<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
---------------
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5731
------------------------
WILLCOX & GIBBS, INC.
(Exact name of registrant as specified in charter)
NEW YORK 13-1474527
(State of (I.R.S. employer identification
Incorporation) no.)
150 ALHAMBRA CIRCLE, CORAL GABLES, FL 33134
(Address of principal executive offices)
305-446-8000
(Telephone Number)
------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------------------------------------ -------------------------------------------------
<S> <C>
Common stock, par value $1 per share New York Stock Exchange, Inc.
The Pacific Stock Exchange, Incorporated
7% Convertible Subordinated Debentures New York Stock Exchange, Inc.
Due 2014
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 1, 1995: 24,114,138 shares of Common Stock were outstanding; and
the aggregate market value of shares held by non-affiliates was $84,902,301 (For
these purposes, a reported closing market price of $6.375 per share on March 1,
1995 has been used and "affiliates" have been arbitrarily determined to be
Rexel, S.A., International Technical Distributors, Inc. (see Item 1 of this
Report) and all directors and officers, although the Company does not
acknowledge that any such entity or person is actually an "affiliate" within the
meaning of the federal securities laws.)
Documents Incorporated By Reference: definitive proxy statement for 1995
Annual Meeting of Stockholders (Part III).
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
Willcox & Gibbs, Inc. (the "Company" or "W&G") is a New York corporation
that was incorporated in 1866. Management believes that the Company is the fifth
largest distributor of electrical parts and supplies in the United States, based
on 1994 sales.
During the last several years, the Company has undertaken a major
restructuring. On April 22, 1992, the Company, Rexel, S.A. ("Rexel"),
International Technical Distributors, Inc. ("ITD"), a subsidiary of Rexel, and
Southern Electric Supply Company, Inc. ("SES"), a subsidiary of ITD engaged in
the distribution of electrical materials, entered into a Purchase Agreement (the
"Purchase Agreement"). Pursuant to the Purchase Agreement, the Company issued to
Rexel and ITD 6,284,301 shares of Company Common Stock in exchange for all of
the stock of SES and approximately $10 million in cash. In addition, pursuant to
the Purchase Agreement, the Company declared a dividend consisting of one share
of common stock of the Company's subsidiary Worldtex, Inc. ("Worldtex") for each
share of Company Common Stock outstanding on November 23, 1992 (the
"Distribution"). In August 1992, the Company transferred to Worldtex all of the
stock of the Company's subsidiaries engaged in the manufacture of covered
elastic yarn.
Also during 1992, the Company disposed of its data communications equipment
distribution business, conducted by Data Net, Inc. and Dataspan Systems, Inc.,
and its Montrose Supply and Equipment Division, which distributed equipment to
the knitting trade. In July 1994, the Company sold its apparel parts and
supplies distribution businesses. As a result of these transactions and the
Distribution, the Company is now engaged solely in the distribution of
electrical goods and supplies.
In April 1993, the Company acquired Sacks Electrical Supply Co. ("Sacks"), a
distributor of electrical supplies and components with three locations in Ohio,
for $13,635,000. On December 17, 1993, the Company acquired Summers Group Inc.,
("Summers"), a distributor of electrical parts and supplies with locations
principally in Texas, Oklahoma, Louisiana, California and Arkansas. The
consideration for the Summers acquisition was $60,000,000 in cash and a
$25,000,000 three year note issued to the seller, plus contingent consideration
to be determined based on Summers' profits before interest and taxes for 1993
and 1994, subject to a maximum purchase price of $120,000,000. In December 1994,
the Company agreed to prepay such note and cancel the contingent consideration
in exchange for cash payments that brought the total cash purchase price for
Summers to $90,950,000 (including $0.7 million of acquisition costs).
In March, 1994, the Company sold 3,491,280 newly-issued shares of Company
Common Stock to Rexel for $31,421,520 in cash. In connection with that sale, the
size of the Company's Board of Directors was reduced from twelve to nine and two
additional nominees of Rexel became directors of the Company. As a result, five
of the Company's nine current directors are nominees of Rexel.
During the last half of 1994, the Company also realigned the management of
its electrical distribution operations. The operations of the Company's
principal subsidiaries, Summers, Sacks, SES and the Consolidated Electric Supply
group ("CES"), were reorganized along geographic lines into two regions: the
Eastern Region and the Western Region. In addition, substantially all of the
Company's operating subsidiaries were merged into either SES, which operates the
Eastern Region, or Summers, which operates the Western Region.
ELECTRICAL DISTRIBUTION OPERATIONS
The Company is engaged in the wholesale distribution of electrical parts and
supplies, operating 171 electrical distribution locations in 19 states and the
Bahamas. The Company manages its business through two principal regional
organizations: the Eastern Region and the Western Region.
The Eastern Region operates 88 distribution centers in 11 states, of which
40 are in Florida, 14 in Ohio, 9 in Mississippi, 6 in Alabama, 4 in Louisiana, 4
in Georgia, 3 in Delaware, 2 in Maryland, 2 in Tennessee, 2 in Oklahoma, 1 in
Virginia and 1 in Freeport, Grand Bahamas.
1
<PAGE>
The Western Region operates 83 locations in 10 states, consisting of 39 in
Texas, 12 in California, 9 in Louisiana, 7 in Oklahoma, 7 in Arkansas, 4 in
Missouri, 2 in Arizona, and 1 in each of Colorado, Illinois and New Mexico.
Each of the Company's electrical distribution locations serves an area with
approximately a 50 mile radius and serves the needs of electrical contractors
engaged in construction work on commercial and residential structures. The
Company also provides materials to industrial customers for maintenance and
repairs and for the manufacture of equipment. In addition, the Company has two
divisions focused on specialty markets: the DataCom division, which distributes
products used to interconnect voice, data and video systems, and the Cummins
division, which distributes supplies to the utility industry. These two
divisions generated approximately 8% of the Company's sales in 1994.
In 1994, the Company served over 75,000 customers, with no single customer
accounting for more than 3% of total annual sales. The Company's ten largest
customers in 1994 represented less than 7.5% of sales. Management believes that
approximately 50% of the Company's sales are from the construction-based
electrical contractor market. The remainder are sold to industrial,
governmental, municipal and utility company customers.
Management believes that the Company is the fifth largest distributor of
electrical parts and supplies in the United States, although there are other
companies which account for significantly greater national volume. The Company
competes with national chains (some of which are affiliated with manufacturing
companies) and other independent distributors operating single or multiple
outlets. Because the electrical supply business is fragmented and highly
competitive, service and price are essential components of success. A typical
Willcox & Gibbs electrical distribution location consists of a 20,000 sq. ft.
warehouse and office facility, ten inside and outside sales representatives, one
technical specialist, six warehouse and delivery personnel, and four management
and support personnel. An average branch has approximately 400 customers,
maintains an inventory of about 15,000 items, and makes deliveries within a
50-mile radius. Small branches are often grouped to constitute a profit center.
The Company's extensive product line includes electrical supplies, such as
cable, cords, boxes, covers, wiring devices, conduit, raceway duct, safety
switches, motor controls, breakers, panels, lamps, fuses and related supplies
and accessories, residential, commercial and industrial electrical fixtures and
other special use fixtures, as well as materials and special cables for
computers and advanced communications systems. The products sold by the Company
are purchased from over 500 manufacturers and other suppliers, the two largest
of which accounted in the aggregate for approximately 14% of the Company's total
purchases during 1994, with none of the remainder accounting for more than 5%.
DISCONTINUED OPERATIONS
APPAREL PARTS AND SUPPLIES DISTRIBUTION
In July 1994, the Company sold its apparel parts and supplies distribution
businesses, which are described below, for consideration valued at approximately
$44 million.
The Company's former Sunbrand Division marketed to the apparel industry a
wide range of sewing equipment parts, supplies and other equipment, including
pressing and finishing equipment, fabric spreading machines and reconditioned
equipment. Its product line included needles, tools, electric and electronic
devices and warehouse equipment. Sunbrand's executive offices were located in
Atlanta. Sunbrand had seven office/distribution centers located near major
apparel manufacturing areas in Atlanta, El Paso, Fall River (Massachusetts),
Miami, Mexico City, Nashville, and Santo Domingo (Dominican Republic).
The Company's former Unity Sewing Supply Division ("Unity"), an importer and
distributor of non-trademarked ("generic") parts for industrial sewing machines,
was headquartered in New York with branch offices in Los Angeles and Miami. It
sold to dealers, not to manufacturers or end users. The majority of Unity's
parts were manufactured in Japan, Germany and the United States.
2
<PAGE>
The Company's former subsidiary, Willcox & Gibbs, Ltd., a wholly-owned
United Kingdom subsidiary, marketed sewing equipment in certain Common Market
countries and sold generic sewing equipment parts in the United Kingdom.
The Company's former subsidiary, Leadtec Systems, Inc. ("Leadtec"),
distributed to the apparel industry a computer-based real-time production
control system, marketed under the name "Satellite Plus", which utilized
hardware manufactured by others and proprietary software designed by Leadtec.
COVERED ELASTIC YARN
Prior to 1993, the Company owned Worldtex and its subsidiaries, which
engaged in the manufacture of covered elastic yarn. These operations were
disposed of by the Company pursuant to the Distribution on November 12, 1992.
While owned by the Company, Worldtex's principal product was nylon covered
spandex used in the manufacture of women's pantyhose, which accounted for 58% of
Worldtex's 1992 sales. Worldtex also sold covered spandex and covered latex
rubber for use in the manufacture of men's, women's and children's socks.
EMPLOYEES
As of December 31, 1994, the Company had a total of approximately 2,800
employees. Approximately 45 employees are covered by collective bargaining
agreements. The Company has experienced no significant labor problems during
recent years and considers that its employee relations are good.
ITEM 2. PROPERTIES
The Company's executive offices are located in leased office space at 150
Alhambra Circle, Coral Gables, Florida. Of the Company's distribution centers,
42 are owned by subsidiaries of the Company and 129 are leased. These leases are
classified as operating leases and expire in various years through 2002. The
Company's distribution centers generally range from 4,000 to 105,000 square feet
and include office and warehouse facilities. The average distribution center is
approximately 20,000 square feet.
Eleven of the Company's distribution centers are leased from Robert Merson,
a Senior Vice President of the Company and President of the Company's Eastern
Region, and/or members of his or his wife's family, for terms extending through
2002. The Company believes that these leases are on terms at least as favorable
as could have been obtained from an unaffiliated third party.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings as of the date of this
Report to which the Company or any of its subsidiaries is a party or to which
any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the last quarter of the Company's fiscal year, no matters were
submitted to a vote of the Company's security holders.
3
<PAGE>
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME AGE TITLE AND PERIOD OF SERVICE
------------------------- ----- ------------------------------------------------------
<S> <C> <C>
Alain Viry 46 President and Chief Executive Officer (March 1994 to
present).
Robert M. Merson 57 Senior Vice President (May 1994 to present); Vice
President (November 1992 to May 1994)
Jules Altshuler 51 Vice President (May 1994 to present)
Jon O. Fullerton 52 Vice President, General Counsel and Secretary (July
1994 to present)
Steven M. Hitt 44 Vice President and Chief Financial Officer (July 1994
to present)
Allan M. Gonopolsky 50 Vice President and Corporate Controller (May 1991 to
November 1992 and July 1994 to present); Vice
President, Chief Financial Officer and Corporate
Controller (November 1992 to July 1994); Corporate
Controller (1978 to April 1991).
</TABLE>
The officers of the Company are elected annually by the Board of Directors.
Mr. Viry also serves as a director of the Company.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange. The following table sets forth the high and low per
share sales prices for the Common Stock on the New York Stock Exchange as
reported by the Dow Jones Historical Stock Quote Reporter Service for each
quarter since December 31, 1992.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1993:
1st Quarter............................................................... $ 7.50 $ 4.75
2nd Quarter............................................................... 7.00 5.25
3rd Quarter............................................................... 7.13 5.00
4th Quarter............................................................... 8.13 6.00
1994:
1st Quarter............................................................... 8.63 6.50
2nd Quarter............................................................... 7.38 5.63
3rd Quarter............................................................... 7.38 6.25
4th Quarter............................................................... 7.50 5.88
1995:
1st Quarter (through March 10)............................................ 6.63 5.75
</TABLE>
At March 10, 1995, there were approximately 1,389 holders of record of
Common Stock.
No dividends have been paid on the Company's Common Stock since the last
quarter of 1991. Future payment of cash dividends by the Company will be
dependent on such factors as business conditions, earnings and the financial
condition of the Company.
The terms of the Company's 9.78% Senior Notes, dated as of April 2, 1991, as
amended, restrict dividends and certain other payments with respect to the
Company's capital stock if the sum thereof for the period since December 31,
1992, exceeds the sum of (i) 35% of net cash proceeds from the sale of stock and
certain subordinated debt for such period, plus (ii) 35% of consolidated net
income (as
4
<PAGE>
defined) for such period. In addition, the Note Agreement and the Company's
Revolving Credit and Reimbursement Agreement, dated as of December 17, 1993,
require that the Company meet certain financial tests that could have the effect
of restricting the Company's ability to pay dividends.
ITEM 6. SELECTED FINANCIAL DATA
WILLCOX & GIBBS, INC. AND SUBSIDIARIES
The following tables set forth certain consolidated financial data of the
Company and its subsidiaries for the five fiscal years ended December 31, 1994,
which has been derived from the Company's audited financial statements, and
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto of the Company appearing elsewhere in this Report on Form 10-K.
The selected financial data of the Company for the years set forth below are
not directly comparable due to acquisitions and dispositions during such
periods, including the distribution of Worldtex on November 12, 1992, the sale
of the Apparel Division on July 13, 1994, and the acquisitions of SES on
November 12, 1992, Sacks on April 12, 1993 and Summers on December 17, 1993.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales.............................................. $ 1,065,543 $ 521,519 $ 359,080 $ 370,103 $ 394,768
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations before income
taxes................................................. $ 16,528 $ 11,928 $ (17,588) $ (6,095) $ 1,728
Income tax provision (benefit)......................... 7,270 5,038 (5,186) (1,656) 281
------------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations............... 9,258 6,890 (12,402) (4,439) 1,447
Income (loss) from discontinued operations............. (327) 1,517 7,527 6,123 4,067
------------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary charge and
cumulative effect of accounting change................ 8,931 8,407 (4,875) 1,684 5,514
Extraordinary charge (a)............................... -- -- -- (1,436) --
Cumulative effect of accounting change (b)............. -- 660 -- -- --
------------- ----------- ----------- ----------- -----------
Net income (loss)...................................... $ 8,931 $ 9,067 $ (4,875) $ 248 $ 5,514
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Earnings per common share (c)
Income (loss) from continuing operations............. $ .39 $ .33 $ (.85) $ (.32) $ .10
Income (loss) from discontinued operations........... (.01) .07 .52 .44 .30
------------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary charge and
cumulative effect of accounting change.............. .38 .40 (.33) .12 .40
Extraordinary charge................................. -- -- -- (.10) --
Cumulative effect of accounting change............... -- .03 -- -- --
------------- ----------- ----------- ----------- -----------
Net income (loss).................................... $ .38 $ .43 $ (.33) $ .02 $ .40
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Total assets......................................... $ 414,487 $ 428,519 $ 285,309 $ 365,429 $ 365,005
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Long-term obligations................................ $ 99,201 $ 129,503 $ 114,251 $ 113,447 $ 83,445
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Cash dividends per common share...................... $ -0- $ -0- $ -0- $ .10 $ .10
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
<FN>
------------------------
(a) Write-off of unamortized discount and expense in connection with a
redemption of all of the outstanding 13% Senior Subordinated Notes due
April 15, 1997.
(b) Cumulative effect of accounting change for income taxes in connection with
SFAS No. 109, "Accounting for Income Taxes."
(c) Fully diluted amounts are anti-dilutive in all years.
</TABLE>
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SIGNIFICANT TRANSACTIONS
In April 1992, the Company, Rexel, S.A. (formerly known at Compagnie de
Distribution de Materiel Electrique) ("Rexel"), International Technical
Distributors, Inc. ("ITD"), a subsidiary of Rexel, and Southern Electric Supply
Company, Inc. ("SES"), a subsidiary of ITD engaged in the distribution of
electrical materials, entered into a Purchase Agreement (the "Purchase
Agreement"). Pursuant to the Purchase Agreement, the Company issued to Rexel and
ITD 6,284,301 shares of Company Common Stock in exchange for all of the stock of
SES and approximately $10 million in cash. In addition, pursuant to the Purchase
Agreement, the Company declared a dividend consisting of one share of common
stock of the Company's subsidiary Worldtex, Inc. ("Worldtex") for each share of
Company Common Stock outstanding on November 23, 1992 (the "Distribution" and,
together with such transactions with Rexel, the "1992 Transactions"). In August
1992, the Company transferred to Worldtex all of the stock of the Company's
subsidiaries engaged in the manufacture of covered elastic yarn. Accordingly,
these businesses are reflected as discontinued operations in the Company's
Consolidated Financial Statements.
Also during 1992, the Company sold its data communications equipment
distribution business and an apparel related unit. On July 13, 1994, the Company
sold its apparel parts and supplies distribution businesses (the "Apparel
Division") for consideration of approximately $44 million. Accordingly, the
Apparel Division is shown as a discontinued operation in the Company's
Consolidated Financial Statements.
In April 1993, the Company acquired Sacks Electrical Supply Co. ("Sacks"), a
distributor of electrical supplies and components with three locations in Ohio,
for $13.6 million. On December 17, 1993, the Company acquired Summers Group,
Inc. ("Summers"), an electrical parts distributor, for $60 million in cash and a
$25 million three year note issued to the seller, plus contingent consideration
to be determined based on Summers' profits before interest and taxes for 1993
and 1994, subject to a maximum purchase price of $120 million. In December 1994,
the Company agreed to prepay such note and cancel the contingent consideration
in exchange for cash payments that brought the total cash purchase price for
Summers to $90.95 million (including $0.7 million of acquisition costs).
On March 1, 1994, the Company sold 3,491,280 newly-issued shares of Company
common stock to Rexel for a total purchase price of $31.4 million. Pursuant to
the Company's agreement with Rexel, the size of the Company's Board of Directors
was reduced from twelve to nine, five of whom are nominees of Rexel.
During the second half of 1994, the operations of the Company's principal
subsidiaries, Summers, Sacks, SES and the Consolidated Electric Supply group
("CES"), were reorganized along geographical lines into two regions: the Eastern
Region and the Western Region. As part of this process, the Company closed six
redundant or underperforming locations and opened ten new distribution centers.
In addition, the Company implemented cost reduction programs, including the
consolidation and redesign of employee benefit and casualty insurance programs,
established new management incentive programs focused on profit growth and asset
management and commenced upgrade of its Eastern Region's computer management
information system.
As a result of the aforementioned transactions and discontinuances, the
Company is now engaged in only one business segment: the distribution of
electrical parts and supplies, principally in the southern United States.
Assuming the Sacks and Summers acquisitions had been consummated as of January
1, 1992 and the SES acquisition had been consummated as of January 1, 1991, the
Company's unaudited pro forma sales would have been $958.5 million and $907.3
million in 1993 and 1992, respectively.
