<PAGE> 1
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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 June 29, 1996
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 33-70442
DAN RIVER INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1854637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2291 Memorial Drive 24541
Danville, Virginia (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (804) 799-7000
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
Number of shares of common stock outstanding as of June 29, 1996:
Class A: 726,454 Shares
Class B: 82,413 Shares
There are 19 pages in the sequentially numbered, manually signed original of
this report.
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<PAGE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
See Following Pages.
<PAGE>
<PAGE> 3
DAN RIVER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 30, June 29,
1995 1996
------------ ------------
<S> <C> <C>
(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 1,540 $ 2,352
Accounts receivable, net 54,848 50,725
Inventories 96,204 92,936
Prepaid expenses and other current assets 2,481 2,085
Deferred income taxes 7,231 8,214
------------ ------------
Total current assets 162,304 156,312
Property, plant and equipment 241,291 257,128
Less accumulated depreciation and amortization (79,311) (89,459)
------------ ------------
Net property, plant and equipment 161,980 167,669
Other assets 6,660 5,432
------------ ------------
$ 330,944 $ 329,413
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 5,138 $ 6,509
Accounts payable 23,776 20,647
Accrued compensation and related benefits 14,857 15,416
Other accrued expenses 8,770 9,009
------------ ------------
Total current liabilities 52,541 51,581
Other liabilities:
Long-term debt 174,565 173,005
Deferred income taxes 16,795 17,660
Other deferred items 6,341 6,557
------------ ------------
Total other liabilities 197,701 197,222
Common stock subject to put rights 7,000 7,000
Shareholders' equity:
Common stock, Class A, $.01 par value; 1,500,000
shares authorized; 726,454 shares issued and
outstanding 7 7
Common stock, Class B, $.01 par value; 1,500,000
shares authorized; 82,413 shares issued and
outstanding 1 1
Additional paid-in capital 67,527 67,527
Retained earnings 8,012 7,920
Pension liability adjustment (1,845) (1,845)
------------ ------------
Total shareholders' equity 73,702 73,610
------------ ------------
$ 330,944 $ 329,413
============ ============
</TABLE>
See accompanying notes.<PAGE>
<PAGE> 4
DAN RIVER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ----------------------
July 1, June 29, July 1, June 29,
1995 1996 1995 1996
--------- -------- -------- --------
<S> <C> <C> <C> <C>
(Dollars in thousands)
Net sales $ 96,972 $ 93,203 $ 195,083 $ 176,941
Costs and expenses:
Cost of sales 75,872 74,940 154,749 145,074
Selling, general
and administrative
expenses 11,034 11,542 22,457 22,956
--------- --------- --------- ---------
Operating income 10,066 6,721 17,877 8,911
Other income (expense) (4) 121 61 377
Interest expense (5,907) (4,633) (11,507) (9,442)
--------- --------- --------- ---------
Income (loss) before
income taxes 4,155 2,209 6,431 (154)
Provision (benefit) for
income taxes 2,069 873 3,387 (62)
--------- --------- --------- ---------
Net income (loss) $ 2,086 $ 1,336 $ 3,044 $ (92)
========= ========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
<PAGE> 5
DAN RIVER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
July 1, June 29,
1995 1996
------------ ------------
<S> <C> <C>
(Dollars in thousands)
Cash flows from operating activities:
Net income (loss) $ 3,044 $ (92)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Noncash interest expense 2,760 594
Depreciation and amortization 10,099 10,413
(Gain) loss on writedown/disposal
of equipment (7) 97
Changes in operating assets and liabilities:
Accounts receivable 4,801 4,123
Inventories (13,444) 1,929
Prepaid expenses and other assets 128 (491)
Accounts payable and accrued expenses (1,304) (2,236)
Deferred income taxes and other
liabilities 186 98
---------- -----------
Net cash provided by operating
activities 6,263 14,435
Cash flows from investing activities:
