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 September 30, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-5863
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JACLYN, INC.
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(Exact name of registrant as specified in its charter)
Delaware 22-1432053
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(State or other jurisdiction of (I.R.S. Employer Incorporation or
organization) Identification No.)
635 59th Street, West New York, New Jersey 07093
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(Address of principal executive offices)
(Zip Code)
(201) 868-9400
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(Registrant's telephone number, including area code)
NONE
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all the 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 registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 1, 2002
- ------------------------------------ -------------------------------
Common Stock, par value $1 per share 2,561,391
JACLYN, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1 Condensed Consolidated Balance Sheets -
September 30, 2002 (unaudited) and June 30, 2002
(derived from audited financial statements) 3
Condensed Consolidated Statements of Earnings - Three Months
Ended September 30, 2002 and 2001 (unaudited) 4
Condensed Consolidated Statements of Cash Flows - Three Months
Ended September 30, 2002 and 2001 (unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3 Quantitative and Qualitative Disclosures about Market Risk 14
Item 4 Controls and Procedures 14
Part II. Other Information:
Item 6 Exhibits and reports on Form 8-K 14
Signatures 15
Certifications 16
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JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
September 30, June 30,
2002 2002
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(Unaudited) (See below)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 125 $ 95
Accounts receivable, net 20,984 14,667
Inventory 11,540 11,395
Prepaid expenses and other current assets 3,065 2,594
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TOTAL CURRENT ASSETS 35,714 28,751
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PROPERTY, PLANT AND EQUIPMENT, net 1,228 1,211
OTHER ASSETS 5,297 5,456
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TOTAL ASSETS $ 42,239 $ 35,418
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank $ 14,770 $ 9,095
Accounts payable 4,731 7,081
Other current liabilities 2,898 2,828
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TOTAL CURRENT LIABILITIES 22,399 19,004
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MORTGAGE PAYABLE 3,120 -
OTHER LONG TERM LIABILITIES 590 590
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock 3,369 3,369
Additional paid-in capital 12,117 12,117
Retained earnings 7,881 7,575
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23,367 23,061
Less: Common shares in treasury at cost 7,237 7,237
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TOTAL STOCKHOLDERS' EQUITY 16,130 15,824
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 42,239 $ 35,418
============ ============
The June 30, 2002 Balance Sheet is derived from audited financial statements.
See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Share Amounts)
Three Months Ended
September 30,
2002 2001
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Net sales $ 29,945 $ 18,220
Cost of goods sold 23,463 13,654
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Gross profit 6,482 4,566
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Shipping, selling and administrative expenses (including a non-cash
charge of $79,000 in 2002 - See Note 5) 5,846 4,427
Interest expense 159 56
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6,005 4,483
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Earnings before income taxes 477 83
Provision for income taxes 171 30
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Net earnings $ 306 $ 53
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Net earnings per common share - basic and diluted $ .12 $ .02
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Weighted average number of shares outstanding - diluted 2,587,000 2,561,000
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See notes to condensed consolidated financial statements.
-4-
JACLYN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
September 30,
2002 2001
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Cash Flows From Operating Activities:
Net Earnings $ 306 $ 53
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization 95 73
Changes in assets and liabilities:
Increase in accounts receivable, net (6,317) (1,687)
(Increase) decrease in inventory (145) 362
Increase in prepaid expenses and other assets (312) (544)
Decrease in accounts payable and other current liabilities (1,950) (1,226)
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Net cash used in operating activities (8,323) (2,969)
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Cash Flows From Investing Activities:
Purchase of property and equipment (112) (15)
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Net cash used in investing activities (112) (15)
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Cash Flows From Financing Activities:
Increase in loans payable - bank 5,675 3,550
Payment of acquisition notes (450) (50)
Proceeds from mortgage loan 3,240 -
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Net cash provided by financing activities 8,465 3,500
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Net Increase in Cash and Cash Equivalents 30 516
Cash and Cash Equivalents, beginning of period 95 66
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Cash and Cash Equivalents, end of period $ 125 $ 582
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Supplemental Information:
Interest paid $ 152 $ 57
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Taxes paid $ 67 $ 7
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See notes to condensed consolidated financial statements.
