<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20459
FORM 10-Q
(Mark one)
[X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended October 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6150
ALBA-WALDENSIAN, INC.
(Exact name of registrant as specified in its Charter)
Delaware 56-0359780
(State or other jurisdiction (I.R.S.Employer Identification No.)
of incorporation or organization)
P.O. Box 100, Valdese, N.C. 28690
(Address of principal executive offices)
(Zip Code)
(704) 874-2191
Registrant's telephone number, including area code
NONE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether 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
APPLICABLE ONLY TO CORPORATE USERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of October 1, 1995, the number of common shares outstanding was 1,864,903.
<PAGE>
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1-2
October 1, 1995 and December 31, 1994
Condensed Consolidated Statements of Current 3
and Retained Earnings for the Three and Nine Month
Periods Ended October 1, 1995 and October 2, 1994
Condensed Consolidated Statements of Cash 4-5
Flows for the Nine Month Periods Ended
October 1, 1995 and October 2, 1994
Notes to Condensed Consolidated Financial 6-8
Statements
Item 2. Management's Discussion and Analysis of 9-13
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
October 1, December 31,
1995 1994 (1)
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash ................................. $ 81,820 $ 103,952
Accounts receivable,net .............. 10,898,973 7,426,654
Refundable income taxes, net ......... 533,473 127,394
Notes receivable ..................... 8,121 30,080
Inventories:
Materials ............................ 3,866,682 3,377,562
Work-in-process ...................... 5,570,235 5,945,246
Finished goods ....................... 7,396,875 7,941,372
Total inventories,net ................ 16,833,792 17,264,180
Prepaid expenses and other ........... 260,654 151,236
Deferred income taxes ............... 298,010 298,010
Total Current Assets .......... 28,914,843 25,401,506
PROPERTY AND EQUIPMENT ............... 29,978,232 27,102,310
LESS ACCUMULATED DEPRECIATION ........ (15,847,339) (15,497,062)
Property, Plant and
Equipment, Net ...................... 14,130,893 11,605,248
OTHER ASSETS:
Goodwill(Note 2) ..................... 9,114,166 0
Notes receivable ..................... 84,553 77,995
Trademarks and patents ............... 291,975 324,654
Cash value-life insurance ........... 310,862 320,325
Total Other Assets ................... 9,801,556 722,974
------------ ------------
TOTAL ASSETS ......................... $ 52,847,292 $ 37,729,728
============ ============
</TABLE>
(1) The balance sheet at December 31, 1994 has been taken from
the audited consolidated financial statements at that date.
See notes to consolidated condensed financial statements.
1
<PAGE>
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
October 1, December 31,
1995 1994(1)
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term borrowings and lines of credit(Note 3) $ 2,505,256 $ 1,178,062
Current maturities of long-term debt(Note 4) .... 2,350,000 500,000
Current maturities of capital lease obligations . 86,346 113,526
Accounts payable ................................ 2,445,042 2,587,875
Accrued liabilities:
Labor and profit-sharing ....................... 852,319 689,983
Property and payroll taxes ..................... 372,536 102,939
Group health claims - estimated ................ 279,177 150,000
Other .......................................... 601,063 213,060
Income taxes payable ............................ 0 0
Total Current Liabilities ....................... 9,491,739 5,535,445
LONG-TERM DEBT (Note 4) ......................... 12,850,000 1,000,000
CAPITAL LEASE OBLIGATIONS ....................... -- 58,069
DEFERRED COMPENSATION ........................... 338,312 344,391
DEFERRED INCOME TAXES ........................... 1,698,369 1,698,369
Total Liabilities ............................ 24,378,420 8,636,274
COMMITMENTS AND CONTINGENCIES(Notes 2,3, and 4)
STOCKHOLDERS' EQUITY:
Common stock - authorized
3,000,000 shares, $2.50 par
value; issued: 1,886,580 shares
in 1995 and 1994; outstanding:
1,864,903 and 1,863,153 shares
in 1995 and 1994, respectively .............. 4,716,450 4,716,450
Additional paid-in capital ...................... 9,182,158 9,182,158
Retained earnings ............................... 14,724,713 15,361,763
Total ........................................... 28,623,321 29,260,571
Less treasury stock - at cost
(21,677 and 23,427 shares in
1995 and 1994, respectively) ................. (154,449) (166,917)
Total Stockholders' Equity ...................... 28,468,872 29,093,454
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ........................... $ 52,847,292 $ 37,729,728
============ ============
</TABLE>
(1) The balance sheet at December 31, 1994 has been taken from the audited
consolidated financial statements at that date.
