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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10 - K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-16448
HOLIDAY RV SUPERSTORES, INCORPORATED
IRS Employer Id No. Sand Lake West Executive Park State of Incorporation:
59-1834763 7851 Greenbriar Parkway, Florida
Orlando, Florida 32819
(407) 363-9211
Securities registered pursuant to Section 12(b) of the Act:
- None -
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates as of January
9, 1995, was approximately $7,577,000.
As of January 9, 1995, Holiday RV Superstores, Incorporated had outstanding
7,449,700 shares of Common Stock.
Documents Incorporated by Reference
Part IV of this Form 10-K incorporates by reference the Registration Statement
on Form S-18 (No. 33-17190-A) effective October 27, 1987, Post Effective
Amendment No. 1 to Registration Statement on Form S-18 effective December 8,
1987, Registration Statement on Form 8-A effective December 28, 1987 filed by
the Registrant, and Post Effective Amendment No. 2 to Registration Statement on
Form S-18 effective August 21, 1989.
(see page 34 for index of exhibits)
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TABLE OF CONTENTS
Item Page
---- ----
PART I
1. Business.......................................................................... 3
2. Properties ....................................................................... 9
3. Legal Proceedings ................................................................ 10
4. Submission of Matters to a Vote of Security Holders............................... 10
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters............. 11
6. Selected Financial Data........................................................... 12
7. Management's Discussion and Analysis of Financial Condition and
Results of Operation........................................................... 14
8. Financial Statements and Supplementary Data....................................... 19
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................................... 19
PART III
10. Directors and Executive Officers of the Registrant............................... 20
11. Executive Compensation........................................................... 25
12. Security Ownership of Certain Beneficial Owners and Management................... 31
13. Certain Relationships and Related Party Transactions............................. 33
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................. 34
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PART I
Item 1. BUSINESS
GENERAL
The Registrant ("Company") is a multi-store retail chain engaged in the
retail sales and service of recreational vehicles ("RV's) and recreational
boats. The Company currently operates eight sales and service dealerships, one
in the heart of the Walt Disney World tourist area in Orlando, Florida, two in
the Gulf Coast tourist areas of Tampa and Ft. Myers, Florida, one in Atlanta,
Georgia adjacent to Interstate 75, one in Greer, South Carolina adjacent to
Interstate 85, two in California's central valley cities of Sacramento and
Bakersfield and one adjacent to Interstate 10 in Las Cruces, New Mexico. The
Las Cruces facility was purchased in October, 1995.
All dealerships offer a full line of both new and used recreational
vehicles and maintain full parts and service facilities, body repair shops and
are equipped to repair virtually any type of recreational vehicle. The Greer
and Las Cruces dealerships sell and service boats and related marine products.
RECREATIONAL VEHICLE INDUSTRY
The recreational vehicle industry is approximately a $14.5 billion dollar
a year industry in the United States, (Recreational Vehicle Industry
Association, "RVIA", Reston, Virginia), catering to the travel and leisure-time
needs of the general public through the sale and service of recreational
vehicles. According to the RVIA, (RV TRADE DIGEST, December 1995) 441,000 new
RVs were shipped by manufacturers to dealers in 1994 compared to 420,200 RVs in
1993 and 389,400 in 1992. Industry shipment peaked in 1976 through 1978 with
526,000 to 534,000 units.
One in ten American families own a recreational vehicle in the United
States, and over 20,000 public and privately owned campgrounds operate
nationwide, according to the RVIA, (RV TRADE DIGEST, October, 1992). There are
over 9 million RVs on the road and an estimated 25 million Americans travel in
RVs (RVIA). According to the US Census Bureau, there were 2,648 RV dealers in
the U.S. in 1992 (RVDA News, September 1995).
The types of recreational vehicles sold by the company consist primarily
of travel trailers and fifth wheels, designed to be towed by another vehicle,
and motorized self-propelled units, built on automotive chassis (motorized
vehicles).
Towable recreational vehicles consist of travel trailers, including fifth
wheel travel trailers, folding camping trailers and truck campers (a
recreational camping unit designed to be loaded
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on to, or affixed to, the bed or chassis of a truck). Motorized recreational
vehicles consist of conventional motor homes (Class "A"), van campers (Class
"B"), mini motor homes, low profile motor homes and compact motor homes (all
referred to as Class "C") and van conversions. Class "A" motor homes are
constructed by the recreational vehicle manufacturer on chassis that already
have the engine and drive components. Van campers (Class "B") are panel type
vans to which the recreational vehicle manufacturer adds sleeping facilities,
kitchen and toilet facilities, fresh water storage, 110 volt hook up and other
items. Class "C" units are built on an automotive manufactured van frame with
an attached cab section, or on an automotive manufactured cab and chassis. The
recreational vehicle manufacturer completes the body section containing the
living area and attaches it to the cab section. For the van conversion, the
recreational vehicle manufacturer modifies a completed van chassis aesthetically
or decoratively in appearance for transportation and recreational purposes.
Currently, there are many manufacturers of both towable and motorized
recreational vehicles. Although there are several sources for manufactured
conventional vans including Ford, GMC, and Chrysler, Japanese imports and other
foreign manufacturers, there are only four major manufacturers in the United
States supplying chassis with engine and drive components to the recreational
vehicle manufacturers: General Motors Company, Ford Motor Company, Oshkosh
Truck Corporation and Spartan Motors Corporation. General Motors Company is
the largest supplier of chassis to RV manufacturers.
Fuel consumption for motorized recreational vehicles has improved
substantially over the last several years. Diesel engines are growing in
popularity over gasoline engines, primarily in the larger vehicles.
MARKETING
ADVERTISING AND PROMOTIONS. The Company has a year around advertising
campaign utilizing newspaper, direct mail, billboards, yellow pages, and
consumer magazine advertising. The advertising program is supplemented by
on-lot promotions and off-lot consumer shows, organized by trade groups and
private companies, primarily during the peak selling season. The Company
participates in 20 to 25 consumer RV shows annually, attended by up to 40,000
consumers each. Smaller product shows are also promoted by the company at RV
parks where by existing RV owners are targeted for "trade-ups" selling
opportunities. The Company utilizes the services of a professional marketing
firm to assist in implementing their advertising and promotion campaign.
The Company's Management believes that the Company was the first
recreational vehicle retailer to promote sales through a national
tele-marketing sales program. The Company promotes several recreational
vehicle clubs and rallies for owners and prospective owners of recreational
vehicles.
PRICING. The Company's Management believes that pricing is an important
element of its marketing strategy and occasionally makes volume purchases at
reduced prices from some manufacturers. These purchases enable the Company to
advertise and achieve a competitive pricing position over many of its
competitors.
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CUSTOMER BASE. The Company's customer base demographic characteristics
vary from dealership to dealership but primarily are represented as the
following. The age group of 35 years and older represent 82% of the customers,
with ages 45 and older representing 58%. Eighty six percent (86%) are married,
49% are retired, 21% have "blue collar" occupations, and 30% are "white collar"
and professionals. The primary income group is $20,000 to $40,000 comprising
53%. Twenty six percent (26%) earn $40,000 to $60,000, and 10% earn over
$60,000. Sixty two percent (62%) of the customers are prior owners of RVs, and
63% need to trade their RV, automobile or boat to make a purchase.
In summary, the Company's primary customer base is 45 years old or older,
retired, earns between $20,000 and $40,000 annually, is a previous owner of an
RV needing to trade to make a purchase.
DEALERSHIP OPERATIONS
The Company, previously Holiday of Orlando, Inc., was incorporated in July
1978, in the State of Florida. In 1984, a second dealership was opened in
Tampa, Florida, to sell and service new and used RVs. In 1988, the Company
opened three new sales and service dealerships, one in Ft. Myers, Florida, one
in Jacksonville, Florida and the third in Atlanta, Georgia. The Atlanta
dealership operates as Holiday RV Superstores of South Atlanta, Inc.
In February 1990, the Company formed Holiday RV Superstores of South
Carolina, Inc. which acquired an existing dealership in Greer, South Carolina
formally, operating as Ledford's RV and Marine World.
From October 1992 through January 1993 the Company operated a temporary
sales location in Homestead, Florida, marketing travel trailers to the victims
of Hurricane Andrew needing temporary housing. In December of 1992, the
Jacksonville, Florida dealership was closed.
In January 1994, the Company formed Holiday RV Superstores West, Inc.
which acquired two existing dealerships located in Bakersfield and Roseville
(Sacramento), California, formerly operating as Venture Out, and an office
location in Campbell, California. The Campbell office closed in November,
1995.
In September 1995, the Company formed Holiday RV Superstores of New
Mexico, Inc. which acquired a vacant RV dealership facility in Las Cruces, New
Mexico. The dealership began operations in November of 1995.
The Company currently markets approximately 40 brands of recreational
vehicles and 10 brands of recreational boats. The Company purchases 79% or
more of its new recreational vehicles from Fleetwood Enterprises Inc., and
Thor Industries, Inc. In addition, the Company sells new recreational
vehicles and recreational boats purchased from a number of other manufacturers
including Winnebago Industries, Cobra Industries, Bayliner Marine Corporation,
and Coachmen Industries, Inc. In the opinion of Management, the loss of any
one brand of new recreational vehicle would not materially affect the Company.
However, the loss of all the
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brands sold by either of the two largest manufacturers, i.e. Fleetwood
Enterprises, Inc., or Thor Industries, Inc., would have a material effect on the
Company's sales. The Company's Management feels the loss of all brands from
either of these two manufacturers to be highly unlikely. Dealer representation
decisions for Fleetwood Enterprises, Inc. and Thor Industries, Inc. manufactured
brands are made at the manufacturer's plants on a brand-by-brand basis, rather
than centrally at each respective company's corporate headquarters.
MANUFACTURERS REPURCHASE AGREEMENTS TO COMPANY'S FLOOR PLAN CREDITORS
Substantially all new vehicles and boats held in inventory for sale are
pledged as security under floor plan contracts with financial institutions.
Under such contracts, the sale of a pledged vehicle to a consumer requires
payment to the lender of the amount attributable to such vehicle under the floor
plan contract. Manufacturers have their respective repurchase agreements in
force with the commercial lending institutions with limited repurchase
indemnification to the lenders against any Company default under the floor plan
contracts.
SERVICE AND PARTS
The Company maintains fully equipped service facilities equipped to handle
virtually any type of recreational vehicle. The Company is a factory
designated chassis warranty service center for Gillig, Chevrolet Division of
General Motors, and Oshkosh, who reimburse the Company for such warranty
services. The Greer and Las Cruces facilities are fully equipped to repair all
brands of boats and motors it sells.
The Company's service facilities are equipped to make engine and drive
train repairs, as well as repairs to refrigerators, ovens and ranges, air
conditioning systems, plumbing and electrical systems of each recreational
vehicle it sells. In addition, the Company is an authorized service center for
most manufacturers of recreational vehicle components, including generators,
roof air conditioners, refrigerators, heaters, ovens and ranges (including
microwave ovens), hot water heaters, toilets, furnaces, furniture, ice makers,
awnings, TV antennas, metal framing, water pumps, hitches, suspension systems,
brakes, windows and axles used in recreational vehicles sold and serviced by
the Company. The Company's service and repair facilities are also used by
commercial customers, including the Federal Emergency Management Agency of the
United States Government (FEMA), Lockheed Martin Aerospace Corporation, Sea
World, Walt Disney World, Universal Studios in Florida and the Department of
Defense.
The Company maintains service agreements with those companies whose new
recreational vehicles and marine products it sells at retail. These service
agreements allow the Company to purchase parts and obtain technical assistance
needed to repair and service vehicles, boats and equipment manufactured by
these companies. The Company also has a supply of propane gas for resale to
recreational vehicle owners for non-chassis use at all locations.
The parts departments of each dealership supports the Company's sales and
service functions. In addition to a parts inventory department, each
dealership stocks accessory items, usually sold to recreational vehicle owners,
and maintains a computerized point-of-purchase inventory
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control and customer tracking system. The Greer and Las Cruces dealerships
maintain inventories of marine parts and accessories for marine products sold.
