Back to GetFilings.com

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X]  Yes  [  ]  No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  [X]  Yes  [  ]  No

As of May 5, 2003 there were 11,040,452 shares of the registrant’s Common Stock outstanding.

Table of Contents

TROPICAL SPORTSWEAR INT’L CORPORATION

FORM 10-Q
TABLE OF CONTENTS

-2-

Table of Contents

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

TROPICAL SPORTSWEAR INT’L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)

See accompanying notes.

-3-

Table of Contents

TROPICAL SPORTSWEAR INT’L CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

See accompanying notes.

-4-

Table of Contents

TROPICAL SPORTSWEAR INT’L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

See accompanying notes.

-5-

Table of Contents

TROPICAL SPORTSWEAR INT’L CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 29, 2003 and September 28, 2002
(In thousands, except share and per share amounts)

1.

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Tropical Sportswear Int’l Corporation (the “Company”) include the accounts of Tropical Sportswear Int’l Corporation and its subsidiaries. These financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes required by generally accepted accounting principles. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended September 28, 2002. In the opinion of management, the unaudited condensed consolidated financial statements contain all necessary adjustments (which include only normal, recurring adjustments) for a fair presentation of the interim periods presented. Operating results for the twenty-six weeks ended March 29, 2003 are not necessarily indicative of results that may be expected for the entire fiscal year ending September 27, 2003.

2.

INVENTORIES

Inventories consist of the following:

3.

DEBT AND CAPITAL LEASES

Long-term debt and capital leases consist of the following:

-6-

Table of Contents

The Company’s revolving credit line (the “Facility”) provides for borrowings of up to $110.0 million, subject to certain borrowing base limitations. Borrowings under the Facility bear variable rates of interest based on LIBOR plus an applicable margin (4.3% at March 29, 2003) and are secured by substantially all of the Company’s domestic assets. The Facility matures in June 2003 and the Company intends to and is in the process of renewing the Facility. As of March 29, 2003, $89.0 million was available for borrowings under the Facility.

4.

EARNINGS PER SHARE

Basic and diluted net income (loss) per share are computed as follows:

5.

RESTRUCTURING OF SAVANE INTERNATIONAL CORP.

On April 18, 2002, the Company announced a plan to consolidate the administrative, cutting and related functions of the Savane division in El Paso, Texas into the Tampa, Florida facility. The Company has completed all aspects of this consolidation in the second fiscal quarter ending March 29, 2003. As part of the consolidation, the Company has vacated its El Paso, Texas administration building and cutting facility.

As a result of these initiatives (internally referred to as “Project Synergy”), the Company recorded exit accruals related to this consolidation during fiscal 2002. During the twenty-six weeks ended March 29, 2003, the Company reduced certain of these exit accruals as the consolidation project has reached completion and better cost estimates were available. As of March 29, 2003, the Company has an accrual of approximately $2.0 million, related to exit costs, which primarily consist of lease terminations ($1.9 million) and related expenses ($0.1 million). The activity in the exit accruals related to Project Synergy during the twenty-six weeks ended March 29, 2003 were as follows:

-7-

Table of Contents

The Company has remaining accrued liabilities related to the 1998 acquisition of Savane International Corp. The exit costs primarily consist of estimated lease termination costs and related expenses. The activity in the exit accruals related to this acquisition during the twenty-six weeks ended March 29, 2003 were as follows:

6.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (Statement No. 144), which is effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. Statement No. 144 supersedes Statement of Financial Accounting Standard No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and provides a single accounting model for long-lived assets to be disposed of. The adoption of Statement No. 144 has not had a material impact on the Company’s financial position and results of operations.

In April 2002, the FASB issued Statement of Financial Accounting Standard No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (Statement No. 145), which is effective for fiscal years beginning after May 15, 2002. This Statement rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt,” as well as an amendment of that Statement, FASB Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements,” as debt extinguishments are no longer classified as extraordinary items unless they meet the requirements in Accounting Principles Board Opinion No. 30 of being unusual and infrequently occurring. The adoption of Statement No. 145 has not had a material impact on the Company’s financial position and results of operations.

In June 2002, the FASB issued Statement of Financial Accounting Standard No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (Statement No. 146), which is effective for exit or disposal activities that are initiated after December 31, 2002. Statement No. 146 nullifies Emerging Issues Task Force

-8-

Table of Contents

No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (EITF 94-3). Statement No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and eliminates the definition and requirements of recognition of exit costs in EITF 94-3. The adoption of Statement No. 146 will affect the timing of recognition of costs associated with any future restructuring activities.

In December 2002, the FASB issued Statement of Financial Accounting Standards Statement No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (Statement No. 148), which is effective for fiscal years and interim periods beginning after December 31, 2002. Statement No. 148 amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to the fair value method of accounting for stock-based employee compensation. In addition, Statement No. 148 amends the disclosure provisions of Statement 123 to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. The adoption of Statement No. 148 has not had a material impact on the Company’s financial position and results of operations.

7.

STOCK OPTION PLAN PRO FORMA INFORMATION

The Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) and related interpretations in accounting for its employee stock options because the alternative fair value accounting provided for under FASB Statement 123, “Accounting for Stock Based Compensation,” (Statement No. 123) requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company’s employee stock options equal the market price of the underlying stock on the date of grant, no compensation expense is recognized.

As discussed in Note 6, the interim information regarding pro forma net income and earnings per share is required by Statement No. 123 and Statement No. 148. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. The Company’s pro forma information is as follows (in thousands except for net income per share information):

No actual stock-based compensation cost was recorded by the Company in the accompanying condensed consolidated financial statements.

-9-

Table of Contents

8.     SUPPLEMENTAL COMBINING CONDENSED FINANCIAL STATEMENTS

The Company’s Senior Subordinated Notes, due 2008 (the “Notes”) are jointly and severally guaranteed fully and unconditionally by the Company’s domestic subsidiaries which are 100% owned by Tropical Sportswear Int’l Corporation (the “Parent”). The Company’s wholly-owned foreign subsidiaries are not guarantors with respect to the Notes and do not have any credit arrangements senior to the Notes except for their local overdraft facilities and capital lease obligations.

The following is the unaudited supplemental combining condensed statement of operations for the thirteen weeks and twenty-six weeks ended March 29, 2003, and the thirteen weeks and twenty-six weeks ended March 30, 2002, the supplemental combining condensed balance sheet as of March 29, 2003 and September 28, 2002, and the supplemental combining condensed statement of cash flows for the twenty-six weeks ended March 29, 2003, and twenty-six weeks ended March 30, 2002. The only intercompany eliminations are the normal intercompany sales, borrowings and investments in wholly-owned subsidiaries. Separate complete financial statements of the guarantor subsidiaries are not presented because management believes that they are not material to investors.

-10-

Table of Contents

-11-

Table of Contents