<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------
FORM 10-KSB, AMENDMENT NO. 1
[_] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended Dec. 31, 1995
-------------
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
Commission File Number 1-8912
------
SBM INDUSTRIES, INC.
---------------------------------------------
(Name of Small Business Issuer in it Charter)
Delaware 36-1805030
- ---------------------------------------- -------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2 Madison Avenue, Suite 201
Larchmont, New York 10538
- ---------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
(914) 833-0649
--------------
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $1.00 par value American Stock Exchange
- ----------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
----- -----
<PAGE>
Check if disclosure of no delinquent filers pursuant to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB [ ]
Issuer's revenues for its most recent fiscal year were $16,531,000.
Based on the closing sales price on March 15, 1994, the aggregate
market value of the voting stock held by non-affiliates of the registrant
was approximately $2,899,908.
The number of shares outstanding of the registrant's common stock was
2,027,616 at March 21, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: Part III -Definitive Proxy
Statement relating to May 7, 1996 Annual Meeting of Shareholders. Parts I
and II - Annual Report to Shareholders for the year ended December 31, 1995.
-2-
<PAGE>
Item 13 is amended to read as follows:
Item 13. Exhibits, Lists and Reports on Form 8-K.
---------------------------------------
(a) 1. & 2. Financial Statements.
--------------------
A copy of the Company's Annual Report to Shareholders for the year
ended December 31, 1995 has been furnished as an exhibit to this Annual
Report on Form 10-KSB. Pages 1 through 19 of such Annual Report to
Shareholders contain the Consolidated Balance Sheet as of December 31, 1995,
and the Consolidated Statements of Operations, Shareholders' Investment and
Cash Flows and Notes to Consolidated Financial Statements for each of the
two years ended December 31, 1995 and 1994, and the Auditors' Report
covering the aforementioned financial statements. These Financial
Statements and the Auditors' Report thereon are incorporated herein by
reference.
(a) Exhibits
--------
(3) The Articles of Incorporation and Bylaws of the Company, as
amended, filed as Exhibit to a report on Form 8, Amendment No. 1 to the
Company's Form 10-K for the fiscal year ended December 31, 1988 and filed
May 26, 1989, are incorporated herein by reference, and Amendment to the
Articles of Incorporation of the Company, changing the name of the Company,
filed as an exhibit to the Company's report on 8-K dated September 15, 1992
and filed September 29, 1992, is incorporated herein by reference.
(4) Certificate of Rights, Designations and Preferences relating to
the 1992 Series A Preferred Stock, filed as Exhibit (4) to the Company's
report on Form 8-K dated September 15, 1992 and filed September 29, 1992, is
incorporated herein by reference.
(10) Material Contracts.
(a) Employment Agreements, each dated September 15, 1992 by
and between the Company and each of Kenneth Karlan and
Keith Sessler respectively, filed as Exhibit (10)(b) to
the Company's report on Form 10-KSB for the fiscal year
ended December 31, 1992, filed March 31, 1993, are
incorporated herein by reference.
(b) 1992 Incentive Stock Option Plan of the Company, an
Exhibit to the Company's Notice of Annual Meeting of
-3-
<PAGE>
Shareholders and Proxy Meeting for Annual Meeting to be
held August 25, 1992, and filed August 13, 1992, is
incorporated herein by reference.
(c) Term Loan Agreement, dated July 6, 1996, between Star
Struck, Inc. and First Fidelity Bank.
(d) Guaranty and Suretyship Agreement, dated July 6, 1996
from the Company to First Fidelity Bank.
(e) Mortgage, Assignment of Lease and Security Agreement,
dated July 6, 1995, between Star Struck, Inc., as
mortgagor, and First Fidelity Bank, as mortgagee, in
the amount of $800,000.00, secured by property known as
8 Francis J. Clarke Circle, Bethel, Connecticut (the
"Property").
(f) Second Mortgage, dated March 18, 1990, by and between
Star Investors, as Mortgagor, and Union Trust Company,
as Mortgagee, in the amount of $150,000, secured by a
second mortgage on the Property, filed as Exhibit
(10)(e) to the Company's report on Form 10-KSB for the
fiscal year ended December 31, 1992, filed March 31,
1993, is incorporated herein by reference.
(g) Pledge Agreement, dated December 6, 1993, between SBM
Industries, Inc. and Michael Sheldon and Carlton Press,
Inc., filed as Exhibit 10(h) to the Company's report on
Form 10-KSB for the year ended December 31, 1993, filed
March 31, 1994.
(h) Consulting Agreement, dated December 6. 1993, between
SBM Acquisition Corp. and Carlton Press, Inc., filed as
Exhibit 10(i) to the Company's report on Form 10-KSB
for the year ended December 31, 1993, filed March 31,
1994.
(i) Non-Compete Agreement, dated December 6, 1993, among
Michael Sheldon, SBM Press Acquisition Corp. and SBM
Industries, Inc., filed as Exhibit
-4-
<PAGE>
10(j) to the Company's report on Form 10-KSB for the
year ended December 31, 1993, filed March 31, 1994.
(11) Statement re: Computation of Per Share Earnings. See page 2 of
the Company's 1995 Annual Report to Shareholders for a description of the
computation of the Company's per share earnings, which description is
incorporated herein by reference.
(13) 1995 SBM Industries, Inc. Annual Report to Shareholders (which,
except for those portions thereof incorporated by reference in this Form 10-
KSB Annual Report, is furnished for the information of the Commission, but
is not deemed to be "filed" as part of this report).
(21) List of Subsidiaries of Registrant, filed as Exhibit 21 to the
Company's report on Form 10-KSB for the year ended December 31, 1994, filed
March 31, 1995.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
-5-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SBM INDUSTRIES INC.
