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 April 1, 1995
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 Number 0-24868
E&B MARINE INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2430891
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 Meadow Road
Edison, New Jersey 08818
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 819-7400
Indicate by a 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 period as 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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class 3,743,381
Common Stock, $.001 par value Shares outstanding at
May 8, 1995
E & B MARINE INC. AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information
Consolidated Balance Sheets -
April 1, 1995 and December 31, 1994 3
Consolidated Statements of Operations -
Three Months ended April 1, 1995
and March 26, 1994 4
Consolidated Statements of Cash Flows -
Three Months ended April 1, 1995
and March 26, 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results
of Operations 7-8
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
E&B MARINE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995 AND DECEMBER 31, 1994
UNAUDITED
Dollars in Thousands 1995 1994
ASSETS
Currents Assets:
Cash and cash equivalents $ 880 $ 719
Accounts receivable 983 501
Inventory 29,083 19,987
Prepaid expenses 764 802
Other current assets 3,488 2,690
------ ------
Total current assets 35,198 24,699
Property, plant and equipment, net 4,731 4,569
Excess of cost over fair value of
assets acquired, net of
amortization 2,094 2,112
Other assets 2,582 2,613
------- -------
TOTAL ASSETS $44,605 $33,993
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Revolving line of credit $ 1,827
Current maturities of long-term debt 1,286 $ 1,282
Accounts payable 14,625 6,370
Accrued expenses 4,486 4,000
------ ------
Total current liabilities 22,224 11,652
Revolving line of credit 10,845 9,427
Long-term debt, less current
maturities 2,213 2,536
Shareholders' Equity:
Common Stock 4 4
Additional paid-in capital 21,053 21,002
Accumulated deficit (9,628) (8,500)
Less:
Treasury stock-at cost (2,084) (2,084)
Value assigned to unearned
compensation (22) (44)
------- -------
Total Shareholders' Equity 9,323 10,378
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY $45,605 $33,993
======= =======
See accompanying notes to consolidated financial statements.
-3-
E&B MARINE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERS ENDED APRIL 1, 1995 AND MARCH 26, 1994
UNAUDITED
Dollars in Thousands,
except per share amounts 1995 1994
Net sales $19,131 $16,148
Cost of goods sold excluding amortization
and depreciation 14,935 12,648
------- -------
Gross profit 4,196 3,500
Selling, general and administrative expenses 5,390 4,669
Depreciation and amortization 285 291
------- -------
Income (Loss) from operations before interest
and income taxes (1,479) (1,460)
Net interest expense (400) (330)
------- -------
Income (Loss) before income taxes (1,879) (1,790)
Income tax benefit 751
------- -------
Net loss $(1,128) $(1,790)
======= =======
Per share amounts:
Net Loss $(0.30) $(0.49)
======= =======
Weighted average number of shares
outstanding 3,708,000 3,688,000
See accompanying notes to consolidated financial statements.
-4-
E&B MARINE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED APRIL 1, 1995 AND MARCH 26, 1994
UNAUDITED
Dollars in Thousands 1995 1994
Cash flows from operating activities:
Net Loss $(1,128) $(1,790)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 285 290
Earned compensation related to ESOP 22 22
Change in assets and liabilities net of
non-cash transactions:
(Increase) in accounts receivable (482) (325)
(Increase) in inventory (9,096) (7,972)
(Increase) in other current assets (798) (49)
(Increase) decrease in prepaid expens e 38 (286)
Decrease in other assets 23 2
Increase in accounts payable 8,255 9,997
Increase (decrease) in accrued expenses 486 (85)
------- -------
Net cash used in operating activities (2,395) (196)
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (421) (613)
------- -------
Net cash used in investing activities (421) (613)
------- -------
Cash flows from financing activities:
Borrowings under debt agreement 3,245 5,900
Payments of debt (319) (4,900)
Proceeds from issuance of stock (net) 51 16
------- -------
Net cash provided by financing activities 2,977 1,016
------- -------
Net change in cash 161 207
Cash and cash equivalents at beginning of year 719 395
------- -------
Cash and cash equivalents at end of quarter $ 880 $602
======= =======
See accompanying notes to consolidated financial statements.
-5-
E & B MARINE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1: Basis of Presentation
The financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the
interim periods.
