-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N2ocymC2TUjvnxgRcVaargQG+V4XoD7ByjJpEjgarFN+Sp3Uy/Vervo82QGP/GI4 zhBAMZsP5KhS+FqrvXLx7A== 0000850476-98-000013.txt : 19980518 0000850476-98-000013.hdr.sgml : 19980518 ACCESSION NUMBER: 0000850476-98-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REXHALL INDUSTRIES INC CENTRAL INDEX KEY: 0000850476 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR HOMES [3716] IRS NUMBER: 954135907 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17824 FILM NUMBER: 98625363 BUSINESS ADDRESS: STREET 1: 46147 7TH STREET WEST CITY: LANCASTER STATE: CA ZIP: 93534 BUSINESS PHONE: 8057260565 MAIL ADDRESS: STREET 1: 46147 7TH STREET WEST CITY: LANCASTER STATE: CA ZIP: 93534 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1998 Commission file number: 0-17824 REXHALL INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) California 95-4135907 (State of Incorporation) (IRS Employer Identification No.) 46147 7th Street West, Lancaster California 93534 (Address of principal executive offices) (Zip Code) (805) 726-0565 (Registrant's telephone number, including area code) 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. Yes x No _____. Applicable only to Corporate Issuers State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 2,776,891 as of 3/31/98. REXHALL INDUSTRIES, INC. INDEX PART 1 - FINANCIAL INFORMATION PAGE NUMBER Item 1. Financial Statements: Balance Sheets at March 31, 1998 3 and December 31, 1997 Statements of Operations for the three months ended March 31,1998 and March 31, 1997 4 Statements of Cash Flows for the three months ended March 31, 1998 and March 31, 1997 5 Notes to Condensed Financial Statements as of March 31, 1998 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Reports on Form 8-K 11 Reports on Form 8-K. 8-K 1/5/98, 8-K 1/8/98, 8-KA 2/23/98 11 Signatures 12 (Audited) (Unaudited) December 31 Mar 31 PART I - FINANCIAL INFORMATION 1997 1998 Item 1. - Financial Statements REXHALL INDUSTRIES, INC. CONDENSED BALANCE SHEETS Assets: Current Assets: Cash and Cash Equivalents $ 811,000 $ 303,000 Accounts Receivable 5,378,000 6,984,000 Inventories 9,439,000 8,748,000 Other Current Assets 59,000 80,000 Income Tax Receivable 337,000 ---- Deferred Income Taxes 2,197,000 2,197,000 Total Current Assets 18,221,000 18,312,000 Property and Equipment - Net 4,957,000 4,992,000 Other --- 190,000 TOTAL ASSETS $23,178.00 $23,494,000 Liabilities and Shareholders' Equity: Current Liabilities: Accounts Payable 6,111,000 5,803,000 Restructuring Reserve 605,000 545,000 Warranty Allowance 937,000 914,000 Accrued Legal Settlement 1,590,000 1,590,000 Dealer Incentives 608,000 489,000 Other Accrued Liabilities 987,000 1,091,000 Current Portion of long-term dept 27,000 28,000 Total Current Liabilities 10,865,000 10,460,000 Deferred Income Tax Liabilities 36,000 36,000 Long Term Debt 797,000 790,000 Total Liabilities 11,698,000 11,286,000 Shareholders' Equity: Preferred Stock - no par value; Authorized 1,000,000 shares; no shares outstanding at March 31, 1998 and December 31, 1997 Common Stock - no par value; Authorized 10,000,000 shares; Outstanding 2,714,000 shares at December 31,1997 and 2,777,000 shares at March 31, 1998 6,267,000 6,452,000 Retained Earnings 5,213,000 5,756,000 Total Shareholders' Equity 11,480,000 12,208,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $23,178,000 $23,494,000 PART I - FINANCIAL INFORMATION Item 1. - Financial Statements REXHALL INDUSTRIES, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, 1997 March 31, 1998 Sales $17,665,000 $14,170,000 Cost of Sales 15,265,000 12,007,000 Gross Profit 2,400,000 2,163,000 Selling, General, Administrative Expenses and Other Expenses 1,496,000 1,258,000 Income Before Income Taxes 904,000 905,000 Income Taxes 366,000 362,000 Net Income $ 538,000 $ 543,000 Basic Net Income Per Common Share $ .19 $ .20 Diluted Net Income Per Common and Equivalent $ .19* $ .20 Share Weighted Average Number of Common Shares Outstanding-Basic 2,761,000 2,722,000 Weighted Average Number of Common and Equivalent Shares Outstanding - Diluted 2,856,000 2,771,000 *Originally reported as $.20 per share based on 2,725,000 shares outstanding, however, considering the 5% stock dividend paid on 5/26/97, adjusted earnings to $.19 per share. PART I - FINANCIAL INFORMATION Item 1. - Financial Statements REXHALL INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 1997 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $538,000 $543,000 Adjustments to reconcile net income to net cash used in Operating Activities: Depreciation and amortization 50,000 83,000 (Increase) in accounts receivable (1,763,000) (1,606,000) Decrease in inventories 1,175,000 691,000 (Increase) in other current assets (30,000) (21,000) (Decrease) in accounts payable (806,000) (308,000) Increase(Decrease) in other current liabilities (93,000) 21,000 (Decrease) In dealer incentives --- (119,000) Increase in non-current