By: /s/ Peter Nisselson
------------------------------
Peter Nisselson, President,
Secretary and Chief Executive
Officer, April 2, 1996
By: /s/ Lawrence J. Goldstein
------------------------------
Lawrence J. Goldstein,
Vice President and Treasurer
April 2, 1996
Dated: April 2, 1996
In accordance with the Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/ Peter Nisselson
------------------------------------
Peter Nisselson, April 2, 1996
(Director)
/s/ Lawrence J. Goldstein
------------------------------------
Lawrence J. Goldstein, April 2, 1996
(Director)
/s/ Kenneth Karlan
------------------------------------
Kenneth Karlan, April 2, 1996
(Director)
------------------------------------
Robert Morris, April , 1996
(Director)
-6-
<PAGE>
- ------------------------------------
Arthur Salzfass, April , 1996
(Director)
/s/ Keith Sessler
- ------------------------------------
Keith Sessler, April 2, 1996
(Director)
- ------------------------------------
Michael Sweedler, April , 1996
(Director)
-7-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
-------
(3) The Articles of Incorporation and Bylaws of the *
Company, as amended, filed as Exhibit to a report on Form 8,
Amendment No. 1 to the Company's Form 10-K for the fiscal year
ended December 31, 1988 and filed May 26, 1989, are incorporated
herein by reference, and Amendment to the Articles of
Incorporation of the Company, changing the name of the Company,
filed as an exhibit to the Company's report on Form 8-K dated
September 15, 1992 and filed September 29, 1992, is incorporated
herein by reference.
(4) Certificate of Rights, Designations and Preferences *
relating to the 1992 Series A Preferred Stock, filed as Exhibit
(4) to the Company's report on Form 8-K dated September 15, 1992
and filed September 29, 1992, is incorporated herein by
reference.
(10) Material Contracts.
(a) Employment Agreements, each dated September *
15, 1992 by and between the Company and each
of Kenneth Karlan and Keith Sessler
respectively, filed as Exhibit (10)(b) to the
Company's report on Form 10-KSB for the
fiscal year ended December 31, 1992, filed
March 31, 1993, is incorporated herein by
reference.
(b) 1992 Incentive Stock Option Plan of the *
Company, an Exhibit to the Company's Notice
of Annual Meeting of Shareholders and Proxy
Meeting for Annual Meeting to be held August
25, 1992, and filed August 13, 1992, is
incorporated herein by reference.
-8-
<PAGE>
(c) Term Loan Agreement, dated July 6, 1996, *
between Star Struck, Inc. and First Fidelity
Bank.
(d) Guaranty and Suretyship Agreement, dated July *
6, 1996, from the Company to First Fidelity
Bank.
(e) Mortgage, dated July 6, 1995, Star Struck, *
Inc., as mortgagor, and First Fidelity Bank,
in the amount of $800,000.00, secured by
property known as 8 Francis J. Clarke Circle,
Bethel, Connecticut (the "Property").
(f) Second Mortgage, dated March 18, 1990, by and *
between Star Investor, as Mortgagor, and
Union Trust Company, as Mortgagee, in the
amount of $150,000, secured by a second
mortgage on the Property, filed as Exhibit
(10)(e) to the Company's report on Form 10-
KSB for the fiscal year ended December 31,
1992, filed March 31, 1993, is incorporated
herein by reference.
(g) Pledge Agreement, dated December 6, 1993, *
between SBM Industries, Inc. and Michael
Sheldon and Carlton Press, Inc., filed as
Exhibit 10(h) to the Company's report on Form
10-KSB for the year ended December 31, 1993,
filed March 31, 1994.
(h) Consulting Agreement, dated December 6, 1993, *
between SBM Acquisition Corp. and Carlton
Press, Inc., filed as Exhibit 10(i) to the
-9-
<PAGE>
Company's report on Form 10-KSB for the year
ended December 31, 1993, filed March 31,
1994.
(i) Non-Compete Agreement, dated December 6, 1993, *
among Michael Sheldon, SBM Press Acquisition
Corp. and SBM Industries, Inc., filed as
Exhibit 10(j) to the Company's report on Form
10-KSB for the year ended December 31, 1993,
filed March 31, 1994.
(11) Statement re: Computation of Per Share Earnings. **
See page 2 of the Company's 1995 Annual Report to Shareholders
for a description of the computation of the Company's per share
earnings, which description is incorporated herein by reference.
(13) 1995 SBM Industries, Inc. Annual Report to **
Shareholders (which, except for those portions thereof
incorporated by reference in this Form 10-KSB Annual Report, is
furnished for the information of the Commission, but is not
deemed to be "filed" as part of this report).
(21) List of Subsidiaries of Registrant, filed as *
Exhibit 21 to the Company's report on Form 10-KSB for the year
ended December 31, 1994, filed March 31, 1995.
(27) Financial Data Schedule. **
____________________________
* Incorporated by reference.
** Filed herewith.
-10-
<PAGE>
EXHIBIT 13
SBM Industries Logo
1.9.9.5
ANNUAL
REPORT
<PAGE>
SBM Industries, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
To Our Shareholders.................................. 1
Selected Financial Information....................... 2
Consolidated Statements of Income.................... 3
Consolidated Balance Sheet........................... 4
Consolidated Statements of Shareholders' Investment.. 5
Consolidated Statements of Cash Flows................ 6
Notes to Consolidated Financial Statements........... 7-10
Report of Independent Auditors....................... 11
Management's Discussion and Analysis................. 12-13
Shareholder Information.............................. 14
Officers and Directors............................... 15
</TABLE>
<PAGE>
SBM Industries, Inc.
To Our Shareholders
- --------------------------------------------------------------------------------
SBM Industries' sales increased to $16,531,000 in 1995 from $13,930,000 in 1994.
