FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-5863
JACLYN, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-1432053
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
635 59th Street, West New York, New Jersey 07093
(Address of principal executive offices)
(Zip Code)
(201) 868-9400
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all the 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
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 1, 1995
Common Stock, par value $1 per share 2,691,405
<PAGE>
JACLYN, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
Part I. Financial Information:
Item 1
Condensed Consolidated Balance Sheets--
March 31, 1995 (unaudited) and June 30, 1994 (derived from
audited financial statements) ................................ 3
Condensed Consolidated Statements of Operations--
Three Months and Nine Months Ended March 31, 1995 and 1994
(unaudited) .................................................. 4
Condensed Consolidated Statements of Cash Flows--Nine Months
Ended March 31, 1995 and 1994 (unaudited) .................... 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) .................................................. 6
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................... 7
Part II. Other Information:
Item 6
Exhibits and reports on Form 8-K ............................... 8
Signatures ..................................................... 8
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<PAGE>
PART 1. FINANCIAL INFORMATION
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, June 30,
1995 1994
(Unaudited) (See below)
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 288 $ 185
------- -------
Trading securities .................................. -- 1,042
------- -------
Securities available for sale ....................... 5,141 4,633
------- -------
Accounts receivable, net ............................ 11,621 14,995
------- -------
Inventories:
Raw materials .................................... 2,753 1,969
Work in process ................................... 1,045 2,127
Finished goods .................................... 4,704 5,923
------- -------
8,502 10,019
------- -------
Prepaid expenses and other current assets ........... 2,841 1,444
------- -------
Total Current Assets ............................ 28,393 32,318
PROPERTY AND EQUIPMENT, net ......................... 1,850 2,114
OTHER NON-CURRENT ASSETS ............................ 402 454
------- -------
TOTAL ASSETS ...................................... $30,645 $34,886
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable--bank ............................... $ 3,557 $ 5,538
Accounts payable .................................. 2,918 4,093
Other current liabilities ......................... 4,702 3,559
------- -------
Total Current Liabilities ......................... 11,177 13,190
------- -------
OTHER NON-CURRENT LIABILITIES ....................... 34 31
------- -------
GUARANTEED BANK LOAN--ESOP .......................... 910 1,150
------- -------
DEFERRED TAXES ON INCOME ............................ 1,827 1,812
------- -------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock ...................................... 3,364 3,366
Additional paid-in capital ........................ 12,123 12,094
Retained earnings ................................. 9,106 11,376
------- -------
24,593 26,836
Less: Common shares in treasury at cost ........... 7,011 6,983
Guaranteed bank loan--ESOP .................. 910 1,150
Unrealized gain on securities available
for sale ................................... (25) --
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 16,697 18,703
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........ $30,645 $34,886
======= =======
The June 30, 1994 Balance Sheet is derived from audited financial statements.
See notes to condensed consolidated financial statements.
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Revenues:
Net Sales ................. $ 17,289 $ 15,766 $ 56,642 $ 62,604
Other Income .............. 80 108 237 330
---------- ---------- ---------- ----------
17,369 15,874 56,879 62,934
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of Goods Sold ........ 12,471 11,494 44,395 44,517
Shipping, Selling and
Administrative Expenses ... 4,942 4,137 14,156 15,920
Restructuring Costs
(Note 3) . .............. -- -- 995 --
---------- ---------- ---------- ----------
17,413 15,631 59,546 60,437
---------- ---------- ---------- ----------
(Loss)/earnings before
income taxes .............. $ (44) $ 243 $ (2,667) $ 2,497
(Benefit)/provision for
income taxes .............. (18) 95 (1,067) 974
---------- ---------- ---------- ----------
Net (loss)/earnings ......... $ (26) $ 148 $ (1,600) $ 1,523
========== ========== ========== ==========
Average number of shares
outstanding .............. 2,691,335 2,687,972 2,691,335 2,687,972
========== ========== ========== ==========
PER SHARE DATA:
Net (loss)/earnings per
common share .............. $ (0.01) $ 0.06 $ (0.59) $ 0.57
========== ========== ========== ==========
Cash dividends per
common share .............. -- $ 0.125 $ 0.25 $ 0.375
