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[EARL SCHEIB LOGO]
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To Our Shareholders:
Sales for the fiscal year ended April 30, 1999 were $55 million, an
increase of 8.2% from prior year sales. During Fiscal 1999, nineteen new shops
became operational and six existing shops were closed, resulting in a year end
operating total of 174 Earl Scheib paint shops. Same shop sales (shops open more
than one year) increased by 3.1% last year. Despite this growth, earnings were
only slightly better than break-even. One of the chief reasons for this poor
earnings performance was that the year was burdened by approximately $900,000 of
expenses that we believe are mostly non-recurring, including an additional
reserve for workers' compensation claims and legal costs for defending against a
lawsuit which has since been settled. Largely as a result of these expenses, net
income for Fiscal 1999 fell to $56,000 compared to net income of $1,064,000 last
year.
Other expenses incurred in Fiscal 1999 include the costs of opening new
shops and the investment in the growth of our fleet department. We are already
beginning to see benefits from these necessary investments in our future. Our
fleet department consists of a separate sales force to concentrate on obtaining
business from states and municipalities, corporations with multiple vehicles and
automotive dealers. This new department accounted for $1.4 million of sales in
Fiscal 1999 and we anticipate nearly doubling those sales in Fiscal 2000.
Earl Scheib is a very sales-driven company. We mean by this that there is
a great deal of leverage in obtaining additional sales. Once we have passed the
break-even point at each shop, the profit from additional sales is quite high.
Our growth must come from increases in same shop sales as well as from the
addition of new shops and greater fleet business. It is very important that we
find the means to ignite increases in our same shop sales. We currently are
reviewing our entire advertising program, including the message contained in our
ads and to whom these ads are directed.
We intend to continue our new shop expansion during Fiscal 2000. Shops
will be opened in markets where we now have a successful presence. This strategy
provides us with the advantage of increasing our market penetration, while
obtaining lower per-shop advertising and supervisory costs.
We are also interested in pursuing the acquisition of profitable chains of
auto painting shops anywhere in the United States. We have explored a few
acquisition opportunities during this past year, but have been unsuccessful in
negotiating a price that would make economic sense for us. We will continue
these efforts.
Increasing the quality of our product is a continuing priority. We believe
that the paint we use is the best in the industry. This belief has been
substantiated by independent testing laboratories. We have a significant
advantage in being the only chain of car painting shops in the United States
that manufactures its own paint in its own factory. Having our own paint factory
gives us excellent control over the quality and cost of our paint as well as
helps us control our inventory levels. Concrete evidence that our paint has
substantially improved from the past is the fact that we reduced the percentage
of warranty work by over 66% since 1995.
In early Fiscal 2000, we are going to initiate a new program that will
offer a line of quality paints to industrial users at very competitive prices.
We have the capacity in our existing facility to undertake this new enterprise.
We believe that this venture has potential for increased sales and profits.
The Human Resource part of our business is extremely important. We have
over 200 employees in our company who meet the public every day in an attempt to
sign up sales. How these employees interact with the public and represent Earl
Scheib is crucial to our success. Hiring the "right" people, and then training
them effectively, has a huge impact on our bottom line. Our manager compensation
packages contain modest salaries with the opportunity for substantial bonuses
based on performance. Attracting the best managers, as well as production
employees, during this period of full employment, has been one of our highest
priorities and challenges.
Before closing, we would like to thank two people for the years that they
have spent with the Company. Don Scheib, after more than 39 years with the
Company, including several years as CEO and Chairman, is retiring from the Board
of Directors effective August 31, 1999. Dan Seigel led the Company during some
difficult transition years. He resigned as President and CEO on January 1, 1999,
but will continue to serve on our Board of Directors. We are pleased to inform
you that Mr. David Eisenberg has joined Earl Scheib as a member of the Board of
Directors and that Mr. Charles Barrantes has recently joined the Company as
Vice-President and Chief Financial Officer.
While the company has regained a level of profitability from the losses
incurred during fiscal years 1995 and 1996 we are far from satisfied with our
performance and believe that we can and will do much better. The first two
months of Fiscal 2000 have begun slowly, with same shop sales dropping 3.8%
below last year. We believe that the new programs that have been put in place
will reverse this trend soon and that the year as a whole will be a substantial
improvement from last year.
Sincerely,
/s/ Philip W. colburn
Philip W. Colburn
Chairman of the Board
/s/ Christian K. Bement
Christian K. Bement
President and Chief Executive Officer
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Earl Scheib, Inc.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
The following table sets forth the Company's operating results for the periods
indicated. Amounts are shown in thousands of dollars and as a percentage of
sales.
YEAR ENDED APRIL 30,
-------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Net sales $55,013 100.0% $50,839 100.0% $48,348 100.0 %
Cost of sales 40,668 73.9 37,048 72.9 34,543 71.4
- ------------------------------------------------------------------------------------------------------------------
Gross profit 14,345 26.1 13,791 27.1 13,805 28.6
Selling, general and administrative expense 13,947 25.4 12,770 25.1 13,708 28.4
- ------------------------------------------------------------------------------------------------------------------
Operating income 398 0.7 1,021 2.0 97 0.2
Other income (expense) (316) (0.6) 112 .2 1,050 2.2
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 82 0.1 1,133 2.2 1,147 2.4
Provision for income taxes 26 -- 69 .1 45 0.1
- ------------------------------------------------------------------------------------------------------------------
Net income $ 56 0.1% $ 1,064 2.1% $ 1,102 2.3 %
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------
FISCAL YEAR ENDED APRIL 30, 1999 ("FISCAL 1999") COMPARED TO FISCAL YEAR ENDED
APRIL 30, 1998 ("FISCAL 1998")
- ------------------------------------------------------------
Total sales for Fiscal 1999 increased $4,174 or 8.2% from Fiscal 1998.
