-----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, QDHPfIpugZzFpZQRlnysCVdY2ciFY42TNZlFhMrbRA1ceqWirhp7dLjckJaCL6Jv 1nPalr0/jxxv22XibMSsDg== 0000950144-95-003219.txt : 19951119 0000950144-95-003219.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950144-95-003219 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPRINGS INDUSTRIES INC CENTRAL INDEX KEY: 0000093102 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 570252730 STATE OF INCORPORATION: SC FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05315 FILM NUMBER: 95592108 BUSINESS ADDRESS: STREET 1: 205 N WHITE ST CITY: FORT MILL STATE: SC ZIP: 29715 BUSINESS PHONE: 8035471500 MAIL ADDRESS: STREET 1: 205 NORTH WHITE STREET CITY: FORT MILL STATE: SC ZIP: 29715 FORMER COMPANY: FORMER CONFORMED NAME: SPRINGS MILLS INC DATE OF NAME CHANGE: 19820517 10-Q 1 SPRINGS INDUSTRIES 10-Q 9-30-95 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------- F O R M 10-Q For the Quarter Ended September 30, 1995 Commission File Number 1-5315 ---------------------------- S P R I N G S I N D U S T R I E S, I N C. (Exact name of registrant as specified in its charter) SOUTH CAROLINA 57-0252730 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 205 North White Street Fort Mill, South Carolina 29715 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (803) 547-1500 ---------------------------- 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 (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No ------ ------ ---------------------------- As of November 7, 1995, there were 12,485,456 shares of Class A Common Stock and 7,650,280 shares of Class B Common Stock of Springs Industries, Inc. outstanding. ---------------------------- There are 14 pages in the sequentially numbered, manually signed original of this report. 2 TABLE OF CONTENTS TO FORM 10-Q PART I - FINANCIAL INFORMATION - ------------------------------ ITEM PAGE - ---- ---- 1. FINANCIAL STATEMENTS 3 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 PART II - OTHER INFORMATION - --------------------------- ITEM PAGE - ---- ---- 6. EXHIBITS 11 SIGNATURES 12 EXHIBIT INDEX 13
3 PART I ITEM I - FINANCIAL STATEMENTS SPRINGS INDUSTRIES, INC. Consolidated Statements of Operations and Retained Earnings (In thousands except per share data) (Unaudited)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ---------------------- ----------------------- SEPT. 30, OCT. 1, SEPT. 30, OCT. 1, 1995 1994 1995 1994 ---------- ---------- ---------- ----------- OPERATIONS Net sales . . . . . . . . . . . . . . . . . . . $ 623,740 $ 535,265 $1,639,548 $1,535,738 Cost of goods sold . . . . . . . . . . . . . 511,818 424,334 1,345,310 1,235,279 Selling, general and administrative expenses . . . . . . . . . . 68,751 69,748 198,481 212,254 ---------- ---------- ---------- ---------- Operating income . . . . . . . . . . . . . 43,171 41,183 95,757 88,205 Interest expense . . . . . . . . . . . . . . 8,778 6,795 23,918 21,228 Other (income) expense . . . . . . . . . . . (230) 530 (3,079) (52) ---------- ---------- ---------- ---------- Income before income taxes . . . . . . . . . . 34,623 33,858 74,918 67,029 Income taxes . . . . . . . . . . . . . . . . . 13,317 14,244 29,352 28,534 ---------- ---------- ---------- ---------- Net income . . . . . . . . . . . . . . . . $ 21,306 $ 19,614 $ 45,566 $ 38,495 ========== ========== ========== ========== Per share: Net income . . . . . . . . . . . . . . . . $ 1.08 $ 1.10 $ 2.41 $ 2.16 ========== ========== ========== ========== Cash dividends declared: Class A shares . . . . . . . . . . . . . $ .33 $ .30 $ .93 $ .90 ========== ========== ========== ========== Class B shares . . . . . . . . . . . . . $ .30 $ .27 $ .84 $ .81 ========== ========== ========== ========== Weighted average shares of common stock . . . . . . . . . . . . . . . . 18,944 17,792 ========== ========== RETAINED EARNINGS Retained earnings at beginning of period . . . . . . . . . . . . . . . . . . $ 581,808 $ 535,229 $ 568,403 $ 526,428 Net income . . . . . . . . . . . . . . . . . . 21,306 19,614 45,566 38,495 Cash dividends declared . . . . . . . . . . . . (6,410) (5,051) (17,265) (15,131) ---------- ---------- ---------- ---------- Retained earnings at end of period . . . . . . $ 596,704 $ 549,792 $ 596,704 $ 549,792 ========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 4 SPRINGS INDUSTRIES, INC. Condensed Consolidated Balance Sheet (In thousands except share data) (Unaudited)
SEPT. 30, DEC. 31, 1995 1994 --------- ------------ ASSETS Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . $ 1,480 $ 769 Accounts receivable . . . . . . . . . . . . . . . . . . 400,194 312,739 Inventories . . . . . . . . . . . . . . . . . . . . . . 382,219 264,161 Other . . . . . . . . . . . . . . . . . . . . . . . . . 34,828 39,335 ---------- ---------- Total current assets . . . . . . . . . . . . . . . . 818,721 617,004 ---------- ---------- Property, plant and equipment . . . . . . . . . . . . . . 1,368,951 1,253,060 Accumulated depreciation . . . . . . . . . . . . . . . (753,498) (697,810) ---------- ---------- Property, plant, and equipment, net . . . . . . . . . 615,453 555,250 ---------- ---------- Other assets and deferred charges . . . . . . . . . . . . 