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, 2000
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, INC.
I.R.S. # 59-1834763
State of Incorporation: Delaware
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 required to be filed 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 1, 2000, Holiday RV Superstores, Incorporated had
outstanding 7,239,300 of Common Stock, par value $.01 per share.
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TABLE OF CONTENTS
Item Page
Part I
Financial Information
1. Consolidated Condensed Balance Sheets........................... 3
Consolidated Condensed Statements of Operations................. 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 .......................... 10
3. Quantitative and Qualitative Disclosures about Market Risk...... 14
Part II
Other Information
4. Submission of Matters to a Vote of Security Holders............. 15
6. Exhibits and Reports on Form 8-K................................ 16
2
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HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
01/31/00 10/31/99
(UNAUDITED)
----------- -----------
CURRENT:
Cash and cash equivalents $ 4,197,046 $ 9,119,264
Accounts receivable:
Trade and contracts in transit 4,149,692 2,234,980
Other 839,447 393,278
Inventories 60,150,405 28,755,779
Prepaid expenses 172,615 60,587
Refundable income taxes 203,752 100,868
Deferred income taxes 177,000 177,000
----------- -----------
TOTAL CURRENT ASSETS 69,889,957 40,841,756
PROPERTY AND EQUIPMENT,
less accumulated depreciation 12,401,504 4,598,477
OTHER ASSETS
Goodwill, less accumulated amortization 4,041,383 --
Other 104,566 177,272
NONCURRENT DEFERRED INCOME TAXES 117,000 117,000
----------- -----------
TOTAL ASSETS $86,554,410 $45,734,505
=========== ===========
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>
01/31/00 10/31/99
(UNAUDITED)
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Floor plan contracts $ 54,547,590 $ 23,673,241
Accounts payable 1,659,451 410,732
Customer deposits 226,529 111,519
Accrued expenses 1,969,342 1,690,760
Current portion of capital lease obligations 63,682 69,161
Current portion of notes payable-real property 88,208 --
Notes payable-bank 400,000 --
------------ ------------
TOTAL CURRENT LIABILITIES 58,954,802 25,955,413
LONG TERM OBLIGATIONS
Capital leases
less current portion 144,624 155,730
Notes-real property
less current portion 6,472,658 --
------------ ------------
TOTAL LONG TERM OBLIGATIONS 6,617,282 155,730
CONVERTIBLE NOTES 1,500,000 --
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par; shares authorized
2,000,000; issued 0
Common stock $.01 par; shares authorized
23,000,000; issued 7,540,000 and 7,505,000 75,400 75,050
Additional paid-in capital 5,235,996 5,184,370
Retained earnings 14,712,585 14,905,597
Treasury stock, 300,700 shares at cost (541,655) (541,655)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 19,482,326 19,623,362
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,554,410 $ 45,734,505
============ ============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
4
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HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATION
----------------------------------------------------------------------------
(Unaudited)
THREE MONTHS ENDED
01/31/00 01/31/99
------------ ------------
SALES & SERVICE REVENUE $ 34,038,673 $ 18,182,994
COST OF SALES AND SERVICE 28,503,788 15,112,933
------------ ------------
Gross profit 5,534,885 3,070,061
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,025,861 2,429,147
------------ ------------
Income from operations 509,024 640,914
INTEREST INCOME 60,590 114,638
INTEREST EXPENSE (837,726) (347,425)
GAIN ON THE SALE OF FIXED ASSETS -- 316,747
------------ ------------
Income (loss) before income taxes (268,112) 724,874
INCOME TAXES (BENEFIT) (75,100) 282,700
------------ ------------
NET (LOSS) INCOME $ (193,012) $ 442,174
============ ============
BASIC AND DILUTED (LOSS) EARNINGS
PER COMMON SHARE $ (0.03) $ 0.06
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES--BASIC 7,226,000 7,192,200
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES--DILUTED 7,226,000 7,260,600
============ ============
See accompanying notes to the consolidated condensed financial statements.
