-----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, H/d9k99/ppJlK+HjPgkujO+6jVxElfOvEq5hsN/kFUe2akdp0zTAdXGROa+JFqcP QtwPEjwBmscgeunC4/0ZOQ== 0000043837-97-000011.txt : 19971216 0000043837-97-000011.hdr.sgml : 19971216 ACCESSION NUMBER: 0000043837-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971101 FILED AS OF DATE: 19971212 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: SEC FILE NUMBER: 001-06083 FILM NUMBER: 97737327 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 1, 1997 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) 6801 JERICHO TURNPIKE, SYOSSET, NEW YORK 11791 (Address of Principal Executive Office) (Zip Code) Registrant's Telephone Number, Including Area Code (516) 677-0500 105 PRICE PARKWAY, FARMINGDALE, NEW YORK 11735 (Former Address) 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 5, 1997. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Condensed Consolidated Balance Sheets November 1, 1997, November 2, 1996 and February 1, 1997 3 Condensed Consolidated Statements of Operations Thirteen and Thirty-Nine Weeks Ended November 1, 1997 and November 2, 1996 4 Condensed Consolidated Statements of Cash Flows Thirty-Nine Weeks Ended November 1, 1997 and November 2, 1996 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION 10 SIGNATURES 11 NOODLE KIDOODLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED November 1, November 2, February 1, 1997 1996 1997 (In thousands, except share data)
ASSETS Current assets: Cash and cash equivalents $ 259 $ 9,803 $11,333 Merchandise inventories 26,035 22,190 17,318 Prepaid expenses and other current assets 2,754 3,758 2,752 Total current assets 29,048 35,751 31,403 Property, plant and equipment - net 18,881 17,758 19,583 Other assets 89 81 50 Total Assets $48,018 $53,590 $51,036 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 18 $ - $ 18 Trade accounts payable 10,474 10,135 5,049 Accrued expenses and taxes 7,074 5,065 7,092 Net liabilities of discontinued operations 1,135 3,435 2,425 Total current liabilities 18,701 18,635 14,584 Long-term debt 739 - 753 Commitments and contingencies - - - Stockholders' equity: Preferred stock-authorized 1,000,000 shares, par value $.001,(none issued) - - - Common stock-authorized 15,000,000, par value $.001, issued 8,503,901 shares, respectively 9 8 9 Capital in excess of par value 43,063 43,064 43,063 Retained earnings (deficit) (10,702) (4,325) (3,581) 32,370 38,747 39,491 Less treasury stock, at cost, 924,261 shares 3,792 3,792 3,792 Total stockholders' equity 28,578 34,955 35,699 Total Liabilities and Stockholders' Equity $48,018 $53,590 $51,036 See accompanying notes to Condensed Consolidated Financial Statements.
-3- NOODLE KIDOODLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED Thirteen Weeks Ended Thirty-Nine Weeks Ended November 1, November 2, November 1, November 2, 1997 1996 1997 1996 (In thousands, except per share data)
Net sales $15,641 $11,845 $44,830 $30,489 Costs and expenses: Cost of product sold including buying and warehousing costs 9,699 7,241 27,902 19,253 Selling and administrative expenses expenses 8,409 7,296 24,331 20,127 18,108 14,537 52,233 39,380 Operating loss (2,467) (2,692) (7,403) (8,891) Interest income 90 233 350 684 Interest expense (22) (9) (68) (29) Loss before income tax (2,399) (2,468) (7,121) (8,236) Income taxes (benefit) - - - - Net loss $(2,399) $(2,468) $(7,121) $(8,236) Net loss per share $ (.32) $ (.33) $ (.94) $ (1.10) Weighted average shares outstanding 7,580 7,574 7,580 7,457 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 1, November 2, 1997 1996 (In thousands)
Cash flows from operating activities: Net loss from operations $(7,121) $(8,236) Adjustments to reconcile to net cash provided (used): Depreciation 1,847 1,315 Decrease (increase) in non-cash working capital accounts: Merchandise inventories (8,717) (11,862) Prepaid expenses, taxes and other current assets (2) (715) Trade accounts payable, accrued expenses and taxes 5,407 5,615 Net cash (used in) continuing operations (8,586) (13,883) (Decrease)increase in net liabilities of discontinued operations (1,290) 7,019 Net cash provided by (used in) discontinued operations (1,290) 7,019 Net cash (used in)operating activities (9,876) (6,864) Cash flows from investing activities: Property additions (1,206) (6,690) Other 22 (26) Net cash (used in)investing activities (1,184) (6,716) Cash flows from financing activities: Proceeds from public offering - 16,009 Proceeds form exercise of employee stock options - 102 Reduction of long-term debt (14) - Net cash provided by (used in) financing activities (14) 16,111 Net increase (decrease) in cash and cash equivalents (11,074) 2,531 Cash and cash equivalents - beginning of period 11,333 7,272 Cash and cash equivalents - end of period $ 259 $ 9,803 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 1, 1997. 