CLARK SCHWEBEL HOLDINGS INC, 10-K, 1998-03-17

CLARK SCHWEBEL HOLDINGS INC
10-K, 1998-03-17
BROADWOVEN FABRIC MILLS, MAN MADE FIBER & SILK

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<PAGE> 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the fiscal year ended January 3, 1998
---------------
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 333-4723
--------------------------------------------------------

CLARK-SCHWEBEL HOLDINGS, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)

Delaware 13-3883016
- ------------------------------------- -------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

2200 South Murray Avenue, Anderson, SC 29622
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

(864) 224-3506
- -------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
- ------------------------------ ----------------------------------------------

Securities registered pursuant to Section 12(g) of the Act:

None
-----------------------------------------------------------
(Title of class)

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
----------- ------------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (SS 229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [ ].

No stock is held by any non-affiliates of the registrant as of January 3, 1998.

As of January 3, 1998, there were 9,000 shares outstanding of common stock of
Clark-Schwebel Holdings, Inc.

<PAGE> 2
CLARK-SCHWEBEL HOLDINGS, INC.
FORM 10-K ANNUAL REPORT FOR
FISCAL YEAR ENDED JANUARY 3, 1998

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE NO.

PART I

<S> <C> <C> <C>
ITEM 1. Business 4

ITEM 2. Properties 11

ITEM 3. Legal Proceedings 11

ITEM 4. Submission of Matters to a Vote of Security Holders 11

PART II

ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters 12

ITEM 6. Selected Financial Data 13

ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 16

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 24

ITEM 8. Financial Statements and Supplementary Data 25

Independent Auditors' Report 26

Consolidated Balance Sheets as of
December 28, 1996 and January 3, 1998. 28

Consolidated Statements of Income for the
years ended January 3, 1998, December 28, 1996
and December 30, 1995. 29

Consolidated Statements of Cash Flows for the years
ended January 3, 1998, December 28, 1996
and December 30, 1995. 30

Notes to Consolidated Financial Statements. 31

ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 44
</TABLE>

2
<PAGE> 3

<TABLE>
PART III
<S> <C> <C> <C>
ITEM 10. Directors and Executive Officers of the Registrant 45

ITEM 11. Executive Compensation 46

ITEM 12. Security Ownership of Certain Beneficial Owners and Management 48

ITEM 13. Certain Relationships and Related Transactions 50

PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 51

SIGNATURES 54

EXHIBIT INDEX
</TABLE>

3
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PART I

ITEM 1. BUSINESS

GENERAL

Except where the context indicates otherwise, the term "the Company"
refers to the registrant, Clark-Schwebel Holdings, Inc., and its wholly owned
subsidiary, Clark-Schwebel, Inc.

The Company believes it has been a leading manufacturer and marketer of
industrial fabrics, including electronics fiber glass fabric, composite
materials fiber glass fabric and high performance fabrics, since the founding of
the business in 1960. The Company believes it is the largest producer of fiber
glass fabrics for use in the growing electronics industry, with an estimated 50%
market share in the United States. Fiber glass fabrics are a critical component
used in the production of printed circuit boards, which are integral to
virtually all advanced electronic products, including computers,
telecommunications equipment, advanced cable television equipment, network
servers, televisions, automotive equipment and home appliances. The Company's
fiber glass fabrics are also used in composite materials to strengthen, insulate
and enhance the dimensional stability of hundreds of products in a variety of
markets, such as aerospace, coating and laminating, marine and tooling, building
insulation and sports equipment. The Company is also a leading manufacturer of
high performance fabrics composed of Kevlar(R) and Spectra(R). High
performance fabrics composed of Kevlar(R), the most widely used aramid fiber,
are used primarily in ballistic protection products, such as vests and helmets
worn by state, local and private police forces and the military, and in
composite materials for aerospace applications.

ELECTRONICS FIBER GLASS FABRIC

The Company believes it is a leading producer of electronics fiber glass
fabric in the United States. The Company sells fiber glass fabric to
manufacturers of high pressure laminates ("HPL") who, in turn, convert fiber
glass fabric into rigid and thin core laminates that are sold to manufacturers
of single-sided, double-sided and multilayer printed circuit boards. Printed
circuit boards require a highly engineered substrate material on which to mount
and interconnect semiconductor chips, passive electronic devices and other
electronic components. Due to its low cost, high strength, dimensional
stability, temperature resistance and electrical insulating properties, fiber
glass fabric has proven to be the most effective substrate material used in the
manufacture of printed circuit boards. In addition, the Company believes that
currently there is no cost-effective substitute material which can satisfy the
stringent quality and performance specifications required of fiber glass fabric
for HPLs in printed circuit boards. Electronics fiber glass fabric represented
58.9%, 62.9% and 64.7% of the Company's net sales in 1995, 1996 and 1997,
respectively.

The Company continues to capitalize on the growth in demand for printed
circuit boards resulting from (i) the development of increasingly complex
electronics products, including personal computers, cellular phones, pagers and
portable computing devices, and (ii) the increasing electronic content of
products in which such use has been historically absent or limited, such as
automobiles, home appliances and medical equipment.

COMPOSITE MATERIALS FIBER GLASS FABRIC

Fiber glass fabrics are also used in composite materials for the
aerospace, coating and laminating, marine and tooling, building insulation and
sports equipment markets. Composite materials fiber glass fabric is used in
various applications which require combinations of fiber glass' inherent
properties, including light weight, strength, temperature and flame resistance,
moisture and chemical resistance, and durability. The Company's customers
produce composite materials by impregnating fiber glass fabric with
thermosetting epoxy and phenolic resin systems. Applications of composite
material fiber glass fabric include aircraft components, such as interior
paneling systems and passenger overhead storage compartments. Fiber glass
fabrics are also used in a

4
<PAGE> 5

wide range of other industrial applications, such as Teflon(R) coated conveyor
belts, window shades, movie screens, electrical insulation products, marine
construction materials, automotive tooling and roofing materials. Composite
materials fiber glass fabric represented 18.5%, 21.3% and 19.4% of the Company's
net sales in 1995, 1996, and 1997, respectively.

The Company's fiber glass fabrics can be found on major airframe programs
at The Boeing Company and Airbus Industries. The Company expects increases in
commercial aircraft build rates through 1998. The growing global economy and
governmental regulations forcing the removal of older, louder, less fuel
efficient aircraft are expected to drive demand for new aircraft.

HIGH PERFORMANCE FABRICS

The Company believes it is a leading producer of high performance fabrics
used primarily to make ballistic protection products, such as vests and helmets
worn by state, local and private police forces and the military and to reinforce
composite materials for aircraft applications. The Company's high performance
fabrics possess physical properties such as durability, low weight and high
tensile strength. The Company's line of high performance products are
manufactured by arranging and finishing aramid and other materials, such as
Kevlar(R) and Spectra(R). Wide ranges of fiber types and construction patterns
provide broad design potential, allowing the Company to manufacture high
performance fabrics to meet stringent customer standards. For instance, the
Company manufactures Kevlar(R) fabric, the most widely used aramid fabric,
according to ballistic design parameters determined by performance criteria of
the end product. The Company sells ballistic protection fabrics designed to
capture high mass, relatively low velocity bullets as well as ballistic
protection fabrics designed to capture low mass, high velocity fragments. High
performance fabrics represented 22.6%, 15.8% and 15.9% of the Company's net
sales in 1995, and 1996 and 1997, respectively.

BUSINESS STRATEGY

The Company's business strategy is to increase sales and profitability by
capitalizing on its leading position in the fiber glass fabrics industry and the
expected increased demand for printed circuit boards. The Company believes that
its long-standing customer and supplier relationships, manufacturing and
technical expertise, and commitment to providing consistent, high quality
products will enable the Company to maintain its leading position in the
industry.

THE ELECTRONICS FIBER GLASS FABRIC INDUSTRY

Fiber glass fabric suppliers to the electronics industry, such as the
Company, convert fiber glass yarn into a variety of fabrics which are then sold
to HPL manufacturers. HPL manufacturers, in turn, convert fiber glass fabric
into rigid, layered laminates that are sold to printed circuit board
manufacturers. There are many intermediate steps between the manufacture of
unstuffed printed circuit boards (i.e. without semiconductors) and final
electronics products. The following chart illustrates the role of electronics
fiber glass fabric suppliers in the large and growing electronics industry.

5
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United States Electronics Market Supply Chain
1997 Sales

Electronics $383 Billion

Printed Circuit Boards $7.9 Billion

High Pressure Laminates $1.4 Billion

Fiber Glass Fabrics $308 Million

Fiber Glass Yarn $150 Million

Sources: PCI Report (December 1997) Henderson Electronic Market Forecast
(December 1997) and Company estimates.

Increasing Demand for Electronic Products. Fiber glass fabrics are a
critical component in the production of printed circuit boards, which are used
in virtually all electronics products. Demand for electronics products has
experienced substantial growth in recent years and is expected to continue to
grow due to expanded applications for computer systems, technological
advancements and new product introductions. This growth is primarily
attributable to the development of more complex and sophisticated electronic
products, including cellular phones, pagers, personal computers and portable
computing devices, as well as the increasing electronic content of products in
which such use has been historically absent or limited, such as automobiles,
home appliances and medical equipment.

The following table illustrates the historical growth of the major
end-user markets for electronics fiber glass fabric.

UNITED STATES ELECTRONIC EQUIPMENT PRODUCTION
(DOLLARS IN BILLIONS)

<TABLE>
<CAPTION>
Historical CAGR
1993 1994 1995 1996 1997 1993-1997
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Computer office equipment ......... $ 91.5 $ 106.8 $ 125.7 $ 143.1 $ 153.1 13.7%
Industrial / Instrumentation ...... 61.5 67.1 77.5 84.9 93.4 11.0
Communications .................... 40.2 47.9 53.6 59.8 68.0 14.0
Military .......................... 49.0 45.5 44.5 43.7 45.7 (1.7)
Automotive / Consumer ............. 18.2 20.9 21.6 22.6 23.2 6.3
-------- -------- -------- -------- -------- ----
Total ............................. $ 260.5 $ 288.2 $ 322.9 $ 354.1 $ 383.4 10.1%
======== ======== ======== ======== ======== ====

</TABLE>

Source: Henderson Electronic Market Forecast (December 1997 and December 1996)

6
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High Performance Standards. As the proliferation of advanced electronics
products continues, electronics producers require printed circuit boards and
fiber glass materials which: (i) operate at higher speeds and frequencies; (ii)
have higher temperature tolerances; and (iii) have reliable, predictable
performance characteristics. Printed circuit boards that perform at faster
speeds with limited power usage must employ printed circuit materials with
improved electrical conductivity properties and insulating characteristics. The
ability of printed circuit boards to perform in high temperature environments is
directly correlated to the electronic materials used to construct the board.
Printed circuit board components must have consistently manufactured dimensional
characteristics and purity to extremely high tolerance levels in order for
printed circuit board manufacturers to achieve acceptable production yields.

Faster Production Cycles Require Closer Collaboration with Customers.
Competitive pressures have led electronic equipment manufacturers to introduce
new products and increase production volume to satisfy growing commercial
demand. These trends have increased the level of collaboration among system
providers, fabricators and printed circuit materials suppliers. Manufacturers of
electronics component materials, such as the Company, must maintain strong
customer and supplier relationships and provide greater technical support to
high pressure laminators on a timely basis.

PRODUCT CHARACTERISTICS

The versatility of fiber glass fabric makes it a unique industrial
material. The Company's fiber glass fabrics offer an excellent combination of
properties from high strength to fire resistance. Wide ranges of yarn sizes and
weave patterns provide broad design potential, enabling the Company to work with
its customers to choose the best combination of material performance, economics
and product flexibility. Fiber glass fabrics have the properties shown below:

- - Dimensional Stability. Fiber glass is a dimensionally stable engineering
material. Fiber glass does not stretch or shrink after exposure to
extremely high or low temperatures.

- - Moisture Resistance. Fiber glass does not absorb moisture and does not
change physically or chemically when exposed to water.

- - High Strength. The high strength-to-weight ratio of fiber glass makes it
a superior material in applications where high strength and minimum
weight are required. When manufactured into a fiber glass fabric, this
strength can be unidirectional or bi-directional, allowing flexibility in
design and cost.

- - Temperature Resistance. Fiber glass is an inorganic material and does not
burn or support combustion.

- - Chemical Resistance. Most chemicals have little or no effect on fiber
glass. Fiber glass fabric does not mildew, rot or deteriorate.

- - Electrical Properties. Fiber glass fabric is an excellent material for
electrical insulation. The combination of properties such as low moisture
absorption, high strength, heat resistance and low dielectric constant
makes fiber glass fabric suitable as a reinforcement for printed circuit
boards and insulating varnishes.

- - Thermal Conductivity. High thermal conductivity properties enable fiber
glass fabric to rapidly dissipate heat.

7
<PAGE> 8

PRODUCT APPLICATIONS

The Company manufactures approximately 700 products which are used in a
broad range of technical, highly engineered product applications as shown below:

<TABLE>
<CAPTION>
PERCENTAGE
OF 1997 PRODUCT
PRODUCT MARKET NET SALES APPLICATION
------- ------ --------- -----------
<S> <C> <C> <C>
Electronics Fiber High pressure 64.7% Personal and mainframe computers,
Glass Fabric laminates printers, cellular telephones,
manufactured for automotive electronics, advanced
printed circuit cable television equipment,
boards personal communication devices,
network servers

Composite Materials Aerospace, 19.4% Commercial aircraft components,
Fiber Glass Fabric Coating/ water skis, electrical cable
Laminating, insulation, movie screens, window
Filtration, shades, pollution control,
Marine, Tooling, reinforced roofing products.
Building

High Performance Aerospace, 15.9% Bullet-resistant vests and helmets,
Fabrics Ballistics aircraft interior/exterior
(Kevlar(R), Spectra(R)) components
</TABLE>

RESEARCH AND DEVELOPMENT

The Company has a modern, well-equipped research and development
laboratory located at its headquarters in Anderson, South Carolina. The
laboratory is equipped to (i) test the physical properties of yarns, fabrics,
and high pressure laminates and the chemical analysis of finishes, sizings and
resins and (ii) produce laminate samples similar to those made by its customers.

The Company's product development and technical staff works with the
in-house technical staffs of its customers in the early stages of product
development to produce and manufacture products with certain qualities and
performance specifications to meet specific customer needs. The Company believes
that its emphasis on product development and technology exchanges with its
German and Japanese joint ventures has enhanced its technical knowledge and
ability to serve its customers.

CUSTOMERS

The Company's customer list includes many leading companies in their
respective industry segments. In 1997, the Company sold its products to nearly
500 customers, with the ten largest accounting for approximately 69% of net
sales. Sales to two of the Company's customers, Allied-Signal Laminate Systems
and Park Electrochemical, each accounted for more than 10% of the Company's 1997
net sales. Sales to the two customers represented as a percentage of net sales
42.3% in 1995, 43.3% in 1996 and 44.6% in 1997, respectively. The Company's top
ten customers have been customers for over five years.

As customers seek to establish closer relationships with suppliers, the
Company expects the concentration of its customer base to increase. The Company
believes that each of its four largest electronics customers purchased over 50%
of its fiber glass fabrics supplies from the Company in 1997. If, for any
reason, any of its key customers were to purchase significantly less of the
Company's products in the future, such decreased level of purchases could have a
material adverse effect on the Company's business, financial condition and
results of operations.

8
<PAGE> 9

The Company markets its products primarily through a direct sales force
and distributes its products primarily through the use of common carriers. The
Company generally manufactures products according to customer forecasts and
regular communications with its customers.

RAW MATERIALS

The principal materials used in the manufacture of the Company's products
are fiber glass, Kevlar(R) and Spectra(R) yarns, PVA sizing and silane binding
agents and coating materials. Over the past 37 years, the company has developed
close beneficial relationships with the two companies that produce virtually
all the fiber glass yarn manufactured in North America, PPG Industries, Inc.
and Owens-Corning. The Company currently purchases substantially all of its
fiber glass yarn from these two suppliers. Based on its long-standing
relationships with its fiber glass yarn suppliers and the volume of its
purchases, the Company believes the conditions under which it purchases fiber
glass yarn are favorable. DuPont, the sole manufacturer of Kevlar(R), has
provided its Kevlar(R) yarn to the Company for more than 20 years. The Company
currently purchases substantially all of its aramid yarn from this one
supplier. There are a limited number of manufacturers of fiber glass yarn and
aramid yarn. Any disruption in the ability or willingness of the Company's
suppliers to deliver fiber glass or aramid yarn to the Company, or any adverse
changes to the conditions governing its yarn purchases, could have a material
adverse effect on the Company's business, financial condition, and results of
operations.

Through mid-1996, fiber glass yarn was in short supply on a global basis,
and the price of fiber glass yarn increased in 1996 at a higher than historical
rate. During the latter half of 1996, fiber glass yarn supply became sufficient
to meet the Company's requirements and supply should continue to be sufficient
for the forseeable future. The Company generally has been able to pass through
its raw material price increases to customers.

COMPETITION

The Company believes it is the market share leader in its targeted fiber
glass fabrics markets in the United States, where it competes primarily on the
basis of long-term relationships with customers and suppliers, quality,
technical support, price and reliability. The Company's major competitor in the
fiber glass fabrics market is BGF Industries. Other fiber glass fabrics
manufacturers are smaller and generally compete in niche markets. The Company
believes it is a market share leader in its targeted high performance markets in
the United States, where there are a small number of competitors.

JOINT VENTURES

The Company has three joint ventures: Clark-Schwebel Tech-Fab Company
("CS Tech-Fab") in the United States, CS-Interglas AG ("CS-Interglas") in Europe
and Asahi-Schwebel Co., Ltd. ("Asahi-Schwebel") in Asia.

CS-Interglas. Through a DM20 million convertible subordinated note and a
24.9% common stock ownership position, the Company effectively has a 42% fully
diluted equity interest in CS-Interglas, a publicly held German company.
CS-Interglas is the successor corporation to a 1993 combination of the Company's
European operations with Interglas. Today, CS-Interglas is Europe's leading
manufacturer of fiber glass fabrics with plants in England, Belgium, France and
Germany.

Asahi-Schwebel. The Company owns a 43.3% interest in Asahi-Schwebel, a
manufacturer of fiber glass fabrics for the electronics industry headquartered
in Japan. Asahi-Schwebel has plant facilities in Japan and a majority interest
in a fiber glass fabric manufacturing and finishing plant in Taiwan.

