<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED JUNE 30, 2000
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------ ----------
Commission File number 333-66221
-------------------------
<TABLE>
<CAPTION>
R.A.B. HOLDINGS, INC. R.A.B. ENTERPRISES, INC.
------------------------------------------------------------- -----------------------------------------------------------
<S> <C>
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
DELAWARE DELAWARE
------------------------------------------------------------- ------------------------------------------------------------
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
13-3893246 13-3988873
------------------------------------------------------------- ------------------------------------------------------------
(I.R.S. Employer identification No.) (I.R.S. Employer identification No.)
444 Madison Avenue, New York, New York 10022
-------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (212) 688-4500
---------------
N/A
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
--- ---
<PAGE>
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
--------------------------------------
R.A.B. ENTERPRISES, INC. AND SUBSIDIARIES
-----------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 2000 and March 31, 2000 1
Condensed Consolidated Statements of Operations - Three months ended
June 30, 2000 and 1999 2
Condensed Consolidated Statements of Cash Flows - Three months ended
June 30, 2000 and 1999 3
Notes to Condensed Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7-10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
R.A.B. ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except for share and per share data)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
June 30, 2000 March 31, 2000
-------------------------- -------------------------
Holdings Enterprises Holdings Enterprises
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 4,943 $ 4,934 $ 4,637 $ 4,618
Accounts receivable 38,113 38,113 54,985 54,985
Inventories 74,271 74,271 65,286 65,286
Restricted investments 3,154 -- 3,145 --
Other current assets 8,476 9,367 5,757 6,805
-------- -------- -------- --------
Total current assets 128,957 126,685 133,810 131,694
-------- -------- -------- --------
Noncurrent assets:
Restricted investments -- -- 1,582 --
Other assets 12,387 14,594 13,158 12,178
-------- -------- -------- --------
Total noncurrent assets 12,387 14,594 14,740 12,178
Property, plant and equipment, net 37,567 37,567 37,199 37,199
Intangibles, net 116,345 116,345 104,259 104,259
-------- -------- -------- --------
Total assets $295,256 $295,191 $290,008 $285,330
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1,946 $ 1,946 $ 1,946 $ 1,946
Accounts payable 56,146 56,146 50,581 50,581
Other current liabilities 24,556 26,062 26,734 24,101
-------- -------- -------- --------
Total current liabilities 82,648 84,154 79,261 76,628
-------- -------- -------- --------
Noncurrent liabilities:
Long-term debt 168,980 143,980 168,143 143,143
Other liabilities 24,562 24,562 23,856 23,856
-------- -------- -------- --------
Total noncurrent liabilities 193,542 168,542 191,999 166,999
-------- -------- -------- --------
Stockholders' equity:
Preferred stock, $500 par value, 100,000 shares authorized,
24,875 shares of Series A issued and outstanding 12,344 -- 12,344 --
1,000 shares of Series B issued and outstanding 500 -- 500 --
Common stock, $.01 and $1.00 par value, 1,000,000 shares
and 200 shares authorized, issued 105,100 shares and
200 shares, respectively 1 -- 1 --
Additional paid-in capital 428 39,482 428 39,482
Retained earnings 5,704 2,923 5,317 2,062
Accumulated other comprehensive income 90 90 159 159
-------- -------- -------- --------
19,067 42,495 18,749 41,703
Less common stock in treasury - 700 shares 1 -- 1 --
-------- -------- -------- --------
Total stockholders' equity 19,066 42,495 18,748 41,703
-------- -------- -------- --------
Total liabilities and stockholders' equity $295,256 $295,191 $290,008 $285,330
======== ======== ======== ========
</TABLE>
See notes to Condensed Consolidated Financial Statements
-1-
<PAGE>
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
R.A.B. ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
June 30, 2000 June 30, 1999
-------------------------- --------------------------
Holdings Enterprises Holdings Enterprises
