6309610Q
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, 1996 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 July 31, 1996, the Registrant had outstanding 3,590,922
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, 1996
and December 31, 1995 3
Condensed Consolidated Statement of
Operations for the three month periods
ended June 30, 1996 and 1995 5
Condensed Consolidated Statement of
Operations for the six month periods
ended June 30, 1996 and 1995 6
Condensed Consolidated Statements
of Cash Flows for the six months
ended June 30, 1996 and 1995 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,
1996 1995
---------------- -------------
Current Assets
Cash $ 44,003 $ 171,432
Trade accounts receivable, net of
allowance for doubtful accounts
of $43,000 in 1996 & 1995 2,624,223 1,221,065
Inventories (Note 2) 2,112,790 1,593,642
Prepaid and other assets 208,450 117,347
------------ -------------
Total current assets 4,989,466 3,103,486
------------ -------------
Other Assets
Property and equipment, net (Note 3) 5,629,700 5,742,270
Other assets 524,841 488,409
Goodwill, net of accumulated
amortization 511,774 551,174
------------- -------------
Total other assets 6,666,315 6,781,853
------------- -------------
$11,655,781 $ 9,885,339
============== ============
3
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
---------------- -------------
Current Liabilities
Current maturities of long term debt
and demand notes payable $ 448,662 $ 2,077,171
Accounts payable 799,054 1,150,365
Accrued expenses 697,999 345,721
------------ -------------
Total current liabilities 1,945,715 3,573,257
Long term debt, net of current
maturities 4,576,662 1,676,713
------------- -------------
Total liabilities 6,522,377 5,249,970
------------- -------------
Shareholders' Equity
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding 3,590,922 shares
in 1996 and 3,531,439 in 1995 35,909 35,314
Additional paid-in-capital 15,119,841 15,088,747
Deficit (9,822,346) (10,288,692)
------------ -----------
5,333,404 4,835,369
Less common stock subscribed ( 200,000) ( 200,000)
------------ -------------
Total shareholders' equity 5,133,404 4,635,369
------------ -------------
$ 11,655,781 $ 9,885,339
============== ============
4
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
------------- -------------
Net Sales $ 5,540,619 $ 4,099,219
Cost of sales 4,211,616 3,525,303
------------- ------------
Gross profit 1,329,003 573,916
Operating expenses
Selling, administrative and general
expenses 639,921 553,848
------------- ------------
Income from operations 689,082 20,068
------------- -------------
Other (expenses) income
Interest expense (185,034) (128,916)
Interest income 62 33
------------- --------------
(184,972) (128,883)
------------- --------------
Net income (loss) $504,110 ($108,815)
============ ============
Fully diluted per share amounts
Net income (loss) per common share $0.13 ($0.03)
============ ============
Weighted average number of common and
common equivalent shares outstanding
during the period 3,764,825 3,291,439
============ ============
5
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
------------- -------------
Net Sales $ 9,151,731 $ 8,146,723
Cost of sales 7,264,404 6,834,637
------------- ------------
Gross profit 1,887,327 1,312,086
Operating expenses
Selling, administrative and general
expenses 1,111,416 1,111,764
------------- ------------
Income from operations 775,911 200,322
------------- -------------
Other (expenses) income
Interest expense (309,769) (274,841)
Interest income 204 150
------------- --------------
(309,565) (274,691)
------------- --------------
Net income (loss) $466,346 ($74,369)
============ ============
Fully diluted per share amounts
Net income (loss) per common share $0.13 ($0.02)
============ ============
Weighted average number of common and
common equivalent shares outstanding
during the period 3,648,262 3,241,439
============= =============
6
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1996 1995
------------- -------------
Cash flows from operating activities
Net Income (loss) $466,346 ($74,369)
------------- ------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization 345,959 354,058
(Increase) decrease in assets
Accounts receivable (1,403,158) (705,097)
Inventories (519,148) (370,468)
Other current and long-term assets (127,535) (100,994)
Increase in liabilities
Accounts payable and
accrued expenses 967 533,544
------------- --------------
Total adjustments (1,702,915) (288,957)
------------- --------------
Net cash used in operating
activities (1,236,569) (363,326)
------------- -------------
Cash flows from investing activities
Acquisition of property and equipment (193,989) (155,664)
------------- -------------
Net cash used in investing activities (193,989) (155,664)
------------ ---------------
7
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1996 1995
------------- -------------
Cash flows from financing activities
Loan Proceeds net of repayments 1,271,440 577,453
Gross proceeds from issuance of stock
and subordinated debt under private
placement 34,740 -0-
Cost of private placement (3,051) -0-
------------- --------------
Net cash provided by
financing activities 1,303,129 577,866
------------- ----------------
Net increase (decrease) in cash (127,429) 58,876
Cash, beginning of period 171,432 79,391
------------- ----------------
Cash, end of period $ 44,003 $138,267
============= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for
interest $309,769 $274,841
8
<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, 1996 and December 31, 1995 consist
of the following:
June 30, 1996 December 31, 1995
Raw materials $1,240,902 $ 872,126
Finished goods 814,805 704,828
Packaging materials
and supplies 99,083 76,688
Less provision for
obsolescence (42,000) (60,000)
---------- ----------
$2,112,790 $1,593,642
========== ==========
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.
