-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L+iqpZsbygelZ/TzPVa14QtciAhG/NNAZzF0raUcjamBpaC0KE5EZ04G5+DZaeIA Hqv9Y3GxB5laoO8+gPLaHg== 0000950168-96-000819.txt : 19960515 0000950168-96-000819.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950168-96-000819 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPEIZMAN INDUSTRIES INC CENTRAL INDEX KEY: 0000092827 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY (NO METALWORKING MACHINERY) [3550] IRS NUMBER: 560901212 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08544 FILM NUMBER: 96562878 BUSINESS ADDRESS: STREET 1: P O BOX 31215 CITY: CHARLOTTE STATE: NC ZIP: 28231 BUSINESS PHONE: 7043723751 MAIL ADDRESS: STREET 1: P O BOX 31215 CITY: CHARLOTTE STATE: NC ZIP: 28231 10-Q 1 SPEIZMAN INDUSTRIES 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 30, 1996 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 No. 0-8544 SPEIZMAN INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 56-0901212 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 508 West Fifth St. 28202 Charlotte, North Carolina (Zip Code) (Address of principal executive offices) (704) 372-3751 (Registrant's telephone number, including area code) 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, 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 the latest practicable date. Outstanding at Class of Common Stock May 10, 1996 Par value $.10 per share 3,208,599 Page 1 of 13 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Condensed Balance Sheets........................ 3 - 4 Consolidated Condensed Statements of Operations.............. 5 Consolidated Condensed Statements of Cash Flows.............. 6 Notes to Consolidated Financial Statements................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................. 8 - 10 PART II. OTHER INFORMATION: Item 6. Exhibits and reports on Form 8-K (a) Reports on Form 8-K...................................... 11 (b) Exhibit 11. Computation of Net Income (Loss) per Share.. 12 Page 2 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
March 30, July 1, 1996 1995 (Unaudited) ASSETS CURRENT: Cash and cash equivalents $ 3,905,386 $ 2,436,859 Accounts receivable, less allowances of $251,328 and $207,158 13,152,872 16,078,683 Inventories 10,602,505 13,428,014 Prepaid expenses and other current assets 2,705,303 2,458,355 -------------- -------------- TOTAL CURRENT ASSETS 30,366,066 34,401,911 -------------- -------------- PROPERTY AND EQUIPMENT: Leasehold improvements 550,684 543,874 Machinery and equipment 970,120 876,565 Furniture, fixtures and transporation equipment 764,200 834,187 -------------- -------------- Total 2,285,004 2,254,626 Less accumulated depreciation and amortization (1,461,799) (1,440,688) -------------- -------------- NET PROPERTY AND EQUIPMENT 823,205 813,938 -------------- -------------- OTHER 731,983 488,609 -------------- -------------- $31,921,254 $35,704,458 ========== ==========
See accompanying notes to consolidated financial statements. Page 3 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
March 30, July 1, 1996 1995 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $10,593,373 $15,056,927 Customers' deposits 3,183,961 884,881 Accrued expenses 216,017 833,886 Current maturities of long-term debt 11,047 13,190 -------------- -------------- TOTAL CURRENT LIABILITIES 14,004,398 16,788,884 -------------- -------------- LONG-TERM DEBT 135,513 133,629 -------------- -------------- TOTAL LIABILITIES 14,139,911 16,922,513 -------------- -------------- STOCKHOLDERS' EQUITY: Common stock - par value $.10; authorized 6,000,000 shares; issued 3,236,199 shares 323,620 323,620 Additional paid-in capital 12,459,965 12,459,965 Retained earnings 5,102,545 6,097,426 Foreign currency translation adjustment (4,990) 731 -------------- -------------- Total 17,881,140 18,881,742 Treasury stock, at cost, 27,600 common shares (99,797) (99,797) -------------- -------------- TOTAL STOCKHOLDERS' EQUITY 17,781,343 18,781,945 -------------- -------------- $31,921,254 $35,704,458 ========== ==========