This increase resulted from a $1,560 or 3.1% same shop increase plus $2,614 in
sales from new shops, net of closed shops. Fleet sales, which are included
above, increased to $1,432 from $185 in Fiscal 1998 as this was the first full
year of fleet operations. Management believes that the same shop sales and car
volume increases resulted from new product offerings including the Company's
EuroPaint(R), improvements in shop operations, the impact of the new sales force
to corporate fleet accounts and improved quality of services.
Cost of sales increased as a percentage of sales from 72.9% in Fiscal 1998
to 73.9% in Fiscal 1999. The 1% increase in cost of sales is largely due to
increased material cost of the new EuroPaint(R) and associated components.
Selling, general and administrative expense increased by $1,177 or 0.3% of
sales in Fiscal 1999 compared to fiscal 1998. These increases resulted from
expansion of the new fleet outside sales force and installation of an accounts
receivable system to service credit sales, expansion of the real estate
department, increased insurance expenses and increased legal fees, partially
offset by a reduction in advertising expense.
Other income (expense) consists of gains from sales of excess real estate
and net interest expense. Net interest expense was $327 in Fiscal 1999, due
primarily to the accrual of interest relating to the potential disallowance of
the carry back of a net operating loss and interest on life insurance policy
loans, compared to interest income of $79 (primarily from investments in
short-term paper) in Fiscal 1998.
The majority of the Company's Fiscal 1998 and all of the Company's Fiscal
1997 federal income tax provisions were offset by net operating loss
carryforwards from past years. Due to income allocation and state income tax
laws, only part of the Company's income before taxes in Fiscal 1999 and 1998 was
offset by the net operating loss carryforwards for state income tax purposes.
The Company provided $4 and $53 in taxes in Fiscal 1999 and 1998, respectively,
for taxes in those states which were not offset by net operating loss
carryforwards.
- ------------------------------------------------------------
FISCAL YEAR ENDED APRIL 30, 1998 ("FISCAL 1998") COMPARED TO FISCAL YEAR ENDED
APRIL 30, 1997 ("FISCAL 1997")
- ------------------------------------------------------------
Total sales for Fiscal 1998 increased $2,491 or 5.2% from Fiscal 1997.
This increase resulted from a $2,765 or 6.0% same shop increase less $274 from
net shop closures. Management believes that the same shop sales increase
resulted from new product offerings including the Company's recent introduction
of EuroPaint(R), improvements in shop operations, the impact of our new sales
force to corporate fleet accounts and improved quality of our services.
Cost of sales increased as a percentage of sales from 71.4% in Fiscal 1997
to 72.9% in Fiscal 1998. In dollars, cost of sales for Fiscal 1998 increased
$2,505 or 7.3% from Fiscal 1997. The increase in cost of sales is largely due to
the increase in material cost of our new EuroPaint(R) and associated components
compared to the cost of the old paint.
Selling, general and administrative expense decreased by $938 or 3.3% of
sales in Fiscal 1998 compared to Fiscal 1997. Advertising expense decreased by
$819 (which represents 87.3% of the decrease in selling, general and
administrative expense between Fiscal 1998 and Fiscal 1997). Decreases in
insurance expense are due mainly to lower group medical insurance, decreases in
the expense of the accounting department due to our new management information
system and lower telecommunication costs due to renegotiated contracts accounted
for $517 of the decrease (which represents 55.1% of the decrease in selling,
general and administrative expense between Fiscal 1998 and Fiscal 1997). These
decreases were partially offset by one-time costs to install the new management
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information system, the expense of our new outside sales force, expansion of our
real estate department, cost of living salary increases for support staff and
the expense of a new program to hire and develop individuals from outside the
Company who have the potential of becoming future Division Managers for the
Company.
Other income consists of gains from the sale of excess real estate and
interest income. During Fiscal 1998, the Company sold three properties for a net
gain of $33 compared to a net gain of $893 from the sale of 21 properties in
Fiscal 1997. Interest income net of interest expense, generated from the
investment of cash in short-term instruments, was lower in Fiscal 1998 than in
Fiscal 1997, $79 and $157, respectively. This decrease in interest income
resulted mainly from lower yields in Fiscal 1998.
The majority of the Company's Fiscal 1998 and all of the Company's Fiscal
1997 federal income tax provisions were offset by net operating loss
carryforwards from past years. Due to income allocation and state income tax
laws, only part of the Company's income before taxes in Fiscal 1998 and 1997 was
offset by the net operating loss carryforwards for state income tax purposes.
The Company provided $53 and $45 in taxes in Fiscal 1998 and 1997, respectively,
for taxes in those states which were not offset by net operating loss
carryforwards.
- ------------------------------------------------------------
Liquidity and Capital Resources
- ------------------------------------------------------------
The Company's cash requirements are based upon its seasonal working capital
needs and its capital requirements for new shops and capitalized additions and
improvements. The first and second quarters and occasionally the fourth quarter
usually have positive cash flow from operations, while the third and
occasionally the fourth quarters are net users of cash.
As of April 30, 1999, the Company had current assets of $6,316 and current
liabilities of $7,908 for a net working capital deficit of $1,592. The Company's
long-term financial obligations consist of its deferred compensation plan, loans
against various life insurance polices, a bank loan secured by a long-term
receivable and three minor capital leases. For the fiscal year ending April 30,
2000 ("Fiscal 2000") the Company plans on opening up to 15 new shops (depending
upon the availability of locations) and performing various fixed asset
improvements at an estimated cost of $3,200.
During Fiscal 1999, the Company had capitalized expenditures of $5,054
which were financed largely through cash flow from operations. The Company
expects that future cash flow from operations will be enhanced by these capital
additions.
In February 1999, the Company received a Notice of Disallowance from the
Internal Revenue Service ("IRS") disallowing a refund from a net operating loss
carryback received in Fiscal 1997. The amount of the 1997 refund was $1,696. The
Company is protesting the IRS's position. The refund of the net operating loss,
and substantially all of the interest relating to the disallowance, are accrued
in the Company's Fiscal 1999 financial statements. If the Company does not
sustain its tax position with the IRS, the net operating loss carryforward could
be used to offset income taxes in future years.
