-----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, EiANuR23f9Cbwb1WcwRfXjxaMDQnKiAG0tgUhmhGnvvU4+rmP0IEL1b99y4/Lk/V ed0o9N7ZSnX/4Mi/3VbG9A== /in/edgar/work/0000950144-00-013434/0000950144-00-013434.txt : 20001114 0000950144-00-013434.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950144-00-013434 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPRINGS INDUSTRIES INC CENTRAL INDEX KEY: 0000093102 STANDARD INDUSTRIAL CLASSIFICATION: [2211 ] IRS NUMBER: 570252730 STATE OF INCORPORATION: SC FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05315 FILM NUMBER: 759442 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 g65181e10-q.txt SPRINGS INDUSTRIES, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 10-Q For the Quarter Ended September 30, 2000 Commission File Number 1-5315 ------------------------------------- SPRINGS INDUSTRIES, INC. (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 8, 2000, there were 10,776,497 shares of Class A Common Stock and 7,154,763 shares of Class B Common Stock of Springs Industries, Inc. outstanding. ------------------------------------- There are 32 pages in the sequentially numbered, manually signed original of this report. The Index to Exhibits is on Page 22 - 1- 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 12 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 19
PART II - OTHER INFORMATION
ITEM PAGE - ---- ---- 6. EXHIBITS 20 SIGNATURES 21 EXHIBIT INDEX 22
- 2 - 3 PART I - FINANCIAL INFORMATION ITEM 1.- FINANCIAL STATEMENTS SPRINGS INDUSTRIES, INC. Condensed Consolidated Statement of Operations and Retained Earnings (In thousands except per share amounts) (Unaudited)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ------------------------- ----------------------------- SEPT. 30, OCT. 2, SEPT.30, OCT. 2, 2000 1999 2000 1999 --------- --------- ----------- ----------- OPERATIONS Net sales ....................... $ 574,753 $ 562,897 $ 1,741,105 $ 1,691,806 Cost and expenses: Cost of goods sold ............ 466,152 455,895 1,401,313 1,384,304 Selling, general and administrative expenses ..... 69,837 70,677 217,101 209,491 Provision for uncollectible receivables ................. 2,070 1,935 4,367 6,306 Restructuring and realignment expenses ........ -- -- 2,890 -- Year 2000 expenses ............ -- 129 -- 844 Interest expense .............. 8,150 6,741 24,044 19,631 Other income, net ............. (186) (1,506) (129) (3,818) --------- --------- ----------- ----------- Total ......................... 546,023 533,871 1,649,586 1,616,758 --------- --------- ----------- ----------- Income before income taxes ....... 28,730 29,026 91,519 75,048 Income tax provision ............. 10,633 11,038 33,871 28,522 --------- --------- ----------- ----------- Net income .................... $ 18,097 $ 17,988 $ 57,648 $ 46,526 ========= ========= =========== =========== Basic earnings per common share ........................... $ 1.01 $ 1.01 $ 3.22 $ 2.61 ========= ========= =========== =========== Diluted earnings per common share ........................... $ 1.00 $ .99 $ 3.16 $ 2.56 ========= ========= =========== =========== Cash dividends declared per common share: Class A common shares .......... $ .33 $ .33 $ .99 $ .99 ========= ========= =========== =========== Class B common shares .......... $ .30 $ .30 $ .90 $ .90 ========= ========= =========== =========== Basic weighted-average common shares outstanding ....... 17,924 17,878 17,920 17,858 Dilutive effect of stock- based compensation awards ....... 193 318 298 293 --------- --------- ----------- ----------- Diluted weighted-average common shares outstanding ....... 18,117 18,196 18,218 18,151 ========= ========= =========== =========== RETAINED EARNINGS Retained earnings at beginning of period ............ $ 706,325 $ 649,126 $ 678,170 $ 631,943 Net income ...................... 18,097 17,988 57,648 46,526 Cash dividends declared ......... (5,700) (5,684) (17,096) (17,039) --------- --------- ----------- ----------- Retained earnings at end of period ......................... $ 718,722 $ 661,430 $ 718,722 $ 661,430 ========= ========= =========== ===========
See Notes to Condensed Consolidated Financial Statements. - 3 - 4 SPRINGS INDUSTRIES, INC. Condensed Consolidated Balance Sheet (In thousands except share data) (Unaudited)
SEPT. 30, JANUARY 1, 2000 2000 ----------- ----------- ASSETS Current assets: Cash and cash equivalents ...................... $ 2,740 $ 4,210 Accounts receivable, net ....................... 327,999 302,210 Inventories, net ............................... 506,344 479,328 Other .......................................... 37,576 37,669 ----------- ----------- Total current assets ......................... 874,659 823,417 ----------- ----------- Property ......................................... 1,496,589 1,452,877 Accumulated depreciation ....................... (875,305) (827,234) ----------- ----------- Property, net ................................ 621,284 625,643 ----------- ----------- Goodwill and other assets ........................ 131,175 125,938 ----------- ----------- Total ........................................ $ 1,627,118 $ 1,574,998 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings .......................... $ 26,600 $ 35,450 Current maturities of long-term debt ........... 20,809 21,203 Accounts payable ............................... 96,824 106,569 Other accrued liabilities ...................... 134,584 137,199 ----------- ----------- Total current liabilities .................... 278,817 300,421 ----------- ----------- Noncurrent liabilities: Long-term debt ................................. 321,502 283,534 Accrued benefits and deferred compensation .................................. 176,192 179,472 Other .......................................... 36,857 36,700 ----------- ----------- Total noncurrent liabilities ................. 534,551 499,706 ----------- ----------- Shareholders' equity: Class A common stock- $.25 par value (10,860,891 and 10,844,536 shares issued in fiscal 2000 and 1999, respectively) ................................ 2,715 2,712 Class B common stock- $.25 par value (7,154,763 and 7,156,663 shares issued and outstanding in fiscal 2000 and 1999, respectively) ................................ 1,789 1,789 Additional paid-in capital ..................... 103,953 103,584 Retained earnings .............................. 718,722 678,170 Cost of Class A common shares in treasury (91,656 and 95,850 shares in fiscal 2000 and 1999, respectively) ...................... (2,094) (2,181) Accumulated other comprehensive loss ........... (11,335) (9,203) ----------- ----------- Total shareholders' equity ................... 813,750 774,871 ----------- ----------- Total ........................................ $ 1,627,118 $ 1,574,998 =========== ===========
See Notes to Condensed Consolidated Financial Statements. - 4 - 5 SPRINGS INDUSTRIES, INC. Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited)
THIRTY-NINE WEEKS ENDED ------------------------ SEPT. 30, OCT. 2, 2000 1999 --------- --------- Operating activities: Net income ........................................ $ 57,648 $ 46,526 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................... 78,948 74,944 Provision for restructuring and realignment expenses ........................................ 2,890 -- Provision for uncollectible receivables .......... 4,367 6,306 (Gains)losses on sales of property ............... 927 (3,602) Changes in working capital, net .................. (67,973) (85,388) Other, net ....................................... (10,295) (8,735) --------- --------- Net cash provided by operating activities ..... 66,512 30,051 --------- --------- Investing activities: Purchases of property ............................. (70,188) (122,097) Proceeds from sales of property ................... 753 32,222 Net proceeds from sales of businesses ............. -- 36,094 Business acquisitions, net of cash acquired ....... (5,700) (52,298) Principal collected on notes receivable ........... 1,100 6,853 --------- --------- Net cash used by investing activities ......... (74,035) (99,226) --------- --------- Financing activities: Proceeds from (repayments of) short-term borrowings, net .................................. (8,850) 35,929 Proceeds from long-term debt ...................... 150,000 70,000 Repayments of long-term debt ...................... (112,426) (62,954) Proceeds from exercise of stock options ........... 119 1,258 Cash dividends paid ............................... (22,790) (22,706) --------- --------- Net cash provided by financing activities ..... 6,053 21,527 --------- --------- Decrease in cash and cash equivalents ............... (1,470) (47,648) Cash and cash equivalents at beginning of period .... 4,210 48,127 --------- --------- Cash and cash equivalents at end of period .......... $ 2,740 $ 479 ========= =========
