-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Efo2ioYZZmBjeE9F75a2L7TkfqxiXLhHiwLyHfqNvZKVcksDexL0RsAhAlS82Ha0 JHq+BgI60cENEipIrBd3HA== /in/edgar/work/20001103/0000914384-00-000004/0000914384-00-000004.txt : 20001106 0000914384-00-000004.hdr.sgml : 20001106 ACCESSION NUMBER: 0000914384-00-000004 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20001103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAN RIVER INC /GA/ CENTRAL INDEX KEY: 0000914384 STANDARD INDUSTRIAL CLASSIFICATION: [2200 ] IRS NUMBER: 581854637 STATE OF INCORPORATION: GA FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-13421 FILM NUMBER: 753014 BUSINESS ADDRESS: STREET 1: 2291 MEMORIAL DRIVE CITY: DANVILLE STATE: VA ZIP: 24541 BUSINESS PHONE: 8047997000 10-Q/A 1 0001.txt 1 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ Form 10-Q/A Amendment No. 1 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 2000 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _______________ Commission file number 1-13421 DAN RIVER INC. (Exact name of registrant as specified in its charter) GEORGIA 58-1854637 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2291 Memorial Drive 24541 Danville, Virginia (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (804) 799-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No Number of shares of common stock outstanding as of July 1, 2000: Class A: 19,703,439 Shares Class B: 2,062,070 Shares - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 2 We hereby amend Items 1 and 2 and Item 6, Exhibit 27, of our Quarterly Report on Form 10-Q for the period ending July 1, 2000, to read in their entirety as set forth below. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. See Following Pages. 3 DAN RIVER INC. CONDENSED CONSOLIDATED BALANCE SHEETS
July 1, January 1, 2000 2000 (restated) ----------- ----------- (in thousands, except share and per share data) ASSETS Current assets: Cash and cash equivalents $ 4,354 $ 2,084 Accounts receivable, net 81,674 77,009 Inventories 211,175 168,487 Prepaid expenses and other current assets 6,593 2,132 Deferred income taxes 14,661 15,381 ----------- ----------- Total current assets 318,457 265,093 Property, plant and equipment 491,973 476,438 Less accumulated depreciation and amortization (197,997) (179,705) ----------- ----------- Net property, plant and equipment 293,976 296,733 Goodwill, net 116,508 110,384 Other assets 16,396 12,372 ----------- ----------- $ 745,337 $ 684,582 =========== ===========
4 DAN RIVER INC. CONDENSED CONSOLIDATED BALANCE SHEETS
July 1, January 1, 2000 2000 (restated) ------------ ------------ (in thousands, except share and per share data) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 25,876 $ 22,368 Accounts payable 38,179 33,464 Accrued compensation and related benefits 21,777 22,411 Other accrued expenses 16,692 12,485 ------------ ------------ Total current liabilities 102,524 90,728 Other liabilities: Long-term debt 335,718 292,416 Deferred income taxes 22,842 19,555 Other liabilities 10,802 10,931 Shareholders' equity: Preferred stock, $.01 par value; authorized 50,000 shares; no shares issued -- -- Common stock, Class A, $.01 par value; authorized 175,000,000 shares; issued and outstanding 19,703,439 shares (20,574,020 shares at January 1, 2000) 197 206 Common stock, Class B, $.01 par value; authorized 35,000,000 shares; issued and outstanding 2,062,070 shares 21 21 Common stock, Class C, $.01 par value; authorized 5,000,000 shares; no shares outstanding -- -- Additional paid-in capital 209,096 213,620 Retained earnings 64,137 57,105 ------------ ------------ Total shareholders' equity 273,451 270,952 ------------ ------------ $ 745,337 $ 684,582 ============ ============
See accompanying notes. 5 DAN RIVER INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended ----------------------- ---------------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 (restated) (restated) --------- -------- -------- -------- (in thousands, except per share data) Net sales $ 157,232 $ 154,104 $ 322,181 $ 323,640 Costs and expenses: Cost of sales 125,378 125,257 259,430 266,899 Selling, general and administrative expenses 18,066 16,034 34,036 33,395 Amortization of goodwill 810 696 1,522 1,392 --------- --------- --------- --------- Operating income 12,978 12,117 27,193 21,954 Other income 153 69 352 358 Interest expense (7,869) (6,985) (15,207) (14,329) --------- --------- --------- --------- Income before income taxes 5,262 5,201 12,338 7,983 Provision for income taxes 2,303 2,274 5,306 3,507 --------- --------- --------- --------- Net income $ 2,959 $ 2,927 $ 7,032 $ 4,476 ========= ========= ========= ========= Earnings per share: Basic $ 0.13 $ 0.13 $ 0.32 $ 0.19 ========= ========= ========= ========= Diluted $ 0.13 $ 0.12 $ 0.32 $ 0.19 ========= ========= ========= =========
