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 JANUARY 31, 1999
OR
[x] 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 March 8, 1999, Holiday RV Superstores, Incorporated had
outstanding 7,166,500 shares of Common Stock, par value $.01 per share.
<PAGE>
TABLE OF CONTENTS
Item Page
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
6. Exhibits and Reports on Form 8-K................................. 12
2
<PAGE>
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
-----------------------------------------------------------------
ASSETS
------
01/31/99 10/31/98
(Unaudited)
----------- ------------
CURRENT:
Cash and cash equivalents $ 8,530,776 $ 7,441,806
Accounts receivable:
Trade and contracts in transit 1,953,876 1,415,930
Other 334,631 373,700
Inventories 27,485,961 23,951,720
Refundable income taxes --- 27,363
Deferred income taxes 159,000 159,000
------------ ------------
TOTAL CURRENT ASSETS 38,464,244 33,369,519
PROPERTY AND EQUIPMENT,
less accumulated depreciation 3,156,135 4,038,377
OTHER ASSETS,
principally covenant not to compete 173,059 200,184
NONCURRENT DEFERRED INCOME TAXES 109,000 109,000
------------ ------------
TOTAL ASSETS $ 41,902,438 $ 37,717,080
============ ============
See accompanying notes to the consolidated condensed financial statements.
3
<PAGE>
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
01/31/99 10/31/98
(Unaudited)
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Floor plan contracts $ 21,612,411 $ 18,083,481
Accounts payable 888,883 878,226
Customer deposits 354,665 185,370
Accrued expenses 686,387 779,656
Current portion of capital lease
Obligations 63,682 61,963
Income tax payable 245,717 ---
------------ ------------
TOTAL CURRENT LIABILITIES 23,851,745 19,988,696
LONG-TERM CAPITAL LEASE OBLIGATIONS,
Less current portion 208,313 220,676
------------ ------------
TOTAL LIABILITIES 24,060,058 20,209,372
------------ ------------
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 13,193,996 12,751,822
Treasury stock, at cost, 298,500 and 157,300
respectively (538,537) (430,098)
Deferred compensation --- (937)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 17,842,380 17,507,708
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 41,902,438 $ 37,717,080
============ ============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
4
<PAGE>
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
------------------------------------------------------------------
(Unaudited)
THREE MONTHS ENDED
01/31/99 01/31/98
------------- ------------
SALES AND SERVICE REVNEUE $ 18,182,994 $ 15,519,000
COST OF SALES AND SERVICE 15,112,933 12,737,695
------------- ------------
Gross Profit 3,070,061 2,781,305
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,429,147 2,280,005
------------- ------------
Income from operations 640,914 501,300
INTEREST INCOME 114,638 126,402
INTEREST EXPENSE (347,425) (360,476)
GAIN ON THE SALE OF ASSETS 316,747 ---
------------- ------------
Income before income taxes 724,874 267,226
INCOME TAXES 282,700 104,200
------------- ------------
NET INCOME $ 442,174 $ 163,026
============= ===========
BASIC AND DILUTED EARNINGS PER SHARE $ 0.06 $ 0.02
============= ===========
BASIC SHARES 7,192,200 7,407,900
============= ===========
DILUTED SHARES 7,260,600 7,421,300
============= ===========
See accompanying notes to the consolidated condensed financial statements.
5
<PAGE>
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
01/31/99 01/31/98
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 17,853,412 $ 15,350,338
Cash paid to suppliers and employees (17,597,929) (15,786,123)
Interest received 114,683 126,402
Interest paid (337,071) (337,658)
Income taxes paid (9,620) (91,186)
------------- ------------
Net cash provided by (used for) operating activities 23,430 (738,227)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (8,821) (148,222)
Proceeds from the sale of real property and
equipment 1,193,444 75,501
------------- ------------
Net cash provided by (used for) investing activities 1,184,623 (72,721)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock purchases (108,439) (185,122)
Repayment of capital lease obligations (10,644) (13,434)
------------- ------------
Net cash used for financing activities (119,083) (198,556)
Net increases (decreases) in cash and cash equivalents 1,088,970 (1,009,504)
------------- ------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,441,806 7,431,318
------------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,530,776 $ 6,421,814
============= ============
</TABLE>
See accompanying notes to the consolidated condensed financial statement.
6
<PAGE>
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
01/31/99 01/31/98
----------- -----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES:
Net income $ 442,174 $ 163,026
Adjustments to reconcile net income to net cash
used for operating activities:
Depreciation and amortization 83,933 89,177
Amortization of deferred compensation 937 1,782
Gain on disposal of assets (316,747) ---
Changes in assets and liabilities:
(Increases) decreases in:
Accounts receivable (498,877) (168,662)
Refundable income taxes 27,363 ---
Inventories (3,534,241) (5,562,725)
Other assets 9,905 2,024
(Increases) decreases in:
Floor plan contracts 3,528,930 4,379,460
Accounts payable 10,657 528,135
Customer deposits 169,295 127,355
Accrued expenses and income taxes payable 100,101 (297,799)
----------- -----------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 23,430 $ (738,227)
=========== ===========
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
7
<PAGE>
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 fiscal
year ended October 31, 1998 The accompanying financial statements have not been
audited 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 months ended
January 31, 1999 are not necessarily indicative of results to be expected for
the fiscal year.
