<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 January 30, 1994
----------------
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: 1-9474
FORSTMANN & COMPANY, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1651326
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1185 Avenue of the Americas
New York, New York 10036
(Address of principal executive offices)
(212) 642-6900
(Registrant's telephone number, including area code)
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. X Yes No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 5,588,035 shares of common stock, $.001 par value,
outstanding as of March 14, 1994.
Total number of pages: 17 pages.
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
FORSTMANN & COMPANY, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED JANUARY 30, 1994
AND JANUARY 31, 1993
(unaudited)
<TABLE>
<CAPTION>
January 30, January 31,
1994 1993
------------ ------------
<S> <C> <C>
Net sales $37,451,000 $43,124,000
Cost of goods sold 28,683,000 34,794,000
----------- -----------
Gross profit 8,768,000 8,330,000
Selling, general and administrative expenses 5,578,000 4,431,000
Provision for uncollectible accounts 1,219,000 168,000
----------- -----------
Operating income 1,971,000 3,731,000
Interest expense 3,854,000 3,751,000
----------- -----------
Loss before income taxes (1,883,000) (20,000)
Income tax (benefit) provision - principally
deferred (744,000) 3,000
----------- -----------
Net loss (1,139,000) (23,000)
Preferred stock in-kind dividends and
accretion to redemption value 58,000 50,000
----------- -----------
Loss applicable to common shareholders $(1,197,000) $ (73,000)
=========== ===========
Per share and share information:
Loss per common share $ (.21) $ (.01)
=========== ===========
Weighted average common shares outstanding 5,585,540 5,585,014
=========== ===========
</TABLE>
See notes to financial statements.
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FORSTMANN & COMPANY, INC.
CONDENSED BALANCE SHEETS
JANUARY 30, 1994 AND OCTOBER 31, 1993
(unaudited)
<TABLE>
<CAPTION>
January 30, October 31,
1994 1993
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 53,000 $ 53,000
Accounts receivable, net of allowance of
$3,264,000 and $2,195,000, respectively 40,279,000 48,816,000
Inventories 95,359,000 76,936,000
Current deferred tax assets 2,867,000 2,869,000
Other current assets 1,556,000 2,298,000
------------ ------------
Total current assets 140,114,000 130,972,000
Property, plant and equipment, net 78,233,000 76,521,000
Deferred financing costs, net of accumulated
amortization of $821,000 and $629,000,
respectively 2,971,000 3,024,000
Other assets 6,097,000 5,850,000
------------ ------------
Total $227,415,000 $216,367,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 2,984,000 $ 2,821,000
Accounts payable 17,189,000 24,580,000
Accrued compensation and payroll taxes 4,943,000 5,457,000
Accrued interest payable 2,637,000 648,000
Other accrued liabilities 3,502,000 4,805,000
------------ ------------
Total current liabilities 31,255,000 38,311,000
Long-term debt, plus unamortized premium
of $4,859,000 and $5,036,000, respectively,
and less current maturities 156,005,000 136,038,000
Deferred tax liabilities 3,289,000 4,033,000
Accrued additional pension liability in
excess of accumulated benefit obligation 1,900,000 1,900,000
Senior preferred stock 2,252,000 2,195,000
Shareholders' Equity:
Common stock 5,588 5,585
Additional paid-in capital 28,591,412 28,570,415
Excess of additional pension liability
over unrecognized prior service cost, net (1,101,000) (1,101,000)
Retained earnings since November 2, 1992 5,218,000 6,415,000
------------ ------------
Total shareholders' equity 32,714,000 33,890,000
------------ ------------
Total $227,415,000 $216,367,000
============ ============
See notes to financial statements.
