<PAGE> 1
UNITED STATES
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, 1994
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 ..................................................1-8681
RUSS BERRIE AND COMPANY, INC.
...............................................................................
(Exact name of registrant as specified in its charter)
New Jersey 22-1815337
...............................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 Bauer Drive, Oakland, New Jersey 07436
...............................................................................
(Address of principal executive offices) (Zip Code)
(201) 337-9000
...............................................................................
(Registrant's telephone number, including area code)
...............................................................................
(Former name, former address and former fiscal year,
if changed since last report)
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 90 days. Yes .X. No ...
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 10, 1994
----- ---------------------------
Common stock, $.10 stated value 21,441,905
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RUSS BERRIE AND COMPANY, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheet as of
March 31, 1994 and December 31, 1993 3
Consolidated Statement of Income
for the three-month periods ended
March 31, 1994 and 1993 4
Consolidated Statement of Cash Flows
for the three-month periods ended
March 31, 1994 and 1993 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7-8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
(2)
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
ASSETS MARCH 31, DECEMBER 31,
- - ------ --------- ------------
1994 1993
---- ----
<S> <C> <C>
Current assets
Cash and cash equivalents $ 47,177 $ 51,478
Short-term investments 31,896 31,421
Accounts receivable, trade, net 49,537 46,899
Merchandise inventories 60,679 66,110
Prepaid expenses and other current assets 5,294 5,005
Deferred income taxes 12,169 12,169
--------- ---------
Total current assets 206,752 213,082
Property, plant and equipment - net 27,511 28,133
Goodwill and other intangible assets - net 16,239 16,420
Other assets 1,611 1,480
--------- ---------
Total assets $ 252,113 $ 259,115
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable 4,419 5,235
Accrued expenses 19,282 23,171
Accrued restructuring costs 5,893 6,283
Accrued income taxes 803 392
--------- ---------
Total current liabilities 30,397 35,081
Shareholders' equity
Common stock; $.10 stated value;
authorized 50,000,000 shares;
issued 23,896,718 at March 31, 1994
and 23,876,274 at December 31, 1993 2,389 2,388
Additional paid-in capital 37,032 36,840
Retained earnings 223,457 225,650
Foreign currency translation adjustments (3,305) (2,987)
Treasury stock, at cost (2,454,813 shares
at March 31, 1994 and December 31, 1993) (37,857) (37,857)
--------- ---------
Total shareholders' equity 221,716 224,034
--------- ---------
Total liabilities and shareholders'
equity $ 252,113 $ 259,115
========= =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
(3)
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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands except per share data)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Net sales $ 64,167 $ 96,310
Cost of sales 31,561 37,735
Selling, general
and administrative expense 31,532 38,866
Investment and other income-net 564 858
-------- ---------
Income before income taxes 1,638 20,567
Provision for income taxes 616 6,933
-------- ---------
Net income $ 1,022 $ 13,634
======== =========
Net income per share $ 0.05 $ 0.62
======== =========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
(4)
<PAGE> 5
RUSS BERRIE AND COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,022 $ 13,634
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,168 1,371
Amortization of intangible assets 427 250
Provision for bad debts 651 1,147
Gain for sale of assets and other, net (2) (53)
Changes in assets and liabilities
Accounts receivable (3,289) 3,464
Inventories 5,431 10,938
Prepaid expenses (289) (706)
Goodwill and other intangible assets (246) -
Other assets (131) 110
Accounts payable (816) (1,982)
Accrued expenses (3,889) (8,322)
Accrued restructuring costs (390) (315)
Accrued income taxes 411 2,518
--------- ---------
Total adjustments (964) 8,420
--------- ---------
Net cash provided by operating activities 58 22,054
Cash flows from investing activities:
Increase in short-term investments (475) (500)
Proceeds from sale of fixed assets 147 87
Capital expenditures (691) (1,289)
--------- ---------
Net cash (used in) investing activities (1,019) (1,702)
Cash flows from financing activities:
Payment of long-term debt - (3,000)
Common stock transactions 193 2,675
Transactions in treasury shares - (19,237)
Dividends (3,215) (3,213)
--------- ---------
Net cash (used in) financing activities (3,022) (22,775)
Effect of exchange rate changes on cash
and cash equivalents (318) (78)
--------- ---------
Net (decrease) in cash and cash equivalents (4,301) (2,501)
Cash and cash equivalents at beginning of period 51,478 62,285
--------- ---------
Cash and cash equivalents at end of period $ 47,177 $ 59,784
========= =========
Cash paid during the period for:
Interest $ 7 239
Income taxes $ 205 4,318
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
(5)
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results
for the interim periods presented and are of a normal recurring nature.
