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 July 4, 1999
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)
(828) 879-6500
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
As of August 2, 1999, the number of common shares outstanding was 3,161,629.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ALBA-WALDENSIAN, INC.
Consolidated Balance Sheets
($000's)
July 4, December 31,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $85 $15
Accounts receivable, net of allowance for
doubtful accounts of $328 and $260, respectively 9,648 6,426
Inventories:
Materials and supplies 4,201 3,076
Work-in-process 8,514 7,048
Finished goods 3,561 3,498
----- -----
Total Inventories 16,276 13,622
------ ------
Deferred income taxes 906 906
Prepaid expenses and other 1,376 602
----- ---
Total Current Assets 28,291 21,571
------ ------
PROPERTY AND EQUIPMENT 42,166 37,441
Less: accumulated depreciation (20,757) (19,559)
------- ------
Net Property and Equipment 21,409 17,882
------ ------
OTHER ASSETS:
Notes receivable 13 13
Trademarks and patents 395 427
Excess of cost over net assets acquired, net 6,591 6,886
----- -----
6,999 7,326
----- -----
TOTAL ASSETS $56,699 $46,779
====== ======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALBA-WALDENSIAN, INC.
Consolidated Balance Sheets
($000's except share amounts)
July 4, December 31,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $1,286 $852
Accounts payable 4,460 2,989
Accrued expenses 1,852 2,842
----- -----
Total Current Liabilities 7,598 6,683
LONG-TERM DEBT (Note 2) 15,507 8,383
DEFERRED COMPENSATION 210 200
DEFERRED INCOME TAX LIABILITY 1,864 1,864
----- -----
Total Liabilities 25,179 17,130
------ ------
STOCKHOLDERS' EQUITY:
Common stock - authorized 5,000,000 shares, $2.50 par value; issued: 3,773,000
and 2,829,834 shares in 1999 and 1998 respectively; outstanding:
3,154,629 and 2,361,231 in 1999 and 1998, respectively 9,433 7,075
Additional paid-in capital 4,466 6,823
Retained earnings 20,720 18,436
------ ------
34,619 32,334
Less treasury stock - at cost
(618,371 and 468,603 shares, respectively) (3,099) (2,685)
----- -----
Total Stockholders' Equity 31,520 29,649
------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $56,699 $46,779
====== ======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALBA-WALDENSIAN, INC.
Consolidated Statements of Operations
(Unaudited)
($000's except per share amounts)
Three Months Ended Six Month Periods Ended
July 4, June 29, July 4, June 29,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $19,321 $17,714 $40,446 $36,010
Cost of sales 13,996 13,196 29,013 27,022
------ ------ ------ ------
Gross margin 5,325 4,518 11,433 8,988
Selling, general and
administrative expense 3,548 3,222 6,853 6,264
----- ----- ----- -----
Operating income 1,777 1,296 4,580 2,724
----- ----- ----- -----
Interest expense 343 220 631 435
Other expenses 23 23 46 42
-- -- -- --
Total other expenses 366 243 677 477
--- --- --- ---
Income before income taxes 1,411 1,053 3,903 2,247
Provision for income taxes 422 400 1,369 854
--- --- ----- ---
Net income $989 $653 $2,534 $1,393
==== ==== ====== =====
Net income per common share
- Basic $.32 $.19 $.81 $.39
- Diluted $.30 $.18 $.76 $.38
Weighted average number of shares
of common stock outstanding
- Basic 3,138 3,450 3,139 3,590
- Diluted 3,334 3,585 3,343 3,657
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALBA-WALDENSIAN, INC.
Consolidated Statements of Stockholders' Equity
(Unaudited)
($000's except share amounts)
Additional
Common Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount Total
------ ------ ------- -------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 1,886,580 $4,716 $9,182 $13,651 (19,177) $(137) $27,412
Purchase of Treasury Stock (295,000) (2,328) (2,328)
Net Income 1,393 1,393
----- -----
Balance at June 28, 1998 1,886,580 $4,716 $9,182 $15,044 314,177) $(2,465) $26,477
========= ===== ===== ====== ======= ===== ======
Balance at January 1, 1999 2,829,834 $7,075 $6,823 $18,436 (468,603) $(2,685) $29,649
Purchase of Treasury Stock (30,900) (604) (604)
Exercise of Stock Options (73) 39,120 190 117
Dividends Paid (177) (177)
Stock Split 943,166 2,358 (2,357) (157,988) 1
Net Income 2,534 2,534
----- -----
Balance at July 4, 1999 3,773,000 $9,433 $4,466 $20,720 (618,371) $(3,099) $31,520
========= ===== ===== ====== ======= ===== ======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALBA-WALDENSIAN, INC.