</TABLE>
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FORSTMANN & COMPANY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED JANUARY 30, 1994
AND JANUARY 31, 1993
(unaudited)
<TABLE>
<CAPTION>
January 30, January 31,
1994 1993
------------ ------------
<S> <C> <C>
Net loss $ (1,139,000) $ (23,000)
------------ ------------
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 3,414,000 2,457,000
Income tax (benefit) provision (744,000) 3,000
Provision for uncollectible accounts 1,219,000 168,000
Gain from disposal of machinery
and equipment (20,000) --
Changes in current assets and current
liabilities:
Accounts receivable 7,318,000 1,015,000
Inventories (18,423,000) (9,759,000)
Other current assets 426,000 (1,281,000)
Accounts payable (7,391,000) (3,256,000)
Accrued liabilities (1,798,000) (4,222,000)
Accrued interest payable 1,989,000 2,114,000
Investment in notes receivable, net 316,000 (539,000)
Deferred financing costs (138,000) (1,946,000)
------------ ------------
Total adjustments (13,832,000) (15,246,000)
------------ ------------
Net cash used by operations (14,971,000) (15,269,000)
------------ ------------
Cash flows used in investing activities:
Capital expenditures (4,728,000) (2,519,000)
Investment in computer information systems (637,000) (297,000)
Net proceeds from disposal of machinery
and equipment 25,000 --
------------ ------------
Net cash used by investing activities (5,340,000) (2,816,000)
------------ ------------
Cash flows from financing activities:
Net borrowings under the Citibank Facility -- 1,500,000
Repayment of the Citibank Facility -- (57,987,000)
Net borrowings under the Revolving
Line of Credit 20,015,000 59,947,000
Proceeds from the Term Loan -- 15,000,000
Borrowings under the CIT Equipment Facility 1,113,000
Repayment of other financing arrangements (838,000) (375,000)
Incentive stock options exercised 21,000 --
------------ ------------
Net cash provided by financing activities 20,311,000 18,085,000
------------ ------------
Net increase in cash -- --
Cash at beginning of period 53,000 52,000
------------ ------------
Cash at end of period $ 53,000 $ 52,000
============ ============
</TABLE>
See notes to financial statements.
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FORSTMANN & COMPANY, INC.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THIRTEEN WEEKS ENDED JANUARY 30, 1994
(unaudited)
<TABLE>
<CAPTION>
Pension
Additional Liability Total
Common Paid-In Over Prior Retained Shareholders'
Stock Capital Service Cost Earnings Equity
------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, October 31,
1993 $5,585 $28,570,415 $(1,101,000) $ 6,415,000 $33,890,000
Incentive stock
options exercised 3 20,997 -- -- 21,000
Loss applicable to
common shareholders -- -- -- (1,197,000) (1,197,000)
------ ----------- ------------ ----------- -----------
Balance, January 30,
1994 $5,588 $28,591,412 $(1,101,000) $ 5,218,000 $32,714,000
====== =========== ============ =========== ===========
</TABLE>
See notes to financial statements.
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<PAGE>
FORSTMANN & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 30, 1994
(Unaudited)
1. Forstmann & Company, Inc. ("the Company") designs, manufactures and markets
woolen, worsted and other fabrics primarily used in the production of apparel,
as well as for specialty products and commercial interior products. A majority
of the Company's common stock is owned by Odyssey Partners, L.P.
The Company has adopted a fiscal year ending the Sunday nearest to October
31.
The condensed financial statements presented herein are unaudited and have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of such information have been made. These financial statements
should be read in conjunction with the financial statements and related notes
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1993 (the "1993 Form 10-K"), to which reference is made. Certain
information normally included in financial statements and related notes prepared
in accordance with generally accepted accounting principles has been condensed
or omitted. Because of the seasonal nature of the Company's business, the
results for the interim periods presented are not indicative of the results for
a full fiscal year.
Certain prior year's financial statement balances have been reclassified to
conform with the current year's presentations.
