<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 4, 1998
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 NO. 0-21661
THE BIBB COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-2253133
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
100 GALLERIA PARKWAY 30339
SUITE 1750 (ZIP CODE)
ATLANTA, GEORGIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(770)644-7000
(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. Yes X No __
--
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by court. Yes X No __
--
As of July 4, 1998, there were 10,061,576 outstanding shares of the
registrant's Common Stock, par value $.01 per share, which is the only class of
common or voting stock of the registrant.
<PAGE>
THE BIBB COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Condensed Financial Statements:
Condensed Balance Sheets - July 4, 1998 and January 3, 1998 3
Condensed Statements of Operations for the three months ended
and the six months ended July 4, 1998 and June 28, 1997 4
Condensed Statement of Changes in Stockholders' Equity for the
six months ended July 4, 1998 5
Condensed Statements of Cash Flows for the
six months ended July 4, 1998 and June 28, 1997 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Continuing Operations 11
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 14
(a) Exhibits
(b) Reports on Form 8-K
Signature Page 15
</TABLE>
2
<PAGE>
THE BIBB COMPANY
CONDENSED BALANCE SHEETS
JULY 4, 1998 AND JANUARY 3, 1998
(In thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
July 4, January 3,
1998 1998
--------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 95 $ 114
Accounts receivable, net of allowances for doubtful accounts, discounts, and claims
of $1,676 and $2,686 as of July 4, 1998 and January 3, 1998, respectively 35,686 34,761
Inventories 59,514 54,305
Net assets of discontinued operations 7,193 12,025
Prepaid expenses and other current assets 3,743 3,019
-------- --------
Total current assets 106,231 104,224
PROPERTY, PLANT and EQUIPMENT, net 80,040 62,829
OTHER ASSETS 2,430 2,298
-------- --------
$188,701 $169,351
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 6,678 $ 3,617
Accounts payable 23,819 17,830
Accrued payroll and other compensation 4,765 5,806
Other accrued liabilities 5,519 9,103
-------- --------
Total current liabilities 40,781 36,356
LONG-TERM DEBT, less current maturities 87,827 74,898
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized, 0 shares issued
and outstanding 0 0
Common stock, $.01 par value, 25,000,000 shares authorized;
10,061,576 shares issued and outstanding 101 101
Additional paid-in capital 88,882 88,882
Accumulated deficit (28,890) (30,886)
-------- --------
Total stockholders' equity 60,093 58,097
-------- --------
$188,701 $169,351
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed balance sheets
(unaudited).
3
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THE BIBB COMPANY
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AND THE SIX MONTHS ENDED
JULY 4, 1998 AND JUNE 28, 1997
(In thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ------------------------------
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 59,515 $ 63,299 $ 116,340 $ 122,231
COST OF SALES 50,629 56,311 99,587 110,569
----------- ----------- ----------- -----------
Gross Profit 8,886 6,988 16,753 11,662
SELLING AND ADMINISTRATIVE
EXPENSES 5,284 5,391 10,966 10,844
----------- ----------- ----------- -----------
Operating Profit 3,602 1,597 5,787 818
OTHER EXPENSES:
Interest expense (1,395) (1,060) (3,135) (2,034)
Loan fee amortization and related
expenses (322) (312) (656) (586)
Other, net 0 (6) 0 (101)
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS $ 1,885 $ 219 $ 1,996 $ (1,903)
----------- ----------- ----------- -----------
NET LOSS OF DISCONTINUED
OPERATIONS, net of taxes:
Apparel business 0 (1,305) 0 (1,604)
Napery business 0 (324) 0 (94)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 1,885 $ (1,410) $ 1,996 $ (3,601)
=========== =========== =========== ===========
PER SHARE INFORMATION:
Net loss from continuing operations:
Basic $ 0.19 $ 0.02 $ 0.20 $ (0.19)
=========== =========== =========== ===========
Diluted $ 0.18 $ 0.02 $ 0.19 $ (0.19)
=========== =========== =========== ===========
Net loss of discontinued operations:
Basic 0.00 (0.16) 0.00 (0.17)
=========== =========== =========== ===========
Diluted 0.00 (0.16) 0.00 (0.17)
=========== =========== =========== ===========
Net loss:
Basic $ 0.19 $ (0.14) $ 0.20 $ (0.36)
=========== =========== =========== ===========
Diluted $ 0.18 $ (0.14) $ 0.19 $ (0.36)
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING:
Basic 10,061,576 10,061,576 10,061,576 10,061,576
=========== =========== =========== ===========
Diluted 10,327,287 10,061,576 10,257,465 10,061,576
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements (unaudited).
