<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number
0-9403
NBI, INC.
State of Incorporation IRS Employer I. D. Number
Delaware 84-0645110
1880 Industrial Circle, Suite F
Longmont, Colorado 80501
(303) 684-2700
Check whether the issuer (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.
[X] YES [_] NO
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan of reorganization confirmed by a court.
[X] YES [_] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1995
- -------------------------------------- -------------------------------
Common Stock, par value $.01 per share 6,497,234
<PAGE>
PAGE 2
NBI, INC.
INDEX TO FORM 10-QSB
For Quarter Ended September 30, 1995
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
<S> <C>
Consolidated Financial Statements (Unaudited)........................3 - 6
Supplementary Notes to Consolidated Financial
Statements (Unaudited)..........................................7 - 11
Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................12 - 13
PART II - OTHER INFORMATION...............................................14
</TABLE>
<PAGE>
PAGE 3
NBI, INC.
CONSOLIDATED BALANCE SHEET
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------- --------
(Unaudited)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 755 $ 1,931
Trading securities............................................ 771 4,324
Receivables, net.............................................. 2,021 371
Inventories................................................... 2,090 196
Other current assets.......................................... 196 391
------- --------
Total current assets....................................... 5,833 7,213
Property and equipment, net..................................... 4,313 55
Other assets.................................................... 322 289
------- --------
$10,468 $ 7,557
======= ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<S> <C> <C>
Current liabilities:
Short-term borrowings and current portion
of notes payable............................................ $ 1,758 $ 925
Accounts payable.............................................. 618 384
Current portion of income taxes payable....................... 322 864
Accrued liabilities........................................... 1,756 544
------- -------
Total current liabilities.................................. 4,454 2,717
Long-term liabilities:
Income taxes payable.......................................... 5,404 5,404
Notes payable................................................. 373 56
Deferred tax liability (net).................................. 251 --
Postemployment disability benefits............................ 229 234
------- -------
Total liabilities.......................................... 10,711 8,411
------- -------
Stockholders' equity:
Common stock - $.01 par value; 20,000,000 shares
authorized; 10,001,270 shares issued......................... 100 100
Capital in excess of par value................................ 5,984 5,769
Accumulated deficit........................................... (5,122) (5,517)
Foreign currency translation adjustment....................... 312 311
------- -------
1,274 663
Less treasury stock, at cost (3,504,036 and 2,973,157 shares). (1,517) (1,517)
------- -------
Total stockholders' equity (deficit).......................... (243) (854)
------- -------
$10,468 $ 7,557
======= =======
</TABLE>
See accompanying notes.
<PAGE>
PAGE 4
NBI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Revenues:
Sales............................................................... $2,471 $ 636
Service and rental.................................................. 378 264
------ ------
2,849 900
Costs and expenses:
Cost of sales....................................................... 1,740 471
Cost of service and rental.......................................... 304 213
Marketing, general and administrative............................... 595 762
Product development and engineering................................. -- 80
------ ------
2,639 1,526
------ ------
Income (loss) from operations........................................ 210 (626)
Other income (expense):
Interest income..................................................... 14 57
Net gain on investments............................................. 643 831
Other income (expense).............................................. 2 (14)
Interest expense.................................................... (187) (181)
------ ------
472 693
------ ------
Income before income taxes and minority interest .................... 682 67
Income tax provision................................................. (293) --
Minority interest.................................................... 6 --
------ ------
Net income........................................................... $ 395 $ 67
====== ======
Income per common share:
Net income before taxes............................................. $ .11 $ .01
Income tax provision................................................ (.05) --
------ ------
Net income.......................................................... $ .06 $ .01
====== ======
Weighted average number of common
and common equivalent shares outstanding............................ 6,497 7,051
====== ======
</TABLE>
See accompanying notes.
