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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2002
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 1-7340
KELLWOOD COMPANY
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2472410
- ------------------------------------ --------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
600 KELLWOOD PARKWAY, P.O. BOX 14374, ST. LOUIS, MO 63178
- --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 576-3100
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 requirements for the past 90 days. YES X NO
--- ---
Number of shares of common stock, par value $.01, outstanding at July 31,
2002 (only one class): 25,560,168.
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1
KELLWOOD COMPANY
----------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Earnings 4
Condensed Consolidated Statement of Cash Flows 5
Notes to Condensed Consolidated Financial
Statements 6-9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-17
PART II. OTHER INFORMATION 18-20
2
PART I. FINANCIAL INFORMATION
-----------------------------
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
------------------------------------------------
(Amounts in thousands)
July 31,
------------------------------- January 31,
2002 2001 2002
------------- ------------- -------------
ASSETS
- ------
Current assets:
Cash and time deposits $ 142,679 $ 21,035 $ 69,239
Receivables, net 290,152 342,543 318,931
Inventories 403,901 479,997 363,486
Prepaid taxes and expenses 40,273 32,456 31,325
------------- ------------- -------------
Total current assets 877,005 876,031 782,981
Property, plant and equipment, net 128,718 110,743 108,938
Intangible assets, net 59,092 40,431 40,469
Goodwill 76,077 78,279 76,077
Other assets 50,562 37,873 35,959
------------- ------------- -------------
Total assets $ 1,191,454 $ 1,143,357 $ 1,044,424
============= ============= =============
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Current liabilities:
Current portion of long-term debt $ 18,219 $ 13,784 $ 18,811
Notes payable 659 74,644 7,612
Accounts payable 179,852 115,291 137,908
Accrued expenses 94,593 90,924 78,822
------------- ------------- -------------
Total current liabilities 293,323 294,643 243,153
Long-term debt 303,056 358,185 307,869
Deferred income taxes and other 58,579 39,833 36,703
Shareowners' equity:
Common stock 214,479 169,398 173,010
Retained earnings 434,869 426,278 429,767
Accumulated other comprehensive income (12,077) (11,246) (11,878)
------------- ------------- -------------
637,271 584,430 590,899
Less treasury stock, at cost (100,775) (133,734) (134,200)
------------- ------------- -------------
Total shareowners' equity 536,496 450,696 456,699
------------- ------------- -------------
Total liabilities and shareowners' equity $ 1,191,454 $ 1,143,357 $ 1,044,424
============= ============= =============
See notes to condensed consolidated financial statements.
3
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
--------------------------------------------------------
(Amounts in thousands except per share data)
Three Months Ended Six Months Ended
July 31, July 31,
------------------------------- --------------------------------
2002 2001 2002 2001
------------- ------------- ------------- -------------
Net sales $ 463,346 $ 501,002 $ 1,034,026 $ 1,210,369
Costs and expenses:
Cost of products sold 368,261 403,531 827,746 963,955
Selling, general and
administrative expenses 81,380 83,915 165,184 179,286
Provision for realignment - - 7,244 -
Amortization of intangible assets 1,330 2,371 2,055 4,716
Interest expense 7,072 8,585 13,911 19,570
Interest income and other, net (723) (333) (1,287) (1,202)
------------- -------------- ------------ --------------
Earnings before income taxes 6,026 2,933 19,173 44,044
Income taxes 2,100 1,100 6,700 17,100
------------- ------------- ------------ -------------
Net earnings $ 3,926 $ 1,833 $ 12,473 $ 26,944
============= ============= ============ =============
Weighted average shares outstanding:
Basic 24,200 22,732 23,573 22,722
============= ============= ============ =============
Diluted 24,682 22,899 23,942 22,890
============= ============= ============ =============
Earnings per share:
Basic $ .16 $ .08 $ .53 $ 1.19
============= ============= ============ =============
Diluted $ .16 $ .08 $ .52 $ 1.18
============= ============= ============ =============
Dividends paid per share $ .16 $ .16 $ .32 $ .32
============= ============= ============ =============
See notes to condensed consolidated financial statements.
4
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
----------------------------------------------------------
(Amounts in thousands)
Six months ended
July 31,
----------------------------------
2002 2001
-------------- -------------
OPERATING ACTIVITIES:
Net earnings $ 12,473 $ 26,944
Add/(deduct) items not affecting operating cash flows:
Depreciation and amortization 14,385 16,011
Non-cash and accrued realignment costs 6,993 -
Deferred income taxes and other 4,089 8,958
Changes in working capital:
Receivables, net 50,949 26,705
Inventories 11,966 22,847
Prepaid taxes and expenses (1,828) 1,306
Accounts payable 32,052 (39,326)
Accrued expenses (7,915) (8,241)
-------------- -------------
Net cash provided / (used) by operating activities 123,164 55,204
-------------- -------------
INVESTING ACTIVITIES:
Additions to fixed assets (6,103) (8,532)
Acquisition, net of cash acquired (17,835)
Subordinated note receivable (11,000) -
Net proceeds from termination of Pension Plan - 66,761
Other investing activities 993 67
-------------- -------------
Net cash provided / (used) by investing activities (33,945) 58,296
-------------- -------------
FINANCING ACTIVITIES:
Reduction of long-term debt (7,204) (53,174)
Proceeds from notes payable 23,098 1,168,344
Reduction of notes payable (30,051) (1,211,402)
Dividends paid (7,371) (7,272)
Stock transactions under incentive plans 5,749 602
-------------- -------------
Net cash provided / (used) by financing activities (15,779) (102,902)
-------------- -------------
NET INCREASE IN CASH AND TIME DEPOSITS 73,440 10,598
Cash and time deposits, beginning of period 69,239 10,437
-------------- -------------
Cash and time deposits, end of period $ 142,679 $ 21,035
============== =============
Significant non-cash investing and financing activities:
Issuance of stock for the acquisition of Gerber Childrenswear, Inc. $ 68,185
--------------
See notes to condensed consolidated financial statements.
