<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
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Commission File Number 1-8912
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SBM INDUSTRIES, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 36-1805030
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Madison Avenue
Larchmont, NY 10538
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (914) 833-0649
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SAME
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Former name, former address and former fiscal year, if changed since
last report.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS: Check whether the registrant filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of
each of the issuer's classes of common equity, as of the latest practicable
date: $1.00 par value - 2,027,616 shares at May 10, 1996.
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SBM INDUSTRIES, INC.
--------------------
INDEX
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MARCH 31, 1996
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
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<S> <C> <C>
ITEM 1.
Condensed Consolidated Balance Sheet
March 31, 1996 1 & 2
Condensed Consolidated Statements of Income-
Three Months Ended March 31, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 4
Notes to Condensed Consolidated Financial
Statements - March 31, 1996 5
ITEM 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations -
March 31, 1996 6
</TABLE>
PART II. OTHER INFORMATION 7
1
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PART I - FINANCIAL INFORMATION
------------------------------
SBM INDUSTRIES, INC.
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CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
------------------------------------------------
MARCH 31, 1996
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A S S E T S
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CURRENT ASSETS:
- --------------
Cash and Cash Equivalents $ 119,000
Accounts Receivable, Less Allowance for Doubtful
Accounts of $205,000 2,244,000
Inventories 3,510,000
Prepaid Expenses and Other Current Assets 218,000
----------
TOTAL CURRENT ASSETS 6,091,000
-------------------- ----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
- --------------------------------------
Land, Building and Improvements 1,246,000
Machinery and Equipment 1,152,000
---------
2,398,000
Less: Accumulated Depreciation 597,000
---------
PROPERTY, PLANT AND EQUIPMENT, NET 1,801,000
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INTANGIBLE ASSETS AND GOODWILL, NET 3,310,000
- ----------------------------------- ---------
OTHER ASSETS:
- ------------
Note Receivable 250,000
----------
TOTAL ASSETS $11,452,000
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SBM INDUSTRIES, INC.
--------------------
CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
------------------------------------------------
MARCH 31, 1996
--------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
CURRENT LIABILITIES:
- -------------------
Borrowings Under Line of Credit $1,225,000
Accounts Payable and Accrued Expenses 1,675,000
Deferred Income 905,000
Current Portion of Notes Payable 315,000
----------
TOTAL CURRENT LIABILITIES 4,120,000
-------------------------
OTHER LIABILITIES:
- -----------------
Notes Payable 1,271,000
----------
TOTAL LIABILITIES 5,391,000
----------------- ----------
MINORITY INTEREST 180,000
- ----------------- ----------
SHAREHOLDERS' INVESTMENT:
- ------------------------
Preferred Shares, $1 Par Value - 500,000 Shares
Authorized; Issued and Outstanding - 0 Shares -
Common Shares, $1 Par Value - 5,000,000 Shares
Authorized; Issued and Outstanding -
2,028,000 Shares 2,028,000
Paid-in Surplus 4,349,000
Accumulated Deficit (496,000)
-----------
TOTAL SHAREHOLDERS' INVESTMENT 5,881,000
------------------------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $11,452,000
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SBM INDUSTRIES, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
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FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------
1996 1995
---- ----
NET SALES $4,618,000 $4,219,000
- ---------
Cost of Sales 2,805,000 2,313,000
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GROSS PROFIT ON SALES 1,813,000 1,906,000
--------------------- ---------- ----------
OPERATING EXPENSES:
- ------------------
Selling, General and Administrative 1,755,000 1,718,000
Depreciation and Amortization 131,000 123,000
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TOTAL OPERATING EXPENSES 1,886,000 1,841,000
------------------------ ---------- ----------
OPERATING INCOME (LOSS) (73,000) 65,000
-----------------------
OTHER INCOME (EXPENSES):
- -----------------------
Interest Expense, Net (47,000) (30,000)
Gain on Sale of Marketable Securities,
Net (Note 1) ----- 38,000
Minority Interest in Subsidiary ----- 28,000
---------- ----------
Income (Loss) Before Income Taxes (120,000) 101,000
Provision For Income Taxes (Note 3) ----- (2,000)
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NET INCOME (LOSS) $ (120,000) $ 99,000
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PER SHARE (Note 1)
- ---------
NET INCOME (LOSS) $ (.06) $ .05
----------------- ---------- ----------
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SBM INDUSTRIES, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
