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 March 31, 1998
{ } 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 May 4, 1998
- ----- --------------------------
Common stock, par value 6,527,189
$.01 per share
1
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
INDEX
PAGE
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheet -
March 31, 1998 and December 31, 1997 3
Consolidated Statement of Income -
Three Months Ended March 31, 1998 and 1997 4
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1998 and 1997 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
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 8,816 $ 3,542
Trade receivables, less allowance for
doubtful accounts of $180,000 18,997 11,388
Inventories 35,728 37,543
Deferred income taxes 3,175 2,741
Prepaid expenses 1,394 1,375
--------------- -----------------
Total current assets 68,110 56,589
Goodwill - net 7,675 7,778
Property, plant and equipment, net 21,127 19,817
Other 3,052 3,020
=============== =================
$ 99,964 $ 87,204
=============== =================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 4,955 $ 554
Accounts payable 12,718 9,006
Accrued expenses 11,239 7,758
--------------- -----------------
Total current liabilities 28,912 17,318
Deferred income taxes 2,079 2,225
Long-term debt 1,736 6,703
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 65 63
Additional paid-in capital 36,563 35,263
Accumulated earnings 30,609 25,632
--------------- -----------------
Total stockholders' equity 67,237 60,958
=============== =================
$ 99,964 $ 87,204
=============== =================
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1998 1997
<S> <C> <C>
Net sales $ 80,286 $ 58,596
Cost of goods sold 67,897 50,993
--------------- -----------------
Gross profit 12,389 7,603
Selling expenses 2,788 2,117
General and administrative expenses 1,426 1,261
Amortization of intangibles 103 103
--------------- -----------------
Operating income 8,072 4,122
Other expense (income):
Interest expense 64 49
Interest income (70) (33)
Other (income) expense 8 19
--------------- -----------------
Income before income taxes 8,070 4,087
Provision for income taxes 3,093 1,698
--------------- -----------------
Net income $ 4,977 $ 2,389
Earnings per common share:
Basic $ 0.77 $ 0.38
Diluted $ 0.66 $ 0.36
Weighted average number of shares:
Basic 6,428 6,232
Diluted 7,544 6,716
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1998 1997
Cash flows from operating activities:
<S> <C> <C>
Net income $ 4,977 $ 2,389
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation expense 415 246
Amortization of intangibles 103 103
Increase in trade receivables (7,609) (10,398)
Decrease (increase) in inventories 1,815 (201)
(Increase) decrease in prepaid expenses (19) 41
Increase in accounts payable 3,712 4,266
Increase in accrued expenses 3,481 2,411
Decrease in deferred income taxes (580) (163)
--------------- -----------------
Net cash provided (used) by operating activities 6,295 (1,306)
Cash flows from investing activities:
Purchases of property, plant and equipment (1,725) (1,946)
--------------- -----------------
Net cash used by investing activities (1,725) (1,946)
Cash flows from financing activities:
Increase in line of credit - 2,930
Increase in other assets (32) (124)
Principal payments on long-term debt (566) (80)
Proceeds from issuance of common stock 1,302 294
--------------- -----------------
Net cash provided by financing activities 704 3,020
--------------- -----------------
Net increase (decrease) in cash 5,274 (232)
Cash beginning of period 3,542 819
--------------- -----------------
Cash end of period $ 8,816 $ 587
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands except shares)
(Unaudited)
<TABLE>
<CAPTION>
Preferred Common Stock Paid-in Accumulated
Stock Shares Amount Capital Earnings Total
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ - 6,311,383 $ 63 $ 35,263 $ 25,632 $ 60,958
Common Stock issued upon
exercise of warrants 166,591 2 1,091 1,093
Common Stock issued upon
exercise of options 14,615 209 209
Net income 4,977 4,977
-------------------------------------------------------------------------
Balance, March 31, 1998 $ - 6,492,589 $ 65 $ 36,563 $ 30,609 $ 67,237
</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:
March 31, December 31,
1998 1997
------------------ ------------------
Finished goods $ 7,116,000 $ 10,751,000
Work-in-process 13,214,000 12,769,000
Raw materials 11,663,000 11,747,000
Chassis 3,735,000 2,276,000
================== ==================
$ 35,728,000 $ 37,543,000
================== ==================
7
<PAGE>
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 March 31, 1998, the Company had working capital of $39.2 million compared
to $39.3 million at December 31, 1997. In February 1998, the Company determined
that it had exceeded a capital expenditure limitation contained in the loan
agreement and certain related agreements governing the Company's 1995 industrial
revenue bond issue (the "Bond Agreements"), of which approximately $4,700,000
was outstanding at December 31, 1997. As a result, the Bond Agreements require
that the Company prepay such debt in full at an amount equal to 100% of the
principal amount of such debt plus accrued interest. The debt has been
classified as current as of March 31, 1998 and was paid on April 24, 1998.
