-----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, HWq4vU2BPPKGqSEmqYTuK6PGS3PhbK113JSAxiw8QfDBqcYkwsJH3hkH4B7jQcFv 8p9Ju1aHxRwfmJpmym5rqg== 0000035469-94-000002.txt : 19940519 0000035469-94-000002.hdr.sgml : 19940519 ACCESSION NUMBER: 0000035469-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON INC CENTRAL INDEX KEY: 0000035469 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94526919 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 3-31-94 10Q 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, 1994 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, 1994 Common Stock 8,671,152 Total pages 11 Exhibit Index page 9 PART 1. FINANCIAL INFORMATION
FIELDCREST CANNON, INC. Consolidated statement of financial position March 31, December 31, Dollars in thousands 1994 1993 Assets Cash $ 4,713 $ 3,865 Accounts receivable net, principally trade 146,598 164,419 Inventories (note 3) 243,428 209,834 Net assets held for sale 31,739 32,536 Other prepaid expenses and current assets 3,211 2,491 Total current assets 429,689 413,145 Plant and equipment, net 290,064 294,277 Deferred charges and other assets 32,450 33,024 Total assets $752,203 $740,446 Liabilities and shareowners' equity Short-term debt $ 84,508 $ - Accounts and drafts payable 49,283 61,365 Federal and state income taxes 2,961 262 Deferred income taxes 13,355 14,799 Accrued liabilities 69,201 65,996 Current portion of long-term debt 2,900 8,397 Total current liabilities 222,208 150,819 Senior long-term debt 18,308 84,611 Subordinated long-term debt 210,000 210,000 Total long-term debt 228,308 294,611 Deferred income taxes 37,611 35,182 Other non-current liabilities 64,976 66,504 Total liabilities 553,103 547,116 Shareowners' equity: Preferred Stock, $.01 par value, 10,000,000 authorized, 1,500,000 issued and outstanding March 31, 1994 and December 31, 1993 (aggregate liquidation (preferrence of $75,000) 15 15 Common Stock, $1 par value, 25,000,000 authorized, 12,277,552 issued March 31, 1994 and 12,186,167 December 31, 1993 12,278 12,186 Additional paid in capital 214,106 212,799 Minimum pension liability adjustment (7,480) (7,480) Retained earnings 97,406 93,035 Excess purchase price for Common Stock acquired and held in treasury - 3,606,400 shares (117,225) (117,225) Total shareowners' equity 199,100 193,330 Total liabilities and shareowners' equity $752,203 $740,446
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 1994 1993 Net sales $232,285 $203,940 Cost of sales 194,893 167,081 Selling, general and administrative 22,344 24,959 Total operating costs and expenses 217,237 192,040 Operating income 15,048 11,900 Other deductions (income): Interest expense 5,848 7,548 Other, net 115 1 Total other deductions 5,963 7,549 Income from continuing operations before income taxes and accounting changes 9,085 4,351 Federal and state income taxes 3,589 1,669 Income from continuing operations before accounting changes 5,496 2,682 Income from discontinued operations - 1,050 Cumulative effect of accounting changes - (70,305) Net income (loss) 5,496 (66,573) Preferred dividends (1,125) - Earnings (loss) on common 4,371 (66,573) Amount added to (subtracted from) retained earnings 4,371 (66,573) Retained earnings, beginning of period 93,035 136,429 Retained earnings, end of period $97,406 $69,856 Income (loss) per commmon share: Income from continuing operations before accounting changes $ .51 $ .22 Income from discontinued operations - .09 Cumulative effect of accounting changes - (5.86) Net income (loss) per common share $ .51 $ (5.55) Fully diluted income (loss) per common share $ .47 $ Average primary shares outstanding 8,623,723 11,999,731 Average fully diluted shares outstanding 14,015,890 11,999,831
See accompanying notes (3) FIELDCREST CANNON, INC. Consolidated statement of cash flows