During Fiscal 1999, the Company borrowed $1,684 against the cash surrender
value of various life insurance policies. In February 1999, the Company entered
into an agreement with a bank for a two-year $4,000 unsecured line of credit. It
is anticipated that the Company will draw on the line of credit during Fiscal
2000.
In Fiscal 1998 the Board of Directors announced that it had authorized the
repurchase of up to 500,000 shares which is approximately 11% of the Company's
common stock outstanding. The share purchase plan authorizes the Company to make
purchases from time to time in the open market or through privately negotiated
transactions and that the purchases will be dependent on market conditions and
availability of shares. Repurchased common shares will be added to the Company's
treasury shares and may be used to meet common stock requirements for future
benefit plans and other corporate purposes. Purchases will be made with existing
company cash or future cash flows from operations. During Fiscal 1999, the
Company purchased 321,000 shares at a cost of $2,031.
Historically, a major source of cash flow for the Company is from
operations. Net cash provided by operating activities for Fiscal 1999 declined
by $1,569 compared to Fiscal 1998. The decrease is mainly due to a reduction in
operating income.
The Company has 72 parcels of non-encumbered property, including the
Company's headquarters and paint factory, which could be either sold or used as
security to obtain outside financing.
- ------------------------------------------------------------
Recent Accounting Pronouncements
- ------------------------------------------------------------
In June 1997, the Financial Accounting Standards Board ('FASB') issued
Statement of Financial Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in general purpose financial statements.
The Statement is effective for fiscal years beginning after December 15, 1997.
The Company did not have operations or transactions during Fiscal 1999, 1998 or
1997 that would give rise to elements of comprehensive income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 redefines the way publicly
held companies report information about segments. The Statement is effective for
fiscal years beginning after December 15, 1997. The Company operates in only one
segment, auto painting and related services. All of its locations are in the
United States with 54 of the 174 locations open at April 30, 1999 in California.
In February 1998, the FASB issued Statement of Financial Accounting
Standard No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This statement which is effective for financial
periods ending after December 15, 1998, requires full disclosure of all pensions
plans and other postretirement benefit plans. The
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Company currently discloses any pensions or other postretirement benefit plans.
In June 1998, the FASB issued Statement of Financial Accounting Standard
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement, which is effective for financial periods beginning after June 15,
1999, addresses the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. The
Company has not historically or does not currently hold any derivative
instruments or participate in any hedging activities.
- ------------------------------------------------------------
Year 2000
- ------------------------------------------------------------
Many computer systems and software products, as well as certain hardware
and equipment containing date sensitive data, were structured to utilize a
two-digit date field meaning that they may not be able to properly recognize
dates in the year 2000. This could result in significant system and equipment
failures. Beginning in Fiscal 1997 the Company began a process of evaluating
its, as well as its critical vendors, systems to identify potential Year 2000
issues and implement solutions. It was decided that the best approach would be
to replace the majority of the Company's legacy information systems.
Starting in late Fiscal 1997 and proceeding during most of Fiscal 1999,
the Company has been undergoing an accelerated installation of new systems. At
the end of Fiscal 1998, the majority of these systems had been operating for
over nine months. During Fiscal 1999, the Company installed new systems in its
accounting department and a credit system to support its new fleet business. The
Company believes that the majority, if not all of its systems, are Year 2000
compliant; however, in this regard, it is relying upon representations made by
its software and hardware vendors, most of whom are large, well-known
international companies. In performing this significant technology
transformation, the Company has relied upon both internal and external
resources. The estimated cost to address Year 2000 issues has not, to date, and
is not expected to have a material impact on the Company's business, operations
or financial condition.
The Company has been in communications with major suppliers, financial
institutions, insurers and others with whom it conducts business to determine
that they will be Year 2000 compliant. The Company has received representations
from these outside parties indicating they believe they currently are or will be
Year 2000 compliant prior to the end of 1999. There can be no assurance,
however, that the systems of third parties on which the Company's systems rely
will be timely converted or that any such failure to convert by another company
would not have an adverse effect on the Company's systems.
The above discussion regarding costs and risks is based on the Company's
best current estimates given information that is currently available to it, and
is subject to change.
