UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2012
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8183
SUPREME INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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75-1670945 |
(State or other jurisdiction of |
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(I.R.S. Employer Identification No.) |
incorporation or organization) |
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2581 E. Kercher Rd., Goshen, Indiana 46528
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (574) 642-3070
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer o |
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Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
Common Stock ($.10 Par Value) |
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Outstanding at October 18, 2012 |
Class A |
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13,517,177 |
Class B |
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1,716,937 |
SUPREME INDUSTRIES, INC.
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Page No. |
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3 | |
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Condensed Consolidated Statements of Operations and Comprehensive Income |
4 |
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5 | |
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6 | |
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Managements Discussion and Analysis of Financial Condition and Results of Operations. |
10 | |
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19 | ||
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19 | ||
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20 | ||
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20 | ||
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Unregistered Sales of Equity Securities and Use of Proceeds. |
21 | |
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21 | ||
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21 | ||
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21 | ||
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EXHIBITS |
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SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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September 29, |
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December 31, |
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2012 |
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2011 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
3,459,896 |
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$ |
106,833 |
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Investments |
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935,651 |
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924,016 |
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Accounts receivable, net |
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21,987,163 |
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22,040,297 |
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Inventories |
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38,504,178 |
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38,134,862 |
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Deferred income taxes |
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1,454,661 |
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Other current assets |
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4,311,626 |
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8,303,579 |
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Total current assets |
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70,653,175 |
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69,509,587 |
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Property, plant and equipment, at cost |
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86,480,686 |
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81,778,886 |
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Less, Accumulated depreciation and amortization |
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49,780,482 |
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48,248,829 |
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Property, plant and equipment, net |
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36,700,204 |
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33,530,057 |
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Other assets |
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1,353,291 |
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1,683,718 |
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Total assets |
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$ |
108,706,670 |
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$ |
104,723,362 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Current maturities of long-term debt |
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$ |
129,926 |
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$ |
246,192 |
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Trade accounts payable |
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15,560,205 |
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21,424,434 |
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Accrued income taxes |
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1,108,537 |
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719,611 |
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Other accrued liabilities |
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12,418,902 |
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11,697,311 |
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Total current liabilities |
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29,217,570 |
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34,087,548 |
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Long-term debt |
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12,160,911 |
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15,702,467 |
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Deferred income taxes |
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637,527 |
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Total liabilities |
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42,016,008 |
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49,790,015 |
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Stockholders equity |
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66,690,662 |
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54,933,347 |
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Total liabilities and stockholders equity |
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$ |
108,706,670 |
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$ |
104,723,362 |
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See accompanying Notes to Consolidated Financial Statements.
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
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Three Months Ended |
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Nine Months Ended |
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September 29, |
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October 1, |
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September 29, |
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October 1, |
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2012 |
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2011 |
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2012 |
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2011 |
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Net sales |
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$ |
71,671,126 |
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$ |
72,799,593 |
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$ |
228,411,988 |
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$ |
234,903,279 |
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Cost of sales |
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60,097,281 |
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63,517,725 |
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192,508,241 |
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211,150,117 |
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Gross profit |
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11,573,845 |
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9,281,868 |
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35,903,747 |
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23,753,162 |
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Selling, general and administrative expenses |
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7,898,906 |
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6,720,752 |
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24,686,538 |
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20,628,189 |
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Legal settlement and related costs |
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2,182,091 |
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Other income |
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(174,445 |
) |
(167,241 |
) |
(766,585 |
) |
(621,845 |
) | ||||
Operating income |
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3,849,384 |
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2,728,357 |
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11,983,794 |
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1,564,727 |
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Interest expense |
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149,710 |
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1,209,645 |
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729,520 |
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1,942,216 |
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Income (loss) from continuing operations before income taxes |
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3,699,674 |
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1,518,712 |
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11,254,274 |
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(377,489 |
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Income tax expense (benefit) |
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129,183 |
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(195,134 |
) |
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Income (loss) from continuing operations |
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3,570,491 |
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1,518,712 |
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11,449,408 |
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(377,489 |
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Discontinued operations |
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Operating loss of discontinued Oregon operations, net of tax |
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(25,984 |
) |
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(717,829 |
) | ||||
Net income (loss) |
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$ |
3,570,491 |
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$ |
1,492,728 |
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$ |
11,449,408 |
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$ |
(1,095,318 |
) |
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Other comprehensive income |
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1,814 |
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860 |
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2,561 |
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7,471 |
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Total comprehensive income (loss) |
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$ |
3,572,305 |
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$ |
1,493,588 |
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$ |
11,451,969 |
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$ |
(1,087,847 |
) |
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Basic income (loss) per share: |
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Income (loss) from continuing operations |
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$ |
0.23 |
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$ |
0.10 |
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$ |
0.75 |
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$ |
(0.02 |
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Loss from discontinued operations |
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(0.05 |
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Net income (loss) per basic share |
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$ |
0.23 |
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$ |
0.10 |
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$ |
0.75 |
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$ |
(0.07 |
) |
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Diluted income (loss) per share: |
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Income (loss) from continuing operations |
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$ |
0.23 |
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$ |
0.10 |
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$ |
0.74 |
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$ |
(0.02 |
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Loss from discontinued operations |
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(0.05 |
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Net income (loss) per diluted share |
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$ |
0.23 |
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$ |
0.10 |
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$ |
0.74 |
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$ |
(0.07 |
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Shares used in the computation of income (loss) per share: |
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Basic |
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15,206,196 |
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15,155,528 |
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15,186,505 |
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14,693,856 |
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Diluted |
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15,470,335 |
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15,345,234 |
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15,437,246 |
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14,693,856 |
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See accompanying Notes to Consolidated Financial Statements.
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Nine Months Ended |
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September 29, |
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October 1, |
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2012 |
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2011 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
11,449,408 |
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$ |
(1,095,318 |
) |
Adjustments to reconcile net income (loss) to net cash from operating activities: |
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Depreciation and amortization |
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2,363,367 |
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3,445,340 |
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Issuance of treasury stock |
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2,184,000 |
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Provision for losses on doubtful receivables |
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30,034 |
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111,704 |
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Stock-based compensation expense |
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216,834 |
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458,096 |
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Gains on sale of property, plant and equipment, net |
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(362,098 |
) |
(329,426 |
) | ||
Changes in operating assets and liabilities |
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(5,752,283 |
) |
5,198,025 |
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Net cash from operating activities |
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7,945,262 |
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9,972,421 |
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Cash flows from investing activities: |
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Additions to property, plant and equipment |
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(5,354,288 |
) |
(1,427,019 |
) | ||
Proceeds from sale of property, plant and equipment |
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4,213,153 |
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494,250 |
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Purchases of investments |
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(11,635 |
) |
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Proceeds from sale of investments |
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270,565 |
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Decrease in other assets |
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129,878 |
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6,559 |
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Net cash from investing activities |
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(1,022,892 |
) |
(655,645 |
) | ||
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Cash flows from financing activities: |
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Proceeds from revolving line of credit and other long-term debt |
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226,248,425 |
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75,485,413 |
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Repayments of revolving line of credit and other long-term debt |
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(229,906,247 |
) |
(85,766,966 |
) | ||
Proceeds from exercise of stock options |
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88,515 |
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48,585 |
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Net cash from financing activities |
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(3,569,307 |
) |
(10,232,968 |
) | ||
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Change in cash and cash equivalents |
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3,353,063 |
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(916,192 |
) | ||
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Cash and cash equivalents, beginning of period |
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106,833 |
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1,050,047 |
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Cash and cash equivalents, end of period |
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$ |
3,459,896 |
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$ |
133,855 |
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See accompanying Notes to Consolidated Financial Statements.
SUPREME INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION AND OPINION OF MANAGEMENT
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all of the information and financial statement disclosures necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, the information furnished herein includes all adjustments necessary to reflect a fair statement of the interim periods reported. The December 31, 2011 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. References to we, us, our, its, Supreme, or the Company refer to Supreme Industries, Inc. and its subsidiaries.
The Company has adopted a 52- or 53-week fiscal year ending the last Saturday in December. The results of operations for the three months ended September 29, 2012 and October 1, 2011 are for 13-week periods, respectively. The results of operations for the nine months ended September 29, 2012 and October 1, 2011 are for 39- and 40-week periods, respectively.