9
<PAGE> 10

CS Tech-Fab. CS Tech-Fab is 50% owned by each of the Company and Les Fils
d'Auguste Chomarat, a French Company. CS Tech-Fab manufactures nonwoven fiber
glass materials for roofing and cement construction applications and for high
performance sails.

The Company's joint venture interests are not subject to the covenants of
the Indenture governing the Senior Notes or the Credit Agreement.

EMPLOYEES

As of February 9, 1998, the Company had 1,331 full time employees, all of
whom were located in the United States. Of these employees, 1,241 were engaged
in manufacturing and manufacturing related services, and 90 were engaged in
sales, marketing and administrative functions. The Company's employees are not
represented by labor unions. The Company considers its relationship with its
employees to be satisfactory.

ENVIRONMENTAL MATTERS

The Company's facilities are subject to a broad range of federal, state
and local environmental laws and requirements, including those governing
discharges to the air and water, the handling and disposal of solid and
hazardous substances and wastes and the remediation of contamination associated
with releases of hazardous substances at Company facilities and offsite disposal
locations. Liability with respect to hazardous substance releases arises
principally under the federal Comprehensive Environmental Response, Compensation
and Liability Act and similar state laws, which impose strict, retroactive,
joint and several liability upon statutorily defined classes of "potentially
responsible parties." The Company's foreign joint venture operations are subject
to varying degrees of environmental regulation in the jurisdictions in which
those facilities are located.

Based upon an environmental review conducted by outside consultants in
connection with the acquisition of the Company from Springs Industries, the
Company believes that it is currently in substantial compliance with all
material environmental requirements. However, due to the dynamic nature of these
requirements, it is likely that continued compliance will require varying
amounts of capital expenditures in future years. The Company does not believe
that these capital expenditures will be material in the foreseeable future.
Nevertheless, as is the case with manufacturing operations in general, if a
release of hazardous substances occurs on or from the Company's properties or
any offsite disposal locations, or if contamination from prior activities is
discovered at such properties or locations, the Company may be held liable and
may be required to pay the cost of remedying the condition and/or satisfying
third party damage claims. The Company has from time to time been the subject of
administrative proceedings, litigation or investigations relating to
environmental matters. Management does not believe that the Company is currently
subject to any environmental proceedings, litigation or investigations which
will have a material adverse effect on the Company.

PATENTS AND TRADEMARKS

The Company has several United States patents, patent applications and
trademarks. While the Company considers its patents to be valuable assets, the
Company does not believe that its competitive position is dependent on patent
protection or that its operations are dependent on any individual patent or
group of related patents. However, in some instances, patents and patent
protection may serve as a barrier to entry in certain product lines. The
Company's policy is to obtain patents on its new products and enforce its patent
rights.

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ITEM 2. PROPERTIES

The Company's executive offices are located in Anderson, South Carolina.
The Company leases warehouses in Santa Fe Springs, California and Anderson,
South Carolina and owns a warehouse that is part of its Statesville facility.
The Company owns and operates four principal manufacturing facilities located in
the southeastern United States.

<TABLE>
<CAPTION>
FACILITY SIZE
LOCATION (SQUARE FEET) PRINCIPAL PRODUCTS MANUFACTURED
-------- ------------- -------------------------------
<S> <C> <C>
Statesville, North Carolina 553,000 Electronics Fiber Glass Fabric
Washington, Georgia 160,000 Electronics Fiber Glass Fabric
Cleveland, Georgia 93,000 Electronics Fiber Glass Fabric
Anderson, South Carolina 432,000 Composite Materials Fiber Glass
Fabric, High Performance Fabrics
</TABLE>

In 1995, 1996 and 1997, the Company spent an aggregate of approximately
$20.4 million on facilities maintenance, capacity expansion, modernization, and
upgrades of equipment. Management believes that substantially all of its
property and equipment is in good condition and that, with current capacity
substantially full, it has sufficient capacity to meet its current manufacturing
needs. Through capacity expansion and productivity improvements, management
believes that the Company will meet its projected manufacturing needs. The
Company's existing manufacturing facilities have approximately 1.2 million
square feet of floor space and are highly automated in their manufacturing
processes and equipment. The Company believes that its manufacturing processes
and standards comply with applicable environmental and worker safety laws and
regulations. Three of the Company's four manufacturing facilities produce a
family of closely related products. Management believes that this focused
approach to manufacturing allows these facilities to shorten manufacturing time,
optimize product flow, and avoid long and costly equipment retooling and
employee training time, all of which lead to overall reduced costs.

Substantially all of the Company's assets are subject to liens in favor
of the Credit Agreement lenders.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company is involved in various legal proceedings
arising in the ordinary course of business. None of the legal matters in which
the Company is currently involved, either individually or in the aggregate, is
expected to have a material adverse effect on the Company's business or
financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

In conjunction with the preferred stock redemption and issuance of senior
debentures, the Company's certificate of incorporation was amended and restated
on July 14, 1997. This required a vote of the Company's security holders, and
was unanimously approved on July 14, 1997 by written consent of the holders of
common stock.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for the common stock of
Clark-Schwebel Holdings, Inc. There are approximately 20 holders of the common
stock of Clark-Schwebel Holdings, Inc.

The information in the paragraphs under the subheading "Preferred Stock
Redemption and Issuance of Senior Debentures" in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations", is
incorporated herein by reference. The 12.5% Senior Debentures were issued
pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended,
to qualified institutional buyers as defined in Rule 144A.

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ITEM 6. SELECTED FINANCIAL DATA

Set forth below are selected historical and other financial data of Fort
Mill, the predecessor company, for the fiscal years ended 1993 through 1995.
Fort Mill had no other operations other than Clark-Schwebel, Inc. and its sole
asset was all of the capital stock of Clark-Schwebel, Inc. The selected
historical financial data were derived from the historical balance sheets for
1994 and 1995 and the historical income statements for 1993, 1994 and 1995. The
historical income statement for 1995 was audited by Deloitte & Touche LLP. The
selected historical consolidated balance sheet data for 1993 was derived from
unaudited historical financial statements of Fort Mill. The 1996 selected
historical and other financial data represents the results of operations of Fort
Mill, the predecessor company, through April 17, 1996, and Clark-Schwebel
Holdings, Inc., the successor company, for the period of April 18, 1996 through
December 28, 1996. The 1997 selected historical and the other financial data
represents the results of operations of Clark-Schwebel Holdings, Inc., the
successor company, for the fiscal year of December 29, 1996 through January 3,
1998. Clark-Schwebel Holdings, Inc.'s sole asset is all of the common stock of
Clark-Schwebel, Inc., its operating company. The 1996 and 1997 selected
historical financial data were derived from 1997 consolidated financial
statements which were audited by Arthur Andersen, LLP. The information contained
in this table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and accompanying notes thereto included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
FISCAL YEAR
---------------------------------------------------------------------------
1993 1994 1995 1996 1996 COMBINED
-------- -------- -------- ------- --------
(3.5 MONTHS) (8.5 MONTHS) 1996 1997
---- ----
(PREDECESSOR) (SUCCESSOR) (12 MONTHS)(SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales ........................ $ 163.7 $ 189.4 $ 231.3 $ 68.9 $ 152.0 $ 220.9 $ 240.2
Cost of sales .................... 139.2 160.7 192.0 55.0 118.6 173.6 184.9
-------- -------- -------- ------- -------- -------- --------
Gross profit ..................... 24.5 28.7 39.3 13.9 33.4 47.3 55.3
Selling, general and
administrative expenses ........ 15.5 14.4 17.8 4.8 10.4 15.2 16.0
Idle equipment write-off (1) ..... -- 1.8 -- -- -- -- --
-------- -------- -------- ------- -------- -------- --------
Operating income ................. 9.0 12.5 21.6 9.1 23.0 32.1 39.3
Interest expense ................. 0.4 0.4 0.4 0.1 10.1 10.2 15.2
Other, net ....................... -- -- -- -- 0.1 0.1 0.1
-------- -------- -------- ------- -------- -------- --------
Income before income taxes ....... 8.6 12.0 21.2 9.0 13.0 22.0 24.2
Provision for income taxes ....... 3.6 4.9 8.4 3.6 5.5 9.1 9.7
Income (loss) from equity
investees, net ................. (3.4) 1.2 2.6 1.2 2.6 3.8 4.0
-------- -------- -------- ------- -------- -------- --------
Income (loss) from continuing
operations ..................... 1.6 8.3 15.3 6.6 10.1 16.7 18.5
Discontinued operations (2) ...... 0.7 3.0 0.1 -- -- -- --
-------- -------- -------- ------- -------- -------- --------
Net income (loss) ................ 2.3 11.3 15.4 6.6 10.1 16.7 18.5
Accrued dividends on
preferred stock ................ -- -- -- -- 3.1 3.1 2.9
-------- -------- -------- ------- -------- -------- --------
Net income (loss) applicable
to common shares ............... $ 2.3 $ 11.3 $ 15.4 $ 6.6 $ 7.0 $ 13.6 $ 15.6
======== ======== ======== ======= ======== ======== ========

</TABLE>

13
<PAGE> 14

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------------------------------------------------------------
1993 1994 1995 1996 1996 COMBINED
---- ---- ---- ---- ---- --------
(3.5 MONTHS) (8.5 MONTHS) 1996 1997
---- ----
(PREDECESSOR) (SUCCESSOR) (12 MONTHS) (SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (3) ...................... $ 19.0 $ 22.5 $ 32.7 $ 12.7 $ 29.6 $ 42.3 $ 48.7
EBITDA, as adjusted (3) ......... 19.0 24.3 34.1 12.7 29.6 42.3 48.7
Depreciation and amortization ... 10.0 10.0 11.1 3.5 7.3 10.8 10.5
Capital expenditures ............ 8.8 11.5 8.4 1.6 2.0 3.6 8.3
Gross profit as a percentage
of net sales .................. 15.0% 15.1% 17.0% 20.2% 22.0% 21.4% 23.0%
EBITDA as a percentage of
net sales ..................... 11.6% 11.9% 14.1% 18.4% 19.5% 19.1% 20.3%
EBITDA, as adjusted as a
percentage of net sales ....... 11.6% 12.8% 14.7% 18.4% 19.5% 19.1% 20.3%
Ratio of earnings to fixed
charges (4) ................... 15.0x 23.2x 45.7x 47.5x 2.0x 2.5x 2.5x
Net cash provided by
(used in) (5):
Operating activities .......... $ 17.3 $ 16.2 $ 18.0 $ 8.0 $ 40.8 $ 48.8 $ 21.6
Investing activities .......... (8.7) 7.6 (8.4) (1.6) (194.9) (196.5) (9.5)
Financing activities .......... (8.7) (23.8) (9.1) (6.5) 157.7 151.2 (16.0)
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(PREDECESSOR) (SUCCESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital ...................... $ 38.1 $ 41.2 $ 46.3 $ 25.2 $ 24.9
Total assets ......................... 186.2 179.6 188.7 240.7 237.7
Total long-term debt (including current
portion) ............................. 5.9 6.1 6.0 123.5 156.0
Total stockholders' equity ........... 147.6 137.5 144.0 49.8 18.1
</TABLE>

- ------------
(1) During 1994, the Company recorded a $1.8 million charge against operating
income related to the write-off of certain idle manufacturing equipment.

(2) In 1994, the Company sold substantially all of the assets of a subsidiary
engaged in a separate line of business. In January 1996, the Company sold
its equity investment in a company engaged in a separate line of business.
For further discussion, see Note 15 to the Audited Financial Statements.

14
<PAGE> 15

(3) EBITDA is defined herein as operating income plus depreciation and
amortization. EBITDA, as adjusted, is defined herein as operating income
plus depreciation, amortization, the non-recurring asset write-off ($1.8
million in 1994) and the provision for a customer bad debt ($1.4 million in
1995) related to a receivable retained by Springs Industries. EBITDA and
EBITDA, as adjusted, includes depreciation and amortization of goodwill and
unearned revenue, but excludes amortization of deferred financing cost.
EBITDA and EBITDA, as adjusted, do not include any income (loss) from
equity investees, net. EBITDA is a widely accepted financial indicator of a
company's ability to service debt. However, EBITDA is not a defined term
under generally accepted accounting principles ("GAAP") and should not be
construed as an alternative to operating income, net income or cash flows
from operating activities as determined by GAAP and should not be construed
as an indication of the Company's operating performance or as a measure of
liquidity. EBITDA and EBITDA, as adjusted, do not represent available or
discretionary funds of the Company.

(4) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before taxes, earnings (loss) from a 50% owned
equity investment, distributed income from the less than 50% owned equity
investments and fixed charges. Fixed charges include interest expense,
including the interest portion of lease expense, and amortization of bond
issue costs.

(5) This cash flow information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

15
<PAGE> 16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND
RESULTS OF OPERATIONS

The following information should be read in conjunction with Item 6,
"Selected Financial Data" and the Financial Statements and the notes thereto
included elsewhere in this Form 10-K. The accompanying analysis compares the
results of operations of Clark-Schwebel Holdings, Inc., the successor company,
on a consolidated basis, for the year ended January 3, 1998 to the results of
operations for the year ended December 28, 1996. The year ended January 3, 1998
contains 53 weeks. The accompanying analysis also compares the results of
operations for the year ended December 28, 1996 to the results of operations of
Fort Mill A Inc., the predecessor company, for the year ended December 30, 1995.
The results of operations for the year ended December 28, 1996 represent the
combined results of the predecessor company, for the period of December 31, 1995
through April 17, 1996, and the successor company for the period of April 18,
1996 through December 28, 1996, in order to establish comparative periods. No
pro forma adjustments were made to the financial statements for purposes of this
analysis due to the insignificance of the adjustments on operating income.
Interest expense for the periods after April 17, 1996 is not comparable to
interest expense for the periods prior to April 17, 1996. The impact of interest
expense on the successor company is discussed below.

GENERAL

The Company believes it is the largest United States manufacturer of
fiber glass fabrics for use in the electronics industry and a leading
manufacturer of fiber glass fabrics and high performance fabrics for a wide
variety of industrial applications. Fiber glass fabric is a critical component
of printed circuit boards which are used in virtually all electronic products,
including computers, telecommunications equipment, advanced cable television
equipment, network servers, televisions, automotive equipment and home
appliances. Fiber glass fabrics are also used to reinforce plastic composite
materials for aircraft and aerospace applications and for marine and tooling
markets. Other applications of fiber glass fabrics include reinforcing
electrical tape and providing high temperature dust filtration for the carbon
black, steel and power industries. The Company's high performance fabrics are
used primarily for civilian and military ballistics protection in
bullet-resistant vests and helmets, and by the aerospace industry in the
manufacture of composite material aircraft parts.

Sales of the Company's fiber glass fabrics are principally driven by the
electronics industry which has experienced growth due to: (i) expanded
applications for computer systems; (ii) technological advancements; and (iii)
new product introductions. The Company believes that there is no cost-effective
substitute for fiber glass fabric that can satisfy the stringent quality and
performance criteria demanded of printed circuit boards. The Company's high
performance sales to the military end-use market are generally dependent upon
government expenditures and may fluctuate from year to year; however, sales to
the civilian ballistics protection market have historically been stable.

The Company's financial results have historically been affected by
general economic conditions and by conditions affecting the electronics industry
in particular. The Company is uncertain how the recent economic events in Asia
will affect the domestic electronics industry in the near term. Accordingly, the
Company cannot predict the impact of Asian events on its business in 1998. The
situation in Asia did not significantly impact the Company's results of
operations in the fourth quarter of 1997.

Fiber glass yarn is the principal raw material used in the production of
fiber glass fabric. There are two major suppliers of fiber glass yarn in the
United States, and substitutes are not readily available. The Company purchases
most of its aramid yarn from one supplier. While shortages in the supply of
fiber glass yarn have occurred, the Company has not experienced such a shortage
since early 1996 and does not anticipate the occurrence of a shortage in the
foreseeable future. The Company generally has been able to pass through yarn
price increases to its customers.

16
<PAGE> 17

RESULTS OF OPERATIONS

1997 COMPARED TO 1996

<TABLE>
<CAPTION>
Period from Twelve month
December 31, Period from Combined twelve period from
1995- April 18- month period December 29, 1996
April 17, December 28, from December 31, - January 3,
1996 1996 1995 - December 1998
(Predecessor Basis) (Successor Basis) 28, 1996 (Successor Basis)
------------------- ----------------- ----------------- ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
NET SALES $ 68,911 $ 152,003 $ 220,914 $ 240,204
Cost of goods sold 54,958 118,605 173,563 184,901
------------------- ----------------- ----------------- ------------------
Gross profit 13,953 33,398 47,351 55,303
Selling, general and a
administrative expenses 4,812 10,418 15,230 15,987
------------------- ----------------- ----------------- ------------------
Operating income 9,141 22,980 32,121 39,316
Interest expense (148) (10,061) (10,209) (15,176)
Other income (expense), net (5) 50 45 35
Provision for income tax (3,595) (5,460) (9,055) (9,657)
Income from equity investees, net 1,174 2,633 3,807 3,997
------------------- ----------------- ----------------- ------------------
Income from continuing operations $ 6,587 $ 10,142 $ 16,709 $ 18,515
=================== ================= ================= ==================

PERCENTAGE OF NET SALES

Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of Goods Sold 79.7 78.0 78.6 77.0
------------------- ----------------- ----------------- ------------------
Gross profit 20.3 22.0 21.4 23.0
Selling, general and administrative expenses 7.0 6.9 6.9 6.7
------------------- ----------------- ----------------- ------------------
Operating income 13.3 15.1 14.5 16.3
Interest expense (0.2) (6.6) (4.6) (6.3)
Other income (expense), net - - - -
Provision for income tax (5.2) (3.6) (4.1) (4.0)
Income (loss) from equity investees, net 1.7 1.7 1.7 1.7
------------------- ----------------- ----------------- ------------------
Income from continuing operations 9.6 % 6.7 % 7.5 % 7.7 %
=================== ================= ================= ==================
</TABLE>

Net Sales. Net sales for 1997 increased by $19.3 million, or 8.7%, to
$240.2 million from $220.9 million in 1996. Sales of electronics fiber glass
increased by 11.9%, while composite materials fiber glass sales declined by
1.2%, resulting in an increase in overall fiber glass sales of $16.0 million, or
8.6%. Electronic fiber glass sales increased compared to 1996 primarily as a
result of the temporary inventory correction in the industry supply chain that
occurred during the third quarter of 1996. Composite material fiber glass sales
declined primarily due to a reduction in sales volume related to coating and
laminating and filtration products, which more than offset improved sales to the
aerospace industry. High performance fabric sales increased $3.3 million, or
9.5%, primarily due to increased sales of military ballistic and aerospace
products.

