<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 6, 1996
NATIONAL R.V. HOLDINGS, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-22268 13-0371079
- ------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction) File Number) Identification No.)
3411 N. Perris Blvd., Perris, California 92571
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (909) 943-6007
N/A
- ------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
On November 6, 1996, National R.V. Holdings, Inc., a Delaware
corporation (the "Company"), announced that pursuant to a Share Exchange
Agreement, dated as of October 22, 1996 (the "Exchange Agreement") , with
Country Coach, Inc. ("CCI) and the stockholders of CCI, all of the
outstanding shares of common stock of CCI were exchanged (the "Share
Exchange") for an aggregate of 543,806 shares of the Company's common stock
at closing on November 6, 1996, in accordance with the terms of the Exchange
Agreement.
CCI is a leading manufacturer of Highline motorhomes and bus
conversions which are marketed under the Concept, Affinity, Magna, Intrigue,
Allure and Country Coach Prevost Conversion brand names. CCI will be operated
as a wholly-owned subsidiary of the Company. In connection with the Share
Exchange, the Company assumed $10.1 million of debt of CCI. In addition, in
connection with the transaction effected by the Share Exchange, CCI was
granted an option (the "Option") for $2.1 million to purchase a manufacturing
site currently leased by CCI in Junction City, Oregon. The Company may, in
the future, cause CCI to exercise the Option.
All of the terms of the Share Exchange are set forth in the Share
Exchange Agreement which is filed as Exhibit A hereto and incorporated by
reference herein.
Item 7. Financial Statements and Exhibits.
----------------------------------
(a) Financial Statements of Business Acquired
The following financial statements of CCI and the reports thereon of
independent accountants, all appearing after the signature page to this Form
8-K, are included herein.
Unaudited Balance Sheet as of September 30, 1996 and 1995
Unaudited Statement of Income for the nine months ended
September 30, 1996 and 1995
Unaudited Statement of Cash Flows for the nine months ended
September 30, 1996 and 1995
Notes to unaudited financial statements
Independent Auditor's Report
Balance Sheets as of December 31, 1995 and 1994
Statements of Income for the years ended December 31, 1995 and 1994
Statements of Shareholders' Equity for the years ended
December 31, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1995
and 1994
Notes to Financial Statements
Independent Auditor's Report
Balance Sheets as of December 31, 1994 and 1993
Statements of Income for the years ended December 31, 1994 and 1993
Statements of Shareholders' Equity for the years ended
December 31, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1994
and 1993
Notes to Financial Statements
<PAGE>
(b) Unaudited Pro-Forma Financial Information
Basis of Presentation
The unaudited pro forma combined financial statements are
presented giving effect to the Acquisition (the "Acquisition") of Country
Coach, Inc. ("Country Coach") and are not necessarily indicative of the
financial position or financial results that might have been achieved had the
Acquisition occurred as of an earlier date, nor are they necessarily indicative
of the financial position or financial results which may occur in the future.
The Unaudited Pro Forma Combined Balance Sheet has been presented assuming the
Acquisition occurred on September 30, 1996. The Unaudited Pro Forma Combined
Statement of Operations for the year ended December 31, 1995 has been presented
as if the Acquisition had occurred on January 1, 1995 and the Unaudited Pro
Forma Combined Statement of Operations for the nine months ended September 30,
1996 has been presented as if the Acquisition had occurred on January 1, 1996.
The Acquisition was accounted for under the purchase method of accounting,
whereby the respective assets and liabilities of Country Coach are recorded at
their estimated fair values. The total purchase cost of the transaction is
estimated to be approximately $9,510,000 and the excess of the purchase cost
over the estimated fair value of net assets acquired is estimated to be
approximately $8,244,000.
<PAGE>
<TABLE>
<CAPTION>
National R.V. Holdings, Inc.
Unaudited Pro Forma Combined Balance Sheet
As of September 30, 1996
(in thousands)
National RV Country
Holdings,Inc. Coach,Inc.
Sept. 30, Sept. 30, Pro Forma Combined
1996 1996(1) Adjustments Pro Forma
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,670 $ ( 310) $( 585)(A) $ 1,775
Trade receivables, less
allowance for doubtful
accounts 7,789 3,422 11,211
Inventories 14,376 11,574 25,950
Deferred income taxes 780 780
Prepaid expenses 569 366 935
-------- -------- -------- --------
Total current assets 26,184 15,052 ( 585) 40,651
Restricted funds 1,749 - 1,749
Property, plant and
equipment, net 10,585 3,311 13,896
Goodwill, net - - 8,244 (B) 8,244
Other assets - 194 194
-------- -------- -------- --------
Total Assets $ 38,518 $ 18,557 $ 7,659 $ 64,734
======== ======== ======== ========
Current liabilities:
Line of credit - $ 160 $ 7,979 (C) $ 9,288
1,149 (D)
Current portion of long-
term debt 146 283 ( 265)(D) 164
Accounts payable 3,301 4,043 7,344
Accrued expenses 2,321 2,185 4,506
Customer deposits - 910 910
-------- -------- -------- --------
Total current liabilities 5,768 7,581 8,863 22,212
Deferred income taxes 1,738 - 1,738
Long-term debt 6,925 1,432 ( 925)(D) 7,432
Commitments and contingencies
Stockholders equity:
Preferred stock-$0.01 par value;
5,000 shares authorized,
4,000 issued and outstanding - - - -
Common stock-$0.01 par value;
10,000,000 shares authorized 59 3 ( 3)(E) 64
5 (B)
Additional paid-in capital 22,421 309 ( 309)(E) 31,416
8,995 (B)
Retained earnings 9,555 9,232 ( 1,029)(E) 9,555
( 7,979)(C)
( 224)(D)
Less - cost of Treasury Stock ( 7,948) - - ( 7,948)
-------- -------- -------- --------
Total stockholders' equity 24,087 9,544 ( 544) 33,087
-------- -------- -------- --------
Total Liabilities and
Stockholders' Equity $ 38,518 $ 18,557 $ 7,659 $ 64,734
======== ======== ======== ========
</TABLE>
(1) As reclassified to conform with the Company's presentation of financial
information.
See Accompanying Notes (A) to (E) to Unaudited Pro Forma Combined Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
National R.V. Holdings, Inc.
