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 July 29, 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 0-14399
WESTERN PUBLISHING GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1104930
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
444 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 688-4500
N/A
(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.
Common stock, par value $.01 per share: 21,026,274 shares outstanding as of
August 30, 1995.
WESTERN PUBLISHING GROUP, INC. AND
SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Accountants' Report 3
Condensed Consolidated Balance Sheets--
July 29, 1995 (Unaudited) and
January 28, 1995 4
Condensed Consolidated Statements of Operations--
Three months ended July 29, 1995 and
July 30, 1994 (Unaudited) 6
Condensed Consolidated Statements of Operations--
Six months ended July 29, 1995 and
July 30, 1994 (Unaudited) 7
Condensed Consolidated Statements of Cash Flows--
Six months ended July 29, 1995 and
July 30, 1994 (Unaudited) 8
Notes to Condensed Consolidated Financial
Statements (Unaudited) 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART II OTHER INFORMATION
Item 3. Exhibits and reports on Form 8-K 16
SIGNATURES 17
EXHIBITS
Exhibit 15 - Letter re: unaudited interim
financial information 18
2
INDEPENDENT ACCOUNTANTS' REPORT
Western Publishing Group, Inc.
New York, New York
We have reviewed the accompanying condensed consolidated balance sheet of
Western Publishing Group, Inc. and subsidiaries as of July 29, 1995, and the
related condensed consolidated statements of operations and cash flows for the
six and three-month periods ended July 29, 1995 and July 30, 1994. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Western Publishing Group, Inc. and
subsidiaries as of January 28, 1995, and the related consolidated statements of
operations, common stockholders' equity and cash flows for the year then ended
(not presented herein); and in our report dated April 21, 1995 (May 6, 1995 as
to Note 6), we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of January 28, 1995 is fairly stated, in
all material respects, in relation to the consolidated balance sheet from which
it has been derived.
Deloitte & Touche LLP
Milwaukee, Wisconsin
September 12, 1995
3
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share and Per Share Data)
July 29, January 28,
ASSETS 1995 1995
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 29,230 $ 85,406
Accounts receivable 83,391 83,251
Inventories 111,564 108,738
Prepublication and prepaid advertising costs 9,391 7,314
Royalty advances 1,856 2,221
Refundable income taxes 5,940
Deferred income taxes 10,676 10,676
Net assets held for sale 14,652 17,681
Other current assets 6,636 6,397
-------- --------
Total current assets 267,396 327,624
-------- --------
OTHER ASSETS 14,385 14,044
-------- --------
PROPERTY, PLANT AND EQUIPMENT 132,027 122,990
Less accumulated depreciation and
amortization 53,276 47,325
-------- --------
Total property, plant and equipment 78,751 75,665
IDENTIFIED INTANGIBLES AND COST IN EXCESS
OF NET ASSETS ACQUIRED (GOODWILL), less
accumulated amortization of $20,189 and
$19,173, respectively 10,457 11,473
-------- --------
$370,989 $428,806
======== ========
See Notes to Condensed Consolidated
Financial Statements
4
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share and Per Share Data)
July 29, January 28,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 19,410 $ 18,461
Accrued compensation and fringe benefits 7,079 9,812
Notes payable to banks 32,000
Other current liabilities 30,839 39,111
-------- --------
Total current liabilities 57,328 99,384
-------- --------
NONCURRENT LIABILITIES:
Long-term debt 149,836 149,828
Accumulated postretirement benefit obligation 27,430 26,894
Other 2,004 1,921
-------- --------
Total noncurrent liabilities 179,270 178,643
-------- --------
CONVERTIBLE PREFERRED STOCK -Series A, 20,000
shares authorized, no par value, 19,970
shares issued and outstanding; at mandatory
redemption amount 9,985 9,985
-------- --------
COMMON STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 30,000,000
shares authorized, 21,235,074 and
21,232,074 shares issued 212 212
Additional paid-in capital 80,944 80,914
Retained earnings 47,514 64,287
Cumulative translation adjustments (1,442) (1,797)
-------- --------
127,228 143,616
Less cost of Common Stock in
treasury - 208,800 shares 2,822 2,822
-------- --------
Total common stockholders' equity 124,406 140,794
-------- --------
$370,989 $428,806
======== ========
See Notes to Condensed Consolidated
Financial Statements
5
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except for Per Share Data)
Three Months Ended
------------------
July 29, July 30,
1995 1994
(Unaudited)
REVENUES: $ 94,209 $105,500
-------- --------
COSTS AND EXPENSES:
Cost of sales 67,149 76,039
Selling, general and administrative 29,385 29,317
Gain on streamlining plan (2,000)
-------- --------
Total costs and expenses 94,534 105,356