PRINCIPAL PRODUCTS AND SERVICES
The Company's principal products and services for the last three years are
listed below, by major revenue source, as a percentage of total revenue.
Principal Products or Services as a Percentage of Total Revenue
Fiscal Year
Principal Product or Service 1995 1994 1993
---------------------------- ---- ---- ----
New Recreation Vehicles and Marine 61.8% 61.8% 63.6%
Used Recreation Vehicles and Marine 24.6% 25.7% 22.7%
Service, Parts and Accessories 9.5% 8.6% 8.2%
Rental 0.1% 0.6% 1.2%
Other, Net 4.0% 3.3% 4.3%
----- ----- -----
Total Revenue 100.0% 100.0% 100.0%
===== ===== =====
EMPLOYEE RELATIONS
As of October 31, 1995 and 1994, the Company had 182 and 198 full time
employees, respectively. The Company has no contracts or collective bargaining
agreements with labor unions and has never experienced work stoppages. The
Company's Management considers its relations with employees to be good. The
Company maintains internal training programs at every level and has a well
developed internal quality control program and customer satisfaction feedback
system for all its dealerships. The Company maintains a nation-wide
recruitment program for sales, service and management personnel. Support
personnel are usually hired from the local labor force. Factory training
programs are available to the employees of the Company and the Company
generally takes full advantage of these programs by sending its employees to
manufacturer supervised schools. Most full time employees are provided with
paid annual vacations, medical and hospitalization insurance premium
reimbursement, sick leave, paid holidays and other fringe benefits. After one
year of employment, employees are eligible to participate in the profit
sharing and 401(k) investment plan.
BUSINESS EXPANSION AND DIVERSIFICATION
The Company intends to continue its primary expansion by acquisition of
existing compatible businesses. Existing RV dealerships with a minimum annual
revenue of $5.0 million will be considered for acquisition. The Company's
primarily focus is the Sunbelt areas of the U.S. and
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the western states. Availability of product lines and dealership location on a
major interstate highway is the primary criteria.
The Company's expansion plan also includes diversification into a
compatible business that would enhance the margins of the Company. The
diversified "targeted business" would be an acquisition or merger candidate
with an existing business, whereby the Company could capitalize on its existing
multi-store management structure and utilize its existing financial resources.
The Company is also considering vehicle leasing, in-house sub-prime retail
financing and "niche" market product manufacturing.
COMPETITION AND BUSINESS RISK
Based upon statistics supplied by the Recreational Vehicle Dealers
Association, the recreational vehicle industry in North America includes
approximately 2,650 retail dealerships nationally. Competition in the sale of
new and used recreational vehicles is intense. The Company competes with a
large number of firms, some of which operate in more than one location,
although most of the Company's competitors operate from a single location. The
Company believes it is one of the most competitive RV dealers in the nation
offering approximately 50 brands of new recreational vehicles and new boats,
supported by extensive service facilities.
Significant competitive factors in the recreational vehicle sales and
service industry include: vehicle availability, price, service, reliability,
quality of service and convenience. The Company's management is of the opinion
that it is competitive in all factors listed above. Nevertheless, the
Company's management anticipates it will continue to face strong competition in
the future.
The recreational vehicle business is heavily dependent upon the
availability and terms of financing for the retail purchase of its products.
Consequently, changes in interest rates and the tightening or loosening of
credit by government agencies and financial institutions have dramatically
affected the Company's business in the past and are likely to do so in the
future.
INSURANCE
The Company has had little difficulty in obtaining insurance coverage for
its dealership operations. Such insurance has been obtained by the Company
annually on a competitive bid basis, at what it believes to be reasonable
premium rates. The applicable premium rates have been increasing slightly,
however, Management does not believe that such increases will have a material
adverse effect on the business of the Company for the foreseeable future.
GOVERNMENT REGULATIONS
The Company's service facilities are subject to federal, state and local
laws and regulations concerning environmental matters. These laws and
regulations affect the storing, dispensing and discharge of petroleum based
products and other waste, and affect the Company in the securing of permits for
its full service dealership operations and in the ongoing conduct of such
operations.
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The securing of permits and compliance with all laws and regulations can be
costly, and could affect the Company's earnings. Further, each dealership of
the Company must comply with the requirements of local governmental bodies
concerning zoning, land use, and environmental factors. State and local laws and
regulations also require each dealership to obtain licenses to operate as a
dealer in recreational vehicles. The Company has obtained all necessary
licenses and permits and Management believes the Company is in full compliance
with all federal, state and local laws and regulations. Furthermore, Management
is not aware of any material capital expenditures necessary for compliance with
any federal, state or local laws and regulations.
Item 2. PROPERTIES
The Company leases the Orlando dealership from its principal stockholders,
officers, and directors, Newton C. Kindlund and Joanne M. Kindlund. The
dealership is located one half mile from Interstate 4, on Sand Lake Road and is
approximately 2.5 miles from the Interstate 4 entrance to Walt Disney World.
These facilities include 30,000 square feet of buildings on approximately 4
acres of land.
The Tampa, Florida dealership is owned by the Company and is approximately
3.5 miles from the intersection of Interstate 4 and Interstate 75, on Highway
301. These facilities include 5.2 acres of land with a 13,000 square foot
building.
The Ft. Myers, Florida dealership is leased from a non-affiliated party.
The facility is located six tenths of a mile west of Interstate 75, on the
north side of the city and includes 9,700 square feet of buildings on
approximately 2.7 acres of land.
The Atlanta, Georgia dealership is owned by the Company and is located
adjacent to Interstate 75, south of Interstate 285 in Forest Park, Georgia.
The facility includes 13,600 square feet of buildings and was expanded in 1995
from 2.2 acres to 5 acres.
The Greer, South Carolina dealership is leased from a non-affiliated
party. The facility is located adjacent to Interstate 85 between Greenville
and Spartanburg, South Carolina. The facility includes a 31,000 square foot
building on 9 acres of land.
The Roseville, California dealership is subleased from a non-affiliated
party. The facility is located adjacent to Interstate 5 and includes 24,000
square feet of buildings on 3.6 acres of land.
The Bakersfield, California dealership is owned by the Company and is
located adjacent to State Road 99 and includes 17,400 square feet of building
on 4.9 acres of land.
The Las Cruces, New Mexico dealership is owned by the Company and is
located adjacent to Interstate 10. The facility includes 14,000 square feet
of building on 7 acres of land.
The corporate office is leased from a non-affiliated party and is located
approximately one quarter of a mile from the Orlando dealership on Sand Lake
Road. The facilities include 3,750 square feet of office and conference room
accommodations.
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Facility and Location
---------------------
Approximate Approximate
Building Premise Size
Dealership Operations Square Feet Acres
--------------------- ----------- ------------
Owned by Company
Tampa, Florida 13,000 5.2
Atlanta, Georgia 13,600 5.0
Bakersfield, California 17,400 4.9
Las Cruces, New Mexico 14,000 7.0
Leased
Orlando, Florida 30,000 4.0
Ft. Myers, Florida 9,700 2.7
Greer, South Carolina 31,000 9.0
Roseville, California 24,000 3.6
Executive Offices
-----------------
Leased
Orlando, Florida 3,750
The Company believes that its facilities are adequate for the foreseeable
future for the business carried on at these locations. Properties at Orlando,
Tampa, Fort Myers, and Roseville are being fully utilized. Properties at
Greer, Bakersfield and Las Cruces are not being fully utilized and have area
for limited expansion
Item 3. LEGAL PROCEEDINGS
The Company is party to various legal proceedings arising from its
ordinary course of operations. The Company's Management believes, based upon
the opinion of the Company's legal counsel, none of these proceedings,
individually or in the aggregate, will result in a material adverse effect on
the Company's consolidated financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION ON COMMON STOCK
The Company's common stock trades on The NASDAQ Stock Market, National
Market System, under the symbol: "RVEE".
The table below gives the market high and low sales prices of the
Company's common stock for the quarters in the fiscal years ended October 31,
1995 and 1994. The prices were furnished by the NASDAQ Stock Market.
MARKET PRICE
1995 1994
-------------- -----------------
Quarter High Low High Low
Ended ---- --- ---- ---
-------
January 31...................... 2 1 5/16 2 9/16 2
April 30 ....................... 1 3/4 1 5/16 2 3/8 1 13/16
July 31 ........................ 2 1/8 1 3/8 2 1/8 1 3/8
October 31 ..................... 4 3/4 1 5/8 1 3/4 1 5/16
DIVIDENDS
No cash dividends have been paid by the Company nor does the Company
anticipate paying cash dividends in the near future.
HOLDERS OF RECORD
As of January 9, 1996, there were 625 holders of record of the Company's
Common Stock.
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Item 6. SELECTED FINANCIAL DATA:
Fiscal Year Ended October, 31 (1)
(in thousands, except earnings per share)
SELECTED STATEMENT --------------------------------------------------------------------
OF INCOME DATA 1995 1994 1993 1992(2) 1991
---- ---- ---- ------- ----
Revenue............................ $70,029 $53,205 $45,767 $40,927 $35,770
Cost of sales...................... 56,872 44,650 38,152 34,709 30,465
------- ------- ------- ------- -------
Gross profit....................... 13,157 8,555 7,615 6,218 5,305
Selling, general and
administrative expenses........... 9,758 6,866 5,744 5,533 5,375
------- ------- ------- ------- -------
Income (loss) from operations...... 3,399 1,689 1,871 685 (70)
Interest income.................... 376 265 247 88 132
Interest expense................... (1,336) (717) (548) (594) (713)
------- ------- ------- ------- -------
Income (loss) before income taxes.. 2,439 1,237 1,570 179 (651)
Income taxes (benefit)............. 980 480 600 51 (239)
------- ------- ------- ------- -------
Income (loss) before
cumulative effect(3).............. 1,459 757 970 128 (412)
Cumulative effect(3)............... -- -- 77 -- --
------- ------- ------- ------- -------
Net income (loss).................. $ 1,459 $ 757 $ 1,047 $ 128 $ (412)
Earnings (loss) per share of common
stock before cumulative effect (3) .20 .10 .13 .02 (.06)
Cumulative effect(3)............... -- -- .01 -- --
------- ------- ------- ------- -------
Earnings (loss) per share of
common stock....................... $ .20 $ .10 $ .14 $ .02 $ (.06)
======= ======= ======= ======= =======
Weighted average number of common
shares outstanding................. 7,437 7,325 7,280 7,248 7,340
Cash dividends paid per common
share............................ $ -- $ -- $ -- $ -- $ --
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As of October, 31 (1)
(in thousands, except per share and operating data)
SELECTED BALANCE ---------------------------------------------------------------
SHEET DATA: 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Working capital.............................. $ 9,408 $ 9,322 $ 8,718 $ 7,156 $ 6,924
Inventories.................................. 19,396 17,194 11,351 13,953 13,992
Total assets................................. 29,717 26,925 19,568 26,248 20,248
Inventories financed (floor plan)............ 13,967 13,170 7,193 10,624 9,396
Long term debt............................... 343 -- 11 20 29
Total liabilities............................ 16,301 14,975 8,570 16,258 10,373
Tangible net worth........................... 13,020 11,467 10,928 9,809 9,698
Book value per common share.................. 1.80 1.62 1.51 1.37 1.35
OPERATING DATA:
Number of dealerships(4)..................... 8 7 5 7 6
Number of RVs and Boats sold................. 2,714 2,002 1,836 1,991(2) 1,483
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(1) See Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(2) Includes 400 RVs sold to the Federal Emergency Management Agency for
$4.34 million.
(3) Cumulative effect of change in accounting for income taxes.
(4) The dealerships listed for 1995 include the newly acquired Las Cruces
facility which became operational in November 1995.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company continued to maintain a strong financial position and high
liquidity throughout Fiscal 1995. $1.7 million of cash generated from net
income and non cash expenses was used to finance other operating activities,
primarily inventories not financed by floor plan sources, resulting in net
cash provided by operating activities of $116,000.