Consolidated Statements of Cash Flows
(Unaudited)
($000's)
Six Month Periods Ended
July 4, June 28,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,534 $ 1,393
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,525 1,216
Provision for bad debts 60 90
Loss on disposal of property (2) 2
Provision for inventory obsolescence 1,004 441
Changes in operating assets and liabilities providing (using) cash:
Accounts receivable (3,210) (1,001)
Refundable Income Taxes (71) --
Inventories (3,657) 137
Prepaid expenses and other (774) (229)
Accounts payable 1,471 (90)
Accrued expenses and other liabilities (531) 308
Income taxes payable (459) 88
Deferred compensation 10 1
-- -
Net cash (used in) provided by operating activities (2,100) 2,356
----- -----
INVESTING ACTIVITIES:
Capital expenditures (2,222) (1,770)
Proceeds from notes receivable -- 2
-- -
Net cash used in investing activities (2,222) (1,768)
----- ------
FINANCING ACTIVITIES:
Net borrowings under line
of credit agreement 4,950 5,490
Principal payments notes and Capital Leases (554) (9,824)
Payment of dividends (177) --
Proceeds from Issuance of Long Term Debt 660 3,664
Cash proceeds for issuance of stock options 118 --
Repurchase of capital stock (605) (2,328)
----- -------
Net cash provided by (used in) financing activities 4,392 (2,998)
----- -------
NET INCREASE (DECREASE) IN CASH 70 (2,410)
CASH AT BEGINNING OF PERIOD 15 2,416
-- -----
CASH AT END OF PERIOD $ 85 $ 6
== =
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALBA-WALDENSIAN, INC.
Consolidated Statements of Cash Flows
(Unaudited)
($000's)
Six Month Periods Ended
July 4, June 29,
1999 1998
---- ----
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<S> <C> <C>
Cash paid during the period for:
Interest $547 $365
Income taxes $1,900 $766
<FN>
During the first six months of 1999, the Company acquired production equipment
totaling $2,503,000 through the issuance of capital leases as compared $180,000
in 1988
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
ALBA-WALDENSIAN, INC.
Notes to Consolidated Financial Statement
(Unaudited)
1. UNAUDITED FINANCIAL INFORMATION
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position as of July 4, 1999, and the results of operations for the
three and six month periods ended July 4, 1999 and June 29, 1998. These
unaudited financial statements should be read in conjunction with the Company's
most recent audited financial statements.
The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year.
All per share and weighted average share information for 1998 has been
restated to reflect the 3 for 2 stock split effected on November 16, 1998 and
the 4 for 3 split effected June 4, 1999.
2. FINANCING
On May 14, 1998, the Company entered into a three-year $21,000,000
financing facility with a major bank composed of up to a $15,000,000 revolving
loan, based upon levels of accounts receivable and inventories, a $3,000,000
term loan and a $3,000,000 credit line to fund future capital expenditures. The
new facility bears interest at Prime plus 0.5% (or at the option of the Company,
portions of the facility may be priced at LIBOR plus 2.25%) and is secured by
substantially all of the assets of the Company.
The loan agreement requires that the Company maintain certain levels of
tangible net worth and fixed charge coverage ratios as well as limiting the
level of capital expenditures ($16.2 million in 1999) and prohibiting other
financing (in excess of $10.5 million in 1999). At July 4, 1999, the Company was
in compliance with the covenants contained in the loan agreement.
During the first six months of 1999, the Company secured $2,503,000 of
capital lease financing covering the acquisition of machinery during 1999. This
facility is secured by only the acquired machinery, bears interest at rates
varying from 7.56% to 7.96% and provides for level monthly payments over its
five-year term.