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 1995
(in thousands, except per share data)
National RV Country Pro Forma Combined
Holdings, Inc. Coach, Inc. Adjustments Pro Forma
(1)
-------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 89,397 $ 67,833 $157,230
Cost of goods sold 78,089 59,029 137,118
-------- -------- ------- --------
Gross profit 11,308 8,804 20,112
Selling expenses 2,643 4,297 6,940
General and administrative
expenses 2,455 1,363 3,818
Goodwill amortization - - 412 (a) 412
-------- -------- ------- --------
Total operating expenses 5,098 5,660 412 11,170
-------- -------- ------- --------
Operating income 6,210 3,144 (412) 8,942
Other expenses (income):
Investment income ( 611) ( 142) ( 753)
Interest expense 614 499 650 (b) 1,763
Other financing related
costs and other 178 ( 5) 173
-------- -------- ------- --------
Total other expenses 181 352 650 1,183
-------- -------- ------- --------
Income before income taxes
and extraordinary items 6,029 2,792 (1,062) 7,759
Provision for income taxes 2,387 - 857 (c) 3,244
-------- -------- ------- --------
Income before extraordinary items 3,642 2,792 (1,919) 4,515
Extraordinary items, net of taxes ( 616) - - ( 616)
-------- -------- ------- --------
Net Income $ 3,026 $ 2,792 $(1,919) $ 3,899
======== ======== ======= ========
Earnings per common share and
common equivalent share
Income before extraordinary
items $ 0.75 $ 0.84
Extraordinary items (0.13) (0.11)
------- -------
Net Income 0.62 0.72
Earnings per common share and
common equivalent share -
fully diluted
Income before extraordinary
items $ 0.75 $ 0.84
Extraordinary items (0.13) (0.11)
------- -------
Net Income 0.62 0.72
Weighted average number of shares:
Primary 4,845 544 (d) 5,389
Fully diluted 4,857 544 (d) 5,401
</TABLE>
(1) As reclassified to conform with the Company's presentation of financial
information.
See Accompanying Notes (a) to (d) to Unaudited Pro Forma Combined Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
National R.V. Holdings, Inc.
Unaudited Pro Forma Combined Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands, except per share data)
National RV Country Pro Forma Combined
Holdings, Inc. Coach, Inc. Adjustments Pro Forma
(1)
-------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 94,958 $ 59,308 $154,266
Cost of goods sold 82,183 51,207 133,390
-------- -------- ------- --------
Gross profit 12,775 8,101 20,876
Selling expenses 2,367 3,691 6,058
General and administrative
expenses 1,773 1,337 3,110
Goodwill amortization - - 309 (aa) 309
-------- -------- ------- --------
Total operating expenses 4,140 5,028 309 9,477
-------- -------- ------- --------
Operating income 8,635 3,073 ( 309) 11,399
Other expenses (income):
Investment income ( 184) ( 270) ( 454)
Interest expense 237 327 451 (bb) 991
( 25)(cc)
Other financing related
costs and other 114 ( 1) 113
-------- -------- ------- --------
Total other expenses 167 56 426 650
-------- -------- ------- --------
Income before income taxes
and extraordinary items 8,468 3,017 ( 735) 10,749
Provision for income taxes 3,434 - 1,036 (dd) 4,470
-------- -------- ------- --------
Net Income $ 5,034 $ 3,017 $(1,772) $ 6,279
======== ======== ======= ========
Earnings per common share and
common equivalent share $ 1.00 $ 1.12
Earnings per common share and
common equivalent share -
fully diluted $ 0.99 $ 1.12
Weighted average number of shares:
Primary 5,045 544 (ee) 5,589
Fully diluted 5,066 544 (ee) 5,610
</TABLE>
(1) As reclassified to conform with the Company's presentation of financial
information.
See Accompanying Notes (aa) to (ee) to Unaudited Pro Forma Combined Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
National R.V. Holdings, Inc.
Unaudited Pro Forma Combined Statement of Operations
For the Nine Months Ended September 30, 1995
(in thousands, except per share data)
National RV Country Pro Forma Combined
Holdings, Inc. Coach, Inc. Adjustments Pro Forma
-------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 65,814 $ 48,962 $114,776
Cost of goods sold 56,901 42,352 99,253
-------- -------- ------- --------
Gross profit 8,913 6,610 15,523
Selling expenses 1,890 3,107 4,997
General and administrative
expenses 1,820 947 2,767
Goodwill amortization - - 309(aaa) 309
-------- -------- ------ --------
Total operating expenses 3,710 4,054 309 8,073
-------- -------- ------ --------
Operating income 5,203 2,556 (309) 7,450
Other expenses (income):
Investment income ( 604) ( 94) ( 698)
Interest expense 564 417 536(bbb) 1,517
Other financing related
costs and other 79 ( 3) 76
-------- -------- ------ --------
Total other expenses 39 319 536 895
-------- -------- ------ --------
Income before income taxes
and extraordinary items 5,164 2,236 (845) 6,555
Provision for income taxes 1,993 - 680(ccc) 2,673
-------- -------- ------- --------
Income before extraordinary items 3,171 2,236 (1,525) 3,882
Extraordinary items, net of taxes ( 616) - - ( 616)
-------- -------- ------- --------
Net Income $ 2,555 $ 2,236 $(1,525) $ 3,266
======== ======== ======= ========
Earnings per common share and
common equivalent share
Income before extraordinary
items $ 0.65 $ 0.72
Extraordinary items (0.13) (0.11)
------- -------
Net Income 0.52 0.60
Earnings per common share and
common equivalent share -
fully diluted
Income before extraordinary
items $ 0.65 $ 0.72
Extraordinary items (0.13) (0.11)
------- -------
Net Income 0.52 0.60
Weighted average number of shares:
Primary 4,878 544 (d) 5,422
Fully diluted 4,881 544 (d) 5,425
</TABLE>
See Accompanying Notes (aaa) to (ddd) to Unaudited Pro Forma Combined Financial
Statements
<PAGE>
Notes to Unaudited Pro Forma Combined Financial Statements
1. Pro Forma Adjustments
Unaudited Pro Forma Combined Balance Sheet
(A) To reflect expenditure of estimated professional fees and other costs
incurred by National RV Holdings and Country Coach in connection with
the Country Coach Acquisition
National RV Holdings:
Financial advisory $385
Accounting 50
Legal 75
----
510
Country Coach:
Accounting $ 35
Legal 40
----
75
----
Total Country Coach Acquisition related expenditures $585
====
(B) To record the estimated goodwill and equity relating to the Country
Coach Acquisition based upon a purchase price of $9,510,000 composed of
the issuance of 543,806 shares of Common Stock in exchange for the
outstanding stock of Country Coach and the incurrance of $585,000 of
acquisition related expenditures. See (A).