The acquisition of new dealership facilities for the relocation of the
Bakersfield, California dealership, acquisition of a dealership in Las Cruces,
New Mexico and the expansion of the Atlanta dealership, used $1.8 million
cash. The Company's decision to discontinue its rental operation and the sale
of its rental fleet generated $472,000, resulting in $1.3 million net cash used
for investing activities. The Company has a $1.0 million credit facility
available for financing expansion but elected not to use the facility in Fiscal
1995.
The net result of all operating, investing and financing activities was
the use of $1.23 million of cash, reducing the Company's cash and cash
equivalents to $4.01 million as of October 31, 1995 compared to $5.24 million
as of October 31, 1994.
Net working capital increased slightly to $9.4 million as of the end of
Fiscal 1995 compared to $9.3 million as of the end of Fiscal 1994.
The Company's liquidity ratios continue to compare favorably to the
recreational vehicle dealers industry averages, as reported by 1995 Annual
Statement Studies, Robert Morris Associates, Philadelphia, Pa. ("RMA"). The
Company's current ratio, as of the end of Fiscal 1995 and Fiscal 1994, was 1.59
and 1.63 with the industry average of 1.3 both years.
The Company's quick ratio, as of the end of Fiscal 1995, and Fiscal 1994,
was 0.37 and 0.46. The Company's quick ratio at the end of Fiscal 1995, a
measure of the ability to pay off current liabilities without relying on the
sale of inventories, was approximately 4 times greater than the industry
average (RMA) of 0.1 both years.
The Company's debt to worth ratio, a measure of the financing provided by
the Company's creditors as compared to the contribution by shareholders, as of
the end of Fiscal 1995 was 1.2. The industry average (RMA) was 3.6 for 1995.
The Company's principal long term commitments, as of the end of Fiscal
1995, consist of obligations under operating leases. The Company also has a
contingent liability to repay a portion of agency commission (referral fees)
received principally from some lending institutions whereby the Company
referred customers to one or more third party financing sources and earned
referral fees (agency commissions) if the lender consummated a loan contract
with the
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customer. In some cases the Company is required to pay back (chargeback) a pro
rata amount of the referral fee to the lender if the loan does not reach
maturity for various reasons such as foreclosure, refinancing, or loan pay-off,
and only if the charge back amount exceeds reserves retained by the lender. The
Company records commission income based upon the amount earned less allowances
for chargebacks. In determining the allowance, the Company takes into
consideration the total customer loans outstanding and estimates the exposure
for potential chargebacks associated with these loans. The Company estimates
the probability for loan pay offs and the potential chargebacks to the Company
related thereto. The Company also considers the current and predicted future
economic conditions, the effects of changes in consumer interest rates and the
aging of all it's customer loans outstanding representing potential chargebacks
to the Company.
The Company's chargeback allowance was $152,000, $193,000, and $603,000
as of the end of Fiscal 1995, Fiscal 1994 and Fiscal 1993 respectively.
Chargebacks were $40,000, $588,000, $111,000 for Fiscal 1995, Fiscal 1994 and
Fiscal 1993, respectively. The $588,000 chargebacks in Fiscal 1994 was
primarily the result of negotiated settlements with third party financing
sources reducing future chargeback potential. Management expects the current
allowance for chargebacks to be sufficient to repay this contingency and does
not expect the ultimate liability to have a significant impact on the liquidity
of the Company.
The Company's Board of Directors, in Fiscal 1993, set specific strategic
targets for the expansion and/or diversification of the Company's operations,
primarily through acquisition, with the ultimate goal of increasing the
Company's value to its shareholders. These targets, if obtained, will mostly
likely require the Company to seek additional capital. Since its initial
public offering in 1987 the Company has funded its expansion plan with
internally generated cash, debt from financial institutions for flooring RVs,
and a issuing limited amount of common stock.
The Company's Management is currently evaluating alternative sources of
capital, its cost and its ultimate effect on the capitalization of the Company.
The Company currently has $25.0 million maximum borrowing under floor plan
contracts of which $11 million was not used as of the end of Fiscal 1995. In
addition, the Company has a $1.0 million credit facility available for
financing this expansion of dealership real property. The Company's
Management feels it can obtain additional debt financing at reasonable
interest rates for expansion and/or diversification of its operations.
Currently Management has no expansion or diversification prospects requiring a
secondary stock offering or a conversion of the financing debt to common stock.
Management does intend to continue to issue common stock and/or options on
common stock as a partial payment for acquisitions when cost effective.
However, Management expects the dilutive effect on the common stockholders of
the Company resulting from issuing such common stock or options to be minimal.
Management believes that during the next twelve months cash generated by
operating activities, cash and cash equivalents on deposit with financial
institutions and financing currently available from floor plan financing
companies will be sufficient for its capital and operating needs for its
existing operations.
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RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR FISCAL 1995 COMPARED TO FISCAL 1994.
Sales and service revenue increased 31.6 % to $70.0 million in Fiscal 1995
from $53.2 in Fiscal 1994 primarily due to revenue from two RV dealerships
acquired on August 1, 1994 (Sacramento and Bakersfield, California). Revenue
increased 2.3%, on a same store basis. This increase, on a same store basis,
compares favorably to the National RV shipment data, according to the
Recreation Vehicle Industry Association (RV Business, January, 1996) reporting
total RV unit shipments to dealers for the ten months ended October 1995
decreased 8.3%. Even though this data is not totally comparable, it does
indicate the Company's change in RV sales were significantly better than the
industries national average.
However, the Company's total revenue decreased (on a same store basis)
6.2% in the fourth quarter of Fiscal 1995, as compared to the same quarter of
Fiscal 1994. The Company's management believes this decrease was the
beginning of a trend whereby the Company's revenue will follow more closely the
national downward trend due to decreased consumer sentiment over concern about
the national economy. Furthermore, the Company's management believes this
downward trend will extend at least through the first quarter of Fiscal 1996,
unless the consumer confidence in the national economy increases.
Cost of sales and service, as a percentage of revenue, decreased to 81.2%
in Fiscal 1995 from 83.9% in Fiscal 1994.
Gross profit increased 53.8% in Fiscal 1995 to $13.2 million from $8.6
million in Fiscal 1994. On a same store basis gross profit increased 9.0%.
As a percentage of revenue, gross profit increased to 18.8% in Fiscal 95
from 16.1% in Fiscal 94. This increase resulted from increases from every
major revenue categories due to two factors; significantly higher gross profit
percentages from the two new California dealerships and slightly higher gross
profits from the eastern dealerships. The California higher percentages were
primarily due to a greater mix of towable RVs sold verses motorized RVs sold.
Towables historically are sold at a higher gross profit percentage than
motorized. The higher eastern dealership's gross profits resulted from a
managerial effort to increase gross profits in all revenue categories. The
eastern dealerships gross profits increased to 16.1% from 15.1%.
Selling, general and administrative expenses (SG&A) increased 42.1% to
$9.76 million in Fiscal 1995 from $6.87 million in Fiscal 1994. As a
percentage of revenue, SG&A increased to 13.9% from 12.9%. These increases
were primarily due to two factors; increased expenses from the
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two new California dealerships, and increased marketing and personnel expenses
resulting from increased revenue.
Income from operations increased 101% to $3.40 million in Fiscal 1995
from $1.69 million in Fiscal 1994. As a percentage of revenue, income from
operations increased to 4.9% from 3.2%.
Interest income increased 41.9% to $376,000 in Fiscal 1995 from $265,000
in Fiscal 1994 due to higher yields on invested cash. Interest expense
increased 86.3% to $1.34 million in Fiscal 1995 from $717,000 in Fiscal 1994.
This increase resulted from higher floor plan balances due to increased new RV
inventories at the two newly acquired California dealerships, and to increased
interest rates resulting from increases in the prime lending rate.
Income before income taxes increased 97.2% to $2.44 million in Fiscal 1995
from $1.24 million in Fiscal 1994. As a percentage of revenue, income before
income taxes increased to 3.4% from 2.3%.
The combined Federal and State income tax rate was 40.2% in Fiscal 1995
compared to 38.8% in Fiscal 1994. Income tax rates varied from Federal
statutory rates due to state income taxes. See Note 11 of the notes to the
consolidated financial statements for components of the income taxes and the
reconciliation of the provision for income taxes to the federal statutory rates.
Net income increased 92.7% to $1,458,993 in Fiscal 1995 from $757,054 in
Fiscal 1994. As a percentage of revenue, net income increased to 2.1% in
Fiscal 1995 from 1.4% in Fiscal 1994.
Earnings per share was 20 cents in Fiscal 1995 compared to 10 cents in
Fiscal 1994.
The dramatic increase in earnings resulted primarily from the two newly
acquired California dealerships. The Company's management does not expect
this level of continued increases in the Company's net income in Fiscal 1996.
Although the Company acquired the Las Cruces property in October, 1995,
management does not expect the Las Cruces dealership will make a significant
contribution to the net income of the Company in Fiscal 1996. Furthermore,
management believes the trend of decreasing revenue the Company experienced in
the fourth quarter of Fiscal 1995, will continue at least through the first
quarter in Fiscal 1996.
RESULTS OF OPERATIONS FOR FISCAL 1994 COMPARED TO FISCAL 1993.
Sales and service revenue increased 16.2% to $53.2 million in Fiscal 1994
from $45.8 million in Fiscal 1993. The Company acquired selected assets from
Venture Out, a California corporation, on August 1, 1994, consisting primarily
of the assets of two RV dealerships operating in Roseville (Sacramento) and
Bakersville, California. Revenue from these two dealerships accounted for 9.2%
of the increase revenue in Fiscal 1995 and Fiscal 1994.
Revenue increased in all the Company's markets resulting primarily from
increased sales of both new and used recreational vehicles. On a same store
basis, a 3% decease in new RV unit sales was offset by a 22% increase in the
average selling price, resulting in a 6% net increase in revenue from the sale
of new RVs. The average selling price increase of new RVs resulted from
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the continuation of a shift in demand, beginning in Fiscal 1993, from lower
priced towables to higher priced motorized. Used RV revenue increased 23%, on
a same store basis, as a result of a 16% increase in unit sales and a 7%
increase in the average price of used RVs sold.
On a same store basis net revenue from agency commissions decreased 10% to
$1.45 million in Fiscal 1994 from $1.6 million in Fiscal 1993. This decrease
was a result of $340,000 chargeback by one of the financial institutions the
Company refers customers to for RV loans. The chargeback resulted from a
negotiated settlement with the financial institution whereby the Company
reduced its future chargeback liability. The total chargeback amount exceeded
the Company's allowance (provision) for the chargebacks from the institution by
$239,000. Without the Company's allowance (provision) for the chargebacks from
the institution by $239,000. Without the chargeback, net agency commissions
would have increased 5%.
Revenue from service, parts increased 9% on a same store basis. Rental
revenue decreased 48% due to high demand for rentals in the first quarter of
Fiscal 1993 from Hurricane Andrew victims, not experienced in Fiscal 1994, and
additional competition in the Orlando market, the only market in which the
Company markets rentals.
Gross profit increased 12.3% to $8.56 million in Fiscal 1994 from $7.62
million in Fiscal 1993. On a same store basis gross profit increased 4%.
As a percentage of revenue, gross profit decreased to 16.1% in Fiscal 1994
from 16.6% in Fiscal 1993. This decrease resulted from the decrease in net
agency commissions. There were no significant changes in the gross profit, as
a percent of revenue, for any other revenue source.
Selling, general and administrative expenses (SG&A) increased 19.8% to
$6.9 million in Fiscal 1994 from $5.7 million in Fiscal 1993. On a same
store basis, SG&A increased 7% due to increased marketing and personnel
expenses resulting from increased revenue, and expenses associated with the
Company's acquisition activities.
Income from operations decreased 9.7% to $1.69 million in Fiscal 1994 from
$1.87 million in Fiscal 1993. As a percentage of revenue, income from
operations decreased to 3.2% in Fiscal 1994 from 4.1% in Fiscal 1993.
