-----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, CFAUdQPXF7Ty1wWmwjxVgDvkFYg5bV7zPdQ13kxBHf5cPSL4G1v9IkdTSoN0X6Qu 1T7+MmatFdJ9WjIBOX3gCw== 0000023249-96-000001.txt : 19960111 0000023249-96-000001.hdr.sgml : 19960111 ACCESSION NUMBER: 0000023249-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951203 FILED AS OF DATE: 19960105 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD FABRICS INC CENTRAL INDEX KEY: 0000023249 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 135673758 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05960 FILM NUMBER: 96501526 BUSINESS ADDRESS: STREET 1: 1359 BROADWAY STREET 2: 4TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2127600300 MAIL ADDRESS: STREET 1: 1359 BROADWAY 4TH FLOOR STREET 2: 1359 BROADWAY 4TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 10-Q 1 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 FOR THE QUARTER ENDED December 3, 1995 COMMISSION FILE NUMBER 1-5960 CONCORD FABRICS INC. (Exact name of Registrant as specified in its charter) DELAWARE 13-5673758 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 1359 Broadway, New York, New York 10018 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 760-0300 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 . 2,115,656 shares of Registrant's Class A Common Stock, par value $.50 per share and 1,509,451 shares of Registrant's Class B Common Stock, par value $.50 per share were outstanding as of December 29, 1995. 1 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 3, 1995 INDEX Page Number PART I. Financial Information Item 1. Financial Statements Consolidated Statements of Operations - Thirteen Weeks Ended December 3, 1995 (Unaudited) and November 27, 1994 (Unaudited) 3 Consolidated Balance Sheets - December 3, 1995 (Unaudited), and September 3, 1995 (Derived from Audited Financial Statements) and November 27, 1994 (Unaudited) 4-5 Consolidated Statements of Cash Flows - Thirteen Weeks Ended December 3, 1995 (Unaudited) and November 27, 1994 (Unaudited) 6 Notes to Consolidated Financial Statements (Unaudited) 7-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 12 Signature Page 13 2 of 13 Item 1. Financial Statements -------------------- CONCORD FABRICS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (Note A) For the Thirteen Weeks Ended ---------------------------- December 3, November 27, 1995 1994 ------------ ------------ Net Sales ................................. $34,311,100 $48,510,294 ----------- ----------- Cost of Sales ............................. 25,215,137 38,038,273 Merchandising Expenses .................... 2,421,815 2,605,726 Selling and Shipping Expenses ............. 3,060,228 3,307,503 General and Administrative Expenses ....... 2,869,888 3,463,150 Interest Expense (Net) .................... 473,536 513,252 ----------- ----------- Total ............................... $34,040,604 $47,927,904 ----------- ----------- Earnings before income taxes .............. 270,496 582,390 Income tax provision ...................... 137,000 242,000 ----------- ----------- Net Earnings .............................. $ 133,496 $ 340,390 =========== =========== Net Earnings per Common Share ............. $.04 $.09 =========== =========== Number of shares used in computing earnings per Common Share .............. 3,624,224 3,602,562 =========== =========== Dividend per Common Share ................. NONE NONE =========== =========== The attached notes are made a part hereof. 3 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Note A) September 3, 1995 (Derived from December 3, Audited November 27, 1995 Financial 1994 A S S E T S (Unaudited) Statements) (Unaudited) - ----------- ------------ ------------ ------------ Current Assets: Cash .......................... $ 1,175,902 $ 2,362,119 $ 1,048,079 Temporary cash investments (at cost which approximates market) 1,000,000 -0- 500,000 Income tax refund receivable .. 1,867,000 2,051,000 -0- Accounts receivable (less estimated doubtful accounts of $1,435,000 on December 3, 1995, $1,225,000 on September 3, 1995, and $2,490,000 on November 27, 1994) ......... 26,759,881 27,909,706 36,211,703 Inventories (Note B) .......... 26,199,925 24,071,426 34,325,747 Prepaid expenses and other current assets .............. 1,692,555 2,352,403 2,204,603 Deferred income taxes ......... 2,138,000 2,172,000 1,669,000 ----------- ----------- ----------- Total Current Assets .......... $60,833,263 $60,918,654 $75,959,132 Property, plant and equipment (at cost, less depreciation and amortization of $5,431,198 on December 3, 1995, $5,101,597 on September 3, 1995, and $6,512,092 on November 27, 1994) ............ 