Deferred taxes |
|
500,500 |
|
|
- |
|
|
Decrease (increase) in operating assets: |
|
|
|
|
|
|
|
Accounts receivable |
|
(7,781,582 |
) |
|
3,657,253 |
|
|
Inventories |
|
(4,813,841 |
) |
|
(4,518,473 |
) |
|
Taxes receivable |
|
(484,895 |
) |
|
(708,135 |
) |
|
Other assets |
|
703,039 |
|
|
(103,596 |
) |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
14,131,526 |
|
|
2,016,151 |
|
|
Accrued warranty |
|
(47,708 |
) |
|
(199,646 |
) |
|
Accrued taxes on income |
|
- |
|
|
(1,412,210 |
) |
|
Accrued compensation and related taxes |
|
22,602 |
|
|
(2,225,203 |
) |
|
Accrued vacation |
|
128,050 |
|
|
131,251 |
|
|
Deposits from customers |
|
2,384,181 |
|
|
1,375,266 |
|
|
Other current liabilities and accrued expenses |
|
306,120 |
|
|
228,745 |
|
|
Total adjustments |
|
6,316,985 |
|
|
(525,949 |
) |
|
Net cash provided by continuing operating activities |
|
9,909,869 |
|
|
1,342,434 |
|
|
Net cash provided by discontinued operating activities |
|
- |
|
|
1,522,500 |
|
|
Net cash provided by operating activities |
|
9,909,869 |
|
|
2,864,934 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
(2,566,330 |
) |
|
(1,009,004 |
) |
|
Proceeds from sales of property, plant and equipment |
|
19,984 |
|
|
6,100 |
|
|
Purchases of marketable securities |
|
(2,800,000 |
) |
|
- |
|
|
Net cash used in investing activities |
|
(5,346,346 |
) |
|
(1,002,904 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
148,053 |
|
|
- |
|
|
Dividends paid |
|
(966,059 |
) |
|
(642,488 |
) |
|
Purchase and retirement of stock |
|
(453,435 |
) |
|
(498,146 |
) |
|
Proceeds from the exercise of stock options |
|
894,740 |
|
|
754,461 |
|
|
Net cash used in financing activities |
|
(376,701 |
) |
|
(386,173 |
) |
|
Net increase in cash and cash equivalents |
|
4,186,822 |
|
|
1,475,857 |
|
|
Cash and cash equivalents at beginning of period |
|
18,480,770 |
|
|
8,081,639 |
|
|
Cash and cash equivalents at end of period |
$ |
22,667,592 |
|
$ |
9,557,496 |
|
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
______________________________________
Note 1
For a description of the accounting policies followed refer to the notes to the Spartan Motors, Inc. (the "Company") consolidated financial statements for the year ended December 31, 2003, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2004.
Note 2
The accompanying unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments that are necessary for the fair presentation of the Company's financial position as of June 30, 2004 and the results of operations and cash flows for the three- and six- month periods ended June 30, 2004 and 2003.
Note 3
The results of operations for the six-month period ended June 30, 2004 are not necessarily indicative of the results to be expected for the full year.
Note 4
Inventories consist of raw materials and purchased components, work in process and finished goods and are summarized as follows:
|
June 30, 2004 |
|
|
December 31, 2003 |
|
||
|
|
|
|
|
|
|
|
|
Finished goods |
$ |
4,782,738 |
|
|
$ |
5,902,783 |
|
|
Work in process |
|
7,351,226 |
|
|
|
5,203,881 |
|
|
Raw materials and purchased components |
|
22,320,529 |
|
|
|
17,715,999 |
|
|
Obsolescence reserve |
|
(3,052,587 |
) |
|
|
(2,234,598 |
) |
|
$ |
31,401,906 |
|
|
$ |
26,588,065 |
|
Note 5
The Company's products generally carry limited warranties, based on terms that are generally accepted in the marketplace. Some components included in the Company's end products (such as engines, transmissions, tires, etc.) may include manufacturers' warranties. These manufacturers' warranties are generally passed on to the end customer of the Company's products.
