UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended ________________June_30,_1995___________________
Commission file number _________________________0-3037__________________________
___________________________WILLIAM_H._SADLIER,_INC._____________________________
(Exact name of registrant as specified in its charter)
__________New_York________________ __________13-5363840____________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
_____9_Pine_Street,_New_York,_New_York_____________________10005-1002___________
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code ____(212)_227-2120___________
_________________________________Not_Applicable_________________________________
Former name, former address and former fiscal year, if changed since last
report.
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of July 31, 1995.
Common stock, par value $0.25 per share: 894,296 shares outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
__________June_30,_________ December_31,
____1995_____________1994___ ____1994____
(Unaudited) (Note)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 340,633 $ 595,862 $ 871,515
Accounts receivable 6,190,240 5,253,084 2,185,333
Refundable income taxes 1,412,000 1,763,000 -
Inventories:
Bound books and merchandise 2,930,011 2,185,757 1,652,782
Sheet stock and work in process 49,259 103,776 55,657
Paper ____215,513_ _____24,951_ _____79,895_
3,194,783 2,314,484 1,788,334
Prepaid expenses 314,271 328,336 333,035
Deferred income taxes ____645,200_ ____650,200_ ____645,200_
Total current assets 12,097,127 10,904,966 5,823,417
Fixed assets--net 1,092,158 1,212,406 1,163,009
Deferred pre-publication costs 6,834,307 5,704,793 6,801,832
Other assets ____786,545_ ____645,888_ ____751,927_
$20,810,137 $18,468,053 $14,540,185
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current portion of long-term debt $ 100,000 $ - $ 100,000
Notes payable--banks 8,650,000 7,200,000 -
Accounts payable 1,169,167 1,246,134 986,436
Accrued royalties 372,923 330,151 1,082,481
Other liabilities and
accrued expenses ____938,210_ ____857,870_ ____868,837_
Total current liabilities 11,230,300 9,634,155 3,037,754
Long-term debt 250,000 - 300,000
Deferred income taxes 41,800 32,900 41,800
Shareholders' equity:
Common shares 225,000 225,000 225,000
Retained earnings __9,094,770_ __8,607,731_ _10,967,364_
9,319,770 8,832,731 11,192,364
Less treasury shares, at cost ____(31,733) ____(31,733) ____(31,733)
__9,288,037_ __8,800,998_ _11,160,631_
$20,810,137 $18,468,053 $14,540,185
============ ============ ============
<FN>
Note: The balance sheet at December 31, 1994 has been taken from the audited
financial statements at that date and condensed.
</TABLE>
<TABLE>
<CAPTION>
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
Six months ended Three months ended
___________June 30,_________ ___________June_30,_________
_____1995___ _____1994___ _____1995___ _____1994___
<S> <C> <C> <C> <C>
Net sales $ 6,982,161 $ 6,000,356 $ 6,137,202 $ 5,189,446
Operating costs and expenses:
Manufacturing, royalty and amortization 2,911,189 2,406,753 2,093,016 1,644,412
Editorial and distribution 2,005,779 2,300,546 991,604 1,269,486
Selling, general and administrative __5,168,166_ __5,306,195_ __2,724,624_ __2,777,083_
_10,085,134_ _10,013,494_ __5,809,244_ __5,690,981_
Operating income (loss) (3,102,973) (4,013,138) 327,958 (501,535)
Other income (expense):
Interest income 522 8,703 7 738
Other income 20,289 5,024 4,274 4,189
Interest expense ___(202,432) ___(101,248) ___(157,129) ____(84,507)
___(181,621) ____(87,521) ___(152,848) ____(79,580)
Income (loss) before income taxes (3,284,594) (4,100,659) 175,110 (581,115)
Provision (credit) for income taxes _(1,412,000) _(1,763,000) _____76,000_ ___(250,000)
Net income (loss) (1,872,594) (2,337,659) 99,110 (331,115)
Retained earnings at beginning of period _10,967,364_ _10,945,390_ __8,995,660_ __8,938,846_
Retained earnings at end of period $ 9,094,770 $ 8,607,731 $ 9,094,770 $ 8,607,731
============ ============ ============ ============
Income (loss) per common share $ (2.09) $ (2.61) $ .11 $ (.37)
============ ============ ============ ============
Average common shares outstanding 894,296 896,439 894,296 894,296
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
___________June_30,___________
_____1995____ ____1994_____
<S> <C> <C>
CASH FLOW USED IN OPERATIONS:
Cash used in operations $_(7,846,254) $_(7,546,148)
CASH FLOW USED IN INVESTING ACTIVITIES:
Proceeds from sale of short-term investments - 695,880
Capital expenditures (32,153) (100,661)
Prepublication cost expenditures (1,252,475) (1,656,565)
Purchase of textbook series ________-____ ____(360,000)
Cash used in investing activities __(1,284,628) __(1,421,346)
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit 8,650,000 7,200,000
Repayment of long-term debt (50,000) -
Purchase of treasury shares ________-____ _____(25,000)
Cash provided by financing activities ___8,600,000_ ___7,175,000_
Decrease in cash and cash equivalents (530,882) (1,792,494)
Cash and cash equivalents at beginning of period _____871,515_ ___2,388,356_
Cash and cash equivalents at end of period $ 340,633 $ 595,862
============= =============
OTHER CASH FLOW INFORMATION:
Depreciation and amortization $ 1,335,175 $ 1,216,387
============= =============
</TABLE>
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheets as of June 30, 1995 and 1994,
and both the condensed consolidated statements of operations and retained
earnings and the condensed consolidated statements of cash flows for the six-
month and three-month periods then ended have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows for all periods
presented have been made.
