<PAGE>
UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-QA
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended: January 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 latest practicable date:
Class Outstanding at January 31,1996
Common Stock $0.30 Par Value 7,978,799
<PAGE>
Item 1. Financial Statements.
Part I.
Item 1
JAYARK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars Expressed In Thousands)
<TABLE>
<CAPTION>
1/31/96 4/30/95
(unaudited) (audited)
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 459 $ 1,177
Accounts & Other Receivables - Net 6,060 5,769
Inventories 10,832 8,533
Deferred Federal Income Taxes 296 296
Other Current Assets 188 379
----------- ---------
Total Current Assets 17,835 16,154
Non Current Assets
Plant & Equipment - Net 905 988
Excess Cost Over Net Assets of
Businesses Acquired - Net 318 333
Deferred Federal Income Taxes 52 52
Total Non Current Assets 1,275 1,373
----------- ---------
Total Assets $19,110 $17,527
----------- ---------
----------- ---------
Liabilities & Stockholders' Equity
Current Liabilities
Notes Payable & Lines of Credit $ 8,084 $ 5,545
Current Maturities of Long Term Obligations 540 24
Trade Accounts Payable 1,367 998
Accrued Liabilities 439 339
Federal & State Income Taxes Payable (68) 464
Other Current Liabilities 1,326 -
----------- ---------
Total Current Liabilities 11,688 7,370
Non Current Liabilities
Long Term Obligations 44 43
Subordinated Debentures 1,400 1,500
Other Long Term Liabilities 1,200 -
----------- ---------
Total Non Current Liabilities 2,644 1,543
----------- ---------
Total Liabilities 14,332 8,913
Stockholders' Equity
Common stock of $.30 par value. Authorized
10,000,000 Shares; Issued and Outstanding
7,978,799 at January 31, 1996 and 6,978,799
at April 30, 1995 2,394 2,094
Additional paid-in capital 7,967 7,110
Retained Earnings (Deficit) (5,583) (590)
----------- ---------
Total Stockholders' Equity 4,778 8,614
----------- ---------
Total Liabilities & Stockholders' Equity $19,110 $17,527
----------- ---------
----------- ---------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JAYARK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Results of Operations
(Dollars Expressed in Thousands Except per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
1/31/96 1/31/95 1/31/96 1/31/95
<S> <C> <C> <C> <C>
Continuing Operations:
Net Revenues $11,830 $13,376 $32,666 $37,077
Costs & Expenses
Cost of Revenues 9,967 10,147 26,084 28,014
Selling, General and Admin 2,512 2,681 6,954 7,491
Interest 270 293 790 676
Loss On Aband of Inv & Oth Chgs 4,580 - 4,580 -
--------- --------- --------- ---------
Total Costs & Expenses 17,329 13,121 38,408 36,181
--------- --------- --------- ---------
Pre Tax Earnings (losses) From Cont Op (5,499) 255 (5,742) 896
--------- --------- --------- ---------
Provision (Credit) For Income Taxes (750) 87 (750) 305
--------- --------- --------- ---------
Income (Loss) From Continuing Op (4,749) 168 (4,992) 591
Discontinued Operations:
Income From Discontinued Operations,
Net of Income Taxes - 4 - 20
--------- --------- --------- ---------
Net Income (loss) $(4,749) $ 172 $(4,992) $ 611
--------- --------- --------- --------- ---------
--------- --------- --------- ---------
Primary Earnings (losses) per Com Sh:
Continuing Operations $ (0.60) $ 0.02 $ (0.63) $ 0.09
Discontinued Operations - - - -
--------- --------- --------- ---------
Net Income $ (0.60) $ 0.02 $ (0.63) $ 0.09
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted Average Common Shares 7,978,799 6,918,860 7,866,480 6,944,324
--------- --------- --------- --------- --------- ---------
--------- --------- --------- ---------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JAYARK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
For The Nine Months Ended
(Dollars Expressed in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1/31/96 1/31/95
<S> <C> <C>
Cash Flows From Operating Activities
Net Income (loss) From Continuing Operations $(4,992) $ 591
Depreciation and Amortization 218 288
Changes In:
Accounts and Other Receivables (291) (1,761)
Federal & State Income Taxes Receivable - -
Inventories (2,299) (3,888)
Other Current Assets 191 73
Notes Payable 2,539 3,994
Current Maturities of Long Term Obligations 515 (182)
Accounts Payable 369 (148)
Accrued Liabilities 100 (124)
Federal & State Income Taxes Payable (532) 22
Other Liabilities 1,326 159
-------- --------
Net Cash Provided By (Used In) Operating Activities (2,856) (976)
-------- --------
Net Income (Loss) From Discontinued Operations - 20