-------- --------
(LOSS) INCOME BEFORE INTEREST EXPENSE AND
INCOME TAX BENEFIT (325) 144
INTEREST EXPENSE 2,801 4,790
-------- --------
LOSS BEFORE INCOME TAX BENEFIT (3,126) (4,646)
BENEFIT FOR INCOME TAXES (85) (1,714)
-------- --------
NET LOSS $ (3,041) $ (2,932)
======== ========
LOSS PER COMMON SHARE $ (0.15) $ (0.15)
======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,025 20,985
======== ========
See Notes to Condensed Consolidated
Financial Statements
6
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except for Per Share Data)
Six Months Ended
------------------
July 29, July 30,
1995 1994
(Unaudited)
REVENUES: $180,154 $173,583
-------- --------
COSTS AND EXPENSES:
Cost of sales 132,747 132,718
Selling, general and administrative 59,485 59,526
Gain on streamlining plan (2,000)
-------- --------
Total costs and expenses 190,232 192,244
-------- --------
LOSS BEFORE INTEREST EXPENSE AND
INCOME TAX BENEFIT (10,078) (18,661)
INTEREST EXPENSE 6,343 8,888
-------- --------
LOSS BEFORE INCOME TAX BENEFIT (16,421) (27,549)
BENEFIT FOR INCOME TAXES (72) (10,600)
-------- --------
NET LOSS $(16,349) $(16,949)
======== ========
LOSS PER COMMON SHARE $ (0.80) $ (0.83)
======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,024 20,972
======== ========
See Notes to Condensed Consolidated
Financial Statements
7
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended
------------------
July 29, July 30,
1995 1994
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(16,349) $(16,949)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 7,271 9,081
Provision for losses on accounts receivable 739 2,255
Gain on streamlining plan (2,000)
Gain on disposition of plant and equipment (353)
Other 449 1,190
Changes in assets and liabilities:
Accounts receivable (737) 30,107
Inventories (2,671) (1,477)
Accounts payable 951 (13,162)
Other assets and liabilities (9,692) (16,558)
-------- --------
Net cash used in operating activities (22,392) (5,513)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of plant and equipment (6,129) (10,191)
Proceeds from streamlining plan 3,801 4,300
Proceeds from disposition of plant and
equipment 571
Return of investment in joint venture 350
-------- --------
Net cash used in investing activities (1,407) (5,891)
-------- --------
8
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended
------------------
July 29, July 30,
1995 1994
(Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of Common Stock (exercise
of options $ 30 $ 600
(Repayments) borrowings under Credit
Agreement (32,000) 16,000
Costs in connection with amendment of credit
facility (597)
Dividends paid on Preferred Stock (424) (424)
Other 5
-------- -------
Net cash (used in) provided by financing
activities (32,394) 15,584
-------- -------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 17 10
-------- -------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (56,176) 4,190
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 85,406 9,513
-------- -------
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 29,230 $13,703
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid (received) during the period for:
Interest $ 6,091 $ 8,179
Income taxes, net of refunds received (5,147) 422
See Notes to Condensed Consolidated
Financial Statements
9
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary to present fairly the
financial position as of July 29, 1995, the results of operations for the three
month and six month periods ended July 29, 1995 and July 30, 1994 and cash flows
for the six month periods ended July 29, 1995 and July 30, 1994.
The results of operations for any interim period are not necessarily indicative
of the results to be expected for the full fiscal year.
These financial statements should be read in conjunction with the consolidated
financial statements of the Company contained in the Company's Form 10-K for the
year ended January 28, 1995 ("Fiscal 1995").
NOTE B - Inventories
Inventories consisted of the following:
July 29, January 28,
1995 1995
(In Thousands)
Raw materials $ 14,482 $ 9,934
Work in process 18,695 19,900
Finished goods 78,387 78,904
-------- --------
$111,564 $108,738
======== ========
NOTE C - Net Assets Held for Sale
During Fiscal 1995, the Company adopted a plan (the "streamlining plan")
designed to improve its competitive position and reduce its cost structure
through the sale, divestiture, consolidation or phase out of certain operations,
properties and products, and a workforce reduction. The streamlining plan
resulted in a net gain which was recorded in the third quarter of Fiscal 1995.
During the quarter ended July 29, 1995, an additional gain of $2,000,000 from
the streamlining plan was recorded as certain costs and expenses of implementing
the plan were less than originally anticipated. As of July 29, 1995, the
remaining net assets held for sale primarily relate to the Company's
Fayetteville facility, which was closed in conjunction with the sale of its game
and puzzle business.