133,434 116,789 ---------- ---------- Total . . . . . . . . . . . . . . . . . . . . . . . $1,567,608 $1,289,043 ========== ========== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings . . . . . . . . . . . . . . . . . $ 27,800 $ 11,100 Current maturities of long-term debt . . . . . . . . . 17,535 21,318 Accounts payable . . . . . . . . . . . . . . . . . . . 95,702 83,232 Other accrued liabilities . . . . . . . . . . . . . . . 153,597 128,306 ---------- ---------- Total current liabilities . . . . . . . . . . . . . . 294,634 243,956 ---------- ---------- Noncurrent liabilities: Long-term debt . . . . . . . . . . . . . . . . . . . . 357,257 265,384 Deferred compensation and benefit plans. . . . . . . . 152,283 144,967 Deferred income taxes and other deferred credits . . . . . . . . . . . . . . . . . . . . . . . 49,707 50,645 ---------- ---------- Total noncurrent liabilities . . . . . . . . . . . . 559,247 460,996 ---------- ---------- Shareowners' equity: Class A common stock- $.25 par value (12,596,658 and 9,884,143 shares issued in 1995 and 1994, respectively) . . . . . . . . . . . 3,149 2,471 Class B common stock- $.25 par value (7,650,280 and 7,830,375 shares issued in 1995 and 1994, respectively) . . . . . . . . . . . 1,913 1,958 Additional paid-in capital . . . . . . . . . . . . . . 109,832 11,413 Retained earnings . . . . . . . . . . . . . . . . . . . 596,704 568,403 Cost of Class A shares in treasury (September 30, 1995-110,648 shares; December 31, 1994 - 119,585 shares) . . . . . . . . . (2,450) (2,602) Currency translation adjustment . . . . . . . . . . . . 4,579 2,448 ---------- ---------- Shareowners' equity . . . . . . . . . . . . . . . . . 713,727 584,091 ---------- ---------- Total . . . . . . . . . . . . . . . . . . . . . . . $1,567,608 $1,289,043 ========== ==========
See Notes to Condensed Consolidated Financial Statements. 5 SPRINGS INDUSTRIES, INC. Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited)
THIRTY-NINE WEEKS ENDED ---------------------------------- SEPT. 30, OCT. 1, 1995 1994 ---------- --------- CASH PROVIDED (USED) BY: Operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,566 $ 38,495 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . 73,528 68,974 Changes in operating assets and liabilities, net of effects of business acquisitions and sale of business . . . . . . . . . . . . . . . . . . . . . . . . (25,166) (27,545) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,407) (54) --------- --------- Net cash provided by operating activities . . . . . . . . . . . 86,521 79,870 --------- --------- Investing activities: Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56,070) (66,439) Business acquisitions, net of stock issued and cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . (79,225) - Proceeds from sales of assets . . . . . . . . . . . . . . . . . . . 1,013 387 Proceeds from sale of business . . . . . . . . . . . . . . . . . . - 17,813 --------- --------- Net cash (used) by investing activities . . . . . . . . . . . . (134,282) (48,239) --------- --------- Financing activities: Proceeds from short-term borrowings . . . . . . . . . . . . . . . . 16,700 9,480 Proceeds from long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,556 1,158 Payments of long-term debt. . . . . . . . . . . . . . . . . . . . . (45,394) (24,407) Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . (22,390) (20,170) --------- --------- Net cash provided (used) by financing activities . . . . . . . . . . . . . . . . . . . . 48,472 (33,939) --------- --------- Increase (decrease) in cash and cash equivalents . . . . . . . . . . . $ 711 $ (2,308) ========= =========
See Notes to Condensed Consolidated Financial Statements. 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Significant Accounting Policies: These condensed consolidated financial statements should be read in conjunction with the financial statements presented in the Springs Industries, Inc. ("Springs" or "the Company") 1994 Annual Report on Form 10-K. In the opinion of the management of Springs, these unaudited condensed consolidated financial statements contain all adjustments of a normal recurring nature necessary for their fair presentation. The results for interim periods reflect estimates for certain items which can be definitively determined only on an annual basis. These items include the valuation of a substantial portion of inventories on a LIFO cost basis and the provision for income taxes. These interim financial statements reflect applicable portions of the estimated annual amounts for such items. The results of operations for interim periods are not necessarily indicative of operating results to be expected for the remainder of the year. In the first quarter of 1995, the Company completed an evaluation of indirect manufacturing costs that in 1994 and prior years were classified as selling, general and administrative expenses. As a result of that evaluation, the Company has made an accounting change to include in inventoriable costs certain indirect manufacturing and manufacturing-related information services costs. No material effect on inventory or net income resulted from the accounting change. Certain other costs relating to designs have been reclassified from selling, general and administrative expenses to cost of goods sold in the current and prior years. 2. Inventory: Inventories are summarized as follows (in thousands):
