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 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 1-6083
GREENMAN BROS. INC.
(Exact Name of Registrant as Specified in Its Charter)
NEW YORK 11-1771705
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
105 PRICE PARKWAY, FARMINGDALE, NEW YORK 11735
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code (516) 293-5300
NOT APPLICABLE
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 periods 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date 5,264,040 shares outstanding
as of June 6, 1995.
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
Condensed Consolidated Balance Sheets
April 29, 1995, April 30, 1994 and January 28, 1995 . . . . . 3
Condensed Consolidated Statements of Income (Loss)
Thirteen Weeks Ended April 29, 1995 and April 30, 1994 . . . . 4
Condensed Consolidated Statements of Cash Flows
Thirteen Weeks Ended April 29, 1995 and April 30,1994 . . . . 5
Notes to Condensed Consolidated
Financial Statements . . . . . . . . . . . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . None
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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GREENMAN BROS. INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
April 29, April 30, January 28,
1995 1994 1995
(In thousands)
<CAPTION>
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,314 $ 8,087 $ 10,908
Trade receivables - net 11,646 14,437 13,622
Merchandise inventories 23,775 34,229 20,264
Prepaid expenses, recoverable taxes
and other 4,962 3,464 5,170
Total current assets 50,697 60,217 49,964
Property, plant and equipment - net 10,350 8,026 9,673
Other assets 179 779 182
Total assets $ 61,226 $ 69,022 $ 59,819
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<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current liabilities:
Trade accounts payable $ 16,983 $ 21,068 $ 12,109
Accrued expenses and taxes 4,597 3,783 5,858
Obligations under capital leases 64 60 64
Income taxes payable - - 133
Total current liabilities 21,644 24,911 18,164
Obligations under capital leases 556 621 572
Deferred income taxes 213 290 213
Stockholders' equity:
Preferred stock - authorized 500
shares, par value $1.00 (none issued)
Preferred stock - Series A Junior
Participating - authorized 440
shares, par value $1.00 (none issued)
Common stock - authorized 10,000
shares, par value $.10; issued 6,188,
6,124 and 6,185 respectively 619 612 619
Capital in excess of par value 25,810 25,630 25,801
Retained earnings 16,176 20,750 18,242
Less: treasury stock, at cost - 924 shares (3,792) (3,792) (3,792)
38,813 43,200 40,870
Total liabilities and stockholders'
equity $ 61,226 $ 69,022 $ 59,819
See accompanying notes to Condensed Consolidated Financial Statements.
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GREENMAN BROS. INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands except per share amounts)
UNAUDITED
Thirteen Weeks Ended
(In thousands)
April 29, April 30,
1995 1994
<CAPTION>
<S> <C> <C>
Net sales $ 24,437 $ 27,168
Costs and expenses:
Cost of product sold 18,300 20,853
Selling and administrative expenses 8,041 7,615
Depreciation 286 251
26,627 28,719
Operating loss (2,190) (1,551)
Interest income 135 94
Interest expense (11) (19)
Loss before income taxes (2,066) (1,476)
Income taxes (benefit) - (590)
Net loss $ (2,066) $ (886)
Net loss per share $ (.39) $ (.17)
Average shares outstanding 5,263 5,200
See accompanying notes to Condensed Consolidated Financial Statements.
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GREENMAN BROS. INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Thirteen Weeks Ended
April 29, April 30,
1995 1994
(In thousands)
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,066) $ (886)
Adjustments to reconcile to net cash provided (used):
Depreciation 286 251
Provision for doubtful accounts 91 101
Decrease (increase) in non-cash working capital
accounts:
Merchandise inventories (3,511) (3,562)
Trade receivables, prepaid expenses and other
current assets 2,093 (94)
Trade accounts payable, accrued expenses, and taxes 3,613 6,251
Income taxes (133) (137)
Net cash provided by operating activities 373 1,924
Cash flows from investing activities:
Proceeds from sale of marketable securities - 1,000
Property additions (963) (633)
Other 3 25
Net cash provided by (used in) investing
activities (960) 392
Cash flows from finacing activities:
Reduction in obligations under capital leases (16) (15)
Proceeds from exercise of employee stock options 9 22
Net cash provided by (used in) financing
activities (7) 7
Net increase (decrease) in cash and cash equivalents (594) 2,323
Cash and cash equivalents-beginning of year 10,908 5,764
Cash and cash equivalents-end of period $ 10,314 $ 8,087
See accompanying notes to Condensed Consolidated Financial Statements.
