<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE SECURITIES
EXCHANGE ACT OF l934
For the period ended September 30, 1995
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
BOBBIE BROOKS, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 53-0246410
(State of Incorporation) (I.R.S. Employer Identification No.)
3830 Kelley Avenue, Cleveland, Ohio 44114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 881-5300
NA
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange
Act of l934 during the preceding l2 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 November 10, 1995: 4,932,400
1
<PAGE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994. . . . . . 3
Consolidated Statements of Operations
for the Three and Nine Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 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 l. 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
2
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)--Note A.
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000's except share amounts)
<CAPTION>
September 30 December 31
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,269 $ 12,502
Marketable securities and
other short-term investments 7,785 -
Trade receivables (less allowances
of $679 in 1995 and $1,250 in 1994) 4,832 5,808
Inventories -- Note B 8,332 7,258
Prepaid expenses and other current assets 707 553
Due from parent 1,778 1,167
--------- ---------
TOTAL CURRENT ASSETS 29,703 27,288
PROPERTY AND EQUIPMENT (at cost
less accumulated depreciation,
amortization, and allowance to reduce
fixed assets to net realizable value
of $9,070 in 1995 and $11,403 in 1994) 6,639 8,728
INTANGIBLE ASSETS
(at cost less accumulated amortization
of $449 in 1995 and $324 in 1994) 668 793
EQUITY INVESTMENT 2,602 2,689
OTHER ASSETS 1,985 1,992
--------- ---------
TOTAL ASSETS $ 41,597 $ 41,490
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets--Continued
($ in 000's except share amounts)
<CAPTION>
September 30 December 31
1995 1994
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,370 $ 6,507
Accrued liabilities 5,738 8,478
Loans payable--related party - 1,911
Income taxes payable 241 246
Current portion of long-term debt 2,731 1,680
--------- ---------
TOTAL CURRENT LIABILITIES 14,080 18,822
LONG-TERM DEBT 69 124
DEFERRED CREDITS AND NONCURRENT LIABILITIES 2,759 3,336
MINORITY INTEREST 707 630
STOCKHOLDERS' EQUITY
Preferred Stock - $.001 par value;
authorized 2,000,000 shares:
Series A: 1,500,000 designated;
907,250 shares issued and outstanding
(aggregate liquidation preference and
unpaid dividend is $28,634 in 1995
and $27,239 in 1994) 1 1
Series B: 300,000 designated;
194,600 issued and outstanding
(aggregate liquidation preference and
unpaid dividend is $21,874 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 52,386 53,042
Unrealized gains on investments available
for sale 461 -
Retained (deficit) (28,871) (34,470)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 23,982 18,578
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 41,597 $ 41,490
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
4
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<TABLE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations
($ in 000's except share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 10,759 $ 11,165 $ 37,522 $ 35,846
Cost of sales 7,990 7,797 27,452 25,193
--------- --------- --------- ---------
GROSS PROFIT 2,769 3,368 10,070 10,653
Cost and expenses:
Selling, general and
administrative expenses 2,062 2,060 6,504 6,455
Depreciation and amortization expenses 284 342 902 927
Interest expense 25 89 109 354
--------- --------- --------- ---------
2,371 2,491 7,515 7,736
Other income, net 1,069 491 2,029 1,549
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND MINORITY INTEREST 1,467 1,368 4,584 4,466
Provision for income taxes - - 8 2
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST 1,467 1,368 4,576 4,464
Minority interest 2 (19) (77) (87)
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 1,469 1,349 4,499 4,377
--------- --------- --------- ---------
Income (loss) from discontinued
operations, net of taxes 1,100 (17,613) 1,100 (19,179)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 2,569 $(16,264) $ 5,599 $(14,802)
========= ========= ========= =========
Preferred stock dividend requirements 1,164 978 3,401 2,858
--------- --------- --------- ---------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $ 1,405 $(17,242) $ 2,198 $(17,660)
========= ========= ========= =========
Earnings (loss) per share:
CONTINUING OPERATIONS (NET OF
PREFERRED STOCK DIVIDEND REQUIREMENTS) $ .06 $ .08 $ .22 $ .31
DISCONTINUED OPERATIONS .22 (3.58) .22 (3.89)
--------- --------- --------- ---------
NET INCOME (LOSS) PER COMMON SHARE $ .28 $ (3.50) $ .44 $ (3.58)
========= ========= ========= =========
Weighted average number of
common shares outstanding 4,932,400 4,932,400 4,932,400 4,932,400
========== ========== ========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
5
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<TABLE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in 000's except share amounts)
<CAPTION>
Nine Months Ended
September 30
l995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income from continuing operations $ 4,499 $ 4,377
Adjustments to reconcile net income to
net cash provided by operating activities:
Income (loss) from discontinued operations 1,100 (19,179)
Write-down of assets of discontinued operations - 8,054
Depreciation 858 1,542
Amortization 125 231
Net (gain) from sale of investments (75) -
Net (gain) loss on disposal of fixed assets (279) 160
Minority interest 77 87
Changes in operating assets and liabilities:
Trade receivables 976 1,221
Inventories (1,074) (1,247)
Other assets (671) (20)
Accounts payable (1,137) 2,822
Other current liabilities (3,609) 2,659
Deferred credits and noncurrent liabilities (577) 1,575
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 213 2,282
INVESTING ACTIVITIES
Purchase of investments (8,613) -
Proceeds from sale of investments 1,364 -
Purchases of fixed assets (243) (2,765)
Proceeds from the sale of fixed assets 2,617 3,016
--------- ---------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (4,875) 251
FINANCING ACTIVITIES
Net (repayments) on loans payable (1,911) (879)
Proceeds from long-term debt 24,030 26,505
Principal payments on long-term debt (23,034) (27,288)
Dividends paid (656) (525)
--------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES (1,571) (2,187)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,233) 346
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,502 1,100
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,269 $ 1,446
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
6
<PAGE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
September 30, 1995
NOTE A -- Basis Of Presentation
- -------------------------------
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 10-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 $2.55
per share for Series A and $12.50 per share for Series B.