However, the Company had a loss of $707,000 or 35c per share in 1995 compared to
a profit from continuing operations of $514,000 or 25c per share in 1994. Also,
the Company had a non-recurring gain from the sale of its last remaining radio
station of $605,000 or 30c per share in 1994. Please see the accompanying
financial statements for details.
At SBM's Star Struck subsidiary, sales of watch batteries, jewelry findings and
watch straps suffered from the mediocre year experienced by the retail jewelry
industry while profitability suffered from less than expected sales. The
Company's financial performance was also adversely effected by problems in
integrating recent acquisitions and managing the marketing efforts necessary to
build further increases in sales. Increased selling, general and administrative
expenses were incurred as the Company endeavored to create a more effective
organization. Having backed and filled, we have come a long way. Now the main
focus will be to build on the organization, especially in marketing and customer
service.
On the positive side, our watch strap manufacturing company, R.C. Manufacturing,
has been doing quite well. In 1995 it gained important new business. Its
revenues increased 50% last year and it is now operating profitably.
Despite increased sales at Carlton Press, our subsidy publishing business, that
company's financial performance was very disappointing in 1995. Management
failed to keep cost of goods sold and operating expenses in line. A top
management change was made at Carlton in the first quarter of this year. Though
it is too early to judge, we believe operations have stabilized. We are
guardedly optimistic.
In last year's President letter, I wrote; "The major focus in 1995 will be to
integrate our acquisitions, and expand middle management to properly manage
anticipated growth with an acceptable level of profits." It was easier said than
done. We do expect the organizational changes will be effective. Therefore, we
should achieve better financial results in 1996
Very truly yours,
/s/ Peter Nisselson
Peter Nisselson
President
March 29, 1996
- --------------------------------------------------------------------------------
one
<PAGE>
SBM Industries, Inc.
Selected Financial Information
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 16,531,000 $ 13,930,000 $ 7,946,000 $ 5,641,000 $ 5,126,000
Income (loss) from continuing
operations before income taxes
and extraordinary item $ (701,000) $ 579,000 $ 76,000 $ ( 132,000) $ 34,000
Income (loss) from continuing
operations after taxes $ (707,000) $ 514,000 $ 88,000 $ (147,000) $ (555,000)
Net income (loss) $ (707,000) $ 1,119,000 $ 40,000 $ (294,000) $ (555,000)
per share $ (.35) $ .55 $ .02 $ (.14) $ (.27)
Shareholders' investment $ 6,001,000 $ 6,708,000 $ 5,706,000 $ 5,666,000 $ 5,960,000
per share $ 2.96 $ 3.31 $ 2.81 $ 2.79 $ 2.94
------------ ------------ ------------ ------------ ------------
Total assets $ 11,537,000 $ 11,715,000 $ 8,878,000 $ 7,045,000 $ 7,388,000
------------ ------------ ------------ ------------ ------------
Long-term debt $ 1,333,000 $ 1,233,000 $ 1,301,000 $ 801,000 $ 917,000
------------ ------------ ------------ ------------ ------------
Cash dividends per share $ .00 $ .00 $ .00 $ .00 $ .00
------------ ------------ ------------ ------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
two
<PAGE>
SBM Industries, Inc.
Consolidated Statements of Income
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31, 1995 1994
------------ ------------
<S> <C> <C>
NET SALES $ 16,531,000 $ 13,930,000
Cost of sales 9,441,000 7,336,000
------------ ------------
Gross Profit on Sales 7,090,000 6,594,000
------------ ------------
OPERATING EXPENSES
Selling, General and Administrative 7,230,000 5,735,000
Depreciation and Amortization 507,000 350,000
------------ ------------
Total Operating Expenses 7,737,000 6,085,000
------------ ------------
Operating Income (Loss) (647,000) 509,000
------------ ------------
OTHER INCOME (EXPENSES)
Interest Expense, Net (145,000) (35,000)
Gain on Sale of Marketable Securities, Net 44,000 50,000
Minority Interest in Subsidiary 47,000 55,000
------------ ------------
(54,000) 70,000
------------ ------------
Income (Loss) from Continuing Operations Before Income Taxes (701,000) 579,000
Provision for Income Taxes (Note 7) 6,000 (65,000)
------------ ------------
Income (Loss) from Continuing Operations (707,000) 514,000
------------ ------------
Discontinued Operations:
------------ ------------
Income from Discontinued Operations -- 8,000
------------ ------------
Gain on Disposal of Discontinued Operations -- 597,000
------------ ------------
Gain from Discontinued Operations -- 605,000
------------ ------------
Net Income (Loss) $ (707,000) $ 1,119,000
------------ ------------
PER SHARE (Note 1)
Income (Loss) from Continuing Operations $ (.35) $ .25
------------ ------------
Discontinued Operations -- .30
------------ ------------
Net Income (Loss) $ (.35) $ .55
------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,028,000 2,028,000
------------ ------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
three
<PAGE>
SBM Industries, Inc.