Interest income increased slightly to $264,000 in Fiscal 1994 from
$246,000 in Fiscal 1993. Interest expense increased 31% to $717,000 in Fiscal
1994 from $547,000 in Fiscal 1993. This increase resulted from higher floor
plan contract balances due to increased new RV inventories associated with the
acquisition, and to increased rates resulting from increases in the prime
lending rate.
Income before income taxes decreased 21.2% to $1,237,000 in Fiscal 1994
from $1,570,000 in Fiscal 1993.
The combined Federal and State income tax rate was 38.9%, in Fiscal 1994
compared to 38.2% in Fiscal 1993. Income taxes for both years varied from the
Federal statutory rates due to state
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income taxes. See Note 11 of the Notes to consolidated financial statements for
components of income taxes and a reconciliation of the provision for income
taxes to the Federal Statutory rate.
Net income decreased 22% to $757,054 in Fiscal 1994 from $970,311 net
income before the cumulative effect of a change in accounting for income taxes
in Fiscal 1993. As a percentage of revenue, net income decreased 1.4% in Fiscal
1994 from 2.1% in Fiscal 1993. The Company elected the early adoption of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("FAS 109"), in Fiscal 1993. The cumulative effect of this change in
method increased the Company's net income in Fiscal 1993 by $77,000.
Including the cumulative effect, net income in Fiscal 1993 was $1,047,311.
Earnings per share were 10 cents in Fiscal 1994 compared to 13 cents in
Fiscal 1993. Without the cumulative effect, earnings per share in Fiscal 1993
were 14 cents.
INFLATION
The Company's Management believes that increases in the cost of new
vehicles and boats that may result from increases in inflation can be offset by
higher resale prices for used retail vehicles and boats as well as higher
retail prices for new vehicles and boats although there may be a lag in the
ability of the Company to pass such increases on to its customers.
Historically, increases in operating costs are passed on to the consumer
when the market allows. The Company's Management believes that its business has
not been significantly affected by inflation despite increased chassis and
manufacture conversion costs experienced.
SEASONALITY
Although the recreational vehicle business is a year round business in the
Southeastern United States and California, the recreational vehicle industry is
seasonal. The Company has significantly higher sales in the second quarter of
its fiscal year, and significantly lower sales in its first and fourth
quarters. During slack seasons at a particular dealership, the Company reduces
inventory of both new and used RVs and introduces other cutbacks in operations
minimizing the impact of the seasonality on the results of operations. Because
a substantial portion of the Company's expenses are fixed, operating income
tends to be lower in the first quarter and fourth quarter of the Company's
Fiscal Year and higher in the second and third quarters.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to Part II, Item 8, is submitted as a separate section of
this Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change of accountants or reported disagreement on any matter
of accounting principles or procedures or financial statement disclosure in
Fiscal 1995.
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company as of January 9, 1996
were as follows:
Officer
and/or
Name Age Position Director since
- ------------------ --- -------- --------------
Newton C. Kindlund 55 President, Chairman of the Bo 1978
Chief Executive Officer
Joanne M. Kindlund 46 Executive Vice President- 1978
Administration, Secretary/
Treasurer and Director
W. Hardee McAlhaney 48 Vice President, 1988
Chief Financial Officer
Franklin J. Hitt 68 Director 1987
Lawrence H. Katz 54 Director 1987
James P. Williams 57 Director 1987
Avie N. Abramowitz 62 Director 1987
Paul G. Clubbe 54 Director 1987
Roy W. Parker 52 Director 1993
All Directors hold office until the next annual meeting of the Company's
shareholders and until their successors are elected and qualified. Executive
officers serve at the discretion of the Board of Directors.
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INDEMNIFICATION
In May, 1991, the Company's Shareholders amended the Company's Articles of
Incorporation to provide for the automatic mandatory indemnification of the
Company's Officers and Directors to the full extent permitted by Florida Law
and for the indemnification of every Company Employee and Agent upon a vote of
its Board of Directors. Prior to the adoption of such amendment to the
Company's Articles of Incorporation and pursuant to authority then set forth in
its by-laws, and upon authorization of its Board of Directors, the Company
executed indemnification agreements with its Officers and Directors in
November, 1990, which agreements were ratified by the Shareholders in May,
1991.
Under such indemnification agreements, indemnification of the Company's
Officers and Directors extends to any and all costs and expenses (including
trial, appellate and other attorneys' fees), judgments, fines, penalties and
amounts paid in settlement, actually and reasonable incurred by the Indemnitee
in connection with any such action. Indemnification is available in any action
unless a judgment (after exhaustion of all appeals) or other final adjudication
determines that the Indemnitee's actions, or omissions to act, were material to
the cause of action so adjudicated and constitute: (i) a violation of criminal
law, unless the Indemnitee had reasonable cause to believe his conduct was
lawful; or, had no reasonable cause to believe his conduct was unlawful; (ii) a
transaction from which the Indemnitee received an improper personal benefit
within the meaning of Florida Statute Section 607.0850(7)(b); (iii) in the case
of a Director, circumstances under which the liability provisions of Florida
Statute Section 607.0834, concerning unlawful distributions made by the Company
are applicable; or, (iv) willful misconduct or a conscious disregard for the
best interest of the Company in a proceeding by or in the right of the Company
to procure a judgment in its favor or in a proceeding by or in the right of a
shareholder of the Company. Further, Florida Statute Section 607.0831 provides
that a Director is not personally liable for monetary damages to the Company or
any other person for any statement, vote, decision, or failure to act,
regarding Company management or policy unless the Director breached or failed
to perform his duties as Director; and, the Director's breach or failure to
perform his duties constitutes an act within the meaning of the aforesaid
clauses (i) - (iv), inclusive.
The indemnification agreements represent an enlargement of the
indemnification rights as specifically set forth in the Florida Statutes;
however, as permitted by Florida Statutes, because the agreements provide that
in all proceedings to determine whether an individual is entitled to
indemnification, the persons making such determination shall presume that such
entitlement exists and the Company has the burden of proof that the
indemnification is not available. Regardless of whether a person is ultimately
found to be entitled to indemnification, the Company is responsible for all
costs incurred by such person in the determination proceedings in addition to
all costs incurred by the person in defending in the original action.
Further, the indemnification agreements' provisions, being similar to
Florida Statutory Law, require indemnification of Officers and Directors if
such persons have been successful on the merits or otherwise in the defense of
any action, the Company being required to indemnify such
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persons against expenses (including attorneys' fees) actually and reasonably
incurred by them in such actions. However, the indemnification agreements
expand the Indemnitee provisions of the Florida Statutes as is authorized by
such Statutes, by expressly defining the term "successful on the merits or
otherwise" to include, among other things, termination's of actions on
procedural grounds (e.g., the statute of limitations or disqualification of the
plaintiff). The agreement also provides that settlements with a cost to the
Indemnitee of less that $15,000.00 and the failure to bring actions within a
specified period of time after the making of any claim or threat of an action
will constitute, for purposes of the agreements, success on the merits or
otherwise. Further, the indemnification agreements provide that persons will be
deemed to have satisfied the requisite standard of care for indemnification if
their actions were based on (i) financial statements, books or account or other
records of the Company; (ii) information supplied to them by the Officers of the
Company or another enterprise in the course of their duties; or, (iii) advice of
legal counsel, outside accountants or appraisers. This provision of the
indemnification agreement is comparable to that found in Florida Statute Section
607.0830.
DIRECTORS AND EXECUTIVE OFFICERS' BUSINESS EXPERIENCE
The following is a brief account of the educational and business experience of
each Director and Officer of the Company:
NEWTON C. KINDLUND
Mr. Kindlund and his wife, Joanne M. Kindlund, are co-founders of the
Company. He has served as President and Chairman since its inception in July
1978. He is a graduate of Michigan State University having received his BA in
1963. He has done postgraduate studies at the Wharton School of the University
of Pennsylvania, Boston College and Indiana University. From 1975 to 1977 he
was a regional Vice President of Recreational Vehicle Industry Association,
Elkhart, Indiana. He was a founder of the Florida RV Trade Association and
served on the Board of Directors of the National Recreational Vehicle Rental
Dealers Association and the Central Florida World Trade Council. Recently Mr.
Kindlund has served a four year term as an Executive Board member and on the
Executive Committee of the Greater Orlando Florida Chamber of Commerce.
Currently Mr. Kindlund is a member of the National Dealer Advisory Council for
Airstream, Inc. and is a past Chairman of the Board of Directors of the
Recreational Vehicle Rental Dealers Association. Mr. Kindlund was recognized
as the RV News RV Executive of the Year for 1995.
JOANNE M. KINDLUND
Mrs. Kindlund, a co-founder of the Company, has served as Executive Vice
President, Secretary and Treasurer and as a Director since its inception in
July, 1978. She graduated from the University of Florida in 1971 with a B.S.
Degree in Advertising and has done postgraduate work at the University of
Florida in accounting and finance. From 1984 to 1985, she assisted Gorman
Planning and Associates, Virginia Beach, Virginia with the creation of software
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managerial systems including accounting systems and inventory control systems
for retail recreational vehicle sales dealerships.
W. HARDEE MCALHANEY
Mr. McAlhaney joined the Company as Corporate Comptroller in 1988 and is
currently a Vice President and Chief Financial Officer of the Company. He
graduated from the University of Tennessee in 1970 with a B.S.B.A. Degree, and
from the University of Florida in 1972 with an MBA Mr. McAlhaney served as
Chief Financial Officer for two national retail chains; The Athletic Attic and
The Athlete's Foot, prior to joining Drexel, Burnham, Lambert as an investment
consultant.
FRANKLIN J. HITT
Mr. Hitt has served on the Board of Directors of the Company since August
of 1987. He received his MBA in 1966 to complement his B.S. in Industrial
Management from Ohio State University in 1965. From 1969 to 1982 he was
Assistant Professor of Finance at the University of Central Florida. From 1969
to 1975 he was Assistant Dean of the College of Business Administration. From
1982 to current date, Mr. Hitt has been an active real estate broker in Central
Florida and currently is President of Franklin J. Hitt Real Estate Enterprise.
He is a licensed general contractor in the State of Florida.
LAWRENCE H. KATZ
Mr. Katz has served as a Director of the Company since August 1987. He
has practiced law, specializing in corporate, business, tax and real property
since 1969. His firm acts as special counsel to the Company on SEC corporate
matters. Mr. Katz earned a Juris Doctorate from Stetson University College of
Law in 1969. In 1966 he earned an MBA in General Management to complement his
Bachelor of Science in Chemistry earned in 1963, both from Rollins College.
JAMES P. WILLIAMS
Mr. Williams has served on the Board of Directors of the Company since
August of 1987. He received his Bachelor of Science Degree in Business in 1961
from Stetson University. Mr. Williams, since graduation from college has been
a practicing accountant having become a Certified Public Accountant in 1967.
He is the senior partner of Williams, Gryzich and Company, CPAs.
AVIE N. ABRAMOWITZ
Mr. Abramowitz has been a Director of the Company since August of 1987.
He received his B.S. degree from the University of Maryland in 1952. He was a
member of the Million Dollar Round Table for 25 years, qualifying for the
prestigious Top of the Table in 1985. From 1957 to current date Mr. Abramowitz
has been a life insurance representative with the Equitable Life
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Corporation. From college graduation until 1957, Mr. Abramowitz was active in
the citrus industry. He is also active in international real estate
acquisitions and developments.
PAUL G. CLUBBE
Mr. Clubbe attended St. Dunstans College, England, Lisgar Collegiate,
Ottawa, Ontario Canada and Pickering College, Toronto, Ontario Canada. From
1982 to present he has been President and Chief Executive Officer of Rotex
Canada, Inc., of Scarborough, Canada (a joint venture with P.C.M., Ltd., and
International Rotex, Inc.) manufacturer of label makers, vinyl embossing tape
and office products. From 1963 to 1964 Mr. Clubbe was a sales representative
for Morgan Paper Co., Ltd., Toronto, Canada. He is Chairman of the Board of
Directors of Rotex Canada, Inc., and a member of the Board of Directors of
Flesherton Concrete Products, Inc., Paulaurier Sales, Inc. and is active in the
international market of Imports/Exports.
