<PAGE> 1
UNITED STATES
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 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-22702
ROBERDS, INC.
(Exact name of registrant as specified in its charter)
Ohio 31-0801335
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1100 East Central Avenue
Dayton, Ohio 45449-1888
(Address of principal executive offices)
(937) 859-5127
(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 requirements
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. On July 29, 1997, 5,984,347
common shares, without par value, were outstanding.
Page 1 of 14
<PAGE> 2
ROBERDS, INC. AND SUBSIDIARY
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of
Operations - Three and Six Months Ended
June 30, 1997 and 1996 4
Condensed Consolidated Statements
of Cash Flows - Six Months Ended
June 30, 1997 and 1996 5
Notes to Condensed Consolidated
Financial Statements 6
ITEM 2. Management's Discussion
and Analysis of Financial
Condition and Results
of Operations 8
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 13
ITEMS 2-3. Inapplicable 13
ITEM 4. Submission of Matters to a
Vote of Security Holders 13
ITEM 5. Inapplicable 13
ITEM 6. Exhibits and Reports
on Form 8-K 13
Page 2 of 14
<PAGE> 3
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30 DECEMBER 31
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,148 $2,794
Receivables:
Customers 1,321 2,364
Vendors and other 1,851 4,028
Merchandise inventories 54,297 62,998
Refundable income taxes 738
Prepaid expenses and other 2,178 1,857
Deferred tax assets 3,212 2,916
---------- -----------
Total current assets 64,745 76,957
Property and equipment, net 103,137 104,953
Deferred tax assets 6,417 6,350
Certificates of deposit, restricted 2,372 2,293
Other assets 1,727 1,655
---------- -----------
$178,398 $192,208
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $13,265 $17,640
Accrued expenses 8,340 9,244
Customer deposits 9,071 8,787
Litigation 2,975 2,943
Current maturities of long term debt 4,026 3,391
---------- -----------
Total current liabilities 37,677 42,005
Long term debt including capital leases 83,004 90,365
Deferred warranty revenue and other 12,474 13,268
SHAREHOLDERS' EQUITY:
Common stock 596 595
Additional paid-in capital 31,927 31,797
Retained earnings 12,720 14,178
---------- -----------
Total shareholders' equity 45,243 46,570
---------- -----------
$178,398 $192,208
========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 14
<PAGE> 4
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET SALES AND SERVICE REVENUES $ 80,235 $ 73,205 $ 163,387 $ 143,869
COST OF SALES 53,629 51,123 110,140 100,873
--------- --------- --------- ---------
Gross profit 26,606 22,082 53,247 42,996
SELLING, DELIVERY AND ADMINISTRATIVE EXPENSES 28,362 23,279 54,788 44,896
INTEREST EXPENSE, NET 1,961 1,312 3,834 2,571
FINANCE PARTICIPATION INCOME (788) (614) (1,380) (1,354)
OTHER INCOME, NET (906) (786) (1,757) (1,666)
--------- --------- --------- ---------
LOSS BEFORE INCOME TAX BENEFIT (2,023) (1,109) (2,238) (1,451)
INCOME TAX BENEFIT (710) (390) (780) (525)
--------- --------- --------- ---------
NET (LOSS) ($ 1,313) $ (719) ($ 1,458) ($ 926)
========= ========= ========= =========
NET (LOSS) PER COMMON SHARE ($ 0.22) $ (0.12) ($ 0.24) ($ 0.16)
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,965 5,927 5,962 5,924
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 14
<PAGE> 5
<TABLE>
<CAPTION>
ROBERDS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS SIX MONTHS
ENDED JUNE 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) ($ 1,458) ($926)
Adjustments to reconcile net (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,535 3,142
Loss on sales of fixed assets 19 102
Changes in assets and liabilities, net 4,742 (786)
-------- --------
Net cash provided by operating activities 7,838 1,532
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,726) (21,613)
Proceeds from sales of fixed assets 48 150
Other (83) (95)
-------- --------
Net cash used in investing activities (2,761) (21,558)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (14,806) (4,610)
Proceeds from long-term debt 8,080 26,200
Net proceeds from issuance of common shares 131 137
Debt issuance costs (128) (45)
-------- --------
Net cash (used in) provided by financing activities (6,723) 21,682