Consolidated Balance Sheet
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995
------------
<S> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 221,000
Accounts Receivable, Less Allowance for Doubtful Accounts of $205,000 1,833,000
Inventories (Note 1) 3,827,000
Prepaid Expenses and Other Current Assets 224,000
------------
Total Current Assets 6,105,000
------------
Property, plant and equipment, at cost (Note 1):
Land, Building and Improvements 1,231,000
Machinery and Equipment 1,106,000
------------
2,337,000
Less - Accumulated Depreciation 547,000
------------
1,790,000
============
Intangible Assets and Goodwill, Net (Note 1) 3,392,000
============
Other Assets:
Note Receivable (Note 11) 250,000
============
Total Assets $ 11,537,000
============
------------
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current Liabilities:
Borrowings Under Line of Credit (Note 5) $ 750,000
Accounts Payable and Accrued Expenses (Note 2) 2,163,000
Deferred Income 834,000
Current Portion of Notes Payable (Note 6) 276,000
------------
Total Current Liabilities 4,023,000
------------
Other Liabilities:
Notes Payable (Note 6) 1,333,000
============
Total Liabilities 5,356,000
============
Commitments and Contingencies (Note 13 and 14)
============
Minority Interest 180,000
============
Shareholders' Investment:
Preferred Shares, $1 Par Value - 500,000 Shares Authorized; Issued and Outstanding -
0 shares in 1995 --
Common Shares, $1 Par Value - 5,000,000 Shares Authorized; Issued and Outstanding -
2,027,616 shares in 1995 2,028,000
Paid in Surplus 4,349,000
Accumulated Deficit (376,000)
============
Total Shareholders' Investment 6,001,000
============
Total Liabilities and Shareholders' Investment $ 11,537,000
============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this balance sheet.
- --------------------------------------------------------------------------------
four
<PAGE>
SBM Industries, Inc.
Consolidated Statements of Shareholders' Investment
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31, 1995 1994
----------- -----------
<S> <C> <C>
COMMON SHARES
Balance at beginning of year $ 2,028,000 $ 2,028,000
Changes during year 0 0
=========== ===========
Balance at End of Year $ 2,028,000 $ 2,028,000
=========== ===========
PREFERRED SHARES
Balance at beginning of year $ 0 $ 1,000
Redemption of preferred stock 0 (1,000)
=========== ===========
Balance at End of Year $ 0 $ 0
=========== ===========
PAID IN SURPLUS
Balance at beginning of year $ 4,349,000 $ 4,465,000
Redemption of preferred stock 0 (116,000)
=========== ===========
Balance at End of Year $ 4,349,000 $ 4,349,000
=========== ===========
RETAINED EARNINGS (ACCUMULATED DEFICIT)
Balance at beginning of year $ 331,000 $ (788,000)
Net Income (Loss) (707,000) 1,119,000
=========== ===========
Balance at End of Year $ (376,000) $ 331,000
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
five
<PAGE>
SBM Industries, Inc.
Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31, 1995 1994
---------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (707,000) $ 1,119,000
---------- ------------
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation and amortization 507,000 350,000
Provision for losses on receivables 85,000 35,000
Gain related to marketable securities (44,000) (50,000)
Income from discontinued operations -- (8,000)
Gain on disposal of discontinued operations -- (597,000)
Minority Interest (47,000) (55,000)
Changes in operating assets and liabilities:
Accounts receivable 250,000 (1,206,000)
Inventories (901,000) (1,274,000)
Prepaid expenses and other current assets (98,000) (68,000)
Accounts payable and accrued expenses 77,000 535,000
Deferred Income 105,000 (25,000)
Other 1,000 (1,000)
---------- ------------
Total Adjustments (65,000) (2,364,000)
---------- ------------
Net Cash Used In Operating Activities (772,000) (1,245,000)
========== ============
CASH FLOWS FROM INVESTING ACTIVITIES
Net Assets Acquired -- 1,163,000
Payments made for Acquisitions -- (2,314,000)
Purchase of Fixed Assets (242,000) (679,000)
Net Proceeds from Sale of Marketable Securities 569,000 --
Minority Interest in Subsidiary -- 55,000
Net Proceeds from Sale of Subsidiary Assets -- 1,754,000
========== ============
Net Cash Provided By (Used In) Investing Activities 327,000 (21,000)
========== ============
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Notes Payable 839,000 701,000
Proceeds from Revolving Line of Credit 425,000 --
Payment of Deferred Financing Fees (15,000) --
Redemption of Preferred Stock -- (117,000)
Payment on Notes Payable (870,000) (724,000)
========== ============
Net Cash Provided By (Used In) Financing Activities 379,000 (140,000)
========== ============
Net Decrease in Cash & Cash Equivalents (66,000) (1,406,000)
========== ============
Cash & Cash Equivalents at Beginning of Year 287,000 1,693,000
========== ============
Cash & Cash Equivalents at End of Year $ 221,000 $ 287,000
========== ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
six
<PAGE>
SBM Industries, Inc.
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
1. Summary of Major Accounting Policies:
Principles of Consolidation
These financial statements include the accounts of SBM Industries, Inc. (the
"Company") and its subsidiaries, Star Struck, Inc. ("SSI"), Carlton Press Corp.
("CPC"), and RCM, Inc. ("RCM"). SSI is 100% owned by the Company, while CPC and
RCM are 80% owned subsidiaries. All intercompany transactions have been
eliminated.
Utilization of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Inventories
Inventories, with the exception of gold, are stated at the lower of cost (first-
in, first-out) or market. Gold inventory is valued at market. Inventories
consist principally of finished goods.
Property, Plant and Equipment
The company provides for depreciation generally using the straight-line method
for financial reporting and an accelerated method for income tax purposes.
Estimated useful lives are as follows:
Assets Life
------ ----
Office Equipment 5-7 Years
Machinery and Equipment 7-10 Years
Building and Improvements 31.5-39 Years
Repair and maintenance costs are expensed as incurred. Renewals and betterments
are capitalized. Upon retirement or other disposition of property, the cost and
related depreciation or amortization are removed from the accounts. Gains and
losses on such retirements are included in income.
Net Income/(Loss) Per Share
Net income/(loss) per share is computed based on the weighted average number of
shares outstanding during each year.
Revenue Recognition
SSI and RCM recognize revenue upon shipment of merchandise to customers. CPC
records revenue upon the completion of certain production benchmarks as defined
in each manuscript contract.
Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued SFAS No. 121,
"Accounting for the Impairment of Long Lived Assets," which is effective for
fiscal years beginning after December 15, 1995. This statement requires that
long-lived assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Company does not expect the adoption of this standard to have a material effect
on its financial position or results of operations.
