SECURITIES AND EXCHANGE
COMMISSION Washington D.C.
20549
(MARK ONE) 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 March 30, 1996
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 0-3305
NCC INDUSTRIES, INC
(Exact name of registrant as specified in its charter)
DELAWARE 62-0643336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 MAIN STREET, CORTLAND, NEW YORK 13045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 756-2841
Indicate by check mark whether 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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No _______
At March 30, 1996, there were outstanding 4,375,492 shares of
registrant's Common Stock, par value $1.00 per share.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
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NCC INDUSTRIES, INC. AND SUBSIDIARY
BALANCE SHEETS
(UNAUDITED)
March 30 December 31
1996 1995
ASSETS
Current assets
Cash and cash equivalents $ 1,576,938 $ 725,198
Investments 93,382 671,382
Accounts receivable, net 15,180,197 15,864,241
Inventories (Note 2) 50,967,533 45,020,477
Other current assets 2,895,377 2,347,071
Total Current Assets 71,013,427 64,628,369
Property, plant and equipment at cost, net 9,768,364 10,155,629
Bond issuance cost 54,846 59,138
Other assets 399,829 525,606
$81,236,466 $75,368,742
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ - $ -
Accounts payable and accrued expenses 38,076,613 32,510,620
Current portion of long-term debt 445,000 445,000
Total Current Liabilities 38,521,613 32,955,620
Long term debt, less current portion 1,916,415 1,916,415
Other liabilities 2,497,111 1,664,956
Shareholder's equity 38,301,327 38,831,751
$81,236,466 $75,368,742
See notes to financial statements.
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NCC INDUSTRIES, INC. AND SUBSIDIARY STATEMENTS
OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
March 30, April 1,
1996 1995
STATEMENTS OF INCOME
Net Sales $ 22,694,362 $27,785,598
Cost and expenses
Cost of sales, shipping, selling,
general and administrative expenses 23,157,061 26,538,137
Interest expense 330,265 384,139
23,487,326 26,922,276
Income (loss) before taxes ($ 792,964) $ 863,322
Income taxes (benefit) ( 262,530) 218,783
Net Income (loss) ($ 530,434) $ 644,539
Income per common share ($0.12) $0.15
Weighted average shares used in
computing per share amounts 4,375,492 4,375,492
Three Months Ended
March 30, April 1,
1996 1995
STATEMENTS OF RETAINED EARNINGS
Retained earnings, beginning $31,645,396 $28,894,732
Net income ( 530,434) $ 644,539
Retained earnings, ending $31,114,962 $29,539,237
See notes to financial statements.
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NCC INDUSTRIES, INC.
AND SUBSIDIARY STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Three Months Ended
March 30, 1996 April 1, 1995
Cash flows from operating activities
Net income (loss) $(530,434) $ 644,539
Adjustments to reconcile net income (loss)to net
cash used in operating activities
Depreciation 387,519 383,646
Amortization 4,292 5,093
Provision for losses on accounts receivable 30,000 27,000
Loss from retirement of equipment 32,987 11,574
Net change in operating assets and liabilities
(Increase) decrease in accounts receivable 654,044 (1,977,171)
Increase in inventory (5,947,056) (6,802,821)
Increase (decrease) in accounts
payable and accrued expenses 5,566,003 1,957,635
(Increase) decrease in other assets 125,777 70,807
Increase in other liabilities 832,155 28,134
Increase in other current assets (548,306) ( 673,263)
Net cash provided by (used in) operating activities $ 606,981 ($6,324,827)
Cash flows from investing activities
Purchase of plant & equipment $(33,241) $( 53,572)
Decrease in investments 278,000 -
Net cash used in investing activities $244,759 $( 53,572)
See notes to financial statements.
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NCC INDUSTRIES, INC. AND
SUBSIDIARY STATEMENTS OF CASH
FLOWS (CONTINUED)
(UNAUDITED)
Three Months Ended
March 30, 1996 April 1, 1995
Cash flows from financing activities
Long term debt borrowings $ - $ 1,000,000
Net borrowings under notes payable,
and bank $ - 5,369,000
Net cash provided by financing activities $ - $ 6,369,000
Net decrease in cash $ 851,740 ($ 9,399)
Cash, beginning of year $ 725,198 $ 1,034,820
Cash, end of quarter
$1,576,938
$ 1,025,421
Supplemental disclosure of cash flow
information
Cash paid during the three months for interest $164,273 $ 445,545
Cash paid during the three months for income taxes - $ 16,146
See notes to financial statements.
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NCC INDUSTRIES, INC. AND SUBSIDIARY NOTES
TO FINANCIAL STATEMENTS
1. Basis of Presentation:
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10Q and Rule 10-
01 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments)considered
necessary for a fair presentation have been included.
Operating results for the three month period ended March 30, 1996
are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. The balance sheet at December 31, 1995
has been derived from the audited balance sheet at that date.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1995.