ROY W. PARKER
Mr. Parker is Chief Executive Officer and Owner of Parker Boat Company,
Incorporated, the Sea Ray boat dealer for Orlando, Florida. Parker Boats was
founded in 1927 Mr. Parker joined the business in 1964, and became the sole
owner in 1980. Parker Boats has ranked consistently as a top 25 dealer in
sales nationally for Sea Ray. Mr. Parker serves as the current President of
the Central Florida Marine Trade Association, and is on the Lakes and Advisory
Board for the City of Maitland, Florida.
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Item 11. EXECUTIVE COMPENSATION
The table below sets forth the cash compensation including salaries,
bonuses, contributions to retirement plans, premium paid on health and dental
insurance plans and disability insurance plans, paid by the Company for the
years ended October 31, 1995, 1994, and 1993, to, or for the benefit of, each
executive officer whose total annual salary and bonus exceeded $100,000, and
the CEO regardless of compensation level.
Summary Compensation Table
- -----------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation
Compensation -------------------------------------------
Awards Awards
--------------------------------------- ----------------------------
Name and Restricted Stock
Principal Position Year Salary(1) Bonus(2) Other Stock Options(3) Other(4)
- -----------------------------------------------------------------------------------------------------------------
Newton C. Kindlund
Chairman, President 1995 $108,364 --- --- --- --- ---
Chief Executive 1994 $107,146 --- --- --- --- ---
Officer 1993 $106,583 --- --- --- --- ---
W. Hardee McAlhaney 1995 $ 83,204 $63,617 --- --- --- $ 587
Vice President 1994 $ 79,341 $17,354 --- --- 25,000 $ 832
Chief Financial Officer 1993 $ 81,501 $36,927 --- --- 25,000 $ 832
- -----------------------------------------------------------------------------------------------------------------
(1) Includes contributions by the Company pursuant to an employee benefit
plan established under Section 401 (k) of the Internal Revenue Code in the
amounts of $3,964, $2,746 and $4,283 for Mr. Kindlund for 1995, 1994 and
1993 respectively, and $5,803, $2,780 and $4,678 for Mr. McAlhaney for
1995, 1994 and 1993 respectively.
(2) Mr. McAlhaney's bonus is based on the Company's net income before taxes.
(3) One (1) option each year for 25,000 shares of common each.
(4) The Company pays the premiums on two (2) term life insurance policies
for Mr. McAlhaney whose sole beneficiary is designated by the insured. The
policies have no cash surrender value provisions.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option grants
made in the fiscal year ended October 31, 1995, to the individuals named in the
Summary Compensation Table. There were no grants of options or SARs to said
individuals during the year.
Individual Grants Potential Realizable Value at
--------------------------------------------------------------- Assume Annual Rates of Stock
Number of % of Total Price Appreciation for Option
Securities Options Exercise
Underlying Granted to or Base Term
Options Employee Price Expiration ---------------------------
Name Granted (#) In FY ($/sh) Date 5% ($) 10%
- ---- ----------- ---------- -------- ---------- ------ --------
Newton C. Kindlund --- --- --- --- --- ----
W. Hardee McAlhaney --- --- --- --- --- ----
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth information concerning the number and value
realized as to options exercised during Fiscal 1995 and options held at October
31, 1995, by the individuals named in the Summary Compensation Table and the
value of those options held at such date. There were no options exercised
during Fiscal 1995 and no SARs were held at year end.
Number of Securities Value of unexercised
Underlying Unexercised In-The-Money Options
Shares Value Options at FY-End (#) FY-End ($) (1)
Acquired on Realized -------------------------- ----------------------------
Name Exercise (#) $ Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
Newton C. Kindlund -- -- -- -- -- --
W. Hardee McAlhaney -- -- 100,000 25,000 117,188 29,525
(1) Based on a price of $3.00 per share, being the closing price of Common
Stock on October 31, 1995.
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DISCRETIONARY AND INCENTIVE BONUSES
The Board of Directors awards discretionary cash bonuses to executive
officers and other employees each year. Bonuses have been paid under various
informal arrangements that have provided for the payment of stipulated amounts
to certain executive officers ratably during the fiscal year, fiscal year end
bonuses to certain executive officers and to marketing and sales support
personnel.
The Company has established an incentive bonus program for its employees
with bonuses generally paid monthly or annually. Bonuses are primarily based
upon net pre-tax profits from the various profit centers within each dealership
and is contingent upon continued employment with the company.
DIRECTORS FEES
Directors, who are not salaried employees of the Company, receive $500 for
their attendance at each meeting of the Board of Directors, Annual Shareholders
Meeting and $175 for each committee meeting. The Directors are reimbursed for
their travel, lodging and food expense incurred when attending such meetings,
if such meetings are held in a location in excess of twenty five (25) miles
from the principal place of business of the Company in Orlando, Florida.
Directors are also reimbursed for their travel, lodging and food expenses
incurred when traveling on behalf of the Company when requested to do so by an
officer of the Company or by the Board of Directors.
DIRECTORS OPTIONS
Each outside Director, serving on the board as of February 20, 1993,
was granted an option for 10,000 shares of common stock of the Company,
exercisable after February 20, 1995. The exercise price is $1.81 per share,
the price of the Company's common stock at the time of the grant. A total of
five options were granted, one to each of the five Directors (total of 50,000
shares).
EMPLOYEE BENEFIT PLANS
The Company maintains a tax qualified, integrated Profit Sharing and
401(k) Employee Investment Plan, ("Plan"). All employees who have attained 21
years of age and complete one year of service are eligible to participate in
the Plan. Plan participants must complete at least two (2) years of service to
begin partial vesting with total vesting occurring when a Plan participant has
completed six (6) years of service to the Company. Normal retirement age under
the retirement Plan is 65 years. The Plan fiscal year ends October 31st.
In Fiscal 1995 $94,204 was contributed to the Plan for the benefit of 113
Plan participants. In Fiscal 1994 $46,883 was contributed to the Plan for the
benefit of 74 Plan participants.
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Nations Bank of Florida's Trust Group, (Nations Bank of Florida, PO Box
1469, Tampa, Florida, 33601, 813-224-5313), serves as trustee, fund manager and
fund administrator.
The Plan documents provide for contributions at the discretion of the
Board of Directors, to be allocated to each Plan participant in an amount not
greater than 10% of each participant's compensation subject to the annual
contribution limitation of the top heavy rules. Under the Plan, compensation
is broadly defined to include wages, salaries, bonuses, overtime and
commissions. Amounts contributed to the Plan by the Company for the 1995, 1994
and 1993 Plan years on behalf of the named individuals are included in the
Executive Compensation Table, of this report are included in said table.
1987 INCENTIVE STOCK OPTION PLAN
In August 1987, the Board of Directors of the Company adopted the 1987
Incentive Stock Option Plan (the "ISO Plan") which provides that the Company
may grant to officers and managerial employees of the Company and its
subsidiaries incentive stock options. The purpose of the ISO Plan is to
provide the Company with a means of attracting, retaining and increasing the
incentive of officers and managerial employees by offering them the opportunity
to invest in, or increase their investment in, the Company. Options under the
ISO Plan are designed to qualify under Section 422A of the Internal Revenue
Code of 1986.
The ISO Plan is administered by the Compensation Advisory Committee of the
Board of Directors (the "Committee") which may grant options to purchase up to
an aggregate of 280,000 shares of Common Stock. The option exercise price must
be at least 100% of the fair market value per share of Common Stock on the date
of grant, except that such price must be at least 110% of the fair market value
per share for employees who own more than 10% of the outstanding Shares of the
Company. The options are exercisable, as determined by the Committee, over a
period of time, but not more than ten years from the date of grant and will be
subject to such other terms and conditions as the Committee may determine. Any
option granted to an employee shall lapse following his termination of
employment; provided, however, that in the discretion of the Committee, the
employee shall have up to three (3) months following his termination of
employment to exercise his options and provided, further, that upon the
employee's permanent and total disability, any option granted to him may be
exercised within twelve months following his termination of employment because
of such disability. The ISO Plan provides for certain anti-dilution
adjustments upon the occurrence of certain events.
28
29
Five separate options for 25,000 shares each have been granted to an Officer
of the Company, the Vice President and Chief Financial Officer, Mr. McAlhaney.
The options were approved by the Board of Directors on the following dates and
at the following option exercise prices:
Date Shares Exercise Price
----------------- ------ --------------
May 23, 1994 25,000 $1.819
February 20, 1993 25,000 $1.813
March 24, 1992 25,000 $1.375
November 17, 1990 25,000 $1.625
May 14, 1990 25,000 $2.500
-------
125,000
=======
BONUS STOCK
In September 1987, the Company issued 250,000 Shares of Common Stock to
various individuals including officers, directors and employees of the Company
for services rendered. These shares have certain restrictions and forfeiture
provisions attached to them. Since September 1987, a number of recipients of
such shares have terminated their employment with the Company resulting in
their bonus shares of Common Stock being forfeited to the Company. After
September 1987, the Company made additional awards of bonus shares to
employees; however, no shares in excess of the initial 250,000 shares have been
issued since forfeited shares equaled or exceeded the number of bonus shares
issued by the Company to employees subsequent to such date. Beginning with the
year ended October 31, 1987, and over a period of two to five years the value
of these shares will be a charge against earnings of the Company. The Company
valued the shares initially issued at 50% of the initial public offering price
of its shares of common stock or $1.25. Shares issued subsequent to September
1987 were valued at 100% of the market value on the day of issue.
29
30
The amount of shares awarded and fair market value assigned to the shares
for the last three Fiscal years are as follows:
Bonus Stock
----------------------------------------------------------------------------------
Number Shares Fair Market Value
Fiscal Year Awarded at time of Award
----------------------------------------------------------------------------------
1995 54,000 $91,125
1994 - 0 - - - -
1993 - 0 - - - -
The bonus stock awards listed above require a two (2) year vesting and
employment period. As of October 31, 1995, 234,700 shares had been granted
pursuant to the plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors Compensation Advisory Committee
membership for Fiscal 1995 included Messrs. Newton C. Kindlund, Lawrence H.
Katz, and James P. Williams. Mr. Kindlund is the President and Chief
Executive Officer of the Company.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The cumulative total shareholder return performance graph as of October
31, 1991, 1992, 1993, 1994 and 1995, for the Company, the S&P 500 Index, and
for the Company's peer group, is submitted as a separate section of this Form
10-K.
30
31
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of January 9, 1996, the number of
shares, of Common Stock of the Company, owned and the percent so owned (i) each
person known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director and/or officer of the Company, and
(iii) all directors and officers of the Company as a group. The number of
shares owned are those "beneficially owned" as determined under the rules of
the Securities and Exchange Commission, including any shares of Common Stock as
to which a person has sole or shared voting power or investment power and any
shares of Common Stock which the person has the right to acquire within 60 days
through the exercise of any option, warrant or right.
Amount and
Name and Address Nature of Beneficial Percentage
of Beneficial Owner Ownership of Class
- ------------------- --------- --------
Newton C. Kindlund (1) 2,255,640 30.3%
7851 Greenbriar Parkway
Orlando, Florida 32819
Joanne M. Kindlund (1) 2,255,640 30.3%
7851 Greenbriar Parkway
Orlando, Florida 32819
W. Hardee McAlhaney 105,000(2) 1.4%
3701 Sedgewick Place
Orlando, Florida 32806
Franklin J. Hitt 15,000(3) *
2348 Hunterfield Road
Maitland, Florida 32751
James P. Williams 11,500(3) *
615 North Wymore Road
Winter Park, Florida 32789
31
32
Amount and
Name and Address Nature of Beneficial Percentage
of Beneficial Owner Ownership of Class
- ------------------- --------- --------
Lawrence H. Katz 10,000(3) *
341 N. Maitland Ave, Suite 120
Maitland, Florida 32751
Avie N. Abramowitz 10,000(3) *
Suite 801, 401 West Colonial Drive
Orlando, Florida 32804
Paul G. Clubbe 57,000(3) *
R.R. #4 Stouffville
Ontario, Canada L4A 7X5
Roy W. Parker - 0 - *
455 South Lake Destiny Road
Orlando, Florida 32810
All Directors and Officers --------- -----
as a group (9 persons) (2) (3) 4,719,780 63.34%
(1) Newton C. Kindlund and Joanne M. Kindlund, husband and wife, each
disclaims any right to control the others exercise of shareholders'
rights, with respect to the Shares, including voting the shares of the
Common Stock of the Company set out in the above Table.
