UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
Amendment No. 1
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended 6/30/96.
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[ ] 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 0-4538
CYBEX INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-1731581
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Smithtown Avenue, Ronkonkoma, New York 11779
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 516-585-9000
------------------------------
LUMEX, INC.
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(Former name, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 19345
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
----- -----
On June 30, 1996, the registrant had outstanding 4,359,642 shares of Common
Stock, par value $.10 per share, which is the registrant's only class of common
stock.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Dollars in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------- -------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $ 17,713 $15,457 $ 37,789 $33,700
Cost and expenses:
Cost of sales 10,124 9,061 22,200 19,722
Selling, general and administrative 7,837 9,389 15,732 17,372
Other income (84) (139) (90) (238)
---------- ------- -------- -------
17,877 18,311 37,842 36,856
---------- ------- -------- -------
Operating loss (164) (2,854) (53) (3,156)
Interest expense 74 403 659 654
Interest income 165 429 230 779
---------- ------- -------- -------
Loss from continuing operations
before income tax benefit (73) (2,828) (482) (3,031)
Income tax benefit -0- (1,012) -0- (1,084)
---------- ------- -------- -------
LOSS FROM CONTINUING OPERATIONS (73) (1,816) (482) (1,947)
Income (loss) from discontinued
operations, net -0- 554 (414) 801
---------- ------- -------- -------
NET LOSS $ (73) $(1,262) $ (896) $(1,146)
========== ======= ======== =======
(LOSS) INCOME PER SHARE OF COMMON STOCK:
Continuing operations $ (0.02) $ (.42) $ (0.11) $ (0.44)
Discontinued operations -0- 0.13 (0.09) 0.18
---------- ------- -------- -------
NET LOSS $ (0.02) $ (0.29) $ (0.20) $ (0.26)
========== ======= ======== =======
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(unaudited)
JUNE 30, DECEMBER 31
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 6,210 $ 1,798
Investments -0- 2,476
Accounts receivable 17,947 22,482
Inventories 13,604 12,024
Lease receivables 1,359 574
Net assets of discontinued operations -0- 37,214
Other current assets 3,968 5,466
------- -------
Total Current Assets 43,088 82,034
Property, plant and equipment, net 13,019 13,291
Lease receivables 1,374 1,402
Intangible assets 2,381 1,687
Other assets 436 504
------- -------
$60,298 $98,918
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ -0- $15,250
Accounts payable 6,461 10,874
Other current liabilities 9,851 28,218
------- -------
Total Current Liabilities 16,312 54,342
Deferred income taxes 1,227 1,227
Long-term debt 3,503 2,715
Stockholders' Equity
Common Stock, par value $.10 per share,
authorized 15,000,000 shares, issued
4,489,286 in 1996 and 4,458,354 in 1995 449 446
Capital surplus 17,390 17,128
Retained earnings 23,205 24,101
Treasury stock at cost (129,644 shares in
1996 and 54,897 shares in 1995) (1,519) (629)
Other (269) (412)
------- -------
Total Stockholder's Equity 39,256 40,634
------- -------
$60,298 $98,918
======= =======
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(unaudited)
SIX MONTHS ENDED
JUNE 30,
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (896) $ (1,146)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,370 2,448
Net changes in operating assets and
liabilities (11,455) (8,740)
Discontinued operations 414 -0-
-------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (10,567) (7,438)
INVESTING ACTIVITIES:
Proceeds from sale of discontinued
operations, net of closing and other costs 36,800 -
Purchase of property, plant and equipment (694) (4,895)
Proceeds from sales and maturities of investments 2,476 -0-
Purchases of intangible assets (33) (3,919)
Other -0- (110)
-------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 38,549 (8,924)
FINANCING ACTIVITIES:
Principal payments of short-term borrowings (15,250) -0-
Proceeds from short-term borrowings -0- 5,500
Proceeds from sales of leases 4,341 4,491
Proceeds from long-term debt 2,465 -0-
Principal payments of long-term debt (14,384) (2,305)
Exercise of stock options 148 18
Common shares reacquired (890) (2)
Other -0- (157)
-------- ---------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (23,570) 7,545
-------- ---------
INCREASE (DECREASE) IN CASH 4,412 (8,817)
CASH AND CASH EQUIVALENTS -- January 1 1,798 9,746
-------- ---------
CASH AND CASH EQUIVALENTS -- June 30 $ 6,210 $ 929
======== =========
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(dollars in thousands)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and changes in cash flows in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The Company has
reclassified the presentation of certain prior year information to conform to
the current year presentation format.
