-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AF7vFO3iifnkKKL9Mpsa1G3cdQe7Uxwua2RoEEOlqrW4p5s3J3DGtDAxmzvyNGBN J0CUi4PLhiZwWZp6rG8FJA== 0000950123-94-001345.txt : 19940901 0000950123-94-001345.hdr.sgml : 19940901 ACCESSION NUMBER: 0000950123-94-001345 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RUSS BERRIE & CO INC CENTRAL INDEX KEY: 0000739878 STANDARD INDUSTRIAL CLASSIFICATION: 3942 IRS NUMBER: 221815337 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08681 FILM NUMBER: 94544034 BUSINESS ADDRESS: STREET 1: 111 BAUER DR CITY: OAKLAND STATE: NJ ZIP: 07436 BUSINESS PHONE: 2013379000 MAIL ADDRESS: STREET 2: 111 BAUER DRIVE CITY: OAKLAND STATE: NJ ZIP: 07436 FORMER COMPANY: FORMER CONFORMED NAME: BERRIE RUSS & CO INC DATE OF NAME CHANGE: 19920703 10-Q 1 RUSS BERRIE AND COMPANY, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ........... June 30, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from .............to................... Commission file number .................................1-8681 RUSS BERRIE AND COMPANY, INC. ................................................................. (Exact name of registrant as specified in its charter) New Jersey 22-1815337 ................................................................. (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 111 Bauer Drive, Oakland, New Jersey 07436 ................................................................. (Address of principal executive offices) (Zip Code) (201) 337-9000 ................................................................. (Registrant's telephone number, including area code) ................................................................. (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 the latest practicable date. CLASS OUTSTANDING AT AUGUST 5, 1994 ----- ----------------------------- Common stock, $.10 stated value 21,469,179 2 RUSS BERRIE AND COMPANY, INC. INDEX PAGE PART I - FINANCIAL INFORMATION NUMBER Item 1. Financial Statements Consolidated Balance Sheet as of June 30, 1994 and December 31, 1993 3 Consolidated Statement of Income for the three-month and six-month periods ended June 30, 1994 and 1993 4 Consolidated Statement of Cash Flows for the six-month periods ended June 30, 1994 and 1993 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 (2) 3 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
(UNAUDITED) JUNE 30, DECEMBER 31, ASSETS -------- ------------ ------ 1994 1993 ---- ---- Current assets Cash and cash $49,739 $ 51,478 Short-term investments 32,059 31,421 Accounts receivable, trade, net 40,843 46,899 Merchandise inventories 61,973 66,110 Prepaid expenses and other current assets 5,563 5,005 Deferred income taxes 13,970 12,169 ------- -------- Total current assets 204,147 213,082 Property, plant and equipment - net 26,276 28,133 Goodwill and other intangible assets - net 16,711 16,420 Other assets 3,002 1,480 ------- ------- Total assets $250,136 $259,115 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities Accounts payable $ 4,410 $ 5,235 Accrued expenses 23,438 23,171 Accrued restructuring costs 5,843 6,283 Accrued income taxes - 392 ------- ------ Total current liabilities 33,691 35,081 Shareholders' equity Common stock; $.10 stated value; authorized 50,000,000 shares; issued 23,918,565 at June 30, 1994 and 23,876,274 at December 31, 1993 2,392 2,388 Additional paid-in capital 37,355 36,840 Retained earnings 216,914 225,650 Foreign currency translation adjustments (2,359) (2,987) Treasury stock, at cost (2,454,813 shares at June 30, 1994 and December 31, 1993) (37,857) (37,857) -------- -------- Total shareholders' equity 216,445 224,034 ------- ------- Total liabilities and shareholders' equity $250,136 $259,115 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. (3) 4 RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED) (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- ------------------------- 1994 1993 1994 1993 -------- -------- -------- -------- Net sales $ 57,546 $ 49,887 $121,713 $146,197 Cost of sales 32,233 22,788 63,794 60,523 Selling, general and administrative expense 31,666 32,761 63,198 71,627 Investment and other income-net 782 649 1,346 1,507 --------- -------- -------- -------- Income (loss) before income taxes (5,571) (5,013) (3,933) 15,554 Provision (benefit) for for income taxes (2,244) (2,012) (1,628) 4,921 --------- -------- -------- -------- Net income (loss) $ (3,327) $ (3,001) $ (2,305) $ 10,633 ======== ======== ======== ======== Net income (loss) per share $ (0.16) $ (0.14) $ (0.11) $ 0.49 ======== ======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements. (4) 5 RUSS BERRIE AND COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN THOUSANDS)