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," for investments. Management determines the appropriate
classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Marketable
securities held as available for sale are carried at fair value with any
unrealized gains or losses reported as a separate component of shareholders'
equity. Realized gains and losses on marketable securities held as
available for sale are included in other income. Interest and dividends on
securities classified as available for sale are included in other income.
7
<PAGE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
September 30, 1995
NOTE B -- Inventories
- ---------------------
The components of inventories consist of the following:
September 30 December 31
1995 1994
Raw materials and supplies $ 5,745 $ 4,912
Work in process 650 622
Finished goods 1,937 1,724
-------- --------
$ 8,332 $ 7,258
======== ========
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three and Nine Months Ended September 30, 1995 and 1994
- -------------------------------------------------------------------------
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. The closure of
the Company's retail department store chain in 1994 and discontinuance of
its apparel manufacturing operations in 1994 have been accounted for as
discontinued operations, resulting in a restatement of the consolidated
statement of operations for the 1994 period. Income from discontinued
operations, net of taxes, for both the three and nine month periods is the
result of actual results being more favorable than anticpated when the
accrual was established during the third quarter of 1994.
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. Income from continuing
operations before other income decreased in 1995 from the comparable periods
in 1994 primarily due to lower gross profits at Allied attributable
primarily to the lower value of the Dollar versus the Deutsche Mark.
Other income includes royalty income from the licensing of trademarks and
tradenames, rental income from real estate and equipment, and interest and
dividend income.
Allied's borrowing level in the nine month period ended September 30, 1995
was lower than the comparable period 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>
LIQUIDITY AND CAPITAL RESOURCES
The Company has almost $14,000,000 of cash, cash equivalents, marketable
securities and other short-term investments, and under $70,000 of long-term
debt, at September 30, 1995.
Accrued liabilities decreased from December 31, 1994 to September 30, 1995
primarily as the result of the payment of certain expenses related to the
closing of the retail department store chain.
Although there was stockholders' equity of $23,982,000 at September 30,
1995, the Preferred Stock is entitled to a liquidation preference equal to
its $37,605,000 face value and $12,359,000 of unpaid cumulative Preferred
Stock dividends.
10
<PAGE>
PART II - OTHER INFORMATION
Item l. 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. None
Item 5. OTHER INFORMATION.
On October 24, 1995, the Company received a proposal from Pubco
Corporation ("Pubco") pursuant to which the Company would merge
with and into a wholly-owned Pubco subsidiary and Company
stockholders would receive one share of newly issued Pubco Common
Stock for each six shares of the Company's Common Stock owned by
them. The proposal must be approved by the Company's Board of
Directors, which has not yet considered the matter, and by the
Company's stockholders at a meeting called for such purpose. The
Company's Board of Directors expects to retain a financial advisor
to opine as to the fairness of the proposed transaction.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Financial Data Schedule
(b) Reports on Form 8-K
None
11
<PAGE>
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
---------------------------------
Robert H. Kanner
Chairman of the Board, President,
Chief Executive Officer and
Chief Financial Officer
Dated: November 14, 1995
12
<PAGE>
EXHIBIT INDEX
Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AT 9/30/95 AND CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE 9 MONTHS ENDED 9/30/95 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,269
<SECURITIES> 7,785
<RECEIVABLES> 5,511
<ALLOWANCES> 679
<INVENTORY> 8,332
<CURRENT-ASSETS> 29,703
<PP&E> 15,709
<DEPRECIATION> 9,070
<TOTAL-ASSETS> 41,597
<CURRENT-LIABILITIES> 14,080
<BONDS> 69
<COMMON> 5
0
1
<OTHER-SE> 23,976
<TOTAL-LIABILITY-AND-EQUITY> 41,597
<SALES> 37,522
<TOTAL-REVENUES> 37,522
<CGS> 27,452
<TOTAL-COSTS> 27,452
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109
<INCOME-PRETAX> 4,584
<INCOME-TAX> 8
<INCOME-CONTINUING> 4,499
<DISCONTINUED> 1,100
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,599
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
