SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 8, 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: 1-4715
The Warnaco Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 95-4032739
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Park Avenue
New York, New York 10016
(Address of registrant's principal executive offices)
(212) 661-1300
(Registrant's telephone number, including area code)
Copies of all communications to:
The Warnaco Group, Inc.
90 Park Avenue
New York, New York 10016
Attention: Vice President and General Counsel
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 [ ]
The number of shares outstanding of the registrant's Class A Common Stock
as of November 18, 1994 is as follows: 42,044,192.
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
THE WARNACO GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands of dollars)
<TABLE>
<CAPTION>
October 8, January 8,
1994 1994
-------- --------
(unaudited)
Assets
<S> <C> <C>
Current assets:
Cash (restricted $112 and $886, respectively)........... $ 5,456 $ 4,651
Accounts receivable -- net.............................. 176,046 126,507
Inventories:
Finished goods........................................ 131,226 120,203
Work in process....................................... 57,862 65,285
Raw materials......................................... 56,520 54,015
-------- --------
Total inventories.................................... 245,608 239,503
Other current assets...................................... 25,493 22,148
-------- --------
Total current assets................................. 452,603 392,809
-------- --------
Property, plant and equipment (net of accumulated
depreciation of $71,328 and $65,257, respectively)...... 84,730 73,636
Other assets:
Intangibles and other assets -- net..................... 275,870 222,188
-------- --------
$813,203 $688,633
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable........................................... $ 4,350 $ 5,819
Borrowing under revolving credit facility............... 176,977 100,523
Current portion of long-term debt....................... 52,175 49,171
Accounts payable and accrued liabilities................ 99,368 112,557
Federal and other income taxes.......................... 1,506 2,778
-------- --------
Total current liabilities............................ 334,376 270,848
-------- --------
Long-term debt............................................ 243,628 245,518
Other long-term liabilities............................... 17,590 13,132
Stockholders' equity:
Preferred Stock; $.01 par value......................... -- --
Common Stock; $.01 par value(1)......................... 421 404
Capital in excess of par value(1)....................... 337,888 315,068
Treasury stock.......................................... (5,000) --
Cumulative translation adjustment....................... (514) 279
Accumulated deficit....................................... (107,467) (147,225)
Notes receivable for common stock issued.................. (7,719) (9,391)
-------- --------
Total stockholders' equity........................... 217,609 159,135
-------- --------
$813,203 $688,633
======== ========
</TABLE>
(1) Adjusted to reflect the two-for-one stock split for shareholders of
record on September 8, 1994 and effective October 3, 1994.
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
(in thousands of dollars except share data)
<TABLE>
<CAPTION>
Quarter ended Nine months ended
------------------------------ ------------------------------
Oct. 8, 1994 Oct. 2, 1993 Oct. 8, 1994 Oct. 2, 1993
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net revenues(1).............................. $ 217,872 $ 183,957 $ 555,905 $ 499,036
Cost of goods sold........................... 147,976 121,258 378,643 333,445
----------- ----------- ----------- -----------
Gross profit................................. 69,896 62,699 177,262 165,591
Selling, administrative and general expenses. 39,812 34,482 108,918 99,103
Loss on California earthquake................ -- -- 3,000 --
----------- ----------- ----------- -----------
Income before interest and income taxes...... 30,084 28,217 65,344 66,488
Interest expense............................. 7,873 10,906 23,586 31,094
----------- ----------- ----------- -----------
Income before income taxes................... 22,211 17,311 41,758 35,394
Provision for income taxes................... 500 105 2,000 1,917
----------- ----------- ----------- -----------
Income from continuing operations(2)......... 21,711 17,206 39,758 33,477
Cumulative effect of change in method of
accounting for postretirement benefits..... -- -- -- (10,500)
----------- ----------- ----------- -----------
Net income................................... $ 21,711 $ 17,206 $ 39,758 $ 22,977
=========== =========== =========== ===========
Income per common share:(3)
Income from continuing operations(2)....... $ 0.52 $ 0.43 $ 0.97 $ 0.84
Cumulative effect of change in method of
accounting for postretirement benefits... -- -- -- (0.26)
----------- ----------- ----------- -----------
Net income per common share(3)............... $ 0.52 $ 0.43 $ 0.97 $ 0.58
=========== =========== =========== ===========
Weighted average number of common
shares outstanding(3)...................... 41,802,944 39,735,912 41,208,672 39,767,450
=========== =========== =========== ===========
</TABLE>
(1) Menswear sales on discontinued brands (Dior, Nicklaus and Puritan) were
lower by $21 million for the third quarter and $56 million for the nine
months. All charges associated with discontinued brands were recorded as a
non-recurring expense in the fourth quarter of 1993. Intimate apparel
sales include Calvin Klein men's underwear, which was acquired on March
14, 1994. On a pro forma basis, as though Calvin Klein businesses were
acquired at the beginning of the second quarter of 1993, revenues for the
third quarter and year-to-date of 1993 would have been $16.7 million and
$27.4 million higher, respectively; net income for those periods would not
have been materially impacted from the reported amounts in the above
statement.
