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 January 3, 1999
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 - (336) 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 January 3, 1999 - 23,023,269
<PAGE>
GUILFORD MILLS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JANUARY 3, 1999
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Condensed Consolidated Financial Statements
The condensed 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 Condensed Consolidated Balance Sheet as of September 27, 1998 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 condensed 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 27, 1998.
The condensed 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. For comparative purposes, certain amounts have been
reclassified to conform with fiscal 1999 presentation. The following condensed
consolidated financial statements are included:
Consolidated Statements of Income for the fourteen weeks ended January 3,
1999 and the thirteen weeks ended December 28, 1997
Condensed Consolidated Balance Sheets as of January 3, 1999 and September 27,
1998
Condensed Consolidated Statements of Cash Flows for the fourteen weeks ended
January 3, 1999 and the thirteen weeks ended December 28, 1997
Condensed Notes to Consolidated Financial Statements
<PAGE>
Guilford Mills, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the Fourteen Weeks Ended January 3, 1999 and the Thirteen Weeks Ended
December 28, 1997
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
(14 Weeks) (13 Weeks)
- --------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 214,913 $ 213,377
- --------------------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of goods sold 178,760 174,844
Selling and administrative 27,399 25,799
- --------------------------------------------------------------------------------
206,159 200,643
- --------------------------------------------------------------------------------
OPERATING INCOME 8,754 12,734
INTEREST EXPENSE 4,127 2,616
OTHER EXPENSE, NET 1,077 147
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX PROVISION 3,550 9,971
INCOME TAX PROVISION 1,187 3,480
- --------------------------------------------------------------------------------
NET INCOME $ 2,363 $ 6,491
- --------------------------------------------------------------------------------
NET INCOME PER SHARE:
Basic $ .10 $ .26
Diluted .10 .25
- --------------------------------------------------------------------------------
DIVIDENDS PER SHARE $ .11 $ .11
- --------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Guilford Mills, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
January 3, 1999 and September 27, 1998
(In thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
JANUARY 3, September 27,
1999 1998
(UNAUDITED)
- ------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 19,761 $ 30,447
Accounts receivable, net 165,501 164,555
Inventories 155,969 153,006
Other current assets 13,123 13,901
- ------------------------------------------------------------------------------------------
Total current assets 354,354 361,909
Property, net 324,094 326,941
Other assets 104,668 100,607
- ------------------------------------------------------------------------------------------
Total assets $ 783,116 $ 789,457
- ------------------------------------------------------------------------------------------
LIABILITIES
Short-term borrowings $ 78,399 $ 55,128
Current maturities of long-term debt 651 811
Other current liabilities 85,129 94,692
- ------------------------------------------------------------------------------------------
Total current liabilities 164,179 150,631
- ------------------------------------------------------------------------------------------
Long-term debt 176,714 176,872
Other non-current liabilities 60,436 76,777
- ------------------------------------------------------------------------------------------
Total long-term liabilities 237,150 253,649
- ------------------------------------------------------------------------------------------
STOCKHOLDERS' INVESTMENT
Common stock 655 655
Capital in excess of par 119,748 119,648
Retained earnings 363,423 363,606
Other comprehensive income (8,633) (7,577)
Other stockholders' investment (93,406) (91,155)
- ------------------------------------------------------------------------------------------
Total stockholders' investment 381,787 385,177
- ------------------------------------------------------------------------------------------
Total liabilities and stockholders' investment $ 783,116 $ 789,457
- ------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Guilford Mills, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fourteen Weeks Ended January 3, 1999 and the Thirteen Weeks Ended
December 28, 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
JANUARY 3, December 28,
1999 1997
(14 WEEKS) (13 Weeks)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 2,363 $ 6,491
Depreciation and amortization 17,100 16,228
Other adjustments to net income, net (101) (1,958)
Net changes in operating assets and liabilities (11,965) (30,045)
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 7,397 (9,284)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property (15,702) (18,119)
Other investing activities, net 1,792 3,969
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (13,910) (14,150)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net 23,278 14,654
Payments of long-term debt (162,308) (1,882)
Proceeds from issuance of long-term debt, net of deferred financing cost paid 140,233 --
Other financing activities, net (5,300) (5,128)
- ---------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (4,097) 7,644
- ---------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (76) 290
- ---------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (10,686) (15,500)
EQUIVALENTS
- ---------------------------------------------------------------------------------------------------------------------
BEGINNING CASH AND CASH EQUIVALENTS 30,447 24,349
ENDING CASH AND CASH EQUIVALENTS $ 19,761 $ 8,849
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
GUILFORD MILLS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 3, 1999
(In thousands except per 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. Per Share Information -- Basic earnings per share information has been
computed by dividing net income by the weighted average number of shares of
common stock, par value $.02 per share, outstanding during the periods
presented. The average shares used in computing basic net income per share for
the fourteen weeks ended January 3, 1999 and the thirteen weeks ended December
28, 1997 were 22,831,000 and 25,451,000, respectively.
