SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996 Commission File No. 0-27682
GLOBE BUSINESS RESOURCES, INC.
Incorporated under the IRS Employer
laws of Ohio Identification No. 31-1256641
1925 Greenwood Avenue
Cincinnati, OH 45246
Phone: (513) 771-8221
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 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 September 17, 1996, 4,321,509 shares of the Registrant's common
stock, no par value, were outstanding.
GLOBE BUSINESS RESOURCES, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - 3
February 29, 1996 and August 31, 1996
Consolidated Statement of Income - 4
Three Months and Six Months Ended
August 31, 1995 and 1996
Consolidated Statement of Cash Flows - 5
Six months ended August 31, 1995 and 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 6. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 14
PART I - FINANCIAL INFORMATION
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
February 29, August 31,
1996 1996
____________ __________
(Unaudited)
ASSETS:
Cash $ 133 $ 530
Accounts receivable, less allowance for doubtful
accounts of $327 and $472, respectively 3,530 5,312
Prepaid expenses 509 1,327
Rental furniture, net 37,407 46,277
Property and equipment, net 2,675 3,302
Goodwill and other intangibles, less accumulated
amortization of $48 -- 3,460
Other, net 207 242
-------- --------
Total assets $ 44,461 $ 60,450
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 3,473 $ 3,601
Customer deposits 1,189 1,442
Accrued compensation 1,569 847
Accrued taxes 447 1,005
Deferred income taxes 1,793 2,300
Accrued interest payable 120 214
Other accrued expenses 633 468
Debt 10,573 23,581
-------- --------
Total liabilities 19,797 33,458
-------- --------
Common stock and other shareholders' equity:
Common stock, no par, 10,000,000 shares
authorized, 4,254,369 and 4,321,509
shares issued and outstanding 18,549 19,000
Retained earnings 10,199 12,076
Fair market value in excess of historical
cost of acquired net assets attributable
to related party transactions (4,084) (4,084)
-------- --------
Total common stock and other
shareholders' equity 24,664 26,992
-------- --------
Total liabilities and shareholders' equity $ 44,461 $ 60,450
======= =======
The accompanying notes are an integral part of these financial
statements.
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
For the three months For the six months
ended August 31, ended August 31,
1995 1996 1995 1996
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenues:
Rental sales $ 9,491 $ 14,032 $ 18,370 $ 23,462
Retail sales 3,469 3,678 6,852 7,361
-------- -------- -------- --------
12,960 17,710 25,222 30,823
-------- -------- -------- --------
Costs and expenses:
Cost of rental sales 2,082 5,226 4,172 7,693
Cost of retail sales 1,779 2,306 3,634 4,509
Warehouse and delivery 1,724 2,145 3,447 3,930
Occupancy 1,395 1,460 2,841 2,849
Selling and advertising 1,826 2,102 3,627 3,970
General and administration 1,648 2,287 3,203 4,133
-------- -------- -------- --------
10,454 15,526 20,924 27,084
-------- -------- -------- --------
Operating income 2,506 2,184 4,298 3,739
Other (income) expense:
Interest expense 647 383 1,215 607
Other 12 (33) 31 (58)
-------- -------- -------- --------
659 350 1,246 549
Income before income taxes 1,847 1,834 3,052 3,190
Provision for income taxes 740 711 1,223 1,243
-------- -------- -------- --------
Net income 1,107 1,123 1,829 1,947
Preferred stock dividends 132 -- 262 --
-------- -------- -------- --------
Net income applicable to common
stock $ 975 $ 1,123 $ 1,567 $ 1,947
======== ======== ======== ========
Earnings per common share:
Net income $ .38 $ .26 $ .61 $ .45
======= ======= ======= =======
Weighted average number of common
shares outstanding 2,546 4,309 2,552 4,282
The accompanying notes are an integral part of these financial
statements.
