-----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, DWutrVaYKAJeYcfQOI8yASoFRXKOd6jcJsebuQRfJFukV7IjxwiqrjXuRPuuNWek Qhblr1+l/rttJyveT1WJcw== /in/edgar/work/20000807/0000912953-00-000012/0000912953-00-000012.txt : 20000921 0000912953-00-000012.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912953-00-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000624 FILED AS OF DATE: 20000807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REAL GOODS TRADING CORP CENTRAL INDEX KEY: 0000912953 STANDARD INDUSTRIAL CLASSIFICATION: [5961 ] IRS NUMBER: 680227324 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-12964 FILM NUMBER: 687070 BUSINESS ADDRESS: STREET 1: 3440 AIRWAY DRIVE STREET 2: SUITE E CITY: SANTA ROSA STATE: CA ZIP: 95403 BUSINESS PHONE: 7075422600 MAIL ADDRESS: STREET 1: 3440 AIRWAY DRIVE STREET 2: SUITE E CITY: SANTA ROSA STATE: CA ZIP: 95403 10QSB 1 0001.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 24, 2000 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-22524 REAL GOODS TRADING CORPORATION (Exact name of small business issuer as specified in its charter) California 68-0227324 (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 3440 Airway Drive, Santa Rosa, California 95403 (Address of principal executive offices) (ZipCode) Issuer's telephone number, including area code: (707) 542-2600 Former name, former address and former fiscal year, if changed since last report. Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of July 24, 2000, there were issued and outstanding 4,814,242 shares of common stock of the issuer. REAL GOODS TRADING CORPORATION INDEX Page Form 10-QSB Cover Page 1 Index 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Condensed Balance Sheets at June 24, 2000 and March 31, 2000 3 Condensed Statements of Operations for the three-month periods ended June 24, 2000 and June 26, 1999 4 Condensed Statements of Cash Flows for the three month periods ended June 24, 2000 and June 26, 1999 5 Notes to Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings. 10 Item 2. Changes in Securities. Item 3. Defaults Upon Senior Securities. Item 4. Submission of Matters to a Vote of Security-Holders. Item 5. Other Information. Item 6. Exhibits and Reports on Form 8-K. Signatures 10 PART I FINANCIAL INFORMATION Item 1. Financial Statements REAL GOODS TRADING CORPORATION CONDENSED BALANCE SHEETS (Unaudited) (In thousands except share data)
June 24, March 31, 2000 2000 ASSETS Current Assets Cash $ 805 $ 876 Marketable securities 575 1,568 Accounts receivable, net of allowance of $6 159 152 Inventories, net 2,910 3,165 Deferred catalog costs, net 369 381 Prepaid expenses 121 150 Deferred taxes 34 34 Total current assets 4,973 6,326 Property, equipment and improvements, net 4,213 3,924 Property held for sale 78 78 Internet project 116 139 Note receivable - affiliate, net of allowance of $259 56 60 Other assets 253 253 Deferred income taxes 837 664 Total Assets $ 10,526 $ 11,444 LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities Accounts payable $ 1,008 $ 1,374 Accrued expenses 404 309 Deposits 50 55 Current maturities of long-term debt 17 17 Other taxes payable 46 39 Total current liabilities 1,525 1,794 Long-term debt 530 534 Total Liabilities 2,055 2,328 Shareowners' Equity Preferred stock, without par value; Authorized 1,000,000 shares; None issued or outstanding - - Common stock, without par value: Authorized 10,000,000 shares;Issued and outstanding 4,822,642 shares and 4,881,742, respectively 10,646 10,771 Accumulated deficit (2,175) (1,655) Total shareowners' equity 8,471 9,116 Total Liabilities and Shareowners' Equity $ 10,526 $ 11,444
See notes to condensed financial statements REAL GOODS TRADING CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except share and per share data)
Three Months Ended June 24, June 26, 2000 1999 Net sales $ 3,202 $ 4,117 Cost of sales 1,977 2,472 Gross Profit 1,225 1,645 Selling, general and administrative expenses 1,933 1,866 Loss from operations (708) (221) Interest and other income and expense, net 15 5 Loss before income taxes (693) (216) Income tax benefit 173 76 Net loss $ (520) $ (140) Net loss per share, basic $ (0.11) $ (0.03) Weighted average shares outstanding, basic 4,876,870 4,080,742
