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 APRIL 30, 1997
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: 4,293,868 shares of the
Company's common stock - $.10 par value - were outstanding as of May 9, 1997.
<PAGE>
UNIFLEX, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Consolidated condensed balance sheets -
April 30, 1997 (unaudited) and January 31, 1997 1
Consolidated condensed statements of income (unaudited) -
For the three months ended April 30, 1997 and 1996 2
Consolidated condensed statements of changes in stockholders' equity
(unaudited) for the three months ended April 30, 1997 and 1996 3
Consolidated condensed statements of cash flows (unaudited)
for the three months ended April 30, 1997 and 1996 4
Notes to consolidated condensed financial statements (unaudited) 5 - 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>
April 30, January 31,
ASSETS 1997 1997
---- ----
(Unaudited)
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 1,379,432 $ 2,114,923
Accounts receivable 4,970,169 4,084,710
Inventories 3,971,553 3,618,893
Prepaid income taxes 46,302 279,791
Prepaid expenses and other current assets 433,958 565,263
Deferred tax asset 383,900 291,200
----------------- ----------------
Total Current Assets 11,185,314 10,954,780
Property and Equipment 7,063,266 6,786,936
Intangible Assets 2,470,387 220,013
Other Assets 759,630 731,590
----------------- ----------------
Total Assets $ 21,478,597 $ 18,693,319
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Acquisition debt - current portion $ 836,417 $ -
Current maturities of long-term debt 170,000 171,000
Accounts payable 1,816,427 1,351,060
Accrued liabilities 1,284,085 998,888
----------------- ----------------
Total Current Liabilities 4,106,929 2,520,948
Acquisition debt 990,000 -
Long-Term Debt 1,453,311 1,493,131
Deferred Compensation and Postretirement Medical Benefits 1,260,747 1,329,237
Deferred rent 144,996 141,246
----------------- ----------------
Total Liabilities 7,955,983 5,484,562
----------------- ----------------
Minority Interest 262,500 262,500
----------------- ----------------
Stockholders' Equity
Common stock - par value $.10 per share
10,000,000 shares authorized, 4,293,868 shares
issued and outstanding 429,386 428,966
Additional paid-in capital 2,449,373 2,448,379
Retained earnings 10,401,658 10,096,340
----------------- ------------------
13,280,417 12,973,685
Less note receivable - stock purchase (20,303) (27,428)
------------------ -------------------
Total Stockholders' Equity 13,260,114 12,946,257
------------------ -------------------
Total Liabilities and Stockholders' Equity $ 21,478,597 $ 18,693,319
================== ===================
</TABLE>
The consolidated condensed balance sheet at January 31, 1997 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>
Three Months Ended
April 30,
---------
1997 1996
---- ----
<S> <C> <C>
Net sales $ 9,257,334 $ 8,554,965
Cost of sales 5,924,676 5,322,572
----------------- ------------------
Gross profit 3,332,658 3,232,393
----------------- ------------------
Shipping and selling expenses 1,791,161 1,558,505
General and administrative expenses 917,115 736,013
----------------- ------------------
2,708,276 2,294,518
----------------- ------------------
Income before other expenses 624,382 937,875
----------------- ------------------
Interest expense - net 113,964 66,303
----------------- ------------------
Income before provision for income taxes 510,418 871,572
----------------- ------------------
Provision for income taxes:
Current 313,700 390,500
Deferred (108,600) (41,500)
----------------- ----------------
205,100 349,000
----------------- ----------------
Net income $ 305,318 $ 522,572
================= ================
Earnings per share $ .07 $ .12
================= ================
Weighted average number of common shares and
common share equivalents outstanding 4,534,528 4,407,500
================= ================
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
2
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained Note Receivable
Shares Amount Capital Earnings Stock Purchase Total
------ ------ ------- -------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at February 1, 1996 3,999,576 $266,638 $1,854,722 $ 8,179,405 $(55,928) $10,244,837
Exercise of stock options 207,000 13,800 153,550 - - 167,350
Tax benefit from exercise of stock options - - 360,000 - - 360,000
Amortization of note receivable - - - - 7,125 7,125
Net income - - - 522,572 - 522,572
----------- -------- ---------- ----------- --------- -----------
Balance at April 30, 1996 4,206,576 $280,438 $2,368,272 $ 8,701,977 $(48,803) $11,301,884
=========== ======== =========== =========== ========= ===========
