<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 September 30, 1996
Commission file number 0-5703
SIEBERT FINANCIAL CORP. (formerly 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.)
885 Third Avenue, New York, NY 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-644-2400
J. Michaels, Inc., 182 Smith Street, Brooklyn, NY 11201
(Former name, former address and former fiscal year, if
changed since last report)
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 - 916,282 shares as of November 1, 1996.
<PAGE> 2
Part I - Financial Information
Item 1. Financial Statements
J. MICHAELS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in Thousands except per share data)
<TABLE>
<CAPTION>
Six Months Three Months
ended Sept. 30, ended Sept. 30,
----------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Discontinued
Operations:
Income (loss) from
discontinued
operations (net
of income tax
provision
(benefit) of
($168) and $13
respectively) $ (251) $ 19 $ (89) $ (61)
Gain on deposition
of assets (net
of income tax
provision
(benefit) of
$530 and $0
respectively) 794 0 164 0
--------- --------- --------- ---------
NET INCOME $ 543 $ 19 $ 375 $ (61)
========= --------- ========= =========
(LOSS)
Earnings $ .60 $ .02 $ .40 $ (.07)
========= ========= ========= =========
(loss) per share
Cash dividends per
share $ 0 $ .19 $ 0 $ .09
========= ========= ========= =========
Weighted average
number of shares
outstanding 903,782 851,282 916,282 851,282
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
J. MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
A S S E T S
9/30/96 3/31/96
------- -------
(unaudited)
<S> <C> <C>
Assets held
for disposal $16,497,279 $15,935,393
=========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities $ 56,624 $ 345,085
----------- -----------
Shareholders'
equity:
Common stock 1,170,369 1,145,369
Additional paid-
in capital 1,687,359 1,405,224
Net unrealized
gain on securi-
ties available
for sale
Retained earnings 14,452,014 13,908,802
----------- -----------
17,309,742 16,459,395
Less common stock
held in treasury,
at cost 489,087 489,087
Less notes
receivable from
shareholder 380,000 380,000
----------- -----------
Total shareholders'
equity $16,440,655 $15,590,308
----------- -----------
Total $16,497,279 $15,935,393
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
J. MICHAELS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
9/30/96 9/30/95
------- -------
<S> <C> <C>
CASH FLOW FROM DISCONTINUED
OPERATIONS:
Net Income $ 543 $ 19
Adjustments to reconcile net
income to net cash
provided by discontinued
operations:
Depreciation 66 47
Gains from sale of
assets (1,324) 0
Decrease (increase) in
current assets held
for disposal 1,664 414
Increase (decrease)
in liabilities (287) 94
-------- --------
Net cash flow provided by
discontinued operations 662 574
-------- --------
CASH FLOW FROM INVEST-
MENT ACTIVITIES
Purchase of fixed assets (35) (136)
Decrease (increase) in
unrestricted cash 0 1,012
Decrease (increase) in
investments 0 (3,558)
Proceeds on sale of
Assets 1,608 0
-------- --------
Net cash flow provided by
(used in) financing
activities 1,573 (2,682)
-------- --------
CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds from exercise of
stock options 307 0
Payments of cash dividends
to stockholders 0 (153)
-------- --------
Net cash flows provided by
(used in) financing
activities 307 (153)
-------- --------
Net Increase (decrease)
in cash and cash
equivalents 2,542 (2,261)
Cash and cash equivalents
beginning of period $ 11,121 $ 9,058
-------- --------
Cash and cash equivalents
end of period $ 13,663 $ 6,797
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
J. MICHAELS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During fiscal 1996, the management of the Company decided to
discontinue its existing retail furniture business. On April 24, 1996 the
Company signed a definitive Plan and Agreement of Merger with Muriel Siebert
Capital Markets Group, Inc. ("MSCMG") providing for the merger of MSCMG into the
Company (the "Merger"). Shortly before the effective date of the Merger, Muriel
Siebert, the sole shareholder of MSCMG, contributed 1,000 shares of Muriel
Siebert & Co., Inc. ("Siebert"), a company engaged in the retail discount
brokerage and investment banking business, being 100% of the shares outstanding,
to MSCMG. The Company will distribute the proceeds and all its assets, other
than its shares of Siebert, to the pre-Merger stockholders of the Company who
will, by virtue of the Merger, collectively retain a 2 1/2% interest in the
surviving company which will change its name to Siebert Financial Corp. The
merger was consummated on November 8, 1996.