Total capital expenditures (15,901) (16,207)
Plant and equipment acquired in
exchange for debt 5,992 3,224
Accrued equipment purchases (4,742) (1,357)
---------- -----------
Capital expenditures in cash (14,651) (14,340)
Proceeds from sale of discontinued product
line -- 2,455
Proceeds from sale of assets 8 1,675
---------- -----------
Net cash used by investing activities (14,643) (10,210)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt -- 25,313
Payments of long-term debt (4,714) (15,200)
Net borrowings (payments) - working capital
facility 13,200 (13,526)
---------- -----------
Net cash provided (used) by financing
activities 8,486 (3,413)
---------- -----------
Net increase in cash and cash equivalents 106 812
Cash and cash equivalents at beginning of period 1,749 1,540
---------- -----------
Cash and cash equivalents at end of period $ 1,855 $ 2,352
========== ===========
</TABLE>
See accompanying notes.<PAGE>
<PAGE> 6
DAN RIVER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
On December 29, 1995, Braelan Corp. (Braelan), Dan River Inc.'s parent and
sole shareholder, was merged with and into Dan River Inc. The condensed
consolidated balance sheets as of December 30, 1995 and June 29, 1996, and
the condensed consolidated statements of operations and cash flows for the
interim periods ended June 29, 1996, represent the consolidated financial
position, results of operations and cash flows of Dan River Inc. and its
wholly-owned subsidiary, Dan River Factory Stores, Inc. The condensed
consolidated statements of operations and cash flows for the interim
periods ended July 1, 1995 represent the consolidated results of
operations and cash flows of Braelan and its subsidiaries. Braelan and
its subsidiaries, and Dan River Inc. and its subsidiary are collectively
referred to as the Company.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation of
results for the interim periods presented have been included. Interim
results are not necessarily indicative of results for a full year. For
further information, refer to the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 30, 1995.
2. Inventories
The components of inventory are as follows:
<TABLE>
<CAPTION>
December 30, June 29,
1995 1996
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Finished goods $ 34,463 $ 33,757
Work in process 51,452 47,975
Raw materials 3,483 4,113
Supplies 6,806 7,091
-------- --------
Total Inventories $ 96,204 $ 92,936
======== ========
</TABLE>
<PAGE>
<PAGE> 7
DAN RIVER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Shareholders' Equity
Activity in Shareholders' Equity is as follows:
<TABLE>
<CAPTION>
Total
Additional Pension Share-
Common Stock Paid-In Retained Liability holders'
Class A Class B Capital Earnings Adjustment Equity
------- -------- ---------- -------- ---------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at Decem-
ber 30, 1995 $ 7 $ 1 $67,527 $ 8,012 $ (1,845) $73,702
Net Loss -- -- -- (92) -- (92)
------ ------ ------- ------- -------- ------
Balance at June
29, 1996 $ 7 $ 1 $67,527 $ 7,920 $ (1,845) $73,610
======= ======= ======= ======= ========= =======
</TABLE>
4. Income taxes
At December 30, 1995, the Company had net operating loss carryforwards of
$1,600,000, which expire in 2005. In addition, the Company had available
a minimum tax credit carryforward of $6,700,000, investment credit
carryforwards of $3,800,000 and other general business credit
carryforwards of $1,500,000. If not used, substantially all of the
investment credit and other general business credit carryforwards will
expire in the years 1996 through 2000.
On September 3, 1991, the Company completed a financial restructuring (the
Restructuring) which involved issuing common and preferred stock to
various parties. The Company believes that the Restructuring did not
result in a "change in ownership" under Section 382 of the Internal
Revenue Code. However, Section 382 and related regulations promulgated by
the Internal Revenue Service (IRS) are extremely complex, and the
Company's assessment of whether or not a "change in ownership" occurred
involves judgments as to certain factual issues and interpretations as to
certain legal issues for which there is little guidance.
