9309610Q
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, 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 November 6, 1996, the Registrant had outstanding 3,802,663
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, 1996
and December 31, 1995 3
Condensed Consolidated Statement of
Operations for the three month periods
ended September 30, 1996 and 1995 5
Condensed Consolidated Statement of
Operations for the nine month periods
ended September 30, 1996 and 1995 6
Condensed Consolidated Statements
of Cash Flows for the nine months
ended September 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
2
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS September 30, December 31,
1996 1995
---------------- -------------
Current Assets
Cash $ 121,461 $ 171,432
Trade accounts receivable, net of
allowance for doubtful accounts of
$43,000 in 1996 & 1995 2,361,563 1,221,065
Inventories (Note 2) 2,451,195 1,593,642
Prepaid and other assets 191,574 117,347
------------ -------------
Total current assets 5,125,793 3,103,486
------------ -------------
Other Assets
Property and equipment, net (Note 3) 6,070,486 5,742,270
Other assets 109,820 488,409
Goodwill, net of accumulated
amortization 492,074 551,174
------------- -------------
Total other assets 6,672,380 6,781,853
------------- -------------
$ 11,798,173 $ 9,885,339
============== ============
3
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
---------------- -------------
Current Liabilities
Current maturities of long term debt
and demand notes payable (Note 4) $ 249,297 $ 2,077,171
Accounts payable 380,586 1,150,365
Accrued expenses 658,860 345,721
----------------- ------------
Total current liabilities 1,288,743 3,573,257
Long term debt, net of current
maturities 4,657,201 1,676,713
------------- -------------
Total liabilities 5,945,944 5,249,970
------------- -------------
Shareholders' Equity
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding 3,802,663 shares
in 1996 and 3,531,439 in 1995 38,027 35,314
Additional paid-in-capital 15,313,070 15,088,747
Deficit (9,298,868) (10,288,692)
------------ -----------
6,052,229 4,835,369
Less common stock subscribed (200,000) (200,000)
------------ -------------
Total shareholders' equity 5,852,229 4,635,369
------------ -------------
$ 11,798,173 $ 9,885,339
============== ============
4
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
September 30, September 30,
1996 1995
------------- -------------
Net Sales $ 5,695,246 $ 4,133,260
Cost of sales 4,382,870 3,730,248
------------- ------------
Gross profit 1,312,376 403,012
Operating expenses
Selling, administrative and general
expenses 631,136 506,497
------------- ------------
Income (loss) from operations 681,240 (103,485)
------------- -------------
Other (expenses) income
Interest expense (158,279) (154,957)
Interest income 517 86
------------- --------------
(157,762) (154,871)
------------- --------------
Net income (loss) before provision
for income taxes 523,478 (258,356)
Income taxes (Note 5) -0- -0-
------------- --------------
Net income (loss) $523,478 ($258,356)
============ ============
Primary earnings per share
Net income (loss) per common share $0.14 ($0.08)
============ ============
Weighted average number of common
shares outstanding during the period 3,733,217 3,303,015
============ ============
Fully diluted per share amounts
Net income (loss) per common share $0.12 ($0.08)
============ ============
Weighted average number of common and
common equivalent shares outstanding
during the period 4,881,574 3,303,015
============ ============
5
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
------------- -------------
Net Sales $ 14,846,977 $ 12,279,983
Cost of sales 11,647,274 10,564,885
------------- ------------
Gross profit 3,199,703 1,715,098
Operating expenses
Selling, administrative and general
expenses 1,742,552 1,618,261
------------- ------------
Income from operations 1,457,151 96,837
------------- -------------
Other (expenses) income
Interest expense (468,048) (429,798)
Interest income 721 236
------------- --------------
(467,327) (429,562)
------------- --------------
Net income (loss) before provision
for income taxes 989,824 (332,725)
Income taxes (Note 5) -0- -0-
------------ --------------
Net income (loss) $989,824 ($332,725)
============ ============
Primary earnings per share
Net income (loss) per common share $0.27 ($0.10)
============ ============
Weighted average number of shares
outstanding during the period 3,615,187 3,286,948
============ ============
Fully diluted per Share amounts
Net income (loss) per common share $0.24 ($0.10)
============ ============
Weighted average number of common and
common equivalent shares outstanding
during the period 4,787,150 3,286,948
============ ============
6
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1996 1995
------------- -------------
Cash flows from operating activities
Net Income (loss) $989,824 ($332,725)
------------- ------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization 522,576 532,438
Change in allowance for doubtful accounts -0- (30,000)
(Increase) decrease in assets
Accounts receivable (1,140,498) (644,228)
Inventories (857,553) (46,994)
Other current and long-term assets 304,362 (204,637)
Increase in liabilities
Accounts payable and
accrued expenses (456,640) 563,429
------------- --------------
Total adjustments (1,627,753) 170,008
------------- --------------
Net cash used in operating
activities (637,929) (162,717)
------------- -------------
Cash flows from investing activities
Acquisition of property and equipment (791,692) (195,476)
------------- -------------
Net cash used in investing activities (791,692) (195,476)
------------ -------------
7
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1996 1995
------------- -------------
Cash flows from financing activities
Net borrowings and loan repayments 1,152,614 373,007
Gross proceeds from issuance of stock
and subordinated debt under private
placement 230,100 74,000
Cost of private placement (3,064) (15,713)
------------- --------------
Net cash provided by
financing activities 1,379,650 431,294
------------- ----------------
Net increase (decrease) in cash (49,971) 73,101
Cash, beginning of period 171,432 79,391
------------- ----------------
Cash, end of period $121,461 $152,492
============= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for
interest $468,048 $429,798
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 September 30, 1996 and December 31, 1995
consist of the following:
September 30, 1996 December 31, 1995
Raw materials $1,584,957 $ 872,126
Finished goods 801,652 704,828
Packaging materials
and supplies 106,586 76,688
Less provision for
obsolescence (42,000) (60,000)
---------- ----------
$2,451,195 $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.