5
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HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 33,447,281 $ 17,853,412
Cash paid to suppliers and employees (32,352,664) (17,597,929)
Interest received 60,589 114,638
Interest paid (837,726) (337,071)
Income taxes paid (102,884) (9,620)
------------ ------------
Net cash provided by operating activities 214,596 23,430
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,036,985) (8,821)
Proceeds from the sale of property and equipment -- 1,193,444
Acquisition of County Line RV, net of cash acquired (4,054,775) --
------------ ------------
Net cash (used in) provided by investing activities (5,091,760) 1,184,623
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock purchases -- (108,439)
Repayment of capital lease obligations (16,585) (10,644)
Proceeds from notes on real property 1,550,000 --
Repayment of notes to former County Line
shareholders (1,629,845) --
Proceeds from the issuance of common stock from
exercise of options 51,376 --
------------ ------------
Net cash used in financing activities (45,054) (119,083)
------------ ------------
Net (decreases) increases in cash and cash equivalents (4,922,218) 1,088,970
CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER 9,119,264 7,441,806
------------ ------------
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 4,197,046 $ 8,530,776
============ ============
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
6
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HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31
2000 1999
------------ ------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net (loss) income $ (193,012) $ 442,174
Adjustments to reconcile net (loss) income to net cash
Provided by operating activities:
Depreciation and amortization 163,630 83,933
Amortization of deferred compensation -- 937
Gain on disposal of property and equipment -- (316,747)
Stock option compensation expense 80,496 --
Changes in assets and liabilities:
(Increases) decreases in:
Accounts receivable (919,254) (498,877)
Refundable income taxes (69,636) 27,363
Inventories (13,800,481) (3,534,241)
Other assets (68,901) 9,905
(Increases) decreases in:
Floor plan contracts 15,637,907 3,528,930
Accounts payable (321,121) 10,657
Customer deposits 115,010 169,295
Accrued expenses and income taxes payable (410,042) 100,101
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 214,596 $ 23,430
============ ============
</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, 1999. 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 months ended
January 31, 2000 are not necessarily indicative of results to be expected for
the fiscal year.
NOTE 2. INVENTORIES
Inventories are summarized as follows:
JANUARY 31, 2000 OCTOBER 31, 1999
---------------- ----------------
New Vehicles $44,212,368 $20,922,867
New Marine 1,471,382 1,503,756
Used Vehicles 12,438,199 4,543,606
Used Marine 109,675 209,276
Parts and Accessories 1,918,781 1,576,274
----------- -----------
$60,150,405 $28,755,779
=========== ===========
NOTE 3. CONVERTIBLE NOTES
In connection with the acquisition of County Line Select Cars, Inc.,
the Company issued two $750,000 notes to the former shareholders of County Line.
The notes have a three-year term and were issued at an interest rate of 8.25%
per annum. Payments of interest only are due quarterly, with the full principal
balance due on or before three years from issuance. The notes are convertible,
at the option of the holder, into common stock of the Company at a fixed
conversion price per share, at any time after two years from the date of
issuance.
NOTE 4. ACQUISITIONS
On November 11, 1999 the Company acquired 100% of the issued and
outstanding stock of County Line Select Cars, Inc. The total purchase price paid
to the County Line shareholders was $6.5 million, consisting of $5.0 million
cash and $1.5 million in notes convertible into the Company's
8
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-CONTINUED
common stock. In connection with the County Line acquisition, the Company repaid
$1.6 million of loans outstanding to the former County Line shareholders. The
acquisition has been accounted for under the purchase method of accounting which
resulted in the recognition of approximately $4.0 million in goodwill, to be
amortized over 20 years on a straight-line basis.
The following unaudited pro-forma summary presents the consolidated
results of operations of the Company as if the acquisition had occurred at the
beginning of periods presented herein. This presentation is for informational
purposes only and does not purport of being indicative of what would have
occurred had the acquisition been made as of these dates or of results which may
occur in the future.
THREE MONTHS ENDED
01/31/00 01/31/99
----------- -----------
Revenue $36,270,000 $35,418,000
Net (Loss) Income (203,000) 486,000
Diluted (Loss) Earnings Per Share $ (0.03) $ 0.07
On January 11, 2000, the Company acquired all of the land and buildings related
to the operations of County Line Select Cars, Inc. from County Line's former
shareholders. The total purchase price was $5.0 million, with the sellers
providing first mortgage financing for the entire purchase. The mortgage has a
10 year term at an interest rate of 9.5% per annum, with principal and interest
payable monthly based on a 20 year amortization.
