-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GZnFCA1085Lg7UgpivQx2vwzbzknssRkIqiK0fBRItDt3P6CryoErtKV83WZ4bmg ppMn+Ff1AzP/dXQT6uk8fg== 0000086082-96-000008.txt : 19961115 0000086082-96-000008.hdr.sgml : 19961115 ACCESSION NUMBER: 0000086082-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SADLIER WILLIAM H INC CENTRAL INDEX KEY: 0000086082 STANDARD INDUSTRIAL CLASSIFICATION: BOOKS: PUBLISHING OR PUBLISHING AND PRINTING [2731] IRS NUMBER: 135363840 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03037 FILM NUMBER: 96661163 BUSINESS ADDRESS: STREET 1: 9 PINE ST CITY: NEW YORK STATE: NY ZIP: 10005-1002 BUSINESS PHONE: 2122272120 MAIL ADDRESS: STREET 2: 9 PINE ST CITY: NEW YORK STATE: NY ZIP: 10005-1002 10-Q 1 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 September 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 October 31,1996. Common stock, par value $0.25 per share: 888,058 shares outstanding.
Item 1. Financial Statements WILLIAM H. SADLIER, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, ---------------------------------- ------------ 1996 1995 1995 ---------------------------------- ------------ (Unaudited) (Note) ASSETS: Cash and cash equivalents $ 2,181,303 $ 1,905,960 $ 687,805 Accounts receivable 9,653,952 9,698,288 2,602,658 Inventories: Bound books and merchandise 2,657,937 2,170,673 2,465,398 Sheet stock and work in process 3,598 10,560 20,239 Paper 203,718 175,232 230,050 ------------ ------------ ------------ 2,865,253 2,356,465 2,715,687 Prepaid expenses 370,730 376,971 277,007 Deferred income taxes 917,600 645,200 917,600 ------------ ------------ ------------ Total current assets 15,988,838 14,982,884 7,200,757 Fixed assets--net 928,872 1,049,447 1,002,171 Deferred pre-publication costs 6,120,382 6,833,395 6,707,073 Other assets 953,834 762,414 827,128 ------------ ------------ ------------ $ 23,991,926 $ 23,628,140 $ 15,737,129 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY: Current portion of long-term debt $ 100,000 $ 100,000 $ 100,000 Notes payable--banks 4,900,000 5,800,000 -- Accounts payable 874,967 816,663 793,244 Accrued royalties 1,308,392 1,144,987 1,169,693 Other liabilities and accrued expenses 3,137,921 2,606,514 1,664,621 ------------ ------------ ------------ Total current liabilties 10,321,280 10,468,164 3,727,558 Long-term debt 125,000 225,000 200,000 Deferred income taxes 31,300 41,800 31,300 Shareholders' equity: Common shares 225,000 225,000 225,000 Retained earnings 13,330,199 12,699,909 11,585,004 ------------ ------------ ------------ 13,555,199 12,924,909 11,810,004 Less treasury shares, at cost (40,853) (31,733) (31,733) ------------ ------------ ------------ 13,514,346 12,893,176 11,778,271 ------------ ------------ ------------ $ 23,991,926 $ 23,628,140 $ 15,737,129 ============ ============ ============ Note: The balance sheet at December 31, 1995 has been taken from the audited financial statements at that date and condensed.
WILLIAM H. SADLIER, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS (Unaudited) Nine months ended Three months ended September 30, September 30, -------------------------------------- --------------------------------- 1996 1995 1996 1995 -------------------------------------- --------------------------------- Net sales $ 23,075,600 $ 20,882,112 $ 15,592,449 $ 13,899,951 Operating costs and expenses: Manufacturing, royalty and amortization 7,202,407 6,873,704 4,238,031 3,962,515 Editorial and distribution 2,495,406 2,675,031 551,303 669,252 Selling, general and administrative 9,559,599 7,737,623 3,317,799 2,569,457 ------------ ------------ ------------ ------------ 19,257,412 17,286,358 8,107,133 7,201,224 ------------ ------------ ------------ ------------ Operating income 3,818,188 3,595,754 7,485,316 6,698,727 Other income (expenses): Interest income 180 685 33 163 Other income 33,509 21,169 8,377 880 Interest expense (416,070) (421,633) (211,392) (219,201) ------------ ------------ ------------ ------------ (382,381) (399,779) (202,982) (218,158) ------------ ------------ ------------ ------------ Income before income taxes 3,435,807 3,195,975 7,282,334 6,480,569 Provision for income taxes 1,512,000 1,374,000 3,204,000 2,786,000 ------------ ------------ ------------ ------------ Net income 1,923,807 1,821,975 4,078,334 3,694,569 Retained earnings at beginning of period 11,585,004 10,967,364 9,430,477 9,094,770 ------------ ------------ ------------ ------------ Cash dividends, $.20 and $.10 per share in 1996 and 1995 repectively (178,612) (89,430) (178,612) (89,430) ------------ ------------ ------------ ------------ Retained earnings at end of period $ 13,330,199 $ 12,699,909 $ 13,330,199 $ 12,699,909 ============ ============ ============ ============ Income per common share $ 2.15 $ 2.04 $ 4.57 $ 4.13 ============ ============ ============ ============ Average common shares outstanding 893,237 894,296 893,058 894,296 ============ ============ ============ ============