Note 4. Short Term Debt.
In April of 1996, the Company's credit facility was extended for two
years and is now due on June 30, 1998.
Note 5. Income Taxes.
The Company has net operating losses to offset the net income, therefore
no provision for income taxes has been recognized.
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, 1996 (the "Current Quarter") the
Company reported net income of $523,478 on net sales of $5,695,246. This
compares to a net loss of $258,356 on net sales of $4,133,260 for the quarter
ended September 30, 1995 (the "Comparable Quarter").
The Current Quarter's sales increased 37.8% ($1,561,986) as compared to
the quarter ended September 30, 1995. This increase is primarily related to
an expanded customer base and a good economy in 1996 as compared to 1995.
Cost of Sales increased to $4,382,870 in the Current Quarter from
$3,730,248 in the Comparable Quarter. As a percentage of net sales, Cost of
Sales improved to 77.0% in the Current Quarter from 90.2% in the Comparable
Quarter. This percentage decrease occurred as a result of the increased sales
volume and reductions in manufacturing costs which were achieved through
improved cost controls.
10
<PAGE>
Selling, general and administrative expenses were $631,136 in the Current
Quarter as compared to $506,497 in the Comparable Quarter. As a percentage of
net sales, selling, general and administrative expenses improved to 11.1% in
the Current Quarter as compared to 12.3% in the Comparable Quarter. This
improvement in selling, general and administrative expenses as a percentage of
net sales is a result of a higher sales level with a proportionally smaller
increase in expenses.
For the nine month period ending September 30, 1996 (the "Current Nine
Months"), the Company reported operating income of $1,457,151 on sales of
$14,846,977. This compares to operating income of $96,837 on sales of
$12,279,983 for the nine months ending September 30, 1995 (the "Comparable Nine
Months"). This increase in operating results is due to the increase in sales.
Sales increased 20.9% or $2,566,994 to $14,846,977 for the Current Nine
Months from $12,279,983 for the Comparable Nine Months. This increase is the
result of the Company's expanded customer base and an improved economic
environment.
Selling, general and administrative expenses in the Current Nine Months
improved to 11.7% of net sales as compared to 13.2% for the Comparable Nine
Months. Selling, general and administrative expenses increased only 7.7% while
sales increased 20.9% for the Current Nine Months.
Liquidity and Capital Resources
At September 30, 1996, the working capital was $3,837,050 resulting in a
ratio of current assets to current liabilities of 3.98 to 1, as compared to a
working capital deficit of $469,771 (.87 to 1) at December 31, 1995. This
increase in working capital is primarily due to the significantly improved
operating results and replacement of short term indebtedness with long term
financing as discussed in Note 4 to the Financial Statements.
Current liabilities at September 30, 1996 totalled $1,288,743 consisting
primarily of $1,039,446 in accounts payable and accrued expenses and $249,297
in current maturities of long term debt. At December 31, 1995, total current
liabilities were $3,573,257 consisting primarily of $2,077,171 in current
maturities of long term debt and $1,496,086 in accounts payable and accrued
expenses.
11
<PAGE>
At September 30 1996, the Company had shareholders' equity of $5,852,229
as compared to $4,635,369 at December 31, 1995. The increase of $1,216,860 is
made up of the following:
Increased equity from issuance of stock $227,036
Net income for the period 989,824
---------
$1,216,860
=========
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 Nine Months was $637,929
as compared to $162,717 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 $791,692 in the Current Nine
Months as compared to $195,476 used in the Comparable Nine Months, both for the
purchase of new equipment.
Net cash provided by financing activities was $1,379,650 in the Current
Nine Months, as compared to $431,294 provided in the Comparable Nine Months.
The current unused credit line as of September 30, 1996 was approximately
$362,000.
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.
At the Company's annual meeting of shareholders held on August 19, 1996
the following matters were submitted to the Company's shareholders:
1. The election of three 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 1996.
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
Theodore A. Schwartz 2,542,048 17,329
Joseph F. Weiderman 2,544,742 14,635
Jacob I. Haft, M.D. 2,543,742 15,635
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, 1996 by a vote of 2,546,433 for
the ratification, 5,314 opposed, and 7,630 abstentions.
No other proposals were submitted to the shareholders during the quarter
ended September 30, 1996.
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
By:/s/ FRANCIS E. WELLOCK, JR.
Francis E. Wellock, Jr.
Chief Financial Officer
Date: November 6, 1996
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 121,461
<SECURITIES> 0
<RECEIVABLES> 2,404,563
<ALLOWANCES> 43,000
<INVENTORY> 2,451,195
<CURRENT-ASSETS> 5,125,793
<PP&E> 11,401,916
<DEPRECIATION> 5,331,430
<TOTAL-ASSETS> 11,798,173
<CURRENT-LIABILITIES> 1,288,743
<BONDS> 0
0
0
<COMMON> 38,027
<OTHER-SE> 5,814,202
<TOTAL-LIABILITY-AND-EQUITY> 11,798,173
<SALES> 14,846,977
<TOTAL-REVENUES> 14,846,977
<CGS> 11,647,274
<TOTAL-COSTS> 11,647,274
<OTHER-EXPENSES> 1,742,552
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 468,048
<INCOME-PRETAX> 989,824
<INCOME-TAX> 0
<INCOME-CONTINUING> 989,824
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 989,824
<EPS-PRIMARY> $.27
<EPS-DILUTED> $.24
</TABLE>