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 suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and related notes included in the Company's Annual Report for the
year ended December 31, 1994.
2. Seasonality
Historically, educational publishing has been subject to the seasonality
associated with the educational year, resulting in a concentration of sales in
the third calendar quarter. Therefore, the results of operations for the six
months ended June 30, 1995 should not necessarily be considered indicative of
the results for the year ending December 31, 1995.
Item 2. Management's_Discussion_and_Analysis_of_Financial_Condition
and_Results_of_Operations
Results_of_Operations
Net sales in the six months ended June 30, 1995 were 16% higher than in the
same period in 1994. The Catholic School and Parish Editions of Coming_to_
Faith, and New_Progress_in_Mathematics and Vocabulary_Workshop all contributed
to the increase.
Manufacturing costs in 1995 remained higher due primarily to increased paper
prices. The Company modestly raised the prices for its products at the
beginning of 1995 and expects to offset most of the remainder of these higher
costs for paper by reasonably increasing its prices in the third quarter of
1995. Editorial expenses were lower in 1995, reflecting the completion of the
revision of several major series. Promotional expenses related to those series
decreased from 1994 levels. General and administrative expenses also were
lower in 1995.
Interest expense increased in 1995 due to higher levels of borrowing and higher
interest rates, while interest income decreased because of a reduction in funds
available for investment. Cash discounts related to increased paper purchases
in the six months ended June 30, 1995 accounted for most of the change in
"other income."
The provision and credits for income taxes in 1995 and 1994 were based on the
effective
rates estimated for each full year.
Liquidity_and_Capital_Resources
Cash and cash equivalents at June 30, 1995 decreased by $255,000 from the
June 30, 1994 level. Working capital decreased by $404,000 from the
comparable date in 1994, primarily due to greater prepublication cost and
editorial expenditures in the year ended December 31, 1994. These expenditures
were incurred to complete the revisions of New_Progress_in_Mathematics and the
Parish Edition of Coming_to_Faith, and to begin the revision of the Catholic
School Edition of Coming_to_Faith. Because of the reduced availability of
paper in 1995, the Company purchased significantly more paper for inventory
than it normally does during the six months ended June 30, 1995 to ensure an
adequate supply for its printing requirements. Inventory levels also reflected
the increased printing requirements of the newly revised series.
Cash flow provided by operations has generally been sufficient to finance
investment in new products, equipment and facilities, dividends paid to
shareholders and the repayment of short-term bank borrowing. Management
believes this will continue to be true in 1995.
In July of 1995, the Company increased its lines of credit with its banks, from
$9,000,000 to $10,500,000. Each year, because of the seasonality associated
with educational publishing, the Company must draw on its lines of credit.
During the latter part of each year, such borrowing is repaid and excess funds
are available for investment in cash equivalents and short-term securities.
At June 30, 1995 and 1994, such short-term borrowing amounted to $8,650,000
and $7,200,000, respectively.
PART_II.__OTHER_INFORMATION
All items required hereunder have been omitted because they are inapplicable
or would result in negative answers.
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.
_WILLIAM_H._SADLIER,_INC._
(Registrant)
__August_3,_1995__ By: /s/_Frank_S._Dinger___________________
(Date) Frank S. Dinger
Chairman of the Board and
Chief Operating Officer
__August_3,_1995__ By: /s/_Henry_E._Christel_________________
(Date) Henry E. Christel
Vice President, Treasurer
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Condensed
Consolidated Balance Sheets and Condensed Consolidated Statements of
Operations and Retained Earnings in accordance with Article 5 of
Regulation S-X.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 340,633 340,633
<SECURITIES> 0 0
<RECEIVABLES> 6,513,182 6,513,182
<ALLOWANCES> 322,942 322,942
<INVENTORY> 3,194,783 3,194,783
<CURRENT-ASSETS> 12,097,127 12,097,127
<PP&E> 1,969,887 1,969,887
<DEPRECIATION> 877,729 877,729
<TOTAL-ASSETS> 20,810,137 20,810,137
<CURRENT-LIABILITIES> 11,230,300 11,230,300
<BONDS> 0 0
<COMMON> 225,000 225,000
0 0
0 0
<OTHER-SE> 9,063,037 9,063,037
<TOTAL-LIABILITY-AND-EQUITY> 20,810,137 20,810,137
<SALES> 6,982,161 6,137,202
<TOTAL-REVENUES> 6,982,161 6,137,202
<CGS> 2,911,189 2,093,016
<TOTAL-COSTS> 10,085,134 5,809,244
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 202,432 157,129
<INCOME-PRETAX> (3,284,594) 175,110
<INCOME-TAX> (1,412,000) 76,000
<INCOME-CONTINUING> (1,872,594) 99,110
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,872,594) 99,110
<EPS-PRIMARY> (2.09) .11
<EPS-DILUTED> (2.09) .11
</TABLE>
