9309510Q
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 September 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 November 14, 1995, the Registrant had outstanding 3,506,439
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 September 30, 1995
and December 31, 1994 3
Condensed Consolidated Statement of
Operations for the three month periods
ended September 30, 1995 and 1994 5
Condensed Consolidated Statement of
Operations for the nine month periods
ended September 30, 1995 and 1994 6
Condensed Consolidated Statements
of Cash Flows for the nine months
ended September 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 September 30, December 31,
1995 1994
---------------- -------------
Current Assets
Cash $ 152,492 $ 79,391
Trade accounts receivable, net of
allowance for doubtful accounts of
$43,000 in 1995 & $73,000 in 1994 1,913,659 1,239,431
Inventories (Note 2) 1,928,890 1,881,896
Prepaid and other assets 233,755 211,172
------------ -------------
Total current assets 4,228,796 3,411,890
------------ -------------
Other Assets
Property and equipment, net (Note 3) 5,877,888 6,155,729
Other assets 412,222 155,169
Goodwill, net of accumulated
amortization 570,854 629,974
------------- -------------
Total other assets 6,860,964 6,940,872
------------- -------------
$ 11,089,760 $ 10,352,762
============== ============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
---------------- -------------
Current Liabilities
Current maturities of long term debt
and demand notes payable (Note 4) $ 2,761,058 $ 228,174
Accounts payable 1,158,933 620,603
Accrued expenses 484,464 459,365
----------------- ------------
Total current liabilities 4,404,455 1,308,142
Long term debt, net of current
maturities 1,713,422 3,873,299
------------- -------------
Total liabilities 6,117,877 5,181,441
------------- -------------
Shareholders' Equity
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding 3,366,439 shares
in 1995 and 3,191,439 in 1994 33,664 31,914
Additional paid-in-capital 14,909,775 14,778,238
Deficit (9,771,556) (9,438,831)
------------ -----------
5,171,883 5,371,321
Less common stock subscribed (200,000) (200,000)
------------ -------------
Total shareholders' equity 4,971,883 5,171,321
------------ -------------
$ 11,089,760 $ 10,352,762
============== ============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
September 30, September 30,
1995 1994
------------- -------------
Net Sales $ 4,133,260 $ 5,019,421
Cost of sales 3,730,248 4,261,969
------------- ------------
Gross profit 403,012 757,452
Operating expenses
Selling, administrative and general
expenses 506,497 522,793
------------- ------------
Income (loss) from operations (103,485) 234,659
------------- -------------
Other (expenses) income
Interest expense (154,957) (154,998)
Interest income 86 324
------------- --------------
(154,871) (154,674)
------------- --------------
Income (loss) before extraordinary (258,356) 79,985
Extraordinary Item (Note 4)
Gain from extinguishment of debt -0- 15,945
Loss from debt exchanged for equity -0- (11,307)
------------ ------------
Net income (loss) ($258,356) $84,623
============ ============
Per Share amounts
Net income (loss) per common share ($0.08) $0.03
============ ============
Weighted average number of common
shares outstanding 3,303,015 3,189,275
============ ============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1994
------------- -------------
Net Sales $ 12,279,983 $ 12,470,510
Cost of sales 10,564,885 10,750,280
------------- ------------
Gross profit 1,715,098 1,720,230
Operating expenses
Selling, administrative and general
expenses 1,618,261 1,349,671
Consulting fees (non-cash) -0- 205,000
------------- ------------
Income from operations 96,837 165,559
------------- -------------
Other (expenses) income
Interest expense (429,798) (368,348)
Interest income 236 4,331
------------- --------------
(429,562) (364,017)
------------- --------------
Loss before extraordinary item ($332,725) ($198,458)
Extraordinary Item
Gain from extinguishment of debt -0- 940,906
============ =============
Net income (loss) ($332,725) $742,448
============ ============
Per Share amounts
Loss per common share before
extraordinary item ($0.10) ($0.07)
Extraordinary item per common share .0.00 0.33
============= =============
Net income (loss) per common share ($0.10) $0.26
============ ============
Weighted average number of common
shares outstanding 3,286,948 2,829,011
============= =============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1995 1994
