<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 March 31, 1996
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 34-0662362
(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 May 13, 1996: 4,932,400
<PAGE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995 . . . . . . . . 3
Consolidated Statements of Operations
for the Three Months Ended March 31,
1996 and 1995. . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31,
1996 and 1995. . . . . . . . . . . . . . . . . . . . 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.
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<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>
March 31 December 31
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,759 $ 7,878
Marketable securities and other
investment available for sale 18,630 11,836
Trade receivables (less allowances
of $308 in 1996 and $279 in 1995) 5,602 5,058
Inventories -- Note B 7,516 7,447
Prepaid expenses and other current assets 838 730
Due from parent 2,094 2,236
-------- --------
TOTAL CURRENT ASSETS 38,439 35,185
PROPERTY AND EQUIPMENT (at cost
less accumulated depreciation,
amortization of $9,572 in 1996
and $9,243 in 1995) 6,644 6,985
INTANGIBLE ASSETS
(at cost less accumulated amortization
of $532 in 1996 and $490 in 1995) 585 627
OTHER ASSETS 2,048 2,210
-------- --------
TOTAL ASSETS $ 47,716 $ 45,007
======== ========
<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>
March 31 December 31
1996 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,101 $ 4,733
Accrued liabilities 7,571 7,642
Loans payable - related party 289 289
Current portion of long-term debt 233 58
-------- --------
TOTAL CURRENT LIABILITIES 15,194 12,722
LONG-TERM DEBT 238 1,742
DEFERRED CREDITS AND NONCURRENT LIABILITIES 2,603 2,772
MINORITY INTEREST 3,092 3,022
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 $29,791 in 1996
and $29,212 in 1995) 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 $22,878 in 1996
and $22,489 in 1995) - -
Common Stock - $.001 par value; authorized
50,000,000 shares, 4,932,400 issued and
outstanding in 1996 and 1995 5 5
Capital in excess of par value 52,174 52,392
Unrealized gains on investments
available for sale 1,300 801
Retained (deficit) (26,891) (28,450)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 26,589 24,749
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 47,716 $ 45,007
======== ========
<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
March 31
l996 l995
<S> <C> <C>
Net sales $ 14,079 $ 13,459
Cost of sales 10,299 9,887
-------- --------
GROSS PROFIT 3,780 3,572
Cost and expenses:
Selling, general and
administrative expenses 2,357 1,755
Depreciation and amortization 226 305
Interest, net (464) (108)
-------- --------
2,119 1,952
Other income (expense), net 11 (21)
-------- --------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 1,672 1,599
Provision for income taxes 43 9
-------- --------
INCOME BEFORE MINORITY INTEREST 1,629 1,590
Minority Interest (70) (53)
-------- --------
NET INCOME 1,559 1,537
Preferred stock dividend requirements 1,186 1,118
-------- --------
NET INCOME APPLICABLE
TO COMMON STOCKHOLDERS $ 373 $ 419
======== ========
NET INCOME PER SHARE $ .08 $ .08
======== ========
Weighted average number of
common shares outstanding 4,932,400 4,932,400
========= =========
<FN>
See notes to consolidated financial statements.<PAGE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
</TABLE>
5.
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<TABLE>
Consolidated Statements of Cash Flows
($ in 000's except share amounts)
<CAPTION>
Three Months Ended
March 31
l996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income from continuing operations $ 1,559 $ 1,537
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 385 335
Net (gain) on sales of securities (3) -
Net loss on disposal of fixed assets 36 -
Minority interest 70 53
Changes in operating assets and liabilities:
Trade receivables (544) (33)
Inventories (69) (765)
Other assets 183 (156)
Accounts payable 2,368 1,291
Other current liabilities (71) (1,908)
Deferred credits and noncurrent liabilities (169) (36)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,745 318
INVESTING ACTIVITIES
Purchases of marketable securities (6,836) (5,467)
Proceeds from sale of marketable securities 544 -
Purchases of fixed assets (27) (102)
Proceeds from the sale of fixed assets 2 288
-------- --------
NET CASH (USED IN) INVESTING ACTIVITIES (6,317) (5,281)
FINANCING ACTIVITIES
Proceeds from long-term debt 6,272 6,206
Principal payments on long-term debt (7,601) (6,482)
Dividends paid (218) (218)
-------- --------
NET CASH (USED IN) FINANCING ACTIVITIES (1,547) (494)
-------- --------
(DECREASE) IN CASH AND CASH EQUIVALENTS (4,119) (5,457)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,878 12,502
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,759 $ 7,045
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
6.
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BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
March 31, 1996
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, 1995.
The consolidated balance sheet as of December 31, 1995 has been derived from
the audited financial statements of that date.
The Company's parent is Pubco Corporation ("Pubco"), which owns
approximately 90% of the Common Stock and all of the Preferred Stock of the
Company.
The Company increased its ownership in Aspen Imaging International, Inc.
("Aspen") at year-end 1995 from approximately 41% to approximately 62%. The
Company's Consolidated Balance Sheets at March 31, 1996 and December 31,
1995 include the accounts of Aspen. The Company's Consolidated Statement of
Operations for the three months ended March 31, 1996 include the results of
Aspen's operations whereas the Company's consolidated statement of
operations for the three months ended March 31, 1995 account for Aspen's
operations on the equity method.
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 $12.50 per share for Series B.
Financial Instruments: The Company's financial instruments recorded on the
balance sheet include cash and cash equivalents and long-term debt. Because
of their short maturity, the carrying amount of cash and cash equivalents
approximates fair value. Because the majority of long-term debt is at
market rates of interest that adjust frequently, the carrying amount of
long-term debt approximates fair value.
