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, 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 October 31,1996
Common Stock, par value $.01 per share 8,000,984
<PAGE>
NBI, INC.
INDEX TO FORM 10-QSB
For Quarter Ended September 30, 1996
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C>
Consolidated Financial Statements (Unaudited) 3 - 6
Supplementary Notes to Consolidated Financial
Statements (Unaudited) 7 - 10
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11 - 13
PART II - OTHER INFORMATION 14
</TABLE>
<PAGE>
NBI, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 649 $ 782
Accounts receivable, net 1,957 1,300
Inventories 2,332 2,317
Net current assets of discontinued operations 47 31
Other current assets 367 878
-------- --------
Total current assets 5,352 5,308
Property, plant and equipment, net 4,738 4,558
Net long-term assets of discontinued operations 16 14
Other assets 313 315
-------- --------
$10,419 $10,195
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------
Current liabilities:
Short-term borrowings and current portion
of notes payable $ 1,670 $ 1,454
Obligation for short-sale transactions 259 493
Accounts payable 1,200 952
Accrued liabilities 831 945
-------- --------
Total current liabilities 3,960 3,844
Long-term liabilities:
Income taxes payable 5,351 5,362
Notes payable 185 224
Deferred income taxes 251 251
Postemployment disability benefits 209 214
-------- --------
Total liabilities 9,956 9,895
-------- --------
Commitments and contingencies
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 6,235 6,181
Accumulated deficit (5,322) (5,429)
Foreign currency translation adjustment 316 316
-------- --------
1,329 1,168
Less treasury stock, at cost (2,000,286 and 2,004,036 shares
at September 30 and June 30, respectively) (866) (868)
-------- --------
Total stockholders' equity 463 300
-------- --------
$10,419 $10,195
======== ========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
NBI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C> <C>
Revenues:
Sales $3,148 $2,424
Service and rental 594 350
------- -------
3,742 2,774
Costs and expenses:
Cost of sales 2,092 1,700
Cost of service and rental 375 232
Marketing, general and administrative 739 537
------- -------
3,206 2,469
------- -------
Income from operations 536 305
Other income (expense):
Net gain (loss) on investments (107) 643
Other income (expense) (49) 22
Interest expense (163) (187)
------- -------
(319) 478
------- -------
Income from continuing operations before provision
for income taxes 217 783
Provision for income taxes (110) (325)
------- -------
Income from continuing operations 107 458
Loss from discontinued operations, net of income tax benefit
of $32 in 1995 -- (63)
------- -------
Net income $ 107 $ 395
======= =======
Income per common share:
Income from continuing operations $ .01 $ .07
Loss from discontinued operations -- (.01)
------- -------
Net income $ .01 $ .06
======= =======
Weighted average number of common
and common equivalent shares outstanding 7,998 6,497
======= =======
<FN>
See acccompanying notes.
</TABLE>
<PAGE>
NBI, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 107 $ 395
Adjustments to reconcile net income to net cash
flow provided by (used in) operating activities:
Utilization of net operating loss carryforwards 54 215
Depreciation and amortization 134 93
Provisions for bad debt allowance 25 6
Provisions for writedown of inventories 36 10
Loss on sales of property and equipment (2) (2)
Net unrealized loss on trading securities 36 184
Other 1 (6)
Changes in assets -- decrease (increase):
Accounts receivable (695) (483)
Inventories (35) 199
Trading securities -- 3,369
Other current assets 512 46
Net assets of discontinued operations (35) --
Other assets (6) (40)
Changes in liabilities -- (decrease) increase:
Obligations for short-sale transactions (270) --
Accounts payable and accrued liabilities 188 (217)
Income tax related accounts 16 (542)
------ -------
Net cash flow provided by operating activities 66 3,227
------ -------
Cash flows from investing activities:
Payments for business acquisitions, net of cash acquired -- (3,504)
Proceeds from sales of property and equipment 3 2
Purchases of property and equipment (309) (23)
------ -------
Net cash flow used in investing activities (306) (3,525)
------- -------
Cash flows from financing activities:
Proceeds from issuance of stock 1 --
Payments on notes payable (85) (106)
Net borrowings (payments) on line of credit and short-term
margin borrowings 262 (772)
------ -------
Net cash flow provided by (used in) financing activities 178 (878)
------ -------
Net decrease in cash and cash equivalents (62) (1,176)
Less increase in cash and cash equivalents included in net current
assets of discontinued operations (71) --
Cash and cash equivalents at beginning of period 782 1,931
------ -------
Cash and cash equivalents at end of period $ 649 $ 755
======= =======
<FN>
See accompanying notes.