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FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(120,000) $ 99,000
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Adjustments to reconcile net income (loss) to cash
used in operating activities:
Depreciation and amortization $ 131,000 $ 123,000
Loss related to marketable securities ----- (38,000)
Income taxes ----- 2,000
Minority Interest ----- (28,000)
Changes in operating assets and liabilities:
Accounts receivable (411,000) (41,000)
Inventories 317,000 (378,000)
Prepaid expenses and other current assets 6,000 (54,000)
Accounts payable and accrued expenses (488,000) (30,000)
Deferred Income 71,000 91,000
Other 1,000 (2,000)
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Total Adjustments $(373,000) $(355,000)
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NET CASH USED IN OPERATING ACTIVITIES $(493,000) $(256,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets $ (61,000) $ (48,000)
Sale of Marketable Securities ----- 197,000
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NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES $ (61,000) $ 149,000
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Revolving Line of Credit $ 475,000 $ -
Payment on Notes Payable (23,000) (140,000)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 452,000 $(140,000)
-------- --------
NET DECREASE IN CASH & CASH EQUIVALENTS $(102,000) $(247,000)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 221,000 287,000
-------- --------
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 119,000 $ 40,000
-------- --------
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SBM INDUSTRIES, INC.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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MARCH 31, 1996
--------------
(1) Summary of Major Accounting Policies
------------------------------------
The consolidated financial statements heretofore presented have been prepared by
SBM Industries, Inc. ("the Company" or "SBM"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these consolidated financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's latest annual report on Form 10-KSB. The interim figures
presented are unaudited and are subject to any adjustments which may result from
the year-end examination of the Company's financial statements. However, in the
opinion of management, the information furnished reflects all adjustments (which
included only normal recurring adjustments) necessary to fairly state the
consolidated financial statements for the interim periods presented.
Marketable securities, as a group, has been valued in accordance with Statement
of Financial Accounting Standards No. 115 "Accounting for Certain Investments in
Debt and Equity Securities." The Company considered all marketable securities
to be trading securities.
Net income per share is computed based on the weighted average number of shares
outstanding during each period. The average number of shares used in the
computation of earnings per share was 2,028,000 for 1996 and 1995.
The profit and loss information for the interim periods presented are not
necessarily indicative of results to be expected for the year.
(2) Stock Options
-------------
On March 10, 1992, the Board of Directors of the Company adopted the 1992
Incentive Stock Option Plan providing for the issuance of 100,000 shares. The
shareholders of the Company approved the 1992 Plan at the Annual Meeting of
Shareholders held on August 25, 1992. Options on 34,400 shares have been
granted pursuant to the 1992 Plan.
(3) Income Taxes
------------
The Company utilized available booked net operating losses to offset tax
liabilities associated with the income from continuing operations.
(4) Contingencies
-------------
Securities litigation is pending in the United States District Court for the
Southern District of New York against the Company and some of its directors.
This is a consolidated action in which plaintiffs, allegedly suing on behalf of
all shareholders similarly situated, allege securities fraud as to the Company's
originally published reports of earnings for the first three quarters of 1994.
The alleged classes of plaintiffs consist of persons who purchased the Company's
stock between specified dates in May 1994 and February 1995. As the matter is
in the early stages, and no discovery has been made, it is too soon to assess
the outcome. The Company intends to defend itself vigorously.
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<PAGE>
SBM INDUSTRIES, INC.
--------------------
ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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FOR THE THREE MONTHS ENDED MARCH 31, 1996
-----------------------------------------
THREE MONTHS ENDED MARCH 31, 1996
---------------------------------
COMPARED TO
------------
THREE MONTHS ENDED MARCH 31, 1995
---------------------------------
SALES. Total sales for the Company in the first quarter of 1996 increased
$399,000, or 9.5%, to $4,618,000. Star Struck's sales for the period were
$3,676,000, up $373,000, or 11%, from $3,303,000 for the first quarter of 1995.
Carlton Press Corp.'s sales of $511,000 were down $151,000, or 23%, from 1995's
first quarter sales of $662,000. RC Manufacturing, Inc.'s sales of $431,000
showed an increase of $177,000, or 70%, over 1995's first quarter sales of
$254,000.