Cash Flows From Investing Activities
Capital Expenditures (120) 212
Amounts to fund purchase the Seasonal bus 2,357 -
Net Assets of Discontinued Operations - 48
-------- --------
Net Cash Provided By (Used In) Investing Activities 2,237 260
-------- --------
Cash Flows From Financing Activities
Long Term Obligations (99) (122)
Acquisition of Treasury Stock - (210)
Issuance of Treasury Stock - 160
Issuance of Common Stock - 463
-------- --------
Net Cash Provided By (Used In) Financing Activities (99) 291
-------- --------
Net Increase (Decrease) in Cash (718) (405)
Cash & Equivalents at Beginning of Period 1,177 777
-------- --------
Cash & Equivalents at End of Period $ 459 $ 372
-------- --------
-------- --------
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The condensed balance sheet of Jayark Corporation and subsidiaries (the
"Company"), as of January 31, 1996, and the related condensed statements of
operations and cash flows for the three and nine months ended January 31, 1996
and 1995 are unaudited. The condensed consolidated balance sheet as of April
30, 1995 has been derived from audited financial statements. The condensed
consolidated financial statements should be read in conjunction with the
audited financial statements and footnotes for the year ended April 30, 1995,
included in the Company's report on Form 10-K, as filed with the Securities
and Exchange Commission, which are incorporated by reference.
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. The provision for income taxes is calculated using the estimated annual
effective Federal tax rate. The Company adopted Statement of Financial
Accounting Standard Number 109 ("SFAS 109") effective May 1, 1993. SFAS 109
changes the criteria for the recognition and measurement of deferred tax assets,
including net operating loss carry forward.
4. During fiscal 1993, the Company sold substantially all operating assets and
discontinued operations of its Printing & Graphics and Sportswear subsidiaries.
5. Certain reclassifications have been made in the 1995 financial statements
to conform them to and make them consistent with the presentation used in for
the 1996 financial statements.
6. The Company recently announced that it has abandoned its investment in and
written off its advances in certain assets and a business acquired in June,
1995. This business has filed for Chapter 11 Bankruptcy protection and is
currently in the process of winding down its operations and liquidating its
assets. As a result, the Company has recorded a pre-tax charge of approximately
$4.5 million in the quarter and nine month periods ended January 31, 1996.
<PAGE>
Item 2.
Management's Discussion & Analysis of Results of Operations
Three Months Ended January 31, 1996 as compared to January 31, 1995
NET REVENUES
Consolidated Revenues of $11,830,000 represents a decrease of
$1,546,000, or 11.6%, as compared to the same period in 1995. The
Audio Visual subsidiary's revenues decreased $446,000, or 15.2%,
compared to last year. The Household subsidiary's revenues decreased
$1,100,000, or 10.5%, as compared to the same period last year as the
retail economy has softened, as well as a change in product mix, slower
deliveries from overseas suppliers and credit restraints on customers.
COST OF REVENUES
Consolidated Cost of Revenues of $9,967,000 decreased $165,000, or 1.6%,
as compared to the same period last year. The Audio Visual subsidiary's
cost of revenues decreased $364,000, or 15.0%, associated with the
decrease in sales. The cost of revenues for the Household subsidiary
increased $199,000, or 2.6%, associated with the decrease in sales and
includes a special charge of $650,000 for the writeoff of certain
inventory.
GROSS MARGIN
Consolidated Gross Margin of $1,863,000 was 15.7% of revenues, and
decreased $1,381,000, or 57.4%, as compared to the same period last
year. The Audio Visual subsidiary decreased its margin by $83,000, or
16.4% as compared with the same period last year. Household subsidiary
margin decreased by $1,298,000, or 47.4% due to a change in product mix
and competitive pressures.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $2,512,000 decreased $184,000, or 6.8%, as
compared to the same period last year. The Audio Visual subsidiary
decreased its expenses by $36,000, or 10.0% as compared to the same
period last year as a result of decreased sales. Household subsidiary
expenses decreased $89,000 or 4.2%. A reduction of corporate expenses
of $59,000 or 25.1% accounted for the balance of the change in expenses.
