UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 April 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________.
Commission File No.: 0-23434
HIRSCH INTERNATIONAL CORP.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2230715
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Wireless Boulevard, Hauppauge, New York 11788
(Address of principal executive offices)
------------------------------------------------------------------
Registrant's telephone number, including area code: (516) 436-7100
Check 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class of Number of
Common Equity Shares
------------- ---------
Class A Common Stock, 3,424,557
par value $.01
Class B Common Stock, 2,732,249
par value $.01
<PAGE>
HIRSCH INTERNATIONAL CORP.
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - April 30, 1996
and January 31, 1996 3-4
Consolidated Statements of Income - Three
Months Ended April 30, 1996 and 1995 5
Consolidated Statements of Cash Flows - Three
Months Ended April 30, 1996 and 1995 6-7
Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
Part II. Other Information 13
Signatures 14
2
<PAGE>
Part I Financial Information
Item 1. Consolidated Financial Statements
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
--------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 6,586,371 $ 6,564,628
SHORT-TERM INVESTMENTS
AVAILABLE-FOR-SALE 2,768,285 2,286,194
ACCOUNTS RECEIVABLE, NET
OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $1,087,000 AND
$1,041,000, RESPECTIVELY 14,243,010 13,707,328
NET INVESTMENT IN SALES-TYPE
LEASES-CURRENT PORTION (Note 4) 1,326,468 1,592,733
INVENTORIES, NET (Note 5) 9,718,603 7,969,203
DEFERRED INCOME TAXES 1,071,353 1,055,473
OTHER CURRENT ASSETS 632,955 630,295
---------- ----------
TOTAL CURRENT ASSETS 36,347,045 33,805,854
---------- ----------
NET INVESTMENT IN SALES-TYPE
LEASES-NON-CURRENT PORTION (Note 4) 7,381,133 7,052,091
PURCHASED TECHNOLOGIES, NET OF
ACCUMULATED AMORTIZATION OF
$415,000 AND $367,000, 924,680 972,508
PROPERTY, PLANT AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION AND
AMORTIZATION 4,854,324 4,840,530
OTHER ASSETS, NET 1,359,067 1,201,143
---------- ----------
TOTAL ASSETS $50,866,249 $47,872,126
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
--------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
TRADE ACCEPTANCES PAYABLE $ 9,139,804 $ 8,656,094
ACCOUNTS PAYABLE AND
ACCRUED EXPENSES 5,912,469 6,774,178
CURRENT MATURITIES OF LONG-TERM DEBT 232,200 242,760
INCOME TAXES PAYABLE 1,296,633 733,009
CUSTOMER DEPOSITS PAYABLE 1,456,229 552,981
--------- ----------
TOTAL CURRENT LIABILITIES 18,037,335 16,959,022
LONG-TERM DEBT, LESS CURRENT
MATURITIES 1,725,750 1,778,626
----------- -----------
TOTAL LIABILITIES 19,763,085 18,737,648
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (Note 3)
PREFERRED STOCK, $.01 PAR VALUE;
AUTHORIZED: 1,000,000 SHARES;
ISSUED: NONE 0 0
CLASS A COMMON STOCK, $.01
PAR VALUE; AUTHORIZED:
9,500,000 SHARES, OUTSTANDING:
3,424,557 AND 3,288,200 SHARES,
RESPECTIVELY 34,246 32,882
CLASS B COMMON STOCK, $.01
PAR VALUE; AUTHORIZED: 3,000,000
SHARES, OUTSTANDING: 2,732,249 AND
2,868,606 SHARES, RESPECTIVELY 27,322 28,686
ADDITIONAL PAID-IN CAPITAL 11,885,627 11,885,627
UNREALIZED HOLDING LOSS ON
SHORT-TERM INVESTMENTS
AVAILABLE-FOR-SALE (16,874) (15,105)
RETAINED EARNINGS 19,172,843 17,202,388
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 31,103,164 29,134,478
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $50,866,249 $47,872,126
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
1996 1995
------ ------
<S> <C> <C>
NET SALES $23,868,173 $20,442,70
INTEREST INCOME RELATED
TO SALES-TYPE LEASES 820,939 575,875
----------- ----------
TOTAL REVENUE 24,689,112 21,018,583
----------- ----------
COST OF GOODS SOLD 15,643,569 13,514,418
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,729,187 4,880,178
INTEREST EXPENSE 69,197 114,371
OTHER INCOME, NET (74,766) (55,333)
----------- -----------
TOTAL EXPENSES 21,367,187 18,453,634
----------- -----------
INCOME BEFORE PROVISION FOR
INCOME TAXES 3,321,925 2,564,949
PROVISION FOR INCOME TAXES 1,351,470 1,052,504
---------- ----------
NET INCOME $1,970,455 $1,512,445
========== ==========
NET INCOME PER SHARE (Note 2) $0.32 $0.25
===== =====
WEIGHTED AVERAGE NUMBER OF