On November 12, 1996 the Company paid a cash dividend of $11.50 per
share to its pre-Merger shareholders of record on November 8, 1996.
The consolidated financial statements include the accounts of J.
Michaels, Inc. and its wholly owned subsidiaries. The financial information
presented is unaudited. Such information reflects all adjustments which, in the
opinion of management, are necessary for a fair presentation. For further
information, refer to the consolidated financial statements and footnotes
thereto incorporated by reference in the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996. Future filings will include only the
accounts of Siebert Financial Corp. and its wholly owned subsidiary, Siebert.
Earnings per share is computed by dividing net earnings (loss) by the
weighted average number of shares outstanding during the period.
On July 7, 1996, the President and a director exercised their stock
options to purchase 25,000 shares. There are no other options outstanding.
The J. Michaels, Inc. Trust, the successor to the pre-Merger assets of
the Company, continues to have an agreement to sell the buildings and real
property representing the Smith Street store and warehouse and the Broadway
store for amounts which are substantially in excess of the remaining book cost
of such buildings and property.
<PAGE> 6
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
J. Michaels, Inc. and its subsidiaries were previously 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 the
retail and leasing operations in Buffalo and the sale of the Company's Fifth
Avenue Store. The Company has retained the retail accounts receivable related
thereto 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 September 30, 1996 was $543,000
compared to $19,000 for the same period last year. The $543,000 includes a gain
of $773,000 on the sale of the Fifth Avenue store.
Revenues this period decreased to $1,094,000 compared to $2,973,000 in
the previous year period.
Selling, general and administrative expenses decreased to $1,119,000
from $1,846,000 in the same period last year.
Bad debts expense decreased by $57,000 from the comparable previous
year period. In 1996, income was additionally charged in the amount of $103,000
representing franchise taxes payable for prior years.
As at November 1, 1996, the Company has little or no retail sales. It
continues to earn interest on its receivables and continues to collect its
receivables.
The Company has contracted to sell the buildings and real property
representing the Smith Street store and warehouse and its Broadway store. It
continues to negotiate the sale of its Fulton Street store.
<PAGE> 7
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
On September 22, 1996, the shareholders of the Company
approved the merger (the "Merger") of Muriel Siebert Capital Markets
Group, Inc. ("Siebert") with and into the Company, the change of name
of the Company to Siebert Financial Corp., the change in the par value
of the common stock to $.01 per share, and an increase in the number of
authorized shares to 49,000,000. On October 31, 1996, the shareholders
of the Company approved a 1-for-7 reverse stock split, to be effective
immediately following the Merger.
Item 5. Other Information
On November 8, 1996, the Merger was consummated. In connection
therewith, the name of the Company was changed to Siebert Financial
Corp., the par value was changed to $.01 and the authorized shares were
increased as described above and a 1-for-7 reverse stock split was
effected. Shareholders of the Company immediately prior to the Merger
received an initial distribution of $11.50 per pre-reverse split share.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 Financial Data Schedule (EDGAR filing
only)
(b) Reports on Form 8-K: 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.
By: /s/ T.K. Flatley
---------------------------
T.K. Flatley
Chief Financial Officer
(on behalf of the
Registrant and as
principal financial
officer)
Dated: November 19, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,497
<CURRENT-LIABILITIES> 57
<BONDS> 0
0
0
<COMMON> 1,170
<OTHER-SE> 15,270
<TOTAL-LIABILITY-AND-EQUITY> 16,497
<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> 375
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
