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 transition period from..................... to .........................
Commission file number 1-6150
ALBA-WALDENSIAN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-0359780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 St. Germain Avenue, S.W.
P.O. Box 100 Valdese, North Carolina 28690
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 704-874-2191
Securities registered pursuant to Section 12 (b) of the Act:
COMMON STOCK ($2.50 PAR VALUE) AMERICAN STOCK EXCHANGE
( Title of class) (Name of exchange on which registered)
Securities registered pursuant to Section 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 ((Section Mark).229.405
of this chapter) 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. { }
State the aggregate market value of the voting stock held by the
non-affiliates of the registrant: Approximately $9,701,719 as
of February 27, 1995.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date: 1,863,153 shares of Common Stock ($2.50 par
value) as of February 27, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Annual Report for the fiscal year
ended December 31, 1994 are incorporated by reference into Parts
I and II.
Portions of the Company's Proxy Statement for the 1994 Annual
Meeting of Stockholders are incorporated by reference into Parts
I and III.
Page 1 of 27 pages (including exhibits)
The Exhibit Index is located on page 24.
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PART I
Item 1. Business.
General Development of Business
Alba-Waldensian, Inc., (the "Company" manufactures a
variety of knitted apparel and health care products in four
plants in Valdese, North Carolina and markets the products
through four divisions, the Consumer Products Division, the
Health Products Division, the Alba Direct Division and the
Byford Apparel Division. In 1992 the Company purchased the
inventory and the rights to the name in the US for Byford
apparel. The Company imports high quality socks and sweaters
from various locations overseas and markets them under the
Byford name to specialty and better department stores. Also in
1992, the Company began to search for a suitable acquisition
for its Health Products Division and on November 30, 1994
acquired the Pulsitate Anti-Embolism Systems (P. A. S.(Register Mark))
business from Baxter Healthcare Corporation. The purchase
consisted mainly of inventory and the rights to the P. A. S. (Register Mark)
name. The Company has been involved for many years as a
supplier of an Anti-Embolism Compression Stocking which is a
component of the P.A.S.(Register Mark) product.
In February of 1994 the Company created AWI Retail, Inc.,
to market products directly to the consumer through retail
outlet stores. AWI Retail Inc., is a wholly owned subsidiary of
the Company and is part of the Alba Direct Division. AWI opened
its first outlet store in November 1994 in Branson, Missouri.
As discussed in more detail below, from 1990 through 1992
the Company consolidated and restructured certain of its
operations and has greatly reduced or eliminated certain
products and product lines. During 1991, the Company stopped
the manufacture of men's socks. Also, during 1990 the Company
completed the removal of certain unprofitable product lines,
including tights and men's
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underwear. As a result of these
moves, two production facilities were closed and remaining
operations were combined into the existing plants. One of the
closed facilities (the Waldensian plant) was sold in March 1992
and the other facility (the Pauline plant) was sold in 1990.
In 1993, the Company developed a process to knit a seamless
bra which was introduced to the market in 1994. This same
process will be used to manufacture tank tops and body suits
which will be introduced in 1995. The Company also plans to
introduce a control version of these garments in the second half
of 1995.
Financial Information About Industry Segments
The Company is in a single line of business: the
manufacturing, processing, importing and selling of knitted
products, which consists of several classes. Accordingly, no
segment information is presented.
Principal Products
The principal products of the Company's four Divisions
are described below. For additional discussion of the current
status of each Division and its products, please see the
Company's 1994 Annual Report to Shareholders, which contains
information expressly incorporated herein by reference.
Consumer Products Division
Products manufactured and sold by this Division include
women's intimate apparel and women's hosiery products. Intimate
apparel includes stretch bikinis, briefs and bodywear, as well
as specially
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designed briefs for maternity wear. Women's hosiery products
include sheer stockings, pantyhose, and trouser socks, primarily
for large-size women and the maternity market.
The Company has developed a process which makes it
possible to knit bras, tank tops and body suits in seamless
knitting equipment. This design technology, which has a patent
pending, has allowed the company to significantly broaden its
product offerings. The seamless knit bra was introduced in 1994
and the tank tops and body suits will be introduced in 1995.
The Company uses state of the art computer-controlled
circular-knitting technology. In addition, a significant
portion of the Company's consumer products, including its
women's intimate apparel, are produced on fine gauge
full-fashion knitting equipment. Such equipment produces
apparel that management believes is better fitting and therefore
more comfortable. Management believes that, due to the limited
availability of such equipment, few companies have the ability
to produce a significant volume of these full-fashioned products.
The Company did not renew for 1995 the license acquired
from Kayser-Roth Corporation in 1990 for No-Nonsense (Register Mark), or the
license acquired from Leslie Fay Company in 1992 for the Leslie
Fay (Register Mark) name, both used in connection with women's hosiery
products. Management's decision to terminate both license
agreements was based on the fact that the licenses no longer
provided value for the Company and that both agreements had a
high minimum royalty payment. Instead, the Company plans to
put renewed emphasis on placing its All Day Long (Register Mark) brand in
department stores.
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Health Products Division
Products manufactured and sold by this division are
designed to assist in healthcare. They include anti-embolism
stockings and pulsitate anti-embolism systems, an intermittent
pneumatic compression device, both of which are designed to
improve circulation and reduce the incidence of deep vein
thrombosis; sterile wound dressings such as pre-saturated gauze,
petrolatum and xeroform gauze, non-adhering dressings and gauze
strips and XX-Span(Register Mark) dressing retainers, an extensible net
tubing designed to hold dressings in place without the use of
adhesive tape. All dressing products are used in wound care
therapy, particularly for the treatment of burns.
In addition, this division manufactures knitted
stockinette in a variety of sizes which is used under fracture
casts or sterile packaged for use as a supplemental drape in
surgical procedures. Heel and elbow pads are XX-Span(Register Mark) sleeves
with an inner soft foam pad used to reduce pressure and the
incidence of decubitus ulcers.
Other products include slip-resistant patient treads, which
are knitted, soft patient footwear with slip resistant soles to
help prevent patient falls while keeping feet warm even while in
bed; knitted arm sleeves, which provide protection to the skin
of patients with poor circulation; blood filter sleeves which
are a component used in blood filtering systems manufactured by
others; and mesh panties, inexpensive stretch pants used to
hold maternity pads or incontinent pads in place.
Byford Apparel Division
The Byford division imports and markets a broad range of
quality men's hosiery and sweaters. For the most part,
Byford's socks are imported from the Byford mill in Leicester,
England and supplemented
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with domestic sources. Sourcing for
Byford sweaters is more broadly based, with products coming from
Coats Viyella mills in the UK, mills in the Far East, and
domestic sweater producers. The men's hosiery incorporates
fully reciprocated and reinforced heels and toes.
Alba Direct Division
Alba Direct distributes products from the Consumer Products
Division, Byford Apparel Division, and Health Products Division
to the independent specialty retail class of trade via
telemarketing. Alba Direct has developed export customers in
Japan and Turkey and is the primary group responsible for
developing the Company's Consumer export business.
In February of 1994, the Company created AWI Retail, Inc.
to market products directly to the consumer through one of the
fastest growing channels of distribution, the retail outlet
store. AWI Retail, Inc. is a wholly owned subsidiary of the
Company and operates as part of the Alba Direct Division.
AWI opened its first outlet store in November of 1994 in
Branson, Missouri and will sell products from the Company's
Consumer Products and Byford Apparel Divisions.
Methods of Distribution
The Consumer Products Division markets its products
directly to chain store organizations, which sell them under
their own labels, and to several companies that market
nationally advertised brands. The Company's products are sold
throughout the United States through salaried and commissioned
salesmen. Byford products are marketed primarily through men's
specialty stores, both chains and independents.
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Products of the Health Products Division for use in hospitals
are marketed to major distributors by the Company's sales
representatives. These products are sold both under private
label and under the company's own Life Span(Register Mark)
Label. Alba Direct distributes branded Consumer Products and
Health Products to the independent retail trade through
telemarketing. Sales offices are located in Valdese, N.C. and
in New York. Total expenses for marketing and selling of all
products from the Company's continuing operations was 10.0% of
sales in 1994, compared to 12.0% in 1993. The decrease from
1993 was mainly due to better cost control and the absence of
incurred costs associated with a repackaging project and
expenses related to the Leslie Fay(Register Mark) line. (See Management's
Discussion and Analysis of Financial Conditions and Results of
Operations in the Company's 1994 Annual Report to Shareholders, which is
incorporated herein by reference.)
Manufacturing
From the 1920's to the 1940's, women's silk stockings were
knitted to the shape of the leg on fine gauge full-fashion
machines and were seamed up the back (because silk is an
inelastic yarn). The introduction of stretch nylon yarn in the
early 1950's made it feasible to knit seamless stockings and,
later, pantyhose on tubular knitting machines. When this
occurred, the industry considered fine gauge full-fashion
knitting equipment obsolete and production of this equipment
here and in Europe ceased. Much existing equipment was
destroyed and none has been manufactured since. However, in the
mid-1950's, the Company developed a technique for producing
stretch, one-size fits all panty products for women on this
full- fashion knitting equipment. After some years of
marketing development, the stretch panty product became quite
successful, and, subsequently, the Company began using the same
equipment to produce children's leotards and tights, and, later,
men's underwear. During 1989 and 1990, men's underwear,
children's leotards and tights were discontinued. Today the
Company manufactures
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regular, plus-size and maternity panties
on the full fashion knitting machines. In past years, the
Company sought and acquired a significant number of fine gauge
full-fashion knitting machines and also developed a substantial
supply of spare parts. As a result, management believes that
the Company now owns more fine gauge full-fashion knitting
machines than any other manufacturer. Company technicians have
developed the capability of rebuilding and refurbishing the
equipment to meet new equipment efficiency and quality
standards. The Company, through its training programs, has
developed a corps of professional mechanics and knitters to
continue efficient operation of these machines. The Company's
present complement of full fashion knitting equipment is more
than sufficient to produce the volume of its present full
fashion sales, and it can produce or has produced any machine
parts required for continuing operation of these machines.
The balance of the company's products are manufactured
on equipment generally available to the industry (even though
some equipment is modified by the Company). The Company
anticipates that capital expenditures for 1995 will be
approximately $2,300,000 for the renovation of existing plant
for replacement of older equipment and for the purchase of new
knitting equipment to increase capacities.
Financial Information About Classes of Similar Products
The Company is in a single line of business:
manufacturing, processing and selling knitted products,
consisting of several classes. The table below illustrates
sales as a percentage of net dollar volume from continuing
operations for each product class for each of the Company's
last five years:
1994 1993 1992 1991 1990
Women's Intimate Apparel 40.2% 37.4% 43.8% 48.6% 44.3%
Men's Wear 4.3 5.5 0.0 0.0 0.0
Women's Hosiery Products 17.4 19.2 19.1 15.7 19.0
Men's Hosiery 7.9 7.3 1.0 1.2 9.7
Health Products 30.2 30.6 36.1 34.5 27.0
100.0% 100.0% 100.0% 100.0% 100.0%
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(Bullet) Women's intimate apparel consists of regular size bras, briefs
and bodywear as well as maternity and plus size briefs.
(Bullet) Mens wear consists of Byford Sweaters.
(Bullet) Women's hosiery products consist of regular maternity and
plus-size panty hose, as well as trouser socks and thigh high
hose.
(Bullet) Men's hosiery consist of Byford socks and consumer products
Toesies (Service Mark).
(Bullet) Health products consist of stockinettes, treads, arm sleeves,
mesh panties, anti-embolism stockings, P.A.S. (Service Mark) sterile wound
dressings, heel pads and elbow pads.
Discontinued products are eliminated for the purpose of
this table. The remaining sales percentages
of each class were restated after this elimination to represent
sales of each class as a percentage of net dollar volume from
continuing product lines.