The Company's policy is to record a provision for the estimated cost of warranty-related claims at the time of the sale and periodically adjust the provision to reflect actual experience. The amount of warranty liability accrued reflects management's best estimate of the expected future cost of honoring the Company's obligations under the warranty agreements. Historically, the cost of fulfilling the Company's warranty obligations has principally involved replacement parts, labor and sometimes travel for field retrofit campaigns. The Company's estimates are based on historical experience, the number of units involved and the extent of features and components included in product models.
Note 5 (continued)
Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. Infrequently, a material warranty issue can arise which is beyond the scope of the Company's historical experience. The Company provides for any such warranty issues as they become known and are estimable. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters beyond the scope of the Company's historical experience.
Changes in the Company's warranty liability were as follows:
For the three months ended June 30:
|
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
|
|
|
Balance of accrued warranty at March 31 |
$ |
2,341,425 |
|
$ |
2,515,948 |
|
|
|
|
|
|
|
|
|
|
Warranties issued during the period |
|
579,181 |
|
|
344,651 |
|
|
|
|
|
|
|
|
|
|
Cash settlements made during the period |
|
(825,933 |
) |
|
(503,599 |
) |
|
|
|
|
|
|
|
|
|
Changes in liability for pre-existing warranties |
|
|
|
|
|
|
|
during the period, including expirations |
|
395,823 |
|
|
211,743 |
|
|
|
|
|
|
|
|
|
|
Balance of accrued warranty at June 30 |
$ |
2,490,496 |
|
$ |
2,568,743 |
|
For the six months ended June 30:
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
|
|
Balance of accrued warranty at January 1 |
$ |
2,538,204 |
|
$ |
2,768,389 |
|
|
|
|
|
|
|
|
|
Warranties issued during the period |
|
1,040,097 |
|
|
749,755 |
|
|
|
|
|
|
|
|
|
Cash settlements made during the period |
|
(1,502,956 |
) |
|
(1,187,117 |
) |
|
|
|
|
|
|
|
|
Changes in liability for pre-existing warranties |
|
|
|
|
|
|
|
during the period, including expirations |
|
415,151 |
|
|
237,716 |
|
|
|
|
|
|
|
|
|
Balance of accrued warranty at June 30 |
$ |
2,490,496 |
|
$ |
2,568,743 |
|
Note 6
The Company has repurchase agreements with certain third-party lending institutions that have provided floor plan financing to customers. These agreements provide for the repurchase of products from the lending institution in the event of the customer's default. The total contingent liability on June 30, 2004 was $0.6 million. Historically, losses under these agreements have not been significant and it is management's opinion that any future losses will not have a material effect on the Company's financial position or future operating results.
Note 7
On September 28, 2000, the Company's Board of Directors passed a resolution to cease funding of the Company's majority-owned subsidiary, Carpenter Industries, Inc. Carpenter's Board of Directors then voted on September 29, 2000 to begin the orderly liquidation of Carpenter. Because Carpenter was a separate segment of the Company's business, the operating results and the disposition of Carpenter's net assets were accounted for as a discontinued operation. Accordingly, previously reported financial results for all periods presented were restated to reflect this business as a discontinued operation.
Note 8
The Company follows Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its stock option plans. Under APB Opinion No. 25, no compensation expense is recognized because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, the Company's net earnings and net earnings per share for the three and six months ended June 30, 2004 and 2003 would have been the pro forma amounts indicated below.
|
|
Three Months Ended June 30, |
|
|
|||||
|
|
2004 |
|
|
2003 |
|
|
||
|
Net earnings |
|
|
|
|
|
|
|
|
|
As reported |
$ |
2,266,809 |
|
|
$ |
734,058 |
|
|
|
Deduct: Compensation expense - fair value method |
|
(98,790 |
) |
|
|
(75,445 |
) |
|
|
Add: Income tax benefit for disqualifying |
|
|
|
|
|
|
|
|
|
Pro forma |
$ |
2,253,947 |
|
|
$ |
667,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per share |
|
|
|
|
|
|
|
|
|
As reported |
$ |
0.18 |
|
|
$ |
0.06 |
|
|
|
Pro forma |
|
0.18 |
|
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per share |
|
|
|
|
|
|
|
|
|
As reported |
$ |
0.18 |
|
|
$ |
0.06 |
|
|
|
Pro forma |
|
0.18 |
|
|
|
0.05 |
|
|
Note 8 (continued)
|
|
Six Months Ended June 30, |
|||||