-----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, M47UO06dZaHuSMqD5yNwIrFSQNRZl67WlJHSaoC5N07gD81VmwBBWY7xu7POu347 AewLnfKotgndr4WohasVkA== 0000850476-99-000018.txt : 19991117 0000850476-99-000018.hdr.sgml : 19991117 ACCESSION NUMBER: 0000850476-99-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99753345 BUSINESS ADDRESS: STREET 1: 46147 7TH STREET WEST CITY: LANCASTER STATE: CA ZIP: 93534 BUSINESS PHONE: 6617260565 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 September 30, 1999 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) (661) 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: 3,160,880 as of November 9, 1999. REXHALL INDUSTRIES, INC. INDEX PART 1 - FINANCIAL INFORMATION PAGE NUMBER Item 1. Financial Statements (Unaudited): Condensed Balance Sheets at September 30, 1999 3 and December 31, 1998 Condensed Statements of Earnings for the three and nine months ended September 30,1999 and September 30, 1998 4-5 Condensed Statements of Cash Flows for the nine months ended September 30, 1999 and September 30, 1998 6 Notes to Condensed Financial Statements as of September 30, 1999 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 Item 3. Quantitative and Qualitative Disclosure about Market Risks 13 PART II - OTHER INFORMATION Legal Proceedings 13 Reports on Form 8-K: NONE Signatures 14 (Unaudited) (Audited) September 30 December 31 PART I - FINANCIAL INFORMATION 1999 1998 Item 1. - Financial Statements REXHALL INDUSTRIES, INC. CONDENSED BALANCE SHEETS ASSETS CURRENT ASSETS Cash $ 2,674,000 $ 5,017,000 Accounts Receivable 7,312,000 4,631,000 Inventories 18,746,000 12,774,000 Other Current Assets 360,000 33,000 Deferred Income Taxes 1,063,000 956,000 Total Current Assets 30,155,000 23,411,000 Property and Equipment - Net 4,821,000 4,519,000 Property Held for Sale 523,000 541,000 TOTAL ASSETS $ 35,499,000 $ 28,471,000 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $ 11,344,000 $ 7,958,000 Warranty Allowance 1,013,000 966,000 Accrued Legal Settlement 740,000 765,000 Accrued Legal 760,000 829,000 Dealer Incentives 952,000 830,000 Accrued Compensation and Benefits 579,000 672,000 Other Accrued Liabilities 436,000 557,000 Current Portion of Long-Term Debt 29,000 29,000 Total Current Liabilities 15,853,000 12,606,000 Deferred Income Tax Liabilities 149,000 106,000 Long-Term Debt 747,000 767,000 TOTAL LIABILITIES 16,749,000 13,479,000 SHAREHOLDERS' EQUITY Preferred Stock - no par value; Authorized 1,000,000 shares; No shares outstanding at December 31,1998 and September 30, 1999 --- --- Common Stock - no par value; Authorized 10,000,000 shares; issued and outstanding 3,010,000 shares at December 31, 1998 and 3,010,000 shares at September 30, 1999 6,788,000 6,788,000 Loan receivable from exercise of options (399,000) (399,000) Retained Earnings 12,361,000 8,603,000 TOTAL SHAREHOLDERS' EQUITY 18,750,000 14,992,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $35,499,000 $28,471,000 See accompanying notes to condensed financial statements PART I - FINANCIAL INFORMATION Item 1. - Condensed Financial Statements REXHALL INDUSTRIES, INC. CONDENSED STATEMENTS OF EARNINGS (UNAUDITED) Three Months Ended September 30, 1999 September 30, 1998 Sales $20,590,000 $18,755,000 Cost of Sales 16,574,000 15,079,000 Gross Profit 4,016,000 3,676,000 Selling, General, Administrative Expenses and Other Expenses 1,956,000 2,068,000 Earnings Before Income Taxes 2,060,000 1,608,000 Income Taxes 809,000 643,000 Net Earnings $ 1,251,000 $ 965,000 Basic Earnings Per Share $ .42 $ .33 Diluted Earnings Per Share $ .42 $ .32 Weighted Average Shares Outstanding - Basic 3,010,000 2,953,000 Weighted Average Shares Outstanding - Diluted 3,010,000 2,980,000 See accompanying notes to condensed financial statements. PART I - FINANCIAL INFORMATION Item 1. - Financial Statements REXHALL INDUSTRIES, INC. CONDENSED STATEMENTS OF EARNINGS (UNAUDITED) Nine Months Ended September 30, 1999 September 30, 1998 Sales $ 63,760,000 $ 51,709,000 Cost of Sales 51,939,000 42,542,000 Gross Profit 11,821,000 9,167,000 Selling, General, Administrative Expenses and Other Expenses 5,572,000 5,063,000 Earnings Before Income Taxes 6,249,000 4,104,000 Income Taxes 2,491,000 1,640,000 Net Earnings $ 3,758,000 $ 2,464,000 Basic Earnings Per Share $ 1.25 $ .83 Diluted Earnings Per Share $ 1.25 $ .83 Weighted Average Shares Outstanding - Basic 3,010,000 2,953,000 Weighted Average Shares Outstanding - Diluted 3,010,000 2,980,000 See accompanying notes to condensed financial statements. PART I - FINANCIAL INFORMATION Item 1. - Financial Statements REXHALL INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended Sept. 30, 1999 Sept. 30, 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 3,758,000 $ 2,464,000 Adjustments to reconcile net income to net cash (used in)provided by Operating Activities: Depreciation and