Exhibit 13
TULTEX 1996 ANNUAL REPORT
(Action photo of volleyball player with DISCUS logo clothing)
CONTENTS
1 Financial Highlights
2 To Our Stockholders
6 Balance Sheet
7 Statement of Income
8 Statement of Changes in Stockholders' Equity
9 Statement of Cash Flows
10 Notes to Financial Statements
19 Report of Independent Accountants
20 Management's Discussion and Analysis
22 Selected Financial Data
23 Common Stock Prices and Dividend Information
24 General Information, Officers and Directors
Inside Back Cover: Plant Locations,
Subsidiaries, Company-Owned Stores
ABOUT OUR COMPANY
Tultex Corporation is one of the world's largest manufacturers and
marketers of casual apparel, including activewear, licensed apparel
and caps. The vertically integrated company has broad distribution
for its products in the retail and wholesale channels. Products are
sold under such brand names as Discus Athletic R, LogoAthletic R,
Logo 7 R, Tultex R and TrackGear TM. Licenses include the NFL,
NBA, MLB, NHL, NASCAR and college.
The company operates yarn, fabric, sewing and distribution
facilities in Virginia, North Carolina, Indiana, Massachusetts and
Jamaica. In addition, Tultex has contractors in Mexico, Central
America, Canada and the Caribbean. Licensed apparel is sourced
from China, Korea, and Taiwan.
Through its strategies, Tultex continues its transformation into a
customer-driven, higher-margin apparel company. These
strategies are:
1. Growing emphasis on higher-margin branded products;
2. Increasing higher-margin distribution channels for activewear;
3. Developing strategic partnerships with major customers;
4. Further reducing operation costs;
5. Creating a stable financial platform.
(On the cover: Katy Eldridge, outside hitter for Team Discus, which
finished third in the 1996 Bud Light Pro Beach Volleyball Series)
FINANCIAL HIGHLIGHTS Tultex Corporation
Fiscal years ended: Dec. 28, 1996 Dec. 30,31, 1995 %Increase
(52 Weeks) (52 weeks) (Decrease)
(In thousands of dollars except per share data)
Operating Results:
Net sales and other income $636,341 $585,289 8.7%
Income before income taxes and extraordinary
loss on early extinguishment of debt $ 26,933 $ 8,948 201.0%
Net income before extraordinary loss on early
extinguishment of debt $ 16,699 $ 5,548 201.0%
Net income $ 16,699 $ 1,802 826.7%
Return on average common stockholders' equity (1) 9.2% 1.0% -
Per Share of Common Stock:
Net income before extraordinary loss on early
extinguishment of debt (2) $ .53 $ .15 253.3%
Net income (2) $ .53 $ .02 2,550.0%
Book value $ 6.40 $ 5.83 9.8%
Year-End Status:
Working capital $275,491 $274,844 .2%
Property, plant and equipment-net $136,426 $129,002 5.8%
Total assets $500,780 $475,799 5.3%
Long-term debt $223,616 $227,540 (1.7)%
Common stockholders' equity $187,730 $173,859 8.0%
Shares of common stock outstanding 29,333,571 29,824,371 (1.6)%
Number of stockholders 2,585 2,932 (11.8)%
Number of employees 6,618 6,835 (3.2)%
Other:
Depreciation $ 21,497 $ 23,163 (7.2)%
Capital expenditures $ 29,048 $ 17,337 67.5%
Interest expense $ 21,742 $ 21,952 (1.0)%
Cash dividends - common and preferred $ 1,135 $ 1,986 (42.8)%
(1) After extraordinary loss on early extinguishment of debt of $3,746,000
during the first quarter of 1995.
(2) Based on weighted average number of shares outstanding.
See Notes to Financial Statements.
1
TO OUR STOCKHOLDERS
By aggressively sticking to the strategies we imple-
mented in 1994, we are able to report good results to
our company owners. In spite of relatively high raw
material costs, our margins improved. We are now
clearly benefiting from our investment in our Discus
Athletic (R) and LogoAthletic (R) brands and our cost
reduction initiatives.
Overall, our branded and premium private label busi-
ness was up 24% over 1995 levels. We are particularly
pleased with the results of our licensed apparel busi-
ness which was up 16% in 1996, achieving results
comparable to 1993, the year prior to the hockey
lockout and baseball strike. We saw dramatic increases
in both our NFL and NBA business in 1996 over 1995.
Additionally, our business with screen printers and
distributors grew 10% in the year. Our people have
done a good job in growing this sector of our business,
which carries high margins. Increased penetration into
this channel of distribution will continue as a key growth
strategy for us in 1997.
Sales for the year were $636.3 million versus $585.3
million during the previous 12 months. Net income for
the year ended December 28, 1996 was $16.7 million,
or 53 cents per share, compared with $1.8 million, or 2
cents per share, for the year ended December 30,
1995. In 1995, Tultex incurred a $6.8 million, or 23 cents
per share, after-tax charge related to the company's
debt refinancing and a required change in the method
of recording advertising costs.
At year-end, our debt was $229.7 million which repre-
sents a modest improvement in our debt-to-capital ratio.
This reduction was achieved even while acquiring a
dyeing plant in Asheville, N.C., repurchasing 500,000
Tultex shares, and increasing our investment in Track
Gear, our licensed apparel subsidiary focused on the
motorsports industry.
Net Sales Operating Income
(in millions) (in millions)
(Bar Chart Appears Here) (Bar Chart Appears Here)
Year Net Sales Year Operating Income
1994 $565.4 1994 $28.2
1995 $585.3 1995 $35.9(1)
1996 $636.3 1996 $48.7
(1)Excludes a $5 million charge relating to a required change
in the method of recording advertising costs.
2
The Asheville dyeing facility provides us with 25% more
capacity. We are experiencing increased demand for
our premium, heavier-weight products, and this new
facility gives us the ability to better serve our custom-
ers' quality and service requirements.
As mentioned, almost 500,000 Tultex shares were
repurchased during 1996, all at below book value.
Acquiring those shares is an excellent investment for
our shareholders, particularly now as the market is
starting to recognize our potential. We will look for
additional opportunities to enhance your investment
through this repurchase program.
TrackGear provides us with a tremendous growth
opportunity in NASCAR, a rapidly-expanding segment
of the licensed business. We recently announced our
primary sponsorship of Roush Racing's Grand National
Series car, driven by Jeff Burton. No other apparel
company currently has this level of investment in the
sport of racing. Given the increasing popularity and fan
loyalty of NASCAR, we feel this sponsorship is a wise
investment and contributes to the authenticity of the
TrackGear TM brand.
As we enter into our 60th year after 59 profitable years,
we will be focused on continuing to aggressively grow
our business as we did in 1996. We expect revenue
growth to come from our Discus Athletic and
LogoAthletic brands and premium private label prod-
ucts, as well as increased penetration in the wholesale
channel of distribution.
(Photograph of Troy Aikman, Dallas Cowboy football player)
Caption: Sales of licensed products in 1996 were a record $228 million, a
16% increase over the previous year. While headwear sales
remained consistent with the previous year, apparel sales
increased dramatically in 1996. We saw our sales volume for
licensed apparel restored to 1993 levels, the year prior to the
baseball strike and hockey lockout.
Increasing brand awareness for LogoAthletic (R) will continue to be
an integral part of the Tultex growth strategies. Marketing and
promotional campaigns have propelled this brand into the
marketplace, developing consumer and retailer interest. Highly
effective commercials and endorsements with high-profile
athletes like Dallas Cowboys Quarterback Troy Aikman reinforce
the authenticity of our products.
3
Growth in Branded/Premium
Private Label Sales
(Tultex sales in millions)
(Bar Chart appears here)
Year Total Sales Branded/Premium Private Label
(in millions) (% of total sales)
1993 $534 14%
1994 $565 25%
1995 $585 33%
1996 $636 38%
(Photo of recreational baseball player appears here)
Caption: In 1996, Tultex continued to experience success
in growing its branded and premium private
label business. In 1996, this better margin
business grew to $239.3 million of sales versus
$193.4 million in 1995, for a 23.7% increase.
A key part of this branded strategy is to
continue building awareness of the Discus
Athletic (R) name. As in 1996, Discus Athletic will
reach a large number of consumers through
national television advertising, with a concen-
tration on high-visibility national sports
programming. Other marketing strategies to
promote Discus will include support of college
sports efforts through sponsorships and
increasing the brand's presence on college
campuses.
4
We believe there are more opportunities to continue to
drive our costs down, while increasing the value of our
products-a combination that is critical to our success.
This includes continuing to invest in offshore production
while improving the productivity of our domestic opera-
tions. Sourcing more and more products, particularly as
we diversify our branded lines, will also present value-
added, cost-saving opportunities for us in the future. In
addition, more normal fiber prices will further reduce
our costs and help to improve our bottom line in 1997.
In order to sustain revenue growth and gain market
share, however, we must become bigger. Our industry
continues its consolidation trend and growth through
acquisition is inevitable. In 1997 and into the next
century, we will be looking for synergistic opportunities
that will strengthen our company and enhance our
competitive position.
On a more personal note, we would like to express our
appreciation to Mr. Don Shook, Vice President-Admini-
stration, for his many years of service to Tultex. Mr. Shook
retired at the end of 1996 after more than 20 years with
the company. We also take this opportunity to welcome
Mr. Seth Bernstein of J.P. Morgan to our Board. We
have no doubt that Mr. Bernstein's experience will be
beneficial to us as our company continues to grow.
