FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995
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 No. 0-8544
SPEIZMAN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-0901212
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
508 West Fifth St. 28202
Charlotte, North Carolina (Zip Code)
(Address of principal executive offices)
(704) 372-3751
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if
changed since 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 preceding 12 months, 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 Common Stock Outstanding at
April 28, 1995
------------------------ ----------------
Par value $.10 per share 3,208,599
Page 1 of 13
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets . . . . . . . . . 3 - 4
Consolidated Condensed Statements of Income . . . . .. . . 5
Consolidated Condensed Statements of Cash Flows . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 8 - 10
PART II. OTHER INFORMATION:
Item 1: Legal Proceedings . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and reports on Form 8-K
(a) Reports on Form 8-K . . . . . . . . . . . . . . . . . 11
(b) Exhibit 11. Computation of Net Income per Share . . . . 12
Page 2
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
April 1, July 2,
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $ 4,142,590 $ 5,433,664
Accounts Receivable, less allowances of
$94,920 and $69,701 13,788,575 15,170,190
Inventories 10,054,899 7,296,836
Prepaid expenses and other current assets 2,089,537 1,182,894
TOTAL CURRENT ASSETS 30,075,601 29,083,584
PROPERTY AND EQUIPMENT:
Leasehold improvements 543,874 542,361
Machinery and equipment 671,257 509,197
Furniture, fixtures and transportation equipment 867,468 877,498
Total 2,082,599 1,929,056
Less accumulated depreciation and amortization (1,417,216) (1,409,050)
NET PROPERTY AND EQUIPMENT 665,383 520,006
OTHER 510,132 556,271
$ 31,251,116 $ 30,159,861
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
April 1, July 2,
1995 1994
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $10,436,645 $10,041,865
Customers' deposits 1,749,917 1,827,196
Accrued expenses 355,437 515,118
Current maturities of long-term debt 44,498 120,630
TOTAL CURRENT LIABILITIES 12,586,497 12,504,809
LONG-TERM DEBT 131,232 172,153
MINORITY INTEREST 2,000 -
TOTAL LIABILITIES 12,719,729 12,676,962
STOCKHOLDERS' EQUITY:
Common Stock - par value $.10; authorized 6,000,000
shares; issued 3,236,199 and 3,234,949 shares 323,620 323,495
Additional paid-in capital 12,456,965 12,455,590
Retained earnings 5,840,982 4,803,611
Foreign currency translation adjustment 9,617 -
Total 18,631,184 17,582,696
Treasury stock, at cost, 27,600 common shares (99,797) (99,797)
TOTAL STOCKHOLDERS' EQUITY 18,531,387 17,482,899
$31,251,116 $ 30,159,861
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
For the Three Months Ended For the Nine Months Ended
4-1-95 4-2-94 4-1-95 4-2-94
(13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks)
<S> <C> <C> <C> <C>
REVENUES $16,131,974 $19,009,008 $ 45,803,828 $49,613,144
COSTS AND EXPENSES:
Cost of sales 13,928,919 16,207,001 40,240,039 42,493,216
Selling expenses 850,968 639,562 2,623,345 1,678,748
General and administrative
expenses 537,948 579,415 1,314,994 1,467,949
Total costs and expenses 15,317,835 17,425,978 44,178,378 45,639,913
814,139 1,583,030 1,625,450 3,973,231
NET INTEREST EXPENSE
(INCOME) 4,653 (14,656) (2,921) 20,664
INCOME BEFORE TAXES
ON INCOME 809,486 1,597,686 1,628,371 3,952,567
TAXES ON INCOME 314,000 565,000 591,000 1,466,000
NET INCOME $ 495,486 $ 1,032,686 $ 1,037,371 $ 2,486,567
PREFERRED STOCK
DIVIDENDS - - - 40,735
NET INCOME APPLICABLE
TO COMMON STOCK $ 495,486 $ 1,032,686 $ 1,037,371 $ 2,445,832
NET INCOME PER SHARE $ .15 $.31 $ .32 $ .87
Weighted average number of
common and equivalent shares 3,259,820 3,301,672 3,272,413 2,820,077
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> (Unaudited)
