-----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, Yiz8FyKW6KO/wKR15jlCMLd7px/QuC2NzHwaHGoxnYfpkjC2U+u2BORZnyptIXau b1nHY8NhE63dmFGUCzZtmg== 0000043837-94-000003.txt : 19941213 0000043837-94-000003.hdr.sgml : 19941213 ACCESSION NUMBER: 0000043837-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940929 FILED AS OF DATE: 19941212 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENMAN BROTHERS INC CENTRAL INDEX KEY: 0000043837 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [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: 94564339 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 October 29, 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 of 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 5,261,040 Shares Outstanding as of November 14, 1994 TABLE OF CONTENTS Page Condensed Consolidated Balance Sheets October 29, 1994, October 30, 1993 and January 29, 1994 . . . . . . . . 3 Condensed Consolidated Statements of Income Thirteen and Thirty-Nine Weeks Ended October 29, 1994 and October 30, 1993. . . . . . . . . . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows Thirty-Nine Weeks Ended October 29, 1994 and October 30, 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 . . . . . . . . . . . . . . . . . . . . . . . . 9 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 GREENMAN BROS. INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
October 29, October 30, January 29, 1994 1993 1994 (in thousands) ASSETS Current assets: Cash and cash equivalents $ 5,620 $ 3,523 $ 5,764 Short-term investments - 1,000 1,000 Trade receivables - net 19,471 22,397 14,737 Merchandise inventories 36,751 41,499 30,667 Prepaid expenses, prepaid taxes and other 6,288 3,177 3,171 Total current assets 68,130 71,596 55,339 Property, plant and equipment - net 9,669 7,343 7,644 Other assets 227 797 804 Total assets $ 78,026 $ 79,736 $ 63,787
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 29,656 $ 31,986 $ 14,182 Accrued expenses and taxes 7,083 3,642 4,418 Obligations under capital leases 60 56 60 Income taxes payable - - 137 Total current liabilities 36,799 35,684 18,797 Obligations under capital leases 591 654 636 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 6,185 6,117 and 6,119 respectively 619 612 612 Capital in excess of par value 25,680 25,594 25,608 Retained earnings 17,839 20,719 21,636 Less: treasury stock, at cost - 924 shares (3,792) (3,792) (3,792) 40,346 43,133 44,064 Total liabilities and stockholders' equity $ 78,026 $ 79,736 $ 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 Thirty-Nine Weeks Ended October 29, October 30, October 29, October 30, 1994 1993 1994 1993 Net Sales $ 35,374 $ 38,175 $ 92,771 $ 99,967 Cost and expenses: Cost of product sold 27,221 29,678 71,007 76,804 Selling and administrative expenses 8,309 7,830 24,040 23,117 Depreciation 285 223 796 653 Provision for store closings - - 3,500 - 35,815 37,731 99,343 100,574 Operating income (loss) (441) 444 (6,572) (607) Interest income 86 125 299 351 Interest expense (18) (29) (56) (89) Income (loss) before income taxes (373) 540 (6,329) (345) Income taxes (benefit) (149) 216 (2,532) (138) Net income (loss) $ (224) $ 324 $ (3,797) $ (207) Net income (loss) per share $ (.04) $ .06 $ (.73) $ (.04) Average shares outstanding 5,218 5,193 5,207 5,385 See accompanying notes to Condensed Consolidated Financial Statements.
