-----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, KjB6eASIgCIbCb9nkvxJ0TcWHfEbmnyRNZt+Bh0PSwW57NZ7tvf8JJv8uNQczO8r n604+RjfFSnwUBqxqsKnbw== 0000950168-95-000437.txt : 19950530 0000950168-95-000437.hdr.sgml : 19950530 ACCESSION NUMBER: 0000950168-95-000437 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPEIZMAN INDUSTRIES INC CENTRAL INDEX KEY: 0000092827 STANDARD INDUSTRIAL CLASSIFICATION: 3550 IRS NUMBER: 560901212 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08544 FILM NUMBER: 95539652 BUSINESS ADDRESS: STREET 1: P O BOX 31215 CITY: CHARLOTTE STATE: NC ZIP: 28231 BUSINESS PHONE: 7043723751 MAIL ADDRESS: STREET 1: P O BOX 31215 CITY: CHARLOTTE STATE: NC ZIP: 28231 10-Q 1 SPEIZMAN 10-Q 80913.1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 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 No. 0-8544 SPEIZMAN INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 56-0901212 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 508 West Fifth St. 28202 Charlotte, North Carolina (Zip Code) (Address of principal executive offices) (704) 372-3751 (Registrant's telephone number, including area code) Not Applicable (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 12 months, 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 latest practicable date. Class of Common Stock Outstanding at April 28, 1995 ------------------------ ---------------- Par value $.10 per share 3,208,599 Page 1 of 13 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Condensed Balance Sheets . . . . . . . . . 3 - 4 Consolidated Condensed Statements of Income . . . . .. . . 5 Consolidated Condensed Statements of Cash Flows . . . . . 6 Notes to Consolidated Financial Statements. . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . 8 - 10 PART II. OTHER INFORMATION: Item 1: Legal Proceedings . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits and reports on Form 8-K (a) Reports on Form 8-K . . . . . . . . . . . . . . . . . 11 (b) Exhibit 11. Computation of Net Income per Share . . . . 12 Page 2 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
April 1, July 2, 1995 1994 (Unaudited) ASSETS CURRENT: Cash and cash equivalents $ 4,142,590 $ 5,433,664 Accounts Receivable, less allowances of $94,920 and $69,701 13,788,575 15,170,190 Inventories 10,054,899 7,296,836 Prepaid expenses and other current assets 2,089,537 1,182,894 TOTAL CURRENT ASSETS 30,075,601 29,083,584 PROPERTY AND EQUIPMENT: Leasehold improvements 543,874 542,361 Machinery and equipment 671,257 509,197 Furniture, fixtures and transportation equipment 867,468 877,498 Total 2,082,599 1,929,056 Less accumulated depreciation and amortization (1,417,216) (1,409,050) NET PROPERTY AND EQUIPMENT 665,383 520,006 OTHER 510,132 556,271 $ 31,251,116 $ 30,159,861
See accompanying notes to consolidated financial statements. Page 3 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
April 1, July 2, 1995 1994 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $10,436,645 $10,041,865 Customers' deposits 1,749,917 1,827,196 Accrued expenses 355,437 515,118 Current maturities of long-term debt 44,498 120,630 TOTAL CURRENT LIABILITIES 12,586,497 12,504,809 LONG-TERM DEBT 131,232 172,153 MINORITY INTEREST 2,000 - TOTAL LIABILITIES 12,719,729 12,676,962 STOCKHOLDERS' EQUITY: Common Stock - par value $.10; authorized 6,000,000 shares; issued 3,236,199 and 3,234,949 shares 323,620 323,495 Additional paid-in capital 12,456,965 12,455,590 Retained earnings 5,840,982 4,803,611 Foreign currency translation adjustment 9,617 - Total 18,631,184 17,582,696 Treasury stock, at cost, 27,600 common shares (99,797) (99,797) TOTAL STOCKHOLDERS' EQUITY 18,531,387 17,482,899 $31,251,116 $ 30,159,861
See accompanying notes to consolidated financial statements. Page 4 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited) (Unaudited) For the Three Months Ended For the Nine Months Ended 4-1-95 4-2-94 4-1-95 4-2-94 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) REVENUES $16,131,974 $19,009,008 $ 45,803,828 $49,613,144 COSTS AND EXPENSES: Cost of sales 13,928,919 16,207,001 40,240,039 42,493,216 Selling expenses 850,968 639,562 2,623,345 1,678,748 General and administrative expenses 537,948 579,415 1,314,994 1,467,949 Total costs and expenses 15,317,835 17,425,978 44,178,378 45,639,913 814,139 1,583,030 1,625,450 3,973,231 NET INTEREST EXPENSE (INCOME) 4,653 (14,656) (2,921) 20,664 INCOME BEFORE TAXES ON INCOME 809,486 1,597,686 1,628,371 3,952,567 TAXES ON INCOME 314,000 565,000 591,000 1,466,000 NET INCOME $ 495,486 $ 1,032,686 $ 1,037,371 $ 2,486,567 PREFERRED STOCK DIVIDENDS - - - 40,735 NET INCOME APPLICABLE TO COMMON STOCK $ 495,486 $ 1,032,686 $ 1,037,371 $ 2,445,832 NET INCOME PER SHARE $ .15 $.31 $ .32 $ .87 Weighted average number of common and equivalent shares 3,259,820 3,301,672 3,272,413 2,820,077
