Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 15, 1997

Documents

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on May 15, 1997




FORM 10-Q


SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549


QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934



For Quarter Ended March 31, 1997 Commission File Number 0-3922


PATRICK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)


INDIANA 35-1057796
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)



1800 South 14th Street, Elkhart, IN 46516
(Address of principal executive offices) (ZIP Code)




Registrant's telephone number, including area code (219) 294-7511


NONE
Former name, former address and former fiscal year, if changed since last
report.


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

Shares of Common Stock Outstanding as of April 30, 1997: 5,965,266


PATRICK INDUSTRIES, INC.


INDEX

Page No.

PART I: Financial Information

Unaudited Condensed Balance Sheets
March 31, 1997 & December 31, 1996 3

Unaudited Condensed Statements of Income
Three Months Ended March 31, 1997 & 1996, 4

Unaudited Condensed Statements of Cash Flows
Three Months Ended March 31, 1997 & 1996 5

Notes to Unaudited Condensed Financial Statements 6

Management's Discussion and Analysis of Financial
Condition and Results of Operations 7

PART II: Other Information 10

Signatures 11

PART I: FINANCIAL INFORMATION

PATRICK INDUSTRIES, INC. CONDENSED BALANCE SHEETS



(Unaudited) (Note)
MARCH 31 DECEMBER 31
1997 1996
ASSETS

CURRENT ASSETS
Cash $ 798,897 $ 6,441,482
Investment in Marketable Securities 5,000,000 ---
Accounts Receivable, Net 27,602,693 15,208,671
Inventories 38,345,279 39,342,506
Other 466,799 393,520
Total Current Assets $ 72,213,668 $ 61,386,179

PROPERTY AND EQUIPMENT, at cost $ 68,980,268 $ 65,630,289
Less Accumulated Depreciation 27,058,814 25,870,995
$ 41,921,454 $ 39,759,294

INTANGIBLE AND OTHER ASSETS $ 5,402,646 $ 5,460,793

Total Assets $ 119,537,768 $ 106,606,266


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current Maturities of Long-term Debt $ 1,138,517 $ 1,138,517
Accounts Payable 21,330,905 10,545,175
Accrued Expenses and Taxes Payable 4,441,322 4,056,031
Total Current Liabilities $ 26,910,744 $ 15,739,723

LONG-TERM DEBT, NET of CURRENT MATURITIES $ 26,044,106 $ 26,151,527

DEFERRED COMPENSATION OBLIGATIONS $ 1,116,607 $ 1,069,357

DEFERRED INCOME TAX CREDITS $ 1,306,339 $ 1,350,000

SHAREHOLDERS' EQUITY
Common Stock $ 22,154,619 $ 22,138,494
Retained Earnings 42,005,353 40,157,165
Total Stockholders' Equity $ 64,159,972 $ 62,295,659

Total Liabilities and Stockholders' Equity $ 119,537,768 $ 106,606,266

NOTE: The balance sheet at December 31, 1996 has been taken from the audited
financial statements at that date and condensed.

See accompanying notes to Unaudited Condensed Financial Statements.



PATRICK INDUSTRIES, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME



THREE MONTHS ENDED
MARCH 31

1997 1996


NET SALES $96,935,710 $93,767,541

COST AND EXPENSES
Cost of Goods Sold $84,979,168 $82,014,145
Warehouse and Delivery Expenses 3,395,562 3,364,653
Selling and Administrative Expenses 4,853,227 4,924,656
Financial Expenses, Net 287,909 296,881
$93,515,866 $90,600,335


INCOME BEFORE INCOME TAXES $ 3,419,844 $ 3,167,206

INCOME TAXES 1,333,700 1,222,500

NET INCOME $ 2,086,144 $ 1,944,706


EARNINGS PER COMMON SHARE $ .35 $ .33

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,964,594 5,967,157


See accompanying notes to Unaudited Condensed Financial Statements.



PATRICK INDUSTRIES, INC.
UNAUDITED CONDENSED STATEMENTS OF
CASH FLOW


THREE MONTHS ENDED
MARCH 31
1997 1996

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,086,144 $ 1,944,706
Adjustment to Reconcile Net Income to Net Cash:
Depreciation and Amortization 1,397,612 1,061,881
Other (28,353) (378)
Change in Assets and Liabilities:
Decrease (Increase) in:
Accounts Receivable (12,394,022) (5,868,551)
Inventories 997,227 1,601,926
Other (73,279) 167,706
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 9,836,649 3,756,025
Income Taxes Payable and Deferred Taxes 1,313,700 1,008,568
Deferred Compensation 47,250 35,749
Net Cash Provided by (Used in) Operating Activities $ 3,182,928 $ 3,707,632

CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures $ (3,494,664) $ (1,458,961)
Investment in Marketable Securities (600,000) - - -
Other 15,139 23,273
Net Cash (Used in) Investing Activities $ (4,079,525) $ (1,435,688)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash Dividend $ (237,954) $ (238,439)
Proceeds from Options 16,125 23,978
Principal Payments on Debt (107,421) - - -
Reacquisition of Common Stock - - - (356,250)
Other (16,738) 80,549
Net Cash Provided by (Used In) Financing Activities $ (345,988) $ (490,162)

Increase (Decrease) in Cash and Cash Equivalents $ (1,242,585) $ 1,781,782

CASH and CASH EQUIVALENTS, BEGINNING $ 2,041,482 $ 1,349,709

CASH and CASH EQUIVALENTS, ENDING $ 798,897 $ 3,131,491

See accompanying notes to Unaudited Condensed Financial Statements.



PATRICK INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. In the opinion of the Registrant, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly financial position as of
March 31, 1997, and December 31, 1996, and the results of operations and
cash flows for the three months ended March 31, 1997 and 1996.

2. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in Registrant's December 31, 1996
audited financial statements. The results of operations for the three
months periods ended March 31, 1997 and 1996 are not necessarily indicative
of the results to be expected for the full year.

3. The inventories on March 31, 1997 and December 31, 1996 consist of the
following classes:



March 31 December 31
1997 1996


Raw Materials $22,861,972 $24,204,345
Work in Process 1,602,117 1,029,127
Finished 3,444,790 5,311,075

Total Manufactured Goods $27,908,879 $30,544,547

Distribution Products 10,436,400 8,797,959
TOTAL INVENTORIES $38,345,279 $39,342,506



The inventories are stated at the lower of cost, First-In, First-Out (FIFO)
method, or market.

4. The earnings per common share for the three months ended March 31, 1997 and
1996 have been computed based on the weighted average number of shares of
common stock outstanding of 5,964,594 and 5,967,157 respectively.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share."
SFAS No. 128 requires the presentation of both basic earnings per share and
diluted earnings per share. Basic earnings per share will be computed by
dividing net income by the weighted-average number of common shares
outstanding. SFAS No. 128 will be effective for the Company's 1997 annual
report. If SFAS No. 128 had been in effect during the first quarter of
1997, there would have been no change in basic earnings per share.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

GENERAL

The Registrant's business has shown significant revenue growth since 1991,
with annual sales increasing from $143 million to $403 million in five years.
This revenue growth showed lower increases in the fourth quarter of 1996 and the
first quarter of 1997 than had been recorded in prior years.

The following table sets forth the percentage relationship to net sales of
certain items in the Registrant's Statements of Operations:




Quarterly Ended
March 31,
1997 1996 1995


Net Sales 100.0% 100.0% 100.0%
Cost of Sales 87.7 87.5 86.3
Gross Profit 12.3 12.5 13.7
Warehouse and Delivery 3.5 3.6 3.7
Selling, General & Administrative 5.0 5.2 5.3
Operating Income 3.8 3.7 4.7
Net Income 2.2 2.1 2.7



RESULTS OF OPERATIONS

Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996
Net Sales. Net sales increased by $3.1 million, or 3.4%, from $93.8
million in the quarter ended March 31, 1996 to $96.9 million in the quarter
ended March 31, 1997. This sales increase was attributable to higher sales
penetration in the Industrial and Recreational Vehicle industries. The
Registrant's sales are 66% to Manufactured Housing, 16% to Recreational
Vehicles, and 18% to other industrial industries.

Gross Profit. Gross Profit increased by approximately $200,000, or 1.7%,
from $11.7 million in the first quarter of 1996, to $11.9 million in the same
1997 quarter. As a percentage of net sales, gross profit decreased from 12.5%
in the first quarter of 1996 to 12.3% in 1997. This decrease in gross profit
was due to highly competitive market pricing of most of Registrant's products in
the first quarter of 1997.

Warehouse and Delivery Expenses. Warehouse and delivery expenses increased
approximately $31,000 or 0.9%, remaining at $3.4 million for both first
quarters. As a percentage of net sales, warehouse and delivery expenses
decreased from 3.6% in the 1996 first quarter to 3.5% in 1997.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately $71,000, or 1.5%, from $4.9
million in 1996, to $4.8 million in 1997. As a percentage of net sales,
selling, general and administrative expenses decreased from 5.2% in 1996 to 5.0%
in 1997.

Operating Income. Operating income increased by approximately $243,000
because of the increased gross profit and the overall reduction of operating
expenses remaining about the same as in 1996. As a percentage of net sales,
operating income increased from 3.7% in 1996 to 3.8% in the 1997 first quarter.