We believe 1997 offers good prospects to continue the
trend of improvement we saw in 1996, and we look
forward to the opportunities ahead.
Sincerely,
(Signature of John M. Franck appears here)
John M. Franck
Chairman
(Signature of Charles W. Davies, Jr. appears here)
Charles W. Davies, Jr.
President and Chief Executive Officer
5
TULTEX CORPORATION
BALANCE SHEET
DEC. 28, DEC. 30,
1996 1995
-------- --------
(IN THOUSANDS OF
DOLLARS
EXCEPT SHARE
DATA)
ASSETS
Current Assets:
Cash and equivalents........................................ $ 1,654 $ 1,981
Accounts receivable, less allowance for doubtful accounts
of $3,762 (1996) and $4,227 (1995)......................... 160,107 142,732
Inventories (Note 2)........................................ 162,283 157,946
Prepaid expenses............................................ 7,877 12,498
-------- --------
Total current assets......................................... 331,921 315,157
Property, plant and equipment, net of depreciation (Note 3).. 136,426 129,002
Intangible assets............................................ 24,333 25,550
Other assets................................................. 8,100 6,090
-------- --------
TOTAL ASSETS................................................. $500,780 $475,799
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks (Note 4)............................. $ 5,628 $ --
Current maturities of long-term debt (Notes 5 and 19)....... 424 145
Accounts payable--trade..................................... 33,981 27,017
Accrued liabilities--other.................................. 14,429 11,868
Dividends payable (Note 6).................................. 284 2
Income taxes payable........................................ 1,684 1,281
-------- --------
Total current liabilities.................................... 56,430 40,313
-------- --------
Long-term debt, less current maturities (Notes 5 and 19)..... 223,616 227,540
-------- --------
Deferrals:
Deferred income taxes (Note 8).............................. 12,890 12,603
Other....................................................... 4,916 6,286
-------- --------
Total deferrals.............................................. 17,806 18,889
-------- --------
Stockholders' equity (Notes 5, 6, 7, 14 and 15):
5% cumulative preferred stock, $100 par value;
authorized--22,000 shares,
issued and outstanding--1,975 shares (1996 and 1995)....... 198 198
Series B, $7.50 cumulative convertible preferred stock;
authorized, issued and outstanding--150,000 shares (1996
and 1995).................................................. 15,000 15,000
Common stock, $1 par value; authorized--60,000,000 shares,
issued and outstanding --29,333,571 shares (1996) and
29,824,371 shares (1995)................................... 29,334 29,824
Capital in excess of par value.............................. 3,416 5,347
Retained earnings........................................... 155,663 140,099
-------- --------
203,611 190,468
Less notes receivable from stockholders.................... 683 1,411
-------- --------
Total stockholders' equity................................... 202,928 189,057
-------- --------
Commitments and contingencies (Notes 11, 12 and 13)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................... $500,780 $475,799
======== ========
The accompanying Notes to Financial Statements are an integral part of this
statement.
6
TULTEX CORPORATION
STATEMENT OF INCOME
FISCAL YEARS ENDED:
---------------------------
DEC. 28, DEC. 30, DEC. 31,
1996 1995 1994
(52 (52 (52
WEEKS) WEEKS) WEEKS)
-------- -------- --------
(IN THOUSANDS OF DOLLARS
EXCEPT PER SHARE DATA)
Net sales and other income....................... $636,341 $585,289 $565,433
-------- -------- --------
Costs and expenses:
Cost of products sold........................... 469,715 432,062 419,769
Depreciation.................................... 21,497 23,163 23,973
Selling, general and administrative (Note 16)... 96,454 99,164 93,510
Gain on sale of facilities...................... -- -- (4,405)
Interest........................................ 21,742 21,952 18,151
-------- -------- --------
Total costs and expenses......................... 609,408 576,341 550,998
-------- -------- --------
Income before income taxes and extraordinary loss
on early extinguishment of debt................. 26,933 8,948 14,435
Provision for income taxes (Note 8).............. 10,234 3,400 5,485
-------- -------- --------
Income before extraordinary loss on early
extinguishment of debt.......................... 16,699 5,548 8,950
Extraordinary loss on early extinguishment of
debt (Net of income taxes of $2,296) (Note 5)... -- (3,746) --
-------- -------- --------
NET INCOME....................................... $ 16,699 $ 1,802 $ 8,950
======== ======== ========
Income per Common Share:
Income before extraordinary loss on early
extinguishment of debt.......................... $ .53 $ .15 $ .26
Extraordinary loss on early extinguishment of
debt............................................ -- (.13) --
-------- -------- --------
NET INCOME....................................... $ .53 $ .02 $ .26
======== ======== ========
DIVIDENDS PER COMMON SHARE (NOTE 6).............. $ .00 $ .00 $ .05
======== ======== ========
The accompanying Notes to Financial Statements are an integral part of this
statement.
7
TULTEX CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
CAPITAL
IN
5% SERIES B EXCESS NOTES TOTAL
PREFERRED PREFERRED COMMON OF PAR RETAINED RECEIVABLE- STOCKHOLDERS'
STOCK STOCK STOCK VALUE EARNINGS STOCKHOLDERS EQUITY
--------- --------- ------- ------- -------- ------------ -------------
(IN THOUSANDS OF DOLLARS)
BALANCE AS OF JANUARY 1,
1994................... $198 $15,000 $29,053 $1,889 $133,107 $ (50) $179,197
Net income for the 52
weeks ended Dec. 31,
1994................... 8,950 8,950
Employee stock pur-
chases................. 754 3,390 (4,144) --
Collections--stockhold-
ers' notes
receivable............. 728 728
Dividends on common
stock.................. (1,490) (1,490)
Dividends on preferred
stock.................. (284) (284)
---- ------- ------- ------ -------- ------ --------
BALANCE AS OF DECEMBER
31, 1994............... 198 15,000 29,807 5,279 140,283 (3,466) 187,101
Net income for the 52
weeks ended Dec. 30,
1995................... 1,802 1,802
Shares issued as payment
of agency commissions.. 17 68 85
Collections--stockhold-
ers' notes
receivable............. 2,055 2,055
Dividends on preferred
stock.................. (1,986) (1,986)
---- ------- ------- ------ -------- ------ --------
BALANCE AS OF DECEMBER
30, 1995............... 198 15,000 29,824 5,347 140,099 (1,411) 189,057
Net income for the 52
weeks ended Dec. 28,
1996................... 16,699 16,699
Exercise of stock op-
tions.................. 7 28 35
Repurchase of common
stock.................. (497) (1,959) (2,456)
Collections--stockhold-
ers' notes
receivable............. 728 728
Dividends on preferred
stock.................. (1,135) (1,135)
---- ------- ------- ------ -------- ------ --------
BALANCE AS OF DECEMBER
28, 1996............... $198 $15,000 $29,334 $3,416 $155,663 $ (683) $202,928
==== ======= ======= ====== ======== ====== ========
The accompanying Notes to Financial Statements are an integral part of this
statement.
8
TULTEX CORPORATION
STATEMENT OF CASH FLOWS
FISCAL YEARS ENDED:
-----------------------------------------------
DEC. 28, 1996 DEC. 30, 1995 DEC. 31, 1994
(52 WEEKS) (52 WEEKS) (52 WEEKS)
--------------- --------------- ---------------
(IN THOUSANDS OF DOLLARS)
OPERATING ACTIVITIES:
Net Income.................... $16,699 $ 1,802 $ 8,950
Items not requiring (provid-
ing) cash:
Depreciation................. 21,497 23,163 23,973
Gain on sale of facilities... -- -- (4,405)
Deferred income taxes........ 287 (2,290) 879
Amortization of intangible
assets....................... 1,217 1,216 1,217
Unamortized deferred debt is-
suance costs................. -- 3,109 --
Other deferrals.............. (1,370) 1,526 (942)
Changes in assets and liabili-
ties:
Accounts receivable ......... (17,375) (2,989) (23,360)
Inventories.................. (4,337) (27,763) 27,095
Prepaid expenses............. 4,621 2,636 (5,929)
Accounts payable and accrued
expenses..................... 9,525 8,151 (3,093)
Income taxes payable......... 403 (1,683) 179
------- -------- -------
Cash provided by operating ac-
tivities..................... 31,167 6,878 24,564
------- -------- -------
INVESTING ACTIVITIES:
Additions to property, plant
and equipment................ (29,048) (17,337) (8,624)
Change in other assets........ (2,010) (838) 1,264
Sales and retirements of prop-
erty and equipment........... 127 56 5,947
------- -------- -------
Cash used by investing activi-
ties......................... (30,931) (18,119) (1,413)
------- -------- -------
FINANCING ACTIVITIES:
Issuance (payment) of short-
term borrowings.............. 5,628 (1,000) 1,000
Issuance (payment) of revolv-
ing credit facility
borrowings................... (3,900) 13,500 (17,000)
Issuance of long-term debt.... 400 110,052 2,054
Payments of long-term debt.... (145) (111,222) (9,137)
Cost of debt issuance......... -- (4,038) --
Cash dividends................ (853) (1,986) (1,774)
Net proceeds (payments) from
issuance (repurchases) of
common stock................. (2,421) 85 --
Proceeds from stock plans..... 728 2,055 728
------- -------- -------
Cash provided (used) by fi-
nancing activities........... (563) 7,446 (24,129)
------- -------- -------
Net decrease in cash and
equivalents.................. (327) (3,795) (978)
Cash and equivalents at begin-
ning of year................. 1,981 5,776 6,754
------- -------- -------
CASH AND EQUIVALENTS AT END OF
YEAR......................... $ 1,654 $ 1,981 $ 5,776
======= ======== =======
The accompanying Notes to Financial Statements are an integral part of this
statement.
