ABOUT REXHALL
Rexhall Industries is a manufacturer of Class "A" motorhomes entering our
14th year of operation. Manufacturing began in 1986 in a renovated, 18,000
square foot recreational vehicle plant in Pacoima, California. As orders
increased, the Company quickly outgrew its modest facilities and moved to
an 80,000 square foot facility in Saugus, California. In June 1989
management decided to take the Company public, with an initial offering of
1.15 million shares of common stock trading on the NASDAQ Stock exchange. In
1991 Business Week Magazine named Rexhall Industries the "Number One Best
Small Growth Company in America," out of 7,700 publicly traded companies.
These early milestones helped reinforce the philosophy of the Company and it
wasn't long before Rexhall was one of the top manufacturers of Class "A"
motorhomes nationally. In 1994, Rexhall started building its new Corporate
headquarters in Lancaster, California. As part of the City of Lancaster's
redevelopment project, Rexhall was able to acquire 10 acres of land on which
to build a new manufacturing facility and Corporate Headquarters, now
encompassing 120,000 square feet of office and production space.
FINANCIAL HIGHLIGHTS
(In Thousands)
2000 1999 1998 1997 1996
SALES $65,175 $84,739 $72,254 $63,012 $64,959
GROSS PROFIT 10,512 15,080 12,940 7,091 8,792
INCOME (LOSS) BEFORE TAXES 3,657 8,859 5,864 (2,912) 2,131
NET INCOME (LOSS) 2,273 5,302 3,390 (1,835) 1,284
WORKING CAPITAL 16,689 16,289 10,769 7,320 9,483
TOTAL ASSETS $39,609 $36,162 $28,449 $23,156 $23,460
SHAREHOLDER'S EQUITY $22,362 $20,272 $14,970 $11,444 $13,545
EARNINGS (LOSS)
PER SHARE $ .73 $ 1.68 $ 1.08 ($ .61) $ .41
WEIGHTED AVERAGE SHARES
OUTSTANDING (DILUTED) 3,116,000 3,161,000 3,140,000 3,032,000 3,148,000
Dear Fellow Shareholders:
2000 was a challenging and disappointing year for Rexhall, as the poor RV
industry fundamentals of weakened consumer confidence, a tightening of credit,
and comparatively high interest rates and fuel costs contributed to the first
industry-wide downturn in years for Class A motorhomes. (The industry
actually sold fewer motorhomes in 2000 than it did in 1998.)
Consumer confidence started to wane in the spring of 2000 as the NASDAQ and
later the NYSE started their downward spirals. This created an overstocking
of inventory on retail dealers' lots, which contributed to the tightening of
credit and dealer insolvency. Ultimately, three major retail flooring lenders
exited the industry.
Rexhall was not spared any of these difficulties as our largest dealer filed
for reorganization bankruptcy during the first quarter of 2000. While we
were only contractually obligated to repurchase $1.2 million of the bankrupt
dealer's inventory, we elected to repurchase all of the $4.2 million in
inventory in order to keep the units from being dumped on the market and
hurting our dealer network. Rexhall reacted to this event by establishing our
own retail dealership in Arizona, Price One RV. While having our own retail
operation presents several exciting opportunities, we are not certain at this
time how long we will stay in this segment due to ever changing market
conditions and government regulations.
As stated earlier, the final results of 2000 were disappointing to us,
especially when compared to our record year of 1999. However, when 2000 is
compared to 1997 and 1996, both of which had similar sales levels to 2000, the
progress we have made in reducing our operating costs becomes more apparent.
For that, I would like to thank our dedicated and innovative employees for
helping us to be profitable during a very challenging time.
Looking to the future, we are still very bullish about the demographics for
our industry (i.e., the baby boomer generation aging into the target market)
and Rexhall's ability to maintain its reputation for innovative, quality
products. To that end, we completed an investment in 1.7 acres in Acton, CA,
which is about 25 miles from our Lancaster facility. This site already has an
18,000-sq. ft. partially constructed building on it. After we finish
completing this building, part of it will become our off-site Research &
Development center. Without an off-site Research & Development center, we are
concerned that the innovations our employees and customers develop might get
lost or, at least, delayed by the day-to-day activities at Lancaster. In
order to continue our innovation leadership, we cannot afford for this to
happen.
Also, we recently strengthened our management team with the addition of
Michael Bourne as our Executive Vice President and Chief Operating Officer.
Michael's business experience and inherent leadership skills will help Rexhall
become more efficient and provide a strong foundation for our future growth.
Michael will be handling the day-to-day activities of running Rexhall, which
will allow me to spend more time focusing on our growth and product
development.
Finally, it appears that 2001 will be at least as challenging as 2000 due to
the same poor industry fundamentals, but we look forward to being more
successful in overcoming these challenges and positioning Rexhall for rapid
growth once the economic conditions become more favorable.
On behalf of the board of directors, I would like to thank you for your
commitment to Rexhall Industries, Inc. I look forward to sharing our future
successes with you.
Sincerely,
/s/William J. Rex
President & Chief Executive Officer
OUR MOTORHOMES
The Company's motorhomes are built with attention to quality. The
materials used by the Company in constructing its motorhomes are commonly
found on more expensive models and, in the opinion of management, generally
are superior to those found on motorhomes in the same price range as the
Company's motorhomes. The Company uses only steel, as opposed to wood or
aluminum, in framing its cage. The Company uses gel coated, high gloss,
one-piece fiberglass panel for the sidewalls, front cap, rear cap and roof,
giving the look of a more expensive motorhome and eliminating many of the
seams commonly found in most motorhomes. Additionally, fiberglass generally
allows easier repair of collision marks and scrapes as opposed to aluminum,
the other material commonly used in sidewall construction. For insulation,
the Company uses polyurethane foam and polystyrene.
The Company's motorhomes are also built with attention to aerodynamics.
Each motorhome has a streamlined bus-front cap that tapers to a width broader
at the junction with the sidewalls than at the leading edge of the nose. That
styling, coupled with rounded corners throughout the coach, permits a smoother
ride, particularly in high winds or when the motorhome is passed by large
trucks and trailers.
The Company currently offers six lines of Class A motorhomes. The
product lines are Aerbus, Rexair, RoseAir, Vision, Anthem and American
Clipper.
