BNS CO - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-5881

BNS Co.

(Exact name of registrant as specified in its charter)

Delaware

050113140

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

25 Enterprise Center, Suite 103, Middletown, Rhode Island 02842

(Address of principal executive offices and zip code)

(401) 848-6300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 3,004,509 of Class A common stock, 29,935 shares of Class B common stock, par value $0.01 per share, outstanding as of April 30, 2004.

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS*

BNS Co.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except per share data)

(unaudited)


	For the Quarter Ended March 31,
	2004			2003
Gravel royalty revenue	$	68		$	188
General and administrative		727			615

Operating loss		(659	)		(427	)
Interest expense		—			22
Other income, net		26			33

Loss from continuing operations before income tax		(633	)		(416	)
Income tax provision		4			33

Loss from continuing operations:		(637	)		(449	)
Income (loss) from discontinued operations		(46	)		297

Net loss	$	(683	)	$	(152	)

Net loss per share basic and diluted:
Continuing operations	$	(0.21	)	$	(0.15	)
Discontinued operations		(0.02	)		0.10

Net loss per common share basic and diluted	$	(0.23	)	$	(0.05	)

*	The accompanying notes are an integral part of the financial statements.

Item 1. FINANCIAL STATEMENTS*

BNS Co.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	March 31, 2004			December 31, 2003
	(unaudited)
ASSETS
Current Assets:
Cash	$	13,865		$	14,404
Other receivable, net of allowance of $0 at March 31, 2004 and $37 allowance at December 31, 2003		82			214
Assets held for sale or disposition		506			493
Prepaid expenses & other current assets		1,042			1,158

Total current assets		15,495			16,269
Machinery and Equipment:
Machinery and equipment		37			37
Less accumulated depreciation		21			20

		16			17
Restricted cash		284			331

	$	15,795		$	16,617

LIABILITIES AND SHAREOWNERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,652		$	1,820
Total current liabilities		1,652			1,820

Long-term liabilities		1,351			1,351
Commitments and contingencies		—			—
Shareowners’ equity
Preferred stock; $1.00 par value; authorized 1,000,000 shares; none issued		—			—
Common Stock:
Class A, par value, $.01; authorized 30,000,000 shares; issued 3,013,027 shares at March 31, 2004 and 3,000,342 shares at December 31, 2003		30			30
Class B, par value, $.01; authorized 2,000,000 shares; issued 29,935 at March 31, 2004 and 35,620 at December 31, 2003		1			1
Additional paid-in capital		87,115			87,071
Accumulated deficit		(74,058	)		(73,375	)
Unamortized value of restricted stock awards		(64	)		(40	)
Accumulated other comprehensive income		223			214
Treasury stock: 8,518 shares at March 31, 2004 and December 31, 2003 at cost		(455	)		(455	)

Total shareowners’ equity		12,792			13,446

	$	15,795		$	16,617

*	The accompanying notes are an integral part of the financial statements.

Item 1. FINANCIAL STATEMENTS*

BNS Co.

CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)


	For the Three Months Ended March 31,
	2004			2003
Cash Used in Operations:
Net loss	$	(683	)	$	(152	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		21			42
Changes in operating assets and liabilities		80			(1,736	)
Changes in assets and liabilities related to discontinued operations and assets held for sale		—			(6	)
Changes in environmental escrow		47			—

Net Cash Used in Operations		(535	)		(1,852	)

Investment Transactions:
Proceeds from sale of business, net of expenses		—			604

Cash Provided by Investing Transactions		—			604

Financing Transactions:
Payment of notes payable		—			(252	)

Cash Used in Financing Transactions		—			(252	)


Effect of Exchange Rate Changes on Cash		(4	)		(18	)

Cash and Cash Equivalents:
Decrease during the period		(539	)		(1,518	)
Beginning balance		14,404			4,416

Ending balance	$	13,865		$	2,898

Supplementary Cash Flow Information:
Interest Paid	$	—		$	69

*	The accompanying notes are an integral part of the financial statements.

Item 1. FINANCIAL STATEMENTS*

BNS Co.

CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY

(in thousands)

For the Three Months ended March 31, 2004


	Shares	Common Stock $.01 par value		Additional paid in capital		Accumulated deficit			Unamortized value of restricted stock awards			Accumulated other comprehensive income		Treasury stock			Total Equity
Balance at January 1, 2004	3,036	$	31	$	87,071	$	(73,375	)	$	(40	)	$	214	$	(455	)	$	13,446
Net loss	—		—		—		(683	)		—			—		—			(683	)
Foreign currency translation adjustment	—		—		—		—			—			9		—			9

Comprehensive loss																		(674	)
Restricted stock awards	7		—		44		—			(44	)		—		—			—
Amortization of restricted stock awards	—		—		—		—			20			—		—			20

Balance at March 31, 2004	3,043	$	31	$	87,115	$	(74,058	)	$	(64	)	$	223	$	(455	)	$	12,792

*	The accompanying notes are an integral part of the financial statements.