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,646) 1,656
-------- --------
CASH AND CASH EQUIVALENTS - Beginning of period 2,794 2,410
-------- --------
CASH AND CASH EQUIVALENTS - End of period $ 1,148 $ 4,066
======== ========
CASH PAID FOR:
Interest, net of capitalized amounts of $38 in 1997
and $333 in 1996 $ 3,985 $ 2,513
======== ========
Income taxes $ 863 $ 939
======== ========
See notes to the condensed consolidated financial statements
</TABLE>
Page 5 of 14
<PAGE> 6
ROBERDS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE DATA)
A. BASIS OF PRESENTATION
The consolidated balance sheet at December 31, 1996 is condensed from the
audited financial statements. The accompanying unaudited condensed consolidated
balance sheet at June 30, 1997, the condensed consolidated statements of
operations for the three and six months ended June 30, 1997 and 1996, and the
condensed consolidated statements of cash flows for the six months ended June
30, 1997 and 1996, have been prepared by the Company in accordance with
generally accepted accounting principles and in the opinion of management
include all adjustments (which consist only of normal recurring adjustments)
necessary for a fair presentation of results of operations for the periods
presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted or condensed. These financial statements should be read in
conjunction with the financial statements and the notes thereto for the year
ended December 31, 1996 included in Form 10-K. The results of operations for the
six months ended June 30, 1997 may not be indicative of the results for the year
ending December 31, 1997.
B. DEBT
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
<S> <C> <C>
Mortgage notes payable $47,341 $40,124
Revolving line of credit 24,000 37,000
Term loan agreement 3,500 4,200
Capital lease obligations 12,189 12,432
---------- -----------
87,030 93,756
Less current maturities 4,026 3,391
---------- -----------
$83,004 $90,365
========== ===========
</TABLE>
The revolving bank line of credit, which was amended in July 1997, expires in
January 2000. The amount available under the line is limited to the lesser of:
(a) $35,000 or (b) an amount based upon a percentage of eligible accounts
receivable, inventory and certain previously incurred leasehold improvements.
The agreement also provides that an additional amount is available for any
expenditures for leasehold improvements and store expansion for which the
Company has commitments for permanent financing. At June 30, 1997, $35,000 was
available under the line of which $24,000 was outstanding. The interest rate
under the line is set monthly at the option of the Company at either the prime
rate (8.50% at June 30, 1997) or one of various LIBOR rates plus 1.55% (7.24% at
June 30, 1997).
The line and term loan agreements include certain restrictive covenants
including, among others, limitations on capital expenditures and the payment of
dividends, maintenance of minimum current, fixed charge coverage, funded debt to
earnings, and debt to tangible net worth ratios.
C. INCOME TAXES
Deferred tax assets relate principally to the deferral of extended warranty
revenues over the lives of the contracts for financial reporting purposes versus
recognizing the revenues in the year of sale for income tax purposes.
Page 6 of 14
<PAGE> 7
Income tax benefit consists of the following:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
1997 1996
<S> <C> <C>
Currently (refundable) payable:
Federal ($495) $290
State and local 78 120
---------- ----------
(417) 410
Deferred (363) (935)
---------- ----------
($780) ($525)
========== ==========
</TABLE>
The disproportionate income tax benefit for the six months ended June 30, 1997
reflects minimum taxes imposed by certain jurisdictions and the effect of items
which are not deductible for income tax purposes.
D. ACCOUNTING PRONOUNCEMENTS
In March 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No.128, "Earnings Per Share." Under
this statement, the Company will be required to restate prior-period earnings
per share data to comply with SFAS 128, including interim periods, beginning
with the year ending December 31, 1997. The effect on previously reported
earnings per share data of the Company has not been determined.
