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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, 2002
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 0-12362
Berger Holdings, Ltd.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2160077
----------------------------------------------------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
805 Pennsylvania Boulevard, Feasterville, PA 19053
----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 355-1200
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 ninety days.
YES X NO _____
As of August 14, 2002, the Registrant had outstanding 5,022,170
shares of its common stock, par value $0.01 per share (the
"Common Stock").
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BERGER HOLDINGS, LTD.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance
Sheets at June 30, 2002 (unaudited)
and December 31, 2001 3
Condensed Consolidated Statements of
Operations (unaudited) for the three-month
periods ended June 30, 2002 and 2001 4
Condensed Consolidated Statements of
Operations (unaudited) for the six-month
periods ended June 30, 2002 and 2001 5
Condensed Consolidated Statements
of Cash Flows (unaudited) for the six-month
periods ended June 30, 2002 and 2001 6
Notes to Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
-2-
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December
2002 2001
ASSETS (unaudited) (audited)
------------------- ------------------
Current assets
Cash and cash equivalents $ 31,270 $ 465,064
Accounts receivable, net of allowance for doubtful
accounts of $127,000 in 2002 and $97,000 in 2001 5,144,058 4,502,631
Inventories 7,153,103 6,496,091
Prepaid and other current assets 602,742 577,451
Deferred income taxes 398,090 398,090
------------------- ------------------
Total current assets 13,329,263 12,439,327
Property, plant and equipment, net 9,510,437 10,082,728
Other assets, net 2,870,771 2,951,985
Goodwill, net 10,087,476 10,165,850
------------------- ------------------
Total assets $ 35,797,947 $ 35,639,890
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long term debt $ 898,190 $ 2,825,785
Accounts payable 3,278,516 1,705,751
Accrued expenses 1,817,321 2,388,724
------------------- ------------------
Total current liabilities 5,994,027 6,920,260
Long term debt 16,070,212 15,148,108
Deferred income taxes 226,796 226,796
Commitments and contingencies - -
Stockholders' equity
Common stock $.01 par value
Authorized 20,000,000 shares in 2002 and 2001
Issued 5,990,795 and 5,989,736 shares in 2002 and 2001
Outstanding 5,022,170 and 5,087,261 shares in 2002 and 2001 59,908 59,897
Additional paid-in-capital 18,190,178 18,187,726
Accumulated deficit (1,845,298) (2,326,843)
------------------- ------------------
16,404,788 15,920,780
Less common stock subscribed (289,250) (289,250)
Less treasury stock at cost
968,625 shares in 2002 and 902,475 shares in 2001 (2,608,626) (2,286,804)
------------------- ------------------
Total stockholders' equity 13,506,912 13,344,726
------------------- ------------------
Total liabilities and stockholders' equity $ 35,797,947 $ 35,639,890
=================== ==================
See accompanying notes to condensed consolidated financial statements
-3-
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30,
2002 2001
-------------- --------------
Net sales $12,056,516 $13,870,909
Cost of sales 9,378,268 10,442,795
-------------- --------------
Gross profit 2,678,248 3,428,114
Selling, administrative and general expenses 1,518,050 1,936,379
-------------- --------------
Income from operations 1,160,198 1,491,735
Interest expense (305,944) (416,895)
Other income, net 4,567 2,791
-------------- --------------
Income before income tax 858,821 1,077,631
Provision for income tax 377,881 474,158
-------------- --------------
Net income $ 480,940 $ 603,473
============== ==============
Basic earnings per share $ .10 $ .11
============== ==============
Basic weighted average common shares outstanding 5,039,878 5,354,030
============== ==============
Diluted earnings per share $ .07 $ .10
============== ==============
Weighted average common shares outstanding 5,039,878 5,354,030
Add: effect of vested and non-vested dilutive securities 1,843,885 919,854
Add: effect of convertible debt and preferred stock - -
-------------- --------------
Diluted weighted average common shares outstanding 6,883,763 6,273,884
============== ==============
See accompanying notes to condensed consolidated financial statements
-4-
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30,
2002 2001
------------ ------------
Net sales $ 21,909,687 $ 24,095,270
