FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: July 31, 1995 Commission File # 000-17468
GREENSTONE ROBERTS ADVERTISING, INC.
One Huntington Quadrangle
Melville, New York 11747
Tel. (516) 249-2121
NEW YORK 11-2250305
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
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 Act of 1934 during the preceding 12 months (or for
such shorter periods 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
Registrant's classes of Common Stock, as of the latest
practicable date:
Common Stock, $.01 par value: 9,536,318 shares
as of August 31, 1995
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PART I- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of July 31, 1995
and October 31, 1994
Consolidated Statements of Operations for the three and
nine month periods ended July 31, 1995 and 1994
Consolidated Statements of Shareholders' Equity
for the nine month period ended July 31, 1995
Consolidated Statements of Cash Flows for the nine
month period ended July 31, 1995 and 1994
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS: July 31, October 31,
1995 1994
<S> <C> <C>
Cash and cash equivalents $951,872 $1,006,294
Short term investments held to maturity 1,080,293 2,246,862
Accounts receivable (net allowance for bad debts
of $353,824 and $327,865, respectively) 6,751,884 7,174,243
Billable production orders in process, at cost 516,552 682,876
Income tax receivable 176,512 -
Other current assets 65,668 112,021
Total current assets 9.542,781 11,222,296
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
at cost, less accumulated depreciation and amortization
of $1,784,280 and $1,495,518, respectively 863,490 1,000,735
NOTE RECEIVABLE 150,000 150,000
DEFERRED TAX BENEFIT 126,732 126,732
OTHER ASSETS 426,780 474,634
TOTAL ASSETS $11,109,783 $12,974,397
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $5,494,581 $7,150,902
Accrued liabilities 332,659 279,529
Total current liabilities 5,827,240 7,430,431
LONG-TERM DEBT 250,000 250,000
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 1,000,000 shares
authorized, no shares issued or outstanding - -
Common stock, $.01 par value, 30,000,000 shares
authorized, 10,600,000 shares issued 106,000 106,000
Additional paid-in capital 3,600,692 3,600,692
Retained earnings 1,772,598 2,034,021
Less: Treasury stock, 1,063,682 shares held at cost (446,747) (446,747)
Total shareholders' equity 5,032,543 5,293,966
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $11,109,783 $12,974,397
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
For the three months ended July 31 For the nine months ended July 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
REVENUES FROM
COMMISSIONS & FEES $2,155,068 $2,579,303 $6,977,421 $8,054,760
EXPENSES:
Salaries and related costs 1,708,835 1,734,946 5,145,926 5,440,622
Other operating expenses 755,893 869,853 2,308,245 2,483,146
Interest income, net (36,839) (30,049) (121,360) ( 71,655)
2,427,889 2,574,750 7,332,811 7,852,113
(LOSS)/INCOME BEFORE (BENEFIT)/
PROVISION FOR INCOME TAXES (272,821) 4,553 (355,390) 202,647
(Benefit)/Provision for
income taxes (77,453) 1,821 (93,967) 81,059
NET (LOSS)/INCOME $(195,368) $2,732 $ (261,423) $ 121,588
NET (LOSS)/INCOME PER COMMON
SHARE $(0.02) $ 0.00 $ (0.03) $ 0.01
Weighted average number of
common shares 9,536,318 9,536,318 9,536,318 9,536,318
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
<PAGE>
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JULY 31, 1995
Common Stock Additional Treasury Stock
Number of Paid-in Retained Number of
Shares Amount Capital Earnings Shares Amount Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1994 10,600,000 $106,000 $3,600,692 $2,034,021 1,063,682 $(446,747) $5,293,966
Net (Loss)/Income - - - (261,423) - - (261,423)
Balance, July 31, 1995 10,600,000 $106,000 $3,600,692 $1,772,598 1,063,682 $(446,747) $5,032,543
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended July 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income $(261,423) $ 121,588
Adjustments to reconcile net (loss)/income to net cash
(used in)/provided by operating activities:
Depreciation and amortization 343,582 325,901
Provision for doubtful accounts 46,395 54,911
Increases/(decreases) in cash resulting from changes in
operating assets and liabilities:
Change in accounts receivable 375,964 2,162,891
Change in billable production orders in process, at cost 166,324 (62,782)
Change in other current assets 46,353 (34,171)
Change in other assets - 545
Change in accounts payable (1,656,321) 958,541
Change in accrued liabilities 53,130 (139,628)
Change in income taxes receivable (176,512) 78,302
Net cash (used in)/provided by operating activities (1,062,508) (859,604)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (158,483) (194,880)
Maturity/(Purchase) of short-term investments
held to maturity 1,166,569 (1,586,676)
Net cash (used in) investing activities 1,008,086 (1,781,556)
NET (DECREASE) IN CASH AND CASH
EQUIVALENTS (54,422) (2,641,160)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 1,006,294 4,440,589
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $951,872 $1,799,429
</TABLE>
The accompanying notes are an integral part of these
consolidated statements
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated interim financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. It is therefore suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included
in the Company's Annual Report on Form 10-K/A Amendment #1
for the fiscal year ended October 31, 1994.
