THE LESHNER CORPORATION
Unaudited Consolidated Balance Sheets as of June 28, 1998 and June 29, 1997
and the Related Unaudited Consolidated Statements of Operations and Earnings
Retained in the Business and Cash Flows for the Nine-Month Periods ended
June 28, 1998 and June 29, 1997
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THE LESHNER CORPORATION AND SUBSIDIARY COMPANY
UNAUDITED CONSOLIDATED BALANCE SHEETS
JUNE 28, 1998 AND JUNE 29, 1997
(Unaudited)
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LIABILITIES AND
ASSETS 1998 1997 STOCKHOLDERS' EQUITY 1998 1997
------------ ------------ ------------ ------------
CURRENT ASSETS: CURRENT LIABILITIES:
Cash $ 67,882 $ 119,503 Current maturities of long-term
Accounts receivable 15,494,501 17,975,684 obligations $30,719,277 $ 4,660,138
Other receivables 312,472 231,339 Accounts Payable 3,456,962 5,638,455
Refundable federal income tax - 1,005,788 Accrued Liabilities:
Inventory 23,523,945 26,407,770 Salaries, wages and commissions 1,139,062 1,323,153
Prepaid expenses and other 169,807 339,824 Taxes other than income tax 970,068 799,661
Deferred income taxes 892,198 976,774 Income tax 749,816 -
------------ ------------ Self insurance 494,347 680,247
Total current assets 40,460,805 47,056,682 Interest 122,048 601,128
Other 396,117 509,406
PROPERTY, At cost: ------------ ------------
Land and land improvements 721,524 710,548 Total current liabilities 38,047,697 14,212,188
Buildings and bldg. improvements 10,625,791 10,153,891 ------------ ------------
Machinery and equipment 36,016,597 34,892,699
Furniture and fixtures 2,026,772 2,192,078 LONG-TERM OBLIGATIONS(less current
Construction in progress 6,283 393,301 maturities):
------------ ------------ Debt 11,170,043 44,202,485
Total 49,396,967 48,342,517 Notes payable to stockholders and
Less accumulated depreciation and other related parties 2,592,130 2,785,041
amortization (22,337,502) (19,172,706) Deferred income taxes 1,472,942 1,837,049
------------ ------------ ------------ ------------
Property, net 27,059,465 29,169,811 Total long-term obligations 15,235,115 48,824,575
------------ ------------
OTHER ASSETS: STOCKHOLDERS' EQUITY
Cash surrender value of life Capital stock - common 600,000 600,000
insurance 553,519 493,995 Paid-in capital in excess of
Intangible assets, net 508,322 558,234 stated value 104,344 104,344
Deferred pension expense 689,369 734,063 Earnings retained in business 15,284,324 14,271,678
------------ ------------ ------------ ------------
Total other assets 1,751,210 1,786,292 Total stockholders' equity 15,988,668 14,976,022
------------ ------------ ------------ ------------
TOTAL $69,271,480 $78,012,785 TOTAL $69,271,480 $78,012,785
============ ============ ============ ============
See notes to unaudited consolidated financial statements.
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THE LESHNER CORPORATION AND SUBSIDIARY COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
EARNINGS RETAINED IN THE BUSINESS
FOR THE NINE-MONTH PERIODS ENDED JUNE 28, 1998 AND JUNE 29, 1997
(Unaudited)
Nine Months Nine Months
Ended Ended
June 28, 1998 June 29, 1997
--------------- ---------------
NET SALES $ 86,234,818 $ 75,513,469
COST OF PRODUCTS SOLD 74,433,882 67,953,093
--------------- ---------------
GROSS PROFIT 11,800,936 7,560,376
SELLING AND GENERAL EXPENSES 7,512,349 7,508,603
--------------- ---------------
INCOME FROM OPERATIONS 4,288,587 51,773
--------------- ---------------
OTHER CHARGES (CREDITS):
Interest expense 2,959,799 2,691,296
Interest income (1,590) (115,914)
Miscellaneous - net (413,390) 5,204
--------------- ---------------
TOTAL OTHER CHARGES, NET 2,544,819 2,580,586
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EARNINGS (LOSS) BEFORE INCOME TAXES 1,743,768 (2,528,813)
INCOME TAX PROVISION (CREDIT) 680,068 (986,235)
--------------- ---------------
NET INCOME (LOSS) 1,063,700 (1,542,578)
EARNINGS RETAINED IN BUSINESS:
Beginning of period 14,220,624 15,814,256
--------------- ---------------
End of period $ 15,284,324 $ 14,271,678
=============== ===============
See notes to unaudited consolidated financial statements.
