<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1996
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 1-12868
JALATE, LTD.
(Exact name of registrant as specified in its charter)
California 95-4121885
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1675 South Alameda Street, Los Angeles, California 90021
(Address of principal executive offices) ( Zip code)
(213)765-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock American Stock Exchange
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
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
----- -----
The number of shares outstanding of the registrant's Common Stock, no par
value, at August 6, 1996 was 3,403,000 shares.
This Form 10-Q contains 12 pages.
1
<PAGE> 2
Item 1. FINANCIAL STATEMENTS.
--------- -----------
JALATE, LTD.
CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
------------ --------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 92 $ 130
Due from factor 1,127 4,384
Trade accounts receivable less allowance for
doubtful receivables of $669 in 1995 and
$1,113 in 1996 989 781
Inventories 4,432 2,922
Refundable income taxes 1,567 1,017
Prepaid expenses and other current assets 313 303
Due from officers 108 --
------ -------
Total current assets 8,626 9,537
Property and equipment, at cost, net 868 1,054
Investment in joint venture 273 479
Other assets, at cost 88 87
------ -------
$9,856 $11,157
====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 90 $ 225
Trade accounts payable 3,188 3,757
Accrued expenses 568 624
Due to customers 672 673
------ -------
Total current liabilities 4,518 5,279
------ -------
Shareholders' equity:
Preferred stock, no par value. Authorized
3,000,000 shares; none issued and outstanding -- --
Common stock, no par value. Authorized
20,000,000 shares; issued and outstanding
3,390,500 and 3,403,000 shares in 1995 and
1996, respectively 5,177 5,177
Additional paid-in capital 134 134
Retained earnings 26 567
------ -------
Total shareholders' equity 5,337 5,878
------ -------
$9,855 $11,157
====== =======
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 3
JALATE, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1996 1995 1996
----------------------- ------------------------
<S> <C> <C> <C> <C>
NET SALES $18,261 $15,567 $37,022 $30,315
Cost of sales 14,347 11,567 27,687 22,407
------- ------- ------- -------
GROSS PROFIT 3,914 4,000 9,335 7,908
Operating expenses 4,748 3,636 8,898 7,253
------- ------- ------- -------
EARNINGS (LOSS) FROM OPERATIONS (834) 364 437 655
Interest expense (260) (161) (413) (320)
Equity in earnings of joint venture 26 121 26 206
------- ------- ------- -------
EARNINGS (LOSS) BEFORE TAXES (1,068) 324 50 541
Income tax (expense) benefit 417 - (17) -
NET EARNINGS (LOSS) $ (651) $ 324 $ 33 $ 541
======= ======= ======= =======
NET EARNINGS PER SHARE $ (0.19) $ 0.10 $ 0.01 $ 0.16
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 3,391 3,403 3,424 3,397
======= ======= ======= =======
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE> 4
JALATE, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1995 1996
------ -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 33 $ 541
------- -------
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 122 180
Changes in assets and liabilities
(Increase) decrease in:
Due from factor 2,389 (3,257)
Trade accounts receivable (579) 208
Inventories (2,403) 1,510
Prepaid expenses and other current assets (1,005) 10
Due from officers -- 106
Refundable income taxes -- 550
Other assets (334) 1
Increase (decrease) in:
Trade accounts payable 1,825 569
Accrued expenses (55) 56
Due to customers 326 1
------ -------
Total adjustments 286 (66)
------ -------
Net cash provided by operating activities 319 475
------- -------
Cash flows from investing activities:
Capital expenditures (245) (366)
Investment in joint venture (26) (206)
------- -------
Net cash used in investing activities (271) (572)
------- -------
Cash flows from financing activities:
Proceeds from issuance of note payable to bank -- 135
------- -------
Net cash provided by financing activities -- 135
------- -------
Net increase in cash 48 38
Cash at beginning of period 182 92
------- -------
Cash at end of period $ 230 $ 130
======= =======
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $ 153 $ 321
Income taxes $ 575 $ --
======= =======
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE> 5
JALATE, LTD.
