<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 1995
----------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________________________to________________________
Commission File number 1-258
----------------------------------------------------------
JG INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
ILLINOIS 36-1141010
- --------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1615 WEST CHICAGO AVENUE CHICAGO, IL 60622
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(312) 850-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
Yes X No
--- ---
Common Stock outstanding as of April 29, 1995 - 7,054,629 shares
----------------------------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
Company or group of companies for which report is filed:
JG INDUSTRIES, INC. AND SUBSIDIARIES (Company)
----------------------------------------------
In the opinion of management, all adjustments necessary to fairly present the
condensed consolidated financial position of the Company as of April 29, 1995,
January 28, 1995, and April 30, 1994 and the results of its operations and its
cash flows for the quarters ended April 29, 1995 (first quarter of fiscal 1996)
and April 30, 1994 (first quarter of fiscal 1995) have been included. These
adjustments consist solely of normal recurring accruals. The results of
operations for such interim periods are not necessarily indicative of results
for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto in the
Company's latest Annual Report on Form 10-K.
2
<PAGE>
JG INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
April 29, January 28, April 30,
1995 1995 1994
---------- ------------ ----------
<S> <C> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents $ 4 $ 2,048 $ 13
Receivables, net 16,138 23,983 16,256
Merchandise inventories 32,629 28,991 31,171
Other current assets 1,264 1,193 1,249
------- ------- -------
Total current assets 50,035 56,215 48,689
------- ------- -------
Land, buildings and
equipment, at cost 35,503 34,987 33,215
Less accumulated depreciation
and amortization 19,220 18,638 16,830
------- ------- -------
16,283 16,349 16,385
------- ------- -------
Deferred income taxes 626 626
Leasehold rights, net 760 813 937
Other assets 2,003 2,004 1,888
------- ------- -------
$69,707 $76,007 $67,899
======= ======= =======
LIABILITIES, COMMON STOCK AND
- -----------------------------
OTHER SHAREHOLDERS' EQUITY
--------------------------
Current Liabilities:
Notes payable $ 1,230 $ 1,350
Current portion of long-term debt 1,915 $ 2,382 3,632
Accounts payable 12,780 11,887 12,565
Accrued liabilities 8,639 11,499 8,559
Undelivered sales liability 4,890 8,983 4,707
Deferred income taxes 927 1,120
------- ------- -------
Total current liabilities 30,381 35,871 30,813
------- ------- -------
Long-term debt, less current portion 12,000 11,269 12,812
Minority interest 17,097 17,268 13,851
Redeemable preferred stock 3,183 3,183 3,183
Common stock and other shareholders' equity:
Common shares; no par value;
authorized 10,000,000 shares;
issued 7,209,311 shares 11,242 11,242 11,242
Paid-in capital 6,129 6,129 5,922
Accumulated deficit (9,046) (7,676) (8,646)
Treasury shares - 154,682, 154,438 and
154,153 shares at cost, respectively (1,279) (1,279) (1,278)
------- ------- -------
7,046 8,416 7,240
------- ------- -------
$69,707 $76,007 $67,899
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE>
JG INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
FOR THE QUARTERS ENDED APRIL 29, 1995 AND APRIL 30, 1994
--------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Quarter
Ended Ended
April 29, April 30,
1995 1994
---------- ----------
<S> <C> <C>
Net sales $ 39,576 $ 41,175
Cost of sales 24,422 25,361
--------- ---------
Gross profit 15,154 15,814
Selling, general and administrative
expenses 16,513 16,103
--------- ---------
Operating loss (1,359) (289)
Interest expense, net (296) (266)
Loss on issuance of stock by subsidiary (3) (5)
--------- ---------
Loss before income tax provision
and minority interest (1,658) (560)
Income tax benefit (provision) 182 (15)
--------- ---------
Loss before minority interest (1,476) (575)
Minority interest in net loss (income)
of subsidiaries 173 (82)
--------- ---------
Net loss $ (1,303) $ (657)
========= =========
Net loss applicable to common and
common equivalent shares $ (1,370) $ (703)
========= =========
Per share net loss applicable to common
and common equivalent shares $ (.19) $ (.10)
========= =========
Average number of common and common
equivalent shares outstanding 7,054,694 7,055,158
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
JG INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED JANUARY 28, 1995,
AND THE QUARTER ENDED APRIL 29, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
-------------
<TABLE>
<CAPTION>
Common Paid-In Accumulated Treasury
Shares Capital Deficit Stock Total
--------- -------- ----------- --------- -------
<S> <C> <C> <C> <C> <C>
Balances, January 29, 1994 $11,242 $ 4,589 $(7,943) $(1,278) $ 6,610
Net income, fiscal 1995 487 487
Gains on sale of H-K stock
to Jupiter 1,540 1,540
Purchase of 285 common shares (1) (1)
Dividends accrued on
redeemable preferred stock (220) (220)
------- ------- ------- ------- -------
Balances, January 28, 1995 11,242 6,129 (7,676) (1,279) 8,416
Net loss, first quarter
fiscal 1996 (1,303) (1,303)
Purchase of 244 common shares
Dividends accrued on
redeemable preferred stock (67) (67)
------- ------- ------- ------- -------
Balances, April 29, 1995 $11,242 $ 6,129 $(9,046) $(1,279) $ 7,046
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part
of these condensed consolidated financial statements.
