-----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, VbJ6HlE7Ss/n0oIXm7EHdbGv2GRZuwAuRAHvnhUMduu8WpgV2qEUMgvuDiykRil+ jr3Iq9EaSsZl6DV+gIhEBA== 0000950144-96-004751.txt : 19960802 0000950144-96-004751.hdr.sgml : 19960802 ACCESSION NUMBER: 0000950144-96-004751 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960801 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERIOR SURGICAL MANUFACTURING CO INC CENTRAL INDEX KEY: 0000095574 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 111385670 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05869 FILM NUMBER: 96602221 BUSINESS ADDRESS: STREET 1: 10099 SEMINOLE BLVD STREET 2: P O BOX 4002 CITY: SEMINOLE STATE: FL ZIP: 34642 BUSINESS PHONE: 8133979611 MAIL ADDRESS: STREET 1: 10099 SEMINOLE BLVD STREET 2: PO BOX 4002 CITY: SEMINOLE STATE: FL ZIP: 34642-0002 10-Q 1 SUPERIOR SURGICAL MFG. CO., INC. FORM 10-Q 1 FORM lO-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-5869-1 SUPERIOR SURGICAL MFG. CO., INC. Incorporated - New York Employer Identification No. 11-1385670 10099 Seminole Boulevard Post Office Box 4002 Seminole, Florida 33775-0002 Telephone No.: 813-397-9611 Indicate by check mark whether the registrant (1) has filed all reports required to be f 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 ------ ------ As of the date of this report, the registrant had 8,133,552 common shares outstanding. Page 1 2 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements SUPERIOR SURGICAL MFG. CO., INC. CONDENSED SUMMARY OF OPERATIONS
Three Months Ended June 30, ----------------------------- 1996 1995 ---------- ---------- (Unaudited) Net sales............................................ $34,896,958 $33,045,056 ---------- ---------- Costs and expenses: Cost of goods sold................................. $23,260,874 22,075,331 Selling and administrative expenses................ 7,876,081 7,494,238 Interest expense................................... 340,147 231,861 ---------- ---------- $31,477,102 $29,801,430 ---------- ---------- Earnings before taxes on income...................... $ 3,419,856 $ 3,243,626 Taxes on income...................................... 1,300,000 1,230,000 ---------- ---------- Net earnings......................................... $ 2,119,856 $ 2,013,626 ========== ========== Weighted average number of shares out- standing during the period......................... 8,133,552 Shs. 8,363,552 Shs. Net earnings per common share...................... $ 0.26 $ 0.24 ========== ========== Cash dividends declared per common share............................................ $ 0.09 $ 0.09 ========== ========== - --------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, ----------------------------- 1996 1995 ---------- ---------- (Unaudited) Net sales............................................ $69,569,150 $67,161,977 ---------- ---------- Costs and expenses: Cost of goods sold................................. $46,452,050 $44,762,126 Selling and administrative expenses................ 15,972,235 15,107,935 Interest expense................................... 633,692 446,973 ---------- ---------- $63,057,977 $60,317,034 ---------- ---------- Earnings before taxes on income...................... $ 6,511,173 $ 6,844,943 Taxes on income...................................... 2,475,000 2,600,000 ---------- ---------- Net earnings......................................... $ 4,036,173 $ 4,244,943 ========== ========== Weighted average number of shares out- standing during the period......................... 8,133,552 Shs. 8,363,552 Shs. Net earnings per common share...................... $ 0.50 $ 0.51 ========== ========== Cash dividends declared per common share............................................ $ 0.18 $ 0.18 ========== ==========
The results of the six months ended June 30, 1996 are not necessarily indicative of results to be expected for the full year ending December 31, 1996. Page 2 3 SUPERIOR SURGICAL MFG. CO., INC. CONDENSED BALANCE SHEETS
June 30 , 1996 December 31, (Unaudited) 1995 ----------- ------------ ASSETS (1) CURRENT ASSETS: Cash and certificates of deposit..................... $ 8,278,012 $ 5,421,553 Accounts receivable and other current assets......... 25,549,069 25,876,100 Inventories*......................................... 42,472,090 41,089,948 ------------ ------------ TOTAL CURRENT ASSETS.......................... $ 76,299,171 $ 72,387,601 PROPERTY, PLANT AND EQUIPMENT.......................... 30,202,482 30,734,584 EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED..................................... 820,601 822,926 OTHER ASSETS........................................... 