8-K 1 fm8k2-03.txt 1 --------------------------------------------------------------------------- --------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 4, 2003 DAN RIVER INC. (Exact name of registrant as specified in its charter) Commission file number 1-13421 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: (434) 799-7000 --------------------------------------------------------------------------- --------------------------------------------------------------------------- 2 Item 5. Other Events and Regulation FD Disclosure. ----------------------------------------- On February 4, 2003, we filed a news release concerning our fourth quarter and full year results for fiscal 2002. The text of the news release is as follows: Danville, Va. February 4, 2003. Dan River Inc. (NYSE: DRF) today reported results for the fourth quarter and year ended December 28, 2002. Net sales for the fourth quarter of fiscal 2002 were $153.2 million, up $7.4 million or 5.0% from $145.8 million in the fourth quarter of fiscal 2001. For the fourth quarter of fiscal 2002, the Company reported net income of $4.2 million, or $0.19 per diluted share. These results compare to a net loss of $10.0 million or $0.46 per diluted share for the fourth quarter of fiscal 2001. Sales of Dan River's home fashions products for the fourth quarter of fiscal 2002 were $112.1 million, up $3.4 million or 3.1% from the fourth quarter of fiscal 2001. Sales of apparel fabrics were $31.3 million, up $3.7 million or 13.3%, and sales of engineered products were $9.8 million, up $0.3 million or 2.9%. For fiscal 2002 net sales were $612.9 million, down $18.1 million or 2.9% from $631.1 million for the 52 weeks of fiscal 2001. Before the cumulative effect of a change in an accounting principle related to goodwill, the Company reported income of $7.4 million, or $0.33 per diluted share for fiscal 2002, compared to a net loss of $20.9 million, or $0.96 per diluted share for fiscal 2001. For the 2002 fiscal year, net sales of Dan River home fashions products were $441.2 million, down $28.7 million, or 6.1%, from fiscal 2001. Net sales of apparel fabrics were $131.5 million, up $12.6 million or 10.6%, and net sales of engineered products were $40.3 million, down $2.0 million or 4.8%. "We are pleased to be able to deliver these fourth quarter and full year operating results," commented Joseph L. Lanier, Jr., Chairman and CEO. "At this time last year, we had set in motion a plan that would allow us to return to our historic levels of profitability. All the necessary actions had been taken to bring inventory and capacity levels more in line with the current business environment. Our expectations materialized in 2002 as our operations ran at more normal levels, raw material prices declined, and our product mix and margins improved." "Accordingly, we were able to generate significantly increased cash flow in fiscal 2002 due to the successful execution of our plan and our focus on working capital management," commented Mr. Lanier, "enabling us to repay $73.4 million of debt during fiscal 2002. Total debt at year end fiscal 2002 was $252 million, down from $369 million just two years ago. Both our existing credit facility and our senior subordinated notes mature this year in the third and fourth quarter, and accordingly, they are reflected in the current portion of long term debt on our balance sheet. We are currently monitoring market conditions and intend to refinance our bank debt with a new credit facility and our senior subordinated notes with a 3 new issue of notes when market conditions are favorable. We expect that we will complete these refinancings prior to the respective maturities of our existing credit facility and notes." In closing, Mr. Lanier said, "As we look to fiscal 2003, we presently expect sales and operating results similar to fiscal 2002. For the full fiscal year of 2003, we are anticipating net income of $0.40 to $0.45 per share. In the first quarter of fiscal 2003, we are expecting net