<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 March 31, 1996
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
Name of Registrant
NBI, INC.
State of Incorporation IRS Employer I. D. Number
Delaware 84-0645110
Address
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 April 30, 1996
- ------------------------------ -----------------------------
Common Stock, par value $.01 per share 7,997,234
<PAGE>
PAGE 2
NBI, INC.
INDEX TO FORM 10-QSB
For Quarter Ended March 31, 1996
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
<S> <C>
Consolidated Financial Statements (Unaudited) . . . . . . . . . . . 3 - 6
Supplementary Notes to Consolidated Financial
Statements (Unaudited). . . . . . . . . . . . . . . . . . . . . 7 - 12
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 13 - 15
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . .16
</TABLE>
<PAGE>
PAGE 3
NBI, INC.
CONSOLIDATED BALANCE SHEET
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
--------- --------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 879 $ 1,931
Trading securities 230 4,324
Receivables, net 1,584 371
Inventories 2,328 196
Other current assets 352 391
------- -------
Total current assets 5,373 7,213
Property and equipment, net 4,410 55
Other assets 308 289
------- --------
$10,091 $ 7,557
======= ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C> <C>
Current liabilities:
Short-term borrowings and current
portion of notes payable $ 1,595 $ 925
Accounts payable 815 384
Current portion of income taxes
payable 26 864
Accrued liabilities 1,289 544
-------- --------
Total current liabilities 3,725 2,717
Long-term liabilities:
Income taxes payable 5,404 5,404
Notes payable 261 56
Deferred tax liability (net) 251 --
Postemployment disability benefits 219 234
-------- --------
Total liabilities 9,860 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 6,176 5,769
Accumulated deficit (5,493) (5,517)
Foreign currency translation adjustment 316 311
-------- --------
1,099 663
Less treasury stock, at cost
(2,004,036 and 3,504,036 shares) (868) (1,517)
-------- --------
Total stockholders' equity (deficit) 231 (854)
-------- --------
$10,091 $ 7,557
======= =======
</TABLE>
See Accompanying notes.
<PAGE>
PAGE 4
NBI, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Sales . . . . . . . . . . .$ 2,352 $ 465 $ 7,623 $1,707
Service and rental . . . . . 517 322 1,506 836
------- ------ ------- ------
2,869 787 9,129 2,543
Costs and expenses:
Cost of sales . . . . . . . 1,736 367 5,514 1,236
Cost of service and rental . 436 214 1,203 630
Product development and
engineering. . . . . . . . -- 65 -- 227
Marketing, general and
administrative . . . . . . 739 714 2,060 2,237
-------- -------- ------- ------
2,911 1,360 8,777 4,330
-------- -------- ------- ------
Income (loss) from operations. (42) (573) 352 (1,787)
Other income (expense):
Interest income. . . . . . . 7 36 22 154
Net gain (loss) on investments (477) 355 203 (198)
Other income (expense) . . . 3 15 46 (16)
Interest expense. . . . . . . .(141) (191) (485) (553)
-------- -------- -------- -------
(608) 215 (214) (613)
-------- -------- -------- -------
Income (loss) before income
taxes and cumulative effect
of change in accounting method (650) (358) 138 (2,400)
Income tax benefit (provision) 217 -- (114) --
-------- -------- -------- -------
Net income (loss) before cumulative
effect of change in
accounting method. . . . . . (433) (358) 24 (2,400)
Cumulative effect of change in
accounting method. . . . . . -- -- -- (271)
-------- -------- ------- ---------
Net income (loss). . . . . . $ (433) $ (358) $ 24 (2,671)
======== ======== ======== ========
Income (loss) per common share:
Pre-tax income (loss) . . $ (.09) $ (.05) $ .02 $ (.35)
Income tax benefit
(provision) . . . . . . . 03 -- (.02) --
-------- -------- -------- -------
Net income (loss) before
cumulative effect of change
in accounting method . $ (.06) $ (.05) $ -- $ (.35)
Cumulative effect of change
in accounting method. . . -- -- -- (.04)
-------- -------- ------- --------
Net income (loss) . . . . $ (.06) $ (.05) $ -- $ (.39)
======== ======== ======== =======
Weighted average number of common
and common equivalent
shares outstanding . . 6,712 6,595 6,568 6,815
======== ======== ======== =======
</TABLE>
See accompanying notes.
