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:
January 31, 1997 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
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(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 January 31, 1997 was:
Common Stock, without par value - 3,050,000 shares<PAGE>
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 January 31, 1997 3
and April 30, 1996
Statements of Income for the Three and 4
Nine Months Ended January 31, 1997 and 1996
Statements of Cash Flows for the 5
Nine Months Ended January 31, 1997 and 1996
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
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Signature Page 10
<PAGE>
ALFA LEISURE, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS:
January 31, April 30,
---1997---- ---1996---
Current Assets:
Cash $ 87,669 $ 505,027
Restricted cash 198,963 209,142
Accounts receivable, trade 2,104,014 1,816,653
Inventories(Note 3) 1,604,066 1,694,798
Prepaid expense 62,704 85,621
--------- ----------
Total current assets 4,057,416 4,311,241
--------- ----------
Property, plant and equipment, net 1,127,082 1,136,691
Deferred tax asset 540,270 540,270
--------- ----------
Total Assets $ 5,724,768 $ 5,988,202
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable, trade $ 2,102,571 $ 1,801,110
Accrued expenses 394,949 411,464
Accrued compensation 281,975 387,261
---------- ----------
Total current liabilities $ 2,779,495 $ 2,599,835
Line of credit 1,547,500 1,997,500
Deferred income 8,200 8,200
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Total Liabilities $ 4,335,195 $ 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 1,729,963 1,723,057
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Total stockholders' equity 1,389,573 1,382,667
---------- ---------
$ 5,724,768 $ 5,988,202
========== =========
See accompanying notes to the unaudited financial statements.<PAGE>
ALFA LEISURE INC.
STATEMENTS OF INCOME
(UNAUDITED)
Three Months Nine Months
Ended January 31, Ended January 31,
----1997--- ---1996--- -----1997--- ----1996---
Sales $ 7,762,813 $ 7,105,310 $ 19,687,748 $ 16,794,646
Cost of Sales 6,444,901 5,959,400 16,714,456 14,691,102
---------- --------- ---------- ------------
Gross Profit 1,317,912 1,145,910 2,973,292 2,103,544
Expenses:
Selling,
General/Admin. 1,006,154 871,707 2,755,368 2,354,590
Interest expense 35,535 52,437 135,780 182,559
--------- --------- ---------- -----------
1,041,689 924,144 2,891,148 2,537,149
Income (loss) before
income taxes 276,223 221,766 82,144 (433,605)
Provision for
income taxes 1,457 2,771 75,238 2,771
--------- -------- ---------- ----------
Net Income (loss) $ 274,766 $ 218,995 $ 6,906 $ (436,376)
========= ======== ========== ==========
Net Income (loss)
per share $ .09 $ .07 $ .00 $ ( .14)
========= ======== ========== ==========
See accompanying notes to the unaudited financial statements.<PAGE>
ALFA LEISURE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended January 31,
1996 1995
---------- ---------
Cash flows from operating
activities: Net income (loss) $ 6,906 $ (436,376)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 104,337 79,803
(Inc)Dec in restricted cash 10,179 60,290
(Inc)Dec in accounts rec (287,361) (234,674)
(Inc)Dec in inventories 90,732 579,742
(Inc)Dec in prepaid expense 22,917 (108,532)
Inc (Dec)in accounts payable 301,461 (402,542)
Inc (Dec)in accrued compensation (105,286) ( 95,108)
Inc (Dec)in accrued expenses (16,515) 90,574
-------- --------
Total adjustments 120,464 (30,447)
-------- --------
Net cash provided (used)
by operating activities 127,370 (466,823)
-------- --------
Cash flows from investing activities:
Acquisition of PP&E (94,728) ( 65,426)
Net cash provided (used) -------- -------
by investing activities (94,728) ( 65,426)
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 (417,358) (233,192)
Cash at beginning of period 505,027 332,498
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Cash at end of period $ 87,669 $ 99,306
======== ========
Supplemental cash flow disclosures:
Interest paid $ 135,780 $ 182,559
Income taxes paid 82,971 -0-
See accompanying notes to the unaudited financial statements.<PAGE>
ALFA LEISURE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
January 31, 1997
1. Accounting Policies
The accompanying Balance Sheets of ALFA LEISURE, INC.("Registrant") at
January 31, 1997 and April 30, 1996 and the Statements of Income and Cash Flows
for the nine month periods ended January 31, 1997 and January 31, 1996 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 nine month
period ended January 31, 1997 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 nine months ended January 31, 1997 and 1996 were
3,050,000.
3. Inventories
Inventories are summarized as follows:
January 31, 1997 April 30, 1996
---------------- ---------------
Raw materials $ 856,287 $ 964,528
Work in process 686,599 588,260
Finished products 61,180 142,010
---------- ----------
$ 1,604,066 $ 1,694,798
========== ==========
<PAGE>
ALFA LEISURE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
January 31, 1997
(Continued)
4. Commitments and Contingencies:
Financing Arrangements:
Registrant is contingently liable at January 31, 1997 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 nine month period ended January 31,
1997 includes prior year adjustments.
6. Financial Condition:
At January 31, 1997 Stockholders' Equity of $1,389,573 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 during the next twelve months. Accordingly, this obligation has been
classified as noncurrent in the balance sheets at January 31, 1997 and
April 30, 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.
January 31,1997
Item 2. Management's Discussion and Analysis of Financial Condition
- ------- and Results of Operations
Results of Operation
----------------------
Sales increased 9.3% for the quarter ended January 31, 1997 as compared to
the same quarter of the previous year and 17.2% over the corresponding nine
month period. Sales unit volume increased by 9.6% over the three month period
of 1996 and 14.9% over the nine months of the pervious year. This increase is
attributable to increased volume from a new lower priced model introduced
during the year.
Cost of sales, expressed as a percentage of sales, decreased to 83.0% in
the quarter ended January 31, 1997 from 83.9% in the same quarter of the prior
year, and to 84.9% from 87.5% for the nine month period through January 31,
1997. This decrease resulted from reductions in material and warranty costs
totaling approximately two percentage points for both the quarter and nine
month periods when compared to the prior year. The quarter to quarter cost
reductions were partially offset as a result of slight increases in labor and
production costs.
Selling, General and Administrative expenses increased approximately 15.4%
for the quarter ended January 31, 1997 as compared to the corresponding period
in 1996, and increased 17.0% over the comparable nine month period of the
period year. Significant increases occurred in advertising, promotion and show
expenses for the nine month period compared to the same period of the prior
year with increases continuing in promotion and show expense over the
comparative quarters.
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
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OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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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
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Not Applicable.
ITEM 5. OTHER INFORMATION
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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 January 31, 1997.
<PAGE>
SIGNATURE
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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: February 27, 1997
BY__________________________
Johnnie R. Crean
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JAN-31-1997
<CASH> 286,632
<SECURITIES> 0
<RECEIVABLES> 2,104,014
<ALLOWANCES> 0
<INVENTORY> 1,604,066
<CURRENT-ASSETS> 4,057,416
<PP&E> 1,127,082
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,724,768
<CURRENT-LIABILITIES> 2,779,495
<BONDS> 0
<COMMON> 62,000
0
0
<OTHER-SE> 1,327,573
<TOTAL-LIABILITY-AND-EQUITY> 5,724,768
<SALES> 19,687,748
<TOTAL-REVENUES> 19,687,748
<CGS> 16,714,456
<TOTAL-COSTS> 16,714,456
<OTHER-EXPENSES> 2,755,368
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135,780
<INCOME-PRETAX> 82,144
<INCOME-TAX> 75,238
<INCOME-CONTINUING> 6,906
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,906
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