See accompanying notes 6 DAN RIVER INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended --------------------------- July 1, July 3, 2000 1999 (restated) ------------ ------------ (in thousands) Cash flows from operating activities: Net income $ 7,032 $ 4,476 Adjustments to reconcile net income to net cash provided by operating activities: Noncash interest expense 376 376 Depreciation and amortization of property, plant and equipment 18,652 19,530 Amortization of goodwill 1,522 1,392 Deferred income taxes 4,006 2,234 Writedown/disposal of assets (244) (48) Changes in operating assets and liabilities: Accounts receivable (5,607) 12,058 Inventories (36,724) 6,793 Prepaid expenses and other assets (5,179) (469) Accounts payable and accrued expenses 11,316 (6,665) Other liabilities (99) 1,989 ---------- ---------- Net cash provided (used) by operating activities (4,949) 41,666 ---------- ---------- Cash flows from investing activities: Capital expenditures (19,657) (18,352) Proceeds from sale of assets 450 7,391 Acquisition of business (15,456) -- ---------- ---------- Net cash used by investing activities (34,663) (10,961) ---------- ---------- Cash flows from financing activities: Payments of long-term debt (11,100) (1,081) Net proceeds from issuance of long-term debt 16,045 -- Net borrowings (payments) - working capital facility 41,500 (29,000) Proceeds from exercise of stock options 36 955 Repurchase of common stock (4,599) -- ---------- ---------- Net cash provided (used) by financing activities 41,882 (29,126) ---------- ---------- Net increase in cash and cash equivalents 2,270 1,579 Cash and cash equivalents at beginning of period 2,084 3,356 ---------- ---------- Cash and cash equivalents at end of period $ 4,354 $ 4,935 ========== ==========
See accompanying notes. 7 DAN RIVER INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Dan River Inc. and its wholly-owned subsidiaries, (collectively, the "Company"). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of results for the interim periods presented have been included. Interim results are not necessarily indicative of results for a full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended January 1, 2000. 2. Restatement As announced in the Company' earnings release on October 26, 2000 for the third quarter of fiscal 2000, the Company has restated its operating results for the first two quarters of fiscal 2000 to reflect a product cost adjustment. During the third quarter of fiscal 2000, the Company discovered that it had been understating fabric usage in the production of certain home fashions products, which caused an understatement of cost of sales in the first two quarters of the year. The recalculation of cost of sales to reflect the proper fabric usage, and the related adjustment to incentive compensation, reduced operating income and net income for the three months ended July 1, 2000 by $2,354,000 and $1,447,000, respectively, and reduced operating income and net income for the six months ended July 1, 2000 by $3,686,000 and $2,266,000, respectively. The accompanying balance sheets and statements of income and cash flows have been restated to reflect these adjustments. 8 The following summarizes key financial statement items that were affected by the restatement:
as originally reported restated ------------- -------- (in thousands, except per share data) As of July 1, 2000: Inventories $215,477 $211,175 Shareholders' equity 275,717 273,451 For the three months ended July 1, 2000: Cost of sales 123,326 125,378 Net income 4,406 2,959 Earnings per share (basic and diluted) 0.20 0.13 For the six months ended July 1, 2000: Cost of sales 255,128 259,430 Net income 9,298 7,032 Earnings per share (basic and diluted) 0.42 0.32
3. Inventories The components of inventory are as follows:
July 1, January 1, 2000 2000 (restated) ------------ ------------ (in thousands) Finished goods $ 83,056 $ 55,710 Work in process 109,846 92,707 Raw materials 4,139 8,475 Supplies 14,134 11,595 -------- -------- Total Inventories $211,175 $168,487 ======== ========
9 DAN RIVER INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4. Shareholders' Equity Activity in Shareholders' Equity is as follows (restated):
Total Additional Share- Common Stock Paid-In Retained holders' Class A Class B Capital Earnings Equity ------- -------- ---------- -------- ---------- (in thousands) Balance at Janu- ary 1, 2000 $ 206 $ 21 $213,620 $57,105 $270,952 Net income -- -- -- 7,032 7,032 Stock option activity -- -- 66 -- 66 Repurchase of Common Stock (9) -- (4,590) -- (4,599) ------ ------ -------- ------- -------- Balance at July 1, 2000 $ 197 $ 21 $209,096 $64,137 $273,451 ====== ====== ======== ======= ========