See accompanying notes to consolidated financial statements. Page 5 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) For the Nine Months Ended 4/1/95 4/2/94 (39 Weeks) (39 Weeks) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 1,037,371 $ 2,486,567 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 130,358 145,428 Provision for inventory obsolescence 150,000 150,000 Foreign currency translation adjustment 9,617 - (Increase) decrease in: Accounts receivable 1,381,615 (4,249,105) Inventories (2,908,063) (1,492,304) Prepaid expenses and deposits (906,643) (437,807) Other assets 46,139 180,251 Increase (decrease) in: Accounts payable 394,780 2,879,190 Customers' deposits (77,279) (1,183,608) Accrued expenses (159,681) (46,108) Net cash provided (used) by operating activities (901,786) (1,567,496) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (308,712) (228,564) Disposition of property and equipment 32,977 201,929 Net cash used in investing activities (275,735) (26,635) CASH FLOWS FROM FINANCING ACTIVITIES: Net payments on notes payable - (174,785) Principal payments on long-term debt (117,053) (691,717) Net proceeds of common stock offering - 9,331,198 Redemption of preferred stock - (894,152) Dividends on preferred stock - (40,735) Issuance of common stock for stock options 1,500 81,951 Minority interest in subsidiary 2,000 - Net cash provided by (used in) financing activities (113,553) 7,611,760 NET INCREASE (DECREASE) IN CASH (1,291,074) 6,017,629 CASH AT BEGINNING OF PERIOD 5,433,664 723,820 CASH AT END OF PERIOD $ 4,142,590 $ 6,741,449 Supplemental Disclosures: Cash paid during period for: Interest $ 73,852 $ 109,153 Income taxes 301,851 1,489,985
See accompanying notes to consolidated financial statements. Page 6 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Management Statement re Adjustments In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present the Registrant's financial position, the results of operations and changes in cash flow for the periods indicated. The accounting policies followed by the Registrant are set forth on page F-6 of the Registrant's Form 10-K for the fiscal year ended July 2, 1994, which is incorporated by reference. Note 2. Inventories Inventories consisted of the following: April 1, July 2, 1995 1994 (unaudited) Machines $ 7,176,637 $ 4,218,036 Parts and Supplies 2,878,262 3,078,800 Total $ 10,054,899 $7,296,836 Note 3. Taxes on Income Taxes on income are allocated to interim periods on the basis of an estimated annual effective tax rate. Note 4. Net Income Per Share Net income per share is computed by dividing net income by the average number of common and common equivalent shares outstanding during the period. Common equivalent shares include those common shares which are issuable upon the exercise of stock options, when dilutive, net of shares assumed to have been repurchased with the proceeds. Page 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's revenues are generated primarily from its distribution of textile equipment, principally knitting machines, to manufacturers of textile products and, to a lesser extent, from the sale of parts used in such equipment and the sale of used textile equipment. RESULTS OF OPERATIONS In the Company's thirteen-week quarter ended April 1, 1995, revenues decreased by about $2.9 million, or about 15.1% from revenues of the same quarter of last year. The $2.9 million decrease in revenues is composed of a $4.9 million decrease in the revenues from the sale of hosiery equipment, partially offset by $2 million in increases in sales of all other equipment. Included in those improved elements were revenues of $1.5 million from operations that were not in existence in the prior period. The Company's year-to-date revenues declined by about $3.8 million or 7.7% from revenues of the