6309510Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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 0-12362
Berger Holdings, Ltd.
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA 23-2160077
(State or Other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number
805 Pennsylvania Boulevard, Feasterville, PA 19053
(Address of principal executive offices)
Registrant's telephone number, including area code:
(215) 355-1200
Indicate by check mark whether the Registrant (1) has filed
all reports required by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months, and (2)
has been subject to such filing requirements for the past ninety
days.
(1) YES X NO _____
(2) YES X NO _____
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO _____
As of August 8, 1995, the Registrant had outstanding 3,291,439
shares of Common Stock, par value $.01 per share.
<PAGE>
BERGER HOLDINGS, LTD.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated
Balance Sheets at June 30, 1995
and December 31, 1994 3
Condensed Consolidated Statement of
Operations for the three month periods
ended June 30, 1995 and 1994 5
Condensed Consolidated Statement of
Operations for the six month periods
ended June 30, 1995 and 1994 6
Condensed Consolidated Statements
of Cash Flows for the six months
ended June 30, 1995 and 1994 7
Notes to Condensed Consolidated
Financial Statements 9
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a
Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS June 30, December 31,
1995 1994
---------------- -------------
Current Assets
Cash $ 138,267 $ 79,391
Trade accounts receivable, net of
allowance for doubtful accounts
of $73,000 in 1995 & 1994 1,944,528 1,239,431
Inventories (Note 2) 2,252,364 1,881,896
Prepaid and other assets 215,794 211,172
------------ -------------
Total current assets 4,550,953 3,411,890
------------ -------------
Other Assets
Property and equipment, net (Note 3) 5,996,775 6,155,729
Other assets 326,541 155,169
Goodwill, net of accumulated
amortization 590,534 629,974
------------- -------------
Total other assets 6,913,850 6,940,872
------------- -------------
$11,464,803 $ 10,352,762
============== ============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
---------------- -------------
Current Liabilities
Current maturities of long term debt
and demand notes payable (Note 4) $ 2,968,860 $ 228,174
Accounts payable 1,164,544 620,603
Accrued expenses 448,968 459,365
------------ -------------
Total current liabilities 4,582,372 1,308,142
Long term debt, net of current
maturities 1,710,479 3,873,299
------------- -------------
Total liabilities 6,292,851 5,181,441
------------- -------------
Shareholders' Equity
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding 3,291,439 shares
in 1995 and 3,191,439 in 1994 32,914 31,914
Additional paid-in-capital 14,852,238 14,778,238
Deficit (9,513,200) (9,438,831)
------------ -----------
5,371,952 5,371,321
Less common stock subscribed (200,000) (200,000)
------------ -------------
Total shareholders' equity 5,171,952 5,171,321
------------ -------------
$ 11,464,803 $ 10,352,762
============== ============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
June 30, June 30,
1995 1994
------------- -------------
Net Sales $ 4,099,219 $ 4,832,974
Cost of sales 3,525,303 4,102,793
------------- ------------
Gross profit 573,916 730,181
Operating expenses
Selling, administrative and general
expenses 553,848 429,852
Consulting fees (non-cash) -0- 175,000
------------- ------------
Income from operations 20,068 125,329
------------- -------------
Other (expenses) income
Interest expense (128,916) (95,634)
Interest income 33 1,399
------------- --------------
(128,883) (94,235)
------------- --------------
Income (loss) before extraordinary item (108,815) 31,094
Extraordinary Item (Note 4)
Gain from extinguishment of debt -0- 936,268
------------ ------------
Net income (loss) ($108,815) $967,362
============ ============
Per Share amounts
Income (loss) per common share before
extraordinary item ($0.03) $0.01
Extraordinary item per common share 0.00 0.31
------------ ------------
Net income (loss) per common share ($0.03) $0.32
============ ============
Weighted average number of common
shares outstanding 3,291,439 3,038,238
============ ============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Six Months
Ended Ended
June 30, June 30,
1995 1994
------------- -------------
Net Sales $ 8,146,723 $ 7,451,089
Cost of sales 6,834,637 6,488,311
------------- ------------
Gross profit 1,312,086 962,778
Operating expenses
Selling, administrative and general
expenses 1,111,764 826,878
Consulting fees (non-cash) -0- 205,000
------------- ------------
Income (loss) from operations 200,322 (69,100)
------------- -------------
Other (expenses) income
Interest expense (274,841) (213,350)
Interest income 150 4,007
------------- --------------
(274,691) (209,343)
------------- --------------
Loss before extraordinary item ($74,369) ($278,443)
Extraordinary Item
Gain from extinguishment of debt -0- 936,268
============ =============
Net income (loss) ($74,369) $657,825
============ ============
Per Share amounts
Loss per common share before
extraordinary item ($0.02) ($0.10)
Extraordinary item per common share 0.00 0.35
============= =============
Net income (loss) per common share ($0.02) $0.25
