UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 30, 1995
Commission File No. 0-5680
BURKE MILLS, INC.
(Exact name of registrant as specified in its charter)
State or other jurisdiction 56-0506342
of incorporation or (I.R.S. Employer Identification No.)
organization: North Carolina
191 Sterling Street, N.W.
Valdese, North Carolina 28690
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 704 874-2261
Securities registered pursuant to Section 12(g) of the Act:
Common Stock No Par Value (Stated Value of $0.66 Per Share)
(Title of Class)
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 (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 by check mark if a disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the registrant (computed by reference to the closing
price on March 1, 1996) was $2,689,713.
The number of shares outstanding of the registrant's only
class of common stock as of March 1, 1996 is 2,741,168 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
ITEM 1. BUSINESS
(a) General Development of Business. The general
development of the business of Burke Mills, Inc. ("the Company")
during the fiscal year ended December 30, 1995 was marked by the
efforts of the Company to concentrate on maintaining its existing
products and its existing markets. The Company continued its
efforts to operate as efficiently and cost-effectively as possible
while maintaining product quality.
(b) Financial Information About Industry Segments. The
Company had only one industry segment during the fiscal year ended
December 30, 1995.
(c) Narrative Description of Business. The Company is
engaged in twisting, texturing, winding, dyeing, processing and
selling of filament, novelty and spun yarns and in the dyeing and
processing of these yarns for others on a commission basis.
The principal market served by the Company are upholstery and
industrial uses through the knitting and weaving industry.
The Company's products are sold in highly competitive markets
primarily throughout the United States. Competition in the
Company's products is on the basis of combination of price, service
and product quality. Many of the Company's competitors are
divisions or segments of larger, diversified firms with greater
financial resources than those of the Company.
The methods of distributions of the Company's products consist
of the efforts of the Company's sales force which makes contact
with existing and prospective customers. The Company markets its
products throughout the United States, with the bulk of business
being primarily in the eastern United States, through two salesmen
employed directly by the Company on salary and a number of
commissioned sales agents working on various accounts.
The dollar amount of backlog of unshipped orders as of
December 30, 1995 was $3,377,000 and as of December 31, 1994 was
$3,907,000. Generally, all orders in backlog at the end of a year
are shipped the following year. The backlog has been calculated by
the Company's normal practice of including orders which are
deliverable over various periods and which may be changed or
cancelled in the future.
The most important raw materials used by the Company are
unprocessed raw yarn, dyes and chemicals. The Company believes
that its sources of supply for these materials are adequate for its
needs and that it is not substantially dependent upon any one
supplier.
With respect to the practices of the Company relating to
working capital items, the Company generally carries enough
inventory for approximately 56 days. On the average, the Company
turns its inventory approximately 6 to 7 times each year. The
Company has been able to meet its delivery schedules and has been
able to enjoy a ready supply of raw materials from suppliers. In
the fiscal year ended December 30, 1995, approximately 11.6% of the
Company's sales was from dyeing and processing of yarn for
customers who supplied the yarn. The Company does not allow
customers the right to return merchandise except where the
merchandise is defective. The Company rarely allows payment terms
to its customers beyond sixty (60) days, and the Company has
experienced no significant problems in collecting its accounts
receivable. The Company believes that industry practices are very
similar to that of the Company in regard to these matters.
The Company sells a substantial portion of its accounts
receivable to a commercial factor so that the factor assumes the
credit risk for these accounts and effects the collection of these
accounts. The Company has the right to borrow from the factor up
to ninety percent (90%) of the face amount of each account sold to
the factor. The Company believes that many companies in the
industry factor their receivables in the same or similar fashion.
Substantially all of the Company's manufacturing operations
are run by electrical energy purchased from local utility companies
and its premises are heated with oil and gas. The Company has not
experienced any shortages in electricity, oil or gas during the
fiscal year. The Company has made no arrangements for alternate
sources of energy. While energy related difficulties are not
expected to prevent the Company from achieving desired production
levels, energy shortages of extended duration could have an adverse
impact on the Company's operations.
The Company has established a recycling program for its major
waste items: yarn, cardboard, plastic tubes and cleaning fluid.
The Company's efforts in recycling earned the 1989 North Carolina
Small Business Recycling Award.
The Company has made various changes in its plant that
regulate the discharge of materials into the environment. The
Company believes it is in compliance with all presently applicable
federal, state and local legislative and administrative regulations
concerning environmental protection; and, although it cannot
predict the effect that future changes in such regulations may
have, particularly as such changes may require capital expenditures
or affect earnings, it does not believe that any competitor subject
to the same or similar regulations will gain any significant and
competitive advantages as a result of any such changes. Compliance
by the Company during the fiscal year ended December 31, 1994 with
federal, state and local environmental protection laws had no
material effect on capital expenditures, earnings or the
competitive position of the Company.
On March 10, 1996, the Company had 308 employees.
The Company's yarn division is its only division.
During the fiscal year ended December 30, 1995, sales to CMI
Industries, Inc. and sales to Collins & Aikman Co. exceeded ten
percent of the Company's revenue for that year. The loss of either
customer would have a material adverse effect on the Company in the
short run; and, the Company believes that it would be able to
replace the business within a reasonable time.
(d) Financial Information About Foreign and Domestic
Operations and Export Sales. The Company had no material amounts
of sales in foreign markets during the last three fiscal years.
The Company had sales to customers in Mexico and Canada during the
last three fiscal years which amounted to less than three percent of
its total sales in each year for each country.
ITEM 2. PROPERTIES
The executive offices and manufacturing plant of the Company
are located at Valdese, North Carolina, which is 75 miles northwest
of Charlotte, North Carolina, and 60 miles east of Asheville, North
Carolina. The main plant and executive offices are located on a
sixteen acre tract of land owned by the Company. Eleven acres of
this tract are encumbered by a first priority lien deed of trust
held by First Union National Bank of North Carolina. The main
plant building used by the Company contains approximately 308,928
square feet. The Company also owns an auxiliary building
containing 36,600 square feet located adjacent to its main plant.
This latter building is currently used for warehousing yarn and as
a distribution center.
The plant buildings are steel and brick structures protected
by automatic sprinkler systems. The various departments, with the
exception of the production dyehouse, are heated, cooled and
humidified.
The Company considers all its properties and manufacturing
equipment to be in a good state of repair, well maintained and
adequate for its present needs.
The Company utilizes substantially all of the space in its
main plant for its offices, machinery and equipment, storage and
shipping and receiving areas. The Company utilizes about half of
the space in the auxiliary building and plans to utilize all of
this building for warehouse and distribution purposes in the near
future.
The approximate maximum capacity in pounds per year of the
Company's machinery and equipment, based upon operating the
machinery and equipment seven (7) days per week fifty (50) weeks
per year, and the approximate percentage of utilization thereof
during the fiscal year ended December 30, 1995 are as follows:
Pounds/Year 1995
Department Capacity Utilization
Twisting Machines 2,500,000 73%
Winding Machines 20,000,000 58%
Texturing Machines 4,835,000 64%
Dyeing Equipment 18,700,000 53%
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party and its property is not subject to
any material pending legal proceedings other than ordinary routine
litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) The principal United States (or other) market on which
the Company's common stock is being traded is the United States
over-the-counter market. The range of high and low bid quotations
for the Company's common stock for each quarterly period during the
past two year period ending December 30, 1995 (as obtained from the
office of Merrill Lynch Pierce Fenner & Smith in Charlotte, North
Carolina) is as follows:
Quarter Ending High Bid Low Bid
-------------- -------- -------
1994
March 31 $1.25 $1.125
June 30 $2.625 $1.125
September 30 $7.00 $2.50
December 31 $6.50 $3.75
1995
March 31 $6.875 $3.75
June 30 $6.00 $3.50
September 30 $4.125 $3.125
December 31 $4.125 $2.375
Such over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
(b) As of February 23, 1996 there were 514 holders of the
common stock of the Company.
(c) The Company has declared no dividends on its common stock
during the past two years.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth on the following page,
for the five years ended December 30, 1995 have been derived from
the audited financial statements of the Company. The data should
be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the audited
financial statements and related notes thereto and other financial
information included therein.