5
<PAGE>
JG INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
FOR THE QUARTERS ENDED APRIL 29, 1995 AND APRIL 30, 1994
--------------------------------------------------------
(IN THOUSANDS)
--------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Quarter Quarter
Ended Ended
April 29, April 30,
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,303) $ (657)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 680 592
Deferred income taxes (193)
Minority interest (173) 82
Loss on issuance of stock
by subsidiary 3 5
Changes in assets and liabilities:
Receivables 7,845 6,436
Merchandise inventories (3,638) (3,426)
Other assets (current) (71) (116)
Other assets (noncurrent) (7) 15
Accounts payable and accrued liabilities (6,095) (4,116)
------- -------
Net cash used in operating activities (2,952) (1,185)
------- -------
Cash flows from investing activities:
Capital expenditures (553) (297)
------- -------
Net cash used in investing activities (553) (297)
------- -------
Cash flows from financing activities:
Net short-term borrowings 1,230 1,350
Net borrowings (repayments) under
revolving credit loan 1,036 (840)
Principal payments of long-term debt (805) (931)
Proceeds from exercise of stock options
at subsidiary 2
------- -------
Net cash provided by (used in)
financing activities 1,461 (419)
------- -------
Net decrease in cash and cash equivalents (2,044) (1,901)
Cash and cash equivalents at beginning of year 2,048 1,914
------- -------
Cash and cash equivalents at end of quarter $ 4 $ 13
======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
6
<PAGE>
JG INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(UNAUDITED)
-----------
1) Merchandise inventories are stated at the lower of cost or market. Cost is
determined on the last-in, first-out (LIFO) basis for approximately 96% of
the inventory as of April 29, 1995, January 28, 1995 and April 30, 1994,
using the retail method. The remaining inventory is valued on the first-in,
first-out (FIFO) basis using the retail method. If the FIFO method had been
used to value all inventories, cost would have been $1,894,000, $1,843,000,
and $1,493,000 higher at April 29, 1995, January 28, 1995 and April 30,
1994, respectively.
2) Receivables are presented net of allowances for cancellation reserves and
doubtful accounts of approximately $234,000 at April 29, 1995, $384,000 at
January 28, 1995 and $345,000 at April 30, 1994.
3) Leasehold rights are shown net of accumulated amortization of $2,462,000 at
April 29, 1995, $2,409,000 at January 28, 1995 and $2,285,000 at April 30,
1994.
4) As previously reported, during fiscal 1995, Sussex Group, Ltd. ("Sussex", an
indirect majority owned subsidiary of the Company), transferred or sold a
total of 800,000 shares of Huffman Koos Inc. ("H-K") common stock to Jupiter
Industries, Inc. ("Jupiter"). The transfer of 700,000 shares of this stock
on February 4, 1994 was used to repay a $5,075,000 note payable to Jupiter.
The remaining 100,000 shares of H-K common Stock was sold to Jupiter on
November 30, 1994 for $800,000. As a result of the transfer and sale of
these shares, the Company recognized a gain of $1,540,000 in fiscal 1995.
This gain was recorded as an increase to paid-in capital and represents the
difference between the amount of the note retired and cash received and the
proportionate share of H-K net equity represented by these shares.
