-----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, KTHPAUXhoHUHFd33/sKiA4VaOaFgSGcCFZ2on8eKytXIv/PzgO4DCbtfPxvLRryh ymGTJ77vVX0QAipUD3QJbQ== 0000035469-97-000010.txt : 19970502 0000035469-97-000010.hdr.sgml : 19970502 ACCESSION NUMBER: 0000035469-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970501 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: 97593077 BUSINESS ADDRESS: STREET 1: ONE LAKE DRIVE CITY: KANNAPOLIS STATE: NC ZIP: 28081 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, 1997 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.) One Lake Circle Drive Kannapolis, N.C. 28081 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (704) 939-2000 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, 1997 Common Stock 9,185,761 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 1997 1996 Assets Cash $ 11,131 $ 4,647 Accounts receivable 158,077 154,511 Inventories (note 3) 216,068 216,165 Other prepaid expenses and current assets 2,829 2,489 Total current assets 388,105 377,812 Plant and equipment, net 320,700 323,838 Deferred charges and other assets 67,788 66,843 Total assets $776,593 $768,493 Liabilities and shareowners' equity Accounts and drafts payable $ 61,742 $ 63,910 Deferred income taxes 17,903 18,212 Accrued liabilities 71,387 61,172 Current portion of long-term debt 6,970 5,508 Total current liabilities 158,002 148,802 Senior long-term debt 111,685 107,746 Subordinated long-term debt 197,500 203,750 Total long-term debt 309,185 311,496 Deferred income taxes 38,436 38,291 Other non-current liabilities 53,624 54,149 Total liabilities 559,247 552,738 Shareowners' equity: Preferred Stock, $.01 par value, 10,000,000 authorized, 1,500,000 issued and outstanding March 31, 1997 and December 31, 1996 (aggregate liquidation preference of $75,000) 15 15 Common Stock, $1 par value, 25,000,000 authorized, 12,792,161 issued March 31, 1997 and 12,738,894 December 31, 1996 12,792 12,739 Additional paid in capital 225,256 224,611 Retained earnings 96,508 95,915 Excess purchase price for Common Stock acquired and held in treasury - 3,606,400 shares (117,225) (117,225) Total shareowners' equity 217,346 215,755 Total liabilities and shareowners' equity $776,593 $768,493
See accompanying notes (2) FIELDCREST CANNON, INC. Consolidated statement of operations and retained earnings
Three Months ended March 31 Dollars in thousands, except per share data 1997 1996 Net sales $262,909 $249,971 Cost of sales 227,155 215,112 Selling, general and administrative 26,511 25,117 Restructuring charges - 3,630 Total operating costs and expenses 253,666 243,859 Operating income 9,243 6,112 Other deductions (income): Interest expense 6,262 7,055 Other, net (224) 140 Total other deductions 6,038 7,195 Income (loss) before income taxes 3,205 (1,083) Federal and state income taxes (benefit) 1,187 (406) Net income (loss) 2,018 (677) Preferred dividends (1,125) (1,125) Earnings (loss) on Common 893 (1,802) Amount added to (subtracted from) retained earnings 893 (1,802) Retained earnings, beginning of period 95,615 99,055 Retained earnings, end of period $ 96,508 $ 97,253 Net income (loss) per Common share $ .10 $ (.20) Fully diluted income (loss) per Common share $ .10 $ (.20) Average primary shares outstanding 9,145,289 8,962,219 Average fully diluted shares outstanding 9,145,289 8,964,457
See accompanying notes (3) FIELDCREST CANNON, INC. Consolidated statement of cash flows
Three Months ended March 31 Dollars in thousands 1997 1996 Increase (decrease) in cash Cash flows from operating activities: Net income (loss) $ 2,018 $ (677) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,699 8,959 Deferred income taxes 145 378 Other (2,025) 6,956 Change in current assets and liabilities: Accounts receivable (3,566) 3,704 Inventories 97 (42,028) Other prepaid expenses and current assets (340) 1,162 Accounts payable and accrued liabilities 8,047 4,616 Deferred income taxes (309) (2,015) Net cash provided by (used in) operating activities 12,766 (18,945) Cash flows from investing activities: Additions to plant and equipment (5,370) (7,059) Proceeds from disposal of plant and equipment 178 1,700 Net cash (used in) investing activities (5,192) (5,359) Cash flows from financing activities: Increase in revolving debt 4,294 21,040 Payments on long-term debt (4,259) (415) Dividends paid on preferred stock (1,125) (1,125) Net cash provided by (used in) financing activities (1,090) 19,500 Increase (decrease) in cash 6,484 (4,804) Cash at beginning of year 4,647 9,124 Cash at end of period $11,131 $ 4,320
See accompanying notes (4) FIELDCREST CANNON, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 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, 1997 and the related results of operations for the three months ended March 31, 1997 and 1996. The unaudited consolidated financial statements should be read in conjunction with the Company's Form 10-K for the year ended December 31, 1996. 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. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of earnings per share for these quarters is not expected to be material. 3. Inventories Inventories are classified as follows:
