-----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, GT7E65+xAmVMJc/iO79mVC/BLbWJ769nLGkNvDU6wdCTd5XpkULPGlzpLry2x251 B1C9GNzSiKnaBVdizUi0AQ== 0000950144-97-005580.txt : 19970514 0000950144-97-005580.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950144-97-005580 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970513 SROS: CSX SROS: NYSE 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: 97602175 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 SPRING INDUSTRIES, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ F O R M 10-Q For the Quarter Ended March 29, 1997 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 May 5, 1997, there were 12,761,786 shares of Class A Common Stock and 7,395,615 shares of Class B Common Stock of Springs Industries, Inc. outstanding. ------------------------ There are 23 pages in the sequentially numbered, manually signed original of this report. Page 1 of 23 The Index to Exhibits is on Page 13 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 8 PART II - OTHER INFORMATION - --------------------------- 4. SUBMISSION OF MATTERS TO A VOTE 10 OF SECURITY HOLDERS 6. EXHIBITS 11 SIGNATURES 12 EXHIBIT INDEX 13
-2- 3 PART I ITEM I - FINANCIAL STATEMENTS SPRINGS INDUSTRIES, INC. Consolidated Statement of Operations and Retained Earnings (In thousands except per share data) (Unaudited)
THIRTEEN WEEKS ENDED --------------------------- MARCH 29, MARCH 30, 1997 1996 ----------- ----------- OPERATIONS Net sales ........................................ $ 543,009 $ 579,340 Cost and expenses: Cost of goods sold .............................. 446,757 477,755 Selling, general and administrative expenses ........................ 71,032 74,499 Restructuring and realignment expenses ........................... 2,763 - Interest expense ................................ 4,521 7,834 Other income, net ............................... (149) (939) ----------- ----------- Total ......................................... 524,924 559,149 ----------- ----------- Income before income taxes ....................... 18,085 20,191 Income tax provision ............................. 6,874 7,885 ----------- ----------- Net income ...................................... $ 11,211 $ 12,306 =========== =========== Per share: Net income ...................................... $ .55 $ .60 =========== =========== Cash dividends declared: Class A shares .................................. $ .33 $ .33 =========== =========== Class B shares .................................. $ .30 $ .30 =========== =========== Weighted average shares of common stock .................................... 20,471 20,389 =========== =========== RETAINED EARNINGS Retained earnings at beginning of period ..................................... $ 675,533 $ 616,347 Net income ...................................... 11,211 12,306 Cash dividends declared ......................... (6,435) (6,417) ----------- ----------- Retained earnings at end of period ........................................ $ 680,309 $ 622,236 =========== ===========
See Notes to Condensed Consolidated Financial Statements. - 3 - 4 SPRINGS INDUSTRIES, INC. Condensed Consolidated Balance Sheet (In thousands except share data) (Unaudited)
MARCH 29, DECEMBER 28, 1997 1996 ----------- ----------- ASSETS Current assets: Cash and cash equivalents ................................ $ 1,571 $ 30,719 Accounts receivable ...................................... 357,230 350,830 Inventories .............................................. 380,140 370,896 Other .................................................... 47,046 37,177 ----------- ----------- Total current assets ................................... 785,987 789,622 ----------- ----------- Property, plant and equipment .............................. 1,331,344 1,320,400 Accumulated depreciation ................................. (804,188) (785,836) ----------- ----------- Property, net .......................................... 527,156 534,564 ----------- ----------- Other assets ............................................... 82,464 73,770 ----------- ----------- Total .................................................. $ 1,395,607 $ 1,397,956 =========== =========== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings .................................... $ 36,800 $ - Current maturities of long-term debt ..................... 6,824 6,921 Accounts payable ......................................... 78,874 103,841 Other accrued liabilities ................................ 123,135 141,727 ----------- ----------- Total current liabilities .............................. 245,633 252,489 ----------- ----------- Noncurrent liabilities: Long-term debt ........................................... 177,180 177,640 Accrued benefits and deferred compensation ............................................ 160,994 160,535 Deferred income taxes and other deferred credits ................................................. 26,048 26,513 ----------- ----------- Total noncurrent liabilities ........................... 364,222 364,688 ----------- ----------- Shareowners' equity: Class A common stock- $.25 par value (12,860,993 and 12,746,374 shares issued in 1997 and 1996, respectively) ................ 3,215 3,187 Class B common stock- $.25 par value (7,395,615 and 7,508,579 shares issued in 1997 and 1996, respectively) ........................ 1,849 1,877 Additional paid-in capital ............................... 110,405 110,352 Retained earnings ........................................ 680,309 675,533 Cost of Class A shares in treasury (103,533 and 106,739 shares in 1997 and 1996, respectively) ........................ (2,323) (2,378) Currency translation adjustment and other ................ (7,703) (7,792) ----------- ----------- Total shareowners' equity .............................. 785,752 780,779 ----------- ----------- Total .................................................. $ 1,395,607 $ 1,397,956 =========== ===========
