United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Period Ended September 30, 2001 Commission File Number 1-878
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BLAIR CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 25-0691670
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 HICKORY STREET, WARREN, PENNSYLVANIA 16366-0001
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(Address of principal executive offices) (Zip Code)
(814) 723-3600
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year, if changed since
last report)
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 periods 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
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As of November 12, 2001 the registrant had outstanding 7,969,544 shares of its
common stock without nominal or par value.
-2-
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS (UNAUDITED)
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
-3-
CONSOLIDATED BALANCE SHEETS
BLAIR CORPORATION AND SUBSIDIARIES
September 30 December 31
2001 2000
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ASSETS
Current assets:
Cash $ 9,568,945 $ 7,497,907
Customer accounts receivable,
less allowances for doubtful
accounts and returns of $47,136,481
in 2001 and $46,764,673 in 2000 151,547,275 172,393,572
Inventories - Note F
Merchandise 91,738,895 94,912,349
Advertising and shipping supplies 22,551,232 14,660,290
------------ ------------
114,290,127 109,572,639
Deferred income taxes - Note E 10,524,000 11,728,000
Prepaid and refundable federal
and state taxes 402,136 -0-
Prepaid expenses 1,476,416 958,849
------------ ------------
Total current assets 287,808,899 302,150,967
Property, plant and equipment:
Land 1,142,144 1,142,144
Buildings 64,421,580 64,235,385
Equipment 59,621,463 54,664,689
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125,185,187 120,042,218
Less allowances for depreciation 71,706,182 66,391,927
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53,479,005 53,650,291
Trademarks 647,229 704,894
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TOTAL ASSETS $341,935,133 $356,506,152
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - Note H $ 35,000,000 $ 25,000,000
Trade accounts payable 55,901,339 76,038,528
Advance payments from customers 3,804,201 2,077,053
Accrued expenses - Note D 10,681,163 14,289,318
Accrued federal and state taxes -0- 929,101
------------ ------------
Total current liabilities 105,386,703 118,334,000
Deferred income taxes 981,000 1,146,000
Stockholders' equity:
Common Stock without par value:
Authorized 12,000,000 shares;
issued 10,075,440 shares
(including shares held in
treasury) - stated value 419,810 419,810
Additional paid-in capital 14,590,839 14,612,333
Retained earnings 265,791,156 267,444,414
------------ ------------
280,801,805 282,476,557
Less 2,105,896 shares in 2001 and
2,106,596 shares in 2000 of
common stock in treasury - at cost 43,194,426 43,218,782
Less receivable from stock plans 2,039,949 2,231,623
------------ ------------
235,567,430 237,026,152
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $341,935,133 $356,506,152
============ ============
See accompanying notes.
-4-
CONSOLIDATED STATEMENTS OF INCOME
BLAIR CORPORATION AND SUBSIDIARIES
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales $123,019,132 $115,183,322 $420,167,346 $402,310,426
Other income - Note G 10,438,565 11,077,735 32,864,250 33,461,735
Interest from tax settlement -0- -0- 4,061,253 -0-
------------ ------------ ------------ ------------
133,457,697 126,261,057 457,092,849 435,772,161
Costs and expenses:
Cost of goods sold 66,517,608 57,529,507 209,767,233 198,937,016
Advertising 35,924,555 30,660,837 123,437,157 96,847,026
General and administrative 29,599,505 30,974,991 94,929,622 91,177,258
Provision for doubtful accounts 6,264,191 8,132,343 24,025,598 24,453,411
Interest 453,151 385,856 1,917,232 1,265,401
------------ ------------ ------------ ------------
138,759,010 127,683,534 454,076,842 412,680,112
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (5,301,313) (1,422,477) 3,016,007 23,092,049
Income tax expense (benefit) - Note E (1,987,000) (649,000) 1,083,000 8,641,000
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (3,314,313) $ (773,477) $ 1,933,007 $ 14,451,049
============ ============ ============ ============
Basic and diluted earnings (loss) per share
based on weighted average shares outstanding
- Note C $(.42) $(.09) $ .24 $1.80
===== ===== ===== =====
See accompanying notes.
-5-
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
BLAIR CORPORATION AND SUBSIDIARIES
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
------------ ------------ ------------ ------------
Common Stock $ 419,810 $ 419,810 $ 419,810 $ 419,810
Additional paid-in capital:
Balance at beginning of period 14,599,554 14,552,382 14,612,333 14,625,722
Issuance (net of forfeitures) of
Common Stock under stock plans (8,715) 55,002 (15,623) (18,779)
Issuance of Common Stock to
non-employee directors -0- -0- (5,871) 441
------------ ----------- ------------ ------------
Balance at end of period 14,590,839 14,607,384 14,590,839 14,607,384
Retained earnings:
Balance at beginning of period 270,300,901 263,968,830 267,444,414 251,163,905
Net income (loss) (3,314,313) (773,477) 1,933,007 14,451,049
Cash dividends declared - Note B (1,195,432) (1,203,648) (3,586,265) (3,623,249)
------------ ------------ ------------ ------------
Balance at end of period 265,791,156 261,991,705 265,791,156 261,991,705
Treasury Stock:
Balance at beginning of period (43,189,579) (43,332,138) (43,218,782) (39,829,081)
Purchase of treasury stock -0- -0- -0- (3,501,222)
Issuance (net of forfeitures) of
Common Stock under stock plans (4,847) 1,281,675 (7,390) 1,257,406
Issuance of Common Stock to
non-employee directors -0- -0- 31,746 22,434
------------ ------------ ------------ ------------
Balance at end of period (43,194,426) (42,050,463) (43,194,426) (42,050,463)
Receivable from stock plans:
Balance at beginning of period (2,117,320) (2,271,556) (2,231,623) (2,402,931)
Issuance (net of forfeitures) of
Common Stock under stock plans 4,375 (433,418) 7,525 (411,048)
Repayments 72,996 64,448 184,149 173,453
------------ ------------ ------------ ------------
Balance at end of period (2,039,949) (2,640,526) (2,039,949) (2,640,526)
------------ ------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY $235,567,430 $232,327,910 $235,567,430 $232,327,910
============ ============ ============ ============
See accompanying notes.