BURKE MILLS, INC. - ITEM 6. SELECTED FINANCIAL DATA
(in thousands except per share data)
Year Ended
December 30, December 31, January 1, January 2, December 28,
1995 1994 1994 1993 1991
SELECTED INCOME STATEMENT DATA
Net sales $34,148 $36,194 $26,835 $22,072 $19,784
Cost of sales 30,666 30,928 24,292 19,861 17,837
------- ------- ------- ------- -------
Gross profit $ 3,482 $ 5,266 $ 2,543 $ 2,211 $ 1,947
======= ======= ======= ======= =======
Income before income taxes $ 1,156 $ 3,376 $ 690 $ 620 $ 172
Income taxes 212 867 316 211 63
------- ------- ------- ------- -------
Net Income $ 944 $ 2,509 $ 374 $ 409 $ 109
======= ======= ======= ======= =======
Per Share (Note A)
Net Income $ .34 $ .92 $ .14 $ .15 $ .04
Cash dividends declared per
common share None None None None None
Weighted average number of
common shares outstanding 2,741 2,741 2,741 2,741 2,741
SELECTED CASH FLOW DATA
Capital expenditures $ 6,372 $ 1,541 $ 1,374 $ 1,257 $ 278
Depreciation $ 1,052 $ 1,006 $ 903 $ 849 $ 837
Cash provided by
operating activities $ 2,004 $ 2,186 $ 985 $ 3,219 $ 314
December 30, December 31, January 1, January 2, December 28,
1995 1994 1994 1993 1991
------------ ------------ ---------- ---------- ------------
SELECTED BALANCE SHEET DATA
Current assets $ 7,641 $ 8,814 $ 7,382 $ 6,082 $ 5,679
Current liabilities 2,171 2,944 2,923 2,173 1,334
------- ------- ------- ------- -------
Working capital $ 5,470 $ 5,870 $ 4,459 $ 3,909 $ 4,345
======= ======= ======= ======= =======
Current ratio 3.52 2.99 2.53 2.80 4.26
Total assets $20,769 $16,621 $14,655 $13,086 $12,123
Long-term debt $ 4,964 $ 995 $ 1,645 $ 1,765 $ 2,249
Deferred income taxes $ 1,406 $ 1,399 $ 1,312 $ 748 $ 548
Shareholders' equity $12,228 $11,284 $ 8,775 $ 8,401 $ 7,992
(A) Income per share has been computed based on the weighted average
number of common shares outstanding during each period.
ITEM 7. BURKE MILLS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth selected operating data of the Company
as percentages of net sales for the periods indicated.
Relationship to Total Revenue
For the Year Ended Period to Period
----------------------------- ----------------
December 30, December 31, January 1, Increase (Decrease)
1995 1994 1994 1994-1995 1993-1994
------ ------ ------ --------- ---------
Net sales 100.0% 100.0% 100.0% ( 5.7%) 34.9%
Cost of sales 89.8 85.5 90.5 ( 0.8) 27.3
------ ------ ------ --------- ---------
Gross profit margin 10.2 14.5 9.5 ( 33.9) 107.0
Selling, general,
administrative and
factoring expenses 6.2 5.0 5.8 15.9 18.0
------ ------ ------ --------- ---------
Operating earnings 4.0 9.5 3.7 ( 60.4) 246.8
Other income 0.2 0.3 0.3 ( 21.3) 36.2
Other expenses (0.8) ( 0.5) ( 1.4) 77.6 ( 57.6)
------ ------ ------ --------- ---------
Income before income taxes 3.4 9.3 2.6 ( 65.7) 389.1
Income taxes 0.6 2.4 1.2 ( 75.5) 174.3
------ ------ ------ --------- ---------
Net income 2.8% 6.9% 1.4% ( 62.4%) 570.5%
====== ====== ====== ========= =========
BURKE MILLS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Results of Operations
- - ---------------------
1995 Compared to 1994
- - ---------------------
Net Sales
- - ---------
Net Sales for the 1995 year aggregated $34,148,493, representing a
decrease of $2,045,264, or 5.7%, as compared to net sales volume of
$36,193,757 recorded by the Company for 1994. Although net sales dollars
decreased by 5.7%, total pounds shipped decreased by 12.8%. Full yarn sales
made by the Company were almost equivalent in both dollar and pounds shipped
for both 1995 and 1994. Sales from commission yarn sales (the dyeing and
processing of customer owned yarns) decreased both in dollars and pounds
by 33.9% and 41.6%, respectively, in 1995 compared with 1994.
Cost of Sales and Gross Margin
- - ------------------------------
Cost of sales which aggregated $30,666,567 for 1995 only decreased
by $261,536 or 0.8%, as compared to 1994.
In spite of the decline in net sales dollars, material cost only
decreased by 1.4% compared to 1994, inasmuch as full yarn sales for 1995
were almost equivalent in dollars and pounds with the 1994 year.
Labor costs decreased by 0.3% and manufacturing overhead actually
increased by 3.0%, as a result of costs incurred for the time and overhead
spent in absorbing the new technology undertaken by the Company in 1995.
Inasmuch as net sales for 1995, as compared to 1994, decreased by 5.7%,
while cost of sales decreased by only 0.8%, the 1995 gross margin decreased
to 10.2%, as compared to 14.5% recorded in 1994.
Results of Operations (Continued)
- - ---------------------------------
1995 Compared to 1994
- - ---------------------
Selling, General and Administrative Expenses
Selling, general and administrative expenses for 1995 aggregated
$1,945,951, or 5.7%, of net sales, as compared to $1,597,829, or 4.4%, of
net sales in 1994. The increase resulted primarily from management salaries
and fringe costs, travel costs, professional services, stockholders'
informational data, commissions, and employee benefits.
Factor's Charges
- - ----------------
Factor's charges for 1995 aggregated $177,901, or .52% of net sales as
compared to $235,253, representing .65%, of net sales in 1994. The ratio
of sales made to factored accounts versus nonfactored accounts for 1995
remained approximately the same as 1994. However, the factoring rate paid
to the factor was reduced during 1995.
Operating Margins
- - -----------------
As a result of the discussion above with respect to the 1995 decrease
in net sales and gross profit percentage, together with the increase in the
percentage to net sales of selling, general and administrative expenses,
the Company reported operating earnings of $1,358,074 in 1995, compared to
operating earnings of $3,432,572 in 1994.
Interest Income
- - ---------------
Interest income for 1995 was $67,966 as compared to $84,306 in 1994.
The interest income was primarily interest earned from matured funds held
by the Company's factor and funds held in a money market account with the
Company's bank.
Sundry Other Income
- - -------------------
Sundry other income increased to $12,275 in 1995, as compared to $5,919
in 1994. The increase of $6,356 was primarily due to additional revenue
from scrap parts sales.
Interest Expense
- - ----------------
Interest expense for the year ended December 30, 1995 increased to
$281,752, as compared to $158,669 in 1994. Interest expense for 1995 and
1994 resulted primarily from interest on the Company's long-term debt. The
increase resulted from additional long-term debt incurred to fund the
acquisition of property, plant and equipment which aggregated $6,371,819
in 1995.
Results of Operations (Continued)
- - ---------------------------------
1995 Compared to 1994
- - ---------------------
Income Before Provision for Income Taxes
- - ----------------------------------------
Income before provision for income taxes for 1995 was $1,156,451, as
compared to $3,375,808 for 1994. The 1995 decrease of $2,219,357 resulted
from the reduction in sales for 1995, coupled with the reduction in gross
profit margin, increased selling, general and administrative expenses and
interest costs.
Provision for Income Taxes
- - --------------------------
Provision for income taxes in 1995 was impacted by an upward adjustment
of the alternative minimum taxes available and by the overaccrual of 1994
income taxes, resulting in a reduction in 1995 income taxes. In 1994, the
income tax provision was reduced as a result of the overaccrual in 1993 of
a valuation allowance on deferred tax assets. The following table
represents an analysis of the tax provisions of 1995 and 1994 taxes:
1995 1994
---- ----
Provision for income taxes $446,429 $1,322,200
Less: Overaccrual of 1994
income taxes and adjustment of
alternative minimum taxes
available as a credit 234,219 -
Overaccrual of 1993 valuation
allowance on deferred tax assets - 455,400
-------- ----------
$212,210 $ 866,800
For 1995, the provision for income taxes of $446,429 would represent a
tax provision of 38.6% rather than 18.4%. Earnings per share would be
reduced by $.09 per share to $.26 rather than the $.34 shown in the
statement of income.
For 1994, the provision for income taxes of $1,322,200 would represent
a tax provision of 39.2% rather than the 25.7%.
Results of Operations
- - ---------------------
1994 Compared to 1993
- - ---------------------
Net Sales
- - ---------
Net Sales for 1994 year aggregated $36,193,757, representing an
increase of $9,359,110, or 34.9%, as compared to net sales volume of
$26,834,647 recorded by the Company for 1993. Although net sales increased
by 34.9%, total pounds shipped increased by only 30.4%. This is explained
below by the increase in sales mix to a greater portion of full yarn sales.