<PAGE>
PAGE 5
NBI, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . . . . $ 24 $ (2,671)
Adjustments to reconcile net income (loss) to net cash
flow provided by operating activities:
Utilization of net operating loss carryforwards . . 11 --
Depreciation and amortization . . . . . . . . 355 102
Provision for bad debts . . . . . . . . . . . 28 (14)
Provision for writedown of inventory. . . . . 43 21
Provision for impairment of property and equipment. . -- 14
Loss (gain) on sales of property and equipment. (2) 8
Net unrealized loss (gain) on investments . . 332 4
Cumulative effect of accounting change. . . . -- 271
Other . . . . . . . . . . . . . . . . . . . . (49) 27
Changes in assets -- decrease (increase):
Accounts receivable. . . . . . . . . . . . (72) 275
Inventory. . . . . . . . . . . . . . . . . (72) (60)
Trading securities . . . . . . . . . . . . 3,762 (4,220)
Marketable securities. . . . . . . . . . . -- 5,086
Other current assets . . . . . . . . . . . (66) 611
Changes in liabilities -- (decrease) increase:
Accounts payable and accrued liabilities . (483) 36
Income tax related accounts. . . . . . . . (838) --
---------- ----------
Net cash flow provided by (used in) operating
activities .. . . . . . . . . . . . 2,973 (510)
Cash flows from investing activities:
Payments for business acquisitions,
net of cash acquired. . (3,521) (288)
Issuance of notes receivable. . . . . . . . . . -- (350)
Collections of notes receivable . . . . . . . . -- 350
Deposit on land purchase option . . . . . . . . (50) --
Proceeds from sales of property and equipment . 2 45
Purchases of property and equipment . . . . . . (350) (19)
--------- --------
Net cash flow used in investing activities. . (3,919) (262)
Cash flows from financing activities:
Proceeds from issuance of stock,
net of offering costs. 1,047 --
Purchases of treasury stock . . . . . . . . . . -- (116)
Payments on notes payable . . . . . . . . . . . (336) (2,931)
Net short-term borrowings (payments). . . . . . (817) 2,370
-------- --------
Net cash flow used in financing activities. . (106) (677)
Effects of exchange rates on cash. . . . . . . . . -- 7
-------- --------
Net decrease in cash and cash equivalents. . . . . (1,052) (1,442)
Cash and cash equivalents at beginning of period . 1,931 2,708
-------- --------
Cash and cash equivalents at end of period . . . . $ 879 $ 1,266
======== ========
</TABLE>
See accompanying notes.
<PAGE>
PAGE 6
NBI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1996 1995
<S> <C> <C>
Supplemental disclosures of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . $ 639 $ 549
===== =====
Income taxes paid . . . . . . . . . . . . . . . $ 942 $ 52
===== =====
</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
continues to be operated as a Holiday Inn Hotel.
On August 14, 1995, with an effective date of close of business
on July 31, 1995, American Glass, Inc., a newly 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 continues
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 have been included in the accompanying
Statements of Operations since the effective date of acquisition.
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, after purchase price adjustments, exceeded the
purchase price by $857,000. 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 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>
Nine Months Ended
March 31,
1996 1995
(Amounts in thousands,
except per share data)
<S> <C> <C>
Revenue. . . . . . . . . . . . . . . . . . $ 9,953 $ 10,228
======= ========
Net income (loss) before extraordinary
items and cumulative effect of
accounting change . . . . . $ 55 $ (1,747)
======= =========
Net income (loss). . . . . . . . . . . . . $ 55 $ (2,018)
======= =========
Net income (loss) per common share . . . . $ .01 $ (.30)
======= ==========
</TABLE>
Note 3 - Cash and Cash Equivalents
- ----------------------------------
The Company's cash and cash equivalents of $879,000 at March 31,
1996 included $86,000 of restricted cash. This represents the
amount held in trust for payments under self insurance plans.