Purchase price $9,510
Adjusted book value of Country Coach which
approximates fair value (net assets acquired) 1,266
------
Excess of purchase price over net assets
acquired (Goodwill) $8,244
======
Country Coach historical book value as of
September 30, 1996 $9,544
To reflect the payment of the October dividend
to Country Coach shareholders (7,979)(see (C))
To reflect expenses incurred by Country Coach on
the acquisition (75)(see (A))
To reflect the extraordinary loss on the required
pre-payment of debt (224)(see (D))
------
Adjusted book value of Country Coach which
approximates fair value $1,266
======
(C) To reflect the dividend paid to Country Coach stockholders on October
21, 1996.
(D) To reflect the required pre-payment of a note to a fomer Country Coach
shareholder and the extraordinary loss thereon. Such required pre-
payment resulted from the Country Coach Acquisition.
(E) To eliminate Country Coach's historical stockholders' equity.
<PAGE>
Unaudited Pro Forma Combined Statement of Operations
(a) To reflect the amortization of the estimated goodwill resulting from the
Country Coach Acquisition using the straight-line method over 20 years.
(b) To reflect interest expense (at an annual rate of 8.015%) arising from
the debt incurred upon payment of the October dividend. See (C).
(c) To reflect the conversion of Country Coach to C-Corp. status and the pro
forma provision for income taxes calculated at the statutory rates.
(d) To adjust weighted average shares outstanding for the shares issued in
conjunction with the Country Coach Acquisition.
<PAGE>
Unaudited Pro Forma Combined Statement of Operations for the Nine Months Ended
September 30, 1996
(aa) To reflect the amortization of the estimated goodwill resulting from the
Country Coach Acquisition using the straight-line method over 20 years.
(bb) To reflect interest expense (at an annual rate of 7.54%) arising from
the debt incurred upon payment of the October dividend. See (C).
(cc) To reflect the interest expense (at an annual rate of 7.54%) arising
form the pre-payment of a note to a former Country Coach Shareholder
(see (D)) and to eliminate the interest expense on this note at an
annual rate of 12.96%.
(dd) To reflect the conversion of Country Coach to C-Corp. status and the pro
forma provision for income taxes calculated at the statutory rates.
(ee) To adjust weighted average shares outstanding for the shares issued in
conjunction with the Country Coach Acquisition.
<PAGE>
Unaudited Pro Forma Combined Statement of Operations for the Nine Months Ended
September 30, 1995
(aaa) To reflect the amortization of the estimated goodwill resulting from the
Country Coach Acquisition using the straight-line method over 20 years.
(bbb) To reflect interest expense (at an annual rate of 8.96%) arising from
the debt incurred upon payment of the October dividend. See (C).
(ccc) To reflect the pro forma provision for income taxes calculated at the
statutory rates.
(ddd) To reflect the conversion of Country Coach to C-Corp. status and the pro
forma provision for income taxes calculated at the statutory rates.
<PAGE>
(c) Exhibits
A. Share Exchange Agreement, dated as of October 22, 1996, by
and among National R.V. Holdings, Inc., Country Coach, Inc.,
Robert B. Lee, Jack L. Courtemanche, Terry N. Lee, Kenda M.
Mason and Brenda J. Lee-Thomson (incorporated herein by
reference from Exhibit A to the Company's current report on
Form 8-K filed with the Securities and Exchange Commission on
November 1, 1996).
B. Press Release of the Company dated November 11, 1996.
<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 hereunto duly authorized.
NATIONAL R.V. HOLDINGS, INC.
By: /s/ Stephen M. Davis
-----------------------
Name: Stephen M. Davis
Title: Secretary
Dated: November 13, 1996
<PAGE>
<TABLE>
<CAPTION>
COUNTRY COACH, INC.
BALANCE SHEET
(In thousands)
(Unaudited)
September 30,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash $ - $ 689
Trade receivables 3,356 2,497
Receivables, related partnership 66 43
Inventories 11,574 14,006
Prepaid expenses 366 228
-------- --------
Total current assets 15,36 17,463
Property, plant and equipment, net 3,311 1,952
Note receivable 45 16
Other Assets 149 ( 46)
-------- --------
$ 18,867 $ 19,385
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Cash overdraft $ 310 $ -
Line of credit 160 5,000
Current portion of long-term debt 283 17
Accounts payable 4,043 3,834
Accrued expenses 2,185 1,281
Customer deposits 910 56
-------- --------
Total current liabilities 7,891 10,188
Long-term debt 1,432 168
Commitments and contingencies
Stockholders' equity:
Common stock - $.05 par value; 1,000,000
shares authorized, 52,681 and 67,251 shares
issued and outstanding at September 30,
1996 and 1995, respectively 3 3
Additional paid-in capital 309 336
Retained earnings 9,232 8,690
-------- --------
Total stockholders' equity 9,544 9,029
-------- --------
$ 18,867 $ 19,385
======== ========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
COUNTRY COACH, INC.
STATEMENT OF INCOME
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1996 1995
------ ------
<S> <C> <C>
Net sales $ 59,308 $ 48,962
Cost of sales 49,539 41,426
-------- --------
Gross profit 9,769 7,536
Selling and marketing 3,621 3,075
General and administrative 1,297 929
Warranty 992 618
Profit sharing bonus 786 358
-------- --------
Operating income 3,073 2,556
Other expense (income):
Interest expense 327 417
Interest income ( 186) ( 94)
Other financing related costs ( 85) ( 3)
-------- --------
Income before income taxes $ 3,017 $ 2,236
======== ========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
COUNTRY COACH, INC.
STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,017 $ 2,236
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense 286 168
Amortization 51 23
Gain on disposition of equipment ( 2) -
Increase in trade receivables ( 683) ( 205)
(Increase) decrease in receivables, related parties ( 28) 13
Decrease in inventories 478 2,198
Decrease in prepaid expenses 79 297
(Increase) decrease in note receivable ( 28) 204
Decrease in accounts payable 153 745
(Decrease) increase in accrued expenses 625 ( 311)
(Decrease) increase in customer deposits 640 ( 1,240)
-------- --------
Net cash provided by operating activities 4,588 4,128
Cash flows from investing activities:
Proceeds from disposition of equipment 2 3
Purchases of property, plant and equipment ( 1,595) ( 862)
(Increase) decrease in other assets 97 135
-------- --------
Net cash used by investing activities ( 1,496) ( 724)
Cash flows from financing activities:
Net payments under line of credit ( 2,840) ( 2,035)
Principal payments on long-term debt 368 ( 13)
Proceeds from issuance of common stock - 215
Distributions to shareholders ( 1,420) ( 1,361)
-------- --------
Net cash provided (used) by financing activities ( 3,892) ( 3,194)
-------- --------
Net increase (decrease) in cash ( 800) 210
Cash beginning of period 490 479
-------- --------
Cash (overdraft) end of period $( 310) $ 689
======== ========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
COUNTRY COACH, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: GENERAL
In the opinion of Country Coach, Inc., the accompanying unaudited
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the
financial position, results of operations and cash flows for all
periods presented. Results for the interim periods are not necessarily
indicative of the results for an entire year and the financial
statements do not include all of the information and footnotes required
by generally accepted accounting principles. For all periods
presented, Country Coach, Inc. was a Sub S Corporation and,
accordingly, required no provision for income taxes.
