<PAGE> 1
BESTWAY, INC. FORM 10-Q
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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 January 31, 2000
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 0-8568
BESTWAY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 81-0332743
- ------------------------------- -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7800 Stemmons Freeway, Suite 320 75247
- --------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(214) 630-6655
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(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 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. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of Common Stock, $.01 par value, outstanding as of
January 31, 2000, was 1,725,147.
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BESTWAY, INC. FORM 10-Q
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QUARTERLY REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE QUARTER ENDED
JANUARY 31, 2000
<TABLE>
<CAPTION>
PAGE NOS.
---------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Unaudited Financial Statements 3-8
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-13
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K, Signatures 14
</TABLE>
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BESTWAY, INC. FORM 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
(UNAUDITED)
JANUARY 31, JULY 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 764,382 $ 812,179
Prepaid expenses 473,307 172,226
Deferred income taxes 779,389 871,152
Other assets 82,918 63,202
Rental merchandise, at cost 23,837,273 20,164,761
less accumulated depreciation 7,924,882 7,339,287
------------ ------------
15,912,391 12,825,474
------------ ------------
Property and equipment, at cost 8,363,863 7,247,516
less accumulated depreciation 3,844,970 3,398,724
------------ ------------
4,518,893 3,848,792
------------ ------------
Non-competes, net of amortization 252,987 262,783
Goodwill, net of amortization 2,236,429 2,362,604
------------ ------------
Total assets $ 25,020,696 $ 21,218,412
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,045,017 $ 1,384,696
Book overdraft 149,109 --
Accrued interest - related parties 20,667 20,667
Income taxes payable 17,053 56,406
Other accrued liabilities 1,399,180 1,541,001
Notes payable-related parties 3,000,000 3,000,000
Notes payable-other 10,451,113 6,244,012
Commitments and contingencies
Stockholders' equity:
Preferred stock, $10.00 par value,
1,000,000 authorized, none issued -- --
Common stock, $.01 par value, 5,000,000 authorized,
1,756,917 issued at January 31, 2000 and
July 31, 1999, respectively 17,569 17,569
Paid-in capital 16,124,578 16,124,578
Less treasury stock, at cost, 31,770 at January 31, 2000
and 11,200 at July 31, 1999, respectively (197,777) (66,241)
Accumulated deficit (7,005,813) (7,104,276)
------------ ------------
Total stockholders' equity 8,938,557 8,971,630
------------ ------------
Total liabilities and stockholders' equity $ 25,020,696 $ 21,218,412
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
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BESTWAY, INC. FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JANUARY 31, JANUARY 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 8,529,370 $ 6,860,956 $ 16,276,196 $ 13,640,607
Sales of merchandise 106,648 66,741 184,387 119,662
------------ ------------ ------------ ------------
8,636,018 6,927,697 16,460,583 13,760,269
------------ ------------ ------------ ------------
Cost and operating expenses:
Depreciation and amortization:
Rental merchandise 1,891,185 1,486,451 3,600,379 2,975,809
Other 399,692 328,274 758,615 676,692
Cost of merchandise sold 104,011 58,802 182,451 115,518
Salaries and wages 2,439,567 1,911,714 4,669,585 3,751,248
Advertising 484,510 311,132 890,921 614,255
Occupancy 566,825 443,938 1,097,916 855,228
Other operating expenses 2,315,396 1,994,687 4,556,659 3,968,434
Interest expense 283,074 187,464 514,353 372,542
(Gain) loss on sale of property
and equipment (7,361) 10,764 (16,949) 4,494
Gain on sale of assets (320) -- (320) --
------------ ------------ ------------ ------------
8,476,579 6,733,226 16,253,610 13,334,220
------------ ------------ ------------ ------------
Income from operations before
income tax provision 159,439 194,471 206,973 426,049
------------ ------------ ------------ ------------
Income tax expense 83,762 89,047 108,510 191,125
------------ ------------ ------------ ------------
Net income $ 75,677 $ 105,424 $ 98,463 $ 234,924
============ ============ ============ ============