income of $0.05 to $0.10 per share." The fiscal 2001 fourth quarter results include net nonrecurring pre- tax charges of $4.3 million, consisting mostly of a noncash writedown in connection with the manufacturing consolidation announced by the Company in December 2001. In addition, in the fourth quarter of fiscal 2001 the Company recorded $3.5 million in bad debt expense related to the Kmart Corporation bankruptcy filing. Included in the full fiscal 2002 results is a one-time increase in income tax expense of $2.8 million, attributable to the tax law changes associated with the Job Creation and Worker Assistance Act of 2002, and a $1.6 million pre-tax charge ($1.0 million after tax) for bad debt expense related to the Chapter 11 filing of Kmart Corporation. The fiscal 2001 results include a one-time tax benefit of $5.0 million recorded as a result of the completion of an IRS examination and goodwill amortization expense of $3.6 million. In compliance with the new accounting pronouncement, SFAS No. 142, "Impairment of Goodwill and Intangible Assets," the Company completed the required transitional impairment test of goodwill in the third quarter of fiscal 2002. As a result of the test, a $20.7 million non-cash charge has been recorded to reflect the writedown of goodwill. This writedown reflects impairment of goodwill in our engineered products, apparel fabrics and import specialty products businesses, and is reported as the cumulative effect of a change in accounting principle as of the first day of fiscal 2002. Including this effect of the change in accounting principle, the Company reported a net loss of $13.3 million, or $0.60 per diluted share, for fiscal 2002. The Company has also announced that its annual meeting of shareholders will be held at 10 a.m. Eastern Time on April 25, 2003, at the Riverview Inn, Country Club Drive, in Danville, Virginia. Shareholders of record on February 28, 2003 will be eligible to participate in and vote at the annual meeting. Note: This news release contains forward-looking statements under applicable securities laws. We believe our forward-looking statements are reasonable; however, undue reliance should not be placed on such statements, which are based on current expectations. Among our forward-looking statements are expectations concerning the refinancing of our credit facility and our senior subordinated notes. There can be no assurance that we will be able to refinance this indebtedness on terms that we consider to be favorable or at all. Our inability to refinance this indebtedness prior to its maturity would have a material adverse effect on our liquidity and results of operations. 4 Additionally, our financial condition and results of operations could be materially and adversely affected (i) by economic and political factors outside of our control, including, for example, the effects of military conflicts or terrorist activity on the U.S. economy generally, including in particular any resultant adverse effects on retail demand and the cost of energy and raw materials used in our manufacturing processes; and (ii) by numerous other market and industry factors which are outside our control. Risks associated with our business are detailed in our annual report on Form 10-K filed with the SEC on March 22, 2002 and in our quarterly report on Form 10-Q filed with the SEC on November 8, 2002. 5 UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT (OOO'S EXCEPT PER SHARE DATA)
