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 June 30, 1999
{ } 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 August 5, 1999
- ----- -----------------------------
Common stock, par value 10,427,232
$.01 per share
1
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
INDEX
PAGE
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheet -
June 30, 1999 and December 31, 1998 3
Consolidated Statement of Income -
Three and Six Months Ended June 30, 1999 and 1998 4
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1999 and 1998 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 - 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands except shares)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 33,764 $ 10,446
Trade receivables, less allowance for
doubtful accounts of $188 16,799 20,719
Inventories 52,874 46,832
Deferred income taxes 4,613 3,883
Prepaid expenses 1,022 809
--------- ---------
Total current assets 109,072 82,689
Goodwill 6,779 7,365
Property, plant and equipment, net 28,942 24,341
Other 1,152 3,344
--------- ---------
$ 145,945 $ 117,739
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 20 $ 166
Accounts payable 17,040 8,771
Accrued expenses 15,435 10,272
-------- ---------
Total current liabilities 32,495 19,209
Deferred income taxes 2,341 2,341
Long-term debt 95 1,700
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.01 par value; 5,000 shares
authorized, 4,000 issued and outstanding - -
Common stock - $.01 par value; 25,000,000 shares
authorized, 10,418,374 and 10,322,837 issued and
outstanding, respectively 104 103
Additional paid-in capital 45,587 44,645
Accumulated earnings 65,323 49,741
--------- ---------
Total stockholders' equity 111,014 94,489
--------- ---------
$ 145,945 $ 117,739
========= =========
</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 Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $ 105,338 $ 90,873 $ 208,320 $ 171,159
Cost of goods sold 87,959 76,575 174,187 144,472
-------- -------- -------- ---------
Gross profit 17,379 14,298 34,133 26,687
Selling expenses 2,612 2,487 5,324 5,275
General and administrative expenses 1,826 1,600 3,734 3,026
Amortization of intangibles 104 104 207 207
-------- -------- -------- ---------
Operating income 12,837 10,107 24,868 18,179
Other expense (income):
Interest expense 6 41 28 105
Interest income (428) (89) (593) (159)
Other (income) expense (380) 215 (384) 223
-------- ------- -------- ---------
Income before income taxes 13,639 9,940 25,817 18,010
Provision for income taxes 5,378 4,172 10,235 7,265
-------- ------- -------- ---------
Net income $ 8,261 $ 5,768 $ 15,582 $ 10,745
Earnings per common share:
Basic $ 0.80 $ 0.59 $ 1.50 $ 1.10
Diluted $ 0.74 $ 0.51 $ 1.38 $ 0.95
Weighted average number of shares:
Basic 10,378 9,734 10,364 9,734
Diluted 11,189 11,364 11,251 11,364
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 15,582 $ 10,745
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation expense 1,130 865
Amortization of intangibles 206 206
Gain on asset disposal (379) -
Tax benefit related to exercise of
stock options 471 -
Decrease (increase) in trade receivables 3,919 (6,723)
Increase in inventories (6,042) (3,531)
(Increase) decrease in prepaid expenses (213) 170
Increase in accounts payable 8,269 6,848
Increase in accrued expenses 5,163 521
Increase in deferred income taxes (729) (901)
-------- ---------
Net cash provided by operating
activities 27,377 8,200
Cash flows from investing activities:
Purchases of property, plant and
equipment (5,712) (2,643)
Decrease (increase) in other assets 21 (197)
Investment in Dune Jet Services, LP 2,912 -
-------- ---------
Net cash used in investing activities (2,779) (2,840)
Cash flows from financing activities:
Principal payments on long-term debt (1,752) (5,308)
Proceeds from issuance of common stock 472 4,117
-------- ---------
Net cash (used) provided
by financing activities (1,280) (1,191)
-------- ---------
Net increase in cash 23,318 4,169
Cash beginning of period 10,446 3,542
-------- ---------
Cash end of period $ 33,764 $ 7,711
======== =========
</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, 1998 $ - 10,322,837 $ 103 $44,645 $ 49,741 $ 94,489
Common Stock issued upon
exercise of warrants 295 3 3
Common Stock issued under
option plan 95,242 1 468 469
Tax benefit related to
exercise of stock options 471 471
Net income 15,582 15,582
-------- ---------- ----- ------- -------- ---------
Balance, June 30, 1999 $ - 10,418,374 $ 104 $45,587 $ 65,323 $ 111,014
======== ========== ===== ======= ======== =========
</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:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Finished goods $ 14,778,558 $ 11,112,000
Work-in-process 14,136,114 13,815,000
Raw materials 12,744,855 12,477,000
Chassis 11,214,454 9,428,000
------------ ------------
$ 52,873,981 $ 46,832,000
============ ============
</TABLE>
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 June 30, 1999, the Company had working capital of $76.6 million compared
to $63.5 million at December 31, 1998. Net cash provided by operating activities
was $27.4 million for the six months ended June 30, 1999, compared to $8.2
million for the same period in 1998. This resulted primarily from an increase in
net income, accounts payable, and accrued expenses, and a decrease in trade
receivables, partially offset by an increase in inventories.
