UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 1, 1995
Commission File Number 0-5680
BURKE MILLS, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0506342
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
191 Sterling Street, N.W.
Valdese, North Carolina 28690
(Address of principal executive offices) (Zip Code)
(704) 874-2261
(Registrant's telephone number, including area code)
No Changes
(Former name, former address and former fiscal year, if
changed since last report)
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 ____
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. As of May 12, 1995,
there were outstanding 2,741,168 shares of the issuer's only class of
common stock.
<PAGE>
PART I - FINANCIAL INFORMATION
BURKE MILLS, INC.
CONDENSED BALANCE SHEETS
April 1, December 31,
1995 1994
-------- ------------
(Unaudited) (Note A)
ASSETS
Current Assets
Cash and cash equivalents $ 1,983,327 $ 1,833,989
Accounts receivable 3,818,531 3,292,156
Inventories 2,680,317 2,924,194
Prepaid expenses and other current assets 215,938 187,952
Deferred income taxes 575,700 575,700
--------- ---------
Total Current Assets 9,273,813 8,813,991
--------- ---------
Property, Plant and Equipment - at cost 21,038,506 19,052,402
Less: Accumulated depreciation 11,420,275 11,244,950
----------- -----------
Property, Plant and Equipment - Net 9,618,231 7,807,452
----------- -----------
$18,892,044 $16,621,443
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 828,549 $ 816,121
Accounts payable 1,853,428 913,276
Income taxes payable 229,399 581,267
Accrued salaries, wages and vacation pay 467,132 370,673
Other liabilities and accrued expenses 197,613 262,498
----------- -----------
Total Current Liabilities 3,576,121 2,943,835
Long-Term Debt 2,237,326 994,776
Deferred Income Taxes 1,399,000 1,399,000
----------- -----------
Total Liabilities 7,212,447 5,337,611
Shareholders' Equity
Common stock, no par value (stated value, $.66)
Authorized - 5,000,000 shares
Issued and outstanding - 2,741,168 shares 1,809,171 1,809,171
Paid-in capital 3,111,349 3,111,349
Retained earnings 6,759,077 6,363.312
---------- ----------
Total Shareholders' Equity 11,679,597 11,283,832
----------- -----------
$18,892,044 $16,621,443
=========== ===========
Note A: The December 31, 1994 Condensed Balance Sheet has been derived from
the audited financial statements at that date but does not include
all of the information and footnotes required for generally
accepted accounting principles for complete financial statements.
[FN]
See notes to condensed financial statements.
<PAGE>
BURKE MILLS, INC.
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended
April 1, April 2,
1995 1994
----------- -----------
Net Sales $9,544,971 $8,787,236
----------- -----------
Costs and Expenses
Cost of sales 8,364,231 7,572,288
Selling, general and administrative expenses 460,256 369,091
Factor's charges 56,093 54,076
----------- -----------
Total Costs and Expenses 8,880,580 7,995,455
----------- -----------
Operating Earnings 664,391 791,781
Other Income
Interest income 26,028 15,423
Other, net 3,882 1,948
----------- -----------
Total 29,910 17,371
----------- -----------
Other Charges
Interest expense 44,236 40,029
----------- -----------
Income Before Provision for Income Taxes 650,065 769,123
Provision for Income Taxes 254,300 304,200
----------- -----------
Net Income 395,765 464,923
Retained Earnings at Beginning of Period 6,363,312 3,854,304
----------- -----------
Retained Earnings at End of Period $6,759,077 $4,319,227
=========== ===========
Earnings Per Share $ .14 $ .17
=========== ===========
Dividends Per Share of Common Stock None None
=========== ===========
Weighted Average Common Shares Outstanding 2,741,168 2,741,168
=========== ===========
[FN]
See notes to condensed financial statements.