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
For the six months ended,
August 31, August 31,
1995 1996
------------ -----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,829 $ 1,947
Adjustments to reconcile net income to
net cash provided by operating activities:
Rental furniture depreciation 2,374 2,917
Other depreciation and amortization 417 485
Provision for losses on accounts receivable (36) 50
Provision for deferred income taxes 5 507
(Gain)/Loss on sales of property and equipment (16) 4
Book value of furniture sales and rental buyouts 4,391 5,811
Changes in assets and liabilities:
Accounts receivable (338) (1,205)
Other assets, net 27 (115)
Prepaid expenses 61 (188)
Accounts payable 407 15
Customer deposits 86 (35)
Accrued compensation (324) (854)
Accrued taxes 393 504
Accrued interest payable (14) 94
Other accrued expenses (5) (133)
-------- --------
Net cash provided by operating activities 9,257 9,804
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to rental furniture (11,203) (15,150)
Purchases of property and equipment (224) (714)
Proceeds from sale of property and equipment 28 --
GranTree Corporation debenture retirement -- (59)
Acquisition of Interim Quarters and Instant Office,
net of cash acquired -- (5,912)
-------- --------
Net cash used in investing activities (11,399) (21,835)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on the revolving credit agreements 29,276 49,023
Repayments on the revolving credit agreements (27,462) (35,853)
Repayments of other debt -- (595)
Principal payments under capital lease obligations (193) (162)
Exercise of common stock options -- 15
-------- --------
Net cash provided by financing activities 1,621 12,428
-------- --------
Net (decrease)increase in cash (521) 397
Cash at beginning of period 732 133
-------- --------
Cash at end of period $ 211 $ 530
======== ========
The accompanying notes are an integral part of these financial
statements.
GLOBE BUSINESS RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- PRESENTATION OF INTERIM INFORMATION
In the opinion of the management of Globe Business Resources, Inc. ("Globe"
or "the Company"), the accompanying unaudited consolidated financial statements
include all adjustments considered necessary to present fairly its financial
position as of August 31, 1996, and the results of its operations for the three
and six months ended August 31, 1995 and 1996 and its cash flows for the six
months ended August 31, 1995 and 1996. Interim results are not necessarily
indicative of results for a full year.
The consolidated financial statements and notes are presented in accordance
with the requirements of Form 10-Q, and do not contain certain information
included in the Company's audited consolidated financial statements and notes
in its Form 10-K for the fiscal year ended February 29, 1996.
NOTE 2 -- ACQUISITIONS
On June 13, 1996, Globe acquired the assets of privately-owned Interim
Quarters, Inc. for $5.7 million in cash, 86,700 shares of Globe common stock
and Globe's assumption of certain liabilities. At the closing, Globe
assumed the liabilities of Interim Quarters (including bonuses payable to
current Interim Quarters employees amounting to 13,300 shares of Globe
common stock), paid $5,700,000 and delivered to the seller 36,700 shares of
Globe's common stock. The other 50,000 shares constitute the remainder of
the purchase price and are expected to be delivered to the seller in the third
quarter, plus or minus an adjustment, which may result from the review by
both parties of the audit of the December 31, 1995 Interim Quarters'
financial statements. Interim Quarters, based in Dallas, Texas, provides
short-term housing to transferring or temporarily assigned corporate
personnel, new hires, trainees and consultants. Interim Quarters has an
inventory of over 800 leased housing units in the Dallas/Ft. Worth
metropolitan area and had annual revenues of approximately $11 million for
the year ended December 31, 1995.
On June 19, 1996, Globe acquired the assets of privately-owned Instant
Office Furniture, Inc. for approximately $0.7 million in cash. Instant
Office Furniture, based in Costa Mesa, California, rents and sells office
furniture to a variety of customers in southern California. Annual revenues
are approximately $1 million.
The purchase price allocation for both Interim Quarters and Instant Office
is as follows:
August 31,
1996
(Unaudited)
(000's)
Cash, receivables and prepaids $1,755
Rental furniture 2,448
Property and equipment 355
Other assets 31
Goodwill and other intangibles 3,508
------
8,097
Liabilities assumed (1,110)
$6,987
The following table sets forth certain income statement data on a
proforma basis, as if Interim Quarters, Inc. and Instant Office Furniture,
Inc. were acquired at the beginning of the periods indicated.
Six Months Ended
August 31,
----------------------
(000's)
1995 1996
---- ----
Total Revenue $31,356 $34,411
Net Income 2,063 2,072
Earnings per common share: Net Income $.69 $.48
Weighted average number of common shares
outstanding 2,602 4,312
NOTE 3 -- SUBSEQUENT EVENT
On October 4, 1996, Globe acquired all furniture rental contracts
and various other assets of privately owned Apartment Furniture Rental, Inc.
("AFR") for approximately $4.2 million in cash and a $300,000 promissory note.
Globe may also purchase affiliated real estate for $300,000 in cash.
AFR, based in Detroit, Michigan, rents and sells residential furniture and has
annual revenues of approximately $5.0 million.
