FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
]X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 1994
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 0-19768
THE SCOTTS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 31-1199481
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14111 Scottslawn Road
Marysville, Ohio 43041
(Address of principal executive offices)
(Zip Code)
(513)644-0011
(Registrant's telephone number, including area code)
(No change)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Class A Outstanding at February 4, 1994
Common Stock, voting, $.01 par value 18,658,535 shares
Page 1 of 17 pages
Exhibit Index at page 16
THE SCOTTS COMPANY AND SUBSIDIARIES
INDEX
Part I. Financial Information: Page No.
Item 1. Financial Statements
Consolidated Balance Sheets -
January 2, 1993, January 1, 1994 and September 30, 1993 3-4
Consolidated Statements of Income -
Three Months ended January 2, 1993 and
Three Months ended January 1, 1994 5
Consolidated Statements of Cash Flows -
Three Months ended January 2, 1993 and
Three Months ended January 1, 1994 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit Index 16
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
ASSETS
January 2 January 1 September 30
1993 1994 1993
Current Assets:
Cash and cash equivalents $ 787 $ 6,247 $ 2,323
Accounts receivable, less allowances
of $2,278, $3,056 and $2,511, respectively 70,909 93,964 60,848
Inventories:
Raw materials 36,263 49,247 31,905
Finished products 61,117 80,174 44,749
Total inventories 97,380 129,421 76,654
Other current assets 5,378 6,517 3,917
Total current assets 174,454 236,149 143,742
Property, plant and equipment, at cost:
Land and land improvements 19,275 21,904 19,817
Buildings 33,669 40,496 36,300
Machinery and equipment 73,962 104,923 87,250
Furniture and fixtures 4,276 6,054 5,952
Construction in progress 12,117 6,796 4,687
143,299 180,173 154,006
Less accumulated depreciation 47,992 57,853 55,215
Net property, plant and equipment 95,307 122,320 98,791
Intangible assets, net of accumulated
amortization of $18,758, $22,014, and
$21,053, respectively 22,768 25,309 19,972
Deferred costs and other assets, net
of accumulated amortization of
$6,944, $8,179 and $7,770, respectively 19,017 21,476 17,745
Excess of costs over underlying value
of net assets acquired (goodwill),
net of accumulated amortization
of $4,383, $5,600 and $5,123, respectively 41,519 103,488 41,340
Total Assets $ 353,065 $ 508,742 $ 321,590
The accompanying notes to consolidated financial
statements are an integral part of these statements.
Page 3
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
January 2 January 1 September 30
1993 1994 1993
Current Liabilities:
Revolving credit and bank line of credit $ 53,182 $ 45,303 $ 705
Current portion of term debt 419 20,444 5,444
Accounts payable 38,665 39,434 28,279
Accrued liabilities 6,847 10,050 9,135
Accrued payroll and fringe benefits 8,742 12,111 12,035
Accrued taxes 5,916 5,725 9,253
Total current liabilities 113,771 133,067 64,851
Long-term debt, less current portion 51,946 207,626 87,080
Postretirement benefits other than pensions 25,041 26,678 26,646
Total Liabilities 190,758 367,371 178,577
Shareholders' Equity:
Preferred Stock, $.01 par value, authorized
10,000,000 shares; none issued - - -
Class A Common Stock, voting, par value $.01
per share; authorized 35,000,000 shares;
issued 21,073,430, 9,550,000, and
21,073,430 shares, respectively 211 211 211
Class B Common Stock, non-voting, par value
$.01 per share; authorized 35,000,000 shares;
none issued - - -
Capital in excess of par value 192,654 193,353 193,263
Deficit (30,527) (10,565) (9,008)
Cumulative foreign currency translation adjustment (31) (187) (12)
Treasury stock 2,414,895 shares at cost - (41,441) (41,441)
Total Shareholders' Equity 162,307 141,371 143,013
Total Liabilities & Shareholders' Equity $ 353,065 $ 508,742 $ 321,590
The accompanying notes to consolidated financial
statements are an integral part of these statements.