-6-
CONSOLIDATED STATEMENTS OF CASH FLOWS
BLAIR CORPORATION AND SUBSIDIARIES
Nine Months Ended
September 30
2001 2000
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OPERATING ACTIVITIES
Net income $ 1,933,007 $ 14,451,049
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 5,899,978 4,453,557
Provision for doubtful accounts 24,025,598 24,453,411
Provision for (benefit from)
deferred income taxes 1,039,000 (1,692,000)
Compensation expense from stock
awards (net of forfeitures) 10,387 850,454
Changes in operating assets and
liabilities providing (using) cash:
Customer accounts receivable (3,179,301) (19,388,220)
Inventories (4,717,488) (23,355,867)
Federal and state taxes (1,331,237) 4,757,311
Prepaid expenses (517,567) 194,026
Trade accounts payable (20,137,189) 4,971,000
Advance payments from customers 1,727,148 1,483,721
Accrued expenses (3,608,155) 2,195,150
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NET CASH PROVIDED BY OPERATING ACTIVITIES 1,144,181 13,373,592
INVESTING ACTIVITIES
Purchases of property, plant and equipment (5,671,027) (9,692,392)
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NET CASH USED IN INVESTING ACTIVITIES (5,671,027) (9,692,392)
FINANCING ACTIVITIES
Net proceeds from bank borrowings 10,000,000 5,500,000
Dividends paid (3,586,265) (3,623,249)
Purchase of Common Stock for treasury -0-
(3,501,222)
Collections on receivable from stock plans 184,149 173,453
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 6,597,884 (1,451,018)
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NET INCREASE IN CASH 2,071,038 2,230,182
Cash at beginning of year 7,497,907 1,625,236
------------ ------------
CASH AT END OF PERIOD $ 9,568,945 $ 3,855,418
============ ============
See accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -7-
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Blair
Corporation and its wholly-owned subsidiaries have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. For further information refer to the financial statements and
footnotes included in the Company's annual report on Form 10-K for the year
ended December 31, 2000.
The consolidated financial statements include the accounts of Blair Corporation
and its wholly-owned subsidiaries. All significant intercompany accounts are
eliminated upon consolidation.
NOTE B - DIVIDENDS DECLARED
2-08-00 $.15 per share 2-09-01 $.15 per share
4-18-00 .15 4-17-01 .15
7-18-00 .15 8-20-01 .15
10-17-00 .15
NOTE C - EARNINGS (LOSS) PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING
Earnings (loss) per share are computed in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share." Basic earnings (loss) per
share are computed using the weighted average number of shares of common stock
outstanding during the period. For diluted earnings (loss) per share, the
weighted average number of shares includes common stock equivalents related to
stock options.
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings (loss) per share computations required by Statement
No. 128:
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
----------- ----------- ----------- -----------
Numerator:
Net income (loss) $(3,314,313) $ (773,477) $ 1,933,007 $14,451,049
Numerator for basic
earnings (loss)
per share (3,314,313) (773,477) 1,933,007 14,451,049
Numerator for
diluted earnings
(loss) per share (3,314,313) (773,477) 1,933,007 14,451,049
Denominator:
Denominator for
basic earnings
(loss) per share:
- Weighted average
shares 7,969,794 8,007,704 7,969,494 8,047,726
Effect of diluted
securities:
- Stock options -0- -0- 78 -0-
----------- ----------- ----------- -----------
Denominator for diluted
earnings (loss)
per share:
- Adjusted weighted
average shares 7,969,794 8,007,704 7,969,572 8,047,726
Basic earnings (loss)
per share $(.42) $(.09) $.24 $1.80
Diluted earnings (loss)
per share $(.42) $(.09) $.24 $1.80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued -8-
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
NOTE D - ACCRUED EXPENSES Accrued expenses consist of:
September 30 December 31
2001 2000
----------- -----------
Employee compensation $ 6,277,241 $ 9,476,660
Contribution to profit sharing
and retirement plan 258,720 2,288,916
Taxes, other than taxes on income 823,809 745,312
Voluntary separation program 1,497,782 -0-
Other accrued items 1,823,611 1,778,430
----------- -----------
$10,681,163 $14,289,318
=========== ===========
NOTE E - INCOME TAXES
The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
The components of income tax expense (benefit) are as follows:
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
----------- ----------- ----------- -----------
Currently payable:
Federal $(3,921,000) $(2,281,000) $ 124,000 $ 9,536,000
State (255,000) (523,000) (80,000) 797,000
----------- ----------- ----------- -----------
(4,176,000) (2,804,000) 44,000 10,333,000
Deferred 2,189,000 2,155,000 1,039,000 (1,692,000)
---------- ----------- ----------- -----------
$(1,987,000) $ (649,000) $ 1,083,000 $ 8,641,000
=========== =========== =========== ===========
The differences between total tax expense (benefit) and the amount computed by
applying the statutory federal income tax rate of 35% to income (loss) before
income taxes are as follows:
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
----------- ----------- ----------- -----------
Statutory rate
applied to
pre-tax income (loss) $(1,855,460) $ (497,867) $ 1,055,602 $ 8,082,217
State income taxes, net
of federal tax benefit 16,900 (159,900) 35,100 532,350
Other items (148,440) 8,767 (7,702) 26,433
----------- ----------- ----------- -----------
$(1,987,000) $ (649,000) $ 1,083,000 $ 8,641,000
=========== =========== =========== ===========
Components of deferred income tax expense (benefit) are as follows:
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
----------- ----------- ----------- -----------