(2) Income from continuing operations before loss on California earthquake
was $42.8 million or $1.04 per share for the nine months ended
October 8, 1994.
(3) Adjusted to reflect the two-for-one stock split for shareholders of
record on September 8, 1994 and effective October 3, 1994.
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Consolidated Condensed Statements of Cash Flow (unaudited)
Increase (Decrease) in Cash
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine months ended
-----------------------------
Oct. 8, 1994 Oct. 2, 1993
------------ ------------
<S> <C> <C>
Cash flow from operations:
Net income................................................................... $ 39,758 $ 22,977
Non cash items included in net income:
Depreciation and amortization.............................................. 14,644 15,729
Interest................................................................... 832 3,029
Loss on California earthquake.............................................. 3,000 --
Cumulative effect of change in method of accounting for
postretirement benefits................................................... -- 10,500
Income taxes paid............................................................ (3,272) (840)
Other changes in operating accounts.......................................... (65,570) (86,942)
Other........................................................................ (9,807) (11,990)
-------- --------
Cash used in operations........................................................ (20,415) (47,537)
-------- --------
Cash flow from investing activities:
Net proceeds from sale of fixed assets....................................... 1,375 460
Purchase of property, plant & equipment...................................... (19,407) (10,310)
Payment for purchase of Calvin Klein underwear businesses and trademarks..... (33,103) --
-------- --------
Cash used in investing activities.............................................. (51,135) (9,850)
-------- --------
Cash flow from financing activities:
Borrowings under revolving credit facilities................................. 76,909 61,941
Net proceeds from the repayment
of notes receivable from employees......................................... 1,672 920
Repayments of debt........................................................... (9,437) (10,206)
Proceeds from other financings............................................... 8,626 7,451
Increase in deferred financing costs......................................... (415) (3,420)
Payments to acquire treasury stock........................................... (5,000) --
-------- --------
Cash provided from financing activities........................................ 72,355 56,686
-------- --------
Increase (decrease) in cash.................................................... 805 (701)
Cash at beginning of period.................................................... 4,651 3,763
-------- --------
Cash at end of period.......................................................... $ 5,456 $ 3,062
======== ========
Other changes in operating accounts:
Accounts receivable.......................................................... $(41,715) $(37,292)
Inventories.................................................................. (1,071) (19,207)
Other current assets......................................................... (3,345) (11,779)
Accounts payable and accrued liabilities..................................... (21,439) (20,581)
Income taxes payable......................................................... 2,000 1,917
-------- --------
$(65,570) $(86,942)
======== ========
Supplemental disclosure of cash flow information:
In the month of March, Warnaco completed the acquisition of
Calvin Klein underwear businesses and trademarks:
Fair value of assets acquired.............................................. $ 69,191
========
Source of Payment:
Cash paid.................................................................. $ 33,103
Issuance of common stock in conjunction with the
Calvin Klein acquisition.................................................. 22,836
Liabilities assumed........................................................ 13,252
--------
Total Payment.............................................................. $ 69,191
========
</TABLE>
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Notes to Consolidated Condensed Financial Statements
1. In the opinion of the Company, the accompanying consolidated
condensed financial statements contained all the adjustments (all of which
were of a normal recurring nature) necessary to present fairly the financial
position of the Company as of October 8, 1994 as well as its results of
operations and cash flows for the periods ended October 8, 1994 and October 2,
1993. Operating results for interim periods may not be indicative of results
for the full fiscal year.
2. Certain amounts for prior periods have been reclassified to be
comparable with the current period presentation.
3 . In the first quarter of 1994, there was a $3.0 million
non-recurring charge related to the January 1994 California earthquake.