2. Inventories are stated at the lower of cost, determined principally by the
LIFO method, or market and consist of:
<TABLE>
<CAPTION>
January 30, October 31,
1994 1993
------------ ------------
<S> <C> <C>
Raw materials and supplies $17,206,000 $18,073,000
Work-in-process 50,894,000 45,165,000
Finished products 29,215,000 15,601,000
Less market reserves (1,956,000) (1,903,000)
----------- -----------
Total 95,359,000 76,936,000
Difference between LIFO
carrying value and current
replacement cost (1,547,000) (1,565,000)
----------- -----------
Current replacement cost $93,812,000 $75,371,000
=========== ===========
</TABLE>
Although current replacement cost for inventories at January 30, 1994 and
October 31, 1993 was less than LIFO carrying value, the Company's management
believes that the carrying value will be recovered through future sales which
will yield normal profit margins.
3. Weighted common shares outstanding for the thirteen weeks ended January 30,
1994 represent the weighted average shares outstanding during the period and for
the thirteen weeks ended January 31, 1993 represent actual shares outstanding.
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4. As described in the 1993 Form 10-K, the Company has accrued certain
estimated costs for environmental matters. Management believes that such
accrual remains appropriate and reasonable, and no additional amounts have been
accrued for such environmental matters with respect to the thirteen weeks ended
January 30, 1994.
5. As discussed in Note 10 in the 1993 Form 10-K, the Company is involved in
legal proceedings with certain shareholders who dissented from a 1992 merger
with an affiliated company (the "Dissenters' Proceeding"). The Company believes
that any payment in respect thereof should not have a material adverse effect on
the results of operations, financial condition or liquidity of the Company.
However, there is no certainty as to the ultimate outcome of the Dissenters'
Proceeding or the amounts, if any, the court will assess against any of the
parties. If the Company is required to pay a cash amount in excess of $500,000,
such payment, in the absence of a consent by GECC (hereinafter defined), would
constitute an event of default under the GECC Facility (hereinafter defined).
The status of the Dissenters' Proceeding has not changed from the status
disclosed in the 1993 Form 10-K.
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<PAGE>
Item 2.
- -------
FORSTMANN & COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the 1993 Form 10-K
for a discussion of the Company's financial condition as of October 31, 1993,
including a discussion of the Company's anticipated liquidity and working
capital requirements during its 1994 fiscal year.
Financial Condition and Liquidity
- ---------------------------------
Net cash used by operating activities during the thirteen weeks ended January
30, 1994 (the "1994 First Quarter") was $15.0 million, a decrease of $0.3
million from the thirteen weeks ended January 31, 1993 (the "1993 First
Quarter"). Historically, during the first half of its fiscal year, the Company
utilizes cash to fund operations, whereas operations provide cash during the
second half of the Company's fiscal year. Net cash used in investing activities
during the 1994 First Quarter, primarily for capital expenditures, was $5.3
million, an increase of $2.5 million from the 1993 First Quarter. Cash utilized
to fund the Company's operations and investing activities during the 1994 First
Quarter was obtained primarily from borrowings, net of repayments, under the
Revolving Line of Credit (hereinafter defined) ($20.0 million) and the CIT
Equipment Facility (hereinafter defined) ($1.1 million).
Inventories increased $18.4 million from October 31, 1993 to January 30, 1994
due to the manufacture of certain fabric components and fabrics in the quarter
in advance of the traditionally strong selling period in the Company's second
and third fiscal quarters. As a result, the Company utilized available
capacity, which is expected to enable the Company to continue to provide a high
level of service to its customers and to reduce further manufacturing lead
times. The Company expects its inventories to decrease by the end of the third
fiscal quarter as sales levels increase.
The Company entered into a five-year loan agreement as of October 30, 1992
with General Electric Capital Corporation ("GECC"), as agent and lender, (the
"GECC Facility") which provides a revolving line of credit up to a maximum of
$85 million (the "Revolving Line of Credit"). Borrowings under the Revolving
Line of Credit bear interest, at the Company's option, at a floating rate (which
is based on the higher of the prime lending rates or 90 day commercial paper
rates, in either case as defined) or a fixed rate (which is based on LIBOR),
payable monthly. The Company benefited from the use of the fixed interest rate
option during the 1994 First Quarter and expects such benefit to continue for
the remainder of fiscal year 1994. The fixed interest rate was approximately
1.0% less than the floating interest rate during the 1994 First Quarter. On
January 28, 1994 and February 28, 1994, the Company selected for the Revolving
Line of Credit a one-month and two-month fixed rate option, which set the fixed
rate 6.125% and 6.6875% per annum, respectively. The Company entered into an
interest rate cap agreement with a bank on January 31, 1994 that effectively
caps the interest rate at 10.5% on borrowings up to $35.0 million. Such
agreement, which cost $150,500, is effective through October 31, 1997.
