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, 1996
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.
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(Exact name of registrant as specified in its charter)
Delaware 22-1432053
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
635 59th Street, West New York, New Jersey 07093
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(Address of principal executive offices)
(Zip Code)
(201) 868-9400
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(Registrant's telephone number, including area code)
NONE
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(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, 1996
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Common Stock, par value $1 per share 2,691,405
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JACLYN, INC. AND SUBSIDIARIES
INDEX
Page No.
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PART I. FINANCIAL INFORMATION:
Item 1
Condensed Consolidated Balance Sheets -
March 31, 1996 (unaudited) and June 30, 1995 (derived from audited financial
statements) 3
Condensed Consolidated Statements of Operations -
Three Months and Nine Months Ended March 31, 1996 and 1995 (unaudited) 4
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended March 31, 1996 and 1995 (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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PART 1. FINANCIAL INFORMATION
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
March 31, June 30,
1996 1995
(Unaudited) (See Note)
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ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 1,120 $ 243
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Securities available for sale 5,097 4,948
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Accounts receivable, net 9,343 10,550
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Inventories:
Raw materials 2,084 1,829
Work in process 761 1,065
Finished goods 3,174 4,848
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6,019 7,742
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Prepaid expenses and other assets 2,421 2,918
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TOTAL CURRENT ASSETS 24,000 26,401
PROPERTY, PLANT AND EQUIPMENT, net 1,517 1,614
OTHER ASSETS 361 394
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TOTAL ASSETS $ 25,878 $ 28,409
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank $ 68 $ 3,538
Accounts payable 3,098 3,022
Other current liabilities 3,931 3,618
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TOTAL CURRENT LIABILITIES 7,097 10,178
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GUARANTEED BANK LOAN - ESOP 704 888
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OTHER NON-CURRENT LIABILITIES 41 33
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DEFERRED INCOME TAXES 1,407 1,368
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COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock 3,369 3,369
Additional paid-in capital 12,117 12,117
Retained earnings 8,799 8,341
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24,285 23,827
Less: Common shares in treasury at cost 7,011 7,011
Guaranteed bank loan - ESOP 704 888
Unrealized gain on securities available for sale (59) (14)
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TOTAL STOCKHOLDERS' EQUITY 16,629 15,942
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,878 $ 28,409
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Note: The June 30, 1995 Balance Sheet is derived from audited financial statements. See notes to condensed consolidated
financial statements.
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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,
1996 1995 1996 1995
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Revenues:
Net Sales $ 18,045 $ 17,289 $ 51,042 $ 56,642
Other Income 76 80 246 237
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18,121 17,369 51,288 56,879
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Costs and Expenses:
Cost of Goods Sold 13,501 12,471 38,140 44,395
Shipping, Selling and Administrative Expenses 4,385 4,873 12,273 13,925
Interest Expense 8 69 113 231
Restructuring Costs (Note 2) - - - 995
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17,894 17,413 50,526 59,546
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Earnings (loss) before income taxes 227 (44) 762 (2,667)
Provision (benefit) for income taxes 92 (18) 304 (1,067)
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Net earnings (loss) $ 135 $ (26) $ 458 $ (1,600)
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Average number of shares outstanding 2,691,405 2,691,335 2,691,405 2,691,335
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PER SHARE DATA:
Net earnings (loss) per common share $ 0.05 $ (0.01) $ 0.17 $ (0.59)
============= ================ =============== ===============
Cash dividends per common share - - - $ 0.25
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See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED
MARCH 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 458 $ (1,600)
Adjustments to reconcile net earnings (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 230 417
Deferred income tax 39 15
Changes in assets and liabilities:
Net purchases of marketable securities - at cost - Trading - 1,042
Decrease in accounts receivable 1,207 3,374
Decrease in inventories 1,723 1,517
Decrease/(increase) in prepaid expenses and other current assets 497 (1,460)
Decrease in security deposits and other assets 25 47
Increase in accounts payable and other current liabilities 389 31
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Net cash provided by operating activities 4,568 3,383
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (129) (174)
Proceeds from sale of property 4 28
Purchases of securities available for sale (1,752) (1,269)
Maturities of securities available for sale 1,648 788
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Net cash used in investing activities (229) (627)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid - (672)
Exercise of stock options - 27
Acquisition of treasury stock - (28)
Decrease in notes payable - bank (3,470) (1,981)
Increase in other non-current liabilities 8 1
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Net cash used in financing activities (3,462) (2,653)
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NET INCREASE IN CASH AND CASH EQUIVALENTS 877 103
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 243 185
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,120 $ 288
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SUPPLEMENTAL INFORMATION:
Interest paid $ 113 $ 254
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Taxes paid $ 152 $ 27
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See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The condensed consolidated balance sheet as of March 31, 1996 and the
condensed consolidated statements of operations and cash flows for the
three and nine month periods ended March 31, 1996 and 1995 have been
prepared by the Company and are unaudited. In the opinion of management,
all adjustments (which include only normal recurring adjustments) have been
made that are necessary to present fairly the financial position, results
of operations and cash flows for all periods presented. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the audited financial statements and notes thereto
included in the Company's 1995 Annual Report to Stockholders. The results
of operations for the period ended March 31, 1996 are not necessarily
indicative of operating results for the full fiscal year.
