<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-6922
GUILFORD MILLS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-1995928
-------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
4925 West Market Street, Greensboro, N.C. 27407
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code - (910) 316-4000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes (X)
No ( )
Number of shares of common stock outstanding
at May 8, 1997 - 21,991,823
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Page 2
GUILFORD MILLS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
The consolidated financial statements included herein have been
prepared by Guilford Mills, Inc. (the "Company" or "Guilford"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The Consolidated Balance Sheet as of September 29, 1996 has been taken from the
audited financial statements as of that date. Certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
latest annual report on Form 10-K for the year ended September 29, 1996.
The consolidated financial statements included herein reflect all
adjustments (none of which are other than normal recurring accruals) which are,
in the opinion of management, necessary for a fair presentation of the
information included. The following consolidated financial statements are
included:
Consolidated Statements of Income for the Twenty-Six Weeks Ended March
30, 1997 and March 31, 1996
Consolidated Statements of Income for the Thirteen Weeks Ended March
30, 1997 and March 31, 1996
Consolidated Balance Sheets as of March 30, 1997 and September 29, 1996
Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended
March 30, 1997 and March 31, 1996
Condensed Notes to Consolidated Financial Statements
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Guilford Mills, Inc.
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E
For the Twenty-Six Weeks Ended March 30, 1997 and March 31, 1996
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------- ------------- -----------
MARCH 30, March 31,
1997 1996
- ---------------------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
NET SALES $430,007 $381,283
- ---------------------------------------------------------------------------------------- -------- --------
COSTS AND EXPENSES:
Cost of goods sold 351,111 320,308
Selling and administrative 47,375 38,665
- ---------------------------------------------------------------------------------------- -------- --------
398,486 358,973
- ---------------------------------------------------------------------------------------- -------- --------
OPERATING INCOME 31,521 22,310
INTEREST EXPENSE 9,334 7,866
OTHER EXPENSE, NET 2,059 1,438
- ---------------------------------------------------------------------------------------- -------- --------
INCOME BEFORE INCOME TAXES 20,128 13,006
INCOME TAX PROVISION 7,244 4,376
- ---------------------------------------------------------------------------------------- -------- --------
NET INCOME $ 12,884 $ 8,630
- ---------------------------------------------------------------------------------------- -------- --------
NET INCOME PER SHARE:
Primary $ .59 $ .41
Fully Diluted .56 .40
- ---------------------------------------------------------------------------------------- -------- --------
DIVIDENDS PER SHARE $ .20 $ .20
- ---------------------------------------------------------------------------------------- -------- --------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
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Guilford Mills, Inc.
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E
For the Thirteen Weeks Ended March 30, 1997 and March 31, 1996
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------- ------------------ ------------------
MARCH 30, March 31,
1997 1996
- ---------------------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
NET SALES $ 219,144 $207,097
- ---------------------------------------------------------------------------------------- ------------------ ------------------
COSTS AND EXPENSES:
Cost of goods sold 178,097 173,721
Selling and administrative 24,132 19,575
- ---------------------------------------------------------------------------------------- ------------------ ------------------
202,229 193,296
- ---------------------------------------------------------------------------------------- ------------------ ------------------
OPERATING INCOME 16,915 13,801
INTEREST EXPENSE 4,162 4,466
OTHER EXPENSE, NET 1,216 427
- ---------------------------------------------------------------------------------------- ------------------ ------------------
INCOME BEFORE INCOME TAXES 11,537 8,908
INCOME TAX PROVISION 4,062 3,026
- ---------------------------------------------------------------------------------------- ------------------ ------------------
NET INCOME $ 7,475 $5,882
- ---------------------------------------------------------------------------------------- ------------------ ------------------
NET INCOME PER SHARE:
Primary $.34 $.28
Fully Diluted .32 .27
- ---------------------------------------------------------------------------------------- ------------------ ------------------
DIVIDENDS PER SHARE $.10 $.10
- ---------------------------------------------------------------------------------------- ------------------ ------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Page 5
Guilford Mills, Inc.
C O N S O L I D A T E D B A L A N C E S H E E T S
March 30, 1997 and September 29, 1996
(In thousands except share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------ -------------------- ------------------
MARCH 30, September 29,
1997 1996
(UNAUDITED)
- ------------------------------------------------------------------------ -------------------- ------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 27,285 $ 31,448
Accounts receivable, net 158,982 172,033
Inventories 148,251 137,993
Prepaid income taxes 2,325 2,437
Other current assets 4,320 7,977
- ------------------------------------------------------------------------ -------------------- ------------------
Total current assets 341,163 351,888
Property, net 301,919 309,964
Cash surrender value of life insurance, net of policy loans 42,985 41,715
Other 26,408 25,263
- ------------------------------------------------------------------------ -------------------- ------------------
Total assets $712,475 $728,830
- ------------------------------------------------------------------------ -------------------- ------------------
LIABILITIES
Short-term borrowings $ 37,508 $ 47,979
Current maturities of long-term debt 8,644 18,837
Accounts payable 56,969 63,551
Accrued liabilities 43,385 43,863
- ------------------------------------------------------------------------ -------------------- ------------------
Total current liabilities 146,506 174,230
Long-term debt 207,997 209,435
Deferred income taxes 21,391 19,969
Other non-current liabilities 25,208 24,970
Minority interest 2,455 2,167
- ------------------------------------------------------------------------ -------------------- ------------------
Total liabilities 403,557 430,771
- ------------------------------------------------------------------------ -------------------- ------------------
STOCKHOLDERS' INVESTMENT
Preferred stock, $1 par; 1,000,000 shares authorized, none issued --- ---
Common stock, $.02 par; 60,000,000 shares authorized, 29,443,799
shares issued, 21,949,058 shares outstanding at March 30, 1997
and 21,683,567 shares outstanding September 29, 1996 589 589
Capital in excess of par 42,452 40,893
Retained earnings 319,739 311,217
Foreign currency translation loss (11,423) (11,988)
Unamortized stock compensation (217) (287)
Treasury stock, at cost (7,494,741 shares at March 30, 1997 and
7,760,232 shares at September 29, 1996) (42,222) (42,365)
- ------------------------------------------------------------------------ -------------------- ------------------
Total stockholders' investment 308,918 298,059
- ------------------------------------------------------------------------ -------------------- ------------------
Total liabilities and stockholders' investment $712,475 $728,830
- ------------------------------------------------------------------------ -------------------- ------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Page 6
Guilford Mills, Inc.