See notes to condensed financial statements REAL GOODS TRADING CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended June 24, June 26, 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (520) $ (140) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 158 97 Deferred income taxes (173) (75) Changes in assets and liabilities: Accounts receivable (7) 253 Interest receivable from affiliate (5) Note receivable - 20 Inventory 255 (410) Deferred catalog costs 12 13 Prepaid expenses 29 116 Accounts payable (366) (168) Accrued expenses 95 (193) Other taxes payable 11 (15) Customer deposits (5) (49) Net cash from operating activities (511) (1,062) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment, improvements, and construction in progress (424) (107) Marketable securities 993 - Note receivable from affiliate - (45) Net cash from investing activities 569 (152) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt (4) (5) Repurchase of common stock (125) - Net cash from financing activities (129) (5) Net decrease in cash (71) (1,219) Cash at beginning of period 876 2,048 Cash at end of period $ 805 $ 829
See notes to condensed financial statements REAL GOODS TRADING CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTH PERIOD ENDED JUNE 24, 2000 NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared from the records of the Company and, in the opinion of management, include all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at June 24, 2000 and the interim results of operations and cash flows for the three months ended June 24, 2000 and June 26, 1999. Certain reclassifications have been made to the prior year amounts to conform to the June 2000 presentation. The balance sheet as of March 31, 2000 was derived from the Company's audited financial statements included in the Company's Annual Report on Form 10-KSB for the year ended March 31, 2000. Accounting policies followed by the Company are described in Note 1 to the audited financial statements for the fiscal year ended March 31, 2000 included in the Company's fiscal 2000 Annual Report to Shareowners. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted for purposes of the condensed financial statements. The condensed financial statements should be read in conjunction with the audited financial statements, including notes thereto, for the year ended March 31, 2000. The results of operations for the three month period herein presented are not necessarily indicative of the results to be expected for the full year. NOTE 2 - PRESENTATION OF SHIPPING AND HANDLING FEES Included in net sales and cost of sales for the three month periods ended June 24, 2000 and June 26, 1999 are shipping and handling fees collected from customers of $212,000 and $277,000 and freight out expense of $198,000 and $248,000, respectively. NOTE 3 - LINE OF CREDIT The Company has a line of credit agreement for $1,500,000 with National Bank of the Redwoods (the "Bank"), which expires on February 28, 2001. Borrowings bear interest at 1.5% over the prime rate, payable monthly. At June 24, 2000 no amounts were outstanding on the Company's line of credit. The line of credit agreement contains restrictive covenants including debt to net worth, current ratios, restrictions on capital expenditures, a limitation on the maximum allowable loss through September 2000, and prohibitions on payment of cash dividends without the Bank's approval. The line is collateralized by substantially all of the Company's assets, including inventory, accounts receivable and mailing lists as well as a key person life insurance policy on the life of the Company's Chairman and largest shareowner. NOTE 4 - SHAREOWNERS' EQUITY In two separate resolutions in August 1998 and April 2000, the Board of Directors authorized the Company to purchase up to a total of $200,000 of common stock in open market and private transactions. During the first quarter of fiscal 2001 the Company repurchased 59,100 shares at an average cost of $2.11 per share. NOTE 5 - SEGMENT INFORMATION The Company has four divisions (Catalog, Internet, Retail and Renewables), all of which sell products purchased from other suppliers directly to customers. The customer bases of all four divisions overlap to some extent, and the purchases and delivery processes to customers overlap as well. Each of the four divisions qualifies as a reportable segment because each is more than 10% of the combined revenue of all operating segments. Financial information for the Company's business segments was as follows:
