1
EXHIBIT 99
DUNDEE MILLS, INCORPORATED
Condensed Consolidated Balance Sheets
(In thousands except share data)
(Unaudited)
MARCH 31, MARCH 31,
1995 1994
--------- ----------
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 2,662 $ 2,429
Accounts receivable . . . . . . . . . . . . . . . . . . . . 50,657 47,422
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 56,890 56,217
Refundable income taxes . . . . . . . . . . . . . . . . . . - 911
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 786 175
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . 110,995 107,154
---------- ----------
Property, plant, and equipment:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,546 1,528
Buildings and improvements . . . . . . . . . . . . . . . . 51,557 50,659
Machinery and equipment . . . . . . . . . . . . . . . . . . 67,670 67,296
Furniture and fixtures . . . . . . . . . . . . . . . . . . 4,151 1,008
---------- ----------
124,924 120,491
Accumulated depreciation . . . . . . . . . . . . . . . . . (68,013) (62,209)
---------- ----------
Property, plant, and equipment, net . . . . . . . . . . . 56,911 58,282
---------- ----------
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 2,875 3,692
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 2,026 652
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . 1,116 1,147
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 173,923 $ 170,927
========== ==========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Trade accounts payable . . . . . . . . . . . . . . . . . . $ 8,570 $ 6,414
Salaries, wages and commissions . . . . . . . . . . . . . . 1,661 3,098
Withholding and payroll taxes . . . . . . . . . . . . . . . 1,642 1,819
Deferred income taxes . . . . . . . . . . . . . . . . . . . - 58
State and local taxes . . . . . . . . . . . . . . . . . . . 1,337 185
Income taxes payable . . . . . . . . . . . . . . . . . . . 1,610 -
Other liabilities . . . . . . . . . . . . . . . . . . . . . 5,269 2,352
Current maturities of long-term debt . . . . . . . . . . . . 8,200 9,445
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . 28,289 23,371
---------- ----------
Noncurrent liabilities:
Long-term debt . . . . . . . . . . . . . . . . . . . . . . 21,715 22,670
Deferred compensation and other deferred
credits . . . . . . . . . . . . . . . . . . . . . . . . . 3,060 1,858
---------- ----------
Total noncurrent liabilities . . . . . . . . . . . . . . 24,775 24,528
---------- ----------
Shareowners' equity:
Common stock - $25.00 par value a share:
Authorized - 200,000 shares, 46,728
shares issued in 1995; 46,913 shares
issued in 1994 . . . . . . . . . . . . . . . . . . . . . 1,168 1,173
Retained earnings . . . . . . . . . . . . . . . . . . . . . 119,691 121,855
---------- ----------
Shareowners' equity . . . . . . . . . . . . . . . . . . . 120,859 123,028
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 173,923 $ 170,927
========== ==========
2
DUNDEE MILLS, INCORPORATED
Condensed Consolidated Statements of Operations
(In thousands except per share data)
(Unaudited)
THREE MONTHS ENDED SEVEN MONTHS ENDED
----------------------------- --------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
OPERATIONS
Net sales . . . . . . . . . . . . . . . . . . . $ 70,559 $ 64,425 $ 160,922 $ 149,532
Cost of goods sold . . . . . . . . . . . . . 61,994 55,264 139,257 129,496
Selling, general and
administrative expenses . . . . . . . . . . 7,687 8,241 17,762 17,399
---------- ---------- ---------- ----------
Operating income . . . . . . . . . . . . . . 878 920 3,903 2,637
Other income . . . . . . . . . . . . . . . . 701 224 1,128 362
---------- ---------- ---------- ----------
1,579 1,144 5,031 2,999
Other deductions:
Interest . . . . . . . . . . . . . . . . . 484 432 1,031 1,033
Other . . . . . . . . . . . . . . . . . . . 1,827 1,252 2,937 2,576
---------- ---------- ---------- ----------
2,311 1,684 3,968 3,609
---------- ---------- ---------- ----------
Income (loss) before income taxes . . . . . . (732) (540) 1,063 (610)
Income taxes (benefit) . . . . . . . . . . . . (298) (167) 432 (189)
---------- ---------- ---------- ----------
Income (loss) before cumulative effect of
changes in accounting principles . . . . . . (434) (373) 631 (421)
Cumulative effects of changes in
accounting principles . . . . . . . . . . . . - - - (193)