See Notes to Condensed Consolidated Financial Statements. - 5 - 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation and Significant Accounting Policies: The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("generally accepted accounting principles") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2000, are not necessarily indicative of the results that may be expected for the year ending December 30, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the annual report on Form 10-K for the year ended January 1, 2000 (the "1999 Annual Report") of Springs Industries, Inc. ("Springs" or the "Company"). Use of Estimates: Preparation of the Company's condensed consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures relating to contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates and assumptions. Reclassifications: Certain prior-year amounts have been reclassified to conform with the fiscal 2000 presentation. Segment Reporting: The Company's operations have been aggregated into one reportable segment in accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Company evaluates its performance based on profit from operations, which is defined as net sales less cost of goods sold, selling, general, and administrative expenses, and the provision for uncollectible receivables. Profit from operations and the reconciliation to the Company's consolidated income before income taxes for the three-month and nine-month periods ended September 30, 2000 and October 2, 1999 were as follows: (in thousands) - 6 - 7
Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------- ----------------------- Sept. 30, Oct. 2, Sept. 30, Oct. 2, 2000 1999 2000 1999 --------- --------- --------- --------- Profit from operations $36,694 $34,390 $118,324 $91,705 Restructuring and realignment expenses - - 2,890 - Year 2000 expenses - 129 - 844 Interest expense 8,150 6,741 24,044 19,631 Other income, net (186) (1,506) (129) (3,818) ------ ------ ------- ------ Income before income taxes $28,730 $29,026 $ 91,519 $75,048 ======= ======= ======== =======
Recently Issued Accounting Standards: In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." This statement revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. SFAS No. 140 is effective for transactions after March 31, 2001, and is effective for recognition and disclosure for fiscal years ending after December 15, 2000. The Company is currently reviewing this guidance in order to determine the impact of this statement, if any, on the consolidated financial statements. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which was amended in June 2000 by the issuance of Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of FASB Statement No. 133)." This statement, as amended, will require the Company to recognize all derivatives on the Consolidated Balance Sheet at fair value, with changes in fair value recognized in earnings unless specific criteria are met for derivatives in qualifying hedging transactions. Changes in fair value of derivatives in qualifying hedging transactions will be reflected in accumulated other comprehensive income and reclassified into earnings at the time the corresponding hedged transaction is reflected in earnings. The Company will be required to adopt SFAS No. 133, as amended, beginning in its 2001 fiscal year. The Company has appointed a cross-functional team to implement SFAS No. 133 and has been reviewing derivative strategies and policies, inventorying freestanding derivatives, reviewing contracts for embedded derivatives, and addressing various other SFAS No. 133 related issues. Management has currently identified cotton futures contracts, natural gas commodity swap contracts and interest rate swap contracts as its only derivative contracts, and management believes these items will qualify for hedge accounting treatment. As noted above, the Company is still reviewing contracts for embedded derivatives, but none have been identified to date. The Company estimates that, as of September 30, 2000, this statement, as amended, will not have a material impact on the Company's consolidated results of operations, financial position, or cash flows. The effect of SFAS No. 133 as of the implementation date on January 1, 2001, however, cannot be determined with certainty at this time because it is subject to the market values of derivative instruments and related hedged items held at the implementation date, as well as continuing interpretive guidance being issued by the FASB. - 7 - 8 2. Accounts Receivable: The Company performs ongoing credit evaluations of its customers' financial conditions and, typically, requires no collateral from its customers. The Company's reserve for doubtful accounts was $11.4 million at September 30, 2000, compared to $9.7 million at January 1, 2000. The increase in the reserve for doubtful accounts at September 30, 2000, reflects a year-to-date provision for doubtful accounts of $4.4 million and net write-offs of approximately $2.7 million for previously reserved accounts. The Company's reserve for doubtful accounts was $14.8 million at October 2, 1999, compared to $11.7 million at January 2, 1999. The increase in the reserve for doubtful accounts at October 2, 1999, reflects a year-to-date provision for doubtful accounts of $6.3 million and net write-offs of approximately $3.2 million for previously reserved accounts. 3. Inventories: Inventories are summarized as follows: (in thousands)
Sept. 30, January 1, 2000 2000 --------- --------- Standard cost (which approximates current cost): Finished goods $ 338,764 $ 328,383 In process 196,772 181,323 Raw materials and supplies 55,399 64,293 --------- --------- 590,935 573,999 Less LIFO reserve (84,591) (94,671) --------- --------- Total $ 506,344 $ 479,328 ========= =========
4. Acquisitions and Divestiture: On August 7, 2000, the Company acquired certain assets and operations of a Mexican maquiladora, which fabricates window blind treatments, and a related U.S. facility. The purchase price was approximately $5.7 million. The acquisition was accounted for as a purchase in accordance with Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations" ("APB 16"), and the operating results for the acquired business have been included in the Company's consolidated financial statements since the August 7, 2000, acquisition date. The purchase price was allocated to the assets acquired based on their estimated fair value at the date of acquisition. The excess of the purchase price over the fair value of the assets acquired, which totaled $3.9 million, has been recorded as goodwill and is being amortized on a straight-line basis over 20 years. The pro-forma impact on sales and operating profits for the three-month and nine-month periods ended September 30, 2000, and October 2, 1999, were not material. - 8 - 9 During the first quarter of 1999, the Company completed two acquisitions and one divestiture. Please refer to the 1999 Annual Report for further discussion of the following transactions. On January 23, 1999, the Company acquired Regal Rugs, Inc. ("Regal"), an importer and manufacturer of bath and accent rugs. Regal's operating results have been included in the Company's consolidated financial statements beginning as of the January 23, 1999, acquisition date. On January 5, 1999, the Company acquired the remaining 50% interest in American Fiber Industries, LLC ("AFI"), a manufacturer and distributor of bed pillows, mattress pads, down comforters and comforter accessories. AFI's operating results have been included in the Company's consolidated financial statements beginning as of the January 5, 1999, acquisition date. Effective March 31, 1999, the Company sold its UltraFabrics business. First-quarter 1999 sales and pretax operating profit for the UltraFabrics business were not material. 5. Restructuring and Realignment Expenses: In the second quarter of 2000, the Company adopted a plan to phase out production and close plants in Griffin and Jackson, Georgia, which manufactured certain baby products, and to phase out yarn production for terry towels at its No. 2 plant in Griffin, beginning in August 2000. The Company recorded a pretax charge of $2.9 million, which included a $2.4 million accrual for severance costs arising from the elimination of an estimated 389 hourly and 37 salaried manufacturing positions, a $0.3 million impairment charge for machinery and equipment to be sold (impairment was determined by comparing the net book value against estimated sales value less costs to sell), and a $0.2 million accrual for estimated idle plant costs. These charges relate primarily to the baby products facilities since costs related to the terry yarn facility were not significant. The Company expects to complete the restructuring plan by the end of the first quarter of fiscal 2001. The following represents changes in the restructuring accruals since the adoption of the plan: (in millions)
Idle Severance Asset Plant Accrual Impairment Costs ------- ---------- ----- Original accrual as of July 1, 2000 $ 2.4 $ 0.3 $ 0.2 Cash payments (0.6) -- (0.2) Charged against assets -- (0.3) -- ----- ----- ----- Accrual balance as of September 30, 2000 $ 1.8 $ 0.0 $ 0.0 ===== ===== =====
- 9 - 10 6. Goodwill: The Company had net goodwill of $62.0 million and $60.2 million at September 30, 2000, and January 1, 2000, respectively. These amounts are net of accumulated amortization of $15.7 million at September 30, 2000, and $13.6 million at January 1, 2000. See Note 4, Acquisitions and Divestiture, for a description of the goodwill from the fiscal 2000 acquisition. 7. Accrued Benefits and Deferred Compensation: The long-term portion of accrued benefits and deferred compensation was comprised of the following: (in thousands)
Sept.30, January 1, 2000 2000 -------- -------- Postretirement medical benefit obligation $ 58,913 $ 62,097 Deferred compensation 66,372 68,132 Other employee benefit obligations 50,907 49,243 -------- -------- Total $176,192 $179,472 ======== ========
