SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 9, 2006
Date of Report (Date of earliest event reported)
HIRSCH INTERNATIONAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 0-23434 11-2230715
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
50 Engineers Road
Hauppauge, New York 11788
(631) 436-7100
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17CFR240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 2 FINANCIAL INFORMATION
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 9, 2006, Hirsch International Corp. announced its financial
results for the fiscal quarter ended September 30, 2006. A copy of the press
release is furnished with this report following the signature page and is
incorporated in this Item 2.02 by reference. The information in this report and
the attached press release shall not be deemed filed for purposes of Section 18
of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, except as shall be
expressly stated by specific reference in such filing.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
99.1 Press Release dated November 9, 2006
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 hereunto duly authorized.
HIRSCH INTERNATIONAL CORP.
By: /s/ Beverly Eichel
---------------------------------------
Beverly Eichel
Executive Vice President - Finance,
Chief Financial Officer and Secretary
Dated: November 15, 2006
Exhibit 99.1
Hirsch Reports Increased 3rd Quarter 2006 Profits
Increases in Gross Margin and Operating Income Continue to Drive Value
Recent Synergistic Product Acquisition, Solid Management Team
and Strong Balance Sheet Positions Company For Growth
HAUPPAUGE, NY - November 9, 2006 - Hirsch International Corp. (NASDAQ: HRSH),
the leading provider of advanced commercial embroidery systems and support
services in the U.S. and newly appointed, exclusive distributor of MHM screen
printing equipment in North America, reported its financial results for the
third quarter and eight months ended September 30, 2006. Highlights of those
results are as follows:
o Net sales were $12.4 million for the quarter ended September 30, 2006,
versus $12.9 million as compared to last year's fiscal third quarter
which ended October 29, 2005. For the eight months ended September 30,
2006, net sales were $34.7 million as compared to $39.2 million for
the prior nine-month period which ended October 29, 2005.
o For the quarter ended September 30, 2006, gross profit increased
$300,000 to $4.5 million from $4.2 million for the quarter ended
October 29, 2005. For the eight months ended September 30, 2006, gross
profit was $12.1 million or 34.9% of net sales as compared to 12.8
million for the nine months ended October 29, 2005 or 32.7% of net
sales.
o Selling, general and administrative expenses and overall operating
expense increased $100,000 from $4.0 million to $4.1 million for the
quarter ended September 30, 2006 as compared to the fiscal quarter
ended October 29, 2005 and decreased $1.0 million for eight months
ended September 30, 2006 as compared to the nine months ended October
29, 2005. Included in the nine months ended October 29, 2005, was a
$147,000 charge for severance costs associated with the Company's
continuing reorganization.
o For the quarter ended September 30, 2006 the Company reported net
income of $424,000, an improvement of $189,000 from net income of
$235,000 for the quarter ended October 29, 2005. For the eight months
ended September 30, 2006, the Company reported net income of $1.3
million, an increase of $0.5 million from the net income of $0.8
million for the nine months ended October 29, 2005.
"The Company continued to improve its year-on-year gross profits, operating
margins and net income resulting in continued quarterly profitability,"
commented Paul Gallagher, Hirsch's President and Chief Executive Officer. "With
$13 million cash on our balance sheet which averages out to $1.56 per share,
tax-advantaged future earnings and most importantly an excellent team of people
at all levels throughout our organization, we have built a solid platform for
future growth. We are aggressively looking for expansion opportunities in and
around the $6 billion decorated apparel industry that will provide us with this
growth and that are accretive to earnings, allowing Hirsch to provide more
opportunities for our employees and to continue building value for our
shareholders."
Mr. Gallagher continued, "After spending the last five years repositioning and
refocusing the business in a very difficult market environment, we are now
really starting to see the fruits of our labor. Our new distribution agreement
signed with MHM adds the world's finest screen printing equipment to our already
well established leadership position in providing the best production equipment
and support services to the decorated apparel industry. After spending a
significant amount of time and effort during the third quarter marketing and
positioning the MHM line in the marketplace, we are more convinced than ever of
the benefits and opportunities the MHM line can provide for our existing
customer base, as well as for new customers and ultimately our shareholders
moving forward."
About Hirsch International Corp.