same period last year. The decrease reflects a decline in hosiery equipment sales of approximately $10.6 million, partially offset by sales of other types of textile equipment, including $2.4 million from operations that were not in existence in the prior year. Cost of sales in the Company's quarter ended April 1, 1995, were 86.3% of revenues. This 86.3% compares to 85.1% in the same quarter of last year. Increased field service expenses accounted for all of this increase, quarter to quarter. In the year- to-date, cost of sales were 87.8% of revenues as compared to 85.5% in the same nine-month period of last year. In the current year-to-date, increases in field service expenses accounted for about one-half of the higher cost of sales. The remainder of the increase in cost of sales, in the year-to-date, reflects the narrowing of margins for hosiery and for outerwear knitting machines due to declines in demand. Selling expenses increased by about $211,000 in the latest quarter as compared to the same quarter of last year and by about $944,000 in the current nine months as compared to the same period of last year. Increases in both of these periods occurred principally in salaries and commissions, travel and trucking, and in letter of credit charges. Substantial portions of those increases relate to the increased operations of the Company's two outerwear knitting machine divisions and the Company's dyeing and finishing equipment division. General and administrative expenses in the current third fiscal quarter declined by about $43,000 from the same quarter of last year. In the year-to-date, general and administrative expenses decreased by about $153,000 from the same period of last year. The major factors in both of these reductions were decreases in profit-based bonuses. Income taxes in the quarter ended April 1, 1995, were 38.8% of pre-tax profits as compared to 35.4% in the same period of last year. This increase reflects adjustments to income tax liabilities upon finalization of the prior year's tax returns. Page 8 OUTLOOK As of January 1, 1995, the Company no longer represents Washex Machinery Company of Wichita Falls, Texas, for the sale of textile dye machines for garments, socks and women's sheer hosiery. This product line contributed revenues in fiscal 1993 of approximately $2.2 million, in fiscal 1994 of approximately $340,000, with no sales in fiscal 1995. The Company's English subsidiary, specializing in sweater machines, initiated operations at the beginning of the Company's current fiscal year. That division has contributed approximately $2.4 million in revenues for the fiscal year-to-date. The sweater manufacturing industry in the United States, as served by the Company, appears to be in a relatively weak position. The Company's sales of sweater machines in the United States for the balance of fiscal 1995 could be affected by this apparent weakness. The sock industry in the United States and Canada, which the Company serves, presents a mixed picture at the present time. There is weak demand for fine gauge rib socks with a somewhat stronger demand for coarse gauge rib socks. The reciprocated heel and toe athletic sock market is showing a moderate up-surge in demand. LIQUIDITY AND CAPITAL RESOURCES At April 1, 1995, the Company's working capital totaled $17.5 million. This figure represents an increase of about $910,000 from the Company's working capital position at the end of the prior fiscal year, July 2, 1994. In the current year-to-date, operating activities used $902,000. This compares to usage of $1,567,000 in the same nine months of last year. In the current period, increases in inventories and in pre-paid expenses and deposits were partially offset by a decrease in accounts receivable and an increase in accounts payable. Capital expenditures, less dispositions, used about $276,000 in the current year-to-date as compared to about $27,000 in the prior year. Cash flow in the first nine months of the prior year included the net proceeds of the common stock offering. The current year does not include any such activity. As a result, financing activities used about $114,000 in the current period as compared to financing activities having provided about $7.6 million in the same period of last year. Overall, net cash decreased by about $1.3 million as compared