Revised Financial Statements
As disclosed in the Companys quarterly report on Form 10-Q for the period ended June 30, 2012, as a result of its recent implementation of a perpetual inventory system, the Company determined that certain of its previously filed financial statements contained errors related to revenue recognition whereby beginning in the third quarter of 2009 and continuing through the first quarter of 2012 revenue at the Texas armored division plant was inappropriately recognized prior to the product being delivered to a customer due to an irregularity. The Company concluded that the errors were isolated to this one location and were not material. In order to assess materiality with respect to the errors, the Company considered Staff Accounting Bulletin (SAB) 99, Materiality and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and determined that the impact of the errors on prior period consolidated financial statements was immaterial. Accordingly, the Companys consolidated balance sheet as of December 31, 2011, and the consolidated statements of operations for the three and nine months ended October 1, 2011, were revised and reflect the correction of these immaterial errors. Correction of the errors in the Companys consolidated balance sheet as of December 31, 2011 resulted in an increase in inventories of approximately $2.1 million, a decrease in accounts receivable of approximately $2.1 million, an increase in customer deposits of approximately $0.4 million, and a decrease to retained earnings of approximately $0.4 million. The following table summarizes the impact on the Companys consolidated statements of operations:
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Three Months Ended |
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Nine Months Ended |
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October 1, 2011 |
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October 1, 2011 |
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($000s omitted) |
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As Reported |
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As Revised |
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As Reported |
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As Revised |
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Net sales |
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$ |
72,811 |
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$ |
72,800 |
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$ |
235,275 |
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$ |
234,903 |
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Net income (loss) |
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$ |
1,522 |
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$ |
1,493 |
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$ |
(1,038 |
) |
$ |
(1,095 |
) |
NOTE 2 DISCONTINUED OPERATIONS
Effective December 25, 2010, the Company decided to cease operations at its Woodburn, Oregon manufacturing facility. The Oregon operations were discontinued due to the Companys decision to exit this unprofitable geographic region. The amount of Oregon business expected to be retained is insignificant. The Oregon facility and equipment were sold during the quarter ended September 29, 2012 and are classified as held for sale as of December 31, 2011 and included in other current assets in the accompanying year-end balance sheet. The sale resulted in a $0.1 million loss and is included in other income in the consolidated statements of operations.
The 2011 operating results for the Woodburn, Oregon location are classified as discontinued operations as follows:
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Three Months Ended |
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Nine Months Ended |
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October 1, 2011 |
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October 1, 2011 |
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Net sales |
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$ |
46,694 |
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$ |
3,332,542 |
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Pretax loss from operations |
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$ |
(25,984 |
) |
$ |
(717,829 |
) |
Net loss |
|
$ |
(25,984 |
) |
$ |
(717,829 |
) |
NOTE 3 INVENTORIES
Inventories, which are stated at the lower of cost or market with cost determined using the first-in, first-out method, consist of the following:
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September 29, |
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December 31, |
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|
|
2012 |
|
2011 |
| ||
Raw materials |
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$ |
24,425,996 |
|
$ |
22,193,743 |
|
Work-in-progress |
|
4,803,280 |
|
6,748,162 |
| ||
Finished goods |
|
9,274,902 |
|
9,192,957 |
| ||
|
|
$ |
38,504,178 |
|
$ |
38,134,862 |
|
NOTE 4 OTHER CURRENT ASSETS
Other current assets include assets held for sale of $1.4 million and $5.2 million at September 29, 2012 and December 31, 2011, respectively.
NOTE 5 FAIR VALUE MEASUREMENT
Generally accepted accounting principles (GAAP) define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs (other than Level 1 prices such as quoted prices for similar assets or liabilities); quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a companys own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The Company used the following methods and significant assumptions to estimate the fair value of items:
Investments: The fair values of investments available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs).
The carrying amounts of cash and cash equivalents, accounts receivable, and trade accounts payable approximated fair value as of September 29, 2012, and December 31, 2011, because of the relatively short maturities of these financial instruments. The carrying amount of long-term debt, including current maturities, approximated fair value as of September 29, 2012, and December 31, 2011, based upon terms and conditions available to the Company at those dates in comparison to the terms and conditions of its outstanding long-term debt.
NOTE 6 LONG-TERM DEBT
Revolving Line of Credit
On September 14, 2011, the Company entered into a Credit Agreement (the Credit Agreement) with Wells Fargo Capital Finance, LLC (the Lender). As of September 29, 2012, the outstanding balance under the Credit Agreement was approximately $8.8 million and the Company had unused credit capacity of approximately $15.9 million. Interest on outstanding borrowings under the Credit Agreement was based on the Lenders prime rate or LIBOR depending on the pricing option selected and the Companys leverage ratio (as defined in the Credit Agreement) resulting in an effective rate of 3.3% at September 29, 2012.
Other Long-Term Debt
During 2011, the Company entered into a capital lease under a sale/leaseback transaction involving its California facility. The outstanding principal amount of the obligation as of September 29, 2012 was $3.5 million with an interest rate of 5.5%. Of this amount $0.1 million and $3.4 million were included in current maturities of long-term debt and long-term debt, respectively, in the accompanying consolidated balance sheets as of September 29, 2012.
NOTE 7 LOSS PER SHARE
The assumed exercise or issuance of 241,339 shares for the nine-month period ended October 1, 2011, relating to stock plans was not included in the computation of diluted loss per share. Inclusion of these shares would have been antidilutive.
NOTE 8 STOCK-BASED COMPENSATION
The following table summarizes the activity for the outstanding stock options for the nine months ended September 29, 2012:
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|
|
Weighted - |
| |
|
|
|
|
Average |
| |
|
|
Number of |
|
Exercise |
| |
|
|
Shares |
|
Price |
| |
Outstanding, December 31, 2011 |
|
1,156,621 |
|
$ |
3.90 |
|
Granted |
|
|
|
n/a |
| |
Exercised |
|
(53,471 |
) |
1.66 |
| |
Expired |
|
(12,974 |
) |
6.15 |
| |
Forfeited |
|
(125,035 |
) |
3.02 |
| |
Outstanding, September 29, 2012 |
|
965,141 |
|
$ |
3.93 |
|
As of September 29, 2012, outstanding exercisable options had an intrinsic value of $606,504 and a weighted-average remaining contractual life of 2.85 years.
Total unrecognized compensation expense related to all share-based awards outstanding at September 29, 2012, was approximately $127,877 and will be recorded over a weighted average contractual life of 1.0 year.
NOTE 9 INCOME TAXES
At December 31, 2011, the Company maintained a valuation allowance against its net deferred tax assets of $4.6 million due to uncertainty of the utilization of such assets. In the second quarter of 2012 the Company determined it was more likely than not that a portion of the net deferred tax assets would be realized based upon sustained profitability coupled with positive forecasted future operating results. As a result, the Company reversed $0.4 million of the valuation allowance, recorded as a non-cash income tax benefit for the three and six months ended June 30, 2012. The Company had retained a $0.4 million valuation allowance against certain state net operating loss carryforwards as of June 30, 2012. In the third quarter of 2012, the Company determined it was more likely than not that these state net operating loss carryforwards will be realized due to anticipated positive operating results and a detailed analysis of future expected taxable income by state. The Company is estimating an effective tax rate for the year ending December 29, 2012 which will be substantially lower than statutory rates due to the reversal of these deferred tax asset reserves. Beginning with the first quarter of 2013, the Company expects to recognize income taxes at normalized rates. The 2011 results did not include any provision for or benefit from income taxes due to the establishment of a full deferred tax valuation allowance.
NOTE 10 COMMITMENTS AND CONTINGENCIES
In October of 2011, the Company was named a defendant in a personal injury suit (Paul Gendrolis and Katherine Gendrolis v. Saxon Fleet Sales, Kolstad Company, and Supreme Industries, Inc.) which was filed in the United States District Court, District of Massachusetts. The complaint seeks $10 million in damages based on allegations that a truck body manufactured by the Company contained an improperly installed plate or lip, which caused Paul Gendrolis to trip and become injured. Claims alleged against the Company include negligence, breach of warranty, breach of consumer protection laws, and loss of consortium. Due to the inherent risk of litigation, the outcome of this case is uncertain and unpredictable; however, at this time, management is vigorously defending the Company and its subsidiaries. The Company has insurance coverage for personal injury claims with the Companys deductible being $250,000. The Company has not currently recorded a liability related to this matter.
