<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
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, 1995
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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 0-10946
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BOBBIE BROOKS, INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 34-0662362
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(State of Incorporation) (I.R.S. Employer Identification No.)
3830 Kelley Avenue, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 881-5300
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NA
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(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 ____
Number of Common Shares Outstanding as of August 9, 1995: 4,932,400
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Page Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
June 30, 1995 and December 31, 1994 . . . . . . . . 3
Consolidated Statements of Operations
for the Three and Six Months Ended June 3O,
1995 and 1994 . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Six Months Ended June 30,
1995 and 1994 . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . 11
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote
of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)--Note A.
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
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($ in 000's except share amounts)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,225 $ 12,502
Marketable securities and
other short-term investments 5,734 -
Trade receivables (less allowances
of $847 in 1995 and $1,250 in 1994) 6,000 5,808
Inventories -- Note B 8,361 7,258
Prepaid expenses and other current assets 525 553
Due from parent 1,475 1,167
-------- --------
T0TAL CURRENT ASSETS 28,320 27,288
PR0PERTY AND EQUIPMENT (at cost
less accumulated depreciation,
amortization, and allowance to reduce
fixed assets to net realizable value
of $11,365 in 1995 and $11,403 in 1994) 7,997 8,728
INTANGIBLE ASSETS
(at cost less accumulated amortization
of $407 in 1995 and $324 in 1994) 710 793
EQUITY INVESTMENT 2,625 2,689
OTHER ASSETS 1,923 1,992
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TOTAL ASSETS $ 41,575 $ 41,490
</TABLE> ======== ========
See notes to consolidated financial statements.
3.
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets--Continued
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($in 000's except share amounts)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,540 $ 6,507
Accrued liabilities 7,249 8,478
Loans payable--related party - 1,911
Income taxes payable 241 246
Current portion of long-term debt 2,145 1,680
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T0TAL CURRENT LIABILITIES 16,175 18,822
LONG-TERM DEBT 77 124
DEFERRED CREDITS AND NONCURRENT LIABILITIES 3,179 3,336
MINORITY INTEREST 709 630
STOCKHOLDERS' EQUITY
Preferred Stock - Series A: $.001 par value;
authorized 2,000,000 shares, issued and
outstanding 907,250 Series A shares
(aggregate liquidation preference and
unpaid dividend is $28,260 in 1995
and $27,239 in 1994) 1 1
Preferred Stock - Series B: $.001 par value;
authorized 300,000 shares, issued and
outstanding 194,600 Series B shares
(aggregate liquidation preference and
unpaid dividend is $21,485 in 1995
and $20,706 in 1994) - -
Common Stock - $.001 par value; authorized
50,000,000 shares, 4,932,400 issued and
outstanding in 1995 and 1994 5 5
Capital in excess of par value 52,604 53,042
Unrealized gains on investments available
for sale 265 -
Retained (deficit) (31,440) (34,470)
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TOTAL STOCKHOLDERS' EQUITY 21,435 18,578
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 41,575 $ 41,490
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</TABLE>
See notes to consolidated financial statements.
4.
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations
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($in 000' s except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Net sales $13,304 $12,425 $26,763 $24,681
Cost of sales 9,575 8,657 19,462 17,396
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GROSS PROFIT 3,729 3,768 7,301 7,285
Cost and expenses:
Selling, general and
administrative expenses 2,394 2,311 4,442 4,395
Depreciation and amortization expenses 313 295 618 585
Interest expense 13 120 84 265
------- ------- ------- -------
2,720 2,726 5,144 5,245
Other income, net 509 498 960 1,058
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INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND MINORITY INTEREST 1,518 1,540 3,117 3,098
Provision for income taxes (1) 1 8 2
------- ------- ------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST 1,519 1,539 3, 109 3,096
Minority interest (26) (39) (79) (68)
------- ------- ------- -------
INCOME FROM CONTINUING OPERATIONS 1,493 1,500 3,030 3,028
------- ------- ------- -------
Income (loss) from discontinued
operations, net of taxes - 170 - (1,566)
------- ------- ------- -------
NET INCOME $ 1,493 $ 1,670 $ 3,030 $ 1,462
======= ======= ======= =======
Preferred stock dividend requirements 1,119 940 2,237 1,880
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NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $374 $730 $793 $(418)
======= ======= ======= =======
Earnings (loss) per share:
CONTINUING OPERATIONS (NET OF
PREFERRED STOCK DIVIDEND REQUIREMENTS) $.08 $.11 $.16 $.23
DISCONTINUED OPERATIONS - .04 - (.31)
------- ------- ------- -------
NET INCOME (LOSS) PER COMMON SHARE $.08 $.15 $.16 $(.08)
======= ======= ======= =======
Weighted average number of
common shares outstanding 4,932,400 4,932,400 4,932,400 4,932,400
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
5.