For the Nine Months Ended
4/1/95 4/2/94
(39 Weeks) (39 Weeks)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,037,371 $ 2,486,567
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 130,358 145,428
Provision for inventory obsolescence 150,000 150,000
Foreign currency translation adjustment 9,617 -
(Increase) decrease in:
Accounts receivable 1,381,615 (4,249,105)
Inventories (2,908,063) (1,492,304)
Prepaid expenses and deposits (906,643) (437,807)
Other assets 46,139 180,251
Increase (decrease) in:
Accounts payable 394,780 2,879,190
Customers' deposits (77,279) (1,183,608)
Accrued expenses (159,681) (46,108)
Net cash provided (used) by operating activities (901,786) (1,567,496)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (308,712) (228,564)
Disposition of property and equipment 32,977 201,929
Net cash used in investing activities (275,735) (26,635)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on notes payable - (174,785)
Principal payments on long-term debt (117,053) (691,717)
Net proceeds of common stock offering - 9,331,198
Redemption of preferred stock - (894,152)
Dividends on preferred stock - (40,735)
Issuance of common stock for stock options 1,500 81,951
Minority interest in subsidiary 2,000 -
Net cash provided by (used in) financing activities (113,553) 7,611,760
NET INCREASE (DECREASE) IN CASH (1,291,074) 6,017,629
CASH AT BEGINNING OF PERIOD 5,433,664 723,820
CASH AT END OF PERIOD $ 4,142,590 $ 6,741,449
Supplemental Disclosures:
Cash paid during period for:
Interest $ 73,852 $ 109,153
Income taxes 301,851 1,489,985
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Management Statement re Adjustments
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present the Registrant's financial position, the
results of operations and changes in cash flow for the
periods indicated.
The accounting policies followed by the Registrant are set
forth on page F-6 of the Registrant's Form 10-K for the
fiscal year ended July 2, 1994, which is incorporated by
reference.
Note 2. Inventories
Inventories consisted of the following:
April 1, July 2,
1995 1994
(unaudited)
Machines $ 7,176,637 $ 4,218,036
Parts and Supplies 2,878,262 3,078,800
Total $ 10,054,899 $7,296,836
Note 3. Taxes on Income
Taxes on income are allocated to interim periods on the basis
of an estimated annual effective tax rate.
Note 4. Net Income Per Share
Net income per share is computed by dividing net income by
the average number of common and common equivalent shares
outstanding during the period. Common equivalent shares
include those common shares which are issuable upon the
exercise of stock options, when dilutive, net of shares
assumed to have been repurchased with the proceeds.
Page 7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's revenues are generated primarily from its distribution
of textile equipment, principally knitting machines, to manufacturers
of textile products and, to a lesser extent, from the sale of parts
used in such equipment and the sale of used textile equipment.
RESULTS OF OPERATIONS
In the Company's thirteen-week quarter ended April 1, 1995,
revenues decreased by about $2.9 million, or about 15.1% from revenues
of the same quarter of last year. The $2.9 million decrease in
revenues is composed of a $4.9 million decrease in the revenues from
the sale of hosiery equipment, partially offset by $2 million in
increases in sales of all other equipment. Included in those
improved elements were revenues of $1.5 million from operations that
were not in existence in the prior period. The Company's
year-to-date revenues declined by about $3.8 million or 7.7% from
revenues of the same period last year. The decrease reflects a decline
in hosiery equipment sales of approximately $10.6 million, partially
offset by sales of other types of textile equipment, including $2.4
million from operations that were not in existence in the prior year.