6
<PAGE>
RESULTS OF CONTINUING OPERATIONS
The following table sets forth the percentages which certain income and
expense items bear to net sales:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Net sales.................................................... 100.0% 100.0% 100.0%
----- ----- -----
----- ----- -----
Gross profit................................................. 19.9% 20.6% 20.4%
Operating costs and expenses:
Selling & administrative................................... 17.6 17.3 18.3
Transaction costs.......................................... -- -- 4.3
Restructuring charges...................................... -- -- 1.2
----- ----- -----
Operating profit (loss)...................................... 2.3 3.3 (3.4)
Interest expense............................................. .9 1.1 1.5
Other income................................................. .1 -- --
----- ----- -----
Income (loss) from continuing operations before income
taxes....................................................... 1.5% 2.2% (4.9)%
----- ----- -----
----- ----- -----
</TABLE>
1994 V. 1993
Sales increased $544.0 million in 1994 to $1.066 billion. Sales for 1994
included a total of $560.8 million from Summers and Sacks, which were acquired
in December 1993 and April 1993, respectively. Had these acquisitions occurred
on January 1, 1993, pro forma 1993 sales would be $958.5 million. The pro forma
sales increase in 1994 of 11.2% was attributable to favorable new home
construction markets and growth of sales in the utility and data communications
markets.
Gross margins declined in 1994 to 19.9% from 20.6% in 1993. This decline was
primarily attributable to the 36% increase during 1994 in the price of copper,
an important component of the goods distributed by the Company. Over half of
this increase occurred in the last four months of the year. While inflation
tends to improve the Company's margins, since so much of the increase in copper
prices occurred late in the year, the improved margins could not offset the $7.2
million increase in LIFO reserves primarily caused by the inflation in copper
wire prices.
Selling and administrative expense increased to $187.4 million in 1994 from
$90.4 million in 1993, reflecting the additional operations added through the
above-mentioned acquisitions. As a percentage of sales, such expenses were 17.6%
in 1994 compared to 17.3% in 1993. Included in selling and administrative costs
for 1994 were nonrecurring charges totaling $4.9 million consisting of charges
primarily associated with the resignation of an officer of the company ($2.1
million), the relocation of the corporate office to Coral Gables, Florida ($0.7
million) and replacement of certain computer systems in the Company's Eastern
Region ($2.1 million). These nonrecurring costs amounted to 0.5% of sales in
1994. Depreciation and amortization increased to $9.7 million in 1994 from $5.2
million in 1993, reflecting increased amortization of goodwill on the 1993
acquisitions of Sacks and Summers and the $2.1 million for replacement of
computer systems.
Interest expense increased to $9.6 million in 1994 from $5.9 million in
1993. While the Company reduced its borrowings $77.1 million by the end of 1994,
interest expense increased due to additional debt arising in 1993 in connection
with the acquisitions of Sacks and Summers and the increase in interest rates on
short-term debt. Additionally, discontinued operations absorbed $2.0 million in
interest expense in 1994 compared to $3.9 million in 1993.
Other income-net increased to $1.0 million in 1994 from $0.7 million in
1993, primarily reflecting higher earnings from short-term investments during
the second half of 1994.
Income from continuing operations increased to $9.3 million in 1994 from
$6.9 million in 1993, reflecting the additional operations added through the
acquisitions of Sacks and Summers in 1993.
7
<PAGE>
1993 V. 1992
The Company's sales increased by $162.4 million in 1993, to $521.5 million.
Excluding the impact of the acquisitions of SES, Sacks and Summers, full-year
sales were up about 3.8%. CES's increase resulted primarily from the improving
housing market, although commercial construction continued to lag. Full-year
sales for SES, Sacks, and Summers as a group were up in 1993 compared with 1992,
reflecting the continued market-share strength of these units in their
respective geographic areas. Full year sales for these divisions totalled $601.3
million in 1993, including, as to Sacks and Summers, the period prior to
acquisition. Certain geographic regions showed an upturn in 1993. However, no
assurance can be given that this trend will continue. Declining copper prices
and strong competition for market share continue to put pressure on the
Company's gross margin, which increased slightly in 1993, to 20.6%.
Selling and administrative expenses increased $24.4 million in 1993,
reflecting the additional operations added through the above-mentioned
acquisitions. However, as a percentage of sales such expenses decreased to 17.3%
in 1993 as compared to 18.3% in 1992, reflecting cost containment programs and a
higher level of sales.
Interest expense in 1993 was $5.9 million, compared with $5.4 million a year
ago. Although the Company reduced its debt at the end of 1992 in connection with
the 1992 Transactions, it increased its borrowings in 1993 to fund the
acquisitions of Sacks and Summers. Other income-net in 1993 was $0.7 million,
compared to $0.1 million in 1992, reflecting principally earnings from
short-term investments during the first half of 1993.
Income from continuing operations increased $19.3 million to $6.9 million in
1993, reflecting principally the costs for 1992 Transactions and restructuring
charges that were accrued in 1992.
DISCONTINUED OPERATIONS
As discussed above, the results of the Apparel Division and Worldtex are
included in the financial statements as discontinued operations. Summarized
results are as follows (000's):
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- -----------
<S> <C> <C> <C>
Sales:
Apparel Division........................................ $ 40,819 $ 76,850 $ 78,977
Worldtex, Inc........................................... -- -- 157,463
--------- --------- -----------
$ 40,819 $ 76,850 $ 236,440
--------- --------- -----------
--------- --------- -----------
Net Income:
Apparel Division........................................ $ 345 $ 1,517 $ 353
Worldtex, Inc........................................... -- -- 7,174
--------- --------- -----------
$ 345 $ 1,517 $ 7,527
--------- --------- -----------
--------- --------- -----------
</TABLE>
The Apparel Division was sold July 13, 1994 and accordingly, sales and net
income of the Apparel Division reflect activity through that date.
INCOME TAXES
The Company had effective income tax rates of 44%, 43% and (6.3)% in 1994,
1993, and 1992. The 1994 rate reflects the impact of state and local taxes,
non-deductible goodwill amortization and increase in the deferred tax asset
valuation allowance, reduced by the current deductibility of certain prior year
transaction costs. The 1993 rate reflects the above as well as a reduction due
to the impact of the utilitzation of federal capital loss carryforwards and an
increase in the federal corporate income tax rate.
Effective January 1, 1993, the Company changed its method of accounting from
the deferred method to the liability method required by SFAS No. 109,
"Accounting for Income Taxes" (see Note 10 of the Notes to the Consolidated
Financial Statements). As permitted under Statement 109, prior years' financial
statements have not been restated. The cumulative effect of adopting Statement
109 as of January 1, 1993 was to increase net income by $660,000 or $.03 per
share for 1993.
8
<PAGE>
As of December 31, 1994 and 1993, the Company had recognized deferred tax
assets of $10.2 million and $11.3 million, respectively, arising primarily from
basis differences between the recorded value for financial reporting purposes
and tax basis of accounts receivable, inventory and various liabilities and
reserves, including restructuring and transaction costs. Such deferred tax
assets have been reduced by a valuation allowance of $1.3 million and $1.1
million in 1994 and 1993, respectively. In addition, the Company has recognized
deferred tax liabilities totaling $9.4 million and $7.8 million in 1994 and
1993, respectively, arising principally from a higher recorded value over tax
basis of property, plant and equipment and certain acquisitions.
LIQUIDITY; CAPITAL RESOURCES
At December 31, 1994, the Company had $23.8 million in cash and cash
equivalents, compared to $19.1 million at December 31, 1993, and had $119.7
million of indebtedness for borrowed money (including current installments and
short-term debt), compared to $196.7 million at December 31, 1993. Total assets
decreased $14.0 million as of the end of 1994 to $414.5 million, primarily due
to the disposition of the Apparel Division as discussed below.
During 1994, the Company generated $33.1 million in cash from its operating
activities compared to $5.8 million in 1993, primarily reflecting improvement in
various working capital items and a full year's operating income from the 1993
acquisitions of Sacks and Summers. Net cash provided by investing activities in
1994 totalled $17.6 million, reflecting net cash proceeds from the disposal of
the Apparel Division of $37.2 million, offset by net capital expenditures of
$12.1 million, the $5.3 million payment to terminate contingent purchase price
obligations in connection with the Summers acquisition and other payments of
$2.2 million. Capital expenditures increased $6.7 million in 1994 to $12.1
million, reflecting the full year impact of the 1993 acquisitions of Sacks and
Summers and investment in additional computer equipment and software associated
with the replacement of certain computer systems in the Eastern Region. Net cash
used in investing activities in 1993 of $62.8 million reflects the Company's
acquisitions of Sacks and Summers, which utilized $68.3 million, offset
partially by proceeds from sales of short-term investments of $12.9 million.
Net cash used in financing activities in 1994 totalled $46.0 million,
reflecting primarily the payment of debt from the proceeds of the issuance of
common stock to Rexel in March 1994, and the sale of the Apparel Division. Net
cash provided by financing activities in 1993 totalled $60.6 million, reflecting
borrowings under credit arrangements to fund the 1993 acquisitions of Sacks and
Summers.
The Company had a current ratio of 1.6 at December 31, 1994 compared to 1.3
at December 31, 1993. The improvement is primarily the result of improvement in
inventory days to 76 days in 1994 from 84 days in 1993 and reduction in
short-term debt in 1994. The number of days sales represented by trade accounts
receivable were 48 at December 31, 1994 compared to 50 at December 31, 1993.
Trade working capital turnover for the year 1994 improved to 7.1 from 6.2 in
1993.
The ratio of borrowings (debt) to stockholders' equity improved to .9 at
December 31, 1994 from 2.1 at December 31, 1993, reflecting improved operating
cash flow and the reduction of borrowings from the proceeds of the common stock
issuance to Rexel and the sale of the Apparel Division in 1994.
In April 1993, the Company acquired Sacks for $13.6 million in cash, and in
December 1993, the Company acquired Summers for $60 million in cash and a $25
million three year note, plus contingent consideration, subject to a maximum
purchase price of $120 million. In December 1994, the Company agreed to prepay
such note and cancel the contingent consideration in exchange for cash payments
that brought the total cash purchase price for Summers to $90.95 million
(including $0.7 million of acquisition costs). The Company regularly reviews
possible acquisitions of businesses, and may from time to time in the future
acquire other businesses. The Company otherwise currently expects that its
capital expenditures during 1995 will be consistent with historical requirements
for the electrical distribution business.
9
<PAGE>
The Company is party to the Revolving Credit and Reimbursement Agreement,
dated as of December 17, 1993 (the "Credit Agreement"), with NationsBank of
Florida, N. A., and Credit Lyonnais New York Branch. The Credit Agreement was
amended on March 30, 1995 and currently provides for borrowings from time to
time through March 31, 2000 of up to $40 million. Borrowings under the Credit
Agreement bear interest at NationsBank's prime rate, or at a rate based on rates
in the certificate of deposit market or LIBOR, plus a margin, which margin
varies depending on the Company's financial performance. The Credit Agreement
includes various covenants, including restrictions on liens, debt and lease
obligations and requirements that certain financial ratios be maintained.
The Company's working capital requirements are generally met by internally
generated funds and short-term borrowings. Management believes sufficient cash
resources will be available to support its long-term growth strategies through
internally generated funds, credit arrangements and the ability of the company
to obtain additional financing. However, no assurance can be given that
financing will continue to be available on attractive terms.
The Company continually reviews the impact of inflation. Pricing policies
are reviewed regularly and, to the extent permitted by competition, the Company
passes increased costs on by increasing the sales price. The Company will
continue to monitor the impact of inflation and will consider these matters in
setting its pricing policies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements, supplementary financial information and
schedules are filed as part of this Report:
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets,
December 31, 1994 and 1993
Consolidated Statements of Income,
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statement of Changes in Stockholders'
Equity,
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows,
Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Supplementary Financial Information
Financial Statement Schedule:
Schedule II -- Valuation and
Qualifying Accounts,
Years Ended December 31, 1994, 1993
and 1992
All schedules not mentioned above are omitted for the reason that they are not
required or are not applicable, or the information is included in the
Consolidated Financial Statements or the Notes thereto.
The foregoing financial statements are incorporated by reference in certain
registration statements on Form S-8 of the Company and the prospectuses relating
thereto in reliance upon the report of Coopers & Lybrand L. L. P. pertaining to
such financial statements given upon the authority of such firm as experts in
accounting and auditing.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Willcox & Gibbs, Inc.:
We have audited the consolidated financial statements and the financial
statement schedule of Willcox & Gibbs, Inc. and subsidiaries listed in Item 8 of
this Form 10-K. These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Willcox &
Gibbs, Inc. and subsidiaries as of December 31, 1994 and 1993 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
As discussed in Note 10 of the consolidated financial statements, in 1993
the Company changed its method of accounting for income taxes.
/s/ Coopers & Lybrand L. L. P.
--------------------------------------
Coopers & Lybrand L. L. P.
Miami, Florida
March 15, 1995 except as to the
information presented in
Note 5 for which
the date is March 30, 1995.
11
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................................... $ 23,843 $ 19,131
Accounts and notes receivable, less allowance for doubtful accounts of $4,149 in 1994
and $4,023 in 1993..................................................................... 142,997 129,163
Inventories............................................................................. 111,276 117,577
Income taxes receivable................................................................. 3,385 1,407
Prepaid expenses and other current assets............................................... 8,930 9,002
Deferred income taxes................................................................... 1,888 1,796
---------- ----------
Total current assets.................................................................. 292,319 278,076
Investments and noncurrent receivables, less allowance for doubtful accounts of $511 in
1994 and $297 in 1993.................................................................... 5,330 2,302
Fixed assets, at cost:
Land.................................................................................... 8,148 8,059
Buildings and leasehold improvements.................................................... 26,077 29,630
Machinery, equipment and other tangible property........................................ 37,048 29,765
---------- ----------
71,273 67,454
Less, accumulated depreciation and amortization......................................... 19,419 14,772
---------- ----------
Fixed assets -- net..................................................................... 51,854 52,682
---------- ----------
Net assets of discontinued operations..................................................... -- 43,337
Other assets.............................................................................. 3,759 4,350
Deferred income taxes..................................................................... 1,253 693
Cost in excess of net assets of acquired businesses, net of accumulated amortization of
$5,355 in 1994 and $3,857 in 1993........................................................ 59,972 47,079
---------- ----------
$ 414,487 $ 428,519
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt......................................................................... $ -- $ 61,500
Current installments of long-term debt.................................................. 24,894 9,261
Accounts and notes payable -- trade, and other liabilities.............................. 155,282 135,733
Deferred income taxes................................................................... 630 --
---------- ----------
Total current liabilities............................................................. 180,806 206,494
Long-term debt............................................................................ 94,761 125,975
Other long-term liabilities............................................................... 4,440 3,528
Deferred income taxes..................................................................... 3,028 --
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock (authorized 600,000 shares, none issued)................................ -- --
Preference stock (authorized 2,000,000 shares, none issued)............................. -- --
Common stock (24,705,233 and 21,213,953 shares issued in 1994 and 1993)................. 24,705 21,214
Capital surplus......................................................................... 81,354 53,818
Retained earnings....................................................................... 30,805 21,874
Cumulative foreign translation adjustment............................................... -- (1,333)
Unrealized losses on marketable equity securities....................................... (875) (625)
Treasury stock, at cost (591,095 and 266,281 shares in 1994 and 1993)................... (4,537) (2,426)
---------- ----------
Total stockholders' equity.............................................................. 131,452 92,522
---------- ----------
$ 414,487 $ 428,519
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1993 1992
----------- ------------- ------------
<S> <C> <C> <C>
Net sales............................................................. $1,065,543 $521,519 $359,080
Cost of goods sold.................................................... 853,041 414,027 285,713
----------- ------------- ------------
Gross profit........................................................ 212,502 107,492 73,367
Selling and administrative expense.................................... 187,423 90,365 65,980
Transaction costs (Note 2)............................................ -- -- 15,344
Restructuring charges................................................. -- -- 4,338
----------- ------------- ------------
Operating profit (loss)............................................. 25,079 17,127 (12,295)
Interest expense...................................................... 9,577 5,890 5,389
Other income -- net................................................... 1,026 691 96
----------- ------------- ------------
Income (loss) from continuing operations before income taxes........ 16,528 11,928 (17,588)
Income tax provision (benefit)........................................ 7,270 5,038 (5,186)
----------- ------------- ------------
Income (loss) from continuing operations............................ 9,258 6,890 (12,402)
Income (loss) from discontinued operations, net of income tax
(benefit) expense of $(256), $1,303 and $4,858....................... (327) 1,517 7,527
----------- ------------- ------------
Income (loss) before cumulative effect of accounting change......... 8,931 8,407 (4,875)
Cumulative effect of accounting change for income taxes............... -- 660 --
----------- ------------- ------------
Net income (loss)................................................... $8,931 $9,067 $(4,875)
----------- ------------- ------------
----------- ------------- ------------
Income (loss) per common share:
Income (loss) from continuing operations............................ $.39 $.33 $(.85)
Income (loss) from discontinued operations, net of income taxes..... (.01) .07 .52
----------- ------------- ------------
Income (loss) before cumulative effect of accounting change......... .38 .40 (.33)
Cumulative effect of accounting change for income taxes............. -- .03 --
----------- ------------- ------------
Net income (loss)................................................... $.38 $.43 $(.33)
----------- ------------- ------------
----------- ------------- ------------
Average number of common and common equivalent shares................. 23,765,000 20,970,000 14,629,000
----------- ------------- ------------
----------- ------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
COMMON CUMULATIVE LOSSES ON
STOCK FOREIGN MARKETABLE TREASURY
COMMON TO BE CAPITAL RETAINED TRANSLATION EQUITY STOCK AT
STOCK ISSUED SURPLUS EARNINGS ADJUSTMENT SECURITIES COST TOTAL
------- ------ ------- --------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992.............. $13,842 $22,511 $ 76,229 $ 1,735 $ (2,391) $ 111,926
Net loss................................ (4,875) (4,875)
Dividend of Worldtex, Inc............... (58,547) 800 (57,747)
Issuance of 583,116 shares pursuant to
Stock Option Plan and 3,185 treasury
shares acquired as payment............. 583 4,178 (35) 4,726
Issuance of 778 shares pursuant to Stock
Acquisition Plan....................... 1 9 10
Foreign translation adjustment.......... (3,721) (3,721)
Issuance of 1,647,307 shares to Rexel
for cash, net of issuance costs of
$2,056................................. 1,648 6,181 7,829
Issuance of 4,636,994 shares for the
acquisition of SES..................... 4,009 $ 628 16,461 21,098
Issuance of 503,543 shares to key
executives in connection with the
Purchase Agreement with Rexel.......... 503 4,478 4,981
------- ------ ------- --------- ------------ ----------- --------- ---------
Balance at December 31, 1992............ 20,586 628 53,818 12,807 (1,186) (2,426) 84,227
Net income.............................. 9,067 9,067
Issuance of 628,430 shares.............. 628 (628)
Foreign translation adjustment.......... (147) (147)
Marketable equity security adjustment... $ (625) (625)
------- ------ ------- --------- ------------ ----------- --------- ---------
Balance at December 31, 1993............ 21,214 -- 53,818 21,874 (1,333) (625) (2,426) 92,522
Net income.............................. 8,931 8,931
Issuance of 3,491,280 shares............ 3,491 27,536 31,027
Foreign translation adjustment.......... 378 378
Sale of apparel parts and supplies
distribution business.................. 955 (2,111) (1,156)
Marketable equity security adjustment... (250) (250)
------- ------ ------- --------- ------------ ----------- --------- ---------
Balance at December 31, 1994............ $24,705 $-- $81,354 $ 30,805 $ -- $ (875) $ (4,537) $ 131,452
------- ------ ------- --------- ------------ ----------- --------- ---------
------- ------ ------- --------- ------------ ----------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
--------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................................ $ 8,931 $ 9,067 $ (4,875)
--------- ---------- ---------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization.............................................. 9,718 5,161 8,395
Provision for losses on accounts receivable 3,600 2,154 2,532
Deferred income taxes...................................................... 3,070 5,639 (2,327)
Loss on sale of apparel division........................................... 1,200 -- --
Cumulative effect of accounting change for income taxes.................... -- (660) --
Changes in assets and liabilities, net of effect of acquisitions, dividend
of Worldtex and sale of net assets:
(Increase) decrease in accounts and notes receivable..................... (17,209) 6,107 (9,755)
Decrease (increase) in inventory......................................... 5,209 1,054 (5,734)
Decrease (increase) in prepaid expenses and other current assets......... 114 (124) 2,652
Increase (decrease) in accounts and notes payable-trade, and other
liabilities............................................................. 20,434 (19,292) 9,173
(Decrease) increase in income taxes receivable........................... (1,931) (1,372) 1,094
Net (payments) provision for restructuring activities...................... (124) (1,302) 2,559
Net (payments) provision for transaction costs............................. (1,208) (777) 10,805
Other, net................................................................. 1,313 135 (149)
--------- ---------- ---------
Total adjustments........................................................ 24,186 (3,277) 19,245
--------- ---------- ---------
Net cash provided by operating activities................................ 33,117 5,790 14,370
--------- ---------- ---------
Cash flows from investing activities:
Sale (purchase) of short-term investments.................................... -- 12,874 (12,874)
Capital expenditures......................................................... (12,094) (5,381) (11,158)
Contingent payments to former shareholders of acquired businesses............ (5,250) -- (168)
Cost of acquisitions, net of cash acquired................................... -- (68,329) --
Cash from acquisition acquired for stock, net of closing costs............... -- -- 1,975
Proceeds from sale of net assets............................................. 37,199 -- 3,350
Other investing activities................................................... (2,211) (1,963) 1,314
--------- ---------- ---------
Net cash provided by (used in) investing activities.......................... 17,644 (62,799) (17,561)
--------- ---------- ---------
Cash flows from financing activities:
Net (payments) borrowings under line of credit arrangements.................. (61,500) 61,500 6,851
Proceeds from issuance of common stock to Rexel, net of issuance costs....... 31,027 -- 7,829
Prepayment of debt of acquired company....................................... -- -- (5,950)
Proceeds from exercise of stock options...................................... -- -- 4,042
Cash transferred in connection with dividend of Worldtex..................... -- -- (1,215)
Other debt payments and financing activities, net............................ (15,576) (927) (873)
--------- ---------- ---------
Net cash (used in) provided by financing activities.......................... (46,049) 60,573 10,684
--------- ---------- ---------
Net increase in cash and cash equivalents.................................... 4,712 3,564 7,493
Cash and cash equivalents at beginning of year................................. 19,131 15,567 8,074
--------- ---------- ---------
Cash and cash equivalents at end of year..................................... $ 23,843 $ 19,131 $ 15,567
--------- ---------- ---------
--------- ---------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest..................................................................... $ 11,660 $ 9,779 $ 14,548
Income taxes................................................................. $ 5,660 $ 1,183 $ 459
Supplemental information of businesses acquired:
Fair value of assets acquired................................................ $ -- $ 179,113 $ 43,403
Liabilities assumed.......................................................... -- (79,490) (22,033)
Note issued to seller........................................................ -- (25,000) --
Common stock issued.......................................................... -- -- (21,098)
--------- ---------- ---------
Cash paid.................................................................... $ -- $ 74,623 $ 272
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. All significant intercompany
transactions and balances have been eliminated.