Diluted earnings per share information also considers the dilutive effect of
stock options and restricted stock grants. The average shares used in computing
diluted net income per share for the fourteen weeks ended January 3, 1999 and
the thirteen weeks ended December 28, 1997 were 22,852,000 and 25,859,000,
respectively.
The difference between the number of average shares used to calculate basic and
diluted earnings per share is due entirely to the number of outstanding stock
options and restricted stock.
The Company has authorized 1,000,000 shares of $1 par preferred stock. As of
January 3, 1999 and September 27, 1998 no such shares were issued.
Subsequent to the close of the first fiscal quarter of 1999, an amendment was
approved by the stockholders of the Company to increase the number of authorized
shares of Common Stock from 40,000,000 to 65,000,000.
3. 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.
Inventories at January 3, 1999 and September 27, 1998 consisted of the
following:
<TABLE>
<CAPTION>
January 3, September 27,
1999 1998
------------------ -----------------
<S> <C> <C>
Finished Goods $ 52,991 $ 48,776
Raw Materials and work in process 107,970 112,275
Manufacturing supplies 8,649 8,811
------------------ -----------------
Total inventories valued at FIFO cost 169,610 169,862
Adjustments to reduce FIFO cost to LIFO cost, net (13,641) (16,856)
------------------
=================
Total inventories $155,969 $153,006
================== =================
</TABLE>
4. Accumulated Depreciation -- Accumulated depreciation at January 3, 1999 and
September 27, 1998 was $461,288 and $457,232, respectively.
5. Restructuring Charges - During the fourth quarter of fiscal 1998, the Company
recorded $2,962 as an accrued liability for severance costs, lease exit cost and
other obligations as a result of restructuring two of its operations. During the
first fiscal quarter of 1999, charges against the accrual totaled $594.
6. Long-term Debt -- On December 18, 1998, the Company issued $145,000 of
unsecured, ten-year notes with a fixed coupon rate of 7.06%. The net proceeds
were used to repay a portion of the Company's outstanding borrowings on its
uncommitted lines of credit and its revolving credit facility. For the
termination of treasury lock agreements, a payment of $4,366 was made during the
first fiscal quarter of 1999 and will be amortized as additional interest
expense over the period of the related debt.
<PAGE>
7. Comprehensive Income -- The Company adopted the Statement of Financial
Accounting Standards No. 130, "Comprehensive Income" ("SFAS No. 130"), during
the first quarter of fiscal 1999. Provisions of SFAS No. 130 require companies
to display with prominence comprehensive income and its components in a full set
of general-purpose financial statements. Comprehensive income is the total of
net income and all other nonowner changes in equity. For the fourteen weeks
ended January 3, 1999 and the thirteen weeks ended December 28, 1997, total
comprehensive income was $1,307 and $8,053, respectively. Included in total
comprehensive income is net income of $2,363 and $6,491 and foreign currency
translation gain/(loss) of ($1,056) and $1,562 for the first fiscal quarter
ended January 3, 1999 and December 28, 1997, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
The first quarter of fiscal 1999 consisted of fourteen weeks. The first quarter
of fiscal 1998 had thirteen weeks.
Consolidated net sales were $214.9 million for the first quarter of fiscal 1999
as compared to $213.4 million for the first quarter of fiscal 1998.
