Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS.
Springs Industries, Inc., a corporation organized under the laws of the State of South Carolina, began its operations in 1888. Springs' principal executive offices are located at 205 North White Street, Fort Mill, South Carolina 29715 (telephone number: 803/547-1500). The Company's operations are conducted by various divisions and legal subsidiaries, each of which operates within either the home furnishings or specialty fabrics industry segment.
The term "Springs" or "the Company" as used herein means Springs Industries, Inc., and its subsidiaries unless clearly indicated otherwise.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information for the home furnishings and specialty fabrics segments is incorporated by reference from the Springs Industries, Inc. 1993 Annual Report to Shareholders ("Annual Report") under the caption "Industry Segment Information," page 12.
(C) NARRATIVE DESCRIPTION OF BUSINESS.
HOME FURNISHINGS SEGMENT -- The home furnishings segment manufactures, purchases for resale, and markets finished products, including sheets, pillowcases,
bedspreads, comforters, soft window coverings, shower curtains, bath rugs and other bath products and juvenile novelties. These products are sold primarily under the trademarks Springmaid(R), Wamsutta(R), Supercale(R), Andre Richard(R), Pacific(R), Custom Designs(TM), Performance(TM), Wabasso(R) and Texmade(R) and under private labels. The segment also manufactures, purchases for resale, and markets decorative window products, including vertical and horizontal blinds, window shades, and window covering hardware. These products are sold primarily under the trademarks Graber(R), Bali(R), Fashion Pleat(R), and CrystalPleat(R) and also under private labels. During 1992 the Company acquired the marketing and distribution operations of C. S. Brooks Canada, Inc. and the Griffiths-Kerr division of Finlayson Enterprises, Ltd., both located in Canada, in a continuing effort to better serve Canadian home furnishings customers and to expand the Company's presence in the Canadian market.
SPECIALTY FABRICS SEGMENT -- The specialty fabrics segment manufactures, purchases for resale, and markets a broad range of finished fabrics for apparel, upholstery, industrial and specialty end uses. Apparel and upholstery fabrics are sold principally to apparel manufacturers, to decorative home furnishings manufacturers and to the home sewing market primarily under the trademarks Springmaid(R), Wamsutta(R), and Ultrasuede(R) and under private labels. Industrial fabrics, which include (i) fiber glass industrial fabrics principally for use in printed electronic circuit boards, advanced composites and reinforced plastics applications, and as a substrate for coating and laminating processes, and (ii) industrial fabrics for use in the printing and electrical industries, are sold under the Clark-Schwebel(TM) trademark. Other specialty fabrics, which include (i) fabrics for use in antiballistic vests and helmets, sporting goods and various other end uses, and (ii) protective and fire retardant fabrics for use in industrial and military apparel and for mattress coverings, draperies and upholstery, are sold under the trademarks Firegard(R), Synergy(R), and Ultima(TM). On March 25, 1993, Springs' subsidiary, Clark-Schwebel, Inc., contributed its European fiber glass subsidiaries and $8.8 million in cash to CS-Interglas A.G., of Ulm, Germany, in consideration of a minority interest in CS-Interglas A.G. and a convertible debenture.
RESTRUCTURING -- In 1990, the Company announced a restructuring plan for certain parts of its operations to consolidate manufacturing operations, convert certain finished fabric facilities to home furnishings production, and offer early retirement to qualifying employees. For further details of this restructuring plan, see Note 3 to the Consolidated Financial Statements, which can be found on Page 19 of the Annual Report.
RAW MATERIALS -- Raw materials used by the Company include cotton, polyester, and other natural and manmade fibers, fiber glass and aramid yarns, fabrics formed from natural and manmade yarns, and dyes and chemicals. Such raw materials are readily available; and, with the exception of certain aramid fibers and yarns (which are used by the specialty fabrics segment in some of its products), the Company is not dependent on any one supplier as a source for raw materials. Any shortage in the
cotton supply by reason of weather, disease or other factors, or significant increases in the price of cotton or polyester, however, could adversely affect the Company's operations.
TRADEMARKS -- The Company considers its trademarks to be of material importance to its business. Protection for these marks is obtained, in part, through United States and foreign trademark registrations. The home furnishings segment uses certain licensed designs and trademarks which may be considered to be of material importance to this segment. These include a license agreement with Bill Blass, Ltd. and multiple license agreements with The Walt Disney Company.
WORKING CAPITAL -- The Company's working capital requirements are funded by its operating cash flow, commercial paper borrowings and short-term bank borrowings. Trade receivables are, in the main, collectible in 60 days or less.
