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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 June 30, 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 June 30, 1996 4,138,520
shares.
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INDEX
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED JUNE 30, 1996
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Consolidated balance sheet--June 30, 1996 (unaudited) and
December 31, 1995 (audited).
Condensed consolidated statement of income (unaudited) - Three
months and six months ended June 30, 1996 and 1995.
Consolidated statement of cash flow (unaudited) - Six months
ended June 30, 1996 and 1995.
Notes to consolidated financial statements (unaudited) - June
30,1996.
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
ASSETS June 30, December 31,
- ------ 1996 1995
Current Assets: ----------- ------------
Cash in bank $ 770,876 $ 785,764
Accounts receivable-net of allowances
for doubtful accounts 1,679,899 1,669,718
Other receivables 25,886 11,036
Inventory 1,484,874 1,667,018
Prepaid expenses 21,778 65,278
Mortgages receivable 153,540 153,540
Marketable securities 318,800 218,928
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Total Current Assets 4,455,653 4,571,282
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Property, plant and equipment at cost, partly
pledged, net of accumulated depreciation 3,540,104 3,666,558
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Other Assets:
Loan receivable from shareholder 353,539 292,366
Deferred taxes 277,169 119,576
Deferred charges net of accumulated
amortization $344,315 in 1996;
$323,559 in 1995 148,792 169,548
Mortgages receivable 65,110 89,264
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Total Other Assets 844,610 670,754
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Total Assets $8,840,367 $8,908,594
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LIABILITIES & STOCKHOLDERS' DEFICIT
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Current Liabilities:
Accounts payable-trade $1,882,227 $1,275,792
Accrued expenses 26,566 166,162
Income taxes payable 195,153 229,204
Notes payable-current portion 567,334 560,085
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Total Current Liabilities 2,671,280 2,231,243
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Long-term debt, notes payable-less
current portion above 1,981,891 2,119,198
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Minority interests in equity of subsidiaries 659,179 747,334
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Stockholders' Equity:
Capital stock-$.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 2,658,441 2,941,243
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Total 3,548,484 3,831,286
Less: Treasury stock 87,940 shares
at cost (20,467) (20,467)
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Net Stockholders' Equity 3,528,017 3,810,819
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Total $8,840,367 $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
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales and gross revenue $7,847,679 $8,599,544 $15,914,044 $17,168,343
---------- ---------- ----------- -----------
Costs and expenses:
Cost of goods sold 7,538,916 8,122,053 15,084,096 16,104,557
Selling, general and
expenses 787,221 706,345 1,459,844 1,394,804
Total Costs &
Expenses 8,326,137 8,828,398 16,543,940 17,499,361
---------- ---------- ----------- -----------
Income (loss) before income
taxes and minority interests (478,458) (228,854) (629,896) (331,018)
---------- ---------- ----------- -----------
Less: Provision for taxes on
income:
State & local taxes (88,460) (18,141) (105,674) (36,376)
Federal income taxes (121,876) (38,758) (153,277) (84,675)
---------- ---------- ----------- -----------
Total (210,336) (56,899) (258,951) (121,051)
Less: Minority interests (loss)
in operations of subsidiaries (42,370) (46,289) (88,155) (71,597)
---------- ---------- ----------- -----------
Net Reductions
(Additions) (252,706) (103,188) (347,106) (192,648)
---------- ---------- ----------- -----------
Net (Loss) $ (225,752) $ (125,666) $ (282,790) $ (138,370)
========== ========== =========== ===========
(Loss) per share $(.05) $(.03) $(.07) $(.03)
========== ========== =========== ===========
Weighted average number of
shares in determining earnings
(loss) per share 4,138,520 4,138,520 4,138,520 4,138,520
</TABLE>
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
SIX MONTHS ENDED JUNE 30,
Operating Activities: 1996 1995
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Net (Loss) from Operations $(282,790) $(138,370)
Plus: Adjustments to reconcile net income
to net cash provided by operating activities:
Minority interest in participation of
subsidiary (88,155) (71,597)
Depreciation & amortization 164,021 225,228
Deferred taxes (157,593) -0-
Loss on sale of building -0- 60,300
Changes in Operating Assets and Liabilities:
(Increase) in accounts receivable (10,181) (49,712)
Decrease (Increase) in inventory 182,144 (161,212)
Decrease in prepaid expenses 43,500 7,476
Increase in accounts payable 606,435 332,163
(Decrease) Increase in accrued expenses
and taxes payable (139,596) 40,744
Decrease in income taxes payable (34,051) (148,888)
(Increase) Decrease in officers' and
other receivables (76,023) 66,469
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Net Cash (Used in) Operating
Activities 207,711 162,601
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Investing Activities:
Purchase of fixed assets (16,823) (13,265)
Proceeds from sale of building -0- 43,046
Proceeds from mortgage receivable 24,154 26,865
Investment in marketable securities (99,872) (102,091)
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Net Cash Provided From (Used
in) Investing Activities (92,541) (45,445)
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Financing Activities:
Payments on IDA loans (128,340) (128,340)
Payment on mortgage debt -0- (13,049)
Payments on auto & equipment loans (1,718) (55,348)
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Net Cash (Used in) Financing
Activities (130,058) (196,737)
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Net (Decrease) in Cash (14,888) (79,581)
Cash at January 1, 785,764 873,371
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Cash at June 30, $ 770,876 $ 793,790
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Note: The accompanying are an integral part of this report.
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 and six
month periods ended June 30, 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 June 30, 1996,
included in the consolidated operations of the Company, are as follows:
Profit & Loss Information
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Sales $6,871,726
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Cost of goods sold 6,397,562
Selling, general and
administrative 621,051
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Total Costs and Expenses 7,018,613
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Pre-Tax (Loss) $ (146,887)
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NOTE 2: Accounts receivable are shown net of allowances for doubtful accounts
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of $-0- at June 30, 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:
June 30, 1996 Dec. 31, 1995
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Raw materials $ 435,156 $ 398,296
Supplies 80,123 95,172
Work in process 165,854 162,326
Finished goods 70,253 85,438
Dairy products 733,488 925,786
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Total $1,484,874 $1,667,018
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 4 - MORTGAGE 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 June 30,
1996 was $114,650.
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 JUNE 30, 1996
Net sales in the second quarter of 1996 were approximately 8.7% lower 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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PART II. OTHER INFORMATION
REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the three months ended
June 30, 1996.
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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: September 12, 1996
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Michael Oberlander, President
Date: September 12, 1996
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Simon Friedman, Chief Financial Officer
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