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JACLYN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation:
The accompanying unaudited condensed consolidated balance sheet as of September
30, 2002, the condensed consolidated statements of earnings and cash flows for
the three month periods ended September 30, 2002 and 2001, have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States of America 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. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the audited financial statements and notes thereto included in
the Company's 2002 Annual Report to Stockholders. The results of operations for
the period ended September 30, 2002 are not necessarily indicative of operating
results for the full fiscal year.
1. Recently Issued Accounting Standards:
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred. This statement also established that fair value is
the objective for initial measurement of the liability. The provisions of
SFAS No. 146 are effective for exit or disposal activities that are
initiated after December 31, 2002. The Company is currently evaluating the
impact of SFAS No. 146 on its consolidated financial statements.
-6-
2. Earnings per Share:
The Company's calculation of Basic and Diluted Net Earnings Per Common
Share follows (in thousands, except share amounts):
Three Months Ended
September 30,
2002 2001
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Basic Net Earnings Per Common Share:
Net Earnings $ 306 $ 53
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Basic Weighted Average Shares Outstanding 2,561,000 2,561,000
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Basic Net Earnings Per Common Share $ .12 $ .02
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Three Months Ended
September 30,
2002 2001
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Diluted Net Earnings Per Common Share:
Net Earnings $ 306 $ 53
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Basic Weighted Average Shares Outstanding 2,561,000 2,561,000
Add: Dilutive Options 26,000 -
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Diluted Weighted Average Shares Outstanding 2,587,000 2,561,000
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Diluted Net Earnings Per Common Share $ .12 $ .02
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Options to purchase 458,000 and 422,000 common shares were outstanding at
September 30, 2002 and 2001, respectively, but were not included in the
computation of diluted earnings per share because the exercise price of the
options exceeded the average market price and would have been
anti-dilutive.
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3. Inventories:
Inventories consist of the following components (in thousands):
September 30, June 30,
2002 2002
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Raw materials $ 2,116 $ 4,816
Work in process 1,299 1,482
Finished goods 8,125 5,097
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$ 11,540 $ 11,395
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4. Financing Agreements
During fiscal 2002 the Company amended its bank line of credit to
accommodate the recently announced acquisition of Topsville, Inc. The
credit facility which extends through February 28, 2003, now provides for
short-term loans, letters of credit and bankers acceptances amounting to
$24,000,000. The Company can borrow up to $17,000,000 with the Company's
inventory and accounts receivable pledged to the bank as collateral,
provided it maintains a minimum ratio of cash and accounts receivable to
bank borrowing of 1.25 to 1, and a minimum tangible net worth of
$11,500,000. Borrowing on the short-term line of credit was $14,770,000 as
of September 30, 2002. At September 30, 2002, the Company was contingently
obligated on open letters of credit for approximately $6,656,000. There was
no borrowing on the banker's acceptance line as of September 30, 2002.
Borrowing during the year was at the bank's prime rate or below, at the
option of the Company. The bank's prime rate at September 30, 2002 was
4.75%.
Subsequent to June 30, 2002, the Company consummated a mortgage loan with a
bank lender in the amount of $3,250,000. The amount of the mortgage loan
was increased in October 2002, on a temporary basis through December 31,
2002, by $1,000,000 at the prime rate of interest. The financing is secured
by a mortgage of the Company's West New York, New Jersey headquarters and
warehouse facility. The loan bears interest at a fixed rate of 7% per
annum. The financing has a fifteen-year term, but is callable by the bank
lender at any time after September 1, 2007 and may be prepaid by the
Company, along with a prepayment fee, from time to time during the term of
the financing. The proceeds of the financing are being used for general
working capital purposes.
