Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
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 0-15339
THE STROBER ORGANIZATION, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2822910
(State of Organization (IRS Employer Identification
or other Jurisdiction Number)
of Incorporation)
550 Hamilton Avenue
BROOKLYN, NEW YORK 11232
(Address of principal executive office)
(718) 832-1212
(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
filing requirements for the past 90 days.
Yes X No _____
COMMON STOCK $.01 PAR - SHARES ISSUED AND OUTSTANDING AT MAY 9, 1996 -
5,027,447
(Number of shares outstanding of each class of the Registrant's Common Stock)
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
INDEX
PAGE
Face Sheet............................................................1
Index.................................................................2
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995.......................3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1996 and 1995.................4
Consolidated Statements of Cash Flows
for the Three Months Ended March 31,
1996 and 1995..............................................5
Notes to Consolidated Financial Statements.................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................7
Part II Other Information..........................................9
Part III Exhibits and Reports on Form 8-K..........................10
Signature............................................................11
<PAGE>
PART 1 - FINANCIAL STATEMENTS
The Strober Organization, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In Thousands)
<S> <C> <C>
ASSETS MAR. 31, DEC. 31,
1996 1995
Current assets:
Cash $5,377 $6,007
Accounts receivable, net of allowance for 13,951 15,907
doubtful accounts of $2,501 and $2,321 in
1996 and 1995, respectively
Inventory 12,239 10,305
Deferred income taxes 921 921
Other current assets 520 347
Total current assets 33,008 33,487
Property and equipment, net 3,398 3,627
Goodwill, net of accumulated amortization of 6,674 6,726
$1,713 and $1,661 in 1996 and 1995,
respectively
Other assets 725 704
Total assets $43,805 $44,544
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $621 $908
Accounts payable 6,336 4,738
Accrued expenses and taxes 2,455 4,150
Total current liabilities 9,412 9,796
Long-term debt, less current installments 1,170 1,224
Total liabilities 10,582 11,020
Stockholders' equity:
Preferred stock, $.01 par value, 1000 -- --
shares authorized and unissued
Common stock, $.01 par value, 20,000 52 52
shares authorized; issued: 5,218 and
5,027 outstanding in 1996 and issued 5,178
and outstanding 4,987 in 1995
Additional paid-in capital 7,099 7,029
Retained earnings 26,855 27,189
Less: Treasury stock at cost, 191 shares (783) (746)
in 1996 and 1995
Total stockholders' equity 33,223 33,524
Total liabilities and stockholders' equity $43,805 $44,544
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
The Strober Organization, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
(In thousands, except per share data) 1996 1995
<S> <C> <C>
Net sales $23,092 $28,167
Cost of goods sold 16,577 20,777
Gross profit 6,515 7,390
Selling, general and administrative 7,159 7,037
expenses
Income (loss) from operation (644) 353
Interest expense (52) (54)
Interest income 119 105
Net income (loss) before income taxes (577) 404
Provision (benefit) for income taxes (242) 165
Net income (loss) ($335) $239
Net income (loss) per share ($0.07) $0.05
Weighted average number of shares 5,132 5,208
outstanding
</TABLE>
The computation of fully diluted earnings per share
does not materially differ from that presented above.
See accompanying notes to consolidated financial statements.
<PAGE>
The Strober Organization, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($335) $239
Adjustments to reconcile net income (loss) to
net cash (used by) provided by operating
activities:
Depreciation and amortization 350 346
Provision for estimated losses on accounts
receivable 180 239
Changes in operating assets and
liabilities:
Accounts receivable 1,776 1,187
Inventory (1,934) (2,192)
Other assets (198) (96)
Accounts payable 1,598 1,756
Accrued expenses and taxes (1,693) (973)
Net cash (used by) provided by operating (256) 506
activities
Cash flows from investing activities:
Additions to property and equipment, net (65) (159)
Cash flows from financing activities:
Repayment of long-term debt (342) (604)
Proceeds from exercise of stock options 70 --
Purchase of Treasury Stock (37) --
Net cash used by financing activities (309) (604)
Net decrease in cash (630) (257)
Cash at beginning of period 6,007 3,890
Cash at end of period $5,377 $3,633
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) UNAUDITED STATEMENTS
The accompanying unaudited consolidated financial statements and other
related financial information furnished reflect all adjustments which are, in
the opinion of management, necessary to a fair presentation of the financial
position as of March 31, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 and 1995.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is suggested
that these consolidated condensed financial statements be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's December 31, 1995 financial statements. The results of operations
for the period ended March 31, 1996 are not necessarily indicative of the
operating results for the full year.
(2) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. Significant intercompany balances and
transactions have been eliminated.
(3) STATEMENTS OF CASH FLOWS-SUPPLEMENTAL DISCLOSURES
Schedule of amounts paid for interest, income taxes and capital lease
obligations.
