- --------------------------------------------------------------------------------
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 June 26, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-------------------
Commission file number 0-18914
R&B, INC.
Incorporated pursuant to the Laws
of the Commonwealth of Pennsylvania
-------------------
IRS - Employer Identification No. 23-2078856
3400 East Walnut Street, Colmar, Pennsylvania 18915
(215) 997-1800
-------------------
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 |_|
As of August 6, 1999 the Registrant had 8,201,360 common shares, $.01 par value,
outstanding.
- --------------------------------------------------------------------------------
<PAGE>
R & B, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 26, 1999
Page
Part I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Statements of Income:
Thirteen Weeks Ended June 26, 1999 and
June 27, 1998...............................3
Twenty-six Weeks Ended June 26, 1999 and
June 27, 1998................................4
Balance Sheets .....................................5
Statements of Cash Flows ...........................6
Notes to Financial Statements ......................7
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations ..........................8
Part II -- OTHER INFORMATION
Item 1. Legal Proceedings ................................13
Item 6. Exhibits and Reports on Form 8-K .................13
Signature.................................................14
Page 2 of 14
<PAGE>
PART I. FINANCIAL INFORMATION
R&B, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
For the Thirteen Weeks Ended
------------------------------
June 26, June 27,
(in thousands, except per share data) 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 68,018 $ 42,047
Cost of goods sold 42,743 25,448
- --------------------------------------------------------------------------------------------
Gross profit 25,275 16,599
Selling, general and administrative expenses 19,193 11,755
- --------------------------------------------------------------------------------------------
Income from operations 6,082 4,844
Interest expense, net 1,806 1,083
- --------------------------------------------------------------------------------------------
Income before taxes 4,276 3,761
Provision for taxes 1,496 1,373
- --------------------------------------------------------------------------------------------
Net Income $ 2,780 $ 2,388
- --------------------------------------------------------------------------------------------
Earnings Per Share:
Basic $ 0.33 $ 0.29
Diluted $ 0.33 $ 0.28
- --------------------------------------------------------------------------------------------
Average Shares Outstanding:
Basic 8,368 8,329
Diluted 8,437 8,494
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
Page 3 of 14
<PAGE>
R&B, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
For the Twenty-six Weeks Ended
------------------------------
June 26, June 27,
(in thousands, except per share data) 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 123,964 $ 81,059
Cost of goods sold 77,004 49,433
- --------------------------------------------------------------------------------------------
Gross profit 46,960 31,626
Selling, general and administrative expenses 37,094 23,990
- --------------------------------------------------------------------------------------------
Income from operations 9,866 7,636
Interest expense, net 3,512 2,023
- --------------------------------------------------------------------------------------------
Income before taxes 6,354 5,613
Provision for taxes 2,223 2,049
- --------------------------------------------------------------------------------------------
Net Income $ 4,13 $ 3,564
- --------------------------------------------------------------------------------------------
Earnings Per Share:
Basic $ 0.49 $ 0.43
Diluted $ 0.49 $ 0.42
- --------------------------------------------------------------------------------------------
Average Shares Outstanding:
Basic 8,358 8,317
Diluted 8,406 8,481
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
Page 4 of 14
<PAGE>
R&B, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
June 26, December 26,
(in thousands, except share data) 1999 1998
- --------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,157 $ 915
Accounts receivable, less allowance for doubtful
accounts and customer credits of $8,229 and $9,715 65,993 55,585
Inventories 79,215 68,401
Deferred income taxes 1,674 1,674
Prepaids and other current assets 2,281 861
- --------------------------------------------------------------------------------------------
Total current assets 151,320 127,436
- --------------------------------------------------------------------------------------------
Property, Plant and Equipment, net 22,836 20,761
Intangible Assets 32,875 33,640
Other Assets 3,386 2,111
- --------------------------------------------------------------------------------------------
Total $ 210,417 $ 183,948
- --------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt $ 2,116 $ 3,089
Accounts payable 25,751 18,309
Accrued compensation 1,981 2,652
Other accrued liabilities 6,408 5,766
