<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 28, 1996 Commission File No. 0-1915
THOMASTON MILLS, INC.
- -------------------------------------------------------------------------------
GEORGIA 58-0460470
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
115 East Main Street, P.O. Box 311, Thomaston, Georgia 30286
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (706) 647-7131.
--------------
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the close of the period covered by this report.
Class A Common Stock $1 Par Value - 5,620,518 Shares
including 710,888 Treasury Shares
Class B Common Stock $1 Par Value - 1,873,506 Shares
including 243,140 Treasury Shares
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 for the past 90 days.
Yes X No
----- -----
<PAGE> 2
INDEX
THOMASTON MILLS, INC. AND SUBSIDIARY
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- December 28, 1996 and
June 29, 1996.
Condensed consolidated statements of operations -- three months
ended December 28, 1996 and three months ended December 30, 1995
and six months ended December 28, 1996 and six months ended
December 30, 1995.
Condensed consolidated statements of changes in cash flows -- six
months ended December 28, 1996 and six months ended December 30,
1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to vote of Security Holders
Item 5. Other information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
THOMASTON MILLS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Dec. 28, 1996 June 29, 1996
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash & cash equivalents $ 1,942 $ 2,077
Accounts receivable, less allowance of
$415 at both dates 44,385 50,408
Inventories--Note B 49,436 42,710
Other current assets 2,743 1,853
------------- -------------
TOTAL CURRENT ASSETS 98,506 97,048
PROPERTY, PLANT AND EQUIPMENT 236,056 233,694
Less allowances for depreciation 151,748 143,071
------------- -------------
84,308 90,623
OTHER ASSETS 2,120 1,788
------------- -------------
$ 184,934 $ 189,459
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,440 $ 15,880
Accrued liabilities 7,052 6,288
Federal and State income taxes 0 844
Current portion of long-term debt
and capital lease obligations 3,024 2,748
------------- -------------
TOTAL CURRENT LIABILITIES 17,516 25,760
OBLIGATIONS UNDER CAPITAL LEASE -
LESS CURRENT PORTION 1,294 1,486
LONG-TERM DEBT 52,807 46,065
DEFERRED INCOME TAXES 6,874 6,874
OTHER LIABILITIES 236 204
SHAREHOLDERS' EQUITY
Class A Common Stock--5,620,518 shares
outstanding including 710,888 treasury shares at
December 28, 1996 and 719,688 at June 29, 1996 5,621 5,621
Class B Common Stock--1,873,506 shares
outstanding including 243,140 treasury shares 1,873 1,873
Additional paid-in capital 8,904 8,904
Retained earnings 95,229 98,092
------------- -------------
111,627 114,490
Less treasury stock - at cost 5,420 5,420
------------- -------------
106,207 109,070
------------- -------------
$ 184,934 $ 189,459
============= =============
</TABLE>
NOTE: The Balance Sheet at June 29, 1996 has been derived from the Audited
Financial Statements at that date. See Note to Condensed Financial Statements.