Amortization 234,000 253,000 Loss on sale of fixed assets 5,000 --- Net change in deferred tax assets and liabilities (64,000) --- (INCREASE) DECREASE IN: Accounts Receivable (2,681,000) 1,545,000 Inventories (5,972,000) (1,593,000) Other Assets (327,000) 246,000 INCREASE (DECREASE) IN: Accounts Payable 3,386,000 1,868,000 Other Accrued and Current Liabilities (261,000) 1,368,000 Dealer Incentives 122,000 222,000 Net cash (used in) provided by operating activities (1,800,000) 6,373,000 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (581,000) (366,000) Proceeds from the sale of fixed assets 59,000 --- Net cash used in provided by in investing activities (522,000) (366,000) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt (21,000) (20,000) Issuance of common stock --- 187,000 Net cash(used)provided by in financing activities (21,000) 167,000 NET INCREASE (DECREASE) IN CASH (2,343,000) 6,174,000 BEGINNING CASH BALANCE 5,017,000 811,000 ENDING CASH BALANCE $ 2,674,000 $ 6,985,000 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID DURING THE YEAR FOR Interest $ 84,000 $ 89,000 Income Taxes 2,900,000 106,000 SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES: Issuance of Common Shares For Notes Receivable $ --- $ 385,000 PART I - FINANCIAL INFORMATION Item 1. REXHALL INDUSTRIES, INC. Notes to the Condensed Financial Statements September 30, 1999 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. 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, 1998. 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 options. Reclassifications Certain reclassifications have been made to prior year to conform to current period financial statement presentation. 3. Detail of Inventory September 30, 1999 December 31, 1998 Raw Material $12,058,000 $ 7,593,000 Work in Process 2,253,000 1,522,000 Finished Motorhomes 4,435,000 3,659,000 TOTAL $18,746,000 $12,774,000 Ford Motor Company has advised Rexhall that they are changing their chassis allocation program for the Year 2000. This could lower our monthly allocation of Ford chassis. In anticipation of the revised allocation program, the Company has increased the chassis inventory. For the Year 2000, the Company will also pursue alternative sources of chassis to augment any possible reduction in allocation. 4. Income Per Share The following is a reconciliation of the basic and diluted earnings per share computation for the three and nine month periods ended September 30, 1999 and 1998. Three Months Nine Months Sept. 30, 1999 Sept. 30, 1998 Sept. 30, 1999 Sept. 30, 1998 Net income used for basic and diluted earnings per share $ 1,251,000 $ 965,000 $ 3,758,000 $ 2,464,000 Weighted average shares used In basic computation 3,010,000 2,953,000 3,010,000 2,953,000 Dilutive effect of stock option --- 27,000 --- 27,000 Weighted average shares used in dilutive computation 3,010,000 2,980,000 3,010,000 2,980,000 Earnings per share: Basic $ 0.42 $ 0.33 $ 1.25 $ 0.83 Diluted $ 0.42 $ 0.32 $ 1.25 $ 0.83 5. Long-Term Debt The Company negotiated a renewal of the $3,500,000 line of credit with a bank through July 1, 2001. Under this line, the Company has set aside $220,000 for an irrevocable standby letter of credit issued to the Department of Industrial Relations for worker's compensation. At September 30, 1999, no amounts were outstanding. The line contains various covenants, for which the Company was in compliance. The Company has a line of credit with Ford Motor Credit Corp. (FMCC) permitting the borrowings up to $4,000,000. Borrowings under the line bear interest at 9.25% at September 30, 1999. The outstanding balance at September 30, 1999 was $8,700,000. The $4,700,000 over advance is currently being negotiated with FMCC. The Company is confident that this temporary over advance will be approved or the line expanded. The Company has adequate resources to pay down this amount to the borrowing limit if approval is not obtained. 6. Subsequent Event On August 30, 1999, the Company's Board of Directors approved a 5% stock dividend for stockholders of record on September 15, 1999. The stock dividend was made on October 15, 1999. PART I - FINANCIAL INFORMATION Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations. All statements in this discussion and analysis which relate to future sales, costs, capital expenditures or earnings are "Forwarding Looking Statements" and should be read subject to the assumptions contained in the "Forward Looking Statements". Results of Operations For the Three Months ended September 30, 1999 and for the Three Months ended September 30, 1998. Sales - 1999 Compared with 1998 Sales were $20,590,000 for the third quarter ended September 30, 1999 compared to $18,755,000 for the same quarter in the prior year. The third quarter sales in 1999 represented a 9.8% increase over the comparable quarter of 1998. Units sold for the third