In February of 2012, the Company was named a defendant in a claim that a fleet of buses manufactured by the Company was defective (King County v. Supreme Corporation) which was filed in Superior Court in King County, Washington. The complaint seeks a sum of approximately $7 million which the plaintiff alleges was paid for the fleet, costs of investigation and repairs, and incidental and consequential damages. These allegations against the Company include breach of contract, breach of implied warranties of fitness and merchantability, and a request for declaratory judgment on the issue of revocation of acceptance of the fleet. Due to the inherent risk of litigation, the outcome of this case is uncertain and unpredictable; however, at this time, management is vigorously defending the Company and its subsidiaries. The Company has not currently recorded a liability related to this matter.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Company Overview
Established in 1974 as a truck body manufacturer, Supreme Industries, Inc., through its wholly-owned subsidiary, Supreme Indiana Operations, Inc., is one of the nations leading manufacturers of specialized vehicles. The Company engages principally in the production and sale of customized truck bodies, buses, and other specialty vehicles. Building on its expertise in providing both cargo and passenger transportation solutions, the Companys specialty vehicle offerings include products such as customized armored vehicles and homeland response vehicles.
The Company utilizes a nationwide direct sales and distribution network consisting of approximately 25 bus distributors, a limited number of truck equipment distributors, and approximately 1,000 commercial truck dealers. The Companys manufacturing and service facilities are located in seven states across the continental United States allowing us to meet the needs of customers across all of North America. Additionally, the Companys favorable customer relations, strong brand-name recognition, extensive product offerings, bailment chassis arrangements, and product innovation, competitively positions Supreme with a strategic footprint in the markets it serves.
The Company and its product offerings are affected by various factors which include, but are not limited to, economic conditions, interest rate fluctuations, volatility in the supply chain of vehicle chassis, and the availability of credit and financing to the Company, our vendors, dealers, or end users. The Companys business is also affected by the availability and costs of certain raw materials that serve as significant components of its product offerings. The Companys risk factors are disclosed in Item 1A Risk Factors in the Companys Annual Report on Form 10-K for the year ended December 31, 2011.
Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and related notes (See Note 1 Basis of Presentation and Opinion of Management) thereto elsewhere in this document and pertains to continuing operations unless otherwise noted.
Overview
Net income from continuing operations for the third quarter of 2012 was $3.6 million, or $0.23 per diluted share, compared with $1.5 million, or $0.10 per diluted share, in the third quarter of 2011. Net income from continuing operations for the nine months ended September 29, 2012 was $11.4 million, or $0.74 per diluted share, compared with a loss from continuing operations of $0.4 million, or ($0.02) per diluted share, for the nine months ended October 1, 2011. These improved results reflect the focus of our strategy to enhance efficiencies, as well as our ability to implement sustainable improvements in all of our core processes.
Our sales backlog at the end of the third quarter of 2012 totaled $63 million compared with $90 million a year ago. While 30% lower than the prior-year period, we believe our improved pricing discipline has created profitable backlog. Additionally, the prior year backlog included initial orders for the 2012 fleet season. As of the end of the third quarter of 2012, the 2013 fleet orders had not yet been awarded.
As we continue through 2012 and into 2013, and manage the Company for profitable growth, our key areas of focus include:
· Improving the buying experience for our customers by incorporating their product improvement ideas and exceeding their expectations throughout the order fulfillment cycle;
· Improving our materials procurement sourcing nationwide;
· Making capital investments to upgrade facilities and equipment;
· Implementing employee-focused initiatives to ensure that our employees view the Company as a great place to work and are proud to be members of the Supreme team;
· Continuing our product development initiatives related to both new and existing products; and
· Further product line rationalization efforts to improve our gross margins and remain focused on our core truck, bus, and armored products.
We continue to aggressively review all aspects of our business by establishing a continuous improvement culture to ensure the ongoing growth and strength of the Company.
Net Sales
Net sales for the three months ended September 29, 2012 decreased $1.1 million, or 1.6%, to $71.7 million as compared with $72.8 million for the three months ended October 1, 2011. Net sales for the nine months ended September 29, 2012 decreased $6.5 million, or 2.8%, to $228.4 million as compared with $234.9 million for the nine months ended October 1, 2011. The following table presents the components of net sales and the changes from period to period:
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||||||||||||
($000s omitted) |
|
Sep 29, |
|
Oct 1, |
|
Change |
|
Sep 29, |
|
Oct 1, |
|
Change |
| ||||||||||
Specialized vehicles: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Trucks |
|
$ |
54,216 |
|
$ |
53,544 |
|
$ |
672 |
|
1.3 |
% |
$ |
170,984 |
|
$ |
174,385 |
|
$ |
(3,401 |
) |
(2.0 |
)% |
Buses |
|
12,705 |
|
14,455 |
|
(1,750 |
) |
(12.1 |
) |
44,474 |
|
44,665 |
|
(191 |
) |
(0.4 |
) | ||||||
Armored vehicles |
|
4,050 |
|
4,272 |
|
(222 |
) |
(5.2 |
) |
10,740 |
|
14,123 |
|
(3,383 |
) |
(24.0 |
) | ||||||
|
|
70,971 |
|
72,271 |
|
(1,300 |
) |
(1.8 |
) |
226,198 |
|
233,173 |
|
(6,975 |
) |
(3.0 |
) | ||||||
Fiberglass products |
|
700 |
|
529 |
|
171 |
|
32.2 |
|
2,214 |
|
1,730 |
|
484 |
|
28.0 |
| ||||||
|
|
$ |
71,671 |
|
$ |
72,800 |
|
$ |
(1,129 |
) |
(1.6 |
)% |
$ |
228,412 |
|
$ |
234,903 |
|
$ |
(6,491 |
) |
(2.8 |
)% |
Truck division sales increased by $0.7 million, or 1.3%, for the three months ended September 29, 2012 due largely to increased orders from one of our National customers. Truck sales decreased by $3.4 million, or 2.0%, for the nine months ended September 29, 2012, primarily due to fewer orders from certain large National fleet customers and our continued policy to avoid business that does not meet our target margins. Although market demand remains below 2007 (pre-recession) levels, we expect retail truck market conditions to show improvement in the near-term.
Bus division sales decreased by $1.8 million, or 12.1%, for the three months ended September 29, 2012, and $0.2 million, or 0.4%, for the nine months ended September 29, 2012. The decrease is primarily due to product mix and highly-competitive state and municipal government contracts. The bus market has been adversely affected by tightened state and municipal budgets, and we are not inclined to bid on business at weak profit margins.
Armored division sales decreased by $0.2 million, or 5.2%, for the three months ended September 29, 2012, and decreased by $3.4 million, or 24.0%, for the nine months ended September 29, 2012, primarily due to lower government procurements, which directly affect our business with the U.S. Department of State to produce armored SUVs for embassies abroad. Partially offsetting the slowness in government orders are increased sales to armored cash-in-transit customers.
Cost of sales and gross profit
Gross profit increased by $2.3 million, or 25%, to $11.6 million for the three months ended September 29, 2012, as compared with $9.3 million for the three months ended October 1, 2011. Gross profit increased by $12.1 million, or 51%, to $35.9 million for the nine months ended September 29, 2012, as compared with $23.8 million for the nine months ended October 1, 2011. The following presents the components of cost of sales as a percentage of net sales and the changes from period to period:
Material Material cost as a percentage of net sales decreased by 2.9% and 4.7% for the three and nine months ended September 29, 2012, as compared with the corresponding periods in 2011. The decrease in the material percentage was due in part to favorable product mix and our focus on increasing gross margins. Although commodity raw material prices seem to have stabilized, the potential for future raw material cost increases remains an ongoing concern for certain commodities including but not limited to aluminum, steel, and wood products. The Company closely monitors major commodities to identify raw material cost escalations and attempts to pass-through cost increases as markets will allow by having material adjustment clauses in most key customer contracts.
Direct Labor Direct labor as a percentage of net sales decreased by 0.3% and 0.9% for the three and nine months ended September 29, 2012, as compared with the corresponding periods in 2011. The decrease in the direct labor percentage was due to efficiencies achieved at certain locations resulting from recent plant redesign and product flow changes.
Overhead Manufacturing overhead as a percentage of net sales increased by 0.5% and 0.1% for the three and nine months ended September 29, 2012, as compared with the corresponding periods in 2011. These slight increases were primarily due to the fixed nature of certain overhead expenses that do not fluctuate with sales volume changes.