</TABLE>
<PAGE>
NBI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C>
Supplemental disclosures of cash flow information:
Interest paid $142 $202
==== ====
Income taxes paid $ 52 $614
==== ====
<FN>
See accompanying notes.
</TABLE>
NBI, INC.
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 1996
financial statements have been reclassified to conform to the fiscal 1997
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. During fiscal 1996,
the Company changed the name of the Belle Vernon Motel Corporation to NBI
Properties, Inc.
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., completed 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, inventories, 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 final adjusted purchase price of $5,770,000 was paid
through the assumption of $3,449,000 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
dates of acquisition.
Note 3 - Discontinued Operations
As of August 27, 1996, the Company has discontinued all of its operations in
the computer industry segment. Therefore, it has separately reported the
losses from this segment as discontinued operations for the three months ended
September 30, 1995. At June 30, 1996, the Company estimated the net
realizable value of the sale or disposal of the discontinued operations,
including estimated costs and expenses directly associated with the disposal
and estimated losses from operations through the expected disposal date, and
expects a moderate overall gain from the discontinued operations. This gain
will be recognized when it is realized.
Revenues from the discontinued operations totaled $394,000 and $75,000 for
the three months ended September 30, 1996 and 1995, respectively.
Note 4 - Cash and Cash Equivalents
Cash and cash equivalents include investments that are readily convertible to
known amounts of cash and have original maturities of three months or less.
The Company places its cash and temporary cash investments with financial
institutions. At times, such investments may be in excess of federally
insured limits.
<PAGE>
Note 5 - Investments in Securities and Obligations from Short-Sale
Transactions
During the three months ended September 30, 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
September 30, 1996, the Company recorded a net realized loss of $71,000 and a
net unrealized loss of $36,000 compared to a net realized gain of $827,000 and
a net unrealized loss of $184,000 in the same quarter of the prior fiscal
year. The substantial realized gain on investments included in the three
months ended September 30, 1995 occurred primarily because the Company sold a
significant portion of its securities to fund its two business acquisitions.
As part of its investment policies, the Company's investment portfolio may
include option instruments and may include a concentrated position in one or
more securities. As a result of this, the financial results may fluctuate
significantly and have larger fluctuations than with a more diversified
portfolio. In addition, the Company may invest in short-sale transactions of
trading securities. Short-sales can result in off-balance sheet risk, as
losses can be incurred in excess of the reported obligation if market prices
of the securities subsequently increase.
At September 30, 1996, the Company had one short investment position totaling
$259,000 which was included in obligations from short-sale transactions. The
short position was subsequently closed resulting in a small gain.
