GOSHEN —

Supreme Industries Inc. has reported improved sales for its fourth quarter and year, but it recorded losses for 2010 and its fourth quarter. The company is also attempting to renegotiate a loan.

Supreme, which makes specialized commercial vehicles, including truck bodies, shuttle buses and armored vehicles, reported Wednesday its net sales for the 2010 fourth quarter rose 23 percent to $54.5 million from $44.5 million in last year’s comparable period. For the full year, net sales reached $220.9 million, up 19 percent from $186.1 million in 2009.

The company said its fourth-quarter pre-tax loss from continuing operations was $6.7 million, or $0.47 per share, compared with the $4.6 million pre-tax loss, or $0.32 per share, reported for the year-ago quarter.

For the full year 2010, the pre-tax loss from continuing operations was $8.1 million, or $0.57 per share, compared with the pre-tax loss of $9.5 million, or $0.67 per share, in 2009’s comparable period.

The company said it continues to experience improved demand for all major product lines, including truck, bus and armored vehicles. The company reported its sales order backlog at Dec. 25, 2010 grew 49 percent to $102 million from $68 million a year ago, and that backlog continues to grow into the first quarter of 2011.

Newly appointed President and Chief Executive Officer Kim Korth said, "We are obviously extremely disappointed with our fourth quarter operating results and the overall losses for 2010. While our sales levels showed continued improvement throughout the year, our operating results were negatively impacted by a number of factors, including continued inefficiencies at several of our plants as well as effectively processing our dramatic increase in orders. We have been doing an intensive review of all aspects of the business and we recently made a series of leadership changes we believe will help us do a much better job of managing our costs and improving profitability going forward."

According to Korth, the company will attempt to divest its idled properties. The company also recently decided to shut its Oregon bus facility.

"We have reviewed in detail all aspects of our business and have clearly identified any costs associated with previous and current restructuring activities," Korth said. "With our continued growth in sales and our focus on improving the operational effectiveness of our plants, we are confident we are well positioned to take advantage of the improving economic outlook in 2011."

The plan

To help ensure adequate liquidity is available during the company’s period of its largest backlog ever, Supreme has enacted a plan that includes, according to the company:

"The divestiture of certain idled properties in a more aggressive fashion, which included significant downward adjustments in the market listing prices that resulted in significant impairment of the net carrying values associated with these facilities;

A recent decision to shut down our Oregon bus facility, which also included significant downward adjustments to the carrying value of various assets."

Financial concerns

The company is also in technical default of a $25.5 million loan. About that situation the company stated, "As of the end of November and December, 2010, Supreme was not in compliance with its minimum EBITDA (earnings before interest, taxes, depreciation and amortization) and its tangible net worth financial covenants under its senior bank loan agreement, which constitute events of default under such agreement. Supreme is in negotiations with the bank to obtain a waiver of such events of default and is seeking restructured credit facilities maturing not earlier than the end of 2011.

"The bank has not yet made any commitment to restructure any of the credit facilities provided under the credit agreement or waive the events of default, but is currently negotiating the restructuring terms with Supreme. $25.5 million was the current outstanding principal balance at Dec. 25, 2010 under the credit agreement. There are no payment defaults under the credit agreement.

"There can be no assurances that an agreement will be reached with the bank for the credit facilities to be restructured maturing not earlier than the end of 2011 and waiving the existence of the events of default."