<PAGE>
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 September 30, 2000
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 November 9, 2000, the Registrant had outstanding 5,319,236 shares
of its common stock, par value $0.01 per share (the "Common Stock").
- 1 -
<PAGE>
BERGER HOLDINGS, LTD.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance
Sheets at September 30, 2000 (unaudited)
and December 31, 1999 3
Condensed Consolidated Statements of
Operations (unaudited) for the three-month
periods ended September 30, 2000 and 1999 4
Condensed Consolidated Statements of
Operations (unaudited) for the nine-month
periods ended September 30, 2000 and 1999 5
Condensed Consolidated Statements
of Cash Flows (unaudited) for the nine-month
periods ended September 30, 2000 and 1999 6
Notes to Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
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
SIGNATURES 14
</TABLE>
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<PAGE>
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 2000 1999
(unaudited)
--------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 73,383 $ 107,116
Accounts receivable, net of allowance for
doubtful accounts of $30,000 in 2000 and 1999 6,041,346 3,695,674
Inventories 5,803,512 5,619,008
Prepaid and other current assets 862,828 542,307
Deferred income taxes 370,760 370,760
--------------------------------------------------
Total current assets 13,151,829 10,334,865
Property, plant and equipment, net 10,838,535 10,796,886
Deferred income taxes 895,208 1,440,419
Other assets, net 2,956,410 3,134,457
Goodwill, net 8,444,220 6,861,193
--------------------------------------------------
Total assets $36,286,202 $32,567,820
==================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long term debt $ 1,651,012 $ 1,680,261
Accounts payable 2,812,655 1,219,531
Accrued expenses 2,413,573 1,334,052
--------------------------------------------------
Total current liabilities 6,877,240 4,233,844
Long term debt 17,294,657 16,388,606
Redeemable common stock, 125,000 shares 250,000 500,000
Commitments and contingencies - -
Stockholders' equity
Preferred Stock - -
Common stock $.01 par value
Authorized 20,000,000 shares
Issued and outstanding 5,614,736 shares in 2000
and 5,489,736 shares in 1999 56,147 54,897
Additional paid-in-capital 17,441,476 17,168,980
Accumulated deficit (4,278,053) (4,941,189)
--------------------------------------------------
13,219,570 12,282,688
Less common stock subscribed (482,916) (482,916)
Less treasury stock at cost
363,600 shares in 2000 and 124,400 shares in 1999 (872,349) (354,402)
--------------------------------------------------
Total stockholders' equity 11,864,305 11,445,370
--------------------------------------------------
Total liabilities and stockholders' equity $36,286,202 $32,567,820
==================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
2000 1999
--------------------- --------------------
<S> <C> <C>
Net sales $12,658,223 $10,786,635
Cost of sales 9,804,468 8,658,211
--------------------- --------------------
Gross profit 2,853,755 2,128,424
Selling, administrative and general expenses 1,803,344 1,339,617
--------------------- --------------------
Income from operations 1,050,411 788,807
Interest expense (444,493) (459,797)
Other income, net 120 -
--------------------- --------------------
Income before income tax 606,038 329,010
Provision for income tax 290,898 118,443
--------------------- --------------------
Net income $ 315,140 $ 210,567
===================== ====================
Basic earnings per share $ .06 $ .04
===================== ====================
Weighted average common shares outstanding 5,307,751 5,468,357
===================== ====================
Diluted earnings per share $ .05 $ .04
===================== ====================
Weighted average common shares outstanding 5,307,751 5,468,357
Add: effect of vested and non-vested dilutive securities 511,193 1,048,576
Add: effect of convertible debt and preferred stock 352,941 941,177
--------------------- --------------------
Diluted weighted average common shares outstanding 6,171,885 7,458,110
===================== ====================
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
2000 1999
--------------------- ---------------------
<S> <C> <C>
Net sales $33,470,963 $30,085,765
Cost of sales 26,181,445 23,770,417
--------------------- ---------------------
Gross profit 7,289,518 6,315,348
Selling, administrative and general expenses 4,716,339 3,882,506
--------------------- ---------------------