2,831,154 2,188,526 ------------ ------------ $110,153,408 $106,133,637 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable..................................... $ 7,554,433 $ 6,630,608 Other current liabilities............................ 3,848,963 3,575,151 Liability for dispute settlement..................... 6,500,000 6,500,000 Current portion of long-term debt.................... 1,433,333 600,000 ------------ ------------ TOTAL CURRENT LIABILITIES..................... $ 19,336,729 $ 17,305,759 LONG-TERM DEBT......................................... 16,866,667 18,000,000 DEFERRED INCOME TAXES.................................. 1,860,000 1,310,000 SHAREHOLDERS' EQUITY................................... 72,090,012 69,517,878 ------------ ------------ $110,153,408 $106,133,637 ============ ============
* Inventories consist of the following:
June 30, 1996 December 31, (Unaudited) 1995 ------------- -------------- Finished goods............................ $ 25,687,670 $ 24,783,647 Work in process........................... 4,263,773 3,515,698 Raw materials............................. 12,520,647 12,790,603 ------------- ------------- $ 42,472,090 $ 41,089,948 ============= =============
(1) The balance sheet as of December 31, 1995 has been taken from the audited financial statement as of that date and has been condensed. Page 3 4 SUPERIOR SURGICAL MFG. CO., INC. SUMMARY OF CASH FLOWS
Six Months Ended June 30, ------------------------- 1996 1995 ---------- ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings........................................ $ 4,036,173 $ 4,244,943 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization.................... 2,088,343 1,712,053 Deferred income taxes............................ 550,000 305,000 Changes in assets and liabilities: Accounts receivable and other current assets....................................... 327,031 1,055,726 Inventories.................................... (1,382,142) (3,871,169) Accounts payable .............................. 923,825 454,832 Other current liabilities...................... 273,812 (476,559) ----------- ------------ Net cash flows provided from operating activities......................................... $ 6,817,042 $ 3,424,826 ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment.......... $(1,553,916) $ (2,274,858) Other assets........................................ (642,628) (193,556) ----------- ------------ Net cash (used) in investing activities............. $(2,196,544) $ (2,468,414) ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES Reduction in long-term debt......................... $ (300,000) $ (300,000) Declaration of cash dividends....................... (1,464,039) (1,505,439) ----------- ------------ Net cash (used) in financing activities............. $(1,764,039) $ (1,805,439) ----------- ------------ Net increase (decrease) in cash and certificates of deposit.......................... $ 2,856,459 $ (849,027) Cash and certificates of deposit balance, beginning of year..................................... 5,421,553 11,233,700 ----------- ------------ Cash and certificates of deposit balance, end of period......................................... $ 8,278,012 $ 10,384,673 =========== ============
Page 4 5 SUPERIOR SURGICAL MFG. CO., INC. NOTES TO SUMMARIZED INTERIM FINANCIAL STATEMENTS Note 1 - Summary of Significant Interim Accounting Policies: a) Recognition of costs and expenses Costs and expenses other than product costs are charged to income in interim periods as incurred, or allocated among interim periods based on an estimate of time expired, benefit received or activity associated with the periods. Procedures adopted for assigning specific cost and expense items to an interim period are consistent with the basis followed by the registrant in reporting results of operations at annual reporting dates. However, when a specific cost or expense item charged to expense for annual reporting purposes benefits more than one interim period, the cost or expense item is allocated to the interim periods. b) Inventories Inventories at interim dates are determined by using both perpetual records and gross profit calculations. c) Accounting for income taxes The provision for income taxes is calculated by using the effective tax rate anticipated for the full year. d) Earnings per share Earnings per share have been computed based on the weighted average number of shares outstanding during each period. The exercise of outstanding stock options would not have a significant effect on earnings per share. Page 5 6 Note 2 - Dispute with Governmental Agency: The previously announced settlement agreements entered into with the Federal government resolving all existing legal claims and proceedings