5
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------
(Amounts in thousands)
1. ACCOUNTING POLICIES. It is the opinion of management that all adjustments
necessary for a fair presentation of results for the interim periods have
been reflected in the statements presented. Such adjustments were normal and
recurring in nature.
Except for the change in accounting for goodwill and intangible assets as
discussed in Note 4, accounting policies have been continued without change
and are described in the Summary of Significant Accounting Policies
contained in the Company's Annual Report to Shareowners for fiscal 2001 (the
year ended January 31, 2002). For additional information regarding the
Company's financial condition, refer to the footnotes accompanying the 2001
financial statements. Details in those notes have not changed significantly
except as indicated herein and as a result of normal transactions in the
interim.
RECLASSIFICATIONS. Certain amounts in the prior year condensed consolidated
financial statements have been reclassified to conform to the current year
presentation.
2. GERBER ACQUISITION. On June 25, 2002 the Company completed an exchange
offer for the shares of Gerber Childrenswear, Inc., (Gerber) for
approximately $18,000 in cash, net of cash acquired of $51,000, and 2.3
million shares of Kellwood common stock valued at $68,185. This acquisition
has been accounted for under the purchase method of accounting. Gerber's
hosiery business has been incorporated into the Men's Sportswear Segment,
and the children's apparel business has been incorporated into the Other
Soft Goods Segment. The Company's unaudited consolidated results of
operations for the first six months, on a pro-forma basis, assuming the
Gerber acquisition had occurred at the beginning of fiscal 2002 are: net
sales of $1,111,116, net income of $16,062, and diluted earnings per share
of $0.62. These pro forma results are not necessarily indicative of the
operating results that would have occurred had these acquisitions been
consummated at the beginning of the year or of future operating results.
3. FACILITIES REALIGNMENT COSTS. The Company has decided to implement
realignment actions, including the closing of certain domestic warehousing
and Latin American production facilities and the discontinuance of a
licensing agreement. The realignments will include the closing of three
warehouse operations and five manufacturing facilities and will result in a
reduction of employment by approximately 1,900. These actions will impact
fiscal 2002 earnings by approximately $15,000 before tax (approximately
$9,700 after tax, or $0.39 per share).
During the first quarter of 2002 the Company recorded pretax realignment and
related costs of $8,949 which included $1,705 recorded in cost of sales and
$7,244 recorded as a provision for realignment. During the second quarter of
2002 the Company recorded additional pretax realignment and related costs of
$669 in cost of sales. These costs included:
Amount Amount Remaining
Provided Utilized Accrual
------------- ------------- -------------
Employee severance $ 2,327 $ 821 $ 1,506
Vacant facilities costs 1,573 387 1,186
Other cash realignment costs 1,362 920 442
------------- ------------- -------------
Total realignment, excluding non-cash 5,262 $ 2,128 $ 3,134
============= =============
Asset impairments 4,356
-------------
Total realignment costs $ 9,618
=============
The remaining expected cost of these actions, approximately $5,400, will be
expensed during fiscal 2002, primarily in the third quarter, as the related
facility closings are announced or as the expenses are incurred. These
programs are expected to be completed in 2003.
6
4. GOODWILL AND INTANGIBLE ASSETS. In July 2001 the Financial Accounting
Standards Board issued Statements of Financial Accounting Standards No. 141,
Business Combinations, and No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives are
not amortized but are subject to annual impairment tests in accordance with
the new Statements. Other intangible assets continue to be amortized over
their estimated useful lives.
The Company applied these new rules of accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. A reconciliation
of previously reported net income and earnings per share to the amounts
adjusted for the exclusion of goodwill amortization follows:
Three months ended July 31, Six months ended July 31,
-------------------------------- ------------------------------
2002 2001 2002 2001
------------- -------------- ------------- --------------
Net earnings:
As reported $ 1,833 $ 26,944
Goodwill amortization 1,376 2,752
-------------- --------------
Adjusted net earnings $ 3,926 $ 3,209 $ 12,473 $ 29,696
============= ============== ============= ==============
Diluted earnings per share:
As reported $ .08 $ 1.18
Goodwill amortization .06 .12
-------------- --------------
Adjusted diluted earnings per share $ .16 $ .14 $ .52 $ 1.30
============= ============== ============= ==============
During the first quarter of 2002 the Company completed the required
impairment tests of goodwill and indefinite-lived intangible assets as
recorded on February 1, 2002. Based on an evaluation of discounted cash
flows and multiple analyses of the Company's reporting units, no impairment
resulted from the initial application of the Statements.
There were no changes in the carrying amounts of goodwill by segment during
the quarter ended July 31, 2002. The balances by segment are as follows:
Women's Other
Sportswear Soft Goods Total
------------ ------------- ------------
Balance as of July 31, 2002 $ 63,425 $ 12,652 $ 76,077
============ ============= ============
Identifiable intangible assets as of July 31, 2002 include:
Gross Accumulated Net
Amount Amortization Book Value
------------- -------------- -------------
Customer Base $ 29,804 $ 6,944 $ 22,860
Trademarks 18,717 8,268 10,449
Other 28,964 3,181 25,783
------------- -------------- -------------
Total intangibles $ 77,485 $ 18,393 $ 59,092
============= ============== =============
Amortization of intangible assets was $1,330 for the quarter ended July 31,
2002 and $2,055 for the six months ended July 31, 2002. Estimated
amortization expense, excluding Gerber and any future acquisitions, for the
years 2002 to 2006 is estimated to be approximately $3,000 per year. The
impact of annual amortization of identified intangibles resulting from the
acquisition of Gerber cannot be determined until an allocation of the
purchase price has been completed.
The amortizable intangible assets have a weighted average estimated
remaining life of approximately 11 years. Estimated identifiable intangible
assets related to the acquisition of Gerber of $23,000 have been
preliminarily classified as Other until an analysis is completed. Additional
adjustments to the purchase price allocation will result from the completion
of an analysis of the acquired assets which is currently in progress.