10
Net assets held for sale consisted of the following:
July 29, January 28,
1995 1995
(In Thousands)
Current assets $ 1,089 $ 2,181
Property, plant and equipment, net 15,563 17,500
-------- --------
16,652 19,681
Less:
Current liabilities (2,000) (2,000)
-------- --------
Net assets held for sale $ 14,652 $ 17,681
======== ========
NOTE D - Loss Per Common Share
Loss per common share was computed as follows:
Three Months Ended Six Months Ended
-------------------- --------------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
(In Thousands except for per share data)
Net loss $ (3,041) $ (2,932) $(16,349) $(16,949)
Preferred dividend requirements (212) (212) (424) (424)
-------- -------- -------- --------
Loss applicable to common stock $ (3,253) $ (3,144) $(16,773) $(17,373)
======== ======== ======== ========
Weighted average common shares
outstanding 21,025 20,985 21,024 20,972
======== ======== ======== ========
Loss per common share $ (0.15) $ (0.15) $ (0.80) $ (0.83)
======== ======== ======== ========
NOTE E - Other Transactions
On September 6, 1995, the Company announced that it had reached an agreement in
principle for the acquisition of a significant interest in the Company by
Richard E. Snyder, the former Chairman and CEO of Simon & Schuster, and by
Warburg, Pincus Ventures, L.P. (the "Snyder/Warburg Pincus venture"). The
Snyder/Warburg Pincus venture would acquire the approximate 20% common stock
ownership interest of the Company's Chairman and Chief Executive Officer,
Richard A. Bernstein and/or from Trusts for his benefit. Through a series of
transactions, including the contribution of Mr. Bernstein's stock and the
funding of a new corporate owner of Penn Corporation, the Snyder/Warburg Pincus
venture would receive $120 million of newly-issued convertible preferred stock
of the Company and a $15 million promissory note. The preferred stock would be
convertible into approximately 33% of the Company's stock. Further, the
Company's Penn Corporation subsidiary would be sold to a new corporation which
will become a publicly traded company, with Mr. Bernstein as its Chairman and
Chief Executive Officer. Mr. Bernstein and the other shareholders of the
Company (excluding the
11
NOTE E - Other Transactions (continued)
Snyder/Warburg Pincus venture) would own shares of Penn Corporation in the same
proportion as their ownership in the Company. The agreement in principle is
subject to the execution of definitive legal agreements and to approval by the
Company's Board of Directors and stockholders.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Revenues for the quarter ended July 29, 1995 decreased $11.3 million (10.7%) to
$94.2 million as compared to $105.5 million for the quarter ended July 30, 1994
and increased $6.6 million (3.8%) to $180.2 million as compared to $173.6
million for the six months ended July 30, 1994. Consumer Products Segment
revenues decreased $12.4 million (13.3%) for the quarter and increased $1.2
million (.8%) for the six months ended July 29, 1995. The increase for the six
month period was primarily due to the Company's strategy to focus on its core
competencies which led to an overall increase in its core consumer products
categories. Specifically, the Company's picture and activity book categories
experienced solid sales increases, partially offset by lower sales of
interactive electronic storybooks as the declines in original formats which are
approaching maturity overshadowed the growth in new electronic storybook
formats. The sales decline for the quarter ended July 29, 1995 was primarily
attributable to a shift in the timing of sales between the first and second
quarters. Certain restocking orders and early fulfillment of sales promotion
programs, which had historically been received in the second quarter, occurred
in the first quarter of Fiscal 1996. Commercial Products Segment revenues which
are comprised of printing services, increased $1.1 million (8.8%) and $5.4
million (23.5%) for the quarter and six months ended July 29, 1995. The increase
for the quarter and six month periods was due to significant growth in the
Company's educational kit business and increased custom publishing sales.
Price decreases in the Consumer Products Segment were approximately 6%. A
significant portion of this decline resulted from pricing adjustments of the
Company's older electronic storybook formats to reflect the ongoing competitive
pressures in this category. Sales of printing services in the Commercial
Products Segment are the result of individual agreements entered into with
customers as to price and services performed. Accordingly, the effects on
inflation cannot be determined on the sales of printing services.
The loss before interest expense and income tax benefit for the quarter ended
July 29, 1995 was $.3 million as compared to income of $.1 million for the
quarter ended July 30, 1994. The $.5 million decrease was the result of a $2.4
million decrease in gross profit, a $.1 million decrease in selling, general and
administrative expenses and a $2.0 million gain on streamlining plan. The
additional gain from the streamlining plan resulted from costs and expenses of
implementing the plan being less than originally anticipated. For the six months
ended July 29, 1995, the loss before interest expense and income tax benefit was
$10.1 million as compared to $18.7 million for the six months ended July 30,
1994. The $8.6 million improvement was the result of a $6.6 million increase in
gross profit and a $2.0 million gain on streamlining plan.
