SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended: Commission file number:
July 31, 1996 0-8624
ALFA LEISURE, INC
(Exact name of registrant as specified in its charter)
TEXAS 75-1309458
(State or other jurisdiction (IRS Employer identification
of incorporation or organization) number)
13501 "5th" Street, Chino, California 91710
(Address of principal executive office)
(909) 628-5574
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required 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
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
YES X NO
The number of shares outstanding of each of the Registrant's classes of
common stock, as of July 31, 1996 was:
Common Stock, without par value - 3,050,000 shares<PAGE>
ALFA LEISURE, INC.
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements(unaudited)
Balance Sheets as of July 31, 1996 3
and April 30, 1996
Statements of Income for the Three 4
Months Ended July 31, 1996 and 1995
Statements of Cash Flows for the 5
Three Months Ended July 31, 1996 and 1995
Notes to Unaudited Financial Statements 6
Item 2 Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION 9
Signature Page 10
<PAGE>
ALFA LEISURE, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS:
July 31, April 30,
---1996---- ---1996---
Current Assets:
Cash $ 11,791 $ 505,027
Restricted cash 209,861 209,142
Accounts receivable, trade 809,976 1,816,653
Inventories(Note 1) 2,614,504 1,694,798
Prepaid expense 105,070 85,621
Total current assets 3,751,202 4,311,241
Property, plant and equipment, net 1,113,018 1,136,691
Deferred tax asset 540,270 540,270
Total Assets $ 5,404,490 $ 5,988,202
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable, trade $ 2,261,975 $ 1,801,110
Accrued expenses 376,742 411,464
Accrued compensation 113,121 387,261
Total current liabilities $ 2,751,838 $ 2,599,835
Line of credit 1,547,500 1,997,500
Deferred income 8,200 8,200
Total Liabilities $ 4,307,538 $ 4,605,535
Commitments and contingencies
Stockholders' equity:
Common stock, no par value; authorized
30,000,000 shares, issued and
outstanding 3,050,000 shares 62,000 62,000
Note receivable from President (402,390) (402,390)
Retained earnings 1,437,342 1,723,057
Total stockholders' equity 1,096,952 1,382,667
$ 5,404,490 $ 5,988,202
See accompanying notes to the unaudited financial statements.<PAGE>
ALFA LEISURE INC.
STATEMENTS OF INCOME
(UNAUDITED)
Three Months
Ended July 31,
---1996----------1995---
Sales $ 4,720,598 $ 3,226,011
Cost of Sales 4,080,861 3,042,952
Gross Profit 639,737 183,059
Expenses:
Selling,
General/Admin. 843,767 753,492
Interest expense 51,859 96,569
895,626 850,061
Income before
income taxes (255,889) (667,002)
Provision for
income taxes 29,828
Net Income $ (285,717) $ (667,002)
Net Income or
loss per share $ ( .09) $ ( .22)
See accompanying notes to the unaudited financial statements.<PAGE>
ALFA LEISURE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended July 31
1996 1995
Cash flows from operating
activities: Net income $ (285,717) $ (667,002)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 38,284 26,601
(Inc)Dec in restricted cash ( 719) 9,405
Decrease in accounts rec 1,006,677 1,145,836
Increase in inventories (919,706) (741,006)
Increase in prepaid expense (19,449) (82,861)
Increase in accounts payable 460,865 221,026
Decrease in accrued compensation (274,140) (183,905)
Decrease in accrued expenses (34,722) (35,154)
Total adjustments 257,090 (359,942)
Net cash provided (used)
by operating activities ( 28,627) (307,060)
Cash flows from investing activities:
Acquisition of PP&E (14,609) ( 17,277)
Net cash provided (used)
by investing activities (14,609) ( 17,277)
Cash flows from financing activities:
Principal payments on LTD -0- ( 942)
Principal payments on credit line (450,000) ( -0-)
Net cash provided (used)
by financing activities (450,000) ( 942)
Net increase (decrease) in cash (493,236) (325,279)
Cash at beginning of period 505,027 332,498
Cash at end of period $ 11,791 $ 7,219
Supplemental cash flow disclosures:
Interest paid $ 51,859 $ 60,012
Income taxes paid 30,254 -0-
See accompanying notes to the unaudited financial statements.<PAGE>
ALFA LEISURE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
July 31, 1996
1. Accounting Policies
The accompanying Balance sheets of ALFA LEISURE, INC.("Registrant") at July
31, 1996 and April 30, 1996 and the Statements of Income and Cash Flows for the
three month periods ended July 31, 1996 and July 31, 1995 are unaudited, but
include all adjustments, consisting only of normal recurring accruals, which
management considers necessary for a fair presentation of Registrant's financial
condition and results of operations in accordance with generally accepted
accounting principles. The information for the three month period ended July
31, 1996 is not necessarily indicative of the operating results for the entire
year. Financial statements for the year ended April 30, 1996 are available for
a full discussion of Registrant's organization and background and for a summary
of its significant accounting policies.
