-----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, iFpLZwBLY+ZUDYuDicZfFIhjI4/9erJXJT40IbwyZLKbLrXzi+J9kQdP7mTiRn2F iCSpSuvTi0ydqOaKIO2OwQ== 0000035469-95-000005.txt : 19950511 0000035469-95-000005.hdr.sgml : 19950511 ACCESSION NUMBER: 0000035469-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950510 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON INC CENTRAL INDEX KEY: 0000035469 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 560586036 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05137 FILM NUMBER: 95535950 BUSINESS ADDRESS: STREET 1: 326 E STADIUM DRIVE CITY: EDEN STATE: NC ZIP: 27288 BUSINESS PHONE: 9196273000 FORMER COMPANY: FORMER CONFORMED NAME: FIELDCREST MILLS INC DATE OF NAME CHANGE: 19860807 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 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 March 31, 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 No. 1-5137 FIELDCREST CANNON, INC. (Exact name of registrant as specified in its charter) DELAWARE 56-0586036 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 326 East Stadium Drive Eden, N.C. 27288 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (910) 627-3000 Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the 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 and (2) has been subject to such filing requirements for the past 90 days. Yes x . No . Number of shares outstanding April 30, 1995 Common Stock 8,846,959 Total pages 10 Exhibit Index page 9 PART 1. FINANCIAL INFORMATION
FIELDCREST CANNON, INC. Consolidated statement of financial position March 31, December 31, Dollars in thousands 1995 1994 Assets Cash $ 4,312 $ 5,885 Accounts receivable 170,128 170,001 Inventories (note 3) 263,611 213,994 Net assets held for sale - 24,000 Other prepaid expenses and current assets 3,527 3,793 Total current assets 441,578 417,673 Plant and equipment, net 322,261 314,726 Deferred charges and other assets 61,128 50,266 Total assets $824,967 $782,665 Liabilities and shareowners' equity Accounts and drafts payable $ 54,989 55,533 Federal and state income taxes 4,018 2,268 Deferred income taxes 19,651 21,988 Accrued liabilities 69,381 53,958 Current portion of long-term debt 1,118 1,465 Total current liabilities 149,157 135,212 Senior long-term debt 132,291 107,744 Subordinated long-term debt 210,000 210,000 Total long-term debt 342,291 317,744 Deferred income taxes 43,471 42,859 Other non-current liabilities 54,896 55,648 Total liabilities 589,815 551,463 Shareowners' equity: Preferred Stock, $.01 par value, 10,000,000 authorized, 1,500,000 issued and outstanding March 31, 1995 and December 31, 1994 (aggregate liquidation preference of $75,000) 15 15 Common Stock, $1 par value, 25,000,000 authorized, 12,458,819 issued March 31, 1995 and 12,360,252 December 31, 1994 12,459 12,360 Additional paid in capital 218,185 216,772 Retained earnings 121,718 119,280 Excess purchase price for Common Stock acquired and held in treasury - 3,606,400 shares (117,225) (117,225) Total shareowners' equity 235,152 231,202 Total liabilities and shareowners' equity $824,967 $782,665 /TABLE See accompanying notes (2) FIELDCREST CANNON, INC. Consolidated statement of income and retained earnings
Three Months ended March 31 Dollars in thousands, except per share data 1995 1994 Net sales $257,009 $232,285 Cost of sales 214,025 194,893 Selling, general and administrative 26,702 22,344 Restructuring charges 3,924 - Total operating costs and expenses 244,651 217,237 Operating income 12,358 15,048 Other deductions (income): Interest expense 6,802 5,848 Other, net (144) 115 Total other deductions 6,658 5,963 Income before income taxes 5,700 9,085 Federal and state income taxes 2,137 3,589 Net Income 3,563 5,496 Preferred dividends (1,125) (1,125) Earnings on common 2,438 4,371 Amount added to retained earnings 2,438 4,371 Retained earnings, beginning of period 119,280 93,035 Retained earnings, end of period $121,718 $ 97,406 Net income per common share $ .28 $ .51 Fully diluted income per common share $ .28 $ .47 Average primary shares outstanding 8,806,975 8,623,723 Average fully diluted shares outstanding 8,807,863 14,015,893
See accompanying notes (3) FIELDCREST CANNON, INC. Consolidated statement of cash flows
