<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JANUARY 19, 1994
----------------
V.F. CORPORATION
--------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
PENNSYLVANIA 1-5256 23-1180120
- ------------ --------------- ------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) I.D. No.)
incorporation)
1047 NORTH PARK ROAD, WYOMISSING, PA 19610
-------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 378-1151
--------------
N/A
-------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
The undersigned Registrant hereby amends the following portion of its
Current Report on Form 8-K dated January 19, 1994 and filed on February 2, 1994
as set forth below:
1. Item 7 is hereby amended and restated as follows:
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Audited financial statements of Nutmeg Industries, Inc. for the year
ended January 30, 1993 are included on pages 3 to 17 herein.
Unaudited financial statements of Nutmeg Industries, Inc. for the nine
months ended October 30, 1993 are included on pages 18 to 23 herein.
2
<PAGE> 3
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Nutmeg Industries, Inc.
We have audited the accompanying consolidated balance sheets of Nutmeg
Industries, Inc. as of January 30, 1993 and January 25, 1992, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the three years in the period ended January 30, 1993. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Nutmeg
Industries, Inc. at January 30, 1993 and January 25, 1992, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended January 30, 1993, in conformity with generally accepted accounting
principles.
/S/ ERNST & YOUNG
-----------------
ERNST & YOUNG
Tampa, Florida
March 3, 1993
3
<PAGE> 4
NUTMEG INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JANUARY 30, JANUARY 25,
ASSETS 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash $ 3,435 $ 25,250
Accounts receivable 28,170 19,764
Inventories:
Finished goods 34,418 33,090
Fabric and components 7,222 6,865
Work in process 2,904 2,794
Supplies 2,924 1,991
- -----------------------------------------------------------------------
Total inventories 47,468 44,740
Prepaid expenses 1,004 401
Deferred income tax benefit 1,388 1,208
- -----------------------------------------------------------------------
Total current assets 81,465 91,363
Property, plant and equipment 29,390 15,317
Less accumulated depreciation 8,019 5,083
- -----------------------------------------------------------------------
Net property, plant and equipment 21,371 10,234
Goodwill, at cost net of accumulated
amortization of $189 at January 30,
1993 ($152 at January 25, 1992) 1,288 752
Other assets 2,595 2,982
- -----------------------------------------------------------------------
Total assets $ 106,719 $ 105,331
=======================================================================
</TABLE>
(Continued)
4
<PAGE> 5
NUTMEG INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JANUARY 30, JANUARY 25,
LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable and current portion
of long-term debt $ - $ 6,456
Accounts payable 13,035 13,174
Income taxes payable 1,255 1,586
Accrued royalties 2,209 1,425
Other accrued liabilities 4,468 3,892
- -----------------------------------------------------------------------
Total current liabilities 20,967 26,533
Long-term debt due after one year - 6,051
Deferred income taxes 676 647
Other noncurrent liabilities 160 222
Stockholders' equity:
Preferred stock, $.01 par value:
5,000,000 shares authorized, none
issued or outstanding - -
Common stock, $.01 par value:
50,000,000 shares authorized,
18,514,202 shares issued
(18,287,685 at January 25, 1992) 185 183
Capital in excess of par value 57,716 56,133
Retained earnings 27,015 15,562
- -----------------------------------------------------------------------
Total stockholders' equity 84,916 71,878
- -----------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 106,719 $ 105,331
=======================================================================
</TABLE>
See accompanying notes.
5
<PAGE> 6
NUTMEG INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
- ---------------------------------------------------------------------------
JANUARY 30, JANUARY 25, JANUARY 26,
1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 159,989 $ 122,373 $ 74,211
Costs and expenses:
Cost of merchandise sold 108,862 84,325 52,573
Selling, general and administrative 33,364 26,923 16,615
Interest, net 73 1,417 1,419
Minority interest and other (income)
expense 38 (1,283) 349
- --------------------------------------------------------------------------
Total costs and expenses 142,337 111,382 70,956
- --------------------------------------------------------------------------
Income before income taxes 17,652 10,991 3,255
Provision (benefit) for income taxes:
Current 6,349 4,953 805
Deferred (150) (761) 434
- --------------------------------------------------------------------------
Total income taxes 6,199 4,192 1,239
- --------------------------------------------------------------------------
Net income $ 11,453 $ 6,799 $ 2,016
==========================================================================
Net income per common share $ .61 $ .47 $ .14
==========================================================================
Weighted average number of common
shares used in the calculation 18,830 14,475 14,926
==========================================================================
</TABLE>
See accompanying notes.