See accompanying notes to consolidated financial statements. Page 4 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited) For the Three Months Ended For the Nine Months Ended 3-30-96 4-01-95 3-30-96 4-01-95 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) ---------- ---------- ---------- ---------- REVENUES $ 11,832,666 $16,131,974 $29,295,220 $45,803,828 -------------- ---------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 10,125,759 13,928,919 25,989,342 40,240,039 Selling expenses 1,028,725 850,968 2,966,155 2,623,345 General and administrative expenses 545,853 537,948 1,300,555 1,314,994 --------------- --------------- --------------- --------------- Total costs and expenses 11,700,337 15,317,835 30,256,052 44,178,378 --------------- --------------- --------------- --------------- 132,329 814,139 (960,832) 1,625,450 NET INTEREST EXPENSE (INCOME) (9,725) 4,653 (12,741) (2,921) --------------- --------------- --------------- --------------- INCOME (LOSS) BEFORE TAXES ON CONTINUING OPERATIONS 142,054 809,486 (948,091) 1,628,371 TAXES (BENEFIT) ON INCOME FROM CONTINUING OPERATIONS 67,000 314,000 (286,000) 591,000 --------------- --------------- --------------- --------------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ 75,054 $ 495,486 $ (662,091) $ 1,037,371 -------------- ------------- --------------- ----------- DISCONTINUED OPERATIONS: Loss from operations of CopyGuard, net of $33,000 tax (55,115) --- (55,115) --- Loss from disposal of CopyGuard, net of $166,000 tax (277,675) --- (277,675) --- --------------- --------------- --------------- --------------- (332,790) --- (332,790) --- --------------- --------------- --------------- --------------- NET INCOME (LOSS) $ (257,736) $ 495,486 $ (994,881) $ 1,037,371 ============= ============= ============= ============ PER SHARE DATA: NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ .02 $ .15 $ (.21) $ .32 (LOSS) ON DISCONTINUED OPERATIONS $ (.10) $ --- $ (.10) $ --- ----- --- ---- --- NET INCOME (LOSS) $ (.08) $ .15 $ (.31) $ .32 ==== ===== ==== ==== Weighted average number of common and equivalent shares 3,248,661 3,259,820 3,270,398 3,272,413
See accompanying notes to consolidated financial statements. Page 5 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) For the Nine Months Ended 3-30-96 4-01-95 (39 Weeks) (39 Weeks) ------------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (994,881) $ 1,037,371 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 110,077 130,358 Provision for inventory obsolescence 150,000 150,000 Foreign currency translation adjustment (5,721) 9,617 (Increase) decrease in: Accounts receivable 2,925,811 1,381,615 Inventories 2,675,509 (2,908,063) Prepaid expenses and deposits (246,948) (906,643) Other assets (243,374) 46,139 Increase (decrease) in: Accounts payable (4,463,554) 394,780 Customers' deposits 2,299,080 (77,279) Accrued expenses (617,869) (159,681) ---------------- -------------- Net cash provided (used) by operating activities 1,588,130 (901,786) ---------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - leased equipment (434,630) --- Capital expenditures - other equipment (32,271) (308,712) Disposition of property and equipment 347,557 32,977 ---------------- -------------- Net cash used in investing activities (119,344) (275,735) ---------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (259) (117,053) Issuance of common stock for stock options --- 1,500 Minority interest in subsidiary --- 2,000 ---------------- -------------- Net cash provided by (used in ) financing activities (259) (113,553) ---------------- -------------- NET INCREASE (DECREASE) IN CASH 1,468,527 (1,291,074) CASH AT BEGINNING OF PERIOD 2,436,859 5,433,664 ---------------- -------------- CASH AT END OF PERIOD $ 3,905,386 $ 4,142,590 ============ ========== Supplemental Disclosures: Cash paid during period for: Interest $ 71,895 $ 73,852 Income taxes 112,311 301,851
See accompanying notes to consolidated financial statements. Page 6 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Management Statement re Adjustments In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present the Registrant's financial position, the results of operations and changes in cash flow for the periods indicated. The accounting policies followed by the Registrant are set forth on page F-6 of the Registrant's Form 10-K for the fiscal year ended July 1, 1995, which is incorporated by reference. Note 2. Inventories Inventories consisted of the following: March 30, July 1, 1996 1995 (unaudited) Machines $ 7,300,269 $10,106,300 Parts and supplies 3,302,236 3,321,714 ----------- --------- Total $ 10,602,505 $13,428,014 =========== ========== Note 3. Taxes on Income Taxes on income are allocated to interim periods on the basis of an estimated annual effective tax rate. Note 4. Net Income (Loss) Per Share Net income (loss) per share is computed by dividing net income by the average number of common and common equivalent shares outstanding during the period. Common equivalent shares include those common shares which are issuable upon the exercise of stock options, when dilutive, net of shares assumed to have been repurchased with the proceeds. Page 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's revenues are generated primarily from its distribution of textile equipment, principally knitting machines, to manufacturers of textile products and, to a lesser extent, from the sale of parts used in