<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
__________________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-16448
HOLIDAY RV SUPERSTORES, INCORPORATED
I.R.S. # 59-1834763
State of Incorporation: Florida
Sand Lake West Executive Park
7851 Greenbriar Parkway
Orlando, Florida 32819
(407) 363-9211
Indicate by check mark whether the registrant (1) has filed all reports
by Section 13 or 15(d) of the Securities and 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
----- -----
As of September 2, 1997, Holiday RV Superstores, Incorporated had
outstanding 7,435,700 shares of Common Stock, par value $.01 per share.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
<S> <C>
Part I
Financial Information
1. Financial Statements................................................................................... 3
Consolidated Condensed Balance Sheets ................................................................. 3
Consolidated Condensed Statements of Income ........................................................... 5
Consolidated Condensed Statements of Cash Flows........................................................ 6
Notes to Consolidated Condensed Financial
Statements .................................................................................... 8
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................................................... 9
Part II
Other Information
4. Submission of Matters to a Vote of Securities Holders................................................... 13
6. Exhibits and Reports on Form 8-K....................................................................... 13
</TABLE>
2
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
07/31/97 10/31/96
----------- -------------
(Unaudited)
<S> <C> <C>
CURRENT:
Cash and cash equivalents $ 7,440,595 $ 5,617,707
Accounts receivable:
Trade and contracts in transit 594,528 506,804
Other 395,584 254,861
Inventories 20,823,252 23,196,007
Refundable income taxes ---- 7,919
Deferred income taxes 147,000 147,000
------------ ------------
TOTAL CURRENT ASSETS 29,400,959 29,730,298
PROPERTY AND EQUIPMENT,
less accumulated depreciation 4,257,546 4,350,649
OTHER ASSETS,
principally covenant not to compete 279,155 330,200
------------ ------------
TOTAL ASSETS $ 33,937,660 $ 34,411,147
============ ============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
3
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HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
07/31/97 10/31/96
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Floor plan contracts $ 15,697,063 $ 17,504,302
Accounts payable 1,147,102 547,375
Customer deposits 252,004 76,405
Accrued expenses 651,974 1,103,729
Current portion of capital lease obligations 57,283 49,737
------------ ------------
TOTAL CURRENT LIABILITIES 17,805,426 19,281,548
LONG TERM CAPITAL LEASE OBLIGATIONS
less current portion 297,353 345,962
DEFERRED INCOME TAXES 11,000 11,000
STOCKHOLDERS' EQUITY:
Common stock $.01 par - shares authorized
10,000,000; issued 7,465,000 74,650 74,650
Additional paid-in capital 5,109,071 5,109,071
Retained earnings 10,695,615 9,672,109
Less:
Treasury stock, at cost, 15,300 shares (46,430) (46,430)
Deferred compensation (9,025) (36,763)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 15,823,881 14,772,637
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 33,937,660 $ 34,411,147
============ ============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
4
<PAGE> 5
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
07/31/97 07/31/96 07/31/97 07/31/96
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
SALES & SERVICE REVENUE $ 15,581,274 $ 18,498,279 $ 52,415,139 $ 58,085,321
COST OF SALES AND SERVICE 12,426,627 15,094,331 42,623,612 47,882,761
-------------- ------------- -------------- --------------
Gross Profit 3,154,647 3,403,948 9,791,527 10,202,560
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,503,103 2,566,271 7,423,863 7,724,770
-------------- ------------- -------------- --------------
Income from operations 651,544 837,677 2,367,664 2,477,790
INTEREST INCOME 143,766 90,897 351,571 273,650
INTEREST EXPENSE 352,742 389,783 1,047,729 1,105,458
-------------- ------------- -------------- --------------
Income before income taxes 442,568 538,791 1,671,506 1,645,982
INCOME TAXES 171,000 214,500 648,000 654,000
-------------- ------------- -------------- --------------
NET INCOME $ 271,568 $ 324,291 $ 1,023,506 $ 991,982
============== ============= ============== ==============
EARNINGS PER SHARE
OF COMMON STOCK $ 0.04 $ 0.04 $ 0.14 $ 0.13
============== ============= ============== ==============
WEIGHTED AVERAGE NUMBER
OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS
OUTSTANDING 7,468,000 7,500,500 7,468,000 7,549,000
============== ============= ============== ==============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
5
<PAGE> 6
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31
1997 1996
-------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 52,199,389 $ 58,549,993
Cash paid to suppliers and employees (48,796,951) (55,229,353)
Interest received 351,571 273,650
Interest paid (1,045,201) (1,096,498)
Income taxes paid (654,385) (701,246)
-------------- --------------
Net cash provided by operating activities 2,054,423 1,796,546
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (191,472) (506,888)
Proceeds from sale of equipment 1,000 ----
-------------- --------------
Net cash used for
investing activities (190,472) (506,888)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of capital lease obligations (41,063) (33,260)
--------------- --------------
Net cash used for financing activities (41,063) (33,260)
Net cash used for (provided by) operating, investing
and financing activities 1,822,888 1,256,398
Cash and cash equivalents, beginning of year 5,617,707 4,012,860
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 7,440,595 5,269,258
============== ==============
</TABLE>
See accompanying notes to the consolidated condensed financial statement.