See Notes to Condensed Consolidated Financial Statements. - 4 - 5 SPRINGS INDUSTRIES, INC. Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited)
THIRTEEN WEEKS ENDED --------------------------- MARCH 29, MARCH 30, 1997 1996 ----------- ----------- Operating activities: Net income ............................................... $ 11,211 $ 12,306 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization ........................... 22,721 26,568 Changes in operating assets and liabilities, net of effects of business acquisitions and sale of businesses ..................................... (52,778) (35,658) Other, net .............................................. (4,799) (2,251) Net cash provided (used) by operating ----------- ----------- activities .......................................... (23,645) 965 ----------- ----------- Investing activities: Purchase of property, plant and equipment .............................................. (15,465) (19,549) Business acquisitions .................................... (6,400) (1,900) Other, net ............................................... (7,022) 2,648 ----------- ----------- Net cash used by investing activities................. (28,887) (18,801) ----------- ----------- Financing activities: Proceeds from short-term borrowings, net ................. 36,800 33,600 Proceeds from long-term borrowings ....................... - 2,261 Repayment of long-term debt .............................. (557) (5,645) Cash dividends paid....................................... (12,859) (12,834) ----------- ----------- Net cash provided by financing activities ............ 23,384 17,382 ----------- ----------- Decrease in cash and cash equivalents....................... $ (29,148) $ (454) =========== ===========
See Notes to Condensed Consolidated Financial Statements. - 5 - 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Significant Accounting Policies: The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements presented in the Springs Industries, Inc. ("Springs" or "the Company") 1996 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. 2. Inventory: Inventories are summarized as follows (in thousands):
March 29, Dec. 28, 1997 1996 ----------- ----------- Standard cost (which approximates average cost) or average cost: Finished goods ................................. $ 256,751 $ 242,650 In process ..................................... 186,922 185,307 Raw materials and supplies ..................... 59,919 67,925 ----------- ----------- 503,592 495,882 Less LIFO reserve ............................... (123,452) (124,986) ----------- ----------- Total .......................................... $ 380,140 $ 370,896 =========== ===========
3. Reclassification: Certain prior-year amounts have been reclassified to conform with the 1997 presentation, including classification in net sales of certain promotional costs which were previously included in selling, general and administrative expenses. 4. Commitments: The Company enters into forward delivery contracts and futures 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. - 6 - 7 5. Divestiture: On April 17, 1996, the Company sold Clark-Schwebel, Inc., a business in the specialty fabrics segment, for $193 million in cash. During the first quarter of 1996, Clark-Schwebel contributed about 10 percent of Springs' sales of $579.3 million and had record earnings of $10.1 million before interest expense and taxes. During the five years ended in 1995, Clark-Schwebel's average contribution was 13 percent of Springs' sales and 9 percent of its earnings before interest expense and taxes. 6. Restructuring and Realignment Costs: During the second quarter of 1996, the Company adopted a plan to consolidate and realign its fabric manufacturing operations. In connection with this plan, the Company closed three fabric manufacturing plants, added production in other plants, and increased outside purchases of grey fabric. A pretax restructuring charge of $30.4 million was recorded in the second quarter, which included $6.6 million for the severance expense arising from the elimination of approximately 850 positions, $16.3 million for write-offs of plant and equipment, and $7.5 million for certain other expenses associated with the plan. Through March 29, 1997, the Company has recorded approximately $6.1 million of actual cash expenditures against the restructuring accrual, which includes $2.4 million of severance expense and $3.7 million for certain other expenses associated with the plan. In addition, the Company has incurred $2.8 million in the current quarter and $6.3 million to date for equipment relocation and other realignment expenses and has made capital investments of $2.3 million related to the plan. Over the next three years, Springs plans to make future capital investments of $15.0 million and incur future expenses of approximately $16.8 million for equipment relocation and other realignment costs which do not qualify as "exit costs." 