<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE SECURITIES
EXCHANGE ACT OF l934
For the period ended September 30, 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 0-1359
PUBCO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 53-0246410
(State of Incorporation) (I.R.S. Employer Identification No.)
3830 Kelley Avenue, Cleveland, Ohio 44114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 881-5300
NA
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange
Act of l934 during the preceding l2 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
Number of Common Shares Outstanding as of November 10, 1995: 3,461,727
1
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PUBCO CORPORATION
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994. . . . . . 3
Consolidated Statements of Operations
for the Three Months and Nine Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Nine Months Ended September 30,
1995 and 1994 . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . 11
Item l. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote
of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)--Note A.
PUBCO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000's except share amounts)
<CAPTION>
September 30 December 31
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,341 $ 12,583
Marketable securities and other
short-term investments 7,785 3
Trade receivables (less allowances of
$679 in 1995 and $1,250 in 1994) 4,832 5,808
Inventories--Note B 8,332 7,258
Prepaid expenses and other current assets 750 586
--------- ---------
TOTAL CURRENT ASSETS 28,040 26,238
PROPERTY AND EQUIPMENT (at cost
less accumulated depreciation,
amortization, and allowance to reduce
fixed assets to net realizable value
of $10,303 in 1995 and $12,576 in 1994) 8,297 10,446
INTANGIBLE ASSETS
(at cost less accumulated amortization of
$448 in 1995 and $324 in 1994) 718 842
EQUITY INVESTMENT 2,602 2,689
OTHER ASSETS 2,644 2,661
--------- ---------
TOTAL ASSETS $ 42,301 $ 42,876
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
PUBCO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets--Continued
($ in 000's except share amounts)
<CAPTION>
September 30 December 31
1995 1994
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,379 $ 6,509
Accrued liabilities 6,033 8,741
Loans payable--related party - 1,911
Income taxes payable 1,466 1,470
Current portion of long-term debt 2,791 1,740
--------- ---------
TOTAL CURRENT LIABILITIES 15,669 20,371
LONG-TERM DEBT 849 949
DEFERRED CREDITS AND NONCURRENT LIABILITIES 3,802 4,378
MINORITY INTEREST 707 630
STOCKHOLDERS' EQUITY
Preferred Stock:
Convertible Preferred Stock - par value $1;
20,000 shares authorized, none issued - -
Preferred Stock - par value $.01;
2,000,000 shares authorized, 70,000
Series A shares issued and outstanding
($7,000 aggregate liquidation preference
in 1995 and 1994) 1 1
Common Stock:
Common Stock - par value $.01; 3,500,000
shares authorized; 2,905,993 issued and
outstanding in 1995 and 2,905,225 issued
and outstanding in 1994 29 29
Class B Stock - par value $.01; 2,000,000
shares authorized, 557,734 issued and
outstanding in 1995 and 558,502 issued
and outstanding in 1994 6 6
Additional paid in capital 30,301 30,957
Unrealized gains on investments available
for sale 461 -
Retained (deficit) (9,524) (14,445)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 21,274 16,548
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 42,301 $ 42,876
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
4
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<TABLE>
PUBCO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
($ in 000's except share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 10,759 $ 11,165 $ 37,522 $ 35,846
Cost of sales 7,990 7,797 27,452 25,193
--------- --------- --------- ---------
GROSS PROFIT 2,769 3,368 10,070 10,653
Costs and expenses:
Selling, general and
administrative expenses 2,312 2,313 7,284 7,217
Depreciation and amortization expenses 305 365 965 994
Interest expense 63 102 208 406
--------- --------- --------- ---------
2,680 2,780 8,457 8,617
Other income, net 1,130 590 2,293 1,939
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND MINORITY INTEREST 1,219 1,178 3,906 3,975
Provision for income taxes 30 - 8 22
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST 1,189 1,178 3,898 3,953
Minority interest 2 (19) (77) (87)
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 1,191 1,159 3,821 3,866
--------- --------- --------- ---------
Income (loss) from discontinued
operations, net of taxes 1,100 (13,369) 1,100 (14,873)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 2,291 $(12,210) $ 4,921 $(11,007)
========= ========= ========= =========
Preferred stock dividend requirements 218 175 656 525
--------- --------- --------- ---------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $ 2,073 $(12,385) $ 4,265 $(11,532)
========= ========= ========= =========
Earnings (loss) per share:
CONTINUING OPERATIONS (NET OF
PREFERRED STOCK DIVIDEND REQUIREMENTS) $ .28 $ .28 $ .91 $ .96
DISCONTINUED OPERATIONS .32 (3.86) .32 (4.29)
--------- --------- --------- ---------
NET INCOME (LOSS) PER COMMON SHARE $ .60 $ (3.58) $ 1.23 $ (3.33)
========= ========= ========= =========
Weighted average number