NOTE 2:INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30,
1996 1995
---- ----
<S> <C> <C>
Finished goods $ 2,575 $ 5,238
Work-in-process 6,252 5,606
Raw Materials 2,575 2,866
Chassis 172 296
------- -------
$11,574 $14,006
======= =======
</TABLE>
<PAGE>
Coopers |Coopers & Lybrand L.L.P.
& Lybrand |
|a professional services firm
COUNTRY COACH, INC.
--------
FINANCIAL STATEMENTS
for the years ended December 31, 1995 and 1994
<PAGE>
COUNTRY COACH, INC.
--------
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Page
----
<S> <C>
Report of Independent Accountants 1
Financial Statements
Balance Sheets 2
Statements of Income and Retained Earnings 3
Statement of Shareholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-11
Country Coach, Inc.
<PAGE>
Coopers |Coopers & Lybrand L.L.P.
& Lybrand |
|a professional services firm
Report of Independent Accountants
To the Board of Directors
Country Coach, Inc.:
We have audited the accompanying balance sheets of Country Coach, Inc. as of
December 31, 1995 and 1994, and the related statements of income and retained
earnings, and cash flows for the years then ended. These financial state-
ments are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Country Coach, Inc. as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted account-
ing principles.
Coopers & Lybrand LLP
Eugene, Oregon
February 16, 1995
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Balance Sheets
December 31, 1995 and 1994
1995 1994
------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 487,903 $ 478,550
Accounts receivable 2,672,672 2,292,860
Receivable, related partnership 38,214 55,838
Inventories 12,051,815 16,204,277
Prepaid expenses and deposits 444,797 525,331
----------- -----------
Total current assets 15,697,401 19,556,856
Property and equipment, net 2,002,043 1,260,585
Note receivable 16,508 220,755
Other assets 296,733 111,862
----------- -----------
$18,012,685 $21,150,058
=========== ===========
LIABILITIES
Current liabilities:
Notes payable $ 3,000,000 $ 7,035,000
Long-term debt, current portion 279,177 17,624
Accounts payable, trade 3,890,225 3,089,493
Accrued expenses 1,558,847 1,591,925
Customer deposits 270,000 1,295,500
----------- -----------
Total current liabilities 8,998,249 13,029,542
Long-term debt, net of current portion 1,068,403 180,435
Contingencies (Note 8)
STOCKHOLDERS'EQUITY
Common stock, $.05 stated value; 1,000,000
shares authorized, 65,570 shares
issued and outstanding 2,634 3,279
Additional paid-in capital 308,858 121,407
Retained earnings 7,634,541 7,815,395
----------- -----------
7,946,033 7,940,081
----------- -----------
$18,012,685 $21,150,058
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 2
<PAGE>
<TABLE>
<CAPTION>
Statements of Income
for the years ended December 31, 1995 and 1994
1995 1994
-------------------- --------------------
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Sales $67,832,955 100.0% $59,483,707 100.0%
Cost of sales 57,922,405 85.4 51,234,646 86.1
----------- ----- ----------- -----
Gross profit 9,910,550 14.6 8,249,061 13.9
Operating expenses:
Selling and marketing 4,268,673 6.3 3,247,911 5.5
General and administrative 1,347,548 2.0 1,825,238 3.0
Warranty 838,411 1.2 649,724 1.1
Profit sharing bonus 311,906 .5 0
----------- ----- ----------- -----
6,766,538 10.0 5,722,873 9.6
----------- ----- ----------- -----
Operating income 3,144,012 4.6 2,526,188 4.3
Other income (expense):
Interest income 141,725 .2 280,317 .5
Interest expense (498,533) ( .7) (525,233) (1.0)
Other income 5,146 116,689 .2
----------- ----- ----------- -----
Net income $ 2,792,350 4.1% $ 2,397,961 4.0%
=========== ===== =========== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 3
<PAGE>
<TABLE>
<CAPTION>
Statements of Shareholders' Equity
for the years ended December 31, 1995 and 1994
Common Stock Additional
------------ Paid-in Retained
Shares Amount Capital Earnings Total
------ ------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1993 65,570 $ 3,279 $ 121,407 $ 7,267,376 $ 7,392,062
Net income 2,397,961 2,397,961
Distributions to
shareholders 0 0 0 (1,849,942) (1,849,942)
------ ------- --------- ----------- -----------
Balance at December 31,
1994 65,570 3,279 121,407 7,815,395 7,940,081
Issuance of common
stock 1,681 84 214,428 214,512
Repurchase of common
stock (14,570) ( 729) ( 26,977) (1,485,104) (1,512,810)
Net income 2,792,350 2,792,350
Distributions to
shareholders 0 0 0 (1,488,100) (1,488,100)
------ ------- --------- ----------- -----------
Balance at December 31,
1994 52,681 $ 2,634 $ 308,858 $ 7,634,541 $ 7,946,033
====== ======= ========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 4
<PAGE>
<TABLE>
<CAPTION>
Statements of Cash Flows
for the years ended December 31, 1995 and 1994
1995 1994
------ ------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities.
