<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 APRIL 30, 1998
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 May 30, 1998, Holiday RV Superstores, Incorporated had outstanding
7,272,300 shares of Common Stock, par value $.01 per share.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
Part I
Financial Information
<S> <C> <C>
1. 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 Security Holders....................13
6. Exhibits and Reports on Form 8-K.......................................13
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES CONSOLIDATED
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
04/30/98 10/31/97
(Unaudited)
------------ -----------
<S> <C> <C>
CURRENT:
Cash and cash equivalents $ 7,328,921 $ 7,431,318
Accounts receivable:
Trade and contracts in transit 1,153,566 841,212
Other 466,683 307,530
Inventories 23,123,429 20,712,744
Deferred income taxes 149,000 149,000
----------- -----------
TOTAL CURRENT ASSETS 32,221,599 29,441,804
PROPERTY AND EQUIPMENT:
less accumulated depreciation 4,163,077 4,209,371
OTHER ASSETS,
principally covenant not to compete 223,371 261,090
NONCURRENT DEFERRED INCOME TAXES 67,000 67,000
----------- -----------
TOTAL ASSETS $36,675,047 $33,979,265
=========== ===========
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
3
<PAGE> 4
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
04/30/98 10/31/97
(Unaudited)
-------------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Floor plan contracts $ 17,215,036 $ 15,805,446
Accounts payable 887,600 511,323
Customer deposits 244,043 141,586
Accrued expenses 738,154 898,639
Current portion of capital lease obligations 58,649 55,514
Income tax payable 413,928 97,693
------------ ------------
TOTAL CURRENT LIABILITIES 19,557,410 17,510,201
LONG TERM CAPITAL LEASE OBLIGATIONS
less current portion 255,631 286,051
STOCKHOLDERS' EQUITY:
Common stock $.01 par - shares authorized
10,000,000; issued 7,465,000 74,650 74,650
Additional paid-in capital 5,112,271 5,112,271
Retained earnings 11,992,117 11,058,706
Less:
Treasury stock, at cost, 192,700 and 31,300
shares respectively (308,176) (50,193)
Deferred compensation (8,856) (12,421)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 16,862,006 16,183,013
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 36,675,047 $ 33,979,265
============ ============
</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 Six Months Ended
04/30/98 04/30/97 04/30/98 04/30/97
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
SALES & SERVICE REVENUE $24,146,941 $21,431,451 $39,665,941 $36,833,865
COST OF SALES AND SERVICE 19,897,834 17,547,310 32,635,529 30,196,985
----------- ----------- ----------- -----------
Gross Profit 4,249,107 3,884,141 7,030,412 6,636,880
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,740,163 2,663,739 5,020,168 4,899,609
----------- ----------- ----------- -----------
Income from operations 1,508,944 1,220,402 2,010,244 1,737,271
INTEREST INCOME 114,262 103,481 240,664 207,805
INTEREST EXPENSE 360,321 340,756 720,797 716,138
----------- ----------- ----------- -----------
Income before income
taxes 1,262,885 983,127 1,530,111 1,228,938
INCOME TAXES 492,500 381,600 596,700 477,000
----------- ----------- ----------- -----------
NET INCOME $ 770,385 $ 601,527 $ 933,411 $ 751,938
=========== =========== =========== ===========
BASIC AND DILUTED EARNINGS
PER SHARE $ 0.11 $ 0.08 0.13 0.10
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 7,281,500 7,449,700 7,345,700 7,449,700
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES AND
COMMON STOCK EQUIVALENTS
OUTSTANDING 7,302,000 7,470,000 7,366,500 7,474,000
=========== =========== =========== ===========
</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>
SIX MONTHS ENDED
APRIL 30
----------------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $39,194,434 $36,031,680
Cash paid to suppliers and employees (38,474,266) (34,616,071)
Interest received 240,664 207,805
Interest paid (717,383) (705,295)
Income taxes paid 35,770 (485,578)
----------- -----------
Net cash provided by operating activities 279,219 432,541
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (171,849) (168,865)
Proceeds from the sale of equipment 75,501 1,000
----------- -----------
Net cash used in investing activities (96,348) (167,865)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock (257,983) ---
Repayment of capital lease obligations (27,285) (28,347)
----------- -----------
Net cash used in financing activities (285,268) (28,347)
NET INCREASES (DECREASES) IN CASH AND CASH
EQUIVALENTS (102,397) 236,329
Cash and cash equivalents, beginning of period 7,431,318 5,617,707
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,328,921 $ 5,854,036
=========== ===========
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
6
<PAGE> 7
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30
-------------------------------------
1998 1997
------------ -----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 933,411 $ 751,938
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 177,081 208,738
Amortization of deferred compensation 3,565 18,492
Gain on disposal of property and equipment
and rental fleet --- (440)
Changes in assets and liabilities:
(Increases) decreases in:
Accounts receivable (471,507) (793,826)
Inventories (2,410,685) 372,830
Other assets 3,280
(6,090)
(Increases) decreases in:
Floor plan contracts 1,409,590 (325,809)
Accounts payable 376,277 532,821
Customer deposits 102,457 96,610
Accrued expenses
and income taxes payable 155,750 (422,723)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 279,219 $ 432,541
============ ============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
7
<PAGE> 8
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, 1997. 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 eliminations 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 six months
ended April 30, 1998 are not necessarily indicative of results to be expected
for the fiscal year.