Additionally, the FASB has issued SFAS No. 123, "Accounting for Stock Based
Compensation." This statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. The accounting
requirements of SFAS No. 123 are effective for transactions entered into in
fiscal years that begin after December 15, 1994, though they may be adopted upon
issuance. The disclosure requirements of SFAS No. 123 are effective for
financial statements for fiscal years beginning after December 15, 1995. The
Company does not expect the adoption of this standard to have a material effect
on its financial position or results of operations.
Amortization of Intangibles
Goodwill is being amortized on a straight-line basis over fifteen, twenty, or
forty years. Subsequent to its acquisitions, the Company continually evaluates
whether later events and circumstances have occurred that indicate the remaining
estimated useful life of goodwill may warrant revision or that the remaining
balance of goodwill may not be recoverable. When factors indicate that goodwill
should be evaluated for possible impairment, the Company uses an estimate of the
related business segments undiscounted net income over the remaining life of the
goodwill in measuring whether the goodwill is recoverable.
Major components of intangibles are as follows:
Amortization
Amounts in thousands Period (Years) 1995
-------------- -------
Non-compete agreements 7-10 $ 1,427
Other intangibles and goodwill 15-40 2,561
-------------- -------
3,988
Accumulated amortization 596
-------------- =======
$ 3,392
=======
2. Accounts Payable and Accrued Expenses
A breakdown of significant accounts payable and accrued expenses at December 31,
1995, is as follows:
Amounts in thousands 1995
-------
Accounts payable $ 1,797
Accrued expenses 366
=======
$ 2,163
=======
- --------------------------------------------------------------------------------
seven
<PAGE>
SBM Industries, Inc.
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
3. Marketable Securities
Beginning in 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This Statement requires the classification of debt and equity
securities based on whether the securities will be held to maturity, are
considered trading securities or are available-for-sale. Classification within
these categories requires the securities to be reported at their fair market
value with unrealized gains and losses included either in current earnings or
reported as a separate component of shareholders' investment, depending on the
ultimate classification. The adoption of this Statement, which resulted in all
marketable securities being classified as trading securities, did not have a
material effect on the Company's financial position or results of operations.
At December 31, 1995, the Company had sold all marketable securities. The gain
on the sale of such securities has been reflected in the statement of income for
the year ended December 31, 1995.
4. Stock Options
The 1992 Incentive Stock Option Plan of SBM Industries, Inc. is a qualified plan
which reserved 100,000 shares of the Company's unissued common stock for
issuance to officers and salaried employees at option prices not less than 100%
of the fair market value on the date of grant. Options are exercisable after the
date of grant and expire five years from the date of grant.
Shares authorized, granted and available under the Stock Option Plan are as
follows:
Authorized Granted Option Price Available
---------- ------- ------------ ---------
Balance at
December 31, 1992 100,000 2,500 $4.00
Canceled in 1993 (500)
Granted in 1993 5,500 $3.31
Granted in 1994 3,300 $7.50
Granted in 1995 25,000 $6.00
Canceled in 1995 (1,400) 65,600
4351 of the shares granted are exercisable at December 31, 1995 at option prices
ranging from $3.31 to $ 7.50 per share.
After one year waiting period twenty-five percent of the options granted may be
exercised in each of the next four years.
5. Borrowings Under Line of Credit
The Company has a $1,000,000 line of credit with a bank which extends through
May 31, 1996. Borrowings under the line bear interest at the prime rate plus one
percent (9.5% at December 31, 1995). The agreement contains certain financial
covenants, the most restrictive of which requires the Company to increase
tangible net worth from that of the prior year. As of December 31, 1995, the
Company had $750,000 outstanding under the line of credit.
6. Notes Payable
The Company's outstanding long-term debt as of December 31, 1995, is summarized
as follows:
1995
-----------
Variable rate mortgage payable, due in monthly
installments to 2003; the current annual rate is
9.5% $ 783,000
Variable rate promissory note payable, due in
monthly installments to 1996; the current rate is
9.75% 30,000
Promissory note payable, due in monthly
installments from 1999 through 2000, net of
$32,000 discount. Interest imputed at 6%. 118,000
Promissory note payable, due in monthly
installments from 1996 through 1999, net of
$80,000 discount. Interest imputed at 6%. 505,000
7% promissory note payable, due in monthly
installments to 1997 41,000
9.75% promissory note payable, due in monthly
installments to 1998 17,000
7.75% promissory note payable, due in 1996 80,000
Other installment obligations 35,000
-----------
1,609,000
-----------
Less Current Portion 276,000
===========
$ 1,333,000
===========
Scheduled maturities of all long-term debt instruments are as follows:
1996 $ 276,000
1997 230,000
1998 218,000
1999 208,000
2000 94,000
Thereafter 583,000
-----------
$ 1,609,000
-----------
Total interest expense was $223,000 and $137,000 in 1995 and 1994, respectively.
Land, building and improvements include a building with a cost of $674,000,
which has a $783,000 mortgage balance at December 31, 1995.
- --------------------------------------------------------------------------------
Eight
<PAGE>
SBM Industries, Inc.