6
<PAGE> 7
NUTMEG INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended January 30, 1993, January 25, 1992, and January 26, 1991
(dollars in thousands)
<TABLE>
<CAPTION>
Common Stock Treasury Stock Capital In
----------------- ----------------- Excess of Retained
Shares Amount Shares Amount Par Value Earnings Total
------ ------ ------ ------ --------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance January 27, 1990 6,775,497 $68 - $ $20,767 $6,747 $27,582
Stock options exercised 14,374 - 55 55
Purchase of treasury
stock (1,015,300) (3,767) (3,767)
Net income 2,016 2,016
----------------------------------------------------------------------------------------------------
Balance January 26, 1991 6,789,871 68 (1,015,300) (3,767) 20,822 8,763 25,886
Sale of common stock,
net of offering costs 2,300,000 23 38,890 38,913
Stock options exercised 49,562 - 222 222
Issuance of treasury stock 3,791 14 44 58
Retirement of treasury
stock (1,011,509) (10) 1,011,509 3,753 (3,743) -
Stock split 4,063,866 41 (41) -
Net income 6,799 6,799
----------------------------------------------------------------------------------------------------
Balance January 25, 1992 12,191,790 122 - - 56,194 15,562 71,878
Stock split 6,095,785 61 (61) -
Stock options exercised 226,627 2 1,583 1,585
Net income 11,453 11,453
----------------------------------------------------------------------------------------------------
Balance January 30, 1993 18,514,202 $185 - $ $57,716 $27,015 $84,916
====================================================================================================
</TABLE>
See accompanying notes.
7
<PAGE> 8
NUTMEG INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
- ----------------------------------------------------------------------------
JANUARY 30, JANUARY 25, JANUARY 26,
1993 1992 1991
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 11,453 $ 6,799 $ 2,016
Adjustments to reconcile net income
to net cash provided from (used by)
operating activities:
Depreciation and amortization 3,149 1,814 1,478
Deferred rent (62) (67) (42)
Deferred income taxes (150) (761) 434
Minority interest - (1,306) 344
Change in operating assets and
liabilities (net of amounts
relating to acquired businesses
and discontinuation of Joint
Venture):
(Increase) decrease in assets:
Accounts receivable (9,314) (7,370) (718)
Income taxes receivable - - 648
Inventories (8,421) (20,299) 2,440
Prepaid expenses (623) 41 (90)
Other assets (82) 14 (647)
Increase (decrease) in liabilities:
Accounts payable 1,403 6,883 2,882
Income taxes payable (331) 1,354 232
Accrued liabilities 1,973 3,997 291
- --------------------------------------------------------------------------
Total adjustments (12,458) (15,700) 7,252
- --------------------------------------------------------------------------
Net cash provided from (used by)
operating activities (1,005) (8,901) 9,268
- --------------------------------------------------------------------------
</TABLE>
(Continued)
8
<PAGE> 9
NUTMEG INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
- --------------------------------------------------------------------------
JANUARY 30, JANUARY 25, JANUARY 26,
1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from investing activities:
Capital expenditures (14,609) (5,282) (1,101)
Proceeds from sale of assets 363 67 133
Acquisition of businesses - (1,009) (3,678)
- --------------------------------------------------------------------------
Net cash used by investing activities (14,246) (6,224) (4,646)
- --------------------------------------------------------------------------
Cash flows from financing activities:
Net (payments) proceeds under lines
of credit and long-term debt (8,149) 697 (1,338)
Minority investment in consolidated
Joint Venture - - 490
Net proceeds from issuance of
common stock 1,585 39,193 55
Payments to acquire treasury stock - - (3,767)
Payments of loan origination fees - (34) (142)
- --------------------------------------------------------------------------
Net cash provided from (used by)
financing activities (6,564) 39,856 (4,702)
- --------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (21,815) 24,731 (80)
Cash and cash equivalents at
beginning of year 25,250 519 599
- --------------------------------------------------------------------------
Cash and cash equivalents at
end of year $ 3,435 $ 25,250 $ 519
==========================================================================
Cash paid (received) during the
year for:
Interest $ 472 $ 1,172 $ 1,455
Income taxes $ 5,560 $ 3,593 $ (74)
</TABLE>
See accompanying notes.
9
<PAGE> 10
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the accounts of
Nutmeg Industries, Inc. ("Industries") and its direct or indirect wholly-owned
subsidiaries, Nutmeg Mills, Inc. ("Mills"), Home Team Advantage, Inc. ("Home
Team Advantage") (formerly Saturday's Hero, Inc.), McBriar Sportswear, Inc.
("McBriar"), which was acquired in May 1990, and McBriar Cap Company, Inc.
("McBriar Cap") (formerly Brand Images Corp.), which was formed to acquire most
of the net assets of Brand Images, Inc. ("BII") in September 1991. For the
years ended January 25, 1992 and January 26, 1991, the consolidated financial
statements include the accounts of a joint venture, 51% of which was owned by
Home Team Advantage ("the Joint Venture"), which was formed in February 1990
(collectively the "Company"). All intercompany accounts and transactions have
been eliminated. The Company is engaged in the design, manufacture and sale of
apparel, the bulk of which is sold under various sports- related licenses.
ACCOUNTING PERIOD - The Company operates on a 52/53 week annual accounting
period ending on the last Saturday in January. The year ended January 30, 1993
includes 53 weeks. The years ended January 25, 1992 and January 26, 1991 each
include 52 weeks.