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Earl Scheib, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share data)
YEAR ENDED APRIL 30,
-----------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------
Net sales $55,013 $50,839 $48,348
Cost of sales 40,668 37,048 34,543
- ---------------------------------------------------------------------------------------------
Gross profit 14,345 13,791 13,805
Selling, general and administrative expense 13,947 12,770 13,708
- ---------------------------------------------------------------------------------------------
Operating income 398 1,021 97
Other income (expense) (316) 112 1,050
- ---------------------------------------------------------------------------------------------
Income before income taxes 82 1,133 1,147
Provision for income taxes 26 69 45
- ---------------------------------------------------------------------------------------------
Net income $ 56 $ 1,064 $ 1,102
- ---------------------------------------------------------------------------------------------
Earnings per share
Basic $ 0.01 $ 0.23 $ 0.24
Diluted $ 0.01 $ 0.22 $ 0.23
- ---------------------------------------------------------------------------------------------
Consolidated Statements of Shareholders' Equity
(Dollars in thousands)
CAPITAL STOCK, $1 PAR
--------------------- ADDITIONAL
SHARES PAID-IN RETAINED TREASURY
OUTSTANDING AMOUNT CAPITAL EARNINGS STOCK TOTAL
- -------------------------------------------------------------------------------------------------------------------
Balance May 1, 1996 4,568,000 $4,568 $5,522 $ 7,966 $ -- $18,056
Net income for the year -- -- -- 1,102 -- 1,102
Stock issued under stock option plan 21,000 21 74 -- -- 95
- -------------------------------------------------------------------------------------------------------------------
Balance April 30, 1997 4,589,000 4,589 5,596 9,068 -- 19,253
Net income for the year -- -- -- 1,064 -- 1,064
Stock issued under stock option plan 193,000 193 1,002 -- -- 1,195
Treasury stock acquired (123,000) -- -- -- (1,077) (1,077)
- -------------------------------------------------------------------------------------------------------------------
Balance April 30, 1998 4,659,000 4,782 6,598 10,132 (1,077) 20,435
Net income for the year -- -- -- 56 -- 56
Stock issued under stock option plan 21,000 21 158 -- -- 179
Treasury stock acquired (321,000) -- -- -- (2,031) (2,031)
- -------------------------------------------------------------------------------------------------------------------
Balance April 30, 1999 4,359,000 $4,803 $6,756 $10,188 $(3,108) $18,639
- -------------------------------------------------------------------------------------------------------------------
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
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Earl Scheib, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
APRIL 30,
------------------
1999 1998
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,265 $ 4,203
Accounts receivable, less allowances of $164 in 1999 and
$51 in 1998 218 258
Inventories 1,701 1,251
Prepaid expenses 1,626 1,568
Deferred income taxes 753 714
Property held for sale 339 25
Other current assets 414 223
- --------------------------------------------------------------------------------
Total current assets 6,316 8,242
Property and equipment, less accumulated depreciation and
amortization 21,089 19,375
Deferred income taxes 2,157 1,877
Other, primarily cash surrender value of life insurance 2,299 1,992
- --------------------------------------------------------------------------------
$31,861 $31,486
- --------------------------------------------------------------------------------
LIABILITIES
Current liabilities:
Accounts payable $ 940 $ 964
Current portion of capital leases 158 134
Accrued expenses:
Payroll and related taxes 1,780 2,005
Insurance 1,139 813
Interest 504 110
Advertising 485 442
Other 1,113 921
Income taxes payable 1,789 2,078
- --------------------------------------------------------------------------------
Total current liabilities 7,908 7,467
Deferred management compensation 3,298 3,363
Long-term debt 2,016 221
Commitments and contingencies -- --
SHAREHOLDERS' EQUITY
Capital stock $1 par -- shares authorized 12,000,000; 4,803 4,782
4,803,000 issued and 4,359,000 outstanding at April 30,
1999;
4,782,000 issued and 4,659,000 outstanding at April 30,
1998
Additional paid-in capital 6,756 6,598
Retained earnings 10,188 10,132
Treasury stock (3,108) (1,077)
- --------------------------------------------------------------------------------
Total shareholders' equity 18,639 20,435
- --------------------------------------------------------------------------------
$31,861 $31,486
- --------------------------------------------------------------------------------
The accompanying Notes are an integral part of these Consolidated Balance
Sheets.
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Earl Scheib, Inc.
Consolidated Statements of Cash Flows
(Dollars in thousands)
YEAR ENDED APRIL 30,
-------------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 56 $ 1,064 $ 1,102
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Gain on disposals of property and equipment (6) (33) (675)
Change in allowances for doubtful accounts 113 -- --
Write-down of property and equipment 127 159 --
Depreciation and amortization 2,918 2,323 1,881
Changes in operating assets and liabilities
Deferred income taxes (319) (283) --
Deferred management compensation (65) (87) (384)
Accounts receivable (74) (45) (149)
Inventories (450) 33 105
Prepaid expenses (58) (265) 69
Other assets (447) 56 (140)
Accounts payable (24) 490 (1,288)
Accrued expenses 530 458 932
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,301 3,870 1,453
- ---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (5,054) (3,870) (3,080)
Proceeds from disposals of property and equipment 49 563 2,708
Reduction (investment) in marketable securities -- 670 (134)
- ---------------------------------------------------------------------------------------------------
Net cash used in investing activities (5,005) (2,637) (506)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on capitalized leases (154) (128) (10)
Stock options exercised 92 239 95
Proceeds from life insurance loans 1,684 -- --
Proceeds from bank loan 175 -- --
Purchase of treasury stock (2,031) -- --
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (234) 111 85
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (2,938) 1,344 1,032
Cash and Cash Equivalents, at beginning of year 4,203 2,859 1,827
- ---------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, at end of year $ 1,265 $ 4,203 $ 2,859
- ---------------------------------------------------------------------------------------------------
Supplemental cash flow disclosure
Income taxes (paid) refunded $ (609) $ (75) $ 1,609
- ---------------------------------------------------------------------------------------------------
Supplemental disclosure of noncash investing and financing activities.
In Fiscal 1999, the Company entered into one capital lease totaling $62. In
Fiscal 1998 the Company received $1,077 in treasury stock as payment for the
exercise price of certain stock options exercised during the year and as payment
of payroll taxes related to the exercise of the stock options. In Fiscal 1997
the Company sold two properties for $253, the proceeds of which were included in
accounts receivable. Additionally, the Company entered into two capital leases
totaling $493.
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
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Earl Scheib, Inc.
Notes to Consolidated Financial Statements
(In thousands except per share data)
- --------------------------------------------------------------------------------
1. Summary of Significant Accounting Policies
NATURE OF BUSINESS: Earl Scheib, Inc. (the "Company") operates the New Earl
Scheib Auto Paint and Body Shops throughout the United States which offer auto
painting and auto body repair services to consumers and businesses. At April 30,
1999, 1998 and 1997 the Company operated 174, 163 and 158 shops, respectively.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements of the
Company include the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS: All highly liquid investment instruments with terms
of three months or less at the time of acquisition are considered to be cash
equivalents while those having maturities in excess of three months are
considered marketable securities.
MARKETABLE SECURITIES: Marketable securities are categorized as available for
sale and consist of commercial paper. Marketable securities are carried at fair
value based upon quoted market prices for each investment.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying value of financial assets and
liabilities approximates fair value due to their short maturity.