<PAGE>
BURKE MILLS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Thirteen
Weeks Ended Weeks Ended
April 1, April 2,
1995 1994
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 395,765 $ 464,923
------------ ----------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 283,873 236,753
Provision for deferred income taxes - (19,000)
Changes in assets and liabilities:
(Increase) in accounts receivable (526,375) (1,825,170)
(Increase) decrease in inventories 243,877 (23,596)
(Increase) in prepaid expenses, and
other current assets (27,986) (26,783)
Increase in accounts payable 940,152 856,726
Increase (decrease) in income taxes payable (351,868) 61,967
Increase in accrued salaries, wages and vacation pay 96,459 86,750
Increase (decrease) in other liabilities and
accrued expenses (64,885) 6,725
------------ -----------
Total Adjustments 593,247 (645,628)
------------ -----------
Net cash provided (used) by operating activities 989,012 (180,705)
------------ ----------
Cash flows from investing activities:
Acquisition of property, plant and equipment (2,094,652) (79,708)
------------ ----------
Net cash (used) by investing activities (2,094,652) (79,708)
------------ ----------
Cash flows from financing activities:
Increase in long-term bank note 1,451,918 -
Principal payments of long-term debt (196,940) (218,671)
------------ ----------
Net cash provided (used) by financing activities 1,254,978 (218,671)
------------ ----------
Net increase (decrease) in cash and cash equivalents 149,338 (479,084)
Cash and cash equivalents at beginning of year 1,833,989 1,903,731
------------ ----------
CASH AND CASH EQUIVALENTS AT END OF
FIRST QUARTER $1,983,327 $1,424,647
============ ===========
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
BURKE MILLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - UNAUDITED FINANCIAL INFORMATION
a. The accompanying unaudited condensed balance sheet as of April 1,
1995, and the related condensed statements of operations and retained
earnings, and cash flows for the thirteen week periods ended April 1,
1995 and April 2, 1994, are unaudited; in the opinion of management,
all adjustments necessary for a fair presentation of these financial
statements have been included. Such adjustments consisted only of
normal recurring items. Operating results for the thirteen weeks ended
April 1, 1995 are not necessarily indicative of results that may be
expected for the year ended December 30, 1995.
The unaudited condensed financial statements and notes are presented
as permitted by the instructions to Form 10-Q and Article 10 of
Regulation SX and do not contain certain information included in the
Company's annual financial statements and notes thereto. The accounting
policies followed by the Company are set forth in Note 1 to the
Company's financial statements in the 1994 Burke Mills, Inc. Annual
Report which is incorporated by reference on Form 10-K.
b. Statements of cash flows - For the purposes of the statements of cash
flows, the Company considers cash on hand, deposits in banks, interest
bearing demand matured funds on deposit with factor and all highly
liquid debt instruments with a maturity of three months or less when
purchased, as cash and cash equivalents. Matured funds on deposit with
the factor earn interest at the prime rate less 1.5%.
FASB No. 95 requires that the following supplemental disclosures to
the statements of cash flows be provided in related disclosures. Cash
paid for interest for the thirteen weeks ended April 1, 1995 and April 2,
1994 was $42,519 and $39,878, respectively. Income taxes paid for the
thirteen weeks ended April 1, 1995 and April 2, 1994 aggregated $606,125
and $261,233, respectively.
NOTE 2 - OPERATIONS OF THE COMPANY
The Company is engaged in the twisting, texturing, winding, dyeing,
processing and selling of filament, novelty and spun yarns and in the
dyeing and processing of these yarns for others on a commission basis.
The Company's fiscal year is the 52 or 53 week period ending on the
Saturday nearest to December 31. Its fiscal quarters also end on the
Saturday nearest to the end of the calendar quarter.