ACCOUNTS RECEIVABLE - The Company provided reserves of $3,026,000 and
$2,273,000 at January 30, 1993 and January 25, 1992, respectively, for bad
debts, discounts, and sales returns and allowances.
INVENTORIES - Inventories are primarily carried at the lower of cost (using
the first-in, first-out method) or market.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is carried at
cost. For financial reporting purposes, depreciation is determined using the
straight-line method and, for income tax purposes, the Company generally uses
accelerated depreciation methods. Estimated useful lives for purposes of
computing financial reporting depreciation are as follows:
<TABLE>
<S> <C>
Equipment, furniture and fixtures. . . . . . . . . . . 5-10 years
Computer equipment and software . . . . . . . . . . . 5-10 years
Building . . . . . . . . . . . . . . . . . . . . . . . 25 years
Leasehold improvements . . . . . . . . . . . . . . . . 5-10 years
Vehicles . . . . . . . . . . . . . . . . . . . . . . . 3-5 years
</TABLE>
10
<PAGE> 11
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
January 30, January 25,
1993 1992
- ------------------------------------------------------------------
<S> <C> <C>
Equipment, furniture and fixtures $ 13,971 $ 8,883
Computer equipment and software 5,223 2,948
Leasehold improvements 2,972 2,212
Buildings and land 5,930 512
Vehicles 257 256
Additions in progress 1,037 506
- ----------------------------------------------------------------
Property, plant and equipment $ 29,390 $ 15,317
================================================================
</TABLE>
Depreciation expense was $3,109,000, $1,774,000, and $1,446,000 in fiscal 1993,
1992 and 1991, respectively.
GOODWILL - Goodwill arising from business combinations is amortized using the
straight-line method over 15-40 years.
CAPITALIZED ACETATE FILM PRODUCTION COSTS - The Company capitalized
$1,287,000, $1,071,000, and $1,000,000 in fiscal 1993, 1992 and 1991,
respectively, of costs incurred in the design and production of acetate films
employed to produce silk screens. Costs capitalized are being expensed over
estimated three year useful lives, using the straight-line method. The related
expense was $1,176,000, $978,000, and $627,000 in fiscal 1993, 1992 and 1991,
respectively. Capitalized amounts included in other assets are $1,881,000 and
$1,770,000 at January 30, 1993 and January 25, 1992, respectively.
DEFERRED LOAN COSTS - Deferred loan costs incurred in connection with the
issuance of debt are amortized over the life of the related debt. Amortization
was $114,000, $245,000, and $119,000 in fiscal 1993, 1992 and 1991,
respectively.
INCOME TAXES - The Company has adopted the provisions of "Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes".
EARNINGS PER SHARE - Earnings per share are computed using the weighted
average number of shares outstanding during the year. Inclusion of common
stock equivalents (stock issuable upon exercise of outstanding stock options
and warrants) in the computation of primary and fully diluted earnings per
share would not be significant for fiscal 1991. Common stock equivalents have
been included in the computations for fiscal 1993 and 1992.
11
<PAGE> 12
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
CASH EQUIVALENTS - The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.
FINANCIAL STATEMENT RECLASSIFICATION - Certain prior years' amounts in the
consolidated financial statements have been reclassified to conform to the
fiscal 1993 presentation. All share and per share data has been restated to
reflect a 3 for 2 stock split in June 1992.
2. JOINT VENTURE AND ACQUISITIONS
In February 1990, Home Team Advantage, a newly created subsidiary, entered into
an agreement to sell licensed sportswear to mass merchants and chain stores
through the Joint Venture. The Company made an initial equity investment of
$510,000 (51% of contributed capital) and acted as the Joint Venture manager.
In May 1992, the Company and its previous Joint Venture partner agreed that,
effective January 26, 1992, the Company would no longer participate in the
profits or losses of the Joint Venture, and that the Joint Venture would
liquidate its remaining assets and be terminated. The Company's Joint Venture
partner assumed all responsibility for the Joint Venture's outstanding bank
debt (which has since been paid) and, upon fulfillment of certain conditions,
the Company's Joint Venture partner will obtain the rights to the "Saturday's
Hero" name. The Company is continuing to serve certain segments of the mass
merchant market through the "Home Team Advantage" label. The Company,
effective January 26, 1992, is no longer recording any sales or operating
results of the Joint Venture. Although the loss of the Joint Venture's sales
is significant, the Company's operating results have not been materially
adversely affected as a result of the termination of the Joint Venture.
On May 31, 1990, the Company completed the acquisition of McBriar from Bennett
Oltman, who remains with the Company under a long-term employment agreement.
The Company invested approximately $3.7 million in cash (obtained from the
Company's available credit lines) to acquire McBriar, including the repayment
of McBriar's then outstanding indebtedness. The acquisition of McBriar was
accounted for as a purchase. The pro forma impact on the Company's historical
operating results from the acquisition of McBriar is not material.
Effective September 2, 1991, the Company acquired, through McBriar Cap, most of
the net assets of BII, a privately held company with facilities in Waycross and
Screven, Georgia, that produced a variety of caps, primarily for the premium
and specialty advertising industry. BII had sales of approximately $3 million
in the fiscal year that ended in November 1990. The Company has expanded the
operations of McBriar Cap to include the manufacture
12
<PAGE> 13
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
of caps for sale by Mills to the licensed sports industry. The pro forma
impact of the acquisition on prior periods is not material.
3. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
January 30, January 25,
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
Variable rate notes (a) $ - $ 8,000
Notes payable to banks:
Principal Credit Line (b) - -
Joint Venture (c) - 4,358
Other obligations - 149
- -------------------------------------------------------------------
Total debt - 12,507
Less: amounts due within one year - 6,456
- -------------------------------------------------------------------
Long-term debt due after one year $ - $ 6,051
===================================================================
</TABLE>
(a) Represents, at January 25, 1992 variable rate notes with interest at prime
plus 1/8% which were repaid in June 1992.
(b) Represents, at January 30, 1993, a $40,000,000 credit line (the "Line") at
variable interest rates. In March 1993, the line was increased to
$50,000,000, which includes an option by the Company to convert
$15,000,000 to a term loan. The line was also extended by one year to
expire in April 1995 (with an additional one year extension available if
certain financial covenants are satisfied). Borrowings are unsecured as
long as liabilities do not exceed net worth. The agreement requires the
Company to maintain, among other things, net worth of $65,000,000 as of
January 30, 1993 (increased $3,000,000 annually) and a ratio of total
liabilities over net worth not to exceed 150%.
(c) Represents, at January 25, 1992, a revolving credit agreement for the
Joint Venture, which was repaid by the Company's Joint Venture partner.
The Company has complied with all long-term debt covenants for fiscal 1993.
4. STOCK OPTION PLANS
The Company has a qualified, employee incentive stock option plan under which
1,316,214 and 1,628,439 shares of common stock were reserved at January 30,
1993 and January 25, 1992, respectively.
The Company also maintains a non-qualified stock option plan for Directors
under which 682,500 and 303,750 shares of common stock were reserved at January
30, 1993 and January 25, 1992, respectively.
13
<PAGE> 14
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
Activity in these stock option plans for fiscal 1993 and 1992 was as follows:
<TABLE>
<S> <C> <C>
January 30, January 25,
1993 1992
- ------------------------------------------------------------------
Outstanding - Beginning of year 671,768 750,654
Granted 416,625 43,875
Exercised (226,628) (111,511)
Canceled (36,900) (11,250)
- ------------------------------------------------------------------
Outstanding - End of year 824,865 671,768
==================================================================
Average price of options exercised $2.23 $1.99
==================================================================
</TABLE>
At January 30, 1993, exercisable options totaled 629,265 and total outstanding
options under these plans were as follows:
<TABLE>
<CAPTION>
Exercise
Price Shares
-------- ----------
<S> <C>
$ 1.67 65,750
1.83 45,000
1.89 56,250
2.29 75,750
2.36 194,065
5.33 2,700
6.56 5,625
10.25 5,000
10.88 5,000
11.25 5,000
12.33 289,725
13.57 75,000
----------
824,865
==========
</TABLE>
In March 1993, an additional 107,150 stock options were granted under the
employee incentive stock option plan, 77,150 and 30,000 which were granted at
exercise prices of $9.875 and $10.865, respectively.
5. COMMITMENTS
The Company leases office and manufacturing facilities and data processing
equipment under non-cancelable operating lease agreements. One of the
manufacturing facilities, with an annual rental of $247,000, is owned by a
partnership in which certain directors, officers and stockholders have a
controlling interest.
Total rent expense for fiscal 1993, 1992 and 1991 was $1,440,000, $1,546,000
and $1,446,000, respectively.
14
<PAGE> 15
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
Annual rental commitments at January 30, 1993 under the Company's lease
agreements are as follows (in thousands):
<TABLE>
<S> <C>
Fiscal 1994 $1,470
Fiscal 1995 1,485
Fiscal 1996 1,500
Fiscal 1997 1,282
Fiscal 1998 1,256
Thereafter 2,175
-----------------------------------------
Total minimum lease obligations $9,168
=========================================
</TABLE>
Certain of the Company's building leases have renewal options ranging from 1 to
15 years.
The Company has employment agreements with certain of its employees. Minimum
obligations under these agreements are $2,658,000.
The Company has entered into various licensing agreements which permit it to
manufacture and market apparel with copyrighted characters and logos. Under
the terms of these agreements, the Company is required to pay minimum
guaranteed fees to some licensors. Remaining minimum annual obligations under
these agreements are approximately: fiscal 1994 - $637,000, fiscal 1995 -
$1,565,000 and fiscal 1996 - $375,000.
6. INCOME TAXES
Deferred income taxes result primarily from differences between asset
depreciation methods and useful lives and from differences in the periods in
which certain provisions for accounts receivable losses are recognized for tax
and financial reporting.