INVENTORIES: Inventories, which are composed of auto paint, shop supplies and
materials, are stated at the lower of last-in, first-out (LIFO) cost or market.
A summary of inventories is as follows:
APRIL 30,
----------------
1999 1998
- ------------------------------------------------------
Paint and supplies $1,810 $1,497
Materials 411 320
LIFO reserve (520) (566)
----------------
Total inventories $1,701 $1,251
----------------
PROPERTY AND EQUIPMENT: Property and equipment are recorded at cost and
depreciated over the estimated useful lives of the assets. Significant additions
or improvements extending asset lives are capitalized; normal maintenance and
repair costs are expensed as incurred. The Company uses the straight-line method
in computing depreciation and amortization for financial reporting purposes and
accelerated methods, with respect to certain assets, for income tax purposes.
START-UP COSTS: Expenses associated with the opening of new auto paint shops are
expensed as incurred.
INCOME TAXES: Deferred income taxes are provided at the statutory rates on the
difference between the financial statement and tax basis of assets and
liabilities and are classified in the consolidated balance sheet as current or
long-term consistent with the classification of the related asset or liability
giving rise to the deferred income taxes. The carrying value of deferred income
tax assets is determined based upon an evaluation of whether the realization of
such assets is more likely than not.
STOCK-BASED COMPENSATION: The Company accounts for its stock option grants in
accordance with Accounting Principles Board Opinion No. 25 and related
Interpretations. Under the Company's current stock option plans, stock options
may not be granted at a price which is less than the quoted market price of the
underlying stock on the date of grant. Therefore, no compensation expense is
recognized for the stock options granted. See Note 5.
IMPAIRMENT OF LONG-LIVED ASSETS: The Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying value of such assets may not be recoverable. If the Company determines
an impairment of a long-lived asset has occurred, it will write down the asset
to its estimated fair value.
REVENUE RECOGNITION: The Company recognizes sales when the work is completed and
the customer accepts delivery of the vehicle.
EARNINGS PER SHARE: Basic earnings per share excludes dilution and is computed
by dividing income available to common shareholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. The only dilutive securities the Company has outstanding are stock
options issued to the Company's Board of Directors, management and employees.
The weighted average number of shares used to calculate basic earnings per
share was 4,452, 4,605, and 4,575 for the years ended April 30, 1999, 1998 and
1997, respectively. The weighted average number of shares used to calculate
diluted earnings per share was 4,532, 4,762, and 4,693 for the years ended April
30, 1999, 1998, and 1997, respectively. The effect of dilutive securities
increased the weighted average shares outstanding by 80, 157, and 118 shares for
the years ended April 30, 1999, 1998 and 1997, respectively.
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Earl Scheib, Inc.
Notes to Consolidated Financial Statements (Continued)
(In thousands except per share data)
- --------------------------------------------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Standards ("SFAS") No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in general
purpose financial statements. The Statement is effective for fiscal years
beginning after December 15, 1997. The Company did not have operations or
transactions during Fiscal 1999, 1998 or 1997 that would give rise to elements
of comprehensive income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 redefines the way publicly
held companies report information about segments. The Statement is effective for
fiscal years beginning after December 15, 1997. The Company operates in only one
segment, auto painting and related services. All of its locations are in the
United States, with 54 of the 174 locations open at April 30, 1999 in
California.
In February 1998, the FASB issued Statement of Financial Accounting
Standard No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This statement which is effective for financial
periods ending after December 15, 1998, requires full disclosure of all pensions
plans and other postretirement benefit plans. See Note 6 for the Company's
disclosures related to pensions and other benefits.
In June 1998, the FASB issued Statement of Financial Accounting Standard
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement, which is effective for financial periods beginning after June 15,
1999, addresses the accounting for derivative instruments including certain
derivative instruments embedded in other contracts, and hedging activities. The
Company has not historically or does not currently hold any derivative
instruments or participate in any hedging activities.
RECLASSIFICATION: Certain reclassifications have been made to prior year
financial statements to conform to the current year presentation.
2. Taxes on Income
The components of the provision for income taxes are as follows:
YEAR ENDED APRIL 30,
----------------------
1999 1998 1997
- ------------------------------------------------------
Current:
Federal $ 314 $ 299 $--
State 63 53 45
----------------------
377 352 45
----------------------
Deferred (351) (283) --
----------------------
Total $ 26 $ 69 $45
----------------------
Reconciliation of the statutory federal income tax rate to the Company's
effective tax rate is as follows:
YEAR ENDED APRIL 30,
-----------------------
1999 1998 1997
- --------------------------------------------------------
Tax at U.S. Federal statutory
tax rate 34.0% 34.0% 34.0%
State taxes, net of federal
benefit 3.9 3.1 2.6
Federal net operating loss (0.0) (29.0) (32.7)
Other (5.5) (2.0) --
-----------------------
Total 32.4% 6.1% 3.9%
-----------------------
At April 30, 1999, net current deferred income tax assets and net
long-term deferred income tax assets are comprised of the following:
APRIL 30,
----------------
1999 1998
- ------------------------------------------------------
Deferred income tax assets-current:
Alternative Minimum Tax Credit $ 221 $ 300
Accrued insurance 302 283
Accrued payroll and vacation 39 38
Accrued medical insurance 103 --
Other 88 93
----------------
$ 753 $ 714
----------------
Deferred income tax assets
(liabilities)-long term:
Net operating loss $ 967 $1,098
Deferred compensation 1,252 1,143
Depreciation (29) (153)
Other 38 (168)
Valuation allowance (71) (43)
----------------
$2,157 $1,877
----------------
In 1999 and 1998 the Company had deferred income tax assets, net of
valuation allowance, of $2,910 and $2,591, respectively. It is management's
opinion that it is more likely than not that the net deferred income tax asset
will be realized.