Advertising costs $ 3,459,000 $ 3,664,000 $ 3,519,000 $ 2,776,000
Provision for doubtful
accounts (1,129,000) (956,000) (1,274,000) (2,697,000)
Provision for estimated
returns (112,000) (89,000) (1,003,000) (954,000)
Severance 73,000 -0- (572,000) -0-
Inventory obsolescence 14,000 (501,000) 714,000 (898,000)
Other items - net (116,000) 37,000 (345,000) 81,000
----------- ----------- ----------- -----------
$ 2,189,000 $ 2,155,000 $ 1,039,000 $(1,692,000)
=========== =========== =========== ===========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued -9-
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
NOTE E - INCOME TAXES - Continued
Components of the deferred tax asset and liability under the liability method as
of September 30, 2001 and December 31, 2000 are as follows:
September 30 December 31
2001 2000
----------- -----------
Current net deferred tax asset:
Doubtful accounts $14,725,000 $13,048,000
Returns allowances 2,501,000 1,498,000
Inventory obsolescence 1,672,000 2,386,000
Inventory costs (2,085,000) (2,085,000)
Vacation pay 1,494,000 1,408,000
Advertising costs (8,530,000) (5,011,000)
Severance costs 572,000 -0-
Other items 175,000 484,000
----------- -----------
$10,524,000 $11,728,000
=========== ===========
Long-term deferred tax liability:
Property, plant and equipment $ 981,000 $ 1,146,000
=========== ===========
NOTE F - INVENTORIES
Inventories are valued at the lower of cost or market. Cost of merchandise
inventories is determined principally on the last-in, first-out (LIFO) method.
Cost of advertising and shipping supplies is determined on the first-in,
first-out (FIFO) method. Advertising and shipping supplies include printed
advertising material and related mailing supplies for promotional mailings which
are generally scheduled to occur within two months. These costs are expensed
when mailed. If the FIFO method had been used for all inventories, the total
amount would have increased by approximately $6,717,000 at both September 30,
2001 and December 31, 2000.
NOTE G - OTHER INCOME Other income consists of:
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
----------- ----------- ----------- -----------
Finance charges on time
payment accounts $ 9,325,888 $ 9,109,142 $28,650,546 $27,662,428
Commissions earned 705,235 919,566 2,615,083 2,664,966
Other items 407,442 1,049,027 1,598,621 3,134,341
----------- ----------- ----------- -----------
$10,438,565 $11,077,735 $32,864,250 $33,461,735
=========== =========== =========== ===========
Finance charges on time payment accounts are recognized on an accrual basis of
accounting.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued -10-
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
NOTE H - FINANCING ARRANGEMENTS
On November 13, 1998, the Company entered into an amended and restated
$95,000,000 Revolving Credit Facility, which expires on November 13, 2001. The
Facility has been reduced to $55,000,000 and extended to December 31, 2001. The
Company intends to replace the extended Facility by December 31, 2001. The
interest rate is, at the Company's option, based on a base rate option, swing
loan rate option or Euro-rate option as defined in the agreement. The Revolving
Credit Facility is unsecured and requires the Company to meet certain covenants
as outlined in the agreement. These covenants specifically relate to tangible
net worth, maintaining a defined leverage ratio, interest coverage ratio and
fixed charge coverage ratio and complying with certain indebtedness
restrictions. As of September 30, 2001 and December 31, 2000, the Company was in
compliance with all the agreement's covenants. At September 30, 2001, the
Company had borrowed $35,000,000 all of which was classified as short term and
at December 31, 2000, $25,000,000 all of which was classified as short term. As
of November 12, 2001, the Company's borrowings outstanding totaled $18,275,000.
NOTE I - NEW ACCOUNTING PRONOUNCEMENTS
Accounting for Derivative Instruments and Hedging Activities The Financial
Accounting Standards Board issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Company adopted the new statement
effective January 1, 2001. The Company has historically not invested in
derivative instruments, and as a result, the adoption of this statement has had
no impact on the financial statements of the Company.
Revenue Recognition in Financial Statements
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." This SAB formalizes the SEC's position on application of
revenue recognition rules. SAB No. 101 was adopted by the Company in the
fourth quarter of 2000 and did not have a substantial effect on the Company.
Business Combinations and Goodwill and Other Intangible Assets In June 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 will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statement. Other intangible assets will
continue to be amortized over their useful lives. The Company will apply the new
rules on accounting for goodwill and other intangible assets beginning in the
first quarter of 2002. It is anticipated that the adoption of this statement
will not have a significant impact on the Company.
NOTE J - VOLUNTARY SEPARATION PROGRAM
In the first quarter of 2001, the Company accrued and charged to expense $2.5
million in separation costs. The costs were charged to General and
Administrative Expense in the income statement. The one-time $2.5 million charge
represents severance pay, related payroll taxes and medical benefits due the 56
eligible employees who accepted the voluntary separation program rather than
relocate or accept other positions in the Company. The program was offered to
eligible employees of the Blair Mailing Center from which the merchandise
returns operations have been relocated and the mailing operations have been
outsourced. As of September 30, 2001, $1,002,218 of the $2.5 million has been
paid.