Notes to Condensed Financial Statements
(Unaudited)
1. General.
--------
The unaudited condensed financial statements have been prepared on the
same basis as the audited financial statements and, in the opinion of
management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation for each of the periods
presented. The resulted of operations for interim periods are not
necessarily indicative of results to be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission under Rule
10-01 of Regulation S-X, the accompanying financial statements and notes
have been condensed and do not contain certain information that will be
included in the Company's annual financial statements and notes thereto.
For further information, refer to the financial statements and related
notes for the year ended December 31, 1995 included in the Company's
Annual Report on Form 10-K.
2. Income Taxes.
-------------
Income taxes for the six months ended June 30, 1996 were computed using
the effective tax rate estimated to be applicable for the full fiscal
year related, which is subject to ongoing review and evaluation by
management. As of December 31, 1995, the Company had deferred tax assets
and a related valuation allowance of $1,084,000. During the three and
six months ended June 30, 1996, taxable income generated by the Company
was offset by a reduction in the beginning balance of the valuation
allowance. Management continues to evaluate the recoverability of the
deferred tax assets.
3. Earnings per Share.
-------------------
Net earnings per share is based on the weighted average number of
shares of Common Stock and Common Stock equivalents outstanding.
5
<PAGE> 6
4. Inventory.
----------
A summary of inventories at June 30, 1996 is as follows:
<TABLE>
<S> <C>
Piece good and trim ...... $ 991,000
Work in process .......... $1,267,000
Finished goods ........... $ 664,000
----------
$2,922,000
</TABLE>
6
<PAGE> 7
5. Adoption of Accounting Standards.
---------------------------------
Stock Compensation. Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (FAS 123), issued in October
1995 and effective for fiscal years beginning after December 15, 1995,
encourages, but does not required, a fair value based method of accounting for
employee stock options or similar equity instruments. FAS 123 allows an entity
to elect to continue to measure compensation cost under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APBO No. 25),
but requires pro forma disclosures of net earnings and earnings per share as if
the fair value based method of accounting had been applied. The Company has
adopted FAS 123 effective January 1, 1996 and has elected to continue to
measure compensation cost under APBO No. 25. Accordingly, FAS 123 has no impact
on the Company's financial position or results of operations.
Impairment of Long-Lived Assets. Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of" (FAS 121), issued in March 1995 and
effective for fiscal years beginning after December 15, 1995, establishes
accounting standards for the recognition and measurement of impairment of
long-lived assets, certain identifiable intangibles, and goodwill either to be
held or disposed of. The Company has adopted FAS 121 effective January 1, 1996
and the adoption has not had a material impact on the Company's financial
position or results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
ADDRESSED IN THIS ITEM 2 CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO A VARIETY OF RISKS AND UNCERTAINTIES, INCLUDING THOSE
DISCUSSED BELOW UNDER THE HEADING "FACTORS THAT MAY AFFECT FUTURE RESULTS" AND
ELSEWHERE IN THIS REPORT ON FORM 10-Q THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE ANTICIPATED BY THE COMPANY'S MANAGEMENT. THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE "ACT") PROVIDES CERTAIN
"SAFE HARBOR" PROVISIONS FOR FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING
STATEMENTS MADE IN THIS QUARTERLY REPORT ON FORM 10-Q ARE MADE PURSUANT TO THE
ACT.
The following table sets forth, for the periods indicated, the
percentage which certain items in the statement of operations data bear to net
sales and the percentage dollar increase (decrease) of such items from period
to period.
7
<PAGE> 8
The following table sets forth, for the periods indicated, the percentage
which certain items in the condensed statements of operations data bear to net
sales and the percentage dollar increase (decrease) of such items from period to
period.
