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 December 30, 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. 6,878,506 shares of Common
Stock as of February 12, 1996.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
Condensed Consolidated Balance Sheets at
December 30, 1995 and September 30, 1995 ............... 1
Condensed Consolidated Statements of Income for the
Three Months Ended December 30, 1995 and
December 31, 1994 ...................................... 3
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended December 30, 1995
and December 31, 1994 .................................. 4
Notes to Condensed Consolidated Financial Statements ... 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 6
PART II - OTHER INFORMATION
Item 1: Legal Proceedings ............................ 8
Item 2: Changes in Securities ........................ 8
Item 3: Defaults upon Senior Securities .............. 8
Item 4: Submission of Matters to a Vote of Security
Holders ...................................... 8
Item 5: Other Information ............................ 8
Item 6: Exhibits and Reports on Form 8-K ............. 8
Signature .............................................. 9
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 30, September 30,
1995 1995
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
Cash $ 45 $ 2,749
Refundable income tax --- 2,485
Accounts receivable, less
allowance for doubtful accounts 28,267 29,438
Inventories (Note 2) 83,725 79,968
Prepaid expenses and other
current assets 5,221 4,765
-------- ---------
Total current assets 117,258 119,405
PROPERTY, PLANT AND EQUIPMENT,
at cost, less accumulated
depreciation and amortization 43,596 43,760
NET ASSETS OF PLANTS HELD FOR SALE 1,234 ---
OTHER ASSETS 1,646 1,852
-------- ---------
$163,734 $165,017
-------- ---------
<FN>
See notes to condensed consolidated financial statements
</FN>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 30, September 30,
1995 1995
(Unaudited) (Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 25,000 $ 23,000
Current portion of long term debt
and capital leases 5,266 4,729
Accounts payable 15,002 11,699
Accrued liabilities 5,173 7,073
-------- --------
Total current liabilities 50,441 46,501
LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATIONS 35,453 37,404
DEFERRED INCOME TAXES 3,374 3,272
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,
6,960,821 shares issued and
outstanding at December 30, 1995
and September 30, 1995 1,750 1,750
Other shareholders' equity 72,716 76,090
-------- --------
$163,734 $165,017
-------- --------
<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)
THREE MONTHS ENDED
December 30, December 31,
1995 1994
Net sales $ 35,187 $ 40,106
Cost of sales 34,633 32,242
-------- --------
Gross profit 554 7,864
Selling, general and administrative
expenses 4,693 5,049
Income(loss) from operations (4,139) 2,815
Interest expense, net of interest
income of $64 in 1995 and $118
in 1994 (1,300) (519)
Income (loss) before provision for
income taxes (5,439) 2,296
Provision (benefit)for income taxes (2,065) 918
--------- ---------
Net income (loss) $(3,374) $ 1,378
--------- ---------
Net income (loss) per share $(.49) $.20
(Note 3) --------- ---------
<FN>
See notes to condensed consolidated financial statements.
</FN>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
December 30, December 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(3,374) $1,378
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities:
Depreciation and amortization 1,588 1,359
Provision for losses on accounts receivable --- 150
Increase (decrease) in deferred income taxes 388 (898)
Change in assets and liabilities 30 (1,225)
--------- ---------
Net cash (used in) provided by
operating activities (1,368) 764
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (2,516) (2,215)
Decrease (increase) in equipment
lease deposits 642 (472)
Proceeds from sale of property, plant
and equipment 2 ---
--------- ---------
Net cash used in investing activities (1,872) (2,687)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings 2,000 5,000
Purchase of treasury shares --- (198)
Proceed from issuance of long-term debt 219 ---
Increase in funds restricted
for capital projects --- (74)
Payment of long-term debt and capital
lease obligations (1,633) (1,940)
Other (50) ---
--------- ---------
Net cash provided by
financing activities 536 2,788
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (2,704) 865
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,749 967
--------- ---------
CASH AT END OF PERIOD $ 45 1,832
--------- ---------
<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, 1995 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 period ended December 30, 1995 are not necessarily indicative of the
results that may be expected for the year ended September 28, 1996. 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, 1995.
(2) Inventories -
Inventories, stated at the lower of cost (primarily last-in, first-out) or
market, are comprised of the following:
December 30, September 30,
1995 1995
Finished goods ................. $61,829 $58,537
Work in process ................. 16,866 17,495
Raw materials and supplies ...... 5,030 3,936
------- -------
$83,725 $79,968
(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 6,883,598
and 7,026,002 for the three months ended December 30, 1995 and December 31,
1994, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three months ended December 30, 1995 were $35.2 million
as compared to $40.1 million in the comparable period of the prior year, a
decrease of $4.9 million or 12.2%. The decrease was due to a reduction of
customer orders for T-shirts as well as reduced prices resulting from activewear
promotional pricing.
Net sales of activewear were $27.5 million for the three months ended
December 30, 1995 as compared to $33.0 million in the comparable period of the
prior year, a decrease of $5.5 million or 16.7%. Net sales of T-shirts decreased
by $6.0 million and sweatshirts increased $0.5 million. The T-shirt decrease was
principally due to lower unit sales of T-shirts of $2.7 million as well as $3.3
million of reduced revenues attributable to promotional pricing. Sales of
sweatshirts increased due to increased unit sales.
