-----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, DJc47ta2yE56o8MFkSKTjxRgQIfHIH4aYJIJNs88x1TFAELs3NLHngnhXHqldUm1 9PNkFov5wSDYMtSt3ewAsA== 0000950144-98-006650.txt : 19980520 0000950144-98-006650.hdr.sgml : 19980520 ACCESSION NUMBER: 0000950144-98-006650 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980404 FILED AS OF DATE: 19980519 SROS: NYSE 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: SEC FILE NUMBER: 001-05315 FILM NUMBER: 98627908 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 INC 10-Q 4-4-1998 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- F O R M 10-Q For the Quarter Ended April 4, 1998 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 8, 1998, there were 11,804,379 shares of Class A Common Stock and 7,270,921 shares of Class B Common Stock of Springs Industries, Inc. outstanding. ----------------------- There are 16 pages in the sequentially numbered, manually signed original of this report. Page 1 of 16 The Index to Exhibits is on Page 15 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 9 FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II - OTHER INFORMATION 4. SUBMISSION OF MATTERS TO A VOTE 12 OF SECURITY HOLDERS 6. EXHIBITS 13 SIGNATURES 14 EXHIBIT INDEX 15
-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 ----------------------- APRIL 4, MARCH 29, 1998 1997 --------- --------- OPERATIONS Net sales ...................................... $ 556,736 $ 543,009 Cost and expenses: Cost of goods sold ........................... 455,059 446,757 Selling, general and administrative expenses .................... 75,001 70,753 Restructuring and realignment expenses ....................... 24,850 2,763 Year 2000 expenses ........................... 1,420 279 Interest expense ............................. 5,554 4,521 Other income ................................. (144) (149) --------- --------- Total ...................................... 561,740 524,924 --------- --------- Income (loss) before income taxes .............. (5,004) 18,085 Income tax provision (benefit) ................. (1,905) 6,874 --------- --------- Net income (loss) ............................ $ (3,099) $ 11,211 ========= ========= Earnings per common share - basic: Net income (loss) ............................ $ (.16) $ .56 ========= ========= Earnings per common share - diluted: Net Income (loss) ........................... $ (.16) $ .54 ========= ========= Cash dividends declared: Class A shares ............................... $ .33 $ .33 ========= ========= Class B shares ............................... $ .30 $ .30 ========= ========= RETAINED EARNINGS Retained earnings at beginning of period .................................... $ 701,354 $ 675,533 Net income (loss) .............................. (3,099) 11,211 Repurchase of Class A common stock ............. (29,059) - Cash dividends declared ........................ (6,188) (6,435) --------- --------- Retained earnings at end of period ............. $ 663,008 $ 680,309 ========= =========
See Notes to Condensed Consolidated Financial Statements. -3- 4 SPRINGS INDUSTRIES, INC. Condensed Consolidated Balance Sheet (In thousands except share data) (Unaudited)
APRIL 4, JANUARY 3, 1998 1998 ----------- ----------- ASSETS Current assets: Cash and cash equivalents ................. $ 399 $ 373 Accounts receivable ....................... 347,697 317,702 Inventories, net .......................... 457,066 420,295 Other ..................................... 52,296 48,309 ----------- ----------- Total current assets .................... 857,458 786,679 ----------- ----------- Property, plant and equipment ............... 1,355,824 1,340,154 Accumulated depreciation .................. (816,055) (799,623) ----------- ----------- Property, plant and equipment, net ...... 539,769 540,531 ----------- ----------- Other assets ................................ 81,963 81,533 ----------- ----------- Total ................................... $ 1,479,190 $ 1,408,743 =========== =========== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term borrowings ..................... $ 61,950 $ 7,450 Current maturities of long-term debt ...... 17,793 14,452 Accounts payable .......................... 97,586 92,135 Accrued restructuring costs ............... 15,890 4,647 Other accrued liabilities ................. 99,666 121,409 ----------- ----------- Total current liabilities ............... 292,885 240,093 ----------- ----------- Noncurrent liabilities: Long-term debt ............................ 220,429 164,287 Accrued benefits and deferred compensation ............................. 175,339 173,681 Other ..................................... 25,501 26,084 ----------- ----------- Total noncurrent liabilities ............ 421,269 364,052 ----------- ----------- Shareowners' equity: Class A common stock- $.25 par value (12,062,582 and 12,601,757 shares issued in 1998 and 1997, respectively) .. 3,016 3,150 Class B common stock- $.25 par value (7,270,921 shares issued and outstanding in 1998 and 1997) ........... 1,818 1,818 Additional paid-in capital ................ 107,748 108,684 Retained earnings ......................... 663,008 701,354 Cost of Class A shares in treasury (100,203 and 101,091 shares in 1998 and 1997, respectively) ................. (2,263) (2,276) Currency translation adjustment and other . (8,291) (8,132) ----------- ----------- Total shareowners' equity ............... 765,036 804,598 ----------- ----------- Total ................................... $ 1,479,190 $ 1,408,743 =========== ===========