Balance at February 1, 1997 4,289,668 $428,966 $2,448,379 $10,096,340 $(27,428) $12,946,257
Exercise of stock options 7,800 780 3,484 - - 4,264
Tax benefit from exercise of stock options - - 21,000 - - 21,000
Shares repurchased and retired (3,600) (360) (23,490) - - (23,850)
Amortization of note receivable - - - - 7,125 7,125
Net income - - - 305,318 - 305,318
------------ -------- ---------- ----------- --------- ------------
Balance at April 30, 1997 4,293,868 $429,386 $2,449,373 $10,401,658 $(20,303) $13,260,114
============== ======== ========== ============ ========= ============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
Three Months Ended
April 30,
---------
1997 1996
---- ----
<S> <C> <C>
Net cash provided by operating activities $ 318,846 $ 734,591
----------- ----------
Cash flows from investing activities:
Purchase of property and equipment (302,706) (176,884)
Purchase of intangible assets (26,276) (48,739)
Acquisition of net assets of Merrick
Packaging Specialists, Inc. - (net of
cash acquired) (664,949) -
------------ ----------
Net cash used in investing activities (993,931) (225,623)
------------ ----------
Cash flows from financing activities:
Proceeds from exercise of stock options 4,264 167,350
Payment for retirement of common stock (23,850) -
Payment of long-term debt (40,820) (636,303)
------------ ----------
Net cash used in financing activities (60,406) (468,953)
------------ ----------
Net (decrease) increase in cash (735,491) 40,015
Cash - beginning of period 2,114,923 1,196,593
---------- ---------
Cash - end of period $1,379,432 $1,236,608
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION:
In the opinion of the 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 April 30, 1997 and the results of operations and
cash flows for the three months ended April 30, 1997 and 1996, 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, 1997.
The results of operations for the three months ended April 30, 1997 are not
necessarily indicative of the operating results for the full year.
NOTE 2. INVENTORIES:
A summary of inventory follows:
April 30, January 31,
1997 1997
---- ----
(Unaudited)
Raw materials and supplies $ 2,623,188 $2,255,078
Work in process 138,560 147,343
Finished products 1,209,805 1,216,472
----------- ----------
$ 3,971,553 $3,618,893
=========== ==========
NOTE 3. ACQUISITION:
On February 5, 1997, the Company purchase substantially all of the assets and
assumed certain liabilities of Merrick Packaging Specialists, Inc. ("Merrick").
Merrick Packaging Specialists, Inc. is a distributor of high quality paper,
paper laminate and plastic shopping bags and boxes for the retail industry. For
the fiscal years ended December 31, 1996 and 1995, Merrick reported unaudited
revenues of approximately $3,600,000 and $3,600,000, respectively. Net income
for the fiscal years ended December 31, 1996 and 1995 were not material. The
acquisition has been accounted for as a purchase, and accordingly, its results
will be included in the Company's results of operations from the effective date
of the acquisition, February 1, 1997. The excess of acquisition cost over the
fair value of Merrick's net tangible assets approximates $2,264,000 and has been
allocated to intangible assets and is being amortized over periods ranging from
fifteen to forty years. Of the purchase price of $2,370,000, $780,000 was paid
at closing and the balance is payable in promissory notes as follows:
DUE DATE AMOUNT INTEREST RATE
-------- ------ -------------
August 1, 1997 $ 600,000 6% per annum
August 1, 1998 600,000 7.5% per annum
March 1, 1999 390,000 7.5% per annum
----------
$1,590,000
5
<PAGE>
UNIFLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. ACQUISITION (CONT'D.):
In addition, loans payable of $236,417 were assumed from Merrick in the
transaction. These loans were paid in May of 1997.
Interest expense charged to operations was $26,700 and $-0-, for the three
months ended April 30, 1997 and 1996, respectively.
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.
NOTE 5. EARNINGS PER SHARE:
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128
simplifies the standards for computing earnings per share previously found in
APB Opinion No. 15, Earnings Per Share and is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods;
earlier adoption is not permitted. The Company does not expect the adoption of
SFAS No. 128 to have a significant impact to its reported results.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
NET SALES:
Net sales for the quarter ended April 30, 1997, as compared to the quarter ended
April 30, 1996, increased $702,000, or 8.2%, to $9,257,000 from $8,555,000. The
increase in net sales was directly attributable to the acquisition of Merrick
Packaging Specialists in February 1997.