<PAGE> 4
THOMASTON MILLS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands except Share and Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
DEC. 28, 1996 Dec. 30, 1995 DEC. 28, 1996 Dec. 30, 1995
-------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 68,172 $ 61,385 $ 137,085 $ 129,981
Cost of sales 63,518 57,244 128,367 119,246
-------------- ------------- ---------------- -------------
4,654 4,141 8,718 10,735
Selling, general
and administrative expenses 4,913 4,918 10,132 10,001
-------------- ------------- ---------------- -------------
(259) (777) (1,414) 734
Other income (expense)-net 100 113 163 313
-------------- ------------- ---------------- -------------
(159) (664) (1,251) 1,047
Interest expense 957 791 1,786 1,566
-------------- ------------- ---------------- -------------
Income (loss) before
income taxes (1,116) (1,455) (3,037) (519)
Provision for income taxes
(benefit) (424) (553) (1,154) (197)
-------------- ------------- ---------------- -------------
Net income (loss) $ (692) $ (902) (1,883) (322)
============== ============= ================ =============
AVERAGE NUMBER OF SHARES 6,547,579 6,537,196 6,546,744 6,536,603
Data Per Share:
Net income (loss) $ (0.1100) $ (0.1400) (0.2900) (0.0500)
Dividends paid $ 0.0750 $ 0.0725 0.1500 0.1450
</TABLE>
<PAGE> 5
THOMASTON MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
December 28, 1996 December 30, 1995
------------------- ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (1,883) $ (322)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 9,029 8,361
Loss (gain) on sale of property, plant
and equipment 161 7
Changes in operating assets and
liabilities:
Accounts receivable 6,023 11,727
Inventories (6,726) (5,070)
Other assets (1,221) (548)
Accounts payable and accrued expenses (8,112) (7,669)
----------------- -----------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (2,729) 6,486
INVESTING ACTIVITIES
Purchases of property, plant and equipment (2,876) (7,085)
Decrease in unexpended construction funds 0 3,242
Proceeds from sales of property, plant
and equipment 1 0
----------------- -----------------
NET CASH USED IN INVESTING
ACTIVITIES (2,875) (3,843)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit
and long-term debt 29,000 2,000
Principal payments on revolving lines of
credit, long-term debt and capital lease
obligations (22,550) (3,913)
Exercise of stock options 0 54
Cash dividends paid (981) (948)
----------------- -----------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 5,469 (2,807)
----------------- -----------------
DECREASE IN CASH
AND CASH EQUIVALENTS (135) (164)
Cash and cash equivalents at beginning
of period 2,077 1,544
----------------- -----------------
Cash and cash equivalents at end
of period $ 1,942 $ 1,380
================= =================
</TABLE>
<PAGE> 6
THOMASTON MILLS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated 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 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 for
a fair presentation have been included. Operating results for the three month
period ended December 28, 1996 are not necessarily indicative of the results
that may be expected for the year ending June 28, 1997. Certain Fiscal 1996
balances have been reclassified to conform with the Fiscal 1997
classifications. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report for
the year ended June 29, 1996.
NOTE B -- INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
December 28, 1996 June 29, 1996
------------------- ---------------
<S> <C> <C>
Raw materials $ 9,782 $ 9,978
Work in process 29,270 21,776
Finished products 22,815 24,037
LIFO reserve (12,431) (13,081)
--------------- ---------------
$ 49,436 $ 42,710
=============== ===============
</TABLE>
<PAGE> 7
THOMASTON MILLS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Sales for the second fiscal quarter ended December 28, 1996 increased 11.1% to
$68,172,000 as compared to sales of $61,385,000 for the second quarter last
year. For the first six months of fiscal year 1997, sales were $137,085,000,
which reflects a 5.5% increase over sales of $129,981,000 for the first six
months of fiscal year 1996. Although each of the Company's product groups,
Consumer, Industrial and Apparel, experienced sales increases for the quarter
and the first six months of fiscal year 1997, increased pressure on margins in
each of the markets served by the Company resulted in gross profit as a
percentage of sales remaining constant for the quarter and declining for the
six months.
Cost of goods sold remained steady at 93.2% of sales for the second quarter of
fiscal years 1997 and 1996. For the first six months of fiscal year 1997, cost
of goods sold was 93.6% of sales as compared to cost of goods sold of 91.7% of
sales for the year - earlier period. The increases in sales for the current
six months have resulted in some improvement in capacity utilization; however,
current sales levels do not allow for optimum usage of the Company's
manufacturing facilities. Raw material prices have also improved slightly.
Gross profit for the second quarter of fiscal years 1997 and 1996 was 6.8% of
sales. Increased sales were offset by increased cost of goods sold with profit
margins remaining constant. Gross profit for the first six months of fiscal
year 1997 was 6.4% of sales as compared to 8.3% of sales for the first six
months of fiscal year 1996.
