UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 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 0-23161
Tropical Sportswear Int'l Corporation
(Exact name of registrant as specified in its charter)
Florida 59-3424305
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
4902 W. Waters Avenue Tampa, FL 33634-1302
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 249-4900
________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
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 the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
As of August 8, 2000 there were 7,632,060 shares of the registrant's Common
Stock outstanding.
<PAGE>
TROPICAL SPORTSWEAR INT'L CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I Financial Information Page No.
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3 Quantitative and Qualitative Disclosures about
Market Risk 13
PART II Other Information
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<CAPTION>
Thirteen Thirteen Thirty-nine Thirty-nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
----------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Net sales $ 123,044 $ 110,544 $ 348,920 $ 315,439
Cost of goods sold 86,959 80,921 246,100 227,007
----------------- ----------------- ----------------- -------------------
Gross profit 36,085 29,623 102,820 88,432
Selling, general and administrative
expenses 21,777 18,760 65,234 58,011
Severance cost charge -- -- 1,006 --
----------------- ----------------- ----------------- -------------------
Operating income 14,308 10,863 36,580 30,421
Other expense:
Interest expense, net 4,279 4,556 12,867 13,884
Other, net 482 882 1,415 1,050
----------------- ----------------- ----------------- -------------------
4,761 5,438 14,282 14,934
Income before income taxes 9,547 5,425 22,298 15,487
Provision for income taxes 3,807 2,150 8,983 5,880
----------------- ----------------- ----------------- -------------------
Net income 5,740 3,275 13,315 9,607
Foreign currency translations (505) 601 (1,240) 382
----------------- ----------------- ----------------- -------------------
Comprehensive income $ 5,235 $ 3,876 $ 12,075 $ 9,989
================= ================= ================= ===================
Net income per common share:
Basic $0.75 $0.43 $1.75 $1.26
================= ===================
================= =================
Diluted $0.74 $0.42 $1.73 $1.22
================= ================= ================= ===================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
July 1, October 2,
2000 1999
----------------- -----------------
ASSETS (unaudited) (audited)
<S> <C> <C>
Current Assets:
Cash $ 2,898 $ 1,607
Accounts receivable 93,500 76,225
Inventories 75,352 72,181
Deferred income taxes 11,309 10,732
Prepaid expenses and other current assets 7,476 14,328
----------------- -----------------
Total current assets 190,535 175,073
Property and equipment, net 45,438 42,185
Intangible assets, including trademarks and goodwill, net 52,251 55,335
Other assets 15,962 16,729
-----------------
-----------------
Total assets $ 304,186 $ 289,322
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 58,558 $ 52,841
Current portion of long-term debt and capital leases 1,985 2,191
----------------- -----------------
Total current liabilities 60,543 55,032
Long-term debt and capital leases 165,796 168,703
Deferred income taxes 2,860 2,860
Other non-current liabilities 2,937 2,904
----------------- -----------------
Total liabilities 232,136 229,499
Shareholders' Equity:
Preferred stock - -
Common stock 76 76
Additional paid in capital 17,687 17,535
Accumulated other comprehensive income (loss) (809) 431
Retained earnings 55,096 41,781
----------------- -----------------
Total shareholders' equity 72,050 59,823
----------------- -----------------
Total liabilities and shareholders' equity $ 304,186 $ 289,322
================= =================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<CAPTION>
Thirty-nine Thirty-nine
Weeks Ended Weeks Ended
July 1, July 3,
2000 1999
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 13,315 $9,607
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,779 6,999
Deferred income taxes and other 4 (2,911)
Changes in operating assets and liabilities:
Accounts receivable (16,871) (8,197)
Inventories (3,171) (303)
Prepaid expenses and other current assets 7,257 (1,157)
Accounts payable and accrued expenses 5,751 (8,688)
---------------- -----------------
Net cash provided by (used in) operating activities 13,064 (4,650)
---------------- -----------------
INVESTING ACTIVITIES
Capital expenditures (7,773) (10,178)
Other, net 94 (1,039)
---------------- -----------------
Net cash used in investing activities (7,679) (11,217)
---------------- -----------------
Financing activities:
Net change in long-term debt and capital leases (3,113) 15,000
Other, net (981) 943
---------------- -----------------
Net cash (used in) provided by financing activities (4,094) 15,943
---------------- -----------------
Net increase in cash 1,291 76
Cash at beginning of period 1,607 2,097
---------------- -----------------
Cash at end of period $2,898 $2,173
================ =================
See accompanying notes.
