<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
_____________________________________
FOR THE QUARTER ENDED SEPTEMBER 30, 1995 COMMISSION FILE # 0-15303
UNICO, INC.
-----------
(Exact name of Registrant as specified in its Charter)
DELAWARE 73-1215433
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1101-B SOVEREIGN ROW, OKLAHOMA CITY, OK 73108
----------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (405) 848-9511
--------------
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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS: COMMON STOCK, $.01 PAR VALUE
------------------------------------
Number of SHARES OUTSTANDING as of November 13, 1995 7,883,095
---------
<PAGE>
UNICO, INC.
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART 1 - FINANCIAL INFORMATION
ITEM 1 CONSOLIDATED BALANCE SHEETS
September 30, 1995 and December 31, 1994 3 & 4
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended September 30, 1995
and the Quarter Ended September 30, 1994 5
For the Nine Months Ended September 30, 1995
and the Nine Months Ended September 30, 1994 6
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Nine Months Ended September 30, 1995
and the Nine Months Ended September 30, 1994 7
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
PART 11 - OTHER INFORMATION 15
SIGNATURE PAGE 16
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
UNICO, INC.
CONSOLIDATED BALANCE SHEETS 1 of 2
- --------------------------- ------
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
- ------
CURRENT:
Cash and Cash Equivalents $ 381,446 $ 708,742
Accounts Receivable:
Trade (net of allowance for uncollectible
accounts of $332,608 and $334,553) 1,515,503 1,789,437
Inventory 366,581 214,402
Notes Receivable 6,482 6,482
Notes Receivable - Stockholders 280,000 280,000
Prepaid Expenses 111,546 109,415
Deferred Tax Asset 19,134 19,134
----------- -----------
Total current assets 2,680,692 3,127,612
PROPERTY:
Furniture, fixtures and equipment 4,666,330 4,010,540
Leasehold improvements 185,093 136,144
Less accumulated depreciation (1,727,552) (1,377,225)
----------- -----------
Property, net 3,123,871 2,769,459
GOODWILL (net of amortization of
$305,763 and $272,754) 1,719,258 1,627,826
DEFERRED TAX ASSET 247,866 247,866
DEPOSITS AND OTHER 382,625 486,848
----------- -----------
TOTAL $ 8,154,312 $ 8,259,611
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
UNICO, INC.
CONSOLIDATED BALANCE SHEETS 2 of 2
- --------------------------- ------
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,511,122 $ 1,074,977
Accrued liabilities 298,756 277,021
Notes payable, current portion 351,190 301,252
Deferred revenue (8,324) 107,879
----------- -----------
Total current liabilities 2,152,744 1,761,129
LONG TERM LIABILITIES:
Notes Payable 1,353,834 1,153,556
Convertible debenture - Affiliate 1,250,000 1,250,000
Subordinated debenture 560,000 560,000
Other 300,000 253,563
----------- -----------
Total long term liabilities 3,463,834 3,217,119
----------- -----------
Total liabilities 5,616,578 4,978,248
REDEEMABLE PREFERRED STOCK:
Preferred stock - $.01 par value;
5,000,000 shares authorized;
Series A and B Redeemable Preferred stock -
280 shares issued and outstanding at
September 30, 1995 and 600 shares issued and
outstanding at December 31, 1994 3 6
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY:
Preferred stock - $.01 par value;
5,000,000 shares authorized;
Series A Convertible Preferred Stock -
1,000 shares issued and outstanding
December 31, 1994 10
Common stock - $.01 par value;
20,000,000 shares authorized;
8,054,118 shares outstanding at
September 30, 1995 and 7,477,544 shares
outstanding at December 31, 1994 80,541 74,773
Additional paid-in capital 5,264,401 5,070,024
Accumulated deficit (2,515,134) (1,571,373)
----------- -----------
2,829,811 3,573,440
Less treasury stock (171,023 shares at cost) (292,077) (292,077)
----------- -----------
Total stockholders' equity 2,537,734 3,281,363
----------- -----------
TOTAL $ 8,154,312 $ 8,259,611
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
UNICO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED SEPTEMBER 30, 1995 AND 1994
- --------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
------------- ----------
<S> <C> <C>
REVENUES:
Coupon and advertising sales,
net of discounts and allowances $ 2,108,155 $3,390,707
Franchise fees 36,430 160
Other 78,827 165,059
------------ ----------
TOTAL REVENUES 2,223,412 3,555,926
EXPENSES:
Production 1,909,151 2,548,899
General and administrative 815,930 719,819
Franchise development 92,948 92,464
Interest expense - affiliate 39,384 38,528
Interest expense - other 52,216 55,478
Restructuring cost 362,549 0
------------ ----------
TOTAL EXPENSES 3,272,178 3,455,188
------------ ----------
NET INCOME (LOSS) BEFORE INCOME TAXES (1,048,766) 100,738
DEFERRED INCOME TAX EXPENSE 5,499 0
------------ ----------
NET INCOME (LOSS) ($1,054,265) $ 100,738
============ ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,883,095 6,932,298
------------ ----------
NET INCOME (LOSS) PER COMMON SHARE ($.133) $.015
============ ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
.