by the government in connection with certain business dealings between the Company and the Department of Veterans Affairs were approved in Federal court on July 24, 1996 with no additional monetary amounts to be paid beyond what was reserved as a liability at December 31, 1995. In addition, the Company has reached an understanding with the Department of Veterans Affairs which enables the Company to continue to receive Federal contracts and benefits in the future provided that certain minimal internal administrative procedures are established by the Company. - -------------------------------------------------------------------------------- The interim information contained above is not certified or audited; it reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the operating results for the periods presented, stated on a basis consistent with that of the audited financial statements. The financial information included in this form has been reviewed by Deloitte & Touche LLP, independent certified public accountants; such review was made in accordance with established professional standards and procedures for such a review. All financial information has been prepared in accordance with the accounting principles or practices reflected in the financial statements for the year ended December 31, 1995, filed with the Securities and Exchange Commission. Reference is hereby made to registrant's Financial Statements for 1995, heretofore filed with registrant's Form 10-K. Page 6 7 [DELOITTE & TOUCHE LLP LETTERHEAD] BOARD OF DIRECTORS Superior Surgical Mfg. Co., Inc. Seminole, Florida We have reviewed the accompanying condensed balance sheet of Superior Surgical Mfg. Co., Inc. (the "Company") as of June 30, 1996, the condensed summaries of operations for the six-months and three-months ended June 30, 1996 and 1995 and the condensed summaries of cash flows for the six-months ended June 30, 1996 and 1995. This condensed financial information is the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed financial information for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet as of December 31, 1995, and the related statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated March 8, 1996, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1995 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Deloitte & Touche LLP - ------------------------------ July 26, 1996 Page 7 8 ITEM 2. Management's Discussion And Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales of the registrant increased by approximately 2% in the first quarter of 1996 compared to the first quarter of 1995 due to new customers and new uniform programs. For the second quarter of 1996 compared to the second quarter of 1995, sales increased by approximately 6% due to continued momentum in the economic activities in the marketplaces served by the registrant. Accordingly, for the six months ended June 30, 1996, sales were approximately 4% more than the six months ended June 30, 1995. Cost of goods sold approximated 66-2/3% for the six months ended June 30, 1996 and 1995. Selling and administrative expenses, as a percentage of sales, were approximately 23% for the first six months of 1996 and 1995. Interest expense of $633,692 for the six month period ended June 30, 1996 increased 42% from $446,973 for the similar period ended June 30, 1995 due to repayment of debt and lesser cash balances invested in certificates of deposit. Net earnings increased 5% to $2,119,856 for the three months ended June 30, 1996 as compared to net earnings of $2,013,626 for the same period ended June 30, 1995 as a result of increased sales. Accounts receivable and other current assets decreased 1% from $25,876,100 on December 31, 1995 to $25,549,069 as of June 30, 1996. Inventories as of June 30, 1996 increased 3% to $42,472,090 from $41,089,948 on December 31, 1995 mainly to support expected future customer demand. Accounts payable increased 14% from $6,630,608 on December 31, 1995 to $7,554,433 on June 30, 1996 primarily due to increases in purchases of inventories. The registrant's current portion of long-term debt of $1,433,333 and long-term debt of $16,866,667 for June 30, 1996 is $300,000 less than it was at December 31, 1995, due to scheduled repayments of debt. As a result of earlier charges taken by the Company prior to 1996 in connection with the Federal government settlement, there will be no additional effect on earnings resulting from finalization of the matter. LIQUIDITY AND CAPITAL RESOURCES Cash and certificates of deposit increased by $2,856,459 from $5,421,553 on December 31, 1995 to $8,278,012 as of June 30, 1996. The change is primarily a result of normal operations. Additionally, as