Through December 30, 1995, the Company has utilized an aggregate of
$34,900,000 in net operating loss carryforwards and $1,400,000 in general
business credit carryforwards that were generated prior to the
Restructuring. The utilization of these carryforwards and related tax
benefits could be significantly restricted or eliminated if the
Restructuring is ultimately deemed to constitute a "change in ownership."
<PAGE>
<PAGE>8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
Net sales for the second quarter of 1996 were $93.2 million, a decrease of $3.8
million (3.9%) compared to the second quarter of 1995. Sales of home fashions
products were up $5.2 million (9.8%) for the quarter, while sales of apparel
fabrics declined $9.0 million, (20.6%).
The increase in sales of home fashions products was due to higher unit volume
of sheets. This was offset somewhat by lower average pricing reflecting a
competitive pricing environment. The reduction in apparel fabric sales was due
mostly to lower unit volume of shirting and sportswear fabrics. The market for
these fabrics continues to be soft. The Company had indicated previously that
it was expecting a pickup in demand for the third quarter. While the incoming
order rate has increased, it is still not at the level the Company needs to run
its apparel fabrics manufacturing operations at budgeted capacities.
Gross profit for the second quarter of 1996 was $18.3 million, 19.6% of sales,
down $2.8 million or 13.4% from the second quarter of 1995, during which gross
profit represented 21.8% of sales. The decrease in gross profit was caused by
higher raw material costs, lower sales of apparel fabrics offset somewhat by
higher sales of home fashions products, and volume cost variances caused by
abbreviated running schedules due to the weak order position for apparel
fabrics.
Selling, general, and administrative expenses for the second quarter of 1996
were up $510,000 (4.6%) as compared to the second quarter of 1995. Most of the
increase related to higher rent expense for the Company's New York office and
showrooms and higher expense due to the development of an increased number of
designs for home fashions products. As a percentage of sales, these expenses
represented 12.4% in the second quarter of 1996 as compared to 11.4% in the
second quarter of 1995.
Due to the factors described above, operating income was $6.7 million, down
$3.3 million or 33.2% from $10.1 million in the second quarter of 1995.
Interest expense for the second quarter of 1996 was $4.6 million, a decrease of
$1.3 million or 21.6% from the second quarter of 1995. The decrease in
interest expense was due to a combination of lower debt levels and lower
average rates. The lower debt levels reflect the conversion from debt to
common equity of the Company's Convertible Junior Subordinated Notes in
September 1995 and lower debt levels under its revolving credit agreement. The
lower average interest rates were primarily attributable to the conversion of
the Junior Subordinated Notes referred to above.
The income tax provision was $873,000 in the second quarter of 1996 (39.5% of
pretax income). This is down $1.2 million or 57.8% from the $2.1 million
(49.8% of pretax income) recorded for the second quarter of 1995. The high
effective tax rate for the second quarter of 1995 reflects the nondeductibility
of interest on the Junior Subordinated Notes. Accordingly, the Company
recorded a net profit of $1.3 million for the second quarter of 1996.
<PAGE>
<PAGE> 9
Net sales for the first six months of 1996 were $176.9 million, which was $18.1
million lower (9.3%) than the corresponding period in 1995. Sales of home
fashions products were up $2.0 million or 1.8%, while sales of apparel fabrics
were $20.1 million (23.9%) lower during the applicable period.
The increase in sales of home fashions products for the first six months of
1996 as compared to the corresponding period in 1995 was due to higher unit
volume of sheets offset by lower sales of accessory products. The decrease in
sales of apparel fabrics reflects lower unit volume of shirting fabrics,
particularly commodity white and blues, and sportswear fabrics. The lower
volume reflects the sluggish retail environment for apparel shirting products
during the period and the excess inventory held by the Company's customers and
by retailers during the first six months of 1996.
