<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1998
---------------
( )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 333-24189
--------------------------------
GFSI, INC.
----------
(Exact name of registrant specified in its charter)
Delaware 74-2810748
- -----------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
Identification No.) or organization)
9700 Commerce Parkway
Lenexa, Kansas 66219
(Address of principal executive offices)
Registrant's telephone number, including area code (913) 888-0445
--------------
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.
(1) Yes (X) No ( )
(2) Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common stock, $0.01 par value per share - 1 share issued and outstanding as of
November 1, 1998
1
<PAGE>
GFSI, INC. AND SUBSIDIARY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 2, 1998
INDEX
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
PART II - OTHER INFORMATION 12
SIGNATURE PAGE 13
2
<PAGE>
GFSI, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)
<TABLE>
<CAPTION>
July 3, October 2,
1998 1998
---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 1,346 $ 3,576
Accounts receivable, net 27,774 37,272
Inventories, net 44,298 43,406
Prepaid expenses and other current assets 1,187 1,050
Deferred income taxes 1,679 1,709
--------- ---------
Total current assets 76,284 87,013
Property, plant and equipment, net 21,243 21,000
Other assets:
Deferred financing costs, net 8,503 8,215
Other 5 5
--------- ---------
Total assets $ 106,035 $ 116,233
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 8,409 $ 7,651
Accrued interest expense 4,521 1,677
Accrued expenses 8,614 8,816
Income taxes payable 1,056 3,342
Current portion of long-term debt 5,050 5,426
--------- ---------
Total current liabilities 27,650 26,912
Deferred income taxes 1,234 1,234
Revolving credit agreement 5,600 14,900
Other long-term obligations 300 150
Long-term debt, less current portion 180,878 179,236
Stockholder's equity (deficiency):
Common stock, $.01 par value, 10,000 shares authorized, one share
issued and outstanding at July 3, 1998 and October 2, 1998 -- --
Additional paid-in capital 51,728 51,728
Accumulated deficiency (161,355) (157,927)
--------- ---------
Total stockholder's deficiency (109,627) (106,199)
--------- ---------
Total liabilities and stockholder's equity (deficiency) $ 106,035 $ 116,233
========= =========
</TABLE>
NOTE: The consolidated balance sheet at July 3, 1998 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to consolidated financial statements.
3
<PAGE>
GFSI, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended
September 26, October 2,
1997 1998
-------------- -----------
<S> <C> <C>
Net sales $60,362 $60,045
Cost of sales 33,539 34,272
------- -------
Gross profit 26,823 25,773
Operating expenses:
Selling 6,505 6,442
General and administrative 6,840 8,725
------- -------
13,345 15,167
------- -------
Operating income 13,478 10,606
Other income (expense):
Interest expense (4,839) (4,913)
Other, net -- 35
------- -------
(4,839) (4,878)
Income before income taxes ------- -------
8,639 5,728
Provision for income taxes 3,542 2,300
------- -------
Net income $ 5,097 $ 3,428
======= =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
GFSI, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousand)
<TABLE>
<CAPTION>
Quarter Ended
September 26, October 2,
1997 1998
-------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,097 $ 3,428
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation 706 765
Amortization of deferred financing costs 291 289
Gain on sale or disposal of property, plant and equipment -- (28)
Deferred income taxes 353 (29)
Changes in operating assets and liabilities:
Accounts receivable, net (15,406) (9,499)
Inventories, net 472 892
Prepaid expenses, other current assets and other assets 307 137
Income taxes payable 3,188 2,286
Accounts payable, accrued expenses and other
long-term obligations (4,347) (3,551)
-------- -------
Net cash used in operating activities (9,339) (5,310)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of property, plant and equipment 39 183
Purchases of property, plant and equipment (418) (678)
-------- -------
Net cash used in investing activities (379) (495)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes to short-term borrowings and revolving credit agreement 9,000 9,300
Proceeds from long-term debt -- --
Payments on long-term debt -- (1,265)
Capital contribution from GFSI Holdings, Inc. 788 --
Distributions to GFSI Holdings, Inc. (1,141) --
-------- -------
Net cash provided by financing activities 8,647 8,035
-------- -------
Net increase (decrease) in cash and cash equivalents (1,071) 2,230
Cash and cash equivalents at beginning of period 1,117 1,346
-------- -------
Cash and cash equivalents at end of period $ 46 $ 3,576
======== =======
Supplemental cash flow information
Interest paid $ 6,677 $ 7,430
======== =======
Income taxes paid $ -- $ 33
======== =======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
GFSI, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 2, 1998
1. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements of GFSI, Inc.