7
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
----------------------------------------------------------------
(Amounts in thousands)
5. OTHER INCOME. Other income in the six months ended July 31, 2001 includes
$3,419 related to the change in accounting for certain inventories from the
LIFO to the FIFO method. The change was effected in the first quarter of
2001 and was not considered material to require restatement of prior years'
income statements.
6. INVENTORIES:
July 31,
------------------------------- January 31,
2002 2001 2002
------------- ------------- --------------
Inventories:
Finished goods $ 305,905 $ 341,105 $ 273,037
Work in process 39,407 71,364 41,783
Raw materials 58,589 67,528 48,666
------------- ------------- --------------
Total Inventories $ 403,901 $ 479,997 $ 363,486
============= ============= ==============
7. DEBT. On April 30, 2002 the Company executed a $240,000 3-year committed,
unsecured bank credit facility with Bank of America as lead arranger and
other participating banks (the "2002 Facility"). The 2002 Facility can be
used for borrowings and/or letters of credit. Borrowings under the 2002
Facility bear interest at a spread of approximately 1.75% over LIBOR. At
July 31, 2002, outstanding short-term loans and letters of credit under the
agreement were $0 and $85,414, respectively.
In conjunction with the execution of the 2002 Facility, the Company
cancelled the prior existing $350,000 bank credit facility. This credit
facility had been scheduled to terminate on August 31, 2002.
The Company maintains informal, uncommitted lines of credit with several
banks, which totaled $35,000 at July 31, 2002. There were no borrowings
under these uncommitted lines at July 31, 2002.
8. COMPREHENSIVE INCOME. The Company's total comprehensive income for the
quarter ended July 31, 2002 and 2001 was $3,921 and $1,838, respectively.
The Company's total comprehensive income for the six months ended July 31,
2002 and 2001 was $12,274 and $26,270, respectively. Differences between net
earnings and total comprehensive income resulted from foreign currency
translation and unrecognized impacts of derivative instruments.
9. STOCK OPTION PLANS. On March 8, 2002 the Company granted nonqualified
stock options to certain officers and other key employees for 676,875 shares
of common stock at an exercise price of $25.50, which was equal to the
market value of the shares on the grant date. The options expire 10 years
after grant and are exercisable in cumulative installments usually over a 5
year period.
8
10. REPORTABLE SEGMENTS. The Company and its subsidiaries are principally
engaged in the apparel and related soft goods industry. The Company's
business units are aggregated into the following reportable segments:
Women's Sportswear, Men's Sportswear, and Other Soft Goods. Sales, segment
earnings, and net assets by segment for the quarter and six months ended
July 31, 2002 as well as a reconciliation of the segment earnings (defined
as Net Sales less Cost of Products Sold and Selling, General and
Administrative expenses) of the reported segments to total Kellwood earnings
before income taxes are as follows:
Three months ended July 31, Six months ended July 31,
-------------------------------- ------------------------------
2002 2001 2002 2001
------------- -------------- ------------- --------------
Net Sales:
Women's Sportswear $ 267,056 $ 331,308 $ 628,216 $ 813,248
Men's Sportswear 97,070 74,805 186,172 156,901
Other Soft Goods 99,220 94,889 219,638 240,220
------------- -------------- ------------- --------------
Kellwood net sales $ 463,346 $ 501,002 $ 1,034,026 $ 1,210,369
============= ============== ============= ==============
Segment earnings*:
Women's Sportswear $ 14,420 $ 12,658 $ 44,081 $ 54,757
Men's Sportswear 6,212 5,433 11,317 12,485
Other Soft Goods 2,750 3,376 6,264 17,514
------------- -------------- ------------- --------------
Total segments 23,382 21,467 61,662 84,756
Amortization of Intangibles (1,330) (2,371) (2,055) (4,716)
Interest expense (7,072) (8,585) (13,911) (19,570)
Provision for realignment ** - - (7,244) -
General corporate and other (8,954) (7,578) (19,279) (16,426)
------------- -------------- ------------- --------------
Earnings before income taxes $ 6,026 $ 2,933 $ 19,173 $ 44,044
============= ============== ============= ==============
Net Assets at quarter-end:
Women's Sportswear $ 375,780 $ 587,388
Men's Sportswear 156,189 139,450
Other Soft Goods 181,730 175,632
Corporate and other 144,731 (5,160)
------------- --------------
Kellwood total $ 858,430 $ 897,310
============= ==============
* - Realignment costs included in segment earnings above:
Women's Sportswear $ 317 $ 402
Men's Sportswear 109 428
Other Soft Goods 243 1,544
------------- -------------
Total segments $ 669 $ 2,374
------------- -------------
** - The provision for realignment relates to the segments as follows:
Women's Sportswear $ - $ 4,055
Men's Sportswear - 1,779
Other Soft Goods - 1,410
------------- -------------
Total $ - $ 7,244
------------- -------------
Segment net assets measures net working capital, net fixed assets and other
non-current operating assets and liabilities of the segment. Goodwill and
net intangibles are included in segment net assets, however the related
amortization expense is included in Amortization of Intangibles and is not
allocated to the segments.
9
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS - $ IN MILLIONS EXCEPT PER SHARE DATA
-----------------------------------------------------------
OPERATING RESULTS
- -----------------
Sales for the second quarter were $463, down $38, or 8%, from last year. Net
earnings were $3.9, or $.16 per share compared to $1.8, or $.08 per share
last year on a diluted basis. Included in net earnings for the current
quarter are earnings from the acquisition of Gerber Childrenswear, Inc. The
earnings were offset with costs of $0.7 before-tax, or $0.4 after-tax ($.02
per share) in business and facilities realignment costs (facilities
realignment costs). This represents the continuation of the previously
announced $15 pretax facility realignment program. Excluding the second
quarter facilities realignment costs, net earnings for the quarter were
$4.4, or $.18 per share.
Sales in the first half were $1,034, down $176, or 15 percent from the prior
year. Net earnings were $12.5, or $.52 per share compared to $26.9, or $1.18
per share last year on a diluted basis. Included in net earnings for the
first half is $9.6 before-tax, or $6.3 after-tax ($.26 per share) in
facilities realignment costs. Excluding the first half facilities
realignment costs, net earnings were $18.8, or $.78 per share.