- --------------------------------------------------------------------------------------------
Total current liabilities 36,256 29,816
- --------------------------------------------------------------------------------------------
Long-Term Debt 95,701 80,004
Deferred Income Taxes 2,514 2,514
Commitments and Contingencies
Shareholders' Equity:
Common stock, par value $.01; authorized
25,000,000 shares; issued 8,392,275 and 8,344,082 84 83
Additional paid-in capital 33,511 33,133
Cumulative translation adjustments (196) (18)
Retained earnings 42,547 38,416
- --------------------------------------------------------------------------------------------
Total shareholders' equity 75,946 71,614
- --------------------------------------------------------------------------------------------
Total $ 210,417 $ 183,948
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</TABLE>
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
Page 5 of 14
<PAGE>
R&B, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
For the Twenty-six Weeks Ended
--------------------------------------------
June 26, June 27,
(in thousands) 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 4,131 $ 3,564
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 3,398 2,439
Provision for doubtful accounts 377 293
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (10,785) 1,700
Inventories (10,814) (4,976)
Prepaids and other current assets (1,420) (878)
Other assets (1,440) (273)
Accounts payable 7,264 2,478
Other accrued liabilities (29) 632
- ----------------------------------------------------------------------------------------------------------
Cash (used in) provided by operating activities (9,318) 4,979
- ----------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Property, plant and equipment additions (4,543) (2,209)
Proceeds from sale and leaseback transaction - 3,194
Business acquisitions - (881)
- ----------------------------------------------------------------------------------------------------------
Cash (used in) provided by investing activities (4,543) 104
- ----------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
ACTIVITIES: a
Net proceeds from revolving credit 15,697 850
-
Repayment of term loans and capitalized lease obligations (973) (4,495)
Proceeds from common stock issuances 379 12
- ----------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities 15,103 (3,633)
- ----------------------------------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 1,242 1,450
Cash and Cash Equivalents, Beginning of Period 915 1,601
- ----------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 2,157 $ 3,051
- ----------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information
Cash paid for interest expense $ 3,113 $ 1,641
Cash paid for income taxes $ 2,901 $ 467
</TABLE>
The accompanying Notes are an integral part of these Consolidated
Financial Statements.
Page 6 of 14
<PAGE>
R&B, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 26, 1999 AND
JUNE 27, 1998 (UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. However, 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 (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the twenty-six week period ended June
26, 1999 are not necessarily indicative of the results that may be expected for
the fiscal year ending December 25, 1999. For further information, refer to the
financial statements and footnotes thereto included in R&B, Inc.'s (the
"Company") Annual Report on Form 10-K for the year ended December 26, 1998.
2. Inventories
Inventories include the cost of material, freight, direct labor and
overhead utilized in the processing of the Company's products. Inventories were
as follows:
June 26, December 26,
(in thousands) 1999 1998
- -----------------------------------------------------
Bulk product $28,367 $31,181
Finished product 44,566 31,445
Packaging materials 6,282 5,775
- -----------------------------------------------------
Total $79,215 $68,401
- -----------------------------------------------------
3. Intangible Assets
Intangible assets consist primarily of goodwill which is amortized over a
period of 40 years. Total accumulated amortization as of June 26, 1999 and June
27, 1998 was $5.2 million and $3.7 million, respectively. Amortization expense
of these assets was $0.4 million in the second quarter of 1999 and 1998.
4. Earnings Per Share
Earnings Per share is computed under Statement of Financial Accounting Stan-
dards No. 128, "Earnings Per Share". The Company has included basic and diluted
earnings per share on the face of the Statements of Income for each period
presented. Weighted average shares for "diluted" earnings per share includes the
assumption of the exercise of all potentially dilutive securities("in the money"
stock options).
Page 7 of 14
<PAGE>
R&B, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Over the periods presented, the Company has focused its efforts on
providing an expanding array of new product offerings and strengthening its rel-
ationships with its customers. To that end, the Company has made significant
investments to increase market penetration, primarily in the form of product
development, customer service, customer credits and allowances, and
strategic acquisitions.