Full yarn sales dollars increased by 37.8% with a corresponding increase in
full yarn pounds of 42.1%. Sales from commission yarn sales (the dyeing and
processing of customer owned yarns) increased by 22.4% while commissions
pounds shipped increased by 10.0%.
The increase in sales to existing customers, to a new customer who
represented 12.9% of the Company's sales and a change in the sales mix to a
greater portion of full yarn sales are the factors responsible for the
increase in 1994 sales over those of 1993.
Cost of Sales and Gross Margin
- - ------------------------------
Cost of sales which aggregated $30,928,103 for 1994 increased by
$6,636,802,or 27.3%.
Material cost increased by $5,294,379, or 38.9%, as compared to 1993.
The major reason material cost increased by 38.9%, while net sales increased
by 34.9%, was a change in sales mix to a greater portion of full yarn sales.
Mill labor increased by $1,063,267, or 18.0%, as compared to 1993. The
major reasons mill labor increased were a 4.8% wage increase that began in
January 1994 and an increase in pounds shipped of 30.4%.
Manufacturing overhead only increased by $279,156, or 5.8%, as compared
to 1993, representing a tight control on fixed and variable manufacturing
costs.
Inasmuch as net sales for 1994, as compared to 1993, increased by 34.9%,
while cost of sales increased 27.3%, the 1994 gross profit margin increased
to 14.5%, as compared to 9.5% in 1993.
Results of Operations (Continued)
- - ---------------------------------
1994 Compared to 1993
- - ---------------------
Selling, General and Administrative Expenses
- - --------------------------------------------
Selling, general and administrative expenses for 1994 aggregated
$1,597,829, or 4.4%, of net sales, as compared to $1,378,717, or 5.1%, of
net sales in 1993.
Factor's Charges
- - ----------------
Factor's charges for 1994 aggregated $235,253, or .65% of net sales as
compared to $174,797, representing a like .65%, of net sales in 1993. The
ratio of sales made to factored accounts versus nonfactored accounts for
1994 remained approximately the same as 1993.
Operating Margins
- - -----------------
As a result of the discussion above with respect to the 1994 increase
in net sales and gross profit percentage, together with the decrease in the
percentage to net sales of selling, general and administrative expenses, the
Company reported operating earnings of $3,432,572, compared to operating
earnings of $989,832 in 1993.
Interest Income
- - ---------------
Interest income for 1994 was $84,306 as compared to $51,464 in 1993. The
interest income was primarily interest earned from matured funds held by the
Company's factor and funds held in a money market account with the Company's
bank.
Sundry Other Income
- - -------------------
Sundry other income decreased to $5,919 in 1994, as compared to $23,380
in 1993. The decrease of $17,461 was primarily due to refunds received in
1993 of property taxes for the years 1991 and 1990.
Interest Expense
- - ----------------
Interest expense for the year ended December 31, 1994 decreased to
$158,669, as compared to $179,588 in 1993. Interest expense for 1994 and
1993 resulted from interest on the Company's long-term debt. The reduction
results primarily from the decrease in long-term debt as a result of
required monthly payments. The interest rate on the principal amount of
such debt varies with increases or decreases in the prime rate.
Results of Operations (Continued)
- - ---------------------------------
1994 Compared to 1993
- - ---------------------
Gain/Loss on Sale and Disposal of Property Assets
- - -------------------------------------------------
The gain on sale of property assets in 1994 resulted from sale of fully
depreciated property assets. For 1993, the loss on disposal of property
assets of $194,863 resulted from a gain of $1,800 on equipment sold, a loss
of $64,728 on assets abandoned and a loss of $131,935 on assets no longer
in existence determined as a result of a physical inventory of property
assets, In the opinion of management most of the machines which could not
be located in 1993, during the physical inventory of property assets, were
used for replacement of broken or worn-out parts of other machines which
are still in use.
Income Before Provision for Income Taxes
- - ----------------------------------------
Income before provision for income taxes for 1994 was $3,375,808, as
compared to $690,225 for 1993. The 1994 increase of $2,685,583 was the
result of a sharp increase in operating earnings, as discussed above, and a
small gain on sale of property assets compared with an approximate loss of
$195,000 on disposal of property assets in 1993.
Provision for Income Taxes
- - --------------------------
Provision for income taxes for the year ended December 31, 1994, was
impacted by the 1994 reduction in the valuation allowance on deferred tax
assets provided in the 1993 fiscal year. The following represents an
analysis of the tax provision for the 1994 year:
Federal income taxes $1,057,900
State income taxes 264,300
----------
1,322,200
Less: Overaccrual of 1993
valuation allowance on
deferred tax assets 455,400
----------
Provision for income taxes $ 866,800
==========
The provision of $1,322,200 would represent a provision of 39.2%. As a
result of the overaccrual of the valuation allowance on deferred tax assets
in 1993, the provision for 1994 has been decreased to 25.7%, an amount and
percentage which will not recur in succeeding years.
Results of Operations (Continued)
- - ---------------------------------
1995 - 1993 Sales Analysis
- - --------------------------
The table below sets forth an analysis of sales volume for the three
year period 1993 to 1995, inclusive. The table below discloses that full
yarn sales prices decreased from the high of $3.64 per pound in 1993 to
$3.58 in 1994 and $3.60 in 1995. Unit prices for commission sales increased
from $1.43 in 1993 to $1.60 in 1994 and $1.82 in 1995.
% of Sales $
% of Pounds of Per
Net Sales Yarn Sold Pound
--------- --------- -----
1995:
Yarn sales 88% 79% $3.60
Commission Sales 12 21 1.82
--------- --------- -----
Total 100% 100%
--------- ---------
1994:
Yarn sales 83% 69% $3.58
Commission Sales 17 31 1.60
--------- --------- -----
Total 100% 100%
--------- ---------
1993:
Yarn sales 82% 64% $3.64
Commission Sales 18 36 1.43
--------- --------- -----
Total 100% 100%
--------- ---------
Results of Operations (Continued)
- - ---------------------------------
Liquidity and Capital Resources:
- - --------------------------------
The Company sells a substantial portion of its accounts receivable to a
commercial factor so that the factor assumes the credit risk for these
accounts and effects the collection of the receivables. The Company has the
right to borrow from the factor up to 90% of the face amount of each account
sold to the factor. As of December 30, 1995, the Company had $2,808,790
due from its factor, all of which matured on January 26, 1996.
The Company had inventories of $2,869,939 as of December 30, 1995. The
Company's average inventories aggregated approximately $2,943,000 for 1995,
representing approximately 56 days inventory on hand. The Company's
inventories turn approximately 6 to 7 times each year.
The Company's working capital decreased by approximately $400,000 at
December 30, 1995 from that of December 31, 1994, primarily as a result of
property asset acquisitions in excess of long-term borrowings. The working
capital of the Company is deemed adequate for the operational needs of the
Company. The following table sets forth the Company's working capital and
working capital ratios as of the close of the last three years:
1995 1994 1993
---- ---- ----
Working capital $5,469,831 $5,870,156 $4,459,101
Working capital ratio 3.5 to 1 3.0 to 1 2.5 to 1
As a measure of current liquidity, the Company's quick position (cash,
cash equivalents and receivables over current liabilities) discloses the
following at December 30, 1995 and December 31, 1994:
December 30, December 31,
1995 1994
Cash, cash equivalents
and receivables $3,808,934 $5,126,145
Current liabilities 2,171,155 2,943,835
---------- ----------
Excess of quick assets
over current liabilities $1,637,779 $2,182,310
========== ==========
Results of Operations (Continued)
- - ---------------------------------
Liquidity and Capital Resources: (Continued)
- - --------------------------------------------
The aggregate long-term debt, including current maturities at December
30, 1995, was $5,179,678 compared to $1,810,897 at December 31, 1994. In
order to finance the acquisition of new property, plant and equipment of
$6,371,819 in 1995, the Company incurred new long-term debt of $4,329,337,
as more fully described in Note 7 of Notes to Financial Statements. The
existing long-term debt will be consolidated into a new long-term obligation
in 1996 of up to $6,000,000. Pursuant to an agreement with its bank, the
new obligation will have no principal maturities until February 1998.
Thereafter, principal payments of $62,500 will be payable monthly for 96
consecutive months.
The Company's long-term debt (exclusive of current maturities) to equity
ratios aggregated 40.6% at December 30, 1995, 8.8% at December 31, 1994 and
18.7% at January 1, 1994.
Capital expenditures are expected to aggregate $1,000,000 to $1,500,000
during 1996.