============ ============
Weighted average number of common
shares outstanding 3,241,439 2,645,893
============= =============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1995 1994
------------- -------------
Cash flows from operating activities
Net Income (loss) ($74,369) $657,825
------------- ------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Extraordinary gains -0- (936,268)
Depreciation and amortization 354,058 532,252
(Increase) decrease in assets
Accounts receivable (705,097) (1,108,752)
Inventories (370,468) (467,849)
Other current and long-term assets (100,994) 306,242
Increase in liabilities
Accounts payable and
accrued expenses 533,544 536,985
------------- --------------
Total adjustments (288,957) (1,137,390)
------------- --------------
Net cash used in operating
activities (363,326) (479,565)
------------- -------------
Cash flows from investing activities
Acquisition of property and equipment (155,664) (418,529)
------------- -------------
Net cash used in investing activities (155,664) (418,529)
------------ ---------------
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1995 1994
------------- -------------
Cash flows from financing activities
Net borrowings and loan repayments 577,866 (358,453)
Gross proceeds from issuance of stock
and subordinated debt under private
placement -0- 907,000
Cost of private placement -0- (23,625)
------------- --------------
Net cash provided by
financing activities 577,866 524,922
------------- ----------------
Net increase (decrease) in cash 58,876 (373,172)
Cash, beginning of period 79,391 578,729
------------- ----------------
Cash, end of period $138,267 $205,557
============= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for
interest $274,841 $213,350
During the current period the Company issued 100,000 shares of common
stock valued at $75,000 in exchange for deposits on equipment.
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring accruals) considered necessary for a fair
presentation have been included.
Note 2. Inventories:
Inventories are valued at the lower of cost or market. Cost is determined
using the first-in, first-out method ("FIFO").
Components of inventories at June 30, 1995 and December 31, 1994 consist
of the following:
June 30, 1995 December 31, 1994
Raw materials $ 955,255 $1,010,187
Finished goods 1,249,706 850,771
Packaging materials
and supplies 78,403 102,938
Less provision for
obsolescence (31,000) (82,000)
---------- ----------
$2,252,364 $1,881,896
========== ==========
All inventory is currently used in the business of the Company's
subsidiary, Berger Bros Company.
Note 3. Property, Plant and Equipment:
Property, plant and equipment is recorded at cost. Costs of major
additions and betterments are capitalized; maintenance and repair costs, which
do not improve or extend the life of the respective assets, are charged to
operations as incurred. Leasehold improvements are amortized over the shorter
of the lease term or useful life.
<PAGE>
When an asset is sold, retired, or otherwise disposed of, the cost of
the property and the related accumulated depreciation is removed from the
respective accounts, and any resulting gains or losses are included in income.
For financial reporting purposes, depreciation is computed on the
straight-line method over the estimated useful lives of the assets. For income
tax purposes, depreciation is computed on accelerated methods.
Note 4. Short Term Debt & Extraordinary Item.
As of June 30, 1995 the Company's working capital credit line of
$2,894,000 has been classified as a current liability. Under the terms of the
credit facility a payment is due on June 30, 1996 for all unpaid principal
unless it is extended. The Company is currently exploring different options
with respect to the refinancing of this credit facility.
In June 1994, the Company paid off its loan with its former lender and
recognized an extraordinary gain of $936,268.
ITEM 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operation.
Results of Operations
The financial statements include the accounts of the Company and its
wholly-owned subsidiary, Berger Financial Corporation and Berger Financial
Corporation's wholly-owned subsidiary, Berger Bros Company. All intercompany
transactions and balances have been eliminated.
During the quarter ended June 30, 1995 (the "Current Quarter") the Company
reported a net loss of $108,815 on net sales of $4,099,219. This compares to
net income of $31,094 on net sales of $4,832,974 for the quarter ended June 30,
1994 (the "Comparable Quarter").
The Current Quarter's sales decreased 15.2% ($733,755) as compared to the
quarter ended June 30, 1994. This decrease is primarily related to the milder
winter experienced in 1995 compared to 1994. In 1994, a severe winter
negatively impacted sales in the first quarter, resulting in sales being
deferred until the second quarter. Sales during the second quarter of 1995 were
not affected in the same manner as in the prior comparable period.
Cost of Sales decreased to $3,525,303 in the Current Quarter from
$4,102,793 in the Comparable Quarter. As a percentage of net sales, Cost of
Sales increased to 86.0% in the Current Quarter from 84.9% in the Comparable
Quarter. This slight increase occurred as a result of decreased sales and the
fixed portion of manufacturing expenses remaining virtually unchanged.