SHARES USED IN THE CALCULATION
OF NET INCOME PER SHARE (Note 2) 6,212,899 5,985,075
========= =========
</TABLE>
5
<PAGE>
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
April 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $1,970,455 $1,512,445
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY
OPERATING ACTVIVITIES:
DEPRECIATION AND AMORTIZATION 282,704 281,926
PROVISION FOR BAD DEBTS 58,373 0
PROVISION FOR SLOW-MOVING INVENTORIES 0 19,130
DEFERRED INCOME TAXES (124,392) 12,212
CHANGES IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE (581,554) (2,021,433)
NET INVESTMENT IN SALES-TYPE LEASES (75,277) (30,572)
INVENTORIES (1,749,400) (228,131)
OTHER ASSETS (793) (273,634)
TRADE ACCEPTANCES PAYABLE 483,710 74,877
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (944,103) (367,931)
INCOME TAXES PAYABLE 563,624 433,565
CUSTOMER DEPOSITS PAYABLE 903,248 711,565
--------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 786,595 124,019
--------- --------
See notes to consolidated financial statements.
</TABLE>
6
<PAGE>
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
April 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (199,282) (141,690)
(PURCHASES) SALES OF SHORT-TERM INVESTMENTS (502,134) 1,996,207
--------- ---------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (701,416) 1,854,517
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
REPAYMENTS OF LONG-TERM DEBT (63,436) (78,951)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (63,436) (78,951)
-------- --------
INCREASE IN CASH AND
CASH EQUIVALENTS 21,743 1,899,585
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,564,628 2,746,665
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $6,586,371 $4,646,250
========== ==========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
INTEREST PAID $68,822 $111,507
======== ========
INCOME TAXES PAID $663,454 $719,257
======== ========
See notes to consolidated financial statements.
</TABLE>
7
<PAGE>
Hirsch International Corp. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended April 30, 1996 and April 30, 1995
1. Organization and Basis of Presentation
The accompanying consolidated financial statements as of and for the three
month periods ended April 30, 1996 and 1995 include the accounts of Hirsch
International Corp. ("Hirsch"), HAPL Leasing Co., Inc. ("HAPL") and Pulse
Microsystems Ltd. ("Pulse" and collectively with Hirsch and HAPL, the
"Company"). The operations of Pulse have been included in the Company's
consolidated operations since its acquisition concurrently with the closing of
the Company's initial public offering ("IPO")
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all the adjustments, consisting of normal accruals,
necessary to present fairly the results of operations for each of the three
month periods ended April 30, 1996 and 1995, the financial position at April 30,
1996 and cash flows for the three month periods ended April 30, 1996 and 1995.
Such adjustments consisted only of normal recurring terms. The consolidated
financial statements and notes thereto should be read in conjunction with the
Company's Annual Report on Form 10-K for the fiscal year ending January 31, 1996
as filed with the Securities and Exchange Commission.
The interim financial results are not necessarily indicative of the results
to be expected for the full year.
2. Net Income Per Share
Net income per share is based on the weighted average number of common
shares outstanding during the period after giving retroactive effect to stock
dividends (See Note 3). Stock options are considered to be common stock
equivalents and, accordingly, approximately 56,000 and 23,700 common stock
equivalent shares have been included in the computation of earnings per share
for the three months ended April 30, 1996 and 1995, respectively, using the
treasury stock method.
3. Stock Dividend
On June 23, 1995, the Company declared a five-for-four stock split effected
in the form of a 25 percent stock dividend which was paid on July 24, 1995 to
stockholders of record on July 10, 1995. The par value of the shares remains
unchanged at $.01 per share. All numbers of shares, per share amounts and per
share prices in the consolidated financial statements and notes thereto have
been adjusted to reflect the stock split unless otherwise noted.