quarter 1999 were 307 as compared to 293 for the same period of 1998. The increase in sales is attributable to the increase in units sold along with a higher dollar amount per coach associated with double slides and diesel units. Cost of Sales - 1999 compared with 1998 Cost of Sales as a percentage of sales was similar when comparing third quarter 1999 to third quarter 1998. The percentages were 80.5% and 80.4% respectively. Although the company continues to strive towards additional production efficiencies, direct labor costs increased in the third quarter due to the introduction of the new millennium edition motor homes. Gross Profit as a percentage of sales was 19.5% for the quarter ended September 30, 1999 as compared to 19.6% for the same period in the prior year. As previously stated in the Cost of Sales section, costs rose due to the introduction of the millennium edition motorhomes, thereby impacting Gross Profit for the quarter ended September 30, 1999. The Company will continue to try and improve the Gross Profit, however, there can be no assurance due to the unknown nature of competitors within the industry. Selling, General Administrative and Other Expenses-1999 compared with 1998 Selling, General Administrative and Other Expenses decreased by approximately $112,000 between the third quarter ended September 30, 1999 and 1998 respectively. This decline is primarily due to a reduction in the legal costs, partially offset by increased warranty costs and advertising. Income Taxes The Company is providing income taxes at an effective tax rate of 40%. The effective tax rate is subject to ongoing review and evaluation by Management. Results of Operations For the Nine Months ended September 30, 1999 and for the Nine Months ended September 30, 1998 Sales - 1999 Compared with 1998 For the nine months ended September 30, 1999, Sales were $63,760,000 compared to $51,709,000 for the same period in the prior year. This represents a 23.3% increase over the prior year. Units sold for these periods were 952 and 814 respectively. On a percentage basis, units sold increased by 17.0% over the prior year. The Company anticipates continued growth but does not anticipate future quarters to reflect as significant increase when compared to the same quarters in 1998. Costs of Sales - 1999 compared with 1998 Cost of Sales as a percentage of sales dropped to 81.5% for the nine months ended September 30, 1999 compared to 82.3% for the same period in 1998. Although there was a drop in year-to-date costs compared to the same period in the prior year, the third quarter incurred additional direct labor costs related to the introduction of the millennium edition motorhomes. Gross Profit rose to 18.5% for the nine months ended September 30, 1999 compared to 17.7% for the same period in the prior year. Although year-to- date gross profit for the nine months reflects a sizable improvement over the prior year, this improvement was partially eroded by the increase in direct labor costs incurred in the third quarter of 1999. It is not anticipated that the company will continue to incur direct labor costs to the extent incurred in the third quarter. The Company continues to explore avenues to improve gross profit, however, there can be no assurance that gross profit will improve due to the unknown nature of competitors within the industry. Selling, General Administrative and Other Expenses - 1999 compared to 1998 Selling, General Administrative and Other Expenses were $5,572,000 compared to $5,063,000 for the nine months ended September 30, 1999 and 1998 respectively. As a percent of sales, the nine months ended September 30, 1999 represented 8.7% compared to 9.8% for the same period in 1998. The dollar increase is made up by administrative bonuses, warranty costs, advertising and sales allowances offset by a reduction in legal costs. Income before taxes 1999 compared with 1998 Income before taxes for the nine months ended September 30, 1999 were $6,249,000 as compared to $4,104,000 for the same period in the prior year. This represented an increase of $2,145,000 or 52.3%. Income taxes are provided based upon the estimated effective rate for the entire fiscal year applied to the pre-tax income for the period. The effective tax rate is subject to ongoing evaluation by management. Financial Condition, Capital Resources and Liquidity The company has relied on internally generated funds, trade credit and debt to finance its operations and expansion. As of September 30, 1999, the company had working capital of $14,302,000 compared to $10,805,000 at December 31, 1998. The $3,497,000 increase in working capital is primarily due to a $5,972,000 increase in inventories and a $2,680,000 increase in receivables, partially offset by a $3,386,000 increase in accounts payable. The cash position decreased by $2,343,000 primarily due to