The Company's Class A line offers many models and floor plans with
multiple decors. These various models come with the following chassis and
engine types (See Item 1. Raw Materials and Chassis.):
- Ford F-53 chassis with a V-10 electronically fuel injected engine
- Workhorse chassis with the 290 H.P. Vortec engine
- Spartan Mountain Master chassis with a 300, 315 or 330 H.P.
diesel engine
- Spartan Summit chassis with a 260 H.P. diesel engine
Models range in size from an overall length of approximately 23 feet to
approximately 39 feet with wheelbase ranging from 158 inches to 252 inches.
All models have an overall maximum width of eight and one half feet (102"
widebody) with a height (with air conditioner) of just over eleven feet.
In addition to size of chassis, Rexair, Aerbus, RoseAir, Vision, Anthem
and American Clipper models are differentiated by exterior graphics, floor
plans and sleeping accommodations. Depending on the model, each motorhome is
equipped to sleep four to six adults comfortably. Standard features and
equipment on all Rexhall models include 60 or 100 gallon gas tank (depending
on chassis and model), halogen headlights, dash air conditioning, double door
flush mounted refrigerator/freezer, three burner range with automatic pilot
and optional conventional oven, radial tires, stabilizing air bags, 34,000 or
35,000 B.T.U. furnace, day/night shades and extra large batteries mounted on a
slide-out tray for easy access and service. Additional standard equipment
includes a television, television antenna, AM/FM stereo radio with cassette
player, auxiliary power generators, microwave oven, roof air conditioners, and
video cassette recorder. Optional equipment includes leak detector for
propane, back up camera, washer and dryer, hydraulic leveling jacks, electric
and heated mirrors, 50 AMP service, ice maker and power entry step for easier
entry into the motorhome. Some models may vary in standard equipment.
Suggested retail prices of Aerbus, Rexair, or RoseAir models with
standard equipment range from $75,000 to $148,000 and fully equipped with
available options from $82,000 to $175,000. Suggested retail prices for the
Vision and American Clipper models (entry level) with standard equipment range
from approximately $70,000 to $88,000 (add $3,000 with available options).
Anthem diesel models range from $99,000 to $105,000 with standard equipment,
and with available options from $110,000 to $130,000. In 2000, the Company
introduced two new entry level diesel products, the American Clipper ES and
the Vision ES diesel pushers. The initial marketing strategy dictated an MSRP
of $89,965 with no optional equipment available.
OUR COMPANY FACILITIES
In December 1995, the Company completed construction and moved into a
87,000 square foot manufacturing facility in Lancaster, California which
serves as both a manufacturing facility and the Company's Corporate
Headquarters. The facility was designed by management to insure efficiency
and to specifically position the company with the opportunity to meet
increased production demands. In September 1996, expansion construction
began at the Lancaster site. The new addition, completed in the fourth
quarter of 1997, provided an additional 19,320 square feet of production
space. The Lancaster manufacturing plant is debt free with no mortgages on
the facility. With minor additions completed in 2000, the total square
footage is now near 120,000 square feet.
Until December 17, 1999, the Company owned a 97,000 square foot
production facility on 12 acres in Elkhart, Indiana. The Elkhart facility
was debt free with no mortgages on the property. The production facility was
used to manufacture motorhomes until December 30, 1997 when the company
decided to cease production at the Elkhart facility. As a result of this
decision to restructure its operations, the Company recorded a charge to
operations of $1,042,000 in 1997. The company retained its wholesale
motorhome sales, warranty and service operations at the location throughout
1998. The Company sold the Indiana facility to a third party on December
17, 1999 and recorded a gain of $573,000.
In September 1995, the Company purchased a 4.5 acre site located in
Lancaster, California to serve as the Company's RV Service Center. The site
contains a 40,000 square foot facility and was purchased from the City of
Lancaster's Redevelopment Agency for $980,000. At December 31, 2000, the
Company was indebted to the City of Lancaster Redevelopment Agency for an
amount of $738,000 with interest at 5.93% per annum due through October
2015. Since December 1997, the Company has leased a portion of the facility
to a third party, which the lessee is a major RV retail dealer.
In September 1996, the Company purchased a 4,500 square foot facility
located one mile east of Elkhart, Indiana. The facility has 1,500 sq. ft. of
office space and a 3,500 sq. ft. warehouse area. At December 31, 2000, this
property is available for sale.
Rexhall Industries, Inc. has entered into a tentative agreement with the
City of Lancaster to acquire 14 acres adjacent to its headquarters in
Lancaster, CA. The agreement will require Rexhall to provide jobs in the
Lancaster Enterprise Zone in exchange for the property and tax credits. If
Rexhall does not fulfill all covenants of the agreement by January 31, 2012,
at that time, Rexhall will be required to pay $613,453, which is less than
the present market value. The purchase agreement is expected to be finalized
in fiscal 2001 at which point the company plans to manufacture its own chassis
and rear engine diesel motorhomes.
In July 2000, the Company purchased approximately 4 acres in Mesa,
Arizona to serve as a site for Price I, Inc. dba, Price One RV, which is a
wholly owned subsidiary of the Company. The Company paid $809,000 for the
land and a partially constructed commercial building located on the property.
Another $410,000 was spent by the Company to ready the site for the retail
sale and service of motorhomes.
In December 2000, the Company and Mr. William J. Rex, President & CEO,
purchased 1.7 acres in Acton, CA for $401,000. The Company and Mr. Rex each
paid 50% of the purchase price and will share equally in the construction of
a building on the property. The Company plans on using its half of the land
and building as an off-site prototype shop, while Mr. Rex intends to use his
half for personal endeavors outside the Company's scope of business.
The Company believes its facilities are adequate to meet its foreseeable
needs.
MARKET INFORMATION.
