<PAGE>
UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended: July 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
0-3255
(Commission File Number)
JAYARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1863419
(State or other jurisdiction of incorporation) (IRS Employer Identification No)
Post Office Box 741528, Houston, Texas 77274
(Address of principal executive offices ) (Zip Code)
(713) 783-9184
(Registrant's telephone number, including area code)
(Former name, former address and fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
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 issuer's classes
of common stock, as of the following dates:
Class Outstanding at 7/31/96
Common Stock $0.30 Par Value 7,978,799
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Item 1. Financial Statements.
Part I.
Item 1
JAYARK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars Expressed In Thousands)
<TABLE>
<CAPTION>
7/31/96 4/30/96
(Unaudited) (Audited)
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $0 $533,676
Accounts Receivable - Less Allowance For 6,681,489 6,029,889
Doubtful Accounts of $743,861 in July
1996 and $808,427 in April 1996
Other Accounts Receivable 452,493 478,120
Federal and State Income Taxes Refundable 695,501 695,501
Inventories 7,465,317 8,654,377
Deferred Federal Income Taxes 295,798 295,798
Other Current Assets 293,471 303,436
------------ ------------
Total Current Assets 15,884,069 16,990,797
Non Current Assets
Property & Equipment, Less Accumulated 765,952 781,266
Depreciation and Amortization
Excess Cost Over Net Assets of Bus Acquired, 305,623 311,461
Less Accum Amortization of $426,315 in
July 1996 and $420,975 in April 1996
Deferred Federal Income Taxes 51,851 52,063
------------ ------------
Total Non Current Assets 1,123,426 1,144,790
------------ ------------
Total Assets $17,007,495 $18,135,587
============ ============
Liabilities
Current Liabilities
Notes Payable & Lines of Credit $8,852,651 $9,051,585
Notes Payable to Related Parties 500,000 500,000
Current Maturities of Long Term Debt 0 38,558
Accounts Payable 1,565,779 1,829,131
Accrued Salaries and Deferred Compensation 215,376 128,990
Commissions Payable 153,489 280,630
Accrual Related to LCL Investment 447,306 1,202,624
Other Current Liabilities 1,081,885 546,621
------------ ------------
Total Current Liabilities 12,816,486 13,578,139
Non Current Liabilities
Long Term Debt, Excluding Current Maturities 14,019 72,020
Subordinated Debentures 1,400,000 1,400,000
Other Long Term Liab, Related to LCL Investmt 470,000 500,000
------------ ------------
Total Non Current Liabilities 1,884,019 1,972,020
------------ ------------
Total Liabilities 14,700,505 15,550,159
Commitments
Stockholders' Equity
Common Stock of $.30 Par Value. Authorized 2,393,639 2,393,639
10,000,000 Shares; Issued 7,978,799 Shares
in 1996 and 7,978,799 Shares in 1995
Additional Paid-In Capital 7,966,730 7,966,730
Deficit (8,053,379) (7,774,941)
------------ ------------
Total Stockholders' Equity 2,306,990 2,585,428
------------ ------------
Total Liabilities & Stockholders' Equity $17,007,495 $18,135,587
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JAYARK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars Expressed in Thousands Except per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
7/31/96 7/31/95
<C> <C>
Net Revenues $12,773,399 $9,839,000
Costs & Expenses
Cost of Revenues 10,386,483 7,601,000
Selling, General & Adm 2,431,738 2,133,000
Interest 292,661 308,000
Other Income (59,433) 0
------------ ------------
Total Costs & Expenses 13,051,449 10,042,000
------------ ------------
Net Income (Loss) ($278,050) ($203,000)
------------ ------------
Earnings (Loss) per Com Share ($0.03) ($0.03)
============ ============
Weighted Average Com Shares 7,978,799 7,402,712
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JAYARK CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For The Three Months Ended
(Dollars Expressed in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
7/31/96 7/31/95
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) ($278,050) ($203,000)
