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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, 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
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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, 1997
- ------------------------------------ --------------------------------
Common Stock, par value $1 per share 2,691,405
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<PAGE>
JACLYN, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information: --------
Item 1
Condensed Consolidated Balance Sheets--December 31, 1996
(unaudited) and June 30, 1996
(derived from audited financial statements) 3
Condensed Consolidated Statements of Earnings--
Three Months and Six Months Ended December 31, 1996
and 1995 (unaudited)
Condensed Consolidated Statements of Cash Flows--Six Months
Ended December 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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<PAGE>
PART 1. FINANCIAL INFORMATION
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
December 31, June 30,
1996 1996
(Unaudited) (See Note)
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,353 $ 665
------- -------
Securities available for sale 3,605 3,614
------- -------
Accounts receivable, net 7,262 10,305
------- -------
Inventories:
Raw materials 2,149 4,379
Work in process 520 1,797
Finished goods 3,288 4,896
------- -------
5,957 11,072
------- -------
Prepaid expenses and other assets 2,535 3,087
------- -------
TOTAL CURRENT ASSETS 23,712 28,743
------- -------
PROPERTY, PLANT AND EQUIPMENT, net 1,521 1,481
OTHER ASSETS 1,669 1,757
------- -------
TOTAL ASSETS $26,902 $31,981
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable--bank $ 100 $ 1,100
Accounts payable 2,603 6,279
Other current liabilities 4,486 5,371
------- -------
TOTAL CURRENT LIABILITIES 7,189 12,750
------- -------
GUARANTEED BANK LOAN--ESOP 509 704
------- -------
OTHER NON-CURRENT LIABILITIES 27 32
------- -------
DEFERRED INCOME TAXES 1,657 1,657
------- -------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock 3,369 3,369
Additional paid-in capital 12,117 12,117
Retained earnings 9,516 9,026
------- -------
25,002 24,512
Less: Common shares in treasury at cost 7,011 7,011
Guaranteed bank loan - ESOP 509 704
Add: Unrealized gain on securities
available for sale 38 41
------- -------
TOTAL STOCKHOLDERS' EQUITY 17,520 16,838
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $26,902 $31,981
======= =======
Note: The June 30, 1996 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 EARNINGS
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------- ------------------------
1996 1995 1996 1995
----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net Sales $ 19,718 $ 15,159 $ 42,695 $ 32,997
Other Income 58 88 118 170
---------- ---------- ---------- ----------
19,776 15,247 42,813 33,167
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of Goods Sold 14,507 11,301 32,238 24,639
Shipping, Selling and
Administrative Expenses 4,997 3,763 9,623 7,888
Interest Expense 47 39 136 105
---------- ---------- ---------- ----------
19,551 15,103 41,997 32,632
---------- ---------- ---------- ----------
Earnings before income taxes 225 144 816 535
Provision for income taxes 91 57 326 212
---------- ---------- ---------- ----------
Net earnings $ 134 $ 87 $ 490 $ 323
========== ========== ========== ===========
Average number of shares outstanding 2,793,405 2,691,405 2,793,405 2,691,405
========== ========== ========== ===========
PER SHARE DATA:
Net earnings per common share $ 0.05 $ 0.03 $ 0.18 $0.12
========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
<TABLE>
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Six Months Ended
December 31,
--------------------
1996 1995
------- ------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 490 $ 323
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Unrealized loss from marketable securities 6 4
Depreciation and amortization 177 153
Changes in assets and liabilities:
Decrease in accounts receivable 3,043 2,088
Decrease in inventories 5,115 1,600
Decrease in prepaid expenses and other current assets 552 466
Decrease in security deposits and other assets 10 11
Decrease in accounts payable and other current liabilities (4,561) (838)
------- --------
Net cash provided by operating activities 4,832 3,807
------- --------
Cash Flows From Investing Activities:
Additions to property and equipment (151) (72)
Proceeds from sale of property 12 2
Purchases of securities available for sale -- (300)
Maturities of securities available for sale -- 430
------- --------
Net cash (used in) provided by investing activities (139) 60
------- --------
Cash Flows From Financing Activities:
Decrease in notes payable--bank (1,000) (3,188)
(Decrease) increase in other non-current liabilities (5) 4
------- --------
Net cash used in financing activities (1,005) (3,184)
------- --------
Net Increase in Cash and Cash Equivalents 3,688 683
Cash and Cash Equivalents, beginning of period 665 243
------- --------
Cash and Cash Equivalents, end of period $ 4,353 $ 926
======= ========
Supplemental Information:
Interest paid $ 136 $ 105
------- --------
Taxes paid $ 514 $ 145
------- --------
</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, 1996 and
the condensed consolidated statements of earnings for the three and
six month periods ended December 31, 1996 and 1995, and the condensed
consolidated statement of cash flows for the six month periods ended
December 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 1996 Annual Report to Stockholders. The
results of operations for the period ended December 31, 1996 are not
necessarily indicative of operating results for the full fiscal year.
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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, 1996 to $4,353,000 from $665,000 at June 30, 1996. The
increase this period was due to a net increase in cash provided by operating
activities of $4,832,000, 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,
in part, to pay down $1,000,000 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 $19,718,000 and $42,695,000 during the three and six-month
periods ended December 31, 1996, compared to $15,159,000 and $32,997,000 in the
three and six-month periods ended December 31, 1995, respectively. The increases
in sales for both the quarter and six months ended December 31, 1996 were
primarily due to sales from the Company's new sleepwear division and higher
sales in the Children's division. Cost of goods sold in proportion to sales was
lower for the three month period ended December 31, 1996 compared to the prior
year comparable period due to higher licensed product sales and a reduction in
short-term promotional selling used earlier in the fiscal year to establish or
maintain market share. Shipping, selling and administrative expenses increased
due to higher royalty expense related to sales of licensed products as well as
volume related increases. Other income was lower in the quarter ended December
31, 1996 mainly due to a decrease in funds available for investment resulting
from the previously announced purchase of the Saddle River trademark. The
increase in interest expense reflects higher average borrowing during the
current three and six month periods compared to the same periods last year.
The increase in earnings before income taxes for the three and six-month periods
as compared to the equivalent periods of last year was due mainly to higher
margins in the three month period and relatively lower shipping, selling and
administrative expenses for the six month period. Net earnings for the three and
six-month period ended December 31, 1996 were $134,000 and $490,000 compared to
net earnings for the same periods last year of $87,000 and $323,000,
respectively.
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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 December 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)
February 12, 1997 /s/ ROBERT CHESTNOV
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Robert Chestnov
President
Chief Executive Officer
February 12, 1997 /s/ ANTHONY CHRISTON
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Anthony Christon
Vice President
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
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27 Financial Data Schedule 10
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 4,353
<SECURITIES> 3,605
<RECEIVABLES> 7,262
<ALLOWANCES> 0
<INVENTORY> 5,957
<CURRENT-ASSETS> 23,712
<PP&E> 1,521
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,902
<CURRENT-LIABILITIES> 7,189
<BONDS> 0
0
0
<COMMON> 3,369
<OTHER-SE> 14,151
<TOTAL-LIABILITY-AND-EQUITY> 26,902
<SALES> 19,718
<TOTAL-REVENUES> 19,776
<CGS> 14,507
<TOTAL-COSTS> 4,997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 225
<INCOME-TAX> 91
<INCOME-CONTINUING> 134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 134
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