Three Months ended March 31 Dollars in thousands 1994 1993 Increase (decrease) in cash Cash flows from operating activities: Net income (loss) $ 5,496 $(66,573) Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of accounting changes - 70,305 Income from discontinued operations - (1,050) Depreciation and amortization 7,588 7,917 Deferred income taxes 2,429 1,197 Change in current assets and liabilities: Accounts receivable 17,821 28,172 Inventories (33,594) (49,059) Other prepaid expenses and current assets (720) 795 Accounts payable and accrued liabilities (8,877) (3,226) Federal and state income taxes 2,699 1,128 Deferred income taxes (1,444) (2,544) Net assets held for sale 797 - Other 231 99 Net cash provided by (used in) operating activities (7,574) (12,839) Cash flows from investing activities: Additions to plant and equipment (3,339) (1,011) Proceeds from disposal of plant and equipment 178 8,407 Net cash provided by (used in) investing activities (3,161) 7,396 Cash flows from financing activities: Increase in revolving debt and other short-term debt 18,840 14,048 Proceeds from issuance of common stock - 39 Payments on long-term debt (6,132) (2,843) Dividends paid (1,125) - Net cash provided by financing activities 11,583 11,244 Cash used in discontinued operations - (5,342) Net increase in cash 848 459 Cash at beginning of year 3,865 4,665 Cash at end of period $ 4,713 $ 5,124
See accompanying notes (4) FIELDCREST CANNON, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1994 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, 1994 and the related results of operations for the three months ended March 31, 1994 and 1993. The unaudited consolidated financial statements should be read in conjunction with Form 10-K for the year ended December 31, 1993. 2. Income Per Share Reference is made to Exhibit 11 to this Form 10-Q for a computation of primary and fully-diluted net income per share. 3. Inventories Inventories are classified as follows:
March 31, December 31, (In thousands) 1994 1993 Finished goods $132,259 $110,223 Work in process 74,614 65,025 Raw materials and supplies 36,555 34,586 $243,428 $209,834
At March 31, 1994 approximately 78% 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 Effective March 10, 1994, the Company amended its $150 million revolving credit facility to reduce the interest rate on borrowings, at the Company's option, to the prime rate fixed by the First National Bank of Boston, or at a Euromarket-based rate plus 1%. The amendment also extended the facility through January 6, 1998 and removed the lien on the Company's plant and equipment. The average interest rate on the revolving term debt was 4.71% on March 31, 1994. The Company's debt (including short-term borrowings) increased $12.7 million during the first quarter of 1994. Inventories increased $33.6 million due to normal seasonal inventory build-up during the quarter. Decreases in accounts receivable of $17.8 million and cash flows from other operating activities provided the remaining cash necessary to fund the inventory build-up during the quarter. Capital expenditures totaled $3.3 million for the quarter compared to $1.0 million for the first quarter of 1993. At March 31, 1994, approximately $54.7 million of the Company's $150 million revolving credit facility was available and unused. Capital expenditures for 1994 are expected to be approximately $50 million compared to $21.6 million in 1993. Included in the 1994 expenditures is the start of a $90 million capital project for a new weaving plant at the Company's Columbus, Ga./Phoenix City, Ala. towel mill. 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, 1994 vs. Quarter Ended March 31, 1993 Net sales from continuing operations for the first quarter of 1994 were $232.3 million compared to $203.9 million in the first quarter of 1993, an increase of 14%. The $28.4 million increase includes $4 million of Caldwell branded towel sales in Canada, a line of towels acquired in March 1993. The increase in revenues was due primarily to increased volume. Average selling prices were lower in the first quarter of 1994 than in the first quarter of 1993 due to continued competitive pressures on selling prices. Selling, general and administrative expenses decreased as a percentage of sales from 12.2% to 9.6% in the first quarter of 1994 compared to the same quarter of 1993. The decrease was due primarily to reduced costs resulting from the voluntary early retirement program implemented in late 1993, lower bad debt expense and a decrease in other selling expenses. (6) Operating income as a percentage of sales increased to 6.5% in the first quarter of 1994 from 5.8% in the first quarter of 1993. The improvement resulted from the decrease in selling, general and administrative expenses which more than offset a decline in gross margins. Continued competitive pressures on selling