Note 6 - Inventories
Inventories are comprised of the following:
<TABLE>
<CAPTION>
September 30,
1996
(Amounts in thousands)
<S> <C>
Raw materials $ 811
Work in process 326
Finished goods 1,184
Food and beverage inventory 11
------
$2,332
======
</TABLE>
Note 7 - Property and Equipment
Capital assets are depreciated on a straight-line basis over their useful
lives shown below:
<TABLE>
<CAPTION>
Asset September 30,
Lives 1996
(Amounts in thousands)
<S> <C> <C>
Land N/A $ 113
Buildings 20-25 yrs 1,929
Machinery and equipment 3-10 yrs 2,761
Office and hotel furniture, fixtures 5-7 yrs 463
Construction-in-progress N/A 551
----------
5,817
Accumulated depreciation (1,079)
----------
$4,738
==========
</TABLE>
<PAGE>
Note 8 - 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, which was paid upon execution of the definitive
agreement on March 19, 1996. Subsequently, quarterly interest payments are
due beginning April 1, 1996 through October 1, 1997. Interest was paid and
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 is being negotiated, under the terms of the
agreement, 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 Company is paying interest on the scheduled payment dates based
upon the rate of 7.5% for this period until the negotiations are finalized.
The remaining principal balance is due in full on October 1, 1997.
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 NBI Properties, Inc. 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
September 30, 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
September 30, 1996. Therefore, none of the principal balance due is
classified as current.
Income tax provision:
A provision for income taxes from continuing operations of $110,000 and
$325,000, including state income tax provisions, was recorded for the three
months ended September 30, 1996, and 1995, respectively. The income tax
provisions were based upon book income. Included in the tax provision for the
three months ended September 30, 1996 and 1995, was $54,000 and $183,000,
respectively, 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 9 - Other Hotel Improvements and Commitments
In connection with its franchise agreement, the Company's hotel operation has
committed to completion of approximately $1,000,000 in renovations to the
hotel during fiscal 1997. As of September 30, 1996, $141,000 of these
improvements had been started and are included in construction in progress.
The Company's hotel franchise
<PAGE>
agreement generally requires compliance with certain terms and conditions
which are subject to review by Holiday Inn. Under this agreement, the Company
has been notified of its noncompliance with the agreed upon timetable related
to the planned renovations. The outcome of such noncompliance presently
cannot be determined and no provision for any liability that may result has
been made in the financial statements.
Note 10 - Stockholders' Equity
The Company has authorized 20,000,000 shares of $.01 par value common stock.
At September 30, 1996, 10,001,270 shares were issued including 2,000,286 held
in treasury. Therefore, the Company had 8,000,984 shares issued and
outstanding at September 30, 1996, including 1,500,000 shares which are
unregistered.
In March 1996, the Company issued 1,500,000 unregistered shares of its common
stock from shares held in treasury through a private placement stock offering.
The offering resulted in net proceeds of $1,047,000 which was used by the
Company first to pay obligations due to the IRS and then for operating capital
of 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 its own purpose until December 31, 1999.
In February 1995, the Company issued warrants to purchase 1.7 million shares
of its common stock at $.89 per share in conjunction with an acquisition.
These warrants are exercisable through December 31, 2002. As of September 30,
1996, no warrants had been exercised.
Note 11 - Seasonal Variations of Operations
All of the Company's ongoing operations typically have their strongest revenue
performance during the first fiscal quarter due to seasonal variations in these
businesses. Generally, the second and fourth fiscal quarters' revenues from
these operations are moderately lower than in the first quarter, while the third
fiscal quarter's revenue is usually significantly lower than the other quarters.
<PAGE>
NBI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER, FISCAL YEAR 1997
The statements in this discussion contain both historical and forward-looking
statements. The forward-looking statements are based upon current
expectations and the actual results could differ materially from those
anticipated. Factors that may affect such forward-looking statements include,
among others, competitive factors and pricing pressures, loss of significant
customers, availability of raw materials, labor disputes, investment results,
ability to comply with franchise agreements, ability to obtain financing,
inflation and general economic conditions.
RESULTS OF OPERATIONS
Revenues from continuing operations for the first quarter of fiscal year 1997
increased $968,000, or 34.9% to $3.7 million from $2.8 million in the first
quarter of the prior fiscal year.
Sales revenue of $3.1 million for the quarter ended September 30, 1996
increased $724,000 from the same period of the prior fiscal year. The
increase in sales revenue was primarily related to the inclusion of a full
quarter of revenue during the three months ended September 30, 1996 from the
L.E. Smith Glass Company, compared to revenues for the period August 1, 1995,
its acquisition date, through September 30, 1995 included in the same quarter
of fiscal 1996.
