SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Third Quarter Ended January 31, 1995
Commission File Number 1-9471
CRUISE AMERICA, INC.
State of Florida I.R.S. No. 59-1403609
11 West Hampton Avenue
Mesa, Arizona 85210-5258
Telephone Number: (602) 464-7300
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 twelve (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 ninety (90) days.
YES /X/ NO
Common Stock, $.01 Par Value
As of January 31, 1995, 5,694,159 of registrants common stock
were outstanding of which 4,110,547 were held by non-affiliates
of the registrant.
TABLE OF CONTENTS
CRUISE AMERICA, INC., AND SUBSIDIARIES
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets.....
Condensed Consolidated Statements of
Operations...............................
Condensed Consolidated Statements of
Cash Flows...............................
Notes to Condensed Consolidated Financial
Statements...............................
ITEM 2. Management's Discussion and Analysis of
Consolidated Financial Condition and
Results of Operations.....................
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CRUISE AMERICA, INC., AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
ASSETS
(Unaudited)
1/31/95 4/30/94
--------- -------
Current Assets:
Cash and Cash Equivalents..... $ 2,198 4,261
Accounts Receivable, Net...... 3,716 2,864
Inventories................... 18,292 21,600
Prepaid Expenses and Other
Current Assets............... 1,038 1,051
------ ------
Total Current Assets.......... 25,244 29,776
------ ------
Rental Vehicles.................... 62,047 55,303
Less Accumulated Depreciation. 12,292 8,829
------ ------
Net Rental Vehicles........... 49,755 46,474
Property and Equipment............. 16,752 16,867
Less Accumulated Depreciation. 6,137 5,736
------ ------
Net Property and Equipment.... 10,615 11,131
Deposits and Other Assets.......... 1,946 2,381
------ ------
$ 87,560 89,762
====== ======
See accompanying notes to condensed consolidated financial
statements.
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDER'S EQUITY
(In thousands)
(Unaudited)
1/31/95 4/30/94
---------- --------
Current Liabilities:
Floor Plan Contracts.....................$ 5,650 5,331
Current Installments of Rental Vehicle
Financing............................... 6,483 8,705
Current Installments of Long-Term Debt... 1,670 1,727
Accounts Payable and Accrued Expenses.... 3,256 2,191
Customer Deposits........................ 645 4,368
Income Taxes Payable..................... 25 25
-------- --------
Total Current Liabilities........... 17,729 22,347
-------- --------
Rental Vehicle Financing, Excluding
Current Installments..................... 17,212 16,651
Long-Term Debt,Excluding Current
Installments............................. 26,800 28,432
Deferred Income Taxes.................... 1,024 268
Stockholders' Equity:
Preferred Stock $1.00 par value;
1,000,000 shares authorized,
none issued or outstanding.............. -- --
Common Stock $.01 par value; 15,000,000
shares authorized, 5,694,000 issued
and outstanding at April 30, 1994 and
January 31,1995....................... 57 57
Additional Paid-in Capital............... 24,815 24,815
Retained Earnings........................ 755 (2,093)
Cumulative Translation Adjustment........ (832) (715)
-------- --------
Total Stockholder's Equity............... 24,795 22,064
Commitments and Other Matters............ -- --
-------- --------
$ 87,560 89,762
======== ========
See accompanying notes to condensed consolidated financial
statements.
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands except per share data)
Three Month Ended Nine Month Ended
1/31/95 1/31/94 1/31/95 1/31/94
----------------- ----------------
Rental Revenue.......... $ 2,670 1,904 32,806 37,922
Sales................... 7,655 13,497 38,302 42,244
------ ------ ------ ------
Total Revenue........... 10,325 15,401 71,108 80,166
------ ------ ------ ------
Cost of Rentals......... 2,001 5,749 13,337 21,729
Costs of Sales.......... 6,467 12,159 34,047 38,370
------ ------ ------ ------
Total costs........ 8,468 17,908 47,384 60,099
------ ------ ------ ------
Gross Profit From
Operations............. 1,857 (2,507) 23,724 20,067
Interest Expense........ 1,611 1,070 4,386 3,898
Selling, General &
Administrative
Expenses............... 4,658 4,456 15,734 15,356
------ ------ ------ ------
Earnings (Loss) before
Income Taxes........... (4,412) (8,033) 3,604 813
Income Tax Expense
(Benefit)............... (831) (1,607) 756 162
------ ------ ------ ------
Net Earnings (Loss)..... $ (3,581) (6,426) 2,848 651
------ ------ ------ ------
Earnings (Loss) Per
Share................... $ (.63) (1.13) .50 .12
------ ------ ------ ------
Average Common Shares
Outstanding............ 5,694 5,694 5,694 5,609
------ ------ ------ ------
See accompanying notes to condensed consolidated financial statements.
