-----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, BNKg1LVOIXcQpxOsH/UcqYp48ZJmo77CgHMnoo60JsI2kzC7Q8NJIT1jYlvXemS/ 4gdkjCB66gsRoms2T0EsAQ== 0000903893-95-000090.txt : 19951213 0000903893-95-000090.hdr.sgml : 19951213 ACCESSION NUMBER: 0000903893-95-000090 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951029 FILED AS OF DATE: 19951212 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAILEY CORP CENTRAL INDEX KEY: 0000753237 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 133229215 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09411 FILM NUMBER: 95601115 BUSINESS ADDRESS: STREET 1: 700 LAFAYETTE RD STREET 2: P O BOX 307 CITY: SEABROOK STATE: NH ZIP: 03874 BUSINESS PHONE: 6034743011 MAIL ADDRESS: STREET 2: 700 LAFAYETTE RD CITY: SEABROOK STATE: NH ZIP: 03874 FORMER COMPANY: FORMER CONFORMED NAME: EDUTECH VENTURES INC DATE OF NAME CHANGE: 19860205 10-Q 1 FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended October 29, 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 1-9411 ------------------ BAILEY CORPORATION (Exact Name of Registrant as Specified in its Charter) ------------------ Delaware 13-3229215 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 700 Lafayette Road P.O. Box 307 Seabrook, New Hampshire 03874 (Address of Principal Executive Offices, Including Zip Code) ---------------- (603) 474-3011 (Registrant's Telephone Number, Including Area Code) -------------- 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 ___ ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Number of Shares Outstanding Title of Each Class at December 8, 1995 ___________________ ___________________ Common Stock, $.10 Par Value 5,353,558 ================================================================================ Part I. FINANCIAL INFORMATION. Item 1. Financial Statements The condensed consolidated financial statements included herein have been prepared by Bailey Corporation (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. While certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures made herein are adequate to make the information not misleading. It is recommended that these condensed statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended July 30, 1995. In the opinion of the Company all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of Bailey Corporation and Subsidiaries as of October 29, 1995, the results of their operations for the three months ended October 29, 1995 and October 30, 1994, and the cash flows for the three months then ended, have been included. BAILEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) OCTOBER 29, 1995 AND JULY 30, 1995 (in thousands, except share and per share data)
Oct 29 Jul 30 1995 1995 ------ ------ ASSETS CURRENT ASSETS: Cash $ 610 $ 313 Restricted cash 817 817 Accounts receivable 26,441 13,751 Inventories: Raw materials 8,274 7,424 Work-in-process 3,276 2,555 Finished goods 3,253 2,745 Tooling 6,639 5,601 ---------- ---------- Total inventories 21,442 18,325 Prepaid expenses and other current assets 3,864 4,026 Deferred income taxes 3,709 3,709 ---------- ---------- Total current assets 56,883 40,941 PROPERTY, PLANT AND EQUIPMENT, NET 50,830 50,391 OTHER ASSETS, NET 10,055 9,389 ---------- ---------- $ 117,768 $ 100,721 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank overdraft $ 3,656 $ 1,585 Short-term debt 17,524 9,360 Current portion of long-term debt 7,783 7,765 Accounts payable 27,104 18,611 Accrued liabilities and other current liabilities 5,598 5,535 Income taxes payable __ 167 ---------- ---------- Total current liabilities 61,665 43,023 LONG-TERM DEBT, less current portion 33,181 33,136 OTHER LONG-TERM LIABILITIES 2,239 2,245 DEFERRED INCOME TAXES 3,437 3,437 ---------- ---------- Total liabilities 100,522 81,841 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock 539 539 Additional paid-in capital 13,805 13,805 Retained earnings 3,568 5,202 Minimum pension liability adjustment (403) (403) Treasury stock (263) (263) ---------- ---------- Total stockholders' equity 17,246 18,880 ---------- ---------- $ 117,768 $ 100,721 ========== ==========
BAILEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) FOR THE THREE MONTHS ENDED OCTOBER 29, 1995 AND OCTOBER 30, 1994 (in thousands, except share and per share data)
Oct 29 Oct 30 1995 1994 ------- ------- NET SALES $41,178 $45,177 ------- ------- COST AND EXPENSES: Cost of products sold 38,764 38,437 Selling, general and administrative expenses 3,576 3,385 ------- ------- Operating income (loss) (1,162) 3,355 INTEREST EXPENSE (NET) 1,176 860 ------- ------- Income (loss) before income taxes (2,338) 2,495 INCOME TAX PROVISION (BENEFIT) (704) 1,022 ------- ------- Net income (loss) $(1,634) $ 1,473 ======= ======= NET INCOME (LOSS) PER COMMON SHARE: Primary $ (.30) $ .27 ======= ======= Fully diluted $ (.30) $ .25 ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING: Primary 5,387,000 5,478,000 ========= ========= Fully diluted 5,387,000 6,451,000 ========= =========
BAILEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) FOR THE THREE MONTHS ENDED OCTOBER 29, 1995 AND OCTOBER 30, 1994
Three Months Ended Oct 29 Oct 30 1995 1994 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(1,634) $1,473 -------- ------ Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 1,397 1,357 Change in assets and liabilities net of effects of acquisitions: Increase in accounts receivable (12,690) (8,858) Increase in inventories (3,117) (2,806) Decrease in prepaid expenses and other current assets 162 5 Increase in other assets, net (669) (162) Increase in accounts payable 8,493 7,161 Increase (decrease) in accrued liabilities and other current liabilities 63 (539) (Decrease) increase in income taxes payable (167) 681 Decrease in other liabilities (6) (38) ------- ------ Net cash used in operating activities (8,168) (1,726) ------- ------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,247) (1,995) ------- ------- Net cash used in investing activities (1,247) (1,995) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in short-term debt (including bank overdrafts), net 10,235 4,343 Payments on long-term debt and capital leases (523) (311) Purchase of treasury stock __ (263) ------- ------- Net cash provided by financing activities 9,712 3,769 ------- ------- Net increase in cash 297 48 CASH, beginning of period 313 201 ------- ------- CASH, end of period $ 610 $ 249 ======= ======= CASH PAID FOR: Interest $1,408 $ 237 Income taxes 50 50 SUPPLEMENTAL DISCLOSURES: Assets acquired under capitalized leases $ 586 $ __
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: First Quarter Fiscal 1996 vs First Quarter Fiscal 1995 Net sales for the first fiscal quarter ended October 29, 1995, decreased $4.0 million, or 8.9%, to $41.2 million, compared to $45.2 million in the first quarter of fiscal 1995. Sales in the first quarter included $5.7 million of new and/or replacement products introduced during the period and $8.7 million of higher sales of certain products carried over from the prior year. These sales increases were offset by a) $14.3 million of sales eliminated due to the discontinuation of products for prior years' models; b) $2.6 million of lower sales of certain carryover products; and c) a $1.5 million decrease in service parts and miscellaneous other sales. Gross profit in the first quarter ended October 29, 1995 decreased $4.33 million, or 64.2%, to $2.41 million, compared to $6.74 million in the first quarter of fiscal 1995. As a percentage of net sales, gross profit for the first quarter declined to 5.9% compared to 14.9% in the same period of the prior year. The reduced gross profit was attributable to several factors: a) the lower sales volume; b) greater than anticipated and more protracted new-product launch costs; c) comparatively lower margins associated with newly introduced products; d) certain raw material cost increases; and e) under-utilization of manufacturing capacity. Selling, general and administrative expenses in the first quarter ended October 29, 1995, increased $191,000, or 5.6%, to $3.57 million compared to $3.38 million in the first quarter of fiscal 1995. As a percentage of net sales, selling, general and administrative expenses were 8.7% in the first quarter compared to 7.5% in the first quarter of the prior year. The higher percentage this year was primarily due to lower sales volume in the first quarter compared to the same period last year. Interest expense for the first fiscal quarter ended October 29, 1995 increased $316,000, or 36.7%, to $1.18 million compared to $860,000 in the first quarter of fiscal 1995. The increase was attributable to a higher average level of borrowing under the Company's revolving line-of-credit. Before provision for income taxes, the Company incurred a loss of $2.34 million for the first quarter ended October 29, 1995 compared to pre-tax income of $2.49 million for the first quarter last year. Accordingly, the Company was able to avail itself of income tax benefits attributable to the first quarter net operating loss carried back to prior years. The benefit thus recognized was at an effective rate of 30% compared to a tax expense rate of 41% for the first quarter of the prior fiscal year. For the first fiscal quarter ended October 29, 1995, the Company incurred a net loss of $1.63 million, or $.30 per share, compared to net income of $1.47 million, or $.25 per share in the first quarter of the prior year. This negative operating performance