FORM 10-Q/A
Amendment No.1
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, 1996 Commission File # 000-17468
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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: 7,474,418 shares
as of May 31, 1996
<PAGE>
Note: The Form 10-Q is hereby amended to change certain financial statement
captions and to amend the first paragraph under "Results of Operations for the
Second Quarter ended April 30, 1996 as compared to the Second Quarter ended
April 30, 1995." In accordance with SEC regulation, the applicable items are
restated in their entirety.
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, 1996 and
October 31, 1995 3
Consolidated Statements of Operations for the three and six
month periods ended April 30, 1996 and 1995 4
Consolidated Statements of Shareholders' Equity
for the six month period ended April 30, 1996 5
Consolidated Statements of Cash Flows for the six
month period ended April 30, 1996 and 1995 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
April 30, October 31,
1996 1995
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 873,229 $3,184,620
Short-term investments 548,462 1,121,015
Accounts receivable, net of allowance for bad debts of
$389,502 and $377,723, respectively 6,874,545 7,016,706
Billable production orders in process, at cost 503,728 532,600
Deferred income tax benefit 332,328 332,328
Other current assets 90,730 111,105
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TOTAL CURRENT ASSETS 9,223,022 12,298,374
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
at cost, less accumulated depreciation and amortization
of $2,092,265 and $1,883,435, respectively 999,261 891,987
OTHER ASSETS 375,790 406,012
TOTAL ASSETS $10,598,073 $13,596,373
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,483,202 $ 7,658,037
Accrued liabilities 634,247 552,323
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Total current liabilities 6,117,449 8,210,360
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LONG-TERM DEBT 250,000 250,000
DEFERRED INCOME TAX 53,109 53,109
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 1,825,449 1,822,959
Less: Treasury stock, 3,125,582 and 1,063,682
shares held at cost, respectively (1,354,626) (446,747)
--------- ----------
Total shareholders' equity 4,177,155 5,082,904
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,598,073 $13,596,373
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
<PAGE>
<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
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES FROM
COMMISSIONS & FEES $2,420,680 $2,510,244 $4,647,531 $4,822,353
---------- ---------- ---------- ----------
EXPENSES:
Salaries and related costs 1,676,179 1,733,939 3,268,490 3,437,091
Other operating expenses 656,873 787,115 1,424,417 1,552,352
Interest income, net (23,889) (35,952) (73,045) (84,521)
$2,309,163 $2,485,102 $4,619,862 $4,904,922
========== ========== ========== ==========
INCOME/(LOSS) BEFORE PROVISION/
(BENEFIT) FOR INCOME TAXES 111,517 25,142 27,669 (82,569)
Provision/(Benefit) for
income taxes 96,869 6,570 25,179 (16,514)
NET INCOME/(LOSS) $ 14,648 $ 18,572 $ 2,490 $ (66,055)
======== ========= ======== =========
NET INCOME/(LOSS) PER COMMON
SHARE $ 0.00 $ .00 $ 0.00 $ (0.01)
========= ========= ======== =========
Weighted average number of
common shares 7,474,418 9,536,318 8,369,419 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 SIX MONTHS ENDED APRIL 30, 1996
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, 1995 10,600,000 $106,000 $3,600,692 $1,822,959 1,063,682 $(446,747) $5,082,904
Treasury Stock Purchased 2,061,900 (907,879) (907,879)
Net (Loss)/Income - - - 2,490 - - 2,490
---------- --------- ---------- --------- -------- -------- ---------
BALANCE, APRIL 30, 1996 10,600,000 $106,000 $3,600,692 $1,825,449 3,125,582 $(1,354,626)$4,177,515
========== ======== ========== ========== ========= ============ =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 2,490 $ (84,627)
Adjustments to reconcile net income/(loss) to net cash
(used in)/provided by operating activities:
Depreciation and amortization 240,734 113,158
Provision for doubtful accounts 11,779 20,364
Increases/(decreases) in cash resulting from changes in operating
assets and liabilities:
Change in accounts receivable 130,382 (419,229)
Change in billable production orders in process, at cost 28,872 127,412
Change in other current assets 20,375 22,486
Change in other assets (1,681) -
Change in accounts payable (2,174,835) (124,449)
Change in accrued liabilities 81,924 181,782
--------- --------
Net cash (used in)/provided by operating activities (1,659,960) ( 163,103)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures/purchases, net (316,105) (45,235)
Purchase/maturity of short term investments 572,553 (101,606)
Purchase of Treasury Stock (907,879) -
Net cash (used in) investing activities (651,431) (146,841)
Net (decrease) in cash and cash equivalents (2,311,391) ( 309,944)
----------- -----------
Cash and cash equivalents at beginning of year 3,184,620 1,006,294
--------- ---------
Cash and cash equivalents at end of period $ 873,229 $ 696,350
======= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements
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 for the fiscal year ended
October 31, 1995.