Inflation
- - ---------
In spite of raw material price increases in 1994 and 1995, the Company
does not believe that operations for the periods discussed have been
significantly affected by inflation. Further, the Company's performance in
maintaining control over elements of overhead, in conjuction with the
infusion of state of the art dyeing technology, have enabled it to remain
competitive with its competition.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
To the Stockholders and Board of Directors of Burke Mills, Inc.
We have audited the accompanying balance sheets of Burke Mills, Inc. as
of December 30, 1995 and December 31, 1994, and the related statements of
operations, changes in shareholders' equity, and cash flows for each of the
three years in the period ended December 30, 1995. Our audits also included
the financial statement schedule listed in the Index at Item 14(a). These
financial statements and financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Burke Mills,
Inc. as of December 30, 1995 and December 31, 1994, and the results of its
operations and its cash flows for each of the three years in the period
ended December 30, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
As discussed in Note 9 of the financial statements, Burke Mills, Inc.
changed its method of accounting for income taxes effective January 3, 1993,
pursuant to the requirements of FASB Statement No. 109.
s/ Cole, Samsel, and Bernstein LLC
Certified Public Accountants
Lodi, New Jersey
January 26, 1996
BURKE MILLS, INC.
BALANCE SHEETS
December 30, December 31,
1995 1994
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 834,833 $ 1,833,989
Accounts receivable 2,974,101 3,292,156
Inventories 2,869,939 2,924,194
Prepaid expenses and other current assets 92,667 187,952
Prepaid income taxes 289,846 -
Deferred income taxes 579,600 575,700
------------ ------------
Total Current Assets 7,640,986 8,813,991
------------ ------------
Property, Plant and Equipment 25,186,871 19,052,402
Less: Accumulated depreciation 12,059,241 11,244,950
------------ ------------
Property, Plant and Equipment - Net 13,127,630 7,807,452
------------ ------------
$20,768,616 $16,621,443
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 215,990 $ 816,121
Accounts payable 1,508,476 913,276
Income taxes payable - 581,267
Accrued salaries and wages 123,637 370,673
Other liabilities and accrued expenses 323,052 262,498
------------ ------------
Total Current Liabilities 2,171,155 2,943,835
Long-Term Debt 4,963,688 994,776
Deferred Income Taxes 1,405,700 1,399,000
------------ ------------
Total Liabilities 8,540,543 5,337,611
------------ ------------
Shareholders' Equity
Common stock, no par value (stated value, $.66)
Authorized - 5,000,000 shares
Issued and outstanding - 2,741,168 shares 1,809,171 1,809,171
Paid-in capital 3,111,349 3,111,349
Retained earnings 7,307,553 6,363,312
------------ ------------
Total Shareholders' Equity 12,228,073 11,283,832
$20,768,616 $16,621,443
------------ ------------
[FN]
See independent auditors' report and notes to financial statements.
BURKE MILLS, INC.
STATEMENTS OF OPERATIONS
Year Ended
----------
December 30, December 31, January 1,
1995 1994 1994
----------- ----------- -----------
Net Sales $34,148,493 $36,193,757 $26,834,647
----------- ----------- -----------
Costs and Expenses
Cost of sales 30,666,567 30,928,103 24,291,301
Selling, general and administrative
expenses 1,945,951 1,597,829 1,378,717
Factor's charges 177,901 235,253 174,797
----------- ----------- -----------
Total Costs and Expenses 32,790,419 32,761,185 25,844,815
----------- ----------- -----------
Operating Earnings 1,358,074 3,432,572 989,832
----------- ----------- -----------
Other Income
Interest income 67,966 84,306 51,464
Gain on sale of property assets - 11,680 -
Other, net 12,275 5,919 23,380
----------- ----------- -----------
Total 80,241 101,905 74,844
----------- ----------- -----------
Other Expenses
Interest expense 281,752 158,669 179,588
Loss on disposal of property assets 112 - 194,863
----------- ----------- -----------
Total 281,864 158,669 374,451
----------- ----------- -----------
Income Before Provision for
Income Taxes 1,156,451 3,375,808 690,225
Provision for Income Taxes 212,210 866,800 316,000
----------- ----------- -----------
Net Income $ 944,241 $2,509,008 $ 374,225
=========== =========== ===========
Net Earnings Per Share $ .34 $ .92 $ .14
=========== =========== ===========
Weighted Average Common Shares
Outstanding 2,741,168 2,741,168 2,741,168
=========== =========== ===========
[FN]
See independent auditors' report and notes to financial statements.
BURKE MILLS, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 30, 1995
Common Stock
No Par Value
Stated Value $.66 Per Share
5,000,000 Shares
Authorized
---------------------- Paid-in Retained Shareholders'
Shares Amount Capital Earnings Equity
--------- ---------- ---------- ---------- -----------
Balance at January 2, 1993 2,741,168 $1,809,171 $3,111,349 $3,480,079 $ 8,400,599
Net income for the
year ended January 1, 1994 - - - 374,225 374,225
--------- ---------- ---------- ---------- -----------
Balance at January 1, 1994 2,741,168 1,809,171 3,111,349 3,854,304 8,774,824
Net income for the
year ended December 31, 1994 - - - 2,509,008 2,509,008
--------- ---------- ---------- ---------- -----------
Balance at December 31, 1994 2,741,168 1,809,171 3,111,349 6,363,312 11,283,832
Net income for the year ended December 30, 1995 - - - 944,241 944,241
--------- ---------- ---------- ---------- -----------
Balance at December 30, 1995 2,741,168 $1,809,171 $3,111,349 $7,307,553 $12,228,073
========= ========== ========== ========== ===========
<FN>
See independent auditors' report and notes to financial statements.
BURKE MILLS, INC.
STATEMENTS OF CASH FLOWS
Year Ended
---------------------------------------
December 30, December 31, January 1,
1995 1994 1994
------------ ------------ ----------
Cash flows from operating activities:
Net income $ 944,241 $2,509,008 $ 374,225
------------ ------------ ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,051,529 1,006,448 903,341
(Gain) loss on sales of plant and equipment,
including losses on disposals 112 (11,680) 194,863
Deferred income taxes 2,800 24,300 51,300
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 318,055 (922,279) (814,532)
(Increase) decrease in inventories 54,255 (356,612) (252,135)
(Increase) in prepaid expenses, taxes
and other current assets (194,561) (160,430) (2,860)
Decrease in other noncurrent assets - - 5,623
Increase (decrease) in accounts payable 595,200 (158,836) 25,706
Increase (decrease) in income taxes payable (581,267) 320,034 261,233
Increase (decrease) in accrued salaries
and wages (247,036) 167,953 45,100
Increase (decrease) in other liabilities
and accrued expenses 60,554 (232,301) 192,896
------------ ------------ ----------
Total Adjustments 1,059,641 (323,403) 610,535
------------ ------------ ----------
Net cash provided by operating activities 2,003,882 2,185,605 984,760
------------ ------------ ----------
Cash flows from investing activities:
Acquisition of property, plant and equipment (6,371,819) (1,540,952) (1,374,411)
Proceeds from sales of plant and equipment - 11,680 1,800
------------ ------------ ----------
Net cash (used) by investing activities (6,371,819) (1,529,272) (1,372,611)
------------ ------------ ----------
Cash flow from financing activities:
Proceeds from long-term bank note 4,180,957 148,380 900,000
Principal payments of long-term debt (812,176) (874,455) (795,038)
------------ ------------ ----------
Net cash provided (used) by financing activities 3,368,781 (726,075) 104,962
------------ ------------ ----------
Net (decrease) in cash and cash equivalents (999,156) (69,742) (282,889)
Cash and cash equivalents at beginning of year 1,833,989 1,903,731 2,186,620
------------ ------------ ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 834,833 $1,833,989 $1,903,731
============ ============ ==========
<FN>
See independent auditors' report and notes to financial statements.
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Accounting period - The Company's fiscal year is the 52 or 53 period
ending the Saturday nearest to December 31. Fiscal years 1995, 1994 and
1993, ended on December 30, 1995, December 31, 1994 and January 1, 1994,
respectively. The fiscal years ended December 30, 1995, December 31, 1994
and January 1, 1994 all consisted of 52 weeks.
Statement of cash flows - For the purposes of the statements of cash
flows, the Company considers cash and cash equivalents to include cash on
hand, deposits in banks, interest bearing demand matured funds on deposit
with factor, and all highly liquid debt instruments with a maturity of three
months or less when purchased.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market. Costs elements included in work in process and
finished goods inventories are raw materials, direct labor and manufacturing
overhead. Market is considered to be net realizable value.
Property, plant and equipment - Property, plant and equipment are
stated at cost.
