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 May 31, 1998 Commission File No. 0-27682
Globe Business Resources, Inc.
Incorporated under the IRS Employer
laws of Ohio Identification No. 31-1256641
11260 Chester Road
Suite 400
Cincinnati, OH 45246
Phone: (513) 771-8287
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 July 3, 1998, 4,555,707 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
May 31, 1998 and February 28, 1998
Consolidated Statement of Income - 4
Three months ended May 31, 1998 and 1997
Consolidated Statement of Cash Flows - 5
Three months ended May 31, 1998 and 1997
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II. Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 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)
May 31, February 28,
1998 1998
--------- ------------
(Unaudited)
ASSETS:
Cash $ 363 $ 526
Trade accounts receivable, less allowance
for doubtful accounts of $623
and $609, respectively 9,710 8,252
Other receivables 569 131
Prepaid expenses 2,876 2,038
Rental furniture, net 53,614 53,220
Property and equipment, net 8,040 7,743
Goodwill and other intangibles, net 30,613 26,695
Note receivable from officer 100 100
Other, net 971 732
--------- ---------
Total assets $ 106,856 $ 99,437
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 5,054 $ 3,561
Customer deposits 2,202 2,027
Accrued compensation 2,140 2,061
Accrued taxes 938 325
Deferred income taxes 4,123 4,183
Accrued interest payable 878 1,121
Other accrued expenses 1,533 1,025
Debt 53,533 49,713
--------- ---------
Total liabilities 70,401 64,016
--------- ---------
Common stock and other shareholders' equity:
Common stock, no par, 15,000,000 shares
authorized, 4,555,142, and 4,548,399
shares issued and outstanding 21,496 21,492
Retained earnings 19,043 18,013
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 36,455 35,421
--------- ---------
Total liabilities and shareholders' equity $ 106,856 $ 99,437
========= =========
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 ended,
---------------------------
May 31, May 31,
1998 1997
---------------------------
(Unaudited)
Revenues:
Corporate housing sales $ 16,858 $ 7,074
Rental sales 11,355 11,318
Retail sales 4,669 3,800
-------- --------
32,882 22,192
-------- --------
Cost of revenues:
Cost of corporate housing sales 11,982 4,832
Cost of rental sales 798 1,000
Cost of retail sales 2,834 2,415
Furniture depreciation and disposals 2,349 2,170
-------- --------
17,963 10,417
-------- --------
Gross profit 14,919 11,775
Operating expenses:
Warehouse and delivery 2,576 2,290
Occupancy 1,854 1,667
Selling and advertising 2,634 2,311
General and administration 4,670 2,793
Amortization of intangible assets 427 161
-------- --------
12,161 9,222
-------- --------
Operating income 2,758 2,553
Other expenses:
Interest expense 964 601
Other, net 31 46
-------- --------
995 647
Income before income taxes 1,763 1,906
Provision for income taxes 688 744
-------- --------
Net income $ 1,075 $ 1,162
======== ========
Earnings per common share:
Basic $ 0.24 $ 0.26
======== ========
Diluted $ 0.23 $ 0.26
======== ========
Weighted average number of
common shares outstanding:
Basic 4,550 4,441
Diluted 4,679 4,496
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 three
months ended,
----------------------
May 31, May 31,
1998 1997
---------- ---------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,075 $ 1,162
Adjustments to reconcile net income to
net cash provided by operating activities:
Rental furniture depreciation 1,902 1,729
Other depreciation and amortization 934 434
Provision for losses on accounts receivable 154 100
Provision for deferred income taxes (60) 52
(Gain)/loss on sale of property and equipment (5) --
Book value of furniture sales and rental buyouts 3,748 3,192
Changes in assets and liabilities:
Accounts receivable (2,064) (579)
Note receivable -- --
Other assets, net (239) 3
Prepaid expenses (838) (13)
Accounts payable 1,493 218
Customer deposits 117 223
Accrued compensation (17) (274)
Accrued taxes 613 694
Accrued interest payable (243) 6
Other accrued expenses 326 118
-------- --------
Net cash provided by operating activities 6,896 7,065
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to rental furniture (5,234) (6,349)
Purchases of property and equipment (805) (1,577)
Proceeds from disposition of property and equipment 6 --
Purchases of businesses, net of cash acquired (4,852) (3,452)
-------- --------
Net cash used in investing activities (10,885) (11,378)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on the revolving credit agreement 37,276 28,587
Repayments on the revolving credit agreement (33,259) (25,425)
Borrowings on the senior note -- --
Borrowings/(repayments) of other debt (75) 1,250
Principal payments under capital lease obligations (121) (115)
Exercise of common stock options 5 --
-------- --------
Net cash provided by financing activities 3,826 4,297
-------- --------
Net decrease in cash (163) (16)
Cash at beginning of period 526 717
-------- --------
Cash at end of period $ 363 $ 701
======== ========
The accompanying notes are an integral part of these financial statements.
