-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mxjqH7jbrpXA3RU9E1HGP1Bd+bDPHJKJb4LbCrZv7up3vLFyKaxhPtSpfS5bSK6M fjd3KLrIWPvlwZyUVvxoLg== 0000043837-94-000001.txt : 19941007 0000043837-94-000001.hdr.sgml : 19941007 ACCESSION NUMBER: 0000043837-94-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940730 FILED AS OF DATE: 19940913 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENMAN BROTHERS INC CENTRAL INDEX KEY: 0000043837 STANDARD INDUSTRIAL CLASSIFICATION: 5090 IRS NUMBER: 111771705 STATE OF INCORPORATION: NY FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06083 FILM NUMBER: 94548825 BUSINESS ADDRESS: STREET 1: 105 PRICE PKWY CITY: FARMINGDALE STATE: NY ZIP: 11735 BUSINESS PHONE: 5162935300 MAIL ADDRESS: STREET 2: 105 PRICE PARKWAY CITY: FARMINGDALE STATE: NY ZIP: 11735 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 30, 1994 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-6083 GREENMAN BROS. INC. (Exact name of Registrant as specified in its charter) NEW YORK 11-1771705 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 105 PRICE PARKWAY, FARMINGDALE, NEW YORK 11735 (Address of Principal Executive Office) (Zip Code) Registrant's Telephone Number, Including Area Code (516) 293-5300 NOT APPLICABLE (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date 5,205,462 Shares Outstanding as of August 31,1994 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Condensed Consolidated Balance Sheets July 30,1994, July 31,1993 and January 29,1994 . . . . . . . 3 Condensed Consolidated Statements of Income (Loss) Thirteen and Twenty-Six Weeks Ended July 30,1994 and July 31,1993. . . . . . . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows Twenty-Six Weeks Ended July 30,1994 and July 31,1993. . . . . 5 Notes to Condensed Consolidated Unaudited Financial Statements. . . . . . . . . . . . . . . . . . . . . 6 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . 7 PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . 10 SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 GREENMAN BROS. INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
July 30, July 31, January 29, 1994 1993 1994 (in thousands) ASSETS Current assets: Cash and cash equivalents $ 6,353 $ 10,258 $ 5,764 Short-term investments - 2,000 1,000 Trade receivables - net 16,431 17,193 14,737 Merchandise inventories 41,480 39,728 30,667 Prepaid expenses, prepaid taxes and other 5,648 2,929 3,171 Total current assets 69,912 72,108 55,339 Property, plant and equipment - net 8,993 6,631 7,644 Other assets 280 828 804 Total assets $ 79,185 $ 79,567 $ 63,787
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 30,460 $ 32,079 $ 14,182 Accrued expenses and taxes 7,233 3,690 4,418 Obligations under capital leases 60 56 60 Income taxes payable - - 137 Total current liabilities 37,753 35,825 18,797 Obligations under capital leases 606 668 636 Deferred income taxes 290 265 290 Stockholders' equity: Preferred stock - authorized - 500 shares, par value $1.00 (none issued) Preferred stock - Series A Junior Participating - authorized - 440 shares, par value $1.00 (none issued) Common stock - authorized - 10,000 shares, par value $.10 - issued 6,130 6,117 and 6,119 respectively 613 612 612 Capital in excess of par value 25,652 25,594 25,608 Retained earnings 18,063 20,395 21,636 Less: treasury stock, at cost - 924, 511, and 511 shares respectively (3,792) (3,792) (3,792) 40,536 42,809 44,064 Total liabilities and stockholders' equity $ 79,185 $ 79,567 $ 63,787 See accompanying notes to Condensed Consolidated Financial Statements. -3-
GREENMAN BROS. INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands except per share amounts) UNAUDITED
Thirteen Weeks Ended Twenty-Six Weeks Ended July 30, July 31, July 30, July 31, 1994 1993 1994 1993 Net sales $ 30,229 $ 30,838 $ 57,397 $ 61,792 Costs and expenses: Cost of product sold 22,933 23,673 43,786 47,126 Selling and administrative expenses 8,116 7,592 15,731 15,287 Depreciation 260 220 511 430 Provision for store closings 3,500 - 3,500 - 34,809 31,485 63,528 62,843 Operating (loss) (4,580) (647) (6,131) (1,051) Interest income 119 102 213 226 Interest expense (19) (29) (38) (60) Loss before income taxes (4,480) (574) (5,956) (885) Income taxes (benefit) (1,793) (232) (2,383) (354) Net loss $ (2,687) $ (342) $ (3,573) $ (531) Net loss per share $ (.52) $ (.06) $ (.69) $ (.10) Average shares outstanding 5,202 5,353 5,201 5,317 See accompanying notes to Condensed Consolidated Financial Statements - 4 -
GREENMAN BROS. INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