the purchase of the chassis inventory. The increase in inventory relates to increased chassis and finished inventory at September 30, 1999 to meet production demands related to model year changes, product expansion and chassis allocation changes. As of September 30, 1999 the Company has a $3,500,000 line of credit with Bank of America which can be used for working capital purposes. The line expires on July 1, 2001. Under this line of credit, $220,000 has been set aside as an irrevocable standby letter of credit for the Company to meet the requirements for self-insurance established by the Department of Industrial Relations which regulates worker's compensation insurance in California. At September 30, 1999, no amounts were outstanding under the line of credit agreement. The line of credit contains various covenants. The Company was in compliance with such covenants as of September 30, 1999. The Company has a line of credit with a chassis vendor, Ford Motor Credit Company ("FMCC"), with a $4,000,000 limit. Borrowings under the line bear interest at an annual rate of prime plus 1% (9.25% at September 30, 1999). All borrowings are secured by the Company's assets. The outstanding balance included in accounts payable at September 30, 1999 was $8,700,000. The temporary over-advance is currently being negotiated and the Company believes that the over-advance will be approved or the line expanded. The Company has adequate resources to pay down this amount to the borrowing limit if approval is not obtained. Capital expenditures during the first nine months of 1999 were $581,000. Management anticipates capital expenditures for the remainder of the 1999 to be $100,000 for refurbishment and expansion of certain production facilities, production equipment and the enhancement of management information systems. The Company anticipates that it will be able to satisfy its ongoing cash requirements through 1999, including payments related to the legal settlement and expansion plans at the California facility, primarily with cash flows from operations, supplemented, if necessary, by borrowings under its revolving credit agreement. 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. Year 2000 The Year 2000 issue is primarily the result of computer programs using a two-digit format, as opposed to four digits, to indicate the year. Computer programs that are date dependent are found in the software that operate many IT systems as well as in the computer based devices which control many types of electronic equipment. Computer programs that are not Year 2000 compliant will be unable to interpret dates beyond the year 1999, which could cause a system failure or other computer errors, leading to a disruption in the operation of the related IT systems or electronic equipment. The Company has established and is implementing a program to address the Year 2000 issue. The Year 2000 program included the implementation of previously planned systems as well as specific Year 2000 programs. All programs are on track for completion before the year 2000 with various applications being upgraded or replaced as needed. The failure to correct a material Year 2000 problem may result in an interruption in, or a failure of, certain normal business operations or activities. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Additionally, the Year 2000 program has not deferred any other company projects that will have a material impact on its results of operation, liquidity or financial condition. IT Systems The Company began undertaking changes to bring non-compliant systems and accompanying methodology to Year 2000 compliant standards. In furtherance of the Year 2000 program, the Company acquired a new Year 2000 compliant client server enterprise system and hired a full time IS professional to oversee the implementation of the program. The IT systems have been inventoried and the necessary Year 2000 upgrades, replacements and retrofits identified. These projects are presently in various stages of analysis, development and implementation. The Year 2000 program is currently scheduled to be completed by the fourth quarter of 1999. Non-IT Systems Non-IT Systems may contain date sensitive embedded technology requiring the Year 2000 upgrades. Examples of this technology include security equipment such as access and alarm systems, as well as facilities equipment such as heating and air conditioning units. The Company is a product manufacturer; therefore, the "embedded chip" issue relates to production line components as well as to the equipment used by the Company. Production line components and facilities and equipment are being inventoried and assessments are in progress. The Company is also addressing the readiness of its critical suppliers and customers. The Company has inventoried its critical suppliers, and is sending letters to