-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, B90REkccDgBeCTV6KkQGmYNTSYTRB0AgrgAx5jf3AQ5iYOjab2+KI/DxgefkVmPo FaBdziOieprz51ViKHudKA== 0000893220-94-000189.txt : 19940404 0000893220-94-000189.hdr.sgml : 19940404 ACCESSION NUMBER: 0000893220-94-000189 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940119 ITEM INFORMATION: 7 FILED AS OF DATE: 19940401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: V F CORP /PA/ CENTRAL INDEX KEY: 0000103379 STANDARD INDUSTRIAL CLASSIFICATION: 2320 IRS NUMBER: 231180120 STATE OF INCORPORATION: PA FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 34 SEC FILE NUMBER: 001-05256 FILM NUMBER: 94520056 BUSINESS ADDRESS: STREET 1: 1047 N PARK RD CITY: WYOMISSING STATE: PA ZIP: 19610 BUSINESS PHONE: 2153781151 MAIL ADDRESS: STREET 2: P O BOX 1022 CITY: READING STATE: PA ZIP: 19603 FORMER COMPANY: FORMER CONFORMED NAME: VF CORPORATION DATE OF NAME CHANGE: 19900621 FORMER COMPANY: FORMER CONFORMED NAME: VANITY FAIR MILLS INC DATE OF NAME CHANGE: 19690520 8-K/A 1 ADMENDMENT NO.1 TO CURRENT REPORT ON FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): JANUARY 19, 1994 ---------------- V.F. CORPORATION -------------------------------------------------------------------------- (Exact name of registrant as specified in charter) PENNSYLVANIA 1-5256 23-1180120 - ------------ --------------- ------------ (State or other (Commission File (IRS Employer jurisdiction of Number) I.D. No.) incorporation) 1047 NORTH PARK ROAD, WYOMISSING, PA 19610 ------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (610) 378-1151 -------------- N/A ------------------------------------------- (Former name or former address, if changed since last report) 2 The undersigned Registrant hereby amends the following portion of its Current Report on Form 8-K dated January 19, 1994 and filed on February 2, 1994 as set forth below: 1. Item 7 is hereby amended and restated as follows: Item 7. Financial Statements and Exhibits. (a) Financial statements of business acquired. Audited financial statements of Nutmeg Industries, Inc. for the year ended January 30, 1993 are included on pages 3 to 17 herein. Unaudited financial statements of Nutmeg Industries, Inc. for the nine months ended October 30, 1993 are included on pages 18 to 23 herein. 2 3 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors Nutmeg Industries, Inc. We have audited the accompanying consolidated balance sheets of Nutmeg Industries, Inc. as of January 30, 1993 and January 25, 1992, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended January 30, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nutmeg Industries, Inc. at January 30, 1993 and January 25, 1992, and the consolidated results of its operations and its cash flows for each of the three years in the period ended January 30, 1993, in conformity with generally accepted accounting principles. /S/ ERNST & YOUNG ----------------- ERNST & YOUNG Tampa, Florida March 3, 1993 3 4 NUTMEG INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
JANUARY 30, JANUARY 25, ASSETS 1993 1992 - ----------------------------------------------------------------------- Current assets: Cash $ 3,435 $ 25,250 Accounts receivable 28,170 19,764 Inventories: Finished goods 34,418 33,090 Fabric and components 7,222 6,865 Work in process 2,904 2,794 Supplies 2,924 1,991 - ----------------------------------------------------------------------- Total inventories 47,468 44,740 Prepaid expenses 1,004 401 Deferred income tax benefit 1,388 1,208 - ----------------------------------------------------------------------- Total current assets 81,465 91,363 Property, plant and equipment 29,390 15,317 Less accumulated depreciation 8,019 5,083 - ----------------------------------------------------------------------- Net property, plant and equipment 21,371 10,234 Goodwill, at cost net of accumulated amortization of $189 at January 30, 1993 ($152 at January 25, 1992) 1,288 752 Other assets 2,595 2,982 - ----------------------------------------------------------------------- Total assets $ 106,719 $ 105,331 =======================================================================
(Continued) 4 5 NUTMEG INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) (IN THOUSANDS, EXCEPT SHARE DATA)
JANUARY 30, JANUARY 25, LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1992 - ----------------------------------------------------------------------- Current liabilities: Notes payable and current portion of long-term debt $ - $ 6,456 Accounts payable 13,035 13,174 Income taxes payable 1,255 1,586 Accrued royalties 2,209 1,425 Other accrued liabilities 4,468 3,892 - ----------------------------------------------------------------------- Total current liabilities 20,967 26,533 Long-term debt due after one year - 6,051 Deferred income taxes 676 647 Other noncurrent liabilities 160 222 Stockholders' equity: Preferred stock, $.01 par value: 5,000,000 shares authorized, none issued or outstanding - - Common stock, $.01 par value: 50,000,000 shares authorized, 18,514,202 shares issued (18,287,685 at January 25, 1992) 185 183 Capital in excess of par value 57,716 56,133 Retained earnings 27,015 15,562 - ----------------------------------------------------------------------- Total stockholders' equity 84,916 71,878 - ----------------------------------------------------------------------- Total liabilities and stockholders' equity $ 106,719 $ 105,331 =======================================================================