</TABLE>
<PAGE>
TROPICAL SPORTSWEAR INT'L CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
July 1, 2000 and October 2, 1999
(In thousands, except share and per share amounts)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Tropical Sportswear Int'l Corporation (the "Company") include the accounts of
Tropical Sportswear Int'l Corporation and its subsidiaries. These financial
statements have been prepared in accordance with the instructions for Form 10-Q
and, therefore, do not include all information and footnotes required by
generally accepted accounting principles. The unaudited condensed consolidated
financial statements should be read in conjunction with the audited financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended October 2, 1999. Certain amounts in the prior year have
been reclassified to conform with the current year presentation. In the opinion
of management, the unaudited condensed consolidated financial statements contain
all necessary adjustments (which include only normal, recurring adjustments) for
a fair presentation of the interim periods presented. Operating results for the
thirty-nine weeks ended July 1, 2000 are not necessarily indicative of results
that may be expected for the entire fiscal year ending September 30, 2000.
2. INVENTORIES
Inventories consist of the following:
July 1, October 2,
2000 1999
---------------- ------------------
Raw materials $7,817 $7,425
Work in process 17,461 15,445
Finished goods 50,074 49,311
---------------- ------------------
$75,352 $72,181
================ ==================
3. DEBT AND CAPITAL LEASES
Long-term debt and capital leases consist of the following:
July 1, October 2,
2000 1999
--------------- ------------------
Revolving credit line $ 47,502 $53,506
Real estate loan 14,886 10,691
Senior Subordinated Notes 100,000 100,000
Other 5,393 6,697
--------------- ------------------
167,781 170,894
Less current maturities 1,985 2,191
--------------- ------------------
$165,796 $168,703
=============== ==================
The Company's revolving credit line (the "Facility") provides for borrowings of
up to $110 million, subject to certain borrowing base limitations. Borrowings
under the Facility bear variable rates of interest (9.3% at July 1, 2000) and
are secured by substantially all of the Company's domestic assets. The Facility
matures in June 2003. As of July 1, 2000, an additional $57.0 million was
available for borrowings under the Facility.
<PAGE>
4. EARNINGS PER SHARE
<TABLE>
Basic and diluted net income per share are computed as follows:
<CAPTION>
Thirteen Thirteen Thirty-nine Thirty-nine
Weeks ended Weeks ended Weeks ended Weeks ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Numerator for basic net income per share:
Net income $5,740 $3,275 $13,315 $9,607
Denominator for basic net income
per share:
Weighted average shares of common
stock outstanding 7,628,888 7,618,478 7,624,788 7,612,782
Effect of dilutive stock options using
the
treasury stock method 138,131 227,938 88,261 260,207
-------------- --------------- -------------- --------------
Denominator for diluted net income per
share 7,767,019 7,846,416 7,713,049 7,872,989
============== =============== ============== ==============
Net income per common share:
Basic $0.75 $0.43 $1.75 $1.26
============== =============== ============== ==============
Diluted $0.74 $0.42 $1.73 $1.22
============== =============== ============== ==============
</TABLE>
5. SUPPLEMENTAL COMBINING CONDENSED FINANCIAL STATEMENTS
The Company's Senior Subordinated Notes, due 2008 (the "Notes") are jointly and
severally guaranteed by the Company's domestic subsidiaries. The wholly-owned
foreign subsidiaries are not guarantors with respect to the Notes and do not
have any credit arrangements senior to the Notes except for their local
overdraft facility and capital lease obligations.
The following is the supplemental combining condensed statement of operations
for the thirteen weeks and thirty-nine weeks ended July 1, 2000, and the
thirteen weeks and thirty-nine weeks ended July 3, 1999, the supplemental
combining condensed balance sheet as of July 1, 2000 and October 2, 1999, and
the supplemental combining condensed statement of cash flows for the thirty-nine
weeks ended July 1, 2000, and the thirty-nine weeks ended July 3, 1999. The only
intercompany eliminations are the normal intercompany sales, borrowings and
investments in wholly-owned subsidiaries. Separate complete financial statements
of the guarantor subsidiaries are not presented because management believes that
they are not material to investors.
