<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
Form 10-Q
Quarterly Report Under Section 13 or 15(D)
of the
Securities Exchange Act of 1934
Commission File Number 0-5703
For Quarter and six months ended September 30, 1995
Exact name of registrant as specified in it's charter - J. MICHAELS, INC.
State or other jurisdiction of incorporation or organization - NEW YORK
I.R.S. employer identification no. - 11-1796714
Address of principal executive offices - 182 SMITH STREET
BROOKLYN, N.Y. 11201
Registrant's telephone number, including area code - 718-852-6100
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) have been subject to
such filing requirements for the past 90 days.
YES X No
Indicate the number of shares outstanding of each of the issuers of common
stock, as of the latest practicable date. 851,282 SHARES OF COMMON STOCK OF
$1.00 PAR VALUE, AS OF SEPTEMBER 30, 1995.
-1-
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<TABLE>
<CAPTION>
J.MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amount in thousands except per
share data)
For the 6 and 3 months ended 9/30
Year to date Quarter
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $2,296 $2,822 $1,078 $1,316
Credit service charges 677 754 341 369
Total revenues 2,973 3,576 1,419 1,685
Cost of sales and operating expenses
Cost of sales, including buying
and occupancy expenses 1,058 1,256 501 586
Selling, general and adminstrative
expenses 1,846 2,050 970 1,079
Bad debts expense 252 194 181 110
Depreciation and amortization 47 73 15 37
3,203 3,573 1,667 1,812
Operating income (230) 3 (248) (127)
Other income (expense) net
Interest and dividend income 222 154 105 83
Capital gains (losses) 38 (42) 33 (38)
Other, net 2 32 - 13
262 144 138 58
- - - -
Income before income taxes 32 147 (110) (69)
Taxes on income 19 63 (49) (32)
Net income $13 $84 ($61) ($37)
Net income per share 0.02 0.10 (0.07) (0.04)
Weighted number of shares outstanding 851,282 851,282 851,282 851,282
Cash dividends per share 0.18 0.18 0.09 0.09
</TABLE>
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<TABLE>
<CAPTION>
J.MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
9/30/95 9/30/94 3/31/95
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash
equivalents $6,796,910 $5,321,078 $9,057,812
Restricted cash - 924,637 1,012,012
Available for
sale securities 4,00l,631 4,722,223 1,456,562
Customer's installment
receivables net
of allowances
for doubtful
accounts
of $400,000 in
both years 3,530,772 4,132,470 4,080,538
Other trade
receivables 71,251 94,632 28,066
Inventories net
of LIFO reserve 820,299 810,920 667,697
Prepaid income taxes 192,414 246,545 226,674
Deferred income taxes 209,691 258,866 209,691
Prepaid expense and
other current assets 11,523 31,969 38,016
Total current assets 15,634,491 16,543,340 16,777,068
Property, plant and
equipment at cost
net of accumulated
depreciation and
amortization (Note 3) 407,758 426,534 422,687
Assets held for lease,
net of accumulated
amortization (Note 3) 197,277 130,623 93,060
Deferred income taxes 44,292 10,000 44,292
Total Assets $16,283,818 $17,110,497 $17,337,107
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion,long
term debt - $11,667 -
Accounts payable
and accrued
expenses 521,197 571,463 427,163
Short positions in
marketable securities - 924,637 1,012,012
Income taxes payable - - -
Total current liabilities 521,197 1,507,767 1,439,175
Shareholders' Equity 15,762,621 15,602,730 15,897,932
Total Liabilities and
shareholders' equity $16,283,818 $17,110,497 $17,337,107
</TABLE>
3
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<TABLE>
<CAPTION>
J.MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
Amount in thousands
For the six months
ended
9/30/95 9/30/94
<S> <C> <C>
Cash flow from operating activities:
Net income $19 $84
Adjustments to reconcile net income to net
cash provided by operating activities-
Reversal of deferred income taxes - -
Depreciation 47 72
Decrease (increase) in receivables 506 457
Decrease (increase) in inventories,
prepaid expenses (92) (88)
Increase (decrease) in payables 94 12
Net cash flows from operating activities 574 537
Cash flow applied to investing activities:
Purchase of fixed assets (136) (35)
Decrease (increase) in restricted cash 1,012 (114)
Decrease (increase) in investments (3,558) 5
Net cash flows from (applied to)
investing activities (2,682) (144)
Cash flow applied to financing
activities:
Reduction of long term debt - -
Purchase of treasury stock - -
Payment of cash dividends to
stockholders (153) (153)
Net cash flow from (applied to)
investing activities (153) (153)
Net increase (decrease) in cash
and cash equivalents: (2,261) 240
Cash and cash equivalents,
beginning of period 9,058 5,081
Cash and cash equivalents,
end of period $6,797 $5,321
</TABLE>
4
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Earnings per share are computed by dividing net earnings by weighted
average number of common shares outstanding during the period.