4. On March 14, 1994, the Company acquired the Calvin Klein worldwide
businesses and trademarks for men's underwear, a worldwide license for Calvin
Klein men's accessories and the Calvin Klein worldwide businesses and
trademarks for women's intimate apparel upon the expiration of an existing
license on December 31, 1994.
5. On June 8, 1994, the Company amended its Credit Agreement to
increase the maximum amount of borrowing available under its revolving loan
facility from $200 million to $235 million to provide flexibility for future
growth.
6. On August 12, 1994, the Company amended its Credit Agreement to
increase the aggregate cap for its letter of credit and financing line
commitment from $55 million to $80 million and eliminate the sublimit on the
bank's exposure.
7. On August 25, 1994, the Company's Board of Directors authorized a
two-for-one stock split for shareholders of record on September 8, 1994 and
effective October 3, 1994. The split increased the number of outstanding
shares of common stock and outstanding options by 100%. Exercise prices for
outstanding options were adjusted to reflect the split. All outstanding share
and per share information has been adjusted to reflect the split as if it had
occurred at the beginning of each period presented.
8. In August 1994, the Company purchased 286,600 shares of its
outstanding common stock on the open market at an average price of $17.45 per
share. Total cost of the purchase was approximately $5 million and is included
in stockholders' equity as treasury stock.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
STATEMENT OF OPERATIONS (selected data)
(amounts in millions of dollars)
<TABLE>
<CAPTION>
Third Quarter Nine months
------------------------------ ------------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues(1).............................. $217.9 $184.0 $555.9 $499.0
Cost of goods sold........................... 148.0 121.3 378.6 333.4
------ ------ ------ ------
Gross profit................................. 69.9 62.7 177.3 165.6
% to net revenues.......................... 32.1% 34.1% 31.9% 33.2%
Selling, administrative and general.......... 39.8 34.5 108.9 99.1
Loss on California earthquake................ -- -- 3.0 --
------ ------ ------ ------
Income before interest and income taxes...... 30.1 28.2 65.4 66.5
% to net revenues.......................... 13.8% 15.3% 11.8% 13.3%
Interest expense............................. 7.9 10.9 23.6 31.1
Provision for income taxes................... 0.5 0.1 2.0 1.9
------ ------ ------ ------
Income from continuing operations(2)......... $ 21.7 $ 17.2 $ 39.8 $ 33.5
====== ====== ====== ======
</TABLE>
(1) Menswear sales on discontinued brands (Dior, Nicklaus and Puritan) were
lower by $21 million for the third quarter and $56 million for the nine
months. All charges associated with discontinued brands were recorded as a
non-recurring expense in the fourth quarter of 1993. Intimate apparel
sales include Calvin Klein men's underwear, which was acquired on March
14, 1994. On a pro forma basis, as though Calvin Klein businesses were
acquired at the beginning of the second quarter of 1993, revenues for the
third quarter and year-to-date of 1993 would have been $16.7 million and
$27.4 million higher, respectively; net income for those periods would not
have been materially impacted from the reported amounts in the above
statement.
(2) Income from continuing operations before loss on California earthquake
was $42.8 million or $1.04 per share for the nine months ended
October 8, 1994.
Net revenues increased 18.4% from $184.0 million in the third quarter of
1993 to $217.9 million in the third quarter of 1994. Net revenues for the nine
months ended October 8, 1994 increased 11.4% from $499.0 million in the first
nine months of 1993 to $555.9 million in the 1994 period.
Intimate Apparel division net revenues increased 39.5% in the third
quarter of 1994 to $152.9 million from $109.6 million in the third quarter of
1993. Included in these revenues are sales of Calvin Klein men's underwear,
which was acquired on March 14, 1994. Excluding the Calvin Klein sales,
Intimate Apparel revenues are up over 20% in the quarter. For the nine months,
Intimate Apparel revenues increased 28.4% to $393.4 million from $306.4
million for the same period last year.
Menswear division net revenues in the third quarter of 1994 of $53.9
million are 15.5% lower, as planned, than the $63.8 million recorded in the
third quarter of 1993, due primarily to $21 million lower sales in the
discontinued brands which include Dior shirts and ties, Puritan and Nicklaus.
Excluding the discontinued brands, Menswear revenues are up over 28% due to a
48% increase in the Chaps brand. Menswear division net revenues for the nine
months of $134.7 million are 18.7% lower than the $165.7 million recorded last
year, due to $56 million lower sales in the discontinued brands. Excluding the
discontinued brands, Menswear revenues are up over 23% for the first nine
months with Chaps up over 37%.