Sales in the apparel market increased approximately 8% to $81.3 million in the
first quarter of fiscal 1999 as compared to $75.5 million for the first quarter
of fiscal 1998. Increases in each of the three significant end-uses
- -ready-to-wear, swimwear and elastics/intimate apparel - occurred during the
first quarter of fiscal 1999. Continued penetration into the intimate apparel
manufacturers and strategic partnerships with major customers of sports
performance fabric accounted for the increases.
Sales of worldwide automotive fabrics increased slightly more than 3% to $88.7
million for the first quarter of fiscal 1999 as compared to the comparable
quarter from the previous fiscal year. Increased market share in North America
and the additional week in the first quarter of fiscal 1999 generated the
increase.
Sales of home fashion products declined by 12% to $33.9 million for the first
quarter of fiscal 1999 as compared to the first quarter of fiscal 1998. The
decrease resulted from lower sales of cotton jersey knit sheeting due to
low-cost imports and waning consumer demand. The decreases were partially offset
by growth in the Company's bedding business.
Product sales in the industrial/specialty markets were $11.0 million for the
first quarter of fiscal 1999, a decrease of 18% from the corresponding quarter
of the prior fiscal year. The most significant declines were in hook and loop
closure system fabrics and fibers. Fibers' sales continued to be impacted by the
Asian economic crisis.
Gross margin as a percent of revenue decreased to 16.8% as compared to 18.1% for
the first quarter of the previous fiscal year. This decrease was due primarily
to price reductions in the polyester ready-to-wear, linings and sleepwear
products as a result of the Asian economic crisis. Additionally, shutdown
expenses of a yarn manufacturing facility and start-up costs in Brazil
negatively impacted gross margins by $1.0 million in the first quarter of fiscal
1999. Continued emphasis on high-margin, value-added products and productivity
and cost improvements, along with raw material price negotiations partially
offset the decreases.
Selling and administrative expenses increased $1.6 million to $27.4 million in
the first quarter of fiscal 1999 compared to $25.8 million in the first quarter
of fiscal 1998. This increase was mainly attributable to fixed salary costs
incurred during the additional week in fiscal 1999 and expenses associated with
the previously disclosed Hofmann Laces investigation.
Interest expense was $4.1 million for the quarter as compared to $2.6 million
for the first quarter of fiscal 1998. An increase in overall debt, resulting
primarily from the share buyback and acceleration of the Hofmann Laces earnout
payment, caused the increase.
Other expense increased to $1.1 million in the first quarter of fiscal 1999 from
$0.1 million in the prior year due to a $0.3 million increase in amortization in
fiscal 1999 and nonrecurring gains on the sale of assets of $0.7 million in
fiscal 1998.
The effective income tax rate for the first quarter of fiscal 1999 was 33.4% as
compared to 34.9% for the corresponding quarter of fiscal 1998. The rate
decreased as a result of a reduction in the U.K. effective tax rate, state
effective tax rate reductions and additional Foreign Sales Corporation benefit.
<PAGE>
Net income for the first quarter of fiscal 1999 decreased to $2.4 million from
$6.5 million for the corresponding quarter of fiscal 1998.
Liquidity and Capital Requirements
- ----------------------------------
At January 3, 1999, working capital was $190.2 million compared to $211.3
million at September 27, 1998. This decrease in working capital was primarily
due to increased short-term borrowings. The Company maintains flexibility with
respect to its seasonal working capital needs through a committed revolving
credit facility of $150 million and its continued access to other traditional
sources of funds, including available uncommitted lines of credit aggregating
over $240 million, and the ability to receive advances against its factored
accounts receivable. At January 3, 1999, borrowing availability against the
Company's revolving credit facility was $125 million and availability against
its uncommitted bank lines of credit was $156 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 the
appropriate financial markets.
On December 18, 1998, the Company issued $145,000 of unsecured, ten-year notes
with a fixed coupon rate of 7.06%. The net proceeds were used to repay a portion
of the Company's outstanding borrowings on its uncommitted lines of credit and
its revolving credit facility.
