SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2002
or
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Identification No.)
incorporation or organization)
3411 N. Perris Blvd., Perris, California 92571
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 943-6007
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 April 17, 2002
----- -----------------------------
Common stock, par value 9,720,155
$.01 per share
1
NATIONAL R.V. HOLDINGS, INC.
INDEX
PAGE
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets -
March 31, 2002 and December 31, 2001 3
Consolidated Statements of Operations -
Three Months Ended March 31, 2002 and 2001 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2002 and 2001 5
Notes to Consolidated Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
2
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
March 31, December 31,
2002 2001
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 1,850 $ 22
Trade receivables, less allowance for doubtful
accounts ($264 and $224, respectively) ............ 24,014 16,378
Inventories ......................................... 67,322 85,385
Deferred income taxes ............................... 7,267 7,267
Income taxes receivable ............................. 7,826 6,688
Prepaid expenses .................................... 1,306 1,647
--------- ---------
Total current assets .............................. 109,585 117,387
Goodwill, net ......................................... 6,126 6,126
Property, plant and equipment, net .................... 43,642 45,257
Other ................................................. 954 1,012
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$ 160,307 $ 169,782
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Book overdraft ...................................... $ - $ 608
Current portion of long-term debt ................... 22 20
Accounts payable .................................... 24,637 29,480
Accrued expenses .................................... 21,028 21,750
--------- ---------
Total current liabilities ......................... 45,687 51,858
Deferred income taxes ................................. 3,469 3,469
Long-term debt ........................................ 36 43
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Total liabilities ..................................... 49,192 55,370
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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, 9,720,155 and 9,718,025 issued
and outstanding, respectively ..................... 97 97
Additional paid-in capital ........................ 33,147 33,128
Retained earnings ................................. 77,871 81,187
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Total stockholders' equity ...................... 111,115 114,412
--------- ---------
$ 160,307 $ 169,782
========= =========
See Notes to Consolidated Financial Statements.
3
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months
Ended March 31,
----------------------
2002 2001
--------- ---------
Net sales ............................................. $ 79,320 $ 62,380
Cost of goods sold .................................... 79,574 60,187
--------- ---------
Gross (loss) profit ................................. (254) 2,193
--------- ---------
Selling expenses ...................................... 3,429 3,039
General and administrative expenses ................... 1,908 2,364
Amortization of intangibles ........................... - 103
--------- ---------
Operating loss ...................................... (5,591) (3,313)
Interest income and other expense, net ................ (305) (220)
--------- ---------
Loss before income taxes ............................ (5,286) (3,093)
Benefit for income taxes .............................. (1,970) (1,198)
--------- ---------
Net loss ............................................ $ (3,316) $ (1,895)
========= =========
Loss per common share:
Basic .............................................. $ (0.34) $ (0.20)
Diluted ............................................ $ (0.34) $ (0.20)
Weighted average number of shares:
Basic .............................................. 9,719 9,663
Diluted ............................................ 9,719 9,663
See Notes to Consolidated Financial Statements.
4
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended March 31,
----------------------
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss ............................................ $ (3,316) $ (1,895)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation ...................................... 978 926
Amortization of intangibles ....................... - 103
Gain on asset disposal ............................ (348) -
Changes in assets and liabilities:
Increase in trade receivables ................... (7,636) (1,836)
Decrease (increase) in inventories .............. 18,063 (8,895)
Increase in income taxes receivable ............. (1,138) -
Decrease in prepaid expenses .................... 341 432
Decrease in book overdraft ...................... (608) -
(Decrease) increase in accounts payable ......... (4,843) 215
(Decrease) increase in accrued expenses ......... (722) 2,969
--------- ---------
Net cash provided by (used in) operating activities 771 (7,981)
--------- ---------
Cash flows from investing activities:
Decrease in other assets ............................ 58 -
Proceeds from sale of assets ........................ 2,424 -
Purchases of property, plant and equipment .......... (1,438) (2,986)
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Net cash provided by (used in) investing activities 1,044 (2,986)
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Cash flows from financing activities:
Principal payments on long-term debt ................ (5) (5)
Proceeds from issuance of common stock .............. 18 -
--------- ---------
Net cash provided by (used in) financing activities 13 (5)
--------- ---------
Net increase (decrease) in cash ..................... 1,828 (10,972)
Cash, beginning of period ........................... 22 16,696
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Cash, end of period ................................. $ 1,850 $ 5,724
========= =========
See Notes to Consolidated Financial Statements.