========== ========== ========== ==========
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Nine Months Ended
March 31,
----------------------
1995 1994
-------- --------
Cash Flows From Operating Activities:
Net (Loss)/Earnings .................................... $(1,600) $ 1,523
Adjustments to reconcile net (loss)/earnings to net
cash provided by/(used in) operating activities:
Sales of trading securities, at cost ................... 1,662 766
Purchases of trading securities ........................ (620) (889)
Depreciation and amortization .......................... 417 383
Deferred income taxes .................................. 15 --
Changes in assets and liabilities:
Decrease in accounts receivable ...................... 3,374 647
Decrease/(increase) in inventories ................... 1,517 (474)
Decrease in prepaid expenses and other current
assets ............................................. 145 169
(Increase)/decrease in prepaid and refundable
income taxes ....................................... (1,605) 627
Decrease in security deposits and other assets ....... 45 132
(Decrease) in accounts payable and other
current liabilities ................................ 31 (1,762)
Increase in security deposits payable ................ 2 9
------- -------
Net cash provided by operating activities .............. 3,383 1,131
------- -------
Cash Flows From Investing Activities:
Additions to property and equipment .................. (174) (397)
Proceeds from sale of property ....................... 28 41
Maturities of securities available for sale, at cost . 788 1,415
Purchases of securities available for sale ........... (1,269) --
------- -------
Net cash (used in)/provided by investing activities .... (627) 1,059
------- -------
Cash Flows From Financing Activities:
Dividends paid ....................................... (672) (1,008)
Exercise of stock options ............................ 27 58
Acquisition of treasury stock ........................ (28) (49)
Increase/(decrease) in notes payable ................. 1 (2)
(Decrease) in loans payable--bank .................... (1,981) (895)
------- -------
Net cash used in financing activities .................. (2,653) (1,896)
------- -------
Net Increase in Cash and Cash Equivalents .............. 103 294
Cash and Cash Equivalents, beginning of period ......... 185 703
------- -------
Cash and Cash Equivalents, end of period ............... $ 288 $ 997
======= =======
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows have been made. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's 1994
Annual Report to Stockholders. The results of operations for the period ended
March 31, 1995 are not necessarily indicative of operating results for the
full year.
2. Effective July 1, 1994 the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Instruments" ("SFAS 115"). Upon adoption of SFAS 115, the Company classified
$1,045,000 of equity and U.S. Treasury securities as "Trading Securities" and
$4,685,000 of debt securities as "Securities Available for Sale". All
securities classified as trading were adjusted to fair market value, and the
resulting unrealized gain of $2,000, net of applicable income taxes, was
recorded in the Statement of Operations. All securities classified as
available for sale were adjusted to fair market value, and the resulting
unrealized gain of $33,000, net of applicable income taxes, was recorded as a
component of stockholders' equity as an unrealized gain on securities
available for sale. Prior to the adoption of SFAS 115, marketable equity
securities and other securities classified as current were carried at the
lower of aggregate cost or fair market value. At March 31, 1995,
stockholders' equity included an unrealized available for sale portfolio gain
of $25,000 net of applicable income taxes of $16,000.
3. A restructuring of certain of the Company's operations resulted in a pre-tax
charge of $995,000 in the second quarter. This charge includes costs
associated with personnel reduction and facilities closure. In addition to
the restructuring charge there were additional pre-tax costs charged to the
second quarter of $525,000, primarily the write down of inventory in
connection with the reorganization. During the quarter ended March 31, 1995,
additional pre-tax costs of $390,000, for shipping, selling and
administrative expenses were incurred relative to the reorganization. The
Company's decision to reorganize was as a result of lower sales primarily due
to the increased direct importation of products by customers as well as the
decline in the Company's Barney[R] young children's line.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased during the nine month period
ended March 31, 1995 to $288,000 from $185,000 at June 30, 1994. The increase
this period was due to funds provided by operating activities of $3,383,000,
primarily from a decrease in accounts receivable, a decrease in inventories and
a net decrease in trading securities, offset by a net loss for the nine month
period of $1,600,000 and an increase in prepaid and refundable income taxes.
