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 OCTOBER 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: 4,244,519 shares of the
Company's common stock - $.10 par value - were outstanding as of November 1,
1996.
<PAGE>
UNIFLEX, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Consolidated condensed balance sheets -
October 31, 1996 (unaudited) and January 31, 1996 1
Consolidated condensed statements of income (unaudited) -
Nine months ended October 31, 1996 and 1995 2
Three months ended October 31, 1996 and 1995 3
Consolidated condensed statements of changes in stockholders'
equity (unaudited) for the nine months ended October 31, 1996 and 1995 4
Consolidated condensed statements of cash flows (unaudited)
for the nine months ended October 31, 1996 and 1995 5
Notes to consolidated condensed financial statements (unaudited) 6 - 7
Item 2. Management's discussion and analysis of financial
condition and results of operations 8 - 9
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 10
SIGNATURES 11
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, January 31,
ASSETS 1996 1996
---- ----
(Unaudited)
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 2,406,263 $ 1,196,593
Accounts receivable 4,485,129 3,364,989
Inventory 3,093,736 2,699,948
Prepaid income taxes 61,491 898,610
Prepaid expenses and other current assets 543,324 606,943
Deferred tax asset 291,100 269,900
----------- -----------
Total Current Assets 10,881,043 9,036,983
Property and Equipment 6,676,639 6,427,427
Intangible Assets 232,681 156,404
Other Assets 723,497 661,798
----------- -----------
Total Assets $18,513,860 $16,282,612
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 155,000 $ 151,646
Accounts payable and accrued expenses 2,721,938 2,186,505
----------- -----------
Total Current Liabilities 2,876,938 2,338,151
Long-Term Debt 1,451,427 2,169,506
Deferred Compensation and Postretirement Medical Benefits 1,301,083 1,215,124
Deferred Rent 137,496 122,496
----------- -----------
Total Liabilities 5,766,944 5,845,277
----------- -----------
Minority Interest 262,500 192,500
----------- ------------
Stockholders' Equity
Common stock - par value $.10 per share
10,000,000 shares authorized, 4,244,525 shares
issued and outstanding 424,452 266,638
Additional paid-in capital 2,301,953 1,854,723
Retained earnings and members' capital 9,792,564 8,179,402
----------- -----------
12,518,969 10,300,763
Less note receivable - stock purchase 34,553 55,928
----------- -----------
Total Stockholders' Equity 12,484,416 10,244,835
----------- -----------
Total Liabilities and Stockholders' Equity $18,513,860 $16,282,612
=========== ===========
</TABLE>
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>
Nine Months Ended
October 31,
-----------
1996 1995
---- ----
<S> <C> <C>
Net sales $26,536,297 $24,282,289
Cost of sales 16,400,294 15,538,336
----------- -----------
Gross profit 10,136,003 8,743,953
----------- -----------
Shipping and selling expenses 4,939,812 4,360,394
General and administrative expenses 2,344,720 2,105,905
----------- -----------
7,284,532 6,466,299
----------- -----------
Income before interest expense 2,851,471 2,277,654
Interest expense - net 178,312 329,808
----------- -----------
Income before provision for income taxes 2,673,159 1,947,846
----------- -----------
Provision for income taxes:
Current 1,162,800 849,000
Deferred (102,800) (98,000)
----------- -----------
1,060,000 751,000
----------- -----------
Net income $ 1,613,159 $1,196,846
=========== ===========
Earnings per common share and common share equivalents: (Note 4)
Net income $ .36 $ .29
=========== ===========
Weighted average number of common shares and common shared
equivalents outstanding 4,475,648 4,085,912
=========== ===========
</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
October 31,
-----------
1996 1995
---- ----
<S> <C> <C>
Net sales $ 9,339,319 $ 8,754,093
Cost of sales 5,650,624 5,434,836
----------- -----------
Gross profit 3,688,695 3,319,257
----------- -----------
Shipping and selling expenses 1,632,767 1,490,465
General and administrative expenses 794,136 724,377
----------- -----------
2,426,903 2,214,842
----------- -----------
Income before interest expense 1,261,792 1,104,415
Interest expense - net 48,195 96,637
----------- -----------
Income before provision for income taxes 1,213,597 1,007,778
----------- -----------
Provision for income taxes:
Current 514,500 433,000
Deferred (39,000) (26,000)
----------- -----------
475,500 407,000
----------- -----------
Net income $ 738,097 $ 600,778
=========== ===========
Earnings per common share and common share equivalents: (Note 4)
Net income $ .16 $ .14
=========== ===========