Gross profit for the first six months of 1996 was $31.9 million (18.0% of
sales) down $8.5 million or 21.0% from the first six months of 1995, during
which gross margins were 20.7% of sales. The decrease in gross profit was due
to lower sales of apparel fabrics, higher raw material costs for both product
groups, and poor manufacturing performance associated with abbreviated running
schedules due to the weak order position for apparel fabrics during the period.
Selling, general, and administrative expenses for the first six months of 1996
were $500,000 higher due to higher rent expense for the Company's New York
office and showrooms and higher expenses associated with the development of an
increased number of fabric designs, offset somewhat by other items. For the
period, these expenses represented 13.0% of sales as compared to 11.5% of sales
for the comparable period in 1995.
For the reasons described above, operating income for the first six months was
$8.9 million, down $9.0 million or 50.2% from the first six months of 1995.
Interest expense for the first six months of 1996 was $9.4 million, a decrease
of $2.1 million or 17.9% from the comparable period during 1995. The decrease
in interest expense was due to the conversion from debt to equity of the
Company's Junior Subordinated Notes in September 1995.
An income tax benefit of $0.1 million was recorded for the first six months of
1996 (40.3% of the pre-tax loss), compared to a $3.4 million provision (52.7%
of pre-tax income) for the first six months of 1995. The high effective tax
rate for the 1995 period reflects the nondeductibility of interest on the
Junior Subordinated Notes. Accordingly, the Company recorded a net loss of
$0.1 million for the first six months of 1996 as compared to a $3.0 million
profit for the comparable 1995 period.
LIQUIDITY AND CAPITAL RESOURCES
General
The Company believes that internally generated cash flow, supplemented by
borrowings under its revolving credit facility and vendor financing, will be
sufficient to meet its foreseeable debt service requirements, capital
expenditures, and working capital needs. The Company is considered highly
leveraged, with a debt to total capital ratio of 69.0% at June 29, 1996.
<PAGE>
<PAGE> 10
Working Capital
Net cash generated from operating activities was $14.4 million in the six
months ended June 29, 1996. Included in that amount is a source of cash from
operating assets and liabilities of $3.4 million, primarily comprised of a $3.8
million source from operating working capital (accounts receivable - $4.1
source, inventories - $1.9 million source, and accounts payable and accrued
expenses - $2.2 million use).
During the comparable six month period ended July 1, 1995, net cash of $6.3
million was generated from operating activities. Included in that amount was a
use of cash for operating assets and liabilities of $9.6 million primarily
consisting of a $9.9 million use for operating working capital (accounts
receivable - $4.8 million source, inventories $13.4 million use, and accounts
payable and accrued expenses - $1.3 million use).
Credit Facilities and Vendor Financing
The Company extended its $60 million revolving credit agreement with a lender
by one year to expire on January 5, 1999. At June 29, 1996, the Company had
aggregate borrowings of $11.5 million outstanding under the credit agreement
and had aggregate unused borrowing availability of $46.6 million. Borrowings
under the credit agreement are secured by the Company's accounts receivable,
inventories and current assets related thereto, and bear interest at the prime
rate (8.25% at June 29, 1996) or Libor plus 2% (7.59% at June 29, 1996), at the
Company's option. The credit agreement contains certain covenants requiring
the maintenance of a certain cash interest coverage ratio and a minimum net
worth. The amount available for borrowing under the credit agreement is based
upon a borrowing base formula which is dependent on the eligible level of
accounts receivable and inventories, less $10 million.
In addition, the Company finances certain capital expenditures through vendors
of the capital assets, and will continue to utilize this method of financing
where it deems appropriate.
Capital Improvements
During the first six months of 1996, the Company purchased $16.2 million in
equipment and manufacturing improvements. Of that amount, $3.2 million was
financed through vendors pursuant to long-term loans secured by the equipment
and the improvements. The Company expects to continue modernizing and making
capital improvements over the next several years, which are anticipated to be
financed through cash generated by operations, vendor financing, and borrowings
under the credit agreement.<PAGE>
<PAGE> 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Pursuant to action taken by written consent of shareholders in lieu
of an annual meeting, effective on May 1, 1996 the Board of Directors
as previously reported to the Commission was re-elected in its
entirety. Consents of holders of 491,831 shares of the Class A
voting common stock of the Company were solicited and received in
favor of the re-election of each of the directors. Consents of the
remaining shareholders of the Company were not solicited.