------------- -------------
Cash flows from operating activities
Net Income (loss) ($332,725) $742,448
------------- ------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Gain from extinguishment of debt -0- (952,213)
Loss from debt exchanged for equity -0- 11,307
Depreciation and amortization 532,438 692,048
Change in allowance for doubtful accounts (30,000) -0-
(Increase) decrease in assets
Accounts receivable (644,228) (1,259,172)
Inventories (46,994) (525,635)
Other current and long-term assets (204,637) 54,601
Increase in liabilities
Accounts payable and
accrued expenses 563,429 536,861
------------- --------------
Total adjustments 170,008 (1,442,203)
------------- --------------
Net cash used in operating
activities (162,717) (699,755)
------------- -------------
Cash flows from investing activities
Acquisition of property and equipment (195,476) (583,365)
------------- -------------
Net cash used in investing activities (195,476) (583,365)
------------ ---------------
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1995 1994
------------- -------------
Cash flows from financing activities
Net borrowings and loan repayments 373,007 288,746
Costs associated with refinancing -0- (140,249)
Settlement of liability on put options -0- (151,125)
Gross proceeds from issuance of stock
and subordinated debt under private
placement 74,000 907,000
Cost of private placement (15,713) (23,625)
------------- --------------
Net cash provided by
financing activities 431,294 880,747
------------- ----------------
Net increase (decrease) in cash 73,101 (402,373)
Cash, beginning of period 79,391 578,729
------------- ----------------
Cash, end of period $152,492 $176,356
============= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for
interest $429,798 $368,348
During the current period the Company issued 100,000 shares of common
stock valued at $75,000 as 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 September 30, 1995 and December 31, 1994
consist of the following:
September 30, 1995 December 31, 1994
Raw materials $ 970,560 $1,010,187
Finished goods 892,819 850,771
Packaging materials
and supplies 90,511 102,938
Less provision for
obsolescence (25,000) (82,000)
---------- ----------
$1,928,890 $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 September 30, 1995 the Company's working capital credit line of
$2,697,000 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 net gain of $940,906.
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 September 30, 1995 (the "Current Quarter") the
Company reported a net loss of $258,356 on net sales of $4,133,260. This
compares to net income of $84,623 on net sales of $5,019,421 for the quarter
ended September 30, 1994 (the "Comparable Quarter").
The Current Quarter's sales decreased 17.6% ($886,161) as compared to the
quarter ended September 30, 1994. This decrease is primarily related to the
adverse weather experienced in 1995 compared to 1994.
Cost of Sales decreased to $3,730,248 in the Current Quarter from
$4,261,969 in the Comparable Quarter. As a percentage of net sales, Cost of
Sales increased to 90.0% in the Current Quarter from 84.9% in the Comparable
Quarter. This percentage increase occurred as a result of decreased sales
volume and the inability to absorb fixed overhead costs.
<PAGE>
Selling, general and administrative expenses were $506,497 in the Current
Quarter as compared to $522,793 in the Comparable Quarter. This decrease in
expenses is due to lower sales commissions resulting from the reduction of sales
in the Current Quarter. As a percentage of net sales, selling, general and
administrative expenses increased to 12.3% in the Current Quarter as compared
to 10.4% in the Comparable Quarter.
For the nine month period ending September 30, 1995 (the "Current Nine
Months"), the Company reported operating income of $96,837 on sales of
$12,279,983. This compares to operating income of $165,559 on sales of
$12,470,510 for the nine months ending September 30, 1994 (the "Comparable Nine
Months"). This decrease in operating results is primarily due to unabsorbed
labor cost and associated benefits cost incurred by the Company in attempting
to build inventory based upon anticipated sales. In light of the current sales
level, the Company is looking at ways to reduce future expenses, which will be
reflected in the fourth quarter. The Company's net loss of $332,725 in the
Current Nine Months as compared to net income of $742,448 in the Comparable Nine
Months resulted primarily from the extraordinary gain of $940,906 in the
Comparable Nine Months.