<PAGE>
BURKE MILLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
NOTE 3 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise the following:
April 1, December 31,
1995 1994
-------- ------------
Cash......................................... $ 478 $ 5,162
Commercial money market investment in bank... 6,764 1,818,064
Matured funds on deposit with factor......... 1,976,085 10,763
----------- -----------
$1,983,327 $1,833,989
=========== ===========
NOTE 4 - ACCOUNTS RECEIVABLE
Accounts receivable are comprised of the following:
April 1, December 31,
1995 1994
-------- ------------
Account current - factor:
Due from factor on regular factoring account...$3,685,136 $3,063,406
Non-factored accounts receivable................. 133,395 228,750
---------- ----------
$3,818,531 $3,292,156
========== ==========
NOTE 5 - INVENTORIES
Inventories are summarized as follows:
April 1, December 31,
1995 1994
--------- -----------
Finished and in process..........................$1,754,013 $1,940,711
Raw materials.................................... 457,357 490,096
Dyes and chemicals............................... 312,869 318,289
Other............................................ 156,078 175,098
---------- ----------
$2,680,317 $2,924,194
========== ==========
NOTE 6 - LONG-TERM DEBT
Long-term debt is comprised of:
April 1, December 31,
1995 1994
--------- -----------
Note payable to bank (a)........................ $ 910,097 $1,063,868
Note payable to bank (b)........................ 555,480 598,649
Advance on note payable to bank (c)............. 1,600,298 148,380
---------- ----------
Total......................................... 3,065,875 1,810,897
Less: Current maturities.................... 828,549 816,121
---------- ----------
Long-Term Debt...................................$2,237,326 $ 994,776
========== ==========
(a) Pursuant to a promissory note, loan agreement and security agreement
dated June 27, 1990, the loan payable to the bank is secured by a first
lien deed of trust on all real property and a first lien deed of trust
and security interest on all machinery, equipment, and personal property
of the Company, excluding inventory and accounts receivable. Interest
on the note accrues at the bank's prime rate plus one-half percent.
Principal and interest payments aggregate $58,950, per month.
<PAGE>
BURKE MILLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
NOTE 6 - LONG-TERM DEBT (Continued)
The loan agreement, as amended, contains various restrictive covenants,
as defined, which include among other things, maintenance of a minimum
tangible net worth, a minimum quick ratio, a maximum debt to tangible net
worth ratio, a restriction on fixed asset additions above a stated amount
annually, and a restriction on the retirement or acquisition of outstanding
capital stock.
(b) On June 26, 1992, the Company received a loan commitment and
agreement from First Union National Bank for a term loan of $900,000 which
was drawn by the Company in March 1993. The loan is secured by a first lien
position on twisting and texturing equipment purchased and a second lien
position on existing machinery and equipment, plus all additions and
accessions now owned by borrower or hereafter acquired and all proceeds of
the foregoing. Interest on this loan accrues and is payable at the bank's
prime rate plus one-half percent, with the rate of interest to be subject to
an absolute interest cap of 10.88% per annum until final maturity of the
note. Principal and interest payments aggregate $18,900, per month.
(c) Effective September 1, 1994, the Company received a loan commitment
from its bank for an additional loan of $5,000,000 to finance the
acquisition by the Company of new machinery and equipment and to fund
Letters of Credit issued in connection with such acquisition. The new loan
is to be collateralized by a first lien position on the new machinery and
equipment to be purchased with the loan and a third lien position on all of
the Company's existing machinery and equipment, plus all additions,
accessions and all proceeds thereof owned or hereafter acquired, and second
Deed of Trust on the Company's property. Interest on the loan accrues and
is payable at the prime rate of the bank. Pursuant to the loan agreement,
promissory note and security agreement, all covenants contained in loan
agreements under Note 6(a) and 6(b) above remain in effect except as
modified in this new loan agreement. Covenants include a debt service
coverage ratio, a limit on annual property asset acquisitions exclusive of
property to be acquired with the loan proceeds under this new loan
agreement, the retirement or acquisition of the Company's capital stock in
excess of a stated amount, the maintenance of a minimum tangible net worth
which shall increase by a stated amount annually. Interest only on this
obligation is payable until September 5, 1995. The Company and the bank
have agreed that all three loan obligations are to be consolidated into one
new note obligation which will be payable in level monthly installments
based on a seven year repayment schedule, including interest over a five
year period beginning in the fourth quarter of 1995, and a final balloon
payment at the end of the five year period.
The annual principal maturities of the long-term debt at April 1, 1995
are as follows:
Current portion.............................................. $ 828,549
1996/1997........................................ $ 240,353
1997/1998........................................ 262,900
1998/1999........................................ 287,561
1999/2000........................................ 314,537
Balloon payment at end of the five year period 1,131,975 2,237,326
----------- ----------
$3,065,875
==========
<PAGE>
BURKE MILLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
NOTE 7 - INCOME TAXES
Effective January 3, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method required
by FASB Statement No. 109, "Accounting for Income Taxes". Under this method,
deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse. Prior to the adoption of Statement
109, income tax expense was determined using the deferred method. Deferred
tax expense was based on items of income and expense that were reported in
different years in the financial statements and tax returns and were
measured at the tax rate in effect in the year the differences originated.