Income from operations 2,573,179 2,432,842
Interest expense (1,297,237) (1,395,189)
Other (expenses) income, net (694) 8,016
--------------------- ---------------------
Income before income tax 1,275,248 1,045,669
Provision for income tax 612,112 376,539
--------------------- ---------------------
Net income $ 663,136 $ 669,130
===================== =====================
Basic earnings per share $ .12 $ .12
===================== =====================
Weighted average common shares outstanding 5,309,465 5,500,386
===================== =====================
Diluted earnings per share $ .11 $ .11
===================== =====================
Weighted average common shares outstanding 5,309,465 5,500,386
Add: effect of vested and non-vested dilutive securities 636,009 1,067,686
Add: effect of convertible debt and preferred stock 352,941 941,177
--------------------- ---------------------
Diluted weighted average common shares outstanding 6,298,415 7,509,249
===================== =====================
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
2000 1999
----------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 663,136 $ 669,130
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Deferred income taxes 545,211 376,539
Depreciation and amortization 1,792,368 1,432,877
Change in operating assets and liabilities, excluding acquisitions
Accounts receivable (2,149,045) (915,004)
Inventories 42,237 (828,106)
Other current and long-term assets 104,304 (248,082)
Accounts payable and accrued expenses 2,285,075 2,175,751
----------------------------------
Net cash provided by operating activities 3,283,286 2,663,105
----------------------------------
Cash flows from investing activities
Acquisition of subsidiary company, net of cash acquired (2,591,673) -
Acquisition of property and equipment (1,084,201) (888,648)
----------------------------------
Net cash used in investing activities (3,675,874) (888,648)
----------------------------------
Cash flows from financing activities
Proceeds from long term debt used for acquisition 2,262,099 -
Net proceeds (repayments) working capital line (322,694) 73,929
Net repayments equipment term loan (776,325) (398,997)
Proceeds from long term debt 479,906 116,161
Repayments of long term debt (539,930) (1,256,775)
Net proceeds from issuance of stock - 5,375
Net payment for redeemable common stock (226,254) -
Repurchase of common stock (517,947) (300,133)
----------------------------------
Net cash provided by (used in) financing activities 358,855 (1,760,440)
----------------------------------
Net increase (decrease) in cash (33,733) 14,017
Cash, beginning of period 107,116 149,885
----------------------------------
Cash, end of period $ 73,383 $ 163,902
==================================
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 1,297,237 $ 1,395,189
==================================
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
BERGER HOLDINGS, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America 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 accounting principles generally
accepted in the United States of America 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.
The financial statements include the accounts of the Company and its two
wholly owned subsidiaries, Berger Financial Corporation ("Financial") and
Financial's wholly owned subsidiary, Berger Bros Company, and the newly acquired
subsidiary, CopperCraft, Inc. (as of the date of acquisition). All inter-
company transactions and balances have been eliminated.
Note 2. Inventories:
Inventories are valued at the lower of cost or market. Cost is determined
using the weighted average method.
Components of inventories at September 30, 2000 and December 31, 1999
consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Raw materials and packaging $3,655,666 $3,610,152
Finished goods 2,147,846 2,008,856
Total inventories $5,803,512 $5,619,008
============ ============
</TABLE>
Note 3. Income Taxes:
Consolidated income tax for the nine-month periods ended September 30, 2000
and 1999 result in an effective income tax rate of 48% and 36%, respectively.
This change in the effective income tax rate is primarily due to permanent
differences created by the goodwill amortization from prior acquisitions of
companies. The Company had an approximately $4,200,000 federal income tax net
operating loss carryforward available at September 30, 2000.
Note 4. Treasury Stock:
On May 18, 1999, the Company's Board of Directors authorized the repurchase
of up to 540,000 shares, or approximately 10%, of the Company's common stock.
