SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED).
For the fiscal year ended October 31, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED).
For the transition period from to
Commission file number 000-17468
GREENSTONE ROBERTS ADVERTISING, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2250305
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Huntington Quadrangle
Suite 1C14
Melville, New York 11747
(Address of principal executive offices)(Zip Code)
(516) 249-2121
Registrant's telephone number, including area code
Securities registered pursuant to Section 12 (b) of the Act: None.
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified
date within 60 days prior to the date of filing.
$3,153,270 as of January 22, 1996
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
Common Stock, $0.01 par value -- 7,474,418 shares
(as of January 22, 1996)
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) Financial Statements:
(i) Report of Independent Public Accountants
(ii) Consolidated Balance Sheets
(iii) Consolidated Statements of Operations
(iv) Consolidated Statements of Shareholders' Equity
(v) Consolidated Statements of Cash Flows
(vi) Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
(i) Report of Independent Public Accountants on Schedule
(ii) Schedule II - Valuation and Qualifying Accounts
(b)Exhibits:
Number Description
3.1 Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-18 (Registration No. 33-26372 NY)).
3.2 By-laws of the Registrant (incorporated by reference to Exhibit 3.2
of the Registrant's Registration Statement on Form S-18
(Registration No. 33-26372 NY)).
10.1 1988 Stock Option Plan (incorporated by reference to Exhibit 10.6 of
the Registrant's Registration Statement on Form S-18
(Registration No. 33-26372 NY)).
10.2 Amendment No.1 to the 1988 Stock Option Plan dated February 7, 1990
(incorporated by reference to Exhibit 10.6 of the Registrant's Form 10-K
for the fiscal year ending October 31, 1990).
10.3 Lease agreements between the Registrant and We're Associates dated
September 28, 1987 (incorporated by reference to Exhibits 10.4 and 10.5
of the Registrant's Registration Statement on Form S-18
(Registration No. 33-26372 NY)).
10.4 Second and third modifications of lease agreements between the
Registrant and We're Associates dated February 14, 1989 and
July 7, 1989, respectively (incorporated by reference to Exhibit 10.8 of
the Registrant's Form 10-K for the fiscal year ending
October 31, 1990).
10.5 Lease agreements between the Registrant and Wyncreek Partners, Ltd.
dated April 17, 1989 and the first and second amendments
dated June 29, 1989 and April 10, 1990, respectively
(incorporated by reference to Exhibit 10.10 of the Registrant's
Form 10-K for the fiscal year ending October 31, 1990).
10.6 Employment agreement between the Registrant and Ronald M.
Greenstone dated December 31, 1994. (Incorporated by reference to Exhibit
10.6 of the Registrant's Form 10-K for the fiscal year
ending October 31, 1994).
10.7 Employment agreement between the Registrant and Gary C. Roberts
dated December 31, 1995.
10.8 Fifth and sixth amendments of lease agreements between
the Registrant and We're Associates dated June 13, 1990
and June 18, 1991, respectively (incorporated by
reference to Exhibit 10.11 of the Registrant's Form 10-
K for the fiscal year ending October 31, 1991).
10.9 Third amendment of lease agreement between the Registrant and
Wyncreek Partners, Ltd. dated January 19, 1991 (incorporated
by reference to Exhibit 10.12 of the Registrant's Form 10-K for the fiscal
year ending October 31, 1991).
10.10 Fourth and fifth amendments of lease agreement between the
Registrant and Wyncreek Partners, Ltd. dated January 22, 1992 and
May 12, 1992 (incorporated by reference to Exhibit 10.10 of the
Registrant's Form 10-K for the fiscal year ending October 31,
1992).
10.11 Lease agreement between the Registrant and Lincoln-Sun Center Ltd.
dated September 4, 1992 (incorporated by reference to
Exhibit 10.11 of the Registrant's Form 10-K for the fiscal year
ending October 31, 1992).
10.12 Sixth amendment of lease agreement between the Registrant
and Wyncreek Partners, Ltd. dated August 26, 1993 (incorporated by
reference to Exhibit 10.12 of the Registrant's Form 10-K
for the fiscal year ending October 31, 1993).