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
For the Twenty-Six Weeks Ended March 30, 1997 and March 31,1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------- ----------------------- ------------------------
MARCH 30, March 31,
1997 1996
- ----------------------------------------------------------------------------- ----------------------- ------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $12,884 $ 8,630
Non-cash items included in net income:
Depreciation and amortization 31,523 26,705
(Gain)Loss on disposition of property (175) 66
Minority interest in net income(loss) 331 (46)
Deferred income taxes 1,271 1,658
Increase in cash surrender value of life insurance, net of policy (1,562) (1,736)
loans
Compensation earned under restricted stock plan 70 649
Changes in assets and liabilities:
Receivables 14,306 4,729
Inventories (9,523) (17,901)
Other current assets 3,942 315
Accounts payable (8,687) (7,584)
Accrued liabilities (1,550) 1,570
Other 1,482 (846)
- ----------------------------------------------------------------------------- ----------------------- ------------------------
Net cash provided by operating activities 44,312 16,209
- ----------------------------------------------------------------------------- ----------------------- ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property (24,468) (23,091)
Proceeds from dispositions of property 2,160 823
(Increase) Decrease in other assets (1,515) 153
Purchase of business, net of cash acquired -- (19,302)
- ----------------------------------------------------------------------------- ----------------------- ------------------------
Net cash used in investing activities (23,823) (41,417)
- ----------------------------------------------------------------------------- ----------------------- ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term (repayments) borrowings, net (8,807) 44,608
Payments of long-term debt (12,765) (65,473)
Proceeds from issuance of long-term debt -- 58,777
Cash dividends (4,364) (4,283)
Common stock options exercised 2,155 187
- ----------------------------------------------------------------------------- ----------------------- ------------------------
Net cash (used in) provided by financing activities (23,781) 33,816
- ----------------------------------------------------------------------------- ----------------------- ------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (871) (771)
- ----------------------------------------------------------------------------- ----------------------- ------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (4,163) 7,837
- ----------------------------------------------------------------------------- ----------------------- ------------------------
BEGINNING CASH AND CASH EQUIVALENTS 31,448 17,964
ENDING CASH AND CASH EQUIVALENTS $27,285 $ 25,801
- ----------------------------------------------------------------------------- ----------------------- ------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
GUILFORD MILLS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 30, 1997
(In thousands except share data)
(Unaudited)
1. Seasonal Fluctuations -- Results for any portion of a year are not
necessarily indicative of the results to be expected for a full year, due to
seasonal aspects of the textile industry.
2. Stock Split-- On April 21, 1997, the Company's Board of Directors approved a
three-for-two split of the Company's common stock, par value $.02 per share (the
"Common Stock"). The split was effected in the form of a 50% stock dividend paid
on May 6, 1997 to stockholders of record on May 1, 1997. The stock dividend
increased the Company's issued Common Stock by approximately 9.8 million shares.
The par value of the additional 9.8 million shares of Common Stock issued has
been credited to Common Stock and a like amount charged to Capital in Excess of
Par. All share and per share data contained herein have been restated for all
periods presented to reflect the stock split.
3. Per Share Information -- Primary net income per share information has been
computed by dividing net income by the weighted average number of shares of
Common Stock and Common Stock equivalents outstanding during the periods. The
weighted average shares of Common Stock and Common Stock equivalents
used in computing primary net income per share for the twenty-six weeks ended
March 30, 1997 and March 31, 1996 were 21,888,000 and 21,239,000,
respectively. The weighted average shares of Common Stock and Common
Stock equivalents used in computing primary net income per share for the
thirteen weeks ended March 30, 1997 and March 31, 1996 were 21,996,000
and 21,381,000, respectively.
Fully diluted income per share information also considers as applicable (i)
the dilutive effect, if any, assuming that the Company's convertible debentures
were converted at the beginning of the current fiscal period, with earnings
being increased by the interest expense, net of income taxes, that would not
have been incurred had conversion taken place and (ii) any additional dilutive
effect for stock options and restricted stock grants. The weighted average
shares used in computing fully diluted net income per share for the twenty-six
weeks ended March 30, 1997 and March 31, 1996 were 25,305,000 and 24,783,000,
respectively. The weighted average shares used in computing fully diluted net
income per share for the thirteen weeks ended March 30, 1997 and March 31, 1996
were 25,377,000 and 24,842,000, respectively.
In March of 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS No. 128").
This Statement requires the presentation of basic earnings per share (net income
available to common shareholders divided by the weighted average number of
shares of common stock outstanding) and a disclosure reconciling the numerator
and the denominator of the earnings per share calculations. SFAS No. 128 is
effective for interim and annual periods ending after December 15, 1997, and
early application is prohibited. Accordingly, the accompanying financial
statements do not reflect the provisions of SFAS No. 128. The Company will adopt
the provisions of SFAS No. 128 in the first quarter of fiscal 1998.
The Company has not yet determined the impact of adoption of SFAS No. 128.
4. Inventories -- Inventories are carried at the lower of cost or market. Cost
is determined by using the LIFO (last-in, first-out) method for the majority of
inventories. Cost for all other inventories has been determined principally by
the FIFO (first-in, first-out) method.
<PAGE>
Page 7
Inventories at March 30, 1997 and September 29, 1996 consisted of the following:
<TABLE>
<CAPTION>
March 30, September 29,
1997 1996
------------------ -----------------
<S> <C> <C>
Finished Goods $ 45,042 $ 45,515
Raw Materials and Work in Process 107,615 95,439
Manufacturing Supplies 13,628 13,892
------------------ -----------------
Total inventories valued at first-in, first-out (FIFO) cost 166,285 154,846
Less -- Adjustments to reduce FIFO cost to LIFO cost, net 18,034 16,853
------------------ -----------------
Total inventories $148,251 $137,993
================== =================
</TABLE>
5. Accumulated Depreciation -- Accumulated depreciation at March 30, 1997 and
September 29, 1996 was $383,810 and $353,364 , respectively.
6. Acquisition --- On January 17, 1996, the Company acquired 100% of the
outstanding capital stock of Hofmann Laces, Ltd., Raschel Fashions
Interknitting, Ltd., and Curtains and Fabrics, Inc. (collectively "Hofmann
Laces"). Hofmann Laces designs and produces lace fabrics for the intimate
apparel, apparel and home fashions markets. It produces stretch knit fabrics for
the apparel, swimwear and intimate apparel markets. Additionally, it cuts and
sews lace fabrics into finished home fashions products which are sold directly
to retailers. The purchase price was comprised of cash of $45,480 and the
issuance of 300,000 shares of Common Stock as adjusted for the May 6, 1997
three-for-two Common Stock split. The acquisition was accounted for using the
purchase method of accounting. Excess purchase price over fair market value of
the underlying assets of $8,429 was allocated to goodwill based upon fair
values. Additional purchase price may be paid based on Hofmann Laces' earnings
for the five year period ending on December 31, 2000.
The operating results of Hofmann Laces have been included in the
consolidated statements of income from the date of acquisition. The following
unaudited pro forma information reflects the results of the Company's operations
assuming the purchase had been made at the beginning of the fiscal year ended
September 29, 1996: for the twenty-six weeks ended March 31, 1996, sales of
$225.8 million, net income of $6.3 million and primary earnings per share of
$.29. In management's opinion, the unaudited pro forma combined results of
operations are not indicative of the actual results that would have occurred had
the acquisition been consummated at the beginning of fiscal 1996 or of future
operations of the combined companies under the ownership and management of the
Company.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the six months ended March 30, 1997 were $430.0 million,
an increase of $48.7 million, or 12.8%, over net sales of $381.3 million for the
six months ended March 31, 1996. Net sales for the second quarter of fiscal 1997
were $219.1 million, an increase of $12.0 million, or 5.8%, over net sales of
$207.1 million for the comparable period of the prior year.