<PAGE>
PAGE 5
NBI, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................ $ 395 $ 67
Adjustments to reconcile net income to net cash
flow provided by (used in) operating activities:
Utilization of net operating loss carryforwards.................. 215 --
Depreciation and amortization.................................... 93 40
Provision for bad debts.......................................... 6 --
Provision for writedown of inventory............................. 10 21
Loss (gain) on sales of property and equipment................... (2) 11
Net unrealized loss (gain) on investments........................ 184 (1,197)
Other............................................................ (6) 7
Changes in assets -- decrease (increase):
Accounts receivable............................................ (483) 36
Inventory...................................................... 199 (40)
Trading securities............................................. 3,369 865
Other current assets........................................... 46 38
Other assets................................................... (40) --
Changes in liabilities -- (decrease) increase:
Accounts payable and accrued liabilities....................... (217) (322)
Income tax related accounts.................................... (542) --
------- -------
Net cash flow provided by (used in) operating activities.. 3,227 (474)
Cash flows from investing activities:
Payments for business acquisitions, net of cash acquired............ (3,504) --
Proceeds from sales of property and equipment....................... 2 28
Purchases of property and equipment................................. (23) (4)
------- -------
Net cash flow provided by (used in) investing activities......... (3,525) 24
Cash flows from financing activities:
Purchases of treasury stock......................................... -- (22)
Payments on notes payable........................................... (106) (1,500)
Net short-term borrowings (payments)................................ (772) 1,300
------- -------
Net cash flow used in financing activities....................... (878) (222)
Effects of exchange rates on cash..................................... -- 3
------- -------
Net decrease in cash and cash equivalents............................. (1,176) (669)
Cash and cash equivalents at beginning of period...................... 1,931 2,708
------- -------
Cash and cash equivalents at end of period............................ $ 755 $ 2,039
======= =======
</TABLE>
See accompanying notes.
<PAGE>
PAGE 6
NBI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
---- ----
Supplemental disclosures of cash flow information:
<S> <C> <C>
Interest paid..................................... $ 202 $ 177
====== =======
Income taxes paid................................. $ 614 $ --
====== =======
</TABLE>
See accompanying notes.
<PAGE>
PAGE 7
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Preparation
- -----------------------------
The accompanying financial statements have been prepared in accordance with the
requirements of Form 10-QSB. In the opinion of Management, the statements
reflect all adjustments necessary for a fair statement of the results of
operations for the interim periods. Certain items in the fiscal 1995 financial
statements have been reclassified to conform to the fiscal 1996 manner of
presentation. The consolidated financial statements include the accounts of the
Company and its wholly owned and majority owned subsidiaries. All significant
intercompany accounts and profits have been eliminated.
Note 2 - Business Acquisitions
- -------------------------------
On August 4, 1995, NBI, Inc. acquired 100% of the outstanding capital stock of
the Belle Vernon Motel Corporation for $2,430,000 in cash pursuant to a stock
purchase agreement. The Belle Vernon Motel Corporation owns and operates an 81
room Holiday Inn in Southwestern Pennsylvania. The primary assets held by the
acquired corporation consist of cash, accounts receivable, property and
equipment. The Company received approval as an authorized Holiday Inn
franchisee prior to the purchase transaction. The property and equipment
acquired will continue to be operated as a Holiday Inn Hotel.
On August 14, 1995, with an effective date of close of business on July 31,
1995, a recently formed, wholly-owned subsidiary of NBI, Inc. closed on its
purchase of a majority of the assets of L.E. Smith Glass Company of Mount
Pleasant, Pennsylvania, pursuant to an asset purchase and sale agreement. L.E.
Smith Glass Company is a manufacturer of handmade fine glass giftware and
lighting fixtures and has been in business since 1907. The assets purchased
consist primarily of accounts receivable, inventory and property, plant and
equipment. The property, plant and equipment acquired will continue to be used
in the manufacture of handmade fine glass giftware and lighting fixtures. The
purchase price of $5,875,745 was paid through the assumption of $3,508,190 of
certain liabilities at July 31, 1995, cash and cash proceeds from the
liquidation of other current assets held by the Company.
