SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13, OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1996
COMMISSION FILE NUMBER: 1-6339
UNIFLEX, INC.
(Exact Name of Registrant As Specified In Its Charter)
DELAWARE 11-2008652
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
383 WEST JOHN STREET, HICKSVILLE, NEW YORK 11802
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 516 - 932 - 2000
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 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 / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,809,584 shares of the
Company's common stock - $.10 par value - were outstanding as of July 31, 1996.
<PAGE>
UNIFLEX, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Consolidated condensed balance sheets -
July 31, 1996 (unaudited) and January 31, 1996 1
Consolidated condensed statements of income (unaudited) -
Six months ended July 31, 1996 and 1995 2
Three months ended July 31, 1996 and 1995 3
Consolidated condensed statements of changes in stockholders'
equity (unaudited) for the six months ended July 31, 1996 and 1995 4
Consolidated condensed statements of cash flows (unaudited)
for the six months ended July 31, 1996 and 1995 5
Notes to consolidated condensed financial statements (unaudited) 6
Item 2. Management's discussion and analysis of financial
condition and results of operations 7 - 8
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 9
SIGNATURES 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, January 31,
ASSETS 1996 1996
---- ----
(Unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 1,669,590 $ 1,196,593
Accounts receivable 4,189,437 3,364,989
Inventory 3,105,599 2,699,948
Prepaid income taxes 223,589 898,610
Prepaid expenses and other current assets 497,168 606,943
Deferred tax asset 302,100 269,900
--------------- ------------------
Total Current Assets 9,987,483 9,036,983
Property and Equipment 6,462,435 6,427,427
Intangible Assets 251,692 156,404
Other Assets 677,039 661,798
--------------- ------------------
Total Assets $ 17,378,649 $ 16,282,612
================ ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 151,000 $ 151,646
Accounts payable and accrued expenses 2,386,579 2,186,505
--------------- ------------------
Total Current Liabilities 2,537,579 2,338,151
Long-Term Debt 1,494,372 2,169,506
Deferred Rent 133,746 122,496
Deferred Compensation and Postretirement Medical Benefits 1,271,598 1,215,124
--------------- ------------------
Total Liabilities 5,437,295 5,845,277
--------------- ------------------
Minority Interest 192,500 192,500
--------------- ------------------
Stockholders' Equity
Common stock - par value $.10 per share
10,000,000 shares authorized, 2,809,584 shares
issued and outstanding 280,958 266,638
Additional paid-in capital 2,385,107 1,854,723
Retained earnings and members' capital 9,124,467 8,179,402
--------------- -------------------
11,790,532 10,300,763
Less note receivable - stock purchase (41,678) (55,928)
--------------- ------------------
Total Stockholders' Equity 11,748,854 10,244,835
--------------- -------------------
Total Liabilities and Stockholders' Equity $ 17,378,649 $ 16,282,612
=============== --=================
</TABLE>
<PAGE>
The consolidated condensed balance sheet at January 31, 1996 has been derived
from the audited financial statements at that date.
The accompanying notes are an integral part of these consolidated condensed
financial statements.
-1-
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
July 31,
--------
1996 1995
---- ----
<S> <C> <C>
Net sales $ 17,196,978 $ 15,528,196
Cost of sales 10,749,670 10,103,500
----------------- -------------------
Gross profit 6,447,308 5,424,696
----------------- ------------------
Shipping and selling expenses 3,307,045 2,869,929
General and administrative expenses 1,550,584 1,381,528
----------------- ------------------
4,857,629 4,251,457
----------------- ------------------
Income before interest expense 1,589,679 1,173,239
----------------- ------------------
Interest - net 130,117 233,171
----------------- ----------------
Income before provision for income taxes 1,459,562 940,068
----------------- ------------------
Provision for income taxes:
Current 648,300 416,000
Deferred (63,800) (72,000)
----------------- ----------------
584,500 344,000
----------------- ----------------
Net income $ 875,062 $ 596,068
========--======= ================
Earnings per common share and common share equivalents:
Net income .30 .22
============--=== -===============
Weighted average number of common shares and
common share equivalents outstanding 2,967,667 2,719,043
================= ==================
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
-2-
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
July 31,
--------
1996 1995
---- ----
<S> <C> <C>
Net sales $ 8,642,013 $ 7,567,787
Cost of sales 5,427,098 5,076,831
----------------- ------------------
Gross profit 3,214,915 2,490,956
----------------- ------------------
Shipping and selling expenses 1,748,540 1,383,303
General and administrative expenses 814,571 674,863
----------------- ----------------
2,563,111 2,058,166
----------------- ------------------
Income before interest expense 651,804 432,790
----------------- ----------------
Interest - net 63,814 111,351
----------------- ----------------
Income before provision for income taxes 587,990 321,439
----------------- ----------------
Provision for income taxes:
Current 257,800 136,000
Deferred (22,300) (36,000)
----------------- ----------------
235,500 100,000