Included in the net loss was a pre-tax charge of $995,000 in the second quarter
in connection with the restructuring of certain of the Company's operations as
well as pre-tax costs of $915,000 in connection with the reorganization of the
Company, primarily the write down of inventory and the closure of certain
facilities. Cash provided by operating activities was offset by funds used in
investing activities of $627,000, mainly from the net increase in securities
available for sale. In addition, the increase in cash and cash equivalents was
offset by an increase in funds used in financing activities of $2,653,000,
principally the repayment of bank loans and payment of cash dividends of $.25
per share. The Board of Directors did not declare a dividend during the third
quarter ended March 31, 1995. The Board of Directors will review the declaration
of dividends on a periodic basis and does not anticipate the resumption of
dividends in the foreseeable future. The Company believes, that with its
existing working capital and the Company's current bank line of credit , it will
have sufficient funds to meet anticipated additional restructuring expenses,
which it expects to incur during the remainder of the current fiscal year, and
for future working capital requirements.
RESULTS OF OPERATIONS
Net sales were $17,289,000 and $56,642,000 during the three and nine month
periods ended March 31, 1995, compared to $15,766,000 and $62,604,000 in the
three and nine month periods ended March 31, 1994, respectively. An increase in
apparel sales accounted for the major portion of the increase in sales during
the current quarter. The decline in sales of the Company's Barney[R] young
children's line and the increased direct importation of products by customers,
partially offset by increased apparel sales, were the primary reasons for the
reduction in sales compared to the nine month period ended March 31, 1994. Cost
of goods sold increased proportionately for the quarter ended March 31, 1995
compared to the quarter ended March 31, 1994. For the nine months ended March
31, 1995, cost of goods sold was proportionately higher than in the comparative
prior year period, primarily due to the large volume of Barney[R] shipments at
higher markups in last year's comparative period. In addition, the current nine
month period contained markdowns relating to the reorganization of $525,000.
Shipping, selling and administrative expenses increased during the quarter ended
March 31, 1995 due to an increase in volume related expenses and reorganization
costs of $390,000, mainly the closure of certain facilities. During the current
nine month period shipping, selling and administrative expenses decreased
compared to the prior year due to the large royalty payments on the Barney[R]
product line in the prior nine month period. The net loss for the three and nine
months ended March 31, 1995 of $26,000 and $1,600,000 compares to net earnings
for the same periods last year of $148,000 and $1,523,000, respectively. The
current three month period loss includes the reorganization pre-tax costs of
$390,000. The current nine month period loss also includes the pre-tax
restructuring charge of $995,000 and reorganization costs of $915,000 as
described in the Liquidity and Capital Resources section above. The Company
expects to incur additional expenses during the remainder of the current fiscal
year relating to the restructuring and reorganization and expects these actions
to be substantially completed by June 30, 1995.
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<PAGE>
Part II. Other information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27. Financial Data Schedule.
b) Reports on Form 8-K. The registrant did not file any reports on Form 8-K
during the three months ended March 31, 1995.
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.
JACLYN, INC.
(Registrant)
May 10, 1995 /s/ ALLAN GINSBURG
-----------------------
Allan Ginsburg,
Chairman of the Board
Chief Financial Officer
May 10, 1995 /s/ ROBERT CHESTNOV
------------------------
Robert Chestnov
President
-8-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- - ----------- ----------- --------
27 Financial Data Schedule 10
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Jaclyn,
Inc. Condensed Consolidated Balance Sheet and the Condensed Statement of
Operations and is qualified in its entirety by reference to such financial
statements.
This is page 10.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 288
<SECURITIES> 5,141
<RECEIVABLES> 11,621
<ALLOWANCES> 0
<INVENTORY> 8,502
<CURRENT-ASSETS> 28,393
<PP&E> 1,850
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,645
<CURRENT-LIABILITIES> 11,177
<BONDS> 0
<COMMON> 3,364
0
0
<OTHER-SE> 13,333
<TOTAL-LIABILITY-AND-EQUITY> 30,645
<SALES> 17,289
<TOTAL-REVENUES> 17,369
<CGS> 12,471
<TOTAL-COSTS> 4,942
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (44)
<INCOME-TAX> (18)
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</TABLE>