See accompanying notes. 5 6 NUTMEG INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED - --------------------------------------------------------------------------- JANUARY 30, JANUARY 25, JANUARY 26, 1993 1992 1991 - --------------------------------------------------------------------------- Net sales $ 159,989 $ 122,373 $ 74,211 Costs and expenses: Cost of merchandise sold 108,862 84,325 52,573 Selling, general and administrative 33,364 26,923 16,615 Interest, net 73 1,417 1,419 Minority interest and other (income) expense 38 (1,283) 349 - -------------------------------------------------------------------------- Total costs and expenses 142,337 111,382 70,956 - -------------------------------------------------------------------------- Income before income taxes 17,652 10,991 3,255 Provision (benefit) for income taxes: Current 6,349 4,953 805 Deferred (150) (761) 434 - -------------------------------------------------------------------------- Total income taxes 6,199 4,192 1,239 - -------------------------------------------------------------------------- Net income $ 11,453 $ 6,799 $ 2,016 ========================================================================== Net income per common share $ .61 $ .47 $ .14 ========================================================================== Weighted average number of common shares used in the calculation 18,830 14,475 14,926 ==========================================================================
See accompanying notes. 6 7 NUTMEG INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years ended January 30, 1993, January 25, 1992, and January 26, 1991 (dollars in thousands)
Common Stock Treasury Stock Capital In ----------------- ----------------- Excess of Retained Shares Amount Shares Amount Par Value Earnings Total ------ ------ ------ ------ --------- -------- ----- Balance January 27, 1990 6,775,497 $68 - $ $20,767 $6,747 $27,582 Stock options exercised 14,374 - 55 55 Purchase of treasury stock (1,015,300) (3,767) (3,767) Net income 2,016 2,016 ---------------------------------------------------------------------------------------------------- Balance January 26, 1991 6,789,871 68 (1,015,300) (3,767) 20,822 8,763 25,886 Sale of common stock, net of offering costs 2,300,000 23 38,890 38,913 Stock options exercised 49,562 - 222 222 Issuance of treasury stock 3,791 14 44 58 Retirement of treasury stock (1,011,509) (10) 1,011,509 3,753 (3,743) - Stock split 4,063,866 41 (41) - Net income 6,799 6,799 ---------------------------------------------------------------------------------------------------- Balance January 25, 1992 12,191,790 122 - - 56,194 15,562 71,878 Stock split 6,095,785 61 (61) - Stock options exercised 226,627 2 1,583 1,585 Net income 11,453 11,453 ---------------------------------------------------------------------------------------------------- Balance January 30, 1993 18,514,202 $185 - $ $57,716 $27,015 $84,916 ====================================================================================================
See accompanying notes. 7 8 NUTMEG INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (IN THOUSANDS)
YEAR ENDED - ---------------------------------------------------------------------------- JANUARY 30, JANUARY 25, JANUARY 26, 1993 1992 1991 - ---------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 11,453 $ 6,799 $ 2,016 Adjustments to reconcile net income to net cash provided from (used by) operating activities: Depreciation and amortization 3,149 1,814 1,478 Deferred rent (62) (67) (42) Deferred income taxes (150) (761) 434 Minority interest - (1,306) 344 Change in operating assets and liabilities (net of amounts relating to acquired businesses and discontinuation of Joint Venture): (Increase) decrease in assets: Accounts receivable (9,314) (7,370) (718) Income taxes receivable - - 648 Inventories (8,421) (20,299) 2,440 Prepaid expenses (623) 41 (90) Other assets (82) 14 (647) Increase (decrease) in liabilities: Accounts payable 1,403 6,883 2,882 Income taxes payable (331) 1,354 232 Accrued liabilities 1,973 3,997 291 - -------------------------------------------------------------------------- Total adjustments (12,458) (15,700) 7,252 - -------------------------------------------------------------------------- Net cash provided from (used by) operating activities (1,005) (8,901) 9,268 - --------------------------------------------------------------------------
(Continued) 8 9 NUTMEG INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) INCREASE (DECREASE) IN CASH (IN THOUSANDS)
YEAR ENDED - -------------------------------------------------------------------------- JANUARY 30, JANUARY 25, JANUARY 26, 1993 1992 1991 - -------------------------------------------------------------------------- Cash flows from investing activities: Capital expenditures (14,609) (5,282) (1,101) Proceeds from sale of assets 363 67 133 Acquisition of businesses - (1,009) (3,678) - -------------------------------------------------------------------------- Net cash used by investing activities (14,246) (6,224) (4,646) - -------------------------------------------------------------------------- Cash flows from financing activities: Net (payments) proceeds under lines of credit and long-term debt (8,149) 697 (1,338) Minority investment in consolidated Joint Venture - - 490 Net proceeds from issuance of common stock 1,585 39,193 55 Payments to acquire treasury stock - - (3,767) Payments of loan origination fees - (34) (142) - -------------------------------------------------------------------------- Net cash provided from (used by) financing activities (6,564) 39,856 (4,702) - -------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (21,815) 24,731 (80) Cash and cash equivalents at beginning of year 25,250 519 599 - -------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 3,435 $ 25,250 $ 519 ========================================================================== Cash paid (received) during the year for: Interest $ 472 $ 1,172 $ 1,455 Income taxes $ 5,560 $ 3,593 $ (74)