Gross profit increased 11.5% from $62.7 million in the third quarter of
1993 to $69.9 million in the third quarter of 1994. Gross profit as a
percentage of net revenues decreased from 34.1% in the third quarter of 1993
to 32.1% in the third quarter of 1994. Gross profit for the first nine months
of 1994 increased 7.0% from $165.6 million in the first nine months of 1993 to
$177.3 million in the first nine months of 1994. Gross profit as a percentage
of net revenues decreased from 33.2% for the first nine months of 1993 to
31.9% for the first nine months of 1994. The decrease in margin was
attributable to the higher mix of Fruit of the Loom and Victoria's Secret
sales.
Selling, administrative and general expense increased from $34.5 million
(18.7% of net revenues) in the third quarter of 1993 to $39.8 million (18.3%
of net revenues) in the third quarter of 1994. Selling, administrative and
general expenses increased from $99.1 million (19.9% of net revenues) in the
first nine months of 1993 to $108.9 million (19.6% of net revenues) for the
first nine months of 1994. The decrease in selling, administrative and general
expenses as a percentage of net revenues reflects the reduction in menswear
division operating costs, and lower selling, administrative and general
expenses required to support the mass merchandise (Fruit of the Loom) and
Victoria's Secret businesses, partially offset by higher marketing expenses in
Intimate Apparel.
The first quarter of 1994 includes a non-recurring expense on the
California earthquake of $3.0 million, related to the deductible portion of
the Company's insurance policy relating to the January 17th California
earthquake which temporarily shut down the Olga distribution center. All other
costs are expected to be fully recovered from insurance.
Interest expense decreased 27.5% from $10.9 million in third quarter of
1993 to $7.9 million in the third quarter of 1994. The decrease in interest
expense reflects the refinancing of the Company's debt that was concluded in
October 1993, as well as the Company's investment grade rating received in May
1994 from Standard and Poor's Corporation, which combined to reduce the cost
of borrowings by 1871/2 basis points from LIBOR plus 2.75% to LIBOR plus 7/8%.
Interest expense for the first nine months of 1994 decreased 24.1% from $31.1
million in the first nine months of 1993 to $23.6 million for the first nine
months of 1994.
The provision for income taxes for all periods primarily reflects
accruals for taxes of foreign subsidiaries and accruals for state and local
income taxes.
Income from continuing operations increased 26.2% from $17.2 million in
the third quarter of 1993 to $21.7 million in the third quarter of 1994. For
the nine months ended in 1994, income from continuing operations increased
18.8% from $33.5 million in the first nine months of 1993 to $39.8 million.
The increases in income from continuing operations reflect the increased gross
profit and decreased interest expense noted above.
The first quarter of 1993 includes an extraordinary non-cash expense of
$10.5 million for the cumulative effect of a change in the method of
accounting for employee postretirement benefits, which was recorded in
accordance with the provisions of Statement of Financial Accounting Standards
No. 106 ("FAS 106"). The adoption of FAS 106 is not expected to have a
material impact on the results of operations in any future period.
Net income for the third quarter of 1994 increased 26.2% to $21.7 million
compared to $17.2 million for the third quarter of 1993. Net income for the
first nine months of 1994 after the $3.0 million non-recurring loss on the
California earthquake was $39.8 million, an increase of 73.0% compared to a
net income for the first nine months of 1993 of $23.0 million after the $10.5
million FAS 106 one-time charge noted above.
Capital Resources and Liquidity
The Company's liquidity requirements arise primarily from its debt
service requirements and the funding of the Company's working capital needs,
primarily inventory and accounts receivable. The Company's borrowing
requirements are seasonal, with peak working capital needs generally arising
at the end of the second quarter and during the third quarter of the fiscal
year. The Company typically generates nearly all of its operating cash flow
in the fourth quarter of the fiscal year reflecting third and fourth quarter
shipments and the sale of inventory built during the first half of the fiscal
year.
During the second quarter of 1994, the Company secured an additional $35
million of revolving credit with its bank group. The increase in borrowing
capability will be used to support growth in the Company's net revenues in
future periods.
In August 1994, the Company purchased 286,600 shares of its outstanding
common stock on the open market at an average price of $17.45 per share. Total
cost of the purchase was approximately $5 million and is included in
stockholders' equity as treasury stock.