Three Months Ended June 24, June 26, 2000 1999 Net Sales: Catalog Division $ 1,286 $ 2,077 Internet Division 380 235 Retail Division 898 790 Renewables Division 571 1,015 Other 67 -0- Consolidated Net Sales 3,202 4,117 Gross Margin: Catalog Division 552 929 Internet Division 155 104 Retail Division 348 302 Renewables Division 143 310 Other 27 -0- Consolidated Gross Margin 1,225 1,645 Reconciliation of Gross Margin to Net Loss: Selling, general & administrative expenses Catalog Division 766 957 Internet Division 232 71 Retail Division 652 442 Renewables Division 242 389 Other 41 7 Consolidated S G & A expenses 1,933 1,866 Interest income 27 17 Interest expense (12) (12) Income tax benefit 173 76 Net Loss $ (520) $ (140)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales Net sales of $3,202,000 for the first quarter of fiscal 2001 were down 22% from the first quarter of fiscal 2000 (net sales of $4,117,000) due to weaker sales of catalog and renewable energy products due primarily to the sales malaise occuring after Y2K fears failed to materialize on January 1, 2000. Catalog division net sales in the first quarter of fiscal 2001 decreased by 38% to $1,286,000 from $2,077,000 in the first quarter of fiscal year 2000 as a result of the Y2K sales malaise mentioned above,weaker response rates to the Company's catalogs, lower average orders and "cannibalization" by Internet division sales. Catalog division sales, were 40% of total net sales as compared to 50% in the first quarter of fiscal 2000. Internet division net sales increased 62% to $380,000 from $235,000 in the first quarter last year, reflecting improvements in the website and the addition of new site partners. To some extent these increases were at the expense of the catalog division as traditional catalog customers chose to order through the Internet channel. Internet division sales amounted to 12% of total net sales in the first quarter of fiscal 2001 compared with 6% of total net sales in the same period last year. Retail store division net sales increased 14% to $898,000 from $790,000 in the first quarter last year primarily due to the addition of the Los Gatos and West Los Angeles stores. Sales included in fiscal 2000 attributable to the new stores total $189,000. Same store sales dropped 8% from $790,000 in fiscal 2000 to $709,000 in fiscal 2001 reflecting a weaker interest in renewable energy products on the part of the consumers due to the post Y2K sales malaise. Also, Solfest, a big source of retail sales at the Hopland store was postponed this year until August. Retail division sales amounted to 28% of total net sales in the first quarter of fiscal 2001 compared with 19% of total net sales in the same period last year. Renewable energy sales decreased 44% to $571,00 in the first quarter of fiscal 2001 from $1,015,000 in the same period in fiscal 2000. Fiscal 2000 revenues included a one-time $182,000 sale of a solar system to a winery in Northern California. The renewable energy industry as a whole has experienced a marked drop in consumer interest following Y2K. Renewable energy sales amounted to 18% of total net sales in the first quarter of fiscal 2001 compared with 25% of the total in the same period last year. The California Energy Commission program, begun in March 1999 as an incentive to install renewable energy systems where customers can buy solar systems for up to 50% off retail price, is mandated by the California legislature to continue for a minimum of four years from inception. The Company's Renewable Energy Division aggressively markets the CEC program. Gross Profit Gross profit for the three months ended June 26, 2000 was $1,225,000 or 38% of sales compared with $1,645,000 or 40% for the same period last year. Overall margins declined with the relatively lower proportion of catalog sales, which historically produce the Company's highest gross profit as a percentage of sales, and a higher proportion of lower margin renewable energy sales in the first quarter of fiscal year 2001 compared with the first quarter of the prior year. The decline in margin also reflects aggressive sale pricing on Y2K product overstocks in the quarter which succeeded in reducing inventory by over $250,000. Catalog sales had a gross profit of 43% or $552,000 for the first quarter of fiscal 2001 compared with 45% or $929,000 in fiscal 2000 due to the Company's decision to aggressively price Y2K product overstocks in catalog mailings and sales fliers to reduce inventory. Retail stores division gross profit for the first