accrued liabilities 112,000 ---- Income tax receivable 267,000 337,000 Net cash used in operating activities (550,000) (379,000) CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (93,000) (118,000) Net cash(used) in investing activities (93,000) (118,000) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt (8,000) (6,000) Repurchase of stock (45,000) (5,000) Net cash used in financing activities (53,000) (11,000) NET DECREASE IN CASH AND CASH EQUIVALENTS (696,000) (508,000) BEGINNING CASH AND CASH EQUIVALENTS 742,000 811,000 ENDING CASH AND CASH EQUIVALENTS $ 46,000 $ 303,000 PART I - FINANCIAL INFORMATION Item 1. REXHALL INDUSTRIES, INC. Notes to the Condensed Financial Statements March 31, 1998 1. Basis of Presentation: The accompanying unaudited condensed Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, they include all adjustments, consisting of normal accruals, necessary to present fairly the information set forth herein in accordance with generally accepted accounting principles for interim reporting. Prior period financial statements have been restated to conform with current period financial statement presentation. For further information refer to the Financial Statements and footnotes included in the Registrant's Annual Report on Form 10-K for year ended December 31, 1997. The Results of Operations for any interim period are not necessarily indicative of the results to be expected for the full year. 2. Summary of Significant Accounting Polices: Income Taxes Income tax expense is based upon the estimated effective tax rate for the entire fiscal year. The effective tax rate is subject to ongoing evaluation by management. Earnings Per Share Basic earnings per share represents net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share represents net earnings divided by the weighted-average number of shares outstanding, inclusive of the dilutive impact of common stock equivalents. During the first quarters ended March 31, 1998 and March 31, 1997, the difference between basic and diluted earning per share was due to the dilutive impact of options to purchase common stock. Recently Issued Pronouncements In June 1997, The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS" 130"). SFAS 130 established standards for the reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. SFAS 130 requires all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement displayed with the same prominence as other financial statements. SFAS 130 does not require a specific financial statement format but requires an enterprise to display an amount representing total comprehensive income for the period covered by the financial statement. Comprehensive income include items such as net income, changes in value of available for sale securities and foreign currency translation gains and losses. SFAS 130 requires an enterprise to (a) classify items of other comprehensive income by there nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of statement of financial position. SFAS 130 is effective for fiscal years beginning after December 15, 1997. There is no difference between net income and comprehensive income for quarter ended March 31, 1998 or March 31, 1997. In June 1997, FASB issued Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131"). SFAS 131 established standards for public business enterprises to report information about operating segments in annual financial statements and requires those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also established standards for related disclosures about products and services, geographic areas and major customers. SFAS 131 requires, among other items, that a public business enterprises report a measure of segment profit or loss, certain specific revenue and expense items, and segment assets information about the revenues derived from the enterprise's products or services and major customers. SFAS 131 also requires the enterprise report descriptive information about the way the operating segments were determined and the products and services provided by the operating segments. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. In the initial year of application, comparative information for earlier years is to be restated. SFAS 131 need not be applied to interim financial statements in the initial year of application, but comparative information for interim periods in the initial year of application is to be reported in financial statements for interim periods in the second year of application. The Company adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related information, (SFAS 131) during the year ended December 31, 1997. Due to the closure of the Elkhart, Indiana manufacturing facility announced during fiscal 1997, management no longer geographically defines its business based on its production facilities. Effective January 1, 1998 the Company measures its profitability and result of operations based on the remaining operating segment in Lancaster, California. 