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, 1996
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, $.01 Par Value
As of January 31, 1996, 5,727,068 of registrants common stock were outstanding
of which 4,143,547 were held by non-affiliates of the registrant.
TABLE OF CONTENTS
CRUISE AMERICA, INC. AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets............................... 1
Condensed Consolidated Statements of Operations..................... 3
Condensed Consolidated Statements of Cash Flows..................... 4
Notes to Condensed Consolidated Financial
Statements.......................................................... 5
ITEM 2. Management's Discussion and Analysis of
Consolidated Financial Condition and
Results of Operations............................................. 6-7
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
ASSETS
(Unaudited)
1-31-96 4-30-95
------- -------
Current Assets:
Cash and Cash Equivalents.....................$ 2,430 3,091
Accounts Receivable, Net ....................... 4,172 3,561
Inventories .................................... 15,696 17,235
Prepaid Expenses and Other Current Assets ...... 1,453 837
------- -------
Total Current Assets ........................... 23,751 24,724
------- -------
Rental Vehicles ..................................... 77,724 63,713
Less Accumulated Depreciation .................. 15,908 12,398
------- -------
Net Rental Vehicles ............................ 61,816 51,315
Property and Equipment .............................. 17,347 16,795
Less Accumulated Depreciation .................. 6,756 6,274
------- -------
Net Property and Equipment ..................... 10,591 10,521
Deposits and Other Assets ........................... 2,654 2,818
------- -------
$98,812 89,378
------- -------
See accompanying notes to condensed consolidated financial statements.
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
1-31-96 4-30-95
------- -------
Current Liabilities:
Floor Plan Contracts........................................$ 3,536 709
Current Installments of Rental Vehicle Financing ............ 8,962 7,394
Current Installments of Long-Term Debt ...................... 4,527 3,072
Accounts Payable and Accrued Expenses ....................... 3,382 2,042
Customer Deposits ........................................... 503 6,380
Income Taxes Payable ........................................ 20 20
-------- --------
Total Current Liabilities ............................... 20,930 19,617
-------- --------
Rental Vehicle Financing, Excluding Current Installments ......... 27,193 23,228
Long-Term Debt, Excluding Current Installments ................... 22,263 23,892
Deferred Income Taxes ............................................ 1,639 312
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, 5,727,000 and 5,694,000 issued and
outstanding at January 31, 1996 and April 30,
1995 respectively ......................................... 57 57
Additional Paid-in Capital .................................. 24,914 24,815
Retained Earnings ........................................... 2,456 (1,908)
Cumulative Translation Adjustment ........................... (640) (635)
-------- --------
Total Stockholders' Equity .................................. 26,787 22,329
Commitments and Other Matters .................................... -------- --------
$ 98,812 89,378
-------- --------
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 Months Ended Nine Months Ended
------------------ -----------------
1-31-96 1-31-95 1-31-96 1-31-95
------- ------- ------- -------
Rental Revenue..............................$ 3,234 2,670 41,291 32,806
Sales....................................... 10,613 7,655 34,779 38,302
------ ----- ------ ------
Total Revenue...................... 13,847 10,325 76,070 71,108
------ ------ ------ ------
Cost of Rentals............................. 2,885 2,001 16,568 13,337
Cost of Sales............................... 9,891 6,467 31,486 34,047
------ ----- ------ ------
Total Costs........................ 12,776 8,468 48,054 47,384
------ ------ ------ ------
Gross Profit From Operations................ 1,071 1,857 28,016 23,724
Interest Expense............................ 1,830 1,611 5,608 4,386
Selling, General, and Administrative
Expenses.................................. 4,464 4,658 16,717 15,734
------ ------ ------ ------
Earnings (Loss) Before Income
Taxes ................................... (5,223) (4,412) 5,691 3,604
Income Tax Expense (Benefit)................ (1,219) (831) 1,327 756
------- -------- ------ -------
Net Earnings (Loss).........................$ (4,004) (3,581) 4,364 2,848
Earnings (Loss) Per Share...................$ (.70) (.63) .76 .50
-------- -------- -------- --------
Average Common Shares Outstanding........... 5,719 5,694 5,709 5,694
------- ------ ------ ------
See accompanying notes to condensed consolidated financial statements.
CRUISE AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
-----------------
1-31-96 1-31-95
------- -------
Cash Flows from Operating Activities:
Net Earnings..........................................$ 4,364 2,848
Depreciation and Amortization......................... 10,385 9,141
Increase in Deferred Income Taxes..................... 1,327 756
Gain on Sale of Rental Vehicles....................... (1,014) (751)
Increase in Accounts Receivable....................... (611) (852)
Decrease in Inventories............................... 1,539 3,308
Increase in Accounts Payable and Accrued Expenses..... 1,340 1,065
Gain on Sale of Property and Equipment................ --- (106)
Increase (Decrease) in Floor Plan Contracts........... 2,827 319
Decrease in Customer Deposits......................... (5,877) (3,723)
Other, Net............................................ (679) 149
--------- -------
13,601 12,154
------ ------
Cash Flows from Financing Activities:
Proceeds from Rental Vehicle Borrowing................ 41,934 30,435
Repayment of Rental Vehicle Borrowing................. (36,401) (32,096)
Repayment of Long Term Borrowing...................... (174) (1,689)
Issuance of Stock..................................... 99 ---
-------- -------
5,458 (3,350)
------- -------
Cash Flows from Investing Activities:
Purchase of Rental Vehicles........................... (41,275) (30,158)
Proceeds from Rental Vehicle Sales.................... 22,107 19,183
Purchase of Property and Equipment.................... (552) (134)
Proceeds from Sale of Property & Equipment............ --- 242
-------- -------
(19,720) (10,867)
--------- -------
Increase in Cash & Cash Equivalents........................ (661) (2,063)
Cash and Cash Equivalents at April 30...................... 3,091 4,261
-------- -------
Cash and Cash Equivalents at January 31....................$ 2,430 2,198
-------- -------
See accompanying notes to condensed consolidated financial statements.