Net income $ 2,792,350 $ 2,397,961
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 277,867 168,461
Gain on disposal of equipment ( 5,146) ( 1,427)
Changes in assets and liabilities:
Trade receivables ( 379,812) (1,536,637)
Receivable, related partnership 17,624 17,103
Inventories 4,152,462 (2,173,285)
Prepaid expenses and deposits 80,534 ( 82,716)
Note receivable 204,247 ( 220,755)
Accounts payable 800,732 492,460
Accrued expenses ( 33,078) 431,406
Customer deposits (1,025,500) 1,160,500
----------- -----------
Net cash provided by (used in)
operating activities 6,882,280 653,073
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment ( 981,390) ( 665,122)
Proceeds from sale of equipment 6,475 3,289
(Increase) decrease in other assets ( 74,135) 215,736
----------- -----------
Net cash used in investing activities (1,049,050) ( 446,099)
----------- -----------
Cash flows from financing activities:
Net increase in notes payable (4,035,000) 2,135,000
Payments of long-term debt ( 513,289) ( 17,103)
Distributions to shareholders (1,488,100) (1,849,942)
Proceeds from issuance of shares 214,512 0
----------- -----------
Net cash provided by financing activities (5,821,877) 267,955
----------- -----------
Net increase (decrease) in cash and
cash equivalents 11,353 474,927
Cash and cash equivalents at beginning of year 478,550 3,623
----------- -----------
Cash and cash equivalents at end of year $ 489,903 $ 478,550
=========== ===========
Supplementary Disclosure of Cash Flow Information:
Cash paid for interest $ 501,287 $ 500,843
Supplementary Disclosure for Noncash Flow Information:
Note payable issued on share repurchase and
noncompete agreement (Note 6) $ 1,662,810
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 5
<PAGE>
Notes to Financial Statements
December 31, 1995 and 1994
1. Summary of Significant Accounting Policies:
Nature of Business: Country Coach, Inc. designs, manufactures and markets
high quality motor coaches sold primarily to dealers throughout the
United States.
Estimates and Industry Factors:
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Concentration of Credit Risk: The Company distributes its products
through independent dealers for motor coaches and direct sales for bus
conversions, and is not dependent upon any one customer. However, sales
to three customers in 1995 and two customers in 1994 represent 10% or
more of net sales (major customers). Sales to the major customers were
$36,462,000 in 1995 and $26,921,000 in 1994. The loss of a significant
dealer or a substantial decrease in sales by such a dealer could have a
material adverse effect on the Company's sales and operating results.
The Company's financial instruments that are exposed to concentrations of
credit risk consist of accounts receivable and repurchase agreements (see
Note 8). The Company's receivables result primarily from the sale of
motor coaches. The Company is generally collateralized until payment is
received from dealers. The Company has a concentration of credit risk in
the recreational vehicle industry and its largest dealers, without
geographic concentration of credit risk.
Warranty and Other Claims: Estimated warranty costs are provided for at
the time of sale of warrantied products. The Company provides a limited
warranty on parts and labor for up to one year. While the Company
believes its warranty accruals are adequate, the Company is subject to
regulations which may require the Company to recall products with design
or safety defects. The Company's operating results could be adversely
affected by a major product recall or if warranty claims in any period
exceed warranty reserves.
The Company has from time to time been subject to product liability
claims. To date, the Company has been successful in obtaining, product
liability insurance on terms the Company considers acceptable. There can
be no assurance that the Company will be able to obtain insurance
Coverage in the future at acceptable levels or that the costs of
insurance will be reasonable. Furthermore, successful assertion against
the Company of one or a series of large uninsured claims, or of one or a
series of claims exceeding any insurance Coverage, could have a
materially adverse effect on the Company's operating results and
financial condition.
Continued
Country Coach, Inc. 6
<PAGE>
Notes to Financial Statements, Continued
December 31, 1995 and 1994
1. Summary of Significant Accounting Policies, Continued:
Fair Value of Financial Instruments: In December 1991, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards No. 107 (SFAS No. 107), "Disclosures about Fair Value of
Financial Instruments". SFAS No. 107 requires disclosures of the
estimated fair value of all financial instruments other than specified
items, such as lease contracts, subsidiary and affiliates investments and
employers' pension and benefit obligations.
The following methods and assumptions were used by management to estimate
the fair value of each class of financial instrument for which it is
practicable to estimate that value. The resulting estimates of fair
value require subjective judgments and are approximate. Changes in the
in the following methodologies and assumptions could significantly affect
estimates.
Long-term Borrowings - The estimated fair values of these financial
instruments set forth below were determined by estimating future cash
flows on a borrowing-by-borrowing basis and discounting these future cash
flows using the Company's incremental borrowing rates for similar types
of borrowing arrangements. Based on this calculation, the estimated fair
value approximates the carrying value of $1,348,000 at December 31, 1995.
Short-term Borrowings - The carrying amount on the revolving line of
credit is $3,000,000 at December 31, 1995, which approximates the
estimated fair value.
Cash and Cash Equivalents: The Company's cash and cash equivalents
consist primarily of bank demand deposits and money market accounts at a
regional commercial bank. At times balances may exceed amounts covered
under federal depository insurance.
Inventories: Inventories are stated at the lower of cost or market. Cost
is determined using a moving average method for materials, work-in-
process and finished coach inventories. Cost includes materials, labor
and manufacturing overhead costs. Materials and labor for work-in-
process and finished goods are specifically identified to units as
incurred. Used coaches and purchased vehicle chassis inventory cost is
determined using the specific identification method.
Property and Equipment: Property and equipment are recorded at cost.
Maintenance and repairs are charred to expense as incurred. Replacements
and renewals are capitalized. When assets are sold, retired or otherwise
disposed of, the cost and accumulated depreciation are removed from the
accounts and any resulting gain or loss is reflected in income.
Depreciation is computed by straight-line and accelerated methods with
rates based on estimated useful lives. Leasehold improvements are
amortized based on the lease term or useful lives.
Revenue: Revenue is recognized upon the shipment of finished coaches to
independent dealers.
Continued
Country Coach, Inc. 7
<PAGE>
Notes to Financial Statements, Continued
December 31, 1995 and 1994
1. Summary of Significant Accounting Policies, Continued:
Research and Development: Research and development expenses charged to
operations were approximately $401,331 in 1995 and $472,157 in 1994.
Advertising Costs: The Company expenses advertising costs as incurred,
except trade show costs which are expensed when the event takes place.
At December 31, 1995 and 1994, total advertising costs reported in
prepaid expenses were $51,834 and $52,602, respectively. During the
years ended December 31, 1995 and 1994, the Company expensed advertising
costs of $470,346 and $292,260, respectively.
Income Taxes: The Company elected to be taxed as an S corporation,
whereby income and losses are reported by the stockholders. Accordingly,
no provision for income taxes has been made in these financial
statements.
Accounting Standard Pronouncements: Effective March 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards No. 12 1, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of," which is effective for
fiscal years beginning after December 15, 1995. The Standard requires
that long-lived assets and certain identifiable intangibles to be held
and used by a-n entity be reviewed for impairment whenever events or
chances in circumstances indicate that the carrying amount of an asset
may not be recoverable. Based on estimates made at December 31, 1995,
the Company does not anticipate a material impact on the financial
statements as a result of the adoption of this new Standard.
