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, 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 October 31, 1995.
Common stock, par value $0.25 per share: 894,296 shares outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
_____ September 30, ______ December 31,
___ 1995 ___ ___ 1994 ___ ___ 1994 ___
(Unaudited) (Note)
ASSETS:
Cash and cash equivalents $ 1,905,960 $ 1,561,123 $ 871,515
Accounts receivable 9,698,288 8,922,939 2,185,333
Inventories:
Bound books and merchandise 2,170,673 1,403,074 1,652,782
Sheet stock and work in process 10,560 85,410 55,657
Paper ____175,232 _____51,648_ _____79,895_
2,356,465 1,540,132 1,788,334
Prepaid expenses 376,971 433,120 333,035
Deferred income taxes ____645,200_ ____650,200_ ____645,200_
Total current assets 14,982,884 13,107,514 5,823,417
Fixed assets--net 1,049,447 1,204,101 1,163,009
Deferred pre-publication costs 6,833,395 6,500,952 6,801,832
Other assets ____762,414_ ____639,954_ ____751,927_
$23,628,140 $21,452,521 $14,540,185
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current portion of long-term debt $ 100,000 $ - $ 100,000
Notes payable--banks 5,800,000 5,300,000 -
Accounts payable 816,663 957,908 986,436
Accrued royalties 1,144,987 981,954 1,082,481
Other liabilities and
accrued expenses __2,606,514_ __2,057,689_ ____868,837_
Total current liabilities 10,468,164 9,297,551 3,037,754
Long-term debt 225,000 - 300,000
Deferred income taxes 41,800 32,900 41,800
Shareholders' equity:
Common shares 225,000 225,000 225,000
Retained earnings _12,699,909_ _11,928,803_ _10,967,364_
12,924,909 12,153,803 11,192,364
Less treasury shares, at cost ____(31,733) ____(31,733) ____(31,733)
_12,893,176_ _12,122,070_ _11,160,631_
$23,628,140 $21,452,521 $14,540,185
============ ============ ============
Note: The balance sheet at December 31, 1994 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,
____1995____ ____1994____ ____1995____ ____1994____
Net sales $20,882,112 $19,041,467 $13,899,951 $13,041,111
Operating costs and expenses:
Manufacturing, royalty
and amortization 6,873,704 5,755,331 3,962,515 3,348,578
Editorial and distribution 2,675,031 3,263,935 669,252 963,389
Selling, general and
administrative __7,737,623_ __7,749,268_ __2,569,457_ __2,443,073
_17,286,358_ _16,768,534_ __7,201,224_ __6,755,040_
Operating income 3,595,754 2,272,933 6,698,727 6,286,071
Other income (expense):
Interest income 685 9,181 163 478
Other income 21,169 13,020 880 7,996
Interest expense ___(421,633) ___(256,862) ___(219,201) ___(155,614)
___(399,779) ___(234,661) ___(218,158) ___(147,140)
Income before income taxes 3,195,975 2,038,272 6,480,569 6,138,931
Provision for income taxes __1,374,000_ ____876,000_ __2,786,000_ __2,639,000_
Net income 1,821,975 1,162,272 3,694,569 3,499,931
Retained earnings at beginning
of period 10,967,364 10,945,390 9,094,770 8,607,731
Cash dividends, $.10 and $.20
per share in 1995 and 1994,
repectively ____(89,430) ___(178,859) ____(89,430) ___(178,859)
Retained earnings at end of
period $12,699,909 $11,928,803 $12,699,909 $11,928,803
============ ============ ============ ============
Income per common share $ 2.04 $ 1.30 $ 4.13 $ 3.91
============ ============ ============ ============
Average common shares
outstanding 894,296 895,796 894,296 894,296
============ ============ ============ ============
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
_____1995____ _____1994____
CASH FLOW USED IN OPERATIONS:
Cash used in operations $ (2,698,335) $ (3,107,764)
CASH FLOW USED IN INVESTING ACTIVITIES:
Proceeds from sale of short-term investments - 695,880
Capital expenditures (41,227) (140,752)
Prepublication cost expenditures (1,861,563) (3,010,738)
Purchase of textbook series ________-____ ____(360,000)
Cash used in investing activities __(1,902,790) __(2,815,610)
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit 5,800,000 5,300,000
Dividends paid (89,430) (178,859)
Repayment of long-term debt (75,000) -
Purchase of treasury shares ________-____ _____(25,000)
Cash provided by financing activities ___5,635,570_ ___5,096,141_
Increase (decrease) in cash and cash equivalents 1,034,445 (827,233)
Cash and cash equivalents at beginning of period _____871,515_ ___2,388,356_
Cash and cash equivalents at end of period $ 1,905,960 $ 1,561,123
============= =============
OTHER CASH FLOW INFORMATION:
Depreciation and amortization $ 2,003,384 $ 1,830,226
============= ============
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, 1995 and 1994,
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, 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 nine
months ended September 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
In the nine months ended September 30, 1995, net sales rose by 10% over the
comparable period in 1994. The Catholic School and Parish Editions of Coming
to Faith, and New Progress in Mathematics and Vocabulary Workshop all
continued to exhibit strong sales growth. Their increases more than offset
the sales generated by the Catechism of the Catholic Church in 1994.
Increased paper prices resulted in higher manufacturing costs in 1995.
During the third quarter of 1995, the Company increased the prices of most of
its products and expects to recover most of these higher costs. Editorial
expenses continued to be lower in 1995 due to the completion of the revisions
of several major series. Selling and promotional expenses directly affected
by the higher sales level increased in the three months ended September 30,
1995. General and administrative expenses also rose slightly in that period.
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 1995 accounted for most of the change in "other income."
The credits and provision for income taxes in 1995 and 1994 were based on the
effective tax rates estimated for each full year.
Liquidity and Capital Resourses
Cash and cash equivalents and working capital at September 30, 1995 increased
by $345,000 and $705,000, respectively, from the comparable date in 1994,
primarily due to reduced prepublication cost and editorial expenditures in
1995. Because of the reduced availability of paper in 1995, the Company
purchased more paper for inventory than it normally does 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 September 30, 1995 and 1994, such short-term borrowing
amounted to $5,800,000 and $5,300,000, respectively. The Company's peak
borrowing was $10,000,000 in 1995 and $8,600,000 in 1994.
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 6, 1995__ By: ___/s/ Frank S. Dinger____
(Date) Frank S. Dinger
Chairman of the Board and
Chief Operating Officer
__November 6, 1995__ By: ___/s/ Henry E. Christel__
(Date) Henry E. Christel
Vice President, Treasurer
Principal Financial Officer