5
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 (in thousands):
March 31, December 31,
2002 2001
--------- ---------
(Unaudited)
Finished goods ........................................ $ 18,932 $ 21,525
Work-in-process ....................................... 26,342 32,415
Raw materials ......................................... 15,639 18,176
Chassis ............................................... 6,409 13,269
--------- ---------
$ 67,322 $ 85,385
========= =========
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
142, "Goodwill and Other Intangible Assets." SFAS 142, which changes the
accounting for goodwill from an amortization method to an impairment-only
approach, is effective for fiscal years beginning after December 15, 2001. The
Company has begun a preliminary review of goodwill to determine the impact that
adoption of this Standard will have on its consolidated financial statements.
Such a determination will be made within the six months permitted by the FASB.
However, beginning January 1, 2002, and in accordance with the Standard, the
Company discontinued goodwill amortization which results in the reduction of
approximately $413,000 of operating expenses per year.
If the Company had adopted SFAS 142 effective January 1, 2001, net loss,
basic loss per share and diluted loss per share would have been as follows:
6
Three Months Ended
March 31,
(in thousands)
----------------------
2002 2001
--------- ---------
Reported net loss ..................................... $ (3,316) $ (1,895)
Add back: goodwill amortization, net of tax effect .... - 63
--------- ---------
Adjusted net loss ..................................... $ (3,316) $ (1,832)
========= =========
Basic loss per share:
Reported net loss ..................................... $ (0.34) $ (0.20)
Goodwill amortization ................................. - 0.01
--------- ---------
Adjusted net loss ..................................... $ (0.34) $ (0.19)
========= =========
Diluted loss per share:
Reported net loss ..................................... $ (0.34) $ (0.20)
Goodwill amortization ................................. - 0.01
--------- ---------
Adjusted net loss ..................................... $ (0.34) $ (0.19)
========= =========
NOTE 4 - CREDIT FACILITY
As of March 31, 2002, the Company was in default with certain financial
covenants of its loan agreement with Bank of America National Trust and Savings
Association; however, no amounts were outstanding under this facility. As a
result, Bank of America may restrict the Company from borrowing any funds
available under the facility, and there can be no assurance that the Company
will be able to utilize the facility any longer. The Company is currently
investigating other banks to replace this revolving credit facility which
expires on August 1, 2002.
NOTE 5 - RECOURSE ON DEALER FINANCING
As is customary in the industry, the Company generally agrees with its
dealers' lenders to repurchase any unsold RVs if the dealers become insolvent
within one year of the purchase of such RVs. Although the total contingent
liability under these agreements approximates $101.7 million at March 31, 2002,
the risk of loss is spread over numerous dealers and lenders and is further
reduced by the resale value of the RVs which the Company would be required to
repurchase. Losses under these agreements have been negligible in the past and
management believes that any future losses under such agreements will not have a
significant effect on the consolidated financial position or results of
operations of the Company.
7
NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Disclosure Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q contains 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
Company's dependence on chassis suppliers; potential liabilities under
repurchase agreements; competition; government regulation; warranty claims;
product liability; and dependence on certain dealers and concentration of
dealers in certain regions. Certain risks and uncertainties that could cause
actual results to differ materially from that projected or suggested are set
forth 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.
Liquidity and Capital Resources
At March 31, 2002, the Company had working capital of $63.9 million
compared to $65.5 million at December 31, 2001.
Net cash provided by operating activities was $0.8 million for the three
months ended March 31, 2002 compared to net cash used in operating activities of
$8.0 million for the comparable period last year. The change was due primarily
to an $18.1 million decrease in inventories mostly offset by a $7.6 million
increase in trade receivables, a $4.8 million decrease in accounts payable and a
$3.3 million net loss for the quarter. The increase in trade receivables
reflects the timing of the recent Family Motor Coach Association trade show,
which occurred in late March 2002.
Net cash provided by investing activities was $1.0 million for the three
months ended March 31, 2002 compared to net cash used in investing activities of
$3.0 million for the comparable period last year. The change was due primarily
to the sale of the Company's airplane in February of 2002.
