SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the First Quarter Ended July 31, 1996
Commission File No. 1-9471
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CRUISE AMERICA, INC.
State of Florida I.R.S. No. 59-1403609
11 West Hampton Avenue
Mesa, Arizona 85210-5258
Telephone: (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 and 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
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Common Stock, $.01 Par Value
As of July 31, 1996, 5,749,568 shares of the registrants common stock were
outstanding of which 4,256,856 were held by non-affiliates of the registrant.
TABLE OF CONTENTS
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CRUISE AMERICA, INC., AND SUBSIDIARIES
ITEM PAGE
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PART I
FINANCIAL INFORMATION
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
2. Management's Discussion and Analysis of Consolidated Financial Condition
and Results of Operations........................................................................................6
3. Exhibits.........................................................................................................9
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
A S S E T S
(In thousands)
Unaudited
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7/31/96 4/30/96
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Current Assets:
Cash and Cash Equivalents..................................................... $ 11,304 2,341
Accounts Receivable, Net...................................................... 2,555 4,056
Inventories................................................................... 11,503 11,752
Prepaid Expenses and Other Current Assets..................................... 1,266 889
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Total Current Assets................................................. 26,628 19,038
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Rental Vehicles............................................................... 119,757 79,094
Less Accumulated Depreciation................................................. 18,165 15,576
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Net Rental Vehicles.................................................. 101,592 63,518
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Property and Equipment........................................................ 17,603 17,426
Less Accumulated Depreciation................................................. 7,081 6,916
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Net Property and Equipment........................................... 10,522 10,510
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Deposits and Other Assets..................................................... 2,436 2,629
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$141,178 95,695
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See accompanying notes to condensed consolidated financial statements.
1
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands except share data)
Unaudited
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7/31/96 4/30/96
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Current Liabilities:
Floor Plan Contracts.......................................................... $ 2,298 2,245
Current Installments of Rental Vehicle Financing.............................. 33,950 10,723
Current Installments of Long-Term Debt........................................ 4,523 3,023
Accounts Payable and Accrued Expenses......................................... 3,875 1,980
Customer Deposits............................................................. 7,159 4,605
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Total Current Liabilities............................................ 51,805 22,576
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Rental Vehicle Financing, Excluding Current Installments...................... 38,363 29,561
Long-Term Debt, Excluding Current Installments................................ 17,867 19,412
Deferred Income Taxes......................................................... 3,494 684
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,
5,750,000 and 5,740,000 issued and outstanding at July 31, 1996 and
April 30, 1996 respectively................................................... 57 57
Additional Paid-in Capital.................................................... 24,981 24,953
Retained Earnings (Deficit)................................................... 5,334 (902)
Cumulative Translation Adjustment............................................. (723) (646)
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Total Stockholders' Equity........................................... 29,649 23,462
Contingencies.................................................................
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$141,178 95,695
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See accompanying notes to condensed consolidated financial statements.
2
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share data)
Three Months Ended
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7/31/96 7/31/95
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Rental Revenue............................................................. $24,163 19,408
Sales...................................................................... 6,833 9,148
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Total Revenue..................................................... 30,996 28,556
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Cost of Rentals............................................................ 7,574 6,022
Cost of Sales.............................................................. 5,806 7,729
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Total Costs....................................................... 13,380 13,751
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Gross Profit from Operations............................................... 17,616 14,805
Interest Expense........................................................... 1,891 1,770
Selling, General and Administrative Expenses............................... 6,679 6,202
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Earnings Before Income Taxes............................................... 9,046 6,833
Income Tax Expense ........................................................ 2,810 1,594
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Net Earnings............................................................... $ 6,236 5,239
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Earnings per Share (Primary and Fully Diluted)............................. $ 1.05 .92
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Shares Used in Calculation................................................. 5,924 5,700
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See accompanying notes to condensed consolidated financial statements.
