-----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, RUFmrEAq+Ty8ddWsdi0lgEH3S7cIA9HhlImb4R6bFw+u0nlsTJwaeg83mfPbKJWq GHKsH9OKP4Brp63Fof0IOQ== 0000950168-97-003249.txt : 19971114 0000950168-97-003249.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950168-97-003249 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 000-08544 FILM NUMBER: 97713868 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, INC. 10-Q Page 1 of 14 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 SEPTEMBER 27, 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 NOVEMBER 5, 1997 --------------------- ---------------- Par value $.10 per share 3,279,806 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 Condensed Financial Statements........ 7 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 9 - 11 PART II. OTHER INFORMATION: Item 6. Exhibits and reports on Form 8-K (a) Reports on Form 8-K.................................... 12 (b) Exhibit 11. Computation of Net Income per Share....... 14 2
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS September 27, June 28, 1997 1997 (Unaudited) (Unaudited) ASSETS CURRENT: Cash and cash equivalents $ 1,502,823 $ 3,832,534 Accounts receivable, less allowances of $655,656 and $474,477 19,915,862 21,075,138 Inventories 14,180,908 12,970,134 Prepaid expenses and other current assets 3,775,596 2,988,786 --------- --------- TOTAL CURRENT ASSETS 39,375,189 40,866,592 ---------- ---------- PROPERTY AND EQUIPMENT: Leasehold improvements 457,665 750,140 Machinery and equipment 1,732,945 1,770,886 Furniture, fixtures and transportation equipment 1,368,892 1,078,429 ------------- ------------- Total 3,559,502 3,599,455 Less accumulated depreciation and amortization (1,257,939) (1,811,183) ----------- ------------ NET PROPERTY AND EQUIPMENT 2,301,563 1,788,272 ------------ ------------ OTHER LONG TERM ASSETS 880,978 518,957 INTANGIBLES, NET OF ACCUMULATED AMORTIZATION 4,381,904 -- ----------- ------------ $ 46,939,634 $ 43,173,821 =========== ===========
See accompanying notes to consolidated condensed financial statements. 3
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS September 27, June 28, 1997 1997 (Unaudited) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Note payable - bank line of credit $ 1,400,000 $ - Accounts payable 13,087,496 19,075,766 Customers' deposits 2,118,690 1,380,621 Accrued expenses 1,853,084 1,667,621 Current maturities of long-term debt 1,001,432 1,769 ----------------- -------------- TOTAL CURRENT LIABILITIES 19,460,702 22,125,777 LONG-TERM DEBT 6,104,344 110,344 ------------------- ------------- TOTAL LIABILITIES 25,565,046 22,236,121 ------------------- ------------- STOCKHOLDERS' EQUITY: Common stock - par value $.10; authorized 20,000,000 shares, issued 3,274,866, outstanding 3,247,266; and authorized 20,000,000 shares, issued 3,262,866, outstanding 3,235,266 327,487 326,287 Additional paid-in capital 12,527,908 12,512,299 Retained earnings 8,618,990 8,209,911 Foreign currency translation adjustment - (11,000) ----------------- ------------ Total 21,474,385 21,037,497 Treasury stock, at cost, 27,600 common shares (99,797) (99,797) --------------- ------------- TOTAL STOCKHOLDERS' EQUITY 21,374,588 20,937,700 ---------------- -------------- $ 46,939,634 $ 43,173,821 ============ ==========
See accompanying notes to consolidated condensed financial statements. 4
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) For the Three Months Ended ------------------------------------------------------- September 27, 1997 September 28, 1996 (13 Weeks) (13 Weeks) ----------------------- ------------------ REVENUES $ 21,469,630 $ 16,966,745 ---------- ---------- COSTS AND EXPENSES: Cost of sales 17,901,555 14,107,777 Selling expenses 1,656,623 1,363,618 General and administrative expenses 1,090,455 680,875 ----------- ------------ Total costs and expenses 20,648,633 16,152,270 ---------- ---------- 820,997 814,475 NET INTEREST EXPENSE (INCOME) 160,918 (46,754) ----------- -------------- Income before taxes on income 660,079 861,229 TAXES ON INCOME 251,000 353,000 ----------- --------------- NET INCOME $ 409,079 $ 508,229 ============== ============= NET INCOME PER SHARE $ 0.12 $ 0.15 ====== ====== Weighted average number of common and equivalent shares 3,391,301 3,305,761 ========= =========
See accompanying notes to consolidated condensed financial statements. 5