For the six months ended March 30, 1997, net sales in the apparel home
fashions business unit increased 11.5% over the six months ended March 31, 1996.
The increase resulted from net sales increases in shapewear and swimwear fabrics
of 8.4%, fastener, medical and industrial fabrics of 82.1%, and home fashions
and linings fabrics of 24.5% . These increases were partially offset by declines
in net sales of intimate apparel fabrics (lingerie, sleepwear and robewear) of
29.4% and women's ready to wear fabrics of 4.1%. The overall increase in net
sales for the apparel home fashions business unit reflects strong consumer
confidence in the economy and a shift in customer demand from
<PAGE>
Page 8
traditional apparel fabrics to specialty and technically engineered apparel,
home fashions, and industrial fabrics. For the quarter ended March 30, 1997, net
sales for the apparel home fashions business unit increased 8.9%, over the
comparable period of the previous year. This resulted from net sales increases
in shapewear and swimwear fabrics of 15.4%, fastener, medical and industrial
fabrics of 63.6%, and home fashions and linings fabrics of 18.6%. These
increases were partially offset by net sales declines in intimate apparel
fabrics of 27.1% and women's ready to wear fabrics of 13.0%.
Net sales for Hofmann Laces for the first six months of fiscal 1997
increased significantly from the first six months of fiscal 1996. The Company
acquired Hofmann Laces in the second quarter of fiscal 1996, and, therefore, the
Company's net sales for the first six months of fiscal 1996 do not include
Hofmann's net sales for the first quarter of fiscal 1996. On a pro forma basis,
as if the Hofmann acquisition had occurred at the beginning of fiscal 1996,
Hofmann's net sales for the first six months of fiscal 1997 increased 27.4% over
the first six months of fiscal 1996. The increase resulted from strong demand
for intimate apparel lace fabrics and home fashion fabrics. For the quarter
ended March 30, 1997, net sales for Hofmann Laces increased 39.3% over the same
quarter a year ago.
Net sales for the U.S. automotive business unit for the six months
ended March 30, 1997 declined 10.5% from the six months ended March 31, 1996.
Net sales to domestic original equipment manufacturers declined 10.6% primarily
as a result of a decline in sales to Ford Motor Company due to Ford production
declines on its platforms such as Taurus, Contour, Mystique and Windstar. Net
sales of fabrics for recreational vehicles and vans declined 10.4% also as a
result of vehicle production declines. For the quarter ended March 30, 1997, net
sales for the U.S. automotive business unit declined 9.4% from the quarter ended
March 30, 1996.
Net sales for the Company's European business unit increased 11.0% for
the first six months of fiscal 1997 over the same period a year ago. The
increase is due to increased market share resulting from new product offerings
and the effect of strengthening of the U.K. pound sterling compared to the U.S.
dollar. During the second quarter of fiscal 1997, Ford Motor Company announced
production decreases on its Mondeo and Fiesta platforms. As a result, net sales
for the Company's European automotive business unit for the second quarter of
fiscal 1997 declined by 3.0% from the same quarter a year ago.
Net sales for the Company's Mexican subsidiary for the first six months
of fiscal 1997 increased 17.1% over the first six months of fiscal 1996. The
increase reflects the strengthening of the Mexican economy and the increased
demand for exported garments under the North American Free Trade Agreement
(NAFTA). For the quarter ended March 30, 1997, net sales for the Company's
Mexican subsidiary increased by 13.9% over the same quarter a year ago. The
Company anticipates that the peso's uncertainty will continue to impact future
revenue translation and total sales of its Mexican subsidiary.
Gross margin for the first six months of fiscal 1997 increased to $78.9
million, or 18.3% of net sales, compared to $61.0 million, or 16.0% of net
sales, for the first six months of fiscal 1996. The total gross margin increase
and increased gross margin as a percentage of net sales resulted from increased
net sales volumes and product mix. For the quarter ended March 30, 1997, gross
margin increased to $41.0 million, or 18.7% of net sales, from $33.4 million, or
16.1% of net sales, for the same quarter a year ago.
Selling and administrative expenses increased to $47.4 million, or
11.0% of net sales, for the six months ended March 30, 1997, compared to $38.7
million, or 10.1% of net sales, for the same period a year ago. The increase in
selling and administrative expenses as a percentage of net sales is due
primarily to increased variable incentive compensation costs resulting from
increased net sales. For the quarter ended March 30, 1997, selling and
administrative expenses were $24.1 million, or 11.0% of net sales, compared to
$19.6 million, or 9.5% of net sales, for the same quarter a year ago. In
addition to the increased variable incentive compensation costs, the company
opened a sales office in Hong Kong and incurred additional advertising and
promotion costs associated with increased net sales volumes.
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Interest expense for the six months ended March 30, 1997 was $9.3
million compared to $7.9 million for the same period a year ago. The increase in
interest expense of $1.4 million is due primarily to additional borrowings
related to the acquisition of Hofmann Laces in the second quarter of fiscal 1996
partially offset by lower short term interest rates. For the quarter ended March
30, 1997, interest expense was $4.2 million compared to $4.5 million for the
quarter ended March 31, 1996. The decline is due to decreased interest rates and
repayments of long-term debt of $11.0 million during the quarter ended March 30,
1997.
Income tax expense for the first six months of 1997 was $7.2 million,
or 36.0% of income before income taxes, compared to $4.4 million, or 33.6% of
income before income taxes for the same period a year ago. The increase in the
effective tax rate is primarily due to the relative proportionate impact of
credits to pre-tax income which decreased significantly from fiscal 1996 to
fiscal 1997.
Net income for the six months ended March 30, 1997 was $12.9 million,
or $.59 per primary share, compared to $8.6 million, or $.41 per primary share,
for the comparable period of the previous year. For the quarter ended March 30,
1997, net income was $7.5 million, or $.34 per primary share, compared to net
income of $5.9 million, or $.28 per primary share, for the same quarter a year
ago.
Effective January 1, 1997, the Mexican economy is considered "highly
inflationary" for financial reporting purposes because the cumulative Mexican
inflation rate for the immediately preceding three years exceeded 100%. As a
result, under SFAS No. 52, the U.S. dollar will be used as the functional
currency for translating the balance sheet and results of operations of the
Company's Mexican subsidiary until the Mexican economy is no longer considered
highly inflationary. Under this method of accounting, foreign currency
translation gains and losses are recognized currently in the results of
operations, rather than as a direct change in stockholders' investment. The
results of operations, on a consolidated basis, for the Company's quarter and
six months ended March 30, 1997 were not significantly affected by the
continuing devaluation of the Mexican peso or the change in method of accounting
for currency translation . While management expects that the peso will devalue
even further in fiscal 1997, it believes that economic growth, spurred by the
continued Mexican domestic demand for apparel fabrics and reduced inflation,
will result in continued growth for its Mexican operations. The Company cannot
determine to what extent this growth may be offset by the negative impact of
economic uncertainty.