Net cash provided by financing activities was $13,000 for the three months
ended March 31, 2002 compared to net cash used in financing activities of $5,000
for the comparable period last year.
The Company has a revolving credit facility of $9,977,356 with Bank of
America, N.A., of which $5,310,077 is reserved for a letter-of-credit, required
by the State of California, serving as security for NRV's self-insured workers'
compensation program. At March 31, 2002, no amounts were outstanding under this
facility; however, the Company was in default with certain financial covenants
of the loan agreement. As a result, Bank of America may restrict the Company
from borrowing any funds available under the facility, and there can be no
assurance that the Company will be able to utilize the facility any longer. The
Company is currently investigating other banks to replace this revolving credit
facility which expires on August 1, 2002.
The Company believes the combination of internally generated funds and
working capital will be sufficient to meet the Company's planned capital and
operational requirements for at least the next 12 months.
8
Results of Operations
Net sales of $79.3 million for the quarter ended March 31, 2002 represent
an increase of $16.9 million or 27.1% from the same quarter last year,
attributable to an industry-wide rebound in recreational vehicle shipments, the
Company's decision to fulfill a high percentage of the higher-priced diesel
motorhomes and the Company's wholesale market share gain. Wholesale unit
shipments of the Company's motorhomes built on diesel chassis increased 41.9% to
325 units for the first quarter 2002, compared to 229 for the first quarter of
the prior year. Shipments of the Company's gas motorhome products decreased 7.5%
from 213 units for the first quarter 2001 to 197 units for the first quarter
2002. This decline reflects the Company's decision to dedicate additional
manufacturing capacity to fulfilling National RV brand diesel motorhome orders.
Unit sales of the Company's towable products increased 35.8% to 364 units in the
first quarter 2002 from 268 units in the same period in 2001.
Cost of goods sold for the quarter ended March 31, 2002 increased by $19.4
million or 32.2% from the comparable period last year. The increase was
primarily due to the increase in sales. Additionally, model year changeover
costs and inefficiencies stemming from operating at reduced production rates
were the most significant factors leading to a negative gross margin of -0.3%
for the quarter compared to a positive 3.5% for the same period last year. Other
factors which affected gross profits in the first quarter of 2002 included
significant, but declining, discounting on Country Coach products to reduce
excess inventory, the relocation of National RV towables to a new facility, and
the recognition of certain costs related to the discontinuation of the Prevost
bus conversion product line.
Selling expenses for the quarter ended March 31, 2002 increased $0.4
million or 12.8% over the same period last year. As a percentage of net sales,
selling expenses decreased to 4.3%, from 4.9% for the same period last year due
to higher sales over which to spread the fixed selling expenses.
General and administrative expenses for the quarter ended March 31, 2002
decreased $0.5 million or 19.3% from the same period last year. As a percentage
of net sales, general and administrative expenses decreased to 2.4%, from 3.8%
for the same period last year due to personnel reductions and due to higher
sales over which to spread the fixed general and administrative expenses.
Due to the discontinuance of goodwill amortization as required by SFAS 142,
there will no longer be a $0.1 million quarterly amortization expense.
Other income for the quarter ended March 31, 2002 was $0.3 million compared
to $0.2 million for the same period last year. The increase was due primarily to
the gain recognized on the sale of the Company's airplane, partially offset by a
decrease in interest income.
The benefit for income taxes for the quarter ended March 31, 2002 was $2.0
million compared to a benefit of $1.2 million for the same period last year. The
effective tax rate for the quarter ended March 31, 2002 was 37.3% compared to
38.7% for the same period last year.
As a result, the Company had a net loss of $3.3 million for the quarter
ended March 31, 2002, as compared to a net loss of $1.9 million for the same
period last year.
9
NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk
Information about market risks for the three months ended March 31, 2002
does not differ materially from that discussed under Item 7A of the registrant's
Annual Report on Form 10-K for the year ended December 31, 2001.
10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
None.
B. Form 8-K
None.
11
SIGNATURE
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: April 24, 2002 By /s/ MARK D. ANDERSEN
Mark D. Andersen
Chief Financial Officer
(Principal Accounting and
Financial Officer)
12