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
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($in 000's except share amounts)
<TABLE>
<CAPTION>
Six Months Ended
June 30
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1995 1994
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OPERATING ACTIVITIES
Net income from continuing operations $ 3,030 $ 3,028
Adjustments to reconcile net income to
net cash provided by operating activities:
(Loss) from discontinued operations - (1,566)
Depreciation 593 992
Amortization 83 151
Net (gain) from sale of investments (5) -
Net (gain) loss on disposal of fixed assets (328) 153
Minority interest 79 68
Changes in operating assets and liabilities:
Trade receivables (192) 811
Inventories (1,103) (1,616)
Other assets (147) 419
Accounts payable 33 1,942
Other current liabilities (1,234) (1,998)
Deferred credits and noncurrent liabilities (157) (280)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 652 2,104
INVESTING ACTIVITIES
Purchase of investments (5,757) -
Proceeds from sale of investments 293 -
Purchases of fixed assets (188) (1,908)
Proceeds from the sale of fixed assets 654 2,509
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NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (4,998) 601
FINANCING ACTIVITIES
Net borrowings on loans payable (1,911) (1,255)
Proceeds from long-term debt 15,126 19,453
Principal payments on long-term debt (14,708) (20,683)
Dividends paid (438) (350)
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NET CASH (USED IN) FINANCING ACTIVITIES (1,931) (2,835)
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(DECREASE) IN CASH AND CASH EQUIVALENTS (6,277) (130)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,502 1,100
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,225 $ 970
======== ========
</TABLE>
See notes to consolidated financial statements.
6.
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
June 30, 1995
NOTE A -- Basis Of Presentation
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The financial information presented herein should be read in conjunction
with the consolidated financial statements and footnotes included in the
Company's Annual Report on Form lO-K for the year ended December 31, 1994.
The consolidated balance sheet as of December 31, 1994 has been derived from
the audited financial statements of that date.
The Company's parent is Pubco Corporation ("Pubco"), which owns
approximately 91% of the Common Stock and all of the Preferred Stock of the
Company.
At September 30, 1994, the Company discontinued the operations of its retail
and apparel manufacturing segments. As a result of such discontinuance, the
consolidated financial statements for the periods presented have been
restated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments considered necessary for a fair presentation have been
included, all of which are of a normal recurring nature.
Net income (loss) per common share has been computed by dividing net income
(loss) after preferred dividend requirements by the weighted average number
of shares of Common Stock outstanding during the periods. The Preferred
Stock dividend requirement is an annual variable dividend, currently $2.25
per share for Series A and $12.50 per share for Series B.
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," for investments. Management determines the appropriate
classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Marketable
securities held as available for sale are carried at fair value with any
unrealized gains or losses reported as a separate component of shareholders'
equity. Realized gains and losses on marketable securities held as
available for sale are included in other income. Interest and dividends on
securities classified as available for sale are included in other income.
7.
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
June 30, 1995
NOTE B -- Inventories
The components of inventories consist of the following:
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
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<S> <C> <C>
Raw materials and supplies $ 5,389 $ 4,912
Work in process 623 622
Finished goods 2,349 1,724
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$ 8,361 $ 7,258
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</TABLE>
8.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three and Six Months Ended June 30, 1995 and 1994
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The Company has completed its transformation from a company with
predominantly retail and apparel operations into a company which
manufactures and distributes business to business products.