Depreciation and amortization of the property accounts are provided
over the estimated useful lives of the assets. For financial reporting
purposes, depreciation on plant and equipment is provided primarily at
straight-line rates. For income tax purposes, depreciation has been
provided at straight-line rates for all property, plant and equipment
acquired prior to 1981 and the accelerated and modified accelerated cost
recovery system for property assets acquired subsequent to December 31, 1980.
The estimated useful lives used for computing depreciation for financial
reporting purposes are generally:
Buildings and improvements 5 - 45 years
Plant machinery and equipment 5 - 17 years
Office equipment 5 - 10 years
Automotive equipment 3 - 5 years
Earnings per share - Earnings per share are based on the net income
divided by the weighted average number of common shares outstanding during
the respective periods.
Use of Estimates in Preparing Financial Statements - In preparing
financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reporting period. Actual results could
differ from those estimates.
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 2 - SEGMENTS OF BUSINESS ENTERPRISE
The Company is engaged in twisting, texturing, winding, dyeing,
processing and selling of filament, novelty and spun yarns and in the
dyeing and processing of these yarns for others on a commission basis.
With respect to its operations, the Company's products and its services
for others on a commission basis, are sold and/or performed for customers
primarily located in the territorial limits of the United States. The
Company did have sales to customers in Mexico during the three fiscal years
ended December 30, 1995, which amounted to 0.5% in 1995 and 2.6% in 1994,
and less than 1% for 1993. Additionally, sales to customers in Canada
in 1995 and 1994 aggregated 1.2% and 1%, respectively. Other than sales to
Mexico and Canada, as discussed above, the Company had no other sales in
foreign markets during the three year period ended December 30, 1995. For
the three year period ended December 30, 1995, the Company has operated
within a single industry segment with classes of similar products. The
principal markets served by the Company are upholstery and industrial uses
through the knitting and weaving industry.
In connection with sales to major customers, two customers' net sales
for 1995 accounted for 10.9% and 10.3%, of net sales respectively. In 1994,
the customer who accounted for the largest sales in 1995, accounted for
12.9% of net sales and one other customer accounted for 10.9%. No customer
accounted for 10% or more than 10% of net sales in 1993. For the purpose of
this determination, sales to groups of companies under common control have
been combined and accounted for as sales to individual companies. The
amounts and percentages of sales to the two customers in 1995 are as follows:
Percentage of
Amount Net Sales
1995
- - ----
Customer 1 $3,706,000 10.9%
Customer 2 3,534,000 10.3%
NOTE 3 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise the following:
December 30, December 31,
1995 1994
------------ ------------
Cash $ 49,259 $ 5,162
Commercial money market
investment in bank 785,574 1,818,064
Matured funds on deposit with
factor - 10,763
------------ ------------
$ 834,833 $1,833,989
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 4 - ACCOUNTS RECEIVABLE
Accounts receivable comprise the following:
December 30, December 31,
1995 1994
------------ ------------
Account current - factor
Due from factor on regular
factoring account $2,808,790 $3,063,406
Non-factored accounts
receivable 165,311 228,750
------------ ------------
Total $2,974,101 $3,292,156
============ ============
Pursuant to a factoring agreement, the Company sells substantial
portions of its accounts receivable to a commercial factor without recourse,
up to maximum credit limits established by the factor for individual
accounts. Amounts invoiced to customers on accounts receivable factored in
excess of the established maximum credit limits are sold to the factor with
recourse in the event of nonpayment by customers.
The Company pays a service charge to its factor to cover credit checking,
assumption of credit risk, record keeping and similar services. In addition,
if the Company takes advances from its factor prior to the average maturity
of the receivables sold (as defined), it is required to pay interest to the
factor on these advances. In connection with such advances from its factor,
the Company incurred interest costs of only $4,590 in 1995 for the four month
period of the advances. The Company incurred no interest costs during the
two previous years, inasmuch as it borrowed no funds from its factor during
those years.
The Company's factor is collateralized by the accounts receivable sold
to the factor. No interest in inventory, other than returned goods, has
been granted to the factor under the factoring contract.
The following represents a summary of advances on receivables received
from the Company's factor prior to the average maturity of the receivables
for the year ended December 30, 1995:
Balance at end of year $ 1,932
Maximum outstanding at any month end 440,902
Average amount outstanding during
the year 52,496
Weighted average interest rate 9.2%
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 5 - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market and are summarized as follows:
December 30, December 31,
1995 1994
------------ ------------
Finished and in process $1,918,400 $1,940,711
Raw materials 447,691 490,096
Dyes and chemicals 378,528 318,289
Other 125,320 175,098
------------ ------------
Total $2,869,939 $2,924,194
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Major classifications of property, plant and equipment are as follows:
December 30, December 31,
1995 1994
------------------- -------------------
Accumulated Accumulated
Cost Depreciation Cost Depreciation
---------- --------- ---------- ---------
Land $ 78,032 $ - $ 78,032 $ -
Land improvements 136,504 71,053 69,944 69,944
Buildings and
improvements 6,141,537 3,735,393 5,064,146 3,601,527
Plant machinery and
equipment 18,042,785 7,761,106 12,423,538 7,170,771
Office equipment 670,658 379,893 595,557 296,538
Automotive equipment 117,355 111,796 117,355 106,170
Deposits on acquisition
of property assets - - 703,830 -
---------- --------- ---------- ---------
Total $25,186,871 $12,059,241 $19,052,402 $11,244,950
=========== =========== =========== ===========
NOTE 7 - LONG-TERM DEBT
Long-Term Debt is comprised of:
December 30, December 31,
1995 1994
----------- ------------
Note payable to bank (a) $ 429,608 $1,063,868
Note payable to bank (b) 420,733 598,649
Advance on note payable to bank (c) 4,329,337 148,380
----------- ------------
Total 5,179,678 1,810,897
Less: Current maturities 215,990 816,121
----------- ------------
Long-Term Debt $4,963,688 $ 994,776
=========== ============
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 7 - LONG-TERM DEBT (Continued)
(a) Pursuant to a promissory note, loan agreement and security agreement
dated June 27, 1990, the loan payable to the bank is secured by a first lien
deed of trust on all real property and a first lien deed of trust and
security interest on all machinery, equipment, and personal property of
the Company, excluding inventory and accounts receivable. Interest on the
note accrues at the bank's prime rate plus one-half percent. Principal and
interest payments aggregate $58,950 per month.
The loan agreement, as amended, contains various restrictive covenants,
as defined, which include among other things, maintenance of a minimum
tangible net worth, a minimum quick ratio, a maximum debt to tangible net
worth ratio, a restriction on fixed asset additions above a stated amount
annually, and a restriction on the retirement or acquisition of the Company's
outstanding capital stock.
(b) On June 26, 1992, the Company received a loan commitment and
agreement from First Union National Bank for a term loan of $900,000, and
pursuant thereto drew the $900,000 on March 23, 1993. The loan is secured
by a first lien position on the purchase of twisting and texturing equipment
and a second lien position on existing machinery and equipment, plus all
additions and accessions now owned by borrower or hereafter acquired and all
proceeds of the foregoing. Interest on this loan accrues and is payable at
the bank's prime rate plus one-half percent, with the rate of interest to be
subject to an absolute interest cap of 10.88% per annum until final maturity
of the note. Principal and interest payments aggregate $18,900 per month.
(c) In September 1994, and during 1995 and early 1996, the Company
received loan commitments from its bank to consolidate existing loans and
new borrowings into one new note obligation of up to $6,000,000 to finance
the acquisition by the Company of new machinery and equipment and to fund
Letters of Credit issued in connection with such acquisition. Among other
things, covenants include a debt service coverage ratio, a limit on annual
property asset acquisitions exclusive of property to be acquired with the
loan proceeds under this new loan agreement, the retirement or acquisition
of the Company's capital stock in excess of a stated amount, the maintenance
of a minimum tangible net worth which shall increase by a stated amount
annually, a minimum quick ratio, and a maximum debt to tangible net worth
ratio.
Additionally, this new loan will term out and refinance the two existing
term loans discussed under 7(a) and 7(b) above, and, accordingly, all term
obligations are to be consolidated into this one $6,000,000 obligation.
This new loan is to be secured by (1) a first Deed of Trust on the property
and buildings located at the Company's manufacturing sites in North Carolina,
(2) a first lien position on the new equipment and machinery installed at
these manufacturing sites and (3) a first lien position on the existing
machinery and equipment located at the Company's manufacturing sites.
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 7 - LONG-TERM DEBT (Continued)
Under this new loan agreement, interest only shall be payable monthly
until February 1998. Thereafter, principal maturities will be payable in
the amount of $62,500 per month for ninety-six consecutive months plus
interest at the fixed rate of 8.06%. In order to effect this fixed interest
rate, the bank will convert its interest rate cap into a fixed rate loan by
entering into a fixed rate hedge contract with the Company. Under this
fixed rate hedge contract, the Company will pay the bank 8.06% for the term
of the contract. In return, the bank will pay the Company LIBOR plus 2.0%.