Item 6. Exhibits and Reports on Form 8-K.
(a)
Exhibit No. Description of Exhibit
- - ----------- ----------------------
10.24.2 Second Amendment to Loan and Security Agreement between
Fleet Capital Corporation (successors to Barclays Business
Credit, Inc. and Shawmut Capital Corporation) and Dan River
Inc.
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for information
only and not filed.
(b) Reports on Form 8-K.
None.
<PAGE>
<PAGE> 12
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.
DAN RIVER INC.
<TABLE>
<S> <C>
Date: August 2, 1996 Barry F. Shea
-----------------------------------
Barry F. Shea
Vice President-Chief Financial Officer
(Authorized Signing Officer and
Principal Financial Officer)
</TABLE>
<PAGE>
<PAGE> 13
Exhibit No. Description of Exhibit Page No.
- - ----------- ---------------------- --------
10.24.2 Second Amendment to Loan and Security Agreement
between Fleet Capital Corporation (successors
to Barclays Business Credit, Inc. and Shawmut
Capital Corporation) and Dan River Inc. 14
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed. 19
<PAGE> 14
SECOND AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment"),
dated this 3rd day of May, 1996, is made by and between
DAN RIVER INC., a Georgia corporation (the "Borrower");
DAN RIVER FACTORY STORES, INC., a Georgia corporation (the "Guarantor");
and
FLEET CAPITAL CORPORATION (f/k/a Shawmut Capital Corporation and successor
by assignment from Barclays Business Credit, Inc.), a Connecticut corporation
(the "Lender")
to the Loan and Security Agreement, dated December 15, 1993, as previously
amended by First Amendment thereto, dated June 1, 1995 (as heretofore or
hereafter amended, modified, restated or supplemented from time to time, the
"Loan Agreement"). All capitalized terms used herein without definition shall
have the meanings ascribed to such terms in the Loan Agreement.
RECITALS
A. Pursuant to the Loan Agreement, Lender has made available to Borrower
a revolving credit facility in the amount of $60,000,000.
B. Lender has agreed to make a non-recourse loan (the "Project Loan") to
the Industrial Development Authority of Danville, Virginia, a political
subdivision of the Commonwealth of Virginia (the "Authority") in an amount up
to $9,000,000 to finance the actual hard and soft costs of constructing and
equipping a plant consisting of approximately 260,000 square feet of interior
floor space on certain land owned by the Authority in the City of Danville,
Virginia, and consisting of approximately 15.731 acres, to be leased by the
Authority to Borrower pursuant to the terms of a lease agreement among the
Authority, as lessor, the City of Danville, Virginia, and Borrower, as lessee,
for use by Borrower as a finished goods distribution center and other uses
related thereto as are reasonably deemed necessary and appropriate in
connection with Borrower's business.
C. Borrower will materially and directly benefit from the Project Loan
and the use of the proceeds thereof by the Authority as herein described, and,
in order to provide an inducement to Lender for the making of the Project Loan,
Borrower has executed and delivered to Lender (i) a Guaranty and Security
Agreement by which Borrower has unconditionally guaranteed the repayment of the
Project Loan and the completion of the project to be constructed, equipped and
leased by the Authority to Borrower, and has granted Lender a Lien in the
Collateral as security therefor, and (ii) a Put Agreement by which Borrower has
agreed to purchase the Project Loan from the Lender under the terms and
conditions described therein.