<TABLE>
<CAPTION>
Percent of Net Sales Percent of Net Sales
Three Months Ended Six Months Ended
June 30, % Dollar June 30, % Dollar
-------------------- Increase -------------------- Increase
1995 1996 (Decrease) 1995 1996 (Decrease)
---- ----- ---------- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% -14.8% 100.0% 100.0% -18.1%
Cost of goods sold (78.6) (74.3) -19.4% (74.8) (73.0) -19.1%
----- ----- ----- ----- ----- -------
Gross profit 21.4 25.7 2.2% 25.2 26.1 -15.3%
Operating expenses (26.0) (23.4) -23.4% (24.0) (23.9) -18.5%
----- ----- ----- ----- ----- -------
Earnings from operations (4.6) 2.3 143.6% 1.2 2.2 49.9%
Interest expense (1.4) (1.0) -38.1% (1.1) (1.1) -22.5%
Equity in earnings of
joint venture 0.1 0.8 365.4% 0.1 0.7 692.3%
----- ----- ----- ----- ----- -------
Earnings before income taxes (5.9) 2.1 130.3% 0.1 1.8 1,539.4%
Income tax (expense) benefit 2.3 -- * * -- *
----- ----- ----- ----- ----- -------
Net earnings -3.8% 2.1% 149.8% 0.1% 1.8% 1,539.4%
===== ===== ===== ===== ===== =======
</TABLE>
* Not calculable
8
<PAGE> 9
Net Sales. Gross sales decreased from $20,244,000 for the three months
ended June 20, 1995 to $16,747,000 for the comparable period of fiscal 1996, a
decrease of 17.3%, and from $40,257,000 for the six months ended June 30, 1995
to $32,759,000 for the comparable period of fiscal 1996, a decrease of 18.6%.
The decrease in gross sales for the six month period was due to a decrease in
the volume of apparel sold from 4,707,000 to 3,654,000 units, a decrease of
22.4%. The decrease in volume of apparel sold was due in part to a 14.3%
decrease in the number of units sold by the Zanoni division and a 16.2%
decrease in the units sold by the Jalate division. The effect of the decrease
in units sold on gross sales was partially offset by the average wholesale
price per unit increase of 4.3%. The average wholesale prices increased 12.7%
for the Zanoni division and 4.6% for the Jalate division. The decrease in gross
sales for the six month period was also attributed to (i) the discontinuing of
the smaller and less profitable Pottery division and the Kids line of apparel,
which was offset in part by the start-up in the second quarter of 1995 of the
Product Development division, (ii) a lack of emphasis on the Missy line of
apparel while the Company repositioned that division and (iii) the Company's
policy to be more selective in their customer base in order to maintain
adequate profitability levels.
Returns and allowances and discounts decreased from $1,983,000 (9.8%
of gross sales) for the three months ended June 30, 1995 to $1,175,000 (7.0% of
gross sales) for the comparable period of fiscal 1996, a decrease 40.7% and
from $3,235,000 (8.0% of gross sales) for the six months ended June 30, 1995 to
$2,444,000 (7.5% of gross sales) for the comparable period of fiscal 1996, a
decrease of 24.5% due in part to the Company's implementation of improved
procedures to manage quality control in the preproduction, production and
distribution operations.
As a result of the above mentioned factors, net sales decreased from
$18,261,000 for the three months ended June 30, 1995 to $15,567,000 for the
comparable period of fiscal 1996, a decrease of 14.8% and decreased from
$37,022,000 of the six months ended June 30, 1995 to $30,315,000 for the
comparable period of 1996, a decrease of 18.1%.
Gross Profit. Gross Profit increased from $3,914,000 (21.4% of net
sales) for the three months ended June 30, 1995 to $4,000,000 (25.7% of net
sales) for the comparable period of fiscal 1996, an increase of 2.2%, and
decreased from $9,335,000 (25.2% of sales) for the six months ended June 30,
1995 to $7,908,000 (26.1% of net sales) for the comparable period of fiscal
1996, a decrease of 15.3%.