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5. Acquisitions:
On January 10, 2002, the Company acquired all of the issued and outstanding
stock of Topsville, Inc., a New York City based manufacturer and
distributor of private label infants' and children's clothing. The tangible
and intangible assets acquired include, among other things, finished goods,
work-in-process and raw material inventory, customer orders, trade names,
office leases in New York City and Hong Kong, an office/warehouse facility
in Florida, and office equipment, furniture and fixtures. The Company used
its existing line of bank credit to pay for a portion of the purchase price
at closing. The aggregate purchase price for the acquisition was
$3,246,000, of which $1,746,000 was paid at the closing of the transaction
and the remainder of which to be paid during the fifteen-month period after
closing. At September 30, 2002, $600,000 was unpaid under the terms of the
purchase agreement.
On January 19, 2001, the Company completed the acquisition of certain
assets of I. Appel Corporation, which manufactures and distributes robes,
dusters and loungewear to department stores. The aggregate purchase price
for the acquisition was approximately $700,000 for goodwill and certain
tangible fixed assets and included $100,000 in acquisition costs. At
September 30, 2002, $50,000 was unpaid under the terms of the purchase
agreement.
The Company recorded a pre-tax, non-cash amortization charge to earnings of
$79,000 to amortization expense within selling and administrative expenses
for the quarter ended September 30, 2002. These charges represent, the
remainder of the allocation of a portion of the purchase price pertaining
to those open orders (backlog) purchased from Topsville, Inc. which have
been shipped from July 1, 2002 to September 30, 2002.
There was no change in the carrying amount of goodwill for the quarter
ended September 30, 2002.
Assuming Topsville was acquired on January 1, 2001, the pro forma results
would have been as follows (in thousands, except per share amounts):
Quarter Ended
September 30,
2002 2001
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Net sales $ 29,945 $ 27,966
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Net earnings $ 356 $ 448
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Net earnings per share - diluted $ .14 $ .17
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the appropriate application of certain accounting
policies, many of which require estimates and assumptions about future events
and their impact on amounts reported in the financial statements and related
notes. Since future events and their impact cannot be determined with certainty,
the actual results will inevitably differ from our estimates. Such differences
could be material to the consolidated financial statements.
Management believes application of accounting policies, and the estimates
inherently required by the policies, are reasonable. These accounting policies
and estimates are constantly reevaluated, and adjustments are made when facts
and circumstances dictate a change. Historically, management has found the
application of accounting policies to be appropriate, and actual results
generally do not differ materially from those determined using necessary
estimates.
The Company's accounting policies are more fully described in Note 1 to the
consolidated financial statements, located in the Annual Report on Form 10-K
filed with the Securities and Exchange Commission on September 30, 2002.
Management has identified certain critical accounting policies that are
described below.
Merchandise inventory
The Company's merchandise inventory is carried at the lower of cost on a
first-in, first-out basis, or market. The Company writes down its inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
the cost of inventory and the estimated market value based upon assumptions
about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs
may be required.
Allowance for doubtful accounts
The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of its customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.
Market development accruals
The Company estimates reductions to revenue for customer programs and incentive
offerings including special pricing agreements, price protection, promotions and
other volume-based incentives. If market conditions were to decline, the Company
may take actions to increase customer incentive offerings possibly resulting in
an incremental reduction of revenue at the time the incentive is offered.
-10-
Long-lived assets, excluding goodwill
In evaluating the fair value and future benefits of long-lived assets, the
Company performs an analysis of the anticipated undiscounted future net cash
flows of the related long-lived assets. If the carrying value of the related
asset exceeds the undiscounted cash flows, the Company reduces the carrying
value to its fair value.
The Company believes at this time that the long-lived asset's carrying values
and useful lives continues to be appropriate. Future adverse changes in market
conditions or poor operating results of underlying investments could result in
an inability to recover the carrying value of the investments that may not be
reflected in an investment's current carrying value, thereby possibly requiring
an impairment charge in the future.