- 4 - GREENMAN BROS. INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
Thirty-Nine Weeks Ended October 29, October 30, 1994 1993 (in thousands) Cash flows from operating activities: Net income (loss) $ (3,797) $ (207) Adjustments to reconcile to net cash provided (used): Depreciation 796 653 Provision for bad debts 296 353 Provision for store closings 3,500 - Decrease (increase) in non-cash working capital accounts: Merchandise inventories (6,084) (12,291) Trade receivables, prepaid taxes and other current assets (8,147) (9,126) Trade accounts payable, accrued expenses, taxes and other 14,639 14,807 Income taxes payable (137) (25) Net cash provided by (used in) operating activities 1,066 (5,836) Cash flows from investing activities: Proceeds from sale of short-term investments 1,000 1,989 Property additions (2,827) (1,411) Other 583 160 Net cash provided by (used in) investing activities (1,244) 738 Cash flows from financing activities: Purchase of treasury stock - (1,872) Reduction in obligations under capital leases (45) (42) Proceeds from exercise of employee stock options 79 - Net cash provided by (used in) financing activities 34 (1,914) Net (decrease) in cash and cash equivalents (144) (7,012) Cash and cash equivalents-beginning of the year 5,764 10,535 Cash and cash equivalents-end of the period $ 5,620 $ 3,523 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 instructions 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 except for the provision described in Note 4. 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 the periods ended October 29, 1994 and October 30, 1993 were 40%. The Balance Sheet caption for prepaid expenses, prepaid taxes and other current assets includes $1.9 million of recoverable income taxes in the current year. 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 $7.7 million for the nine 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 Thirty-Nine Weeks Ended October 29, 1994 Compared with Thirteen and Thirty-Nine Weeks Ended October 30, 1993 Results of Operations Sales for the thirteen and thirty-nine week periods ended October 29,1994 were $35.4 million and $92.8 million, respectively, reflecting decreases of 7.3% and 7.2% from the results of the prior year's comparable periods. Wholesale sales decreased $3.8 million or 10.8% for the third quarter and $9.4 million or 10.5% 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. These declines were partially offset by an increase in sales and customer base in the supermarket, chain drug 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 (trademark) operation represented 11.9% and 13.0% of total sales for the thirteen and thirty-nine week periods ended October 29, 1994 respectively, compared to 8.5% and 9.8% for the same periods of last year. Overall retail sales increased 29.5% to $4.2 million for the quarter which reflects increases in sales of $1.4 million and $.3 million for Noodle Kidoodle and Toy Park, respectively, offset by decreases of $.7 million in sales for Playworld Toy Stores versus last year. For the nine-months sales increased 22.9% to $12.0 million reflecting increases of $2.5 million and $.5 million for Noodle Kidoodle and Toy Park, respectively, offset by a decrease in Playworld Toy Stores sales of $.8 million compared to last year. Comparable store sales decreased 8.8% to $2.8 million for the thirteen weeks and increased .9% to $9.5 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 fourth quarter of the prior year and two this year, offset by the closing of two leased departments. The retail sales decreases were all in the Playworld operation where the decision to close stores has impacted the operation. On August 10, 1994 the Company announced that it will be closing it's retail stores operating under the name Playworld Toy Stores and one leased department operation by the end of fiscal 1995. Due to leasing issues it is now expected that two of these stores will remain open indefinitely and consideration is being given to changes in their format. The Playworld Stores and leased department operation represented 11.3% of total annual sales for fiscal 1994. The Company opened one Noodle Kidoodle store during the third quarter and one additional store in November of this year. There are currently four Noodle stores operating and the Company is making plans for approximately fifteen for fiscal 1996. Gross profit as a percent of sales increased .7% for the quarter and .3% for the year to date versus the same periods of the prior year. The improvement in the margin for both the quarter and year to date reflects the change in sales mix of higher margin retail sales to total sales. For the thirteen and thirty-nine week periods declines in margin in wholesale were offset by changes in the mix of retail sales to total sales. Wholesale segment gross - 7 - profit as a percent of sales was 20.7% versus 21.0% for the thirteen week period and 21.1% versus 21.7% for the thirty-nine week period. The decline of .3% and .6% in the gross profit for the third quarter and year to date was primarily attributable to lower sales levels