Basic and diluted net income per share $ .04 $ .06 $ .06 $ .13
============ ============ ============ ============
Weighted average common
shares outstanding 1,728,114 1,748,292 1,736,299 1,749,942
============ ============ ============ ============
Diluted weighted average common
shares outstanding 1,745,012 1,779,576 1,756,513 1,786,529
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
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BESTWAY, INC. FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
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For the six months ended January 31, 2000
<TABLE>
<CAPTION>
(UNAUDITED)
-------------------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK
------------------------- PAID-IN ------------------------ ACCUMULATED
SHARES AMOUNT CAPITAL SHARES AMOUNT DEFICIT
--------- ----------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1999 1,756,917 $ 17,569 $16,124,578 (11,200) $ (66,241) $(7,104,276)
Treasury stock purchases -- -- -- (20,570) (131,536) --
Net income for the six months
ended January 31, 2000 -- -- -- -- -- 98,463
--------- ----------- ----------- ------- ----------- -----------
Balance at January 31, 2000 1,756,917 $ 17,569 $16,124,578 (31,770) $ (197,777) $(7,005,813)
========= =========== =========== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE> 6
BESTWAY, INC. FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
----------------------------
JANUARY 31,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 98,463 $ 234,924
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,358,994 3,652,501
Net book value of rental units retired 1,074,544 1,260,296
(Gain) loss on sale of property and equipment (16,949) 4,494
Deferred income taxes 91,763 158,616
Gain on sale of assets (320) --
Changes in operating assets and liabilities other than cash:
Prepaid expenses (301,081) 33,787
Other assets (19,716) (34,787)
Accounts payable (305,998) (141,197)
Income taxes payable (39,353) (143,681)
Accrued interest payable -- 5,167
Other accrued liabilities (141,821) 4,716
----------- -----------
Total adjustments (807,969) (275,995)
----------- -----------
Net cash flows from operating activities 4,798,526 5,034,836
----------- -----------
Cash flows from investing activities:
Purchase of rental units and equipment (7,818,255) (4,733,854)
Additions to property and equipment (1,286,908) (1,039,418)
Proceeds from sale of property and equipment 20,871 29,752
Asset purchase net of cash acquired (92,578) (523,896)
Proceeds from sale of assets 105,873 --
----------- -----------
Net cash flows used in investing activities (9,070,997) (6,267,416)
----------- -----------
Cash flows from financing activities:
Book overdraft 149,109 --
Proceeds from notes payable 4,212,999 1,925,000
Repayment of notes payable (5,898) (455,391)
Treasury stock purchase (131,536) (40,591)
----------- -----------
Net cash flows provided by financing activities 4,224,674 1,429,018
----------- -----------
Cash at beginning of period 812,179 501,119
----------- -----------
Cash at end of period $ 764,382 $ 697,557
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
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BESTWAY, INC. FORM 10-Q
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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1. REFERENCE TO PREVIOUS DISCLOSURES
The condensed consolidated financial statements included herein have been
prepared by the Company without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Management believes that the disclosures are adequate to
make the information presented not misleading and that all adjustments
deemed necessary for a fair statement of the results for the interim
period have been reflected. It is suggested that these unaudited
condensed consolidated financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's
1999 Form 10-K, particularly with regard to disclosure relating to
significant accounting policies. The year-end condensed consolidated
balance sheet data was derived from audited financial statements, but
does not include all disclosures required by generally accepted auditing
principles.
2. INCOME PER SHARE
Basic and diluted income per share is calculated based on the weighted
average common shares outstanding during the period. Common stock
equivalents (stock options) are not included in the calculation of
diluted income per share if their effect would be antidilutive. For the
three and six months ended January 31, 2000 and 1999, 77,960 and 33,195
shares, respectively and 55,750 and 27,750 shares, respectively, of stock
options were excluded from the calculation of diluted income per share.