9
<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.
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, 1996 (the "Current Quarter") the Company
reported net income of $504,110 on net sales of $5,540,619. This compares to a
net loss of $108,815 on net sales of $4,099,219 for the quarter ended June 30,
1995 (the "Comparable Quarter").
The Current Quarter's sales increased 35.2% ($1,441,400) as compared to
the quarter ended June 30, 1995. This increase is primarily due to a stronger
core market, new customers and more advantageous weather conditions in 1996 as
compared to 1995.
Cost of Sales increased to $4,211,616 in the Current Quarter from
$3,525,303 in the Comparable Quarter. As a percentage of net sales, Cost of
Sales decreased to 76.0% in the Current Quarter from 86.0% in the Comparable
Quarter. This decrease occurred as a result of allocating fixed overhead costs
over a greater number of units produced, thereby reducing the cost of inventory
items. At the same time, the Company was able to reduce direct labor costs.
10
<PAGE>
Selling, general and administrative expenses were $639,921 in the Current
Quarter as compared to $553,848 in the Comparable Quarter. This increase in
expenses is due to higher promotional costs and advertising fees in the Current
Quarter. As a percentage of net sales, selling, general and administrative
expenses decreased to 11.5% in the Current Quarter as compared to 13.5% in the
Comparable Quarter.
For the six month period ending June 30, 1996 (the "Current Half"), the
Company reported operating income of $775,911 on sales of $9,151,731. This
compares to operating income of $200,322 on sales of $8,146,723 for the six
months ending June 30, 1995 (the "Comparable Half"). The improvement in
operating results is primarily due to the increase in sales volume and
improved control of operating expenses. The Company had net income of $466,346
in the Current Half as compared to a net loss of $74,369 in the Comparable Half.
Sales increased 12.3% or $1,005,008 to $9,151,731 for the Current Half
from $8,146,723 in the Comparable Half. This increase is primarily due to a
stronger core market and new accounts.
Selling, general and administrative expenses in the Current Half were
$1,111,416 as compared to $1,111,764 in the Comparable Half. Selling, general,
and administrative expenses as a percentage of Sales decreased to 12.1% in the
Current Half from 13.6% in the Comparable Half due to cost control measures
implemented in 1996.
Liquidity and Capital Resources
At June 30, 1996, working capital was $3,043,751 resulting in a ratio of
current assets to current liabilities of 2.56 to 1, as compared to working
capital of($469,771) (.87 to 1) at December 31, 1995. This increase in working
capital is due to the fact that the Company's credit line of $3,500,000 has
been extended for a two year term and reclassified to a long term debt as
compared to a current liability at December 31, 1995.
Current liabilities at June 30, 1996 totalled $1,945,715 consisting
primarily of $1,497,053 in accounts payable and accrued expenses and $448,662
in current maturities of long term debt. At December 31, 1995, total current
liabilities were $3,573,257 consisting primarily of $1,496,086 in accounts
payable and accrued expenses and $2,077,171 in current maturities of long term
debt. Current liabilities decreased by $1,627,542 primarily as a result of
reclassifying short term debt to long term debt upon the renewal of its credit
facility with The CIT Group.
11
<PAGE>
At June 30 1996, the Company had shareholders' equity of $5,133,404 as
compared to $4,635,369 at December 31, 1995. The increase of $498,035 is made
up of the following:
Issuance of stock $ 31,689
Net income for the period 466,346
-------
$498,035
=======
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.
Cash used in operating activities for the Current Half was $1,236,569 as
compared to $363,326 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 $193,989 in the Current Half
as compared to $155,664 used in the Comparable Half.
Net cash provided by financing activities was $1,303,129 in the Current
Half, as compared to $577,866 provided in the Comparable Half. The current
unused credit line as of June 30, 1996 was approximately $412,000. As of July
24, 1996 CIT has provided an additional $250,000 of availability to Berger's
credit line.
12
<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.
13
<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: July 31, 1996
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 44,003
<SECURITIES> 0
<RECEIVABLES> 2,667,223
<ALLOWANCES> 43,000
<INVENTORY> 2,112,790
<CURRENT-ASSETS> 4,989,466
<PP&E> 10,811,713
<DEPRECIATION> 5,182,013
<TOTAL-ASSETS> 11,655,781
<CURRENT-LIABILITIES> 1,945,715
<BONDS> 0
0
0
<COMMON> 35,909
<OTHER-SE> 5,097,495
<TOTAL-LIABILITY-AND-EQUITY> 11,655,781
<SALES> 9,151,731
<TOTAL-REVENUES> 9,151,731
<CGS> 7,264,404
<TOTAL-COSTS> 7,264,404
<OTHER-EXPENSES> 1,111,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 309,769
<INCOME-PRETAX> 466,346
<INCOME-TAX> 0
<INCOME-CONTINUING> 466,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 466,346
<EPS-PRIMARY> $.13
<EPS-DILUTED> $.13
</TABLE>