On April 5, 1993, the Company issued an aggregate of $20 million Senior
Secured Floating Rates Notes due October 30, 1997 (the "Senior Secured Notes").
Borrowings under the Senior Secured Notes bear interest, at the Company's
option, at a floating rate (which is based on the prime rate, as defined) or a
fixed rate (which is based on LIBOR), payable quarterly. The
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floating rate is 1.75% per annum above the prime rate, as defined, and the fixed
rate is 3.25% per annum above LIBOR. The Senior Secured Notes bear interest at
the fixed rate of 6.50% per annum from January 28, 1994 through April 29, 1994.
Proceeds from the Company's ordinary operations are applied to reduce the
principal amount of borrowings outstanding under the Revolving Line of Credit.
Unused portions of the Revolving Line of Credit may be borrowed and reborrowed,
subject to availability in accordance with the then applicable commitment and
borrowing base limitations. The Company's obligations under the GECC Facility
are secured by liens on substantially all of the Company's assets.
The Company is a party to a loan and security agreement (the "CIT Equipment
Facility") with The CIT Group/Equipment Financing, Inc. which provided financing
for the acquisition of, and to refinance borrowings incurred to acquire, various
textile machinery and equipment. Pursuant to the CIT Equipment Facility, which
is secured with the financed equipment, the Company has an aggregate of $8.8
million of outstanding borrowings at January 30, 1994 at interest rates ranging
from 7.36% to 7.75% per annum.
Long-term debt at January 30, 1994 was $156.0 million, an increase of $20.0
million from October 31, 1993. Such increase was primarily a result of
borrowings, net of repayments, under the GECC Facility and borrowings under the
CIT Equipment Facility, which were used to fund the Company's working capital
needs and to acquire certain machinery and equipment.
The Company's cash requirements, including capital expenditures and working
capital, during the 1994 First Quarter were funded from the proceeds from
borrowings under the Revolving Line of Credit. At January 30, 1994, the
aggregate amount of revolving loans and letters of credit outstanding under the
Revolving Line of Credit was approximately $70.2 million and loan availability,
in excess of the Company's outstanding borrowings and letters of credit, was
approximately $8.3 million.
Capital additions, including capital lease obligations, for plant and
equipment were $4.7 million in the 1994 First Quarter. The Company expects
spending for capital expenditures, primarily machinery and equipment, to be
approximately $22.0 million during the 1994 fiscal year. The Company believes
that cash generated from operations during the 1994 fiscal year, borrowings
under the Revolving Line of Credit and permitted operating and capital leases
will be sufficient to fund its ongoing working capital and capital expenditure
requirements in the 1994 fiscal year. Further, on January 31, 1994, the Company
engaged Donaldson, Lufkin & Jenrette Securities Corporation to act as exclusive
agent for the Company in connection with the private placement of $10 million of
additional Senior Secured Floating Rate Notes due October 30, 1997 (the
"Additional Senior Secured Notes"). The Additional Senior Secured Notes are
expected to have substantially the same terms and conditions as the Senior
Secured Notes except that no sinking fund payments will be required. The
Company expects to complete this transaction in late March or early April 1994,
the net proceeds of which will initially be used to reduce the Company's
Revolving Line of Credit and also for general corporate purposes, including
capital expenditures and possible acquisitions.