6
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HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31
1997 1996
--------------- --------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net income $ 1,023,506 $ 991,982
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 350,278 293,899
(Gain) loss on disposal of property and equipment
and rental fleet 12,697 42,182
Cash provided by (used for):
Accounts receivable (228,447) 422,490
Inventories 2,372,755 (1,882,012)
Prepaid expenses 7,919 39,333
Other Assets (617) 8,082
Floor plan contracts (1,807,239) 2,011,863
Accounts payable 599,727 87,486
Customer deposits 175,599 123,446
Accruals (451,755) (342,205)
-------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 2,054,423 $ 1,796,546
============== =============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
7
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1.
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K for the year
ended October 31, 1996. The accompanying financial statements have not been
examined by an independent accountant in accordance with generally accepted
auditing standards, but in the opinion of management, such financial statements
include all adjustments, consisting only of normal recurring adjustments and
accruals, and inter-company elimination's necessary to summarize fairly the
Company's financial position and results of operations. Due to the seasonality
of the Company's business, the results of operations for three and nine months
ended July 31, 1997 are not necessarily indicative of results to be expected
for the fiscal year.
NOTE 2. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
July 31, 1997 October 31, 1996
------------- ----------------
<S> <C> <C>
New Vehicles $15,684,668 $17,581,630
New Marine 554,505 750,147
Used Vehicles 2,950,144 3,320,401
Used Marine 82,321 117,164
Parts and Accessories 1,551,614 1,426,665
----------- -----------
$20,823,252 $23,196,007
=========== ===========
</TABLE>
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
Certain current accounts, such as inventories and floor plan contracts,
materially changed during the period. These changes are a result of normal
seasonality of the business, except as discussed in the financial condition
section of this report.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward looking statements.
The Company wishes to caution investors that any forward looking statements
made by or on behalf of the Company are subject to uncertainties and other
factors that could cause actual results to differ materially from such
statements. The uncertainties and other factors include, but are not limited
to, the factors listed in the Company's Form 10-K for the year ended October
31, 1996 (many of which have been discussed in prior SEC filings by the
Company.) Though the Company has attempted to list the factors it believes to
be important to its business the Company wishes to caution investors that other
factors may prove to be important in affecting the Company's results of
operations. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it access the impact of each
such factor on the business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from forward looking
statements.
Investors are further cautioned not to place undue reliance on any forward
looking statements as they speak only of the Company's view as of the date the
statement was made. The Company undertakes no obligation to publicly update or
revise any forward looking statements, whether as a result of new information,
future events, or otherwise.
NEW FINANCIAL ACCOUNTING STANDARDS ISSUED
In February 1997, The Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share" which is effective for interim and annual periods
ending after December 15, 1997. The overall objective of SFAS No. 128 is to
simplify the calculation of earnings per share (EPS) and achieve comparability
with International Accounting Standards. The Company will be required to adopt
SFAS No. 128 in the first quarter of 1998, but does not expect that the
adoption will have a material effect on earnings per share.
FINANCIAL CONDITION AS OF JULY 31, 1997 COMPARED TO JULY 31, 1996.
