-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Duut1GUdGV9yFpu7Ks1/R1twb4LCJ9DTd/P4pkiD0dZyIj6MJzzdKbAZ+MAZOIiT ExhBmpqurxCoyckIN3x/wA== 0000043837-96-000004.txt : 19961218 0000043837-96-000004.hdr.sgml : 19961218 ACCESSION NUMBER: 0000043837-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961102 FILED AS OF DATE: 19961217 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOODLE KIDOODLE 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: 96681878 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 FORMER COMPANY: FORMER CONFORMED NAME: GREENMAN BROTHERS INC DATE OF NAME CHANGE: 19920703 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 November 2, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period from __________________ to _________________ Commission file number 1-6083 NOODLE KIDOODLE, INC. (Exact name of Registrant as specified in its charter) DELAWARE 11-1771705 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 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 7,579,640 shares outstanding as of December 9, 1996. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Condensed Consolidated Balance Sheets November 2, 1996, October 28, 1995, and February 3, 1996 3 Condensed Consolidated Statements of Operations Thirteen and Thirty-Nine Weeks Ended November 2, 1996 and October 28, 1995 4 Condensed Consolidated Statements of Cash Flows Thirty-Nine Weeks Ended November 2, 1996 and October 28, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION None SIGNATURES 10 NOODLE KIDOODLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
November 2, October 28, February 3, 1996 1995 1996 (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 9,803 $ 6,548 $ 7,272 Merchandise inventories 22,190 12,437 10,328 Prepaid expenses and other current assets 3,758 1,888 3,043 Net assets of discontinued operations - 6,327 3,584 Total current assets 35,751 27,200 24,227 Property, plant and equipment - net 17,758 11,622 12,994 Other assets 81 50 55 Total Assets $53,590 $38,872 $37,276 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $10,135 $ 7,191 $ 5,283 Accrued expenses and taxes 5,065 5,237 4,913 Net liabilities of discontinued operations 3,435 - - Total current liabilities 18,635 12,428 10,196 Commitments and contingencies - - - Stockholders' equity: Preferred stock-authorized 1,000,000, 500,000 and 1,000,000 shares, par value $.001, $1.00 and $.001, respectively, (none issued) - - - Common stock-authorized 15,000,000, 10,000,000 and 15,000,000 shares, par value $.001, $.10 and $.001, issued 8,503,901, 6,292,701 and 6,300,401 shares, respectively 8 629 6 Capital in excess of par value 43,064 26,294 26,955 Retained earnings (4,325) 3,313 3,911 38,747 30,236 30,872 Less treasury stock, at cost, 924,261 shares 3,792 3,792 3,792 Total stockholders' equity 34,955 26,444 27,080 Total Liabilities and Stockholders' Equity $53,590 $38,872 $37,276 See accompanying notes to Condensed Consolidated Financial Statements.
-3- NOODLE KIDOODLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands except per share amounts) UNAUDITED
Thirteen Weeks Ended Thirty-Nine Weeks Ended November 2, October 28, November 2, October 28, 1996 1995 1996 1995 Net sales $11,845 $ 6,288 $30,489 $13,508 Costs and expenses: Cost of product sold including buying and warehousing costs 7,241 4,122 19,253 8,784 Selling and administrative expenses 7,296 4,855 20,127 10,563 Provision for restructured operations - 500 - 500 14,537 9,477 39,380 19,847 Operating loss (2,692) (3,189) (8,891) (6,339) Interest income 233 229 684 501 Interest expense (9) (10) (29) (32) Loss from continuing operations before income taxes (2,468) (2,970) (8,236) (5,870) Income taxes (benefit) - - - - Net loss from continuing operations (2,468) (2,970) (8,236) (5,870) Discontinued operations: Loss from discontinued operations, net of income tax benefit of $-0- and $-0- respectively - - - (1,914) Loss on disposal of discontinued operations including operating loss of $8,907 during the disposal period (including income taxes of $1,602) - - - (7,145) Net loss from discontinued operations - - - (9,059) Net loss $(2,468) $(2,970) $(8,236) $(14,929) Net loss per share: Continuing operations $ (.33) $ (.55) $ (1.10) $ (1.11) Discontinuing operations - - - (1.71) Net loss per share $ (.33) $ (.55) $ (1.10) $ (2.82) Average shares outstanding 7,574 5,356 7,457 5,302 See accompanying notes to Condensed Consolidated Financial Statements
-4- NOODLE KIDODOLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDTED STATEMENTS OF CASH FLOWS UNAUDITED
