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: April 30, 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 May 31, 1995
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Number
PART I- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of April 30, 1995 and
October 31, 1994 3
Consolidated Statements of Operations for the three and six
month periods ended April 30, 1995 and 1994 4
Consolidated Statements of Shareholders' Equity
for the six month period ended April 30, 1995 5
Consolidated Statements of Cash Flows for the six
month period ended April 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS April 30, October 31,
1995 1994
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $695,009 $1,006,294
Short term investments held to maturity 1,110,078 2,246,862
Accounts receivable (net of allowance for bad debts
$363,694 and $327,865, respectively) 8,580,760 7,174,243
Billable production orders in process, at cost 365,828 682,876
Income tax receivable 99,058 -
Other current assets 79,568 112,021
Total current assets 10,930,301 11,222,296
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
at cost, less accumulated depreciation and amortization
of $1,691,648 and $1,495,518, respectively 901,766 1,000,735
NOTE RECEIVABLE 150,000 150,000
DEFERRED TAX BENEFIT 126,732 126,732
OTHER ASSETS 442,731 474,634
TOTAL ASSETS $12,551,530 $12,974,397
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $6,810,782 $7,150,902
Accrued liabilities 262,837 279,529
Total current liabilities 7,073,619 7,430,431
250,000
LONG-TERM DEBT 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 106,000
authorized, 10,600,000 shares issued 106,000 3,600,692
Additional paid-in capital 3,600,692 2,034,021
Retained earnings 1,967,966 (446,747)
Less: Treasury stock, 1,063,682 shares held at cost (446,747) 5,293,966
Total shareholders' equity 5,227,911
$12,974,397
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,551,530
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended April 30 For the six months ended April 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
REVENUES FROM
COMMISSIONS & FEES $2,510,244 $2,822,047 $4,822,353 $5,475,457
EXPENSES:
Salaries and related costs 1,733,939 1,872,949 3,437,091 3,705,676
Other operating expenses 787,115 792,805 1,552,352 1,613,293
Interest income, net (35,952) (18,084) (84,521) (41,606)
2,485,102 2,647,670 4,904,922 5,277,363
INCOME/(LOSS) BEFORE PROVISION/
(BENEFIT) FOR INCOME TAXES 25,142 174,377 (82,569) 198,094
Provision/(Benefit) for
income taxes 6,570 69,751 (16,514) 79,238
NET INCOME/(LOSS) $ 18,572 $ 104,626 $ (66,055) $ 118,856
NET INCOME/(LOSS) PER COMMON
SHARE $ 0.00 $ 0.01 $ (0.01) $ 0.01
Weighted average number of
common shares 9,536,318 9,536,318 9,536,318 9,536,318
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED APRIL 30, 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 - - - (66,055) - - (66,055)
Balance, April 30, 1995 10,600,000 $106,000 $3,600,692 $1,967,966 1,063.682 $(446,747) $5,227,911
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended April 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income $(66,055) $118,856
Adjustments to reconcile net (loss)/income to net cash
(used in)/provided by operating activities:
Depreciation and amortization 227,139 217,440
Provision for doubtful accounts 35,829 37,015
Increases/(decreases) in cash resulting from changes in
operating assets and liabilities:
Change in accounts receivable (1,442,346) (3,406,861)
Change in billable production orders in process, at cost 317,048 481,501
Change in other current assets 32,453 58,910
Change in other assets - 1,217
Change in accounts payable (340,120) 1,038,090
Change in accrued liabilities (16,692) (109,133)
Change in income taxes receivable (99,058) 76,481
Net cash (used in)/provided by operating activities (1,351,802) (1,486,484)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (96,267) (155,906)
Net cash (used in) investing activities (96,267) (155,906)
CASH FLOWS FROM FINANCING ACTIVITIES:
Maturity/(Purchase) of short-term
investments held to maturity 1,136,784 -
Net cash provided by financing activities 1,136,784 -
NET (DECREASE) IN CASH AND CASH
EQUIVALENTS (311,285) (1,642,390)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 1,006,294 4,440,589
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $695,009 $2,798,199
The accompanying notes are an integral part of these consolidated statements
</TABLE>
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 six month periods ended April 30, 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 six 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 six month periods ended
April 30, 1995, and 1994.