Note 4 - Investments in Securities
- ----------------------------------
During the nine months ended March 31, 1996 and 1995, all of the
Company's securities were classified as trading securities; no
securities were classified as held-to-maturity or
available-for-sale. For the quarter ended March 31, 1996, the
Company recorded a net realized loss of $66,000 and a net
unrealized loss of $411,000 compared to a net realized gain of
$56,000 and a net unrealized gain of $299,000 in the same quarter
of the prior fiscal year. The Company recorded a net realized
gain of $535,000 and a net unrealized loss of $332,000 for the
nine months ended March 31, 1996, compared to a net realized loss
of $194,000 and a net unrealized loss of $4,000 recorded in the
same period of the prior fiscal year.
During the first quarter of the current fiscal year, the Company
sold a significant portion of its securities to fund the
Company's two business acquisitions.
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 have and may continue to fluctuate
significantly and have larger fluctuations than with a more
diversified portfolio. At March 31, 1996, marketable securities
did include a concentrated position in one equity security in the
building materials manufacturing industry.
Note 5 - Inventories
- --------------------
Inventories are comprised of the following:
<TABLE>
<CAPTION>
March 31,
1996
(Amounts in thousands)
<S> <C>
Raw materials $ 690
Work in process 401
Finished goods 1,226
Food and beverage inventory 11
--------
$ 2,328
========
</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 March 31,
Lives 1996
(Amounts in thousands)
<S> <C> <C>
Land N/A $ 130
Buildings 20-25 yrs 1,812
Machinery and equipment 3-10 yrs 2,749
Office and hotel furniture, fixtures 5-7 yrs 497
Construction-in-progress N/A 164
---------
5,352
Accumulated depreciation (942)
---------
$ 4,410
=========
</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 provided for a principal
payment of $250,000, plus accrued interest for the period July 1,
1995 through September 30, 1995, at the original stated rate, and
accrued interest for the period October 1, 1995 through December
31, 1995, at the rate of 7.5% per annum, paid upon execution of
the definitive agreement, which was executed on March 19, 1996.
Subsequently, quarterly interest payments are due beginning April
1, 1996 through October 1, 1997. Interest accrued 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 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 March 31, 1996
and June 30, 1995 reflect these revised payments terms.
In conjunction with the new agreement, the Company granted 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 revised agreement based upon the Company's cash and cash
equivalents at March 31, 1996. Furthermore, any other accelerated
principal payments due under the new agreement within the next
twelve months, based upon subsequent quarter-end cash and cash
equivalent positions, are not determinable at March 31, 1996.
Therefore, none of the principle balance due is classified as current.
<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:
- --------------------
An income tax benefit of $217,000, net of state income tax
provisions, was recorded for the three months ended March 31,
1996, while there was a provision for income taxes totaling
$114,000 for the nine months then ended. The income tax
provisions are based upon book income. Included in the tax
provision for the nine months ended March 31, 1996, was $11,000
of non-cash charges for 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 and Short-term Borrowings
- ------------------------------------------------
In conjunction with the acquisition of the L.E. Smith Glass
Company, the Company assumed certain notes payable. The
following summarizes the Company's notes payable and short-term
borrowings outstanding at March 31, 1996:
<TABLE>
<CAPTION>
March 31,
1996
(Amounts in thousands)
<S> <C>
Revolving bank credit note of $2,000,000, interest at bank's
prime rate plus 1 1/4% or less, depending upon attainment of
certain financial ratios as defined in the agreement;
collateralized by a first security interest in all accounts
receivable, inventories and personal property of the glass
company $ 1,301
8.75% bank note payable; payable in monthly installments
of $8,333 through July 1999; cross collateralized with the
revolving credit note above 317
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 78
Promissory note with no stated interest rate; payable in monthly
installments of $9,444 through December 1996 76
Other 84
---------
Total notes payable and short-term borrowings 1,856
Less current portion (1,595)
----------
Long-term portion of notes payable $ 261
==========
</TABLE>
<PAGE>
PAGE 11
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9 - Private Placement Stock Offering
- -----------------------------------------
The Company issued 1,500,000 unregistered shares of its common
stock from shares held in treasury through a private placement
stock offering during the quarter ended March 31, 1996. The
offering resulted in net proceeds of $1,047,000 used by the
Company first to pay obligations due to the IRS during the third
quarter of fiscal 1996 and then for operating capital for the
Company. Holders of at least 50% of the shares issued have the
right to demand registration of the shares after December 1,
1996. Holders also have the right to have their shares
registered at any time the Company registers shares for it's own
purpose until December 31, 1999.