Effective with the approval of shareholders at the Company's annual meeting of
shareholders on August 7, 1996, the Company's name was changed from Lumex, Inc.
to CYBEX International, Inc.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the Company's
latest Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE 2 -- DISCONTINUED OPERATIONS
On April 3, 1996, the Company completed the sale of its Lumex Division (the
"Division") to Fuqua Enterprises, Inc. ("Fuqua") for $40,750 in cash and,
accordingly the net assets and operating results of the Division are reflected
as discontinued operations. The sale agreement provides for a post closing
adjustment to the sales price based on changes in the net assets of the Division
from December 31, 1995, through the closing date. The Company has received
notice from Fuqua that it is not in agreement with the recorded amount of
certain of the net assets of the Division as of the closing date. Under the
terms of the sale agreement, if the Company and Fuqua are unable to agree on the
recorded amount of net assets, the disputed items will be submitted to
arbitration by an independent accounting firm.
NOTE 3 -- INVENTORIES
Inventories are valued at the lower of cost or market. Certain inventories are
valued under the last-in first-out (LIFO) method. The estimated replacement cost
of LIFO inventories exceeds stated LIFO cost by $1,551 and $1,500 at June 30,
1996, and December 31, 1995, respectively.
Inventories were as follows:
June 30, December 31
1996 1995
---- ----
Finished goods $ 6,308 $ 4,160
Work in process 4,259 3,828
Raw materials 3,037 4,036
------- -------
$13,604 $12,024
======= =======
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<PAGE>
Because the inventory determination under the LIFO method can only be made at
the end of each fiscal year based on the inventory levels and costs at that
point, interim LIFO determinations are based on management's estimates of
expected year-end inventory levels and costs.
Since future estimates of inventory levels and prices are subject to many forces
beyond the control of management, interim financial results are subject to final
year-end LIFO inventory amounts.
NOTE 4 -- LONG-TERM DEBT
In May 1996, the Company borrowed $2,465 from a bank pursuant to a five year,
9.48% fixed rate term loan agreement. The term loan is payable in fifty seven
equal principal installments plus interest which commenced June 15, 1996. The
term loan is secured by an equivalent amount of specific lease receivables
included in the Company's lease receivables.
NOTE 5 -- NET (LOSS) INCOME PER COMMON SHARE
Net (loss) income per common share is computed by dividing net (loss) income by
the weighted average number of common shares and, if applicable, common share
equivalents (dilutive stock options) outstanding during each year as appears
below:
1996 1995
---- ----
Three months ended June 30 4,413,590 4,348,212
Six months ended June 30 4,415,247 4,353,240
6
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
On April 3, 1996, the Company completed the sale of substantially all the assets
of its Lumex Division for $40,750,000 in cash. Accordingly, the results of
operations of the Lumex Division have been reflected as discontinued operations.
The following discussion, including statistics presented, refers solely to
continuing operations unless otherwise stated.
RESULTS OF OPERATIONS
The following table sets forth selected items from the consolidated statements
of operations as a percentage of sales:
<TABLE>
<CAPTION>
% %
Quarter Ended Inc. Six Months Ended Inc.
