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 9/30/96.
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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 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
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 516-585-9000
------------------------------
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 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 [_]
On September 30, 1996, the registrant had outstanding 4,369,197 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 CONDENSED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Dollars in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 19,074 $ 17,039 $ 56,863 $ 50,739
Cost and expenses:
Cost of sales 11,602 10,486 33,802 30,208
Selling, general and administrative 7,557 8,965 23,289 26,337
Other income (52) (207) (142) (445)
-------- -------- -------- --------
19,107 19,244 56,949 56,100
-------- -------- -------- --------
Operating loss (33) (2,205) (86) (5,361)
Interest expense 119 480 778 1,134
Interest income 260 402 490 1,181
-------- -------- -------- --------
Income (loss) from continuing operations
before income tax benefit 108 (2,283) (374) (5,314)
Income tax benefit -0- (817) -0- (1,901)
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS 108 (1,466) (374) (3,413)
Income (loss) from discontinued
operations, net -0- 549 (414) 1,350
-------- -------- -------- --------
NET INCOME (LOSS) $ 108 $ 917 $ 788 $ (2,063)
======== ======== ======== ========
INCOME (LOSS) PER SHARE OF COMMON STOCK:
Continuing operations $ 0.02 $ (0.34) $ (0.09) $ (0.78)
Discontinued operations 0.00 0.13 (0.09) 0.31
-------- -------- -------- --------
NET INCOME (LOSS) $ 0.02 $ (0.21) $ (0.18) $ (0.47)
======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE>
CYBEX INTERNATIONAL, INC.
(FORMERLY LUMEX, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(unaudited)
SEPTEMBER 30, DECEMBER 31,
1996 1995
----- ----
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 4,808 $ 1,798
Investments -0- 2,476
Accounts receivable 18,157 22,482
Inventories 12,451 12,024
Lease receivables 2,811 574
Net assets of discontinued operations -0- 37,214
Other current assets 5,660 5,466
------- -------
Total Current Assets 43,887 82,034
Property, plant and equipment, net 13,001 13,291
Intangible assets 1,336 1,687
Lease receivables 2,016 1,402
Other assets 405 504
------- -------
$60,645 $98,918
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ -0- $15,250
Current maturities of long term debt 1,655 14,330
Accounts payable 4,875 10,874
Other current liabilities 10,119 13,888
------- -------
Total Current Liabilities 16,649 54,342
Deferred income taxes 1,227 1,227
Long-term debt 3,280 2,715
Stockholders' Equity
Common Stock, par value $.10 per share,
authorized 15,000,000 shares, issued
4,498,802 in 1996 and 4,458,354 in 1995 450 446
Capital surplus 17,485 17,128
Retained earnings 23,313 24,101
Treasury stock at cost (129,605 shares in 1996 and
54,897 shares in 1995) (1,506) (629)
Other (253) (412)
------- -------
Total Stockholders' Equity 39,489 40,634
------- -------
$60,645 $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)
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (788) $ (2,063)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,154 3,588
Net changes in operating assets and liabilities (14,943) (18,099)
Discontinued operations 414 -0-
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (13,163) (16,574)
INVESTING ACTIVITIES:
Proceeds from sale of discontinued
operations, net of closing and other costs 36,800 -
Purchase of property, plant and equipment (1,096) (7,418)
Proceeds from sales and maturities of investments 2,476 -0-
Purchases of intangible assets (34) (4,094)
Other -0- (70)
--------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 38,146 (11,582)
FINANCING ACTIVITIES:
Principal payments of short-term borrowings (15,250) -0-
Proceeds from short-term borrowings -0- 13,500
Proceeds from sales of lease receivables 6,168 4,491
Proceeds from long-term debt 2,465 4,500
Principal payments of long-term debt (14,576) (3,055)
Exercise of stock options 232 70
Common shares reacquired (1,012) (2)
Other -0- (158)
--------- ---------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (21,973) 19,346
--------- ---------
INCREASE (DECREASE) IN CASH 3,010 (8,810)
CASH AND CASH EQUIVALENTS -- January 1 1,798 9,746
--------- ---------
CASH AND CASH EQUIVALENTS -- September 30 $ 4,808 $ 936
========= =========
</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 the change 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 stated 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 for resolution.