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 157,334 $ 157,334 $ 125,571 $ 125,525
Costs and expenses:
Cost of sales 119,320 119,320 97,878 97,878
Selling 15,298 15,298 11,121 11,121
Distribution and warehousing 14,244 14,244 9,762 9,762
General and administrative 7,085 7,082 5,912 5,909
Amortization of intangibles 964 964 762 762
--------- --------- --------- ---------
Total costs and expenses 156,911 156,908 125,435 125,432
--------- --------- --------- ---------
Operating income 423 426 136 93
Interest expense, net 4,892 4,109 4,714 3,918
--------- --------- --------- ---------
Loss before benefit for income taxes and
extraordinary item (4,469) (3,683) (4,578) (3,825)
Benefit for income taxes (1,662) (1,350) (1,713) (1,416)
--------- --------- --------- ---------
Loss before extraordinary item (2,807) (2,333) (2,865) (2,409)
Extraordinary gain on early extinguishment of debt,
net of income taxes of $2.1 million at June 30, 2000
and $7.3 million and $2.0 million at June 30, 1999,
respectively 3,194 3,194 11,194 3,022
--------- --------- --------- ---------
Net income $ 387 $ 861 $ 8,329 $ 613
========= ========= ========= =========
</TABLE>
See notes to Condensed Consolidated Financial Statements
-2-
<PAGE>
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
R.A.B. INTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
June 30, 2000 June 30, 1999
----------------------------- ---------------------------
Holdings Enterprises Holdings Enterprises
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 387 $ 861 $ 8,329 $ 613
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Extraordinary gain on early extinguishment of debt,
net of income taxes (3,194) (3,194) (11,194) (3,022)
Depreciation and amortization 2,706 2,678 2,327 2,289
Changes in assets and liabilities:
Accounts receivable 24,879 24,879 13,347 13,347
Inventories (4,259) (4,259) (3,756) (3,756)
Accounts payable (2,412) (2,412) (11,523) (11,523)
Other assets and liabilities (8,585) (7,396) (9,378) (7,008)
-------- -------- -------- --------
Net cash provided by (used in) operating activities 9,522 11,157 (11,848) (9,060)
-------- -------- -------- --------
Cash flows from investing activities:
Purchase of Miller Buckeye Biscuit Company, Inc.,
net of cash acquired (17,055) (17,055) -- --
Acquisitions of plant and equipment (454) (454) (1,237) (1,237)
-------- -------- -------- --------
Net cash used in investing activities (17,509) (17,509) (1,237) (1,237)
-------- -------- -------- --------
Cash flows from financing activities:
Purchase of senior notes (12,979) (12,979) (15,166) (6,416)
Payments from Interest Escrow Account 1,625 -- 8,622 --
Borrowings under Credit Agreement 19,647 19,647 15,969 15,969
Proceeds from issuance of preferred stock -- -- 3,000 --
-------- -------- -------- --------
Net cash provided by financing activities 8,293 6,668 12,425 9,553
-------- -------- -------- --------
Net increase (decrease) in cash 306 316 (660) (744)
Cash, beginning of period 4,637 4,618 2,088 2,078
-------- -------- -------- --------
Cash, end of period $ 4,943 $ 4,934 $ 1,428 $ 1,334
======== ======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 8,417 $ 6,792 $ 9,772 $ 6,843
Income taxes $ 3,201 $ 155 $ 46 $ 46
</TABLE>
See notes to Condensed Consolidated Financial Statements
-3-
<PAGE>
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
R.A.B. ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
--------------------------------------------------------------------------------
NOTE A - Basis of Presentation
The condensed consolidated financial statements include the accounts of R.A.B.
Holdings, Inc. ("Holdings") and its wholly-owned subsidiary, R.A.B. Enterprises,
Inc. ("Enterprises") and its wholly-owned subsidiaries (collectively, the
"Company"). Holdings is a holding company with no substantial assets or
operations other than its investment in Enterprises. Enterprises is a holding
company with no substantial assets or operations other than its investments in
Millbrook Distribution Services Inc. ("Millbrook") and The B. Manischewitz
Company, LLC ("Manischewitz").
These condensed consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements as of March 31, 2000 and
1999 contained in the Company's Form 10-K filed with the Securities and Exchange
Commission. The information related to March 31, 2000 contained herein has been
derived from the Company's audited consolidated financial statements.