(b) CASH EQUIVALENTS
Highly liquid investments with a maturity of three months or less when
purchased are generally considered to be cash equivalents.
(c) INVENTORIES
Inventories are stated at the lower of LIFO cost or market for
continuing operations. Had the FIFO method been used to value
inventories, total inventories would have increased $12,867 and $5,632
at December 31, 1994 and 1993, respectively.
For the discontinued operations, inventories were stated at the lower of
FIFO cost or market and were included in Net Assets of Discontinued
Operations at December 31, 1993.
(d) INVESTMENTS AND NONCURRENT RECEIVABLES
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standard No. 115, "Accounting for Certain Investments in Debt
and Equity Securities", which addresses the accounting and reporting for
investments in equity securities that have readily determinable fair
value and for all investments in debt securities. The Standard
classifies investments into one of three categories: Held-to-maturity,
Available-for-sale, and Trading.
At December 31, 1994, the Company has classified its investments in debt
securities as "Trading". These investments are included as part of Cash
and Cash Equivalents based on their liquidity. Investments in equity
securities have been classified as "Available-for-sale". The fair value
of these securities at year end was approximately $625. The Company does
not believe that adoption of this new Standard has had a significant
effect on its financial statements.
(e) DEPRECIATION AND AMORTIZATION
Depreciation, computed by means of straight-line and accelerated
methods, is based on the estimated useful lives of the related assets.
Leasehold improvements are amortized over their respective lease terms
or their estimated useful lives, if shorter.
Cost in excess of net assets of acquired businesses ("goodwill") is
amortized over 40 years. At each balance sheet date, the Company reviews
the carrying value of goodwill in relation to current and expected
operating results of the businesses which benefit therefrom in order to
assess whether there has been a permanent impairment of goodwill.
(f) FORWARD EXCHANGE CONTRACTS
Solely in connection with the apparel parts and supplies distribution
business, which was sold on July 13, 1994, the Company entered into
forward exchange contracts in limited circumstances as a hedge against
purchases with extended terms denominated in foreign currency. These
contracts were used by the Company to minimize exposure and reduce risk
from exchange rate fluctuations in the regular course of its foreign
apparel business. Gains and losses on forward contracts were deferred
and included in the measurement of the related foreign currency
transaction. Cash provided and used for forward contracts is included in
the cash flows resulting from changes in accounts and notes payable --
trade.
16
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) INCOME TAXES
No provision is made for income taxes which may be payable if
undistributed earnings of foreign subsidiaries were to be paid as
dividends to the Company, since the Company intends that such earnings
will continue to be invested in those countries. At December 31, 1993,
the cumulative amount of foreign undistributed earnings amounted to
approximately $630. Foreign tax credits may be available as a reduction
of United States income taxes in the event of such distributions.
(h) EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of
common and common equivalent shares outstanding during the year.
(i) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
1994 presentation.
2. SIGNIFICANT TRANSACTIONS
On November 12, 1992, pursuant to a Purchase Agreement dated April 22, 1992
among the Company, Rexel, S.A. (formerly known as Compagnie de Distribution de
Materiel Electrique) ("Rexel"), International Technical Distributors, Inc.
("ITD"), a subsidiary of Rexel, and Southern Electric Supply Company ("SES"), a
subsidiary of ITD engaged in the distribution of electrical components and
supplies, the Company issued to Rexel and ITD 6,284,301 shares of the Company's
common stock. In exchange for such stock issuance, the Company received $9,885
in cash and all the capital stock of SES. The SES acquisition was accounted for
by the purchase method (see Note 3). Common stock and capital surplus have been
adjusted for the proceeds received from the common stock issuance less issue
costs of $2,056.
Pursuant to an Investment Agreement entered into in connection with the
Purchase Agreement, Rexel agreed to certain limitations on its ownership of the
outstanding common stock of the Company and to certain other restrictions during
the five years after closing. On March 1, 1994, the Company sold to Rexel
3,491,280 newly issued shares of Company common stock for a total cash purchase
price of $31,422, which was used to repay short-term debt. As a result, Rexel
increased its beneficial ownership of the outstanding common stock of the
Company from 30% to 40%. In connection with that purchase, the Company, Rexel
and ITD executed an amendment to the Investment Agreement which, among other
things, permited Rexel to increase its beneficial ownership of Company common
stock to 45% and provided for termination of the Investment Agreement on
December 31, 1994. As of February 6, 1995, Rexel had further increased its
beneficial ownership to approximately 43.7%.
In connection with the November 12, 1992 transaction, the Company
distributed Worldtex, Inc. ("Worldtex"), its covered yarn manufacturing segment,
as a dividend to its stockholders during the fourth quarter of 1992. Worldtex
owns the former subsidiaries of the Company engaged in the manufacture of
covered yarn. Effective with the dividend, retained earnings was charged $58,547
for the book value of the net assets distributed, including assets of $152,407
and liabilities of $93,860. Liabilities included $32,000 of debt assumed by
Worldtex which was previously outstanding under the Company's prior revolving
credit arrangement. The results of the covered yarn operation for 1992 are
included in the Consolidated Statements of Income as discontinued operations
(see Note 4).
Results for 1992 include transaction-related costs of $15,344, including
certain investment advisor services, legal and accounting fees and executive
incentive payments, in connection with these transactions.
17
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. ACQUISITIONS
On April 12, 1993 the Company acquired the common stock of Sacks Electrical
Supply Co. ("Sacks"), a distributor of electrical supplies and components with
three locations in Ohio, for $13.9 million (including $0.3 million of
acquisition costs).
On December 17, 1993, the Company acquired the common stock of Summers
Group, Inc. ("Summers") for $60 million in cash and a $25 million three-year
note issued to the seller, plus contingent consideration to be determined based
on defined profits of Summers, subject to a maximum purchase price of $120
million. On December 22, 1994, the Company reached an agreement pursuant to
which the Company paid $5.25 million in cash and agreed to pay the balance of
the $25 million note ($16.7 million) prior to June 30, 1995, and the contingent
consideration was cancelled. The additional payments, plus $0.7 million of
acquisition costs, bring the total purchase price to $90.95 million. Summers is
a distributor of electrical parts and supplies with locations principally in
Texas, Oklahoma, Louisiana, California and Arkansas.
Each of these 1993 acquisitions has been recorded as a purchase, and the
excess of the total purchase price over the fair value of the net assets
acquired ($7.1 million for Sacks and $25.6 million for Summers) is being
amortized over 40 years. Sacks' and Summers' results of operations are included
in the Company's financial statements from the respective dates of acquisition.
As discussed in Note 2 of the Notes to Consolidated Financial Statements,
the Company acquired all of the issued capital stock of SES in exchange for the
issuance of 4,636,994 shares of the Company's common stock. The total purchase
price was $21,370, representing market value of the shares and certain closing
costs. The shares include 628,430 shares issued in 1993. SES' results of
operations are included in the Company's financial statements from the date of
acquisition. The acquisition has been recorded as a purchase and the excess of
the total purchase price over the fair value of the net assets acquired
($10,475) is being amortized over 40 years.
The following table summarizes the effect on consolidated sales and income
(loss) from continuing operations of the Company for 1993 and 1992, on an
unaudited pro forma basis, assuming the Sacks and Summers acquisitions had been
consummated as of January 1, 1992 and the SES acquisition had been consummated
as of January 1, 1991.
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Sales............................................................... $ 958,518 $ 907,322
----------- -----------
----------- -----------
Income (loss) from continuing operations............................ $ 12,622 $ (6,273)
----------- -----------
----------- -----------
Income (loss) per share from continuing operations.................. $ .60 $ (.43)
----------- -----------
----------- -----------
</TABLE>
The pro forma results above are not necessarily indicative of what actually
would have occurred if the acquisitions had been in effect at the beginning of
each period or are they necessarily indicative of future consolidated results.
4. DISCONTINUED OPERATIONS
In the fourth quarter of 1993, the Company decided to sell its apparel parts
and supplies distribution business ("Apparel") and engaged an investment banking
firm, of which a director of the Company is president, to seek a purchaser. The
sale was consummated on July 13, 1994 for consideration valued at approximately
$44.0 million, consisting of cash of $38.6 million ($37.2 million net of costs),
a $3 million subordinated note from the buyer valued at $2.3 million, warrants
to purchase approximately 15% of the buyer valued at $0.7 million and 324,814
shares of Company common stock valued at $2.1 million. The net proceeds from the
sale approximated book value of the net assets sold,
18
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. DISCONTINUED OPERATIONS (CONTINUED)
but resulted in a loss on disposal of $0.7 million, net of taxes, due primarily
to the recognition of previously established deferred foreign translation
adjustments. In connection with the sale, the investment banking firm was paid
$0.5 million. Accordingly, this business is included in the Consolidated
Statements of Income as discontinued operations for all periods presented. As
discussed in Note 2, the covered yarn operation is included as discontinued
operations in 1992. Summarized results of the discontinued operations (excluding
the loss on disposal) are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- -----------
<S> <C> <C> <C>
Sales:
Apparel................................................. $ 40,819 $ 76,850 $ 78,977
Covered yarn............................................ -- -- 157,463
--------- --------- -----------
$ 40,819 $ 76,850 $ 236,440
--------- --------- -----------
--------- --------- -----------
Net income:
Apparel................................................. $ 345 $ 1,517 $ 353
Covered yarn............................................ -- -- 7,174
--------- --------- -----------
$ 345 $ 1,517 $ 7,527
--------- --------- -----------
--------- --------- -----------
</TABLE>
Interest expense of $1,983, $3,927 and $4,078 for the years ended December
31, 1994, 1993 and 1992, respectively, have been allocated to Apparel operating
results based upon net assets of the Apparel operation. Interest expense of
$1,148 for the year ended December 31, 1992 has been allocated to covered yarn
operating results determined by applying the Company weighted average borrowing
rate during the period to weighted average levels of the Company corporate debt
to be assumed by Worldtex.
The assets of the apparel operations at December 31, 1993 are included in
the accompanying Consolidated Balance Sheet as "Net assets of discontinued
operations" and are as follows:
<TABLE>
<CAPTION>
1993
---------
<S> <C>
Current assets..................................................................... $ 43,632
Fixed assets -- net................................................................ 2,795
Investment and noncurrent receivables.............................................. 1,180
Other assets....................................................................... 759
Cost in excess of net assets of acquired businesses -- net......................... 1,590
---------
Total assets................................................................... 49,956
Current liabilities................................................................ 6,619
---------
Net assets..................................................................... $ 43,337
---------
---------
</TABLE>
The Company's continuing operations consist solely of the distribution of
electrical parts and supplies, principally in the southern United States.
5. SHORT-TERM DEBT
The Company entered into a Revolving Credit and Reimbursement Agreement,
dated as of December 17, 1993 (the "Credit Agreement"), with NationsBank of
Florida, N.A., and Credit Lyonnais New York Branch. The Credit Agreement
originally provided for borrowings from time to time through December 1997 of up
to the lesser of (i) $90 million ($50 million as of July 13, 1994) and (ii) the
sum of 80% of eligible accounts receivable and 50% of eligible inventory. The
Credit Agreement
19
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
5. SHORT-TERM DEBT (CONTINUED)
was amended on March 30, 1995 to provide for borrowings through March 31, 2000
of up to $40 million with no limitation due to levels of accounts receivable and
inventory. Borrowings under the Credit Agreement bear interest at NationsBank's
prime rate, or at a rate based on rates in the certificate of deposit market or
LIBOR, plus a margin, which margin varies depending on the Company's financial
performance. The Credit Agreement includes various covenants, including
restrictions on liens, debt and lease obligations and requirements that certain
financial ratios be maintained.
6. LONG-TERM DEBT
Long-term debt, less current installments, consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1993
----------- -----------
<S> <C> <C>
9.78% Senior Notes due March 15, 2001...................................... $ 50,000 $ 50,000
7% Convertible Subordinated Debentures, due August 1, 2014................. 50,000 50,000
4.375% Senior Note due June 30, 1995....................................... 16,667 25,000
9.5% Mortgage notes payable................................................ -- 6,596
Other notes payable (net of unamortized discount of $119 at December 31,
1993)..................................................................... 2,988 3,640
----------- -----------
119,655 135,236
Less, current installments............................................. 24,894 9,261
----------- -----------
$ 94,761 $ 125,975
----------- -----------
----------- -----------
</TABLE>
The 9.78% Senior Notes are payable ratably over a seven-year period
commencing March 15, 1995 with interest payable semiannually at a rate of 9.78%
per annum. Under the terms of the Senior Notes (as amended), the Company may pay
dividends and make other restricted payments (as defined) to the extent of 35%
of consolidated net income (as defined) plus certain other amounts and is
subject to certain restrictions on the incurrence of additional debt and other
transactions and to other covenants calling for minimum levels of working
capital and certain financial ratios.
The 7% Convertible Subordinated Debentures are due August 1, 2014 with
interest payable semiannually on February 1 and August 1. The debentures are
convertible into common stock of the Company at $9.57 per share and are subject
to a sinking fund, commencing August 1, 2000, calculated to retire 70% of the
debentures prior to final maturity. The debentures are subordinated to present
and future senior indebtedness (as defined) of the Company. In certain
circumstances involving the occurrence of a Risk Event (as defined) prior to
August 1, 1999, the Company will be required to offer to repurchase all or part
of the debentures at 100% of their principal amount plus accrued interest. The
Company has the option to pay the repurchase price in cash or shares of its
common stock. At December 31, 1994, approximately 8,511,000 shares would have
been necessary to repurchase the debentures.
The 4.375% Senior Note was issued to the seller in connection with the
Summers acquisition and is payable with interest at 4.375% per annum prior to
June 30, 1995 (see Note 3).
The mortgage notes payable were prepaid in full on October 31, 1994.
20
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
6. LONG-TERM DEBT (CONTINUED)
Long-term debt maturities during the next five years are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
--------------------------------------------------------------- ---------
<S> <C>
1995........................................................... $ 24,894
1996........................................................... 7,742
1997........................................................... 7,633
1998........................................................... 7,606
1999........................................................... 7,433
</TABLE>
Based on borrowing rates currently available to the Company for long-term
debt with similar terms and average maturities, and the quoted market price of
Company's Convertible Debentures, the fair value of the Company's indebtedness
was approximately $113,000 as of December 31, 1994 and 1993.
7. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company is 37,600,000 shares, consisting
of 600,000 shares of Preferred Stock with a par value of $12 per share,
2,000,000 shares of Preference Stock with a par value of $1 per share and
35,000,000 shares of Common Stock with a par value of $1 per share. The Board of
Directors may issue the Preference Stock from time to time in one or more series
and fix the dividend rates, voting rights and liquidation preferences and
establish redemption, sinking fund, conversion, exchange and other relative
rights, preferences and limitations of a particular series.
Shares of common stock as at December 31, 1994 are reserved for:
<TABLE>
<CAPTION>
SHARES
-----------
<S> <C>
Conversion of Subordinated Debentures............................................ 5,224,660
Stock options.................................................................... 815,753
</TABLE>
8. STOCK OPTION PLANS, STOCK ACQUISITION PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN
Under the Company's 1988 and 1985 Stock Option Plans, options to purchase up
to 1,266,667 shares and 829,630 shares of common stock, respectively, were
available to be granted to key employees of the Company. The 1985 plan
terminated on January 15, 1995. The 1988 Plan also provides that each director
of the Company, other than one who is an officer or employee, be granted a
non-qualified stock option to purchase 10,000 shares of Company common stock.
For each plan, the option period is either ten or eleven years from the date of
grant, and options may be exercised at various times depending on the provisions
of the grant.
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE NUMBER OF SHARES
SHARES PER SHARE EXERCISABLE
---------- --------------- -----------------
<S> <C> <C> <C>
Outstanding at January 1, 1992............... 731,121 $3.80 - $8.88 280,653
Exercised.................................. (685,113) 3.80 - 8.88
Terminated and cancelled................... (15,070) 5.75 - 7.31
----------
Outstanding at December 31, 1992............. 30,938 3.80 - 8.88 30,938
Granted.................................... 597,000 6.56 - 6.69
Terminated and cancelled................... (10,820) 7.00 - 8.88
----------
Outstanding at December 31, 1993............. 617,118 3.80 - 7.00 20,118
Granted.................................... 160,000 6.50 - 8.06
Terminated and cancelled................... (207,118) 3.80 - 7.00
----------
Outstanding at December 31, 1994............. 570,000 $6.50 - $8.06 237,200
----------
----------
</TABLE>
21
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
8. STOCK OPTION PLANS, STOCK ACQUISITION PLAN AND EMPLOYEE STOCK OWNERSHIP
PLAN (CONTINUED)
All options were granted at market value on the date of grant.