9
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994.
NOTE 1--THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
Tultex Corporation is a marketer and vertically integrated manufacturer of
activewear and licensed sports apparel which is considered a single business
segment. The company's product lines include fleeced sweats, jersey products
and decorated jackets and caps. The significant accounting policies followed
by Tultex Corporation and its subsidiaries in preparing the accompanying con-
solidated financial statements are as follows:
Basis of Consolidation--The consolidated financial statements include the
accounts of the company and its subsidiaries. All significant intercompany
balances and transactions are eliminated in consolidation.
Cash and Equivalents--The company considers cash on hand, deposits in banks,
certificates of deposit and short-term marketable securities as cash and
equivalents for the purposes of the statement of cash flows. Such cash equiva-
lents have original maturities of less than 90 days.
Inventories--Inventories are recorded at the lower of cost or market, with
cost determined on the first-in, first-out (FIFO) method.
Property, Plant and Equipment--Land, buildings and equipment are carried at
cost. Major renewals and betterments are charged to the property accounts
while replacements, maintenance and repairs which do not improve or extend the
lives of the respective assets are expensed currently. Interest is capitalized
on major capital expenditures during the period of construction. There was no
interest capitalized in the three years ended December 28, 1996. Depreciation
is provided on the straight-line method for all depreciable assets over their
estimated useful lives as follows:
ESTIMATED
CLASSIFICATION USEFUL LIVES
-------------- ------------
Land improvements........................................ 20 years
Buildings and improvements............................... 12-50 years
Machinery and equipment.................................. 3-20 years
Intangible Assets--Goodwill and licenses are being amortized on a straight-
line basis over 25 years. The company continually evaluates the existence of
goodwill impairment on the basis of whether the goodwill is fully recoverable
from projected, undiscounted net cash flows of the related asset. The gross
amount of goodwill was $3,909,000 at December 28, 1996 and December 30, 1995.
Accumulated amortization of goodwill was $782,000 and $625,000 at December 28,
1996 and December 30, 1995, respectively. The gross amount of licenses was
$26,507,000 at December 28, 1996 and December 30, 1995. Accumulated amortiza-
tion of licenses was $5,301,000 and $4,241,000 at December 28, 1996 and Decem-
ber 30, 1995,respectively.
Pensions--Pension expense includes charges for amounts not less than the ac-
tuarially determined current service costs plus amortization of prior service
costs over 30 years. The company funds amounts accrued for pension expense not
in excess of the amount deductible for federal income tax purposes.
Revenue Recognition--The company recognizes the sale when the goods are
shipped or ownership is assumed by the customer.
Income Taxes--Income taxes are provided based upon income reported for fi-
nancial statement purposes. Deferred income taxes reflect the tax effect of
temporary differences between financial and taxable income.
Net Income per Common Share--Net income per common share is computed using
the weighted average number of common shares and dilutive common equivalent
shares outstanding during the period after deducting the preferred dividend
requirements which accrued during the period. The weighted average number of
common shares outstanding were 29,589,000 , 29,810,000 and 29,685,000 for fis-
cal 1996, 1995 and 1994,
10
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
respectively. Fully diluted net income per common share is not materially dif-
ferent from primary net income per common share for fiscal 1996, 1995 and
1994. The dilutive effect of stock options is computed using the treasury
stock method.
Fiscal Year--The company's fiscal year ends on the Saturday nearest to De-
cember 31, which periodically results in a fiscal year of 53 weeks.
Fair Value of Financial Instruments--Statement of Financial Accounting Stan-
dards No. 107, "Disclosures about Fair Value of Financial Instruments," re-
quires disclosure about the fair value of certain instruments. Cash, accounts
receivable, accounts payable, accrued liabilities and variable rate debt are
reflected in the financial statements at fair value because of the short-term
maturity of these instruments. The estimated fair value of the company's fixed
rate debt is disclosed in Note 5.
Use of Estimates in Preparation of Financial Statements--The preparation of
financial statements in conformity with generally accepted accounting princi-
ples requires management to make estimates and assumptions that affect the re-
ported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 2--INVENTORIES
The components of inventories are as follows:
DEC. 28, DEC. 30, DEC. 31,
1996 1995 1994
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
Raw materials........................................ $ 31,253 $ 20,803 $ 25,704
Goods in process..................................... 21,464 17,645 13,453
Finished goods....................................... 103,269 113,290 87,436
Supplies............................................. 6,297 6,208 3,590
-------- -------- --------
Total inventories.................................... $162,283 $157,946 $130,183
======== ======== ========
NOTE 3--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, consist of the following:
DEC. 28, DEC. 30,
1996 1995
-------- --------
(IN THOUSANDS OF
DOLLARS) ---
Land and improvements..................................... $ 4,193 $ 3,779
Buildings and improvements................................ 64,991 68,757
Machinery and equipment................................... 235,499 219,352
Construction in progress.................................. 18,657 6,494
-------- --------
323,340 298,382
Less accumulated depreciation............................. 186,914 169,380
-------- --------
Net property, plant and equipment......................... $136,426 $129,002
======== ========
NOTE 4--SHORT TERM AGREEMENTS
The company currently has short-term lines of credit with two banks totaling
$8,000,000. Borrowings outstanding at December 28, 1996 were $5,000,000 with
interest at 6.9%. There were no borrowings outstanding under these lines at
December 30, 1995.
The company's TrackGear, Inc. subsidiary had revolving credit facility
borrowings of $628,000 outstanding at December 28, 1996.
11
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The company utilizes letters of credit for foreign sourcing of inventory.
Trade letters of credit outstanding were $3,206,000, $3,648,000 and $ 2,026,000
at December 28, 1996, December 30, 1995 and December 31, 1994, respectively.
NOTE 5--LONG TERM DEBT
DEC. 28, DEC. 30,
1996 1995
-------- --------
(IN THOUSANDS OF
DOLLARS)
Amount due under revolving credit agreements................. $113,600 $117,500
10 5/8% senior notes due March 15, 2005...................... 110,000 110,000
Other indebtedness........................................... 440 185
-------- --------
224,040 227,685
Less current maturities...................................... 424 145
-------- --------
Total long-term debt......................................... $223,616 $227,540
======== ========
In March 1995, the company sold $110 million of 10 5/8% senior notes due
March 15, 2005. Net proceeds from the sale, together with borrowings under the
revolving credit facility, were used to pay principal, accrued interest and
prepayment expenses related to the $95,000,000 aggregate principal amount of 8
7/8% senior notes due June 1, 1999 and the $15,997,000 aggregate principal
amount term loan due July 31, 1996. In connection with the repayment of the 8
7/8% senior notes and the term loan, the company was required to write off un-
amortized debt issuance costs and incurred a prepayment penalty. The resultant
one-time, after-tax charge amounted to $3,746,000 or 13 cents per share.
Concurrent with the sale of the 10 5/8% senior notes, the company entered
into a three-year $225,000,000 revolving credit facility which replaced its ex-
isting two-year facility due to expire on October 5, 1995. The agreement pro-
vides for borrowings at or below prime.
All subsidiaries of the company fully and unconditionally guarantee the
company's obligations under the 10 5/8% senior notes on a joint and several ba-
sis.
The senior notes and revolving credit facility contain provisions regarding
maintenance of net worth, indebtedness levels and restrictions on the payment
of cash dividends. At December 28, 1996, the company was in compliance with all
debt covenants. Consolidated retained earnings free of dividend restrictions
imposed by the debt covenants amounted to $6,830,000 at December 28, 1996.
Interest paid by the company in 1996, 1995 and 1994 was $21,654,000,
$22,412,000 and $18,598,000, respectively. The weighted average interest rates
on borrowings under the revolving credit facility at December 28, 1996 and De-
cember 30, 1995 were 6.9% and 7.6%, respectively.
The aggregate maturities of long-term debt for each of the next five fiscal
years are as follows:
TOTAL
-------------
(IN THOUSANDS
OF DOLLARS)
1997........................................................ $ 424
1998........................................................ 113,609*
1999........................................................ 6
2000........................................................ --
2001........................................................ --
* Includes maturity of $113,600 outstanding under revolving credit fa-
cility.
At December 28, 1996 and December 30, 1995, the fair value of the 10 5/8% se-
nior notes exceeded the carrying amount by approximately $10,800,000 and
$2,100,000, respectively. Such fair values were deter-
12
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
mined using valuation techniques that considered cash flows discounted at cur-
rent market rates in effect at the end of the year.
NOTE 6--DIVIDENDS
At December 28, 1996, dividends payable represented amounts paid on the
company's 5% cumulative preferred stock and Series B cumulative preferred stock
on January 2, 1997.
During the second quarter of 1994, the company suspended the payment of divi-
dends on its common stock. As of December 28, 1996, common stock dividends had
not been reinstated.
NOTE 7--STOCK OPTIONS
In 1988, the company's stockholders ratified the 1987 Stock Option Plan under
which 700,000 shares of common stock were reserved for stock option grants to
certain officers and employees. The plan provided that options may be granted
at prices not less than the fair market value on the date the option is grant-
ed, which means the closing price of a share of common stock as reported on the
New York Stock Exchange composite tape on such day. Some options remain unexer-
cised from the 1987 Stock Option Plan which expired November 19, 1992.