Goodwill
Goodwill is periodically reviewed for impairment. The carrying value of goodwill
would be impaired if the estimate of future discounted cash flows is less than
carrying value. To the extent these future projections or our strategies change,
the conclusion regarding impairment may differ from the current estimates.
Deferred taxes
Should the Company determine that it would not be able to realize all or part of
its net deferred tax asset in the future, an adjustment to the deferred tax
asset would be charged to income in the period such determination was made.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased $30,000 during the three-month
period ended September 30, 2002 to $125,000 from $95,000 at June 30, 2002.
Net cash was used in operating activities mostly to fund accounts receivable
totaling $6,317,000, to pay down accounts payable and other current liabilities
of $1,950,000, and to fund prepaid expenses and other current assets totaling
$312,000. Net cash used in operating activities was principally funded by
increasing the amount borrowed under the Company's line of credit by $5,675,000
and from the proceeds of a mortgage loan totaling approximately $3,240,000,
offset by payments of acquisition notes totaling $450,000.
During fiscal 2002, the Company amended its bank line of credit, which extends
through February 28, 2003. This credit facility provides the Company with
short-term loans, letters of credit and bankers acceptances amounting to
$24,000,000, with inventory and accounts receivable pledged to the bank as
collateral. The Company can borrow up to $17,000,000 in short-term loans. The
Company is required to maintain a minimum ratio of 1.25 to 1, cash and accounts
receivable to bank loans, as well as a minimum tangible net worth of
$11,500,000, and is in compliance with these requirements. In October 2002, the
Company borrowed an additional $1,000,000 (at the prime interest rate) under its
existing mortgage for immediate seasonal working capital needs. The Company
anticipates repaying such amount no later than December 31, 2002.
In addition, while the Company believes that funds provided by operations,
existing working capital and the Company's bank line of credit will be
sufficient to meet its short-term foreseeable working capital needs, the Company
is presently negotiating with several lending institutions to increase its line
of credit in order to accommodate anticipated increased sales volume.
-11-
There are no plans for significant capital expenditures in the near term.
Contractual Obligations and Commercial Commitments
To facilitate an understanding of our contractual obligations and commercial
commitments, the following data is provided as of September 30, 2002:
* * * * Payments Due by Period * * * *
Contractual Obligations Total 1 Year 2-3 Years 4-5 Years After 5 Years
----------- ----------- ----------- ----------- -------------
Notes Payable $14,770,000 $14,770,000 $ - $ - $ -
Acquisition Notes 650,000 650,000 - - -
Mortgage Payable 3,240,000 120,000 250,000 260,000 2,610,000
Royalties 329,000 82,000 247,000 - -
Operating Leases 2,773,000 874,000 1,027,000 326,000 546,000
----------- ----------- ----------- ----------- -----------
Total Contractual Obligations $21,762,000 $16,496,000 $ 1,524,000 $ 586,000 $ 3,156,000
----------- ----------- ----------- ----------- -----------
* * * * * * * * After * * * * * * * *
Other
Commercial Total Within 1 2-3 4-5
Commitments Commitments Year 1 Year Years Years 5 Years
- ---------------- ----------- ----------- ----------- ----------- ----------- -----------
Letters of
Credit $ 6,656,000 $ 6,656,000 - - - -
----------- ----------- ----------- ----------- ----------- -----------
Total
Commercial $ 6,656,000 $ 6,656,000 - - - -
Commitments
----------- ----------- ----------- ----------- ----------- -----------
RESULTS OF OPERATIONS
Net sales were $29,945,000 during the three-month period ended September 30,
2002 compared to $18,220,000 in the three-month period ended September 30, 2001.
The increase in net sales this quarter compared to last year's first quarter was
mostly the result of higher volume in the Company's Apparel category.
Net sales for the Apparel category were $22,121,000 for the quarter ended
September 30, 2002, which reflects a $12,296,000, or 125%, increase from the
prior year's comparable quarter net sales. The sales increase for this category
was primarily due to net sales from the Topsville children's apparel business,
acquired in January 2002. In addition, increased customer orders from existing
customers of the women's apparel catalogue business contributed to the increase.