3. DIVIDENDS
The Company declared a semi-annual cash dividend of $.075 per share
($177,000) on its common stock payable on February 22, 1999 to shareholders of
record on February 12, 1999. Under the Company's loan agreement with a bank (see
Note 2), dividends and repurchases of Company stock may not exceed $4,000,000
during the three-year term of the loan. As of July 4, 1999, dividends and
repurchases of Company stock have totaled $3,678,000.
4. EARNINGS PER SHARE
<TABLE>
<CAPTION>
Six Month Period Ended June 28, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
(000's, except per share amounts)
<S> <C> <C> <C>
Basic EPS
Net Income $1,393 3,590 $.39
Effect of Dilutive Securities
Stock Options -- 67
Diluted EPS
Net Income $1,393 3,657 $.38
</TABLE>
<TABLE>
<CAPTION>
Six Month Period Ended July 4, 1999
Income Shares Per-Share
(Numerator) (Denominator) Amount
(000's, except per share amounts)
<S> <C> <C> <C>
Basic EPS
Net Income $2,534 3,139 $.81
Effect of Dilutive Securities
Stock Options -- 204 --
Diluted EPS
Net Income $2,534 3,343 $.76
</TABLE>
5 SEGMENT INFORMATION
The following table contains selected information with respect to the
Company's business segments:
<TABLE>
<CAPTION>
Six Month Periods Ended
July 4, June 28,
1999 1998
($000's)
<S> <C> <C>
Consumer Products
Net sales $22,590 $19,637
Segment profit 3,320 2,259
% Net sales 14.7% 11.5%
Segment assets 33,602 N/A
Health Products
Net sales $17,856 $16,373
Segment profit 3,769 2,703
% Net sales 21.1% 16.5%
Segment assets 12,487 N/A
Segment profit -
Consumer Products $3,320 $2,259
Health Products 3,769 1,495
----- -----
Total segment profit 7,089 2,542
General and administrative expenses 2,509 1,114
Other expense, net 677 233
--- ---
Income before income taxes $3,903 $1,195
<FN>
N/A = Information Not Available
</FN>
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
We currently have a three-year $21,000,000 financing facility with a
major bank (see Note 2 of Notes to Consolidated Financial Statements). This
financing facility provides a revolving loan of up to $15,000,000, depending
upon levels of accounts receivable and inventories, a term loan of $3,000,000
and a capital expenditure line of $3,000,000. In addition, the facility permits
the Company to secure other outside financing of capital expenditures of up to
$10,500,000 in 1999. We have secured a total commitment of $10,500,000 for lease
financing in 1999 with two major financial institutions and through the second
quarter have funded $2,503,000 of capital expenditures under such leases.
Working capital continues to be adequate to support the Company's
operations. On July 4, 1999, the Company had current working capital of
$20,693,000 with a current ratio of 3.7 to 1. This is comparable to $14,888,000
or 3.2 to 1 at December 31, 1998. Working capital increased during 1999
primarily due to a $3,222,000 increase in accounts receivable from an unusually
low level of $6,426,000 at December 31, 1998 to $9,648,000 while for the same
periods the number of outstanding days sales outstanding decreased from 46.2 to
43.0. Also, inventories have increased by $2,654,000 from $13,622,000 to
$16,276,000, partially due to a delay in the completion of certain large orders
originally scheduled to ship in the second quarter. Under the terms of our new
financing facility, all of our excess cash is used daily to reduce the
outstanding balance on our revolving credit line. This results in increasing the
amount available to borrow under the revolver while at the same time providing
for the maximum short-term investment return on the Company's available cash
balances. However, this results in our not reporting normal levels of cash
(current asset) which have been utilized to temporarily reduce our revolving
credit line (long-term liability). Availability under our revolving credit line
totaled $4,358,000 at July 4, 1999.
Liquidity needs are primarily affected by and related to capital
expenditures and changes in the Company's business volume. During the first six
months of 1999, these needs were adequately met through our $21 million
financing facility and $2,503,000 of lease financing. Capital expenditures for
the first six months of 1999 totaled $4,725,000, reflecting continued expansion
of our seamless knitting capacity to meet the increasing demand for our seamless
products. This level of capital expenditures compares to $1,770,000 for the
first six months of 1998.