CUSTOMERS -- In 1993, sales to Wal-Mart Stores, Inc. equaled 11% of Springs' total sales; no other single customer accounted for ten percent or more of Springs' total sales.
BACKLOG ORDERS -- The unfilled order position at January 1, 1994, amounted to approximately $209 million. The unfilled order position at January 2, 1993, was approximately $232 million. The Company's unfilled order position has decreased in the past two years due primarily to (i) a planned shift in sales to home furnishings from apparel fabrics (where home furnishings have historically had shorter lead times for orders than apparel fabrics), and (ii) an emphasis by the Company, as well as its competitors, to shorten the time period necessary to fill orders for goods.
COMPETITIVE CONDITIONS -- The markets in which the principal products of the Company are sold are highly competitive as to price, quality, customer service and product design.
ENVIRONMENTAL EXPENDITURES -- The Company spent approximately $5.2 million on environmental and related safety and health projects in 1993 and expects to spend approximately $5.1 million in 1994.
ASSOCIATES -- Approximately 20,500 associates were employed by Springs and its subsidiaries at the end of 1993.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES.
International sales of home furnishings and specialty fabric products are made through Springs' divisions and its subsidiaries. International sales accounted for approximately 7.3 percent of total sales in 1993.
ITEM 2.



ITEM 2. PROPERTIES
The Company owns its Executive Office Building and its Research and Development Center in Fort Mill, South Carolina, and the twenty-one story Springs Building at 104 West 40th Street, New York, New York. The Springs Building contains sales headquarters for two of the Company's divisions and other staff support offices. A majority of the Springs Building is leased to other businesses.
The Springmaid Home Fashions Division, Performance Division and Wamsutta Home Products Division lease offices in New York, New York at 787 7th Avenue and 1285 Avenue of the Americas. Other divisions lease additional space in other locations for administration and sales offices and distribution centers.
The Company also owns a customer service center located near Lancaster, South Carolina. This facility houses customer service operations, computer and data processing operations and accounting offices.
Springs has sixteen plants used in the manufacture of grey goods, six dyeing, printing and finishing plants, nine fabricating plants, four plants used in the manufacture of decorative window products and four fiber glass fabric manufacturing plants. Of these plants, twenty-four are in South Carolina, four in North Carolina, three in Georgia, two each in Alabama and California, and one each in Pennsylvania, Tennessee, Wisconsin and Nevada.
The home furnishings segment uses twenty-five of these plants and the specialty fabrics segment uses eight. In addition, the home furnishings and specialty fabrics segments share six plants. Five of these plants are leased either through industrial revenue bond financing or through other leases. In addition, the Pennsylvania plant is subject to a mortgage. All other plants are owned by Spring and are unencumbered.
All plants are well maintained and in good operating condition.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
Information required by this Item is contained in Notes to Consolidated Financial Statements, Note 10. - Other Matters, found on page 23 of the Annual Report and incorporated herein by reference.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None reportable.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Class A Common Stock of Springs is traded on the New York Stock Exchange. As of March 23, 1994, there were approximately 3,133 holders of record of Class A Common Stock, and approximately 85 holders of Class B Common Stock. No established trading market exists for Class B Common Stock. However, Class B Common Stock may, at the election of the holder, be exchanged at any time for Class A Common Stock. Information required by this Item on the sales prices and dividends of the Common Stock of Springs is incorporated by reference from page 25 of the Annual Report under the caption "Quarterly Financial Data (Unaudited), Dividends and Price Range of Common Stock."
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Information required by this Item is incorporated by reference from pages 26 and 27 of the Annual Report under the caption "Selected Financial Data."