The Company's Common Stock has traded in the over-the-counter market
since June 22, 1989 and sales and other information are reported in the
NASDAQ National Market System. The Company's NASDAQ symbol is "REXL". The
following table sets forth the range of high and low closing sale prices of a
share of the Company's Common Stock in the over-the-counter market for each
quarter since the first quarter of 1998 according to NASDAQ:
2000 High Low
First Quarter $10.38 $ 7.75
Second Quarter 9.13 5.06
Third Quarter 5.44 4.28
Fourth Quarter 6.00 4.25
1999 High Low
First Quarter $ 9.17 $ 7.62
Second Quarter 12.26 7.50
Third Quarter 12.62 9.50
Fourth Quarter 11.75 8.38
1998 High Low
First Quarter $ 5.19 $ 4.53
Second Quarter 7.63 4.44
Third Quarter 9.38 5.13
Fourth Quarter 9.00 4.75
Holders
At March 29, 2001, the Company had 62 shareholders of record.
The following table sets forth, for each of the three years indicated,
the percentage of revenues represented by certain items on the Company's
Statements of Operations:
Percentage of Net Revenues
Year Ended December 31,
2000 1999 1998
Net Revenues 100.0% 100.0% 100.0%
Costs of goods sold 83.9 82.2 82.1
Gross profit 16.1 17.8 17.9
Selling, general, and
administrative expenses 10.4 9.0 10.4
Restructuring charge --- --- (0.4)
Income from operations 5.7 8.8 7.9
Legal Settlement --- 0.7 ---
Other Income, net 0.1 0.2 0.2
Gain on sale of fixed assets --- 0.7 ---
Income before income taxes 5.6 10.4 8.1
Income tax expense 2.1 4.1 3.4
Net income 3.5% 6.3% 4.7%
MANAGEMENT DISCUSSION AND ANALYSIS
Overview
The following discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein. As is
generally the case in the recreational vehicle industry, various factors can
influence sales. These factors include demographics, changes in interest
rates, competition, restrictions on the availability of financing for the
purchase of recreational vehicles, as well as significant changes in the
availability and price of gasoline. The Company's business is also seasonal
in that normally the majority of sales occur in the second and third quarter.
Prior to 1998, the Company operated two manufacturing divisions,
Lancaster, California and Elkhart, Indiana. During 1997, the Company's Board
of directors adopted a formal plan of restructuring whereby the Company
implemented a plan to cease production operations at its Elkhart, Indiana
manufacturing plant and potentially sell all or part of the real estate the
facility occupied. This decision was based upon the Company's evaluation of
costs and the product quality of the recreational vehicles being produced in
Elkhart. Concurrent with this decision, the Company completed an expansion of
its Lancaster facility to accommodate the expected rise in production.
Throughout 1998 the Company retained its wholesale motorhome sales, warranty
and service operations at the Indiana production facility. In December 1999,
the Company sold the Indiana facility.
Two key transactions adversely impacted the Company's results of
operations during 1997. In addition to the aforementioned restructuring
charge for the production closure of the Elkhart facility, the Company reached
a settlement of an existing class action lawsuit against the Company.
Pursuant to the settlement, the Company was required to pay $825,000, plus
issue coupons to all members of the class for a discount of $200 on future
repairs or $1,250 towards the purchase of a new Rexhall vehicle. The Company
reported the impact from these transactions as charges in the accompanying
statement of operations aggregating $1,042,000 for the restructuring and
$1,590,000 for the lawsuit settlement during 1997. During 1998, the Company's
restructuring effort was completed and $282,000 of the restructuring charge
was reversed. In the fourth quarter of 1999, $604,000 of the legal
settlement was reversed as a result of less than expected coupon redemptions.
To counter the short-term and long-term effects of the bankruptcy of the
Company's largest dealer in 2000, the Company established it's own retail
operations in Mesa, Arizona, Price I, Inc. dba, Price One, RV. Under the
terms of the repurchase agreements with the bankrupt dealer's lenders, while
the Company was only obligated to repurchase $1.2 million of motorhomes, they
elected to repurchase $4.2 million in order to keep this inventory from being
dumped on the market at substantially lower prices. As of December 31, 2000,
the Company had resold $2.7 million of the repurchased inventory. The retail
operations at Price One, RV did not begin in earnest until October of 2000,
but Management expects this to become a profitable venture for the Company.
However, it is not certain how long the Company will maintain its retail
operations due to ever changing market conditions and government regulations.
Result of Operations
Comparison of the Year Ended December 31, 2000 to Year Ended December
31, 1999
Net revenues for the year ended December 31, 2000, were $65.2 million,
compared to $84.7 million for 1999, a decrease of $19.5 million or 23.0%. The
number of units shipped, net of repurchased units, in 2000 decreased 388 to
861 in 2000 from 1,249 in 1999, a decrease of 31.1%. The average net selling
price increased approximately 12% during the period due to a higher mix of
diesel units and units with double slides.
The decline in net revenues is primarily attributable to the first down
market in years for Class "A" motorhomes and the bankruptcy of the Company's
largest dealer. Management believes the driver of the overall down turn in
the market is declining consumer confidence since the stock market started
dropping in March of 2000. This triggered a domino effect that led to a
tightening of credit for retail dealers and consumers. Management cannot
determine when these conditions will improve.
Gross profit for the year ended December 31, 2000 decreased to $10.5
million from $15.1 million for 1999, a decrease of $4.6 million or 30.5%. The
gross margin for 2000 was 16.1% as compared to 17.8% for 1999. The decrease
in sales created a smaller absorption base for manufacturing overhead, which
was the primary driver behind the decrease in gross margin. Manufacturing
overhead includes costs such as depreciation, indirect labor, shop supplies,
utilities, insurance, etc. The nature of these costs is less variable than
materials and labor, so overhead absorption suffers in periods of quickly
declining base. Management believes that prudent steps were taken to reduce
these costs as market conditions dictated, and this small decline in gross
margin compares favorably to the rest of the industry.
Selling, general and administrative expenses (SG&A) for the year ended
December 31, 2000 were $6.8 million, compared to $7.6 million for 1999, a
decrease of $0.8 million or 10.5%. This reduction was primarily attributed to
lower warranty costs and management's quick reaction to market conditions by
holding these costs down. Despite those actions, the 23% reduction in sales
caused SG&A to increase as a percent of net revenues from 9.0% in 1999 to
10.4% in 2000.
The Company's effective income tax rate was 37.8% for the year ended
December 31, 2000 as compared with 40.2% for 1999. Basic and diluted net
income per share was $.73 and $.73 respectively, for the year ended December
31, 2000, as compared to basic and diluted net income per share of $1.68 and
$1.68, respectively, in 1999. The decrease in basic and diluted net income
per share was due to decreased net revenues and the effects of the legal
settlement and gain on sale of fixed assets during 1999, which were not a
source of income in 2000.
