-----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, JwIjNXffAsgMMazF8oewsxcx74Ahp883GPWodMilwGWZF9yzGyKXCjvsoAbkUYm2 Ef6jcAPmxIspcMt2aYz1aQ== 0000950168-97-001213.txt : 19970513 0000950168-97-001213.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950168-97-001213 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPEIZMAN INDUSTRIES INC CENTRAL INDEX KEY: 0000092827 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-INDUSTRIAL MACHINERY & EQUIPMENT [5084] IRS NUMBER: 560901212 STATE OF INCORPORATION: DE FISCAL YEAR END: 0629 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08544 FILM NUMBER: 97600787 BUSINESS ADDRESS: STREET 1: 508 W. 5TH STREET CITY: CHARLOTTE STATE: NC ZIP: 28231 BUSINESS PHONE: 7043723751 MAIL ADDRESS: STREET 1: 508 W. 5TH STREET CITY: CHARLOTTE STATE: NC ZIP: 28231 10-Q 1 SPEIZMAN INDUSTRIES 10-Q 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 March 29, 1997 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. Outstanding at Class of Common Stock May 6, 1997 Par value $.10 per share 3,235,266 Page 1 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 Operations 5 Consolidated Condensed Statements of Cash Flows 6 Notes to Consolidated Condensed Financial Statements. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II. OTHER INFORMATION: Item 6. Exhibits and reports on Form 8-K 11 Page 2 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited) March 29, June 29, 1997 1996 ---------- -------------- ASSETS CURRENT: Cash and cash equivalents $ 620,295 $ 7,981,723 Accounts receivable, less allowances of $419,716 and $259,956 21,348,314 12,160,449 Inventories 14,351,950 11,639,552 Prepaid expenses and other current assets 3,588,322 2,340,111 ---------- -------------- TOTAL CURRENT ASSETS 39,908,881 34,121,835 ---------- -------------- PROPERTY AND EQUIPMENT: Leasehold improvements 750,140 550,684 Machinery and equipment 1,760,506 1,208,508 Furniture, fixtures and transportation equipment 1,078,027 1,218,570 ---------- -------------- Total 3,588,673 2,977,762 Less accumulated depreciation and amortization (1,722,726 (1,525,058) ---------- -------------- NET PROPERTY AND EQUIPMENT 1,865,947 1,452,704 ---------- -------------- OTHER 323,432 574,685 ---------- -------------- $ 42,098,260 $ 36,149,224 ============ ===============
See accompanying notes to consolidated condensed financial statements. Page 3 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) March 29, June 29, 1997 1996 ---------- -------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 19,293,621 $ 14,864,567 Customers' deposits 2,037,099 2,723,466 Accrued expenses 644,814 209,881 Current maturities of long-term debt 2,077 11,051 ---------- -------------- TOTAL CURRENT LIABILITIES 21,977,611 17,808,965 LONG-TERM DEBT 116,901 137,334 ------------ ------------ TOTAL LIABILITIES 22,094,512 17,946,299 ------------ ------------ STOCKHOLDERS' EQUITY: Common stock - par value $.10; authorized 20,000,000 shares, issued 3,262,866; and authorized 6,000,000, issued 3,236,199 shares 326,287 323,620 Additional paid-in capital 12,512,299 12,459,965 Retained earnings 7,272,359 5,524,360 Foreign currency translation adjustment (7,400) (5,223) ------------ ------------ Total 20,103,545 18,302,722 Treasury stock, at cost, 27,600 common shares (99,797) (99,797) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 20,003,748 18,202,925 ------------ ------------ $ 42,098,260 $ 36,149,224 ============ ============ See accompanying notes to consolidated condensed financial statements. Page 4 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited) For the Three Months Ended For the Nine Months Ended 3-29-97 3-30-96 3-29-97 3-30-96 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) Note 5 Note 5 REVENUES $ 22,297,479 $ 11,832,666 $55,728,776 $29,295,220 --------------- --------------- ----------- ----------- COSTS AND EXPENSES: Cost of sales 18,333,407 10,125,759 46,236,808 25,989,342 Selling expenses 1,585,232 1,560,515 4,367,771 3,497,945 General and administrative expenses 856,751 545,853 2,280,122 1,300,555 --------------- ----------------- --------------- ------------------- Total costs and expenses 20,775,390 12,232,127 52,884,701 30,787,842 --------------- ----------------- --------------- ------------------- 1,522,089 (399,461) 2,844,075 (1,492,622) NET INTEREST EXPENSE (INCOME) 34,459 (9,725) (19,924} (12,741) -------------- --------------- -------------- ------------------ INCOME (LOSS) BEFORE TAXES ON INCOME 1,487,630 (389,736) 2,863,999 (1,479,881) TAXES (BENEFIT) ON INCOME 569,000 (132,000) 1,116,000 (485,000) ------------- --------------- --------------- ---------------- NET INCOME (LOSS) $ 918,630 $ (257,736) $ 1,747,999 $ (994,881) ============= ============== ============== =============== NET INCOME (LOSS) PER SHARE $ 0.27 $ (0.08) $ 0.52 $ (0.31) ======= ======== ======= ======== Weighted average number of common and equivalent shares 3,379,174 3,248,661 3,353,260 3,270,398