Both acquisitions have been accounted for under the purchase method of
accounting. The results of operations of these acquired businesses are included
in the accompanying Statements of Operations since the effective date of
acquisitions. The total purchase price, including acquisition costs, for the
Belle Vernon Motel Corporation and the L.E. Smith Glass Company was $2,496,000
and $6,004,000, respectively. The fair market value of the net assets acquired
of the Belle Vernon Motel Corporation exceeded the purchase price by $869,000.
Accordingly, the noncurrent assets consisting of property and equipment have
been reduced by this amount under the purchase method of accounting. Similarly,
the fair market value of the net assets acquired of the L.E. Smith Glass Company
exceeded the purchase price by $771,000; therefore, the noncurrent assets
consisting of property, plant and equipment were reduced by this amount.
Proforma consolidated results of operations of the Company is shown in the
following table as if these businesses were acquired as of the first day of the
periods presented, July 1, 1995 and 1994. This proforma information is based on
the Company's accompanying statements of operations and the historical financial
information of the acquired companies, and includes adjustments to income taxes,
interest expense and depreciation, giving effect of the terms of the transaction
as if the acquisitions had occurred on the first day presented.
<PAGE>
PAGE 8
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Proforma consolidated results of operations:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
---- ----
(Amounts in thousands,
except per share data)
<S> <C> <C>
Revenue................................................ $3,673 $3,527
====== ======
Net income before extraordinary items and cumulative
effect of accounting changes......................... $ 427 $ 259
====== ======
Net income............................................. $ 427 $ 259
====== ======
Earnings per share..................................... $ .07 $ .04
====== ======
</TABLE>
Note 3 - Cash and Cash Equivalents
- -----------------------------------
The Company's cash and cash equivalents of $755,000 at September 30, 1995
includes $99,000 of restricted cash. This represents the amount held in trust
for payments under self insurance plans.
Note 4 - Investments in Securities
- ----------------------------------
During the three months ended September 30, 1995 and 1994, all of the Company's
securities were classified as trading securities; no securities were classified
as held-to-maturity or available-for-sale. During the quarter ended September
30, 1995, the Company recorded a significant realized gain on investments due to
the sale of a significant portion of its securities to fund two business
acquisitions. The Company recorded a net realized gain of $827,000 and a net
unrealized loss of $184,000 for the quarter ended September 30, 1995, compared
to a net realized loss of $366,000 and a net unrealized gain of $1,197,000
recorded in the same period of the prior fiscal year.
The Company's investment portfolio may, at any point in time, include a
concentrated position in one security. As a result of this, the financial
results may fluctuate significantly and have larger fluctuations than with a
more diversified portfolio. At September 30, 1995, marketable securities do
include a concentrated position in one equity security.
Note 5 - Inventories
- --------------------
Inventories are comprised of the following:
<TABLE>
<CAPTION>
September 30,
1995
----
(Amounts in thousands)
<S> <C>
Raw materials $ 589
Work in process 334
Finished goods 1,147
Food and beverage inventory 20
------
$ 2,090
======
</TABLE>
<PAGE>
PAGE 9
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6 - Property and Equipment
- -------------------------------
Capital assets are depreciated on a straight-line basis over their useful lives
shown below:
<TABLE>
<CAPTION>
Asset September 30,
Lives 1995
----- ----
(Amounts in thousands)
<S> <C> <C>
Land N/A $ 77
Buildings 20-25 yrs 1,714
Machinery and equipment 3-10 yrs 2,685
Office and hotel furniture, fixtures 5-7 yrs 490
Construction-in-progress N/A 51
--------
5,017
Accumulated depreciation (704)
--------
$ 4,313
========
</TABLE>
Note 7 - Income Taxes
- ---------------------
IRS Debt:
- ---------
On October 13, 1995, the Company entered into an agreement in principle with the
IRS, effective October 1, 1995, revising the payment terms provided in its
settlement agreement with the IRS dated June 12, 1991. The new agreement
provides for accrued interest through September 30, 1995, at the original stated
rate, plus a principal payment of $250,000 to be paid upon execution of the
definitive agreement. Thereafter, quarterly interest payments are due from
January 1, 1996 through October 1, 1997. Interest will accrue on the
outstanding principal balance at the rate of 7.5% for the period October 1, 1995
through March 31, 1996. The interest rate for April 1, 1996 through October 1,
1997 will be reevaluated in April 1996 based upon NBI's ability to pay the
statutory rate, but in no event will the interest rate for this period exceed
the lesser of the statutory rate or 10%. The remaining principal balance is due
in full on October 1, 1997. The balance sheets at September 30, 1995 and June
30, 1995 reflect these revised payments terms.