in housewares and stationery product lines that have traditionally carried higher margins. Those declines were partially offset by increased margins in the toy product line as a result of decreased sales to large mass merchandisers that carry lower gross profit rates. Margins for the retail segment increased 4.3% to 40.6% for the thirteen week period and 2.3% to 39.0% for the year to date, primarily due to volume in the Noodle Kidoodle and Toy Park stores which operate with higher margins. Operating expenses other than interest and provision for store closings increased 6.7% and 4.5% 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 3.2% for the three month period and 3.0% for the nine month period versus last year. Wholesale segment expenses increased .8% for the thirteen week period and declined 4.7% for the thirty-nine week period versus the comparable periods of last year. As a percent of sales operating expenses in the wholesale segment increased 2.3% and 1.3% for the quarter and year to date respectively, versus the same periods of last year. The increase in expenses as a percent of sales reflects the impact of the revenue decreases which were only partially offset by expense reductions. The operating expenses as a percent of sales for the retail segment decreased .4% for the thirteen week period and increased 4.4% for the thirty-nine weeks period versus the prior year's comparable periods. The decrease for the quarter resulted from higher overall retail sales levels and lower expenses in the Playworld operation partially offset by an increase in Noodle Kidoodle expenses. For the year to date period the increase was primarily attributable to the opening of Noodle Kidoodle stores and increases in office personnel required to plan and implement the expansion of that concept. Pre-tax interest income decreased $39,000 for the quarter and $52,000 for the year to date. The decline in both the third quarter and year to date was primarily attributable to lower average cash levels partially offset by higher average rates. Interest expense decreased $11,000 and $33,000 for the thirteen and thirty-nine 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 or provision at an estimated effective tax rate of approximately 40% for the quarter and year to date periods ended October 29, 1994 and October 30, 1993 respectively. The net loss for the quarter ended October 29, 1994 was $.2 million ($.04 per share) versus net income of $.3 million ($.06 per share) for the same period of last year. For the nine months of the current year the net loss was $3.8 million ($.73 per share) versus $.2 million ($.04 per share) for the same period of last year. - 8 - Liquidity and Source of Capital Cash flows provided from operating activities for the nine months ended October 29, 1994, were $1.1 million versus cash used of $5.8 million for the period ended October 30, 1993. Net earnings before non-cash expenditures of depreciation, provision for doubtful accounts and provision for store closing provided $.8 million and changes in working capital components provided $.3 million for the period ended October 29, 1994. For the thirty-nine weeks ended October 30, 1993, net earnings before non-cash expenditures contributed $.8 million and changes in working capital components required $6.6 million of cash. The improvement in working capital components for the nine-months ended October 29, 1994, resulted primarily from decreases in inventory levels and trade receivables offset by increases in prepaid taxes and decreases in trade accounts payable. Cash used in investing activities was $1.2 million for the thirty-nine week period ended October 29, 1994. Property additions utilized $2.8 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 nine month period ended October 30, 1993 was $.7 million with approximately $2.0 million provided from the redemption of certain U.S. Treasury securities offset by the use of $1.4 million for property additions and other. Cash utilized for financing activities of $1.9 million for the nine months nended October 30, 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 $6.9 million during the thirty-nine week period ended October 29, 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 borrowing of $10.0 million. The Company has not and does not expect to require any borrowing under this agreement in fiscal 1995 for its existing businesses. PART II - OTHER INFORMATION Item 6. Exhibits (a) Exhibit 27 - 9 - 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: December 12, 1994 STANLEY GREENMAN Stanley Greenman, Chairman of the Board, Chief Executive Officer, Director Date: December 12, 1994 WILLIAM A. JOHNSON, JR. William A. Johnson Jr., Vice President, Chief Financial Officer and Secretary - 10 - EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR. 10-Q
5 1,000 9-MOS JAN-29-1994 JAN-30-1994 OCT-29-1994 5,620 0 20,641 1,170 36,751 68,130 17,767 8,098 78,026 36,799 591 619 0 0 39,727 78,026 92,771 92,771 71,007 71,007 28,040 296 56 (6,329) (2,532) (3,797) 0 0 0 (3,797) (.73) (.73)
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