Comparison of Year Ended December 31, 1999 to Year Ended December 31, 1998
Net revenues for the year ended December 31, 1999, were $84.7 million,
compared to $72.3 million for 1998, an increase of $12.4 million or 17.3%.
The number of units shipped in 1999 increased 127 to 1,249 in 1999 from 1,122
in 1998, an increase of 11.3%. The average net selling price increased
approximately 5% during the period. The increase in average per unit selling
price results from a 75% increase in diesel model sales over the prior year
and continued increases in double slide unit sales (50%). The increases in
these higher priced models were complimented by the strong demand for
Rexhall's lower priced Vision and American Clipper models, whose sales
increased by 30% over 1998 sales.
Gross profit for the year ended December 31, 1999 increased to $15.1
million from $12.9 million for 1998, an increase of $2.2 million or 17.1%.
The gross margin for 1999 was 17.8% as compared to 17.9% for 1998. The
increase in gross profit remained steady as the Company was able to hold most
material costs stable and pass on the few increases that were necessary.
While there was no material change in production labor cost, the introduction
of the millennium edition motorhome in late 1999 resulted in a temporary
increase in direct labor costs.
Selling, general and administrative expenses (SG&A) for the year ended
December 31, 1999 were $7.6 million, compared to $7.5 million for 1998.
Overall, SG&A expense remained relatively unchanged from the prior year.
Within this cost category several areas of cost increased in conjunction with
sales but were offset by other reductions in cost. The decrease in selling,
general and administrative expenses as a percentage of net revenues from
10.4% in 1998 to 9.0% in 1999 results from the increased sales level while
maintaining the level of administrative spending.
At December 31, 1999, the Company's most significant obligations under
the Masterjohn legal settlement had been completed. As a result of the less
than expected coupon redemptions, the Company re-evaluated the required legal
settlement reserve resulting in the reversal of $604,000. The remaining
$125,000 represents the estimated utilization of $1,250 coupons for new
motorhome purchases.
On December 17, 1999, the Company sold its Indiana manufacturing
facility. The sale resulted in a pre-tax gain of $573,000 for the year ended
December 31, 1999. The Company halted production at the 97,000 square foot
Indiana factory in 1999 as it consolidated its operations in California.
The Company's effective income tax rate was 40.2% for the year ended
December 31, 1999 as compared with 42.2% for 1998. Basic and diluted net
income per share was $1.68 and $1.68 respectively, for the year ended
December 31, 1999, as compared to basic and diluted net income per share of
$1.09 and $1.08, respectively, in 1998. The increase in basic and diluted
net income per share was due to increased sales and decreased SG&A costs as a
percentage of net revenues as well as the effects of the legal settlement and
gain on sale of fixed assets during 1999 which were not expenses in 1998.
Liquidity and Capital Resources
The Company has relied primarily on internally generated funds, trade
credit and debt to finance its operations and expansions. As of December 31,
2000, the Company had working capital of $16,689,000, compared to $16,289,000
at December 31, 1999, a $400,000 increase in working capital. Significant
working capital increases are reflected in a $4,142,000 decrease in accounts
payable partially offset by a $1,104,000 decrease in accounts receivable, and
a decrease of $2,903,000 in cash.
Capital expenditures during 2000 were $1,910,000. Management anticipates
a lower level of capital expenditures in 2001. Cash flows from financing
activities consisted primarily of the repurchase and retirement of stock on
the open market of $547,000. Management will continue to repurchase and
retire stock during 2001.
As of December 31, 2000 the Company has a $3,500,000 line of credit with
a bank which can be used for working capital purposes secured by equipment,
inventory, and receivables. The line of credit expires July 1, 2001. Under
this line of credit, $283,000 has been set aside as an irrevocable standby
letter of credit for the Company to meet the requirements for self-insurance
established by the Department of Industrial Relations which regulates
workmen's compensation insurance in California. At December 31, 2000, no
amounts were outstanding under the line of credit agreement. The line of
credit contains various covenants. The Company was in compliance with such
covenants at December 31, 2000.
The Company has a line of credit with a chassis vendor, Ford Motor
Credit Company ("FMCC"), with a $8,000,000 limit. Borrowings under the line
bear interest at an annual rate of prime plus 1% (10.5% at December 31, 2000).
All borrowings are secured by the Ford merchandise. The outstanding balances
included in accounts payable at December 31, 2000 and 1999 were $3,555,000
and $7,145,000 respectively.
The Company's has a line of credit with a financial institution for
financing purchases of inventory for its retail operations. The line of
credit has a limit of $7,500,000 and borrowings under the line bear interest
at an annual rate of prime plus 5% (10% at December 31, 2000). All
borrowings are secured by inventory held by the Company's retail operations.
The balance outstanding at December 31, 2000 was $6,605,000.
The Company anticipates that it will be able to satisfy its ongoing cash
requirements through 2001, including payments related to the expansion plans
at the California facility, primarily with cash flows from operations,
supplemented, if necessary, by borrowings under its revolving credit
agreement.
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Rexhall Industries, Inc.
We have audited the accompanying consolidated balance sheets of Rexhall
Industries, Inc. and subsidiary as of December 31, 2000 and 1999, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 2000.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Rexhall
Industries, Inc. and subsidiary as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America.