GERBER ACQUISITION. On June 25, 2002 the Company completed an exchange offer
for the shares of Gerber Childrenswear, Inc., (Gerber) for approximately $18
in cash, net of cash acquired of $51, and 2.3 million shares of Kellwood
common stock valued at $68. This acquisition has been accounted for under
the purchase method of accounting. Gerber's hosiery business will be
included in the Men's Sportswear Segment, and the children's apparel
business will be included in the Other Soft Goods Segment.
SUMMARIZED FINANCIAL DATA for the quarter and six months ended July 31, 2002
and 2001, including facilities realignment costs, are as follows
(percentages are calculated based on actual data, but columns may not add
due to rounding):
Three months ended July 31, Six months ended July 31,
--------------------------------- ------------------------------------
2002(1) 2001 Change 2002(1) 2001 Change
-------- -------- ------ --------- --------- ------
Net Sales $ 463 $ 501 -7.5% $ 1,034 $ 1,210 -14.6%
Cost of products sold 368 404 -8.7% 828 964 -14.1%
-------- -------- --------- --------- --------- ---------
Gross Profit 95 97 -2.4% 206 246 -16.3%
S, G & A 81 84 -3.0% 165 179 -7.9%
-------- -------- --------- --------- --------- ---------
Operating earnings 14 14 1.1% 41 67 -38.8%
Provision for realignment - - - 7 - nm
Amortization of intangibles 1 2 -43.9% 2 5 -56.4%
Interest expense 7 9 -17.6% 14 20 -28.9%
Interest (income) & other, net(2) (1) (0) nm (1) (1) 7.1%
--------- -------- --------- --------- --------- ---------
Earnings before tax 6 3 105.5% 19 44 -56.5%
Income taxes 2 1 90.9% 7 17 -60.8%
-------- -------- --------- --------- --------- ---------
Net earnings $ 4 $ 2 114.2% 12 27 -53.7%
======== ======== ========= ========= ========= =========
Effective tax rate 34.8% 37.5% -2.7% 34.9% 38.8% -3.9%
Average diluted shares 24.7 22.9 7.8% 23.9 22.9 4.6%
-------- -------- --------- --------- --------- ---------
Diluted Earnings per Share $ .16 $ .08 98.7% $ .52 $ 1.18 -55.7%
-------- -------- --------- --------- --------- ---------
(1)-Impact of facilities realignment costs included in data above:
Cost of products sold $ .7 - - $ 2.4 - -
Provision for realignment - - - 7.2 - -
-------- -------- --------- --------- --------- ---------
Earnings before tax .7 - - 9.6 - -
Income taxes .2 - - 3.4 - -
-------- -------- --------- --------- --------- ---------
Net earnings $ .4 - - $ 6.3 - -
-------- -------- --------- --------- --------- ---------
Diluted Earnings per Share $ .02 $ .27
-------- ---------
(2)-Including LIFO credit of $3.4 in the three months ended April 30, 2001.
10
Three months ended July 31, Six months ended July 31,
--------------------------- ---------------------------
As a percentage of net sales: 2002 2001 Change 2002 2001 Change
- ----------------------------- ------ ------ ------ ------ ------ ------
Net Sales 100.0% 100.0% - 100.0% 100.0% -
Cost of products sold 79.5% 80.5% -1.1% 80.1% 79.6% 0.4%
------ ------ ------ ------ ------ ------
Gross Profit 20.5% 19.5% 1.1% 19.9% 20.4% -0.4%
S, G & A 17.6% 16.7% 0.8% 16.0% 14.8% 1.2%
------ ------ ------ ------ ------ ------
Operating earnings 3.0% 2.7% 0.3% 4.0% 5.5% -1.6%
Provision for realignment - - - 0.7% - 0.7%
Amortization of intangibles 0.3% 0.5% -0.2% 0.2% 0.4% -0.2%
Interest expense 1.5% 1.7% -0.2% 1.3% 1.6% -0.3%
Interest (income) & other, net -0.2% -0.1% -0.1% -0.1% -0.1% -0.0%
------ ------ ------ ------ ------ ------
Earnings before tax 1.3% 0.6% 0.7% 1.9% 3.6% -1.8%
Income taxes 0.5% 0.2% 0.2% 0.6% 1.4% -0.8%
------ ------ ------ ------ ------ ------
Net earnings 0.8% 0.4% 0.5% 1.2% 2.2% -1.0%
====== ====== ====== ====== ====== ======
SEASONALITY: Kellwood's businesses are quite seasonal. The Company generally
sells its products prior to the principal retail selling seasons: spring,
summer, fall, and holiday. Sales and earnings for the quarter ended July 31
have historically been lower than for the other quarters of the fiscal year.
In recent years, the July quarter's results have represented approximately
21% of the year's sales and 9% of net earnings before unusual items and
facilities realignment costs.
SALES. Retail sales for the quarter were down in essentially every channel
of distribution except the discount channel, reflecting the cautious buying
of both the retailers and consumers. This drop in volume was anticipated
earlier in the year when we placed orders with our contractors for the
transition/early Fall season. Accordingly, we entered the transitional
shipping season in May with inventory down 40% from last year. The only
segment reporting lower sales in the second quarter was Women's Sportswear,
which was down 19% for the quarter (23% for the six months). The Men's
Sportswear segment was up 30% from the comparable quarter last year (19% for
the six months), and sales of Other Soft Goods were up 5% for the quarter,
but down 9% for the six months. The increases in the second quarter for
Men's Sportswear and Other Soft Goods were due largely to the acquisition of
Gerber.
GROSS PROFIT for the second quarter was $96, down $1 from last year, however
gross profit as a percentage of sales was up a full percentage point at
20.5% compared to last year's 19.5%. The year-to-year improvement in gross
margin resulted from higher initial margins from a shift in sourcing away
from Mexico and the Caribbean to the Far East, and improved sell-throughs
resulting in lower markdown requests which more than offset the negative
impact of lower sales on the absorption of burden expenses which are largely
fixed.
