-----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, JpnqpV7bNqEAhhubpuxfd+cEa/Pm3KDkLZJR1JVBx7Q+ucj4FKomMABK7wVEELJF 6jYaVInnoYleGL4bWsukBQ== 0000911420-95-000034.txt : 19950517 0000911420-95-000034.hdr.sgml : 19950516 ACCESSION NUMBER: 0000911420-95-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BISCAYNE APPAREL INC /FL/ CENTRAL INDEX KEY: 0000088706 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 650200397 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09635 FILM NUMBER: 95537978 BUSINESS ADDRESS: STREET 1: 1373 BROAD ST STREET 2: 2665 SOUTH BAYSHORE DRIVE SUITE 800 CITY: CLINTON STATE: NJ ZIP: 07013 BUSINESS PHONE: 2014733240 MAIL ADDRESS: STREET 1: 2665 SOUTH BAYSHORE DRIVE SUITE 800 STREET 2: 2665 SOUTH BAYSHORE DRIVE SUITE 800 CITY: MIAMI STATE: FL ZIP: 33133 FORMER COMPANY: FORMER CONFORMED NAME: BISCAYNE HOLDINGS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: XCOR INTERNATIONAL INC DATE OF NAME CHANGE: 19860727 FORMER COMPANY: FORMER CONFORMED NAME: SEEBURG INDUSTRIES INC DATE OF NAME CHANGE: 19780823 10-Q 1 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 quarter ended MARCH 31, 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 1-9635 BISCAYNE APPAREL, INC. (Exact name of registrant as specified in its charter) Florida 65-0200397 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1373 Broad Street, Clifton, New Jersey 07013 (Address of principal executive offices) (Zip Code) (201) 473-3240 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all the 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 [ ] At April 30, 1995, there were 10,224,227 outstanding shares of the registrant's Common Stock, $0.01 par value. BISCAYNE APPAREL, INC. INDEX Part I. Financial Information Consolidated Balance Sheets March 31, 1995 and December 31, 1994 Consolidated Statements of Operations Three Months Ended March 31, 1995 and 1994 Consolidated Statements of Cash Flows Three Months Ended March 31, 1995 and 1994 Notes to Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information Item 1 - Legal Proceedings Item 6 - Exhibits and Reports on Form 8-K Signatures BISCAYNE APPAREL, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
MARCH 31, DECEMBER 31, 1995 1994 (Unaudited) ASSETS Current assets: Cash and cash equivalents. . . $ 2,624 $ 4,178 Trade accounts receivable, less allowances of $1,274 in 1995 and $1,754 in 1994. . 9,240 21,009 Inventories. . . . . . . . . . 30,643 22,584 Prepaid expenses and other . . 1,865 833 Total current assets . . . . 44,372 48,604 Property, plant and equipment, less accumulated depreciation of $1,492 in 1995 and $1,388 in 1994 . . . . . . . . . . . . . 3,292 2,984 Investment in Hartwell Sports, Inc. . . . . . . . . . . . . . 1,568 1,505 Goodwill, net. . . . . . . . . . 5,120 5,202 Other assets, net. . . . . . . . 3,029 2,142 $57,381 $60,437 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable . . . . . . . $ 5,470 $ 6,060 Accrued liabilities. . . . . . 4,359 6,973 Notes payable to banks . . . . 9,000 8,500 Current portion of long-term debt. . . . . . . . 1,250 - Senior subordinated bridge notes . . . . . . . . . . . . - 4,776 Total current liabilities. . 20,079 26,309 Subordinated notes . . . . . . . 6,444 7,944 Other liabilities. . . . . . . . 298 303 Long-term debt . . . . . . . . . 6,250 - Commitments and contingencies. . - - Stockholders' Equity: Common stock, $0.01 par value; 25,000,000 shares authorized; 10,224,227 issued and outstanding in 1995 and 10,223,899 in 1994 . . . . . . . . . . . 102 102 Additional paid-in capital . . . 25,225 25,225 Unearned stock award compensation . . . . . . . . . (186) (203) Retained earnings (deficit). . . (831) 757 Total stockholders' equity . 24,310 25,881 $57,381 $60,437 See accompanying notes.