(c) Reports on Form 8-K:
There were no reports on Form 8-K filed during the fiscal year ended
October 31, 1995.
SIGNATURES
Pursuant to the requirements of the Section 15(d) 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 February 6, 1996.
Greenstone Roberts Advertising, Inc.
By: /s/Ronald M. Greenstone
Ronald M. Greenstone
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons in the capacities and on
the dates indicated.
RONALD M. GREENSTONE Chairman of the Board, February 6, 1996
Chief Executive Officer,
(principal executive
officer) and Director
GARY C. ROBERTS President, Chief February 6, 1996
Operating Officer
and Director
GREGORY A. RICE Senior Vice President, February 6, 1996
Chief Financial
Officer, Treasurer
ANTHONY V. CURTO Director February 6, 1996
RICHARD PROJAIN Director February 6, 1996
LEONARD SCHRIFT Director February 6, 1996
MARTIN SUSSMAN Director February 6, 1996
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Number
Report of Independent Public Accountants F-1
Consolidated Balance Sheets as of October 31, 1995 and 1994 F-2
Consolidated Statements of Operations
for the years ended October 31, 1995,1994 and 1993 F-3
Consolidated Statements of Shareholders' Equity
for the years ended October 31, 1995, 1994 and 1993 F-4
Consolidated Statements of Cash Flows for the
years ended October 31, 1995, 1994 and 1993 F-5
Notes to Consolidated Financial Statements F-6 to F-10
Index to Supplemental Schedules S-1
Report of Independent Public Accountants on Schedule S-2
Schedule II - Valuation and Qualifying Accounts S-3
Information required by other schedules called for under Regulation S-X is
either not applicable or is included in the consolidated financial
statements or notes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Greenstone Roberts Advertising, Inc.:
We have audited the accompanying consolidated balance sheets of Greenstone
Roberts Advertising, Inc. (a New York corporation) and subsidiary as of
October 31, 1995 and 1994 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
in the period ended October 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Greenstone Roberts
Advertising, Inc. and subsidiary as of October 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three
years in the period ended October 31, 1995, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Melville, New York
January 3, 1996
except with respect
to the matter
discussed in Note 9,
as to which the date
is January 19, 1996
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, October 31
ASSETS 1995 1994
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 3,184,620 $ 1,006,294
Short-term investments 1,121,015 2,280,047
Accounts receivable (net of
allowance for bad debts of
$377,723 and $327,865,
respectively) 7,016,706 7,141,058
Billage production orders in
process, at cost 532,600 682,876
Deferred income tax benefit 332,328 227,653
Other current assets 111,105 112,021
Total current assets 12,298,374 11,449,949
FURNITURE, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, as cost, less accumulated
depreciation and amortization of
$1,883,435 and $1,495,518,
respectively 891,987 1,000,735
NOTE RECEIVABLE 150,000
OTHER ASSETS 406,012 474,634
TOTAL ASSETS $13,596,373 $13,075,318
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,658,037 $ 7,179,695
Accrued liabilities 552,323 279,529
Total current liabilities 8,210,360 7,459,224
LONG-TERM DEBT 250,000 250,000
DEFERRED INCOME TAX 53,109 72,128
COMMITMENTS AND CONTINGENCIES (Note 8) - -
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value,
1,000,000 shares authorized, no
shares issues or outstanding - -
Common stock, $.01 par value,
authorized, 10,600,000 shares
issued 106,000 106,000
Additional paid-in capital 3,600,692 3,600,692
Retained earnings 1,822,959 2,034,021
Less: Treasury stock,
1,063,682 shares held at cost (446,747) (446,747)
Total shareholders' equity 5,082,904 5,293,966
TOTAL LIABILTIES AND SHAREHOLDERS
EQUITY $13,596,373 $13,075,318
</TABLE>
The accompanying notes are an integral part of these
