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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended
December 31, 1995.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 of Incorporation) (IRS Employer Identification No.)
P.O. Box 237, 65140 U.S. 33 East, Goshen, Indiana 46526
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) - (219) 642-3070
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock ($.10 Par Value) American Stock Exchange
1993 Callable Warrants American Stock Exchange
(Title of each class) (Name of Each Exchange on Which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
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 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in the definitive proxy or
information statements incorporated by reference in Part III of the Form
10-K or any amendment hereto. X
The aggregate market value of the voting stock held by non-affiliates of the
registrant at March 15, 1996: $45,930,935
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 15, 1996
Class A Common Stock ($.10 Par Value) 7,127,289 shares
Class B Common Stock ($.10 Par Value) 1,402,976 shares
Documents Incorporated by Reference
Parts of Form 10-K Into Which the
Document Document is Incorporated
Portions of the Proxy Statement
for Annual Meeting of Shareholders
to be held on May 2, 1996 Part III
The Index to Exhibits is on page in the sequential numbering system.
Total pages
PART I
ITEM 1. BUSINESS.
History
Supreme Industries, Inc., a Delaware corporation, (the "Company"),
formerly ESI Industries, Inc. ("ESI") and prior to that Exploration Surveys,
Inc. was incorporated in 1979, and its former wholly-owned subsidiary, TGC
Industries, Inc. ("TGC"), was incorporated in 1980. ESI and TGC were both
engaged in the geophysical services business principally through data-bank
sales of gravity information and by conducting gravity, magnetic, and
seismic surveys under contracts to companies engaged in exploring for oil
and gas.
In January of 1984, Supreme Corporation ("Supreme") was formed as a
wholly-owned subsidiary of ESI to acquire a company which was engaged in the
business of manufacturing, selling, and repairing specialized truck bodies
and related equipment. Thus, from 1984 through June 30, 1986, ESI was
engaged in two separate and distinct businesses through its operating
subsidiaries.
In June 1986, the Boards of Directors of ESI and TGC approved a spin-off
transaction whereby ESI transferred its gravity and magnetic related
geophysical assets to TGC, and all of the shares of TGC owned by ESI were
distributed as a stock dividend to ESI's shareholders. From July 31, 1986,
the effective date of the spin-off, through December 30, 1986, ESI acted
solely as a holding company for Supreme.
In order to permit a diversification of operations, in December 1986
the Company, through a newly formed, wholly-owned subsidiary, Contempri
Homes, Inc., ("Contempri"), purchased all of the assets and assumed
substantially all of the liabilities of Contempri Homes, Inc., a
Pennsylvania corporation engaged in the business of producing modular homes.
On July 22, 1987, Supreme's newly formed, wholly-owned subsidiary,
Supreme-Jannell Corporation, a Texas corporation, ("Supreme-Jannell"),
purchased the operations and certain assets and assumed certain liabilities
of Jannell & Son Body Co., a Rhode Island corporation engaged in both truck
body manufacturing and sales and truck body repair and truck equipment sales
at facilities in Rhode Island. Supreme-Jannell did not purchase the truck
repair portion of Jannell & Son Body Co.
On March 2, 1990, Supreme Corporation purchased land and a manufacturing
facility in Jonestown, Pennsylvania, for the purpose of manufacturing truck
bodies and selling them in the Mid-Atlantic and Northeastern states. This
facility produces bodies that had previously been manufactured in leased
facilities located in Woonsocket, Rhode Island. On May 11, 1990,
Supreme-Jannell Corporation's name was changed to "Supreme Mid-Atlantic
Corporation" to reflect the wider area being serviced.
On December 7, 1992, the Boards of Directors of the Company and
Contempri approved a spin-off of Contempri whereby ESI would distribute to
the stockholders of record of ESI on December 15, 1992 one unit, consisting
of one share of Common Stock of Contempri and one 1993 Callable Warrant to
purchase one-half share of the Company's Class A Common Stock, for every
three shares of ESI Class A or Class B Common Stock, held. The spin-off was
effective for financial and accounting purposes as of December 31, 1992.
Subsequent to the spin-off, the Company has been operating in one line of
business as a manufacturer of specialized truck bodies through its operating
subsidiary, Supreme Corporation. At the Company's annual meeting in June 1993
the Company's shareholders approved the change of its name to Supreme
Industries, Inc.
On August 29, 1994, the Company acquired the business operations and
substantially all of the operating assets of Murphy Body Company, Inc.,
Wilson, North Carolina. The acquisition provided additional refrigerated
product lines that the Company did not currently produce as well as adding
additional capacity for the Company's existing product lines. The
acquisition also provides better market penetration for all of the Company's
product lines into Virginia and North and South Carolina.
Financial Information About Industry Segments
The Company operated in two industry segments, Specialized Truck Body
Manufacturing and Modular Home Manufacturing from December 1986 through
December 1992. The Company currently operates in one industry segment,
Specialized Truck Body Manufacturing, since the spin-off of Contempri.
General Description of the Company's Business
Specialized Truck Body Industry
The specialized truck body industry consists of companies that
manufacture and/or distribute specialized truck bodies and install them and
other equipment on truck chassis. The truck chassis, each of which consists
of an engine, frame with wheels, and in some cases a cab, are manufactured
by third parties who are typically major automotive or truck companies.
Such companies typically do not build specialized truck bodies. See
"Competition."
Supreme's products are medium-priced with prices generally ranging from
$1,000 to $45,000. Supreme's truck bodies and custom trailers are offered in
aluminum or fiberglass reinforced plywood panel ("FRP") construction and are
available in lengths of 9 to 45 feet and heights up to 13 feet, 6 inches.
Examples of optional equipment offered by Supreme include lift gates,
cargo-handling equipment, customized doors, special bumpers, ladder racks,
and refrigeration equipment, which are configured with truck bodies to meet
the end-user's needs. Supreme also makes its own fiberglass wind deflectors
under the name of Fuel Shark, which reduce wind resistance and improve fuel
efficiency. Supreme is not in the business of manufacturing recreational
vehicles or long-distance aluminum truck-trailers. The following is a brief
summary of Supreme's products:
Van bodies. Supreme's van bodies are typically fabricated
up to 28 feet in length with prepainted aluminum or FRP
panels, aerodynamic front and side corners, hardwood floors
and various door configurations to accommodate end-user
loading and unloading requirements. This product is used
for diversified dry freight transportation.
Refrigerated Chiller (trademark) insulated van bodies.
Chiller (trademark) vans are insulated FRP bodies which can
accommodate controlled temperature and refrigeration needs of
end-users. All fiberglass exterior laminated walls are
corrosion resistant and utilize foam insulation which permits
varying levels of temperature to as low as minus twenty degrees
Fahrenheit.
Kold King (trademark) aluminum insulated van bodies.
Supreme's advances in insulated foam technology have created
this aluminum insulated body with greater strength, less
weight and better thermal efficiency.
Nordica (trademark) fiberglass refrigerated truck bodies.
Nordica (trademark) bodies allow the customer to use a
smaller refrigeration unit. The bodies incorporate
seamless gel-coated fiberglass walls and fiberglass
pultrusion to create a lightweight body that is strong
and durable.
Iner-City (trademark) cutaway van bodies. Aluminum or FRP
cutaway van bodies are installed only on cutaway chassis
which are available with or without access to the cargo area
from the cab. The Iner-City (trademark) cutaway van body is
similar to the regular van body except for floor construction
and shorter lengths (10 feet to 15 feet) as compared with van
bodies which are constructed to lengths of up to 28 feet.
Iner-City (trademark) walk-in van bodies. Supreme manufactures
its walk-in vans on a rail truck chassis having no cab.
Supreme fabricates the driver's compartment and body using
FRP panels and aluminum. Some uses for this product include
the distribution of food products and small packages.
Commander (trademark) fiberglass van bodies. The Commander
(trademark) is a one-piece fiberglass molded body used
principally in the lawn care industry. The corrosion
resistant body has an interior design which helps control
chemical spills or damage from corrosion and enhances the
clean-up process.
Spartan mini-bodies. Spartan mini-bodies are produced in
three different configurations and designed to be mounted
on small trucks for diversified commercial use.
StarTrans (trademark) shuttle buses. In June of 1985, Supreme
introduced its proprietary StarTrans (trademark) line of
shuttle bus products. The StarTrans (trademark) shuttle
buses have seating capacities for 12 to 29 people and are
offered with a variety of seating arrangements and with such
options as wheelchair lifts, custom interiors, and special
exterior paint schemes. The shuttle bus line features an
improved aerodynamic exterior design and is intended for use
by hotels, nursing homes, car leasing companies, and airport-
related users.
StarTrans (trademark) mid-size buses. Supreme's StarTrans
(trademark) Bus Division introduced a mid-size bus at its
national bus distributors meeting in the summer of 1995.
The bus is offered in lengths of up to 31 feet with a capacity
of up to 35 passengers. This product will serve the public
transit and tour markets and provide the Company's dealer
network with a more comprehensive product line.
Customized trailers. Supreme manufactures a variety of
customized trailers for special needs, including mobile
laboratories, antique and race car haulers, and trailers
for the broadcasting industry.
Stake bodies. Stake bodies are flatbeds with various
configurations of removable sides. The stake body is
utilized for intercity distribution of products, as well
as for a broad range of agricultural transportation needs.
Chiller (trademark), Kold King (trademark), Nordica
(trademark), Iner-City (trademark), Commander (trademark),
Spartan, StarTrans (trademark), and Fuel Shark are trademarks
used by Supreme Corporation in its marketing of truck bodies
and buses. Chiller (trademark), Kold King (trademark), Nordica
(trademark), Iner-City (trademark), Commander (trademark) and
StarTrans (trademark) are trademarks registered in the U.S.
Patent and Trademark Office.
Some examples of specialized truck bodies that are not manufactured by
Supreme are dump bodies, utility bodies and garbage packers. Neither Supreme
nor any of its competitors manufacture every type of specialized truck body.
Supreme intends to continue to expand its product line, but there is no
assurance that it will do so.
Manufacturing
Supreme's manufacturing facilities are located in Goshen, Indiana;
Griffin, Georgia; Cleburne, Texas; Riverside, California; Jonestown,
Pennsylvania and Wilson, North Carolina. Supreme's management estimates
that on the average, Supreme's plants and equipment are being used at
approximately 50%-90% of capacity on a one-shift basis.