8
<PAGE>
Hirsch International Corp. and Subsidiaries
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
4. Net Investment in Sales-Type Leases
April 30, 1996 January 31, 1996
-------------- ----------------
<S> <C> <C>
Total Minimum Lease Payments Receivable... $9,459,007 $9,595,952
Allowance for Estimated Uncollectible
Lease Payments ........................... (312,500) (300,000)
Estimated Residual Value of Leased
Property (Unguaranteed)................... 2,154,170 1,832,088
Less: Unearned Income..................... (2,593,076) (2,483,216)
----------- -----------
Net Investment............................ 8,707,601 8,644,824
Less: Current Portion..................... (1,326,468) (1,592,733)
----------- -----------
Long-Term Portion......................... $7,381,133 $7,052,091
=========== ===========
</TABLE>
5. Inventories, Net
<TABLE>
<CAPTION>
April 30, 1996 January 31, 1996
-------------- ----------------
<S> <C> <C>
Machines.................................. $6,758,512 $6,158,040
Parts..................................... 3,773,559 2,837,165
---------- ----------
10,532,071 8,995,205
Less: Reserve............................. (813,468) (1,026,002)
----------- -----------
Inventories, net.......................... $9,718,603 $7,969,203
=========== ===========
</TABLE>
6. Subsequent Events
On June 7, 1996 the Company acquired all of the outstanding capital stock
of Sewing Machine Exchange, Inc. ("SMX"). This acquisition will be accounted for
as a purchase and accordingly, the acquired assets and assumed liabilities will
be recorded at their estimated fair market values at the date of acquisition.
The cost in excess of fair value of SMX will be recorded as goodwill. The
purchase price was $8.69 million, payable by delivery of a promissory note in
the principal amount of $4.25 million to each of the two shareholders of SMX and
by delivery of an aggregate of 9,375 shares of the Company's Class A Common
Stock. Pursuant to the terms of the promissory notes, the Company was required
to make a principal payment on each note in the amount of $2.5 million on June
12, 1996 with the balance of each note ($1.75 million) payable in 60 equal
monthly installments of principal and interest beginning July 7, 1996.
Concurrent with the acquisition, the Company entered into 5 year'employment
contracts with SMX's former shareholders.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the three months ended April 30, 1996 as compared to the three months
ended April 30, 1995
Net Sales. Net sales for the three months ended April 30, 1996 were
$23,868,000, an increase of $3,425,000, or 16.8%, compared to $20,443,000 for
the three months ended April 30, 1995. Approximately $2,687,000 of such increase
was due to the sale of embroidery machinery for the three months ended April 30,
1996. The Company believes that this increase is the result of the continued
strong demand for traditional embroidered products, the creation of new
embroidery applications and markets and the emergence of "embroidery
entrepreneurs" as a growing segment of the marketplace. The Company believes
that purchasers of smaller embroidery machines are a significant source of
repeat business for the sale of multihead machines as the entrepreneurs'
operations expand.
The Company sells embroidery machines manufactured by Tajima Industries
Ltd. ("Tajima") and Brother Industries Ltd. ("Brother"). Singlehead embroidery
machines and multihead embroidery machines represented 15.9% and 84.1%,
respectively, of the number of embroidery machines sold during the three months
ended April 30, 1996 as compared to 15.6% and 84.4% for the three months ended
April 30, 1995, respectively.
Revenue from the sale of the Company's computer hardware and software,
parts, service, used machines, application software and embroidery supplies for
the three months ended April 30, 1996 aggregated approximately $3,414,000, as
compared to $2,676,000 for the three months ended April 30, 1995.
Interest income related to sales-type leases. HAPL had interest income of
$821,000 for the three months ended April 30, 1996 as compared to $576,000 for
the three months ended April 30, 1995, which represents an increase of $245,000,
or 42.6%. This increase is a result of the continued expansion of HAPL's
operations.
Cost of Goods Sold. For the three months ended April 30, 1996, cost of
goods sold increased $2,129,000, or 15.8%, to $15,644,000 from $13,514,000 for
the three months ended April 30, 1995. The increase was in direct proportion to
the Company's increased sales volume. The devaluation of the dollar against the
yen had a minimal effect on Tajima equipment gross margins since all currency
fluctuations have been reflected in pricing adjustments in order to maintain
consistent gross margins. Profit margins are consistent throughout the Tajima
and Brother product lines. Gross margins for the Company's value added products
are generally higher than gross margins on the sale of embroidery machinery.
Selling, General and Administrative Expenses ("SG&A"). For the three months
ended April 30, 1996 SG&A increased $849,000, or 17.4%, to $5,729,000 from
$4,880,000 for the three months ended April 30, 1995, respectively. As a
percentage of revenues during the three months ended April 30, 1996 SG&A
remained consistent at 23.2%. In order to implement its growth strategy the
Company has hired additional sales and marketing personnel for small machines
and supplies, opened four new sales offices and hired additional software
programmers and technicians. The Company also increased expenditures for
advertising and for participation in trade shows and seminars.