NOTE 5. STOCK OPTIONS GRANTED
The Company granted stock options during the quarter ended January 31,
2000 to four of its executives totaling 405,000 shares. The results of
operations presented for the three months ended January 31, 2000 include
approximately $80,000 compensation expense for stock options granted, at then
less than fair market value, resulting from the grant made during the period to
one of the Company's executives, and grants made in prior periods to consultants
to the Company and to prior members of the Company's Board of Directors.
NOTE 6. SUBSEQUENT EVENT
On March 1, 2000, the Company purchased 100% of the outstanding common
stock of Little Valley Auto and RV Sales, Inc. for a total of $3.4 million in
cash and a note convertible into common stock. The note has a three-year term,
and was issued at an interest rate of 7.50% per annum. Payments of interest only
are due quarterly, with the full principal balance due on or before three years
from issuance. The note is convertible, at the option of the holders, into
common stock of the Company at a fixed price per share, at any time after two
years from the date of issuance.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements.
These forward-looking statements may generally be identified by introductions
such as "outlook" for an upcoming period of time, or words and phrases such as
"should," "expects," "hopes," "plans," "anticipates," "projected," "believes,"
"forward-looking" (or variants of those words and phrases) or similar language
indicating the expression of an opinion or view concerning the future. Holiday
wishes to caution investors that any forward-looking statements made by or on
behalf of Holiday 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 Holiday's Form 10-K for the year ended October 31, 1999 (many of which
have been discussed in prior SEC filings by Holiday). Though Holiday has
attempted to list the factors it believes to be important to its business,
Holiday wishes to caution investors that other factors might prove to be
important in affecting Holiday'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 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 Holiday's view as of the date
the statement was made. Holiday undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events, or otherwise.
GENERAL
Holiday is a multi-store retail chain engaged in the retail sales and
service of recreation vehicles, or RVs, and recreation boats. As of January 31,
2000 Holiday operated twelve retail centers, six in Central and North Central
Florida, two in the Gulf Coast areas of Tampa and Ft. Myers, Florida, one in
Roseville, South Carolina, two in California's central valley cities of
Sacramento and Bakersfield and one in Las Cruces, New Mexico. On March 1, 2000
the thirteenth center was acquired in Prosperity, West Virginia.
Holiday intends to capitalize on the anticipated double-digit growth
and upon the significant consolidation opportunities available in the highly
fragmented recreational vehicle industry by acquiring additional dealers and
improving their performance and profitability through the implementation of
Holiday's operating strategies. The primary acquisition focus is on
well-established recreational vehicle dealers in geographic markets not
currently served by the operating subsidiaries, particularly geographic markets
with strong demographics. Holiday also may seek to acquire dealers that, while
located in attractive geographic markets, have not been able to realize
favorable market share or profitability and that can benefit substantially from
Holiday's systems and operating strategies. Holiday is also considering
opportunities within its existing markets when operating and marketing
efficiencies can be obtained by the addition of more dealerships. Holiday may
expand its range of product lines and its market penetration by acquiring
dealers that distribute recreation vehicle product lines different from those
currently offered by Holiday.
10
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As a result of the considerable industry experience and relationships
of Holiday's management team, Holiday believes it is well positioned to identify
and evaluate acquisition candidates and assess their growth prospects, the
quality of their management teams, their local reputation with customers, and
the suitability of their locations. Holiday believes it is regarded as an
attractive acquirer by dealers because of (1) Holiday's historical performance
and the experience and reputation of its management team within the industry;
(2) Holiday's decentralized operating strategy, which enables the managers of an
acquired dealer to continue their involvement in dealership operations; (3) the
ability of management and employees of an acquired dealer to participate in
Holiday's growth and expansion through potential stock ownership and career
advancement opportunities; (4) the ability to offer liquidity to the owners of
acquired dealers through the receipt of stock or cash.
The first acquisition was completed on November 11, 1999, when Holiday
purchased 100% of the outstanding common stock of County Line Select Cars, Inc.
from its shareholders, Armando Alonso and Francisco Alonso. County Line is based
in Ocala, Florida and its annual revenue was approximately $70 million prior to
the acquisition. The County Line purchase established a leadership position in
Florida by expanding the number of dealerships in Florida from three to eight.