The Company calculates its net sales by subtracting credits and
allowances from gross sales. Credits and allowances include costs for co-
operative advertising, product returns,discounts given to customers who purchase
new products for inclusion in their stores, and the cost of competitors'
products that are purchased from the customer in order to induce a customer to
purchase new product lines from the Company. The credits and allowances are
designed to increase market penetration and increase the number of product lines
carried by customers by displacing competitors' products within customers'
stores and promoting consolidation of customers' suppliers.
The Company may experience significant fluctuations from quarter to
quarter in its results of operations due to the timing of orders placed by
the Company's customers. Generally, the second and third quarters have the
highest level of customer orders, but the introduction of new products and
product lines to customers may cause significant fluctuations from quarter to
quarter.
In January of 1998, the Company acquired the outstanding stock of
Scan-Tech USA/Sweden AB and related entities ("Scan-Tech"). Headquartered in
Stockholm, Sweden, Scan-Tech is a global distributor of replacement automotive
parts, primarily Volvo and Saab.
In September 1998, the Company began its acquisition of selective assets
of the Service Line Division ("Champ") of Standard Motor Products, Inc. Champ
includes the Champ Service Line, Pik-A-Nut and Everco. The acquisition was
completed in stages with the final stage (Everco) occurring in January 1999.
In October 1998, the Company acquired the assets of Allparts, Inc.
Headquartered in Louisiana, Missouri, Allparts is a leading supplier of auto-
motive hydraulic brake parts to the automotive aftermarket.
Page 8 of 14
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items in the Company's
Consolidated Statements of Income.
<TABLE>
<CAPTION>
Percentage of Net Sales
----------------------------------------------------------------------------
For the Thirteen Weeks Ended For the Twenty-six Weeks Ended
----------------------------------------------------------------------------
June 26, June 27, June 26, June 27,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 62.8% 60.5% 62.1% 61.0%
- ----------------------------------------------------------------------------------------------------
Gross profit 37.2% 39.5% 37.9% 39.0%
Selling, general and
administrative expenses 28.2% 28.0% 29.9% 29.6%
- ----------------------------------------------------------------------------------------------------
Income from operations 9.0% 11.5% 8.0% 9.4%
Interest expense, net 2.7% 2.6% 2.9% 2.5%
- ----------------------------------------------------------------------------------------------------
Income before taxes 6.3% 8.9% 5.1% 6.9%
Provision for taxes 2.2% 3.2% 1.8% 2.5%
- ----------------------------------------------------------------------------------------------------
Net income 4.1% 5.7% 3.3% 4.4%
- ----------------------------------------------------------------------------------------------------
</TABLE>
Thirteen Weeks Ended June 26,1999 Compared to Thirteen Weeks Ended June 27, 1998
Net sales increased to $68.0 million for the thirteen weeks ended June 26,
1999 from $42.0 million for the same period in 1998, an increase of 61.8%.
48% of this increase or $12.5 million came from the Company's existing business
and the remaining $13.4 million relates to the acquisitions made in 1998.
Cost of goods sold for the thirteen weeks ended June 26, 1999 increased
to $42.7 million from $25.4 million for the same period in 1998, an increase
of 68.0%. As a percent of net sales, cost of goods sold for thethirteen weeks
ended June 26, 1999 increased to 62.8% from 60.5% for the thirteen weeks
ended June 27, 1998. The reduction in gross profit percentage is the result of
an increasing portion of total revenues attributable to the acquisitions
who, by the nature of their business, carry a lower gross margin.
Selling, general and administrative expenses for the thirteen weeks
ended June 26, 1999 increased to $19.2 million from $11.8 million for the
thirteen weeks ended June 27, 1998, an increase of 63.3%. As a percent of
net sales, selling, general and administrative expenses increased slightly to
28.2% in 1999 from 28.0% in 1998. This modest increase resulted primarily from
increased labor and freight costs associated with shipments of products to
customers.