such equipment and the sale of used textile equipment. RESULTS OF OPERATIONS Revenues in the Company's third fiscal quarter ended March 30, 1996 declined by approximately $4.3 million or 26.6%. Major components of this decline are hosiery equipment sales which were down $2.7 million and sweater and trim equipment sales which were down $2.4 million. The decline in hosiery equipment sales appears to continue to be related to poor retail sales of garments in the fall and winter season of 1995. The decline in sweater and trim equipment appears to be related to the same poor retail environment coupled with a general decline in the consumption of sweaters. In the nine months ended March 30, 1996, the Company's revenues declined by $16.5 million or approximately 36.0%. Major elements in the year-to-date decline are a $12.7 million decrease in hosiery equipment sales, a $5.5 million decrease in sales of sweater and trim equipment, both partially offset by $2.0 million in sales from knit fabric equipment, a new product line this year. Cost of sales as a percentage of revenues in the Company's fiscal 1996 third quarter declined slightly to 85.6% from 86.3% in the same quarter of last year, reflecting changes in product mix. In the year-to-date, cost of sales as a percentage of revenues increased to 88.7% as compared to 87.8% in the same nine month period of last year. Service expenses, a component of cost of sales, accounted for this unfavorable shift. Although service expenses actually declined by $85,000 between the comparable nine month periods, service expenses did not decline in proportion to the decline in revenues. Selling expenses increased by $178,000 in the Company's third fiscal quarter and by $343,000 in the year-to-date as compared to the comparable periods of last year. Material elements of these increases occurred in sales salaries and commissions, travel expenses and rental and space costs. The Company's United Kingdom subsidiary accounted for $65,000 of the $343,000 increase in the year-to-date selling expense figures. General and administrative expenses in the current third quarter and in the year-to-date are essentially unchanged from the comparable periods of last year. Interest expense is shown net of interest income. The small favorable shift in the current quarter reflects a $7,000 decrease in interest expense and a $7,000 increase in interest income. In the year-to-date, the small favorable shift reflects a $3,000 decrease in interest expense and a $7,000 increase in interest income. The effective rate of taxes on income from continuing operations in the current quarter at 47.2% has been skewed upward by the relatively small amount of pre-tax profits as compared to partially or wholly non-deductible expenses, year-to-date. Page 8 In the Company's current third fiscal quarter, there is a charge for discontinued operations in the amount of $333,000. This after-tax figure records the cost of the discontinuation of the Company's CopyGuard Division. CopyGuard was developing a computer-generated matrix to invisibly mark garments to prevent counterfeiting. However, its continuing cash funding requirements were diverting funds from the Company's core business while prospects of bringing the system to market, successfully, were diminishing. Although the system developed by CopyGuard functioned successfully from a technical point of view, the system has not proven to be commercially feasible for the prospective users. Consequently, in the current third fiscal quarter, management elected to cease all CopyGuard operations, write off all assets of the CopyGuard Division and provide for any remaining expenses. The loss on disposal of CopyGuard is equivalent to $0.10 per share of outstanding common stock in both the current quarter and the year-to-date. OUTLOOK Late in the Company's current second quarter, the sock industry served by the Company began to demonstrate some improvement. Demand for single cylinder athletic sock machines with patterning capability increased strongly. Demand for double cylinder and dial rib socks made on other machines sold by the Company has remained sluggish. At the same time, the sweater manufacturing industry in the United States and in the United Kingdom is displaying substantial weakness. In February 1996, the Company became the U.S., Canadian and Mexican distributor for Tonello S.r.l., an Italian manufacturer of garment wet processing equipment. The Company's new garment wet processing division will distribute and install Tonello equipment, concentrating its efforts on the processing of blue jean garments as well as dyeing. LIQUIDITY AND CAPITAL RESOURCES At March 30, 1996, the Company's working capital was approximately $16.4 million, down about $1.3 million