SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
--------------------------------------
For the Second Quarter Ended October 31, 1995
Commission File Number 1-9471
CRUISE AMERICA, INC.
State of Florida I.R.S. No. 59-1403609
11 West Hampton Avenue
Mesa, Arizona 85210-5258
Telephone Number: (602) 464-7300
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 twelve (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 ninety (90) days.
YES X NO
---- ----
Common Stock, $.01 Par Value
As of October 31, 1995, 5,716,068 of registrants common stock were outstanding
of which 4,132,547 were held by non-affiliates of the registrant.
<PAGE>
TABLE OF CONTENTS
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CRUISE AMERICA, INC. AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------
Condensed Consolidated Balance Sheets............................. 1
Condensed Consolidated Statements of Operations................... 3
Condensed Consolidated Statements of Cash Flows................... 4
Notes to Condensed Consolidated Financial Statements.............. 5
ITEM 2. Management's Discussion and Analysis of Consolidated Financial
- ------
Condition and Results of Operations............................... 6-7
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PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
ASSETS
(Unaudited)
10-31-95 4-30-95
-------- -------
Current Assets:
Cash and Cash Equivalents ................... $ 7,339 3,091
Accounts Receivable, Net .................... 4,199 3,561
Inventories ................................. 15,035 17,235
Prepaid Expenses and Other Current
Assets ................................. 1,642 837
-------- --------
Total Current Assets ........................ $ 28,215 $ 24,724
-------- --------
Rental Vehicles .................................. 87,712 63,713
Less Accumulated Depreciation ............... 16,845 12,398
-------- --------
Net Rental Vehicles ......................... 70,867 51,315
Property and Equipment ........................... 16,937 16,795
Less Accumulated Depreciation ............... 6,566 6,274
-------- --------
Net Property and Equipment .................. 10,371 10,521
Deposits and Other Assets ........................ 2,824 2,818
-------- --------
........................................... $112,277 89,378
-------- --------
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
<CAPTION>
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
10-31-95 4-30-95
-------- -------
<S> <C> <C>
Current Liabilities:
Floor Plan Contracts.................................................... $ 2,476 709
Current Installments of Rental Vehicle Financing ........................ 17,033 7,394
Current Installments of Long-Term Debt .................................. 4,527 3,072
Accounts Payable and Accrued Expenses ................................... 3,069 2,042
Customer Deposits ....................................................... 621 6,380
Income Taxes Payable .................................................... 20 20
--------- ---------
Total Current Liabilities ........................................... 27,746 19,617
--------- ---------
Rental Vehicle Financing, Excluding Current Installments ..................... 28,537 23,228
Long-Term Debt, Excluding Current Installments ............................... 22,321 23,892
Deferred Income Taxes ........................................................ 2,874 312
Stockholders' Equity:
Preferred Stock $1.00 par value: 1,000,000 shares
authorized, none issued or outstanding ................................ -- --
Common Stock $.01 par value; 15,000,000 shares authorized,
5,716,000 and 5,694,000 issued and outstanding
at October 31, 1995 and April 30, 1995 respectively ................... 57 57
Additional Paid-in Capital .............................................. 24,881 24,815
Retained Earnings ....................................................... 6,460 (1,908)
Cumulative Translation Adjustment ....................................... (599) (635)
--------- ---------
Total Stockholders' Equity .............................................. 30,799 22,329
Commitments and Other Matters
$ 112,277 89,378
--------- ---------
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
10-31-95 10-31-94 10-31-95 10-31-94
-------- -------- -------- --------
Rental Revenue ..................... $18,649 14,398 38,057 30,136
