SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission file number: 0-17824
REXHALL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
California 95-4135907
(State of Incorporation) (IRS Employer Identification No.)
46147 7th Street West, Lancaster California 93534
(Address of principal executive offices) (Zip Code)
(805) 726-0565
(Registrant's telephone number, including area code)
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 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 _____.
Applicable only to Corporate Issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,767,806 as of 7/31/1997.
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REXHALL INDUSTRIES, INC.
INDEX
PART 1 - FINANCIAL INFORMATION PAGE NUMBER
Item 1.
Financial Statements:
Condensed Balance Sheets at June 30, 1997 3
and December 31, 1996
Condensed Statements of Operations for the
three and six months ended June 30,1997
and June 30, 1996 4, 5
Condensed Statements of Cash Flows (unaudited)
for the six months ended June 30, 1997
and June 30, 1996 6
Notes to Condensed Financial Statements
as of June 30, 1997 7
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8, 9
PART II - OTHER INFORMATION
Item 6.
Exhibits and reports on Form 8-K 9
Form 8-K has been filed during the
quarter for which this report is filed.
Signatures 10
Exhibits
Exhibit 11 - Computation supporting 11
earnings per common and common equivalent share
amounts
Exhibit 27 - Financial Data Sheet Submitted via Edgar
Electronic Filing System 12
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(Audited) (Unaudited)
December 31 June 30
PART I - FINANCIAL INFORMATION 1996 1997
Item 1. - Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
Assets:
Current Assets
Cash and Short Term Investments $ 742,000 $ 681,000
Accounts Receivable 3,208,000 5,552,000
Inventories 13,793,000 12,978,000
Other Current Assets 151,000 93,000
Income Tax Received 271,000 ---
Deferred Income Taxes 439,000 439,000
Total Current Assets 18,604,000 19,743,000
Property and Equipment - Net 4,885,000 4,960,000
Other Assets 7,000 7,000
TOTAL ASSETS $23,496,000 $24,710,000
Liabilities and Shareholders' Equity:
Current Liabilities
Accounts Payable $7,591,000 $ 7,561,000
Warranty Allowance 355,000 323,000
Reserve for Self-Insurance 365,000 413,000
Other Accrued Liabilities 748,000 903,000
Income Taxes Payable --- ---
Current Portion of Long Term Debt 26,000 25,000
Total Current Liabilities 9,085,000 9,225,000
Deferred Income Tax Liabilities 4,000 25,000
Long Term Debt 826,000 815,000
Total Liabilities $ 9,915,000 $10,065,000
Shareholders' Equity:
Preferred Stock - no par value;
Authorized 1,000,000 shares; no
shares outstanding at June 30,
1997 and December 31, 1996
Common Stock - no par value;
Authorized 10,000,000 shares;
Outstanding 2,767,806 shares
at 7/31/1997 and 2,630,030
shares at December 31, 1996 $ 6,533,000 $ 6,376,000
Retained Earnings 7,048,000 8,269,000
Total Shareholders' Equity 13,581,000 14,645,000
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $23,496,000 $24,710,000
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
June 30, 1996 June 30, 1997
Sales $18,780,000 $16,215,000
Cost of Sales 15,543,000 13,583,000
Gross Profit 3,237,000 2,632,000
Selling, General, Administrative
Expenses and Other Expenses 1,843,000 1,485,000
Income Before Taxes 1,394,000 1,147,000
Income Taxes 566,000 464,000
Net Income $ 828,000 $ 683,000
Net Income Per Common Share $ .29(1) $ .24
Weighted Average Number of
Common Shares Outstanding (primary) 2,848,564(2) 2,821,433
(1) Net income per common share originally reported as .31. However,
considering the 5% stock dividend paid on 5/26/97, the figure has been
adjusted to reflect the dividend in order to equitably compare like
quarters.
(2) Weighted average number of common shares outstanding was originally
reported as 2,712,918. Considering the 5/26/97 5% dividend, the number
indicated above reflects such dividend.
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended
June 30, 1996 June 30, 1997
Sales $ 33,851,000 33,880,000
Cost of Sales 28,383,000 28,848,000
Gross Profit 5,468,000 5,032,000
Selling, General, Administrative
Expenses and Other Expenses 3,320,000 2,981,000
Income Before Taxes 2,148,000 2,051,000
Income Taxes 859,000 830,000
Net Income $ 1,289,000 $ 1,221,000
Net Income Per Common Share $ .45(1) $ .43
Weighted Average Number of
Common Shares Outstanding 2,848,564(2) 2,821,433
(primary)
(1) Net income per common share originally reported as .48. However,
considering the 5% stock dividend paid on 5/26/97, the figure has been
adjusted to reflect the dividend in order to equitably compare like
quarters.
(2) Weighted average number of common shares outstanding was originally
reported as 2,712,918. Considering the 5/26/97 5% dividend, the number
indicated above reflects such dividend.