Page 4
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands except share data)
Three Months Ended
January 2 January 1
1993 1994
Net sales $ 67,757 $ 68,326
Cost of sales 37,054 37,364
Gross profit 30,703 30,962
Operating expenses:
Marketing 11,939 12,921
Distribution 9,818 10,976
General and administrative 6,287 5,010
Research and development 1,552 2,004
Total operating expenses 29,596 30,911
Income from operations 1,107 51
Interest expense 1,721 2,640
Other expenses, net 162 28
Loss before income tax benefit and
cumulative effect of accounting changes (776) (2,617)
Income tax benefit (305) (1,060)
Loss before cumulative effect
of accounting changes (471)(1) (1,557)
Cumulative effect of changes in accounting
for postretirement benefits, net of tax
and income taxes (13,157) -
Net loss $ (13,628)(2) $ (1,557)
Net loss per common share:
Loss before cumulative effect of accounting changes $ (.02) $ (.08)
Cumulative effect of changes in accounting for
postretirement benefits, net of tax and income taxes (.63) -
Net loss $ (.65) $ (.08)
Weighted average number of
common shares outstanding 21,128,564 18,658,535
(1) Loss before cumulative effect of accounting changes for the three months ended January 2, 1993 has been
restated to reflect an ongoing net of tax charge of $462 or $.02 resulting from the adoption of SFAS No. 106
effective October 1, 1992.
(2) The net loss for the three months ended January 2, 1993 has been restated to reflect the cumulative effect
of changes in accounting for postretirement benefits (a net of tax change of $14,932 or $.71 per share) and
income taxes (a benefit of $1,775 or $.08 per share).
The accompanying notes to consolidated financial
statements are an integral part of these statements.
Page 5
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
January 2 January 1
1993 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (13,628) $ (1,557)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 4,322 4,603
Cumulative effect of change in accounting
for postretirement benefits 24,280 -
Postretirement benefits 761 32
Deferred income taxes (11,422) -
Net increase in certain components
of working capital (48,000) (53,377)
Net decrease in other assets
and liabilities and other adjustments 295 (147)
Net cash used in operating activities (43,392) (50,446)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in plant and equipment, net (2,582) (4,985)
Acquisition of Sierra, net of cash acquired - (118,986)
Acquisition of Republic, net of cash acquired (16,366) -
Net cash used in investing activities (18,948) (123,971)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under term debt - 125,000
Payments on term and other debt - (141)
Revolving lines of credit and bank line
of credit, net 62,247 53,598
Net cash provided by financing activities 62,247 178,457
Effect of exchange rate changes on cash - (116)
Net increase (decrease) in cash (93) 3,924
Cash at beginning of period 880 2,323
Cash at end of period $ 787 $ 6,247
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amount capitalized $ 882 $ 1,958
Income taxes paid 1,107 2,261
Detail of entities acquired:
Fair value of assets acquired 23,799 138,933
Liabilities assumed (7,433) (19,947)
Net cash paid for acquisition 16,366 118,986
The accompanying notes to consolidated financial
statements are an integral part of these statements.
Page 6
THE SCOTTS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
The Scotts Company ("Scotts") through its wholly-owned subsidiaries, The
O. M. Scott & Sons Company ("OMS"), Hyponex Corporation ("Hyponex"),
Republic Tool and Manufacturing Corp. ("Republic") and Scott-Sierra
Horticultural Products Company ("Sierra") (collectively, the "Company"),
is engaged in the manufacture and sale of lawn care and garden products.
The Company's business is highly seasonal with approximately 70% of sales
occurring in the second and third fiscal quarters. Substantially all of
the assets currently held by Scotts consist of the capital stock of OMS
and advances to OMS. The consolidated financial statements include the
financial statements of Scotts and OMS. All material intercompany
transactions have been eliminated.