On March 21, 1991, the company's stockholders ratified the 1990 Stock Option
Plan under which 700,000 shares of common stock were reserved for option grants
to certain officers and employees. Options granted under the 1990 Plan may be
incentive stock options ("ISOs") or nonqualified stock options. The option
price will be fixed by the Executive Compensation Committee of the Board at the
time the option is granted, but in the case of an ISO, the price cannot be less
than the share's fair market value on the date of grant. Grants must be made
before October 18, 2000 and generally expire within 10 years of the date of
grant. In exercising options, an employee may receive a loan from the company
for up to 90% of the exercise price. Outstanding loans are shown as a reduction
of stockholders' equity on the balance sheet. On May 19, 1994, the stockholders
approved an increase of 500,000 shares in the maximum number of shares to be
issued pursuant to the exercise of options granted under the Plan, extended the
date that grants could be made to October 27, 2003, and provided that no par-
ticipant may be granted options in any calendar year for more than 50,000
shares of common stock.
On April 30, 1996, the company's stockholders ratified the 1996 Stock Incen-
tive Plan under which 700,000 shares of common stock were reserved for stock
option grants and other awards.
A summary of the changes in the number of common shares under option for each
of the three previous years follows:
YEAR ENDED
DECEMBER 28, 1996
---------------------
PER SHARE
NUMBER OF OPTION
SHARES PRICE
--------- -----------
Outstanding at beginning of year......................... 1,298,400 $5.00-$9.75
Granted.................................................. 293,000 $4.88
Exercised................................................ 7,000 $4.88-$6.00
Expired.................................................. 30,000 $8.25-$8.38
Cancelled................................................ 90,800 $4.88-$9.75
--------- -----------
Outstanding at end of year............................... 1,463,600 $4.88-$9.75
========= ===========
Exercisable at end of year............................... 1,333,600 $4.88-$9.75
========= ===========
Shares reserved for future grant:
Beginning of year........................................ 23,000
=========
End of year.............................................. 517,800
=========
13
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED
DECEMBER 30, 1995
---------------------
PER SHARE
NUMBER OF OPTION
SHARES PRICE
--------- -----------
Outstanding at beginning of year......................... 1,225,400 $5.13-$9.75
Granted.................................................. 181,000 $5.00-$5.50
Exercised................................................ -- --
Expired.................................................. 82,300 $7.50-$7.63
Cancelled................................................ 25,700 $5.00-$9.75
--------- -----------
Outstanding at end of year............................... 1,298,400 $5.00-$9.75
========= ===========
Exercisable at end of year............................... 1,098,400 $5.00-$9.75
========= ===========
Shares reserved for future grant:
Beginning of year........................................ 190,000
=========
End of Year.............................................. 23,000
=========
YEAR ENDED
DECEMBER 31, 1994
---------------------
PER SHARE
NUMBER OF OPTION
SHARES PRICE
--------- -----------
Outstanding at beginning of year......................... 928,233 $6.88-$9.75
Granted.................................................. 397,500 $5.13-$6.00
Exercised................................................ -- --
Expired.................................................. 20,000 $9.13
Cancelled................................................ 80,333 $6.00-$9.75
--------- -----------
Outstanding at end of year............................... 1,225,400 $5.13-$9.75
========= ===========
Exercisable at end of year............................... 1,025,400 $5.13-$9.75
========= ===========
Shares reserved for future grant:
Beginning of year........................................ 39,900
=========
End of year.............................................. 190,000
=========
The company has adopted the disclosure-only provisions of Statement of Finan-
cial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensa-
tion," which establishes a fair value-based method of accounting for stock-
based compensation. Accordingly, no compensation cost has been recognized for
the stock option plans. Had compensation cost for the company's three stock op-
tion plans been determined based on the fair value at the grant date for awards
in 1996 and 1995 consistent with provisions of SFAS 123, the company's net in-
come and net income per share would have been reduced to the pro forma amounts
indicated in the table below:
FISCAL YEARS ENDED
---------------------------
DEC. 28, 1996 DEC. 30, 1995
------------- -------------
(IN THOUSANDS OF DOLLARS)
Net income--as reported............................. $16,699 $1,802
Net income--pro forma .............................. $16,316 $1,491
Net income per share--as reported................... $.53 $.02
Net income per share--pro forma .................... $.51 $.01
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions used for
grants in 1996 and 1995: dividend yield of 0.0%; expected volatility of 36.16%;
weighted average risk-free interest rate of 6.67% for 1996 and 6.57% for 1995;
and expected lives of 5 years.
14
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--INCOME TAXES
The components of the provision for federal and state income taxes are
summarized as follows:
DEC.28,1996 DEC.30,1995 DEC.31,1994
------------- ------------- -------------
(IN THOUSANDS OF DOLLARS)
Currently payable:
Federal............................... $ 8,437 $ 4,965 $4,072
State................................. 1,510 725 534
------- ------- ------
9,947 5,690 4,606
------- ------- ------
Deferred:
Federal............................... 297 (1,778) 590
State................................. (10) (512) 289
------- ------- ------
287 (2,290) 879
------- ------- ------
Total provision....................... $10,234 $ 3,400 $5,485
======= ======= ======
Deferred income taxes resulted from the following temporary differences:
DEC.28,1996 DEC.30,1995 DEC.31,1994
------------- ------------- -------------
(IN THOUSANDS OF DOLLARS)
Depreciation......................... $(1,109) $ 63 $ 579
Inventory............................ 264 (1,593) 1,388
Pension.............................. 435 (395) 31
Intangible assets.................... 299 608 299
Postretirement benefits.............. (12) (156) (58)
AMT credit carryforward.............. 362 1,255 (1,617)
Bad debt and other allowances........ 201 (1,133) 99
Accrued liabilities.................. (239) (512) --
Other................................ 86 (427) 158
------- ------- -------
Total................................ $ 287 $(2,290) $ 879
======= ======= =======
Significant components of the deferred tax liabilities and assets are as fol-
lows:
DEC.28,1996 DEC.30,1995
------------- -------------
(IN THOUSANDS OF DOLLARS)
Deferred tax liabilities:
Tax over book depreciation.......................... $15,523 $16,632
Intangible assets................................... 1,631 1,332
------- -------
Gross deferred tax liabilities...................... 17,154 17,964
------- -------
Deferred tax assets:
Bad debt and other allowances....................... 1,398 1,599
Inventory reserves.................................. 376 640
Postretirement benefits............................. 402 390
Pension obligations................................. 891 1,326
Worker's compensation............................... 155 227
AMT credit carryforward............................. -- 362
Accrued liabilities................................. 751 512
Other............................................... 291 305
------- -------
Gross deferred tax assets........................... 4,264 5,361
------- -------
Net deferred tax liabilities........................ $12,890 $12,603
======= =======
15
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
A reconciliation of the statutory federal income tax rates with the company's
effective income tax rates for 1996, 1995 and 1994 was as follows:
DEC.28,1996 DEC.30,1995 DEC.31,1994
------------- ------------- -------------
Statutory federal rate................ 35% 35% 35%
State rate, net....................... 3 3 3
--- --- ---
Effective income tax rate............. 38% 38% 38%
=== === ===
Income tax payments were $8,597,000, $4,895,000 and $4,659,000 for fiscal
1996, 1995 and 1994, respectively.
NOTE 9--EMPLOYEE BENEFITS
All qualified employees of the parent company and its LogoAthletic/Headwear,
Inc. subsidiary are covered by a noncontributory, defined benefit plan. The
benefits are based on years of service and the employee's highest five consecu-
tive calendar years of compensation paid during the 10 most recent years before
retirement. Prior service costs are amortized over 30 years. The status of the
defined benefit plan as of December 28, 1996 and December 30, 1995 was as fol-
lows:
1996 1995
------- -------
(IN THOUSANDS
OF DOLLARS)
Fair value of plan assets, primarily listed stocks and
corporate and government debt............................... $38,218 $35,631
------- -------
Accumulated benefit obligation, including vested benefits of
$33,652 and $33,735, respectively.......................... 34,457 34,320
Additional benefits based on estimated future salary
levels...................................................... 4,834 4,512
------- -------
Projected benefit obligation................................ 39,291 38,832
------- -------
Projected benefit obligation in excess of plan assets....... (1,073) (3,201)
Unrecognized net loss....................................... 669 2,025
Unrecognized net transitional assets........................ (899) (1,369)
Unrecognized prior service cost............................. 445 502
------- -------
Accrued pension liability................................... $ (858) $(2,043)
======= =======
The following rate assumptions were made for the plan:
1996 1995
----- -----
Discount rate of return on projected benefit obligation........... 7.75% 7.75%
Rate of return on plan assets..................................... 10.00% 10.00%
The long-term rate of salary progression for 1996 reflected an increase of
3.5% for the first year, followed by 4% for six years with an ultimate rate of
increase of 5% thereafter. The long-term rate for 1995 reflected an increase of
3.5% for the first two years, followed by 4% for six years with an ultimate
rate increase of 5% thereafter.
Pension expense in 1996, 1995 and 1994 included the following components:
1996 1995 1994
------- ------- -------
(IN THOUSANDS OF
DOLLARS)
Service cost-benefits earned during the period....... $ 1,591 $ 1,285 $ 1,707
Interest on projected benefit obligation............. 2,862 2,814 2,808
Actual gain (loss) on plan assets.................... (5,307) (4,542) 4,587
Net deferral......................................... 1,415 719 (9,000)
------- ------- -------
Net periodic pension cost............................ $ 561 $ 276 $ 102
======= ======= =======
The company's policy has been to fund the minimum required contribution after
the end of the fiscal year plus interest on the contribution from the end of
the plan year until paid.