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," which will require new segment information
in public companies' annual financial statements. Additionally, selected segment
information will be required in interim financial statements. The Statement
requires that comparative information for prior years to be restated. SFAS No.
131 is effective for financial statements for periods beginning after December
31, 1997. The effect on the Company's financial statements has not been
determined.
Page 7 of 14
<PAGE> 8
ROBERDS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS)
RESULTS OF OPERATIONS
For the first six months of 1997, sales increased by 13.6 percent over the
comparable period in 1996. Operations for the first six months of 1997 resulted
in a net loss of $(1,458) as compared to net loss of $(926) for the first six
months of 1996.
Sales for the three months ended June 1997 increased to $80,235 from $73,205 for
the three months ended June 1996, an increase of 9.6 percent. Sales for the
first half of 1997 increased to $163,387 from $143,869 for the first half of
1996, an increase of 13.6 percent. Sales in 1997 were positively affected by the
opening of the new Cincinnati megastore in July 1996 and, to a lesser extent,
the opening of the Buckhead, Georgia store in November 1996.
Comparable store sales decreased 12.6 percent for the three months ended June
1997 and decreased 11.0 percent for the first six months of 1997. A highly
competitive retail environment for big ticket goods continued, and contributed
to the decrease in comparable store sales. Additionally, during 1997, the
Company focused on improving its gross margin percentage versus the very
price-promotional approach taken during 1996. The percentage decreases in sales
in the Company's three established market areas (excluding Cincinnati) were as
follows:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
TOTAL COMPARABLE TOTAL COMPARABLE
STORES STORES STORES STORES
<S> <C> <C> <C> <C>
Dayton (9)% (9)% (7)% (7)%
Atlanta (11) (18) (9) (17)
Tampa (9) (9) (9) (9)
</TABLE>
Sales by major product category as a percentage of total sales follows:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Furniture 38% 37% 38% 38%
Bedding 13 12 13 12
Major Appliances 27 28 25 26
Consumer Electronics 17 18 18 20
Extended Warranty Contracts and Other 5 5 6 4
------------ ----------- ----------- -----------
100% 100% 100% 100%
============ =========== =========== ===========
</TABLE>
Page 8 of 14
<PAGE> 9
In March 1997, the Company entered into an agreement to sell third-party
extended warranty contracts. Revenues and the related costs of the contracts
entered into after the effective date of the agreement are being recognized at
the time the third-party contracts are sold. Revenues and selling costs related
to contracts sold prior to the effective date of the agreement will continue to
be deferred and recognized over the lives of the contracts, and the expenses
related to service costs will be recognized as incurred. Total sales were
positively affected by this agreement by approximately 2.3 percent for the three
months ended June 30, 1997, and 1.3 percent for the six months then ended.
For the three months ended June 1997, gross profit was $26,606, or 33.2 percent
of sales, as compared to $22,082, or 30.2 percent of sales, for the three months
ended June 1996. Gross profit for the six months ended June 1997 was $53,247, or
32.6 percent of sales, as compared to $42,996, or 29.9 percent of sales, for the
six months ended June 1996. The gross profit margin percentage increased because
in 1996 the Company emphasized a heavily price-promotional merchandising
strategy combined with extended financing in an attempt to attract additional
store traffic and to respond to competitive conditions, particularly in the
consumer electronics and appliance categories, and it did not utilize that
strategy in the first half of 1997. Additionally, the gross margin percentage
was affected favorably by a somewhat larger portion of total sales from the
higher-margin furniture category, primarily as the result of a higher percentage
of furniture sales in the Cincinnati megastore, and the higher-margin extended
warranty category. Selling third-party extended warranty contracts favorably
affected gross margins as a percentage of sales by approximately 0.9 percent for
the three months ended June 30, 1997, and 0.5 percent for the six months then
ended.