Gross Profit. Gross profit for 1997 increased $7.9 million, or 16.8%, to
$55.3 million from $47.4 million in 1996. Gross profit as a percentage of sales
improved to 23.0% in 1997 from 21.4% in 1996. The improvement in gross profit
resulted primarily from higher sales in 1997 compared to 1996, a shift in sales
mix weighted more towards higher margin fiber glass fabrics, and the favorable
impact of improved manufacturing efficiencies.

SG&A. Selling, general, and administrative expenses for 1997 increased by
$0.8 million, or 4.9%, to $16.0 million from $15.2 million in 1996. As a
percentage of net sales, SG&A decreased to 6.7% in 1997 from 6.9% in 1996. The
increase in such expenses resulted primarily from higher freight costs related
to additional volume and higher goodwill amortization, which reflects a full
year of expense in 1997, compared to 8.5 months in 1996, due to the Acquisition.
In addition, legal and consulting fees increased in 1997, primarily due to the
transactions related to the preferred stock redemption.

Operating Income. Operating income for 1997 increased $7.2 million, or
22.4% to $39.3 million from $32.1 million in 1996. As a percentage of net sales,
operating income increased to 16.4% in 1997 from 14.5% in 1996 due primarily to
the increases in sales and gross profit.

Interest Expense. Interest expense incurred by the Company increased to
$15.2 million in 1997 compared to $10.2 million in 1996. Interest expense in
1997 is not fully comparable to 1996 due to the financing related to the
Acquisition effective April 17, 1996 and the issuance of the Senior Debentures
effective August 14, 1997.

17
<PAGE> 18

Income From Equity Investees, Net. Income from equity investees, net, for
1997 increased $0.2 million, or 5.0%, to $4.0 million from $3.8 million in 1996.
This improvement resulted primarily from higher net income reported by
Asahi-Schwebel, which was partially offset by a decline in the net income
reported by CS-Interglas. Asahi-Schwebel's results were favorably impacted
primarily by the strength of sales in Japan and Taiwan, driven by improved
pricing and a strong dollar. Additionally, a recently completed modernization
project at Asahi-Schwebel's 51% owned subsidiary, Asahi-Schwebel (Taiwan) Co.,
Ltd., has led to improved manufacturing efficiencies and higher profits being
reported by this facility. Also, the results of operations of Taiwan were
included with the results of Asahi-Schwebel for twelve months in 1997 compared
to only nine months in 1996, effective with the acquisition on April 1, 1996.
The recent economic events in Asia have not significantly impacted the operating
results of Asahi-Schwebel or Taiwan, and the Company is uncertain as to how
Asian events will effect the results of these companies in the future.
CS-Interglas operating results declined compared to last year, due primarily to
softening demand relative to a year ago in Europe for electronic fiber glass
fabric. The softening demand was experienced primarily in the first quarter of
1997, but returned to expected levels later in 1997. In addition, effective
December 31, 1996, the interest rate on the CS-Interglas Convertible Notes held
by the Company declined from 8% to 5%, which resulted in a decline in interest
income included in income from equity investees, net. CS-Tech Fab results in
1997 were slightly higher than those experienced in 1996.

The equity investment as of January 3, 1998 increased by $2.0 million from the
December 28, 1996 balance sheet. The increase resulted from the purchase of an
additional 4.3% common equity interest in Asahi-Schwebel in October 1997, and
additional equity income recorded in 1997. However, these increases were
partially offset by a decline that resulted from a strengthening U.S. dollar
relative to the German mark (the functional currency for CS-Interglas) and the
Japanese yen (the functional currency for Asahi-Schwebel), and a $1.6 million
dividend distribution received by the Company from Asahi-Schwebel in July 1997.

Income From Continuing Operations. Income from continuing operations for
1997 increased $1.8 million, or 10.8%, to $18.5 million from $16.7 million in
1996. The significant improvement in operating income was partially offset by
the increase in interest expense and a higher provision for income tax. This
impact, combined with the increase in income from equity investees, net,
accounted for the increase in income from continuing operations.

1996 COMPARED TO 1995

Twelve month Period from
period from December 31, Period from Combined twelve
January 1 - 1995 April 18 - month period
December 30, April 17, December 28, from December 31,
1995 1996 1996 1995 - December
(Predecessor Basis) (Predecessor Basis) (Successor Basis) 28, 1996
------------------- ------------------- ----------------- -----------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net sales $ 231,306 $ 68,911 $ 152,003 $ 220,914
Cost of goods sold 191,978 54,958 118,605 173,563
-------------------- -------------------- ----------------- ------------------
Gross profit 39,328 13,953 33,398 47,351
Selling, general and administrative expenses 17,750 4,812 10,418 15,230
-------------------- -------------------- ----------------- ------------------
Operating income 21,578 9,141 22,980 32,121
Interest expense (401) (148) (10,061) (10,209)
Other income (expense), net 12 (5) 50 45
Provision for income tax (8,444) (3,595) (5,460) (9,055)
Income from equity investees, net 2,553 1,174 2,633 3,807
-------------------- -------------------- ----------------- ------------------
Income from continuing operations $ 15,298 $ 6,567 $ 10,142 $ 16,709
==================== ==================== ================= ==================

PERCENTAGE OF NET SALES

Net sales 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 83.0 79.7 78.0 78.6
-------------------- -------------------- ----------------- ------------------
Gross profit 17.0 20.3 22.0 21.4
Selling, general and administrative expenses 7.7 7.0 6.9 6.9
-------------------- -------------------- ----------------- ------------------
Operating income 9.3 13.3 15.1 14.5
Interest expense (0.2) (0.2) (6.6) (4.6)
Other income (expense), net - - - -
Provision for income tax (3.6) (5.2) (3.6) (4.1)
Income (loss) from equity investees, net 1.1 1.7 1.7 1.7
-------------------- -------------------- ----------------- ------------------
Income from continuing operations 6.6% 9.6% 6.7% 7.5%
==================== ==================== ================= ==================
</TABLE>

18
<PAGE> 19

Net Sales. Net sales for 1996 decreased by $10.4 million, or 4.5%, to
$220.9 million from $231.3 million in 1995. Despite reduced demand for
electronics fiber glass fabric in the third quarter due to an inventory
correction in the supply chain, sales of electronics fiber glass in 1996
increased modestly by 2.0% in 1996 over 1995. Composite material fiber glass
sales increased 10.2% in the same period. Higher sales to the aerospace and
coating & laminating markets accounted for this increase. While overall fiber
glass sales were up $7.1 million, or 3.9%, the increase was more than offset by
a $17.5 million, or 33.4%, decline in high performance fabric sales. After a
strong first quarter in high performance fabric sales, there was a significant
reduction in the number of contract quotes requested by the government for
military ballistic fabrics. Management's decision to exit the automotive airbag
fabric business also contributed to the decline in high performance sales.

Gross Profit. Gross profit for 1996 increased $8.0 million or 20.4% to
$47.4 million from $39.3 million in 1995. Gross profit as a percentage of sales
improved to 21.4% in 1996 from 17.0% in 1995. The significant improvement in
both gross profit dollars and gross profit percentage resulted from several
factors including a shift in sales mix weighted more towards fiberglass fabrics
which generate higher margins than high performance fabric, improved operating
efficiencies which allow management the flexibility to run extended workweeks at
electronic fiber glass plants and to adjust running schedules to customer demand
when necessary, and improved pricing.

SG&A. SG&A for 1996 decreased by $2.5 million, or 14.2%, to $15.2
million. As a percentage of net sales, SG&A decreased to 6.9% in 1996 from 7.7%
in 1995. This decrease resulted from lower bad debt expense and lower stand
alone expenses in 1996 compared to parent company allocations in 1995, offset
somewhat by higher goodwill amortization and the payout to certain executives of
compensation under Springs Industries' executive compensation plans which vested
and were paid on the Closing of the Acquisition.

Operating Income. Operating income increased by 48.8% in 1996 to $32.1
million from $21.6 million in 1995. As a percentage of sales, operating income
increased to 14.5% in 1996 from 9.5% in 1995 due to all the factors mentioned
above.

Interest Expense. Interest expense is not comparable to prior periods as
a result of the financing related to the Acquisition. Interest expense for the
successor company was $10.2 million, for the period of April 18, 1996 to
December 28, 1996.

Income From Equity Investees, Net. Income from equity investees, net,
improved by $1.3 million to $3.8 million in 1996. This improvement resulted from
higher net income reported by Asahi-Schwebel. Asahi-Schwebel's results were
favorably impacted primarily by the strength of sales in Japan, driven by
improved pricing and a stronger dollar, and, to a lesser degree, by the
inclusion of the financial results of its newly acquired 51% owned subsidiary,
Asahi-Schwebel (Taiwan) Co., Ltd. The results of operations of Taiwan were
included with the results of Asahi-Schwebel effective with the acquisition on
April 1, 1996. CS-Interglas results were flat when compared to last year. Demand
for electronic fiber glass fabric in the last quarter of 1996 moderated somewhat
in Europe from earlier demand levels. CS-Tech Fab results in 1996 were slightly
lower than those experienced in 1995.

Income From Continuing Operations. The significant improvements in
operating results and income from equity investees were more than enough to
offset the increase in interest expense, as income from continuing operations
for 1996 was 9.2% higher than in 1995.

LIQUIDITY AND CAPITAL RESOURCES

THE ACQUISITION

Clark-Schwebel Holdings, Inc., its wholly owned subsidiary, Clark-S
Acquisition Corporation ("Clark-S Acquisition"), and Clark-S Acquisition's
wholly owned subsidiary, CS Finance Corporation of Delaware, were all
incorporated in Delaware by Vestar Equity Partners, L.P. ("Vestar") in 1996 to
effect the acquisition (the "Acquisition") of Fort Mill A Inc. ("Fort Mill") and
Clark-Schwebel, Inc., Fort Mill's wholly owned subsidiary.

19
<PAGE> 20

Pursuant to an Agreement and Plan of Merger, dated February 24, 1996, as amended
(the "Merger Agreement"), among Vestar/CS Holding Company, L.L.C. ("Vestar/CS
Holding"), Clark-S Acquisition, Springs Industries, Inc. ("Springs Industries")
and Fort Mill, Clark-S Acquisition purchased all of the issued and outstanding
capital stock of Fort Mill from Springs Industries. Concurrently with the
consummation of the Acquisition, Clark-S Acquisition merged into Fort Mill, with
Fort Mill as the surviving corporation, and CS Finance Corporation of Delaware
merged into Clark-Schwebel, Inc. with Clark-Schwebel, Inc. as the surviving
corporation. On the day following the Closing, Fort Mill merged (the "Merger")
into Clark-Schwebel, Inc., and since that merger, Clark-Schwebel Holdings,
Inc.'s primary asset has been the capital stock of Clark-Schwebel, Inc.
Clark-Schwebel, Inc. had been incorporated as a Delaware corporation in 1994.

The consideration for the Acquisition was $192.9 million in cash. In
order to finance the Acquisition, including the payment of related fees and
expenses: (i) Vestar/CS Holding and certain key members of management and their
lineal descendants (the "Management Investors") made an equity contribution of
$45.0 million in exchange for all of the capital stock of Clark-Schwebel
Holdings, Inc.; (ii) Clark-S Acquisition consummated an offering of $110.0
million in Senior Notes (the "Senior Notes"); and (iii) Clark-S Acquisition
entered into a Credit Agreement (the "Credit Agreement") providing for
borrowings of up to $70.0 million ($35.0 million of which was drawn at Closing
under a revolving credit facility (the "Revolving Credit Facility") and $15.0
million of which was drawn at Closing under a term loan (the "Term Loan")).
Clark-Schwebel Holdings, Inc. guaranteed the indebtedness under the Senior Notes
and the Credit Agreement. As a result of these transactions, the obligations of
Clark-S Acquisition with respect to the Senior Notes and the Credit Agreement
were assumed by the Company. On August 5, 1996, the Company consummated the
exchange of $110 million principal amount of Senior Notes registered under the
Securities Act of 1933, as amended, for the $110 million principal amount of
Senior Notes issued in connection with the Acquisition.

PREFERRED STOCK REDEMPTION AND ISSUANCE OF SENIOR DEBENTURES

In addition, on July 14, 1997, the Company prepaid all of its outstanding
indebtedness under the Term Loan and amended the Credit Agreement to provide,
among other things, that the Company could, subject to certain conditions, pay
up to $5.0 million in cash and issue Senior Debentures in a redemption of the
Preferred Stock, and make semi-annual interest payments in cash on the Senior
Debentures. The Revolving Credit Facility under the Credit Agreement was also
amended to increase the aggregate amount of commitments thereunder to $65.0
million.

Vestar/CS-Holding sold the Preferred Stock on July 14, 1997 and
simultaneously purchased 10% of the outstanding Common Stock of the Company from
the management investors on a pro rata basis. Upon the consummation of that
transaction, all of the Company's outstanding loans to management were repaid in
full.

On August 14, 1997, the Company issued $46.0 million in 12.5% Senior
Debentures due 2007 (the "Senior Debentures") and paid $5.0 million in cash in
exchange for and redemption of the Preferred Stock and all accrued but unpaid
dividends on the Preferred Stock. On January 6, 1998 the Company consummated the
exchange of $46.0 million of Senior Debentures registered under the Securities
Act of 1933, as amended, for the $46.0 million of Senior Debentures which had
been issued in August 1997.

DESCRIPTION OF INDEBTEDNESS

With the prepayment of the Term Loan under the Credit Agreement, the
Company had the following debt at January 3, 1998: a $65.0 million Revolving
Credit Facility under the Credit Agreement, none of which was drawn at year end,
$110.0 million in Senior Notes, and $46.0 million in Senior Debentures. The
Revolving Credit Facility is available for working capital and general corporate
purposes and matures in April 2002. Substantially all of the assets of
Clark-Schwebel, Inc. (the "Operating Company") are subject to liens in favor of
the Credit Agreement lenders. The interest rate per annum is variable and based
upon (i) a Base Rate (defined in the Credit Agreement) or

20
<PAGE> 21

(ii) LIBOR plus a margin which varies based upon the Company's financial
performance. The margin over LIBOR at January 3, 1998 was 0.875%.

The Senior Notes bear interest at a rate of 10.5% per annum, payable
semi-annually on April 15 and October 15 of each year. Other than upon a change
of control or as a result of certain assets sales, the Operating Company will
not be required to make any principal payments in respect of the Senior Notes
until maturity in April 2006. Holdings unconditionally and irrevocably
guarantees the Senior Notes, which are the obligation of the Operating Company.
Depending on market conditions and the Company's financial position, the
Operating Company may from time to time make open market purchases of the Senior
Notes.

The Senior Debentures bear interest at a rate of 12.5% per annum, payable
semi-annually on January 15 and July 15 to the extent permitted by the Credit
Agreement and the indenture governing the Senior Notes. If the Company is unable
to pay interest in cash due to the prohibitions contained in the Credit
Agreement or such indenture, interest on the Senior Debentures would be payable
in additional Senior Debentures. The Senior Debentures will not be redeemable at
the Company's option prior to July 15, 2002, except in the event of a public
equity offering, or a change of control or subsidiary change of control after
January 15, 1998. The Senior Debentures are subordinated to borrowings under the
Credit Agreement and to the Senior Notes.

The Company's ability to borrow in excess of the commitments set forth in
the Credit Agreement is limited by the terms of the Credit Agreement and the
indentures governing the Senior Notes and Senior Debentures. Additionally, such
terms provide limitations on the Company with respect to restricted payments,
indebtedness, liens, investments, dividends, distributions, transactions with
affiliates, debt repayments, capital expenditures, mergers and consolidations.
The Credit Facility also requires the maintenance of certain financial ratios.
At January 3, 1998, the Company was in compliance with such covenants. With the
exception of the Senior Debentures, which are obligations of Clark-Schwebel
Holdings, Inc., all other debt is incurred at the Operating Company level.

All assets of Clark-Schwebel, Inc. represent restricted net assets under
the Credit Agreement with the exception of the foreign equity investments and
distributions received from the foreign equity investments. Except in limited
circumstances, Clark-Schwebel, Inc. is prohibited from transferring restricted
net assets to Clark-Schwebel Holdings, Inc. in the form of cash dividends,
loans, or advances without the consent of a third party lender. The amount (in
thousands) of unrestricted net assets at January 3, 1998 is $62,257, which
represents the book value of the foreign equity investments ($61,254) and
distributions received in the form of cash from the foreign equity investments
($1,003).

PURCHASE OF ADDITIONAL EQUITY INVESTMENT IN ASAHI-SCHWEBEL CO., LTD.

On October 1, 1997, the Company purchased an additional 4.3% common
equity interest in Asahi-Schwebel Co., Ltd. ("ASCO"), raising its ownership
interest from 39% to 43.3%. ASCO manufactures fiber glass fabric in Japan and
has a majority interest in a fiber glass manufacturer located in Taiwan. This
equity investment will continue to be accounted for on the equity method of
accounting.

1997 COMPARED TO 1996

Cash provided by operating activities in 1997 was $21.6 million, compared
with $40.8 million provided in 1996. Cash provided by operating activities
declined due to an increase in working capital in 1997 while, in 1996,
significant cash was generated through reductions in working capital. Despite
the decline, cash provided from operating activities in 1997 allowed the Company
to increase capital expenditures from 1996, prepay and eliminate the Term Loan,
pay $5.0 million in connection with the Preferred Stock Redemption and make an
additional investment in ASCO. The Company spent $8.3 million on capital
additions in 1997, compared to $3.6 million in 1996. The Company typically makes
capital expenditures to enhance capacity and improve manufacturing facilities
and processing equipment. The Company anticipates that capital spending in 1998
will approximate the same levels experienced in 1997. As of January 3, 1998, the
Company had cash and cash equivalents of approximately $0.1 million. In
addition, the Company had $65.0 million of undrawn availability under the
Revolving Credit Facility.

21
<PAGE> 22

The Company ended the year with debt, net of cash, of $155.9 million, consisting
of $110.0 million in Senior Notes, $46.0 in Senior Debentures, and $0.1 million
in cash and cash equivalents.

