<PAGE> 1
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 April 5, 1997
Commission File No. 1-11126
DYERSBURG CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1363247
(State or other jurisdiction of (I.R.S employer identification no.)
incorporation or organization)
1315 PHILLIPS ST., DYERSBURG, TENNESSEE 38024
(Address of principal executive offices) (Zip Code)
(901) 285-2323
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, Par Value $.01/Share New York Stock Exchange
(Title of each class) (Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
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 the number of shares outstanding of each issuer's classes of common
stock, as of the latest practicable date.
Title of each Number of shares outstanding as of April 5, 1997
- --------------------------- ------------------------------------------------
Common Stock $.01 par value 13,134,003
<PAGE> 2
INDEX TO FORM 10-Q
DYERSBURG CORPORATION
<TABLE>
<CAPTION>
PART I--FINANCIAL INFORMATION PAGE NUMBER
<S> <C>
ITEM 1--FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Condensed Balance Sheets at
April 5, 1997, September 28, 1996, and
March 30, 1996..................................................3
Consolidated Condensed Statements of Income
for the Three Months Ended April 5, 1997,
and March 30, 1996; Six Months Ended
April 5, 1997, and March 30, 1996...............................4
Consolidated Condensed Statements of Cash
Flows for the Six Months Ended
April 5, 1997, and March 30, 1996...............................5
Notes to Consolidated Condensed Financial
Statements......................................................6
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................7
PART II--OTHER INFORMATION
ITEM 4--SUBMISSION OF MATTERS TO A VOTE
OF SHAREHOLDERS.....................................................8
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K......................................8
SIGNATURES....................................................................9
EXHIBIT 11--COMPUTATION OF EARNINGS PER SHARE................................10
</TABLE>
2
<PAGE> 3
DYERSBURG CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
April 5, September 28, March 30,
1997 1996 1996
-------- ------------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 478 $ 983 $ 378
Accounts receivable, net......................... 37,716 42,427 31,689
Inventories...................................... 36,601 23,248 35,186
Prepaid expenses and other....................... 615 858 990
-------- -------- --------
Total current assets........................ 75,410 67,516 68,243
Intangibles...................................... 58,734 59,733 61,193
Property, plant and equipment, net............... 66,444 67,758 69,566
-------- -------- --------
Total assets....................................... $200,588 $195,007 $199,002
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable........................... $ 10,988 $ 8,296 $ 12,100
Accrued expenses................................. 6,820 7,137 5,025
-------- -------- --------
Total current liabilities................... 17,808 15,433 17,125
Deferred income taxes and other.................. 9,257 9,239 8,791
Long-term debt................................... 82,511 81,593 88,947
-------- -------- --------
Total liabilities.................................. 109,576 106,265 114,863
-------- -------- --------
Stockholders' Equity:
Common stock..................................... 131 132 137
Additional paid-in capital....................... 41,330 41,460 44,259
Retained earnings................................ 49,551 47,150 39,743
-------- -------- --------
Total stockholders' equity......................... 91,012 88,742 84,139
-------- -------- --------
Total liabilities and stockholders' equity......... $200,588 $195,007 $199,002
======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
DYERSBURG CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- ---------------------------
April 5, March 30, April 5, March 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales ............................. $ 51,038 $ 42,344 $ 89,831 $ 72,432
Costs and expenses:
Cost of sales ...................... 39,908 34,448 70,258 58,786
Selling, general, and administrative 6,412 4,955 12,222 9,502
Interest and amortization
of debt costs ................... 1,467 1,494 2,949 2,914
----------- ----------- ----------- -----------
Total costs and expenses .............. 47,787 40,897 85,429 71,202
----------- ----------- ----------- -----------
Income before income taxes ............ 3,251 1,447 4,402 1,230
Income taxes .......................... 1,272 599 1,739 506
----------- ----------- ----------- -----------
Net Income ............................ $ 1,979 $ 848 $ 2,663 $ 724
=========== =========== =========== ===========
Weighted average common
shares outstanding ................... 13,132,882 13,674,476 13,134,049 13,797,764
=========== =========== =========== ===========
Per common share data:
Net Income ........................ $ 0.15 $ 0.06 $ 0.20 $ 0.05
=========== =========== =========== ===========
$ 0.01 $ 0.01 $ 0.02 $ 0.02
Dividends
=========== =========== =========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE> 5
DYERSBURG CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------------
April 5, March 30,
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income ........................................ $ 2,663 $ 724
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization ................ 5,971 6,005
Deferred income taxes ........................ 17 14