16
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The company has a nonqualified, unfunded supplementary retirement plan for
which it has purchased cost recovery life insurance on the lives of the partic-
ipants. The company is the sole owner and beneficiary of such policies. The
amount of coverage is designed to provide sufficient revenues to recover all
costs of the plan if assumptions made as to mortality experience, policy earn-
ings and other factors are realized. Expenses related to the plan were $557,000
in 1996, $577,000 in 1995 and $536,000 in 1994. The actuarially determined lia-
bility which has been included in other deferrals was $3,051,000 at December
28, 1996, $3,434,000 at December 30, 1995 and $3,506,000 at December 31, 1994.
The following table sets forth the supplementary plan's status and amounts
recognized in the company's financial statements at December 28, 1996 and De-
cember 30, 1995:
1996 1995
------------ ------------
(IN THOUSANDS OF DOLLARS)
Fair value of plan assets......................... $ -- $ --
Accumulated benefit obligation, including vested
benefits of $2,883 and $3,288, respectively...... 3,051 3,434
Additional benefits based on estimated future sal-
ary levels....................................... 344 402
------------ ------------
Projected benefit obligation...................... 3,395 3,836
------------ ------------
Projected benefit obligation in excess of plan as-
sets............................................. (3,395) (3,836)
Unrecognized net loss............................. 866 1,229
Unrecognized prior service cost................... 240 260
Unrecognized transitional obligation.............. 801 892
Adjustment required to recognize minimum liabili-
ty............................................... (1,563) (1,979)
------------ ------------
Unfunded accrued supplementary pension costs...... $ (3,051) $ (3,434)
============ ============
Net supplementary pension cost for the three years included the following
components:
1996 1995 1994
---- ---- ----
(IN THOUSANDS
OF DOLLARS)
Service cost-benefits earned during the period.................. $102 $ 85 $139
Interest on projected benefit obligation........................ 275 309 255
Net amortization................................................ 180 183 142
---- ---- ----
Net periodic supplementary pension cost......................... $557 $577 $536
==== ==== ====
Substantially all employees meeting certain requirements are eligible to par-
ticipate in the company's employee savings (401-K) plan. Employee contributions
are limited to a percentage of their compensation, as defined in the plan. The
plan does not provide for any company contributions.
Substantially all employees are eligible to receive certain bonuses or prof-
it-sharing amounts, the amounts of which are determined by the labor contract
for employees covered by the collective bargaining agreement, the 1996 Tultex
Corporation Consolidated Incentive Plan for certain salaried employees, and
management discretion for all other employees. The 1996 Tultex Corporation Con-
solidated Incentive Plan was designed to provide a performance-based incentive
for employees of the company who are in a position to contribute materially to
the success of the company and its subsidiaries. Awards under the plan are de-
termined by the company's performance against established performance goals.
Total bonus expenses amounted to $3,734,000 in 1996, $2,044,000 in 1995 and
$1,791,000 in 1994.
The company also provides certain postretirement medical and life insurance
benefits to substantially all employees who retire with a minimum of 20 years
of service for the period of time until the employee and any dependents reach
age 65. The medical plan requires monthly contributions by retired participants
which
17
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
are dependent on the participant's length of service, age at the date of re-
tirement and Medicare eligibility. The life insurance plan is noncontributory.
Prior to 1993, the company expensed the costs relating to these unfunded plans
as incurred.
In 1993, the company adopted Statement of Financial Standards (SFAS) No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The standard requires companies to recognize the estimated costs of providing
postretirement benefits on an accrual basis. The company elected the delayed
recognition method of adoption which allows amortization of the initial tran-
sitional obligation over a 20-year period. At January 3, 1993, the actuarially
determined accumulated postretirement benefit obligation was $5,101,000.
The amounts recognized in the company's balance sheet at December 28, 1996
and December 30, 1995 were as follows:
1996 1995
------- -------
(IN THOUSANDS
OF DOLLARS)
Accumulated postretirement benefit obligation................ $(7,634) $(6,973)
Unrecognized transitional obligation......................... 4,077 4,334
Unrecognized loss............................................ 2,499 1,770
------- -------
Accrued liability............................................ $(1,058) $ (869)
======= =======
Net periodic postretirement benefit costs for 1996, 1995 and 1994 included
the following components:
1996 1995 1994
------ ------ ----
(IN THOUSANDS OF
DOLLARS)
Service cost-benefits earned during the period............. $ 198 $ 207 $198
Interest on accumulated postretirement benefit obligation.. 523 564 398
Amortization of accumulated postretirement benefit obliga-
tion...................................................... 256 256 256
Amortization of loss....................................... 63 63 --
------ ------ ----
Total periodic postretirement benefit cost................. $1,040 $1,090 $852
====== ====== ====
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.75% for 1996 and 1995. The assumed medical cost trend rate
was 9% and 10% in 1996 and 1995, respectively, declining by 1% per year until
an ultimate goal of 5.5% is achieved. The effect of a 1% increase in the as-
sumed health care cost trend rates for each future year would have increased
the aggregate of 1996 service cost and interest cost by $77,000, and would
have increased the December 28, 1996 accumulated postretirement benefit obli-
gation by $588,000.
The adoption of Statement of Financial Accounting Standards (SFAS) No. 112,
"Employers' Accounting for Postemployment Benefits," in 1994 had no material
impact on the company's results of operations or financial position, as the
company does not have significant postemployment benefits.
18
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of the unaudited quarterly financial information
for the years ended December 28, 1996 and December 30, 1995.
1996 1995
-------- --------
(IN THOUSANDS OF
DOLLARS EXCEPT
PER SHARE DATA)
Net Sales and Other Income
1st quarter............................................. $ 95,303 $ 84,138
2nd quarter............................................. 138,198 120,986
3rd quarter............................................. 215,390 207,911
4th quarter............................................. 187,450 172,254
-------- --------
Total..................................................... $636,341 $585,289
======== ========
Gross Profit
1st quarter............................................. $ 20,005 $ 20,445
2nd quarter............................................. 27,556 25,275
3rd quarter............................................. 53,263 46,303
4th quarter............................................. 45,943 39,833
-------- --------
Total..................................................... $146,767 $131,856
======== ========
Income Before Income Taxes and Extraordinary Loss on
Early Extinguishment of Debt
1st quarter............................................. $ (8,901) $(12,882)
2nd quarter............................................. 1,120 (88)
3rd quarter............................................. 21,011 14,889
4th quarter............................................. 13,703 7,029
-------- --------
Total..................................................... $ 26,933 $ 8,948
======== ========
Income Before Extraordinary Loss on Early Extinguishment
of Debt
1st quarter............................................. $ (5,520) $ (7,987)
2nd quarter............................................. 689 (62)
3rd quarter............................................. 13,025 9,239
4th quarter............................................. 8,505 4,358
-------- --------
Total..................................................... $ 16,699 $ 5,548
======== ========
Net Income
1st quarter............................................. $ (5,520) $(11,733)
2nd quarter............................................. 689 (62)
3rd quarter............................................. 13,025 9,239
4th quarter............................................. 8,505 4,358
-------- --------
Total..................................................... $ 16,699 $ 1,802
======== ========
Income per Common Share Before Extraordinary Loss on
Early Extinguishment of Debt
1st quarter............................................. $ (.19) $ (.27)
2nd quarter............................................. .01 (.01)
3rd quarter............................................. .43 .30
4th quarter............................................. .28 .13
-------- --------
Total..................................................... $ .53 $ .15
======== ========
Net Income per Common Share
1st quarter............................................. $ (.19) $ (.40)
2nd quarter............................................. .01 (.01)
3rd quarter............................................. .43 .30
4th quarter............................................. .28 .13
-------- --------
Total..................................................... $ .53 $ .02
======== ========
19
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11--COMMITMENTS
At December 28, 1996, the company was obligated under a number of
noncancellable, renewable operating leases as follows:
MANUFACTURING
DATA FACILITIES
PROCESSING AND
EQUIPMENT OTHER TOTAL
---------- ------------- -------
(IN THOUSANDS OF DOLLARS)
1997........................................... $4,275 $ 5,755 $10,030
1998........................................... 3,137 4,623 7,760
1999........................................... 1,651 3,127 4,778
2000........................................... -- 2,465 2,465
2001........................................... -- 2,156 2,156
2002 and after................................. -- 11,673 11,673
------ ------- -------
Total.......................................... $9,063 $29,799 $38,862
====== ======= =======
Rental expense charged to income was $13,287,000 in 1996, $13,128,000 in 1995
and $13,358,000 in 1994.
The company has entered into various licensing agreements which permit it to
market apparel with copyrighted logos from the sports industry. Under the terms
of these agreements, the company is required to pay minimum guaranteed fees to
certain licensors. The remaining minimum obligations under these agreements at
December 28, 1996 were approximately $2,800,000 in fiscal 1997.
NOTE 12--EMPLOYMENT AGREEMENTS
The company has entered into employment continuity agreements with certain of
its executives which provide for the payments to these executives of amounts up
to three times their annual compensation plus continuation of certain benefits
if there is a change in control in the company (as defined) and a termination
of their employment. The maximum contingent liability at December 28, 1996 un-
der these agreements was approximately $4,489,000.