/s/ KPMG LLP
Los Angeles, California
March 7, 2001
REXHALL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
ASSETS 2000 1999
CURRENT ASSETS
Cash $ 3,427,000 $ 6,330,000
Accounts receivables, less allowance
for doubtful accounts $100,000 in 2000,
and $50,000 in 1999 5,832,000 6,936,000
Income Tax Receivable 281,000 ---
Inventories 22,475,000 16,504,000
Deferred income taxes (note 6) 821,000 1,133,000
Other current assets 340,000 341,000
Total Current Assets 33,176,000 31,244,000
Property and equipment at cost net of
accumulated depreciation (note 2) 6,152,000 4,753,000
Property held for sale (note 11) 127,000 131,000
Other assets 154,000 34,000
TOTAL ASSETS $ 39,609,000 $ 36,162,000
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable (note 3) $ 6,773,000 $ 10,915,000
Notes payable and current portion
of long-term debt (note 5) 6,638,000 31,000
Warranty allowance 837,000 1,000,000
Accrued Legal (note 8) 445,000 737,000
Dealer Incentives 732,000 1,050,000
Other accrued liabilities 691,000 497,000
Accrued Compensation and Benefits 371,000 725,000
TOTAL CURRENT LIABILITIES 16,487,000 14,955,000
Deferred income taxes (note 6) 55,000 198,000
Long-Term debt, less current
of portion (note 5) 705,000 737,000
TOTAL LIABILITIES 17,247,000 15,890,000
SHAREHOLDERS' EQUITY
Preferred Stock - no par value
Authorized, 1,000,000 shares;
No shares outstanding at December 31, 1999
and December 31, 2000 --- ---
Common stock-no par value,
Authorized, 10,000,000 shares,
issued and outstanding;
3,057,000 at December 31, 2000 and
3,161,000 at 1999 (Note 9) 6,241,000 6,788,000
Loan receivable from exercise
of options (Note 4) (57,000) (421,000)
Retained earnings 16,178,000 13,905,000
TOTAL SHAREHOLDERS' EQUITY 22,362,000 20,272,000
Commitments and Contingencies (Note 3 and 7)
TOTAL LIABILITIES AND SHAREHOLDER EQUITY $ 39,609,000 $ 36,162,00
See accompanying notes to financial statements
REXHALL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998
2000 1999 1998
Net Revenues (Note 10) $ 65,175,000 $ 84,739,000 $72,254,000
Cost of Sales 54,663,000 69,659,000 59,314,000
Gross Profit 10,512,000 15,080,000 12,940,000
Operating Expenses:
Selling, General and
Administrative Expenses 6,785,000 7,597,000 7,549,000
Restructuring Charge --- --- (282,000)
Income from Operations 3,727,000 7,483,000 5,673,000
Other Income, net
Interest Income 265,000 256,000 157,000
Interest Expense (521,000) (208,000) (101,000)
Legal Settlement --- 604,000 ---
Other Income (Expense), net 186,000 151,000 135,000
Gain on Sale of Fixed Assets --- 573,000 ---
Income Before Income Taxes 3,657,000 8,859,000 5,864,000
Income Tax Expense (Note 6) 1,384,000 3,557,000 2,474,000
Net Income $ 2,273,000 $ 5,302,000 $ 3,390,000
Basic Net Income Per Share $ .73 $ 1.68 $ 1.09
Diluted Net Income Per Share $ .73 $ 1.68 $ 1.08
Weighted Average Shares Outstanding - Basic
3,116,000 3,161,000 3,118,000
Weighted Average Shares Outstanding - Diluted
3,116,000 3,161,000 3,140,000
See accompanying notes to financial statements
REXHALL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 and 2000
COMMON STOCK LOAN RETAINED
SHARES AMOUNT RECEIVABLE EARNINGS TOTAL
BALANCE,
December 31, 1997 2,714,000 6,267,000 (36,000) 5,213,000 11,444,000
Repurchase and
Retirement of Stock (7,000) (63,000) --- --- (63,000)
Exercise of
Stock options 161,000 584,000 --- --- 584,000
5% Stock Dividend 142,000 --- --- --- ---
Loans receivable
from exercise of
Stock options --- --- (385,000) --- (385,000)
Net Income --- --- --- 3,390,000 3,390,000
BALANCE,
December 31, 1998 3,010,000 $6,788,000 ($421,000) $8,603,000 $14,970,000
5% Stock Dividend 151,000 --- --- --- ---
Net Income --- --- --- 5,302,000 5,302,000
BALANCE,
December 31, 1999 3,161,000 $6,788,000 ($421,000) $13,905,000 $20,272,000
Repurchase and
Retirement of Stock (104,000) (547,000) --- --- (547,000)
Repayment of loan receivable
related to stock options --- --- 364,000 --- 364,000
Net Income --- --- --- 2,273,000 2,273,000
BALANCE,
December 31, 2000 3,057,000 $6,241,000 (57,000) $16,178,000 $22,362,000
See accompanying notes to financial statements
REXHALL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,273,000 $ 5,302,000 $ 3,390,000
Adjustments to reconcile net income
to net cash provided by
Operating Activities:
Depreciation and amortization 364,000 368,000 344,000
Gain on sale of property, plant
and equipment --- (573,000) ---
Provision for deferred income taxes 169,000 (85,000) 1,311,000
(Increase) decrease in:
Accounts receivable 1,104,000 (2,341,000) 747,000
Inventories 634,000 (3,730,000) (3,335,000)
Income tax
receivable (281,000) --- 337,000
Increase(decrease) in:
Accounts payable (4,142,000) 2,957,000 1,846,000
Restructuring Reserve --- --- (605,000)
Warranty allowance (163,000) 34,000 29,000
Accrued legal (292,000) (857,000) (344,000)
Dealer incentives (318,000) 220,000 221,000
Other assets and liabilities 348,000 (300,000) 639,000
Net cash provided by operating
activities (304,000) 995,000 4,580,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (1,759,000) (643,000) (482,000)
Proceeds from sale of property
and equipment --- 1,024,000 ---
Issuance of notes receivable (151,000) --- ---
Net cash provided by (used in)
investing activities (1,910,000) 381,000 (482,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (30,000) (28,000) (28,000)
Repayments on short-term notes (127,000) (35,000) ---
Proceeds from exercise of
stock options 15,000 --- 199,000
Repurchase and retirement of stock (547,000) --- (63,000)
Net cash provided by (used in)
financing activities (689,000) (63,000) 108,000
NET (DECREASE) INCREASE IN CASH (2,903,000) 1,313,000 4,206,000
BEGINNING CASH BALANCE 6,330,000 5,017,000 811,000
ENDING CASH BALANCE $ 3,427,000 $ 6,330,000 $ 5,017,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid
during the year $ 1,370,000 $ 4,056,000 $ 1,090,000
Interest paid during the year $ 283,000 $ 183,000 $ 101,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Loans to related parties for
stock option exercise $ --- $ --- $ 385,000
Repayment of Loan receivable
through cancellation of bonus
liability $ 349,000 --- ---
Notes payable for
insurance policies $ 223,000 --- ---
Inventory purchases on
vehicle credit facility $ 6,605,000 $ --- $ ---
See accompanying notes to financial statements
REXHALL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities - Rexhall Industries, Inc. and subsidiary (the "Company")
is engaged in designing, manufacturing and selling Class A motorhomes. Class
A motorhomes are self-contained and self-powered recreational vehicles used
primarily in conjunction with leisure travel and outdoor activities. The
Company's wholly owned subsidiary, Price I, Inc. dba Price One RV, is a
retailer of Class A motorhomes.