Gross profit decreased $2.4 million (8.1%) to $27.1 million for the quarter
ended July 29, 1995 as compared to $29.5 million for the quarter ended July 30,
1994. Gross profit increased $6.5 million (16.0%) to $47.4 million for the six
months ended July 29, 1995 as compared to $40.9 million for the six months ended
July 30, 1994. As a percentage of revenues, the gross profit margin increased to
28.7% and 26.3% for the quarter and six months ended July 29, 1995 from 27.9%
and 23.5% for the quarter and six months ended July 30, 1994. In the Consumer
Products Segment, gross profit decreased $2.7 million (9.6%) to $25.3 million
for the quarter ended July 29, 1995 and increased $4.5 million (11.6%) to $43.3
million for the six months as compared to the prior year. As a percentage of
revenues, the Consumer Products Segment gross profit margin increased to 31.4%
and 28.5% for the quarter and six months of Fiscal 1996 as compared to 30.1% and
25.8% for the quarter and six months of Fiscal 1995.
13
The increase in gross profit margin resulted from a reduction in unfavorable
manufacturing variances due to incremental production in response to increased
demand for the Company's products, manufacturing efficiencies realized and
product specification changes, partially offset by increased raw material prices
for certain grades of paper and certain price decreases in the Consumer Products
Segment. Additionally, the increase in gross profit margin was attributable to a
favorable change in product mix, which caused a decrease in royalty costs. In
the Commercial Products Segment, the gross profit margin of printing services
increased to 13.1% and 14.4% for the quarter and six months of Fiscal 1996
compared to 11.9% and 9.1% for the quarter and six months of Fiscal 1995. The
increase was due to a favorable shift in product mix to higher margin products,
lower unfavorable manufacturing variances and effective sourcing of educational
kit components.
Selling, general and administrative expenses for the quarter and six months
ended July 29, 1995 remained consistent with the quarter and six months ended
July 30, 1994. This is primarily the result of lower personnel costs resulting
from organizational streamlining in Fiscal 1995 offset by general increases in
other administrative categories.
Interest expense for the quarter decreased $2.0 million to $2.8 million as
compared to $4.8 million in Fiscal 1996 and for the six months decreased $2.5
million to $6.3 million as compared to $8.9 million in Fiscal 1995. The decrease
was due to lower average debt outstanding as the Company repaid all outstanding
notes under its Revolving Credit Agreement in the first quarter of Fiscal 1996,
offset by higher interest rates in the first quarter of Fiscal 1996. Total
average outstanding debt decreased to $155.9 million for the Fiscal 1996 period
from $244.3 million for the Fiscal 1995 period (see Financial Condition,
Liquidity and Capital Resources), while average interest rates increased to 8.2%
for the Fiscal 1996 period as compared to 7.3% for the Fiscal 1995 period. The
increase in average interest rates resulted from the increase in short term
rates.
Presently, the Company does not anticipate any significant provision or benefit
for income taxes in Fiscal 1996; therefore, for the quarter and six months ended
July 29, 1995, there was no income tax benefit from operations as no tax benefit
was recognized on operating losses. Profitable operating results in subsequent
periods will benefit from an income tax rate which will be lower than the
statutory rate due to the reinstatement of deferred tax assets for which a
valuation allowance has been established. For the quarter and six months ended
July 30, 1994, the income tax benefit rate was 36.9% and 38.5%, respectively.
The loss for the quarter ended July 29, 1995 was $3.0 million or $.15 per share,
compared to a loss of $2.9 million or $.15 per share for the quarter ended July
30, 1994. The loss for the six months ended July 29, 1995 was $16.3 million or
$.80 per share, compared to a loss of $16.9 million or $.83 per share for the
six months ended July 30, 1994. The operations for the six months ended July 29,
1995 reflect the normal seasonality of the Company's business. As the Consumer
Products Segment ships product to its retailing customers in anticipation of the
holiday selling season, the Company experiences a greater portion of its total
revenues in the second half of the fiscal year.