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . $ (434) $ (373) $ 631 $ (614)
========== ========== ========== ==========
Weighted average shares of
common stock . . . . . . . . . . . . . . . . 46,764 46,930
========== ==========
Per share:
Income (loss) before cumulative effect of
changes in accounting principles . . . . . . $ (9.28) $ (7.95) $ 13.49 $ (8.97)
Cumulative effects of changes in
accounting principles . . . . . . . . . . . . - - - (4.12)
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . $ (9.28) $ (7.95) $ 13.49 $ (13.09)
========== ========== ========== ==========
Dividends paid . . . . . . . . . . . . . . . . . $ 5.00 $ 5.00 $ 9.00 $ 9.00
========== ========== ========== ==========
3
DUNDEE MILLS, INCORPORATED
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
SEVEN MONTHS ENDED
-----------------------------------
MARCH 31, MARCH 31,
1995 1994
---------- ----------
CASH PROVIDED (USED) BY:
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 631 $ (614)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . 6,199 6,226
Cumulative effect of adoption of SFAS No. 109 . . . . . . . . . - 193
Deferred tax provision . . . . . . . . . . . . . . . . . . . . . (1,303) (811)
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . . . . . . . . . (713) (2,065)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (10,162) 4,622
Refundable income taxes . . . . . . . . . . . . . . . . . . . . 822 (506)
Other current assets . . . . . . . . . . . . . . . . . . . . . . 111 743
Prepaids and deposits . . . . . . . . . . . . . . . . . . . . . 719 (1,070)
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . 594 22
Other current liabilities . . . . . . . . . . . . . . . . . . . 5,499 1,698
Other non-current liabilities . . . . . . . . . . . . . . . . . 698 704
--------- ---------
Net cash provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . 3,095 9,142
--------- ---------
Investing activities:
Purchase of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,461) (2,732)
--------- ---------
Net cash (used) by investing activities . . . . . . . . . . . . (4,461) (2,732)
--------- ---------
Financing activities:
Proceeds from sale of stock . . . . . . . . . . . . . . . . . . . 50 -
Purchases of common stock . . . . . . . . . . . . . . . . . . . . (135) (54)
Proceeds from long-term debt borrowings . . . . . . . . . . . . . 2,000 -
Payment of long-term debt . . . . . . . . . . . . . . . . . . . . (4,000) (6,000)
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . (421) (422)
--------- ---------
Net cash (used) by financing activities . . . . . . . . . . . (2,506) (6,476)
--------- ---------
Decrease in cash and cash equivalents . . . . . . . . . . . . . . . $ (3,872) $ (66)
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . . . . . . . . . . . 6,534 2,495
--------- ---------
Cash and cash equivalents at
end of period . . .. . . . . . . . . . . . . . . . . . . . . . . $ 2,662 $ 2,429
========= =========
4
Dundee Mills, Incorporated
Notes to Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements 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
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the seven-month period
ended March 31, 1995, are not necessarily indicative of future periods.
2. Income Taxes
Effective September 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes" ("FSAS 109"). Although permitted under the new rules, prior year's
financial statements have not been restated.
The cumulative effect of adopting SFAS 109 as of September 1, 1993, was to
reduce net income by $193,208.00 ($4.12 per common share).
3. Long Term Debt
The Company amended its revolving credit agreement, effective as of August 31,
1994, (the "Amended RCA") to provide for unsecured borrowings, under a
revolving credit note ("RCN"), of up to $25,000,000. The commitment is,
however, reduced by each payment made by the Company, unless the Company
notifies the lender to the contrary. The commitment shall be reduced by the
amount of such repayment, unless notification is given, until the commitment is
reduced to $10,000,000. The RCN matures on August 31, 1997. Under the Amended
RCA, $15,000,000 of the RCN is eligible for conversion to a five-year term
loan. The term conversion provision may be initiated by the Company upon
maturity, and the Company would be required to make twenty equal quarterly
principal payments commencing September 30, 1997.