Liquidity and Capital Requirements
At March 30, 1997, working capital was $194.7 million compared to
$177.7 million at September 29, 1996. This increase in working capital is due
primarily to a reduction in short-term borrowings as cash generated from
operating activities allowed for the repayment of $20.7 million of current debt.
The Company maintains flexibility with respect to its seasonal working capital
needs through a revolving credit facility of $150 million and its continued
access to other traditional sources of funds, including uncommitted bank lines
of credit aggregating $135 million, and the ability to receive advances against
its factored accounts receivable. At March 30, 1997 no borrowings were
outstanding against the Company's $150 million credit facility, and the
Company's borrowing availability under its uncommitted bank lines of credit was
$35.5 million. Management believes that the Company's financial position and
operating performance will continue to provide the Company with the ability to
obtain necessary capital from appropriate financial markets.
Contingencies and Future Operations
Since January 1992, the Company has been involved in discussions with
the United States Environmental Protection Agency ("EPA") regarding remedial
actions at its Gold Mills, Inc. ("Gold") facility in Pine Grove, Pennsylvania
which was acquired in October 1986. Between 1988 and 1990, the Company
implemented a number of corrective measures at the facility in conjunction with
the Pennsylvania Department of Environmental Resources and incurred
approximately $3.5 million in costs. Subsequently, through negotiations with the
EPA, Gold entered into a Final Administrative Consent Order with the EPA,
effective October 14, 1992. Pursuant to such order, Gold has performed (i)
certain measures designed to prevent any potential threats to the environment at
the facility and (ii) an investigation to fully determine the nature of any
release of hazardous substances at the facility. The Company has not received a
response to its report filed with the EPA. Upon receipt of EPA comments, Gold
will conduct a study to evaluate alternatives for any corrective action which
may be
<PAGE>
Page 10
necessary at the facility. The failure of Gold to comply with the terms of the
Consent Order may result in the imposition of monetary penalties against Gold.
In the fourth quarter of 1992, a pre-tax charge of $8.0 million was provided for
the estimated future cost of the additional remediation.
During the fourth quarter of 1992, the Company also received a Notice of
Violation from the North Carolina Division of Environmental Management
concerning ground water contamination on or near one of its North Carolina
facilities. The Company has voluntarily agreed to allow the installation of
monitoring wells at the site but denies that such contaminants originated from
the Company's operations or property. An additional pre-tax charge of $1.3
million was provided in the fourth quarter of 1992 to reflect the estimated
future costs of monitoring this and other environmental matters including the
removal of underground storage tanks at the Company's facilities. The Company
has removed substantially all underground storage tanks at its facilities. At
March 30, 1997, environmental accruals amounted to $5.6 million of which $4.6
million is non-current and is included in other non-current liabilities in the
balance sheet.
The Company is also involved in various litigation arising in the ordinary
course of business. Although the final outcome of these legal and environmental
matters cannot be determined, based on the facts presently known, it is
management's opinion that the final resolution of these matters will not have a
material adverse effect on the Company's financial position or future results of
operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Reference is made to Item 3 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 29, 1996, which item is
incorporated herein by reference.
Items 2 - 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<S> <C>
Exhibit No.
(3) By-Laws of Guilford Mills, Inc. (as amended through February 6, 1997).
(10)(a)* Amendments to The Guilford Mills, Inc. 1991 Stock Option Plan.
(10)(b)* Amendment to The Guilford Mills, Inc. 1989 Restricted Stock Plan.
</TABLE>
* Items denoted with an asterisk represent management contracts or compensatory
plans or arrangements
(b) Reports on Form 8-K:
Not Applicable
<PAGE>
Page 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUILFORD MILLS, INC.
(Registrant)
Date: May 13, 1997 By:________________________
Terrence E. Geremski
Senior Vice President/Chief Financial Officer
<PAGE>
BY-LAWS
OF
GUILFORD MILLS, INC.
(AS AMENDED THROUGH FEBRUARY 6, 1997)
ARTICLE I
OFFICES
The principal office of the Corporation within the State of Delaware
shall be located at the address stated in the Certificate of Incorporation or in
any certificate of appointment or change of agent or of change of principal
office which shall be filed with the Secretary of State on behalf of the
Corporation. The Corporation may have such other offices, either within or
without the State of Delaware, as the Board of Directors may designate or as the
business of the Corporation may require from time to time.
ARTICLE II
STOCKHOLDERS
The Annual Meeting of the stockholders for the purpose of electing
Directors and for the transaction of such other business as may come before the
meeting shall in 1993 be held on such day during the months of October or
November as may be fixed by the Board of Directors. The next Annual Meeting of
the stockholders for the purpose of electing Directors and for the transaction
of such other business as may come before the meeting shall be held on such day
during the months of
<PAGE>
February or March in 1995 as may be fixed by the Board of Directors. Thereafter,
the Annual Meeting of the stockholders for the purpose of electing Directors and
for the transaction of such other business as may come before the meeting shall
be on such day during the months of February or March in each year as may be
fixed by the Board of Directors. If the election of Directors shall not be held
on the day designated herein for any annual meeting of the stockholders, or at
any adjournment thereof, the annual election of Directors may be held at a
special meeting of the stockholders as soon thereafter as may be convenient.
SECTION 2. Place of Meeting. Annual meetings and special meetings of
the stockholders shall be held at such place, within or without the State of
Delaware and at such hour as may be fixed from time to time by the Board of
Directors. At least ten days' (but not more than 50 days') notice shall be given
to the stockholders of the place so fixed.
SECTION 3. Special Meetings. Special meetings of stockholders of the
Corporation may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the whole Board of Directors.
SECTION 4. Notice of Meeting. Written or printed notice stating the
time and place of the meeting shall be delivered not less than ten (10) days
before the date of the meeting, either personally or by mail, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States Mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid. Such notice need not
state the purposes of the meeting unless required by law. Whenever the
provisions of law or of the Certificate of Incorporation or By-laws of the
Corporation require that a meeting of the stockholders shall be duly called for
the purpose, or that a certain notice of the time, place and purposes of any
such meeting shall be given, in order that certain
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action may be taken at such meeting, a written waiver of notice of the time,
place and purposes of such meeting, whether regular or special, signed by every
stockholder entitled to notice not present in person or duly represented by
proxy at such meeting, or by his attorney or legal representative thereunto duly
authorized, either before or after the time fixed for holding said meeting,
shall be deemed equivalent to such call and notice, and such action if taken at
any such meeting shall be as valid as if call and notice had been duly given.
Notice of any adjourned meeting of the stockholders shall not be required to be
given.
SECTION 5. Closing of Transfer Books for Fixing of Record Date. The
Board of Directors may close the stock transfer books of the Corporation for a
period not exceeding fifty (50) days preceding the date of any meeting of
stockholders or the date for payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding fifty (50)
days in connection with obtaining the consent of stockholders for any purpose.
