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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended September 30, 1997
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ........ to .........
Commission file number: 0-22268
NATIONAL R.V. HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0371079
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3411 N. Perris Blvd.
Perris, California 92571
(909) 943-6007
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
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__
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 11, 1997
- ----- --------------------------------
Common stock, par value 6,254,133
$.01 per share
1
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
INDEX
PAGE
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheet -
September 30, 1997 and December 31, 1996 3
Consolidated Statement of Income -
Three and Nine Months Ended September 30, 1997 and 1996 4
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1997 and 1996 5
Consolidated Statement of Changes in Stockholders' Equity 6
Notes to Consolidated Financial Statements 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 10
Signature 11
2
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NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
September 30, December 31,
1997 1996
ASSETS
Current Assets:
Cash $ - $ 819
Trade receivables, less allowance for
doubtful accounts of $177,000 14,238 5,522
Inventories 40,520 34,015
Deferred income taxes 2,488 1,384
Prepaid expenses 953 1,232
-------------- ---------------
Total current assets 58,199 42,972
Goodwill 7,881 8,191
Restricted funds - 1,210
Property, plant and equipment, net 19,320 15,542
Other 3,069 135
-------------- ---------------
$ 88,469 $ 68,050
============== ===============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Cash overdraft $ 1,237 $ -
Line of credit 2,104 1,400
Current portion of long-term debt 545 545
Accounts payable 11,712 7,736
Accrued expenses 8,677 3,738
-------------- ---------------
Total current liabilities 24,275 13,419
Deferred income taxes 1,827 1,827
Long-term debt 7,067 7,272
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.01 par value; 5,000 shares
authorized, 4,000 issued and outstanding - -
Common stock - $.01 par value; 10,000,000 shares
authorized 63 62
Additional paid-in capital 34,681 34,344
Accumulated earnings 20,776 11,126
Less: cost of treasury shares (220) -
-------------- ---------------
Total stockholders' equity 55,300 45,532
-------------- ---------------
$ 88,469 $ 68,050
============== ===============
See Notes to Consolidated Financial Statements
3
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NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Net sales $ 76,780 $ 27,139 $ 204,567 $ 94,958
Cost of goods sold 65,749 23,422 176,826 82,183
-------- ------- --------- --------
Gross profit 11,031 3,717 27,741 12,775
Selling expenses 2,499 719 6,726 2,367
General and administrative
expenses 1,511 588 4,294 1,773
Amortization of intangibles 103 - 310 -
-------- ------- --------- --------
Operating income 6,918 2,410 16,411 8,635
Other expense (income):
Interest expense 104 42 254 237
Interest income (37) (48) (107) (184)
Other 13 37 74 114
-------- ------- --------- --------
Income before income taxes 6,838 2,379 16,190 8,468
Provision for income
taxes 2,696 968 6,540 3,434
-------- ------- --------- --------
Net income $ 4,142 $ 1,411 $ 9,650 $ 5,034
Earnings per common share
and common equivalent shares:
Primary $ 0.59 $ 0.27 $ 1.42 $ 1.00
Fully diluted $ 0.58 $ 0.27 $ 1.40 $ 0.99
Weighted average number of shares:
Primary 6,966 5,247 6,805 5,045
Fully diluted 7,169 5,296 6,896 5,066
See Notes to Consolidated Financial Statements
4
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NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1997 1996
Cash flows from operating activities:
Net income $ 9,650 $ 5,034
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 928 358
Amortization of intangibles 310 -
Increase in trade receivables (8,716) (1,106)
Increase in inventories (6,505) (29)
(Decrease) increase in prepaid expenses 279 (176)
Increase (decrease) in accounts payable 3,976 (104)
Increase in accrued expenses 4,939 873
Increase in deferred income taxes (1,104) (309)
-------------- ----------------
Net cash provided by operating activities 3,757 4,541
Cash flows from investing activities:
Increase in other assets (2,934) -
Purchases of property, plant and equipment (4,706) (3,461)
-------------- ----------------
Net cash used by investing activities (7,640) (3,461)
Cash flows from financing activities:
Increase in cash overdraft 1,237 -
Increase (decrease) under line of credit 704 (1,900)
Decrease in restricted funds 1,210 3,098
Principal payments on long-term debt (205) (109)
Proceeds from issuance of common stock 338 1,381
Purchase of treasury stock (220) (953)
-------------- ----------------
Net cash provided by financing activities 3,064 1,517
-------------- ----------------
Net (decrease) increase in cash (819) 2,597
Cash beginning of period 819 73
-------------- ----------------
Cash end of period $ - $ 2,670
See Notes to Consolidated Financial Statements
5
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NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands except shares)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Preferred Common Stock Paid-in Accumulated Treasury Stock
Stock Shares Amount Capital Earnings Shares Amount Total
--------- --------- ------- -------- ---------- ------- ------ -------
Balance, December 31, 1996 $ - 6,193,579 $ 62 $ 34,344 $ 11,126 $ - $45,532
Common Stock issued upon
exercise of warrants 37,500 1 230 231
Common Stock issued under
option plan 21,554 - 107 107
Purchase of treasury stock (12,400) (220) (220)
Net income 9,650 9,650
--------- --------- ------- -------- ---------- ------- ------ -------
Balance, September 30, 1997 $ - 6,252,633 $ 63 $ 34,681 $ 20,776 (12,400) $(220) $55,300
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
PART I, ITEM 1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - GENERAL
In the opinion of National R.V. Holdings, Inc. (collectively, with its
subsidiaries National R.V., Inc., and Country Coach, Inc. referred to herein as
the "Company"), the accompanying unaudited consolidated 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. These financial statements
should be read in conjunction with the financial statements and notes thereto
contained in the Company's latest annual report on Form 10-K.