As of December 31, 1994, options for the purchase of 245,753 shares were
available for future grant under the 1988 plan.
The Company's Employee Stock Ownership Plan, which became effective in 1981,
provides eligible employees with an opportunity to purchase the Company's common
stock through payroll deductions, which are matched by the Company, subject to
certain limitations. Contributions to the plan are invested by an independent
trustee in common stock of the Company. Stock attributable to Company
contributions vests at the rate of 10% for each twelve months of contributions
by the employee, with 100% vesting after five years of service. The Company's
contributions to the plan, net of forfeitures, charged to income for 1994, 1993
and 1992 were $592, $695 and $758, respectively. Effective January 1, 1995, this
plan was merged into a new plan known as the Willcox & Gibbs, Inc. Section
401(k) Savings Plan.
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT PLANS
The Company has a qualified noncontributory defined benefit pension plan
covering certain eligible domestic employees. The Company also had a qualified
noncontributory defined benefit pension plan covering certain eligible domestic
employees in the discontinued apparel operation. As part of the agreement to
sell the apparel operation, the purchaser assumed all obligations under this
plan. The Company's funding policy is to contribute annually the maximum amount
that can be deducted for Federal income tax purposes. The Company also has a
non-qualified defined benefit supplemental retirement plan covering key
employees, which is not funded. The benefits of all plans are based on years of
service and defined levels of compensation.
The Company also had a defined benefit plan maintained for eligible
employees of certain United Kingdom subsidiaries included in the discontinued
apparel operation. The plan is funded annually for the maximum amount permitted
by statute. The benefits are based on years of service and defined levels of
compensation.
Under the collective bargaining agreement of the textile industry in France,
employees of a subsidiary Worldtex are entitled to a lump-sum payment at
retirement based on their length of service at retirement and final pay. All
obligations under this plan were assumed by Worldtex in connection with the
dividend.
22
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT
PLANS (CONTINUED)
The following table sets forth the plans' funded status at December 31, 1994
and 1993:
<TABLE>
<CAPTION>
1994
------------------------ 1993
--------------------------------------------------
DOMESTIC DOMESTIC
------------------------ -------------------------------------
QUALIFIED QUALIFIED
NON- SUBSIDIARY UNITED NON- SUBSIDIARY
QUALIFIED PLAN KINGDOM QUALIFIED QUALIFIED PLAN
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation................... $ (1,608) $ (938) $ (1,144) $ (1,745) $ (5,071) $ (1,174)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Accumulated benefit obligation.............. $ (1,669) $ (944) $ (1,249) $ (1,884) $ (5,223) $ (1,178)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Projected benefit obligation.................. $ (1,669) $ (1,388) $ (1,753) $ (1,884) $ (6,052) $ (1,692)
Plan assets at fair value..................... -- 1,870 1,555 -- 4,342 1,867
----------- ----------- ----------- ----------- ----------- -----------
Projected benefit obligation (in excess of)
less than plan assets...................... (1,669) 482 (198) (1,884) (1,710) 175
Unrecognized net loss (gain).................. (133) 20 352 (334) 1,150 362
Unrecognized prior service cost............... -- -- -- -- (259 ) --
Unrecognized net transition (asset)
obligation................................... 71 -- (118 ) 236 92 --
----------- ----------- ----------- ----------- ----------- -----------
Accrued pension asset (liability)........... $ (1,731 ) $ 502 $ 36 $ (1,982 ) $ (727 ) $ 537
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The qualified domestic plan assets include guaranteed investment contracts,
mutual and money market funds, government securities, whole life insurance
policies and common stock of the Company and Worldtex (such stock with a
combined market value of $520 at December 31, 1993). The United Kingdom plan
assets are comprised of certain deferred annuity contracts.
Net periodic pension cost for 1994 (excluding the United Kingdom Plan
assumed in the Apparel sale), 1993 and 1992 included the following components:
<TABLE>
<CAPTION>
INTEREST COST ON
PROJECTED BENEFIT ACTUAL RETURN NET AMORTIZATION NET PERIODIC
SERVICE COST OBLIGATIONS ON ASSETS AND DEFERRAL PENSION COST
------------- ----------------- --------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
1994
Domestic:
Non-Qualified.................... $ 44 $ 131 -- $ 10 $ 185
Qualified........................ $ 158 222 (173) 6 $ 213
Qualified Subsidiary Plan........ $ 59 123 (130) (17) $ 35
-----
$ 433
-----
-----
1993
United Kingdom..................... $ 76 178 (157) (15) $ 82
Domestic:
Non-Qualified.................... $ 49 131 -- (8) $ 172
Qualified........................ $ 322 403 (221) (101) $ 403
Qualified Subsidiary Plan........ $ 22 92 (127) -- $ (13)
-----
$ 644
-----
-----
1992
France............................. $ 9 19 -- -- $ 28
United Kingdom..................... $ 102 199 (196) (18) $ 87
Domestic:
Non-Qualified.................... $ 97 230 -- 33 $ 360
Qualified........................ $ 299 343 (260) (84) $ 298
-----
$ 773
-----
-----
</TABLE>
23
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT
PLANS (CONTINUED)
The actuarial assumptions used for each of the plans for 1994, 1993 and 1992
are as follows:
<TABLE>
<CAPTION>
QUALIFIED
QUALIFIED SUBSIDIARY NON QUALIFIED
1994 PLAN PLAN PLAN
----------------------------------------------------------------------- ------------- ----------- -------------
<S> <C> <C> <C>
Weighted average discounts used in determining the actuarial present
value of the projected benefit obligation............................. 7.25% 8.25% 8.50%
Rates of increase in future compensation levels........................ 4.50% 5.00% n/a
Expected long-term rates of return on assets........................... 7.25% 8.50% n/a
1993
-----------------------------------------------------------------------
Weighted average discounts used in determining the actuarial present
value of the projected benefit obligation............................. 7.25% 7.25% 7.50%
Rates of increase in future compensation levels........................ 4.50% 4.00% n/a
Expected long-term rates of return on assets........................... 8.00% 8.50% n/a
</TABLE>
For the non-qualified domestic plan, no salary increase was assumed as the
Company has frozen salaries under the plan at current levels. Liabilities under
this plan attributable to Worldtex employees were assumed by Worldtex in
connection with the dividend of Worldtex.
For the United Kingdom plan, the assumed discount rate at December 31, 1993
and 1992 was 9.0% and 10.0%, respectively. The rate of increase in future
compensation levels was 9.0% for both years and the expected long-term rate of
return on assets was 9.0% at December 31, 1993 and 10.0% at December 31, 1992.
For the French plan, the assumed discount rate and rate of increase in
future compensation levels were 9.0% and 5.0%, respectively.
Certain subsidiaries have noncontributory profit-sharing plans and defined
contribution pension plans providing for minimum contributions based upon
defined levels of subsidiary income or employee compensation.
In 1995, all defined benefits and profit sharing plans have been merged into
a new Willcox & Gibbs, Inc. Section 401(k).
Pension and profit-sharing expense for the years ended December 31, 1994,
1993 and 1992 amounted to approximately $2,880, $1,338 and $2,141, respectively.
A subsidiary of the Company, acquired in 1993, provides certain health care
benefits for eligible retired employees. The status of the plan at December 31,
1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation ("APBO")........................ $ 905 $ 722
Unrecognized net (loss) gain.................................................. (144) 5
--------- ---------
Accrued postretirement benefit cost........................................... $ 761 $ 727
--------- ---------
--------- ---------
</TABLE>
The postretirement benefit cost in 1994 and 1993 included the following
components:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Interest cost on APBO......................................................... $ 68 $ 39
Net amortization and deferral................................................. 22 --
--------- ---------
$ 90 $ 39
--------- ---------
--------- ---------
</TABLE>
24
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT
PLANS (CONTINUED)
The plan is unfunded. The discount rate used in determining APBO was 8.25%
and 7.25% at December 31, 1994 and 1993, respectively. The assumed health care
trend rate assumed for 1995 was 11.5%. Increasing assumed health care trends one
percentage point will increase the APBO by $83 as of December 31, 1994.
10. INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." Under Statement 109, the liability method is used in accounting
for income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Prior to
the adoption of Statement 109, income tax expense was determined using the
deferred method. Deferred tax expense was based on items of income and expense
that were reported in different years in the financial statements and tax
returns and were measured at the tax rate in effect in the year the difference
originated.
As permitted by Statement 109, the Company has elected not to restate the
financial statements of any prior years. The effect of the change on pretax
income from continuing operations for the year ended December 31, 1993 was not
material; however, the cumulative effect of the change as of January 1, 1993
increased net income by $660 or $.03 per share.
The Company and its U.S. subsidiaries file Federal income tax returns on a
consolidated basis. The provision (benefit) for income taxes has been classified
as follows in the consolidated statements of income:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Tax provision (benefit) from continuing operations...................... $ 7,270 $ 5,038 $ (5,186)
Tax provision (benefit) for discontinued operations..................... (256) 1,303 4,858
--------- --------- ---------
$ 7,014 $ 6,341 $ (328)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Federal:
Current............................................................... $ 2,473 $ 259 $ (1,204)
Deferred.............................................................. 3,141 4,251 (3,164)
State and local:
Current............................................................... 1,396 297 873
Deferred.............................................................. (111) 1,361 9
Foreign:
Current............................................................... 75 146 2,330
Deferred.............................................................. 40 27 828
--------- --------- ---------
$ 7,014 $ 6,341 $ (328)
--------- --------- ---------
--------- --------- ---------
</TABLE>
25
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. INCOME TAXES (CONTINUED)
Deferred income taxes result from temporary differences in the recognition
of revenue and expenses for financial statement and income tax reporting
purposes. The tax effects of each as of December 31, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
1994 1993
--------- ----------
<S> <C> <C>
Deferred tax assets:
Accounts receivable........................................................... $ 1,764 $ 2,245
Inventory..................................................................... 2,505 1,716
Other liabilities and reserves................................................ 2,162 3,206
Accrued restructuring and transaction costs................................... 1,947 2,808
Federal capital loss and AMT credit carryforward.............................. 253 422
State net operating loss carryforwards........................................ 1,553 938
Valuation allowance........................................................... (1,278) (1,093)
--------- ----------
Total deferred tax assets..................................................... 8,906 10,242
--------- ----------
Deferred tax liabilities:
Property, plant and equipment................................................. 3,592 1,811
Book/tax difference on asset valuation upon acquisition....................... 5,831 5,942
--------- ----------
Total deferred tax liabilities................................................ 9,423 7,753
--------- ----------
Net deferred tax (liabilities) assets......................................... $ (517) $ 2,489
--------- ----------
--------- ----------
</TABLE>
The change in the valuation allowance between 1994 and 1993 of $185 resulted
from updating estimates of state and local net operating losses.
Income (loss) before income taxes is comprised of the following:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ----------
<S> <C> <C> <C>
Continuing operations:
Domestic.......................................................... $ 16,501 $ 11,861 $ (18,275)
Foreign........................................................... 23 67 687
--------- --------- ----------
16,524 11,928 (17,588)
Discontinued operations............................................. (583) 2,820 12,385
--------- --------- ----------
$ 15,941 $ 14,748 $ (5,203)
--------- --------- ----------
--------- --------- ----------
</TABLE>
26
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. INCOME TAXES (CONTINUED)
A reconciliation for 1994, 1993 and 1992 between the amount computed using
the Federal income tax rate and the effective rate of tax on income (loss),
including discontinued operations, but excluding extraordinary charge, is as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Statutory Federal income tax rate........................................... 35.0% 35.0% (34.0)%
State and local income taxes, net of Federal income tax effect.............. 4.5 5.9 11.2
Amortization of goodwill.................................................... 2.0 2.1 5.3
Transaction costs........................................................... (1.2) (1.4) 6.3
(Decrease) increase in taxes resulting from foreign income subject to
foreign income tax but not expected to be subject to U.S. tax in
foreseeable future......................................................... (0.1) (0.8) 4.5
Impact on deferred taxes of 1993 federal corporate tax rate change to 35%... -- (1.7) --
Utilization of federal capital loss carryforward not previously
recognized................................................................. -- (2.2) --
Increase in deferred tax asset valuation allowance.......................... 1.2 2.6 --
Alternative minimum tax..................................................... -- 0.6 --
Other, net.................................................................. 2.6 2.9 0.4
--------- --------- ---------
Effective tax rate........................................................ 44.0% 43.0% (6.3)%
--------- --------- ---------
--------- --------- ---------
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
At December 31, 1994, annual minimum rental commitments under noncancelable
operating leases, primarily for real property, are summarized as follows:
<TABLE>
<S> <C>
1995...................................................... $ 6,963
1996...................................................... 5,235
1997...................................................... 3,679
1998...................................................... 2,709
1999...................................................... 2,202
2000 and thereafter....................................... 3,365
---------
$ 24,153
---------
---------
</TABLE>
The minimum annual commitments include amounts payable to an officer of the
Company and/or members of his and his wife's family and amounts payable to an
officer of a subsidiary as follows: 1995 - $855; 1996 - $731; 1997 - $671; 1998
-$630; 1999 - $630; thereafter - $1,417.
Total rent expense charged to operations for the years ended December 31,
1994, 1993 and 1992 amounted to approximately $9,498, $6,589 and $5,148,
respectively.
In the normal course of business, the Company is sometimes named as a
defendant in litigation. In the opinion of management, based upon the advice of
counsel, any uninsured liability which may result from the resolution of any
present litigation or asserted claim will not have a material effect on the
Company's financial position or results of operations.
27
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. ACCOUNTS AND NOTES PAYABLE -- TRADE, AND OTHER LIABILITIES
Accounts and notes payable -- trade and other liabilities consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1993
----------- -----------
<S> <C> <C>
Accounts and other payables -- trade.......................................... $ 116,530 $ 99,072
Salaries, wages and other compensation........................................ 13,854 12,875
Pensions, profit sharing and employee benefits................................ 5,091 5,769
Taxes, other than income taxes................................................ 3,068 2,080
Interest...................................................................... 3,006 3,068
Restructuring accruals........................................................ -- 124
Transaction cost accruals..................................................... 235 1,444
Other......................................................................... 13,498 11,301
----------- -----------
$ 155,282 $ 135,733
----------- -----------
----------- -----------
</TABLE>
13. RESULTS OF OPERATIONS
In connection with the resignation of an executive of the Company on March
18, 1994, the Company entered into an agreement with such executive that
provided, among other things, certain payments and acceleration of certain other
payments in connection with the executive's related employment agreement.
Results for 1994 include charges of $1.7 million in connection with this
agreement.
The Company has recorded charges to operations of $5,586 for the years ended
December 31, 1992 related to certain restructuring actions initiated by the
Company ($1,248 is included in discontinued apparel operations).
In 1992, the Company sold its data communications equipment distribution
business and an apparel-related unit in return for $3,350 in cash, $1,858 of
short and long-term notes and a marketable equity security with a fair market
value of $1,500. The disposal of these businesses relate to actions originally
initiated in 1991. The Company also initiated other restructuring actions,
including the disposal of other operations, that do not relate to the Company's
core business.
In 1992, certain restructuring actions initiated in 1991 and 1990 required
more costs to implement than originally expected. The additional costs, included
in the restructuring charges for this period, changed based on the revised
estimates and experience to date.
28
<PAGE>
WILLCOX & GIBBS, INC.
SUPPLEMENTARY FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31, 1994 AND 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRIMARY EARNINGS (LOSS) PER SHARE (1)
------------------------------------------------
INCOME INCOME
BEFORE BEFORE
UNAUDITED INCOME (LOSS) CUMULATIVE INCOME (LOSS) CUMULATIVE
QUARTERLY INCOME FROM FROM EFFECT OF INCOME FROM FROM EFFECT OF
FINANCIAL GROSS CONTINUING DISCONTINUED ACCOUNTING NET CONTINUING DISCONTINUED ACCOUNTING NET
DATA (1) NET SALES PROFIT OPERATIONS OPERATIONS CHANGE INCOME OPERATIONS OPERATIONS CHANGE INCOME
---------- ---------- -------- ----------- ------------- ----------- ------- ----------- ------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994:
First..... $ 244,607 $ 50,324 $ 1,733 $ 232 $ 1,965 $1,965 $ .08 $ .01 $ .09 $ .09
Second.... 264,466 52,702 2,842 375 3,217 3,217 .12 .01 .13 .13
Third..... 275,822 53,134 2,780 (934) 1,846 1,846 .11 (.03) .08 .08
Fourth.... 280,648 56,342 1,903 -- 1,903 1,903 .08 -- .08 .08
---------- -------- ----------- ------------- ----------- ------- --- ----- --- -------
$1,065,543 $212,502 $ 9,258 $ (327) $ 8,931 $8,931 $ .39 $ (.01) $ .38 $ .38
---------- -------- ----------- ------------- ----------- ------- --- ----- --- -------
---------- -------- ----------- ------------- ----------- ------- --- ----- --- -------
1993:
First..... $ 111,824 $ 22,764 $ 1,198 $ 624 $ 1,822 $2,482 $ .06 $ .03 $ .09 $ .12
Second.... 126,427 25,740 1,275 869 2,144 2,144 .06 .04 .10 .10
Third..... 138,691 28,045 2,125 157 2,282 2,282 .10 .01 .11 .11
Fourth.... 144,577 30,943 2,292 (133) 2,159 2,159 .11 (.01) .10 .10
---------- -------- ----------- ------------- ----------- ------- --- ----- --- -------
$ 521,519 $107,492 $ 6,890 $ 1,517 $ 8,407 $9,067 $ .33 $ .07 $ .40 $ .43
---------- -------- ----------- ------------- ----------- ------- --- ----- --- -------
---------- -------- ----------- ------------- ----------- ------- --- ----- --- -------
<FN>
------------------------
(1) Fully diluted amounts are anti-dilutive in 1994 and 1993.
</TABLE>
29
<PAGE>
SCHEDULE II
WILLCOX & GIBBS, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN C
----------------------
COLUMN B ADDITIONS COLUMN E
---------- ---------------------- COLUMN D ----------
COLUMN A BALANCE AT CHARGES TO ------------- BALANCE AT
---------------------------------------- BEGINNING COSTS AND DEDUCTIONS CLOSE OF
DESCRIPTION OF PERIOD EXPENSES OTHER FROM RESERVES PERIOD
---------------------------------------- ---------- ---------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994:
Allowance for doubtful accounts....... $ 4,023 $ 3,600 $ -- $ 3,474(A) $ 4,149
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
Year ended December 31, 1993:
Allowance for doubtful accounts....... $ 10,035 $ 2,154 $ 451(B) $ 8,617(A) $ 4,023
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
Year ended December 31, 1992:
Allowance for doubtful accounts....... $ 8,667 $ 3,692 $ 300(B) $ 2,624(A) $ 10,035
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
<FN>
------------------------
Notes:
(A) Accounts charged off, recoveries, and other adjustments, net, including
reclassification of apparel net assets, sale of companies and dividend of
Worldtex.
(B) Additions resulting primarily from acquired companies.