(UNAUDITED) SIX MONTHS ENDED JUNE 30, ---------------------------------- 1994 1993 ---- ---- Cash flows from operating activities: Net income (loss) $ (2,305) $ 10,633 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,411 2,736 Amortization of intangible assets 897 483 Provision for bad debts 3,324 1,687 Loss (gain) on sale of assets and other, net 343 88 Changes in assets and liabilities Accounts receivable 2,732 35,071 Inventories 4,137 8,196 Prepaid expenses (558) (2,874) Goodwill and other intangible assets (1,188) - Other assets (1,522) (100) Accounts payable (825) (2,720) Accrued expenses 267 (8,601) Accrued restructuring costs (440) (444) Accrued and deferred income taxes (2,193) (4,673) ------- ------- Total adjustments 7,385 28,849 ----- ------- Net cash provided by operating activities 5,080 39,482 Cash flows from investing activities: Increase in short-term investments (638) (787) Proceeds from sale of fixed assets 218 339 Capital expenditures (1,115) (3,303) ------- ------- Net cash (used in) investing activities (1,535) (3,751) Cash flows from financing activities: Payment of long-term debt - (3,000) Common stock transactions 519 3,356 Transactions in treasury shares - (22,214) Dividends (6,431) (6,402) ------- -------- Net cash (used in) financing activities (5,912) (28,260) Effect of exchange rate changes on cash and cash equivalents 628 (125) ------- ------- Net increase (decrease) in cash and cash equivalents (1,739) 7,346 Cash and cash equivalents at beginning of period 51,478 62,285 ------ ------ Cash and cash equivalents at end of period $ 49,739 $ 69,631 ====== ======= Cash paid during the period for: Interest $ 44 $ 433 Income taxes $ 565 $ 9,661
The accompanying notes are an integral part of the consolidated financial statements. (5) 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 The information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented and are of a normal recurring nature. Results for interim periods are not necessarily an indication of results to be expected for the year. NOTE 2 The weighted average number of shares outstanding during the three and six-month periods ended June 30, 1994 were 21,446,000 and 21,440,000 shares, respectively compared to the three and six-month periods ended June 30, 1993 of 21,265,000 and 21,622,000 shares, respectively. Employee stock option plans did not have a material dilutive effect on the earnings per share calculation. NOTE 3 Cash dividends of $3,216,323 ($.15 per share) were paid on June 7, 1994 to shareholders of record of the Company's Common Stock on May 20, 1994. Cash dividends of $6,430,884 ($.15 per share per quarter) were paid in the six-month period ended June 30, 1994. Cash dividends of $3,189,151 ($.15 per share) were paid on June 7, 1993 to shareholders of record of the Company's Common Stock on May 21, 1993. Cash dividends of $6,402,193 ($.15 per share per quarter) were paid in the six-month period ended June 30, 1993. (6) 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations for the Six Months Ended June 30, 1994 Consolidated net sales for the six months ended June 30, 1994 were $121,713,000 compared to $146,197,000 for the six months ended June 30, 1993. The decrease can be attributed to a lower level of sales of Troll products compared to the prior year. During the six-month period ended June 30, 1994 net sales of Troll products were approximately $4,947,000. Net sales of these products during the six-month period ended June 30, 1993 were approximately $62,008,000. Included in the results for the six months ended June 30, 1994 are the net sales of $34,698,000 achieved by Cap Toys, Inc. which was acquired in October 1993. Cost of sales was 52.4% of net sales for the six months ended June 30, 1994 compared to 41.4% for the same period in 1993. This increase can be attributed primarily to the higher gross profit margins on sales of Troll products during the six-month period ended June 30, 1993 and the effects of the reduction of the selling price of certain of the Company's products in August 1993. Also contributing to the increase in cost of sales are the lower gross margins achieved by Cap Toys, Inc. compared to the Company's other sales and distribution channels. In addition, certain components of cost of sales are fixed costs which were absorbed by the higher sales volume in the six months ended June 30, 1993. Selling, general and administrative expense was $63,198,000 or 51.9% of net sales for the six months ended June 30, 1994 compared to $71,627,000 or 49.0% of net sales for the six months ended June 30, 1993, a decrease of $8,429,000 or 11.8%. This decrease can be primarily attributed to a decrease in expenses required to support lower sales levels (approximately $9,800,000), cost reductions associated with the restructuring program implemented during 1993 of closing and consolidating distribution centers and administrative functions ($4,800,000) and to lower expenses related to the Company's "RUSS" consumer advertising program (approximately $1,400,000). Partially