Principles of Consolidation - The consolidated financial statements include
the financial statements of Rexhall Industries, Inc. and our wholly-owned
subsidiary. All significant intercompany balances and transactions have been
eliminated in consolidation.
Concentration of Credit Risk - Sales are usually made to dealers over a wide
geographic area on either a C.O.D. basis or on terms requiring payment within
ten days or less of the dealer's receipt of the unit. Most dealers have floor
plan financing arrangements with banks or other financing institutions under
which the lender advances all, or substantially all, of the purchase price of
the motorhome. The loan is collateralized by a lien on the purchased
motorhome. As is customary in the industry, the Company has entered into
repurchase agreements with these lenders. In general, the repurchase
agreements provide that in the event of default by the dealer on its agreement
to the lending institution, the Company will repurchase the motorhome so
financed.
The Company has recorded an allowance for doubtful accounts to cover the
difference between recorded revenues and collections from customers. The
allowance for bad debts is adjusted periodically based upon the Company's
evaluation of historical collection experiences, industry trends and other
relevant factors.
Inventories - Inventories are stated at the lower of cost or market value,
determined using the first-in, first-out basis, or market. Costs include
material, labor and applicable manufacturing overhead. Inventories consist of
the following at December 31, 2000 and 1999:
2000 1999
Raw materials $ 6,561,000 $11,341,000
Work-in-Progress 1,810,000 2,485,000
Finished Goods 14,104,000 2,678,000
Total $22,475,000 $16,504,000
Depreciation and Amortization - Depreciation and amortization are computed
based on the straight-line method over the estimated useful lives of the
assets, which range from 3 to 31.5 years.
Property held for sale is stated at the lower of cost or fair value less
selling expenses and includes certain property and equipment no longer used
in the Company's operation.
Revenue Recognition - The Company derives revenue primarily from the sale of
motorhomes to dealers across the United States. Revenue is recognized when
title of the motorhome transfers to the dealer. This generally occurs upon
shipment. Revenue from the Company's retail operations are recognized when
merchandise is received by the customer. Revenues are shown net of
repurchases. Revenues are also generated from the service of motorhomes and
from shipment or installation of parts and accessories.
Warranty Reserve Policy - The Company provides retail purchasers of its
motorhomes with a limited warranty against defects in materials and
workmanship for 12 months or 12,000 miles measured from date of purchase, or
upon the transfer of the vehicle by the original owner, whichever occurs
first. The Company's warranty excludes certain specified components,
including chassis, engines and power train, and appliances, which are
warranted separately by the suppliers. The Company estimates warranty
reserves required by applying historical experience with regard to
probabilities of failure and cost to product sales covered by warranty terms.
Warranty expense was $900,000, $1,386,000 and $1,041,000 for the years ended
December 31, 2000, 1999, and 1998, respectively.
Income Taxes - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.
Earnings per Share - Basic earnings per share represents net earning divided
by the weighted average number of common shares outstanding during the
period. Diluted earnings per share represents net earnings divided by the
weighted average number of shares outstanding, inclusive of the dilutive
impact of common stock options, provided their impact is not anti-dilutive.
See note 12.
Use of Estimates -The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions relating to 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 these estimates.
Segment Information - The Company's reportable business segments are
manufacturing and retail operations. Management evaluates segment
performance based primarily on revenue and net income (loss).
Accounting for Stock Options - In October, 1995, Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensations ("SFAS
No. 123"), was issued. This statement encourages, but does not require, a
fair value based method of accounting for employee stock options. The
Company will continue to measure compensation costs under Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and
comply with the pro forma disclosure requirements of SFAS No. 123 in its
annual financial statements.
Fair Values of Financial Instruments - The following methods and assumptions
were used to estimate the fair value of each class of financial instruments
for which it is practicable to estimate that value:
Cash, trade and other receivables, trade accounts payable, notes payable and
accrued expenses: The carrying amounts approximate the fair values of these
instruments due to their short-term nature.
Long-Term Debt: The fair value of the Company's long-term debt approximates
the current book value based on estimated quotations made on long-term debt
facilities with similar quality and terms.
Reclassifications - Certain reclassifications have been made to the 1999 and
1998 financial statements to conform to the 2000 presentation.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 2000 and 1999:
Useful Lives
(In years) 2000 1999
Building and Land 5, 31.5 5,910,000 4,381,000
Furniture, fixtures and equipment 3-7 1,667,000 1,490,000
Autos and trucks 3-7 375,000 322,000
7,952,000 6,193,000
Less accumulated depreciation
and amortization 1,800,000 1,440,000
Property and equipment, net $6,152,000 $4,753,000
3. LINES OF CREDIT
The Company has available a $3,500,000 revolving line of credit with a bank
expiring on July 1, 2001 secured by equipment, inventory, and receivables.
The reference rate is the rate of interest publicly announced from time to
time by the bank in San Francisco. At December 31, 2000, no amounts were
outstanding under this line and $283,000 of standby letters of credit have
been issued. All borrowings are collateralized by the Company's assets.
The Company has a line of credit with a chassis vendor, Ford Motor Credit
Company ("FMCC"), with a $8,000,000 limit. Borrowings under the line bear
interest at an annual rate of prime plus 1% (10.5% at December 31, 2000).
All borrowings are secured by the Ford merchandise. The outstanding balances
included in accounts payable at December 31, 2000 and 1999 were $3,555,000 and
$7,145,000 respectively.