Change in accounts receivable ................ 4,710 5,232
Change in inventories ........................ (13,353) (12,949)
Change in accounts payable ................... 2,692 1,586
Other-net .................................... (78) (308)
-------- --------
Net cash provided by operating activities 2,622 304
INVESTING ACTIVITIES
Capital expenditures .............................. (3,632) (8,780)
Other-net ......................................... (19) (577)
-------- --------
Net cash used in investing activities .... (3,651) (9,357)
FINANCING ACTIVITIES
Retirement of debt ................................ (108) (100)
Net borrowing under revolving credit agreement .... 1,025 11,400
Dividends paid .................................... (262) (276)
Issuance of common stock .......................... 29 --
Retirement of common stock ........................ (160) (2,567)
-------- --------
Net cash provided by financing activities 524 8,457
-------- --------
Net decrease in cash .................... (505) (596)
Cash at beginning of period ......................... 983 974
-------- --------
Cash at end of period ................................ $ 478 $ 378
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
DYERSBURG CORPORATION
April 5, 1997
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
include the accounts of Dyersburg Corporation and its wholly-owned subsidiaries
("Company"). All significant intercompany balances and transactions have been
eliminated. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 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. Financial information as of
September 28, 1996, has been derived from the audited financial statements of
the Company, but does not include all disclosures required by generally accepted
accounting principles. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
financial information for the periods indicated have been included. Due to
seasonal patterns, the results for interim periods are not necessarily
indicative of results to be expected for the year. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the fiscal year ended September 28,
1996.
NOTE B--INVENTORIES
<TABLE>
<CAPTION>
Apr. 5, Sept. 28, Mar. 30,
1997 1996 1996
------- -------- -------
(in thousands)
<S> <C> <C> <C>
Raw Materials $ 8,121 $ 5,573 $ 6,608
Work in Process 13,056 8,530 10,516
Finished Goods 15,424 9,145 18,062
------- ------- -------
$36,601 $23,248 $35,186
======= ======= =======
</TABLE>
NOTE C--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which is required to be adopted in the quarter ending
January 3, 1998. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
The impact of Statement 128 on the calculation of diluted earnings per share for
the three and six months ended April 5, 1997, and March 30, 1996, is
immaterial.
6
<PAGE> 7
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the quarter ended April 5, 1997, increased by
approximately 20.5% to $51.0 million versus $42.3 million for the quarter ended
March 30, 1996. The increase in net sales dollars was driven by an approximate
60.8% increase in outerwear shipments for the second quarter of 1997 as compared
to the same period in 1996. Stretch fabrics enjoyed an increase of over 18.0%,
while cotton jersey fabrics reflected strong sales volumes as well. Infant
sleepers increased 36.7% over the same period last year. Gross margins for the
quarter improved to 21.8% for the second quarter of 1997 versus 18.6% for the
same period in fiscal 1996. Margins benefited from an improved product mix
combined with the overall increase in sales. The six month period ended April 5,
1997, consisted of 27 weeks compared to the six month period ended March 30,
1996, which had 26 weeks.
Selling, general and administrative expenses increased 29.4% for the
second quarter of fiscal 1997 compared to the same period in fiscal 1996.
However, these same expenses as a percentage of sales were 12.6% for the first
quarter versus 11.7% for the same period in 1996, and 13.6% for the first half
of 1997 compared to 13.1% for the same period last year. The increase in
expenses was primarily due to an increase in bad debt expense and salaries and
benefits. Bad debt expense increased to $.32 million and $.86 million for the
three and six month periods ended April 5, 1997, as compared to $.08 million and
$.25 million for the same periods in 1996. The Company continually evaluates the
adequacy of its allowance for bad debts based upon general trends and its
specific analysis of certain accounts. Based upon this review and the risks
associated with a few certain accounts, management deemed this increase
necessary. Salaries and benefits increased to $3.33 million and $6.35 million
for the three and six month periods ended April 5, 1997, as compared to $2.55
million and $4.96 million for the same periods in 1996. The increases in
salaries and benefits were primarily due to increased profit sharing, sales and
incentive bonuses due to increased profits, and to a lesser degree due to
increased sales and marketing staff.
Quarterly interest expense of $1.47 million was approximately equal to
that of the prior year. When compared to the higher sales volume for the period
ended April 5, 1997, however, interest as a percentage of sales decreased to
2.9% in the fiscal 1997 quarter versus 3.5% in the comparable period in fiscal
1996. The effective tax rate for the second quarter of fiscal 1997 was
approximately 39% exceeding the federal statutory rate due to the
nondeductibility for tax purposes of certain expense items, principally the
amortization of goodwill.
