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 July 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. 6,877,638 shares of
Common Stock as of July 28, 1995.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
Condensed Consolidated Balance Sheets at
July 1, 1995 and September 30, 1994 ..................... 1
Condensed Consolidated Statements of Income for the
Three Months Ended July 1, 1995 and June 30, 1994 ....... 3
Condensed Consolidated Statements of Income for the
Nine Months Ended July 1, 1995 and June 30, 1994 ........ 4
Condensed Consolidated Statements of Cash Flows for
the Nine Months Ended July 1, 1995 and June 30, 1994 .... 5
Notes to Condensed Consolidated Financial Statements .... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 7
PART II - OTHER INFORMATION
Item 1: Legal Proceedings ............................. 10
Item 2: Changes in Securities ......................... 10
Item 3: Defaults upon Senior Securities ............... 10
Item 4: Submission of Matters to a Vote of Security
Holders ....................................... 10
Item 5: Other Information ............................. 10
Item 6: Exhibits and Reports on Form 8-K .............. 10
Signature ............................................... 11
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
July 1, September 30,
1995 1994
----------- --------------
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
Cash ...................................... $ 1,073 $ 967
Accounts receivable, less
allowance for doubtful accounts ......... 41,362 35,757
Inventories (Note 2) ...................... 75,228 44,720
Prepaid expenses and other
current assets ....................... 2,319 4,963
-------- --------
Total current assets ................. 119,982 86,407
PROPERTY, PLANT AND EQUIPMENT,
at cost, less accumulated
depreciation and amortization ............. 36,469 30,435
FUNDS RESTRICTED FOR CAPITAL PROJECTS .............. 2,518 2,342
GOODWILL ........................................... 423 435
OTHER ASSETS ....................................... 1,392 1,298
-------- --------
$160,784 $120,917
======== ========
<FN>
See notes to condensed consolidated financial statements
</FN>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
July 1, September 30,
1995 1994
(Unaudited) (Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable 29,000 $ ---
Current portion of long term debt
and capital lease obligations 4,755 5,377
Accounts payable 11,167 10,485
Accrued liabilities 8,606 9,660
------- -------
Total current liabilities 53,528 25,522
LONG TERM DEBT AND CAPITAL
LEASE OBLIGATIONS 23,945 17,133
DEFERRED INCOME TAXES 2,693 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,
6,998,038 and 6,960,821 shares
issued and outstanding at July 1,
1995 and September 30, 1994,
respectively 1,750 1,740
Other shareholders' equity 78,868 74,282
-------- --------
$160,784 $120,917
======== ========
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE
>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
THREE MONTHS ENDED,
July 1, June 30,
1995 1994
-------- --------
Net sales $ 45,548 $ 61,165
Cost of sales 36,657 54,460
-------- --------
Gross profit 8,891 6,705
Selling, general and administrative
expenses 4,629 4,820
-------- --------
Income from operations 4,262 1,885
Interest expense, net of interest
income of $47 in 1995 and $104
in 1994 (1,044) (1,080)
-------- --------
Income before provision for
income taxes 3,218 805
Provision for income taxes 1,102 322
-------- --------
Net income $ 2,116 $ 483
========= ========
Net income per share (Note 3) $.30 $.07
========= ========
<FN>
See notes to condensed consolidated financial statements.
</FN>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
NINE MONTHS ENDED,
July 1, June 30,
1995 1994
-------- --------
Net sales $ 137,606 $139,569
Cost of sales 110,864 120,658
--------- ---------
Gross profit 26,742 18,911
Selling, general and administrative
expenses 15,351 13,918
--------- ---------
Income from operations 11,391 4,993
Interest expense, net of interest
income of $232 in 1995 and $203
in 1994 (2,402) (3,055)
--------- ---------
Income before provision for
income taxes 8,989 1,938
Provision for income taxes 3,386 775
--------- ---------
Net income $ 5,603 $ 1,163
========= =========
Net income per share (Note 3) $.80 $.17
========= =========
<FN>
See notes to condensed consolidated financial statements.
</FN>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
NINE MONTHS ENDED,
July 1, June 30,
1995 1994
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,603 $ 1,163
Adjustments to reconcile net income to
cash (used in) provided by
operating activities:
Depreciation and amortization 3,949 3,954
Provision for losses on accounts receivable 450 (30)
Increase in deferred income taxes 453 1,785
Other 36 (70)
Change in assets and liabilities (34,897) (759)
--------- ---------
Net cash (used in) provided by
operating activities (24,406) 6,043
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (9,959) (4,245)
Decrease (increase)in equipment
lease deposits 408 (329)
Proceeds from sale of property, plant
and equipment 57 222
--------- ---------
Net cash used in investing activities (9,494) (4,352)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings 30,000 10,000
Payment of short-term borrowings (1,000) (10,000)
Proceeds from issuance of long term debt 11,000 119
Purchase of treasury shares (1,339) ---
Sale of common stock 331 21
Increase in funds restricted
for capital projects (176) (148)
Payment of long term debt and capital
lease obligations (4,810) (4,349)
--------- ---------
Net cash provided by (used in)
financing activities 34,006 (4,357)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 106 (2,666)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 967 6,716
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,073 $ 4,050
========= =========
<FN>
See notes to condensed consolidated financial statements.
