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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 September 30, 2000
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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 _________
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 lastreport)
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, 2000
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Common Stock, par value $1 per share 2,646,891
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JACLYN, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
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Part I. Financial Information:
Item 1
<S> <C>
Condensed Consolidated Balance Sheets -
September 30, 2000 (unaudited) and June 30, 2000 (derived from audited financial
statements) 3
Condensed Consolidated Statements of Earnings -
Three Months Ended September 30, 2000 and 1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows - Three Months
Ended September 30, 2000 and 1999 (unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3
Quantitative and Qualitative Disclosures about Market Risk 12
Part II. Other Information:
Item 6
Exhibits and reports on Form 8-K 13
Signatures 13
</TABLE>
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PART 1. FINANCIAL INFORMATION
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
(Unaudited) (See below)
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ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 571 $ 315
Securities available for sale 1,628 1,632
Accounts receivable, net 11,625 9,694
Inventory 9,028 8,618
Prepaid expenses and other assets 3,114 2,892
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TOTAL CURRENT ASSETS 25,966 23,151
PROPERTY, PLANT AND EQUIPMENT, net 1,000 1,005
OTHER ASSETS 2,344 2,360
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TOTAL ASSETS $ 29,310 $ 26,516
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank $ 5,195 $ 1,270
Accounts payable 4,165 4,882
Other current liabilities 2,004 2,442
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TOTAL CURRENT LIABILITIES 11,364 8,594
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DEFERRED INCOME TAXES 1,065 1,065
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock 3,369 3,369
Additional paid-in capital 12,117 12,117
Retained earnings 8,348 8,214
Accumulated other comprehensive income 6 5
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23,840 23,705
Less: Common shares in treasury at cost 6,959 6,848
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TOTAL STOCKHOLDERS' EQUITY 16,881 16,857
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,310 $ 26,516
============= ===========
</TABLE>
The June 30, 2000 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)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
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<S> <C> <C>
Net sales $ 20,117 $ 15,472
Cost of goods sold 15,468 11,240
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Gross profit 4,649 4,232
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Shipping, selling and administrative expenses 4,365 4,081
Interest expense 104 38
Interest income 29 23
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4,440 4,096
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Earnings before income taxes 209 136
Provision for income taxes 75 49
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Net earnings $ 134 $ 87
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Net earnings per common share - basic and diluted $ .05 $ .03
========== =========
Weighted average number of shares outstanding - diluted 2,680 2,729
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 134 $ 87
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization 85 101
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (1,931) 618
Increase in inventory (410) (246)
(Increase) decrease in prepaid expenses and other assets (222) 455
Decrease in accounts payable and other current liabilities (1,155) (1,502)
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Net cash used in operating activities (3,499) (487)
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Cash Flows From Investing Activities:
Purchase of property and equipment (64) (10)
Purchase of marketable securities - available for sale 405 -
Maturities of marketable securities - available for sale (400) -
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Net cash used in investing activities (59) (10)
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Cash Flows From Financing Activities:
Increase (decrease) in loans payable - bank 3,925 (180)
Repurchase of common stock (111) -
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Net cash provided by (used in) financing activities 3,814 (180)
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Net Increase (Decrease) in Cash and Cash Equivalents 256 (677)
Cash and Cash Equivalents, beginning of period 315 1,051
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Cash and Cash Equivalents, end of period $ 571 $ 374
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Supplemental Information:
Interest paid $ 76 $ 26
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Taxes paid $ 1 $ 2
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</TABLE>
See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated balance sheet as of
September 30, 2000 and the condensed consolidated statements of earnings
and cash flows for the three month periods ended September 30, 2000 and
1999 have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the
United States of America for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. 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 2000 Annual Report to
Stockholders. The results of operations for the period ended September
30, 2000 are not necessarily indicative of operating results for the
full fiscal year.
2. In June 1998 the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities."
This statement establishes accounting and reporting standards for
derivative instruments and hedging activities. The Company has no
derivative instruments and as such has determined that the application
of SFAS No. 133 does not have a material impact on its financial
position or results of operations.
3. In November 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101,
"Revenue Recognition". This Bulletin sets forth the SEC Staff's position
regarding the point at which it is appropriate to recognize revenue. The
Staff believes that revenue is realizable and earned when all of the
following criteria are met: persuasive evidence of an arrangement
exists; delivery has occurred or service has been rendered; the seller's
price to the buyer is fixed or determinable; and the amount to be
collected is reasonably assured. The Company uses the above criteria to
determine whether revenue can be recognized, and therefore believes that
the issuance of this Bulletin does not have an impact on its financial
statements.