(2) Includes options exercisable for 100,000 shares of Common Stock issued
under the 1987 Incentive Stock Option Plan.
(3) Includes options exercisable for 10,000 shares of Common Stock underlying
an option granted February 20, 1993. A total of five (5) options, each
for 10,000 shares (50,000 total shares), were granted to five Directors
of the Company.
* Less than 1% of Class
32
33
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1994, the Company renewed a five year lease agreement with
Newton C. Kindlund and Joanne M. Kindlund, husband and wife, whereby the
Company leases the real property upon which its dealership is located in
Orlando, Florida. The annual rent is currently $144,000 and, in addition
thereto, the Company pays the real estate taxes, insures the interest of Mr.
and Mrs. Kindlund against casualty loss, pays for all repairs to the property
and names Mr. and Mrs. Kindlund as co-insured under its general liability
insurance policy. The lease provides for a cost of living increase for each
year of the lease beginning with the second lease year. The term of the lease
agreement expires on October 31, 1999. In fiscal year 1995, the Company paid
to or for the benefit of Mr. and Mrs. Kindlund $144,000 for the use of these
premises.
Based on current market rates for properties similar to those listed
above, transactions with Mr. and Mrs. Kindlund related to the lease for the
Orlando property were on terms comparable to those which would have been
reached with unaffiliated parties.
Since 1987, Lawrence H. Katz, a Director of the Company has served as
special counsel of the Company on corporate and SEC matters as a senior partner
or Katz, Jaeger and Blankner. In 1992 Mr. Katz continued his services to the
Company representing the firm of Lawrence H. Katz.
33
34
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K
INDEX TO EXHIBITS
Exhibit
- -------
Number Description of Exhibit
- ------ ----------------------
a(1) and The financial statements are filed as a separate section of this Form 10-K.
a(2)
a(3) Exhibits required to be filed by Item 601 of Regulation S-K.
1(a) Form of Underwriting Agreement.
1(b) Form of Seller's Agreement.
3(a) Articles of Incorporation.
3(b) Amendment to Articles of Incorporation.
3(c) Amendment to Articles of Incorporation.
3(d) By-Laws.
3(e) Amendment in the Entirety of By-Laws.
3(f) Amendment to By-Laws.
4(a) Form of Common Stock Certificate of the Company.
4(b) Underwriter's Warrant of Thomas James Associates, Inc. dated November 10, 1987.
10(a) Material contracts numbers 10(a) through 10(bbbbb), were filed with Registrants' 10-K Annual Report for the year
October 31, 1994, and by this reference is incorporated herein.
21 Holiday R.V. Rental/Leasing, Inc. is a subsidiary of the Registrant. This subsidiary, which is wholly owned by
Registrant, was incorporated
34
35
under the Laws of the State Of Florida and is in good standing. The Subsidiary does business only under the name
of Holiday R.V. Rental/Leasing, Inc. Holiday RV Superstores of South Atlanta, Inc. is a subsidiary of the
Registrant. This subsidiary, which is wholly owned by Registrant, was incorporated under the Laws of the State of
Georgia and is in good standing. The subsidiary does business under the name of Holiday RV Superstores and
Holiday RV Superstores of South Atlanta, Inc. Holiday RV Superstores of South Carolina, Inc. is a subsidiary of
the Registrant. This subsidiary, which is wholly owned by Registrant, was incorporated under the Laws of the
State of South Carolina and is in good standing. The subsidiary does business under the name of Holiday RV
Superstores and Holiday RV Superstores of South Carolina, Inc. Holiday RV Superstores West, Inc. is a wholly-owned
subsidiary of the Registrant, incorporated in the State of California and is in good standing. The Subsidiary does
business under the names of Holiday RV Superstores and Holiday RV Superstores West, Inc. Holiday RV Superstores of
New Mexico, Inc., is a wholly owned subsidiary of the Registrant. This subsidiary was incorporated under the laws
of the State of New Mexico and is in good standing. This subsidiary does business under the name of Holiday RV
Superstores and Holiday RV Superstores of New Mexico, Inc.
b The Company filed no reports on Form 8-K during the fourth quarter of Fiscal 1995.
c(1) Exhibits Numbering a(3)1(a) through and including a(3)10(llll), are contained in the Exhibits to the
Registration Statement on Form S-18 filed by the Company on September 14, 1987, and which became effective on
October 27, 1987, (SEC Registration No. 33-17190-A) which Exhibits to said Registration Statement are incorporated
by reference herein. Exhibits a(3)3(c) and a(3)3(f) are contained in the Exhibits to Form 8-A Registration
Statement pursuant to Section 12(g) of the Securities Exchange Act filed by the Company on December 22, 1987, and
which became effective December 28, 1987, which Exhibits to said Registration Statement are incorporated by
reference herein.
c(2) No exhibits are filed with this report.
35
36
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
HOLIDAY RV SUPERSTORES, INCORPORATED
Registrant
By: /s/NEWTON C. KINDLUND, PRESIDENT
------------------------------------
Newton C. Kindlund, President and
Chairman
DATED: JANUARY 21, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Newton C. Kindlund President, Chairman of January 21, 1996
- --------------------- the Board of Directors
President and Chairman Chief Executive Officer
Principal Executive Officer
Newton C. Kindlund
/s/Joanne M. Kindlund Executive Vice President- January 21, 1996
- --------------------- Administration, Secretary/
Principal Administrative Officer Treasurer and Director
Joanne M. Kindlund
/s/W. Hardee McAlhaney Vice President, January 21, 1996
- ---------------------- Chief Financial Officer and
Principal Financial Director
and Accounting Officer
W. Hardee McAlhaney
36
37
Signature Title Date
- --------- ----- ----
/s/Lawrence H. Katz Director January 21, 1996
- -------------------
Lawrence H. Katz
/s/James P. Williams Director January 21, 1996
- --------------------
James P. Williams
/s/ Avie N. Abramowitz Director January 21, 1996
- ----------------------
Avie N. Abramowitz
/s/Franklin J. Hitt Director January 21, 1996
- -------------------
Franklin J. Hitt
37
38
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) and (2)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
AS OF OCTOBER 31, 1995 AND 1994
AND FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
HOLIDAY RV SUPERSTORES, INCORPORATED
AND SUBSIDIARIES
ORLANDO, FLORIDA
38
39
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONTENTS
Report of independent certified public accountants F-2
Consolidated financial statements
Balance sheets F-3 - F-4
Statements of income F-5
Statements of stockholders' equity F-6 - F-7
Statements of cash flows F-8 - F-9
Summary of significant accounting policies F-10 - F-11
Notes to consolidated financial statements F-12 - F-23
F-1
40
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Holiday RV Superstores, Incorporated
Orlando, Florida
We have audited the consolidated balance sheets of Holiday RV Superstores,
Incorporated and subsidiaries as of October 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the three years in the period ended October 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Holiday RV
Superstores, Incorporated and subsidiaries at October 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended October 31, 1995 in conformity with
generally accepted accounting principles.
As discussed in the summary of accounting policies, effective November 1, 1992,
the Company changed its method of accounting for income taxes by adopting
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
BDO SEIDMAN, LLP
Orlando, Florida
December 19, 1995
F-2
41
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 1995 1994
- --------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT:
Cash and cash equivalents $ 4,012,860 $ 5,239,701
Accounts receivable:
Trade and contracts in transit 1,434,936 1,263,422
Other 428,718 293,055
Inventories 19,396,069 17,193,896
Prepaid expenses - 146,854
Refundable income taxes 39,333 -
Deferred income taxes 49,000 63,000
- --------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 25,360,916 24,199,928
PROPERTY AND EQUIPMENT, less accumulated depreciation 3,947,401 1,710,567
RENTAL FLEET, less accumulated depreciation - 531,280
OTHER ASSETS, principally covenant not to compete 408,480 483,031
- --------------------------------------------------------------------------------------------------------------
$29,716,797 $26,924,806
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-3
42
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 1995 1994
- --------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan contracts $13,966,923 $13,169,621
Accounts payable 901,911 683,069
Customer deposits 101,661 211,193
Accrued expenses 946,886 814,355
Current portion of capital lease obligations 35,750 -
- --------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 15,953,131 14,878,238
LONG-TERM CAPITAL LEASE OBLIGATIONS,
less current portion 342,657 -
DEFERRED INCOME TAXES 5,000 97,000
STOCKHOLDERS' EQUITY:
Common stock $.01 par - shares authorized 10,000,000;
issued 7,465,000 74,650 74,650
Additional paid-in capital 5,103,052 5,069,842
Retained earnings 8,340,177 6,881,184
Treasury stock, at cost, 15,300 and 69,300 shares (18,193) (76,108)
Deferred compensation (83,677) -
- --------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 13,416,009 11,949,568
- --------------------------------------------------------------------------------------------------------------
$29,716,797 $26,924,806
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-4
43
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year ended October 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
SALES AND SERVICE REVENUE $70,029,358 $53,205,114 $45,766,704
COST OF SALES AND SERVICE 56,871,801 44,650,237 38,151,632
- --------------------------------------------------------------------------------------------------------------
Gross profit 13,157,557 8,554,877 7,615,072
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,758,414 6,865,599 5,743,852
- --------------------------------------------------------------------------------------------------------------
Income from operations 3,399,143 1,689,278 1,871,220
INTEREST INCOME 375,847 264,914 246,535
INTEREST EXPENSE (1,335,997) (717,138) (547,444)
- --------------------------------------------------------------------------------------------------------------
Income before income taxes 2,438,993 1,237,054 1,570,311
INCOME TAXES 980,000 480,000 600,000
- --------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES 1,458,993 757,054 970,311
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES - - 77,000
- --------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,458,993 $ 757,054 $ 1,047,311
==============================================================================================================
EARNINGS PER SHARE OF COMMON STOCK
BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES $ .20 $ .10 $ .13
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES - - .01
- --------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE OF COMMON STOCK $ .20 $ .10 $ .14
==============================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS OUTSTANDING 7,436,804 7,324,650 7,279,800
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-5
44
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Additional
---------------------- Paid-in
Shares Amount Capital
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1992 7,340,000 $73,400 $4,889,529
Net income for the year - - -
Return of unvested restricted bonus stock - - -
Amortization of deferred compensation - - -
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1993 7,340,000 73,400 4,889,529
Issuance of common stock 125,000 1,250 180,313
Net income for the year - - -
Return of unvested restricted bonus stock - - -
Amortization of deferred compensation - - -
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1994 7,465,000 74,650 5,069,842
Net income for the year - - -
Restricted stock issued from
treasury (54,000 shares) - - 33,210
Amortization of deferred compensation - - -
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1995 7,465,000 $74,650 $5,103,052
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-6
45
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Treasury Stock
Retained ------------------------ Deferred
Earnings Shares Amount Compensation
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1992 $5,076,819 64,600 $(69,283) $(38,590)
Net income for the year 1,047,311 - - -
Return of unvested restricted bonus stock - 3,700 (6,075) 1,582
Amortization of deferred compensation - - - 23,274
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1993 6,124,130 68,300 (75,358) (13,734)
Issuance of common stock - - - -
Net income for the year 757,054 - - -
Return of unvested restricted bonus stock - 1,000 (750) -
Amortization of deferred compensation - - - 13,734
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1994 6,881,184 69,300 (76,108) -
Net income for the year 1,458,993 - - -
Restricted stock issued from
treasury (54,000 shares) - (54,000) 57,915 (91,127)
Amortization of deferred compensation - - - 7,450
- --------------------------------------------------------------------------------------------------------------
BALANCE,
October 31, 1995 $ 8,340,177 15,300 $(18,193) $(83,677)
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-7
46
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended October 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 69,672,230 $ 52,378,540 $ 50,409,905
Cash paid to suppliers and employees (67,646,691) (50,365,228) (48,726,675)
Interest received 375,847 264,914 246,535
Interest paid (1,324,757) (658,476) (589,085)
Income taxes paid (960,269) (450,136) (585,408)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 116,360 1,169,614 755,272
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,802,392) (37,240) (61,232)
Proceeds from the sale of rental fleet
and equipment 472,364 330,530 332,465
Business acquisition - (1,165,795) -
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
investing activities (1,330,028) (872,505) 271,233
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of capital lease obligations (13,173) (18,833) (7,290)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating,
investing and financing activities (1,226,841) 278,276 1,019,215
CASH AND CASH EQUIVALENTS, beginning of year 5,239,701 4,961,425 3,942,210
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 4,012,860 $ 5,239,701 $ 4,961,425
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-8
47
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended October 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 1,458,993 $ 757,054 $ 1,047,311
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of change in
accounting for income taxes - - (77,000)
Depreciation and amortization 303,093 343,518 367,701
Return of unvested bonus stock - (750) (4,493)
Deferred income taxes (78,000) 20,000 50,000
(Gain) loss on disposal of property
and equipment and rental fleet (49,591) (31,351) 18,640
Cash provided by (used for):
Accounts receivable (307,177) (795,223) 4,667,561
Refundable income taxes (39,333) - -
Inventories (2,112,596) (2,082,279) 2,454,926
Prepaid expenses 146,854 (43,439) (71,335)
Other assets (10,910) - -
Floor plan contracts 797,302 2,684,884 (3,430,620)
Note payable - - (3,880,400)
Accounts payable (14,912) (24,133) (9,188)
Customer deposits (109,532) 63,163 (51,502)
Accruals 132,529 278,170 (326,329)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 116,360 $ 1,169,614 $ 755,272
==============================================================================================================
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-9
48
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF The consolidated financial statements include
CONSOLIDATION the accounts of Holiday RV CONSOLIDATION Superstores,
Incorporated and its subsidiaries (the "Company"), which
include Holiday RV Rental/Leasing, Inc., Holiday RV
Superstores of South Atlanta, Inc., Holiday RV
Superstores of South Carolina, Inc., Holiday RV
Superstores West, Inc. and Holiday RV Superstores of
New Mexico, Inc. All material intercompany accounts and
transactions are eliminated.