3. ACQUISITIONS AND DISPOSITIONS
On October 7, 1999, the Company signed an asset purchase agreement with
Panco Electronics and Appliances, Inc. to acquire all rental contracts
associated with a single store location in Mississippi for approximately
$93,000 in cash.
On January 7, 2000, the Company entered into an asset purchase agreement
with Rent-A-Center, Inc. to sell all the assets of one store location in
Mississippi. The Company received $109,747 in cash for all the assets
involved in the daily operation of the store including all rental
inventory being rented by customers. Idle inventory was transferred to
the Company's existing store locations.
4. COMMON STOCK
During the six months ending January 31, 2000, the Company repurchased
20,570 shares of its common stock in the open market at a cost of
$131,536.
7
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BESTWAY, INC. FORM 10-Q
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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5. NOTES PAYABLE
On November 30, 1999, the Company amended its November 18, 1997 Third
Amendment to First Amended and Restated Revolving Credit Loan Agreement
(the "Agreement") with its senior collateralized lender. In the
amendment, the Company extended the maturity date from November 30, 1999
to February 29, 2000 and increased the maximum amount of revolving credit
under such loan agreement from $8,500,000 to $9,000,000. On December 28,
1999, the Company further amended the Agreement. In the amendment, the
Company revised certain covenants, increased the maximum amount of
revolving credit under such agreement from $9,000,000 to $17,500,000 and
extended the maturity date from February 29, 2000 to February 28, 2002.
On December 23, 1999, the Company amended its subordinated note payable
to O'Donnell & Masur, LP dated August 18, 1999. In the amendment, the
Company extended the maturity date from August 19, 2001 to February 28,
2002.
6. SUBSEQUENT EVENT
On February 2, 2000, the Company entered into an asset purchase agreement
with MATCAM, Inc. to sell all the assets of one store location in
Georgia. The Company received $110,000 in cash for all the assets
involved in the daily operation of the store including all rental
inventory being rented by customers. Idle inventory was transferred to
the Company's existing store locations.
8
<PAGE> 9
BESTWAY, INC. FORM 10-Q
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report on Form 10-Q contains various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements represent the Company's expectations
or beliefs concerning future events. Any forward-looking statements made
by or on behalf of the Company are subject to uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other factors include, but are not
limited to, (i) the ability of the Company to acquire additional
rental-purchase stores on favorable terms, (ii) the ability of the
Company to improve the performance of such acquired stores and to
integrate such acquired stores into the Company's operations, and (iii)
the impact of state and federal laws regulating or otherwise affecting
the rental-purchase transaction. Undo reliance should not be placed on
any forward-looking statements made by or on behalf of the Company as
such statements speak only as of the date made. The Company under takes
no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, the occurrence of future events
or otherwise.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
from the Company's unaudited Condensed Consolidated Statements of Income,
expressed as a percentage of revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -----------------
JANUARY 31, JANUARY 31,
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues:
Rental income 98.8 % 99.0 % 98.9 % 99.1 %
Sales of merchandise 1.2 1.0 1.1 0.9
------ ------ ------ ------
Total revenues 100.0 100.0 100.0 100.0
------ ------ ------ ------
Cost and operating expenses:
Depreciation and amortization:
Rental merchandise 21.9 21.5 21.9 21.7
Other 4.6 4.7 4.6 4.9
Cost of merchandise sold 1.2 0.8 1.1 0.8
Salaries and wages 28.2 27.6 28.4 27.3
Advertising 5.6 4.5 5.4 4.5
Occupancy 6.6 6.4 6.6 6.2
Other operating expenses 26.8 28.8 27.7 28.8
Interest expense 3.3 2.7 3.1 2.7
(Gain) loss on sale of property and equipment -- 0.2 (0.1) --
Gain on sale of assets -- -- -- --
------ ------ ------ ------
Total cost and operating expenses 98.2 97.2 98.7 96.9
------ ------ ------ ------
Income from operations before income tax provision 1.8 2.8 1.3 3.1
------ ------ ------ ------
Income tax expense 0.9 1.3 0.7 1.4
------ ------ ------ ------
Net income 0.9 % 1.5 % 0.6 % 1.7 %
====== ====== ====== ======
</TABLE>
9
<PAGE> 10
BESTWAY, INC. FORM 10-Q
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CON'T.