Supreme builds specialized truck bodies and installs other equipment on
truck chassis, most of which are provided by bailment pool arrangements or
are owned by dealers or end-users. These truck bodies are built on an
assembly line from engineered structural components, such as floors, roofs,
and wall panels. These components are manufactured from Supreme's
proprietary designs and are installed on the truck chassis. Supreme then
installs optional equipment and applies any special finishes that the
customer has specified. At each step of the manufacturing and installation
process, Supreme conducts quality control procedures to insure that the
products meet its customers' specifications. Supreme's products are
generally produced to firm orders and are designed and engineered by Supreme.
Order levels will vary depending upon price, competition, prevailing
economic conditions and other factors.
Supreme has designed and built its own fabricating equipment for many
of its manufacturing processes. Supreme has its own fiberglass manufacturing
facilities that process and assemble the FRP panels and other fiberglass
products as required. The Company has recently completed the construction
of a new manufacturing facility that will produce FRP panels on a continuous
basis. The patented process will increase the Company's capacity to produce
panels on a cost efficient basis. Once fully operational, the facility will
supply all of the Company's internal needs and also allow it to market FRP
panels to other users. Based on knowledge and experience in the industry,
management believes Supreme is one of the few specialized truck body
manufacturers having this capability.
Supreme has established a captive hardwood flooring manufacturing
facility in Honduras to provide a dependable source of supply at favorable
costs. The facility is located near abundant supplies of several hardwood
species that are suitable for truck flooring. The facility will have
adequate capacity to supply all of the Company's internal needs as well as
allow the Company to market excess capacity to other users of hardwood
flooring.
Supreme provides limited warranties against construction defects in its
products. These warranties generally provide for the replacement or repair
of defective parts or workmanship for five years following the date of
retail sale. Supreme carries liability insurance for all its products.
Supreme does not purchase truck chassis for inventory. Supreme accepts
shipment of truck chassis owned by dealers or end-users, for the purpose of
installing and/or manufacturing its specialized truck bodies on such chassis.
In the event of a labor disruption or other uncontrollable event adversely
affecting the limited number of companies which manufacture and/or deliver
such truck chassis, Supreme's level of manufacturing could be substantially
reduced. Approximately 20% of the chassis involved in Supreme's
manufacturing has been secured through bailment or consignment agreements
with three major chassis manufacturers that provide for truck chassis pools
at each of Supreme's manufacturing facilities.
Raw Materials
Supreme does not have any long-term raw material contracts and is
dependent upon suppliers of lumber, fiberglass, aluminum and steel for its
manufacturing. However, there are several readily available sources for
these raw materials. In addition, as discussed above, Supreme has
established a captive hardwood flooring manufacturing facility in Honduras
to provide a dependable source of supply at favorable costs. From time to
time, Supreme's operations may be affected by labor disruptions experienced
by its raw material suppliers.
Marketing
Supreme normally sells the truck body and/or equipment that has been
installed on the truck chassis to either truck equipment distributors, truck
dealers or directly to end-users. Truck bodies purchased by a truck dealer
from Supreme are sold by the dealer to its own customers. Since Supreme or
its distributors (and not the truck dealers) generally service all Supreme
products sold by the truck dealers, each truck dealer is normally located
within relatively close geographic proximity to Supreme or the distributor
supplying such dealer.
Supreme's distributor/dealer network consists of approximately 85 truck
equipment distributors and 500 truck dealers. Management believes that this
large distributor/dealer network, coupled with Supreme's geographically-
dispersed plant sites, gives Supreme a distinct marketing advantage over its
competitors. Supreme generally delivers its products within 3 to 6 weeks
after the receipt of orders.
Approximately 50 employees are engaged in direct sales. Supreme
engages in direct advertising in trade publications, trade shows and
cooperative advertising campaigns with distributors.
Competition
Specialized truck bodies are produced by many companies, most of which
compete on a regional basis. Management believes that Supreme enjoys a
competitive advantage based upon its established distributor/dealer network
and six production facilities and four distribution centers. Truck chassis
manufacturers have not generally shown an interest in manufacturing truck
bodies because such manufacturers' highly-automated assembly line operations
do not lend themselves to the efficient production of a wide variety of
highly specialized and different truck bodies and equipment.
Trademarks
The Company owns and maintains trademarks that are used in marketing
specialized products manufactured by Supreme. Management believes that
these trademarks have significant customer goodwill.
Working Capital
The Company utilizes its credit facilities to finance its accounts
receivable and to purchase inventories. Pursuant to agreements with the
holders of certain long-term indebtedness, the Company is required to
maintain a minimum working capital of not less than $7,500,000 and a working
capital ratio of at least 1.5 to 1.0.
Major Customers
No single customer or group of customers under common control accounted
for 10% or more of the Company's revenues for the fiscal year ended December
31, 1995.
Environment Regulation
The Company's manufacturing operations are subject to federal, state,
and local statutes and regulations relating to the protection of the
environment, work site safety standards, and product size and weight
limitations. Such regulations increase the Company's cost of doing business.
Because other companies are subject to similar regulations, such regulations
are not believed to have an adverse effect on the Company's competitive
position.
Employees
As of December 31, 1995, the Company employed approximately 1,400
employees, none of whom are represented by a collective bargaining unit.
The Company considers its relations with its employees to be satisfactory.
Executive Officers of the Registrant
The name, age, business background, position held with the Registrant
and tenure of each of the Registrant's executive officers are set forth
below. No family relationship exists among any of the executive officers.
Served as
Executive Positions With
Name, Age, and Business Experience Officer Since Company
Herbert M. Gardner, 56 1979 Chairman of the
Senior Vice President of Janney Board, President
Montgomery Scott Inc., investment bankers,
since 1978; Chairman of the Board of the
Company, a manufacturer of specialized
truck bodies and shuttle buses, since 1979
and President of the Company since June
1992; Chairman of the Board and a Director
of Contempri Homes, Inc., a manufacturer of
modular homes, since 1987; Shelter
Components Corporations, Director, a supplier
to the manufactured housing and recreational
vehicle industries; Nu Horizons Electronics
Corp., Director, an electronic component
distributor; Transmedia Network, Inc.,
Director, a specialized restaurant savings
charge card company; Hirsch International Corp.,
Director, importer of computerized embroidery
machines, supplies, and developer of embroidery
machine application software; TGC Industries,
Inc., Director, a company engaged in the
geophysical services industry and a specialty
packaging manufacturer and distributor; The
Western Transmedia Company, Inc., Director, a
franchisee of Transmedia Network principally
for the State of California, a specialized
finance charge card company.
Omer G. Kropf, 54 1984 Executive Vice
Executive Vice President of the Company since President
August 1985; President and Chief Executive
Officer of Supreme Corporation, a subsidiary
of the Company, since January 19, 1984; Vice
President of Contempri Homes, Inc., a
manufacturer of modular homes, from 1987 to
February, 1994; President of a specialized
truck body manufacturing company from 1974
through 1983, the predecessor of Supreme
Corporation.
William J. Barrett, 56 1979 Secretary and
Senior Vice President of Janney Montgomery Assistant
Scott Inc., investment bankers, since 1966; Treasurer
Secretary and Assistant Treasurer of the
Company and a Director since 1979; Secretary
and Assistant Treasurer of Contempri Homes,
Inc., and a Director of Contempri Homes,
Inc., a manufacturer of modular homes, since
1987; Esmor Correctional Services, Inc.,
Director, a private management and operation
firm of secure and non-secure corrections
and detention facilities for federal, state
and local corrections agencies; Frederick's
of Hollywood, Inc., Director, an apparel
marketing company; Shelter Components
Corporation, Chairman of the Board, a supplier
to the manufactured housing and recreational
vehicle industries; TGC Industries, Inc.,
Director, a geophysical services company and a
specialty packaging manufacturer and
distributor; The Western Transmedia Company,
Inc., Director, a franchisee of Transmedia
Network principally for the State of California,
a specialized finance charge card company.
Robert W. Wilson, 51 1990 Executive Vice
Treasurer, Executive Vice President, and President,
Chief Financial Officer of the Company Treasurer
since December 1992; Vice President of and Chief
Finance of Supreme Corporation since 1988; Financial
Senior Auditor Price Waterhouse LLP, 1969 Officer
through 1973; Controller Riblet Products
Inc., 1973 through 1979; and Vice President
Riblet Products Inc., 1979 through 1988.
ITEM 2. PROPERTIES.
Supreme has manufacturing operations located in Goshen, Indiana;
Griffin, Georgia; Cleburne, Texas; Riverside, California; Jonestown,
Pennsylvania and Wilson, North Carolina. These manufacturing facilities
aggregate approximately 851,000 square feet of buildings, of which
approximately 351,000 square feet are owned by Supreme and approximately
500,000 square feet are leased.
Of the leased properties, approximately 280,000 square feet of buildings
and approximately 63 acres of land located in Goshen, Indiana and Griffin,
Georgia are leased from a limited partnership controlled by certain members
of the Company's Board of Directors. In addition, a 100,000 square foot
parking lot is leased from one of the Company's Executive Vice Presidents,
and a former owner of Supreme's predecessor. Such board members and
Executive Vice President are herein referred to as the "Affiliated Lessors."
The Company's leases with the Affiliated Lessors (other than the lease
covering the parking lot) will continue through July 25, 2000. Supreme has
the right to renew the leases (except the lease covering the parking lot)
for one additional five-year period through July 25, 2005.
Supreme has an option to purchase all of the properties (excluding the
parking lot) leased to Supreme by the Affiliated Lessors any time during
the lease period or renewal period. The purchase price will be equal to the
higher of: (a) $2,765,000; or (b) $2,765,000 times the figure obtained as a
result of dividing (i) the Consumer Price Index for the month preceding the
month during which the option is exercised, by (ii) the Consumer Price
Index for June of 1988.
Supreme Mid-Atlantic began operating in a refurbished manufacturing
facility in June of 1990. A 22,500 square foot addition to Supreme
Mid-Atlantic was completed in December 1992. During 1994 Supreme purchased a
22,500 square foot manufacturing plant adjacent to its Cleburne plant as
well as constructing a 14,000 square foot addition to its existing plant.