Selling, general and administrative expenses were $4,913,000 or 7.2% of sales
in second quarter and $10,132,000 or 7.4% of sales in the first six months of
fiscal year 1997. Selling, general and administrative expenses for the second
quarter and first six months of fiscal year 1996 were $4,918,000 or 8.0% of
sales and $10,001,000 or 7.7% of sales respectively. The Company strives to
maintain selling, general and administrative expenses at a low percentage of
sales ratio.
Other income was $100,000 in second quarter and $163,000 for the first six
months of fiscal year 1997 as compared to $113,000 in second quarter and
$313,000 for the first six months of fiscal year 1996. Other income consists
primarily of interest earned and sales of miscellaneous obsolete equipment.
Interest expense increased $166,000 from $791,000 in second quarter fiscal year
1996 to $957,000 in second quarter fiscal year 1997. For the first six months
of fiscal year 1997, interest expense was $1,786,000 as compared to $1,566,000
for the first six months last year. This increase was primarily the result of
slightly higher interest rates and additional borrowings associated with the
Company's expansion of the Lakeside Comforter Plant and the addition of a new
Dye Range.
<PAGE> 8
Income tax expense (benefit) for the second quarter and first six months of
fiscal years 1997 and 1996 was 38% of taxable income (loss), which approximates
the statutory income tax rate for the tax jurisdictions in which the Company
operates.
The Company lost $692,000 or $.11 per share for the second quarter and
$1,883,000 or $.29 per share for the first six months of fiscal year 1997. Net
loss for the comparable quarter and six months last year was $902,000 or $.14
per share and $322,000 or $.05 per share respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to maintain a strong financial position. At December 28,
1996, working capital was $80,990,000 as compared to $70,235,000 at December
30, 1995. The ratio of current assets to current liabilities was 5.62:1 at
December 28, 1996 and 5.24:1 at December 30, 1995.
Cash provided by financing activities totaling $5,469,000 was the principal
source of funds for the six months ended December 28, 1996. The Company's
primary use of funds during the first six months of fiscal year 1997 was
$2,875,000 in purchases of property, plant and equipment and $2,729,000 in
operating activities.
During the first quarter of fiscal year 1997, the Company completed the
financing for an expansion of the Lakeside Comforter Plant and an addition of a
new Dye Range. This project was begun in the fourth quarter of fiscal year
1996. Financing is provided with $18,000,000 in taxable Industrial Revenue
Bonds issued through the Thomaston-Upson County Industrial Development
Authority. These bonds will be retired over a fifteen year period with
interest only payable for the first three years. Proceeds from the sale of the
bonds were applied to the Company's revolving credit facility until needed for
the project.
During the fourth quarter of fiscal year 1996, the Company revised and expanded
its revolving credit agreement which provides for unsecured borrowings of up to
$27,000,000. At December 28, 1996, $10,500,000 was available under this
agreement.
The Company had capital expenditure commitments at December 28, 1996 for $8.0
million, primarily for machinery and equipment. Management believes that cash
provided by operating activities and the revolving credit agreement will be
sufficient to finance capital requirements and operating needs of the Company
for fiscal 1997.
INVENTORIES
Inventories at December 28, 1996 and December 30, 1995 were $49,436,000 and
$44,736,000 respectively. This increase in inventory is primarily the result
of a buildup in work in process inventory to cover future orders. Total
inventory turnover on an average annualized rate were 5.2 turns for the first
six months of fiscal year 1997 and 5.3 turns for the first six months of fiscal
year 1996.
RAW MATERIALS
The Company's primary raw material is cotton. As a commodity, cotton is traded
on established markets and periodically experiences price fluctuations. The
Company
<PAGE> 9
monitors the cotton market and buys its cotton from brokers. The Company has
not had and does not anticipate any material difficulty in obtaining cotton.
In order to assure a continuous supply of cotton, the Company enters into
cotton purchase contracts for several months in advance of delivery which
either provide for (1) fixed quantities to be purchased at a pre-determined
price, or (2) fixed quantities to be purchased at a price to be determined (at
a later date). When the Company sells its product to its customers, the cost
of cotton under existing cotton purchase contracts is taken into account in
calculating the price for the Company's product. The Company generally
attempts to match product sales contracts with fixed price cotton purchase
contracts and uses market price cotton contracts to anticipate future needs and
subsequent product sales contracts. To the extent prices are sometimes fixed
in advance of shipment, the Company may benefit from its cotton purchase
contracts, to the extent prices thereafter rise, or may incur increased cost,
to the extent prices thereafter fall.