<PAGE>
<TABLE>
<CAPTION>
Thirteen Weeks Ended July 1, 2000
-----------------------------------------------------------------------------
Non-
Statement of Operations Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 58,406 $ 56,043 $ 9,915 $ (1,320) $ 123,044
Gross profit 15,859 18,115 2,111 - 36,085
Operating income (loss) 8,299 7,151 (1,142) - 14,308
Interest, income taxes and other, net 5,445 3,970 (218) (629) 8,568
Net income (loss) 2,854 3,181 (924) 629 5,740
Thirteen Weeks Ended July 3, 1999
-----------------------------------------------------------------------------
Non-
Statement of Operations Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
Net sales $ 49,025 $ 53,695 $9,427 $(1,603) $110,544
Gross profit 12,178 14,638 2,807 - 29,623
Operating income 5,932 4,792 139 - 10,863
Interest, income taxes and other, net 3,139 6,054 (1,553) (52) 7,588
Net income (loss) 2,793 (1,262) 1,692 52 3,275
Thirty-nine Weeks Ended July 1, 2000
-----------------------------------------------------------------------------
Non-
Statement of Operations Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
Net sales $150,670 $ 171,148 $30,296 $(3,194) $ 348,920
Gross profit 39,378 54,306 9,136 - 102,820
Operating income (loss) 15,686 20,975 (81) - 36,580
Interest, income taxes and other, net 9,658 13,452 (80) 235 23,265
Net income (loss) 6,028 7,523 (1) (235) 13,315
Thirty-nine Weeks Ended July 3, 1999
-----------------------------------------------------------------------------
Non-
Statement of Operations Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
Net sales $129,539 $159,896 $30,691 $(4,687) $315,439
Gross profit 32,032 47,123 9,277 - 88,432
Operating income 13,913 15,682 826 - 30,421
Interest, income taxes and other, net 7,107 13,156 (1,215) 1,766 20,814
Net income 6,806 2,526 2,041 (1,766) 9,607
<PAGE>
As of July 1, 2000
------------------------------------------------------------------------------
Non-
Balance Sheet Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- ------------- --------------
ASSETS
Cash $ 149 $ 23 $ 2,726 $ - $ 2,898
Accounts receivable, net 47,449 40,818 5,771 (538) 93,500
Inventories 25,697 41,527 8,128 - 75,352
Other current assets 2,755 14,122 601 1,307 18,785
----------- ------------- ------------- ------------- --------------
Total current assets 76,050 96,490 17,226 769 190,535
Property, plant and equipment, net 27,702 11,147 6,589 - 45,438
Investment in subsidiaries and other assets 140,432 66,153 4,094 (142,466) 68,213
----------- ------------- ------------- ------------- --------------
Total assets $244,184 $173,790 $27,909 $(141,697) $304,186
=========== ============= ============= ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 18,522 $34,828 $ 4,439 $ 769 $ 58,558
Current portion of long-term debt and
capital leases 888 1,097 - - 1,985
----------- ------------- ------------- ------------- --------------
Total current liabilities 19,410 35,925 4,439 769 60,543
Long-term debt and noncurrent portion of
capital leases 161,711 4,085 - - 165,796
Other noncurrent liabilities 69 5,591 137 - 5,797
Stockholders' equity 62,994 128,189 23,333 (142,466) 72,050
----------- ------------- ------------- ------------- --------------
Total liabilities and stockholders'
equity $244,184 $173,790 $27,909 $(141,697) $304,186
=========== ============= ============= ============= ==============
As of October 2, 1999
------------------------------------------------------------------------------
Non-
Balance Sheet Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- ------------- --------------
ASSETS
Cash $ 90 $ 28 $ 1,489 $ - $ 1,607
Accounts receivable, net 28,502 42,736 6,295 (1,308) 76,225
Inventories 22,958 38,354 10,869 - 72,181
Other current assets 12,800 11,817 443 - 25,060
----------- ------------- ------------- ------------- --------------
Total current assets 64,350 92,935 19,096 (1,308) 175,073
Property, plant and equipment, net 22,762 12,782 6,641 - 42,185
Investment in subsidiaries and other assets 152,391 57,062 5,520 (142,909) 72,064
----------- ------------- ------------- ------------- --------------
Total assets $239,503 $162,779 $31,257 $(144,217) $289,322
=========== ============= ============= ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $20,886 $26,843 $6,420 $ (1,308) $ 52,841
Current portion of long-term debt and
capital leases 619 1,565 7 - 2,191
----------- ------------- ------------- ------------- --------------
Total current liabilities 21,505 28,408 6,427 (1,308) 55,032
Long-term debt and noncurrent portion of
capital 163,876 4,827 - - 168,703
leases
Other noncurrent liabilities 69 5,664 31 - 5,764
Stockholders' equity 54,053 123,880 24,799 (142,909) 59,823
----------- ------------- ------------- ------------- --------------