New Products or Segments
The Company maintains an active research and development
department that continually evaluates new products and process.
Management also evaluates new products, business opportunities,
and acquisitions on an on-going basis and could encounter an
opportunity which would require substantial investment in the
future. Such investments occurred in 1994 with the
acquisition of the pulsitate anti-embolism business from
Baxter Healthcare Corporation and in 1995 with the acquisition
of the Balfour Health Products Division from Kayser-Roth
Corporation. (See "Management 's Discussion and Analysis
of Financial Condition and Results of Operations" in the
Company's 1994 Annual Report to Shareholders).
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Sources and Availability of Raw Materials
The principal raw materials used by the Company in its
manufacturing processes include various types of yarn, chemicals
for dyeing and finishing and for impregnating medical products
and packaging materials for all products. The Company acquires
these materials from a number of sources and is not dependent
on any one source for a significant amount of its raw materials.
The Company anticipates no material change in either the
availability or the cost of its raw materials.
Patents and Licenses
The only material patents held by the Company are (1) for
pantyhose with a terry crotch insert, which expired in 1992;
(2) for a device used to warm wet dressings; and (3) for a
process covering the manufacture of dressings. The latter two
patents expire in 2002. The Company or its subsidiary, Pilot
Research Corporation, holds numerous other patents that, because
of obsolescence or other reasons, are not material to the
Company's current operations. The Company licensed the
No-Nonsense(Register Mark) Trademark in 1990 for an initial term of 3 years
and seven months with renewal options after the expiration date.
The Company also licensed the Leslie Fay(Register Mark) trademark in 1992 for
an initial term of three years. Management decided to terminate
both license agreements at the end of 1994. Management's decision
was based on the fact that these licenses no longer provided value
for the Company and that the agreements carried a high minimum
royalty payment.
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Seasonality
Sales tend to be fairly even throughout the year. For a
tabular presentation of unaudited summary financial information
on a quarterly basis, see the Company's 1994 Annual Report to
Shareholders, which information is incorporated herein by
reference.
Working Capital
Differences resulting from seasonal fluctuations have not
been sufficient to materially affect the Company's working
capital requirements. The Company sells merchandise on
consignment only on a limited basis. Returns are permitted when
the quality of merchandise sold is below acceptable standards or
when an error in completing an order occurs. The number and
amounts of returns during fiscal 1994 did not have a material
effect on working capital of the Company. Due to the various
approaches to manufacturing and distribution used by the
industry, the Company is not aware of any industry-wide norms
relating to sale and delivery requirements. In Novemver 1994,
working capital was adversely affected by the purchase of
inventory related to the pulsitate anti-embolism system from
Baxter Healthcare Corporation. This purchase was financed
through short-term borrowings under a line of credit which
management intends to convert to a long term note in 1995 with
an amortization of 5 years.
Significant Customers
Baxter Healthcare Corporation is the only customer that
represents ten percent or greater of the Company's sales
volume for the years ended in 1994, 1993 and 1992.
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1994 1993 1992
Baxter Healthcare Corporation $12,902,722 $13,610,937 $11,074,280
Percentage of sales 22.8% 26.8% 27.3%
While the loss of Baxter Healthcare Corporation would
have a material adverse effect on the business of the Company,
management believes that, because of the number of departments
within this company to which it sells, the likelihood of a
material amount of sales loss is reduced.
Government Contracts
The Company did not have any business in 1994 subject to
renegotiation of profits or termination of contracts at the
election of the government.
Backlog
The Company's backlog of firm orders at December 31, 1994
and 1993 was $2,173,893 and $2,526,727. A majority of the
Company's orders are for delivery within 30 to 60 days. The
backlog figures, therefore, are not normally indicative of
orders for the remainder of the year.
Competition
In addition to meeting the demands of the
normal hosiery and intimate apparel markets, the Company
specializes in producing garments for the hard-to-fit woman.
Consumer products are sold on a
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private label basis through the nation's retail chains and
national brands. Health care products for use in hospitals are
marketed under private label to major distributors, supported by
commissioned sales representatives. In addition, health care
products for use in the home have been introduced under private
label and under the Company's own Life Span(Register Mark) label. Byford
products are primarily marketed under the Byford name. The
Company encounters substantial competition in the sale of its
products from numerous competitors, a few of which are known to
have larger sales and capital resources than the Company.
Management is unable to estimate the number of the Company's
competitors or its relative position among them. Management
believes that the principal methods of competition in the
markets in which the Company competes include price, delivery,
performance, service and the ability to bring to the market
innovative products. Management believes that the Company is
competitive with respect to these factors but is unable to
identify specific positive and negative aspects of the
Company's business pertaining to such factors. (See also"
Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's 1994 Annual Report to Shareholders).
Research and Development
The Company estimates that in 1994 it spent $376,008 in
company-sponsored research and development projects through the
Company's Research and Development Department and its wholly
owned subsidiary, Pilot Research Corporation. This compares to
$340,663 in 1993 and $186,542 in 1992. The Company did not
participate in 1994, 1993 or 1992 in any material customer
sponsored research activities relating to the development or the
improvement of existing products, services or techniques.
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Environmental Regulations
In the opinion of management, the Company and its
subsidiaries are in substantial compliance with present federal,
state and local regulations regarding the discharge of materials
into the environment. Capital expenditures required to be made
in order to achieve such compliance have had no material effect
upon the earnings or competitive position of the Company or
its subsidiaries. Management believes that continued compliance
will require no material expenditures.
Government Regulation
The Company is subject to various regulations relating to
the maintenance of safe working conditions and manufacturing
practices. In addition, certain of the products manufactured by
the Health Products Division are subject to the requirements of
the Food and Drug Administration with respect to environmentally
controlled facilities. Management believes that it is
currently in compliance with all such regulations.
Employees
The Company had 847 employees as of December 31, 1994.
Item 2. Properties.
The Company's principal physical properties are listed
below:
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Approximate
Square
Name Location Footage Use
Alba Valdese, NC 157,000 Knitting, Yarn
Processing &
Finishing
Knitting Valdese, NC 18,000 Knitting (intimate apparel)
John Louis Valdese, NC 178,300 Finishing
Pineburr Valdese, NC 81,000 Knitting (hosiery & health
care products)
Mainstreet Valdese, NC 69,000 Finishing
Office Valdese, NC 52,000 Corporate
headquarters
Offices New York City 2,488 Sales Offices
AWI Retail Branson, MO 1,760 Retail Store
All plants are of brick and steel construction, and most
areas have been air conditioned. All have been maintained in
working condition. The Company leases its New York City office
and its Branson, MO retail store. The rest of the Company's physical
properties are held in fee simple, subject to encumbrances that
are described in Note 4 of Notes to Consolidated Financial
Statements in the Company's 1994 Annual Report to
Shareholders, which information is incorporated herein by
reference.
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Item 3. Legal Proceedings.
There are no material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the Company or any of its subsidiaries is a party or
which any of its properties is subject.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The information called for by this item appears beneath the
heading "Stock Prices and Dividend Information" in the
Company's 1994 Annual Report to Shareholders, which information
is incorporated herein by reference. The Company's $2.50 par
value Common Stock is registered and traded on the American
Stock Exchange under the symbol "AWS". The Board of Directors
has no formal policy with respect to the payment of dividends
and no such dividends have been declared or paid during the past
three fiscal years.
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Item 6. Selected Financial Data.
The information called for by this item appears beneath the
heading "Five-Year Selected Financial Data" in the Company's
1994 Annual Report to Shareholders , which information is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Conditions and Operations
The information called for by this item appears beneath the
heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's 1994
Annual Report to Shareholders, which information is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information called for by this item appears in the
Company's 1994 Annual Report to Shareholders, which
information is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
The information regarding Directors called for by this item
appears beneath the heading "Information about Directors and
Nominees for Director" in the Company's Proxy Statement for
the 1995 Annual Meeting of Shareholders, which information is
incorporated herein by reference. Such Proxy Statement will be
filed with the Securities and Exchange Commission not later than
120 days after the Company's fiscal year end.
Executive Officers
The following table sets forth certain information about
the Company's executive officers:
Name Position with "the Company"
Thomas F. Schuster 52 President and Chief Executive
Officer
Donald R. Denne 57 Senior Vice President and President
of the Health Products Division
Thomas I. Nail 47 Treasurer, Secretary and Chief
Financial Officer
Robert F. Fumento 48 Vice President and President of
the Consumer Products Division
James Douglas Dickson 38 Assistant Secretary
Warren R. Nesbit 42 Vice President
Charles D. Poteat 51 Vice President
The following paragraphs set forth information concerning
each executive officer's business experience:
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Mr. Thomas F. Schuster has been President and Chief
Executive Officer of the Company since August, 1992 and served
as Executive Vice President and Chief Operating Officer from
February, 1992 to August 1992. Prior to joining the Company,
he was an Independent Consultant from 1989 until 1992, President
of US Operations for a division of Coats Viyella (British
Corporation) from 1987 through 1989, and President and CEO of
The Great American Knitting Mills Division of Cluett Peabody,
1983 - 1986. Prior to this Mr. Schuster held an equity
position with Hartmann Luggage Company, and progressively more
responsible marketing positions with various large organizations. Mr.
Schuster holds a B. A. degree from Tufts University and an
M.B.A. from Harvard Business School.
Mr. Donald R. Denne joined the Company in 1987 as a
Corporate Vice President and President of the Health Products
Division. Prior to joining the Company, Mr. Denne served as
Vice President of Marketing for General Medical Corporation,
Vice President of Health Products for Work Wear Corporation, and
Vice President for Business Planning for American Hospital
Supply.
Mr. Thomas I. Nail joined the Company as Chief Financial
Officer in March of 1994. He was elected as Secretary and
Treasurer of the Corporation in May of 1994. Prior to joining
the Company, Mr. Nail served as Vice President of Finance and as
a member of the Board of Directors of Burke Mills, Inc. for
approximately six years. Mr. Nail served as Controller of
Intercomp Wire and Cable, a subsidiary of Insilco, Inc. from
1985 to 1987. Mr. Nail has a degree in Business from Auburn
University.
Mr. Robert F. Fumento was elected Vice President of the
Company and President of the Consumer Division in August ,
1992. Prior to joining the Company, Mr. Fumento served as
President of No-Nonsense Division of Exquisite Form. From 1984
until 1989, Mr. Fumento served as Vice President, General
Manager for the Apparel Division of Totes, Inc. Prior to this
he served in various marketing and sales management positions
following the receipt of his B.B.A. from Villanova University in
1968.
Mr. James Douglas Dickson joined the Company in 1994 as
Corporate Controller. He was elected Assistant Secretary on
December 15, 1994. Prior to joining the Company, Mr. Dickson
served as Controller of Hickorycraft, Inc., a division of Masco
Corporation from 1987 to 1994 and as Division Controller of
Sealed Air Corporation from 1982 to 1987. Mr. Dickson holds a
B.B.A. from the University of Georgia and is a Certified
Management Accountant.
Mr. Warren Nesbit joined the Company in December, 1985 as
Director of Human Resources. He was named Vice President of
Human Resources in 1990 and elected to serve as a Corporate
Vice President in 1993. Mr. Nesbit served as Vice President of
Industrial Relations with Marion Manufacturing, in Marion, North
Carolina prior to joining the Company. He held various
Manufacturing and human resource responsibilities with
Burlington Industries from 1978 to 1984. Mr. Nesbit is a
graduate of the University of North Carolina.
Mr. Charles D. Poteat joined the Company in June, 1993 as
Vice President of Operations. He was elected to the additional
position of Corporate Vice President in December, 1993. From
February, 1992 until June 1993, Mr. Poteat was Senior Vice
President, Manufacturing , Cooper, Inc. and from 1977 to 1989,
Vice President, Manufacturing of Kayser-Roth Hosiery, Inc. Mr.