Thirty-nine Weeks Ended November 2, October 28, 1996 1995 (In thousands) Cash flows from operating activities: Net loss from continuing operations $(8,236) $(5,870) Adjustments to reconcile to net cash provided (used): Depreciation 1,315 648 Restructuring charge non-cash-portion - 500 Decrease (increase) in non-cash working capital accounts: Merchandise inventories (11,862) (8,107) Prepaid expenses, taxes and other current assets (715) 1,092 Trade accounts payable, accrued expenses and other 5,615 4,756 Net cash (used in) continuing operations (13,883) (6,981) Net loss from discontinued operations - (9,059) Adjustments to reconcile to net cash provided (used): Depreciation - 286 Provision for doubtful accounts - 581 Deferred income taxes - 1,602 Decrease (increase) in non-cash working capital accounts and other assets and liabilities 7,019 15,960 Net cash provided by discontinued operations 7,019 9,370 Net cash provided by (used in)operating activities (6,864) 2,389 Cash flows from investing activities: Property additions - continuing operations (6,690) (7,118) Property additions - discontinued operations - (86) Other (26) - Net cash (used in)investing activities (6,716) (7,204) Cash flow from financing activities: Proceeds from public offering 16,009 - Proceeds from exercise of employees stock options 102 503 Reduction in obligations under capital lease - (48) Net cash provided by financing activities 16,111 455 Net increase (decrease) in cash and cash equivalents 2,531 (4,360) Cash and cash equivalents - beginning of year 7,272 10,908 Cash and cash equivalents - end of period $ 9,803 $ 6,548 See accompanying notes to Condensed Consolidated Financial Statements
-5- NOODLE KIDOODLE, 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 and are subject to year-end adjustments. However, in the opinion of management, all known adjustments (which consist primarily of normal recurring accruals) have been made to present fairly the consolidated operating results for the unaudited periods. 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 February 3, 1996. 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 date of three months or less are considered to be cash equivalents. These investments are stated at cost which approximates market. NOTE 3: Income tax provisions are based on estimated annual effective tax rates. The loss from continuing operations for the periods ended November 2, 1996 and October 28, 1995 provided no tax benefit. NOTE 4: On August 30, 1995 the Company adopted a formal plan to discontinue its wholesale business segment The operations and net assets of the wholesale business segment are being accounted for as a discontinued operation, and accordingly, its operating results and net assets are reported in this manner in all periods presented in the accompanying unaudited condensed consolidated financial statements. Revenues from such operations were $8.7 million for the thirteen weeks ended October 28, 1995 and $50.6 million for the corresponding thirty-nine week period. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Thirteen Weeks Ended November 2, 1996 Compared With Thirteen Weeks Ended October 28, 1995 Continuing Operations Net sales increased $5.6 million to $11.9 million in the thirteen week period ended November 2, 1996 from $6.3 million in the comparable period in the prior year, primarily due to the addition of 13 new stores, of which three opened in the fourth quarter of last year and ten opened in the first nine months of the current year. The Company operated 28 Noodle Kidoodle stores and one Playworld store at November 2, 1996 compared to fifteen Noodle Kidoodle stores, two Playworld stores, and two Toy Park stores at October 28, 1995. The Company closed one Playworld store and two Toy Park stores in the first half of the current year. Gross profit (derived from net sales less the cost of product sold, which includes buying and warehousing costs) increased $2.4 million to $4.6 million in the thirteen week period ended November 2, 1996 from $2.2 million in the comparable period in the prior year. Gross profit, as a percentage of net sales ("gross profit percentage"), increased to 38.9% in the third quarter ended November 2, 1996 from 34.4% in the comparable period in the prior year. This improvement was primarily due to the leveraging of buying and warehousing costs and favorable merchandise cost comparisons in the Playworld division. Selling and administrative expenses increased $2.4 million to $7.3 million in the thirteen week period ended November 2, 1996 from $4.9 million in the comparable period in the prior year. These increases resulted from higher direct store expenses of $2.2 million as a result of increases in the store base and from higher home office costs of $.6 million reflecting the infrastructure that has been put into place since the end of the second quarter of last year, offset by lower net advertising expenses. Selling and administrative expenses, as a percent of net sales, decreased to 61.6% in the thirteen week period ended November 2, 1996 from 77.2% in the comparable period in the prior year. The decrease resulted primarily from the leveraging of direct store expenses, home office and advertising expenses over a larger store base in the current quarter. Net loss from continuing operations decreased $.5 million to $2.5 million ($.33 per share) in the period ended November 2, 1996 from $3.0 million ($.55 per share) in the comparable period in the prior year. The prior year's figure includes a provision for restructured operations of $.5 million. There are no tax benefits provided in either period. -7- Thirty-Nine Weeks Ended November 2, 1996 Compared with Thirty-Nine Weeks Ended October 28, 1995 Continuing Operations Net sales increased $17.0 million to $30.5 million in the thirty-nine week period ended November 2, 1996 from $13.5 million in the comparable period in the prior year, primarily due to the addition of 