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 ________________March_31,_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 April 30, 1996. Common stock, par value $0.25 per
share: 893,058 shares outstanding.
PART_I._FINANCIAL_INFORMATION
Item 1. Financial Statements
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
__________March_31,_________ December_31,
____1996_____________1995___ ____1995____
(Unaudited) (Note)
ASSETS:
Cash and cash equivalents $ 243,646 $ 336,514 $ 687,805
Accounts receivable 1,455,877 1,037,882 2,602,658
Refundable income taxes 1,705,000 1,593,000 -
Inventories:
Bound books and merchandise 2,777,098 2,479,956 2,465,398
Sheet stock and work in process 8,174 61,092 20,239
Paper ____759,130_ ____616,859_ ____230,050_
3,544,402 3,157,907 2,715,687
Prepaid expenses 292,280 303,461 277,007
Deferred income taxes ____917,600_ ____645,200_ ___ 917,600_
Total current assets 8,158,805 7,073,964 7,200,757
Fixed assets--net 995,212 1,139,553 1,002,171
Deferred pre-publication costs 6,581,572 6,757,577 6,707,073
Other assets ____820,067_ ____782,128_ ____827,128_
$16,555,656 $15,753,222 $15,737,129
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current portion oflong-term
debt $ 100,000 $ 100,000 $ 100,000
Notes payble--banks 4,300,000 3,600,000 -
Accounts payable 1,345,514 1,805,451 793,244
Accrued royalties 45,583 40,306 1,169,693
Other liabilities and
accrued expenses ____959,300_ ____701,738_ __1,664,621_
Total current liabilities 6,750,397 6,247,495 3,727,558
Long-Term Debt 175,000 275,000 200,000
Deferred income taxes 31,300 41,800 31,300
Shareholders' equity:
Common shares 225,000 225,000 225,000
Retained earnings __9,414,812_ __8,995,660_ _11,585,004_
9,639,812 9,220,660 11,810,004
Less treasury shares, at cost____(40,853) ____(31,733) ____(31,733)
__9,598,959_ __9,188,927_ _11,778,271_
$16,555,656 $15,753,222 $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 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
Three months ended
___________March_31,__________
_____1996____ _____1995____
Net sales $ 865,621 $ 844,959
Operating costs and expenses:
Manufacturing, royalty and amortization 812,886 818,173
Editorial and distribution 965,944 1,014,175
Selling, general and administrative ___2,931,859_ ___2,443,542_
___4,710,689_ __ 4,275,890_
Operating loss (3,845,068) (3,430,931)
Other income (expense):
Interest income 123 515
Other income 15,364 16,015
Interest expense _____(45,611) _____(45,303)
____ (30,124) _____(28,773)
Loss before income taxes (3,875,192) (3,459,704)
Credit for income taxes __(1,705,000) __(1,488,000)
Net loss (2,170,192) (1,971,704)
Retained earnings at beginning of period __11,585,004_ __10,967,364_
Retained earnings at end of period $ 9,414,812 $ 8,995,660
============= =============
Net loss per common share $ (2.43) $ (2.21)
============= =============
Average common shares outstanding 893,505 894,296
============= =============
WILLIAM H. SADLIER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
____________March_31,_________
_____1996____ _____1995____
CASH FLOW USED IN OPERATIONS:
Cash used in operations $_(4,185,570) $ (3,516,210)
CASH FLOW USED IN INVESTING ACTIVITIES:
Capital expenditures (43,970) (28,046)
Prepublication cost expenditures ____(480,499) ____(565,745)
Cash used in investing activities ____(524,469) ____(593,791)
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit 4,300,000 3,600,000
Repayment of long-term debt (25,000) (25,000)
Purchase of treasury shares ______(9,120) __________ -_
Cash provided by financing activities ___4,265,880_ ___3,575,000_
Decrease in cash and cash equivalents (444,159) (535,001)
Cash and cash equivalents at beginning of
period _____687,805_ _____871,515_
Cash and cash equivalents at end of period $ 243,646 $ 336,514
============= =============
OTHER CASH FLOW INFORMATION:
Depreciation and amortization $ 656,929 $ 661,503
============= =============
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 March 31, 1996 and 1995,
and both the condensed consolidated statements of operations and retained
earnings and the condensed consolidated statements of cash flows for the
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 both 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
three months ended March 31, 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
The first calendar quarter historically represents less than 5% of the
Company's annual sales. Most of the increase in net sales in the three
months ended March 31, 1996 was attributable to growth of Vocabulary_Workshop
and the first sales of the newly introduced Sadlier Phonics series.
There was little change in manufacturing costs compared with 1995 due
primarily to the stabilization of paper prices. In 1996, editorial expenses
were lower than in the comparable period in 1995 when revisions of two major
series had recently been completed. Selling expenses increased in 1996, the
result of costs associated with the introduction of the new Sadlier_Phonics
series, promotional expenses incurred earlier in the year compared with 1995,
and the establishment of a network of independent sales representatives to
expand the Company's presence in the public school market.
The credits 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 March 31, 1996 decreased by $93,000 from the
March 31, 1995 level. Working capital increased by $582,000 from the
comparable date in 1995.
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.
The Company maintains lines of credit with its banks, under which $10,500,000
was available at March 31, 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 March 31, 1996 and 1995, such short-term borrowing amounted
to $4,300,000 and $3,600,000, 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)
__May 10, 1996__ By: /s/ Frank_S._Dinger________
(Date) Frank S. Dinger
Chairman of the Board
Chief Operating Officer
__May 10, 1996__ By: /s/ Henry_E._Christel______
(Date) Henry E. Christel
Vice President, Treasurer
Principal Financial Officer
__May 10, 1996__ By: /s/ Dasil C. Thomas________
(Date) Dasil C. Thomas
Principal Accounting Officer