Poteat is a graduate of the University of North Carolina.
The Company's officers are elected for a one year term at
the annual meeting of the Board of Directors.
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Item 11. Executive Compensation.
The information called for by this item appears under the
heading "Executive Compensation" in the definitive Proxy
Statement for the Company's 1995 Annual Meeting of
Shareholders, which information is incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information called for by this item appears under the
heading "Voting Securities and Principal Security Holders" in
the Company's Proxy Statement for the 1995 Annual Meeting of
Shareholders, which information is incorporated herein by
reference.
Item 13. Certain Relationships and Transactions.
The information called for by this item appears under
the heading "Information About Directors and Nominees for
Directors" in the definitive Proxy Statement for the Company's
1995 Annual Meeting of Shareholders, which information is
incorporated by reference.
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) The following are filed as a part of this report:
(1) Financial statements filed:
(i) The following consolidated financial statements of the
Company and its subsidiaries included in the
Company's 1994 Annual Report are incorporated
herein by reference to the Annual Report as indicated
Consolidated Balance Sheets - December 31, 1994 and
1993.
Consolidated Statements of Income - Years ended
December 31, 1994, 1993, and 1992.
Consolidated Statements of Stockholders' Equity- Years
ended December 31, 1994, 1993, and 1992.
Consolidated Statements of Cash Flows - Years ended
December 31, 1994, 1993, and 1992.
Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules filed:
Report of Independent Certified Public Accountants on
Financial Statement
Schedule (page S-1 of this report)
Schedule II (Valuation and Qualifying Accounts) (page S-2 of
this report)
All other schedules are omitted as the required information
is inapplicable or is present in the financial statements
or related notes thereto.
(3) Exhibits filed:
3.1 Certificates of Incorporation, as amended, which is
incorporated herein by reference to Exhibit 3.1 of the
Company's 1986 Annual Report on Form 10-K.
3.1.1 Amendment to Certificate of Incorporation adopted by
shareholders which is incorporated herein by reference
to Exhibit 3.1 of the Company's 1987 Annual Report on
Form 10-K.
3.2 Bylaws, which are incorporated herein by reference to
Exhibit 3.2 of the Company's 1986 Annual Report on form 10-K.
4.1 Specimen certificate of common stock, which is
incorporated herein by reference to Exhibit 4 of the Company's
Registration Statement on Form S-2 (No. 2-83186).
21
<PAGE>
4.2 Notes and Security Agreements (2) dated March 5, 1982 in
favor of Wachovia ($5,000,000 and $1,8000,000, respectively),
which are incorporated herein by reference to Exhibit 10.11 of
the Company's Registration Statement on Form S-2 (No. 2-83186).
and Brixton International Associates, which is incorporated
by reference to Exhibit 10-24 of the Company's
Registration Statement on Form S-2(No. 2-83186)
4.3 Undertaking of the Company to file exhibits pursuant to
Item 601 (b) (4)(iii)(A) of Regulation S-K, which is
incorporated herein by reference to Exhibit 28 of the
Company's 1986 Annual Report on Form 10-K.
10.5 Office Lease dated March 16, 1982 between the Company
and Empire State Building Company, which is incorporated by
reference to Exhibit 10.25 of the Company's Registration
Statement on Form S-2 (No. 2-83186)
* 10.6 Deferred Compensation Agreement between the Company and
William Schubert dated April 1, 1976, which is incorporated by
reference to Exhibit 10.30 of the Company's Registration
Statement on Form S-2(No. 2-83186).
*10.7 Deferred Compensation Agreement between the Company and
William D. Schubert dated December 18, 1984, which is
incorporated by reference to Exhibit 10.2 of the Company's
Annual Report on Form 10-K for the year ended December 31,
1984.
*10.8 1983 Key Employee Incentive Stock Option
Plan which is incorporated herein by reference to
Exhibit 10 of the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1983.
*10.9 Management Incentive Plan, which is incorporated herein by
reference to Exhibit 10.1 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1984.
*10.10 1989 Non-Qualified Deferred Compensation Plan, which is
incorporated herein by reference to Exhibit 10.10 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1988.
*10.11 1989 Management Incentive Plan which is incorporated herein
by reference to Exhibit 10.10 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1988.
*10.12 1992 Non-Qualified Stock Option Plan for Non-Employee Directors
which is incorporated herein by reference to Exhibit 10.12 of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
*10.13 1993 Long Term Performance Plan which is incorporated herein
by reference to Exhibit 10.13 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993.
13 1994 Annual Report to Shareholders
. 21 List of Subsidiaries of the Company
23.1 Consent of Independent Auditors, Deloitte & Touche LLP
23.2 Consent of Independent Certified Public Accountants, BDO
Seidman
27. Financial Data Schedule (filed in electronic format only).
This Schedule is furnished for the information of the
Commission and is not deemed to be "filed".
* Identifies compensation plans.
b. Reports on Form 8-K: No reports on Form 8-K were filed
during the last quarter of the year ended December 31, 1994.
22
<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.
ALBA-WALDENSIAN, INC.
Date : April 5, 1995 By /s/ Thomas F. Schuster
Thomas F. Schuster
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated
/s/ Paul H. Albritton, Jr. /s/William M. Cousins, Jr.
Paul H. Albritton, Director William M. Cousins, Jr. Director
April 5, 1995 April 5, 1995
/s/Clyde Wm. Engle /s/James M. Fawcett, Jr.
Clyde Wm. Engle, Director James M. Fawcett, Jr. , Director
April 5, 1995 April 5, 1995
/s/C. Alan Forbes /s/Thomas I. Nail
C. Alan Forbes, Director Thomas I, Nail
April 5, 1995 Treasurer and Secretary (Chief Financial
and Accounting Officer)
April 5, 1995
/s/Glenn J. Kennedy /s/Joseph C. Minio
Glenn J. Kennedy, Director Joseph C. Minio, Director
April 5, 1995 April 5, 1995
/s/Lee M. Mortenson
Lee N. Mortenson, Director
April 5, 1995
23
<PAGE>
ALBA-WALDENSIAN, INC.
INDEX TO EXHIBITS
Annual Report on Form 10-K Commission File No.
For the fiscal year ended December 31, 1994 1-6150
Exhibit Number Exhibit
13 1994 Annual Report to Shareholders
21 Subsidiaries of the Company as of December
31, 1994
23.1 Consent of Independent Auditors,
Deloitte & Touche LLP
23.2 Consent of Independent Certified Public
Accountants, BDO Seidman
27 Financial Data Schedule (filed in electronic
format only)
<PAGE>
ALBA-WALDENSIAN, INC.
1994 Annual Report
Net Sales
($ in Millions)
(Chart- Net Sales appears here
plot points are as followed)
1990 1991 1992 1993 1994
41.9 39.7 40.6 50.9 56.5
PROFITABLY GROWTH SALES
<PAGE>
FINANCIAL HIGHLIGHTS
Net Sales Gross Margin
($ in millions)
(Chart - Net Sales chart appears (Chart - Gross Margin chart appears
here plot points are as followed) here plot points are as followed)
1990 1991 1992 1993 1994 1990 1991 1992 1993 1994
41.9 39.7 40.6 50.9 56.5 21.1% 22.8% 25.1% 26.5% 25.2%
Earnings
($ in millions)
(Chart - Earnings chart appears
here plot points are as followed)
1990 1991 1992 1993 1994 Actual Net Income
1.4 1.4 1.6 1.7(1) 2.0 $984.478
Earnings Per Share Sales Per Employee
(Chart - Earnings Per Share Chart (Chart - Sales Per Emplyee Chart
appears here plot points are appears here plot points are
as followed) as followed)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 Actual Earnings 1990 1991 1992 1993 1994
0.77 0.77 0.86 0.91(2) 1.05 per Share 44,000 46,000 51,000 58,000 67,000
0.54
</TABLE>
(1) 1993 Proforma/actual shows net income and estimated and net income before
the two special charges to income in 1993.
(2) 1993 Proforma/actual shows actual earnings per share and estimated
earnings per share before the two special charges to earnings in 1993.
<PAGE>
CORPORATE
MISSION
PROFITABLY
GROW SALES (Photograph - of employee working) (Photograph - of employee working)
(Photograph - of employee working)
STRATEGY
HUSTLE !
OR GET OUT
OF THE WAY (Photograph - of employee working)
(Photograph - of employee working) (Photograph - of employee working
TACTICS
INNOVATE!
OR ABDICATE
(Page number appears in leaf) 1
<PAGE>
To Our Shareholders
1994 was a banner year for Alba-Waldensian, as the company continued to
fulfill its primary corporate mission of Profitably Growing Sales.
Total corporate sales grew 11.1% from $50,855,377 in 1993 to $56,506,566 in
1994. Net profits after taxes nearly doubled, increasing from $984,478 last year
to $1,945,876 in 1994 - an increase of 97.7%. We are pleased to note that sales
hit a record high, profits were the highest they've been in the past 11 years,
and productivity - as measured by sales per employee - rose nearly 16% to
$67,000.
As our business was profitably growing however, we faced a new challenge -
one of a labor shortage. Unemployment in Burke County fell to a record low and,
as a result, Alba suffered manpower shortages throughout the year. This not only
inhibited our ability to produce enough to ship all of our orders complete and
on time, but it also resulted in a significant amount of unbudgeted turnover-
related expenses - excessive overtime and training costs.
We are in the process of dealing with our labor shortage problems by
installing automated hosiery packaging equipment to free up additional personnel
and by increasing our use of outside contractors to sew and package product for
us.
On a division by division basis, Alba Health Products sales grew modestly
during the year while their profits increased by a dramatic 37%. This
increase in bottom line profits was due to a combination of improved gross
profit margins and a very tight reign on spending.
In December, the (Photograph - Thomas F. Schuster)
Health Products
Division acquired
the Pulsatile Anti
embolism System
Business from
Baxter, thereby
doubling their
business in vascu
lar care products.
The Alba Health
CareProducts
Division has long been associated with the P.A.S. business as a component
supplier and therefore understands the business and how to run it. In short, it
was exactly the kind of acquisition we've been looking for.
The Health Products Division is continuing to look for suitable
acquisitions as part of their strategy to accelerate the growth of their
profitable business segment through acquisition as well as internal growth.
The Consumer Products Division was hit the hardest by the on-going labor
shortages during the year. In spite of this, they grew their sales to record
levels and were solidly profitable throughout the year.
(Page number appears in leaf)2
<PAGE>
Alba Direct had another record year with their sales growing 37% and their
profits growing nearly 61%.
Our Byford Division suffered problems which became apparent in the first
quarter of the year as inventories got out of balance and their fall sweater
line proved to be very poorly designed. These problems were quickly addressed by
bringing Ralph Doernberg, Byford's previous CFO, back to run the division as
president. At the same time, Ms. Claudia Herzog joined the division as vice
president in charge of design and product development. The results of their
combined efforts are already being felt as inventories come into line and Ms.
Herzog's design expertise bears fruit with dramatically improved lines of both
socks and sweaters.
Helping us to accomplish our many goals is Thomas Nail, who joined Alba as
Chief Financial Officer in March, 1994, replacing Van Irwin who resigned. Tom
brought a wealth of varied experience to Alba and quickly proved himself to be a
valued member of our management group.
All in all, Alba-Waldensian did a good job in 1994 of coping with the many
growth-related problems that were inevitable. Alba is quickly going through the
transition from being a big, small company to a small, big company. Our primary
challenge as we go through this change is to cope with our growth and hold our
spending in line, particularly overhead-related spending.
We think we're uniquely positioned to meet these challenges because of the
backgrounds of the members of the top management group. Everyone started out in
a large corporate environment for their "basic training" and then moved on to
hold increasingly responsible positions with smaller companies. This means that
our management group is able to take the best things that they learned in big
companies and combine them with the sense of "get it done" so necessary in a
smaller company environment.
