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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 9, 1999
DAN RIVER INC.
(Exact name of registrant as specified in its charter)
Commission file number 1-13421
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
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Item 5. Other Events.
The Unaudited Pro Forma Combined Statement of Income of Dan River Inc.
for the fiscal year ended January 2, 1999 is set forth on the following pages.
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME OF DAN RIVER INC.
On October 14, 1998, Dan River Inc. ("Dan River") acquired all of the
capital stock of The Bibb Company ("Bibb") for $86.5 million in cash,
including transaction costs, and the issuance of approximately
4,257,000 shares of Dan River Class A common stock. In connection with
the acquisition, Dan River also retired $78.6 million of Bibb
indebtedness, and paid $2.0 in cash and issued 104,000 shares of Class
A common stock in cancellation of nonqualified Bibb stock options.
The Unaudited Pro Forma Combined Statement of Income for the fiscal
year ended January 2, 1999 gives effect to the acquisition of Bibb and the
financing thereof as if they had occurred on the first day of the fiscal year.
The pro forma information does not purport to reflect the results of operations
that actually would have resulted had the acquisition and related financing
occurred on that date, or to project results of operations for any future
period.
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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended January 2, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
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Dan River Bibb (1) Adjustments (7) Combined
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(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $ 517,443 $178,961 $ - $ 696,404
Costs and expenses:
Cost of sales 406,619 159,808 1,401 (2) 567,828
Selling, general and administrative expenses 58,410 18,035 (2,887) (3) 73,558
Amortization of goodwill 589 - 2,194 (4) 2,783
Other operating costs, net 5,347 - - 5,347
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Operating income 46,478 1,118 (708) 46,888
Other income 334 - 334
Interest expense (18,713) (6,523) (2,814) (5) (28,050)
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Income before income taxes and extraordinary item 28,099 (5,405) (3,522) 19,172
Provision for income taxes 10,998 - (2,952) (6) 8,046
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Income before extraordinary item $ 17,101 $ (5,405) $ (570) $ 11,126
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Earnings per share before extraordinary item:
Basic $0.86 $0.48
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Diluted $0.85 $0.47
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Weighted average shares outstanding:
Basic 19,803 23,206
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Diluted 20,035 23,438
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(1) Reflects the operating results of Bibb for the portion of fiscal 1998
prior to its acquisition on October 14, 1998.
(2) Reflects the increase in cost of sales attributable to the assumed
adjustments necessary to state Bibb's inventories at fair market value
as of the beginning of 1998, principally the elimination of the
last-in, first-out reserve.
(3) Reflects the elimination of merger costs incurred by Bibb, and
duplicate administrative expenses, principally management compensation
and related fringe benefits.
(4) Reflects amortization of goodwill on the straight-line method over 40
years.
(5) Reflects additional interest expense, consisting of the following:
Interest expense on new floating rate bank debt incurred in connection
with (i) the refinancing of Bibb outstanding indebtedness, (ii) the
refinancing of Dan River's existing working capital facility, and (iii)
the funding of the cash portion of the buyout of Bibb outstanding
Common Stock and stock options, and other transaction costs. For each
1/8% change in the assumed interest rate on new floating rate bank
debt, interest would change by $178. $9,593
Amortization of debt issuance costs on the above 243
Less: historical interest on debt refinanced, including amortization of
debt issuance costs and related expenses (7,022)
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$2,814
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(6) Adjustment of pro forma income tax expense to reflect an assumed effective
tax rate of 38.6% .
(7) The pro forma adjustments do not include the impact of certain
merger-related cost savings initiatives that Dan River intends to
implement. The additional cost savings, which are expected to total $15.5
million (pre-tax) on an annual basis, include:
- reduced selling, general and administrative expense, principally from
the elimination of overlapping administrative functions;
- manufacturing cost savings from certain plant alignment and capacity
utilization synergies, and manufacturing practices expected to result
in improved operating efficiencies;
- cost savings relating to manufacturing techniques and specifications;
and
- savings expected to be realized through volume purchasing of certain
raw materials, such as polyester and packaging materials.
The projected cost savings are based on estimates and assumptions believed
to be reasonable by management. Due to the inherent uncertainty associated
with such estimates and assumptions, there can be no assurance that these
cost savings will actually be realized.
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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 hereunto duly authorized.
DAN RIVER INC. (Registrant)
Date: April 9, 1999 /s/ Harry L. Goodrich
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Harry L. Goodrich
Vice President