See notes to consolidated condensed financial statements.
2
<PAGE>
ALBA-WALDENSIAN,INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Current
And Retained Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Ended Nine Month Period Ended
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CURRENT EARNINGS:
Net sales ........................ $ 16,769,041 $ 14,700,034 $ 47,399,453 $ 42,839,078
Cost of sales .................... 14,426,170 10,636,996 38,075,432 31,760,572
Gross profit ..................... 2,342,871 4,063,038 9,324,021 11,078,506
Selling, general and
administrative expenses ....... 3,165,007 2,755,609 9,351,651 8,237,956
Operating income ................. (822,136) 1,307,429 27,630 2,840,550
Interest expense ................. (361,579) (64,260) (883,946) (248,520)
Interest income .................. 5,877 7,687 14,661 28,647
Other ............................ 2,446 6,742 (134,114) 50,465
Total other income (expense) ..... (353,256) (49,831) (1,003,399) (169,408)
Income before income taxes ....... (1,175,392) 1,257,598 (1,031,029) 2,671,142
Provision for income taxes ....... ( 446,649) 465,265 ( 391,791) 988,323
Net income........................ $( 728,743) $ 792,233 $ (639,238) $ 1,682,819
============ ============ ============ ============
Weighted average number of shares
of common stock outstanding .... 1,864,502 1,851,951 1,864,094 1,846,723
============ ============ ============ ============
Net income per common share ...... $ (.39) $ .42 $ (.34) $ .91
============ ============ ============ ============
RETAINED EARNINGS:
Balance at beginning of period .. $ 15,453,143 $ 14,313,355 $ 15,361,763 $ 13,426,272
Net income ...................... (728,743) 792,233 (639,238) 1,682,819
Exercise of stock options ....... 313 1,500 2,188 (1,903)
Balance at end of period ........ $ 14,724,713 $ 15,107,188 $ 14,724,713 $ 15,107,188
============ ============ ============ ============
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Month Periods Ended
October 1, October 2,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ......................................... $ (639,238) $ 1,682,819
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization ...................... 1,745,260 1,408,473
Provision for bad debts, net of recoveries ......... 174,406 173,550
Realized loss (gain) on sale of property ........... 126,184 (9,464)
Provision for inventory obsolescence ............... 902,367 235,015
Changes in operating assets and
liabilities providing (using) cash:
Accounts receivable ......................... (1,690,446) (1,496,395)
Refundable income taxes .............. (406,079) 76,134
Inventories .......................... 1,051,132) (965,749)
Prepaid expenses and other .......... ( 99,955) 26,669
Accounts payable ............................ (142,833) (869,869)
Accrued and other liabilities ............... 632,185 806,638
Income taxes payable ........................ 0 464,643
Deferred compensation ....................... ( 6,079) (77,048)
Net cash provided by (used in) operating activities. 1,646,904 1,355,416
INVESTING ACTIVITIES:
Capital expenditures .............................. (1,584,227) (917,815)
Payment for purchase of Balfour Healthcare ........ (15,312,437) 0
Proceeds from sale of property .................... 255,626 0
Proceeds from notes receivable .................... 15,401 25,935
Net cash used in investing activities .............. (16,625,637) (891,880)
FINANCING ACTIVITIES:
Net borrowings (payments) under line
of credit agreements ............................. 1,327,194 (50,000)
Issuance of long term debt ........................ 15,000,000 0
Principal payments on notes and leases ............ (1,385,249) (501,724)
Cash proceeds from exercise of stock options ..... 14,656 101,625
Net cash provided by (used in) financing activities 14,956,601 (450,099)
NET INCREASE (DECREASE) IN CASH .................... (22,132) 13,437
CASH AT BEGINNING OF PERIOD ........................ 103,952 960,516
CASH AT END OF PERIOD .............................. $ 81,820 $ 973,953
============ ============
4
<PAGE>
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Nine Month Period Ended
October 1, October 2,
1995 1994
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ................... $845,698 $212,952
Income Taxes ............... $ 16,285 $447,577
See notes to consolidated condensed financial statements.
5
<PAGE>
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statement
For the Three and Nine Month Periods Ended October 1, 1995
and October 2, 1994
(Unaudited)
1. UNAUDITED FINANCIAL INFORMATION
In the opinion of the Company, the accompanying unaudited Consolidated
Condensed Financial Statements contain all adjustments necessary to present
fairly the financial position as of October 1, 1995 and the results of
operations for the three and nine months periods ended October 1, 1995 and
October 2, 1994. The financial statements are presented as permitted by the
instructions to Form 10-Q and Article 10 of regulation S-X. The accounting
policies followed by the company are set forth in the Company's Annual Report on
Form 10-K which is incorporated by reference.