To meet its liquidity needs, the Company has relied and expects to
continue to rely on internally generated funds and, to the extent necessary, on
undrawn commitments available under the Revolving Credit Facility. The Company
believes that cash generated from operations and borrowing resources will be
sufficient to fund the Company's cash needs for the foreseeable future.

IMPACT OF YEAR 2000

Management has initiated a plan to prepare the Company's computer systems
and applications for the year 2000. At January 3, 1998, the Company had made
substantial progress in programming its business systems for year 2000
compliance. Management estimates that all computer systems and applications will
be year 2000 compliant prior to that date. The Company expects to incur
primarily internal staff costs related to infrastructure and facilities
enhancements necessary to prepare the systems for the year 2000. Testing and
conversion of system applications is expected to cost approximately $1.7 million
over the next three years. This estimate includes the cost to purchase and
install two software systems to replace systems which are currently not year
2000 compliant.

JOINT VENTURES

The Company accounts for its three joint venture interests using the
equity method of accounting. Accordingly, the Company's operating income
excludes net income (loss) from such interests. Historically, each of the three
joint venture interests has been wholly self-supporting and received no
contributions from the Company. See Item 1, "Business--Joint Ventures."

ACCOUNTING STANDARDS

A summary of the Company's significant accounting policies is included in
Note 4 to the footnotes of the Audited Financial Statements for the fiscal year
ended January 3, 1998, enclosed in this Form 10-K.

CERTAIN RELEVANT FACTORS

Under the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, forward looking statements, such as earnings projections,
are protected from liability as long as they are accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from projected results. The Company wishes to
caution readers that the following important factors, among others, in some
cases have affected, and in the future could affect, the Company's actual
results and could cause the Company's actual results to differ materially from
those expressed in any forward-looking statements made by, or on behalf of, the
Company whether contained herein, in other documents subsequently filed by the
Company with the SEC, or in oral statements:

- - A moderating growth rate or reduction in sales of electronics products,
which incorporate a significant percentage of the Company's products,
could materially affect operating results. The electronics industry is
cyclical and has experienced recurring downturns. A future downturn could
reduce demand for, and prices of, materials used in electronics products,
including those manufactured by the Company. For example, the recent
economic turmoil in Asia could potentially result in a decline in
electronics industry growth rates, which could impact the future
operating results of the Company.

- - Rapid technology changes in the electronics industry have placed
increasingly rigorous demands on weight, thickness, and consistency of
fiber glass products produced by the Company. Technological change in the
printed circuit board industry is rapid and continuous and will continue
to require increased technological and

22
<PAGE> 23
manufacturing capability and expertise. Advances in semi-conductor
technology could further reduce the surface area of printed circuit
boards and possibly demand for the Company's products. Operating results
could be materially affected by the Company's ability to maintain its
technological position.

- - The Company could face increased competition if cost-effective
alternatives to fiber glass fabrics were developed for the electronics
industry. Currently, only lower-end electronics, which use a paper based
laminate system for printed circuit boards, and very high-end
electronics, which use a variety of very expensive materials for printed
circuit boards, use non-fiber glass fabrics. However, the development and
introduction of cost-competitive alternatives could have a material
adverse impact on the Company's business, financial condition, and
results of operations.

- - Virtually all fiber glass yarn manufactured in North America is produced
by two suppliers, and substitutes are not readily available. The Company
purchases substantially all of its fiber glass yarn from these two
suppliers. The Company purchases most of its aramid yarn from one
supplier. Any disruption in the ability or willingness of the Company's
suppliers to deliver fiber glass or aramid yarns to the Company could
have a material adverse effect on the Company's business, financial
condition, and results of operations. During 1995 and through mid-1996,
the Company experienced a fiber glass yarn shortage which limited the
Company's ability to expand production of fiber glass fabrics. The
Company has not experienced such a shortage since mid-1996, and does not
anticipate the occurrence of a shortage in the foreseeable future.
Additionally, due in part to the fiber glass yarn shortage, the price of
fiber glass yarn increased at a higher than historical rate in 1996 and
1997. While the Company generally has been able to pass through increases
in the cost of fiber glass yarn, the inability of the Company to do so in
the future could have a material adverse effect on the Company's
business, financial condition, and results of operations.

- - The Company's customer base is concentrated. In 1997, sales to two of the
Company's customers each accounted for more than 10% of the Company's net
sales, and sales to the Company's top ten customers accounted for
approximately 70% of net sales. As customers seek to establish closer
relationships with their suppliers, the Company expects its customer base
to continue to become more concentrated. If, for any reason, any of its
key customers were to purchase significantly less of the Company's
products in the future, such decreased level of purchases could have a
material adverse effect on the Company's business, financial condition,
and results of operations.

- - The Company could face an increasingly competitive market place in
electronics fiber glass fabric resulting from expected capacity growth in
fiber glass yarn and woven fiber glass both domestically and world wide.

- - The Company relies on constant communication with its customers to
anticipate the future volume of purchase orders. A variety of conditions,
both specific to the individual customer and generally affecting the
customer's industry, can cause a customer to reduce or delay orders
previously anticipated by the Company.

- - The Company's facilities are subject to a broad range of federal, state,
local, and foreign environmental laws and requirements, including those
governing discharges to the air and water, the handling and disposal of
solid and hazardous substances and wastes and the remediation of
contamination associated with releases of hazardous substances at Company
facilities and offsite disposal locations. The Company has made, and will
continue to make, expenditures to comply with such laws and requirements.
The Company believes, based on information currently available to
management, that it will not require material capital expenditures to
maintain compliance with environmental requirements during this or the
following fiscal year or the foreseeable future. However, future events,
such as changes in existing laws and regulations or the discovery of
contamination at sites owned or operated by the Company, or to which
Company waste has been transported, may give rise to additional
compliance or remediation costs which could have a material adverse
effect on the Company's financial condition or results of operations.

- - The Company's success is dependent upon certain key management personnel.
There is competition for qualified employees among companies in the
electronic materials industry, and the loss of certain of the Company's
employees or an inability to continue to attract and motivate highly
skilled employees could have a material adverse effect on the Company's
business, financial condition, and results of operations.

23
<PAGE> 24

- - The Company's international joint ventures are subject to risks,
including exchange rates, unexpected changes in regulatory requirements,
tariffs, international trade restrictions or prohibitions, political and
economic instability, and changes in taxation. Equity income from the
international joint ventures may be materially affected by currency
exchange rate fluctuations.

INFLATION

The Company generally attempts to pass cost increases to its customers.
Costs are affected by, among other things, inflation, and the effects of
inflation may be experienced by the Company in future periods. The Company
believes, however, that inflationary effects have not been material to the
Company during the past three years.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

24
<PAGE> 25

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(See Pages 26 - 43 - This page is intentionally left blank).

25
<PAGE> 26

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Clark-Schwebel Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of Clark-Schwebel
Holdings, Inc. (a Delaware corporation) and subsidiaries as of December 28,
1996, and January 3, 1998, and the related consolidated statements of income and
cash flows for each of the two periods in the year ending December 28, 1996, and
the fiscal year ending January 3, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clark-Schwebel Holdings, Inc.
and subsidiaries as of December 28, 1996, and January 3, 1998, and the results
of their operations and their cash flows for each of the two periods in the year
ended December 28, 1996, and the fiscal year ending January 3, 1998, in
conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in the index are the
responsibility of the Company's management and are presented for the purposes of
complying with the Securities and Exchange Commission's rules and are not a
required part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

Arthur Andersen LLP

Columbia, South Carolina,
February 12, 1998.

26
<PAGE> 27

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying statements of income and cash flows of Fort
Mill A Inc. (the "Predecessor") (a wholly owned subsidiary of Springs
Industries, Inc.) for the fiscal year ended December 30, 1995. These financial
statements are the responsibility of the Predecessor's management. Our
responsibility is to express an opinion on the financial statements based on our
audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of Fort Mill A Inc. for the
fiscal year ended December 30, 1995 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina
February 9, 1996
(February 24, 1996 as to Note 2)

27
<PAGE> 28

CLARK-SCHWEBEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1996 AND JANUARY 3, 1998
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................. $ 4,064 $ 147
Accounts receivable, .................................. 25,794 28,527
Inventories, net ...................................... 33,625 34,897
Other ................................................. 592 235
--------- ---------
Total current assets .............................. 64,075 63,806
--------- ---------

PROPERTY, PLANT AND EQUIPMENT ............................. 67,936 72,133
Accumulated depreciation ................................ (5,841) (12,540)
--------- ---------
Property, plant and equipment, net .................... 62,095 59,593
--------- ---------

EQUITY INVESTMENTS ........................................ 63,426 65,411
GOODWILL .................................................. 44,333 43,205
OTHER ASSETS .............................................. 6,808 5,702
--------- ---------
TOTAL ASSETS .............................................. $ 240,737 $ 237,717
========= =========

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable ...................................... $ 21,448 $ 19,806
Accrued liabilities ................................... 15,330 16,706
Deferred tax liabilities -- current ................... 2,056 2,370
Current maturities of long-term debt .................. 51 0
--------- ---------
Total current liabilities .......................... 38,885 38,882
LONG-TERM DEBT ............................................ 123,440 155,994
DEFERRED TAX LIABILITIES .................................. 21,458 20,575
LONG-TERM BENEFIT PLANS AND OTHER ......................... 7,121 4,139
COMMITMENTS AND CONTINGENCIES
--------- ---------
TOTAL LIABILITIES ......................................... 190,904 219,590
--------- ---------

EQUITY:
Preferred stock (par value per share - $.01) - 12.5%
participating, 10,000 shares authorized, 1,000 and 0
shares issued and outstanding, respectively ........... 35,000 0
Common stock (par value per share - $.01) - 100,000
shares authorized, 9,000 shares issued and outstanding,
less management loans of $822 and $0, respectively .... 9,178 9,000
Retained earnings ..................................... 7,005 13,664
Cumulative translation adjustment ..................... (1,350) (4,537)
--------- ---------
Total equity ...................................... 49,833 18,127
--------- ---------
TOTAL LIABILITIES AND EQUITY .............................. $ 240,737 $ 237,717
========= =========
</TABLE>

See notes to consolidated financial statements

28
<PAGE> 29

CLARK-SCHWEBEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND JANUARY 3, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 - APRIL 18 - 1996 -
APRIL 17, DECEMBER 28, JANUARY 3,
1995 1996 1996 1998
--------- -------------- ----------- -------------
(PREDECESSOR BASIS) (SUCCESSOR BASIS)

<S> <C> <C> <C> <C>
Net .......................................... $ 231,306 $ 68,911 $ 152,003 $ 240,204
Cost of goods sold ........................... 191,978 54,958 118,605 184,901
--------- --------- --------- ---------
Gross profit ................................. 39,328 13,953 33,398 55,303
Selling, general and administrative
expenses .................................. 17,750 4,812 10,418 15,987
--------- --------- --------- ---------
Operating income .......................... 21,578 9,141 22,980 39,316

Other income (expense):
Interest expense .......................... (401) (148) (10,061) (15,176)
Other, net ................................ 12 (5) 50 35
--------- --------- --------- ---------
Income before income taxes ................... 21,189 8,988 12,969 24,175
Provision for income tax ..................... (8,444) (3,595) (5,460) (9,657)
Income from equity investees, net ............ 2,553 1,174 2,633 3,997
--------- --------- --------- ---------
Income from continuing operations ............ 15,298 6,567 10,142 18,515
Discontinued operations:
Income from discontinued operations, net . 111 0 0 0
--------- --------- --------- ---------
Net income ................................... $ 15,409 $ 6,567 10,142 18,515
Accrued dividends on preferred stock ......... ========= ========= (3,137) (2,856)
--------- ---------
Net income applicable to common shares ... $ 7,005 $ 15,659
========= =========
</TABLE>

See notes to consolidated financial statements.

29
<PAGE> 30

CLARK-SCHWEBEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 30, 1995, DECEMBER 28, 1996 AND JANUARY 3, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 - APRIL 18 - 1996 -
APRIL 17, DECEMBER 28, JANUARY 3,
1995 1996 1996 1998
---------- ------------- ------------ ------------
(PREDECESSOR BASIS) (SUCCESSOR BASIS)

OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income ................................................ $ 15,409 $ 6,567 $ 10,142 $ 18,515
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of goodwill
and unearned revenue ................................. 11,128 3,526 6,683 9,385
Amortization of deferred financing cost .............. 0 0 601 1,106
Deferred tax ......................................... 176 1,404 (1,128) (1,369)
Income from equity investments, ...................... (2,553) (1,174) (2,633) (3,997)
Income from discontinued operations, net ............. (111) 0 0 0
Loss on sale of equipment ............................ 0 0 0 42
Changes in assets and liabilities, net of the
effects of the purchase of the company:
Accounts receivable ............................... (8,244) 1,832 3,811 (2,733)
Inventories ....................................... (2,931) (2,883) 3,323 (1,272)
Prepaid expenses and other ........................ 1,465 (187) 1,399 890
Accounts payable .................................. 3,181 (697) 14,011 (1,642)
Accrued liabilities ............................... 367 (289) 5,076 2,377
Other ................................................ 124 (131) (455) 342
--------- --------- --------- ---------
Net cash provided by operating activities ........ 18,011 7,968 40,830 21,644
--------- --------- --------- ---------
INVESTING ACTIVITIES:
Purchases of equipment and other assets ................... (8,429) (1,603) (2,035) (11,019)
Proceeds from sale of assets .............................. 42 0 0 1,511
Payment for purchase of company ........................... 0 0 (192,895) 0
--------- --------- --------- ---------
Net cash used in investing activities ............ (8,387) (1,603) (194,930) (9,508)
--------- --------- --------- ---------
FINANCING ACTIVITIES:
Investment by Springs ..................................... (8,982) (10,955) 0 0
Transfer of assets retained by Springs .................... 0 4,461 0 0
Proceeds from issuance of stock ........................... 0 0 45,000 0
Payment of acquisition fees, net .......................... 0 0 (10,128) 0
Loans to management investors ............................. 0 0 (822) 0
Proceeds from long-term borrowings ........................ 0 0 160,000 45,994
Principal payments under long-term debt and
capital lease obligations ................................. (87) (29) (36,616) (13,491)
Redemption of preferred stock, net ........................ 0 0 0 (50,172)
Dividends received from ASCO .............................. 0 0 304 1,616
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities ............................. (9,069) (6,523) 157,738 (16,053)
--------- --------- --------- ---------
NET CHANGE IN CASH ............................................ 555 (158) 3,638 (3,917)
CASH, BEGINNING OF PERIOD/YEAR ................................ 29 584 426 4,064
--------- --------- --------- ---------
CASH, END OF PERIOD/YEAR ...................................... $ 584 $ 426 $ 4,064 $ 147
========= ========= ========= =========
CASH PAID FOR INTEREST ........................................ $ 401 $ 120 $ 7,081 $ 12,263
========= ========= ========= =========
CASH PAID FOR TAXES ........................................... $ 0 $ 0 $ 7,546 $ 10,488
========= ========= ========= =========
</TABLE>

See notes to consolidated financial statements.

30
<PAGE> 31

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements include the assets,
liabilities and results of operations of Clark-Schwebel Holdings, Inc. the
successor company ("Company"), following the change in ownership (See Note 2),
for the following periods: as of and for the period ended January 3, 1998, and
as of December 28, 1996 and for the period from April 18, 1996 to December 28,
1996. The Company's primary asset is the capital stock of Clark-Schwebel, Inc.
its operating company. The statements also include the assets, liabilities, and
results of operations as of and for the period ended December 30, 1995, and for
the period from December 31, 1995 to April 17, 1996 of Fort Mill A Inc., the
predecessor company ("Predecessor Company"), prior to the change in ownership.
The statements of the Predecessor Company include certain liabilities and
expenses that historically were accounted for only at the Springs Industries,
Inc. ("Springs") - parent company level. The financial statements of the
Predecessor Company and Successor Company are not comparable in certain respects
due to differences between the costs bases of certain assets and liabilities and
the impact of interest expense on the Successor Company (see Note 2).

SUMMARIZED FINANCIAL INFORMATION -- The following table provides
summarized financial information for Clark-Schwebel, Inc., the operating
company, on a stand alone basis. Clark-Schwebel, Inc. is a wholly owned
subsidiary of Clark-Schwebel Holdings, Inc. and its separate financial
statements are not included or filed separately because management has
determined that they would not be material to investors. The 1996 balance sheet
information is as of December 28, 1996 and the 1996 income statement information
is for the period from April 18, 1996 through December 28, 1996. The 1997
balance sheet information is as of January 3, 1998 and the 1997 income statement
information is for the period from December 29, 1996 to January 3, 1998.

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Current assets ........................... $ 64,038 $ 63,806
Noncurrent assets ........................ 176,662 173,911
-------- --------
Total assets ............................. $240,700 $237,717
======== ========
Current liabilities ...................... $ 38,885 $ 36,706
Noncurrent liabilities ................... 148,878 135,097
Equity ................................... 52,937 65,914
-------- --------
Total liabilities and equity ............. $240,700 $237,717
======== ========
Net sales ................................ $152,003 $240,204
Gross profit ............................. 33,398 55,303
Income from continuing operations ........ 10,135 19,816
Net income ............................... $ 10,135 $ 19,816
======== ========
Dividends to Clark-Schwebel Holdings, Inc. $ 0 $ 5,000
======== ========
</TABLE>

All assets of Clark-Schwebel, Inc. represent restricted net assets with
the exception of the foreign equity investments and distributions received from
the foreign equity investments. Except in limited circumstances, Clark-Schwebel,
Inc. is prohibited from transferring restricted net assets to Clark-Schwebel
Holdings, Inc. in the form of cash dividends, loans, or advances without the
consent of a third party lender. The amount of unrestricted net assets at
January 3, 1998 is $62,257, which represents the book value of the foreign
equity investments ($61,254) and distributions received in the form of cash from
the foreign equity investments ($1,003).

OPERATIONS -- The Company consists primarily of the operations, assets,
and liabilities of manufacturing facilities located in Anderson, SC,
Statesville, NC, Cleveland, GA, and Washington, GA, which produce woven fiber
glass and aramid fabrics. The Company's products are used in electronic circuit
boards, coated and laminated composites, aircraft construction and protective
apparel such as anti-ballistic vests and helmets.