The Company continued to maintain a strong financial position and high
liquidity for the first nine months of Fiscal 97. Decreases in cash flows
resulting from lower revenue were offset by decreases in cash paid to suppliers
and employees, resulting in a net cash provided by operating activities of $2.0
million in Fiscal 97 compared to $1.8 million in Fiscal 96. Cash used for
investing activities decreased from $506,000 used in Fiscal 96 primarily to
fund the new Bakersfield dealership facility, to $190,000
9
<PAGE> 10
in Fiscal 97 primarily used for the acquisition of additional undeveloped real
property to expand the Bakersfield dealership and to fund improvements to a
newly leased dealership in Fort Myers.
The net results on the Company's cash from all activities was an increase
of $1.8 million in Fiscal 97 compared to an increase of $1.3 million in Fiscal
96. These changes resulted in a cash position of $7,441,000 as of July 31,
1997 as compared to $5,269,000 as of July 31, 1996.
Net working capital increased to $11.6 million as of July 31, 1997 as
compared to $10.5 million as of July 31, 1996.
The Company's principal long term commitments consist of obligations under
operating and capital leases. The Company also has a contingent liability to
repay a portion of agency commission (referral fees) received principally from
certain lending institutions whereby the Company referred customers to one or
more third party financing sources and earned referral fees (agency
commissions) if the lender consummated a loan contract with the customer. In
some cases, the Company is required to pay back (chargeback) the referral fee
to the lender if the loan is paid off or foreclosed in the first six (6) months
of the term of the loan, if the chargeback amount exceeds reserves retained by
the lender. The Company records agency commission income based upon the amount
earned less allowances for chargebacks. In determining the allowance, the
Company takes into consideration the total customer loans outstanding and
estimates the exposure for potential chargebacks to the Company related
thereto. The Company also considers current and expected future economic
conditions, the effects of the change in customer interest rates and the aging
of all customer loans outstanding when estimating potential chargebacks to the
Company. Management expects the current allowance for chargebacks to be
sufficient to repay this chargeback contingency and does not expect the
ultimate liability to have a significant impact on the liquidity of the
Company.
The Company's maximum borrowing as of July 31, 1997 available under floor
plan contracts was $47 million, a decrease of $10 million from the previous
quarter due to the elimination of one of it's floor plan lending sources for
inactivity of the account. As of July 31, 1997 the Company had $31 million of
unused floor plan.
The Company's management feels it can obtain additional debt financing at
reasonable interest rates for expansion and/or diversification of its
operations. Currently, management has no expansion or diversification
prospects requiring a secondary stock offering or conversion of the financing
debt to common stock. Management does intend to continue to issue common stock
and/or options on common stock as a partial payment for acquisitions when cost
effective. However, management expects the dilutive effect on the common
stockholders of the Company resulting from issuing such common stock or options
to be minimal.
Management believes during the next twelve months, cash generated by
operating activities, cash and cash equivalents currently on deposit with
financial institutions and financing currently available from financial
companies will be sufficient for its capital and operating needs.
10
<PAGE> 11
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED JULY 31, 1997 COMPARED TO THE
THREE MONTHS ENDED JULY 31, 1996.
Sales and service revenue decreased 16% to $15.6 million from $18.5 million
due to lower revenue from the eastern dealerships. Revenue was down in all
major sources except service related revenue was up 6%.
According to RV Business (August, 1997) towable RV retail sales were up
0.8%, and motorized RV retail sales were down 8.4%, for the four months ended
April, 1997. This general overall downward trend and increased competition in
the Company's eastern markets accounts for the decrease in the Company's
revenue in Fiscal 97. Consequently, the Company's management is continuing to
make a number of strategical changes in store management and marketing strategy
including the relocation of the Ft. Myers dealership.
As a result of these changes management feels the eastern dealerships will
become more competitive and increase revenue. However, management does not
feel the Company's revenue for the remainder of Fiscal 97 will exceed last
year's revenue due to continued decrease in the overall demand for it's
products and increased competition in it's eastern markets.
Gross profit decreased 7% to $3.2 million from $3.4 million. As a percent
of revenue, gross profit increased to 20.2% from 18.4% primarily as a result of
increased margins on the sale of used RVs.
Selling, general and administrative (SG&A) expenses decreased 2.5% to $2.5
million from $2.6 million. As a percent of revenue, SG&A increased to 16.1%
from 13.9%.
Income from operations decreased 22% to $651,000 from $838,000. As a
percent of revenue, income from operations deceased to 4.2% from 4.5%.
