<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 ........... June 30, 1995
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.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT AUGUST 5, 1995
----- -----------------------------
<S> <C>
Common stock, $.10 stated value 21,533,376
</TABLE>
<PAGE> 2
RUSS BERRIE AND COMPANY, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION NUMBER
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet as of
June 30, 1995 and December 31, 1994 3
Consolidated Statement of Income
for the three-month and six-month periods
ended June 30, 1995 and 1994
4
Consolidated Statement of Cash Flows
for the six-month periods ended
June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7-9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
(2)
<PAGE> 3
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 JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 35,266 $ 42,758
Short-term investments - 5,203
Accounts receivable, trade, net 50,240 55,474
Merchandise inventories 78,885 67,052
Prepaid expenses and other current assets 4,526 4,229
Deferred income taxes 14,184 14,176
-------- --------
Total current assets 183,101 188,892
Property, plant and equipment - net 25,478 25,298
Goodwill and other intangible assets - net 34,714 35,913
Other assets 5,242 4,723
-------- --------
Total assets $248,535 $254,826
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,401 $ 6,972
Accrued expenses 22,382 24,795
Accrued restructuring costs 3,369 4,527
Accrued income taxes - 144
-------- --------
Total current liabilities 31,152 36,438
Shareholders' equity
Common stock; $.10 stated value;
authorized 50,000,000 shares;
issued 23,988,189 at June 30, 1995
and 23,953,530 at December 31, 1994 2,399 2,395
Additional paid-in capital 38,312 37,875
Retained earnings 215,882 218,103
Foreign currency translation adjustments (1,353) (2,128)
Treasury stock, at cost (2,454,813 shares
at June 30, 1995 and December 31, 1994) (37,857) (37,857)
-------- --------
Total shareholders' equity 217,383 218,388
-------- --------
Total liabilities and shareholders'
equity $248,535 $254,826
======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
(3)
<PAGE> 4
RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $74,263 $57,546 $154,381 $121,713
Cost of sales 38,676 32,233 78,000 63,794
Selling, general
and administrative expense 35,865 31,666 71,708 63,198
Investment and other income-net 453 782 1,181 1,346
------- ------- -------- --------
Income (loss) before income taxes 175 (5,571) 5,854 (3,933)
Provision (benefit) for
for income taxes 21 (2,244) 1,617 (1,628)
------- ------- -------- --------
Net income (loss) $ 154 $(3,327) $ 4,237 $ (2,305)
======= ======= ======== ========
Net income (loss) per share $ 0.01 $( 0.16) $ 0.20 $ (0.11)
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
(4)
<PAGE> 5
RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,237 $(2,305)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 2,067 2,411
Amortization of intangible assets 1,499 897
Provision for bad debts 3,759 3,324
Loss (gain) on sale of assets and other, net (37) 343
Changes in assets and liabilities
Accounts receivable 1,475 2,732
Inventories (11,833) 4,137
Prepaid expenses (297) (558)
Goodwill and other intangible assets (300) (1,188)
Other assets (519) (1,522)
Accounts payable (1,570) (825)
Accrued expenses (2,405) 267
Accrued restructuring costs (1,159) (440)
Accrued and deferred income taxes (160) (2,193)
------- -------
Total adjustments (9,480) 7,385
------- -------
Net cash provided by (used in) operating activities (5,243) 5,080
Cash flows from investing activities:
Decrease (increase) in short-term investments 5,203 (638)
Proceeds from sale of fixed assets 199 218
Capital expenditures (2,408) (1,115)
------- -------
Net cash provided by (used in) investing activities 2,994 (1,535)
Cash flows from financing activities:
Common stock transactions 440 519
Dividends (6,458) (6,431)
------- -------
Net cash (used in) financing activities (6,018) (5,912)
Effect of exchange rate changes on cash
and cash equivalents 775 628
------- -------
Net (decrease) in cash and cash equivalents (7,492) (1,739)
Cash and cash equivalents at beginning of period 42,758 51,478
------- -------
Cash and cash equivalents at end of period $35,266 $49,739
======= =======
Cash paid during the period for:
Interest $ 130 $ 44
Income taxes $ 1,768 $ 565
</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 and
six-month periods ended June 30, 1995 were 21,530,000 and 21,520,000
shares, respectively, compared to the three and six-month periods ended
June 30, 1994 of 21,446,000 and 21,440,000 shares, respectively. Employee
stock option plans did not have a material dilutive effect on the
earnings per share calculation.
NOTE 3
Cash dividends of $3,229,850 ($.15 per share) were paid on June 7, 1995
to shareholders of record of the Company's Common Stock on May 22, 1995.
Cash dividends of $6,457,813 ($.15 per share per quarter) were paid in
the six-month period ended June 30, 1995.
Cash dividends of $3,216,323 ($.15 per share) were paid on June 7, 1994
to shareholders of record of the Company's Common Stock on May 20, 1994.
Cash dividends of $6,430,884 ($.15 per share per quarter) were paid in
the six-month period ended June 30, 1994.