31
<PAGE> 32

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

2. PURCHASE TRANSACTION

On February 24, 1996, the Company, Springs and affiliates of Vestar
Equity Partners, L.P. (Vestar), entered into an Agreement and Plan of Merger
(Agreement) whereby affiliates of Vestar would acquire the Company. Pursuant to
the Agreement, on April 17, 1996 (Closing Date), Vestar/CS Holding Company, LLC
(Vestar/CS) purchased all of the issued and outstanding capital stock of Fort
Mill A Inc. from Springs for approximately $192,895. The sources of cash for
this purchase included $110,000 of senior notes, an equity contribution of
$45,000 and bank debt. On the day following the Closing Date, Vestar/CS had an
82% common equity interest and management investors had an 18% common equity
interest in the Company.

Under the Agreement, Springs agreed to (i) assume responsibility for
repayment of the Industrial Revenue Bonds payable in 2010 and related accrued
interest, (ii) pay $959 in certain accrued employee benefits, (iii) provide
indemnification for certain environmental, tax and other matters (including the
environmental matter described in Note 14 for which $175 was accrued at December
30, 1995), (iv) retain the accounts receivable from one customer (which totaled
$2,782 as of December 30, 1995) and related $1,400 reserve, and (v) retain the
$99 accrued obligation related to the Company's Long-Term Disability Plan. At
the Closing Date, all payable and receivable accounts between the Company and
Springs were canceled.

The acquisition was accounted for as a purchase business combination. The
adjustment to net assets represents the step-up to fair value of the net assets
acquired as follows:

<TABLE>
<S> <C>
Purchase price ................................................... $ 192,895
Nonfinancing portion of fees and expenses ........................ 2,780
---------
Total purchase price ............................................. 195,675
Less fair value of net assets acquired ........................... (150,547)
---------
Excess of purchase price over fair value of net assets acquired .. $ 45,128
=========
</TABLE>

The fair values of Clark-Schwebel, Inc.'s assets and liabilities at the
date of acquisition are presented below:

<TABLE>
<S> <C>
Current assets ................................................... $ 68,410
Property, plant and equipment .................................... 66,391
Equity investments ............................................... 62,314
Current liabilities .............................................. (20,282)
Other liabilities ................................................ (26,286)
---------
Net assets acquired .............................................. $ 150,547
=========
</TABLE>

Following the acquisition, the purchase cost (including the fees and
expenses related thereto) was allocated to the tangible and intangible assets
and liabilities of the Company based upon their respective fair values. This
resulted in a step-up in the basis of inventory of $5,274 and property, plant
and equipment of $15,000. The excess of the purchase price over the fair value
of net assets acquired of $45,128 was recorded as goodwill, and is being
amortized on a straight-line basis over a period of 40 years.

Additional agreements include Transition Agreements for specified periods
in which Springs would be compensated for certain services provided to the
Company, and a Management Agreement that specifies services to be provided to
the Company by Vestar.

In accordance with agreements related to the change of ownership
transaction, certain assets totaling $4,461 were transferred to Springs in the
first quarter of 1996. This balance has been separately disclosed on the face of
the accompanying 1996 statements of cash flows.

32
<PAGE> 33
CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

3. PREFERRED STOCK REDEMPTION AND ISSUANCE OF SENIOR DEBENTURES

On July 14, 1997, the Company amended the terms of its outstanding
participating preferred stock (the "Preferred Stock") by amending and restating
its certificate of incorporation (the "Certificate") to allow the Company to
redeem such Preferred Stock. On August 14, 1997 the Company issued $46.0 million
in 12.5% Senior Debentures due 2007 (the "Senior Debentures") and paid $5
million in cash in exchange for and redemption of the Preferred Stock. The $51.0
million redemption price was established as follows:

<TABLE>
<S> <C>
Book value of Preferred Stock ................ $ 35.0
Accrued Preferred Stock dividends ............ 6.0
Common equity component of Preferred Stock ... 10.0
-------
Total ............................... $ 51.0
=======
</TABLE>

Vestar/CS-Holding paid $1.0 million for the common equity component of
the Preferred Stock at the time of the Acquisition. The common equity component
was purchased for $10.0 million on the redemption date.

The overall net impact of the Preferred Stock redemption and issuance of
Senior Debentures was a reduction of equity by $44.2 million, an increase in
debt by $46.0 million, a reduction of "long-term benefit plans and other"
liabilities by $6.0 million, and a decrease in cash by $4.2 million.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Following is a summary of the significant accounting policies used in the
preparation of the financial statements of the Company.

BASIS OF CONSOLIDATION - The consolidated financial statements include
the accounts of the Company and its subsidiaries. All material intercompany
amounts and transactions have been eliminated.

FISCAL YEAR - The Company's operations are based on a fifty-two or
fifty-three week fiscal year ending on the Saturday closest to December 31. The
fiscal years ended December 30, 1995, December 28, 1996 and January 3, 1998 are
referred to herein as 1995, 1996 and 1997, respectively. The 1995 and 1996
fiscal years each consisted of 52 weeks, while the 1997 fiscal year consisted of
53 weeks. Due to the purchase transaction on April 17, 1996, the 52 week fiscal
year in 1996 is comprised of the operations of the Predecessor Company and the
Successor Company.

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 reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates include the allowance for doubtful
accounts receivable and the liabilities for certain long-term benefit plans.
Actual results could differ from such estimates.

REVENUE RECOGNITION - Revenue from product sales is recognized at the
time ownership of the goods transfers to the customer and the earnings process
is complete. This generally occurs when the goods are shipped.

33
<PAGE> 34
CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on
hand and in the bank as well as short term investments held for the purpose of
general liquidity. Such investments normally mature within three months from the
date of acquisition.

ACCOUNTS RECEIVABLE - The Company establishes an allowance for doubtful
accounts based upon factors including the credit risk of specific customers,
historical trends and other information. The Company performs ongoing credit
evaluations of its customers' financial condition and generally requires no
collateral. The reserve for doubtful accounts was $853 at December 28, 1996 and
$1,100 at January 3, 1998. The provision for uncollectible amounts was $1,842,
($84), $160 and $189 for fiscal 1995, 1996 (Predecessor), 1996 (Successor) and
1997 (Successor), respectively. Net write-offs (recoveries) were $349, ($6),
($38) and ($58), respectively, for the same periods.

INVENTORIES - Inventories are valued at the lower of cost or market. Cost
is determined using the last-in, first-out (LIFO) method for substantially all
inventories.

PROPERTY, PLANT, AND EQUIPMENT - Property, plant, and equipment is
recorded at cost and depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets. Estimated useful lives are as
follows:

<TABLE>
<S> <C>
Land improvements .............................. 10 to 20 years
Buildings and improvements ..................... 20 to 40 years
Machinery and equipment ........................ 3 to 11 years
</TABLE>

EQUITY INVESTMENTS -The company owns equity interests in CS-Interglas AG
(headquartered in Germany), Asahi-Schwebel Co., Ltd. (headquartered in Japan)
and Clark Schwebel Tech-Fab Company (located in Anderson, SC), which are
accounted for using the equity method of accounting.

FOREIGN CURRENCY - The foreign equity investments are translated at
year-end exchange rates. Equity income and losses are translated at the average
rate during the year. Cumulative translation adjustments are reflected as a
separate component of stockholders' equity.

POSTRETIREMENT BENEFITS - Postretirement benefits are accounted for
pursuant to Statement of Financial Accounting Standards ("SFAS") No. 106,
Employers Accounting for Postretirement Benefits Other Than Pensions. SFAS No.
106 requires that the projected future cost of providing postretirement
benefits, such as health care and life insurance, be recognized as an expense as
employees render service rather than when claims are incurred.

INCOME TAXES - Income taxes are accounted for pursuant to SFAS 109,
Accounting for Income Taxes. Under SFAS No. 109, deferred income tax assets and
liabilities represent the future income tax effect of temporary differences
between the book and tax bases of assets and liabilities assuming they will be
realized and settled at the amounts reported in the financial statements. The
provision for income taxes included in the accompanying financial statements is
computed in a manner consistent with SFAS No. 109.

CERTAIN COMPENSATION PLANS - Certain key employees of the Company were
granted stock options and certain types of deferred compensation related to
Springs common stock under Springs' executive plans. Compensation expense
allocated from Springs for these grants for 1995, 1996 (Predecessor), 1996
Successor) and 1997 (Successor) was approximately $145, $418, $0 and $0,
respectively.

NEW ACCOUNTING STANDARD - During 1997, the FASB issued SFAS No. 130,
"Comprehensive Income", that is not effective until 1998. SFAS No. 130 applies
to the Company and will be adopted in the first quarter of 1998. Comprehensive
income is defined as essentially all changes in shareholders' equity exclusive
of transactions with owners, such as translation adjustments on investments in
foreign subsidiaries. Comprehensive income includes net income (loss) plus
changes in certain assets and liabilities that are reported directly in equity,
referred to as "Other Comprehensive Income." The adoption of SFAS No. 130 is not
expected to have a material impact on the consolidated financial statements of
the Company.

34
<PAGE> 35

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

5. LONG-TERM DEBT

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Senior Notes, payable in 2006, interest at 10.5% ................... $ 110,000 $ 110,000
Senior Debentures, payable in 2007, interest at 12.5% .............. 0 45,994
Term Loan payable in quarterly installments; paid in July 1997 ..... 13,440 0
Revolving Credit Agreement, due 2002, interest at variable
rates .......................................................... 0 0
Capitalized lease obligation payable in equal monthly
Installments of $7, through June 1997 .......................... 51 0
--------- ---------
Total .............................................................. 123,491 155,994
Less current maturities ............................................ (51) 0
--------- ---------
Long-term debt ..................................................... $ 123,440 $ 155,994
========= =========
</TABLE>

The Senior Notes accrue interest at a fixed rate of 10.5% per annum, with
interest payable semiannually in arrears on April 15 and October 15. The Senior
Notes are not redeemable at the option of the Company prior to April 15, 2001,
except in the event of a public equity offering of the Company, at which time a
portion of the Senior Notes would be redeemable. Management estimates that the
fair value of the Senior Notes is $120,450 at January 3, 1998, based on the
estimated market trading price for the Senior Notes as of January 3, 1998.

The Senior Debentures accrue interest at a fixed rate of 12.5% per annum
with interest payable semiannually in arrears on January 15 and July 15 to the
extent permitted by the Credit Agreement and the indenture governing the Senior
Notes. If the Company is unable to pay interest in cash due to the prohibitions
contained in the Credit Agreement or such indenture, interest on the Senior
Debentures would be payable in additional Senior Debentures. Under the terms of
the indenture, Clark-Schwebel, Inc., the operating company, must maintain a
minimum fixed charge coverage ratio in order to pay dividends. At January 3,
1998, the indenture allowed the operating company to pay $8,700 in dividends to
the Company. The Senior Debentures will not be redeemable at the Company's
option prior to July 15, 2002, except in the event of a public equity offering
of the Company, or a change of control or subsidiary change of control after
January 15, 1998. Management estimates that the fair value of the Senior
Debentures is $49,214 at January 3, 1998, based on the estimated market trading
price for the Senior Debentures as of January 3, 1998.

On July 14, 1997, the Company prepaid all of its outstanding indebtedness
under the Term Loan and amended the Credit Agreement to provide, among other
things, that the Company may, subject to certain conditions, pay up to $5,000 in
cash and issue Senior Debentures in a redemption of the Preferred Stock, and
make semi-annual interest payments in cash on the Senior Debentures. The
Revolving Credit Facility under the Credit Agreement was also amended to
increase the aggregate amount of commitments thereunder to $65,000.

The Company pays a quarterly commitment fee equal to 0.25% on the unused
portion of the Revolving Credit Facility which was $65,000 at January 3, 1998.

The Revolving Credit Facility, the Senior Notes, and the Senior
Debentures contain certain restrictive covenants which provide limitations on
the Company with respect to restricted payments, indebtedness, liens,
investments, dividends, distributions, transactions with affiliates, debt
repayments, capital expenditures, mergers, and consolidations. The bank facility
covenants also require maintenance of certain financial ratios. At January 3,
1998, the Company was in compliance with such covenants. With the exception of
the Senior Debentures, which are obligations of Clark-Schwebel Holdings, Inc.,
all other debt is incurred at the Clark-Schwebel, Inc., operating company level.
Substantially all of the assets of Clark-Schwebel, Inc., the operating company,
are subject to liens in favor of the Revolving Credit Facility lenders.

35
<PAGE> 36

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

5. LONG-TERM DEBT - (CONTINUED)

No principal payments are required on any long-term debt in the next five
years due to the payment of the term loan in July 1997.

6. INVENTORIES

Inventories consisted of the following:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Finished goods ..................... $ 10,256 $ 12,301
Raw material and supplies .......... 9,254 8,854
In process ......................... 15,215 15,317
-------- --------
Total at standard cost
(which approximates average cost) . 34,725 36,472
Less LIFO reserve .................. (1,100) (1,575)
-------- --------
Inventories, net ................... $ 33,625 $ 34,897
======== ========
</TABLE>

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Land ................................. $ 1,875 $ 1,875
Buildings and improvements ........... 19,381 20,714
Machinery and equipment .............. 43,113 47,061
Construction in progress ............. 3,567 2,483
-------- --------
Total ................................ 67,936 72,133
Less accumulated depreciation ........ (5,841) (12,540)
-------- --------
Property, plant and equipment, net ... $ 62,095 $ 59,593
======== ========
</TABLE>

8. OTHER CURRENT LIABILITIES

Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Accrued retirement and incentive ..... $ 3,841 $ 4,711
Employee benefit accruals ............ 3,017 2,935
Accrued payroll ...................... 2,759 2,235
Accrued interest ..................... 2,477 4,576
Other accrued liabilities ............ 2,235 2,249
Unearned revenue ..................... 1,001 0
------- -------
Total accrued liabilities ............ $15,330 $16,706
======= =======
</TABLE>

36
<PAGE> 37

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

9. STOCKHOLDERS' EQUITY

Changes in stockholders' equity on a successor basis for the periods of
April 18, 1996 through December 28, 1996, and December 29, 1996 through January
3, 1998, respectively, consisted of the following (in thousands, except share
amounts):
<TABLE>
<CAPTION>
Preferred Stock Common Stock Cumulative
--------------- ------------ Retained Translation
Shares Amount Shares Amount Earnings Adjustment
------ ------ ------ ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Preferred stock issued on April 17, 1996..... 1,000 $ 35,000
Common stock issued on April 17, 1996........ 9,000 $ 10,000
Management loans (see Note 16) .............. (822)
Net income .................................. $ 10,142
Accrued preferred stock dividend ............ (3,137)
Cumulative translation adjustment ........... $( 1,350)
------ -------- ----- -------- -------- --------
Balance at December 28, 1996 ................ 1,000 $ 35,000 9,000 $ 9,178 $ 7,005 $( 1,350)
====== ======== ===== ======== ======== ========
Repayment of management loans
(See Notes 3 and 16) ...................... 822
Net income .................................. 18,515
Accrued preferred stock dividend ............ (2,856)
Redemption of preferred stock
(see Note 3) .............................. (1,000) (35,000) (1,000) (9,000)
Cumulative translation adjustment ........... (3,187)
------ -------- ----- -------- -------- --------
Balance at January 3, 1998 .................. 0 $ 0 9,000 $ 9,000 $ 13,664 $( 4,537)
====== ======== ===== ======== ======== ========
</TABLE>

10. EMPLOYEE BENEFIT PLANS

EMPLOYEES PROFIT SHARING/RETIREMENT PLANS

Substantially all associates of the Company are covered by defined
contribution plans. In 1995 and 1996 (Predecessor Company) the plan was provided
by Springs. The 1996 Successor Company plan operates substantially the same as
the Springs plan. The Company makes contributions to a defined contribution
Profit Sharing Plan annually based upon the profitability of the Company. The
contribution is allocated to participant accounts based upon participant
compensation. The amount of the Company contribution is subject to approval by
the Board of Directors.

In addition, associates are allowed to contribute a percentage of their
compensation to a defined contribution plan and the Company will match a portion
of their contribution. This plan, available to substantially all associates,
contains a matched savings provision that permits pre-tax employee
contributions. Participants can contribute from 1% to 12% of their compensation
and receive a 50% matching employer contribution on up to 4% of the
participant's contribution.

Defined contribution plan expense for 1995, 1996 (Predecessor), and 1996
(Successor) and 1997 (Successor) was $1,810, $964, $1,655 and $3,116,
respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company participates in a defined benefit postretirement medical plan
which covers substantially all salaried and nonsalaried employees. In 1995 and
1996 (Predecessor Company) the plan was provided by Springs. The benefit cost
and benefit obligation for these periods was allocated by Springs to the
Predecessor Company. The 1996 Successor Company and 1997 plan operated
identically to the Springs plan, but was a separate plan on a stand alone
company basis. The plan provides medical

37
<PAGE> 38

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)

10. EMPLOYEE BENEFIT PLANS - (CONTINUED)

coverage to age 65 for employees who retire at age 62 or later, have at least 25
years of service and participated in the plan prior to retirement. The plan is
funded on a "pay-as-you-go" basis and is contributory, with retiree
contributions adjusted periodically. Postretirement benefit cost consisted of
the following components:

<TABLE>
<CAPTION>
1995 1996 1996 1997
---- ---- ---- ----
(PREDECESSOR) (SUCCESSOR)

<S> <C> <C> <C> <C>
Service cost .................... $ 138 $ 41 $ 71 $ 127
Interest cost.................... 278 83 229 283
------ ------ ------ ------
$ 416 $ 124 $ 300 $ 410
====== ====== ====== ======
</TABLE>

Management believes that the 1995 and 1996 (Predecessor) allocated
amounts are reasonable and approximate the amounts that would have resulted from
a SFAS 106 calculation of postretirement benefit cost on a separate company
basis. The 1996 Successor and 1997 amounts were determined on a stand alone
company basis.

The Company has assumed responsibility for the accrued benefits
attributable to employees of the Company. Pursuant to the Agreement, the Company
established employee benefit plans which are substantially similar to Springs'
employee benefit plans.

The following table sets forth the status of the Company's obligation
under SFAS No. 106 at the end of 1996 and 1997:

<TABLE>
<CAPTION>
Accumulated postretirement benefit obligation ("APBO")
1996 1997
------- -------

<S> <C> <C>
Retirees ....................................... $ 1,473 $ 1,416
Fully eligible active plan participants ........ 393 261
Other active participants ...................... 2,145 2,583
------- -------
Accumulated postretirement benefit obligation .. $ 4,011 $ 4,260

Unrecognized gain/(loss) ....................... (27) (121)
------- -------
Total recorded obligation ...................... $ 3,984 $ 4,139
======= =======
</TABLE>

The 1996 and 1997 balance sheets include a liability of $3,984 and
$4,139, respectively, which is classified in "Long-Term Benefit Plans and
Other."