offsetting these decreases is the inclusions of the selling, general and administrative expenses of Cap Toys, Inc. (approximately $8,500,000) for the six months ended June 30, 1994. Investment and other income of $ 1,346,000 for the six months ended June 30, 1994 compares to $1,507,000 for the six months ended June 30, 1993. (7) 8 The results for the six months ended June 30, 1994 reflect an income tax benefit of $1,628,000 due to the loss before income taxes of $3,933,000. This compares to a provision for income taxes of $4,921,000 for the same period last year. Net loss for the six months ended June 30, 1994 of $2,305,000 compares to net income of $10,633,000 for the same period last year. This decrease in net income can be attributed to the decrease in net sales and the increase in cost of sales as a percent of net sales described above, partially offset by the decrease in selling, general and administrative expense. Results of Operations for the three months ended June 30, 1994 Consolidated net sales for the three months ended June 30, 1994 were $57,546,000 compared to $49,887,000 for the three months ended June 30, 1993, an increase of $7,659,000 or 15.4%. The increase can be attributed to the inclusion of the net sales of Cap Toys, Inc. of $21,366,000 during the three months ended June 30, 1994. Excluding Cap Toys, Inc., net sales decreased $13,707,000 resulting from the lower level of sales of Troll products compared to the prior year. During the three-month period ended June 30, 1994 net sales of Troll products were $1,490,000 compared to $17,594,000 during the three months ended June 30, 1993. Cost of Sales was 56.0% of net sales for the three months ended June 30, 1994 compared to 45.7% for the same period in 1993. This increase can be attributed to the higher gross profit margins on sales of Troll products during the three-month period ended June 30, 1993 and the effects of the reduction of the selling price of certain of the Company's products in August 1993. Also contributing to the increase are the lower gross margins achieved by Cap Toys, Inc. compared to the Company's other sales and distribution channels. Selling, general and administrative expense was $31,666,000 or 55.0% of sales for the three months ended June 30, 1994 compared to 32,761,000 or 65.7% of net sales for the three months ended June 30, 1993, a decrease of $1,095,000 or 3.3%. Included in selling, general and administrative expense for the three months ended June 30, 1994 are the selling, general and administrative expense of Cap Toys, Inc.(approximately $5,000,000). Excluding these expenses, selling general and administrative expense decreased $6,095,000. This decrease can be primarily attributed to a decrease in expenses required to support lower sales levels (approximately $3,100,000) and cost reductions associated with the restructuring program implemented during 1993 of closing and consolidating distribution centers and administrative functions (approximately $2,400,000). Investment and other income of $782,000 for the three months ended June 30, 1994 compares to $649,000 for the three months ended June 30, 1993. The results for the three months ended June 30, 1994 reflect an income tax benefit of $2,244,000 due to the loss before income taxes of $5,571,000. This compares to an income tax benefit of $2,012,000 for the same period last year. Net loss for the three months ended June 30, 1994 of $3,327,000 compares to a net loss of $3,001,000 for the same period last year. The increase in the net loss can be primarily attributed to the increase in cost of sales as a percentage of net sales which is described above. (8) 9 Liquidity and Capital Resources At June 30, 1994, the Company had cash, cash equivalents and short-term investments of $81,798,000 compared to $82,899,000 at December 31, 1993. The Company has signed a letter of intent to acquire a toy company based in California. The acquisition, if consummated, will be accounted for as a purchase. It is anticipated that the acquisition would be paid for in cash and funded entirely from available cash and cash equivalents. Working capital requirements during the six months ended June 30, 1994 were met entirely through internally generated funds. The Company remains in a highly liquid position and believes that the resources available from operations and bank lines of credit are sufficient to meet the foreseeable requirements of its business. (9) 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K b) During the quarter ended June 30, 1994, no reports on Form 8-K were filed. (10) 11 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. RUSS BERRIE AND COMPANY, INC. ----------------------------- (Registrant) 8/12/94 By s/Paul Cargotch - - -------- ----------------------------- Date Paul Cargotch Vice President - Finance and Chief Financial Officer (11) -----END PRIVACY-ENHANCED MESSAGE-----