CRUISE AMERICA, INC., AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(Unaudited)
(In thousands)
Nine Months Ended
-----------------
1/31/95 1/31/94
------- -------
Cash Flows from Operating Activities:
Net Earnings.........................$ 2,848 651
Depreciation and Amortization......... 9,141 9,448
Increase in Deferred Income Taxes.... 756 162
Gain on Sale of Rental Vehicles...... (751) (1,134)
(Increase) in Accounts Receivable.... (852) 1,019
Decrease in Inventories.............. 3,308 2,981
(Decrease) Increase in Accounts
Payable & Accrued Expenses.......... 1,065 49
Gain on Sale of Property and
Equipment........................... (106) (1)
Increase (Decrease) in Floor
Plan Contracts...................... 319 (2,827)
Decrease in Customer Deposits (3,723) (6,171)
One-time Revaluation Charge.......... -- 3,452
Other, Net........................... 149 914
------ ------
12,154 8,543
------ ------
Cash Flows from Financing Activities:
Proceeds from Rental Vehicle
Borrowing........................... 30,435 31,444
Repayment of Rental Vehicle
Borrowing........................... (32,096) (40,622)
Proceeds from Long Term Borrowing.... -- 1,500
Repayment of Long Term Borrowing..... (1,689) (2,788)
Issuance of Stock.................... -- 708
------ ------
(3,350) ( 9,758)
------ ------
Cash Flows from Investing Activities:
Purchase of Rental Vehicles.......... (30,158) (25,934)
Proceeds from Rental Vehicle Sales... 19,183 24,390
Purchase of Property and Equipment... (134) (2,327)
Proceeds from Sale of Property
& Equipment......................... 242 48
------ ------
(10,867) ( 3,823)
------ ------
Increase (Decrease) in Cash
& Cash Equivalents.................. (2,063) (5,038)
Cash & Cash Equivalents at April 30.. 4,261 8,302
------ ------
Cash & Cash Equivalents at
January 31..........................$ 2,198 3,264
------ ------
See accompanying notes to condensed consolidated financial statements.
CRUISE AMERICA, INC., AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Nine Months Ended January 31, 1995
NOTE 1.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all the adjustments (principally consisting of
normal recurring accruals) necessary to present fairly the financial position of
Cruise America, Inc., and Subsidiaries (the Company) as of January 31, 1995, and
the results of operations for the three month and nine month periods ended
January 31, 1994, and 1995.
Certain items in the prior year financial statements have been reclassified
to conform with the current period presentations.
NOTE 2.
Supplemental Disclosures of Cash Flow Information (in thousands):
Nine Months Ended January 31,
-----------------------------
1995 1994
Cash paid during the period for:
Income Taxes 0 0
Interest on Borrowings 4,317 4,233
------ ------
NOTE 3.
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business. In the opinion of management, the
disposition of these matters will not have a material adverse effect on the
financial condition of the Company.
NOTE 4.
During the third quarter ended January 31, 1994, the Company made a
strategic decision to permanently retire a segment of older vehicles from its
rental fleet. This decision was consistent with the Company's ongoing goal to
maintain its position as the industry leader by operating the newest rental
fleet in the industry. In conjunction with this retirement, the Company
transferred vehicles having a net book value of $22,075,000 into sales inventory
and took a one time pre-tax charge of $3,452,000 during the quarter to adjust
the carrying value of the vehicles for quick disposition and to cover any
refurbishing costs needed. The one time charge is included in Cost of Rentals.
The decrease in inventories in the Consolidated Statements of Cash Flows for the
nine months ended January 31, 1994, is net of the transfer-in of the vehicles.
PART I.