The components of the provision (benefit) for income taxes are (in thousands):
<TABLE>
<CAPTION>
January 30, January 25, January 26,
1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $5,292 $4,120 $ 691
Deferred (140) (600) 389
State:
Current 1,057 833 114
Deferred (10) (161) 45
- --------------------------------------------------------------------------
Total $6,199 $4,192 $1,239
==========================================================================
</TABLE>
15
<PAGE> 16
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
Factors causing the effective tax rate to differ from the statutory rate were:
<TABLE>
<CAPTION>
January 30, January 25, January 26,
1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34% 34% 34%
Increases (decreases):
State income taxes 3 4 3
Depreciation of excess tax basis - - (2)
Other (2) - 3
- --------------------------------------------------------------------------
Effective tax rate 35% 38% 38%
==========================================================================
</TABLE>
The Company has adopted Statement No. 109 of the Financial Accounting Standards
Board on accounting for Income Taxes (SFAS 109). The adoption of SFAS 109 did
not have a material impact on net income.
7. MAJOR CUSTOMERS
Sales to one customer for fiscal 1993, 1992 and 1991 were approximately
$34,611,000, $30,151,000 and $22,453,000, respectively.
8. PUBLIC OFFERING
On November 19, 1991, the Company completed the sale of 5,175,000 shares of its
Common Stock at $8 per share. The $38,913,000 net proceeds of the offering
were used to repay indebtedness, to acquire capital assets, for the expansion
of certain facilities and for the Company's working capital requirements.
9. CONTINGENT LIABILITY
The Internal Revenue Service ("IRS") completed an examination of the Company's
corporate tax returns for the years ended January 28, 1989, January 27, 1990
and January 26, 1991 and had asserted that the Company's sales representatives
were employees and not independent contractors. The Company has reached a
tentative agreement with the IRS under which the IRS will reverse its
assessment and the Company will treat its sales representatives as "statutory
employees" effective January 1, 1993. The settlement agreement is subject to
final approval and will not have a material adverse impact on the Company's
financial condition or future operating results.
16
<PAGE> 17
NUTMEG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 30, 1993, JANUARY 25, 1992 AND JANUARY 26, 1991
10. EMPLOYEE BENEFIT PLAN
In May 1990, Mills initiated a 401(k) profit sharing plan ("the Plan"). All
employees 18 years of age with at least one year of continuous service are
eligible to participate. Mills matches a portion of the employees'
contributions. The Company funds are then utilized by the Plan to acquire the
Company's Common Stock for the benefit of the Plan's participants. The
Company's contributions to the Plan for fiscal 1993, fiscal 1992 and fiscal
1991 were $219,000, $188,000 and $40,000, respectively.
11. LEGAL PROCEEDINGS
On April 5, 1990, an action naming the Company and certain of its officers and
directors was filed in the United States District Court for the Middle District
of Florida, Tampa Division. The action, captioned Ressler vs. Jacobson, et
al., purported to be a class action filed by the plaintiff on behalf of all
purchasers of the Company's common stock during the period May 23, 1989 through
March 7, 1990. The complaint alleged that, during that period, the Company, in
various public statements, including the Prospectus accompanying the May 23,
1989 common stock offering and various other public documents filed with the
Securities and Exchange Commission, failed to disclose the actual financial
condition of the Company and its actual business prospects, thus allegedly
violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The complaint sought an unspecified amount of money
damages. The Company has settled the litigation on terms that did not have a
material adverse effect on the Company's financial condition or operating
results.
12. SUBSEQUENT EVENT
On January 31, 1993 the Company completed the acquisition of Tryrare Ltd.
("Tryrare"), a British company engaged primarily in the sale of licensed
sportswear. The pro forma impact of the acquisition of Tryrare, which had
sales of approximately $9 million in its last fiscal year, is not material.
17
<PAGE> 18
NUTMEG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OCTOBER 30, JANUARY 30,
ASSETS 1993 1993
- -------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash $ 2,347 $ 3,435
Accounts receivable 49,647 28,170
Inventories:
Finished goods 52,826 34,418
Fabric and components 8,539 7,222
Work in process 3,531 2,904
Supplies 3,062 2,924
- -----------------------------------------------------------------------
Total inventories 67,958 47,468
Prepaid expenses 1,446 1,004
Deferred income tax benefit 1,388 1,388
- -----------------------------------------------------------------------
Total current assets 122,786 81,465
Property, plant and equipment 37,387 29,390
Less accumulated depreciation 11,485 8,019
- -----------------------------------------------------------------------
Net property, plant and equipment 25,902 21,371
Goodwill, at cost net of accumulated
amortization of $217 at October 30,
1993 ($189 at January 30, 1993) 1,499 1,288
Other assets 4,144 2,595
- -----------------------------------------------------------------------
Total assets $154,331 $106,719
=======================================================================
</TABLE>
See accompanying notes.