2. The financial information presented is unaudited. Such information reflects
all adjustments, which in the opinion of management, are necessary to
present fairly the consolidated results of operations and changes in
financial position for the three months then ended.
The financial statements and related information for the six months
ended June 30, 1994 has been restated to conform to restated statements
presented in 10K filed for year ended March 31, 1995.
3. Accumulated depreciation and amortization was:
PROPERTY
PLANT LEASING
EQUIPMENT ASSETS
At September 30, 1995 $982,016 $754,168
At September 30, 1994 $981,125 $695,434
At March 31, 1995 $956,137 $733,451
4. The Statements of Cash Flows are presented pursuant to the
provisions of Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows".
5. Shareholders' equity includes net unrealized gain (loss) on
Securities available for sale.
At September 30, 1995 -0-
At September 30, 1994 ($23,711)
- -5-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL STRUCTURE AND RESULTS OF OPERATION
J. Michaels, Inc. and its subsidiaries are principally engaged in the retail
sale of household furnishings, primarily on credit. The Company also operates
a retail furniture rental division in the Buffalo area.
Approximately 85% of retail furniture sales were made to revolving credit
customers.
Sales (including finance charges) for the six months decreased from the
previous year by 16.9%. Net earnings decreased by 84.5%. The decrease in sales
reflects the continued weakness in regional economy. Gross margin for the six
months was 53.9% as compared to 55.4% last year. Credit Service Charges
decreased by 10.2% over the previous year.
Selling general and administrative expenses decreased by $204,000 primarily
representing decreased payroll and payroll related costs.
Capital gains realized for the current six months was approximately $38,000.
At September 30, 1995 the Company had no investments which varied with the
market. The reserve for unrealized gains, and losses therefore, was reduced
to zero.
- -6-
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<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
Ratios Useful in Analyzing the Results of Operations
6 months ended
9/30
1995 1994
<S> <C> <C>
Sales, including credit service charges
(in thousands) $2,973 $3,576
Percent increase (decrease) over
previous year (16.9) (14.9)
Cost of sales as a percent
of sales 35.6 35.1
Selling, general &
administrative expenses-
as a percent of sales 62.1 57.3
Bad debt expense as a
percent of sales 8.5 5.4
Depreciation and
amortization as a
percent of sales 1.6 2.0
Interest and dividend
income as a percent
of sales 7.5 4.3
Net income
(in thousands) $13 $84
Net income as a percent of sales 0.4 2.3
</TABLE>
7
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PART II - OTHER INFORMATION
None
- - 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the securities exchanges act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J. Michaels, Inc.
By: /s/ Martin Kasman, Treasurer
Martin Kasman, Treasurer
Date: November 13, 1995
- -9-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
J. MICHAELS, INC.
3 MONTHS ENDED 9/30/95
</LEGEND>
[TEXT]
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 6797
<SECURITIES> 4002
<RECEIVABLES> 3932
<ALLOWANCES> 400
<INVENTORY> 820
<CURRENT-ASSETS> 15634
<PP&E> 1390
<DEPRECIATION> 982
<TOTAL-ASSETS> 16284
<CURRENT-LIABILITIES> 521
<BONDS> 0
<COMMON> 616
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16284
<SALES> 2296
<TOTAL-REVENUES> 2973
<CGS> 1058
<TOTAL-COSTS> 3203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 32
<INCOME-TAX> 19
<INCOME-CONTINUING> 13
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<NET-INCOME> 13
<EPS-PRIMARY> .02
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</TABLE>