BISCAYNE APPAREL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except per share data) (Unaudited)
THREE MONTHS ENDED MARCH 31, 1995 1994 Net sales. . . . . . . . . . . . . . $ 15,389 $ 6,547 Operating costs and expenses: Cost of goods sold . . . . . . . . 11,524 5,151 Selling, general and administrative 5,964 3,057 Operating loss . . . . . . . . . . . (2,099) (1,661) Other income and (expenses): Interest and other expenses. . . . (595) (221) Interest and other income. . . . . 32 38 Equity in net income of Hartwell Sports, Inc . . . . . . . . . . . 63 - Loss before income tax benefit . . . (2,599) (1,844) Income tax benefit . . . . . . . . . (1,011) (695) Net loss . . . . . . . . . . . . . . $ (1,588) $ (1,149) Net loss per common share. . . . . . $ (0.16) $ (0.13) Shares used in computing loss per common share . . . . . . . . . 10,224,227 8,526,902 See accompanying notes.
BISCAYNE APPAREL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
THREE MONTHS ENDED MARCH 31, 1995 1994 Operating activities: Net loss . . . . . . . . . . . . . . .$ (1,588) $ (1,149) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Gain on sale of assets. . . . . . . . (3) - Equity in net income of Hartwell Sports, Inc. . . . . . . . . . . . . (63) - Amortization of unearned stock award compensation . . . . . . . . . 17 17 Depreciation expense. . . . . . . . . 108 92 Amortization expense. . . . . . . . . 57 53 Provision for losses and sales allowances on receivables. . . . . . 337 228 (Increase) decrease in operating assets: Trade accounts receivable. . . . . . . 11,432 9,031 Inventories. . . . . . . . . . . . . . (8,059) (3,601) Prepaid expenses and other . . . . . . (1,032) (416) Other assets . . . . . . . . . . . . . (870) (453) Increase (decrease) in operating liabilities: Accounts payable . . . . . . . . . . . (1,537) 1,664 Accrued liabilities. . . . . . . . . . (1,655) (1,503) Other liabilities. . . . . . . . . . . (3) (3) Net cash (used in) provided by operating activities. . . . . . . . (2,859) 3,960 Investing activities: Net sale of assets . . . . . . . . . . 9 - Capital expenditures . . . . . . . . . (422) (550) Equity investment in Hartwell Sports, Inc.. . . . . . . . . . . . . - (1,500) Net cash used in investing activities. . . . . . . . . . . . . (413) (2,050) Financing activities: Payments under notes payable to banks . . . . . . . . . . . . . . . . (13,825) (2,850) Borrowings under notes payable to banks. . . . . . . . . . . . . . . 14,325 - Proceeds from term loan. . . . . . . . 7,500 - Repayment of subordinated notes. . . . (6,276) - Principal payments of capital leases. . . . . . . . . . . . . . . . (6) (12) Net cash provided by (used in) financing activities. . . . . . . . 1,718 (2,862) Net decrease in cash and cash equivalents . . . . . . . . . . . . . . (1,554) (952) Cash and cash equivalents at beginning of year . . . . . . . . . . . 4,178 1,568 Cash and cash equivalents at end of year . . . . . . . . . . . . . . $ 2,624 $ 616 Supplemental disclosure information: Interest expense paid. . . . . . . . . $ 440 $ 221 Income taxes paid. . . . . . . . . . . $ 114 $ 658 See accompanying notes.