8,258,109 8,153,913 9,668,485 Property and plant leased to others 2,155,492 2,193,532 2,307,652 Property, plant, & equipment held for sale - at estimated disposal value 3,000,000 3,000,000 -0- Other assets ..................... 2,143,028 2,379,826 1,529,872 ----------- ----------- ----------- T O T A L .................. $76,389,892 $76,645,925 $89,465,141 =========== =========== =========== The attached notes are made a part hereof. 4 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Note A) September 3, 1995 (Derived from December 3, Audited November 27, 1995 Financial 1994 L I A B I L I T I E S (Unaudited) Statements) (Unaudited) - --------------------- ------------ ------------ ------------ Current Liabilities: Notes payable - banks (Note C) ................... $ 2,000,000 $ 2,000,000 $18,000,000 Accounts payable .............. 10,218,306 8,923,439 12,072,774 Accrued expenses and taxes .... 3,543,543 5,370,075 6,966,674 Income taxes payable .......... 97,000 -0- 50,296 ------------ ------------ ------------ Total Current Liabilities ..... $15,858,849 $16,293,514 $37,089,744 Notes payable - insurance company (Note D) .............. 20,000,000 20,000,000 9,000,000 Deferred income taxes ............ 214,000 214,000 -0- Other liabilities ................ 376,090 361,090 311,685 ------------ ------------ ----------- Total Liabilities ............. $36,448,939 $36,868,604 $46,401,429 Commitments and contingencies ------------ ------------ ------------ (Note E) S T O C K H O L D E R S ' E Q U I T Y Common stock: (Notes F & G) Class A - $.50 par value authorized 4,000,000 shares, issued 2,115,656 shares at December 3, 1995, 2,105,611 shares September 3, 1995 and 2,093,111 shares at November 27, 1994. ......... 1,057,828 1,052,805 1,046,555 Class B - $.50 par value authorized 4,000,000 shares, issued 1,509,451 shares at December 3, 1995, 1,509,451 shares at September 3, 1995 and 1,509,451 shares at November 27, 1994. ......... 754,726 754,726 754,726 Additional paid-in capital ....... 9,087,998 9,062,885 9,031,635 Retained earnings ................ 29,040,401 28,906,905 32,230,796 ----------- ----------- ----------- Total Stockholders' Equity .... $39,940,953 $39,777,321 $43,063,712 ----------- ----------- ----------- T O T A L .................. $76,389,892 $76,645,925 $89,465,141 =========== =========== =========== The attached notes are made a part hereof. 5 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Note A) For the Thirteen Weeks Ended --------------------------------- December 3, November 27, 1995 1994 ------------ ------------ Cash flows from operating activities: Net earnings .................................... $ 133,496 $ 340,390 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization ............. 367,641 448,274 Deferred income tax ....................... 34,000 179,000 Provision for doubtful accounts ........... 210,000 315,000 Changes in assets: Decrease (increase) in: Accounts receivable ................. 939,825 (1,527,541) Inventories ......................... (2,128,499) (3,241,187) Income tax refunds receivable ....... 184,000 -0- Prepaid expenses and other current assets .................... 659,848 352,326 Other assets ........................ 236,798 (1,379) Changes in liabilities: Increase (decrease) in: Accounts payable .................... 1,294,867 (3,118,009) Accrued expenses and taxes .......... (1,826,532) (45,136) Income taxes payable ................ 97,000 (942,341) Other liabilities ................... 15,000 9,732 ------------ ------------ Net cash provided by (used in) operating activities: .................................. 217,444 (7,230,871) ------------ ------------ Cash flows from investing activity: Purchases of property, plant, and equipment ..... (433,797) (1,198,432) ------------ ------------ Cash flows from financing activities: Increase in notes payable - bank ................ -0- 8,400,000 Sale of common stock (stock option exercised) ... 30,136 -0- ------------ ----------- Net cash provided by financing activities: ...... 30,136 8,400,000 NET (DECREASE) IN CASH AND CASH EQUIVALENTS ........ (186,217) (29,303) ------------ ------------ Cash and cash equivalents - beginning of period .... 2,362,119 1,577,382 ------------ ------------ CASH AND CASH EQUIVALENTS - END OF PERIOD .......... $ 2,175,902 $ 1,548,079 ============ ============ The attached notes are made a part hereof.