Gross margin percentages for the first six months of 1997 by category were
approximately 39 percent for furniture, 44 percent for bedding, 22 percent for
major appliances and 18 percent for consumer electronics. The gross margin
percentages for the first half of 1997, as compared to the first half of 1996,
increased for all product categories. The gross margin percentage increase for
appliances and consumer electronics reflects a less price-promotional approach
during 1997 as compared to 1996. Product prices and margins in appliances and
consumer electronics are likely to incur some additional pressure, particularly
in the Dayton market, during the second half of 1997 as a national retailer of
these products entered the Dayton market area near the end of the second
quarter of 1997.
For the three months ended June 1997, selling, delivery, and administrative
expenses, which include occupancy costs, were $28,362, or 35.3 percent of sales,
as compared to $23,279, or 31.8 percent of sales, for the comparable period in
1996. Selling, delivery, and administrative expenses for the six months ended
June 1997 were $54,788, or 33.5 percent of sales, as compared to $44,896, or
31.2 percent of sales, for the comparable period in 1996. The increase as a
percentage of sales for the three and six months ended June 1997 is primarily
attributed to: (a) increased advertising and promotion expenses in an attempt to
generate additional store traffic, (b) production expenses for a new television
advertising theme and campaign that were expensed the first time the related
advertising was utilized, (c) increased sales commissions as a result of a
higher percentage of revenue associated with warranty contracts, (d) the effect
of fixed occupancy costs in light of the Company's declining comparable store
sales, and (e) increased workers' compensation costs. These increases were
offset in part during the six months ended June 1997 by a decrease in finance
charges for extended financing programs offered to customers during the first
quarter of 1997, and the elimination of pre-opening costs that were incurred in
1996 for the Cincinnati market entry.
Interest expense, net of interest income, increased to $1,961, or 2.5 percent of
sales, for the three months ended June 1997 compared to $1,312, or 1.8 percent
of sales, for the comparable period in 1996. For the six months ended June 1997
and 1996, net interest expense was $3,834, or 2.3 percent of sales, and $2,571,
or 1.8 percent of sales, respectively. Interest expense increased in 1997
primarily as the result of additional indebtedness incurred to finance the
Cincinnati megastore, the Buckhead showroom, and the increase in merchandise
inventory levels, primarily related to the Cincinnati market entry. Net interest
expense for the three months ended June 1996 was partially offset by the
capitalization of $227 while no interest was capitalized during the three months
ended June 1997. Net interest expense for the first half of 1997 was reduced by
$38 of capitalized interest while interest expense in the first half of 1996 was
reduced by $333 of capitalized interest.
Finance participation income, which consists of income from participation in the
Company's private label credit card program, was $788, or 1.0 percent of sales,
for the three months ended June 1997, as compared to $614, or 0.8 percent of
sales, for the comparable period in 1996, and was $1,380, or 0.8 percent of
sales, for the six months ended June 1997, as compared to $1,354, or 0.9 percent
of sales, for the comparable period in 1996. The increase in finance
participation for three months ended June 1997 is a result of the Company
emphasizing its core finance programs during the first three months of 1997
which yielded an increase
Page 9 of 14
<PAGE> 10
in finance participation in the second quarter of 1997. For the six months ended
June 1997, finance participation decreased as a percentage of sales as compared
to the comparable period in 1996. The decrease in participation is a result of
the previously mentioned increase in the use of core financing programs offered
to customers during the first quarter, which do not yield income during the
initial grace period. The balances on the core finance program result in costs
to the Company but do not yield participation to the Company during an initial
interest-free period, resulting in a decrease in the Company's participation
during the first quarter of 1997.
Other income increased to $906, or 1.1 percent of sales, for the three months
ended June 1997 as compared to $786, or 1.1 percent of sales, for the comparable
period in 1996. For the six months ended June 1997, other income increased to
$1,757, or 1.1 percent of sales, as compared to $1,666, or 1.2 percent of sales,
for the comparable period in 1996. The majority of other income consists of cash
discounts and rental income from tenants. Cash discounts decreased in total and
as a percentage of sales in 1997 as the Company contracted its appliance and
consumer electronics inventories to better match the consumer demand for these
products. Also included in other income during the three months ended June 1997
was $21 of losses on the disposal of fixed assets as compared to $102 for the
comparable period in 1996.
