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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarter Ended March 31, 1996 Commission File Number 0-83903-NY
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SPECTEX INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
New York 13-6186951
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(State of Incorporation) (I.R.S. Employer
Identification No.)
505 Carroll Street Brooklyn, NY 11215
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718) 797-9400
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Not Applicable
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Former name, former address and former fiscal year, if changed last report
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 proceeding 12 months (or for such shorter periods 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
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Number of shares outstanding of common stock - at March 31, 1996 4,138,520
shares.
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INDEX
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1996
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet--March 31, 1996 (unaudited) and
December 31, 1995 (audited).
Condensed Consolidated Statement of Income (unaudited)
- Three months ended March 31, 1996 and 1995.
Consolidated Statement of Cash Flow (unaudited)
- Three months ended March 31, 1996 and 1995.
Notes to Consolidated Financial Statements (unaudited)
- March 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
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NOT APPLICABLE
SIGNATURES
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS-NOTE BELOW
March 31, December 31,
ASSETS
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Current Assets: ----------- -------------
Cash in bank $ 490,393 $ 785,764
Accounts receivable 1,401,868 1,669,718
Other receivables 19,416 11,036
Inventory 1,938,403 1,667,018
Prepaid expenses 64,255 65,278
Mortgages receivable 153,540 153,540
Marketable securities 218,799 218,928
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Total Current Assets 4,286,674 4,571,282
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Property, plant and equipment, net 3,616,006 3,666,558
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Other Assets:
Loan receivable from shareholder 362,156 292,366
Deferred taxes 127,247 119,576
Deferred charges-net of accumulated
amortization $333,937 in 1996;
$323,559 in 1995 159,170 169,548
Mortgages receivable 77,337 89,264
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Total Other Assets 725,910 670,754
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Total Assets $8,628,590 $8,908,594
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LIABILITIES & STOCKHOLDERS' EQUITY
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Current Liabilities:
Accounts payable-trade $1,249,555 $1,275,792
Accrued expenses 148,894 166,162
Income taxes payable 161,218 229,204
Notes payable-current portion 567,534 560,085
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Total Current Liabilities 2,127,201 2,231,243
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Long-term debt, notes payable-less
current portion above 2,046,061 2,119,198
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Minority interests in equity of subsidiaries 701,549 747,334
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Stockholders' Equity:
Capital stock-$.01 par value-authorized
5,000,000 shares and 4,338,520 shares
issued 43,383 43,383
Capital in excess of par 846,660 846,660
Retained earnings 2,884,203 2,941,243
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Total 3,774,246 3,831,286
Less: Treasury stock 87,940 shares
at cost (20,467) (20,467)
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Net Stockholders' Equity 3,753,779 3,810,819
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Total $8,628,590 $8,908,594
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Note: The accompanying notes are an integral part of this report.
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31,
1996 1995
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Net sales and gross revenue $8,066,365 $8,568,799
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Costs and expenses:
Cost of goods sold 7,545,180 7,982,504
Selling, general and administrative
expenses 672,623 688,459
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Total Costs & Expenses 8,217,803 8,670,963
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(Loss) before income taxes and
minority interests (151,438) (102,164)
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Less: Provision (recovery) for taxes
on income:
State & local taxes (17,214) (18,235)
Federal income taxes (31,401) (45,917)
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Total (48,615) (64,152)
Less: Minority interests (loss) in
operations of subsidiaries (45,785) (25,308)
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Net Reductions (Additions) (94,400) (89,460)
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Net (Loss) $ (57,038) $ (12,704)
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(Loss) per share $(.01) $ NIL
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Dividends per share $ -0- $ -0-
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Weighted average number of shares
used in determining per share
earnings 4,138,520 4,138,520
Note: The accompanying notes are an integral part of this report.