Financial Expense, Net. Interest expense decreased by approximately $9,000
in 1997 from 297,000 in 1996 to $288,000 in 1997. The Registrant's borrowing
level was slightly lower in the 1997 first quarter and more funds were invested
than in 1996.

Net Income. Net income increased by approximately $141,000 from $1.9
million in the 1996 first quarter to $2.0 million in 1997. This increase is
primarily attributable to the factors described above.


Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1995
Net Sales. Net sales increased by $6.7 million, or 7.7%, from $87.0
million for the quarter ended March 31, 1995, to $93.8 million in the quarter
ended March 31, 1996. This sales increase was attributable to 7% increases in
units shipped by the Manufactured Housing industry, which represents
approximately 68% of the Registrant's sales. The Registrant's sales to the
Recreational Vehicle industry were down as a percent of total company sales as a
result of a slight decline in units produced in that industry, which represents
approximately 16% of Registrant's sales.

Gross Profit. Gross profit decreased by approximately $217,000, or 1.8%,
from $11.9 million in the first quarter of 1995, to $11.7 million in the same
1996 quarter. As a percentage of net sales, gross profit decreased from 13.7%
in first quarter 1995 to 12.5% in 1996. This decrease in gross profit was the
result of lower volume and higher inventory costs in the Registrant's aluminum
extrusion division and lower volume, moving, and start-up costs at the new
Oregon facility. The Registrant also experienced competitive market pricing of
certain products in the first quarter of 1996.

Warehouse and Delivery Expenses. Warehouse and delivery expenses increased
approximately $114,000, or 3.5%, from $3.3 million in 1995, to $3.4 million in
the first quarter of 1996. As a percentage of net sales, warehouse and delivery
expenses decreased from 3.7% in 1995 to 3.6% in the 1996 first quarter.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by approximately $348,000, or 7.6%, from $4.5
million in 1995, to $4.9 million in 1996. As a percentage of net sales,
selling, general and administrative expenses decreased from 5.3% in 1995 to 5.2%
in 1996.

Operating Income. Operating income decreased by approximately $680,000
because of the reduced gross profit and increases in warehouse and delivery, and
selling, general and administrative expenses. As a percentage of sales,
operating income decreased from 4.7% in 1995 to 3.7% in the 1996 first quarter.

Financial Expense, Net. Interest expense decreased by approximately
$51,000 from $348,000 in 1995 to $297,000 in the first quarter of 1996. The
Registrant's borrowing levels in the 1996 period were slightly higher but at
lower rates.

Net Income. Net income decreased by approximately $371,000 from $2.3
million in 1995 to $1.9 million in 1996 for the first quarter ended March 31.
This decrease is attributable to the factors described above.



LIQUIDITY AND CAPITAL RESOURCES

The Registrant's primary capital requirements are to meet working capital
needs, support its capital expenditure plans and meet debt service requirements.


The Registrant, in September, 1995, issued to an insurance company in a
private placement $18,000,000 of senior unsecured notes. The ten year notes
bear interest at 6.82%, with semi-annual interest payments beginning in 1996 and
seven annual principal repayments beginning September 15, 1999. These funds
were used to reduce existing bank debt and for working capital needs.

The Registrant had a bank financing agreement (the Credit Agreement) with
NBD Bank, N.A. for a term loan and a revolver loan. In September, 1995 with
funds from the insurance company private placement, the Registrant prepaid the
term loan in full and paid the revolver outstanding balance. The Revolving
Credit Agreement was amended on February 13, 1997 and provides revolver loan
availability of $10,000,000 with maturity in three years. Pursuant to the
Credit Agreement, the Registrant is required to maintain certain financial
ratios, all of which are currently complied with.

The Registrant believes that cash generated from operations and borrowings
under its credit agreements will be sufficient to fund its working capital
requirements and capital expenditures as currently contemplated.



SEASONALITY

Manufacturing operations in the Manufactured Housing and Recreational
Vehicle industries historically have been seasonal and are generally at the
highest levels when the climate is temperate. Accordingly, the Registrant's
sales and profits are generally highest in the second and third quarters.



INFLATION

The Registrant does not believe that inflation had a material effect on
results of operations for the periods presented.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities

None

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

10 Credit Agreement dated as of February 2, 1997 among the
Registrant and NBD Bank

27 Financial Data Schedule

(b) There were no Reports filed on Form 8-K


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



PATRICK INDUSTRIES, INC.
(Registrant)





Date May 12, 1997 /S/Mervin D. Lung

Mervin D. Lung
(Chairman of the Board)





Date May 12, 1997 /S/David D. Lung

David D. Lung
(President)






Date May 12, 1997 /S/Keith V. Kankel
Keith V. Kankel
(Vice President Finance)
(Principal Accounting Officer)