Net sales of infantswear was $7.7 million for the three months ended
December 30, 1995 compared to $7.1 million last year. The increase was due to
sales of new products.
Gross profit for the quarter ended December 30, 1995 of $0.6 million
decreased $7.3 million from the comparable period of the prior year due to
promotional pricing mentioned above as well as increased operating costs. Gross
profit, as a percentage of net sales, decreased to 1.6% compared to 19.6% in the
comparable period of the prior year due to the price decreases mentioned above
(10.7%), costs associated with reduced production schedules (4.7%) and increased
per unit operating costs (2.6%).
Selling, general and administrative expenses for the three months ended
December 30, 1995 decreased $0.4 million from the comparable period of the prior
year due to lower sales related costs.
Interest expense, net of interest income, for the first quarter of 1995 was
$1.3 million compared to $0.5 million for the corresponding period last year.
The increase was due primarily to higher average borrowings as well as higher
borrowing rates.
Liquidity and Capital Resources
Working capital was $66.8 million at December 30, 1995 compared to $72.9
million at September 30, 1995. The decrease was due primarily to current
maturities of long-term debt and losses from operations.
In order to improve liquidity and strengthen the Company's balance sheet,
the Board of Directors has approved a $75 million refinancing of existing debt,
which includes an $11.25 million equity infusion into the Company through a
rights offering to stockholders. Existing stockholders will be given the
opportunity to maintain their current ownership percentage by receiving the
right to subscribe to shares at $7.00 per share on the basis of one share of
Oneita common stock for each four shares of stock presently held. Avondale
Mills, Inc., the Company's largest raw material supplier and Robert M. Gintel,
the Company's Chairman of the Board, have agreed to subscribe to all shares not
purchased by existing shareholders. In no event will Oneita issue more than
1,607,143 shares of stock in connection with the rights offering, which will
represent 18.9 percent of the then 8,485,649 shares outstanding. The rights
offered to shareholders will be non-transferable and non-tradeable. The $11.25
million proceeds from the rights offering will be used to prepay certain of the
subordinated notes described below.
In January 1996, the Company issued 10% subordinated notes to Avondale
Mills, Inc. and Robert Gintel in the aggregate principal amount of $15 million
maturing February 26, 1999, concurrently with the funding of the Company's new
bank credit facility. The notes are subordinate to the Company's bank debt and
certain other senior debt. Subordinated notes in the amount of $7.5 million to
Avondale and $3.75 million to Gintel will be prepaid from the proceeds of the
rights offering. In the event the rights offering is not consummated by May 31,
1996, Avondale and Gintel will have the right to convert these $11.25 million of
notes into shares of Oneita Common Stock at $7.00 per share. In connection with
the $3,750 subordinated note to Gintel which will remain outstanding after the
rights offering, subject to stockholder approval, the Company will also issue to
Gintel warrants to purchase 125,000 shares of Oneita Common Stock at $7.00 per
share. The proceeds from issuance of the notes will be used for working capital
and capital expenditures.
In January 1996, the Company entered into a new agreement with its banks to
borrow $60 million under a new revolving line of credit. The proceeds of the new
debt were used to pay off an existing bank credit facility and existing
short-term bank lines totaling $50 million. The additional $10 million of the
proceeds will be used for working capital and capital expenditures. The new
revolving line of credit will be collateralized by inventories and accounts
receivable and will mature on January 26, 1999.
The Company believes that its working capital and bank lines are sufficient
to meet its liquidity needs for at least the next twelve months.
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
(a) Exhibits
10.24 10% Initial Subordinated Note dated January 26, 1996 in
the principal amount of $3,750,000 issued to Robert M.
Gintel
10.25 10% Subordinated Note dated January 26, 1996 in the
principal amount of $3,750,000 issued to Robert M. Gintel
10.26 10% Subordinated Note dated January 26, 1996 in the principal amount of
$7,500,000 issued to Avondale Mills, Inc.
10.27 Registration Rights Agreement dated January 26, 1996
among the Company, Robert M. Gintel and Avondale Mills,
Inc.
10.28 $60,000,000 Revolving Credit Agreement dated January 26,
1996 among the Company, SunTrust Bank, Atlanta, First
Union National Bank of South Carolina and NatWest Bank
N.A.
10.29 $25,000,000 Promissory Note dated January 26, 1996 issued
to SunTrust Bank, Atlanta
10.30 $25,000,000 Promissory Note dated January 26, 1996 issued
to First Union Bank of South Carolina
10.31 $10,000,000 Promissory Note dated January 26, 1996 issued
to NatWest bank N.A.
10.32 Security Agreement dated January 26, 1996 among the
Company, SunTrust Bank, Atlanta, First Union National
Bank of South Carolina and NatWest Bank N.A. and the
Prudential Insurance Company of America
27 Financial Data Schedule
(b) No Reports on Form 8-K were filed during this quarterly period.
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: February 12, 1996