Delivery Delivery costs as a percentage of net sales decreased by 0.7% and 0.1% for the three and nine months ended September 29, 2012, as compared with the corresponding periods in 2011. The Company continuously seeks more cost-effective delivery methods to counteract the ongoing impact of high fuel costs.
Selling, general and administrative expenses
Selling, general and administrative (G&A) expenses increased by $1.2 million, or 17.5%, to $7.9 million for the three months ended September 29, 2012, as compared with $6.7 million for the three months ended October 1, 2011. Selling and G&A expenses increased by $4.1 million, or 19.7%, to $24.7 million for the nine months ended September 29, 2012, as compared with $20.6 million for the nine months ended October 1, 2011. The following table presents selling and G&A expenses as a percentage of net sales and the changes from period to period:
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||||||||||||||||||||
($000s omitted) |
|
Sep 29, |
|
Oct 1, |
|
Change |
|
Sep 29, |
|
Oct 1, |
|
Change |
| ||||||||||||||||||
Selling expenses |
|
$ |
2,493 |
|
3.5 |
% |
$ |
2,444 |
|
3.4 |
% |
$ |
49 |
|
0.1 |
% |
$ |
7,690 |
|
3.4 |
% |
$ |
7,046 |
|
3.0 |
% |
$ |
644 |
|
0.4 |
% |
G&A expenses |
|
5,406 |
|
7.5 |
|
4,277 |
|
5.9 |
|
1,129 |
|
1.6 |
|
16,997 |
|
7.4 |
|
13,582 |
|
5.8 |
|
3,415 |
|
1.6 |
| ||||||
Total |
|
$ |
7,899 |
|
11.0 |
% |
$ |
6,721 |
|
9.2 |
% |
$ |
1,178 |
|
1.8 |
% |
$ |
24,687 |
|
10.8 |
% |
$ |
20,628 |
|
8.8 |
% |
$ |
4,059 |
|
2.0 |
% |
Selling expenses Selling expenses remained relatively unchanged for the three months ended September 29, 2012, and increased $0.6 million for the nine months ended September 29, 2012, as compared to the corresponding periods in 2011. As a percentage of net sales, selling expenses increased 0.1% and 0.4% for the three and nine months ended September 29, 2012, as compared with the corresponding periods in 2011. The increase as a percentage of net sales resulted from a change in the sales commission structure which better correlates to the profitable sales levels.
G&A expenses G&A expenses increased $1.1 million and $3.4 million for the three and nine months ended September 29, 2012, as compared to the corresponding periods in 2011. As a percentage of net sales, G&A expenses increased 1.6% for both the three and nine months ended September 29, 2012, as compared with the corresponding periods in 2011. The increase was the result of several factors including additions in senior management, incentive compensation plans, and severance costs related to senior management changes made in early 2012, as well as costs associated with the implementation of a new inventory management system.
Other income
Other income was $0.2 million and $0.8 million for the three and nine months ended September 29, 2012, compared with $0.2 million and $0.6 million for the three and nine months ended October 1, 2011. Other income consisted of rental income, gain on the sale of assets, and other miscellaneous income received by the Company. During the first quarter of 2012, the Company realized a gain of approximately $0.3 million on the sale of real estate.
Legal settlement and related costs
The Company settled a lawsuit during the second quarter of 2011. The legal settlement and related costs were $2.2 million for the nine months ended October 1, 2011. No additional legal costs related to this lawsuit were incurred after settlement.
Interest expense
Interest expense was $0.1 million and $0.7 million for the three and nine months ended September 29, 2012, compared with $1.2 million and $1.9 million for the three and nine months ended October 1, 2011. The decline in interest expense resulted from a combination of lower average bank borrowings and lower (performance-based) borrowing rates during the periods. Additionally, interest expense in 2011 included approximately $0.8 million of charges resulting from the write off of capitalized bank fees related to the Companys previous bank credit agreement. The effective interest rate on bank borrowings was 3.3% at quarter end, and the Company was in compliance with all provisions of its Credit Agreement.
Income taxes
At December 31, 2011, the Company maintained a valuation allowance against its net deferred tax assets of $4.6 million due to uncertainty of the utilization of such assets. In the second quarter of 2012 the Company determined it was more likely than not that a portion of the net deferred tax assets would be realized based upon sustained profitability coupled with positive forecasted future operating results. As a result, the Company reversed $0.4 million of the valuation allowance, recorded as a non-cash income tax benefit for the three and six months ended June 30, 2012. The Company had retained a $0.4 million valuation allowance against certain state net operating loss carryforwards as of June 30, 2012. In the third quarter of 2012, the Company determined it was more likely than not that these state net operating loss carryforwards will be realized due to anticipated positive operating results and a detailed analysis of future expected taxable income by state. The Company is estimating an effective tax rate for the year ending December 29, 2012 which will be substantially lower than statutory rates due to the reversal of these deferred tax asset reserves. Beginning with the first quarter of 2013, the Company expects to recognize income taxes at normalized rates. The 2011 results did not include any provision for or benefit from income taxes due to the establishment of a full deferred tax valuation allowance.
Net income (loss) from continuing operations
Net income from continuing operations increased by $2.1 million to $3.6 million (5.0% of net sales) for the three months ended September 29, 2012, from net income of $1.5 million (2.1% of net sales) for the three months ended October 1, 2011. Net income from continuing operations increased by $11.8 million to $11.4 million (5.0% of net sales) for the nine months ended September 29, 2012, from a net loss of $0.4 million (0.1% of net sales) for the nine months ended October 1, 2011. Net income improved significantly, despite lower sales, due to a margin-focused sales strategy, favorable product mix and efficiencies gains at our manufacturing plants.
Discontinued operations
The Company decided to discontinue its Oregon operations in December of 2010. Accordingly, the Company has classified the prior period results for Oregon as discontinued operations. The operations were ceased in the first quarter of 2011 due to the Companys decision to exit this unprofitable geographic region. The after-tax loss from the discontinued operations was $0.7 million for the nine months ended October 1, 2011. The Oregon facility and equipment were sold during the quarter ended September 29, 2012. The sale resulted in a $0.1 million loss and is included in other income in the consolidated statements of operations.
Basic and diluted income (loss) per share
The following table presents basic and diluted income (loss) per share and the changes from period to period:
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
Sep 29, |
|
Oct 1, |
|
Sep 29, |
|
Oct 1, |
| ||||
Basic income (loss) per share: |
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations |
|
$ |
0.23 |
|
$ |
0.10 |
|
$ |
0.75 |
|
$ |
(0.02 |
) |
Loss from discontinued operations |
|
|
|
|
|
|
|
(0.05 |
) | ||||
Net income (loss) per basic share |
|
$ |
0.23 |
|
$ |
0.10 |
|
$ |
0.75 |
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Diluted income (loss) per share: |
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations |
|
$ |
0.23 |
|
$ |
0.10 |
|
$ |
0.74 |
|
$ |
(0.02 |
) |
Loss from discontinued operations |
|
|
|
|
|
|
|
(0.05 |
) | ||||
Net income (loss) per diluted share |
|
$ |
0.23 |
|
$ |
0.10 |
|
$ |
0.74 |
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Shares used in the computation of income (loss) per share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
15,206,196 |
|
15,155,528 |
|
15,186,505 |
|
14,693,856 |
| ||||
Diluted |
|
15,470,335 |
|
15,345,234 |
|
15,437,246 |
|
14,693,856 |
|
Liquidity and Capital Resources
Cash Flows
The Companys primary sources of liquidity have been cash flows from operating activities and borrowings under its credit facility. Principal uses of cash have been to support working capital needs, meet debt service requirements, and fund capital expenditure needs.
Operating activities
Cash flows from operations represent the net income earned, or net loss sustained, in the reported periods adjusted for non-cash charges coupled with changes in operating assets and liabilities. Cash provided by operating activities totaled $7.9 million for the nine months ended September 29, 2012, as compared with $10.0 million for the nine months ended October 1, 2011. Cash from operating activities was unfavorably impacted during the first nine months of 2012 by a $5.9 million decrease in trade accounts payable. The decrease in accounts payable resulted from payments to vendors due to the Companys improved overall liquidity and borrowing capacity.