(6)
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Six Months Ended June 30, 1995
Consolidated net sales for the six months ended June 30, 1995 were $154,381,000
compared to $121,713,000 for the six months ended June 30, 1994. This represents
an increase of 26.8%. Included in the results for the six months ended June 30,
1995 are the net sales of $18,809,000 achieved by OddzOn Products, Inc., which
was acquired in October 1994. Net sales for Cap Toys, Inc. of $38,640,000 for
the six months ended June 30, 1995 compares to $34,698,000 for the six months
ended June 30, 1994, an increase of 11.4%. Excluding the net sales of Cap Toys,
Inc. and OddzOn Products, Inc., consolidated net sales for the six months ended
June 30, 1995 were $96,932,000 compared to $87,015,000 for the six months ended
June 30, 1994, an increase of 11.4%.
Cost of sales was 50.5% of net sales for the six months ended June 30, 1995
compared to 52.4% of net sales for the same period in 1994. This decrease can
be attributed to the components of cost of sales that are fixed costs which were
absorbed by the higher sales volume during the six-month period ended June 30,
1995.
Selling, general and administrative expense was $71,708,000 or 46.4% of net
sales for the six months ended June 30, 1995 compared to $63,198,000 or 51.9%
of net sales for the six months ended June 30, 1994. The increase in selling,
general and administrative expense can be attributed to the inclusion of the
selling, general and administrative expense of OddzOn Products, Inc. for the
six months ended June 30, 1995 (approximately $7,400,000).
Investment and other income of $1,181,000 for the six months ended June 30,
1995 compares to $1,346,000 for the six months ended June 30, 1994.
The provision for income taxes of $1,617,000 for the six months ended June 30,
1995 compares to an income tax benefit of $1,628,000 in the same period in the
prior year.
Net income for the six months ended June 30, 1995 of $4,237,000 compares to a
net loss of $2,305,000 for the same period last year. The increase in net
income can be attributed to the increase in net sales, partially offset by the
increase in selling, general and administrative expense.
(7)
<PAGE> 8
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1995
Consolidated net sales for the three months ended June 30, 1995 were
$74,263,000 compared to $57,546,000 for the three months ended June 30, 1994,
an increase of $16,717,000 or 29.0%. Included in the results for the three
months ended June 30, 1995 are the net sales of $11,082,000 achieved by OddzOn
Products, Inc. which was acquired in October 1994. Net sales of Cap Toys, Inc.
of $22,489,000 for the three months ended June 30, 1995 compares to $21,366,000
for the three months ended June 30, 1994, an increase of 5.3%. Excluding the
net sales of Cap Toys, Inc. and OddzOn Products, Inc., consolidated net sales
for the three months ended June 30, 1995 were $40,692,000 compared to
$36,180,000 for the three months ended June 30, 1994, an increase of 12.5%.
Cost of sales was 52.1% of net sales for the three months ended June 30, 1995
compared to 56.0% for the same period in 1994. This decrease can be attributed
in part to lower import duties on certain of the Company's products. In
addition, certain components of cost of sales are fixed costs which were
absorbed by the higher sales volume in the three months ended June 30, 1995.
Selling, general and administrative expense was $35,865,000 or 48.3% of net
sales for the three months ended June 30, 1995 compared to $31,666,000 or
55.0% of net sales for the three months ended June 30, 1994, an increase of
$4,199,000 or 13.3%. The increase in selling, general and administrative
expense can be attributed to the inclusion of the selling, general and
administrative expense of OddzOn Products, Inc. for the three months ended June
30, 1995 (approximately $4,200,000).
Investment and other income of $453,000 for the three months ended June 30,
1995 compares to $782,000 for the three months ended June 30, 1994.
Net income for the three months ended June 30, 1995 of $154,000 compares to a
net loss of $3,327,000 for the same period last year. The increase in net
income can be attributed to the increase in net sales, partially offset by the
increase in selling, general and administrative expense.
(8)
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company had cash, cash equivalents and short-term
investments of $35,266,000 compared to $47,961,000 at December 31, 1994.
This decrease can be attributed to the increase in merchandise inventories as a
result of the seasonal sales levels that the Company has historically
experienced during the third and fourth quarters.
The Company has signed a letter of intent to sell all of the net operating
assets of its Papel/Freelance, Inc. subsidiary. The proceeds generated from
the sale will be used for general corporate purposes. The Company anticipates
that this transaction will be completed before December 31, 1995.
Working capital requirements during the six months ended June 30, 1995 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.
(9)
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
b) During the quarter ended June 30, 1995,
no reports on Form 8-K were filed.
(10)
<PAGE> 11
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)
8/11/95 By s/Paul Cargotch
- -------- -----------------------------
Date Paul Cargotch
Vice President - Finance and
Chief Financial Officer
(11)
<PAGE> 12
EXHIBIT INDEX
-------------
EXHIBIT 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 35,266
<SECURITIES> 0
<RECEIVABLES> 56,960
<ALLOWANCES> 6,720
<INVENTORY> 78,885
<CURRENT-ASSETS> 183,101
<PP&E> 53,682
<DEPRECIATION> 28,204
<TOTAL-ASSETS> 248,535
<CURRENT-LIABILITIES> 31,152
<BONDS> 0
<COMMON> 2,399
0
0
<OTHER-SE> 214,984
<TOTAL-LIABILITY-AND-EQUITY> 248,535
<SALES> 154,381
<TOTAL-REVENUES> 154,381
<CGS> 0
<TOTAL-COSTS> 78,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,854
<INCOME-TAX> 1,617
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,237
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
