UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-6633
FOR BETTER LIVING, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-2598411
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
13620 Lincoln Way, #380 95603-3236
Auburn, California (Zip code)
(Address of principal executive offices)
(916) 823-9600
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (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 twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of May 13, 1996:
Common Stock, $.05 par value - 877,816 shares.
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FOR BETTER LIVING, INC. AND SUBSIDIARIES
INDEX
<CAPTION>
Page No.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, March 30, 1996, and 3
December 30, 1995
Condensed Consolidated Statements of Income for the Three Months Ended 4
March 30, 1996 and April 1, 1995
Condensed Consolidated Statements of Cash Flows for the Three Months Ended 5
March 30, 1996 and April 1, 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results 7
of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 8
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 30, December 30,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 803,000 $ 1,528,000
Accounts receivable - trade (less allowance for doubtful accounts of
$1,107,000 and $747,000 at March 30, 1996 and December 30, 1995,
respectfully) 16,238,000 13,177,000
Inventories 8,333,000 8,401,000
Deferred income taxes 2,065,000 2,065,000
Other 4,111,000 3,881,000
------------ ------------
Total current assets $ 31,550,000 $ 29,052,000
------------ ------------
PROPERTY:
Property at cost 38,541,000 39,967,000
Less accumulated depreciation and amortization (28,660,000) (28,614,000)
------------ ------------
Property - net 9,881,000 11,353,000
------------ ------------
AVAILABLE-FOR-SALE SECURITIES 1,670,000 1,700,000
------------ ------------
OTHER ASSETS 479,000 477,000
------------ ------------
TOTAL $ 43,580,000 $ 42,582,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 1,098,000 $ 1,217,000
Accounts payable - trade 4,167,000 4,139,000
Accrued salaries and wages 1,403,000 1,941,000
Deferred income 2,021,000 1,860,000
Other 5,180,000 4,025,000
------------ ------------
Total current liabilities 13,869,000 13,182,000
------------ ------------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 11,580,000 11,718,000
------------ ------------
OTHER LIABILITIES (primarily deferred compensation) 1,034,000 1,039,000
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock - par value $1.00 per share (authorized, 150,000 shares;
outstanding, none)
Common stock - par value $.05 per share (authorized, 2,500,000
shares; outstanding, 877,816 shares) 44,000 44,000
Additional paid-in capital 1,083,000 1,083,000
Unrealized net gains and losses on available-for-sale securities 183,000 214,000
Retained earnings 15,787,000 15,302,000
------------ ------------
Total stockholders' equity 17,097,000 16,643,000
------------ ------------
TOTAL $ 43,580,000 $ 42,582,000
============ ============
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
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FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
---------------------------
March 30, April 1,
1996 1995
----------- -----------
NET REVENUES $25,465,000 $17,716,000
----------- -----------
COST AND EXPENSES:
Cost of sales 16,750,000 10,749,000
Selling, general and administrative expenses 7,529,000 6,489,000
Interest expense 376,000 239,000
----------- -----------
Total cost and expenses 24,655,000 17,477,000
----------- -----------
INCOME BEFORE PROVISION FOR TAXES 810,000 239,000
PROVISION FOR TAXES 325,000 96,000
----------- -----------
NET INCOME $ 485,000 $ 143,000
=========== ===========
NET INCOME PER COMMON SHARE: $ 0.55 $ 0.16
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 877,816 877,816
=========== ===========
CASH DIVIDENDS PER COMMON SHARE $ 0.00 $ 0.00
=========== ===========
See the accompanying notes to condensed consolidated financial statements.