BISCAYNE APPAREL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated financial statements, which are for an interim period, do not include all disclosures provided in the annual consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes with respect thereto contained in the Biscayne Apparel, Inc., ("the Company") 1994 Annual Report on Form 10-K. The consolidated financial statements of the Company include the accounts of the parent company, and its wholly-owned subsidiaries, Biscayne Apparel International, Inc. ("BAII"), Scientific Products Inc. ("SPI") and M&L International, Inc. ("M&L"), which was acquired in 1994, and its wholly-owned subsidiaries, Unidex Garments (Philippines), Inc., Watersports Garment Manufacturing, Inc., Teri Outerwear Manufacturing, Inc., GES Sportswear Manufacturing Corp. and M&L International (H.K.) Limited. BAII operates through two divisions, Andy Johns Fashions International ("Andy Johns") and Varon, and its wholly-owned subsidiaries, Mackintosh of New England Co. and Mackintosh (U.K.) Limited. The Company holds a 20% interest in Hartwell Sports, Inc. and accounts for investments in less than 50% owned affiliates, over which it exercises significant influence, under the equity method in accordance with Accounting Principle Board Opinion No. 18. All material intercompany balances and transactions have been eliminated. Certain amounts included in prior period financial statements have been reclassified to conform with the 1995 presentation. 2. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the financial statements. 3. The results of operations for the three month period ended March 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. 4. Earnings per common share is based on the weighted average number of common and common equivalent shares outstanding during the period. Common stock equivalents include incremental shares from the exercise of stock options and warrants under the treasury stock method. 5. Included in accounts payable at March 31, 1995 and March 31, 1994, are the Company's obligations under outstanding letters of credit of $947,000 and $778,000, respectively. 6. On March 10, 1995, the Company's Board of Directors declared a five percent stock dividend with respect to the Company's Common Stock par value, $0.01 ("Common Stock"). Each holder of record on May 24, 1995 is entitled to receive one share of Common Stock for every 20 shares held. Cash will be paid in lieu of issuing fractional shares at a price of $2.125 per share, the closing price of the Common Stock on March 10, 1995. The distribution date is May 31, 1995. 7. On November 30, 1994, the Company acquired M&L, a Chicago- based designer, manufacturer and marketer of infants', toddlers' and children's outerwear, sportswear, and swimwear. The following unaudited pro forma combined financial data reflects the results of the Company and M&L as if the Acquisition had occurred on January 1, 1994 (in thousands, except per share data):
Pro Forma Data for the Three Months ended 3/31/94 Net Sales................ $ 13,864 Loss Before Income Tax Benefit................. $ (2,764) Net Loss................. $ (1,709) Loss Per Share........... $ (0.17) Shares Used in Computing Pro Forma Earnings Per Share.................. 10,193,899
8. At December 31, 1994, the Company had a $32,000,000 uncommitted credit agreement (the "BAI Agreement") with several commercial banks. The BAI Agreement was collateralized by substantially all of the Company's trade accounts receivable and imported finished goods inventory, a first mortgage on Varon's real property, and was guaranteed by the Company. Under the BAI Agreement, the Company was restricted from making any cash dividend payments. The BAI Agreement was to expire on April 30, 1995, but was paid off on March 16, 1995 with proceeds from the Revolver Agreement (see below). In connection with the acquisition of M&L, M&L entered into a three year $23,000,000 committed revolver credit agreement with a bank ("The M&L Agreement"), which the Company guaranteed. The M&L Agreement was collateralized by substantially all of M&L's assets including accounts receivable, inventories, excess cash deposited in a cash collateral account and equipment. The M&L Agreement required specified levels of working capital, minimum compensating cash balances of $650,000 and compliance with various financial ratios. The M&L Agreement also restricted capital