The Amended RCA provides for interest at the prime rate minus one-half percent
per annum of LIBOR for interest periods of 30, 60 or 90 days, plus an
additional 35/100 percent per annum. However, Dundee is party to an interest
rate swap with a
5
decreasing notional amount equal to the outstanding balance of
the RCN which changed the floating interest rate exposure on the RCN to a fixed
interest rate exposure. Under this swap agreement, the Company pays a fixed
interest rate of 6.1% and receives the 3 month LIBOR rate reset quarterly (6.25%
at March 31, 1995) on the notional amount. This interest rate swap expires in
December 1996.
The amount of $8,000,000 has been included in current liabilities at March 31,
1995 since the Company intends to repay that amount in the next twelve-month
period.
4. Subsequent Event
On May 25, 1995, the shareholders of the Company approved a merger whereby
Springs Industries, Inc. exchanged common stock and cash for all of the issued
and outstanding common stock of the Company. Immediately prior to the merger
and pursuant to an action by a special committee of Dundee's Board of
Directors, the Company paid $2,168,000 to certain officers of the Company in
recognition of their past service to the Company and their special efforts
toward the consummation of the merger. In connection with the merger, the
outstanding commitment under the RCN was extinguished.
6
SPRINGS INDUSTRIES, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
as of April 1, 1995
(in thousands)
Pro Forma
Increase
Springs Dundee (Decrease) Pro Forma
(Historical) (Historical) Adjustments Combined
------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,142 $ 2,662 $ (1,438) a, n $ 2,366
Accounts receivable 300,175 50,657 -- 350,832
Inventories 299,229 56,890 27,906 b 384,025
Other 40,169 786 (4,896) a, c, d 36,059
--------------------------------------- -----------
Total current assets 640,715 110,995 21,572 773,282
--------------------------------------- -----------
Property, plant and equipment 1,271,382 124,924 (80,165) e, o 1,316,141
Accumulated depreciation (717,598) (68,013) 68,013 e (717,598)
--------------------------------------- -----------
Property, plant, and equipment, net 553,784 56,911 (12,152) o 598,543
--------------------------------------- -----------
Other assets and deferred charges 119,775 6,017 (1,116) f 124,676
--------------------------------------- -----------
Total $1,314,274 $173,923 $ 8,304 $1,496,501
======================================= ===========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term borrowings and current
maturities of long-term debt $ 76,991 $ 8,200 -- $ 85,191
Accounts payable and other accrued liabilities 192,695 20,089 $ 7,282 g 220,066
--------------------------------------- -----------
Total current liabilities 269,686 28,289 7,282 305,257
--------------------------------------- -----------
Noncurrent liabilities:
Long-term debt 261,786 21,715 21,195 o 304,696
Long-term benefit plans and
deferred compensation 141,856 3,060 3,840 h 148,756
Deferred income taxes and other
deferred credits 50,841 -- (1,519) c 49,322
--------------------------------------- -----------
Total noncurrent liabilities 454,483 24,775 23,516 502,774
--------------------------------------- -----------
Shareowners' equity:
Class A common stock ($0.25 par value) 2,472 -- 629 o 3,101
Class B common stock ($0.25 par value) 1,958 -- -- 1,958
Dundee common stock ($25.00 par value) -- 1,168 (1,168) m 0
Additional paid-in capital 11,657 -- 97,736 o 109,393
Retained earnings 573,225 119,691 (119,691) m 573,225
Cost of Class A shares in treasury (2,467) -- -- (2,467)
Currency translation adjustment 3,260 -- -- 3,260
--------------------------------------- -----------
Shareowners' equity 590,105 120,859 (22,494) 688,470
--------------------------------------- -----------
Total $1,314,274 $173,923 $ 8,304 $1,496,501
======================================= ===========
7
SPRINGS INDUSTRIES, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
for the Thirteen Weeks Ended April 1, 1995
(in thousands except share data)
Pro Forma
Increase
Springs Dundee (Decrease) Pro Forma
(Historical) (Historical) Adjustments Combined