The consolidated balance sheets as at January 2, 1993 and January 1, 1994
and the related consolidated statements of income and cash flows for the
three month periods ended January 2, 1993 and January 1, 1994 are
unaudited; however, in the opinion of management, such financial
statements contain all adjustments necessary for the fair presentation of
the Company's financial position and results of operations. Interim
results reflect all normal recurring adjustments and are not necessarily
indicative of results for a full year. The interim financial statements
and notes are presented as specified by Regulation S-X of the Securities
Exchange Act of 1934, and should be read in conjunction with the
financial statements and accompanying notes in the Company's fiscal 1993
Annual Report on Form 10-K.
The loss before cumulative effect of accounting changes for the three
months ended January 2, 1993 has been restated to reflect an ongoing
charge of $462,000 or $.02 per share resulting from the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." Similarly,
the net loss for the three months ended January 2, 1993 has been restated
to reflect the cumulative effect of the adoption of SFAS No. 106 (a net
of tax charge of $14,932,000 or $.71 per share) and SFAS No. 109,
"Accounting for Income Taxes" (a benefit of $1,775,000 or $.08 per
share). The consolidated balance sheet as of January 2, 1993 and the
related statement of cash flows for the three months then ended have also
been restated to reflect the accounting changes.
2. Acquisitions
Effective December 16, 1993, the Company completed the acquisition of
Grace-Sierra Horticultural Products Company (all further references to
Grace-Sierra, now known as Scott-Sierra Horticultural Products Company,
will be made as "Sierra") for an aggregate purchase price of
approximately $123,100,000, including estimated transaction costs of
$3,100,000. Sierra is a leading international manufacturer and marketer
of specialty fertilizers and related products for the nursery,
greenhouse, golf course and consumer markets. Sierra manufactures
controlled-release fertilizers in the United States and the
Page 7
Netherlands, as well as water-soluble fertilizers and specialty organics
in the United States. Approximately one-quarter of Sierra's net sales
are derived from European and other international markets; approximately
one-quarter of Sierra's assets are internationally based. The purchase
price was financed under an amendment to the Company's Credit Agreement,
whereby term debt commitments available thereunder were increased to
$195,000,000.
Effective November 19, 1992, the Company acquired Republic Tool &
Manufacturing Corp. ("Republic") headquartered in Carlsbad, California.
Republic designs, develops, manufactures and markets lawn and garden
equipment with the substantial majority of its revenue derived from the
sale of its products to mass merchandisers, home centers and garden
outlets in the United States. The purchase price of approximately
$16,366,000 was financed under an amendment to the revolving credit
portion of the Company's Credit Agreement.
The acquisitions have been accounted for using the purchase method.
Accordingly, the purchase price has been allocated to the assets acquired
and liabilities assumed based on their estimated fair values at the date
of acquisition. The excess of purchase price over the estimated fair
values of the net assets acquired ("goodwill") of approximately
$62,505,000 and $6,366,000 for Sierra and Republic, respectively, are
being amortized on a straight-line basis over 40 years. The acquired
companies' results of operations have been included in the Consolidated
Statements of Income from the respective acquisition dates.
The following represents pro forma results of operations assuming the
Sierra acquisition had occurred effective October 1, 1992 after giving
effect to certain related adjustments, including depreciation and
amortization on tangible and intangible assets, and interest on
acquisition debt. Pro forma results of the Republic acquisition,
assuming an effective date of October 1, 1992, would not be materially
different from the results reported.
Three Months Ended
(in thousands, except per share amounts)
January 2 January 1
1993 1994
Net sales $ 95,555 $ 89,152
Loss before cumulative effect
of accounting changes $ (1,757) $ (2,900)
Net loss $ (14,914) $ (2,900)
Loss per common share before cumulative
effect of accounting changes $ (.09) $ (.14)
Net loss per common share $ (.71) $ (.14)
The pro forma information provided does not purport to be indicative of
actual results of operations if the Sierra acquisition had occurred as of
October 1, 1992, and is not intended to be indicative of future results
or trends.