See accompanying notes. 9 10 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION - The consolidated financial statements include the accounts of Nutmeg Industries, Inc. ("Industries") and its direct or indirect wholly-owned subsidiaries, Nutmeg Mills, Inc. ("Mills"), Home Team Advantage, Inc. ("Home Team Advantage") (formerly Saturday's Hero, Inc.), McBriar Sportswear, Inc. ("McBriar"), which was acquired in May 1990, and McBriar Cap Company, Inc. ("McBriar Cap") (formerly Brand Images Corp.), which was formed to acquire most of the net assets of Brand Images, Inc. ("BII") in September 1991. For the years ended January 25, 1992 and January 26, 1991, the consolidated financial statements include the accounts of a joint venture, 51% of which was owned by Home Team Advantage ("the Joint Venture"), which was formed in February 1990 (collectively the "Company"). All intercompany accounts and transactions have been eliminated. The Company is engaged in the design, manufacture and sale of apparel, the bulk of which is sold under various sports- related licenses. ACCOUNTING PERIOD - The Company operates on a 52/53 week annual accounting period ending on the last Saturday in January. The year ended January 30, 1993 includes 53 weeks. The years ended January 25, 1992 and January 26, 1991 each include 52 weeks. ACCOUNTS RECEIVABLE - The Company provided reserves of $3,026,000 and $2,273,000 at January 30, 1993 and January 25, 1992, respectively, for bad debts, discounts, and sales returns and allowances. INVENTORIES - Inventories are primarily carried at the lower of cost (using the first-in, first-out method) or market. PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is carried at cost. For financial reporting purposes, depreciation is determined using the straight-line method and, for income tax purposes, the Company generally uses accelerated depreciation methods. Estimated useful lives for purposes of computing financial reporting depreciation are as follows: Equipment, furniture and fixtures. . . . . . . . . . . 5-10 years Computer equipment and software . . . . . . . . . . . 5-10 years Building . . . . . . . . . . . . . . . . . . . . . . . 25 years Leasehold improvements . . . . . . . . . . . . . . . . 5-10 years Vehicles . . . . . . . . . . . . . . . . . . . . . . . 3-5 years
10 11 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 Property, plant and equipment consist of the following (in thousands):
January 30, January 25, 1993 1992 - ------------------------------------------------------------------ Equipment, furniture and fixtures $ 13,971 $ 8,883 Computer equipment and software 5,223 2,948 Leasehold improvements 2,972 2,212 Buildings and land 5,930 512 Vehicles 257 256 Additions in progress 1,037 506 - ---------------------------------------------------------------- Property, plant and equipment $ 29,390 $ 15,317 ================================================================
Depreciation expense was $3,109,000, $1,774,000, and $1,446,000 in fiscal 1993, 1992 and 1991, respectively. GOODWILL - Goodwill arising from business combinations is amortized using the straight-line method over 15-40 years. CAPITALIZED ACETATE FILM PRODUCTION COSTS - The Company capitalized $1,287,000, $1,071,000, and $1,000,000 in fiscal 1993, 1992 and 1991, respectively, of costs incurred in the design and production of acetate films employed to produce silk screens. Costs capitalized are being expensed over estimated three year useful lives, using the straight-line method. The related expense was $1,176,000, $978,000, and $627,000 in fiscal 1993, 1992 and 1991, respectively. Capitalized amounts included in other assets are $1,881,000 and $1,770,000 at January 30, 1993 and January 25, 1992, respectively. DEFERRED LOAN COSTS - Deferred loan costs incurred in connection with the issuance of debt are amortized over the life of the related debt. Amortization was $114,000, $245,000, and $119,000 in fiscal 1993, 1992 and 1991, respectively. INCOME TAXES - The Company has adopted the provisions of "Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes". EARNINGS PER SHARE - Earnings per share are computed using the weighted average number of shares outstanding during the year. Inclusion of common stock equivalents (stock issuable upon exercise of outstanding stock options and warrants) in the computation of primary and fully diluted earnings per share would not be significant for fiscal 1991. Common stock equivalents have been included in the computations for fiscal 1993 and 1992. 11 12 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 CASH EQUIVALENTS - The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. FINANCIAL STATEMENT RECLASSIFICATION - Certain prior years' amounts in the consolidated financial statements have been reclassified to conform to the fiscal 1993 presentation. All share and per share data has been restated to reflect a 3 for 2 stock split in June 1992. 2. JOINT VENTURE AND ACQUISITIONS In February 1990, Home Team Advantage, a newly created subsidiary, entered into an agreement to sell licensed sportswear to mass merchants and chain stores through the Joint Venture. The Company made an initial equity investment of $510,000 (51% of contributed capital) and acted as the Joint Venture manager. In May 1992, the Company and its previous Joint Venture partner agreed that, effective January 26, 1992, the Company would no longer participate in the profits or losses of the Joint Venture, and that the Joint Venture would liquidate its remaining assets and be terminated. The Company's Joint Venture partner assumed all responsibility for the Joint Venture's outstanding bank debt (which has since been paid) and, upon fulfillment of certain conditions, the Company's Joint Venture partner will obtain the rights to the "Saturday's Hero" name. The Company is continuing to serve certain segments of the mass merchant market through the "Home Team Advantage" label. The Company, effective January 26, 1992, is no longer recording any sales or operating results of the Joint Venture. Although the loss of the Joint Venture's sales is significant, the Company's operating results have not been materially adversely affected as a result of the termination of the Joint Venture. On May 31, 1990, the Company completed the acquisition of McBriar from Bennett Oltman, who remains with the Company under a long-term employment agreement. The Company invested approximately $3.7 million in cash (obtained from the Company's available credit lines) to acquire McBriar, including the repayment of McBriar's then outstanding indebtedness. The acquisition of McBriar was accounted for as a purchase. The pro forma impact on the Company's historical operating results from the acquisition of McBriar is not material. Effective September 2, 1991, the Company acquired, through McBriar Cap, most of the net assets of BII, a privately held company with facilities in Waycross and Screven, Georgia, that produced a variety of caps, primarily for the premium and specialty advertising industry. BII had sales of approximately $3 million in the fiscal year that ended in November 1990. The Company has expanded the operations of McBriar Cap to include the manufacture 12 13 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 of caps for sale by Mills to the licensed sports industry. The pro forma impact of the acquisition on prior periods is not material. 3. NOTES PAYABLE AND LONG-TERM DEBT Notes payable and long-term debt consisted of the following (in thousands):
January 30, January 25, 1993 1992 - ------------------------------------------------------------------- Variable rate notes (a) $ - $ 8,000 Notes payable to banks: Principal Credit Line (b) - - Joint Venture (c) - 4,358 Other obligations - 149 - ------------------------------------------------------------------- Total debt - 12,507 Less: amounts due within one year - 6,456 - ------------------------------------------------------------------- Long-term debt due after one year $ - $ 6,051 ===================================================================
(a) Represents, at January 25, 1992 variable rate notes with interest at prime plus 1/8% which were repaid in June 1992. (b) Represents, at January 30, 1993, a $40,000,000 credit line (the "Line") at variable interest rates. In March 1993, the line was increased to $50,000,000, which includes an option by the Company to convert $15,000,000 to a term loan. The line was also extended by one year to expire in April 1995 (with an additional one year extension available if certain financial covenants are satisfied). Borrowings are unsecured as long as liabilities do not exceed net worth. The agreement requires the Company to maintain, among other things, net worth of $65,000,000 as of January 30, 1993 (increased $3,000,000 annually) and a ratio of total liabilities over net worth not to exceed 150%. (c) Represents, at January 25, 1992, a revolving credit agreement for the Joint Venture, which was repaid by the Company's Joint Venture partner. The Company has complied with all long-term debt covenants for fiscal 1993. 4. STOCK OPTION PLANS The Company has a qualified, employee incentive stock option plan under which 1,316,214 and 1,628,439 shares of common stock were reserved at January 30, 1993 and January 25, 1992, respectively. The Company also maintains a non-qualified stock option plan for Directors under which 682,500 and 303,750 shares of common stock were reserved at January 30, 1993 and January 25, 1992, respectively. 13 14 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 Activity in these stock option plans for fiscal 1993 and 1992 was as follows: January 30, January 25, 1993 1992 - ------------------------------------------------------------------ Outstanding - Beginning of year 671,768 750,654 Granted 416,625 43,875 Exercised (226,628) (111,511) Canceled (36,900) (11,250) - ------------------------------------------------------------------ Outstanding - End of year 824,865 671,768 ================================================================== Average price of options exercised $2.23 $1.99 ==================================================================
At January 30, 1993, exercisable options totaled 629,265 and total outstanding options under these plans were as follows:
Exercise Price Shares -------- ---------- $ 1.67 65,750 1.83 45,000 1.89 56,250 2.29 75,750 2.36 194,065 5.33 2,700 6.56 5,625 10.25 5,000 10.88 5,000 11.25 5,000 12.33 289,725 13.57 75,000 ---------- 824,865 ==========
In March 1993, an additional 107,150 stock options were granted under the employee incentive stock option plan, 77,150 and 30,000 which were granted at exercise prices of $9.875 and $10.865, respectively. 5. COMMITMENTS The Company leases office and manufacturing facilities and data processing equipment under non-cancelable operating lease agreements. One of the manufacturing facilities, with an annual rental of $247,000, is owned by a partnership in which certain directors, officers and stockholders have a controlling interest. Total rent expense for fiscal 1993, 1992 and 1991 was $1,440,000, $1,546,000 and $1,446,000, respectively. 14 15 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 Annual rental commitments at January 30, 1993 under the Company's lease agreements are as follows (in thousands): Fiscal 1994 $1,470 Fiscal 1995 1,485 Fiscal 1996 1,500 Fiscal 1997 1,282 Fiscal 1998 1,256 Thereafter 2,175 ----------------------------------------- Total minimum lease obligations $9,168 =========================================
Certain of the Company's building leases have renewal options ranging from 1 to 15 years. The Company has employment agreements with certain of its employees. Minimum obligations under these agreements are $2,658,000. The Company has entered into various licensing agreements which permit it to manufacture and market apparel with copyrighted characters and logos. Under the terms of these agreements, the Company is required to pay minimum guaranteed fees to some licensors. Remaining minimum annual obligations under these agreements are approximately: fiscal 1994 - $637,000, fiscal 1995 - $1,565,000 and fiscal 1996 - $375,000. 6. INCOME TAXES Deferred income taxes result primarily from differences between asset depreciation methods and useful lives and from differences in the periods in which certain provisions for accounts receivable losses are recognized for tax and financial reporting. The components of the provision (benefit) for income taxes are (in thousands):
January 30, January 25, January 26, 1993 1992 1991 - -------------------------------------------------------------------------- Federal: Current $5,292 $4,120 $ 691 Deferred (140) (600) 389 State: Current 1,057 833 114 Deferred (10) (161) 45 - -------------------------------------------------------------------------- Total $6,199 $4,192 $1,239 ==========================================================================
15 16 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 Factors causing the effective tax rate to differ from the statutory rate were:
January 30, January 25, January 26, 1993 1992 1991 - -------------------------------------------------------------------------- Federal statutory rate 34% 34% 34% Increases (decreases): State income taxes 3 4 3 Depreciation of excess tax basis - - (2) Other (2) - 3 - -------------------------------------------------------------------------- Effective tax rate 35% 38% 38% ==========================================================================
The Company has adopted Statement No. 109 of the Financial Accounting Standards Board on accounting for Income Taxes (SFAS 109). The adoption of SFAS 109 did not have a material impact on net income. 7. MAJOR CUSTOMERS Sales to one customer for fiscal 1993, 1992 and 1991 were approximately $34,611,000, $30,151,000 and $22,453,000, respectively. 8. PUBLIC OFFERING On November 19, 1991, the Company completed the sale of 5,175,000 shares of its Common Stock at $8 per share. The $38,913,000 net proceeds of the offering were used to repay indebtedness, to acquire capital assets, for the expansion of certain facilities and for the Company's working capital requirements. 9. CONTINGENT LIABILITY The Internal Revenue Service ("IRS") completed an examination of the Company's corporate tax returns for the years ended January 28, 1989, January 27, 1990 and January 26, 1991 and had asserted that the Company's sales representatives were employees and not independent contractors. The Company has reached a tentative agreement with the IRS under which the IRS will reverse its assessment and the Company will treat its sales representatives as "statutory employees" effective January 1, 1993. The settlement agreement is subject to final approval and will not have a material adverse impact on the Company's financial condition or future operating results. 16 17 NUTMEG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991 10. EMPLOYEE BENEFIT PLAN In May 1990, Mills initiated a 401(k) profit sharing plan ("the Plan"). All employees 18 years of age with at least one year of continuous service are eligible to participate. Mills matches a portion of the employees' contributions. The Company funds are then utilized by the Plan to acquire the Company's Common Stock for the benefit of the Plan's participants. The Company's contributions to the Plan for fiscal 1993, fiscal 1992 and fiscal 1991 were $219,000, $188,000 and $40,000, respectively. 11. LEGAL PROCEEDINGS On April 5, 1990, an action naming the Company and certain of its officers and directors was filed in the United States District Court for the Middle District of Florida, Tampa Division. The action, captioned Ressler vs. Jacobson, et al., purported to be a class action filed by the plaintiff on behalf of all purchasers of the Company's common stock during the period May 23, 1989 through March 7, 1990. The complaint alleged that, during that period, the Company, in various public statements, including the Prospectus accompanying the May 23, 1989 common stock offering and various other public documents filed with the Securities and Exchange Commission, failed to disclose the actual financial condition of the Company and its actual business prospects, thus allegedly violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint sought an unspecified amount of money damages. The Company has settled the litigation on terms that did not have a material adverse effect on the Company's financial condition or operating results. 12. SUBSEQUENT EVENT On January 31, 1993 the Company completed the acquisition of Tryrare Ltd. ("Tryrare"), a British company engaged primarily in the sale of licensed sportswear. The pro forma impact of the acquisition of Tryrare, which had sales of approximately $9 million in its last fiscal year, is not material. 17 18 NUTMEG INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
OCTOBER 30, JANUARY 30, ASSETS 1993 1993 - ------------------------------------------------------------------------- (UNAUDITED) Current assets: Cash $ 2,347 $ 3,435 Accounts receivable 49,647 28,170 Inventories: Finished goods 52,826 34,418 Fabric and components 8,539 7,222 Work in process 3,531 2,904 Supplies 3,062 2,924 - ----------------------------------------------------------------------- Total inventories 67,958 47,468 Prepaid expenses 1,446 1,004 Deferred income tax benefit 1,388 1,388 - ----------------------------------------------------------------------- Total current assets 122,786 81,465 Property, plant and equipment 37,387 29,390 Less accumulated depreciation 11,485 8,019 - ----------------------------------------------------------------------- Net property, plant and equipment 25,902 21,371 Goodwill, at cost net of accumulated amortization of $217 at October 30, 1993 ($189 at January 30, 1993) 1,499 1,288 Other assets 4,144 2,595 - ----------------------------------------------------------------------- Total assets $154,331 $106,719 =======================================================================
See accompanying notes. 18 19 NUTMEG INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (IN THOUSANDS, EXCEPT SHARE DATA)
OCTOBER 30, JANUARY 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1993 - ----------------------------------------------------------------------- (UNAUDITED) Current liabilities: Notes payable and current portion of long-term debt $ 155 $ - Accounts payable 12,745 13,035 Income taxes payable 2,727 1,255 Other accrued liabilities 10,331 6,677 - ----------------------------------------------------------------------- Total current liabilities 25,958 20,967 Long-term debt due after one year 31,199 - Deferred income taxes 720 676 Other noncurrent liabilities 211 160 Stockholders' equity: Preferred stock, $.01 par value: 5,000,000 shares authorized, none issued or outstanding - - Common stock, $.01 par value: 50,000,000 shares authorized 18,563,632 shares issued (18,514,202 at January 30, 1993) 186 185 Capital in excess of par value 58,173 57,716 Foreign currency reserve (94) - Retained earnings 37,978 27,015 - ----------------------------------------------------------------------- Total stockholders' equity 96,243 84,916 - ----------------------------------------------------------------------- Total liabilities and stockholders' equity $154,331 $106,719 =======================================================================
See accompanying notes. 19 20 NUTMEG INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED ---------------------- ----------------------- OCTOBER 30, OCTOBER 24, OCTOBER 30, OCTOBER 24, 1993 1992 1993 1992 ---------- ---------- ---------- ---------- Net sales $ 66,091 $ 59,805 $ 144,215 $ 118,945 Costs and expenses: Cost of merchandise sold 42,564 41,217 94,831 80,919 Selling, general and administrative 13,223 11,849 31,421 25,620 Interest, net 257 114 432 78 Minority interest and other (income) expense (28) 30 1 32 -------- -------- -------- -------- Total costs and expenses 56,016 53,210 126,685 106,649 -------- -------- -------- -------- Income before income taxes 10,075 6,595 17,530 12,296 Income tax provision 3,708 2,338 6,567 4,341 -------- -------- -------- -------- Net income $ 6,367 $ 4,257 $ 10,963 $ 7,955 ======== ======== ======== ======== Net income per share $ .34 $ .23 $ .58 $ .42 ======== ======== ======== ======== Weighted average number of common shares used in the calculation 18,940 18,841 18,903 18,774 ======== ======== ======== ========
See accompanying notes. 20 21 NUTMEG INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (UNAUDITED) (IN THOUSANDS)
NINE MONTHS ENDED ------------------------ OCTOBER 30, OCTOBER 24, 1993 1992 ---------- ---------- Cash flows from operating activities: Net income $ 10,963 $ 7,955 --------- -------- Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 3,786 2,218 Deferred rent 51 (51) Change in operating assets and liabilities (net of amounts relating to acquired business and discontinuation of Joint Venture): (Increase) decrease in assets: Accounts receivable (20,050) (19,608) Inventories (19,201) (11,018) Prepaid expenses (289) (95) Other assets (1,224) 301 Increase (decrease) in liabilities: Accounts payable (2,036) (835) Income taxes payable 1,510 994 Accrued liabilities 2,686 2,513 -------- -------- Total adjustments (34,767) (25,581) --------- --------- Net cash used by operating activities (23,804) (17,626) --------- --------
(continued) See accompanying notes. 21 22 NUTMEG INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (UNAUDITED) (IN THOUSANDS)
NINE MONTHS ENDED ------------------------ OCTOBER 30, OCTOBER 24, 1993 1992 ---------- ---------- Cash flows from investing activities: Capital expenditures $( 7,834) $(11,393) Proceeds from sale of assets 246 383 Acquisition of business (657) - --------- -------- Net cash used by investing activities (8,245) (11,010) ---------- ------------- Cash flows from financing activities: Net borrowings under lines of credit and long-term debt 30,576 4,337 Proceeds from issuance of common stock 458 460 --- ------- Net cash provided by financing activities 31,034 4,797 -------- ------- Effect of exchange rate changes on cash (73) - --------- ------- Net decrease in cash ( 1,088) (23,839) Cash at beginning of period 3,435 25,250 --------- ------- Cash at end of period $ 2,347 $ 1,411 ======== ======= Cash paid during the periods for: Interest $ 423 $ 301 Income taxes $ 5,071 $ 3,341
See accompanying notes. 22 23 NUTMEG INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 30, 1993, OCTOBER 24, 1992, AND JANUARY 30, 1993 (Information pertaining to the three months and nine months ended October 30, 1993 and October 24, 1992 is unaudited) 1. Consolidation and Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Nutmeg Industries, Inc. ("Industries") and its direct or indirect wholly-owned subsidiaries, Nutmeg Mills, Inc. ("Mills"), Home Team Advantage, Inc. ("Home Team Advantage") (formerly Saturday's Hero, Inc.), McBriar Sportswear, Inc. ("McBriar"), McBriar Cap Company, Inc. ("McBriar Cap") (formerly Brand Images Corp.) and Tryrare Ltd. ("Tryrare") which was acquired on January 31, 1993 (collectively the "Company"). The unaudited condensed consolidated financial statements of the Company include all adjustments, consisting only of normal recurring accruals, which the Company considers necessary for a fair presentation of the financial position and results of operations for these periods. Results of operations for the nine months ended October 30, 1993 are not necessarily indicative of those expected for the entire fiscal year. All intercompany accounts and transactions have been eliminated. The Company is engaged in the design, manufacture and sale of various apparel, the bulk of which is sold under various sports-related licenses. 2. Subsequent Event On December 13, 1993, the Company and VF Corporation ("VF") announced that they had executed a definitive merger agreement whereby VF will acquire all outstanding shares of the Company for $17.50 cash per share. The Boards of Directors of the Company and VF have approved the offer and merger. As the first step in the transaction, a subsidiary of VF will commence a cash tender offer promptly for all outstanding common shares of the Company at $17.50 per share. The tender offer is expected to close in mid-January. The offer will be conditioned, among other things, upon a majority of the issued and outstanding shares of the Company being properly tendered and not withdrawn prior to the expiration of the offer. In connection with the transaction, VF has obtained options to acquire approximately 18.9% of the outstanding stock of the Company from Richard E. Jacobson and Martin G. Jacobson, Chairman and President of the Company, respectively, and an option to acquire approximately 2.98 million shares of the Company's Common Stock from the Company, representing 13.8% of the amount of the Company's Common Stock that would be outstanding if the option were exercised. 23 24 (b) Unaudited pro forma combined condensed financial statements. In January 1994, VF Corporation ("VF") acquired H.H. Cutler Company ("Cutler") for a total consideration of $154.7 million. Also in January 1994, VF acquired Nutmeg Industries, Inc. ("Nutmeg") for a total consideration of $352.2 million. The acquisitions of Cutler and Nutmeg (the "Acquired Companies") have been accounted for under the purchase method of accounting. The following pro forma combined condensed balance sheet of VF and the Acquired Companies assumes that the acquisitions had occurred on January 1, 1994. The following pro forma combined condensed income statement of VF and the Acquired Companies for the fiscal year ended January 1, 1994 assumes that the acquisitions had occurred on January 3, 1993. The pro forma combined financial statements are based on the historical consolidated financial statements of VF and the Acquired Companies. The historical income statements of the Acquired Companies exclude the cumulative effect of changes in accounting principles as of January 3, 1993 to conform their accounting policies to those of VF. These changes in accounting principles total $11.0 million after giving effect to income taxes and relate primarily to differences in the treatment of certain expenses as period expenses versus deferred costs and the application of VF inventory valuation policies. The pro forma adjustments are as set forth in the accompanying notes. The Acquired Companies' assets and liabilities have been recorded at their estimated fair values, and the excess purchase price has been assigned to intangible assets. Fair values of assets acquired and liabilities assumed are based on preliminary estimates; revisions are not expected to be material. Such unaudited pro forma information should be read in conjunction with the audited financial statements and related notes set forth in VF's Annual Report on Form 10-K and with the audited and unaudited financial statements of Nutmeg set forth herein. Such information does not purport to be indicative of results that would actually have been obtained had such transactions been completed as of the dates indicated or that may be obtained in the future. 24 25 VF Corporation Pro Forma Combined Condensed Balance Sheet January 1, 1994 (In thousands)
VF Acquired Pro Forma Pro Forma Corporation Companies Adjustments Combined ----------- --------- ----------- --------- Assets Current Assets Cash and equivalents $ 151,564 $ 5,260 $(130,000) (1) $ 26,824 Accounts receivable 511,887 45,515 557,402 Inventories 778,767 91,055 4,800 (2) 874,622 Other current assets 57,962 8,505 66,467 ---------- -------- ---------- Total current assets 1,500,180 150,335 1,525,315 Property, Plant and Equipment, net 712,759 51,473 5,200 (3) 769,432 Intangible Assets, net 575,359 1,563 344,500 (4) 921,422 Other Assets 89,050 1,605 90,655 ---------- -------- -------- ---------- $2,877,348 $204,976 $224,500 $3,306,824 ========== ======== ======== ========== Liabilities and Shareholders' Equity Current Liabilities Short-term borrowings, including current portion of long-term debt $ 145,767 $ 39,270 $ 330,605 (5) $ 515,642 Accounts payable 246,503 26,797 273,300 Accrued liabilities 267,578 25,300 7,700 (6) 300,578 ---------- -------- ---------- Total current liabilities 659,848 91,367 1,089,520 Long-term Debt 527,573 14,945 (11,300) (7) 531,218 Deferred Income Taxes and Other Liabilities 126,978 (4,741) 900 (8) 123,137 Redeemable Preferred Stock, net 15,549 - 15,549 Common Shareholders' Equity 1,547,400 103,405 (103,405) (9) 1,547,400 ---------- -------- -------- ---------- $2,877,348 $204,976 $224,500 $3,306,824 ========== ======== ======== ==========