Sept. 30, Dec. 31, 1995 1994 --------- ------------ Standard cost (which approximates average cost) or average cost: Finished goods . . . . . . . . . . . . . . . . . . . $ 244,949 $ 173,729 In process . . . . . . . . . . . . . . . . . . . . . 217,541 166,347 Raw materials and supplies . . . . . . . . . . . . . 71,503 56,553 --------- --------- 533,993 396,629 --------- --------- Less LIFO reserve . . . . . . . . . . . . . . . . . . . (151,774) (132,468) --------- --------- Total . . . . . . . . . . . . . . . . . . . . . . . . $ 382,219 $ 264,161 ========= =========
7 3. Commitments: The Company enters into forward delivery contracts for raw material purchases, consistent with the size of its business, to reduce the Company's exposure to price volatility. Management assesses these contracts on a continuous basis to determine if contract prices will be recovered through subsequent sales. At September 30, 1995, the market value of the contracts exceeded the contract price. 4. Financial Instruments: The Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. Springs uses interest rate swap agreements to reduce the potential impact of increases in interest rates on floating-rate long-term debt. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the interest rate swap agreements. However, the Company does not anticipate nonperformance by the counterparties. 5. Acquisitions: The Company has acquired three business during 1995. On May 27, 1995, the Company purchased all of the outstanding stock of Dundee Mills, Incorporated, a leading manufacturer of towels, infant and toddler bedding, knitted infant apparel, and healthcare products. The purchase price was approximately $120 million, $21.2 million of which was paid in cash and the remainder through the issuance of 2,514,113 shares of Springs Class A common stock with a fair value of $98.4 million. Effective May 28, 1995, the Company also purchased substantially all of the assets of Dawson Home Fashions, Inc., a leading manufacturer of shower curtains and bath fashions accessories. Springs paid approximately $39 million in cash for the business. On August 3, 1995, the Company purchased substantially all of the assets of the Nanik Window Coverings Group of Apogee Enterprises, Incorporated, a leading manufacturer of wood window blinds and interior shutters. The Company funded the cash payments for the businesses acquired with proceeds from a new debt issue. The acquisitions have been accounted for using the purchase method of accounting. The estimated costs of the businesses acquired have been allocated on the basis of the estimated fair value of the assets acquired and liabilities assumed. The Company expects to finalize the purchase price allocation during the fourth quarter. The operating results of Dundee, Dawson and Nanik are included in the Company's consolidated results of operations from the dates of acquisition. The following summary of unaudited pro forma results of operations presents information as if the acquisitions had occurred at the beginning of each fiscal year. The pro forma earnings-per-share calculation treats the Springs Class A common shares issued in the Dundee acquisition as being outstanding during all of 1994 and 1995. The 1994 pro forma amounts include the results of Clark-Schwebel Distribution Corporation through June of 1994, at which time it was sold to a third party. The pro forma information is provided for informational purposes only and is not indicative of results which would have occurred or which may occur in the future (in thousands, except per share amounts): 8
(Unaudited) Nine Months Ended ------------------------------------ Sept. 30, Oct. 1, 1995 1994 ---------- ---------- Net sales $1,793,761 $1,819,760 Net income 39,778 34,064 Earnings per share 1.96 1.68
6. Legal and Environmental: As disclosed in the 1994 Annual Report on Form 10-K, Springs is involved in certain administrative proceedings alleging violations of environmental laws and regulations, including proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act. In connection with these proceedings, the Company has accrued an amount which represents management's best estimate of Springs' probable liability. Springs is also involved in various other legal proceedings and claims incidental to its business. Springs is defending its position in all such proceedings. In the opinion of management, based on the advice of counsel, the resolution of the above matters should not have a material adverse impact on the financial condition nor the future results of operations of Springs. 