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GREENMAN BROS. INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q and do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments for a fair statement of the results and financial
position for the interim periods presented have been included. All
such adjustments are of a normal recurring nature. This financial
information should be read in conjunction with the financial
statements and notes thereto included in the registrant's annual
report on Form 10-K for the year ended January 28, 1995 (fiscal
1995).
It should be noted that amounts included in the financial
statements of the prior year have been reclassified to conform to
the current year's presentation.
Due to the seasonal nature of the Company's business, results for
the interim period are not necessarily indicative of the results
to be expected for the fiscal year.
NOTE 2. All highly liquid investments with a maturity of three months or
less are considered to be cash equivalents; investments with
maturities between three and twelve months are considered to be
short-term investments. These investments are stated at cost which
approximates market.
NOTE 3. Income tax provisions are based on estimated annual effective tax
rates. The operating loss for the first quarter ended April 29,
1995 provides no current tax benefit. The Company has certain
available tax planning strategies and the ability to generate
taxable income that could be implemented, if necessary, to realize
net tax benefits reported for prior periods. The effective income
tax rate used for the period ended April 30, 1994 was 40%.
NOTE 4. On May 31, 1995 the Company announced that it is investigating the
possible sale of its wholesale business operating under the name
Greenman Merchandising Services ("GMS"). The intent of such a sale
would be to free-up capital that will be needed to grow the Noodle
Kidoodle TM retail business. GMS had sales of $113 million in
fiscal 1995 while the Company's total revenues were $137 million.
Pre-tax earnings for GMS in fiscal 1995 were $1.8 million while the
Company incurred a pre-tax loss of $5.5 million which included a
pre-tax provision of $3.9 million for the closing of Playworld Toy
Stores. For the quarter ended April 29, 1995 GMS had sales of $21.2
million while the Company's total revenues were $24.4 million. The
pre-tax loss for GMS in the current quarter was $.9 million while
the Company's pre-tax loss was $2.1 million.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Thirteen Weeks Ended April 29, 1995 Compared with
Thirteen Weeks Ended April 30, 1994
Results of Operations
Sales for the thirteen week period ended April 29, 1995 decreased $2.7
million or 10.1% versus the comparable period of the prior year.
Wholesale sales decreased 8.7% to $21.2 million in the first quarter versus
the first quarter of the prior year. The Company indicated in its 10-K filing
for the year ended January 28, 1995 (fiscal 1995) that wholesale sales are
expected to decline in fiscal 1996. A decrease in the mass merchandise
retail channel of approximately $3.4 million was only partially offset by
increased business in the chain drug, supermarkets, deep discount drug and
home center channels of distribution. On May 31, 1995 the Company announced
that it is investigating the possible sale of the wholesale business
operating under the name Greenman Merchandising Services.
Retail sales of our Noodle Kidoodle TM operation (TM is purposely omitted
everywhere else) and Playworld Toy Stores represented 13.4% of total sales
for the thirteen week period ended April 29, 1995 compared to 14.8% for the
thirteen week period ended April 30, 1994. Overall retail sales decreased
18.1% to $3.3 million for the first quarter versus last year as a result of
closing the Playworld Toy Stores and one leased department operation during
the second half of last year. Playworld Toy Stores sales decreased by $2.7
million offset by increases in Noodle Kidoodle sales of $1.9 million as a
result of opening three stores in the second half of last year and one store
in February 1995. Comparable store sales decreased 20.6%. The decrease was
attributable to lower sales in the remaining Playworld Toy Stores of 37.2%
partially offset by an increase of 22.5% in the one Noodle Kidoodle store
that had year to year comparisons.
Gross Profit as a percent of sales was 25.1% for the first quarter versus
23.2% for the comparable period of last year. The increase in overall gross
profit percentage of 1.9% was attributable to higher margins in both the
wholesale and retail segments. Margins in the wholesale segment improved by
1.6% to 22.5% primarily due to the decline of sales in the toy product line
to mass merchandise customers that carry lower margins. Margins in the
retail segment increased by 4.9% to 42.0% for the first quarter versus the
same period of last year primarily due to increased sales in the Noodle
Kidoodle stores which operate with higher margins.
Operating expenses other than interest increased by 5.9% for the thirteen
week period versus the comparable period of the prior year. The Company's
operating expenses as a percent of sales increased 5.1% for the quarter
versus the prior year.
