-----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, SQkAEbcRM4VWAa+hEBMox3+NJYPIm/++AtlBswJzy/jyxpPEwZ27HE5eSq3Xoss+ NqN4kS28RaaFTOF1PWs80A== 0001092306-01-500154.txt : 20010814 0001092306-01-500154.hdr.sgml : 20010814 ACCESSION NUMBER: 0001092306-01-500154 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DHB CAPITAL GROUP INC /DE/ CENTRAL INDEX KEY: 0000899166 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 113129361 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13112 FILM NUMBER: 1705888 BUSINESS ADDRESS: STREET 1: 555 WESTBURY AVE CITY: CARLE PLACE STATE: NY ZIP: 11514 BUSINESS PHONE: 5166212552 MAIL ADDRESS: STREET 1: 555 WESTBURY AVE CITY: CARLE PLACE STATE: NY ZIP: 11514 10-Q 1 qtr2-10q.txt FORM 10Q DATED JUNE 30, 2001 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED June 30, 2001 Commission File No. 0-22429 DHB INDUSTRIES, INC (Exact name of Registrant as specified in its charter) DELAWARE 11-3129361 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation) 555 WESTBURY AVENUE, CARLE PLACE, NEW YORK 11514 (Address of principal executive offices) Registrant's telephone number: (516) 997-1155 FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT: DHB Capital Group Inc. - -------------------------------------------------------------------------------- Indicate by check whether the registrant (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act 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 [ ] As of July 23, 2001, there were 31,339,847 shares of Common Stock, $.001 par value outstanding. ================================================================================ CONTENTS PART I Financial Information PAGE ---- Item 1. Financial Statements Consolidated Balance Sheet as of June 30, 2001 and December 31, 2000 3 Unaudited Consolidated Statements of Income and Accumulated Deficit For The Three Months Ended June 30, 2001 and 2000 4 Unaudited Consolidated Statements of Operations and Accumulated Deficit For The Six Months Ended June 30, 2001 and 2000 5 Unaudited Consolidated Statements of Cash Flows For The Six Months Ended June 30, 2001 and 2000 6 Unaudited Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 7-9 PART II Other Information 9 Signatures 10
DHB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited June 30, December 31, ASSETS 2001 2000 ------ --------- ----------- CURRENT ASSETS Cash and cash equivalents $ 1,437,965 $ 566,887 Marketable securities - 368,996 Accounts receivable, less allowance for doubtful accounts of $719,705 and $653,384 7,533,421 8,121,188 Inventories 17,005,297 14,297,059 Prepaid expenses and other current assets 1,078,443 1,091,952 ----------- ----------- Total Current Assets 27,055,126 24,446,082 ----------- ----------- PROPERTY AND EQUIPMENT, net 1,955,250 1,940,326 ----------- ----------- OTHER ASSETS Investments in non-marketable securities 941,750 941,750 Deferred tax assets 429,300 429,300 Deposits and other assets 298,079 298,813 ----------- ----------- Total Other Assets 1,669,129 1,669,863 ----------- ----------- TOTAL ASSETS $30,679,505 $28,056,271 =========== =========== CURRENT LIABILITIES Accounts payable $11,700,305 $11,257,987 Accrued expenses and other current liabilities 5,033,613 5,547,759 Current maturities of long term debt 111,103 143,748 ----------- ----------- Total Current Liabilities 16,845,021 16,949,494 ----------- ----------- LONG TERM LIABILITIES Long term debt, net of current maturities 2,593 15,356 Note Payable - stockholder 16,046,469 16,046,469 ----------- ----------- Total Long Term Debt 16,049,062 16,061,825 ----------- ----------- Total Liabilities 32,894,083 33,011,319 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY Common stock $.001 par value, 100,000,000 shares authorized, 31,360,347 issued and outstanding 31,360 31,674 Additional paid in capital 23,713,331 24,535,500 Accumulated deficit (25,890,339) (29,215,460) Other comprehensive income (loss) (68,930) (306,762) ----------- ----------- STOCKHOLDERS' DEFICIENCY (2,214,578) (4,955,048) ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS DEFICIENCY $30,679,505 $28,056,271 =========== ===========
See accompanying notes to financial statements. 3
DHB INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT FOR THE THREE MONTHS ENDED JUNE 30, 2001 2000 ---- ---- Net sales $23,513,811 $16,128,373 Cost of sales 17,308,556 11,516,371 ----------- ----------- Gross Profit 6,205,255 4,612,002 Selling, general and administrative expenses 3,090,487 2,814,800 ----------- ----------- Income before other income (expense) 3,114,768 1,797,202 ----------- ----------- Other Expenses (678,005) (762,998) ----------- ----------- Income before income taxes 2,436,763 1,034,204 Income taxes 134,199 22,878 ----------- ----------- Net income 2,302,564 1,011,326 Accumulated Deficit Beginning (28,192,903) (34,600,428) ----------- ----------- Accumulated Deficit Ending (25,890,339) (33,589,102) =========== =========== Earnings per common share Continuing Operations Basic shares $0.074 $0.032 =========== =========== Diluted shares $0.066 $0.032 =========== =========== Discontinued Operations Basic shares - - - - =========== =========== Diluted shares - - - - =========== =========== Weighted shares outstanding Basic shares 31,275,585 32,343,941 Warrants 3,707,806 - ----------- ----------- Diluted shares 34,983,391 32,343,941 =========== ===========
