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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
August 7, 1996
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Date of Report (Date of earliest event reported)
Empire of Carolina, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-7909 13-2999480
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5150 Linton Boulevard, 5th Floor, Delray Beach, Florida 33484
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(Address of principal executive offices) (Zip Code)
(407) 498-4000
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On August 7, 1996, the Registrant issued the press release attached
hereto as Exhibit 99, which press release is hereby incorporated by reference
herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99 referred to in Item 5 of this Current Report is filed as a
part of this Current Report and is hereby incorporated by reference herein.
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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 hereunto duly authorized.
EMPIRE OF CAROLINA, INC.
By /s/ Steven Geller
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Name: Steven Geller
Title: Chairman and Chief
Executive Officer
Date: August 7, 1996
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EXHIBIT INDEX
Exhibit
Number Description
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99 Press Release, dated August 7, 1996.
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EXHIBIT 99
FOR: Empire of Carolina, Inc.
APPROVED BY: Steve Geller
Chief Executive Officer
(407) 498-4000
CONTACT: Naomi Rosenfeld/Betsy Bond
Press: Michael McMullan
Morgen-Walke Associates
FOR IMMEDIATE RELEASE (212) 850-5600
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EMPIRE OF CAROLINA ANNOUNCES
SECOND QUARTER RESULTS
DELRAY BEACH, FL, August 7, 1996 -- Empire of Carolina, Inc.
(AMEX-EMP) today announced results for the second quarter and six months ended
June 30, 1996. Net sales for the quarter increased to $33.4 million compared
with $19.6 million in the same period in 1995. The net loss for the quarter
was $1,700,000 or $0.32 per share compared with a loss of $1,262,000 or $0.30
per share for the same period during the prior year. Net sales for the six
months ended June 30, 1996 increased to $55.6 million from $38.7 million for
the same period in 1995. The net loss for the six months ended June 30, 1996
was $3,856,000 or $0.73 per share compared to $2,268,000 or $0.54 per share for
the six months ended June 30, 1995.
Steven Geller, Chairman and Chief Executive Officer, commented, "I am
pleased to report that our second quarter performance was ahead of analysts'
expectations. Sales continue to be strong and retail take-away of our
spring/summer lines has been excellent. Early retail sales performance of our
Fantasy Fillies(TM) line has been above our plan. The sales of our core lines,
such as Big Wheels(R), Buddy L(R) vehicles and Grand Champions(R) collectible
horses are continuing to grow. However, offsetting our excellent first-half
sales performance are several
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very recent events that are having a negative impact on production and will
adversely affect earnings for the third and fourth quarter."
The Company's production schedule was adversely affected by delays in
the installation and start-up of new equipment, a plant shutdown necessitated
by hurricane Bertha and the recently diagnosed serious illness of the Company's
Senior Vice President of Manufacturing, who commenced medical leave on July 12,
1996. These events arose while the Tarboro facility was ramping up to meet
peak seasonal production demands. To satisfy customer requirements, the
Company has made the decision to temporarily outsource production of certain
components to independent contract molders. The Company expects that the extra
costs associated with these events will cause earnings to be below analysts'
estimates.
Mr. Geller continued, "While these developments are disappointing, our
clear priority is to service our customers. In addition, shipments of
merchandise sourced through our Hong Kong office, which represent approximately
25% of our business, have not been affected by these events."
Mr. Geller added, "Marvin Smollar, the Company's President and Chief
Operating Officer, has temporarily assumed direct responsibility for the
manufacturing operations at the Tarboro facility. The Company remains
committed to our goal of becoming a leading supplier of toys and plastic
decorative holiday products and we do not expect that these developments will
have a long-term affect on achieving our goals."
This press release contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. Such statements are
subject to various risks and uncertainties which could cause actual results to
vary materially from those stated. Should one or more of these
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risks or uncertainties materialize or should underlying assumptions prove
incorrect actual results may vary materially from those anticipated, estimated,
expected or projected. Such risks and uncertainties include the Company's
ability to manage inventory production and costs, to meet potential increases
or decreases in demand, potential adverse customer impact due to delivery
delays including effects on existing and future orders, competitive practices
in the toy and decorative holiday products industries, changing consumer
preferences and risks associated with consumer acceptance of new product
introductions, potential increases in raw material prices, potential delays or
production problems associated with foreign sourcing of production and the
impact of pricing policies including providing discounts and allowances.
Certain of these as well as other risks and uncertainties are described in more
detail in the Company's Registration Statement on Form S-1 filed under the
Securities Act of 1933, Registration No. 333-4440.
Empire of Carolina, Inc. designs, develops, manufactures and markets a
broad range of basic plastic children's toys. It's Holiday Products Division
produces and markets decorative seasonal items including Christmas, Halloween
and Easter illuminated products. The Company's full line of basic toys
includes the Big Wheel(R) line of ride-on toys, Grand Champions(R) collectible
horses, Buddy L(R) cars and trucks, and Power Driver(R) ride-ons.
(Financial Tables to Follow)
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EMPIRE OF CAROLINA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net Sales $33,422 $19,631 $55,608 $38,719
Cost of goods sold 25,907 12,939 42,124 25,876
------- ------- ------- -------
Gross profit 7,515 6,692 13,484 12,843
Selling, and
administrative expenses 8,268 7,612 15,566 14,416
Nonrecurring restructuring
and relocating expenses 0 409 0 559
------- ------- ------- -------
Operating income (loss) (753) (1,329) (2,082) (2,132)
------- ------- ------- -------
Other Income (Expenses):
Interest income, dividends,
and net realized gains 3 371 16 425
Interest expense (2,302) (894) (4,434) (1,561)
------- ------- ------- -------
Total other income (expenses) (2,229) (523) (4,418) (1,136)
------- ------- ------- -------
Loss before income taxes (3,052) (1,852) (6,500) (3,268)
Income tax benefit 1,352 590 2,644 1,000
------- ------- ------- -------
Net income (loss) $(1,700) $(1,262) $(3,856) $(2,268)
======= ======= ======= =======
Loss per common share $ (0.32) $ (0.30) $ (0.73) $ (0.54)
======= ======= ======= =======
Weighted average common
shares outstanding 5,321 4,191 5,261 4,191
======= ======= ======= =======
</TABLE>
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