Our intent to keep things simple is reflected in our corporate credo:
CORPORATE MISSION: PROFITABLY GROW SALES;
STRATEGY: HUSTLE! OR GET OUT OF THE WAY;
TACTICS: INNOVATE! OR ABDICATE.
1994 was a tough year for all of Alba's people, primarily because our
continuing labor shortages forced everyone to work long, often tedious hours of
overtime. I'm happy to report that the Alba team responded in an absolutely
magnificent way and we once again thank each and every one of them for their
efforts throughout 1994.
(Signature - Thomas F. Schuster)
THOMAS F. SCHUSTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(Page number appears in leaf)3
Trademark TM
<PAGE>
(Logo - Albahealth)
1994 was a record year for Alba's Health Products Division. Sales growth was
limited to 2.2%, reflecting the affect in the market place of on-going confusion
and consolidation among health care providers. In spite of this minimal sales
growth however, profits grew by 37%, the result of increased gross profit
margins and tight controls on spending throughout the year.
Alba's Health Products are sold throughout the United States, Canada,
Australia, England, Germany, Sweden and Denmark under the company's Life-Span(R)
and ALBAhealthTM brands, as well as customer private label. During 1994,
distribution of Alba Health Products was significantly improved by adding 14 new
customers, all of whom are expected to show meaningful growth next year. This
expanded distribution is consistent with the division's goal of allowing all
health care providers access to our products through their distributor of
choice.
Alba Health Products are manufactured in the company's Valdese, North
Carolina facilities, taking advantage of Alba's advanced knitting technology and
expertise. These products include anti-embolism stockings, orthopedic
stockinette, knitted footwear, and a variety of specialty items. Additionally, a
line of specialty wound care dress-
ings are manufactured in Alba's clean room facilities which meet all Food
and Drug Administration requirements.
During the year, the (Photograph - socks)
division's safety footwear
lineof Terry-TreadsTM,
Fashion-Treads(R) and
Safe-T-TreadsTM grew its
sales and attained over a
40% market share. The
lines' broad range of
styles, sizes and colors
fits every customer need
and with fall prevention a primary safety concern of all health care
providers, the market for this product line continues to increase.
Day-TreadsTM are designed for short term wear by patients using same day
surgery facilities or outpatient facilities, a fast growing segment of the total
market. They provide the same safety features as the division's regular Treads
and are bulk packaged to further reduce unit cost, thus supporting the universal
goal of health care providers - to deliver lower cost care.
As a result of the division's continued high level of service, quality,
innovative new products and sales
(Page number appears in leaf)4
<PAGE>
and marketing support, our largest customer for Treads, Baxter Healthcare
Hospitex Division, recognized Alba as their 1994 Supplier of the Year.
The division's anti-embolism stockings had exceptional growth in Germany in
1994 as the European market rebounded from a soft prior year. Likewise, the new
cost effective Life-Span(R) line was well received by all US customers. The
division's Life-Span(R) stockings and other products including the
ALBAhealthTM brand of dressings were introduced to expanded distribution in
the United States, Canada and Puerto Rico during the year.
With 200 styles of sterile and bulk stockinette, the division's offering is
one of the largest in the industry and sales increased 5% in 1994. This growth
came from custom ORprocedure manufacturers, and the expanded group of
distributors.
Thedivision's Heel and Elbow pads, XX-Span(R)
dressing retainers, arm sleeves and other specialty products grew 4% in
1994.
Perhaps the most significant event to impact the division during the year
was the December 1st acquisition of the Pulsatile Anti-embolism System
(P.A.S.(R)) from Baxter Healthcare. This dynamic system for the treatment and
prevention of deep vein thrombosis nicely complements our anti-embolism
compression stocking business. It's a business we know and understand and in
fact have been involved with for a number of years. The net result will be that
our sales in the vascular care market will more than double in 1995 as a result
of this acquisition.
Continuing the division's growth through expanded distribution and further
acquisitions will continue to be our primary strategic thrust in 1995 and
beyond.
In summary, 1994 was a challenging but rewarding year for the division. The
on-going dialog on a new healthcare system continues to result in significant
consolidations within the industry. Healthcare providers and their product
suppliers are merging in an accelerated rate, thereby reducing the customer base
for medical product manufacturers. However, being positioned as
a provider of (Photograph - healthcare product)
relatively low
cost medical
consumable
products means
that our ulti
mate customer
base - the patient - will continue to grow in the years ahead and we remain
highly confident about the division's future.
(Page number appears in leaf)5
<PAGE>
The Consumer Products Division of Alba Waldensian manufactures and markets a
wide variety of knitted apparel products, primarily using state-of-the-art
computer controlled circular knitting machines. Product lines include intimate
apparel and sheer hosiery in regular size, queensize and maternity size,
marketed on a branded and private label basis.
(Photograph - Woman in intimate apparel)
Alba's distribution channels continued to move upscale during the year and
an increased emphasis on department store and specialty store distribution began
to pay off. Major new accounts such as Price Club, BJ's and Bon Ton stores were
added during 1994, resulting in incremental new volume for the company. Sales
in all segments of our business finished well ahead of prior year and standard
gross profit margin improved 13%, while spending as a percent of sales
was reduced by 33%.
(Photograph - Woman in intimate apparel)
By category, sales of intimate apparel increased 24.9% and our maternity
business increased by 12.2% over 1993. Although the sheer hosiery business was
difficult as consumer preference has continued shifting away from sheer hosiery
toward tights and trouser socks and competitors cut prices to prop up sagging
sales, this segment of our business finished 5.9% ahead. In total, the
division's sales increased over 16% for the year and were solidly profitable.
Private Label
In addition to our branded business, the private label segment has remained
a key component of the division's overall strategy. Private label intimate
apparel programs have been expanded in all classes of trade, including major
department store groups. The continued development of this portion of our
business is important, not only for the volume and profit it generates but also
for the business relationships that it helps us to develop.
(Page number appears in leaf)6
<PAGE>
New Products
New products are the life blood of our business and the division's
commitment to providing quality products that consumers demand and offering them
at value prices is foremost in our product development plans. 1994 saw the
introduction of many new and more profitable products.
During the year, the US Patent Office approved our patent application for
the division's seamless, stretch bra which is knit on circular knitting
equipment. This patent approval allows us to protect this revolutionary product
from competitive copy-cats. The process which is utilized to knit these bras has
further led to the development of tank tops and teddies, thereby significantly
broadening Alba's product assortment at retail. Currently, the R&D group is
refining control versions of these products which will be brought to market
early next year as the "second round".
Other
The division's Electronic Data Interchange (EDI) capabilities provide it
with a direct link to our major retail customers for efficiently and quickly
processing orders. Major retailers order on a daily basis rather than monthly,
which smoothes order and merchandise flow through our distribution center.
This requires however, that we have inventory readily available for each of
our major accounts. Emphasis has therefore been increased on improving
forecasting techniques to bring inventory down to minimum acceptable levels
while servicing customer needs. Further, as new products are introduced into the
line, it becomes increasingly important to plan the demise of older products
which have become tired and need replacing. New procedures have been implemented
to prevent the build-up of inventory on those products
which have (Photograph - Woman in intimate apparel)
been planned for
discontinuation.
Effectively han
dling this process
allows us to keep
our inventories
clean on an on
going basis.
(Page number appears in leaf)7
<PAGE>
(Logo - Byford)
Byford Apparel has now completed its second year as a division of Alba-
Waldensian and continues to make progress toward developing the department store
class of trade, while maintaining its rich and long heritage of specialty store-
based British tradition.
Byford recently cele (Photograph - Man trying on socks)
brated its 75th
anniversary and is
today a world-wide
brand. In the United
States, Byford prod
ucts were first intro
duced in 1923.
Byford designs and markets better men's socks and sweaters and focuses on three
separate target markets - department stores, better specialty stores, and the
fast emerging golf trade. Alternative markets, such as corporate premium sales
and catalogs, are also being successfully developed by the company.
Byford socks are sourced primarily from the D. Byford Mill in Leicester,
England, while their sweater sourcing is more broadly based with products coming
from the United Kingdom, the Far East and the United States.
Due to a variety of factors, it became apparent in the first quarter of the
year that Byford was developing problems in the areas of weak design and
unbalanced inventories. Therefore, two personnel changes were made. First,
Ralph M. Doernberg joined the division as president. Secondly, Claudia Herzog
joined as vice president in charge of product development and design. As the
year progressed, their influence began to be felt in terms of much improved
design in both the sock and sweater lines and inventories quickly coming under
control.
The new "Made in America" line of Byford socks, targeted at the department
store class of trade, was introduced in the first half of the year. Due to
quality and design issues, it met with only limited success and is currently
being totally redesigned and sourced for a relaunch during the latter part of
the first quarter of 1995. This line will continue to be popularly priced and
will compete for main-stream department store business. The division continues
to place a great deal of emphasis on this collection as a means of significantly
expanding its presence within the department store class of trade throughout the
United States.
Although there were some rocky times in the first part of 1994, the
Byford/Alba-Waldensian marriage is still considered to be a good one and the
corporation looks forward to a significantly improved results in 1995.
(Page number appears in leaf)8
<PAGE>
Alba Direct
Alba Direct is the telemarketing arm of AlbaWaldensian, selling both
consumer and medical specialty products to over 2400 independent retailers
throughout the country.
The division had a strong year and finished 1994 more than 37% ahead of
prior year with profits out-pacing sales gains. This dramatic growth in volume
reflects strong development of its export business, primarily to Japan, and the
addition of All Day Long(R) bras and panties to their product offerings.
Alba Direct's operating strategy is to provide its many independent retail
customers with exceptional service, including the shipping of orders within 48
hours of receipt.
(Photograph - Woman working at computer)
Alba Direct opened an outlet store in Branson, MO in late 1994 to test the
feasibility of selling Alba product direct to consumers. The Branson facility
will carry all of Alba's products including hosiery, bras, panties, teddies,
maternity products, and Byford socks and sweaters. This store gives us an entry
into one of the fastest growing retail channels.
Telemarketing has consistently proven to be a low cost, low investment,
high return method of achieving profitable new distribution and sales.