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended 9-27-97 9-28-96 (13 Weeks) (13 Weeks) ------------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 409,079 $ 508,229 Adjustments to reconcile net income to cash used by operating activities: Depreciation and amortization 252,919 87,877 Provision for inventory obsolescence 50,000 50,000 Gain on disposal of assets (1,390) - Foreign currency translation adjustment 11,000 6,240 (Increase) decrease in: Accounts receivable 5,280,865 (2,198,246) Inventories 981,576 (507,653) Prepaid expenses and other current assets (777,313) (446,226) Other assets 221,138 (10,935) Increase (decrease) in: Accounts payable (6,709,308) 935,764 Customers' deposits 420,059 (1,452,184) Accrued expenses (1,075,463) 287,317 ---------------- ---------------- Net cash used in operating activities (936,838) (2,739,817) ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Wink Davis Equipment Company (9,500,000) - Capital expenditures (104,868) (74,390) Proceeds on sale of assets 3,500 11,137 ---------------- ---------------- Net cash used in investing activities (9,601,368) (63,253) ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on line of credit agreement 2,500,000 - Payments on line of credit agreement (1,100,000) - Payment on line of credit agreement of Wink Davis Equipment Company (201,977) - Proceeds from issuance of term note due to bank 7,000,000 - Principal payments on long-term debt (6,337) (17,647) Issuance of common stock for stock options 16,809 55,001 ---------------- ---------------- Net cash provided by financing activities 8,208,495 37,354 ---------------- ---------------- NET DECREASE IN CASH (2,329,711) (2,765,716) CASH AND CASH EQUIVALENTS at beginning of period 3,832,534 7,981,723 ---------------- ---------------- CASH AND CASH EQUIVALENTS at end of period $ 1,502,823 $ 5,216,007 ================ ============ Supplemental Disclosures: Cash paid during period for: Interest $ 104,296 $ 5,857 Income taxes 277,428 1,102
See accompanying notes to consolidated condensed financial statements. 6 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED 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 June 28, 1997, which is incorporated by reference. Note 2. Inventories Inventories consisted of the following: September 27, June 28, 1997 1997 (Unaudited) (Unaudited) Machines $ 8,726,655 $ 8,768,841 Parts and supplies 5,454,253 4,201,293 --------- ------------ Total $ 14,180,908 $ 12,970,134 ========== ========== 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. Note 5. Intangibles Intangibles, including goodwill, arose from the acquisition of Wink Davis Equipment Company, Inc. and are being amortized over 15 years on a straight-line basis. 7 Note 6. Pro Forma Earnings Per Share In February 1997, the Financial Accounting Standards Board issued FAS No. 128, "Earnings per Share", which established new standards for computations of earnings per share. Statement No. 128 will be effective for periods ending after December 15, 1997 and will require presentation of: (1) "Basic Earnings per Share", computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period and (2) "Diluted Earnings per Share", which gives effect to all dilutive potential common shares that were outstanding during the period, by increasing the denominator to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Had FAS 128 been effective for the quarters ended September 27, 1997 and September 28, 1996, basic and diluted earnings per share would have been as follows: September 27, September 28, 1997 1996 Basic earnings per share................$..0.13 $ 0.16 Diluted earnings per share..............$..0.12 $ 0.15 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's operations consist of Speizman Industries, Inc., based in Charlotte, North Carolina and Wink Davis Equipment Company, Inc. ("Wink Davis"), based in Atlanta, Georgia. The revenues of Speizman Industries 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. Wink Davis, a wholly owned subsidiary of Speizman Industries, distributes and services laundry equipment and parts, principally in the southeastern United States and in the Chicago, Illinois area. RESULTS OF OPERATIONS Revenues increased by about $4.5 million in the first quarter of the current fiscal year to total $21.4 million. This compares to the first quarter of last year when revenues totaled $17.0 million. This improvement in revenues resulted primarily from the inclusion of two months of operations of Wink Davis. Wink Davis, all of whose