Investing activities
Cash used in investing activities was $1.0 million for the nine months ended September 29, 2012 as compared with $0.7 for the nine months ended October 1, 2011. During the first nine months of 2012, the Companys capital expenditures totaled $5.4 million consisting primarily of the capital investments in our Indiana manufacturing facilities. Additionally, we received $4.2 million from the sale of idle property, plant, and equipment, including $4.0 million from the sale of assets previously classified as held for sale.
Financing activities
Financing activities used $3.6 million of cash for the nine months ended September 29, 2012 as compared with cash used of $10.2 million for the nine months ended October 1, 2011. The Company paid down its revolving bank line of credit and other long-term debt in the amount of $3.7 million during the nine months ended September 29, 2012. The repayments resulted from improved profitability and lower working capital needs during the second half of the year versus the first half of the year when higher working capital was necessary to support seasonal fleet orders.
Capital Resources
Revolving Line of Credit
On September 14, 2011, the Company entered into a Credit Agreement (the Credit Agreement) with Wells Fargo Capital Finance, LLC (the Lender). As of September 29, 2012, the outstanding balance under the Credit Agreement was approximately $8.8 million, and the Company had unused credit capacity of approximately $15.9 million. Interest on outstanding borrowings under the Credit Agreement was based on the Lenders prime rate or LIBOR depending on the pricing option selected and the Companys leverage ratio, as defined in the Credit Agreement, resulting in an effective rate of 3.3% at September 29, 2012, and the Company was in compliance with all provisions of its Credit Agreement.
Other Long-Term Debt
During 2011, the Company entered into a capital lease under a sale/leaseback transaction involving its California facility. The outstanding principal amount of the obligation as of September 29, 2012, was $3.5 million with an interest rate of 5.5%. Of this amount $0.1 million and $3.4 million were included in current maturities of long-term debt and long-term debt, respectively, in the accompanying consolidated balance sheets at September 29, 2012.
Summary of Liquidity and Capital Resources
The Companys primary capital needs are for working capital demands, to meet its debt service obligations, and to finance capital expenditure requirements. The Company has a substantial asset collateral base and a strong equity position which management believes adequately supports the outstanding revolving line of credit. Additionally, the Company is completing plans to attempt to sell certain idle assets which, if completed, will provide additional liquidity to reduce borrowings under the Companys revolving line of credit.
The Companys 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. However, as of September 29, 2012, the Company had approximately $3.5 million of cash primarily resulting from proceeds received from the sale of a facility which was classified as held for sale. The proceeds from this sale will be used as part of a like-kind exchange transaction.
Critical Accounting Policies and Estimates
Managements discussion and analysis of its financial position and results of operations are based upon the Companys consolidated condensed financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Companys significant accounting policies are discussed in Note 1 of the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2011. In managements opinion, the Companys critical accounting policies include revenue recognition, allowance for doubtful accounts, excess and obsolete inventories, inventory relief, fair value of assets held for sale, accrued insurance, and accrued warranty.
Revenue Recognition The Company generally recognizes revenue when products are shipped to the customer. Revenue on certain customer requested bill and hold transactions is recognized after the customer is notified that the products have been completed according to customer specifications, have passed all of the Companys quality control inspections, and are ready for delivery based on established delivery terms.
Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial conditions of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required which would adversely affect our future operating results.
Excess and Obsolete Inventories The Company must make estimates regarding the future use of raw materials, chassis, and finished products, and provide for obsolete or slow-moving inventories. If actual product life cycles, product demand, and/or market conditions are less favorable than those projected by management, additional inventory write-downs may be required which would adversely affect future operating results.
Inventory Relief For monthly and quarterly financial reporting, cost of sales is recorded and inventories are relieved by the use of standard bills of material adjusted for scrap and other estimated factors affecting inventory relief. Because of our large and diverse product line and the customized nature of each order, it is difficult to place full reliance on the bills of material for accurate relief of inventories. Although the Company continues to refine the process of creating accurate bills of materials, manual adjustments (which are based on estimates) are necessary to assure correct relief of inventories for products sold. The calculations to estimate costs not captured in the bill of materials take into account the customized nature of products, historical inventory relief percentages, scrap variances, and other factors which could impact inventory relief.
The accuracy of the inventory relief is not fully known until physical inventories are conducted at each of the Companys locations. We conduct semi-annual physical inventories at a majority of our locations and schedule them in a manner that provides coverage in each of our calendar quarters. We have invested significant resources in our continuing effort to improve the physical inventory process and accuracy of our inventory accounting system.
Beginning in the second quarter of 2012, the Company began the process of implementing a perpetual inventory system. As a result of the ongoing implementation, the Company self-identified errors related to revenue recognition during certain past reporting periods (See Note 1). Although the errors were limited to one location and deemed immaterial, the Company believes that these findings underscore the importance of implementing a perpetual inventory system. The Company is in the process of implementing the perpetual inventory system by division with an anticipated completion in the fourth quarter of 2012.
Fair Value of Assets Held for Sale Assets held for sale are carried at fair value less costs to dispose. The Company evaluates the carrying value of property held for sale whenever events or changes in circumstances indicate that a propertys carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, or (2) a significant adverse change in the extent or manner in which an asset is used. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The Company estimates the fair value of its properties held for sale based on appraisals and other current market data.
Accrued Insurance - The Company has a self-insured retention against product liability claims with insurance coverage over and above the retention. The Company is also self-insured for a portion of its employee medical benefits and workers compensation. Product liability claims are routinely reviewed by the Companys insurance carrier, and management routinely reviews other self-insurance risks for purposes of establishing ultimate loss estimates. In addition, management must determine estimated liability for claims incurred but not reported. Such estimates, and any subsequent changes in estimates, may result in adjustments to our operating results in the future.
Accrued Warranty The Company provides limited warranties for periods of up to five years from the date of retail sale. Estimated warranty costs are accrued at the time of sale and are based upon historical experience.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, other than historical facts, which reflect the view of management with respect to future events. When used in this report, words such as believe, expect, anticipate, estimate, intend, and similar expressions, as they relate to the Company or its plans or operations, identify forward-looking statements. Such forward-looking statements are based on assumptions made by, and information currently available to, management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that the expectations reflected in such forward-looking statements are reasonable, and it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from such expectations include, without limitation, an economic slowdown in the specialized vehicle industry, limitations on the availability of chassis on which the Companys products are dependent, availability of raw materials, raw material cost increases, and severe interest rate increases. Furthermore, the Company can provide no assurance that such raw material cost increases can be passed on to its customers through implementation of price increases for the Companys products. The forward-looking statements contained herein reflect the current view of management with respect to future events and are subject to those factors and other risks, uncertainties, and assumptions relating to the operations, results of operations, cash flows, and financial position of the Company. The Company assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those contemplated by such forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There has been no material change from the information provided in the Companys Annual Report on Form 10-K, Item 7A: Quantitative and Qualitative Disclosures About Market Risk, for the year ended December 31, 2011.
ITEM 4. CONTROLS AND PROCEDURES.
a. Evaluation of Disclosure Controls and Procedures.
In connection with the preparation of this Form 10-Q, an evaluation was performed under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective as of September 29, 2012.
b. Changes in Internal Control over Financial Reporting.
There has been no change in the Companys internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting, except that the Company implemented a perpetual inventory system at three of the Companys locations during the quarter ended September 29, 2012 and anticipates implementing the perpetual inventory system at the Companys remaining two locations in the quarter ended December 29, 2012.
The Company continues to take action to assure compliance with the internal controls, disclosure controls, and other requirements of the Sarbanes-Oxley Act of 2002. Management, including the Companys Chief Executive Officer and Chief Financial Officer, cannot guarantee that the internal controls and disclosure controls will prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of a control system have been met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls.
The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in any cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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 establishes accruals for matters that are probable and reasonably estimable.
For a discussion of those Risk Factors affecting the Company, you should carefully consider the Risk Factors discussed in Part I, under Item 1A: Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2011, which is herein incorporated by reference.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
Not applicable.