For measurement purposes, a 10.8% annual rate of increase in the per
capita cost of covered health care benefits was assumed. This 10.8% rate is
assumed to decrease gradually to 6.3% in the year 2006 and remain at that level
thereafter. If the health care cost trend rate was increased by one percent, the
APBO would increase by 12.6% and postretirement benefit cost would increase by
approximately 14.6%. The discount rate used in determining the APBO at January
3, 1998 was 7.25%.

38
<PAGE> 39

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)

11. INCOME TAXES

The following tables present the components of the provision for income
taxes, a reconciliation of the statutory U.S. income tax rate to the effective
income tax rate, and the principal items of deferred income tax assets and
liabilities at the end of 1995, 1996 (Predecessor), 1996 (Successor), and 1997
(Successor).

Components of the total income tax provision were as follows:

<TABLE>
<CAPTION>
1995 1996 1996 1997
------- ------- ------- -------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C>
Current federal .............. $ 8,622 $ 3,739 $ 6,011 $ 9,906
Current state ................ 1,297 563 1,096 1,955
------- ------- ------- -------
Total current ................ 9,919 4,302 7,107 11,861
------- ------- ------- -------
Deferred federal ............. 129 56 (18) 543
Deferred state ............... 47 20 (3) 107
------- ------- ------- -------
Total deferred ............... 176 76 (21) 650
------- ------- ------- -------
Total provision .............. $10,095 $ 4,378 $ 7,086 $12,511
======= ======= ======= =======
</TABLE>

The total provision is included in the statements of income as follows:

<TABLE>
<CAPTION>
1995 1996 1996 1997
------- ------- ------- -------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C>
Provision on income before income taxes .... $ 8,444 $ 3,595 $ 5,460 $ 9,657
Income from equity investees ............... 1,582 783 1,626 2,854
Income of discontinued operations .......... 69 0 0 0
------- ------- ------- -------
Total provision ............................ $10,095 $ 4,378 $ 7,086 $12,511
======= ======= ======= =======
</TABLE>

The difference between the federal statutory tax rate and the effective
tax rate on income before income taxes was as follows:

<TABLE>
<CAPTION>
1995 1996 1996 1997
---- ---- ---- ----
(PREDECESSOR) (SUCCESSOR)

<S> <C> <C> <C> <C>
Provision at federal statutory tax rate ...... 35.0% 35.0% 35.0% 35.0%
State income tax, net of federal tax effect .. 3.4 3.4 4.2 4.2
Amortization of acquisition price not
Deductible for tax purposes ............ 0.7 0.7 2.1 1.6
Other ........................................ 0.8 0.9 (0.2) (0.5)
---- ---- ---- ----
Effective tax rate ........................... 39.9% 40.0% 41.1% 40.3%
==== ==== ==== ====
</TABLE>

39
<PAGE> 40

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)

11. INCOME TAXES - (CONTINUED)

Temporary differences and the related balances of deferred tax assets and
liabilities were as follows:

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Employee benefit accruals ................... $ 3,356 $ 2,865
Equity investments .......................... 2,376 3,519
Other items ................................. 419 1,176
------- -------
Total deferred tax assets ................... 6,151 7,561
------- -------
Property .................................... 11,920 11,114
Equity investments .......................... 12,551 13,339
Inventories ................................. 4,362 4,786
Other items ................................. 832 1,267
------- -------
Total deferred tax liabilities .............. 29,665 30,506
------- -------
Net deferred tax liabilities ................ $23,514 $22,945
======= =======
</TABLE>

12. EQUITY INVESTMENTS

CS-INTERGLAS AG ("INTERGLAS") -- In March 1993, the Company contributed
two European subsidiaries and $8.8 million to Interglas, a company which
manufactures fiber glass, aramid and carbon fabrics, in exchange for a 24.9%
common stock interest and convertible notes with a face value of 20 million
Deutsche marks (the "Convertible Notes"). No gain or loss was recognized as a
result of this exchange. The Company's common stock investment in Interglas had
a carrying value of $14,282 and $13,107 at December 28, 1996 and January 3,
1998, respectively.

The Convertible Notes, which had a carrying value of $13,037 and $11,344
at December 28, 1996 and January 3, 1998, respectively, are convertible into
common stock of Interglas. At the Company's option, conversion would result in
the Company owning a total of 42% of the outstanding common stock of Interglas
as of January 3, 1998. Interest on the Convertible Notes, which is included in
income from equity investees, is at 8% through December 31, 1996 and 5%
thereafter. Interest income in 1995, 1996 and 1997 was recognized on an accrual
basis. If Convertible Notes are not converted, the principal balance plus
outstanding interest becomes due on June 30, 2007.

ASAHI-SCHWEBEL CO. LTD. ("ASCO") -- On October 1, 1997, the Company
purchased an additional 4.3% common equity interest in ASCO, which increased the
Company's ownership percentage from 39.0% to 43.3%. ASCO, a company which
manufactures fiber glass fabric, operates a facility in Japan and, in 1996,
acquired a majority interest in a fiber glass manufacturer located in Taiwan.
The Company's investment in ASCO had a carrying value of $32,586 and $36,803 at
December 28, 1996 and January 3, 1998, respectively. The carrying value at
January 3, 1998 exceeds 43.3% of ASCO's total equity by approximately $1.7
million, which is being amortized on a straight-line basis through 2008.

CLARK-SCHWEBEL TECH-FAB COMPANY ("TECH-FAB") -- The Company owns a 50%
partnership interest in Tech-Fab, a joint venture which manufactures nonwoven
fabrics using fiber glass and other synthetic materials. The Company's
investment in Tech-Fab had a carrying value of $3,521 and $4,156 at December 28,
1996 and January 3, 1998, respectively.

40
<PAGE> 41

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

12. EQUITY INVESTMENTS - (CONTINUED)

COMBINED SUMMARIZED FINANCIAL INFORMATION---The following table provides
combined summarized balance sheet information for these investees as of December
28, 1996 and January 3, 1998:

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Current assets ........................................... $165,715 $178,573
Noncurrent assets ........................................ 125,597 118,694
-------- --------
Total assets ............................................. $291,312 $297,267
======== ========
Current liabilities ...................................... $ 54,303 $ 64,879
Noncurrent liabilities ................................... 89,279 77,036
Minority interest ........................................ 9,715 11,712
Redeemable equity instrument ............................. 21,341 19,853
Equity ................................................... 116,675 123,787
-------- --------
Total liabilities and equity ............................. $291,312 $297,267
======== ========

</TABLE>

The following table provides combined summarized income statement
information for these investees for the years ended December 30, 1995, December
28,1996, and January 3, 1998:

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales .................... $328,145 $317,918 $328,122
Operating income ............. 20,761 35,163 36,739
Net income ................... 13,207 16,643 17,783
======== ======== ========
</TABLE>

13. MAJOR CUSTOMERS, CERTAIN CONCENTRATIONS, AND FAIR VALUE OF FINANCIAL
INSTRUMENTS

Sales to two customers exceeded 10% of net sales during fiscal 1995,
1996, and 1997. Sales to the two customers represented as a percentage of net
sales 29.1% and 13.2% in 1995, 29.9% and 13.5% in 1996 (Predecessor), 29.1% and
14.1% in 1996 (Successor), and 28.7% and 15.9% in 1997 (Successor),
respectively. Accounts receivable due from these two customers as a percent of
total accounts receivable was 38.0% and 19.8% at December 28, 1996 and 27.1% and
25.2% at January 3, 1998. Although the Company's exposure to credit risk could
be affected by conditions or occurrences within these customers' industry, no
indication of such adverse circumstances existed at January 3, 1998.

The Company currently buys substantially all of its fiber glass yarn, an
important component of its products, from two suppliers and substantially all of
its aramid yarn from one supplier. There are a limited number of manufacturers
of fiber glass yarn and aramid yarn.

The Company's financial instruments include cash, short term investments,
accounts receivable, Convertible Notes, accounts payable and long-term debt.
Management estimates that the carrying value of such instruments approximates
fair value, with the exception of the Senior Notes and Senior Debentures (see
Note 5).

41
<PAGE> 42

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

14. COMMITMENTS AND CONTINGENCIES

The Company leases certain machinery and equipment under noncancelable
operating leases. Rent expense attributed to such leases was $384, $177, $314,
and $563 in 1995, 1996 (Predecessor), 1996 (Successor), and 1997 (Successor),
respectively.

Future minimum payments under the non-cancelable operating leases as of
January 3, 1998 were as follows:

Prior to the Closing Date of the Acquisition, the Company was involved in
administrative proceedings under environmental laws and regulations, including
proceedings under the Comprehensive Environmental Response, Compensation and
Liability Act. On the closing date, Springs assumed all liabilities related to
the costs associated with these environmental matters. There was no material
provision for environmental matters in 1995, 1996 or 1997.

The Company is subject to legal proceedings and claims which arise in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not materially affect the Company's financial
position or results of operations.

15. DISCONTINUED OPERATIONS

In January 1996, the Company sold its equity investment in a company
engaged in a separate line of business for an amount which approximated book
value. The proceeds received were distributed to Springs. The equity earnings
from this investment are included in Discontinued Operations in the Company's
financial statements.

16. RELATED PARTY TRANSACTIONS

In connection with the Acquisition, certain members of management (the
"Management Investors") made equity contributions to the Company pursuant to a
Management Subscription Agreement which provided the terms under which the
Management Investors could purchase shares in the Company. The Management
Subscription Agreement set forth the share price, vesting provisions,
disposition of shares upon termination of employment, and certain other rights
of the Management Investors with respect to the shares.

The Management Investors purchased $1.8 million, or 18%, of the common
equity in the Company. Approximately $0.8 million of the purchase price was
financed by the Company through a promissory note (the "Note") which carried an
interest rate of 6.51% annually. As described in Note 3, the notes were paid in
full during 1997 in connection with the Preferred Stock Redemption.

The Management Investors have entered into a Securityholders Agreement
with the Company and Vestar/CS Holding which contains certain agreements among
such parties with respect to the capital stock and corporate governance of the
Company. The Securityholders Agreement gives Vestar/CS Holding the right to
appoint all members to the Board of Directors of the Company. Additionally, the
Securityholders

42
<PAGE> 43

CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

16. RELATED PARTY TRANSACTIONS - (CONTINUED)

Agreement restricts the ability of Management Investors to transfer their equity
interest except upon (A) the exercise of their tag along rights, which allows
Management Investors to sell their equity interest when Vestar/CS Holding sells
its equity interest in the Company; (B) a sale of the Company; (C) the exercise
of certain put and call options under the Management Subscription Agreement; (D)
a public sale of the Company's common stock.

The Management Investors have entered into a Voting Trust Agreement with
the Company and Vestar/CS Holding which requires Management Investors to vote
all of their common stock as directed by Vestar/CS Holding for the approval of
any of the following: amendment to the Company's Certificate of `Incorporation,
merger, share exchange, combination or consolidation of the Company with any
other person, the sale, lease or exchange of all or substantially all of the
property and assets of the Company, or the reorganization, recapitalization,
liquidation, or dissolution of the Company.

Pursuant to a Management Advisory Agreement (the "Management Agreement"),
Vestar Capital Partners will receive an annual fee and reimbursement of
out-of-pocket expenses for management and financial consulting services provided
to the Company. Such services include advising the Company on the establishment
of effective banking, legal and other business relationships, and assisting
management in developing and implementing strategies for improving the
operational, marketing and financial performance of the Company. The management
advisory fees to be paid per annum will equal the greater of (i) 1.0% of the
consolidated earnings of the Company before interest, taxes, depreciation and
amortization or (ii) $350. Expenses pursuant to the Management Agreement were
approximately $485 in 1997 and $258 for the period from April 18, 1996 to
December 28, 1996 (Successor Company).

Upon consummation of the Acquisition, the Company paid to Vestar Capital
Partners an investment banking fee of approximately $1.5 million plus
out-of-pocket expenses for its services in structuring the transaction and
providing financial advice in connection therewith. Additionally, a member of
the Company's Board of Directors received a fee of approximately $600 for his
consulting services in connection with the Acquisition.

43
<PAGE> 44

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

Not applicable.

44
<PAGE> 45

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain information with respect to members of
the Board of Directors and executive officers of the Company.
<TABLE>
<CAPTION>

Name Age Position
---- --- --------
<S> <C> <C>
Jack P. Schwebel....................... 72 Chairman of the Board
William D. Bennison.................... 53 President and Director
Richard C. Wolfe ...................... 49 Executive Vice President and Director
William H. Boyles...................... 54 Vice President-Fiber Glass Sales and Marketing
Donald R. Burnette .................... 49 Chief Financial Officer, Treasurer and Secretary
Harvey A. Morse........................ 44 Vice President-Human Resources
Dieter R. Wachter...................... 53 Vice President-High Performance Fabrics
Norman W. Alpert....................... 39 Director
John D. Howard......................... 45 Director
Sander M. Levy......................... 36 Director
Arthur J. Nagle........................ 59 Director
Daniel S. O'Connell.................... 43 Director
Frank Greenberg........................ 68 Director
Gerard Seelig.......................... 71 Director
</TABLE>

All of the above Directors have been Directors since the Acquisition.

JACK P. SCHWEBEL has served as Chairman of the Board of the Company since
the Acquisition. Mr. Schwebel also serves as a director of CS-Interglas and
Asahi-Schwebel. Mr. Schwebel co-founded Clark-Schwebel, Inc. in 1960 and served
as Chairman, President and Chief Executive Officer from 1964 until retiring at
the end of 1992. Mr. Schwebel received a B.S. degree from The Wharton School of
the University of Pennsylvania.

WILLIAM D. BENNISON joined the Company in 1989 as Vice President, Sales
and Marketing, and since 1992 has served as President. Mr. Bennison also serves
as President of CS Tech-Fab and director of CS-Interglas and Asahi-Schwebel. Mr.
Bennison was President of BGF Industries and its predecessor, Burlington Glass
Fabrics Co., from 1981 to 1989. Mr. Bennison received a B.S. degree from Indiana
University and an M.B.A. degree from Columbia University.

RICHARD C. WOLFE has served as Executive Vice President of the Company
since the Acquisition. Mr. Wolfe joined the Company in 1986 as Vice President,
Manufacturing, and from 1989 to 1996, he served as Senior Vice President of
United States Manufacturing and Operational Functions. Mr. Wolfe received a B.S.
degree from the Georgia Institute of Technology and is a graduate of the
Advanced Management Program of The Harvard Business School.

WILLIAM H. BOYLES joined the Company in 1988 as National Sales Manager
and since 1989 has served as Vice President, Fiber Glass Sales and Marketing.
Prior to 1988, Mr. Boyles was Vice President and General Manager of Uniglass
Industries.

DONALD R. BURNETTE has served as Chief Financial Officer, Treasurer and
Secretary of the Company since the Acquisition. Mr. Burnette was Vice President
and Controller of the Company from 1993 to 1996. From 1987 to 1993, Mr. Burnette
was Vice President of Administration and Controller for the Wamsutta Home
Products Division (a manufacturer of home furnishings) of Springs Industries.
Mr. Burnette served in various financial positions with Springs Industries from
1978 to 1987. Mr. Burnette received a B.S. degree from Francis Marion
University.

HARVEY A. MORSE has served as Vice President, Human Resources since 1994.
From 1987 to 1994, Mr. Morse served as Director of Human Resources for the
Company, and from 1978 to 1987, he served in various human resource positions
for Springs Industries. Mr. Morse received a bachelor's degree from the
University of North Carolina at Chapel Hill.

DIETER R. WACHTER has served as Vice President, High Performance Fabrics
since 1989. Prior to 1989, Mr. Wachter was involved in the development of the
High Performance Fabrics unit and held positions in a variety of areas within
High Performance Fabrics, including sales and marketing. Mr. Wachter graduated
from business school in Zurich, Switzerland.

45
<PAGE> 46

NORMAN W. ALPERT is a Managing Director of Vestar Capital Partners*
(engaged in merchant banking) and was a founding partner of Vestar at its
inception in 1988. Mr. Alpert is Chairman of the Board of Directors of Advanced
Organics, Inc. and International AirParts Corporation and a director of
Russell-Stanley Corporation, Remington Products Company and Aearo Corporation,
all companies in which Vestar or its affiliates have a significant equity
interest. Mr. Alpert received an A.B. degree from Brown University.

JOHN D. HOWARD is a Senior Managing Director for Bear Stearns & Co., Inc.
serving as head of its Merchant Banking Group. Mr. Howard founded Gryphon
Capital Partners (engaged in merchant banking) and serves as its Chief Executive
Officer. Previously Mr. Howard was Co-Chief Executive Officer of Vestar Capital
Partners. Mr. Howard is a director of Celestial Seasonings, Inc. and Dyersburg
Corporation. Mr. Howard received a B.A. degree from Trinity College and an
M.P.P.M. degree from Yale University School of Management.

SANDER M. LEVY is a Managing Director of Vestar Capital Partners* and was
a founding partner of Vestar at its inception in 1988. Mr. Levy is a director of
Sun Apparel, Inc. Mr. Levy received a B.S. degree from The Wharton School of the
University of Pennsylvania and an M.B.A. degree from Columbia University.

ARTHUR J. NAGLE is a Managing Director of Vestar Capital Partners* and
was a founding partner of Vestar at its inception in 1988. Mr. Nagle is a
director of Aearo Corporation, Chart House Enterprises, Inc., Russell-Stanley
Corporation, La Petite Academy, Inc. and Remington Products Company, all
companies (other than Chart House Enterprises, Inc.) in which Vestar or its
affiliates have a significant equity interest. Mr. Nagle received a B.S. degree
from Pennsylvania State University and an M.B.A. degree from Columbia
University.

DANIEL S. O'CONNELL is the Chief Executive Officer and founder of Vestar
Capital Partners.* Mr. O'Connell is director of Aearo Corporation, Advanced
Organics, Inc., Pinnacle Automation, Inc., Russell-Stanley Corporation,
Remington Products Company, Sun Apparel, Inc. and Reid Plastics, all companies
in which Vestar or its affiliates have a significant equity interest. Mr.
O'Connell received an A.B. degree from Brown University and an M.P.P.M. degree
from Yale University School of Management.