3. Detail of Inventory December 31, 1997 March 31,1998 Raw Material $ 4,659,000 3,578,000 Work in Process 2,124,000 1,013,000 Finished Motorhomes 2,656,000 4,157,000 TOTAL $9,439,000 $8,748,000 4. Income Per Share The following is a reconciliation of the basic and diluted income per share computation for the quarters ended March 31, 1997 and 1998. Three Months Ended March 31, 1997 March 31, 1998 Net income used for basic diluted income per share $ 538,000 543,000 Share of Common Stock and Common Stock equivalents: Weighted average shares used In basic computation 2,761,000 2,722,000 Weighted stock option 95,000 49,000 Shares used in diluted computation 2,856,000 2,771,000 Income per share: Basic $ 0.19 $ 0.20 Diluted 0.19 0.20 During 1997, the Company issued a 5% stock dividend, resulting in the issuance of 131,000 shares of common stock. The impact of this stock dividend has been retroactively recorded in the per share calculation for the three months ended March 31, 1997. 5. RESTRUCTURING During 1997, the Company's Board of Directors approved a restructuring of the Company's operations. The restructuring plan provided for changes in the operations, and production strategies. In implementing these plans, the Company decided to cease manufacturing operations at it's Elkhart, Indiana plant. The Company recorded charges aggregating $1,042,000 as a result of this restructuring plan in the fourth quarter of 1997. The ceasing of manufacturing operations at the Elkhart facility was made in conjunction with the recently completed expansion of the California facility to accommodate the projected increase in production at the California plant. As a result of this repositioning, the Company determined that certain of it's fixed assets and inventories located at the Elkhart plant should be written down, resulting in a charge of approximately $937,000. Addiitionally, the Company recorded severance, rebates and other related costs relating to the closure of the Elkhart plan for approximately $105,000, which was included as a restructuring charge in the accompanying statements of operations for the year-ended December 31, 1997. As of March 31, 1998, the Company had a reserve of $545,000 relating to this restructuring. Restructuring reserve at 12/31/97 $605,000 Payments and asset write-downs through March 31, 1998 60,000 Future cash outlay and charges $545,000 PART I - FINANCIAL INFORMATION Item 2. - Management Discussion and Analysis of Financial Condition and Results of Operations Results of Operations For the Three Months ended March 31, 1998 and For the Three Months ended March 31, 1997 Sales - 1998 Compared with 1997 Sales for the quarter ended March 31, 1998, totaled $14,170,000 as compared to $17,665,000 in 1997. The units sold for the quarter ended March 31, 1998 were 231 vs. 307 in 1997. The decrease in sales was principally due to the unusual amount of inclement weather conditions that hampered first quarter retail sales efforts, limited availability of Allison Transmissions and the lead time needed to increase production at the California facility to compensate for the production closure at Indiana. Cost of Sales - 1998 compared with 1997 The Cost of Sales as a percentage of sales for the first quarter of 1998 was 84.7% vs 86.4% in the first quarter of 1997. The cost of sales percentage for 1998 decreased due to the centralization of production in the California facility. Gross Profit for the first quarter of 1998 was 15.3% vs 13.6% for the first quarter of 1997. This increase was due to the cost decrease discussed in Cost of Sales above. The Company anticipates that gross margins should improve in the future due to economies of scale realized in operating one production facility. However there can be no assurance that gross margins will improve due to the unknown nature of competitors within the industry. Selling, General Administrative and Other Expenses-1998 compared with 1997 Selling, General Administrative, and Other Expenses decreased in the first quarter of 1998 by $238,000, mostly as a result of the decrease in direct selling costs associated with the reduction in sales as discussed in Sales above. Selling, General and Administrative and Other Expenses, as a percentage, were 8.9.