In the first quarter of Fiscal 1997, the Company received federal income
tax refunds of $1,696 resulting from the application of net operating loss
carrybacks. Approximately $448 of the tax refunds relate to the benefit of
carrying back net operating losses to periods for which the tax rates exceeded
the current federal income tax rate. The $448 refund relating to the difference
in federal tax rates is currently deferred on the Company's balance sheet.
9
11
Earl Scheib, Inc.
Notes to Consolidated Financial Statements (Continued)
(In thousands except per share data)
- --------------------------------------------------------------------------------
3. Property and Equipment
Property and equipment including their estimated useful lives consist of the
following:
APRIL 30,
------------------ ESTIMATED
1999 1998 USEFUL LIFE
- ----------------------------------------------------------
Land $ 5,171 $ 5,339
Buildings and
building
improvements 9,319 9,567 8-33 years
Machinery and
equipment 10,614 9,117 3-10 years
Automotive equipment 142 142 2-4 years
Office furniture and
equipment 3,123 2,605 3-10 years
Leasehold
improvements 8,491 6,013 Life of Lease
------------------
36,860 32,783
Less accumulated
depreciation and
amortization 15,771 13,408
------------------
Net property and
equipment $21,089 $19,375
------------------
4. Leases
The Company leases approximately 60% of its auto paint shops. Management
expects that in the normal course of business such leases will be renewed or
replaced by other leases. Certain lease agreements contain renewal and/or
purchase options. Rent expense for Fiscal 1999, 1998 and 1997 was $3,658, $2,995
and $2,651, respectively. Following is a schedule, by year, of the future
minimum operating lease commitments as of April 30, 1999.
YEAR ENDING APRIL 30:
- ------------------------------------------------------
2000 $ 3,647
2001 3,310
2002 2,688
2003 2,034
2004 1,218
Thereafter 2,417
-------
Total minimum lease payments $15,314
-------
5. Stock Options
The Company has two nonqualified stock option plans. One plan allows for the
granting of up to 150 shares of the Company's capital stock to nonemployee
directors of the Company (the "Directors' Plan"). A second plan allows for the
granting of up to 900 shares of the Company's capital stock to certain employees
of the Company (the "Employees' Plan"). Both plans require that the price of the
shares underlying the option granted be no less than the fair market value of
the shares on the date of the grant. The plans allow for discretionary vesting
periods. Besides the two plans discussed, the Company has made separate grants
of stock options to its chief executive officer and chief operating officer.
In November of 1994, the Company granted a stock option for 400 shares of
the Company's capital stock to the Company's chief executive officer. The
options become vested and exercisable in a 50% installment on the first
anniversary following the date of grant and in 12.5% installments in each
quarter following the first anniversary of the date of grant.
Stock option transactions are summarized as follows:
WEIGHTED
NUMBER AVERAGE
OF OPTION PRICE EXERCISE
SHARES PER SHARE PRICE
- --------------------------------------------------------
Outstanding at
May 1, 1996 1,066 $4.50 - $11.23 $6.54
Granted 107 $6.88 - $10.00 $7.33
Exercised (21) $ 4.50 $4.50
Canceled (83) $4.50 - $11.23 $6.51
---------------------------------
Outstanding at
April 30, 1997 1,069 $4.50 - $11.23 $6.67
Granted 150 $ 8.75 $8.75
Exercised (193) $4.50 - $7.875 $6.17
Canceled (48) $4.50 - $7.875 $6.93
---------------------------------
Outstanding at
April 30, 1998 978 $4.50 - $11.23 $7.07
Granted 514 $5.00 - $ 8.63 $5.34
Exercised (21) $4.50 - $ 7.00 $4.54
Canceled (359) $5.00 - $ 8.75 $7.37
---------------------------------
Outstanding at
April 30, 1999 1,112 $4.50 - $11.23 $6.22
---------------------------------
APRIL 30,
------------------
1999 1998 1997
- -------------------------------------------------------
Shares exercisable 590 682 749
Shares available for grant at
end of year 307 61 164
------------------
10
12
Earl Scheib, Inc.
Notes to Consolidated Financial Statements (Continued)
(In thousands except per share data)
- --------------------------------------------------------------------------------
The following table summarizes information about stock options
outstanding:
OPTIONS OUTSTANDING
---------------------------------------------------
WEIGHTED WEIGHTED
RANGE OF OUTSTANDING AVERAGE AVERAGE
EXERCISE AT APRIL 30, REMAINING EXERCISE
PRICE 1999 LIFE PRICE
---------------------------------------------------
$4.50 - $ 5.50 675 8.6 $5.25
$5.51 - $ 6.50 100 3.8 $6.19
$6.51 - $11.23 337 6.5 $8.17
-----------
1,112
-----------
OPTIONS EXERCISABLE
- -----------------------------------------
WEIGHTED
EXERCISABLE AT AVERAGE
RANGE OF APRIL 30, EXERCISE
EXERCISE PRICE 1999 PRICE
- -----------------------------------------
$4.50 - $ 5.50 197 $5.17
$5.51 - $ 6.50 100 $6.19
$6.51 - $11.23 293 $8.26
-------------
590
-------------
If the Company had followed SFAS No. 123, "Accounting for Stock-Based
Compensation", in determining compensation cost from stock options, then the
Company would have had a pro forma net income (loss) and earnings (loss) per
share indicated below:
APRIL 30,
--------------------------
1999 1998 1997
- -----------------------------------------------------
Net income (loss):
As reported $ 56 $1,064 $1,102
Pro forma (453) 493 864
Net income (loss) per
common share:
As reported:
Basic $ 0.01 $ 0.23 $ 0.24
Diluted 0.01 0.22 0.23
Pro forma:
Basic (.10) 0.11 0.18
Diluted (.10) 0.10 0.18
Because options vest over several years and additional options are granted
each year, the effects on pro forma net income and related per share amounts
presented above are not representative of the effect for future years.