suppliers, and where appropriate, contacting certain suppliers requesting Year 2000 certification. The Company is also contacting certain key customers where potential Year 2000 problems may exist. In certain areas where the Company relies on products supplied by manufacturers for the systems provided to its customers, the Company is seeking standard Year 2000 warranties that, to the extent assignable, may be transferred to customers. Costs The total cost associated with required modifications to become Year 2000 compliant is not expected to be material to the Company's results of operations, liquidity and financial condition. The estimated total cost of the Year 2000 effort is expected to be under $100,000. This estimate does not include the cost of the Company's previously planned business critical systems upgrades, which have not been accelerated due to the Year 2000 problem. Risks and Contingency Planning The Company has identified and assessed the areas that may be at risk related to the Year 2000 problem. The failure to correct a material Year 2000 problem may result in an interruption in, or a failure of, certain normal business operations or activities. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers, the Company is unable to determine at this time whether the consequences of the Year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition. The Company has initiated contingency planning for possible Year 2000 issues, including such factors as supply chain and banking operations. Where needed, the Company will establish contingency plans based on the Company's actual testing experience and assessment of outside risks. The Company anticipates final contingency plans to be in place by December 1999. The Year 2000 program is expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem. The Company believes that through its Year 2000 program, the possibility of significant interruptions of normal business operations should be reduced. Readers are cautioned that forward looking statements contained in the Year 2000 Update should be read in conjunction with the Company's disclosures under the heading "Forward Looking Statements". Forward-Looking Statements Our statements of our intentions or expectations are "forward-looking statements" based on assumptions and on facts known to us today. Those assumptions will become less valid over time, but we do not intend to update this report. Rexhall's business is seasonal, and we are approaching the period when sales have usually declined. The risks associated with Year 2000 problems which may be encountered by the Company and its suppliers and customers have not been identified, but may occur. Low interest rates, low unemployment, and ready availability of motor fuel have in the past been associated with favorable recreational vehicle sales. Recently, rates have risen, and recent reports of decreased consumer confidence may reduce sales, but the seriousness of a potential decline cannot be predicted. Many of Rexhall's competitors are substantially larger, and many of its suppliers and dealer's also have greater economic power so that the volume and prices of both supplies and sales may be adversely affected. Management intends to remain aware of these factors and react to them, but cannot predict their timing or significance. Item 3. Quantitative and Qualitative Disclosure About Market Risk In the ordinary course of its business, the Company is exposed to certain market risks, primarily changes in interest rates. After an assessment of these risks to the Company's operations, the Company believes that its primary market risk exposures (within the meaning of Regulation S-K Item 305) are not material and are not expected to have any material adverse effect on the Company's financial condition, results of operations or cash flows for the next fiscal year. The Company's line of credit permits a combination of fixed and variable rates at the Company's option, which Management believes reduces the risk of interest rate fluctuation. Other Information Item 1 - Legal Proceedings Legal Settlement -Bruce Elworthy and Anne B. Marshall (Elworthy and Marshall) sued the Company in June 1995 in the Superior Court of the County of Los Angeles. The suit alleged that a leveling system on a motorhome, purchased from Rexhall was defective and caused damages to Elworthy and Marshall of $1,000,000 for medical expenses, loss of earnings and pain and suffering. Rexhall prevailed in its defense with zero dollars being awarded to the plaintiffs. The verdict is currently under appeal. Item 2. - Reports on Form 8-K a) Reports on Form 8-K: None 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: /s/William J. Rex William J. Rex Chairman, President and Chief Executive Officer Date: /s/Thomas M. Zirnite Thomas M. Zirnite Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----