<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, 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 MAY 8, 1995
----- --------------------------
<S> <C>
Common stock, $.10 stated value 21,532,332
</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
March 31, 1995 and December 31, 1994 3
Consolidated Statement of Income
for the three-month periods ended
March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows
for the three-month periods ended
March 31, 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 and 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
</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 MARCH 31, DECEMBER 31,
------ 1995 1994
------------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 38,311 $ 42,758
Short-term investments - 5,203
Accounts receivable, trade, net 60,815 55,474
Merchandise inventories 70,940 67,052
Prepaid expenses and other current assets 5,246 4,229
Deferred income taxes 14,176 14,176
-------- --------
Total current assets 189,488 188,892
Property, plant and equipment - net 25,315 25,298
Goodwill and other intangible assets - net 35,242 35,913
Other assets 5,208 4,723
-------- --------
Total assets $255,253 $254,826
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable $ 6,045 $ 6,972
Accrued expenses 23,517 24,795
Accrued restructuring costs 3,738 4,527
Accrued income taxes 1,362 144
-------- --------
Total current liabilities 34,662 36,438
Shareholders' equity
Common stock; $.10 stated value;
authorized 50,000,000 shares;
issued 23,980,563 at March 31, 1995
and 23,953,530 at December 31, 1994 2,398 2,395
Additional paid-in capital 38,216 37,875
Retained earnings 218,958 218,103
Foreign currency translation adjustments (1,124) (2,128)
Treasury stock, at cost (2,454,813 shares
at March 31, 1995 and December 31, 1994) (37,857) (37,857)
-------- --------
Total shareholders' equity 220,591 218,388
-------- --------
Total liabilities and shareholders'
equity $255,253 $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)
THREE MONTHS ENDED
MARCH 31,
------------------
1995 1994
------ ------
<S> <C> <C>
Net sales $80,118 $64,167
Cost of sales 39,324 31,561
------
------- -------
Gross profit 40,794 32,606
Selling, general
and administrative expense 35,843 31,532
Investment and other income-net 728 564
------- -------
Income before income taxes 5,679 1,638
Provision for income taxes 1,596 616
------- -------
Net income $ 4,083 $ 1,022
======= =======
Net income per share $ 0.19 $ 0.05
======= =======
</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,
-----------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,083 $ 1,022
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,054 1,168
Amortization of intangible assets 745 427
Provision for accounts receivable reserves 1,879 651
Loss on sale of assets and other, net (125) (2)
Changes in assets and liabilities
Accounts receivable (7,220) (3,289)
Inventories (3,889) 5,431
Prepaid expenses (1,017) (289)
Goodwill and other intangible assets (74) (246)
Other assets (485) (131)
Accounts payable (927) (816)
Accrued expenses (1,278) (3,889)
Accrued restructuring costs (789) (390)
Accrued and deferred income taxes 1,218 411
------- -------
Total adjustments (10,908) (964)
------- -------
Net cash provided by (used in)
operating activities (6,825) 58
Cash flows from investing activities:
Decrease (increase) in short-term investments 5,203 (475)
Proceeds from sale of fixed assets 95 147
Capital expenditures (1,040) (691)
------- -------
Net cash provided by (used in) investing
activities 4,258 (1,019)
Cash flows from financing activities:
Common stock transactions 344 193
Dividends (3,228) (3,215)
------- -------
Net cash (used in) financing activities (2,884) (3,022)
Effect of exchange rate changes on cash
and cash equivalents 1,004 (318)
------- -------
Net (decrease) in cash and cash equivalents (4,447) (4,301)
Cash and cash equivalents at beginning of period 42,758 51,478
------- -------
Cash and cash equivalents at end of period $38,311 $47,177
======= =======
Cash paid during the period for:
Interest $ 22 $ 7
Income taxes $ 378 $ 205
</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, 1995 and 1994 were 21,510,957 and
21,434,316 shares, respectively. Employee stock option plans did
not have a material dilutive effect on the earnings per share
calculation.