consolidated balance
sheets.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended October 31,
1995 1994 1993
<S> <C> <C> <C>
REVENUES FROM COMMISSIONS AND
FEES $9,685,169 $10,507,754 $11,191,293
EXPENSES:
Salaries and related costs 6,921,093 7,197,734 7,883,903
Other operating expenses 3,142,500 3,365,089 3,980,599
Interest income, net (160,034) (109,451) (45,903)
9,903,559 10,453,372 11,818,599
(LOSS)/INCOME BEFORE (BENEFIT)
PROVISON FOR INCOME TAXES (218,390) 54,382 (627,306)
(BENEFIT)/PROVISION FOR INCOME
TAXES (7,328) 50,260 (160,571)
NET (LOSS)/NET INCOME $(211,062) $ 4,122 $ (466,735)
NET (LOSS)/NET INCOME PER COMMON
SHARE $ (0.02) $ 0.00 $ (0.05)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 9,536,318 9,536,318 9,536,318
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
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, 1992 10,600,000 $106,000 $3,600,692 $2,496,634 1,063,682 $(446,747) $5,756,579
Net (loss) - - - (466,735) - - (466,735)
Balance- October 31, 1993 10,600,000 106,000 3,600,692 2,029,899 1,063,682 (446,747) 5,289,844
Net income - - - 4,122 - - 4,122
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) - - - (211,062) - - (211,062)
Balance - October 31, 1995 10,600,000 $106,000 $3,600,692 $1,822,959 1,063,682 $(446,747) $5,082,904
</TABLE>
The accompanying notes are an integral part of these
consolidated
statements.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended October 31,
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net (loss/income $(211,062) $ 4,122 $ (466,735)
Adjustments to reconcile net income/(loss)
to net cash
Provided by/(used in) operating activities:
Depreciation and amortization 451,723 438,737 412,427
Provision for doubtful accounts 51,907 129,057 463,682
Deferred income tax benefit (104,675) (227,653) -
Deferred income tax liability (19,019) 168,303 (161,993)
Increases/(decreases) in cash
resulting from changes in
operating assets and liabilities
Change in accounts receivable 72,445 (1,831,889) 4,169,437
Change in billable production
orders in process, at cost 150,276 186,672 (287,748)
Change in income tax receivable - 64,859 (138,471)
Change in other current assets 916 30,210 214,039
Change in note receivable 150,000 - -
Change in other assets 4,816 (753) 59,097
Change in accounts payable 478,342 279,547 (2,507,057)
Change in accrued liabilities 272,794 (142,344) 70,344
Net cash provided by/(used in)
operating activities 1,298,463 (901,132) 1,827,022
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity/(purchase) of short-term
investments 1,159,032 (2,280,047) -
Capital expenditures, net (279,169) (253,116) (398,079)
Net cash provided by/(used in)
investing activities 879,863 (2,533,163) (398,079)
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 2,178,326 (3,434,295) 1,428,943
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 1,006,294 4,440,589 3,011,646
CASH AND CASH EQUIVALENTS AT END OF YEAR $3,184,620 $1,006,294 $4,440,589
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Greenstone Roberts Advertising, Inc. and its
100% owned subsidiary, Greenstone Roberts Advertising
Florida, Inc. (together the "Company"). All intercompany
balances and transactions have been eliminated.
Recognition of Commission and Fee Revenue
Substantially all revenues are derived from commissions for
placement of advertisements in various media and for
production of advertisements and marketing materials. Such
revenues are recognized as billed. Billings are generally
rendered upon insertion date for print media, job completion
date for production costs, and month of air date for
broadcast media.
Concentration of Credit Risk
The Company provides advertising and marketing services to
a wide range of clients who operate in many industry
sectors. The Company grants credit to all qualified clients,
but does not believe it is exposed to any undue
concentration of credit risk to any significant degree.
Reclassifications
Certain prior year amounts have been reclassified to conform
with the 1995 presentation.
