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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 December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-5863
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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
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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 February 1, 1996
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Common Stock, par value $1 per share 2,691,405
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
INDEX
Page No.
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Part I. Financial Information:
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Item 1
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Condensed Consolidated Balance Sheets --
December 31, 1995 (unaudited) and June 30, 1995
(derived from audited financial statements) .................. 3
Condensed Consolidated Statements of Operations --
Three Months and Six Months Ended December 31, 1995
and 1994 (unaudited) ........................................ 4
Condensed Consolidated Statements of Cash Flows -- Six Months
Ended December 31, 1995 and 1994 (unaudited) ................ 5
Notes to Condensed Consolidated Financial Statements
(unaudited) .................................................. 6
Item 2
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Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................... 7
Part II. Other Information:
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Item 6
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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)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
(Unaudited) (See Note)
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ASSETS
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................... $ 926 $ 243
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Securities available for sale ........................... 4,904 4,948
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Accounts receivable, net ................................ 8,462 10,550
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Inventories:
Raw materials ..................................... 1,694 1,829
Work in process ................................... 683 1,065
Finished goods .................................... 3,765 4,848
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6,142 7,742
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Prepaid expenses and other assets ....................... 2,452 2,918
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TOTAL CURRENT ASSETS .................................... 22,886 26,401
PROPERTY, PLANT AND EQUIPMENT, net ...................... 1,536 1,614
OTHER ASSETS ............................................ 378 394
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TOTAL ASSETS ....................................... $24,800 $28,409
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Notes payable -- bank ............................. $ 350 $ 3,538
Accounts payable .................................. 2,004 3,022
Other current liabilities ......................... 3,798 3,618
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TOTAL CURRENT LIABILITIES ............................... 6,152 10,178
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GUARANTEED BANK LOAN -- ESOP ............................ 704 888
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OTHER NON-CURRENT LIABILITIES ........................... 37 33
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DEFERRED INCOME TAXES ................................... 1,410 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 ................................. 8,664 8,341
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24,150 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 .................................. (62) (14)
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TOTAL STOCKHOLDERS' EQUITY .............................. 16,497 15,942
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $24,800 $28,409
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</TABLE>
NOTE: The June 30, 1995 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)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Revenues:
Net Sales .......................................... $15,159 $15,552 $32,997 $39,353
Other Income ....................................... 88 54 170 157
--------- --------- --------- ---------
15,247 15,606 33,167 39,510
--------- --------- --------- ---------
Costs and Expenses:
Cost of Goods Sold .................................. 11,301 13,139 24,639 31,924
Shipping, Selling and Administrative Expenses ....... 3,763 4,561 7,888 9,052
Interest Expense .................................... 39 77 105 162
Restructuring Costs (Note 2) ........................ -- 995 -- 995
--------- --------- --------- ---------
15,103 18,772 32,632 42,133
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Earnings (loss) before income taxes ..................... 144 (3,166) 535 (2,623)
Provision (benefit) for income taxes .................... 57 (1,209) 212 (1,049)
--------- --------- --------- ---------
Net earnings (loss) ..................................... $ 87 $(1,957) $ 323 $(1,574)
========= ========= ========= =========
Average number of shares outstanding .................... 2,691,405 2,691,307 2,691,405 2,691,307
========= ========= ========= =========
PER SHARE DATA:
Net earnings (loss) per common share .................... $0.03 $(0.73) $ 0.12 $ (0.59)
========= ========= ========= =========
Cash dividends per common share ......................... -- $0.125 -- $ 0.25
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
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1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ........................................................ $ 323 $(1,574)
Adjustments to reconcile net earnings(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization .............................................. 153 278
Deferred income tax ........................................................ -- (5)
Changes in assets and liabilities:
Net purchases of marketable securities - at cost - Trading .............. -- 1,040
Decrease in accounts receivable ......................................... 2,088 4,370
Decrease in inventories ................................................. 1,600 637
Decrease in prepaid expenses and other current assets ................... 466 (1,414)
Decrease in security deposits and other assets .......................... 11 26
Decrease in accounts payable and other current liabilities .............. (838) (711)
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Net cash provided by operating activities ................................. 3,803 2,647
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ..................................... (72) (92)
Proceeds from sale of property .......................................... 2 28
Purchases of securities available for sale .............................. (300) --
Maturities of securities available for sale ............................. 434 708
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Net cash provided by investing activities .................................. 64 644
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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 ....................................... (3,188) (1,205)
Increase in other non-current liabilities ............................... 4 4
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Net cash used in financing activities ...................................... (3,184) (1,874)
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NET INCREASE IN CASH AND CASH EQUIVALENTS .................................. 683 1,417
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ............................. 243 185
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CASH AND CASH EQUIVALENTS, END OF PERIOD ................................... $ 926 $ 1,602
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</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The condensed consolidated balance sheet as of December 31, 1995 and the
condensed consolidated statements of operations and cash flows for the
three and six month periods ended December 31, 1995 and 1994 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 December 31, 1995 are not necessarily
indicative of operating results for the full fiscal year.