FRANK GREENBERG was the Chairman of the Board of Directors and Chief
Executive Officer of Burlington Industries, Inc. (engaged in textile
manufacturing) from 1986 until his retirement in 1994. Mr. Greenberg served as
Chairman of the Board of Burlington until his retirement in February 1998. Mr.
Greenberg received a B. A. degree from the University of Chicago.

GERARD L. SEELIG has over 35 years of experience in managing worldwide
industrial and technology based businesses. Most recently he was an Executive
Vice President with Allied Signal, Inc. Prior to joining Allied Signal, Inc., he
held Senior Executive positions at ITT (12 years) and Lockheed Corporation (10
years). Mr. Seelig is a Director of Advanced Organics, Inc. and International
AirParts Corporation, companies in which Vestar or its affiliates have a
significant equity interest, Simplicity Corporation and Larson-Davis
Corporation. Mr. Seelig received a B. S. degree from Ohio State University and
an M.S. degree from New York University.

* Vestar/CS Holding Co., L.L.C., which is an affiliate of Vestar Capital
Partners, is the principal shareholder of the Company.

The term in office of each director ends when his or her successor has
been elected or upon his or her removal or resignation. Each executive officer
serves at the discretion of the Board of Directors.

The information set forth under Item 13 "Certain Relationships and
Related Transactions" under the subheading, "Securityholders Agreement and
Voting Trust Agreement", is incorporated herein by reference thereto.

ITEM 11. EXECUTIVE COMPENSATION

The compensation of executive officers of the Company is determined by
the Board of Directors of the Company upon the recommendation of the
Compensation Committee. None of the historical benefit or compensation plans of
Springs Industries is described herein because each was terminated with respect
to the named officers in connection with the Acquisition. The following table
sets forth information concerning compensation received by the five executive
officers of the Company who received the most salary and bonus in 1997 (the
"Named Executive Officers") for services rendered in 1997, 1996 and 1995.

46
<PAGE> 47

Summary Compensation Table
<TABLE>
<CAPTION>

Annual Compensation Long Term Compensation
------------------- ----------------------

Restricted
Stock Options All Other
Name and Principal Position Year Salary ($) Bonus ($) Awards SAR's (#) Payouts Compensation ($)
- --------------------------- ---- --------- --------- ------ --------- ------- ----------------
(4) (5) (6)
--- --- ---
<S> <C> <C> <C> <C>
Jack P. Schwebel.......... 1997 265,000 379,915 --------- --------- --------- 13,042(1)
Chairman of the Board 1996 (3) 170,192 204,230 --------- --------- --------- 9,873(2)
1995 ------- ------- --------- --------- --------- -------

William D. Bennison....... 1997 217,300 311,530 --------- --------- --------- 13,073(1)
President 1996 199,250 239,100 --------- --------- --------- 626,325(2)
1995 191,211 133,848 4,859 6,000 33,317 38,600(7)

Richard C. Wolfe.......... 1997 176,046 252,387 --------- --------- --------- 13,073(1)
Executive Vice President 1996 161,000 193,200 --------- --------- --------- 254,483(2)
1995 153,846 92,308 4,859 4,000 22,846 27,640(7)

William H. Boyles......... 1997 140,846 168,269 --------- --------- --------- 13,073(1)
Vice President 1996 125,077 125,077 --------- --------- --------- 14,594(2)
1995 118,500 56,000 2,916 --------- --------- 12,500(7)

Donald R. Burnette........ 1997 127,308 152,095 --------- --------- --------- 13,073(1)
Chief Financial Officer, 1996 114,000 114,000 --------- --------- --------- 82,275(2)
Treasurer & Secretary 1995 106,385 63,832 2,916 --------- --------- 12,851(7)
</TABLE>

(1) The named Executive Officers participated in the Company's Profit Sharing
and 401(K) match programs. The payments made by the Company in 1997
pursuant to these programs are listed under All Other Compensation.

(2) In connection with the Acquisition, benefits payable under certain
executive compensation plans of Springs Industries were accelerated and
paid in cash to Messrs. Bennison, Wolfe, Boyles and Burnette on the
closing date of the Acquisition as follows: Mr. Bennison received
$613,452 under the Springs Industries Incentive Stock Plan, Deferred Unit
Stock Plan, Contingent Compensation Plan and Excess Benefit Plan; Mr.
Wolfe received $241,619 under the Springs Industries Incentive Stock
Plan, Deferred Unit Stock Plan, Contingent Compensation Plan, and Excess
Benefit Plan; Mr. Boyles received $1,721 under the Springs Industries
Excess Benefit Plan; and Mr. Burnette received $69,402 under the Springs
Industries Deferred Unit Stock Plan and Excess Benefit Plan.
Additionally, the Named Executive Officers participated in the Company's
Profit Sharing and 401(k) match programs. The payments made by the
Company pursuant to these programs for 1996 were as follows: Mr. Schwebel
- $9,873, Mr. Bennison - $12,873, Mr. Wolfe $12,873, Mr. Boyles -
$12,873, Mr. Burnette - $12,873. The payments made pursuant to all the
above programs are listed under All Other Compensation for 1996.

(3) Represents compensation from April 18, 1996 to the end of the year.

(4) Under a Springs Industries' restricted stock award plan, certain of the
Named Executive Officers were awarded restricted shares of Springs
Industries Class A Common Stock. The dollar value shown in the table for
these shares is based on the $38.875 per share closing market price on
the date of grant of such shares. The number of such shares is as
follows: Mr. Bennison 125: Mr. Wolfe, 125: Mr. Boyles, 75; and Mr.
Burnette, 75. One-third of these shares vested in 1994, one-third in 1995
and one-third in 1996. Dividends were paid on all restricted stock
holdings.

(5) On February 16, 1995, Messrs. Bennison and Wolfe received options to
purchase 6,000 and 4,000 shares of Springs Industries Class A Common
Stock, respectively, pursuant to the Springs Industries, Inc. 1991
Incentive Stock Plan.

(6) Messrs. Bennison and Wolfe received cash payments pursuant to performance
unit awards granted under an incentive stock plan of Springs Industries
of $16,659 and $11,423, respectively Messrs. Bennison and Wolfe received
shares of Springs Industries Class A Common Stock under the Restated and
Amended Springs Industries, Inc. Deferred Unit Stock Plan with a value on
the date of issuance of $16,658 and $11,423, respectively.

47
<PAGE> 48

(7) The named Executive Officers participated in Springs Industries' profit
sharing, 401(k) match, contingent compensation and excess benefit
programs. The aggregate payments made by Springs Industries pursuant to
such programs are listed under All Other Compensations for 1995.

MANAGEMENT EQUITY PARTICIPATION

In connection with the Acquisition, in order to provide financial
incentives for certain of its employees, the Company entered into a management
subscription agreement with each of the Management Investors (each, a
"Management Subscription Agreement"). The Management Subscription Agreement
provides for certain rights with respect to shares of Common Stock of
Clark-Schwebel Holdings, Inc. purchased by the Management Investors (the
"Purchased Shares").

At Closing of the Acquisition, the Management Investors purchased an
aggregate of $1.8 million of Purchased Shares representing 18% of the
acquisition of the fully diluted Common Stock of Clark-Schwebel Holdings, Inc.
Approximately $0.8 million of the purchase price of the Purchased Shares was
financed by the Company (the "Management Loans"). As a result, Messrs. Bennison
(President), Wolfe (Executive Vice President), Boyles (Vice President), and
Burnette (Chief Financial Officer) owed the Company $120,000, $210,000, $95,000
and $90,000 respectively, pursuant to notes that bear interest at 6.51% per
annum, have a term of 10 years and are subject to mandatory prepayment in the
event the employment of such Management Investor terminates. Each of these notes
was secured by a pledge of the relevant Management Investor's Common Stock of
Clark-Schwebel Holdings, Inc. On July 14, 1997, Vestar/CS-Holdings purchased 10%
of the Purchased Shares from the Management Investors on a prorata basis, and a
portion of the proceeds of such purchase was used by the Management Investors to
repay the Management Loans in full.

Upon the termination of employment of the holder, the Purchased Shares
will be subject to certain call provisions exercisable by the Company and/or
Vestar/CS Holding at a purchase price that varies depending upon the reason for
the termination and the number of years from the Acquisition. Upon the
termination of the holder's employment due to disability, death or retirement,
the holder will have the right, subject to certain limitations, to cause the
Company to purchase the holder's Common Stock of Clark-Schwebel Holdings, Inc.
at a price that varies according to the number of years that have elapsed
following the Acquisition.

COMPENSATION OF DIRECTORS

Mr. Schwebel receives base annual compensation of $260,000 plus bonus for
his services as Chairman of the Board. Directors of the Company who are neither
employees of the Company nor affiliated with Vestar receive annual compensation
of $12,500 plus $2,500 per Board meeting attended plus $1,250 for each Board
Committee meeting attended. Other directors do not receive any compensation for
services in such capacity.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Greenberg, Nagle and Levy are the members of the Compensation
Committee which reviews and makes recommendations to the Board of Directors
regarding the compensation and benefits of the Company's executive officers and
key employees.

Since the Acquisition, each of these individuals has had an interest
in transactions or business relationships involving the Company. See the
information contained in Item 13, "Certain Relationships and Related
Transactions", which is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the Clark-Schwebel, Inc.'s issued and outstanding capital stock is
owned by Clark-Schwebel Holdings, Inc. ("Holdings"). Set forth below is certain
information regarding the beneficial ownership of Holdings Common Stock by each
person known by Holdings to beneficially own 5.0% or more of the outstanding
shares of Holdings Common Stock, each director and Named Executive Officer and
all directors and Executive Officers as a group. Except as indicated below, the
address for each of the persons listed below is c/o Clark-Schwebel, Inc., 2200
South Murray Avenue, Anderson, South Carolina, 29622.

48
<PAGE> 49

<TABLE>
<CAPTION>
Holdings' Common Stock
----------------------

Number Percentage
- -------------------------------------------------------------------------------------
<S> <C> <C>
Vestar/CS Holding Company, L.L.C.(1)(2) ................ 7,380 82.0%
c/o Vestar Equity Partners
245 Park Avenue, 41st Floor
New York, New York 10167
William D. Bennison(2) ................................. 432 4.8%
Richard C. Wolfe(2) .................................... 324 3.6%
William H. Boyles(2) ................................... 108 1.2%
Donald R. Burnette(2) .................................. 135 1.5%
Dieter Wachter(2) ...................................... 81 0.9%
Harvey A. Morse(2) ..................................... 54 0.6%
Jack P. Schwebel(3) ................................... 0 0
Norman W. Alpert(4) .................................... 7,380 82.0%
John D. Howard ......................................... 0 0
Sander M. Levy(4) ...................................... 7,380 82.0%
Arthur J. Nagle(4) ..................................... 7,380 82.0%
Daniel S. O'Connell(4) ................................. 7,380 82.0%
Frank Greenberg ........................................ 0 0
Gerard L. Seelig ....................................... 0 0
Directors and Executive Officers as a group ............ 8,514 94.6%
(14 persons)
</TABLE>

(1) The sole manager of Vestar/CS Holding is Vestar. The sole general partner of
Vestar is Vestar Associates L.P., a limited partnership whose sole general
partner is Vestar Associates Corporation ("VAC"). In such capacity, VAC
exercises sole voting and investment power with respect to all of the shares of
Holdings held of record by Vestar/CS Holding. Messrs. Alpert, Levy, Nagle and
O'Connell, who are directors of the Company, are affiliated with Vestar in the
capacities described under Item 10, "Directors and Executive Officers of the
Registrant" and are directors, executive officers and stockholders of VAC.
Individually, no stockholder, director or officer of VAC is deemed to have or
share such voting or investment power with respect to shares of Holdings held of
record by Vestar/CS Holding within the meaning of Rule 13d-3 under the Exchange
Act. Accordingly, no part of the shares of Holdings Common Stock is beneficially
owned by Messrs. Alpert, Levy, Nagle or O'Connell or any other stockholder,
director or officer of VAC.

(2) Messrs. Bennison, Wolfe, Boyles, Burnette, Wachter and Morse have entered
into the Securityholders Agreement which contains certain agreements with
respect to the capital stock and corporate governance of the Company and the
Voting Trust Agreement (as defined herein) pursuant to which Messrs. Bennison,
Wolfe, Boyles, Burnette, Wachter and Morse have agreed to vote their shares as
directed by Vestar/CS Holding with respect to certain matters. All outstanding
shares of Holdings Common Stock are held by Vestar/CS Holding, as trustee under
the Voting Trust Agreement. Each of Messrs. Bennison, Wolfe, Boyles, Burnette,
Wachter and Morse is also party to a Management Subscription Agreement. See the
information under the subheading, "Management Equity Participation", in Item 11,
"Executive Compensation" and the information under the subheading
"Securityholders Agreement and Voting Trust Agreement", in Item 13, "Certain
Relationships and Related Transactions."

(3) Mr. Schwebel's three adult children and other family members own 5.82% of
the fully diluted Holdings Common Stock which shares are not included in the
table above as beneficially owned by Mr. Schwebel. Mr. Schwebel has no voting or
investment power with respect to these shares and accordingly no part of such
shares is beneficially owned by Mr. Schwebel.

(4) Messrs. Alpert, Levy, Nagle and O'Connell are affiliated with Vestar/CS
Holdings in the capacities described in Note (1) above and under Item 10,
"Directors and Executive Officers of the Registrant". Beneficial ownership of
Holdings Common Stock for each of these individuals includes the 7,380 shares of
Holdings Common Stock included in the above table beneficially owned by
Vestar/CS Holdings, of which such persons disclaim beneficial ownership. Each
such person's business address is c/o Vestar Equity Partners, L.P., 245 Park
Avenue, 41st Floor, New York, New York 10167.

The information set forth under Item 13, "Certain Relationships and Related
Transactions", under the subheading, "Securityholders Agreement and Voting Trust
Agreement" is incorporated herein by reference thereto.

49
<PAGE> 50

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ACQUISITION

The information set forth in Item 7, "Management's Dicussion and
Analysis of Financial Condition and Results of Operations" under the
subheadings, "The Acquisition" and "Preferred Stock Redemption and Issuance of
Senior Debentures" is incorporated herein by reference thereto.

In connection with the Acquisition, Vestar/CS Holding Company, L.L.C.
and the executive officers of the Company acquired the Holdings Common Stock
shown under Item 12, "Security Ownership of Certain Beneficial Owners and
Management", and Messrs. John Howard, Frank Greenberg and Gerard Seelig
(directors of the Company) acquired membership interests in Vestar/CS Holding
Company, L.L.C.. Each of Messrs. Norman Alpert, John Howard, Sander Levy, Arthur
Nagle and Daniel O'Connell (directors of the Company) has a direct or indirect
pecuniary interest in Vestar which is a member and the sole manager of Vestar/CS
Holding.

SECURITYHOLDERS AGREEMENT AND VOTING TRUST AGREEMENT

In connection with the Acquisition, Vestar/CS Holding and the
Management Investors entered into a securityholders agreement (the
"Securityholders Agreement") which contains certain agreements among such
parties with respect to the capital stock and corporate governance of the
Company.

Pursuant to the Securityholders Agreement, Vestar/CS Holding has the
right to appoint all members to the Board of Directors of the Company; provided
that two of the directors designated by Vestar/CS Holding shall be elected from
the management of the Company. In addition, pursuant to the Securityholders
Agreement and a voting trust agreement (the "Voting Trust Agreement"), the
Management Investors will vote all of their Holdings Common Stock as directed by
Vestar/CS Holding for the approval of any amendment to Holdings' Certificate of
Incorporation, the merger, share exchange, combination or consolidation of the
Company with any other person, the sale, lease or exchange of all or
substantially all of the property and assets of the Company and its subsidiaries
on a consolidated basis or the reorganization, recapitalization, liquidation,
dissolution or winding-up of the Company.

The Securityholders Agreement contains certain provisions which, with
certain exceptions, (i) restrict the ability of the Management Investors to
transfer their respective equity interest in Holdings except pursuant to, among
other bases, an exercise of tag-along rights upon the sale of Holdings Common
Stock held by Vestar/CS Holding, a sale of the Company, the exercise of certain
put and call options under the Management Subscription Agreements, or a public
sale of Holdings Common Stock; and (ii) restrict the ability of Vestar/CS
Holding to transfer its securities of the Company, except pursuant to, among
other bases, the tag-along rights of the Management Investors, a public sale of
Holdings Common Stock, or a sale of the Company.

The Securityholders Agreement contains certain provisions which, subject
to certain exceptions, grant Vestar/CS Holding, subsequent to the first public
sale of Holdings Common Stock, the right to demand registration of Holdings
Common Stock under the Securities Act (a "Demand Right"). Vestar/CS Holding will
be able to exercise such Demand Right four times. All persons party to the
Securityholders Agreement will have the right to participate, or "piggyback," in
certain registrations initiated by Holdings or pursuant to a Demand Right.

OTHER RELATIONSHIPS

Pursuant to a management advisory agreement (the "Management Agreement"),
Vestar Capital Partners will receive an annual fee and reimbursement of
out-of-pocket expenses for management and financial consulting services provided
to the Company. Such services include advising the Company on the establishment
of effective banking, legal and other business relationships, and assisting
management in developing and implementing strategies for improving the
operational, marketing and financial performance of the Company. The management
advisory fees to be paid per annum will equal the greater of (i) 1.0% of the
consolidated earnings of the Company before interest, taxes, depreciation and
amortization or (ii) $350,000. Expenses incurred pursuant to the Management
Agreement were approximately $485,000 in 1997 and $258,000 in 1996. Each of
Messrs. Alpert, Levy, Nagle and O'Connell, four of the directors of the Company,
benefits from any payments received by Vestar Capital Partners.

50
<PAGE> 51

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.

(a) (1) Financial Statements

Included in Part II, Item 8

Consolidated Balance Sheets as of December 28,
1996 and January 3, 1998

Consolidated Statements of Income
for the years ended January 3, 1998,
December 28, 1996 and December 30, 1995

Consolidated Statements of Cash Flow
for the years ended January 3, 1998,
December 28, 1996 and December 30, 1995

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

Schedule I - Condensed Financial Information
of Registrant

Schedule II - Valuation and Qualifying
Accounts

(3) List of Exhibits

<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of February 24, 1996, among
Springs Industries, Inc., Fort Mill A Inc., Vestar/CS Holding
Company, L.L.C. and Clark-S Acquisition Corporation (incorporated
by reference to Exhibit 2.1 to the Registrant's Registration
Statement on Form S-4, Reg. No. 333-4723 ("the S-4")).