2. Inventory:
a) Inventories at March 30, 1996 are stated at the lower
of cost (first-in, first-out) or market (generally realizable net
amount), and are obtained from the perpetual
inventory records of the Company. No physical
inventory was taken.
b) Inventories consist of:
March 30, December 31,
1996 1995
(unaudited)
Raw Materials $ 8,305,984 $ 7,566,204
Work in process 10,848,396 10,659,170
Finished goods 31,813,153 26,795,103
Total $50,967,533 $45,020,477
3. Net income per share:
Per share amounts are based on the weighted average
number of shares outstanding during the period.
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NCC INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(continued)
4. Facility closure costs:
In March, 1996, Registrant announced its intent to close
its Puerto Rican manufacturing facilities by the third
quarter of 1996.
Registrant has recorded a provision of $675,000 for non
employee benefit related closure costs of its Puerto
Rican facilities including rent, maintenance, security,
relocation and all other costs incidental to closure of
the facilities. Employee related costs have not been
determined but will materially impact second quarter
results of Registrant.
5. Income Taxes:
The income tax provision is calculated based upon an
estimated tax rate for the year for each tax jurisdiction.
6. Subsequent event:
On May 13, 1996, Registrant announced the planned
closure of its Cortland, NY cutting operations which
will occur in the third quarter of 1996. Registrant
will obtain cutting services from its parent,
Maidenform, Inc. in an effort to reduce costs.
Management has not determined the total expected cost of
closure which will be recorded in the second quarter of
1996, but such closure costs could be material to
Registrant's 1996 results.
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ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net sales for the first quarter of 1996
declined by 18% as compared to the first quarter of
1995 due primarily to softness in the brands and
private label businesses of Registrant's major
customers. The impact of the
cancellation of the "Bill Blass" trademark
merchandise has resulted in a 48% reduction of
sales to Walmart, the Registrant's customer for
such merchandise. Registrant's management
anticipates partial recovery of the sales to
Walmart in the second half of 1996. Sales to
Mervyn's, another major customer, declined 50% due
to reduced orders caused by a softness in the
retail markets. Registrant's management
anticipates at least partial recovery of this
business in the second half of 1996. Sales to Mast
Industries declined 66% in the first quarter of
1996 as compared to the first quarter of 1995.
However, new style introductions are planned for
shipment beginning in the second quarter and
Registrant's management anticipates recovery of
sale shortfalls over the balance of 1996.
Registrant's management also anticipates similar
recoveries in its branded product lines to at least
partially replace declining sales volume and reduce
inventory levels. Partially offsetting a 22%
decline in unit volume is an increase in the
average revenue per unit of 6.5% in the first
quarter of 1996.
Cost of sales was generally consistent for the
first quarter of 1996 as compared to the first
quarter of 1995. Shipping, advertising and selling expenss
increased as a percentage of sales primarily due to the reduced
sales volumes. General and administrative
expenses were higher in the first quarter of 1996
as compared to the first quarter of 1995 due to the
recording of non-employee benefit
costs related to the closure of Registrant's
Puerto Rican manufacturing facilities. Interest expense was
lower during the first quarter of 1996 as compared
to the first quarter of 1995.
As a result of the aforementioned items, net
income declined to a loss of $530,434 in the first
quarter of 1996 as compared to the first quarter of 1995.
Due to excess cutting capacity, Registrant
will be consolidating all of its domestic cutting
operations into another existing U.S. cutting
facility of Maidenform, Inc., Registrant's parent.
The Cortland cutting plant will be closed over the
next several months in an effort to reduce costs.
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Financial Condition
Net cash flows provided by operating
activities increased $6,931,000 during the first
quarter of 1996 as compared to the first quarter of
1995 due primarily to increases in accounts payable
and accrued expenses. Inventory increased
primarily due to lower-than-anticipated shipments
in the first quarter of 1996.
Net cash flows provided by investing activities increased due to
liquidation of investments held by Registrant.
Working capital was $32,937,000 at March 30,
1996 as compared to $31,673,000 at December 31,
1995. While Registrant and its parent has lines of
credit of $220,000,000, the lines of credit were
all utilized. Registrant's management believes
that the Maidenform Group's line of credit and debt
capacity under the revolving credit facility,
together with vendor support are adequate to meet
its anticipated operating needs through the end of
1996. However, in the event of any material
adverse change in either vendor support or in
Registrant's anticipated sales for 1996, Registrant
could experience an adverse impact on its liquidity.
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NCC INDUSTRIES, INC.
PART II - OTHER INFORMATION
(No applicable items)
SIGNATURES
Pursuant to the requirements to 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.
NCC INDUSTRIES, INC.
Date 5/14/96 By: /s/ Ira Glazer
Ira Glazer
Executive Vice President -
Chief Operating Officer
Date 5/14/96 By: /s/ Steven Masket
Steven Masket
Executive Vice President -
General Counsel, Secretary
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