NOTE K - EMPLOYEE STOCK PURCHASE PLAN
The Company had an Employee Stock Purchase Plan wherein shares of treasury stock
could be issued to certain employees at a price established at the discretion of
the Employee Stock Purchase Plan Committee. In 2001, no stock has been issued
under the Plan and the Plan has been terminated. On July 19, 2000, 31,852 shares
were issued under the Plan.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued -11-
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
NOTE L - OMNIBUS STOCK PLAN
The Company has an Omnibus Stock Plan that gives the Company the ability to
offer a variety of equity based awards to persons who are key to the Company's
growth, development and financial success. Awards are valued in accordance with
the terms and conditions of the Omnibus Stock Plan as determined by the Omnibus
Stock Plan Committee. Non-qualified stock options totaling 90,519 options were
awarded to the executive officers on April 16, 2001. Restricted stock awards
totaling 35,400 shares of treasury stock were issued to certain employees on
July 19, 2000.
NOTE M - CONTINGENCIES
The Company is involved in certain items of litigation, arising in the normal
course of business. While it cannot be predicted with certainty, management
believes that the outcome will not have a material effect on the Company's
financial condition or results of operations.
NOTE N - USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NOTE O - RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified to
conform with the current year presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -12-
CONDITION AND RESULTS OF OPERATIONS
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Results of Operations
---------------------
Comparison of Third Quarter 2001 and Third Quarter 2000
The third quarter of 2001 resulted in a net loss of $3,314,313 as compared to a
net loss of $773,477 for the third quarter of 2000. Results for the third
quarter ended September 30, 2001 reflect increased liquidation efforts,
including a higher volume of sale priced offerings, to move excess inventory.
The third quarter results reflect the current downturn in economic conditions
and a continual decline in response rates and consumer spending. The third
quarter of 2001 was also negatively impacted by costs associated with the
Company's investments in several growth initiatives including Crossing Pointe,
Blair's men's and women's targeted apparel catalogs and e-commerce. It is
anticipated that these investments will continue, subject to adjustment, during
the remainder of the year. The third quarter of the year is historically the
lowest earnings quarter of the year for the Company.
Net sales for the third quarter of 2001 were 6.8% higher than net sales for the
third quarter of 2000. Actual response rates in the third quarter of 2001 were
slightly lower than in the third quarter of 2000 and improved from the first six
months of 2001. Actual response rates were below expected levels in the third
quarter of 2001. The higher volume of sale priced offerings in the third quarter
of 2001 favorably impacted response rates but reduced margins. Gross sales
revenue generated per advertising dollar decreased approximately 10% in the
third quarter of 2001 as compared to the third quarter of 2000. The total number
of orders shipped decreased while the average order size increased in the third
quarter of 2001 as compared to the third quarter of 2000. The provision for
returned merchandise as a percentage of gross sales decreased slightly in the
third quarter of 2001 as compared to the third quarter of 2000.
Other income decreased 5.8% in the third quarter of 2001 as compared to the
third quarter of 2000. Other income decreased primarily because the Company has
not realized any gain on barter in 2001.
Cost of goods sold as a percentage of net sales increased to 54.1% in the third
quarter of 2001 from 49.9% in the third quarter of 2000. Increased efforts to
liquidate excess inventory, including a higher volume of sale priced offerings,
were primarily responsible for the increase in cost of goods sold.
Advertising expense in the third quarter of 2001 increased 17% from the third
quarter of 2000. A planned larger advertising effort, a postal rate increase and
new marketing growth initiatives (Crossing Pointe, e-commerce and men's and
women's targeted apparel catalogs) were primarily responsible for the increased
advertising cost in the third quarter of 2001.
The total number of catalog mailings released in the third quarter of 2001 was
25% more than in the third quarter of 2000 (42.4 million vs. 33.9 million).
Print advertising for Crossing Pointe (started in the third quarter of 2000) is
all via catalog and is included in the catalog mailings numbers.
The total number of letter mailings released in the third quarter of 2001 was 7%
more than in the third quarter of 2000 (13.4 million vs. 12.5 million). Letter
mailings are most productive when targeting the Company's female customers and,
since mid-year 2000, have been used only to promote our women's apparel lines.
Total volume of the co-op and media advertising programs decreased 45% in the
third quarter of 2001 as compared to the third quarter of 2000 (88 million vs.
160 million).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -13-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Results of Operations - Continued
---------------------
Comparison of Third Quarter 2001 and Third Quarter 2000 - Continued
The Company launched e-commerce sites for Crossing Pointe,
www.crossingpointe.com, and the Blair Online Outlet early in the third quarter
of 2000. The Blair website, www.blair.com (including the Online Outlet), was
launched late third quarter/early fourth quarter of 2000. A redesigned
www.blair.com was introduced in the first quarter of 2001 and features improved
navigation and quicker access to our expanded product offerings. The Company has
also launched e-commerce sites for Scandia Woods and Irvine Park, new men's
targeted apparel catalogs. Over $8 million in e-commerce sales were generated in
the third quarter of 2001 as compared to $2.5 million for the entire year of
2000.
General and administrative expense decreased 4.4% in the third quarter of 2001
as compared to the third quarter of 2000. The lower general and administrative
expense in the third quarter of 2001 was primarily attributable to reductions in
professional services and in employee benefits tied to the Company's
profitability.