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 3-29-97 3-30-96 (39 Weeks) (39 Weeks) ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 1,747,999 $ (994,881) Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: Depreciation and amortization 344,100 110,077 Provision for inventory obsolescence 150,000 150,000 Foreign currency translation adjustment (2,177) (5,721) (Increase) decrease in: Accounts receivable (9,187,865) 2,925,811 Inventories (2,862,398) 2,675,509 Prepaid expenses and deposits (1,248,211) (246,948) Other assets 251,253 (243,374) Increase (decrease) in: Accounts payable 4,429,054 (4,463,554) Customers' deposits (686,367) 2,299,080 Accrued expenses 434,933 (617,869) ------------ ----------- Net cash provided (used) by operating activities (6,629,679) 1,588,130 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (780,572) (466,901) Disposition of property and equipment 23,229 347,557 ------------ ----------- Net cash used in investing activities (757,343) (119,344) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (29,407) (259) Issuance of common stock for stock options 55,001 -- ------------ ----------- Net cash provided by (used in) financing activities 25,594 (259) ------------ ----------- NET INCREASE (DECREASE) IN CASH (7,361,428) 1,468,527 CASH AT BEGINNING OF PERIOD 7,981,723 2,436,859 ------------ ----------- CASH AT END OF PERIOD $ 620,295 $ 3,905,386 ============ ============= Supplemental Disclosures: Cash paid during period for: Interest $ 76,456 $ 71,895 Income taxes 826,000 112,311 See accompanying notes to consolidated financial statements. Page 6 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 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 June 29, 1996, which is incorporated by reference. Note 2. Inventories Inventories consisted of the following: March 29, June 29, 1997 1996 ----------- ----------- Machines $10,535,332 $ 8,211,242 Parts and supplies 3,816,618 3,428,310 ------------ ----------- Total $14,351,950 $11,639,552 =========== =========== 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 (Loss) Per Share Net income (loss) 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. Note 5. Restated Consolidated Condensed Statements of Operations The Company's Consolidated Condensed Statements of Operations for the quarter and the year-to-date ended March 30, 1996 have been restated. Losses of $531,790 before taxes and $332,790 after taxes have been reclassified from discontinued operations. The $531,790 loss represented assets and anticipated expenses of the closed CopyGuard Division. Such write-offs and expenses, all sales related, have been reclassified in the current report to Selling Expenses. 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 and dyeing and finishing equipment, 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 Revenues increased by $10.5 million to $22.3 million or by 88% in the Company's current third fiscal quarter ended March 29, 1997 as compared to the same quarter of last year. The improvement in revenues resulted essentially from a $9.8 million increase in sales of hosiery manufacturing equipment, a $1.2 million increase in sales of circular fabric machines, less $0.5 million in net decreases in all other sales and other revenues. Revenues increased by $26.4 million to $55.7 million or by 90% in the Company's current first nine months as compared to $29.3 million in the same nine-month period of last year. The improved revenues resulted from a $25.0 million increase in sales of hosiery manufacturing equipment, a $1.6 million increase in sales of knitted fabric machines, less $0.2 million in net decreases in all other sales and other revenues. Cost of sales in the current third quarter were 82.2% of revenues as compared to 85.6% in the same quarter a year ago. Similarly, cost of sales in the nine months year-to-date were 83.0% of revenues as compared to 88.7% in the prior year-to-date. The favorable shifts in both periods resulted essentially from the improved volume in the hosiery manufacturing equipment sector, coupled with improved margins. Additionally, service expenses, a component of cost of sales, increased at a lower rate than the sales rate of increase. Service expenses accounted for 3.0 points of the 82.2% cost of sales figure in the current third quarter as compared to 3.7 points of the 85.6% cost of sales figure in last year's third quarter. More significantly, in the current year-to-date, service expenses accounted for 3.4 points of the 83.0% cost of sales as compared to 5.0 points of the 88.7% cost of sales in the year-to-date a year ago. The Company's Consolidated Condensed Statements of Operations for the quarter and for the year-to-date ended March 30, 1996 have been restated. Losses of $532,000 before taxes and $333,000 after taxes have been reclassified from discontinued operations. The $532,000 loss represents assets and anticipated expenses of the closed CopyGuard Division. Such write-offs and expenses, all sales related, have been reclassified in the current report to Selling expenses. Selling expenses in the current third quarter were essentially unchanged, at $1.6 million, from a similar figure in the same quarter of last year. However, selling expenses in the current year-to-date increased to $4.4 million from $3.5 million in the first nine months of last year. The $870,000 increase results essentially from increases of $281,000 in sales salaries and $592,000 in sales commissions and overrides. Page 8 General and administrative expenses increased by $311,000 in the current third quarter. In the current year-to-date, these expenses increased by $979,000. In the current third quarter, the increase reflects increases in salaries and in profit-related executive bonuses. There were no executive bonuses accrued in last year's third quarter or last year's year-to-date due to operating losses in both periods. In the current year-to-date, the increase results from increases in salaries, profit-related executive bonuses, bad debt reserve provisions and costs associated with a computer installation. In the Company's current third quarter, net interest expense totaled about $34,000 