<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 April 3, 1999 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 30286-0004
----------------------------------------------------------------------
(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
710,838 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 -- April 3, 1999 and June 27,
1998
Condensed consolidated statements of operations -- thirteen weeks ended
April 3, 1999 and thirteen weeks ended March 28, 1998 and forty weeks
ended April 3, 1999 and thirty-nine weeks ended March 28, 1998
Condensed consolidated statements of cash flows -- forty weeks ended
April 3, 1999 and thirty-nine weeks ended March 28, 1998.
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 a 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>
April 03, 1999 June 27, 1998
-------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash & cash equivalents $ 1,486 $ 1,122
Accounts receivable, less allowance of
$563 at April 3, 1999 and $871 at June 27, 1998 40,095 46,268
Inventories--Note B 48,447 46,585
Other current assets 4,150 8,832
-------- --------
TOTAL CURRENT ASSETS 94,178 102,807
PROPERTY, PLANT AND EQUIPMENT 253,728 251,159
Less allowance for depreciation 179,120 168,336
-------- --------
74,608 82,823
OTHER ASSETS 12,851 4,536
-------- --------
$181,637 $190,166
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,953 $ 11,805
Accrued liabilities 7,446 8,101
Current portion of long-term debt
and capital lease obligations--Note D 76,547 2,648
-------- --------
TOTAL CURRENT LIABILITIES 101,946 22,554
OBLIGATIONS UNDER CAPITAL LEASE -
LESS CURRENT PORTION 1,084 1,361
LONG-TERM DEBT--Note D 0 72,268
DEFERRED INCOME TAXES 4,907 4,907
OTHER LIABILITIES 2,642 2,861
SHAREHOLDERS' EQUITY
Class A Common Stock--5,620,518 shares
outstanding including 710,838 treasury shares 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 60,080 75,237
-------- --------
76,478 91,635
Less treasury stock - at cost 5,420 5,420
-------- --------
71,058 86,215
-------- --------
$181,637 $190,166
======== ========
</TABLE>
NOTE: The Balance Sheet at June 27, 1998 has been
derived from the Audited Financial Statements at that
date. See Notes 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>
13 Weeks 13 Weeks 40 Weeks 39 Weeks
Ended Ended Ended Ended
April 03, 1999 March 28, 1998 April 03, 1999 March 28, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 60,740 $ 68,710 $ 169,488 $ 209,958
Cost of sales 59,501 66,644 170,767 199,387
----------- ----------- ----------- -----------
1,239 2,066 (1,279) 10,571
Selling, general
and administrative expenses 5,094 5,037 14,970 15,106
----------- ----------- ----------- -----------
(3,855) (2,971) (16,249) (4,535)
Other income (expense) - net 47 79 506 254
----------- ----------- ----------- -----------
(3,808) (2,892) (15,743) (4,281)
Interest expense 1,723 1,310 4,921 3,852
----------- ----------- ----------- -----------
Income (loss) before
income taxes (5,531) (4,202) (20,664) (8,133)
Provision for income taxes
(benefit) 0 (1,596) (5,751) (3,090)
----------- ----------- ----------- -----------
Net income (loss) $ (5,531) $ (2,606) $ (14,913) $ (5,043)
=========== =========== =========== ===========
Weighted Average Number of Shares - Basic 6,540,046 6,540,042 6,540,046 6,540,042
Basic earnings (loss) per share $ (0.8500) $ (0.4000) $ (2.2800) $ (0.7700)
Weighted Average Number of Shares - Diluted 6,540,046 6,540,042 6,540,046 6,540,042
Diluted earnings (loss) per share $ (0.8500) $ (0.4000) $ (2.2800) $ (0.7700)
Dividends paid per share $ 0.0000 $ 0.0750 $ 0.0375 $ 0.2250
</TABLE>
<PAGE> 5
THOMASTON MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
40 Weeks 39 Weeks
Ended Ended
April 3, 1999 March 28, 1998
------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(14,913) $ (5,043)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 11,134 12,811
Gain on sale of property, plant
and equipment (48) (2)
Changes in operating assets and liabilities:
Accounts receivable 6,173 6,921
Inventories (1,862) (7,795)
Other assets (3,632) (1,640)
Accounts payable and accrued expenses 5,646 (2,441)
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,498 2,811
INVESTING ACTIVITIES
Purchases of property, plant and equipment (2,921) (7,627)
Less capital lease obligations incurred 0 664
-------- --------
Cash for property, plant and equipment (2,921) (6,963)
Proceeds from sales of property, plant
and equipment 50 2
-------- --------
NET CASH USED IN INVESTING