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4. The Company's schedule of Net Comprehensive Income are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
----- -----
<S> <C> <C>
Net earnings $ 134 $ 87
Other comprehensive income, net of tax:
Unrealized holding gain on securities arising during period $ 1 -
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Net comprehensive income $ 135 $ 87
</TABLE>
5. The Company's calculation of Basic and Diluted Net Earnings Per Common
Share are as follows (in thousands, except per share amounts) :
<TABLE>
<CAPTION>
Quarter Ended September 30,
2000 1999
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<S> <C> <C>
Basic Net Earnings Per Common Share:
---------------------------------------
Net Earnings $ 134 $ 87
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Basic Weighted Average Shares Outstanding 2,673 2,711
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Basic Net Income Per Common Share $ .05 $ .03
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Diluted Net Earnings Per Common Share:
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Net Earnings $ 134 $ 87
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Basic Weighted Average Shares Outstanding 2,673 2,711
Add: Dilutive Options 7 18
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Diluted Weighted Average Shares Outstanding 2,680 2,729
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Diluted Net Earnings Per Common Share $ .05 $ .03
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</TABLE>
Options to purchase 142,000 and 340,000 common shares were outstanding at
September 30, 2000 and 1999, respectively, but were not included in the
computation of diluted earnings per share because the exercise price of the
options exceeded the average market price and would have been anti-dilutive.
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5. Inventories consist of the following components (in thousands):
<TABLE>
<CAPTION>
September 30, June 30, 2000
2000 2000
<S> <C> <C>
Raw materials $ 2,137 $ 4,611
Work in process 2,944 1,970
Finished goods 3,947 2,037
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$ 9,028 $ 8,618
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</TABLE>
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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 $256,000 during the three-
month period ended September 30, 2000 to $571,000 from $315,000 at June 30,
2000. Net cash was used for operating activities mostly to fund accounts
receivable totaling $1,931,00, pay down accounts payable and other current
liabilities of $1,155,000, an increase in inventory of $410,000 and an increase
in prepaid expenses and other current assets totaling $ 222,000. Net cash used
in operating activities was funded, in part, by Company borrowings of
$3,925,000. The Company previously announced that the Board of Directors
authorized the repurchase by the Company of up to 150,000 shares of the
Company's Common Stock. Purchases can be made from time to time in the open
market and through privately negotiated transactions, subject to general market
and other conditions. The Company intends to finance these repurchases from its
own funds and/or from its bank credit facility. As of September 30, 2000 the
Company repurchased 56,700 shares of its Common Stock at a cost of $155,000.
The Company has an agreement with a bank for a line of credit which extends
through June 30, 2001. The credit facility provides the Company with short-term
loans, letters of credit and bankers acceptances amounting to $20,000,000. The
Company can borrow up to $10,000,000 with the Company's inventory and accounts
receivable is pledged to the bank as collateral, provided it
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maintains a minimum quick ratio of 1 to 1, as well as a minimum tangible net
worth of $14,000,000.
The Company believes that funds provided by operations, existing working capital
and the Company's 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 $20,117,000 during the three-month period ended September 30,
2000 compared to $15,472,000 in the three-month period ended September 30, 1999.
This quarter's increase in net sales was mostly the result of improved women's
sleepwear division sales, along with a higher level of women's apparel sales
volume.
The gross profit percentage was lower at 23.1% this quarter as compared to 27.4%
in last year's same quarter due primarily to lower margins in the women's
apparel division.
Shipping, selling and administrative expenses increased $284,000 in the first
quarter versus the prior years comparable period. However, as a percentage of
net sales, shipping, selling and administrative expenses decreased by 4.7%
mainly due to the relative level of fixed costs compared to higher net sales.
Interest expense of $104,000 in the first quarter of fiscal 2000 compares with
$38,000 in the prior comparable period as a result of higher bank borrowing used
to fund much higher levels of
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inventory this period versus last year's same period. Other income was higher by
$6,000 in the first quarter of the current fiscal year compared to the fiscal
2000 first quarter due to a slightly higher rate of return on invested funds.
Earnings before income taxes this three-month period as compared to the
equivalent period of fiscal 1999 were higher due primarily to increased sales,
offset somewhat by higher shipping, selling and administrative expenses and
higher interest expense discussed above. Net earnings for the quarter ended
September 30, 2000 of $134,000 compared to net earnings for the same period last
year of $87,000.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998 the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments and
hedging activities. The Company has no derivative instruments and as such has
determined that the application of SFAS No. 133 does not have a material impact
on its financial position or results of operations.
In November 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101, "Revenue
Recognition". This Bulletin sets forth the SEC Staff's position regarding the
point at which it is appropriate to recognize revenue. The Staff believes that
revenue is realizable and earned when all of the following criteria are met:
persuasive evidence of an arrangement exists; delivery has occurred or service
has been rendered; the seller's price to the buyer is fixed or determinable; and
the amount to be collected is reasonably assured. The Company uses the above
criteria to
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determine whether revenue can be recognized, and therefore believes that the
issuance of this Bulletin does not have an impact on its financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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There have been no material changes in the information set forth under the
caption "Item 7A-Quantitative and Qualitative Disclosures About Market Risk" in
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
2000.
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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, 2000.
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 13, 2000 /s/Allan Ginsburg
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Allan Ginsburg
Chairman of the Board
November 13, 2000 /s/ Anthony Christon
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Anthony Christon
Vice President
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description Page No.
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27 Financial Data Schedules 15, 16
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