Working capital at January 30, 1994 was $108.9 million, an increase of $16.2
million from October 31, 1993. This increase resulted, in part, from a $9.1
million increase in current assets, primarily attributable to an increase in
inventories of $18.4 million, which was somewhat offset by a decrease in
accounts receivable of $7.6 million. The decrease in accounts receivable is
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attributable primarily to the $5.7 million decrease in sales in the 1994 First
Quarter. Further, working capital increased as a result of a $7.1 decrease in
current liabilities, primarily accounts payable. Such increase in working
capital was funded primarily from borrowings under the Revolving Line of Credit.
The increase in inventories primarily occurred in work-in-process and
finished products which increased, net of market reserves, by $5.7 million and
$13.6 million, respectively. The increase in work-in-process and finished
products precedes the seasonal increase in sales, which primarily occurs in the
Company's second and third fiscal quarters.
The Company's sales order backlog at February 27, 1994 was $79.7 million
compared to a sales order backlog of $80.2 million at February 28, 1993.
Although the sales order backlog at February 27, 1994 is almost equal to that of
the same period one year ago, it includes a decline in the sales order backlog
for womenswear and outerwear, which was somewhat offset by an increase in orders
for government products. The decline in the womenswear and outerwear backlog is
attributable to the industry trend toward a later season and in product mix due
to changing fashion trends. Unfilled government orders included in the February
27, 1994 backlog were $5.8 million as compared with none at February 28, 1993.
RESULTS OF OPERATIONS
- ---------------------
THE 1994 FIRST QUARTER COMPARED TO THE 1993 FIRST QUARTER
Net sales for the 1994 First Quarter were $37.5 million, a decrease of 13.2%
from the 1993 First Quarter. Total yards of fabric sold decreased 21.4% during
the 1994 First Quarter, which was somewhat offset by sales of styles with per
yard selling prices above last year's average. The decline in sales is
attributable primarily to a decline in the sale of womenswear fabrics, due to a
shift in product mix resulting from changing fashion trends.
Cost of goods sold decreased to $28.7 million in the 1994 First Quarter from
$34.8 million in the 1993 First Quarter. Gross profit increased 5.3% in the
1994 First Quarter to $8.8 million, and gross profit margin for the 1994 First
Quarter was 23.4% compared to 19.3% for the 1993 First Quarter. This
improvement was attributable to the effects of lower wool prices, improved
manufacturing efficiencies and a shift in product mix to styles with higher per
yard selling prices. The thirteen weeks ended January 30, 1994 and January 31,
1993 include the effects of the Company's quasi reorganization which was
effected as of the beginning of the Company's 1993 fiscal year. Gross profit
for the thirteen weeks ended January 31, 1993 includes a one-time benefit of
$1.8 million ($1.2 million net of income taxes or $0.21 per share). Such one-
time benefit related to the reversal in the 1993 First Quarter of unfavorable
wool purchase commitments recorded as a liability in connection with the quasi
reorganization which resulted in a reduction in cost of goods sold in such
quarter.
Selling, general and administrative expenses, excluding the provision for
uncollectible accounts, increased 25.9% to $5.6 million in the 1994 First
Quarter, compared to $4.4 million in the 1993 First Quarter. Over half of the
increase is attributable to human resources-related expenses primarily
associated with salary increases and the hiring of additional personnel for
management information services. Due to the modernization and computerization
of the Company's styling, sales and marketing operations in New York, coupled
with other computer equipment upgrades, facility, depreciation and amortization
expenses were higher in the 1994 First Quarter than in the 1993 First Quarter.
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The provision for uncollectible accounts increased from $0.2 million in the
1993 First Quarter to $1.2 million in the 1994 First Quarter. Such increase
primarily is attributable to one of the Company's outerwear customers, which
owed the Company $2.4 million, filing for protection under the federal
Bankruptcy Code in February 1994. Prior to such filing, the Company had
reserved approximately 50% of the aggregate amount due from such customer and,
based on information currently available, has reserved as of January 30, 1994
approximately 92% of the aggregate amount due.
Interest expense for the 1994 First Quarter was $3.9 million. The $0.1
million increase in interest expense in the 1994 First Quarter primarily was due
to the additional borrowings under the Revolving Line of Credit.