See Notes to Condensed Consolidated Financial Statements. -4- 5 SPRINGS INDUSTRIES, INC. Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited)
THIRTEEN WEEKS ENDED ------------------------ APRIL 4, MARCH 29, 1998 1997 -------- --------- Operating activities: Net income (loss) ................................... $ (3,099) $ 11,211 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization ...................... 23,266 22,721 Provision for restructuring costs .................. 23,049 - Changes in operating assets and liabilities, net of effects of business acquisitions ........... (77,608) (52,778) Other, net ......................................... (5,274) (4,799) -------- -------- Net cash used by operating activities ........... (39,666) (23,645) -------- -------- Investing activities: Purchases of property, plant and equipment ......................................... (33,299) (15,465) Business acquisitions ............................... - (6,400) Principal collected on notes receivable ............. 2,002 600 Notes receivable funded ............................. - (8,000) Proceeds from sales of assets ....................... 311 378 -------- -------- Net cash used by investing activities ............ (30,986) (28,887) -------- -------- Financing activities: Proceeds (repayments) from short-term borrowings, net ................................... 54,500 36,800 Proceeds from long-term borrowings .................. 60,000 - Repayments of long-term debt ........................ (517) (557) Repurchase of Class A shares ........................ (32,367) - Proceeds from exercise of stock options ............. 1,600 - Cash dividends paid ................................. (12,538) (12,859) -------- -------- Net cash provided by financing activities ....... 70,678 23,384 -------- -------- Increase (decrease) in cash and cash equivalents .......................................... $ 26 $(29,148) ======== ========
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") 1997 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. Inventories: Inventories are summarized as follows (in thousands):
April 4, Jan. 3, 1998 1998 --------- --------- Standard cost (which approximates average cost) or average cost: Finished goods........................... $ 313,345 $ 280,316 In process............................... 205,651 199,600 Raw materials and supplies............... 59,924 59,381 --------- --------- 578,920 539,297 Less LIFO reserve......................... (121,854) (119,002) --------- --------- Total.................................... $ 457,066 $ 420,295 ========= =========
3. Restructuring and Realignment Costs: During the first quarter of 1998, the Company adopted a plan to close the Company's Rock Hill Printing and Finishing Plant. The phase-down of the facility is expected to begin in May of 1998 and to take approximately five months. A pretax charge of $23.0 million was recorded in the first quarter of 1998, including $11.3 million for write-offs of plant and equipment, $4.0 million for severance arising from the elimination of approximately 480 positions, and $7.7 million for certain other expenses associated with the closing of the facility. No cash expenditures were recorded against the accruals in the first quarter. In connection with the closing of this plant, the Company expects to incur approximately $8.0 million for equipment relocation and other realignment expenses which do not qualify as "exit costs." -6- 7 In the second quarter of 1996, the Company adopted a plan to consolidate and realign its fabric manufacturing operations. A pretax restructuring charge of $30.4 million was recorded in the second quarter of 1996 which included a $16.3 million write-off of plant and equipment, a $6.6 million accrual for anticipated severance arising from the elimination of approximately 850 positions, and a $7.5 million accrual for certain other anticipated expenses associated with the plan. Through April 4, 1998, the Company has recorded cash expenditures of approximately $4.2 million against the severance accrual and $5.5 million against the accrual for certain other expenses associated with the plan. In addition, the Company has incurred expenses of $16.7 million, including $1.8 million in 1998, for equipment relocation and other realignment expenses related to the plan. 4. Other: The Company presently expects to spend