Cost of sales in the Company's quarter ended April 1, 1995, were 86.3%
of revenues. This 86.3% compares to 85.1% in the same quarter of last
year. Increased field service expenses accounted for all of this
increase, quarter to quarter. In the year- to-date, cost of sales were
87.8% of revenues as compared to 85.5% in the same nine-month period of
last year. In the current year-to-date, increases in field service
expenses accounted for about one-half of the higher cost of sales. The
remainder of the increase in cost of sales, in the year-to-date,
reflects the narrowing of margins for hosiery and for outerwear knitting
machines due to declines in demand.
Selling expenses increased by about $211,000 in the latest quarter as
compared to the same quarter of last year and by about $944,000 in the
current nine months as compared to the same period of last year.
Increases in both of these periods occurred principally in salaries
and commissions, travel and trucking, and in letter of credit charges.
Substantial portions of those increases relate to the increased
operations of the Company's two outerwear knitting machine divisions
and the Company's dyeing and finishing equipment division.
General and administrative expenses in the current third fiscal
quarter declined by about $43,000 from the same quarter of last year.
In the year-to-date, general and administrative expenses decreased by
about $153,000 from the same period of last year. The major factors in
both of these reductions were decreases in profit-based bonuses.
Income taxes in the quarter ended April 1, 1995, were 38.8% of pre-tax
profits as compared to 35.4% in the same period of last year. This
increase reflects adjustments to income tax liabilities upon
finalization of the prior year's tax returns.
Page 8
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OUTLOOK
As of January 1, 1995, the Company no longer represents Washex
Machinery Company of Wichita Falls, Texas, for the sale of textile dye
machines for garments, socks and women's sheer hosiery. This product
line contributed revenues in fiscal 1993 of approximately $2.2 million,
in fiscal 1994 of approximately $340,000, with no sales in fiscal 1995.
The Company's English subsidiary, specializing in sweater machines,
initiated operations at the beginning of the Company's current fiscal
year. That division has contributed approximately $2.4 million in
revenues for the fiscal year-to-date.
The sweater manufacturing industry in the United States, as
served by the Company, appears to be in a relatively weak position.
The Company's sales of sweater machines in the United States for the
balance of fiscal 1995 could be affected by this apparent weakness.
The sock industry in the United States and Canada, which the Company
serves, presents a mixed picture at the present time. There is weak
demand for fine gauge rib socks with a somewhat stronger demand for
coarse gauge rib socks. The reciprocated heel and toe athletic sock
market is showing a moderate up-surge in demand.
LIQUIDITY AND CAPITAL RESOURCES
At April 1, 1995, the Company's working capital totaled $17.5
million. This figure represents an increase of about $910,000 from the
Company's working capital position at the end of the prior fiscal year,
July 2, 1994.
In the current year-to-date, operating activities used $902,000. This
compares to usage of $1,567,000 in the same nine months of last year.
In the current period, increases in inventories and in pre-paid expenses
and deposits were partially offset by a decrease in accounts receivable
and an increase in accounts payable.
Capital expenditures, less dispositions, used about $276,000 in the
current year-to-date as compared to about $27,000 in the prior year.
Cash flow in the first nine months of the prior year included the net
proceeds of the common stock offering. The current year does not
include any such activity. As a result, financing activities used
about $114,000 in the current period as compared to financing activities
having provided about $7.6 million in the same period of last year.
Overall, net cash decreased by about $1.3 million as compared to an
increase of about $6.0 million in the same period of last year.
The Company presently has no material commitments for capital
expenditures and does not anticipate incurring such commitments in the
balance of fiscal 1995.
Page 9
<PAGE>
SEASONALITY AND OTHER FACTORS
There are certain seasonal factors that may affect the Company's
business. Traditionally, manufacturing businesses in Italy close for
the month of August, and the Company's customers close for one
week in July. Consequently, no shipments or deliveries, as the case
may be, of machines distributed by the Company that are manufactured in
Italy are made during these periods in the Company's first quarter.
In addition, manufacturing businesses in Italy generally close for two
weeks in December, during the Company's second quarter.