</FN>
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 nine month periods ended July 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:
July 1, Sept. 30,
1995 1994
------- ---------
Finished goods ................. $52,885 $31,754
Work in process ................. 17,150 10,249
Raw materials and supplies ...... 5,193 2,717
------- -------
$75,228 $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 6,953,171
and 6,980,405 for the three months ended July 1, 1995 and June 30, 1994,
respectively and 7,002,833 and 6,968,354 for the nine months ended July 1, 1995
and June 30, 1994, respectively.
(4) Fiscal Year End
Effective October 1, 1994, the Company changed its year end from a
calender 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 calender quarter.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended July 1, 1995 Compared to Three Months Ended June 30,
1994.
Net sales for the three months ended July 1, 1995 were $45.5 million as
compared to $61.2 million in the comparable period of the prior year, a decrease
of $15.7 million or 25.7%. The decrease was due to a reduction in customer
orders, partially offset by net price increases over the last 12 months of 9.6%.
Net sales of activewear were $37.6 million for the three months ended
July 1, 1995 as compared to $52.2 million in the comparable period of the prior
year, a decrease of $14.6 million or 28.0%. Net sales of T-shirts and
sweatshirts decreased by $13.4 million and $1.2 million, respectively. These
decreases were principally due to decreased unit sales of T-shirts of $17.4
million and sweatshirts of $1.3 million, partially offset by $4.3 million of
additional revenue attributable to increased prices. The lower sales were due to
reduced demand from distributors who were over-inventoried at the beginning of
the quarter, and to a continuing shortening of the inventory pipeline between
manufacturers and distributors. Although the Company had announced a rebate
program in early May to help promote demand, this program did not have a
material affect on sales.
Net sales of infantswear were $7.9 million for the three months ended
July 1, 1995 as compared to $9.0 million in the comparable period of 1994, a
decrease of $1.1 million or 12.2%. 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 July 1, 1995 was $8.9 million, an
increase of $2.2 million or 32.8% from the comparable period of the prior year.
Gross profit, as a percentage of net sales, increased to 19.5% compared to 11.0%
in the comparable period of the prior year due to the price increases mentioned
above (9.6%) and overall reduced per unit operating cost (3.7%), offset in part
by increased raw material prices (4.8%).
Selling, general and administrative expenses for the three months ended
July 1, 1995 decreased $0.2 million or 4.2% from the comparable period of the
prior year. The reduction was due primarily to reduced costs related to the
reduction in sales.
Interest expense, net of interest income, for the third quarter of 1995
was $1.0 million compared to $1.1 million for the corresponding period last
year. The decrease was due primarily to lower average borrowings.
Nine Months Ended July 1, 1995 Compared to Nine Months Ended June 30,
1994.
Net sales for the nine months ended July 1, 1995 were $137.6 million as
compared to $139.6 million in the prior year, a decrease of $2.0 million or
1.4%. The decrease was due to a reduction in customer orders, offset by net
price increases over the last 12 months of 6.5%.
Net sales of activewear were $113.9 million for the nine months ended
July 1, 1995 compared to $113.8 million in the prior year, an increase of $0.1
million or 0.1%. Net sales of T-shirts decreased by $1.4 million due to reduced
unit sales of $9.9 million, substantially offset by the effect of increased
prices of $8.5 million. Net sales of sweatshirts increased by $1.5 million due
to increased unit sales of $1.1 million and increased prices of $0.4 million.
Net sales of infantswear were $23.7 million for the nine months ended
July 1, 1995 as compared to $25.8 million in the comparable period of the prior
year, a decrease of $2.1 million or 8.1%. 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 nine months ended July 1, 1995 was $26.7 million,
an increase of $7.8 million or 41.3% from the comparable period of the prior
year. Gross profit as a percentage of net sales increased to 19.4% compared to
13.5% in the comparable period of the prior year due to the price increases
mentioned above (6.5%) and overall reduced per unit operating costs (2.5%),
offset in part by increased raw material prices (3.1%).
Selling, general and administrative expenses for the nine months ended
July 1, 1995 increased $1.5 million or 10.8% 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 and 1996.
Interest expense, net of interest income, for the nine months ended
July 1, 1995 was $2.4 million compared to $3.1 million for the corresponding
period last year. The decrease was due primarily to lower average borrowings.
Liquidity and Capital Resources
Working capital was $66.5 million at July 1, 1995 compared to $60.9
million at September 30, 1994. The increase was due primarily to higher
receivables and inventories. 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 July 1, 1995, there were $29.0 million outstanding under the
uncommitted short-term lines. At July 1, 1995, there was $11,000,000 outstanding
under the $25,000,000 bank credit facility. These bank lines were used to
finance planned, seasonal increases in accounts receivable and inventories. 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 July 1, 1995 an aggregate 120,400 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 $1,339,000.
The previously announced 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
estimated cost of the project has been increased from $16,000,000 to $18,700,000
due to installation of higher technologically advanced equipment than was
originally planned. 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.
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
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
None
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: August 7, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ONEITA INDUSTRIES, INC.
FORM 10Q
EXHIBIT INDEX
Exhibit
Number Exhibit Description
------- -------------------
27 Financial Data Schedule
27 Financial Data Schedule