GLOBE BUSINESS RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
NOTE 1 -- PRESENTATION OF INTERIM INFORMATION
In the opinion of the management of Globe Business Resources, Inc., the
accompanying unaudited consolidated financial statements include all adjustments
considered necessary to present fairly its financial position as of May 31,
1998, and the results of its operations for the three months ended May 31, 1998
and 1997 and its cash flows for the three months ended May 31, 1998 and 1997.
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 28, 1998.
Certain prior year amounts have been reclassified to conform with current
year presentation.
NOTE 2 -- ACQUISITIONS
During the first quarter of fiscal 1999, the Company completed two asset
acquisitions and settled certain contingent consideration on two fiscal 1998
acquisitions. These transactions were completed by payment of approximately $4.9
million in cash and the assumption of certain liabilities.
On April 30, 1998, Globe acquired certain assets of privately owned Express
Rental, Inc., dba Express Furniture Rental ("EFR"), which is based in Ventura,
California and operates in the rent-to-rent segment of the furniture rental
business. The assets acquired consist of EFR's Los Angeles operations, with
annual revenues of approximately $2.0 million.
On May 1, 1998, Globe acquired substantially all the assets of privately
owned Feld Corporate Housing ("FCH"), which operates in Denver, Colorado and
provides short-term housing to transferring or temporarily assigned corporate
personnel, new hires, trainees and consultants. FCH maintained an inventory of
approximately 250 leased housing units at the time of acquisition and had annual
revenues of approximately $5.0 million for the year ended December 31, 1997.
In accordance with APB No. 16, these acquisitions were accounted for using
the purchase method.
The purchase price allocation for the acquired businesses is as follows:
(Unaudited)
-------------
Cash, receivables and prepaids $ (14)
Rental furniture 810
Property and equipment -
Other assets -
Goodwill and other intangibles 4,345
--------
5,141
Liabilities assumed (289)
---------
$ 4,852
========
The following table sets forth certain Globe consolidated income statement
data on a pro forma basis, as if EFR and FCH were acquired at the beginning of
the periods indicated.
Three months ended May 31,
--------------------------
1998 1997
----------- ---------
Revenues $ 33,930 $ 23,743
Net income 1,173 1,310
Basic earnings per common share $ 0.26 $ 0.29
Diluted earnings per common share $ 0.25 $ 0.29
Weighted average number of common
shares outstanding:
Basic 4,550 4,441
Diluted 4,679 4,496
SUBSEQUENT EVENT
On June 1, 1998, Globe acquired substantially all the assets of privately
owned Village Suites ("VS") for approximately $7,700 in cash and the assumption
of certain liabilities. VS, based in Detroit, Michigan with operations in
Illinois, Michigan, Minnesota, Ohio and Wisconsin provides short-term housing to
transferring or temporarily assigned corporate personnel, new hires, trainees
and consultants. VS maintained an inventory of approximately 770 leased housing
units at the time of acquisition and had annual revenues of approximately $13.0
million for the year ended September 30, 1997.
NOTE 3 -- EARNINGS PER SHARE
The Company adopted SFAS No. 128, "Earnings per Share", in the fourth
quarter of fiscal 1998. All earnings per share amounts for prior periods have
been restated to conform to this statement, which had no material effect on the
previously reported earnings per share.
