-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sWQ41KjhG0842CGHrz6B2eSbG7OaxN1wU8WfDWyG6Kl8LbMOI8KdCZ1dZIwGfXrm iCbcjwuU9kxHk+yxTg5A8w== 0000950112-95-001872.txt : 19950718 0000950112-95-001872.hdr.sgml : 19950718 ACCESSION NUMBER: 0000950112-95-001872 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950527 FILED AS OF DATE: 19950713 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANTUCKET INDUSTRIES INC CENTRAL INDEX KEY: 0000069623 STANDARD INDUSTRIAL CLASSIFICATION: 2250 IRS NUMBER: 580962699 STATE OF INCORPORATION: DE FISCAL YEAR END: 0225 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08509 FILM NUMBER: 95553593 BUSINESS ADDRESS: STREET 1: 105 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 212-889-5656 MAIL ADDRESS: STREET 1: 105 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: NANTUCKET LINGERIE INC DATE OF NAME CHANGE: 19690715 10-Q 1 NANTUCKET INDUSTRIES THIS DOCUMENT IS A COPY OF THE FORM 10-Q FILED ON JULY 11, 1995 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION. UNITED STATES 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 May 27, 1995 ------------ 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: 1-8509 ------ NANTUCKET INDUSTRIES, INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 58-0962699 - - ------------------------------------------------ ------------------- (State of other jurisdiction of incorporation or (I.R.S. Employer organization) Identification No.) 105 Madison Avenue, New York, New York 10016 - - ------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) (212)889-5656 -------------- (Registrant's telephone number, including area code) _________________________________________________________________ (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 twelve months (or for such shorter period that the registrant was required to file such reports), and (2) as been subject to such filing requirements for the past ninety days. X YES [ ] NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant had filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] YES [ ] NO APPLICABLE ONLY TO CORPORATE ISSUERS: NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES ------------------------------------------- QUARTERLY REPORT ---------------- QUARTER ENDED MAY 27, 1995 --------------------------- I N D E X ---------- Part I. FINANCIAL INFORMATION PAGE - - --------------------- ---- Consolidated balance sheets 3 Consolidated statements of operations 4 Consolidated statements of cash flows 5 Notes to consolidated financial statements 6 - 8 Management's discussion and analysis of financial condition and results of operations 9 - 10 Part II. OTHER INFORMATION NONE - - ----------------- ---- Signature Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS
February 25, February 25, 1995 1995 ------------ ------------ ASSETS (Notes 6) CURRENT ASSETS Cash $32,049 $595,918 Accounts receivable, less allowance for doubtful accounts of $194,000 and $175,000, respectively (Note 1-c) 6,472,148 4,928,272 Inventories (Notes 1-d and 4) 10,984,196 11,390,858 Refundable income taxes (Note 7) - 558,000 Other current assets 760,054 538,062 ----------- ----------- Total current assets 18,248,447 18,011,110 PROPERTY, PLANT AND EQUIPMENT - NET (Notes 1-e and 5) 3,766,871 3,772,008 OTHER ASSETS,NET 168,194 412,324 ----------- ----------- $22,183,512 $22,195,442 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt (Note 6) $975,000 $700,000 Accounts payable 2,405,989 3,693,908 Accrued salaries and employee benefits 811,882 907,906 Accrued unusual charge (Note 3) 465,000 765,000 Accrued expenses and other liabilities 358,267 1,203,633 Accrued royalties 399,546 468,355 Income taxes payable 2,640 10,184 ----------- ----------- Total current liabilities 5,418,324 7,748,986 LONG-TERM DEBT (Note 6) 9,941,799 7,999,847 ACCRUED UNUSUAL CHARGE (Note 3) 1,058,330 1,450,000 NOTE PAYABLE TO RELATED PARTY (Note 6) 300,000 300,000 ----------- ----------- 16,718,453 17,498,833 COMMITMENTS AND CONTINGENCIES (NOTES 3,9 and 12) STOCKHOLDERS' EQUITY (Notes 8 and 9) Preferred stock, $.10 par value; 500,000 shares authorized, of which 5,000 shares have been designated as non-voting convertible and are issued and outstanding 500 - Common stock, $.10 par value; authorized 6,000,000 shares; issued 2,991,848 299,185 299,185 Additional paid-in capital 11,576,898 10,577,398 Accumulated deficit (6,340,135) (2,898,532) ----------- ----------- 5,536,448 7,978,051 Less-13,052 shares at February 25, 1995 and 503,052 shares at February 26, 1994 of common stock held in treasury, at cost 71,389 3,281,442 ----------- ----------- 5,465,059 4,696,609 ----------- ----------- $22,183,512 $22,195,442 =========== ===========