Sales .............................. 15,018 20,565 24,166 30,647
------- ------- ------- -------
Total Revenue ............. 33,667 34,963 62,223 60,783
------- ------- ------- -------
Cost of Rentals .................... 7,661 6,143 13,683 11,336
Cost of Sales ...................... 13,866 19,254 21,595 27,580
------- ------- ------- -------
Total Costs ............... 21,527 25,397 35,278 38,916
------- ------- ------- -------
Gross Profit From Operations ....... 12,140 9,566 26,945 21,867
Interest Expense ................... 2,009 1,343 3,778 2,775
Selling, General, and Administrative
Expenses ......................... 6,050 5,240 12,253 11,076
------- ------- ------- -------
Earnings Before Income Taxes ....... 4,081 2,983 10,914 8,016
Income Tax Expense ................. 952 580 2,546 1,587
------- ------- ------- -------
Net Earnings ....................... $ 3,129 2,403 8,368 6,429
Earnings Per Share ................. $ .55 .42 1.47 1.13
------- ------- ------- -------
Average Common Shares Outstanding .. 5,709 5,694 5,704 5,694
------- ------- ------- -------
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
----------------
10-31-95 10-31-94
--------- ---------
Cash Flows from Operating Activities:
Net Earnings .................................... $ 8,368 6,429
Depreciation and Amortization ................... 7,947 7,123
Increase in Deferred Income Taxes ............... 2,562 1,597
Gain on Sale of Rental Vehicles ................. (737) (405)
(Increase) in Accounts Receivable ............... (638) (1,953)
Decrease in Inventories ......................... 2,200 2,389
Increase in Accounts Payable and Accrued Expenses 1,027 833
Gain on Sale of Property and Equipment .......... -- (106)
Increase (Decrease) in Floor Plan Contracts ..... 1,767 (169)
Decrease in Customer Deposits ................... (5,759) (3,788)
Other, Net ...................................... (896) (839)
--------- ---------
15,841 11,111
--------- ---------
Cash Flows from Financing Activities:
Proceeds from Rental Vehicle Borrowing .......... 41,463 30,328
Repayment of Rental Vehicle Borrowing ........... (26,515) (24,751)
Repayment of Long Term Borrowing ................ (116) (1,617)
Issuance of Stock ............................... 66 --
--------- ---------
14,898 3,960
--------- ---------
Cash Flows from Investing Activities:
Purchase of Rental Vehicles ..................... (40,463) (29,683)
Proceeds from Rental Vehicle Sales .............. 14,114 16,015
Purchase of Property and Equipment .............. (142) (117)
Proceeds from Sale of Property & Equipment ...... -- 242
--------- ---------
(26,491) (13,543)
--------- ---------
Increase in Cash & Cash Equivalents .................. 4,248 1,528
Cash and Cash Equivalents at April 30 ................ 3,091 4,261
--------- ---------
Cash and Cash Equivalents at October 31 .............. $ 7,339 5,789
--------- ---------
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Nine Months Ended October 31, 1995
NOTE 1.
- ------
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all the adjustments (principally consisting of
normal recurring accruals) necessary to present fairly the financial position of
Cruise America, Inc. and Subsidiaries (the Company) as of October 31, 1995 and
the results of operations for the three month and six month periods ended
October 31, 1995 and 1994.
Certain items in the prior year financial statements have been reclassified to
conform with the current period presentations.
Effective May 1, 1995, the Company began allocating the cost of new motorhomes
between the chassis and house components and is depreciating the components
using the straight-line and mileage methods over 9 year lives with residuals of
10% to 25%. The impact of this change is not expected to be material to
operating results for the year.
NOTE 2.
- ------
Supplemental disclosures of cash flow information (in thousands):
Six Months Ended October 31,
---------------------------
1995 1994
------ -----
Cash paid during the period for:
Interest on Borrowings .................. $3,313 3,093
NOTE 3.
- ------
The Company is a party to various claims, legal actions and complaints arising
in the ordinary course of business. In the opinion of management, the
disposition of these matters will not have a material adverse effect on the
financial condition of the Company.
<PAGE>
PART I.