NOTE 2 - INVENTORIES
Inventories consist of the following:
September 30, December 31,
1997 1996
------------------ ------------------
Finished goods $ 10,579,000 $ 8,116,000
Work-in-process 13,636,000 11,000,000
Raw materials 9,605,000 7,987,000
Chassis 6,700,000 6,912,000
================== ==================
$ 40,520,000 $ 34,015,000
================== ==================
NOTE 3 - Other
In September 1997, the Company acquired, for $2.75 million, a limited
partnership interest in Dune Jet Services, L.P. (the "Partnership"), a Delaware
limited partnership formed for the purposes of acquiring and operating an
airplane for the partners' business uses and for third-party charter flights
(the "Aircraft"). The general partner of the Partnership is Dune Jet Services,
Inc. ("DJ Services") , a Delaware corporation, the sole stockholder of which is
the Company's Chairman, Mr. Gary N. Siegler. DJ Services contributed $1.55
million for its general partnership interest and an additional $3.25 million for
a separate limited partnership interest. The Aircraft has been partially
financed by a $4.25 million loan from a third party financing source, the
repayment of which loan was personally guaranteed by Mr. Siegler. Pursuant to
the Partnership's limited partnership agreement and proposed operating
agreement, the Company, as a limited partner, will have the right to use the
Aircraft for business purposes for its pro rata share of 800 hours per year, at
a rate modestly above the variable cost of operating the Aircraft. Hours not
used by the partners will be available for charter flights at market rates.
Profits and losses of the Partnership are generally allocated in accordance with
the partners' respective capital contributions, except that depreciation is
allocated to the general partner, and distributions to the partners will be made
in the same ratios as such allocations. Pursuant to the partnership agreement,
DJ Services is entitled to reimbursement for expenses and indemnification from
the Partnership for acting in its capacity as general partner.
7
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NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At September 30, 1997, the Company had working capital of $33.9 million
compared to $29.6 million at December 31, 1996. Net cash provided by operating
activities was $3.8 million for the nine months ended September 30, 1997,
compared to $4.5 million for the same period in 1996. An increase in net income,
accounts payable and accrued expenses was offset by an increase in accounts
receivable, inventories and deferred income taxes.
Cash used by investing activities was $7.6 million compared to $3.5 million
for the comparable period last year. The increase was primarily due to the
construction of a new 154,000 square foot building and the acquisition of the
limited partnership interest in Dune Jet Services, L.P.
Cash provided by financing activities was $3.1 million compared to $1.5
million for the comparable period last year. The change was primarily due to an
increase in cash overdraft and line of credit, and a decrease in restricted
funds used for the construction of the new building.
The Company believes that the combination of internally generated funds,
existing capital and funds available from its existing credit facility, will be
sufficient to meet the Company's planned capital and operational requirements
for at least the next 24 months.
Results of Operations
Net sales for the third quarter of 1997 increased by $49.6 million or 182.9%
from the comparable period last year. For the first nine months of 1997, the
Company reported sales of $204.6 million, 115.4% higher than sales of $95.0
million for the first nine months of last year. This increase resulted from the
sale of 352 motorhomes at the Company's Country Coach subsidiary with no
comparable sales for last year. The Company's National RV subsidiary shipped 325
more Class A motorhomes than last year and the average sales price increased
16.1% to $67,290 reflecting strong demand for higher-priced motorhomes with
slide-out rooms.