Note 10 - Segment Information
- -----------------------------
Due to its acquisitions during the first quarter of fiscal 1996,
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 its certain assets,
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 March 31, 1996. 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 exceeded its assets, the subsidiary
filed for a voluntary liquidation during the third quarter of
fiscal 1996.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue from operations:
Glass manufacturing . . . . $ 2,185 $ -- $ 7,052 $ --
======= ======= ======= =======
Hotel operations. . . . . . $ 415 $ -- $ 1,272 $ --
======= ======= ======= =======
Computer sales and service -
foreign operations. . . . $ -- $ 608 $ -- $ 1,553
======= ======= ======= =======
Computer sales and service and other -
domestic operations. . . $ 269 $ 179 $ 805 $ 990
======= ======= ======= =======
Operating income (loss):
Glass manufacturing . . . . $ 220 $ -- $ 1,065 $ --
======= ======= ======= =======
Hotel operations. . . . . . $ 5 $ -- $ 96 $ --
======= ======= ======= =======
Computer sales and service -
foreign operations . . . $ -- $ (212) $ (3) $ (517)
======= ======= ======== ========
Computer sales and service and other -
domestic operations . . . $ (109) $ (181) $ (295) $ (604)
======== ======== ======== ========
</TABLE>
<PAGE>
<PAGE>
PAGE 12
NBI, INC.
SUPPLEMENTARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
<S> <C> <C>
Identifiable assets:
Glass manufacturing . . . . . . . . . . . . $ 6,394 $ --
======= ======
Hotel operations. . . . . . . . . . . . . $ 2,104 $ --
======= ======
Computer sales and service - foreign
operations. . . . . . . . . . . . . . . $ 98 $ 264
======= ======
Computer sales and service and other -
domestic operations . . . . . . . . . . $ 726 $ 779
======= ======
</TABLE>
<PAGE>
<PAGE>
PAGE 13
NBI, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Third Quarter, Fiscal Year 1996
Results of Operations
Revenues for the third quarter of fiscal year 1996 increased $2.1
million, or 264.6%, to $2.9 million from $787,000 in the third
quarter of the prior fiscal year. Year-to-date, revenues totaled
$9.1 million for the nine months ended March 31, 1996, an
increase of $6.6 million, or 259.0%, compared to revenues of $2.5
million for the same period of fiscal 1995.
Sales revenue of $2.4 million for the quarter ended March 31,
1996 increased $1.9 million from the same period of the prior
fiscal year. For the nine months ended March 31, 1996, sales
revenue totaled $7.6 million, an increase of $5.9 million as
compared to the same period in fiscal 1995. The increase in
sales revenue was primarily related to the L.E. Smith Glass
Company acquired effective August 1, 1995, which generated $2.2
million and $7.1 million of sales revenue during the three and
nine months ended March 31, 1996, respectively. However, this
improvement was partially offset by a decrease due to the absence
of sales revenue from the Company's international operation which
was sold in fiscal 1995.