NOTE 2. INVENTORIES
Inventories are summarized as follows:
JANUARY 31, 1999 OCTOBER 31, 1998
---------------- ----------------
New Vehicles $20,006,067 $16,952,586
New Marine 1,348,363 897,415
Used Vehicles 4,317,031 4,296,247
Used Marine 161,461 145,862
Parts and Accessories 1,653,039 1,659,610
----------- -----------
$27,485,961 $23,951,720
=========== ===========
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
Certain current accounts, such as accounts receivable, 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, 1998 (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 JANUARY 31, 1999 COMPARED TO JANUARY 31, 1998.
The Company continued to maintain a strong financial position with high
liquidity. Cash from operating activities increased approximately $760,000 to a
positive cash flow of $23,000 from a use of $738,000 cash in the prior year.
This increase was primarily due to increased net income and increased taxes
payable.
Cash from investing activities increased $1.2 million due to the sale of
real property and equipment previously operated as a dealership in Atlanta,
Georgia.
Cash used for financing activities to continue the company's common stock
repurchase, $110,000 compared to $185,00 in the prior year.
The net results on the Company's cash position from all activities was an
increase of $1,089,000 compared to a use of cash of $1,009,000 in the prior
year. As a result the Company had $8.5 million in cash at quarter end compared
to $6.4 million last year.
9
<PAGE>
Net working capital increased 23% to $14.6 million from $11.9 million.
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 within 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 an
allowance 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.
As of January 31, 1999, the Company had $25 million maximum borrowing
available under floor plan contracts of which $3 million was not used.
The Company's management feels it can easily obtain additional debt
financing at reasonable interest rates for floor plan contracts for expansion
and/or diversification of its operations. Currently Management has no expansion
or diversification prospects requiring a secondary stock offering or a
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.
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 1999, COMPARED
TO THE THREE MONTHS ENDED JANUARY 31, 1998.
Sales and service revenue increased 17.2% to $18.2 million from $15.5
million due to increased sales of new and used vehicles. The Company experienced
a continued trend, from Fiscal 1998, of increased average sale prices of both
new and used vehicles, accounting for approximately half of the increased
revenue. The balance of the increase was due to increased new and used unit
sales, an
10
<PAGE>
improvement from Fiscal 1998 trend of slightly decreasing unit sales.
The closing of the Atlanta dealership in December of 1998 had no material effect
on sales revenue. The Atlanta dealership had been unprofitable and management
expects the closing to have a positive effect on the Company's operations.
Overall service and parts revenue decreased 7%. However, on a same
dealership basis (without Atlanta), service and parts revenue were approximately
the same as the prior year.
Cost of sales, as a percent of revenue, increased to 83.1% from 82.1%.
Gross profit increased 10.4% to $3.1 million from $2.8 million. As a
percent of revenue, gross profit decreased to 16.9% from 17.9%, due to a
decrease in the gross margins from the sale of higher priced new and used
motorized vehicles. Typically, as vehicle sales prices increase, gross margins
decrease.
Agency commissions represented 17.6% of the Company's total gross profit,
as compared to 16.6% the prior year. Agency commission 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, as compared to 66% the prior year.
Selling, general and administrative (SG&A) expenses increased 6.5% to $2.43
million from $2.28 million, primarily due to increased selling expenses related
from increased revenues. As a percent of revenue, SG&A decreased to 13.4% from
14.7%.
Operating income increased 28% to $641,000 from $501,000. As a percent of
revenue, operating income increased to 3.5% from 3.2%.
Interest income decreased 9% due to lower yields on short term funds
invested. Lower interest rates on floor plan debt offset increased interest on
higher floor plan balances resulting in a net 4% decrease in interest expense.
A gain of $317,000 resulted from the sale of the Company's Atlanta, Georgia
dealership property and equipment.
Income before income taxes increased 171% to $725,000 from $267,000.
Without the gain, income before income taxes increased 53% for fiscal 99.
The combined Federal and State income tax rate was 39.0 %, same as the
prior year. Income taxes for both periods varied from the Federal rates due to
State income taxes.
Net income increased 171% to $442,174 from $163,026
Earnings per share increased to 6 cents from 2 cents.
11
<PAGE>
PART II
OTHER INFORMATION
There is no information to report under Items 1, 2, 3,4 and 5 of Part II of
this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
27 Financial Data Schedule (for SEC use only).
Reports on Form 8-K
None
12
<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.
DATE HOLIDAY RV SUPERSTORES, INCORPORATED
- ----
March 12, 1999 /s/ NEWTON C. KINDLUND
--------------------------------------------
Newton C. Kindlund, President,
Chief Executive Officer
Principal Executive Officer
March 12, 1999 /s/ JOANNE M. KINDLUND
--------------------------------------------
Joanne M. Kindlund, Executive
Vice President-Administration,
Secretary /Treasurer
Principal Administrative Officer
March 12, 1999 /s/ W. HARDEE MCALHANEY
--------------------------------------------
W. Hardee McAlhaney, Vice President
Chief Financial Officer
Principal Financial and Accounting Officer
13
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
(for SEC use only).
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 8,531
<SECURITIES> 0
<RECEIVABLES> 2,289
<ALLOWANCES> 0
<INVENTORY> 27,486
<CURRENT-ASSETS> 38,464
<PP&E> 4,509
<DEPRECIATION> 1,353
<TOTAL-ASSETS> 41,902
<CURRENT-LIABILITIES> 23,852
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 17,767
<TOTAL-LIABILITY-AND-EQUITY> 41,902
<SALES> 18,183
<TOTAL-REVENUES> 18,183
<CGS> 15,113
<TOTAL-COSTS> 15,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 725
<INCOME-TAX> 283
<INCOME-CONTINUING> 442
<DISCONTINUED> 442
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 442
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