The provision for doubtful accounts as a percentage of credit sales decreased
24.7% in the third quarter of 2001 as compared to the third quarter of 2000. The
estimated provision for doubtful accounts is based on current expectations
(consumer credit and economic trends, etc...), sales mix (prospect/customer) and
current and prior years' experience, especially delinquencies (accounts over 30
days past due) and actual charge-offs (accounts removed from accounts receivable
for non-payment). The estimated bad debt rate used for the third quarter of 2001
was approximately 23% lower than the bad debt rate used in third quarter of
2000. The estimated bad debt rate decreased primarily due to a reduction in
prospect sales and improving delinquency and charge-off rates. At September 30,
2001, the delinquency rate of open accounts receivable was approximately 12%
lower than at September 30, 2000. The delinquency rate for established credit
customers (96.6% of open receivables at September 30, 2001, 95.2% at September
30, 2000) decreased 11% and the delinquency rate for prospects (3.4% of open
receivables at September 30, 2001, 4.8% at September 30, 2000) increased 3.8%.
The charge-off rate for the third quarter of 2001 was 6.5% more than the
charge-off rate for the third quarter of 2000, but was approximately 14% lower
than the charge-off rate for the first six months of 2001. Recoveries of bad
debts previously charged off have been credited back against the allowance for
doubtful accounts. Credit granting, collection and behavior models continue to
be updated and improved, and, along with expanding database capabilities,
provide valuable credit-marketing opportunities.
Interest expense increased 17% in the third quarter of 2001 as compared to the
third quarter of 2000. Interest expense results primarily from the Company's
borrowings necessary to finance customer accounts receivable, inventories and
growth initiatives. At September 30, 2001, inventories were up 10.5% and gross
customer accounts receivable were down 2.5% as compared to September 30, 2000.
Average debt outstanding was higher in the third quarter of 2001 than in the
third quarter of 2000.
Income taxes as a percentage of loss before income taxes were 37.5% in the third
quarter of 2001 and 45.6% in the third quarter of 2000. The federal income tax
rate was 35% in both years. The difference in the total income tax rate was
caused by a change in the Company's effective state income tax rate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -14-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Results of Operations - Continued
---------------------
Comparison of Nine Month Periods Ended September 30, 2001 and September 30, 2000
Net income for the nine months ended September 30, 2001 was $1,933,007, or $.24
per share, as compared to $14,451,049, or $1.80 per share, for the nine months
ended September 30, 2000. Results for the first nine months of 2001 were
negatively affected by liquidation of excess inventory, the current downturn in
economic conditions, a continued decline in response rates and consumer spending
and the costs associated with the Company's investments in several growth
initiatives. The nine months of 2001 also included a $2.5 million charge
attributable to the Company's voluntary separation program. The one-time charge,
decreased net income for the first nine months of 2001 by $1.5 million, or $.18
per share. The nine months of 2001 also included $4 million of interest income
resulting from an Internal Revenue tax settlement. The one-time gain in interest
income increased net income for the first nine months of 2001 by $2.6 million,
or $.32 per share.
Net sales for the first nine months of 2001 increased to a record level and were
4.4% higher than net sales for the first nine months of 2000. Actual response
rates in the first nine months of 2001 were lower than in the first nine months
of 2000 and were below expected levels for the first nine months of 2001. Gross
sales revenue generated per advertising dollar decreased approximately 18% in
the first nine months of 2001 as compared to the first nine months of 2000. The
total number of orders shipped decreased while the average order size increased
in the first nine months of 2001 as compared to the first nine months of 2000.
The provision for returned merchandise as a percentage of gross sales increased
slightly in the first nine months of 2001 as compared to the first nine months
of 2000.
Other income decreased 1.8% in the first nine months of 2001 as compared to the
first nine months of 2000. Other income decreased primarily because the Company
has not realized any gain on barter in 2001.
A one-time $4 million interest payment resulting from an Internal Revenue tax
settlement was received at the end of June 2001. The Company also recovered
approximately $9 million in federal income tax refunds from the tax settlement.
Cost of goods sold as a percentage of net sales increased to 49.9% in the first
nine months of 2001 from 49.4% in the first nine months of 2000. Liquidation of
excess inventory primarily in the third quarter of 2001, more than offset stable
or declining product costs and the Company's efforts to improve gross margins.
Advertising expense in the first nine months of 2001 increased 27% from the
first nine months of 2000. A planned larger advertising effort, a postal rate
increase and new marketing growth initiatives (Crossing Pointe, e-commerce and
men's and women's targeted apparel catalogs) were primarily responsible for the
increased advertising costs in the first nine months of 2001.
The total number of catalog mailings released in the first nine months of 2001
was 36% more than in the first nine months of 2000 (135.3 million vs. 99.4
million). Print advertising for Crossing Pointe (started in third quarter of
2000) is all via catalog and is included in the catalog mailings numbers.
The total number of letter mailings released in the first nine months of 2001
was 7% less than in the first nine months of 2000 (61.9 million vs. 66.6
million). Letter mailings are most productive when targeting the Company's
female customers and, since mid-year 2000, have been used to promote our women's
apparel lines.