4. LOANS TO RELATED PARTIES:
From time to time the Company makes loans to certain officers and key
employees related to the exercise of stock options. During 1998, the Company
advanced $385,000 to key employees under the Company's Incentive and
Non-Statutory Stock Option Plan (The Plan) in exchange for the exercise of
123,000 options. These loans are full recourse loans and are secured by the
shares of common stock issued upon such exercise. The notes bear interest at
a rate as defined by Regulation 1.1274-4 of Internal Revenue Code of 1986,
(4.47% at December 31, 2000). Loans extended for the exercise of incentive
stock options are netted against equity. During 2000, an executive of the
company repaid a portion of the outstanding loans and related accrued interest
by foregoing the bonus liability that was due from the Company. The maturity
date of certain notes outstanding are March 20, 2003. No loans for stock
options were made to officers during 2000, and the outstanding balance at
December 31, 2000 was $57,000.
In December 2000, the Company and Mr. William J. Rex, President & CEO,
purchased a partially completed building on 1.7 acres in Acton, CA for
$401,000. The Company and Mr. Rex each contributed 50% of the purchase price
and will share equally in the final construction of the building on the
property. The Company plans on using its half of the land and building as an
off-site prototype shop, while Mr. Rex intends to use his half for personal
endeavors outside the Company's scope of business. The Company paid $151,000
on behalf of Mr. Rex in exchange for a $151,000 note receivable. The note is
secured by the executive's interest in the property.
5. NOTES PAYABLE AND LONG-TERM DEBT
2000 1999
Vehicle inventory credit facility;
secured by the Company's
inventory; interest rates of $10.0%
at December 31, 2000
6,605,000 ---
Promissory note payable to the
City of Lancaster Redevelopment 738,000 768,000
Agency, 240 monthly payments of $6,285 including
principal and interest at 5.93% per annum,
note matures on October 2015.
The note is collateralized by land and building
with a net book value of approximately
$900,000 at December 31, 2000.
Total Notes Payable and Long-Term Debt. $7,343,000 $ 768,000
Less: Current Portion 6,638,000 31,000
Long-Term Portion $ 705,000 $ 737,000
The Company has a credit facility with a financial institution to finance the
purchase of new and used vehicle inventory. The facility provides maximum
borrowing of $7,500,000 of which $6,605,000 was outstanding at December 31,
2000. Borrowings under these facilities are secured by the Company's certain
vehicle inventory which was $7,905,000 at December 31, 2000.
Future annual minimum principal payments due on long-term debt (including
current portion) as of December 31, 2000 are as follows:
Year Ending December 31,
2001 6,638,000
2002 35,000
2003 37,000
2004 39,000
2005 41,000
Thereafter 553,000
$7,343,000
6. INCOME TAXES
The components of income tax expense are as follows:
Years Ended December 31,
2000 1999 1998
Current:
Federal 915,000 $2,884,000 $1,018,000
State 300,000 758,000 145,000
1,215,000 3,642,000 1,163,000
Deferred:
Federal 159,000 (89,000) 950,000
State 10,000 4,000 361,000
169,000 (85,000) 1,311,000
$1,384,000 $3,557,000 $2,474,000
The components of deferred tax assets (liabilities) at December 31, 2000 and
1999 follows
2000 1999
Current:
Allowance for bad debts 40,000 16,000
Inventory reserves and unicap 145,000 88,000
Warranty accrual 332,000 237,00
Dealer incentives --- 195,000
Reserve for self insurance 112,000 133,000
Legal reserves --- 164,000
Other accrued liabilities 97,000 32,000
State tax 95,000 268,000
$ 821,000 $1,133,000
Non Current:
Depreciation (55,000) (198,000)
Net deferred tax assets $ 766,000 $ 935,000
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before income taxes due to
the following:
Years Ended
December 31,
2000 1999 1998
Income before income taxes $ 3,657,000 $ 8,859,000 $5,864,000
Statutory federal tax rate 34% 34% 34%
Expected tax expense 1,243,000 3,012,000 1,994,000
State taxes net of federal effect 205,000 500,000 334,000
Permanent differences 5,000 36,000 6,000
Write off of income tax receivable --- --- 140,000
Other adjustments (69,000) 9,000 ---
Provision for income taxes $ 1,384,000 $ 3,557,000 $ 2,474,000
7. COMMITMENTS AND CONTINGENCIES
Repurchase Agreements - Motorhomes purchased under financing agreements by
dealers are subject to repurchase by the Company under the terms of the
financing, at dealer cost plus unpaid interest in the event of default by the
dealer. During 2000, the Company repurchased approximately $4,190,000 as a
result of its obligations associated with the bankruptcy of its largest
dealer. As of December 31, 2000, the Company had resold $2,690,000 of the
repurchased inventory. Due to favorable negotiated repurchase prices, the
effect on the Company was nominal. Additional obligations to repurchase under
the Company's repurchase agreements amounted to approximately $150,000. At
December 31, 2000 and 1999 approximately $26,700,000 and $34,200,000,
respectively, of dealer inventory is covered by repurchase agreements.
Dealers do not have the contractual right to return motorhomes under any
Rexhall Dealer Agreement. There are also a number of state statutes which
require the repurchasing of motorhomes whenever a dealership is terminated.
Litigation -The Company was sued by Bruce Elworthy and Anne B. Marshall
(Elworthy and Marshall) in June 1995 in the Superior Court of the County of
Los Angeles. The complaint alleged that a leveling system on a motorhome
purchased from Rexhall was defective and caused damages to Elworthy and
Marshall of $1,000,000 for medical expenses, loss of earnings, and pain and
suffering. Rexhall prevailed in its defense with zero dollars being awarded
to the Plaintiffs. The verdict is currently under appeal by the Plaintiffs.
Although the Company believes the final disposition of this matter will not
have a material adverse effect on the Company's financial position or result
of operations, if Elworthy and Marshall were to prevail on its liability
claims, a judgment on appeal in a material amount could be awarded against the
Company.
Other than the above referenced case, the Company is a defendant in
various other legal proceedings resulting from the normal course of business.
In the opinion of company management, the resolution of such matters will not
have a material effect on its financial statements or results of operations.