Cost of sales 17,437,684 18,834,801
------------ ------------
Gross profit 4,472,003 5,260,469
Selling, administrative and general expenses 3,020,075 3,703,093
------------ ------------
Income from operations 1,451,928 1,557,376
Interest expense (604,296) (863,388)
Other income, net 12,269 16,191
------------ ------------
Income before income tax 859,901 710,179
Provision for income tax 378,356 312,479
------------ ------------
Net income $ 481,545 $ 397,700
============ ============
Basic earnings per share $ .10 $ .07
============ ============
Basic weighted average common shares outstanding 5,053,131 5,347,887
============ ============
Diluted earnings per share $ .07 $ .07
============ ============
Weighted average common shares outstanding 5,053,131 5,347,887
Add: effect of vested and non-vested dilutive securities 1,827,407 661,527
Add: effect of convertible debt and preferred stock - 11,604
------------ ------------
Diluted weighted average common shares outstanding 6,880,538 6,021,018
============ ============
See accompanying notes to condensed consolidated financial statements
-5-
BERGER HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
2002 2001
----------- -----------
Cash flows from operating activities
Net income $ 481,545 $ 397,700
Adjustments to reconcile net income to net cash provided by
operating activities
Deferred income taxes - 181,058
Depreciation and amortization 1,162,886 1,310,615
Increase in accounts receivable allowance 30,000 39,000
Loss on disposition of assets - 124
Change in operating assets and liabilities
Accounts receivable (671,427) (1,643,012)
Inventories (657,012) 311,899
Other current and long-term assets (127,191) (116,624)
Accounts payable and accrued expenses 1,001,362 546,077
----------- -----------
Net cash provided by operating activities 1,220,163 1,026,837
----------- -----------
Cash flows from investing activities
Acquisition of property and equipment, net of retirements (329,107) (501,897)
----------- -----------
Net cash used in investing activities (329,107) (501,897)
----------- -----------
Cash flows from financing activities
Proceeds from working capital line 6,547,218 -
Repayments of working capital line (6,873,941) (197,440)
Proceeds from equipment term loan 2,400,000 750,000
Repayments of equipment term loan (2,359,082) (767,855)
Proceeds from long term debt 55,768 36,052
Repayments of long term debt (775,454) (257,246)
Repurchase of common stock (321,822) (169,003)
Proceeds from the exercise of common stock options 2,463 -
----------- -----------
Net cash used in financing activities (1,324,850) (605,492)
----------- -----------
Net decrease in cash (433,794) (80,552)
Cash and cash equivalents, beginning of period 465,064 306,912
----------- -----------
Cash and cash equivalents, end of period $ 31,270 $ 226,360
=========== ===========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 604,296 $ 863,388
=========== ===========
Cash paid during the period for income taxes $ 260,967 $ 109,000
=========== ===========
See accompanying notes to condensed consolidated financial statements
-6-
BERGER HOLDINGS, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring accruals) considered necessary for a fair
presentation have been included.
The financial statements include the accounts of Berger Holdings, Ltd.
(the "Company") and its wholly owned subsidiaries, Berger Financial Corp.,
Berger Bros Company, Copper Craft, Inc. and Walker Metal Products, Inc. All
inter-company transactions and balances have been eliminated.
The Company manufactures and distributes roof drainage systems for both
residential and commercial roofs. The Company's roof drainage product line,
consisting of gutters, downspouts, soffits, fascias, snow guards, trim coil,
custom metal architectural pieces, and other associated accessories and
fittings, is manufactured by the Company at its facilities located in
Pennsylvania, Texas and Georgia. The Company sells roof drainage and ancillary
products to wholesale distributors who sell directly to roofers and contractors
for use in the repair and replacement of roof drainage systems in existing
buildings or for use in new construction. The principal raw materials used in
manufacturing the Company's roof drainage and ancillary products are aluminum,
steel and copper.
Certain balances have been reclassified to conform to the current year
presentation. The Company reclassified customer incentive program costs to Net
Sales for both the three-month and six-month periods ended June 30, 2001.
Note 2. Inventories:
Inventories are valued at the lower of cost or market. Cost is
determined using the weighted average method.