INVENTORIES Inventories are valued at the lower of cost or market
on an aggregate basis. New and used vehicles are
accounted for using specific identification. Cost of
parts and accessory inventories is determined by the
first-in, first-out (FIFO) method.
COVENANT NOT The covenant not to compete is being amortized on a
TO COMPETE straight-line basis over seven years. Accumulated
amortization totaled $86,000 and $17,000 as of October
31, 1995 and 1994, respectively.
PROPERTY, Property, equipment and rental fleet are stated at cost.
EQUIPMENT, Depreciation is computed EQUIPMENT, over the estimated
RENTAL FLEET AND useful lives of the assets by the straight-line method
DEPRECIATION for financial reporting and by accelerated methods
for income tax purposes. Amortization of leasehold
improvements is computed by the straight-line method
over the estimated useful lives of the assets. Gains on
sales of rental vehicles are recorded as gross profit.
CHANGE IN METHOD During the fourth quarter of fiscal 1993, the Company
OF ACCOUNTING FOR elected the early adoption, effective November 1, 1992,
INCOME TAXES of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109") which
requires recognition of estimated income taxes payable
or refundable on income tax returns for the current year
and for the estimated future tax effect attributable to
temporary differences and carryforwards. Measurement of
deferred income tax is based on enacted tax laws
including tax rates, with the measurement of deferred
income tax assets being reduced by available tax
benefits not expected to be realized.
F-10
49
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In accordance with FAS 109, the initial application of
the statement has been made as of the beginning of
the Company's fiscal year, and the effect of applying
this new method to years prior to fiscal 1993 have been
presented in the statements of income as the cumulative
effect of the change in accounting method. The
cumulative effect of this change in method for fiscal
1993 was to increase net income by $77,000 ($.01 per
share).
REVENUE Retail sales and related costs of vehicles, parts and
RECOGNITION service are recognized in operations upon delivery
of products or services to customers or, in the case of
recreational vehicles, when title passes to the
customer. Factory incentives and rebates are recorded
as a reduction in the related product cost as earned.
Deferred compensation consists of the unamortized
portion of the value of shares of common stock which
were awarded to various individuals, including certain
employees of the Company. The awards provide for
vesting of the shares over periods of two to five
years. Amortization of the deferred compensation is
computed by the straight-line method over the vesting
periods. Unvested shares forfeited to the Company are
recorded as treasury stock based on the value of the
shares at their original issuance date.
EARNINGS PER SHARE Earnings per share is based upon the weighted average
shares of common stock and common stock equivalents
outstanding during the respective period.
F-11
50
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION, The Company is a multi-state retail chain of dealerships
BUSINESS AND engaged in the retail sales and service of recreational
BUSINESS vehicles and recreational boats and the rental BUSINESS
ACQUISITION of recreational vehicles in the Southeastern United
States, New Mexico and California. During 1995, the
Company dissolved its rental operations and transferred
all rental units to used vehicle inventory to be sold in
the ordinary course of business. Each dealership offers
a full line of new and used recreational vehicles, and
each dealership maintains a parts, service and body
repair facility. Recreational vehicle rental activity
was, and recreational boat sales are, carried on at
selected dealerships.
Approximately 79% of the Company's new vehicle sales for
the year ended October 31, 1995 consist of vehicles
purchased from two manufacturers.
The Company was incorporated in July 1978 in the
State of Florida. In May 1981, the Company formed
Holiday RV Rental/Leasing, Inc., a Florida corporation
to engage in the business of recreational vehicle
rentals. In July 1988, the Company formed Holiday RV
Superstores of South Atlanta, Inc., a Georgia
Corporation which acquired an existing recreational
vehicle sales location in Atlanta, Georgia. In February
1990, the Company formed Holiday RV Superstores of South
Carolina, Inc., a South Carolina corporation which
acquired an existing recreational vehicle and marine
sales location in Greer, South Carolina. In January
1994, the Company formed Holiday RV Superstores West,
Inc., a California corporation which acquired existing
recreational vehicle sales locations in Bakersfield and
Roseville, California in August 1994 (the "California
acquisition"). In September 1995, the Company formed
Holiday RV Superstores of New Mexico, Inc., a New Mexico
corporation which purchased land and a building in Las
Cruces, New Mexico to be used as a recreational vehicle
and marine sales location.
The California acquisition has been accounted
for by the purchase method of accounting, and the
purchase price of $4,731,000 approximates the fair value
of the net assets acquired. The operating results of
this acquisition are included in the Company's
consolidated results of operations from the date of
acquisition.
F-12
51
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro-forma summary presents the
consolidated results of operations of the Company
as if the acquisition had occurred at the beginning of
periods presented and do not purport of be indicative of
what would have occurred had the acquisition been made
as of these dates or of results which may occur in the
future.
1994 1993
--------------------------------------------------------------------------
Revenue $69,031,000 $62,446,000
==========================================================================
Net income $ 1,093,000 $ 1,087,000
==========================================================================
Earnings per share of common stock $ 0.15 $ 0.15
==========================================================================
2. SUPPLEMENTAL For purposes of the statements of cash flows, the
CASH FLOW Company considers all highly liquid debt instruments
INFORMATION purchased with a maturity of three months or less
to be cash equivalents. Cash and cash equivalents
include checking accounts, money market funds and
repurchase agreements.
The following summarizes noncash investing and
financing transactions:
1995 1994 1993
----------------------------------------------------------------------------------------------
Transfer of rental vehicles to inventory $495,020 $ 23,402 $147,753
Purchase of assets in California
acquisition through assumption of
liabilities and issuance of stock
(125,000 shares) - 3,565,213 -
Deferred compensation from
stock issuance 92,127 - -
Capital lease incurred to
purchase equipment 391,580 - -
Accounts payable incurred to purchase
construction in progress 233,754 - -
==============================================================================================
F-13
52
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ACCOUNTS The Company evaluates the collectibility of all accounts
RECEIVABLE receivable and establishes an allowance for doubtful
accounts as deemed necessary. At October 31, 1995 and
1994, all accounts receivable were evaluated and deemed
collectible.
4. INVENORIES Inventories are summarized as follows:
1995 1994
-------------------------------------------------------------------------
New vehicles $14,307,290 $13,055,626
New marine 511,044 422,615
Used vehicles 3,273,885 2,525,036
Used marine 40,464 34,842
Parts and accessories 1,263,386 1,155,777
-------------------------------------------------------------------------
$19,396,069 $17,193,896
=========================================================================
5. PROPERTY AND Property and equipment are summarized as follows:
EQUIPMENT
Useful
Lives 1995 1994
---------------------------------------------------------------------------------
Land $1,855,136 $ 798,211
Buildings and leasehold
improvements 15-31 yrs. 1,176,623 793,774
Machinery and shop
equipment 5- 7 yrs. 179,809 175,573
Office equipment
and furniture 5-10 yrs. 897,313 583,556
Vehicles 3- 5 yrs. 157,325 152,355
Construction in progress
(estimated cost to complete
$380,000) 551,857 -
---------------------------------------------------------------------------------
4,818,081 2,503,469
Less accumulated depreciation
and amortization (870,680) (792,902)
---------------------------------------------------------------------------------
$3,947,401 $1,710,567
=================================================================================
F-14
53
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. RENTAL FLEET Rental fleet is summarized as follows:
Useful
Lives 1994
---------------------------------------------------------------------------------
Rental units 5-7 yrs. $ 698,570
Less accumulated depreciation (167,290)
---------------------------------------------------------------------------------
$ 531,280
=================================================================================
7. FLOOR PLAN Substantially all inventories, accounts receivable and
CONTRACTS AND equipment are pledged as security under floor plan
NOTE PAYABLE contracts. Floor plan contracts are due upon sale of
the related vehicle.
Interest rates and interest expense are as follows for
the years ended October 31:
Interest Interest
Rate Expense
----------------------------------------------------------------
1995 7.75 - 10.00% $1,335,997
1994 6.00 - 9.25% $ 717,138
1993 6.00 - 7.50% $ 547,444
================================================================
Maximum borrowings available under the contracts were
$26,000,000 as of October 31, 1995. The following
summarizes certain information about the borrowings
under the floor plan contracts:
1995 1994
-------------------------------------------------------------------------
Maximum amount outstanding
at any month end $15,257,815 $13,170,112
Average amount outstanding
during the period $13,800,043 $ 9,105,511
Weighted average interest rate
during the period 9.3% 7.7%
=========================================================================
F-15
54
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. STOCK OPTION In August 1987, the Company adopted an Incentive
PLAN Stock Option Plan (the "Plan"). The Plan provides for
the issuance of up to 280,000 shares of common stock.
The option exercise price must be at least 100% of the
fair market value per share of common stock on the date
of grant, except that such price must be at least 110%
of the fair market value per share for employees who
own more than 10% of the outstanding shares of the
Company. The options are exercisable, as determined by
the Compensation Committee, over a period of time, but
not more than ten years from the date of grant and will
be subject to such other terms and conditions as the
Committee may determine. Changes in options are
summarized as follows:
Exercise
Shares Price
---------------------------------------------------------------------------------
Balance, October 31, 1992 100,000 $1.38 - 3.38
Granted 25,000 1.81
---------------------------------------------------------------------------------
Balance, October 31, 1993 125,000 1.38 - 3.38
Granted 25,000 1.82
Canceled (25,000) 3.38
---------------------------------------------------------------------------------
Balance, October 31, 1994 and 1995 125,000 1.38 - 2.50
=================================================================================
At October 31, 1995, 100,000 of the above options were
exercisable.