Weighted average number of common shares and common shared
equivalents outstanding 4,509,817 4,164,845
=========== ===========
</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 NINE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
--------------------------- Additional
Paid-In
Shares Amount Capital
------ ------ -------
<S> <C> <C> <C>
Balance at February 1, 1995 3,360,498 $224,033 $424,695
Exercise of stock options 234,000 15,600 77,220
Tax benefit from exercise
of stock options - - 430,000
Amortization of note receivable - - -
Net income - - -
---------- --------- -----------
Balance at October 31, 1995 3,594,498 $239,633 $931,915
========= ======== ========
Balance at February 1, 1996 2,666,384 $266,638 $1,854,722
Exercise of stock options 173,300 17,330 188,313
Tax benefit from exercise
of stock options - - 399,402
Issuance of common stock to
effect a 3 for 2 stock split (Note 4) 1,404,841 140,484 (140,484)
Amortization of note receivable - - -
Net income - - -
--------- --------- ---------
Balance at October 31, 1996 4,244,525 $424,452 $2,301,953
========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Retained Earnings
and Members' Note Receivable
Capital Stock Purchase Total
------- -------------- -----
<S> <C> <C> <C>
Balance at February 1, 1995 $6,720,821 $(84,428) $7,285,121
Exercise of stock options - - 92,820
Tax benefit from exercise
of stock options - - 430,000
Amortization of note receivable - 21,375 21,375
Net income 1,196,846 - 1,196,846
--------- --------- -----------
Balance at October 31, 1995 $7,917,667 $(63,053) $ 9,026,162
========== ======== ===========
Balance at February 1, 1996 $8,179,405 $(55,928) $10,244,837
Exercise of stock options - - 205,643
Tax benefit from exercise
of stock options - - 399,402
Issuance of common stock to
effect a 3 for 2 stock split (Note 4) - - -
Amortization of note receivable - 21,375 21,375
Net income 1,613,159 - 1,613,159
---------- --------- -----------
Balance at October 31, 1996 $9,792,564 $(34,553) $12,484,416
========== ======== ===========
</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>
Nine Months Ended
October 31,
-----------
1996 1995
---- ----
<S> <C> <C>
Net cash provided by operating activities $2,644,902 $1,980,119
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (858,477) (779,172)
Purchase of intangibles (67,673) (79,095)
---------- ----------
Net cash used in investing activities (926,150) (858,267)
---------- ----------
Cash flows from financing activities:
Minority interest contributed - 27,500
Proceeds from long-term debt - 7,500
Payment of notes payable - (60,000)
Payment of long-term debt (714,725) (951,953)
Proceeds from issuance of common stock 205,643 92,820
--------- ----------
Net cash used in financing activities (509,082) (884,133)
--------- ----------
Net increase in cash and cash equivalents 1,209,670 237,719
Cash and cash equivalents - beginning of period 1,196,593 527,725
--------- ----------
Cash and cash equivalents - end of period $2,406,263 $ 765,444
========== ==========
</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 October 31, 1996 and the results of operations and
cash flows for the nine months and three months ended October 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 nine months ended October 31, 1996 are not
necessarily indicative of the operating results for the full year.
NOTE 2. INVENTORY:
A summary of inventory follows:
October 31, January 31,
1996 1996
(Unaudited)
Raw materials and supplies $1,997,186 $1,755,374
Work in process 238,502 227,715
Finished products 858,048 716,859
----------- -----------
$3,093,736 $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>
NOTE 4. STOCK DIVIDEND:
On October 15, 1996, the Company effected a three for two stock split recorded
in the form of a stock dividend payable to shareholders of record at September
25, 1996. As a result, common stock was increased by $140,484 and additional
paid-in capital was decreased by the same amount. All references in the
accompanying financial statements to the number of common shares and per share
amounts have been restated to reflect the stock dividend.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
NET SALES:
Net sales for the quarter ended October 31, 1996 were $9,339,000,
compared to $8,754,000 for the same quarter in the prior year, an increase of
$585,000, or 6.7%.
Net sales for the nine months ended October 31, 1996 were
$26,536,000, compared to $24,282,000 for the same period in the prior year, an
increase of $2,254,000, or 9.3%.
Net sales for the quarter ended October 31, 1996, compared to the
immediately preceding quarter ended July 31, 1996, increased from $8,642,000 to
$9,339,000, an increase of $697,000, or 8.1%.