% of sales in 1998 as compared to 8.5% in the first quarter of 1997. This increase was due to the expense amounts being spread over a smaller sales base. PART I - FINANCIAL INFORMATION Item 2. - Management Discussion and Analysis or Plan of Operations Income before taxes - 1998 compared with 1997 The decrease in income before taxes in the first quarter of 1998 was due to reduced sales as discussed in section Sales above. The increase in income after taxes in the first quarter of 1998 was due to reduced costs of sales and efficiencies gained from the Company's restructuring plan adopted in the fourth quarter of 1997, including efficiencies gained from the Indiana plant closure. Financial Condition, Capital Resources and Liquidity The Company's cash needs are primarily to support it's inventory production, refurbishment of facilities and equipment and systems development. The Company has historically financed its operations primarily with internally generated funds and trade credit. At March 31, 1998, working capital was $7,852,000 as compared to working capital of $7,356,000 at December 31, 1997. The Company has available a $3,500,000 revolving line of credit with a bank expiring on June 1, 1998. At March 31, 1998, no amounts were outstanding under this line. The line of credit agreement requires the compliance with certain financial and operations covenants as defined in the agreement. The Company was not in compliance with certain of its covenants as of March 31, 1998. However, the Company requested and received a waiver of such non-compliance. Cash used in operating activities for the first quarter ended March 31, 1998 was $379,000 as compared to $550,000 for the comparable period in 1997. During the first quarter of 1998, accounts receivable increased by $1,606,000 and accounts payable decreased by $308,000. These cash flow uses were offset by a reduction in inventory of $691,000 and net income of $543,000 for the period. During the first quarter $60,000 of cash was used to execute the Company's restructuring plan adopted in the fourth quarter of 1997. Cash flows from investing activities for the first quarter ended March 31, 1998 consisted solely of capital expenditures of $118,000 as compared to $93,000 for comparable period in 1997. The Company's capital expenditures for the remainder of 1998 are currently expected to be approximately, $150,000 and will relate to refurbishment and expansion of certain production equipment and the enhancement of management information system. Cash flows from financing activities for the first quarter ended March 31, 1998 consisted principally of a stock repurchase of $5,000 and repayment of long term debt of $6,000. The Company will buy back stock in the open market from time to time when the market price is deemed to be appropriate by management. Future repurchases of common stock for the remainder of 1998 are not expected to be significant. Management believes that funds generated from operation, available borrowing under its line of credit and the use of trade credit will be sufficient to satisfy the Company's working capital requirements and commitments for capital expenditures through the first quarter of 1999. SEASONALITY The Company's business is subject to seasonal and quarterly fluctuations. Historically, the Company has realized a higher portion of its sales in the second quarter and third quarter, consistent with the summer vacation season. This is consistent with industry trends. CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE PRIVATE SECURITY LITIGATION REFORM ACT OF 1995 Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations that are not related to historical results are forward looking statements. Actual results may differ materially from those projected or implied in the forward looking statements. Further, certain forward looking statements are based upon assumptions of future events which may not prove to be accurate. These forward looking statements involve risks and uncertainties which are more fully described in Item 1, Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. I - OTHER INFORMATION Item 1 - Legal Proceedings Legal Settlement - The class action lawsuit Masterjohn et al vs. Rexhall, et al, Case No. 752188 filed in the Superior Court of Orange County, California has been settled subject to court approval. Under the agreement Rexhall would pay $825,000 in cash, and issue one coupon per vehicle owned by members of the class of $1250 towards purchase of a new Rexhall vehicle or $200 toward service, parts and labor. Coupons would be redeemable at Rexhall's two service centers in Indiana and California, as well as three other dealerships geographically dispersed. The total number of vehicles owned by class members is estimated at approximately 5,000. The Company has recorded a charge of $1,590,000 in 1997 relating to this settlement. Item 2. - Reports on Form 8-K a) Reports on Form 8-K: 8-K 1/5/98 0000850476-98-000002 8-K 1/8/98 0000850476-98-000005 8-KA 2/23/98 0000850476-98-000007 REXHALL INDUSTRIES, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REXHALL INDUSTRIES, INC. by (Registrant) Date: May 15, 1998 /S/William J. Rex William J. Rex Chairman, President and Chief Executive Officer Date: May 15, 1998 /S/Phillip J. Parks Phillip J. Parks Controller EX-27 2
5 3-MOS DEC-31-1997 MAR-31-1998 303,000 0 6,984,000 0 8,748,000 18,312,000 4,992,000 0 23,494,000 10,460,000 0 0 0 6,452,000 0 23,494,000 14,170,000 14,170,000 12,007,000 12,007,000 1,258,000 0 0 905,000 362,000 543,000 0 0 0 543,000 .20 .20
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