- -------------------------------------------------------------------------------- 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 29, 2003 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------- Commission file number 0-18914 R&B, INC. Incorporated pursuant to the Laws of the Commonwealth of Pennsylvania ------------------- IRS - Employer Identification No. 23-2078856 3400 East Walnut Street, Colmar, Pennsylvania 18915 (215) 997-1800 ------------------- 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|_| Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes |_| No|X| As of May 5, 2003 the Registrant had 8,609,898 common shares, $.01 par value, outstanding. - -------------------------------------------------------------------------------- Page 1 of 16
R & B, INC. AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q March 29, 2003 Page Part I -- FINANCIAL INFORMATION Item 1.Consolidated Financial Statements (unaudited) Statements of Operations: Thirteen Weeks Ended March 29, 2003 and March 30, 2002.............................. 3 Balance Sheets...................................... 4 Statements of Cash Flows............................. 5 Notes to Consolidated Financial Statements........... 6 Item 2.Management's Discussion and Analysis of Results of Operations and Financial Condition.............................. 9 Item 3.Quantitative and Qualitative Disclosure about Market Risk................................ 12 Item 4.Controls and Procedures.............................. 12 Part II -- OTHER INFORMATION Item 1.Legal Proceedings.................................... 13 Item 6.Exhibits and Reports on Form 8-K..................... 13 Signature . . . . . . . .................................... 14 Certifications.............................................. 15 Page 2 of 16
PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS R&B, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) <TABLE> <CAPTION> For the Thirteen Weeks Ended ------------------------------ March 29, March 30, (in thousands, except per share data) 2003 2002 - -------------------------------------------------------------------------------------------- <S> <C> <C> Net Sales $ 50,272 $ 51,080 Cost of goods sold 31,674 32,674 - -------------------------------------------------------------------------------------------- Gross profit 18,598 18,406 Selling, general and administrative expenses 14,260 14,085 - -------------------------------------------------------------------------------------------- Income from operations 4,338 4,321 Interest expense, net of interest income of $57 and $104 891 1,025 - -------------------------------------------------------------------------------------------- Income before taxes 3,447 3,296 Provision for taxes 1,222 1,149 - -------------------------------------------------------------------------------------------- Net Income $ 2,225 $ 2,147 ============================================================================================ Earnings Per Share: Basic $0.26 $0.25 Diluted 0.25 0.24 ============================================================================================ Average Shares Outstanding: Basic 8,521 8,474 Diluted 8,981 8,900 </TABLE> See accompanying notes to consolidated financial statements. Page 3 of 16
<TABLE> R&B, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS <CAPTION> March 29, December 28, (in thousands, except share data) 2003 2002 - --------------------------------------------------- ----------------- ----------------- <S> <C> <C> Assets (unaudited) Current Assets: Cash and cash equivalents $ 6,241 $ 5,169 Short-term investments 10,769 14,002 Accounts receivable, less allowance for doubtful accounts and customer credits of $15,525 and $17,854 48,446 48,769 Inventories 51,808 47,217 Deferred income taxes 7,481 7,621 Prepaids and other current assets 1,347 1,425 - --------------------------------------------------- ----------------- ----------------- Total current assets 126,092 124,203 - --------------------------------------------------- ----------------- ----------------- Property, Plant and Equipment, net 16,287 16,591 Goodwill 28,681 28,607 Other Assets 917 727 - --------------------------------------------------- ----------------- ----------------- Total $171,977 $170,128 =================================================== ================= ================= Liabilities and Shareholders' Equity Current Liabilities: Current portion of long-term debt $ 9,439 $ 9,291 Accounts payable 13,143 11,813 Accrued compensation 4,574 7,304 Other accrued liabilities 4,884 4,455 - --------------------------------------------------- ----------------- ----------------- Total current liabilities 32,040 32,863 Long-Term Debt 43,785 44,218 Deferred Income Taxes 3,899 3,475 Commitments and Contingencies Shareholders' Equity: Common stock, par value $.01; authorized 25,000,000 shares; issued 8,563,364 and 8,501,070 shares 86 85 Additional paid-in capital 33,282 32,937 Cumulative translation adjustments 165 55 Retained earnings 58,720 56,495 Total shareholders' equity 92,253 89,572 - --------------------------------------------------- ----------------- ----------------- Total $171,977 $170,128 =================================================== ================= ================= </TABLE> See accompanying notes to consolidated financial statements. Page 4 of 16
