Florida Reprographics (Tampa, FL) Chapter 11 Bankruptcy (Part 7)

On April 8, 2011, Florida Reprographics filed with the Bankruptcy Court its Operating Report for February 2011.

Our most recent previous post covering the topic of Florida Reprographics’ Chapter 11 Bankruptcy matter took place on March 9^th. Today, we’re going to provide a brief “update”; this brief update to mention FR’s operating results, since filing Chapter 11 on November 30, 2011. FR is required to file a “monthly operating report.” Please note that, although the report requires FR to report “gross Income”, it is my understanding that “gross income” means “total cash receipts” for the month. So, FR isn’t required to report “Sales” on an accrual or GAAP basis, but, rather, on a “cash” basis. Consider that when you reflect on the numbers in the table.

We’ve done six previous posts on “Reprographics 101” about Florida Reprographics’ Chapter 11 Bankruptcy. If you want to review those earlier posts, enter “Florida Reprographics” in the search window on this blog.

The “table” below is an at-a-glance summary of the information FR has reported about its business operations since filing BK.

Info pulled from FR Monthly Operating Reports	For month of	For month of	For month of
	Dec-10	Jan-11	Feb-11
Cash Receipts ("Income") for the month	$38,620	$29,827	$35,674
A/R Balance at the end of the month	$124,505	$136,199	$109,520
Number of employees as of date of report	9	7	7

If FR’s results for full-year 2011, “gross receipts-wise”, end up at 12x the monthly average “gross receipts” results achieved during the first 3 months after FR filed for bankruptcy reorganization, then FR’s full-year 2011 “gross receipts” results will likely end up at around $417,000.

In 2006, prior to the ugly recession kicking in, FR (we estimate, based on our knowledge of FR’s operations at the time and on business conditions in the Tampa Bay Market Area at that time) generated “Sales” in excess of $2 million! So, at its current pace, FR’s Sales, at the current time, appear to be more than 75% “off peak.”

Going further, FR currently has (and has, since January, had) 7 employees. Dividing $417,000 in annual “gross receipts” by the number 7, equates to approximately $60,000 in “gross receipts” per employee. A few years ago, I recall ARC saying, in one of its SEC filings, that its average annual revenue “per employee” was over $120,000. Even today, with ARC’s substantially reduced Sales and employee-population numbers, ARC appears to be generating average annual revenues, per employee, of more than $110,00. Quite frankly, I don’t know how FR will be able to sustain a reprographics business enterprise with annual sales of only $60,000 per employee.

Now, I’d like to “re-mention” that the BK court, on January 7th, approved the owner’s (Chris Charles’) request for “officer compensation” at $4,000 “bi-weekly”, which is just north of $8,000 per month.

1. The Motion is GRANTED on a final basis as provided herein.

2. The Debtor is authorized to pay a salary of $4,000.00 on a bi-weekly basis to Christopher Charles, as President of the Debtor. To the extent Mr. Charles is reimbursed for expenses, the Debtor shall provide the detail to support such expenses to the United States Trustee upon request.

Based on FR’s most recent operating results (the past three month “Operating Reports filed with the BK court), I haven’t a clue how FR, going forward, will be able to pay-down its secured debt, let alone make any dent, at all, in its unsecured debt. At the same time, the owner, Chris Charles, will be “milking” nearly $100,000 per year from the business. Our BK laws are very strange.

Here’s a link that will take you to FR’s most recently filed (Feb 2011) Monthly Operating Report.

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JYmU1OWM1MzgtNTJlZS00MGQzLThmMGQtYWMzZWM1NjNjNmFl&hl=en&authkey=COWp5zc