7. Legal and Environmental: As disclosed in the 1996 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 protecting its interests in all such proceedings. In the opinion of management, based on the advice of counsel, the likelihood that the resolution of the above matters would have a material adverse impact on either the financial condition or the future results of operations of Springs is remote. - 7 - 8 ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS GENERAL During the second quarter of 1996, the Company adopted a plan to consolidate and realign its fabric manufacturing operations. In connection with this plan, the Company closed three fabric manufacturing plants, added production in other plants, and increased outside purchases of grey fabric. A pretax restructuring charge of $30.4 million was recorded in the second quarter, which included $6.6 million for the severance expense arising from the elimination of approximately 850 positions, $16.3 million for write-offs of plant and equipment, and $7.5 million for certain other expenses associated with the plan. Through March 29, 1997, the Company has recorded approximately $6.1 million of actual cash expenditures against the restructuring accrual, which includes $2.4 million of severance expense and $3.7 million for certain other expenses associated with the plan. In addition, the Company has incurred $2.8 million in the current quarter and $6.3 million to date for equipment relocation and other realignment expenses and has made capital investments of $2.3 million related to the plan. Over the next three years, Springs plans to make future capital investments of $15.0 million and incur future expenses of approximately $16.8 million for equipment relocation and other realignment costs which do not qualify as "exit costs." On April 17, 1996, the Company sold Clark-Schwebel, Inc., a business in the specialty fabrics segment, for $193 million in cash. During the first quarter of 1996, Clark-Schwebel contributed about 10 percent of Springs' sales of $579.3 million and had record earnings of $10.1 million before interest expense and taxes. During the five years ended in 1995, Clark-Schwebel's average contribution was 13 percent of Springs' sales and 9 percent of its earnings before interest expense and taxes. RESULTS OF OPERATIONS Sales Net sales for the first quarter of 1997 were $543.0 million, down 6 percent from the first quarter of 1996. The 1996 figures include results for Clark-Schwebel, Inc. Excluding Clark-Schwebel's sales from the prior year, sales for the quarter increased by 5 percent. The home furnishings segment generated sales growth of 7 percent for the first quarter. The specialty fabrics segment's first-quarter sales were lower than a year ago by 44 percent, primarily due to the sale of Clark-Schwebel. Earnings Net income for the first quarter of 1997 was $11.2 million, or $.55 per share, down about 8 percent from the $.60 per share earned in 1996. Excluding the effect of realignment expenses associated with the restructuring of the fabric manufacturing operations, net income was $12.9 million, or $0.63 per share. In the home furnishings segment, improved volume and margin expansion in bed, bath and window fashions produced a 43 percent increase in operating profit over last year. Excluding the effect of the realignment expenses, operating profit for the home furnishings segment increased 60 percent. The specialty fabrics segment's earnings were lower than the prior year due primarily to the sale of Clark-Schwebel. The sales and earnings of the continuing specialty fabrics businesses were lower than a year ago because of sluggish demand for home-sewing fabrics and fashion apparel fabrics. - 8 - 9 CAPITAL RESOURCES AND LIQUIDITY A normal seasonal increase in working capital since year-end resulted in increased short-term borrowings. The company expects capital expenditures for 1997 to approximate $120 million. These investments will focus on manufacturing equipment, distribution facilities and information systems. Springs believes its 1997 cash needs will be adequately provided from operations and borrowings from commercial paper and committed lines. OTHER Certain prior-year amounts have been reclassified to conform with the 1997 presentation, including classification in net sales of certain promotional costs which were previously included in selling, general and administrative expenses. - 9 - 10 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of the security holders of the Company was held on April 21, 1997. (b) During the annual meeting, the security holders of the Company elected the following directors to hold office until the next annual meeting of the security holders and until a successor is duly elected and qualified: John F. Akers John H. McArthur Crandall Close Bowles Aldo Papone John L. Clendenin Donald S. Perkins Leroy S. Close Robin B. Smith Charles W. Coker Sherwood H. Smith, Jr. Walter Y. Elisha Stewart Turley