<PAGE>
INTEREST EXPENSE
Consolidated Interest Expense of $270,000 decreased $23,000, or 7.8% due
to lower interest rates which was partially offset by increased levels
of borrowings.
LOSS ON ABANDONMENT OF INVESTMENT & OTHER CHARGES
Consolidated Loss On Abandonment of Investment of $4,580,000 was
incurred as a result of the Company's abandonment of its investment in
and the writeoff of advances in certain assets and a business acquired
in June, 1995.
PRE-TAX INCOME (LOSS)
Consolidated Pre-Tax Losses (from continuing operations) of ($5,499,000)
was incurred as compared to a profit of $255,000 the same period last
year primarily due to the loss on abandonment of an investment and the
writeoff of advances in certain assets and a business acquired in
June, 1995.
NET INCOME
Consolidated Net Losses of ($4,592,000) was incurred compared to net
income of $168,000 during the same period last year primarily because
of the loss on abandonment referred to above coupled with a decrease
in revenues.
<PAGE>
Nine Months Ended January 31, 1996 as compared to January 31, 1995
NET REVENUES
Consolidated Revenues of $32,666,000 represents a decrease of
$4,411,000, or 11.9%, as compared to the same period in 1995. The Audio
Visual subsidiary's revenues decreased $173,000, or 2.0%, compared to
last year. The Household subsidiary's sales decreased $4,238,000, or
15.2%, as compared to the same period last year as the retail economy
has softened, as well as a change in product mix, slower deliveries
from overseas suppliers and credit restraints on customers.
COST OF REVENUES
Consolidated Cost of Revenues of $26,084,000 decreased $1,885,000, or
9.7%, as compared to the same period last year. The Audio Visual
subsidiary's cost of revenues decreased $102,000, or 1.4%, associated
with the decrease in sales. The cost of revenues for the Household
subsidiary decreased $1,783,000, or 8.5%, associated with the decrease
in sales and includes a special charge of $650,000 for the writeoff of
certain inventory.
GROSS MARGIN
Consolidated Gross Margin of $7,389,000 was 20.1% of revenues, and
decreased $1,719,000, or 18.9%, as compared to the same period last
year. The Audio Visual subsidiary decreased its margin by $71,000,
or 4.7% as compared with the same period last year. Household
subsidiary margin decreased by $1,648,000 due to a change in product
mix coupled with competitive pressures and a soft retail economy.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $6,954,000 decreased $582,000, or 7.7%, as
compared to the same period last year. The Audio Visual subsidiary
decreased its expenses by $89,000, or 8.5% as compared to the same
period last year. Household subsidiary expenses decreased by $553,000
or 9.2%, which was primarily due to a decrease in commission expense
and overseas expense. Corporate expenses increased $60,000 or 8.9%,
accounting for the balance of the total increase in expenses.
<PAGE>
INTEREST EXPENSE
Consolidated Interest Expense of $790,000 increased $114,000, or 16.9%
due to increased levels of borrowings which was partially offset by
lower interest rates.
LOSS ON ABANDONMENT OF INVESTMENT & OTHER CHARGES
Consolidated Loss On Abandonment of Investment of $4,580,000 was
incurred as a result of the Company's abandonment of its investment
in and the writeoff of advances in certain assets and a business
acquired in June, 1995.
PRE-TAX INCOME (LOSS)
Consolidated Pre-Tax (Losses) (from continuing operations) of
($5,742,000) was incurred as compared to a pre-tax profit of $896,000
for the same period last year primarily because of the loss on
abandonment of an investment and the writeoff of advances in certain
assets and a business acquired in June, 1995.
NET INCOME (LOSS)
Consolidated Net (Losses) of ($4,992,000) was incurred, as compared
net income of $611,000 during the same period last year, primarily
because of the loss on abandonment referred to above coupled with a
decrease in revenues.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital amounted to $6,304,000 at January 31, 1996, compared to
$8,784,000 at April 30, 1995. The $2,480,000 decrease is principally
due to the net loss from operations, and the abandonment of the
investment and the writeoff of advances in certain assets and a business
acquired in June, 1995. Cash and cash equivalents totaled $459,000,
which was down $718,000 from the $1,177,000 balance on April 30, 1995.
