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: January 31, 1996 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: 7,474,418 shares
as of March 11, 1996
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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 January 31, 1996 and October 31, 1995 3
Consolidated Statements of Operations for the three months
ended January 31, 1996 and 1995 4
Consolidated Statements of Shareholders' Equity for the three
months ended January 31, 1996 5
Consolidated Statements of Cash Flows for the three months ended
January 31, 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
PART II- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31, October 31,
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 2,662,714 $ 3,184,620
Short-term investments 1,138,537 1,121,015
Accounts receivable (net allowance for bad debts
of $393,188 and $377,723, respectively) 6,305,179 7,016,706
Billable production orders in process, at cost 342,899 532,600
Deferred income tax benefit 332,328 332,328
Other current assets 51,334 111,105
Total current assets $10,832,991 $12,298,374
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
at cost, less accumulated depreciation and amortization
of $1,982,697 and $1,883,435, respectively 824,031 891,987
OTHER ASSETS 600,762 406,012
TOTAL ASSETS $12,257,784 $13,596,373
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 7,174,193 7,658,037
Accrued liabilities 617,615 552,323
Total current liabilities 7,791,808 8,210,360
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 1,810,801 1,822,959
Less: Treasury stock, 3,125,582 and 1,063,682
held at cost, respectively (1,354,626) (446,747)
Total shareholder's equity 4,162,867 5,082,904
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $12,257,784 $13,596,373
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended January 31,
1996 1995
<S> <C> <C>
REVENUES FROM
COMMISSIONS AND FEES $2,226,850 $2,312,109
EXPENSES:
Salaries and related costs 1,592,311 1,703,152
Other operating expenses 767,543 765,237
Interest (income) net of interest expense (49,156) (48,569)
$2,310,698 $2,419,820
LOSS BEFORE BENEFIT FOR INCOME TAXES (83,848) (107,711)
Benefit for income taxes (71,690) (23,084)
NET LOSS ($12,158) ($84,627)
NET LOSS PER COMMON SHARE ($0.00) ($0.01)
Weighted average number of common shares 9,244,963 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 THREE MONTHS ENDED JANUARY 31, 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 Purchase - - - - 2,061,900 (907,879) (907,879)
Net (Loss)/Income - - - (12,158) - - (12,158)
Balance, January 31, 1996 10,600,000 $106,000 $3,600,692 $1,810,801 3,125,582 $(1,354,626) $4,162,867
</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 three months ended
January 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (12,158) $(84,627)
Adjustments to reconcile net loss to net cash provided by/(used in) operating
activities:
Depreciation and amortization 115,214 113,158
Provision for doubtful accounts 15,465 20,364
Increase/(decreases) in cash resulting from changes in operating
assets and liabilities:
Change in accounts receivable 696,062 (419,229)
Change in billable production orders in process at cost 189,701 127,412
Change in other current assets 59,771 22,486
Change in other assets (194,750) -
Change in accounts payable (483,844) (124,448)
Change in accrued liabilities 65,292 181,782
Net cash provided by/(used in) operating activities 450,753 163,102
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures/purchases, net (47,258) (45,235)
Purchase of Treasury Stock (907,879) -
Purchase/maturity of short-term investments (17,522) (101,606)
Net cash used in investing activities 972,659) (146,841)
Net increase/(decrease) in cash and cash equivalents (521,906) (309,943)
Cash and cash equivalents at beginning of period 3,184,620 1,006,294
Cash and cash equivalents at end of period $2,662,714 $696,351
</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 month periods ended January 31, 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 month period has been computed
based upon the weighted average number of shares of common stock and common
stock equivalents outstanding, 9,244,963 for the three month period ended
January 31, 1996 and 9,536,318 for the three month period ended January 31,
1995.
6. Billable production orders in process are net of advance billings to
clients, which were $211,064 at January 31, 1996, and $309,999 at October 31,
1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of operations for the first quarter ended January 31, 1996 as compared
to the first quarter ended January 31, 1995.
Consolidated commission and fee income decreased $85,259 or 4% from $2,312,109
for the quarter ended January 31, 1995 to $2,226,850 for the quarter ended
January 31, 1996. The revenue decrease is due to decreased activity from
existing clients which approximated 30%. This was substantially offset by
activity from new clients which approximated 26%.
Salaries and related costs decreased 7%, from $1,703,152 for the quarter ended
January 31, 1995 to $1,592,311 for the quarter ended January 31, 1996. The
decrease is the result of a reduction in staffing in response to the decreased
activity. Salaries and related costs as a percent of revenues decreased from 74%
for the quarter ended January 31, 1995 to 72% for the quarter ended January 31,
1996, due to the reduced staffing levels partially offset by decreased revenues.
Other operating expenses remained constant for these comparative periods.
Interest income remained constant for these comparative periods.
The (loss) before (benefit) for income taxes decreased $23,863 from a loss of
$107,711 for the quarter ended January 31, 1995 compared to a loss of $83,848
for the quarter ended January 31, 1996. This reduction is the result of a
decrease in staffing costs partially offset by a small reduction in revenue.
The effective tax rate for the tax benefit of $71,690 is 85.5% This is primarily
the result of certain expenses that are permanently non-deductible for income
tax purposes.
Liquidity and Capital Resources
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 decreased $521,906 from $3,184,620 at October 31, 1995
to $2,662,714 at January 31, 1996. The cash equivalent balance decrease was the
result of the timing of receipts on accounts receivables, payments on accounts
payable, and the Company's repurchase of 2,061,900 shares of its common stock
that were under the control of one shareholder.
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
incurred on behalf of clients.
The Registrant has available an unused committed line of credit from a bank of
$5,000,000 at January 31, 1996. 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 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 March 14, 1996.
Greenstone Roberts Advertising, Inc.
By:/s/ Gary C. Roberts
Gary C. Roberts
President and Chief Operating Officer
By:/s/ Leonard Schrift
Leonard Schrift
Senior Vice President
Chief Financial Officer and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 2,662,714
<SECURITIES> 1,138,537
<RECEIVABLES> 6,698,367
<ALLOWANCES> (393,188)
<INVENTORY> 0
<CURRENT-ASSETS> 10,832,991
<PP&E> 2,806,728
<DEPRECIATION> (1,982,697)
<TOTAL-ASSETS> 12,257,784
<CURRENT-LIABILITIES> 7,791,808
<BONDS> 250,000
0
0
<COMMON> 106,000
<OTHER-SE> 4,056,867
<TOTAL-LIABILITY-AND-EQUITY> 12,257,784
<SALES> 0
<TOTAL-REVENUES> 2,226,850
<CGS> 0
<TOTAL-COSTS> 1,592,311
<OTHER-EXPENSES> 752,078
<LOSS-PROVISION> 15,465
<INTEREST-EXPENSE> (49,156)
<INCOME-PRETAX> (83,848)
<INCOME-TAX> (71,690)
<INCOME-CONTINUING> (12,158)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,158)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