2. During the quarter ending December 31, 1994 the Company announced a
restructuring of certain of its operations that resulted in a pre-tax
charge of $995,000. This charge includes costs associated with personnel
reduction and facilities closure. In addition to the restructuring charge,
there were pre-tax expenses charged to the quarter of $525,000, primarily
the write down of inventory. The Company's decision to restructure was as a
result of lower sales primarily due to the increased direct importation of
products by our customers as well as the decline in the Company's Barney(R)
childrens 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 six month period
ended December 31, 1995 to $926,000 from $243,000 at June 30, 1995. The increase
this period was due to an increase in cash provided by operating activities of
$3,803,000, primarily from decreases in inventory and accounts receivable,
offset by a decrease in accounts payable and other current liabilities. The net
increase in cash provided by operating activities was used principally to pay
down $3,188,000 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 $15,159,000 and $32,997,000 during the three and six-month
periods ended December 31, 1995, compared to $15,552,000 and $39,353,000 in the
three and six-month periods ended December 31, 1994. These decreases for both
the quarter and six months ended December 31, 1995, were primarily due to the
decline in shipments of the Company's moderately priced product lines. Cost of
goods sold in proportion to sales was lower this quarter and six months as
compared to last year's same periods due to higher margins achieved as a benefit
of last year's restructuring and due to higher department store margins
attributable to the impact of the "pre-sold" inventory program, which resulted
in fewer off-price sales. 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 decreased due to lower volume related expenses as well
as savings associated with the restructuring, including a reduction in personnel
and the closure of a warehouse and showroom. Other income was higher in the
period ended December 31, 1995 mainly due to an increase in funds available for
investment. The reduction in interest expense reflects lower average borrowing
during the current three and six month periods compared to the same 1994
periods.
The increase in earnings before income taxes for the three and six-month periods
as compared to the equivalent period of fiscal 1994 was due mainly to higher
margins and lower shipping, selling and administrative expenses. Net earnings
for the quarter and six-month period ended December 31, 1995 were $87,000 and
$323,000 compared to a net loss for the same periods last year of $1,957,000 and
$1,574,000. Last year's loss includes a second quarter pre-tax charge of
$995,000 and $525,000 of expenses, primarily for the write-down of inventory,
both in connection with the Company's restructuring.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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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 December 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.
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(Registrant)
February 12, 1995 /s/ ROBERT CHESTNOV
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Robert Chestnov
President
Chief Executive Officer
February 12, 1995 /s/ ANTHONY CHRISTON
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Anthony Christon
Vice President
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION PAGE NO.
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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 at December 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1995
<CASH> 926
<SECURITIES> 4,904
<RECEIVABLES> 8,462
<ALLOWANCES> 0
<INVENTORY> 6,142
<CURRENT-ASSETS> 22,886
<PP&E> 1,536
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,800
<CURRENT-LIABILITIES> 6,152
<BONDS> 0
<COMMON> 0
0
3,369
<OTHER-SE> 13,128
<TOTAL-LIABILITY-AND-EQUITY> 24,800
<SALES> 15,159
<TOTAL-REVENUES> 15,247
<CGS> 11,301
<TOTAL-COSTS> 3,763
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 144
<INCOME-TAX> 57
<INCOME-CONTINUING> 87
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