6 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES NOTES TO FORM 10-Q AS AT DECEMBER 3, 1995 (Unaudited) Note A The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair representation have been included. Operating results for the thirteen weeks ended December 3, 1995 are not necessarily indicative of the results that may be expected for the fiscal year ending September 1, 1996. These statements should be read in conjunction with the financial statements and notes thereto included in Registrant's annual report to shareholders and Form 10-K for the fiscal year ended September 3, 1995. Note B - Inventories: Inventories are summarized by categories as follows: December 3, September 3, November 27, 1995 1995 1994 ------------ ----------- ------------ Finished goods......... $12,630,977 $12,160,524 $17,476,648 Work-in-process........ 4,000,689 3,253,096 5,660,189 Greige goods and yarn.. 9,568,259 8,657,806 11,188,910 ------------ ----------- ------------ Total............... $26,199,925 $24,071,426 $34,325,747 ============ =========== ============ The foregoing inventory amounts at December 3, 1995 and November 27, 1994 were determined from perpetual inventory records maintained by Registrant. Note C - Notes Payable - Banks: At December 3, 1995, Registrant had total unused bank lines of credit aggregating $18,000,000; bank debt was $2,000,000. Amounts borrowed are generally due in 30 to 90 days. The line of credit arrangements are informal and cancellable at the banks' option. Registrant is generally expected to maintain average annual compensating bank balances in consideration of its average annual bank borrowings. Registrant believes it has been in substantial compliance with its arrangements and that withdrawal of bank balances is not legally restricted. The average interest rate on amounts outstanding at December 3, 1995 was 8.75%. A subsidiary of the Registrant had approximately $2,400,000 of letters of credit outstanding at December 3, 1995 for merchandise scheduled for future delivery. 7 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES NOTES TO FORM 10-Q AS AT DECEMBER 3, 1995 (Unaudited) Continued Note D - Notes Payable - Insurance Company: On November 30, 1994, the Registrant obtained a $20,000,000 loan from John Hancock Mutual Life Insurance Company. This unsecured loan bears interest at 9.31% a per annum and is repayable in seven equal annual installments commencing on November 30, 1998. A portion of the loan proceeds was used to repay the $9,000,000 loan outstanding to the Prudential Insurance Company of America and a prepayment penalty of $495,000 associated therewith. The new loan agreement requires maintenance of certain financial ratios and maintenance of tangible net worth of approximately $36,000,000. The agreement also prohibits the pledging of assets and restricts dividends and redemptions of capital stock to $3,000,000 plus 50% of net earnings subsequent to August 28, 1994; the cumulative amount available for such payments aggregated approximately $2,092,000 at December 3, 1995. Note E - Purchase Commitments: At December 3, 1995, Registrant had outstanding commitments to purchase greige goods aggregating $3,800,000. At November 27, 1994 outstanding purchase commitments were approximately $13,200,000. Note F - Common Stock: The Class A and Class B shares principally differ as follows: (1) The Class A shares have a 15% dividend preference and a 10% liquidation preference with respect to the Class B shares. (2) Holders of Class A shares are entitled to one vote a share whereas holders of Class B shares are entitled to ten votes a share. (3) Holders of Class A shares voting as a separate class are entitled to elect 25% of Registrant's directors and holders of Class A shares and Class B shares voting together are entitled to elect the remaining directors. 8 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES NOTES TO FORM 10-Q AS AT DECEMBER 3, 1995 (Unaudited) Continued (4) Class B shares are convertible into Class A shares on the basis of one share of Class A shares for each share of Class B shares; Class A shares have no conversion rights. Note G - Stock Options: Pursuant to an Incentive Program adopted on January 10, 1989, awards (as defined) may be granted to key employees of the Registrant up to a maximum of 500,000 shares of the Registrant's Class A common stock. On January 10, 1989, options to purchase an aggregate of 150,000 shares of the Registrant's Class A common stock at $3 a share (fair market value at such date) was granted to three employees. The options are exercisable in four annual installments commencing January 10, 1994 and expire ten years from the date of grant. Option activity for the thirteen weeks ended December 3, 1995 is summarized as follows: Options Outstanding ------------------- Shares Available Number of for Grant Shares Amount Balance - September 3, 1995 .. 350,000 100,000 $300,000 Thirteen Weeks ended December 3, 1995: Cancelled ................. -0- (2,455)* (7,365) Exercised ................. -0- (10,045)* (30,135) ------- -------- --------- Balance - December 3, 1995 ... 