During the first fiscal quarter of 1999, the Company repurchased 138,805 shares
of the Company's common stock at an average price of $14.37. The Company's
repurchases of shares were recorded as treasury stock and resulted in a
reduction in stockholders' equity. As of January 3, 1999, 2,674,005 shares of
the authorized 3,500,000 shares have been repurchased.
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
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
January 3, 1999, environmental accruals amounted to $4.9 million of which $3.9
million is non-current and is included in other deferred liabilities in the
balance sheet.
Several purported class action lawsuits have been filed on behalf of purchasers
of the Company's common stock against the Company and certain of its officers
and directors. These lawsuits were consolidated by order of the Court on January
8, 1999. A Consolidated and Amended Class Action Complaint was filed on February
8, 1999. The Consolidated Complaint purports to allege claims under Section
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, in connection with the Company's public disclosure of
accounting irregularities at the Hofmann Laces unit in fiscal year 1998.
Specifically, the Consolidated Complaint alleges that, during the alleged class
period (January 20, 1998 through October 26, 1998), defendants materially
misrepresented the Company's financial condition and overstated the Company's
reported earnings. No specific amount of damages is sought in the Consolidated
Complaint. Defendants have until April 9, 1999 to respond to the Consolidated
Complaint. The Company intends to vigorously defend the lawsuits. It is
management's opinion, based upon the facts presently known, 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.
<PAGE>
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.
Year 2000
- ---------
The Year 2000 issue affecting most entities, including the Company, results from
the possible inability of internal and external computer systems and
applications to recognize and process data pertaining to years after 1999. Over
the last five years, the Company has committed significant resources to the
reengineering of its business processes and information systems. The education,
identification, evaluation, implementation and testing of changes to systems and
applications to achieve Year 2000 readiness with the Company's operational,
manufacturing and financial areas have been an integral part of this process.
Based upon recently completed Year 2000 compliance assessments of both internal
information technology and embedded systems for all of the Company's facilities,
equipment and infrastructure, the Company expects to successfully implement any
systems and programming changes necessary prior to the turn of the century in
all of its domestic and international operations. The planning, inventory and
impact analysis phases have been completed. The Company is currently in the
remediation phase of the project and expects to complete the final testing phase
by July, 1999. The completion of a contingency plan is anticipated by the Spring
of 1999. The scope of the Company's contingency plan will take into account both
internal systems and third party risks. Manual intervention and the use of
alternate power sources are considerations for the internal system risks and
efforts to reduce third party risks may include establishing safety stock,
choosing alternate vendors and coordinating orders with customers.
The Company has spent $0.6 million to date for Year 2000 readiness. Management's
current estimate for the total cost of Year 2000 compliance tasks is $1.4
million. This amount has been included in the Company's operating budget and is
not from the deferral of other information technology projects.
The Company continues to work with its customers, suppliers, and other third
parties to identify external weaknesses and provide solutions. Year 2000
compliance questionnaires were distributed to material third parties. Based on
the 77% response rate, no material business interruption issues have been
identified. To the extent that suppliers are not compliant or did not respond,
the Company will include alternatives in its contingency plan. The reasonably
likely worst case scenario that could arise as a result of service suppliers'
Year 2000 problems would be an interruption of normal business operations. The
worst case scenario would include an interruption in utility service that would
halt the manufacturing process. Revenue would depend on the amount of
deliverable goods in inventory and therefore, cannot be determined at this time.
There can be no assurance that there will not be a delay in, increased costs or
a material disruption of business activities associated with Year 2000
readiness.
Foreign Currency Translation
- ----------------------------
The Company has a majority owned foreign subsidiary which operates in Mexico.
Until recently, the Mexican economy was considered "highly inflationary" for
financial reporting purposes because the cumulative Mexican inflation rate for
the immediately preceding three years exceeded 100%. Under Statement of
Financial Standards No. 52, "Foreign Currency Translation", the U.S. dollar was
used as the functional currency for translating the balance sheet and the
results of operations of the Company's Mexican operation - Grupo Ambar S.A. de
C.V. Mexico's inflation rate has recently fallen below 100% for the preceding
three years and as a result is no longer considered highly inflationary for
financial reporting purposes. Effective in the second quarter of fiscal 1999,
the functional currency for Grupo Ambar S.A. de C.V. will return to the Mexican
peso and any translation adjustments will appear as Other Comprehensive Income
in the stockholders' investment section of the balance sheet and not in the
results of operations. This new accounting treatment is not expected to have a
material impact on the financial position of the Company.