4
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THE BIBB COMPANY
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 4, 1998
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Common
Stock Additional
($.01 Paid-in Accumulated
Par Value) Capital Deficit Total
---------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Balance, January 3, 1998 $ 101 $88,882 $(30,886) $58,097
Net Income 0 0 1,996 1,996
---------------- ----------------- ----------------- ------------------
Balance, July 4, 1998 $ 101 $88,882 $(28,890) $60,093
================= ================= ================= ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
(unaudited).
5
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THE BIBB COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
July 4, June 28,
1998 1997
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,996 $ (3,601)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 3,361 3,625
Loan fee amortization and related expenses 656 586
Net loss on sales and retirement of assets 0 13
Changes in operating assets and liabilities:
Assets held for sale 0 37,012
Net assets of discontinued operations 4,832 0
Other working capital accounts (6,069) 816
-------- ---------
Net cash provided by operating activities 4,776 38,451
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,245) (5,814)
Proceeds from sale of fixed assets 0 2,565
Other, net (694) (304)
-------- ---------
Net cash used in investing activities (10,939) (3,553)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt and capital lease obligation (1,040) (3,046)
Proceeds from sale/leaseback transaction 1,933 0
Net borrowings (repayments) of senior debt 5,973 (34,920)
Loan fees (722) 0
-------- ---------
Net cash provided by (used in) financing activities 6,144 (37,966)
-------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (19) (3,068)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 114 3,206
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 95 $ 138
======== =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 3,979 $ 3,205
======== =========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements (unaudited).
6
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THE BIBB COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF INTERIM PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the Company's financial
position as of July 4, 1998, the results of its operations for three month
periods ended and the six month periods ended July 4, 1998 and June 28, 1997
and cash flows for the six month periods ended July 4, 1998 and June 28, 1997,
have been included. Operating results for the three month and six month
periods ended July 4, 1998 are not necessarily indicative of the results that
may be expected for the year ending January 2, 1999. Certain information and
note disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to the Securities and Exchange Commission's rules and
regulations. The condensed financial statements should be read in conjunction
with the Company's audited financial statements and notes thereto for the year
ended January 3, 1998. The condensed balance sheet at January 3, 1998, has
been derived from these statements.
Unless the context otherwise requires, the "Company" means The Bibb
Company, a Delaware corporation.
Certain prior period amounts have been reclassified in order to conform to
current period presentation.
On June 29, 1998, the Company and Dan River Inc., a leading manufacturer and
marketer of textile products for the home fashions and apparel fabrics
markets, ("Dan River"), announced a definitive merger agreement, as
subsequently amended, under which Dan River will acquire the Company for a
combination of cash and Dan River stock in a tax-free transaction valued in
excess of $250 million, including assumed debt (the "Merger"). Each of the
Company's shareholders will be entitled to elect whether to receive $16.50 in
cash, .84615 shares of Dan River Class A common stock, or a combination
thereof, for each of the Company's shares held, subject to proration. The
closing of the Merger is expected to occur in the third quarter of 1998,
subject to the fulfillment of certain customary closing conditions.
2. SIGNIFICANT ACCOUNTING POLICIES
Discontinued Operations
In December 1997, the Company sold its napery business, which consisted of
the manufacture and marketing of damask table linen products serving the
hospitality market (the "Napery Business"), and related inventory, to Mount
Vernon Mills, Inc. In connection therewith, the Company closed its Roanoke
Rapids, North Carolina manufacturing plant during the three month period ended
April 4, 1998 and is actively seeking a buyer for the property. As the assets
of the Napery Business are currently being liquidated, they have been
classified, as of July 4, 1998 and January 3, 1998, as net assets of
discontinued operations, and the results of operations of the Napery Business
are excluded from the Company's continuing operations.
During the three month period ended April 4, 1998, the Company exited the
apparel business, which consisted of the manufacture and marketing of apparel
fabrics, principally chambray, which is sold primarily to garment
manufacturers (the "Apparel Business"). As a result, the Company discontinued
its manufacturing operations at the Company's Columbus, Georgia facility. The
assets
7
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of the Apparel Business are currently being liquidated. As a result, the
Company classified the assets, except for real estate, of the Apparel Business
as net assets of discontinued operations, and the results of operations for
the Apparel Business are excluded from the Company's continuing operations.
