<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
-------------
or
[ ] 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 1-67
MICKELBERRY COMMUNICATIONS INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-1474360
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
405 Park Avenue, New York, New York 10022
(Address of principal executive offices)
(Zip Code)
(212) 832-0303
---------------------------
(Registrant's telephone number, including area code)
---------------------------
(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) or 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 practicable date.
5,878,000 shares of common stock, par value $1 per share, were issued and
outstanding at June 30, 1995.
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
INDEX
PART I. - FINANCIAL INFORMATION Page No
-------
Item 1. Financial Statements:
Consolidated Statements of Income for the three months
and six months ended June 30, 1995 and 1994 3
Consolidated Balance Sheets at June 30, 1995
and December 31, 1994 5
Consolidated Statements of Cash Flows for the six
months ended June 30, 1995 and 1994 6
Consolidated Statement of Stockholders' Equity
for the six months ended June 30, 1995 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
For the three months and six months ended
June 30, 1995 and 1994
In Thousands (except per share)
<TABLE>
<CAPTION>
2nd Quarter Year To Date
------------------- ------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
Tangible products $ 33,348 $ 24,420 $ 59,068 $ 47,484
Services 5,947 5,037 11,412 9,534
-------- -------- -------- --------
39,295 29,457 70,480 57,018
Equity in pre-tax earnings
(loss) of affiliated company (198) - (325) -
Costs and expenses
Cost of revenues
Tangible products 28,291 19,306 48,301 37,562
Services 4,946 4,220 9,826 8,427
Selling and administrative 5,500 5,344 10,903 10,600
-------- -------- -------- --------
38,737 28,870 69,030 56,589
-------- -------- -------- --------
Operating income 360 587 1,125 429
Other expense (income)
Interest expense 489 495 972 987
Investment income (106) (150) (233) (317)
Other - net 63 60 (103) 50
-------- -------- -------- --------
446 405 636 720
-------- -------- -------- --------
Income (loss) before taxes (86) 182 489 (291)
Income taxes (benefit) (34) 73 l96 (116)
Net income (loss) $ (52) $ 109 $ 293 $ (175)
======== ======== ======== ========
Income (loss) per common share
Primary:
Net income (loss) $ (0.01) $ 0.02 $ 0.04 $ (0.04)
======== ======== ======== ========
Fully diluted:
Net income (loss) $ (0.01) $ 0.02 $ 0.04 $ (0.04)
======== ======== ======== ========
Dividends per common share $ 0.015 $ 0.015 $ 0.030 $ 0.030
</TABLE>
3
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED BALANCE SHEETS
In Thousands (except shares and par values)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
--------- ----------
<S> <C> <C>
Assets
Current assets:
Cash $ 1,181 $ 1,596
Temporary investments 6,161 7,759
Receivables, less allowances for
doubtful accounts and returns -
$3,092, (1994 - $5,260) 42,895 32,701
Inventories 25,895 20,045
--------- ---------
Total current assets 76,132 62,101
Intangibles - net 10,740 11,152
Property, plant and equipment-net 25,557 26,680
Other 858 523
--------- ---------
$ 113,287 $ 100,456
========= =========
Liabilities
Current liabilities:
Accounts payable $ 30,530 $ 16,479
Notes payable 9,140 9,180
Accrued liabilities 12,770 13,222
Income taxes payable 2,770 2,614
Current portion of long-term debt 2,632 2,547
--------- ---------
Total current liabilities 57,842 44,042
Deferred income taxes 938 938
Long-term debt 19,563 20,703
Stockholders' equity
Preferred stock, par value $1-
5,000,000 shares authorized;
242,000 shares issued, (minimum
liquidation preference $727) 242 242
Common stock, par value $1-
20,000,000 shares authorized;
5,878,000 shares issued 5,878 5,878
Capital in excess of par value 2,157 2,157
Retained earnings 26,869 26,790
Cumulative foreign currency
translation adjustment (52) (56)
Unrealized holding gain (loss) (150) (238)
--------- ---------
Total stockholders' equity 34,944 34,773
--------- ---------
$ 113,287 $ 100,456
========= =========
</TABLE>
4
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
In Thousands
Operating Activities
1995 1994
--------- ---------
<S> <C> <C>
Net income (loss) $ 293 $ (175)
Adjustments to reconcile net income
to net cash:
Equity in after tax income
of affiliated company - 41