Cash used in investing activities was $2.8 million for both six-month
periods. However, purchases of property, plant, and equipment were $5.7 million
compared to $2.6 million for the comparable period last year. This increase was
offset by a $2.9 million distribution in respect to the Company's limited
partnership interest in Dune Jet Services, LP. The Company expects that its
limited partnership interest in Dune Jet Services will be fully liquidated
during 1999.
Cash used in financing activities was $1.3 million compared to $1.2 million
for the comparable period 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 second quarter of 1999 increased by $14.5 million, or 15.9%
from the comparable period last year. For the first half of 1999, the Company
reported sales of $208.3 million, 21.7% higher than sales of $171.2 million for
the first half of last year. The Company's National RV subsidiary shipped 215
more Class A motorhomes and 30 more fifth-wheel units. The average sales price
for Class A motorhomes at the National RV subsidiary increased 9.3% from the
same period last year to $75,741. At the Country Coach subsidiary, the average
price increased 4.6% to $219,212. Both increases reflect strong demand for
higher-priced motorhomes with slide-out rooms.
Cost of goods sold of $88 million for the second quarter of 1999 resulted in
a gross margin of 16.5% compared to a gross margin of 15.7% for the same period
last year. Cost of goods sold of $174.2 million for the first half of 1999
resulted in a gross margin of 16.4% compared to a gross margin of 15.6% for the
same period last year. The increase was due primarily to manufacturing
efficiencies resulting from increased production volume at both subsidiaries.
Selling expense for the second quarter of 1999 increased to $2.6 million, or
2.5% of net sales, compared to $2.5 million, or 2.7% of net sales for the same
period last year. Selling expense for the first half of 1999 remained constant
at $5.3 million, or 2.6% of net sales, compared to $5.3 million, or 3.1% of net
sales for the same period last year. The decrease as a percentage of net sales
was primarily due to a change in the method of calculating commissions at the
National RV subsidiary.
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 second quarter of 1999 increased
to $1.8 million, or 1.7% of net sales, compared to $1.6 million, or 1.8% of net
sales for the same period last year. General and administrative expense for the
first half of 1999 increased to $3.7 million, or 1.8% of net sales, compared to
$3.0 million, or 1.8% of net sales for the same period last year.
As a result of the foregoing, operating income for the second quarter of 1999
increased 27.0% to $12.8 million, or 12.2% of net sales, compared to $10.1
million, or 11.1% of net sales for the same period last year. Operating income
for the first half of 1999 increased 36.8% to $24.9 million, or 11.9% of net
sales, compared to $18.2 million, or 10.6% of net sales for the same period last
year.
Interest expense for the first half of 1999 decreased $77,000 compared to the
same period last year due to the retirement of debt. Interest income increased
$434,000 for the six months due to an increase in cash. Other income of $384,000
for the first half of 1999 is comprised primarily of a gain of $362,000 from the
liquidation of the investment in Dune Jet Services, LP, as noted above.
As a result of the foregoing, income before income taxes for the second
quarter of 1999 increased to $13.6 million, or 12.9% of net sales, compared to
$9.9 million, or 10.9% of net sales for the same period last year. Income before
income taxes for the first half of 1999 increased to $25.8 million, or 12.4% of
net sales, compared to $18.0 million, or 10.5% of net sales for the same period
last year.
Provision for income taxes for the second quarter of fiscal 1999 was $5.4
million compared to $4.2 million for the same period last year. Provision for
income taxes for the first half of 1999 was $10.2 million compared to $7.3
million for the same period last year. The effective tax rate for the first half
of 1999 was 39.6% compared to 40.3% for the same period last year. The decrease
was due primarily to improved apportionment of income to states with lower
taxes.