The table below sets forth net sales, net losses, and net loss per common
share for the discontinued Apparel Business and Napery Business for the three
months ended July 4, 1998 and June 28, 1997 (in thousands, except per share
data):
<TABLE>
<CAPTION>
For the three months ended For the three months ended
July 4, 1998 June 28, 1997
---------------------------------- ----------------------------------------
Apparel Napery Apparel Napery
Business Business Business Business
-------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Net sales $1,229 $ 0 $ 6,223 $2,389
Net loss $ 0 $ 0 $(1,305) $ (324)
Net loss per common share,
basic and diluted $ 0.00 $0.00 $ (0.13) $(0.03)
</TABLE>
Net assets of discontinued operations at July 4, 1998 and January 3, 1998
are set forth below (in thousands):
<TABLE>
<CAPTION>
July 4, January 3,
1998 1998
------------------ ---------------------
<S> <C> <C>
Accounts receivable, net $1,268 $ 5,115
Inventory 0 7,486
Property, plant & equipment 6,698 8,864
Accounts payable and accrued liabilities (773) (9,440)
------------------ ---------------------
$7,193 $12,025
================== =====================
</TABLE>
Recent Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130"), Statement of Financial
Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and
Related Information" ("SFAS 131"), Statement of Financial Accounting Standards
No. 132, "Employers' Disclosures About Pensions and Other Postretirement
Benefits -an amendment of FASB Statements No. 87, 88, and 106" ("SFAS 132"),
and Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), effective January
4, 1998. SFAS 130 establishes standards to measure all changes in equity that
result from transactions and other economic events other than transactions
with owners. Comprehensive income is the total of net income and all other
nonowner changes in equity. SFAS 131 introduces a new segment reporting model
called the "management approach." The management approach is based on the
manner in which management organizes segments within a company for making
operating decisions and assessing performance. The management approach
replaces the notion of industry and geographic segments. SFAS 132 revises
disclosures about pension and other postretirement benefit plans, yet it does
not change the measurement or recognition of those plans. SFAS 133 establishes
accounting standards for derivative instruments and hedging activities. The
Company does not currently engage in hedging activities or utilize derivative
instruments. The disclosures relative to SFAS's 130, 131, 132 and 133 do not
significantly affect the Company's current disclosures.
8
<PAGE>
3. INVENTORIES
The major classes of inventories, exclusive of inventory related to the
discontinued apparel and napery businesses, were as follows (in thousands):
<TABLE>
<CAPTION>
July 4, January 3,
1998 1998
-------- ----------
<S> <C> <C>
Raw materials and supplies $ 8,545 $ 7,713
Work-in-process 25,981 24,308
Finished goods 23,541 22,238
-------- ---------
Total at FIFO cost 58,067 54,259
Excess of LIFO cost over FIFO cost 1,447 46
-------- ---------
Total at LIFO cost $ 59,514 $ 54,305
======== =========
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment, exclusive of items related to the
discontinued apparel and napery businesses were as follows (in thousands):
<TABLE>
<CAPTION>
July 4, January 3,
1998 1998
---------- ------------
<S> <C> <C>
Machinery and equipment $ 35,334 $ 27,853
Land, buildings, and improvements 22,348 22,348
Construction in progress 31,125 18,609
-------- --------
88,807 68,810
Less accumulated depreciation 8,767 5,981
-------- --------
$ 80,040 $ 62,829
======== ========
</TABLE>
5. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
July 4, January 3,
1998 1998
---------- ------------
<S> <C> <C>
Line of credit under New Credit Agreement $ 57,253 $ 58,615
Term loan under New Credit Agreement 19,643 12,308
Capital lease obligations 17,247 7,162
Other 362 430
-------- ---------
$ 94,505 $ 78,515
Less current maturities 6,678 3,617
-------- ---------
$ 87,827 $ 74,898
======== =========
</TABLE>
Effective March 6, 1998, the Company entered into an amendment to the Loan
and Security Agreement dated as of September 12, 1996, by and among Congress
Financial Corporation, as agent, and the lenders party thereto and the Company
(the "New Credit Agreement"). Significant provisions of the new amendment are
as follows:
9
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(i) increase of the term loan to $21.3 million, (ii) extension of the
renewal date from September 16, 1999 to November 1, 2000, (iii) reduction
of the tangible net worth covenant from a minimum of $70 million to a
minimum of $50 million, (iv) reduction of the prepayment fees for replacing
the credit agreement after September 16, 1998, from $575,000 to $300,000,
and (v) reduction of the revolving loan limit to $60 million.
6. INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the use of the liability method
in accounting for income taxes. Under SFAS No. 109, deferred tax assets and
liabilities are determined based on the difference between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. Deferred
income taxes also reflect the value of net operating losses and an offsetting
valuation allowance. There was no net income tax expense or benefit recorded
in the three months ended and the six months ended July 4, 1998 or the three
months ended and the six months ended June 28, 1997.
7. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128") during 1997. SFAS 128 replaces primary
earnings per share with basic earnings per share. Basic earnings per share
excludes the effect of any potentially dilutive common equivalent shares.
Basic earnings per share is calculated based on weighted average number of
shares of common stock outstanding, which was 10,061,576 for all periods
presented herein. Fully diluted earnings per share, now called diluted
earnings per share, is still required. Diluted earnings per share is
calculated treating all potentially dilutive securities such as stock options
as outstanding during the entire period, or from grant date if granted during
the period. For the three months ended and the six months ended July 4, 1998,
697,000 options were included in the calculation. For the three months ended
and the six months ended June 28, 1997, all options (200,000) were anti-
dilutive and thus were not included in the calculation.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF CONTINUING OPERATIONS
On June 29, 1998, the Company and Dan River announced a definitive merger
agreement under which Dan River will acquire the Company for a combination of
cash and, as subsequently amended, Dan River stock in a tax-free transaction
valued in excess of $250 million, including assumed debt (the `Merger"). Each
of the Company's shareholders will be entitled to elect whether to receive
$16.50 in cash, .84615 shares of Dan River Class A common stock, or a
combination thereof, for each of the Company's shares held, subject to
proration. The closing of the Merger is expected to occur in the third quarter
of 1998, subject to the fulfillment of certain customary closing conditions.
(a) Comparison of the Three Months Ended July 4, 1998 with Three Months Ended
June 28, 1997 (in thousands).
Net sales for the three months ended July 4, 1998, were $59,515 compared to
$63,299 for the three months ended June 28, 1997, a decrease of $3,784 or
6.0%.
The Company's gross profit for the three months ended July 4, 1998 was
$8,886 or 14.9% of net sales compared to $6,988 or 11.0% of net sales for the
three months ended June 28, 1997. This increase is due primarily to the
Company's focused customer programs and associated strengthening of
partnerships and product offerings. In addition, the Company is beginning to
realize the cost savings from its capital improvement program.
Selling and administrative expenses for the three months ended July 4, 1998
were $5,284 or 8.9% of net sales compared to $5,391 or 8.5% of net sales for
the three months ended June 28, 1997.
As a result of the above factors, operating profit for the three months
ended July 4, 1998 improved to $3,602 from $1,597 in the three months ended
June 28, 1997, an increase of $2,005.
Interest expense for the three months ended July 4, 1998 was $1,395
compared to $1,060 for the three months ended June 28, 1997, an increase of
$335 due to the increase in debt outstanding to $94.5 million as of July 4,
1998 from $51.4 million as of June 28, 1997 partly offset by interest capital-
ized of $618. The increase in debt resulted primarily from capital
expenditures made as part of the capital improvement program.
Net losses from discontinued Napery and Apparel businesses totaled $324 and
$1,305, respectively in the three months ended June 28, 1997.
As a result of the above factors, net income for the three months ended
July 4, 1998 was $1,885 compared to a net loss of $1,410 in the three months
ended June 28, 1997, an improvement of $3,295.
(b) Comparison of the Six Months Ended July 4, 1998 with Six Months Ended
June 28, 1997 (in thousands).
Net sales for the six months ended July 4, 1998, were $116,340 compared to
$122,231 for the six months ended June 28, 1997, a decrease of $5,891 or 4.8%.
The Company's gross profit for the six months ended July 4, 1998 was
$16,753 or 14.4% of net sales compared to $11,662 or 9.5% of net sales for the
six months ended June 28, 1997. This increase is due primarily to the
Company's focused customer programs and associated strengthening of
partnerships and product offerings. In addition, the Company is beginning to
realize the cost savings from its capital improvement program.