resulted from the same adverse factors that caused the aforementioned decrease in gross profit, namely: reduced sales volume, substantial new-product launching costs, lower margins on newly introduced products, raw material cost increases and unabsorbed overhead expense related to under-utilized manufacturing capacity. LIQUIDITY AND CAPITAL RESOURCES During the first fiscal quarter ended October 29, 1995 activities related to a series of new product launches required additional investments in production tooling and product inventories totaling $3.1 million and a $12.7 million increase in accounts receivable. These increases added to a $1.6 million net loss for the period were offset by depreciation and amortization of $1.4 million and an $8.5 million increase in accounts payable resulting in net use of cash in operating activities of $8.2 million. This employment of cash in operations plus capital expenditures of $1.2 million in the first quarter were funded primarily by a $10.2 million increase in utilization of the Company's revolving line-of-credit. As a result of the foregoing, at October 29, 1995 total capitalization was $50.4 million including long-term debt of $31.2 million, or 65.8%, and stockholders' equity of $17.2 million, or 34.2% of total capitalization. Meanwhile, during the first quarter net working capital decreased $2.7 million with the result that at October 29, 1995 the current ratio was .92 to 1. Due to these developments, as of October 29, 1995 there were instances of non-compliance with technical covenants of certain of the Company's debt agreements. The holders thereof have been advised and the Company expects to undertake negotiations for waivers and/or amendments. Meanwhile, actions initiated during the fourth quarter of last year to reduce operating costs and expenses seeking to restore operations to a profitable level and to address liquidity constraints are continuing. These measures have been supplemented with efforts to identify and arrange alternative sources of interim financing to meet requirements including debt retirement obligations for the next twelve months. PART II - OTHER INFORMATION Item 1. Legal Proceedings On June 2, 1994, the Company was served with a summons and complaint with respect to Vicki Match Suna and Lori Rosen v. Bailey Corporation, a purported class action suit brought in the United States District Court for the District of New Hampshire. The complaint alleged that the Company violated Rule 10b-5 of the Securities and Exchange Act of 1934 by a purported dissemination of misleading information as to its financial position in connection with the purchase and sale of its securities. The Company was successful in having the complaint dismissed, and also in rebuffing the plaintiffs' attempt to file an amended complaint. The Court allowed the plaintiffs to make one more attempt, however, and on September 1, 1995, a second amended complaint was filed. The Company has moved for dismissal of this complaint also and the action in its entirety. If this effort is unsuccessful, the Company intends vigorously to assert defenses which it believes to be meritorious. The complaint does not specify an amount of damages and the proceeding is still in its infancy. The extent of any exposure of the Company, therefore, cannot be determined at this time. With respect to other legal proceedings, reference is made to the Company's Annual Report on Form 10-K for the fiscal year ended July, 30, 1995, filed with the Securities and Exchange Commission on October 30, 1995. Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit Index is set forth below. (b) None. EXHIBIT INDEX EXHIBIT TITLE METHOD OF FILING - ------- ----- ---------------- 11.1 Computation of Filed herewith (included in Condensed Net Income Per Share Consolidated Statements of Operations for the three months ended October 29, 1995 and October 30, 1994) 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 thereto duly authorized. BAILEY CORPORATION ------------------ Registrant Date: December 12, 1995 /s/ Leonard J. Heilman ----------------------- Leonard J. Heilman Executive Vice President - Finance and Administration, Treasurer and Assistant Secretary (principal financial and accounting officer) EX-27 2 ARTICLE 5 FDS - BAILEY CORPORATION
5 This schedule contains summary financial information extracted from S.E.C. Form 10-Q for the quarterly period ended October 29, 1995 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JUL-30-1995 JUL-31-1995 OCT-29-1995 610 0 27,649 (1,208) 21,442 56,883 71,279 (20,449) 117,768 61,665 33,181 539 0 0 16,707 117,768 41,178 41,178 38,764 42,340 0 0 1,176 (2,338) ( 704) (1,634) 0 0 0 (1,634) (.30) (.30)
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