Depreciation 2,394 1,996
Amortization 418 423
Net change in:
Accounts receivable (10,194) (2,787)
Inventories (5,850) (1,866)
Accounts payable 14,051 6,012
Accrued liabilities (452) (1,169)
Income taxes 156 27
Notes payable to bank (40) 88
--------- ---------
Net increase (decrease) from
operating activities 776 2,590
--------- ---------
Investing Activities
Net change in temporary investments 1,657 2,945
Expenditures for property, plant
and equipment (1,271) (4,351)
Expenditures for intangibles - (42)
Other (308) 428
--------- ---------
Net increase (decrease) from
investing activities 78 (1,020)
--------- ---------
Financing Activities
Principal payments for debt (1,061) (872)
Dividends paid (212) (213)
--------- ---------
Net increase (decrease) from
financing activities (1,273) (1,085)
--------- ---------
Effect of exchange rate changes
on cash 4 9
--------- ---------
Net increase (decrease) in cash (415) 494
Cash at beginning of year 1,596 460
--------- ---------
Cash at end of period $ 1,181 $ 954
========= =========
</TABLE>
5
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the six months ended June 30,1995
In Thousands
<TABLE>
Cumulative
Common Capital Foreign Unrealized Total
Preferred Stock, in Excess Currency Holding Stock
Stock, Par of Par Retained Translation Gain holders'
Par Value $1 Value $1 Value Earnings Adjustment (Loss) Equity
------------ -------- --------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 $242 $5,878 $2,157 $26,790 $ (56) $(238) $34,773
Net income - - - 293 - - 293
Cash dividends - - - (214) - - (214)
Translation
adjustments - - - - 4 - 4
Change in market
value of available-
for-sale securities
(net of tax) - - - - - 88 88
------------ ------ --------- -------- ----------- ----------- --------
Balance at
June 30, 1995 $242 $5,878 $2,157 $26,869 $ (52) $(150) $34,944
============ ====== ========= ======== =========== =========== ========
</TABLE>
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company's management, the financial statements reflect
all adjustments necessary to a fair statement of the results for the interim
periods presented.
2. The results of operations for the six months ended June 30, 1995 and 1994 are
not necessarily indicative of the results to be expected for the full year.
3. Inventories at June 30, 1995 and December 31, 1994 consist
of:
In Thousands
1995 1994
------- -------
Finished goods $12,137 $ 8,761
Work-in-process 6,673 7,166
Raw materials 7,085 4,118
------- -------
$25,895 $20,045
======= =======
4. Intangibles and Property, Plant and Equipment
Intangibles: Intangibles at June 30, l995 and December 31,
-----------
1994 are valued at cost and consist of:
In Thousands
l995 1994
------- -------
Costs in excess of net tangible
assets of businesses acquired $15,746 $15,746
Less accumulated amortization (5,006) (4,594)
------- -------
$10,740 $11,152
======= =======
Property, Plant and Equipment: Property, plant and equipment at June 30, 1995
-----------------------------
and December 31, 1994 are valued at cost and consist of:
In Thousands
1995 1994
------- ------
Leasehold improvements $ 3,759 $ 3,497
Machinery and equipment 43,347 42,337
-------- --------
47,106 45,834
Less accumulated depreciation
and amortization (21,549) (l9,154)
-------- --------
$ 25,557 $ 26,680
======== ========
7
<PAGE>
5. Consolidated Statements of Cash Flows
The following is supplemental information regarding cash
flows:
In Thousands
1995 1994
----- ------
Cash paid during the period for:
Interest $ 961 $1,008
Income taxes $ 62 $ 158
6. Investment Income
Investment income consists of the following:
In Thousands
1995 1994
----- ------
Interest $ 232 $ 317
Net gain on sales of securities
and adjustments to values - -
----- ------
$ 232 $ 317
===== ======
As of June 30, 1995 investments in mutual funds classified
as available-for-sale securities were as follows:
In Thousands
Cost $3,500
Unrealized losses 250
------
Fair value $3,250
======
8. Eguity in Affiliated Company
The Excel Marketing Group, a wholly owned subsidiary of the Company, owns a
50% interest in Excel Plus Ltd., a company engaged in supermarket promotions
in Europe. The Company accounts for Excel Plus under the equity method and
records its share of Excel Plus's income before taxes as a separate item in
the Consolidated Statements of Income. The Company's share of Excel Plus's
income tax expense is included in the consolidated provision for income
taxes.