The acquisition also strengthened Holiday's depth of management by establishing
Holiday's first regional office.
The second acquisition was completed on March 1, 2000, when Holiday
purchased 100% of the outstanding stock of Little Valley Auto and RV Sales, Inc.
from its shareholders Ernest Davis, Jr. and Lori A. Davis. Little Valley is
based in Prosperity, West Virginia and its annual revenue was approximately $13
million prior to the acquisition. The Little Valley purchase expands Holiday's
platform in the Mid-Atlantic states. The quality and experience of management
and the historical profitability of its operations exceeded Holiday's
thresholds.
Holiday has launched a marketing program to consolidate and rebrand the
various tradenames of its subsidiaries under a new national tradename
identity--Recreation USA. Currently, Holiday and its subsidiaries operate under
multiple tradenames, including the original tradename Holiday RV Superstores
along with County Line RV and Little Valley RV. Holiday intends to gradually
phase in its new tradename during Fiscal 2000 as customer awareness of the
Recreation USA brand increases. This strategy capitalizes on the "brand name
equity" of the acquired stores while the new name--Recreation USA--becomes more
recognized. This is the strategy Holiday intends to use when acquiring
dealerships in the future.
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 liquidity and capital
resources section of this report.
LIQUIDITY AND CAPITAL RESOURCES
Holiday's cash needs are primarily for its strategic acquisitions, and
to a lesser degree to support operations including non-floored inventory for
resale and slower sales period liquidity. These cash
11
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needs have historically been financed with cash from operations and cash in
Holiday's treasury. Changes in Holiday's new inventory are financed by floor
plan credit facilities.
During the period ended January 31, 2000 Holiday's cash flows increased
significantly reflecting the activities of the County Line acquisition and the
new stores acquired. Cash flows from operating activities nearly doubled in all
major categories. Net cash provided by operating activities increased to
$215,000 from $23,000.
Investing activities used $5.1 million cash, $4.1 million for the
purchase of County Line common stock, and $1.0 million primarily for building
the relocated Spartanburg, S.C. dealership.
Cash provided by financing activities was primarily $1.6 million from a
real property mortgage in Spartanburg offset by the use of $1.6 million to
retire notes from the prior shareholders of County Line, as a condition of the
County Line acquisition.
Net use of cash from all activities was $4.9 million, reducing cash and
cash equivalents as of January 31, 2000 to $4.2 million, as compared to $8.5
million as of January 31, 1999.
Working capital decreased to $10.9 million from $14.8 million the prior
year primarily due to a decrease in current assets resulting from cash used for
acquisitions, and increased current liabilities resulting from additional floor
plan financing for used vehicle inventory.
Holiday's principal long-term commitments, as of January 31, 2000,
consists of obligations under operating leases and commitments, at the option of
the note holders, to convert notes into Holiday's common stock at a fixed
conversion price.
Holiday also has a contingent liability to repay a portion of agency
commission, or referral fees, received from lending institutions whereby Holiday
referred customers to one or more third-party financing sources and earned
agency commissions if the lender consummated a loan contract with the customer.
In some cases, Holiday could be required to pay back the agency commission to
the lender if the loan is paid off or foreclosed in a specific period of time,
usually limited to the first six months of the term, if the chargeback amount
exceeds reserves retained by the lender. Holiday records commission income based
upon the amount earned less allowances for chargebacks. In determining the
allowance, Holiday takes into consideration the current and predicted future
economic conditions, the effects of changes in consumer interest rates, and the
aging of referred customer loans to estimate potential chargebacks.
Holiday's growth strategies are dependent upon obtaining adequate
financing for the purchase of recreation vehicle and marine dealerships.
Holiday's management is currently evaluating various sources of capital, its
cost, and its ultimate effect on Holiday's capitalization. Holiday currently has
approximately $6.0 million available under floor plan lines of credit and
bank lines of credit.
Holiday's management believes it can obtain additional debt financing
at reasonable cost for its expansion. Three of the dealership properties owned
by Holiday are not mortgaged. Management is currently considering mortgage
financing, or the sale of its real property on a leaseback arrangement, for
which the proceeds could be used for expansion of operations.