NOTE 4 -- EARNINGS PER SHARE
Earnings per share for the six months ended August 31, 1995 is determined
by dividing net income applicable to common stock by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. Outstanding stock options and a warrant are common stock
equivalents. Earnings per share for the six months ended August 31, 1996 is
determined by dividing net income by the weighted average number of shares of
common stock, as the exercise of outstanding stock options would not cause a
dilutive effect in excess of 3%. Net income applicable to common stock is
net income reduced by preferred stock dividends.
NOTE 5 -- RENTAL FURNITURE
February 29, August 31,
1996 1996
(000's) (Unaudited)
(000's)
Furniture on rental $30,814 $36,583
Furniture on hand 12,811 16,826
------- -------
43,625 53,409
Accumulated depreciation (6,218) (7,132)
------- -------
$37,407 $46,277
======= =======
NOTE 6 -- DEBT
February 29, August 31,
1996 1996
------------ -----------
(000's) (Unaudited)
(000's)
The 1996 Credit Agreement:
The Fifth Third Bank, PNC Bank, and Society
National Bank revolving note, average
interest of 7.4% at August 31, 1996 $ 9,830 $23,000
Capital lease obligations 743 581
------- -------
$10,573 $23,581
======= =======
The funds required for the Interim Quarters and Instant Office acquisitions
(see Note 2) were derived from borrowings under the Company's 1996 Credit
Agreement. At August 31, 1996, the 1996 Credit Agreement provided a total
unused credit facility of approximately $7.0 million.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements beginning on page 3.
GENERAL
Globe operates in the rent-to-rent segment of the furniture rental
industry and rents quality office and residential furniture to a variety of
corporate and individual customers. The Company sells residential and office
furniture that no longer meets its "showroom condition" standards for
rental and offers new furniture for sale through its showrooms and its account
executives.
In addition, the Company's wholly owned subsidiary, Interim Quarters,
Inc., operates the largest corporate housing company in the Dallas/Ft.
Worth metroplex.
The Company's fiscal year ends on February 28/29.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain
income statement data as a percentage of total revenues and certain gross
profit data as a percentage of respective rental sales and retail sales
revenues.
Three Months Ended Six Months Ended
August 31, August 31,
------------------ ----------------
1995 1996 1995 1996
---- ---- ---- ----
Revenues:
Rental sales 73.2% 79.2% 72.8% 76.1%
Retail sales 26.8 20.8 27.2 23.9
----- ----- ----- -----
Total revenues 100.0% 100.0% 100.0% 100.0%
Gross profit:
Rental sales 78.1% 62.8% 77.3% 67.2%
Retail sales 48.7 37.3 47.0 38.7
----- ----- ----- -----
Total gross profit 70.2 57.5 69.1 60.4
Operating expenses 50.9 45.1 52.0 48.3
----- ----- ----- -----
Operating income 19.3 12.4 17.1 12.1
Interest/other 5.1 2.0 4.9 1.8
----- ----- ----- -----
Income before taxes 14.2% 10.4% 12.2% 10.3%
===== ===== ===== =====
Impact of GranTree acquisition
In January 1993, Globe acquired GranTree Corporation ("GranTree") for
$9.3 million. Until November 1995, the Company's reported cost of
revenues was favorably impacted as furniture was sold to retail customers or
bought out by lease customers because of two factors: (i) the adoption
of fresh-start reporting in March 1992, at which time GranTree reduced the
net book value of its rental furniture by approximately $7.1 million, and
(ii) the $3.3 million amount by which the book value of GranTree exceeded the
purchase price paid by the Company (collectively, the "GranTree Gross Profit
Accounting Effects").
The following table sets forth for the periods indicated the dollar
amount of the GranTree Gross Profit Accounting Effects and certain income
statement data as a percentage of total revenues adjusted to exclude the
GranTree Gross Profit Accounting Effects.
Three Months Ended Six Months Ended
August 31, August 31,
1995 1996 1995 1996
------ ------- ------ -----
(dollars in thousands) (dollars in thousands)
GranTree Gross Profit
Accounting Effects $544 $ - $1,078 $ -
Adjusted to exclude the
GranTree Gross Profit
Accounting Effects: As a Percentage of Total Revenues
Total gross profit 66.0% 57.5% 64.8% 60.4%
Operating expenses 50.9 45.1 52.0 48.3
---- ---- ---- ----
Operating income 15.1 12.4 12.8 12.1
Interest/other 5.1 2.0 4.9 1.8
---- ---- ---- ----
Income before income taxes 10.0% 10.4% 7.9% 10.3%
==== ==== ==== ====
Due to the significant impact of the GranTree acquisition and the
related GranTree Gross Profit Accounting Effects on the Company's
operations and financial results, the Company's historical results of
operations for fiscal 1996 and period-to-period comparisons will not be
indicative of future results.