June 30, (Dec) June 30, (Dec)
-------------- ----- ---------------- -----
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 14.6% 100.0% 100.0% 12.1%
Cost and expenses
Cost of sales 57.2 58.6 11.7 58.8 58.5 12.6
Selling, general and 44.3 60.8 (16.5) 41.6 51.6 (9.4)
administrative
Loss from continuing operations
before income tax benefit (0.4) (18.3) (1.3) (9.0)
</TABLE>
1996 vs. 1995:
- --------------
Net sales increased 14.6%, to $17,713,000 in the second quarter 1996 as compared
to net sales of $15,457,000 in the second quarter 1995. For the first six months
of 1996, net sales increased 12.1% to $37,789,000 as compared to $33,700,000 for
the period in 1995. The quarterly sales growth was primarily attributable to
significantly higher worldwide shipments of variable resistance training
equipment, including the second generation VR2 products, and of commercial
treadmills. Shipments of the NORM isokinetic extremity testing and
rehabilitation unit were also higher in the second quarter 1996 compared to the
second quarter 1995, principally due to the more reimbursement-friendly
international market. Shipments of the Company's BIKE and SEMI were lower in the
current year's second quarter and year-to-date compared to the same periods a
year earlier, principally due to continued competitive pricing practices.
Gross margins improved, as a percentage of sales, to 42.9% in the second quarter
1996 as compared to 41.4% in the same quarter a year ago, largely the result of
changing product mix and the impact in the prior year quarter of the startup
costs of several major new products.
Selling, general and administrative expenses declined both in terms of dollars,
and as a percentage of sales, to 44.3% for the second quarter 1996 compared to
60.8% for the same
7
<PAGE>
period a year earlier. Expense reductions put in place as part of the
restructuring plan adopted in the fourth quarter 1995 resulted in lower overall
selling and administrative costs, principally resulting from the realignment of
the Company's sales and customer service departments. Product development costs
were higher in 1995 due to accelerated efforts to complete the CYBEX NORM and
VR2 product lines which were successfully introduced in mid 1995.
Interest expense declined significantly as the Company repaid approximately $28
million of bank debt from the proceeds received in the sale of the Company's
Lumex Division in April 1996. Interest income declined due to lower average
balances in the Company's lease receivable portfolio.
The Company has significant carryforward tax losses and has not taken any
additional tax benefit for financial statement purposes.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had a current ratio of 2.64 to 1 and working
capital in excess of $26.7 million, including $6.2 million in cash and cash
equivalents. The Company's financial condition considerably improved as a result
of the sale of its Lumex Division, completed on April 3, 1996, for $40.75
million in cash.
Net cash used by operating activities was $10.6 million during the first six
months of 1996. Cash used in continuing operations of approximately
$11 million resulted largely from a $9.6 million decrease in accounts payable
and accrued liabilities, including $2.1 million of payments made related to $8.2
million of non-recurring charges recorded in the fourth quarter 1995.
Cash provided by investing activities of $38.5 million, included $36.8 million
from the sale of the Company's Lumex Division on April 3, 1996, net of closing
and other costs, and sales and maturities of investments used to fund operating
activities during the quarter.
Cash used in financing activities of $23.6 million resulted primarily from the
repayment of short-term and long-term borrowings of $27.8 million from the
proceeds received in the sale of the Lumex Division and was largely offset by
$4.3 million received from periodic sales of lease receivables.
The Company has a $10 million bank line of credit under which, subsequent to the
sale of its Lumex Division, there were no outstanding borrowings. Management
expects the cash flow generated from its manufacturing operations plus the net
proceeds from the sale of the Lumex Division will be sufficient to meet its
general working capital and capital expenditure requirements, including those
related to the restructuring of its continuing operations. The Company's finance
subsidiary is expected to continue to support its working capital requirements
through periodic sales of its lease portfolios to third party financial
institutions.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
CYBEX INTERNATIONAL, INC.
Date: March 27, 1997 By /s/ Robert McNally
Robert McNally
Sr. Vice President and
Chief Financial Officer
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