Page 8
3. Long-term Debt
On December 16, 1993, the Company entered into an amendment to its Credit
Agreement to finance the Sierra acquisition. The amendment increased the
term debt commitments available under the Credit Agreement to
$195,000,000. The Credit Agreement continues to provide a revolving
credit commitment of $150,000,000 through the scheduled maturity date of
March 31, 1996. The Company's long-term debt consists of the following:
January 1
1994
Revolving credit loan and bank line of credit $ 75,303,000
Term loan 195,000,000
Capital lease obligations and other 3,070,000
273,373,000
Less current portions 65,747,000
$ 207,626,000
Scheduled maturities of term debt are as follows:
Fiscal Year
1994 $ 5,000,000
1995 25,000,000
1996 27,500,000
1997 32,500,000
1998 30,000,000
1999 and thereafter 75,000,000
All other aspects of the Company's Credit Agreement remain substantially
the same.
4. Income Taxes
The effective income tax rate used for the three month period ended
January 1, 1994 differs from the statutory federal rate principally due
to state and local income tax expense, amortization of goodwill and
amortization of prepaid pension costs. A tax benefit of $1,060,000 has
been recognized since, due to the established seasonal pattern of
business, it is expected that the loss in the first quarter will be
offset by income in later interim periods.
5. Contingencies
The Company is involved in various lawsuits and claims that arise in the
normal course of business. In the opinion of management, these claims
individually and in the aggregate are not expected to result in a
material adverse effect on the Company's financial position or results of
operations, however, there can be no assurance that future quarterly or
annual operating results will not be materially affected by final
resolution of these matters. The following details the more significant
of these matters.
The Company has been involved in studying a landfill to which it is
believed some of the Company's solid waste had been hauled in the
Page 9
1970's. In September 1991, the Company was named by the Ohio
Environmental Protection Agency ("Ohio EPA") as a Potentially Responsible
Party ("PRP") with respect to this landfill. Pursuant to a consent order
with the Ohio EPA, the Company, together with four other PRP's identified
to date, is investigating the extent of contamination at the landfill and
developing a remediation program.
In July 1990, the Company was directed by the Army Corps of Engineers
(the "Corps") to cease peat harvesting operations at its New Jersey
facility. The Corps has alleged that the peat harvesting operations were
in violation of the Clean Water Act ("CWA"). The United States
Department of Justice has commenced a legal action to seek a permanent
injunction against peat harvesting at this facility and to recover civil
penalties under the CWA. This action had been suspended while the
parties engaged in discussion to resolve the dispute. Those discussions
have not resulted in a settlement and accordingly the action has been
reinstated. The Company intends to defend the action vigorously but if
the Corps' position is upheld the Company could be prohibited from
further harvesting of peat at this location and penalties could be
assessed against the Company. In the opinion of management, the outcome
of this action will not have a material adverse effect on the Company's
financial position or results of operations. Furthermore, management
believes the Company has sufficient raw material supplies available such
that service to customers will not be adversely affected by continued
closure of this peat harvesting operation.
6. Accounting Issues
In November 1992, the Financial Accounting Standards Board issued
SFAS No. 112, "Employers' Accounting for Postemployment Benefits," which
changes the prevalent method of accounting for benefits provided after
employments but before retirement. The Company is required to adopt
SFAS No. 112 no later than the first quarter of fiscal 1995. Management
is currently evaluating the provisions of SFAS No. 112 and, at this time,
the effect of adopting SFAS No. 112 has not been determined.
Page 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended January 1, 1994, versus Three Months Ended January 2,
1993.
Net sales of $68,326,000 increased by $569,000 or approximately 0.8%.
Net sales for the three months ended January 1, 1994, included $4,879,000
of net sales from sales of Grace-Sierra Horticultural Products Company,
now known as Scott-Sierra Horticultural Products Company, ("Sierra")
which was acquired by Scotts on December 16, 1993. Sales for the period,
before inclusion of Sierra sales, declined 6.4% to $63,446,000 primarily
due to decreased sales volume. Consumer Business Group sales of
$44,165,000 decreased by $2,080,000 or approximately 4.5%. The decrease
was primarily attributable to delays in availability of new products,
primarily a new line of spreaders. Professional Business Group sales of
$18,071,000 decreased $2,932,000 or approximately 14.0%. Scotts
management feels that this decrease reflects a continuing trend by golf
course customers to order products closer to Spring usage. Composting
revenues of $1,210,000 increased by $701,000.