In conjunction with the new agreement, the Company has agreed to grant the IRS a
security interest in all of the real and personal property of the L.E. Smith
Glass Company which is owned by American Glass, Inc., a recently formed, wholly-
owned subsidiary of NBI, Inc., providing that the Company can obtain the
necessary approvals from the existing security holders. If the necessary
approvals can not be obtained, NBI, Inc. has agreed to grant the IRS a security
interest in all of the capital stock of American Glass, Inc., as well as all of
the capital stock of the Belle Vernon Motel Corporation. The security interest
will automatically terminate upon full payment by NBI of all principal and
interest owed to the IRS under the agreement. The agreement also provides for
accelerated principal payments to be made within forty-five days after the end
of any fiscal quarter in which NBI Inc.'s unconsolidated cash and cash
equivalents, excluding restricted cash, exceed $1.3 million. The Company is
required to pay to the IRS fifty percent of the amount by which such cash and
cash equivalents exceed $1.3 million. Any such payment shall be applied to and
shall reduce the outstanding principal balance.
There is no accelerated principal amount payable in accordance with the original
agreement, based upon the Company's cash, cash equivalents and treasury
investments at September 30, 1995. Furthermore, any other accelerated principal
payments due within the next twelve months based upon subsequent quarter-end
cash and cash equivalent positions under the new agreement, are not determinable
at September 30, 1995. Therefore, only the scheduled principal payments due
within the next twelve months have been classified as current at September 30,
1995.
<PAGE>
PAGE 10
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Tax effect of acquisitions:
- ---------------------------
In conjunction with the Belle Vernon Motel Corporation acquisition (See Note 2),
a deferred tax liability of $466,000 was recorded for the temporary differences
between the acquired tax basis and the book basis of the property, plant and
equipment acquired. This liability was partially offset by a deferred tax asset
of $215,000 related to the availability of the Company's net operating losses
through their expiration in the year 2010, to offset the temporary book versus
tax differences arising from the acquisition. There was no tax effect from the
L.E. Smith Glass Company acquisition.
Income tax provision:
- ---------------------
A provision for income taxes totaling $293,000 was recorded for the three months
ended September 30, 1995, based upon book income using a federal rate of 34% and
an effective state rate of 14%. Included in the income tax provision for the
first quarter of fiscal 1996 is $215,000 which is a non-cash item due to the
utilization of the Company's pre-reorganization net operating losses. In
accordance with fresh start accounting, which was adopted as of April 30, 1992,
and as a result of the Company's reorganization under Chapter 11 of the U.S.
Bankruptcy Code, utilization of any income tax benefit from pre-reorganization
net operating losses are not credited to the income tax provision, but rather,
reported as an addition to capital in excess of par value.
Note 8 - Notes Payable
- ----------------------
In conjunction with the acquisition of the L.E. Smith Glass Company, the Company
assumed certain notes payable. The following summarizes the notes payable
outstanding at September 30, 1995.