D. As an additional condition precedent to the making of the Project
Loan, Borrower and Lender have agreed to amend the Loan Agreement as set forth
herein.<PAGE>
<PAGE>15
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE I
AMENDMENTS TO LOAN AGREEMENT
The Loan Agreement is hereby amended as follows:
1.1. Definitions. Section 1.1, Defined Terms, is amended by making the
following changes:
(a) The definition of "Obligations" is amended in its entirety to
read as follows:
"Obligations - Collectively, (a) the Revolving Credit Loans and all
other sums loaned or advanced by Lender to or on behalf of Borrower
pursuant to this Agreement or the other Loan Documents, (b) all
liabilities, indebtedness and obligations now or any time hereafter owing
by Borrower or any Guarantor to Lender under this Agreement or any of the
other Loan Documents, (c) Letter of Credit Obligations and all other
obligations incurred by Lender, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance of a Letter of
Credit Guaranty or any other agreement, instrument or document with
respect to a Letter of Credit; and (d) all other liabilities,
indebtedness and obligations of any and every kind now or hereafter owing
or to become due from Borrower or any Guarantor in respect of the
Revolving Credit Loans. The term includes, without limitation, all
principal, interest, charges, expenses, fees, attorneys' fees and any
other sums chargeable to, or to be paid by, Borrower or any Guarantor
under any of the Loan Documents, but shall not include any of the Project
Loan Obligations."
(b) The following definitions are added:
"Authority - The Industrial Development Authority of Danville,
Virginia, a political subdivision of the Commonwealth of Virginia.
Project - The construction of a plant consisting of approximately
260,000 square feet on certain land owned by the Authority in the City of
Danville, Virginia, and consisting of approximately 15.731 acres, to be
leased by the Authority to Borrower pursuant to the terms of the Project
Lease.
Project Lease - The Lease Agreement among the Authority, as lessor,
the City of Danville, Virginia, and Borrower, as lessee, dated on or
about the date of the Second Amendment to this Agreement, as amended,
modified, supplemented or restated from time to time.
Project Loan - The non-recourse loan from Lender to the Authority in
an amount up to $9,000,000 to finance the actual hard and soft costs of
constructing the Project.
<PAGE>
<PAGE> 16
Project Loan Documents - The Project Loan Guaranty, the Put
Agreement, the Project Lease, and all other agreements, notes, deeds of
trust, assignments, instruments and other documents executed by the
Authority or Borrower to evidence or secure the Project Loan.
Project Loan Guaranty - The Guaranty and Security Agreement, dated on
or about the date of the Second Amendment to this Agreement, executed by
Borrower and Lender, by which Borrower unconditionally guarantees the
repayment of the Project Loan and the completion of the Project, and
grants Lender a Lien in the Collateral as security therefor, as amended,
modified, supplemented or restated from time to time.
Project Obligations - Collectively, (a) the Project Loan and all
other sums loaned or advanced by Lender to or on behalf of the Authority
or Borrower pursuant to the terms of any of the Project Documents, (b)
all liabilities, indebtedness or obligations now or at any time hereafter
owing by the Authority or Borrower under any of the Project Loan
Documents, and (c) all other liabilities, indebtedness and obligations of
any and every kind now or hereafter owing or to become due from the
Authority or Borrower to Lender in respect of the Project Loan. The term
includes, without limitation, all principal, interest, charges, expenses,
fees, attorneys' fees and any other sums chargeable to, or to be paid by,
the Authority or Borrower under any of the Project Loan Documents,
including, without limitation, all legal fees and expenses incurred by
Lender in connection with the exercise of its rights under the Put
Agreement and the closing of the sale of the Project Loan to Borrower
pursuant to the terms thereof.
Put Agreement - The Put Agreement, dated on or about the date of the
Second Amendment to this Agreement, between Borrower and Lender, pursuant
to which Borrower agrees to purchase the Project Loan from Lender under
the terms and conditions described therein, as amended, modified,
supplemented or restated from time to time."