Service and rental revenue increased $195,000 to $517,000, and
$670,000 to $1.5 million for the three and nine months ended
March 31, 1996, respectively, as compared to the same periods in
fiscal 1995. The increased revenues resulted primarily from the
inclusion of $415,000 and $1.3 million of revenues during the
three and nine months ended March 31, 1996, respectively, from
the 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 fiscal 1996.
Total revenues are expected to increase significantly for the
three months ended June 30, 1996, as compared to the same period
in the prior fiscal year, due to the Company's fiscal 1996
acquisitions. Additionally, revenues for the fourth quarter of
fiscal 1996 are expected to increase moderately compared to the
third quarter of fiscal 1996, due to an expected increase in
revenues from the new businesses, as seasonal variations cause
the third fiscal quarter to be the lowest revenue quarter for
these businesses.
Cost of sales, service and rental was $2.2 million, or 75.7% of
total revenue, and $6.7 million, or 73.6% of total revenue, for
the three and nine months ended March 31, 1996, respectively.
Comparable figures for the same periods in fiscal 1995 were
$581,000 and $1.9 million, or 73.8% and 73.4% of total revenues,
respectively.
Cost of sales as a percentage of sales revenue for the three and
nine months ended March 31, 1996 was 73.8% and 72.3%,
respectively, compared to 78.9% and 72.4% for the same periods in
fiscal 1995. 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 periods of the prior fiscal year.
Cost of service as a percentage of service and rental revenue was
84.3% and 79.9% for the three and nine months ended March 31,
1996, respectively, compared to 66.5% and 75.4% for the same
periods in the prior fiscal year, respectively. The related
decline in gross margin rate was primarily due to the absence of
international services revenues at a higher gross margin rate.
Cost of sales, service and rental as a percentage of total
revenue in the fourth quarter of fiscal 1996 is expected to be
significantly lower than in the fourth quarter of fiscal 1995,
due to variances in the revenue mix. In addition, cost of sales,
service and rental as a percentage of total revenue is expected
to be slightly lower in the fourth quarter of fiscal 1996, as
compared to the third quarter of fiscal 1996, primarily due to
higher anticipated revenue volumes.
<PAGE>
PAGE 14
NBI, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Third Quarter, Fiscal Year 1996 - Continued
The Company had no product development and engineering expenses
for the three and nine months ended March 31, 1996, compared to
expenses of $65,000 and $227,000, respectively, for the same
periods of the prior fiscal year, because the Company
discontinued all software development activity as of June 30,
1995.
Marketing, general and administrative expenses totaled $739,000
and $714,000 for the three months ended March 31, 1996 and 1995,
respectively. The increase in expenses related to the inclusion
of the glass manufacturing and hotel operations were
significantly offset by the absence of expenses from the
Company's international operation during the quarter.
Year-to-date, marketing, general and administrative expenses
totaled $2.1 million for the nine months ended March 31, 1996, a
decrease of $177,000 compared to expenses of $2.2 million for the
same period of fiscal 1995. Significant savings resulting from
the absence of expenses from the Company's international
operation in fiscal 1996 and various expense control measures
implemented during fiscal 1995, exceeded the increase in expenses
resulting from the inclusion of eight months of marketing,
general and administrative expenses related to the glass
manufacturing and hotel businesses acquired in August 1995.
Marketing, general and administrative expenses are expected to
increase significantly for the three months ended June 30, 1996,
as compared to the same period in the prior fiscal year, as
expenses from the Company's fiscal 1996 acquisitions are expected
to exceed savings resulting from the absence of expenses
associated with its international subsidiary. Marketing, general
and administrative expenses are also expected to increase
moderately for the fourth quarter of fiscal 1996, compared to the
third quarter of fiscal 1996, primarily due to increased sales
activity.
Interest income totaled $7,000 and $22,000 for the three and nine
months ended March 31, 1996 respectively, compared to $36,000 and
$154,000 for the three and nine months ended March 31, 1995. The
decrease was primarily related to a lower level of average
outstanding cash and investments during fiscal 1996, as well as
variances in the mix of debt and equity securities held by the
Company.