Interest expense, net, increased to $1.8 million for the thirteen weeks
ended June 26, 1999 from $1.1 million for the thirteen weeks ended June
27, 1998. This increase resulted from higher average debt levels in the second
quarter of 1999 relating to the funding of acquisitions made by the Company
during 1998 and the expansion in working capital assets to support the growth in
revenues.
A provision for income taxes of $1.5 million was recorded for the thirteen
weeks ended June 26, 1999 and $1.4 million for the same period in 1998.
The decrease in the Company's effective tax rate from 36.5% in 1998 to 35.0% in
1999 resulted primarily from lower foreign tax rates.
Page 9 of 14
<PAGE>
Twenty-six Weeks Ended June 26, 1999 Compared to
Twenty-six Weeks Ended June 27, 1998
Net sales increased to $124.0 million for the twenty-six weeks ended
June 26, 1999 from $81.1 million for the same period in 1998, an increase of
52.9%. The existing business accounted for 47% of this increase or $20.3 million
and the remaining $22.6 million relates to the acquisitions made in 1998.
Cost of goods sold for the twenty-six weeks ended June 26, 1999 increased
to $77.0 million from $49.4 million for the same period in 1998, an increase
of 55.8%. As a percent of net sales, cost of goods sold for the twenty-six weeks
ended June 26, 1999 increased to 62.1% from 61.0% for the same period in 1998.
This percentage increase resulted from the acquisitions, which realize relative-
ly lower gross margins than the Company's historic levels, and increased sales
to the Company's largest customers, which have lower margins.
Selling, general and administrative expenses for the twenty-six weeks
ended June 26, 1999 increased to $37.1 million from $24.0 million for the
twenty-six weeks ended June 27, 1998, an increase of 54.6%. As a percentage of
net sales, selling, general and administrative expenses increased slightly to
29.9% for the twenty-six weeks ended June 26, 1999 from 29.6% for the same
period last in 1998. The increase is primarily due to the acquisitions and
expenses required to support the increase in sales.
Interest expense, net, increased to $3.5 million for the twenty-six
weeks ended June 26, 1999 from $2.0 million for the twenty-six weeks ended
June 27, 1998, an increase of 73.6%. This increase resulted from higher
average debt levels in 1999 relating to the funding of acquisitions made by the
Company during 1998 and the expansion in working capital assets to support the
growth in revenues.
A provision for income taxes of $2.2 million was recorded for the
twenty-six weeks ended June 26, 1999 and $2.0 million was recorded for the
twenty-six weeks ended June 27, 1998, an increase of 9.0%. The decrease in
the Company's effective tax rate from 36.5% in 1998 to 35.0% in 1999 resulted
primarily from lower foreign tax rates.
Net income increased to $4.1 million for the twenty-six weeks ended
June 26, 1999 from $3.6 million of the twenty-six weeks ended June 27, 1998,
an increase of 15.9%. As a percentage of net sales, net income decreased to 3.3%
for the twenty-six weeks period in 1999 from 4.4% for the same period in 1998.
Liquidity and Capital Resources
The Company has financed its growth through the combination of cash
flow from its operations, issuance of senior notes and borrowings under its
credit facilities. Working capital was $115.1 million as of June 26, 1999
and $97.6 million as of December 26, 1998. The Company believes that the cash
generated from operations and borrowings available under its revolving credit
facility will be sufficient to meet the Company's working capital needs and to
fund expansion for the foreseeable future.
Net cash used in operating activities was $9.3 million for the
twenty-six weeks ended June 26, 1999 and net cash provided was $5.0 million
for the twenty-six weeks ended June 27, 1998. These amounts represent net
income plus depreciation and amortization less changes in working capital.
During 1999, the most significant changes were increases in inventories,
accounts receivable and accounts payable resulting from the growth in revenues.
During 1998, the most significant changes were increases in inventories and
accounts payable and a decrease in accounts receivable.