Interest Expense. Interest expense for the three months ended April 30,
1996 decreased $45,000, or 39.5% as compared to the three month period ended
April 30, 1995. This decrease related primarily to the decrease in long-term
debt. However, as HAPL's operations expand, additional financing could increase
interest expense.
Other income, net. Other income, net, consists principally of investment
interest.
Provision for income taxes. The provision for income taxes reflected an
effective tax rate of approximately 40.7% for the three months ended April 30,
1996 as compared to 41.0% for the three months ended April 30, 1995. Differences
from the Federal statutory rate consisted primarily of provisions for state
income taxes net of Federal tax benefit. The decrease in the tax rate for the
three months ended April 30, 1996 is principally the result of changes in the
sales mix which resulted in increased sales to states with lower effective tax
rates. The principal components of the deferred income tax assets result from
allowances and accruals which are not currently deductible for tax purposes
10
<PAGE>
and differences in amortization periods between book and tax bases. The Company
has not established any valuation allowances against these deferred tax assets
as management believes it is more likely than not that the Company will realize
these assets in the future based upon the historical profitable operations of
the Company.
Net Income. Net Income for the three months ended April 30, 1996 increased
$458,000, or 30.3%, to $1,970,000 from $1,512,000 for the three months ended
April 30, 1995. This increase is due to the continued growth in machine sales in
addition to the contribution to net income from the sale of the Company's value
added products.
Liquidity and Capital Resources
The Company's working capital was $18,310,000 at April 30, 1996, an
increase of $1,463,000, or 8.7%, from $16,847,000 at January 31, 1996. The
Company has financed its operations principally through cash generated from
operations, long-term financing of certain capital expenditures and the proceeds
from the IPO and the Company's secondary offering.
During the nine months ended April 30, 1996, the Company's cash and cash
equivalents and short-term investments available-for-sale increased by $504,000
to $9,355,000. Net cash of $787,000 was provided by the Company's operating
activities principally as a result of the Company's earnings of $1,970,000.
Changes to working capital components resulted in a use of cash of $1,184,000,
cash provided by increases in the balance of trade acceptances payable, income
taxes payable and customer deposits aggregating $1,951,000 was offset by cash
used to increase inventory, net investment in sales-type leases, accounts
receivable and other assets aggregating $2,407,000 and a decrease in accounts
payable and accrued expenses of approximately $944,000. These changes resulted
from expansion of the Company's business.
The Company purchases foreign currency futures contracts to hedge specific
purchase commitments. Substantially all foreign currency purchase commitments
are matched with specific foreign currency futures contracts. Consequently, the
Company believes that no material foreign currency exchange risk exists relating
to outstanding trade acceptances payable. The cost of such contracts are
included in the cost of inventory. See Note 10(B) of Notes to Consolidated
Financial Statements in the Company's 1996 Annual Report on Form 10-K, as filed
with the Securities and Exchange Commission.
At April 30, 1996, the Company had uncommitted line of credit agreements
with two banks aggregating $30,000,000. These lines, which are unsecured, can be
used for working capital loans, bankers acceptances, letters of credit and
deferred payment letters of credit. These lines of credit can be canceled at any
time by either party. These lines have been used for letters of credit and
deferred payment letters of credit aggregating approximately $9,140,000 at April
30, 1996. The absence of these lines would impair the Company's ability to
purchase Tajima equipment.
HAPL is a party to a $4,000,000 revolving credit agreement (the
"Agreement") which expires on August 19, 1996. Borrowings under the Agreement
are determined by the use of a formula and bear interest at the alternate base
rate (8.25% as of April 30, 1996) plus one-half of one percent. The Agreement is
secured by a lien on substantially all of HAPL's assets not otherwise pledged.
There were no borrowings under this Agreement at April 30, 1996.
HAPL sells substantially all of its leases to financial institutions on a
non-recourse basis several months after the commencement of the lease term
thereby reducing its financing requirements. In certain cases, HAPL retains
leases for which it cannot obtain commitments from financing sources. HAPL
Leasing, which was fully activated in May 1993, has closed $64,293,000 in lease
agreements as of April 30, 1996. Of this total, $56,700,000, or 88.2%, of the
leases have been sold to third party financial institutions on a non-recourse
basis.
On October 27, 1994, Hirsch entered into a ten year, $2,295,000 mortgage
agreement with a bank (the "Mortgage") for its new corporate headquarters. The
Mortgage bears interest at a fixed rate of 8.8% and is payable in equal monthly
principal installments of $19,125. The obligation under the Mortgage is secured
by a lien on the premises and the related improvements thereon.