Also in 1994, the Company purchased 36,760 square feet of manufacturing space
in Jonestown, Pennsylvania and a 48,000 square foot fiberglass parts
manufacturing facility in Goshen, Indiana that was previously leased. The
Company leases approximately 90,000 square feet of manufacturing space
in Wilson, North Carolina.
Supreme continues to mount truck bodies made in Jonestown,
Pennsylvania, at an owned facility in Woonsocket, Rhode Island for sales to
customers in New England. In addition, Supreme operates sales/distribution
facilities in Apopka, Florida and Houston and San Antonio, Texas.
Supreme leases a 75,000 square foot manufacturing facility in Riverside,
California, that expires October 31, 1996. In preparation for the
expiration of this lease, the Company has signed a contract to purchase a
100,000 square foot manufacturing facility and 20 acres of land in southern
California. The facility will provide the Company additional capacity to
serve the large West Coast markets.
The Company is constructing a new facility in Ligonier, Indiana which
will greatly expand its ability to produce Fiberglass Reinforced Plywood
panels. The facility is scheduled to begin operation in the second quarter
of 1996. Initially it will produce for the Company's internal needs, but it
is anticipated that sufficient capacity will be available by the fourth
quarter to allow the Company to market to other users of FRP panels in the
trucking and construction industries.
The Company is also constructing a new facility in La Ceiba, Honduras
which will provide the Company with a reliable, cost efficient source of
hardwood flooring used in its truck bodies. Production is scheduled to
start in the second quarter of 1996. Once fully operational it is projected
that production capacity will allow the Company to market to other users of
hardwood flooring.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary
course of its business activities. Each of these matters is subject to
various uncertainties, and it is possible that some of these matters may be
resolved unfavorably to the Company. The Company has established accruals
for matters that are probable and reasonably estimable. Management believes
that any liability that may ultimately result from the resolution of these
matters in excess of accruals and or amounts provided by insurance coverage
will not have a material adverse effect on the consolidated financial
position or results of operation of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted by the Company to a vote of the Company's
security holders, through the solicitation of proxies or otherwise, during
the fourth quarter of the year ended December 31, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Class A Common Stock is traded on the American Stock
Exchange (ticker symbol STS). The number of record holders of the Class A
Common Stock as of March 15, 1996, was approximately 428. Due to the number
of shares held in nominee or street name, it is likely that there are more
than 428 beneficial owners of the Company's Class A Common Stock.
The Company's Class A Common Stock closed at $7.5625 on the American
Stock Exchange on March 15, 1996, on which date there were 7,127,289 shares
of Class A Common Stock outstanding. High and low closing prices of the
Class A Common Stock for the two year period ended December 31, 1995 were:
Closing Price of Class A Common Stock
High Low
October 1 - December 31, 1995 8 9/16 6 1/2
July 1 - September 30, 1995 9 7 7/8
April 1 - June 30, 1995 8 1/8 5 7/16
January 1 - March 31, 1995 5 13/16 4 13/16
October 1 - December 31, 1994 5 9/16 4 7/16
July 1 - September 30, 1994 5 11/16 4 11/16
April 1 - June 30, 1994 5 11/16 4 7/16
January 1 - March 31, 1994 6 1/4 4 1/16
All of the 1,402,976 outstanding shares of the Company's Class B Common
Stock were held by a total of 14 persons as of March 15, 1996. There is no
established trading market for the Class B Common Stock. Class B Common
Stock is freely convertible on a one-for-one basis into an equal number of
shares of Class A Common Stock and ownership of the Class B shares is deemed
to be beneficial ownership of the Class A shares under Rule 13d-3(d)(1)
promulgated under the securities Exchange Act of 1934.
ITEM 6. SELECTED FINANCIAL DATA.
Consolidated Income
Statement Data:
(in millions, except per For the Years Ended December 31,
share amounts) 1995 1994 1993 1992 1991
Net revenue $ 164.5 $ 137.3 $ 114.4 $ 84.0 $ 61.3
Income from continuing
operations 7.2 5.5 4.3 2.1 1.1
Loss from discontinued
operation --- --- --- (2.1) (3.1)
Net income (loss)(1) 7.2 5.5 4.3 0.0 (2.0)
Net income (loss) per share:(2)
Primary earnings per share
Continuing operations $ .84 $ .67 $ .56 $ .40 $ .22
Discontinued operations --- --- --- (.39) (.59)
Net income (loss)(1) $ .84 $ .67 $ .56 $ .01 $ (.37)
Fully diluted earnings per
share:
Continuing operations $ .80 $ .64 $ .51 $ .30 $ .17
Consolidated Balance
Sheet Data:(1)
(in millions)
Working capital $ 23.1 $ 20.0 $ 13.9 $ 9.7 $ 11.3
Total assets 62.4 57.6 45.5 34.8 45.9
Long-term debt
(excluding current
maturities) 18.0 19.7 13.6 13.8 16.7
Stockholders' equity 28.8 20.0 14.0 6.6 17.0
Notes:
(1) Consolidated income statement and balance sheet data for 1992 and 1991
includes Contempri Homes, Inc., which was accounted for as a discontinued
operation and spun-off effective December 31, 1992.
(2) All per share amounts have been restated for the 10% common stock
dividend paid on December 22, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Comparison of 1995 with 1994
Revenues for 1995 increased 19.7% to $164.5 million from the $137.3
million recorded in 1994, establishing a new record. In addition, 1995 was
the fourth consecutive year of increased revenues over the comparable prior
year. Each of the Company's six manufacturing facilities achieved double
digit growth. The gain reflects the breadth of the Company's product line
and the broad variety of industries and customers served. Total unit
shipments were up approximately 8% with the balance of the increased
revenues resulting from changes in product mix and selective price increases.
Revenue at Supreme's StarTrans (trademark) line of shuttle buses also
increased significantly during 1995. This product is sold through our
extensive distributor network to end users that represent essentially
non-cyclical markets.
The Company's gross profit percentage in 1995 improved to 17.2%,
compared with 16.8% in 1994. The improvement can be attributed to direct
labor efficiencies on larger production runs during the year and to the
fixed nature of certain components of the overhead pool that do not rise
when revenues increase. Offsetting these improvements were increases in the
cost of the Company's basic raw materials. The Company implemented two
price increases during the year in both its truck body and bus product lines
to mitigate the effect of raw material cost increases. However, based on
production cycles, benefits from the selling price increases were delayed an
average 8 to 12 weeks from the announcement while the higher raw material
costs were more immediate in their impact on cost of goods sold.
Selling, general and administrative expenses were $14.3 million or 8.7%
of revenue in 1995, compared with $12.1 million or 8.8% of revenue in 1994.
Selling expenses increased $1.0 million during the year, but as a percentage
of revenues remained constant at 3.8%. Many categories within the selling
classification, e.g. literature, promotions, travel and entertainment, and
commissions, were approximately the same percentage of revenue in each period.
Administrative expenses increased $1.1 million but declined to 4.8% of
revenues from 5.0% in 1994. The decline can be attributed to those items
that do not correlate directly with revenues.
Interest expense increased to $1.8 million in 1995 from $1.6 million in
1994. It declined as a percentage of revenues to 1.1% in the current year
compared to 1.2% in 1994. The rise in interest expense can be directly
correlated to the higher levels of inventories and accounts receivable
financed by borrowings required to support the 19.7% revenue increase.
The Company's effective income tax rate of 40.6% in 1995 was comparable
to the 41.4% rate in 1994.
Comparison of 1994 with 1993
Revenue rose for the third consecutive year to a new record of $137.3
million from $114.4 million in 1993. Revenues at Supreme's manufacturing
facilities, strategically located in all major U.S. markets, increased from
12.6% to in excess of 30%. These increases resulted from the strength of
the many diverse industries that Supreme serves with its wide range of
specialized truck bodies.
Revenue from Supreme's shuttle bus product line also increased
significantly when compared to the prior year.
The Company's gross profit percentage declined to 16.8% in 1994 from
17.7% in 1993. The Company experienced significant raw material cost
increases in mid-1994. The Company absorbed these increased expenses and
experienced lower gross margin by delaying product price increases. However,
the Company did implement two price increases of approximately 3% in April,
and 5% in August. The Company honored all orders placed prior to the
effective date of the price increases, delaying actual realization of such
increases by approximately four months.
Direct labor expenses also increased during the year reducing the gross
profit percentage. A scarcity of skilled labor, primarily in the Midwest
and Northeast, caused prevailing wage rates to increase while actual
productivity declined. In addition, start up costs associated with the
Company's additions to its Pennsylvania and Texas manufacturing facilities
adversely affected direct labor expenses.
The Company's overhead expenses as a percentage of revenues declined in
1994 due in part to those items in the overhead pool that do not vary
directly with revenues. The Company has also made considerable progress in
improving its safety record and has significantly reduced its worker's
compensation insurance expense.
Selling, general and administrative expenses were $12.1 million or 8.8%
of revenue in 1994 compared with $11.0 million or 9.6% of revenue in 1993.
The decline of .8% can be attributed to those items that do not vary directly
with revenues while the increase of $1.1 million is due to those components
that do vary directly with revenues.
Interest expense declined to $1.63 million in 1994 from $1.83 million in
1993. The decline is primarily due to the refinancing of the Company's
revolving line of credit and term note. Prior to refinancing, the Company
was paying 2.25% above prime on both the revolver and term loan. The
Company's current revolver is at the prime rate or certain basis points above
LIBOR while the term debt is at 6.4%. The impact of lower borrowing rates
was partially offset by increased borrowings to fund increased working
capital requirements.
The Company's effective income tax rate on $9.3 million of pre-tax
income in 1994 was 41.4% compared to 42.7% on pre-tax income of $7.4 million
in 1993. The slight decrease in the effective tax rate was caused by
variations in 1994 compared to 1993 in income in states where the Company is
subject to state income taxes.
Liquidity and Capital Resources
In 1995, cash flows from operations and funding available under the
Company's revolving credit agreement were adequate to finance operations and
provide for capital expenditures during the year. The Company has a $12.0
million revolving line of credit. The Company utilized its full availability
under the revolver from December, 1994 to May, 1995 to finance working capital
needs necessitated by inventory requirements, in preparation for substantial
fleet orders that are normally concentrated within the first five months of
each year. To meet stringent delivery schedules, the Company must build
finished goods inventory in advance of their actual delivery date. The
Company is currently negotiating an increase in the amount available under
its revolving line of credit, and expects to have adequate availability under
its increased line of credit to support its working capital needs.