18
<PAGE> 19
NUTMEG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OCTOBER 30, JANUARY 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1993
- -----------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Notes payable and current portion
of long-term debt $ 155 $ -
Accounts payable 12,745 13,035
Income taxes payable 2,727 1,255
Other accrued liabilities 10,331 6,677
- -----------------------------------------------------------------------
Total current liabilities 25,958 20,967
Long-term debt due after one year 31,199 -
Deferred income taxes 720 676
Other noncurrent liabilities 211 160
Stockholders' equity:
Preferred stock, $.01 par value:
5,000,000 shares authorized, none
issued or outstanding - -
Common stock, $.01 par value:
50,000,000 shares authorized
18,563,632 shares issued
(18,514,202 at January 30, 1993) 186 185
Capital in excess of par value 58,173 57,716
Foreign currency reserve (94) -
Retained earnings 37,978 27,015
- -----------------------------------------------------------------------
Total stockholders' equity 96,243 84,916
- -----------------------------------------------------------------------
Total liabilities and
stockholders' equity $154,331 $106,719
=======================================================================
</TABLE>
See accompanying notes.
19
<PAGE> 20
NUTMEG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- -----------------------
OCTOBER 30, OCTOBER 24, OCTOBER 30, OCTOBER 24,
1993 1992 1993 1992
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 66,091 $ 59,805 $ 144,215 $ 118,945
Costs and expenses:
Cost of merchandise sold 42,564 41,217 94,831 80,919
Selling, general and
administrative 13,223 11,849 31,421 25,620
Interest, net 257 114 432 78
Minority interest and
other (income) expense (28) 30 1 32
-------- -------- -------- --------
Total costs and expenses 56,016 53,210 126,685 106,649
-------- -------- -------- --------
Income before income taxes 10,075 6,595 17,530 12,296
Income tax provision 3,708 2,338 6,567 4,341
-------- -------- -------- --------
Net income $ 6,367 $ 4,257 $ 10,963 $ 7,955
======== ======== ======== ========
Net income per share $ .34 $ .23 $ .58 $ .42
======== ======== ======== ========
Weighted average number
of common shares used in
the calculation 18,940 18,841 18,903 18,774
======== ======== ======== ========
</TABLE>
See accompanying notes.
20
<PAGE> 21
NUTMEG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
OCTOBER 30, OCTOBER 24,
1993 1992
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,963 $ 7,955
--------- --------
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 3,786 2,218
Deferred rent 51 (51)
Change in operating assets and
liabilities (net of amounts relating
to acquired business and discontinuation
of Joint Venture):
(Increase) decrease in assets:
Accounts receivable (20,050) (19,608)
Inventories (19,201) (11,018)
Prepaid expenses (289) (95)
Other assets (1,224) 301
Increase (decrease) in liabilities:
Accounts payable (2,036) (835)
Income taxes payable 1,510 994
Accrued liabilities 2,686 2,513
-------- --------
Total adjustments (34,767) (25,581)
--------- ---------
Net cash used by operating activities (23,804) (17,626)
--------- --------
</TABLE>
(continued)
See accompanying notes.
21
<PAGE> 22
NUTMEG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
OCTOBER 30, OCTOBER 24,
1993 1992
---------- ----------
<S> <C> <C>
Cash flows from investing activities:
Capital expenditures $( 7,834) $(11,393)
Proceeds from sale of assets 246 383
Acquisition of business (657) -
--------- --------
Net cash used by investing activities (8,245) (11,010)
---------- -------------
Cash flows from financing activities:
Net borrowings under lines of credit
and long-term debt 30,576 4,337
Proceeds from issuance of common stock 458 460
--- -------
Net cash provided by financing activities 31,034 4,797
-------- -------
Effect of exchange rate changes on cash (73) -
--------- -------
Net decrease in cash ( 1,088) (23,839)
Cash at beginning of period 3,435 25,250
--------- -------
Cash at end of period $ 2,347 $ 1,411
======== =======
Cash paid during the periods for:
Interest $ 423 $ 301
Income taxes $ 5,071 $ 3,341
</TABLE>
See accompanying notes.
22
<PAGE> 23
NUTMEG INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 30, 1993, OCTOBER 24, 1992, AND JANUARY 30, 1993
(Information pertaining to the three months and nine months ended October 30,
1993 and October 24, 1992 is unaudited)
1. Consolidation and Basis of Presentation
The unaudited condensed consolidated financial statements include the
accounts of Nutmeg Industries, Inc. ("Industries") and its direct or
indirect wholly-owned subsidiaries, Nutmeg Mills, Inc. ("Mills"), Home
Team Advantage, Inc. ("Home Team Advantage") (formerly Saturday's Hero,
Inc.), McBriar Sportswear, Inc. ("McBriar"), McBriar Cap Company, Inc.
("McBriar Cap") (formerly Brand Images Corp.) and Tryrare Ltd. ("Tryrare")
which was acquired on January 31, 1993 (collectively the "Company"). The
unaudited condensed consolidated financial statements of the Company
include all adjustments, consisting only of normal recurring accruals,
which the Company considers necessary for a fair presentation of the
financial position and results of operations for these periods. Results
of operations for the nine months ended October 30, 1993 are not
necessarily indicative of those expected for the entire fiscal year. All
intercompany accounts and transactions have been eliminated. The Company
is engaged in the design, manufacture and sale of various apparel, the
bulk of which is sold under various sports-related licenses.