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FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
---------------------------
March 30, April 1,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 485,000 $ 143,000
Depreciation, depletion and amortization 450,000 503,000
Other (2,441,000) (3,277,000)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES $(1,506,000) $(2,631,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property (696,000) (346,000)
Purchases of available-for-sale securities (373,000) --
Proceeds from the sale of property and
available-for-sale securities 2,116,000 1,718,000
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,047,000 1,372,000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings -- 1,625,000
Proceeds from long-term borrowings 104,000 --
Payment of long-term debt and capital lease obligations (370,000) (404,000)
----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (266,000) 1,221,000
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (725,000) (38,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,528,000 1,828,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 803,000 $ 1,790,000
=========== ===========
CASH PAID DURING THE PERIOD FOR THE FOLLOWING:
Interest $ 326,000 $ 168,000
=========== ===========
Income taxes paid (refunded) ($ 39,000) ($ 36,000)
=========== ===========
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
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FOR BETTER LIVING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and, in
the opinion of the Company, include all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position, results of operations and changes in cash flows of the Company as
of the dates and for the periods indicated. All significant intercompany
transactions have been eliminated. Certain amounts as previously reported
have been reclassified to conform to the current period presentation.
2. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full fiscal year.
3. Inventories consist of the following:
March 30, December 30,
1996 1995
---------- ----------
Finished products $5,582,000 $5,455,000
Work-in-process 327,000 337,000
Raw materials and supplies 2,424,000 2,609,000
---------- ----------
Total inventories $8,333,000 $8,401,000
========== ==========
4. The Company received, in prior periods, notices of proposed
assessments from the California Franchise Tax Board ("CFTB") relating to
its 1978-1981 tax years. The principal issue raised in these notices was
whether the Company's oil and gas operations were part of a unitary
business with the other operations of the Company. The CFTB has taken the
position that the oil and gas operations were not unitary with these other
operations and, therefore, has disallowed for California income tax
purposes losses arising from oil and gas operations. The Company paid the
assessed taxes of $379,000 and associated interest of $946,000 in 1992. It
filed suit in 1994 and received a favorable decision and judgment in
February 1995 for recovery of these amounts, plus interest. The CFTB has
appealed that decision however, and the matter is now pending before the
California Court of Appeal. The Company expects a decision before the end
of 1996.
Deductions similar to those disallowed by the CFTB for the 1978-1981
tax years were also taken by the Company in its subsequent tax years. The
CFTB has recently examined those subsequent periods and, as a result of its
examination, has issued a notice of proposed assessment of additional taxes
for tax years 1982-1987. The proposed assessment is for $272,000 in
additional taxes which would result in associated interest expense of
approximately $476,000 through the first quarter of 1996. The Company's
management believes that the ultimate outcome of this matter will not have
a material adverse effect on the Company's consolidated financial
statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Requirements
For the three months ended March 30, 1996, cash and cash equivalents
decreased $725,000. The primary sources of cash during the period were
$2,116,000 from the sale of property and available-for-sale securities and
$104,000 from long-term borrowings. Significant uses of cash were $1,506,000 for
operating activities. $696,000 for purchases of property primarily for The
Quikset Organization, $373,000 for purchases of available-for-sale securities
and $370,000 for debt and capital lease obligations repayments.
For the three months ended April 1, 1995, cash and cash equivalents
decreased $38,000. The primary sources of cash during the period were $1,718,000
from the sale of property and available-for-sale securities and $1,625,000 from
short-term borrowings. Significant uses of cash were $2,631,000 for operating
activities, $404,000 for debt and capital lease obligation repayments and
$346,000 for purchases of property primarily for The Quikset Organization.
The Company's management believes that its liquidity position at March
30, 1996, together with funds anticipated to be generated from its operations
and available under its Revolver will provide sufficient cash resources to
finance its operating activities.
Results of Operations
During the three months ended March 30, 1996, net revenues increased
$7,749,000 from the comparable period of the prior year. This primarily resulted
from increases in revenues of $8,280,000 at The Quikset Organization and
$542,000 at the Communications Group, partially offset by a decrease in other
operating revenues of $1,073,000. The increase at The Quikset Organization was
primarily due to increases in sales at its Texas concrete operations. The
increase at the Communications Group resulted primarily from increases in
advertising revenues at the majority of its magazines. The decrease in other
operating revenues was primarily due to a decrease in sales of
available-for-sale securities.