ACTIVITIES (2,871) (6,961)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit
and long-term debt 9,975 8,664
Less capital lease obligations incurred 0 (664)
-------- --------
Cash proceeds from borrowings 9,975 8,000
Principal payments on revolving lines of
credit, long-term debt and capital lease
obligations (8,993) (2,782)
Cash dividends paid (245) (1,472)
-------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 737 3,746
-------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 364 (404)
Cash and cash equivalents at beginning
of period 1,122 1,886
-------- --------
Cash and cash equivalents at end
of period $ 1,486 $ 1,482
======== ========
</TABLE>
<PAGE> 6
THOMASTON MILLS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 3, 1999
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 thirteen weeks ended April 3, 1999 are
not necessarily indicative of the results that may be expected for the year
ending July 3, 1999. Certain fiscal 1998 balances have been reclassified to
conform with the fiscal 1999 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 27, 1998.
NOTE B -- INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
April 3, 1999 June 27, 1998
------------- -------------
<S> <C> <C>
Raw materials $ 6,644 $ 7,569
Work in process 27,331 29,525
Finished products 23,412 21,631
LIFO reserve (8,940) (12,140)
-------- --------
$ 48,447 $ 46,585
======== ========
</TABLE>
<PAGE> 7
NOTE C -- NET INCOME (LOSS) PER COMMON SHARE
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128 "Earnings per Share" in its second quarter ended on December
27, 1997. SFAS No. 128 replaced the previously reported primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented and,
where necessary, restated to conform to SFAS No. 128 requirements.
The following table sets forth the computation of the numerator and
denominator used in the calculation of basic and diluted earnings (loss) per
share:
<TABLE>
<CAPTION>
(Dollars in Thousands except Share and Per Share Data)
--------------------------------------------------------------------
13 Weeks 13 Weeks 40 Weeks 39 Weeks
Ended Ended Ended Ended
April 03, 1999 March 28, 1999 April 03, 1999 March 28, 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) from continuing operations $ (5,531) $ (2,606) $ (14,913) $ (5,043)
----------- ----------- ----------- -----------
Numerator for basic and diluted earnings (loss) per share $ (5,531) $ (2,606) $ (14,913) $ (5,043)
=========== =========== =========== ===========
Denominator:
Denominator for basic earnings (loss) per share -
Weighted average shares 6,540,046 6,540,042 6,540,046 6,540,042
Dilutive effect of potential common shares -
Employee stock options N/A N/A N/A N/A
----------- ----------- ----------- -----------
Denominator for diluted earnings (loss) per share -
adjusted weighted-average shares and
assumed conversions 6,540,046 6,540,042 6,540,046 6,540,042
=========== =========== =========== ===========
Basic earnings (loss) per share $(0.8500) $ (0.8500) $ (0.4000) $ (2.2800) $ (0.7700)
=========== =========== =========== ===========
Diluted earnings (loss) per share $ (0.8500) $ (0.4000) $ (2.2800) $ (0.7700)
=========== =========== =========== ===========
Potentially dilutive common shares related to
options outstanding:
Not considered in calculation due to net loss 0 14,283 0 9,166
=========== =========== =========== ===========
Not considered in calculation due to average
price of Company's common stock exceeding
exercise price of options 861,104 594,163 887,502 596,738
=========== =========== =========== ===========
</TABLE>
<PAGE> 8
NOTE D -- LONG-TERM OBLIGATIONS
In August 1998, the Company entered into a two-year Credit and Security
Agreement (the "Credit Agreement") providing for a revolving credit facility of
up to $45,000,000, a term loan of $18,000,000 and standby letters of credit of
$17,250,000. On April 1, 1999, the Company and its lenders amended the Credit
Agreement. Among other things, this amendment shortened the termination date of
the Credit Agreement to June 1, 1999, and included a waiver of the Company's
non-compliance with certain financial covenants. The Company has been engaged in
negotiations with its current lenders and with potential new lenders in order to
obtain commitments for replacement credit arrangements. The Company currently
believes that it will be able to enter into agreements with one or more new
lenders to provide for replacement credit facilities during the fourth quarter.