8
<PAGE>
Summarized financial information of Excel Plus is as follows:
<TABLE>
<CAPTION>
In Thousands
Second Quarter Year To Date
---------------- ----------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $ 797 $ 1,761 $2,759 $1,761
Costs and expenses 1,193 1,897 3,409 1,897
------ ------- ------ ------
Income (loss) before
taxes (396) (136) (650) (136)
Income taxes (benefit) - (54) - (54)
------ ------- ------ ------
Net income (loss) $ (396) $ (82) $ (650) $ (82)
====== ======= ====== ======
<CAPTION>
June 30, December 31,
1995 1994
------- -------
<S> <C> <C>
Current assets $ 3,311 $ 6,418
Non current assets 53 52
------- -------
$ 3,364 $ 6,470
------- -------
Current liabilities $ 4,854 $ 7,617
Non current liabilities (1,490) -
Equity - (1,147)
------- -------
$ 3,364 $ 6,470
======= =======
</TABLE>
9
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
---------------------
The Company lost $86,000 before tax in the second quarter of 1995. This compares
with a pretax profit of $182,000 in the second quarter of 1994. The company
earned $489,000 in the first half of 1995. This compares with a pretax loss of
$291,000 in the first half of 1994.
The poor results for the second quarter of 1995 reflect losses for the
supermarket division of Excel which is in the process of selling its inventory
at discounted prices. In addition, profits for printing operations were lower in
the second quarter of 1995 than in 1994 because of poor volume at the Company's
St. Petersburg, Florida facility.
Improved year-to-date results in 1995 reflect increased earnings for the
Company's advertising and promotion segment. The improvement results from
clients' increased advertising spending.
10
<PAGE>
FINANCIAL CONDITION
-------------------
The Company's financial condition at June 30, 1995 is little changed from
December 31, 1994. Receivables and payables balances have increased as a result
of client's increased advertising expenditures. Inventories have increased
because of the addition of a dinnerware line of products to complement Excel's
flatware products sold to department stores and other retail outlets.
11
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
(11) Statement re Computation of Per Share Earnings
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this report
is filed.
12
<PAGE>
MICkELBERRY COMMUNICATIONS INCORPORATED
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.
MICKELBERRY COMMUNICATIONS INCORPORATED
---------------------------------------
(Registrant)
Date:________
_______________________________________
George Kane
Senior Vice President, Finance
(Chief Accounting officer and
duly authorized Officer)
13
<PAGE>
EXHIBIT 11
----------
MICKELBERRY COMMUNICATIONS INCORPORATED
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
For the Three Months and Six Months Ended
June 30, 1995 and 1994
In Thousands (except per share)
<TABLE>
<CAPTION>
2nd Quarter
-------------------------------------------------
1995 1994
---------------------- ----------------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income (loss)
attributable to
common stock:
Net income (loss) $ (52) $ (52) $ 109 $ 109
Less dividends on
preferred stock (18) (18) (18) (18)
------- ------- ------- -------
1. Net income (loss) $ (70) $ (70) $ 91 $ 91
======= ======= ======= =======
Shares used in
calculating earnings
(loss) per share (all
weighted averages):
Shares outstanding 5,878 5,878 5,876 5,876
Shares deemed issued
for stock options (if
dilutive) - - 8 8
------- ------- ------- -------
2. Total 5,878 5,878 5,894 5,894
======= ======= ======= =======
Earnings (loss)
per share:
Net income (1 divided by 2) $ (.01) $ (.01) $ .02 $ .02
======= ======= ======= =======
Year to Date
-------------------------------------------------
Income (loss)
attributable to
common stock:
Net income (loss) $ 293 $ 293 $ (175) $ (175)
Less dividends on
preferred stock (36) (36) (36) (36)
------- ------- ------- -------
1. Net income (loss) $ 257 $ 257 $ (211) $ (211)
======= ======= ======= =======
Shares used in
calculating earnings
(loss) per share (all
weighted averages):
Shares outstanding 5,878 5,878 5,876 5,876
Shares deemed issued
for stock options (if
dilutive) 71 71 - -
------- ------- ------- -------
2. Total 5,949 5,949 5,876 5,876
======= ======= ======= =======
Earnings (loss)
per share:
Net income (1 divided by 2) $ .04 $ .01 $ (.04) $ (.04)
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,181
<SECURITIES> 6,161
<RECEIVABLES> 42,895
<ALLOWANCES> 0
<INVENTORY> 25,895
<CURRENT-ASSETS> 76,132
<PP&E> 47,106
<DEPRECIATION> 21,549
<TOTAL-ASSETS> 113,287
<CURRENT-LIABILITIES> 57,842
<BONDS> 19,563
<COMMON> 5,878
0
242
<OTHER-SE> 29,026
<TOTAL-LIABILITY-AND-EQUITY> 113,287
<SALES> 59,068
<TOTAL-REVENUES> 70,480
<CGS> 48,301
<TOTAL-COSTS> 58,127
<OTHER-EXPENSES> 10,903
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 972
<INCOME-PRETAX> 489
<INCOME-TAX> 196
<INCOME-CONTINUING> 293
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 293
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