The major capital expenditure during the year was $1.8 million spent on
the Company's patented FRP (fiberglass reinforced panel) machine. The
facility is substantially complete and will begin operation early in 1996.
The Company has also invested $1.0 million in a laminated hardwood
flooring production facility to manufacture hardwood floors for its
specialized truck bodies. This facility is scheduled to begin supplying the
Company's hardwood flooring needs in the second quarter of 1996.
The Company also acquired a distribution facility in Woonsocket, Rhode
Island for approximately $300,000 to replace a previously leased location.
This facility serves the New England states. In addition, the Company has
signed a contract to purchase a 100,000 square foot manufacturing facility
on 20 acres of land in Southern California to replace a leased facility. The
Company has purchased land in Louisville, Kentucky area to further expand its
distribution. The Company plans to increase its distribution capabilities
and has under consideration facilities in St. Louis, Missouri, and Denver,
Colorado.
The Company's working capital was $23.1 million at December 31, 1995
compared to $20.0 million at December 31, 1994. The ratio of current assets
to current liabilities improved to 2.6 to 1 from 2.2 to 1 at the end of 1994.
The Company's debt to equity ratio improved to 1.2 to 1 at the end of 1995
compared to 1.9 to 1 at the end of 1994. The increases in accounts
receivable of $.6 million and inventories of $.4 million are the result of
the strong revenue increase in 1995.
Other Matters
The Company's cost of raw materials continued to increase during 1995
but has currently shown signs of stabilizing. The Company has implemented
selling price increases throuthout the year to offset these increased costs.
While selling price increases hav substantially held, the Company did not
benefit immediately from such increases due to extensive backlogs in place
at the time of their implementation.
The Company expects to adopt the disclosure requirements of Statement of
Financial Accounting Standards No. 123 ("SFAS No. 123") in 1996 and,
accordingly, the implementation of SFAS No. 123 will not impact the Company's
consolidated balance sheet or income statement.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required to be filed pursuant to this Item 8
are included elsewhere in this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Directors - Certain information required by Item 10 of Form 10-K
is hereby incorporated by reference from the Company's definitive proxy
statement, which will be filed pursuant to Regulation 14A within 120 days
after the Company's year end for the year covered by this report, under the
caption "Election of Directors" of the proxy statement.
(b) Executive Officers - See "Executive Officers of the Registrant" in
Item 1 of Part I of this form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 of Form 10-K is hereby incorporated
by reference from the Company's definitive proxy statement, which will be
filed pursuant to Regulation 14A within 120 days after the Company's year
end for the year covered by this report, under the caption "Executive
Compensation" of the proxy statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 of Form 10-K is hereby incorporated
by reference from the Company's definitive proxy statement, which will be
filed pursuant to Regulation 14A within 120 days after the Company's year
end for the year covered by this report, under the caption "Security
Ownership of Certain Beneficial Owners and Management" of the proxy
statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 13 of Form 10-K is hereby incorporated
by reference from the Company's definitive proxy statement, which will be
filed pursuant to Regulation 14A within 120 days after the Company's year
end for the year covered by this report, under the caption "Transactions with
Management" of the proxy statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Form 10-K
Page
a. Documents filed as part of this report:
1. Financial Statements
Report of Independent Accountants A-1
Consolidated Balance Sheets as of
December 31, 1995 and 1994 A-2
Consolidated Statements of Income for the
years ended December 31, 1995, 1994 and 1993 A-3
Consolidated Statements of Stockholders'
Equity for the years ended December 31,
1995, 1994 and 1993 A-4
Consolidated Statements of Cash Flows for
the years ended December 31, 1995, 1994
and 1993 A-5
Notes to the Consolidated Financial
Statements A-6
through A-16
2. Financial Statement Schedule:
Report of Independent Accountants on
Financial Statement Schedule S-1
Schedule II - Valuation and Qualifying
Accounts S-2
Schedules other than those listed above are omitted because they are not
required or the information is included in the Notes to the Consolidated
Financial Statements.
3. Exhibits:
See Index to Exhibits
b. Reports on Form 8-K
No report on Form 8-K was filed during the three month period ended
December 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Supreme Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Supreme
Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Supreme
Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
January 26, 1996
A-1
Supreme Industries, Inc. And Subsidiaries
Consolidated Balance Sheets
as of December 31, 1995 and 1994
ASSETS
1995 1994
Current assets:
Cash and cash equivalents $ 106,740 $ 273,720
Accounts receivable, net of allowance
for doubtful accounts of $430,000
in 1995 and 1994 16,336,446 15,733,321
Inventories 20,144,271 19,715,520
Deferred income taxes 910,918 1,060,572
Other current assets 448,665 228,161
Total current assets 37,947,040 37,011,294
Property, plant and equipment, net 21,454,511 17,465,466
Intangible assets, net 2,112,004 2,315,314
Other assets 913,107 800,000
Total assets $ 62,426,662 $ 57,592,074
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 2,609,815 $ 2,947,776
Trade accounts payable 6,343,766 7,401,498
Accrued wages and benefits 3,456,139 3,177,585
Accrued income taxes 138,682 812,242
Other accrued liabilities 2,259,740 2,621,768
Total current liabilities 14,808,142 16,960,869
Long-term debt 18,031,553 19,747,322
Deferred income taxes 784,086 888,740
Total liabilities 33,623,781 37,596,931
Commitments and contingencies (Note I)
Stockholders' equity:
Preferred Stock, $1 par value;
authorized 1,000,000 shares, none
issued
Class A Common Stock, $.10 par value;
authorized 15,000,000 shares, issued
6,738,610 shares in 1995 and 5,714,986
shares in 1994 673,861 571,499
Class B Common Stock, convertible into
Class A Common Stock on a one-for-one
basis, $.10 par value; authorized
5,000,000 shares, issued 1,801,663
shares in 1995 and 1,715,150 shares
in 1994 180,166 171,515
Additional paid-in capital 18,911,421 10,953,544
Retained earnings 9,193,919 8,455,071
Treasury stock, Class A Common Stock,
at cost, 15,132 shares in 1995 and
13,757 shares in 1994 (156,486) (156,486)
Total stockholders' equity 28,802,881 19,995,143
Total liabilities and
stockholders' equity $ 62,426,662 $ 57,592,074
The accompanying notes are a part of the consolidated financial statements.
A-2
Supreme Industries, Inc. And Subsidiaries
for the years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Revenue:
Net sales $ 163,449,175 $ 136,545,869 $ 113,992,833
Other income 1,001,804 803,757 400,218
164,450,979 137,349,626 114,393,051
Costs and expenses:
Cost of sales 136,224,658 114,233,435 94,090,831
Selling, general and
administrative 14,255,971 12,146,018 11,027,891
Interest 1,781,350 1,632,590 1,825,760
152,261,979 128,012,043 106,944,482
Income before income taxes 12,189,000 9,337,583 7,448,569
Income taxes 4,949,000 3,865,000 3,181,000
Net income $ 7,240,000 $ 5,472,583 $ 4,267,569
Earnings per share:
Primary $ .84 $ .67 $ .56
Fully diluted $ .80 $ .64 $ .51
Weighted average number of
shares of common stock and
common stock equivalents:
Primary 8,594,104 8,143,373 7,549,590
Fully diluted 9,261,114 8,755,544 8,674,021
The accommpanying notes are a part of the consolidated financial statements.
A-3
Supreme Industries, Inc. And Subsidiaries
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1995, 1994 and 1993
Class A Class B Additional
Common Stock Common Stock Paid-in- Retained Treasury
Shares Amount Shares Amount Capital Earnings Stock Total
Balance, January 1, 1993 3,306,096 $ 330,610 1,786,515 $ 178,651 $ 6,220,871 $ --- $ (156,486) $ 6,573,646
Net income --- --- --- --- --- 4,267,569 --- 4,267,569
Conversion of 35,319
shares of Class B
Common Stock to Class
A Common Stock 35,319 3,532 (35,319) (3,532) --- --- --- ---
Conversion of $365,572
face amount of 8.6%
convertible Series B
notes 77,125 7,712 --- --- 357,860 --- --- 365,572
Conversion of $500,000
face amount of 11%
convertible Series D
notes 800,000 80,000 --- --- 420,000 --- --- 500,000
Conversion of $294,750
face amount of 11%
convertible Series E
notes 471,600 47,160 --- --- 247,590 --- --- 294,750
Conversion of $1,002,500
face amount of 8.5%
convertible Series F
notes 445,555 44,555 --- --- 957,945 --- --- 1,002,500
Exercise of stock
options 41,131 4,113 --- --- 80,082 --- --- 84,195
Exercise of warrants 292,154 29,216 --- --- 918,840 --- --- 948,056
Balance, December 31,
1993 5,468,980 546,898 1,751,196 175,119 9,203,188 4,267,569 (156,486) 14,036,288
Net income --- --- --- --- --- 5,472,583 --- 5,472,583
Conversion of 36,046
shares of Class B
Common Stock to
Class A Common Stock 36,046 3,604 (36,046) (3,604) --- --- --- ---
Exercise of stock
options 12,001 1,201 --- --- 11,133 --- --- 12,334
Exercise of warrants
and related activity 197,959 19,796 --- --- 1,739,223 (1,285,081) --- 473,938
Balance, December 31,
1994 5,714,986 571,499 1,715,150 171,515 10,953,544 8,455,071 (156,486) 19,995,143
Net income --- --- --- --- --- 7,240,000 --- 7,240,000
Conversion of 77,268
shares of Class B
Common Stock to Class
A Common Stock 77,268 7,727 (77,268) (7,727) --- --- --- ---
Conversion of $1,500,000
face amount of 8.6%
convertible Series B
notes 316,455 31,645 --- --- 1,468,355 --- --- 1,500,000
Exercise of stock
options 17,400 1,740 --- --- 65,998 --- --- 67,738
10% Common Stock dividend 612,501 61,250 163,781 16,378 6,423,524 (6,501,152) --- ---
Balance, December 31,
1995 6,738,610 $ 673,861 1,801,663 $ 180,166 $ 18,911,421 $ 9,193,919 $ (156,486) $ 28,802,881
The accompanying notes are a part of the consolidated financial statements.