11
<PAGE>
On June 7, 1996 the Company acquired all of the outstanding capital stock
of Sewing Machine Exchange, Inc. ("SMX"). This acquisition will be accounted for
as a purchase and accordingly, the acquired assets and assumed liabilities will
be recorded at their estimated fair market values at the date of acquisition.
The cost in excess of fair value of SMX will be recorded as goodwill. The
purchase price was $8.69 million payable by delivery of a promissory note in the
principal amount of $4.25 million to each of the two shareholders of SMX and by
delivery of an aggregate of 9,375 shares of the Company's Class A Common Stock.
Pursuant to the terms of the promissory notes, the Company was required to make
a principal payment on each note in the amount of $2.5 million on June 12, 1996
with the balance of each note ($1.75 million) payable in 60 equal monthly
installments of principal and interest beginning July 7, 1996. Concurrent with
the acquisition, the Company entered into 5 year employment contracts with SMX's
former shareholders.
SMX is the exclusive distributor in the states of Illinois, Iowa,
Minnesota, Wisconsin, North and South Dakota and Nebraska of single and
multihead machines manufactured by Tajima, and the exclusive distributor in 11
midwestern states. of 1,4 and 12 head embroidery machines and related software
manufactured by Melco Embroidery Systems.
On June 10, 1996, the Company entered into a term loan agreement with a
bank (the "Term Loan Agreement") pursuant to which the bank lent $7.5 million to
the Company to fund the acquisition of SMX and to repay SMX's credit facilities.
The loan is repayable in twenty (20) equal quarterly installments of principal
and interest (as defined in the Term Loan Agreement) beginning September 30,
1996. The loan has been guaranteed by Pulse and SMX.
The Company believes that its existing cash and funds generated from
operations, together with its existing financing agreements, will be sufficient
to meet its working capital and capital expenditure requirements and to finance
planned growth.
Backlog and Inventory
The ability of the Company to fill orders quickly is an important part of
its customer service strategy. The embroidery machines held in inventory by the
Company are generally shipped within a week from the customer's orders are
received, and as a result, backlog is not meaningful as an indicator of future
sales.
Inventory of new Tajima and Brother embroidery machines at April 30, 1996
was $3,507,000 and $1,424,000, respectively, representing approximately one
month's sales which is comparable to historical inventory levels. Inventory of
approximately $1,828,000 consisted of computer software, used machines and other
equipment.
Recent Pronouncements of the Financial Accounting Standards Board
Recent pronouncements of the Financial Accounting Standards Board ("FASB"),
which are not required to be adopted at this date, include Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") and SFAS No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," ("SFAS No. 121)
which are effective for fiscal years beginning December 15, 1995. The Company
adopted SFAS No. 121 and SFAS No. 119, "Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments" in the third quarter of
fiscal 1996 and SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" during the first quarter of fiscal 1995. The adoption of the
recent FASB pronouncements did not have material impact on the Company's
Consolidated Financial Statements. SFAS No. 123 is not expected to have a
material impact on the Company's Consolidated Financial Statements.
12
<PAGE>
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
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27. Article 5 Financial Data Schedule
13
<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.
HIRSCH INTERNATIONAL CORP.
Registrant
By: \s\ Henry Arnberg
---------------------------
Henry Arnberg, President and
Chief Executive Officer
By: \s\ Kenneth Shifrin
----------------------------
Kenneth Shifrin,
Chief Financial Officer
Dated: June 14, 1996
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000915909
<NAME> HIRSCH INTERNATIONAL CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-1-1996
<PERIOD-END> APR-30-1996
<CASH> 6,586
<SECURITIES> 2,768
<RECEIVABLES> 15,330
<ALLOWANCES> 1,087
<INVENTORY> 9,719
<CURRENT-ASSETS> 36,347
<PP&E> 6,732
<DEPRECIATION> 1,878
<TOTAL-ASSETS> 50,866
<CURRENT-LIABILITIES> 18,037
<BONDS> 1,726
0
0
<COMMON> 62
<OTHER-SE> 31,042
<TOTAL-LIABILITY-AND-EQUITY> 50,866
<SALES> 23,868
<TOTAL-REVENUES> 24,689
<CGS> 15,644
<TOTAL-COSTS> 21,367
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 58
<INTEREST-EXPENSE> 69
<INCOME-PRETAX> 3,322
<INCOME-TAX> 1,351
<INCOME-CONTINUING> 1,970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,970
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