GATT
In December 1993, 117 countries reached an agreement under the General
Agreement on Tariffs and Trade that would cover new areas of trade, further cut
tariffs and strengthen multilateral free-trade rules by creating a World Trade
Organization (WTO) as its successor. This agreement was ratified by the United
States Congress and went into effect on July 1, 1995. As part of this new
agreement, the Multifiber Arrangement (MFA) under which textile and apparel
trade had been controlled, will be phased out along with its import quotas over
a 10-year period. Tariffs on textiles will be cut by an average of 11.6% over
10 years. A weighted average tariff for products sold by Thomaston Mills, if
imported, would be cut by 8.8%. Under the agreement, quotas on the least
sensitive import products will be phased out over the first five years and
quotas on the most sensitive import products will not be affected until the
latter part of the ten- year period.
The WTO agreement contains some provisions which may have a favorable impact on
the textile industry. An assembly rule of origin amendment makes it illegal
for a non- WTO member country to assemble garments from pieces cut in a member
country and then export the garments as originating in the country where they
were cut. Additionally, the agreement preserves the authority of the President
of the United States to control imports from non-WTO countries such as Taiwan
or China.
Although the WTO agreement may reduce the cost of certain imported textiles,
the Company believes that upgraded technology resulting in increased
productivity and lower costs will enable it to compete in a global market.
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) As of December 28, 1996, there were no material pending legal
proceedings, other than routine litigation incidental to its
business, to which the Company was a party or to which any
property of the Company was subject. Such routine legal
proceedings are not believed to be material to the Company.
(b) Not applicable
ITEM 2. CHANGE IN SECURITIES
(a) (b) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) (b) Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The election of directors and selection of Ernst & Young as the
Company's independent auditors were approved by the holders of the
Company's Class B Common Stock at the Annual Meeting of Shareholders
held on October 3, 1996. Set forth below are the results of the
voting:
<TABLE>
<CAPTION>
VOTES VOTES
FOR AGAINST ABSTENTIONS
--------- ------- -----------
<S> <C> <C> <C>
ELECTION OF DIRECTORS
Thomas D. Adams, Jr. 1,478,037 0 4,001
C. Ronald Barfield 1,478,037 0 4,001
Archie H. Davis 1,478,037 0 4,001
H. Stewart Davis 1,478,037 0 4,001
George H. Hightower 1,478,037 0 4,001
George H. Hightower, Jr. 1,478,037 0 4,001
Neil H. Hightower 1,478,037 0 4,001
William H. Hightower, Jr. 1,478,037 0 4,001
Rosser R. Raines 1,478,037 0 4,001
Dr. Jerry M. Williamson 1,478,037 0 4,001
Dom H. Wyant 1,478,037 0 4,001
SELECTION OF ERNST & YOUNG 1,478,191 336 3,161
</TABLE>
<PAGE> 11
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
13.1 Quarterly Report to Shareholders dated December 28, 1996
27.0 Financial Data Schedule (for SEC purposes only)
99.1 Press Release
(b) The Company did not file any reports on Form 8-K during the three
months ended December 28, 1996.
<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.
Thomaston Mills, Inc.