The items which comprise deferred tax assets and liabilities are as
follows:
Deferred Tax Deferred Tax
Assets Liabilities
------------ ------------
Accelerated depreciation $1,399,000
Alternative minimum taxes paid $417,800
Inventory capitalization for tax purposes 10,400
Investment tax and research and
development credits 147,500
------------ ------------
$575,700 $1,399,000
Thirteen Weeks Ended
April 1, April 2,
1995 1994
--------- ---------
Income taxes consist of:
State $ 50,400 $ 60,800
Federal 203,900 243,400
--------- ---------
$254,300 $304,200
========= =========
At December 31, 1994 and April 1, 1995, the Company had tax credit
carryforwards available for tax purposes as follows:
Investment Research and
Tax Development
Expiring In Credits Credits
- - - - ----------- ---------- ------------
1995....................................... $ 6,943 $ --
1996....................................... 18,934 --
1997....................................... 19,979 --
1998....................................... 22,663 4,020
1999....................................... 51,682 6,722
2000....................................... 61,682 7,045
2001....................................... -- 2,585
2002....................................... -- 1,930
2004....................................... -- 1,090
2005....................................... -- 3,619
-------- --------
Total........................................$181,883 $ 27,011
Pursuant to the Tax Reform Act of 1986, the amount of the investment
tax credit carryforward available as a credit against income tax is reduced
by 35% of such carryforward tax credits used.
<PAGE>
BURKE MILLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
NOTE 8 - EMPLOYEE BENEFIT PLAN
Effective January 1, 1985, the Company elected to become a
participating employer in the Burke Mills, Inc. Savings and Retirement Plan
and Trust which has been qualified under Section 401(k) of the Internal
Revenue Code. This plan allows eligible employees to contribute a salary
reduction amount of not less than 1% nor greater than 25% of the employee's
salary. The salary reduction percentage must equal an increment of 1%. The
employer may make a matching contribution for each employee out of current
net profits or accumulated net profits (as defined), in an amount the
employer may from time to time deem advisable. The Company has made
provision in the accompanying financial statements for matching
contributions of $49,641 and $65,000 for the fiscal quarters ended April 1,
1995 and April 2, 1994, respectively.
NOTE 9 - CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of occasional temporary
cash investments, matured funds on deposit with the Company's factor and
amounts due from the factor on receivables sold to the factor on a
non-recourse basis. The receivables sold to the factor during a month
generally have a maturity date on the 25th to the 30th of the following
month, at which time the amount due to the Company by the factor is
transferred to matured funds on deposit with factor. From time to time,
the Company places its temporary cash investments with its bank in short-term
certificates. In addition to its matured funds of $1,976,085 as of April 1,
1995, the Company had $3,685,136 due from its factor which matured in April
1995 and was transferred to matured funds status. The Company utilizes its
matured funds on a continuous basis to replenish its cash in bank for the
payment of materials, labor and overhead, since the Company does not borrow
funds for working capital purposes.
NOTE 10 - COMMITMENTS
At April 1, 1995, the Company was committed to its bank for
$1,600,298 on import letters of credit to vendors covering machinery and
equipment purchased. Inasmuch as title to the machinery and equipment had
passed to the Company, the machinery and equipment has been included in
property, plant and equipment as at April 1, 1995 and the obligation to the
bank has been included in notes payable. The $1,600,298 obligation is part
of the $5,000,000 commitment from the bank incurred to finance the
acquisition of new machinery and equipment to be purchased in 1995, as more
fully set forth in Note 6 to these Notes to Condensed Financial Statements.
Payment to the vendor on the letters of credit will be made on October 1,
1995.
NOTE 11 - EARNINGS PER SHARE
Earnings per share are based on the net income divided by the
weighted average number of common shares outstanding during the thirteen
week periods ended April 1, 1995 and April 2, 1994.
