UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, S.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 1-9734
ONEITA INDUSTRIES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 57-0351045
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4130 FABER PLACE DRIVE, SUITE 200, CHARLESTON, SC 29405
(Address of principal executive offices) (Zip Code)
(803) 529 - 5225
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing for
the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 6,867,821 shares of Common
Stock as of April 28, 1995.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
--------- -----------
Condensed Consolidated Balance Sheets at
April 1, 1995 and September 30, 1994 .................... 1
Condensed Consolidated Statements of Income for the
Three Months Ended April 1, 1995 and March 31, 1994 ..... 3
Condensed Consolidated Statements of Income for the
Six Months Ended April 1, 1995 and March 31, 1994 ....... 4
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended April 1, 1995 and March 31, 1994 ... 5
Notes to Condensed Consolidated Financial Statements .... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 8
PART II - OTHER INFORMATION
Item 1: Legal Proceedings ............................. 11
Item 2: Changes in Securities ......................... 11
Item 3: Defaults upon Senior Securities ............... 11
Item 4: Submission of Matters to a Vote of Security
Holders ....................................... 11
Item 5: Other Information ............................. 12
Item 6: Exhibits and Reports on Form 8-K .............. 12
Signature ....................................................... 13
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
April 1, September 30,
1995 1994
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
Cash $ 2,333 $ 967
Accounts receivable, less
allowance for doubtful accounts 47,745 35,757
Inventories (Note 2) 60,279 44,720
Prepaid expenses and other
current assets 3,177 4,963
------- -------
Total current assets 113,534 86,407
PROPERTY, PLANT AND EQUIPMENT,
at cost, less accumulated
depreciation and amortization 33,093 30,435
FUNDS RESTRICTED FOR CAPITAL PROJECTS 2,479 2,342
OTHER ASSETS 1,777 1,733
------- -------
$150,883 $120,917
======== ========
[FN]
See notes to condensed consolidated financial statements
[/FN]
1
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
April 1, September 30,
1994 1994
-------- -------------
(Unaudited) (Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 26,500 $ ---
Current portion of long term debt
and capital lease obligations 4,829 5,377
Accounts payable 9,490 10,485
Accrued liabilities 13,651 9,660
------- -------
Total current liabilities 54,470 25,522
LONG TERM DEBT AND CAPITAL
LEASE OBLIGATIONS 14,811 17,133
DEFERRED INCOME TAXES 2,310 2,240
SHAREHOLDERS' EQUITY:
Preferred Stock, Series I, par
value $1.00 per share, 2,000,000
shares authorized, none issued --- ---
Common Stock, $.25 par value,
15,000,000 shares authorized,
6,997,838 and 6,960,821 shares
issued and outstanding at April 1,
1995 and September 30, 1994,
respectively 1,749 1,740
Other shareholders' equity 77,543 74,282
------- -------
$150,883 $120,917
======== ========
[FN]
See notes to condensed consolidated financial statements.
[/FN]
2
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
THREE MONTHS ENDED,
April 1, March 31,
1995 1994
------- ------
Net sales $ 51,952 $ 44,179
Cost of sales 41,965 37,516
-------- --------
Gross profit 9,987 6,663
Selling, general and administrative
expenses 5,673 5,059
-------- --------
Income from operations 4,314 1,604
Interest expense, net of interest
income of $57 in 1995 and $32
in 1994 839 1,059
-------- --------
Income before provision for
income taxes 3,475 545
Provision for income taxes 1,366 218
-------- --------
Net income $ 2,109 $ 327
======== ========
Net income per share (Note 3) $.30 $.05
======== ========
[FN]
See notes to condensed consolidated financial statements.
[/FN]
3
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
SIX MONTHS ENDED,
April 1, March 31,
1995 1994
------- ------
Net sales $ 92,058 $ 78,404
Cost of sales 74,207 66,198
------- -------
Gross profit 17,851 12,206
Selling, general and administrative
expenses 10,722 9,098
------- -------
Income from operations 7,129 3,108
Interest expense, net of interest
income of $185 in 1995 and $99
in 1994 1,358 1,975
------- -------
Income before provision for
income taxes 5,771 1,133
Provision for income taxes 2,284 453
------- -------
Net income $ 3,487 $ 680
======== ========
Net income per share (Note 3) $.50 $.10
==== ====
[FN]
See notes to condensed consolidated financial statements.