NOTE 2. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
April 30, 1998 October 31, 1997
-------------- ----------------
<S> <C> <C>
New Vehicles $16,354,615 $15,276,085
New Marine 836,090 617,067
Used Vehicles 4,151,368 3,214,149
Used Marine 96,894 135,377
Parts and Accessories 1,684,462 1,470,066
----------- ------------
$23,123,429 $20,712,744
=========== ===========
</TABLE>
NOTE 3. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standard No. 128, earnings
per share, in the Quarter ended January 31, 1998. The overall objective of SFAS
No. 128 is to simplify the calculation of earnings per share (EPS) and achieve
comparability with the International Accounting Standards. The adoption of SFAS
No. 128 did not change earnings per share as previously presented for the
Quarter and six months ended April 30, 1997.
8
<PAGE> 9
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, 1997 (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 assess 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.
FINANCIAL CONDITION AS OF APRIL 30, 1998 COMPARED TO APRIL 30, 1997.
The Company continued to maintain a strong financial position and high
liquidity for the first six months of fiscal 98. Inventories increased $2.4
million of which $1.3 million was new inventory financed by floor plan contracts
with financial institutions. $1.1 million in cash was used to finance increased
used and parts inventory. Inventory increases were the result of the Company's
management focus on stocking and selling higher priced motorhomes.
Cash used for increased inventories was financed primarily by cash
available from increased payables and net income.
The net result of all operating activities was an increase in cash of
$280,000 for the six month period.
Net cash used in investing activities decreased to $96,000 from $168,000
due primarily to proceeds from the sale of equipment offsetting equipment
purchases.
9
<PAGE> 10
Cash used in financing activities increased to $285,000 from $28,000 as a
result of the Company's stock repurchase. The Company announced in January 1998
a program to repurchase up to $1 million of it's common stock.
The net results on the Company's cash position from all activities was a
decrease of $102,000 for the current year compared to an increase of $236,000
for the prior year.
As of April 30, 1998 the Company had $7.3 million cash, compared to $5.9
million for the same period last year.
Net working capital increased 13% to $12.7 million as of the end of the
quarter compared to $11.2 million for the same period last year.
The Company's principal long term commitments consist of obligations under
operating 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
recognizes 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 has $34 million maximum borrowing available under floor plan
contracts of which $17 million was not used.
The Company's management feels it can obtain additional debt financing at
sub-prime 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 that during the next twelve months cash generated by
operating activities, cash and cash equivalents on deposit with financial
institutions and financing currently available from floor plan financing
companies will be sufficient for its capital and operating needs for its
existing operations.
10
<PAGE> 11
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED APRIL 30, 1998 COMPARED TO THE
THREE MONTHS ENDED APRIL 30, 1997.
Sales and service revenue increased 12.7% to $24.1 million from $21.4
million due to a 25% increase in the average selling price of the Company's
primary source of revenue, new vehicle sales. This increase was the result of
management's continued focus on the sale of higher priced Class A motorhomes
with greater potential for higher dollar gross profits.
Used vehicle sales increased 12% due to an increases in the average selling
price.
The Company's management feels increases in the higher priced new and used
vehicles were primarily the result of pent-up demand resulting from the
depressed first quarter sales due to the "El Nino" effect on its markets. The
Company's management also predicts it will continue to see increased revenue for
the remaining quarters of fiscal 1998 due to the strong pent-up demand.
Cost of sales, as a percent of revenue increased from 81.9% to 82.4%.