For all periods presented, basic earnings per share was calculated by
dividing net income applicable to common stock by the weighted average number of
shares outstanding during the period.
For all periods presented, diluted earnings per share was calculated by
dividing net income applicable to common stock by the weighted average number of
shares and dilutive potential common shares outstanding during the period.
Potential common shares include outstanding stock options and contingently
issuable shares.
The following table presents the calculation of basic and diluted earnings
per share for the periods indicated.
Three months ended May 31,
-------------------------
1998 1997
---------- --------
(Unaudited)
Net income used to calculate basic and diluted
earnings per share $ 1,075 $ 1,162
======= =======
Weighted average common shares used to calculate
basic earnings per share 4,550 4,441
======= =======
Basic earnings per common share $ 0.24 $ 0.26
======= =======
Shares used in the calculation of
diluted earnings per share:
Weighted average common shares 4,550 4,441
Dilutive effect of assumed exercise
of options for the purchase
of common shares 57 46
Dilutive effect of assumed issuance of
contingently issuable shares 72 9
------- --------
Weighted average common shares used to calculate
diluted earnings per share 4,679 4,496
======= =======
Diluted earnings per common share $ 0.23 $ 0.26
======= =======
NOTE 4 -- RENTAL FURNITURE
Rental furniture consists of the following:
May 31, February 28,
1998 1998
----------- ------------
(unaudited)
Furniture on rental $42,999 $41,884
Furniture on hand 21,074 21,537
-------- --------
64,073 63,421
Accumulated depreciation (10,459) (10,201)
--------- ---------
$53,614 $53,220
======= =======
NOTE 5 -- DEBT
Outstanding debt consists of:
May 31, February 28,
1998 1998
-------- ------------
(Unaudited)
The Fifth Third Bank, PNC Bank and
Norwest Bank unsecured revolving note,
average interest of 7.31% $ 20,493 $ -
The Fifth Third Bank and PNC Bank unsecured
revolving note, average interest of 7.39% - 16,476
7.54% Senior Notes, unsecured, interest
payable semi-annually on March 1 and
September 1, due September 1, 2007 30,000 30,000
6.0% note payable to seller of acquired
business, payable in monthly installments,
due December 31, 2000 775 850
7.5% note payable to seller of acquired
business, payable in monthly
installments, due November 2, 1998 157 181
7.2% mortgage note payable to
The Fifth Third Bank, interest
payable in monthly installments,
due December 1, 2002 1,496 1,510
Capital lease obligations 612 696
-------- --------
$ 53,533 $ 49,713
======== ========
The funds required for the EFR and FCH acquisitions were derived from
borrowings under the Company's unsecured revolving Credit Agreement.
On May 14, 1998, the Company's $30 million unsecured revolving line of
credit with the Fifth Third Bank and PNC Bank was increased, by amendment, to a
$45 million unsecured revolving line of credit with The Fifth Third Bank, PNC
Bank and Norwest Bank. Interest rates, unused facility fees and other terms are
unchanged from the original revolving Credit Agreement. At May 31, 1998, the
revolving Credit Agreement provided a total unused credit facility of
approximately $24.5 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 is a major participant in the temporary relocation industry,
operating in both the corporate housing and rent-to-rent furniture businesses.
The corporate housing business provides short-term housing through an inventory
of leased housing units to temporarily assigned corporate personnel, new hires,
trainees and consultants. The rent-to-rent furniture business rents quality
office and residential furniture to a variety of corporate and individual
customers. Additionally, the Company sells residential and office furniture that
no longer meets its "showroom condition" standards for rental through its
clearance centers and offers new furniture for sale through its showrooms and
account executives.
The Company's fiscal year ends on February 28/29.
The discussions contained under Results of Operations and Liquidity and
Capital Resources include forward-looking information which is subject to risks
and qualifications including, but not limited to, those set forth in Exhibit 99.
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 corporate housing, rental and retail sales
revenues.