<PAGE>
BURKE MILLS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- - - - ---------------------
1995 Compared to 1994
- - - - ---------------------
The following discussion should be read in conjunction with the
information set forth under the Financial Statements and Notes thereto
included elsewhere in the 10-Q.
RESULTS OF OPERATIONS
The following table sets forth operating data of the Company as a
percentage of net sales for the periods indicated below:
Thirteen Weeks Ended
April 1, April 2,
1995 1994
-------- --------
Net sales 100.0% 100.0%
Cost of sales 87.6 86.2
------- -------
Gross profit 12.4 13.8
Selling, general, administrative
and factoring charges 5.4 4.8
------- -------
Operating earnings 7.0 9.0
Interest expense 0.5 0.4
Other (income) - net (0.3) (0.2)
------- -------
Income before income taxes 6.8 8.8
Income taxes 2.7 3.5
------- -------
Net income 4.1% 5.3%
======= =======
THIRTEEN WEEKS ENDED APRIL 1, 1995
COMPARED TO THIRTEEN WEEKS ENDED APRIL 2, 1994
Net Sales
- - - - ---------
Net sales for the first fiscal quarter ended April 1, 1995, which
consisted of thirteen weeks, increased by $757,735, or 8.6%, as compared to
the first quarter of 1994. Pounds shipped for the first quarter of 1995
increased by 1.3%. Full yarn pounds shipped increased by 7.0%, while
commission yarn (the dyeing and processing of customer owned yarns) pounds
shipped decreased by 10.8%. Key factors contributing to the net increased
revenues were changes in the product mix to a higher percentage of full yarn
sales versus commission processing of yarns, and raw material increases
resulting in higher selling prices.
<PAGE>
BURKE MILLS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Cost of Sales and Gross Margin
- - - - ------------------------------
Cost of sales for the first quarter of 1995 increased by $791,943,
or 10.5%, as compared to the first quarter of 1994.
Material cost for the 1995 fiscal quarter increased by $463,107, or
10.1%, as compared to the first quarter of 1994. The primary reasons for
the increase in material cost were an increase in full yarn pounds shipped
of 7.0%, and a change in sales mix to a greater portion of full yarn sales,
as discussed above.
Manufacturing labor cost increased by $89,945, representing an
increase of 5.5%, for the first quarter of 1995 compared to the like period
of 1994. This increase resulted primarily from a wage increase of
approximately 2 1/2% to 3% granted January 2, 1995.
Manufacturing overhead increased by $238,891, or 17.4%, primarily as
a result of increases in payroll taxes, workmen's compensation, employee
insurance costs, repairs and maintenance and depreciation.
Gross margin for the first quarter of 1995 was $1,180,740 as compared
to $1,214,948 for the first quarter of 1994, a decrease of $34,208. The
decrease was the result of an increase in sales volume of $757,735, but with
a corresponding increase in cost of sales of $791,943. As a result of the
increase in sales volume with a larger increase in cost of sales, the gross
margin for the 1995 quarter aggregated 12.4% compared with 13.8% for the
similar quarter of 1994.
Selling, General and Administrative Expenses
- - - - --------------------------------------------
Selling, general and administrative expenses for the first quarter
of 1995 increased by $91,165, or 24.7%. Selling, general and administrative
expenses for the 1995 quarter represented 4.8% of net sales compared to 4.2%
in 1994.
Factor's Charges
- - - - ----------------
Factor's charges for the first quarter of 1995 increased by $2,017,
as compared to the first quarter of 1994. The increase in factor's charges
was caused by the increase in sales dollars for the quarter. The ratio of
factored accounts versus nonfactored accounts for the first quarter of 1995,
as compared to the similar quarter of 1994, remained approximately the same.
Interest Expense
- - - - ----------------
Interest expense for the first quarter of 1995 increased by $4,207,
as compared to 1994. Interest expense for 1995 and 1994 resulted from
interest on the Company's long-term debt.
<PAGE>
BURKE MILLS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Interest Income
- - - - ---------------
Interest income for the 1995 quarter increased by $10,605, as
compared to the first quarter of 1994. The increase was due to a higher
average balance invested with the Company's factor and from the increases
in the prime rate in 1995 compared with the 1994 period.