On April 17, 2000, Millbrook acquired substantially all of the assets and
operation of the Miller Buckeye Biscuit Company, Inc. ("Miller Buckeye") for a
purchase price of approximately $17.5 million, including transaction costs. The
acquisition, which was funded through borrowings under the Company's Credit
Agreement, was accounted for as a purchase. Accordingly, the purchase price was
allocated to the assets purchased and liabilities assumed based upon their
estimated fair values at the date of acquisition, utilizing preliminary
allocations of purchase price which are subject to further refinement and
adjustment, including appraisals and other valuation analyses. The excess of
cost over the fair value of net assets acquired represents goodwill which is
being amortized on a straight-line basis over twenty years.
On January 31, 2000, Millbrook acquired certain of the assets and operation of
I. Epstein & Sons, Inc. ("Epstein") for a purchase price of approximately $15.4
million, including transaction costs. Epstein was a full service distributor of
kosher and specialty food products, including its Season brand of canned fish,
vegetables and other specialty food products. Concurrent with the acquisition,
the management and ownership of the Season brand was assumed by the Company's
Manischewitz subsidiary. Pro forma historical operating results reflecting the
Miller Buckeye and Epstein acquisitions have not been included as the impact of
each of these acquisitions was not considered significant on a consolidated
basis.
On May 1, 1998, Enterprises acquired all of the outstanding interests of
Manischewitz for approximately $126.2 million through the issuance of $120
million Senior Notes due 2005 bearing interest at 10.5% ("10.5% Notes") and the
issuance by Holdings of $48 million Senior Notes due 2008 bearing interest at
13% ("13% Notes"). The 10.5% Notes are fully and unconditionally guaranteed on a
joint and several basis by Millbrook and Manischewitz. Accordingly, as the
combined financial statements of the subsidiaries guaranteeing the 10.5% Notes
are substantially equivalent to the consolidated financial statements of
Enterprises, no separate financial statements of Millbrook and Manischewitz are
presented since management has determined that such information is not material
to investors.
The 13% Notes pay interest for the first three years, semi-annually from an
interest escrow account which was established upon their issuance. The interest
escrow account consists of treasury securities which have been accounted for as
held to maturity and are classified on the condensed consolidated balance sheets
as Restricted investments. These Restricted investments, which mature November 1
and May 1 during each of the first three years the 13% Notes are outstanding,
may only be used to pay the semi-annual interest due.
-4-
<PAGE>
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
R.A.B. ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
--------------------------------------------------------------------------------
NOTE A - Basis of Presentation (Continued)
All significant intercompany transactions and balances are eliminated in
consolidation. The results of operations for any interim period are not
necessarily indicative of the results to be expected for the full fiscal year.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary to present fairly the
financial position of the Company as of June 30, 2000, and the results of
operations and cash flows for the periods ended June 30, 2000 and 1999.
NOTE B - Inventories
Inventories are valued at the lower of cost or market. Cost is determined by the
last-in, first-out ("LIFO") method. Inventories consisted of the following (in
thousands):
June 30, March 31,
2000 2000
--------- ---------
Raw Materials $ 1,611 $ 1,815
Finished Goods 72,660 63,471
--------- ---------
$ 74,271 $ 65,286
========= =========
NOTE C - Related Party Transactions
For the three month periods ended June 30, 2000 and 1999, the Company paid
$502,500 and $390,000, respectively, to an affiliated entity for management
fees, reasonable services provided and expenses incurred on its behalf.
NOTE D - Revenues
Revenues for the three months ended June 30, 2000 include other income from the
sale of land in Israel of approximately $700,000.
NOTE E - Comprehensive Income
For the periods ended June 30, 2000 and 1999, Holdings' and Enterprises'
comprehensive income was $318,000 and $8,397,000 and $792,000 and $681,000,
respectively.
-5-
<PAGE>
R.A.B. HOLDINGS, INC. AND SUBSIDIARIES
R.A.B. ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(Unaudited)
--------------------------------------------------------------------------------
NOTE E - Segment Reporting
The following information is presented in accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information", which
established standards for reporting information about operating segments in the
Company's interim financial statements.