R&B, INC. AND SUBSIDIARIES <TABLE> CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) <CAPTION> For the Thirteen Weeks Ended ----------------------------------- March 29, March 30, (in thousands) 2003 2002 - ---------------------------------------------------------------- --------------- ------------------- <S> <C> <C> Cash Flows from Operating Activities: Net income $ 2,225 $ 2,147 Adjustments to reconcile net income to cash (used in) provided by operating activities: Depreciation and amortization 1,192 1,586 Provision for doubtful accounts 134 189 Provision for deferred income tax 564 227 Provision for non-cash stock compensation 14 76 Changes in assets and liabilities: Accounts receivable 287 (115) Inventories (4,414) (606) Prepaids and other (292) 413 Accounts payable 1,288 611 Other accrued liabilities (2,169) (2,337) - ---------------------------------------------------------------- --------------- ------------------- Cash (used in) provided by operating activities (1,171) 2,191 - ---------------------------------------------------------------- --------------- ------------------- Cash Flows from Investing Activities: Property, plant and equipment additions (885) (486) Purchases of short-term investments (3,817) - Proceeds from maturities of short-term investments 7,050 - - ---------------------------------------------------------------- --------------- ------------------- Cash provided by (used in) investing activities 2,348 (486) - ---------------------------------------------------------------- --------------- ------------------- Cash Flows from Financing Activities: Repayment of term loans and capitalized lease obligations (285) ( 1,180) Proceeds from common stock issuances 180 27 - ---------------------------------------------------------------- --------------- ------------------- Cash used in financing activities (105) (1,153) - ---------------------------------------------------------------- --------------- ------------------- Net Increase in Cash and Cash Equivalents 1,072 552 Cash and Cash Equivalents, Beginning of Period 5,169 21,689 - ---------------------------------------------------------------- --------------- ------------------- Cash and Cash Equivalents, End of Period $ 6,241 $ 22,241 ================================================================ =============== =================== Supplemental Cash Flow Information Cash paid for interest expense $ 919 $ 1,124 Cash paid for income taxes $ 329 $ 656 </TABLE> See accompanying notes to consolidated financial statements. Page 5 of 16
R&B, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THIRTEEN WEEKS ENDED MARCH 29, 2003 AND MARCH 30, 2002 (UNAUDITED) 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. However, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the thirteen week period ended March 29, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ending December 27, 2003. For further information, refer to the financial statements and footnotes thereto included in R&B, Inc.'s (the "Company") Annual Report on Form 10-K for the year ended December 28, 2002. 2. Inventories Inventories include the cost of material, freight, direct labor and overhead utilized in the processing of the Company's products. Inventories were as follows: March 29, December 28, (in thousands) 2003 2002 - ------------------- --------------- --------------- Bulk product $21,478 $19,923 Finished product 27,316 24,462 Packaging materials 3,014 2,832 - ------------------- --------------- --------------- Total $51,808 $47,217 =================== =============== =============== 3. Earnings Per Share The following table sets forth the computation of basic earnings per share and diluted earnings per share for the thirteen week periods ended March 29, 2003 and March 30, 2002. Thirteen Weeks Ended --------------------------------- March 29, March 30, (in thousands, except per share data) 2003 2002 - --------------------------------------------- ------------- --- ------------- - Numerator: Net income ............................. $ 2,225 $ 2,147 Denominator: Weighted average shares outstanding 8,521 8,474 Effect of dilutive stock options........ 460 426 ------------- --- ------------- - Adjusted weighted average shares outstanding diluted earnings per share......... 8,981 8,900 ============= === ============= = Basic earnings per share..................... $ 0.26 $ 0.25 ============= === ============= = Diluted earnings per share................... $ 0.25 $ 0.24 ============= === ============= = Options to purchase 5,000 shares were outstanding at March 30, 2002, but were not included in the computation of diluted earnings per share, as their effect would have been antidilutive. Page 6 of 16
4. Stock-Based Compensation Effective May 18, 2000 the Company amended and restated its incentive Stock Option Plan (the "Plan"). Under the terms of the Plan, the Board of Directors of the Company may grant incentive stock options and non-qualified stock options or combinations thereof to purchase up to 1,172,500 shares of common stock to officers, directors and employees. Grants under the Plan must be made within 10 years of the plan amendment date and are exercisable at the discretion of the Board of Directors but in no event more than 10 years from the date of grant. At March 29, 2003, options to acquire 332,174 shares were available for grant under the Plan. The Company accounts for the Plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25 (APB No. 25), "Accounting for Stock Issued to Employees", and related interpretations. Under APB No. 25, compensation expense is based on the difference, if any, on the date of the grant between the fair value of our stock and the exercise price of the option. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards, ("SFAS") No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation. <TABLE> <CAPTION> Thirteen Weeks Ended - ------------------------------------------------ ------------------------------------ (in thousands, except per share data) March 29, March 30, 2003 2002 - ------------------------------------------------ ----------------- ----------------- <S> <C> <C> Net income: Net income, as reported $ 2,225 $ 2,147 Add: Stock-based employee compensation expense, net of related tax effects, included in the determination of net income, as reported 9 49 Less: Stock-based employee compensation expense, net of related tax effects, determined under fair value based method for all awards (11) (157) Net income, pro forma $ 2,223 $ 2,039 - ------------------------------------------------ ----------------- ----------------- Earnings per share: Basic - as reported $ 0.26 $ 0.25 Basic - pro forma $ 0.26 $ 0.24 Diluted - as reported $ 0.25 $ 0.24 Diluted - pro forma $ 0.25 $ 0.23 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: </TABLE> 2003 2002 ---- ---- Expected dividend yield 0% 0% Expected stock price volatility 53% 46% Risk-free interest rate 3.3% 5.3% Expected life of option 7.5 years 7.5 years 5. Related-Party Transaction The Company has entered into leases for two operating facilities with partnerships of which the Company's Chief Executive Officer and Executive Vice President are partners. On March 14, 2003, the Company entered into an agreement with one of the partnerships related to the Company to terminate the lease for its Carrollton, Georgia facility. In connection with this agreement, the Company will pay $200,000 to terminate this lease subject to the closing of the sale of the building Page 7 of 16
by the partnership to an unrelated entity. On April 15, 2003, the Company paid this amount, which was previously accrued, to the partnership upon completion of the sale of the building. 6. New Accounting Pronouncements In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal of Activities." The statement will be applied prospectively to exit or disposal activities initiated after December 28, 2002. The initial adoption of this pronouncement will not have a material effect on the consolidated statement of operations. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of SFAS 123." This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in APB Opinion No. 25 and related interpretations. Accordingly, compensation expense for stock options is measured as the excess, if any, of the estimate of the market value of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock. The Company will adopt the annual disclosure provisions of SFAS No. 148 in its financial reports for the fiscal year ended December 27, 2003 and has adopted the interim disclosure provisions for its financial reports for the quarter ended March 29, 2003. As the adoption of this standard involves disclosures only, the Company does not expect a material impact on its results of operations, financial position or liquidity. In January 2003, the FASB issued Interpretation Number 46, "Consolidation of Variable Interest Entities" (FIN 46). This interpretation addresses consolidation by business enterprises of variable interest entities. This interpretation is not expected to have a material effect on the Company's consolidated financial statements. Page 8 of 16
R&B, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Over the periods presented, the Company has focused its efforts on providing an expanding array of new product offerings and strengthening its relationships with its customers. To that end, the Company has made significant investments to increase market penetration, primarily in the form of product development, customer service, customer credits and allowances. The Company recognizes revenue for sales to its customers at the time of shipment from the Company's warehouses. Net sales are calculated by subtracting allowances for customer credits from gross revenues. Allowances for customer credits include costs for product returns, discounts and promotional rebates given to customers who purchase new products for inclusion in their stores, and the cost of competitors' products that are purchased from the customer in order to induce a customer to purchase new product lines from the Company. The Company provides for customer credits and potential returns at the time of sale. The Company may experience significant fluctuations from quarter to quarter in its results of operations due to the timing of orders placed by the Company's customers. Generally, the second and third quarters have the highest level of shipments, but the introduction of new products and product lines to customers may cause significant fluctuations from quarter to quarter. The Company operates on a fifty-two, fifty-three week period ending on the last Saturday of the calendar year. Sale of Specialty Fastener Business and Litigation Settlement On May 1, 2002, the Company entered into agreements to sell its specialty fastener business and to settle litigation initiated by the Company in 1996 related to its purchase of the Dorman business. Total proceeds from the sale and settlement, net of transaction costs and purchase price adjustments were approximately $7.4 million. The transactions resulted in an after-tax gain on the sale of the fastener business of $1.3 million, and a reduction in goodwill totaling $2.2 million. Results of Operations The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items in the Company's Consolidated Statements of Operations: Percentage of Net Sales --------------------------------- For the Thirteen Weeks Ended Thirty-nine Weeks Ended --------------------------------- March 29, March 30, 2003 2002 - ---------------------------------------- ---------------- ---------------- Net Sales 100.0% 100.0% Cost of goods sold 63.0% 64.0% - ---------------------------------------- ---------------- ---------------- Gross profit 37.0% 36.0% Selling, general and administrative expenses 28.4% 27.5% - ---------------------------------------- ---------------- ---------------- Income from operations 8.6% 8.5% Interest expense, net 1.8% 2.0% - ---------------------------------------- ---------------- ---------------- Income before taxes 6.8% 6.5% Provision for taxes 2.4% 2.3% - ---------------------------------------- ---------------- ---------------- Net Income 4.4% 4.2% ======================================== ================ ================ Page 9 of 16
