SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended September 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-9040
DRYCLEAN USA, Inc.
(Exact name of small business issuer as specified in its charter)
DELAWARE 11-2014231
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
290 N.E. 68 Street, Miami, Florida 33138
(Address of principal executive offices)
(305) 754-4551
(Issuer's telephone number)
Not Applicable
(Former name)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date: Common Stock, $.025 par
value per share - 7,014,450 shares outstanding as of November 7, 2003.
Transitional Small Business Disclosure Format: Yes No X
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DRYCLEAN USA, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------
For the three months ended
September 30,
2003 2002
(UNAUDITED) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Net sales $ 3,115,281 $ 3,590,305
Development fees, franchise and license fees,
commissions and other income 184,580 216,770
- ---------------------------------------------------------------------------------------------------------------------
Total revenues 3,299,861 3,807,075
Cost of sales 2,247,725 2,554,866
Selling, general and administrative expenses 912,922 926,731
Research and development expenses 9,550 12,269
- ---------------------------------------------------------------------------------------------------------------------
3,170,197 3,493,866
Operating income 129,664 313,209
Interest income 8,935 1,160
Interest expense - (8,723)
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 138,599 305,646
Provision for income taxes 55,440 122,258
- ---------------------------------------------------------------------------------------------------------------------
Net earnings $ 83,159 $ 183,388
- ---------------------------------------------------------------------------------------------------------------------
Basic and diluted earnings per share $ .01 $ .03
=====================================================================================================================
Weighted average number of shares:
of common stock outstanding (Note 2)
Basic 6,996,450 6,996,450
Diluted 6,996,450 6,996,450
=====================================================================================================================
2
DRYCLEAN USA, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
- ---------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, June 30,
2003 2003
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 1,565,122 $ 1,614,141
Accounts and trade notes receivable, net 1,370,143 1,382,386
Inventories 2,827,881 2,576,938
Note receivable-current 157,143 157,143
Refundable income taxes 6,635 -
Lease receivables 21,864 53,894
Deferred income taxes 118,525 118,525
Other current assets 206,934 169,094
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 6,274,247 6,072,121
Note receivable, less current portion 185,714 211,905
Equipment and improvements, net 228,792 233,767
Franchise, trademarks and other
intangible assets, net 389,887 409,308
Deferred income taxes 28,541 28,541
- ---------------------------------------------------------------------------------------------------------------------
$ 7,107,181 $ 6,955,642
=====================================================================================================================
3
DRYCLEAN USA, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND
STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, June 30,
2003 2003
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 1,200,369 $ 1,066,860
Customer deposits and other 383,002 335,206
Income taxes payable - 112,925
Dividends payable 350,963 -
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,934,334 1,514,991
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 1,934,334 1,514,991
Stockholders' Equity
Common stock, $.025 par value, 15,000,000
shares authorized; 7,027,500
shares issued and outstanding, including shares
held in treasury 175,688 175,688
Additional paid-in capital 2,048,570 2,048,570
Retained earnings 2,951,609 3,219,413
Treasury stock, 31,050 shares at cost (3,020) (3,020)
- ---------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,172,847 5,440,651
- ---------------------------------------------------------------------------------------------------------------------
$ 7,107,181 $ 6,955,642
=====================================================================================================================
4
DRYCLEAN USA, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------------
For the three months ended
September 30,
2003 2002
(UNAUDITED) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Operating activities:
Net earnings $ 83,159 $ 183,388
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 29,055 35,721
Bad debt expense 714 15,651
(Increase) decrease in operating assets:
Accounts, notes and lease receivables 43,562 (126,218)
Inventories (250,943) 148,412
Other current assets (37,840) 63,266
Refundable income taxes (6,635) 122,258
Increase (decrease) in operating liabilities:
Accounts payable and
accrued expenses 133,506 (527,761)
Customer deposits and other 47,796 (231)
Income taxes payable (112,925) -
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (70,551) (85,514)
- ---------------------------------------------------------------------------------------------------------------------
Investing activities:
Net proceeds from disposal of business - 210,000
Capital expenditures, net (2,675) -
Payments received on note receivable 26,192 -
Patent and trademark expenditures (1,985) (8,542)
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 21,532 201,458
- ---------------------------------------------------------------------------------------------------------------------
Financing activities:
Payments on term loan - (80,000)
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities - (80,000)
- ---------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (49,019) 35,944
Cash and cash equivalents at beginning of period 1,614,141 1,264,357
- ---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,565,122 $ 1,300,301
=====================================================================================================================
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ - $ 8,723
Income taxes $ 175,000 $ -
Dividends declared and not paid $ 350,963 $ -
5
DRYCLEAN USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
NOTE (1) - GENERAL: The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial statements and the
instructions to Form 10-QSB related to interim period financial statements.