We intend to continue to aggressively expand our seamless knitting
capacity in 1999 in response to increasing demand for our seamless women's
apparel. In addition to the 66% capacity increase in 1998, we have enough
knitting machines on order with scheduled delivery dates in 1999 to further
increase seamless knitting capacity by another 85% from its beginning 1999
levels. Capital expenditures in 1999 may approximate $16,000,000. This level of
investment in the future of our Company will allow us to capitalize on the
expanding demand for seamless apparel.
Cash utilized in operating activities was $2,100,000 in the first six
months of 1999 as compared to $2,356,000 of cash generated in the comparable
period of 1998. This decrease in cash provided in 1999 was primarily due to a
net increase of $3,210,000 in accounts receivable from an unusually low level of
$6,421,000 at December 31, 1998 to $9,648,000 at July 4, 1999 coupled with an
increase in inventories of $3,657,000.
Net cash used in investing activities during the first six months of
1999 was $2,222,000 compared to $1,770,000 in 1998. The cash used in each of
these two periods was primarily for capital expenditures to expand capacities,
and to replace and update plant and equipment. In addition to the $2,222,000 of
cash expenditures to acquire productive equipment during the first six months of
1999, the Company also acquired $2,503,000 of equipment through capital lease
financing. Financing activities in 1999 included $4,950,000 of funding from the
Company's revolving line of credit, the repurchase of 41,310 shares ($605,000)
of the Company's common stock and the payment of $177,000 (5.625 cents per
post-split share) in cash dividends.
The Company declared a semi-annual cash dividend of $.075 per share
($.05625 per post-split share) totaling $177,000 on its common stock payable on
February 22, 1999, to shareholders of record on February 12, 1999. Under the
Company's loan agreement with a bank, dividends and repurchases of Company stock
may not exceed $4,000,000 during the three-year term of the loan. At July 4,
1999, dividends and stock repurchases totaled $3,678,000 from the inception of
the loan.
On June 4, 1999, we effected a 4 for 3 stock split in the form of a 33
1/3% stock dividend to shareholders of record as of May 25, 1999. All per share
amounts and weighted average share information has been retroactively restated
to reflect this stock split. Subsequent to July 4, 1999, we declared a cash
dividend of $.075 per share (post-split) payable on August 24, 1999 to common
stockholders of record on August 14, 1999.
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
Items as a percentage of sales are reflected in the following table:
Three Month Periods Ended Six Month Periods Ended
July 4, June 28, July 4, June 28,
1999 1998 1999 1998
---- ---- ---- ----
(%)
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
Cost of sales 72.4 74.5 71.7 75.0
---- ---- ---- ----
Gross margin 27.6 25.5 28.3 25.0
Selling, general and
administrative expenses 18.4 18.2 16.9 17.4
---- ---- ---- ----
Operating income 9.2 7.3 11.4 7.6
Other expense, net 1.9 1.4 1.8 1.3
--- --- --- ---
Income before income taxes 7.3 5.9 9.6 6.3
Provision for income taxes 2.2 2.2 3.3 2.4
--- --- --- ---
Net income 5.1 3.7 6.3 3.9
</TABLE>
Three Month Periods Ended July 4, 1999 and June 28, 1998
During the second quarter of 1999, the Company reached record levels of
revenues and earnings. Second quarter earnings of $989,000 increased 55.5% as
compared to $653,000 in the second quarter of 1998. The quarterly earnings per
share of 32 cents (30 cents fully diluted) represented an increase of 67%
(diluted) and was a record second quarter for the Company as compared to 19
cents (18 cents fully diluted) per share in the second quarter of 1998. Revenues
for the 1999-quarter increased 9.1% reaching a second quarter record level of
$19,321,000 as compared to $17,714,000 for the prior year.
Net sales by division for the second quarter of 1999 compared to the
second quarter of 1998 are set forth in the following table ($000's):
<TABLE>
<CAPTION>
Three Month Periods Ended
July 4, June 28, Increase/ % Increase/
1999 1998 (Decrease) (Decrease)
---- ---- ---------- ----------
<S> <C> <C> <C> <C>
Consumer Products $10,529 $9,764 $765 7.8%
Health Products 8,792 7,950 842 10.6%
----- ----- ---
Total $19,321 $17,714 $1,607 9.1%
</TABLE>
Sales of Consumer Products increased $765,000 during the second
quarter, or 7.8% over the comparable quarter of 1998. This increase results
primarily from continuing acceptance of the Company's seamless women's apparel
as consumers continued to respond positively to the unsurpassed fit, comfort and
style of seamless intimates and combination innerwear/outerwear products.