The increase in gross profit as a percent of net sales for both the
three month period and six month period for fiscal 1996 compared to fiscal 1995
was due primarily to the decrease in discounts, returns and allowances in all
product lines and to the company's policy of selecting customers that provide
acceptable gross profit margins.
9
<PAGE> 10
Operating Expense. Operating expenses decreased from $4,748,000 (26.0%
of net sales) for the three months ended June 30, 1995 to $3,636,000 (23.4% of
net sales) for the comparable period of fiscal 1996, a decrease of 23.4%, and
from $8,898,000 (24.0% of net sales) for the six months ended June 30, 1995 to
$7,253,000 (23.9% of net sales) for the comparable period of fiscal 1996, a
decrease of 18.5%. The decrease in operating expenses in absolute terms was due
primarily to (i) a reduction in the number of full-time employees from 175 on
June 30, 1995 to 150 on June 30, 1996 (ii) a significant reduction in the cost
of freight-out as a result of minimizing air shipments and restructuring the
distribution center and (iii) re-analyzing all company expenses and benefiting
from cost-cutting measures where appropriate.
Interest Expense. Interest expense primarily reflects interest payable
on advances from the factor and interest payable on loans against imports.
Interest expense decreased from $260,000 for the three months ended June 30,
1995 to $161,000 for the comparable period of fiscal 1996, a decrease of 38.1%,
and from $413,000 for the six months ended June 30, 1995 to $320,000 for the
comparable period of fiscal 1996, a decrease of 22.5% due to (i) the decreases
in advances from the factor partly as result of reductions in gross sales and
inventory and (ii) the decrease in the interest rate charged by the factor.
Equity in Earnings of Joint Venture. Investment in joint venture is
accounted for by the equity method, under which the Company's share of earnings
of the joint venture is reflected in income as earned and distributions are
credited against the investment in the joint venture when received. Equity
earnings increased from $26,000 for the three months ended June 30, 1995 to
$121,000 for the comparable period fiscal 1996, an increase of 365.5% and from
$26,000 for the six months ended June 30, 1995 to $206,000 for the comparable
period fiscal 1996, an increase of 692.3%. The increases are partly
attributable to (i) the joint venture commenced operations in May 1995 and (ii)
the joint venture management has increased the unit volume of sales while
controlling operating expenses.
Income Taxes. As of March 31, 1996, the Company had deferred tax assets
and a related valuation allowance of $1,044,000. During the three months ended
June 30, 1996, taxable income generated by the Company was offset by a
reduction in the valuation allowance of $130,000. Management continues to
evaluate the recoverability the deferred tax assets. The estimated effective
tax rate for 1996 is subject to ongoing review and evaluation by management. A
40.1% effective combined federal and state tax rate has been used for the
income tax provision for three months ended June 30, 1996.
Net Earnings. Net earnings (loss) increased from a new loss of $651,000
($.19 per common share) for the three months ended June 30, 1995 to net profit
of $324,000 ($.10 per common share) and from a net profit of $33,000 ($.01 per
common share) for the six months ended June 30, 1995 to a net profit of $541,000
($.16 per common share) for a comparable fiscal period, an increase of 1,539.4%.
The increases in net earnings for the periods ended June 30, 1996 are attributed
to the reductions to expenses described above.
Liquidity and Capital Resources. At June 30, 1996, working capital was
$4,258,000 and cash provided by operating activities aggregated $475,000.
Inventory at June 30, 1996 was $2,922,000 as compared to $4,109,000 on
March 31, 1996 and $4,432,000 at December 31, 1995.
At June 30, 1996, advances from factor and amount due from factor were
$2,177,000 and $6,561,000 respectively, and the balance of outstanding letters
of credit was $421,000.