<TABLE>
<CAPTION>
September 30,
1995
----
(Amounts in thousands)
<S> <C>
Revolving bank credit note of $1,500,000, interest at bank's prime rate
plus 2 1/2%; collateralized by a first security interest in all accounts receivable,
inventories and personal property of the glass company $ 1,346
8.75% bank note payable; payable in monthly installments of $8,333 through
August 1998; cross collateralized with the revolving credit note above 367
Promissory note with interest at prime; payable in varying monthly principal
installments not exceeding $30,000 through August 1996; collateralized
by a second security interest in all inventory and receivables of the glass company 178
Promissory note with no stated interest rate; payable in monthly installments of
$9,444 through December 1996 132
Other 108
----------
Total notes payable 2,131
Less current portion (1,758)
----------
Long term portion of notes payable $ 373
==========
</TABLE>
<PAGE>
PAGE 11
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9 - Segment Information
- ----------------------------
Due to its recent acquisitions, the Company now has operations in two additional
industries, hotel operations and glass manufacturing. Previously, the Company
operated primarily in the computer sales and services industry. The Company has
no revenues from affiliated customers in fiscal 1996 or 1995.
On April 28, 1995, NBI, Ltd., a wholly-owned international subsidiary of NBI,
Inc., completed a sale of certain assets of the company, including its customer
base. Under the terms of the sale agreement, NBI, Ltd. retained certain assets
and liabilities. Therefore, the Company has no revenues from foreign operations
in fiscal 1996 but does have identifiable assets from its foreign subsidiary at
September 30, 1995. NBI, Ltd. is managing the disposition of these assets and
liabilities until such time as it can complete an orderly disposition of this
entity. Because the liabilities of the subsidiary exceed its assets, the
Company anticipated that the subsidiary will be required to file for a voluntary
liquidation during fiscal 1996.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
---- ----
(Amounts in thousands)
<S> <C> <C>
Revenue from operations:
Glass manufacturing......................................... $ 2,328 $ --
Hotel operations............................................ 350 --
Computer sales and service - foreign subsidiary............. -- 393
Computer sales and service and other - domestic operations.. 171 507
--------- --------
$ 2,849 $ 900
========= ========
Operating income (loss):
Glass manufacturing......................................... $ 477 $ --
Hotel operations............................................ 49 --
Computer sales and service - foreign subsidiary............. (1) (124)
Computer sales and service and other - domestic operations.. (133) (196)
--------- --------
$ 392 $ (320)
========= ========
Identifiable assets:
Glass manufacturing ........................................ $ 6,441 $ --
Hotel operations............................................ 1,924 --
Computer sales and service - foreign subsidiary............. 101 565
Computer sales and service and other - domestic operations.. 681 705
--------- --------
$ 9,147 $ 1,270
========= ========
</TABLE>
<PAGE>
PAGE 12
NBI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER, FISCAL YEAR 1996
RESULTS OF OPERATIONS
Revenues for the first quarter of fiscal year 1996 increased $1.9 million, or
216.6%, to $2.8 million from $900,000 in the first quarter of the prior fiscal
year. Cost of sales, service and rental was $2.0 million, or 71.7% of total
revenues for the three months ended September 30, 1995, compared to $684,000, or
76.0% of total revenue, for the same period in the prior fiscal year. The
increased revenues and related gross margin resulted primarily from the
Company's acquisition of the L.E. Smith Glass Company and the Belle Vernon
Holiday Inn during the first quarter of fiscal 1996.
Sales revenue of $2.5 million for the quarter ended September 30, 1995 increased
$1.8 million from $636,000 in the same period of the prior fiscal year. The
increase in sales revenue was related to the L.E. Smith Glass Company acquired
effective August 1, 1995, which generated $2.3 million of sales revenue during
the current quarter. However, this improvement was partially offset by the
absence of sales revenue from the Company's international subsidiary which was
sold in fiscal 1995, and lower sales revenues from its AlphaNet division
resulting from the absence of revenues from computer hardware and software sales
due to a change in market focus during fiscal 1995.
