<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 March 31, 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
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MICKELBERRY COMMUNICATIONS INCORPORATED
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(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
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(Address of principal executive offices)
(Zip Code)
(212) 832-0303
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(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) 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 practicable date.
5,878,000 shares of common stock, par value $1 per share, were issued and
outstanding at March 31, 1995.
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MICKELBERRY COMMUNICATIONS INCORPORATED
INDEX
PART I. - FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements:
Consolidated Statements of Income for the three months
ended March 31, 1995 and 1994 3
Consolidated Balance Sheets at March 31, 1995
and December 31, 1994 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and 1994 5
Consolidated Statement of Stockholders' Equity
for the three months ended March 31, 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
2
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MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended
March 31, 1995 and 1994
In Thousands (except per share)
<TABLE>
<CAPTION>
1st Quarter
--------------------
1995 1994
-------- --------
<S> <C> <C>
Revenues
Tangible products $25,720 $23,064
Services 5,465 4,497
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31,185 27,561
Equity in pre-tax earnings
(loss) of affiliated company (127) -
Costs and expenses
Cost of revenues
Tangible products 19,883 18,256
Services 4,880 4,207
Selling and administrative 5,403 5,256
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30,166 27,719
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Operating income (loss) 892 (158)
Other expense (income)
Interest expense 483 492
Investment income (127) (148)
Other - net (39) (10)
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317 334
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Income (loss) before taxes 575 (492)
Income taxes (benefit) 230 (197)
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Net income (loss) $ 345 $ (295)
======= =======
Income (loss) per common share
Primary:
Net income (loss) $ 0.06 $ (0.05)
======= =======
Fully diluted:
Net income (loss) $ 0.05 $ (0.05)
======= =======
Dividends per common share $ 0.015 $ 0.015
======= =======
</TABLE>
3
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MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED BALANCE SHEETS
In Thousands (except shares and par values)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Assets
Current assets
Cash $ 157 $ 1,596
Temporary investments 4,380 7,759
Receivables, less allowances for
doubtful accounts and returns -
$4,285 (1994 - $5,260) 34,648 32,701
Inventories 27,864 20,045
-------- --------
Total current assets 67,049 62,101
Intangibles - net 10,946 11,152
Property, plant and equipment - net 26,136 26,680
Other 562 523
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$104,693 $100,456
======== ========
Liabilities
Current liabilities
Accounts payable $ 23,467 $ 16,479
Notes payable 8,537 9,180
Accrued liabilities 11,040 13,222
Income taxes payable 2,927 2,614
Current portion of long-term debt 2,615 2,547
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Total current liabilities 48,586 44,042
Deferred income taxes 938 938
Long-term debt 20,113 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 authorized;
5,878,000 shares issued 5,878 5,878
Capital in excess of par value 2,157 2,157
Retained earnings 27,029 26,790
Cumulative foreign currency
translation adjustment (54) (56)
Unrealized holding gain (loss) (196) (238)
-------- --------
Total stockholders' equity 35,056 34,773
-------- --------
$104,693 $100,456
======== ========
</TABLE>
4
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MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended
March 31, 1995 and 1994
<TABLE>
<CAPTION>
In Thousands
Operating Activities 1995 1994
-------- --------
<S> <C> <C>
Net income (loss) $ 345 $ (295)
Adjustments to reconcile
net income to net cash:
Depreciation 1,195 1,050
Amortization 209 212
Net change in:
Accounts receivable (1,947) 1,425
Inventories (7,819) (2,796)
Accounts payable 6,988 2,568
Accrued liabilities (2,182) (974)
Income taxes 313 (186)
Notes payable to bank (643) 189
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Net increase (decrease) from
operating activities (3,541) 1,193
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Investing Activities
Net change in temporary investments 3,421 2,124
Expenditures for property, plant
and equipment (651) (1,857)
Expenditures for intangibles - (34)
Other (39) 296
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Net increase (decrease) from
investing activities 2,731 529
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Financing Activities
Principal payments for debt (525) (430)
Dividends paid (106) (106)
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Net increase (decrease) from
financing activities (631) (536)
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Effect of exchange rate changes
on cash 2 15
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Net increase (decrease) in cash (1,439) 1,201
Cash at beginning of year 1,596 460
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Cash at end of period $ 157 $ 1,661
======== ========
</TABLE>
5
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MICKELBERRY COMMUNICATIONS INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the three months ended
March 31, 1995
In Thousands
<TABLE>
<CAPTION>
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 - - - 345 - - 345
Cash dividends - - - (106) - - (106)
Translation
adjustments - - - - 2 - 2
Change in market
value of available-
for-sale securities
(net of tax) - - - - - 42 42
---- ------ ------ ------- ---- ----- -------
Balance at
March 31, 1995 $242 $5,878 $2,157 $27,029 $(54) $(196) $35,056
==== ====== ====== ======= ==== ===== =======
</TABLE>
6
<PAGE>
MICKELBERRY COMMUNICATIONS
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 three months ended March 31, 1995 and
1994 are not necessarily indicative of the results to be expected for the
full year.