On September 20, 2000, the Company's Board of Directors authorized the
repurchase of up to an additional 520,000 shares for a total of 1,060,000
shares, or approximately 20%, of the Company's common stock. As of November 9,
2000, the Company had repurchased 420,500 shares. The repurchases will continue
to be made from time to time through open market purchases or privately
negotiated transactions at the discretion of the Company. The amount and timing
of the repurchases will depend on market conditions and other factors.
- 7 -
<PAGE>
Note 5. Acquisition:
On March 31, 2000 the Company purchased all of the outstanding shares of
the common stock of CopperCraft, Inc., a Texas corporation ("CopperCraft"). As
consideration, the Company paid $2,642,410 consisting of $1,740,822 in cash and
a note payable of $512,500. The Company also effectively assumed $389,088 in
liabilities. CopperCraft reported sales of approximately $2,400,000 and net
income of $150,000 in 1999. The Company utilized funds obtained from its Credit
Facility from Summit Bank to acquire CopperCraft. The acquisition was accounted
for as a purchase and the excess of the fair value of the assets (goodwill) is
being amortized on a straight-line basis generally over 20 years. The initial
purchase price allocation for the acquisition is preliminary and may be adjusted
upon completion of the final valuation work.
The following unaudited pro forma financial information presents the
combined results of operations of the Company as if the acquisition had occurred
as of January 1, 2000 after giving effect to certain adjustments, including
amortization of goodwill, increased interest expense on debt related to the
acquisition, and related income tax effects. The pro forma results of
operations are not indicative of the actual results that would have occurred had
the acquisition been consummated at the beginning of the period presented and is
not intended to be a projection of future results.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 2000
------------------
<S> <C>
Total Revenues........................... $34,236,963
Net Earnings............................. $ 691,136
Diluted Earnings Per Share............... $ 0.13
</TABLE>
Note 6. Redeemable Common Stock:
On September 29, 2000, the Company issued 125,000 shares of common stock
valued at $250,000 to the holder of a debenture with a principal amount of
$2,500,000 in connection with: the elimination of the right to convert the
debenture into common stock, and the cancellation of warrants to purchase
240,000 shares of the Company's common stock held by the debenture holder. The
Company also increased the interest rate on this debenture from 10% to 11% for
the remainder of the term of the debenture. In conjunction with the transaction,
the Company gave the holder of the common stock the right to require the Company
to repurchase the stock at $2.00 per share by giving notice to the Company of
the exercise of that right at any time up to and until December 20, 2000. These
shares have been classified as redeemable common stock in the consolidated
financial statements.
Note 7. Subsequent Events:
On October 31, 2000, the Company purchased all of the outstanding shares of
the common stock of Walker Metal Products, Inc., a Georgia corporation ("Walker
Metal Products"). As consideration, the Company paid $3,950,000 consisting of
$3,000,000 in cash and notes payable of $800,000. The Company also effectively
assumed approximately $150,000 in liabilities. Walker Metal Products reported
sales of approximately $4,200,000 for the twelve-month period ending September
30, 2000. The Company utilized funds obtained from its Credit Facility from
Summit Bank to acquire Walker Metal Products. The acquisition was accounted for
as a purchase and the excess of the fair value of the assets (goodwill) is being
amortized on a straight-line basis generally over 20 years.
- 8 -
<PAGE>
Also on October 31, 2000, the Company entered into an agreement (the
"Amendment") with Summit Bank (the "Bank"), at the Company's request, to amend
the Amended and Restated Loan and Security Agreement with the Bank (the "Loan
Agreement") to: (i) reduce the maximum line amount available under the Loan
Agreement from $17,500,000 to $15,000,000; and (ii) modify certain covenants
contained in the Loan Agreement. A copy of the Amendment is filed herewith as
Exhibit 10(b).