Income tax benefit for the six months ended June 1997 was $780, or approximately
35% of the loss before taxes, as compared to $525, or 36% of the loss before
taxes, in 1996. The lower effective tax rate in 1997 reflects minimum taxes
imposed by certain jurisdictions and the effect of items which are not
deductible for income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased to $1,148 at June 30, 1997 as compared to $2,794 at December 31,
1996. During the first six months of 1996, the Company generated $7,838 of cash
from operating activities. Cash of $3,220 was generated from a reduction of
customer and vendor receivables, primarily as a result of fewer outstanding
balances from second source financing providers and the collection of year-end
vendor incentives. During the first six months of 1997, inventories decreased
$8,701 primarily in the appliance and consumer electronics product categories. A
portion of the cash generated from operations was utilized to reduce the balance
outstanding under the Company's revolving bank line of credit.
During the first six months of 1997, the Company's capital expenditures totaled
$2,726. These expenditures related primarily to the expansion of the West
Carrollton, Ohio store into space that was formerly used for warehousing. This
expansion was completed early in April, 1997, and completes the Company's
expansion plans for 1997. As a result, capital expenditures for the balance of
1997 are expected to be significantly less than the Company incurred over the
last several years.
In July 1997, the Company amended its revolving bank line of credit agreement
which expires in January 2000. The amendment relaxed certain covenants in order
for the Company to remain in compliance with those covenants. Additionally, the
maximum amount available under the line was reduced since the facility was no
longer needed to finance capital expenditures. The amount available under the
line is limited to the lesser of: (a) $35,000, or (b) an amount based upon a
percentage of eligible accounts receivable, inventory and certain previously
incurred leasehold improvements. The agreement also provides that an additional
amount is available for any expenditures for leasehold improvements and store
expansion for which the Company has commitments for permanent financing. At June
30, 1997, $35,000 was available under the line, of which $24,000 was
outstanding.
The line includes certain restrictive covenants including, among others,
limitations on capital expenditures and the payment of dividends, maintenance of
minimum current, fixed-charge-coverage, funded-debt-to-earnings, and
debt-to-tangible-net-worth ratios. Certain of the covenants contained in the
Company's revolving credit agreement become increasingly restrictive through
1997 and into 1998. In order to remain in compliance with those amended
covenants, the Company's operations and cash flow will have to improve over the
actual results experienced during the first half of 1997.
In April 1997, the Company closed a mortgage loan for $8,080 to finance the
expenditures associated with the acquisition and renovation of its showroom in
the Buckhead area of Atlanta, Georgia. The loan requires monthly principal
payments of $45 with the balance due at the end of the fifth year. The loan
bears interest at 9.03%. Proceeds from the loan were used to reduce the
outstanding balance on the Company's revolving line of credit.
Page 10 of 14
<PAGE> 11
The Company's lease on its Decatur, Georgia store expires in January 1998. The
area surrounding the store, and the shopping center in which it is located, have
deteriorated since the store opened in 1989. As a result, the Company has
decided to abandon the store after the 1997 holiday selling season. There are no
immediate plans to locate another store in that area, though long-term, the
Company will explore other locations on the east side of Atlanta.
The Company has announced plans to enter the Columbus, Ohio market with a
facility similar in size and design to the Cincinnati store. The Columbus
market, which would represent the Company's fifth marketing area, would enable
the further utilization of the Fairborn, Ohio warehouse facility. Management
does not believe that the Company should take on the additional debt obligations
necessary to enter the Columbus market without additional equity. As a result,
the Company does not plan to move forward with the Columbus entry until it has
identified a source for that additional equity.
SEASONALITY
The Company typically experiences an increase in overall sales in the fourth
quarter. This increase is driven by an increase in the sales of consumer
electronics and furniture products associated with the holiday season. At the
same time, major appliance sales typically decline in the fourth quarter. As a
result, operating results for the full year are highly dependent upon the
success of the Company's operations in the fourth quarter.