(The "Company") include the accounts of the Company and the accounts of its
wholly owned subsidiary, Event 1, Inc. ("Event 1"). All intercompany balances
and transactions have been eliminated. The unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange
Commission. Accordingly they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statement reporting purposes. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the financial position and operations of the Company have
been included. Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the entire fiscal year. For
further information, refer to the financial statements and footnotes thereto for
the year ended July 3, 1998 included in the Company's Annual Report on Form
10-K.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. Recapitalization Transaction
----------------------------
On October 31, 1996, the Board of Directors of Winning Ways, Inc. ("Winning
Ways") executed a letter of intent to enter into a transaction with The Jordan
Company. The Transaction included the formation of a holdings company, GFSI
Holdings, Inc. ("Holdings") and the Company, a wholly owned subsidiary of
Holdings, to effect the acquisition of Winning Ways. On February 27, 1997,
pursuant to the acquisition agreement, Holdings and the Company acquired all of
the issued and outstanding capital stock of Winning Ways, and immediately
thereafter merged Winning Ways with and into the Company with the Company as the
surviving entity. All of the capital stock of Winning Ways acquired by Holdings
in connection with the acquisition was contributed to the Company along with the
balance of the Equity Contribution, as described below.
6
<PAGE>
The aggregate purchase price for Winning Ways was $242.3 million, consisting
of $173.1 million in cash at closing, a post closing payment at April 30, 1997
of $10.0 million and the repayment of $59.2 million of Winning Ways' existing
indebtedness. To finance the Acquisition, including approximately $11.5 million
of related fees and expenses: (i) The Jordan Company, its affiliates and JZEP
PLC (collectively the "Jordan Investors") invested $52.2 million in Holdings and
Holdings contributed $51.4 million of this amount to the Company (the "Equity
Contribution"); (ii) the Company entered into a credit agreement (the "Credit
Agreement") which provides for borrowings of up to $115.0 million, of which
approximately $68.0 million was outstanding at closing and approximately $22.9
million was utilized to cover outstanding letters of credit at closing; and
(iii) the Company issued $125.0 million of Senior Subordinated Notes (the
"Senior Subordinated Notes") which were purchased by institutional investors
through a Rule 144A private placement. The Equity Contribution was comprised of
(i) a contribution of $13.6 million from the Jordan Investors to Holdings in
exchange for Holdings Preferred Stock and approximately 50% of the Common Stock
of Holdings; (ii) a contribution of $13.6 million from the Management Investors
to Holdings in exchange for Holdings Preferred Stock and approximately 50% of
the Common Stock of Holdings, and (iii) a contribution of $25.0 million from a
Jordan Investor to Holdings in exchange for subordinated notes of Holdings (the
"Holdings Subordinated Notes"). Approximately $0.8 million of the contribution
from the Management Investors was financed by loans from Holdings.
Subsequent to the recapitalization transactions described above, the Company
became a wholly owned subsidiary of Holdings. Holdings is dependent upon the
cash flows of the Company to provide funds to enable Holdings to pay
consolidated income taxes, fees payable under a consulting agreement and certain
other ordinary course expenses incurred on behalf of the Company and to provide
funds to service the indebtedness represented by the $50.0 million Holdings
Series B Senior Discount Notes due 2009. Holdings Series B Senior Discount
Notes do not have an annual cash requirement until 2005. Additionally, the
remaining cumulative Holdings Preferred Stock will accrue dividends totaling
approximately $427,000 annually. Holdings Preferred Stock may be redeemed at
stated value (approximately $3.6 million) plus accrued dividends with mandatory
redemption in 2009.
3. Commitments and Contingencies
-----------------------------
The Company, in the normal course of business, may be threatened with or named
as a defendant in various lawsuits. It is not possible to determine the
ultimate disposition of these matters, however, management is of the opinion
that there are no known claims or known contingent claims that are likely to
have a material adverse effect on the results of operations, financial
condition, or cash flows of the Company.
Various state and local taxing authorities have examined, or are in the
process of examining the Company's sales and use tax returns. The Company is
currently reviewing
7
<PAGE>
the status and the results of such examinations, including the methods used by
certain state taxing authorities in calculating the sales tax assessments and
believes that it has accrued an amount adequate to cover the assessments.