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 for the periods ended November 1, 1997 and November 2, 1996 provided no tax benefit. NOTE 4. Recent Accounting Pronouncements: In February 1997, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 changes the computational guidelines for earnings per share information. The Company will adopt the provisions of SFAS 128 in its January 31, 1998 consolidated financial statements. SFAS 128 will eliminate the presentation of primary earnings per share and replace it with basic earnings per share. Basic earnings per share differs from primary earnings per share because common stock equivalents are not considered in computing basic earnings per share. Fully diluted earnings per share will be replaced with diluted earnings per share. Diluted earnings per share is similar to fully diluted earnings per share, except in determining the number of dilutive -6- shares outstanding for options and warrants, the proceeds that would be received upon the conversion of all dilutive options and warrants are assumed to be used to repurchase the Company's common shares at the average market price of such stock during the period. For fully diluted earnings per share, the higher of the average market price or ending market price is used. The Company expects that the adoption of SFAS 128 will have no material effect upon its reported results. -7- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Thirteen Weeks Ended November 1, 1997 Compared With Thirteen Weeks Ended November 2, 1996 Net sales increased $3.8 million to $15.6 million in the thirteen week period ended November 1, 1997 from $11.8 million in the comparable period in the prior year. Sales from Noodle Kidoodle stores increased $3.8 million to $15.5 million in the third quarter from $11.7 million in the comparable period in the prior year, primarily due to the addition of four new stores of which three opened in the fourth quarter of last year and one opened in the first half of the current year, coupled with an increase in comparable store sales of 8%. Other retail sales remained virtually flat in the thirteen week period ended November 1, 1997 compared to the comparable period in the prior year. The Company closed its last Playworld store on October 31, 1997. The Company operated thirty-two Noodle Kidoodle stores at November 1, 1997 compared to twenty-eight Noodle Kidoodle stores and one Playworld store at November 2, 1996. Gross profit (derived from net sales less the cost of product sold, which includes buying and warehousing costs) increased $1.3 million to $5.9 million in the thirteen week period ended November 1, 1997 from $4.6 million in the comparable period in the prior year. Gross profit, as a percentage of net sales ("gross profit percentage"), decreased to 38.0% in the third quarter ended November 1, 1997 from 38.9% in the comparable period in the prior year. Gross profit percentage at Noodle Kidoodle stores increased to 37.7% in the current quarter from 36.9% in the comparable period in the prior year, primarily due to the leveraging of warehousing costs and lower merchandise costs. Selling and administrative expenses increased $1.1 million to $8.4 million in the thirteen week period ended November 1, 1997 from $7.3 million in the comparable period in the prior year. These increases resulted from higher direct store expenses of $1.5 million as a result of changes in the store base, offset by reductions in home office costs of $.3 million and reduced store pre-opening expenses of $.1 million. Selling and administrative expenses, as a percent of net sales, decreased to 53.8% in the thirteen week period ended November 1, 1997 from 61.6% in the comparable period in the prior year. The decrease resulted primarily from the leveraging of home office and store expenses over a larger sales base. Net loss decreased $.1 million to $2.4 million ($.32 per share) in the period ended November 1, 1997 from $2.5 million ($.33 per share) in the comparable period in the prior year. -8- Thirty-Nine Weeks Ended November 1, 1997 Compared with Thirty-Nine Weeks Ended November 2, 1996 Net sales increased $14.3 million to $44.8 million in the thirty-nine week period ended November 1, 1997 from $30.5 million in the comparable period in the prior year. Sales from Noodle Kidoodle stores increased $15.6 million to $44.6 million in the current nine-month period from $29.0 million in the comparable period in the prior