(c) Description of Matter For Against or Abstentions Voted Upon Withheld (i) Annual election of directors: John F. Akers 40,094,969 72,675 Crandall Close Bowles 40,092,703 74,941 John L. Clendenin 40,096,878 70,766 Leroy S. Close 40,092,093 75,551 Charles W. Coker 40,099,303 68,341 Walter Y. Elisha 40,097,875 69,769 John H. McArthur 40,097,799 69,845 Aldo Papone 40,099,215 69,429 Donald S. Perkins 40,096,219 71,425 Robin B. Smith 40,098,690 68,654 Sherwood H. Smith, Jr. 40,099,187 68,456 Stewart Turley 40,099,253 68,716 (ii) Ratification of the 40,085,912 18,242 63,490 appointment of Deloitte & Touche as the Company's auditors
(d) N/A - 10 - 11 ITEM 6 - EXHIBITS The following exhibits are filed as part of this report: (10) Material Contracts-Executive Compensation Plans and Arrangements (a) Supplemental Executive Retirement Plan (27) Financial Data Schedule (for SEC purposes) - 11 - 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 Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) DATED: May 12, 1997 - 12 - 13 EXHIBIT INDEX
Item Page Number - ---- ----------- (10)(a) Supplemental Executive Retirement Plan as approved by the Board of 14 Directors on October 19, 1996, filed herewith (9 pages) (27) Financial Data Schedule (for SEC purposes) 23
- 13 - EX-10.A 2 SUPPLEMENTAL EXECUTIVE RETIREMENT 1 SPRINGS INDUSTRIES, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN THIS INSTRUMENT is effective as of the 1st day of November, 1996 and executed this 6th day of May, 1997, by SPRINGS INDUSTRIES, INC. (the "Company"). Background Statement The Company has for many years maintained various qualified retirement plans to provide long service employees of the Company and its subsidiaries with an adequate replacement income in retirement. Certain provisions of the Internal Revenue Code impose limitations on the amount of retirement benefits that can be provided to the Company's management and highly compensated employees through qualified plans. The Company wishes to establish this Supplemental Executive Retirement Plan ("Supplemental Plan"), effective as of November 1, 1996, as an unfunded pension plan for a select group of management or highly compensated employees of the Company and its subsidiaries within the meaning of section 2520.104-23 of the regulations promulgated under the Employee Retirement Income Security Act of 1974 ("ERISA"), for the purpose of providing adequate retirement income and related benefits to these employees. ARTICLE I TITLE Section 1.01 The supplemental benefit plan set forth below shall be known as the Springs Industries, Inc. Supplemental Executive Retirement Plan. ARTICLE II PARTICIPATION Section 2.01 The Management Compensation and Organization Committee of the Board of Directors of the Company (the "Committee") shall designate which of the employees of the Company and its subsidiaries shall participate in this - 14 - 2 Supplemental Plan. Each individual so designated shall be referred to as a "Participant." ARTICLE III RETIREMENT INCOME Section 3.01 The retirement income payable to or on behalf of a Participant under this Supplemental Plan ("Supplemental Benefits") shall be an annual benefit equal to the excess, if any, of (a), adjusted, as applicable, by Section 3.01(c) and by Section 3.03, over (b) where (a) is sixty percent (60%) of the average yearly amount of compensation, including base salary, any sustained performance awards, and any bonus under the Company's Achievement Incentive Plan, or any successor plan or plans or any similar annual bonus plan of any subsidiary of the Company, ("AIP bonus") (unreduced by any amount not currently includible in income by reason of the applicability of section 125 or 401(k) of the Internal Revenue Code or by any deferrals of compensation), during the five calendar years of employment out of the last ten years of Credited Service that will produce the highest average ("Final Average Pay") [The determination of Final Average Pay shall be determined first on the basis of AIP bonuses paid and second on the basis on AIP bonuses accrued, with the higher amount being used as Final Average Pay], and (b) is the aggregate annual income received, or receivable upon application, from the following sources: (i) Old-age insurance benefits at age 65 under the Social Security Act, computed as if the Participant had no further earnings after the date of his retirement hereunder ("Retirement Date"). (ii) The deemed income amount as of the Participant's Retirement Date (determined as a single life annuity for the Participant) that is the actuarial equivalent to the Participant's aggregate vested account balances as of his Retirement date in the profit sharing fund account and the savings fund Company matching account under (a) the Springs of Achievement Partnership Plan and any defined contribution retirement plan maintained by a subsidiary of the Company, (b) the Springs of Achievement Excess Benefits Partnership Plan and (c) the Company's Deferred Compensation Plan. The deemed income amount under this Section 3.01(b)(ii) for the profit sharing - 15 - 3 fund account under the plans shall be determined as follows: [A] Determine the Participant's account balance in each such plan as of December 31, 