Impact of Interim Quarters acquisition
In June 1996, Globe entered the corporate housing industry with
the acquisition of Interim Quarters, Inc.
Interim Quarters has a lower gross profit margin, as well as lower
expenses as a percentage of sales, than Globe's furniture rental business.
As a result, the Company's gross profit margin and expenses as a percentage of
sales are both lower in the second quarter and first six months of
fiscal 1997 than the corresponding periods of the prior
year. Interim Quarters' operating margin, since the acquisition, is
11.3% compared to an operating margin of 12.3% for Globe's furniture rental
business in the first six months of fiscal 1997.
Globe is planning to become a consolidator in the corporate
housing industry, thereby capitalizing on the desires of many corporations
to have a corporate housing company that can handle a company's needs
nationally.
Oakwood Corporate Housing, the only national corporate housing company,
does approximately $2 million annually in furniture rental with the Company.
The Company believes that Oakwood perceives the Company as a competitor due
to its entrance into the corporate housing business as Oakwood has started to
move its furniture rental business to other vendors.
COMPARISON OF SECOND QUARTER FISCAL 1997 TO SECOND QUARTER FISCAL 1996
Total revenues of $17.7 million increased $4.7 million, or 36.7%, in
the second quarter of fiscal 1997, from $13.0 million in the second
quarter of fiscal 1996, due in part to the acquisition of Interim Quarters.
Excluding the acquisition of Interim Quarters on June 13, 1996, total revenues
increased $1.1 million, or 8.3%, in the second quarter of fiscal 1997
compared to the second quarter of fiscal 1996.
Rental revenues of $14.0 million in the second quarter of fiscal
1997 increased 47.8% from $9.5 million in the second quarter of fiscal
1996. Excluding the Interim Quarters acquisition, rental revenue
increased $0.9 million, or 9.2%, over the same period. The growth in rental
revenues, excluding Interim Quarters, was due to the acquisition of Instant
Office on June 19, 1996, which added 1% to the growth rate, a 3% increase in
the average monthly lease, and a 6% increase in the average number of
leases outstanding during the quarter.
Sales revenues of $3.7 million increased $0.2 million, or 6.0%, in the
second quarter of fiscal 1997 from $3.5 million in the second quarter of fiscal
1996.
Gross profit of $10.2 million in the second quarter of fiscal 1997
increased $1.1 million, or 11.9%, from $9.1 million in the second quarter of
fiscal 1996 and declined as a percentage of revenues to 57.5% from 70.2%
over the same period due primarily to the lower margins associated with the
Interim Quarters corporate housing revenues. Excluding Interim Quarters and
the GranTree Gross Profit Accounting Effects, gross profit margin declined to
64.2% in the second quarter of fiscal 1997 from 66.0% in the second quarter
of fiscal 1996 due primarily to lower margins on retail sales.
Operating expenses of $8.0 million in the second quarter of fiscal 1997
increased 21.2% from $6.6 million in the second quarter of fiscal 1996.
Excluding Interim Quarters, operating expenses increased $0.6 million, or
9.8%, due primarily to higher warehousing costs and higher general and
administrative costs related to Globe becoming a public company in February
1996. As a percentage of total revenues, expenses declined to 45.1% from
50.9% over the same period as a result of the acquisition of Interim Quarters,
which has lower expenses as a percentage of sales than the Company's furniture
rental business.
As a result of the changes in revenues, gross profit and operating expenses
discussed above, operating income decreased 12.8% from $2.5 million, or 19.3%
of revenues in the second quarter of fiscal 1996, to $2.2 million, or 12.4% of
revenues in the second quarter of fiscal 1997. Excluding the GranTree Gross
Profit Accounting Effects, operating income increased 11.3% from $2.0 million
in fiscal 1996, or 15.1% of revenues, to $2.2 million, or 12.4% of revenues, in
fiscal 1997.
Interest/other expense decreased $0.3 million, or 46.9%, from $0.7 million
in the second quarter of fiscal 1996 to $0.4 million in the second quarter of
fiscal 1997 and as a percentage of total revenues decreased from 5.1% to 2.0%
over the same period. The decreased expense for fiscal 1997 was due primarily
to lower interest costs associated with lower average debt balances as a
result of the February 1996 initial public offering.