Accordingly, these condensed consolidated financial statements do not include
certain information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
However, the accompanying unaudited condensed consolidated financial statements
contain all adjustments (consisting only of normal recurring accruals) which, in
the opinion of management, are necessary in order to make the financial
statements not misleading. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the Company's financial statements and footnotes
thereto in the Company's Annual Report on Form 10-KSB for the year ended June
30, 2003. The June 30, 2003 balance sheet information, contained herein, was
derived from the audited consolidated financial statements included in the
Company's Annual Report on Form 10-KSB as of that date.
NOTE (2) - EARNINGS PER SHARE: There were 439,000 and 522,750 stock options
outstanding at September 30, 2003 and September 30, 2002, respectively, that
were excluded in the computations of earnings per share for such years because
the exercise prices of the options were at least the average market prices of
the Company's common stock during these periods.
NOTE (3) - BANK CREDIT FACILITY: On October 22, 2003, the Company received an
extension, until October 30, 2004, of its existing $2,250,000 revolving line of
credit facility. Revolving credit borrowings are limited by a borrowing base of
60% of eligible accounts receivable and 60% of certain, and 50% of other,
eligible inventories. As of September 30, 2003, the Company had no outstanding
borrowings under the line of credit.
NOTE (4) - CASH DIVIDENDS: On September 26, 2003, the Company's Board of
Directors declared a $.05 per share cash dividend (an aggregate of approximately
$350,000) which was paid on October 31, 2003 to shareholders of record on
October 17, 2003.
NOTE (5) - STOCK OPTIONS: The Company accounts for its stock-based compensation
plans under Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees. The pro forma information below is based on
provisions of Statement of Financial Accounting Standard ("FAS") No. 123,
Accounting for Stock-Based Compensation, as amended by FAS No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure, issued in December 2002:
6
For the three months ended
September 30,
2003 2002
- -----------------------------------------------------------------------------------------------------------
Net earnings, as reported $ 83,159 $ 183,388
Less: Fair value of employee stock compensation 1,500 3,500
--------------- ---------------
Pro forma net earnings 81,659 179,888
=============== ===============
Earning per common share:
Net income, as reported-Basic and diluted $ 0.01 $ 0.03
Net income, pro forma-Basic and diluted $ 0.01 $ 0.03
There were no options granted during the three months ended September 30, 2003
and 2002. In October 2003, two employees exercised options to purchase 18,000
shares.
NOTE (6) - SEGMENT INFORMATION: The Company's reportable segments are strategic
businesses that offer different products and services. They are managed
separately because each business requires different marketing strategies. The
Company primarily evaluates the operating performance of its segments based on
the categories noted in the table below. The Company has no sales between
segments.
Financial information for the Company's business segments is as follows:
For the three months ended
September 30,
- ---------------------------------------------------------------------------------------------------------------------
2003 2002
(UNAUDITED) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Revenues:
Commercial and industrial laundry and dry cleaning equipment $ 3,183,320 $ 3,760,211
License and franchise operations 116,541 46,864
- ---------------------------------------------------------------------------------------------------------------------
Total revenues $ 3,299,861 $ 3,807,075
- ---------------------------------------------------------------------------------------------------------------------
Operating income (loss)
Commercial and industrial laundry and dry cleaning equipment $ 76,731 $ 376,833
License and franchise operations 93,120 (12,337)
Corporate (40,187) (51,287)
- ---------------------------------------------------------------------------------------------------------------------
Total operating income (loss) $ 129,664 $ 313,209
- ---------------------------------------------------------------------------------------------------------------------
7
SEPTEMBER 30, June 30,
2003 2003
(UNAUDITED)
Identifiable assets:
Commercial and industrial laundry and dry cleaning equipment $ 5,715,892 $ 5,458,438
License and franchise operations 828,036 759,750
Corporate 563,253 737,454
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 7,107,181 $ 6,955,642
====================================================================================================================
NOTE (7) - NEW ACCOUNTING PRONOUNCEMENTS:
During April 2003, the FASB issued SFAS No. 149 - "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", effective for contracts entered
into or modified after June 30, 2003, except as stated below and for hedging
relationships designated after June 30, 2003. In addition, except as stated
below, all provisions of this Statement should be applied prospectively. The
provisions of this Statement that relate to Statement 133 Implementation Issues
that have been effective for fiscal quarters that began prior to June 15, 2003,
should continue to be applied in accordance with their respective effective
dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases
or sales of then-issued securities or other securities that do not yet exist,
should be applied to both existing contracts and new contracts entered into
after June 30, 2003. The Company does not participate in such transactions,
however, it is evaluating the effect of this new pronouncement, if any, and will
adopt FASB 149 prospectively as proscribed.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." The statement
requires that an issuer classify financial instruments that are within its scope
as a liability. Many of those instruments were classified as equity under
previous guidance. SFAS No. 150 is effective for all financial instruments
entered into or modified after May 31, 2003. Otherwise, it is effective on July
1, 2003 except for mandatorily redeemable non controlling (minority) interest
which, on October 29, 2003, the FASB decided to defer indefinitely. The adoption
of SFAS No. 150 did not materially impact the Company's financial position or
results of operations.