OUTLOOK
The Company intends to focus the majority of its resources over the next several
quarters on refining its overall operations in preparation for future expansion.
The Company's financial performance is influenced by consumer confidence,
interest rates, the general level of housing activity, and the general level of
economic activity in the United States. Consumers continue to buy big ticket
goods very cautiously. This has led to a very sharp competitive situation, as
the major retailers have struggled to maintain volume in a difficult retailing
environment. This situation is expected to continue to put pressure on
comparable store sales, product prices and margins, and operating results.
FORWARD-LOOKING STATEMENTS
In the interest of providing the Company's shareholders and potential investors
with information concerning management's assessment of the outlook for the
Company, this report contains certain "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. Readers should bear in
mind that statements relating to the Company's business prospects, as distinct
from historical facts, are forward-looking statements which, by their very
nature, involve numerous risks and uncertainties. Factors that could cause the
Company's actual results to differ materially from management's expectations
include, but are not limited to:
Changes in economic conditions in the United States, including but not limited
to the general level of economic activity, levels of housing activity, interest
rates, the availability of consumer credit, consumer confidence, and inflation.
Changes in the economic conditions in the market areas in which the Company
operates, such as a strike or shutdown of a major employer or industry.
Unusual weather patterns, such as unusually hot or cool summers, which can
affect the sale of refrigeration products, or unusually cold winters, which can
affect consumers' desire and ability to shop for the Company's products. Acts of
God, such as floods, hurricanes, or tornados, that interrupt the Company's
ability to sell or deliver merchandise, interrupt consumers' ability to shop, or
destroy a major Company facility, in particular a warehouse or computer
facility.
Changes in the competitive environment in the Company's market areas, including
the bankruptcy or liquidation of existing competitors.
The entry into the Company's lines of business and market areas by new, larger,
well-financed competitors, which may have the ability to withstand intense price
competition over extended periods of time.
Page 11 of 14
<PAGE> 12
The availability and cost of adequate, appropriate newspaper, television, and
pre-printed advertising. A strike or work stoppage affecting the Company's media
outlets.
Adverse results in litigation matters.
Difficulties in hiring, training, and retaining a capable work force at
reasonable levels of compensation, in both existing market areas and in
expansion locations. Difficulties in hiring and retaining an effective senior
management group, particularly as the Company expands. An attempt to organize a
significant portion of the Company's work force.
The availability of appropriate sites for expansion, on favorable terms, and the
long-term receptivity of consumers to new store formats and locations.
Access to bank lines of credit and real estate mortgage financing sources at
favorable rates of interest, terms, and conditions.
Access to additional equity capital to fund the Company's long-term expansion.
Access to extended-payment financing sources (e.g., "twelve months same as
cash") at a favorable cost to the Company and with favorable rates of approval
by the financing source. Access to private-label financing sources (e.g.,
"Roberds charge card") that provide favorable rates of interest to the customer,
favorable rates of return to the Company, and favorable rates of approval by the
financing source.
Rapid changes in products, particularly electronics products, such that the
Company bears the risk of obsolescence or the consumer withdraws from the market
until such time as the product category has stabilized.
Shifts in the mix of the Company's sales between its higher-margin products
(bedding and furniture) and its lower-margin products (electronics and
appliances), which may result from changes in consumer priorities, competitive
factors, or other factors.
The absence of new products in the Company's product categories that would drive
additional consumer interest and purchases.
Adverse changes in the cost or availability of the products the Company sells.
Rapid increases in the price of the Company's products, which cannot be passed
on to consumers as the result of competitive pressures.
The loss, or significant reduction in the availability, of certain key
name-brand products. Decisions by vendors to curtail the availability of certain
product presently sold by the Company, or to make products that are presently
sold by the Company available to certain competitors that do not presently have
access to such products. Changes in import duties or restrictions affecting the
Company's ability to import certain products.