-12-
Net sales for the Handbags category were $7,824,000 for the three-month period
ended September 30, 2002, a decrease of $571,000, or 6.8 %, from the same
three-month period in the prior fiscal year, for the most part reflecting no
current sales from the Anne Klein license (which was not renewed on June 30,
2002), offset, in part, by increased demand for our children's bag business.
The overall gross profit percentage declined 3.5% to 21.6% this quarter as
compared to 25.1% in last year's same quarter due primarily to overall lower
margins in the Handbags category.
Gross margins for the Apparel category in the three-month period of the current
fiscal quarter increased to 21.4% from 20.2% in last year's comparable quarter
due to the addition of Topsville's business and much stronger volume-related
margins in the women's apparel catalogue business, specifically as these margins
are affected by the relative level of fixed production costs.
Gross margins for the Handbags category of 22.4%, averaged 8.4% lower than the
prior year comparable period reflecting, for the most part, lower competitive
margins in the Company's premium bag business and the non-renewal of the Anne
Klein licensing business noted above.
Shipping, selling and administrative expenses increased $1,419,000 in the first
quarter versus the prior year's comparable period primarily due to the Topsville
acquisition. However, as a percentage of net sales, shipping, selling and
administrative expenses decreased by 4.8% mainly due to the relative level of
fixed costs compared to much higher net sales for the quarter ended September
30, 2002.
Interest expense of $159,000 in the first quarter of fiscal 2002 compares with
$56,000 in the prior comparable period primarily the result of a much higher
level of bank borrowing in the current period required to support much greater
volume versus last year's same period.
Earnings before income taxes in this fiscal year's three-month period as
compared to the equivalent period of fiscal 2001 were higher due primarily to an
increase in net sales and gross profit dollars, offset by somewhat higher
shipping, selling and administrative expenses, and higher interest expense,
discussed above. Net earnings for the quarter ended September 30, 2002 were
$306,000. Excluding the remaining after-tax, non-cash charge of $50,000 relating
to the accounting for the acquisition of Topsville, Inc., the Company had
earnings for the period ended September 30, 2002 of $356,000 compared to net
earnings for the same period last year of $53,000.
This Form 10-Q may contain forward-looking statements that are being made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The Company's actual performance and results may vary as a
result of a number of risks, uncertainties and other factors, both foreseen and
unforeseen, including general economic and business conditions, competition in
the accessories and apparel markets, continuing favorable sales patterns,
pricing and consumer buying trends.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. This statement also
established that fair value is the objective for initial measurement of the
liability. The provisions of SFAS No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002. The Company is currently
evaluating the impact of SFAS No. 146 on its consolidated financial statements.
-13-
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the information set forth under the
caption "Item 7A-Quantitative and Qualitative Disclosures About Market Risk" in
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
2002.
Item 4. Controls and Procedures.
Within the 90-day period prior to the filing date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
management of the Company, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the Company's evaluation,
the Company's Chief Executive Officer and Chief Financial Officer concluded that
the Company's disclosure controls and procedures were effective. There have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect those controls subsequent to the date of the
Company's evaluation.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit Number Description
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
b) Reports on Form 8-K.
The registrant did not file any reports on Form 8-K during the three
months ended September 30, 2002.
-14-
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.
JACLYN, INC.
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(Registrant)
November 14, 2002 /s/ Allan Ginsburg
----------------------------
Allan Ginsburg
Chairman of the Board
November 14, 2002 /s/ Anthony Christon
----------------------------
Anthony Christon
Vice President
Chief Financial Officer
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CERTIFICATIONS
I, Robert Chestnov, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Jaclyn, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Robert Chestnov
- -------------------------------
Robert Chestnov, President and
Principal Executive Officer
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I, Anthony Christon, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Jaclyn, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Anthony Christon
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Anthony Christon, Principal Financial
Officer
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