In January 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities ("VIE's") created after January 31, 2003, and to VIE's in which an
enterprise obtains an interest after that date. On October 9, 2003, the FASB
issued FASB Staff Position No. FIN 46-6 "Effective Date of FASB Interpretation
No. 46, Consolidation of Variable Interest Entities," which defers the
implementation date for public entities that hold an interest in a variable
interest entity or potential variable interest entity from the first fiscal year
or interim period beginning after June 15, 2003 to the end of the first interim
or annual period ending after December 15, 2003. This
8
deferral applies only if (1) the variable interest entity was created before
February 1, 2003 and (2) the public entity has not issued financial statements
reporting that variable interest entity in accordance with FIN 46, other than
disclosures required by paragraph 26 of FIN 46. The adoption of FIN 46 is not
expected to have a material impact on the Company's financial position,
liquidity or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
GENERAL
Effective July 31, 2002, the Company sold substantially all of the operating
assets (principally inventory, equipment and intangible assets, including
tradenames) of its Metro-Tel telecommunications segment to an unaffiliated third
party. The Company retained all of the cash, accounts receivable and liabilities
of the segment. The sales price was $800,000, of which $250,000 was paid in cash
on August 2, 2002 and the remaining $550,000 is evidenced by the purchaser's
promissory note that bears interest at the prevailing prime rate plus 1% per
annum and is payable in 42 equal monthly installments commencing October 1,
2002. In March 2003, the purchaser prepaid $50,000 of the outstanding promissory
note, which was applied to the last installments to become due. Payment and
performance of the promissory note is guaranteed by two companies affiliated
with the purchaser and the three principal shareholders of the purchaser and the
affiliated companies, and is collateralized by substantially all of the
operating assets of the purchaser and the affiliated companies. The Company has
agreed to subordinate payment of the promissory note, the obligations of the
affiliated companies under their guarantees and the collateral granted by the
purchaser and the affiliated companies to the obligations of the purchaser and
the affiliated companies to two bank lenders, subject to the Company's right to
receive installment payments under the promissory note as long as the purchaser
and the affiliated companies are not in default of their obligations to the
applicable lender. The Company agreed to a three-year covenant not to compete
with the purchaser.
The following discussion relates to the Company's continuing operations.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 2003, cash decreased by $49,019
compared to an increase of $35,944 for the same period of fiscal 2003.
Operating activities for the three months ended September 30, 2003 used net cash
of $70,551. The Company's net earnings ($83,159), together with non-cash
expenses for depreciation and amortization ($29,055) and a provision for bad
debt ($714) produced an aggregate of $112,928 of cash. However, changes in
operating assets and liabilities used cash of $183,479, mostly to support
increases in inventories ($250,943), other assets ($37,840) and refundable
income taxes ($6,635) and as a result of a decrease in income taxes payable
($112,925). The inventory increase was to take advantage of higher discounts
from the Company's vendors and an increase in incoming order activity. Partially
offsetting these uses of cash was cash provided by a decrease in accounts, trade
notes and lease receivables ($43,562) and an increase in accounts payable and
accrued expenses ($133,506) and customer deposits ($47,796)
9
Operating activities for the three months ended September 30, 2002 used cash of
$85,514. Earnings from continuing operations plus non-cash expenses for
depreciation and amortization ($35,721) and bad debt expense ($15,651) provided
cash of $234,760. However, changes in operating assets and liabilities used cash
of $320,274, principally to support an increase in accounts, trade notes and
lease receivables ($126,218). In addition, cash of $527,721 was used to reduce
accounts payable and accrued expenses. These uses were partially offset by a
reduction in inventories ($148,412), refundable income taxes ($122,258) and a
decrease in other assets ($63,266).
