SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the First Quarter Ended July 31, 1997
Commission File No. 1-9471
__________________________________________________
CRUISE AMERICA, INC.
State of Florida I.R.S. No. 59-1403609
11 West Hampton Avenue
Mesa, Arizona 85210-5258
Telephone: (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 and 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 July 31, 1997, 5,767,200 shares of the registrants common stock were
outstanding of which 4,311,798 were held by non-affiliates of the registrant.
<PAGE>
TABLE OF CONTENTS
-----------------
CRUISE AMERICA, INC., AND SUBSIDIARIES
ITEM PAGE
- --------------------------------------------------------------------------------
PART I
FINANCIAL INFORMATION
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
2. Management's Discussion and Analysis of Consolidated Financial Condition
and Results of Operations.................................................6
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
A S S E T S
(In thousands)
Unaudited
------------------------
Current Assets: 7/31/97 4/30/97
------------------------
Cash and Cash Equivalents............................. $ 6,418 4,029
Accounts Receivable, Net.............................. 3,886 5,897
Inventories........................................... 11,266 11,909
Prepaid Expenses and Other Current Assets............. 1,783 1,067
---------- ---------
Total Current Assets......................... 23,353 22,902
---------- ---------
Rental Vehicles....................................... 125,891 92,463
Less Accumulated Depreciation......................... 20,455 18,498
---------- ---------
Net Rental Vehicles.......................... 105,436 73,965
---------- ---------
Property and Equipment................................ 14,845 14,408
Less Accumulated Depreciation......................... 6,628 6,467
---------- ---------
Net Property and Equipment................... 8,217 7,941
---------- ---------
Deposits and Other Assets............................. 2,449 2,416
---------- ---------
$139,455 107,224
---------- ---------
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands except share data)
<TABLE>
<CAPTION>
Unaudited
-------------------------
Current Liabilities: 7/31/97 4/30/97
-------------------------
<S> <C> <C>
Floor Plan Contracts.......................................................... $ 3,148 3,665
Current Installments of Rental Vehicle Financing.............................. 35,567 13,014
Current Installments of Long-Term Debt........................................ 4,511 4,128
Accounts Payable and Accrued Expenses......................................... 2,997 2,704
Customer Deposits............................................................. 4,107 5,648
---------- ---------
Total Current Liabilities............................................ 50,330 29,159
---------- ---------
Rental Vehicle Financing, Excluding Current Installments...................... 39,039 36,466
Long-Term Debt, Excluding Current Installments................................ 12,239 13,771
Deferred Income Taxes......................................................... 5,337 1,764
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,
5,767,000 and 5,753,000 issued and outstanding at July 31, 1997 and
April 30, 1997 respectively................................................... 58 58
Additional Paid-in Capital.................................................... 25,035 24,993
Retained Earnings............................................................. 8,163 1,811
Cumulative Translation Adjustment............................................. (746) (798)
---------- ---------
Total Stockholders' Equity........................................... 32,510 26,064
Contingencies.................................................................
---------- ---------
$139,455 107,224
---------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share data)
Three Months Ended
-------------------------
7/31/97 7/31/96
-------------------------
Rental Revenue....................................... $26,159 24,163
Sales................................................ 6,915 6,833
---------- ----------
Total Revenue............................... 33,074 30,996
---------- ----------
Cost of Rentals...................................... 8,052 7,574
Cost of Sales........................................ 5,682 5,806
---------- ----------
Total Costs................................. 13,734 13,380
---------- ----------
Gross Profit from Operations......................... 19,340 17,616
Interest Expense..................................... 1,931 1,891
Selling, General and Administrative Expenses......... 7,484 6,679
---------- ----------
Earnings Before Income Taxes......................... 9,925 9,046
Income Tax Expense .................................. 3,573 2,810
---------- ----------
Net Earnings......................................... $ 6,352 6,236
---------- ----------
Earnings per Share (Primary and Fully Diluted)....... $ 1.07 1.05
---------- ----------
Shares Used in Calculation........................... 5,957 5,924
---------- ----------
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
7/31/97 7/31/96
----------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings................................................. $ 6,352 6,236
Depreciation and Amortization................................ 4,699 4,116
Increase in Deferred Income Taxes............................ 3,573 2,810
Gain on Sale of Rental Vehicles.............................. (541) (358)
Decrease in Accounts Receivable.............................. 2,011 1,501
Decrease in Inventories...................................... 643 249
Increase in Accounts Payable and Accrued Expenses............ 293 1,895
Increase (Decrease) in Floor Plan Contracts.................. (517) 53
Increase (Decrease) in Customer Deposits..................... (1,541) 2,554
Other, Net................................................... (728) (323)
---------- ----------
Net Cash Provided by Operating Activities.................... 14,244 18,733
---------- ----------
Cash Flows from Financing Activities:
Proceeds from Rental Vehicle Borrowing....................... 38,301 44,291
Repayment of Rental Vehicle Borrowing........................ (13,175) (12,262)
Repayment of Long-Term Borrowing............................. (1,149) (45)
Issuance of Stock............................................ 42 28
---------- ----------
Net Cash Provided by Financing Activities.................... 24,019 32,012
---------- ----------
Cash Flows from Investing Activities:
Purchase of Rental Vehicles.................................. (38,723) (44,469)
Proceeds from Rental Vehicle Sales........................... 3,286 2,864
Purchase of Property and Equipment........................... (437) (177)
---------- ----------
Net Cash Used in Investing Activities........................ (35,874) (41,782)
---------- ----------
Increase in Cash and Cash Equivalents.............................. 2,389 8,963
Cash and Cash Equivalents at April 30.............................. 4,029 2,341
---------- ----------
Cash and Cash Equivalents at July 31............................... $ 6,418 11,304
---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CRUISE AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JULY 31, 1997
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 July 31, 1997, and
the results of operations for the three month periods ended July 31, 1997 and
1996.