The accompanying notes are an integral part of these statements. 3 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS Thirteen Weeks Ended -------------- ------------ May 27, May 28, 1995 1994 -------------- ------------ Net sales $10,492,736 $8,508,708 Cost of sales 7,886,142 6,848,573 -------------- ------------ Gross profit 2,606,594 1,660,135 Selling, general and administrative expenses 2,019,026 1,881,214 -------------- ------------ Operating profit (loss) 587,568 (221,079) Interest expense 331,326 227,501 -------------- ------------ Net income (loss) 256,242 (448,580) ============== ============ Net income (loss) per share $0.09 ($0.18) ============== ============ Weighted average common shares outstanding 2,981,296 2,488,796 ============== ============ The accompanying notes are an integral part of these statements. 4 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Thirteen Weeks Ended -------------------------- May 27 May 28 1995 1994 ----------- --------- Cash flows from operating activities Net income (loss) $256,242 ($448,580) Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities Depreciation and amortization 91,898 89,731 Provision for doubtful accounts 30,000 11,921 Provision for obsolete and slow moving inventory 60,000 60,000 (Increase) decrease in assets Accounts receivable (732,755) (1,941,817) Refundable income taxes 46,664 Inventories 197,801 (33,285) Other current assets (38,219) (255,331) Increase (decrease) in liabilities Accounts payable 185,515 (1,560,301) Accrued expenses and other liabilities (311,592) (1,044,622) Income taxes payable (7,544) Accrued unusual charge (98,788) (355,709) ----------- --------- Net cash (used in) provided by operating activities (359,898) (5,438,873) ----------- --------- Cash flows from investing activities Additions to property, plant and equipment (44,799) (87,985) Decrease (Increase) in other assets 31,850 (84,797) ----------- --------- Net cash used in investing activities (12,949) (172,782) ----------- --------- Cash flows from financing activities Payments of previous line of credit agreement (5,090,294) Issuance of convertible preferred stock 1,000,000 Borrowings under line of credit agreement, net 372,647 9,169,779 ----------- --------- Net cash provided by (used in) financing activities 372,647 5,079,485 ----------- --------- NET DECREASE IN CASH ($200) ($532,170) Cash at beginning of period 32,049 595,918 ----------- --------- Cash at end of period $31,849 $63,748 =========== ========= SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: Cash paid during the period: Interest $302,911 $205,496 =========== ========= Income taxes $10,880 =========== ========= The accompanying notes are an integral part of these statements 5 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTEEN WEEKS ENDED MAY 27, 1995 AND MAY 28, 1994 -------------------------------------------------- (unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of May 27, 1995 and the consolidated statements of operations and statements of cash flows for the thirteen weeks ended May 27, 1995 and May 28, 1994 have been prepared by the company without audit. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the financial position of the Company and its subsidiaries at May 27, 1995 and the results of their operations and cash flows for the thirteen weeks ended May 27, 1995 and May 28, 1994 have been made on a consistent basis. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1995 Annual Report on Form 10-K. The results of operations for the periods presented are not necessarily indicative of the operating results for the full year. 2. INVENTORIES Inventories are summarized as follows: May 27, February 25, 1995 1995 ------------- ------------ Raw materials $ 1,812,761 $ 1,960,413 Work in process 5,449,009 5,594,387 Finished goods 3,464,625 3,429,396 ------------- ------------ $ 10,726,395 $ 10,984,196 ============ ============ 6 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTEEN WEEKS ENDED MAY 27, 1995 AND MAY 28, 1994 -------------------------------------------------- (continued) (unaudited) 3. INCOME TAXES At May 27, 1995 the Company had a net deferred tax asset in excess of $4,600,000 which is fully reserved until it can be utilized to offset deferred tax liabilities or realized against taxable income. In addition, the Company had a net operating loss carryforward for book and tax purposes of approximately $12,000,000 and $9,000,000 respectively. Accordingly, no provision for income taxes has been reflected in the accompanying financial statements. 4. STOCKHOLDERS' EQUITY On March 22, 1994, the Company sold to its Management Group 5,000 shares of non-voting convertible preferred stock for $1,000,000. These shares are convertible into 200,000 shares of common stock at the rate of $5.00 per share. These shares provide for cumulative dividends at a floating rate equal to the prime rate and approximate $92,000 at May, 1995. Such dividends are convertible into common stock at the rate of $5.00 per share. These shares are redeemable, at the option of the Company, on or after February 28, 1999 and have a liquidation preference of $200 per share. On August 22, 1994, the Company sold 490,000 shares of its common treasury stock to GUESS?, Inc. and certain of its affiliates at $6.00 per share. The treasury stock issued had an average cost of $6.52 per share. Accordingly the difference between the net proceeds, approximating $2,900,000 and the treasury share's cost of $3,196,000 