For the quarter ended October 31, 1996, net sales at the
Registrant's Advertising Specialty Division increased by approximately 26% and
net sales at Uniflex Southwest L.L.C., d/b/a Cycle Plastics, increased by
approximately 60% compared to the same period in the prior year.
The increase in net sales for the nine months ended October 31,
1996, compared to the same period in the prior year, was primarily attributable
to increased sales in the Registrant's Medical Products Division of
approximately $739,000, or 14%, and Advertising Specialty Division of
approximately $1,197,000, or 12%. In addition, Uniflex Southwest L.L.C., d/b/a
Cycle Plastics, which commenced operations in June 1995, added to the increase
in net sales by shipping approximately $718,000 of product for the nine months
ended October 31, 1996, compared to $170,000 in the prior year. The foregoing
increases in net sales were reduced by a decline in net sales in certain of the
Registrant's other divisions. On January 1, 1996, the Registrant instituted a
price increase of approximately four percent on all its products.
The Registrant's backlog at October 31, 1996 was $5,301,000
compared to $4,945,000 at October 31, 1995, an increase of $356,000, or 7.2%.
COST OF SALES AND EXPENSES:
Cost of sales for the quarter ended October 31, 1996, compared to
the quarter ended October 31, 1995, increased approximately $216,000, or 4.0%,
to $5,651,000 from $5,435,000, primarily as a result of increased sales. Cost of
sales as a percentage of net sales, for the quarter ended October 31, 1996,
compared to the same quarter in the prior year, decreased to 60.5% from 62.1%.
This decrease was attributable to the improved mix in the Registrant's products
and continued manufacturing efficiencies.
Cost of sales for the nine months ended October 31, 1996, as
compared to the nine months ended October 31, 1995, increased approximately
$862,000, or 5.5%, to $16,400,000 from $15,538,000, primarily as a result of
increased sales. Cost of sales as a percentage of net sales for the nine months
ended October 31, 1996, compared to the same period in the prior year, decreased
to 61.8% from 64.0%. This decrease was attributable to the improved mix in the
Registrant's products and continued manufacturing efficiencies.
Shipping, selling and general and administrative expenses for the
quarter ended October 31, 1996, as compared to the quarter ended October 31,
1995, increased approximately $212,000, or 9.6%, from $2,215,000 to $2,427,000.
This increase was primarily attributable to increased expenses resulting from
increased net sales. Shipping, selling and general and administrative expenses
for the nine months ended October 31, 1996, as compared to the same period in
the prior year, increased approximately $819,000, or 12.7%, from $6,466,000 to
$7,285,000. This increase was primarily attributable to increased expenses due
to increased net sales.
8
<PAGE>
INTEREST EXPENSE:
Interest expense for the quarter ended October 31, 1996, as
compared to the quarter ended October 31, 1995, decreased approximately $49,000,
or 50.5%, to $48,000 from $97,000. Interest expense for the nine months ended
October 31, 1996, as compared to the nine months ended October 31, 1995,
decreased approximately $152,000, or 46.1%, to $178,000 from $330,000. These
decreases are attributable to the Registrant's repayment in full of its
outstanding working capital bank debt on February 13, 1996.
WORKING CAPITAL AND LIQUIDITY:
Working capital increased to $8,004,000 at October 31, 1996, as
compared to $6,474,000 at October 31, 1995, an increase of $1,530,000, or 23.6%,
resulting in a working capital ratio of approximately 3.8 to 1 at October 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.
9
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27; Financial Data Schedule
(b) Report on Form 8-K - The Registrant filed no reports on Form
8-K during the quarter ended October 31, 1996.
10
<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: December 6, 1996
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the quarter ended October 31, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> OCT-31-1996
<CASH> 2,406,263
<SECURITIES> 0
<RECEIVABLES> 4,485,129
<ALLOWANCES> 200,653
<INVENTORY> 3,093,736
<CURRENT-ASSETS> 10,881,043
<PP&E> 6,676,639
<DEPRECIATION> 8,305,678
<TOTAL-ASSETS> 18,513,860
<CURRENT-LIABILITIES> 2,876,938
<BONDS> 0
0
0
<COMMON> 424,452
<OTHER-SE> 12,059,964
<TOTAL-LIABILITY-AND-EQUITY> 18,513,860
<SALES> 26,536,297
<TOTAL-REVENUES> 26,536,297
<CGS> 16,400,294
<TOTAL-COSTS> 23,684,826
<OTHER-EXPENSES> 178,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178,312
<INCOME-PRETAX> 2,673,159
<INCOME-TAX> 1,060,000
<INCOME-CONTINUING> 1,613,159
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,613,159
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