During the three months ended March 30, 1996, the Company recognized
income before taxes of $810,000, or an increase in pre-tax income of $571,000
from the comparable period of the prior year. This increase in pre-tax income
resulted primarily from an increase in operating profit of $1,888,000 at The
Quikset Organization, partially offset by a decrease in other operating profit
of $1,082,000 and a decrease in operating profit of $74,000 at the
Communications Group. The increase in operating profit at The Quikset
Organization was primarily a result of the increase in revenues from its Texas
concrete operations. The decrease in other operating profit resulted primarily
from a decrease in gains from the disposition of available-for-sale securities.
The decrease in operating profit at the Communications Group was primarily due
to increased production and paper costs.
During the three months ended April 1, 1995, net revenues increased
$2,502,000 from the comparable period of the prior year. This primarily resulted
from an increase in other revenues of $1,165,000, increases in revenues of
$687,000 at The Quikset Organization and increases in revenues of $650,000 at
the Communications Group. The increase in other revenues resulted primarily from
the sale of available-for-sale securities. The increase at The Quikset
Organization was primarily due to an increase in revenues from its plastics
operation and Georgia concrete operation. The increase at the Communications
Group resulted primarily from increases in advertising and newsstand revenue
from its new Bike magazine as well as from several of its other magazines.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
During the three months ended April 1, 1995, the Company recognized
income before taxes of $239,000, or an increase in pre-tax income of $1,140,000
from the comparable period of the prior year. This increase in pre-tax income
resulted primarily from an increase in other operating profit of $1,155,000 and
an increase in operating profit of $121,000 at the Communications Group,
partially offset by an increase in operating losses of $159,000 at The Quikset
Organization. The increase in other operating profit resulted primarily from an
increase in gains from dispositions of securities. The increase in operating
profit at the Communications Group was primarily a result of the increase in
revenues from its various magazines. The increase in operating losses at The
Quikset Organization was primarily due to a decline in gross margins and certain
increases in selling, general and administrative expenses.
The increase in interest expense in 1996 was primarily due to an
increase in borrowings under its line of credit arrangement from the comparable
period of the prior year.
Net gains recognized on the disposition of available-for-sale
investments for the three months ended March 30, 1996 and April 1, 1995 were
$12,000 and $1,203,000, respectively.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibits are filed as part of this Report: The numbers refer
to the Exhibit Table of Item 601 of Regulation S-K.
3.1 Certificate of Incorporation. Incorporated by reference to Exhibit
3.1 of the Registrant's Form 10-K for the year
ended December 30, 1995.
3.2 By-Laws of the Registrant. Incorporated by reference to Exhibit
3.2 of the Registrant's Form 10-K for the year ended
December 30, 1995.
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three months ended March
30, 1996.
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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.
FOR BETTER LIVING, INC.
DATE: May 13, 1996 BY: Karl M. Stockbridge
--------------------- -------------------
Karl M. Stockbridge
Executive Vice President
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 2,630,000
<SECURITIES> 0
<RECEIVABLES> 16,238,000
<ALLOWANCES> 1,107,000
<INVENTORY> 8,333,000
<CURRENT-ASSETS> 33,377,000
<PP&E> 38,541,000
<DEPRECIATION> 28,660,000
<TOTAL-ASSETS> 45,407,000
<CURRENT-LIABILITIES> 15,696,000
<BONDS> 0
<COMMON> 44,000
0
0
<OTHER-SE> 17,053,000
<TOTAL-LIABILITY-AND-EQUITY> 45,407,000
<SALES> 25,264,000
<TOTAL-REVENUES> 25,465,000
<CGS> 16,750,000
<TOTAL-COSTS> 24,655,000
<OTHER-EXPENSES> 7,905,000
<LOSS-PROVISION> 403,000
<INTEREST-EXPENSE> 376,000
<INCOME-PRETAX> 810,000
<INCOME-TAX> 325,000
<INCOME-CONTINUING> 485,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485,000
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
</TABLE>