WILLIAM H. SADLIER, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended September 30 --------------------------- 1996 1995 --------------------------- CASH FLOW USED IN OPERATIONS: Cash used in operations $(1,833,155) $(2,698,335) ----------- ----------- CASH FLOW USED IN INVESTING ACTIVITIES: Capital expenditures (79,306) (41,227) Prepublication cost expenditures (1,231,309) (1,861,563) ----------- ----------- Cash used in investing activities (1,310,615) (1,902,790) ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Net borrowings under lines of credit 4,900,000 5,800,000 Dividends paid (178,612) (89,430) Repayment of long-term debt (75,000) (75,000) Purchase of treasury shares (9,120) -- ----------- ----------- Cash provided by financing activities 4,637,268 5,635,570 ----------- ----------- Increase in cash and cash equivalents 1,493,498 1,034,445 Cash and cash equivalents at beginning of period 687,805 871,515 ----------- ----------- Cash and cash equivalents at end of period $ 2,181,303 $ 1,905,960 =========== =========== OTHER CASH FLOW INFORMATION: Depreciation and amortization $ 1,970,606 $ 2,003,384 =========== ===========
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 September 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 nine-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 nine months ended September 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 in the nine months ended September 30, 1996 rose from $20,882,000 to $23,076,000, or 10%, compared with the same period in 1995. Sales of religion products increased by 4% and sales of non-religion products increased by 25%. The Company's sales to public schools were up by 26%. Coming to Faith remained strong and the new First Eucharist and First Reconciliation provided growth in the sacrament program. Initial sales of Sadlier Phonics together with New Progress in Mathematics and Vocabulary Workshop, accounted for the increase in non-religion products. Manufacturing costs decreased slightly as a percentage of net sales due to the easing of paper prices in 1996. No significant fluctuation in paper prices is anticipated at this time. Distribution expenses were reduced because more of the Company's order fulfillment costs were charged to customers. Selling, general and administrative expenses increased from 37% to 41%. Selling expenses rose in 1996, reflecting costs related to the new Sadlier Phonics series, the expanded promotion of New Progress in Mathematics, Vocabulary Workshop and the Company's other language art products, and a network of independent sales representatives selling to public schools. Operating income in the nine months ended September 30, 1996 increased from $3,596,000 to $3,818,000, or 6%. Net income for the nine months was $1,924,000, or $2.15 per share, in 1996 compared with $1,822,000, or $2.04 per share, in 1995. The Company's fourth quarter is historically a loss period since educational publishing sales decline while operating expenses continue. Net income and income per share for the full year will be lower than the nine month amounts. The 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 and working capital at September 30, 1996 increased by $275,000 and $1,153,000, respectively, from the comparable date in 1995, primarily due to reduced prepublication cost expenditures and an increase in payments received from customers in 1996. The increase in inventories over 1995 levels, which had been $1,263,000 at June 30, 1996, declined to $509,000 at September 30, 1996, and is expected to be reduced further by year end. 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 for the balance of 1996. In October of 1996, the Company completed the increase in its bank lines of credit, from $10,500,000 to $12,000,000. 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 September 30, 1996 and 1995, such short-term borrowing amounted to $4,900,000 and $5,800,000, respectively. The Company's peak borrowing was $10,700,000 in 1996 and $10,000,000 in 1995. In 1994, the Company financed the acquisition of a textbook series from another publisher with a $400,000 unsecured four year term loan, payable in equal monthly installments with interest. $225,000 of the principal amount was outstanding at September 30, 1996. 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) November 7, 1996 By: /s/ Frank S. Dinger - ---------------- ----------------------- (Date) Frank S. Dinger Chairman of the Board and Chief Operating Officer November 7, 1996 By: /s/ Henry E. Christel - ---------------- ------------------------- (Date) Henry E. Christel Vice President,Treasurer Principal Financial Officer November 7, 1996 By: /s/ Dasil C. Thomas - ---------------- ----------------------- (Date) Dasil C. Thomas Controller Principal Accounting Officer EX-27 2
5 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. 9-MOS DEC-31-1996 SEP-30-1996 2,181,303 0 10,309,084 655,132 2,865,253 15,988,838 2,061,326 1,132,454 23,991,926 10,321,280 0 0 0 225,000 13,289,346 23,991,926 23,075,600 23,075,600 7,202,407 19,257,412 0 0 416,070 3,435,807 1,512,000 1,923,807 0 0 0 1,923,807 2.15 2.15
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