2.2 Amendment No. 1 to Agreement and Plan of Merger, among Springs
Industries, Inc., Fort Mill A, Inc., Vestar/CS Holding Company,
L.L.C. and Clark-S Acquisition Corporation (incorporated by
reference to Exhibit 2.2 to the S-4).

2.3 Form of Management Common Stock Subscription Agreement, dated as
of April 17, 1996, between Clark-Schwebel Holdings, Inc. and the
Management Investors (incorporated by reference to Exhibit 2.3 to
the S-4). +

3.1 Amended and Restated Certificate of Incorporation of
Clark-Schwebel Holdings, Inc. (incorporated by reference to
Exhibit 3.1 to the quarterly report on Form 10-Q for the period
ended June 28, 1997 of the Registrant (File No. 333-4723)(the
"1997 Second Quarter 10-Q").
</TABLE>

51
<PAGE> 52

<TABLE>
<S> <C>
3.2 Amended and Restated By-laws of Clark-Schwebel Holdings, Inc.
(incorporated by reference to Exhibit 3.2 to the 1997 Second
Quarter 10-Q.)

3.3 Certificate of Incorporation of Clark-Schwebel, Inc. (incorporated
by reference to Exhibit 3.3 to the S-4).

3.4 By-laws of Clark-Schwebel, Inc. (incorporated by reference to
Exhibit 3.4 to the S-4).

4.1 Indenture, dated as of April 17, 1996, among Clark-Schwebel
Holdings, Inc., Clark-S Acquisition Corporation, CS Finance
Corporation of Delaware and Fleet National Bank, as Trustee.
(incorporated by reference to Exhibit 4.1 to the S-4).

4.2 First Supplemental Indenture, dated as of April 18, 1996, between
Clark-Schwebel, Inc. and Fleet National Bank (incorporated by
reference to Exhibit 4.2 to the S-4).

4.3 Forms of Series A and Series B 10 1/2% Senior Notes (included in
Exhibit 4.1 as Exhibit A thereto) (incorporated by reference to
Exhibit 4.3 to the S-4).

4.4 Purchase Agreement, dated as of April 12, 1996, among
Clark-Schwebel Holdings, Inc., Clark- S Acquisition Corporation,
CS Finance Corporation of Delaware, Donaldson, Lufkin & Jenrette
Securities Corporation, Bear, Stearns & Co. Inc., CS First Boston
Corporation and Lazard Freres & Co. LLC. (incorporated by
reference to Exhibit 4.4 to the S-4).

4.5 Registration Rights Agreement, dated as of April 17, 1996, by and
among Clark-Schwebel Holdings, Inc., Clark-S Acquisition
Corporation, CS Finance Corporation of Delaware, Donaldson, Lufkin
& Jenrette Securities Corporation, Bear, Stearns & Co. Inc., CS
First Boston Corporation and Lazard Freres & Co. LLC.
(incorporated by reference to Exhibit 4.5 to the S-4).

4.6 Securityholders Agreement, dated April 17, 1996, by and among
Clark-Schwebel Holdings, Inc., Vestar/CS Holding Company, L.L.C.
and certain other parties thereto (incorporated by reference to
Exhibit 4.6 to the S-4).

4.7 Form of Holdings Guarantee (included in Exhibit 4.1 as Exhibit D
thereto) (incorporated by reference to Exhibit 4.7 to the S-4).

4.8 Form of Subsidiary Guarantee (included in Exhibit 4.1 as Exhibit C
thereto) (incorporated by reference to Exhibit 4.8 to the S-4).

4.9 Indenture dated as of August 14, 1997 between Clark-Schwebel
Holdings, Inc. and State Street Bank and Trust Company with
respect to the 12.5% Senior Debentures due 2007 (incorporated by
reference to Exhibit 4.1 to the Registrants Registration Statement
on Form S-4 (File No. 333-36491)).

4.10 Registration Rights Agreement dated as of July 14, 1997 between
Clark-Schwebel Holdings, Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation (incorporated by reference to Exhibit 10.1
to the 1997 Second Quarter 10-Q).

4.11 See Exhibits 10.1, 10.1.1, 10.1.2, 10.2, 10.3 and 10.4.

9.1 Voting Trust Agreement, made as of April 17, 1996, by and among
Clark-Schwebel Holdings, Inc., Vestar/CS Holding Company, L.L.C.
and other parties thereto (incorporated by reference to Exhibit
9.1 to the S-4).
</TABLE>

52
<PAGE> 53

<TABLE>
<S> <C>
10.1 Credit Agreement, dated as of April 17, 1996, among Clark-Schwebel
Holdings, Inc., Clark-Schwebel, Inc. and the several banks and
other financial institutions from time to time parties thereto and
the Chase Manhatten Bank (the "Agent") (incorporated by reference
to Exhibit 10.1 to the S-4).

10.1.1 First Amendment to the Credit Agreement, dated as of March 27,
1997, among Clark-Schwebel Holdings, Inc., Clark-Schwebel Inc.,
the Agent and the other parties thereto (incorporated by reference
to Exhibit 10.1.1 to the Quarterly Report on Form 10-Q for the
period ended March 29, 1997 of the Registrant (File No.
333-4723)).

10.1.2 Second Amendment to the Credit Agreement, dated as of July 14,
1997, among Clark-Schwebel Holdings, Inc., Clark-Schwebel, Inc.,
the Agent and the other parties thereto (incorporated by reference
to Exhibit 10.2 to 1997 Second Quarter 10-Q).

10.2 Form of Security Agreement, dated as of April 17, 1996, made by
each Guarantor in favor of the Agent (incorporated by reference to
Exhibit 10.4 to the S-4).

10.3 Form of Pledge Agreement, dated as of April 17, 1996, made by each
Guarantor in favor of the Agent (incorporated by reference to
Exhibit 10.5 to the S-4).

10.4 Form of Guarantee Agreement, dated as of April 17, 1996, made by
each Guarantor in favor of the Agent (incorporated by reference to
Exhibit 10.6 to the S-4).

10.5 Management Agreement, dated as of April 17, 1996, between
Clark-Schwebel Holdings, Inc., Clark-Schwebel, Inc., and Vestar
Capital Partners (incorporated by reference to Exhibit 10.8 to the
S-4).

10.6 Form of Intellectual Property Security Agreement, among
Clark-Schwebel Holdings, Inc., Clark-Schwebel, Inc. and the other
parties thereto (incorporated by reference to Exhibit 10.9 to the
S-4).

10.7 1996 Executive Bonus Plan (incorporated by reference to Exhibit
10.7 to the Registrants Annual Report on Form 10-K for the year
ended December 28, 1996 (File No. 333-4723) (the "1996 10-K")). +

10.8 1997 Executive Bonus Plan (incorporated by reference to Exhibit
10.8 to the 1996 10-K). +

10.9 1998 Executive Bonus Plan. +

12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.

21.1 Subsidiaries of the Registrant.

27 Financial Data Schedule (electronic filing only).
</TABLE>

+ This is a management contract or compensatory plan or arrangement.

(b) Reports on Form 8-K.

No report on Form 8-K was filed during the fiscal quarter ended
January 3, 1998.

53
<PAGE> 54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

CLARK-SCHWEBEL HOLDINGS, INC.
-------------------------------------------
(Registrant)

Date: March 16, 1998 By: /s/ Donald R. Burnette
------------------- ------------------------------------------
Name: Donald R. Burnette
Title: Vice President and Chief Financial
Officer

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.

Date March 16, 1998 /s/ William D. Bennison
--------------------- -------------------------------------------
Name: William D. Bennison
Title: President and Director

Date March 16, 1998 /s/ Donald R. Burnette
-------------------- -------------------------------------------
Name: Donald R. Burnette
Title: Vice President and Chief Financial
Officer

Date March 16, 1998 /s/ Kyle J. Davidson
-------------------- -------------------------------------------
Name: Kyle J. Davidson
Title: Controller

Date March 16, 1998 /s/ Jack P. Schwebel
-------------------- -------------------------------------------
Name: Jack P. Schwebel
Title: Chairman of the Board

Date March 16, 1998 /s/ Richard C. Wolfe
-------------------- -------------------------------------------
Name: Richard C. Wolfe
Title: Executive Vice President and
Director

Date March 16, 1998 /s/ Norman W. Alpert
--------------------- -------------------------------------------
Name: Norman W. Alpert
Title: Director

Date March 16, 1998 /s/ John D. Howard
-------------------- -------------------------------------------
Name: John D. Howard
Title: Director

Date March 16, 1998 /s/ Sander M. Levy
-------------------- -------------------------------------------
Name: Sander M. Levy
Title: Director

54
<PAGE> 55

Date March 16, 1998 /s/ Arthur J. Nagle
-------------------- -------------------------------------------
Name: Arthur J. Nagle
Title: Director

Date March 16, 1998 /s/ Daniel S. O'Connell
-------------------- -------------------------------------------
Name: Daniel S. O'Connell
Title: Director

Date March 16, 1998 /s/ Frank Greenberg
-------------------- -------------------------------------------
Name: Frank Greenberg
Title: Director

Date March 16, 1998 /s/ Gerard L. Seelig
-------------------- -------------------------------------------
Name: Gerard L. Seelig
Title: Director

55
<PAGE> 56

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

No annual report to security-holders covering the Registrant's last
fiscal year has been sent to security-holders.

No proxy statement, form of proxy or other proxy soliciting material
has been sent to more than 10 of the Registrant's security-holders with respect
to any annual or other meeting of security-holders.

56
<PAGE> 57

EXHIBIT INDEX

10.9 1998 Executive Bonus Plan.

12.1 Ratio of Earnings of Fixed Charges.

21.1 Subsidiaries of the Registrant.

27. Financial Data Schedule.
(electronic filing only)

57
<PAGE> 58

CLARK-SCHWEBEL HOLDINGS, INC. AND SUBSIDIARY

SCHEDULE 1 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(Dollars in Thousands)

SUMMARIZED FINANCIAL INFORMATION---The following table provides summarized
financial information for Clark-Schwebel, Inc., the operating company, on a
stand alone basis. The 1996 balance sheet information is as of December 28, 1996
and the 1996 income statement information is for the period from April 18, 1996
through December 28, 1996. The 1997 balance sheet information is as of January
3, 1998 and the 1997 income statement information is for the period from
December 29, 1996 to January 3, 1998.

<TABLE>
<CAPTION>
1996 1997
--------- ---------

<S> <C> <C>
Current assets ................................. $ 64,038 $ 63,806
Noncurrent assets .............................. 176,662 173,911
--------- ---------
Total assets ................................... 240,700 237,717
Less:
Current liabilities ............................ (38,885) (36,706)
Noncurrent liabilities ......................... (148,878) (135,097)
--------- ---------
Net assets ..................................... $ 52,937 $ 65,914
========= =========

Net sales ...................................... $ 152,003 $ 240,204
Gross profit ................................... 33,398 55,303
Income from continuing operations .............. 10,135 19,816
Net income ..................................... 10,135 19,816
========= =========

Condensed Statement of Cash Flows:
Operating activities ........................... $ 41,127 $ 21,610
Investing activities ........................... (194,930) (9,508)
Financing activities ........................... 157,434 (15,982)
--------- ---------
Net change in cash ............................. $ 3,631 $ (3,880)
========= =========
Dividends from Asahi-Schwebel Co., Ltd. ........ $ 304 $ 1,616
========= =========
Dividends to Clark-Schwebel Holdings, Inc. ..... $ 0 $ 5,000
========= =========
</TABLE>

All assets of Clark-Schwebel, Inc., the operating company, represent
restricted net assets with the exception of the foreign equity investments and
distributions received from the foreign equity investments. Except in limited
circumstances, Clark-Schwebel, Inc. is prohibited from transferring restricted
net assets to Clark-Schwebel Holdings, Inc. in the form of cash dividends,
loans, or advances without the consent of a third party lender. The amount of
unrestricted net assets at January 3, 1998 is $62,257, which represents the book
value of the foreign equity investments ($61,254) and distributions received in
the form of cash from the foreign equity investments ($1,003).

<PAGE> 59

CLARK-SCHWEBEL HOLDINGS, INC. AND SUBSIDIARY

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)

<TABLE>
<CAPTION>
Column A Column B Column C Column C Column D Column E
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(A) (B) (C)

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Year ended January 3, 1998 (Successor) $ 853 189 58 $1,100

Year ended December 28, 1996:
36.5 week period ended December 28, 1996 (Successor) $ 655 160 38 $ 853
15.5 week period ended April 17, 1996 (Predecessor) $2,133 (84) 6 (1,400) $ 655

Year ended December 30, 1995 (Predecessor) $ 641 1,842 (349) $2,133
</TABLE>

(A) - The allowance for doubtful accounts was reduced as of the April
17, 1996 Acquisition Date by $160 to reflect management's estimate
of the reserve for bad debts as of the Acquisition Date.
(B) - Uncollectible accounts, net of recoveries
(C) - As part of Acquisition Agreement, Springs Industries, the former
parent company of Fort Mill A Inc. agreed to retain the accounts
receivable from one customer (which totaled $2,782 as of December
30, 1995) and related $1,400 reserve. The asset and related reserve
were transferred to Springs at April 17, 1996, the Acquisition Date.

<PAGE> 1
EXHIBIT 10.9

CLARK-SCHWEBEL, INC.
1998 EXECUTIVE BONUS POOL

Attached is the 1998 Executive Bonus Plan as submitted by management and
recommended by the Compensation and Benefit Committee.

1. The plan is based on EBITDA. From $0 - $29.9M EBITDA, the pool is $0K, or
Board discretion. A table is attached that reflects the % of bonus pool
earned at various levels of EBITDA up to $56M or 125% of pool.

2. A secondary pool of 10.0% would be set aside to reward management members
outside the incentive plan. (In the past, these awards have been
recommended by the responsible Vice President, based on individual
special performance.)

3. The plan participant pool would be split between earned @ 70% and
discretionary @ 30%. Payout of the discretionary portion would be
determined by the appropriate Vice President and President, based on
individual goals and performance against those goals.

4. There will be five levels of participation ranging from 40.0% to 120% of
annual base salary based on level of responsibility.

5. The bonus allocation pool will be calculated by multiplying the base pay
(W-2 base pay) of each individual by their level of participation and
totaling. The earned bonus of 70% is then allocated to participants based
on the allocation pool while the 30% discretionary portion is based on
individual's performance as determined by their respective manager.

<PAGE> 2

CLARK-SCHWEBEL, INC.
BONUS POOL SCHEDULE

POOL: $2,055K

<TABLE>
<CAPTION>
$000
% EARNED
EBITDA POOL POOL
- ------ ---- ----
<S> <C> <C>

0 - 29.9 BOARD DISCRETION
30.0 25.0 $ 514.0
37.0 50.0 $1,028.0
44.0 75.0 $1,541.0
50.0 100.0 $2,055.0
56.0 125.0 $2,568.8
</TABLE>

PARTICIPATION LEVEL AS A % OF BASE SALARY

PLAN LEVEL I. 120%
II. 100%
III. 80%
IV. 60%
V. 40%

<PAGE> 1
EXHIBIT 12.1

RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
Fiscal Year
--------------------------------------------------------------------------
1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ----
(Predecessor) (Successor)
(dollars in thousands)

<S> <C> <C> <C> <C> <C> <C>
Income before income taxes ................ $ 8,620 $12,037 $21,189 $ 8,988 $12,969 $24,175
Equity income (loss) ...................... 13 529 3,393 82 1,811 2,789
------- ------- ------- ------- ------- -------
Income before income taxes and
extraordinary items ....................... 8,633 12,566 24,582 9,070 14,780 26,964
Fixed charges:
Cash interest expense ..................... 401 401 401 148 9,458 11,895
Dividends on preferred stock .............. N/A N/A N/A N/A 5,185 4,722
Amortization of bond issue costs .......... 21 21 21 6 411 576
Amortization of deferred debt ............. 0 0 0 0 192 530
Interest expense on rental expense ........
194 144 128 41 124 195
------- ------- ------- ------- ------- -------
Total fixed charges ....................... 616 566 550 195 15,370 17,918
======= ======= ======= ======= ======= =======
Income before income taxes,
extraordinary items and fixed
charges ................................... 9,249 13,132 25,132 9,265 30,150 44,882
======= ======= ======= ======= ======= =======

Ratio of earnings to fixed charges......... 15.0 23.2 45.7 47.5 2.0 2.5
======= ======= ======= ======= ======= =======
</TABLE>

<PAGE> 1

EXHIBIT 21.1

Subsidiaries of the Registrant

Subsidiaries of Clark-Schwebel Holdings, Inc.:

Clark-Schwebel, Inc., a Delaware corporation

Subsidiaries of Clark-Schwebel, Inc.:

Clark-Schwebel Holding Corporation, a New York corporation

Clark-Schwebel Foreign Sales Corporation, a U.S. Virgin Islands corporation

Clark-Schwebel International, Inc, a Delaware corporation

Clark-Schwebel Group Hong Kong, Ltd., a foreign corporation

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> JAN-03-1998<F1>
<CASH> 147
<SECURITIES> 0
<RECEIVABLES> 28,527
<ALLOWANCES> 0
<INVENTORY> 34,897
<CURRENT-ASSETS> 63,806
<PP&E> 72,133
<DEPRECIATION> 12,540
<TOTAL-ASSETS> 237,717
<CURRENT-LIABILITIES> 38,882
<BONDS> 155,994
0
0
<COMMON> 9,000
<OTHER-SE> 9,127
<TOTAL-LIABILITY-AND-EQUITY> 237,717
<SALES> 240,204
<TOTAL-REVENUES> 240,204
<CGS> 184,901
<TOTAL-COSTS> 184,901
<OTHER-EXPENSES> 15,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,176
<INCOME-PRETAX> 24,175
<INCOME-TAX> 9,657
<INCOME-CONTINUING> 18,515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,515
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>The results of operations for the year ended January 3, 1998 represent the
combined results of Clark-Schwebel Holdings, Inc. ("Company") for the period of
December 29, 1996 through January 3, 1998 (successor company). A change in
ownership resulted from a leveraged buyout on April 17, 1996, and the
transaction resulted in a new basis of accounting for the Company. Therefore,
the results of operations for year ended January 3, 1998 are not fully
comparable to preceding reporting periods. This schedule contains summary
financial information from the Company's financial statements and is qualified
in its entirety by reference to such financial statements.
</FN>

</TABLE>