Components of inventories at June 30, 2002 and December 31, 2001
consisted of the following:
June 30, 2002 December 31, 2001
----------------- ------------------
Raw materials and packaging $3,970,987 $3,633,886
Finished goods 3,182,116 2,862,205
---------- ----------
Total Inventories $7,153,103 $6,496,091
========== ==========
Note 3. Income Taxes:
Consolidated income tax expense for the six-month period ended June 30,
2002 and the six-month period ended June 30, 2001 results in an effective rate
of 44%. The Company had no federal income tax net operating loss carryforward
available at June 30, 2002.
Note 4. Treasury Stock:
In May 1999, the Company received approval from its Board of Directors
to begin an open market stock
-7-
repurchase program under which the aggregate number of shares currently
authorized for repurchase is 1,560,000. Of this amount, the Company had
repurchased a total of 814,625 shares, of which 66,150 shares were repurchased
during the six months ended June 30, 2002, excluding the private purchase of
154,000 shares from various investors. The repurchases will continue to be made
from time to time through open market purchases or privately negotiated
transactions at the discretion of the Company. The amount and timing of the
repurchases will depend on market conditions and other factors.
Note 5. Derivative Financial Instruments:
Effective January 1, 2001, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 133 and No. 138
"Accounting for Derivative Instruments and Hedging Activities." The Company has
only limited involvement with derivative financial instruments and does not use
them for trading purposes. As of June 30, 2002, the Company has no outstanding
derivative instruments or hedging activities.
Note 6. Goodwill and Other Intangible Assets:
Effective January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 142 "Goodwill and Other
Intangible Assets." The Company has tested for goodwill impairment and
determined that there is none related to the Company's prior acquisitions. The
Company has ceased amortizing goodwill that relates to these acquisitions. The
following table adjusts the second quarter and six months of 2001 to compare it
to the second quarter and six months of 2002.
For the Quarter Ended For the Six Months Ended
June 30, June 30,
2002 2001 2002 2001
--------------------------------------------------
Net income $ 480,940 $ 603,473 $ 481,545 $ 397,700
Add back: Goodwill amortization - 88,133 - 176,266
--------------------------------------------------
Adjusted net income $ 480,940 $ 691,606 $ 481,545 $ 573,966
==================================================
Basic earnings per share:
Net income $ .10 $ .11 $ .10 $ .07
Goodwill amortization - .02 - .04
--------------------------------------------------
Adjusted net income $ .10 $ .13 $ .10 $ .11
==================================================
Diluted earnings per share:
Net income $ .07 $ .10 $ .07 $ .07
Goodwill amortization - .01 - .03
--------------------------------------------------
Adjusted net income $ .07 $ .11 $ .07 $ .10
==================================================
Note 7. Long-Lived Assets:
Effective January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets." The Company has tested for
long-lived asset impairment and determined that there is no material impact to
the Company's financial statements.
-8-
Note 8. Refinancing:
Effective June 13, 2002, the Company replaced its working capital and term
loans with Fleet Bank, N.A., formerly Summit Bank, N.A. with loans from Wachovia
Bank, National Association (the "Bank"). The working capital loan obtained from
the Bank provides $9,500,000 of financing at a borrowing base of LIBOR plus 2.75
basis points due monthly, not to exceed the Bank's prime rate for a three-year
term. The term loan obtained from the Bank provides $2,400,000 of financing at a
borrowing base of LIBOR plus 2.60 basis points, not to exceed the Bank's prime
rate with monthly principal payments of approximately $29,000. This term loan is
due June 1, 2009. The Company has the option to obtain another term loan of
$2,400,000 from the Bank at a borrowing base of LIBOR plus 2.25 basis points,
not to exceed the Bank's prime rate. All of the Company's loans with the Bank
are predicated upon certain financial covenants, which will be monitored on a
quarterly basis. The working capital loan and term loans are secured by all of
the Company's assets. At June 30, 2002, the Company met all of its financial
covenants.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Results of Operations
Sales for the three-month period ended June 30, 2002 (the "Current
Quarter") were $12,056,516, a decrease of 13.1%, or $1,814,393, as compared to
$13,870,909 for the three-month period ended June 30, 2001 (the "Comparable
Quarter"). This decrease in sales is attributable to the mild winter experienced
in 2002 in the Company's core market, the softness of general economic
conditions and increased competition in the form of pricing pressure and lost
business.