1.2. Negative Covenants. Section 9.2 (E), Limitation on Liens, is amended
by deleting the word "and" immediately preceding clause (ix), deleting the
period at the end of clause (ix) and adding the following at the end of clause
(ix):
"and (x) Liens of Lender in the Collateral as security for the
Project Loan Obligations provided such Liens are junior and subordinate to
the Liens of Lender in the Collateral as security for the Obligations."
1.3. Events of Default. Section 12.1, Events of Default, is amended by
adding a new subsection (I) as follows:
"(I) Project Loan Documents. A default or event of default shall
occur under any of the Project Loan Documents and the maturity of the
Project Loan Obligations is accelerated in consequence thereof."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender that:
<PAGE>
<PAGE> 17
2.1. Compliance With the Loan Agreement. As of the execution of this
Amendment, Borrower and Guarantor are in compliance with all of the terms and
provisions set forth in the Loan Documents to be observed or performed, except
where the failure of Borrower and Guarantor to comply has been waived in
writing by Lender.
2.2. Representations in Loan Agreement. The representations and
warranties of the Borrower set forth in the Loan Agreement are true and correct
in all material respects except to the extent that such representations and
warrants relate solely to or are specifically expressed as of a particular
date or period which is past or expired as of the date hereof.
2.3. No Event of Default. No Default or Event of Default exists.
ARTICLE III
MODIFICATION OF LOAN DOCUMENTS AND CONDITIONS
3.1. Loan Documents. Any individual or collective reference to the Loan
Agreement in any of the Loan Documents shall mean, unless otherwise
specifically provided, the Loan Agreement as amended hereby and as further
amended, restated, supplemented or modified from time to time hereafter.
3.2. Conditions. The effectiveness of this Amendment is conditioned upon
the execution and delivery by each Participating Lender of a consent to
Lender's execution, delivery and performance hereof.
3.3. Consent by Guarantor. Guarantor hereby consents to, and agrees to be
bound by, each of the amendments to the Loan Agreement and the other Loan
Documents set forth herein.
ARTICLE IV
GENERAL
4.1. Full Force and Effect. As expressly amended hereby, the Loan
Agreement shall continue in full force and effect in accordance with the
provisions thereof. As used in the Loan Agreement "hereinafter", "hereto",
"hereof", or words of similar import, shall, unless the context otherwise
requires, mean the Loan Agreement as amended by this Amendment.
4.2. Applicable Law. This Amendment shall be construed, interpreted and
enforced in accordance with the laws of the State of North Carolina.
4.3. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one and the same instrument.
4.4. Further Assurances. Borrower and Guarantor shall execute and deliver
to Lender such documents, certificates and opinions as Lender may reasonably
request to effect the amendments contemplated by this Amendment.
4.5. Headings. The headings of this Amendment are for the purpose of
reference only and shall not effect the construction of this Amendment.
<PAGE>
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers to be effective as of
the date first above written.
DAN RIVER INC.
By: Scott D. Batson
Title: Vice President-Finance
DAN RIVER FACTORY STORES, INC.
By: Scott D. Batson
Title: Treasurer
FLEET CAPITAL CORPORATION
By: W. Reed Paden
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 29, 1996 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AS OF JUNE 29, 1996 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 2,352
<SECURITIES> 0
<RECEIVABLES> 50,725
<ALLOWANCES> 0
<INVENTORY> 92,936
<CURRENT-ASSETS> 156,312
<PP&E> 257,128
<DEPRECIATION> 89,459
<TOTAL-ASSETS> 329,413
<CURRENT-LIABILITIES> 51,581
<BONDS> 120,000
173,005
0
<COMMON> 8
<OTHER-SE> 73,602
<TOTAL-LIABILITY-AND-EQUITY> 329,413
<SALES> 176,941
<TOTAL-REVENUES> 176,941
<CGS> 145,074
<TOTAL-COSTS> 168,030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,442
<INCOME-PRETAX> (154)
<INCOME-TAX> (62)
<INCOME-CONTINUING> 8,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