Comparison of Three Months Ended January 31, 2000 and 1999
For the three months ended January 31, 2000 compared to the three months
ended January 31, 1999, total revenue increased $1,708,321 or 24.7% to
$8,636,018 from $6,927,697. The increase in total revenue was primarily
attributable to the inclusion of stores acquired and new store openings
in fiscal year 1999, inclusion of nine new store openings in fiscal year
2000, and improved same store revenues. Revenue from same stores
increased $713,937 or 11.5% and accounted for 41.8% of the increase. Same
store revenues represent those revenues earned in stores that were
operated by the Company for the entire quarter ending January 31, 2000
and 1999. The improvement was primarily attributable to an increase in
both the number of items on rent and in revenue earned per item. Revenue
from the stores acquired and opened in fiscal year 1999 accounted for
$996,956, or 58.3% of the increase. Revenue from the nine new store
openings in fiscal year 2000 accounted for $560,592, or 32.9% of the
increase. Revenue decreased $563,164, or 33.0% due to closing and merging
five store locations in fiscal year 1999 and selling three stores in
fiscal year 1999, respectively.
Total costs and operating expenses increased $1,743,353, or 25.9% to
$8,476,579 from $6,733,226 and increased 1.0% as a percentage of total
revenues to 98.2% from 97.2%. The increase was primarily the result of
expenses associated with acquired and new store openings in fiscal year
1999, and nine new stores opened in fiscal year 2000.
Depreciation of rental merchandise increased $404,734, or 27.2% to
$1,891,185 from $1,486,451. Depreciation of rental merchandise expressed
as a percent of total revenue increased .4% to 21.9% from 21.5%. Other
depreciation and amortization increased $71,418, or 21.7% to $399,692
from $328,274 and as a percentage of total revenue decreased .1% to 4.6%
from 4.7%.
Salaries and wages increased $527,853, or 27.6% to $2,439,567 from
$1,911,714 and as a percentage of total store revenue increased .6% to
28.2% from 27.6%. Salaries and wages increased $217,180, or 41.4% of the
total increase was due to the stores acquired and opened in fiscal year
1999. Additional personnel for the nine new internal stores opened in
fiscal year 2000 increased salaries and wages by $256,405, or 48.6% of
the total increase. Advertising expense increased $173,378, or 55.7% to
$484,510 from $311,132. Advertising expense expressed as a percent of
total store revenue increased 1.1% to 5.6% from 4.5% primarily due to the
stores acquired and opened in fiscal year 1999 and the nine new stores
opened in fiscal year 2000, respectively. Occupancy expense increased
$122,887, or 27.7% to $566,825 from $443,938 and as a percentage of total
revenues increased .2% to 6.6% from 6.4% primarily due to stores opened
in fiscal year 1999 and fiscal year 2000. Other operating expenses
increased $320,709, or 16.1% to $2,315,396 from $1,994,687 and as a
percentage of total revenues decreased 2.0% to 26.8% from 28.8%. The
increase was primarily attributable to the stores opened in fiscal year
1999 and fiscal year 2000.
10
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BESTWAY, INC. FORM 10-Q
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CON'T.
For the quarter ended January 31, 2000 compared to the quarter ended
January 31, 1999, income from operations before income tax provision
decreased $35,032, or 18.0% to $159,439 from $194,471 and as a percentage
of total revenues decreased 1.0% to 1.8% from 2.8%. The decrease was
primarily due to operating losses of $240,616 from the nine new stores
opened in fiscal year 2000. The new stores operated at a lower average
revenue per store as compared to the Company's existing stores and,
therefore, had higher salaries and wages, advertising and occupancy
expenses as a percentage of total revenues.