Service and rental revenue increased $244,000 to $594,000 for the three months
ended September 30, 1996 as compared to the same period in fiscal 1996. The
increased revenues resulted primarily from the inclusion of three full months
of revenue during the first quarter of fiscal 1997 from the Belle Vernon
Holiday Inn, compared to revenues for the period August 4, 1995, its
acquisition date, through September 30, 1995 included in the first quarter of
fiscal 1996.
Total revenues from continuing operations are expected to increase moderately
for the three months ended December 31, 1996, as compared to the same period
in the prior fiscal year, primarily due to increased sales efforts for the
glass manufacturing company. However, revenues for the second quarter of
fiscal 1997 are expected to decrease moderately compared to the first quarter
of fiscal 1997, as seasonal variations cause the first fiscal quarter to be
the highest revenue quarter for all operations and the Company expects an
additional decline in service and rental revenues resulting from a reduction
in available rooms due to the hotel construction project.
Cost of sales, service and rental was $2.5 million, or 65.9% of total revenue
for the three months ended September 30, 1996, compared to $1.9 million, or
69.6% for the same period of the prior fiscal year.
Cost of sales as a percentage of sales revenue was 66.5% for the first quarter
of fiscal 1997 as compared to 70.1% for the same period of fiscal 1996. The
resulting improved gross margin was primarily related to an overstatement of
cost of goods sold of $99,000 in the first quarter of fiscal 1996 which was
corrected in the fourth quarter of fiscal 1996.
Cost of service and rental as a percentage of service and rental revenues was
63.1% for the first quarter of fiscal 1997 as compared to 66.3% for the same
period of the prior fiscal year. The related improved gross margin was due to
the increased revenue volume without a corresponding increase in costs as the
costs include a significant amount of fixed expenses.
Cost of sales, service and rental as a percentage of total revenue for the
second quarter of fiscal 1997 is expected to increase slightly, compared to the
second quarter of fiscal 1996, primarily due to expected decline in service
and rental revenues available to cover fixed costs. Cost of sales, service and
rental as a percentage of total revenue for the second quarter of fiscal 1997
is also expected to increase moderately compared to the first quarter of fiscal
1997 due to an expected decline in revenue volume from all operations available
to cover fixed costs.
<PAGE>
NBI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER, FISCAL YEAR 1997 - CONTINUED
Marketing, general and administrative expenses totaled $739,000 and $537,000
for the three months ended September 30, 1996 and 1995, respectively. The
increase in expenses are primarily due to the inclusion of the glass
manufacturing and hotel operations for a full quarter in the first quarter of
fiscal 1997 while these operations were only included since acquisition date,
August 1, 1995 and August 4, 1995, respectively, in the first quarter of
fiscal 1996. In addition, the glass manufacturing operation experienced
higher expenses due to increased sales and marketing activities.
Marketing, general and administrative expenses are expected to increase
moderately for the three months ended December 31, 1996, as compared to the
same period in the prior fiscal year, due to the increased sales and marketing
activities for the glass manufacturing operation. Marketing, general and
administrative expenses are expected to remain relatively constant in the
second quarter of fiscal 1997 compared to the first quarter of fiscal 1997.
The Company recorded a net loss on investments of $107,000 in the first
quarter of fiscal 1997, compared to a net gain on investments of $643,000 for
fiscal 1995. Included in the net loss on investments in the first quarter of
fiscal 1997 was a realized loss of $71,000 and an unrealized loss of $36,000.