Twenty-Six Weeks Ended July 30, July 31, 1994 1993 (In thousands) Cash flows from operating activities: Net loss $ (3,573) $ (531) Adjustments to reconcile to net cash provided (used): Depreciation 511 430 Provision for doubtful accounts 153 194 Provision for store closings 3,500 - Decrease (increase) in non-cash working capital accounts: Merchandise inventories (10,813) (10,520) Trade receivables, prepaid expenses and other current assets (4,324) (3,515) Trade accounts payable, accrued expenses, taxes and other 15,593 14,948 Income taxes payable (137) (25) Net cash provided by operating activities 910 981 Cash flows from investing activities: Proceeds from sale of short term investments 1,000 987 Property additions (1,860) (457) Other 524 112 Net cash provided by (used in) investing activities (336) 642 Cash flows from financing activities: Purchase of treasury stock - (1,872) Reduction in obligations under capital leases (30) (28) Proceeds from exercise of employee stock options 45 - Net cash provided by (used in) financing activities 15 (1,900) Net increase in cash and cash equivalents 589 (277) Cash and cash equivalents-beginning of year 5,764 10,535 Cash and cash equivalents-end of period $ 6,353 $ 10,258 See accompanying notes to Condensed Consolidated Financial Statements - 5 -
GREENMAN BROS. INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED NOTE 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instruction to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments for a fair statement of the results and financial position for the interim periods presented have been included. All such adjustments are of a normal recurring nature. This financial information should be read in conjunction with the financial statements and notes thereto included in the registrant's annual report on Form 10-K for the year ended January 29, 1994. It should be noted that amounts included in the Financial Statements of the prior year have been reclassified to conform to the current year's presentation. Due to the seasonal nature of the Company's business, results for the interim period are not necessarily indicative of the results to be expected for the fiscal year. NOTE 2. All highly liquid investments with a maturity of three months or less are considered to be cash equivalents; investments with maturities between three and twelve months are considered to be short-term investments. These investments are stated at cost which approximates market. NOTE 3. Income tax provisions are based on estimated annual effective tax rates. The effective income tax rates used for both the periods ended July 30, 1994 and July 31, 1993 were approximately 40%. NOTE 4. On August 10, 1994 the Company announced the closing of seven stores operating under the name Playworld Toy Stores and one leased department operation. These operations generated revenues of $5.5 million for the first six months of the current year and $16.1 million for all of last year. During the second quarter the Company took a pre-tax charge of $3.5 million to cover the unusual costs of the decision to close the Playworld operation including the writedown of fixed assets and inventories to net realizable values, severance and certain lease related costs. The total charge is included in the line captioned provision for store closings in the operating expense portion of the Condensed Consolidated Statements of Income (Loss). Operating results are presented as they normally would have been. - 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Thirteen and Twenty-Six Weeks Ended July 30, 1994 Compared with Thirteen and Twenty-Six Weeks Ended July 31, 1993 Results of Operations Sales for the thirteen and twenty-six week periods ended July 30, 1994 were $30.2 million and $57.4 million, respectively, reflecting a decrease of 2.0% and 7.1% from the results of the prior year's comparable periods. Wholesale sales decreased $1.3 million or 4.7% for the second quarter and $5.7 million or 10.3% for the year to date versus the same periods of last year. The decline in wholesale sales in both periods resulted from several factors. For over a year, the volume and the customer base in the mass merchandise retail channel has been declining. This trend is expected to continue, reflecting a movement to direct purchases of major product lines as well as bankruptcies and consolidation at many of our mass merchandise customers. In addition, the twenty-six week period reflects a decline in sales due to an extremely