In lieu of closing the stock transfer books as aforesaid, the Board of Directors
may fix in advance a date, not exceeding fifty (50) days preceding the date of
any meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment or rights, or to exercise the rights in respect of any
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such change, conversion or exchange of capital stock, or to give such consent,
and in such case be entitled to such notice of, and to vote at, such meeting and
any adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give such consent,
as the case may be, notwithstanding any transfer of any stock on the books of
the Corporation after any such record date fixed as aforesaid. In the event that
the Board of Directors shall not have closed the transfer books of the
Corporation or fixed a date for the determination of its stockholders entitled
to vote, as aforesaid, no share of stock shall be voted on at any election for
Directors which has been transferred on the books of the Corporation within
twenty (20) days next preceding such election of Directors.
SECTION 6. Quorum. The holders of a majority of the outstanding shares
of the Corporation entitled to vote, present in person or represented by proxy,
shall constitute a quorum at any meeting of the stockholders. In the absence of
a quorum at any meeting, or any adjournment thereof, a majority in interest of
the stockholders present in person or represented by proxy may adjourn the
meeting from time to time without further notice. At such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally held.
SECTION 7. Proxies. At all meetings of stockholders, the vote of any
stockholder may be cast in person or by his proxy or proxies (who need not be
stockholders) appointed by an instrument in writing subscribed by such
stockholder or by his duly authorized attorney-in-fact and delivered to the
Secretary of the meeting. No
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appointment of proxy shall be valid after one year from the date thereof, unless
the proxy provides for a longer period.
SECTION 8. Voting Shares. Each stockholder shall be entitled at each
meeting of the stockholders to one vote in person or by proxy for each share of
capital stock having voting rights held by him.
SECTION 9. Voting Lists. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order and showing the address of each
stockholder of record and the number of shares registered in the name of each
stockholder of record. Such list shall be open during the usual hours for
business at the place where said election is to be held for ten (10) days next
preceding the date of said election, to the examination of any stockholder, and
shall be produced and kept at the time and place of the meeting during the whole
time thereof, and subject to the inspection of any stockholder who may be
present.
SECTION 10. Notification of Nomination of Directors. Nominations for
election to the Board of Directors of the Corporation at a meeting of
stockholders may be made by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of Directors at such meeting who
complies with the notice procedures set forth in this Section 10. Such
nominations, other than those made by, or on behalf of the Board of Directors,
may be made only if notice in writing is personally delivered to, or mailed by
first class United States mail, postage prepaid, and received by,0 the Secretary
of the
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Corporation not less than sixty (60) days nor more than ninety (90) days prior
to such meeting; provided, however, that if less than seventy (70) days' notice
or prior public disclosure of the date of the meeting is given to stockholders,
such nomination shall have been mailed by first class United States mail,
postage prepaid, and received by, or personally delivered to, the Secretary of
the Corporation not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the meeting was mailed or such
public disclosure was made, whichever occurs first. Such notice shall set forth
(a) as to each proposed nominee (i) the name, age, business address and, if
known, residence address of each such nominee, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares, if any, of stock of
the Corporation that are beneficially owned by each such nominee and (iv) any
other information concerning the nominee that must be disclosed in proxy
solicitations pursuant to the proxy rules of the Securities and Exchange
Commission if such person had been nominated, or intended to be nominated, by
the Board of Directors (including such person's written consent to be named as a
nominee and to serve as a Director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the Corporation's
books, of such stockholder (ii) a representation that such stockholder is a
holder of record of shares of stock of the Corporation entitled to vote at the
meeting and the class and number of shares of the Corporation which are
beneficially owned by such stockholder, (iii) a representation that such
stockholder intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice and (iv) a description of all
arrangements or understandings between such
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stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
such stockholder. The Corporation also may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to serve as a Director of
the Corporation.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 11. Notice of Business at Annual Meetings. At an annual meeting
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, if such business relates to the election of Directors of the
Corporation, the procedures in Article II, Section 10 must be complied with. If
such business relates to any other matter, the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be personally delivered to, or mailed by
first class United States mail, postage prepaid, and received by, the Secretary
of the Corporation not less than sixty (60)
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days nor more than ninety (90) days prior to such meeting; provided, however,
that if less than seventy (70) days' notice or prior public disclosure of the
date of the meeting is given to stockholders, such notice, to be timely, must
have been mailed by first class United States mail, postage prepaid, and
received by, or personally delivered to, the Secretary of the Corporation not
later than the close of business on the tenth (10th) day following the day on
which notice of the date of the meeting was mailed or such public disclosure was
made, whichever occurs first. A stockholder's notice to the Secretary of the
Corporation shall set forth as to each matter the stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (iii) a
representation that the stockholder is a holder of record of shares of stock of
the Corporation entitled to vote at the meeting and the class and number of
shares of the Corporation which are beneficially owned by the stockholder and
(iv) any material interest of the stockholder in such business. Notwithstanding
anything in these By-laws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section 11 and except that any stockholder proposal which complies with Rule
14a-8 of the proxy rules (or any successor provision) promulgated under the
Securities Exchange Act of 1934, as amended, and is to be included in the
Corporation's proxy statement for an annual meeting of stockholders shall be
deemed to comply with the requirements of this Section 11.
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The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 11, and if he should so
determine, he shall so declare to the meeting and the business not properly
brought before the meeting shall be disregarded.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
SECTION 2. Number, tenure and qualifications. The number of Directors
shall be such as from time to time shall be fixed by the Board of Directors, but
in no case shall the number be more than fourteen (14) or less than three (3).
Each Director shall hold office until the next election of the class for which
such Directors shall have been chosen, and until a successor shall be duly
elected and qualified, or until his death, resignation or removal. No Director
need be a stockholder of the Corporation.
SECTION 3. Regular Meetings. The first meeting of each newly elected
Board of Directors shall be held immediately after, and at the same place as the
annual election of Directors, if a quorum shall be then present, in which case
notice of such meeting need not be given. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Delaware,
for the holding of regular meetings without other notice than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or of any two Directors. The
person or
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persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Delaware, as the place for
holding any special meeting of the Board of Directors called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
least two (2) days prior thereto by written notice delivered personally or
mailed to each Director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Each such notice shall state the time and place of the
meeting but need not state the purposes thereof except as otherwise in these
By-laws expressly provided. Unless required by law or these By-laws, such notice
shall not be required to be given to any Director who shall be present at such
meeting, or who shall waive such notice in writing or by telegraph, cable or
radio, whether before or after the meeting, and any meeting of the Board of
Directors shall be a legal meeting without any notice thereof having been given
if all of the Directors shall be present thereat. Whenever the provisions of the
law or of the Certificate of Incorporation of the Corporation or these By-laws
require that a meeting of the Directors shall be duly called for the purpose, or
that a certain notice of the time, place and purposes of any such meeting shall
be given, in order that certain action may be taken at such meeting, a written
waiver of notice of the time, place and purposes of such meeting, whether
regular or special, signed by every Director not present in person, either
before or after the time fixed for holding said meeting, shall be deemed
equivalent to such call and notice, and
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such action if taken at any such meeting shall be as valid as if call and notice
had been duly given.
SECTION 6. Quorum. A majority of the Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but if less than such a quorum is present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time without further
notice.