10 DAN RIVER INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended Six Months Ended ----------------------- ---------------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 (restated) (restated) --------- -------- -------- -------- (in thousands, except per share data) Numerator for basic and diluted earnings per share -- net income $ 2,959 $ 2,927 $ 7,032 $ 4,476 ========= ========= ========= ========= Denominator: Denominator for basic earnings per share-- weighted-average shares 22,063 23,368 22,282 23,362 Effect of dilutive securities: Employee stock options -- 162 -- 165 --------- --------- --------- --------- Denominator for diluted earnings per share--weighted average shares adjusted for dilutive securities 22,063 23,530 22,282 23,527 ========= ========= ========= ========= Earnings per share: Basic $ 0.13 $ 0.13 $ 0.32 $ 0.19 ========= ========= ========= ========= Diluted $ 0.13 $ 0.12 $ 0.32 $ 0.19 ========= ========= ========= =========
11 6. Segment Information Summarized information by reportable segment is shown in the following tables:
Three Months Ended Six Months Ended ----------------------- ---------------------- July 1, July 3, July 1, July 3, 2000 1999 2000 1999 (restated) (restated) --------- -------- -------- -------- (in thousands) Net sales: Home Fashions $ 105,624 $ 103,379 $ 219,997 $ 220,769 Apparel Fabrics 38,261 39,395 75,212 79,623 Engineered Products 13,347 11,330 26,972 23,248 --------- --------- --------- --------- Consolidated net sales $ 157,232 $ 154,104 $ 322,181 $ 323,640 ========= ========= ========= ========= Operating income: Home Fashions $ 10,152 $ 12,203 $ 22,392 $ 23,965 Apparel Fabrics 3,175 1,300 6,407 1,174 Engineered Products 822 1,035 1,572 1,572 Corporate items not allocated to segments: Amortization of goodwill (810) (696) (1,522) (1,392) Other (361) (1,725) (1,656) (3,365) --------- --------- --------- --------- Consolidated operating income $ 12,978 $ 12,117 $ 27,193 $ 21,954 ========= ========= ========= =========
7. Acquisition On April 3, 2000, the Company acquired substantially all of the assets of Import Specialists, Inc. ("ISI") for $15.5 million in cash, subject to finalization of a working capital adjustment, and the assumption of certain operating liabilities. The assets acquired consisted principally of receivables and inventory. The acquisition was funded with borrowings under the Company's working capital line of credit. ISI is an importer of home textile products, including natural fiber doormats and bootscrapers, throws, area and accent rugs, and decorative pillows. The operations have been incorporated into the home fashions division as the "Import Specialty Products Group." The acquisition has been accounted for as a purchase and the results of operations of the 12 acquired business have been included in the consolidated financial statements since the date of acquisition. The preliminary allocation of the purchase price of ISI to the assets acquired resulted in goodwill of $7.6 million being recorded, which is being amortized over 20 years. 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. As further described in Note 2 to the Condensed Consolidated Financial Statements, the Company has restated its operating results for the first two quarters of fiscal 2000 to reflect a product cost adjustment. The following discussion reflects the effects of the restatement. RESULTS OF OPERATIONS Comparison of Three Months Ended July 1, 2000 and July 3, 1999 ACQUISITION On April 3, 2000 we acquired substantially all of the assets of Import Specialists, Inc. See Note 7 to Condensed Consolidated Financial Statements. NET SALES Net sales for the second quarter of fiscal 2000 were $157.2 million, an increase of $3.1 million or 2.0% from net sales of $154.1 million for the second quarter of fiscal 1999. Net sales of home fashions products were $105.6 million for the second quarter of fiscal 2000, up $2.2 million or 2.2% from the second quarter of fiscal 1999. Incremental sales from the Import Specialists business we acquired in April 2000 were $3.6 million. Excluding these sales, net sales were down slightly in the second quarter of fiscal 2000, due to a slowdown in reorders from some major retailers. Net sales of apparel fabrics for the second quarter of fiscal 2000 were $38.3 million, down $1.1 million or 2.9% from the second quarter of fiscal 1999. We believe that demand for this product category has been negatively impacted by a decline in dress shirting sales at retail, due to the popularity of business casual dress. Net sales of engineered products were $13.3 million for the second quarter of fiscal 2000, up $2.0 million or 17.8% from the second quarter of fiscal 1999. The increase reflects healthy demand across all product lines for this segment, as well as new fabric finishing capabilities, which have enabled us to better meet the demand for certain of our products. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses were $18.1 million for the second quarter of fiscal 2000 (11.5% of net sales), an increase of $2.0 million or 12.7% from $16.0 million (10.4% of net sales) for the second quarter of fiscal 1999. Incremental expenses resulting from the acquisition of Import Specialists contributed $0.6 million of the increase. The remainder of the increase was caused by higher expenses for home fashion designs and higher information systems expenses, offset in part by lower incentive compensation. 