6309710Q
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 June 30, 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) (Zip Code)
Registrant's telephone number, including area code: (215) 355-1200
Indicate by check mark whether the Registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months or for such
shorter period that the Registrant was required to
file such reports, 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 July 30, 1997, the Registrant had
outstanding 5,041,393 shares of Common Stock, par
value $0.01 per share.
<PAGE>
BERGER HOLDINGS, LTD.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated
Balance Sheets at June 30, 1997
and December 31, 1996 3
Condensed Consolidated Statement of
Operations for the three month periods
ended June 30, 1997 and 1996 5
Condensed Consolidated Statement of
Operations for the six month periods
ended June 30, 1997 and 1996 6
Condensed Consolidated Statements
of Cash Flows for the six month periods
ended June 30, 1997 and 1996 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
<PAGE>
<TABLE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS June 30, December 31,
1997 1996
----------------- -----------------
<S> <C> <C>
Cash $ 263,824 $ 1,236,709
Trade accounts receivable, net of
allowance for doubtful accounts
of $43,000 in 1997 & 1996 2,648,592 1,569,741
Inventories (Note 2) 2,698,317 2,133,895
Prepaid and other assets 258,160 153,733
Deferred income taxes 250,000 250,000
---------------- -----------------
Total current assets 6,118,893 5,344,078
---------------- -----------------
Other Assets
Property and equipment, net (Note 3) 6,183,197 6,080,755
Deferred income taxes 450,000 250,000
Other assets 625,492 145,654
Goodwill, net of accumulated
amortization 1,639,974 472,374
---------------- -----------------
Total other assets 8,898,663 6,948,783
---------------- -----------------
$15,017,556 $12,292,861
================ =================
</TABLE>
- 2 -
<PAGE>
<TABLE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
----------------- -----------------
<S> <C> <C>
Current maturities of long term debt
and demand notes payable (Note 4) $ 244,163 $ 247,717
Accounts payable 468,808 110,867
Accrued expenses 418,631 557,222
----------------- -----------------
Total current liabilities 1,131,602 915,806
Long term debt, net of current
maturities 5,144,715 3,721,719
----------------- -----------------
Total liabilities 6,276,317 4,637,525
----------------- -----------------
Shareholders' Equity
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding 5,041,393 shares
in 1997 and 4,858,150 in 1996 50,414 48,581
Additional paid-in-capital 17,027,175 16,753,862
Deficit (7,828,434) (8,634,191)
----------------- -----------------
9,249,155 8,168,252
Less common stock subscribed (507,916) (512,916)
----------------- -----------------
Total shareholders' equity 8,741,239 7,655,336
----------------- -----------------
$15,017,556 $12,292,861
================= =================
</TABLE>
- 3 -
<PAGE>
<TABLE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
----------------- -----------------
<S> <C> <C>
Net Sales $ 5,514,006 $ 5,540,619
Cost of sales 4,172,650 4,211,616
----------------- -----------------
Gross profit 1,341,356 1,329,003
Operating expenses
Selling, administrative and general
expenses 755,966 639,921
----------------- -----------------
Income from operations 585,390 689,082
----------------- -----------------
Other (expenses) income
Interest expense (147,455) (185,034)
Interest income 3,397 62
----------------- -----------------
(144,058) (184,972)
----------------- -----------------
Income from continuing operations 441,332 504,110
before income tax benefit
Income tax benefit 200,000 -0-
----------------- -----------------
Net income $641,332 $504,110
================= =================
Earnings per common share
Earnings per common share and common
share equivalents
Net income $0.13 $0.14
================= =================
Weighted average number of common
shares outstanding 5,019,044 3,578,689
================= =================
Earnings per share assuming full dilution
Net income $0.11 $0.13
================= =================
Weighted average number of common
and common share equivalents
outstanding for the period 5,771,489 3,764,825
================= =================
</TABLE>
- 4 -
<PAGE>
<TABLE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
----------------- -----------------
<S> <C> <C>
Net Sales $ 10,013,329 $ 9,151,731
Cost of sales 7,715,173 7,264,404
----------------- -----------------
Gross profit 2,298,156 1,887,327
Operating expenses
Selling, administrative and general
expenses 1,416,686 1,111,416
----------------- -----------------
Income from operations 881,470 775,911
----------------- -----------------
Other (expenses) income
Interest expense (286,230) (309,769)
Interest income 10,516 204
----------------- -----------------
(275,714) (309,565)
----------------- -----------------
Income from continuing operations
before income tax benefit 605,756 466,346
Income tax benefit 200,000 -0-
----------------- -----------------
Net income $805,756 $466,346
================= =================
Earnings per common share
Earnings per common share and common
share equivalents
Net income $0.16 $0.13
================= =================
Weighted average number of common
shares outstanding 4,981,017 3,555,194
================= =================
Earnings per share assuming full dilution
Net income $0.14 $0.13
================= =================
Weighted average number of common
and common share equivalents
outstanding for the period 5,733,461 3,648,262
================= =================
</TABLE>
- 5 -
<PAGE>
<TABLE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30,
1997 1996
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities
Net Income $ 805,756 $ 466,346
----------------- -----------------
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Deferred income tax (200,000) -0-
Depreciation and amortization 364,696 345,959
(Increase) decrease in assets, net of
effects from purchase of Real-Tool,Inc.