2. Inventories:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Materials $ 1,863,512 $ 1,828,232
Vehicle chassis 450,612 487,221
Work-in-process 5,491,207 6,748,031
Finished coaches 3,121,484 4,884,583
Used coaches 1,125,000 2,256,210
----------- -----------
$12,051,815 $16,204,277
=========== ===========
</TABLE>
Country Coach, Inc. 8
<PAGE>
Notes to Financial Statements, Continued
December 31, 1995 and 1994
3. Property and Equipment:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Leasehold improvements $ 1,317,933 $ 746,527
Manufacturing equipment and vehicles 1,275,289 1,007,882
Office and data processing equipment 807,723 687,343
----------- -----------
3,400,945 2,441,752
Less accumulated depreciation
and amortization 1,398,902 1,181,167
----------- -----------
$ 2,002,043 $ 1,260,585
=========== ===========
</TABLE>
4. Notes Payable:
The Company has established an $11,000,000 revolving line of credit with
the United States National Bank of Oregon with interest payable monthly at
the Bank's prime rate (8.5% at December 31, 1995) or the IBOR rate (5.81%
at December 31, 1995) plus 1.25% to 2.5%, depending on certain financial
statement ratios, collateralized by all accounts receivable and inventory.
The agreement requires that the Company maintain certain debt to worth and
working capital ratios. At year end, interest was paid based on the IBOR
rate option at 7.3 1%. Borrowings under the credit facility, which
matures on April 30, 1996, amounted to $3,000,000 and $7,035,000 at
December 31, 1995 and 1994, respectively.
5. Long-term Debt:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Note payable to former shareholder/employee,
payable in annual installments of $382,856
including interest at 12.96%, due August 1999 $1,167,145
Note payable, City of Junction City,
payable in monthly installments of $1,924
including interest at 3%, due January 2005,
collateral of real property leased from
related partnership 180,435 $ 198,059
---------- ---------
1,347,580 198,059
Less current portion 279,177 17,624
---------- ---------
$1,068,403 $ 180,435
========== =========
</TABLE>
Country Coach, Inc. 9
<PAGE>
Notes to Financial Statements, Continued
December 31, 1995 and 1994
5. Long-term Debt:
The aggregate maturities on the above debt in the years subsequent to
December 31, 1996 are:
<TABLE>
<S> <C>
1997 $ 284,133
1998 319,101
1999 360,753
2000 20,472
Thereafter 83,944
</TABLE>
6. Related-Party Transactions, Related Partnership:
Country Coach, Inc. leases on a five-year term certain land and buildings
from Lee Joint Venture, a partnership comprised of stockholders of the
Company. The Company renewed its lease term beginning November 1, 1995.
Lease expense is $84,360 per month, with an annual cost of living
adjustment. Rents paid or accrued by the Company to the partnership
amounted to $956,032 and $789,098 during 1995 and 1994, respectively.
The Company also had an outstanding receivable from Lee Joint Venture of
$38,214 and $55,838 at December 31, 1995 and 1994, respectively. Interest
income on this receivable amounted to $5,670 and $6,191 for the years
ended December 31, 1995 and 1994, respectively.
In April 1995, the President of the Company purchased 1,681 shares of
common stock for $214,512.
In October 1995, the Company repurchased 14,570 shares of outstanding
common stock from a shareholder/employee for $1,512,810. In connection
with the share repurchase, the former shareholder/employee entered into a
noncompete agreement for $150,000. The share repurchase and noncompete
agreement were financed through the issuance of a note payable to the
former shareholder/employee with an original balance of $1,662,810.
Interest on the note amounted to $33,153 during 1995.
7. Profit Sharing Plan:
The Company has a cash bonus plan based on various Company performance and
profit results. Employees with 6 months of service at the end of each
quarter are eligible under the plan. For the year ended December 31,
1995, the Company recorded bonuses under the plan totaling $311,906. No
bonuses were awarded by the Company in 1994
Country Coach, Inc. 10
<PAGE>
Notes to Financial Statements, Continued
December 31, 1995 and 1994
8. Commitments and Contingencies:
Repurchase Agreements: Substantially all of the Company's sales to dealers
are made on terms requiring cash on delivery. The Company does not
normally finance dealer purchases. However, most dealers are financed on
a "floor plan" basis by a bank or finance company which lends the dealer
all or substantially all of the wholesale purchase price and retains a
security interest in the vehicles purchased. Upon request of a lending
institution financing a dealer's purchases of the Company's products, the
Company will execute a repurchase agreement. These agreements provide
that for up to 12 months after a unit is financed, the Company will
repurchase the unit if the dealer is in default and upon a determination
by the lending institution to repossess the unit. The Company's liability
under repurchase agreements is limited to the unpaid balance owed to the
lending institution by reason of its extending credit to the dealer to
purchase Country Coach, Inc.'s vehicles. The Company does not anticipate
any significant losses will be incurred under these agreements, The
approximate amount subject to contingent repurchase arising from these
agreements at December 31, 1995 is $14,792,000.
Other: The Company is involved in litigation arising in the normal course
of business. In the opinion of management, the ultimate outcome of these
claims will not have a material effect on the financial statements.
Country Coach, Inc. 11
<PAGE>
Coopers |Coopers & Lybrand L.L.P.
& Lybrand |
|a professional services firm
COUNTRY COACH, INC.
--------
FINANCIAL STATEMENTS
for the years ended December 31, 1994 and 1993
<PAGE>
COUNTRY COACH, INC.
--------
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Page
----
<S> <C>
Report of Independent Accountants 1
Financial Statements
Balance Sheets 2
Statements of Income and Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5-8
</TABLE>
Country Coach, Inc.
<PAGE>
Coopers |Coopers & Lybrand L.L.P.
& Lybrand |
|a professional services firm
Report of Independent Accountants
To the Board of Directors
Country Coach, Inc.:
We have audited the accompanying balance sheets of Country Coach, Inc. as of
December 31, 1994 and 1993, and the related statements of income and retained
earnings, and cash flows for the years then ended. These financial state-
ments are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Country Coach, Inc. as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted account-
ing principles.