[/FN]
4
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
SIX MONTHS ENDED,
April 1, March 31,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,487 $ 680
Adjustments to reconcile net income to
cash used in operating activities:
Depreciation and amortization 2,808 2,572
Provision for losses on accounts receivable 300 166
Increase in deferred income taxes 70 396
Other 54 83
Change in assets and liabilities (23,595) (9,739)
-------- -------
Net cash used in operating activities (16.876) (5,842)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (5,451) (3,402)
Decrease (increase)in equipment
lease deposits 408 (95)
Proceeds from sale of property, plant
and equipment 9 198
------- -------
Net cash used in investing activities (5,034) (3,299)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings 26,500 6,000
Proceeds from issuance of long term debt --- 119
Purchase of treasury shares (547) ---
Sale of common stock 330 21
Increase in funds restricted
for capital projects (137) (64)
Payment of long term debt and capital
lease obligations (2,870) (2,377)
------- -------
Net cash provided by financing activies 23,276 3,699
------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,366 (5,442)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 967 6,716
------- -------
CASH AT END OF PERIOD $ 2,333 $ 1,274
======= =======
[FN]
See notes to condensed consolidated financial statements.
[/FN]
5
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation -
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 generally accepted accounting principles for complete
financial statements. The balance sheet at September 30, 1994 has been derived
from the audited financial statements at that date. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month and six month periods ended April 1, 1995 are not necessarily
indicative of the results that may be expected for the year ended September 30,
1995. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report to shareholders
for the year ended September 30, 1994.
(2) Inventories -
Inventories, stated at the lower of cost (primarily last-in, first-out) or
market, are comprised of the following:
April 1, September 30,
1995 1994
------- -------------
Finished ...................... $41,959 $31,754
Work in p...................... 14,589 10,249
Raw materials and supplies..... 3,731 2,717
------- -------
$60,279 $44,720
======= =======
(3) Net Income Per Share -
Earnings per share are calculated using the weighted average number of
shares of common stock, and where dilutive, common stock equivalents outstanding
during each period. Shares used in computing per share results were 7,029,326
and 6,962,625 for the three months ended April 1, 1995 and March 31, 1994,
respectively and 7,027,664 and 6,962,328 for the six months ended April 1, 1995
and March 31, 1994, respectively.
6
(4) Fiscal Year End
Effective October 1, 1994, the Company changed its year end from a calendar
year ending September 30 to a 52/53 week year ending on the closest Saturday to
September 30. Accordingly, the interim periods will also be reported on the
Saturday closest to the calendar quarter.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Three Months Ended April 1, 1995 Compared to Three Months Ended March 31,
1994.
Net sales for the three months ended April 1, 1995 were $52.0 million as
compared to $44.2 million in the comparable period of the prior year, an
increase of $7.8 million or 17.6%. The increase was due to an increase in
customer orders and average price increases over the last 12 months of
approximately 6%.
Net sales of activewear were $43.3 million for the three months ended April
1, 1995 as compared to $34.5 million in the comparable period of the prior year,
an increase of $8.8 million or 25.5%. Net sales of T-shirts and sweat shirts
increased by $7.7 million and $1.1 million, respectively. These increases were
principally due to increased unit sales of T-shirts of $4.8 million and sweat
shirts of $1.0 million, as well as $3.0 million of additional revenue
attributable to increased prices.
Net sales of infantswear were $8.7 million for the three months ended April
1, 1995 as compared to $9.7 million in the comparable period of 1994, a decrease
of $1.0 million or 10.3%. The reduced sales are principally the result of lower
unit sales of higher priced playwear lines caused by increased competition
including promotional pricing.
Gross profit for the quarter ended April 1, 1995 was $10.0 million, an
increase of $3.3 million or 49.3% from the comparable period of the prior year.
Gross profit, as a percentage of net sales, increased to 19.2% compared to 15.1%
in the comparable period of the prior year due to the price increases mentioned
above (6.0%) and overall reduced per unit operating costs (0.8%), offset in part
by increased raw material prices (2.7%).
Selling, general and administrative expenses for the three months ended
April 1, 1995 increased $1.0 million or 19.5% from the comparable period of the
prior year, due to a higher number of selling and administrative personnel and
other related personnel costs. The increased personnel were added to support
anticipated increased sales in fiscal 1995.
8
Interest expense, net of interest income, for the first quarter of 1995 was
$0.8 million compared to $1.1 million for the corresponding period last year.
The decrease was due primarily to lower average borrowings.
Six Months Ended April 1, 1995 Compared to Six Months Ended March 31, 1994.
Net sales for the six months ended April 1, 1995 were $92.1 million as
compared to $78.4 million in the prior year, an increase of $13.7 million or
17.5%. The increase was due to an increase in customer orders and average price
increases over the last 12 months of approximately 4.9%
Net sales of activewear were $76.3 million for the six months ended April
1, 1995 compared to $61.6 million in the prior year, an increase of $14.7
million or 23.9%. Net sales of T-shirts and sweatshirts increased by $12.0
million and $2.7 million, respectively. These increases were principally due to
increased unit sales of T-shirts of $7.6 million and sweatshirts of $2.4
million, as well as $4.5 million of additional revenue attributable to increased
prices.