Total volume of the co-op media advertising programs increased 8% in the first
nine months of 2001 as compared to the first nine months of 2000 (833 million
vs. 773 million).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -15-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Results of Operations - Continued
---------------------
Comparison of Nine Month Periods Ended September 30, 2001 and September 30,
2000 - Continued
The Company launched e-commerce sites for Crossing Pointe,
www.crossingpointe.com, and the Blair Online Outlet early in the third quarter
of 2000. The Blair website, www.blair.com (including the Online Outlet), was
launched late third quarter/early fourth quarter of 2000. A redesigned
www.blair.com was introduced in the first quarter of 2001 and features improved
navigation and quicker access to our expanded product offerings. The Company has
also launched e-commerce sites for Scandia Woods and Irvine Park, new men's
targeted apparel catalogs. Over $22 million in e-commerce sales were generated
in the first nine months of 2001 as compared to $2.5 million for the entire year
of 2000.
General and administrative expense increased 4.1% in the first nine months of
2001 as compared to the first nine months of 2000. The higher general and
administrative expense in 2001 was primarily attributable to the one-time $2.5
million charge for the Company's voluntary separation program, and to the costs
associated with e-commerce, Crossing Pointe and recently introduced men's and
women's targeted apparel catalogs. The $2.5 million charge represents the cost
of the severance pay, related payroll taxes and medical benefits due the 56
eligible employees who accepted the voluntary separation program rather than
relocate or accept other positions in the Company. The program was offered to
eligible employees of the Blair Mailing Center from which the merchandise
returns operations have been relocated and the mailing operations have been
outsourced. As of September 30, 2001, $1,002,218 of the $2.5 million charge has
been paid.
The provision for doubtful accounts as a percentage of credit sales decreased
1.4% in the first nine months of 2001 as compared to the first nine months of
2000.The estimated provision for doubtful accounts is based on current
expectations (consumer credit and economic trends, etc...), sales mix
(prospect/customer) and current and prior years' experience, especially
delinquencies (accounts over 30 days past due) and actual charge-offs
(accounts removed from accounts receivable for non-payment). The estimated bad
debt rate used for the first nine months of 2001 was approximately the same as
the bad debt rate used in the first nine months of 2000. The estimated bad debt
rate has stayed approximately the same primarily due to a tightening of credit
granting, slightly lower prospect sales and improving delinquency and charge-off
rates. At September 30, 2001, the delinquency rate of open accounts receivable
was approximately 12% lower than at September 30, 2000. The delinquency rate for
established credit customers (96.6%of open receivables at September 30, 2001,
95.2% at September 30, 2000) decreased 11% and the delinquency rate for
prospects (3.4% of open receivables at September 30, 2001, 4.8% at September 30,
2000) increased 3.8%. The charge-off rate for the first nine months of 2001 was
18% more than the charge-off rate for the first nine months of 2000, but the
charge-off rate for the third quarter of 2001 was only 6.5% more than charge-off
rate for the third quarter of 2000 and was 14% lower than the charge-off rate
for the first six months of 2001. Recoveries of bad debts previously charged off
have been credited back against the allowance for doubtful accounts. Credit
granting, collection and behavior models continue to be updated and improved,
and, along with expanding database capabilities, provide valuable
credit-marketing opportunities.
Interest expense increased 52% in the first nine months of 2001 as compared to
the first nine months of 2000. Interest expense results primarily from the
Company's borrowings necessary to finance customer accounts receivable,
inventories and growth initiatives. At September 30, 2001, inventories were up
10.5% and gross customer accounts receivable were down 2.5% as compared to
September 30, 2000. Average debt outstanding has been higher in 2001 than in
2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -16-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Results of Operations - Continued
---------------------
Comparison of Nine Month Periods Ended September 30, 2001 and September 30,
2000 - Continued
Income taxes as a percentage of income before income taxes were 35.9% in the
first nine months of 2001 and 37.4% in the first nine months of 2000. The
federal income tax rate was 35% in both years. The decrease in the total income
tax rate was caused by a change in the Company's effective state income tax
rate.
Liquidity and Sources of Capital
--------------------------------
All working capital and cash requirements for the first nine months of 2001 were
met. In November 1998, the Company entered into an amended and restated
$95,000,000 Revolving Credit Facility, which expires on November 13, 2001. The
Facility has been reduced to $55,000,000 and extended to December 31, 2001. The
Company intends to replace the extended Facility by December 31, 2001. This
unsecured Revolving Credit Facility requires the Company to meet certain
covenants some of which have been amended since November 1998, and the Company
is in compliance with all the covenants. Borrowings outstanding at September 30,
2001 were $35,000,000 all classified as current. Borrowings outstanding at
December 31, 2000 were $25,000,000 all classified as current. As of November 12,
2001, the Company's borrowings outstanding totaled $18,275.000.
The ratio of current assets to current liabilities was 2.73 at September 30,
2001 2.55 at December 31, 2000 and 3.07 at September 30, 2000. Working Capital
decreased $1,394,771 in the first nine months of 2001 primarily due to dividends
paid exceeding net income. The 2001 decrease was primarily reflected in
decreased customer accounts receivable and increased notes payable more than
offsetting decreased trade accounts payable and increased inventories.
Merchandise inventory turnover was 2.4 at September 30, 2001, 2.8 at December
31, 2000 and 2.9 at September 30, 2000. Merchandise inventory as of September
30, 2001 decreased 3.3% from December 31, 2000 and increased 8.5% from September
30, 2000. Inventory levels have increased since September 30, 2000 due to lower
than expected response rates since mid-2000 and the introduction of new catalogs
in late 2000 and early 2001. Sales mailings were increased in the third quarter
of 2001 to help bring inventory levels down.