The results of operations for the three and nine month periods ended
October 1, 1995 are not necessarily indicative of the results to be expected for
the full year. These unaudited financial statements should be read in
conjunction with the Company's most recent audited financial statements.
The three month period for 1995 began July 3, 1995 and ended October 1,
1995. The three month period for 1994 began July 4, 1994 and ended October 2,
1994. The nine month period for 1995 began January 1, 1995 and ended October 1,
1995. The nine month period for 1994 began January 1, 1994 and ended October 2,
1994.
2. ACQUISITION
On March 6, 1995, the company acquired the Balfour Healthcare Division of
Kayser-Roth Corporation. The acquisition consisted of the following, subject to
post-closing adjustments:
Fair value of assets acquired:
Accounts Receivable .... 1,956,279
Fixed Assets ........... 2,730,830
Inventory .............. 1,523,111
Goodwill ............... 9,419,145
Total assets acquired... 15,629,365
Cash paid .............. 15,312,437
Liabilities assumed .... 316,928
The acquisition was accounted for using the purchase method of accounting.
Accordingly, the purchase price was allocated to assets acquired based on their
estimated fair values and may be subject to further adjustment. The total cost
in excess of estimated fair value(goodwill of $9,419,145) is amortized on a
straight line basis over 15 years. The Company financed 100% of the acquisition
with a variable long term loan agreement(Note 4).
The results of operation of the Balfour Healthcare Division are included in the
accompanying financial statements since the date of acquisition.
6
<PAGE>
The following unaudited pro forma summary presents the information as
if the acquisition had occurred at the beginning of 1995 and 1994, after giving
effect to certain adjustments, including amortization of goodwill and interest
expense from debt issued to fund the acquisition and related income tax effects.
The total interest expense included in this pro forma summary is $647,800 in
1994 and $934,600 in 1995. Goodwill amortization is $461,000. This pro forma
summary is provided for information purposes only. It is based on historical
information and does not necessarily reflect the actual results that would have
occurred nor is it necessarily indicative of future results of operations.
</TABLE>
<TABLE>
<CAPTION>
Three Month Periods Ended Nine Month Periods Ended
October 1, 1995 October 2, 1994 October 1, 1995 October 2, 1994
(Amounts in thousands of dollars, except per share data)
<S> <C> <C> <C> <C>
Net Sales ............... $ 16,769.0 $ 18,313.0 $ 50,054.0 $ 53,759.1
Net Income .............. (639.2) 936.1 (581.5) 2,001.7
Earnings per common share $ (.39) $ .51 $ (.31) $ 1.08
</TABLE>
3. SHORT TERM BORROWINGS AND LINES OF CREDIT
On March 6, 1995, the Company restructured its short term line of credit
to $5,000,000. This line of credit was used to purchase the Baxter Healthcare
P.A.S.(R) business in November, 1994 for $2,040,000 and to support existing
working capital needs. In addition this line of credit provides a sublimit of
$1,000,000 to support import letters of credit. Interest is accrued at the LIBOR
rate plus 1 3/4% at October 1,1995. The amount outstanding at October 1, 1995,
and December 31, 1994 was $2,505,256 and $1,178,062, respectively.
4. LONG TERM DEBT
Long term debt is comprised of:
October 1 December 31
1995 1994
Note Payable-Equipment Loan(a) ................. $ 1,125,000 $ 1,500,000
Note Payable-Balfour Purchase(b)................ 14,075,000 --
Total ........................... 15,200,000 1,500,000
Less:Current Maturities.......... 2,350,000 500,000
Total Long Term Debt ........................... $ 12,850,000 $ 1,000,000
(a) Pursuant to a fixed rate term loan agreement dated February 12,
1993, this $2,000,000 note was used to purchase new equipment. Interest accrues
at 6.3% fixed rate and principal payments are made quarterly with the final
payment due December 31, 1997.
7
<PAGE>
(b) Pursuant to variable loan rate term loan agreement dated March 6,
1995, this $15,000,000 note was used to purchase the Balfour Healthcare Division
from Kayser-Roth Corporation. Interest accrues at the rate of LIBOR plus 2% at
October 1, 1995. Principal payments are being made quarterly and began June 30,
1995 with the final payment due June 30, 2000. The note is collateralized by all
assets of the company.