8. LEGAL SETTLEMENT
Legal Settlement - The class action lawsuit Masterjohn et al vs. Rexhall, et
al, Case No. 752188 filed in the Superior Court of Orange County, California
was settled on October 2, 1998. Under the agreement Rexhall paid $825,000
in cash, and issued one coupon per vehicle owned by members of the class of
$1,250 towards purchase of a new Rexhall vehicle or $200 toward service, parts
and labor. New vehicle coupons expired December 31, 2000 while service, parts
and labor expired December 31, 1999. Coupons were redeemable at Rexhall's
Lancaster, California Service Center, as well as other designated dealerships
geographically dispersed. The total number of vehicles owned by class members
is estimated at approximately 5,000. The Company recorded a charge of
$1,590,000 in 1997 relating to this settlement. During the fourth quarter of
1999, the Company released $604,000 of the settlement reserve due to less than
expected coupon redemption rates. At December 31, 2000, the Company has no
remaining liability under the settlement agreement.
9. STOCK INCENTIVE PLAN
The Company has granted stock options under its Incentive and Nonstatutory
Stock Option Plan (the "Plan"), which provides for the granting of (I)
incentive stock options to key employees, pursuant to Section 422A of the
Internal Revenue Code of 1986, and (ii) nonstatutory stock options to key
employees, directors and consultants to the Company designated by the Board a
eligible under the Plan. Under the Plan, options for up to 225,000 shares may
be granted. Options granted and outstanding under the Plan expire in five
years and become exercisable and vest in annual increments from two to three
years. The maximum term of each option may not exceed 10 years. The
following table summarizes the change in outstanding employee incentive stock
options:
Weighted
Number of Range of Options Average
Options Prices per Share Exercise Price
Outstanding options at
December 31, 1997 123,000 2.75 - 3.25 3.13
Options exercised (123,000) 2.75 - 3.25 3.13
Options canceled --- --- ---
Outstanding options at
December 31, 1998,
1999 and 2000 --- --- ---
All stock options under the Plan are granted at the fair market value of the
Company's common stock at the grant date. No options were granted to
employees during 2000 and 1999 or 1998. The Company applies Accounting
Principles Board Opinion No. 25 and related Interpretations in accounting for
the Plan. Accordingly, no compensation cost for the Plan has been recognized
in 2000, 1999 or 1998.
10. SIGNIFICANT CUSTOMERS
Sohn Corporation operates 3 Southern California locations and accounted for
13.8% of the Company's revenue in 2000. The Company had one major customer,
RV World Productions aka RV Supercenter (five (5) Arizona locations), who
accounted for 16% of the Company's net revenues during 1999. The Company had
two major customers, RV World Productions aka RV Supercenter and Richardson's
RV (five Arizona locations and three Southern California locations,
respectively), who accounted for 14% and 11% respectively of the Company's net
revenues during 1998.
11. PROPERTY HELD FOR SALE
Property held for sale consisted of 12 acres of land in Elkhart, Indiana. A
97,000 square foot building resides on the property which used to house the
Company's East Coast production facility. In fiscal 1997, the Company's Board
of Directors adopted a formal plan of restructuring whereby the Company
implemented a plan to cease production operations at this location. During
1998, the Company continued to operate a wholesale motorhome sales, warranty,
and service operations at this location. During the year-ended December 31,
1998, the Company's Board of Directors approved a plan to sell the Elkhart
property and facility in its entirety.
On December 17, 1999, the Company sold the Elkhart, Indiana manufacturing
facility land and building for total consideration of $966,000, net of
executory costs. The accompanying results of operations for the year ended
December 31, 1999 reflect the sale of such property and the resulting gain on
sale of $573,000, net of executory costs.
At December 31, 2000, the Company's customer service center in Elkhart,
Indiana remained available for sale. The facility has 1500 square feet of
office space and a 3500 square foot warehouse area with a net book value of
$127,000 as of December 31, 2000.
12. INCOME PER SHARE
The following is a reconciliation of the basic and diluted income per share
computation for the year 2000, 1999 and 1998 (in thousands):
Year ended December 31,
2000 1999 1998
Net income used for basic and
diluted income per share $2,273 $5,302 $3,390
Share of Common Stock and
Common Stock equivalents:
Weighted average shares used
in basic computation 3,116 3,161 3,118
Weighted average stock options --- --- 22
Shares used in diluted computation 3,116 3,161 3,140
Income per share:
Basic $ .73 $ 1.68 $ 1.09
Diluted $ .73 $ 1.68 $ 1.08
During the twelve months ended December 31, 2000, the Company repurchased
104,000 common shares on the open market at an average cost of $5.26 per
share.
13. SEGMENT INFORMATION
In accordance with the requirements of SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information," the Company's reportable
business segments and respective accounting policies, policies of the segments
are the same as those described in Note 1. Management evaluates segment
performance based primarily on revenue and net income (loss).
Segment information is summarized as follows (in thousands):
Dec. 31, 2000 Dec. 31,1999 Dec. 31, 1998
Net Revenues:
Manufacturing $ 67,307 $ 84,739 $ 72,254
Retail Operations 1,745 --- ---
Intercompany Elimination (3,877) --- ---
$ 65,175 $ 84,739 $ 72,254
Net Income (Loss):
Manufacturing $ 2,887 $ 5,302 $ 3,390
Retail Operations (139) --- ---
Intercompany Elimination (475) --- ---
$ 2,273 $ 5,302 $ 3,390
Total Assets:
Manufacturing $ 33,311 $ 36,162
Retail Operations 8,095 ---
Intercompany Elimination $ (1,797) $ ---
$ 39,609 $ 36,162
14 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The results of operations for fiscal 2000 and 1999 are as follows:
First Second Third Fourth
IN THOUSANDS, EXCEPT PER SHARE DATA Quarter Quarter Quarter Quarter
FISCAL 2000:
Net Revenues $20,664 $15,090 $12,646 $16,775
Gross Profit 3,303 2,032 2,599 2,578
Income Before Income Taxes 1,655 655 883 464
Net Income 964 360 498 451
Basic and Diluted Net Income
Per Share (1) .31 .11 .16 .15
FISCAL 1999:
Net Revenues $22,233 $20,937 $20,590 $20,979
Gross Profit 4,139 3,666 4,016 3,259
Income Before Income Taxes 2,095 2,094 2,060 2,610
Net Income 1,259 1,248 1,251 1,544
Basic and Diluted Net Income
Per Share (1) .40 .39 .40 .49
(1) Net income per share amounts for each quarter are required to be computed
independently and may not equal the amount computed for the total year.