An operating segment is identified as a component of an enterprise for which
separate financial information is available for evaluation by the chief decision
maker, or decision making group, in deciding on how to allocate resources and
assess performance. The Company operates as one business segment consisting of
four product lines. The fourth product line, Crossing Pointe, was added in the
third quarter of 2000 and is expected to become a significant revenue source
over the next few years. Home Products net sales as a percentage of total net
sales were 12.8% ($53.6 million) in the first nine months of 2001 as compared to
14.2% ($57.3 million) in the first nine months of 2000. Menswear net sales as a
percentage of total net sales were 18.3% ($77.0 million) as compared to 19.2%
($77.3 million). Womenswear net sales as a percentage of total sales were 66.2%
($278.2 million) as compared to 66.2% ($266.5 million). Crossing Pointe net
sales as a percentage of total net sales were 2.7% ($11.3 million) as compared
to .3% ($1.2 million). Home Products merchandise inventory totaled $7.9 million
at September 30, 2001, $17.1 million at December 31, 2000 and $21.4 million at
September 30, 2000. Menswear merchandise inventory was $21.6 million at
September 30, 2001, $20.7 million at December 31, 2000 and $20.0 million at
September 30, 2000. Womenswear merchandise inventory was $57.9 million at
September 30, 2001, $54.3 million at December 31, 2000 and $41.0 million at
September 30, 2000. Crossing Pointe merchandise inventory was $4.4 million at
September 30, 2001, $2.8 million at December 31, 2000 and $2.1 million at
September 30, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -17-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Liquidity and Sources of Capital - Continued
--------------------------------
The Company looks upon its credit granting (Blair Credit) as a marketing
advantage. In the early 1990's, the Company started extending revolving credit
to first-time (prospect) buyers. Blair Credit was offered only to established
customers prior to that time. Prospects responded. This led to a broad offering
of pre-approved lines of credit to prospects in 1995 and 1996. Sales, accounts
receivable and bad debts expectedly increased. However, as the receivables aged,
bad debts greatly exceeded expected levels. The Company recognized that it
didn't have all the necessary credit controls in place and put a hold (second
quarter 1996) on pre-approved credit offers and reviewed and strengthened
(mid-1996 and on) credit controls. Blair Credit customers, on average, buy more,
buy more often and are more loyal than cash and credit card customers. The
benefit from the increased sales volume achieved by offering Blair Credit is
significant and more than outweighs the cost of the credit program. The cost
and/or contribution of the credit program itself can be quickly assessed by
comparing finance charges (included in other income) to the provision for
doubtful accounts. For the first nine months of 2001, finance charges were $28.7
million and the provision for doubtful accounts was $24.0 million (net of $4.6
million) as compared to the first nine months of 2000, finance charges were
$27.7 million and the provision for doubtful accounts was $24.5 million (net of
$3.2 million). This assessment does not take into consideration the
administrative cost of the credit program (included in general and
administrative expense), the cost of money and the impact on sales. The
Company's gross credit sales decreased .3% in the first nine months of 2001 as
compared to the first nine months of 2000.
The Company has added new facilities, modernized its existing facilities and
acquired new cost-saving equipment during the last several years. Capital
expenditures for property, plant and equipment totaled $5.7 million during the
first nine months of 2001 and $9.7 million during the first nine months of 2000.
Capital expenditures had been projected to be $15 million plus for each of the
years 2001 and 2002 and nearly $10 million for 2003. However, capital
expenditures for 2001 will be delayed due to the current economic conditions.
This includes slowing the implementation of the previously announced $23 million
modernization and enhancement of the Company's fulfillment operations. Capital
expenditures for the year 2001 are projected to be approximately $8 million.
As of the filing date of this report, the Company has not declared a quarterly
dividend that would be payable on December 15, 2001. The dividend declaration
will be considered on November 15, 2001. It is the Company's intent to continue
paying dividends; however, the Company will evaluate its dividend practice on an
on-going basis. See "Future Considerations."
The Company has, from the fourth quarter of 1996 through the year 2000,
repurchased a total of 1,620,940 shares of its Common Stock - 864,720 shares
purchased on the open market and 756,220 shares from the Estate of John L.
Blair. In 2000, the Company purchased 268,704 shares on the open market. No
shares have been repurchased in 2001.
Future cash needs will be financed by cash flow from operations, the existing
borrowing arrangement and, if needed, other financing arrangements that may be
available to the Company. The Company intends to renew or replace its current
borrowing arrangement, which expires on December 31, 2001. The Company's current
projection of future cash requirements, however, may be affected in the future
by numerous factors, including changes in customer payments on accounts
receivable, consumer credit industry trends, sales volume, operating cost
fluctuations, revised capital spending plans and unplanned capital spending.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -18-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Impact of Inflation and Changing Prices
---------------------------------------
Although inflation has moderated in our economy, the Company is continually
seeking ways to cope with its impact. To the extent permitted by competition,
increased costs are passed on to customers by selectively increasing selling
prices over a period of time. Profit margins have been pressured by paper cost
and postal rate increases. Paper prices were higher in 1998 than in 1997, lower
in 1999 than in 1998, again higher in 2000 than in 1999 and stable to declining
at this time. Postal rates increased on January 10, 1999, on January 7, 2001 and
again on July 1, 2001.
The Company principally uses the LIFO method of accounting for its merchandise
inventories. Under this method, the cost of products sold reported in the
financial statements approximates current costs and thus reduces distortion in
reported income due to increasing costs. The charges to operations for
depreciation represent the allocation of historical costs incurred over past
years and are significantly less than if they were based on the current cost of
productive capacity being used.
Property, plant and equipment are continuously being expanded and updated. Major
projects are discussed under Liquidity and Sources of Capital. Assets acquired
in prior years will, of course, be replaced at higher costs but this will take
place over many years. New assets, when acquired, will result in higher
depreciation charges, but in many cases, due to technological improvements,
savings in operating costs should result.