Total liabilities and stockholders' $239,503 $162,779 $31,257 $(144,217) $289,322
equity
=========== ============= ============= ============= ==============
<PAGE>
Thirty-nine Weeks Ended July 1, 2000
------------------------------------------------------------------------------
Non-
Statement of Cash Flows Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- -------------- -------------
Net cash provided by operating activities $ 8,734 $ 1,631 $ 2,699 $ - $ 13,064
Net cash used in investing activities (6,804) (425) (450) - (7,679)
Net cash used in financing activities (1,871) (1,211) (1,012) - (4,094)
Net increase (decrease) in cash 59 (5) 1,237 - 1,291
Cash, beginning of period 90 28 1,489 - 1,607
Cash, end of period 149 23 2,726 - 2,898
Thirty-nine Weeks Ended July 3, 1999
------------------------------------------------------------------------------
Non-
Statement of Cash Flows Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- -------------- -------------
Net cash provided by (used in) operating
activities $(11,905) $ 6,724 $531 $ - $(4,650)
Net cash provided by (used in) investing
activities (7,077) (4,029) (111) - (11,217)
Net cash provided by (used in) financing
activities 18,954 (3,259) 248 - 15,943
Net increase (decrease) in cash (28) (564) 668 - 76
Cash, beginning of period 120 748 1,229 - 2,097
Cash, end of period 92 184 1,897 - 2,173
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
<TABLE>
The following table sets forth, for the periods indicated, selected items in the
Company's consolidated statements of income expressed as a percentage of net
sales:
<CAPTION>
Thirteen Thirteen Thirty-nine Thirty-nine
Weeks ended Weeks ended Weeks ended Weeks ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
-------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 70.7 73.2 70.5 72.0
-------------- --------------- ---------------- --------------
Gross profit 29.3 26.8 29.5 28.0
Selling, general and administrative 17.7 17.0 18.7 18.4
expenses
Severance cost charge - - 0.3 -
-------------- --------------- ---------------- --------------
Operating income 11.6 9.8 10.5 9.6
Interest expense, net 3.4 4.1 3.7 4.4
Other, net 0.4 0.8 0.4 0.3
-------------- --------------- ---------------- --------------
Income before income taxes 7.8 4.9 6.4 4.9
Provision for income taxes 3.1 1.9 2.6 1.9
--------------- ---------------- --------------
--------------
Net income 4.7% 3.0% 3.8% 3.0%
============== =============== ================ ==============
</TABLE>
Thirteen weeks ended July 1, 2000 compared to the thirteen weeks ended July 3,
1999
Net Sales. Net sales increased 11.3% to $123.0 million for the third
quarter of fiscal 2000 from $110.5 million in the comparable prior year quarter.
This increase was primarily due to an increase in units sold.
Gross Profit. Gross profit increased 21.8% to $36.1 million, or 29.3%
of net sales for the third quarter of fiscal 2000, from $29.6 million, or 26.8%
of net sales, for the comparable prior year quarter. The dollar increase was
primarily due to the increase in sales volume. The increase in gross profit as a
percentage of net sales is primarily due to increased production efficiencies
and other cost saving measures. The increase was partially offset by an increase
in a provision for excess and obsolete inventory at one of the Company's foreign
subsidiaries. Gross profit in the third quarter of fiscal 1999 was negatively
impacted by disruptions caused by the installation in May 1999 of an enhanced
inventory management and customer order fulfillment system at the Company's
Tampa, Florida distribution center. Due to delays in shipping that this
installation caused, special discounts were provided to customers which lowered
the gross profit margin during the third quarter of fiscal 1999.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $21.8 million, or 17.7% of net sales for
the third quarter of fiscal 2000, from $18.8 million, or 17.0% of net sales, for
the comparable prior year quarter. The dollar increase was primarily due to an
increase in overall units sold. The increase in selling, general and
administrative expenses as a percent of net sales was due to a combination of
increased spending for merchandising and product development, as well as higher
incentive based compensation accruals.
Interest Expense. Interest expense decreased to $4.3 million for the
third quarter of fiscal 2000, from $4.6 million for the comparable prior year
quarter. The decrease was primarily due to lower average outstanding borrowings
under the Company's credit facility, offset in part by higher interest rates.
Income Taxes. The Company's effective income tax rate for the third
quarter of fiscal 2000 was 39.9% compared to 39.6% in the comparable prior year
quarter. These rates are based on the Company's expected effective annual tax
rate.