Net sales of infantswear were $15.8 million for the six months ended April
1, 1995 as compared to $16.8 million in the comparable period of the prior year,
a decrease of $1.0 million or 6.0%. The reduced sales are principally the result
of lower unit sales of higher priced playwear lines caused by increased
competition including promotional pricing.
Gross profit for the six months ended April 1, 1995 was $17.9 million, an
increase of $5.7 million or 46.7% from the comparable period of the prior year.
Gross profit as a percentage of net sales increased to 19.4% compared to 15.6%
in the comparable period of the prior year due to the price increases mentioned
above (4.9%) and overall reduced per unit operating costs (1.1%), offset in part
by increased raw material prices (2.2%)
Selling, general and administrative expenses for the six months ended April
1, 1995 increased $1.6 million or 17.9% from the comparable period of the prior
year, due to a higher number of selling and administrative personnel and other
personnel related costs. The increased personnel were added to support
anticipated increased sales in fiscal 1995.
Interest expense, net of interest income, for the six months ended April 1,
1995 was $1.4 million compared to $2.0 million for the corresponding period last
year. The decrease was due primarily to lower average borrowings.
9
The Company announced in May 1995 the implementation of a rebate program to
be effective for most of the third quarter ending July 1, 1995, under which
screenprinters will be eligible for certain rebates. The impact on third quarter
pretax profits is estimated to be between $1.5 and $2.0 million.
Liquidity and Capital Resources
- -------------------------------
Working capital was $59.1 million at April 1, 1995 compared to $60.9
million at September 30, 1994. The decrease was due primarily to current
maturities of long-term debt. The Company has available bank lines of credit of
approximately $55.0 million, including $30.0 million of uncommitted short-term
lines of credit and $25.0 million under a bank credit facility which provides
for interest at approximately the lending banks' prime rates and becomes due
between 1997 and 2000. At April 1, 1995, there were $26.5 million outstanding
under the uncommitted short-term lines. These bank lines were used to finance
planned, seasonal increases in accounts receivable and inventories. At April 1,
1995, there were no borrowings outstanding under the $25,000,0000 bank credit
facility. The Company believes that its working capital and bank lines are
sufficient to meet its liquidity needs for at least the next twelve months.
Through April 1, 1995 an aggregate 61,900 shares of the Company's Common
Stock has been purchased in connection with a previously announced 350,000 share
Stock Repurchase Plan at a total cost of $697,000.
The previously announced $16,000,000 textile expansion project at the
Fayette, Alabama facility is being accelerated in order to provide incremental
production capacity within two years rather than the originally planned three
years. The Company intends to finance this accelerated project through a debt
financing which it expects to consummate during 1995; however, no assurance can
be given that such debt financing will be consummated. In the event that this
debt financing is not consummated in a timely manner, the Company believes that
its available bank credit facility, together with operating leases and funds
generated from operations, would be sufficient to finance this project.
Effects of Inflation
- --------------------
The Company believes that the relatively moderate rates of inflation in
recent years have not had a significant impact on its sales and profitability.
10
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
-----------------
None
Item 2 Changes in Securities
---------------------
None
Item 3 Defaults upon Senior Securities
-------------------------------
None
Item 4 Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Registrant held its Annual Meeting of Stockholders on
February 24, 1995.
(b) Seven directors were elected at the Annual Meeting to
serve until the Annual Meeting of Stockholders in 1996.
The names of these Directors and votes cast in favor of
their election and shares withheld are as follows:
NAME VOTES FOR VOTES WITHHELD
------ --------- --------------
Robert M. Gintel 5,113,091 373,140
Albert Fried, Jr. 5,115,116 371,115
Herbert J. Fleming 5,115,116 371,115
Meyer A. Gross 5,115,273 369,958
Lewis Rubin 5,115,116 371,115
John G. Hudson 5,115,116 371,115
H. Varnell Moore 5,115,116 371,115
In the stockholders approved a proposal to approve and
adopt the Company's Outside Director Stock Option Plan:
VOTES FOR VOTES AGAINST ABSTAIN
--------- ------------- -------
4,834,148 532,429 37,325
11
Item 5 Other Information
-----------------
None
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
10.6 Agreement dated April 3, 1995, between Registrant and
First Union National Bank of South Carolina
10.7 Promissory Note dated April 25, 1995, between Registrant
and National Westminster Bank, USA
10.8 Multiple Disbursement Revolving Note dated January 1,
1995 between Registrant and Trust Company Bank
27 Financial Data Schedules
12
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONEITA INDUSTRIES, INC.
By: /s/ Herbert J. Fleming
------------------------
Herbert J. Fleming
President
By: /s/ James L. Ford
------------------------
James L. Ford
Executive Vice-President
of Finance and
Chief Financial Officer
Date: May 15, 1995
13