NOTE 13--CONCENTRATION OF CREDIT RISK
The company's concentration of credit risk is limited due to the large number
of primarily domestic customers who are geographically dispersed. The company
has no customer that constituted 10% of net sales in 1996 or 1995. There was
one customer who constituted 10.4% of net sales in 1994. As disclosed on the
balance sheet, the company maintains an allowance for doubtful accounts to
cover estimated credit losses.
NOTE 14--SHAREHOLDER RIGHTS PLAN
In March 1990, the Board of Directors of the company adopted a Shareholder
Rights Plan and declared a dividend of one right for each outstanding share of
common stock to shareholders of record on April 2, 1990. Each right entitles
the registered holder to purchase from the company, until the earlier of March
22, 2000 or the redemption of the rights, one one-thousandth of a share of
newly authorized Junior Participating Cumulative Preferred Stock, Series A,
without par value, at an exercise price of $40. The rights are not exercisable
or transferable apart from the common stock until the earlier of (i) 10 days
following the public announcement that a person or a group of affiliated per-
sons has acquired or obtained the right to acquire beneficial ownership of 10%
or more of the company's outstanding common stock or (ii) 10 business days fol-
lowing the commencement of a tender offer or exchange offer that would result
in a person or a group owning 10% or more of the company's outstanding common
stock. The company may redeem the rights at a price of $.01 per right at any
time prior to the acquisition of 10% or more of the company's outstanding com-
mon stock or certain other triggering events.
20
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15--STOCK PURCHASE PLAN
In February 1994, the company initiated the Salaried Employees' Stock Pur-
chase Plan. Under the plan, employees could elect to purchase shares of the
company's common stock in amounts ranging from 20-30% of their annual salary.
Employees pay for the stock through payroll deductions over a 60-month period.
Interest at 6% per annum will be charged until the stock is fully paid and the
shares are held by the company until that time. Under the plan, 753,667 shares
were issued at a price of $5.50. Of the $4,144,000 loans recorded for the
shares, $3,461,000 has been collected, leaving an outstanding balance at Decem-
ber 28, 1996 of $683,000. Interest income realized in 1996, 1995 and 1994 on
the loans was $64,000, $138,000 and $188,000, respectively. In January 1995,
the directors of the company approved an amendment to the plan that allows an
employee options for early payment of the loan.
NOTE 16--ADVERTISING COSTS
In fiscal 1995, the company adopted the provisions of the Accounting Stan-
dards Executive Committee's Statement of Position on Reporting Advertising
Costs ("Statement"). The Statement required that certain advertising costs
which were previously deferred and amortized over an anticipated benefit period
be recognized currently in the statement of income. Advertising expense charged
to income was $21,614,000 in 1996, $22,706,000 in 1995 and $14,669,000 in 1994.
Selling, general and administrative expenses reported on the statement of in-
come increased by approximately $5,000,000 in 1995 as a result of adopting this
change in method of recording advertising costs.
NOTE 17--UNIONIZATION OF FACILITIES
In August 1994, hourly employees at the company's Martinsville, Virginia fa-
cilities voted for representation by the Amalgamated Clothing and Textile Work-
ers Union (now known as the Union of Needletrades, Industrial and Textile Em-
ployees or UNITE). Tultex accepted a three-year contract with UNITE, which was
ratified by an employee vote in March 1995. The contract covers approximately
2,100 employees in the Martinsville area. In May 1995, hourly employees at the
company's South Boston, Virginia sewing facility voted for representation by
UNITE. A three-year contract was ratified by an employee vote in August 1995.
The contract covers approximately 550 employees in the South Boston area.
NOTE 18--INVESTMENT IN JOINT VENTURE
In November 1995, the company and four other investors completed the forma-
tion of Wide Open Performance Wear, Inc., now known as TrackGear, Inc. Through
its investment of $750,000, the company acquired a minority ownership in this
newly-formed sportswear company. In September 1996, the company acquired major-
ity ownership of TrackGear, Inc. through an additional investment of $250,000.
The sportswear company manufactures and markets imprinted motorsports apparel.
21
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19--CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following financial information presents condensed consolidated financial
data which includes (i) the parent company only ("Parent"), (ii) the wholly-
owned subsidiaries on a combined basis ("Wholly-owned Subsidiaries"), (iii) the
majority-owned subsidiary (Majority-owned Subsidiary) and (iv) the company on a
consolidated basis.
MAJORITY
WHOLLY-OWNED OWNED
PARENT SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- ------------ ---------- ------------ ------------
(IN THOUSANDS OF DOLLARS)
AS OF AND FOR THE YEAR
ENDED
DECEMBER 28, 1996
Current assets.......... $275,694 $158,955 $1,729 $(104,457) $331,921
Noncurrent assets....... 189,088 36,405 1,005 (57,639) 168,859
-------- -------- ------ --------- --------
Total assets............ $464,782 $195,360 $2,734 $(162,096) $500,780
======== ======== ====== ========= ========
Current liabilities..... $ 38,074 $116,763 $2,390 $(100,797) $ 56,430
Noncurrent liabilities.. 242,011 (161) (405) (23) 241,422
-------- -------- ------ --------- --------
Total liabilities....... $280,085 $116,602 $1,985 $(100,820) $297,852
======== ======== ====== ========= ========
Net sales............... $411,151 $253,318 $2,489 $ (30,617) $636,341
Costs and expenses...... 396,370 240,784 3,426 (31,172) 609,408
-------- -------- ------ --------- --------
Pretax income (loss).... $ 14,781 $ 12,534 $ (937) $ 555 $ 26,933
======== ======== ====== ========= ========
MAJORITY-
WHOLLY-OWNED OWNED
PARENT SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- ------------ ---------- ------------ ------------
(IN THOUSANDS OF DOLLARS)
AS OF AND FOR THE YEAR
ENDED
DECEMBER 30, 1995
Current assets.......... $267,300 $206,137 $3,559 $(161,839) $315,157
Noncurrent assets....... 182,927 38,089 -- (60,374) 160,642
-------- -------- ------ --------- --------
Total assets............ $450,227 $244,226 $3,559 $(222,213) $475,799
======== ======== ====== ========= ========
Current liabilities..... $ 25,222 $173,849 $2,956 $(161,714) $ 40,313
Noncurrent liabilities.. 246,463 (22) (51) 39 246,429
-------- -------- ------ --------- --------
Total liabilities....... $271,685 $173,827 $2,905 $(161,675) $286,742
======== ======== ====== ========= ========
Net sales............... $386,300 $214,230 $8,681 $ (23,922) $585,289
Costs and expenses...... 373,466 219,240 8,073 (24,438) 576,341
-------- -------- ------ --------- --------
Pretax income (loss).... $ 12,834 $ (5,010) $ 608 $ 516 $ 8,948
======== ======== ====== ========= ========
22
TULTEX CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MAJORITY-
WHOLLY-OWNED OWNED
PARENT SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- ------------ ---------- ------------ ------------
(IN THOUSANDS OF DOLLARS)
AS OF AND FOR THE YEAR
ENDED
DECEMBER 31, 1994
Current assets.......... $242,754 $110,927 $1,938 $ (65,712) $289,907
Noncurrent assets....... 185,383 41,894 -- (60,375) 166,902
-------- -------- ------ --------- --------
Total assets............ $428,137 $152,821 $1,938 $(126,087) $456,809
======== ======== ====== ========= ========
Current liabilities..... $153,163 $ 76,728 $1,698 $ (64,536) $167,053
Noncurrent liabilities.. 101,098 1,611 (56) 2 102,655
-------- -------- ------ --------- --------
Total liabilities....... $254,261 $ 78,339 $1,642 $ (64,534) $269,708
======== ======== ====== ========= ========
Net sales............... $341,420 $240,239 $3,644 $ (19,870) $565,433
Costs and expenses...... 327,931 239,748 3,931 (20,612) $550,998
-------- -------- ------ --------- --------
Pretax income (loss).... $ 13,489 $ 491 $ (287) $ 742 $ 14,435
======== ======== ====== ========= ========
23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Tultex Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of cash flows and of changes in stockhold-
ers' equity present fairly, in all material respects, the financial position
of Tultex Corporation and its subsidiaries (the company) at December 28, 1996
and December 30, 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 28, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the company's management; our responsi-
bility is to express an opinion on these financial statements based on our au-
dits. We conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evi-
dence supporting the amounts and disclosures in the financial statements, as-
sessing the accounting principles used and significant estimates made by man-
agement, and evaluating the overall financial statement presentation. We be-
lieve that our audits provide a reasonable basis for the opinion expressed
above.
In 1995, the company changed its method of recording advertising costs, as
discussed in Note 16 of Notes to Financial Statements.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
February 4, 1997
24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents the Company's consolidated statement of operations
as a percentage of net sales and other income:
-------------------------------------------------------
DECEMBER 28, 1996 DECEMBER 30, 1995 DECEMBER 31, 1994
(52 WEEKS) (52 WEEKS) (52 WEEKS)
----------------- ----------------- -----------------
Net sales and other
income 100.0% 100.0% 100.0%
----- ----- -----
Cost of products sold 73.8 73.8 74.2
Depreciation 3.4 4.0 4.2
Selling, general and
administrative 15.2 16.9 16.5
Gain on sales of
facilities - - (0.7)
Interest 3.4 3.8 3.2
----- ----- -----
Total costs and
expenses 95.8 98.5 97.4
----- ----- -----
Income before income
taxes and
extraordinary loss on
early extinguishment
of debt 4.2 1.5 2.6
Provision for income
taxes 1.6 0.6 1.0
----- ----- -----
Income before
extraordinary loss on
early extinguishment
of debt 2.6 0.9 1.6
Extraordinary loss on
early extinguishment
of debt (net of
income taxes) - (0.6) -
----- ----- -----
Net income 2.6% 0.3% 1.6%
===== ===== =====
- ----------
Note: Certain items have been rounded to cause the columns to add to 100%.