Net Income. As a result of the above factors, net income increased
75.3% to $5.7 million for the third quarter of fiscal 2000 from $3.3 million in
the comparable prior year quarter.
<PAGE>
Thirty-nine weeks ended July 1, 2000 compared to the thirty- nine weeks ended
July 3, 1999
Net Sales. Net sales increased 10.6% to $348.9 million for the
thirty-nine weeks ended July 1, 2000 from $315.4 million in the comparable prior
year period. This increase was primarily due to an increase in units sold.
Gross Profit. Gross profit increased 16.3% to $102.8 million, or 29.5%
of net sales for the thirty-nine weeks ended July 1, 2000, from $88.4 million,
or 28.0% of net sales, for the comparable prior year period. The dollar increase
was primarily due to the increase in sales volume. The increase in gross profit
as a percentage of net sales is primarily due to increased production
efficiencies and other cost saving measures. Gross profit for the thirty-nine
weeks ended July 3, 1999 was negatively impacted by disruptions caused by the
installation in May 1999 of an enhanced inventory management and customer order
fulfillment system at the Company's Tampa, Florida distribution center. Due to
delays in shipping that this installation caused, special discounts were
provided to customers which lowered the gross profit margin during the third
quarter of fiscal 1999.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 12.5% to $65.2 million, or 18.7% of net sales,
for the thirty-nine weeks ended July 1, 2000, from $58.0 million, or 18.4% of
net sales, for the comparable prior year period. The dollar increase was
primarily due to an increase in overall units sold. The increase in selling,
general and administrative expenses as a percent of net sales was due to a
combination of increased spending for merchandising and product development, as
well as higher incentive based compensation accruals.
Severance Cost Charge. In the first quarter of fiscal 2000, the Company
recorded a pre-tax charge of $1.0 million for severance payments to the former
CEO of Farah/Savane who resigned as an officer and director of the Company
effective December 30, 1999.
Interest Expense. Interest expense decreased to $12.9 million for the
thirty-nine weeks ended July 1, 2000, from $13.9 million for the comparable
prior year period. The decrease was primarily due to lower average outstanding
borrowings under the Company's credit facility, offset in part by higher
interest rates.
Income Taxes. The Company's effective income tax rate for thirty-nine
weeks ended July 1, 2000 was 40.3% compared to 38.0% in the comparable prior
year period. These rates are based on the Company's expected effective annual
tax rate and were lower last year due to the anticipated annual pretax income at
the time and the relative impact of non-deductible goodwill amortization
expense.
Net Income. As a result of the above factors, net income increased
38.6% to $13.3 million for the thirty-nine weeks ended July 1, 2000 from $9.6
million for the comparable prior year period.
Liquidity and Capital Resources
The Company's revolving credit line (the "Facility") provides for borrowings of
up to $110 million, subject to certain borrowing base limitations. Borrowings
under the Facility bear variable rates of interest (9.3% at July 1, 2000) and
are secured by substantially all of the Company's domestic assets. The Facility
matures in June 2003. As of July 1, 2000, an additional $57.0 was available for
borrowings under the Facility.
During the thirty-nine weeks ended July 1, 2000, the Company generated $13.1
million of cash from its operations. This was primarily the result of net income
of $13.3 million (which included noncash expenses of $6.8 million), a decrease
in prepaid expenses and other current assets of $7.3 million, and an increase in
accounts payable and accrued expenses of $5.8 million, offset in part by a $16.9
million increase in accounts receivable and a $3.2 million increase in
inventory.
Capital expenditures totaled $7.8 million for the thirty-nine weeks ended July
1, 2000 and are expected to approximate $11.0 million for the entire fiscal
year. The expenditures expected for the remainder of the fiscal year primarily
relate to the upgrade or replacement of various equipment, and replacement of
the existing computer systems at the Company's Tampa, Florida location.
The Company believes that its existing working capital, borrowings available
under the Facility and internally generated funds provide sufficient resources
to support current business activities.
<PAGE>
Seasonality
Historically, the Company's business has been seasonal, with slightly higher
sales and income in the second and third fiscal quarters. In addition, certain
of the Company's products, such as shorts and corduroy pants, tend to be
seasonal in nature. In the event such products represent a greater percentage of
the Company's sales in the future, the seasonality of the Company's sales may be
increased.