12
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Holiday intends to continue the use of its common stock, either by
initial payment or by issuing debt convertible to common stock, as one form of
partial, or complete payment for acquisitions. However, management does not
expect a dilutive effect on the common stockholders of Holiday as a result from
issuing such common stock.
On January 7, 2000, a special shareholder meeting approved seven items
recommended by Holiday's board. Among the items, two could provide Holiday with
additional capital raising opportunities. Holiday's authorized common shares
were increased from 10 million to 23 million. Secondly, Holiday was authorized
to issue up to two million shares of preferred stock. Management feels both of
these items are necessary to initiate Holiday's expansion.
During the next twelve months it may be necessary to issue additional
common stock, additional debt convertible to common stock, or preferred stock
that could be converted to common stock, to fund Holiday's expansion. However,
management believes the issuance of additional common stock or preferred stock
convertible to common stock will be anti-dilutive to its shareholders.
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 2000,
COMPARED TO THE THREE MONTHS ENDED JANUARY 31, 1999.
Sales and service revenue increased 87% to $34.0 million from $18.2
million. The primary components of the increase was the revenue from the newly
acquired dealerships in Fiscal 2000 and positive comparable store sales.
Accordingly, of the increase in sales and service revenue, $15 million, or 82%,
was related to the newly acquired County Line dealerships. Holiday also
benefited from comparable store sales. During the quarter, sales and service
revenue increased by $0.8 million on a proforma comparable basis (12 stores).
Management believes the relative small comparable store sales increase
was primarily due to decreased customer traffic as result of the negative impact
of increased gas prices and interest rates. Management has responded to these
market conditions with a new focus on aggressive promotions, improved product
mix and service.
Gross profit increased 80% to $5.5 million from $3.1 million. As a
percent of revenue, the gross margin decreased to 16.3% from 16.9% primarily due
a change in strategy relative to the inventory mix resulting in the sale of some
new and used vehicles at lower than normal gross margins.
Agency commissions represented 13.6% of Holiday's total gross profit,
as compared to 17.6% the prior year.
Selling, general and administrative (SG&A) expenses increased $2.6
million or 107% to $5.0 million primarily due to $2.2 million of SG&A expense
for the newly acquired stores. As a percent of revenue, SG&A increased to 14.8%
from 13.4% primarily due to increased personnel expense to build an
infrastructure for expansion, expenses related to improving shareholder
relations and communications, and promotion expense to establish Holiday's new
brand identity.
Operating income decreased 20% to $509,000 from $641,000. As a percent
of revenue, operating income decreased to 1.5% from 3.5%.
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Interest income decreased 47% to $61,000 from $115,000 due to cash used
in investing activities. Interest expense increased 141% primarily due to an
increase in floor plan financing for inventory and convertible notes to
shareholders resulting from acquisitions.
Income before income tax decreased $993,000 or 137% to a loss of
$268,000 from an income of $725,000. A gain of $317,000 was realized in the
prior year from the sale of Holiday's Atlanta dealership property and equipment.
The combined Federal and State tax benefit rate was 28% compared to an
income tax expense rate of 39% in the prior year. The combined rate decreased
due to increases in non-deductible expenses for tax, principally goodwill.
Net income decreased 144% to a loss of $193,000 compared to a net
income of $442,000. Net loss, as a percent of revenue, was -0.6% compared to net
income as percent of revenue of 2.4%.
Earnings per share was a loss of 3 cents compared to an income of 6
cents.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN EXCHANGE. To date, Holiday's revenue from operations has
exclusively been denominated in United States dollars. The recreational vehicle
and boat products that Holiday sold to date have been priced in United States
dollars and all our sales in the fiscal year 1998 and 1999 and the first quarter
of 2000 have been denominated in United States dollars. In the future, Holiday
may acquire recreational vehicle or boat products that are priced in currencies
other than the United States dollar and Holiday may expand sales operations
outside the United States. If either of these events occur, fluctuations in the
values of the respective currencies in which Holiday purchases or sells could
adversely affect Holiday. Due to the constantly changing currency exposures and
the volatility of currency exchange rates, there can be no assurance that
Holiday would not experience currency losses in the future, nor can Holiday
predict the effect of exchange rate fluctuations upon future operating results.
In the event Holiday conducts transactions in currencies other than the United
States dollar, management intends to carefully evaluate Holiday's currency
management policies. If management deems it appropriate, Holiday may consider
hedging a portion of a currency exposure in the future.