Effective May 23, 1995, the Company through Sussex sold an additional
150,000 shares of H-K common stock to Jupiter for $1,125,000. The Company
expects to recognize a gain of approximately $175,000 in the second quarter
of fiscal 1996 related to this sale. Such gain will be recorded as an
increase to paid-in capital.
Pursuant to the terms of the various stock purchase agreements (the
"Agreements"), Sussex has been granted an option to repurchase any or all of
the 950,000 H-K shares on or prior to February 4, 1996 for a purchase price
ranging from $7.25 to $8.00 per share plus interest on such amount. The
Agreements also contain a provision which requires Jupiter to vote the
950,000 H-K shares for the election of a majority of the Board of Directors
of H-K as Sussex shall direct. As a result of this voting provision, the
Company through Sussex, retains effective control of H-K.
As a result of the transactions described above, the Company and Jupiter now
own 29.9% and 24.2%, respectively, of H-K's outstanding common stock based
on the number of H-K shares currently outstanding.
5) During the first quarter of fiscal 1996 and 1995, options to purchase 400
and 2,200 shares, respectively, of common stock of H-K were exercised.
Losses of $3,000 and $5,000, respectively, on the issuance of these shares
were recorded by the Company with an increase to minority interest as H-K's
net book value per share exceeded the option prices.
6) Loss per share applicable to common and common equivalent shares is computed
after recognition of the dividend requirements on redeemable preferred stock
of $67,000 in fiscal 1996 and $46,000 in fiscal 1995.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-----------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash and cash equivalents decreased by $2,044,000 during the quarter ended
April 29, 1995 which included approximately $2,952,000 of net cash used in
operating activities. Accounts receivable decreased by $7,845,000 and the
undelivered sales liability decreased by $4,093,000 due to the record volume of
furniture delivery by Huffman Koos Inc. ("H-K") during the first quarter. These
deliveries generated cash receipts which were used to decrease accounts payable
and accrued expenses by $2,002,000. Inventory increased by approxi mately
$3,638,000 due to normal seasonal increases. Approximately $553,000 of net cash
was used in investing activities due solely to capital expenditures as described
below. Approximately $1,461,000 of net cash was provided by financing activities
due to net borrowings on lines of credit of $2,266,000 offset by scheduled debt
payments of $805,000.
Goldblatt's Department Stores, Inc. ("Goldblatt's") spent approximately $237,000
on capital expenditures during the first quarter of fiscal 1996 related to
normal capital maintenance. Goldblatt's capital expenditures for the balance of
fiscal 1996 will be minimal as no new store openings or major store renovations
are planned. Goldblatt's had remaining availability of $2,129,000 under its line
of credit as of April 29, 1995. The Company believes that Goldblatt's working
capital and line of credit will be adequate to fund current operations and
service the Company's indebtedness through fiscal 1996.
H-K spent approximately $316,000 on capital expenditures during the first
quarter of fiscal 1996, the majority of which related to the renovation of its
Bridgewater, New Jersey store. The remodeling was completed in May 1995 at a
total cost of approximately $450,000. This completes the refurbishing program
initiated in 1993 which encompassed the renovation of all of H-K's older stores.
H-K previously announced that it had executed a lease for a new store in
Norwalk, Connecticut. This store will open later this year. Total cost of
leasehold improvements for this location are expected to approximate $750,000
and will be funded from working capital. H-K had remaining availability of
$4,349,000 under its revolving line of credit at April 29, 1995. H-K's
operations and available line of credit are expected to adequately fund its
working capital requirements during the remainder of fiscal 1996. The assets of
H-K are restricted from transfer to the Company under the terms of its loan
agreements.
As previously reported, during fiscal 1995, Sussex Group, Ltd. ("Sussex", an
indirect majority owned subsidiary of the Company), transferred or sold a total
of 800,000 shares of Huffman Koos Inc. ("H-K") common stock to Jupiter
Industries, Inc. ("Jupiter"). The transfer of 700,000 shares of this stock on
February 4, 1994 was used to repay a $5,075,000 note payable to Jupiter. The
remaining 100,000 shares of H-K common Stock was sold to Jupiter on November 30,
1994 for $800,000. As a result of the transfer and sale of these shares, the
Company recognized a gain of $1,540,000 in fiscal 1995. This gain was recorded
as an increase to paid-in capital and represents the difference between the
amount of the note retired and cash received and the proportionate share of H-K
net equity represented by these shares.