This loan agreement contains various loan covenants, as defined, which
include maintaining a minimum tangible net worth, a minimum cash flow and
leverage ratio and a limit on capital spending. The agreement also maintains
that any cash dividends paid will not cause default of any loan covenant as a
result of paying those dividends.
The annual principal maturites of the long term debt at October 1, 1995
were as follows:
1995 $ 587,500
1996 2,350,000
1997 2,350,000
1998 2,350,000
1999 2,350,000
2000 5,212,500
Total $ 15,200,000
5. EARNINGS PER SHARE
Net income per common share is calculated on the weighted average number of
shares of common stock outstanding during the period. The effect of dilutive
common stock equivalents is immaterial.
6. LICENSE AGREEMENTS
The Company has a licensing agreement with Coats Viyella
International, UK, in which it is obligated to pay a 5% royalty on all sales of
product under the Byford Apparel label that is not produced by Coats Viyella.
The Company also has an agreement with Mr. Ray Shaw, which obligates to Company
to pay a 5% royalty on all product sold under the BBWr label.
In connection with the purchase of Balfour Health Products, the Company
is obligated to pay Ms. Ada Shapiro a royalty of 5% of sales up to $1,000,000,
2.5% of sales from $1,000,000 to $2,000,000, and 1.5% of sales over $2,000,000
on two styles of diabetic socks produced by Balfour Health Products.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Company has good liquidity. On October 1, 1995, the Company had a
current working capital ratio of 3.05 to 1 and working capital of $19,423,104.
This ratio was down from 4.59 to 1 at October 2, 1994 primarily due to the short
term borrowings associated with the acquisition of the P.A.S(R) business in
November, 1994 and current maturities of long-term debt associated with the
acquisition of Balfour Health Products in March, 1995.
Liquidity needs are primarily affected by and related to capital expenditures
and increased levels of accounts receivable due to the Company's growth. These
needs are adequately being met through available working capital, and are
supplemented by a short-term line of credit of $5,000,000, to cover
fluctuations, as well as a $2,000,000 equipment term loan. In addition, the
Company issued $15,000,000 of long-term debt on March 6, 1995 to purchase the
assets of Balfour Health Products which consisted of accounts receivable,
building and equipment, and inventory.
Results of Operations
Three Month Periods Ended October 1, 1995, and October 2, 1994
Net sales by division for the third quarter of 1995 compared to the
third quarter of 1994 are set forth in the following table.
Three Month Period Ended
Oct. 1 Oct. 2 Increase/ %Increase
1995 1994 (Decrease) (Decrease)
Consumer Products $ 6,192,105 $ 7,619,258 $(1,427,153) (18.7)%
Health Products . 8,136,808 3,971,440 4,165,368 104.9 %
Alba Direct ..... 538,198 866,303 ( 328,105) (37.9)%
Byford .......... 1,868,787 2,243,033 ( 374,246) (16.7)%
AWI Retail ...... 33,143 0 33,143 N/A
Total ... 16,769,041 14,700,034 2,069,007 14.1%
The net sales increase of $2,069,007 as shown in the table above was
attributed to the increase in sales of the Health Products Division, which
includes the newly acquired Balfour Health Products Division. During the second
quarter, the Company began to consolidate customers and products that were
common to both Balfour and Alba-Waldensian. It is estimated that 96.4% of the
104.9% sales increase in the Health Products Division was due to the Balfour
purchase and the remainder is due to an increase in other business. The decrease
in Consumer Product sales was the result of the prevailing weakness in the
nation's retail sector and increased competition for the retailers limited
dollars. The decline in Alba Direct sales is attributed to the Company's
termination of two of its seven Japanese dealers. The Byford Division sales in
the third quarter declined primarily due to softness in the sweater market.
9
<PAGE>
Gross profits decreased for the third quarter of 1995, as compared to
the third quarter of 1994 by $1,720,167. During the third quarter, the Company
recorded an additional $1.2 million write-down of inventory. The Company writes
down close-out and irregular inventory on an ongoing basis, but due to the fact
that Consumer Products sales volume had been soft for the last year and product
prices are being depressed by other manufacturers closing out excess inventory
throughout the marketplace the Company believes additional write-downs are
necessary. Without the $1.2 million dollar write-down of inventory, the gross
profit decrease would have been $520,167. This reflects the loss of gross profit
from the decrease in the Consumer Products, Alba Direct and Byford sales and the
increase in manufacturing cost caused by manufacturing overhead cost not being
reduced proportionate to the decrease in sales.