----------------- ----------------
Net income $ 352,490 $ 221,439
=============== ================--
Earnings per common share and common share equivalents:
Net income $ .12 $ .08
============--=== ============-===
Weighted average number of common shares and
common share equivalents outstanding 2,993,456 2,730,152
================= ==================
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
-3-
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
retained earnings
common stock additional and
----------------------- paid-in members' note receivable
SHARES AMOUNT CAPITAL CAPITAL STOCK PURCHASE TOTAL
------ ------ ------- ------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at February 1, 1995 2,240,332 $ 224,033 $ 424,695 $6,720,821 $(84,428) $ 7,285,121
Amortization of note receivable - - - - 14,250 14,250
Net income - - - 596,068 - 596,068
--------- ---------- ---------- ---------- --------- -----------
Balance at July 31, 1995 2,240,332 $ 224,033 $ 424,695 $7,316,889 $(70,178) $ 7,895,439
========= ========== ======= == ========== ========= ===========
Balance at February 1, 1996 2,666,384 $ 266,638 $1,854,722 $8,179,405 $(55,928) $10,244,837
Exercise of stock options 143,200 14,320 158,385 - - 172,705
Tax benefit from exercise
of stock options - - 372,000 - - 372,000
Members' capital contribution - - - 70,000 70,000
Amortization of note receivable - - - - 14,250 14,250
Net income - - - 875,062 - 875,062
--------- --------- ---------- ---------- --------- -----------
Balance at July 31, 1996 2,809,584 $ 280,958 $2,385,107 $9,124,467 $(41,678) $11,748,854
========= ========= ========== ====== === ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
-4-
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31,
--------
1996 1995
---- ----
<S> <C> <C>
Net cash provided by operating activities $ 1,479,825 $ 1,397,412
----------------- -----------------
Cash flows from investing activities:
Purchase of property and equipment (436,956) (560,346)
Purchase of intangibles (66,797) (67,591)
----------------- ----------------
Net cash used in investing activities (503,753) (627,937)
---------------- -----------------
Cash flows from financing activities:
Proceeds from exercise of stock options 172,705
Minority interest contributed - 27,500
Proceeds from long-term debt - 7,500
Payment of long-term debt (675,780) (267,489)
---------------- -----------------
Net cash used in financing activities (503,075) (232,489)
---------------- -----------------
Net increase in cash 472,997 536,986
Cash and cash equivalents - beginning of period 1,196,593 527,725
---------------- ------------------
Cash and cash equivalents - end of period $ 1,669,590 $ 1,064,711
================ ==================
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
-5-
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION:
In the opinion of management of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments (consisting
of only normal recurring adjustments) necessary to present fairly the financial
position of the Company as of July 31, 1996 and the results of operations and
cash flows for the six months ended July 31, 1996 and 1995, and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the audited financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended January 31, 1996.
The results of operations for the six months ended July 31, 1996 are not
necessarily indicative of the operating results for the full year.
NOTE 2. INVENTORY:
A summary of inventory follows:
July 31, January 31,
1996 1996
---- ----
(Unaudited)
Raw materials and supplies $ 2,089,392 $ 1,755,374
Work in process 239,713 227,715
Finished products 776,494 716,859
------------- ------------
$ 3,105,599 $ 2,699,948
============= ============
NOTE 3. STOCK-BASED COMPENSATION:
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock- Based Compensation." The Statement defines a fair value
based method of accounting for an employee stock option or similar equity
instrument. As permitted by the Statement, the Company has elected to continue
to measure cost for its stock-based compensation plans using the intrinsic value
based method of accounting prescribed by APB Opinion No. 25. "Accounting for
Stock Issued to Employees." Accordingly, beginning with the Annual Report for
the fiscal year ended January 31, 1997, the Company will be required to make pro
forma disclosures of net income and earnings per share for the fiscal years
ended January 31, 1996 and 1997, as if the fair value based method of accounting
defined in SFAS No. 123 had been applied.
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES:
Net sales for the quarter ended July 31, 1996 were $8,642,000, as compared to
$7,568,000 for the quarter ended July 31, 1995, an increase of $1,074,000, or
14.2%.
Net sales for the six months ended July 31, 1996 were $17,197,000, as compared
to $15,528,000 for the six months ended July 31, 1995, an increase of
$1,669,000, or 10.8%.
The increase in net sales for the six months ended July 31, 1996 over the same
period in the prior year was primarily attributable to increased unit sales at
the Registrant's Cycle Plastics and Safelink subsidiaries which began operations
in June 1995 and March 1996, respectively, and which consequently contributed
only minimally to net sales in the earlier period. Increased production capacity
also allowed the Registrant to increase shipments of Medical Products Division
products by approximately 14%. In addition, in January, 1996, the Registrant
instituted a price increase of approximately five percent on its products.