approximately $15 million during 1998 and 1999 to modify its computer information systems to ensure the proper processing of transactions relating to Year 2000 and beyond. This "Year 2000 Computer Problem" creates risk for the Company from unforeseen problems in its own computer systems and those of third parties with whom the Company conducts business transactions. Year 2000-related failures of the Company's and/or third parties' computer systems could have a material impact on the Company's ability to conduct its business. Management currently believes that Company information systems affected by the Year 2000 issues have been identified and that its implementation plans will ensure compliance for its systems by the Year 2000. The pretax amount expensed in the first quarter of 1998 in connection with these efforts was $1.4 million, compared to $0.3 million in the first quarter of 1997. In 1997, the Financial Accounting Standards Board issued Statement No. 130, "Reporting Comprehensive Income," which was required to be adopted for fiscal years beginning after December 15, 1997. This Statement establishes standards for reporting and display of comprehensive income. Comprehensive income (loss) was ($3.2) million for the first quarter of 1998 and $11.3 million for the first quarter of 1997. The difference between net income and comprehensive income was accumulated translation adjustments of $(99) thousand for the first quarter of 1998 and $54 thousand for the first quarter of 1997. 5. Legal and Environmental: As disclosed in the 1997 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. -7- 8 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. -8- 9 ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS GENERAL During the first quarter of 1998 the Company announced a $67.0 million plan to modernize and expand its towel manufacturing. Nearly $40.0 million is expected to be spent in Hartwell, Georgia, to build a new weaving plant and to modernize a yarn manufacturing facility, nearly doubling the capacity of that plant. Over $26.0 million is expected to be spent to modernize terry manufacturing facilities in Griffin, Georgia. The plan is expected to be completed in approximately 15 months. In addition, the Company adopted a plan in the first quarter of 1998 to close the Company's Rock Hill Printing and Finishing Plant. The phase-down of the facility is expected to begin in May of 1998 and to take approximately five months. A pretax charge of $23.0 million was recorded in the first quarter of 1998, including $11.3 million for write-offs of plant and equipment, $4.0 million for severance arising from the elimination of approximately 480 positions, and $7.7 million for certain other expenses associated with the closing of the facility. No cash expenditures were recorded against the accruals in the first quarter. In connection with the closing of this plant, the Company expects to incur approximately $8.0 million for equipment relocation and other realignment expenses which do not qualify as "exit costs." RESULTS OF OPERATIONS Sales Net sales for the first quarter of 1998 were $556.7 million, up about 3 percent from the first quarter of 1997. Springs' 1997 first-quarter results reflected its participation in the largest retail rollouts of new home furnishings programs in industry history. Nevertheless, the home furnishings segment, in 1998, generated record first-quarter sales, up 2 percent from last year. The specialty fabrics segment's first-quarter sales increased by 4 percent compared to 1997. Earnings The Company reported a net loss of $3.1 million, or $.16 per diluted share, for the first quarter of 1998, compared to net income of $11.2 million, or $.54 per diluted share, for 1997. The loss was caused by three unusual items: the $23.0 million pretax charge associated with the planned closing of the Rock Hill Printing and Finishing Plant, realignment expenses associated with the restructuring of fabric manufacturing operations, and charges incurred for Year 2000 modifications to information systems. Without these unusual items, net income for the first quarter of 1998 would have been $13.2 million, or $.66 per diluted share, compared to $13.1 million, or $0.64 per diluted share, for 1997. In the home furnishings segment, profits were slightly below last year. Profits for the specialty fabrics segment were significantly below last year due to the restructuring charge recorded in the first quarter of 1998. Excluding the restructuring charge and Year 2000 expenses, profits for the specialty fabrics segment showed improvement compared to last year. -9- 10 CAPITAL RESOURCES AND LIQUIDITY Increases in accounts receivable and inventory resulted in a first-quarter increase in short-term borrowings. Proceeds from long-term debt were used to finance purchases of equipment and Class A shares during the first quarter of 1998. The Company expects capital expenditures for 1998 to approximate $150 million. The focus