(Page number appears in leaf)9
<PAGE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................................................................................. $ 103,952 $ 960,516
Accounts receivable (net of allowance for uncollectible accounts of $180,000 in 1994 and $194,000 in
1993 (Note 3)...................................................................................... 7,426,654 7,197,978
Refundable income taxes (Note 7)..................................................................... 127,394 76,133
Notes receivable..................................................................................... 30,080 41,669
Inventories (Note 1)................................................................................. 17,264,180 14,148,626
Deferred income tax asset (Note 7)................................................................... 298,010 402,435
Prepaid expenses and other........................................................................... 151,236 133,788
Total current assets................................................................................. 25,401,506 22,961,145
PROPERTY AND EQUIPMENT (Notes 2, 3, and 4):
Land................................................................................................. 139,744 139,744
Buildings............................................................................................ 7,154,717 7,135,374
Machinery and equipment.............................................................................. 19,807,849 18,253,100
Total property and equipment......................................................................... 27,102,310 25,528,218
Less accumulated depreciation and amortization....................................................... (15,497,062) (14,054,565)
Net Property and equipment........................................................................... 11,605,248 11,473,653
OTHER ASSETS:
Notes receivable..................................................................................... 77,995 85,318
Trademarks and patents............................................................................... 324,654 368,230
Cash surrender value of life insurance (net of loans against policies of $101,591 in 1994 and
$143,164 in 1993).................................................................................. 320,325 335,422
Total other assets................................................................................... 722,974 788,970
Total assets......................................................................................... $ 37,729,728 $ 35,223,768
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and lines of credit (Note 3)................................................... $ 1,178,062 $ --
Current maturities of long-terms debt (Note 4)....................................................... 500,000 550,000
Current maturities of capital lease obligations (Note 2)............................................. 113,526 177,887
Accounts payable..................................................................................... 2,587,875 2,763,647
Accrued Expenses:
Payroll and profit-sharing......................................................................... 689,983 620,972
Property and payroll taxes......................................................................... 102,939 133,234
Group health claims -- estimated................................................................... 150,000 150,000
Other.............................................................................................. 213,060 272,269
Total current liabilities............................................................................ 5,535,445 4,668,009
LONG-TERM DEBT (Note 4).............................................................................. 1,000,000 1,500,000
CAPITAL LEASE OBLIGATIONS (Note 2)................................................................... 58,069 277,087
DEFERRED COMPENSATION................................................................................ 344,391 450,365
DEFERRED INCOME TAX LIABILITY (Note 7)............................................................... 1,698,369 1,347,794
Total liabilities.................................................................................... 8,636,274 8,243,255
Commitments (Notes 2, 3, 4, 5, 8 and 10)............................................................. -- --
STOCKHOLDERS' EQUITY (Notes 3 and 5):
Common stock -- authorized 3,000,000 shares, $2.50 par value; issued: 1,886,580 shares in 1994 and
1993; outstanding: 1,863,153 and 1,838,528 shares in 1994 and 1993, respectively................... 4,716,450 4,716,450
Additional paid-in capital........................................................................... 9,182,158 9,182,158
Retained earnings.................................................................................... 15,361,763 13,426,272
Total................................................................................................ 29,260,371 27,324,880
Less treasury stock -- at cost (23,427 and 48,052 shares in 1994 and 1993, respectively)............. (166,917) (344,367)
Total stockholders' equity........................................................................... 29,093,454 26,980,513
Total liabilities and stockholders' equity........................................................... $ 37,729,728 $ 35,223,768
</TABLE>
SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
(Page number appears in a leaf)10
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
NET SALES (Note 6)...................................................................... $56,506,566 $50,855,377 $40,567,425
COST OF SALES........................................................................... 42,252,186 37,376,874 30,380,066
GROSS MARGIN............................................................................ 14,254,380 13,478,503 10,187,359
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 9)................................... 11,007,734 11,594,258 8,136,491
OPERATING INCOME........................................................................ 3,246,646 1,884,245 2,050,868
OTHER INCOME (EXPENSE):
Interest expense........................................................................ (274,739) (247,821) (235,480)
Interest income......................................................................... 57,863 65,380 155,903
Gain on sale of property and equipment.................................................. 27,992 83,598 11,138
Cost associated with unconsummated acquisition.......................................... -- (428,652) --
Other................................................................................... 91,781 78,353 85,929
Total other income (expense), net....................................................... (97,103) (449,142) 17,490
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE........................................................ 3,149,543 1,435,103 2,068,358
PROVISION FOR INCOME TAXES (Note 7)..................................................... 1,203,667 450,625 726,838
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE....................... 1,945,876 984,478 1,341,520
CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN ACCOUNTING FOR INCOME TAXES (Note 7)...... -- -- 226,245
NET INCOME.............................................................................. $ 1,945,876 $ 984,478 $ 1,567,765
INCOME PER COMMON SHARE DATA:
Income before cumulative effect of change in accounting principle....................... $ 1.05 $ .54 $ .74
Cumulative effect on prior years of change in accounting for
income taxes.......................................................................... -- -- .12
NET INCOME PER COMMON SHARE............................................................. $ 1.05 $ .54 $ .86
</TABLE>
SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY STOCK
SHARES* AMOUNT CAPITAL EARNINGS SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1992........................ 1,886,580 $4,716,450 $9,182,158 $10,994,430 (68,302) $(604,175)
Net income........................................ 1,567,765
Exercise of stock options......................... (34,150) 5,000 64,150
BALANCE AT DECEMBER 31, 1992...................... 1,886,580 4,716,450 9,182,158 12,528,045 (63,302) (540,025)
Net income........................................ 984,478
Exercise of stock options......................... (86,251) 15,250 195,658
BALANCE AT DECEMBER 31, 1993...................... 1,886,580 4,716,450 9,182,158 13,426,272 (48,052) (344,367)
Net income........................................ 1,945,876
Exercise of stock options......................... (10,385) 24,625 177,450
BALANCE AT DECEMBER 31, 1994...................... 1,886,580 $4,716,450 $9,182,158 $15,361,763 (23,427) $(166,917)
<CAPTION>
TOTAL
<S> <C>
BALANCE AT JANUARY 1, 1992........................ $24,288,863
Net income........................................ 1,567,765
Exercise of stock options......................... 30,000
BALANCE AT DECEMBER 31, 1992...................... 25,886,628
Net income........................................ 984,478
Exercise of stock options......................... 109,407
BALANCE AT DECEMBER 31, 1993...................... 26,980,513
Net income........................................ 1,945,876
Exercise of stock options......................... 167,065
BALANCE AT DECEMBER 31, 1994...................... $29,093,454
</TABLE>
*DENOTES SHARES ISSUED.
SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
(Page number appears in a leaf)11
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................................................... $ 1,945,876 $ 984,478
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization.......................................................... 1,736,576 1,731,808
Provision for bad debts................................................................ 74,933 654,205
Gain on sale of property and equipment................................................. (27,992) (83,598)
Increase in deferred income taxes...................................................... 455,000 221,762
Provision for inventory obsolescence................................................... 579,997 434,000
Cumulative effect of change in accounting principle.................................... -- --
Changes in operating assets and liabilities providing (using) cash:
Accounts receivable................................................................. (303,611) (3,084,953)
Refundable income taxes............................................................. (51,260) 45,118
Inventories......................................................................... (3,695,551) (3,819,867)
Prepaid expenses and other.......................................................... (14,967) 146,003
Accounts payable.................................................................... (175,772) 1,752,881
Accrued and other liabilities....................................................... (21,088) 255,816
Deferred compensation............................................................... (105,974) (106,768)
Net cash provided by (used in) operating activities...................................... 396,167 (869,115)
INVESTING ACTIVITIES:
Capital expenditures..................................................................... (1,918,638) (1,719,170)
Proceeds from sale of property, plant and equipment...................................... 4,250 24,505
Proceeds from notes receivable........................................................... 31,530 232,276
Loans made............................................................................... -- --
Net cash used in investing activities.................................................... (1,882,858) (1,462,389)
FINANCING ACTIVITIES:
Proceeds from borrowings under line of credit agreement.................................. 1,178,062 --
Proceeds from issuance of long-term debt................................................. -- 4,000,000
Principal payments on long-term debt and leases.......................................... (715,000) (2,366,683)
Cash proceeds from exercise of stock options............................................. 167,065 75,000
Net cash provided by (used in) financing activities...................................... 630,127 1,708,317
NET INCREASE (DECREASE) IN CASH.......................................................... (856,564) (623,187)
CASH AT BEGINNING OF YEAR................................................................ 960,516 1,583,703
CASH AT END OF YEAR...................................................................... $ 103,952 $ 960,516
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -- Cash paid during
the year for:
Interest............................................................................... $ 259,222 $ 249,499
Income taxes........................................................................... $ 801,917 $ 327,139
<CAPTION>
1992
<S> <C>
OPERATING ACTIVITIES:
Net income............................................................................... $ 1,567,765
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization.......................................................... 1,679,237
Provision for bad debts................................................................ 55,122
Gain on sale of property and equipment................................................. (11,138)
Increase in deferred income taxes...................................................... 311,017
Provision for inventory obsolescence................................................... 76,000
Cumulative effect of change in accounting principle.................................... (226,245)
Changes in operating assets and liabilities providing (using) cash:
Accounts receivable................................................................. (46,045)
Refundable income taxes............................................................. 5,449
Inventories......................................................................... (501,322)
Prepaid expenses and other.......................................................... (218,221)
Accounts payable.................................................................... 56,314
Accrued and other liabilities....................................................... (525,962)
Deferred compensation............................................................... (88,364)
Net cash provided by (used in) operating activities...................................... 2,133,607
INVESTING ACTIVITIES:
Capital expenditures..................................................................... (1,326,091)
Proceeds from sale of property, plant and equipment...................................... 108,500
Proceeds from notes receivable........................................................... 29,258
Loans made............................................................................... (20,000)
Net cash used in investing activities.................................................... (1,208,333)
FINANCING ACTIVITIES:
Proceeds from borrowings under line of credit agreement.................................. --
Proceeds from issuance of long-term debt................................................. --
Principal payments on long-term debt and leases.......................................... (921,409)
Cash proceeds from exercise of stock options............................................. 30,000
Net cash provided by (used in) financing activities...................................... (891,409)
NET INCREASE (DECREASE) IN CASH.......................................................... 33,865
CASH AT BEGINNING OF YEAR................................................................ 1,549,838
CASH AT END OF YEAR...................................................................... $ 1,583,703
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -- Cash paid during
the year for:
Interest............................................................................... $ 240,794
Income taxes........................................................................... $ 410,272
</TABLE>
SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
(Page number appears in a leaf)12
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
OPERATIONS -- Alba-Waldensian, Inc. (the Company) manufactures and sells an
extensive line of knitted apparel products as well as a variety of surgical
products for the health care industry.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Pilot Research Corp.,
Alba-Waldensian Export Corp., and AWI Retail, Inc. All significant intercompany
accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS -- The Company considers short-term investments with
original maturities of less than three months to be equivalent to cash.
INVENTORIES -- Inventories are stated at the lower of cost (first-in, first-out
"FIFO" basis) or market.
PROPERTY AND DEPRECIATION AND AMORTIZATION -- Property and equipment are stated
at cost. Betterments are capitalized. Maintenance and repairs are expensed as
incurred.
The provision for depreciation is primarily based on the straight-line method
calculated to extinguish the costs of the respective assets over their estimated
useful lives which range from seven to forty years for buildings and
improvements and three to twenty years for furniture, fixtures, machinery and
equipment.
Assets under capital leases are amortized in accordance with the Company's
normal depreciation policy for owned assets or over the lease term if shorter.
INTANGIBLE ASSETS -- The costs of acquired trademarks and patents are amortized
using the straight-line method over their estimated useful lives of
approximately seventeen years.
REVENUE RECOGNITION -- The Company recognizes revenue when goods are shipped.
RESEARCH AND DEVELOPMENT -- The Company sponsores research and development
projects through its research and development department and its wholly owned
subsidiary, Pilot Research Corporation. Expenditures for research and
development are expensed as incurred. The Company spent approximately $376,000,
$341,000 and $187,000 for research and development in 1994, 1993 and 1992,
respectively.
INCOME TAXES -- The Company adopted prospectively Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) in 1992,
which required a change from the deferred method to the asset and liability
method of accounting for income taxes. Under the asset and liability method,
deferred income taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities.
CONCENTRATION OF CREDIT RISK -- Financial instruments which potentially subject
the Company to concentrations of credit risk consist of trade receivables. Any
such risk is limited due to the Company's large number of customers and their
geographic dispersion, except as discussed in Note 6.
NET INCOME PER COMMON SHARE -- Net income per common share is calculated on the
weighted average number of shares of common stock outstanding (1,848,671 in
1994, 1,826,190 in 1993 and 1,818,949 in 1992). When dilutive, outstanding
options to purchase common stock are considered. The effect on earnings per
share of dilutive stock options was not material.
DEFERRED COMPENSATION -- The Company has agreements with several of its officers
providing for the deferral of a portion of their annual compensation until their
retirement from the Company. The agreements allow for payment of the deferred
amounts over a ten-year period beginning on the retirement date. Compensation
expense is being recognized over the period of active employment. The liability
represents the present value of future payments as of December 31, 1994 and
1993
(Page number appears in a leaf)13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
GROUP HEALTH INSURANCE -- The Company is self-insured as to group health
insurance for its employees. The Company accrues an amount for estimated claims
incurred but not reported.