Gross profit for the six months as a percentage of sales decreased 0.4% to
19.9% from 20.4% in the prior year. Facilities realignment costs of $2.4 or
0.3% of sales contributed to this decrease in margins.
S,G&A EXPENSE for the second quarter decreased $2.5 but increased as a
percentage of sales to 17.6% from 16.7% in the prior year. The reduction in
S,G&A expense reflects the exiting of unprofitable labels and business units
and the consolidation of operating support units partially offset by Gerber
S,G&A expense. The increase in S,G&A as a percent of sales was a consequence
of the sales reduction discussed above, and a significant component of S,G&A
being fixed.
S,G&A expense for the six months decreased $14.1 but increased as a
percentage of sales to 16.0% from 14.8% in the prior year due to the same
combination of factors that impacted the second quarter.
FACILITIES REALIGNMENT COSTS. The global market for piece goods and apparel
production has changed significantly in favor of sourcing piece goods and
finished product out of the Far East. At the same time, the downturn in the
economy and consumer confidence has resulted in a prolonged period of weak
consumer and retail demand which, in turn, has resulted in some excess
capacity in the Company's warehousing and distribution network. As a result,
management has analyzed its sourcing and distribution infrastructure along
with other structural issues and is implementing actions to align the
Company to reflect the new business environment. As a result of this study,
the Company decided to implement realignment actions, which will impact
fiscal 2002 earnings by approximately $15.0 before tax (approximately $9.7
after tax, or $0.39 per share).
11
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS - $ in MILLIONS (continued)
-----------------------------------------------------
During the second quarter of 2002 the Company recorded pretax facilities
realignment costs of $0.7 in cost of sales. For the six months the Company
recorded pretax facilities realignment costs of $9.6 which included $2.4
recorded in cost of sales and $7.2 recorded as a provision for realignment.
The remaining expected cost of these actions, approximately $5.4, will be
expensed in the remaining quarters of fiscal 2002, primarily in the third
quarter, as the related facility closings are announced or as the expenses
are incurred. These programs are expected to be completed in 2003. These
charges will provide for a reduction of employment by approximately 1,900,
primarily in Latin American production and domestic warehousing functions.
AMORTIZATION of intangible assets decreased $1.1 for the quarter ($2.6 for
the six months) compared to the prior year as a result of the implementation
of FAS 142 and the related cessation of amortization of goodwill. This
decrease was partially offset by the amortization of identified intangible
assets related to Gerber. Identified intangible assets are amortized over
their estimated economic useful lives.
INTEREST EXPENSE for the second quarter was $7.1, down $1.5 from last year
due to a $121 reduction in average debt in the second quarter this year
compared to the second quarter of 2001. Interest expense for the six months
was $13.9, down $5.7 from last year due to the $121 reduction in average
debt for the second quarter and a $245 reduction in average debt during the
first quarter.
OTHER INCOME in the six months ended July 31, 2001 included $3.4 from the
change in accounting for certain inventories from the LIFO to the FIFO
method. The change was not considered material to require restatement of
prior years' income statements.
INCOME TAXES. The effective tax rate for the second quarter was 34.8%, down
from last year's 37.5%. The effective tax rate for the six months was 34.9%,
down from last year's 38.8%. The primary factors in this decline are the
cessation of the non-deductible goodwill amortization and foreign tax
differences associated with the Company's Smart Shirts' overseas operations.
SEGMENT RESULTS
- ---------------
The Company and its subsidiaries are principally engaged in the apparel and
related soft goods industry. Sales by segment for the quarter and six months
were as follows:
Three months ended July 31, Six months ended July 31,
---------------------------------- -----------------------------------
2002 2001 Change 2002 2001 Change
-------- -------- ------ -------- --------- ------
Women's Sportswear $ 267 $ 331 (19.4%) $ 628 $ 813 (22.8%)
Men's Sportswear 97 75 29.8% 186 157 18.7%
Other Soft Goods 99 95 4.6% 220 240 (8.6%)
-------- -------- -------- -------- --------- --------
Total Net Sales $ 463 $ 501 (7.5%) $ 1,034 $ 1,210 (14.6%)
======== ======== ======== ======== ========= ========
Earnings by segment for the quarter (excluding facilities realignment costs
in the current year) were as follows:
Three months ended July 31, as a percentage of net sales
---------------------------------- -----------------------------------
2002 2001 Change 2002 2001 Change
-------- -------- ------ -------- -------- ------
Women's Sportswear $ 14.7 $ 12.7 16.4% 5.5% 3.8% 1.7%
Men's Sportswear 6.3 5.4 16.3% 6.5% 7.3% (0.8%)
Other Soft Goods 3.0 3.4 (11.4%) 3.0% 3.6% (0.5%)
-------- -------- -------- -------- --------- --------
Segment Earnings $ 24.1 $ 21.5 12.0% 5.2% 4.3% 0.9%
======== ======== ======== ======== ========= ========
Earnings by segment for the six months (excluding facilities realignment
costs in the current year) were as follows:
Six months ended July 31, as a percentage of net sales
--------------------------------- -----------------------------------
2002 2001 Change 2002 2001 Change
-------- -------- ------ -------- -------- ------
Women's Sportswear $ 44.5 $ 54.8 (18.8%) 7.1% 6.7% 0.3%
Men's Sportswear 11.7 12.5 (5.9%) 6.3% 8.0% (1.6%)
Other Soft Goods 7.8 17.5 (55.4%) 3.6% 7.3% (3.7%)
-------- -------- -------- -------- --------- --------
Segment Earnings $ 64.0 $ 84.8 (24.4%) 6.2% 7.0% (0.8%)
======== ======== ======== ======== ========= ========
12
WOMEN'S SPORTSWEAR sales for the quarter were $267, down $64, or 19% from
last year. Sales for the six months were $628, down $185, or 23% from last
year. The Company's plan anticipated a decline of this magnitude. Segment
earnings increased to 5.5% of sales compared to 3.8% last year for the
second quarter and 7.1% of sales compared to 6.7% last year for the six
months. In order to understand why the Women's Sportswear business was
planned down for the quarter and six months, it's helpful to first address
four key issues apart from the unfavorable retail economic climate and look
back at what transpired last year during the spring and transitional selling
season at both wholesale and retail.