Certain items in the prior year financial statements have been reclassified to
conform with the current period presentations.
NOTE 2.
Supplemental Disclosures of Cash Flow Information (in thousands):
Three Months Ended
------------------------------------
7/31/97 7/31/96
------------ ------------
Interest on Borrowings 1,479 1,225
------------ ------------
NOTE 3.
On May 14, 1987, a concession operator of American Land Cruisers of California,
Incorporated (ALCCAL, a subsidiary of the Company) commenced a lawsuit entitled
Altman's America, et al. v. American Land Cruisers of California, Incorporated,
et al. in the Superior Court of the State of California for the County of Los
Angeles. The action rose out of a claim for an alleged wrongful termination by
ALCCAL of a sublease agreement. This case has been tried twice. The first trial
resulted in a judgement in the amount of approximately $3.5 million. That
judgement was reversed on appeal and remanded for retrial. The second trial
resulted in judgements for the plaintiffs in the amount of $235,000 and a
judgement for ALCCAL of $634,000, which equaled a net judgement for ALCCAL of
$399,000. On July 18, 1996 the Appellate Court reduced the total amount due to
ALCCAL by approximately $400,000 and remanded the case for retrial, which should
be resolved at the Superior Court level prior to the end of calendar year 1997.
ALCCAL is defending itself vigorously and intends to pursue all means to defeat
the case.
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.
5
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 2
CRUISE AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Three Months Ended July 31, 1997
This Quarterly Report on Form 10-Q contains "forward-looking statements" which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in the forward-looking statement as a result
of certain factors, including those set forth in Exhibit 99 of the Company's
Annual Report on Form 10-K for April 30, 1997.
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 and fourth fiscal quarters. Due to the seasonality of rental and sales
operations, certain accounts fluctuate from quarter to quarter.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 1997, the Company had current liabilities in excess of current
assets in the amount of $26,977,000. 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 estimates that if these assets were classified as current assets,
the Company would not have a working capital deficit.
The Company believes that, during the next year, cash generated from operations
and financing available from banks and other financial institutions will be
sufficient for its capital and operating needs.
THREE MONTHS ENDED JULY 31, 1997 AS COMPARED WITH
THREE MONTHS ENDED JULY 31, 1996
Rental Revenue for the quarter ended July 31, 1997, was $26,159,000 compared to
$24,163,000 for the quarter ended July 31, 1996. This improvement was due to a
3% increase in revenue days and a 6% increase in revenue per day. The increase
in revenue days resulted from an increase in the size of the rental fleet,
offset in part by a slight reduction in utilization.
Sales for the quarter ended July 31, 1997, were $6,915,000, compared to
$6,833,000, for the same period a year ago. An increase in Rental Vehicle Sales
was mostly offset by a decrease in New and Used Vehicle Sales.
Cost of Rentals as a percentage of Rental Revenue was 31% in 1997 and 1996.
Economies of scale achieved through increased volume and rates were offset by a
slight reduction in vehicle utilization.
Cost of Sales as a percentage of Sales was 82% for the quarter ended July 31,
1997, compared to 85% in 1996. Profit improvements were recorded in both Rental
Vehicle Sales and New and Used Vehicle Sales.
Interest Expense for the quarter ended July 31, 1997, was $1,931,000 compared to
$1,891,000 in 1996. This increase is due primarily to an increase in average
debt levels, offset in part by lower average interest rates.
6
<PAGE>
Selling, General and Administrative Expenses were $7,484,000 in the first
quarter compared to $6,679,000 a year ago. This increase is due to increased
expenses incurred in order to meet the Company's increased rental demand.
Selling, General and Administrative Expenses as a percentage of Total Revenue
was 23% in 1997 compared to 22% in 1996.
7
<PAGE>
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.
September 6, 1997 Eric R. Bensen
---------------------------------
Eric R. Bensen
Vice President
Chief Financial Officer
September 6, 1997 Randall Smalley
---------------------------------
Randall Smalley
President
Chief Executive Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1997
<CASH> 6,418
<SECURITIES> 0
<RECEIVABLES> 3,886
<ALLOWANCES> 0
<INVENTORY> 11,266
<CURRENT-ASSETS> 23,353
<PP&E> 140,736
<DEPRECIATION> 27,083
<TOTAL-ASSETS> 139,455
<CURRENT-LIABILITIES> 50,330
<BONDS> 51,278
0
0
<COMMON> 58
<OTHER-SE> 32,452
<TOTAL-LIABILITY-AND-EQUITY> 139,455
<SALES> 6,915
<TOTAL-REVENUES> 33,074
<CGS> 5,682
<TOTAL-COSTS> 13,734
<OTHER-EXPENSES> 7,484
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,931
<INCOME-PRETAX> 9,925
<INCOME-TAX> 3,573
<INCOME-CONTINUING> 6,352
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,352
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