</TABLE>
30
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information responsive to the Items comprising this
Part III that is contained in the Company's definitive proxy statement for its
1995 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934, which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES
The financial statements and financial statement schedules included in this
Report are listed in the introductory portion of Item 8.
EXHIBITS
The following exhibits are filed as part of this Report (for convenience of
reference, exhibits are listed according to numbers assigned in the exhibit
tables of Item 601 of Regulation S-K under the Securities Exchange Act of 1934
and management contracts and compensatory plans are indicated by an asterisk):
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- ----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Sale and Purchase Agreement, dated as of June 15, 1994, among the Company, WG, Inc. and WG Apparel,
Inc. -- filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 15, 1994, and
incorporated herein by reference.
2.2 Purchase Agreement, dated as of December 10, 1993, among Willcox & Gibbs, Inc., ITD and Rexel --
filed as Exhibit 2 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated
herein by reference.
3.1 Composite certificate of incorporation -- filed as exhibit 3.1 to the Company's Annual Report on
Form 10-K for 1993 and incorporated herein by reference.
3.2 By-laws of the Company -- filed as exhibit 3.2 to the Company's annual report on Form 10-K for 1993
and incorporated herein by reference.
4.1 Note Agreement, dated as of April 2, 1991, between the Company and The Prudential Insurance Company
of America -- filed as Exhibit 4.1 to the Company's report on Form 10-Q for the quarter ended March
31, 1991 and incorporated herein by reference.
4.2 Amendment No. 2, dated as of November 11, 1992, to the Note Agreement, dated as of April 2, 1991 --
filed as Exhibit 4.2 to the Company's annual report on Form 10-K for 1992 and incorporated herein
by reference.
4.3 Amendment No. 3, dated as of March 30, 1993, to the Note Agreement, dated as of April 2, 1991 --
filed as Exhibit 4.3 to the Company's annual report on Form 10-K for 1993 and incorporated herein
by reference.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- ----------------------------------------------------------------------------------------------------
<C> <S>
4.4 Amendment No. 4, dated as of December 17, 1993, to the Note Agreement, dated as of April 2, 1991 --
filed as Exhibit 4.4 to the Company's Annual Report as Form 10-K and incorporated herein as
reference.
4.5 Amendment No. 5, dated as of December 31, 1994, to the Note Agreement, dated as of April 2, 1991 --
filed herewith.
4.6 Indenture dated as of August 1, 1989 between the Company and Manufacturers Hanover Trust Company, as
Trustee relating to the 7% Debentures -- filed as Exhibit 4 to the Company's report on Form 10-Q
for the quarter ended June 30, 1989 and incorporated herein by reference.
4.7 Mortgage notes dated December 11, 1986 from a subsidiary of the Company to two insurance company
lenders, in the original principal amount of $7,000,000. [This instrument is not filed pursuant to
instruction (b)(4)(iii) of Item 601 of Regulation S-K; a copy will be furnished to the Commission
upon request.]
10.1 Amended Employment Contact dated as of July 12, 1988 between the Company and Sidney B. Becker --
filed as Exhibit 10.1 to the Company's annual report on Form 10-K for 1988 and incorporated herein
by reference.*
10.2 Amendment dated January 17, 1990, to the Amended Employment Contract between the Company and Sidney
B. Becker -- filed as Exhibit 10.2 to the Company's annual report on Form 10-K for 1990 and
incorporated herein by reference.*
10.3 Letter Agreement, dated April 22, 1992, between the Company and Sidney B. Becker relating to his
Amended Employment Contract -- filed as Exhibit E to the Company's Proxy Statement, dated September
2, 1992, and incorporated herein by reference.*
10.4 Employment Contract dated as of July 12, 1988 between the Company and Allan M. Gonopolsky -- filed
as Exhibit 10.2 to the Company's annual report on Form 10-K for 1988 and incorporated herein by
reference.*
10.5 Letter Agreement, dated April 22, 1992, between the Company and Allan M. Gonopolsky relating to his
Employment Contract -- filed as Exhibit G to the Company's Proxy Statement, dated September 2,
1992, and incorporated herein by reference.*
10.6 Amended Employment Contract dated as of July 12, 1988 between the Company and Richard J. Mackey --
filed as Exhibit 10.4 to the Company's annual report on Form 10-K for 1988 and incorporated herein
by reference.*
10.7 Amendment dated January 8, 1991, to the Amended Employment Contract between the Company and Richard
J. Mackey -- filed as Exhibit 10.5 to the Company's annual report on Form 10-K for 1990 and
incorporated herein by reference.*
10.8 Letter Agreement, dated April 22, 1992, between the Company and Richard J. Mackey relating to his
Amended Employment Contract -- filed as Exhibit F to the Company's Proxy Statement, dated September
2, 1992, and incorporated herein by reference.*
10.9 Employment Contract dated as of April 22, 1992 between the Company and John K. Ziegler -- filed as
Exhibit C to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by
reference.*
10.10 Employment Contract dated April 22, 1992, between the Company and Robert M. Merson -- filed as
Exhibit D to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by
reference.*
10.11 Employment Contract dated as of January 1, 1991 between the Company and Wayne Campbell -- filed on
Exhibit 10.9 to the Company's annual report on Form 10-K for 1990 and incorporated herein by
reference.*
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- ----------------------------------------------------------------------------------------------------
<C> <S>
10.12 Revolving Credit and Reimbursement Agreement dated as of December 17, 1993, among the Company and
NationsBank of Florida, National Association, and Credit Lyonnais New York Branch -- filed as
exhibit 10.16 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by
reference.
10.13 1988 Stock Incentive Plan, as amended and restated effective March 9, 1993 -- filed as Exhibit A to
the Company's Proxy Statement for its annual meeting of stockholders to be held on May 21, 1993 and
incorporated herein by reference.*
10.14 1985 Stock Option Plan as amended -- filed as Exhibit A to the Company's Proxy Statement for its
annual meeting of stockholders held on May 10, 1985 and amended as described in the Proxy Statement
for the annual meeting held on May 9, 1986 and incorporated herein by reference.*
10.15 1982 Stock Option Plan -- filed as Exhibit A to the Company's Proxy Statement for its annual meeting
of stockholders held on May 14, 1982 and incorporated herein by reference.*
10.16 Form of indemnification agreement, dated as of November 18, 1986, between the Company and its
directors and officers -- filed as Exhibit 10.30 to the Company's annual report on Form 10-K for
1986 and incorporated herein by reference.
10.17 Distribution Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. --
filed as Exhibit 10.25 to the Company's annual report on Form 10-K for 1992 and incorporated herein
by reference.
10.18 Tax Sharing Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. --
filed as Exhibit 10.26 to the Company's annual report on Form 10-K for 1992 and incorporated herein
by reference.
10.19 Severance Agreement, dated as of March 18, 1994, between the Company, Steinthal Sample Co., Inc. and
John K. Ziegler -- filed as exhibit 10.19 to the Company's annual report on Form 10-K for 1993 and
incorporated herein by reference.*
10.20 Employment Contract, dated as of March 18, 1994, between the Company and Alain C. Viry -- filed
herewith.*
10.21 Employment Contract, dated as of June 26, 1994, between the Company and Steven M. Hitt -- filed
herewith.*
10.22 Employment Contract, dated as of April 12, 1993, between Sacks Electrical Supply Co., Inc. and Jules
Altshuler -- filed herewith.*
10.23 Employment Contract, dated as of May 27, 1994, between the Company and Jon O. Fullerton -- filed
herewith.*
10.24 Employment Contract, dated as of June 27, 1994, between the Company and Allan M. Gonopolsky -- filed
herewith.*
10.25 Severance Agreement, dated as of February 10, 1995, between the Company and Wayne Campbell -- filed
herewith.*
11.1 Statement re computation of per share earnings -- filed herewith.
21.1 Subsidiaries of the Company -- filed herewith.
23.1 Consent of Coopers & Lybrand L.L.P. -- filed herewith.
24.1 Powers of Attorney executed by certain directors and officers of the Company -- filed as Exhibit
24.1 to the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.
27.1 Financial Data Schedule -- filed with EDGAR filing only.
</TABLE>
8-K REPORTS
During the last quarter of the Company's 1994 fiscal year, the Company did
not file a Current Report on Form 8-K.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 30, 1995 WILLCOX & GIBBS, INC.
By: ______/s/_ALLAN M. GONOPOLSKY_____
Allan M. Gonopolsky
VICE PRESIDENT
AND CORPORATE CONTROLLER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 30, 1995 by the following persons on
behalf of the registrant and in the capacities indicated.
<TABLE>
<C> <S>
ALAIN VIRY* President and Chief Executive Officer and
Alain Viry Director
/s/STEVEN M. HITT
Steven M. Hitt Vice President and Chief Financial Officer
/s/ALLAN M. GONOPOLSKY Vice President and Corporate Controller and
Allan M. Gonopolsky Attorney for persons indicated by asterisk
FREDERIC DE CASTRO*
Frederic de Castro Director
JOHN B. FRASER*
John B. Fraser Director
R. GARY GENTLES*
R. Gary Gentles Director
AUSTIN LIST*
Austin List Director
ERIC LOMAS*
Eric Lomas Director
GERALD E. MORRIS*
Gerald E. Morris Director
NICOLAS SOKOLOW*
Nicolas Sokolow Director
SERGE WEINBERG*
Serge Weinberg Director
</TABLE>
34
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Sale and Purchase Agreement, dated as of June 15, 1994, among the Company, WG, Inc. and WG Apparel, Inc.
-- filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 15, 1994, and
incorporated herein by reference.
2.2 Purchase Agreement, dated as of December 10, 1993, among Willcox & Gibbs, Inc., ITD and Rexel -- filed as
Exhibit 2 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated herein by
reference.
3.1 Composite certificate of incorporation -- filed as exhibit 3.1 to the Company's Annual Report on Form
10-K for 1993 and incorporated herein by reference.
3.2 By-laws of the Company -- filed as exhibit 3.2 to the Company's annual report on Form 10-K for 1993 and
incorporated herein by reference.
4.1 Note Agreement, dated as of April 2, 1991, between the Company and The Prudential Insurance Company of
America -- filed as Exhibit 4.1 to the Company's report on Form 10-Q for the quarter ended March 31,
1991 and incorporated herein by reference.
4.2 Amendment No. 2, dated as of November 11, 1992, to the Note Agreement, dated as of April 2, 1991 -- filed
as Exhibit 4.2 to the Company's annual report on Form 10-K for 1992 and incorporated herein by
reference.
4.3 Amendment No. 3, dated as of March 30, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed as
Exhibit 4.3 to the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.
4.4 Amendment No. 4, dated as of December 17, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
as exhibit 4.4 to the Company's Annual Report as Form 10-K and incorporated herein as reference.
4.5 Amendment No. 5, dated as of December 31, 1994, to the Note Agreement, dated as of April 2, 1991 -- filed
herewith.
4.6 Indenture dated as of August 1, 1989 between the Company and Manufacturers Hanover Trust Company, as
Trustee relating to the 7% Debentures -- filed as Exhibit 4 to the Company's report on Form 10-Q for the
quarter ended June 30, 1989 and incorporated herein by reference.
4.7 Mortgage notes dated December 11, 1986 from a subsidiary of the Company to two insurance company lenders,
in the original principal amount of $7,000,000. [This instrument is not filed pursuant to instruction
(b)(4)(iii) of Item 601 of Regulation S-K; a copy will be furnished to the Commission upon request.]
10.1 Amended Employment Contact dated as of July 12, 1988 between the Company and Sidney B. Becker -- filed as
Exhibit 10.1 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*
10.2 Amendment dated January 17, 1990, to the Amended Employment Contract between the Company and Sidney B.
Becker -- filed as Exhibit 10.2 to the Company's annual report on Form 10-K for 1990 and incorporated
herein by reference.*
10.3 Letter Agreement, dated April 22, 1992, between the Company and Sidney B. Becker relating to his Amended
Employment Contract -- filed as Exhibit E to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.4 Employment Contract dated as of July 12, 1988 between the Company and Allan M. Gonopolsky -- filed as
Exhibit 10.2 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.5 Letter Agreement, dated April 22, 1992, between the Company and Allan M. Gonopolsky relating to his
Employment Contract -- filed as Exhibit G to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.6 Amended Employment Contract dated as of July 12, 1988 between the Company and Richard J. Mackey -- filed
as Exhibit 10.4 to the Company's annual report on Form 10-K for 1988 and incorporated herein by
reference.*
10.7 Amendment dated January 8, 1991, to the Amended Employment Contract between the Company and Richard J.
Mackey -- filed as Exhibit 10.5 to the Company's annual report on Form 10-K for 1990 and incorporated
herein by reference.*
10.8 Letter Agreement, dated April 22, 1992, between the Company and Richard J. Mackey relating to his Amended
Employment Contract -- filed as Exhibit F to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.9 Employment Contract dated as of April 22, 1992 between the Company and John K. Ziegler -- filed as
Exhibit C to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by
reference.*
10.10 Employment Contract dated April 22, 1992, between the Company and Robert M. Merson -- filed as Exhibit D
to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by reference.*
10.11 Employment Contract dated as of January 1, 1991 between the Company and Wayne Campbell -- filed on
Exhibit 10.9 to the Company's annual report on Form 10-K for 1990 and incorporated herein by reference.*
10.12 Revolving Credit and Reimbursement Agreement dated as of December 17, 1993, among the Company and
NationsBank of Florida, National Association, and Credit Lyonnais New York Branch -- filed as exhibit
10.16 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference.
10.13 1988 Stock Incentive Plan, as amended and restated effective March 9, 1993 -- filed as Exhibit A to the
Company's Proxy Statement for its annual meeting of stockholders to be held on May 21, 1993 and
incorporated herein by reference.*
10.14 1985 Stock Option Plan as amended -- filed as Exhibit A to the Company's Proxy Statement for its annual
meeting of stockholders held on May 10, 1985 and amended as described in the Proxy Statement for the
annual meeting held on May 9, 1986 and incorporated herein by reference.*
10.15 1982 Stock Option Plan -- filed as Exhibit A to the Company's Proxy Statement for its annual meeting of
stockholders held on May 14, 1982 and incorporated herein by reference.*
10.16 Form of indemnification agreement, dated as of November 18, 1986, between the Company and its directors
and officers -- filed as Exhibit 10.30 to the Company's annual report on Form 10-K for 1986 and
incorporated herein by reference.
10.17 Distribution Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
Exhibit 10.25 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.18 Tax Sharing Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
Exhibit 10.26 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.19 Severance Agreement, dated as of March 18, 1994, between the Company, Steinthal Sample Co., Inc. and John
K. Ziegler -- filed as exhibit 10.19 to the Company's annual report on Form 10-K for 1993 and
incorporated herein by reference.*
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.20 Employment Contract, dated as of March 18, 1994, between the Company and Alain C. Viry -- filed
herewith.*
10.21 Employment Contract, dated as of June 26, 1994, between the Company and Steven M. Hitt -- filed
herewith.*
10.22 Employment Contract, dated as of April 12, 1993, between Sacks Electrical Supply Co., Inc. and Jules
Altshuler -- filed herewith.*
10.23 Employment Contract, dated as of May 27, 1994, between the Company and Jon O. Fullerton -- filed
herewith.*
10.24 Employment Contract, dated as of June 27, 1994, between the Company and Allan M. Gonopolsky -- filed
herewith.*
10.25 Severance Agreement, dated as of February 10, 1995, between the Company and Wayne Campbell -- filed
herewith.*
11.1 Statement re computation of per share earnings -- filed herewith.
21.1 Subsidiaries of the Company -- filed herewith.
23.1 Consent of Coopers & Lybrand L.L.P. -- filed herewith.
24.1 Powers of Attorney executed by certain directors and officers of the Company -- filed as Exhibit 24.1 to
the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.
27.1 Financial Data Schedule -- filed with EDGAR filing only.
</TABLE>
8-K REPORTS
During the last quarter of the Company's 1994 fiscal year, the Company did
not file a Current Report on Form 8-K.
37
<PAGE>
AMENDMENT NO. 5 TO NOTE AGREEMENT
AMENDMENT NO. 5 dated as of December 1, 1994 to Note Agreement dated as of
April 2, 1991 between WILLCOX & GIBBS, INC. and THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA (as amended, the "Agreement"). Capitalized terms used herein without
definition have the meanings ascribed to such terms in the Agreement.
1. AMENDMENTS
(a) Paragraph 6A(4) of the Agreement is hereby amended and restated in its
entirety as follows:
"6A(4). FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio
calculated as of the last day of any fiscal quarter of the Company ending in any
of the periods specified in the table below to be less than the ratio set forth
in such table opposite such period:
Period Ratio
------ -----
September 30, 1994 through and
including December 31, 1996 1.10 to 1.00
January 1, 1997 and thereafter 1.40 to 1.00"
(b) Paragraph 6D(3)(iv) of the Agreement is hereby amended deleting "and" at
the end of clause (x), replacing the period at the end of clause (xi)
with "; and" and adding a new clause (xii) as follows:
"(xii) own, purchase and acquire (x) tax exempt obligations of any
state of the United States of America or any political subdivision or public
instrumentality thereof which are payable in United States dollars and are rated
in one of the two highest rating categories by Standard & Poor's Corporation or
Moody's Investors Service, Inc. and which have a weighted average life of not
more than 90 days, and (y) securities of any open-end investment company
registered under the Investment Company Act of 1940, as amended, which invests
primarily in obligations meeting the requirements set forth in this clause
(xii);
2. MISCELLANEOUS
(a) This Amendment shall be effective as of the date above written upon
execution by the parties hereto. Except as set forth herein, this amendment
shall not constitute a waiver or amendment of any provision of the Agreement and
the Agreement is and shall continue to be in full force and effect.
(b) This Amendment may be executed in any number of counterparts, each of which
shall
<PAGE>
constitute an original and all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute this Amendment as of the date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By
---------------------------------
Vice President
WILLCOX & GIBBS, INC.
By
---------------------------------
Title: Treasurer
<PAGE>
EMPLOYMENT CONTRACT dated as of March 18, 1994, between Willcox &
Gibbs, Inc., a New York corporation ("W&G"), whose business address is 530 Fifth
Avenue, New York, New York 10036, and Alain C. Viry, whose address is 36 rue de
Richelieu 75001, Paris, France ("Employee").
Employee is currently a senior executive of Rexel, S.A., a substantial
stockholder of W&G, based in Paris, France. In order to induce Employee to
become a senior executive of W&G, W&G desires to enter into this Employment
Contract with Employee, effective as of the date hereof, and Employee is willing
to do so, on the terms and conditions hereinafter set forth.
Accordingly, in consideration of the premises and the mutual
agreements hereafter set forth, the parties hereby agree as follows:
1. TERM
W&G agrees to employ Employee to perform services in a senior
executive capacity for a period (the "Employment Period") commencing as of the
date hereof and ending on the third anniversary of the date hereof, which period
shall be automatically extended thereafter for successive one year terms,
subject to termination at such time as is provided by Section 8.
2. NATURE OF SERVICES
Initially and for so long during the Employment Period as is required
by W&G's Board of Directors, Employee shall be employed as chief executive
officer of W&G. Employee's principal services shall be rendered in Coral
Gables, Florida.
3. AGREEMENT TO SERVE
Employee agrees to his employment as described in Section 2 and
agrees to devote all of his business time and efforts during the Employment
Period to the performance of his duties under this Employment Contract;
PROVIDED, HOWEVER, that he shall be permitted to pursue personal and family
business and investment activities of a non-competitive nature so long as such
activities in the aggregate do not consume a material amount of business time
and effort and do not, in any event, interfere with the performance of his
duties under this Employment Contract.
