<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
( ) 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 0-20797
---------------------------
RUSH ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1733016
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8810 I.H. 10 East
San Antonio, Texas 78219
(Address of principal executive offices)
(Zip Code)
(210) 661-4511
(Registrant's telephone number, including area code)
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
--- ---
----------------------
Indicated below is the number of shares outstanding of the
registrant's only class of common stock, as of August 8, 1997.
Number of
Shares
Title of Class Outstanding
-------------- -----------
Common Stock, $.01 Par Value 6,643,730
<PAGE> 2
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
ASSETS (UNAUDITED) (AUDITED)
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 15,142 $ 21,507
Accounts receivable, net 18,169 23,064
Inventories 34,551 36,688
Prepaid expenses and other 579 1,503
-------- --------
Total current assets 68,441 82,762
PROPERTY AND EQUIPMENT, net 25,219 23,222
OTHER ASSETS, net 8,934 3,233
-------- --------
Total assets $102,594 $109,217
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floorplan notes payable $ 32,809 $ 42,228
Current maturities of long-term debt 7,471 2,115
Advances outstanding under lines of credit 20 20
Trade accounts payable 6,053 5,157
Accrued expenses 4,658 8,566
-------- --------
Total current liabilities 51,011 58,086
DEFERRED INCOME TAX LIABILITY, net 1,122 1,027
LONG-TERM DEBT, net of current maturities 11,987 13,412
SHAREHOLDERS' EQUITY
Rush Enterprises, Inc., common stock, par value $.01 per share; 66 66
25,000,000 shares authorized; 6,643,730 outstanding at June 30, 1997 and
December 31, 1996
Additional paid-in-capital 33,342 33,342
Retained earnings 5,066 3,284
-------- --------
Total shareholders' equity 38,474 36,692
-------- --------
Total liabilities and shareholders' equity $102,594 $109,217
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 3
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE - UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ------------------------
1997 1996 1997 1996
--------- -------- ------------ ----------
<S> <C> <C> <C> <C>
REVENUES:
New and used truck sales $71,831 $ 63,190 $133,636 $121,323
Parts and service 19,051 16,174 35,346 31,951
Lease and rental 3,448 3,468 6,656 6,636
Finance and insurance 1,056 1,389 2,081 2,875
Other 386 388 965 698
------- -------- -------- --------
Total revenues 95,772 84,609 178,684 163,483
COST OF PRODUCTS SOLD 81,301 71,061 151,044 135,061
------- -------- -------- --------
GROSS PROFIT 14,471 13,548 27,640 28,422
SELLING, GENERAL AND ADMINISTRATIVE 11,716 9,882 22,500 21,784
DEPRECIATION AND AMORTIZATION 715 588 1,343 1,134
------- -------- -------- --------
OPERATING INCOME 2,040 3,078 3,797 5,504
INTEREST EXPENSE 433 1,072 923 2,046
------- -------- -------- --------
INCOME BEFORE INCOME TAXES 1,607 2,006 2,874 3,458
PROVISION FOR INCOME TAXES 610 400 1,092 400
------- -------- -------- --------
NET INCOME $ 997 $ 1,606 $ 1,782 $ 3,058
======= ======== ======== ========
EARNINGS PER SHARE
Primary $ 0.15 $ 0.27
======= ========
Fully Diluted $ 0.15 $ 0.27
======= ========
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 6,644 6,644
======= ========
Fully Diluted 6,644 6,644
======= ========
UNAUDITED PRO FORMA DATA:
Income before income taxes
$ 2,006 $ 3,458
Pro forma adjustments to reflect federal and
state income taxes 762 1,314
------- -------
Pro forma income after provision for income
taxes $ 1,244 2,144
======= =======
Pro forma income per share $ 0.26 $ 0.47
======= =======
Weighted average shares outstanding used in
the pro forma net income per share calculation 4,758 4,528
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 4
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS - UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,782 $ 3,058
Adjustments to reconcile net income to cash provided
by (used in) continuing operations
Depreciation and amortization 1,343 1,134
Gain on sale of property and equipment (84) --
Provision for deferred income tax expense 95 325
Change in accounts receivable 4,895 1,847
Change in inventories 4,277 (2,744)
Change in prepaid expenses and other current
assets 924 (55)
Change in accounts payable 896 (572)
Change in accrued expenses (3,987) (1,701)
-------- --------
Net cash provided by operating activities 10,141 1,292
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (4,292) (4,601)
Proceeds from the sale of property and equipment 1,297 554
Acquisitions of dealerships and leasing operations (7,915) --
Changes in other assets (108) (258)
-------- --------
Net cash used in investing activities (11,018) (4,305)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock -- 31,303
Proceeds from notes payable 5,998 2,643
Principal payments on notes payable (2,067) (2,278)
Draws (payments) on floor plan financing, net (9,419) 308
Draws on line of credit, net -- (10)
Dividends paid -- (9,555)
-------- --------
Net cash (used in) provided by financing activities (5,488) 22,411
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (6,365) 19,398
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 21,507 2,149
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 15,142 $ 21,547
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during year for interest $ 945 $ 2,034
======== ========
Cash paid during year for taxes $ 650 $ -
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 5
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1 - PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The interim consolidated financial statements included herein have
been prepared by Rush Enterprises, Inc. and subsidiaries (collectively referred
to as the "Company"), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). All adjustments have been made
to the accompanying interim consolidated financial statements which are, in the
opinion of the Company's management, necessary for a fair presentation of the
Company's operating results. All adjustments are of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. It is
recommended that these interim consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's form 10-K. Certain prior period amounts have been
reclassified for comparative purposes.