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995
Net sales and other income of $636.3 million for the year ended December 28,
1996, represents an increase of $51.1 million, or 8.7%, over the prior year.
This increase was primarily the result of increased sales volumes, and was fur-
ther supported by a shift in sales mix to premium products. Activewear sales of
$408.2 million in 1996 represent an increase of $20.4 million, or 5.3%, as com-
pared to 1995. Licensed sales of $228.1 million in 1996 represent an increase
of $30.7 million, or 15.5%, as compared to fiscal 1995. Licensed apparel sales
in 1995 were adversely effected by professional sports labor issues which were
resolved prior to fiscal 1996. During 1996, sales of higher margin branded and
premium private label products increased 23.7%, and sales to the screenprint
and distributor channels increased 10.2%. Sales of jersey products were $112.4
million for fiscal 1996, representing 27.5% of the Company's activewear sales
as compared to 24.0% for fiscal 1995.
Cost of products sold as a percentage of sales was 73.8% for both 1996 and
1995. The increased margins achieved from the sale of premium products in 1996
were offset by higher raw material costs and the increased percentage of jersey
product sales which are at lower margins. The higher raw material costs were
due to raw cotton and polyester prices which peaked in the first half of 1996.
These prices began to decline in the second half of the year, and the Company
expects its raw material prices for 1997 to decline from 1996 levels. As of
February 20, 1997, the Company has fixed the price on approximately 60% of its
planned cotton purchases for fiscal 1997.
Depreciation expense as a percentage of sales was 3.4% for fiscal 1996 and 4.0%
for fiscal 1995. The $1.7 million decline in depreciation expense from the 1995
amount of $23.2 million was the result of certain assets becoming fully depre-
ciated during 1996. This decrease was partially offset by depreciation expense
incurred on 1996 capital additions of $29.0 million.
25
Selling, general and administrative ("SG&A") expenses decreased $2.7 million in
1996. As a percentage of sales, SG&A expenses were 15.2% in 1996 and 16.9% in
1995. The 1995 percentage includes a one-time charge of $5.0 million, or .8% of
sales, in deferred advertising costs which were charged off as required by the
Accounting Standards Executive Committee's Statement on Reporting Advertising
Costs. This statement first became effective for the Company at the beginning
of fiscal 1995. Excluding the effect of this charge in 1996, SG&A expenses re-
flect higher advertising costs which were used to support the increase in
sales. This increase in advertising spending was partially offset by a decrease
in the bad debt provision resulting from improved collection experience.
Operating income (income before interest and income taxes) increased 57.6% dur-
ing the 1996 fiscal year to $48.7 million compared to $30.9 million for fiscal
1995. This increase results from both the higher revenues achieved and the ef-
fects of improved cost controls.
Interest expense as a percentage of sales decreased from 3.8% in 1995 to 3.4%
in 1996. Interest expense decreased from $22.0 million to $21.7 million in
1996, primarily as a result of lower average rates. The nature of the Company's
primary business requires extensive seasonal borrowings to support its working
capital needs. During fiscal 1996, working capital borrowings averaged $137.5
million at an average rate of 6.9% compared to $136.4 million and 7.6% respec-
tively, for the comparable period of the prior year.
Provision for income taxes is a function of pretax earnings and the combined
effective rate of federal and state income taxes. This combined rate was 38% in
both 1996 and 1995. The provision for income taxes increased $6.8 million in
1996 as a result of higher pretax earnings, representing 1.6% of net sales as
compared to 0.6% in fiscal 1995.
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
Net sales and other income of $585.3 million for fiscal 1995 increased $19.9
million, or 3.5%, over the 1994 level of $565.4 million. The 1995 sales growth
was due to increased sales volume in the activewear line, and was partially
offset by decreases in licensed apparel and headwear sales volume which re-
sulted from professional sports labor issues. Sales of premium products in-
creased in 1995, with Discus Athletic activewear up 29.9% to $75.8 million, and
LogoAthletic licensed apparel up 42.8% to $92.0 million. Sales of jersey prod-
ucts were $93.1 million for 1995, representing 24.0% of the Company's
activewear sales as compared to 16.5% for 1994.
Cost of products sold as a percentage of sales improved in fiscal 1995, de-
creasing from 74.2% in fiscal 1994 to 73.8%. This reduction resulted primarily
from manufacturing efficiencies realized from increased production schedules
and higher average selling prices. Costs were reduced in spite of growth in
jersey volume, which typically produces lower margins, and increased raw mate-
rial costs. Raw material costs were higher in 1995 than in 1994 as a result of
the increased price of both raw cotton and polyester fiber.
Depreciation expense as a percentage of sales decreased from 4.2% for 1994 to
4.0% for 1995. Depreciation expense decreased from $24.0 million in 1994 to
$23.2 million in 1995, due to relatively low capital expenditures.
SG&A expenses increased as a percentage of sales to 16.9% for 1995 from 16.5%
for 1994. This increase is primarily due to the one-time charge of $5.0 million
for deferred advertising costs required to be recognized in 1995. In addition,
the bad debt provision was increased in 1995 in response to collection diffi-
culties.
Interest expense as a percentage of sales increased from 3.2% in 1994 to 3.8%
in 1995. Interest expense increased from $18.2 million in 1994 to $22.0 million
in 1995 due to higher interest rates. Average borrowing requirements of $136.4
million at an average rate of 7.6% in 1995 compared with $155.3 million and
5.2% for 1994, respectively.
Provision for income taxes reflects an effective rate for combined federal and
state income of 38% for both 1995 and 1994.
26
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net working capital at December 28, 1996 of $275.4 million was $0.6 million
higher than the December 30, 1995 amount of $274.8 million. Net accounts re-
ceivable increased $17.4 million from December 30, 1995 to December 28, 1996
due to the strong fourth quarter sales increase.
Inventories traditionally increase through the first half of the year to sup-
port second-half shipments. In 1996, inventories peaked on May 25, 1996 at
$220.9 million and then dropped to $162.3 million on December 28, 1996. As of
December 28, 1996, inventories had increased $4.3 million or 2.7% from December
30, 1995. This increase was primarily due to additional jersey inventories pro-
duced to meet anticipated first quarter 1997 demand. The current ratio (ratio
of current assets to current liabilities) at December 28, 1996, was 5.9 com-
pared to 7.8 for December 30, 1995. The decrease in the ratio was mainly due to
higher current liabilities required to meet the increase in receivables and in-
ventories.
Total indebtedness at December 28, 1996 consisted primarily of the 1995 Notes
totaling $110 million and $113.6 million outstanding under the Senior Credit
Facility. The Company's average credit facility borrowings during fiscal 1996
were $137.5 million and its peak borrowing was $175.5 million at September 11,
1996. At December 28, 1996, the Company was in compliance with all debt cove-
nants.
On March 20, 1996, the Company's Board of Directors authorized the purchase of
up to 750,000 shares of the Company's common stock. On October 29, 1996, the
Company's Board of Directors authorized the purchase of an additional 250,000
shares. As of December 28, 1996, a total of 497,800 shares had been purchased
and retired. Stockholders' equity increased $13.9 million during fiscal 1996 as
a result of net income for the period of $16.7 million and net proceeds from
the employee stock purchase plan of $0.8 million partially offset by repur-
chases of common stock totalling $2.5 million and preferred dividends of $1.1
million.
In fiscal 1996, net cash provided by operations was $31.2 million compared to
$6.9 million in fiscal 1995, reflecting the improved earnings in 1996. Cash
used for capital expenditures increased $11.7 million in fiscal 1996 from $17.3
million to $29.0 million primarily as a result of the purchase of the Asheville
dyeing facility. The Company has budgeted $21.0 million for capital expendi-
tures in fiscal 1997. Cash used by financing activities was $0.6 million for
fiscal 1996 compared to cash provided by financing activities of $7.4 million
in 1995 as a result of payments on the revolving credit facility and stock re-
purchases. The Company expects that its short-term borrowing needs, including
that required for the acquisition of California Shirt Sales, Inc., will be met
through cash generated from operations and borrowings under the Senior Credit
Facility. See "Business-Recent Development." Debt as a percentage of capital-
ization was 53.1% at December 28, 1996 compared to 54.6% at December 30, 1995.