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, 1996 and 1995.
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, 8,369,419 for the six month period
ended April 30, 1996 and 9,536,318 for the six month period ended April 30,
1995.
6. Billable production orders in process are net of advance billings to
clients, which were $143,682 at April 30, 1996, and $309,999 at October 31,
1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED APRIL 30, 1996 AS
COMPARED TO THE SECOND QUARTER ENDED APRIL 30, 1995.
Consolidated commission and fee revenue decreased $89,564 or 4% from
$2,510,244 for the quarter ended April 30, 1995 to $2,420,680 for the quarter
ended April 30, 1996. Approximately 9% of the consolidated revenues and fee
income for the quarter relates to the recognition of a non recurring favorable
settlement during the quarter with respect to certain liabilities.
Salaries and related costs decreased 3%, from $1,733,939 for the quarter ended
April 30, 1995 to $1,676,179 for the quarter ended April 30, 1996. The decrease
is the result of a reduction in staffing in response to decreased activity,
partially offset by additional staff to support new accounts, and normal salary
increases. Salaries and related costs as a percent of revenues remained at 69%
for the comparative periods.
Other operating expenses decreased 17% as management continues its efforts to
control costs in various operating areas.
Interest income, net, decreased $12,063 due primarily to the use of funds to
repurchase 2,061,900 shares of the Company's common stock.
Income/(loss) before provision/(benefit) for income taxes increased $86,375 from
an income of $25,142 for the quarter ended April 30, 1995 to an income of
$111,517 for the quarter ended April 30, 1996. The increase is the result of
management efforts to reduce and control costs as discussed above, partially
offset by the decrease in revenue.
The effective tax rate for the tax provision of $96,869 is 87% This is primarily
the result of certain expenses that are permanently non-deductible for income
tax purposes.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1996 AS COMPARED TO THE
SIX MONTHS ENDED APRIL 30, 1995.
Consolidated commission and fee revenue decreased $174,822 or 4% from $4,822,353
for the six months ended April 30, 1995 to $4,647,531 for the six months ended
April 30, 1996. The revenue decrease is attributable to the decrease in activity
from existing clients, partially offset by the non recurring favorable
settlement with respect to certain liabilities as discussed above.
Salaries and related costs decreased 5% from $3,437,091 for the six months ended
April 30, 1995 to $3,268,490 for the six months ended April 30, 1996. 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 decreased from 71% for the six months ended April 30, 1995 to 70% at
April 30, 1996 mainly as a result of decreased staffing for the six months.
Other operating expenses decreased 8%, mainly as a result of management's
continuing efforts to control costs in various operating areas.
Interest income, net, decreased $11,476 due primarily to the use of funds to
repurchase 2,061,900 shares of the Company's common stock.
Income/(loss) before provision/(benefit) for income taxes increased $110,238
from a loss of $82,569 for the six months ended April 30, 1995, to income of
$27,669 for the six months ended April 30, 1996. The increase is the result of
management's efforts to reduce and control costs, partially offset by the
decreases in revenue.
The effective tax rate for the tax provision of $25,179 is 91% This is primarily
the result of certain expenses that are permanently non-deductible for income
tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased by $982,441 to $3,105,573 at April 30,
1996 as compared to $4,088,014 at October 31, 1995.
Cash and cash equivalents decreased $2,311,391 from $3,184,620 at October 31,
1995 to $873,229 at April 30, 1996. The cash and cash equivalents balance
decrease was the result of the timing of payments on accounts payable, purchases
of capital assets, and the repurchase of the Company's own capital stock,
partially offset by the timing of receipts on accounts receivable and the
maturity of short-term investments in U.S. Treasury Bills.
It should be noted that the Company 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 Company has available an unused committed line of credit from a bank of
$5,000,000 at April 30, 1996. Management believes that its current working
capital levels and funds provided by profitable operations will be sufficient to
meet the Company's liquidity and working capital requirements for the
foreseeable future. The Company does not anticipate any material increases of
capital expenditures or other requirements which will adversely affect its
liquidity.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Melville, State of New
York on June 14, 1996.
Greenstone Roberts Advertising, Inc.
By: /s/ Gary C. Roberts
Gary C. Roberts
President & COO
By: /s/Leonard Schrift
Leonard Schrift
Senior Vice President & CFO