The liabilities are long term in nature and will be paid over time in accordance with the terms of the plans. 8. Financing Arrangements: For the nine-month period ended September 30, 2000, the Company borrowed an additional $55.0 million through its existing long-term revolving credit agreement, which will expire in December 2002. The LIBOR-based weighted-average interest rate on this agreement was 6.9 percent as of September 30, 2000. 9. Comprehensive Income: Comprehensive income was $16.7 million and $17.9 million for the three-month periods and $55.5 million and $47.2 million for the nine-month periods ended September 30, 2000, and October 2, 1999, respectively. Net income differed from comprehensive income due to foreign currency translation adjustments. 10. Income Taxes: The Company's provision for income taxes for fiscal 2000 is based on an estimated 37 percent effective tax rate, compared to 38 percent during fiscal 1999. This change is due to the Company's ongoing tax planning strategies and management of tax rates in various jurisdictions. 11. Contingencies: As disclosed in its 1999 Annual Report, Springs is involved in certain administrative proceedings governed by environmental laws and regulations, including proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act. The potential costs to the Company related to all of these environmental matters are uncertain due to such factors as: the unknown magnitude of possible - 10 - 11 pollution and cleanup costs; the complexity and evolving nature of governmental laws and regulations and their interpretations; the timing, varying costs and effectiveness of alternative cleanup technologies; the determination of the Company's liability in proportion to other potentially responsible parties; and the extent, if any, to which such costs are recoverable from insurers or other parties. In connection with these proceedings, the Company estimates the range of possible losses to be between $6.2 million and $14.4 million and has accrued an undiscounted liability of approximately $10.0 million as of September 30, 2000, which represents management's best estimate of Springs' probable liability concerning all known environmental matters. Management believes the $10.0 million will be paid out over the next 15 years. This accrual has not been reduced by any potential insurance recovery to which the Company may be entitled regarding environmental matters. Environmental matters include a site listed on the United States Environmental Protection Agency's ("EPA") National Priority List where Springs is the sole responsible party. Springs, the EPA and the United States Department of Justice have executed a consent decree related to this site. Soil cleanup was completed in 1993, subject to final approval by the EPA, and the approved EPA groundwater remedy began in 1996. There are no other known sites which the Company presently believes may involve material expenditures. Springs is also involved in various 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. - 11 - 12 ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Springs Industries, Inc. ("Springs" or "the Company") is engaged in manufacturing, marketing and selling home furnishings products. The Company's product line includes sheets, pillows, pillowcases, bedspreads, comforters, mattress pads, baby bedding and infant apparel, towels, shower curtains, bath and accent rugs, other bath fashion accessories, over-the-counter home-sewing fabrics, drapery hardware, and hard and soft decorative window fashions. The Company's emphasis on the home furnishings market has developed into three strategic initiatives: focus on key accounts; brand investment and expansion; and manufacturing and purchasing efficiencies. These initiatives commenced in 1998 and continue to be enhanced and expanded. In June 2000, the Company announced a restructuring plan to reduce certain production costs and in August 2000 began to phase out production and close plants in Griffin and in Jackson, Georgia, which manufacture certain baby products. The Company also began to phase out yarn production at the Griffin, Georgia terry towel plant No. 2 in August 2000, and transfer that production to the Company's Griffin plant No. 5 and Hartwell, Georgia facilities. As a result of this plan, an after-tax restructuring charge of $1.8 million, or $0.10 per diluted share, was recorded in June 2000, principally for severance and idle plant costs. See RESTRUCTURING AND REALIGNMENT EXPENSES for additional information. Consistent with the Company's home furnishings market strategy, Springs acquired two home furnishings businesses in the first quarter of 1999. On January 23, 1999, the Company acquired Regal Rugs, Inc. ("Regal"), an importer and manufacturer of bath and accent rugs, for approximately $35 million. The acquisition was accounted for as a purchase, and Regal's operating results have been included in the Company's consolidated financial statements beginning as of the January 23, 1999, acquisition date. On January 5, 1999, the Company acquired the remaining 50 percent interest in American Fiber Industries, LLC ("AFI"), a manufacturer and distributor of bed pillows, mattress pads, down comforters, and comforter accessories, for approximately $15 million. The Company has accounted for the remaining interest as a purchase, and AFI's operating results have been included in the Company's consolidated financial statements since the January 5, 1999, acquisition date. Please refer to the Company's consolidated financial statements and footnotes thereto included in the annual report on Form 10-K for the year ended January 1, 2000 (the "1999 Annual Report") for additional information. RESULTS OF OPERATIONS Sales Net sales for the third quarter of 2000 were $574.8 million, up 2.1 percent from the third quarter of 1999. This increase was principally driven by the Company's key accounts, with continued sales growth of bedding and bath products to major mass merchants and specialty stores and higher sales of - 12 - 13 hard window fashions products to home improvement retailers. The Company continues to benefit from incremental sales growth over the prior year resulting from its decision to introduce the Springmaid(R) brand to mass merchants. The AFI business also experienced strong increases in sales volume over the prior year. These positive sales trends were partially offset by continued lower sales to department stores and smaller specialty stores, and lower sales of hard window fashions products to distributors and fabricators. During the first nine months of 2000, the Company's net sales were $1.741 billion, up 2.9 percent from a year ago. The year-to-date increase reflects higher sales of bed, bath and hard window fashions products to the Company's key accounts, including higher sales from the AFI business. The growth in the key accounts has been partially offset by lower levels of sales to department stores and smaller specialty stores compared to prior-year periods. Earnings Net income for the third quarter was $18.1 million, or $1.00 per diluted share, compared to $18.0 million, or $0.99 per diluted share in the third quarter of 1999. Third quarter 1999 earnings included Year 2000 expenses of $0.1 million and an after-tax gain on the sale-leaseback of the Company's New York office building of $0.9 million. Third quarter 1999 net income excluding Year 2000 expenses and the New York office building gain would have been $17.2 million, or $0.94 per diluted share. Operating earnings for the third quarter of 2000 were $36.7 million, up 6.7 percent from $34.4 million in the third quarter of 1999. The improvement in operating earnings was due primarily to the increase in sales volume and lower selling, general and administrative expenses. Although operating earnings improved, net income remained flat compared to the third quarter of last year due to higher interest expense in 2000 and the New York office building gain in 1999. The Company's gross margin for the third quarter decreased slightly, from 19.0 percent in 1999 to 18.9 percent in 2000. This decline resulted primarily from a higher level of customer claims and continued efforts to reduce the Company's inventory levels through increased sales of off-quality and closeout merchandise and temporary production curtailments. These items were offset by improvements from purchasing and manufacturing initiatives. The Company's selling, general and administrative expenses for the third quarter of 2000 decreased when compared to the third quarter of 1999. These expenses were lower in the third quarter of 2000 due to a focus on cost containment, and lower expenses for compensation incentives based on overall Company performance. Selling, general and administrative expenses in the third quarter of 1999 also included higher fees for management advisory services related to the Company's development of its manufacturing and purchasing efficiency initiatives. Net income for the first nine months of 2000 was $57.6 million, or $3.16 per diluted share, compared to last year's $46.5 million, or $2.56 per diluted share. Net income before the effects of the restructuring and realignment charge in the second quarter of 2000, and Year 2000 expenses and the New York office building gain in 1999, would have been $59.5 million, or $3.26 - 13 - 14 per diluted share, for the first nine months of 2000, compared to $46.1 million, or $2.54 per diluted share, for the first nine months of 1999. Operating earnings for the first nine months of 2000 were $118.3 million, compared to $91.7 million in the prior year. This increase in operating earnings was driven primarily by the increases in sales volumes and by improvements in gross margin, from 18.2 percent in 1999 to 19.5 percent in 2000. This increase resulted primarily from purchasing efficiencies and improved manufacturing productivity. The gross margin for the first nine months of 2000 excludes the impact of the second-quarter restructuring and realignment charge. Selling, general and administrative expenses were higher in the first nine months of 2000, compared to the first nine months of 1999, due to higher spending for advertising, increased sales and marketing expenses to improve customer service and focus on key accounts, and a second-quarter 2000 state sales and use tax assessment. Selling, general and administrative expenses for 1999 reflect higher fees for management advisory services related to the Company's development of its manufacturing and purchasing efficiency initiatives. The provision for bad debts is lower in 2000 and reflects an overall improvement in the credit quality of the Company's receivables. Income Taxes The Company's provision for income taxes for fiscal 2000 is based on an estimated 37 percent effective tax rate, compared to 38 percent during fiscal 1999. This change is due to the Company's ongoing tax planning strategies and management of tax rates in various jurisdictions and resulted in reductions in the tax provisions of $0.3 million and $0.9 million for the third quarter and first nine months of 2000, respectively. OUTLOOK The Company expects the current sales growth rate over the prior year to improve slightly for the fourth quarter of 2000 through growth in the Company's key accounts, the introduction of new programs in the quarter, and increased sales of off-quality and closeout merchandise. Gross margins for the fourth quarter of 2000 are expected to decline from the third quarter of 2000 due to projected higher sales of off-quality and closeout merchandise and continued curtailments of inventory production. This projected decline in gross margins is expected to be offset somewhat by lower levels of customer claims and the impact of the ongoing manufacturing and purchasing initiatives. In addition to the impact of the above-mentioned items, fourth quarter 2000 gross margins are expected to be lower than the fourth quarter of 1999 due to the favorable impact of the settlement of a $3.2 million business interruption insurance claim recorded in the fourth quarter of 1999. RESTRUCTURING AND REALIGNMENT EXPENSES In the second quarter of 2000, the Company adopted a plan to phase out production and close plants in Griffin and Jackson, Georgia, which manufactured certain baby products, and to phase out yarn production for terry towels at its No. 2 plant in Griffin, Georgia beginning in August 2000. The Company will replace the baby products production by outsourcing from low-cost providers. The terry yarn production at the Griffin No. 2 plant has been transferred to the Company's Griffin No. 5 and Hartwell, Georgia, - 14 - 15 plants, where recent investment in new manufacturing technology allows terry yarn to be produced more competitively. In connection with this plan, the Company recorded a pretax charge of $2.9 million, which included a $2.4 million accrual for severance costs arising from the elimination of an estimated 389 hourly and 37 salaried manufacturing positions, a $0.3 million impairment charge for machinery and equipment to be sold (impairment was determined by comparing the net book value against estimated sales value less costs to sell), and a $0.2 million accrual for estimated idle plant costs. These charges relate primarily to the baby products facilities since costs related to the terry yarn facility were not significant. The expected benefits of this plan include lower product costs and better utilization of existing capacity in other facilities. As a result, the Company expects to realize after-tax savings from lower product costs of $0.9 million for the second half of 2000, and $2.5 million in fiscal 2001. The restructuring plan is expected to be complete by the end of the first quarter of fiscal 2001. The following represents changes in the restructuring accruals since the adoption of the plan: (in millions)
Idle Severance Asset Plant Accrual Impairment Costs ------- ---------- ----- Original accrual as of July 1, 2000 $ 2.4 $ 0.3 $ 0.2 Cash payments (0.6) -- (0.2) Charged against assets -- (0.3) -- ----- ----- ----- Accrual balance as of September 30, 2000 $ 1.8 $ 0.0 $ 0.0 ===== ===== =====
CAPITAL RESOURCES AND LIQUIDITY The Company decreased its short-term borrowings by $8.9 million and borrowed an additional $55.0 million under its existing long-term revolving credit agreement during the first nine months of 2000. These borrowings were used to fund higher levels of accounts receivable and inventory and to reduce various current liabilities. An increase in inventory by $27.0 million over prior year-end occurred primarily as a result of higher levels of grey roll stock inventory and off-quality and closeout merchandise. Accounts payable and other current liabilities decreased by $12.4 million from the end of 1999. The Company has reduced its revised estimate of capital expenditures for 2000 from $145 million to approximately $125 million. Management believes that cash generated by operations and borrowings from bank lines will adequately provide for the Company's cash needs during 2000. ACQUISITION On August 7, 2000, the Company acquired certain assets and operations of a Mexican maquiladora, which fabricates window blind treatments, and a related - 15 - 16 U.S. facility. The purchase price was approximately $5.7 million. The acquisition was accounted for as a purchase in accordance with Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations" ("APB 16"), and the operating results of the acquired business have been included in the Company's consolidated financial statements since the August 7, 2000 acquisition date. The purchase price was allocated to the assets acquired based on their estimated fair value at the date of acquisition. The excess of the purchase price over the fair value of the assets acquired, which totaled $3.9 million, has been recorded as goodwill and is being amortized on a straight-line basis over 20 years. The pro-forma impact on sales and operating profits for the three-month and nine-month periods ended September 30, 2000 and October 2, 1999, were not material. MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS Refer to NEW PRONOUNCEMENTS for a discussion of the impact of Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," on market risk sensitive instruments and positions. Interest Rate Risk: Springs is exposed to interest rate volatility with regard to existing issuances of variable rate debt. The Company uses interest rate swaps to reduce interest rate volatility and funding costs associated with certain debt issues, and to achieve a desired proportion of variable versus fixed-rate debt, based on current and projected market conditions. The fair value of the Company's derivative financial instruments and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations, has not changed materially as of September 30, 2000, relative to the fair value of such instruments at January 1, 2000. Commodity Price Risk: The Company is exposed to price fluctuations related to anticipated purchases of certain raw materials, primarily cotton fiber. Springs uses a combination of forward delivery contracts and exchange-traded futures contracts, 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. The number of futures contracts held and the fair value of those contracts at September 30, 2000, were not material, and near-term changes in the price of cotton fiber are not expected to have a material impact on the Company's future earnings or cash flows. The Company is also exposed to price fluctuations related to anticipated purchases of natural gas. During the third quarter of 2000, Springs entered into a commodity swap contract to fix the price it pays for natural gas for a portion of its expected utilization during the fourth quarter of 2000. The fair value of the contract at September 30, 2000 was not material. Foreign Exchange Risk: The Company is exposed to foreign exchange risks to the extent of adverse fluctuations in certain exchange rates, primarily the Canadian dollar and Mexican peso. The Company does not believe that reasonably possible near-term changes in foreign currencies will result in a material impact on future earnings or cash flows. - 16 - 17 NEW PRONOUNCEMENTS In September 2000, the Financial Accounting Standards Board ("FASB"), issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." This statement revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. SFAS No. 140 is effective for transactions after March 31, 2001, and is effective for recognition and disclosure for fiscal years ending after December 15, 2000. The Company is currently reviewing this guidance in order to determine the impact of this statement, if any, on the consolidated financial statements. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which was amended in June 2000 by the issuance of Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of FASB Statement No. 133)." This statement, as amended, will require the Company to recognize all derivatives on the Consolidated Balance Sheet at fair value, with changes in fair value recognized in earnings unless specific criteria are met for derivatives in qualifying hedging transactions. Changes in fair value of derivatives in qualifying hedging transactions will be reflected in accumulated other comprehensive income and reclassified into earnings at the time the corresponding hedged transaction is reflected in earnings. The Company will be required to adopt SFAS No. 133, as amended, beginning in its 2001 fiscal year. The Company has appointed a cross-functional team to implement SFAS No. 133 and has been reviewing derivative strategies and policies, inventorying freestanding derivatives, reviewing contracts for embedded derivatives, and addressing various other SFAS No. 133 related issues. Management has currently identified cotton futures contracts, natural gas commodity swap contracts and interest rate swap contracts as its only derivative contracts, and management believes these items will qualify for hedge accounting treatment. As noted above, the Company is still reviewing contracts for embedded derivatives, but none have been identified to date. The Company estimates that, as of September 30, 2000, this statement, as amended, will not have a material impact on the Company's consolidated results of operations, financial position, or cash flows. The effect of SFAS No. 133 as of the implementation date on January 1, 2001, however, cannot be determined with certainty at this time because it is subject to the market values of derivative instruments and related hedged items held at the implementation date, as well as continuing interpretive guidance being issued by the FASB. FORWARD LOOKING INFORMATION This Form 10-Q report contains forward-looking statements that are based on management's expectations, estimates, projections, and assumptions. Words such as "expects," "believes," "estimates," and variations of such words and similar expressions are often used to identify such forward-looking statements which include but are not limited to projections of sales, expenditures, savings, completion dates, cash flows, and operating performance. Such forward-looking statements are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guaranties of future performance; instead, they relate to situations with respect to which certain risks and uncertainties are difficult to predict. Actual future results and trends, therefore, may - 17 - 18 differ materially from what is predicted in forward-looking statements due to a variety of factors, including: the health of the retail economy in general, competitive conditions and demand for the Company's products; progress toward the Company's manufacturing and purchasing efficiency initiatives; unanticipated natural disasters; legal proceedings; labor matters; and the availability and price of raw materials which could be affected by weather, disease, energy costs, or other factors. - 18 - 19 ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information called for by this item is incorporated by reference from this Form 10-Q under the caption "Market Risk Sensitive Instruments and Positions" of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations." - 19 - 20 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS The following exhibits are filed as part of this report: (3) Articles of Incorporation and Bylaws (a) Springs Industries, Inc.'s Bylaws, amended and restated as of July 13, 2000. (27) Financial Data Schedule (for SEC purposes) - 20 - 21 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/Jeffrey A. Atkins ----------------------------- Jeffrey A. Atkins Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) DATED: November 13, 2000 - 21 - 22 EXHIBIT INDEX
Item Page No. ---- -------- (3) Articles of Incorporation and Bylaws (a) Springs Industries, Inc.'s Bylaws, amended and restated as of July 13, 2000, filed herewith (9 pages). 23 (27) Financial Data Schedule (for SEC purposes) 32
- 22 - EX-3 2 g65181ex3.txt ARTICLES OF INCORPORATION & BYLAWS 1 EXHIBIT 3 SPRINGS INDUSTRIES, INC. BYLAWS (AMENDED AS OF JULY 13, 2000) ARTICLE I Offices Section 1. The Corporation shall maintain its registered office in the Town of Fort Mill, York County, South Carolina, where it shall maintain a registered agent. The Corporation shall maintain such other offices, both within and without the State of South Carolina, as may be determined from time to time by the Board of Directors or as the business of the Corporation may from time to time require. ARTICLE II Capital Stock Section 1. Certificates. The interest of each shareholder in the Corporation shall be evidenced by certificates in conformity with law and otherwise as the Board of Directors may determine from time to time. Each such certificate shall be signed, either manually or in facsimile, by the Chief Executive Officer, the President or a Vice President and by the Secretary or an Assistant Secretary and may be sealed with the seal of the Corporation or a facsimile thereof. In case any officer who has signed or whose facsimile signature has been placed upon any certificate, shall have ceased to be such before the certificate is issued, it may be issued by the Corporation with the same effect as if such officer had not ceased to be such prior to the time of its issue. Section 2. Transfer of Stock. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and the Corporation shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, regardless of whether it shall have express or other notice thereof, except as may be expressly provided by law. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. Section 3. Lost, stolen or destroyed certificates. In case the record holder of a share or shares of stock of the Corporation claims that the certificate representing such share or shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in its place, but only on delivery to the Corporation of (a) proof satisfactory to the Corporation in the reasonable exercise of its discretion of such loss, destruction or wrongful taking, (b) proof of compliance with the requirements of law relating thereto, and (c) a sufficient indemnity bond or, if in a form approved by the Board of Directors, another adequate form of security sufficient to indemnify the Corporation against loss; provided, however, in no event shall the Corporation be required to issue a replacement certificate unless the record holder requests the Corporation to do so before the Corporation has notice that the certificate or certificates have been acquired by a bona fide purchaser. Section 4. Regulations, transfer agents, and registrars. The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem appropriate concerning the issuance, transfer, conversion, registration, and cancellation of certificates for shares of this Corporation's stock not inconsistent with the laws of South Carolina, the Articles of Incorporation, or these Bylaws. The Board of Directors may appoint one or more transfer agents or registrars, or both, and may require all stock certificates to bear the signature of a transfer agent or of a registrar or both. - 23 - 2 ARTICLE III Shareholders Meetings Section 1. Annual meetings. The annual meeting of the shareholders shall be held at such place, either within or without the State of South Carolina, and at such day and hour, not later than May 31 of each year, as may be determined by the Chairman of the Board or the Board of Directors and designated in the notice of such meeting. In the absence of such a determination, the annual meeting shall be held on the last Monday in April of each year. The business to be transacted at such meeting shall be the election of directors and such other business as may be properly brought before the meeting. Section 2. Special meetings. Special meetings of the shareholders may be called only by the Board of Directors, the Chairman of the Board, or the holders of not less than ten percent (10%) of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. Special meetings of the shareholders may be held at such place, either within or without the State of South Carolina, as the Board of Directors shall designate. If no designation is made by the Board of Directors, the place of meeting shall be the principal office of the Corporation. Section 3. Notice of meetings, waiver. The Secretary or an Assistant Secretary shall give to each shareholder entitled to vote at any meeting, or otherwise entitled by law to notice of such meeting, written notice of the date, time, place, and, in the case of a special meeting, the purpose or purposes of such meeting, together with such other data and information as may be required by law, or as the Board of Directors shall provide. Such notice shall be given personally or by mail or as otherwise permitted by law not less than ten (10) nor more than sixty (60) days before the date of the meeting. Furthermore, such notice shall be deemed to be effective at the earlier of the date when deposited in the United States mail or its receipt by the shareholder. If mailed, such notice shall be directed to the shareholder's address as it appears on the stock transfer books of the Corporation. Such further notice shall be given as may be required by law. A shareholder may waive the notice of meeting by signing, either in