of shares outstanding 3,463,727 3,463,727 3,463,727 3,463,727
========== ========== ========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
5
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<TABLE>
PUBCO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in 000's except share amounts)
<CAPTION>
Nine Months Ended
September 30
l995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income from continuing operations $ 3,821 $ 3,866
Adjustments to reconcile net income to
net cash provided by operating activities:
Income (loss) from discontinued operations 1,100 (14,873)
Write-down of assets of discontinued operations - 3,841
Depreciation 918 1,607
Amortization 124 139
Net (gain) on sales of investments (75) (133)
Net (gain) losses on disposal of fixed assets (279) 160
Minority interest 77 87
Changes in operating assets and liabilities:
Trade receivables 976 1,221
Inventories (1,074) (1,247)
Other assets (60) 68
Accounts payable (1,130) 2,804
Other current liabilities (3,576) 2,452
Deferred credits and noncurrent liabilities (576) 1,575
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 246 1,567
INVESTING ACTIVITIES
Distributions from partnership and trust investments - 24
Purchases of investments (8,613) -
Proceeds from sale of investments 1,367 724
Purchases of fixed assets (243) (2,773)
Proceeds from the sale of fixed assets 2,617 3,016
--------- ---------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (4,872) 991
FINANCING ACTIVITIES
Net (repayments) on loans payable (1,911) (879)
Proceeds from long-term debt 24,030 27,405
Principal payments on long-term debt (23,079) (28,232)
Dividends paid (656) (525)
--------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES (1,616) (2,231)
--------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,242) 327
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,583 1,122
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,341 $ 1,449
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
6
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PUBCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
September 30, 1995
NOTE A -- Basis of Presentation
- -------------------------------
The financial information presented herein should be read in conjunction
with the consolidated financial statements and footnotes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
The consolidated balance sheet as of December 31, 1994 has been derived from
the audited financial statements at that date.
The accompanying unaudited consolidated financial statements reflect
consolidation of the operations of the Company's wholly-owned subsidiaries
and Bobbie Brooks, Incorporated ("Brooks"), an approximately 91%-owned
subsidiary.
At September 30, 1994, the Company discontinued the operations of its retail
and apparel manufacturing segments. As a result of such discontinuance, the
consolidated financial statements for the periods presented have been
restated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments considered necessary for a fair presentation have been
included, all of which are of a normal recurring nature.
Net income (loss) per common share has been computed by dividing net income
(loss) after preferred dividend requirements by the weighted average number
of shares of Common Stock and Class B Stock outstanding during the periods.
The Preferred Stock dividend requirement is an annual variable dividend,
currently $12.50 per share.
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," for investments. Management determines the appropriate
classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Marketable
securities held as available for sale are carried at fair value with any
unrealized gains or losses reported as a separate component of shareholders'
equity. Realized gains and losses on marketable securities held as
available for sale are included in other income. Interest and dividends on
securities classified as available for sale are included in other income.
7
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PUBCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in 000's except share amounts)
September 30, 1995
NOTE B -- Inventories
- ---------------------
The components of inventories consist of the following:
September 30 December 31
1995 1994
Raw materials and supplies $ 5,745 $ 4,912
Work in process 650 622
Finished goods 1,937 1,724
-------- --------
$ 8,332 $ 7,258
======== ========
8
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three and Nine Months Ended September 30, 1995 and 1994
- -------------------------------------------------------------------------
The Company has completed its transformation from a company with
predominantly retail and apparel operations into a company which
manufactures and distributes business to business products. The closure of
the Company's retail department store chain in 1994 and discontinuance of
its apparel manufacturing operations in 1994 have been accounted for as
discontinued operations, resulting in a restatement of the consolidated
statement of operations for the 1994 period. Income from discontinued
operations, net of taxes, for both the three and nine month periods is the
result of actual results being more favorable than anticpated when the
accrual was established during the third quarter of 1994.