Thirteen Weeks Ended March 29, 2003 Compared to Thirteen Weeks Ended March 30, 2002 Net sales decreased 1.6% to $50.3 million for the thirteen weeks ended March 29, 2003 from $51.1 million for the same period in 2002. Revenues from the specialty fastener business sold in May 2002 totaled $1.5 million in the thirteen weeks ended March 30, 2002. Net sales increased $0.7 million, or 1.4%, after adjusting for the specialty fastener business sale. Sales volume in 2003 increased as a result of shipments to a new customer for the Company's Allparts brake business, but was largely offset by a lower level of new product introductions and line updates during the quarter, and inventory reduction initiatives by certain customers. Cost of goods sold, as a percentage of sales, declined to 63.0% for the thirteen weeks ended March 29, 2003 from 64.0% in the same period last year. The decline in cost of goods sold as a percentage of sales in 2003 is the result of lower materials and operating costs, and lower allowances for customer credits as a result of a reduction in new program introductions during the quarter. Selling, general and administrative expenses for the thirteen weeks ended March 29, 2003 increased $0.2 million, or 1.2%, to $14.3 million from $14.1 million for the same period in 2002. The increase is the result of inflationary increases in wages and other expenses and higher spending on new product development, offset by savings from several cost reduction initiatives. Interest expense, net, decreased to $0.9 million for the thirteen weeks ended March 29, 2003 from $1.0 million in the prior year due to lowering borrowing levels. In August 2002 the Company made the first of seven annual installment payments of $8.6 million due under the terms of its Senior Note Agreements. The Company's effective tax rate increased to 35.5% for the thirteen weeks ended March 29, 2003 from 34.9% for the thirteen weeks ended March 30, 2002. Liquidity and Capital Resources Historically, the Company has financed its growth through a combination of cash flow from operations and through the issuance of senior indebtedness through its bank credit facility and senior note agreements. At March 29, 2003, working capital was $94.1 million, total long-term debt (including the current portion) was $53.2 million and shareholders' equity was $92.3 million. Cash and short-term investments as of March 29, 2003 totaled $17.0 million. Long-term debt consists primarily of $51.4 million in Senior Notes that were originally issued in August 1998, in a private placement on an unsecured basis ("Notes"). The Notes bear a 6.81% fixed interest rate, payable quarterly. Annual principal payments of $8.6 million are due each August through 2008. The Notes require, among other things, that the Company maintain certain financial covenants relating to debt to capital ratios and minimum net worth. In March 2001, the Company amended its Revolving Credit Facility. The amended agreement provides for a $10.0 million facility for a three-year term that expires in March 2004. Borrowings under the amended facility are on an unsecured basis with interest at rates ranging from LIBOR plus 150 to LIBOR plus 275 basis points. The loan agreement also contains covenants, the most restrictive of which pertain to net worth and the ratio of debt to EBITDA. In addition, the Company's Swedish subsidiary maintains a short-term $1.5 million credit facility. There were no borrowings under either facility as of March 29, 2003. The Company amended certain agreements related to its 1998 acquisition of Scan-Tech USA/Sweden A.B. and related entities ("Scan-Tech") during 2001. As a result of this transaction, the Company purchased and canceled 250,000 shares of its common stock issued in connection with the acquisition and canceled the earn out provisions of the acquisition agreement in exchange for consideration of $3.2 million to be paid by the Company in installments through December 2005. The aggregate amount outstanding under this obligation was $1.4 million at March 29, 2003. The Company reported a net use of cash from its operating activities of $1.2 million in the three months ended March 29, 2003. The primary use of cash flow was inventory, which increased $4.4 million during the quarter. Inventory grew due to a seasonal build in inventory levels and management's decision to increase inventory safety stocks given recent world events. Cash flow was also used to reduce other accrued liabilities by $2.2 million as a result of the Company's funding of employee profit sharing and incentive payments earned in the prior year, but paid in the first quarter of 2003. Page 10 of 16