Cost of sales was $9,378,268 in the Current Quarter, as compared to
$10,442,795 in the Comparable Quarter. As a percentage of net sales, cost of
sales increased to 77.8% in the Current Quarter from 75.3% in the Comparable
Quarter. This percentage increase is mainly attributable to increases in raw
material costs during the Current Quarter as compared to the Comparable Quarter
and lower sales prices on certain products due to increased competition as
explained above.
Selling, administrative and general expenses were $1,518,050 in the Current
Quarter as compared to $1,936,379 in the Comparable Quarter. As a percentage of
net sales, selling, administrative and general expenses decreased to 12.6% in
the Current Quarter, compared to 14.0% in the Comparable Quarter. This decrease
in expenses is primarily the result of a reduction in ongoing operational
expenses and the adoption of SFAS 142, which eliminated the amortization of
goodwill.
Income from operations in the Current Quarter was $1,160,198, a decrease of
$331,537 or 22.2%, versus $1,491,735 in the Comparable Quarter. This decrease in
income from operations during the Current Quarter is the result of the decreases
in sales due to the mild winter, general economic conditions and increased
competition, while incurring increases in raw material costs and lowering
certain prices.
During the Current Quarter, the Company reported net income of $480,940 a
decrease of $122,533 or 20.3%, as compared to net income of $603,473 for the
Comparable Quarter. This decrease in net income is a result of lower income from
operations as described above, partially offset by reductions in interest
expense and the provision for income tax.
Sales for the six-month period ended June 30, 2002 (the "Current Half")
were $21,909,687, a decrease of 9.1%, or $2,185,583, as compared to $24,095,270
for the six-month period ended June 30, 2001 (the "Comparable
-9-
Half"). This decrease in sales is attributable to the exceptionally mild winter
experienced in the Company's core market in 2002 versus the more typical winter
damage experienced in 2001, the softness of general economic conditions and
pricing pressure due to increased competition as explained above.
Cost of sales was $17,437,684 in the Current Half, as compared to
$18,834,801 in the Comparable Half. As a percentage of net sales, cost of sales
increased to 79.6% in the Current Half from 78.2% in the Comparable Half. This
percentage increase is mainly attributable to increases in raw material costs
during the Current Quarter as compared to the Comparable Quarter and lower
prices on certain products due to increased competition.
Selling, administrative and general expenses were $3,020,075 in the Current
Half as compared to $3,703,093 in the Comparable Half. As a percentage of net
sales, selling, administrative and general expenses decreased to 13.8% in the
Current Half, compared to 15.4% in the Comparable Half. This decrease in
expenses is primarily the result of a reduction in ongoing operational expenses
and the adoption of SFAS 142, which eliminated the amortization of goodwill.
Income from operations in the Current Half was $1,451,928, a decrease of
$105,448 or 6.8%, versus $1,557,376 in the Comparable Half. This decrease in
income from operations during the Current Half is the result of the decreases in
sales due to the mild winter, general economic conditions and increased
competition, while incurring increases in raw material costs and lowering
certain prices.
During the Current Half, the Company reported net income of $481,545, an
increase of $83,845, as compared to net income of $397,700 for the Comparable
Half. This increase is a result of a $259,092 reduction in interest expense
which offset the reduction in income from operations as described above. The
decrease in interest expense is due to reduced principal balances and reduced
interest rates.
Liquidity and Capital Resources
At June 30, 2002, the Company had long-term debt consisting of working
capital loans of $6,547,218, term loans of $2,400,000, a 10% Subordinated
Debenture of $1,500,000, an 11% Subordinated Debenture of $2,500,000, a note
payable of $800,000 from a prior acquisition, capital leases of $735,086 and a
mortgage for $2,486,098, resulting in total debt outstanding of $16,968,402.
At June 30, 2002, working capital was $7,335,236, resulting in a current
ratio of 2.2 to 1, as compared to working capital of $5,519,067 and a ratio of
1.8 to 1 at December 31, 2001. This change in working capital is primarily the
result of the Company refinancing its credit facility (the "Credit Facility")
with Wachovia Bank, N.A. on June 14, 2002 from Fleet Bank, N.A., formerly Summit
Bank, N.A., which was due on January 2, 2003.