Accounting Pronouncement
------------------------
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities", was
issued. Statement No. 133 provides new guidelines for accounting for
derivative instruments and requires companies to recognize all derivatives
on the balance sheet at fair value. Gains or losses resulting from
changes in the values of the derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The Company adopted Statement No. 133 effective January 1,
2001. The adoption of Statement No. 133 did not have an impact on the
financial statements of the Company, as the Company has historically not
invested in derivative instruments.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." Bulletin No. 101 formalizes the SEC's position on application
of revenue recognition rules. The Company adopted Bulletin No. 101 in the
fourth quarter of 2000 and the adoption did not have a substantial effect on
the Company.
In June 2001, Statements of Financial Accounting Standards No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets", were issued.
The Statements are effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill and intangible assets deemed to indefinite lives
will no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. The Company will apply the Statements
beginning in the first quarter of 2002. It is anticipated that adoption of these
Statements will not have a significant impact on the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -19-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Future Considerations
---------------------
The Company is faced with the ever-present challenge of maintaining and
expanding the customer file. This involves the acquisition of new customers
(prospects), the conversion of new customers to established customers (active
repeat buyers) and the retention and/or reactivation of established customers.
These actions are vital in growing the business but are being impacted by
increased operating costs, a declining labor pool, increased competition in the
retail sector, high levels of consumer debt and varying consumer response rates.
The Company's marketing strategy includes targeting customers in the "40 to 60,
low-to-moderate income" market and in the "60+, low-to-moderate income" market.
The "40 to 60" market, is the fastest growing segment of the population. Success
of the Company's marketing strategy requires investment in database management,
financial and operating systems, prospecting programs, catalog marketing, new
product lines, telephone call centers, Internet commerce and fulfillment
capabilities and capacity. Management believes that these investments should
improve Blair Corporation's position in new and existing markets and provide
opportunities for future earnings growth.
The Company recently announced a partnership with accomplished actress, artist,
author and mother, Jane Seymour, to launch the "Jane Seymour Signature
Collection" of women's apparel. The Jane Seymour inspired fashions will be sold
exclusively through the Company's Crossing Pointe catalog and website
(www.crossingpointe.com). The first "Jane Seymour Signature Collection" fashions
will preview in early January 2002 on the Crossing Pointe website and will debut
in the Crossing Pointe Spring 2002 catalog mailing at the end of January 2002.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------
Forward-looking statements in this 10-Q report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Words such as "believes," "anticipates," "plans," "expects," and similar
expressions are intended to identify forward-looking statements. Any statements
contained in this report that are not statements of historical fact may be
deemed to be forward-looking statements. Such forward-looking statements are
included in, but not limited to, the following sections of the report.
- The paragraph on the provision for doubtful accounts in the Results of
Operations, Comparison of Third Quarter 2001 and Third Quarter 2000.
- The paragraph on the provision for doubtful accounts in the Results of
Operations, Comparison of Nine Month Periods Ended September 30, 2001
and September 30, 2000.
- The paragraph on merchandise inventory in Liquidity and Sources of
Capital.
- The third sentence (The fourth product line, Crossing Pointe...) of the
paragraph on operating segment in Liquidity and Sources of Capital.
- The paragraph on credit granting as a marketing advantage in Liquidity
and Sources of Capital.
- The paragraph on capital expenditures in Liquidity and Sources of
Capital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL -20-
CONDITION AND RESULTS OF OPERATIONS - Continued
BLAIR CORPORATION AND SUBSIDIARY
September 30, 2001
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------
- Continued
- The paragraph on dividend practice in Liquidity and Sources of Capital.
- The paragraph on future cash needs in Liquidity and Sources of Capital.
- The Impact of Inflation and Changing Prices.
- Future Considerations.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (ii) the Company's plans and
results of operations will be affected by the Company's ability to manage its
growth, accounts receivable and inventory; and (iii) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's annual report on
Form 10-K for the year ended December 31, 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION -21-
BLAIR CORPORATION AND SUBSIDIARIES
September 30, 2001
ITEM 1. Legal Proceedings
-----------------
The Company is from time to time a party to ordinary routine litigation
incidental to various aspects of its operations. Management is not currently
aware of any litigation that will have a material adverse impact on the
Company's financial condition or results of operations.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not Applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Not Applicable.
Item 5. Other Information
-----------------
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
3.1 Restated Certificate of Incorporation*
3.2 Amended Bylaws of Blair Corporation**
4 Specimen Common Stock Certificate***
11 Statement regarding computation of per share earnings****
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended September
30, 2001
---------------------------
* Incorporated by reference to Exhibit A to the Quarterly Report on Form 10-Q of
the Company filed with the SEC on August 10, 1995 (SEC File No. 1-878).
** Incorporated by reference to Exhibit 4.3 to the Form S-8 Registration
Statement filed with the SEC on July 19, 2000 (SEC File No. 333-41770).
*** Incorporated by reference to Exhibit 4.1 to the Form S-8 Registration
Statement filed with the SEC on July 19, 2000 (SEC File No. 333-41770).
**** Incorporated by reference to Note C of the financial statements included
herein.
-22-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLAIR CORPORATION
--------------------------------
(Registrant)
Date November 12, 2001 By KENT R. SIVILLO
--------------------------- ---------------------------------
KENT R. SIVILLO
Vice President and Treasurer
(Principal Financial Officer
and Duly Authorized Officer)