In January of 1992, the Company renewed and extended a financing
arrangement with a financial institution to make available a total of
$20,300,000 in a combination of revolving lines of credit and term
loans. The term loans were repaid in January 1995. This financing
arrangement was used to consolidate existing financing, to pay for the
Household subsidiary acquisition, and to provide available working
capital for continuing operations.
The arrangement with the financial institution was amended in March
1993, to make available a total of $16,325,000 in a combination of
revolving lines of credit and term loans. The loan agreement was revised
to reflect the payoff of the revolving line and term loan associated
with the sale of the Printing & Graphics subsidiary.
The financing arrangement, was further amended in December 1993, to make
available a total of $13,075,000 in combination of revolving lines of
credit and term loan. The loan agreement was revised to reflect the
recollateralization of certain manufacturing assets of the Household
subsidiary, as well as restructuring certain portions of the Company
debt from demand notes to revolving lines of credit.
The current financing arrangement was further amended in December 1994:
the loan agreement was revised to reflect the renewal and extension of
the maturity dates of lines of credit to December 1995, to make
available a total of $13,000,000 maximum in revolving lines of credit,
reduce the rate of interest charged on the lines of credit, approve the
repayment schedule of the Company's subordinated convertible debentures,
and reflect the payoff of the term loans.
Consolidated open lines of credit, available to the Audio Visual and
Household subsidiaries from their associated financing agreements,
were $1,519,000 on January 31, 1995, as compared to $1,401,000 the
previous year. The Company's open lines of credit agreement expired on
February 28, 1996. However, the financial institution is continuing
<PAGE>
to advance funds while the company is renegotiating the extension of the
existing credit facility.
As a result of the operating losses, increased levels of inventory with
lower sales, and its abandonment of its investment in and the writeoff
of advances in certain assets and a business acquired in June, 1995,
the Company has experienced a substantial reduction in its working
capital and its cash position. Financial flexibility has been
substantially diminished; however, a combination of funds available
through renewal of the open lines of credit, anticipated cash flows
from operations and existing cash balances are expected to provide
adequate funds to meet planned requirements for the balance of the year.
The Company's operating budget for the remainder of fiscal 1996
anticipates modest profitability and cash flow. More efficient
operations of its Audio Visual and Household subsidiaries are
expected to provide sufficient cost savings and increased revenues
to achieve this goal. To the extent that the Company's assumptions
underlying its operating budget are not achieved, its operating results
may be adversely affected, but the Company will continue to reduce costs
where appropriate.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
Not Applicable
ITEM 2. Changes in Securities.
Not Applicable
ITEM 3. Defaults Upon Senior Securities.
Not Applicable
ITEM 4. Submission of Matter to a Vote of Security Holders.
Not Applicable
ITEM 5. Other Information.
Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Report on Form 8-K - October 23, 1995.
<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
March 15, 1996
David L. Koffman, President
Chief Executive Officer
March 15, 1996
David Golden, Executive VP
Principal Financial Officer
<PAGE>
Financial Data Schedule
[ARTICLE] 5
[LEGEND]
[RESTATED]
[CIK] 0000053260
[NAME]
<MULIPLIER> 1000.0
[CURRENCY] USD
[FISCAL-YEAR-END] 04/30/96
[PERIOD-START] 11/01/95
[PERIOD-END] 01/31/96
[PERIOD-TYPE] 9-mos
[EXCHANGE-RATE]
[CASH] 459
[SECURITIES] -
[RECEIVABLES] 6,060
[ALLOWANCES] -
[INVENTORY] 10,832
[CURRENT-ASSETS] 17,835
[PP&E] 905
[DEPRECIATION] -
[TOTAL-ASSETS] 19,110
[CURRENT-LIABILITIES] 11,688
[BONDS] -
[COMMON] 2,394
[PREFERRED-MANDATORY] -
[PREFERRED] -
[OTHER-SE] 2,384
[TOTAL-LIABILITY-AND-EQUITY] 19,110
[SALES] 32,666
[TOTAL-REVENUES] 32,666
[CGS] 26,084
[TOTAL-COSTS] 37,618
[OTHER-EXPENSES] -
[LOSS-PROVISION] -
[INTEREST-EXPENSE] 790
[INCOME-PRETAX] (5,742)
[INCOME-TAX] (750)
[INCOME-CONTINUING] (4,992)
[DISCONTINUED] -
[EXTRAORDINARY] -
[CHANGES] -
[NET-INCOME] (4,992)
[EPS-PRIMARY] -0.63