Current liabilities at June 30, 2002 totaled $5,994,027, consisting
primarily of $5,095,837 in accounts payable and accrued expenses and $898,190 in
current maturities of long-term debt. At December 31, 2001, total current
liabilities were $6,920,260, consisting primarily of $4,094,475 in accounts
payable and accrued expenses and $2,825,785 in current maturities of long-term
debt. The decrease in current liabilities is primarily due to the refinancing of
the Company's credit facility.
At June 30, 2002, the Company had stockholders' equity of $13,506,912, as
compared to $13,344,726 at December 31, 2001. This change is primarily
attributable to the purchases of Common Stock pursuant to the Company's stock
repurchase program and the Current Half's net income.
Cash provided by operating activities for the Current Half was $1,220,163,
as compared to $1,026,837 in the Comparable Half. This increase is due to the
Current Half's net income, increases in accounts receivable, and increases in
accounts payable and accrued expenses, which funded the Company's increased
inventory.
-10-
Net cash used in investing activities was $329,107 in the Current Half, as
compared to $501,897 in the Comparable Half. Net cash used in investing
activities in both the Current and Comparable Half was used to upgrade
facilities and purchase new equipment.
Net cash used in financing activities totaled $1,324,850 in the Current
Half, as compared to $605,492 in the Comparable Half. This difference is due to
payments on long-term debt and the repurchase of Common Stock.
The Company's contractual obligations and commercial commitments over the
next five years and beyond are as follows:
Expected Cash Payments by Year (in thousands)
--------------------------------------------------------------
Remainder 2007 &
Contractual Commitments of 2002 2003 2004 2005 2006 Beyond Total
- ----------------------- ------- ---- ---- ---- ---- ------ -----
Revolving credit $ - $ - $ - $6,547 $ - $ - $ 6,547
Long term debt 247 4,502 1,314 1,727 197 1,699 9,686
Capital lease obligations 199 372 118 30 13 3 735
Operating lease obligations 626 648 563 512 461 316 3,126
---------------------------------------------------------------------------------------
Total $1,072 $5,522 $1,995 $8,816 $671 $2,018 $20,094
=======================================================================================
The Company believes that its cash flow from operations and its sources of
financing are adequate for its anticipated needs in the near term. As described
above, the Company obtained a new Credit Facility on June 13, 2002 from Wachovia
Bank, National Association. The cost and terms of any future financing
arrangements will depend on market conditions and the Company's financial
position at that time.
New Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 "Business Combinations"
("SFAS 141"). This statement requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method and supersedes APB
Opinion No. 16, "Business Combinations," and Statement of Financial Accounting
Standards No. 38, "Accounting for Preacquisition Contingencies of Purchased
Enterprises." Also in July 2001, the FASB issued Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS
142"). SFAS 142 supersedes APB Opinion No. 17 "Intangible Assets." Under SFAS
142, goodwill is no longer subject to amortization over its estimated useful
life, but instead subject to at least an annual assessment for impairment by
applying a fair-value-based test.
As of the June 30, 2002, the Company has unamortized goodwill in the amount
of $10,087,476, which is subject to the transition provisions of SFASs 141 and
142. Amortization expense related to goodwill was $157,381 for the Comparable
Quarter and $314,761 for the Comparable Half. The Company has analyzed the
implications of SFASs 141 and 142 and has concluded that there is no material
impact on the financial statements of the Company.
In July 2001, the FASB issued Statement of Financial Accounting Standards
No. 143, "Accounting for Asset Retirement Obligations," ("SFAS 143") which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. The standard
-11-
applies to legal obligations with the retirement of long-lived assets that
result from the acquisition, construction, development and (or) normal use of
the asset. Adoption is required for fiscal years beginning after June 15, 2002,
with earlier adoption encouraged. The Company is in the process of analyzing the
implications of SFAS 143 and does not believe that the adoption of this
statement will have a material impact on the net earnings of the Company.