Selling and administrative expenses for the six months ended July 4, 1998
were $10,966 or 9.4% of net sales compared to $10,844 or 8.9% of net sales for
the six months ended June 28, 1997.
11
<PAGE>
As a result of the above factors, operating profit for the six months ended
July 4, 1998 improved to $5,787 compared to $818 in the six months ended June
28, 1997, an increase of $4,969.
Interest expense for the six months ended July 4, 1998 was $3,135 compared
to $2,034 for the six months ended June 28, 1997, an increase of $1,101
primarily due to the increase in debt outstanding to $94.5 million as of July
4, 1998 from $51.4 million as of June 28, 1997 partly offset by interest
capitalized of $618. The increase in debt resulted primarily from capital
expenditures made as part of the capital improvement program.
Net losses from discontinued Napery and Apparel businesses totaled $94 and
$1,604, respectively in the six months ended June 28, 1997.
As a result of the above factors, net income for the six months ended July
4, 1998 was $1,996 compared to a net loss of $3,601 in the six months ended
June 28, 1997, an improvement of $5,597.
(C) Liquidity and Capital Resources (in thousands, except where noted)
General. Net cash provided by operating activities was $4,776 for the six
months ended July 4, 1998 compared to $38,451 for the six months ended June
28, 1997. In the six months ended June 28, 1997, the Company sold its terry
operations for net cash proceeds of $37,012. Excluding the sale of the terry
operations, net cash flow from operations increased by approximately $3,337 as
a result of the Company recording net income of $1,996 in the six months ended
July 4, 1998, as compared to a net loss of $3,601 in the six months ended June
28, 1997.
Net cash used in investing activities increased to $10,939 in the six
months ended July 4, 1998 from $3,553 in the six months ended June 28, 1997.
This increase is primarily due to an increase in capital expenditures,
excluding capital leases to $10,245 in the six months ended July 4, 1998 from
$5,814 in the six months ended June 28, 1997 partly offset by proceeds from
the sale of fixed assets in the six months ended June 28, 1997 of $2,565.
Net cash provided by financing activities increased to $6,144 in the six
months ended July 4, 1998 from net cash used in financing activities of
$37,966 in the six months ended June 28, 1997. The net cash provided by
financing activities in the six months ended July 4, 1998 resulted from
increased borrowings under the New Credit Agreement, as amended. In the six
months ended June 28, 1997, the Company repaid an outstanding industrial
development revenue bond in the amount of $3,000 and also repaid outstanding
indebtedness of $37,012 with the proceeds from the sale of the terry
operations. Effective March 6, 1998, the Company amended the New Credit
Agreement and as a result, increased the borrowings under the agreement.
Significant provisions of the amendment are as follows:
(i) increase of the term loan to $21.3 million (ii) extension of the
renewal date from September 16, 1999 to November 1, 2000, (iii) reduction
of the tangible net worth covenant from a minimum of $70 million to a
minimum of $50 million, (iv) reduction of the prepayment fees for replacing
the credit agreement after September 16, 1998, from $0.575 million to $0.3
million, and (v) reduction of the revolving loan limit to $60 million.
Liquidity. The Company experiences significant fluctuations in its working
capital requirements primarily associated with its retail customers' late
summer and fall inventory purchasing. The Company's primary ongoing cash
requirements will be to fund debt service, make capital expenditures and
finance working capital. The Company believes that it will generate
sufficient cash flow from operations, supplemented by its available borrowings
under the New Credit Agreement and anticipated leases, to meet working capital
and capital expenditure requirements as well as debt service requirements
under the New Credit Agreement.
12
<PAGE>
As a result of the New Credit Agreement, as amended, the Company is
entitled to borrow up to a maximum of approximately $79.8 million as
determined by borrowing base availability and applicable revolving loan
reserves.
As of July 4, 1998, the Company had $76.9 million in borrowings outstanding
under the New Credit Agreement, of which approximately $4.1 million is due
over the next twelve months.
As of July 4, 1998, the Company had the ability to borrow up to an
additional $2.9 million for general operating requirements under the revolving
loan provisions of the New Credit Agreement based on meeting certain
requirements of the agreement.
