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, 1997
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, 6,583,098
par value $.01
Class B Common Stock, 2,732,249
par value $.01
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis contains forward-looking statements
which involve risks and uncertainties. When used herein, the words "anticipate",
"believe", "estimate" and "expect" and similar expressions as they relate to the
Company or its management are intended to identify such forward-looking
statements. The Company's actual results, performance or achievements could
differ materially from the results expressed in or implied by these
forward-looking statements. Factors that could cause or contribute to such
differences should be read in conjunction with, and is qualified in its entirety
by, the Company's Consolidated Financial Statements, including the Notes
thereto. Historical results are not necessarily indicative of trends in
operating results for any future period.
Results of Operations
The following table presents certain income statement items expressed as a
percentage of total revenue for the three months ended April 30, 1997 and 1996.
Quarter Ended April 30,
1997 1996
Net sales 97.6% 96.7%
Interest income related to
sales-type leases 2.4% 3.3%
_____ _____
Total revenue 100.0% 100.0%
Costs of goods sold 63.8% 63.3%
Selling, general and
administrative expenses 23.4% 23.2%
Interest expense, net 0.9% 0.3%
Other income, net (0.1%) (0.3%)
_____ _____
Income before income taxes 12.0% 13.5%
Provision for income taxes 5.1% 5.5%
_____ _____
Net income 6.9% 8.0%
===== =====
Three months ended April 30, 1997 as Compared to the three months ended
April 30, 1996
Net Sales. Net sales for three months ended April 30, 1997 were
$37,145,000, an increase of $13,277,000, or 55.6%, compared to $23,868,000 for
the three months ended April 30, 1996. Approximately $10,760,000 of such
increase was due to the sale of embroidery machinery for the three months ended
April 30, 1997. The Company believes that this increase is the result of the
continued strong demand for embroidered products, the expansion into new
territories acquired through recent acquisitions (See Note 4), the creation of
new embroidery applications and markets and the continued strength of
"embroidery entrepreneurs" as a growing segment of the marketplace.
Additionally, technological advances and innovations in embroidery equipment
have opened up new marketing opportunities.
The Company's revenues have also grown in large part as a result in the
growth in sales of the singlehead embroidery machine. Singlehead embroidery
machines and multihead embroidery machines represented 46.4% and 53.6%,
respectively, of the number of embroidery machines sold during the three months
ended April 30, 1997 as compared to 43.3% and 56.7% for the three months ended
April 30, 1996, 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, 1997 aggregated approximately $5,931,000, an
increase of approximately 73.7% as compared to $3,414,000 for the three months
ended April 30, 1996. This increase is primarily attributable to the increase in
machine revenues.
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<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 13, 1997
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