of June 30, 1996, under its existing revolving Credit Agreement, the registrant had $10,000,000 available to it. The registrant has operated without hindrance or restraint with its present working capital, as income generated from operations and outside sources of credit, both trade and institutional, have been more than adequate. In the foreseeable future, the registrant will continue its ongoing capital expenditure program designed to maintain and improve its facilities. The registrant at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company paid $6,500,000 in the third quarter of 1996 in connection with the settlement of its dispute with the Federal government. The registrant believes that its cash flow from operating activities together with other capital resources and funds from credit sources are adequate to meet all of its funding requirements for the foreseeable future. Page 8 9 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings The previously announced settlement agreements entered into with the Federal government resolving all existing legal claims and proceedings by the government in connection with certain business dealings between the Company and the Department of Veterans Affairs were approved in Federal court on July 24, 1996 with no additional monetary amounts to be paid beyond what was reserved as a liability at December 31, 1995. In addition, the Company has reached an understanding with the Department of Veterans Affairs which enables the Company to continue to receive Federal contracts and benefits in the future provided that certain minimal internal administrative procedures are established by the Company. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities Inapplicable. ITEM 4. Submission of matters to a vote of security-holders The Annual Meeting of Shareholders was held on May 3, 1996. Of the 8,133,552 shares outstanding and entitled to vote at the meeting, 7,483,786 shares were present at the meeting, in person or by proxy. At the meeting the shareholders: Page 9 10 a) Voted for the nomination of all proposed Directors being, Messrs. G.M. Benstock, A.D. Schwartz, M. Benstock, S. Schechter, P. Benstock, T.K. Riden and M. Gaetan, PhD. The votes on all directors nominated were as follows:
Nominee Votes For: Votes Withheld: ------------------ ---------- --------------- Gerald M. Benstock 7,422,915 60,871 ---------- --------------- Saul Schechter 7,424,415 59,371 ---------- --------------- Alan D. Schwartz 7,424,415 59,371 ---------- --------------- Michael Benstock 7,424,515 59,271 ---------- --------------- Peter Benstock 7,424,515 59,271 ---------- --------------- Manuel Gaetan 7,422,215 61,571 ---------- --------------- Thomas K. Riden 7,422,215 61,571 ---------- ---------------
b) Ratified the appointment of Deloitte & Touche LLP, independent certified public accountants, as auditors for the Company's financial statements for the year ending December 31, 1996 with 7,454,487 votes for the motion, 18,359 votes against and 10,940 votes abstaining. ITEM 5. Other Information Inapplicable. ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits 15 Letter re: Unaudited Interim Financial Information. 27 Financial Data Schedule. b) Reports on Form 8-K None. 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. Date: July 29, 1996 SUPERIOR SURGICAL MFG. CO., INC. By /s/ Gerald M. Benstock ----------------------------------- Gerald M. Benstock Chairman and Chief Executive Officer By /s/ John W. Johansen ----------------------------------- John W. Johansen Chief Financial Officer and Principal Accounting Officer, Sr. Vice President and Treasurer Page 10 EX-15 2 LETTER RE:UNAUDITED INTERIM FINANCIAL INFORMATION 1 [DELOITTE & TOUCHE LLP LETTERHEAD] EXHIBIT 15 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION BOARD OF DIRECTORS Superior Surgical Mfg. Co., Inc. Seminole, Florida We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Superior Surgical Mfg. Co., Inc. for the periods ended June 30, 1996 and 1995, as indicated in our report dated July 29, 1996; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, is incorporated by reference in Registration Statement No. 2-85796 on Form S-8. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Deloitte & Touche LLP July 26, 1996 Page 11 EX-27 3 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SUPERIOR SURGICAL MANUFACTURING COMPANY, INC. FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 8,278,012 0 25,549,069 0 42,472,090 76,299,171 30,202,482 0 110,153,408 19,336,729 16,866,667 0 0 8,133,552 72,090,012 110,153,408 69,569,150 0 46,452,050 63,057,977 0 0 633,692 6,511,173 2,475,000 0 0 0 0 4,036,173 0.50 0.50
-----END PRIVACY-ENHANCED MESSAGE-----