Adjustments to Reconcile Earnings (Loss) to Cash
From Operating Activities:
Depreciation and Amortization of Property and Equip 40,196 73,000
Amortization of Excess of Cost Over Net Assets of 5,340 5,000
Businesses Acquired
Changes In Assets and Liabilities Net of Effects
From Acquisition of Subs:
(Incr) Decr In Deferred Fed Inc Tax Exp (Benefit) 110 0
(Incr) Decr In Accounts Receivable Net (625,973) (890,000)
(Incr) Decr In Inventories 1,189,060 7,000
(Incr) Decr In Other Current Assets 9,965 73,000
(Incr) Decr In Accounts Payable (263,352) 765,000
(Incr) Decr In Federal & State Income Tax Payable 0 (557,000)
(Incr) Decr In Accr Salaries & Deferred Comp 86,386 (27,000)
(Incr) Decr In Commissions Payable (127,141) 0
(Incr) Decr In Other Liabilities (249,842) 703,000
------------ ------------
Net Cash Provided By (Used In) Operating Activities (213,301) (51,000)
------------ ------------
Cash Flows From Investing Activities:
Capital Expenditures for Property and Equip (24,882) (66,000)
Invest In & Advances In Certain Assets Acq 0 (898,000)
------------ ------------
Net Cash Provided By (Used In) Investing Activities (24,882) (964,000)
------------ ------------
Cash Flows From Financing Activities:
Payment of Long Term Debt (96,559) 4,000
Proceeds (Payments) From Issue of Notes Pay (198,934) 238,000
------------ ------------
Net Cash Provided By (Used In) Financing Activities (295,493) 242,000
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents (533,676) (773,000)
Cash & Equivalents at Beginning ofYear 533,676 1,177,000
------------ ------------
Cash & Equivalents at End of Year $0 $404,000
============ ============
Supplemental Disclosures of Cash Flow Information:
Cash Paid For:
Interest $292,661 $308,000
============ ============
Income Taxes 0 0
============ ============
Non-Cash Transactions:
Common Stock Issued in Connection With LCL Inv 0 1,157,000
============ ============
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated balance sheet of Jayark Corporation and subsidiaries (the
"Company"), as of July 31, 1996, and the related consolidated statements of
operations and cash flows for the three months ended July 31, 1996 and 1995 are
unaudited. The consolidated balance sheet as of April 30, 1996 has been derived
from audited financial statements. The consolidated financial statements should
be read in conjunction with the audited financial statements and footnotes for
the year ended April 30, 1996, included in the Company's report on Form 10-K.
2. The interim financial statements reflect all adjustments (consisting of
only normal and recurring accruals and adjustments) which are, in the opinion
of management, necessary to a fair statement of the results for the interim
periods presented. The Company's operating results for any particular interim
period may not be indicative of results for the full year.
3. Certain reclassifications have been made in the 1995 financial statements to
conform them to and make them consistent with the presentation used in the 1996
financial statements.
<PAGE>
Item 2.
Management's Discussion & Analysis of Results of Operations
Three Months Ended July 31, 1996 as compared to July 31, 1995
NET REVENUES
Consolidated Revenues of $12,773,000 represents an increase of
$2,934,000, or 29.8%, as compared to the same period in 1995. The
Audio Visual subsidiary's revenues increased $149,000, or 5.1%,
compared to last year. The Household subsidiary's revenues increased
$2,785,000, or 40.3%, as compared to the same period last year. This
significant increase is a result of the bulk sale of certain slow
moving inventory, the majority of which was sold in this quarter. They
have also recently added two new high volume customers.
COST OF REVENUES
Consolidated Cost of Revenues of $10,386,000 increased $2,785,000, or
36.6%, as compared to the same period last year. The Audio Visual
subsidiary's cost of revenues increased $157,000, or 6.4%, associated
with the increase in sales. The cost of revenues for the Household
subsidiary increased $2,628,000, or 50.8%, associated with the increase
in sales.