Comparison of Six Months Ended January 31, 2000 and 1999
For the six months ended January 31, 2000 compared to the six months
ended January 31, 1999, total revenue increased $2,700,314, or 19.6% to
$16,460,583 from $13,760,269. The increase in total revenue was primarily
attributable to the inclusion of stores acquired and new store openings
in fiscal year 1999, inclusion of nine new store openings in fiscal year
2000, and improved same store revenues. Revenue from same stores
increased $1,066,996 or 8.7% and accounted for 39.5% of the increase.
Same store revenues represent those revenues earned in stores that were
operated by the Company for the entire six months ending January 31, 2000
and 1999. The improvement was primarily attributable to an increase in
both the number of items on rent and in revenue earned per item. Revenue
from the stores acquired and opened in fiscal year 1999 accounted for
$2,159,772, or 80.0% of the increase. Revenue from the nine new store
openings in fiscal year 2000 accounted for $642,340, or 23.8% of the
increase. Revenue decreased $1,168,794, or 43.3% for the six-month period
due to closing and merging five store locations in fiscal year 1999 and
selling three stores in fiscal year 1999, respectively.
Total costs and operating expenses increased $2,919,390, or 21.9% to
$16,253,610 from $13,334,220 and increased 1.8% to 98.7% from 96.9%. The
increase was primarily the result of expenses associated with acquired
and new store openings in fiscal year 1999, and nine new stores opened
during the six months ended January 31, 2000.
Depreciation of rental merchandise increased $624,570, or 21.0% to
$3,600,379 from $2,975,809. Depreciation of rental merchandise expressed
as a percent of total revenue increased .2% to 21.9% from 21.7%. Other
depreciation and amortization increased $81,923, or 12.1% to $758,615
from $676,692 and as a percentage of total revenue decreased .3% to 4.6%
from 4.9%.
Salaries and wages increased $918,337, or 24.5% to $4,669,585 from
$3,751,248 and as a percentage of total store revenue increased 1.1% to
28.4% from 27.3%. Salaries and wages increased $488,245, or 53.2% of the
total increase was due to the stores acquired and opened in fiscal year
1999. Additional personnel for the nine new internal stores opened in
fiscal year 2000 increased salaries and wages by $368,023, or 40.1% of
the total increase. Advertising expense increased $276,666, or 45.0% to
$890,921 from $614,255. Advertising expense expressed as a percent of
total store revenue increased .9% to 5.4% from 4.5% primarily due to the
stores acquired and opened in fiscal year 1999 and the nine new stores
opened in the six months ending January 31, 2000, respectively. Occupancy
expense increased $242,688, or 28.4% to $1,097,916 from $855,228 and as a
percentage of total revenues increased .4% to 6.6% from 6.2% primarily
due to stores opened in fiscal year 1999 and fiscal year 2000. Other
operating expenses increases $588,225, or 14.8% to $4,556,659 from
$3,968,434 and as a percentage of total revenues decreased 1.1% to
11
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BESTWAY, INC. FORM 10-Q
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27.7% from 28.8%. The increase was primarily attributable to the stores
opened in fiscal year 1999 and the nine new stores opened during the six
months ended January 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CON'T.
For the six months ended January 31, 2000 compared to the six months
ended January 31, 1999, income from operations before income tax
provision decreased $219,076, or 51.4% to $206,973 from $426,049 and as a
percentage of total revenues decreased 1.8% to 1.3% from 3.1%. The
decrease was primarily due to operating losses of $451,429 from the nine
new stores opened in the six months ending January 31, 2000. The new
stores operated at a lower average revenue per store as compared to the
Company's existing stores and, therefore, had higher salaries and wages,
advertising and occupancy expenses as a percentage of total revenues.
Financial Condition, Liquidity and Capital Resources
For the six months ended January 31, 2000, the Company's net cash flows
from operating activities was $4,798,526 as compared to $5,034,836 for
the six months ending January 31, 1999. The decrease was primarily due to
an increase in net income as adjusted for non-cash charges offset by
increased outflow for working capital commitments.