A-4
Supreme Industries, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
for the years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Cash flows from operating activities:
Net income $ 7,240,000 $ 5,472,583 $ 4,267,569
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,772,421 1,497,689 1,422,509
Amortization of intangibles
and other assets 203,310 203,310 360,937
Provision for losses on
doubtful receivables 317,885 446,550 419,000
Deferred income taxes 45,000 (110,000) (457,000)
(Gain) loss on sale of
property, plant, and
equipment (20,852) (38,303) 43,245
Changes in operating assets
and liabilities, excluding
effects of acquisition in
1994:
Accounts receivable (996,010) (2,809,345) (2,582,728)
Inventories (428,751) (2,660,372) (4,923,781)
Other current assets (220,504) 5,322 131,933
Trade accounts payable (1,057,732) (2,840,852) 2,818,422
Accrued liabilities (757,034) 1,071,679 1,203,417
Net cash provided by
operating activities 6,097,733 238,261 2,703,523
Cash flows from investing activities:
Acquisition of a business --- (1,142,102) ---
Additions to property, plant and
equipment (5,849,425) (6,992,143) (3,959,371)
Proceeds from sale of property,
plant and equipment 108,811 86,284 86,230
Increase in intangible and other
assets (38,107) --- (1,210,846)
Net cash (used in)
investing activities (5,778,721) (8,047,961) (5,083,987)
Cash flows from financing activities:
Proceeds from revolving line of
credit and other long-term debt 68,634,487 75,083,334 123,509,375
Repayments of revolving line of
credit and other long-term debt (69,188,217) (68,128,525)(122,189,183)
Proceeds from exercise of stock
options and warrants 67,738 486,272 1,032,251
Net cash provided by
(used in) financing
activities (485,992) 7,441,081 2,352,443
Decrease in cash and cash equivalents (166,980) (368,619) (28,021)
Cash and cash equivalents, beginning
of year 273,720 642,339 670,360
Cash and cash equivalents, end of
year $ 106,740 $ 273,720 $ 642,339
Supplemental disclosure of cash
flow information:
Cash paid during the year for:
Interest, net of capitalized
interest in 1995 $ 1,777,487 $ 1,524,166 $ 1,849,571
Income taxes 5,577,560 4,105,652 4,037,573
Noncash investing and financing
activities:
Liabilities assumed in
acquisition of a business --- 937,842 ---
Conversion of convertible notes
to shares of Class A Common
Stock 1,500,000 --- 2,162,822
Conversion of Class B Common
Stock to Class A Common Stock 7,727 3,604 3,532
Exchange of warrants for Class
A Common Stock --- 389,617 ---
Exchange of Class A Common Stock
upon exercise of warrants --- 1,154,580 ---
10% Common Stock dividend 6,501,152 --- ---
The accompanying notes are a part of the consolidated financial statements.
A-5
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements
for the years ended December 31, 1995, 1994 and 1993
A. NATURE OF OPERATIONS AND ACCOUNTING POLICIES.
Supreme Industries, Inc. and its subsidiaries (collectively the
"Company") manufacture specialized truck bodies that are mounted on new
truck chassis produced by others. The Company's truck body products
include cut-away and dry freight van bodies, refrigerated units and stake
bodies. The Company also manufactures shuttle buses and trailers.
The following is a summary of the significant accounting policies used
in the preparation of the accompanying consolidated financial statements:
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of Supreme Industries, Inc. and its
wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Revenue Recognition and Concentration of Credit Risk - The production
of specialized truck bodies and shuttle buses starts when an order is
received from the customer. Revenue is recognized when the unit is
shipped to the customer. Concentration of credit risk is limited due
to the large number of customers and their dispersion among many
different industries and geographic regions. The Company performs an
ongoing credit evaluation of its customers' financial condition, and
credit is extended to customers on an unsecured basis. Future credit
losses are provided for currently through the allowance for doubtful
accounts and actual credit losses are charged to the allowance when
incurred.
Earnings Per Share - Primary earnings per share is determined by
dividing net income by the weighted average number of shares of
common stock (both classes) and common stock equivalents, if dilutive,
outstanding during the year. Fully diluted earnings per share includes
the impact of convertible debt (see Note D).
Cash and Cash Equivalents - The Company considers all highly liquid
investments with original maturities of three months or less to be
cash equivalents.
Fair Value of Financial Instruments - The carrying amounts of cash
equivalents, accounts receivable and accounts payable approximated
fair value as of December 31, 1995, because of the relatively short
maturities of these instruments. The carrying amount of senior
long-term debt, including current maturities, approximated fair value
as of December 31, 1995, based upon terms and conditions currently
available to the Company in comparison to terms and conditions of the
senior long-term debt. The Company's subordinated debt (see Note D)
is convertible into the Company's Class A Common Stock. Based upon
the market value of the Company's Class A Common Stock at December 31,
1995, and the conversion ratio, the fair value of the subordinated
debt approximates $2.2 million compared to its carrying value of
$1,134,428.
Inventories - Inventories are stated at the lower of cost or market,
with cost determined using the first-in, first-out method.
A-6
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
A. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Concluded.
Property, Plant and Equipment - Property, plant and equipment are
recorded at cost. For financial reporting purposes, depreciation is
provided based on the straight-line method over the estimated
useful lives of the assets. Amortization of leasehold improvements,
for financial reporting purposes, is determined by the straight-line
method over the lesser of the useful life of the asset or term of
the lease.
Upon sale or other disposition of assets, the cost and related
accumulated depreciation and amortization are removed from the
accounts and any resulting gain or loss is reflected in operations.
Expenditures for maintenance and repairs are charged to operations
as incurred. Maintenance and repair expense was $1,865,031,
$1,895,990 and $1,535,129 for the years ended December 31, 1995,
1994 and 1993, respectively. Betterments and major renewals are
capitalized and recorded in the appropriate asset accounts.
Capitalized Interest - Interest costs capitalized during the
construction period of new buildings, machinery and equipment were
$200,000 for the year ended December 31, 1995 (none in 1994 or 1993).
Intangible Assets - Intangible assets at December 31, 1995 and 1994
consist of goodwill - $3,379,031 and patents - $325,000, and are
recorded at cost and shown net of accumulated amortization.
Amortization of goodwill is provided using the straight-line method
over the estimated benefit period (16 to 25 years), and patents are
amortized over seven years using the straight-line method.
Accumulated amortization at December 31, 1995 and 1994 was
$1,592,027 and $1,388,717, respectively.
The Company periodically reviews the carrying value of goodwill to
assess recoverability and impairments would be recognized in
operating results if a permanent diminution in value were to occur.
Warranty - Estimated warranty costs are provided at the time of
sale and are based upon historical experience and have averaged
less than one percent (1%) of net sales.
Income Taxes - Deferred income taxes are determined using the
liability method.
Use of Estimates in the Preparation of Financial Statements - The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
A-7
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
B. INVENTORIES.
Inventories consist of the following:
1995 1994
Raw materials $ 11,599,585 $ 11,718,902
Work-in-progress 3,113,990 2,716,238
Finished goods 5,430,696 5,280,380
Total $ 20,144,271 $ 19,715,520
C. PROPERTY, PLANT AND EQUIPMENT.
Property, plant and equipment consists
of the following:
1995 1994
Land and improvements $ 2,123,848 $ 1,840,394
Buildings and improvements 7,688,414 7,064,572
Leasehold improvements 4,845,816 4,678,090
Machinery and equipment 15,072,557 13,649,494
Construction in progress 4,153,012 1,196,096
33,883,647 28,428,646
Less, Accumulated depreci-
ation and amortization 12,429,136 10,963,180
Property, plant and
equipment, net $ 21,454,511 $ 17,465,466
A-8
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
D. LONG-TERM DEBT.
Long-term debt consists of the following:
1995 1994
Senior Debt:
Revolving line of credit $ 11,872,822 $ 10,977,934
Term note 3,333,333 4,333,333
Industrial Revenue Bond,
principal and interest, at
a variable rate, payable
in monthly installments in
alternate years, with final
maturity in August 2010,
collateralized by real estate 766,667 800,000
Real estate mortgages:
8%, due in September 1998 754,793 822,556
7.75%, due in May 1999 611,937 729,348
Variable rate, due in July 2001 656,528 705,698
7.5%, due in October 1997 471,065 508,024
9%, due in September 1997 342,802 355,224
9.5%, due in June 2009 284,531 294,569
8.1%, due in January 1999 254,640 276,466
8%, due in May 1998 134,408 182,171
7.25%, due in May 1996 23,414 75,347
19,506,940 20,060,670
Subordinated Debt:
8.6% convertible Series B
notes, due in December 1996 1,134,428 2,634,428
Total debt 20,641,368 22,695,098
Less, Current maturities 2,609,815 2,947,776
Long-term debt $ 18,031,553 $ 19,747,322
A-9
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
D. LONG-TERM DEBT, Concluded.
The revolving line of credit, term note and a letter of credit
facility are part of a master credit agreement (the "Credit
Agreement"). The Credit Agreement provides for borrowings under the
revolving line of credit of up to $12 million, subject to certain
limitations based on a percentage of accounts receivable and
inventories and the amount of outstanding letters of credit. Interest
on outstanding borrowings under the revolving line of credit is based
on the bank's prime rate or certain basis points above the LIBOR rate
depending on the pricing option selected and the Company's leverage
ratio, as defined. The revolving line of credit also requires a
commitment fee ranging from 3/16% to 1% per annum depending on the
Company's leverage ratio and based upon the annualized average unused
portion. All amounts outstanding under the revolving line of credit
will be due at maturity, April 30, 1997. The term note provides for
monthly payments of $83,333 plus interest through April 1999. Interest
on the term note is based on a fixed rate of 6.4%. The Credit
Agreement makes letters of credit available up to $1,000,000.
Outstanding borrowings under the Credit Agreement are collateralized
by accounts receivable, inventories and equipment.
The Credit Agreement contains, among other matters, certain
restrictive covenants including maintenance of a minimum consolidated
tangible net worth of $12,750,000, adjusted quarterly for 50% of
cumulative net income of the Company after the effective date of the
agreement ($19,106,300 at December 31, 1995), minimum consolidated
working capital of $4 million and restrictions on capital expenditures
and dividend payments.
