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,_1996___________
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 31,1996.
Common stock, par value $0.25 per share: 893,058 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,
____1996____ ____1995____ ____1995____
(Unaudited) (Note)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 611,930 $ 340,633 $ 687,805
Accounts receivable 6,817,012 6,190,240 2,602,658
Refundable income taxes 1,692,000 1,412,000 -
Inventories:
Bound books and merchandise 4,035,835 2,930,011 2,465,398
Sheet stock and work in process 3,598 49,259 20,239
Paper ____418,328_ ____215,513_ ____230,050_
4,457,761 3,194,783 2,715,687
Prepaid expenses 381,936 314,271 277,007
Deferred income taxes ____917,600_ ____645,200_ ____917,600_
Total current assets 14,878,239 12,097,127 7,200,757
Fixed assets--net 963,041 1,092,158 1,002,171
Deferred pre-publication costs 6,324,791 6,834,307 6,707,073
Other assets ____831,084_ ____786,545_ ____827,128_
$22,997,155 $20,810,137 $15,737,129
============ =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current portion of long-term debt$ 100,000 $ 100,000 $ 100,000
Notes payable--banks 9,350,000 8,650,000 -
Accounts payable 2,183,712 1,169,167 793,244
Accrued royalties 423,150 372,923 1,169,693
Other liabilities and
accrued expenses __1,144,369_ ____938,210_ __1,664,621_
Total current liabilities 13,201,231 11,230,300 3,727,558
Long-term debt 150,000 250,000 200,000
Deferred income taxes 31,300 41,800 31,300
Shareholders' equity:
Common shares 225,000 225,000 225,000
Retained earnings __9,430,477_ __9,094,770_ _11,585,004_
9,655,477 9,319,770 11,810,004
Less treasury shares, at cost ____(40,853) ____(31,733) ____(31,733)
__9,614,624_ __9,288,037_ _11,778,271_
$22,997,155 $20,810,137 $15,737,129
============ ============ ============
Note: The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date and condensed.
</TABLE>
<TABLE>
<CAPTION>
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
Six months ended Three months ended
_________June 30,________ _________June 30,________
____1996____ ____1995____ ____1996____ ____1995____
<S> <C> <C> <C> <C>
Net sales $ 7,483,151 $ 6,982,161 $ 6,617,530 $ 6,137,202
Operating costs and expenses:
Manufacturing, royalty
and amortization 2,964,376 2,911,189 2,151,490 2,093,016
Editorial and distribution 1,944,103 2,005,779 978,159 991,604
Selling, general and
administrative __6,241,800_ __5,168,166_ __3,309,941_ __2,724,624_
_11,150,279_ _10,085,134_ __6,439,590_ __5,809,244_
Operating income (loss) (3,607,128) (3,102,973) 177,940 327,958
Other income (expense):
Interest income 147 522 24 7
Other income 25,132 20,289 9,768 4,274
Interest expense ___(204,678) ___(202,432) ___(159,067) (157,129)
___(179,399) ___(181,621) ___(149,275) ___(152,848)
Income (loss) before income taxes (3,846,527) (3,284,594) 28,665 175,110
Provision (credit) for income taxes _(1,692,000) _(1,412,000) _____13,000_ _____76,000_
Net income (loss) (2,154,527) (1,872,594) 15,665 99,110
Retained earnings at beginning
of period _11,585,004_ _10,967,364_ __9,414,812_ __8,995,660_
Retained earnings at end of
period $ 9,430,477 $ 9,094,770 $ 9,430,477 $ 9,094,770
============ ============ ============ ============
Income (loss) per common share $ (2.41) $ (2.09) $ .02 $ .11
============ ============ ============ ============
Average common shares
outstanding 893,313 894,296 893,058 894,296
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
_________June 30,_________
____1996____ ____1995____
<S> <C> <C>
CASH FLOW USED IN OPERATIONS:
Cash used in operations $(8,476,491) $(7,846,254)
CASH FLOW USED IN INVESTING ACTIVITIES:
Capital expenditures (60,546) (32,153)
Prepublication cost expenditures ____829,718) _(1,252,475)
Cash used in investing activities ___(890,263) _(1,284,628)
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit 9,350,000 8,650,000
Repayment of long-term debt (50,000) (50,000)
Purchase of treasury shares _____(9,120) __________-
Cash provided by financing activities __9,290,880_ __8,600,000_
Decrease in cash and cash equivalents (75,875) (530,882)
Cash and cash equivalents at beginning of period ____687,825_ ____871,515_
Cash and cash equivalents at end of period $ 611,930 $ 340,633
============ ============
OTHER CASH FLOW INFORMATION:
Depreciation and amortization $ 1,311,676 $ 1,335,175
============ ============
</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, 1996 and 1995,
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, 1995.
