-----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, FYy9SJo+DqbY6MRxvlOf6hV8WHyDVY1wPh4sWdnSHxOcB2yCTIuKQt3PZB1WONmA Vaj2SYBptkmZa8+74/1A8Q== 0000950144-96-001841.txt : 19960501 0000950144-96-001841.hdr.sgml : 19960501 ACCESSION NUMBER: 0000950144-96-001841 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960430 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: 96553853 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 10-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 March 31, 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 34645-0002 Telephone No.: 813-397-9611 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 (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 of 11 2 PART I - FINANCIAL INFORMATION ------------------------------ ITEM 1. Financial Statements SUPERIOR SURGICAL MFG. CO., INC. CONDENSED SUMMARY OF OPERATIONS
Three Months Ended March 31, ------------------------------- 1996 1995 ------------ ------------ (Unaudited) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34,672,192 $34,116,921 ----------- ----------- Costs and expenses: Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,191,176 $22,686,795 Selling and administrative expenses . . . . . . . . . . . . . . . . . . . 8,096,154 7,613,697 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,545 215,112 ----------- ----------- $31,580,875 $30,515,604 ----------- ----------- Earnings before taxes on income . . . . . . . . . . . . . . . . . . . . . . $ 3,091,317 $ 3,601,317 Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175,000 1,370,000 ----------- ----------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,916,317 $ 2,231,317 =========== =========== Weighted average number of shares out- standing during the period . . . . . . . . . . . . . . . . . . . . . . . 8,133,552 Shs. 8,363,552 Shs. Net earnings per common share . . . . . . . . . . . . . . . . . . . . . . $ 0.24 $ 0.27 =========== =========== Cash dividends declared per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.09 $ 0.09 =========== ===========
The results of the three months ended March 31, 1996 are not necessarily indicative of results to be expected for the full year ending December 31, 1996. Page 2 of 11 3 SUPERIOR SURGICAL MFG. CO., INC. CONDENSED BALANCE SHEETS
ASSETS ------ March 31, 1996 December 31, (Unaudited) 1995 ----------- ------------ (1) CURRENT ASSETS: Cash and certificates of deposit . . . . . . . . . . . . . . . . . . . . $ 9,653,225 $ 5,421,553 Accounts receivable and other current assets . . . . . . . . . . . . . . 25,571,883 25,876,100 Inventories* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,184,683 41,089,948 ------------ ------------ TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 77,409,791 $ 72,387,601 PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . 30,171,375 30,734,584 EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 821,764 822,926 OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,763,893 2,188,526 ------------ ------------ $111,166,823 $106,133,637 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,792,032 $ 6,630,608 Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 5,077,616 3,575,151 Liability for dispute settlement . . . . . . . . . . . . . . . . . . . . 6,500,000 6,500,000 Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . 600,000 600,000 ------------ ------------ TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . $ 20,969,648 $ 17,305,759 LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000,000 18,000,000 DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,495,000 1,310,000 SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,702,175 69,517,878 ------------ ------------ $111,166,823 $106,133,637 ============ ============
* Inventories consist of the following:
March 31, 1996 December 31, (Unaudited) 1995 ------------ ------------ Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . $24,766,532 $24,783,647 Work in process . . . . . . . . . . . . . . . . . . . . . . . . . 4,106,308 3,515,698 Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . 13,311,843 12,790,603 ----------- ----------- $42,184,683 $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 of 11 4 SUPERIOR SURGICAL MFG. CO., INC. SUMMARY OF CASH FLOWS
Three Months Ended March 31, ---------------------------- 1996 1995 ---------- ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,916,317 $ 2,231,317 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 1,037,293 799,125 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 185,000 15,000 Changes in assets and liabilities: Accounts receivable and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304,217 (1,156,450) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,094,735) (2,398,171) Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 2,161,424 1,160,752 Other current liabilities . . . . . . . . . . . . . . . . . . . . . 1,502,465 1,978,102 ------------ ------------ Net cash flows provided from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,011,981 $ 2,629,675 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Additions to property,plant,and equipment . . . . . . . . . . . . . . . . $ (472,922) $ (1,704,565) Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (575,367) (215,779) ------------ ------------ Net cash (used) in investing activities . . . . . . . . . . . . . . . . . $ (1,048,289) $ (1,920,344) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Declaration of cash dividends . . . . . . . . . . . . . . . . . . . . . . $ (732,020) $ (752,720) ------------ ------------ Net cash (used) provided in financing activities . . . . . . . . . . . . $ (732,020) $ (752,720) ------------ ------------ Net increase (decrease) in cash and certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . $ 4,231,672 $ (43,389) Cash and certificates of deposit balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,421,553 11,233,700 ------------ ------------ Cash and certificates of deposit balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,653,225 $ 11,190,311 ============ ============