<TABLE>
<CAPTION>
In thousands
<S> <C> <C>
1996 1995
Interest paid $32 $39
Income taxes paid $261 $219
Capital lease obligations $ 0 $271
incurred for purchase
of equipment
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth certain income statement amounts expressed as a
percentage of sales:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of goods sold 71.8% 73.8%
Gross Profit 28.2% 26.2%
SG&A expenses 31.0% 25.0%
Income (loss) from operations (2.8)% 1.2%
Net interest income .3% .2%
Net income (loss) before income tax (2.5)% 1.4%
Provision (benefit) for income tax 1.0% .6%
Net income (loss) (1.5)% .8%
</TABLE>
RESULT OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 1996 COMPARED TO FIRST QUARTER ENDED MARCH 31,
1995
Net sales for the quarter ended March 31, 1996 decreased by $5.1 million (18%)
compared to the same period in 1995. The decrease in sales is primarily due to
extremely severe weather conditions experienced in the Northeast this winter as
compared to milder weather conditions of the first quarter of 1995. The record
breaking snow that occurred during the first quarter of 1996 halted outside
construction activity for many of the Company's customers and greatly hampered
jobsite deliveries to those customers who could continue to work.
Gross profit decreased by $875,000 (12%) in the first quarter of 1996 as
compared to the same period in 1995 due to the lower sales volume. Gross
profit as a percentage of sales increased from 26.2% to 28.2% in the first
quarter of 1996 compared to the same period in 1995.
Selling, general and administrative expenses increased by $122,000 (2%) in the
first quarter of 1996 compared to the same period in 1995. The following table
shows the components of the SG&A expenses:
THREE MONTHS ENDED
IN THOUSANDS 3/31/96 3/31/95
Delivery $ 2,745 $ 2,688
Selling 1,033 1,002
Administrative 3,381 3,347
$7,159 $7,037
Income from operations decreased $997,000 in the first quarter of 1996 due to a
loss of $644,000 compared to income of $353,000 in the same period in 1995.
This decrease resulted primarily from the inclement weather related decrease in
sales volume. Net income before taxes decreased $981,000 in the 1996 first
quarter to a net loss of $577,000 compared to net income of $404,000 in the
same period in 1995.
The net loss for the first quarter of 1996 reflects an income tax benefit of
$242,000 compared to an income tax provision of $165,000 for the same period in
1995. Net income for the first quarter ended March 31, 1996, decreased
$574,000 to a loss of $335,000 compared to net income of $239,000 in the same
period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company financed its operations in the first quarter of 1996 without the
necessity of any borrowings. The Company also maintains a revolving working
capital line of credit in the amount of $10,000,000 with the Chase Manhattan
Bank, N.A. which expires in January 1997. Borrowings under the credit facility
are made as needed, up to a maximum of 75% of eligible accounts receivable and
bear interest at the prime rate plus 1/2 a percentage point or at the option of
the Company at various fixed London Interbank Offered Rate interest rates. The
Company pledged as collateral for the credit facility its accounts receivable
and is required to maintain certain financial covenants. At March 31, 1996,
there were no balances owed under this credit line. The Company believes that
this credit facility will provide sufficient working capital to support current
and future operations and that an extension or replacement of the revolving
working capital line of credit will be obtained in the next six months.
In March 1995, the Company entered into a master lease agreement with Chase
Equipment Leasing Inc. to lease certain trucks and forklift equipment. The
agreement provides for a monthly rental payment adjusted upon changes in the
one month London Interbank Offered Rate.
At March 31, 1996, the Company's outstanding balance of subordinated notes
payable was $292,000 compared to $583,000 at December 31, 1995. These notes
were issued pursuant to the acquisition of The General Building Supply Company
in January 1988. The notes are due September 1, 1996 and are paid with 36
consecutive monthly payments of $97,222 plus interest at 8% per annum. During
1995, the Company prepaid three monthly principal payments on the notes
amounting to $292,000 and expects to make the final note payment on June 1,
1996.
Capital expenditures, net of dispositions, amounted to $65,000 in the three
month period ended March 31, 1996, compared to $430,000 in the same period in
1995. The Company plans to purchase during the 1996 fiscal year new delivery
equipment and computer equipment costing approximately $2 million.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings. It is,
however, involved in litigation relating to claims arising out of its
operations in the normal course of business. Such claims against the Company
are generally covered by insurance. It is the opinion of management that any
uninsured liability resulting from such litigation would not have a material
adverse effect on the Company's business, financial position or earnings.
<PAGE>
PART III
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
There was a Report on Form 8-K filed during the quarter which
reported that the Company issued a press release on February 20, 1996
announcing that the Company had retained Hill Thompson Capital Markets, Inc. as
its financial advisor.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE STROBER ORGANIZATION, INC.
By: /s/David J. Polishook
_________________________________
David J. Polishook
Chief Financial Officer
and Treasurer
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STROBER ORGANIZATION, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE>
<FISCAL-YEAR-END> Dec-31-96
<PERIOD-START> Jan-01-96
<PERIOD-END> Mar-31-96
<CASH> 5,377
<SECURITIES> 0
<RECEIVABLES> 16,452
<ALLOWANCES> 2,501
<INVENTORY> 12,239
<CURRENT-ASSETS> 33,008
<PP&E> 12,741
<DEPRECIATION> 9,343
<TOTAL-ASSETS> 43,805
<CURRENT-LIABILITIES> 9,412
<BONDS> 0
<COMMON> 52
0
0
<OTHER-SE> 33,171
<TOTAL-LIABILITY-AND-EQUITY> 43,805
<SALES> 23,092
<Total-Revenue> 23,092
<CGS> 16,577
<TOTAL-COSTS> 16,577
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 180
<INTEREST-EXPENSE> 52
<INCOME-PRETAX> (577)
<Income-Tax) (242)
<INCOME-CONTINUING> (335)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (335)
<EPS-PRIMARY> -0.07
<EPS-DILUTED> -0.07
</TABLE>