NOTE 3 -- INVENTORIES
Inventories are valued at the lower of cost or market. Certain inventories
representing 38% and 33% of total inventories at September 30, 1996 and December
31, 1995, respectively, are valued under the last-in first-out (LIFO) method.
The estimated replacement cost of LIFO inventories exceeds stated LIFO cost by
$1,550 and $1,500 at September 30, 1996, and December 31, 1995, respectively.
Inventories were comprised of the following:
September 30, December 31
1996 1995
---- ----
Finished goods $ 4,534 $ 4,160
Work in process 3,590 3,828
Raw materials 4,327 4,036
------- -------
$12,451 $12,024
======= =======
5
<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 -- REVOLVING CREDIT AGREEMENT
In October 1996, the Company renewed and amended its credit facility to a
committed Revolving Credit Agreement which provides up to $10 million through
October 15, 1998, at the lower of the bank prime rate plus 1/4% or LIBOR plus
2.5% at the time of borrowing. The Company paid a $75,000 facility fee and pays
a commitment fee of 1/4% based on the unused portion of the facility. The credit
facility is principally secured by the Company's trade accounts receivable and
inventories. The Agreement requires the Company to maintain certain financial
ratios and comply with certain other restrictive covenants, including a
restriction on the payment of dividends not to exceed twenty percent (20%) of
current year's net income.
NOTE 5 -- NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed by dividing net income (loss) 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 Sept. 30 4,365,417 4,345,689
Nine months ended Sept. 30 4,400,341 4,350,488
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. Nine Months Ended Inc.
September 30, (Dec.) September 30, (Dec.)
-------------- ------ -------------- -------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 12.0% 100.0% 100.0% 12.1%
Cost of sales 60.8 61.6 10.7 59.5 59.5 11.9
Selling, general and 39.6 52.6 (15.7) 41.0 51.9 (11.6)
administrative
Income/(loss) from continuing
operations before income tax benefit 0.6 (13.4) (0.7) (10.5) 93.0
</TABLE>
1996 vs. 1995:
- --------------
Net sales increased 12.0%, to $19,074,000, in the third quarter 1996 as compared
to net sales of $17,039,000 in the third quarter 1995. For the first nine months
of 1996, net sales increased 12.1%, to $56,863,000, as compared to $50,739,000
for the same period in 1995.
The quarter and year-to-date sales growth was primarily attributable to
significantly higher worldwide shipments of CYBEX variable resistance training
equipment, including the second generation VR2 products, and commercial
treadmills, both introduced in mid 1995. Sales of the Company's other strength
lines, free weight, plate-loaded and modular systems, were also higher in the
periods, while shipments of the BIKE and SEMI were lower due to continued
competitive pricing practices.
Gross margins improved to 39.2% during the third quarter 1996 compared to 38.4%
in the third quarter 1995, due to a favorable product mix offsetting the impact
of increased international shipments which have lower margins. The quarter to
quarter margin comparisons were also affected by production start up costs
incurred in the 1995 quarter for several major new products.
7
<PAGE>
Selling, general and administrative expenses declined $1,408,000, and
$3,048,000, for the three and nine month periods ended September 30, 1996,
respectively, as compared to the same periods in 1995. These expense reductions
were largely attributable to the restructuring plan adopted in the fourth
quarter of 1995, which included the realignment of the Company's sales and
customer service departments, discontinuing its line of consumer products and
workforce reductions. Product development expenses 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 September 30, 1996, the Company had a current ratio of 2.64 to 1 and working
capital in excess of $27.2 million, including $4.8 million in cash and cash
equivalents. The Company's financial condition considerably improved during 1996
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 $13.2 million during the first nine
months of 1996. Cash used in continuing operations of approximately $13.6
million resulted largely from a $9.7 million decrease in accounts payable and
accrued liabilities, including $2.7 million of payments made related to $8.2
million of non-recurring charges recorded in the fourth quarter 1995, and a $2.8
million increase in lease receivables.
Cash provided by investing activities of $38.1 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 $2.5 million of sales and maturities of investments used to
fund operating activities less $1.1 million in purchases of capital equipment.
Cash used in financing activities of $22.0 million resulted primarily from the
net repayment of short-term and long-term borrowings of $27.4 million from the
proceeds received in the sale of the Lumex Division less $6.1 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
9