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Results of Operations
Sales for the three-month period ended September 30, 2000 (the "Current
Quarter") were $12,658,223, an increase of 17.4%, or $1,871,588, as compared to
$10,786,635 for the three month period ended September 30, 1999 (the "Comparable
Quarter"). Approximately 57% of this increase was attributable to the
CopperCraft acquisition, while 43% was related to an increase in other Company
sales.
During the Current Quarter, the Company reported net income of $315,140, as
compared to a net income of $210,567 for the Comparable Quarter, an increase of
$104,573, or 49.7%. The Current Quarter's net income increase was attributable
to a combination of both growth of sales of existing businesses and growth of
sales of acquired businesses and improved product mix, partially offset by an
effective tax rate of 48% in the Current Quarter versus 36% in the Comparable
Quarter.
Income from operations in the Current Quarter was $1,050,411 versus
$788,807 in the Comparable Quarter, an increase of 33.2%, or $261,604. This
increase is primarily attributable to a combination of both internal and
external growth in sales and improved product mix.
Cost of sales was $9,804,468 in the Current Quarter, as compared to
$8,658,211 in the Comparable Quarter. As a percentage of net sales, cost of
sales decreased to 77.5% in the Current Quarter from 80.3% in the Comparable
Quarter. This percentage decrease is mainly attributable to an improvement of
product mix resulting from both the CopperCraft acquisition and internal
efforts.
Selling, administrative and general expenses were $1,803,344 in the Current
Quarter as compared to $1,339,617 in the Comparable Quarter. As a percentage of
net sales, selling, administrative and general expenses increased to 14.2% in
the Current Quarter, compared to 12.4% in the Comparable Quarter. Approximately
55%, or $256,110 of the $463,727 increase in expenses, is a result of the
CopperCraft operations.
Sales for the nine-month period ended September 30, 2000 (the "Current Nine
Months") were $33,470,963, an increase of 11.3%, or $3,385,198, as compared to
$30,085,765 for the nine month period ended September 30, 1999 (the "Comparable
Nine Months"). Approximately 56% of this increase was attributable to the
CopperCraft acquisition, while 44% was related to an increase in other Company
sales.
During the Current Nine Months, the Company reported net income of
$663,136, as compared to a net income of $669,130 for the Comparable Nine
Months. The Current Nine Months net income was flat due to a higher effective
tax rate of 48%, compared to 36% for the Comparable Nine Months.
Income from operations in the Current Nine Months was $2,573,179 versus
$2,432,842 in the Comparable Nine Months, an increase of 5.8%. This increase is
attributable to the CopperCraft acquisition, internal growth in sales and an
improvement in product mix.
- 9 -
<PAGE>
Cost of sales was $26,181,445 in the Current Nine Months, as compared to
$23,770,417 in the Comparable Nine Months. As a percentage of net sales, cost
of sales decreased to 78.2% in the Current Nine Months from 79.0% in the
Comparable Nine Months. This percentage decrease in cost of sales was the
result of an improvement in product mix due primarily to the CopperCraft
acquisition.
Selling, administrative and general expenses were $4,716,339 in the Current
Nine Months as compared to $3,882,506 in the Comparable Nine Months. As a
percentage of net sales, selling, administrative and general expenses increased
to 14.1% in the Current Nine Months, compared to 12.9% in the Comparable Nine
Months. Approximately 54%, or $449,401 of the $833,833 increase in expenses, is
a result of the CopperCraft operations.
Liquidity and Capital Resources
At September 30, 2000, the Company had long-term debt consisting of working
capital and term loans of $10,115,140, 10% Convertible Debenture of $1,500,000,
11% Subordinated Debenture of $2,500,000, 12.25% Subordinated Debenture of
$500,000, a note payable of $512,500, leases of $1,088,738 and a Mortgage for
$2,729,291 for a total of $18,945,669. As of such date, the Company had
indebtedness under its working capital loan from Summit Bank, N.A. (the "Working
Capital Loan") of $6,858,726.