2. Subsequent Event
On December 13, 1993, the Company and VF Corporation ("VF") announced that
they had executed a definitive merger agreement whereby VF will acquire
all outstanding shares of the Company for $17.50 cash per share.
The Boards of Directors of the Company and VF have approved the offer and
merger. As the first step in the transaction, a subsidiary of VF will
commence a cash tender offer promptly for all outstanding common shares of
the Company at $17.50 per share. The tender offer is expected to close in
mid-January. The offer will be conditioned, among other things, upon a
majority of the issued and outstanding shares of the Company being
properly tendered and not withdrawn prior to the expiration of the offer.
In connection with the transaction, VF has obtained options to acquire
approximately 18.9% of the outstanding stock of the Company from Richard
E. Jacobson and Martin G. Jacobson, Chairman and President of the Company,
respectively, and an option to acquire approximately 2.98 million shares
of the Company's Common Stock from the Company, representing 13.8% of the
amount of the Company's Common Stock that would be outstanding if the
option were exercised.
23
<PAGE> 24
(b) Unaudited pro forma combined condensed financial statements.
In January 1994, VF Corporation ("VF") acquired H.H. Cutler Company
("Cutler") for a total consideration of $154.7 million. Also in January 1994,
VF acquired Nutmeg Industries, Inc. ("Nutmeg") for a total consideration of
$352.2 million. The acquisitions of Cutler and Nutmeg (the "Acquired
Companies") have been accounted for under the purchase method of accounting.
The following pro forma combined condensed balance sheet of VF and the Acquired
Companies assumes that the acquisitions had occurred on January 1, 1994. The
following pro forma combined condensed income statement of VF and the Acquired
Companies for the fiscal year ended January 1, 1994 assumes that the
acquisitions had occurred on January 3, 1993.
The pro forma combined financial statements are based on the
historical consolidated financial statements of VF and the Acquired Companies.
The historical income statements of the Acquired Companies exclude the
cumulative effect of changes in accounting principles as of January 3, 1993 to
conform their accounting policies to those of VF. These changes in accounting
principles total $11.0 million after giving effect to income taxes and relate
primarily to differences in the treatment of certain expenses as period
expenses versus deferred costs and the application of VF inventory valuation
policies.
The pro forma adjustments are as set forth in the accompanying notes.
The Acquired Companies' assets and liabilities have been recorded at
their estimated fair values, and the excess purchase price has been assigned to
intangible assets. Fair values of assets acquired and liabilities assumed are
based on preliminary estimates; revisions are not expected to be material.
Such unaudited pro forma information should be read in conjunction
with the audited financial statements and related notes set forth in VF's
Annual Report on Form 10-K and with the audited and unaudited financial
statements of Nutmeg set forth herein. Such information does not purport to be
indicative of results that would actually have been obtained had such
transactions been completed as of the dates indicated or that may be obtained
in the future.
24
<PAGE> 25
VF Corporation
Pro Forma Combined Condensed Balance Sheet
January 1, 1994
(In thousands)
<TABLE>
<CAPTION>
VF Acquired Pro Forma Pro Forma
Corporation Companies Adjustments Combined
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash and equivalents $ 151,564 $ 5,260 $(130,000) (1) $ 26,824
Accounts receivable 511,887 45,515 557,402
Inventories 778,767 91,055 4,800 (2) 874,622
Other current assets 57,962 8,505 66,467
---------- -------- ----------
Total current assets 1,500,180 150,335 1,525,315
Property, Plant and Equipment, net 712,759 51,473 5,200 (3) 769,432
Intangible Assets, net 575,359 1,563 344,500 (4) 921,422
Other Assets 89,050 1,605 90,655
---------- -------- -------- ----------
$2,877,348 $204,976 $224,500 $3,306,824
========== ======== ======== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term borrowings,
including current portion of
long-term debt $ 145,767 $ 39,270 $ 330,605 (5) $ 515,642
Accounts payable 246,503 26,797 273,300
Accrued liabilities 267,578 25,300 7,700 (6) 300,578
---------- -------- ----------
Total current liabilities 659,848 91,367 1,089,520
Long-term Debt 527,573 14,945 (11,300) (7) 531,218
Deferred Income Taxes and Other
Liabilities 126,978 (4,741) 900 (8) 123,137
Redeemable Preferred Stock, net 15,549 - 15,549
Common Shareholders' Equity 1,547,400 103,405 (103,405) (9) 1,547,400
---------- -------- -------- ----------
$2,877,348 $204,976 $224,500 $3,306,824
========== ======== ======== ==========
</TABLE>
See accompanying notes to pro forma combined condensed balance sheet.
25
<PAGE> 26
VF Corporation
Notes to Pro Forma Combined Condensed Balance Sheet
The following is a summary of the adjustments reflected in the pro forma
combined condensed balance sheet:
(1) Payment of VF funds to purchase the Acquired Companies.
(2) Write-up of Acquired Companies' inventories to fair value.
(3) Write-up of Acquired Companies' property, plant and equipment to fair
value.
(4) Intangible assets representing the excess of the purchase price over
the fair values assigned to net tangible assets of the Acquired
Companies.