GROSS PROFIT. Gross profit decreased by $93,000 to $1,813,000 in the first
quarter of 1996. Gross margin decreased to 39.3% in 1996 compared to 45.2% for
the same period in 1995. For 1996, Star Struck had a gross margin of 37.8% on
its first quarter sales, while Carlton Press and RC Manufacturing showed gross
margins of 38.2% and 53.4%, respectively. These figures represent a 3.9% and
30.5% decrease in gross margin for Star Struck and Carlton Press, respectively,
and a 24.3% increase in gross margin for RC Manufacturing, Inc., compared to the
same period in 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $37,000 to $1,755,000 in the first quarter of
1996. As a percentage of sales, selling, general and administrative expenses
decreased to 38% in the first quarter of 1996 compared to 41% for the same
period in 1995. For the first quarter of 1996, Star Struck's selling, general
and administrative expenses represented 25.9% of total sales. Carlton Press
Corp.'s selling, general and administrative expenses of $372,000 were 8.0% of
total sales, while RC Manufacturing's and SBM's expenses were 3.7% and .4% of
total sales, respectively, in the first quarter of 1996.
OPERATING PROFIT. Operating profit decreased $138,000 to show a loss of $73,000
for the first quarter of 1996.
NET INCOME. Net income for the first quarter of 1996 decreased $219,000 to show
a loss of $120,000.
LIQUIDITY AND CAPITAL RESOURCES. Cash proceeds received from the sale of
assets over the years, including the sale of a radio station and securities,
have been used for acquisitions, as well as working capital requirements needed
for expansion of existing operations.
The Company has line of credit agreements with two of its banks. The Company
had used the full availability of $1,225,000 under these agreements at March 31,
1996.
The Company believes that it has adequate funds available to conduct and
continue its business and to repay the approximate $315,000 in long-term debt
which will mature in the next twelve months.
At March 31, 1996 net working capital was $1,971,000.
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<PAGE>
PART II - OTHER INFORMATION
---------------------------
SBM INDUSTRIES, INC.
--------------------
MARCH 31, 1996
--------------
Item 1. Legal Proceedings
In March 1995, four alleged class action complaints were filed in the
United States District Court for the Southern District of New York against the
Company and some of its directors. The complaints allege violations of the
federal securities laws in connection with the financial information contained
in the Company's quarterly financial reports issued in 1994. The alleged classes
of plaintiffs consist of persons who purchased the Company's stock between
specified dates in May 1994 and February 1995. As the matter is in the early
stages, it is too soon to assess the outcome. The Company intends to defend
itself vigorously.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27-Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1996
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.
SBM INDUSTRIES, INC.
Date: May 10, 1996 By:/s/ Peter Nisselson
-------------------------------------
Peter Nisselson, President
Date: May 10, 1996 By:/s/ Lawrence Goldstein___________
----------------------
Lawrence Goldstein, Vice-President, Treasurer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SBM
INDUSTRIES, INC.'S QUARTERLY REPORT TO STOCKHOLDERS FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 119,000 0
<SECURITIES> 0 0
<RECEIVABLES> 2,449,000 0
<ALLOWANCES> 205,000 0
<INVENTORY> 3,510,000 0
<CURRENT-ASSETS> 6,091,000 0
<PP&E> 2,398,000 0
<DEPRECIATION> 597,000 0
<TOTAL-ASSETS> 11,452,000 0
<CURRENT-LIABILITIES> 4,120,000 0
<BONDS> 0 0
0 0
0 0
<COMMON> 2,028,000 0
<OTHER-SE> 3,853,000 0
<TOTAL-LIABILITY-AND-EQUITY> 11,452,000 0
<SALES> 4,618,000 4,219,000
<TOTAL-REVENUES> 4,618,000 4,219,000
<CGS> 2,805,000 2,313,000
<TOTAL-COSTS> 1,886,000 1,841,000
<OTHER-EXPENSES> 0 (66,000)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 47,000 30,000
<INCOME-PRETAX> (120,000) 101,000
<INCOME-TAX> 0 2,000
<INCOME-CONTINUING> (120,000) 99,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (120,000) 99,000
<EPS-PRIMARY> (.06) .05
<EPS-DILUTED> 0 0
</TABLE>