Exhibits:
Exhibit 3.1 |
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Certificate of Incorporation of the Company, filed as Exhibit 3(a) to the Companys Registration Statement on Form 8-A, filed with the Commission on September 18, 1989, and incorporated herein by reference. |
Exhibit 3.2 |
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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 Companys annual report on Form 10-K for the fiscal year ended December 31, 1993, and incorporated herein by reference. |
Exhibit 3.3 |
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Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1996, and incorporated herein by reference. |
Exhibit 3.4 |
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Second Amended and Restated Bylaws, filed as Exhibit 3.1 to the Companys current report on Form 8-K, filed on February 22, 2011, and incorporated herein by reference. |
Exhibit 10.1* |
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2012 Supreme Cash and Equity Bonus Plan dated July 3, 2012. |
Exhibit 31.1* |
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
Exhibit 32.1* |
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Exhibit 101* |
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The following financial statements from the Companys Quarterly Report on Form 10-Q for the quarter ended September 29, 2012, filed on November 8, 2012, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements. |
*Filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SUPREME INDUSTRIES, INC. | |
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By: |
/s/ Matthew W. Long |
DATE: November 8, 2012 |
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Matthew W. Long |
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Interim Chief Executive Officer and Chief Financial Officer |
Exhibit |
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Description of Document |
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Exhibit 3.1 |
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Certificate of Incorporation of the Company, filed as Exhibit 3(a) to the Companys Registration Statement on Form 8-A, filed with the Commission on September 18, 1989, and incorporated herein by reference. |
Exhibit 3.2 |
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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 Companys annual report on Form 10-K for the fiscal year ended December 31, 1993, and incorporated herein by reference. |
Exhibit 3.3 |
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Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1996, and incorporated herein by reference. |
Exhibit 3.4 |
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Second Amended and Restated Bylaws, filed as Exhibit 3.1 to the Companys current report on Form 8-K, filed on February 22, 2011, and incorporated herein by reference. |
Exhibit 10.1* |
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2012 Supreme Cash and Equity Bonus Plan dated July 3, 2012. |
Exhibit 31.1* |
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
Exhibit 32.1* |
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Exhibit 101* |
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The following financial statements from the Companys Quarterly Report on Form 10-Q for the quarter ended September 29, 2012, filed on November 8, 2012, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements. |
*Filed herewith.
Exhibit 10.1
2012 SUPREME CASH AND EQUITY BONUS PLAN
SECTION 1. DEFINITIONS: Terms capitalized in this 2012 Supreme Cash and Equity Bonus Plan (the 2012 Bonus Plan), but not otherwise defined herein, shall have the meanings ascribed to such terms in the Supreme Industries, Inc. 2012 Long-Term Incentive Plan.
Award: Shall mean after the Plan Year and all Performance Goal achievement is determined, the grant of equity and/or payment of cash pursuant to the terms of this 2012 Bonus Plan.
Cash Target Incentive: Shall mean a target dollar amount that a Participant will earn, payable in the form of cash, if all applicable Performance Goals for the Plan Year are achieved at the 100% level. The target is set for each Participant in accord with their function within the Company.
Equity Target Incentive: Shall mean a target dollar amount that a Participant will earn, payable in the form of equity, if all applicable Performance Goals for the Plan Year are achieved at the 100% level. The target is set for each Participant in accord with their function within the Company.
Gross Margin: Shall mean sales minus cost of goods sold, as shown by the Companys consolidated statement of earnings for 2012.
Inventory Turns: Shall mean the cost of goods sold divided by average inventory.
Leadership Team: Shall mean the following individuals:
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· Office of the President: | ||
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Matt Long: |
Chief Financial Officer and interim Chief Executive Officer of Supreme Industries, Inc. and Supreme Indiana Operations, Inc. |
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Mike Oium: |
Vice President, Operations, Supreme Indiana Operations, Inc. |
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John Dorbin: |
Vice President and General Counsel Supreme Indiana Operations, Inc. |
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· Bob Besse: |
Vice President of Sales and Marketing, Supreme Indiana Operations, Inc. | |
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· Jackie Daniels: |
Vice President, Human Resources, Supreme Indiana Operations, Inc. |
Net Income: Shall mean net income as shown by the Companys audited consolidated statement of earnings for 2012.
Participant: Shall mean the Leadership Team and any other employee of the Company designated as covered by this 2012 Bonus Plan by the Office of the President with the advice and consent of Supreme Industries, Inc.s Executive Committee.
Plan Year: Shall mean January 1, 2012 through December 31, 2012.
Qualitative Performance Goals: Shall mean Performance Goals based on Qualitative Performance Measures.
Qualitative Performance Measures: Shall mean those objective and subjective factors which are recommended by the Executive Committee to the Compensation Committee and which the Compensation Committee may, in its discretion, consider in determining each Participants Award.
Quantitative Performance Goals: Shall mean Performance Goals based on Quantitative Performance Measures.
Quantitative Performance Measures: Shall mean those specific and objectively measurable financial metrics which are recommended by the Executive Committee to the Compensation Committee and which are selected by the Compensation Committee.
Supreme or Company: Shall mean Supreme Industries, Inc. or any subsidiary of Supreme Industries, Inc.
SECTION 2. SUMMARY: The 2012 Bonus Plan is intended to provide financial incentives to executive officers and key employees of Supreme Industries, Inc. and its subsidiaries through the use of at risk variable pay tied to specific performance incentives which will motivate their actions and behaviors in ways beneficial to the Company and its stockholders. This 2012 Bonus Plan will offer Participants the opportunity to earn a bonus paid out in the form of cash, as well as a bonus paid out in the form of equity for the attainment of 2012 Bonus Plan incentives.
SECTION 3. PHILOSOPHY: The Board believes that compensation of executive officers and key employees should be partially at risk and variable, based on performance against certain pre-established financial objectives and other goals that are important to the Company. The 2012 Supreme Cash and Equity Bonus Plan (the 2012 Bonus Plan) is intended to focus the efforts of the Participants on achieving those objectives in order to help ensure the sustained profitability, long-term growth, and continued wellbeing of the Company. The Board believes that doing so aligns the interests of management with stockholders.
The 2012 Bonus Program is based on an independent compensation study done mid-year 2011. The 2012 Bonus Plan is structured to provide Participants with competitive cash and equity rewards for successful performance, which enables the Company to attract and retain critical management resources.
SECTION 4. ADMINISTRATION: Administration of this 2012 Bonus Plan shall be vested in the Compensation Committee. The decisions of the Compensation Committee shall be final as to the interpretation of the 2012 Bonus Plan or any rule, procedure or action related thereto. All Participants consent to the transfer and use of personal data by the Company and its agents in connection with the administration of this 2012 Bonus Plan.
SECTION 5. ELIGIBILITY: Only Participants as defined above are eligible to participate in the 2012 Bonus Plan.
To receive an Award under the 2012 Bonus Plan, a Participant must be an active, full-time employee on the last business day of the Plan Year, except as provided herein. An employee who is hired or promoted after the date of adoption of this 2012 Bonus Plan may be selected as a Participant at such time, provided that any Award earned by such Participant shall be prorated to reflect that Participants actual time in service.
If a Participant dies or incurs a Total and Permanent Disability, an Award, prorated on the basis of Participants actual time in service with the Company during the Plan Year prior to death or Total and Permanent Disability, will be paid to the Participant or his or her beneficiary at the same time and in the same manner as Awards for the Plan Year are paid to the other Participants. The Participants beneficiary under the 2012 Bonus Plan shall be the beneficiary designated for the Participants group life insurance plan. If no such beneficiary has been designated, the Award will be paid to the Participants estate.
If a Participant terminates service due to Retirement prior to the last day of the Plan Year, an Award, prorated on the basis of Participants actual time in service with the Company during the Plan Year prior to Retirement, shall be paid to the Participant at the same time and in the same manner as Awards for the Plan Year are paid to other Participants.
If a Change In Control occurs prior to the last day of the Plan Year, the full value of the Award, payable based on the Cash Target Incentive or Equity Target Incentive, as applicable, shall be paid to the Participant on or within 30 days of the Change In Control.
SECTION 6. SETTING OF TARGET INCENTIVES, PERFORMANCE GOALS, AND CALCULATION OF AWARDS FOR THE LEADERSHIP TEAM: Management has submitted recommendations for the 2012 Bonus Plan. The Compensation Committee has been asked by the Executive Committee to review these proposals in conjunction with an independent compensation study and advise the Executive Committee on whether managements recommendations generally align with the independent compensation study. The Compensation Committee determined that the procedures and goals outlined in this section were proper and suitable to meet the Companys goals.