Three Months ended March 31 Dollars in thousands 1995 1994 Increase (decrease) in cash Cash flows from operating activities: Net income $ 3,563 $ 5,496 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,753 7,588 Deferred income taxes 612 2,429 Other 1,277 1,028 Change in current assets and liabilities, excluding effects of acquisition of Sure Fit: Accounts receivable 8,563 17,821 Inventories (32,319) (33,594) Other prepaid expenses and current assets 501 (720) Accounts payable and accrued liabilities 7,361 (8,877) Federal and state income taxes 1,750 2,699 Deferred income taxes (2,337) (1,444) Net cash used in operating activities (3,276) (7,574) Cash flows from investing activities: Additions to plant and equipment (14,712) (3,339) Proceeds from disposal of plant and equipment 460 178 Proceeds from net assets held for sale 20,184 - Purchase of Sure Fit, net of cash acquired (27,300) - Net cash used in investing activities (21,368) (3,161) Cash flows from financing activities: Increase in revolving debt 24,947 18,840 Payments on long-term debt (751) (6,132) Dividends paid on preferred stock (1,125) (1,125) Net cash provided by financing activities 23,071 11,583 Increase (decrease) in cash (1,573) 848 Cash at beginning of year 5,885 3,865 Cash at end of period $ 4,312 $ 4,713
(4) FIELDCREST CANNON, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1995 1. Basis of Presentation The consolidated financial statements are unaudited. In the opinion of management all adjustments, consisting only of normal recurring items, have been made which are necessary to show a fair presentation of the financial position of the Company at March 31, 1995 and the related results of operations for the three months ended March 31, 1995 and 1994. The unaudited consolidated financial statements should be read in conjunction with the Company's Form 10-K for the year ended December 31, 1994. 2. Income Per Common Share Reference is made to Exhibit 11 to this Form 10-Q for a computation of primary and fully-diluted net income per Common share. 3. Inventories Inventories are classified as follows:
March 31, December 31, (In thousands) 1995 1994 Finished goods $139,133 $109,423 Work in process 74,017 65,375 Raw materials and supplies 50,461 39,196 $263,611 $213,994
At March 31, 1995 approximately 69% of the inventories were valued on the last-in, first-out method (LIFO). 4. Sale of Bangor and Aroostook Railroad In March 1995 the Company sold the Bangor and Aroostook Railroad for $20 million of cash and $8 million of notes receivable. Cash proceeds were used to reduce borrowings under the Company's revolving credit facility. (5) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Changes in Financial Condition The Company's debt (including the current portion of long-term debt) increased $24.2 million during the first quarter of 1995. Debt was reduced by $20 million from cash proceeds from the sale of the Bangor and Aroostook Railroad and increased by $27 million from the acquisition of the Sure Fit furniture coverings business of UTC Holdings. After excluding the effects of the acquisition of Sure Fit, inventories increased $32.3 million due to normal seasonal inventory build-up during the quarter. Capital expenditures totaled $14.7 million for the quarter compared to $3.3 million for the first quarter of 1994. Included in the 1995 capital expenditures is $9.1 million for the $90 million capital project for the new weaving plant at the Company's Columbus, GA/Phoenix City, Ala. towel mill. Capital expenditures for 1995 are expected to be in the $50-$55 million range. At March 31, 1995, approximately $75.8 million of the Company's $195 million revolving credit facility was available and unused. It is anticipated that financing of future capital expenditures will be provided by cash flows from operations, borrowings under the Company's revolving credit facility, and, possibly, the sale of long-term debt or equity securities. Changes in Results of Operations Quarter Ended March 31, 1995 vs. Quarter Ended March 31, 1994 Net sales for the first quarter of 1995 were $257.0 million compared to $232.3 million in the first quarter of 1994, an increase of 11%. The $24.7 million increase includes $13.4 million of furniture coverings from the Sure Fit business acquired in January 1995. The increase in revenues, after adjusting for the Sure Fit acquisition, was due approximately equally to volume increases and price increases implemented during the last half of 1994. Gross profit margins increased from 16.1% to 16.7% in the first quarter 1995. The increase was less than the sales price increases due to higher raw material and labor costs and lower mill activity. Additional cost increases in cotton and other raw materials have caused the Company to implement further price increases on its products beginning in the