NOTE 3
Cash dividends of $3,227,963 ($.15 per share) were paid on March
17, 1995 to shareholders of record of the Company's Common Stock on
March 3, 1995. Cash dividends of 3,214,561 ($.15 per share) were
paid in the three- month period ended March 31, 1994.
(6)
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended March 31, 1995
Consolidated net sales for the three months ended March 31, 1995 were
$80,118,000 compared to $64,167,000 for the three months ended March 31, 1994.
This represents an increase of $15,951,000 or 24.9%. Included in the results
for the three months ended March 31, 1995 are the net sales of $7,727,000
achieved by OddzOn Products, Inc. which was acquired in October 1994. Net
sales of Cap Toys, Inc. of $16,151,000 for the three months ended March 31,
1995 compares to $13,332,000 for the three months ended March 31, 1994, an
increase of 21.1%. The increase in net sales of Cap Toys, Inc. is a result of
the continued strong performance of its major product lines and improved
availability of certain inventory in 1995 as compared to 1994. Excluding the
net sales of Cap Toys, Inc. and OddzOn Products, Inc., consolidated net sales
for the three months ended March 31, 1995 were $56,240,000 compared to
$50,835,000 for the three months ended March 31, 1994, an increase of 10.6%.
This increase can be primarily attributed to the positive response in the
marketplace to newly introduced gift products.
Cost of sales were 49.1% of net sales for the three months ended March 31, 1995
compared to 49.2% for the same period in 1994.
Selling, general and administrative expense was $35,843,000 or 44.7% of net
sales for the three months ended March 31, 1995 compared to $31,532,000 or 49.1%
of net sales for the three months ended March 31, 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 three months ended March 31, 1995 (approximately $3,100,000) and the
increase in the selling, general and administrative expense of Cap Toys, Inc.
(approximately $1,900,000). The increase at Cap Toys, Inc. is primarily due to
an increase in advertising expense related to an expanded advertising program in
1995 compared to 1994, and certain increased expenses required to support the
accelerated rate of growth that Cap Toys, Inc. has experienced since its
acquisition in 1993.
Investment and other income of $728,000 for three months ended March 31, 1995
compares to $564,000 for the three months ended March 31, 1994. This increase
can be primarily attributed to foreign currency exchange gains related to
intercompany loan transactions.
The provision for income taxes as a percentage of income before taxes for the
three months ended March 31, 1995 was 28.1% compared to 37.6% in the same
period in the prior year. This decrease can be primarily attributed to lower
tax provisions related to certain foreign subsidiaries.
Net income for the three months ended March 31, 1995 of $4,083,000 compares to
net income of $1,022,000 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
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had cash, cash equivalents of $38,311,000
compared to cash, cash equivalents and short-term investments of $47,961,000
at December 31, 1994.
Working capital requirements during the three months ended March 31, 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.
(8)
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
b) During the quarter ended March 31, 1995,
no reports on Form 8-K were filed.
(9)
<PAGE> 10
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)
5/10/95 By s/ Paul Cargotch
- -------- -----------------------------
Date Paul Cargotch
Vice President - Finance and
Chief Financial Officer
(10)
<PAGE> 11
EXHIBIT INDEX
-------------
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 38,311
<SECURITIES> 0
<RECEIVABLES> 67,850
<ALLOWANCES> 7,035
<INVENTORY> 70,940
<CURRENT-ASSETS> 189,488
<PP&E> 53,035
<DEPRECIATION> 27,720
<TOTAL-ASSETS> 255,253
<CURRENT-LIABILITIES> 34,662
<BONDS> 0
<COMMON> 2,398
0
0
<OTHER-SE> 218,193
<TOTAL-LIABILITY-AND-EQUITY> 255,253
<SALES> 80,118
<TOTAL-REVENUES> 80,118
<CGS> 0
<TOTAL-COSTS> 39,324
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,679
<INCOME-TAX> 1,596
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,083
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