person or by proxy, and delivering to the Corporation a written waiver of notice, either before or after such meeting. Attendance of a shareholder at a meeting, in person or by proxy, shall constitute waiver of objection to lack of notice or defective notice of the meeting unless the shareholder, at the beginning of the meeting, objects to holding the meeting or transacting business at the meeting. Except where otherwise required by law, notice need not be given of any adjourned meeting of the shareholders if the new date, time and place are announced at the meeting before adjournment. Section 4. List of shareholders. Prior to any meeting of the shareholders, a complete alphabetical list of the shareholders entitled to notice of such meeting arranged by voting group (and within each voting group by class or series of shares), showing the address of and the number of shares held by each shareholder, shall be prepared by the Secretary or under his direction. Such list shall be available for inspection by any shareholder at the principal office of the Corporation beginning on the date on which notice of the meeting is given for which the list was prepared and continuing through the meeting. Such list shall also be physically present at the place of the meeting and available for inspection by any shareholder at any time during the meeting or any adjournment. Section 5. Quorum. Except as otherwise provided by law or by the Articles of Incorporation, the required quorum for the transaction of any item of business at any meeting of shareholders shall consist of shareholders representing, either in person or by proxy, a majority of the votes entitled to be cast within each voting group entitled to vote on such item of business at such meeting. If a quorum be not present, a meeting of shareholders may be adjourned from time to time by the Chairman of the Board or by a vote of shares having a majority of the shares represented at such meeting, until a quorum is present. Section 6. Voting. Except as otherwise provided in the Articles of Incorporation, at every meeting of the shareholders, each shareholder of the Corporation entitled to vote generally on a matter shall have, as to such matter, one vote per share in person or by properly executed proxy for each share of Class A Common Stock or voting Preferred Stock registered in his name and four votes per share in person or by properly executed proxy for each share of Class B Common Stock registered in his name. In all elections - 24 - 3 of directors, each shareholder shall be entitled to cumulate his votes as provided in the Articles of Incorporation. A shareholder may vote his shares through a proxy appointed by a written instrument signed by the shareholder or by his duly authorized attorney in fact and delivered to the Secretary of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution unless a longer period is expressly provided therein and such longer period is permitted by law. If a quorum exists within a voting group whose vote is required on a matter other than the election of directors, action on such matter by such voting group is approved if the votes cast within such voting group favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law, the Articles of Incorporation, or a bylaw. In electing directors, those candidates who receive the greatest number of votes cast at the meeting shall be deemed elected even though not receiving a majority of votes cast. Section 7. Inspectors of Elections. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act, or if all inspectors or alternates who have been appointed are unable to act at a meeting of shareholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. The inspectors of election shall receive and take charge of all proxies and ballots, shall resolve all questions respecting the validity of proxies, and the qualifications of voters, and shall certify and report the results of the voting to the presiding officer. Section 8. Organization. The Chairman of the Board shall preside over all meetings of shareholders, or if he shall not be present, such person as may be designated by the Board of Directors shall preside. The Secretary of the Corporation, or in his absence an Assistant Secretary, shall act as secretary of every meeting. ARTICLE IV Board of Directors Section 1. General powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities expressly conferred on it by these Bylaws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, by the Articles of Incorporation, or by these Bylaws directed or required to be exercised or done by the shareholders. Directors shall be elected at the annual meeting of the shareholders and shall serve until the next annual meeting or any special meeting of shareholders called earlier for the purpose of election of directors and until their successors shall be elected and qualified or until their earlier resignation or removal. The Board of Directors may appoint a Chairman and one or more Vice Chairmen of the Board. Only members of the Board of Directors are eligible to be the Chairman and Vice Chairmen. Directors, including the Chairman of the Board and any Vice Chairman of the Board, may also serve as officers of the Corporation. Section 2. Number and qualification. The number of directors shall be not less than three (3) nor more than fifteen (15), the exact number of directors within such limits to be fixed and determined from time to time by the vote of the Board of Directors or by a resolution of the shareholders. No decrease in the number of directors fixed by the Board of Directors or the shareholders shall have the effect of shortening the term of any incumbent director. No person who has attained the age of 70 years shall be eligible to be elected or appointed to the Board of Directors. Section 3. Vacancies. Any vacancy on the Board of Directors, including a vacancy resulting from an increase in the number of directors, may be filled by the shareholders at an annual meeting or a special meeting called for that purpose or by a majority of the remaining directors, even if the directors remaining in office constitute less than a quorum of the Board, at any regular or special meeting of the Board. A director so elected shall serve until the next annual meeting of the shareholders or any special - 25 - 4 meeting of shareholders called earlier for the purpose of the election of directors and until his successor shall be elected and qualified or until his earlier resignation or removal. Section 4. Meetings. The regular annual meeting of the Board of Directors shall be held not more than thirty (30) days subsequent to the annual meeting of the shareholders at such time and place as the Chairman of the Board or the Board of Directors shall direct. Other regular meetings of the Board of Directors may be held at such time and place, within or without the State of South Carolina, as the Board by resolution determines. A special meeting of the Board of Directors may be called by the Chairman of the Board or by a majority of the members of the Board of Directors then in office. Each director shall be notified by the Secretary or any Assistant Secretary of the date, time and place of each special meeting of the Board of Directors by written notice addressed to him at his business or residence, by telephone communication or by any other means permitted by law. If mailed, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five days before such meeting. If by overnight carrier service, such notice shall be deemed adequately given when delivered to the carrier at least two days before the meeting; if by telegram, when the telegram is delivered to the telegraph company at least 24 hours before the time set for the meeting; if by facsimile transmission, when transmitted at least 24 hours before the time set for the meeting; or if by telephone, when given at least 12 hours before the time set for the meeting. Notice of a meeting of directors need not be given of regular meetings of the Board of Directors held at times fixed by resolution of the Board of Directors. Notice need not be given of adjourned meetings, whether regular or special. Notice of a meeting of directors need not be given to any director who signs a waiver of notice, either before or after the meeting and such waiver is filed with the minutes or corporate records. Attendance of a director at a meeting shall of itself constitute a waiver of notice of such meeting, unless such director at the beginning of the meeting (or promptly upon his arrival) objects to holding or transacting business at the meeting and does not thereafter vote for or consent to action at the meeting. Unless otherwise required by law, the Articles of Incorporation, or these Bylaws, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice. Section 5. Quorum and required vote. Two-thirds of the directors in office immediately before a meeting begins shall be necessary at any regular or special meeting to constitute a quorum for the transaction of business. If a quorum is not present, a majority of the directors present at any meeting of the Board may adjourn the meeting to a subsequent day and hour without further notice. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 6. Compensation. The Board of Directors may by resolution provide for the payment of compensation to directors for their services as such and for the payment of fees and expenses to directors for attendance at any regular or special meeting of the Board; provided, however, that nothing herein shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 7. Removal. At any meeting of the shareholders called for that purpose, with notice of such purpose given, any director or directors may be removed from office, with or without cause, by a vote of the holders of a majority of the shares then entitled to be cast within each voting group entitled to vote for the election of each such director; provided, however, that no director may be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors or of the class of directors of which he is a part. When any director or directors are removed, new directors may be elected at the same meeting of the shareholders for the unexpired term of the director or directors removed. Section 8. Executive committee. The Board of Directors, by a resolution or resolutions adopted by a majority of the members of the board then in office, may appoint from among its membership an executive committee consisting of such number of directors as may be so designated, but in no event fewer than three (3). Except as otherwise limited by law, the Articles of Incorporation, or by the resolution or resolutions creating or concerning the executive committee, the executive committee shall have full - 26 - 5 power and authorization, in the intervals between meetings of the Board of Directors, to do any and all things in relation to the management and direction of the business and affairs of the Corporation and to exercise any and all powers of the Board of Directors. Section 9. Other committees. Other standing committees may be appointed by the Board of Directors from among its membership by a resolution adopted by a majority of the members of the Board then in office consisting of such number of directors as may be so designated, but in no event fewer than three (3). Except as otherwise limited by law or the Articles of Incorporation, the Board may, by resolution, invest any such committee with such powers, and impose upon it such conditions within the power and authority of the Board, as the Board shall see fit. The Board of Directors may, by a resolution or resolutions adopted by a majority of the members of the Board then in office, designate one or more directors from among its membership as alternate members of the Executive or other committees who may act in the place and stead of any absent member or members at any committee meeting. Section 10. Conduct of committees. Within the powers conferred upon it and as permitted by law, the Executive committee and any other committee appointed by the Board of Directors may adopt rules for the conduct of its own business, shall keep minutes of its meetings, and shall report, as the Board of Directors may request, its activities since the last regular or special meeting of the Board. Any committee appointed by the Board of Directors, including the Executive committee, may be disestablished at any regular or special meeting of the Board or its power and purposes amended as the Board may determine. Section 11. Action of the Board of Directors taken without a meeting. Except as otherwise provided by law, any action which is required or permitted to be taken by the Board of Directors, or any committee thereof, may be taken without a meeting if all of the directors, or all of the committee members, as the case may be, execute either before or after the action is taken a written consent thereto and such consent is filed with the records of the Corporation or with the minutes of the Board or committee. ARTICLE V Officers Section 1. Corporate officers. The Board of Directors shall appoint a Chief Executive Officer, a President, a Secretary, and a Treasurer. The Board of Directors, the Chairman of the Board, or the Chief Executive Officer may appoint one or more Vice Presidents and such other officers as the Board of Directors, the Chairman of the Board or the Chief Executive Officer may determine. Section 2. Division officers. The Board of Directors, the Chairman of the Board or the Chief Executive Officer may appoint officers with titles indicating their responsibilities in operating divisions of the Corporation which may include President, Vice President, and any other divisional titles which may be deemed appropriate. Section 3. Compensation. The compensation of the Chairman of the Board, the Chief Executive Officer, the President, and the Vice Chairman of the Board, shall be determined by the Board of Directors, and unless the Board of Directors shall determine otherwise, the Chairman of the Board or the Chief Executive Officer shall determine the compensation of all other officers of the Corporation. Section 4. Chairman of the Board and Vice Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors, unless the Vice Chairman of the Board has been designated by the Board of Directors to preside at meetings of the Board of Directors. The Chairman of the Board and Vice Chairman of the Board shall perform such other duties as may be determined by the Board of Directors. Section 5. Chief Executive Officer. The Chief Executive Officer shall be responsible for the general management of the affairs of the Corporation and shall perform all such other duties as are properly required of him by the Board of Directors. - 27 - 6 Section 6. President. Unless the President is also appointed Chief Executive Officer, the President shall perform all duties incident to the office of President and such other duties as are properly required of him by the Board of Directors or the Chief Executive Officer. Section 7. Secretary. The Secretary shall issue notices for all meetings of the Board of Directors, any committees thereof, and shareholders and shall cause the minutes of the same to be recorded in books provided for that purpose. He shall have charge of the corporate seal and of all corporate records and shall have the responsibility for authenticating records of the Corporation. He shall make such reports and perform such other duties as the Board of Directors, the Chairman of the Board, or the Chief Executive Officer shall determine are properly required of him and, in general, perform all duties incident to the office of Secretary. Section 8. Treasurer. The Treasurer shall have the custody of all monies and securities of the Corporation. He shall perform such other duties as the Board of Directors, the Chairman of the Board, or the Chief Executive Officer shall determine are properly required of him and, in general, perform all duties incident to the office of Treasurer. Section 9. Duties of other officers. All other officers shall perform such duties as the Board of Directors, the Chairman of the Board, or the Chief Executive Officer may determine are properly required of him. Section 10. Term of office, removal, and vacancies. The appointment of officers by the Board of Directors shall take place annually at the meeting of the Board of Directors following the annual meeting of the shareholders. Officers may also be appointed by the Board of Directors at any regular meeting of the Board or at any special meeting of the Board called for that purpose. Officers permitted to be appointed by the Chairman of the Board or the Chief Executive Officer may be appointed any time. Each officer shall hold office until his successor shall have been duly appointed and shall have qualified or until his death or until he shall resign. Any officer may be removed from office, with or without cause, at any time by a vote of a majority of the members of the Board of Directors then in office. Any officer appointed by the Chairman of the Board or the Chief Executive Officer may be removed from office, with or without cause, at any time by the Chairman of the Board or the Chief Executive Officer. Any vacancy in an office may be filled by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer, except that only the Board of Directors may fill a vacancy in the positions of Chief Executive Officer, President, Secretary or Treasurer. Section 11. Bonds. The Board of Directors, the Chairman of the Board, or the Chief Executive Officer may require any officer, agent, or employee of the Corporation to give bond to the Corporation, with sufficient surety or sureties to insure the faithful performance of such officer's, agent's, or employee's duties. ARTICLE VI Miscellaneous Section 1. Seal. The seal of the Corporation shall be in such form and shall contain such symbols and wording as the Board of Directors may from time to time adopt. Section 2. Buying and selling property. Without limiting the authority granted to officers pursuant to Article V, the Chairman of the Board, Vice Chairman, the Chief Executive Officer, and such other person or persons as the Chairman of the Board, Vice Chairman, the Chief Executive Officer, or the Board of Directors shall designate by name or position, shall have the authority to buy or sell, and to contract to buy or sell, on behalf of the Corporation, any real property of any kind whatsoever. Section 3. Execution of documents. Any contract, negotiable instrument, or other written obligation shall be binding on the Corporation when executed by the Chairman of the Board, Vice - 28 - 7 Chairman, the Chief Executive Officer, or such other person or persons as the Chairman of the Board, Vice Chairman, the Chief Executive Officer, or the Board of Directors shall designate by name or position. Section 