6. Billable production orders in process are net of advance
billings to clients, which were $541,528 at April 30, 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.
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of operations for the Second Quarter ended April 30,
1995
as compared to the Second Quarter ended April 30, 1994.
Consolidated commission and fee revenue decreased $311,803 or
11%
from $2,822,047 for the quarter ended
April 30, 1994 to $2,510,244 for the quarter ended April 30,
1995. The revenue decrease is attributable to the
loss of Royal Caribbean Cruises Ltd., and other clients, as well
as the decrease in activity from existing clients
which approximated 25%. This was partially offset by increased
activity from new and existing clients which approximated 14%.
Salaries and related costs decreased 7%, from $1,872,949 for the
quarter ended April 30, 1994 to $1,733,939 for the quarter ended
April 30, 1995. The decrease is the result of a reduction in
staffing in response to the decreased activity last year with
the
Company's largest client, partially offset by additional staff
to
support new accounts, and normal salary increases. Salaries and
related costs as a percent of revenues increased from 66%
for the quarter ended April 30, 1994 to 69% for the quarter
ended
April 30, 1995, mainly as a result of the decreased revenues for
the quarter.
Other operating expenses decreased 1% as management continues
its
efforts to control costs in various operating areas.
Interest income, net, increased $17,868 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 $149,235 from an income of $174,377 for
the quarter ended April 30, 1994 to an income of $25,142 for the
quarter ended April 30, 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 six months ended April 30, 1995 as
compared to the six months ended April 30, 1994.
Consolidated commission and fee revenue decreased $653,104 or
12%
from $5,475,457 for the six months ended April 30, 1994 to
$4,822,353 for the six months ended April 30, 1995. The revenue
decrease is attributable to the loss of Royal Caribbean Cruises
Ltd., and other clients, as well as the decrease in activity
from
existing clients which approximated 31%. This was partially
offset by increased activity from new and existing clients
which approximated 19%.
Salaries and related costs decreased 7% from $3,705,676 for the
six months ended April 30, 1994 to $3,437,091
for the six months ended April 30, 1995. The decrease is the
result of a reduction in staffing in response to the
decreased activity during the year with the Company's largest
client, 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 six months ended April 30, 1994 to 71% at April 30,
1995 mainly as a result of the decreased
revenues partially offset by decreased staffing for the six
months.
Other operating expenses decreased 4%, mainly as a result of
management's continuing efforts to control costs in various
operating areas.
Interest income, net, increased $42,915 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 $280,663 from an income of $198,094 for
the six months ended April 30, 1994, to a loss of $82,569 for
the
six months ended April 30, 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 improved by $64,817 to $3,856,682
at April 30, 1995 as compared to $3,791,865 at October 31, 1994.
Cash and cash equivalents decreased $311,285 from $1,006,294 at
October 31, 1994 to $695,009 at April 30, 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 April 30, 1995.
Management believes that its current working capital levels and
funds provided by profitable operations 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.
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
PART II- OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security-Holders:
On April 12, 1995 the Registrant held its annual meeting
and
recorded the voting results of its shareholders for Directors
and
independent auditors. The following table details these
results:
<TABLE>
<CAPTION>
Appointment of Directors Votes For Votes Against Abstentions
<S> <C> <C> <C>
Director #1 8,087,905 79,735 -
Director #2 8,102,705 64,935 -
Director #3 8,065,605 102,035 -
Appointment of Independent Auditors:
Votes For Votes Against Abstentions
8,074,302 39,603 53,735
</TABLE>
Item 5 - Other Information:
None.
Item 6 - Exhibits and Reports on Form 8-K:
None.
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 June 12, 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