The floating rate (LIBOR plus 1.9%) that the Company will pay the bank will
be equal to the floating rate that the bank's capital markets will pay to
the Company. Whether LIBOR rates rise or fall over the life of the loan
agreement, the Company will continue to pay the bank a fixed rate of 8.06%
for the life of the contract, thereby creating a fixed rate loan.
The annual principal maturities of the long-term debt at December 30,
1995 are as follows:
Current portion $ 215,990
1997 $ -
1998 687,500
1999 750,000
2000 750,000
Thereafter 2,776,188 4,963,688
---------- ----------
$5,179,678
==========
NOTE 8 - OTHER LIABILITIES AND ACCRUED EXPENSES
Other liabilities and accrued expenses consist of the following:
December 30, December 31,
1995 1994
----------- ------------
Employee health insurance claims accrued $ 11,920 $ 49,157
Payroll taxes payable 39,971 48,461
Utilities payable 80,768 76,042
Accrued interest 31,918 7,699
Deferred credit 93,940 -
Other 64,535 81,139
----------- ------------
$323,052 $262,498
=========== ============
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 9 - INCOME TAXES
Effective January 3, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method required
by FASB Statement No. 109, "Accounting for Income Taxes". Under this method,
deferred tax assets and liabilities are recognized based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws. Prior to the adoption of
Statement No. 109, income tax expense was determined using the deferred
method. Deferred tax expense was based on items of income and expense that
were reported in different years in the financial statements and tax returns
and were measured at the tax rate in effect in the year the differences
originated.
The Company has not restated prior period financial statements because
the effects of adopting Statement No. 109 on operations and cash flows are
not material. The items which comprise deferred tax assets and liabilities
at December 30, 1995, are as follows:
Deferred Tax Deferred Tax
Assets Liabilities
------------ ------------
Accelerated depreciation $ - $1,405,700
Alternative minimum tax paid 573,400 -
Inventory capitalization for tax purposes 6,200 -
------------ ------------
$ 579,600 $1,405,700
============ ============
Provision for income taxes consist of:
Year Ended
--------------------------------------
December 30, December 31, January 1,
1995 1994 1994
---- ---- ----
Current
Federal $120,978 $674,100 $264,700
State 88,432 168,400 -
Deferred 2,800 24,300 51,300
-------- -------- --------
Provision for Income Taxes $212,210 $866,800 $316,000
======== ======== ========
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 9 - INCOME TAXES (Continued)
The provisions for income taxes for the years ended December 30, 1995
and December 31, 1994, were impacted by the 1995 adjustments of alternative
minimum taxes and overaccrual of Federal income taxes, and the 1994 tax
provision was affected by reduction in the valuation allowance on deferred
tax assets provided in the 1993 fiscal year. The following represents an
analysis of the tax provisions for 1995 and 1994:
Year Ended
--------------------------
December 30, December 31,
1995 1994
---- ----
Federal income taxes $355,210 $1,057,900
State income taxes 91,219 264,300
-------- ----------
Total 446,429 1,322,200
Less: Overaccrual of 1994 income taxes
and adjustment of alternative
minimum taxes 234,219 -
Overaccrual of 1993 valuation
allowance on deferred tax assets - 455,400
-------- ----------
Provision for income taxes $212,210 $ 866,800
======== ==========
For 1995, the provision for income taxes of $446,429 would represent a tax
provision of 38.6% rather than 18.4%. Earnings per share would be reduced
by $.08 per share to $.26 rather than the $.34 shown in the statement of
income.
For 1994, the provision for income taxes of $1,322,200 would represent a tax
provision of 39.2% rather than 25.7%.
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 9 - INCOME TAXES (Continued)
The provision for income taxes on historical income differs from the
amounts computed by applying the applicable Federal statutory rates, due to
the following:
Year Ended
--------------------------------------
December 30, December 31, January 1,
1995 1994 1994
---- ---- ----
Income before income taxes $1,156,451 $3,375,808 $690,225
Federal income tax rate 34% 34% 34%
---------- ---------- --------
Computed taxes at maximum
statutory income tax rate 393,193 1,147,775 234,677
Increase (reduction) in taxes
resulting from:
Tax effect of non-deductible
loss on disposal of property
assets (fully depreciated
for tax purposes) - - 66,253
State income taxes, net of
Federal income tax benefit 60,205 174,425 33,858
Adjustment for deferred
income taxes - - (31,000)
Tax effect of non-allowable
items and timing differences - - 12,965
Alternative minimum tax adjustment (174,883) - -
Overaccrual of prior year
income taxes (59,336) - -
Other (6,969) - (753)
Overaccrual of prior year
valuation allowance on
deferred tax assets - (455,400) -
---------- ---------- --------
Provision for Income Taxes $ 212,210 $ 866,800 $316,000
========== ========== ========
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 10 - STATEMENTS OF CASH FLOWS
FASB No. 95 requires that the following supplemental disclosures to the
statements of cash flows be provided in related disclosures. Cash paid for
interest was $257,533 in 1995 $159,750 in 1994 and $182,458 in 1993. Cash
paid for income taxes aggregated $1,080,668 in 1995 and $522,466 in 1994.
There were no income taxes paid in 1993.
NOTE 11 - RENTAL EXPENSES AND LEASE COMMITMENTS
Rental expenses under all lease commitments for the fiscal years ended
December 30, 1995, December 31, 1994 and January 1, 1994 aggregated $46,153,
$34,159 and $28,626, respectively. Minimum lease commitments under terms of
all noncancellable leases, which consist only of leased equipment, are as
follows as of December 30, 1995:
1996 $ 40,249
1997 36,277
1998 22,391
1999 5,334
---------
NOTE 12 - QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands of dollars except for per share amounts)
Quarter
First Second Third Fourth
1995
Net sales $9,545 $8,586 $7,385 $8,632
Cost of sales 8,364 7,488 7,127 7,687
Gross profit 1,181 1,098 258 945
Net income (loss) 396 369 (173) 352
Net income (loss) per
common share $ 0.14 $ 0.14 ($ 0.06) $ 0.12
1994
Net sales $8,787 $9,075 $9,521 $8,811
Cost of sales 7,572 7,779 8,198 7,379
Gross profit 1,215 1,296 1,323 1,432
Net income 465 889 524 631
Net income per
common share $ 0.17 $ 0.32 $ 0.19 $ 0.24
1993
Net sales $6,386 $6,609 $6,581 $7,259
Cost of sales 5,729 6,051 6,086 6,425
Gross profit 657 558 495 834
Net income 117 65 64 128
Net income per
common share $ 0.04 $ 0.03 $ 0.02 $ 0.05
BURKE MILLS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
NOTE 13 - EMPLOYEE BENEFIT PLAN
The Company is a participating employer in the Burke Mills, Inc. Savings
and Retirement Plan and Trust which has been qualified under Section 401(k)
of the Internal Revenue Code. This plan allows eligible employees to
contribute a salary reduction amount of not less than 1% nor greater than
25% of the employee's salary. The salary reduction percentage must equal an
increment of 1%. The employer may make a matching contribution for each
employee out of current net profits or accumulated net profits (as defined),
in an amount the employer may from time to time deem advisable. The Company
has made provision in the accompanying financial statements for matching
contributions of $94,176, $303,504 and $50,000 for 1995, 1994 and 1993,
respectively.
NOTE 14 - CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of occasional temporary
cash investments, matured funds on deposit with the Company's factor and
amounts due from the factor on receivables sold to the factor on a
non-recourse basis. The receivables sold to the factor during a month
generally have a maturity date on the 25th to the 30th of the following
month, at which time the amount due to the Company by the factor is
transferred to matured funds on deposit with factor. At December 30, 1995,
the Company had $2,808,790 due from its factor. The Company utilizes its
matured funds on a continuous basis to replenish its cash in bank for the
payments of materials, labor and overhead. From time to time, the Company
places its temporary cash investments with its bank in short-term
certificates. At December 30, 1995, the Company had a $785,574 short term
commercial money market investment in its bank.
NOTE 15 - OTHER COMMITMENTS
The Company was committed under outstanding letters of credit at
December 30, 1995 in the aggregate amount of $203,229, due in March 1996.