The Company's cash management system and revolving line of credit are
designed to maintain zero cash balances and, accordingly, checks
outstanding in excess of bank balances are classified as additional
borrowings under the revolving line of credit. Checks outstanding in
excess of bank balances at December 31, 1995 and 1994 aggregated
$2,073,000 and $2,978,000, respectively.
The Company's subordinated debt is subordinated in right of payment
to all existing and future senior indebtedness of the Company. Series
B notes are convertible into shares of the Company's Class A Common
Stock at a conversion price of $4.31 prior to December 15, 1996. The
Company's subordinated debt is payable to related parties (entities
which are considered related parties because of direct and beneficial
ownership of the Company's Common Stock). The Series B notes are part
of a master note agreement which includes certain restrictive
covenants including maintenance of a minimum working capital ratio,
minimum consolidated working capital of $7.5 million and limitations
on incurrence of additional indebtedness.
Maturities of long-term debt for each of the next five years are as
follows: 1996 - $2,609,815; 1997 - $14,028,777; 1998 $1,932,989;
1999 - $806,536 and 2000 - $131,110.
A-10
Supreme Industries Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
E. RETIREMENT PLAN.
The Company maintains a defined contribution plan which covers
substantially all employees of the Company and its participating
subsidiaries who have reached the age of twenty-one years and have
completed one year of credited service. The plan provides that
eligible employees can contribute from one to fifteen percent of
their annual compensation and the Company will match fifteen percent
(ten percent prior to March 1, 1994) of employees' contributions up
to six percent of the employees' compensation. The Board of Directors
may increase or decrease the Company's contribution on a year-by-year
basis. Expense related to this plan for the years ended December 31,
1995, 1994 and 1993 was $149,249, $90,387 and $44,384, respectively.
F. STOCKHOLDERS' EQUITY.
Common Stock
On November 29, 1995, the Board of Directors declared a 10% common
stock dividend payable on December 22, 1995, to stockholders of record
on December 15, 1995. Earnings per share and weighted average shares
outstanding have been restated to reflect the 10% stock dividend.
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock
($1 par value), of which none has been issued. The Board of Directors
is vested with the authority to determine and state the designations
and relative preferences, limitations, voting rights, if any, and
other rights of the preferred shares.
Convertible Class B Common Stock
Class B Common Stock is convertible into Class A Common Stock on a
one-for-one basis. Holders of Class A Common Stock are entitled to
elect one-third of the Board of Directors, rounded to the lowest whole
number. Holders of Class B Common Stock elect the remainder of the
directors. Conversions of Class B Common Stock to Class A Common Stock
for the years ended December 31, 1995 and 1994 were 77,268 shares and
36,046 shares, respectively.
A-11
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
F. STOCKHOLDERS' EQUITY, Continued.
Stock Options
During 1992, the Company adopted a 1992 Stock Option Plan (the "1992
Plan") under which 330,000 (adjusted for the 10% stock dividend)
shares of Class A Common Stock were reserved for grant. Under the
terms of the 1992 Plan, both incentive stock options and non-statutory
stock options can be granted by a specially designated Stock Option
Committee. The option terms, such as restrictions on exercise, are as
determined by the Stock Option Committee. At December 31, 1995,
153,010 options were outstanding under the 1992 Plan of which 96,506
were exercisable.
At December 31, 1995, there were 22,000 options outstanding and
exercisable under the 1982 Incentive Stock Option Plan. This plan
expired on January 19, 1992.
Information on stock options for the years ended December 31, 1995
and 1994 is summarized as follows:
Number
of Shares Price Range
Outstanding, January 1, 1994 176,501 $.75 to $5.38
Expired (3,000) 5.38
Exercised (12,001) .75 to 1.25
Granted 15,000 6.00
Outstanding, December 31, 1994 176,500 1.25 to 6.00
Exercised (17,400) 3.89
Effect of 10% stock dividend 15,910 1.14 to 5.45
Outstanding, December 31, 1995 175,010 1.14 to 5.45
Options exercisable at December 31, 1995 118,506
As of December 31, 1995 and 1994, 157,850 shares (adjusted for the 10%
stock dividend) were reserved for future options.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), was
issued. This statement requires the fair value of stock options and
other stock-based compensation issued to employees to either be
included as compensation expense in the income statement, or the pro
forma effect on net income and earnings per share of such compensation
expense to be disclosed in the notes to the financial statements. The
Company expects to adopt SFAS No. 123 on a disclosure basis only, and
the disclosure requirements are effective for fiscal years beginning
after December 15, 1995. As such, implementation of SFAS No. 123 will
not impact the Company's consolidated balance sheet or income
statement.
A-12
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
F. STOCKHOLDERS' EQUITY, Continued.
Callable Warrants
As of December 31, 1995, there were 2,480,762 outstanding 1993 Callable
Warrants. Each 1993 Callable Warrant entitles the holder to purchase
.55 share of Class A Common Stock at an exercise price of $5.45 per
whole share (shares and exercise price adjusted for the 10% stock
dividend). The 1993 Callable Warrants are callable by the Company on
30 days notice at $.10 per warrant, and will expire June 9, 1996,
unless extended. The warrants became exercisable on December 12,
1995.
At December 31, 1993, the Company had 645,990 callable warrants
outstanding with an expiration date of November 30, 1994 (as extended
by the Company from the original maturity of November 30, 1993). The
warrants were originally exercisable at $6.00 per share of Class A
Common Stock. Effective March 2, 1993, the Board of Directors modified
the exercise provisions of the warrants to 1.19 shares of Class A
Common Stock for $5.05 per share. On October 5, 1993, the Board of
Directors modified the purchase rights for an interim period
beginning on October 21, 1993 and ending on November 30, 1993 to
provide for the purchase of 1.19 shares of Class A Common Stock for
$4.75 per share. After November 30, 1993, the purchase price reverted
back to $5.05 per share. Effective September 22, 1994, the Board of
Directors further modified the exercise provisions of the warrants to
allow warrant holders the option of exchanging 5 warrants for 1 share
of Class A Common Stock or satisfying the exercise price described
above in cash or shares of Class A Common Stock of the Company
previously owned by the warrant holder, or some combination thereof.
During the year ended December 31, 1994, 79,273 warrants were
exercised for cash, 192,430 warrants were exercised utilizing shares
of Class A Common Stock of the Company for payment, 318,105 warrants
were exchanged for Class A Common Stock on a 5 warrants for 1 share
basis and 56,182 warrants expired on November 30, 1994.
During the year ended December 31, 1993, 26,974 shares of Class A
Common Stock were issued upon exercise of 22,671 callable warrants
for cash proceeds of $128,650 ($4.75 per share). In addition, in
November 1993, 265,180 shares of Class A Common Stock were issued
upon exercise of 222,841 warrants held by an officer of the Company
for cash proceeds of $819,406 ($3.09 per share).
A-13
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
G. INCOME TAXES.
Income taxes consist of the following:
1995 1994 1993
Federal:
Current $ 3,953,000 $ 3,200,000 $ 2,907,500
Deferred 37,000 (90,000) (374,500)
3,990,000 3,110,000 2,533,000
State:
Current 951,000 775,000 730,500
Deferred 8,000 (20,000) (82,500)
959,000 755,000 648,000
Total $ 4,949,000 $ 3,865,000 $ 3,181,000
The components of the net deferred tax asset and the net deferred tax
liability were as follows:
1995 1994
Current deferred tax asset:
Allowance for doubtful
receivables $ 166,099 $ 166,099
Inventories 220,134 171,859
Accrued liabilities 502,848 643,318
Other 21,837 79,296
Deferred tax asset $ 910,918 $ 1,060,572
Long-term deferred tax liability:
Depreciation $ 712,505 $ 755,908
Other 71,581 132,832
Deferred tax liability $ 784,086 $ 888,740
A reconciliation of the provision for income taxes to the amount
computed by applying the statutory Federal income tax rate (35% in
1995 and 34% in 1994 and 1993) to income before income taxes is as
follows:
1995 1994 1993
Income taxes at statutory
rate $ 4,266,200 $ 3,174,800 $ 2,532,500
State income taxes, net
of federal benefit 623,300 498,300 427,700
Amortization of goodwill 36,900 35,800 35,800
Other 22,600 156,100 185,000
Total $ 4,949,000 $ 3,865,000 $ 3,181,000
A-14
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Continued
for the years ended December 31, 1995, 1994 and 1993
H. ACQUISITION OF MURPHY BODY COMPANY.
On August 29, 1994, the Company acquired the business operations and
substantially all of the operating assets of Murphy Body Company,
Inc., Wilson, North Carolina, a manufacturer of refrigerated truck
bodies. The purchase price, which approximated the fair value of the
acquired assets, consisted of cash of $1,142,102 and assumed
liabilities of $937,842. The acquisition was accounted for as a
purchase, and the net assets and results of operations have been
included in the Company's consolidated financial statements from the
acquisition date. Pro forma financial information has not been
presented as it is not materially different from the Company's
historical results.
I. COMMITMENTS AND CONTINGENCIES.
Lease Commitments
The Company leases certain office and manufacturing facilities under
operating lease agreements which expire at various dates through July
2000. Certain of the lease agreements are with related parties for
which related party rent expense for the years ended December 31,
1995, 1994 and 1993 aggregated $478,163, $446,442 and $496,113,
respectively.
The rent expense under all operating leases aggregated $1,027,606,
$984,177 and $1,105,969 for the years ended December 31, 1995, 1994
and 1993, respectively.
At December 31, 1995, future minimum annual rental payments under
noncancelable operating leases aggregated $3,378,000, and are payable
as follows: 1996 - $951,000; 1997 - $762,000; 1998 - $738,000;
1999 - $650,000 and 2000 - $277,000.
Obligation To Purchase Consigned Inventories
The Company obtains vehicle chassis for its truck, bus and specialized
vehicle products directly from the truck manufacturer under converter
pool agreements. Chassis are obtained from the manufacturers based on
orders from customers, and to a lesser extent, for unallocated orders.