1996. [B] Adjust the account balances in such plans for the period January 1, 1997 to the Participant's Retirement Date by assuming that the Company makes a contribution for each calendar year following December 31, 1996, of five percent (5%) on compensation and an additional two percent (2%) on compensation in excess of fifty percent (50%) of the Social Security taxable wage base. Such adjustment may result in an assumed account balance (the "Assumed Account Balance") that is greater than, or less than the Participant's actual account balance in one of such plans. [C] Adjust the Assumed Account Balance in each such plan each year by the earnings rate normally credited to the actual account balance by the terms of the plan involved. [D] Determine the deemed income amount by applying to the Participant's Assumed Account Balance in each such plan such actuarial methods and assumptions as the Committee may from time to time approve. The deemed income amount under this item for the savings fund Company matching account under the plans shall be determined by applying to the Participant's balance in the Company matching account in each plan such actuarial methods and assumptions as the Committee may from time to time approve. (iii) The deemed income amount as of the Participant's Retirement Date (determined as a single life annuity for the Participant) that is the actuarial equivalent to the Participant' s aggregate account balances as of the Retirement Date under the Company's Deferred Compensation Plan related to the Company's discontinued Shadow Retirement Plan. The deemed income amount under this item shall be determined by use of the same actuarial methods and assumptions as are used in determining the income amount under item (ii). (iv) The deemed income amount as of the Participant's Retirement Date (determined as a single life annuity for the Participant) that is the actuarial - 16 - 4 equivalent to the Participant' s aggregate vested account balances under the Company's Contingent Compensation Plan as of the Retirement Date. The deemed income amount under this item shall be determined by use of the same actuarial methods and assumptions as are used in determining the income amount under item (ii) above applied to the Participant's actual aggregate vested account balances. V. The pension benefit (determined as a single life annuity for the Participant) payable under any defined benefit plan (qualified or non-qualified) of the Company or of any of its subsidiaries. If an actuarial determination is required under this item, the methods and assumptions selected under item (ii) above shall be applied. (c) The percent of average compensation determined pursuant to paragraph (a) above shall be reduced by 2.4% for each full year of Credited Service that is less than twenty-five (25) and by 0.2% for each full month of any partial year. (The percent of average compensation determined pursuant to Paragraph (a) above, as reduced, if applicable, is hereafter referred to as the "Target Benefit.") There shall be no increase in such percentage if a Participant has more than 25 years of Credited Service. "Credited Service" for purposes of this Supplemental Plan shall mean calendar years of full-time active employment with the Company and its subsidiaries. Credited Service shall also include years of full-time active employment with any other affiliated entity, if service with the entity has been designated by the Committee to constitute "Credited Service" for purposes of this Supplemental Plan and provided that the Supplemental Benefit shall be reduced by any retirement benefits provided by the affiliated entity in a manner consistent with this Section 3.01. (d) The Committee in its discretion may provide that Credited Service shall also include years of full-time active employment by a Participant with a non-affiliated entity; provided, however, that the Participant's Supplemental Benefit shall be reduced by any retirement benefits provided by the non-affiliated entity in a manner consistent with this Section 3.01. Section 3.02 The normal method of payment of Supplemental Benefits shall be a straight life annuity payable monthly for the Participant's life, but the Participant may elect to have his or her Supplemental Benefits paid in the form of a joint and fifty percent survivor annuity for the life of the Participant and his or her spouse in the reduced amount that is the actuarial equivalent of the straight life annuity on the Participant's life. - 17 - 5 Section 3.03 (a) A Participant becomes vested in Supplemental Benefits only upon attainment of age fifty-five (55) and completion of ten (10) years of Credited Service. Upon termination of employment after such vesting, a Participant shall be considered to be retired under this Plan and, as of the month following termination or employment, shall begin receiving his or her Supplemental Benefits. If the Participant has attained age sixty-two (62), no reduction in the amount of Supplemental Benefits shall be made. If a Participant retires hereunder prior to age sixty-two (62), the Participant's Target Benefit shall be reduced by five percent (5%) for each full year, and 5/12% for each full month, by which the Participant's Retirement Date precedes the Participant's sixty-second