prices caused the lower margins and reduced the benefits of the increase in unit sales and the associated higher mill activity levels. Interest expense was $1.7 million less in the first quarter of 1994 due to the reduction of debt with the proceeds from the sale of the carpet and rug division in July 1993 and lower borrowing rates. The effective income tax was 39.5% for the first quarter of 1994 compared to 38.4% for the first quarter of 1993. The increase results primarily from the increase in the federal statutory income tax rate from 34% to 35% which was enacted in the third quarter of 1993. Income from continuing operations before accounting changes was $5.5 million, or $.51 per common share, in the first quarter of 1994 compared to $2.7 million, or $.22 per common share, in the first quarter of 1993. The Company adopted FAS 106, "Employers' Accounting for Postretirement Benefits other than Pensions" and FAS 109, "Accounting for Income Taxes", effective January 1, 1993. The cumulative effect of the accounting changes reduced the first quarter of 1993 net income by $70.3 million, or $5.86 per common share, but had no cash impact. Net income for the first quarter of 1994 was $5.5 million, or $.51 per common share, compared to a loss of $66.6 million, or $5.55 per common share, in the first quarter of 1993. 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 (Loss) 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, 1994. (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, 1994 (8) EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR FIELDCREST CANNON, INC. FOR THE QUARTER ENDED MARCH 31, 1994 Exhibit Number Description Page Number (11) Computation of Primary and Fully Diluted Net Income Per Share 10 (9)
Exhibit 11 Computation of Primary and Fully Diluted Net Income (Loss) Per Share For the three months ended March 31 1994 1993 Average shares outstanding 8,603,330 11,976,398 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 20,393 23,333 Average shares and equivalents outstanding, primary 8,623,723 11,999,731 Average shares outstanding 8,603,330 11,976,398 Add shares giving effect to the conversion of the convertible subordinated debentures 2,824,859 (1) Add shares giving effect to the conversion of the convertible preferred stock 2,564,100 - 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 23,601 23,433 Average shares and equivalents outstanding, assuming full dilution 14,015,890 11,999,831 Primary Earnings Income from continuing operations before accounting changes $ 5,496,000 $ 2,682,000 Income from discontinued operations - 1,050,000 Cumulative effect of accounting changes - (70,305,000) Net income (loss) 5,496,000 (66,573,000) Preferred dividends (1,125,000) - Earnings (loss) on Common $ 4,371,000 $(66,573,000)
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Exhibit 11 Computation of Primary and Fully Diluted Net Income (Loss) Per Share (continued) For the three months ended March 31 1994 1993 Primary earnings (loss) per common share Income (loss) from continuing operations before accounting changes $ .51 $ .22 Income from discontinued operations - .09 Cumulative effect of accounting changes - (5.86) Income (loss) $ .51 $ (5.55) Fully Diluted Earnings Earnings on Common from continuing operations before accounting changes $4,371,000 $2,682,000 Add convertible subordinated debenture interest, net of taxes 1,144,000 (1) Add convertible preferred dividends 1,125,000 - Income from continuing operations before accounting changes as adjusted 6,640,000 2,682,000 Income from discontinued operations - 1,050,000 Income before accounting changes 6,640,000 3,732,000 Cumulative effect of accounting changes - (70,305,000) Net income (loss) $6,640,000 $(66,573,000) Fully diluted earnings (loss) per Common share Income before accounting changes $ .47 $ .31 Cumulative effect of accounting changes - (2) Net income (loss) $ .47 $ (2) (1) The assumed conversion of the Registrant's Convertible Subordinated Debentures for the three months ended March 31, 1993 would have an anti-dilutive effect for the computation of earnings per share; therefore, conversion has not been assumed for this period. (2) Fully diluted net income per share for the three months ended March 31, 1993 are not presented as effects are anti-dilutive
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