5
<PAGE>
UNICO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
- -----------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
REVENUES:
Coupon and advertising sales,
net of discounts and allowances $8,494,710 $10,774,184
Franchise fees 65,455 57,143
Other 293,526 514,531
---------- -----------
TOTAL REVENUES 8,853,691 11,345,858
EXPENSES:
Production 6,351,681 7,591,620
General and administrative 2,506,846 2,735,254
Franchise development 292,708 234,956
Interest expense - affiliate 117,296 115,584
Interest expense - other 156,575 153,094
Restructuring cost 362,549 0
---------- -----------
TOTAL EXPENSES 9,787,655 10,830,508
---------- -----------
NET INCOME (LOSS) BEFORE INCOME TAXES (933,964) 515,350
DEFERRED INCOME TAX EXPENSE 12,834 0
---------- -----------
NET INCOME (LOSS) ($946,798) $ 515,350
========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,640,215 6,889,197
---------- -----------
NET INCOME (LOSS) PER COMMON SHARE ($.123) $.075
========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
UNICO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 946,798) $ 515,350
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 396,894 397,354
Provision for bad debts 34,172 37,498
Deferred income taxes
Other income effect of exchange of stock for debt (124,441)
Changes in operating assets and liabilities:
Accounts receivable 239,764 (387,044)
Prepaid expenses and inventory (154,312) (128,722)
Deposits and other 84,048 (29,047)
Accounts payable and accrued liabilities 504,317 168,160
Deferred revenue (116,203) (236,022)
----------- ---------
Net Cash Provided (Used) by Operating Activities (82,559) 337,477
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property (704,739) (304,115)
Cash received from stock options 200,132 107,900
Repayments from notes receivable 0 109,350
----------- ---------
Net Cash Provided (Used) In Investing Activities (504,607) (86,865)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debentures 0 25,000
Proceeds from notes payable 165,000 959,328
Payment of notes payable 85,216 (760,012)
Payment of funding costs 9,654 (87,075)
----------- ---------
Net Cash Provided (Used) In Financing Activities 259,870 137,241
----------- ---------
CHANGE IN CASH AND CASH EQUIVALENTS: (327,296) 387,853
Cash and Cash Equivalents - Beginning of Period 708,742 341,415
----------- ---------
Cash and Cash Equivalents - End of Period $ 381,446 $ 729,268
=========== =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes $ 0 $ 0
Cash paid for interest $ 273,871 $ 268,678
Exchange of receivables for stock $ 0 $ 148,695
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
UNICO, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994
1. BASIS OF PRESENTATION
---------------------
The interim consolidated financial statements at September 30, 1995 and for
the three and nine month periods ended September 30, 1995 and 1994 are
unaudited, but include all adjustments which the Company considers necessary
for a fair presentation. The December 31, 1994 balance sheet was derived from
the Company's audited financial statements.
The accompanying unaudited financial statements are for the interim periods
and do not include all disclosures normally provided in annual financial
statements, and should be read in conjunction with the Company's audited
financial statements. The accompanying unaudited interim financial statements
for the three and nine month periods ended September 30, 1995 are not
necessarily indicative of the results which can be expected for the entire
fiscal year.