CRUISE AMERICA, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Nine Months Ended January 31, 1996
NOTE 1.
In the opinion of management, the accompanying unaudited condensed 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, 1996 and
the results of operations for the three month and nine month periods ended
January 31, 1996 and 1995.
Certain items in the prior year financial statements have been reclassified to
conform with the current period presentations.
Effective May 1, 1995, the Company began allocating the cost of new motorhomes
between the chassis and house components and is depreciating the components
using the straight-line and mileage methods over 9 year lives with residuals of
10% to 25%. The impact of this change is not expected to be material to
operating results for the year.
NOTE 2.
Supplemental disclosures of cash flow information (in thousands):
Nine Months Ended January 31,
-----------------------------
1996 1995
---- ----
Cash paid during the period for:
Interest on Borrowings.............$ 4,755 4,317
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.
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, 1996
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 fiscal quarter. Due to the seasonality of rental and sales operations,
certain accounts fluctuate from quarter to quarter.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 1996, the Company had working capital in the amount of
$2,821,000. The Company's working capital, as presented, includes a significant
portion of rental vehicle financing. The Company's working capital does not,
however, include any portion of the related assets - rental vehicles, even
though a significant portion of these vehicles are expected to be sold during
the year through the Company's normal fleet rotation. The Company believes that,
during the next year, cash generated from operations and existing financing
available from banks and other financial institutions will be sufficient for its
capital and operating needs. At January 31, 1996, the Company believes it is in
compliance with all debt covenants associated with its various financing
agreements.
NINE MONTHS ENDED JANUARY 31, 1996 AS COMPARED WITH
NINE MONTHS ENDED JANUARY 31, 1995
Rental Revenue for the nine months ended January 31, 1996 was $41,291,000
compared to $32,806,000 for the nine months ended January 31, 1995. This
increase was due primarily to a 30% increase in revenue days, which was offset
slightly by a 4% decline in revenue per day.
Sales for the nine months ended January 31, 1996 were $34,779,000 compared to
$38,302,000 for the same period a year ago. Sales revenue declined for several
reasons. Fewer rental vehicles were available for sale due to high fleet
utilization rates during the peak summer season; the number of RV sales
facilities operated by the Company has been reduced from 19 to 15; and new
vehicle sales have continued to be affected by an industry-wide slowdown in
demand.
Cost of Rentals as a percentage of Rental Revenue was 40% for the nine months
ended January 31, 1996 compared to 41% in 1995. This slight improvement was due
primarily to an increase in vehicle utilization.
Cost of Sales as a percentage of Sales increased slightly to 91% in 1996 from
89% in 1995. This increase was a result of a slight shift in the mix of sales
toward lower margin rental vehicle sales.
Interest expense for the nine months ended January 31, 1996 was $5,608,000
compared to $4,386,000 in 1995. The increase was due primarily to an increase in
average interest rates as well as slightly higher average borrowings.
Selling, general, and administrative expenses remained stable at 22% of revenue
in 1996 and in 1995. Incremental expenses incurred in order to meet the
Company's increased rental demand during 1996 were offset by higher revenues.
THREE MONTHS ENDED JANUARY 31, 1996 AS COMPARED WITH
THREE MONTHS ENDED JANUARY 31, 1995
Rental Revenue for the quarter ended January 31, 1996 was $3,234,000 compared to
$2,670,000 reported for the quarter ended January 31, 1995. This increase was
due to a 19% increase in revenue days, as well as a 1% increase in revenue per
day.
Sales for the quarter ended January 31, 1996 were $10,613,000 compared to
$7,655,000 for the same period a year ago. Higher sales of rental fleet vehicles
during the quarter were offset in part by a decline in new vehicle sales. High
rental fleet utilization in the second quarter delayed the sale of a significant
number of vehicles until the third quarter.
Cost of Rentals as a percentage of Rental Revenue was 89% in 1996 compared to
75% in 1995. Although Rental Revenue increased compared to the prior year,
holding costs also increased as a result of a larger fleet being carried over
from the second quarter.
Cost of Sales as a percentage of Sales increased to 93% in 1996 from 84% in
1995. This was primarily due to an increase in lower margin rental vehicle sales
as a percentage of total sales.
Interest Expense for the quarter increased to $1,830,000 from $1,611,000 in the
prior year as a result of higher interest rates and higher average borrowings.
Selling, general, and administrative expenses decreased to 32% of revenue in
1996 from 45% of revenue in 1995. This decrease is due to expenses declining
slightly while revenues increased.
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 8, 1996 /s/ Eric R. Bensen
-------------------
Eric R. Bensen
Vice President
Chief Financial Officer
March 8, 1996 /s/ Randall Smalley
--------------------
Randall Smalley
President
Chief Executive Officer