<PAGE>
2
4. COMPENSATION AND BENEFITS
Employee's salary during the Employment Period shall be fixed from
time to time by the Executive Compensation Committee of the Board of Directors
of W&G (the "Committee") but shall not be less than $300,000 per annum.
Employee's salary during the Employment Period shall be paid in equal
installments no less frequently than monthly. In addition:
(a) Employee shall be entitled to receive such bonus or bonuses, with
respect to each calendar year or portion thereof during which the Employment
Period is in effect, as may be determined in accordance with such incentive plan
applicable to the executive officers of W&G as shall be approved by the
Committee; provided that Employee shall be entitled to a bonus of not less than
$75,000 with respect to 1994. The bonus with respect to any year shall be paid
by March 1 of the next succeeding year.
(b) During the Employment Period, Employee shall be entitled to: (i)
reimbursement for reasonable travel, entertainment and other expenses
necessarily incurred in the performance of his duties hereunder upon submission
and approval of written statements in accordance with W&G's standard policies as
in effect from time to time; (ii) reasonable vacations in accordance with W&G's
then current regular procedures governing executives: (iii) use of an automobile
in the business of W&G, for which W&G agrees to pay all insurance, maintenance
and fuel costs and license and registration fees; (iv) participation in all
compensation, pension, welfare and fringe benefit plans, programs and policies
of W&G applicable to senior executives of W&G (except that Employee shall not be
included in W&G's medical and hospital insurance plan or retirement plans unless
he requests in writing to be included); and (v) such additional compensation, in
the form of incentive compensation or otherwise, and such participation in W&G
stock option, stock award, stock purchase or other stock plans, as the Committee
may from time to time provide.
(c) As reimbursement for Employee's costs and expenses of relocating
from France to the United States in 1994, W&G shall pay Employee $10,000 and
reimburse him for reasonable out-of-pocket expenses of Employee in moving his
property from France to Florida and one air fare (business class) from France to
the U.S. for each of Employee, his wife and his children. In addition, W&G
shall pay Employee such additional amounts as shall be necessary to reimburse
him for any U.S. federal, state or local or French income taxes required to be
paid by Employee with respect to payments to him pursuant to this subsection (c)
(including this sentence), after taking into account any deductions to which
Employee is entitled with respect to the reimbursed expenses.
<PAGE>
3
(d) W&G will reimburse Employee for the cost of round trip air fare
(business class) for up to eight trips between the U.S. and France taken after
the date hereof and before September 1, 1995.
(e) Upon termination of this Agreement for any reason (except
pursuant to Section 8(a)(iii) or Section 8(c), W&G will reimburse Employee for
reasonable out-of-pocket expenses of Employee in moving his property to France
and one return air fare (business class) from the U.S. to France for each of
Employee, his wife and his children.
5. NON-COMPETITION
Employee agrees that he will not, directly or indirectly (individually
or for, with or through any other person, firm or corporation), compete with W&G
or any of its subsidiaries (i) during the Employment Period with respect to any
business carried on by W&G or any such subsidiary or (ii) for a period of two
years after the end of the Employment Period with respect to any business
carried on at the end of the Employment Period by W&G or any of its subsidiaries
in North America. Notwithstanding the foregoing:
(a) If W&G terminates the Employment Period other than as expressly
provided pursuant to this Employment Contract, this Section 5 shall cease to
apply from and after such wrongful termination.
(b) Employee shall be permitted to own not in excess of one percent
of any class of securities or any publicly traded company, PROVIDED Employee is
not part of any controlling group and is solely a passive investor.
(c) Employee shall be entitled to perform services for Rexel, S.A. or
any of its subsidiaries after the end of the Employment Period.
6. PATENTS, INVENTIONS
All of Employee's interest in patents, patent applications,
inventions, technological innovations, copyrights, developments and processes
now or hereinafter during his employment by W&G owned or developed by Employee
relating to the business of W&G or any subsidiary of W&G, shall belong to W&G,
and without further compensation, but at W&G's expense, forthwith upon request
of W&G, Employee shall execute any and all such assignments and other documents
and take any and all such other action as W&G may reasonably request in order to
<PAGE>
4
vest in W&G all Employee's right, title and interest in and to such patents,
patent applications, inventions, technological innovations, copyrights,
developments or processes, free and clear of liens, charges and encumbrances.
7. CONFIDENTIAL INFORMATION
All confidential information which Employee may now have or may obtain
during his employment by W&G relating to the business of W&G or any affiliate
thereof shall not be disclosed to any other person (except as required by law)
either during or after the termination of the Employment Period without the
prior written permission of W&G, and Employee shall return all tangible evidence
of such confidential information to W&G prior to or at the termination of the
Employment Period. Such information shall not include any information otherwise
publicly known.
8. TERMINATION
Notwithstanding anything herein contained:
(a) If, during the Employment Period, Employee shall (i) die, (ii)
become physically or mentally incapacitated or disabled for a period of six
consecutive months to an extent which renders Employee unable to perform his
services under this Employment Contract as evidenced by the written confirmation
of an independent physician selected by W&G and not unreasonably rejected by
Employee or his legal representatives, or (iii) be convicted of or plead guilty
or no-contest to a felony or commit an act of personal dishonesty which was
intended to personally enrich Employee or members of his family at the financial
expense of W&G or any affiliate of W&G, then W&G shall have the right to give
immediate notice of termination of the Employment Period whereupon the same
shall be deemed terminated.
(b) Employee shall have the right to give notice of termination for
any reason of the Employment Period as of a date (not earlier than six months
after such notice) to be specified in such notice.
(c) If during the Employment Period Employee shall materially breach
any of the terms of this Agreement, then W&G shall have the right to give
written notice describing such breach in reasonable detail to Employee, and if
Employee shall not within 60 days after the date such notice is given correct
such breach or pay reasonable compensation to W&G for its direct damages
attributable to such breach, W&G shall have the right to terminate the
Employment Period, by written notice to
<PAGE>
5
Employee given within 90 days after the aforesaid notice of breach. Such
termination shall occur on the 30th day after such notice of termination is
given.
(d) Either Employee or W&G may give written notice to the other of
his or its election not to extend the Employment Period at least three months
prior to the scheduled automatic extension of the Employment Period.
(e) W&G shall have the right to terminate the Employment Period
immediately upon written notice by W&G to Employee.
(f) Employee (or his estate or legal representatives) shall be
entitled to receive, in the event of termination of the Employment Period
pursuant to Sections 8(a), 8(b), 8(c) or 8(d), (i) salary at the highest
annual rate in effect at any time during the period of 12 months preceding the
giving of notice of termination (the "Then Current Rate") to the day on which
termination shall take effect, (ii) such bonus and other benefits as Employee
is entitled to receive pursuant to Section 4(a) hereof payable in accordance
with the terms thereof and (iii) any other bonus or benefit as may be provided
by the Committee. Benefits, or other amounts to which Employee has become
entitled during his employment, under Section 4 or any other program or plan of
W&G, including those which are payable at or following termination of the
Employment Period shall be paid in accordance with the particular program or
plan except as otherwise expressly provided in this Employment Contract. If the
Employment Period is terminated pursuant to Section 8(e), W&G shall pay to
Employee for a period of 90 days after termination of the Employment Period
salary at the Then Current Rate, minus any amount received by Employee as
payment for services during such 90 day period rendered to any other person.
9. INDEMNIFICATION
In addition to (and not in lieu of) any of Employee's rights to
indemnification or otherwise, contained in W&G's certificate of incorporation,
by-laws, the Indemnity Agreement dated November 12, 1992, between Employee and
W&G or any other agreement, if any action, suit, proceeding (including any
arbitration proceeding) or claim shall be brought or asserted with respect to
the enforcement or interpretation of this Employment Contract or any provision
contained herein, W&G, to the full extent permitted by applicable law and its
certificate of incorporation and by-laws as in effect on the date hereof, hereby
indemnifies Employee for his reasonable attorneys' fees and other expenses
incurred in connection with such action,
<PAGE>
6
suit, proceeding or claim and agrees to pay or reimburse the same promptly upon
demand by Employee (plus interest at the applicable Federal rate provided in
Section 7872(f)(2) of the Internal Revenue Code of 1986, as amended), provided
that W&G shall not be obligated to indemnify Employee under this Employment
Contract with respect to any action, suit, proceeding or claim brought by
Employee in which it is finally determined that Employee's interpretations of
this Employment Contract at issue, taken as a whole, are less correct than the
interpretations asserted by W&G. W&G shall preserve and make available to
Employee all documents and information now or hereafter in the possession of W&G
which may be required by Employee for the prosecution or defense of any such
action, suit, proceeding or claim.
10. PAYMENT OBLIGATION ABSOLUTE
W&G's obligation to make payments provided for in this Employment
Contract and otherwise perform its obligations hereunder shall be absolute and
unconditional and shall not be affected by any setoff, counterclaim, recoupment,
defense or other circumstance or rights which W&G may have against Employee or
anyone else (including without limitation any rights which W&G may have against
Employee for violation of Sections 5 or 7 of this Employment Contract, all of
which shall be required to be asserted in independent proceedings). Employee
shall not be required to mitigate the amount of any payment provided for herein
by seeking other employment or taking any other action nor shall the amount of
any payment provided for herein be reduced by amounts earned by Employee from
other employment or otherwise after the termination of the Employment Period,
except as provided in Section 8(f).
11. ENTIRE AGREEMENT: SEVERABILITY
This Employment Contract sets forth the entire understanding of the
parties with respect to the subject matter herein and may be modified only by a
written instrument duly executed by each party. The invalidity or
unenforceability of any provision of this Employment Contract shall not affect
the validity or enforceability of any other provision.
12. NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by certified mail, telex,
telecopy (or like transmission) or delivery against receipt to the party to whom
it is given (i) at such party's address set forth in the preamble to this
Employment Contract or (ii) to such other
<PAGE>
7
address as the party shall have furnished in writing in accordance with the
provisions of this Section 12. Any notice or other communication shall be
deemed to have been given as of the date so delivered or transmitted by telex or
telecopy (or like transmission) and the appropriate answerback received or three
days after the date so mailed.
13. ASSIGNMENT: ASSUMPTION
In the event of a future disposition of (or including) the properties
and business of W&G, substantially as an entirety, by merger, consolidation,
sale of stock or assets or otherwise, then W&G shall require the acquiring or
surviving corporation (which shall be substituted for W&G hereunder) to
expressly assume and agree to perform this Employment Contract in the same
manner and to the same extent that W&G would have been required to perform it
had no such disposition occurred. Employee's rights under this Employment
Contract shall not be transferable by assignment or otherwise, shall not be
subject to commutation or encumbrance and shall not be subject to the claims of
Employee's creditors.
14. BINDING EFFECT: INUREMENT
This Employment Contract shall be binding upon and inure to the
benefit of W&G, its successors and those who are its assigns under Section 13.
15. ARBITRATION
Any controversy or claim arising out of or in connection with this
Employment Contract shall be settled by arbitration held in Miami, Florida in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered may be entered in any court having
jurisdiction. Without limiting the provisions of Section 9, the costs of the
arbitration proceedings shall be borne by the Company.
16. GOVERNING LAW
This Employment Contract shall be governed by and construed in
accordance with the laws of the State of Florida, without giving effect to
conflict of laws.
17. WITHHOLDING
W&G shall withhold from all amounts payable to Employee under this
Employment Contract all federal, state and local taxes required by law to be
withheld with respect to such payments.
<PAGE>
8
IN WITNESS WHEREOF, the parties have duly executed this Employment Contract
as of the date first above written.
WILLCOX & GIBBS, INC.
By
---------------------------------------
---------------------------------------
Alain C. Viry
<PAGE>
SUMMERS GROUP LETTERHEAD
STEVEN M. HITT
VICE PRESIDENT-FINANCE
Mr. Alain Viry
President and CEO
Willcox & Gibbs, Inc.
530 Fifth Avenue
New York, NY 10036
Re: Transfer to Willcox & Gibbs Corporate Staff
-------------------------------------------
Dear Alain:
This letter outlines the terms on which we have agreed I will transfer from my
current position with Summers Group, Inc. to then be employed by Willcox &
Gibbs, Inc. (the "Company").
DUTIES. I will be employed in a senior executive capacity as CFO of the Company
and would have such responsibilities as are normally associated with such
position. I will report directly to you. I will be elected a Vice President of
the Company at the next meeting of the Board. Upon my election as Vice
President, the Company will enter an Officers' and Directors' Indemnity
Agreement with me in the same form as those entered with other senior executive
officers. I will work in Coral Gables, Florida area with travel as necessary.
COMPENSATION. My minimum base annual salary will be at the rate of $160,000
subject to increase from time to time in the discretion of the Board. Base
salary will be paid in installments in conformity with the Company's payroll
periods. The base salary is subject to a one-time adjustment for cost of
housing differential between the Dallas/Fort Worth area costs and the Miami area
costs per square foot in accordance with the following paragraph on COST OF
HOUSING DIFFERENTIAL. In addition to base salary, I will receive bonuses each
year based on the Willcox & Gibbs Executive Bonus Program criteria to be
determined by January 1, 1995. My 1994 bonus will be based on the 1994
Executive Management Bonus Program for Summers Group, Inc. according to Annex A
to Schedule 1.1 of the Purchase Agreement dated as of November 20, 1993 between
Willcox & Gibbs and BTR Dunlop, Inc. (copy attached).
CAR AND CLUBS. In addition to the above, I will also receive a car allowance of
at least $1,250 per month, payable on the first of each month, in addition to
gas and oil, plus payment by the Company for one golf club membership and club
dues not to exceed $20,000 in membership cost.
<PAGE>
Mr. Alain Viry
Wilcox & Gibbs, Inc.
Page 2
STOCK OPTION. I will participate in the Company's 1988 Incentive Stock Option
Plan, as amended, and will receive such options as from time to time are granted
by the Compensation Committee.
TERM AND TERMINATION. My employment will continue indefinitely subject to
termination as outlined in this paragraph. Either I or the Company may
terminate employment by no less than 30 days' written notice to the other. In
the event my employment is terminated by the Company, I shall be entitled to
termination pay on the date of my termination in the amount of six months' base
salary as of the date of termination and one month for each year of service to a
maximum of twelve months, and continued coverage under the medical, life and
disability plans of the Company for a period of one year from the termination
date. I will receive credit for my years of service with Summers Group, Inc. in
determining termination pay.
EMPLOYEE BENEFIT PROGRAMS. I will continue to participate in the Summers Group,
Inc. employee benefit programs through December 31, 1994, at which time I will
be entitled to participate in all Willcox & Gibbs employee benefit programs in
accordance with the terms of each plan. I will receive credit for my years of
service with Summers Group, Inc. in determining vesting or eligibility for any
Willcox & Gibbs employee benefit program.
VACATION. I will be eligible for vacation in accordance with the Willcox &
Gibbs vacation policy with credit for my years of service with Summers Group,
Inc. In no event will my allowable vacation be less than three weeks per year.
CPA LICENSE AND CPE EXPENSE. The Company agrees to pay my annual CPA license
fee and membership fees for the AICPA and the State Society and agrees to pay my
continuing education expenses in order to keep my CPA designation current.
RELOCATION EXPENSE. The Company agrees to pay all moving and relocation
expenses in accordance with the relocation expense policy (the "Policy") of
Summers Group, Inc., which is attached, with the following amendments:
1. The Company guarantees to pay me the difference between the net
proceeds to Seller received upon the sale of my home at 2324
Table Rock Court, Arlington, Texas and $95,000 and gives me the
flexibility to set the sell price to effect a quick sale of
the home.
2. Interim living expenses according to the Policy will be paid
by the Company until my house is sold.
3. The Company agrees to pay for my trips home each weekend until
my house is sold.
4. If an apartment is rented during the interim living period, the
Company agrees to pay the cost of furniture rental, renter's
insurance and any lease cancellation costs.
<PAGE>
Mr. Alain Viry
Wilcox & Gibbs, Inc.
Page 3
5. The Company agrees to pay up to three house hunting trips for my
family to the Miami area.
COST OF HOUSING DIFFERENTIAL. If the cost of housing in the Miami area exceeds
the cost of my house in Arlington, Texas ($86 per square foot) on a per square
foot basis, for a house comparable to the house I now own in Arlington, Texas,
the Company agrees to make some adjustment in my base salary for the cost of
housing differential. The intent of this paragraph is to provide me with some
level of protection against a significant increase in house payment as a result
of the relocation while allowing the Company some discretion in the amount of
the adjustment.
TAX EFFECT OF RELOCATION COSTS. The Company agrees to reimburse me for the
increase in personal income taxes due to relocation, if any, to be calculated as
the difference in my personal income tax including and excluding the costs and
reimbursements of relocation expenses covered by the Policy as amended under
RELOCATION EXPENSE above.
I believe the above is in conformity with our agreement to date. If you agree,
please sign a copy of this letter and return it to me.
Very truly yours,
/s/
Steven M. Hitt
Agreed to an accepted this 26th day of June, 1994.
WILLCOX & GIBBS, INC.
By: /s/
---------------------------
Alain Viry, President and CEO
<PAGE>
EMPLOYMENT CONTRACT dated as of April 12, 1993, by and between Sacks
Electrical Supply Co., Inc.("Employer"), an Ohio corporation and wholly-owned
subsidiary of Willcox & Gibbs, Inc. ("W&G"), whose business address is 530 Fifth
Avenue, New York, New York 10036, and Jules Altshuler, whose business address is
711 Johnston St., Akron, Ohio 44306-0187 ("Employee").
Employer desires to engage Employee to perform services as a senior
manager of Employer, and Employee desires to perform such services, on the terms
and conditions hereinafter set forth.
Accordingly, Employer and Employee agree as follows:
1. TERM
Employer agrees to employ Employee to perform services in a senior
executive capacity of Employer for a period commencing with the date hereof and
ending on the third anniversary of the date hereof or such shorter period as may
be provided for herein (the "Employment Period").
2. NATURE OF SERVICES
Initially and for so long during the Employment Period as is required
by Employer's Board of Directors, Employee shall be employed as President and
Chief Executive Officer of Employer and shall perform such duties as shall be
assigned to him by, and in the performance of his duties shall be subject to the
direction of, the Chief Executive Officer of W&G or his designee.
3. AGREEMENT TO SERVE
Employee agrees to his employment as described in Section 2, and
agrees to devote all his business time and efforts to the performance of his
duties under this Employment Contract. Employee agrees that, in the course of
his employment, he will faithfully observe and carry out all of the duties and
responsibilities customarily owed by an employee to his employer.
4. COMPENSATION
In consideration of his services hereunder, Employer shall pay
Employee, for the period in which he renders such services pursuant to this
Employment Contract:
(a) Salary at the rate fixed from time to time by the Board of
Directors of Employer, which shall not be less than $147,000
per annum, payable no less frequently than monthly in equal
installments.
(b) A bonus payment determined pursuant to the Profit Sharing
Plan, as amended, attached hereto as Annex A.
<PAGE>
2
5. EXPENSES; VACATIONS; FRINGE BENEFITS
Employee shall be entitled to: (i) reimbursement for reasonable
travel, entertainment and other expenses properly incurred in the performance of
his duties hereunder upon submission of vouchers in accordance with W&G's
standard procedures as in effect from time to time, (ii) reasonable vacations in
accordance with Employer's regular practices governing employees having duties
generally comparable to Employee's, (iii) group insurance and other group
benefits comparable to those provided by Employer to its employees and (iv) an
allowance of $8,160 per annum, to reimburse Employee for use of his automobile
for business purposes of Employer, plus reimbursement of Employee's out-of-
pocket costs for maintenance, registration fees and fuel relating to such use of
such automobile. In addition, Employee shall be entitled to benefits
substantially equivalent to those provided by Employer as of the date hereof
under the employee benefit plans listed on Annex B hereto, subject to
modifications required by law or prudent business practices.