Gross profit increased 9.4% to $4.25 million from $3.88 million. As a
percent of revenue, gross profit decreased to 17.6% from 18.1% primarily due to
lower gross profit percentage from the sale of high priced motorhomes. This
inverse relationship between sale price and gross profit as a percent of sale
price is typical in the industry; i.e., the higher sale price, the lower the
gross profit as a percent of the sale price. However, as the sales price
increases, dollar gross profits increase.
Agency commissions represented 20% of the Company's total gross profit, as
compared to 17% in the prior year. Agency commissions and gross profit from the
sale of new and used vehicles and boats, in the aggregate, represented 78% of
the Company's total gross profit, as compared to 76% in the prior year.
Selling, general and administrative (SG&A) expenses increased only 2.9% to
$2.74 million from $2.66 million. As a result, income from operations increased
24% to $1.51 million from $1.22 million.
Interest income increased 10% to $114,000 from $103,000. Interest expense
increased 6% to $360,000 from $341,000.
Income before income taxes increased 29% to $1,263,000 from $983,000. As a
percent of revenue, income before income taxes increased to 5.2% from 4.6%.
The combined Federal and State income tax rate was 39.0% in the current
quarter compared to 38.8% in the same quarter last year. Income taxes for both
periods varied from the Federal statutory rates due to State Income Taxes.
Net income was the highest for any second quarter in the Company's history,
increasing 28% to $770,385 from $601,527. Net income as a percent of revenue
increased to 3.2% from 2.8%.
11
<PAGE> 12
Earnings per share increased to 11 cents from 8 cents.
RESULTS FROM OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1998 COMPARED TO THE
SIX MONTHS ENDED APRIL 30, 1997.
Sales and service revenue set a record for the Company for any first six
month period, increasing 7.7% to $39.7 million from $36.8 million due to a 19%
increase in the average selling price of new vehicle sales. This increase was
the result of management's continued focus on the sale of higher priced Class A
motorhomes with greater potential for higher gross profits.
Used vehicle sales increased 6% due to an increase in the average sales
price.
Cost of sales, as a percent of revenue increased to 82.3% from 82.0%.
Gross profit increased 5.9% to $7.0 million compared to $6.6 million. As a
percent of revenue, gross profit decreased to 17.7% from 18.0% primarily due to
lower gross profit percentage from the sale of higher priced motorhomes.
Agency commissions represented 18.5% of the Company's total gross profit,
as compared to 17.3% in the prior year. Agency commissions and gross profit from
the sale of new and used vehicles and boats, in the aggregate, represented 75%
of the Company's total gross profit in both years.
Selling, general and administrative (SG&A) expenses increased only 2.5% to
$5.0 million from $4.9 million. As a result, income from operations increased
15.7% to $2.0 million from $1.7 million.
Interest income increased 16% to $241,000 from $208,000. Interest expense
increased slightly to $721,000 from $716,000.
Income before income taxes increased 25% to $1.53 million from $1.23
million. As a percent of revenue, income before income taxes increased to 3.9%
from 3.3%.
The combined Federal and State income tax rate was 39.0% in the current
period compared to 38.8% in the same period last year. Income taxes for both
periods varied from Federal taxes due to State income taxes.
Net income was the highest in the Company's history for any first six month
period, increasing 24% to $933,411 from $751,938. Net income as a percent of
revenue increased to 2.4% from 2.0%.
Earnings per share increased to 13 cents a share from 10 cents a share.
12
<PAGE> 13
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 18, 1998 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 4,519,604
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 no report on Form 8-K for the three months ended April
30, 1998.
13
<PAGE> 14
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
June 9, 1998 /S/ Newton C. Kindlund
----------------------
Newton C. Kindlund, President
Chief Executive Officer
Principal Executive Officer
June 9, 1998 /S/ W. Hardee McAlhaney
-----------------------
W. Hardee McAlhaney, Vice President
Chief Financial Officer
Principal Financial and Accounting Officer
June 9, 1998 /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> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<CASH> 7,329
<SECURITIES> 0
<RECEIVABLES> 1,620
<ALLOWANCES> 0
<INVENTORY> 23,123
<CURRENT-ASSETS> 32,222
<PP&E> 5,583
<DEPRECIATION> 1,420
<TOTAL-ASSETS> 36,675
<CURRENT-LIABILITIES> 19,557
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 16,787
<TOTAL-LIABILITY-AND-EQUITY> 36,675
<SALES> 39,666
<TOTAL-REVENUES> 39,666
<CGS> 32,635
<TOTAL-COSTS> 32,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 721
<INCOME-PRETAX> 1,530
<INCOME-TAX> 597
<INCOME-CONTINUING> 933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 933
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
