SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q Quarterly Report Under Section 13 or 15(D) of the Securities Exchange Act of 1934 Commission File Number 0-5703 For Quarter and six months ended December 31, 1995 Exact name of registrant as specified in itOs charter D J. Michaels, Inc. State or other jurisdiction of incorporation or organization D New York I.R.S. employer identification no. D 11-1796714 Address of principal executive offices D 182 Smith Street Brooklyn, N.Y. 11201 RegistrantOs telephone number, including area code D 718-852-6100 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) have been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuers of common stock, as of the latest practicable date. 891,282 SHARES OF COMMON STOCK OF $1.00 PAR VALUE, AS OF DECEMBER 31, 1995. -1-
<TABLE> <CAPTION> J.MICHAELS,INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amount in thousands except per share data) For the 9 and 3 months ended 12/31 Year to date Quarter 1995 1994 1995 1994 <S> <C> <C> <C> <C> Net sales $3,694 $4,661 $1,398 $1,839 Credit service charges 996 1,143 319 389 -------- --------------------------- Total revenues 4,690 5,804 1,717 2,228 Cost of sales and operating expenses Cost of sales,including buying and occupancy expenses 1,628 2,066 570 810 Selling,general and administrative expenses 2,939 3,134 1,093 1,084 Bad debts expense 387 314 135 120 Depreciation and amortization 60 109 13 36 ------------------------------------ 5,014 5,623 1,811 2,050 ------------------------------------ Operating income (324) 181 (94) 178 ------------------------------------ Other income (expense) net Interest and dividend income 341 254 119 100 Capital gains 38 (28) - 14 Other,net (2) 39 (4) 7 ------------------------------------ 377 265 115 121 ------------------------------------ Income before taxes 53 446 21 299 Taxes on income 20 191 1 128 ------------------------------------ Net income $33 $255 $20 $171 ==================================== Net income per share 0.04 0.30 O.O2 0.20 Weighted number of shares outstanding855,633 851,282 889,604 851,282 Cash dividends per share 0.27 0.27 0.09 0.09 </TABLE> -2-
<TABLE> <CAPTION> J.MICHAELS,INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 12/31/95 12/31/94 3/31/95 <S> <C> <C> <C> ASSETS Current Assets: Cash and cash equivalents $5,397,434 $5,364,532 $9,057,812 Restricted cash - 1,033,514 1,012,012 Available for sale securities 5,500,000 4,892,389 1,456,562 Customer's installment receivables net of allowances for doubtful accounts of $400,000 in 1993 and 1992 3,500,429 4,601,303 4,080,538 Other trade receivables 78,444 55,207 28,066 Notes Receivable 380,000 Inventories net of LIFO reserve 714,371 781,311 667,697 Prepaid income taxes 214,025 119,026 226,674 Deferred income taxes 209,691 258,866 209,691 Prepaid expense and other current assets 31,168 46,845 38,016 ------------------------------------ Total current assets 16,025,562 17,152,993 16,777,068 Property,plant and equipment at cost net of accumulated depreciation and amortization (Note 3) 403,753 417,406 422,687 Assets held for lease,net of accumulated amortization Note 3) 213,556 104,439 93,060 Deferred income taxes 44,292 10,000 44,292 ------------------------------------ Total Assets $16,687,163 $17,684,838 $17,337,107 ==================================== LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Current portion,long term debt - $4,167 - Accounts payable and accrued expenses $567,127 919,253 $427,163 Short positions in marketable securities - 1,033,514 1,012,012 ----------- ------------------------ Total current liabilities 567,127 1,956,934 1,439,175 Shareholders Equity 16,120,036 15,727,904 15,897,932 ------------------------------------ Total Liabilities and shareholders equity $16,687,163 $17,684,838 $17,337,107 =========== ======================== </TABLE> -3-
<TABLE> <CAPTION> J.MICHAELS,INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited) Amount in thousands For the nine months ended 12/31/95 12/31/94 <S> <C> <>C Cash flow from operating activities: Net income $33 $255 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation 60 109 Decrease (increase) in receivables 150 28 Decrease (increase) in inventories, prepaid expenses (27) 54 Increase (decrease) in payables 140 461 ------------------ Net cash flows from operating activities 356 907 ------------------ Cash flow applied to investing activities: Purchase of fixed assets (164) (45) Sale of fixed assets - 10 Decrease (increase) in restricted cash 1,012 (223) Decrease (increase) in investments (5,055) (135) -------- --------- Net cash flows from (applied to) investing activities (4,207) (393) ------------------ Cash flow applied to financing activities: Sale of common stock-re:warrants 420 - Payment of cash dividends to stockholders (230) (230) -------- --------- Net cash flow from (applied to) investing activiti activities 190 (230) ------------------ Net increase(decrease) in cash and cash equivalents (3,661) 284 Cash and cash equivalents, beginning of period 9,058 5,376 ------- --------- Cash and cash equivalents, end of period $5,397 $5,660 ================== </TABLE> -4-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Earnings per share are computed by dividing net earnings by weighted average number of common shares outstanding during the period. 