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
7. Income Taxes
Deferred income taxes result from timing differences in recording of certain
expenses for financial reporting and tax purposes. The source of these
differences and the tax effects are as follows:
Amounts in thousands 1995 1994
------ ------
Net operating loss carryforward $ 465 $ 270
Excess of financial depreciation over
tax depreciation 32 11
Bad debt reserves 70 41
Alternative minimum tax 13 13
Unrealized depreciation of marketable
securities -- 40
------ ------
$ 580 $ 375
Valuation Allowance (580) (375)
------ ------
$ 0 $ 0
====== ======
Reconciliations between actual tax expense and the amount computed by applying
the statutory U.S. Federal Income tax rate to income (loss) from continuing
operations are as follows:
1995 1994
---------------- ----------------
% of % of % of % of
Pre-Tax Pre-Tax Pre-Tax Pre-Tax
Amounts in thousands Amount Income Amount Income
------- ------- ------- -------
Tax at statutory
Federal Income tax rate $ (238) (34.0%) $ 197 (34.0%)
Current year addition
to Net Operating Loss 238 34.0 -- --
Net Operating Loss Applied to Income -- -- (197) (34.0)
Alternative minimum tax -- -- 13 2.0
State and local taxes, and other 6 1.0 52 9.0
------ ----- ------ -----
$ 6 1% $ 65 11%
------ ----- ------ -----
At December 31, 1995, for tax reporting purposes, the Company had approximately
$1,370,000 of operating loss carryforwards. The tax operating loss carryforwards
will begin expiring in 2005.
In 1994, approximately $600,000 of the net operating loss carryforward was
utilized to offset taxable income which resulted from the disposal of WWMY-FM.
(See Note 8)
8. Acquisitions & Disposals
On August 29, 1994, SBM Industries, Inc., through its Star Struck, Inc. ("SSI")
subsidiary, purchased the business of Freedman & Sons, Corp., ("Freedman") a
distributor of watch straps. The purchase price was $610,000, which represented
the approximate book value of the assets acquired (inventory, accounts
receivable, and fixed assets). A cash payment of $350,000 was made at closing
and the balance is represented by a $260,000 note payable.
In October 1994, RCM, Inc., an 80% owned subsidiary of SBM (through its wholly
owned subsidiary SSI) acquired certain assets of R.C. Manufacturing, Inc., a
watch strap manufacturer. The purchase price was $280,000 in cash and notes,
which represented the approximate book value of the assets acquired. Previous
owners continue as management and have employment and profit participation
agreements.
In October 1994, SBM Industries, Inc., through SSI, purchased certain assets of
Timecraft, Inc.'s watch battery distribution product line. The purchase price
for the approximate book value of the assets was $525,000. In addition, the
Company entered into a five year sales commission agreement based on sales to a
specific customer.
In January 1994, the Company sold the assets of WWMY-FM Broadcasting, Inc. to
Voyager Communications, Inc., pursuant to their July 1991 agreement, for
approximately $1,800,000 in cash. The gain on the disposal of $597,000 and the
income from operations of $8,000 have been recognized as discontinued operations
in the 1994 consolidated statement of income.
9. Condensed Pro Forma Information For Acquisitions (Unaudited)
The following pro forma combined condensed statement of income for the years
ended December 31, 1994 and 1993 gives effect to the acquisition of Freedman:
Pro Forma Presentation of Freedman Acquisition
For the Years Ended December 31, 1994 and 1993
(In thousands except per share)
(Unaudited)
1994 1993
------- ------
Net Sales $14,742 $9,364
Income from Continuing
Operations $ 596 $ 126
Net Income $ 1,201 $ 78
Earnings Per Share $ .59 $ .04
The pro forma statement assumes that the acquisition of Freedman occurred on
January 1, 1993. All appropriate adjustments have been made to reflect the
acquisition, including amortization of goodwill and non-compete covenant,
interest income and expense adjustments and elimination of expenses that related
to prior ownership.
- --------------------------------------------------------------------------------
nine
<PAGE>
SBM Industries, Inc.
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
10. Business Segments
The Company's operations by business segment for the year ended December 31,
1995 were as follows:
<TABLE>
<CAPTION>
Battery & Watch Strap Subsidy Watch Strap
Distribution Publishing Manufacturing Total
--------------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net Sales $ 13,094,000 $ 2,505,000 $ 932,000 $ 16,531,000
Operating Income $ 20,000 $ (327,000) $ (340,000) $ (647,000)
(Loss)
Identifiable Assets $ 9,353,000* $ 2,018,000 $ 166,000 $ 11,537,000
Depreciation
& Amortization $ 283,000 $ 198,000 $ 26,000 $ 507,000
Capital Expenditures $ 134,000 $ 48,000 $ 60,000 $ 242,000
</TABLE>
*Includes corporate assets amounting to $381,000, which largely consists of cash
and a note receivable.
The majority of the customers in the battery and watch strap distribution line
of business are small retail jewelers nationwide. Revenue generated in the
subsidy publishing segment can be attributable to authors located throughout the
United States. The watch strap manufacturing sales are made to watch strap
distributors in the United States and Hong Kong.
11. Related Party Transactions
Note Receivable of $250,000 represents an amount due from CPC'S minority
shareholder for his interest in the subsidiary related to his portion of the
purchase price of CPC which was paid by the Company. The amount is payable in
eight annual installments beginning December 31, 1996 through December 31, 2003.
Interest is payable annually at 6% commencing December 31, 1994.
During 1994, the Company redeemed the preferred stock held by an officer of the
Company at the liquidation preference of $100 per share.
12. Major Customers
During 1995 and 1994, 14% and 11%, respectively, of the Company's total sales
were made to a single customer in the battery and watch strap distribution line
of business. Additionally, in 1995, 11% of the Company's total sales were made
to another customer in the same line of business.
13. Commitments
The Company leases certain property and equipment under operating leases
expiring on various dates through 2000. Total rent expense amounted to $188,268
and $137,696 in 1995 and 1994, respectively. Aggregate future minimum rent
payments under the terms of non-cancelable leases as of December 31 are as
follows:
1996 $157,000
1997 74,000
1998 68,000
1999 9,000
2000 3,000
During 1994, the Company entered into consulting agreements which include annual
payments of $160,000. In addition, the Company entered into a sales commission
agreement on sales to a certain customer. These agreements expire in three to
five years.