Pending completion of a new credit facility, all borrowings outstanding under
the current Credit Agreement have been classified as current liabilities.
<PAGE> 9
THOMASTON MILLS, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Sales for the third fiscal quarter ended April 3, 1999 were down 11.6% to
$60,740,000 from third quarter sales last year of $68,710,000. Contributing to
the sales decline were the January 1998 sale of the Rattlers Division and the
November 1998 closing of the Griffin, Georgia yarn facility. Depressed market
demand for denim and greige goods and finished fabrics sold through the
Company's Home Furnishing Division also contributed to the sales decline. Sales
of $169,488,000 for the forty weeks ended April 3, 1999 were down 19.3% from
sales of $209,958,000 for the comparable thirty-nine week period last year.
Cost of sales for the third fiscal quarter was $59,501,000 or 98% of sales
compared to cost of sales for the third fiscal quarter last year of $66,644,000
or 97% of sales. Although the Company continues to experience lower raw material
costs and improved capacity utilization at certain of its manufacturing
facilities, lower sales prices on units sold have offset these improvements.
Gross profit for the third fiscal quarter was 2% of sales as compared to 3% of
sales for the third quarter last year. For the forty weeks ended April 3, 1999,
the Company generated a negative gross profit of $1,279,000 against a positive
gross profit of $10,571,000 for the thirty-nine weeks ended March 28, 1998. The
negative gross profit was the result of weak markets for the Company's products
along with the Company's concentrated effort to bring inventory levels more in
line with sales volume. Inventory levels were reduced from $56,524,000 at March
28, 1998, to $48,447,000 at April 3, 1999.
Selling, general and administrative expenses were $5,094,000 for the third
fiscal quarter compared to $5,037,000 for the third quarter last year. For the
forty weeks ended April 3, 1999, selling, general and administrative expenses
were $14,970,000 compared to $15,106,000 for the thirty-nine weeks ended March
28, 1998. The decrease in sales, however, resulted in selling, general and
administrative expenses as a percent of sales to increase to 8.4% of sales for
the third quarter this year compared to 7.3% of sales for the third quarter last
year. For the forty weeks ended April 3, 1999, selling, general and
administrative expenses were 8.8% of sales as compared to 7.2% of sales for the
thirty-nine weeks ended March 28, 1998.
Other income during the third quarter of fiscal year 1999 was $47,000 and
$79,000 for fiscal year 1998 third quarter. Other income relates to
miscellaneous equipment sales and interest earned on the Company's short-term
investments of cash.
Interest expense increased for both the quarter and the forty weeks ended April
3, 1999, when compared to the third quarter and the thirty-nine weeks ended
March 28, 1998. This increase was the result of increased borrowings and higher
interest rates under the Company's credit facilities.
Due to its accumulated net operating losses, the Company has established a
valuation reserve for income tax benefits generated in the quarter ended April
3, 1999. The valuation reserve results in no income tax benefits being recorded
during third quarter. Income tax expense (benefit) for the second quarter and
first six months of fiscal year 1999 and for the third quarter and first nine
months of fiscal year 1998 was 38% of taxable income (loss), which approximates
the statutory income tax rate for the tax jurisdictions in which the Company
operates.
<PAGE> 10
For the third quarter of fiscal year 1999, the Company sustained a loss of
$5,531,000, or $.85 per basic and diluted share, as compared to a third quarter
fiscal year 1998 net loss of $2,606,000, or $.40 per basic and diluted share.
For the forty weeks ended April 3, 1999, the Company sustained a loss of
$14,913,000 , or $2.28 per basic and diluted share, as compared to a net loss of
$5,043,000, or $.77 per basic and diluted share, for the thirty-nine weeks ended
March 28, 1998.