The fair market value of stock options granted for purposes of the SFAS
No. 123 compensation was determined by using the Black-Scholes option-pricing
model and the following assumptions: a weighted average risk-free interest rate
of 5.07%, 5.86% and 6.77% for fiscal 1999, 1998 and 1997, respectively; an
expected life of 10 years; expected volatility of 34.1%, 32.6% and 32.8% in
fiscal 1999, 1998 and 1997, respectively, and no expected dividend. The
weighted-average fair value of the options issued by the Company in fiscal 1999,
1998 and 1997 was $2.97, $4.90 and $4.25, respectively.
6. Deferred Management Compensation
In 1987, the Company adopted a non-qualified supplemental compensation plan (the
"Plan") to provide benefits (including post retirement health care and death
benefits) to certain employees who were officers or key employees of the Company
prior to fiscal 1995 (admission to the plan was discontinued at the beginning of
fiscal 1995). Participants share in the cost of the Plan by deferring a portion
of their annual compensation for that purpose. Deferred compensation expense
under the Plan for Fiscal 1999, 1998 and 1997 was $173, $180 and $358,
respectively.
The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7.0% for fiscal 1999, 1998 and 1997. Due to the
compensation agreements having predetermined fixed dollar amounts of benefits,
no rates of increase in future compensation were used. The table below sets
forth the funded status and amounts recognized in the Company's consolidated
financial statements for the supplemental compensation plan:
APRIL 30,
-----------------
1999 1998
- --------------------------------------------------------
Change in benefit obligation
Benefit obligation at beginning of
year............................... 2,952 2,986
Service cost......................... 41 43
Interest cost........................ 191 196
Actuarial (gain) loss................ (34) 45
Benefits paid........................ (283) (318)
-----------------
Benefit obligation at end of year.... 2,867 2,952
Change in plan assets
Fair value of plan assets............ -- --
Funded status........................ (2,867) (2,952)
Unrecognized prior service cost...... 540 599
Unrecognized (gain) loss............. 140 106
-----------------
Net amount recognized................ (2,187) (2,247)
Amounts recognized in the statement
of financial position consist of:
Accrued benefit liability............ (2,867) (2,952)
Intangible assets.................... 680 705
-----------------
Net amount recognized................ (2,187) (2,247)
11
13
Earl Scheib, Inc.
Notes to Consolidated Financial Statements (Continued)
(In thousands except per share data)
- --------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
------------------------
1999 1998 1997
- --------------------------------------------------------
Weighted-average assumptions
Discount rate................. 7% 7% 7%
Components of net periodic
benefit cost
Service cost.................. 41 43 92
Interest cost................. 191 196 262
Amortization of prior service
costs....................... (59) (59) 4
------------------------
Net periodic benefit cost..... 173 180 358
The Company entered into whole life insurance contracts, to partially fund
its obligations under the Plan. The Company was not obligated to enter into
these contracts and is not required to use policy proceeds to pay for the Plan.
As of April 30, 1999 and 1998, these contracts had cash surrender values of
$1,780 and $1,642, respectively.
401(K) PLAN
In 1999, the Company established a 401(k) Plan covering substantially all
employees. Employees may elect to participate in the 401(k) Plan, provided that
they meet certain eligibility requirements. Voluntary employee contributions are
limited to 15 percent (up to a maximum of $10,000) of compensation. Subject to
the vesting schedule, Company contributions, equal to 50 percent of the first 4
percent of employee contributions are distributed ("matched") at the end of each
calendar year to participants then employed. As of April 30, 1999 the Company
accrued contributions of $31.
7. Long-term Debt
APRIL 30,
-------------
1999 1998
- -----------------------------------------------------
Loans against life insurance policy
cash surrender value................ $1,684 $ --
Note payable to bank.................. 226 --
Capital leases........................ 106 221
-------------
$2,016 $221
====== ====
Loans against life insurance policy cash surrender values bear interest at
a variable rate (currently 7%) with interest payable annually. The principal is
not due until such time as the policies are surrendered. Management does not
expect to pay these loans in Fiscal 2000.
The note payable to a bank is secured by a long-term receivable from a
state agency. Interest, at prime rate (8% as of April 30, 1999), and principal
are payable upon demand.
Capital lease obligations relate to the purchase of computer equipment and
bear interest at 3.54% to 11.5%. The long-term portion of the principal is due
in Fiscal 2001.
The Company has an agreement with a bank for a two-year $4,000 unsecured
line of credit. At April 30, 1999 no balance was outstanding.
8. Commitments and Contingencies
The Company has an agreement with its bank to finance a letter of credit
facility under which the bank has issued approximately $2,194 in standby letters
of credit at April 30, 1999. The letters of credit are in favor of the Company's
insurance carrier and secure the unfunded portion of the Company's estimated
worker's compensation insurance liabilities.
The Company is involved in several legal proceedings and claims as well as
environmental matters which arise in the ordinary course of its business.
Management believes that the amount of ultimate liability with respect to these
matters should not materially affect the Company's financial statements.
12
14
Report of Independent Public Accountants
"To the Shareholders of Earl Scheib, Inc.:
"We have audited the accompanying consolidated
balance sheet of Earl Scheib, Inc. (a Delaware
corporation) and subsidiaries as of April 30, 1999,
and the related consolidated statement of operations,
shareholders' equity and cash flow for the year then
ended. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
financial statements based on our audit.
"We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
financial statements. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
"In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Earl Scheib, Inc. and
subsidiaries as of April 30, 1999, and the results of
its operations and its cash flow for the year then
ended in conformity with generally accepted
accounting principles."
/s/ ARTHUR ANDERSEN LLP
Los Angeles, California
July 27, 1999
13
15
Earl Scheib, Inc.