Cost of sales for the three months ended January 1, 1994 represented
54.7% of net sales, reflecting no change from 54.7% for the three months
ended January 2, 1993.
Operating expenses of $30,911,000 increased by $1,315,000 or
approximately 4.4%. The increase was partly caused by the inclusion of
operating expenses of Sierra and partly by increased freight expense this
year. The increase in freight expense was due to an increase in the
number of less-than-truckload shipments because of the delay in the
availability of new products primarily a new line of spreaders. Reduced
general and administrative expense for the quarter, this year, partially
offset the increase.
Interest expense of $2,640,000 increased by $919,000 or approximately
53.4%. The increase was primarily attributable to an increase in
borrowing levels resulting from purchase of a block of Scotts' Class A
Common Stock in February 1993 and the acquisition of Sierra in December
1993.
The net loss decreased from $13,628,000 last year to $1,557,000 this
year. The decrease was attributable to a prior period non-recurring
charge of $13,157,000 for the cumulative effect of changes in accounting
for postretirement benefits, net of tax and income taxes and was offset
in part by lower income from operations this year.
Financial Position as at January 1, 1994.
Capital expenditures for the fiscal year ending September 30, 1994 are
expected to be approximately $31,500,000 including capital expenditures
of Sierra. The key capital project is a $13,000,000 investment in a new
Page 11
production facility to increase capacity to meet demand for Scotts'
Poly-SR controlled release fertilizers. Capital expenditures will be
financed with cash provided by operations and utilization of existing
credit facilities.
Current assets of $236,149,000 increased by $92,407,000 compared with
current assets as at September 30, 1993 and by $61,695,000 compared with
current assets as at January 2, 1993. The increase compared with
September 30, 1993 is partly attributable to the seasonal nature of
Scotts' business with inventory and accounts receivable levels generally
being higher in December relative to September. The increase was also
caused in part, by inclusion of Sierra's current assets which amounted to
$47,418,000. The increase compared with January 2, 1993 was primarily
caused by inclusion of Sierra's current assets of $47,418,000 and also by
higher inventory levels for Scotts and Hyponex products this year in
anticipation of the upcoming peak selling season.
Total assets of $508,742,000 increased by $187,152,000 compared with
total assets as at September 30, 1993 and by $155,677,000 compared with
total assets as at January 2, 1993. The increases were primarily
attributable to the inclusion of Sierra's assets which amounted to
$141,731,000 including goodwill in the amount of $62,440,000.
Total liabilities of $367,550,000 increased by $188,973,000 compared with
total liabilities as at September 30, 1993 and by $176,792,000 compared
with total liabilities as at January 2, 1993. The increase compared with
September 30, 1993 is partly caused by the seasonability of the
business. It is also caused, in large part, by $125,000,000 of term debt
incurred in December 1993 to facilitate the acquisition of Sierra and by
inclusion of Sierra's liabilities which amounted to $18,571,000. The
increase compared with January 2, 1993 was primarily attributable to
borrowings for the Sierra acquisition; borrowings in February, 1993 to
purchase a block of Scotts' Class A Common Stock for approximately
$41,400,000 and the inclusion of Sierra's liabilities.
Shareholders' equity of $141,192,000 decreased by $1,821,000 compared
with September 30, 1993 and by $21,115,000 compared with January 2,
1993. The decrease compared with January 2, 1993 was primarily due to a
reduction in shareholders' equity in connection with the purchase of the
Class A Common Stock in February 1993, offset by net earnings for the
twelve month period ended January 1, 1994.