Financial Condition, Liquidity and Capital Resources
Operations for the six months ended July 29, 1995, excluding the streamlining
plan gain, non-cash charges for depreciation, amortization and the provision for
losses on accounts receivable utilized cash of approximately $10.3 million. The
operations for the six month ended July 30, 1994 excluding non-cash charges for
depreciation, amortization and the provision for loses on accounts receivable
utilized cash of approximately $5.6 million. During the six months ended July
29, 1995 and July 30, 1994, other
14
changes in assets and liabilities, resulting from operating activities, used
cash of $12.1 million and provided cash of $.1 million, respectively, resulting
in net cash used in operating activities of $22.4 million and $5.5 million,
respectively. Acquisitions of property, plant and equipment were $6.1 million
during the six months ended July 29, 1995 as compared to $10.2 million during
the six months ended July 30, 1994. Capital expenditures for the six months
ended July 29, 1995 include costs associated with the Company's new order
processing, customer service and inventory management system, the acquisition of
a five unit web press, retail fixtures utilized in its category management
programs and the installation of emission control equipment in one of its
manufacturing facilities. During the second quarter of Fiscal 1996, the Company
commenced a facility expansion of its paper tableware and party goods operations
in Kalamazoo, Michigan. The construction of the building addition phase of the
expansion, which is expected to be completed in Fiscal 1997, is estimated to
cost $5.1 million.
During the six months ended July 29, 1995, the Company utilized cash for
financing activities by repaying $32.0 million of outstanding borrowings under
its Revolving Credit Agreement and the Agreement was terminated. Cash provided
by financing activities during the six months ended July 30, 1994 was primarily
from borrowings of $16.0 million under the Company's Revolving Credit Agreement.
Working capital decreased to $210.1 million from $228.2 million at January 28,
1995. This decrease results from the Company's investment in property, plant and
equipment and the funds required for its operations during the Fiscal 1996
period. While the Company does not anticipate any interruption in its business
because of the reduced availability of certain grades of paper, manufacturing
costs in Fiscal 1996 will be impacted by the resulting cost increases.
Following the repayment of all outstanding notes and the termination of its
Revolving Credit Agreement, the Company has been involved in negotiations to
arrange financing for its seasonal borrowing requirements, which are projected
to be significantly reduced from historical levels. In the opinion of
management, a financing arrangement will be consummated in the third quarter of
Fiscal 1996. However, if the Company is unable to complete an acceptable
financing arrangement, management has developed alternative plans which could
include the deferral of capital expenditures, the implementation of working
capital management programs, and/or the sale of assets, resulting in a reduction
in its peak seasonal needs. Accordingly, in the opinion of management, the
implementation of the alternative plans, if necessary, will not materially
impact planned operating levels.
15
PART II OTHER INFORMATION
ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K:
a. Exhibit 15 - Letter re: unaudited interim financial information.
b. No reports were filed on Form 8-K during the quarter for which this
report is filed.
16
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN PUBLISHING GROUP, INC.
September 12, 1995 /s/ Richard A. Bernstein
------------------------
Richard A. Bernstein
Chairman
September 12, 1995 /s/ Steven M. Grossman
----------------------
Steven M. Grossman
Chief Financial Officer
17
EXHIBIT 15
Western Publishing Group, Inc.
New York, New York
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited interim financial
information of Western Publishing Group, Inc. and subsidiaries for the periods
ended July 29, 1995 and July 30, 1994, as indicated in our report dated
September 12, 1995; because we did not perform an audit, we expressed no opinion
on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended July 29, 1995, is
incorporated by reference in the following Registration Statements:
Form S-8:
File No. 33-18430
File No. 33-18692
File No. 33-18693
File No. 33-28019
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
Milwaukee, Wisconsin
September 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Western
Publishing Group, Inc. and Subsidiaries Condensed Consolidated Financial
Statements as of and for the six months ended July 29, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> JUL-29-1995
<CASH> 29,230
<SECURITIES> 0
<RECEIVABLES> 91,349
<ALLOWANCES> 7,958
<INVENTORY> 111,564
<CURRENT-ASSETS> 267,396
<PP&E> 132,028
<DEPRECIATION> 53,276
<TOTAL-ASSETS> 370,989
<CURRENT-LIABILITIES> 57,328
<BONDS> 149,836
9,985
0
<COMMON> 212
<OTHER-SE> 124,618
<TOTAL-LIABILITY-AND-EQUITY> 370,989
<SALES> 177,165
<TOTAL-REVENUES> 180,154
<CGS> 132,747
<TOTAL-COSTS> 59,485
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 739
<INTEREST-EXPENSE> 6,343
<INCOME-PRETAX> (13,295)
<INCOME-TAX> 72
<INCOME-CONTINUING> (16,349)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,349
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0
<FN>
[INSERT TEXT OF FOOTNOTE B]
</TABLE>
