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:
October 31, 1996 0-8624
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ALFA LEISURE, INC
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(Exact name of registrant as specified in its charter)
TEXAS 75-1309458
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(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 October 31, 1996 was:
Common Stock, without par value - 3,050,000 shares
<PAGE 2>
ALFA LEISURE, INC.
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Index
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PART I. FINANCIAL INFORMATION Page
- ------- --------------------- ----
Item 1. Financial Statements(unaudited)
Balance Sheets as of October 31, 1996 3
and April 30, 1996
Statements of Income for the Three and 4
Six Months Ended October 31, 1996 and 1995
Statements of Cash Flows for the 5
Six Months Ended October 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 3>
ALFA LEISURE, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS:
October 31, April 30,
---1996---- ---1996---
Current Assets:
Cash $ 95,018 $ 505,027
Restricted cash 210,690 209,142
Accounts receivable, trade 1,721,372 1,816,653
Inventories(Note 1) 1,861,053 1,694,798
Prepaid expense 104,385 85,621
--------- ---------
Total current assets 3,992,518 4,311,241
--------- ---------
Property, plant and equipment, net 1,112,816 1,136,691
Deferred tax asset 540,270 540,270
--------- ---------
Total Assets $ 5,645,604 $ 5,988,202
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable, trade $ 2,478,504 $ 1,801,110
Accrued expenses 378,324 411,464
Accrued compensation 118,267 387,261
--------- ---------
Total current liabilities $ 2,975,095 $ 2,599,835
Line of credit 1,547,500 1,997,500
Deferred income 8,200 8,200
--------- ---------
Total Liabilities $ 4,530,795 $ 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 1,455,199 1,723,057
--------- ---------
Total stockholders' equity 1,114,809 1,382,667
--------- ---------
$ 5,645,604 $ 5,988,202
========= =========
See accompanying notes to the unaudited financial statements.
<PAGE 4>
<TABLE> ALFA LEISURE INC.
STATEMENTS OF INCOME
(UNAUDITED)
Three Months Six Months
Ended October 31, Ended October 31,
---1996----- -----1995--- ---1996----- -----1995---
<CAPTION>
<S> <C> <C> <C> <C>
Sales $ 7,204,337 $ 6,463,326 $ 11,924,935 $9,689,337
Cost of Sales 6,188,694 5,688,929 10,269,555 8,731,881
--------- --------- ---------- ---------
Gross Profit 1,015,643 774,397 1,655,380 957,456
Expenses:
Selling, General/Admin. 905,447 729,392 1,749,214 1,482,884
Interest expense 48,386 33,553 100,245 130,122
--------- --------- --------- ---------
953,833 762,945 1,849,459 1,613,006
Income before income taxes 61,810 11,452 (194,079) (655,550)
Provision for income taxes 43,953 73,781
--------- --------- --------- ---------
Net Income $ 17,857 $ 11,452 $ (267,860) $ (655,550)
========= ========= ========= =========
Net Income or loss
per share $ .01 $ .00 $ ( .09) $ ( .21)
========= ========= ========= =========
See accompanying notes to the unaudited financial statements.
</TABLE>
<PAGE 5>
ALFA LEISURE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended October 31
1996 1995
----- -----
Cash flows from operating
activities: Net income $ (267,860) $ (655,550)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 76,566 53,202
(Inc)Dec in restricted cash (1,548) 73,420
Decrease in accounts rec 95,281 ( 90,325)
Increase in inventories (166,255) 337,020
Increase in prepaid expense (18,764) (145,123)
Increase in accounts payable 677,394 1,827
Decrease in accrued compensation (281,531) (101,225)
Decrease in accrued expenses (20,600) 13,104
--------- ---------
Total adjustments 360,543 141,900
--------- ---------
Net cash provided (used)
by operating activities 92,683 (513,650)
--------- ---------
Cash flows from investing activities:
Acquisition of PP&E (52,691) ( 31,194)
--------- ---------
Net cash provided (used)
by investing activities (52,691) ( 31,194)
Cash flows from financing activities:
Principal payments on LTD -0- ( 943)
Principal draw on credit line -0- 300,000
Principal payments on
credit line (450,000) ( -0-)
--------- ---------
Net cash provided (used)
by financing activities (450,000) (299,057)
Net increase (decrease) in cash (410,008) (245,787)
Cash at beginning of period 505,027 332,498
--------- ---------
Cash at end of period $ 95,019 $ 86,711
========= =========
Supplemental cash flow disclosures:
Interest paid $ 112,478 $ 93,565
Income taxes paid 73,781 -0-
See accompanying notes to the unaudited financial statements.
<PAGE 6>
ALFA LEISURE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
October 31, 1996
1. Accounting Policies
The accompanying Balance sheets of ALFA LEISURE,
INC.("Registrant") at October 31, 1996 and April 30, 1996 and the
Statements of Income and Cash Flows for the six month periods ended
October 31, 1996 and October 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 six
month period ended October 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 six months ended October 31,
1996 and 1995 were 3,050,000.
3. Inventories
Inventories are summarized as follows:
October 31, 1996 April 30, 1996
-------------- --------------
Raw materials $ 1,029,796 $ 964,528
Work in process 633,833 588,260
Finished products 197,424 142,010
--------- ---------
$ 1,861,053 $ 1,694,798
========= =========
<PAGE 7>
ALFA LEISURE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
October 31, 1996
(Continued)
4. Commitments and Contingencies:
Financing Arrangements:
Registrant is contingently liable at October 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 for the three and six month
periods ended October 31, 1996 represent prior year adjustments.
6. Financial Condition:
At October 31, 1996 Stockholders' Equity of $1,114,809 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 October 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 8>
ALFA LEISURE INC.
October 31,1996
Item 2. Management's Discussion and Analysis of Financial Condition
- ------- and Results of Operations
Results of Operation
--------------------
Sales increased 11% for the quarter ended October 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 October 31, 1996 from 88% in the same quarter
of the prior year. This decrease resulted from increased labor
efficiency.
Selling, General and Administrative expenses increased
approximately 24% for the quarter ended October 31, 1996 as compared
to the corresponding period in 1995, resulting from an increase in
customer service, advertising and show expenses and an increased staff
to accommodate the increase in sales.
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 9>
PART II
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OTHER INFORMATION
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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 October 31, 1996.
<PAGE 10>
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: November 20, 1996
BY /s/ Johnnie R. Crean
---------------------
Johnnie R. Crean
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<CASH> 305,708
<SECURITIES> 0
<RECEIVABLES> 1,721,372
<ALLOWANCES> 0
<INVENTORY> 1,861,053
<CURRENT-ASSETS> 3,992,518
<PP&E> 1,112,816
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,645,604
<CURRENT-LIABILITIES> 2,975,095
<BONDS> 0
0
0
<COMMON> 62,000
<OTHER-SE> 1,052,809
<TOTAL-LIABILITY-AND-EQUITY> 5,645,604
<SALES> 11,924,935
<TOTAL-REVENUES> 11,924,935
<CGS> 10,269,555
<TOTAL-COSTS> 10,269,555
<OTHER-EXPENSES> 1,749,214
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100,245
<INCOME-PRETAX> (194,079)
<INCOME-TAX> 73,781
<INCOME-CONTINUING> (267,860)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (267,860)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