The Registrant's Medical Products Division contributed approximately $498,000
and $832,000 to increased net sales for the quarter and the six months ended
July 31, 1996, respectively. The Registrant's Advertising Specialty Division
contributed approximately $278,000 and $327,000 to increased net sales for the
quarter and the six months ended July 31, 1996, respectively. The Registrant's
Cycle Plastics subsidiary contributed approximately $243,000 and $467,000 to
increased net sales for the quarter and the six months ended July 31, 1996,
respectively. The Registrant's newly formed subsidiary, Uniflex Southeast
L.L.C., d/b/a Safelink contributed approximately $46,000 and $94,000 to
increased net sales for the quarter and the six months ended July 31, 1996,
respectively.
Net sales for the quarter ended July 31, 1996, as compared to the immediately
preceding quarter ended April 30, 1996, increased approximately $87,000, or
1.0%.
The Registrant's backlog at July 31, 1996, was $5,095,000 compared to $4,482,000
at July 31, 1995, an increase of $613,000, or 13.7%.
COST OF SALES AND EXPENSES:
Cost of sales for the quarter ended July 31, 1996, as compared to the quarter
ended July 31, 1995, increased $350,000, or 6.9%, to $5,427,000 from $5,077,000.
Cost of sales, as a percentage of net sales, for the quarter ended July 31,
1996, as compared to the same quarter in the prior year, decreased to 62.8% from
67.1%. This decrease was attributable to the improved mix in the sale of the
Registrants' products and lower labor and material costs as a percentage of net
sales.
Cost of sales for the six months ended July 31, 1996, as compared to the six
months ended July 31, 1995, increased $646,000, or 6.4%, to $10,750,000 from
$10,104,000. Cost of sales, as a percentage of net sales for the six months
ended July 31, 1996, as compared to the same period in the prior year, decreased
to 62.5% from 65.1%.
Shipping, selling and general and administrative expenses for the quarter ended
July 31, 1996, as compared to the quarter ended July 31, 1995, increased
$505,000, or 24.5%, from $2,059,000 to $2,563,000. This increase was primarily
attributable to increased expenses resulting from increased net sales. Shipping,
selling, general
-7-
<PAGE>
and administrative expenses for the six months ended July 31, 1996, as compared
to the same period in the prior year, increased $607,000, or 14.3%, from
$4,251,000 to $4,858,000. This increase was primarily attributable to increased
expenses, principally due to increased net sales.
INTEREST EXPENSE:
Interest expense for the quarter ended July 31, 1996, as compared to the quarter
ended July 31, 1995, decreased approximately $48,000, or 42.9%, to $64,000 from
$112,000. Interest expense for the six months ended July 31, 1996, as compared
to the six months ended July 31, 1995, decreased approximately $103,000, or
44.2%, to $130,000 from $233,000. The decreases are attributable to the
Registrant's repayment in full of its outstanding working capital bank debt in
full on February 13, 1996.
WORKING CAPITAL AND LIQUIDITY:
Working capital increased to $7,450,000 at July 31, 1996, as compared to
$6,064,000, at July 31, 1995, an increase of $1,386,000, or 22.9%, resulting in
a working capital ratio of 4 to 1 at July 31, 1996. The Registrant believes it
has sufficient working capital and unused lines of credit to meet its expected
liquidity and capital reserve requirements for the foreseeable future.
When used in Management's Discussion and Analysis of Financial Condition and
Results of Operations, the words "anticipate," "estimate" and similar
expressions are intended to identify forward-looking statements. These
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected, including reduced
sales and increases in raw materials and production costs.
-8-
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27; Financial Data Schedule
-9-
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
UNIFLEX, INC.
(Registrant)
/S/ HERBERT BARRY
-------------------------------------
Herbert Barry (Chairman Of The Board)
/S/ ROBERT GUGLIOTTA
-------------------------------------
Robert Gugliotta (VP Finance)
Date: September 12, 1996
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the quarter ended July 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 1,669,590
<SECURITIES> 0
<RECEIVABLES> 4,189,437
<ALLOWANCES> 191,770
<INVENTORY> 3,105,599
<CURRENT-ASSETS> 9,987,483
<PP&E> 6,462,435
<DEPRECIATION> 8,098,361
<TOTAL-ASSETS> 17,378,649
<CURRENT-LIABILITIES> 2,537,579
<BONDS> 0
0
0
<COMMON> 280,958
<OTHER-SE> 11,467,896
<TOTAL-LIABILITY-AND-EQUITY> 17,378,649
<SALES> 17,196,978
<TOTAL-REVENUES> 17,196,978
<CGS> 10,749,670
<TOTAL-COSTS> 15,607,299
<OTHER-EXPENSES> 130,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130,117
<INCOME-PRETAX> 1,459,562
<INCOME-TAX> 584,500
<INCOME-CONTINUING> 875,062
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 875,062
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