Capital Expenditures. The Company has made and expects to make,
significant capital expenditures in the future to modernize its facilities and
reduce operating costs. Capital expenditures, excluding capital leases were
$10,245 in the six months ended July 4, 1998. The Company's ability to draw
advances under the New Credit Agreement for the purpose of funding capital
expenditures, remains subject to compliance with the terms and conditions of
the New Credit Agreement (including its borrowing base requirements).
Forward Looking Statements
A number of the matters and subject areas discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Continuing
Operations" that are not historical or current facts deal with potential
future circumstances and developments. The discussion of such matters and
subject areas is qualified by the inherent risks and uncertainties surrounding
future expectations generally, and such discussion also may materially differ
from the Company's actual future experience involving any one or more of such
matters and subject areas. The Company has attempted to identify, in context,
certain of the factors that it currently believes may cause actual future
experience and results to differ from the Company's current expectations
regarding the relevant matter or subject area. The operation and results of
the Company's textile business may also be subject to the effect of other
risks and uncertainties in addition to the relevant qualifying factors
identified elsewhere in "Management's Discussion and Analysis of Financial
Condition and Results of Continuing Operations," including, but not limited
to, general economic conditions in the markets in which the Company operates,
the ability to implement the Company's capital improvement program, the
ability to achieve further market penetration and additional customers, the
cost of raw materials, particularly cotton, and other risks and uncertainties
associated with the textile industry.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11. Statement re: computation of diluted per share earnings
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K dated July 6, 1998 regarding announcement of the plan of merger
with Dan River.
14
<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.
THE BIBB COMPANY
Date: August 17, 1998 /s/ MICHAEL L. FULBRIGHT
------------------------
By: Michael L. Fulbright
Chairman of the Board, President and
Chief Executive Officer
/s/ CHARLES R. TUTTEROW
-----------------------
By: Charles R. Tutterow
Vice President, Chief Financial Officer,
Secretary, and
Principal Accounting Officer
15
<PAGE>
Exhibit 11
The Bibb Company
Statement Re: Computation of Diluted Earnings Per Share
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ---------------------------
July 4, 1998 June 28, 1997 July 4, 1998 June 28, 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Net Income (loss) applicable to common stock $ 1,885 (1,410) $ 1,996 (3,601)
Weighted average shares outstanding:
Weighted average common shares outstanding 10,062 10,062 10,062 10,062
Shares upon assumed exercise of stock options (1) 265 0 195 0
------- ------- ------- -------
Weighted average share outstanding 10,327 10,062 10,257 10,062
------- ------- ------- -------
Diluted net income (loss) per share of common stock 0.18 (0.14) 0.19 (0.36)
======= ======= ======= =======
</TABLE>
_________
(1) Stock options are assumed exercised using the modified treasury stock
method, except where the effect is anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JAN-02-1999 JAN-03-1998
<PERIOD-START> APR-05-1998 MAR-30-1997
<PERIOD-END> JUL-04-1998 JUN-28-1997
<CASH> 95,000 114,000
<SECURITIES> 0 0
<RECEIVABLES> 37,362,000 37,447,000
<ALLOWANCES> 1,676,000 2,686,000
<INVENTORY> 59,514,000 54,305,000
<CURRENT-ASSETS> 106,231,000 104,224,000
<PP&E> 88,807,000 68,810,000
<DEPRECIATION> 8,767,000 5,981,000
<TOTAL-ASSETS> 188,701,000 169,351,000
<CURRENT-LIABILITIES> 40,781,000 36,356,000
<BONDS> 87,827,000 74,898,000
0 0
0 0
<COMMON> 101,000 101,000
<OTHER-SE> 88,882,000 88,882,000
<TOTAL-LIABILITY-AND-EQUITY> 188,701,000 169,351,000
<SALES> 59,515,000 63,299,000
<TOTAL-REVENUES> 59,515,000 63,299,000
<CGS> 50,629,000 56,311,000
<TOTAL-COSTS> 50,629,000 56,311,000
<OTHER-EXPENSES> 5,284,000 5,391,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (1,717,000) (1,378,000)
<INCOME-PRETAX> 1,885,000 219,000
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 1,885,000 219,000
<DISCONTINUED> 0 (1,629,000)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,885,000 (1,410,000)
<EPS-PRIMARY> 0.19 (0.14)
<EPS-DILUTED> 0.18 (0.14)
</TABLE>