Under a separate plan, the Company granted
options during 1993 for 50,000 shares to certain
directors with an exercise price of $1.81 per share. All
of these options were exercisable at October 31, 1995.
None were exercised during the year.
9. RESTRICTED In August 1994, as part of the California acquisition,
STOCK OPTIONS the Company granted options for 125,000 shares at an
exercise price equal to the average closing price of the
Company's common stock for the 30 days prior to the
acquisition, $1.70 per share. These options expire on
July 31, 2004. Of these options, 100,000 are
exercisable as of October 31, 1995. The remaining
options become exercisable on August 1, 1996.
In connection with the purchase of the Greer, South
Carolina dealership, the Company granted an option to
the sellers to purchase 20,000 shares of the
F-16
55
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Company's unregistered common stock. This option was
granted on April 2, 1991 at an exercise price of $3.44
per share. The option is exercisable, in whole or in
part, at anytime within five (5) years from the date of
the grant of the option. As of October 31, 1995, the
option was not exercised.
10. SALES AND The following is a summary of sales and service and
SERVICE cost of sales and service:
1995 1994 1993
---------------------------------------------------------------------------------
Sales and service:
New vehicles and marine $43,294,387 $32,887,359 $29,112,340
Used vehicles and marine 17,201,027 13,695,022 10,393,026
Service, parts and accessories 6,678,911 4,555,283 3,743,850
Rental revenue 86,184 302,788 542,212
Other, net 2,768,849 1,764,662 1,975,276
---------------------------------------------------------------------------------
$70,029,358 $53,205,114 $45,766,704
=================================================================================
Cost of sales and service:
New vehicles and marine $38,856,410 $30,193,033 $26,774,205
Used vehicles and marine 14,508,723 11,755,293 9,054,150
Service, parts and accessories 3,467,932 2,509,682 2,072,490
Rentals 38,736 192,229 250,787
---------------------------------------------------------------------------------
$56,871,801 $44,650,237 $38,151,632
=================================================================================
F-17
56
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. INCOME TAXES The components of income taxes are as follows:
1995 1994 1993
---------------------------------------------------------------------------------
Current:
Federal $ 883,000 $380,000 $493,000
State 175,000 80,000 57,000
---------------------------------------------------------------------------------
1,058,000 460,000 550,000
---------------------------------------------------------------------------------
Deferred:
Federal (73,000) 11,000 27,000
State (5,000) 9,000 23,000
---------------------------------------------------------------------------------
(78,000) 20,000 50,000
---------------------------------------------------------------------------------
Total income taxes $ 980,000 $480,000 $600,000
=================================================================================
F-18
57
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of deferred tax assets and liabilities
consist of the following:
1995 1994
----------------------------------------------------------------------------
Deferred tax assets:
Property and equipment $ 10,000 $ 13,000
Deferred compensation 3,000 17,000
Franchise fees 2,000 3,000
Noncompete agreement 17,000 4,000
Inventory 60,000 53,000
State net operating loss carryforwards 7,000 10,000
----------------------------------------------------------------------------
Gross deferred income tax assets 99,000 100,000
Valuation allowance - -
----------------------------------------------------------------------------
Total deferred tax assets 99,000 100,000
----------------------------------------------------------------------------
Deferred tax liabilities:
Deferred finance income (18,000) (79,000)
Rental fleet (37,000) (55,000)
----------------------------------------------------------------------------
Total deferred tax liabilities (55,000) (134,000)
----------------------------------------------------------------------------
Total net deferred tax assets (liabilities) 44,000 (34,000)
Less current deferred tax assets (49,000) (63,000)
----------------------------------------------------------------------------
Long-term deferred tax liabilities $ (5,000) $ (97,000)
============================================================================
F-19
58
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summary reconciles differences from taxes
at the federal statutory rate with the effective rate
before the cumulative effect of change in accounting:
1995 1994 1993
------------------ ----------------- -------------------
Amount Percent Amount Percent Amount Percent
-----------------------------------------------------------------------------------------------
Income taxes at
statutory rates $829,000 34.0% $420,000 34.0% $534,000 34.0%
State income taxes, net
of federal benefit 112,000 4.6% 59,000 4.8% 57,000 3.6%
Other 39,000 1.6% 1,000 .1% 9,000 .6%
-----------------------------------------------------------------------------------------------
Income taxes at
effective rates $980,000 40.2% $480,000 38.9% $600,000 38.2%
===============================================================================================
At October 31, 1995, the Company has net operating
loss carryforwards of approximately $115,000 for state
income tax purposes that expire in 2004.
12. EMPLOYEES The Company adopted a Profit-Sharing and Employee
BENEFIT Investment Plan in 1992 which covers substantially all
PLAN employees meeting certain minimum age and service Plans
requirements. Contributions to the plan, included in
selling, general and administrative expenses, were
$94,204, $46,883 and $59,659 for 1995, 1994 and 1993,
respectively.
13. LEASES AND The Company conducts its operations from leased
RELATED PARTY facilities including land and buildings in Orlando and
TRANSACTIONS Fort Myers, Florida; Greer, South Carolina; and
Bakersfield and Roseville, California. The Orlando
(excluding the corporate facility) facility is leased
from the principal stockholders. The leases which are
classified as operating leases, expire on various dates
from 1994 through 2000 and include renewal options.
The Company also leases computer equipment which
is included in property and equipment in the amount of
$391,580. The lease, which is classified as a capital
lease, expires in 2002, at which time the Company will
have an option to purchase the computer equipment for a
nominal amount.
F-20
59
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of October 31, 1995, future minimum rental payments
required under the capital lease and operating leases
that have initial or remaining noncancelable lease terms
in excess of one year are as follows:
Capital Operating
Lease Leases
1996 $ 72,451 $ 487,000
1997 79,037 420,000
1998 79,037 420,000
1999 79,037 308,000
2000 79,037 84,000
Thereafter 151,490 -
Total minimum lease payments $ 540,089 $1,719,000
==========
Amount representing interest (161,682)
---------
Present value of minimum lease payments $ 378,407
=========
Rental expense under all operating leases was as
follows:
Related
Total Parties
--------------------------------------------------------------------------
1995 615,800 $144,000
1994 401,775 $144,000
1993 357,400 $172,000
==========================================================================
14. COMMITMENTS Concentration of Risk
AND
CONTINGENCIES Due to the nature of its business and the volume of
sales activity, the Company accumulates, from time to
time, bank balances in excess of the insurance provided
by Federal and/or other insurance sources. At October
31, 1995, such excess balances totaled approximately
$4,580,000.
F-21
60
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Third-Party Financing
The Company uses third-party banks and/or finance
companies to assist its customers in locating financing
for vehicle purchases. The Company refers customers to
one or more of these third-party financing sources and
earns a referral fee if the third-party lender
consummates a loan contract with the customer. These
contracts represent third-party financing, and the
Company provides no underwriting or credit approval
services for the lender. The Company's referral fees
are in fact a commission and are typically based upon
the difference between the interest rate the customer
pays under the contract with the lender and an interest
rate designated by the lender. The Company does not
service the collection of these loans or receivables
either initially or in the future. The Company is
charged back a pro rata amount of the commission by the
lender if the loan does not reach maturity for various
reasons such as foreclosure, refinancing or loan
pay-off, if this amount exceeds reserves retained by the
lender.
The Company records this commission income based
upon the amount earned less allowances for chargebacks.
In determining the allowance for chargebacks, the
Company takes into consideration the total customer
loans outstanding and estimates the exposure for
potential chargebacks associated with these loans. The
Company estimates the probability for loan payoffs and
estimates potential chargebacks to the Company related
thereto. The Company also considers the current and
future economic conditions, the effects of the change in
consumer interest rates and the aging of all loans
outstanding. The chargeback allowance was approximately
$152,000 and $193,000 at October 31, 1995 and 1994,
respectively. Finance chargebacks were approximately
$40,000, $588,000 and $111,000 for 1995, 1994 and 1993,
respectively.
15. FUTURE The Company is required to adopt the provisions of
ACCOUNTING Statement of Financial Accounting Standards No. 123,
CHANGE ("SFAS No. 123"), Accounting for Stock Based
Compensation for or before its fiscal year ending
October 31, 1997. SFAS No. 123, among other things,
requires certain added disclosures regarding the fair
value of equity instruments, such as stock options,
issued by
F-22
61
HOLIDAY RV SUPERSTORES,
INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the Company. In addition, SFAS No. 123 encourages the
recognition of expense for the fair value of equity
instruments issued by the Company.
The Company has not yet determined whether the optional
expense recognition provisions of SFAS No. 123 will be
adopted, and therefore, the effects of adopting SFAS No.
123 cannot be determined.
F-23
62
SCHEDULE VIII
HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED OCTOBER 31, 1995, 1994, 1993
Charges Other
Balance at to cost Charges charges- Balance
Beginning and to other additions at end of
Year Description of Period expenses Accounts (deductions)(a) period(b)
- ------------------------------------------------------------------------------------------------------------
1995 Finance Commissions
Chargeback Reserves $193,374 $ 39,858 $ - - - $ (81,140) $152,092
1994 Finance Commissions
Chargeback Reserves 603,244 339.476 - - - (748,346) 193,374
1993 Finance Commissions
Chargeback Reserves 587,925 111,395 - - - (96,076) 603,244
- ------------------------------------------------------------------------------------------------------------
(a) Finance income chargebacks paid.
(b) Finance reserves balance includes an allowance for disputed chargeback
claims of $343,465 for the year ended 1993.
S-1
63
ANNUAL REPORT ON FORM 10-K
ITEM 11
CUMULATIVE TOTAL SHAREHOLDER RETURN
PERFORMANCE GRAPH AS OF OCTOBER 31,
1991, 1992, 1993, 1994 AND 1995
FOR
HOLIDAY RV SUPERSTORES, INC., THE S&P 500 INDEX, AND
INDEX OF HOLIDAY RV SUPERSTORES, INC.'S PEER GROUP
64
DISCLOSURE REQUIRED FOR
ITEM 402(L) FOR FORM 10-K (ANNUAL REPORT)
PERFORMANCE GRAPH
Here in displays a line graph plotting three (3) series of points,
whereby the Y axis is the total cumulative shareholder return, and
the X axis is the year, being 1990 through 1995.
The plotted points (cumulative shareholder return by year) are listed in the
table below.
1990 1991 1992 1993 1994 1995
----------------------------------------------------------------------------------------
RVEE 100.00 78.83 80.74 146.15 92.31 184.62
----------------------------------------------------------------------------------------
S&P 500 100.00 133.50 146.79 168.72 175.25 221.58
----------------------------------------------------------------------------------------
PEER GROUP 100.00 99.04 87.28 258.60 255.56 202.14
----------------------------------------------------------------------------------------
The performance graph above illustrates the cumulative yearly
shareholder return for the past five years, assuming a $100 investment on
October 31, 1990, in (1) the Company; (RVEE) (2) The Standard and Poor's 500
composite index, assuming reinvestment of dividends; (3) a Company determined
Market Capitalization Peer Group composite index, assuming reinvestment of
dividends.
The Peer Group consist of twenty publicly owned retail companies with
similar market capitalization as Holiday RV Superstores, Inc., whose common
stocks are traded on exchanges. The market capitalization criteria in
determining a peer group was selected by the Company for shareholder return
comparative purposes, as there is no published industry or line-of-business
index comparable to the industry or line-of-business as that of the Company.
The peer group consist of the following companies:
Audio King Corp., Brendles Inc., Eagle Holding Inc., Evans Inc., FFP Partners
LP-CL, A., Foodarama Supermarkets, Harold's Stores Inc., Hills Department
Stores Inc., Holiday RV Superstores, Inc., Huffman Koos Inc., Michaels (J.)
Inc., Pubco Corp., Seaway Food Town Inc., Sound Advice Inc., Spec's Music Inc.,
Strober Organization Inc., Sunshine-Jr Stores, Uni-Marts Inc. CL A, Village
Super Market CL A, Warehouse Club Inc.