039710Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1997
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.
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 May 8, 1997, the Registrant had outstanding 4,995,525
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 March 31, 1997
and December 31, 1996 3
Condensed Consolidated Statement of
Operations for the three month periods
ended March 31, 1997 and 1996 5
Condensed Consolidated Statements
of Cash Flows for the quarter
ended March 31, 1997 and 1996 6
Notes to Condensed Consolidated
Financial Statements 8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior securities 11
Item 4. Submission of Matters to a
Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS March 31, December 31,
1997 1996
------------ ------------
Current assets
Cash $ 449,254 $ 1,236,709
Trade accounts receivable, net of
allowance for doubtful accounts
of $43,000 in 1997 & 1996 2,065,303 1,569,741
Inventories (Note 2) 2,510,232 2,133,895
Prepaid and other assets 280,439 153,733
Deferred income taxes 250,000 250,000
------------ -------------
Total current assets 5,555,228 5,344,078
------------ -------------
Other assets
Property and equipment, net (Note 3) 6,674,207 6,080,755
Deferred income taxes 250,000 250,000
Other assets 28,695 145,654
Goodwill, net of accumulated
amortization 1,659,674 472,374
------------ -------------
Total other assets 8,612,576 6,948,783
------------ -------------
$14,167,804 $12,292,861
============ =============
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
------------ -------------
Current liabilities
Current maturities of long term debt
and demand notes payable $ 994,238 $ 247,717
Accounts payable 490,248 110,867
Accrued expenses 315,784 557,222
----------- -----------
Total current liabilities 1,800,270 915,806
Long term debt, net of current
maturities 4,316,024 3,721,719
----------- -----------
Total liabilities 6,116,294 4,637,525
----------- -----------
Stockholders' Equity
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding
4,995,525 shares in 1997
4,858,150 shares in 1996 49,955 48,581
Additional paid-in capital 16,979,238 16,753,862
Deficit (8,469,767) (8,634,191)
----------- -----------
8,559,426 8,168,252
Less common stock subscribed (507,916) ( 512,916)
----------- -----------
Total stockholders' equity 8,051,510 7,655,336
----------- -----------
$14,167,804 $12,292,861
=========== ===========
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
-------------- --------------
Net sales $4,499,323 $3,611,112
Cost of sales 3,542,523 3,052,788
---------- ----------
Gross profit 956,800 558,324
Operating expenses
Selling, administrative and general
expenses 660,720 471,495
---------- ----------
Income from operations 296,080 86,829
---------- ----------
Other (expenses) income
Interest expense (138,775) (124,735)
Interest income 7,119 142
---------- ---------
(131,656) (124,593)
---------- ---------
Net income (loss) $164,424 ($37,764)
========== =========
Earnings (loss) per common share
Earnings per common share and common
share equivalents
Net income (loss) $.03 ($.01)
=========== ==========
Weighted average number of common
shares outstanding 4,942,533 3,531,439
=========== ==========
Earnings per share assuming full dilution
Net income (loss) $.03 ($.01)
=========== ==========
Weighted average number of common
and common share equivalents
outstanding for the period 5,739,959 3,531,439
=========== ==========
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1997 1996
----------- ----------
Cash flows from operating activities
Net income (loss) $164,424 ($37,764)
----------- ----------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization 173,292 171,360
(Increase) decrease in assets, net of
effects from purchase of Real-Tool, Inc.
Accounts receivable (404,399) (605,917)
Inventories (316,882) 58,620
Other current and long-term assets (9,747) (47,986)
Increase in liabilities
Accounts payable and accrued expenses 137,943 95,335
----------- -----------
Total adjustments (419,793) (328,588)
----------- -----------
Net cash used in operating
activities (255,369) (366,352)
----------- -----------
Cash flows from investing activities
Acquisition of property and equipment (254,325) (126,901)
Payment for purchase of Real-Tool, Inc. (900,618) -
----------- -----------
Net cash used in investing activities (1,154,943) (126,901)
----------- -----------
<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1997 1996
----------- ----------
Cash flows from financing activities
Net borrowings under term loan and
working capital line 610,225 478,334
Principal payments under mortgage and
lease obligations (19,399) -
Net proceeds from issuance of stock 32,031 -
----------- ----------
Net cash provided by
financing activities 622,857 478,334
----------- ----------
Net decrease in cash (787,455) (14,919)
Cash, beginning of period 1,236,709 171,432
----------- ----------
Cash, end of period $449,254 $156,513
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for
interest $138,775 $124,735
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
The Company purchased Real-Tool, Inc. for a combination of cash and
common stock totalling $1,850,618. In connection with the acquisition,
the following assets were acquired and liabilities incurred:
Accounts Receivable $ 91,163
Inventory 59,455
Equipment and pattern dies 33,000
Goodwill and other intangible assets 1,667,000
Cash paid for capital stock and assets (900,618)
Value assigned to common stock issued
in connection with acquisition (200,000)
---------
Liabilities incurred $ 750,000
=========
<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 March 31, 1997 and December 31, 1996
consist of the following:
March 31, 1997 December 31, 1996
Raw materials $1,463,771 $1,291,490
Finished goods 1,014,007 816,719
Packaging materials
and supplies 78,454 71,686
Less provision for
obsolescence (46,000) (46,000)
---------- ----------
$2,510,232 $2,133,895
========== ==========
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.