March 31, December 31, (In thousands) 1997 1996 Finished goods $103,705 $104,092 Work in process 65,825 68,668 Raw materials and supplies 46,538 43,405 $216,068 $216,165
At March 31, 1997 approximately 68% of the inventories were valued on the last-in, first-out method (LIFO). (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) decreased $.8 million during the first quarter of 1997 and cash increased $6.5 million. Capital expenditures totaled $5.4 million for the quarter compared to $7.1 million for the first quarter of 1996. Capital expenditures for 1997 are expected to be approximately $70 million. At March 31, 1997, approximately $87.4 million of the Company's $200 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, 1997 vs. Quarter Ended March 31, 1996 Net sales for the first quarter of 1997 were $262.9 million compared to $250.0 million in the first quarter of 1996, an increase of 5.2%. Excluding the effects of the sales during 1996 of the Company's Blanket Division, sales in the first quarter of 1997 increased 10%. The increase in revenues was due primarily to volume increases. Gross profit margins decreased from 13.9% to 13.6% in the first quarter 1997. The decrease was due to increased promotional product sales during the 1997 first quarter. Selling, general and administrative expenses increased as a percentage of sales from 10.0% to 10.1% in the first quarter of 1997 compared to the same quarter of 1996. The increase was due primarily to higher information technology expenses associated with implementation of new enterprise information systems. The first quarter of 1996 includes a $3.6 million pre-tax restructuring charge for closing a towel weaving plant and a yarn manufacturing plant. Interest expense decreased $.8 million in the first quarter of 1997 as compared to the first quarter of 1996 due primarily to a decrease in average debt outstanding. Total debt declined $70.5 million from March 31, 1996 to March 31, 1997. The decreased debt resulted from the sale of the Blanket Division in 1996 and lower inventory levels. Inventories were $31.1 million lower at March 31, 1997, than at march 31, 1996, after excluding blanket inventories. (6) The effective income tax rate was 37.0% for the first quarter of 1997 compared to 37.5% for the first quarter of 1996. Net income totaled $2.0 million, or $.10 per share after preferred dividends, in the first quarter of 1997 compared to a net loss, including the effect of the restructuring charges, of $.7 million, or $.20 per share after preferred dividends, in the first quarter of 1996. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of earnings per share for these quarters is not expected to be material. 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 On February 14, 1997, the Registrant filed a Form 8-K to report, under Item 5 (Other Events), that effective on February 6, 1997, the Registrant amended its Rights Agreement dated as of November 24, 1993, between the Registrant and The First National Bank of Boston. (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 1, 1997 (8) EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR FIELDCREST CANNON, INC. FOR THE QUARTER ENDED MARCH 31, 1997
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 1997 1996 Average shares outstanding 9,142,094 8,954,830 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 3,195 7,389 Average shares and equivalents outstanding, primary 9,145,289 8,962,219 Average shares outstanding 9,142,094 8,954,830 Add shares giving effect to the conversion of the convertible subordinated debentures (1) (1) Add shares giving effect to the conversion of the convertible preferred stock (1) (1) 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 3,195 9,627 Average shares and equivalents outstanding, assuming full dilution 9,145,289 8,964,457 Primary Earnings Net income (loss) $ 2,018,000 $ (677,000) Preferred dividends (1,125,000) (1,125,000) Earnings (loss) on Common $ 893,000 $(1,802,000) Primary earnings (loss) per share $ .10 $ (.20) Fully Diluted Earnings Earnings (loss) on Common $ 893,000 $(1,802,000) Add convertible subordinated debenture interest, net of taxes (1) (1) Add convertible preferred dividends (1) (1) Net income (loss) $ 893,000 $(1,802,000) Fully diluted earnings (loss) per share $ .10 $ (.20)
(1) The assumed conversion of the Registrant's Convertible Subordinated Debentures and Convertible Preferred Stock for the three month periods ended March 31, 1997 and 1996 would have an anti-dilutive effect for the computation of earnings per share; therefore, conversion has not been assumed for these periods. (10) EX-27 2
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 11,131 0 158,077 0 216,068 388,105 320,700 0 776,593 158,002 309,185 0 15 12,792 204,539 776,593 262,909 262,909 227,155 227,155 26,511 0 6,262 3,205 1,187 2,018 0 0 0 2,018 .10 .10
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