expenditures, leases, other borrowings, cash dividends and other items. The M&L Agreement was to expire December 31, 1997. The M&L Agreement was paid off on March 16, 1995 with proceeds from the Revolver Agreement (see below). On March 16, 1995, the Company entered into an agreement with several banks for a $56,000,000 two year committed revolving credit facility (the "Revolver Agreement") and a $7,500,000 four year term loan (the "Term Loan"), which replaced the existing BAI Agreement and the M&L Agreement, and was used to repay debt and other related costs associated with the M&L acquisition. The Revolver Agreement and the Term Loan are collateralized by all of the Company's assets, excluding domestic inventory, and including all trademarks. Additionally, the Revolver Agreement and the Term Loan require various financial covenants and reporting requirements and limit capital expenditures, cash dividends, other indebtedness, affiliate transactions, mergers and acquisitions and other items. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Quarter Ended March 31, 1995 versus Quarter Ended March 31, 1994: Net sales for the first quarter of 1995 increased to $15,389,000 from first quarter 1994 net sales of $6,547,000. The increase is mainly attributable to the addition of M&L, which was acquired on November 30, 1994. Consolidated sales backlog at April 30, 1995 were $51,040,000, compared to $66,725,000 at April 30, 1994. This decrease is due to the extremely warm winter experienced last year causing both outerwear manufacturers and retailers to carryover increased levels of inventory into 1995. The result is that retailers are hesitating to place orders for Fall 1995 outerwear products as evidenced by the Company's largest 1994 customer placing orders of only $342,000, as of April 30, 1995, compared to $11,580,000 as of April 30, 1994. However, the Company's underwear, daywear and sportswear operations reflect a sales backlog of $14,684,000 at April 30, 1995, which exceeds the April 30, 1994 sales backlog of $10,636,000 by 38%. Cost of goods sold, as a percentage of net sales, was 75% versus 79% for the quarters ended March 31, 1995 and 1994, respectively. The decrease is attributable to the addition of M&L in 1995 and Andy Johns and Mackintosh realizing higher selling prices in 1995. Selling, general and administrative expenses ("S,G&A"), as a percentage of net sales, decreased from 47% for the first quarter of 1994 to 39% in the first quarter of 1995, resulting primarily from the addition of M&L in 1995, increased sales on fixed S,G&A expenses and management's efforts to control these costs. Other Interest and other expense for the quarter ended March 31, 1995 increased $374,000 from the comparable quarter of 1994. The increase is primarily due to increased borrowings incurred in connection with the acquisition of M&L and increased bank interest rates. Interest and other income decreased by $6,000 in the first quarter of 1995, compared with the first quarter of 1994 due to lower cash balances invested. Income Taxes For the quarters ended March 31, 1995 and 1994, the income tax benefit was greater than the provision which would be derived upon application of the federal statutory rate, primarily because of state income tax provisions, non-taxable interest income and non- deductible amortization of goodwill. Liquidity and Capital Resources Cash and cash equivalents were $2,624,000 and $4,178,000 at March 31, 1995 and December 31, 1994, respectively. At March 31, 1995, the Company's working capital was $24,293,000, representing a current ratio of 2.2:1. This compares to working capital of $22,295,000 and a current ratio of 1.85:1 at December 31, 1994. The increase in the working capital ratio is due to the repayment of short-term subordinated debt with long-term bank borrowings. The decrease in cash on hand is largely due to the Company reducing short-term outstanding bank borrowings. As presented in the Consolidated Statements of Cash Flows for the three months ended March 31, 1995, the decrease in accounts receivable of $11,432,000 and the increase in inventories of $8,059,000 are due to the seasonality of the Company's operations. The net increase in cash from financing activities of $1,718,000 is due to the Company's seasonality and the refinancing of debt, as discussed below. At December 31, 1994, the Company had a $32,000,000 uncommitted credit agreement (the "BAI Agreement") with several commercial banks. The BAI Agreement was to expire on April 30, 1995, but was paid off on March 16, 1995 with proceeds from the Revolver Agreement, as discussed below. In connection with the acquisition of M&L, M&L entered into a three year $23,000,000 committed revolver credit agreement with a bank ("The M&L Agreement"), which the Company guaranteed. The M&L Agreement was to expire December 31, 1997 but was paid off on March 16, 1995 with proceeds from the Revolver Agreement, as discussed below. On March 16, 1995, the Company entered into an agreement with several banks for a $56,000,000 two year committed revolving credit facility (the "Revolver Agreement"), and a $7,500,000 four year term loan (the "Term Loan"), which replaced the existing BAI Agreement and the M&L Agreement, and was used to repay debt and other related costs associated with the M&L acquisition. Capital expenditures for the three months ended March 31, 1995 decreased to $422,000 from $550,000 in 1994. The decrease is primarily due to the 1994 expansion of Varon's Arlington, Georgia facility, offset by increases as a result of the addition of M&L. In March 1994, the Company purchased, for $1,500,000, a 20% interest in Hartwell Sports, Inc., a manufacturer of casual shirts and jackets. The purchase and subsequent accounting for the investment is being recorded under the equity method in accordance with Accounting Principle Board Opinion No. 18. The Company expects that cash on hand, investments in short-term securities, investment income, cash from operations and borrowings under its credit agreement will be sufficient to fund current operations and to enable the Company to meet its obligations as they become due. Effect of Inflation and Seasonality The Company believes that inflation will not significantly effect its profit margins or have a material effect on the prices of other goods and services used in its business operations. Sales of women's and children's outerwear and children's thermal underwear are seasonal. Historically, Andy Johns, Mackintosh, Varon and M&L have significantly higher revenues in the third and fourth quarters than in the first and second quarters. Therefore, the results of any interim period are not necessarily indicative of the results which might be expected during a full year. Part II. Other Information Item 1. Legal Proceedings The Company is, from time to time, involved in routine litigation. None of such litigation in which the Company is presently involved is material to its financial position or results of operations. Item 6. Exhibits and Reports on Form 8-K. a) Exhibits: Exhibit 11 - Computation of Per Share Earnings b) Reports on Form 8-K: During the quarter for which this Quarterly Report on Form 10-Q is filed, the Registrant did not file any Current Reports on Form 8-K. 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: BISCAYNE APPAREL, INC. Date: May 15, 1995 By: /s/ John E. Pollack John E. Pollack President and Chief Executive Officer Date: May 15, 1995 By: /s/ Peter Vandenberg, Jr. Peter Vandenberg, Jr. Vice President, Treasurer and Chief Financial Officer EXHIBIT 11 Biscayne Apparel, Inc. Computation of Per Share Earnings (Dollars in Thousands, Except Per Share Amounts) (Unaudited)
THREE MONTHS ENDED MARCH 31, 1995 1994 Net loss . . . . . . . . . . . . . $ (1,588) $ (1,149) PRIMARY: Common and common equivalent shares: Weighted average common shares outstanding. . . . . . . 10,224,227 8,526,902 Potential dilution upon exercise of stock options and warrants . - - Shares used in computation of earnings per common share. . . . 10,224,227 8,526,902 PER SHARE AMOUNTS: Net loss per share . . . . . . . . $ (0.16) $ (0.13) FULLY DILUTED: Common and common equivalent shares: Weighted average common shares outstanding . . . . . . . . . . 10,224,227 8,526,902 Potential dilution upon exercise of stock options and warrants . - - Shares used in computation of earnings per common share. . . . 10,224,227 8,526,902 PER SHARE AMOUNTS: Net loss per share . . . . . . . . $ (0.16) $ (0.13)
EX-27 2
5 Financial Statements for Biscayne Apparel, Inc. - Form 10-Q 1 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 2,624 0 10,514 (1,274) 30,643 44,372 4,784 (1,492) 57,381 20,079 0 102 0 0 24,208 57,381 15,389 15,389 11,524 11,524 0 0 595 (2,599) (1,011) (1,588) 0 0 0 (1,588) (0.16) (0.16)
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