Additionally, the Company had a signed contract to acquire during 1996,
i2 Technologies for software in the amount of $240,000.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in nor disagreements with
accountants on accounting and financial disclosure during the
Company's two most recent fiscal years or during any subsequent
interim period. The current accounting firm for the Company, Cole,
Samsel & Bernstein LLC of New York, New York, has served as
accountant for the Company during the last two most recent fiscal
years.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The current members of the Board of Directors of the Company
were elected at the annual meeting of shareholders of the Company
on May 16, 1995 and will serve until the next annual or substitute
annual meeting of shareholders. They are:
Name
(Age)(Year lst Elected) Principal Occupation
Humayun N. Shaikh Chairman of the Company
(53) (1978)
Richard F. Whisenant President of the Company
(58) (1979)
Robert E. Bell, Jr. President, Hickory Industries,
(53) (1993) Inc.
Robert P. Huntley Chairman, Secretary and
(58) (1993) Treasurer, Timberidge Lumber
Company
Ahmed H. Shaikh CEO, Nafees Cotton Mills, Ltd.
(27) (1994)
"Direct" ownership means ownership as record owner.
"Indirect" ownership means beneficial ownership other than as
record owner.
Mr. Humayun Shaikh serves as a director of Nafees Cotton
Mills, Ltd (engaged in synthetic yarn spinning) of Lahore,
Pakistan, and has so served for more than the past five years.
Until 1994 he was a director of Colony Textile Mills, Ltd. (engaged
in spinning and weaving of yarn and dyeing and printing of fabric)
and of National Security Insurance Co., Ltd. (engaged in the
writing of property and casualty insurance) both of Karachi,
Pakistan, and so served for more than the five years prior to 1994.
Mr. Shaikh devotes approximately half of his time to the management
of the Company. Mr. Shaikh served as President of the Company from
January 1981 until May 1992, when he became Chairman.
Mr. Whisenant, prior to becoming President of the Company in
May 1992, served as Executive Vice President from January 1981
until May 1992 and as Vice President of Manufacturing from 1978 to
1981. Prior to that time Mr. Whisenant served as plant manager and
manufacturing manager of the knit division of the Company.
Mr. Bell has been President of Hickory Industries, Inc.,
Hickory, North Carolina, since 1987. Hickory Industries, Inc. is
a narrow fabric manufacturer (draw cords, shoe laces, etc.) and
shoe care products. Mr. Bell is licensed as a certified public
accountant and a certified management accountant.
Mr. Huntley was Executive Vice President of Newton
Transportation Company, Inc., Lenoir, North Carolina, from 1986
until March 31, 1996. Newton Transportation Company, Inc. is a
long haul new furniture carrier. Mr. Huntley also serves as
Chairman, Secretary and Treasurer of Timberidge Lumber Company, a
supplier of hardwood lumber to the furniture industry. He also has
business interests in other areas including real estate, fabric and
furniture. Mr. Huntley is licensed as a certified public
accountant.
Mr. Ahmed Shaikh graduated from Brown University with a
Bachelor of Arts degree in Economics in May 1991. While in
college, Mr. Shaikh worked during the summer at Nafees Cotton Mills
and at the Company. Upon his graduation in 1991, he worked during
the summer of 1991 at the Company. From September 1991 to
September 1992, Mr. Shaikh was employed by Colony Textile Mills,
Ltd. in Karachi, Pakistan, in a management position. Since 1992
Mr. Shaikh has been employed by Nafees Cotton Mills, Ltd. in a
management position, and on October 1, 1994 he became Chief
Executive Officer of this company. Mr. Shaikh is the son of
Humayun Shaikh, Chairman of the Board of the Company.
All executive officers of the Company are serving until the
annual or substitute annual meeting of directors and until their
successors have been duly elected and qualified. The current
officers of the Company, in addition to Humayun N. Shaikh and
Richard F. Whisenant, are as follows:
S. Scott Womack (age 42) is Vice President-Finance and
Treasurer of the Company, having assumed that office in September
1994. Prior to that time, Mr. Womack was Vice President of Finance
at Tanner Industries, Inc., Rutherfordton, North Carolina, from
1992 to May 1994. From 1989 to 1992, Mr. Womack served as
corporate comptroller for Tanner Industries, Inc.
Richard Byers (age 56) is Vice President-Sales of the Company,
having assumed that office in December 1978. Mr. Byers served as
production control manager of the Company from 1968 to December
1978.
Maggie Simmons-Hughes (age 56) is Vice President-Human
Resources of the Company, having assumed that office in May 1991.
Ms. Hughes served as personnel manager of the Company from 1980 to
May 1991.
Robert W. Downs (age 44) is Vice President-Operations having
assumed that office in 1995. Mr. Downs was first employed by the
Company as General Manager in 1994. From 1989 to 1994, Mr. Downs
was General Manager of the thread division at Dixie Yarns Company.
Pender R. McElroy (age 55) is Secretary of the Company, having
assumed that office in April 1981. Mr. McElroy is a member of the
law firm of James, McElroy & Diehl, P.A., Charlotte, North
Carolina, legal counsel for the Company.
Michael B. Smith (age 39) is Assistant Secretary of the
Company, having assumed that office in May 1985. Mr. Smith has
been employed by the Company as a cost accountant since 1978.
ITEM 11. EXECUTIVE COMPENSATION
All plan and non-plan compensation awarded to, earned by, or
paid to the chief executive officer, Humayun N. Shaikh, and to
Richard F. Whisenant, for the past three fiscal years is shown in
the following table:
SUMMARY COMPENSATION TABLE
Annual Compensation
Other Annual All Other
Name and Salary Bonus Compensation Compensation
Principal Position Year ($) ($) ($) ($)
- - ----------------------------------------------------------------------
Humayun N. Shaikh 1993 $ 84,000 0 0 0
Chairman 1994 $150,000 0 0 0
1995 $150,000 0 0 0
Richard F. Whisenant 1993 $109,333 0 0 2,112
President 1994 $115,000 0 0 $12,692
1995 $115,609 0 0 3,173
-------
There is no executive officer of the Company whose total
annual salary and bonus during each of the last three fiscal years
exceeded $100,000, except for Humayun N. Shaikh and Richard F.
Whisenant. Annual compensation exceeded that figure during the
last two fiscal years for Mr. Shaikh and the last three fiscal
years for Mr. Whisenant.
The Company has no long-term compensation arrangements with
its executive officers.
For the last three fiscal years, the Company has paid Nafees
Cotton Mills, Ltd. $18,000 annually toward the expense of
maintaining and operating an office for the Company in Pakistan.
Mr. Humayun N. Shaikh is a director of Nafees Cotton Mills, Ltd.
The Company made matching contributions to its Savings and
Retirement Plan and Trust (401(k) Plan) during each of the last
three fiscal years. As a participant in that plan, Mr. Whisenant's
account was allocated a portion of each such contribution. Those
amounts are shown under "All Other Compensation" in the Summary
Compensation Table.
Directors who are employed by the Company are not compensated
for services as directors. Directors not employed by the Company
receive $500 for each board meeting or committee meeting attended.
Mr. Humayun Shaikh receives reimbursement for actual travel
expenses incurred while travelling for the Company.
The policy of the board of directors for compensation of the
Chief Executive Officer and the executive officers has been and is
to compensate those officers at a level as close to what the board
believes is competitive in the industry for companies of comparable
size and geographic location (the piedmont area of North and South
Carolina). The board does not tie company performance to the level
of compensation of the Chief Executive Officer or the other
executive officers.
Humayun N. Shaikh Richard F. Whisenant
Robert E. Bell, Jr. Robert P. Huntley
Ahmed H. Shaikh
The graph which follows compares the yearly percentage change
in the Company's cumulative shareholder return on its common stock
with the cumulative total return of (a) all United States
companies traded on the NASDAQ stock market and (b) 34 companies
traded on the NASDAQ stock market which carry NASDAQ Standard
Industrial Classification (SIC) Code 22, being companies producing
textile mill products (which is an index published by the Center
for Research in Security Prices of the University of Chicago
Graduate School of Business, Chicago, Illinois.) A list of the 34
companies will be provided to any shareholder upon written request.
[Explanation of graph for purposes of electronic filing with the
Securities and Exchange Commission. Original graph not filed
electronically.]
The performance graph shows dollar figures from $0 through
$1,000 along the left side of the graph. Along the base of the
graph, the starting point is December 31, 1990, and the graph is
divided into five main segments, each representing the years from
1990 through 1995, and each of the five segments is divided into 12
sections representing the twelve months of the year. There are
four lines on the graph:
(1) One line is a level undeviated line over the five-year period
which begins and ends at the $100 level.
(2) There is a solid line showing the total returns index for
Burke Mills, Inc.
(3) A broken line showing the total returns index for all the U.S.
companies on the NASDAQ stock market.