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, 1996 should not necessarily be considered
indicative of the results for the year ending December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results_of_Operations
Net sales rose by 7% in the six months ended June 30, 1996 from the same
period in 1995. A new program for children receiving the first sacraments,
New_Progress_in_Mathematics and the recently introduced Sadlier_Phonics
series provided most of this sales increase.
Manufacturing costs for the six months were relatively unchanged from 1995.
The moderation in paper prices is expected to have a positive impact on gross
margins over the remainder of the year. Selling expenses increased in 1996,
reflecting costs related to the introduction and promotion of the new Sadlier_
Phonics series, the expanded promotion of New_Progress_in_Mathematics,
Vocabulary_Workshop and the Company's other language arts products, and the
establishment of a network of independent sales representatives to expand the
Company's presence in the public school market.
The credits and provisions for income taxes in 1996 and 1995 were based on
the effective tax rates estimated for each full year.
Liquidity_and_Capital_Resources
Cash and cash equivalents at June 30, 1996 increased by $271,297 from
June 30, 1995. In 1996 the reduction in prepublication cost expenditures,
compared with higher levels in 1994 and 1995, was a major reason for the
increase of $ 810,181 in working capital. Increased inventory purchases,
both to obtain better unit prices and to assure sufficient quantities for a
potential expansion of sales to the public school market, resulted in
larger inventory and accounts payable balances in 1996.
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 1996.
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, 1996 and 1995,
such short-term borrowing amounted to $9,350,000 and $8,650,000, respectively.
By the end of August 1996, the Company expects to increase its lines of credit
from $10,500,000 to $12,000,000.
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_13,_1996_ By: /s/_Frank_S._Dinger___
(Date) Frank S. Dinger
Chairman of the Board and
Chief Operating Officer
_August_13,_1996_ By: /s/_Henry_E._Christel_
(Date) Henry E. Christel
Vice President, Treasurer
Principal Financial Officer
_August_13,_1996_ By: /s/_Dasil_C._Thomas___
(Date) Dasil C. Thomas
Controller
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 611,930
<SECURITIES> 0
<RECEIVABLES> 7,157,972
<ALLOWANCES> 340,960
<INVENTORY> 4,457,761
<CURRENT-ASSETS> 14,878,239
<PP&E> 2,042,565
<DEPRECIATION> 1,079,524
<TOTAL-ASSETS> 22,997,155
<CURRENT-LIABILITIES> 13,201,231
<BONDS> 0
0
0
<COMMON> 225,000
<OTHER-SE> 9,389,624
<TOTAL-LIABILITY-AND-EQUITY> 22,997,155
<SALES> 7,483,151
<TOTAL-REVENUES> 7,483,151
<CGS> 2,964,376
<TOTAL-COSTS> 11,150,279
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204,678
<INCOME-PRETAX> (3,846,527)
<INCOME-TAX> (1,692,000)
<INCOME-CONTINUING> (2,154,527)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,154,527)
<EPS-PRIMARY> (2.41)
<EPS-DILUTED> (2.41)
</TABLE>