The Company's continuing operations primarily consist of Buckeye Business
Products, Inc. ("Buckeye") and Allied Construction Products, Inc.
("Allied"). Each of these operations is located at the Company's
manufacturing facility in Cleveland, Ohio. Income from continuing
operations before other income decreased in 1995 from the comparable periods
in 1994 primarily due to lower gross profits at Allied attributable
primarily to the lower value of the Dollar versus the Deutsche Mark.
Other income includes royalty income from the licensing of trademarks and
tradenames, rental income from real estate and equipment, and interest and
dividend income.
Allied's borrowing level in the nine month period ended September 30, 1995
was lower than the comparable period in 1994 primarily because of the
reduction in debt resulting from the sale of its building and relocation to
the Company's leased premises. This reduction along with lower borrowing
levels at Buckeye caused a reduction in interest expense from the 1994
periods to the 1995 periods.
9
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LIQUIDITY AND CAPITAL RESOURCES
The Company has almost $14,000,000 of cash, cash equivalents, marketable
securities and other short-term investments, and under $850,000 of long-term
debt, at September 30, 1995.
Accrued liabilities decreased from December 31, 1994 to September 30, 1995
primarily as the result of the payment of certain expenses related to the
closing of the retail department store chain.
Stockholders' equity of $21,274,000 at September 30, 1995 includes
$7,000,000 attributable to Preferred Stock liquidation preference.
On October 30, 1995, the Company announced that it would purchase, from time
to time in the open market, up to 175,000 shares of its Common Stock.
Through November 10, 1995, the Company has repurchased 2,000 of such shares
at an aggregate price of approximately $12,000.
10
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PART II - OTHER INFORMATION
Item l. LEGAL PROCEEDINGS. None
Item 2. CHANGES IN SECURITIES. None
Item 3. DEFAULTS UPON SENIOR SECURITIES. None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None
Item 5. OTHER INFORMATION.
On October 24, 1995, the Company announced that it had made
separate proposals to its 91% owned subsidiary, Bobbie Brooks,
Incorporated (NASDAQ: BBKS) and to Bobbie Brooks' 43% owned
subsidiary, Aspen Imaging International, Inc. (NASDAQ: ARIB),
which if accepted, would result in the Company owning 100% of
Bobbie Brooks and the assets of Aspen and the stockholders of each
such company receiving Company Common Stock.
The proposal made to Bobbie Brooks would provide for the merger of
Bobbie Brooks into a wholly owned subsidiary of the Company and the
conversion of each six shares of Bobbie Brooks Common Stock into
one share of Company Common Stock. The proposal made to Aspen
would provide for the acquisition of the assets of Aspen by a
wholly owned subsidiary of the Company for Company Common Stock and
the distribution to former Aspen stockholders of one share of
Company Common Stock for each seven shares of Aspen Imaging Common
Stock.
The proposals are subject to the approval of the Company's
stockholders and the approval of the Board of Directors and
stockholders of each of Bobbie Brooks and Aspen, after each of
those companies has received advice from its independent financial
advisor.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Financial Data Schedule
(b) Reports on Form 8-K
None
11
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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.
PUBCO CORPORATION
/s/ Robert H. Kanner
---------------------------------
Robert H. Kanner
Chairman of the Board, President,
Chief Executive Officer and
Chief Financial Officer
Dated: November 14, 1995
12
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EXHIBIT INDEX
Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AT 9/30/95 AND CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE 9 MONTHS ENDED 9/30/95 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,341
<SECURITIES> 7,785
<RECEIVABLES> 5,511
<ALLOWANCES> 679
<INVENTORY> 8,332
<CURRENT-ASSETS> 28,040
<PP&E> 18,600
<DEPRECIATION> 10,303
<TOTAL-ASSETS> 42,301
<CURRENT-LIABILITIES> 15,669
<BONDS> 849
<COMMON> 35
0
1
<OTHER-SE> 21,238
<TOTAL-LIABILITY-AND-EQUITY> 42,301
<SALES> 37,522
<TOTAL-REVENUES> 37,522
<CGS> 27,452
<TOTAL-COSTS> 27,452
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 3,906
<INCOME-TAX> 8
<INCOME-CONTINUING> 3,821
<DISCONTINUED> 1,100
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,921
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
</TABLE>