Page 4 of 11 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 of 11 6 Note 2 - Dispute with Governmental Agency: The Company has been a target of a Federal criminal investigation relating to a previously reported dispute involving alleged false statements and false claims purportedly made in connection with contracts awarded by the U. S. Department of Veterans Affairs. Federal authorities were also pursuing a civil investigation of the Company relating to these matters. The dispute did not involve the integrity of the Company's products. The Company and the government have signed settlement agreements which, subject to court approval, should resolve all issues regarding the investigation and dispute. In addition, the Company is currently in active discussions with the Department of Veterans Affairs (formerly the Veterans Administration) with regard to the Company's ability to receive future Federal contracts and other benefits. Management expects that no restrictions will be placed on the Company upon finalization of the agreements. _______________________________________________________________________________ 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 of 11 7 DELOITTE & TOUCHE LLP (LOGO) Certified Public Accountants Suite 1200 201 East Kennedy Boulevard Tampa, Florida 33602-5821 Telephone: (813) 273-8300 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 March 31, 1996, and the condensed summaries of operations and cash flows for the three-months ended March 31, 1996 and 1995. This condensed financial information is the responsibility of the Company's management. We conducted our review 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 review, 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 April 22, 1996 Page 7 of 11 8 ITEM 2. Management's Discussion And Analysis of Financial Condition and Results of Operations Results Of Operations Net sales of the registrant have continued to increase due to new customers and new uniform programs. Cost of goods sold approximated 66.7% for the three months ended March 31, 1996 and 1995. Selling and administrative expenses, as a percentage of sales, were approximately 22.9% for the first three months of 1996 and 1995. Interest expense of $293,545 for the three month period ended March 31, 1996 increased 36% from $215,112 for the similar period ended March 31, 1995 due to lesser cash balances invested in certificates of deposit in 1996. Net earnings decreased 14% to $1,916,317 for the three months ended March 31, 1996 as compared to net earnings of $2,231,317 for the same period ended March 31, 1995 as a result of increased expenses, primarily selling and administrative. Accounts receivable and other current assets decreased 1% from $25,876,100 on December 31, 1995 to $25,571,883 as of March 31, 1996. Inventories as of March 31, 1996 increased 3% to $42,184,683 from $41,089,948 on December 31, 1995 mainly to support expected customer demand. Accounts payable increased 33% from $6,630,608 on December 31, 1995 to $8,792,032 on March 31, 1996 primarily due to increases in purchases of inventories. The registrant's current portion of long-term debt of $600,000 and long-term debt of $18,000,000 for March 31, 1996 is unchanged compared to December 31, 1995. Liquidity And Capital Resources Cash and certificates of deposit increased by $4,231,672 from $5,421,553 on December 31, 1995 to $9,653,225 as of March 31, 1996. The change is primarily a result of normal operations. Additionally, as of March 31, 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 registrant believes that its cash flow from operating activities together with other capital resources and funds from credit sources will be adequate to meet all of its funding requirements for the remainder of the year and for the foreseeable future. Page 8 of 11 9 PART II - OTHER INFORMATION --------------------------- ITEM 1. Legal Proceedings As previously reported, the Company has been a target of a federal criminal investigation relating to a dispute involving alleged false statements and false claims purportedly made in connection with contracts ostensibly awarded by the U. S. Department of Veterans Affairs. Federal authorities have also conducted a civil investigation of the Company relating to these matters. The dispute does not involve the integrity of the Company's products. The Company has reached agreements with the Department of Justice and the United States Attorney's Office in Tampa, Florida, to resolve these previously announced disputes. The agreements are subject to additional approval by the Court. If finalized, the agreements will resolve the disputes and criminal and civil investigations of the Company arising from the VA contracts. The agreements provide for a $6,200,000 payment to settle civil and contractual disputes and a $300,000 fine coupled with a guilty plea by the Company for one count for a violation of the Federal False Statements Act. The Company is not certain whether or not a previously terminated officer will be charged in connection with the matter. However, upon finalization of the agreements, the investigations are expected to be concluded with none of the Company's existing officers or directors being charged. The Company is in active discussions with the Department of Veterans Affairs (formerly the Veterans Administration) with regard to the Company's ability to receive future Federal contracts and other benefits. Management expects that no restrictions will be placed on the Company upon finalization of the agreements and resulting plea. The Company accrued $6,500,000 through December 31, 1995 in anticipation of the dispute settlement. Management is not aware of any additional charges that may result should a finalization of the settlement occur. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities Inapplicable. ITEM 4. Submission of Matters to a Vote of Security-Holders None. Page 9 of 11 10 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 (for SEC use only). 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: April 26, 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 Treasurer Page 10 of 11 EX-15 2 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION 1 EXHIBIT 15 DELOITTE & TOUCHE LLP - ------------ --------------------------------------------------------- Certified Public Accountants Suite 1200 201 East Kennedy Boulevard Tampa, Florida 33602-5821 Telephone: (813) 273-8300 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 March 31, 1996 and 1995, as indicated in our report dated April 22, 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 March 31, 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 April 22, 1996 Page 11 of 11 EX-27 3 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 1 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 9,653,225 0 25,571,883 0 42,184,683 77,409,791 30,171,375 0 111,166,823 20,969,648 18,000,000 0 0 8,133,552 70,702,175 111,166,823 34,672,192 0 23,191,176 31,580,875 0 0 293,545 3,091,317 1,175,000 0 0 0 0 1,916,317 0.24 0.24
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