birthday. (b) Notwithstanding sub-section 3.03(a), a Participant shall become vested in his Supplemental Benefits upon attainment of age 55 with completion of less than ten (10) years of Credited Service, if the employment of the Participant is terminated by reason of death, total disability or economic termination, as defined in the Springs of Achievement Partnership Plan, or under such other circumstances as the Committee may approve. The Participant's Supplemental Benefit will become payable as of the month following termination of employment. (c) If a Participant who has become vested in his or her Supplemental Benefits dies while still employed by the Company or an affiliated entity, the surviving spouse of such Participant married to the Participant at the time of death will begin receiving an annuity for life in an amount determined as though the Participant had retired immediately before death and elected a joint and fifty percent survivor annuity with his or her spouse. Section 3.04 (a) Except for amounts paid under a joint and fifty percent survivor annuity to a Participant's spouse, no amount shall be paid to anyone following the death of a Participant. (b) Payment of Supplemental Benefits shall not be affected by the employment of a Participant by the Company or an affiliated entity as a consultant or independent contractor. Payment of Supplemental Benefits shall be conditioned, however, upon the Participant's execution of, and continued compliance with, a retirement agreement, in such form as the Committee may approve, pursuant to which the Participant agrees not to engage in activities competitive with, or otherwise detrimental to, the interests of the Company and which in the Committee's discretion may require prior notice to the Committee, and approval by the Committee, before the Participant accepts employment or conducts consulting activities after retirement. - 18 - 6 (c) The Committee in its discretion may determine that an amount of Supplemental Benefits is too small to pay as an annuity and direct that a lump sum amount that is the actuarial equivalent of such Supplemental Benefits be paid to the Participant in lieu of annuity payments. ARTICLE IV THE SUPPLEMENTAL PLAN COMMITTEE Section 4.01 The Committee shall administer this Supplemental Plan and shall cause records to be kept of individual Participants' benefits hereunder. To the extent this Supplemental Plan is considered subject to the Employee Retirement Income Security Act of 1974, the Committee shall be the "named fiduciary" of this Supplemental Plan. Section 4.02 The Committee shall from time to time establish rules for the administration of this Supplemental Plan. Without limiting the generality of the preceding sentence, the Committee shall set forth in writing, available for inspection by any interested party, the procedures to be followed in presenting claims for benefits under this Supplemental Plan. The Committee may rely on the records of the Company, as certified to it, with respect to any and all factual matters dealing with participation or benefits under this Supplemental Plan. In case of any factual dispute hereunder, the Committee shall interpret this Supplemental Plan and shall determine all questions arising in the administration, interpretation and application of this Supplemental Plan. All such determinations shall be final, conclusive and binding except to the extent that they are appealed under the following claims procedure. The Committee may delegate to a plan administrator the duties of normal administration of the Plan, including record keeping, and the initial determination of benefits. In the event that the claim of any person to all or any part of any payment or benefit under this Supplemental Plan shall be denied, the Committee shall provide to the claimant, within sixty (60) days after receipt of such claim, a written notice setting forth, in a manner calculated to be understood by the claimant, (i) the specific reason or reasons for the denial; (ii) specific references to the pertinent Supplemental Plan provisions on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation as to why such material or information is necessary; and (iv) an explanation of this Supplemental Plan's claim procedure. - 19 - 7 Within sixty (60) days after receipt of the above material, the claimant shall have a reasonable opportunity to appeal the denial of the claim to the Committee for a full and fair review. The claimant or his duly authorized representative may (i) request a review upon written notice to the Committee; (ii) review pertinent documents; and (iii) submit issues and comments in writing. A decision by the Committee will be made not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which event a decision should be rendered as soon as possible, but in no event later than one hundred and twenty (120) days after such receipt. The Committee's decision on review shall be written and shall include specific reasons for the decision written in a manner calculated to be understood by the claimant, with specific references to the pertinent Supplemental Plan provisions on which the decision is based. Section 4.03 Every decision and action of the Committee shall be valid if concurred in by a majority of the members then in office, which