Cash used by operating activities in the first nine months of 1994 was
$20.4 million, which is $27.1 million favorable, compared to a use of $47.5
million in the comparable 1993 period. The favorableness resulted from the
higher net income and a more efficient use of inventory. The use of cash in
the first nine months is attributable to a seasonal requirement of working
capital.
The Company believes that funds available under its existing credit
arrangements and cash flow to be generated from future operations will be
sufficient to meet working capital and capital expenditure needs of the
Company, including interest and principal payments on outstanding debt
obligations, for the foreseeable future.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Restated Certificate of Incorporation of the Company.
(Incorporated herein by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1, File No.
33-45877.)
3.2 By-Laws of the Company. (Incorporated herein by reference to
Exhibit 3.2 to the Company's Registration Statement on Form
S-1, File No. 33-45877.)
4.1 Registration Rights Agreement dated March 14, 1994 between the
Company and Calvin Klein, Inc. ("CKI"). (Incorporated herein by
reference to Exhibit 4.1 to the Company's Form 10-Q filed May
24, 1994.)
10.1 Credit Agreement dated July 16, 1993 (the "U.S. $55,000,000
Credit Agreement") among Warnaco Inc., The Bank of Nova Scotia,
as agent, and certain other lenders named therein.
(Incorporated herein by reference to Exhibit 10.1 to the
Company's Form 10-Q filed May 24, 1994.)
10.2 Amendment No. 1 to the U.S. $55,000,000 Credit Agreement dated
October 14, 1993. (Incorporated herein by reference to Exhibit
10.2 to the Company's Form 10-Q filed May 24, 1994.)
10.3 Amendment No. 2 to the U.S. $55,000,000 Credit Agreement dated
November 5, 1993. (Incorporated herein by reference to Exhibit
10.3 to the Company's Form 10-Q filed May 24, 1994.)
10.4 Amendment No. 3 to the U.S. $55,000,000 Credit Agreement dated
January 7, 1994. (Incorporated herein by reference to Exhibit
10.4 to the Company's Form 10-Q filed May 24, 1994.)
10.5 Amendment No. 4 to the U.S. $55,000,000 Credit Agreement dated
April 25, 1994. (Incorporated herein by reference to Exhibit
10.5 to the Company's Form 10-Q filed May 24, 1994.)
10.6 Amendment No. 5 to the U.S. $55,000,000 Credit Agreement dated
August 12, 1994. (Incorporated herein by reference to Exhibit
10.6 to the Company's Form 10-Q filed August 23, 1994.)
10.7 Acquisition Agreement dated March 14, 1994 by and among CKI,
the Company and Warnaco Inc. (Incorporated herein by reference
to Exhibit 10.6 to the Company's Form 10-Q filed May 24, 1994.)
10.8 U.S. $500,000,000 Credit Agreement dated October 14, 1993 (the
"U.S. $500,000,000 Credit Agreement") among the Company,
Warnaco Inc., The Bank of Nova Scotia, as co-managing agent and
paying agent, Citicorp U.S.A., as co-managing agent and
documentation and collateral agent, and certain other lenders
named therein. (Incorporated herein by reference to Exhibit
10-1 to the Company's Form 10-Q filed November 16, 1993.)
10.9 Amendment No. 1 to the U.S. $500,000,000 Credit Agreement dated
June 8, 1994. (Incorporated herein by reference to Exhibit 10.9
to the Company's Form 10-Q filed August 23, 1994.)
10.10 Employment Agreement dated January 6, 1991 between the Company
and Linda J. Wachner. (Incorporated herein by reference to
Exhibit 10.7 to the Company's Registration Statement on Form
S-1, File No. 33-45877.)
10.11 Incentive Compensation Plan. (Incorporated herein by reference
to Exhibit 10.8 to the Company's Registration Statement on Form
S-1, File No. 33-45877.)
10.12 1991 Stock Option Plan. (Incorporated herein by reference to
Exhibit 10.9 to the Company's Registration Statement on Form
S-1, File No. 33-45877.)
10.13 Amended and Restated 1988 Employee Stock Purchase Plan, as
amended. (Incorporated herein by reference to Exhibit 10.10 to
the Company's Registration Statement on Form S-1, File No.
33-45877.)