The results of operations for the three-month period ended April 1,
1995 are not necessarily indicative of the results to be expected
for the full year.
2: Inventories
Inventory has been calculated using the cost complement obtained
from the inventory tracking system which is applied on an
individual store basis. Additionally, gross profit margin is
reduced by an estimated percentage of sales for shrinkage.
3: Loss per Common Share
The loss per Common Share for 1995 and 1994 respectively, is based
on the weighted average number of Common Shares outstanding during
the quarter. Common stock equivalents are not considered in the
computation, as their inclusion (utilizing the modified treasury
stock method), would be anti-dilutive on the per share amounts.
-6-
E & B MARINE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)
RESULTS OF OPERATIONS
Consolidated net sales for the three-month period ended April 1,
1995 were $19,131, an increase of $2,983 or 18.5 percent from sales
of $16,148 for the three-month period ended March 26, 1994.
Retail store net sales were $15,925 for the three-month period
ended April 1, 1995, an increase of 20.4 percent from net sales of
$13,228 in 1994. Sales in stores opened during comparable periods
in 1995 and 1994 increased $1,460 or 11.0 percent.
The increase in sales in the retail stores is principally
attributable to the seven retail stores opened after the first
quarter of 1994 and a later ending of the first fiscal quarter of
1995 due to the Company's 52-53 week fiscal year. Comparable retail
store sales for the first quarter of 1995 would have increased 1.6
percent over the first quarter of 1994 had fiscal 1994 been a 52 week
year.
Mail-order net sales were $3,206 for the three-month period ended
April 1, 1995, an increase of $286 or 9.8 percent compared to net
sales of $2,920 for the three-month period ended March 26, 1994.
The increase in mail-order sales can be principally attributable to
a later ending of the first fiscal quarter of 1995 due to the
Company's 52-53 week fiscal year and milder weather conditions in
1995.
The Company's gross profit margin in 1995 of 21.9 percent is
comparable to the gross profit margin of 21.7 percent in 1994.
Selling, general and administrative expenses increased $721 or 15.4
percent from the previous year. As a percentage of sales, selling,
general and administrative expenses decreased from 28.9 percent in
1994 to 28.2 percent in 1995. During the first quarter of 1995,
the Company incurred additional expenses relating to the new retail
stores and improvements to the 1995 master catalog.
Net interest expense increased to $400 in 1995 from $330 in 1994.
The Company incurred an increased level of borrowings and rate of
interest in the first quarter of 1995. See "Liquidity and Capital
Resources" below for further discussion.
The Company recorded an income tax benefit of $751 for the three
months ended April 1, 1995 which represents the tax benefit of
losses which the Company believes will more likely than not be
recognized.
The loss for the three-months ended April 1, 1995 was $1,128
compared to the loss at March 26, 1994 of $1,790.
-7-
E & B MARINE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at April 1, 1995 and December 31,
1994 was $12,974 and $13,047, respectively. The decrease in
working capital was mainly attributable to increased borrowings
under the revolving line of credit and increased accounts payable
to finance increased inventory levels. The Company increased its
inventory to prepare for its peak selling season, to increase its
product assortment and to accommodate store openings.
The Company believes that its working capital and its credit
facility will be adequate to meet identifiable working capital
requirements in the foreseeable future. Total weighted average
borrowings were $16,395 and $14,360 in 1995 and 1994, respectively
and the weighted average interest rate was 9.8 percent and 8.2
percent in the first quarters of 1995 and 1994, respectively.
Cash flow from operations, combined with its available line of
credit of $15,000, is expected to provide the necessary funds for
planned capital expenditures during 1995 and 1996. These
expenditures are estimated to total approximately $3,000 in 1995
and primarily constitute expenditures for store expansion,
relocations and remodelings.
-8-
E&B MARINE INC. AND SUBSIDIARIES
Part II - Other Information
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended April 1, 1995.
-9-
E&B MARINE INC. AND SUBSIDIARIES
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.
May 12, 1995 E&B MARINE INC.
By Kenneth G. Peskin
Kenneth G. Peskin
Chairman and
Chief Executive Officer
By Walfrido A. Martinez
Walfrido A. Martinez
Senior Vice President,
Chief Financial Officer