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands except per share data)

BNS Co. (the “Company”) is a real estate management company deriving royalty revenues from an owned landfill property in the United Kingdom (the “U.K. Property”). As previously disclosed, it is the Company’s intention to sell the U.K. Property, and then liquidate or seek other strategic alternatives. On February 5, 2004, the Company entered into an agreement with Bath Road Holdings Limited (the “U.K. Agreement”) to sell its interest in the U.K. Property, for 5.5 million British Pounds. The transaction will be in the form of a sale of the stock of the Company’s U.K. subsidiary that holds title to the property and the sale of the Company’s note receivable from the U.K. subsidiary. There will also be a post-closing adjustment for the U.K. subsidiary’s net working capital at the time of closing. The sale of the U.K. subsidiary is deemed to constitute the sale of substantially all assets of the Company within the meaning of the Delaware General Corporation Law and therefore requires stockholder approval, which will be sought at the Company’s 2004 Annual Meeting to be held on June 11, 2004.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter ended March 31, 2004 are not indicative of the results that may be expected for the year ended December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2003.

The U.K. Property consists of approximately 86.5 acres of land adjacent to the Heathrow airport. The property is currently operated as a landfill facility (prior to December 2003, a gravel extraction and landfill facility), for which the Company receives royalties. The property is subject to zoning restrictions which limit its development potential. The royalties are shared with the adjacent land owner under the terms of a partnership agreement. The facility operator is responsible for restoring the property after the landfill activity is complete. Gravel and landfill royalty revenue for each of the quarters ended March 31, 2004 and 2003 was $68 and $188, respectively.

Since the Company is presently a real estate management business consisting solely of the U. K. Property, and has entered into the U.K. Agreement to sell this property, the Company is not in significant direct competition with any other specific business. However, the Company may be deemed to be in competition generally with other businesses seeking to provide land fill services in the United Kingdom.

On August 26, 2003, pursuant to a Purchase and Sales Agreement dated as of April 28, 2003, as amended between the Company and Wasserman RE Ventures LLC (“Wasserman”), the Company sold an industrial and office building along with the adjoining acreage (a total of approximately 169 acres, all in Rhode Island)(the “Rhode Island Property”) and reported a gain of $15,210 net of expenses on the sale. The Company received proceeds of $18,684 net of expenses. Additionally, the Company established an environmental escrow in the original amount of $331 to cover certain environmental remediation costs. During the quarter, certain environmental related costs associated with the Rhode Island Property were paid by the Company using restricted cash from this escrow account. This escrow account is presented as restricted cash on the consolidated balance sheet. The purchase price was determined by arms-length negotiation between representatives of the Company and representatives of Wasserman. In connection with the sale of the Rhode Island Property, the Company relocated its headquarters to its present business location in Middletown, Rhode Island.

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands except per share data)

The sale of the Rhode Island Property and the pending sale of U.K. Property are part of the Company’s plan to sell its remaining assets and then liquidate or seek other strategic alternatives. Such plan may involve one of the following alternatives: a) the sale of the Company through a merger or other change in control transaction; b) a liquidation, either through a dissolution, formation of a liquidating trust and liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal bankruptcy reorganization proceeding, both of which would involve provisions for payments to creditors (including contingent claims) and contemplated distributions to stockholders; or c) continuation of the Company as a going-concern for either a limited or longer period of time while the Company devotes energies to resolving its contingent liabilities and makes investments which are permitted without requiring the Company to register as an “investment company” under the Investment Company Act of 1940. Such investments may include possible acquisitions of other operating businesses.

Discontinued Operations – As a result of the sale of the Rhode Island Property in 2003, the Company has presented the net rental operation from this property in discontinued operations for the quarters ended March 31, 2004 and 2003. The loss reported in discontinued operations in 2004 contains expenses incurred subsequent to and related to the sale of the Rhode Island Property. Rental revenues for the first quarter of 2003 were $566.

3.	For the three months ended March 31, 2004 and March 31, 2003, the Company has recorded an income tax provision relative to continuing operations of $4 and $33, respectively. This represents an income tax provision associated with the gravel and landfill royalty income earned in the United Kingdom.

4.	The following table sets forth the computation of basic and diluted loss per share:


	For the Quarter Ended March 31,
	2004			2003
Numerator:
Loss from continuing operations	$	(637	)	$	(449	)
Income (loss) from discontinued operations		(46	)		297

Net loss	$	(683	)	$	(152	)

Denominator for basic earnings per share:
Weighted-average shares		2,992			2,922
Effect of dilutive securities:
Employee stock options and restricted stock		—			—

Denominator for diluted earnings per share		2,992			2,922

Basic and diluted income (loss) per share from: