-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TJmz8Ak7aYawcxXPrsyRH57CzdgA5XFAHbjhG1rN3L+bxDKyGwrB9YzTN/twiNlD ri7VMIPu86E28whC6AXa/g== 0000950168-95-001035.txt : 19951119 0000950168-95-001035.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950168-95-001035 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951001 FILED AS OF DATE: 19951114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALBA WALDENSIAN INC CENTRAL INDEX KEY: 0000003292 STANDARD INDUSTRIAL CLASSIFICATION: KNITTING MILLS [2250] IRS NUMBER: 560359780 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06150 FILM NUMBER: 95592198 BUSINESS ADDRESS: STREET 1: 201 ST GERMAIN AVE SW STREET 2: P O BOX 100 CITY: VALDESE STATE: NC ZIP: 28690 BUSINESS PHONE: 7048742191 MAIL ADDRESS: STREET 1: P O BOX 100 CITY: VALDESE STATE: NC ZIP: 28690 10-Q 1 ALBA-WALDENSIAN 10-Q #40789.1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20459 FORM 10-Q (Mark one) [X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended October 1, 1995 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 1-6150 ALBA-WALDENSIAN, INC. (Exact name of registrant as specified in its Charter) Delaware 56-0359780 (State or other jurisdiction (I.R.S.Employer Identification No.) of incorporation or organization) P.O. Box 100, Valdese, N.C. 28690 (Address of principal executive offices) (Zip Code) (704) 874-2191 Registrant's telephone number, including area code NONE Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO APPLICABLE ONLY TO CORPORATE USERS Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. As of October 1, 1995, the number of common shares outstanding was 1,864,903. ALBA-WALDENSIAN, INC. AND SUBSIDIARIES INDEX PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets 1-2 October 1, 1995 and December 31, 1994 Condensed Consolidated Statements of Current 3 and Retained Earnings for the Three and Nine Month Periods Ended October 1, 1995 and October 2, 1994 Condensed Consolidated Statements of Cash 4-5 Flows for the Nine Month Periods Ended October 1, 1995 and October 2, 1994 Notes to Condensed Consolidated Financial 6-8 Statements Item 2. Management's Discussion and Analysis of 9-13 Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALBA-WALDENSIAN, INC. AND SUBSIDIARIES Consolidated Balance Sheets
October 1, December 31, 1995 1994 (1) ASSETS (Unaudited) CURRENT ASSETS: Cash ................................. $ 81,820 $ 103,952 Accounts receivable,net .............. 10,898,973 7,426,654 Refundable income taxes, net ......... 533,473 127,394 Notes receivable ..................... 8,121 30,080 Inventories: Materials ............................ 3,866,682 3,377,562 Work-in-process ...................... 5,570,235 5,945,246 Finished goods ....................... 7,396,875 7,941,372 Total inventories,net ................ 16,833,792 17,264,180 Prepaid expenses and other ........... 260,654 151,236 Deferred income taxes ............... 298,010 298,010 Total Current Assets .......... 28,914,843 25,401,506 PROPERTY AND EQUIPMENT ............... 29,978,232 27,102,310 LESS ACCUMULATED DEPRECIATION ........ (15,847,339) (15,497,062) Property, Plant and Equipment, Net ...................... 14,130,893 11,605,248 OTHER ASSETS: Goodwill(Note 2) ..................... 9,114,166 0 Notes receivable ..................... 84,553 77,995 Trademarks and patents ............... 291,975 324,654 Cash value-life insurance ........... 310,862 320,325 Total Other Assets ................... 9,801,556 722,974 ------------ ------------ TOTAL ASSETS ......................... $ 52,847,292 $ 37,729,728 ============ ============
(1) The balance sheet at December 31, 1994 has been taken from the audited consolidated financial statements at that date. See notes to consolidated condensed financial statements. 1 ALBA-WALDENSIAN, INC. AND SUBSIDIARIES Consolidated Balance Sheets
October 1, December 31, 1995 1994(1) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short term borrowings and lines of credit(Note 3) $ 2,505,256 $ 1,178,062 Current maturities of long-term debt(Note 4) .... 2,350,000 500,000 Current maturities of capital lease obligations . 86,346 113,526 Accounts payable ................................ 2,445,042 2,587,875 Accrued liabilities: Labor and profit-sharing ....................... 852,319 689,983 Property and payroll taxes ..................... 372,536 102,939 Group health claims - estimated ................ 279,177 150,000 Other .......................................... 601,063 213,060 Income taxes payable ............................ 0 0 Total Current Liabilities ....................... 9,491,739 5,535,445 LONG-TERM DEBT (Note 4) ......................... 12,850,000 1,000,000 CAPITAL LEASE OBLIGATIONS ....................... -- 58,069 DEFERRED COMPENSATION ........................... 338,312 344,391 DEFERRED INCOME TAXES ........................... 1,698,369 1,698,369 Total Liabilities ............................ 24,378,420 8,636,274 COMMITMENTS AND CONTINGENCIES(Notes 2,3, and 4) STOCKHOLDERS' EQUITY: Common stock - authorized 3,000,000 shares, $2.50 par value; issued: 1,886,580 shares in 1995 and 1994; outstanding: 1,864,903 and 1,863,153 shares in 1995 and 1994, respectively .............. 4,716,450 4,716,450 Additional paid-in capital ...................... 9,182,158 9,182,158 Retained earnings ............................... 14,724,713 15,361,763 Total ........................................... 28,623,321 29,260,571 Less treasury stock - at cost (21,677 and 23,427 shares in 1995 and 1994, respectively) ................. (154,449) (166,917) Total Stockholders' Equity ...................... 28,468,872 29,093,454 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................... $ 52,847,292 $ 37,729,728 ============ ============
(1) The balance sheet at December 31, 1994 has been taken from the audited consolidated financial statements at that date. See notes to consolidated condensed financial statements. 2 ALBA-WALDENSIAN,INC. AND SUBSIDIARIES Condensed Consolidated Statements of Current And Retained Earnings (Unaudited)
Three Month Period Ended Nine Month Period Ended October 1, October 2, October 1, October 2, 1995 1994 1995 1994 CURRENT EARNINGS: Net sales ........................ $ 16,769,041 $ 14,700,034 $ 47,399,453 $ 42,839,078 Cost of sales .................... 14,426,170 10,636,996 38,075,432 31,760,572 Gross profit ..................... 2,342,871 4,063,038 9,324,021 11,078,506 Selling, general and administrative expenses ....... 3,165,007 2,755,609 9,351,651 8,237,956 Operating income ................. (822,136) 1,307,429 27,630 2,840,550 Interest expense ................. (361,579) (64,260) (883,946) (248,520) Interest income .................. 5,877 7,687 14,661 28,647 Other ............................ 2,446 6,742 (134,114) 50,465 Total other income (expense) ..... (353,256) (49,831) (1,003,399) (169,408) Income before income taxes ....... (1,175,392) 1,257,598 (1,031,029) 2,671,142 Provision for income taxes ....... ( 446,649) 465,265 ( 391,791) 988,323 Net income........................ $( 728,743) $ 792,233 $ (639,238) $ 1,682,819 ============ ============ ============ ============ Weighted average number of shares of common stock outstanding .... 1,864,502 1,851,951 1,864,094 1,846,723 ============ ============ ============ ============ Net income per common share ...... $ (.39) $ .42 $ (.34) $ .91 ============ ============ ============ ============ RETAINED EARNINGS: Balance at beginning of period .. $ 15,453,143 $ 14,313,355 $ 15,361,763 $ 13,426,272 Net income ...................... (728,743) 792,233 (639,238) 1,682,819 Exercise of stock options ....... 313 1,500 2,188 (1,903) Balance at end of period ........ $ 14,724,713 $ 15,107,188 $ 14,724,713 $ 15,107,188 ============ ============ ============ ============
See notes to consolidated condensed financial statements. 3 ALBA-WALDENSIAN, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Month Periods Ended October 1, October 2, 1995 1994 OPERATING ACTIVITIES: Net income ......................................... $ (639,238) $ 1,682,819 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization ...................... 1,745,260 1,408,473 Provision for bad debts, net of recoveries ......... 174,406 173,550 Realized loss (gain) on sale of property ........... 126,184 (9,464) Provision for inventory obsolescence ............... 902,367 235,015 Changes in operating assets and liabilities providing (using) cash: Accounts receivable ......................... (1,690,446) (1,496,395) Refundable income taxes .............. (406,079) 76,134 Inventories .......................... 1,051,132) (965,749) Prepaid expenses and other .......... ( 99,955) 26,669 Accounts payable ............................ (142,833) (869,869) Accrued and other liabilities ............... 632,185 806,638 Income taxes payable ........................ 0 464,643 Deferred compensation ....................... ( 6,079) (77,048) Net cash provided by (used in) operating activities. 1,646,904 1,355,416 INVESTING ACTIVITIES: Capital expenditures .............................. (1,584,227) (917,815) Payment for purchase of Balfour Healthcare ........ (15,312,437) 0 Proceeds from sale of property .................... 255,626 0 Proceeds from notes receivable .................... 15,401 25,935 Net cash used in investing activities .............. (16,625,637) (891,880) FINANCING ACTIVITIES: Net borrowings (payments) under line of credit agreements ............................. 1,327,194 (50,000) Issuance of long term debt ........................ 15,000,000 0 Principal payments on notes and leases ............ (1,385,249) (501,724) Cash proceeds from exercise of stock options ..... 14,656 101,625 Net cash provided by (used in) financing activities 14,956,601 (450,099) NET INCREASE (DECREASE) IN CASH .................... (22,132) 13,437 CASH AT BEGINNING OF PERIOD ........................ 103,952 960,516 CASH AT END OF PERIOD .............................. $ 81,820 $ 973,953 ============ ============ 4 ALBA-WALDENSIAN, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited) Nine Month Period Ended October 1, October 2, 1995 1994 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest ................... $845,698 $212,952 Income Taxes ............... $ 16,285 $447,577 See notes to consolidated condensed financial statements. 5 ALBA-WALDENSIAN, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statement For the Three and Nine Month Periods Ended October 1, 1995 and October 2, 1994 (Unaudited) 1. UNAUDITED FINANCIAL INFORMATION In the opinion of the Company, the accompanying unaudited Consolidated Condensed Financial Statements contain all adjustments necessary to present fairly the financial position as of October 1, 1995 and the results of operations for the three and nine months periods ended October 1, 1995 and October 2, 1994. The financial statements are presented as permitted by the instructions to Form 10-Q and Article 10 of regulation S-X. The accounting policies followed by the company are set forth in the Company's Annual Report on Form 10-K which is incorporated by reference. The results of operations for the three and nine month periods ended October 1, 1995 are not necessarily indicative of the results to be expected for the full year. These unaudited financial statements should be read in conjunction with the Company's most recent audited financial statements. The three month period for 1995 began July 3, 1995 and ended October 1, 1995. The three month period for 1994 began July 4, 1994 and ended October 2, 1994. The nine month period for 1995 began January 1, 1995 and ended October 1, 1995. The nine month period for 1994 began January 1, 1994 and ended October 2, 1994. 2. ACQUISITION On March 6, 1995, the company acquired the Balfour Healthcare Division of Kayser-Roth Corporation. The acquisition consisted of the following, subject to post-closing adjustments: Fair value of assets acquired: Accounts Receivable .... 1,956,279 Fixed Assets ........... 2,730,830 Inventory .............. 1,523,111 Goodwill ............... 9,419,145 Total assets acquired... 15,629,365 Cash paid .............. 15,312,437 Liabilities assumed .... 316,928 The acquisition was accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to assets acquired based on their estimated fair values and may be subject to further adjustment. The total cost in excess of estimated fair value(goodwill of $9,419,145) is amortized on a straight line basis over 15 years. The Company financed 100% of the acquisition with a variable long term loan agreement(Note 4). The results of operation of the Balfour Healthcare Division are included in the accompanying financial statements since the date of acquisition. 6 The following unaudited pro forma summary presents the information as if the acquisition had occurred at the beginning of 1995 and 1994, after giving effect to certain adjustments, including amortization of goodwill and interest expense from debt issued to fund the acquisition and related income tax effects. The total interest expense included in this pro forma summary is $647,800 in 1994 and $934,600 in 1995. Goodwill amortization is $461,000. This pro forma summary is provided for information purposes only. It is based on historical information and does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations.
Three Month Periods Ended Nine Month Periods Ended October 1, 1995 October 2, 1994 October 1, 1995 October 2, 1994 (Amounts in thousands of dollars, except per share data) Net Sales ............... $ 16,769.0 $ 18,313.0 $ 50,054.0 $ 53,759.1 Net Income .............. (639.2) 936.1 (581.5) 2,001.7 Earnings per common share $ (.39) $ .51 $ (.31) $ 1.08
3. SHORT TERM BORROWINGS AND LINES OF CREDIT On March 6, 1995, the Company restructured its short term line of credit to $5,000,000. This line of credit was used to purchase the Baxter Healthcare P.A.S.(R) business in November, 1994 for $2,040,000 and to support existing working capital needs. In addition this line of credit provides a sublimit of $1,000,000 to support import letters of credit. Interest is accrued at the LIBOR rate plus 1 3/4% at October 1,1995. The amount outstanding at October 1, 1995, and December 31, 1994 was $2,505,256 and $1,178,062, respectively. 4. LONG TERM DEBT Long term debt is comprised of: October 1 December 31 1995 1994 Note Payable-Equipment Loan(a) ................. $ 1,125,000 $ 1,500,000 Note Payable-Balfour Purchase(b)................ 14,075,000 -- Total ........................... 15,200,000 1,500,000 Less:Current Maturities.......... 2,350,000 500,000 Total Long Term Debt ........................... $ 12,850,000 $ 1,000,000 (a) Pursuant to a fixed rate term loan agreement dated February 12, 1993, this $2,000,000 note was used to purchase new equipment. Interest accrues at 6.3% fixed rate and principal payments are made quarterly with the final payment due December 31, 1997. 7 (b) Pursuant to variable loan rate term loan agreement dated March 6, 1995, this $15,000,000 note was used to purchase the Balfour Healthcare Division from Kayser-Roth Corporation. Interest accrues at the rate of LIBOR plus 2% at October 1, 1995. Principal payments are being made quarterly and began June 30, 1995 with the final payment due June 30, 2000. The note is collateralized by all assets of the company. This loan agreement contains various loan covenants, as defined, which include maintaining a minimum tangible net worth, a minimum cash flow and leverage ratio and a limit on capital spending. The agreement also maintains that any cash dividends paid will not cause default of any loan covenant as a result of paying those dividends. The annual principal maturites of the long term debt at October 1, 1995 were as follows: 1995 $ 587,500 1996 2,350,000 1997 2,350,000 1998 2,350,000 1999 2,350,000 2000 5,212,500 Total $ 15,200,000 5. EARNINGS PER SHARE Net income per common share is calculated on the weighted average number of shares of common stock outstanding during the period. The effect of dilutive common stock equivalents is immaterial. 6. LICENSE AGREEMENTS The Company has a licensing agreement with Coats Viyella International, UK, in which it is obligated to pay a 5% royalty on all sales of product under the Byford Apparel label that is not produced by Coats Viyella. The Company also has an agreement with Mr. Ray Shaw, which obligates to Company to pay a 5% royalty on all product sold under the BBWr label. In connection with the purchase of Balfour Health Products, the Company is obligated to pay Ms. Ada Shapiro a royalty of 5% of sales up to $1,000,000, 2.5% of sales from $1,000,000 to $2,000,000, and 1.5% of sales over $2,000,000 on two styles of diabetic socks produced by Balfour Health Products. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Company has good liquidity. On October 1, 1995, the Company had a current working capital ratio of 3.05 to 1 and working capital of $19,423,104. This ratio was down from 4.59 to 1 at October 2, 1994 primarily due to the short term borrowings associated with the acquisition of the P.A.S(R) business in November, 1994 and current maturities of long-term debt associated with the acquisition of Balfour Health Products in March, 1995. Liquidity needs are primarily affected by and related to capital expenditures and increased levels of accounts receivable due to the Company's growth. These needs are adequately being met through available working capital, and are supplemented by a short-term line of credit of $5,000,000, to cover fluctuations, as well as a $2,000,000 equipment term loan. In addition, the Company issued $15,000,000 of long-term debt on March 6, 1995 to purchase the assets of Balfour Health Products which consisted of accounts receivable, building and equipment, and inventory. Results of Operations Three Month Periods Ended October 1, 1995, and October 2, 1994 Net sales by division for the third quarter of 1995 compared to the third quarter of 1994 are set forth in the following table. Three Month Period Ended Oct. 1 Oct. 2 Increase/ %Increase 1995 1994 (Decrease) (Decrease) Consumer Products $ 6,192,105 $ 7,619,258 $(1,427,153) (18.7)% Health Products . 8,136,808 3,971,440 4,165,368 104.9 % Alba Direct ..... 538,198 866,303 ( 328,105) (37.9)% Byford .......... 1,868,787 2,243,033 ( 374,246) (16.7)% AWI Retail ...... 33,143 0 33,143 N/A Total ... 16,769,041 14,700,034 2,069,007 14.1% The net sales increase of $2,069,007 as shown in the table above was attributed to the increase in sales of the Health Products Division, which includes the newly acquired Balfour Health Products Division. During the second quarter, the Company began to consolidate customers and products that were common to both Balfour and Alba-Waldensian. It is estimated that 96.4% of the 104.9% sales increase in the Health Products Division was due to the Balfour purchase and the remainder is due to an increase in other business. The decrease in Consumer Product sales was the result of the prevailing weakness in the nation's retail sector and increased competition for the retailers limited dollars. The decline in Alba Direct sales is attributed to the Company's termination of two of its seven Japanese dealers. The Byford Division sales in the third quarter declined primarily due to softness in the sweater market. 9 Gross profits decreased for the third quarter of 1995, as compared to the third quarter of 1994 by $1,720,167. During the third quarter, the Company recorded an additional $1.2 million write-down of inventory. The Company writes down close-out and irregular inventory on an ongoing basis, but due to the fact that Consumer Products sales volume had been soft for the last year and product prices are being depressed by other manufacturers closing out excess inventory throughout the marketplace the Company believes additional write-downs are necessary. Without the $1.2 million dollar write-down of inventory, the gross profit decrease would have been $520,167. This reflects the loss of gross profit from the decrease in the Consumer Products, Alba Direct and Byford sales and the increase in manufacturing cost caused by manufacturing overhead cost not being reduced proportionate to the decrease in sales. Selling, general, and administrative expenses(as a percentage of net sales) increased from 18.7% in 1994 to 18.9% in 1995. The increase is due to the addition of goodwill expense for the Balfour acquisition of $153,000 or .9% of net sales. There was an operating loss of $822,136 in the third quarter as compared to operating income in the third quarter of 1994 of $1,307,429, a decrease of $2,129,565 in operating results. The decrease in operating income was primarily due to the decrease in sales and gross profits of the Consumer Products and Alba Direct Divisions and the write-down of inventory of $1.2 million, as discussed above. Net other income /expense aggregated $353,256 of expense for the third quarter of 1995, as compared to an expense of $49,831 in the third quarter of 1994. The increased expense is primarily due to the increase in interest expense of $297,319 which relates to the financing of the Balfour acquisition. Net loss after taxes for the three month period ended October 1, 1995 was $728,743, a decrease of $1,520,976 from the net income of $792,233 in third quarter of 1994. The decrease in net income was primarily due to the lower sales and gross profits in the Consumer, Alba Direct, and Balfour Divisions and the write-down of inventory, as discussed above. Nine Month Periods Ended October 1, 1995 and October 2, 1994 Net Sales by division for the first nine month period of 1995 as compared to the first nine month period of 1994 are set forth in the following table: Nine Month Period Ended Oct. 1 Oct. 2 Increase/ %Increase 1995 1994 (Decrease) (Decrease) Consumer Products $ 19,052,556 $ 23,307,077 $ (4,254,521) (18.3)% Health Products . 22,682,515 11,747,380 10,935,135 93.1% Alba Direct ..... 1,576,019 3,289,868 (1,713,849) (52.1)% Byford .......... 4,036,069 4,494,753 ( 458,684) (10.2)% AWI Retail ...... 52,294 0 52,294 100.0% Total ... $ 47,399,453 $42,839,078 $ 4,560,375 $ 10.7% 10 The net sales increase of $4,560,375 as shown in the table above was attributed to the increase in sales of the Health Products Division, which includes the newly acquired Balfour Health Products Division. It is estimated that 82.9% of the 93.1% increase in Health Products Division's sales was due to the acquisition of Balfour and the remainder due to an increase in other business. The weakness in Consumer Products began in the fourth quarter of 1994 as major customers experienced an overstocked position in retail inventories. This weakness has continued through the first nine months of 1995. The decline in Alba Direct sales is attributed to the Company's termination of two of its seven Japanese dealers. The Byford Division sales have experienced a decline primarily due to softness in the sweater market. Gross profits decreased for the first nine months of 1995 as compared to 1994 by $1,754,485. During the third quarter, the Company recorded an additional $1.2 million write-down of inventory. The Company writes down close-out and irregular inventory on a regular basis, but due to the fact that Consumer Product sales volume has been soft for the last year and product prices are being depressed by other manufacturers closing out excess inventories throughout the marketplace the Company believes the additional write-downs are necessary. Without the $1.2 million write-down of inventory, the gross profit decrease would be $554,485. This reflects the loss of gross profit from the decrease in Consumer Products, Alba Direct, and Byford sales, and increases in manufacturing cost caused by manufacturing cost not being reduced proportionate to the decrease in sales. Selling, general and administrative expenses(as a percentage of sales) increased from 19.2% in 1994 to 19.7% in 1995. The increase is primarily due to the addition of goodwill expense for the Balfour acquisition of $305,000 or .6% of net sales, and the addition of contract programmers in the MIS department. Operating income decreased by $2,812,920 for the nine month period in 1995, as compared to 1994. The decrease in operating income was primarily due to the decrease in sales and gross profits in the Consumer, Alba Direct and Byford Divisions and the write-down of inventory of $1.2 million, as discussed above. Net other income/expense aggregated $1,003,399 of expense for the first nine months of 1995 as compared to an expense of $169,408 in 1994. The increase in expense is primarily due to two factors. One, the increase in interest expense of $635,426 which relates to the financing of the Balfour acquisition. Two, a loss on the sale of the Company's Main Street plant of $90,000. The Main Street plant was vacated due to consolidation of the Company's Health Products production in Rockwood, Tennessee and the reorganization of manufacturing in the Valdese area. Net loss after taxes for the nine month period ended October 1, 1995 was $639,238, a decrease of $2,322,057 from net income of $1,682,819 in the third quarter of 1994. The decrease in net income was primarily due to lower sales and gross profits in the Consumer Products, Alba Direct and Byford Divisions and the write-down of inventory, as discussed above. 11 Other Discussion The Company completed its relocation of the Valdese, NC Health Products manufacturing to the newly acquired Balfour facility in Rockwood, TN in the third quarter. The Company believes the consolidation of Health Products manufacturing will reduce costs and enable management to lower inventories for the Company's Health Products operations. In addition, the Company completed the reorganization of its Consumer Products operation in Valdese, NC in the third quarter. The reorganization has enabled the Company to consolidate manufacturing into fewer plants. Management believes the reorganization will lower manufacturing cost and reduce inventories. Items as a percentage of sales are reflected in the following table: Three Month Periods Ended Nine Month Period Ended Oct.1, Oct. 2, Oct. 1, Oct.2, 1995 1994 1995 1994 Net sales ................... 100.0% 100.0% 100.0% 100.0% Cost of sales ................ 86.0% 72.4% 80.3% 74.1% Gross margin ................ 14.0% 27.6% 19.7% 25.9% Selling, general and administrative expenses ..... 18.9% 18.8% 19.7% 19.2% Operating income ............. (4.9%) 8.8% (0.0%) 6.7% Other income (expense), net... (2.1%) (0.3%) (2.1%) (0.4)% Income before income taxes... (7.0%) 8.5% (2.1%) 6.3% Provision for income taxes... (2.7%) 3.2% ( .8%) 2.3% Net Income ................ (4.3%) 5.3% (1.3%) 4.0% ===== ===== ===== ==== 12 PART II. OTHER INFORMATION Items 1,2,3,4, and 5 are inapplicable and have been omitted. Item 6. Exhibits and Reports on FORM 8-K a. Exhibits 11. Computation of earnings per share 27. Financial Data Schedule(filed in electronic format only) b. Form 8-K None Reported 13 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 there unto duly authorized. ALBA-WALDENSIAN, INC. AND SUBSIDIARIES (Signature of Thomas I. Nail appears here) Date:11-13-95 -------------------------------------- Thomas I. Nail Chief Financial Officer and Principal Accounting Officer 14 EX-11 2 EXHIBIT 11 EXHIBIT 11 ALBA-WALDENSIAN, INC. AND SUBSIDIARIES Calculation of Primary and Fully Dilutive Earnings Per Share (unaudited)
Three Month Period Ended Nine Month Period Ended Oct.1, Oct.2, Oct.1, Oct.2, 1995 1994 1995 1994 Primary Earning Per Share Weighted average number of common shares outstanding ......... 1,864,502 1,851,591 1,864,094 1,846,723 Net Income(Loss) ................ $ (728,743) $792,208 $(639,238) $ 1,682,209 Primary Earning Per Share ....... $ (.39) $ .42 $ (.34) $ .91 Fully Dilutive Earning Per Share Weighted average number of common shares outstanding ........ 1,864,502 1,851,591 1,864,094 1,846,723 Common Stock Equivalents(Options) 9,811 37,591 14,835 36,670 1,874,313 1,889,182 1,878,929 1,883,393 Net Income(Loss) ................ $ (728,743) $792,208 $(639,238) $ 1,682,819 Fully dilutive Earnings Per Share $ (.39) $ .42 $ (.34) $ .89
15 EX-27 3 EXHIBIT 27
5 9-MOS DEC-31-1995 JAN-01-1995 OCT-01-1995 81,820 0 10,898,973 0 16,833,792 28,914,843 29,978,232 15,847,339 52,847,292 9,491,739 0 4,716,450 0 0 23,752,422 52,847,292 47,399,453 47,414,114 38,075,432 47,427,083 134,114 0 883,946 (1,031,029) (391,791) 0 0 0 0 (639,238) (.34) (.34)
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