<PAGE>
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 September 30, 1997
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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 November 1, 1997
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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 -
September 30, 1997 (unaudited) and June 30, 1997
(derived from audited financial statements) 3
Condensed Consolidated Statements of Earnings -
Three Months Ended September 30, 1997 and 1996
(unaudited) 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended September 30, 1997 and 1996
(unaudited) 5
Notes to Condensed Consolidated Financial Statements 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)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997
(UNAUDITED) (SEE BELOW)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,293 $ 1,580
Securities available for sale 3,671 3,607
Accounts receivable, net 13,241 11,484
Inventories:
Raw materials 2,213 3,237
Work in process 1,968 1,319
Finished goods 4,923 5,506
9,104 10,062
Prepaid expenses and other assets 3,162 4,100
TOTAL CURRENT ASSETS 30,471 30,833
PROPERTY, PLANT AND EQUIPMENT, net 1,603 1,638
OTHER ASSETS 1,545 1,592
TOTAL ASSETS $33,619 $34,063
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank $ 6,402 $ 4,163
Accounts payable 3,087 6,477
Other current liabilities 3,883 3,496
TOTAL CURRENT LIABILITIES 13,372 14,136
GUARANTEED BANK LOAN - ESOP 334 509
OTHER NON-CURRENT LIABILITIES 28 28
DEFERRED TAXES ON INCOME 1,617 1,605
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock 3,369 3,369
Additional paid-in capital 12,117 12,117
Retained earnings 10,078 9,789
25,564 25,275
Less: Common shares in treasury at cost 7,011 7,011
Guaranteed bank loan - ESOP 334 509
Add: Unrealized gain on securities available for sale 49 30
TOTAL STOCKHOLDERS' EQUITY 18,268 17,785
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $33,619 $34,063
</TABLE>
The June 30, 1997 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 EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1997 1996
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<S> <C> <C>
Net Sales $ 19,330 $ 22,977
Cost of Goods Sold 14,474 17,731
Gross Profit 4,856 5,246
Shipping, Selling and Administrative Expenses 4,333 4,626
Interest Expense 117 89
Other income, net 60 60
4,390 4,655
Earnings before income taxes 466 591
Provision for income taxes 177 236
Net Earnings $ 289 $ 355
Average number of shares outstanding 2,852,905 2,691,405
Net Earnings per Common Share $0.10 $0.13
</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>
THREE MONTHS ENDED
SEPTEMBER 30,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 289 $ 355
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 116 121
Deferred income tax 12 (1)
Unrealized loss from marketable securities - 5
Changes in assets and liabilities:
Increase in accounts receivable (1,757) (711)
Decrease in inventories 958 2,437
Decrease in prepaid expenses and other current assets 811 45
Decrease in prepaid and refundable income taxes 127 229
Decrease in security deposits and other assets 8 5
Decrease in accounts payable and other current liabilities (3,003) (3,916)
Net cash used in operating activities (2,439) (1,431)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (56) (67)
Proceeds from sale of property 14 10
Purchase of marketable securities - at cost - available for sale (845) -
Maturities of marketable securities - at cost - available for sale 800 -
Net cash used in investing activities (87) (57)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable - bank 2,239 2,550
Decrease in security deposits payable - (4)
Net cash provided by financing activities 2,239 2,546
NET INCREASE IN CASH AND CASH EQUIVALENTS (287) 1,058
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,580 665
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,293 $ 1,723
SUPPLEMENTAL INFORMATION:
Interest paid $ 117 $ 89
Taxes paid $ 51 $ 22
</TABLE>
See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of September 30, 1997 and the
condensed consolidated statements of operations and cash flows for the three
month periods ended September 30, 1997 and 1996 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 1997 Annual Report to
Stockholders. The results of operations for the period ended September 30, 1997
are not necessarily indicative of operating results for the full fiscal year.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," which is effective for the Company for the
year ended June 30, 1999. SFAS No. 131 requires disclosure about operating
segments in complete sets of financial statements and in condensed financial
statements of interim periods issued to shareholders. The new standard also
requires that the Company report certain information about their products and
services, the geographic areas in which they operate, and major customers. The
Company has not yet determined the impact, if any, of the adoption of SFAS No.
131.
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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 decreased during the three-month period
ended September 30, 1997 to $1,293,000 from $1,580,000 at June 30, 1997. Net
cash used in operating activities of $2,439,000 resulted from a decrease in
accounts payable and an increase in accounts receivable, offset by decreases in
inventories, prepaid expenses and net earnings. The net cash used in operating
activities was primarily funded by bank borrowing totaling $2,239,000. The
Company believes that funds provided by operations, existing working capital and
the Company's current bank line of credit 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 $19,330,000 during the three-month period ended September 30,
1997 compared to $22,977,000 in the three-month period ended September 30, 1996.
The decrease in sales was primarily due to the timing of shipments to certain of
the Company's customers from the first quarter to the second quarter and, to
some extent, due to lower anticipated first quarter volume. The gross profit
percentage was slightly higher this quarter as compared to last year's same
quarter due to higher margins achieved in the Company's premium and apparel
divisions. Shipping, selling and administrative expenses decreased mainly due to
lower volume related expenses; however, the percentage of these costs versus net
sales increased 2.3% when compared to last year's same period results. Interest
expense was higher in the first quarter of fiscal 1998 compared to the prior
comparable period as a result of higher average bank borrowing. The decrease in
earnings before income taxes this three-month period as compared to the
equivalent period of fiscal 1997 was due mainly to the decrease in sales, offset
by lower shipping, selling and administrative expenses. Net earnings for the
quarter ended September 30, 1997 were $289,000 compared to net earnings for the
same period last year of $355,000.
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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 September 30, 1997.
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)
November 12, 1997 /s/Robert Chestnov
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Robert Chestnov
President and Chief Executive Officer
November 12, 1997 /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>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1293
<SECURITIES> 3671
<RECEIVABLES> 15175
<ALLOWANCES> 736
<INVENTORY> 9104
<CURRENT-ASSETS> 30471
<PP&E> 4231
<DEPRECIATION> 2628
<TOTAL-ASSETS> 33619
<CURRENT-LIABILITIES> 13372
<BONDS> 0
0
0
<COMMON> 3369
<OTHER-SE> 12117
<TOTAL-LIABILITY-AND-EQUITY> 33619
<SALES> 19330
<TOTAL-REVENUES> 19330
<CGS> 14474
<TOTAL-COSTS> 4333
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117
<INCOME-PRETAX> 466
<INCOME-TAX> 117
<INCOME-CONTINUING> 289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 289
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