4. New Accounting Standards
------------------------
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" was issued in June 1998. This
statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires an entity to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for all quarters of fiscal years beginning after June 15, 1999. The
Company is in the process of determining what impact the adoption of SFAS No.
133 will have on its financial position and results of operations.
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 provides
guidance on accounting for the costs of internal use computer software at
various stages of development. This SOP is effective for fiscal years beginning
after December 15, 1998. The Company does not expect the implementation of this
SOP to have a material impact on the Company's financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-----------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The discussions set forth in this Form 10-Q should be read in conjunction with
the financial information included herein and the Company's Annual Report on
Form 10-K for the year ended July 3, 1998. Management's discussion and analysis
of financial condition and results of operations and other sections of this
report contain forward-looking statements relating to future results of the
Company. Such forward-looking
8
<PAGE>
statements are identified by use of forward-looking words such as "anticipates",
"believes", "plans", "estimates", "expects", and "intends" or words or phrases
of similar expression. These forward-looking statements are subject to various
assumptions, risks and uncertainties, including but not limited to, changes in
political and economic conditions, demand for the Company's products, acceptance
of new products, developments affecting the Company's products and to those
discussed in the Company's filings with the Securities and Exchange Commission.
Accordingly, actual results could differ materially from those contemplated by
the forward-looking statements.
THE FOLLOWING SETS FORTH THE AMOUNT AND PERCENTAGE OF NET SALES FOR EACH OF
THE PERIODS INDICATED (DOLLARS IN THOUSANDS):
<TABLE>
<CAPTION>
Quarter Ended
September 26,1997 October 2, 1998
--------------------- -------------------
<S> <C> <C> <C> <C>
Resort $18,684 31.0% $17,256 28.7%
Corporate 16,569 27.4% 19,257 32.1%
College Bookstore 19,342 32.0% 18,193 30.3%
Sports Specialty 3,601 6.0% 3,270 5.4%
Event 1 178 .3%
Other 2,166 3.6% 1,891 3.2%
------- -------
Total $60,362 $60,045
======= =======
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth certain historical financial information of the
Company, expressed as a percentage of net sales, for the quarters ended
September 26, 1997 and October 2, 1998.
<TABLE>
<CAPTION>
Quarter Ended
September 26, October 2,
1997 1998
-------------- -----------
<S> <C> <C>
Net sales 100.0% 100.0%
Gross profit 44.4 42.9
EBITDA 23.5 18.9
Operating income 22.3 17.7
</TABLE>
EBITDA represents operating income plus depreciation and amortization. While
EBITDA should not be construed as a substitute for operating income or a better
indicator of liquidity than cash flow from operating activities, which are
determined in accordance with generally accepted accounting principles, it is
included herein to provide additional information with respect to the ability of
the Company to meet its future debt
9
<PAGE>
service, capital expenditure and working capital requirements. In addition, the
Company believes that certain investors find EBITDA to be a useful tool for
measuring the ability of the Company to service its debt. EBITDA is not
necessarily a measure of the Company's ability to fund its cash needs. See the
Consolidated Statements of Cash Flows of the Company herein for further
information.
COMPARISON OF OPERATING RESULTS FOR THE QUARTERS ENDED OCTOBER 2, 1998 AND
SEPTEMBER 26, 1997.
Net Sales. Net sales for the first quarter of fiscal 1999, the three
months ended October 2, 1998, decreased .5% to $60.0 million from $60.4 million
in the first quarter of fiscal 1998. The decrease in net sales primarily
reflects decreases in net sales at the Company's Resort, College Bookstore and
Sports Specialty divisions of 7.6%, 5.9% and 9.2% respectively. These decreases
in net sales were partially offset by an increase in net sales in the Company's
Corporate division of 16.2% and the Event 1 subsidiary sales of $178,000 for the
quarter ended October 2, 1998.
Gross Profit. Gross profit for the first quarter of fiscal 1999 decreased
3.9% to $25.8 million from $26.8 million in the first quarter of fiscal 1998.
The decrease in gross profit is primarily a result of the net sales decrease
described above and an increase in production costs during the first quarter of
fiscal year 1999 due primarily to a change in the production mix to more
embroidered units which are more costly to produce. For the first quarter of
fiscal 1999, gross profit as a percentage of net sales decreased to 42.9%
compared to 44.4% in the first quarter of fiscal 1998.