Net sales for the quarter ended April 30, 1997, as compared to the immediately
preceding quarter ended January 31, 1997, increased $1,327,000, or 16.7%. The
increase in net sales was largely attributable to the acquisition of Merrick
Packaging Specialists in February 1997 and increases in sales of all product
lines as a result of the increased number of shipping days in the quarter as
compared to the immediately preceding quarter.
COST OF SALES AND EXPENSES:
Cost of sales for the quarter ended April 30, 1997, as compared to the quarter
ended April 30, 1996, increased $602,000, or 11.3%, to $5,925,000 from
$5,323,000. Cost of sales as a percentage of net sales for the quarter ended
April 30, 1997, as compared to the same quarter in the prior year, increased to
64.0% from 62.2%. The increase was primarily attributable to the increase in net
sales and the resulting increase in cost of sales in connection with the Merrick
Packaging Specialists acquisition. Additionally, increases in the costs of
certain raw materials, primarily polyethylene, contributed to the increase in
cost of sales.
Cost of sales for the quarter ended April 30, 1997, as compared to the
immediately preceding quarter ended January 31, 1997, increased $946,000, or
19.0%, to $5,925,000 from $4,979,000. Cost of sales as a percentage of net sales
for the quarter ended January 31, 1997, increased to 64.0% from 62.8%. The
increase was primarily attributable to the increase in net sales and the
resulting increase in cost of sales in connection with the Merrick Packaging
Specialists acquisition and increased costs for polyethylene film.
Shipping and selling and general and administrative expenses for the quarter
ended April 30, 1997, as compared to the quarter ended April 30, 1996, increased
$413,000, or 18.0%, from $2,295,000 to $2,708,000. This increase was primarily
attributable to increased expenses resulting from increased net sales resulting
in higher commissions, salaries and related shipping expenses. Shipping and
selling and general and administrative expenses as a percentage of net sales for
the quarter ended April 30, 1997, as compared to the same quarter in the prior
year increased to 29.3% from 26.8%.
7
<PAGE>
INTEREST EXPENSE:
Interest expense for the quarter ended April 30, 1997, as compared to the
quarter ended April 30, 1996, increased $48,000, or 72.7%, to $114,000 from
$66,000. This increase was attributable to the decrease in interest earned on
excess cash from investing due to the funds required for the Merrick Packaging
Specialists acquisition as well as interest costs incurred in the Merrick
Packaging Specialists acquisition.
WORKING CAPITAL AND LIQUIDITY:
Working capital decreased to $7,078,000 at April 30, 1997, as compared to
$7,152,000 at April 30, 1996, a decrease of $74,000 or approximately 1.03%,
resulting in a working capital ratio of 2.7 to 1 at April 30, 1997. This
decrease was primarily attributable to the use of funds needed to acquire the
assets of Merrick Packaging Specialists Inc. and related short-term acquisition
debt. All cash needed to fund this acquisition was derived from the Registrant's
on-hand cash. At April 30, 1997, the Registrant had not utilized any of its
existing credit facilities. The Registrant believes it has sufficient working
capital and unused lines of credit to meet its expected requirement and capital
liquidity requirements for the foreseeable future.
8
<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 Form 8-K dated
February 12, 1997 relating to an acquisition of assets
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)
Herbert Barry
-------------------------------------
Herbert Barry (Chairman Of The Board)
Robert Gugliotta
-------------------------------------
Robert Gugliotta (VP Finance)
Date: June 11, 1997
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 April 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1997
<CASH> 1,379,492
<SECURITIES> 0
<RECEIVABLES> 5,140,432
<ALLOWANCES> 170,263
<INVENTORY> 3,971,553
<CURRENT-ASSETS> 11,185,314
<PP&E> 7,063,266
<DEPRECIATION> 8,731,227
<TOTAL-ASSETS> 21,478,597
<CURRENT-LIABILITIES> 4,106,929
<BONDS> 0
0
0
<COMMON> 429,386
<OTHER-SE> 12,830,728
<TOTAL-LIABILITY-AND-EQUITY> 21,478,597
<SALES> 9,257,334
<TOTAL-REVENUES> 9,257,334
<CGS> 5,924,676
<TOTAL-COSTS> 8,632,952
<OTHER-EXPENSES> 113,964
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 113,964
<INCOME-PRETAX> 510,418
<INCOME-TAX> 205,100
<INCOME-CONTINUING> 305,318
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 305,318
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