For the six months ended January 31, 2000, the Company's net cash flows
used in investing activities was $9,070,997 as compared to $6,267,416 for
the six months ended January 31, 1999. The Company's investing activities
reflects a $247,490 increase in additions to property and equipment and a
$3,084,401 increase in the purchase of rental units and equipment for the
nine internal store openings during the six months.
For the six months ended January 31, 2000, the Company's net cash flows
provided by financing activities was $4,224,674 as compared to $1,429,018
for the six months ended January 31, 1999. The increase in financing
activities principally reflects increased borrowings on the Company's
debt to finance the purchase of rental units and equipment for the nine
internal store openings during the six months.
On November 30, 1999, the Company amended its November 18, 1997 Third
Amendment to First Amended and Restated Revolving Credit Loan Agreement
(the "Agreement") with its senior collateralized lender. In the
amendment, the Company extended the maturity date from November 30, 1999
to February 29, 2000 and increased the maximum amount of revolving credit
under such loan agreement from $8,500,000 to $9,000,000. On December 28,
1999, the Company further amended the Agreement. In the amendment, the
Company revised certain covenants, increased the maximum amount of
revolving credit under such agreement from $9,000,000 to $17,500,000 and
extended the maturity date from February 29, 2000 to February 28, 2002.
On December 23, 1999, the Company amended its subordinated note payable
to O'Donnell & Masur, LP dated August 18, 1999. In the amendment, the
Company extended the maturity date from August 19, 2001 to February 28,
2002.
Inflation
Although the Company cannot precisely determine the effects of inflation
on its business, it is management's belief that the effects on revenues
and operating results have not been significant.
12
<PAGE> 13
BESTWAY, INC. FORM 10-Q
- --------------------------------------------------------------------------------
Year 2000 Update
Prior to January 1, 2000, the Company performed an assessment of its
critical information technology (IT) and non-IT systems, corrected all
deficiencies identified and developed contingency plans for potential Year 2000
issues. To date, the Company has experienced no problems in connection with Year
2000 issues.
The total cost to make the Company's systems and equipment Year 2000
compliant was approximately $5,000 including software and systems replaced in
the Company's normal upgrade cycle. The total cost does not include internal
labor costs for employees who spent part of their time working on the Company's
Year 2000 project.
13
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BESTWAY, INC. FORM 10-Q
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PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K, SIGNATURES
(a) Exhibits required by Item 601 of Regulation S-K
27 Financial Data Schedule
Filed electronically only, not attached to printed reports
(b) Report on Form 8-k
(1) On January 13, 2000, the Company filed a Current Report on
Form 8-k disclosing its amended and restated revolving credit
loan agreement with its senior secured lender.
(2) On January 13, 2000, the Company filed a Current Report on
Form 8-k disclosing its amended subordinated note agreement.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BESTWAY, INC.
March 16, 2000
/s/ Beth A. Durrett
-------------------
Beth A. Durrett
Chief Financial Officer
(Principal Financial Officer and duly authorized
to sign on behalf of the Registrant)
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 764,382
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23,837,273
<CURRENT-ASSETS> 0
<PP&E> 8,363,863
<DEPRECIATION> 11,769,852
<TOTAL-ASSETS> 25,020,696
<CURRENT-LIABILITIES> 0
<BONDS> 13,451,113
0
0
<COMMON> 17,569
<OTHER-SE> 8,920,988
<TOTAL-LIABILITY-AND-EQUITY> 25,020,696
<SALES> 0
<TOTAL-REVENUES> 16,460,583
<CGS> 0
<TOTAL-COSTS> 3,600,379
<OTHER-EXPENSES> 12,138,878
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 514,353
<INCOME-PRETAX> 206,973
<INCOME-TAX> 108,510
<INCOME-CONTINUING> 98,463
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,463
<EPS-BASIC> .06
<EPS-DILUTED> 0
</TABLE>