PROFIT-SHARING PLAN -- The Company sponsors a profit-sharing plan which covers
substantially all employees. Contributions to the plan are funded annually.
RECLASSIFICATION -- Certain 1993 and 1992 amounts have been reclassified to
conform with 1994 classifications.
1. INVENTORIES
Inventories at December 31, 1994 and 1993 include:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Materials and supplies............. $ 3,377,562 $ 2,548,836
Work-in-process.................... 5,945,246 5,870,073
Finished goods..................... 7,941,372 5,729,717
Total.............................. $17,264,180 $14,148,626
</TABLE>
During 1994, the Company recorded allowances for inventory obsolescence of
approximately $580,000 related to the writedown of close-out and obsolete raw
material and finished goods. In addition, the Company acquired $2,040,000 in
inventory from Baxter Healthcare on December 1, 1994 that was financed by
short-term borrowings (See Note 3).
2. LEASES
The Company leases certain computer equipment under capital leases. Such
equipment is included in property and equipment as of December 31, 1994 and 1993
and is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Machinery and equipment.................... $549,039 $847,757
Less accumulated amortization.............. 375,912 453,180
Net equipment under capital leases......... $173,127 $394,577
</TABLE>
The future minimum lease payments under capital and other equipment operating
leases having initial or remaining noncancellable lease terms in excess of one
year are summarized as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR LEASES LEASES
<S> <C> <C>
1995....................................... $195,887 $133,706
1996....................................... 134,776 60,413
1997....................................... 116,033 --
1998....................................... 36,991 --
1999....................................... 24,851 --
Total minimum lease payments............... $508,538 194,119
Less amount representing interest.......... 25,524
Present value of net minimum lease
payments.................................. 171,595
Less current maturities of capital lease
obligations............................... 113,526
Noncurrent maturities of capital lease
obligations............................... $ 58,069
</TABLE>
Total rental expense for all operating leases was $240,846 in 1994, $232,347 in
1993 and $191,554 in 1992.
3. SHORT-TERM BORROWINGS AND LINES OF CREDIT
The Company has an agreement with a bank which provides a seasonal line of
credit of up to $3,000,000 (of which $1,821,938 was unused at December 31, 1994)
with interest at the bank's prime rate. Indebtedness under this agreement is
collateralized by equipment and accounts receivable. The Company also has
established a $1,000,000 line of credit to support the issuance of import
letters of credit which matured December 31, 1994. The loan agreements contain
covenants, the most restrictive of which state that dividends will not exceed
net income less debt service payments and that fixed asset additions will not
exceed $2,500,000 per year.
(Page number appears in a leaf)14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
The following relates to aggregate short-term borrowings in 1994, 1993 and 1992:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Amount outstanding at December
31............................ $1,178,062 -- --
Maximum amount outstanding at
any month end................. $1,178,062 $2,150,000 $400,000
Average amount outstanding
(based on weighted daily
average balances)............. 59,326 $ 733,836 $ 55,972
Weighted average interest rate
during the year............... 6.98% 6.08% 6.40%
Weighted average interest rate
at December 31................ 7.00% -- --
</TABLE>
The weighted average interest rate during the year was computed by dividing
total short-term interest expense for the year by the weighted average amount
outstanding during the year.
4. LONG-TERM DEBT
Long-term debt at December 31, 1994 and 1993 is comprised of the following:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Equipment Term Loan, due $125,000
quarterly through December 31, 1997 plus
interest at 6.30%....................... $1,500,000 $2,000,000
Industrial Revenue Bond, paid February 1,
1994, plus interest at 66% of quoted
prime rate (6.00% at December 31,
1993)................................... -- 50,000
Total.................................... 1,500,000 2,050,000
Less current maturities.................. 500,000 550,000
Long-term debt........................... $1,000,000 $1,500,000
</TABLE>
A substantial portion of the Company's property and equipment is pledged as
collateral for the long-term debt.
Maturities of long-term debt, exclusive of capital lease obligations, over the
next three years are as follows:
<TABLE>
<S> <C>
YEAR
1995................................................ $ 500,000
1996................................................ 500,000
1997................................................ 500,000
Total............................................... $1,500,000
</TABLE>
5. COMMON STOCK AND EMPLOYEE INCENTIVE PLANS
In June, 1993, the Company adopted the 1993 Long Term Performance Plan (the 1993
Plan), which includes both qualified and nonqualified option provisions and
stock appreciation rights and restricted, performance and other stock-based
awards. Under the 1993 Plan, the Compensation Committee of the Board of
Directors is authorized to grant stock awards to purchase up to 250,000 shares
of the Company's common stock at prices equal to the fair value of the stock on
the dates of grant. The 1993 Plan replaced the 1983 Employee Stock Option Plan
(the 1983 Plan), which provided for the granting of 100,000 shares of the
Company's stock.
The 1993 Plan options are exercisable over a period determined by the
Compensation Committee at the date of grant, beginning five months after the
date of grant. The 1983 Plan qualified and nonqualified options are exercisable
at the rate of 25% per year, beginning one year from the date of grant. At
December 31, 1994, options to purchase 33,000 shares were exercisable.
The Company has adopted the 1992 Nonqualified Stock Option Plan for Nonemployee
Directors (the 1992 Plan). Under the 1992 Plan, each nonemployee director was
granted options to purchase 2,000 shares of the Company's common stock at prices
equal to the fair value of the stock on the dates of grant. Options to purchase
an aggregate of 16,000 shares were granted December 14, 1993 and are exercisable
any time after the grant date and before the expiration date (December 14,
1998).
(Page number appears in a leaf)15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Transactions involving the Plans are summarized as follows:
<TABLE>
<CAPTION>
OPTION SHARES QUALIFIED NONQUALIFIED
<S> <C> <C>
Outstanding at
January 1, 1992.................. 69,000 25,000
Granted........................... 36,000 15,000
Exercised......................... (5,000) --
Expired and/or cancelled.......... (25,000) (15,000)
Outstanding at
December 31, 1992................ 75,000 25,000
Granted........................... 37,500 16,000
Exercised......................... (15,250) --
Outstanding at
December 31, 1993................ 97,250 41,000
Granted........................... 50,000 --
Exercised......................... (20,250) (4,375)
Expired and/or cancelled.......... (18,500) (625)
Outstanding at
December 31, 1994................ 108,500 36,000
OPTION PRICES PER SHARE:
1992
Granted........................... $ 7.25-$8.25 $7.625
Exercised......................... $ 6.125 --
Expired and/or cancelled.......... $ 6.00-$9.125 $7.50-$7.625
1993
Granted........................... $ 8.625-$10.00 $7.94
Exercised......................... $ 6.125-$7.625 --
1994
Granted........................... $10.625-$11.250 --
Exercised......................... $ 6.125-$7.625 $6.50-$7.62
Expired and/or cancelled.......... $ 6.125-$8.625 --
</TABLE>
6. MAJOR CUSTOMERS
The Company's single line of business is considered to be the manufacture,
processing and sale of knitted products. Sales to Baxter Healthcare Corporation
(representing 10% or more of net sales) totaled $12,902,722, $13,610,937,
$11,074,280 in 1994, 1993 and 1992, respectively.
7. INCOME TAXES
In prior years, the Company was subject to alternative minimum tax. These
amounts are allowed as credits against regular income tax in future years when
the regular tax expense exceeds the alternative minimum tax expense. During
1994, the Company utilized approximately $117,000 of these alternative minimum
tax credits to reduce income taxes. In addition, general business tax credits
totaling approximately $182,000 were also used to reduce 1994 federal income
taxes.
Approximately $24,000 of available alternative minimum tax credit carryovers
were not utilized in 1994 and are available to offset future federal income
taxes.
Components of the income tax provision for 1994, 1993 and 1992 included:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current:
Federal......................... $ 632,667 $210,968 $415,821
State........................... 116,000 17,895 --
Total current.................... 748,667 228,863 415,821
Deferred:
Federal......................... 438,000 196,513 226,982
State........................... 17,000 25,249 84,035
Total deferred................... 455,000 221,762 311,017
Total provision for income
taxes........................... $1,203,667 $450,625 $726,838
</TABLE>
The approximate tax effect of each type of temporary difference and carryforward
that gave rise to the Company's deferred income tax assets and liabilities for
1994 and 1993 under SFAS 109 are as follows:
<TABLE>
<CAPTION>
1994 ASSETS LIABILITIES TOTAL
<S> <C> <C> <C>
Current:
Receivables................ $ 49,766 $ -- $ 49,766
Inventories................ 249,563 -- 249,563
Prepaid expenses........... -- (1,459) (1,459)
Vacation pay............... 140 -- 140
Total current............... 299,469 (1,459) 298,010
Noncurrent:
Property................... -- (1,922,664) (1,922,664)
Deferred compensation...... 164,833 -- 164,833
Insurance reserve.......... 54,900 -- 54,900
Deferred revenue........... -- (19,352) (19,352)
Alternative minimum tax
credit carryforward....... 23,914 -- 23,914
Total noncurrent............ 243,647 (1,942,016) (1,698,369)
Total current and
noncurrent................. $543,116 $(1,943,475) $(1,400,359)
</TABLE>
(Page number appears in a leaf)16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1993 ASSETS LIABILITIES TOTAL
<S> <C> <C> <C>
Current:
Receivables................ $ 55,004 $ -- $ 55,004
Inventories................ 180,656 -- 180,656
Prepaid expenses........... -- (15,587) (15,587)
Vacation pay............... 466 -- 466
General business credit
carryforward.............. 181,896 -- 181,896
Total current............... 418,022 (15,587) 402,435
Noncurrent:
Property................... -- (1,883,366) (1,883,366)
Deferred costs............. 157,015 -- 157,015
Deferred compensation...... 204,078 -- 204,078
Insurance reserve.......... 54,945 -- 54,945
Deferred revenue........... -- (21,380) (21,380)
Alternative minimum tax
credit carryforward....... 140,914 -- 140,914
Total noncurrent............ 556,952 (1,904,746) (1,347,794)
Total current and
noncurrent................. $974,974 $(1,920,333) $ (945,359)
</TABLE>
The Company has not provided valuation allowances for the deferred tax assets as
no conditions exist that require such allowances.
The income tax provision differs from the amount computed by applying the
federal statutory income tax rate of 34% to pre-tax income. The computed amount
is reconciled to total income tax expense as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Federal income tax at
statutory rate................. $1,070,845 $487,935 $ 703,242
State income taxes, net of
federal benefit................ 87,780 28,475 55,463
Restoration of general business
credits due to IRS
settlement..................... -- (51,751) (101,970)
Prior year income tax associated
with IRS settlement and
adjustments.................... -- -- 64,575
Change, net of premiums paid and
proceeds, in officers' life
insurance values............... (6,323) (4,149) (6,916)
Expenses which are not
deductible for income
tax purposes................... 22,923 13,323 12,444
All other....................... 28,442 (23,208) --
Total provision for
income taxes................... $1,203,667 $450,625 $ 726,838
</TABLE>
8. EMPLOYEE BENEFITS
The Company has an employee salary deferral plan covering substantially all
employees which allows participants to defer from 2% to 10% of their salaries
with the Company contributing 40% of the participant's contribution.
Contribution expense related to this plan for the years ended December 31, 1994,
1993 and 1992 was $171,030, $156,277,and $126,531, respectively.
9. SUPPLEMENTARY INCOME STATEMENT DATA
Reportable expenses in excess of 1% of operating revenues are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Royalties..................... $369,284 $ 600,320 $ 264,801
Advertising and
promotions................... $522,156 725,514 529,453
</TABLE>
10. SUBSEQUENT EVENT
On March 6, 1995, the Company purchased the Balfour Health Care Division and
manufacturing facility in Rockwood, Tennessee from Kayser-Roth Corporation for
approximately $14.5 million, subject to post-closing adjustments. It is
anticipated that, the acquisition of Balfour will add approximately $15 million
in annual sales to the Company. The company financed 100% of the acquisition
price with a revolving loan agreement provided by a major bank.