For the three months ended,
--------------------------------
May 31, 1998 May 31, 1997
------------ ------------
Revenues:
Corporate housing sales 51.3% 31.9%
Rental sales 34.5% 51.0%
Retail sales 14.2% 17.1%
--------- ---------
Total revenues 100.0% 100.0%
Gross profit:
Corporate housing sales 28.9% 31.7%
Rental sales 93.0% 91.2%
Retail sales 39.3% 36.4%
--------- ---------
Gross profit before depreciation
and disposals 52.5% 62.8%
Furniture depreciation and disposals (7.1%) (9.8%)
--------- --------
Combined gross profit 45.4% 53.1%
Operating expenses 35.7% 40.8%
Amortization of intangible assets 1.3% 0.7%
---------- --------
Operating income 8.4% 11.5%
Interest/other 3.0% 2.9%
---------- --------
Income before taxes 5.4% 8.6%
========== ========
Impact of Corporate Housing Acquisitions
Globe entered the corporate housing business in fiscal 1997 by making three
acquisitions. Seven additional corporate housing businesses were acquired in
fiscal 1998. Globe continued its corporate housing acquisition program during
the first quarter of fiscal 1999 with the acquisition of Feld Corporate Housing
in May 1998. Another corporate housing acquisition was made in June 1998,
subsequent to completion of the first quarter. All acquisitions to date have
been accounted for using the purchase method of accounting.
Corporate housing companies' assets consist primarily of accounts
receivable, customer deposits and some minor furniture and fixed asset balances.
Consequently, the purchase price for these businesses is allocated largely to
goodwill and other intangibles. Cost of goodwill and other intangibles related
to the corporate housing acquisitions approximates $31.0 million and is being
amortized on a straight-line basis primarily over twenty years. Goodwill and
intangibles amortization, which is a separate component of operating expenses,
reduced operating profit by $0.4 million, or 1.3% of revenues, in the first
quarter of fiscal 1999 and $0.2 million, or 0.7% of revenues, in the first
quarter of fiscal 1998.
The corporate housing business has a lower gross profit margin, as well as
lower operating expenses as a percentage of revenues, than the furniture rental
business. As a result, the Company's gross profit margin and operating expenses
as a percentage of revenues have been declining since the Company entered the
corporate housing business. Gross profit margin decreased to 45.4% in the first
quarter of fiscal 1999 from 53.1% in the first quarter of fiscal 1998, resulting
from the larger percentage of total revenues from corporate housing (51.3% in
the first quarter of fiscal 1999 versus 31.9% in the comparable period of fiscal
1998). Gross profit margin on rental sales in the first quarter of fiscal 1999
was 93.0%, versus 28.9% for corporate housing. Comparable gross profit margins
for the first quarter of fiscal 1998 were 91.2% and 31.7%, respectively. Because
the Company is integrating its furniture rental and corporate housing
operations, these gross profit percentages exclude furniture depreciation and
disposals which can no longer be separately identified. An additional result of
this integration is that operating expenses and, therefore, operating margins
for furniture rental and corporate housing cannot be specifically identified.
Combined operating expenses, excluding goodwill, decreased to 35.7% of revenues
in the first quarter of fiscal 1999 from 40.8% in the first quarter of fiscal
1998, while the operating margin, including goodwill, decreased to 8.4% of
revenues in the first quarter of fiscal 1999 from 11.5% of revenues in the first
quarter of fiscal 1998. The reduction in operating margin is primarily the
result of the increasing mix of corporate housing revenues over the comparable
periods, additions to the Company's management team and related infrastructure
spending to support the Company's rapid growth, and greater amortization
expenses. Excluding amortization expenses, operating margins declined to 9.7% in
the first quarter of fiscal 1999 from 12.2% in the first quarter of fiscal 1998.
Globe plans to continue its consolidation of corporate housing through
additional acquisitions, thereby capitalizing on the desire of many corporations
to have a corporate housing company that can meet their needs nationally. With
the acquisitions to date, Globe has expanded its presence into twenty-two
markets and is the market leader in nine of these markets, with annualized
corporate housing revenues in excess of $90 million. Globe is vying with two
other corporate housing companies for the number two position in the industry.