9 ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS GENERAL The Company achieved record sales and net income despite higher raw material and supply costs. Price increases on bedding products, announced in March of 1995, became effective during the third quarter. RESULTS OF OPERATIONS Sales Net sales for the third quarter were 16 percent greater than net sales reported in the third quarter of 1994. The home furnishings segment produced a third-quarter sales increase of 20 percent over the prior year, largely as a result of the acquisitions, effective May 27, 1995, of Dundee Mills, Incorporated and the principal assets of Dawson Home Fashions, Inc. In the third quarter of 1995, the specialty fabrics segment's sales were seven percent higher than in the third quarter of 1994. This improvement resulted from stronger demand for woven fiberglass fabrics and other industrial textiles. Year-to-date net sales improved seven percent compared to the first nine months of 1994. The Dundee and Dawson acquisitions, which occurred in the second quarter of 1995, substantially contributed toward a nine-month sales increase of 12 percent in the home furnishings segment over last year. Year-to-date specialty fabrics sales, excluding the effect of Clark-Schwebel Distribution Corporation, which was sold in June 1994, increased three percent over the first nine months of 1994. This improvement was due to increased volume in industrial fabrics. Earnings Third-quarter net income of $21.3 million increased nine percent from last year's net income of $19.6 million, though earnings per share declined slightly to $1.08 from last year's record of $1.10 due to an increased number of shares outstanding. Third-quarter operating income for the home furnishings segment was somewhat higher than last year's in spite of significantly higher raw material and supply costs in 1995. The specialty fabrics segment produced a moderate improvement in third-quarter operating income over last year as the strength of its industrial fabrics businesses more than offset the effect of sluggish markets for finished fabrics for home sewing and apparel. Year-to-date earnings of $45.6 million, or $2.41 per share, represented an 18 percent increase from net income of $38.5 million, or $2.16 per share, in 1994. The home furnishings segment's operating income improved substantially over last year. This improvement was due to higher average selling prices and cost reductions as well as the Dundee and Dawson acquisitions, which occurred in the second quarter of 1995. In the specialty fabrics segment, operating income was lower than a year ago due to sales weakness and lower margins in finished fabrics. 10 CAPITAL RESOURCES AND LIQUIDITY During the second quarter, the Company purchased all of the outstanding stock of Dundee Mills, Incorporated, a leading manufacturer of towels, infant and toddler bedding, knitted infant apparel and healthcare products. The purchase price was approximately $120 million, which was funded by a cash payment of $21.2 million and the issuance of approximately 2.5 million shares of Springs Class A common stock with a fair value of $98.4 million. In addition, the Company also purchased substantially all of the assets of Dawson Home Fashions, Inc., a leading manufacturer of shower curtains and bath fashions accessories. Springs paid approximately $39 million in cash for the business. In the third quarter, the Company purchased substantially all of the assets of the Nanik Window Coverings Group of Apogee Enterprises, Inc., a leading manufacturer of wood window blinds and interior shutters. The Company funded the cash payments for the businesses acquired with proceeds from a new debt issue. In spite of the addition of approximately $111 million of new debt in connection with the acquisitions ($77 million to fund cash payments and $34 million of debt assumed), total debt increased only $41 million from September 1994 due to improved operating cash flow. Capital expenditures for 1995 are expected to be somewhat lower than 1994 levels. Cash needs for the remainder of 1995 are expected to be provided from operations and commercial paper and short-term bank borrowings. OTHER During the first quarter of 1995, the Company completed an evaluation of indirect manufacturing costs that in 1994 and prior years were classified as selling, general and administrative expenses. As a result of that evaluation, the Company has made an accounting change to include in inventoriable costs certain indirect manufacturing and manufacturing-related information services costs. No material effect on inventory or net income resulted from the accounting change. Certain other costs relating to designs have been reclassified from selling, general and administrative expenses to cost of goods sold in the current and prior years. 11 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS The following exhibits are filed as part of this report: (27) Financial Data Schedule (for SEC use only) 12 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, Springs Industries, Inc. has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. SPRINGS INDUSTRIES, INC. By: /s/ James F. Zahrn ------------------------------- James F. Zahrn Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) DATED: November 14, 1995 13 EXHIBIT INDEX Item - ---- PAGE ---- (27) Financial Data Schedule (for SEC use only) 14 EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SPRINGS INDUSTRIES, INC. FOR THE QUARTER ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-30-1995 JAN-01-1995 SEP-30-1995 1,480 0 400,194 0 382,219 818,721 1,368,951 753,498 1,567,608 294,634 357,257 5,062 0 0 708,665 1,567,608 1,639,548 1,639,548 1,345,310 1,345,310 0 0 23,918 74,918 29,352 45,566 0 0 0 45,566 2.41 2.41
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