Net cash used in investing activities amounted to $4.5 million for
the twenty-six weeks ended June 26, 1999 and cash provided by investing
activities in 1998 amounted to $0.1. In 1999, additions to plant and equipment
accounted for the investing activities. In 1998, proceeds from a
sales/leaseback transaction relating to the Company's new computer system were
almost totally offset by the acquisition of Scan-Tech and additions to property,
plant and equipment.
Page 10 of 14
<PAGE>
Net cash provided by financing activities amounted to $15.1 million and
net cash used was $3.6 million for the twenty-six weeks ended June 26, 1999
and June 27, 1998, respectively. In 1999, borrowings under the line of credit
accounted for the majority of the funds provided. In 1998, repayments of term
loans and capitalized leases was partially offset by advances under the
Company's revolving credit facility.
The Acquisition of Scan-Tech. In January 1998, Scan-Tech was acquired
with the payment of $1 million in cash, up to 350,000 shares of the Company's
common stock and assumption of certain liabilities including approximately
$0.8 million in bank debt.
The Acquisition of Champ. In September 1998, the Company began its
acquisition of selective assets of Champ from Standard Motor Products, Inc. for
approximately $2.3 million representing the net asset value of inventories. The
acquisition was completed in stages with the final stage (Everco) occurring
in January 1999 and requiring a payment of approximately $0.3 million represent-
ing the net asset value of inventories.
The Acquisition of Allparts. In October 1998, the Company acquired the
assets of Allparts from JPE, Inc., for approximately $10.1 million in cash.
Senior Notes. In August 1998, the Company completed a private placement
of $60 million in 6.81% Senior Notes due August 21, 2008 on an unsecured basis.
The ten-year Notes bear a 6.81 percent fixed interest rate, payable quarterly,
with an initial four-year interest only period.
Revolving Credit Facility. In connection with the Notes, the Company
amended its $35 million revolving credit facility with First Union National Bank
and National City Bank. As amended, the commitment for the line was extended for
a five-year term on an unsecured basis with interest at Libor plus 75 basis
points. Proceeds from the Notes were used, among other things, to pay down the
term debt portions of the bank credit facilities previously advanced to
the Company by the bank syndicate. Borrowings under the revolving credit
facility amounted to $29.2 million at June 26, 1999 and to $13.5 million
at December 26,1998.
Industrial Revenue Bonds. Construction of the Company's Warsaw, Kentucky
facility in 1990 was funded by the Bonds. The Bonds bear interest at an annual
rate of 4% payable monthly and require annual principal payments of $300,000 or
$350,000 in alternating years with the final payment due in July, 2009.
Capitalized Leases. The Company's leases for its Pennsylvania and
Georgia facilities are recorded as capitalized leases in the Company's financial
statements. In addition, in 1998 the Company entered into a sale/leaseback
transaction relating to its new computer system in the amount of $4.3 million.
Foreign Currency Fluctuations. Approximately 45% of the Company's
products were purchased from a variety of foreign countries. The products
generally are purchased through purchase orders with the purchase price
specified in U.S. dollars. Accordingly, the Company does not have exposure to
fluctuation in the relationship between the dollar and various foreign
currencies between the time of execution of the purchase order and payment for
the product. However, to the extent that the dollar decreases in value to
foreign currencies in the future, the price of the product in dollars for new
purchase orders may increase. The Company attempts to lessen the impact of these
currency fluctuations by resourcing its purchases to other countries.
Year 2000 Compliance
The efficient operation of the Company's business is dependent in part
on its computer software programs and operating systems ("Programs").The Company
has been evaluating its Programs to identify potential Year 2000 compliance
problems. This evaluation led to the selection and implementation of a
comprehensive enterprise resource planning package and related
programs ("New System"). This New System, installed in 1998, is used in
several key areas of the company's business including inventory purchasing and
management, production planning, forecasting, pricing, sales, shipping and
financial reporting and replaces the majority of the Company's previous
Programs. Those Programs not replaced by the New System are also being evaluated
for Year 2000 compliance and appropriate adjustments have been or will be made
to bring them into compliance either through modification or replacement. The
most significant of these are the Company's Human Resource, payroll and time
keeping systems which were replaced with a combination of purchased software and
third party services during the first quarter of 1999.