At September 30, 2000, working capital was $6,274,589, resulting in a ratio
of current assets to current liabilities of 1.91 to 1, as compared to working
capital of $6,101,021 and a ratio of 2.44 to 1 at December 31, 1999. This
decrease in working capital is the result of higher levels of accounts payable
and accrued expenses required to support the seasonality of the business.
Current liabilities at September 30, 2000 totaled $6,877,240, consisting
primarily of $5,226,228 in accounts payable and accrued expenses and $1,651,012
in current maturities of long-term debt. At December 31, 1999, total current
liabilities were $4,233,844, consisting primarily of $2,553,583 in accounts
payable and accrued expenses and $1,680,261 in current maturities of long-term
debt. The increase in current liabilities is primarily due to the seasonal
growth related to support an increase in sales.
At September 30, 2000, the Company had stockholders' equity of $11,864,305,
as compared to $11,445,370 at December 31, 1999. This change is primarily
attributable to the net income during the Current Nine Months, which was
partially offset by the repurchase of shares of the Company's Common Stock and
the Company's payment of $226,254 pursuant to its obligation to a recipient of
125,000 shares of the Common Stock incurred in connection with a prior
acquisition.
Cash provided by operating activities for the Current Nine Months was
$3,283,286 as compared to $2,663,105 in the Comparable Nine Months. The change
from the Comparable Nine Months is primarily due to the seasonality of the
business and the management of inventory levels.
Net cash used in investing activities was $3,675,874 in the Current Nine
Months, as compared to $888,648 used in the Comparable Nine Months. This change
is primarily due to the acquisition of CopperCraft.
Net cash provided by financing activities totaled $358,855 in the Current
Nine Months, as compared to $1,760,440 used in the Comparable Nine Months. This
difference is primarily due to the debt used to acquire CopperCraft, the
$226,254 payment referenced above and the payment for shares repurchased by the
Company.
- 10 -
<PAGE>
On October 31, 2000, the Company entered into an agreement (the
"Amendment") with Summit Bank (the "Bank"), at the Company's request, to amend
the Amended and Restated Loan and Security Agreement with the Bank (the "Loan
Agreement") to: (i) reduce the maximum line amount available under the Loan
Agreement from $17,500,000 to $15,000,000; and (ii) modify certain covenants
contained in the Loan Agreement. A copy of the Amendment is filed herewith as
Exhibit 10(b).
The Company believes that its sources of financing are adequate for its
anticipated needs. The cost and terms of any future financing arrangements will
depend on the market conditions and the Company's financial position at that
time.
New Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). This statement standardizes the accounting for derivative instruments by
requiring that an entity recognize those items as assets or liabilities in the
statement of financial position and measure them at fair value. The statement
was scheduled to be effective for fiscal years beginning after June 15, 1999.
In June 1999, the FASB issued Statement of Financial Accounting Standards No.
137 "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133" ("SFAS 137"). SFAS 137 delayed
the effective date of SFAS 133 for one year, to fiscal years beginning after
June 15, 2000. The implementation of SFAS 133 is not expected to have a
material impact on the net earnings of the Company.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". This was followed by Staff Accounting Bulletin No. 101A,
"Implementation Issues Related to SAB 101", in March 2000 and by Staff
Accounting Bulletin No. 101B, "Second Amendment: Revenue Recognition in
Financial Statements" SAB 101B, in June 2000. These bulletins summarize certain
of the SEC's views about applying accounting principles generally accepted in
the United States of America to revenue recognition in financial statements.
The impact of SAB 101B on the Company was to delay the implementation date of
SAB 101 until fourth quarter of 2000. The SEC is providing guidance due, in
part, to the large number of revenue recognition issues that registrants
encounter. The Company is in the process of analyzing the implications of these
bulletins and does not expect the guidance to have a material impact on the net
earnings of the Company.
Forward-looking Statements
With the exception of the reported actual results, the information
presented herein contains predictions, estimates and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward looking
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance and achievements of the Company to differ
materially from those expressed or implied by such forward-looking statements.