Although each manufacturer's agreement has different terms and
conditions, the agreements generally provide that the manufacturer
will provide a supply of chassis to be maintained from time to time at
the Company's various production facilities under the conditions that
the Company will store such chassis and will not make any additions or
modifications to such chassis and will not move, sell or otherwise
dispose of such chassis, except under the terms of the agreement. The
manufacturer does not transfer the certificate of origin to the
Company and, accordingly, the Company accounts for the chassis as
consigned inventory belonging to the manufacturer. Under these
agreements if the chassis is not delivered to a customer within 90
days of delivery to the Company, the Company is required to pay a
finance charge on the chassis. At December 31, 1995 and 1994, chassis
inventory, accounted for as consigned inventory to the Company by the
manufacturers, aggregated $14,014,241 and $14,523,702, respectively.
Typically, chassis are converted and delivered to customers within 90
days of the receipt of the chassis by the Company.
A-15
Supreme Industries, Inc. And Subsidiaries
Notes To Consolidated Financial Statements, Concluded
for the years ended December 31, 1995, 1994 and 1993
I. COMMITMENTS AND CONTINGENCIES, Concluded.
Self-Insurance
The Company is self-insured for a portion of product liability
($100,000 per occurrence), certain employee health benefits ($75,000
annually per employee with an annual aggregate of approximately
$2,000,000) and workers' compensation in certain states ($250,000 per
occurrence with an annual aggregate of approximately $5,000,000). The
Company accrues for the estimated losses occurring from both asserted
and unasserted claims. The estimate of the liability for unasserted
claims arising from incurred but not reported claims is based on an
analysis of historical claims data.
Other
The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the
ordinary course of its business activities. Each of these matters is
subject to various uncertainties, and it is possible that some of
these matters may be resolved unfavorably to the Company. The
Company has established accruals for matters that are probable and
reasonably estimable. Management believes that any liability that
may ultimately result from the resolution of these matters in excess
of accruals and or amounts provided by insurance coverage will not
have a material adverse effect on the consolidated financial position
or results of operation of the Company.
A-16
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Stockholders and
Board of Directors of
Supreme Industries, Inc.:
Our report on the consolidated financial statements of Supreme Industries,
Inc. and subsidiaries is included on page A-1 of this Form 10-K. In
connection with our audits of such consolidated financial statements, we
have also audited the related financial statement schedule listed in Item
14(a)(2) of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
January 26, 1996
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
Column B Column C
Balance At Charged To Column E
Column A Beginning Costs And Column D Balance At
Description Of Period Expenses Deductions End of Period
Year Ended December 31,
1995:
Reserves and
allowances deducted
from asset accounts:
Allowance for
doubtful
receivables: $ 630,000 $ 318,000 $ 393,000(1) $ 555,000(2)
Year Ended December 31,
1994:
Reserves and
allowances deducted
from asset accounts:
Allowance for
doubtful
receivables: $ 630,000 $ 447,000 $ 447,000(1) $ 630,000(3)
Year Ended December 31,
1993:
Reserves and
allowances deducted
from asset accounts:
Allowance for
doubtful
receivables: $ 245,000 $ 419,000 $ 34,000(1) $ 630,000(3)
(1) Uncollectible accounts written off, net of recoveries.
(2) Reflected in the consolidated balance sheet as follows: deducted from
accounts receivable - $430,000 and deducted from other assets
($125,000 note receivable from Contempri Homes, Inc.) - $125,000.
(3) Reflected in the consolidated balance sheet as follows: deducted from
accounts receivable - $430,000 and deducted from other assets ($1
million note receivable from Contempri Homes, Inc.) - $200,000.
S-2
SIGNATURES
Pursuant to the requirements of the Section 13 and 15(d) 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: March 27, 1996 By: /s/Herbert M. Gardner
Herbert M. Gardner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in capacities and on the dates indicated.
/s/Herbert M. Gardner Chairman of the Board March 27, 1996
Herbert M. Gardner and President
(Principal Executive
Officer)
/s/Omer G. Kropf Executive Vice President March 27, 1996
Omer G. Kropf and Director
/s/William J. Barrett Secretary, Assistant March 27, 1996
William J. Barrett Treasurer and Director
/s/Robert W. Wilson Executive Vice President March 27, 1996
Robert W. Wilson Treasurer, Chief
Financial Officer and
Director (Principal
Financial and Accounting
Officer)
/s/Robert J. Campbell Director March 27, 1996
Robert J. Campbell
/s/Thomas Cantwell Director March 27, 1996
Thomas Cantwell
/s/Rice M. Tilley, Jr. Assistant Secretary March 27, 1996
Rice M. Tilley, Jr. and Director
/s/H. Douglas Schrock Director March 27, 1996
H. Douglas Schrock
/s/Rick L. Horn Director March 27, 1996
Rick L. Horn
INDEX TO EXHIBITS
Exhibit Description
3.1 Certificate of Incorporation of the Company, filed as Exhibit
3(a) to the Company's Registration Statement on Form 8-A, filed
with the Commission on September 18, 1989, and incorporated
herein by reference.
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company filed with the Secretary of State of Delaware on June 10,
1993 filed as Exhibit 3.2 to the Company's annual report on Form
10-K for the fiscal year ended December 31, 1993, and
incorporated herein by reference.
3.3 Bylaws of the Company, filed as Exhibit 3(b) to the Company's
Registration Statement on Form 8-A, filed with the Commission on
September 18, 1989, and incorporated herein by reference.
4.1 Note Agreements dated as of December 15, 1986, between the
Company and Massachusetts Mutual Life Insurance Company and
MassMutual Corporate Investors, respectively, and signed in
connection with certain long-term indebtedness, filed as Exhibit
4.15 to the Company's Registration Statement on Form S-4
(Registration No. 3311990), filed with the Commission, and
incorporated herein by reference.
4.2 Amendment dated July 15, 1987, to Sections 4.2 and 4.5 of the
Note Agreements described in 4.1 above, filed as Exhibit 4.14 to
the Company's annual report of Form 10-K for the fiscal year
ended December 31, 1987, and incorporated herein by reference.
4.3 Amendment, dated September 15, 1987, to Sections 4.2 and 4.5 of
the Note Agreements described in 4.1 above, filed as Exhibit 4.15
to the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated herein by reference.
4.4 Amendment dated February 18, 1988, to Section 4.2 of the Note
Agreements described in 4.1 above, filed as Exhibit 4.16 to the
Company's annual report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by reference.
4.5 Amendment dated March 16, 1988, to Section 4.2 of the Note
Agreements described in 4.1 above, filed as Exhibit 4.17 to the
Company's annual report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by reference.
4.6 Amendment dated September 7, 1990, to Sections 4.2 and 4.3 of
the Note Agreements described in 4.1 above, filed as Exhibit 4.6
to the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1990, and incorporated herein by reference.
4.7 Amendment dated March 27, 1991, to Sections 4.1 of the Note
Agreements described in 4.1 above, filed as Exhibit 4.7 to the
Company's annual report on Form 10-K for the fiscal year ended
December 31, 1991, and incorporated herein by reference.
4.8 Amendment Agreements dated as of December 1, 1991, amending
Sections 4.2, 4.3, 5.3, 7.1, 8, and 9.5 of the Note Agreements
described in 4.1 above, filed as Exhibit 4.8 to the Company's
annual report on Form 10-K for the fiscal year ended December 31,
1991, and incorporated herein by reference.
4.9 Amendment Agreements dated as of December 31, 1992, to Note
Agreements described in 4.1 above, filed as Exhibit 4.8 to the
Company's Registration Statement on Form 10 filed with the SEC
on February 22, 1993, and incorporated herein by reference.
4.10 Note Agreement dated as of December 1, 1991, between the Company
and Massachusetts Mutual Life Insurance Company and MassMutual
Corporate Investors, respectively, and signed in connection with
certain long-term indebtedness, filed as Exhibit 4.9 to the
Company's annual report on Form 10-K for the fiscal year ended
December 31, 1991, and incorporated herein by reference.
4.11 Amendment Agreements dated as of December 31, 1992, to Note
Agreements described in 4.10 above, filed as Exhibit 4.9 to the
Company's Registration Statement on Form 10 filed with the SEC
on February 22, 1993, and incorporated herein by reference.
4.12 Accounts Financing Agreement (Security Agreement) dated as of
December 31, 1991, between Supreme Corporation, Supreme Truck
Bodies of California, Inc., Supreme Corporation of Texas and
Supreme Mid-Atlantic Corporation, as obligors, and Congress
Financial Corporation and signed in connection with certain
long-term indebtedness, filed as Exhibit 4.30 to the Company's
annual report on Form 10-K for the fiscal year ended December 31,
1991, and incorporated herein by reference.
4.13 Accounts Financing Agreement (Security Agreement) dated as of
December 31, 1991, between Contempri Homes, Inc. (a former
subsidiary of the Company), as obligor, and Congress Financial
Corporation and signed in connection with certain long-term
indebtedness, filed as Exhibit 4.31 to the Company's annual
report on Form 10-K for the fiscal year ended December 31, 1991,
and incorporated herein by reference.
4.14 Accounts Financing Agreement (Security Agreement) dated as of
December 31, 1991, between Rouse Welding & Body, Inc., as
obligor, and Congress Financial Corporation and signed in
connection with certain long-term indebtedness, filed as Exhibit
4.32 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1991, and incorporated herein by
reference.
4.15 Amendment to Financing Agreement dated February 16, 1993, and
effective as of December 31, 1992, to Accounts Financing
Agreement (Security Agreement) described in 4.12 above, filed as
Exhibit 4.10 to the Company's Registration Statement on Form 10-K
filed with the SEC on February 22, 1993, and incorporated herein
by reference.
4.16 Amendment to Financing Agreement dated February 16, 1993, and
effective as of December 31, 1992, to Accounts Financing
Agreement (Security Agreement) described in 4.13 above, filed as
exhibit 4.11 to the Company's Registration Statement on Form 10-K
filed with the SEC on February 22, 1993, and incorporated herein
by reference.
4.17 Amendment to Financing Agreement dated February 16, 1993, and
effective as of December 31, 1992, to Accounts Financing
Agreement (Security Agreement) described in 4.14 above, filed as
Exhibit 4.12 to the Company's Registration Statement on Form 10
filed with the SEC on February 22, 1993, and incorporated herein
by reference.