Page 11 of 14
<PAGE>
Based on present information, the Company believes that it will be able
to achieve Year 2000 compliance through a combination of the New System
and modification to other Programs, however, no assurance can be given
that these efforts will be successful. The investment in capital expenditures to
implement the New System and the Human Resources, payroll and time keeping
systems was approximately $4.9 million and the Company estimates that the
expenses associated with modification of other Programs will not be material.
The Company maintains contingency plans for computer failures, power
outages, natural disasters, etc. Year 2000 contingency plans for
mission-critical systems are being developed and will be integrated with the
existing plans where appropriate by December 1999. Further, in the event that
any of the Company's significant suppliers or customers do not successfully and
timely achieve Year 2000 compliance, the Company's business operations could be
adversely affected.
Impact of Inflation
The Company has not generally been adversely affected by inflation. The
Company believes that price increases resulting from inflation generally could
be passed on to its customers, since prices charged by the Company are not set
by long-term contracts.
Cautionary Statement Regarding Forward Looking Statements
Certain statements periodically made by or on behalf of the Company and
certain statements contained herein including statements in Management's
Discussion and Analysis of Financial Condition and Results of Operation; such as
statements regarding litigation; and certain other statements contained herein
regarding matters that are not historical fact are forward looking statements
(as such term is defined in the Securities Act of 1933), and because such
statements involve risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward looking
statements. Factors that cause actual results to differ materially include but
are not limited to those factors discussed in the Company's Annual Report on
Form 10-K under "Business -Investment Considerations."
Quantitative and Qualitative Disclosure about Material Risk
The Company's market risk is the potential loss arising from adverse
changes in interest rates. With the exception of the Company's revolving credit
facility, long-term debt obligations are at fixed interest rates and
denominated in U.S. dollars. The Company manages its interest rate risk by
monitoring trends in interest rates as a basis for determining whether to enter
into fixed rate or variable rate agreements. Market risk is estimated as the
potential increase in fair value of the Company's long- term debt obligations
resulting from a hypothetical one-percent decrease in interest rates and amounts
to approximately $3.6 million over the term of the debt. Although the Company
continues to evaluate derivative financial instruments to manage foreign
currency exchange rate changes, the Company does not currently hold derivatives
for managing these risks of for trading purposes.
Page 12 of 14
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
In addition to commitments and obligation which arise in the ordinary
course of business, the Company is subject to various claims and legal actions
from time to time involving contracts, competitive practices, trademark rights,
product liability claims and other matters arising out of the conduct of the
Company's business.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K
None
Page 13 of 14
<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
undersigned thereunto duly authorized.
R & B, INC.
Date August 10, 1999 \s\ Richard Berman
Richard Berman
President
Date August 10, 1999 \s\ Malcolm Walter
Malcolm Walter
Chief Financial Officer and
Principal Accounting Officer
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-26-1998
<PERIOD-END> JUN-26-1999
<CASH> 2,157
<SECURITIES> 0
<RECEIVABLES> 74,222
<ALLOWANCES> (8,229)
<INVENTORY> 79,215
<CURRENT-ASSETS> 151,320
<PP&E> 43,520
<DEPRECIATION> (20,684)
<TOTAL-ASSETS> 210,417
<CURRENT-LIABILITIES> 36,256
<BONDS> 95,701
0
0
<COMMON> 84
<OTHER-SE> 75,862
<TOTAL-LIABILITY-AND-EQUITY> 210,417
<SALES> 123,964
<TOTAL-REVENUES> 123,964
<CGS> 77,004
<TOTAL-COSTS> 37,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,512
<INCOME-PRETAX> 6,354
<INCOME-TAX> 2,223
<INCOME-CONTINUING> 4,131
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,131
<EPS-BASIC> 0.49
<EPS-DILUTED> 0.49
</TABLE>