6. NON-COMPETITION
Employee agrees that he will not, directly or indirectly (individually
or for, with or through any other person, firm or corporation), (i) compete with
W&G, Employer or any subsidiary or other affiliate of W&G or Employer or any
successors or assigns of their businesses during the Employment Period with
respect to any business carried on by W&G, Employer or any such subsidiary or
other affiliate, successor or assign at any place within the United States, or
(ii) for a period of one year after the end of the Employment Period, compete
with W&G, Employer or any subsidiary or other affiliate of W&G or Employer or
any successors or assigns of the businesses conducted by W&G or Employer, with
respect to any line of business conducted by such entities that Employee was
involved with at anytime during the Employment Period at any place within the
United States. If any court shall determine that the duration or geographical
limit of the foregoing restriction is unenforceable, it is the intention of the
parties that the foregoing restriction shall not be terminated but shall be
deemed amended to the extent required to render it valid and enforceable, such
amendment to apply only with respect to the operation of this Section 6(a) in
the jurisdiction of the court that has made the adjudication.
7. PATENTS; INVENTIONS
All of Employee's interest in patents, patent applications,
inventions, technological innovations, copyrights, developments and processes
now or hereafter during the Employment Period owned or developed by Employee
relating to the business of W&G, Employer or any subsidiary or other affiliate
of either of them shall belong to the Employer, and without further
compensation, but at Employer's expense, forthwith upon request of Employer,
Employee shall execute any and all such assignments and other documents and take
any and all such other action as Employer may reasonably request in order to
vest in the Employer all Employee's right, title and interest in and to such
patents, patent applications, inventions, technological innovations, copyrights,
developments or processes, free and clear of liens, charges and encumbrances.
<PAGE>
3
8. CONFIDENTIAL INFORMATION
All confidential information which Employee may now have or may obtain
during the Employment Period relating to the business of W&G, Employer or any
subsidiary or other affiliate of either of them shall not be disclosed to any
other person during and after the termination of the Employment Period without
the prior written permission of Employer, and Employee shall return all tangible
evidence of such confidential information to Employer prior to or at the
termination of the Employment Period. Such information shall not include any
information otherwise publicly known without assistance from Employee.
9. SPECIFIC PERFORMANCE
Employee acknowledges that the restrictions contained in Sections 6, 7
and 8 above are a reasonable and necessary protection of the immediate interests
of Employer, that any violation of these restrictions would cause substantial
injury to Employer and that Employer would have not entered into this Employment
Contract with Employee without receiving the additional consideration offered by
Employee in binding himself to these restrictions. In the event of a breach or
threatened breach by Employee of these restrictions, Employer shall be entitled
to apply to any court of competent jurisdiction for an injunction restraining
Employee from such breach or threatened breach; PROVIDED, HOWEVER, that the
right to apply for an injunction shall not be construed as prohibiting Employer
from pursuing any other available remedies for such breach or threatened breach.
10. WITHHOLDING OF TAXES
Any payments to Employee or his designated beneficiary or
beneficiaries pursuant to the terms of this Employment Contract shall be reduced
by such amounts as are required to be withheld with respect thereto under all
present and future federal, state and local tax laws and regulations and other
laws and regulations.
11. TERMINATION
Notwithstanding anything herein contained:
(a) If Employee shall die during the Employment Period, his
estate shall be entitled to receive his salary at the rate
provided in Section 4(a) to the end of the calendar month in
which his death occurs.
(b) If, during the Employment Period, Employee shall become
physically or mentally incapacitated or disabled for a
period of three consecutive months, then Employer shall have
the right to give immediate notice of termination of
Employee's services hereunder, whereupon Employee shall be
entitled to receive his salary at the rate provided in
Section 4(a) to the end of the calendar month in which
termination occurs.
<PAGE>
4
(c) Employer shall have the right to give immediate notice of
termination of Employee's services hereunder as of a date
specified in such notice for "cause," in which case all
rights of Employee hereunder shall terminate as of such
specified date. For purposes of this provision, "cause"
shall mean Employee's conviction of, or plea of "no contest"
to, a felony or any other crime involving dishonesty or
moral turpitude, failure to follow a directive of the Board
of Directors of Employer or a breach by Employee of his
obligations under this Agreement.
12. ENTIRE AGREEMENT
This Employment Contract sets forth the entire understanding of the
parties with respect to the subject matter herein and may be modified only by a
written instrument duly executed by each party.
13. NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by registered mail, return
receipt requested, transmitted by telecopier or similar means, sent by overnight
delivery service such as Federal Express or delivered against receipt to the
party to whom it is to be given (i) at such party's address set forth in the
preamble to this Employment Contract or (ii) to such other address as the party
shall have furnished in writing in accordance with the provisions of this
Section 13. Any notice or other communication shall be deemed to have been
given as of the date so delivered or transmitted by telecopier or similar means,
the next business day after mailed by overnight delivery service or five days
after the date so mailed.
14. ASSIGNMENT
In the event of a future disposition of (or including) the properties
and business of Employer, substantially as an entirety, by merger,
consolidation, sale of stock or assets or otherwise, then Employer may elect to
assign this Employment Contract and all of its rights and obligations hereunder
to the acquiring or surviving corporation, provided that (i) such corporation
shall assume in writing all of the obligations of Employer hereunder and upon
such assumption Employer shall be relieved from all of its obligations hereunder
and (ii) to the extent that such acquiring or successor corporation engages in
any business other than the business conducted by Employer prior to such
assignment, the formula for determining the bonus payable pursuant to
Section 4(b) shall be appropriately adjusted so that it is based entirely on the
results of the business conducted by the Employer and not on any other business
conducted by such acquiring or surviving corporation. Employee's rights under
this Employment Contract shall not be transferable by assignment or otherwise.
<PAGE>
5
15. BINDING EFFECT
This Employment Contract shall be binding upon and inure to the
benefit of Employer, its successors and those who are its assigns under Section
14.
16. INVALID PROVISIONS
If any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Employment Contract shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. In lieu of
such illegal, invalid or unenforceable provision there shall be added
automatically as a part hereof a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
17. EXECUTION IN COUNTERPARTS
This Employment Contract may be executed in counterparts, each of
which shall be deemed an original, but both of which shall constitute one and
the same instrument.
18. GOVERNING LAW
This Employment Contract shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws.
IN WITNESS WHEREOF, the parties have duly executed this Employment
Contract as of the date first above written.
SACKS ELECTRICAL SUPPLY CO., INC.
By: /s/
------------------------------
Title:
/s/
------------------------------
Jules Altshuler
<PAGE>
JON O.FULLERTON
12 SOUTH BLUFF ROAD
CHATTANOOGA, TENNESSEE 37419
May 27, 1994
Mr. Alain Viry
President and C.E.O.
Willcox & Gibbs, Inc.
530 5th Avenue
New York, New York 10036
In re: TERMS OF EMPLOYMENT
Dear Alain:
This letter sets forth the terms on which we have agreed I would become employed
by Willcox & Gibbs, Inc. (the "Company").
DUTIES. I would be employed in a senior executive capacity as general counsel
and would be in charge of all legal affairs of the Company. I would report
directly to you, the members of the Office of the President, and the Board. I
would be elected a Vice President of the Company at the next meeting of the
Board. Upon my election as Vice President, the Company will enter an Officers'
and Directors' Indemnity Agreement with me in the same form as those entered
with other senior executive officers. My position in the Company would parallel
that of the CFO. I would work in the Coral Gables, Florida area with travel as
necessary.
COMPENSATION. My minimum base annual salary would be at the rate of $170,O00,
subject to increase from time to time in the discretion of the Board. Base
salary would be paid in installments in conformity with the Company's payroll
periods. In addition to base salary, I would receive a minimum bonus for the
balance of 1994 of $25,000, and a minimum bonus of three times my monthly
salary for calendar year 1995 and thereafter, if the Company meets it's overall
performance goals (which will be the same basis on which you qualify for a
bonus). Bonuses would be paid on or before March 1 of each year.
C JOF53284 V1
<PAGE>
Mr. Alain Viry
May 27, 1994
Page 2
CAR AND CLUB DUES. In addition to the above, I would also receive a car
allowance of at least $550 per month, plus payment by the Company of club dues
for one club as we may mutually agree upon.
STOCK OPTION. I would receive a stock option with tandem SARs in 1994 of at
least 30,000 shares (with such option to be granted at the time I am elected as
a Vice President of the Company) exercisable at $6.50 per share or such higher
per share price as the stock may be trading for on the date of grant. Such
option shall be for nonrestricted shares, may be exercised in whole or in
increments at any time during the 10-year period after its grant, and shall
remain exercisable for such 10-year period even if my employment is terminated
for any reason.
TERM AND TERMINATION. My employment will continue indefinitely subject to
termination as outlined in this paragraph. Either I or the Company may
terminate employment by no less than 30 days' written notice to the other. In
the event the Company should terminate my employment by such notice on or prior
to January 1, 1996, I shall be entitled to termination pay on the date of my
termination in the amount of one year's base compensation, or $170,000. In the
event my employment is terminated by the Company after January 1, 1996, I shall
be entitled to termination pay on the date of my termination in the amount of
six months' base compensation (computed using my base salary for the six months
immediately preceding such termination). The above payments shall not apply if
the Company terminates me for gross misconduct or fraud or if my termination is
by reason of death, or disability continuing for more than six consecutive
months.
HEALTH INSURANCE. No later than January 1, 1995, I shall be entitled to family
medical coverage on the same basis as other employees at my level in the
Company. There shall be no preexisting condition exclusion or waiting period on
the health insurance to be provided by the Company on or prior to January 1,
1995. Between the date of my employment and January 1, 1995, the Company agrees
to pay each month to me the cost of continuing my current family health coverage
under COBRA, plus any tax costs to me of continuing my present coverage under
COBRA.
OTHER FRINGE BENEFITS. I shall be entitled to participate in accordance with
the terms of each plan in all other fringe benefit plans maintained by the
Company, including life insurance and disability insurance and all employee
benefit plans.
C JOF53284 V1
<PAGE>
Mr. Alain Viry
May 27,1994
Page 3
MOVING EXPENSES. The Company agrees to pay all reasonable moving and relocation
expenses (including reasonable expenses of trips to search for housing) and
travel expenses associated with moving my family to the Miami area and any
temporary living and travel expenses (including weekend travel to visit my wife
or for my wife to visit me) in connection with my work in the New York office or
the Coral Gables office. In addition, the Company agrees to pay me the sum of
$1O,000 on or before September 1, 1994 to cover miscellaneous non-itemized
relocation expenses.
DEFERRED COMPENSATION. The Company agrees that I would participate in a non-
funded deferred compensation plan at a level which would provide a minimum
benefit of $3,000 per month for a period of ten years assuming I have remained
in the employment of the Company until May 31, 2002. The payments from such
plan would commence within 30 days after any termination of my employment.
Vesting of this benefit would occur ratably by month over the period of my
employment in the event my employment were terminated prior to May 31, 2002.
VACATION. As we have discussed, I ordinarily take four weeks of vacation per
year and would continue to do so.
BAR DUES AND CONTINUING LEGAL EDUCATION EXPENSE. The Company agrees to pay my
bar dues and reasonable continuing legal education expenses in order to keep my
bar admissions current.
If the above is in conformity with our discussions, please sign a copy of this
letter and return it to me. I would then be available on June 1, 1994 and would
become an employee of the Company on that date to begin work and to assist with
the move to the
<PAGE>
Mr. Alain Viry
May 27, 1994
Page 4
Coral Gables area. Of course, I will probably need to spend a few days in
Chattanooga over the next month or so to finish winding things up.
I look forward to our association.
Very truly yours,
/s/ Jon O. Fullerton
Jon O. Fullerton
Agreed to and accepted this 31 day of May, 1994,
WILLCOX & GIBBS, INC.
By: /s/ Alain Viry
----------------------
(Alain Viry) President
and C.E.O.
<PAGE>
[Letterhead - Willcox & Gibbs]
June 27, 1994
Mr. Allan M. Gonopolsky
Willcox & Gibbs, Inc.
530 Fifth Avenue
New York, New York 10036
In re: Employment as Vice President and Controller Willcox & Gibbs, Inc.
-----------------------------------------------------------------
Dear Allan:
This letter outlines the terms which we discussed that you would continue your
employment by Willcox & Gibbs, Inc. (the "Company") and transfer to Florida as
Vice President and Controller of the Company.
DUTIES. You would be employed as Vice President and Controller and would
perform the duties normally associated with that position and such other duties
as may be assigned from time to time. You would report to Steve Hitt who would
be CFO. You would be based in Coral Gables, Florida area, with travel as
necessary.
COMPENSATION. Your base annual salary would be at the rate of $95,000 per year,
beginning October 1, 1994 subject to increase from time to time in the
discretion of the Board. You would be eligible to receive a bonus for the year
ending December 31, 1994 in the discretion of the Company. For years ending
December 31,1995 and thereafter, your bonus would be based upon a formula that
we will develop which is tied to overall performance of the Company.
CAR. You will retain the Lexus ES-300 for use until it is decided to sell or
trade such car. At that time, you will be entitled to a car in accordance with
the Company's auto policy existing at that time for employees at your level.
The Company will reimburse you for your gas, oil and repairs for such
automobile.
TERMS AND TERMINATION. Your employment would continue indefinitely, subject to
termination as outlined in this paragraph. Either yourself or the Company could
<PAGE>
Mr. Allan M. Gonopolsky
June 27, 1994
Page 2
terminate employment by no less than 60 days' written notice to the other. In
the event you employment is terminated by the Company, you would be entitled to
six months' base salary (based upon your rate of pay on the date of termination)
as termination pay. If at the conclusion of the initial six months termination
period you have not found new employment but, in the judgement of the Company
you have been diligently seeking new employment, the Company will pay up to
three additional months of termination pay pending your finding new employment.
Any such additional payments shall cease immediately upon your finding new
employment. In addition, the Company will reimburse you for your actual moving
expenses (but not any other relocation expenses) for your household back to the
New York City (or equivalent distance) area if your employment is terminated by
the Company on or before January 1, 1996. The above payments would not apply if
the Company should terminate you for gross misconduct or fraud or if your
termination is by reason of death or disability continuing for more than six
consecutive months.
FREEZE OF COMPANY'S SUPPLEMENTAL RETIREMENT PLAN BENEFITS. The benefits payable
to you under the Company's supplemental retirement plan will be frozen as of
September 30, 1994, and your participation in such plan shall cease as of the
date except for your vested benefits on September 30, 1994 which vested benefits
shall be payable in accordance with such plan.
ELIMINATION OF EXPENSE ALLOWANCE. Your monthly expense allowance will cease as
of July 31, 1994. However, the Company will reimburse you for reasonable and
actual itemized out of pocket expenses incurred by you in connection with the
conduct of the Company's business.
ELIMINATION OF MEDICAL EXPENSE REIMBURSEMENT PLAN. Your participation in the
Company's medical expense reimbursement plan will cease as of July 31, 1994, and
no request for medical expense reimbursement after that date will be honored
regardless of the date incurred.
SUPPLEMENTAL DISABILITY. The Company will continue to pay for your supplemental
disability insurance in the same amount and in the same manner as the Company
has been doing in the past, but only such date as the Company has estimated a
new disability plan for all employees in the corporate office.
<PAGE>
Mr. Allan M. Gonopolsky
June 27, 1994
Page 3
OTHER FRINGE BENEFITS. You will continue to participate in the other employee
benefit plans offered by the Company on the same basis as other employees of the
Company.
VACATION. You will receive vacation time of at least three weeks per year or
such greater amount as provided by the Company's policies.
RELOCATION EXPENSES. The Company will pay your relocation expenses in
connection with your relocation to Florida in accordance with the relocation
policy of the Summers Group, Inc. which is attached as if such policy were the
Company's with the following exceptions:
(1) There will be no Miscellaneous Expense Reimbursement as set forth in
Paragraph H of the Summers policy.
(2) Paragraphs A and B under the Reimbursable Expense Section on Page 1
of the Summers policy are replaced by the paragraph entitled "Transitional and
Temporary Living Expenses" which follows immediately below.
TRANSITIONAL AND TEMPORARY LIVING EXPENSES. As we discussed, the Company would
provide travel, temporary lodging and a car for your use in Miami. In addition,
for meals and other expenses, the Company would provide you with a per diem
allowance of $40. The Company would also provide two round trips per month
coach class air fare between New York and Miami. These benefits would continue
for a reasonable time (but not less than 90 days) until your wife has relocated
to the Miami area. In no event would these benefits be provided for longer than
180 days.
CPA AND CPE EXPENSE. The Company agrees to pay your continuing education
expenses in order in keep your CPA designation current and for your CPA
license.
<PAGE>
Mr. Allan M. Gonopolsky
June 27, 1994
Page 4
If the above is in conformity with our discussions, please sign a copy of this
letter and return it to me. I look forward to our continued association.
Very truly yours,
Willcox & Gibbs, Inc.
By: /S/ ALAIN VIRY
-----------------
Alain Viry
President and CEO
Agreed to and accepted this 27 day of June, 1994.
/S/ ALLAN GONOPOLSKY
--------------------
(Allan M. Gonopolsky)
<PAGE>
SEVERANCE AND CONSULTING AGREEMENT
AGREEMENT, dated as of February 10,1995, by and among WILLCOX & GIBBS,
INC., a New York corporation ("W&G"), SOUTHERN ELECTRIC SUPPLY COMPANY, INC.
("SES"), a Delaware corporation, d/b/a CONSOLIDATED ELECTRIC SUPPLY ("CES"),
and WAYNE E. CAMPBELL (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive has been employed as an executive of W&G pursuant to
an Employment Contract dated as of January 1, 1991 (the "Employment Contract");
and
WHEREAS, the parties wish to terminate the Employment Contract and end
their employment relationship on mutually agreeable terms and to provide for the
Executive to consult with W&G or SES in accordance with this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT CONTRACT.
The Employment Contract and all rights and obligations arising
thereunder except those obligations of Executive and W&G under Paragraphs 4 and
5 are terminated effective February 10, 1995.
2. RESIGNATIONS AND TERMINATION OF EMPLOYMENT.
(a) At the request of W&G, the Executive hereby resigns as an officer
and employee of W&G, as an officer, director and employee of any of W&G's
Subsidiaries or Affiliates and from any corporate committee of W&G or any such
Subsidiaries or Affiliates effective February 10, 1995. For purposes of this
Agreement, a "Subsidiary" of a corporation shall mean any corporation,
association or other business entity which is required to be consolidated with
such corporation under generally accepted accounting principles, and an
"Affiliate" of a corporation shall mean a person or other entity that directly
or indirectly controls, or is controlled by, or is under common control with
such corporation.
3. CONSULTING SERVICES
From the date of this Agreement through August 10, 1996 (the
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<PAGE>
"Consultation Period"), Executive agrees to consult with and assist W&G and SES
to the extent called upon to do so by W&G or SES in connection with the
operation of its electrical supplies distribution businesses. The Executive
agrees to be available no more than fifteen (15) business days per year for such
consulting duties during the Consultation Period, unless Executive has become
disabled and his physician has advised W&G that Executive's health does not
permit such consultation activities. Executive further agrees that such
consultation shall be rendered at such times as the Executive and W&G agree are
appropriate giving the effect to the then regular personal and other business
activities of the Executive. W&G's Chief Executive Officer shall give the
Executive reasonable advance notice of any requirements for consultation and he
shall use his reasonable best efforts to perform such consultation on the
schedule requested. In connection with any consultation services, the Executive
shall be entitled to be reimbursed for all expenses reasonably and necessarily
incurred by him in connection with performance of his consulting duties, in
accordance with the Company's then applicable procedures, including without
limitation reimbursement for travel and relating expenses to and from whatever
may be the then current place of residence or where he may be conducting other
business activities. The obligations of the Executive under this Paragraph
shall not restrict the Executive from other employment so long as the Executive
is in compliance with Paragraph 7 of this Agreement.