4. Deposits. The cash monies of the Corporation shall be deposited in such banks, trust companies, or other depositories as the Chairman of the Board, Vice Chairman, the Chief Executive Officer, the Corporation's principal financial officer, or the Board of Directors shall designate by name and may be withdrawn therefrom only upon the signature of persons designated by the Chairman of the Board, Vice Chairman, the Chief Executive Officer, the Corporation's principal financial officer, or the Board of Directors. Section 5. Voting securities held by the Corporation. Unless the Board of Directors orders otherwise, the Chairman of the Board, Vice Chairman of the Board, the Chief Executive Officer, and such other officer or officers as the Chairman of the Board, Vice Chairman of the Board, or the Chief Executive Officer shall designate in writing, shall each have full power and authority on behalf of the Corporation to attend, to act and to vote at any meeting of the security holders of other corporations in which the Corporation may hold securities and at such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the Corporation might have possessed and exercised if it had been present. Section 6. Dividends and distributions. Before declaring any distributions, the Board of Directors may fix and set aside from time to time such sums over and above paid-in capital of the Corporation as a reserve for any proper purpose, including expansion, maintenance, or contingencies, as the Board may deem desirable, and the Board may from time to time increase, diminish, and vary any such sums so set aside. Section 7. Indemnification. (a) General. The Corporation shall indemnify each person who: (i) is or was a director or officer of the Corporation (including the heirs, executors, administrators or estate of such person); or (ii) while holding a status described in (i) above, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as follows: (A) if such person is or was a director of the Corporation, to the full extent permitted under South Carolina Business Corporation Act of 1988, as amended ("SCBCA") ss.ss.33-8-510 and 520, or as required by the determination of a court pursuant to SCBCA ss.33-8-540; or (B) if such person is or was a non-director officer of the Corporation, to the full extent permitted by SCBCA ss.33-8-560(1) as to mandatory and court-ordered indemnification and otherwise in the same manner and to the same extent that directors are permitted to be indemnified under SCBCA ss.33-8-510. (b) Procedure. (i) Directors. If indemnification is requested by a director pursuant to subsection (a) of this Section 7 under the authority granted by SCBCA ss.33-8-510, then the Board shall cause a determination to be made in one of the manners prescribed in SCBCA ss.33-8-550 as to whether indemnification of the director requesting such indemnification is permissible in the circumstances because such director has met the standard of conduct set forth in SCBCA ss.33-8-510. Upon any such determination that such indemnification is proper or upon mandatory indemnification pursuant to SCBCA ss.33-8-520, the Corporation shall make indemnification payments to the maximum extent permitted by SCBCA ss.33-8-510 or 520. - 29 - 8 (ii) Non-director officers. If indemnification is requested by a non-director officer pursuant to subsection (a) of this Section 7, then the Board shall cause a determination to be made as to whether such indemnification is permissible in the circumstances because such person has met the standard of conduct set forth in SCBCA ss.33-8-510 or as otherwise provided in subsection (a) of this Section 7. Upon the determination by the Board that indemnification of any such non-director officer is proper or upon mandatory indemnification pursuant to SCBCA ss.33-8-520, the Corporation shall make indemnification payments to the maximum extent permitted by SCBCA ss.33-8-520 or 560, as the case may be. (c) Interim payment of expenses. The Corporation shall pay in advance the expenses (including attorneys' fees) of defending a civil or criminal action, suit, or proceeding that are incurred by a person who: (i) is or was a director or officer of the Corporation (including the heirs, executors, administrators or estate of such person); or (ii) while holding a status described in (i) above, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as follows: (A) if such person is or was a director, to the full extent permitted by and in accordance with SCBCA ss.33-8-530; and (B) with respect to non-director officers, in the same manner and to the same extent it is permitted to advance expenses to directors pursuant to SCBCA ss.33-8-530; provided, however, that such person [whether covered by clause (A) or (B) above] shall provide the Corporation with (1) a written affirmation of such person's good faith belief that such person has met the applicable standard of conduct, and (2) a written understanding by such person or on such person's behalf to repay any expenses advanced if it shall ultimately be determined that such person is not entitled to be indemnified against such expenses. (d) Non-officer/non-director agents and employees. The Board may indemnify, or advance expenses in connection with a proceeding that may be the subject of indemnification to, a non-officer or non-director agent or employee of the Corporation if, to the extent and on such terms as the Board may from time to time determine. (e) Subsequent amendment. No amendment, termination, rescission or other elimination of this Section 7 or of any relevant provisions of the SCBCA or any other applicable law shall affect or diminish in any way the rights to indemnification under this Section 7 with respect to any action, suit or proceeding arising out of, or relating to, any event or act or omission occurring or fact or circumstance existing prior to such amendment, termination, rescission or other elimination. (f) Other rights; indemnification agreements; certain limitations. The indemnification and advancement of expenses provided by, or granted pursuant to, other subsections of this Section 7 shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled pursuant to any applicable law (including court-ordered indemnification pursuant to SCBCA ss.33-8-540), to any agreement, or to any vote of shareholders (including a vote pursuant to SCBCA ss.33-8-550) or of disinterested directors or otherwise, both as to action in such person's official capacity and as to action in any other capacity while an officer or director. Nothing contained in this Section 7 shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements which provide indemnification rights and procedures permitted by the SCBCA. Notwithstanding the foregoing or any other provision of the Bylaws, the Corporation's Articles of Incorporation or applicable law, indemnification of a director shall not be permitted (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve gross negligence, intentional misconduct, or a knowing violation of law, (iii) for the types of liability set forth in SCBCA ss.33-8-330, or (iv) for any transaction from which he received an - 30 - 9 improper personal benefit; and indemnification of officers shall not be permitted if inconsistent with public policy. (g) Continuation of right to indemnification. All rights to indemnification under this Section 7 [including those arising pursuant to subsection (e) above] shall continue as to a person who has ceased to be a director or officer, shall inure to the benefit of heirs, executors, administrators and the estate of such person, and shall be deemed to be a contract between the Corporation and each such person or entity. This Section 7 shall be binding upon any successor corporation to the Corporation, whether by way of merger, consolidation, liquidation, dissolution or otherwise. (h) Notice. If the Corporation indemnifies or advances expenses to a director under Section 7(a) in connection with a proceeding by or in right of the Corporation, the Corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next meeting of shareholders. (i) Savings clause. If this Section 7 or any portion of it shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify persons specified in this Section 7 to the full extent permitted by any applicable portion of this Section 7 that shall not have been invalidated and to the full extent permitted by applicable law. ARTICLE VII Amendment Subject to the Articles of Incorporation and the SCBCA, the Bylaws may be amended or repealed at any meeting of the shareholders at which a quorum exists if the votes in favor of the amendment exceed the votes opposed to the amendment, or at any meeting of the Board of Directors of the Corporation at which a quorum exists by an affirmative vote of a majority of the members of the Board of Directors then in office. The shareholders may prescribe that any bylaws adopted by them shall not be altered, amended or repealed by the Board. - 31 - EX-27 3 g65181ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SPRINGS INDUSTRIES, INC., FOR THE QUARTER ENDED SEPTEMBER 30, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-30-2000 JAN-02-2000 SEP-30-2000 2,740 0 327,999 11,371 506,344 874,659 1,496,589 875,305 1,627,118 278,817 321,502 0 0 4,504 809,246 1,627,118 1,741,105 1,741,105 1,401,313 1,401,313 0 4,367 24,044 91,519 33,871 57,648 0 0 0 57,648 3.22 3.16
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