The Company believes that its present and currently available sources of
working capital are sufficient to maintain its current level of operations for
the foreseeable future.
10
<PAGE> 11
FACTORS THAT MAY AFFECT FUTURE RESULTS
All forward-looking statements contained in this Item 2 are subject to,
in addition to the other matters described in the Report on Form 10-Q, a
variety of significant risks and uncertainties. The following discussion
highlights some of these risks and uncertainties. Further, from time to time,
information provided by the Company or statements made by its employees may
contain forward-looking information. The Company cautions the reader that there
can be no assurance that actual results or business conditions will not differ
materially from those projected or suggested in such forward-looking statements
as a result of various factors, including those discussed below.
Recent Operating Results. For the year ended December 31, 1995, the
Company reported a net loss of $2,896,000, primarily due to the factors
described in the Company's Annual Report on Form 10-K. The Company has
responded to this loss by commencing a program to improve operating
efficiencies by expanding and strengthening its management team, including the
hiring of a new CEO, CFO, MIS director, Human Resources director, Distribution
manager, Operations manager and Piece Goods manager. Although the Company's new
management has responded to this loss with the measures described above, and
has achieved net earnings of $541,000 for the first six months of fiscal 1996,
there can be no assurance that these or any other measures will lead to
continued profitability for the Company in the remaining six months of 1996.
11
<PAGE> 12
Management Strategy. As discussed above, the Company's new management
has commenced a restructuring of operations in response to the Company's recent
losses. The planned measures are based upon the new management's current
understanding and assumptions concerning the Company's operations and,
accordingly, management may modify its approach on these measures, or take
additional measures, as it deems appropriate. Further, there can be no
assurance that management's strategy in responding to the Company's losses
will continue to prove successful.
Substantial Competition. The apparel industry is highly competitive.
Many of the Company's competitors have substantially greater financial,
distribution, marketing and other resources, including greater brand awareness,
than the Company. The Company competes with numerous apparel manufacturers,
including those with their own retail stores, as well as department stores,
specialty stores, retail chains and mass merchandisers which sell apparel under
their own labels. From time to time, the Company has lowered prices on certain
products to maintain market share, which has adversely affected the Company's
gross profit margin on such products. There can be no assurance that such price
competition will not recur.
Changing Fashion Trends. The Company's success depends in substantial
part on its ability to correctly anticipate, gauge and respond to rapidly
changing consumer preferences in a timely manner. If the Company materially
misjudges the market for a particular product or product line, the Company may
be faced with a substantial reduction in sales and excess inventory. There can
be no assurance that the Company will be able to correctly anticipate, gauge
and respond to changing consumer preferences in a timely manner in the future.
Economic Conditions. The apparel industry historically has been
subject to substantial cyclical variation, and a recession in the general
economy or uncertainties regarding future economic prospects that affect
consumer spending habits have in the past had, and may in the future have, a
materially adverse effect on the Company's results of operations. In addition,
certain retailers, including some of the Company's customers, are experiencing
financial difficulties which increase the risk of extending credit to such
retailers. Many retailers have attempted to improve their own operating
efficiencies by concentrating their purchasing power among an increasingly
small group of vendors. There can be no assurance that the Company will remain
a preferred vendor for its existing customers. A decrease in business from, or
loss of, a major customer could have a material adverse effect on the Company's
results of operations. In addition, there can be no assurance that the
Company's factor will approve the extension of credit to certain retail
customers in the future. If a customer's credit is not approved by the factor,
the Company could either assume the collection risk on sales to such customer
itself, or choose not to make sales to such customer.
Variability of Quarterly Results. The Company has experienced, and
expects to continue to experience, variability in its net sales and operating
results on a quarterly basis. The Company believes the factors which influence
this variability include (i) the timing of the Company's introduction of new
apparel collections, (ii) the level of consumer acceptance of each new
collection, (iii) general economic and industry conditions that affect consumer
spending and retailer purchasing, (v) the timing of the placement or
cancellation of customer orders, (v) the timing of expenditures in anticipation
of increased sales and customer delivery requirements, (vi) the weather and
(vii) actions of competitors. In addition, women's apparel business is highly
seasonal.