<TABLE>
<CAPTION>
For the three month
period ended June 30, 2000 1999
--------------------- ------------------------------- ------------------------------
Holdings Enterprises Holdings Enterprises
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Revenues
Millbrook .................................... $ 154,409 $ 154,409 $ 120,761 $ 120,761
Manischewitz ................................. 6,834 6,834 4,864 4,864
--------- --------- --------- ---------
Total segment revenues ..................... 161,243 161,243 125,625 125,625
Corporate items, principally
the elimination of
intercompany sales ........................ (3,909) (3,909) (54) (100)
--------- --------- --------- ---------
$ 157,334 $ 157,334 $ 125,571 $ 125,525
========= ========= ========= =========
Operating income
Millbrook .................................... $ 2,675 $ 2,675 $ 1,674 $ 1,674
Manischewitz ................................. 909 909 298 298
--------- --------- --------- ---------
Total segment operating
income ................................... 3,584 3,584 1,972 1,972
Corporate items and
eliminations ............................. (3,161) (3,158) (1,836) (1,879)
--------- --------- --------- ---------
$ 423 $ 426 $ 136 $ 93
========= ========= ========= =========
</TABLE>
NOTE F - Extraordinary Item - Early Extinguishment of Debt
During the three month periods ended June 30, 2000 and 1999, Enterprises
repurchased approximately $18.8 million and $11.9 million of its outstanding
10.5% Notes resulting in a gain of approximately $3.2 million and $3.0 million,
net of income taxes of approximately $2.1 million and $2.0 million,
respectively. In addition, during the three month period ended June 30, 1999 the
stockholders of Holdings purchased $3 million of additional preferred stock to
partially fund Holdings' repurchase of $23 million of its outstanding 13% Notes
resulting in a gain of approximately $8.2 million, net of income taxes of
approximately $5.3 million. These transactions were recorded as extraordinary
items.
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Revenues. Revenues for the three month period ended June 30, 2000 increased
$31.8 million or 25.3% to $157.3 million as compared to $125.5 million for the
three month period ended June 30, 1999. Revenues include:
(i) Millbrook's revenues of $154.4 million for the three month period
ended June 30, 2000 as compared to $120.8 million for the three month
period ended June 30, 1999;
(ii) Manischewitz' revenues of $6.8 million for the three month period
ended June 30, 2000 as compared to $4.9 million for the three month
period ended June 30, 1999; and
(iii) intersegment sales, which are eliminated in consolidation, of $3.9
million for the three month period ended June 30, 2000 as compared to
$0.1 million for the three month period ended June 30, 1999.
Millbrook's revenues increased $33.6 million or 27.9% as compared to the
comparable period of the prior year. This increase is principally due to sales
resulting from the Epstein and Miller Buckeye acquisitions and the growth of
sales to existing customers.
Manischewitz' revenues increased $2.0 million or 40.5% as compared to the
comparable period of the prior year. This increase is principally due to:
(i) sales of Season brand products acquired as part of the Epstein
acquisition ($1.6 million); and
(ii) a gain on the sale of land in Israel ($0.7 million); partially offset
by
(iii) lower sales in the quarter due to the timing of the jewish holiday of
Rosh Hashanah ($0.3 million). As the holiday begins approximately
three weeks later this year, distributors postponed their purchases to
the second quarter.
Gross Profit. Gross profit for the three month period ended June 30, 2000 was
$38.0 million as compared to $27.7 million for the three month period ended June
30, 1999, an increase of $10.3 million or 37.3%. As a percentage of revenues,
the gross profit margin was 24.2% for the three month period ended June 30, 2000
as compared to 22.1% for the three month period ended June 30, 1999.
The increase in gross profit dollars and its impact on gross profit margin is
primarily due to the following:
(i) additional margin dollars associated with Millbrook's increased sales
to existing customers ($3.4 million or 0.9%);
(ii) distribution sales acquired as part of the Epstein and Miller Buckeye
acquisitions ($6.6 million or 0.6%); and
(iii) additional margin dollars associated with Manischewitz' sales ($0.1
million or 0.2%). This increase is principally due to a favorable
shift in product mix to higher margin products.