Registrant's fiscal year ends on the last Sunday in April and its fiscal
quarters are measured in increments of thirteen (13) week periods beginning on
the day following the last Sunday in April. While the financial statements
reflect operations of Registrant as of, and/or for the periods ending on the
last Sunday in April, and the thirteen (13) week periods measured therefrom,
they have been presented as if Registrant's fiscal year ends on April 30 in
order to simplify the presentation.
2. Earnings Per Share
Net income per share is based upon the weighted average number of shares
outstanding during the periods presented. The weighted average shares
outstanding during the three months ended July 31, 1996 and 1995 were 3,050,000.
3. Inventories
Inventories are summarized as follows:
July 31, 1996 April 30, 1996
Raw materials $ 1,275,919 $ 964,528
Work in process 531,487 588,260
Finished products 807,098 142,010
$ 2,614,504 $ 1,694,798
<PAGE>
ALFA LEISURE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
July 31, 1996
(Continued)
4. Commitments and Contingencies:
Financing Arrangements:
Registrant is contingently liable at July 31, 1996 under the terms of
repurchase agreements which have been established with financing institutions
to provide inventory financing for dealers of Registrant's products. The risk
of loss under these agreements is spread over numerous dealers and financing
institutions and is reduced by the resale value of any products which may
require repurchase. Registrant has historically experienced no significant
losses under these agreements.
5. Income Taxes:
The provision for income taxes is calculated using Registrant's estimated
annual effective tax rate including the utilization of loss carry forwards.
6. Financial Condition:
The Company's July 31 quarter, it's seasonally lowest sales quarter
historically results in operating losses. At July 31, 1996 Stockholders' Equity
of $1,096,952 and favorable credit terms extended by vendors continues to play
a major role in determining the adequacy of funds generated internally.
Management is confident in its ability to maintain profitability and believes
internally generated funds along with an available line of credit provide
adequate resources to meet its needs.
7. Line of credit:
The Company has a line of credit set at $2,000,000 bearing interest at Bank
of America's prime rate plus 1%. Interest is payable monthly. Although the line
of credit is payable within 90 days of any written demand by the lender, the
lender has given assurances that no demand will be made for principal payments
through July 1997. Accordingly, this obligation has been classified as
noncurrent in the balance sheets at July 31, 1996 and April 1996.
Substantially all assets of the Company are pledged as collateral for the
line of credit. The Company's President has personally guaranteed the line of
credit and has assigned his rights under the lease for the Company's principal
manufacturing facility as additional collateral.
<PAGE>
ALFA LEISURE INC.
July 31,1996
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operation
Sales increased 46% for the quarter ended July 31, 1996 as compared to the
same quarter of the previous year. The increase resulted substantially from
increased unit sales as a result of general improvement in the recreational
vehicle market.
Cost of sales, expressed as a percentage of sales, decreased to 86% in the
quarter ended July 31, 1996 from 94% in the same quarter of the prior year. This
decrease is resulted from the increase in sales activity.
Selling, General and Administrative expenses increased approximately 12%
for the quarter ended July 31, 1996 as compared to the corresponding period in
1995, again resulting from the increased sales activity. Interest expense
declined as a result of borrowing levels.
Liquidity and Capital Resources
Capital expenditures during fiscal 1997 are expected to be primarily for
routine periodic replacement of existing plant and equipment. Registrant
believes that it has sufficient available capacity to meet the demand for its
products in the foreseeable future.
Registrant meets its needs for working capital and capital expenditures
with internally generated funds and from a line of credit. Registrant has been
able to take discounts on trade payables as a result of Registrant's line of
credit and favorable credit terms with its vendors.
Registrant is confident of overall profitability in fiscal 1997 as a result
of the introduction of a new product line and increased sales activity. In
addition, Registrant currently has no significant commitments for cash
expenditures other than normal operations and debt service during 1997. The
favorable credit terms extended by vendors continues to play a key role in
determining the adequacy of funds available to conduct operations in an
efficient manner.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Not Applicable.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended July 31, 1996.
<PAGE>
SIGNATURE
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.
ALFA LEISURE, INC.
a Texas Corporation
Dated: September 13, 1996
BY__________________________
Johnnie R. Crean
President