SECTION 7. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. Removal of Directors. Any Director may be removed, but only
with cause, at any time, by the affirmative vote of the holders of a majority of
the outstanding stock entitled to vote for the election of Directors of the
Corporation, at a special meeting of the stockholders called and held for the
purpose.
SECTION 9. Vacancies. Any vacancy or vacancies in the Board of
Directors resulting from death, resignation, removal, and increase in the
authorized number of Directors, or any other cause, may be filled only by a
majority vote of the Directors then in office, though less than a quorum, and
each Director so elected shall hold office until the next election of the class
for which such Director shall have been chosen and until his successor shall be
duly elected and qualified, or until his death, resignation or removal.
SECTION 10. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid such fee for attendance at each meeting
of the Board of Directors or such stated salary as Director as shall be fixed by
the Board of Directors. No
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such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
EXECUTIVE COMMITTEE
SECTION 1. Designation and Vacancies. The Executive Committee, if any,
shall be designated as provided in the Certificate of Incorporation, shall
consist of not less than three members of the Board of Directors, one of whom
shall be designated the Chairman of the Executive Committee. The Chairman of the
Executive Committee shall preside at meetings of the Executive Committee, and
the Secretary of the Corporation, or such other person as the Executive
Committee shall from time to time determine, shall act as Secretary of the
Executive Committee.
The Board of Directors, by action of a majority of the whole Board,
shall fill vacancies in the Executive Committee.
SECTION 2. Powers. During the intervals between the meetings of the
Board of Directors, the Executive Committee, if designated, shall have, and may
exercise, all of the powers of the Board of Directors (other than the power to
remove or elect officers) in the management of the business and affairs of the
Corporation, including the power to authorize the seal of the Corporation to be
affixed to all papers which may require it, in such manner as the Executive
Committee shall deem for the best interests of the Corporation, in all cases in
which specific directions shall not have been given by the Board of Directors.
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All action by the Executive Committee shall be reported to the Board of
Directors at its meeting next succeeding such action.
SECTION 3. Procedures, Meetings and Quorum. The Executive Committee
shall meet at such times and at such place or places as may be provided by such
rules of procedures as the Executive Committee may adopt, or by resolution of
the Executive Committee or of the Board of Directors. At every meeting of the
Executive Committee the presence of a majority of all the members shall be
necessary for the adoption by it of any resolution.
SECTION 4. Compensation. By resolution of the Board of Directors, the
members of the Executive Committee may be paid their expenses, if any, of
attendance at each meeting of the Executive Committee, and may be paid such fee
for attendance at each meeting of the Executive Committee as shall be fixed by
the Board of Directors.
ARTICLE 7
AUDIT COMMITTEE
SECTION 1. Audit Committee. The Audit Committee, if any, of the Board
of Directors shall be designated by the Board of Directors and shall consist of
not less than two (2) members of the Board of Directors, none of whom shall be
executive officers of the Corporation. One member of the Audit Committee may be
designated the Chairman of the Audit Committee. The Chairman of the Audit
Committee shall preside at meetings of the Audit Committee, and the Secretary of
the Corporation, or such other person as the Audit Committee shall from time to
time determine, shall act as Secretary of the Audit
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Committee. The Board of Directors, by action of a majority of the whole Board,
shall fill vacancies in the Audit Committee.
SECTION 2. Powers. The Audit Committee shall meet with management to
consider the adequacy of the internal controls of the Corporation and the
objectivity of financial reporting. The Audit Committee shall also meet with the
Corporation's independent accountants and with appropriate Corporation financial
personnel with respect to such matters. The Audit Committee shall recommend to
the Board of Directors the appointment of independent accountants. The Audit
Committee shall have such other powers as are granted to it by resolution of the
Board of Directors.
SECTION 3. Procedures, Meetings and Quorum. The Audit Committee shall
meet at such times and at such place or places as may be provided by such rules
of procedures as the Audit Committee may adopt, or by resolution of the Audit
Committee or of the Board of Directors. At every meeting of the Audit Committee
the presence of a majority of all the members shall be necessary for the
adoption of a new resolution.
SECTION 4. Compensation. By resolution of the Board of Directors, the
members of the Audit Committee may be paid their expenses, if any, of attendance
at each meeting of the Audit Committee and may be paid such fee for attendance
at each meeting of the Audit Committee as shall be fixed by the Board of
Directors.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a Chairman
of the Board, a President, one or more Vice Presidents (the number thereof to be
determined
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by the Board of Directors), a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers (including a Vice
Chairman of the Board) and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors. Any two offices (but not more
than two), other than the offices of a President and Secretary, may be held by
the same person. The President shall be chosen from among the Directors.
SECTION 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually at the first
meeting of the Board of Directors following the annual election of Directors. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as may be convenient. Each officer shall hold office
until his successor shall be duly elected and qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 3. Removal of Officers. Any officer may be removed, either with
or without cause, by the vote of a majority of the whole Board of Directors at a
special meeting called for the purpose or, except in case of any officer elected
by the Board of Directors, by any superior officer upon whom the power of
removal may be conferred by the Board of Directors or by these By-laws.
SECTION 4. Vacancies. A vacancy in any office resulting from death,
resignation, removal or any other cause, may be filled by the Board of Directors
for the unexpired portion of the term.
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SECTION 5. Chairman and Vice Chairman of the Board. The Chairman of the
Board of Directors shall be the chief executive officer of the Corporation,
shall preside at all meetings of the stockholders and of the Board of Directors
at which he is present and shall have the final executive authority with respect
to the management of the affairs and policies of the Corporation, including all
powers and authority which, by custom and usage, ordinarily are inherent in and
incident to the office of the chief executive officer of the Corporation. The
Vice Chairman of the Board of Directors shall, in the absence of the Chairman of
the Board of Directors, preside at all meetings of the stockholders and of the
Board of Directors at which he is present, and shall perform such other duties
as may be prescribed by the Board of Directors from time to time.
SECTION 6. President. The President shall be the chief operating
officer of the Corporation and shall have overall responsibility and authority
for the general management of the operations of the Corporation, including such
powers and authority which, by custom and usage, ordinarily are inherent in and
incident to the office of the chief executive officer, except as the same
specifically may be limited by resolution of the Board of Directors.
SECTION 7. The Vice Presidents. Each Vice President shall have such
powers and perform such duties as the Board of Directors may determine or as may
be assigned to him by the President. In the absence of the President or in the
event of his death, or inability or refusal to act, the Vice President (or in
the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties
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of the President, and when so acting, shall have all the powers and be subject
to all the restrictions upon the President.
SECTION 8. The Secretary. The Secretary shall (a) keep the minutes of
the meetings of the stockholders, the Board of Directors, the Executive
Committee (if designated), and all other committees, if any, of which a
Secretary shall not have been appointed, in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-laws and as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, the execution of which on behalf of
the Corporation under its seal, is duly authorized; (d) be in charge of the
stock ledger of the Corporation; (e) in general perform all duties incident to
the office of Secretary and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
SECTION 9. The Treasurer. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the Corporation from
any source whatsoever; (c) deposit all such moneys in the name of the
Corporation in such banks, trust companies, or other depositories as shall be
selected in accordance with the provisions of Article VI of these By-laws; and
(d) in general perform all duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors. He shall, if required by the Board of Directors, give a
bond for the
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faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine.