The determination of the Cash Target Incentive and Equity Target Incentive will be based on recommendations of the Executive Committee to the Compensation Committee of the Board. The Compensation Committee is tasked with making the final determination for each member of the Leadership Team. Each member of the Leadership Team will have their Cash Target Incentive, Equity Target Incentive, personal goal(s) and maximum possible Award provided to them in writing separate from this 2012 Bonus Plan. At the time that an OTIP transaction appears more likely, equity grants may take into consideration the prospective value of each Participants OTIP percentage participation on a discounted basis. For 2012, it has been determined that the OTIP will not be taken into consideration with regard to any equity related grants.
All cash Awards and equity Awards will be based on quantitative and qualitative measures.
Quantitative Performance Goals will be weighted to account for 2/3rds of the Award determination and;
Qualitative Performance Goals will be weighted to account for 1/3rd of the Award determination.
Quantitative Performance Goals for the Leadership Team in 2012 are as follows:
Net income of not less than $7,945,000;
Gross margin of not less than 13.5%; and
Six (6) inventory turns.
IN DETERMINING THE QUANTITATIVE COMPONENT OF THE AWARD, NET INCOME SHALL BE WEIGHTED 50%, GROSS MARGIN SHALL BE WEIGHTED 25%, AND INVENTORY TURNS SHALL BE WEIGHTED 25%.
Qualitative Performance Goals for the Leadership Team in 2012:
Successful transition from the Office of the President to the new CEO;
Perpetual inventory system operational; and
Successful completion of the Participants Personal Goal(s).
Each Participant shall have at least three (3) Personal Goals, at least one of which will be quantitatively measurable.
IN DETERMINING THE QUALITATIVE COMPONENT OF THE AWARD, OFFICE OF THE PRESIDENT TRANSITION SHALL BE WEIGHTED 33.3%, PERPETUAL INVENTORY SYSTEM OPERATIONAL SHALL BE WEIGHTED 33.4%, AND SUCCESSFUL COMPLETION OF PERSONAL GOAL(S) SHALL BE WEIGHTED 33.3%.
Quantitative Performance Goal achievement will be determined by comparing the relevant 2012 Performance Goal with the Companys actual performance for that financial metric during the Plan Year. The threshold for each Quantitative Performance Goal is at least 80% of the goal set for 2012. For each one percent increment (rounded to the nearest whole percentage) below the goal, achievement for a Performance Goal will decline by five percent (5%) until reaching the threshold, below which there will be no Award achievement attributable to that particular Performance Goal.
Participants may earn above target incentive Awards for above goal performance, up to a maximum Award of 150% of the target incentive. The maximum performance cap is 125% for each Quantitative Performance Goal. For each one percent increment (rounded to the nearest whole percentage) of above goal performance, achievement for a Performance Goal will increase by two percent (2%), up to the 125% cap. This results in a maximum possible achievement of 150% of target incentive for Quantitative Performance Goals.
Qualitative Performance Goal achievement for the Plan Year will be determined by the Compensation Committee, in its sole discretion.
Once the Compensation Committee determines the level of achievement for each Performance Goal, the Compensation Committee will apply the weighting for each Performance Goal and apply the 2/3 Quantitative Measures and 1/3 Qualitative measures split. That factor will be multiplied by each member of the Leadership Teams Cash Target Incentive and Equity Target Incentive to arrive at the Participants cash Award and equity Award.
The Compensation Committee may, in its discretion, adjust the payout of an Award downward after consideration of other business factors, including overall performance of the Company and the individuals contribution to Company performance. The Compensation Committee may reduce or entirely eliminate an Award in the event a Participant is on a performance improvement plan or otherwise demonstrates unsatisfactory performance or discipline during the Plan Year. The Compensation Committee may adjust a payout of an Award in its discretion to prevent the enlargement or dilution of the Award because of extraordinary events or circumstances as determined by the Compensation Committee.
SECTION 7. TARGET INCENTIVES, PERFORMANCE GOALS AND CALCULATION OF AWARDS FOR OTHER PARTICIPANTS:
Once the Leadership Team target incentives and goals are set, the Office of the President will then set target incentives and goals for all other Participants, utilizing the Quantitative Goals specified above, setting Qualitative Goals relating each individuals job functions, and with weighting to be determined by the Office of the President. Prior to advising the Participants of their participation in this 2012 Bonus Plan, the Office of the President will advise the Executive Committee of its determinations. Awards will be calculated in the same manner as specified above.
SECTION 8. APPROVAL AND PAYMENT OF AWARDS:
Upon completion of the Plan Year, the Compensation Committee shall certify to what extent the Performance Goals were met and determine the Award payable to each Participant based on information supplied and certified by management. Certification by the Compensation Committee shall be subject to completion of the annual audit and certification of overall Company results by the Companys independent auditors. Payment of cash Awards shall be made in a lump sum payment in cash except to the extent of Participants elective contribution to any qualified deferred compensation plan. Payment of equity Awards shall be made in the form of a grant of restricted stock units pursuant to the Supreme Industries, Inc. 2012 Long-Term Incentive Plan, which will vest over three years in equal increments, in accord with the form of agreement attached to this 2012 Bonus Plan as Exhibit A. To the extent Awards are subject to Section 409A of the Code, payments are intended to qualify as short-term deferrals under the regulations adopted under Section 409A of the Code. Payment of cash Awards and determination and grant of equity Awards shall be made as soon as reasonably practicable in 2013, but no later than March 15, 2013. The Company may deduct from any Award such amounts as may be required to be withheld under any federal, state or local tax laws.
SECTION 9. RECOUPMENT OF AWARDS:
If the Board learns of any intentional misconduct by a Participant which directly contributes to the Company having to restate all or a portion of its financial statements, the Board may, in its sole discretion, require the Participant to reimburse the Company for the difference between any Awards paid to the Participant based on achievement of financial results that were subsequently the subject of a restatement and the amount the Participant would have earned as awards under the 2012 Bonus Plan based on the financial results as restated.
SECTION 10. NO CONTRACT:
The 2012 Bonus Plan is not and shall not be construed as an employment contract or as a promise or contract to pay Awards to Participants or their beneficiaries. The 2012 Bonus Plan shall be approved by the Compensation Committee and may be amended from time to time by the Compensation Committee or terminated without notice. No Participant or beneficiary may sell, assign, transfer, discount or pledge as collateral for a loan, or otherwise anticipate any right to payment of an Award under this 2012 Bonus Plan.
SECTION 11. GOVERNING LAW
This 2012 Bonus Plan shall be governed by the laws of the State of Delaware.
Exhibit A
RESTRICTED STOCK UNIT AWARD AGREEMENT
SUPREME INDUSTRIES, INC.
2012 LONG-TERM INCENTIVE PLAN
1. Award of Restricted Stock Units. Pursuant to the Supreme Industries, Inc. 2012 Long-Term Incentive Plan (the Plan) for Employees, Contractors, and Outside Directors of Supreme Industries, Inc., a Delaware corporation (the Company), the Company grants to
(the Participant)
an Award under the Plan for ( ) Restricted Stock Units (the Awarded Units) which may be converted into the number of shares of Common Stock of the Company equal to the number of Restricted Stock Units, subject to the terms and conditions of the Plan and this Restricted Stock Unit Award Agreement (this Agreement). The Date of Grant of this Restricted Stock Unit Award is , 2012. Each Awarded Unit shall be a notional share of Common Stock, with the value of each Awarded Unit being equal to the Fair Market Value of a share of Common Stock at any time.
2. Subject to Plan. This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the provisions of this Agreement. To the extent the terms of the Plan are inconsistent with the provisions of the Agreement, this Agreement shall control. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.
3. Vesting; Time of Delivery of Shares. Awarded Units which have become vested pursuant to the terms of this Section 3 are collectively referred to herein as Vested RSUs. All other Awarded Units are collectively referred to herein as Unvested RSUs.
a. Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Awarded Units shall be vested as follows:
i. One-third (1/3) of the total Awarded Units shall vest on the first anniversary of the Date of Grant and become Vested RSUs, provided the Participant is employed by (or if the Participant is a Contractor or an Outside Director, is providing services to) the Company or a Subsidiary on that date.
ii. One-third (1/3) of the total Awarded Units shall vest on the second anniversary of the Date of Grant and become Vested RSUs, provided the Participant is employed by (or if the Participant is a Contractor or an Outside Director, is providing services to) the Company or a Subsidiary on that date.
iii. The remaining One-third (1/3) of the total Awarded Units shall vest on the third anniversary of the Date of Grant and become Vested RSUs, provided the Participant is employed by (or if the Participant is a Contractor or an Outside Director, is providing services to) the Company or a Subsidiary on that date.