As Globe increases its presence in the corporate housing business some
competing corporate housing companies that are customers of Globe may transfer
their furniture rental business to other vendors. At the end of June 1998, the
Company's annualized revenues from these corporate housing companies
approximated $9.5 million.
Due to the significant impact of the corporate housing acquisitions on the
Company's operations and financial results, certain aspects of the Company's
historical results of operations and period-to-period comparisons will not be
indicative of future results.
Comparison of First Quarter Fiscal 1999 to First Quarter Fiscal 1998
Total revenues of $32.9 million increased $10.7 million, or 48.2%, in the
first quarter of fiscal 1999, from $22.2 million in the first quarter of fiscal
1998, primarily due to acquisitions which occurred subsequent to the first
quarter of fiscal 1998. Excluding the corporate housing operations and the
impact of intercompany eliminations, total revenues increased 9.6% in the first
quarter of fiscal 1999 compared to the first quarter of fiscal 1998.
Corporate housing revenues of $16.9 million in the first quarter of fiscal
1999 increased 138.3% from $7.1 million in the first quarter of fiscal 1998.
This increase was primarily caused by acquisitions which occurred after the
first quarter of fiscal 1998.
Rental revenues of $11.3 million in the first quarter of fiscal 1999 were
flat when compared to the first quarter of fiscal 1998 due to the elimination of
revenues from corporate housing customers acquired by the Company subsequent to
the first quarter of fiscal 1998. Excluding the impact of intercompany
eliminations, rental revenues increased 5.1%.
Sales revenues of $4.7 million increased $0.9 million, or 22.9%, in the
first quarter of fiscal 1999 from $3.8 million in the first quarter of fiscal
1998, driven by an increase of $0.6 million, or 37.7%, in clearance center
revenues over the period. The additional $0.3 million increase is primarily
attributable to increased sales of new office furniture in the first quarter of
fiscal 1999 versus the first quarter of fiscal 1998.
Gross profit of $14.9 million in the first quarter of fiscal 1999 increased
$3.1 million, or 26.7%, from $11.8 million in the first quarter of fiscal 1998
and declined as a percentage of revenues to 45.4% from 53.1% over the same
period due to the higher mix of corporate housing revenues and the lower margins
associated with these revenues. Gross profit on both rental and retail sales
revenues improved versus the comparable prior year period. Corporate housing
gross profit declined versus the comparable prior year period but improved
versus the gross profit levels which were experienced in the last nine months of
fiscal 1998 as the Company is actively addressing occupancy levels at certain
corporate housing locations.
Operating expenses of $12.2 million in the first quarter of fiscal 1999
increased 31.9% from $9.2 million in the first quarter of fiscal 1998 as a
result of acquisitions, as well as additions to the Company's management team
and related infrastructure spending to support the Company's rapid growth, which
occurred subsequent to the first quarter of fiscal 1998. As a percentage of
total revenues, these expenses declined to 37.0% from 41.6% over the same period
as a result of corporate housing's lower operating expenses as a percent of
revenues. The investment in management and infrastructure should enable the
Company to continue its acquisition strategy without incurring significant
additional overhead.
As a result of the changes in revenues, gross profit and operating expenses
discussed above, operating income increased 8.0% to $2.8 million, or 8.4% of
revenues in the first quarter of fiscal 1999, from $2.6 million, or 11.5% of
revenues in the first quarter of fiscal 1998.
Interest/other expense increased $0.4 million to $1.0 million in the first
quarter of fiscal 1999 from $0.6 million in the first quarter of fiscal 1998 and
as a percentage of total revenues increased slightly to 3.0% from 2.9% over the
same period. The increased expense for fiscal 1999 was due primarily to higher
debt balances than in the comparable period of fiscal 1998. The debt increase
was the result of funding required for acquisitions.
Income before income taxes of $1.8 million in the first quarter of fiscal
1999 declined $0.1 million, or 7.5%, compared to the first quarter of fiscal
1998 and as a percentage of revenues decreased to 5.4% from 8.6% over the same
period.