3
CRUISE AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
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7/31/96 7/31/95
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Cash Flows from Operating Activities:
Net Earnings......................................................... $ 6,236 5,239
Depreciation and Amortization........................................ 4,116 3,696
Increase in Deferred Income Taxes.................................... 2,810 1,594
Gain on Sale of Rental Vehicles...................................... (358) (277)
Decrease in Accounts Receivable...................................... 1,501 181
Decrease in Inventories.............................................. 249 2,141
Increase in Accounts Payable and Accrued Expenses.................... 1,895 1,193
Increase in Floor Plan Contracts..................................... 53 1,007
Increase (Decrease) in Customer Deposits............................. 2,554 (2,101)
Other, Net........................................................... (323) (668)
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Net Cash Provided by Operating Activities............................ 18,733 12,005
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Cash Flows from Financing Activities:
Proceeds from Rental Vehicle Borrowing............................... 44,291 34,912
Repayment of Rental Vehicle Borrowing................................ (12,262) (10,946)
Repayment of Long-Term Borrowing..................................... (45) (57)
Issuance of Stock.................................................... 28 27
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Net Cash Provided by Financing Activities............................ 32,012 23,936
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Cash Flows from Investing Activities:
Purchase of Rental Vehicles.......................................... (44,469) (35,781)
Proceeds from Rental Vehicle Sales................................... 2,864 2,650
Purchase of Property and Equipment................................... (177) (59)
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Net Cash Used in Investing Activities................................ (41,782) (33,190)
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Increase in Cash and Cash Equivalents...................................... 8,963 2,751
Cash and Cash Equivalents at April 30...................................... 2,341 3,091
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Cash and Cash Equivalents at July 31....................................... 11,304 5,842
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See accompanying notes to condensed consolidated financial statements.
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CRUISE AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JULY 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 July 31, 1996, and
the results of operations for the three month periods ended July 31, 1995 and
1996.
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):
Three Months Ended
------------------------------------
7/31/96 7/31/95
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Cash paid during the period for:
Income Taxes $ 0 0
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Interest on Borrowings $ 1,225 917
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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.
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PART 1. FINANCIAL INFORMATION
ITEM 2
CRUISE AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Three Months Ended July 31, 1996
This Quarterly Report on Form 10-Q contains forward looking statements.
Additional written or oral forward looking statements may be made by the Company
from time to time in filings with the Securities and Exchange Commission or
otherwise. Such forward looking statements are within the meaning of that term
in Section 27A of the Securities Act of 1933, as amended, and Section 21F of the
Securities Exchange Act of 1934, as amended. Such statements may include, but
not limited to, projections of revenues, income, or loss, capital expenditures,
plans for future operations, financing needs or plans, and plans relating to
products or services of the Company, as well as assumptions relating to the
foregoing.
Forward looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward looking statements. Statements in the Quarterly Report,
including the Notes to the Condensed Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," describe factors, among others, that could contribute to or cause
such differences. Additional factors that could cause actual results to differ
materially from those expressed in such forward looking statements are set forth
in Exhibit 99 to this Quarterly Report on Form 10-Q.
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 July 31, 1996, the Company had current liabilities in excess of current
assets in the amount of $25,177,000. 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 estimates that if these assets were classified as current assets,
the Company would not have a working capital deficit.
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.
THREE MONTHS ENDED JULY 31, 1996 AS COMPARED WITH
THREE MONTHS ENDED JULY 31, 1995
Rental Revenue for the quarter ended July 31, 1996, was $24,163,000 compared to
$19,408,000 for the quarter ended July 31, 1995. This improvement was due to a
29% increase in revenue days offset in part by a 4% decrease in revenue per day.
The increase in revenue days resulted from an increase in the size of the rental
fleet as well as an increase in utilization due to strong demand.
6
Sales for the quarter ended July 31, 1996, were $6,833,000, compared to
$9,148,000, for the same period a year ago. The Company's wholesale sales in the
quarter were lower than in the same quarter of the prior year due in part to the
Company's conversion to a modular motorhome fleet, which has the effect of
extending the service life of the rental vehicle by replacing the chassis. Sales
were also affected by a continuing industry wide downturn in sales at retail.
Additionally, the Company returned some for-sale rental vehicles to its rental
fleet as well as some new units held for sale in response to the high rental
demand, reducing the number of vehicles available for sale during the quarter.
Cost of Rentals as a percentage of Rental Revenue was 31% in 1996 and 1995.
Economies of scale achieved through increased volume and utilization were offset
by a slight reduction in rates.
Cost of Sales as a percentage of Sales was 85% for the quarter ended July 31,
1996, compared to 84% in 1995. This increase is due to a slight change in the
mix of vehicles sold toward lower margin rental vehicle sales.
Interest Expense for the quarter ended July 31, 1996, was $1,891,000 compared to
$1,770,000 in 1995. This increase is due primarily to an increase in average
debt levels, offset in part by lower average interest rates.
Selling, General and Administrative Expenses were $6,679,000 in the first
quarter compared to $6,202,000 a year ago. This increase is due to increased
expenses incurred in order to meet the Company's increased rental demand.
Selling, General and Administrative Expenses as a percentage of Total Revenue
was 22% in 1996 and 1995.
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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.
September 6, 1996 Eric R. Bensen
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Eric R. Bensen
Vice President
Chief Financial Officer
September 6, 1996 Randall Smalley
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Randall Smalley
President
Chief Executive Officer
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