1. Kellwood's core brands enjoyed a strong sell-in during the first quarter
of last year. However, the apparel market turned soft and, in hindsight, the
stores overbought for spring last year. Consumer demand dropped about April
of last year across every channel of distribution and, as a result,
retailers were forced to take heavy mid-year markdowns and began to look for
ways to either push out deliveries or cancel orders for fall.
In an effort to avoid repeating the same mistake this year, stores cut their
open-to-buys for spring 2002 by 15 to 25%. The Company anticipated this
would occur during the 2002 planning process and planned its business down
for spring of this year.
2. The second major issue impacting business for spring has been a temporary
shift in consumer demand for dresses. With all of its brands combined,
Kellwood is the largest company in the U.S. dress business. Last year the
Company sold nearly $450 in dresses for the year, representing about 30% of
our total sportswear volume. The dress category had been very strong in '99
to 2001, about a three-year period, and the Company had benefited from that
strength. Beginning in fall of last year, the dress category fell out of
favor with the consumer and, as a result, the stores cut their spring 2002
open-to-buy for dresses by about 25%.
3. The third major issue that has temporarily taken its toll on the Women's
Sportswear business is also fashion-related. The Company failed to
sufficiently update some of our core lines last year, and, as a result, its
sell-throughs were below plan, necessitating a considerably higher level of
markdowns than the stores had planned, and certainly the Company had
planned. As a result, the retailers cut us back for spring 2002. The fashion
issue was addressed by bringing in new design and merchandising talent for
all of the Company's major brands and the Company is pleased with the
performance of its brands at retail this Spring and Summer.
4. The fourth and final issue, which has resulted in lower sales for the
quarter, is a combination of the broad-based weaknesses within the
department store channel along with a shift in merchandising strategy of
some department stores. This issue has resulted in lower sales of our Sag
Harbor(R), Koret(R), and a few other moderately priced brands.
MEN'S SPORTSWEAR. Sales of Men's Sportswear in the second quarter were $97,
up $22, or 30% from last year. Excluding the sales of Auburn Hosiery, a
division of Gerber, sales of the ongoing segments were up 15% from last
year. Sales for the six months were $186, up $29, or 19% from last year.
Kellwood's Men's Sportswear segment, which is largely private label,
consists of two major businesses: Smart Shirts, which principally
manufactures and sells private label woven shirts as well as the licensed
brand, Nautica(R) dress shirts; and the Menswear business unit which
manufactures and sells private label pants and jeans, and Slates(R)
sportswear (a brand licensed from Levi).
Smart Shirts sales in the second quarter were 17% ahead of last year.
Principal drivers of growth came from providing additional value-added
logistical services to key customers along with volume from new customers
serviced by a recent acquisition, J.G. Garments, in the Philippines. Unit
sales to the rest of Smart Shirts' customers were essentially flat with last
year in a down market.
Sales for the Menswear Division in the second quarter were up 8% from last
year. In the private label area, year-to-year growth came from a variety of
new products and programs. Our Slates(R) brand product has been successfully
repositioned to incorporate more fine gauge knits and to be more mainstream.
13
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS - $ in MILLIONS (continued)
-----------------------------------------------------
OTHER SOFT GOODS sales in the second quarter were $99, up $4, or 5% from the
prior year. Gerber Apparel added $13 of sales to the second quarter.
Excluding this volume, sales from the two ongoing divisions of Other Soft
Goods, Intimate Apparel and Recreation Products were down $9 or 9% from last
year. Sales for the six months were $220, down $20, or 9% from the prior
year. The drop in sales for the six months was broad based and across nearly
every major product category. Sales in the first six months of last year
were bolstered by a number of new intimate apparel programs with several
specialty stores. Due to weak consumer demand, the specialty stores have
canceled the new programs, and it's unlikely that we'll see an opportunity
for growth this year in those programs. Recreation products sales in the
first half of last year were bolstered by the launching of two new brands of
camping products. Sales in the current year were impacted by softness in the
camping furniture business and the loss of several private label sleeping
bag programs. Segment earnings for the second quarter were down $0.4 to 3.0%
of sales compared to 3.6% of sales in the prior year, largely due to the
decline in sales.
FINANCIAL CONDITION
- -------------------
Cash flow from operations is ordinarily the Company's primary source of
liquidity. Kellwood uses financial leverage to minimize the overall cost of
capital and maintain adequate operating and financial flexibility.
Management monitors leverage through its debt-to-capital ratio. Working
capital management is monitored primarily by analysis of the Company's
investment in accounts receivable and inventories and by the amount of
accounts payable.
LEVERAGE
- --------
Total debt represents 37.5% of capital at July 31, 2002 as compared to 49.8%
at July 31, 2001. Two major items contributed to this improvement. Total
debt decreased to $322 at the end of July, $125 lower than last year,
largely due to improved working capital management. The second factor was
the use of stock in the Gerber acquisition, which strengthened the Company's
equity position by $68.
WORKING CAPITAL
- ---------------
The CURRENT RATIO remained 3.0 at July 31, 2002, the same as July 31, 2001.
CASH AND TIME DEPOSITS were $143 at July 31, 2002 compared to $21 last year.
ACCOUNTS RECEIVABLE were $290, or 54 days sales outstanding, as of July 31,
2002, compared to 57 days at July 31, 2001. Excluding the acquisition of
Gerber, receivables were $78 or 23% lower than last year on 8% lower sales
for the quarter.
INVENTORIES were down $76, or 16%, to $404 as of July 31, 2002. Excluding
the acquisition of Gerber, inventories were down $123 or 26% lower than last
year.