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Management's discussion and analysis of financial condition and results of operations required by this Item is incorporated by reference from pages 13 and 14 of
the Annual Report under the caption "Management's Discussion and Analysis of Operations and Financial Condition." In addition, in view of events that have occurred following the issuance of the Annual Report, the Company announced on March 22, 1994, a plan to reduce annual operating costs by at least $15 million, coupled with a general price increase for its bedding products effective at midyear. The cost reduction plan includes acceleration of expense-cutting programs already in progress; deferral of certain capital projects with associated expense; reduction of salaried jobs through consolidations, anticipated attrition and a hold on new hiring; and efficiencies in administrative areas as a result of systems improvements. The cost-cutting plan was stepped up in response to the Company's lower than expected earnings during the first two months of 1994. Home furnishings, the larger of Springs' two business segments, experienced pressure on its sales and margins. As a result, the Company presently expects to report first quarter earnings in the range of $.30 - $.35 per share compared with last year's $.51 per share (exclusive of a one-time accounting charge of $4.07 due to the Company's adoption of Statements of Financial Accounting Standards No. 106 and No. 109). The general price increase for the Company's bedding products was partly in response to the expected future impact of markedly higher cotton prices.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements, including the report of independent certified public accountants, and supplementary data required by this Item are incorporated by reference from the Annual Report. See Item 14 for a list of financial statements and the pages of the Annual Report from which they are incorporated. Supplementary data is incorporated by reference from page 25 of the Annual Report under the caption "Quarterly Financial Data (Unaudited), Dividends and Price Range of Common Stock."
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information about directors required by this Item is incorporated by reference from the Company's Proxy Statement to Security Holders dated March 2, 1994, (the "Proxy Statement") under the captions "Directors, Nominees, and Election of Directors and Beneficial Ownership of Common Stock" and "Information Regarding the Board of Directors" on pages 2 through 6 of the Proxy Statement. The information on Executive Officers is listed below.
Position and Business Name Age Experience - ---- --- --------------------- Crandall C. Bowles 46 Executive Vice President - Springs and President -Textile Manufacturing Group (March 1993 to present). Executive Vice President - Growth and Development (April 1992 to February 1993). Director (1978 to present). President - The Springs Company (1982 to April 1992).
C. Powers Dorsett 49 Vice President - General Counsel and Secretary (February 1990 to present). Assistant General Counsel, Flowers Industries, Inc. (August 1989 to January 1990). Vice President, General Counsel and Secretary, West Point-Pepperell, Inc. (1988-89).
Walter Y. Elisha 61 Chairman of the Board (October 1983 to present) and Chief Executive Officer (1981 to present). President (December 1989 to present). Director (February 1980 to present).
Richard D. Foster 54 Vice President - Human Resources (May 1990 to present); Manager - Human Resources, Major Appliance Business Group, General Electric Co. (June 1987 to May 1990).
Stephen P. Kelbley 51 Executive Vice President - Springs (September 1991 to present). President - Specialty Fabrics Group (March 1994 to present). Chief Financial Officer (September 1991 to March 1994). Senior Vice President - Finance and Chief Financial Officer, Bausch & Lomb Incorporated (August 1984 to August 1991).
James C. McKelvey 49 Vice President - Controller (November 1993 to present). Vice President - Controller, Springmaid/Performance Home Fashions Division (1987 to November 1993).
Robert W. Moser 55 Executive Vice President - Springs (July 1989 to present). President - Specialty Fabrics Group (March 1993 to March 1994). President - Finished Fabrics Group (July 1989 to March 1993 ). President - Windows Group (September 1991 to March 1993). Vice President - Finished Fabrics Group (August 1987 to June 1989).
Thomas P. O'Connor 48 Executive Vice President - Springs (August 1992 to present). President - Home Fashions Group (February 1993 to present). Senior Vice President - Springs (September 1991 to August 1992). President - Bed and Bath Group (September 1991 to February 1993). President - Springmaid Home Fashions Division (1988 to August 1991).
Robert L. Thompson 57 Vice President - Public Affairs (September 1986 to present).
J. Spratt White 52 Senior Vice President - Growth and Development (March 1993 to present). Senior Vice President - Springs and President - Diversified Products Group (February 1990 to March 1993). Senior Vice President - Human Resources (June 1989 to May 1990.) Senior Vice President, General counsel and Corporate Secretary (June 1985 to February 1990).
James F. Zahrn 43 Vice President - Finance and Treasurer (March 1994 to present). Vice President and Treasurer (May 1993 to March 1994). Treasurer (August 1986 to May 1993).
- ------------------------------------------ Crandall Close Bowles, an Executive Vice President and director of the Company, and Leroy S. Close, a director of the Company, are sister and brother. There are no other family relationships within the director and Executive Officer group.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is incorporated by reference from the Proxy Statement under the captions "Executive Officer Compensation and Related Information," "Management Compensation and Organization Committee Report," "Employment Agreements" and "Performance Graph" on pages 7 through 15 of the Proxy Statement.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is incorporated by reference from the Proxy Statement under the captions "Directors, Nominees and Election of Directors and Beneficial Ownership of Common Stock" and "Information Regarding the Board of Directors" on pages 2 through 6 of the Proxy Statement.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is incorporated by reference from the Proxy Statement under the caption "Compensation Committee Interlocks and Insider Participation" and "Transactions With Certain Persons" on pages 17 and 18 of the Proxy Statement.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following financial statements and independent auditors' report are incorporated by reference from the Annual Report as a part of this Report:
(i) Consolidated Balance Sheet (Annual Report page 16).