Interest income increased 58% to $144,000 from $91,000, due to increased
cash available for short term investment. Interest expense decreased 10% to
$353,000 from $390,000.
Income before income taxes decreased 18% to $443,000 from $539,000. As a
percent of revenue, income before income taxes decreased slightly to 2.8%
from 2.9%.
The combined Federal and State income tax rate was 38.7% compared to 39.8%.
Income taxes for both periods varied from the Federal statutory rates due to
State income taxes.
Net income decreased 16% to $271,568 from $324,291. As a percent of
revenue, net income decreased slightly to 1.7% from 1.8%.
Earnings per share remained the same, 4 cents per share.
11
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RESULTS FROM OPERATIONS FOR THE NINE MONTHS ENDED JULY 31, 1997 COMPARED TO THE
NINE MONTHS ENDED JULY 31, 1996.
Sales and service revenue decreased 10% to $52.4 million from $58.1
million primarily due to a 13% decrease in new RV and marine sales from the
eastern dealerships. Service and parts related revenue increased 5%.
Gross profit decreased 4% to $9.8 million from $10.2 million. As a
percent of revenue, gross profit increased to 18.7% from 17.6% primarily due
to increased margins from the sale of used RVs.
Selling, general and administrative (SG&A) expenses decreased 4.0% to $7.4
million from $7.7 million due to lower selling related expenses. As a percent
of revenue, SG&A increased to 14.2% from 13.3%.
Income from operations decreased 4.4% to $2.4 million from $2.5 million.
As a percent of revenue, income from operations increased slightly to 4.5%
from 4.3%.
Interest income increased 29% to $352,000 from $274,000, due to more cash
available for short term investment. Interest expense decreased 5% to $1.05
million from $1.11 million.
Income before income taxes increased 1.6% to $1,672,000 from $1,646,000.
As a percentage of revenue, income before income taxes increased to 3.2% from
2.8%.
The combined Federal and State income tax rate was 38.8% compared to
39.8%. Income taxes for both periods varied from the Federal statutory rates
due to State income taxes.
Net income increased 3.2% to $1,023,506 from $991,982. As a percent of
revenue, net income increased to 2.0% compared to 1.7%.
Earnings per share increased to 14 cents from 13 cents.
12
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PART II
OTHER INFORMATION
There is no information to report under Items 1, 2, 3 and 5 of Part II of
this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held May 19, 1997 the following
individuals were re-elected to the Board of Directors:
Paul G. Clubbe Joanne M. Kindlund
Roy W. Parker Newton C. Kindlund
Harvey M. Alper W. Hardee McAlhaney
James P. Williams
The company did not solicit proxies for the meeting. A total of 4,543,736
shares of Common Stock were represented and voted at the meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
27 Financial Data Schedule (for SEC use only).
FORM 8-K
The Company filed a report on Form 8-K on August 21, 1997 reporting under
item 4. the dismissal of it's prior certifying accountant, BDO Seidman, LLP.
The response letter from BDO Seidman, LLP was included as an exhibit.
13
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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.
Date HOLIDAY RV SUPERSTORES, INCORPORATED
September 10, 1997 /S/ Newton C. Kindlund
-----------------------------------
Newton C. Kindlund, President
Chief Executive Officer
Principle Executive Officer
September 10, 1997 /S/ W. Hardee McAlhaney
-----------------------------------
W. Hardee McAlhaney, Vice President
Chief Financial Officer
Principal Financial and Accounting
Officer
September 10, 1997 /S/ Joanne M. Kindlund
-------------------------------------
Joanne M. Kindlund, Secretary
Treasurer
Principal Secretary and Treasurer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JUL-31-1997
<CASH> 7,441
<SECURITIES> 0
<RECEIVABLES> 990
<ALLOWANCES> 0
<INVENTORY> 20,823
<CURRENT-ASSETS> 29,401
<PP&E> 5,549
<DEPRECIATION> 1,292
<TOTAL-ASSETS> 33,938
<CURRENT-LIABILITIES> 17,805
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 15,749
<TOTAL-LIABILITY-AND-EQUITY> 33,938
<SALES> 52,415
<TOTAL-REVENUES> 52,415
<CGS> 42,623
<TOTAL-COSTS> 42,623
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,048
<INCOME-PRETAX> 1,672
<INCOME-TAX> 648
<INCOME-CONTINUING> 1,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,023
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