SECTION 10. Assistant Secretaries and Assistant Treasurers. At the
request of the Secretary or in his absence or disability, one or more Assistant
Secretaries designated by the Board of Directors shall have all the powers of
the Secretary. At the request of the Treasurer or in his absence or disability,
one or more Assistant Treasurers designated by the Board of Directors shall have
all the powers of the Treasurer. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties as shall be assigned to them
by the Secretary or the Treasurer, respectively, or by the President or the
Board of Directors.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. Except as otherwise provided by law, these
By-laws or resolutions of the Board of Directors, any contract or other
instrument shall be valid and binding on the Corporation if executed and
delivered in its name and on its behalf by the President or in his absence or
disability by any Vice President. The Board of Directors may, however, authorize
any other officer or officers or other agent or agents to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loan shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a
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resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers or other
agent or agents of the Corporation and in such manner and as shall from time to
time be determined by resolution of the Board of Directors. Each of such
officers and agents shall give such bond, if any, as the Board of Directors may
require.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select or as may be designated by any officer or officers of the
Corporation.
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of
stock of the Corporation shall be in such form and shall contain such
information as shall be required by law at the time the same are issued. Such
certificates shall be (i) signed by the Chairman or Vice Chairman of the Board
of Directors or by the President or a Vice President and by the Treasurer or an
Assistant Treasurer, or by the Secretary or an Assistant Secretary. If such
certificate is countersigned (i) by a transfer agent other than the Corporation
or its employee or (ii) by a registrar other than the Corporation or its
employee, any of the signatures above authorized may be a facsimile. Such
certificates
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shall bear the seal of the Corporation which may be a facsimile thereof. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, the
certificate may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent, or registrar at the date of issue. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and the date of issue, shall be entered on the
stock transfer books of the Corporation. The person in whose name any shares
shall stand on the books of the Corporation shall be deemed by the Corporation
to be the owner thereof for all purposes. All certificates surrendered to the
Corporation for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and cancelled, except as otherwise provided in the Certificate of
Incorporation and except that in case of a lost, destroyed, or mutilated
certificate a new one may be issued therefor upon such terms and/or indemnity to
the Corporation as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or the Transfer
Agent of the Corporation and on surrender for cancellation of the certificate
for such shares.
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ARTICLE IX
FISCAL YEAR
The 1994 fiscal year of the Corporation shall commence on September 27,
1993 and end on October 2, 1994. Thereafter, the fiscal year of the Corporation
shall commence on the first Monday following the Sunday nearest September 30 in
each year and end on the Sunday nearest September 30 in each year.
ARTICLE X
SEAL
The corporate seal of the Corporation shall be in the form of a circle
and shall include the name of the Corporation and reference to the year and
place of its incorporation.
ARTICLE XI
INDEMNIFICATION
SECTION 1. Indemnification Respecting Third Party Claims. The
Corporation, to the full extent permitted, and in the manner required, by the
laws of the State of Delaware as in effect at the time of the adoption of this
Article or as such laws may be amended from time to time, shall indemnify any
person who was or is made a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (including any
appeal thereof), whether civil, criminal, administrative or investigative in
nature (other than an action by or in the right of the Corporation), by reason
of the fact that such person is or was a Director, officer, employee or agent of
the Corporation, or, if at a time when he was a Director, officer, employee or
agent of the
21
<PAGE>
Corporation, is or was serving at the request of, or to represent the interests
of, the Corporation as a Director, officer, partner, fiduciary, employee or
agent (a "Subsidiary Officer") of another Corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise (an "Affiliated
Entity"), against expenses (including attorneys' fees and disbursements), costs,
judgments, fines, penalties and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful; provided, however,
that the Corporation shall not be obligated to indemnify against any amount paid
in settlement unless the Corporation has consented to such settlement, which
consent shall not be unreasonably withheld. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that his or her conduct was unlawful.
Notwithstanding anything to the contrary in the foregoing provisions of this
Section 1, a person shall not be entitled, as a matter of right, to
indemnification pursuant to this Section 1 against costs or expenses incurred in
connection with any action, suit or proceeding commenced by such person against
any person who is or was a Director, officer, fiduciary, employee or agent of
the Corporation
22
<PAGE>
or a Subsidiary Officer of any Affiliated Entity, but such indemnification may
be provided by the Corporation in a specific case as permitted by Section 6 of
this Article.
SECTION 2. Indemnification Respecting Derivative Claims. The
Corporation, to the full extent permitted, and in the manner required, by the
laws of the State of Delaware as in effect at the time of the adoption of this
Article or as such laws may be amended from time to time, shall indemnify any
person who was or is made a party to or is threatened to be made a party to any
threatened, pending or completed action or suit (including any appeal thereof)
brought in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a Director, officer, employee or
agent of the Corporation, or, if at a time when he was a Director, officer,
employee or agent of the Corporation, is or was serving at the request of, or to
represent the interests of, the Corporation as a Subsidiary Officer of an
Affiliated Entity against expenses (including attorneys' fees and disbursements)
and costs actually and reasonably incurred by such person in connection with
such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless, and except to the extent that, the Court of
Chancery of the State of Delaware or the court in which such judgment was
rendered shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses and costs as the
Court of Chancery of the State of Delaware or such other
23
<PAGE>
court shall deem proper. Notwithstanding anything to the contrary in the
foregoing provisions of this Section 2, a person shall not be entitled, as a
matter of right, to indemnification pursuant to this Section 2 against costs and
expenses incurred in connection with any action or suit in the right of the
Corporation commenced by such person, but such indemnification may be provided
by the Corporation in any specific case as permitted by Section 6 of this
Article.
SECTION 3. Determination of Entitlement to Indemnification. Any
indemnification under Section 1 or 2 of this Article (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification is proper under the circumstances because
such person has met the applicable standard of conduct set forth in Section 1 or
2 of this Article. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to the action, suit or proceeding in respect of which indemnification is
sought or by majority vote of the members of a committee of the Board of
Directors composed of at least three members each of whom is not a party to such
action, suit or proceeding, or (b) if such a quorum is not obtainable and/or
such a committee is not established or obtainable, or, even if obtainable, if a
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion or (c) by the stockholders. In the event a request for
indemnification is made by any person referred to in Section 1 or Section 2, the
Corporation shall cause such determination to be made not later than 60 days
after such request is made.
24
<PAGE>
SECTION 4. Right to Indemnification Upon Successful Defense and For
Service as a Witness.
(a) Notwithstanding the other provisions of this Article, to
the extent that a Director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1 or 2 of this Article, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) and costs actually and reasonably incurred
by such person in connection therewith.