--------------------------------------------------------------------
OPERATIONS
NET SALES $483,136 $70,559 -- $553,695
-------------------------------------- ---------
Cost of goods sold 396,028 61,994 $ 776 i, p 458,798
Selling, general and administrative
expenses 64,010 7,687 9 j 71,706
-------------------------------------- ---------
Operating income 23,098 878.00 (785) 23,191
Interest expense 7,252 484.00 358.00 k 8,094
Other (income) expense (835) 1,126 -- 291.00
-------------------------------------- ---------
Income before income taxes 16,681 (732) (1,143) 14,806
Income tax provision 6,813 (298) (452) l 6,063
-------------------------------------- ---------
NET INCOME (LOSS) $ 9,868 $ (434) $ (691) $ 8,743
====================================== =========
PER SHARE:
NET INCOME $ 0.55 $ 0.43
====================================== =========
8
SPRINGS INDUSTRIES, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(UNAUDITED)
The following pro forma adjustments (in thousands) have been applied to the
unaudited pro forma condensed combined balance sheet and the unaudited pro
forma condensed combined statement of operations of Springs Industries, Inc.,
and Dundee Mills, Incorporated, to give effect to the Merger as if it had
occurred on April 1, 1995, and January 1, 1995, respectively:
(a) Reflects the collection before the Effective Time by Dundee of
notes receivable in the amount of $730 from Dundee
shareholders in accordance with the Merger Agreement.
(b) Represents an increase of $27,906 to restate Dundee's LIFO
inventory to fair value.
(c) Reflects deferred taxes associated with pro forma adjustments,
which have been classified to conform with Springs'
presentation. Other current assets decreased $9,349 and
deferred income taxes and other deferred credits decreased
$1,519.
(d) Reflects the fair value of Dundee's forward cotton purchase
contracts in the amount of $5,183.
(e) Reflects the elimination of $68,013 of Dundee's property and
accumulated depreciation to reflect net book value.
(f) Reflects the elimination of $1,116 of certain Dundee
intangible assets.
(g) Reflects various accruals of $7,282 including transaction
costs.
(h) Reflects the fair value of the benefit obligation for a
nonqualified defined benefit pension plan in the amount of
$3,840.
(i) Represents the reduction of depreciation expense in the amount
of $1,780 to reflect depreciation on the fair value of fixed
assets and to reflect conforming changes in depreciation
methods and depreciable lives.
(j) Reflects the discontinuation of amortization expense relating
to certain eliminated intangible assets of Dundee and the
elimination of amortization
9
expense associated with nonqualified defined benefit pension
plans (net expense $9).
(k) Reflects additional interest expense of $358 associated with
long-term debt incurred to complete the Merger.
(l) Reflects the income tax benefit at statutory federal and state
rates of $452 associated with pro forma statement of
operations adjustments.
(m) Reflects the removal of the stockholders' equity balances of
Dundee.
(n) Reflects the payment of $2,168 in management retention
compensation to be paid by Dundee immediately prior to the
Effective Date of the Merger, as permitted by the Merger
Agreement.
(o) The allocation of Merger Consideration is summarized below (in
thousands):
Springs Class A Common Stock issued . . . . . . $ 98,365
Additional long-term debt to fund cash
portion of Merger Consideration . . . . . . . 21,195
--------
Total Merger Consideration . . . . . . . . 119,560
--------
Less:
Fair value of net assets acquired
other than property and equipment . . . . . 74,801
Historical book value of property and
equipment acquired . . . . . . . . . . . . . 56,911
--------
Total . . . . . . . . . . . . . . . . . . 131,712
--------
Difference . . . . . . . . . . . . . . . . . . . $(12,152)
========
The Springs Class A Common Stock issued would have a par value total of
$629, and additional paid in capital would increase by $97,736 based on
the fair value of Springs Class A Common Stock of $39.125 at the date
of acquisition.
(p) Reflects the amortization of the fair value related to
cotton contracts during the quarter of $2,556.