Results for interim periods are not necessarily an indication of
results to be expected for the year.
NOTE 2
The weighted average number of shares outstanding during the
three-month periods ended March 31, 1994 and 1993 were 21,434,316 and
21,984,169 shares, respectively. Employee stock option plans did not
have a material dilutive effect on the earnings per share calculation.
NOTE 3
Cash dividends of $3,214,561 ($.15 per share) were paid on March 18,
1994 to shareholders of record of the Company's Common Stock on March
4, 1994. Cash dividends of $3,213,042 ($.15 per share) were paid in
the three-month period ended March 31, 1993.
NOTE 4
All numbers of common shares, except shares authorized, and per share
data throughout the consolidated financial statements have been
restated to reflect a three-for-two common stock split effective April
1, 1993.
(6)
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended March 31, 1994
Consolidated net sales for the three months ended March 31, 1994 were $
64,167,000 compared to $96,310,000 for the three months ended March 31, 1993.
This represents a decrease of $ 32,143,000 or 33.4%. The decrease can be
attributed to a lower level of sales of Troll products compared to the prior
year. During the three-month period ended March 31, 1994, net sales of Troll
products were approximately $3,457,000 or 5.4% of net sales. Net sales of
these products during the three-month period ended March 31, 1993 were
$44,414,000 or 46.1% of net sales. Included in the results for the three
months ended March 31, 1994 are the net sales of $13,332,000 achieved by Cap
Toys, Inc. which was acquired in October 1993.
Cost of sales was 49.2% of net sales for the three months ended March 31, 1994
compared to 39.2% for the same period in 1993. This increase can be attributed
primarily to the higher gross profit margins on sales of Troll products during
the three-month period ended March 31, 1993 and the effects of the reduction of
the selling price of certain of the Company's products in August 1993. In
addition, certain components of cost of sales are fixed costs which were
absorbed by the higher sales volume in the three months ended March 31, 1993.
Also contributing to the increase is the lower gross margins achieved by Cap
Toys, Inc. compared to the Company's other sales and distribution channels.
Selling, general and administrative expense was $31,532,000 or 49.1% of net
sales for the three months ended March 31, 1994 compared to $38,866,000 or
40.4% of net sales for the three months ended March 31, 1993, a decrease of
$7,334,000 or 18.9%. This decrease can be primarily attributed to a decrease
in expenses required to support lower sales levels (approximately $6,700,000),
cost reductions associated with the restructuring program implimented during
1993 of closing and consolidating distribution centers and administrative
functions ($2,400,000) and to lower expenses related to the Company's
consumer advertising program (approximately $1,100,000). Partially offsetting
these decreases is the inclusions of the selling, general and administrative
expenses of Cap Toys, Inc. for the three months ended March 31, 1994.
Investment and other income of $ 564,000 for the three months ended March 31,
1994 compares to $858,000 for the three months ended March 31, 1993. This
decrease can be primarily attributed to decreased investment income relative to
the Company's short-term investment portfolio resulting from lower investment
returns and lower investment balances.
(7)
<PAGE> 8
The provision for income taxes as a percentage of income before taxes for the
three months ended March 31, 1994 was 37.6% of net sales compared to 33.7% in
the same period in the prior year.
Net income for the three months ended March 31, 1994 of $ 1,022,000 compares to
net income of $13,634,000 for the same period last year. The decrease in net
income can be attributed to the decrease in net sales, partially offset by the
decrease in selling, general and administrative expense.
Liquidity and Capital Resources
At March 31, 1994, the Company had cash, cash equivalents and short-term
investments of $79,073,000 compared to $82,899,000 at December 31, 1993.
Working capital requirements during the three months ended March 31, 1994 were
met entirely through internally generated funds. The Company remains in a
highly liquid position and believes that the resources available from
operations and bank lines of credit are sufficient to meet the foreseeable
requirements of its business.
(8)
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
b) During the quarter ended March 31, 1994, no reports on
Form 8-K were filed.
(9)
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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.
RUSS BERRIE AND COMPANY, INC.
-----------------------------
(Registrant)
5/12/94 By s/Paul Cargotch
- - ---------------- ------------------------------
Date Paul Cargotch
Vice President - Finance and
Chief Financial Officer
(10)