The acquisition will be accounted for using the purchase method of accounting.
The excess of the purchase price over the estimated fair value of the net assets
acquired (goodwill) of $8.721 million will be amortized on a straight line basis
over its estimated life. The purchase price allocation is based on preliminary
estimates of the fair value of the net assets acquired and is subject to
adjustment.
(Page number appears in a leaf)17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Alba-Waldensian, Inc.
Valdese, North Carolina
We have audited the accompanying consolidated balance sheet of
Alba-Waldensian, Inc. and subsidiaries as of December 31, 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Alba-Waldensian, Inc. and subsidiaries at December 31, 1994, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
BDO SEIDMAN
Greensboro, North Carolina
February 8, 1995, except for Note 10
which is as of March 6, 1995
(Page number appears in a leaf)18
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Alba-Waldensian, Inc.
Valdese, North Carolina
We have audited the accompanying consolidated balance sheet of
Alba-Waldensian, Inc. and subsidiaries as of December 31, 1993, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the two years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Alba-Waldensian, Inc. and
subsidiaries as of December 31, 1993, and the results of their operations and
their cash flows for each of the two years in the period ended December 31, 1993
in conformity with generally accepted accounting principles.
As discussed in Notes 1 and 8 to the consolidated financial statements, in
1992 the Company changed its method of accounting for income taxes effective
January 1, 1992 to conform with Statement of Financial Accounting Standards No.
109.
DELOITTE & TOUCHE LLP
Hickory, NC
February 11, 1994
(Page number appears in a leaf)19
<PAGE>
STOCK PRICES AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
SALES PRICE OF COMMON SHARES SALES PRICE OF COMMON SHARES
HIGH 1994 LOW HIGH 1993 LOW
<S> <C> <C> <C> <C>
First Quarter......................... 11 3/4 9 7/8 10 7 3/4
Second Quarter........................ 12 1/8 9 3/4 10 5/8 8 3/8
Third Quarter......................... 12 1/8 10 5/8 10 1/4 8 1/2
Fourth Quarter........................ 11 3/8 10 1/2 10 7/8 8 1/2
<CAPTION>
DIVIDENDS PER SHARE
<S> <C> <C> <C>
First Quarter......................... $ -- $ --
Second Quarter........................ $ -- $ --
Third Quarter......................... $ -- $ --
Fourth Quarter........................ $ -- $ --
</TABLE>
SEE NOTE 3 TO THE CONSOLIDATED FINANCIAL STATEMENTS CONCERNING RESTRICTIONS ON
THE PAYMENT OF DIVIDENDS.
CLASSES OF PRODUCTS
<TABLE>
<CAPTION>
YEARS WOMEN'S WOMEN'S MEN'S
ENDED HOSIERY INTIMATE HOSIERY HEALTH
DECEMBER 31, PRODUCTS PRODUCTS PRODUCTS MEN'S WEAR PRODUCTS
<S> <C> <C> <C> <C> <C>
1990 19.0% 44.3% 9.7% -- 27.0%
1991 15.7% 48.6% 1.2% -- 34.5%
1992 19.1% 43.8% 1.0% -- 36.1%
1993 19.2% 37.4% 7.3% 5.5% 30.6%
1994 17.4% 40.2% 7.9% 4.3% 30.2%
</TABLE>
NOTE: AMOUNTS REPRESENT PERCENTAGES OF ANNUAL NET SALES.
FIVE-YEAR SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
IN THOUSANDS EXCEPT FOR PER SHARE AMOUNT
1994 1993 1992 1991
<S> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Net sales...................................................................... $56,506 $50,855 $40,567 $39,728
Gross margin................................................................... 14,254 13,479 10,187 9,072
Income before income taxes and cumulative effect of a change in accounting
principle.................................................................... 3,150 1,435 2,068 2,074
Provision for income taxes..................................................... 1,204 451 727 665
Income before cumulative effect of a change in accounting principle............ 1,946 984 1,341 1,409
Cumulative effect on prior years of a change in accounting for
income taxes................................................................. -- -- 226 --
Net income..................................................................... 1,946 984 1,567 1,409
Income per common share:
Income before cumulative effect of a change in accounting principle.......... 1.05 .54 .74 .77
Cumulative effect on prior years of a change in accounting for
income taxes.............................................................. -- -- .12 --
Net income per common share.................................................. 1.05 .54 .86 .77
At Year End:
Total assets................................................................. $37,730 $35,224 $30,586 $29,767
Long-term debt and capital lease obligations................................. 1,058 1,777 505 872
SELECTED SUPPLEMENTARY FINANCIAL DATA
Property and equipment:
Net investment............................................................... $11,605 $11,474 $11,475 $11,982
Current additions............................................................ 1,919 1,719 1,326 1,844
Depreciation................................................................. 1,693 1,688 1,614 1,483
Other:
Working capital.............................................................. $19,866 $18,293 $15,922 $13,529
Stockholders' equity......................................................... 29,093 26,981 25,887 24,289
Stockholders' equity per common share........................................ 15.73 14.78 14.23 13.36
Weighted average number of shares of common stock outstanding................ 1,849 1,826 1,819 1,818
<CAPTION>
1990
<S> <C>
SELECTED FINANCIAL DATA:
Net sales...................................................................... $41,852
Gross margin................................................................... 8,834
Income before income taxes and cumulative effect of a change in accounting
principle.................................................................... 1,710
Provision for income taxes..................................................... 302
Income before cumulative effect of a change in accounting principle............ 1,408
Cumulative effect on prior years of a change in accounting for
income taxes................................................................. --
Net income..................................................................... 1,408
Income per common share:
Income before cumulative effect of a change in accounting principle.......... .77
Cumulative effect on prior years of a change in accounting for
income taxes.............................................................. --
Net income per common share.................................................. .77
At Year End:
Total assets................................................................. $28,386
Long-term debt and capital lease obligations................................. 910
SELECTED SUPPLEMENTARY FINANCIAL DATA
Property and equipment:
Net investment............................................................... $11,569
Current additions............................................................ 2,566
Depreciation................................................................. 1,275
Other:
Working capital.............................................................. $12,420
Stockholders' equity......................................................... 22,880
Stockholders' equity per common share........................................ 12.59
Weighted average number of shares of common stock outstanding................ 1,818
</TABLE>
SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" IN THIS REPORT FOR A DISCUSSION OF CERTAIN FACTORS WHICH AFFECT THE
COMPARABILITY OF THE INFORMATION REFLECTED ABOVE.
(Page number appears in a leaf)20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table details the items in the Consolidated Statements of Income
as a percentage of sales for 1994, 1993, and 1992.
<TABLE>
<CAPTION>
PERCENTAGE OF SALES
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Net Sales............................. 100.0% 100.0% 100.0%
Cost of Sales......................... 74.8 73.5 74.9
Gross Margin.......................... 25.2 26.5 25.1
Selling, General and Administrative... 19.5 22.7 20.0
Operating Income...................... 5.7 3.8 5.1
Other Income (Expense), Net........... (.2) (1.0 ) 0.0
Income Before Income Taxes............ 5.5 2.8 5.1
Provision for Income Taxes
(including cumulative effect
adjustment in 1992)................. 2.1 .9 1.2
Net Income............................ 3.4% 1.9 % 3.9 %
</TABLE>
Net sales for 1994 increased $5,651,189 or 11.1% as compared to an increase of
$10,287,952 or 25.4% in 1993. Net sales increased over 1993 primarily as a
result of increased sales to existing customers and a shifting of customers to
higher value added products. The Company experienced increases in sales of its
intimate apparel, ladies hosiery, surgical footwear, stockinette, Byford socks
and in its telemarketing operations. Alba's Factory Outlet store, which opened
in late November and was not fully operational in 1994, had no significant
impact on net sales.
The Byford Division, which was purchased in Decemeber of 1992 accounted for
15.7% of the 25.4% increase in 1993 net sales over 1992. The Company also
experienced increases in sales of intimate apparel, ladies hosiery, surgical
footwear, stockinette, and the Telemarketing operations.
Gross margin declined in 1994 to 25.2% as compared to 26.5% in 1993. Major
factors that affected gross margins. The Byford Division closed-out and marked
down excess inventories, resulting in a gross margin decline for the division
from 34.9% in 1993 to 23.5% in 1994. Allowances for obsolences of approximately
$580,000 were recorded in 1994 to account for such markdown and close-outs.
Also, the Valdese, NC area experienced an unemployment rate of less than 3%,
causing excess overtime, training and out sourcing for sewing and packaging
product.
Although overall gross margins declined, the Health Products and Telemarketing
divisions gross margins improved.
Gross margins in 1993 improved slightly from 1992, primarily due to sales of
higher margin Byford products.
Selling, General and Administrative expenses as a percentage of sales decreased
from 22.8% in 1993 to 19.5% in 1994. In 1993 the bankruptcy of a major retailer
caused a charge to Bad Debts of 1.1% of sales and costs associated with the
Leslie Fay(Register mark) line were not repeated in 1994. Also, in 1994
management placed special emphasis on controlling S, G & A costs.
Interest expense was $275,000 in 1994, $248,000 in 1993 and $235,000 in 1992.
Short term interest rates began to rise in 1994 and averaged 6.98% for 1994 as
compared to average rates of 6.06% in 1993 and 6.40% in 1992. Average borrowings
under the short term revolver were $57,000 in 1994 as compared to $734,000 in
1993 and $56,000 in 1992. Borrowings under the short term revolver did not occur
in 1994 until November 30, at which time the company used its line of credit to
finance the $2,040,000 purchase of the Baxter Healthcare Systems
P.A.S.(Register mark) The company plans to covert the short term financing to a
long-term note in the first quarter of 1995. In general interest expense
increased due to a higher average total debt in 1994.
Other Income (Expense), (exclusive of Interest Income and Expenses) Net for 1994
reflected net other income of $119,773 as compared to a net other expense of
$266,701 in 1993 and net other income of $97,067 in 1992. Other expense in 1993
included a write-off of $429,000 for costs related to an unconsummated
acquisition.
The Company continues to be faced with an unsettled retail environment. This
trend, coupled with the fact that the Company is still primarily in the private
label business with limited channels of distribution and is susceptible to
replacement by branded products, increases the level of uncertainty about the
level of sales in the future. However, management continues to search for
alternate products and channels of distribution as well as aggressively pursuing
branded products to combat this uncertainty in the marketplace. The Company is
putting renewed
(Page number appears in a leaf)21
<PAGE>
MANAGEMENT'S DISCUSSION CONTINUED
emphasis on placing its ALL DAY LONG(Register mark) brand in department stores
to build its own brand. Management believes that the acquisition of Byford
apparel and the renewed emphasis on the branded products are steps in the right
direction.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs are primarily related to working capital required
to support necessary increases in inventories, receivables and capital
expenditures for plant and equipment renovations and expansions. These needs are
being met by cash on hand, cash flow, and a short term line of credit of
$3,000,000. The short term line of credit requires the Company to comply with
certain restrictive covenants (see Note 3 to consolidated financial statements).
These covenants permit the Company to fund capital expenditures at an adequate
level to support current and future operations. Working capital increased by
$1,572,925 over 1993. The increase over 1993 was primarily due to the
P.A.S.(Register mark) inventories purchased from Baxter Healthcare Corporation.
Cash provided by operating activities was $396,167 for 1994, compared to cash
used of $869,115 in 1993 and cash provided of $2,133,607 in 1992. The cash
provided by operations in 1994, was mainly the result of improved collection of
accounts receivable during 1994.
Net cash used in investing activities was $1,882,858 in 1994 compared to
$1,462,389 in 1993 and $1,208,333 in 1992. The cash used in each of these years
primarily was invested in capital expenditures to expand capacities, and to
replace and update existing plant and equipment.