<PAGE>
Safe Harbor-Forward-Looking Statements
- --------------------------------------
From time to time, the Company may publish forward-looking statements relative
to such matters as anticipated financial performance, business prospects,
technological developments, new products, research and development activities
and similar matters. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.
All statements other than statements of historical fact included in this
document, including, without limitation the statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are,
or may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934.
Important factors that could cause actual results to differ materially from
those discussed in such forward-looking statements include:
1. general economic factors including, but not limited to, changes in interest
rates, foreign currency translation rates, consumer confidence, housing
starts, trends in disposable income, changes in consumer demand for goods
produced, and cyclical or other downturns
2. the overall level of automotive production and the production of specific
car models
3. fashion trends
4. information and technological advances including Year 2000 issues
5. cost and availability of raw materials, labor and natural and other
resources
6. domestic and foreign competition
7. domestic and foreign governmental regulations and trade policies
8. reliance on major customers
9. success of marketing, advertising and promotional campaigns
10. inability to achieve cost reductions through consolidations and
restructuring of acquired companies
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 27, 1998, which item is
incorporated herein by reference, as modified by this report on Form 10-Q.
Items 2. - 3. Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company's
fiscal 1998 Annual Meeting of Stockholders was held on February 4, 1999. At such
meeting, the stockholders elected each of Paul G. Gillease, Stephen C.
Hassenfelt, and Charles A. Hayes to serve as directors for a three-year term
expiring after the Company's 2001 fiscal year. The stockholders at such meeting
approved an amendment to the Company's certificate of incorporation increasing
the number of authorized shares of the Company's Common Stock from 40,000,000 to
65,000,000. At the same meeting the stockholders also ratified the selection of
Arthur Andersen LLP as independent auditors for the fiscal year ending October
3, 1999. The number of votes cast for, against or withheld, as well as the
number of abstentions, as the case may be, with respect to each matter voted
upon at the fiscal 1998 Annual Stockholders' Meeting is set forth below:
(1) Election of Directors
Director Votes For Votes Withheld
-------- --------- --------------
Paul G. Gillease 19,895,698 291,887
Stephen C. Hassenfelt 19,911,561 276,024
Charles A. Hayes 19,927,978 259,607
<PAGE>
(2) Increase in Authorized Common Stock
Votes For Votes Against Abstentions Broker Non-votes
--------- ------------- ----------- ----------------
16,175,830 3,914,369 46,622 50,764
(3) Ratification of Selection of Auditors
Votes For Votes Against Abstentions
--------- ------------- -----------
20,118,797 48,413 20,375
Item 5. - 6. Not Applicable.
<PAGE>
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: February 17, 1999 By: /s/ Terrence E. Geremski
-----------------------------------
Terrence E. Geremski
Executive Vice President/
Chief Financial Officer
<PAGE>
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: February 17, 1999 By:
-----------------------------------
Terrence E. Geremski
Executive Vice President/
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-03-1999
<PERIOD-START> OCT-03-1999
<PERIOD-END> JAN-03-1999
<EXCHANGE-RATE> 1.00
<CASH> 19,761
<SECURITIES> 0
<RECEIVABLES> 165,501
<ALLOWANCES> 0
<INVENTORY> 155,969
<CURRENT-ASSETS> 354,354
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 783,116
<CURRENT-LIABILITIES> 164,179
<BONDS> 0
0
0
<COMMON> 655
<OTHER-SE> 381,132
<TOTAL-LIABILITY-AND-EQUITY> 783,116
<SALES> 214,913
<TOTAL-REVENUES> 214,913
<CGS> 178,760
<TOTAL-COSTS> 178,760
<OTHER-EXPENSES> 1,077
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,127
<INCOME-PRETAX> 3,550
<INCOME-TAX> 1,187
<INCOME-CONTINUING> 2,363
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,363
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