4.18 Amendment to Accounts Financing Agreement dated May 14, 1993, to
Account Financing Agreement (Security Agreement) described in 4.2
above, filed as Exhibit 4.13 to the Company's Amendment No. 1 to
its Registration Statement on Form 10 dated May 17, 1993, and
incorporated herein by reference.
4.19 Amendment to Accounts Financing Agreement dated May 14, 1993, to
Accounts Financing Agreement (Security Agreement) described in
4.14 above, filed as Exhibit 4.14 to the Company's Amendment No.
1 to its Registration Statement on Form 10 dated May 17, 1993,
and incorporated herein by reference.
4.20 Form of ESI warrant, filed as Exhibit 4(b) to the Company's
Registration Statement on Form 8-A, filed with the Commission on
September 18, 1989, and incorporated herein by reference.
4.21 Form of Warrant Agreement between the Company and Republic Bank
Dallas, N.A., as Warrant Agent, relating to the ESI Warrants,
filed as exhibit 4.2 to the Company's Registration Statement on
Form S-4 (Registration No. 3311990), filed with the Commission
and incorporated herein by reference.
4.22 Amendment Number One to the Warrant Agreement described in 4.19
above, dated effective July 1, 1988, filed as Exhibit 4.29 to
the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by reference.
4.23 Form of Warrant Agreement between the Company and American Stock
Transfer & Trust Company, as Warrant Agent, relating to the ESI
1993 Callable Warrants, filed as Exhibit 4.3 to the Company's
Registration Statement on Form 10 filed with the SEC on February
22, 1993, and incorporated herein by reference.
4.24 Form of Pairing Agreement between the Company and Contempri
Homes, Inc., relating to the pairing as a unit of the Company's
1993 Callable Warrant and the Common Stock of Contempri Homes,
Inc. (a former subsidiary of the Company), filed as exhibit 4.4
to the Company's Registration Statement on Form 10 filed with
the SEC on February 22, 1993, and incorporated herein by
reference.
4.25 Credit Agreement dated as of April 25, 1994, between the Company,
Supreme Corporation, and NBD Bank and signed in connection with
certain long-term indebtedness, filed as Exhibit 4.25 to the
Company's annual report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by reference.
4.26 Letter Agreement dated April 25, 1994, between the Company and
Congress Financial Corporation with respect to the repayment by
the Company to Congress Financial Corporation of certain
long-term indebtedness, filed as Exhibit 4.26 to the Company's
annual report on Form 10-K for the fiscal year ended December 31,
1994, and incorporated herein by reference.
10.1 The Company's 1982 Incentive Stock Option Plan, filed as Exhibit
10(c) to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1981, and incorporated herein by
reference.
10.2 Form of Stock Option Agreement used to evidence options granted
under the Company's 1982 Incentive Stock Option Plan, filed as
Exhibit 10(d) to the Company's annual report on Form 10-K for
the fiscal year ended December 31, 1981, and incorporated herein
by reference.
10.3 Amendment Number One to the Company's 1982 Incentive Stock Option
Plan as adopted by the Company's Board of Directors effective
May 1, 1987, filed as Exhibit 10.3 to the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1987, and
incorporated herein by reference.
10.4 Amendment Number Two to the Company's 1982 Incentive Stock Option
Plan as adopted by the Company's Board of Directors effective
December 2, 1987, filed as Exhibit 10.4 to the Company's annual
report on Form 10-K for the fiscal year ended December 31, 1987,
and incorporated herein by reference.
10.5 The Company's 1986 Non-Qualified Stock Option Plan, filed as
Exhibit 10.35 to the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1986, and incorporated herein by
reference.
10.6 Form of Non-Qualified Stock Option used to evidence options
granted under the Company's 1986 Non-Qualified Stock Option Plan,
filed as exhibit 10.36 to the Company's annual report on Form
10-K for the fiscal year ended December 31, 1986, and
incorporated herein by reference.
10.7 The Company's 1992 Stock Option Plan, filed as Exhibit 10.7 to
the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated herein by reference.
10.8 Form of Stock Option grant agreement used to evidence options
granted under the Company's 1992 Stock Option Plan, filed as
Exhibit 10.8 to the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1992, and incorporated herein by
reference.
10.9 Form of Amended Stock Purchase Warrant dated November 29, 1988,
for 222,841 shares of the Company's Class A Common Stock by Omer
G. Kropf, filed as Exhibit 10.12 to the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1988, and
incorporated herein by reference.
10.10 Inventory Loan and Security Agreement dated October 12, 1988,
among General Motors Acceptance Corporation and the Company, its
subsidiaries, and certain subsidiaries of Supreme Corporation,
filed as Exhibit 10.19 to the Company's annual report on Form
10-K for the fiscal year ended December 31, 1988, and
incorporated herein by reference.
10.11 Form of Demand Promissory Note dated September 28, 1988, in the
principal amount of $2,940,000 from the Company, and relating to
the Agreement described 10.10 above, filed as Exhibit 10.20 to
the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by reference.
10.12 Intercreditor Agreement dated as of December 31, 1991, among
General Motors Acceptance Corporation and Congress Financial
Corporation, and relating to the Agreement described in 10.10
above filed as Exhibit 10.14 to the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1991, and
incorporated herein by reference.
10.13 Pool Company Wholesale Finance Plan Application for Wholesale
Financing and Security Agreements, dated December 5, 1990, among
Ford Motor Credit Company and each of Supreme Corporation,
Supreme Truck Bodies of California, Inc., Supreme Corporation of
Texas, and Supreme Mid-Atlantic Corporation, filed as Exhibit
10.15 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1991, and incorporated herein by
reference.
10.14 Release of security interest from Ford Motor Credit Corporation
dated December 26, 1991, addressed to Congress Financial
Corporation, and relating to the Agreements described in 10.13
above, filed as Exhibit 10.16 to the Company's annual report on
Form 10-K for the year ended December 31, 1991, and incorporated
herein by reference.
10.15 Lease dated July 25, 1988, between Supreme Corporation and G-2,
Ltd., a Texas limited partnership, relating to Supreme
Corporation's Goshen, Indiana facilities, filed as exhibit 10.22
to the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by reference.
10.16 Lease dated July 25, 1988, between Supreme Corporation and G-2,
Ltd., a Texas limited partnership, relating to Supreme
Corporation's Griffin, Georgia facilities, filed as Exhibit 10.23
to the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by reference.
10.17 Lease dated August 27, 1990, between Supreme Truck Bodies of
California, Inc. and Edgar Maas, individually and as Trustee of
the Marsha Maas Testamentary Trust, relating to Supreme
Corporation's Riverside, California facility, filed as Exhibit
10.19 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1991, and incorporated herein by
reference.
10.18 License Agreement dated to be effective November 5, 1992, between
Supreme Corporation as licensee and ACCGRUPPENAB, a Swedish
Corporation, as licensor, with respect to certain know-how and
patent rights, filed as exhibit 10.19 to the Company's annual
report on Form 10-K for the fiscal year ended December 31, 1993,
and incorporated herein by reference.
10.19 Employment Contract dated to be effective May 1, 1993, between
Supreme Corporation and Omer G. Kropf filed as Exhibit 10.20 to
the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1993, and incorporated herein by reference.
10.20 Consulting Agreement dated to be effective January 1, 1993,
between the Company and William J. Barrett, filed as Exhibit
10.21 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1993, and incorporated herein by
reference.
10.21 Consulting Agreement dated to be effective January 1, 1993,
between the Company and Herbert M. Gardner, filed as Exhibit
10.22 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1993, and incorporated herein by
reference.
10.22 Consulting Agreement dated to be effective April 15, 1993,
between the Company and Rice M. Tilley, Jr., filed as Exhibit
10.23 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1993, and incorporated herein by
reference.
10.23 Consulting Agreement dated to be effective April 15, 1993,
between the Company and H. Douglas Schrock, filed as Exhibit
10.24 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1993, and incorporated herein by
reference.
10.24 Employment Contract dated to be effective October 1, 1994,
between Supreme Corporation and Robert W. Wilson, filed as Exhibit
10.24 to the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1994, and incorporated herein by
reference.
11.1 Statement regarding computation of per share earnings.
21.1 Subsidiaries of the Company.
23.1 Consent of Independent Accountants.
EXHIBIT 11.1 -- STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
(Amounts in thousands, except per share data)
Years Ended December 31,
1995 1994 1993
PRIMARY
Average shares outstanding 8,160 7,978 7,422
Net effect of dilutive stock
options and warrants - based
on the treasury stock method
using average market price 420 165 128
Dilutive effect of subordinated
convertible notes 14 -- --
TOTAL 8,594 8,143 7,550
Net income $ 7,240 $ 5,473 $ 4,268
Earnings per share $ .84 $ .67 $ .56
FULLY DILUTED
Average shares outstanding 8,160 7,978 7,422
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 490 166 135
Dilutive effect of subordinated
convertible notes 611 612 1,117
TOTAL 9,261 8,756 8,674
Net income $ 7,240 $ 5,473 $ 4,268
Interest expense reduction due
to assumed conversion of
subordinated convertible
notes - net of tax 131 127 146
Net income as adjusted $ 7,371 $ 5,600 $ 4,414
Earnings per share $ .80 $ .64 $ .51
Exhibit 21.1
Subsidiaries of the Company
Supreme Corporation of Texas, a Texas Corporation
Supreme Truck Bodies of California, Inc., a California Corporation
Supreme Mid-Atlantic Corporation, a Texas Corporation
Supreme/Murphy Truck Bodies, Inc., a North Carolina Corporation
Rouse Welding and Body Company, Inc., a Texas Corporation
Atlantic Sales Corporation, a Texas Corporation
Atlantic Wood Products, S.A.
PA Land Holding Corp., a Texas Corporation
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Supreme Industries, Inc. (formerly ESI Industries, Inc.) on Form S-8
(File No. 33-64047) and on Form S-3 (File Nos. 33-59586; 33-49488 and
33-59343) and in the related Prospectus of our reports dated January 26,
1996, on our audits of the consolidated financial statements and financial
statement schedule of Supreme Industries, Inc. and subsidiaries as of
December 31, 1995 and 1994, and for each of the three years in the period
ended December 31, 1995 which reports are included in this Annual Report on
Form 10-K.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
March 27, 1996