Net cash provided by financing activities was $630,126 in 1994 compared to
$1,708,317 in 1993 and to net cash used of $891,409 in 1992. Cash was provided
in 1994 by short term debt and was used to finance the P.A.S.(Register mark)
Business purchased from Baxter Healthcare Corporation.
Anticipated capital expenditures for 1995 will be approximately $2,300,000 for
the existing business. Capital expenditures will be made to renovate existing
plant and equipment and to purchase new, more efficient knitting equipment. It
is expected that cash required for capital expenditures will be provided by
operations, supplemented by the Company's short term line of credit.
SUBSEQUENT MATTERS
On March 6, 1995 the Company purchased the Balfour Healthcare Division from
Kayser-Roth Corporation for approximately $14.5 million, subject to post closing
adjustments.
The acquisition included Kayser-Roth's 258,000 square foot facility in Rockwood,
Tennessee, all healthcare related machines, healthcare inventories, and
healthcare accounts receivable.
It is expected that the acquisition of Balfour will add approximately $15
million in annual sales to Alba's Health Products Division. Balfour manufactures
and distributes component and finished tubular knit products. Their customers
include manufacturers of surgical gowns and drape packs, and distributors of
healthcare products. Products include gown cuffs, stockinette drapes, orthopedic
stockinette for casting systems, patient footwear, infant caps, and specialty
products. All products are produced in and shipped from the Rockwood facility,
which has also manufactured Kayser-Roth athletic sock brands.
Under a transition agreement Kayser-Roth will continue to manufacture sock
products in the facility during a phase out period of approximately six months.
The Company plans to integrate its Valdese Health Products Division
manufacturing operations into the Rockwood facility, as Kayser-Roth phases out
its sock production. The Valdese employees involved in the manufacture of Health
Products will be absorbed into the Company's Consumer Products Division. The
Company believes that the relocation of the Valdese Health Products
manufacturing division to the Rockwood facility will help resolve the labor
shortage the Company has experienced over the last few years.
It is anticipated that capital expenditures of approximately $800,000 will be
made for machinery to improve efficiencies and renovations to the building to
accommodate the Valdese production. It is expected that cash required for
capital expenditures will be provided by operations and supplemented by the
Company's short term line of credit.
OTHER
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" in 1992. See Summary of Significant Accounting
Policies and Note 7 of the Notes to the Consolidated Financial Statements.
(Page number appears in a leaf)22
<PAGE>
QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED (EXPRESSED IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1994 1993
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30,
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales........................ $ 13,667 $14,700 $ 14,744 $13,395 $ 13,308 $13,679 $11,870
Gross Margin..................... 3,175 4,063 3,782 3,234 3,723 3,702 2,967
Net Income....................... 264 792 549 341 16 568 98
Income per Common Share Data:
Before Cumulative Effect of a
Change in Accounting
Principle.................... .14 .42 .30 .19 $ .01 $ .31 $ .05
Net Income..................... .14 .42 .30 .19 $ .01 $ .31 $ .05
Weighted Average Number of Shares
of Common Stock Outstanding.... 1,854 1,852 1,849 1,839 1,834 1,825 1,823
<CAPTION>
MARCH 31,
<S> <C>
Net Sales........................ $11,998
Gross Margin..................... 3,087
Net Income....................... 302
Income per Common Share Data:
Before Cumulative Effect of a
Change in Accounting
Principle.................... $ .17
Net Income..................... $ .17
Weighted Average Number of Shares
of Common Stock Outstanding.... 1,823
</TABLE>
1994
NOTE: SIGNIFICANT FOURTH QUARTER ADJUSTMENTS IN 1994 INCLUDED $202 INCREASE IN
ALLOWANCE FOR INVENTORY OBSOLESCENCE ($125, NET OF INCOME TAXES).
1993
NOTE: SIGNIFICANT FOURTH QUARTER ADJUSTMENTS IN 1993 INCLUDED $556 BAD DEBT
LOSSES AND $428 WRITE-OFF OF ACQUISITION COSTS ($382 AND $294, NET OF
INCOME TAXES, RESPECTIVELY.)
Left to right: Warren R. Nesbit, Thomas I. Nail,
Charles D. Poteat, Thomas F. Schuster,
Robert F. Fumento, Donald R. Denne
(Page number appears in a leaf)23
CORPORATE MANAGEMENT
THOMAS F. SCHUSTER
CEO & President
CLYDE WM. ENGLE
Chairman of the Board
DONALD R. DENNE
Senior Vice President
ROBERT F. FUMENTO
Vice President
JAMES DOUGLAS DICKSON, JR.
Assistant Secretary
Corporate Controller
THOMAS I. NAIL
Secretary-Treasurer
& CFO
WARREN R. NESBIT
Vice President
CHARLES D. POTEAT
Vice President
CORPORATE DIRECTORS
TERM EXPIRING MAY 1995
CLYDE WM. ENGLE
Chairman of the Board
and Chief Executive
Officer of Telco
Capital Corporation
Chicago, Illinois
JOSEPH C. MINIO
President
Belle Haven Management Ltd.
Greenwich, Connecticut
THOMAS F. SCHUSTER
President & Chief
Executive Officer
TERM EXPIRING MAY 1996
C. ALAN FORBES
Management Consultant
Charlotte, North Carolina
LEE N. MORTENSON
President and Chief Operating Officer & Director of
Telco Capital Corporation
Chicago, Illinois
JAMES M. FAWCETT, JR.
Registered Representative and Agent
Equitable Financial Companies
Chicago, Illinois
TERM EXPIRING MAY 1997
PAUL H. ALBRITTON, JR.
Management Consultant
Raleigh, North Carolina
WILLIAM M. COUSINS, JR.
Management Consultant
Jupiter, Florida
GLENN J. KENNEDY
Executive Vice President
Acton Corporation
Raleigh, North Carolina
CORPORATE INFORMATION
PRINCIPAL MARKET
The Company's Common Stock is listed on American Stock Exchange
TRANSFER AGENT - REGISTRAR
First Union National Bank
of North Carolina
Charlotte, North Carolina
NUMBER OF SHAREHOLDERS
The number of holders of record
of Alba's Common Stock on March 10, 1995
was approximately 376.
ANNUAL MEETING
Third Wednesday in May
CORPORATE HEADQUARTERS
Alba-Waldensian, Inc.
Box 100
201 St. Germain, S.W.
Valdese, North Carolina 28690
AUDITOR
BDO Seidman
Greensboro, North Carolina
OFFER TO FURNISH FORM 10-K
Upon written request of a shareholder, the Company will provide,
without charge, a copy of its Annual Report on Form 10-K for the fiscal
year 1994, including financial statements and schedules thereto required
to be filed with the Securities and Exchange Commission. Requests should
be directed to James Douglas Dickson, Jr., Alba-Waldensian,
Inc., Post Office Box 100, Valdese, North Carolina 28690.
(Page number appears in leaf)24
<PAGE>
HISTORY OF ALBA-WALDENSIAN, INC.
Waldensian Hosiery Mills began operating in Valdese, North Carolina in 1901,
in a 40 x 80 foot building constructed of timber cut from the local farm
lands. Twenty employees reported to work at this new company on May 8th that
year.
Over the last 94 years, Alba-Waldensian has grown into a multi-facility
national company manufacturing a variety of innovative products for both
domestic and international markets. Although the company began as a producer
of women's knit hosiery products, in the mid-fifties the Company learned to
knit women's stretch panties on their original full-fashion knitting equipment.
Today, as things have progressed, the company uses state of the art technology
in the form of high speed, computerized, circular knit machinery to knit
stretch panties and pantyhose.
In 1961, Waldensian Hosiery Mills merged with Alba Hosiery Mills to form the
current Alba-Waldensian and in 1969 the corporation went public, listing its
stock on the American Stock Exchange. In 1974, the company introduced a group
of health products utilizing Alba's knitting expertise. This business has
since grown considerably and today Alba is a leading manufacturer and marketer
of products used in hospitals and nursing homes, with distribution throughout
the United States, Canada, England, Europe and the Middle East.
In 1989, the company formed Alba Direct, a telemarketing Division to sell
the company's many products to small retail and export accounts. The company
continued to diversify in 1992 with its acquisition of Byford Apparel, a
leading marketer of English men's socks and sweaters. The company recognizes
the influence of its Waldensian forefathers, who immigrated to Valdese, North
Carolina from the Cottian Alps of Italy in 1893. With this keen sense of
heritage and commitment to the future, Alba-Waldensian continues to build
on its reputation for outstanding quality and service to its customers.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
As of December 31, 1994
Percentage of
Name Jurisdiction Stock Owned
AWI Retail, Inc. North Carolina 100%
Pilot Research Corp. North Carolina 100%
Alba Export Corp. North Carolina 100%
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' REPORT
Alba-Waldensian, Inc. and Subsidiaries:
We consent to the incorporation by reference in Registration
Statement No. 33-15833 on Form S-8 of our reports dated February
11, 1994 appearing in or incorporated by reference in the Annual
Report on Form 10-K of Alba-Waldensian, Inc. and subsidiaries
for the year ended December 31, 1994.
DELOITTE & TOUCHE LLP
Hickory, North Carolina
April 3, 1995
<PAGE>
Exhibit 23.2
Consent of Independent Certified Public Accountants
Alba Waldensian, Inc.
Valdese, NC North Carolina
We hereby consent to the incorporation by reference in the Registration
Statement No. 33-15833 on Form S-8 of our reports dated February 8, 1995,
relating to the consolidated financial statements and schedules of Alba-
Waldensian, Inc. incorporated by reference in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994.
Greensboro, North Carolina BDO Seidman
April 5, 1995
<PAGE>
<TABLE>
<CAPTION>
Schedule II
Alba-Waldensian, Inc.
and Subsidiaries
Valdese, North Carolina
Valuation and Qualifying Accounts
Balance at Charged to Reduction Balance
Description/ Beginning of Cost and of at End
Fiscal Year Ended Period Expenses Allowance of Period
<S> <C> <C> <C> <C>
Year Ended December 31, 1994
Accounts Receivable-Allowance 194,000 74,933 88,933 180,000
for uncollectible accounts
Notes Receivable-Allowance for 0
uncollectible accounts
Inventory-Reserve for markdowns 149,000 579,997 343,797 385,200
Year Ended December 31, 1993
Accounts Receivable-Allowance 120,000 654,000 580,000 194,000
for uncollectible accounts
Notes Receivable-Allowance for 43,000 43,000 0
uncollectible accounts
Inventory-Reserve for markdowns 400,000 434,000 685,000 149,000
Year Ended December 31, 1992
Accounts Receivable-Allowance 164,000 13,000 57,000 120,000
for uncollectible accounts
Notes Receivable-Allowance for 20,000 23,000 43,000
uncollectible accounts
Inventory-Reserve for markdowns 500,000 76,000 176,000 400,000
</TABLE>
S-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of the Company for the year ended
December 31, 1994 included in the Company's 1994 Annual Report to
Shareholders and is qualified in its entirety by reference to such Annual
Report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 103,952
<SECURITIES> 0
<RECEIVABLES> 7,426,654
<ALLOWANCES> 0
<INVENTORY> 17,264,180
<CURRENT-ASSETS> 25,401,506
<PP&E> 27,102,310
<DEPRECIATION> 15,497,062
<TOTAL-ASSETS> 37,729,728
<CURRENT-LIABILITIES> 5,535,445
<BONDS> 1,000,000
<COMMON> 4,716,450
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 37,729,728
<SALES> 56,506,566
<TOTAL-REVENUES> 56,684,202
<CGS> 42,252,186
<TOTAL-COSTS> 53,259,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 274,739
<INCOME-PRETAX> 3,149,543
<INCOME-TAX> 1,203,667
<INCOME-CONTINUING> 1,945,876
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,945,876
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