14 OPERATING INCOME Consolidated operating income for the second quarter of fiscal 2000 was $13.0 million (8.3% of net sales) compared to $12.1 million (7.9% of net sales) for the second quarter of fiscal 1999. Segment Operating Income: Operating income for the home fashions segment was $10.2 million for the second quarter of fiscal 2000, including $0.3 million in operating income contributed by the Import Specialists business that we acquired in April, 2000. This compares to $12.2 million in operating income earned in the second quarter of fiscal 1999. The decrease in operating income is generally attributable to increases in information systems expenses and design costs. The Import Specialists business contributed $1.0 million in gross profit in the current quarter. Otherwise, gross profit was about equal in the second quarter of fiscal 2000 compared to the second quarter of fiscal 1999, with cost savings from lower cotton prices in the current year offset by the effects of less efficient manufacturing performance. The apparel fabrics segment generated $3.2 million in operating income for the second quarter of fiscal 2000, compared to $1.3 million for the second quarter of fiscal 1999. The higher profitability in the current quarter reflects improved margins due to better capacity utilization and lower raw material costs. Per unit costs for goods sold in the second quarter of fiscal 1999 were high due to the under-absorption of fixed costs resulting from operating on reduced running schedules as we worked off excess inventories. Operating income for the engineered products segment was $0.8 million for the second quarter of fiscal 2000, compared to $1.0 million for the second quarter of fiscal 1999. Although revenues increased by $2.0 million in the current quarter, manufacturing operations ran less efficiently in the second quarter of 2000 compared to the second quarter of fiscal 1999, which negatively impacted operating margins. Corporate Items: Amortization of goodwill was $0.8 million in the second quarter of fiscal 2000 compared to $0.7 million in the second quarter of fiscal 1999. The increase in fiscal 2000 is attributable to goodwill resulting from our April 2000 acquisition of Import Specialists. Other expenses not allocated to segments totaled $0.4 million in the second quarter of fiscal 2000 compared to $1.7 million in the second quarter of fiscal 1999. The fiscal 1999 amount includes $1.3 million of depreciation on the write-up of the Company's fixed assets from its acquisition in 1989. The vast majority of the write-up was for manufacturing equipment that was fully depreciated before the second quarter of fiscal 2000. INTEREST EXPENSE Interest expense was $7.9 million for the second quarter of fiscal 2000, up $0.9 million over the second quarter of fiscal 1999. Higher average debt levels resulted in $0.5 million of the increase, with the remainder caused by the effect of higher average interest rates. 15 INCOME TAX PROVISION The income tax provision was $2.3 million (43.8% of pre-tax income) for the second quarter of fiscal 2000, which is approximately the same amount and effective tax rate as in the comparable period of the prior year. The relatively high effective rate for both periods was caused by the effect of nondeductible goodwill amortization. NET INCOME AND EARNINGS PER SHARE Net income for the second quarter of fiscal 2000 was $3.0 million or $0.13 per share (diluted) compared to $2.9 million or $0.12 per share (diluted) for the second quarter of fiscal 1999. Weighted average diluted shares outstanding decreased to 22.1 million for the second quarter of fiscal 2000 from 23.4 million for the second quarter of fiscal 1999 due principally to the repurchase of shares under the Company's stock repurchase program. Comparison of Six Months Ended July 1, 2000 and July 3, 1999 NET SALES Net sales for the first six months of fiscal 2000 were $322.2 million, a decrease of $1.5 million or 0.5% from net sales of $323.6 million for the first six months of fiscal 1999. Net sales of home fashions products were $220.0 million for the first six months of fiscal 2000, down $0.8 million or 0.3% from the first six months of fiscal 1999. Excluding $3.6 million in incremental sales attributable to the Import Specialist business that we acquired in April 2000, net sales decreased by $4.4 million. The decrease was chiefly attributable to disruptions early in fiscal 2000 caused by poor weather and the implementation of our new enterprise resource planning system, and to a slowdown in reorders from some major retailers in the second quarter of the fiscal year. Net sales of apparel fabrics for the first six months of fiscal 2000 were $75.2 million, down $4.4 million or 5.5% from the first six months of fiscal 1999. The decrease reflects a competitive pricing environment for shirting fabrics, and lower unit volume which we believe is attributable to a decline in dress shirting sales at retail. Net sales of engineered products were $27.0 million for the first six months of fiscal 2000, up $3.7 million or 16.0% from the first six months of fiscal 1999. The increase reflects healthy demand across all product lines for this segment, as well as new fabric finishing capabilities, which have enabled us to better meet the demand for certain of our products. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses were $34.0 million for the first six months of fiscal 2000 (10.6% of net sales), an increase of $0.6 million or 1.9% from $33.4 million (10.3% of net sales) for the first six months of fiscal 1999. Except for $0.6 million in incremental expenses attributable to 16 the Import Specialists business that we acquired in April 2000, total selling, general and administrative expenses were approximately the same in the first six months of both fiscal years. In the first six months of fiscal 2000 increases over the prior year in information systems expenses and home fashions design costs were offset by lower incentive compensation. OPERATING INCOME Consolidated operating income for the first six months of fiscal 2000 was $27.2 million (8.4% of net sales) compared to $22.0 million (6.8% of net sales) for the first six months of fiscal 1999. Segment Operating Income: Operating income for the home fashions segment was $22.4 million for the first six months of fiscal 2000, including $0.3 million in operating income contributed by the Import Specialists business that we acquired in April, 2000. This compares to $24.0 million in operating income earned in the first six months of fiscal 1999. The decrease in operating income is generally attributable to increases in information systems expenses and design costs, particularly in the second quarter of fiscal 2000. The Import Specialists business contributed $1.0 million in gross profit in the current year. Otherwise, gross profit was about equal in the first six months of fiscal 2000 compared to the first six months of fiscal 1999, with cost savings from lower cotton prices in the current year offset by the effects of less efficient manufacturing performance. The apparel fabrics segment generated $6.4 million in operating income for the first six months of fiscal 2000, compared to $1.2 million for the first six months of fiscal 1999. The higher profitability in the current fiscal year reflects improved margins due to better capacity utilization and lower raw material costs. Per unit costs for goods sold in the first part of fiscal 1999 were high due to the under-absorption of fixed costs resulting from operating on reduced running schedules as we worked off excess inventories. Operating income for the engineered products segment was $1.6 million for the first six months of fiscal 2000, approximately the same as for the first six months of fiscal 1999. Although revenues increased by $3.7 million in the first six months of fiscal 2000, less efficient manufacturing performance in the current year negatively impacted operating margins. Corporate Items: Amortization of goodwill was $1.5 million in the first six months of fiscal 2000 compared to $1.4 million in the first six months of fiscal 1999. The increase in fiscal 2000 is attributable to goodwill resulting from our April 2000 acquisition of Import Specialists. Other expenses not allocated to segments totaled $1.7 million in the first six months of fiscal 2000 compared to $3.4 million in the first six months of fiscal 1999. The fiscal 2000 amount includes $1.2 million attributable to depreciation on the write-up of the Company's fixed assets from its acquisition in 1989, compared to $2.7 million in fiscal 1999. The vast majority of the write-up was for manufacturing equipment that was fully depreciated before the end of the first quarter of fiscal 2000. 17 INTEREST EXPENSE Interest expense was $15.2 million for the first six months of fiscal 2000, up $0.9 million over the first six months of fiscal 1999. The increase was caused by higher average interest rates. INCOME TAX PROVISION The income tax provision was $5.3 million (43.0% of pre-tax income) for the first six months of fiscal 2000, compared to $3.5 million (43.9% of pre-tax income) for the first six months of fiscal 1999. The relatively high effective rate for both periods was caused by the effect of nondeductible goodwill amortization. NET INCOME AND EARNINGS PER SHARE Net income for the first six months of fiscal 2000 was $7.0 million or $0.32 per share (diluted) compared to $4.5 million or $0.19 per share (diluted) for the first six months of fiscal 1999. Weighted average diluted shares outstanding decreased to 22.3 million for the first