Accounts receivable (1,078,851) (1,403,158)
Inventories (564,422) (519,148)
Other current and long-term assets (70,857) (127,535)
(Decrease) increase in liabilities
Accounts payable and accrued expenses 218,701 967
----------------- -----------------
Total adjustments (1,330,733) (1,702,915)
----------------- -----------------
Net cash used in operating activities (524,977) (1,236,569)
----------------- -----------------
Cash flows from investing activities
Acquisition of property and equipment (426,158) (193,989)
Payment for purchase of Real-Tool, Inc. (900,618) -0-
----------------- -----------------
Net cash used in investing activities (1,326,776) (193,989)
----------------- -----------------
</TABLE>
- 6 -
<PAGE>
<TABLE>
BERGER HOLDINGS, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30,
1997 1996
----------------- -----------------
<S> <C> <C>
Cash flows from financing activities
Proceeds from working capital line 819,092 1,271,440
Loan and mortgage repayments 37,850 -0-
Net proceeds from issuance of stock 21,926 31,689
----------------- -----------------
Net cash provided by
financing activities 878,868 1,303,129
----------------- -----------------
Net (decrease) in cash (972,885) (127,429)
Cash, beginning of period 1,236,709 171,432
----------------- -----------------
Cash, end of period $ 263,824 $ 44,003
================= =================
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
<S> <C> <C>
Cash paid during the period for
Interest $ 286,230 $ 309,769
</TABLE>
<TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
<CAPTION>
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:
<S> <C>
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)
----------------
$ 750,000
================
</TABLE>
- 7 -
<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, 1997 and December 31, 1996
consist of the following:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
---------------- ------------------
<S> <C> <C>
Raw materials $1,478,950 $1,291,490
Finished goods 1,199,321 816,719
Packaging materials
and supplies 66,046 71,686
Less provision for
Obsolescence (46,000) (46,000)
---------------- ------------------
$2,698,317 $2,133,895
================ ==================
</TABLE>
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 andbetterments 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.
- 8 -
<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
Condition and Results of Operation.
Results of Operations
The financial statements include the accounts of the Company
and its Wholly-owned subsidiary, Berger Financial Corporation
("Financial") and Financial's wholly-owned subsidiary, Berger Bros Company.
All intercompany transactions and balances have been eliminated.
During the quarter ended June 30, 1997 (the "Current Quarter"),
the Company reported net income of $641,332 on net sales of $5,514,006. This
compares to net income of $504,110 on net sales of $5,540,619 for the quarter
ended June 30,1996 (the "Comparable Quarter").
The Current Quarter's sales are flat compared to the quarter ended June
30, 1996.
Income from continuing operations in the Current Quarter was $441,332
versus $504,110 in the Comparable Quarter, a decrease of 12.5% which primarily
can be attributed to the added promotional cost incurred in helping to introduce
the Real-Tool product in the Current Quarter.
Cost of Sales were flat at $4,172,650 in the Current Quarter
compared to $4,211,616 in the Comparable Quarter. As a percentage of net sales,
Cost of Sales decreased slightly to 75.7% in the Current Quarter from 76.0% in
the Comparable Quarter.