2. COMMITMENTS & CONTINGENCIES
---------------------------
The Florida Department of Revenue has issued a Notice of Intent to levy
additional sales taxes with penalty and interest charges totaling
approximately $480,000 against the Company's subsidiary, Cal-Central Marketing
Corporation. The Company has filed a formal objection to the Intent to Levy
and intends to vigorously contest substantial aspects of the audit which
resulted in the levy. A liability for this matter was recorded by the
subsidiary in a prior period and is included in other long-term liabilities in
the financial statements at December 31, 1994 and September 30, 1995. While
the ultimate outcome cannot be predicted, management believes that the amount
accrued for this contingency is adequate and that resolution of this issue
will not have a material adverse effect on the Company's financial position or
results of operation.
3. INCOME TAXES
------------
Management has determined that it is not more likely than not that the Company
will be able to realize all the tax benefits from the available net operating
losses carryforward and has, therefore, provided a valuation allowance of
$878,364. Given the level of net income before taxes in 1994, and the
expectation of net income over the upcoming twelve months, the Company has
recognized a net deferred tax asset of $267,000 at December 31, 1994 and
$257,000 at September 30, 1995. A deferred income tax benefit of $267,000 was
recognized for 1994 and $53,363 was recognized for the six months ended June 30,
1995. Management will continue to evaluate the need to increase or decrease the
valuation allowance as operating results for 1995 develop further. The Company
recognized a $9,470 deferred income tax provision for the six months ended June
30, 1995.
8
<PAGE>
4. OTHER INCOME
------------
In February, 1994, the Company restructured a $130,000 Note Receivable and
approximately $120,000 in accounts receivable from The American Education
Corporation ("TAEC"), in connection with the recapitalization of TAEC. The terms
of the restructuring provided for a cash payment of $75,000, a one year note for
$50,000 with 7% annual interest, and 260,602 shares of TAEC Common Stock. The
new note was paid in March, 1994. In addition, the Company converted its TAEC
Preferred Stock into 1,371,420 shares of TAEC Common Stock.
On June 9, 1994, the Company sold its investment in TAEC Common Stock for
cash. Total proceeds of the sale were $501,520 and resulted in other income
of approximately $340,000.
5. EXCHANGE OF DEBT FOR STOCK
--------------------------
On February 22, 1995, the Company entered into an agreement with the holders of
the Company's Redeemable Preferred stock to exchange 320 shares of such stock
for 355,556 shares of Common stock. This transaction was completed with the
issuance of these restricted shares on April 20, 1995. The impact of this
transaction was a $320,000 reduction of required future cash redemption.
As a component of the consolidation of administrative functions and reduction of
debt at the Company's subsidiary, Cal-Central Marketing Corporation, the Company
entered into agreements on February 22, 1995 with two vendors of the Company to
exchange 92,963 shares of Common stock for $83,667 of accounts payable in lieu
of cash payment. Additional agreements were reached on the same date with two
note holders of Cal-Central Marketing Corporation, to exchange $115,250 of notes
payable, in lieu of payment, for 128,055 shares of Common stock of the Company.
These transactions were completed with the issuance of the restricted shares on
April 20, 1995.
Due to a prevailing market price that was lower than the agreed upon exchange
price of Common stock for these liabilities, the Company recognized gross
benefit of approximately $120,000, offset by expenses or accrued expenses of
approximately $80,000, which resulted in other revenue of approximately $37,000.
Accounting for these events is reflected in the accompanying financial
statements.
Subsequent to December 31, 1994, the conversion rights to the Company's
outstanding Convertible Preferred stock expired and the stock was canceled.
6. SUBSIDIARY RESTRUCTURING
------------------------
The Company acquired Cal-Central Marketing Corporation as a wholly owned
subsidiary on October 27, 1993. Operating profitability and cash flow for the
subsidiary have been below management's expectations and potential since the
acquisition. A significant liquidity shortfall occurred for this subsidiary
during the quarter ended September 30, 1995, prompting management of UNICO to
assume control over all administrative functions of the subsidiary. In this
process, it was determined to be in the best interests of shareholders and the
Company to close the Fort
9
<PAGE>
Lauderdale, Florida production facility and consolidate art and printing
functions for Cal-Central into the Company's newly expanded facility in
Springfield, Virginia. A restructuring charge comprised of estimated costs
related to this closing was recorded during the quarter ended September 30,
1995. This non-recurring expense was comprised of the following:
<TABLE>
<CAPTION>
<S> <C>
Leasehold Improvement Forfeiture $19,426.