10.14 Warnaco Employee Retirement Plan. (Incorporated herein by
reference to Exhibit 10.11 to the Company's Registration
Statement on Form S-1, File No. 33-45877.)
10.15 Executive Management Agreement dated May 9, 1991 between the
Company, Warnaco and The Spectrum Group, Inc. (Incorporated
herein by reference to Exhibit 10.13 to the Company's
Registration Statement on Form S-1, File No. 33-45877.)
10.16 1993 Stock Plan for non-employee directors. (Incorporated
herein by reference to the Company's Proxy Statement for its
1994 Annual Meeting of Shareholders.)
10.17 Amended and Restated 1993 Stock Plan. (Incorporated herein by
reference to the Company's Proxy Statement for its 1994 Annual
Meeting of Shareholders.)
10.18 The Warnaco Group, Inc. Supplemental Incentive Compensation
Plan. (Incorporated herein by reference to the Company's Proxy
Statement for its 1994 Annual Meeting of Shareholders.)
11.1 Earnings per share.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter.
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.
THE WARNACO GROUP, INC.
Date: November 22, 1994
By: /s/ DARIUSH ASHRAFI
-------------------------------
Dariush Ashrafi
Director, Senior Vice President
and Chief Financial Officer
Principal Financial Officer
Date: November 22, 1994
By: /s/ WILLIAM S. FINKELSTEIN
-------------------------------
William S. Finkelstein
Senior Vice President and
Corporate Controller
Principal Accounting Officer
EXHIBIT 11.1
THE WARNACO GROUP, INC.
Calculation of Income per Common Share
(in thousands except share data)
<TABLE>
<CAPTION>
Third Quarter Nine months
------------------------------ ------------------------------
1994 1993 1994 1993
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income from continuing operations applic-
able to common shareholders(1)............. $ 21,711 $ 17,206 $ 39,758 $ 33,477
Cumulative effect of change in the method
of accounting for postretirement benefits.. -- -- -- (10,500)
------------ ------------ ------------ ------------
Net income................................... $ 21,711 $ 17,206 $ 39,758 $ 22,977
============ ============ ============ ============
Weighted average number of shares actually
outstanding during the year................ 38,749,795 36,075,000 37,916,367 36,075,650
Add common equivalent shares(2).............. 3,053,149 3,660,912 3,292,305 3,691,800
------------ ------------ ------------ ------------
Weighted average number of shares used
in calculation of primary income per
share(3).................................. 41,802,944 39,735,912 41,208,672 39,767,450
============ ============ ============ ============
Income per common share:(3)
Income from continuing operations applic-
able to common shareholders................ $ 0.52 $ 0.43 $ 0.97 $ 0.84
Cumulative effect of change in the method
of accounting for postretirement
benefits................................. -- -- -- (0.26)
------------ ------------ ------------ ------------
Net income per common share.................. $ 0.52 $ 0.43 $ 0.97 $ 0.58
============ ============ ============ ============
- - - ------------------
<FN>
(1) Income from continuing operations before loss on California earthquake
was $42.8 million or $1.04 per share for the nine months ended
October 8, 1994.
(2) Represents additional shares under the Employee Stock Plan and Company
Option Plan for which portions of the exercise price are below average
price during the quarter.
(3) Adjusted to reflect the two-for-one stock split for shareholders of
record on September 8, 1994 and effective October 3, 1994.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE WARNACO GROUP, INC. FOR THE QUARTER AND NINE
MONTHS ENDED OCTOBER 8, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-07-1995
<PERIOD-START> JAN-09-1994
<PERIOD-END> OCT-08-1994
<CASH> 5,456
<SECURITIES> 0
<RECEIVABLES> 177,117
<ALLOWANCES> 1,071
<INVENTORY> 245,608
<CURRENT-ASSETS> 452,603
<PP&E> 156,058
<DEPRECIATION> 71,328
<TOTAL-ASSETS> 813,203
<CURRENT-LIABILITIES> 334,376
<BONDS> 243,628
0
0
<COMMON> 421
<OTHER-SE> 217,188
<TOTAL-LIABILITY-AND-EQUITY> 813,203
<SALES> 555,905
<TOTAL-REVENUES> 555,905
<CGS> 378,643
<TOTAL-COSTS> 378,643
<OTHER-EXPENSES> 3,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,586
<INCOME-PRETAX> 41,758
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 39,758
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,758
<EPS-PRIMARY> .97
<EPS-DILUTED> .97
</TABLE>