Cash Equivalents
For purposes of the consolidated balance sheets and
consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with
original maturities of three months or less to be cash
equivalents, including commercial paper, certificates of
deposit and money market mutual funds. Cash equivalents
as of October 31, 1995 and 1994 were $2,891,281 and $910,303,
respectively.
Short-Term Investments
Effective November 1, 1994, 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.
In connection with the adoption of this pronouncement,
the Company's debt securities have been classified as held
to maturity and are stated at amortized cost which, due to the
nature of the securities, aproximates market value.
The adoption of SFAS No. 115 had an immaterial effect on the
Company's financial statements.
Short term investments include Treasury bills and notes with
maturities of four
to seven months, with yields ranging
from 5.50% to 7.54%
Furniture, Equipment and Leasehold Improvements
Furniture, equipment and leasehold improvements are
stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization are
computed using the straight-line
method over the useful lives of the assets as follows:
Furniture 5 - 7 years
Equipment 5 - 7 years
Leasehold improvements Lease term or useful life,
whichever is shorter
Other Assets
Other assets include intangible assets (primarily goodwill)
which were recorded by the Company based on the value of certain
assets obtained in the acquisition of other businesses.
These assets are being amortized on a straight-line
basis, over a ten-year period.
Income Taxes
Effective November 1, 1993, the Company
adopted Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes" ("SFAS No. 109"). SFAS
No. 109 requires the use of the asset and liability method of
accounting for income taxes and deferred income taxes are
recorded to reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end. The
adoption of SFAS No. 109 had an immaterial effect on the
Company's financial statements.
Recently Issued Accounting Pronouncements
In March of 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121
(SFAS No. 121) - "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of".
SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in
circumstances indicated that the carrying amount of an asset
may not be recoverable.
In October of 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards
No. 123 (SFAS No. 123) "Accounting for Stock-Based
Compensation". SFAS No. 123 established financial
accounting and reporting standards for stock-based employee
compensation plans as well as transactions in which an
entity issues equity instruments to acquire goods or services
from non-employees.
SFAS No. 121 and SFAS No. 123 are effective for fiscal years
beginning after December 15, 1995, although earlier
adoption is permitted. The Company does not believe that
the adoption of SFAS No. 121 or SFAS No. 123 will have a
material adverse effect on the Company's consolidated
financial statements.
2. LINE OF CREDIT AGREEMENTS:
The Company has an unsecured $5,000,000 line of credit
with a bank which expires April 30, 1996. Borrowings
against this line bear interest at the rate of prime plus
1/2% per annum. The Company did not borrow against the line
during fiscal 1995 and fiscal 1994.
3. NOTE RECEIVABLE:
On July 21, 1993, the Company entered into a
settlement agreement with the former
principals of an earlier acquisition regarding certain
accounts receivable. Under the terms of the agreement,
the principals agreed to pay the Company a total
of $160,000 in consideration of approximately
$230,000 of accounts receivable. The difference was
written-off as bad debt expense. Additionally, the
principals were required to return Company owned
assets which were in their possession, including office
furniture, equipment, files and records. The $160,000
payment consisted of an immediate payment of $10,000 and a
balloon promissory note bearing interest at 8% per annum,
in the principal amount of $150,000 which was payable on
or before January 1, 1996, or upon the sale or
conveyance of certain real property against which the note
has been secured by a second mortgage, whichever occurs
first. On August 15, 1995, the Company received full
payment of the principal of $150,000 and all accrued interest.
4. LONG-TERM DEBT:
Long-term debt consists of a note payable relating to the
acquisition of certain assets of an advertising agency in
February 1992. The note, by its terms, was payable in two
equal installments of $125,000 in February 1993 and 1994,
respectively. The Company believes that due to certain
misrepresentations by the seller in connection with
the business of this agency, a significant adjustment in the
purchase price is required. Accordingly, the Company has
forgone any payment of the note payable until a fair settlement
is agreed to.
The entire note payable balance has therefore
been included in long-term debt. Any adjustment to the purchase
price would result in a reduction to long-term debt and other
assets.