Sales of Health Products increased $842,000 or 10.6% lead by increases
in treads and stockinettes.
Gross margins increased in 1999 to 27.6% of net sales (25.5% in 1998)
as the result of increased volume, higher margins on new styles of seamless
women's apparel developed after the second quarter of 1998 and tighter cost
controls.
Selling, general and administrative expenses increased 10.1% during the
second quarter of 1999, reflective of the higher volumes but remained relatively
constant as a percentage of net sales at 18.2% in 1998 and 18.4% in 1999.
Interest expense increased as a result of higher borrowings under the
revolving line of credit agreement to fund increased capital expenditures
necessary to continue our aggressive expansion of productive capacity to keep
pace with the increasing demand for our products.
Six Month Periods Ended July 4, 1999 and June 28, 1998
During the first half of 1999, the Company reached record levels of
revenues and earnings. This year's earnings of $2,534,000 increased 81.9% as
compared to $1,393,000 in the same six months of 1998. The 1999 earnings per
share of 81 cents (76 cents fully diluted) represented an increase of 100%
(diluted) and was a record first six months for the Company as compared to 39
cents (38 cents fully diluted) per share in the six months of 1998. Revenues for
the 1999 year to date period increased 12.3% reaching a first six months record
level of $40,446,000 as compared to $36,010,000 for the same six months of the
prior year.
Net sales by division for the first six months of 1999 compared to the
first six months of 1998 are set forth in the following table ($000's):
<TABLE>
<CAPTION>
Six Month Periods Ended
July 4, June 28, Increase/ % Increase/
1999 1998 (Decrease) (Decrease)
---- ---- ---------- ----------
<S> <C> <C> <C> <C>
Consumer Products $22,590 $19,637 $2,953 15.0%
Health Products 17,856 16,373 1,483 9.1%
------ ------ -----
Total $40,446 $36,010 $4,436 12.3%
</TABLE>
Sales of Consumer Products increased $2,953,000 during the first six
months, or 15.0% over the comparable six months of 1998. This increase results
primarily from continuing acceptance of the Company's seamless women's apparel
as consumers continued to respond positively to the unsurpassed fit, comfort and
style of seamless intimates and combination innerwear/outerwear products.
Sales of Health Products increased $1,483,000 or 9.1% lead by increases
in treads and stockinettes.
Gross margins increased in 1999 to 28.3% of net sales (25.0% in 1998)
as the result of increased volume, higher margins on new styles of seamless
women's apparel developed after the second quarter of 1998 and tighter cost
controls.
Selling, general and administrative expenses increased 9.4% during the
six months of 1999, reflective of the higher volumes but declined as a
percentage of net sales from 17.4% in 1998 to 16.9% in 1999.
Interest expense increased as a result of higher borrowings under the
revolving line of credit agreement to fund increased capital expenditures
necessary to continue our aggressive expansion of productive capacity to keep
pace with the increasing demand for our products.
FORWARD-LOOKING INFORMATION
We continue to expect the long-term growth of the seamless apparel
business to produce outstanding revenue and earnings for Alba, however, we must
further develop and expand our manufacturing processes and finishing capacities
to keep pace with the marketplace's demand for our seamless products and the
rapid expansion of our knitting capacity. Consumer Products' revenues in the
second quarter fell short of the 1st quarter as the Company experienced delays
in the completion of customer orders caused by production capacity limitations
and longer production cycles associated with certain new technology yarns and
new product designs. While we are implementing the steps necessary to shorten
these production processes and to expand finishing capacity, the effect of
certain of these efforts may not be felt until the latter part of 1999.
Our Health Products Division has performed well through the first six
months of 1999 and we anticipate the Division to continue on its steady growth
pattern throughout the remainder of the year and into the year 2000.
YEAR 2000 COMPLIANCE
We have addressed the Year 2000 compliance issues in three parts; our
products, our internal systems and third-parties.
Our Products - Year 2000 compliance is not an issue for any of our
products. None of our products, women's hosiery, women's intimate apparel or
health products contains date-sensitive-electronic components or date-sensitive
software.