to an increase of about $6.0 million in the same period of last year. The Company presently has no material commitments for capital expenditures and does not anticipate incurring such commitments in the balance of fiscal 1995. Page 9 SEASONALITY AND OTHER FACTORS There are certain seasonal factors that may affect the Company's business. Traditionally, manufacturing businesses in Italy close for the month of August, and the Company's customers close for one week in July. Consequently, no shipments or deliveries, as the case may be, of machines distributed by the Company that are manufactured in Italy are made during these periods in the Company's first quarter. In addition, manufacturing businesses in Italy generally close for two weeks in December, during the Company's second quarter. Fluctuations in customer orders or other factors may affect quarterly variations in net revenues from year to year. EFFECTS OF INFLATION AND CHANGING PRICES Management believes that inflation has not had a material effect on the Company's operations. Most of the Company's machines and spare part purchases are denominated and payable in Italian lira. Currency fluctuations of the lira could result in substantial price level changes and therefore impede or promote import/export sales and substantially impact profits. However, to reduce exposure to adverse foreign currency fluctuations during the period from customer orders to payment for goods sold, the Company enters into forward foreign exchange contracts. The Company is not able to assess the quantitative effect that such currency fluctuations could have upon the Company's operations. There can be no assurance that fluctuations in foreign currency exchange rates will not have a significant adverse effect on future operations. Page 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings On August 21, 1989, Dorothy L. Boyd, Administratrix, instituted an action against the Company in the United States District Court for the Western District of Virginia, seeking $5,000,000.00 in damages allegedly resulting from a wrongful death that involved machinery manufactured and sold by the Company more than 20 years before the death. On January 12, 1994, the District Court granted the Company's Motion for Summary Judgment and entered a judgment for the Company. The plaintiff appealed to the United States Court of Appeals for the Fourth Circuit, which on December 12, 1994, affirmed the judgment of the District Court. The time in which the plaintiff could either petition the Fourth Circuit Court for a re-hearing or petition the United States Supreme Court for a writ of certiorari, has expired. Therefore, this case is completed with no finding of liability on the part of the Company. Item 6. Exhibits and reports on Form 8-K (a) No reports on Form 8-K were filed by the Registrant during or applicable to the period reported here. (b) Exhibit 11. - Computation of Net Income Per Share Page 11 Exhibit 11 NET INCOME PER SHARE The following table presents the information needed to compute primary income per common share:
(Unaudited) (Unaudited) For the Three Months Ended For the Nine Months Ended 4-1-95 4-2-94 4-1-95 4-2-94 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) Net income applicable to common stock $ 495,486 $1,032,686 $1,037,371 $ 2,445,832 Weighted average shares outstanding 3,236,199 3,181,173 3,236,199 2,700,087 Less: Treasury shares (27,600) (27,600) (27,600) (27,600) Add: Assumed exercise of options reduced by the number of shares purchased with proceeds 51,221 148,099 63,814 147,590 Adjusted weighted average of shares outstanding 3,259,820 3,301,672 3,272,413 2,820,077 Net income per share $ .15 $ .31 $ .32 $ .87
Page 12 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. SPEIZMAN INDUSTRIES, INC. (Registrant) Date: May 11, 1995 /s/ Robert S. Speizman Robert S. Speizman President Date: May 11, 1995 /s/ Josef Sklut Josef Sklut Vice President-Finance (Chief Financial Officer) Page 13 EX-27 2 EXHIBIT 27
5 9-MOS JUL-01-1995 JUL-03-1994 APR-01-1995 4,142,590 0 13,883,495 (94,920) 10,054,899 30,075,601 2,089,537 (1,417,216) 31,251,116 12,586,497 0 323,620 0 0 18,207,767 31,251,116 45,803,828 45,803,828 40,240,039 44,178,378 0 0 (2,921) 1,628,371 591,000 1,037,371 0 0 0 1,037,371 0.32 0.32
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