Wholesale expenses increased 3.3% as a percent of sales for the thirteen week
period ended April 29, 1995 versus the comparable period of the prior year.
The increase resulted primarily from lower sales levels and higher
distribution costs. The operating expenses for the retail segment increased
17.9% as a percent of sales for the first quarter versus the prior year. The
increase resulted from lower comparable store sales in the Playworld
operation and a higher cost structure in the Noodle Kidoodle stores which had
four more stores operating during this period versus last year.
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Pre-tax interest income increased by $41,000 for the quarter versus the
comparable period of last year. The increase resulted from both higher
average interest rates and cash balances. The average interest rate for the
thirteen week period ended April 29, 1995 was 5.5% versus 2.8% for the period
ended April 30, 1994. The average cash balance was $9.7 million for the
current first quarter versus $7.1 million for the comparable period of last
year. Pre-tax interest expense decreased $8,000 for the first quarter versus
the prior year.
The Company did not provide an income tax benefit for the quarter ended April
29, 1995. For the quarter ended April 30, 1994 the Company recorded an
income tax benefit based on an estimated effective tax rate of 40%.
The net loss for the thirteen week period was approximately $2.1 million
($.39 per share) versus $.9 million ($.17 per share) for the same period of
last year.
Liquidity and Sources of Capital
The Company maintained an average cash and cash equivalent balance of
approximately $9.7 million during the first quarter ended April 29, 1995.
The average cash balance was substantially invested in high grade commercial
paper.
Cash flow provided from operating activities for the thirteen week period
ended April 29,1995 were $.4 million versus $1.9 million for the period ended
April 30,1994. Net earnings before non-cash expenditures of depreciation and
provision for doubtful accounts utilized $1.7 million of cash offset by $2.1
million of cash provided from changes in working capital components. In the
first quarter ended April 30, 1994, net earnings before non-cash expenditures
utilized $.5 million of cash offset by $2.4 million of cash provided from
changes in working capital components.
Cash used in investing activities was approximately $1.0 million for the
first quarter ended April 29, 1995 versus cash provided of $.4 million for
the first quarter ended April 30, 1994. Property additions and other
utilized approximately $1.0 million of cash for the thirteen week period
ended April 29, 1995 versus $.6 million for the thirteen week period ended
April 30, 1994. Approximately $1.0 million was provided from the redemption
of U.S. Treasury bills for the first quarter ended April 30, 1994.
The Company has an unsecured revolving credit facility from a bank which
currently provides for maximum borrowing of $10.0 million that expires in
June 1995. The Company is currently negotiating a new credit agreement which
is expected to be in place during the second quarter. The Company did not
require any borrowings during the first quarter ended April 29, 1995. The
Company expects to utilize some bank borrowing during the second half of
fiscal 1996 as a result of a $10.0 million capital expenditures anticipated
for the opening of new Noodle Kidoodle stores during fiscal 1996. As
previously noted the Company has announced that it is considering the sale
of its wholesale business. Should such a sale take place the proceeds would
be sufficient to fund the current years expansion program without bank
borrowings.
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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.
GREENMAN BROS. INC.
(Registrant)
Date: June 12, 1995 STANLEY GREENMAN
Stanley Greenman, Chairman of the Board,
Chief Executive Officer, Director
(Principal Executive Officer)
Date: June 12, 1995 WILLIAM A. JOHNSON JR.
William A. Johnson Jr., Vice President,
Chief Financial Officer and Secretary
(Principal Financial & Accounting Officer)
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 10,314
<SECURITIES> 0
<RECEIVABLES> 12,696
<ALLOWANCES> 1,050
<INVENTORY> 23,775
<CURRENT-ASSETS> 50,697
<PP&E> 18,326
<DEPRECIATION> 7,976
<TOTAL-ASSETS> 61,226
<CURRENT-LIABILITIES> 21,644
<BONDS> 0
<COMMON> 619
0
0
<OTHER-SE> 38,194
<TOTAL-LIABILITY-AND-EQUITY> 61,226
<SALES> 24,437
<TOTAL-REVENUES> 24,437
<CGS> 18,300
<TOTAL-COSTS> 18,300
<OTHER-EXPENSES> 8,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> (2,066)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,066)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,066)
<EPS-PRIMARY> (.39)
<EPS-DILUTED> (.39)
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