Liquidity and Capital Resources
Operating activities provided cash flow of $2,498,000 during the forty weeks
ended April 3, 1999. The primary use of funds was $2,871,000 in purchases of
property, plant and equipment. Financing activities, consisting of net
borrowings on revolving lines of credit, long-term debt and capital lease
obligations, provided funds of $737,000.
On August 19, 1998, the Company entered into a new two-year credit agreement
with a group of banks for borrowings up to $80,250,000 including a revolving
credit facility up to $45,000,000, a term loan of $18,000,000 and standby
letters of credit of $17,250,000 (the "Credit Agreement"). Proceeds from
borrowings under the Credit Agreement were used to refinance the Company's
revolving credit facility, a long-term note payable due March 2001 in the amount
of $2,150,000 and a portion of the Industrial Revenue Bonds existing at June 27,
1998. Standby letters of credit were issued to provide credit enhancement of
other credit facilities existing at June 27, 1998. Borrowings under the Credit
Agreement were initially secured by all assets and properties of the Company,
other than real estate. The borrowings available under the revolving credit
facility are based on the amount of eligible trade accounts receivable and
inventories. At April 3, 1999, the Company had the ability to borrow up to an
additional $525,000 under the revolving credit facility. The interest rate on
borrowings under this line is currently based on the prime interest rate plus
2%. The Company pays facility fees on the unused portions of the committed
credit line.
On January 19, 1999, the Company and its lenders amended the Credit Agreement to
provide for, among other things, a reduction in the borrowing-base fixed reserve
from $10,000,000 to $5,000,000 and a waiver of certain restrictive covenants.
The lenders agreed to allow the reduction in the borrowing base fixed reserve
requirement to continue in effect through April 30, 1999. This amendment also
provided that borrowings under the Credit Agreement were to be further secured
by all real estate of the Company.
On April 1, 1999, the Company and its lenders amended the Credit Agreement to
continue the reduction in the borrowing-base fixed reserve from $10,000,000 to
$5,000,000 through June 1, 1999. This amendment also shortened the termination
date of the Credit Agreement to June 1, 1999, and included a waiver of
non-compliance with certain financial covenants.
The Company has been engaged in negotiations with its current lenders and with
potential new lenders in order to obtain commitments for replacement credit
arrangements. The Company currently believes that it will be able to enter into
agreements with one or more new lenders to provide for replacement credit
facilities during the fourth quarter. Pending completion of new credit
facilities, all borrowings outstanding under the current Credit Agreement have
been classified as current liabilities. The Company expects that it will be able
to obtain the commitment letter on or before June 1, 1999, that if such letter
is acceptable to the existing lenders, they will agree to extend the termination
date under the Credit Agreement, and that the Company will be able to consummate
a refinancing of its outstanding indebtedness prior to the end of the fourth
quarter; however, there can be no assurance that any or all of the foregoing
will occur. Furthermore, there can be no assurance as to what remedies the
existing lenders may seek under the Credit Agreement if the Company is unable to
fulfill its obligations thereunder.
<PAGE> 11
Inventories
Inventories at April 3, 1999 and March 28, 1998 were $48,447,000 and
$56,524,000, respectively. The Company has made a concentrated effort to bring
inventory levels more in line with sales volume. Total inventory turns on an
average annualized rate were 4.7 times for the forty weeks ended April 3, 1999
and 4.7 times for the thirty-nine weeks ended March 28, 1998.
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 monitors the cotton market and buys its cotton from brokers. The Company
has not had and does not currently 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 predetermined 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 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
<PAGE> 12
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.
Rattlers Brand
In January 1998, the Company entered into a license agreement by which it agreed
to license (with an option to purchase) its Rattlers Brand trademark. Under this
agreement, the Company will be paid a royalty for sales of products using the
Rattlers Brand trademark. The agreement is for a term of twelve years and
includes provisions for minimum annual royalty payments.