Liquidation Discount on Furniture and 28,013.
Fixtures
Deposits Forfeiture 34,110.
Employee Severance 15,000.
Distributor Cancellations 30,000.
Legal, Accounting, Moving, and
Facilities Lease Cancellation 36,000.
</TABLE>
In addition, the reserve for doubtful accounts was increased by $200,000 to
reflect the impact of interruptions in advertising product development and
distribution related to the liquidity shortfall and movement of production
functions.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's principal measures of liquidity are cash, certificates of
deposit, accounts receivable and salable inventory. Also, management deems
appropriately managed and collateralized bank lines of credit as a proper
supplement to its liquidity.
The Company's working capital was $527,948 at September 30, 1995, a 61%
decrease from December 31, 1994. This change reflects: a decrease in Cash and
Equivalents of $327,296 resulting primarily from operating losses, payment of
debt and additions to plant and equipment; a net decrease of $273,934 in trade
Accounts Receivable, related to impairment of collectibility of accounts
receivable at Cal-Central Marketing Corporation ("Cal-Central"); an increase of
$152,179 in paper Inventory at United Coupon Corporation ("United Coupon") in
preparation for upcoming peak periods; and an increase of $2,131 in Prepaid
Expenses related to payment of various annual charges and expenses. These
changes were impacted by an increase of $436,145 in Accounts Payable, primarily
due to seasonal factors at United Coupon, and a $21,735 increase in Accrued
Liabilities related to accrual of non-recurring restructuring costs at Cal-
Central. Working capital was aided by a $116,203 reduction in Deferred Revenue
related to timing of work completion and billing at the end of the quarter as
compared to the end of the year. Also, current Notes Payable increased by
$49,938. Certain liabilities have maturity dates of less than twelve months.
The Company has an established history of renewal for these items. Management
has the intent and believes the Company has the ability to renew these items,
thus, they have been appropriately classified as long term.
Long term liabilities increased by $246,715 during the period as a result of
financing for equipment additions.
During the quarter ended September 30, 1995, the Company's subsidiary Cal-
Central developed a serious liquidity shortfall as a result of an unexpected,
rapid decline in the subsidiary's core cooperative advertising business. The
decline, which was precipitated by a temporary interruption of service by two
key advertising distributors, limited Cal-Central's ability to meet current
operating and debt-service obligations. As a result, UNICO management initiated
a restructuring program for Cal-Central which immediately reduced operating
expenditures, through the elimination of non-critical personnel, marginal sales
centers, and unprofitable sales and manufacturing functions. In addition,
management arranged a deferral of unsecured debenture interest payments which
were due in October, 1995. Also, interim financing was arranged with the
Company's major debenture holders to provide supplemental working capital for
financing the restructuring plan. Management is optimistic that the plan for
Cal-Central will be successful and that the interim financing will be sufficient
to allow time for an appropriate reduction of debt within limits that are
comfortably supportable by total Company operations. Such actions could require
securities, debt, or cash beyond that currently available within the Company.
Management will consider appropriate options available in providing such
funding.
11
<PAGE>
RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30, 1995
AS COMPARED TO THE QUARTER ENDED SEPTEMBER 30, 1994
- ---------------------------------------------------
Gross Revenue for the quarter ended September 30, 1995 declined 37% from the
same period in 1994, from $3,555,926 to $2,223,412. Coupon and Advertising
Sales, which include coupon production service fees, national account
advertising fees, advertising sales and commercial printing, and which represent
95% of total revenue for 1995, decreased by 38% from the corresponding period in
1994. Coupon Sales from United Coupon Corporation increased approximately 3%
over the prior year, at $1,636,029 compared to $1,591,342 for the same period in
1994. National Account sales and Commercial Printing revenue increased
approximately $32,000 during the current period, while Advertising Sales at Cal-
Central declined by $1,318,218. The increase in National Account sales is
related to heavier emphasis on this revenue source within United Coupon. The
increase in Commercial Printing is a result of the establishment of this
specialty printing division within United Coupon during the latter portion of
1994. The Cal-Central decline was caused by an interruption of advertising
product distribution by two key distributors and a temporary liquidity shortfall
within Cal-Central which reduced short term sales opportunities.