was applied to the Company's Retained Earnings. In connection with the Company's refinancing on March 22, 1994, the Company entered into a $2,000,000 Term Loan Agreement with Chemical Bank. This loan is payable in scheduled installments of $500,000 on December 14, 1994, June 15, 1995, December 15, 1995 and March 15, 1996. This agreement also provides for mandatory prepayments of $500,000 due September 15, 1994 and December 15, 1994, $250,000 due February 15, 1995 and June 15, 1995 and $500,000 due September 15, 1995. In fiscal 1995, the Company prepaid $1,000,000, which pursuant to the agreement were applied to the scheduled installments of December 15, 1994 and June 15, 1995. Accordingly, the next schedule installment will be due December 15, 1995. Pursuant to the agreement, the Company issued 2,500 treasury common shares related to the mandatory 7 prepayment not made on February 15, 1995. The agreement requires the Company to issue additional common shares at the rate of 1 share for every $100 of mandatory prepayment if such prepayments are not made in accordance with the schedule payment dates. 5. UNUSUAL CHARGE In the fourth quarter of fiscal 1994, the Company terminated the employment contracts of its Chairman and Vice Chairman. In accordance with the underlying agreement, they will be paid an aggregate of approximately $400,000 per year in severance, as well as certain other benefits, through February 28, 1999. The present value of these payments, $1,915,000, was accrued at February 26, 1994. Thru May 27, 1995 $490,000 of this accrual has been paid; $391,000 during fiscal year 1995 and $99,000 during the first quarter of fiscal 1996. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operation - - -------------------- Net sales for the first quarter ended May 27, 1995 increased 23% from prior year levels to $10,493,000. This is a result of a 38% increase in revenues from the core men's fashion underwear division and a 35% increase in the GUESS? intimate apparel revenues. These increases were offset by declines of $882,000 from the elimination of unprofitable product lines. For the first quarter, the gross profit increased $946,000 to $2,607,000. Gross profit margins for the first quarter increased to 24.8% compared to the prior year level of 19.5%. Higher profit margins are attributable to improved product mix of increased GUESS? sales, operating efficiencies and lower cost sourcing of major styles. Selling, general and administrative expenses for the first quarter increased 7.3% to $2,019,000 compared to $1,881,000 for the first quarter of the prior year. The increase of $138,000 is primarily due to variable selling costs related to the increase in net sales. The increase in interest expense of $104,000 is due to the higher prime rates in effect during the first quarter of this year compared to prior year and also to the increase in debt relating to the Company's refinancing of March 22, 1994. Liquidity and Capital Resources - - ------------------------------- During fiscal 1994 the Company's liquidity and capital resources were adversely affected by its operating losses and reduced borrowing availability under the existing credit facilities. Additionally, the Company had difficulty receiving delivery of raw materials for its domestic production and an absence of availability to open letters of credit for its imported products. The Company was successful in refinancing its credit agreements with (i) a three year $15,000,000 revolving credit facility, including a $3,000,000 letter of credit facility, with Congress Financial, (ii) a $2,000,000 Term Loan Agreement with Chemical Bank and (iii) an additional $1,500,000 Term Loan with Congress replacing the Industrial Revenue Bond financing of the Cartersville, Georgia manufacturing plant. Additionally, the $1,000,000 investment in the Company by the Management Group and the sale of 490,000 shares of common treasury stock to GUESS?, Inc. and certain of its affiliates increased the Company's liquidity and capital resources. The net proceeds of $2.9 million from the sales of treasury shares was used to prepay $500,000 of bank debt and the balance provided additional working capital resources. The Company believes that the credit facility provides adequate financing flexibility to fund its operations. 9 Working capital increased $109,000 from year-end levels to $12,939,000. This increase reflects an increase of accounts receivables due to increased sales levels, offset by a decline in inventory levels, and reductions of accounts payable and accrued liabilities. These increases in working capital were offset by an increase in current maturities of debt to Chemical Bank. The Company believes that the moderate rate of inflation over the past few years has not had a significant impact on sales or profitability. 10 SIGNATURE 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. NANTUCKET INDUSTRIES, INC. (Registrant) By: s/ Ronald S. Hoffman --------------------- July 11, 1995 Ronald S. Hoffman, Vice President - Finance (Chief Accounting Officer) 11 -----END PRIVACY-ENHANCED MESSAGE-----