12
<PAGE> 13
Reliance on Key Personnel. The operations of the Company depend to a great
extent on the efforts of its senior management, including Vinton W. Bacon, Larry
Brahim, Theodore B. Cooper, Jeffrey L. Friedman and Jan L. Grossman. The
extended loss of the services of one or more of these individuals could have a
materially adverse effect on the Company's operations.
Impact of Foreign Operations. In July 1994, the Company commenced
manufacturing products abroad. As a result, the Company's operations are subject
to the customary risks of doing business abroad, including, but not limited to,
transportation delays, political instability, expropriation, currency
fluctuations and the imposition of tariffs, import and export controls and other
non-tariff barriers (including changes in the allocation of quotas).
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
------------------
Item 2. Changes in Securities. None
----------------------
Item 3. Defaults Upon Senior Securities. None
--------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
The Company held its 1996 annual meeting of shareholders (the
"Meeting") on April 25, 1996. At the Meeting, the Company's shareholders
considered and voted upon the following matters:
1. Increase in the Number of Directors. To ratify the amendment of the
Bylaws of the Company to provide that the authorized number of directors shall
be not less than five nor more than nine.
<TABLE>
<S> <C> <C>
For Against Abstain
2,466,205 2,200 0
</TABLE>
2. Elimination of Cumulative Voting. To amend the Restated Articles of
Incorporation and the Bylaws of the Company to eliminate the right of any
shareholder to accumulate votes in the election of directors.
<TABLE>
<S> <C> <C>
For Against Abstain
2,452,750 15,655 0
</TABLE>
3. Election of Directors. To elect the following eight persons to the
Board of Directors of the Company to serve until the next annual meeting of
shareholders and until their successors have been elected and qualified.
<TABLE>
<CAPTION>
Name For Against Abstain
- ---- --------- ------- -------
<S> <C> <C> <C>
Vinton W. Bacon 2,456,505 0 11,900
Larry Brahim 2,456,505 0 11,900
Theodore B. Cooper 2,456,505 0 11,900
Allan E. Dalshaug 2,456,505 0 11,900
Joe S. Davis 2,456,505 0 11,900
I. Jay Goldfarb 2,456,505 0 11,900
Jan L. Grossman 2,456,505 0 11,900
Howard L. Hughes 2,456,505 0 11,900
</TABLE>
4. Ratification of the Appointment of Independent Auditors. To ratify
the appointment of KPMG Peat Marwick LLP as the Company's independent auditors
for the fiscal year ending December 31, 1996.
<TABLE>
<S> <C> <C>
For Against Abstain
2,468,405 0 0
</TABLE>
Item 5. Other Information. None
------------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
a. Exhibits - None
b. Reports on Form 8-K - None
<PAGE> 15
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.
JALATE, LTD.
Date: August 6, 1996 By /s/
----------------------------
Frederick A. Findley
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 130
<SECURITIES> 0
<RECEIVABLES> 5497
<ALLOWANCES> 1113
<INVENTORY> 2922
<CURRENT-ASSETS> 9537
<PP&E> 1746
<DEPRECIATION> 692
<TOTAL-ASSETS> 11157
<CURRENT-LIABILITIES> 5279
<BONDS> 0
0
0
<COMMON> 5177
<OTHER-SE> 701
<TOTAL-LIABILITY-AND-EQUITY> 11157
<SALES> 15567
<TOTAL-REVENUES> 15567
<CGS> 11567
<TOTAL-COSTS> 15207
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 163
<INTEREST-EXPENSE> 161
<INCOME-PRETAX> 324
<INCOME-TAX> 0
<INCOME-CONTINUING> 324
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 324
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