During 1994, the Company closed its retail department store chain and
discontinued its apparel manufacturing operations. These actions have been
accounted for as discontinued operations. The Company's continuing
operations primarily consist of Buckeye Business Products, Inc. ("Buckeye")
and Allied Construction Products, Inc. ("Allied"). Each of these operations
is located at the Company's manufacturing facility in Cleveland, Ohio.
As a result of the discontinuance of the Company's retail and apparel
businesses in 1994, the consolidated statement of operations for the 1994
period has been restated to reflect these operations as discontinued.
Sales increased in the three and six month periods ended June 30, 1995
primarily as the result of an increase in sales at Allied.
The increase in cost of sales as a percentage of sales and the corresponding
decrease in gross profit percentage, from the 1994 periods to the 1995
periods, is primarily attributable to increased component and part costs
experienced by Allied because of the lower value of the Dollar versus the
Deutsche Mark in 1995, compared to the 1994 periods.
The decrease in selling, general and administrative expenses as a percentage
of sales from the 1994 periods to the 1995 periods includes a decrease at
Allied resulting from the increase in sales. Allied's borrowing levels in
both the three and six month periods ended June 30, 1995 were lower than the
comparable periods in 1994 primarily because of the reduction in debt
resulting from the sale of its building and relocation to the Company's
leased premises. This reduction along with lower borrowing levels at
Buckeye caused a reduction in interest expense from the 1994 periods to the
1995 periods.
9.
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
The Company has almost $12,000,000 of cash, cash equivalents, marketable
securities and other short-term investments, and under $100,000 of long-term
debt, at June 30, 1995.
The increases in inventories and accounts payable from December 31, 1994 to
June 30, 1995 reflect Allied's and Buckeye's seasonal build-up of
inventories.
Accrued liabilities decreased from December 31, 1994 to June 30, 1995
primarily as the result of the payment of certain expenses related to the
closing of the retail department store chain.
The Company is evaluating the advantages of a possible merger or other
combination with Pubco and Aspen Imaging International, Inc., approximately
43% of which is owned by the Company.
Although there was stockholders' equity of $21,435,000 at June 30, 1995, the
Preferred Stock is entitled to a liquidation preference equal to its
$37,605,000 face value and $11,414,000 of unpaid cumulative Preferred Stock
dividends.
10.
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. None
Item 2. CHANGES IN SECURITIES. None
Item 3. DEFAULTS UPON SENIOR SECURITIES. None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) On June 29, 1995, the Company held its Annual Meeting of
Stockholders.
(b) At the Meeting, the Stockholders elected three Directors to
serve for a term commencing June 29, 1995 and continuing until
the next Annual Meeting of Stockholders or until their
respective successors are duly elected and qualified. Stanley
R. Browne, Stephen R. Kalette, and Robert H. Kanner, each of
whom was then serving as a Director of the Company, were
elected to serve as Directors for such new term.
(c) Not applicable.
(d) Not applicable.
Item 5. OTHER INFORMATION. None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Financial Data Schedule
(b) Reports on Form 8-K
None
11.
<PAGE> 12
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.
BOBBIE BROOKS, INCORPORATED
/s/ Robert H. Kanner
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Robert H. Kanner
Chairman of the Board, President,
Chief Executive Officer and
Chief Financial Officer
Dated: August 10, 1995
12.
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EXHIBIT INDEX
Financial Data Schedule
13.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AT 6/30/95 AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE 6
MONTHS ENDED 6-30-95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 6,225
<SECURITIES> 5,734
<RECEIVABLES> 6,847
<ALLOWANCES> 847
<INVENTORY> 8,361
<CURRENT-ASSETS> 28,320
<PP&E> 19,362
<DEPRECIATION> 11,365
<TOTAL-ASSETS> 41,575
<CURRENT-LIABILITIES> 16,175
<BONDS> 77
<COMMON> 5
0
1
<OTHER-SE> 21,429
<TOTAL-LIABILITY-AND-EQUITY> 41,575
<SALES> 26,763
<TOTAL-REVENUES> 26,763
<CGS> 19,462
<TOTAL-COSTS> 19,462
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 3,117
<INCOME-TAX> 8
<INCOME-CONTINUING> 3,030
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,030
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