Hirsch is the leading provider of advanced computerized commercial embroidery
systems and support services in the United States. The Company offers single and
multi-head embroidery machines; proprietary application software; embroidery
parts, supplies and accessories; and technical service and support. Hirsch's
customers include contract embroiderers, manufacturers of apparel and fashion
accessories, retail stores, and embroidery entrepreneurs. The Company is the
country's leading single source provider of Tajima embroidery systems, marketing
under the name "Tajima USA Sales & Support by Hirsch."
Additionally, on August 2, 2006 Hirsch announced that it has entered into an
exclusive ten year distribution agreement with MHM Siebdruckmaschinen GmbH for
the distribution and support of MHM screen printing equipment in North America.
MHM's product line will be marketed under the name "MHM North America by
Hirsch".
Hirsch, lead by a strong and experienced management team, is focused on
continuing to grow its core business through sound acquisitions of products and
processes, as well as through related business ventures in which the Company can
build and maximize stockholder value. The Company was founded in 1970 and is
headquartered in Hauppauge, NY.
Safe Harbor Statement
Safe Harbor Statement
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements. The Company noted that
forward-looking statements set forth above involve a number of risks and
uncertainties that could cause actual results to differ materially from any such
statement, including, without limitation, the risks and uncertainties discussed
under the caption "Risk Factors" in the Company's Form 10-K for fiscal 2006,
which discussion is incorporated herein by reference .Readers are also urged to
read the periodic filings and current reports on Form 8-K of the Company.
Contacts:
Hirsch International Corp.
Investor Relations Department
631-701-2345
The Investor Relations Group
Kevin Murphy or Adam Holdsworth
212.825.3210
kmurphy@investorrelationsgroup.com
aholdsworth@investrelationsgroup.com
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, January 28,
---------------------- --------------------
2006 2006
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ASSETS (unaudited)
Cash and cash equivalents (includes restricted cash) $ 13,249 $13,676
Accounts receivable, net 4,655 4,929
Inventories, net 6,161 4,128
Other current assets 1,358 513
Property, plant and equipment, net 376 1,574
Other assets 535 1,534
---------------------- --------------------
TOTAL ASSETS $26,334 $26,354
====================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 9,568 $9,428
Customer deposits and other 313 430
Other current liabilities 80 1,270
Other long term liabilities - less current maturities 210 -
Deferred gain on sale of building - 608
---------------------- --------------------
TOTAL LIABILITIES 10,171 11,736
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TOTAL STOCKHOLDERS' EQUITY 16,163 14,618
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,334 $26,354
====================== ====================
HIRSCH INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
(unaudited)
Three Nine
Three Months Months Eight Months
Ended Ended Months Ended Ended
September October September October 29,
30, 2006 29, 2005 30, 2006 2005
-------------- ------------- -------------- -------------
NET SALES $12,383 $12,854 $34,688 $39,165
COST OF SALES 7,926 8,660 22,596 26,373
-------------- ------------- -------------- -------------
GROSS PROFIT 4,457 4,194 12,092 12,792
OPERATING EXPENSES
Selling, general and administrative expenses 4,100 3,965 10,927 11,774
Severance costs - - - 147
-------------- ------------- -------------- -------------
Total operating expenses 4,100 3,965 10,927 11,921
-------------- ------------- -------------- -------------
OPERATING INCOME 357 229 1,165 871
-------------- ------------- -------------- -------------
OTHER (INCOME) EXPENSE (87) (14) (166) 4
-------------- ------------- -------------- -------------
INCOME BEFORE PROVISION FOR INCOME 444 243 1,331 867
TAXES
INCOME TAX PROVISION 20 8 34 38
-------------- ------------- -------------- -------------
NET INCOME $424 $ 235 $ 1,297 $829
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EARNINGS PER SHARE:
Basic $0.05 $0.03 $0.15 $0.10
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Diluted $0.04 $0.02 $0.13 $0.09
============== ============= ============== =============
WEIGHTED AVERAGE NUMBER OF SHARES IN THE
CALCULATION OF INCOME PER SHARE
Basic 8,510 8,464 8,495 8,458
============== ============= ============== =============
Diluted 9,750 9,510 9,735 9,505
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