(b) To the extent any person who is or was a Director,
officer, employee or agent of the Corporation has served or prepared to serve as
a witness in any action, suit or proceeding (whether civil, criminal,
administrative or investigative in nature) or in any investigation by the
Corporation or the Board of Directors thereof or a committee thereof or by any
securities exchange on which securities of the Corporation are or were listed by
reason of his services as a Director, officer, employee or agent of the
Corporation or as a Subsidiary Officer of any Affiliated Entity (other than in a
suit commenced by such person), the Corporation shall indemnify such person
against expenses (including attorneys' fees and disbursements) and costs
actually and reasonably incurred by such person in connection therewith within
30 days after receipt by the Corporation from such person of a statement
requesting such indemnification, averring such service and reasonably evidencing
such expenses and costs.
SECTION 5. Advance of Expenses. Expenses and costs incurred by any
person referred to in Section 1 or Section 2 of this Article in defending a
civil, criminal,
25
<PAGE>
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized by this Article.
SECTION 6. Indemnification Not Exclusive. The provision of
indemnification to or the advancement of expenses and costs to any person under
this Article, or the entitlement of any person to indemnification or advancement
of expenses and costs under this Article, shall not limit or restrict in any way
the power of the Corporation to indemnify or advance expenses and costs to such
person in any other way permitted by law or be deemed exclusive of, or
invalidate, any right to which any person seeking indemnification or advancement
of expenses and costs may be entitled under any law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in such
person's capacity as an officer, Director, employee or agent of the Corporation
and as to action in any other capacity while holding any such position.
SECTION 7. Accrual of Claims; Successors. The indemnification provided
or permitted under this Article shall apply in respect of any expense, cost,
judgment, fine, penalty or amount paid in settlement, whether or not the claim
or cause of action in respect thereof accrued or arose before or after the
effective date of this Article. The right of any person who is or was a
Director, officer, employee or agent of the Corporation to indemnification under
this Article shall continue after he shall have ceased to be a
26
<PAGE>
Director, officer, employee or agent and shall inure to the benefit of the
heirs, distributees, executors, administrators and other legal representatives
of such person.
SECTION 8. Corporate Obligations; Reliance. This Article shall be
deemed to create a binding obligation on the part of the Corporation to its
current and former officers, Directors, employees and agents and their heirs,
distributees, executors, administrators and other legal representatives, and
such persons in acting in such capacities shall be entitled to rely on the
provisions of this Article, without giving notice thereof to the Corporation.
SECTION 9. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of, or to
represent the interests of, the Corporation as a Subsidiary Officer of any
Affiliated Entity, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article or
applicable law.
SECTION 10. Definitions of Certain Terms.
(a) For purposes of this Article, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its corporate existence had continued, would
have been permitted under applicable law to indemnify its Directors, officers,
employees or agents, so that any person who is or was a
27
<PAGE>
Director, officer, employee or agent of such constituent corporation, or is or
was serving at the request, or to represent the interests of, such constituent
corporation as a Director, officer, employee or agent of any Affiliated Entity
shall stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence had continued.
(b) For purposes of this Article, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; references to "serving at the request of the Corporation" shall
include any service as a Director, officer, fiduciary, employee or agent of the
Corporation which imposes duties on, or involves services by, such Director,
officer, fiduciary, employee or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interest of the Corporation" as
referred to in this Article.
28
<PAGE>
EXHIBIT (10)(A)
AMENDMENTS TO THE
GUILFORD MILLS, INC.
1991 STOCK OPTION PLAN
The first sentence of Article X of the Option Plan shall be amended to
read in its entirety as follows:
Subject to the terms and conditions of Articles X through XIV
hereof, commencing with the Annual Meeting of stockholders of
the Company to be held in February, 1997, each person who has
served as a director of the Company for two or more
consecutive years on the date of grant shall automatically be
granted, subject to continued service as a director, (a) upon
the first date of grant occurring after the completion of two
consecutive years of service as a director of the Company, an
option to purchase 7,500 Shares, and (b) upon each of the
dates of grant occurring after the completion of two
consecutive years of service as a director of the Company
prior to the expiration of this Plan, an option to purchase
3,750 Shares.
Article XIII of the Option Plan shall be amended to read in its
entirety as follows:
XIII. DIRECTOR PARTICIPANT'S ELIGIBILITY UNDER THE PLAN
Any Director Participant who is also a key employee of the
Company or a key employee of any subsidiary corporation or
parent corporation of the Company now existing or hereafter
formed or acquired and who has received an Option pursuant to
Article X hereof prior to the Annual Meeting of stockholders
of the Company to be held in February, 1997 shall be eligible
to receive any other grant or award under any other Article of
this Plan. Commencing with the Annual Meeting of stockholders
of the Company to be held in February, 1997, a director of the
Company who is also a key employee of the Company or a key
employee of any subsidiary corporation or parent corporation
of the Company now existing or hereafter formed or acquired
shall be ineligible to receive an Option pursuant to Article X
hereof, but shall be eligible to receive any other grant or
award under any other Article of this Plan.
<PAGE>
The first sentence of Article XXIV of the Option Plan shall be amended
to read in its entirety as follows:
The Board of Directors, the Executive Committee or the Option
Committee, as the case may be, may, from time to time, amend
the Plan without the approval of the stockholders of the
Company, unless such approval is otherwise required by law.
<PAGE>
EXHIBIT (10)(B)
AMENDMENT TO THE
GUILFORD MILLS, INC.
1989 RESTRICTED STOCK PLAN
The first sentence of the third paragraph of Article III of the
Restricted Plan shall be amended to read in its entirety as follows:
Subject to the express provisions of the Plan, the
Compensation Committee also shall have authority, in its sole
discretion, to construe, amend, suspend or terminate the Plan
and the awards granted hereunder (including amendments which
accelerate the lapse of a restriction described in Article V),
to prescribe, amend and rescind rules and regulations relating
to the Plan, and to make all other determinations necessary or
advisable for administering the Plan (including determinations
during any suspension or after any termination). Any such
amendment to the Plan or the awards granted hereunder may be
made by the Compensation Committee without the approval of the
stockholders of the Company, unless such approval is otherwise
required by law.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Guilford Mills, Inc. for the year ended
September 29, 1996, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> MAR-30-1997
<CASH> 27,285
<SECURITIES> 0
<RECEIVABLES> 158,982
<ALLOWANCES> 0
<INVENTORY> 148,251
<CURRENT-ASSETS> 341,163
<PP&E> 685,729
<DEPRECIATION> 383,810
<TOTAL-ASSETS> 712,475
<CURRENT-LIABILITIES> 146,506
<BONDS> 0
0
0
<COMMON> 589
<OTHER-SE> 308,329
<TOTAL-LIABILITY-AND-EQUITY> 712,475
<SALES> 219,144
<TOTAL-REVENUES> 219,144
<CGS> 178,097
<TOTAL-COSTS> 202,229
<OTHER-EXPENSES> 1,216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,162
<INCOME-PRETAX> 11,537
<INCOME-TAX> 4,062
<INCOME-CONTINUING> 7,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,475
<EPS-PRIMARY> .34
<EPS-DILUTED> .32
</TABLE>