14. 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.
- --------------------------------------------------------------------------------
Ten
<PAGE>
SBM Industries, Inc.
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Shareholders of SBM Industries, Inc.:
We have audited the accompanying consolidated balance sheet of SBM Industries,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1995, and the
related consolidated statements of income, shareholders' investment and cash
flows for each of the two years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SBM Industries, Inc., and
subsidiaries as of December 31, 1995, and the results of their operations and
their cash flows for each of the two years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
March 6, 1996
- --------------------------------------------------------------------------------
eleven
<PAGE>
SBM Industries, Inc.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
1995
- ----
Net Sales
Total sales for SBM Industries, Inc. ("SBM" or the Company) in 1995 increased
19% to $16,531,000 from $13,930,000 in 1994. These sales, as well as the sales
and earnings from continuing operation for the five years covered by the
foregoing financial statements and selected financial statements and selected
financial data, are primarily attributable to SBM's Star Struck, Inc. ("SSI")
subsidiary.
Sales for SSI were $13,094,000, up 13% from $11,560,000 in 1994. This increase
is due to the inclusion of a full year of Freedman & Sons, corp. ("Freedman")
and Timecraft Industries, Inc. ("TCI") sales, as well as consistent growth of
existing product lines.
Carlton Press Corp. ("CPC"), the Company's 80% owned subsidy publishing company,
had sales of $2,505,000. This is an 18% increase over 1994's sales of
$2,129,000. CPC has increased in the completion of manuscript contracts and
increased revenue recognition.
RCM. Inc. ("RCM"). SBM's 80% owned watch strap manufacturer, had sales of
$932,000. This $691,000 increase over 1994 sales of $241,000 can be attributed
to the additional revenue obtains from a major new customer and the inclusion of
a full year of sales, as opposed to 1994 sales which only reflected three months
of activity.
Gross Profit
Gross profit, as a percentage of sales, decreased to 43% in 1995 from 47% in
1994.
SSI's gross profit on sales of 41% was consistent with that of prior years.
CPC's increased rate of production led to an increase in the number of contracts
flowing through the final stage of completion which generates the lowest profit
margin. This resulted in CPC's gross profit on sales of 58%; a decrease of 16%
from 1994's gross margin of 74%.
RCM's gross profit on sales decreased 20% to 23% from 43% in 1994. This decrease
is attributable to start up costs incurred in the production of a sample line
for RCM's new customer which were only slightly offset by volume purchase
discounts for its increased level of inventory.
Selling, General and
Administrative Expenses
Selling, general and administrative expenses, as a percentage of sales,
increased to 44% in 1995 as compared with 41% in 1994 for the Company. This
increase is a combination of several items. Salaries have increased in each
entity with the Company's commitment to growth in hiring additional personnel.
Prior years' acquisitions continue to increase selling, general and
administrative expenses through consulting and sales commission agreements.
During 1995, approximately $343,000 in consulting fees and $159,000 in sales
commissions were recorded.
Operating Income (Loss)
Operating income decreased by $1,156,000 to show a loss of $647,000 from a
profit of $509,000 in 1994. Reflected in 1995's operating loss was SSI's profit
of $102,000, which was offset by CPC's and RCM's operating losses of $327,000
and $341,000, respectively, and SBM's corporate loss of $81,000.
Interest Expense
Net interest expense was $145,000 in 1995, up $110,000 from $35,000 in 1994.
Approximately $43,000 in interest expense related to the additional borrowings
on the Company's line of credit was recorded in 1995. Interest on a refinanced
mortgage totaled approximately $37,000 in 1995.
Net Income
The Company showed a net loss of $707,000, or $(.35) per share in 1995, compared
with a profit of $1,119,000, or $.55 per share in 1994. 1995's results did not
have the benefit of the income and gain on the disposal of WWMY-FM Broadcasting,
Inc. ("WWMY-FM") as did 1994's results. Income from continuing operations
decreased $1,221,000, or $.60 per share.
1994
- ----
In January 1994, SBM sold the assets of WWMY-FM to Voyager Communications for
approximately $1,800,000. The gain on the disposal, $597,000, and the income
from operations of $8,000 have been recognized as discontinued operations in the
1994 consolidated statement of income. The following discussion and analysis
does not reflect WWMY-FM's operating results.
Since divesting itself of its radio station business, the Company has been
seeking to expand into other business areas to improve return on its shareholder
investment. SBM is now a distributor of watch batteries and jewelry findings,
and a manufacturer and distributor of watch straps, as well as an 80% owner of
CPC.
On August 29, 1994, SBM, through its Star Struck, Inc. subsidiary, purchased the
business of Freedman a distributor of watch straps. Freedman's operations will
be combined with SSI's Sahara and Town & Country watch strap lines. Thetotal
purchase price was $610,000,which represented the approximate book value of the
assets acquired (inventory,
- --------------------------------------------------------------------------------
twelve
<PAGE>
SBM Industries, Inc.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
accounts receivable, and fixed assets). A cash payment of $350,000 was made at
closing and the balance is represented by a $260,000 interest bearing note
payable.
In October 1994, RCM, an 80% owned subsidiary of SBM (through its wholly owned
subsidiary SSI) acquired certain assets of R.C. Manufacturing, Inc., a watch
strap manufacturer. The purchase price was $280,000 in cash and notes, which
represented the approximate book value of the assets acquired. Previous R.C.
Manufacturing, Inc. owners continue as management and have employment and profit
participation agreements. Operations will remain in St. Petersburg, Florida.
In October 1994, SBM, through SSI, purchased certain assets of TCI watch battery
distribution product line. The purchase price for the approximate book value of
the assets was $525,000. In addition, the Company entered into a five year sales
commission agreement based on sales to a specific customer. The acquired assets
will be combined with SSI's watch battery operations.