See accompanying notes to financial statements. 4
DHB INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT FOR THE SIX MONTHS ENDED JUNE 30, 2001 2000 ---- ---- Net sales $43,688,755 $29,704,021 Cost of sales 32,531,989 21,110,712 ----------- ----------- Gross Profit 11,156,766 8,593,309 Selling, general and administrative expenses 6,423,853 5,701,489 ----------- ----------- Income before other income (expense) 4,732,913 2,891,820 ----------- ----------- Other Expenses (1,267,692) (1,548,032) ----------- ----------- Income (Loss) from Continuing Operations 3,465,221 1,343,788 Discontinued operations Loss from discontinued operations (517,288) Gain on disposal of discontinued operations - 857,860 ----------- ----------- Total income (loss) from discontinued operations - 340,572 ----------- ----------- Income (loss) before income taxes 3,465,221 1,684,360 Income taxes 140,100 50,651 ----------- ----------- Net income (loss) 3,325,121 1,633,709 Accumulated Deficit Beginning (29,215,460) (35,222,811) ----------- ----------- Accumulated Deficit Ending (25,890,339) (33,589,102) =========== =========== Earnings (loss) per common share Continuing Operations: Basic shares $0.106 $0.042 =========== =========== Diluted shares $0.093 $0.042 =========== =========== Discontinued Operations: Basic shares - - $0.011 =========== =========== Diluted shares - - $0.011 =========== =========== Weighted shares outstanding Basic shares 31,316,940 32,338,061 Warrants 4,606,148 - ----------- ----------- Diluted shares 35,923,088 32,338,061 =========== ===========
See accompanying notes to financial statements. 5
DHB INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000 ---- ---- Net Income (loss) $ 3,325,121 $ 1,633,709 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 254,066 210,801 Stock issued in settlement of a lawsuit -- -- Stock issued for services 114,918 32,600 Changes in assets and liabilities (Increase) Decrease in: Accounts receivable 587,767 492,385 Marketable securities 368,996 -- Inventories (2,708,238) (2,360,317) Prepaid expenses and other current assets 13,509 56,871 Deferred taxes -- -- Deposits and other assets 192 138,645 Increase (decrease) in: Accounts payable 442,318 (1,720,229) Accrued expenses and other current liabilities (514,146) 2,776,564 State income taxes payable -- -- ----------- ----------- Net cash provided (used) by operating activities 1,884,503 1,261,029 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of assets of subsidiary, net of cash acquired 3,933,980 Payments made for property and equipment (268,448) (312,581) ----------- ----------- Net Cash provided (used) by investing activities (268,448) 3,621,399 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds (repayments) of note payable- bank (5,000,000) Principal payments on long-term debt (45,408) (257,095) Comprehensive income 237,832 (58,022) Purchase of treasury stock (937,401) (31,026) Stock warrant exercised -- -- Net proceeds from sale of common stock -- 691,124 ----------- ----------- Net cash provided (used) by financing activities (744,977) (4,655,019) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 871,078 227,409 CASH AND CASH EQUIVALENTS - BEGINNING 566,887 473,441 ----------- ----------- CASH AND CASH EQUIVALENTS - END $1,437,965 $ 700,850 =========== =========== Supplemental cash flow information Cash paid for: Interest $12,196 $88,272 Taxes $ 9,844 $26,206
See accompanying notes to financial statements. 6 DHB INDUSTRIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 ITEM 1. BASIS OF PRESENTATION The consolidated balance sheet at the end of the preceding year has been derived from the audited consolidated balance sheet contained in the Company's form 10-K and is presented for comparative purposes. All other financial statements are unaudited. All unaudited amounts are subject to year-end adjustments and audit, but the Company believes all adjustments, consisting only of normal and recurring adjustments, necessary to present fairly the financial condition, results of operations and changes in cash flows for all interim periods have been made. The results of operations for interim periods are not necessarily indicative of the operating results for the full year. Footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with published rules and regulations of the Securities and Exchange Commission. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's form 10-K for the most recent fiscal year. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2001, COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000. Consolidated net sales increased 46% to approximately $23.5 million for the three months ended June 30, 2000 as compared to approximately $16.1 million for the three months ended June 30, 2000. This increase is attributable to the increase volumes from Military Customers for the Company's ballistic apparel. Gross Profit decreased 3% to 26% for the second quarter 2001 as compared to 2000 due to the lower margins on military contracts. During the second quarter, cost controls and manufacturing efficiencies resulted in operating margins expanding over 50% - from 6.4% in the second quarter of 2000 to 10.4% in quarter just 7 ended. Operating income rose to $2.3 million for the second quarter of 2001 versus $1 million for the second quarter of 2000. Net income was approximately $2.3 million for the three months ended June 30, 2001 as compared to approximately $1 million for the three months ended June 30, 2000. The Company's tax expense remains minor due to the utilization of net operating loss carryforwards. SIX MONTHS ENDED JUNE 30, 2001, COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000. Revenues for the first six months surged to $43.7 million or 47% above the $29.7 million posted during the six-month period last year due to increased volumes from military customers for the Company's ballistic apparel. Gross profit increased $2.6 million to $11.2 million for the first half of 2001, but declined as a percentage of net sales to 25.5% from 28.9% in the first half of 2000 due to lower margins on military contracts. For the six months ending June 30, 2001 operating income rose nearly $2 million to $3.3 million from $1.3 million for the comparable period in the prior year. Net income was approximately $3.3 million for the six months ended June 30, 2001 as compared to $1.7 million for the six months ended June 30, 2000, a 104% improvement. The gross profit and income increases are a direct result of the manufacturing operating efficiencies resulting from higher sales volumes, volume discounts from our vendors as a result of the increases in our purchasing volumes, and management's control of expenses. LIQUIDITY AND CAPITAL RESOURCES The Company's primary capital requirements over the next twelve months are to assist PACA, Point Blank, NDL, and Point Blank International in financing their working capital requirements. Working capital is needed to finance the receivables, manufacturing process and inventory. Working capital at June 30, 2001 was approximately $10.2 million as compared $7.5 million at December 31, 2000. The current ratio at June 30, 2001 improved to 1.61 as compared 1.44 as of the calendar year-end. The Company's cash flow statement showed net cash provided by operating activities for the six months ended June 30, 2001 and June 30, 2000 was $1.9 million and $1.3 million respectively. During the first six months of 2001, the Company repurchased and retired 349,663 shares in the open market for an aggregate price of approximately $937,401. During the first half of 2000, the company generated cash of $3.9 million from the sale of its Electronics Group, the proceeds, together with funds generated from operations were used to retire $5 million in bank indebtedness. EFFECT OF INFLATION AND CHANGING PRICES. The Company did not experience significant increases in raw material prices during the six months ended June 30, 2001 and 2000. The Company believes it will be able to increase prices on its products to meet future price increases in raw materials, should they occur. 8 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report contains certain forward-looking statements and information relating to the Company that is based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. When used in this document, the words "anticipate," "believe," "estimate", "expect", "going forward", and the similar expressions, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements. PART II. OTHER INFORMATION ITEM 2. CHANGE IN SECURITIES In May 2001, the Company granted stock warrants for 25,000 shares with an exercise price of $2.00 per share to each of its four directors. ITEM 5. OTHER INFORMATION. At a the annual meeting on July 20, 2001, DHB Capital Group's stockholders approved a change in the name of the Corporation to DHB Industries, Inc. The change in name was effective July 24, 2001 upon filing with the Delaware Secretary of State. The Board feels that the new name more accurately reflects the nature of the Corporation's businesses and avoids any confusion associated with the perception that the Corporation is a venture capital or other financial service business. ITEM 6. EXHIBITS AND REPORTS NONE 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized. Dated: August 3, 2001 DHB CAPITAL GROUP INC. /s/ DAVID H. BROOKS ---------------------- David H. Brooks Chairman of the Board, and Director /s/DAWN SCHLEGEL ----------------------- Dawn Schlegel Chief Financial Officer 10 -----END PRIVACY-ENHANCED MESSAGE-----