six months of fiscal 2000 from 23.5 million for the first six months of fiscal 1999 due principally to the repurchase of shares under the Company's stock repurchase program. LIQUIDITY AND CAPITAL RESOURCES General We believe that internally generated cash flow, supplemented by borrowings under our working capital line of credit, will be sufficient to meet our foreseeable debt service requirements, capital expenditures, and working capital needs. We had a debt to total capital ratio of 56.9% at July 1, 2000. Credit Facilities We maintain a credit facility comprised of a $127.9 million term loan and a $150 million working capital line of credit. This credit facility is secured by our accounts receivable and inventories. As of July 1, 2000, $97.4 million was used and $52.6 million was unused and available for borrowing under the working capital line of credit. The credit facility bears interest at the Base Rate plus applicable percentage, as defined (9.63% as of August 1, 2000) or LIBOR plus applicable percentage (8.01% as of August 1, 2000), for periods of one, two, three or six months, at our option. The working capital line is non-amortizing and any amounts outstanding are due at the final maturity of September 30, 2003. The term loan was fully borrowed for $125 million at its inception in October of 1998 and has scheduled amortization payments which began this fiscal year. In June, we added $12.9 million of new debt to the term loan. The new outstanding under the term loan is $127.9 million. Two more quarterly payments of $5 million each are scheduled for this fiscal year. 18 The credit facility is provided pursuant to a loan agreement which contains certain covenants, including the maintenance of certain interest coverage ratio and maximum debt levels, and limitations on mergers and consolidations, affiliated transactions, incurring liens, disposing of assets and limitations on investments. An event of default under the loan agreement includes a Change of Control (as defined) as well as non-compliance with certain other provisions. Working Capital Net cash used in operating activities was $4.9 million in the six months ended July 1, 2000. Included in that amount is a use of cash from operating assets and liabilities of $36.3 million, comprised of a $31.0 million use of operating working capital (accounts receivable - $5.6 million use, inven- tories - $36.7 million use, and accounts payable and accrued expenses - $11.3 million source) and a $5.3 million use of cash for prepaid expenses and other assets and other liabilities. The inventory buildup is due primarily to the rollout of a major new home fashions program scheduled to begin shipping during the third quarter. During the comparable six month period ended July 3, 1999, net cash generated from operating activities was $41.7 million. Included in that amount is a source of cash for operating assets and liabilities of $13.7 million, primarily comprised of a $12.2 million source for operating working capital (accounts receivable - $12.1 million source, inventories - $6.8 million source, and accounts payable and accrued expenses - $6.7 million use) and a $1.5 million source of cash for prepaid expenses and other assets and other liabilities. Capital Improvements During the first six months of fiscal 2000, we purchased $19.7 million in equipment and manufacturing improvements. On April 3, 2000, we acquired substantially all of the assets of Import Specialists, Inc. for $15.5 million in cash, and the assumption of certain operating liabilities. Share Repurchase At the beginning of this fiscal year, we had $5 million remaining of a $10 million share repurchase program authorized by the Board of Directors in August 1999. Shares repurchases pursuant to this program are retired and constitute authorized but unissued shares. During the first six months of fiscal 2000 we repurchased 877,225 shares for $4,599,126. We have $400,874 remaining under the authorization for repurchase of shares. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not Applicable. 19 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit 27 is attached hereto as amended in its entirety. 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. DAN RIVER INC. Date: November 3, 2000 /s/ Barry F. Shea ----------------------------------- Barry F. Shea Executive Vice President-Chief Financial Officer (Authorized Signing Officer and Principal Financial Officer)
EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET OF DAN RIVER INC. AS OF JULY 1, 2000 (RESTATED) AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JULY 1, 2000 (RESTATED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-30-2000 JUL-01-2000 4,354 0 81,674 0 211,175 318,457 491,973 197,997 745,337 102,524 335,718 0 0 218 273,233 745,337 322,181 322,181 259,430 259,430 0 0 15,207 12,338 5,306 7,032 0 0 0 7,032 0.32 0.32
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