Operating Expenses. Operating expenses for the first quarter of fiscal
1999 increased 13.7% to $15.2 million from $13.3 million in the first quarter of
fiscal 1998. Increases in operating expenses are primarily attributable to
increased staffing levels, and to costs associated with Event 1 activities.
Operating expenses as a percentage of net sales increased to 25.3% from 22.0% in
the prior year first quarter.
EBITDA. EBITDA for the first quarter of fiscal 1999 decreased 19.8% to
$11.4 million from $14.2 million in the first quarter of fiscal 1998. The
decrease for the period is primarily a result of the decrease in net sales and
related gross profit and the increase in operating expenses, as described above.
EBITDA as a percentage of net sales decreased to 18.9% from 23.5% in the first
quarter of fiscal 1998.
Operating Income. Operating income for the first quarter of fiscal 1999
decreased 21.3% to $10.6 million from $13.5 million in the first quarter of
fiscal 1998. The decrease is attributable to the changes in gross profit and
the increase in operating expenses described above. Operating income as a
percentage of net sales deceased for the first quarter of fiscal 1999 to 17.7%
from 22.3% in fiscal 1998.
Other Income (Expense). Other expense for the first quarter of fiscal
1999 increased to $4.9 million from $4.8 million in the first quarter of fiscal
1998. The increase for the period is primarily a result of increased interest
expense associated with borrowings under the Company's $115 million Credit
Agreement. The effect of derivative financial instruments serves to minimize
unplanned changes in interest expense due to changes in interest rates. As
such, interest rate fluctuations and their effect were immaterial for the
periods presented. A reasonable likely change in the underlying rate, price or
index would not have a material impact on the financial position of the Company.
Income Taxes. The effective income tax rates for the quarters ended
October 2, 1998 and September 26, 1997 were 40.2% and 41.0%, respectively.
Net Income. Net income for the first quarter of fiscal 1999 was $3.4
million compared to $5.1 million in the first quarter of fiscal 1998.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities for the first quarter of fiscal 1999 was
$5.3 million compared to $9.3 million in the first quarter of fiscal 1998. The
change in cash provided by operating activities between the two periods resulted
from a decrease in net income for the period and changes in working capital
account balances in the first quarter of fiscal year 1999 as compared to the
first quarter of fiscal 1998.
Cash used by investing activities in the first quarter of fiscal 1999 was
$495,000 compared to $379,000 in the first quarter of 1998. The cash used in
both periods was related to acquisitions of property, plant and equipment.
Cash provided by financing activities for the first quarter of fiscal 1999 was
$8.0 million compared to $8.6 million in the first quarter of fiscal 1998. Cash
flows from borrowings under the revolving credit agreement were relatively
consistent during the two periods, however, during the first quarter of fiscal
1998, the Company also had a capital contribution of $788,000 which did not
recur during the first quarter of fiscal year 1999.
The Company believes that cash flow from operating activities and borrowings
under the Credit Agreement will be adequate to meet the Company's short-term and
long-term liquidity requirements prior to the maturity of its credit facilities
in 2007, although no assurance can be given in this regard. Under the Credit
Agreement, the Revolver provides $50 million of revolving credit availability
(of which $14.9 million was outstanding as of October 2, 1998 and approximately
$18.1 million was utilized for outstanding commercial and stand-by letters of
credit).
Holdings is dependent upon the cash flows of the Company to provide funds to
pay certain ordinary course expenses incurred on behalf of the Company and to
service the indebtedness represented by the $50.0 million of 11.375% Series B
Senior Discount Notes due 2009 (the "Discount Notes"). The Discount Notes will
accrete at a rate of 11.375%, compounded semi-annually to an aggregate principal
amount of $108.5 million at September 15, 2004. Thereafter, the Discount Notes
will accrue interest at the rate of 11.375% per annum, payable semi-annually, in
cash on March 15 and September 15 of each year, commencing on March 15, 2005.
Holdings will be dependent on the Company to provide funds to service the
indebtedness. Additionally, the remaining cumulative Holdings Preferred Stock
will accrue dividends totaling approximately $427,000 annually. Holdings
Preferred Stock may be redeemed at stated value (approximately $3.6 million)
plus accrued dividends with mandatory redemption in 2009.