Effective May 23, 1995, the Company through Sussex sold an additional 150,000
shares of H-K common stock to Jupiter for $1,125,000. The Company expects to
recognize a gain of approximately $175,000 in the second quarter of fiscal 1996
related to this sale. Such gain will be recorded as an increase to paid-in
capital.
Pursuant to the terms of the various stock purchase agreements (the
"Agreements"), Sussex has been granted an option to repurchase any or all of the
950,000 H-K shares on or prior to February 4, 1996 for a purchase price ranging
from $7.25 to $8.00 per share plus interest on such amount. The Agreements also
contain a provision which requires Jupiter to vote the 950,000 H-K shares for
the election of a majority of the Board of Directors of H-K as Sussex shall
direct. As a result of this voting provision, the Company through Sussex,
retains effective control of H-K. As a result of the transactions described
above, the Company and Jupiter now own 29.9% and 24.2%, respectively, of H-K's
outstanding common stock based on the number of H-K shares currently
outstanding.
8
<PAGE>
RESULTS OF OPERATIONS
---------------------
QUARTER ENDED APRIL 29, 1995 (FISCAL 1996) VS.
- ----------------------------------------------
QUARTER ENDED APRIL 30, 1994 (FISCAL 1995)
- ------------------------------------------
Net sales decreased 3.9% over the prior year due to a 9.4% sales decline for the
quarter at Goldblatt's. This decrease was the result of cold and rainy weather
conditions, delays by the IRS in issuing tax refunds and a general slowing of
the economy. The entire Goldblatt's decline came in the first two months of the
quarter. Since then Goldblatt's has been on an upward trend showing a 12.0%
sales increase for April and a 3.0% increase for May. Huffman Koos sales were
essentially flat showing a modest .5% gain.
The Company's gross profit percentage remained relatively constant at 38.3% of
sales compared to 38.4% of sales in the prior year. H-K's gross profit
percentage remained constant at 43.6% of sales while Goldblatt's gross profit
percentage decreased to 31.0% of sales from 31.8% of sales in the prior year.
The decrease in Goldblatt's gross profit percentage is the result of an increase
in the inventory shrinkage reserve. Management increased the estimated reserve
in order to provide for potential errors in the new computer system for
recording promotional markdowns. Actual inventory shrinkage results will be
known when Goldblatt's completes its mid-year physical inventory count in July
1995.
Selling, general and administrative expenses ("SG&A") increased to 41.7% of
sales from 39.1% in the prior year. H-K's SG&A increased to 44.6% of sales from
42.1% of sales in the prior year while Goldblatt's SG&A increased to 35.7% of
sales from 33.4% of sales in the prior year. The increase at H-K is the result
of increases in handling and delivery expenses due to higher deliveries compared
to the prior year, increased costs in the customer service department where
investments were made in order to improve customer service levels, and increased
occupancy expense due to lease renewals. At Goldblatt's, the increase in SG&A
expense as a percentage of sales was due to the sales decline. Actual SG&A
expense at Goldblatt's was down approximately $185,000 as expense reductions
were achieved in virtually every cost center as management continues to see the
benefits of its January 1994 cost reduction program.
Interest expense increased because of increases in the prime rate of interest.
9
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
10
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the under-
signed thereunto fully authorized.
JG INDUSTRIES, INC.
-------------------
(Registrant)
Date: June 6, 1995 /s/ Clarence Farrar
------------ --------------------------
CLARENCE FARRAR
President
/s/ William Guzik
--------------------------
WILLIAM GUZIK
Chief Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE JG INDUSTRIES, INC FIRST QUARTER 10Q FOR FISCAL 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 4
<SECURITIES> 0
<RECEIVABLES> 16,138
<ALLOWANCES> 234
<INVENTORY> 32,629
<CURRENT-ASSETS> 50,035
<PP&E> 35,503
<DEPRECIATION> 19,220
<TOTAL-ASSETS> 69,707
<CURRENT-LIABILITIES> 30,381
<BONDS> 12,000
<COMMON> 11,242
3,183
0
<OTHER-SE> (4,196)
<TOTAL-LIABILITY-AND-EQUITY> 69,707
<SALES> 39,576
<TOTAL-REVENUES> 39,576
<CGS> 24,422
<TOTAL-COSTS> 24,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 296
<INCOME-PRETAX> (1,658)
<INCOME-TAX> (182)
<INCOME-CONTINUING> (1,303)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,303)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> 0
</TABLE>