2. These statements reflect all adjustments consisting of
normal recurring accruals which, in the opinion of management,
are necessary for a fair presentation of the Company's financial
position and results of operations and cash flows for the
three and nine month periods ended July 31, 1995 and 1994.
3. Results of operations for interim periods are not
necessarily indicative of annual earnings.
4. The consolidated financial statements include the accounts
of the Company and its subsidiary. All intercompany balances and
transactions have been eliminated.
5. Net income per common share for the three and nine month
periods have been computed based upon the weighted average number
of shares of common stock and common stock equivalents
outstanding, 9,536,318 for the three and nine
month periods ended July 31, 1995, and 1994.
6. Billable production orders in process are net of advance
billings to clients, which were $582,750 at July 31, 1995, and
$122,095 at October 31, 1994.
7. During the first quarter of fiscal 1995, the Company
adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS No. 115"). SFAS No. 115 establishes the
accounting and reporting for investments in equity securities
that have readily determinable fair values and for all
investments in debt securities. The effect of the
accounting change was not material and the consolidated financial
statements for prior years have not been restated.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of operations for the Third Quarter ended July 31, 1995
as compared to the Third Quarter ended July 31, 1994.
Consolidated commission and fee revenue decreased $424,235 or 16%
from $2,579,303 for the quarter ended July 31, 1994 to $2,155,068
for the quarter ended July 31, 1995. The revenue decrease is
attributable to, 1) the loss of clients which approximated 15%,
2) the net decrease in activity from existing clients which
approximated 8%, this was partially offset by activity from new
clients which approximated 7%.
Salaries and related costs decreased 2%, from $1,734,946 for the
quarter ended July 31, 1994 to $1,708,835 for the quarter ended
July 31, 1995. The decrease is the result of a reduction in
staffing in response to the decreased activity, partially offset
by additional staff to support new accounts, and normal salary
increases. Salaries and related costs as a percent of revenues
increased from 67% for the quarter ended July 31, 1994
to 79% for the quarter ended July 31, 1995, mainly as a result of
the decreased revenues for the quarter.
Other operating expenses decreased 13% as management continues
its efforts to control costs in various operating areas.
Interest income, net, increased $6,790 as a result of higher
average interest yields on investments made in U.S.
Treasury Securities and Treasury Money Market Mutual Funds.
Income/(loss) before provision/(benefit) for income taxes
decreased $277,374 from an income of $4,553 for
the quarter ended July 31, 1994 to a loss of $272,821 for the
quarter ended July 31, 1995. The decrease is
the result of the decrease in revenues, partially offset by
management efforts to reduce and control costs as
discussed above.
Results of operations for the nine months ended July 31, 1995 as
compared to the nine months ended July 31, 1994.