Fluctuations in customer orders or other factors may affect quarterly
variations in net revenues from year to year.
EFFECTS OF INFLATION AND CHANGING PRICES
Management believes that inflation has not had a material effect on the
Company's operations.
Most of the Company's machines and spare part purchases are denominated
and payable in Italian lira. Currency fluctuations of the lira could
result in substantial price level changes and therefore impede or
promote import/export sales and substantially impact profits.
However, to reduce exposure to adverse foreign currency fluctuations
during the period from customer orders to payment for goods sold, the
Company enters into forward foreign exchange contracts. The Company is
not able to assess the quantitative effect that such currency
fluctuations could have upon the Company's operations. There can be no
assurance that fluctuations in foreign currency exchange rates will not
have a significant adverse effect on future operations.
Page 10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On August 21, 1989, Dorothy L. Boyd, Administratrix,
instituted an action against the Company in the United States
District Court for the Western District of Virginia,
seeking $5,000,000.00 in damages allegedly resulting from a
wrongful death that involved machinery manufactured and sold
by the Company more than 20 years before the death. On
January 12, 1994, the District Court granted the Company's
Motion for Summary Judgment and entered a judgment for
the Company. The plaintiff appealed to the United States
Court of Appeals for the Fourth Circuit, which on
December 12, 1994, affirmed the judgment of the District
Court. The time in which the plaintiff could either petition
the Fourth Circuit Court for a re-hearing or petition the
United States Supreme Court for a writ of certiorari, has
expired. Therefore, this case is completed with no finding
of liability on the part of the Company.
Item 6. Exhibits and reports on Form 8-K
(a) No reports on Form 8-K were filed by the Registrant
during or applicable to the period reported here.
(b) Exhibit 11. - Computation of Net Income Per Share
Page 11
<PAGE>
Exhibit 11
NET INCOME PER SHARE
The following table presents the information needed to compute primary
income per common share:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
For the Three Months Ended For the Nine Months Ended
4-1-95 4-2-94 4-1-95 4-2-94
(13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks)
<S> <C> <C> <C> <C>
Net income applicable to
common stock $ 495,486 $1,032,686 $1,037,371 $ 2,445,832
Weighted average shares
outstanding 3,236,199 3,181,173 3,236,199 2,700,087
Less: Treasury shares (27,600) (27,600) (27,600) (27,600)
Add: Assumed exercise of
options reduced by the
number of shares purchased
with proceeds 51,221 148,099 63,814 147,590
Adjusted weighted average
of shares outstanding 3,259,820 3,301,672 3,272,413 2,820,077
Net income per share $ .15 $ .31 $ .32 $ .87
</TABLE>
Page 12
<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.
SPEIZMAN INDUSTRIES, INC.
(Registrant)
Date: May 11, 1995 /s/ Robert S. Speizman
Robert S. Speizman
President
Date: May 11, 1995 /s/ Josef Sklut
Josef Sklut
Vice President-Finance
(Chief Financial Officer)
Page 13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-START> JUL-03-1994
<PERIOD-END> APR-01-1995
<CASH> 4,142,590
<SECURITIES> 0
<RECEIVABLES> 13,883,495
<ALLOWANCES> (94,920)
<INVENTORY> 10,054,899
<CURRENT-ASSETS> 30,075,601
<PP&E> 2,089,537
<DEPRECIATION> (1,417,216)
<TOTAL-ASSETS> 31,251,116
<CURRENT-LIABILITIES> 12,586,497
<BONDS> 0
<COMMON> 323,620
0
0
<OTHER-SE> 18,207,767
<TOTAL-LIABILITY-AND-EQUITY> 31,251,116
<SALES> 45,803,828
<TOTAL-REVENUES> 45,803,828
<CGS> 40,240,039
<TOTAL-COSTS> 44,178,378
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,921)
<INCOME-PRETAX> 1,628,371
<INCOME-TAX> 591,000
<INCOME-CONTINUING> 1,037,371
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,037,371
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