common stock was acquired on August 1, 1997, recognized revenues of $4.4 million for the two months ended September 27, 1997. Speizman Industries' revenues were substantially unchanged. Decreases in sales of hosiery and in sweater manufacturing equipment were offset by increases in sales of dyeing and finishing equipment and in equipment for the manufacturing of knitted fabrics. Cost of sales as a percentage of net revenues in the latest quarter was 83.4% as compared to 83.1% in the first quarter of the prior fiscal year. The apparent rise in the cost of sales percentage reflects a higher cost of sales in the newly acquired Wink Davis operations as compared to the cost of sales in textile machine operations. In the current quarter, the cost of sales percentage for textile machines was 82.7% as compared to 83.1% for the same operations in the first quarter of last year. Selling expenses in the first quarter of fiscal 1997 were approximately $1,657,000 or about 7.7% of revenues. This compares to $1,364,000 or 8.0% of revenues in the first quarter of last year. Substantially all of this $293,000 increase is attributable to the two months of operations of Wink Davis. Selling expenses at Wink Davis totaled $329,000 in the current quarter. General and administrative expenses in the first quarter of fiscal 1998 were $1,090,000 or 5.1% of revenues as compared to $681,000 or 4.0% of revenues in the first quarter of fiscal 1997. General and administrative expenses at Wink Davis totaled $247,000. Additionally, amortization of goodwill and acquisition costs, associated with the Wink Davis purchase, totaled $64,000. The balance of the increase can be attributed to administrative salaries, partially offset by a lower requirement for bad debt provisions. 9 Interest expense is shown net of interest income. The $9.5 million purchase of Wink Davis on August 1, 1997 was financed through debt. Accordingly, net interest expense increased in the first quarter of fiscal 1998 to $161,000. In the same quarter of fiscal 1997, interest income exceeded interest expense by $47,000. In the first quarter of fiscal 1998, the income tax provision represents 38.0% of pre-tax income. In the same quarter of last year, the tax benefit represented 41.0% of pre-tax income. The favorable shift in the current quarter is more consistent with blended US state and federal tax rates, as the Company's English subsidiary has been liquidated. Net income for the current first quarter totaled $409,000 as compared to income of $508,000 in the same quarter of last year. Earnings per share were $0.12 as compared to $0.15 in the same quarter of last year. OUTLOOK The decline in demand for new sock manufacturing equipment during the Company's current first quarter is continuing in its second quarter. The Company's customers are reluctant to make substantial commitments of purchases of new machines at this time. Hopefully, this situation will improve in the following quarter. The Company's backlog of firm orders for textile manufacturing equipment remains substantial. The Company's backlog of orders for laundry equipment in the newly acquired Wink Davis remains at levels similar to prior years. LIQUIDITY AND CAPITAL RESOURCES At September 27, 1997, the Company's working capital totaled $19.9 million. This figure represents an increase of $1,174,000 from the Company's working capital at the end of the prior fiscal year, June 28, 1997. The Company's current ratio at September 27, 1997 was 2.02 to 1.00. At June 28, 1997, it was 1.85 to 1.00. On August 1, 1997, the Company purchased all of the outstanding stock of Wink Davis for $9.5 million plus a conditional additional payment of up to $1.5 million in cash over a five-year period based on certain pre-tax earnings calculations. The purchase was funded by (a) a $7.0 million term loan with quarterly principal payments of $250,000 beginning December 31, 1997, the balance due July 31, 2000 and (b) $2.5 million direct borrowings from a revolving line of credit. Operating activities used $937,000 in cash in the quarter ended September 27, 1997, as compared to $2.7 million used by operating activities in the first quarter of last year. In the current quarter, this usage of cash was generated essentially by decreases in accounts payable, partially offset by decreases in accounts receivable. In the first quarter of last year, this usage was generated by substantial increases in accounts receivable, inventories and