13 new stores, of which three opened in the fourth quarter of last year, and ten opened through November 2, 1996. The Company operated 28 Noodle Kidoodle stores and one Playworld store at November 2, 1996, compared to fifteen Noodle Kidoodle stores, two Playworld stores, and two Toy Park stores at October 28, 1995. The Company closed one Playworld store and two Toy Park stores in the first half of the current fiscal year. Gross profit (derived from net sales less the cost of product sold, which includes buying and warehousing costs) increased $6.5 million to $11.2 million in the thirty-nine week period ended November 2, 1996 from $4.7 million in the comparable period in the prior year. Gross profit as a percent of net sales ("gross profit percentage") increased to 36.9% in the current nine-month period from 35.0% in the comparable period in the prior year, primarily due to the leveraging of buying costs and lower merchandising costs and favorable merchandise cost comparison in the Playworld division. Warehousing costs were flat compared to last year. The Noodle Kidoodle stores were serviced by their own warehouse in the current period, however, the warehouse was shared with the discontinued wholesale business in the comparable period in the prior year. Selling and administrative expenses increased $9.6 million to $20.1 million in the thirty-nine week period ended November 2, 1996 from $10.5 million in the comparable period in the prior year. These increases resulted primarily from higher direct store expenses of $7.1 million due to increases in the store base and from higher home office costs of $2.3 million reflecting the infrastructure that has been put into place since the end of the second quarter of last year. Selling and administrative expenses as a percent of net sales decreased to 66.0% in the thirty-nine week period ended November 2, 1996 from 78.2% in the comparable period in the prior year. The decrease resulted primarily from leveraging of direct store expenses, home office and net advertising expenses over a larger store base and in the current year. Net loss from continuing operations increased $2.4 million to $8.2 million ($1.10 per share) in the nine-month period ended November 2, 1996 from $5.8 million ($1.11 per share) in the comparable period in the prior year. The prior year's figure includes a provision for restructured operations of $.5 million. There are no tax benefits provided in either period. -8- Net loss from discontinued operations was $9.1 million ($1.71 per share) in the thirty-nine week period ended October 28, 1995. The discontinued operations represents the Company's wholesale operation which was closed effective August 30, 1995. Liquidity and Capital Resources During the thirty-nine week period ended November 2, 1996 the Company used $13.9 million of cash flows for operating activities of the continuing operations primarily to fund the net loss of $8.2 million and an increase in working capital requirements of $7.0 million due to increases in the store base and buildup of inventory for the holiday season, partially offset by depreciation of $1.3 million. The discontinued operations generated $7.0 million of cash flows primarily from the sale of the Farmingdale facility. The Company also used cash to fund investing activities of $6.7 million primarily for the purchase of fixed assets for new stores. In February 1996, the Company completed a secondary stock offering of 2.2 million shares of common stock, which provided $16.0 million in cash. As a result of the foregoing, cash and cash equivalents increased during the period by $2.5 million. In February 1996 the Company obtained a line of credit from a bank which is unsecured, provides for maximum borrowing of $10.0 million in short-term loans and letters of credit, and expires on April 30, 1997. The Company has available net operating loss carryforwards of approximately $15.0 million for income tax purposes. Quarterly fluctuation in results and seasonality. The timing of new store openings and related pre-opening expenses and the amount of revenue contributed by new stores have caused, and are expected to cause in the future, the Company's quarterly results of operations to fluctuate. In addition, the Company's operations are highly seasonal, a significant portion of a typical store's revenues is generated during the Company's fourth fiscal quarter, which coincides with the Christmas selling season. The Company does not expect to generate positive operating income during the first three fiscal quarters for the foreseeable future. -9- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOODLE KIDOODLE, INC. (Registrant) Date: December 16, 1996 STANLEY GREENMAN Stanley Greenman, Chairman of the Board, Chief Executive Officer, and Treasurer (Principal Executive Officer) Date: December 16, 1996 KENNETH S. BETUKER Kenneth S. Betuker Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) -10- EX-27 2 ARTICAL 5 FIN. DATA SCHEDULE FOR 3RD. QTR 10Q.
5 1000 9-MOS FEB-01-1997 FEB-04-1996 NOV-02-1996 9,803 0 0 0 22,190 35,751 21,613 3,855 53,590 18,635 0 0 0 8 34,947 53,590 30,489 30,489 19,253 19,253 20,127 0 29 (8,236) 0 (8,236) 0 0 0 (8,236) (1.10) (1.10)
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