As a result of the foregoing, net income for the second quarter of 1999
increased to $8.3 million, or 7.8% of net sales, compared to $5.8 million, or
6.3% of net sales for the same period last year. Net income for the first half
of 1999 increased to $15.6 million, or 7.5% of net sales, compared to $10.7
million, or 6.3% of net sales for the same period last year.
9
<PAGE>
Year 2000 Date Conversion
An issue affecting the Company and most other companies is whether computer
systems and applications will recognize and process the year 2000 and beyond.
The Company is in the process of assessing and implementing necessary changes
for all areas of the Company's business which could be impacted; these include
such areas as business computer systems, dealership systems, plant floor
equipment, end-user computing, financial institutions and suppliers.
Based on assessments completed to date and compliance plans in process, the
Company does not expect that the year 2000 issue will have a material effect on
its business operations, consolidated financial condition, cash flows, or
results of operations. However, if appropriate modifications are not made by the
Company's suppliers or dealers on a timely basis, or if the Company's actual
costs or timing for the year 2000 date conversion differ materially from its
present estimates, the Company's operations and financial results could be
significantly adversely affected.
Disclosure Regarding Forward Looking Statements
Statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
forward-looking statements are inherently uncertain. Actual performance and
results may differ materially from that projected or suggested herein due to
certain risks and uncertainties including, without limitation, the cyclical
nature of the recreational vehicle industry; seasonality and potential
fluctuations in the Company's operating results; the pricing and availability
of gasoline; the Company's dependence on chassis suppliers; the integration by
the Company of acquired businesses and the management of growth; potential
liabilities under repurchase agreements; competition; government regulation;
product liability; dependence on key personnel and dependence on certain dealers
and concentration of dealers in certain regions. Additional information
concerning certain risks and uncertainties that could cause actual results
to differ materially from that projected or suggested may be identified from
time to time in the Company's filings with the Securities and Exchange
Commission (SEC) and the Company's public announcements, copies of which are
available from the SEC or from the Company upon request.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 28, 1999, the Company held its 1999 Annual Meeting of
stockholders (the "Annual Meeting"). The matters voted upon at the Annual
Meeting and the votes cast for such matters were as follows:
1. The Company's stockholders elected Gary N. Siegler and Wayne
M. Mertes as Class I Directors to serve until the 2002 Annual
Meeting. Voting for the nominees for director was as follows:
Gary N. Siegler; 7,239,646 shares FOR and 561,513 shares
WITHHELD; and Wayne M. Mertes; 7,241,487 shares FOR and
556,663 shares WITHHELD.
2. The Company's stockholders approved the adoption of the
Company's 1999 Stock Option Plan. For the approval of the 1999
Stock Option Plan, the vote was 5,185,145 shares FOR;
2,589,847 shares AGAINST; and 26,167 shares ABSTAINING.
3. The Company's stockholders approved the appointment of
PricewaterhouseCoopers LLP, as the Company's auditor for the
current fiscal year. For the appointment of
PricewaterhouseCoopers LLP as the Company's auditor, the vote
was 7,699,815 shares FOR; 96,551 shares AGAINST; and 4,793
shares ABSTAINING.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
99.1 Disclosure Regarding Forward Looking Statements
B. Reports on Form 8-K
None
11
<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: August 5, 1999 By /s/ BRADLEY C. ALBRECHTSEN
Bradley C. Albrechtsen
Chief Financial Officer,
Treasurer, and Assistant
Secretary (Principal
Accounting and Finance
Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 33,764
<SECURITIES> 0
<RECEIVABLES> 16,799
<ALLOWANCES> 188
<INVENTORY> 52,874
<CURRENT-ASSETS> 109,072
<PP&E> 28,942
<DEPRECIATION> 8,077
<TOTAL-ASSETS> 145,945
<CURRENT-LIABILITIES> 32,495
<BONDS> 0
0
0
<COMMON> 104
<OTHER-SE> 110,910
<TOTAL-LIABILITY-AND-EQUITY> 145,945
<SALES> 208,320
<TOTAL-REVENUES> 208,320
<CGS> 174,187
<TOTAL-COSTS> 174,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 25,817
<INCOME-TAX> 10,235
<INCOME-CONTINUING> 15,582
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,582
<EPS-BASIC> 1.50
<EPS-DILUTED> 1.38
</TABLE>