2.The financial information presented is unaudited. Such information reflects all adjustments, which in the opinion of management, are necessary to present fairly the consolidated results of operations and changes in financial position for the three months then ended. The financial statements and related information for the nine months ended December 31, 1994 has been restated to conform to restated statements presented in 10K filed for year ended March 31, 1995. 3.Accumulated depreciation and amortization was: Property Plant Leasing Equipment Assets At December 31, 1995 $986,021 $763,768 At December 31, 1994 $960,181 $716,034 At March 31, 1995 $956,137 $733,451 4. The Statements of Cash Flows are presented pursuant to the provisions of Statement Financial Accounting Standards No. 95, OStatement of Cash FlowsO. 5. ShareholdersO equity includes net unrealized gain (loss) on Securities available for sale. At December 31, 1995 D0D At December 31, 1994 $6,204 6. Subsequent Event. On February 1, 1996, the Company signed a letter of intent in connection with a proposed merger with Muriel Siebert Capital Markets Group, Inc. The letter of intent contemplates that the Company will liquidate all of its existing assets, and at the effectiveness of the Merger, the existing shareholders of the Company will receive out of the liquidation proceeds a cash payment and the right to share pro rata the remaining net after tax proceeds (after payment of expenses and liabilities) realized from the sale of the existing assets of the Company. After the Merger, the shareholders of the Company as of the effectiveness of the Merger will retain 2.5% of the shares of the surviving company, and the shareholders of Siebert will own 97.5% of the shares of the surviving company. The surviving company will continue the existing brokerage business conducted by Muriel Siebert & Co., Inc. -5-
MANAGEMENTOS DISCUSSION AND ANALYSIS OF FINANCIAL STRUCTURE AND RESULTS OF OPERATION J. Michaels, Inc. and its subsidiaries are principally engaged in the retail sale of household furnishings, primarily on credit. The Company also operates a retail furniture rental division in the Buffalo area. Approximately 85% of retail furniture sales were made to revolving credit customers. Sales (including finance charges) for the nine months decreased from the previous year by 19.9% Net earnings decreased by 87%. The decrease in sales reflects the continued weakness in regional economy. Gross margin for the six months was 53.9% as compared to 55.4% last year. Credit Service Charges decreased by 10.2% over the previous year. Selling general and administrative expenses decreased by $195,000 primarily representing decreased advertising, payroll and payroll related costs. Capital gains realized for the current nine months was approximately $38,000. At December 31, 1995 the Company had no investments which varied with the market. The reserve for unrealized gains, and losses, therefore, was reduced to zero. -6-
<TABLE> <CAPTION> RESULTS OF OPERATIONS Ratios Useful in Analyzing the Results of Operations Nine months ended December 31, 1995 1994 <S> <C> <C> Sales, including credit service charges (in thousands) $4,690 $5,804 Percent increase (decrease) over previous year (19.9) (13.6) Cost of sales as a percent of sales 34.7 35.6 Selling, general & administrative expenses- as a percent of sales 44.1 54.0 Bad debt expense as a percent of sales 8.3 5.4 Depreciation and amortization as a percent of sales 1.3 1.9 Interest and dividend income as a percent of sales 7.3 4.4 Net income (in thousands) $33 $255 Net income (as a percentage of sales) .7 4.4 </TABLE> -7-
Part II D Other Information Item 5. Other Information. On February 1, 1996, the Company signed a letter of intent in connection with a merger of the Company, and the liquidation of the CompanyOs assets. See note 6 to the financial statements. -8-
Signatures Pursuant to the requirements of the securities exchanges act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. J. Michaels, Inc. By: /s/ Arthur Fettner, Treasurer Arthur Fettner, Treasurer Date: February 8, 1996 -9-