Service and rental revenue increased $114,000 to $378,000 for the three months
ended September 30, 1995, as compared to 1994, due to the inclusion of $340,000
of revenues from the Company's Belle Vernon Holiday Inn, acquired on August 4,
1995. This increase was partially offset by a decline caused by the absence of
international services revenues in the first quarter of fiscal 1995. In
addition, the first quarter of fiscal 1995 included revenues from the completion
of training services for customers related to the Company's domestic systems
integration business, which was closed in June 1994.
Revenues are expected to increase significantly for the three months ended
December 31, 1995, as compared to the same period in the prior fiscal year, due
to the Company's recent acquisitions. Revenues for the second quarter of fiscal
1996 are expected to increase moderately compared to the first quarter of fiscal
1996 due to the inclusion of a full quarter of revenues in the second quarter
from the two new acquisitions, partially offset by a decline in the revenues due
to seasonal variations in these businesses.
Cost of sales as a percentage of sales revenue for the three months ended
September 30, 1995 and 1994, was 70.4% and 74.1%, respectively. The related
improved gross margin resulted primarily from the inclusion of sales from the
L.E. Smith Glass Company at a higher gross margin rate than experienced for
total sales in the same period of the prior fiscal year.
Cost of service as a percentage of service and rental revenue was 80.4% and
80.7% for the first quarter of fiscal year 1996 and 1995, respectively. The
related gross margin was constant primarily due to the inclusion of service and
rental revenues from the Belle Vernon Holiday Inn at a higher gross margin rate
than experienced for total service and rental revenues in the same period of the
prior fiscal year, partially offset by a decline in the gross margin rate caused
by the absence of international services revenues at a higher gross margin rate.
Cost of sales, service and rental as a percentage of total revenue is also
expected to be lower in the second quarter of fiscal 1996, as compared to the
second quarter of fiscal 1995, due to the inclusion of revenues from the L.E.
Smith Glass Company and the Belle Vernon Holiday Inn at slightly higher average
margins. Cost of sales, service and rental as a percentage of total revenue is
expected to remain relatively constant in the second quarter of fiscal 1996 as
compared to the first quarter of fiscal 1996.
The Company had no product development and engineering expenses for the three
months ended September 30, 1995 compared to expenses of $80,000 for the same
period of the prior fiscal year because the Company discontinued all software
development activity as of June 30, 1995.
<PAGE>
PAGE 13
NBI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER, FISCAL YEAR 1995 - CONTINUED
Marketing, general and administrative expenses totaled $595,000 and $762,000 for
the three months ended September 30, 1995 and 1994, respectively. The decline
is related to significant savings resulting from the absence of expenses from
the Company's international subsidiary and various expense control measures
implemented during fiscal 1995, partially offset by the addition of marketing,
general and administrative expenses related to the newly acquired businesses.
Marketing, general and administrative expenses are expected to increase
moderately for the three months ended December 31, 1995, as compared to the same
period in the prior fiscal year, as expenses from the Company's recent
acquisitions are expected to exceed savings resulting from the absence of
expenses associated with its international subsidiary. Marketing, general and
administrative expenses for the second quarter of fiscal 1996 are expected to
increase significantly compared to the first quarter of fiscal 1996, due to the
inclusion of a full quarter of expenses in the second quarter from the
acquired businesses.
Interest income totaled $14,000 and $57,000 for the three months ended September
30, 1995 and 1994, respectively. This decrease was primarily related to
variances in the mix of debt and equity securities held by the Company
The Company recorded a net gain on investments totaling $643,000 in the first
quarter of fiscal 1996 compared to a net gain of $831,000 for the three months
ended September 30, 1995. During the first quarter of fiscal 1996, the Company
sold a majority of its trading securities and recorded a net realized gain on
the sale of investments of $827,000. In addition, a net unrealized loss on
investments of $184,000 was recorded during the first quarter of fiscal 1996.
This compares to a net realized loss on the sale of investments of $366,000 and
a net unrealized gain on investments of $1,197,000 in the same period of the
prior fiscal year.