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THE LESHNER CORPORATION AND SUBSIDIARY COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED JUNE 28, 1998 AND JUNE 29, 1997
(Unaudited)
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Nine Months Nine Months
Ended Ended
June 28, 1998 June 29, 1997
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,063,700 $ (1,542,578)
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,599,355 2,474,448
Loss (gain) on disposal of property 2,574 163,498
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 3,501,064 (884,858)
Decrease (increase) in refundable federal income tax 590,265 (115,548)
Decrease (increase) in inventory 33,020 (5,114,749)
Decrease in prepaid expenses and other assets 102,804 225,770
Decrease (increase) in other assets (28,486) 77,146
Increase (decrease) in accounts payable (1,565,031) 1,680,698
Increase in accrued liabilities 1,030,610 777,582
--------------- ---------------
Net cash provided by (used in) operating activities 7,329,875 (2,258,591)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (645,662) (4,601,932)
Proceeds from disposal of fixed assets 5,353 -
Proceeds from IRB fund - 4,690,687
--------------- ---------------
Net cash used in investing activities (640,309) 88,755
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (payments) under revolving line of credit agreement (3,029,273) 5,504,342
Proceeds from issuance of long-term debt 261,191
Principal payments of long-term debt (3,774,072) (3,318,378)
Proceeds from notes payable to stockholders and other related parties - 206,000
Principal payments on notes payable to shareholders and other
related parties (120,573) (162,733)
--------------- ---------------
Net cash provided by (used in) financing activities (6,662,727) 2,229,231
--------------- ---------------
NET INCREASE IN CASH 26,839 59,395
CASH - Beginning of period 41,043 60,108
--------------- ---------------
CASH - Balance end of period $ 67,882 $ 119,503
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash refunds during the period for federal income tax $ (573,486) $ (870,694)
Cash paid during the period for interest 2,600,740 2,187,216
Property acquired through the issuance of debt and capital leases - 1,218,065
See notes to unaudited consolidated financial statements.
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THE LESHNER CORPORATION AND SUBSIDIARY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The unaudited consolidated financial statements include
the accounts of The Leshner Corporation ("Leshner") and its wholly-owned
subsidiary (the "Company"), Opelika Industries, Inc. ("Opelika"). All
material intercompany transactions and balances have been eliminated.
BASIS OF PRESENTATION - The accompanying unaudited consolidated financial
statements of The Leshner Corporation and Subsidiary Company have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete annual financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Results
of operations for the nine months ended June 28, 1998 and June 29, 1997
are not necessarily indicative of results that may be expected for the
full year. These unaudited financial statements should be read in
conjunction with the audited financial statements and notes thereto in
the Company's annual financial statements for the years ended
September 27, 1997 and September 28, 1996.
2. INVENTORIES
Inventories consisted of the following:
June 28, June 29,
1996 1997
------------- -------------
Raw materials $ 3,950,016 $ 5,992,166
Work in process 3,379,082 4,403,131
Finished goods 16,194,847 16,012,473
------------- -------------
Total $ 23,523,945 $ 26,407,770
============= =============
Inventories are valued at the lower of either standard or estimated cost
(which approximates cost on a FIFO basis) or market.
3. SUBSEQUENT EVENT
Effective July 28, 1998, the Company completed a plan of merger with
Pillowtex Corporation whereby all of the Company's outstanding shares of
common stock were acquired by a subsidiary of Pillowtex Corporation for
approximately $33,500,000.
* * * * *
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