Investing activities generated $2.3 million of cash in the three months ended March 29, 2003. Net proceeds from short term-investments generated $3.2 million in cash flow while additions to property, plant and equipment used $0.9 million of cash during the quarter. Short-term investments consist of highly liquid corporate and government bonds with maturities from three months to one year. Financing activities required $0.1 million in the three months ended March 29, 2003. These activities consisted of scheduled repayments under capital lease and other debt obligations net of proceeds from common stock issuances. The Company believes that cash and short-term investments on hand and cash generated from operations together with its available sources of capital are sufficient to meet ongoing cash needs for the foreseeable future. Foreign Currency Fluctuations. The Company purchases approximately half of it products from a variety of foreign countries. The products generally are purchased through purchase orders with the purchase price specified in U.S. dollars. Accordingly, the Company does not have exposure to fluctuations in the relationship between the dollar and various foreign currencies between the time of execution of the purchase order and payment for the product. However, to the extent that the dollar decreases in value to foreign currencies in the future, the price of the product in dollars for new purchase orders may increase. The Company attempts to lessen the impact of these currency fluctuations by resourcing its purchases to other countries. Impact of Inflation The Company has not generally been adversely affected by inflation. The Company believes that price increases resulting from inflation generally could be mitigated through the use of alternative suppliers and by resourcing its purchases to other countries. Cautionary Statement Regarding Forward Looking Statements Certain statements periodically made by or on behalf of the Company and certain statements contained herein including statements in Management's Discussion and Analysis of Financial Condition and Results of Operations, such as statements regarding litigation, and certain other statements contained herein regarding matters that are not historical fact are forward looking statements (as such term is defined in the Securities Act of 1933), and because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking statements. Factors that cause actual results to differ materially include but are not limited to those factors discussed in the Company's Annual Report on Form 10-K under "Risk Factors." Item 3. Quantitative and Qualitative Disclosure about Market Risk The Company's market risk is the potential loss arising from adverse changes in interest rates. With the exception of the Company's revolving credit facility, long-term debt obligations are at fixed interest rates and denominated in U.S. dollars. Under the terms of the Company's revolving credit facility, a change in LIBOR market interest rates would affect the rate at which the Company could borrow funds thereafter. The Company believes that the effect of any such change would be minimal. The Company manages its interest rate risk by monitoring trends in interest rates as a basis for determining whether to enter into fixed rate or variable rate agreements. Short-term fixed income investments are subject to interest rate risk. The portfolio consists solely of investment grade corporate and government securities to minimize credit risk. Occasionally, the Company uses derivative financial instruments, consisting of foreign currency forward purchase and sales contracts with terms of less than one year, to hedge its exposure to changes in foreign currency exchange. Its primary exposure to changes in foreign currency rates results from changes in exchange rates on certain third-party trade receivables and payables of the Company's Swedish subsidiary. There were no forward purchase or sales contracts outstanding as of March 29, 2003. Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures. The Company's Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within ninety days before the filing date of this quarterly report (the "Evaluation Date"). Based on that evaluation, the Chief Executive Officers and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective, providing them with material Page 11 of 16
information relating to the Company as required to be disclosed in the reports the Company files or submits under the Exchange Act on a timely basis. (b) Changes in internal controls. There were no significant changes in the Company's internal controls or in other factors that could significantly affect those controls subsequent to the Evaluation Date. Page 12 of 16
PART II: OTHER INFORMATION Item 1. Legal Proceedings In addition to commitments and obligation which arise in the ordinary course of business, the Company is subject to various claims and legal actions from time to time involving contracts, competitive practices, trademark rights, product liability claims and other matters arising out of the conduct of the Company's business. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 99.1 Certifications Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002). (b) Reports on Form 8-K None Page 13 of 16
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. R & B, INC. Date May 8, 2003 \s\ Richard Berman --------------- ------------------------- Richard Berman President and Chief Executive Officer Date May 8, 2003 \s\ Mathias Barton --------------- -------------------------- Mathias Barton Chief Financial Officer and Principal Accounting Officer Page 14 of 16
CERTIFICATIONS I, Richard Berman, President and Chief Executive Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of R&B, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 8, 2003 \s\ Richard Berman Richard Berman President and Chief Executive Officer Page 15 of 16
CERTIFICATIONS I, Mathias Barton, Chief Financial Officer and Principal Accounting Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of R&B, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 8, 2003 \s\ Mathias Barton Mathias Barton Chief Financial Officer Page 16 of 16