2. During the second quarter of fiscal 1995 the Company announced a
restructuring of certain of its operations that resulted in a pre-tax
charge of $995,000. This charge included costs associated with personnel
reduction and facilities closure. In addition to this restructuring charge,
there were pre-tax expenses charged to the quarter of $525,000, primarily
for the write down of inventory. During last year's third quarter, the
Company incurred additional ongoing costs related to the restructuring,
primarily for the closure of certain facilities, of $390,000. The Company's
decision to restructure was the result of lower sales, primarily due to the
increased direct importation of products by its customers, as well as the
decline in the Company's Barney(R)children's line.
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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, 1996 to $1,120,000 from $243,000 at June 30, 1995. This was due
to an increase in cash provided by operating activities of $4,568,000, primarily
from decreases in inventory and accounts receivable and an increase in accounts
payable and other current liabilities. The overall increase in cash provided by
operating activities was used principally to pay down $3,470,000 of short-term
bank loans. The Company believes that funds provided by operations, existing
working capital and the Company's current bank lines will be sufficient to meet
foreseeable working capital needs. There are no plans for significant capital
expenditures in the near term.
RESULTS OF OPERATIONS
Net sales were $18,045,000 and $51,042,000 during the three and nine-month
periods ended March 31, 1996, compared to $17,289,000 and $56,642,000 in the
three and nine-month periods ended March 31, 1995, respectively. The increase in
sales for the third quarter 1996 vs. 1995 is attributable to increased volume in
the Company's higher priced department store lines as well as shipments related
to its new women's robes and sleepwear business. The sales decrease for the nine
months ended March 31, 1996 was primarily due to the decline in shipments of the
Company's moderately priced product lines. Cost of goods sold in proportion to
sales was slightly higher this quarter compared to the same quarter in 1995.
This was attributable to higher relative costs in the Company's domestic
manufacturing facilities due to lower production volumes, as well as additional
costs due to the startup of its women's robes and sleepwear division. For the
nine months, compared to the same period last year, cost of goods sold was
proportionately lower due to higher department store margins, as well as the
impact of the "pre-sold" inventory program, which has resulted in fewer
off-price sales of the Company's moderately priced lines. In addition, last
year's cost of sales contained expenses totaling $525,000 primarily relating to
the write-down of inventory in connection with the Company's restructuring.
Shipping, selling and administrative expenses for the three and nine-month
periods decreased due to a reduction in volume related expenses, as well as
savings associated with the restructuring, including a reduction in personnel
and the closure of a warehouse and showroom. Lower interest expense reflects
lower average borrowing during the current three and nine-month periods compared
to the same 1995 periods.
The increase in earnings before income taxes for the three and nine-month
periods as compared to the equivalent periods of fiscal 1995 was due mainly to
lower shipping, selling and administrative expenses and lower interest expense,
and higher margins for the nine-month comparative periods. Net earnings for the
third quarter and nine-month period ended March 31, 1996 were $135,000 and
$458,000 compared to a net loss for the same periods last year of $26,000 and
$1,600,000. Last year's third quarter loss included a pre-tax charge of $390,000
of costs related to the Company's restructuring, primarily for the closure of
certain facilities. The nine month results included a pre-tax charge of $995,000
and expenses of $915,000, primarily for the write down of inventory, both in
connection with the Company's restructuring.
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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, 1996.
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.
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(Registrant)
May 13, 1996 /s/ ROBERT CHESTNOV
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Robert Chestnov
President
Chief Executive Officer
May 13, 1996 /s/ ANTHONY CHRISTON
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Anthony Christon
Vice President
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description Page No.
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27 Financial Data Schedule 10
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<LEGEND>
This schedule contains summary financial information extracted from the
Jaclyn, Inc. Condensed Consolidated Balance Sheet at March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,120
<SECURITIES> 5,097
<RECEIVABLES> 9,343
<ALLOWANCES> 0
<INVENTORY> 6,019
<CURRENT-ASSETS> 24,000
<PP&E> 1,517
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,878
<CURRENT-LIABILITIES> 7,097
<BONDS> 0
0
0
<COMMON> 3,369
<OTHER-SE> 13,260
<TOTAL-LIABILITY-AND-EQUITY> 25,878
<SALES> 18,045
<TOTAL-REVENUES> 18,121
<CGS> 13,501
<TOTAL-COSTS> 4,385
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 227
<INCOME-TAX> 92
<INCOME-CONTINUING> 135
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 135
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
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