5. INCOME TAXES:
The (benefit)/provision for income taxes included in the
accompanying consolidated statements of operations consists of
the following:
<TABLE>
<CAPTION>
October 31, October 31, October 31,
1995 1994 1993
CURRENT:
<S> <C> <C> <C>
Federal $50,863 $ 5,324 $(12,456)
State 65,503 71,117 3,878
116,366 76,441 (8,578)
DEFERRED:
Accelerated depreciation (10,538) 2,363 10,998
Employee bonus - (8,438) (58,934)
Allowance for bad debts (15,579) (1,270) (84,093)
Goodwill amortization (11,230) 6,450 -
Vacation accrual (34,263) (1,451) (17,196)
Various accrued
liabilities and other (20,973) 4,958 ( 2,768)
State NOL carry forward (31,111) (28,793) -
(123,694) (26,181) (151,993)
TOTAL $ (7,328) $50,260 $(160,571)
</TABLE>
The Company has a state net operating loss (NOL) carryforward in
Florida of approximately $60,000 as of October 31, 1995. The
NOL carryforward is due to losses incurred by the Company's 100%
owned subsidiary. The carryforward, which management expects
will be fully utilized, expires as follows:
Year Amount
2009 $29,000
2010 $31,000
The deferred income tax benefit and deferred income tax
liability reflected in the accompanying consolidated balance
sheet represents differences in the timing of the recognition of
certain income and expenses for income tax and financial
reporting purposes.
The primary sources of these differences are bad debt
deductions and depreciation.
The following table reconciles the Federal Statutory rate to
the Company's effective rate:
<TABLE>
<CAPTION>
October 31, October 31, October 31,
1995 1994 1993
<S> <C> <C> <C>
Tax (benefit)/provision computed
at statutory rate (31.3%) 15.0% ( 34.0%)
State tax, net of Federal tax effect 2.3% 66.1% 0.4%
Non-deductible expenses and other 25.6% 11.3% 8.0%
(3.4%) 92.4% (25.6%)
</TABLE>
The effective tax rate in fiscal 1995 of (3.4%) is primarily the
result of certain expenses that are permanently non-
deductible for income tax purposes and an IRS audit
assessment for approximately $20,000 which closes tax
years 1992, 1993 and 1994.
In fiscal 1994, the effective tax rate of approximately 92%
results primarily from the Company's state tax provision.
During that year, the Company incurred a loss at its Florida
subsidiary for which a tax benefit was recorded at 5.5% and
had profitable operations in New York State which required
a provision for New York State taxes at a rate of
approximately 12%. On a consolidated basis, the net
income is significantly less than New York State income,
thereby resulting in an effective tax rate significantly higher
than the statutory rate.
Income taxes paid during fiscal 1995, 1994 and 1993 were
$143,228, $0, and $146,499, respectively.
6. SAVINGS PLAN:
The Company adopted a 401(k) Savings Plan ("Saving Plan") as
of August 1, 1984. The Savings Plan covers all employees with
one or more years of service. The Company matches
employee contributions utilizing a percentage determined at the
discretion of management. Such percentage was 15% of
employee contributions for both fiscal 1995 and 1994 and
had been 25% for the preceding year. The Company's fiscal
October 31, 1995, 1994, and 1993 Savings Plan contributions
were $32,496, $39,630, and $45,443, respectively.
7. SIGNIFICANT CUSTOMERS:
For the year ended October 31, 1995, business from one
customer represented 15% of the Company's
consolidated revenues. In addition, the Company's five
largest clients represented 38% of consolidated revenues for
that period and the Company depends upon a
core of approximately 30 clients from which it obtains the bulk
of its consolidated revenues. For the years ended
October 31, 1994 and 1993, business from a
company which is no longer a customer represented 11%,
and 25% of consolidated revenues, respectively.
During 1994, no other individual customer
represented more than 10% of consolidated
revenues.
8. COMMITMENTS AND CONTINGENCIES:
Leases
At October 31, 1995, the Company was committed under
operating leases, principally for office space,
through fiscal 2000.