Selling, general, and administrative expenses(as a percentage of net
sales) increased from 18.7% in 1994 to 18.9% in 1995. The increase is due to the
addition of goodwill expense for the Balfour acquisition of $153,000 or .9% of
net sales.
There was an operating loss of $822,136 in the third quarter as compared
to operating income in the third quarter of 1994 of $1,307,429, a decrease of
$2,129,565 in operating results. The decrease in operating income was primarily
due to the decrease in sales and gross profits of the Consumer Products and Alba
Direct Divisions and the write-down of inventory of $1.2 million, as discussed
above.
Net other income /expense aggregated $353,256 of expense for the third
quarter of 1995, as compared to an expense of $49,831 in the third quarter of
1994. The increased expense is primarily due to the increase in interest expense
of $297,319 which relates to the financing of the Balfour acquisition.
Net loss after taxes for the three month period ended October 1, 1995
was $728,743, a decrease of $1,520,976 from the net income of $792,233 in third
quarter of 1994. The decrease in net income was primarily due to the lower sales
and gross profits in the Consumer, Alba Direct, and Balfour Divisions and the
write-down of inventory, as discussed above.
Nine Month Periods Ended October 1, 1995 and October 2, 1994
Net Sales by division for the first nine month period of 1995 as
compared to the first nine month period of 1994 are set forth in the following
table:
Nine Month Period Ended
Oct. 1 Oct. 2 Increase/ %Increase
1995 1994 (Decrease) (Decrease)
Consumer Products $ 19,052,556 $ 23,307,077 $ (4,254,521) (18.3)%
Health Products . 22,682,515 11,747,380 10,935,135 93.1%
Alba Direct ..... 1,576,019 3,289,868 (1,713,849) (52.1)%
Byford .......... 4,036,069 4,494,753 ( 458,684) (10.2)%
AWI Retail ...... 52,294 0 52,294 100.0%
Total ... $ 47,399,453 $42,839,078 $ 4,560,375 $ 10.7%
10
<PAGE>
The net sales increase of $4,560,375 as shown in the table above was
attributed to the increase in sales of the Health Products Division, which
includes the newly acquired Balfour Health Products Division. It is estimated
that 82.9% of the 93.1% increase in Health Products Division's sales was due to
the acquisition of Balfour and the remainder due to an increase in other
business. The weakness in Consumer Products began in the fourth quarter of 1994
as major customers experienced an overstocked position in retail inventories.
This weakness has continued through the first nine months of 1995. The decline
in Alba Direct sales is attributed to the Company's termination of two of its
seven Japanese dealers. The Byford Division sales have experienced a decline
primarily due to softness in the sweater market.
Gross profits decreased for the first nine months of 1995 as compared to
1994 by $1,754,485. During the third quarter, the Company recorded an additional
$1.2 million write-down of inventory. The Company writes down close-out and
irregular inventory on a regular basis, but due to the fact that Consumer
Product sales volume has been soft for the last year and product prices are
being depressed by other manufacturers closing out excess inventories throughout
the marketplace the Company believes the additional write-downs are necessary.
Without the $1.2 million write-down of inventory, the gross profit decrease
would be $554,485. This reflects the loss of gross profit from the decrease in
Consumer Products, Alba Direct, and Byford sales, and increases in manufacturing
cost caused by manufacturing cost not being reduced proportionate to the
decrease in sales.
Selling, general and administrative expenses(as a percentage of sales)
increased from 19.2% in 1994 to 19.7% in 1995. The increase is primarily due to
the addition of goodwill expense for the Balfour acquisition of $305,000 or .6%
of net sales, and the addition of contract programmers in the MIS department.
Operating income decreased by $2,812,920 for the nine month period in
1995, as compared to 1994. The decrease in operating income was primarily due to
the decrease in sales and gross profits in the Consumer, Alba Direct and Byford
Divisions and the write-down of inventory of $1.2 million, as discussed above.
Net other income/expense aggregated $1,003,399 of expense for the first
nine months of 1995 as compared to an expense of $169,408 in 1994. The increase
in expense is primarily due to two factors. One, the increase in interest
expense of $635,426 which relates to the financing of the Balfour acquisition.
Two, a loss on the sale of the Company's Main Street plant of $90,000. The Main
Street plant was vacated due to consolidation of the Company's Health Products
production in Rockwood, Tennessee and the reorganization of manufacturing in the
Valdese area.