This compares to a net realized gain of $827,000 and a net unrealized loss of
$184,000 recorded in the same period of fiscal 1996. The significant net
realized gain on investments included in the first quarter of fiscal 1996
occurred because the Company sold a majority of its trading securities in
order to fund the business acquisitions competed during that period. As part
of its investment policy, the Company's investment portfolio may include
investments in option instruments and may include a concentrated position in
one or more securities. As a result of this, the financial results may
fluctuate significantly and have larger fluctuations than with a more
diversified portfolio. In addition, the Company may invest in short-sale
transactions of trading securities. Short-sales can result in off-balance
sheet risk, as losses can be incurred in excess of the reported obligation if
market prices of the securities subsequently increase.
The Company recorded income tax provisions from continuing operations of
$110,000 and $325,000 for the quarters ended September 30, 1996 and 1995,
respectively, based upon book income including state income tax provisions of
$66,000 and $96,000, respectively, primarily related to the Company's
Pennsylvania operations. Included in these tax provisions were $54,000 and
$183,000 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
loss carryforwards are not credited to the income tax provision, but rather,
reported as an addition to capital in excess of par value.
As of August 27, 1996, the Company has discontinued all of its operations in
the computer industry segment. Therefore, it has separately reported the
losses from this segment as discontinued operations for the three months ended
September 30, 1995. The Company incurred a net loss from discontinued
operations of $63,000 for the three months ended September 30, 1995. At June
30, 1996, the Company estimated the net realizable value of the sale
or disposal of the discontinued operations, including estimated costs and
expenses directly associated with the disposal and estimated losses from
operations through the expected disposal date, and expects a moderate overall
gain from the discontinued operations. This gain will be recognized when it
is realized.
The Company reported net income of $107,000 for the first quarter of fiscal
1997, compared to net income of $395,000 for the first quarter of fiscal 1996.
<PAGE>
NBI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER, FISCAL YEAR 1997 - CONTINUED
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's total assets and working capital at September 30, 1996 of $10.4
million and $1.4 million, respectively, remained fairly constant compared to
$10.2 million and $1.5 million at June 30, 1996, respectively.
The Company's hotel operation has committed to completion of approximately
$1,000,000 in renovations to the hotel during fiscal 1997. The Company is
currently in process of attaining a first mortgage on the property to cover
these renovations, which it expects to be completed during the second quarter
of fiscal 1997. The Company's hotel franchise agreement generally requires
compliance with certain terms and conditions which are subject to review by
Holiday Inn. Under this agreement, the Company has been notified of its
noncompliance with the agreed upon timetable related to the planned
renovations. The outcome of such noncompliance presently cannot be determined
and no provision for any liability that may result has been made in the
financial statements.
The entire outstanding principal balance on the IRS debt of $5,278,000 at
September 30, 1996 is due in full on October 1, 1997. In order to pay such
amount, the Company will need to obtain additional debt or equity financing.
There can be no assurances that the Company will be able to obtain such
financing or that if it is able to obtain such financing, that it will be
on favorable terms.
The Company expects its other working capital requirements in the next fiscal
year to be met by existing working capital at September 30, 1996, internally
generated funds and short-term borrowings under an existing line of credit.
<PAGE>
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
September 30, 1996.
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 14, 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>
<CAPTION>
<C> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jun-30-1997
<PERIOD-START> Jul-01-1996
<PERIOD-END> Sep-30-1996
<CASH> 649
<SECURITIES> 0
<RECEIVABLES> 1,957
<ALLOWANCES> 0
<INVENTORY> 2,332
<CURRENT-ASSETS> 5,352
<PP&E> 4,738
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,419
<CURRENT-LIABILITIES> 3,960
<BONDS> 5,996
<COMMON> 100
0
0
<OTHER-SE> 363
<TOTAL-LIABILITY-AND-EQUITY> 10,419
<SALES> 3,148
<TOTAL-REVENUES> 3,742
<CGS> 2,092
<TOTAL-COSTS> 2,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> 217
<INCOME-TAX> 110
<INCOME-CONTINUING> 107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
This schedule contains summary financial information extracted from the
consolidated financial statements of NBI, Inc. for the three months ended
September 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</TABLE>