GROSS MARGIN
Consolidated Gross Margin of $2,387,000 was 18.7% of revenues, as
compared to 22.7% for the same period last year. The Audio Visual
subsidiary decreased its margin by 1.1% as compared with the same period
last year. Household subsidiary margin decreased by 5.6% due to a
very small margin obtained from the bulk sale of certain slow moving
inventory.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $2,432,000 increased as compared to the same
period last year. The Audio Visual subsidiary expenses decreased 0.1%,
when compared to the same period last year. Household subsidiary
expenses increased 13.4%. This increase was due to higher payroll costs
and commissions on higher sales. An increase in corporate expenses of
74.2% accounted for the balance of the change in expenses and was due to
increased operating expenses.
<PAGE>
INTEREST EXPENSE
Consolidated Interest Expense of $293,000 decreased $15,000, or 5.0%
due to decreased levels of borrowings.
NET INCOME
Consolidated Net Losses of ($278,000) was incurred compared to a net
loss of ($203,000) during the same period last year primarily because
of increased operating costs.
LIQUIDITY AND CAPITAL RESOURCES
Working capital amounted to $3,068,000 at July 31, 1996, compared to
$3,413,000 at April 30, 1996. The decrease is principally due to the
loss during the period.
In January of 1992, the Company renewed and extended a financing arrangement
with State Street Bank and Trust Company to make available a total of
$20,300,000 in combination of revolving lines of credit and term loans. Over
the course of the next several years, the financing arrangement was amended with
availability ranging from $13,000,000 to $16,325,000.
The current financing arrangement was further amended in April 1996. The loan
agreement was revised to reflect the renewal and extension of the maturity dates
of lines of credit to April 1997, to approve the repayment schedule of the
Company's subordinated convertible debentures, to reflect the payoff of the term
loans, and to make available a total of $11,500,000 maximum in revolving lines
of credit. Rosalco has a line of $10,000,000 and AVES has a line of $1,500,000,
with interest charged at prime plus 1 3/4% for Rosalco, and prime plus 1% for
AVES.
In September 1996, the current financing arrangement was further amended to
increase Rosalco's line of credit to $11,000,000. The $1,000,000 seasonal
overadvance is available through October 31, 1996, and thereafter the line of
credit reverts back to $10,000,000. In consideration for the seasonal advance,
certain related parties advanced an adiitional $500,000 to the Company in
September 1996, which was applied to Rosalco's outstanding line of credit. The
related party advances now totaling $1,000,000 are payable on demand and
interest is paid monthly at prime plus 2 1/2%.
A combination of funds available through line of credit sources, anticipated
cash flows from operations and existing cash balances is expected to provide
adequate funds to meet planned requirements for the coming year.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Report on Form 8-K - May 3, 1996
<PAGE>
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.
JAYARK CORPORATION
Registrant
/S/ David L. Koffman September 30, 1996
David L. Koffman, President
Chief Executive Officer
/S/ Robert C. Nolt September 30, 1996
Robert C. Nolt
Chief Financial Officer
<PAGE>
Financial Data Schedule
[ARTICLE] 5
[LEGEND]
[RESTATED]
[CIK] 0000053260
[NAME]
<MULIPLIER> 1000.0
[CURRENCY] USD
[FISCAL-YEAR-END] 04/30/97
[PERIOD-START] 05/01/96
[PERIOD-END] 07/31/96
[PERIOD-TYPE] 3-mos
[EXCHANGE-RATE]
[CASH] 0
[SECURITIES] 0
[RECEIVABLES] 7,878
[ALLOWANCES] (744)
[INVENTORY] 7,465
[CURRENT-ASSETS] 15,884
[PP&E] 2,079
[DEPRECIATION] (1,313)
[TOTAL-ASSETS] 17,007
[CURRENT-LIABILITIES] 12,816
[BONDS] 0
[COMMON] 2,394
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 17,007
[SALES] 12,773
[TOTAL-REVENUES] 12,773
[CGS] 10,386
[TOTAL-COSTS] 10,386
[OTHER-EXPENSES] 2,372
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 293
[INCOME-PRETAX] (278)
[INCOME-TAX] 0
[INCOME-CONTINUING] (278)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (278)
[EPS-PRIMARY] -0.03
[EPS-DILUTED] -0.03