ITEM 2
CRUISE AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Six Months Ended October 31, 1995
SEASONALITY
- -----------
The Company's business is seasonal. In the first and second fiscal quarters, the
Company historically records profits. In the third and fourth quarters, the
Company historically records losses. The Company's purchases of motorhomes for
the rental fleet are also seasonal, with the majority of purchases being made in
the first fiscal quarter. Due to the seasonality of rental and sales operations,
certain accounts fluctuate from quarter to quarter.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of October 31, 1995, the Company had working capital in the amount of
$469,000. The Company's working capital, as presented, includes a significant
portion of rental vehicle financing. The Company's working capital does not,
however, include any portion of the related assets - rental vehicles, even
though a significant portion of these vehicles are expected to be sold during
the year through the Company's normal fleet rotation. The Company believes that,
during the next year, cash generated from operations and existing financing
available from banks and other financial institutions will be sufficient for its
capital and operating needs. At October 31, 1995, the Company believes it is in
compliance with all debt covenants associated with its various financing
agreements.
SIX MONTHS ENDED OCTOBER 31, 1995 AS COMPARED WITH
- --------------------------------------------------
SIX MONTHS ENDED OCTOBER 31, 1994
- ---------------------------------
Rental Revenue for the six months ended October 31, 1995 was $38,057,000
compared to $30,136,000 for the six months ended October 31, 1994. This was due
primarily to a 31% increase in revenue days, which was offset slightly by a 4%
decline in revenue per day.
Sales for the six months ended October 31, 1995 were $24,166,000 compared to
$30,647,000 for the same period a year ago. Sales revenue declined for several
reasons. Fewer rental vehicles were available for sale due to high fleet
utilization rates; the number of RV sales facilities operated by the Company has
been reduced; and new vehicle sales have been affected by an industry-wide
slowdown in demand.
Cost of Rentals as a percentage of Rental Revenue was 36% for the six months
ended October 31, 1995 compared to 38% in 1994. This improvement was due
primarily to an increase in vehicle utilization to 68% in 1995 from 58% in 1994.
Cost of Sales as a percentage of Sales decreased slightly to 89% in 1995 from
90% in 1994. This increase in profitability was a result of a slight shift in
the mix of sales toward higher margin used vehicle sales.
Interest expense for the six months ended October 31, 1995 was $3,778,000
compared to $2,775,000 in 1994. The increase was due primarily to an increase in
average interest rates as well as slightly higher average borrowings.
Selling, general, and administrative expenses increased slightly to 20% of
revenue in 1995 from 18% in 1994. This increase is due to incremental expenses
incurred in order to meet the Company's increased rental demand as well as a
shift in revenue mix toward more rental revenue. More personnel expense and
administrative expenses are required for the rental portion of the Company's
operations.
THREE MONTHS ENDED OCTOBER 31, 1995 AS COMPARED WITH
- ----------------------------------------------------
THREE MONTHS ENDED OCTOBER 31, 1994
- -----------------------------------
Rental Revenue for the quarter ended October 31, 1995 was $18,649,000 compared
to $14,398,000 reported for the quarter ended October 31, 1994. This increase
was due to a 30% increase in revenue days.
Sales for the quarter ended October 31, 1995 were $15,018,000 compared to
$20,565,000 for the same period a year ago. High rental fleet utilization, fewer
sales facilities, and an industry-wide slowdown in new vehicle sales caused this
decrease in sales.
Cost of Rentals as a percentage of Rental Revenue was 41% in 1995 compared to
43% in 1994. This improvement was the result of higher utilization of the rental
fleet.
Cost of Sales as a percentage of Sales decreased to 92% in 1995 from 94% in
1994. This decrease was primarily due to an increase in higher margin used
vehicle sales as a percentage of total sales.
Selling, general, and administrative expenses increased to 18% of revenue in
1995 from 15% of revenue in 1994. This increase is due to expenses relating to
the Company's increased rental demand as well as a shift in revenue mix toward
rental revenue.
SIGNATURES
----------
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.
CRUISE AMERICA, INC.
December 6, 1995 /s/ Eric R. Bensen
------------------------------
Eric R. Bensen
Vice President
Chief Financial Officer
December 6, 1995 /s/ Randall Smalley
------------------------------
Randall Smalley
President
Chief Executive Officer
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