Franchise Fee Income for the period improved substantially from the prior
year, with $36,430 reported for the 1995 quarter compared to $160 for the same
period in 1994. Franchise sales continue to receive intensive effort and
management attention.
Other Revenue for the current period was $78,827 compared to $165,059 in 1994.
The decline is directly related to non-recurring revenue received during the
1994 period related the sale of publishing assets.
Production Expenses, which include art development, printing, bindery,
delivery, product development, distributor support and selling expense,
decreased by $639,748 during the third quarter of 1995 in contrast to the same
period in 1994. This decrease is related to the decline in Advertising Sales
and related production activities at Cal-Central, partially offset by higher
levels of Commercial Printing at United Coupon.
General and Administrative Expense decreased by 13% over the same period last
year primarily as a result of cost containment and consolidation of
administrative functions at Cal-Central, partially offset by increased costs
related to expanded production facilities at United Coupon.
Franchise Development Cost, which includes the cost of developing,
advertising, selling, training and supporting United Coupon franchises, was
approximately equal to the prior year.
Interest Expense - Other decreased 6% over the same period last year as a
result of lower prevailing interest rates applied against slightly higher levels
of debt subject to interest.
During the quarter ended September 30, 1995, the Company's subsidiary, Cal-
Central, experienced a significant cash flow shortfall as a result of the
temporary interruption of product distribution by two key distributors. This
shortfall received reaction from UNICO management through the initiation of a
12
<PAGE>
restructuring plan to reduce Cal-Central administrative overhead and operating
expenses and to implement more efficient and effective approaches to sales
administration and product manufacturing. During the initial phases of
restructuring, Cal-Central was unable to meet all product art and printing
requirements resulting in the deferral of $366,545 of product sales revenue from
the third quarter into future periods.
In addition, the interruption of distribution of Cal-Central products caused a
delay in Cal-Central's ability to meet the distribution commitment of
advertising sales contracts. In management's opinion, this delay caused an
impairment of approximately $200,000 in the collectibility of trade accounts
receivable related to these contracts. This impairment has been reflected as a
non-recurring expense during the period.
As a component of the restructuring plan for Cal-Central, the Fort Lauderdale,
Florida art and printing facility will be closed and related functions will be
transferred to the Company's newly-expanded facility in Springfield, Virginia.
A non-recurring restructuring charge of $162,549 was recorded during the quarter
ended September 30, 1995, to reflect the costs of closing the Fort Lauderdale
plant and transferring art and printing functions and equipment to the
Springfield facility. These closing and transferring actions are expected to be
completed in December, 1995.
Net Loss for the current period was $1,054,265 compared to net income of
$100,738 for the prior year. This significant decline is directly related to
the restructuring of Cal-Central, including the interruption of art and printing
functions which delayed the realization of revenue from advertising sales, as
well as the net effect of revenue variations and cost reductions noted above.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995
AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1994
- -------------------------------------------------------
Gross Revenue for the nine months ended September 30, 1995, declined 22% from
the same period in 1994, from $11,345,858 to $8,853,691. Coupon and Advertising
Sales, which represent 96% of total revenue for 1995, decreased by 21%, from the
corresponding period in 1994. Coupon Sales from United Coupon Corporation were
$5,179,611 compared to $4,485,475 for the same period in 1994. United Coupon's
coupon sales increase was offset by a decline in revenues at Cal-Central from
approximately $6,100,000 in 1994 to $3,358,610 in 1995. This lower sales level
at Cal-Central was caused by a temporary interruption of product distribution by
two key distributors and a resultant working capital shortfall. The increase in
Coupon and Advertising Sales at United Coupon was caused by increases in both
National Account Advertising Sales and Commercial Printing.
Franchise Fee Income for the 1995 period was $65,455 compared to $57,143
reported for the same period in 1994. Franchise sales efforts are continuing on
an intensified basis.