concurrence may be had without a formal meeting. The Committee shall select a Secretary, who may or may not be a member of the Committee, and any other officials deemed necessary to carry out this Supplemental Plan, and shall adopt rules governing its procedures not inconsistent herewith. The Committee shall keep a permanent record of its meetings and actions. ARTICLE V NATURE OF COMPANY OBLIGATION AND PARTICIPANT INTEREST Section 5.01 The interest of the Participant and/or any person claiming by or through him under this Supplemental Plan shall not be superior to that of an unsecured general creditor of the Company. Benefits payable under this Supplemental Plan may be provided for either from the general assets of the Company or by the Company establishing a trust for the benefit of Participants, but if such trust is established, neither the Participant nor any person claiming by or through him shall have any right to the property held in such trust for the satisfaction of any claim for benefit payments which is superior to the rights of general creditors of the Company. Section 5.02 In the event any trust, escrow or other arrangement of like force or effect is created in favor of the Participant or any person claiming by or through him under this Supplemental Plan by virtue of the benefits provided hereunder, the property held in such trust shall be available to all - 20 - 8 unsecured general creditors of the Company if the Company becomes insolvent within the meaning of the trust instrument. ARTICLE VI MISCELLANEOUS Section 6.01 This Supplemental Plan may be amended or discontinued by the Company at any time, but Supplemental Benefits which have been accrued to date under this Supplemental Plan may not be cancelled or reduced by any such amendment or discontinuance. Section 6.02 The Company shall not merge, consolidate or otherwise combine with any other business organization unless and until such successor or other organization shall expressly assume all rights and obligations of the Company set forth under this Supplemental Plan. Section 6.03 This Supplemental Plan shall not be deemed to constitute a contract between the Company and any Participant or employee for the continued employment of any such employee with the Company. Nothing contained in this Supplemental Plan shall be deemed to give any Participant or employee either the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Participant or employee at any time regardless of the effect which such discharge shall or may have upon such Participant or employee under this Supplemental Plan. Section 6.04 None of the benefits under this Supplemental Plan are subject to the claims of creditors of a Participant or any person claiming by or through him and will not be subject to attachment, garnishment or any other legal process. Neither a Participant nor any person claiming by or through him may assign, sell, borrow on or otherwise encumber any of his beneficial interest under this Supplemental Plan nor shall any such interest be in any manner liable for or subject to the deeds, contracts, liabilities, engagements, or torts of a Participant or any person claiming by or through him. Section 6.05 This Supplemental Plan shall be construed in accordance with the laws of the State of South Carolina, except where such laws are superseded by ERISA or other federal law, in which case ERISA or such other federal law shall control. Section 6.06 In making any distribution to or for the benefit of any minor or incompetent person, the Committee, in its sole, absolute and uncontrolled discretion, may, but need not, direct such distribution to a legal or natural guardian or other relative of such incompetent, or to any adult with whom such - 21 - 9 incompetent temporarily or permanently resides, and any such guardian, relative or other person shall have full authority and discretion to expend such distribution for the use and benefit of such incompetent. The receipt of such distribution by such guardian, relative or other person shall be a complete discharge to the Company without any responsibility on its part or on the part of the Committee to see to the application thereof. Section 6.07 In case any provision of this Supplemental Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect its remaining parts and this Supplemental Plan shall be construed and enforced as if such illegal and invalid provisions had never been inserted herein. SIGNATURE IN WITNESS WHEREOF, the Company has caused this Supplemental Plan to be executed as of the 6th day of May, 1997, effective as set forth above. SPRINGS INDUSTRIES, INC. (CORPORATE SEAL) By: /s/ J. Spratt White ---------------------------- J. Spratt White Title: Senior Vice President- Human Resources Attest: /s/ Robert W. Sullivan - ------------------------- Robert W. Sullivan Assistant Secretary - 22 - EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SPRINGS INDUSTRIES, INC., FOR THE QUARTER ENDED MARCH 29, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JAN-03-1998 DEC-29-1996 MAR-29-1997 1,571 0 357,230 0 380,140 785,987 1,331,344 804,188 1,395,607 245,633 177,180 5,064 0 0 780,688 1,395,607 543,009 543,009 446,757 446,757 0 0 4,521 18,085 6,874 11,211 0 0 0 11,211 0.55 0.55
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