Consolidated commission and fee revenue decreased $1,077,339 or
13% from $8,054,760 for the nine months ended July 31, 1994 to
$6,977,421 for the nine months ended July 31, 1995.
The revenue decrease is attributable to the loss of Royal
Caribbean Cruise Lines and other clients
which approximated 25%, partially
offset by the net increase in activity from existing clients
which approximated 5% and activity from new clients
which approximated 7%.
Salaries and related costs decreased 5% from $5,440,622 for the
nine months ended July 31, 1994 to $5,145,926 for the nine months
ended July 31, 1995. The decrease is the result of a reduction
in staffing in response to the decreased activity during the
year, partially offset by additional staff to support new
accounts, and normal salary increases. Salaries and related
costs as a percent of revenues increased from 68% for the
nine months ended July 31, 1994 to 74% for the nine months ended
July 31, 1995, mainly as a result of the
decreased revenues partially offset by decreased staffing for the
nine months.
Other operating expenses decreased 7%, mainly as a result of
management's continuing efforts to control costs
in various operating areas.
Interest income, net, increased $49,705 as a result of higher
average yields on investments in U.S. Treasury
Securities and Treasury Money Market Mutual Funds.
Income/(loss) before provision/(benefit) for income taxes
decreased $558,037 from an income of $202,647 for
the nine months ended July 31, 1994, to a loss of $355,390 for
the nine months ended July 31, 1995. The decrease is the result
of the decrease in revenue partially offset by
management's efforts to reduce and control costs.
Liquidity and Capital Resources
The Company's working capital decreased by $76,324 to $3,715,541
at July 31, 1995 as compared to $3,791,865 at October 31, 1994.
Cash and cash equivalents decreased $54,422 from $1,006,294 at
October 31, 1994 to $951,872 at July 31, 1995. The cash and cash
equivalents balance decrease was the result of the timing of
receipts on accounts receivable, payments on accounts payable,
purchases of capital assets and the maturity of short term
investments in U.S. Treasury Bills.
It should be noted that the Registrant recognizes commissions as
a percentage of expenditures incurred for clients. Therefore,
the accounts receivable balance does not relate only to
the commissions and fees shown on the income statement, but also
represents receivables for the total of the production costs and
media purchased for clients. Similarly, the accounts payable
balance includes payables for production costs and media incurred
on behalf of clients.
The Registrant has available an unused committed line of credit
from a bank of $5,000,000 at July 31, 1995. Management believes
that its current working capital levels will be sufficient to
meet the Registrant's liquidity and working capital requirements
for the foreseeable future. The Registrant does not
anticipate any material increases of capital expenditures or
other requirements which will adversely affect its
liquidity.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
PART II- OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K:
Exhibit 27: Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Melville, State of New York on
September 14, 1995.
Greenstone Roberts Advertising, Inc.
By:/s/ Gary C. Roberts
Gary C. Roberts
President & COO
By: /s/Gregory A. Rice
Gregory A. Rice
Senior Vice President & CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the consolidated balance sheet and statement of operations
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 951,872
<SECURITIES> 1,080,293
<RECEIVABLES> 7,105,708
<ALLOWANCES> (353,824)
<INVENTORY> 0
<CURRENT-ASSETS> 9,542,781
<PP&E> 2,647,770
<DEPRECIATION> (1,784,280)
<TOTAL-ASSETS> 11,109,783
<CURRENT-LIABILITIES> 5,827,240
<BONDS> 250,000
<COMMON> 106,000
0
0
<OTHER-SE> 4,926,543
<TOTAL-LIABILITY-AND-EQUITY> 11,109,783
<SALES> 0
<TOTAL-REVENUES> 6,977,421
<CGS> 0
<TOTAL-COSTS> 5,145,926
<OTHER-EXPENSES> 2,261,850
<LOSS-PROVISION> 46,395
<INTEREST-EXPENSE> (121,360)
<INCOME-PRETAX> (355,390)
<INCOME-TAX> (93,967)
<INCOME-CONTINUING> (261,423)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (261,423)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