In October 2001, the FASB issued Statement of Financial Accounting Standard
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
("SFAS 144") which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. While SFAS 144 supersedes Statement
of Financial Accounting Standard No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," it retains many
of the fundamental provisions of that Statement. SFAS 144 also supersedes the
accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations--Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business. However, it retains
the requirement in Opinion No. 30 to report separately discontinued operations
and extends that reporting to a component of an entity that either has been
disposed of (by sale, abandonment, or in a distribution to owners) or is
classified as held for sale. SFAS 144 is effective for fiscal years beginning
after December 15, 2001. The Company has analyzed the implications of this
Statement and the guidance did not have an impact on the net earnings of the
Company.
In April 2002, the FASB issued Statement of Financial Accounting Standard
No. 145, "Rescission of SFAS No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections." This Statement rescinds SFAS No. 4, "Reporting
Gains and Losses from Extinguishment of Debt" and SFAS No. 64, "Extinguishments
of Debt Made to Satisfy Sinking-Fund Requirements." The Statement requires gains
and losses from debt extinguishments that are used as part of the Company's risk
management strategy to be classified as income from operations rather than as
extraordinary items, net of tax. The Company adopted this Statement as of July
1, 2002.
In June 2002, the FASB issued Statement of Financial Accounting Standard
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities."
This Statement addresses the accounting for costs associated with disposal
activities covered by SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," and with exit (restructuring) activities previously
covered by Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity." This
Statement nullifies EITF 94-3 in its entirety and requires that a liability for
all costs to be recognized when the liability is incurred. This Statement also
establishes a fair value objective for initial measurement of the liability. The
Statement will be applied prospectively to exit or disposal activities initiated
after December 31, 2002. The Company is reviewing the provisions of the
Statement.
Forward-looking Statements
The information presented herein contains predictions, estimates and other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward
looking statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance and achievements of the
Company to differ materially from those expressed or implied by such
forward-looking statements. Although the Company believes its plans, intentions
and expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that such plans, intentions,
expectations, objects or goals will be achieved. Important factors that could
cause actual results to differ materially from those included in the
forward-looking statements include but are not limited to: increases in the cost
of raw materials; fluctuations in demand for the Company's products; weather
conditions; future acquisitions; attempts to expand the Company's operations;
integration of acquired businesses; need for additional financing; competition;
and dependence on key personnel.
-12-
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
For information regarding the Company's exposure to certain market risks,
see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001. There
have been no significant changes since December 31, 2001 in the Company's
portfolio of financial instruments or market risk exposures.
-13-
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities and Use of Proceeds.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
Item 3 - Defaults Upon Senior Securities.
None.
Item 4 - Submission of Matters to a Vote of Securities Holders.
The Company's 2002 Annual Meeting of Shareholders (the "Meeting") was held
on June 19, 2002 at the Company's headquarters in Feasterville, Pennsylvania. At
the Meeting, Joseph F. Weiderman, John P. Kirwin, III and Dr. Jacob I. Haft were
re-elected as directors of the Company, with terms to expire in the year 2005 or
until their successors in office have been duly elected and qualified. With
regard to Mr. Weiderman, 4,391,475 votes were cast in favor of his election, 50
against and 13,578 abstained. With regard to Mr. Kirwin, 4,394,405 votes were
cast in favor of his election, 50 against and 10,648 abstained. With regard to
Dr. Haft, 4,393,371 votes were cast in favor of his election, 84 against and
11,648 abstained.
The following directors have terms of office that continued after the
Meeting: Paul. L. Spiese, III, Larry Falcon, Dr. Jon Kraut, Theodore A.
Schwartz, and Jay Seid.
Item 5 - Other Information.
None.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibit 10 Loan and Security Agreement, dated June 13, 2002, among
Berger Holdings, Ltd., Berger Financial Corp., Berger Bros Company, Copper
Craft, Inc., Walker Metal Products, Inc. and Wachovia Bank, National
Association.
Exhibit 99 Statement of Chief Executive Officer and Chief Financial
Officer of the Company pursuant to 18 U.S.C. Section 1350.
(b) None.
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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.
BERGER HOLDINGS, LTD.
By: /s/ JOSEPH F. WEIDERMAN
---------------------------
Joseph F. Weiderman
President and
Chief Operating Officer
By: /s/ FRANCIS E. WELLOCK, JR.
-------------------------------
Francis E. Wellock, Jr.
Chief Financial Officer
Date: August 14, 2002
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