Sales decreased $190,527 to $12,279,983 for the Current Nine Months from
$12,470,510 for the Comparable Nine Months. This decrease is a result of the
Construction industry's softness as well as the adverse weather conditions in
the Current Nine Months.
Selling, general and administrative expenses in the Current Nine Months
increased 20% compared to the Comparable Nine Months due to the hiring of a new
salesman, additional advertising, higher professional and warranty fees,
resulting primarily from the introduction of a new product segment.
Liquidity and Capital Resources
At September 30, 1995, the working capital deficit was $175,659 resulting
in a ratio of current assets to current liabilities of .96 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 primarily due to the fact that the Company's credit line
of $2,697,000 has been reclassified to a current liability as discussed in Note
4 to the Financial Statements.
Current liabilities at September 30, 1995 totalled $4,404,455 consisting
primarily of $1,643,397 in accounts payable and accrued expenses and $2,761,058
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 only $228,174 in current maturities of long
term debt.
<PAGE>
At September 30 1995, the Company had shareholders' equity of $4,971,883
as compared to $5,171,321 at December 31, 1994. The decrease of $199,438 is
made up of the following:
Increased equity for issuance of stock $133,287
Net loss for the period ( 332,725)
--------
($199,438)
========
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 Nine Months was $162,717
as compared to $699,755 used in the Comparable Nine Months. These uses of cash
result primarily from the increase in inventory and accounts receivable during
both the Current and Comparable Nine Months.
Net cash used in investing activities totaled $195,476 in the Current Nine
Months as compared to $583,365 used in the Comparable Nine Months for the
purchase of new equipment.
Net cash provided by financing activities was $431,294 in the Current Nine
Months, as compared to $880,747 provided in the Comparable Nine Months. The
current unused credit line as of September 30, 1995 was approximately $803,000.
<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.
At the Company's annual meeting of shareholders held on August 9, 1995 the
following matters were submitted to the Company's shareholders:
1. The election of two members of the Company's Board of Directors
(the "Board").
2. A proposal to ratify the appointment of Goldenberg Rosenthal
Friedlander as the Company's independent auditors for the fiscal
year 1995.
The Company's shareholders elected the following persons to the Board by the
vote set forth opposite their respective names:
NAME VOTES FOR VOTES AGAINST
Paul L. Spiese, III 1,915,123 12,988
Larry Falcon 1,912,816 15,295
The Company's shareholders also approved the other proposal described above:
Goldenberg Rosenthal Friedlander was approved as the Company's independent
auditors for the fiscal year ended December 31, 1995 by a vote of 1,911,594 for
the ratification, 3,255 opposed, and 13,258 abstentions.
No other proposals were submitted to the shareholders during the quarter
ended September 30, 1995.
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: November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 152,492
<SECURITIES> 0
<RECEIVABLES> 1,956,659
<ALLOWANCES> 43,000
<INVENTORY> 1,928,890
<CURRENT-ASSETS> 4,228,796
<PP&E> 10,586,214
<DEPRECIATION> 4,708,326
<TOTAL-ASSETS> 11,089,760
<CURRENT-LIABILITIES> 4,404,455
<BONDS> 0
<COMMON> 33,664
0
0
<OTHER-SE> 4,971,883
<TOTAL-LIABILITY-AND-EQUITY> 11,089,760
<SALES> 12,279,983
<TOTAL-REVENUES> 12,279,983
<CGS> 10,564,885
<TOTAL-COSTS> 10,564,885
<OTHER-EXPENSES> 1,618,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 429,798
<INCOME-PRETAX> (332,725)
<INCOME-TAX> 0
<INCOME-CONTINUING> (332,725)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (332,725)
<EPS-PRIMARY> $(.10)
<EPS-DILUTED> $(.10)
</TABLE>