Although the Company believes its plans, intentions and expectations reflected
in such forward-looking statements are based on reasonable assumptions, it can
give no assurance that such plans, intentions, expectations, objects or goals
will be achieved. Important factors that could cause actual results to differ
materially from those included in the forward-looking statements include but are
not limited to: the timing of customer orders and product mix; material costs;
the impact of weather conditions on the Company's business; pricing pressure
from customers; the level of backlog; market acceptance of new products; and the
Company's ability to complete and successfully integrate acquisitions.
- 11 -
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
For information regarding the Company's exposure to certain market risks,
see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
There have been no significant changes since December 31, 1999 in the Company's
portfolio of financial instruments or market risk exposures.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities and Use of Proceeds.
(a) Inapplicable.
(b) Inapplicable.
(c) On September 29, 2000, the Company entered into an Exchange
Agreement (the "Exchange Agreement," a copy of which is filed herewith
as Exhibit 10(a)) with FINOVA Mezzanine Capital Inc. f/k/a Sirrom
Capital Corporation ("Finova") pursuant to which: (a) the Company's
10% Convertible Subordinated Debenture (the "Original Debenture") in
the principal amount of $2,500,000 held by Finova was amended and
restated (the Original Debenture, as amended and restated, is referred
to as the "Amended Debenture") to (i) increase the interest rate from
10% to 11%, (ii) delete the conversion provisions, and (iii) provide
for a prepayment premium; (b) a stock purchase warrant for the
purchase of 240,000 shares of the Company's common stock held by
Finova was canceled; and (c) 125,000 unregistered shares of the
Company's common stock (the "Shares") were issued to Finova. A copy of
the Amended Debenture is filed herewith as Exhibit A to the Exchange
Agreement.
The Shares were issued on September 29, 2000 (the "Sale"). No
underwriters were involved in the Sale and no cash consideration or
proceeds were derived from the Sale. The Sale was exempt from
registration under Sections 3(a)(9) and 4(2) of the Securities Act of
1933, as amended. Under the terms of the Exchange Agreement, the
Shares are subject to Finova's right to require the Company to
purchase the Shares at a purchase price of $2.00 per Share by giving
notice to the Company of the exercise of that right at any time up to
and until December 20, 2000. The Exchange Agreement also imposes
certain registration obligations on the Company with regard to the
Shares.
(d) Inapplicable
Item 3 - Defaults Upon Senior Securities.
None.
- 12 -
<PAGE>
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.
Exhibit 10(a) Exchange Agreement, dated September 29, 2000, by and between
Berger Holdings, Ltd. and Finova Mezzanine Capital Inc., including as
Exhibit A thereto the form of amended and restated debenture.
Exhibit 10(b) Third Amendment to the Amended and Restated Loan and
Security Agreement, dated as of October 31, 2000, by and among Berger
Holdings, Ltd., Berger Financial Corp., a Delaware corporation, Berger
Bros Company, a Pennsylvania corporation, CopperCraft, Inc., a Texas
corporation, Walker Metal Products, Inc., a Georgia corporation, and
Summit Bank, N.A., excluding schedules.
Exhibit 27 Financial Data Schedule
- 13 -
<PAGE>
Signatures
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: November 13, 2000
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EXHIBIT INDEX
Exhibit 10(a) Exchange Agreement, dated September 29, 2000, by and between
Berger Holdings, Ltd. and Finova Mezzanine Capital Inc., including as
Exhibit A thereto the form of amended and restated debenture.
Exhibit 10(b) Third Amendment to the Amended and Restated Loan and
Security Agreement, dated as of October 31, 2000, by and among Berger
Holdings, Ltd., Berger Financial Corp., a Delaware corporation, Berger
Bros Company, a Pennsylvania corporation, CopperCraft, Inc., a Texas
corporation, Walker Metal Products, Inc., a Georgia corporation, and
Summit Bank, N.A., excluding schedules.
Exhibit 27 Financial Data Schedule