27
SELECTED FINANCIAL DATA Tultex Corporation
1996 1995 1994 1993 1992
(In thousands of dollars except per share data) (52 Weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks)
Summary of Operations:
Net sales and other income $636,341 $585,289 $565,433 $533,611 $503,946
Costs and operating expenses 587,666 554,389 532,847 507,524 470,155
Operating income 48,675 30,900 32,586 26,087 33,791
Interest expense 21,742 21,952 18,151 16,996 13,540
Income before income taxes and extraordinary
loss on early extinguishment of debt 26,933 8,948 14,435 9,091 20,251
Provision for income taxes 10,234 3,400 5,485 3,188 7,060
Income before extraordinary loss on early
extinguishment of debt 16,699 5,548 8,950 5,903 13,191
Extraordinary loss on early extinguishment of debt - (3,746) - - -
Net Income 16,699 1,802 8,950 5,903 13,191
Less preferred dividend requirement 1,135 1,135 1,135 1,135 1,041
Balance to common stock $ 15,564 $ 667 $ 7,815 $ 4,768 $ 12,150
Weighted average number of common shares
outstanding 29,589 29,810 29,685 28,961 28,872
Shares outstanding at year end 29,334 29,824 29,807 29,053 28,878
Per Common Share:
Income before extraordinary loss on early
extinguishment of debt $ .53 $ .15 $ .26 $ .16 $ .42
Net income $ .53 $ .02 $ .26 $ .16 $ .42
Dividends declared (Note 6) $ .00 $ .00 $ .05 $ .20 $ .20
Book value $ 6.40 $ 5.83 $ 5.74 $ 5.64 $ 5.67
Year-End Data:
Current assets $331,921 $315,157 $289,907 $288,691 $249,327
Current liabilities 56,430 40,313 167,053 45,138 122,610
Working capital $275,491 $274,844 $122,854 $243,553 $126,717
Inventories $162,283 $157,946 $130,183 $157,278 $130,166
Property, plant and equipment (net) $136,426 $129,002 $134,884 $151,775 $153,188
Total assets $500,780 $475,799 $456,809 $474,965 $435,818
Bank notes payable $ 5,628 - $ 1,000 - $ 79,825
Current portion of long-term debt $ 424 $ 145 $132,353 $ 8,524 $ 2,268
Capital Invested:
Long-term debt $223,616 $227,540 $ 83,002 $230,914 $118,438
Stockholders' equity 202,928 189,057 187,101 179,197 178,793
Total capital invested $426,544 $416,597 $270,103 $410,111 $297,231
Return on average total capital invested 4.0% 0.5% 2.6% 1.7% 5.2%
Long-term debt as a percentage of total capital 52.4% 54.6% 30.7% 56.3% 39.8%
1992 has been restated to reflect the acquisition of Universal Industries,
Inc. (now known as LogoAthletic/Headwear, Inc.) treated as a pooling of
interests, and to reflect a change in accounting method from LIFO to FIFO.
28
COMMON STOCK PRICES AND
DIVIDEND INFORMATION Tultex Corporation
The company's common stock is listed on the New York Stock Exchange under the
symbol TTX. The following table shows the daily high, low and closing quotations
and dividends per share paid by quarters:
52 Weeks ended December 28, 1996 52 Weeks ended December 30, 1995
Range of Quotations Range of Quotations
Quarter Ended Low High Close Low High Close
March 30 $3 7/8 $4 7/8 $4 5/8 $4 1/8 $5 1/8 $4 5/8
June 29 4 1/2 5 7/8 4 3/4 4 5/8 5 7/8 5 5/8
September 28 4 1/4 5 5/8 5 3/8 5 1/4 6 1/2 5 3/8
December 28 5 3/8 7 3/4 7 4 5 3/8 4 1/8
See Note 5 to Consolidated Financial Statements for restrictions on
consolidated retained earnings imposed by debt covenants. At December 28, 1996,
$6,830,000 of consolidated retained earnings were free of such dividend
restrictions.
SHARES OF STOCK
The average number of shares of common stock for the year was 29,589,405. The
common shares outstanding at year-end amounted to 29,333,571.
STOCK DIVIDENDS AND STOCK SPLITS
Stock dividends and stock splits in the last 10 years include a three-for-two
split on July 31, 1987
29
GENERAL INFORMATION
Stock Listing
Traded on the New York Stock Exchange under the symbol -- TTX
Form 10-K Request
Copies of the company's report to the Securities and Exchange Commission on Form
10-K may be obtained without charge by writing to:
Kathy Rogers
Corporate Secretary
Tultex Corporation
P.O. Box 5191
Martinsville, VA 24115
or by calling 540-632-2961, extension 3830
or by e-mail: krogers@neocomm.net
Shareholder Relations
If you have questions regarding your stock, you may contact:
Regina Haynes
Supervisor-Shareholder Relations
Tultex Corporation
P.O. Box 5191
Martinsville, VA 24115
540-632-2961, extension 3831
FAX: 540-632-8000
Corporate Office
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, VA 24112
540-632-2961
FAX: 540-632-8000
Internet Address: www.tultex.com
General Counsel
Hunton & Williams
P.O. Box 1535
Richmond, VA 23212
804-788-8200
Independent Accountants
Price Waterhouse LLP
200 W. 2nd Street
Winston-Salem, NC 27101
910-725-0691
Transfer Agent
First Union National Bank of NC
Shareholder Services Group
230 South Tryon Street
Charlotte, NC 28288-1153
800-829-8432
Corporate Officers
J. M. Franck
Chairman of the Board
C. W. Davies, Jr.
President and Chief Executive Officer
O. R. Rollins
Executive Vice President and General Counsel
J. J. Smith
Vice President-Distribution/Logistics and Systems
W. J. Gardner, Jr.
Vice President-Operations
B. A. Ratliff
Vice President-Resources
W. J. Caruba
Vice President-Sales and Marketing
A.J. Pichirallo
Vice President-Wholesale
S. H. Wood
Vice President and Chief Financial Officer
J.F. Kies
Controller
K. H. Rogers
Corporate Secretary
R. C. Haynes
Assistant Secretary
W. T. Moore
Assistant Treasurer
Board of Directors
J. M. Franck
C. W. Davies, Jr.
S. P. Bernstein
Managing Director, Head of Leveraged Finance Group
J.P. Morgan & Company, Inc.
L. M. Ewers, Jr.
Partner
Hunton & Williams, Attorneys at Law
I. M. Groves, Jr.
Retired Chairman and Chief Executive Officer
Mainstreet BankGroup, Incorporated
H. R. Hunnicutt, Jr.
Retired Chairman and Chief Executive Officer of the Company
F. K. Iverson
Chairman
Nucor Corporation
B. M. Jacobson
Partner
Katz, Sapper & Miller
Certified Public Accountants
R. M. Simmons Jr.
Retired Chairman of the Board
American Furniture Company
Committees of the Board
Audit Committee
I. M. Groves, Jr.
B. M. Jacobson
Executive Compensation Committee
L. M. Ewers, Jr.
B. M. Jacobson
R. M. Simmons, Jr.
Nominating Committee
J. M. Franck
H. R. Hunnicutt, Jr.
F. K. Iverson
PLANT LOCATIONS
Yarn Manufacturing
Mayodan, North Carolina
Roxboro, North Carolina (2 Plants)
Fabric Manufacturing
Asheville, North Carolina
Martinsville, Virginia
Apparel Manufacturing
Bastian, Virginia
Chilhowie, Virginia
Martinsville, Virginia
Roanoke, Virginia
South Boston, Virginia
Dobson, North Carolina
Mayodan, North Carolina
Customer Service Center
Beaver Creek Industrial Park
Martinsville, Virginia
SUBSIDIARIES
Akom Limited
Montego Bay, Jamaica
Dominion Stores, Inc.
Martinsville, Virginia
LogoAthletic, Inc.
Indianapolis, Indiana
LogoAthletic/Headwear, Inc.
Mattapoisett, Massachusetts
TrackGear, Inc.
Charlotte, North Carolina
Tultex Canada, Inc.
Edmonton, Alberta, Canada
COMPANY-OWNED STORE LOCATIONS
Tultex Mill Outlet Stores
550 Franklin Street
Martinsville, Virginia
Hupps Mill Plaza
South Boston, Virginia
Riverside Shopping Center
Danville, Virginia
5327 Williamson Road
Roanoke, Virginia
3225 Old Forest Road
Lynchburg, Virginia
East Lee Highway
Chilhowie, Virginia
1105 Stafford Drive
Princeton, West Virginia
Meadow Green Shopping Center
Eden, North Carolina
905 North Madison Avenue
Roxboro, North Carolina
704C East Broad Avenue
Rockingham, North Carolina
3840 Reynolda Road
Winston-Salem, North Carolina
Willowdale Shopping Center
Durham, North Carolina
132 New Market Madison
Madison, North Carolina
The Sweatshirt Company
Outlets at Birch Run
Birch Run, Michigan
Horizon Outlet Center
Monroe, Michigan
Lake Erie Factory Outlet
Milan, Ohio
Horizon Outlet Center
Oshkosh, Wisconsin
Factory Stores of America at North Bend
North Bend, Washington
Factory Outlets
Post Falls, Idaho
Crossings Outlet Square
Tannersville, Pennsylvania
Rockvale Square
Lancaster, Pennsylvania
Factory Stores of America at Nuttree II
Vacaville, California
Pacific Outlet Center
Gilroy, California
Natoma Station Factory Outlets
Folsom, California
Horizon Outlet Center
Fremont, Indiana
Horizon Outlet Center
Edinburgh, Indiana
North Hampton Factory Outlet
North Hampton, New Jersey
Factory Stores of America
Nashville, Tennessee
Five Oaks Factory Stores
Sevierville, Tennessee
Bend Factory Outlets
Bend, Oregon
Ocean Outlets Seaside
Rehoboth Beach, Delaware
Sikeston Factory Outlet Stores
Miner, Missouri
Nebraska Crossing Factory Stores
Gretna, Nebraska
LogoAthletic Stores
5668 George Town Road
Indianapolis, Indiana
2333 Post Drive
Indianapolis, Indiana
TULTEX
Tultex Corporation
PO Box 5191
Martinsville VA 24115