Burke Mills, Inc.
191 Sterling Street, N.W.
Valdese, North Carolina 28690
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Pursuant to the SEC letter dated November 30, 1999, RE: Burke Mills, Inc., Form
10-K for the period ended January 2, 1999, File No. 0-5680, and further to the
requirements of the Securities Exchange Act of 1934, we are transmitting
herewith an amendment to Form 10-K for period ending 1/2/99 and responses to
questions contained therein.
Sincerely,
Burke Mills, Inc.
/s Thomas I. Nail
Thomas I. Nail, Vice President, Finance
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Independent Auditor's Report, page 1
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Response to Question 1:
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The Company filed for protection under Chapter 11 in 1979 and sought an
accounting firm experienced with companies operating under Chapter 11. At the
recommendation of one of the largest creditors, the Company's current firm was
engaged. The Company emerged from Chapter 11 in 1984, and because of its fine
work, the accounting firm has retained the engagement. The firm has offices in
New York, NY, and Lodi, NJ, and is licensed in both states.
The firm is not currently licensed to operate in the State of North Carolina but
has applied for a license.
Notes to Financial Statements
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Note 3 Accounts Receivable, page 2
Response to Question 4:
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The Company has an agreement with the factor that the sale of receivables to the
factor is without recourse. The factor has filed a UCC-1 to evidence ownership
of the receivables and separate the asset from the Company's creditors. After
the sale of the receivables to the factor, the Company does not maintain any
detailed accounts receivable information for customer activities, but maintains
an accounts receivable from the factor.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended January 2, 1999
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
_________________ to _________________
Commission File No. 0-5680
BURKE MILLS, INC.
(Exact name of registrant as specified in its charter)
(I.R.S. Employer Identification No.) 56-0506342
State or other jurisdiction of incorporation or 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:
828 874-6341
The undersigned registrant hereby amends PART II - NOTES TO FINANCIAL
STATEMENTS, [NOTE 1 AND 10], and further by addition of Exhibits 23 and 99 to
its Annual Report on Form 10-K for the period ending 1/2/99, as set forth below.
SIGNATURES
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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: December 23, 1999 BURKE MILLS, INC.
By: Humayun N. Shaikh /s
----------------------
Humayun N. Shaikh,
Chairman of the Board
(Principal Executive Officer)
By: Thomas I. Nail /s
-----------------------
Thomas I. Nail
Vice President of Finance
(Principal Financial Officer)
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Date: December 23, 1999 By: Humayun N. Shaikh /s
---------------------------
Humayun N. Shaikh, Director
Date: December 23, 1999 By: Aehsun Shaikh /s
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Aehsun Shaikh, Director
Date: December 23, 1999 By: Charles P. McCamy /s
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Charles P. McCamy, Director
Date: December 23, 1999 By: Robert P. Huntley /s
---------------------------
Robert P. Huntley, Director
Date: December 23, 1999 By: William T. Dunn /s
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William T. Dunn, Director
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
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Accounting period - The Company's fiscal year is the 52 or 53 week period ending
the Saturday nearest to December 31. Fiscal years 1998, 1997 and 1996 ended on
January 2, 1999, January 3, 1998 and December 28, 1996, respectively. The fiscal
years ended January 2, 1999 and December 28, 1996 consisted of 52 weeks. The
fiscal year ended January 3, 1998 consisted of 53 weeks.
Revenue recognition - Revenues from sales are recognized at the time shipments
are made to customers.
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. Cost 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
Computer 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 - The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.
NOTE 10 - INVESTMENT IN AFFILIATE AND RELATED PARTY TRANSACTIONS
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The company owns 49.8% of Fytek, S.A. de C.V. (Fytek), a Mexican corporation.
Fytek began operation in the fourth quarter of 1997. The company accounts for
the ownership using the equity method. During 1998, the Company had sales of
$165,000 to Fytek compared to no sales in 1997. Purchases from Fytek were
$1,337,000 compared to $156,000 in 1997. At January 3, 1999, Fytek owed the
Company $130,000 for leased equipment which will be paid in March 1999.
Fytek's financial information is as follows:
Statement of Income
(In thousands of U.S. Dollars)
1998 1997
---- ----
Net Sales $7,767 $1,239
Gross Profit 1,177 155
Net income from continuing operations 994 91
Income before income taxes 994 91
Income taxes 470 32
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Net income $ 523 $ 59
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Balance Sheet
(In thousands of U.S. Dollars)
1998 1997
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Current assets $3,217 $2,182
Non-current 55 -0-
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Total assets $3,272 $2,182
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Current liabilities $2,461 $1,729
Non-current liabilities -0- -0-
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Total liabilities $2,461 $1,729
Stockholder's equity 811 453
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Total liabilities and stockholder's equity $3,272 $2,182
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In 1998, the Company purchased $151,000 of yarns from Nafees Cotton Mills, Ltd.
The Company paid for the yarn purchased by wire transfer 30 days after the Bill
of Lading date and by Letter of Credit 120 days after the Bill of Lading date.
Humayun N. Shaikh, Chairman and CEO of the Company, is also director of Nafees
Cotton Mills, Ltd. Aehsun Shaikh, Director of the Company, is also a Director of
Nafees Cotton Mills, Ltd., since 1993 and of Legler-Nafees Denim Mills, Ltd.,
since 1999.