3. Inventories at March 31, 1995 and December 31, 1994 consist of:
<TABLE>
<CAPTION>
In Thousands
1995 1994
------- -------
<S> <C> <C>
Finished goods $ 9,503 $ 8,761
Work-in-process 12,943 7,166
Raw materials 5,418 4,118
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$27,864 $20,045
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</TABLE>
4. Intangibles and Property, Plant and Equipment
Intangibles: Intangibles at March 31, 1995 and December 31, 1994 are
valued at cost and consist of:
<TABLE>
<CAPTION>
In Thousands 1995 1994
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<S> <C> <C>
Costs in excess of net tangible assets
of businesses acquired $15,746 $15,746
Less accumulated amortization (4,800) (4,594)
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$10,946 $11,152
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</TABLE>
Property, Plant and Equipment: Property, plant and equipment at March 31,
-----------------------------
1995 and December 31, 1994 are valued at cost and consist of:
<TABLE>
<CAPTION>
In Thousands 1995 1994
------- -------
<S> <C> <C>
Leasehold improvements $ 3,749 $ 3,497
Machinery and equipment 42,736 42,337
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46,485 45,834
Less accumulated depreciation
and amortization (20,349) (19,154)
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$26,136 $26,680
======= =======
</TABLE>
7
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5. Consolidated Statements of Cash Flows
The following is supplemental information regarding cash flows:
<TABLE>
<CAPTION>
In Thousands 1995 1994
------- -------
<S> <C> <C>
Cash paid during the period for:
Interest $ 283 $ 309
Income taxes $ 56 $ 103
</TABLE>
6. Equity 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 dinnerware and other
product promotions in Europe. The Company accounts for Excel Plus under the
equity method and records its share of Excel Plus' income or loss before
taxes as a separate item in the Consolidated Statements of Income. The
Company's share of Excel Plus' income tax expense is included in the
consoldiated provision for income taxes.
Summarized financial information of Excel Plus is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
In Thousands 1995 1994
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<S> <C> <C>
Current assets $ 4,771 $ 6,418
Non current assets 60 52
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$ 4,831 $ 6,470
======= =======
Current liabilities $ 6,235 $ 7,617
Non current liabilities - -
Equity (1,404) (1,147)
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$ 4,831 $ 6,470
======= =======
</TABLE>
<TABLE>
<CAPTION>
1st Quarter
---------------------
1995 1994
------- -------
<S> <C> <C>
Revenues $ 1,962 $ 1,245
Costs and expenses 2,216 1,245
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Income (loss) before taxes (254) -
Income taxes (benefit) - -
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Net income (loss) $ (254) $ -
======= =======
</TABLE>
8
<PAGE>
MICKELBERRY COMMUNICATIONS INCORPORATED
Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
---------------------
Consolidated revenues were $31.2 million in the first quarter of 1995, a
13% increase over the $27.6 million of revenues recorded in the first quarter of
1994. Revenue increased in both the advertising and promotion and printing
segments representing, for each segment, a greater volume of business.
Equity in pre tax earnings of Excel Plus, the Excel Marketing Group's
European joint venture was a loss of $127,000 in the first quarter of 1995
compared with a break-even in 1994.
Operating income was $892,000 in the first quarter of 1995 compared with
a loss of $158,000 in 1994. The improvement in operating income results from the
increased volume of business mentioned above, better margins in the printing
business and reduced losses for the Excel Marketing Group. The Excel Marketing
Group lost money in both the first quarter of 1995 and 1994. These losses
include the Group's equity in the earnings (loss) of Excel Plus. The losses are
lower in 1995 since a smaller portion of the business relates to supermarket
continuity programs.
Pre tax income was a profit of $575,000 for the first quarter of 1995
compared with a loss of $492,000 in 1994. The improvement in pre tax income
mirrors the improvement in operating income discussed above.
FINANCIAL CONDITION
-------------------
The major change in the Company's financial condition at March 31, 1995
compared to December 31,1994 is the increase in non cash working capital and a
corresponding decrease in cash and temporary investments. Inventory balances
increased by $7.8 million during the first quarter. These increases were
principally in the printing segment and result from increased business in
printing corporate annual reports.
9
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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.
10
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MICKELBERRY COMMUNICATIONS INCORPORATED
SIGNATURES
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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 CORPORATION
(Registrant)
Date: May 12, 1995 /s/ George Kane
------------ ------------------------------
George Kane
Senior Vice President, Finance
(Chief Accounting Officer
and duly authorized Officer)
11
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EXHIBIT 11
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MICKELBERRY COMMUNICATIONS INCORPORATED
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
For the Three Months Ended
March 31, 1995 and 1994
In Thousands (except per share)
<TABLE>
<CAPTION>
1st Quarter
-------------------------------------
1995 1994
------------------ -----------------
Primary Fully Primary Fully
Diluted Diluted
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Income (loss)
attributable to
common stock:
Net income (loss) $ 345 $ 345 $ (295) $ (295)
Less dividends on
preferred stock (18) (18) (18) (18)
Add interest on
convertible debentures
(if applicable) - 118 - -
------ ------ ------- ------
1. Net income (loss) $ 327 $ 445 $ (313) $ (313)
====== ====== ======= ======
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) 45 114 - -
Shares deemed issued for
convertible debentures
(if applicable and
dilutive) - 2,312 - -
------ ------ ------- ------
2. Total 5,923 8,304 5,876 5,876
====== ====== ======= ======
Earnings (loss)
per share:
Net income (1 / 2) $.06 $.05 $ (.05) $ (.05)
====== ====== ======= ======
</TABLE>
12