<PAGE>
Selling, general and administrative expenses were $553,848 in the Current
Quarter as compared to $429,852 in the Comparable Quarter. This increase in
expenses is due to the hiring of an additional salesman and two sales
representatives and higher promotional costs and advertising fees in the Current
Quarter. As a percentage of net sales, selling, general and administrative
expenses increased to 13.5% in the Current Quarter as compared to 8.9% in the
Comparable Quarter.
For the six month period ending June 30, 1995 (the "Current Half") and for
the first time in the Company's recent history, the Company reported operating
income of $200,322 on sales of $8,146,723. This compares to an operating loss
$69,100 on sales of $7,451,089 for the six months ending June 30, 1994 (the
"Comparable Half"). The improvement in operating results is primarily due to
the increase in sales and improved gross profit margins which were somewhat
offset by increased selling, administrative, and general expenses. The
Company's net income of $657,825 in the Comparable Half as compared to a net
loss of $74,369 in the Current Half resulted from the extraordinary gain of
$936,268 from the extinguishment of debt in the Comparable Half.
Sales increased $695,634 to $8,146,723 for the Current Half from $7,451,089
for the Comparable Half. This increase is a result of the Company's increased
market share despite a softness in the construction industry.
Selling, general and administrative expenses in the Current Half are up 34%
compared to the Comparable Half due to the hiring of a new salesman and two
sales representatives, an aggressive advertising and promotional program, and
higher professional and warranty fees.
Liquidity and Capital Resources
At June 30, 1995, working capital was ($31,419) resulting in a ratio of
current assets to current liabilities of .99 to 1, as compared to working
capital of $2,103,748 (2.61 to 1) at December 31, 1994. This decrease in
working capital is due to the fact that the Company's credit line of $2,894,000
has been reclassified to a current liability as discussed in Note 4 to the
Financial Statements.
Current liabilities at June 30, 1995 totalled $4,582,372 consisting
primarily of $1,613,512 in accounts payable and accrued expenses and $2,968,860
in current maturities of long term debt. At December 31, 1994, total current
liabilities were $1,308,142 consisting primarily of $1,079,968 in accounts
payable and accrued expenses and $228,174 in current maturities of long term
debt.
<PAGE>
At June 30 1995, the Company had shareholders' equity of $5,171,952 as
compared to $5,171,321 at December 31, 1994. The increase of $631 is made up
of the following:
Increased equity for issuance of stock $75,000
Net loss for the period (74,369)
-------
$631
=======
Depending upon the Company's performance and market conditions, the
exercise of outstanding warrants could produce additional proceeds. There can
be no assurance that any warrants will be exercised.
In February 1995, the Company reached an agreement with a supplier of new
equipment originally ordered in 1990. Delivery is expected during the fourth
quarter of 1995 pursuant to an 11 month purchase agreement which requires
payments in 1995 of approximately $200,000.
Cash used in operating activities for the Current Half was $363,326 as
compared to $479,565 used in the Comparable Half. These uses of cash result
primarily from the increase in inventory and accounts receivable during both the
Current and Comparable Half.
Net cash used in investing activities totaled $155,664 in the Current Half
as compared to $418,529 used in the Comparable Half.
Net cash provided by financing activities was $577,866 in the Current Half,
as compared to $524,922 provided in the Comparable Half. The current unused
credit line as of June 30, 1995 was approximately $606,000.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings.
None.
Item 2 - Changes in Securities.
None.
Item 3 - Defaults Upon Senior Securities.
None.
Item 4 - Submission of Matters to a Vote of Securities Holders.
None.
Item 5 - Other Information.
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K.
None.
<PAGE>
Signature
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.
BERGER HOLDINGS, LTD.
By:/s/ JOSEPH F. WEIDERMAN
Joseph F. Weiderman
President and
Chief Financial Officer
Date: August 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 138,267
<SECURITIES> 0
<RECEIVABLES> 2,017,528
<ALLOWANCES> 73,000
<INVENTORY> 2,252,364
<CURRENT-ASSETS> 4,550,953
<PP&E> 10,546,401
<DEPRECIATION> 4,549,626
<TOTAL-ASSETS> 11,464,803
<CURRENT-LIABILITIES> 4,582,372
<BONDS> 0
<COMMON> 32,914
0
0
<OTHER-SE> 5,139,038
<TOTAL-LIABILITY-AND-EQUITY> 11,464,803
<SALES> 8,146,723
<TOTAL-REVENUES> 8,146,723
<CGS> 6,834,637
<TOTAL-COSTS> 6,834,637
<OTHER-EXPENSES> 1,111,764
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 274,691
<INCOME-PRETAX> (74,369)
<INCOME-TAX> 0
<INCOME-CONTINUING> 200,322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,369)
<EPS-PRIMARY> $(.02)
<EPS-DILUTED> $(.02)
</TABLE>