/s/ Neil H. Hightower
-----------------------------
Neil H. Hightower
President and Chief
Date: February 11, 1997 Executive Officer
-----------------
/s/ Rosser R. Raines
-----------------------------
Rosser R. Raines
Treasurer-Principal Financial
Date: February 11, 1997 Officer
-----------------
<PAGE> 1
EXHIBIT 13.1
THOMASTON MILLS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 28, December 30, December 28, December 30,
1996 1995 1996 1995
====================================================================================================================================
<S> <C> <C> <C> <C>
Net Sales $ 68,172 $ 61,385 $ 137,085 $ 129,9081
Cost of sales 63,518 57,244 128,367 119,246
- ------------------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses 4,654 4,141 8,718 10,735
Other income (expense)-net 4,913 4,918 10,132 10,001
100 113 163 313
- ------------------------------------------------------------------------------------------------------------------------------------
(159) (664) (1,251) 1,047
Interest expense 957 791 1,786 1,566
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (1,116) (1,455) (3,037) (519)
Provision for income taxes (benefit) (424) (553) (1,154) (197)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (692) $ (902) $ (1,883) $ (322)
====================================================================================================================================
Average Number of Shares 6,547,579 6,537,196 6,546,744 6,536,603
Net income (loss) per share $ (0.1100) $ (0.1400) $ (0.2900) $ (0.0500)
Dividends paid per share $ 0.0750 $ 0.0725 $ 0.1500 $ 0.1450
====================================================================================================================================
</TABLE>
CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 28, December 30,
1996 1995
====================================================================================================================================
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,942 $ 1,380
Accounts receivable 44,800 39,612
Less allowance for uncollectible accounts (415) (415
Inventories 49,436 44,736
Other current assets 2,743 1,476
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 98,506 86,789
Property, Plant and Equipment 236,056 224,452
Less allowance for depreciation (151,748) (137,101)
Other assets 2,120 1,385
- ------------------------------------------------------------------------------------------------------------------------------------
$ 184,934 $ 175,525
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 7,440 $ 8,244
Accrued liabilities 7,052 5,107
Current portion of capital lease obligations 376 455
Current portion of long-term debt 2,648 2,748
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 17,516 16,554
Obligations under capital leases 1,294 1,075
Long-term debt 52,807 41,455
Deferred income taxes 6,874 7,233
Other liabilities 236 148
Shareholders' Equity 106,207 109,060
- ------------------------------------------------------------------------------------------------------------------------------------
$ 184,934 $ 175,525
====================================================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THOMASTON MILLS, INC. FOR THE SIX MONTHS ENDED DECEMBER
31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> DEC-28-1996
<CASH> 1,942
<SECURITIES> 0
<RECEIVABLES> 44,800
<ALLOWANCES> 415
<INVENTORY> 49,436
<CURRENT-ASSETS> 98,506
<PP&E> 236,056
<DEPRECIATION> 151,748
<TOTAL-ASSETS> 184,934
<CURRENT-LIABILITIES> 17,516
<BONDS> 36,307
0
0
<COMMON> 7,494
<OTHER-SE> 98,713
<TOTAL-LIABILITY-AND-EQUITY> 184,934
<SALES> 137,085
<TOTAL-REVENUES> 137,248
<CGS> 128,367
<TOTAL-COSTS> 128,367
<OTHER-EXPENSES> 10,132
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,786
<INCOME-PRETAX> (3,037)
<INCOME-TAX> (1,154)
<INCOME-CONTINUING> (1,883)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,883)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE
SECOND QUARTER REPORT [LETTERHEAD]
1997
TO THE SHAREHOLDERS:
Sales for the second fiscal quarter ended December 28, 1996 improved slightly
to $68,172,000 and were 11 per cent ahead of the year before. Margins during
the quarter continued under pressure, and the Company sustained a loss of
$692,000, or $.11 per share.
Capacity utilization is an ongoing challenge in the consumer products area of
the business, and we are now experiencing some slowness and reduced pricing in
the denim area. We believe that apparel sales of denim products at retail are
still growing, but there is an oversupply of denim fabric which will last at
least through the third fiscal quarter.
On the positive side, raw material prices are lower, and the overall textile
economy seems to be improving. The new dye range project is on schedule and
production from this new equipment will be available in late spring. The
Lakeside shipping facility expansion is also on schedule.
Thomaston Mills is well positioned for improved performance when capacity
utilization and textile demand strenghthens.
Sincerely,
/s/ Neil H. Hightower
- ---------------------
Neil H. Hightower
President and CEO
January 21, 1997