Income Before Provision for Income Taxes
- - - - ----------------------------------------
For the thirteen week period ended April 1, 1995, income before
provision for income taxes decreased by $119,058, or 15.5%, as compared to
the similar period of 1994.
The decrease was primarily due to an 8.6% increase in sales volume,
offset, however, by a decreased gross profit percentage to 12.4% in the 1995
period compared to 13.8% in the like period of 1994, as a result of changes
in product mix, and to increases in net operating expenses in the 1995 fiscal
quarter, resulting from non recurring expenses associated with the current
expansion.
Provision for Income Taxes
- - - - --------------------------
For the thirteen week periods ended April 1, 1995 and April 2, 1994,
the Company made provision for income taxes of $254,300 and $304,200,
respectively, based on the pre-tax income for the 1995 and 1994 periods of
$650,065 and $769,123, respectively. Income taxes as a percentage of pre-tax
income aggregated 39.1% for the 1995 period compared with 39.6% for the like
period of 1994.
Subsequent matters
- - - - ------------------
Looking forward to the remainder of 1995, the Company remains
cautiosly optimistic due to the uncertainty surrounding the current economic
outlook. During the first quarter the Company experienced a downturn in
demand in several key markets. Based on the current level of incoming
orders, the Company anticipates that the revenues and net income for the
second quarter will be lower than in the first quarter.
Liquidity and Capital Resources
- - - - -------------------------------
The Company sells a substantial portion of its accounts receivable
to a commercial factor so that the factor assumes the credit risk for these
accounts and effects the collection of the receivables. The Company has the
right to borrow from the factor up to 90% of the face amount of each account
sold to the factor, but the Company has not borrowed any funds from its
factor during the three year period ended December 31, 1994, and the fiscal
quarter ended April 1, 1995. As of April 1, 1995, the Company had $5,651,221
due from its factor, of which amount $1,976,085 was in matured funds held by
the factor, and a net amount of $3,685,136 consisted of amounts due from the
factor on the regular factoring account, with maturity dates in April 1995.
<PAGE>
BURKE MILLS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Liquidity and Capital Resources (Continued)
- - - - -------------------------------
The Company's working capital at April 1, 1995 aggregated
$5,697,692, representing a working capital ratio of 2.6 to 1 compared with
a working capital of $5,870,156 at December 31, 1994 and a working capital
ratio of 3.0 to 1.
As a measure of current liquidity, the Company's quick position
(cash, cash equivalents and receivables over current liabilities) discloses
the following at April 1, 1995:
Cash, cash equivalents and receivables...............$5,801,858
Current liabilities.................................. 3,576,121
----------
Excess of quick assets over current liabilities......$2,225,737
==========
The Company believes that its cash, cash equivalents and receivables
plus internally generated funds and its credit arrangements will be
sufficient to finance its operations for the next 12 months.
The results of operations of the Company for the periods discussed
have not been significantly affected by inflation.
During the first quarter of 1995, the Company acquired and made
deposits on new machinery and equipment of approximately $2,100,000 as set
forth in the accompanying statement of cash flows. For the balance of 1995,
the Company anticipates the acquisition of machinery and equipment of
approximately $2,900,000, which together with the acquisitions and deposits
on acquisitions incurred to April 1, 1995 will aggregate an anticipated
acquisition of new machinery of $5,000,000 in 1995. The Company has
obtained a loan commitment of $5,000,000 from its bank to fund these
acquisitions. This new loan obligation together with two other existing
loans owed to the bank will be consolidated into one new note to be payable
monthly, including interest, over a five year period based on a seven year
repayment schedule plus a balloon payment at the end of the fifth year.
Payments on the consolidated note will begin in the fourth quarter of 1995.
<PAGE>
BURKE MILLS, INC.
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.
BURKE MILLS, INC.
(Registrant)
Date: May 16, 1995 Richard F. Whisenant
Richard F. Whisenant
(President)
Date: May 16, 1995 S. Scott Womack
S. Scott Womack
(Vice-President-Finance and
Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> APR-01-1995
<CASH> 1983327
<SECURITIES> 0
<RECEIVABLES> 3818531
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