Selected Financial Data
(Dollars in thousands except per share data)
YEAR ENDED APRIL 30,
-----------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Net sales $55,013 $50,839 $48,348 $43,981 $47,288
Net income (loss) 56 1,064 1,102 895 (5,553)
Per share:
Earnings -- Basic 0.01 0.23 0.24 0.20 (1.22)
Earnings -- Diluted 0.01 0.22 0.23 0.19 (1.22)
Cash dividends declared -- -- -- -- --
FINANCIAL POSITION
Property and equipment, net $21,089 $19,375 $18,012 $18,040 $14,868
Total assets 31,861 31,486 29,450 28,510 29,502
Long-term liabilities 5,314 3,584 3,779 3,809 3,600
Shareholders' equity 18,639 20,435 19,253 18,056 17,161
Number of shops at the end of the year 174 163 158 160 164
- ---------------------------------------------------------------------------------------------------------------
Selected Quarterly Financial Data (Unaudited)
The following table sets forth unaudited operating data for each of the
specified quarters of fiscal years 1999 and 1998. This quarterly information has
been prepared on the same basis as the annual consolidated financial statements
and, in the opinion of management, contains all adjustments necessary to state
fairly the information set forth herein.
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
For the Fiscal Year Ended April 30, 1999
Revenues $15,903 $14,765 $ 9,895 $14,450
Gross profit 5,180 4,459 1,287 3,419
Net income (loss) 1,006 587 (1,193) (344)
Basic earnings (loss) per share 0.22 0.13 (0.27) (0.08)
Diluted earnings (loss) per share 0.21 0.13 (0.27) (0.08)
For the Fiscal Year Ended April 30, 1998
Revenues $14,755 $13,900 $ 8,490 $13,694
Gross profit 5,118 4,298 895 3,480
Net income (loss) 1,461 709 (1,222) 116
Basic earnings (loss) per share 0.32 0.15 (0.27) 0.03
Diluted earnings (loss) per share 0.31 0.15 (0.27) 0.02
- ------------------------------------------------------------------------------------------------------------
(Notes to selected quarterly financial data)
The variation in net income and earnings per share between the fourth
quarter of fiscal 1999 and the fourth quarter of fiscal 1998 is due to (1) a
decrease in same shop sales in the fiscal 1999 fourth quarter, (2) an increase
in legal fees due to defense and settlement of litigation and (3) significantly
higher workers compensation accruals compared to the prior period.
14
16
Earl Scheib, Inc.
- --------------------------------------------------------------------------------
Market Information
Earl Scheib, Inc. is listed and traded on the America Stock Exchange under the
ticker symbol "ESH". As of April 30, 1999, there were approximately 251 holders
of record of the Company's stock according to records maintained by the Companys
transfer agent. The high and low sales prices of the stock for each of the
fiscal quarters of 1999 and 1998 are as follows:
1999 1998
- --------------------------------------------------------------------------------------------------
1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH
QTR. QTR. QTR. QTR. QTR. QTR. QTR. QTR.
- --------------------------------------------------------------------------------------------------
High $9 1/4 $7 $6 $6 1/2 $7 9/16 $9 3/8 $9 1/4 $9 5/8
Low 6 3/ 4 3/ 4 3/ 4 3/ 5 1/ 6 5/1 7 1/ 8 1/
- --------------------------------------------------------------------------------------------------
No dividends were paid in either fiscal 1999 or 1998.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
The statements which are not historical facts contained in this Annual Report
are forward looking statements that involve risks and uncertainties, including,
but not limited to, the effect of weather, the effect of economic conditions,
the impact of competitive products, services and pricing, capacity and supply
constraints or difficulties, changes in laws and regulations applicable to the
Company, the impact of Year 2000 hardships, the impact of the Company's new
EuroPaint(R), the impact of advertising and promotional activities, the impact
of the Company's expansion and fleet sales, the potential adverse effects of
certain litigation and the impact of various tax positions taken by the Company.
15
17
Directors and Executive Officers
Directors
Philip W. Colburn
Chairman of the Board
Christian K. Bement
President and Chief Executive Officer
of the Company
Stuart D. Buchalter
Of Counsel
Buchalter, Nemer, Fields & Younger
David Eisenberg
Chief Executive Officer
Let's Talk Cellular & Wireless
Alexander L. Kyman
Business and Financial Consultant
Donald R. Scheib
Retired
Daniel A. Seigel
Business Consultant
Executive Officers
Christian K. Bement
President and Chief Executive Officer
James E. Smith
Vice President Shop Operations
David I. Sunkin
Vice President and General Counsel,
Secretary
Registrar and Transfer Agent
Continental Stock Transfer & Trust Co.
New York, NY
Corporate Counsel
Buchalter, Nemer, Fields & Younger
A Professional Corporation
Los Angeles, California
Auditors
Arthur Andersen LLP
Los Angeles, California
Major Facilities
Corporate Office
8737 Wilshire Boulevard
Beverly Hills, California 90211-2795
Manufacturing and Warehousing
Earl Scheib Automotive Paint Finishes, Inc.
1940 East Trafficway
Springfield, Missouri 65802-2297
Annual Meeting of Shareholders
The annual meeting of Earl Scheib, Inc. will be held at 10:00 AM (PDT) on
Thursday, September 2, 1999, at the Hotel Nikko, 465 So. La Cienega Blvd., Los
Angeles, CA 90048. All Shareholders are cordially invited to attend.
Shareholders of record on July 16, 1999, are entitled to vote. This annual
report has been prepared by management for the information of the Shareholders
and employees of the Company and is not intended to be used in connection with
any sale, offer to sell, or solicitation of an offer to purchase any securities
of the Company.
Form 10-K
A copy of the Companys Annual Report to the Securities and Exchange Commission
on Form 10-K may be obtained at no cost upon written request to:
Corporate Secretary
Earl Scheib, Inc.
8737 Wilshire Boulevard
Beverly Hills, California 90211-2795
Stock Listing
Earl Scheib, Inc. is listed and traded on the American Stock Exchange (Symbol:
"ESH").
16