YEAR 2000
The Company continues to address the Year 2000 compliance issue. A task force
was formed two years ago with representatives from data processing, greige
manufacturing, finishing, purchasing, accounting and internal audit. The
company-wide endeavor, which involves the testing, assessment and remediation of
both information technology and non-information technology systems, is designed
to significantly reduce the risk of business interruption to Thomaston Mills'
internal operations, business partners, customers, and suppliers as the next
century approaches.
The millennium issue is being addressed on two fronts:
Internal - most internally developed systems have been rewritten since 1990.
Beginning in 1991, a standard feature incorporated into all rewrites was a four
digit year capability. Intensive review modification and testing of all internal
programs began in January 1998. As of April 3, 1999, the work was approximately
99% complete. The Company is now addressing contingency issues. Testing of the
systems has been completed.
External - the Company has inventoried all equipment in use within the Company
that contains a computer chip or uses externally developed software. The
manufacturers are being contacted for Y2K compliance certification. The
Company's customers and vendors are also being contacted for written Y2K
assurance. As of April 3, 1999, approximately two-thirds of those customers and
business partners contacted have responded and, to date, the Company has not
been informed of any external systems or equipment with a Year 2000 compliance
issue that would materially impair the Company's business, financial condition
or results of operations. However, the Company has no means of ensuring that
such external systems or equipment will not encounter compliance problems that
are expected to require further remediation. The Company will continue to
monitor the progress
<PAGE> 13
of its material vendors and customers in addressing those issues, and will
develop contingency plans if potential problems are identified.
Anticipated costs for the compliance effort total $450,000, most of which has
been incurred and expensed. To date, the Company's review has not revealed any
significant problems relative to the Year 2000 issue; however, there can be no
assurance that the Company's systems or equipment, or those of its vendors,
customers or other third parties, will be made Year 2000 compliant in a timely
manner or that the impact of the failure to achieve such compliance will not
have a material adverse effect on the Company's business, financial condition or
results of operations.
Forward-Looking Statements
Certain of the above statements contained herein under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements express or
implied by such forward-looking statements. Such factors include, among other
things, business conditions, volatility of commodities markets, ability to
control operating costs, developing successful new products and maintaining
effective pricing and promotion of its products.
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) As of April 3, 1999 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
(a) (b)(c)(d) Not applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Second Amendment to Credit and Security Agreement,
dated as of April 1, 1999, by and among the Company,
Thomaston Mills FSC, Inc., and the Lenders named
therein (to be filed by amendment).
10.2 Consent and Waiver No. 2 to Credit and Security
Agreement, dated as of March 5, 1999, by and among
the Company, Thomaston Mills FSC, Inc., and the
Lenders named therein (to be filed by amendment).
27.0 Financial Data Schedule (for SEC purposes only)
(b) The Company did not file any reports on Form 8-K during the
three months ended April 3, 1999.
<PAGE> 15
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: May 24, 1999 Executive Officer
/s/ A. William Ott
---------------------------
A. William Ott
Treasurer and Chief
Date: May 24, 1999 Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THOMASTON MILLS, INC. FOR THE NINE MONTHS ENDED APRIL 3,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-03-1999
<PERIOD-START> JUN-28-1998
<PERIOD-END> APR-03-1999
<CASH> 1,486
<SECURITIES> 0
<RECEIVABLES> 40,658
<ALLOWANCES> 563
<INVENTORY> 48,447
<CURRENT-ASSETS> 94,178
<PP&E> 253,728
<DEPRECIATION> 179,120
<TOTAL-ASSETS> 181,637
<CURRENT-LIABILITIES> 101,946
<BONDS> 0
0
0
<COMMON> 7,494
<OTHER-SE> 63,564
<TOTAL-LIABILITY-AND-EQUITY> 181,637
<SALES> 169,488
<TOTAL-REVENUES> 169,994
<CGS> 170,767
<TOTAL-COSTS> 170,767
<OTHER-EXPENSES> 14,970
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,921
<INCOME-PRETAX> (20,664)
<INCOME-TAX> (5,751)
<INCOME-CONTINUING> (14,913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,913)
<EPS-BASIC> (2.28)
<EPS-DILUTED> (2.28)
</TABLE>