Off balance sheet financial instruments include foreign currency exchange
agreements. In the normal course of business, the Company's construction
products subsidiary purchases components from a German supplier and from
7.
<PAGE>
BOBBIE BROOKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
March 31, 1996
NOTE A -- Basis Of Presentation--Continued
time to time, enters into foreign currency exchange contracts with banks in
order to fix its trade payables denominated in the Deutsche Mark. The
contract amounts outstanding and the net deferred gains or losses were not
significant at March 31, 1996 and December 31, 1995.
Effective January 1, 1996, the Financial Accounting Standards Board issued
SFAS No. 121 - "Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed Of." SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used, and
for long-lived assets and certain identifiable intangibles to be disposed
of. The effect of its adoption is immaterial to results of operations.
Certain prior year amounts have been reclassified to conform to the 1996
presentation.
NOTE B -- Inventories
The components of inventories consist of the following:
March 31 December 31
1996 1995
Raw materials and supplies $ 4,599 $ 4,532
Work in process 666 484
Finished goods 2,251 2,431
------- -------
$ 7,516 $ 7,447
======= =======
8.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1996 and 1995
Due to the increase in the Company's ownership of Aspen to approximately 62%
at the end of 1995, the Company's Consolidated Balance Sheets at March 31,
1996 and December 31, 1995 include the accounts of Aspen. The Company's
Consolidated Statement of Operations for the three months ended March 31,
1996 includes the results of Aspen. For the comparable period in 1995, the
Company accounted for Aspen's results of operations using the equity method
which were not significant and were included in other income in the
Company's Consolidated Statements of Operations.
The Company's continuing operations primarily consist of Buckeye Business
Products, Inc. ("Buckeye"), Allied Construction Products, Inc. ("Allied")
and Aspen.
Sales increased in the three months ended March 31, 1996, from the three
months ended March 31, 1995, primarily as the result of the inclusion of the
sales of Aspen.
Selling, general and administrative expenses increased in the three month
period ended March 31, 1996 from the three months ended March 31, 1995
primarily as the result of the inclusion of Aspen in the 1996 period.
The decrease in interest, net, is primarily the result of slightly lower
borrowing levels at Allied during the 1996 period compared to the 1995
period and the significant increase in interest income. Earnings from the
Company's cash and cash equivalents and marketable securities and other
short term investments increased because of increases in the amount of such
assets. These assets increased due to the inclusion of Aspen in 1996 as
well as the continued receipt of proceeds from discontinued operations at
the Company. The Company will continue to generate interest and other
income on its available funds until used to make an acquisition of other
operating businesses. While no particular acquisition is pending or has
been identified, the Company routinely reviews acquisition opportunities.
The dividend requirements for the two classes of preferred stock adjust
annually, in January and August, respectively, based on changes in the prime
rate. Changes in the prime rate at August, 1995 compared to August, 1994
caused the increase in preferred stock dividend requirements.
9.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had almost $22,400,000 of cash, cash
equivalents, marketable securities and other short-term investments,
including approximately $5,300,000 owned by Aspen, and approximately
$238,000 of long-term debt.
The increases in inventories and accounts payable from December 31, 1995 to
March 31, 1996 reflect Allied's normal seasonal build-up of inventories
offset by decreases at both Buckeye and Aspen.
Although there was stockholders' equity of $26,589,000 at March 31, 1996,
the Preferred Stock is entitled to a liquidation preference equal to its
$37,605,000 face value and $14,520,000 of unpaid cumulative Preferred Stock
dividends. As a result, there is no stockholders' equity available to the
Common Stock.
The Company has not consistently generated pretax income and the potential
future tax benefits of the deferred tax assets, primarily net operating loss
carryforwards, may not be realized. Accordingly, a valuation allowance has
been provided equal to the net deferred tax assets related to these
potential future tax benefits, which totaled approximately $14,000,000 at
December 31, 1995. Should the Company generate pretax income in future
years, the tax benefits of the net operating loss carryforwards and other
items will be realized, which will have a positive impact on the future cash
flows, liquidity and capital resources of the Company.
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 merger proposal from
its parent, Pubco Corporation ("Pubco"). Under the proposal, the
Company would be merged with and into Pubco and the Company's
stockholders would receive one share of Pubco's Common Stock for
each six shares of the Company's Common Stock owned by them. On
April 10, 1996, the Company's Board of Directors accepted the
Pubco proposal, subject to stockholder approval, and authorized
the Company to enter into a Merger Agreement, which was executed
on April 26, 1996. The Company's stockholders will consider the
matters at a Special Meeting to be held on June 27, 1996.
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: May 14, 1996
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 3/31/96 AND CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE 3 MONTHS ENDED 3/31/96 AND IS QUALIFIED BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,759
<SECURITIES> 18,630
<RECEIVABLES> 5,910
<ALLOWANCES> 308
<INVENTORY> 7,516
<CURRENT-ASSETS> 38,439
<PP&E> 16,216
<DEPRECIATION> 9,572
<TOTAL-ASSETS> 47,716
<CURRENT-LIABILITIES> 15,194
<BONDS> 238
0
1
<COMMON> 5
<OTHER-SE> 26,583
<TOTAL-LIABILITY-AND-EQUITY> 47,716
<SALES> 14,079
<TOTAL-REVENUES> 14,079
<CGS> 10,299
<TOTAL-COSTS> 10,299
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,672
<INCOME-TAX> 43
<INCOME-CONTINUING> 1,559
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,559
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