4. PAYMENTS TO THE EXECUTIVE.
A. In consideration of the termination of the Employment Contract,
W&G shall pay the Executive the following amounts:
(1) $200,000, representing 100% of Executive's current salary which
shall be payable over the 12 month period beginning February 11, 1995, and
ending February 10, 1996, in equal installments corresponding to W&G's regular
payroll periods.
(2) The sum of $4,311.41 per month for 120 consecutive months
commencing on March 11, 1995. Such payments represent the amounts due Executive
under Paragraph 4 of the Willcox & Gibbs Supplemental Death and Retirement Plan
as Amended July 12, 1988.
B. In consideration of the Executive's consulting services, W&G
shall pay the Executive the sum of $2,000 per month for 18 consecutive months
commencing March 11, 1995, such sum representing additional compensation for the
consulting services to be rendered by the Executive hereunder.
5. OPTIONS AND BENEFIT PLANS.
(a) The Executive will be entitled to exercise in accordance with
their terms his outstanding stock options to purchase such shares of W&G common
stock
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that are scheduled to become exercisable on or before March 26, 1995. All
remaining stock options to purchase W&G common stock shall expire on March 26,
1995.
(b) W&G agrees that during the Consultation Period that Executive
will continue to be eligible for health, disability and life insurance coverage
as a consultant to W&G on the same basis as a full time employee, upon payment
of the employees share of costs to participants in such Plan. At the expiration
of the Consultation Period, Executive shall be entitled to elect to continue
medical coverage as provided by federal law. Executive acknowledges that as of
the date of this Agreement he is no longer qualified to participate in W&G's
401(k) Savings and Retirement Plan and that for purposes of this Plan, his
employment is terminated as of February 10, 1995. Executive, however, shall be
entitled to all vested benefits under W&G's 401(k) Savings and Retirement Plan
(which now includes Executive's account in the CES Profit Sharing Plan and the
W&G ESOP Plan, as a result of merger of these Plans on January 1, 1995) and all
vested benefits under the Retirement Plan maintained by WG, Inc. (formerly the
Apparel Division of W&G). W&G acknowledges that the Executive's benefits are
100% vested in all such qualified Plans.
6. W&G LOAN
(a) The Executive acknowledges that he is indebted to W&G as
evidenced by Promissory Note dated November 25, 1986, in the original principal
amount of $200,000. Executive agrees to continue to make payments on such Note
in accordance with its terms.
7. NONSOLICITATION, NONCOMPETITION AND CONFIDENTIALITY AGREEMENTS
(a) For a period of one year following the end of the Consultation
Period, the Executive shall not, directly or indirectly, solicit any person who
is employed by W&G or any of its Subsidiaries or Affiliates to (i) terminate his
or her employment with W&G or such other company, or (ii) accept employment with
anyone other than W&G or such other company.
(b) The Executive agrees that he will not, directly or indirectly
(individually or for, with or through any other person, firm or corporation),
compete with W&G or any of its Subsidiaries or Affiliates for a period of one
year following the termination of the Consultation Period with respect to any
business carried on by W&G or any of its Subsidiaries or Affiliates as of
February 10, 1995. Notwithstanding the foregoing, the Executive shall be
permitted to own not in excess of one percent of any class of securities of any
publicly traded company, which is in competition with W&G, provided the
Executive is not part of any controlling group and is solely a passive investor.
(c) All confidential information which the Executive may now have or
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<PAGE>
may have obtained during his employment by W&G relating to the business of W&G
or any Subsidiary or Affiliate thereof shall not be disclosed to any other
person (except as required by law) without the prior written permission of W&G,
and the Executive has returned all tangible evidence of such confidential
information to W&G and will promptly return any such information following the
Executive's discovery thereof in the future. Such information shall not include
any information otherwise publicly known.
(d) Except as provided in Section 7(c) hereof, the Executive has
returned (or will return promptly thereafter following the Executive's discovery
thereof) to W&G any credit cards, cardkey passes, computer access codes, door
and file keys, and other physical or personal property provided by W&G, if any.
(e) All of Executive's interest in patents, patent applications,
inventions, technological innovations, copyrights, developments and processes
during his employment by W&G owned or developed by Executive relating to the
business of W&G or any affiliate of W&G, shall belong to W&G, and without
further compensation, but at W&G's expense, forthwith upon request of W&G,
Executive shall execute any and all such assignments and other documents and
take any and all such other action as W&G may reasonably request in order to
vest in W&G all Executive's right, title and interest in and to such patents,
patent applications, inventions, technological innovations, copyrights,
developments or processes, free and clear of liens, charges and encumbrances.
(f) Subject to Section 21 hereof, in the event of a breach or
threatened breach of the provisions of this Section 7, the Executive
acknowledges that W&G will be entitled to seek from a court any interim or
provisional relief that may be necessary to protect W&G's rights or property
pending the arbitral tribunal's determination of the merits of the controversy.
(g) If it is determined that any of the provisions of this Section 7,
or any part thereof, is unenforceable because of the duration or scope of such
provision, it is the intention of the parties that the duration or scope of such
provision, as the case may be, shall be reduced so that such provision becomes
enforceable.
8. RELEASES.
(a) The Executive, having received independent legal advice,
voluntarily and knowingly releases W&G, each of its Subsidiaries and Affiliates
and their respective officers and directors from any and all claims, actions,
and causes of action he has or may have arising on or before the date of this
Agreement, whether known or unknown, relating to his employment by, or
termination of employment with, W&G or any of its Subsidiaries and Affiliates,
including, without limitation (a) those arising under the Age Discrimination in
Employment Act of 1967, as amended, and other federal, state or local human and
civil rights or labor laws, and (b) those arising under the
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<PAGE>
Employment Contract, except that the Executive does not release (i) his right to
have W&G perform its obligations under this Agreement, (ii) his right to
benefits under the Retirement Plan, the ESOP and the 401(k) Plan and CES Profit
Sharing Plan (Executive recognizes that the ESOP, 401(k) and CES Profit Sharing
Plan are now merged into the W&G 401(k) Savings and Retirement Plan), (iii) his
right to indemnification under (1) the certificate of incorporation or bylaws of
W&G or any of its Subsidiaries or Affiliates of which he has been an officer or
director, (2) the laws of the state of incorporation of W&G or any such
Subsidiary or Affiliate, (3) the Indemnity Agreement dated November 11, 1986,
between the Executive and W&G (the "Indemnity Agreement"), or (4) any insurance
policy maintained by W&G or any such Subsidiary or Affiliate, as the case may
be.
(b) W&G voluntarily and knowingly releases the Executive from any and
all claims, actions and causes of action it has or may have arising on or before
the date of this Agreement, whether known or unknown, except that W&G does not
release its right to have the Executive perform his obligations under this
Agreement or any claim, action or cause of action that W&G may have against the
Executive to the extent it is determined by a final judgment adverse to the
Executive that the Executive's acts or omissions were in bad faith or involved
in intentional misconduct or a knowing violation of law, or the Executive
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
9. COOPERATION REGARDING CLAIMS AND LITIGATION.
The Executive shall not assist any person or firm in asserting or
considering the assertion of any claim against W&G, SES or any Subsidiary of
either unless compelled by legal process to do so and will give W&G prompt
notice of any process served or contact made by any person considering or
asserting such a claim and permit W&G at its sole option and expense to
represent Executive or provide representation for Executive in any such
proceeding or claim. The Executive shall cooperate and generally make himself
available to give testimony and assistance in connection with any such claim,
litigation or arbitration proceeding or any proceeding or investigation
initiated by any governmental authority or agency involving W&G or any of its
Subsidiaries or Affiliates and arising out of activities of W&G or its
Subsidiaries or Affiliates prior to the date of this Agreement and during the
period of his employment with W&G. W&G or one of its Subsidiaries or Affiliates
shall reimburse the Executive for, or advance to the Executive, all reasonable
out-of-pocket travel and other expenses incurred by the Executive at the
specific request of W&G in connection with the Executive's testimony,
cooperation and assistance under this Section 9. Such expenses shall be
reimbursed or advanced promptly after the Executive's submission to W&G of
statements in such reasonable detail as W&G may require. Time spent performing
Executive's obligations under this Section 9 shall be deemed to be time spent
consulting pursuant to the consulting provisions of this Agreement, and,
accordingly, the Executive's compensation for performing his obligations under
this
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<PAGE>
Section 9 shall be deemed included in the payments set forth in Paragraph 4, and
no additional payments shall be due Executive.
10. OPPORTUNITY FOR REVIEW BY COUNSEL AND PERIOD TO REVOKE AGREEMENT.
The Executive acknowledges that he has been advised to consult with an
attorney before executing this Agreement. Until the close of business on March
14, 1995, the Executive may revoke this Agreement by notice to W&G pursuant to
Section 13 whereupon the rights and obligations of the parties to this Agreement
shall be revoked retroactively to February 10,1995, and W&G and the Executive
shall return to each other any amounts or other benefits provided under this
Agreement or the Consulting Agreement.
11. RIGHTS RELATING TO EMPLOYMENT AND TERMINATION.
This Agreement integrates and embodies all understandings and
agreements among the Executive, W&G, SES, and/or any of their Subsidiaries or
Affiliates in connection with the Executive's employment and termination of
employment with W&G, SES or any of its Subsidiaries or Affiliates. Except as
specifically provided in this Agreement, the Executive shall not be entitled to
any payments or other benefits on account of his having been employed by, or
having terminated his employment with, W&G or any of its Subsidiaries or
Affiliates.
12. WITHHOLDING.
W&G may withhold from all amounts payable to the Executive under this
Agreement all federal, state and local taxes required by law to be withheld with
respect to such payments.
13. NOTICE.
Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or sent by registered or certified mail, postage prepaid, return
receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
notice of:
If to W&G or SES: Willcox & Gibbs, Inc.
150 Alhambra Circle
Coral Gables, Florida 33134
Attention: President
If to the Executive: Wayne E. Campbell
10751 Stonebridge Boulevard
Boca Raton, Florida 33498
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<PAGE>
14. AMENDMENT OR WAIVER:
No provision in this Agreement may be amended unless such amendment is
agreed to in writing, signed by the Executive and by an authorized officer of
W&G. No waiver by either party hereto of any breach by the other party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of W&G, as the case may be.
15. SEVERABILITY.
In the event that any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
16. HEADINGS.
The headings of sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
17. COUNTERPARTS.
This Agreement may be executed in one or more counterparts.
18. REFERENCES.
In the event of the Executive's death or a judicial determination of
his incompetence, references in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his legal representative or to his beneficiary or
beneficiaries.
19. BINDING AGREEMENT; ASSIGNMENT.
Except as provided in Section 10 hereof, this Agreement is binding
upon the parties hereto and their respective successors, heirs and assigns. No
rights or obligations under this Agreement may be assigned or transferred by the
Executive except that the Executive's rights to compensation and benefits
hereunder shall, in the event of death, pass to his estate, or to his designated
beneficiary, and may be transferred by will or operation of law. The
Executive's rights under this Agreement
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<PAGE>
shall not be transferable by assignment or otherwise, shall not be subject to
commutation or encumbrance and shall not be subject to the claims of the
Executive's creditors.
In the event of a future disposition of (or including) the properties
and business of W&G, substantially as an entirety, by merger, consolidation,
sale of stock or assets or otherwise, then W&G shall require the acquiring or
surviving corporation (which shall be substituted for W&G hereunder) to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that W&G would have been required to perform it had no such
disposition occurred.
20. PAYMENT OBLIGATION ABSOLUTE.
Except as provided in Section 10 hereof, and for any claims arising by
reason of Executive's violation of Paragraph 7 of this Agreement, W&G's
obligation to make payments provided for in this Agreement and otherwise perform
its obligations hereunder shall be absolute and unconditional and shall not be
affected by an setoff, counterclaim, recoupment, defense or other circumstance
or rights which W&G may have against the Executive or anyone else, all of which
shall be required to be asserted in independent proceedings. The Executive
shall not be required to mitigate the amount of any payment provided for herein
by seeking other employment or taking any other action nor shall the amount of
any payment provided for herein be reduced by amounts earned by the Executive
from other employment or otherwise.
21. ARBITRATION; INDEMNIFICATION.
(a) Any controversy or claim arising out of or in connection with
this Agreement shall be settled by arbitration held in Miami, Florida, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered (including an award for money
damages) may be entered in any court having jurisdiction. The cost of the
arbitration proceeding shall be apportioned between the parties by the
arbitration panel. Either party may, without inconsistency with this Agreement,
seek from a court any interim or provisional relief that may be necessary to
protect the rights or property of that party pending the arbitral tribunal's
determination of the merits of the controversy.
(b) In addition to (and not in lieu of) any of the Executive's rights
to indemnification or otherwise, contained in W&G's certificate of
incorporation, by-laws, the Indemnity Agreement or any other agreement, if any
action, suit, proceeding (including any arbitration proceeding) or claim shall
be brought or asserted with respect to the enforcement or interpretation of this
Agreement or any provision contained herein, W&G, to the full extent permitted
by applicable law and its certificate of incorporation and by-laws as in effect
on the date hereof, hereby indemnifies the Executive for his reasonable
attorneys' fees and other expenses incurred in connection
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with such action, suit, proceeding or claim and agrees to pay or reimburse the
same promptly upon demand by the Executive (plus interest at the applicable
Federal rate provided in Section 7872(f)(2) of the internal Revenue Code of
1986, as amended), provided that W&G shall not be obligated to indemnify the
Executive under this Agreement with respect to any action, suit, proceeding or
claim brought by the Executive in which it is finally determined that the
Executive's interpretations of this Agreement at issue, taken as a whole, are
less correct than the interpretations asserted by W&G. W&G shall preserve and
make available to the Executive all documents and information now or hereafter
in the possession of W&G which may be reasonably required by the Executive for
the prosecution or defense of any such action, suit, proceeding or claim.
22. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Florida
without reference to the principles of conflict of laws.
IN WITNESS WHEREOF, the Executive, W&G, and SES have caused this
Agreement to be executed as of the day and year first above written.
SOUTHERN ELECTRIC SUPPLY WILLCOX & GIBBS, INC.
COMPANY, INC. d/b/a CONSOLIDATED
ELECTRIC SUPPLY
By: /s/ Alain C. Viry By: /s/ Alain C. Viry
-------------------------------- ---------------------------------
Alain C. Viry, Vice President Alain C. Viry, President and CEO
EXECUTIVE:
/s/ Wayne E. Campbell
-----------------------------------
Wayne E. Campbell
-9-
<PAGE>
EXHIBIT 11.1
WILLCOX & GIBBS, INC.
COMPUTATION OF NET INCOME PER
COMMON AND COMMON EQUIVALENT SHARE
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ----------
<S> <C> <C> <C>
Income (loss) from continuing operations...................................... $ 9,258 $ 6,890 $ (12,402)
Income (loss) from discontinued operations.................................... (327) 1,517 7,527
--------- --------- ----------
Income (loss) before cumulative effect of accounting change................... 8,931 8,407 (4,875)
Cumulative effect of accounting change for income taxes....................... -- 660 --
--------- --------- ----------
Income (loss) applicable to primary common and common equivalent shares....... 8,931 9,067 (4,875)
Interest reduction, net of taxes, upon conversion of Convertible Subordinated
Debentures................................................................... 1,960 1,995 2,100
--------- --------- ----------
Income (loss) applicable to fully diluted common shares....................... $ 10,891 $ 11,062 $ (2,775)
--------- --------- ----------
--------- --------- ----------
Primary shares:
Weighted average number of common shares and common share equivalents
outstanding during the year
Common (net of treasury stock).............................................. 23,734 20,947 14,503
Options..................................................................... 31 23 118
Warrants.................................................................... -- -- 8
--------- --------- ----------
23,765 20,970 14,629
--------- --------- ----------
--------- --------- ----------
Fully diluted shares:
Weighted average number of common shares and common share equivalents
outstanding during the year:
Common (net of treasury stock).............................................. 23,734 20,947 14,503
Options..................................................................... 31 23 118
Warrants.................................................................... -- -- 8
Conversion of Subordinated Debentures....................................... 5,225 5,225 2,454
--------- --------- ----------
28,990 26,195 17,083
--------- --------- ----------
--------- --------- ----------
</TABLE>
<PAGE>
SUBSIDIARIES
The following are the subsidiaries of Willcox & Gibbs, Inc.
Calcon Electric Supply, Inc. California
C.E.S. Industries, Inc. Delaware
Clark Consolidated Industries, Inc. Ohio
Consolidated Electric Supply, Inc. Delaware
Consolidated Electric Supply (Bahamas) Ltd. Bahamas
Duellman Electric Supply Company Ohio
Elgee Electric Supply Co. Ohio
Engineered Apparel Concepts, Inc. Delaware
Rawlinson Electric Company Texas
Rogers Lighting Company Texas
Robin Service Corporation New York
Seaco Electrical Supplies, Inc. Florida
Southern Electric Supply Company, Inc. Delaware
Spindletop Electrical Distributing Company Texas
Summers Electric Company Texas
Summers Group, Inc. Delaware
The Sacks Electrical Supply Co. Ohio
W & G Export Corporation Georgia
Willcox & Gibbs of Alabama, Inc. Alabama
Willcox & Gibbs DN, Inc. Delaware
Willcox & Gibbs DS, Inc. Delaware
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
--------------
We consent to the incorporation by reference in the registration statement
of Willcox & Gibbs, Inc. and subsidiaries on Form S-8 which relate to the 1988
Stock Incentive Plan (No. 33-32648), the 1985 Stock Option Plan (No. 33-4584),
the Employee Stock Ownership Plan (No. 33-14148), of our report, which includes
an explanatory paragraph regarding the Company's change in method of accounting
for income taxes, dated March 15, 1995, except as to the information presented
in Note 5 for which the date is March 30, 1995, on our audits of the
consolidated financial statements and financial statement schedule of Willcox &
Gibbs, Inc. and subsidiaries as of December 31, 1994 and 1993, and for each of
the three years in the period ended December 31, 1994, which report is included
in this Annual Report on Form 10-K. We also consent to the reference to our firm
as "Experts."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Miami, Florida
March 30, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WILLCOX &
GIBBS, INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 23,843
<SECURITIES> 0
<RECEIVABLES> 147,146
<ALLOWANCES> 4,149
<INVENTORY> 111,276
<CURRENT-ASSETS> 292,319
<PP&E> 71,273
<DEPRECIATION> 19,419
<TOTAL-ASSETS> 414,487
<CURRENT-LIABILITIES> 180,806
<BONDS> 94,761
<COMMON> 24,705
0
0
<OTHER-SE> 106,747
<TOTAL-LIABILITY-AND-EQUITY> 414,487
<SALES> 1,065,543
<TOTAL-REVENUES> 1,065,543
<CGS> 853,041
<TOTAL-COSTS> 853,041
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,600
<INTEREST-EXPENSE> 9,577
<INCOME-PRETAX> 16,528
<INCOME-TAX> 7,270
<INCOME-CONTINUING> 9,258
<DISCONTINUED> (327)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,931
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