Other revenue declined by $221,005 during the first nine months of 1995
compared to the prior year primarily as a result of $190,000 in non-recurring
revenue recognized during the 1994 period related to the disposition of the
Company's prior publishing assets and investment. Included in 1995 results is
approximately $37,000 in other income related to the exchange of common stock
for payment of
13
<PAGE>
liabilities at an exchange price per share that was greater than
the prevailing market price for common stock.
Production Expenses, which include art development, printing, bindery,
delivery, product development, distributor support and selling expense,
decreased 16% during the 1995 period in contrast to the same period in 1994.
This $1,239,939 decrease is caused by the decline in Coupon and Advertising
Sales.
General and Administrative Expense decreased 8% over the same period last year
primarily as a result of cost containment and consolidation of administrative
functions at Cal-Central, partially offset by costs related to plant expansion
at United Coupon.
Franchise Development Costs, which include the costs of developing,
advertising, selling, training and supporting United Coupon franchises,
increased approximately 25% during the 1995 period, from $234,956 in 1994 to
$292,708 in 1995. This increase reflects expanded advertising for new franchise
sales as well as addition of franchise sales staff and management.
Interest Expense was approximately equal to the prior year.
Non-recurring Restructuring Cost of $362,549 was recorded during the nine
month period of 1995 to reflect the costs associated with restructuring Cal-
Central, closing the Fort Lauderdale plant, transferring art and production
functions to the Springfield facility, and impairment of accounts receivable
related to temporary interruption of distribution for Cal-Central.
Net Loss for the nine month period was $946,798 compared to net income of
$575,350 for the prior year. This decline in net income is the net effect of
the revenue variations and cost reductions noted above coupled with non-
recurring costs incurred during 1995 related to the restructuring of Cal-Central
and non-recurring revenue recognized during the 1994 period related to sale of
the Company's former publishing assets.
14
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
Omitted from this report as inapplicable.
Item 2. Changes in Securities
---------------------
Omitted from this report as inapplicable.
Item 3. Default Upon Senior Securities
------------------------------
Omitted from this report as inapplicable.
Item 4. Submission of Matters to Vote of Securities Holders
---------------------------------------------------
Omitted from this report as inapplicable.
Item 5. Other Information
-----------------
Omitted from this report as inapplicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A. Exhibits
Omitted from this report as inapplicable
B. Reports on Form 8-K
There were no reports on Form 8-K filed or
required to be filed for the quarter ended
September 30, 1995.
15
<PAGE>
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.
UNICO, INC.
November 14, 1995 By: /s/ W. Douglas Frans
---------------------------------
W. Douglas Frans
Chief Executive Officer
and President
By: /s/ Ted W. Strickland
---------------------------------
Ted W. Strickland
Chief Financial Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1995
<PERIOD-END> SEP-30-1995 JUN-30-1995
<CASH> 381,446 708,742
<SECURITIES> 0 0
<RECEIVABLES> 1,515,503 1,789,437
<ALLOWANCES> 332,608 (334,553)
<INVENTORY> 366,581 214,402
<CURRENT-ASSETS> 2,680,692 3,127,612
<PP&E> 3,123,871 2,769,459
<DEPRECIATION> 1,727,552 (1,377,225)
<TOTAL-ASSETS> 8,154,312 8,259,611
<CURRENT-LIABILITIES> 2,152,744 1,761,129
<BONDS> 0 0
<COMMON> 80,541 74,773
3 6
0 10
<OTHER-SE> 2,457,190 3,206,574
<TOTAL-LIABILITY-AND-EQUITY> 8,154,312 8,259,611
<SALES> 8,853,691 13,564,975
<TOTAL-REVENUES> 8,853,691 14,579,163
<CGS> 6,351,681 9,215,427
<TOTAL-COSTS> 9,787,655 14,219,182
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 273,871 324,887
<INCOME-PRETAX> (933,964) 359,981
<INCOME-TAX> 12,834 (267,000)
<INCOME-CONTINUING> (946,798) 626,981
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (946,798) 626,981
<EPS-PRIMARY> (.123) .09
<EPS-DILUTED> (.123) .09
</TABLE>