Investing activities for the three months ended September 30, 2003 provided cash
of $21,532, as a result of payments received on a note from the sale of the
Company's telecommunication segment ($26,192) offset, in part, by capital
expenditures for equipment ($2,675) and patent and trademark expenses ($1,985).
For the same period of fiscal 2003, investing activities provided cash of
$201,458, principally as a result $210,000 of cash provided from the net
proceeds from the sale of the telecommunications segment. The Company did not
purchase any equipment during the period, however, it spent $8,542 on patent
expenses.
The Company prepaid the remaining balance of its term loan in the fourth quarter
of fiscal 2003 and, therefore, was debt free and without financing activities
for the three month period ended September 30, 2003. During the first quarter of
fiscal 2002, the Company used cash of $80,000 to make monthly payments on its
then term loan.
On October 22, 2003, the Company received an extension, until October 30, 2004,
of its existing $2,250,000 revolving line of credit facility. Revolving credit
borrowings are limited by a borrowing base of 60% of eligible accounts
receivable and 60% of certain, and 50% of other, eligible inventories. As of
September 30, 2003, the Company had no outstanding borrowings under the line of
credit.
On September 26, 2003, the Company's Board of Directors declared a $.05 per
share cash dividend (an aggregate of approximately $350,000) which was paid on
October 31, 2003 to shareholders of record on October 17, 2003.
The Company believes that its present cash position and the cash it expects to
generate from operations and cash borrowings available under its $2,250,000 line
of credit will be sufficient to meet its presently contemplated operational
needs.
OFF-BALANCE SHEET FINANCING
The Company has no off-balance sheet financing arrangements within the meaning
of item 303(c) of Regulation S-B.
RESULTS OF OPERATIONS
Total revenues for the three month period ended September 30, 2003 decreased by
$507,214 (13.3%) from the same period of fiscal 2003. Revenues of the commercial
laundry and dry cleaning segment decreased by 15.3% due to a 43.5% reduction of
commercial laundry equipment sales when compared to the same fiscal 2003 period
which was benefited by the delivery of large shipments at the end of the
quarter. This comparative decrease was offset, in part, by increases in coin
laundry equipment sales (158.8%) and spare parts (8.5%). Sales of dry
10
cleaning machines declined by 15.6%, primarily due to the sluggish domestic and
foreign economies. Revenues of the Company's license and franchise segment
increased by $69,677 (148.7%) resulting from increased commissions received as
consultants.
Cost of goods sold, expressed as a percentage of net sales, increased to 72.2%
for the first three months of fiscal 2004, from 71.2% for the same period of
fiscal 2003. The slight decrease in margins can be attributed to the relative
mix of products sold. The costs of products remained essentially flat.
Selling, general and administrative expenses decreased by $13,809 (1.5%) for the
first quarter of fiscal 2004 from the same period of a year ago. The decrease
was mostly attributable to lower bad debt and commission expenses in the license
and franchise segment, which offset increases in exhibit and convention and
advertising expenses in the commercial laundry and dry cleaning machine segment.
Research and development expenses, which are associated with payroll costs on
ongoing projects, decreased by $2,719 (22.2%) for the three month period ended
September 30, 2003, when compared to the same period of a year ago.
Interest income increased by $7,775 for the first quarter of fiscal 2004 when
compared to the same period of fiscal 2003 due primarily to interest payments
under a note received by the Company as part of the consideration for the sale
of the Company's telecommunications segment.
There was no interest expense during the first three months of fiscal 2004, as
the Company's term loan was prepaid in full in May 2003 and there were no
amounts outstanding on the Company's line of credit during the period, making
the Company debt free. Interest expense of $8,723 during the first three months
of fiscal 2003 related to the Company's then outstanding term loan.
The effective tax rate used in each of the periods was 40%.
INFLATION
Inflation has not had a significant effect on the Company's operations during
any of the reported periods.
TRANSACTIONS WITH RELATED PARTIES
The Company leases 27,000 square feet of warehouse and office space from William
K. Steiner, a principal stockholder, Chairman of the Board of Directors and a
director of the Company, under a lease, which expires in October 2004. Annual
rental under this lease is approximately $83,200. The Company believes that the
terms of the lease are comparable to terms that would be obtained from an
unaffiliated third party for similar property in a similar locale.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The accounting policies that the Company has identified as critical to its
business operations and to an understanding of the Company's results of
operations are described in detail in the
11
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 2003.