The Company recorded a net loss on investments totaling $477,000
in the third quarter of fiscal 1996, compared to a net gain of
$355,000 for the three months ended March 31, 1995. The variance
was primarily related to an unrealized loss of $411,000 recorded
for the three months ended March 31, 1996, compared to an
unrealized gain of $299,000 included in the third quarter of
fiscal 1995. For the nine months ended March 31, 1996, the
Company recorded a net gain on investments of $203,000, compared
to a net loss on investments of $198,000 recorded in the same
period of the prior fiscal year. During the nine months ended
March 31, 1996, the Company sold a majority of its trading
securities and recorded a net realized gain on the sale of
investments of $535,000. However, this was partially offset by
an unrealized loss on investments of $332,000 recorded during the
same period. This compares to a net realized loss on the sale of
investments of $194,000 and a net unrealized loss on investments
of $4,000 recorded in the same period of the prior fiscal year.
An income tax benefit totaling $217,000, net of state income tax
provisions, was recorded for the quarter ended March 31, 1996.
The Company recorded income tax provisions of $114,000 for the
nine months ended March 31, 1996 based upon book income. Included
in the tax provisions for the nine months ended March 31, 1966,
was $11,000 of non-cash charges for the utilization of the
Company's pre-reorganization net operating loses. 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 loss
carryforwards are not credited to the income tax provision, but
rather, reported as an addition to capital in excess of par
value.
A charge of $271,000 for the cumulative effect of an accounting
change was recorded during the nine months ended March 31, 1995.
This related to the Company's adoption of Financial Accounting
Standards Board Statement No. 112, "Employers' Accounting For
Postemployment Benefits".
<PAGE>
PAGE 15
NBI, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Third Quarter, Fiscal Year 1996 - Continued
The Company reported a net loss of $433,000 for the third quarter
of fiscal 1996 compared to a net loss of $358,000 for the third
quarter of fiscal 1995. For the nine months ended March 31,
1996, the Company had net income of $24,000, compared to a net
loss of $2.7 million recorded during the same period in the prior
fiscal year.
Financial Condition, Liquidity and Capital Resources
The Company's total assets increased $2.4 million from $7.6
million at June 30, 1995, to $10.0 million at March 31, 1996.
The increase was primarily related to the two business
acquisitions completed by the Company in August 1995. Working
capital decreased $2.9 million from $4.5 million at June 30,
1995, to $1.6 million at March 31, 1996. The 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.
Total stockholders' equity increased $1.1 million from a deficit
of $854,000 at June 30, 1995 to equity of $231,000 at March 31,
1996, primarily due to a private placement stock offering of 1.5
million shares completed during the third quarter of fiscal 1996
raising $1.0 million. 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 at least
$1.0 million. The Company plans on funding these renovations by
obtaining a mortgage on the property.
<PAGE>
<PAGE>
PAGE 16
NBI, INC.
Part II - Other Information
Item 6 Exhibits and Reports on Form 8-K
- ---------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended March 31, 1996.
<PAGE>
PAGE 17
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.
May 8, 1996 By: /s/ Marjorie A. Cogan
----------- ---------------------------------
(Date) Marjorie A. Cogan
As a duly authorized officer
Corporate Controller, Secretary
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 879
<SECURITIES> 230
<RECEIVABLES> 1,584
<ALLOWANCES> 0
<INVENTORY> 2,328
<CURRENT-ASSETS> 5,373
<PP&E> 4,410
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,091
<CURRENT-LIABILITIES> 3,725
<BONDS> 5,665
0
0
<COMMON> 100
<OTHER-SE> 131
<TOTAL-LIABILITY-AND-EQUITY> 10,091
<SALES> 7,623
<TOTAL-REVENUES> 9,129
<CGS> 5,514
<TOTAL-COSTS> 6,717
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 485
<INCOME-PRETAX> 138
<INCOME-TAX> 114
<INCOME-CONTINUING> 24
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