Fourth Quarter Year ----------------------- -------------------- 2002 2001 2002 2001 --------- -------- --------- -------- Net Sales $ 153,178 $ 145,824 $ 612,949 $631,072 Cost of Sales 123,343 130,182 500,351 562,606 --------- --------- --------- -------- Gross Profit 29,835 15,642 112,598 68,466 S,G and A 17,399 18,601 68,805 67,910 Amortization of Goodwill -- 902 -- 3,617 Other Operating Costs, Net (240) 4,282 (550) 4,282 --------- --------- --------- -------- Operating Income (Loss) 12,676 (8,143) 44,343 (7,343) Operating Income (Expense) 352 (2) 455 694 Equity in Loss of Joint Venture -- -- -- (244) Interest Expense 5,906 7,320 26,884 32,063 --------- --------- --------- -------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change 7,122 (15,465) 17,914 (38,956) Provision (Benefit) for Income Taxes 2,964 (5,442) 10,534 (18,087) --------- --------- --------- -------- Income (Loss) Before Cumulative Effect of Accounting Change 4,158 (10,023) 7,380 (20,869) Cumulative Effect of Accounting Change, Net of Tax -- -- (20,701) -- --------- --------- --------- -------- Net Income (Loss) $ 4,158 $ (10,023) $ (13,321) $(20,869) ========= ========= ========= ========
6 UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT (000's EXCEPT PER SHARE DATA)
Fourth Quarter Year ----------------------- -------------------- 2002 2001 2002 2001 --------- --------- --------- -------- Earnings (Loss) Per Share--Basic: Income (Loss) Before Cumulative Effect of Accounting Change $ 0.19 $ (0.46) $ 0.34 $ (0.96) Cumulative Effect of Accounting Change -- -- (0.95) -- --------- -------- -------- ------- Net Income (Loss) $ 0.19 $ 0.46) $ (0.61) $ (0.96) ========= ======== ======== ======= Earnings (Loss) Per Share --Diluted: Income (Loss) Before Cumulative Effect of Accounting Change $ 0.19 $ (0.46) $ 0.33 $ (0.96) Cumulative Effect of Accounting Change -- -- (0.93) -- --------- -------- -------- ------- Net Income (Loss) $ 0.19 $ (0.46) $ (0.60) $ (0.96) ========= ======== ======== ======= Wtd. Avg. No. Shares: Basic 21,839 21,766 21,827 21,766 Diluted 22,234 21,766 22,163 21,766
7 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (000's)
2002 2001 ----------- ---------- ASSETS: ------ Cash $ 2,832 $ 8,316 Accounts Receivable 71,292 75,029 Inventories 151,586 156,508 Other Current Assets 19,667 25,107 ----------- ----------- Total Current Assets 245,377 264,960 Property, Plant & Equipment, Net 248,175 273,735 Goodwill, Net 91,701 115,134 Other Assets 10,269 12,540 ----------- ----------- Total Assets $ 595,522 $ 666,369 =========== =========== Liabilities and Shareholders' Equity: ------------------------------------ Current Maturities of Long-Term Debt $ 241,231 $ 26,375 Accounts Payable & Accrued Expenses 58,439 54,222 ------------ ----------- Total Current Liabilities 299,670 80,597 Long-Term Debt 10,792 299,024 Deferred Income Taxes and Other Liabilities 56,023 36,410 Shareholders' Equity 229,037 250,338 ------------ ----------- Total Liabilities & Shareholders' Equity $ 595,522 $ 666,369 ============ ===========
8 UNAUDITED SEGMENT INFORMATION (000's)
Fourth Quarter Year ----------------------- --------------------- 2002 2001 2002 2001 --------- -------- --------- --------- Net Sales Home Fashions $ 112,097 $ 108,689 $ 441,157 $ 469,862 Apparel Fabrics 31,329 27,660 131,482 118,881 Engineered Products 9,752 9,475 40,310 42,329 --------- --------- --------- --------- Consolidated Net Sales $ 153,178 $ 145,824 $ 612,949 $ 631,072 ========= ========= ========= ========= Operating Income (Loss) Home Fashions $ 12,477 $ 1,044 $ 43,634 $ 10,922 Apparel Fabrics 730 (3,949) 2,158 (8,579) Engineered Products (333) 81 (1,474) (830) Corporate Items Not Allocated to Segments: Amortization of Goodwill -- (902) -- (3,617) Other Operating Costs, Net 240 (4,282) 550 (4,282) Other (438) (135) (525) (957) --------- --------- --------- --------- Consolidated Operating Income $ 12,676 $ (8,143) $ 44,343 $ (7,343) ========= ========= ========= =========
9 UNAUDITED OTHER FINANCIAL DATA (000's)
Fourth Quarter Year ----------------------- --------------------- 2002 2001 2002 2001 --------- -------- --------- --------- EBITDA $ 21,957 $ 6,665 $ 81,653 $ 40,007 Depreciation & Amortization of Property, Plant & Equipment $ 9,521 $ 9,624 $ 37,860 $ 39,451 Capital Expenditures in Cash $ 3,797 $ 2,455 $ 12,384 $ 18,246
10 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 hereunto duly authorized. DAN RIVER INC. (Registrant) Date: February 4, 2003 /s/ Harry L. Goodrich --------------------------------- Harry L. Goodrich Vice President