Additionally, gross margin for the three month period ended June 30, 2000 was
favorably impacted by a gain on the sale of land in Israel.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Operating Expenses. Distribution and warehousing expenses for the three month
period ended June 30, 2000 were $14.2 million, as compared to $9.8 million for
the three month period ended June 30, 1999. As a percentage of revenues,
distribution and warehousing expenses increased to 9.1% for the three month
period ended June 30, 2000 as compared to 7.8% for the comparable period of the
prior year. The increase in distribution and warehousing costs is principally
due to:
(i) the addition of the Company's new distribution facilities in East
Brunswick, New Jersey and Youngstown, Ohio as a result of the Epstein
and Miller Buckeye acquisitions; and
(ii) the labor and transportation costs associated with the revenue
increases generated by Millbrook's existing customers.
Selling, general and administrative expenses for the three month period ended
June 30, 2000 were $22.4 million, as compared to $17.0 million for the three
month period ended June 30, 1999. As a percentage of revenues, selling, general
and administrative expenses increased to 14.2% for the three month period ended
June 30, 2000 as compared to 13.6% for the comparable period of the prior year.
This increase primarily consists of:
(i) incremental selling, general and administrative costs associated with
the Epstein and Miller Buckeye acquisitions ($3.9 million); and
(ii) an increase of $0.6 million in costs associated with Manischewitz'
operations principally relating to television advertising of certain
of the Company's mainstream products.
Amortization of intangibles was $1.0 million for the three month period ended
June 30, 2000 as compared to $0.8 million for the three month period ended June
30, 1999. This increase is due to the amortization resulting from the Epstein
and Miller Buckeye acquisitions.
Interest Expense. Interest expense for the three month period ended June 30,
2000 was $4.9 million (consisting of $0.8 million for Holdings and $4.1 million
for Enterprises, respectively) as compared to $4.7 million (consisting of $0.8
million for Holdings and $3.9 million for Enterprises, respectively) for the
three month period ended June 30, 1999. The increase in interest expense is
primarily attributable to higher levels of debt outstanding under the Company's
Credit Agreement as a result of its recent acquisitions, partially offset by
Enterprises' repurchases of 10.5% Notes.
Taxes. For each of the three month periods ended June 30, 2000 and 1999, the
benefit for income taxes was $1.7 million for Holdings and $1.4 million for
Enterprises, respectively. These benefits principally relate to the results of
operations.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Extraordinary Item - Early Extinguishment of Debt. The extraordinary gain on
early extinguishment of debt for the three month period ended June 30, 2000 was
$3.2 million (net of income taxes of $2.1 million). This gain resulted from
Enterprises' repurchase of approximately $18.8 million of its outstanding 10.5%
Notes. The extraordinary gain on early extinguishment of debt for the three
month period ended June 30, 1999 was $11.2 million (consisting of $8.2 million,
net of income taxes of $5.3 million for Holdings and $3.0 million, net of income
taxes of $2.0 million for Enterprises). This gain resulted from Holdings'
repurchase of $23.0 million of its outstanding 13% Notes and Enterprises'
repurchase of approximately $11.9 million of its outstanding 10.5% Notes.
Net Income. As a result of the foregoing, the net income for the three month
period ended June 30, 2000 was $0.4 million and $0.9 million for Holdings and
Enterprises, respectively, as compared to net income of $8.3 million for
Holdings and $0.6 million for Enterprises for the three month period ended June
30, 1999.
Impact of New Accounting Pronouncements. Statement of Financial Accounting
Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging
Activities" was issued in June 1998 and, as amended, is effective for fiscal
years beginning after June 15, 2000. SFAS No. 133 requires the recognition of
all derivatives in the consolidated balance sheet as either assets or
liabilities measured at fair value. The Company will adopt SFAS No. 133 when it
becomes effective. The Company has not yet determined the impact SFAS No. 133
will have on its financial position or results of operations when such statement
is adopted.