Our Internal Systems - We are confident that all major systems within
Alba will be Year 2000 compliant before the turn of the century. For operational
reasons, in late 1996 we decided to install a new integrated manufacturing and
financial reporting management information system. This new system involved
acquiring new system hardware, new PC-based local and wide-area networks and the
standardization of PC software. All of these hardware and software systems are
Year 2000 compliant. The new system hardware, the new PC-based local area
network and the new financial reporting system are now operational. The new
manufacturing system and the wide-area network should be operational in the
third quarter or early fourth quarter of 1999. Additionally, we have
substantially completed our review of all other date-sensitive systems
throughout Alba with no material non-compliance problems noted. This review also
included non-information technology systems and equipment such as the electronic
components of our knitting and other manufacturing equipment.
Third Parties - Like most all other companies, we are dependent upon
our material vendors, suppliers and customers to ensure that we remain a going
concern. We are unable to control the actions of others with respect to their
Year 2000 compliance. However, our material suppliers, service providers and
customers are mostly all very large companies within their own industries and
have much at stake in ensuring their own compliance. We are questioning these
third parties as to their compliance plans and to date have not been advised of
any major non-compliance problems. We expect to complete this process during the
third quarter and will then develop contingency plans in indicated problem
areas, as feasible. The risks to Alba in this area are obviously significant;
for example, we could not operate without a continuous source of electricity to
our manufacturing plants and there are no realistic contingency alternatives
available. Similarly, there is very little that we can do to continue sales to
customers who themselves are unable to operate due to their own failure to
ensure Year 2000 compliance.
We have not incurred and do not anticipate that we will incur material
costs associated with the Year 2000 compliance issue. Our operational decision
in 1996 to replace our manufacturing and financial reporting systems had the
side benefit of eliminating most Year 2000 compliance issues for us.
THIS QUARTERLY REPORT ON FORM 1O-Q, INCLUDING ANY INFORMATION INCORPORTATED
THEREIN BY REFERENCE, MAY CONTAIN, IN ADDITION TO HISTORICAL INFORMATION,
CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE SIGNIFICANT RISKS AND
UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT'S BELIEF
AS WELL AS ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO,
MANAGEMENT PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS CAN GENERALLY BE
IDENTIFIED AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT USUALLY WILL INCLUDE
WORDS SUCH AS "THE COMPANY BELIEVES"; OR "ANTICIPATES", OR "EXPECTS"; OR WORDS
OF SIMILAR IMPORT. SIMILARLY, STATEMENTS THAT DESCRIBE THE COMPANY'S FUTURE
PLANS, OBJECTIVES, ESTIMATES OR GOALS ARE ALSO FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ADDRESS FUTURE EVENTS AND CONDITIONS CONCERNING CAPITAL EXPENDITURES,
EARNINGS, SALES, LIQUIDITY AND CAPITAL RESOURCES, AND ACCOUNTING MATTERS.
THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN, OR
IMPLIED BY, THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN ITEM 1 DESCRIPTION OF BUSINESS; AND ELSEWHERE IN THE COMPANY'S
ANNUAL REPORT ON FORM 1O-K FOR THE YEAR ENDED DECEMBER 31, 1998, OR IN
INFORMATION INCORPORATED THERIN BY REFERENCE, AS WELL AS FACTORS SUCH AS FUTURE
ECONOMIC CONDITIONS, ACCEPTANCE BY CUSTOMERS OF THE COMPANY'S PRODUCTS, CHANGES
IN CUSTOMER DEMAND, LEGISLATIVE, REGULATORY AND COMPETITIVE DEVELOPMENTS IN
MARKETS IN WHICH THE COMPANY OPERATES AND OTHER CIRCUMSTANCES AFFECTING
ANTICIPATED REVENUES AND COSTS. THE COMPANY UNDERTAKES NO OBLIGATION TO RELEASE
PUBLICLY THE RESULT OF ANY REVISIONS TO THESE FORWARD LOOKING STATEMENTS THAT
MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS REPORT OR
TO REFLECT THE OCCURRENCE OF OTHER ANTICIPATED EVENTS.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on FORM 8-K
a. Exhibits
27. Financial Data Schedule (filed in electronic format only)
b. Form 8-K
None
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.
Date: August 12, 1999 /s/ Glenn J. Kennedy
--------------------
Vice President and Treasurer
(Chief Financial Officer and
Principal Accounting Officer
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