other current assets, and a decrease in customer deposits, partially offset by an increase in accounts payable. For the first quarter of fiscal 1998, investing activities used $9.6 million in cash, primarily related to the purchase of Wink Davis. Investing activities used $63,000 in cash for the first quarter of the prior fiscal year. 10 For the first quarter of fiscal 1998, financing activities provided $8.2 million in cash, primarily related to borrowings from a term loan and advances on the revolving line of credit. Financing activities provided $37,000 in cash for the first quarter of the prior fiscal year. Overall, net cash decreased by $2.3 million in the first quarter of fiscal 1998 as compared with a net cash decrease of $2.8 million in the same quarter of last year. The Company has no firm material commitments for capital expenditures; however, it does anticipate incurring some commitments in the balance of fiscal 1998. The Company has plans to relocate several textile machinery warehouses and the administrative offices of Speizman Industries into a new, single location. The new property would be leased by the Company. The Company is expected to incur leasehold improvement costs of approximately $300,000 to $500,000. Whether all of these costs will be incurred in fiscal 1998 cannot now be forecasted. 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 which fall 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 of customer orders or other factors may result in 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 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. DISCLOSURE ABOUT FOREIGN CURRENCY RISK A significant number of the Company's purchases of textile machinery for resale is denominated in Italian Lira. In the ordinary course of business, the Company enters into foreign exchange forward contracts to mitigate the effect of foreign currency movements between the Italian Lira and the US dollar from the time of placing the Company's purchase order until final payment for the purchase is made. The contracts have maturity dates that do not exceed 12 months. Substantially all of the increase or decrease of the Lira denominated purchased price is offset by the gains and losses of the foreign exchange contract. The unrealized gains and losses on these contracts are deferred and recognized in the results of operations in the period in which the hedged transaction is consummated. 11 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (a) On August 14, 1997, the Company filed a report on Form 8-K, dated August 1, 1997, reporting Item 2, "ACQUISITION OR DISPOSITION OF ASSETS", relating to the purchase of Wink Davis Equipment Company, Inc. (b) On October 14, 1997, the Company filed a report on Form 8-K/A, dated August 1, 1997, reporting Item 2, "ACQUISITION OR DISPOSITION OF ASSETS", relating to the purchase of Wink Davis Equipment Company, Inc. (c) Exhibit 11. - Computation of net Income Per Share. 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: November 12, 1997 /s/ Robert S. Speizman ---------------------------------- ---------------------- Robert S. Speizman President Date: November 12, 1997 /s/ Josef Sklut ---------------------------------- ---------------------- Josef Sklut Vice President-Finance (Chief Financial Officer) 13 EX-11 2 NET INCOME PER SHARE-EXHIBIT 11
Exhibit 11 NET INCOME PER SHARE The following table presents the information needed to compute primary income per common share: For the Three Months Ended -------------------------------------------------------- September 27, 1997 September 28, 1996 (13 Weeks) (13 Weeks) ------------------------ ----------------- Net income $ 409,078 $ 508,229 ============ =========== Weighted average shares outstanding 3,263,262 3,236,785 Less: Treasury shares (27,600) (27,600) Add: Assumed exercise of options reduced by the number of shares purchased with proceeds 155,639 96,576 ----------------- ------------- Adjusted weighted average of shares outstanding 3,391,301 3,305,761 ============= =========== Net income per share $ 0.12 $ 0.15 ====== ====== 14
EX-27 3 ARTICLE 5 FIN. DATA SCHEDULE FOR YEAR 1997
5 3-MOS JUN-28-1997 JUN-29-1997 SEP-27-1997 1,502,823 0 20,571,518 655,656 14,180,908 39,375,189 3,559,502 1,257,939 46,939,634 19,460,702 0 327,487 0 0 21,047,101 46,939,634 21,469,630 21,469,630 17,901,555 20,648,633 0 0 160,918 660,079 251,000 409,079 0 0 0 409,079 0.12 0.12
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