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.
<PAGE>
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 ("Berger Financial")
and Berger Financial's wholly-owned subsidiary, Berger Bros Company. All
intercompany transactions and balances have been eliminated.
During the quarter ended March 31, 1997 (the "Current Quarter") the
Company reported a net income of $164,424 on net sales of $4,499,323. This
compares to a net loss of $37,764 on net sales of $3,611,112 for the
quarter ended March 31, 1996 (the "Comparable Quarter").
The Current Quarter's sales increased 24.6% ($888,211) from the
Comparable Quarter. The Real-Tool (as defined below) product line sales
contributed $138,153 of the increase in sales for the Current Quarter. The
remainder of the sales increase is attributable to increased advertising,
marketing and an improved customer base.
Cost of Sales increased to $3,542,523 in the Current Quarter from
$3,052,788 in the Comparable Quarter as a result of the increased sales
volume.
Selling, general and administrative expenses were $660,720 in the
Current Quarter as compared to $471,495 in the Comparable Quarter. This
increase in expenses is due to a volume rebate program, increased advertising
in national magazines and participation in national and international trade
shows. As a percentage of net sales, selling, general and administrative
expenses increased to 14.7% in the Current Quarter as compared to 13.1% in
the Comparable Quarter.
Liquidity and Capital Resources
On February 7, 1997 the Company aquired all of the stock of Real-Tool,
Inc., a Virginia corporation ("Real-Tool") that manufactures snow guards for
metal roofs. The Company purchased the assets for $900,618, incurred a
liability aggregating $750,000 which is payable in quarterly installments
over a one year period and issued 100,000 shares of its common stock to the
former owner of Real-Tool. The Company also entered into a royalty agreement
through 2012 which calls for minimum payments of $75,000 annually through the
year 2002.
At March 31, 1997 working capital was $3,754,958 resulting in a ratio
of current assets to current liabilities of 3.09 to 1, as compared to
working capital of $4,428,272 (5.84 to 1) at December 31, 1996. The
reduction in working capital is primarily due to the acquisition of Real-Tool.
Current liabilities at March 31, 1997 totalled $1,800,270 consisting
primarily of $994,238 in current maturities of long term debt and notes
payable and $806,032 in accounts payable and accrued expenses. At December 31,
1996, total current liabilities were $915,806 consisting primarily of
$247,717 in current maturities of long term debt and $668,089 in accounts
payable and accrued expenses. This increase in current liabilities is
primarily due to the liabilities incurred in connection with the acquisition.
At March 31 1997, the Company had stockholders' equity of $8,051,510
as compared to $7,655,336 at December 31, 1996. The increase is
attributable to the Current Quarter's net income, stock issued in connection
with the Real-Tool acquisition and the exercise of stock warrants.
<PAGE>
Cash used in operating activities for the Current Quarter was $255,369
as compared to $366,352 used in the Comparable Quarter. The first quarter
negative cash flow results primarily from the increase in accounts
receivable and inventory due to the seasonality of the business.
Net cash used in investing activities totaled $1,154,943 in the Current
Quarter as compared to $126,901 used in the Comparable Quarter. This
difference is primarily the result of the purchase of Real-Tool.
Net cash provided by financing activities was $622,857 in the Current
Quarter, as compared to $478,334 provided in the Comparable Quarter.
The unused portion of the credit line as of March 31, 1997 was approximately
$670,000.
<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.
The Registrant filed with the commission a current report on form 8-K,
dated February 7, 1997, reporting Items 2 and 7 of form 8-K. No
financial statements were filed therewith.
<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: May 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 449,254
<SECURITIES> 0
<RECEIVABLES> 2,108,303
<ALLOWANCES> 43,000
<INVENTORY> 2,510,232
<CURRENT-ASSETS> 5,555,228
<PP&E> 12,319,620
<DEPRECIATION> 5,645,413
<TOTAL-ASSETS> 14,167,804
<CURRENT-LIABILITIES> 1,800,270
<BONDS> 0
0
0
<COMMON> 49,955
<OTHER-SE> 8,001,555
<TOTAL-LIABILITY-AND-EQUITY> 14,167,804
<SALES> 4,499,323
<TOTAL-REVENUES> 4,499,323
<CGS> 3,542,523
<TOTAL-COSTS> 3,542,523
<OTHER-EXPENSES> 660,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138,775
<INCOME-PRETAX> 164,424
<INCOME-TAX> 0
<INCOME-CONTINUING> 164,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 164,424
<EPS-PRIMARY> $.03
<EPS-DILUTED> $.03
</TABLE>