Cost of goods sold of $65.7 million for the third quarter of 1997 resulted in
a gross margin of 14.4% compared to a gross margin of 13.7% for the same period
last year. Cost of goods sold of $176.8 million for the first nine months of
1997 resulted in a gross margin of 13.6% compared to a gross margin of 13.5% for
the same period last year. The gross margin increase was due primarily to
manufacturing efficiencies at the Company's National RV subsidiary which
operated at a 38.4% higher rate of production than last year. Additionally, the
Company's Country Coach subsidiary realized a higher gross profit margin on
their sales which were not included in last year results.
8
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Selling expense for the third quarter of 1997 increased to $2.5 million or
3.3% of net sales, compared to $0.7 million or 2.6% of net sales for the same
period last year. Selling expense for the first nine months of 1997 increased to
$6.7 million or 3.3% of net sales, compared to $2.4 million or 2.5% of net sales
for the same period last year. The increase was due primarily to higher selling
expenses at Country Coach which are typical in the Highline market.
General and administrative expense for the third quarter of 1997 increased to
$1.5 million or 2.0% of net sales, compared to $0.6 million or 2.2% of net sales
for the same period last year. General and administrative expense for the first
nine months of 1997 increased to $4.3 million or 2.1% of net sales, compared to
$1.8 million or 1.9% of net sales for the same period last year. The increase
was due primarily to the general and administrative expenses of Country Coach.
Amortization of intangibles increased $0.1 million for the third quarter of
1997 and $0.3 million for the first nine months of 1997 due to the Country Coach
acquisition.
As a result of the foregoing, operating income for the third quarter of 1997
increased 187.1% to $6.9 million or 9.0% of net sales, compared to $2.4 million
or 8.9% of net sales for the same period last year. Operating income for the
first nine months of 1997 increased 90.1% to $16.4 million or 8.0% of net sales,
compared to $8.6 million or 9.1% of net sales for the same period last year.
Net interest expense and other financing related costs for the first nine
months of 1997 increased $54,000.
As a result of the foregoing, income before income taxes for the third
quarter of 1997 increased to $6.8 million or 8.9% of net sales, compared to $2.4
million or 8.8% of net sales for the same period last year. Income before income
taxes for the first nine months of 1997 increased to $16.2 million or 7.9% of
net sales, compared to $8.5 million or 8.9% of net sales for the same period
last year.
Provision for income taxes for the third quarter of fiscal 1997 was $2.7
million compared to $1.0 million for the same period last year. Provision for
income taxes for the first nine months of 1997 was $6.5 million compared to $3.4
million for the same period last year. The effective tax rate for the first nine
months of 1997 was 40.4% compared to 40.6% for the same period last year. The
decrease was due mainly to apportioning sales to states with lower tax rates.
As a result of the foregoing, net income for the third quarter of 1997
increased to $4.1 million or 5.4% of net sales, compared to $1.4 million or 5.2%
of net sales for the same period last year. Net income for the first nine months
of 1997 increased to $9.7 million or 4.7% of net sales, compared to $5.0 million
or 5.3% of net sales for the same period last year.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
99 Forward Looking Statements
B. Reports on Form 8-K
None
10
<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.
NATIONAL R.V. HOLDINGS, INC.
(Registrant)
Date: November 11, 1997 By /s/ KENNETH W. ASHLEY
Kenneth W. Ashley
Senior Vice President and Chief Financial
Officer (Principal Accounting and Finance
Officer)
11
<PAGE>
Exhibit 99
Forward Looking Statements
The reports of National R.V. Holdings, Inc., a Delaware corporation (the
"Registrant"), under the Securities Exchange Act of 1934 contain forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, the following considerations: (i) the cyclical nature of the
recreational vehicle industry, seasonality and potential fluctuations in the
Registrant's operating results; (ii) the registrant's dependence on chassis
suppliers; (iii) the integration by the Registrant of acquired businesses and
the management of growth; (iv) potential liabilities under repurchase
agreements; (v) competition; (vi) government regulation; (vii) product
liability; (viii) dependence on key personnel; (ix) dependence on certain
dealers and concentration of dealers in certain regions; (x) expansion of
manufacturing facilities; (xi) control by affiliates; and (xii) antitakeover
provisions.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 14,415
<ALLOWANCES> 177
<INVENTORY> 40,520
<CURRENT-ASSETS> 58,199
<PP&E> 24,827
<DEPRECIATION> 5,507
<TOTAL-ASSETS> 88,469
<CURRENT-LIABILITIES> 24,275
<BONDS> 7,067
0
0
<COMMON> 63
<OTHER-SE> 55,237
<TOTAL-LIABILITY-AND-EQUITY> 88,469
<SALES> 204,567
<TOTAL-REVENUES> 204,567
<CGS> 176,826
<TOTAL-COSTS> 176,826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 254
<INCOME-PRETAX> 16,190
<INCOME-TAX> 6,540
<INCOME-CONTINUING> 9,650
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,650
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.40
</TABLE>