quarter of fiscal 2000 was 39% or $348,000 and was up slightly from the 38% margin level or $302,000 of the same period in fiscal 2000. This slight increase reflects a lower percentage of renewable energy product sales in the sales mix. Renewable energy division sales, including design and consulting fees for solar, wind and hydro projects, had a gross margin of 25% or $143,000 compared to a gross margin of 31% or $310,000 in the same period of the prior fiscal year. The drop in percentage in fiscal 2001 results from a one-time large sale completed at less than a 20% margin. Renewable energy sales typically have lower gross margins which tend to reduce the Company's overall average gross margin. Operating Expenses and Interest Income Selling, general and administrative expenses were $1,933,000, or 60% of net sales compared with $1,866,000 or 45% of net sales in the first three months of the prior year. This increase in percentage reflects the drop in sales and decreases in the areas of labor and benefits, postage and freight, equipment expense, utilities, training, recruitment, and general administrative expense. Decreases in these areas were offset by increases in catalog and printing, advertising, supplies, depreciation, rents, and purchased services. In the first quarter of fiscal 2001, the Company had net interest income of $15,000 compared with net interest income of $5,000 in the first quarter of fiscal 2000. Earnings For the first three months of fiscal 2001, the Company incurred a pre-tax loss of $693,000 and a net loss of $520,000, or $.11 per share compared to a pre-tax loss in the first quarter of fiscal 2000 of $216,000, and a net loss of $140,000 or $.03 per share. Weak sales due to post Y2K malaise and lower margins due to sale prices reducing inventory levels were the primary reasons for these increased losses. The pre-tax loss of $693,000 is slightly better than was budgeted. The Company's first fiscal quarter, which ends at the end of June, is historically a weak quarter and has never been profitable. The Company typically experiences seasonality with sales and earnings building toward the third quarter (the holiday season) which is historically the Company's strongest and most profitable quarter. Income Tax Benefit The income tax benefit used by the Company was 25% in the first quarter of fiscal 2001 compared with 35% in the first quarter of fiscal 2000. These rates represent the projected rates expected by management for each fiscal year. Liquidity and Capital Resources For the quarter ended June 24, 2000, cash used in operations was $511,000 primarily due to reductions in accounts payable. Overall, the Company generated $569,000 from net investing activities and used $129,000 in its financing activities. The net effect of these activities was to decrease cash from $876,000 at March 31, 2000 to $805,000 at June 24, 2000. Management believes that cash flow from operations together with bank debt financing and existing cash reserves will be sufficient to fund the Company's operations through fiscal 2001. The bank line of credit financing, which is presently not being used by the Company, is subject to the Company's ability to limit its pre-tax loss for the period ended September 23, 2000. There can be no assurance that the Company will be able to so limit its pre-tax loss. If the Company cannot retain its bank financing, its ability to conduct its business in the ordinary course could be materially and adversely affected. Effects of Inflation The overall effects of inflation on the Company's business during the periods discussed were not material. ***** PART II OTHER INFORMATION Item 1. Legal Proceedings. No Applicable. Item 2. Changes in Securities. Not Applicable. Item 3. Defaults Upon Senior Securities. Not Applicable. Item 4. Submission of Matters to a Vote of Security-Holders. Not Applicable Item 5. Other Information. Not Applicable Item 6. Exhibits and Reports on Form 8-K. SIGNATURES In accordance with the requirements of the Securities Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REAL GOODS TRADING CORPORATION (Registrant) DATED: August 4, 2000 by:[S]LESLIE B. SEELY Leslie B. Seely Chief Financial Officer EX-27 2 0002.txt
5 3-MOS MAR-31-2001 JUN-24-2000 805 575 165 6 2910 4973 5811 1598 10526 1525 0 0 0 10646 (2175) 10526 3202 3202 1977 1977 1933 0 (15) (693) (173) (520) 0 0 0 (520) (.11) (.11)
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