Net cash provided by operating activities was $6.3 million for the three
months ended March 31, 1998, compared to cash used by operating activities of
$1.3 million for the same period in 1997. The change was due primarily to an
increase in net income and favorable changes in accounts receivable, inventories
and accrued expenses, offset somewhat by changes in accounts payable and
deferred income taxes.
Cash used by investing activities was $1.7 million compared to $1.9 million
for the comparable period last year.
Cash provided by financing activities was $0.7 million compared to $3.0
million for the comparable period last year. The change was primarily due to a
$2.9 million increase in the line of credit last year.
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 three months ended March 31, 1998 increased by $21.7
million or 37.0% from the same period last year. The Company's Country Coach
subsidiary shipped 30 more Class A motorhomes than last year and the National RV
subsidiary shipped 170 more Class A motorhomes and 36 more fifth-wheel units.
The average sales price for Class A motorhomes at the National RV subsidiary
increased 8.9% to $69,484 reflecting strong demand for higher-priced motorhomes
with slide-out rooms.
Cost of goods sold for the three months ended March 31, 1998 increased by
$16.9 million or 33.1% from the comparable period last year. The increase was
primarily due to the increase in sales. Gross profit margin increased to 15.4%
for the current period as compared to 13.0% for the same period last year. The
increase was due primarily to manufacturing efficiencies at the National RV
subsidiary which operated at a 28.3% higher rate of production than last year.
Selling expense for the three months ended March 31, 1998 increased $0.7
million or 31.7% from the same period last year. The increase was due primarily
to commissions and promotional costs related to the higher sales volume. As a
percent of net sales, selling expense decreased to 3.5% from 3.6% for the same
period last year.
8
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
General and administrative expense for the three months ended March 31, 1998
increased $0.2 million or 13.1% from the same period last year. As a percent of
net sales, general and administrative expense decreased to 1.8% from 2.2% for
the same period last year.
As a result of the foregoing, operating income for the three months ended
March 31, 1998 increased $4.0 million, or 95.8%. As a percent of net sales,
operating income increased to 10.1% from 7.0% for the same period last year.
Net interest expense and other financing related costs for the three months
ended March 31, 1998 increased income by $33,000 from the same period last year
due primarily to an increase in interest income.
As a result of the foregoing, income before taxes increased $4.0 million, or
97.5% to $8.1 million for the three months ended March 31, 1998. As a percent of
net sales, income before taxes increased to 10.1% from 7.0% for the same period
last year.
Provision for income taxes for the three months ended March 31, 1998 and 1997
was $3.1 million and $1.7 million, respectively. The effective tax rate
decreased to 38.3% from 41.5% for the same period last year. The decrease was
due primarily to improved apportionment of income to states with lower tax
rates.
As a result, net income increased $2.6 million, or 108.3% to $5.0 million for
the three months ended March 31, 1998, as compared to $2.4 million for the same
period last year. As a percent of net sales, net income increased to 6.2% from
4.1% for the same period last year.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
None.
B. Form 8-K
On March 6, 1998, the Company filed a Current Report on Form 8-K dated
February 25, 1998. Such Form 8-K reported under Item 5 that on February 28,1998,
the Board of Directors of National R.V. Holdings, Inc. appointed Mr. Doy B.
Henely as a Class III director to fill the vacancy left by the recent
resignation of Gary L. Fuhrman. In addition, the Board expanded the size of the
Class II class of directors from two to three and appointed Mr. Greg McCaffery
as a Class II director.
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: May 4, 1998 By /s/ WAYNE M. MERTES
Wayne M. Mertes
(President and Chief Executive Officer)
Date: May 4, 1998 By /s/ KENNETH W. ASHLEY
Kenneth W. Ashley
(Chief Financial Officer and Treasurer)
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-30-1998
<CASH> 8,816
<SECURITIES> 0
<RECEIVABLES> 19,177
<ALLOWANCES> 180
<INVENTORY> 35,728
<CURRENT-ASSETS> 68,110
<PP&E> 27,442
<DEPRECIATION> 6,315
<TOTAL-ASSETS> 99,964
<CURRENT-LIABILITIES> 28,912
<BONDS> 1,736
0
0
<COMMON> 65
<OTHER-SE> 67,172
<TOTAL-LIABILITY-AND-EQUITY> 99,964
<SALES> 80,286
<TOTAL-REVENUES> 80,286
<CGS> 67,897
<TOTAL-COSTS> 67,897
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64
<INCOME-PRETAX> 8,070
<INCOME-TAX> 3,093
<INCOME-CONTINUING> 4,977
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,977
<EPS-PRIMARY> .77
<EPS-DILUTED> .66
</TABLE>