In the 1994 First Quarter, the Company recognized an income tax benefit of
$0.7 million. As a result of the foregoing, the Company's net loss was $1.1
million in the 1994 First Quarter compared to a net loss of $23,000 in the 1993
First Quarter.
Preferred stock in-kind dividends and accretion to redemption value was
$58,000 in the 1994 First Quarter. As a result of the foregoing, the Company's
loss applicable to common shareholders was $1.2 million for the 1994 First
Quarter, compared to a loss of $73,000 for the 1993 First Quarter.
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PART II -- OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K:
(a) Exhibits
(11) Statement regarding computation of per share earnings --
11.1 Computation of per share earnings (loss)
(15) Letter regarding unaudited interim financial information -
15.1 Independent Accountants' Report, dated March 4, 1994,
from Deloitte & Touche to Forstmann & Company, Inc.
(23) Consents of experts and counsel -
23.1 Letter of Deloitte & Touche, independent
public accountants.
(b) Current Reports on Form 8-K -- no reports on Form 8-K
were filed during the quarter for which this report is filed.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORSTMANN & COMPANY, INC.
-------------------------------
(Registrant)
/s/ William B. Towne
-------------------------------
William B. Towne
Executive Vice President &
Chief Financial Officer
March 14, 1994
- --------------
Date
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
- ------- ----------- ----------
<S> <C> <C>
11.1 Computation of per share earnings (loss) 15
15.1 Independent Accountants' Report, dated
March 4, 1994, from Deloitte & Touche to
Forstmann & Company, Inc. 16
23.1 Consent of Deloitte & Touche 17
</TABLE>
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<PAGE>
Exhibit 11.1
Forstmann & Company, Inc.
Computation of Per Share Earnings (Loss)
<TABLE>
<CAPTION>
Thirteen
Weeks Ended
January 30, 1994
----------------
<S> <C>
Loss applicable to common shareholders $(1,197,000)
===========
Weighted average common shares and common
share equivalents outstanding:
Weighted average common shares outstanding $ 5,585,540
Add average common shares equivalents -
options to purchase common shares, net 74,088
-----------
Average common shares and common share
equivalents outstanding 5,659,628
===========
Loss per common share and common share equivalent $ (.21)
===========
</TABLE>
NOTE: The information provided in this exhibit is presented in accordance with
Regulation S-K, Item 601(b)(11), while income per common share on the
Company's condensed statements of operations and retained earnings
(deficit) is presented in accordance with Accounting Principles Board
(APB) Opinion No. 15. This information is not required by Footnote 2 to
paragraph 14 of APB Opinion No. 15 as dilution is anti-dilutive.
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<PAGE>
Exhibit 15.1
INDEPENDENT ACCOUNTANT'S REPORT
Forstmann & Company, Inc.:
We have made a review of the accompanying balance sheet of Forstmann & Company,
Inc. as of January 30, 1994 and the related statements of operations,
shareholders' equity, and cash flows for the thirteen weeks ended January 30,
1994 and January 31, 1993 in accordance with standards established by the
American Institute of Certified Public Accountants.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical procedures to financial data, and making
inquires of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such financial statements for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Forstmann & Company, Inc. as of October 31, 1993
and the related statements of operations, shareholders' equity, and cash flows
for the fifty-two weeks then ended (not presented herein); and in our report
dated December 9, 1993, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of October 31, 1993 is fairly stated in all material
respects in relation to the balance sheet from which it has been derived.
/s/ Deloitte & Touche
- ---------------------
Atlanta, Georgia
March 4, 1994
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<PAGE>
Exhibit 23.1
March 14, 1994
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, NY 10036
Dear Sirs:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Forstmann & Company, Inc. for the periods ended January 30, 1994
and January 31, 1993, as indicated in our report dated March 4, 1994; because we
did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended January 30, 1994, is
incorporated by reference in Registration Statement No. 33-55770 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act, is not considered a part of the Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
/s/Deloitte & Touche
- --------------------
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