harsh winter in our primary trading area that impacted shipping and retail sales at many of our customers. These declines were partially offset by an increase in sales and customer base in the supermarket and deep discount drug business in both the quarter and year to date. Retail sales of our Playworld Toy Stores, Toy Park operation and Noodle Kidoodle TM operation represented 12.7% and 13.7% of total sales for the thirteen and twenty-six week periods ended July 30, 1994 respectively, compared to 10.2% and 10.6% for the same periods of last year. Overall retail sales increase 22.0% to $3.8 million for the quarter and 19.7% to $7.8 million for the six month period versus last year. Comparable store sales increased 6.5% to $3.2 million for the thirteen weeks and increased 5.1% to $6.7 million for the year to date. The balance of the improvement in overall sales in both the quarter and year to date came from the opening of one Noodle Kidoodle store in the latter part of the prior year and a second in the second quarter of this year offset by the closing of two leased departments. The Company is expecting to open two additional Noodle Kidoodle Stores this year and is making plans for approximately fifteen for fiscal 1996. On August 10, 1994 the Company has announced that it will be closing all seven of it's retail stores operating under the name Playworld Toy Stores and one leased department operation by the end of fiscal 1995. The stores to be closed represented 11.3% of total annual sales for fiscal 1994. Gross profit as a percent of sales increased .9% for the quarter and was flat for the year to date versus the same periods of the prior year. The improvement in the margin for the quarter reflects a change in sales mix of higher margin retail sales to total sales. For the year to date period declines in margin in wholesale were offset by changes in the mix of retail sales to total sales. Wholesale segment gross profit as a percent of sales was 21.9% versus 21.6% for the thirteen week period and 21.4% versus 22.2% for the twenty-six week period. The improvement of .3% in the gross profit percentage for the second quarter resulted from increased margins in the toy and stationary product lines as a result of decreased sales to large mass merchandisers that usually carry lower gross profit rates. The decrease in - 7 - margins of .8% for the year to date period was primarily attributable to lower sales levels in housewares and stationary product lines that have traditionally carried higher margins. Margins for the retail segment increased 2.0% to 39.3% for the thirteen week period and 1.1% to 38.1% for the year to date, primarily due to volume in the Noodle Kidoodle stores which operate with higher margins. Operating expenses other than interest and provision for store closings increased 7.2% and 3.3% for the quarter and year to date respectively, versus the comparable periods of last year. The Company's operating expenses as a percent of sales increased 2.4% for the three month period and 2.9% for the six month period versus last year. Wholesale segment expenses declined 2.7% for the thirteen week period and 7.4% for the twenty-six week period versus the comparable periods of last year. As a percent of sales operating expenses increased .5% and .8% for the quarter and year to date respectively, versus the same periods of last year primarily due to lower sales levels. The operating expenses as a percent of sales for the retail segment increased 6.8% for both the thirteen and twenty-six week periods versus the prior year's comparable periods. The increase for both the second quarter and year to date resulted primarily from the opening of Noodle Kidoodle stores. Pre-tax interest income increased $17,000 for the quarter and decreased $13,000 for the year to date versus the prior year's comparable periods. The increase for the three month period was primarily attributable to vendor cash discounts for early payment of dated invoices. Lower average cash levels and interest rates decreased interest income in both the quarter and year to date periods. Interest expense decreased $10,000 and $22,000 for the thirteen and twenty-six week periods respectively, versus the prior year's comparable periods. Provision for store closings of $3.5 million reflects a one time charge to cover the unusual costs of closing the Playworld Toy Stores and one leased department operation. These costs include the writedown of fixed assets and inventories to net realizable values, severance and certain lease