Financial Condition, Liquidity and Capital Resources
Operations for the three months ended June 30, 2000, excluding the net gain on
the early extinguishment of debt and non-cash charges for depreciation and
amortization, utilized cash of $0.1 million for Holdings and provided cash of
$0.3 million for Enterprises, as compared to utilizing cash of $0.5 million for
Holdings and $0.1 million for Enterprises, for the three months ended June 30,
1999. During the three month period ended June 30, 2000 and 1999, other changes
in assets and liabilities resulting from operating activities provided cash of
$9.6 million for Holdings and $10.8 million for Enterprises and utilized cash of
$11.3 million for Holdings and $9.0 million for Enterprises, respectively,
resulting in net cash provided by operating activities of $9.5 million for
Holdings and $11.2 million for Enterprises and net cash used in operating
activities of $11.8 million for Holdings and $9.1 million for Enterprises,
respectively.
Investing activities, which principally consisted of the acquisition of Miller
Buckeye in the fiscal 2001 period and the acquisitions of property and equipment
resulted in a use of cash of $17.5 million and $1.2 million for the three month
periods ended June 30, 2000 and 1999 for each of Holdings and Enterprises,
respectively.
During the three month period ended June 30, 2000, financing activities, which
principally consisted of the repurchase of $18.8 million of long-term debt for
$13.0 million by Enterprises, offset by $1.6 million of payments from the
Interest Escrow Account by Holdings; and additional borrowings of $19.6 million
under the Credit Agreement, resulted in cash provided of $8.3 million for
Holdings and $6.7 million for Enterprises. During the three month period ended
June 30, 1999, financing activities principally consisted of the repurchase of
$23 million of long-term debt for $8.8 million by Holdings and $11.9 million of
long-term debt for $6.4 million by Enterprises, offset by $8.6 million of
payments from the Interest Escrow Account by Holdings; additional borrowings of
$16.0 million under the Credit Agreement; and $3 million of proceeds from the
issuance of preferred stock by Holdings, resulted in cash provided of $12.4
million for Holdings and $9.6 million for Enterprises.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Concluded)
Financial Condition, Liquidity and Capital Resources (Continued)
As a result of the early extinguishment of debt during the three month period
ended June 30, 2000, Enterprises' annual interest expense was reduced by $0.9
million.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Item 7a of the Company's Form 10-K for the year ended March
31, 2000 filed with the Securities and Exchange Commission.
--------------
The foregoing discussion in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contains "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Additionally,
written materials issued and oral statements made from time to time by Holdings
and Enterprises may contain forward-looking statements. Forward-looking
statements can be identified by the fact that they do not relate strictly to
historical or current facts and by their use of words such as "goals",
"expects", "plans", "believes", "estimates", "forecasts", "projects", "intends"
and other words of similar meaning. Execution of business and acquisition
strategies, expansion of product lines and increase of distribution networks or
product sales are areas, among others, whose future success may be difficult to
predict. They are based on management's then-current information, assumptions,
plans, expectations, estimates and projections regarding the food and wholesale
distribution industries. However, such statements are not guarantees of future
performance, and actual results and outcomes may differ materially from what is
expressed depending on a variety of factors, many of which are outside of
Holdings' and Enterprises' control. Given theses uncertainties, current and
prospective investors are cautioned not to place undue reliance on such
forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements or to publicly announce the result of any revisions
to any of the forward-looking statements herein to reflect future events or
developments.
Among the factors that could cause actual outcomes or results to differ
materially from what is expressed in these forward-looking statements are
changes in the demand for, supply of, and market prices of Holdings' and
Enterprises' products, the action of current and potential new competitors,
changes in technology and economic conditions.
-10-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
a. Exhibits
27.1 Financial Data Schedule for R.A.B. Holdings, Inc. for the three
months ended June 30, 2000.
27.2 Financial Data Schedule for R.A.B. Enterprises, Inc. for the
three months ended June 30, 2000.
b. No reports were filed on Form 8-K during the quarter for which this
report is filed.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
R.A.B. HOLDINGS, INC.
August 15, 2000 /s/ Richard A. Bernstein
------------------------
Richard A. Bernstein
Chairman
August 15, 2000 /s/ Steven M. Grossman
----------------------
Steven M. Grossman
Chief Financial Officer
R.A.B. ENTERPRISES, INC.
August 15, 2000 /s/ Richard A. Bernstein
------------------------
Richard A. Bernstein
Chairman
August 15, 2000 /s/ Steven M. Grossman
----------------------
Steven M. Grossman
Chief Financial Officer