(4) Another broken line showing the total returns index for 34
NASDAQ stocks carrying the NASDAQ standard industrial
classification code 22.
The legend on the graph indicates as follows:
Legend
CRSP Total Returns
Index for: 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
- - ------------------ -------- -------- -------- -------- -------- --------
Burke Mills, Inc. 100.0 116.7 116.7 183.3 500.0 416.7
NASDAQ Stock Market
(U.S. Companies) 100.0 160.5 186.9 214.5 209.7 296.5
NASDAQ Stocks
(SIC 2200-2299 U.S.
Companies)
Textile mill
products 100.0 124.1 145.0 207.5 138.4 163.7
No officer or director of the Company was granted, exercised
or realized any stock appreciation rights, options, or warrants
during the fiscal year ended December 30, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners. As of
February 23, 1996 the following persons are the only persons known
to the Company to be the beneficial owners of more than five
percent of the common stock of the Company (the only voting
securities of the Company):
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- - -------- ------------------- -------------------- --------
Common Naseus, Inc. 1,443,329 shares 52.7%
Stock Flat 72, Building 383 (Direct)
Road 1912
Manama Town 319, Bahrain
Common Humayun N. Shaikh 1,443,329 shares 52.7%
Stock Nafees Cotton Mills, Ltd. (Indirect)
Ismail Aiwan-i-Science
Shahrah-i-Jalaluddin Roomi
Lahore - 54600, Pakistan
Common Khalid A. H. Al Sagar 721,664 shares 26.3%
Stock Flat 72, Building 383 (Indirect)
Road 1912
Manama Town 319, Bahrain
United Arab Emirates
Common Hickory Industries, Inc. 270,000 shares 9.85%
Stock Box 429 (Direct)
Hickory, N.C. 28603
Common Robert E. Bell, Jr. 270,000 shares 9.85%
Stock Hickory Industries, Inc. (Indirect)
Box 429
Hickory, N.C. 28603
The shares beneficially owned by Humayun N. Shaikh are shares
owned of record by Naseus, Inc. Naseus, Inc., a Panamanian
corporation, holds 1,443,329 shares of the Company's stock as
nominee for Khalid A. H. Al Sagar. Mr. Al Sagar has sole
investment power as to 721,664 shares of the stock of the Company
owned by Naseus, Inc. Humayun N. Shaikh, who is chairman and a
director of the Company, holds the sole voting power as to the
stock of the Company owned by Naseus, Inc. and investment power as
to 721,665 shares of the stock of the Company owned by the Naseus,
Inc. Naseus, Inc. is a holding company for business interests and
does not conduct any active operations.
Robert E. Bell, Jr. is the president, director and sole
shareholder of Hickory Industries, Inc. Hickory Industries, Inc.
directly owns of record 270,000 shares of the stock of the Company.
The Company is informed and believes that as of
February 23, 1996 Cede & Co. held 687,157 shares of the Company
(25.1%) as nominee for Depository Trust Company, 55 Water Street,
New York, New York 10004, that Cede & Co. and Depository Trust
Company both disclaim any beneficial ownership thereof, and that
such shares are held for the account of numerous other persons, no
one of whom is believed to beneficially own five percent or more of
the common stock of the Company.
(b) Security ownership of management. As of February 23,
1996, the common stock of the Company (the only class of equity
securities of the Company) beneficially owned by the directors, the
chief executive officer, Humayun N. Shaikh, by the four most highly
compensated executive officers other than Mr. Shaikh, and by all
officers and director nominees as a group is as follows:
Amount (Shares)
and Nature of Percent
Name/Group Beneficial Ownership of Class
Humayun N. Shaikh 1,443,329 52.7%
Chairman and Director Indirect
Richard F. Whisenant 4,668 0.17%
President and Director Direct
Robert E. Bell, Jr. 270,000 9.9%
Director Indirect
Robert P. Huntley 120,000 4.4%
Director Direct
Ahmed H. Shaikh 0 0.0%
Director
S. Scott Womack
Vice President-Finance 0 0.00%
Richard F. Byers 6,000 0.20%
Vice President-Sales Direct
Robert W. Downs 0 0.00%
Vice President-Operations
All officers and directors 1,844,597 67.3%
as a group (8 persons) (Direct and
Indirect)
(c) Changes in control. No report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with management and others. No report.
(b) Certain business relationships. No report.
(c) Indebtedness of management.
Humayun N. Shaikh, Chairman of the Company, was indebted to
the Company for a period of time during the Company's last fiscal
year. The largest aggregate amount of indebtedness by Mr. Shaikh
to the Company outstanding at any time since the beginning of the
last fiscal year of the Company was $108,123.00. The nature of the
indebtedness was advances by the Company to Mr. Shaikh to cover
traveling and other expenses. These amounts were advanced against
Mr. Shaikh's accrued salary and expense reimbursement, and through
oversight the total of the advances reached a point in excess of
the accruals due Mr. Shaikh. No interest was charged to Mr.
Shaikh. Mr. Shaikh is not indebted to the Company as of March 15,
1996. Because of the oversight, Mr. Shaikh has determined that he
will not be receiving advances against accrued salary and expenses
from the Company in the future.
(d) Transactions with promoters. No report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report.
(a)1. Report of Independent Certified Public Accountants.
The following financial statements of Burke Mills, Inc. and
the related auditors' report required to be included in Part II
Item 8, are listed below:
Auditors' report
Balance sheets
December 30, 1995
December 31, 1994
Statements of operations
Year ended December 30, 1995
Year ended December 31, 1994
Year ended January 1, 1994
Statements of changes in shareholders' equity
Year ended December 30, 1995
Year ended December 31, 1994
Year ended January 1, 1994
Statements of cash flows
Year ended December 30, 1995
Year ended December 31, 1994
Year ended January 1, 1994
Notes to financial statements
(a)2. The financial statement schedules required to be filed
by Item 8 of this form and by paragraph (d) of Item 14 are included
in Part IV of this report and are as follows:
Schedule II - Valuation and qualifying accounts
Year ended December 30, 1995
Year ended December 31, 1994
Year ended January 1, 1994
All other financial statement schedules have been omitted
since the required information is not present in amounts sufficient
to require submission of the schedule, or because the required
information is included in the financial statements or the notes
thereto.
(a)3. The exhibits required by Item 601 of Regulation S-K and
paragraph (c) of Item 14 are the articles of incorporation and by-
laws of the Company which are incorporated herein by reference from
the Amendment on Form 8 to the annual report on Form 10-K of the
Company for the fiscal year ended January 2, 1982 previously filed
with the Commission. The exhibit required by Item 601(c) of
Regulation SK, Financial Data Schedule, is set forth on page 41 of
this report.
(b) No reports on Form 8-K were filed by the Company during
the last quarter of the period covered by this report.
(c) See sub-Item (a)3 above.
(d) See sub-Item (a)2 above.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 30, 1995
Column A Column B Column C Column D Column E
Balance at Balance at
beginning of end of
Description period Additions Deductions period
- - ----------- ------------ --------- ---------- ----------
Valuation Allowance on
Deferred Income Tax Assets:
Year Ended December 30, 1995 $ - $ - $ - $ -
Year Ended December 31, 1994 623,309 - 623,309(a) -
Year Ended January 1, 1994 - 623,309(b) - 623,309
a. For the year ended December 31, 1994, $167,909 of the valuation
allowance was utilized in the realization of the deferred tax assets
provided for the year ended January 1, 1994. Inasmuch as no further
valuation allowance was deemed necessary as of December 31, 1994, $455,400
has been credited to the provision for income taxes for the year ended
December 31, 1994. Accordingly, the Company believes that its deferred tax
assets as of December 31, 1994 will be realized and no valuation allowance
is required as of December 31, 1994.
b. For the year ended January 1, 1994, the Company recorded deferred tax
assets of $1,136,409 representing possible future realization of these
deferred tax assets. In accordance with the provisions of FASB No. 109, a
valuation allowance of $623,309 was deemed adequate for that portion of the
deferred tax assets which might not be probable of realization.
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 29, 1996 BURKE MILLS, INC.
By: s/ Humayun N. Shaikh
Humayun N. Shaikh, Chairman
of the Board
(Principal Executive Officer)
By: s/ S. Scott Womack
S. Scott Womack
Vice President-Finance
and Treasurer
(Principal Accounting Officer)
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Date: March 29, 1996 s/ Humayun N. Shaikh
Humayun N. Shaikh, Director
Date: March 29, 1996 s/ Richard F. Whisenant
Richard F. Whisenant, Director
Date: March 29, 1996 s/ Ahmed H. Shaikh
Ahmed H. Shaikh, Director