Changes in income tax rates or structures that may affect the Company's tax
burden or consumers' ability to purchase or finance big-ticket goods or new
housing. Significant increases in real estate tax rates affecting the Company's
properties.
Changes in government regulations affecting the Company, its products, its
advertising, or its work force, including changes in the minimum wage. Changes
in government regulations affecting the Company's employee benefit plans.
New competition from alternative sales media and channels of distribution, such
as catalog mail order, telemarketing, television shopping services, and online
media.
Changes in highway or street configurations such that the Company's stores
become less accessible to consumers. Changes in consumer use or ownership of
"second homes," particularly in the Tampa, Florida market.
Changes in the cost or availability of liability, property, or health insurance.
Page 12 of 14
<PAGE> 13
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS In May 1997, one of the Company's former Market
Presidents filed suit in United States District Court, Middle District of
Florida, Bernucca v. Roberds, Inc., Case No. 97-1311-CIV-T-24B, alleging, among
other things, that the Company violated the Age Discrimination in Employment Act
of 1964 and the Florida Civil Rights Act in connection with its termination of
the plaintiff. The complaint does not specify the amount of damages sustained by
the plaintiff. The Company has answered in the suit, but discovery has not yet
commenced. At this time, it is not possible to predict the outcome of the suit
or to estimate the Company's liability, if any.
In the ordinary course of its business, the Company is from time to time a party
in certain legal proceedings. In the opinion of management, the Company is not a
party to any litigation, other than as described above, that would have a
material adverse effect on its operations or financial condition if the
proceeding was determined adversely to the Company.
ITEM 2. CHANGES IN SECURITIES None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None.
L
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting
of the Company's shareholders was held on May 13, 1997. Four of the Company's
directors were re-elected to two-year terms ending in 1999 upon a vote as
follows:
<TABLE>
<CAPTION>
NAME FOR WITHHELD ABSTAIN BROKER NON-
VOTE
<S> <C> <C> <C>
Kenneth W. Fletcher 5,253,802 None 11,581 699,447
C.E. Gunter 5,244,102 None 21,281 699,447
Dr. James F. Robeson 5,253,802 None 11,581 699,447
Robert M. Wilson 5,253,802 None 11,581 699,447
</TABLE>
The following directors' terms of office continue until the annual meeting of
the Company's shareholders to be held in 1998: Messrs. Jerry L. Kirby, Howard W.
Smith, Gilbert P. Williamson, and Donald C. Wright. Additionally, an amendment
to the Roberds, Inc. Employee Stock Purchase Plan was approved upon a vote as
follows:
<TABLE>
<S> <C>
For 4,787,349
Against 30,685
Abstain 21,868
Broker non-vote 1,124,928
</TABLE>
ITEM 5. OTHER INFORMATION None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K There were no reports filed by the
Company on Form 8-K during the quarter ended June 30, 1997.
Page 13 of 14
<PAGE> 14
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.
Roberds, Inc., by
(Registrant)
Date July 29, 1997 /s/ Robert M. Wilson
------------------------- ---------------------
Robert M. Wilson
Executive Vice President
Chief Financial Officer
Date July 29, 1997 /s/ Michael A. Bruns
------------------------- ---------------------
Michael A. Bruns
Vice President
Controller
Chief Accounting Officer
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,148
<SECURITIES> 0
<RECEIVABLES> 3,172
<ALLOWANCES> 0
<INVENTORY> 54,297
<CURRENT-ASSETS> 64,745
<PP&E> 130,300
<DEPRECIATION> 27,163
<TOTAL-ASSETS> 178,398
<CURRENT-LIABILITIES> 37,677
<BONDS> 83,004
0
0
<COMMON> 596
<OTHER-SE> 44,647
<TOTAL-LIABILITY-AND-EQUITY> 178,398
<SALES> 163,387
<TOTAL-REVENUES> 163,387
<CGS> 110,140
<TOTAL-COSTS> 110,140
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,834
<INCOME-PRETAX> (2,238)
<INCOME-TAX> (780)
<INCOME-CONTINUING> (1,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,458)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