Notwithstanding the foregoing, upon the occurrence of (i) a Change in Control, or (ii) a Termination of Service due to death or Total and Permanent Disability, all Unvested RSUs shall immediately become Vested RSUs.
b. Subject to the provisions of the Plan and this Agreement, upon the vesting of Awarded Units, or as soon as practicable following vesting, and in no event, later than sixty (60) days after vesting of Awarded Units, the Company shall convert the Vested RSUs into the number of whole shares of Common Stock equal to the number of Vested RSUs and shall deliver to the Participant or the Participants personal representative a number of shares of Common Stock equal to the number of Vested RSUs credited to the Participant. From and after the date of receipt of such shares, the Participant or the Participants estate, personal representative or beneficiary, as the case may be, shall have full rights of transfer or resale with respect to such stock subject to applicable state and federal regulations.
c. For purposes of this Agreement, the following terms shall have the meanings set forth below:
Cause shall have the meaning set forth in the Participants employment agreement with the Company, or, if no employment agreement is in effect for the Participant, Cause shall mean (i) the Participants violation of the Company written policies, standards or guidelines, which the Participant failed to cure within thirty (30) days after receiving written notice detailing the allegations from either the Board or the Participants supervisor; (ii) the Participants failure or refusal to satisfactorily perform the duties and responsibilities necessary to carry out the Participants job duties, which the Participant failed to cure within thirty (30) days after receiving written notice from either the Board or the Participants supervisor; (iii) the Participants gross negligence or willful misconduct in the performance of the Participants duties for the Company; (iv) dishonesty, fraud, misconduct, unlawful discrimination, gross negligence, willful breach of fiduciary duty, bad faith or theft on the part of the Participant that the Company, in their sole discretion, consider materially damaging to, or which materially discredits, the Company; (v) the Participants commission of an act (other than the good faith exercise of the Participants business judgment in the exercise of his or her responsibilities) resulting in material damages to the Company; (vi) the Participants inability to perform his or her duties for a reason other than the Participants Total and Permanent Disability; and (viii) the Participants conviction, commission, or plea of nolo contendere for any criminal offense or commission by the Participant of any act that the Company, in their sole discretion, considers materially damaging to, or which materially discredits the Company.
4. Forfeiture of Awarded Units. Upon the Participants Termination of Service for any reason, the Participant shall be deemed to have forfeited all of the Participants Unvested RSUs. Upon forfeiture, all of the Participants rights with respect to the forfeited Unvested RSUs shall cease and terminate, without any further obligations on the part of the Company.
5. Who May Receive Converted Awarded Units. During the lifetime of the Participant, the Common Stock received upon conversion of Awarded Units may only be received by the Participant or his or her legal representative. If the Participant dies prior to the date his or her Awarded Units are converted into shares of Common Stock as described in Section 3 above, the Common Stock relating to such converted Awarded Units may be received by any individual who is entitled to receive the property of the Participant pursuant to the applicable laws of descent and distribution.
6. No Fractional Shares. Awarded Units may be converted only with respect to full shares, and no fractional share of Common Stock shall be issued.
7. Nonassignability. The Awarded Units are not assignable or transferable by the Participant except by will or by the laws of descent and distribution.
8. Rights as Stockholder. The Participant will have no rights as a stockholder with respect to any shares covered by this Agreement until the issuance of a certificate or certificates to the Participant or the registration of such shares in the Participants name for the shares of Common Stock. The Awarded Units shall be subject to the terms and conditions of this Agreement. Except as otherwise provided in Section 9 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates. The Participant, by his or her execution of this Agreement, agrees to execute any documents requested by the Company in connection with the issuance of a certificate or certificates for the shares of Common Stock.
9. Adjustment of Number of Awarded Units and Related Matters. The number of shares of Common Stock covered by the Awarded Units shall be subject to adjustment in accordance with Articles 11-13 of the Plan.
10. Specific Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.
11. Participants Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that the Company will not be obligated to issue any shares of Common Stock to the Participant hereunder, if the issuance of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Participant are subject to all Applicable Laws, rules, and regulations.
12. Investment Representation. Unless the shares of Common Stock are issued to the Participant in a transaction registered under applicable federal and state securities laws, by his execution hereof, the Participant represents and warrants to the Company that all Common Stock which may be acquired hereunder will be acquired by the Participant for investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws. Unless the Common Stock is issued to him in a transaction registered under the applicable federal and state securities laws, all certificates issued with respect to the Common Stock shall bear an appropriate restrictive investment legend and shall be held indefinitely, unless they are subsequently registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required.
13. Participants Acknowledgments. The Participant acknowledges that a copy of the Plan has been made available for his or her review by the Company, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.
14. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).
15. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee or as a Contractor or as an Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Contractor or Outside Director at any time.
16. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.
17. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.
18. Entire Agreement. This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.
19. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.
20. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties; provided, however, that the Company may change or modify this Agreement without the Participants consent or signature if the Company determines, in its sole discretion, that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder. Notwithstanding the preceding sentence, the Company may amend the Plan to the extent permitted by the Plan.
21. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.
22. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.
23. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:
a. Notice to the Company shall be addressed and delivered as follows:
Supreme Industries, Inc.
Goshen, IN
Attn:
Facsimile:
b. Notice to the Participant shall be addressed and delivered as set forth on the signature page.
24. Section 409A; Six Month Delay. Notwithstanding anything herein to the contrary, in the case of a distribution of shares of Common Stock on account of any Termination of Service, other than death, a distribution of the number of such shares, determined after application of the withholding requirements set forth in Section 25 below, on behalf of the Participant, if the Participant is a specified employee as defined in § 1.409A-1(i) of the Final Regulations under Section 409A of the Code, to the extent otherwise required under Section 409A of the Code, shall not occur until the date which is six (6) months following the date of the Participants Termination of Service (or, if earlier, the date of death of the Participant).
25. Tax Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement. Unless the Company otherwise consents in writing to an alternative withholding method, the Company, or if applicable, any Subsidiary (for purposes of this Section 25, the term Company shall be deemed to include any applicable Subsidiary) shall have the right to deduct from all amounts paid in cash or other form in connection with the Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with this Award. The Company shall withhold the number of shares to be delivered upon the conversion of the Awarded Units with an aggregate Fair Market Value that equals (but does not exceed) the amount of any Federal, state, local, or other taxes required by law to be withheld in connection with this Award. However, if the Participant is a specified employee as defined in §1.409A-1(i) of the Final Regulations under Section 409A of the Code who is subject to the six (6) months delay provided for in Section 24 above, the Company shall withhold the number of shares attributable to the employment taxes on the date of the Participants Termination of Service and withhold the number of shares attributable to the income taxes on the date which occurs six (6) months following the date of the Participants Termination of Service (or, if earlier, the date of death of the Participant).
The Company may, in its sole discretion and prior to the date of conversion, also permit the Participant receiving shares of Common Stock upon conversion of Awarded Units to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participants income arising with respect to this Award. Such payments shall be required to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment, if the Company, in its sole discretion, so consents in writing, may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the exercising Participant to the Company of shares of Common Stock that the Participant has not acquired from the Company within six (6) months prior to the date of exercise, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Companys withholding of a number of shares to be delivered upon the conversion of the Awarded Units, which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.
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[Remainder of Page Intentionally Left Blank
Signature Page Follows.]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.
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SUPREME INDUSTRIES, INC. | ||
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Herbert M. Gardner | |
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Chairman of the Board | |
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
I, Matthew W. Long, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Supreme Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
DATE: November 8, 2012 |
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/s/ Matthew W. Long |
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Matthew W. Long |
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Interim Chief Executive Officer and Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Supreme Industries, Inc. (the Company) does hereby certify, to such officers knowledge, that:
The Quarterly Report on Form 10-Q for the quarter ended September 29, 2012 (the Form 10-Q) of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.
DATE: November 8, 2012 |
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/s/ Matthew W. Long |
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Matthew W. Long |
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Interim Chief Executive Officer and Chief Financial Officer |
The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
FAIR VALUE MEASUREMENT
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9 Months Ended | |
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Sep. 29, 2012
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FAIR VALUE MEASUREMENT | ||
FAIR VALUE MEASUREMENT |
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