Coopers & Lybrand LLP
Eugene, Oregon
February 16, 1995
<PAGE>
<TABLE>
<CAPTION>
Balance Sheets
December 31, 1994 and 1993
1994 1993
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 478,550 $ 3,623
Accounts receivable 2,292,860 756,223
Receivable, related partnership 55,838 72,941
Inventories 16,204,277 14,030,992
Prepaid expenses and deposits 525,331 442,615
----------- -----------
Total current assets 19,556,856 15,306,394
Property and equipment, net 1,260,585 765,786
Note receivable 220,755
Other assets 111,862 327,596
----------- -----------
$21,150,058 $16,399,776
=========== ===========
LIABILITIES
Current liabilities:
Notes payable $ 7,035,000 $ 4,900,000
Long-term debt, current portion 17,624 17,103
Accounts payable, trade 3,089,493 2,597,033
Accrued expenses 1,591,925 1,160,519
Customer deposits 1,295,500 135,000
----------- -----------
Total current liabilities 13,029,542 8,809,655
Long-term debt, net of current portion 180,435 198,059
Contingencies (Note 8)
STOCKHOLDERS'EQUITY
Common stock, $.05 stated value; 1,000,000
shares authorized, 65,570 shares
issued and outstanding 3,279 3,279
Additional paid-in capital 121,407 121,407
Retained earnings 7,815,395 7,267,376
----------- -----------
7,940,081 7,392,062
----------- -----------
$21,150,058 $16,399,776
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 2
<PAGE>
<TABLE>
<CAPTION>
Statements of Income and Retained Earnings
for the years ended December 31, 1994 and 1993
1994 1993
-------------------- --------------------
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Sales $59,483,707 100.0% $50,728,600 100.0%
Cost of sales 51,234,646 86.1 43,544,967 85.8
----------- ----- ----------- -----
Gross profit 8,249,061 13.9 7,183,633 14.2
Operating expenses:
Selling and marketing 3,247,911 5.5 2,575,644 5.1
General and administrative 1,825,238 3.0 1,316,768 2.6
Warranty 649,724 1.1 543,515 1.1
Profit sharing bonus 0 507,395 1.0
----------- ----- ----------- -----
5,722,873 9.6 4,943,322 9.8
----------- ----- ----------- -----
Operating income 2,526,188 4.3 2,240,311 4.4
Other income (expense):
Interest income 280,317 .5 100,624 .2
Interest expense (525,233) (1.0) (323,413) (.6)
Gain on disposal of equipment 1,427 731
Other income 115,262 .2 0
----------- ----- ----------- -----
Net income 2,397,961 4.0% 2,018,253 4.0%
Retained earnings, beginning
of year 7,267,376 6,350,456
Distributions to shareholders (1,849,942) (1,101,333)
----------- -----------
Retained earnings, end of year $ 7,815,395 $ 7,267,376
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 3
<PAGE>
<TABLE>
<CAPTION>
Statements of Cash Flows
for the years ended December 31, 1994 and 1993
1994 1993
------- -------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities.
Net income $ 2,397,961 $ 2,018,253
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 168,461 140,986
Gain on disposal of equipment ( 1,427) ( 731)
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (1,536,637) 126,230
Receivable, related partnership 17,103 16,599
Inventory (2,173,285) (2,530,978)
Prepaid expenses and deposits ( 82,716) ( 19,591)
Note receivable ( 220,755)
Increase (decrease) in:
Accounts payable 492,460 620,771
Accrued expenses 431,406 90,996
Customer deposits 1,160,500 ( 712,944)
----------- -----------
Net cash provided by (used in)
operating activities 653,073 ( 250,409)
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment ( 665,122) ( 274,558)
Proceeds from sale of equipment 3,289 2,847
(Increase) decrease in other assets 215,736 ( 71,161)
----------- -----------
Net cash used in investing activities ( 446,099) ( 342,872)
----------- -----------
Cash flows from financing activities:
Net increase in notes payable 2,135,000 1,605,000
Payments of long-term debt ( 17,103) ( 16,600)
Distributions to shareholders (1,849,942) (1,101,333)
----------- -----------
Net cash provided by financing activities 267,955 487,067
----------- -----------
Net increase (decrease) in cash and
cash equivalents 474,927 ( 106,214)
Cash and cash equivalents at beginning of year 3,623 109,837
----------- -----------
Cash and cash equivalents at end of year $ 478,550 $ 3,623
=========== ===========
Supplementary Disclosure of Cash Flow Information:
Cash paid for interest $ 500,843 $ 306,099
</TABLE>
The accompanying notes are an integral part of these financial statements.
Country Coach, Inc. 4
<PAGE>
Notes to Financial Statements
December 31, 1994 and 1993
1. Summary of Significant Accounting Policies:
Nature of Business: Country Coach, Inc. designs, manufactures and markets
high quality motor coaches sold primarily to dealers throughout the
United States.
Revenue: Revenue is recognized upon the shipment of finished coaches to
independent dealers.
County Coach, Inc.: The Company distributes its products through an
independent dealer network for motor coaches and direct sales for bus
conversions, and is not dependent upon any one customer. However, sales
to two customers in 1994 and 1993 represent 10% or more of net sales
(a major customer). Sales to the major customers were $27,448,353 in
1994 and $23,545,058 in 1993.
Cash and Cash Equivalents: The Company's cash and cash equivalents
consist primarily of bank demand deposits and money market accounts at a
regional commercial bank. At times balances may exceed amounts covered
under federal depository insurance.
Concentration of Credit Risk: The Company's financial instruments that
are exposed to concentrations of credit risk consist of accounts
receivable and repurchase agreements (see Note 8). The Company's
receivables result primarily from the sales of motor coaches to
independent dealers. The Company generally requires no collateral from
its dealers.
The Company has a concentration of credit risk in the recreational
vehicle industry and its largest dealers, without geographic
concentration of credit risk.
Inventories: Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method for materials,
work-in-process and finished coach inventories. Cost includes materials,
labor and manufacturing overhead costs. Used coaches and vehicle chassis
inventory cost is determined using the specific identification method.
Property and Equipment: Property and equipment are recorded at cost.
Maintenance and repairs are charged to expense as incurred. Replacements
and renewals are capitalized. When assets are sold, retired or otherwise
disposed of, the cost and accumulated depreciation are removed from the
accounts and any resulting gain or loss is reflected in income.
Depreciation is computed by straight-line and accelerated methods with
rates based on estimated useful lives. Leasehold improvements are
amortized based on the lease term or useful lives.
Continued
Country Coach, Inc. 5
<PAGE>
Notes to Financial Statements, Continued
December 31, 1994 and 1993
1. Summary of Significant Accounting Policies, Continued:
Warranty Claims: Estimated warranty costs arc provided at the time of sale
of the warrantied products.