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
REXHALL INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
1996 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,289,000 $1,221,000
Adjustments to reconcile net income to net cash
provided(used by) operating activities:
Depreciation and amortization 102,000 132,000
Decrease(Increase) in accounts receivable (502,000) (2,344,000)
(Decrease)Increase in inventories (4,037,000) 815,000
Decrease in other current assets 134,000 58,000
(Decrease)Increase in accounts payable 1,973,000 (30,000)
Increase in reserve for self insurance 15,000 48,000
Decrease(Increase) in other current liab. inc. warranty (106,000) (32,000)
Increase in non-current accrued liabilities 242,000 155,000
(Increase)decrease income tax receivable --- 271,000
Increase(decrease) deferred income tax liabilities --- 21,000
Net cash used by operating activities (890,000) 315,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (504,000) (207,000)
Net cash used in investing activities (504,000) (207,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repurchase) Issuance of Common Stock 32,000 (157,000)
Repayment of long-term debt (12,000) (12,000)
Net cash (used in) provided by financing activities 20,000 (169,000)
NET DECREASE IN CASH AND CASH
EQUIVALENTS (1,374,000) (61,000)
BEGINNING CASH AND CASH EQUIVALENTS 1,998,000 742,000
ENDING CASH AND CASH EQUIVALENTS $ 624,000 $ 681,000
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PART I - FINANCIAL INFORMATION
Item 1.
REXHALL INDUSTRIES, INC.
Notes to the Condensed Financial Statements
June 30, 1997
1. The accompanying condensed Financial Statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
Prior period financial statements have been restated to conform with current
period financial statement presentation. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included.
For further information refer to the Financial Statements and footnotes
included in the Registrant's Annual Report on Form 10-K for year ended
December 31, 1996.
The Results of Operations for any interim period are not necessarily
indicative of the results to be expected for the full year.
2. Detail of Inventory December 31, 1996 June 30, 1997
Raw Material $ 6,608,000 $ 7,639,000
Work in Process 2,753,000 2,823,000
Finished Motorhomes 4,432,000 2,516,000
TOTAL $13,793,000 $12,978,000
3. Cash in Bank $ 742,000 $ 681,000
TOTAL $ 742,000 $ 681,000
4. On 4/21/97 the Board of Directors approved to issued a 5% common stock
divided to owners of record as of May 12, 1997. The earnings per share data
has been adjusted in order to equitably compare like quarters.
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PART I - FINANCIAL INFORMATION
Item 2. - Management Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Sales - 2nd Quarter 1997 Compared with 2nd Quarter 1996
Sales for the quarter ended June 30, 1997, totaled $16,215,000 as compared
to $18,780,000 in 1996. The units sold in 1997 were 275 vs. 336 in 1996.
The decrease in sales was due to the restructuring of the Indiana plant.
Cost of Sales - 2nd Quarter 1997 compared with 2nd Quarter 1996
The Cost of Sales as a percentage of sales for the second quarter of 1997
was 83.8% vs. 82.7% in the second Quarter of 1996. The cost of sales
percentage for 1997 increased due to cost obsorbtion of product
improvements.
Gross Profit - 2nd Quarter 1997 compared with 2nd Quarter 1996
Gross Profit for the second quarter of 1997 decreased to 16.2% from 17.2%
for the second quarter of 1996. The decrease was due to the decline in
sales.
Selling, General Administrative and Other Expenses - 2nd Quarter 1997
compared with 2nd Quarter 1996
Selling, General Administrative and Other Expenses were 9.2% of Sales in
1997 as compared to 9.8% in the second quarter of 1996. The expenses
associated with sales commissions and advertising were major factors
involved in the decreased expenses.
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PART I - FINANCIAL INFORMATION
Item 2. - Management Discussion and Analysis or Plan of Operations
Financial Condition, Capital Resources and Liquidity
At June 30, 1997, working capital was $10,518,000 as compared to working
capital of $9,519,000 at December 31, 1996.
At present, the Company has a $3,500,000 line of credit with Bank of
America which can be used for working capital purposes. At June 30, 1997,
the company had used $365,000 under this line of credit to obtain a
stand-by Letter of Credit permitting the company to remain self-insured for
Workers' Compensation.
Management believes that internally generated funds, cash on hand, and
borrowing available under its line of credit will be sufficient for the
Company's cash needs for the next twelve months.
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibit 11. Computation supporting earnings per common and common
equivalent share amounts.
b) Reports on Form 8-K. Form 8-K has been filed during the quarter for
which this report is filed.
The Company is a defendant in an action on behalf of purchasers of its
motorhomes, alleging that the Company and its California dealers
misrepresented the construction and quality of its motorhomes. The action
is currently pending in Orange County Superior Court, California. Class
certification proceedings began April 1, 1997, and mailing to the certified
class was authorized July 16, subject to additional hearings seeking
decertification set for August 13, 1997. The relief requested includes
actual damages, injunctive relief, and punitive damages, in unspecified
amounts. An adverse judgment, if granted, could be material to the
Company. While the outcome of the litigation cannot be predicted, the
Company believes that it has meritorious defenses to the claims. (The
court date August 13, 1997, has been continued by order of the court until
August 27, 1997.)
c) Exhibit 27. Financial data sheet submitted to SEC via Edgar Electronic
Filing System.
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REXHALL INDUSTRIES, INC.
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.
REXHALL INDUSTRIES, INC. by
(Registrant)
Date: August 14,1997 /S/William J. Rex
William J. Rex
Chairman, President and
Chief Executive Officer
Date: August 14, 1997 /S/Phillip J. Parks
Phillip J. Parks
Controller
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Exhibit 11.
Computation Supporting Earnings per Common Share
Second Quarter
1996 1997
Net Income $ 828,000 $ 683,000
Weighted Average Number of Common
Shares Outstanding (primary) 2,848,564 2,821,433
Earnings per Share $ .29 $ .24
(1) Originally reported as 2,712,918 shares outstanding and earnings per
share to be at .31. However, considering the 5% stock dividend paid
on 5/26/97, the figures have been adjusted to reflect the dividend in
order to equitably compare like quarters.