year, primarily due to the addition of four new stores, of which three opened in the fourth quarter of last year, and one opened in the first half of this year, coupled with an increase in comparable store sales of 11%. Other retail sales decreased $1.3 million to $.2 million in the nine-month period ended November 1, 1997 from $1.5 million in the comparable period in the prior year, primarily due to the closing of one Playworld store and two Toy Park stores during the first half of last year. The Company closed its last Playworld store on October 31, 1997. The Company operated thirty-two Noodle Kidoodle stores at November 1, 1997, compared to twenty-eight Noodle Kidoodle stores and one Playworld store at November 2, 1996. Gross profit (derived from net sales less the cost of product sold, which includes buying and warehousing costs) increased $5.7 million to $16.9 million in the thirty-nine week period ended November 1, 1997 from $11.2 million in the comparable period in the prior year. Gross profit as a percent of net sales ("gross profit percentage") increased to 37.8% in the current nine-month period from 36.9% in the comparable period in the prior year. Gross profit percentage at Noodle Kidoodle stores increased to 37.7% for the nine-month period ended November 1, 1997 from 36.3% in the comparable period in the prior year, primarily due to the leveraging of buying and warehousing costs over a larger sales base and lower merchandise costs. Selling and administrative expenses increased $4.2 million to $24.3 million in the thirty-nine week period ended November 1, 1997 from $20.1 million in the comparable period in the prior year. These increases resulted from higher direct store expenses of $4.7 million due to changes in the store base, offset by reduced home office and store pre- opening costs of $.5 million. Selling and administrative expenses as a percent of net sales decreased to 54.3% in the thirty-nine week period ended November 1, 1997 from 66.0% in the comparable period in the prior year. The decrease resulted primarily from leveraging of home office and store expenses over a larger sales base. Net loss decreased $1.1 million to $7.1 million ($.94 per share) in the nine-month period ended November 1, 1997 from $8.2 million ($1.10 per share) in the comparable period in the prior year. -9- Liquidity and Capital Resources During the thirty-nine week period ended November 1, 1997 the Company used $9.9 million of cash in its operating activities, primarily to fund the net loss of $7.1 million, an increase in working capital of $3.3 million, and a reduction in the net liabilities of discontinued operations of $1.3 million, offset by $1.8 million of depreciation charges. The increase in working capital was primarily the result of increased inventory levels for the upcoming holiday selling season. The Company used $1.2 million of cash to fund investing activities, primarily to purchase fixed assets for new and remodeled stores. As a result of the foregoing, cash and cash equivalents decreased during the period by $11.1 million. In June 1997 the Company entered into a $15.0 million, three year revolving credit facility with The CIT Group/Business Credit, Inc. This facility may be used for direct borrowings and letters of credit, and is secured by the Company's inventory. The Company has available net operating loss carryforwards of approximately $20.0 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 revenue 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. Part II - Other Information Item 6. Exhibits and Reports on Form 8-K. (a) None (b) The Company filed a report on Form 8-K on November 21, 1997 which reported the following information under Items 5 and 7 of that form. The Board of Directors of Noodle Kidoodle, Inc. voted unanimously to amend and restate the By-Laws of the Company on November 12, 1997. The actual amended and restated By-Laws should be referred to in order to obtain a complete understanding of the changes. -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. NOODLE KIDOODLE, INC. (Registrant) Date: December 12, 1997 STANLEY GREENMAN /s/Stanley Greenman,Chairman of the Board, Chief Executive Officer, and Treasurer (Principal Executive Officer) Date: December 12, 1997 KENNETH S. BETUKER /s/Kenneth S. Betuker Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) EX-27 2 ARTICAL 5 FIN. DATA SCHEDULE FOR 3RD QTR 10-Q
5 1000 9-MOS JAN-31-1998 FEB-02-1997 NOV-01-1997 259 0 0 0 26,035 29,048 24,786 5,905 48,018 18,701 0 0 0 9 28,569 48,018 44,830 44,830 27,902 27,902 24,331 0 68 (7,121) 0 (7,121) 0 0 0 (7,121) (0.94) (0.94)
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