Rent expense was $841,826, $809,499 and $796,724, for the years
ended October 31, 1995, 1994 and 1993, respectively.
Future minimum rents under terms of the existing leases are as
follows:
1996 $782,020
1997 $626,602
1998 $491,997
1999 $212,385
2000 $17,771
Stock Option Plan
In December 1988, the Board of Directors approved the
adoption of the 1988 Stock Option Plan (the "Plan"). The
Plan was amended in 1990 to increase the number of
common shares reserved for issuance to key employees,
including officers and directors who are also employees,
from 600,000 to 900,000 shares. All options are granted at
not less than 100% of the fair market value on the date of
grant.
Options granted expire six years from the date of grant, and
are exercisable in varying amounts up to three years, at
which time all options granted become exercisable. Options
that are unexercised are canceled immediately if the holder
ceases to be an employee of the Company.
The following is a summary of activity and information
relating to shares subject to option under the Plan:
<TABLE>
<CAPTION>
Number of Shares
under Option
<S> <C>
BALANCE, October 31, 1993 at exercise prices from
$0.46875 to $1.63 503,000
Options granted at exercise price of $0.50 per share 515,000
Options canceled at exercise prices from $0.78
to $1.63 per share (203,000)
BALANCE, October 31, 1994 at exercise prices from
$0.46875 to $0.50 815,000
Options granted at exercise price of $0.46875 to
$0.53 22,500
Options canceled at exercise price of $0.46875 to
$0.53 (193,500)
BALANCE, October 31, 1995 at exercise prices from
$0.46875 to $0.53 644,000
</TABLE>
As of October 31, 1995 there were 621,500 options excercisable
and 256,000 options available for grant.
Employment Agreements
As of January 1, 1996 and January 1, 1995, the Company
renewed employment agreements with its two executive
officers. The employment agreements provide for
aggregate annual compensation of $665,000, and expire December
31, 1997. The agreements also provide for incentive compensation
equivalent to an aggregate amount of 5% of income before
provision for income taxes.
Litigation
The Company is involved in legal matters arising from the
ordinary course of business. In management's opinion, any
unfavorable outcome associated with these matters
would not have a material adverse effect on the Company's
consolidated financial statements.
9. SUBSEQUENT EVENT:
On January 19, 1996 the Company repurchased 2,061,900 shares
of its common stock that were under the control
of one shareholder. The repurchase price was $.41 per
share for an aggregate purchase price of approximately
$845,000 plus certain expenses. The shares repurchased
represented approximately 22% of the outstanding common stock of
the Company and are being held in treasury. The treasury stock
repurchase was paid for from the Company's cash and cash
equivalent balance. Following the repurchase, the Company has
7,474,418 shares of common stock outstanding.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
INDEX TO SUPPLEMENTAL SCHEDULES
PAGE
NUMBER
Report of Independent Public Accountants on Schedule S-2
Scheduel II - Valuation and Qualifying Accounts S-3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Greenstone Roberts Advertising, Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of Greenstone
Roberts Advertising, Inc. and subsidiary included in this filing
and have issued our report thereon dated January 3, 1996 except
with respect to the matter discussed in Note 9, as to which the
date is January 19, 1996. Our audits were made for the purpose
of forming an opinion on the basic consolidated financial
statements taken as a whole. The schedule listed in the
accompanying index is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part
of the basic consolidated financial statements. This schedule
has been subjected to the auditing procedures applied in the
audits of the basic consolidated financial statements and, in
our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to
the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Melville, New York
January 3, 1996
SCHEDULE II
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Balance at Charged to
beginning costs and Balance at
of year expenses Deductions end of year
Description
Allowance for Bad Debts-
Fiscal year ended-
<S> <C> <C> <C> <C>
October 31, 1993 $ 89,000 $463,682 $216,350 $336,332
October 31, 1994 $336,332 $129,057 $137,524 $327,865
October 31, 1995 $327,865 $ 51,907 $ 2,049 $377,723
</TABLE>
This schedule should be read in conjunction with the
accompanying consolidated financial statements and notes
thereto.