2 - CORPORATE REORGANIZATION AND COMMON STOCK OFFERING
The Company successfully completed an initial public offering (the
Offering) of 2,875,000 common shares on June 12, 1996. As part of this
transaction, the Company terminated its S corporation federal tax election and
was subject to federal and certain state income taxes from that date forward.
On June 12, 1996 the Company paid the S Corporation shareholder approximately
$6,000,000 million representing the undistributed accumulated earnings of the S
Corporation prior to June 12, 1996.
Following the Offering there were 6,625,000 common shares outstanding,
including 3,750,000 owned by the shareholder of the predecessor S Corporation.
As part of the reorganization, the Company acquired a managing general
agent (the "MGA"), as a wholly-owned subsidiary, to manage all of the
operations of Associated Acceptance, Inc. ("AA"). The MGA is responsible for
funding the operations of AA, directing the use of AA's assets, and incurring
liabilities on AA's behalf in exchange for the MGA receiving any and all net
income of AA. W. Marvin Rush, the sole shareholder of AA, is prohibited from
the sale or transfer of the capital stock of AA under the MGA agreement, except
as designated by the Company. Therefore, the financial position and operations
of AA have been included as part of the Company's consolidated financial
position and results of operations.
3 - PRO FORMA INFORMATION (UNAUDITED)
Pro forma income from continuing operations and pro forma income per
share for the three and six month periods ended June 30, 1996, have been
determined assuming that the Company had been taxed as a C corporation for
federal and certain state income tax purposes for such periods.
Pro forma income per share had been computed using the weighted
average number of common shares outstanding of Rush Enterprises, Inc. Weighted
average common shares for all periods presented prior to the Offering have been
increased by 547,400 shares to reflect the number of shares that would have to
have been sold at the offering price per share to repay an approximate
$6,000,000 distribution of undistributed S corporation earnings.
4 - COMMITMENTS AND CONTINGENCIES
The Company is contingently liable to finance contracts for the notes
sold to such finance companies related to the sale of trucks. The Company's
recourse liability related to sold finance contracts is limited to 15 to 25
percent of the outstanding amount of each note sold to the finance company with
the aggregate recourse liability for 1997 being limited to $600,000. The
Company provides an allowance for repossession losses and early repayment
penalties.
6
<PAGE> 6
The Company is involved in various claims and legal actions arising in
the ordinary course of business. The Company believes it is unlikely that the
final outcome of any of the claims or proceedings to which the Company is a
party would have a material adverse effect on the Company's financial position
or results of operations, however, due to the inherent uncertainty of
litigation, there can be no assurance that the resolution of any particular
claim or proceeding would not have a material adverse effect on the Company's
results of operations for the fiscal period in which such resolution occurred.
The Company has consulting agreements with individuals for an
aggregate monthly payment of $15,725. The agreements expire in 1999 through
2001.
5 - SUBSEQUENT EVENTS
In July of 1997, the Company announced the formation of a new
construction equipment division, Rush Equipment Centers, Inc. Concurrently, the
company entered into a letter of intent with C. Jim Stewart & Stevenson, Inc.
to purchase the assets of its John Deere dealership in the Texas gulf coast
territory. The acquisition, subject to regulatory approval, the approval of
John Deere Construction Equipment Company and the signing of a definitive
purchase agreement, is expected to close on or about September 30, 1997.
6 - NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which requires that certain items currently reported in stockholders'
equity, such as foreign currency translation adjustments and gains and losses
on certain securities, be shown in a financial statement, displayed as
prominently as other financial statements. SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997 and requires reclassification of
earlier financial statements for comparative purposes. Management of the
Company does not anticipate the adoption of SFAS No. 130 will have a material
impact on the Company's financial position or results of operations.
In June 1997, The FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which requires the
disclosure of segment data based on how management makes decisions about
allocating resources to segments and measuring their performance. It also
requires entity-wide disclosures about the products and services an entity
provides, the material countries in which it holds assets and reports revenues
and about its major customers. SFAS No. 131 supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise," and is effective for fiscal
years beginning after December 15, 1997. Management of the Company does not
anticipate the adoption of SFAS No. 131 will have a material impact on the
Company's financial position or results of operations.
7
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RUSH ENTERPRISES, INC.
Date: January 8, 1998 By: /s/ W. MARVIN RUSH
------------------
Name: W. Marvin Rush
Title: Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: January 8, 1998 By: /s/ MARTIN A. NAEGELIN, JR.
---------------------------
Name: Martin A. Naegelin, Jr.
Title: Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
16