of the Company's investments will be on new state-of-the-art manufacturing, distribution and information technology. In October of 1997, the Company's Board of Directors approved the purchase of up to 2 million shares of the Company's Class A common stock. The Company had repurchased 988,500 shares through the first quarter of 1998. The Company presently expects to spend approximately $15 million during 1998 and 1999 to modify its computer information systems to ensure the proper processing of transactions relating to Year 2000 and beyond. This "Year 2000 Computer Problem" creates risk for the Company from unforeseen problems in its own computer systems and those of third parties with whom the Company conducts business transactions. Year 2000-related failures of the Company's and/or third parties' computer systems could have a material impact on the Company's ability to conduct its business. Management currently believes that Company information systems affected by the Year 2000 issues have been identified and that its implementation plans will ensure compliance for its systems by the Year 2000. The pretax amount expensed in the first quarter of 1998 in connection with these efforts was $1.4 million, compared to $0.3 million in the first quarter of 1997. RESTRUCTURING AND REALIGNMENT During the second quarter of 1996, the Company adopted a plan to consolidate and realign its fabric manufacturing operations. A pretax restructuring charge of $30.4 million was recorded in the second quarter of 1996 which included a $16.3 million write-off of plant and equipment, a $6.6 million accrual for anticipated severance arising from the elimination of approximately 850 positions, and a $7.5 million accrual for certain other anticipated expenses associated with the plan. Through April 4, 1998, the Company has recorded cash expenditures of approximately $4.2 million against the severance accrual and $5.5 million against the accrual for certain other expenses associated with the plan. In addition, the Company has incurred expenses of $16.7 million, including $1.8 million in 1998, for equipment relocation and other realignment expenses related to the plan. Over the next 8 months, Springs plans to incur expenses of approximately $5.2 million for equipment relocation and other realignment costs related to the plan which do not qualify as "exit costs." As noted above, the Company adopted a plan in the first quarter of 1998 to close the Rock Hill Printing and Finishing Plant. A pretax charge of $23.0 million was recorded during the first quarter of 1998. -10- 11 FORWARD LOOKING INFORMATION This Form 10-Q report contains forward-looking statements that reflect management's expectations, estimates, projections, and assumptions of future performance and economic conditions. Words such as "expects," "anticipates," "plans," "believes," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements which include but are not limited to projections of expenditures, cash flows, and operating performance. The Company cautions investors that any forward-looking statement is subject to risks and uncertainties that may cause actual results to vary significantly from those projected, stated, or implied by the forward-looking statement. Factors that could cause actual results to differ are discussed in the Company's most recently filed 10-K. -11- 12 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 20, 1998. (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 Aldo Papone Crandall Close Bowles Donald S. Perkins John L. Clendenin Robin B. Smith Leroy S. Close Sherwood H. Smith, Jr. Charles W. Coker Stewart Turley John H. McArthur (c)
Description of Matter Voted Upon For Against or Abstentions Withheld (i) Annual election of directors: John F. Akers 38,405,246 285,334 Crandall Close Bowles 38,622,779 67,801 John L. Clendenin 38,640,341 50,239 Leroy S. Close 38,662,789 67,791 Charles W. Coker 38,642,147 48,433 John H. McArthur 38,640,535 50,045 Aldo Papone 38,640,645 49,935 Donald S. Perkins 38,641,209 49,371 Robin B. Smith 38,640,163 50,417 Sherwood H. Smith, Jr. 38,639,992 50,588 Stewart Turley 38,642,455 48,125 (ii) Ratification of the 38,659,236 19,585 11,759 appointment of Deloitte & Touche as the Company's auditors
(d) N/A -12- 13 ITEM 6 - EXHIBITS The following exhibits are filed as part of this report: (27) Financial Data Schedule -13- 14 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 19, 1998 -14- 15 EXHIBIT INDEX Item - ---- (27) Financial Data Schedule (for SEC purposes) -15- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SPRINGS INDUSTRIES, INC., FOR THE QUARTER ENDED APRIL 4, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JAN-02-1999 JAN-04-1998 APR-04-1998 399 0 347,697 0 457,066 857,458 1,355,824 816,055 1,479,190 292,885 220,429 0 0 4,834 760,202 1,479,190 556,736 556,736 455,059 455,059 0 0 5,554 (5,004) (1,905) (3,099) 0 0 0 (3,099) (0.16) (0.16)
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