DERIVATIVE AND MARKET RISK DISCLOSURE
The Company's market risk exposure is primarily due to possible fluctuations
in interest rates. Derivative financial instruments, including an interest rate
swap and an interest rate cap agreement are used by the Company to manage its
exposure on variable rate debt obligations. The Company enters into such
agreements for hedging purposes and not with a view toward speculating in the
underlying instruments. The Company uses a balanced mix of debt maturities
along with both fixed rate and variable rate debt to manage its exposure to
interest rate changes. The fixed rate portion of the Company's long-term debt
does not bear significant interest rate risk. The variable rate debt would be
affected by interest rate changes to the extent the debt is not matched with an
interest rate swap or cap agreement or to the extent, in the case of the
revolving credit agreement, that balances are outstanding. An immediate 10
percent change in interest rates would not have a material effect on the
Company's results of operations over the next fiscal year, although there can be
no assurances that interest rates will not significantly change.
11
<PAGE>
YEAR 2000 COMPLIANCE
The Company has a program to identify, evaluate and implement changes to its
computer systems as necessary to address the Year 2000 issue. As part of the
program, the Company is currently upgrading its existing management information
system ("MIS") with a new system designed to improve the overall efficiency of
the Company's operations and to enable management to more closely track the
financial performance of each of its sales and operating areas. Based on
management's best estimates, the new MIS will be operational during fiscal year
ending July 2, 1999. The costs associated with the new MIS implementation are
not expected to be material to the Company and are being expensed as incurred.
Any difficulty with the installation, initial operation or untimely resolution
of the new MIS may present an uncertainty that would be reasonably likely to
affect the Company's inventory purchasing control, sales and customer service
which could materially and adversely impact the Company's future financial
results, or cause its reported financial information not to be necessarily
indicative of future operating results or future financial condition.
Also as part of the Company's Year 2000 program, the Company has initiated
communications with suppliers with which it interacts to determine their plans
for addressing Year 2000 concerns. Based upon management's best estimates, all
year 2000 issues will be resolved in 1999. However, the Company cannot make any
assurances that its computer systems, or the computer systems of its suppliers
will be Year 2000 ready on schedule, or that management's cost estimates will be
achieved.
SEASONALITY AND INFLATION
The Company experiences seasonal fluctuations in its sales and profitability,
with generally higher sales and gross profit in the first and second quarters of
its fiscal year. The seasonality of sales and profitability is primarily due to
higher volume at the College Bookstore division during the first two fiscal
quarters. This pattern of sales affects working capital requirements and
liquidity, as the Company generally must finance higher levels of inventory
during these periods prior to fully receiving payment from these customers.
Sales and profitability at the Company's Resort, Corporate and Sports Specialty
divisions typically show no significant seasonal variations. As the Company
continues to expand into other markets in its Resorts, Corporate and Sports
Specialty divisions, seasonal fluctuations in sales and profitability are
expected to decline. Cash requirements of Event 1 are anticipated to be
seasonal, with increasing sales and profitability in the third and fourth
quarters of fiscal years.
The impact of inflation on the Company's operations has not been significant
to date. However, there can be no assurance that a high rate of inflation in the
future would not have an adverse effect on the Company's operating results.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
There has been no change to matters discussed in Business-Legal Proceedings in
the Company's Form 10-K as filed with the Securities and Exchange Commission on
September 25, 1998.
Item 2. Changes in Securities
- -----------------------------
None
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
None
Item 5. Other Information
- -------------------------
None
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits. The following exhibits are included with this report:
Exhibit 27 - Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the reporting
period.
13
<PAGE>
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.
GFSI, INC.
November 13, 1998
/s/ ROBERT G. SHAW
-------------------------------------------------
Robert G. Shaw, Sr. Vice President of Finance and
Principal Accounting Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from GFSI Inc.
Form 10-Q as of October 2, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-02-1999
<PERIOD-START> JUL-03-1998
<PERIOD-END> OCT-02-1998
<CASH> 3,576
<SECURITIES> 0
<RECEIVABLES> 37,272
<ALLOWANCES> 0
<INVENTORY> 43,406
<CURRENT-ASSETS> 87,013
<PP&E> 38,157
<DEPRECIATION> 17,157
<TOTAL-ASSETS> 116,233
<CURRENT-LIABILITIES> 26,912
<BONDS> 194,136
0
0
<COMMON> 0
<OTHER-SE> (106,199)
<TOTAL-LIABILITY-AND-EQUITY> 116,233
<SALES> 60,045
<TOTAL-REVENUES> 60,045
<CGS> 34,272
<TOTAL-COSTS> 49,439
<OTHER-EXPENSES> (35)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,913
<INCOME-PRETAX> 5,728
<INCOME-TAX> 2,300
<INCOME-CONTINUING> 3,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,428
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