from that same position at the end of the prior fiscal year, July 1, 1995. The Company's current ratio at March 30, 1996 was 2.17 to 1 as compared to 2.05 to 1 at July 1, 1995. Operating activities provided about $1.6 million in the nine months ended March 30, 1996. Operating activities used about $0.9 million in the same period of last year. In the current period, this favorable result reflects a $5.6 million decrease in receivables and inventories, largely offset by a $2.8 million net decrease in payables and customers' deposits, as well as the $1.0 million loss from continuing and discontinued operations. Investing activities used approximately $119,000 in the current year-to-date as compared to $276,000 in the same period of last year. The current year investing activities reflect about $435,000 in hosiery equipment inventory which the Company leased in the current period to customers largely offset by $348,000 in disposition of property and equipment. Overall, net cash increased by about $1.5 million in the current nine month period. In the same period of last year, net cash declined by about $1.3 million. The Company presently has no material commitments for capital expenditures and does not anticipate incurring such commitments in the balance of fiscal 1996. Page 9 SEASONALITY AND OTHER FACTORS There are certain seasonal factors that may affect the Company's business. Traditionally, manufacturing businesses in Italy close for the month of August, and the Company's customers close for one week in July. Consequently, no shipments or deliveries, as the case may be, of machines distributed by the Company that are manufactured in Italy are made during these periods in the Company's first quarter. In addition, manufacturing businesses in Italy generally close for two weeks in December, during the Company's second quarter. Fluctuations in customer orders or other factors also may cause quarterly variations in net revenues from year to year. EFFECTS OF INFLATION AND CHANGING PRICES Management believes that inflation has not had a material effect on the Company's operations. A substantial portion of the Company's machine and spare part purchases are denominated and payable in Italian lira. Currency fluctuations of the lira could result in substantial price level changes and therefore impede or promote import/export sales and substantially impact profits. However, to reduce exposure to adverse foreign currency fluctuations during the period from customer orders to payment for goods sold, the Company enters into forward foreign exchange contracts. The Company is not able to assess the quantitative effect that such currency fluctuations could have upon the Company's operations. There can be no assurance that fluctuations in foreign currency exchange rates will not have a significantly adverse effect on future operations. Page 10 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (a) No reports on Form 8-K were filed by the Registrant during or applicable to the period reported here. (b) Exhibit 11. - Computation of Net Income (Loss) Per Share Page 11 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. SPEIZMAN INDUSTRIES, INC. (Registrant) Date: May 14, 1996 /s/ Robert S. Speizman --------------------- ---------------------- Robert S. Speizman President Date: May 14, 1996 /s/ Josef Sklut --------------------- --------------- Josef Sklut Vice President-Finance (Chief Financial Officer) Page 12 EX-11 2 EXHIBIT 11 Exhibit 11 NET INCOME (LOSS) PER SHARE The following table presents the information needed to compute primary income per common share:
(Unaudited) (Unaudited) For the Three Months Ended For the Nine Months Ended 3-30-96 4-01-95 3-30-96 4-01-95 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) ---------- ---------- ---------- ---------- Net income (loss) $ (257,736) $ 495,486 $ (994,881) $ 1,037,371 Weighted average shares outstanding 3,236,199 3,236,199 3,236,199 3,236,199 Less: Treasury Shares (27,600) (27,600) (27,600) (27,600) Add: Assumed exercise of options reduced by the number of shares purchased with proceeds 40,062 51,221 61,799 63,814 --------------- -------------- -------------- -------------- Adjusted weighted average of shares outstanding 3,248,661 3,259,820 3,270,398 3,272,413 =============== ============== ============== ============== Net income (loss) per share $ (.08) $ .15 $ (.31) $ .32 ---- --- ---- ---
EX-27 3 EXHIBIT 27
5 9-MOS JUN-29-1996 JUL-02-1995 MAR-30-1996 3,905,386 0 13,404,200 251,328 10,602,505 30,366,066 2,285,004 1,461,799 31,921,254 14,004,398 0 0 0 323,620 17,457,723 31,921,254 29,295,220 29,295,220 25,989,342 30,256,052 0 0 (12,741) (948,091) (286,000) (662,091) 332,790 0 0 (994,881) (.31) (.31)
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