INTEREST RATES: Holiday invests its surplus cash in financial
instruments consisting principally of overnight bank repurchase agreements with
fixed rates of interest. Investments in both fixed rate and floating rate
interest earning instruments carry a degree of interest rate risk. Fixed rate
securities may have their fair market value adversely impacted due to a rise in
interest rates, while floating rate securities may produce less income than
expected if interest rates fall. Holiday's overnight repo investments have some
of the characteristics of floating rate securities, since the rates are subject
to change each business day. Due in part to these factors, our future investment
income may fall short of expectations due to changes in interest rates. If in
the future we invest in longer term fixed rate investments we may suffer losses
in principal if forced to sell securities which have seen a decline in market
value due to changes in interest rates. We may also face interest rate risk
exposure in connection with debt issued in connection with our acquisition
strategy.
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PART II
OTHER INFORMTION
There is no information to report under Items 1, 2, 3, or 5 of Part II
of this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of Shareholders of Holiday was held on January 7,
2000, at which the following items were submitted and approved:
<TABLE>
<CAPTION>
VOTES VOTES NUMBERS OF
FOR AGAINST ABSTENTIONS
--------- --------- ------------
<S> <C> <C> <C>
(1) Change in Holiday's state of incorporation
from Florida to Delaware by means of a merger
of Holiday with and into a wholly-owned
subsidiary; 6,069,226 376,367 11,300
(2) Increase the authorized number of shares of
capital stock in Holiday's Certificate of Incorporation
to be filed in Delaware in connection with the
reincorporation from the present 10,000,000 to
25,000,000; 6,152,261 287,332 17,300
(3) Authorize Holiday's Delaware Certificate of
Incorporation the issuance of up to 2,000,000
shares of preferred stock. 5,806,291 631,102 19,500
(4) Adopt by laws in connection with the reincorporation; 6,092,649 378,667 16,100
(5) Provide in Holiday's Delaware Certificate of
Incorporation and bylaws for a classified board
of directors and advance notice of shareholders
proposals and nominations for the election of
directors; 6,067,149 405,367 14,900
(6) Approve the Holiday RV Superstores, Inc. 1999
Stock Compensation Program; 5,806,247 632,425 18,221
(7) Approve grants of stock options to Holiday's directors
who serve as directors in of and prior to May 1999; 6,309,634 125,418 21,841
</TABLE>
15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
See the Exhibit Index on page 18.
REPORTS ON FORM 8-K
Holiday filed a report on Form 8-K dated November 11, 1999 reporting the
acquisition of 100% of the issued and then outstanding stock of County Line
Select Cars, Inc. Holiday filed a Form 8 K/A dated January 25, 2000 including
the audited historical financial statements of the business acquired and pro
forma financial information required under Item 7 of the report filed on Form
8-K dated November 11, 1999.
Holiday filed on January 31, 2000 a report on Form 8-K dated January 25,
2000, reporting the press release announcing management changes in the Company.
16
<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, INC.
- ----
/s/ RONALD G. HUNEYCUTT
March 16, 2000 ---------------------------------
Ronald G. Huneycutt, President
Chief Executive Officer
/s/ GARY RODNEY
March 16, 2000 ---------------------------------
Gary Rodney, Vice President
Chief Financial Officer
Principle Accounting Officer
17
<PAGE>
Exhibit Index
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27.1 Financial Data Schedule
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 4,197
<SECURITIES> 0
<RECEIVABLES> 4,989
<ALLOWANCES> 0
<INVENTORY> 60,150
<CURRENT-ASSETS> 69,890
<PP&E> 14,518
<DEPRECIATION> 2,117
<TOTAL-ASSETS> 86,554
<CURRENT-LIABILITIES> 58,954
<BONDS> 7,972
0
0
<COMMON> 75
<OTHER-SE> 19,407
<TOTAL-LIABILITY-AND-EQUITY> 86,554
<SALES> 34,039
<TOTAL-REVENUES> 34,039
<CGS> 28,504
<TOTAL-COSTS> 28,504
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 838
<INCOME-PRETAX> (268)
<INCOME-TAX> (75)
<INCOME-CONTINUING> (193)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