See accompanying notes to pro forma combined condensed balance sheet. 25 26 VF Corporation Notes to Pro Forma Combined Condensed Balance Sheet The following is a summary of the adjustments reflected in the pro forma combined condensed balance sheet: (1) Payment of VF funds to purchase the Acquired Companies. (2) Write-up of Acquired Companies' inventories to fair value. (3) Write-up of Acquired Companies' property, plant and equipment to fair value. (4) Intangible assets representing the excess of the purchase price over the fair values assigned to net tangible assets of the Acquired Companies. (5) Short-term borrowings incurred by VF to purchase the Acquired Companies, net of Acquired Companies' short-term debt repaid. (6) Accrual of plant closing costs of Acquired Companies. (7) Repayment of long-term debt of Acquired Companies. (8) Deferred income tax effect at the statutory federal and state tax rate of the pro forma balance sheet adjustments. (9) Elimination of Acquired Companies' historical equity. 26 27 VF Corporation Pro Forma Combined Condensed Income Statement Year Ended January 1, 1994 (In thousands)
VF Acquired Pro Forma Pro Forma Corporation Companies Adjustments Combined ----------- --------- ----------- --------- Net Sales $4,320,404 $390,153 $4,710,557 Costs and Operating Expenses Cost of products sold 2,974,861 289,400 $ 800 (2) 3,265,061 Marketing, administrative and general expenses 913,734 59,899 973,633 Unusual items (1) - 4,300 4,300 ---------- --------- ---------- 3,888,595 353,599 4,242,994 ---------- --------- ---------- Operating Income 431,809 36,554 467,563 Other Income (Expense) Interest expense, net (37,387) (2,888) (34,500) (3) (74,775) Other income, net 5,565 (31,745) 29,200 (4) (9,980) (13,000) (5) ---------- --------- ---------- (31,822) (34,633) (84,755) ---------- --------- ---------- Income Before Income Taxes 399,987 1,921 382,808 Income Taxes 153,572 1,202 (4,000) (6) 150,774 ---------- --------- -------- ---------- Net Income $ 246,415 $ 719 $(15,100) $ 232,034 ========== ========= ======== ========== Earnings Per Common Share Primary $3.80 $3.58 Fully diluted 3.71 3.49
See accompanying notes to pro forma combined condensed income statement. 27 28 VF Corporation Notes to Pro Forma Combined Condensed Income Statement The following is a summary of the adjustments reflected in the pro forma combined condensed income statement: (1) Changes in accounting estimates to conform to VF accounting practices for computing allowances for bad debts, returns and discounts and for computing certain accrued liabilities. (2) Increased depreciation expense resulting from the write-up of property, plant and equipment to fair value. (3) Interest expense relating to purchase of the Acquired Companies at VF's assumed long-term borrowing rate. (4) Elimination of nonrecurring charges included in Acquired Companies' operating results that directly result from their sale to VF, primarily payments for the value of stock options and the accrual of management incentives and contracts. (5) Amortization of intangible assets of Acquired Companies on a straight-line basis. (6) Income tax effect at the statutory federal and state tax rate for the pro forma income statement adjustments, excluding amortization of nondeductible intangible assets. 28 29 (c) Exhibits 2.1 Stock Purchase Agreement dated October 12, 1993, by and among V.F. Corporation and the Shareholders of H.H. Cutler Company. 2.2 Offer to Purchase, dated December 17, 1993, of all the outstanding shares of Common Stock of Nutmeg Industries, Inc. by Spice Acquisition Co., a wholly owned subsidiary of V.F. Corporation. 2.3 Agreement and Plan of Merger, dated December 12, 1993, among Nutmeg Industries, Inc., V.F. Corporation and Spice Acquisition Co. 2.4 Amendment No. 1, dated January 27, 1994, to Agreement and Plan of Merger among Nutmeg Industries Inc., V.F. Corporation and Spice Acquisition Co. 23 Consents of experts and counsel. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. V.F. CORPORATION ---------------- (Registrant) March 31, 1994 By: /s/ G.G. Johnson -------------------------- G.G. Johnson Vice President-Finance (Chief Financial Officer) 29 EX-23 2 CONSENT OF INDEPENDENT AUDITORS 1 CONSENT OF INDEPENDENT AUDITORS We consent to the use of our report dated March 3, 1993 with respect to the consolidated financial statements of Nutmeg Industries, Inc. for the fiscal year ended January 30, 1993, included in the Current Report on Form 8-K as amended on the Form 8-K/A of V.F. Corporation dated January 19, 1994. We also consent to the incorporation by reference in (1) Registration Statement No. 33-55014 which acts as Post-Effective Amendment No. 2 to Registration Statement No. 33-26566 on Forms S-8/S-3 and Post-Effective Amendment No. 6 to Registration Statement No. 2-85579 on Forms S-8/S-3, (2) Registration Statement No. 33-33621 on Form S-8 which acts as Post-Effective Amendment No. 2 to Registration Statement No. 2-99945 on Form S-8, (3) Registration Statement No. 33-47329 which acts as Post-Effective Amendment No. 2 to Registration Statement No. 33-30889 on Form S-3, (4) Registration Statement No. 33-10491 on Form S-3, and (5) Registration Statement No. 33-41241 on Form S-8 of our report dated March 3, 1993, with respect to the consolidated financial statements filed herein included in the Current Report on Form 8-K as amended on the Form 8-K/A of V. F. Corporation dated January 19, 1994. ERNST & YOUNG Tampa, Florida March 31, 1994 -----END PRIVACY-ENHANCED MESSAGE-----