Income before income taxes of $1.8 million in the second quarter of
fiscal 1997 was flat compared to the second quarter of fiscal 1996.
Excluding the GranTree Gross Profit
Accounting Effects, income before income taxes increased $0.5 million, or
40.8%, from $1.3 million in the second quarter of fiscal 1996 to $1.8 million
in the second quarter of fiscal 1997.
The Company's effective tax rate, which includes federal, state and local
taxes, decreased from 40.0% to 38.8% from the second quarter of fiscal 1996
to the second quarter of fiscal 1997.
COMPARISON OF SIX MONTHS ENDED AUGUST 31, 1996 TO SIX MONTHS ENDED AUGUST
31, 1995
Total revenues of $30.8 million increased $5.6 million, or 22.2%, in
the first six months of fiscal 1997 from $25.2 million in the first six
months of fiscal 1996 due in part to the acquisition of Interim Quarters.
Excluding the acquisition of Interim Quarters, total revenues increased $1.9
million, or 7.6% in the first six months of fiscal 1997 compared to the
first six months of fiscal 1996.
Rental revenues of $23.5 million in the first six months of fiscal 1997
increased $5.1 million, or 27.7%, from $18.4 million in the first six months of
fiscal 1996. Excluding the Interim Quarters acquisition, rental revenue
increased $1.4 million, or 7.7% over the same period. The growth in rental
revenues, excluding Interim Quarters, was due to the acquisition of
Instant Office which added 1% to the growth rate, a 3% increase in the average
monthly lease and a 5% increase in the average number of leases outstanding
during the first six months.
Sales revenues of $7.4 million increased $0.5 million, or 7.4%, in the
first six months of fiscal 1997 from $6.9 million in the first six months of
fiscal 1996.
Gross profit of $18.6 million in the first six months of fiscal
1997 increased $1.2 million, or 6.9%, from $17.4 million in the first six
months of fiscal 1996 and declined as a percentage of revenues to 60.4% from
69.1% over the same period due primarily to the lower margins associated with
the Interim Quarters corporate housing revenues. Excluding Interim Quarters and
the GranTree Gross Profit Accounting Effects, gross profit margin declined
to 64.3% in the first six months of fiscal 1997 from 64.8% in the first six
months of fiscal 1996 due primarily to lower margins on retail sales.
Operating expenses of $14.9 million in the first six months of fiscal
1997 increased 13.4% from $13.1 million in the first six months of fiscal
1996. Excluding Interim Quarters, operating expenses increased $1.0 million,
or 7.7% due primarily to higher warehousing costs and higher general and
administrative costs related to Globe becoming a public company in
February 1996. As a percentage of total revenues, expenses declined to
48.3% from 52.0% over the same period as a result of lower operating expenses
as a percentage of sales at Interim Quarters.
As a result of the changes in revenues, gross profit and operating expenses
discussed above, operating income decreased 13.0% from $4.3 million, or 17.1%
of revenues in the first six months of fiscal 1996 to $3.7 million, or 12.1%
of revenues in the first six months of fiscal 1997. Excluding the GranTree
Gross Profit Accounting Effects, operating income increased 16.1% from $3.2
million, or 12.8% of revenue in fiscal 1996, to $3.7 million, or 12.1% of
revenues in fiscal 1997.
Interest/other expense decreased $0.7 million, or 55.9%, from $1.2
million in the first six months of fiscal 1996 to $0.5 million in the first
six months of fiscal 1997 and as a percentage of total revenues decreased from
4.9% to 1.8% over the same period. The decreased expense for fiscal 1997 was
due primarily to lower interest costs associated with lower average debt
balances as a result of the February 1996 initial public offering.
Income before income taxes of $3.2 million in the first six months of
fiscal 1997 increased 4.5% compared to the first six months of fiscal 1996.
Excluding the GranTree Gross Profit Accounting Effects, income before
income taxes increased $1.2 million, or 61.6%, from $2.0 million in the first
six months of fiscal 1996 to $3.2 million in the first six months of fiscal
1997.
The Company's effective tax rate, which includes federal, state and local
taxes, decreased from 40.1% to 39.0% from the first six months of fiscal 1996
to the first six months of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
In February 1996, the Company raised net proceeds of approximately
$17.4 million in an initial public offering of its common stock. The Company
used those proceeds to pay a portion of the Company's outstanding bank debt
and redeem all outstanding shares of the Company's redeemable preferred stock
plus accrued dividends.