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
THREE MONTHS ENDED MARCH 31,
Operating Activities: 1996 1995
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Net (Loss) from Operations $ (57,040) $ (12,704)
Plus: Adjustments to reconcile net income
to net cash provided by operating activities:
Minority interest in participation of
subsidiary (45,785) (25,308)
Depreciation & amortization 60,930 73,593
Deferred income taxes (7,671) -0-
Changes in Operating Assets and Liabilities:
Decrease (Increase) in accounts receivable 267,850 (45,608)
(Increase) Decrease in inventory (271,385) 107,187
Decrease in prepaid expenses 1,023 4,385
(Decrease) in accounts payable (26,237) (191,012)
(Decrease) Increase in accrued expenses
& taxes payable (145,146) 67,100
Increase (Decrease) in income taxes payable 59,892 (131,436)
(Increase) in other receivables (8,380) 83,308
Increase in due from shareholder (69,790) -0-
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Net Cash (Used in) Other
Operating Activities (241,739) (70,495)
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Investing Activities:
Proceeds from mortgage receivable 11,927 10,796
Reduction in investment in marketable
securities 129 93
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Net Cash Provided by Investing
Activities 12,056 10,889
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Financing Activities:
Payments on IDA loans (64,170) (51,670)
Payments on auto & equipment loans -0- (51,805)
Payments on mortgage debt (1,518) (2,495)
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Net Cash (Used in) Financing
Activities (65,688) (105,970)
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Net (Decrease) in Cash (295,371) (165,576)
Cash at January 1, 785,764 873,371
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Cash at March 31, $ 490,393 $ 707,795
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Note: The accompanying notes are an integral part of this report.
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - BASIS OF PRESENTATION:
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The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with instructions to Form 10-Q and Rule
10-01 of Regulation S-X. 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 accruals) considered necessary for a
fair presentation, have been included. Operating results for the three months
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. 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.
The Company and its operating subsidiaries, with the exception of J&J Farms
Creamery, Inc. are engaged in apparel manufacturing.
Operating data of J&J Farms Creamery, Inc. for the quarter ending March 31,
1996, included in the consolidated operations of the Company, are as follows:
Profit & Loss Information
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Revenues $7,304,480
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Cost of goods sold 6,869,581
Selling, general and
administrative 574,979
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Total Costs and Expenses 7,444,560
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Pre-Tax Income $ (140,080)
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NOTE 2: Accounts receivable are shown net of allowances for doubtful accounts
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of $-0- at March 31, 1996 and $-0- at December 31, 1995.
NOTE 3: Inventories at statement dates are shown at the lower of cost or market
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on a first-in first-out basis, and are classified and valued as follows:
March 31, 1996 December 31, 1995
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Raw materials $ 268,437 $ 398,296
Supplies 56,874 95,172
Work in process 281,439 162,326
Finished apparel goods 236,226 85,438
Dairy products 1,095,427 925,786
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Total $1,938,403 $1,667,018
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 4 - MORTGAGES RECEIVABLE:
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On June 1, 1988 the Company loaned money to an unrelated party as a mortgage
receivable investment of $510,000 with interest at 12% per annum; of this amount
$449,000 has been repaid. The note has been revised to reflect a balance of
$61,000, which is due in 1996.
In 1993 J&J Farms Creamery, Inc. loaned money to an unrelated party as a
mortgage receivable of $240,000, payable at the rate of 10% per annum; fully
amortized over a five year period. The balance due on this loan at March 31,
1996 was $126,877.
NOTE 5 - DEFERRED CHARGES:
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Deferred charges include covenants not to compete and mortgage refinancing costs
in connection with NYC Industrial Development Agency financings and are being
amortized over their respective terms.
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SPECTEX INDUSTRIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
Net revenues in the first quarter of 1996 were 6% less as compared to 1995. The
gross profit percentage decreased while operating expenses as a percentage of
sales increased as compared to 1995.
Cash flow generated by the Company's operations is deemed adequate to meet the
Company's financial obligations.
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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.
Spectex Industries, Inc.
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(Registrant)
Date: July 18, 1996
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Michael Oberlander, President
Date: July 18, 1996
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Simon Friedman, Chief Financial Officer
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