as compared to net interest income of about $10,000 in the third quarter of last year. This shift reflects the Company's use of its revolving credit line during the current third quarter. Year-to-date net interest income was about $20,000 as compared to $13,000 in the same period of last year. Net income for the current third quarter was $919,000 or $0.27 per share as compared to a loss of $258,000 or $0.08 per share in the third quarter of last year. Net income in the nine months of the current fiscal year totaled $1,748,000 or $0.52 per share. This compares to a loss of $995,000 or $0.31 per share for the first nine months of last year. OUTLOOK The Company's current backlog of firm orders remains substantial. However, there has been a definite decline in the demand for new sock manufacturing equipment sold by the Company to its major customers in the United States and Canada. This decline has been partially offset by increased sales activities for new equipment in Mexico, both in the sock and blue jean manufacturing industries. The Company's circular knitting machine and outerwear dyeing and finishing divisions also show modest increases in sales orders. The Company entered into a non-binding letter of intent to purchase Wink Davis Equipment Company, Inc. ("Wink Davis") of Atlanta, Georgia, on April 9, 1997. The Company is currently engaged in the due diligence process and anticipates signing a definitive agreement for the purchase of Wink Davis by June 1997. The base purchase price for the Wink Davis stock is approximately $9.5 million payable in cash at closing plus assumption of debt (consisting principally of trade payables) and the possible conditional payment of up to $1.5 million over a five-year period based on certain pre-tax earnings calculations. The Company is discussing with financial institutions arrangements for the funding of this acquisition. Wink Davis distributes laundry equipment and parts, principally in the southeastern United States. LIQUIDITY AND CAPITAL RESOURCES At March 29, 1997, the Company's working capital totaled $17.9 million. This figure compares to $16.3 million at the end of the prior fiscal year. The Company's current ratio at March 29, 1997 was 1.82 to 1. At the end of the prior fiscal year, this ratio was 1.92 to 1. In the current year-to-date, operating activities used $6.6 million largely due to substantial increases in accounts receivable, inventories and prepaid expenses and deposits, partially offset by an increase in accounts payable. In the prior year-to-date, operating activities provided $1.6 million. Page 9 Net cash used in investing activities totaled $757,000 as compared to $119,000 used in the same period of the prior year-to-date. Overall, net cash decreased by $7.4 million as compared to a $1.5 million increase in the prior year-to-date. The Company renewed its credit facility with NationsBank, N.A. on December 19, 1996. This facility provides $25.0 million including up to a maximum of $4.0 million for direct borrowings, with the balance available for the issuance of documentary letters of credit. This line of credit expires October 31, 1999. 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 also may cause 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. A substantial portion of the Company's machine 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 significantly adverse effect on future operations. Page 10 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (a) Exhibits: 10.* Speizman Industries, Inc. Nonqualified Stock Option Plan as amended on October 4, 1996 (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (Registration No. 333-23503)). 11. Computation of Net Income (Loss) Per Share. 27. Financial Data Schedule. (b) No reports on Form 8-K were filed by the Registrant during or applicable to the period reported here. - -------------------- * This Exhibit relates to a management contract or compensatory plan or arrangement. Page 11 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 12, 1997 /s/ Robert S. Speizman Robert S. Speizman President Date: May 12, 1997 /s/ Josef Sklut Josef Sklut Vice President-Finance (Chief Financial Officer) Page 12 SPEIZMAN INDUSTRIES, INC. INDEX TO EXHIBITS
Exhibit Number Description of Exhibit 10.* Speizman Industries, Inc. Nonqualified Stock Option Plan as amended on October 4, 1996 (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (Registration No. 333-23503)). 11. Computation of Net Income (Loss) Per Share. 27. Financial Data Schedule.
- -------------------- * This Exhibit relates to a management contract or compensatory plan or arrangement. EX-11 2 EXHIBIT 11 Exhibit 11 NET INCOME (LOSS) 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 3/29/97 3/30/96 3/29/97 3/30/96 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) Net income (loss) $ 918,630 $ (257,736) $ 1,747,999 $ (994,881) Weighted average shares outstanding 3,262,866 3,236,199 3,254,172 3,236,199 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 143,908 40,062 126,688 61,799 Adjusted weighted average of shares outstanding 3,379,174 3,248,661 3,353,260 3,270,398 Net income (loss) per share $ 0.27 $ (0.08) $ 0.52 $ (0.31)
EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS JUN-28-1997 JUN-30-1996 MAR-29-1997 620,295 0 21,768,030 419,716 14,351,950 39,908,881 3,588,673 1,722,726 42,098,260 21,977,611 0 0 0 326,287 19,677,461 42,098,260 55,728,776 55,728,776 46,236,808 52,884,701 0 0 (19,924) 2,863,999 1,116,000 1,747,999 0 0 0 1,747,999 0.52 0.52
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