The Company's effective tax rate, which includes federal, state and local
taxes, remained flat at 39.0% in the first quarter of fiscal 1999 as compared to
the first quarter of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
On May 14, 1998, the Company's $30.0 million unsecured line of credit was
increased to $45.0 million. Interest rates for this revolving line of credit are
based on a leverage formula, which is currently the lesser of the prime rate
minus 25 basis points or LIBOR plus 150 basis points. At July 3, 1998, the
unused line of credit was $15.8 million, which is available for acquisitions and
general corporate purposes.
The term of the line of credit will expire on September 30, 2000, requiring
full payment of the then outstanding balance. The Company expects to have other
financing arrangements in place prior to this date.
From March 1, 1998 through July 3, 1998 Globe used approximately $12.6
million from its lines of credit and assumed approximately $0.7 million of
certain liabilities in completing three acquisitions and settling certain
contingent consideration for two fiscal 1998 acquisitions. (See note 2 to the
consolidated financial statements for further discussion of these acquisitions.)
The Company's principal use of cash 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 $5.2 million in the first three months of fiscal 1999
and $6.3 million in the first three months of fiscal 1998. The lower level of
purchases in the first quarter of fiscal 1999 versus the prior year period
reflects the Company's efforts to better manage inventory utilization. As the
Company's growth strategies are implemented, furniture purchases are expected to
increase.
Capital expenditures were $0.8 million and $1.6 million in the first three
months of fiscal 1999 and 1998, respectively. Current year expenditures were
financed through cash provided by operations while the prior year expenditures
were financed primarily by a $1.5 million mortgage loan. Expenditures for the
first three months of fiscal 1999 were largely attributable to continued
development of computer systems. The decrease from the prior year results from
the completion of construction of a showroom/warehouse facility in Indianapolis,
Indiana during fiscal 1998. Costs to further develop the computer systems, which
are anticipated to be approximately $1.3 million, will be incurred in the next
9-12 months and are expected to be financed through cash generated by
operations.
In the first three months of fiscal 1999 and 1998, net cash provided by
operations was $6.9 million and $7.1 million, respectively, generating $0.9
million more cash than was necessary to fund investing activities (excluding
acquisitions) in the first three months of fiscal 1999 and $0.9 million less
cash than was necessary to fund investing activities (excluding acquisitions) in
the first three months of fiscal 1998. The improvement in cash flow in the first
quarter of fiscal 1999 is the result of the lower levels of furniture purchases
and capital expenditures in the current year period discussed above.
Aside from acquisitions, furniture purchases, which have historically been
seasonally weighted to the first half of the fiscal year, are the primary reason
for use of the credit facilities. Any temporary cash deficiencies resulting from
these purchases will be funded via the line of credit. The Company expects cash
flow from operations plus the credit facilities to be sufficient to fund the
Company's needs, other than significant acquisitions and any repurchases that
may be made under the Company's authorized $3.0 million stock repurchase
program, for the foreseeable future.
YEAR 2000
The Company's internal financial and operational systems are Year 2000
compliant. Management is not aware of exposures related to the operations of
customers or vendors. No material adverse consequences are anticipated in
conjunction with the Year 2000 issue and management intends to monitor the
situation on an ongoing basis.
PART II
ITEM 1
Legal Proceedings
None
ITEM 2
Changes in Securities
None
ITEM 3
Defaults Upon Senior Securities
None
ITEM 4
Submission of Matters to a Vote of Security Holders
None
ITEM 5
Other Information
None
ITEM 6
Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Exhibits:
10.5.1 Amendment to Credit Agreement among the Registrant, The
Fifth Third Bank, PNC Bank and Norwest Bank dated May 14,
1998.
27 Financial Data Schedule
99 Safe Harbor Statement
(b) Reports on Form 8-K filed during the first quarter of 1999:
Form 8-K filed May 18, 1998 for the Feld Corporate Housing acquisition.
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: /s/Sharon G. Kebe
---------------------------------
Sharon G. Kebe
Senior Vice President-Finance
and Treasurer
(Principal Financial Officer)
Signed: July 9, 1998