Recreation USA Announces Results for Fiscal 2001
FT. LAUDERDALE, Fla., Feb. 2 Holiday RV Superstores, Inc. today announced its results for fiscal 2001.
The Ft. Lauderdale, Fla. recreational vehicle and marine retailer, which operates under the tradename Recreation USA, reported a net loss of $16.6 million, or $2.04 per share, on net sales of $134.3 million for the year ended October 31, 2001, compared with a net loss of $3.2 million, or $0.42 per share, on sales of $152.4 million for the prior fiscal year. Higher sales of parts and service partially offset substantially lower sales of Recreation USA's core RV and marine products, which were negatively impacted by the economy.
The Company said the fiscal 2001 results include approximately $4.1 million in non-recurring charges related to its operating and financing activities. During the fourth quarter of fiscal 2001, Recreation USA recorded a $1.6 million charge to account for impairment of goodwill in connection with two store closings in the Florida market. Recreation USA also recorded a non- cash expense of $1.5 million in the second quarter of 2001 in connection with the conversion of seller notes into shares of common stock.
In addition, the Company reported a $1.0 million fourth-quarter charge to reflect the change in the way it recognizes revenue on commissions associated with its finance and insurance products, in accordance with the U.S. Securities Exchange Commission Staff Accounting Bulletin No. 101, ``Revenue Recognition in Financial Statements'' (SAB 101).
A $1.6 million non-cash consulting expense was recorded for the issuance of 500,000 shares of common stock to a financial consultant.
``Fiscal 2001 was difficult for the entire recreational vehicle industry, and Recreation USA was no exception,'' said Marcus A. Lemonis, chairman and CEO. ``As our country moved into a recession, consumers became more cautious with their discretionary spending. We have responded to the changes in the markets where we operate by shifting our product mix to lower-priced vehicles that better meet consumer demand and by improving our service operations.
``We dramatically reduced our overstocked inventory in fiscal 2001 by reducing retail prices to increase sales of aged units, and through additional inventory reserves of $2.3 million that we booked in the fourth quarter. Our reserves were based on inventory aging, reassessment of wholesale market value and salability, historical sales activity and the condition of the merchandise. The net of our efforts this fiscal year was to reduce our new and used vehicle and marine inventory by $24.6 million.
``While the short-term market for recreational vehicles is likely to remain challenging, studies show that the long-term outlook for the industry continues to be favorable. Industry research indicates that lower interest rates, stable gas prices and the desire for greater travel flexibility in the wake of September 11 will increase the demand for RVs.''
Recreation USA said that it has seen increased sales activity at its dealerships during the first quarter of fiscal 2002. Retailers attending the recent Tampa Super Show reported strong attendance and sharpened consumer demand.
Recreation USA recently announced that it has received $2.0 million in a private equity offering, and plans to use the proceeds for working capital and general corporate purposes. The Company reported it is currently in talks with its primary floor-plan lender and expects to announce a new agreement shortly.
The Company also announced a series of dealership changes designed to streamline operations while maximizing its nationwide footprint. Recreation USA announced that it consolidated three dealerships in northern Florida under one roof by closing stores in Inverness and Ocala South and transferring operations to its heavily trafficked Ocala North store. The company also recently closed underperforming dealerships in Tampa and Ft. Myers.
``As part of our ongoing examination of dealership performance, we made the assessment that we were over-stored in certain areas of Florida,'' Lemonis explained. ``These realignments allow us to concentrate our Florida resources and better serve our customers in this critical market. These consolidations, in combination with other strategic operating and financial initiatives, allow us to enter fiscal 2002 with a much clearer picture of the improvements we still need to make.''
About Recreation USA: Recreation USA operates retail stores in California, Florida, Kentucky, New Mexico, South Carolina, Virginia and West Virginia. Recreation USA, the nation's only publicly traded national retailer of recreational vehicles and boats, sells, services and finances more than 90 RV and 13 boat brands.
The private Securities Litigation Reform Act of 1995 provides a ``safe harbor'' for certain forward-looking statements. The statements contained in this news release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance these expectations and beliefs about future events are accurate. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors. These factors include the following: our auditors have expressed doubt about our ability to continue as a going concern; our need to continue to have access to floor-plan financing for inventory, which may become unavailable to us; our ability to raise further capital in our private placement; market prices for fuel; less-than- expected consumer demand for our products, pricing pressures; and other competitive factors. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, please see our filings with the Securities and Exchange Commission.
HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED OCTOBER 31,
2001 2000 1999
Sales and service revenue
Vehicle and marine $120,794,939 $138,155,081 $72,240,919
Service, parts and
accessories 10,075,207 9,240,171 6,233,791
Other, net 3,476,908 4,972,094 2,921,580
Total sales and
service revenue 134,347,054 152,367,346 81,396,290
Cost of sales and service
Vehicles and marine 109,711,839 122,284,905 63,883,910
Service, parts
and accessories 5,989,109 5,089,500 3,485,500
Total cost of sales
and service 115,700,948 127,374,405 67,369,410
Gross profit 18,646,106 24,992,941 14,026,880
Selling, general and
administrative expenses 26,836,270 25,031,909 10,291,795
Goodwill impairment 1,572,590 - -
Income (loss) from operations (9,762,754) (38,968) 3,735,085
Other income (expense):
Interest income 47,707 117,788 554,557
Interest expense (4,641,117) (5,094,560) (1,133,687)
Total other income
(expense) (4,593,410) (4,976,772) (579,130)
Gain (loss) on sale of
fixed assets (106,095) 35,845 318,820
Gain (loss) on debt conversion (1,523,545) - -
Gain (loss) on involuntary
sale of assets 358,562 - -
Income (loss) before income
taxes and cumulative
effect of a change in
accounting principle (15,627,242) (4,979,895) 3,474,775
Income taxes (benefit) (53,343) (1,775,120) 1,321,000
Net income (loss) before
cumulative effect of a
change in accounting principle (15,573,899) (3,204,775) 2,153,775
Cumulative effect on prior
years to October 31, 2001
of implementing SAB 101
(See Note 2) (1,030,926) - -
Net income (loss) $(16,604,825) $(3,204,775) $2,153,775
Basic and diluted earnings
(loss) per common share:
Income (loss) before income
taxes and cumulative
effect of a change in
accounting principle $(1.91) $(0.42) $0.30
Cumulative effect on prior
years (to October 31, 2001)
of implementing SAB 101 $(0.13) $ - $ -
Net income (loss) $(2.04) $(0.42) $0.30
Proforma amounts assuming
SAB 101 is applied retroactively:
Net income (loss) $(3,607,000) $2,154,000
Basic and diluted earnings (loss)
per common share $(0.48) $0.30