The Company reported pretax income of $688,000 for the three months ended
September 30, 1995, compared to $67,000 for the same period in fiscal year 1995.
The improved performance was primarily related to the business acquisitions
completed by the Company during the first quarter of fiscal 1996 and the absence
of a loss from the Company's international subsidiary which was sold in fiscal
1995.
A provision for income taxes totaling $293,000 was recorded for the three months
ended September 30, 1995, based upon book income using a federal rate of 34% and
an effective state rate of 14%. Included in the income tax provision for the
first quarter of fiscal 1996 is $215,000 which is a non-cash item due to the
utilization of the Company's pre-reorganization net operating losses. In
accordance with fresh start accounting, which was adopted as of April 30, 1992,
and as a result of the Company's reorganization under Chapter 11 of the U.S.
Bankruptcy Code, utilization of any income tax benefit from pre-reorganization
net operating losses are not credited to the income tax provision, but rather,
reported as an addition to capital in excess of par value. No provision for
income taxes was recorded for the three months ended September 30, 1994.
Net income totaled $395,000 for the first quarter of fiscal 1996 compared to
$67,000 for the same period in the prior fiscal year.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's total assets increased $2.9 million from $7.6 million at June 30,
1995, to $10.5 million at September 30, 1995. The increase was primarily
related to the two business acquisitions completed by the Company in August
1995. Working capital decreased $3.1 million from $4.5 million at June 30,
1995, to $1.4 million at September 30, 1995. This decline was primarily related
to cash and marketable securities used to fund the business acquisitions and is
offset by a significant increase in property, plant and equipment arising from
the acquisitions. Management anticipates that working capital needs for the
next year will be met by currently available working capital and internally
generated funds. During the next year, the Company expects to perform
renovations on the Belle Vernon Holiday Inn which are anticipated to cost
approximately $1.0 million. The Company plans on funding these renovations by
obtaining a mortgage on the property.
<PAGE>
PAGE 14
NBI, INC.
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
- ---------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K:
The following Forms 8-K were filed with the Commission during the quarter
ended September 30, 1995:
1. Form 8-K dated July 25, 1995, Item 5 - Other Events:
The Company was the successful bidder for a majority of the assets
of L.E. Smith Glass Company of Mount Pleasant, Pennsylvania.
2. Form 8-K dated August 4, 1995, Item 2 - Acquisition and Disposition
of Assets:
I. The Company acquired 100% of the outstanding capital stock of
the Belle Vernon Motel Corporation on August 4, 1995.
II. The Company's recently formed, wholly-owned subsidiary,
American Glass, Inc., closed on it's purchase of a majority of the
assets of L.E. Smith Glass Company of Mount Pleasant, Pennsylvania
on August 14, 1995.
3. Form 8-K dated August 11, 1995, Item 4 - Changes in the Company's
Certifying Accountant:
On August 11, 1995, NBI dismissed the firm of Ernst & Young LLP and
on August 17, 1995, engaged the firm of BDO Seidman LLP as its
principal accountant.
4. Form 8-K/A dated September 28, 1995, Item 7 - Financial Statements
and Proforma Financial Information:
I. Audited financial statements of the Belle Vernon Motel
Corporation as of December 31, 1994 and 1993 and for the years then
ended, and unaudited interim financial statements as of June 30,
1995 and for the six months then ended.
II. Audited financial statements of L.E. Smith Glass Company as of
March 31, 1995, 1994 and 1993, and for the years then ended, and
unaudited interim financial statements as of June 30, 1995 and for
the three months then ended.
III. Proforma financial statements as of June 30, 1995 and for the
year then ended.
<PAGE>
PAGE 15
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.
NBI, INC.
November 22, 1995 By: /s/ Marjorie A. Cogan
- ------------------------------ --------------------------------------
(Date) Marjorie A. Cogan
As a duly authorized officer
Corporate Controller, Secretary
(Principal Financial and Accounting Officer)
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