<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 1996
Commission file Number 0-5703
J. Michaels, Inc.
(Exact name of registrant as specified in its charter.)
New York 11-1796714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
182 Smith Street, Brooklyn, NY 11201
(Address of principal executive offices (Zip Code)
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) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Common Stock, $1 Par Value - 891,282 shares as of June 30, 1996.
<PAGE> 2
J. MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Amounts in Thousands except 3 Months ended June 30,
for per share data
1996 1995
---- ----
<S> <C> <C>
Income (loss) from discontinued
operations (net of income tax
provision (benefit) of $(107,000)
and $62,000 respectively) $(162) $80
Gain on disposition of assets
(net of income tax provision
(benefit) of $218,000 and $0
respectively) $330 -
---- --
NET INCOME (LOSS) $168 $80
===== ===
Earnings per share:
Discontinued operations $.19 $.09
==== ====
Cash dividends per share $0 $.09
==== ====
Weighted average number of
shares outstanding 891,282 851,282
======= =======
</TABLE>
<PAGE> 3
J. MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
6/30/96 6/30/95 3/31/96
------- ------- -------
<S> <C> <C> <C>
Assets held
for disposal $15,891,106 $17,595,704 $ 15,935,393
----------- ----------- -----------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities $ 133,176 $ 1,677,865 $ 345,085
----------- ----------- -----------
Shareholders'
equity:
Common stock 1,145,369 1,105,369 1,145,369
Additional paid-
in capital 1,405,224 1,025,224 1,405,224
Net unrealized
gain on securi-
ties available
for sale - 17,944 -
Retained earnings 14,076,424 14,258,389 13,908,802
---------- ---------- ----------
16,627,017 16,406,926 16,459,395
Less common stock
held in treasury,
at cost 489,087 489,087 489,087
Less notes
receivable from
shareholder 380,000 - 380,000
----------- ----------- ----------
Total shareholders'
equity 15,757,930 15,917,839 15,590,308
----------- ----------- ----------
Total $15,891,106 $17,595,704 $15,935,393
=========== =========== ===========
</TABLE>
<PAGE> 4
J. MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Amounts in thousands) THREE MONTHS ENDED
6/30/96 6/30/95
------- -------
<S> <C> <C>
Cash flow from discontinued operations:
Net Income (loss) $ 168 $ 80
Adjustments to reconcile net
income (loss) to net cash
provided by discontinued
operations:
Depreciation 60 32
Gain from sale of assets (549)
Decrease (increase) in
current assets held
for disposal 1,236 260
Increase (decrease)
in liabilities (422) 239
------- ---
Net cash flow from
discontinued operations 493 611
------- ---
Cash flow applied to invest-
ment activities
Purchase of fixed assets (35) (64)
Decrease (increase) in
restricted cash - (308)
Decrease (increase) in
investments - (3,120)
Proceeds on sale of assets 835
------ ------
Net cash flow from
(applied to)
investing activities 800 (3,492)
------ -------
Cash flow applied to financing activities:
Payments of cash dividends
to stockholders - (78)
------ -------
Net cash flow from
(applied to) financing
activities - (78)
------ ------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 1,293 (2,959)
Cash and cash equivalents,
beginning of period 11,121 9,058
------ ------
Cash and cash equivalents,
end of period $12,414 $6,099
======= ======
</TABLE>
<PAGE> 5
J. MICHAELS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Earnings per share are computed by dividing net earnings by weighted average
number of common shares outstanding during 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 discontinued operations and
changes in financial position for the three months then ended.
3. As previously reported, during its 1996 fiscal year, the Company decided to
discontinue its existing furniture business and enter into a merger with
Muriel Siebert Capital Markets Group, Inc., pursuant to which the net
proceeds from the sale of the Company's assets would be distributed to its
pre-merger shareholders. The Company, subsequent to June 30, 1996, entered
into an agreement to sell the buildings and real property representing the
Smith Street store and warehouse for $1,400,000, which is substantially in
excess of the remaining book cost of such buildings and property.
4. On July 7, 1996, the President and a director exercised their stock options
to purchase 25,000 shares. In connection therewith the Company received
$307,135 and issued 25,000 shares of Common Stock. There are no other
options outstanding.
<PAGE> 6
J. MICHAELS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
J. Michaels, Inc. and its subsidiaries were, until now, engaged in the
retail sale of household furnishings, primarily on credit. The Company also
operated a retail furniture leasing division in the Buffalo, N.Y. area.
During the Company's 1996 fiscal year, the Company decided to
discontinue its existing furniture business and is in the process of selling its
assets. The financial statements contained in this report have accordingly been
restated to reflect all of the Company's operations as a discontinued operation,
and the discussion set forth herein is historical in nature.
The data submitted below reflects, among other things, the sale of
retail and leasing operations in Buffalo. The Company has retained the retail
accounts receivable and continues to collect same. Expenses include severance
and other payroll termination costs of employees who have left.
Net income for the three months ended June 30, 1996 was $168,000
compared to $80,000 last year. The $168,000 includes a gain of $548,000 on the
sale of the Buffalo businesses.
Revenues this year decreased to $826,000 compared to $1,554,000 in the
previous year.
Selling, general and administrative expenses decreased to $554,000 from
$876,000 in the preceding year.
Bad debts expense decreased by $86,000 from the previous year. This
reduction is primarily the result of recoveries exceeding write offs.
Other income (net) increased from $124,000 last year to 148,000. In
1996, income was additionally charged in the amount of $105,000 representing
franchise taxes payable resulting from audits of 1991, 1992 and 1993.
As at August 15, 1996, the Company has little or no retail sales. It
does continue to earn interest on its receivables and continues to collect its
receivables.
The Company has contracted to sell its Fifth Avenue store and the
buildings and real property representing the Smith Street store and warehouse
for $850,000 and $1,400,000 respectively. It continues to negotiate the sale
of its remaining real properties.
<PAGE> 7
PART II - OTHER INFORMATION
None
<PAGE> 8
SIGNATURES
Pursuant to the requirement 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.
J. MICHAELS, INC.
By: ARTHUR FETTNER
-------------------
Arthur Fettner CAO
Dated: August 15, 1996
<PAGE> 9
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,891
<CURRENT-LIABILITIES> 133
<BONDS> 0
0
0
<COMMON> 1,145
<OTHER-SE> 1,405
<TOTAL-LIABILITY-AND-EQUITY> 15,891
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (162)
<EXTRAORDINARY> 330
<CHANGES> 0
<NET-INCOME> 168
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