Research and Development: Research and development expenses charged to
operations were approximately $472,157 in 1994 and $265,680 in 1993.
Income Taxes: The Company elected to be taxed as an S corporation, whereby
income and losses are reported by the stockholders. Accordingly, no
provision for income taxes has been made in these financial statements.
2. Inventories:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Materials $ 1,828,232 $ 1,531,839
Vehicle chassis 487,221 199,252
Work-in-process 6,748,031 5,033,710
Finished coaches 4,884,583 3,274,816
Used coaches 2,256,210 3,991,375
----------- -----------
$16,204,277 $14,030,992
=========== ===========
</TABLE>
3. Property and Equipment:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Leasehold improvements $ 746,527 $ 514,101
Manufacturing equipment and vehicles 1,007,882 698,353
Office and data processing equipment 687,343 626,970
----------- -----------
2,441,752 1,839,424
Less accumulated depreciation
and amortization 1,181,167 1,073,638
----------- -----------
$ 1,260,585 $ 765,786
=========== ===========
</TABLE>
Country Coach, Inc. 6
<PAGE>
Notes to Financial Statements, Continued
December 31, 1994 and 1993
4. Notes Payable:
The Company has established a revolving line of credit with the United
States National Bank of Oregon in the amount of $11,000,000 with interest
at the Bank's prime rate, and with collateral of certain accounts
receivable and inventory. The agreement requires that the Company
maintain certain debt to worth and working capital ratios. The Bank's
prime rate was 8.5% at December 31, 1994 (6% at December 31, 1993).
Borrowings were $7,035,000 at December 31, 1994 and $4,900,000 at
December 31, 1993.
5. Long-term Debt:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Note payable, City of Junction City,
payable in monthly installments of $1,924
including interest at 3%, due January 2005,
collateral of real property leased from
related partnership $ 198,059 $ 215,162
Less current portion 17,624 17,103
--------- ---------
$ 180,435 $ 198,059
========= =========
</TABLE>
The aggregate maturities on the above debt in the years subsequent to
December 31, 1995 are:
<TABLE>
<S> <C>
1996 $ 18,160
1997 18,712
1998 19,281
1999 19,868
Thereafter 104,414
</TABLE>
6. Related-Party Transactions, Related Partnership:
Country Coach, Inc. leases on a year-to-year basis certain land and
buildings from Lee Joint Venture, a partnership comprised of stockholders
of the Company. Rents paid or accrued by the Company to the partnership
during 1994 amounted to $789,098 ($647,388 in 1993).
The Company also has an outstanding receivable from Lee Joint Venture at
December 31, 1994 of $55,838 and earned related interest income of $6,191
on this receivable ($72,941 and $6,697, respectively, at December 31,
1993).
Country Coach, Inc. 7
<PAGE>
Notes to Financial Statements, Continued
December 31, 1994 and 1993
7. Profit Sharing Plan:
The Company has a cash bonus plan based on various Company performance and
profit results. Employees with 12 months of service at the beginning of
the year are eligible under the plan. No bonus was awarded by the Company
on 1994 results (awarded $507,395 for the bonus, plus related taxes, based
on 1993 results).
8. Contingencies:
Repurchase Agreements: Substantially all of the Company's sales to dealers
are made on terms requiring cash on delivery. The Company does not
normally finance dealer purchases. However, most dealers are financed on
a "floor plan" basis by a bank or finance company which lends the dealer
all or substantially all of the wholesale purchase price and retains a
security interest in the vehicles purchased. Upon request of a lending
institution financing a dealer's purchases of the Company's products, the
Company will execute a repurchase agreement. These agreements provide
that for up to 12 months after a unit is financed, the Company will
repurchase the unit if the dealer is in default and upon a determination
by the lending institution to repossess the unit. The Company's liability
under repurchase agreements is limited to the unpaid balance owed to the
lending institution by reason of its extending credit to the dealer to
purchase Country Coach, Inc.'s vehicles. The Company does not anticipate
any significant losses will be incurred under these agreements, The
approximate amount subject to contingent repurchase arising from these
agreements at December 31, 1994 is $12,469,000.
Other: The Company is involved in litigation arising in the normal course
of business. In the opinion of management, the ultimate outcome of these
claims will not have a material effect on the financial statements.
Country Coach, Inc. 8
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Exhibit B
FOR IMMEDIATE RELEASE
NATIONAL R.V. HOLDINGS, INC. CONSUMMATES
ACQUISITION OF COUNTRY COACH, INC.
PERRIS, California (November 11, 1996) - National R.V. Holdings, Inc. (Nasdaq:
NRVH) announced today that it has closed its previously-announced acquisition
of Country Coach, Inc., a leading manufacturer of Highline motorhomes based in
Junction City, Oregon. The acquisition, valued at $19 million, was consummated
through the issuance of 543,806 shares of National R.V. Holdings Common Stock
valued at $9 million and the assumption of approximately $10 million of debt.
In connection with the acquisition, Robert B. Lee, Country Coach's founder and
Chief Executive Officer, has joined National's Board of Directors. Mr. Lee
and the rest of Country Coach management are continuing in their current
positions. Country Coach generated net sales of approximately $70 million and
pre-tax profits of $2.8 million in 1995. Net sales and pre-tax profits are
well ahead of comparable period results for the first nine months of 1996.
The Company expects the transaction to be immediately accretive to earnings
per share. The acquisition makes the Company the fifth largest manufacturer
of Class A motorhomes in the nation with a 6.5% market share.
Commenting on the Country Coach acquisition, Gary Siegler, Chairman of the
Board of Directors of National R.V. Holdings, stated, "We are excited to add
Country Coach's fine products and management team to the Company. Country
Coach provides us with a leading presence in the Highline market, making
National one of the largest and fastest-growing RV manufacturers in the U.S."
National R.V. Holdings is one of the nation's leading manufacturers of Class A
motorhomes. Through its National R.V. subsidiary, the Company designs,
manufactures and markets Class A motorhomes and fifth-wheel travel trailers
under brand names including Dolphin, Sea Breeze, and Tropi-Cal. Through its
Country Coach subsidiary, the Company designs, manufactures and markets
Highline Class A motorhomes and bus conversions under brand names including
Concept, Affinity, Magna, Intrigue and Allure.
CONTACTS: Kenneth W. Ashley Eugene G. Heller/Lynne P. Farris
Chief Financial Officer Silverman Heller Associates
(909)943-6007 (310)208-2550