The primary source of liquidity for Scotts' operations are funds
generated by operations and borrowings under Scotts' Third Amended and
Restated Credit Agreement ("Credit Agreement"). The Credit Agreement was
amended in December 1993 to provide financing for and permit the
acquisition of Sierra. As amended, the Credit Agreement provides a
revolving credit commitment of $150.0 million through March 31, 1996 and
$195.0 million of term debt with scheduled maturities commencing on April
30, 1994 and extending through September 30, 2000. The Credit Agreement
contains financial covenants which, among other things, limit capital
expenditures, require maintenance of Adjusted Operating Profit,
Consolidated Net Worth and Interest Coverage (each as defined therein)
and require Scotts to reduce revolving credit borrowings to no more than
$30.0 million for 30 consecutive days each year.
Page 12
The Company's business is highly seasonal which is reflected in working
capital requirements. Working capital requirements are greatest from
November through May, the peak production period, and are at their
highest in March. Working capital needs are relatively low in the summer
months.
In the opinion of Scotts management, cash flow from operations and
capital resources will be sufficient to meet future debt service and
working capital needs.
Accounting Issues
In November 1992, the Board issued Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits"
("SFAS 112"), which changes the prevalent method of accounting for
benefits provided after employment but before retirement. Scotts must
adopt SFAS 112 no later than the first quarter of fiscal 1995.
Management is currently evaluating the provisions of SFAS 112 and, at
this time, the effect of adopting SFAS 112 has not been determined.
Page 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11(a) Computation of Net Income Per Common Share
(b) Reports on Form 8-K.
On December 30, 1993, Scotts filed a Form 8-K to report
the acquisition of Grace-Sierra Horticultural Products
Company by The O. M. Scott & Sons Company. Form 8-K will
be amended on or before February 28, 1994 to include the
financial statements specified by Rule 11-01 of
Regulation S-X of the Securities Exchange Act of 1934 and
Items 7(a) and 7(b) of Form 8-K.
Page 14
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.
THE SCOTTS COMPANY
Date February 15, 1994 /s/ Paul D. Yeager
Paul D. Yeager
Executive Vice President
Chief Financial Officer
Principal Accounting Officer
Page 15
THE SCOTTS COMPANY
QUARTERLY REPORT ON FORM 10-Q FOR
FISCAL QUARTER ENDED JANUARY 1, 1994
EXHIBIT INDEX
Exhibit Page
Number Description Number
11(a) Computation of Net Income Per Common Share 17
Page 16
Exhibit 11(a)
THE SCOTTS COMPANY
Computation of Net Income Per Common Share
Primary (Unaudited)
(Dollars in thousands except per share amounts)
For the Three Months Ended
January 2 January 1
1993 1994
Net loss for computing net income
per common share:
Loss before cumulative effect of $ (471)(1) $ (1,557)
accounting changes
Cumulative effect of changes in accounting for
postretirement benefits, net of tax and
income taxes $ (13,157) -
Net loss $ (13,628)(2) $ (1,557)
Net Income Per Common Share:
Loss before cumulative effect of
accounting changes $ (.02) $ (.08)
Cumulative effect of changes in accounting for
postretirement benefits, net of tax and
income taxes (.63) -
Net loss per common share $ (.65) $ (.08)
Computation of Weighted Average Number
of Common Shares Outstanding (Unaudited)
For the Three Months Ended
January 2 January 1
1993 1994
Weighted average number
of shares outstanding 21,073,430 18,658,535
Effect of options based upon
the Treasury Stock Method:
January 1992 - 136,364 at $ 9.90 53,003 -
November 1992 - 123,925 at $16.25 2,131 -
December 1992 - 300,000 at $18.00 - -
Weighted average number of
shares for computing net loss
per common share 21,128,564 18,658,535(3)
Loss before cumulative effect of accounting changes for the three months ended January 2, 1993
has been restated to reflect an ongoing net of tax charge of $462 or $.02 resulting from the
adoption of SFAS No. 106 effective October 1, 1992.
The net loss for the three months ended January 2, 1993 has been restated to reflect the
cumulative effect of changes in accounting for postretirement benefits (a net of tax change
of $14,932 or $.71 per share) and income taxes (a benefit of $1,775 or $.08 per share).
On a fully diluted basis, weighted average shares outstanding did not differ from the primary
calculation due to the antidilutive effect of common stock equivalents in a loss period.