related costs. The Playworld operation incurred a small loss in fiscal 1994 and had been only marginally profitable for the few years prior. The concept did not have growth potential and its closing is expected to allow the Company to better focus on its expansion plan for Noodle Kidoodle as well as providing approximately $2.0 million of cash to fund that expansion. The Company recorded an income tax benefit at an estimated effective tax rate of approximately 40% for the quarter and year to date periods ended July 30, 1994 and July 31, 1993 respectively. The net loss for the quarter ended July 30, 1994 was $2.7 million ($.52 per share) versus $.3 million ($.06 per share) for the same period of last year. For the six months of the current year the net loss was $3.6 million ($.69 per share) versus $.5 million ($.10 per share) for the same period of last year. Liquidity and Source of Capital Cash flows provided from operating activities for the six months ended July 30, 1994, were $.9 million versus approximately $1.0 million for the period ended July 31, 1993. Net earnings before non-cash expenditures of depreciation, provision for doubtful accounts and provision for store closings provided $.6 million and changes in working capital components - 8 - provided $.3 million for the period ended July 30, 1994. For the twenty-six weeks ended July 31, 1993, net earnings before non-cash expenditures contributed $.1 million and the balance of the increase from operations resulted from changes in working capital components. Cash used in investing activities was $.3 million for the twenty-six week period ended July 30,1994. Property additions utilized $1.8 million of cash offset by cash provided from the redemption of U.S. Treasury bills of $1.0 million and proceeds from a life insurance policy of $.5 million. Cash provided from investing activities for the six month period ended July 31, 1993 was $.6 million. Approximately $1.0 million was provided from the redemption of U.S. Treasury bills offset by the use of $.4 million of cash for property additions and other. Cash utilized for financing activities of $1.9 million for the six months ended July 31, 1993 was primarily due to the repurchase of 413,600 shares of the Company's common stock. The Company maintained an average cash and cash equivalent balance of approximately $7.8 million during the twenty-six week period ended July 30, 1994. These funds were substantially invested in high grade commercial paper and tax exempt money market funds. The Company has an unsecured revolving credit facility from a bank which currently provides for maximum borrowings of $10.0 million. The Company has not and does not expect to require any borrowings under this agreement in fiscal 1995 for its existing businesses. - 9 - Part II - Other Information Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Shareholders held July 7, 1994 the following persons were elected as directors of the Company. Class 1 Directors: (until the 1995 meeting) Lester Greenman Barry W. Ridings Class 3 Directors: (until the 1997 meeting) Stanley Greenman Joseph A. Madenberg Robert Stokvis The following Directors continue in office for the duration of their terms Class 1 Directors: (until the 1995 meeting) Joshua Biblowitz Class 2 Directors: (until the 1996 meeting) Robin L. Farkas Stewart Katz Benjamin Zdatny In addition, at the Annual Meeting, the shareholders approved the Company's 1994 Stock Incentive Plan (the "1994 Plan"), as set forth in the Proxy Statement dated May 27, 1994 ( the "Proxy Statement"). The holders of 2,638,933 shares voted in favor of the proposal; the holders of 752,247 shares voted against the proposal; the holders of 54,470 shares abstained from voting on the proposal; the broker non-vote was 1,729,069 shares. The shareholders approved the Company's Outside Directors' 1994 Stock Option Plan (the "Directors' Plan") as described in the Proxy Statement. The holders of 2,858,639 shares voted in favor of the proposal; the holders of 530,503 shares voted against the proposal; the holders of 56,508 shares abstained from voting on the proposal; the broker non-vote was 1,729,069 shares. - 10 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GREENMAN BROS. INC. (Registrant) Date: September 12, 1994 STANLEY GREENMAN Stanley Greenman, Chairman of the Board, Chief Executive Officer, Director Date: September 12, 1994 WILLIAM A. JOHNSON, JR. William A. Johnson Jr., Vice President, Chief Financial Officer and Secretary - 11 - -----END PRIVACY-ENHANCED MESSAGE-----