In many cases, the accounting treatment of a particular transaction is
specifically dictated by accounting principles generally accepted in the United
States of America, with no need for management's judgment in their application.
In other cases, preparation of the Company's unaudited condensed consolidated
financial statements for interim periods requires us to make estimates and
assumptions that effect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reported period. There can be no assurance that the actual results will not
differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
During April 2003, the FASB issued SFAS No. 149 - "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", effective for contracts entered
into or modified after June 30, 2003, except as stated below and for hedging
relationships designated after June 30, 2003. In addition, except as stated
below, all provisions of this Statement should be applied prospectively. The
provisions of this Statement that relate to Statement 133 Implementation Issues
that have been effective for fiscal quarters that began prior to June 15, 2003,
should continue to be applied in accordance with their respective effective
dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases
or sales of then-issued securities or other securities that do not yet exist,
should be applied to both existing contracts and new contracts entered into
after June 30, 2003. The Company does not participate in such transactions,
however, it is evaluating the effect of this new pronouncement, if any, and will
adopt FASB 149 prospectively as proscribed.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." The statement
requires that an issuer classify financial instruments that are within its scope
as a liability. Many of those instruments were classified as equity under
previous guidance. SFAS No. 150 is effective for all financial instruments
entered into or modified after May 31, 2003. Otherwise, it is effective on July
1, 2003 except for mandatorily redeemable non controlling (minority) interest
which, on October 29, 2003, the FASB decided to defer indefinitely. The adoption
of SFAS No. 150 did not materially impact the Company's financial position or
results of operations.
In January 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities ("VIE's") created after January 31, 2003, and to VIE's in which an
enterprise obtains an interest after that date. On October 9, 2003, the FASB
issued FASB Staff Position No. FIN 46-6 "Effective Date of FASB Interpretation
No. 46, Consolidation of Variable Interest Entities," which defers the
implementation date for public entities that hold an interest in a variable
interest entity or potential variable interest entity from the first fiscal year
or interim period beginning after June 15, 2003 to the end of the first interim
or annual period ending after December 15, 2003. This deferral applies only if
(1) the variable interest entity was created before February 1, 2003 and (2) the
public entity has not issued financial statements reporting that variable
interest entity in
12
accordance with FIN 46, other than disclosures required by paragraph 26 of FIN
46. The adoption of FIN 46 is not expected to have a material impact on the
Company's financial position, liquidity or results of operations.
ITEM 3. CONTROLS AND PROCEDURES.
As of the end of the period covered by this report, management of the Company,
with the participation of the Company's President and principal executive
officer and the Company's principal financial officer, evaluated the
effectiveness of the Company's "disclosure controls and procedures," as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that
evaluation, these officers concluded that, as of the date of their evaluation,
the Company's disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed in the Company's
periodic filings under the Securities Exchange Act of 1934 is accumulated and
communicated to our management, including those officers, to allow timely
decisions regarding required disclosure.
During the period covered by this Report, there were no changes in the Company's
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
4.01 Letter agreement dated October 22, 2003 between the Company and
Wachovia Bank, National Association, formerly named First Union
National Bank
31.01 Certification of principal executive officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 promulgated under the Securities
Exchange Act of 1934.
31.02 Certification of principal financial officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 promulgated under the Securities
Exchange Act of 1934.
32.01 Certification of Principal Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.02 Certification of Principal Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
During the quarter ended September 30, 2003, the Company furnished one
report on Form 8-K, dated September 26, 2003 (date of earliest event
reported), reporting under Item 12, Results of Operations and
Financial Condition. No financial statements were filed with that
Report.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 13, 2003 DRYCLEAN USA, Inc.
By: /s/ Venerando J. Indelicato
-------------------------------------
Venerando J. Indelicato,
Treasurer and Chief Financial Officer
14
Exhibit Index
4.01 Letter agreement dated October 22, 2003 between the Company and
Wachovia Bank, National Association, formerly named First Union
National Bank
31.01 Certification of principal executive officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 promulgated under the Securities
Exchange Act of 1934.
31.02 Certification of principal financial officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 promulgated under the Securities
Exchange Act of 1934.
32.01 Certification of Principal Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.02 Certification of Principal Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.