At the completion of the initial public offering, a new $30.0 million
line of credit (the "1996 Credit Agreement") replaced the credit agreement in
place at that time (the "1995 Credit Agreement"). Interest rates for this new
line of credit are based upon a leverage formula, which is currently the
lesser of the prime rate or LIBOR plus 175 basis points. At August 31, 1996,
the new line of credit provided up to $30.0 million, or the maximum available
under borrowing base calculations ($28.1 million at September 17, 1996), of
financing for the Company which will be available for acquisitions and general
corporate purposes. The Company is in the process of negotiating an increase to
the credit line.
In June 1996, Globe used approximately $5.7 million of its line of credit
and issued 50,000 shares of Globe common stock to acquire Interim Quarters,
Inc. An additional 50,000 shares is expected to be delivered to the seller
in the third quarter, plus or minus an adjustment which may result from the
review by both parties of the audit of the December 31, 1995 Interim Quarters
financial statement. In June 1996, Globe used approximately $700,000 of its
line of credit to acquire Instant Office Furniture, Inc. (see note 2 to
the consolidated financial statements).
The Company's principal use of cash for operations is for furniture
purchases. The Company purchases furniture to replace furniture which has
been sold and to maintain adequate levels of rental furniture to meet
existing and new customer needs. Furniture purchases were $11.2 million
in the first six months of fiscal 1996 and $15.2 million in the first six
months of fiscal 1997, with such purchases funding increased furniture on
rental balances, as well as increased furniture on hand balances in the first
six months of fiscal 1997. The Company's furniture purchases typically are
seasonally weighted to the first half of the year. Furniture purchases are
expected to decrease during the second half of fiscal 1997.
Capital expenditures were $0.2 million and $0.7 million in the first six
months of fiscal 1996 and 1997, respectively. Acquisitions of property and
equipment financed through capital leases, and not reflected in the preceding
capital expenditure data, were $0.3 million and $0.0 over the same periods.
In the first six months of fiscal 1996 and 1997, net cash provided
by operations was $9.3 million and $9.8 million, respectively, generating
$2.1 and$12.0 million, respectively, less cash than was necessary to fund
investing activities. The 1995 Credit Agreement and the 1996 Credit Agreement
provided sufficient financing for the Company's cash requirements in the first
six months of fiscal 1996 and 1997, respectively. The Company expects
cash flow from operations to be sufficient to fund all of the Company's
needs, other than acquisitions, during the balance of fiscal 1997.
PART II
ITEM 1
LEGAL PROCEEDINGS
None
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on July 9, 1996. Each
of the following matters was voted upon and approved by the Company's
shareholders as indicated below:
1. Establishment of the number of directors to be elected at five,
3,896,119 votes for, 6,300 votes against, 3,600 abstentions.
2. Elected the following directors:
a. David D. Hoguet, 3,895,154 votes for and 0 abstentions
b. Blair D. Neller, 3,895,154 votes for and 0 abstentions
c. Alvin Z. Meisel, 3,895,454 votes for and 0 abstentions
d. William R. Griffin, 3,895,454 votes for and 0 abstentions
e. Thomas C. Parise, 3,895,454 votes for and 0 abstentions.
3. Ratified the appointment of Price Waterhouse LLP as independent
public accountants for fiscal 1997, 3,895,019 votes for,
7,100 votes against, 3,900 abstentions.
ITEM 6
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits: 27 Financial data schedule
(b) Reports on Form 8-K filed during the second quarter of 1996:
Form 8-K filed July 8, 1996 for the Interim Quarters acquisition.
Form 8-KA filed August 27, 1996 including the following financial information
for the Interim Quarters acquisition:
Financial statements
1. Financial statements of Interim Quarters, Inc., as of December 31, 1995
(audited).
2. Financial statements of Interim Quarters, Inc., as of May 31, 1996
(unaudited).
Proforma financial information
1. Globe Business Resources, Inc. consolidated balance sheet as of May 31,
1996 (unaudited).
2. Globe Business Resources, Inc. consolidated statement of income for the
year ended February 29, 1996 (unaudited).
3. Globe Business Resources, Inc. consolidated statement of income for the
three month period ended May 31, 1996 (unaudited).
Amendment No.1 to Form 8-KA filed September 12, 1996, including amendments to
note C in the notes to the proforma financial statements.
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.
Globe Business Resources, Inc.
By: Sharon G. Kebe
--------------------------------
Sharon G. Kebe
Senior Vice President-Finance
and Treasurer
(Principal Financial Officer)
Signed: October 10, 1996