Net loss after taxes for the nine month period ended October 1, 1995 was
$639,238, a decrease of $2,322,057 from net income of $1,682,819 in the third
quarter of 1994. The decrease in net income was primarily due to lower sales and
gross profits in the Consumer Products, Alba Direct and Byford Divisions and the
write-down of inventory, as discussed above.
11
<PAGE>
Other Discussion
The Company completed its relocation of the Valdese, NC Health Products
manufacturing to the newly acquired Balfour facility in Rockwood, TN in the
third quarter. The Company believes the consolidation of Health Products
manufacturing will reduce costs and enable management to lower inventories for
the Company's Health Products operations.
In addition, the Company completed the reorganization of its Consumer
Products operation in Valdese, NC in the third quarter. The reorganization has
enabled the Company to consolidate manufacturing into fewer plants. Management
believes the reorganization will lower manufacturing cost and reduce
inventories.
Items as a percentage of sales are reflected in the following table:
Three Month Periods Ended Nine Month Period Ended
Oct.1, Oct. 2, Oct. 1, Oct.2,
1995 1994 1995 1994
Net sales ................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ................ 86.0% 72.4% 80.3% 74.1%
Gross margin ................ 14.0% 27.6% 19.7% 25.9%
Selling, general and
administrative expenses ..... 18.9% 18.8% 19.7% 19.2%
Operating income ............. (4.9%) 8.8% (0.0%) 6.7%
Other income (expense), net... (2.1%) (0.3%) (2.1%) (0.4)%
Income before income taxes... (7.0%) 8.5% (2.1%) 6.3%
Provision for income taxes... (2.7%) 3.2% ( .8%) 2.3%
Net Income ................ (4.3%) 5.3% (1.3%) 4.0%
===== ===== ===== ====
12
<PAGE>
PART II. OTHER INFORMATION
Items 1,2,3,4, and 5 are inapplicable and have been omitted.
Item 6. Exhibits and Reports on FORM 8-K
a. Exhibits
11. Computation of earnings per share
27. Financial Data Schedule(filed in electronic format only)
b. Form 8-K
None Reported
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
(Signature of Thomas I. Nail appears here)
Date:11-13-95 --------------------------------------
Thomas I. Nail
Chief Financial Officer and
Principal Accounting Officer
14
<PAGE>
EXHIBIT 11
ALBA-WALDENSIAN, INC. AND SUBSIDIARIES
Calculation of Primary and Fully Dilutive Earnings Per Share
(unaudited)
<TABLE>
<CAPTION>
Three Month Period Ended Nine Month Period Ended
Oct.1, Oct.2, Oct.1, Oct.2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary Earning Per Share
Weighted average number of common
shares outstanding ......... 1,864,502 1,851,591 1,864,094 1,846,723
Net Income(Loss) ................ $ (728,743) $792,208 $(639,238) $ 1,682,209
Primary Earning Per Share ....... $ (.39) $ .42 $ (.34) $ .91
Fully Dilutive Earning Per Share
Weighted average number of common
shares outstanding ........ 1,864,502 1,851,591 1,864,094 1,846,723
Common Stock Equivalents(Options) 9,811 37,591 14,835 36,670
1,874,313 1,889,182 1,878,929 1,883,393
Net Income(Loss) ................ $ (728,743) $792,208 $(639,238) $ 1,682,819
Fully dilutive Earnings Per Share $ (.39) $ .42 $ (.34) $ .89
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> OCT-01-1995
<CASH> 81,820
<SECURITIES> 0
<RECEIVABLES> 10,898,973
<ALLOWANCES> 0
<INVENTORY> 16,833,792
<CURRENT-ASSETS> 28,914,843
<PP&E> 29,978,232
<DEPRECIATION> 15,847,339
<TOTAL-ASSETS> 52,847,292
<CURRENT-LIABILITIES> 9,491,739
<BONDS> 0
<COMMON> 4,716,450
0
0
<OTHER-SE> 23,752,422
<TOTAL-LIABILITY-AND-EQUITY> 52,847,292
<SALES> 47,399,453
<TOTAL-REVENUES> 47,414,114
<CGS> 38,075,432
<TOTAL-COSTS> 47,427,083
<OTHER-EXPENSES> 134,114
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 883,946
<INCOME-PRETAX> (1,031,029)
<INCOME-TAX> (391,791)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (639,238)
<EPS-PRIMARY> (.34)
<EPS-DILUTED> (.34)
</TABLE>