second quarter of 1995. Selling, general and administrative expenses increased as a percentage of sales from 9.6% to 10.4% in the first quarter of 1995 compared to the same quarter of 1994. The increase was due primarily to increased advertising and other selling expenses. In the first quarter of 1995 the Company announced a reorganization of its New York operations and the relocation of sales, marketing and design personnel to Kannapolis, N.C. In conjunction with the (6) reorganization, the Company will offer a voluntary early retirement program for all of its eligible salaried employees. The Company expects to incur pre-tax costs in the range of $10 to $12 million, or $.71 to $.85 per share after tax, as a result of these actions. Annual pre-tax savings of $6 to $8 million, or $.42 to $.57 per share after tax, are anticipated. A pre-tax charge of $3.9 million, or $.28 per share after tax, was accrued in the first quarter of 1995 for employee severance and termination benefits related to the reorganization. The remaining costs for relocation and the voluntary early retirement program will be incurred later in the year. Operating income as a percentage of sales decreased to 4.8% in the first quarter of 1995 from 6.5% in the first quarter of 1994. The decrease was due to the $3.9 million of restructuring charges described above and the increase in selling, general and administrative expenses. Interest expense increased $1.0 million in the first quarter of 1995 as compared to the first quarter of 1994 due primarily to an increase in average debt outstanding. The effective income tax rate was 37.5% for the first quarter of 1995 compared to 39.5% for the first quarter of 1994. The annual effective income tax rate for 1994 was 37.3% before favorable prior years tax settlements which reduced the 1994 annual rate to 33.6%. Net income for the first quarter of 1995 was $3.6 million, or $.28 per common share, compared to $5.5 million, or $.51 per common share, in the first quarter of 1994. PART II. OTHER INFORMATION FIELDCREST CANNON, INC. Item 6. Exhibits and Reports on Form 8-K (a). Exhibits 11. Computation of Primary and Fully Diluted Net Income Per Share. (b). Reports on Form 8-K The Registrant did not file any reports to the Commission on Form 8-K for the quarter ended March 31, 1995. (7) S I G N A T U R E S 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. FIELDCREST CANNON, INC. (Registrant) BY: (signed) T. R. Staab T. R. Staab Vice President and Chief Financial Officer Date: May 10, 1995 (8)
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR FIELDCREST CANNON, INC. FOR THE QUARTER ENDED MARCH 31, 1995 Exhibit Page Number Description Number (11) Computation of Primary and Fully Diluted Net Income Per Share 10 /TABLE (9)
Exhibit 11 Computation of Primary and Fully Diluted Net Income Per Share For the three months ended March 31 1995 1994 Average shares outstanding 8,794,159 8,603,330 Add shares assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 12,816 20,393 Average shares and equivalents outstanding, primary 8,806,975 8,623,723 Average shares outstanding 8,794,159 8,603,330 Add shares giving effect to the conversion of the convertible subordinated debentures (1) 2,824,859 Add shares giving effect to the conversion of the convertible preferred stock (1) 2,564,103 Add shares assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options 13,704 23,601 Average shares and equivalents outstanding, assuming full dilution 8,807,863 14,015,893 Primary Earnings Net income $3,563,000 $ 5,496,000 Preferred dividends (1,125,000) (1,125,000) Earnings on Common $2,438,000 $ 4,371,000 Primary earnings per common share $ .28 $ .51 Fully Diluted Earnings Earnings on Common $2,438,000 $ 4,371,000 Add convertible subordinated debenture interest, net of taxes (1) 1,144,000 Add convertible preferred dividends (1) 1,125,000 Net income $2,438,000 $ 6,640,000 Fully diluted earnings per Common share $ .28 $ .47 (1) The assumed conversion of the Registrant's Convertible Subordinated Debentures and Convertible Preferred Stock for the three months ended March 31, 1995 would have an anti-dilutive effect for the computation of earnings per share; therefore, conversion has not been assumed for this period. (10)
EX-27 2
5 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 4,312 0 170,128 0 263,611 441,578 322,261 0 824,967 149,157 342,291 12,459 0 15 222,678 824,967 257,009 257,009 214,025 214,025 30,626 0 6,802 5,700 2,137 3,563 0 0 0 3,563 .28 .28
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