350,000 87,500 $262,500 ======= ======== ========= * Exercised and cancelled by an employee who retired. 9 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES NOTES TO FORM 10-Q AS AT DECEMBER 3, 1995 (Unaudited) Note H - Earnings Per Share: Earnings per share are computed by dividing net earnings by common shares outstanding and common stock equivalents. Outstanding options did not have a material dilutive effect on earnings per share for the thirteen week periods ended December 3, 1995 and November 27, 1994. Note I - Chino, California Facility: In February 1994, the Registrant leased the land and building at the Chino California facility for a five year period at an annual net rental of $297,000; the lessee was also granted the option to purchase the land and building during the lease period for $2,900,000. Note J - Property, Plant and Equipment Held for Sale: In the fourth quarter of fiscal 1995 Registrant decided to dispose of its Washington, Georgia dyeing and finishing plant and has been actively searching for a buyer; manufacturing operations ceased October 6, 1995. Registrant provided for estimated expenses during the disposition period in its fiscal year ended September 3, 1995 and estimates that the net proceeds of sale will approximate the facility's depreciated cost. 10 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES DECEMBER 3, 1995 Item 2..........MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS OPERATIONS - Thirteen Weeks Ended December 3, 1995 Compared With Thirteen Weeks Ended November 27, 1994. Fabric sales decreased by 29.3% principally due to a decrease in yardage sold. Gross profit margin increased from 21.6% in fiscal 1995 to 26.5% in fiscal 1996 primarily due to better performance at Registrant's Milledgeville, Georgia plant and the discontinuance of operations of the inefficient Washington, Georgia facility. Selling and shipping expenses declined by 7.5% as a result of the decrease in Registrant's sales. The decrease was less than the actual sales decrease because some of Registrant's selling expenses do not vary with sales but represent sales management costs which are more fixed in nature. General and administrative expenses declined by 17.1% as a result of a decline in Registrant's 1) provision for doubtful accounts as there were no significant customer failures in the current period in contrast with the first fiscal quarter 1995 experience, 2) consulting fees associated with systems programming, and 3) cost savings attributed to the shut-down of the Washington plant. Earnings before income taxes for the thirteen weeks of fiscal 1996 were $270,000 compared with $582,000 for the thirteen weeks of fiscal 1995. Net earnings were $133,000 for 1996 and $340,000 for 1995. LIQUIDITY AND CAPITAL RESOURCES During the thirteen weeks ended of fiscal 1996, Registrant's operations provided $217,000 cash. $434,000 was used to acquire machinery and equipment. Cash decreased by $186,000 during the period. Working capital increased by $296,000 for the thirteen weeks ended December 3, 1995. Registrant expects its lines of credit and cash flow from operations to be adequate to finance operations and meet its cash requirements for fiscal 1996. 11 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES FORM 10-Q PART II Item 6. Exhibits and reports on Form 8-K (a) Exhibits - None (b) No report on Form 8-K was filed by Registrant during the thirteen weeks ended December 3, 1995. 12 of 13 CONCORD FABRICS INC. AND SUBSIDIARIES ------------------------------------- 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. CONCORD FABRICS INC. --------------------------------- Registrant Date: January 5, 1996 By /s/ Earl Kramer Earl Kramer President and Chief Executive Officer Date: January 5, 1996 By /s/ Martin Wolfson Martin Wolfson Senior Vice President-Treasurer Chief Financial Officer 13 of 13 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST QUARTER AND THIRTEEN WEEKS ENDED FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO IT. 0000023249 CONCORD FABRICS INC. 1 U. S. DOLLARS 3-MOS 3-MOS SEP-01-1996 SEP-03-1995 SEP-04-1995 AUG-29-1994 DEC-03-1995 NOV-27-1994 1 1 2,175,902 1,548,079 0 0 26,759,881 36,211,703 0 0 26,199,925 34,325,747 60,833,263 75,959,132 13,413,601 11,976,137 0 0 76,389,892 89,465,141 15,858,849 37,089,744 0 0 1,812,554 1,801,281 0 0 0 0 0 0 76,389,892 89,465,141 34,311,100 48,510,294 34,311,100 48,510,294 25,215,137 38,038,273 34,040,604 47,927,904 0 0 0 0 473,536 513,252 270,496 582,390 137,000 242,000 0 0 0 0 0 0 0 0 133,496 340,390 .04 .09 0. 0.
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