ACCOUNTS PAYABLE AND ACCRUALS increased by $88 to $274 at the end of the
second quarter in spite of the decline in sales and the associated lower
purchases of inventory. The Company has been successful in moving
contractors from letters of credit to open account.
FINANCING AND INVESTING ACTIVITIES
- ----------------------------------
Capital expenditures were $6.1 for the six months compared to $8.5 in the
comparable period last year.
In April 2002 the Company entered into a transaction with Designs, Inc.
(NASDAQ: DESI). Pursuant to this transaction the Company acquired an $11, 5%
Subordinated Note and signed a seven-year Sourcing Agreement under which
Kellwood will produce men's sportswear, activewear and furnishings for the
nationwide chain of Casual Male stores.
DEBT:
On April 30, 2002 the Company executed a $240 three-year committed,
unsecured bank credit facility with Bank of America as lead arranger and
other participating banks (the "2002 Facility"). The 2002 Facility can be
used for borrowings and/or letters of credit. Borrowings under the 2002
Facility bear interest at a spread of approximately 1.75% over LIBOR. At
July 31, 2002, outstanding short-term loans and letters of credit under the
agreement were $0 and $85, respectively. In conjunction with the execution
of the 2002 Facility, the Company cancelled the prior existing $350 bank
14
credit facility. This credit facility had been scheduled to terminate on
August 31, 2002.
The Company maintains informal, uncommitted lines of credit with several
banks, which totaled $35 at July 31, 2002. There were no borrowings under
these uncommitted lines at July 31, 2002.
ACQUISITIONS:
In addition to the Gerber transaction described above, the Company
continually evaluates possible acquisition candidates as a part of its
ongoing corporate development process. Various potential acquisition
candidates are in different stages of this process.
Management believes that the combined operating, cash and equity position
and credit facilities of the Company will continue to provide the capital
flexibility necessary to fund future opportunities and to meet existing
obligations.
OUTLOOK AS OF SEPTEMBER 10, 2002
- --------------------------------
MANAGEMENT'S OUTLOOK FOR KELLWOOD'S THIRD QUARTER, excluding the impact of
Gerber, remains essentially unchanged from our original plan. Sales in the
third quarter are expected to be approximately $630 with all of the growth
coming from the acquisition of Gerber. Sales of Men's Sportswear are
expected to be in the range of $135 to $140, up approximately 24%, with the
majority of the growth coming from Auburn Hosiery, a division of Gerber. We
expect Other Soft Goods sales to be in the range of $115 to $120, up 33%
with all of the growth coming from Gerber Apparel. Women's Sportswear sales
are expected to be in the range of $375 to $380, down approximately 6%.
Net earnings and earnings per share for the third quarter, before the
previously discussed facilities realignment charge, are forecasted to be
approximately $21 to $22, or $.80 to $.85 per share, versus $13.9, or $.61
per diluted share last year. The impact of facilities realignment costs on
the third quarter is expected to be approximately $.10 per diluted share.
OUTLOOK FOR THE TOTAL YEAR. For fiscal 2002, which ends January 2003, sales
are expected to be in the range of $2.2 billion. Net earnings and earnings
per share for fiscal 2002 before the provision for facilities realignment
are expected to be in the range of $48 to $50, or $1.95 to $2.00 per share,
versus $37.7, or $1.65 per share reported in fiscal 2001 on a diluted basis.
This includes the impact of reduced amortization of intangible assets
resulting from the implementation of FAS 142, which will increase earnings
per share by approximately $.24. The full-year impact on net earnings and
earnings per share from the previously announced business and facilities
realignment charge remains at $9.7, or $.39 per share.
STOCK OPTION ACCOUNTING
- -----------------------
The Company has decided to expense stock options effective in Fiscal 2003,
which begins February 1, 2003. Expensing of stock options is not expected to
impact earnings significantly, and the expensing will be implemented in
accordance with current Generally Accepted Accounting Principles.
RECENTLY ISSUED ACCOUNTING STANDARDS RELATED TO ACCOUNTING FOR GOODWILL
- -----------------------------------------------------------------------
In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets.
FAS 141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting, and establishes
specific criteria for recording intangible assets separate from goodwill. In
the first quarter of fiscal 2002, the Company's recorded goodwill and
intangibles were evaluated against the new criteria. As a result, certain
previously identified "assembled workforce" intangibles were subsumed into
goodwill.
FAS 142 requires the use of a nonamortization approach to account for
purchased goodwill and indefinite-lived intangibles. Under the
nonamortization approach, goodwill and indefinite-lived intangibles are not
amortized into results of operations, but instead will be reviewed for
impairment and written down and charged to results of operations only in the
period or periods in which their recorded values are determined to be more
than their fair value.
FAS 142 was adopted by the Company as of February 1, 2002. No impairment
resulted from the initial application of this Statement. The adoption of
these statements resulted in reduced annual amortization expense, as
amortization of goodwill is no longer recorded after February 1, 2002.
Additionally, future years' annual impairment reviews may result in periodic
write-downs.
15
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS - $ in MILLIONS (continued)
-----------------------------------------------------
Had FAS 142 been effective for 2001, application of the nonamortization
provisions of the Statement would have increased the company's reported
diluted earnings per share by approximately $.06 and $.12 for the quarter
and six months ended July 31, 2001, respectively.
RECENTLY ISSUED ACCOUNTING STANDARDS RELATED TO ACCOUNTING FOR EXIT OR
- ----------------------------------------------------------------------
DISPOSAL ACTIVITIES.
- -------------------
In June 2002, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. FAS 146 provides direction for accounting and
disclosure regarding specific costs related to an exit or disposal activity.
These include, but are not limited to, costs to terminate a contract that is
not a capital lease, costs to consolidate facilities or relocate employees,
and certain termination benefits provided to employees that are
involuntarily terminated under the terms of a one-time benefit arrangement.
The Company is required to adopt FAS 146 for any disposal activities
initiated after December 31, 2002. The Company is currently reviewing the
impact of the adoption of FAS 146 on its financial statements.