Net Sales
Total sales for the Company in 1994 increased 75% to $13,930,000 from $7,946,000
in 1993. These sales, as well as the sales and earnings from continuing
operations for the five years covered by the foregoing financial statements and
selected financial data, are primarily attributable to SSI.
Sales for SSI were $11,560,000, up 48% from $7,823,000 in 1993. This increase is
not due to higher prices, but rather the increased volume of existing products
and from recent acquisitions. Freedman sales accounted for 4% of total sales for
SSI, while sales to the additional customers gained through the acquisition of
TCI's watch battery distribution product line accounted for 5% of SSI's sales.
CPC's sales of $2,129,000 (15% of total sales) were up from 1993 sales of
$123,000. This is because 1994 reflects a full year of CPC operations, as
opposed to 1993 which reflects one month.
The acquisition of RCM in October 1994 brought in additional sales of $241,000,
or 2% of the Company's total sales. The acquisition of the watch strap
manufacturer has enabled SSI to expedite its watch strap sourcing.
Gross Profit
Gross Profit, as a percentage of sales, increased to 47% in 1994 from 45% in
1993. The improvement in gross profit reflects SSI's ability to take advantage
of purchase discounts and, with increased volume in the watch battery
distribution line, obtain better pricing from its major vendors. Also reflected
in the Company's gross margin is CPC's and Freedman's gross profit on sales of
74% and 67%, respectively.
Selling, General and Administrative Expenses
Selling, general and administrative expenses, as a percentage of sales,
decreased to 41% in 1994 as compared with 43% in 1993 for the Company. The
overall decrease in the percentage of selling, general and administrative
expenses compared to sales was partially offset by additional expenditures
incurred in 1994 related to the Company's entering into consulting and sales
commission agreements, as well as non-compete agreements. During the last four
months of 1994, approximately $53,000 in consulting fees, $85,000 in sales
commissions and $30,000 in amortization of non-compete agreements were recorded.
These agreements will continue for three to seven and one-half years.
Liquidity and Capital Resources
- -------------------------------
The net decreased in cash and cash equivalents of $66,000 is attributable to the
$772,000 used in operating activities. Inventory levels in 1995 increased
$901,000 or 31% over 1994. This increase is necessary to fulfill the needs of
customers on a timely basis. Investing activities provided $327,000. The sale of
the Company's marketable securities provided $569,000, while $242,000 was
expended for fixed assets. During 1995, the Company repaid $870,000 of its
outstanding debt. This included $549,000 associated with the existing mortgage
on the building at Star Struck, which was refinanced.
The Company has a line of credit agreement with one of its banks. The Company
has $1,000,000 available under the line of credit, of which $750,000 was used at
December 31, 1995.
The Company believes that it has adequate funds available to conduct and
continue its business and to repay the approximate $276,000 in long-term debt
which will mature in 1996
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.
- --------------------------------------------------------------------------------
Thirteen
<PAGE>
SBM Industries, Inc.
Shareholder Information
- --------------------------------------------------------------------------------
Market and Dividend Information
The following table shows the quarterly per share sales price ranges of the
Company's common stock on the American Stock Exchange for 1995 and 1994. No
dividends were paid during this period. On March 22, 1996 there were 2,027,616
shares of common stock outstanding.
1995 1994
----------------- -----------------
High Low High Low
First Quarter $ 13.750 $ 6.125 $ 5.000 $ 3.750
Second Quarter 7.250 5.500 7.375 4.000
Third Quarter 6.063 5.250 7.500 5.375
Fourth Quarter 5.250 3.875 20.750 7.125
Annual Meeting
The Annual Meeting of Shareholders of SBM Industries, Inc. will be held on May
7, 1996.
Availability of Form 10-KSB
A copy of SBM Industries, Inc's. 1995 Annual Report to the Securities and
Exchange Commission Form 10-KSB will be furnished without charge to shareholders
upon written request to the Corporate Secretary.
Capital Stock Listing
American Stock Exchange
Symbol: SBM
Transfer Agent and Registrar
Harris Trust and Savings Bank, Chicago
Auditors
Arthur Andersen LLP, New York
- --------------------------------------------------------------------------------
fourteen
<PAGE>
SBM Industries, Inc.
- --------------------------------------------------------------------------------
Officers and Directors
Lawrence J. Goldstein
Vice President and Director; General
Partner, Santa Monica Partners
Kenneth Karlan
Vice President and Director
Robert J. Morris
Director; President of Dunhill
Personnel of Manhattan
Peter Nisselson
President and Director
Arthur Salzfass
Director; Chairman, MicroInfo
Keith Sessler
Vice President and Director
Michael J. Sweedler
Director; Partner, Darby and Darby,
P.C.
- --------------------------------------------------------------------------------
fifteen
<PAGE>
SBM Industries Logo
Two Madison Avenue
Larchmont, NY 10538
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 221,000
<SECURITIES> 0
<RECEIVABLES> 2,038,000
<ALLOWANCES> (205,000)
<INVENTORY> 3,827,000
<CURRENT-ASSETS> 6,105,000
<PP&E> 2,337,000
<DEPRECIATION> (547,000)
<TOTAL-ASSETS> 11,537,000
<CURRENT-LIABILITIES> (4,023,000)
<BONDS> (1,333,000)
0
0
<COMMON> (2,028,000)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (11,537,000)
<SALES> (16,531,000)
<TOTAL-REVENUES> (16,531,000)
<CGS> 9,441,000
<TOTAL-COSTS> 9,441,000
<OTHER-EXPENSES> 7,737,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 145,000
<INCOME-PRETAX> (701,000)
<INCOME-TAX> 6,000
<INCOME-CONTINUING> (707,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (707,000)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