Factors Affecting the Company's Business and Prospects
This report contains forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. Management
cautions that these statements represent projections and estimates of future
performance and involve certain risks and uncertainties. The Company's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors including, without limitation:
continued improvements in operating efficiencies such that the Company's
operating income margins continue to improve; the continued acceptance of the
Company's existing and new products by its major customers; the financial
strength of the Company's major customers; the ability of the Company to
continue to use certain licensed trademarks and tradenames, including John
Henry(R), Bill Blass(R), and Van Heusen(R); general economic conditions,
including potential changes in demand in the retail market, price and
availability of raw materials and global manufacturing costs and restrictions;
increases in costs; potential business disruptions associated with the Company's
implementation of its Enterprise 2000 software systems; and other risk factors
listed from time to time in the Company's SEC reports and announcements. In
addition, the estimated financial results for any period do not necessarily
indicate the results that may be expected for any future period.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's market risk is primarily limited to fluctuations in interest rates
as it pertains to the Company's borrowings under the Facility and the Real
Estate Loan. There have been no material changes to the Item 7A disclosure made
in the Company's Annual Report on Form 10-K for the fiscal year ended October 2,
1999.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits to this report on Form 10-Q are listed on the
Exhibit Index, which immediately follows the signature page
hereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the thirteen-week
period ended July 1, 2000.
<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.
TROPICAL SPORTSWEAR INT'L CORPORATION
(Registrant)
/s/ Michael Kagan
Michael Kagan
Executive Vice President, and Chief
Financial Officer (in the dual capacity
of duly authorized officer and principal
accounting officer)
August 8, 2000
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Index to Exhibits
Exhibit
Number Description
*2.1 Agreement and Plan of Merger dated May 1, 1998 among Tropical
Sportswear Int'l Corporation, Foxfire Acquisition Corp. and
Farah Incorporated (filed as Exhibit (c)(1) to Tropical
Sportswear Int'l Corporation's Schedule 14D-1 filed May 8,
1998).
*3.1 Amended and Restated Articles of Incorporation of Tropical
Sportswear Int'l Corporation (filed as Exhibit 3.1 to Tropical
Sportswear Int'l Corporation (filed as Exhibit (o)(1) to
Tropical Sportswear Int'l Corporation's Exhibit 3.1 to
Tropical Sportswear Int'l Corporation's Annual Report on Form
10-K filed January 4, 1999)).
*3.2 Amended and Restated By-Laws of Tropical Sportswear Int'l
Corporation (filed as Exhibit 3.2 to Tropical Sportswear Int'l
Corporation's Registration Statement on Form S-1 filed August
15, 1997).
*4.1 Specimen Certificate for the Common Stock of Tropical
Sportswear Int'l Corporation (filed as Exhibit 4.1 to
Amendment No. 1 to Tropical Sportswear Int'l Corporation's
Registration Statement on Form S-1 filed October 2, 1997).
*4.2 Shareholders' Agreement dated as of September 29, 1997 among
Tropical Sportswear Int'l Corporation, William W. Compton,
the Compton Family Limited Partnership, Michael Kagan, the
Kagan Family Limited Partnership, Shakale Internacional, S.A.
and Accel, S.A. de C.V. (filed as Exhibit 4.2 to Amendment No.
1 to Tropical Sportswear Int'l Corporation's Registration
Statement on Form S-1 filed October 2, 1997).
*4.3 Exchange and Registration Rights Agreement dated as of June
24, 1998 between Tropical Sportswear Int'l Corporation and
Prudential Securities Incorporated (filed as Exhibit 4.3 to
Tropical Sportswear Int'l Corporation's Form S-4 filed August
20, 1998).
*4.4 Indenture dated as of June 24, 1998 among Tropical Sportswear
Int'l Corporation, the Subsidiary Guarantors named therein,
and SunTrust Bank, Atlanta, as trustee (filed as Exhibit 4.4
to Tropical Sportswear Int'l Corporation's Form S-4 filed
August 20, 1998).
*4.5 Shareholder Protection Rights Agreement, dated as of November
13, 1998, between Tropical Sportswear Int'l Corporation and
Firstar Bank Milwaukee, N.A. (which includes as Exhibit B
thereto the Form of Right Certificate) (filed as Exhibit 99.1
of Tropical Sportswear Int'l Corporation's Form 8-K dated
November 13, 1998).
*10.1 Tropical Sportswear Int'l Corporation 2000 Long-Term Incentive
Plan (filed as Exhibit 99.1 to Tropical Sportswear Int'l
Corporation's Registration Statement in Form S-8, dated July
28, 2000)
27.1 Financial Data Schedule (filed herewith).
* Incorporated by reference.