- 9 -
<PAGE>
Selling, general and administrative expenses were $755,966 in the
Current Quarter as compared to $639,921 in the Comparable Quarter. This increase
in expenses is due to expanded national advertising in the Current Quarter,
which management expects will benefit subsequent periods. As a percentage
of net sales, selling, general and administrative expenses increased to
13.7% in the Current Quarter as compared to 11.6% in the Comparable
Quarter.
Sales for the six month period ending June 30, 1997 (the "Current
Half"), were $10,013,329 an increase of 9.4% or $861,598 as compared to
$9,151,731 for the six month period ending June 30, 1996 (the "Comparable
Half").
Income from continuing operations for the Current Half was
$605,756 an increase of 29.9% or $139,410 compared to the Comparable
Half. The improvement in both revenues and income can be attributed
to the contributions from the newly acquired Real-Tool product line and
continued expansion of the Company's copper products.
Net income for the Current Half was $805,756 as compared to $466,346 in
the Comparable Half. The Current Half and the Current Quarter income includes
an adjustment to the deferred tax asset valuation allowance (see below).
Provision for income taxes for the six months ended June 30:
1997 1996
---- ----
Current, federal and state
at statutory rates $240,000 $190,000
Deferred, reduction of
valuation allowance (440,000) (190,000)
------------- -------------
($200,000) -0-
============= =============
Selling, general and administrative expenses in the Current Half were
$1,416,686 compared to $1,111,416 in the Comparable Half, mainly due to
increased national advertising and promotional costs related to the introduction
of the Real-Tool product line in 1997.
Liquidity and Capital Resources
On February 7, 1997 the Company acquired 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.
- 10 -
<PAGE>
At June 30, 1997, working capital was $4,987,291 resulting in a ratio
of current assets to current liabilities of 5.41 to 1, as compared to working
capital of $4,428,272 and a ratio of 5.84 to 1 at December 31, 1996.
Current liabilities at June 30, 1997 totaled $1,131,602
consisting primarily of $887,439 in accounts payable and accrued expenses and
$244,163 in current maturities of long term debt. At December 31, 1996,
total current liabilities were $915,806 consisting primarily of $668,089
in accounts payable and accrued expenses and $247,717 in current maturities of
long term debt.
At June 30 1997, the Company had shareholders' equity of $8,741,239
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.
Cash used in operating activities for the Current Half was
$524,977 as compared to $1,236,569 used in the Comparable Half. These uses
of cash result primarily from the increase in inventory, accounts receivable
and accounts payable during both the Current and Comparable Half.
Net cash used in investing activities totaled $1,326,776 in the Current
Half as compared to $193,989 used in the Comparable Half, primarily due to the
acquisition of Real-Tool.
Net cash provided by financing activities was $878,868 in the Current
Half, as compared to $1,303,129 provided in the Comparable Half. The
current unused credit line as of June 30, 1997 was approximately $365,000.
- 11 -
<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.
- 12 -
<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 Operating Officer
By:/s/ FRANCIS E. WELLOCK, JR.
Francis E. Wellock, Jr.
Chief Financial Officer
Date: August 12, 1997
- 13 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 263,824
<SECURITIES> 0
<RECEIVABLES> 2,691,592
<ALLOWANCES> 43,000
<INVENTORY> 2,698,317
<CURRENT-ASSETS> 6,118,893
<PP&E> 11,998,733
<DEPRECIATION> 5,815,536
<TOTAL-ASSETS> 15,017,556
<CURRENT-LIABILITIES> 1,131,602
<BONDS> 0
0
0
<COMMON> 50,414
<OTHER-SE> 8,690,825
<TOTAL-LIABILITY-AND-EQUITY> 15,017,556
<SALES> 10,013,329
<TOTAL-REVENUES> 10,013,329
<CGS> 7,715,173
<TOTAL-COSTS> 7,715,173
<OTHER-EXPENSES> 1,416,686
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 286,230
<INCOME-PRETAX> 605,756
<INCOME-TAX> 200,000
<INCOME-CONTINUING> 805,756
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 805,756
<EPS-PRIMARY> .16
<EPS-DILUTED> .14
</TABLE>