(ii) Consolidated Statement of Operations and Retained Earnings (Annual Report page 15).
(iii) Consolidated Statement of Cash Flows (Annual Report page 17).
(iv) Notes to Consolidated Financial Statements (Annual Report pages 18 through 23).
(v) Independent Auditors' Report (Annual Report page 24).
2. The following financial statement schedules* and independent auditors' report are filed as part of this Report:
(i) Schedule V - Property, Plant and Equipment for the Fiscal Years Ended January 1, 1994, January 2, 1993, and December 28, 1991. (1 page).
(ii) Schedule VI - Accumulated Depreciation of Property, Plant and Equipment for the Fiscal Years Ended January 1, 1994, January 2, 1993, and December 28, 1991. (1 page).
(iii) Schedule IX - Short-Term Borrowings for the Fiscal Years Ended January 1, 1994, January 2, 1993, and December 28, 1991. (1 page).
(iv) Schedule X - Supplementary Income Information for the Fiscal Years Ended January 1, 1994, January 2, 1993, and December 28, 1991. (1 page).
(v) Independent Auditors' Report. (1 page).
*Schedules other than those included are omitted because, under applicable rules, the omitted schedules are not required, are inapplicable or the information required is included in the Financial Statements or in the Notes thereto.
3. Exhibits required to be listed by Item 601 of Regulation S-K are listed (and, where applicable, attached) in the Exhibit Index attached hereto, which is incorporated herein by this reference.
(b) Reports on Form 8-K: No 8-K's were filed during the last quarter of the period covered by this report.
(SIGNATURES ON NEXT PAGE) - -------------------------
SIGNATURES - ----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Springs Industries, Inc. has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SPRINGS INDUSTRIES, INC.
By: James F. Zahrn ---------------------------- James F. Zahrn, Vice President-Finance and Treasurer
Date: March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: John F. Akers By: Crandall C. Bowles --------------------------- ---------------------------- John F. Akers, Director Crandall C. Bowles, Director Date: March 30, 1994 Date: March 30,1994
By: John L. Clendenin By: Leroy S. Close --------------------------- ---------------------------- John L. Clendenin, Director Leroy S. Close, Director Date: March 30, 1994 Date: March 30,1994
By: Charles W. Coker By: Walter Y. Elisha --------------------------- ---------------------------- Charles W. Coker, Director Walter Y. Elisha, Chairman, Date: March 30, 1994 Chief Executive Officer, President, and Director (Principal Executive Officer) Date: March 30,1994
By: Dan M. Krausse By: John H. McArthur --------------------------- ---------------------------- Dan M. Krausse, Director John H. McArthur, Director Date: March 30, 1994 Date: March 30, 1994
By: Aldo Papone By: Donald S. Perkins --------------------------- ---------------------------- Aldo Papone, Director Donald S. Perkins, Director Date: March 30, 1994 Date: March 30,1994
By: Robin B. Smith By: Sherwood H. Smith --------------------------- ---------------------------- Robin B. Smith, Director Sherwood H. Smith, Director Date: March 30, 1994 Date: March 30, 1994
By: Stewart Turley --------------------------- Stewart Turley, Director Date: March 30, 1994
By: James F. Zahrn By: James C. McKelvey --------------------------- ---------------------------- James F. Zahrn James C. McKelvey, Vice President-Finance Vice President and Controller and Treasurer (Principal Accounting Officer) (Principal Financial Officer) Date: March 30, 1994 Date: March 30,1994
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC ---------------------------------------
FINANCIAL STATEMENT SCHEDULES
* * * * * * * * * * * * * * * * * * * *
INDEPENDENT AUDITORS' REPORT - ----------------------------
To the Board of Directors of Springs Industries, Inc.
We have audited the consolidated financial statements of Springs Industries, Inc. as of January 1, 1994 and January 2, 1993, and for each of the three fiscal years in the period ended January 1, 1994, and have issued our report thereon dated January 31, 1994. Such consolidated financial statements and report are included in your 1993 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedules of Springs Industries, Inc., listed in Item 14. These consolidated financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE DELOITTE & TOUCHE Charlotte, North Carolina
January 31, 1994
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