Liquidity and Capital Resources
Working capital at April 5, 1997, increased to $57.6 million versus
$51.1 million at March 30, 1996, due primarily to an increase in accounts
receivable of $6.0 million reflecting the higher sales volume this year. The
Company's current ratio (current assets to current liabilities) was 4.23:1 and
its debt-to-capital ratio was 47.6% at April 5, 1997, compared to 4.37:1 and
47.9% at September 28, 1996, and 3.98:1 and 51.4% at March 30, 1996.
7
<PAGE> 8
Net receivables increased from $24.8 million at January 4, 1997, to
$37.7 million at April 5, 1997, as a result of seasonal sales levels.
Inventories increased to $36.6 million during the second quarter of 1997 in
anticipation of seasonally stronger sales for the remainder of the fiscal year.
Capital expenditures for the six months ended April 5, 1997, were $3.6
million versus $8.8 million for the same period in the prior year. The Company
anticipates that capital expenditures in fiscal 1997 will approximate $14
million as compared to $11.8 million in 1996.
At April 5, 1997, the Company had $12.9 million of unused available
bank lines of credit. The Company believes that cash generated from operations
and the available revolving credit facility will be sufficient to fund the
capital spending and normal operating needs.
PART II--OTHER INFORMATION
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held the Annual Meeting of Shareholders on January 22,
1997, (the "Annual Meeting"). At the Annual Meeting, the shareholders of the
Company elected three Class II directors, L. R. Jalenak, Jr., T. Eugene McBride,
and Patricia Hilsberg for three-year terms and until their successors are duly
elected and qualified.
<TABLE>
<CAPTION>
For Withheld (Abstain)
--------- ------------------
<S> <C> <C>
L. R. Jalenak, Jr. 9,852,873 7,400
T. Eugene McBride 9,852,873 7,400
Patricia Hilsberg 9,851,873 8,400
</TABLE>
The shareholders ratified the appointment of Ernst & Young LLP as the
independent certified public accountants of the Company for fiscal 1997. There
were 9,607,971 votes cast for such proposal, 248,002 votes cast against such
proposal, and 4,300 votes withheld (abstain) with respect to such proposal.
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) 11 Statements regarding computation of
earnings per share.
27 Financial Data Schedule (for SEC use only)
(b) The Corporation filed a report on Form 8-K,
effective April 17, 1997, regarding changes
in control of registrant and a change in certain bylaws.
8
<PAGE> 9
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.
May 15, 1997 /s/ William S. Shropshire, Jr.
----------------------------------
William S. Shropshire, Jr.
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
9
<PAGE> 1
EXHIBIT 11--COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
April 5, 1997 March 30, 1996 April 5, 1997 March 30, 1996
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Average shares
outstanding 13,132,882 13,674,476 13,134,049 13,797,764
Net income (loss) $ 1,979 $ 848 $ 2,663 $ 724
=========== =========== =========== ===========
Earnings (loss)
per share of
common stock $ .15 $ .06 $ .20 $ 0.05
=========== =========== =========== ===========
</TABLE>
The dilutive effect of stock options, calculated using the treasury stock
method, was less than 1% during all periods posted.
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX MONTHS ENDED APRIL 5, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-05-1997
<PERIOD-END> APR-05-1997
<CASH> 477,991
<SECURITIES> 0
<RECEIVABLES> 39,291,069<F1>
<ALLOWANCES> (1,575,000)<F1>
<INVENTORY> 36,601,299
<CURRENT-ASSETS> 75,410,018
<PP&E> 125,168,586
<DEPRECIATION> (58,724,601)
<TOTAL-ASSETS> 200,587,563
<CURRENT-LIABILITIES> 17,807,763
<BONDS> 82,511,000
0
0
<COMMON> 131,340
<OTHER-SE> 90,880,829
<TOTAL-LIABILITY-AND-EQUITY> 200,587,563
<SALES> 89,830,755
<TOTAL-REVENUES> 89,830,755
<CGS> 70,257,960
<TOTAL-COSTS> 12,221,656
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 861,531
<INTEREST-EXPENSE> 2,949,125
<INCOME-PRETAX> 4,402,014
<INCOME-TAX> 1,738,844
<INCOME-CONTINUING> 2,663,170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,663,170
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
<FN>
Amounts inapplicable or not disclosed as a separate line on the Balance Sheet
or Statement of Income are reported as $0 herein.
<F1>Notes and accounts receivable - trade are reported net of allowances for
doubtful accounts in the Balance Sheet.
</FN>
</TABLE>