(5) Short-term borrowings incurred by VF to purchase the Acquired
Companies, net of Acquired Companies' short-term debt repaid.
(6) Accrual of plant closing costs of Acquired Companies.
(7) Repayment of long-term debt of Acquired Companies.
(8) Deferred income tax effect at the statutory federal and state
tax rate of the pro forma balance sheet adjustments.
(9) Elimination of Acquired Companies' historical equity.
26
<PAGE> 27
VF Corporation
Pro Forma Combined Condensed Income Statement
Year Ended January 1, 1994
(In thousands)
<TABLE>
<CAPTION>
VF Acquired Pro Forma Pro Forma
Corporation Companies Adjustments Combined
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $4,320,404 $390,153 $4,710,557
Costs and Operating Expenses
Cost of products sold 2,974,861 289,400 $ 800 (2) 3,265,061
Marketing, administrative
and general expenses 913,734 59,899 973,633
Unusual items (1) - 4,300 4,300
---------- --------- ----------
3,888,595 353,599 4,242,994
---------- --------- ----------
Operating Income 431,809 36,554 467,563
Other Income (Expense)
Interest expense, net (37,387) (2,888) (34,500) (3) (74,775)
Other income, net 5,565 (31,745) 29,200 (4) (9,980)
(13,000) (5)
---------- --------- ----------
(31,822) (34,633) (84,755)
---------- --------- ----------
Income Before Income Taxes 399,987 1,921 382,808
Income Taxes 153,572 1,202 (4,000) (6) 150,774
---------- --------- -------- ----------
Net Income $ 246,415 $ 719 $(15,100) $ 232,034
========== ========= ======== ==========
Earnings Per Common Share
Primary $3.80 $3.58
Fully diluted 3.71 3.49
</TABLE>
See accompanying notes to pro forma combined condensed income statement.
27
<PAGE> 28
VF Corporation
Notes to Pro Forma Combined Condensed Income Statement
The following is a summary of the adjustments reflected in the pro forma
combined condensed income statement:
(1) Changes in accounting estimates to conform to VF accounting practices
for computing allowances for bad debts, returns and discounts and for
computing certain accrued liabilities.
(2) Increased depreciation expense resulting from the write-up of
property, plant and equipment to fair value.
(3) Interest expense relating to purchase of the Acquired Companies at
VF's assumed long-term borrowing rate.
(4) Elimination of nonrecurring charges included in Acquired Companies'
operating results that directly result from their sale to VF,
primarily payments for the value of stock options and the accrual of
management incentives and contracts.
(5) Amortization of intangible assets of Acquired Companies on a
straight-line basis.
(6) Income tax effect at the statutory federal and state tax rate for the
pro forma income statement adjustments, excluding amortization of
nondeductible intangible assets.
28
<PAGE> 29
(c) Exhibits
2.1 Stock Purchase Agreement dated October 12, 1993, by and among
V.F. Corporation and the Shareholders of H.H. Cutler Company.
2.2 Offer to Purchase, dated December 17, 1993, of all the
outstanding shares of Common Stock of Nutmeg Industries, Inc.
by Spice Acquisition Co., a wholly owned subsidiary of V.F.
Corporation.
2.3 Agreement and Plan of Merger, dated December 12, 1993, among
Nutmeg Industries, Inc., V.F. Corporation and Spice
Acquisition Co.
2.4 Amendment No. 1, dated January 27, 1994, to Agreement and Plan
of Merger among Nutmeg Industries Inc., V.F. Corporation and
Spice Acquisition Co.
23 Consents of experts and counsel.
SIGNATURE
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.
V.F. CORPORATION
----------------
(Registrant)
March 31, 1994 By: /s/ G.G. Johnson
--------------------------
G.G. Johnson
Vice President-Finance
(Chief Financial Officer)
29
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated March 3, 1993 with respect to the
consolidated financial statements of Nutmeg Industries, Inc. for the fiscal
year ended January 30, 1993, included in the Current Report on Form 8-K as
amended on the Form 8-K/A of V.F. Corporation dated January 19, 1994.
We also consent to the incorporation by reference in (1) Registration Statement
No. 33-55014 which acts as Post-Effective Amendment No. 2 to Registration
Statement No. 33-26566 on Forms S-8/S-3 and Post-Effective Amendment No. 6 to
Registration Statement No. 2-85579 on Forms S-8/S-3, (2) Registration
Statement No. 33-33621 on Form S-8 which acts as Post-Effective Amendment No. 2
to Registration Statement No. 2-99945 on Form S-8, (3) Registration Statement
No. 33-47329 which acts as Post-Effective Amendment No. 2 to Registration
Statement No. 33-30889 on Form S-3, (4) Registration Statement No. 33-10491 on
Form S-3, and (5) Registration Statement No. 33-41241 on Form S-8 of
our report dated March 3, 1993, with respect to the consolidated financial
statements filed herein included in the Current Report on Form 8-K as amended
on the Form 8-K/A of V. F. Corporation dated January 19, 1994.
ERNST & YOUNG
Tampa, Florida
March 31, 1994