ITEM 2
CRUISE AMERICA, INC., AND SUBSIDIARIES
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Nine Months ended January 31, 1995
SEASONALITY
The Company's business is seasonal. In the first and second fiscal
quarters, the Company historically records profits. In the third and fourth
quarters, the Company historically records losses. The Company's purchases of
motorhomes for the rental fleet are also seasonal, with the majority of
purchases being made in the first and fourth fiscal quarters. Due to the
seasonality of rental and sales operations, certain accounts fluctuate from
quarter to quarter.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 1995, the Company has working capital in the amount of
$7.5 million. The Company believes that, during the next year, cash generated
from operations and financing available from banks and other financial
institutions will be sufficient for its capital and operating needs.
NINE MONTHS ENDED JANUARY 31, 1995 AS COMPARED WITH
NINE MONTHS ENDED JANUARY 31, 1994
Rental Revenue for the nine months ended January 31, 1995, was $32,806,000,
compared to $37,922,000, reported for the nine months ended January 31, 1994.
This decline was due to a 25% reduction in revenue days offset in part by a 15%
increase in revenue per day. The decline in Rental Revenue, which occurred in
the first two quarters, was partially offset by improvement in the third
quarter.
Sales for the nine months ended January 31, 1995, were $38,302,000,
compared to $42,244,000, for the nine months ended January 31, 1994. This
decline was due primarily to the Company's decision to limit wholesale sales in
the third quarter as the Company's need to sell older fleet vehicles diminished.
Cost of Rentals as a percentage of Rental Revenue was 41% for the nine
months ended January 31, 1995, compared to 57% for the nine months ended January
31, 1994. Cost of Rentals in 1994 included a one-time revaluation charge of
$3,452,000. Cost of Rentals as a percentage of Rental Revenue for the nine
months ended January 31, 1994, excluding the one-time charge was 48%. The
increase in profitability was due to a decrease in variable costs which resulted
from a drop in volume of rental operations at the same time rental rates were
increasing. A reduction in the average rental fleet size also had the effect of
lowering fixed rental costs.
Cost of Sales as a percentage of Sales was 89% in 1995 compared to 91% in
1994. This increase in profitability has resulted from a slight shift in the mix
of sales toward higher margin used vehicle sales as well as a reduction in
wholesale sales of older fleet vehicles.
Interest Expense increased in 1995 to $4,386,000 from $3,898,000 due
primarily to interest rate increases.
Selling, general and administrative expenses increased from $15,356,000 in
1994, to $15,734,000 in 1995 mainly as a result of additional advertising
expenditures as well as a slight increase in personnel costs to the Company's
fleet refurbishing activities.
THREE MONTHS ENDED JANUARY 31, 1995 AS COMPARED WITH
THREE MONTHS ENDED JANUARY 31, 1994
Rental Revenue for the quarter ended January 31, 1995, was $2,670,000
compared to $1,904,000 reported for the quarter ended January 31, 1994. This
improvement was due to a 38% increase in revenue days and a 2% increase in
revenue per day.
Sales for the quarter ended January 31, 1995, were $7,655,000 compared to
$13,497,000 for the same period a year ago. This decline was due mainly to a
shift in rental vehicle sales from the third quarter to the second quarter this
year. The Company was able to accelerate these sales due to lower rental volume
at the end of the peak summer rental season. In addition, the Company limited
wholesale sales in the third quarter as the need to dispose of older fleet
vehicles dimished.
Cost of Rentals as a percentage of Rental Revenue was 75% in 1995, compared
to 302% in 1994. Cost of Rentals in 1994 included a one-time revaluation charge
of $3,452,000. Cost of Rentals as a percentage of Rental Revenue for the quarter
ended January 31, 1994, excluding the one-time charge was 121%. The improvement
in the current year is due to the Company operating a newer, smaller fleet,
which has had the impact of reducing both fixed and variable costs.
Cost of Sales as a percentage of Sales was 84% for the quarter ended
January 31, 1995, compared to 90% in 1994. This increase is due to the Company's
shift away from lower margin wholesale sales.
Interest Expense for the quarter ended January 31, 1995, was $1,611,000
compared to $1,070,000 in 1994. This increase is due to increased interest rates
as the prime rate has increased dramatically.
Selling, general and administrative expenses were $4,658,000 in the third
quarter compared to $4,456,000 a year ago. This increase was due to increased
advertising and increased personnel costs associated with the Company's
refurbishing of rental vehicles.
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.
CRUISE AMERICA, INC.
March 9, 1995 ERIC R. BENSEN
-----------------------
Eric R. Bensen
Vice President
Chief Financial Officer
March 9, 1995 Randall Smalley
-----------------------
Randall Smalley
President
Chief Executive Officer