MARKET RISK DISCLOSURES - INTEREST RATE RISK; FAIR VALUE DISCLOSURE
- -------------------------------------------------------------------
At July 31, 2002, the Company's debt portfolio was composed almost entirely
of fixed-rate debt; less than 1% of the outstanding debt was variable-rate.
Kellwood's strategy regarding management of its exposure to interest rate
fluctuations did not change significantly during the quarter. Management
does not expect any significant changes in its exposure to interest rate
fluctuations or in how such exposure is managed during fiscal 2002.
Based on quoted market prices obtained through independent pricing sources
for the same or similar types of borrowing arrangements, the Company
believes the major components of its fixed rate long-term debt have a market
value of approximately $331 at July 31, 2002 which compares to their book
value of $319. With respect to the Company's fixed-rate debt outstanding at
July 31, 2002, a 10% increase in interest rates would have resulted in
approximately a $14 decrease in the market value of Kellwood's fixed-rate
debt; a 10% decrease in interest rates would have resulted in approximately
a $15 increase in the market value of Kellwood's fixed-rate debt. With
respect to the Company's variable-rate debt, a 10% change in interest rates
would have had an immaterial impact on the Company's interest expense for
the quarter.
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
- -----------------------------------------------------------------
This Quarterly Report contains statements which, to the extent they are not
statements of historical or present fact, constitute "forward-looking
statements" within the meaning of the Securities Act of 1933, the Securities
Exchange Act of 1934, and the Private Securities Litigation Reform Act of
1995. These forward-looking statements represent the Company's expectations
or beliefs concerning future events and are based on various assumptions and
subject to a wide variety of risks and uncertainties. Although the Company
believes that its expectations reflected in the forward-looking statements
are reasonable, it cannot and does not give any assurance that such
expectations will prove to be correct.
The Company's forward-looking statements are based on certain assumptions,
and the Company's operations are subject to various risks and uncertainties.
Any one of these factors or any combination of these factors could
materially affect the results of the Company's operations and cause actual
results to differ materially from the Company's expectations. These factors
include but are not limited to:
o changes in the retail environment. With the growing trend towards
retail trade consolidation, the Company is increasingly dependent
upon key retailers whose bargaining strength and share of the
Company's business is growing. Accordingly, the Company faces
greater pressure from these customers to provide more favorable
trade terms. The Company can be negatively affected by changes in
the policies or negotiating positions of its customers. The
inability of the Company to develop satisfactory programs and
systems to satisfy these customers could adversely affect operating
results in any reporting period;
o changes in the relative performance of the Company's business units
that could have an adverse impact on the business units' forecasted
cash flows, resulting in goodwill impairment charges;
o changes in trends in the market segments in which the Company
competes;
o the performance of the Company's products within the prevailing
retail environment;
16
o customer acceptance of both new designs and newly introduced
product lines;
o actions of competitors that may impact the Company's business;
o financial or operational difficulties encountered by customers or
suppliers;
o continued satisfactory relationships with licensees and licensors
of trademarks and brands;
o the impact of economic changes, such as:
o the overall level of consumer spending for apparel,
o national and regional economic conditions,
o inflation or deflation,
o currency exchange fluctuations,
o changes in interest rates and other capital market conditions;
o stable governments and business conditions in the nations where the
Company's products are manufactured;
o the scope, nature or impact of acquisition activity; and
o changes in the Company's plans, strategies, objectives,
expectations and intentions which may happen at any time at the
discretion of the Company.
The reader is also directed to the Company's periodic filings with the
Securities and Exchange Commission for additional factors that may impact
the Company's results of operations and financial condition.
The words "believe", "expect", "will", "estimate", "project", "forecast",
"should", "anticipate" and similar expressions may identify forward-looking
statements. Additionally, all statements other than statements of historical
facts included in this Annual Report including without limitation, the
statements under "Financial Review" and "Outlook", are also forward-looking
statements.
Forward-looking statements are not guarantees, as actual results could
differ materially from those expressed or implied in forward-looking
statements. The Company specifically disclaims any obligation to publicly
update, modify, retract or revise any forward-looking statements, whether as
a result of new information, future events or otherwise. All forward-looking
statements contained herein, the entire contents of the Company's website,
and all subsequent written and oral forward-looking statements attributable
to the Company or persons acting on its behalf, are expressly qualified in
their entirety by this cautionary statement.
17
PART II. OTHER INFORMATION
--------------------------
KELLWOOD COMPANY
----------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------------------------------------------------------------
On May 30, 2002 Kellwood held its Annual Meeting of Shareowners. Reference
is made to Form 10-Q for the quarter ended April 30, 2002, SEC File No.
1-7340.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
a) EXHIBITS:
S.E.C. Exhibit
Reference No. Description
------------- -----------
99.1 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed herewith.
b) REPORTS ON FORM 8-K:
The following reports were filed on Form 8-K during the three
months ended July 31, 2002:
Current Report on Form 8-K dated May 15, 2002, reporting under Item
2 the Company's acquisition of Gerber Childrenswear, Inc.
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.
KELLWOOD COMPANY
September 12, 2002 /s/ Thomas H. Pollihan
----------------------
Thomas H. Pollihan
Senior Vice President, Secretary and
General Counsel
September 12, 2002 /s/ W. Lee Capps, III
---------------------
W. Lee Capps, III
Senior Vice President Finance and
Chief Financial Officer
(Principal Financial Officer)
September 12, 2002 /s/ Lawrence E. Hummel
----------------------
Lawrence E. Hummel
Vice President Controller
(Principal Accounting Officer)
18
CERTIFICATIONS
I, Hal J. Upbin, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period
ended July 31, 2002, of Kellwood Company;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report.
Date: September 12, 2002
/s/ HAL J. UPBIN
--------------------------
Hal J. Upbin
Chief Executive Officer
I, W. Lee Capps, III, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period
ended July 31, 2002, of Kellwood Company;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report.
Date: September 12, 2002
/s/ W. LEE CAPPS, III
--------------------------
W. Lee Capps, III
Chief Financial Officer
19