<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 2, 1994
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 No 33-30434
THE BIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 13-3348029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
237 Coliseum Drive, Macon, Georgia 31201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (912) 752-6700
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
As of July 29, 1994, there were outstanding 9,600 shares of the
registrant's Common Stock, par value $.10 per share, which is the only class
of common or voting stock of the registrant.
<PAGE>
THE BIBB COMPANY
INDEX
<PAGE>
PART I - FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements:
Consolidated balance sheets -
July 2, 1994 and January 1, 1994
Consolidated statements of operations
for the quarters and six months ended
July 2, 1994 and July 3, 1993
Statement of changes in stockholders' equity
Consolidated statements of cash flows for the six months
ended July 2, 1994 and July 3, 1993
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
<TABLE>
THE BIBB COMPANY
CONSOLIDATED BALANCE SHEETS
(thousands of dollars except per share data)
<CAPTION>
July 2, January 1,
1994 1994
___________ __________
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 128 $ 146
Restricted Cash 11,580 5,344
Accounts receivable, net of
allowances for doubtful accounts,
discounts and claims of $3,791
and $3,686, respectively 11,721 11,374
Inventories 84,541 73,926
Prepaid expenses and other
current assets 1,854 1,130
________ ________
<PAGE>
Total current assets 109,824 91,920
======== ========
NET ASSETS OF DISCONTINUED
OPERATIONS 50,729 47,212
PROPERTY, PLANT and EQUIPMENT, net 64,622 65,386
INVESTMENT IN AFFILIATE -
T.B. WOOD'S SONS COMPANY 15,512 14,924
OTHER ASSETS 9,854 8,762
_________ _________
$ 250,541 $ 228,204
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt $ 86 $ 86
Accounts payable 40,038 23,756
Accrued payroll and other
compensation 11,488 12,484
Accrued interest 6,616 6,641
Other accrued liabilities 4,415 4,385
__________ __________
Total current liabilities 62,643 47,352
LONG-TERM DEBT, less current
maturities 199,240 175,353
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Preferred stock, Series A cumulative,
$10 par value, 250,000 shares
authorized; 0 shares issued and
outstanding -- --
Common stock, $.10 par value,
500,000 shares authorized; 9,600
shares issued and outstanding 1 1
Additional paid-in capital 3,427 3,427
Retained earnings (deficit) (14,439) 2,402
Net pension liability ( 331) ( 331)
__________ __________
Total stockholders' equity (11,342) 5,499
$250,541 $228,204
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE BIBB COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands of dollars, except per share amounts)
(unaudited)
<CAPTION>
Quarters Ended Six Months Ended
_____________________ ____________________
July 2, July 3, July 2, July 3,
1994 1993 1994 1993
_______ _______ _______ _______
<S> <C> <C> <C> <C>
NET SALES $ 85,382 $ 96,468 $165,244 $176,972
COST OF SALES 75,716 77,210 141,794 143,734
Gross Profit 9,666 19,258 23,450 33,238
SELLING AND ADMINISTRATIVE
EXPENSES 9,264 8,592 17,689 16,175
MANAGEMENT FEES TO
AFFILIATE 1,000 1,000 2,000 2,000
________ ________ ________ ________
Operating Profit (Loss) ( 598) 9,666 3,761 15,063
OTHER INCOME (EXPENSE)
Interest expense ( 5,722) ( 5,980) ( 11,113) ( 11,701)
Interest income from
Affiliate - T.B. Wood's
Sons Company 293 -- 588 --
Loan fee amortization
and expense ( 306) ( 446) ( 614) ( 680)
Other, net ( 277) ( 35) ( 453) 358
________ ________ _________ _________
( 6,012) ( 6,461) ( 11,592) ( 12,023)
________ ________ _________ _________
INCOME (LOSS) BEFORE
DISCONTINUED OPERATIONS ( 6,610) 3,205 ( 7,831) 3,040
DISCONTINUED OPERATIONS:
Loss from operations ( 5,643) ( 2,092) ( 8,010) ( 3,357)
Provision for losses
during disposition ( 1,000) -- ( 1,000) --
________ ________ __________ ________
INCOME (LOSS) BEFORE
INCOME TAXES ( 13,253) 1,113 ( 16,841) ( 317)
PROVISION FOR INCOME TAXES -- -- -- --
NET INCOME (LOSS) ( 13,253) 1,113 ( 16,841) ( 317)
======== ======== ========= ========
<PAGE>
INCOME (LOSS) BEFORE
DISCONTINUED OPERATIONS
PER SHARE OF
COMMON STOCK ( 688.54) 333.85 ( 815.73) 316.67
DISCONTINUED OPERATIONS PER
SHARE OF COMMON STOCK ( 691.98) ( 217.92) ( 938.54) ( 349.69)
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK $(1,380.52) $ 115.94 $(1,754.27) $( 33.02)
========== ========= ========== =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 9,600 9,600 9,600 9,600
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE BIBB COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(thousands of dollars)
(unaudited)
<CAPTION>
Additional Net
Preferred Common Paid-in Retained Pension
Stock Stock Capital Earnings Liability
_________ _______ __________ ________ _________
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1994 $ -- $ 1 $ 3,427 $ 2,402 $( 331)
Net loss -- -- -- (16,841) --
_______ _______ _______ ________ ________
Balance,
July 2, 1994 $ -- $ 1 $ 3,427 $( 14,439) $( 331)
======= ======= ======= ========= =======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE BIBB COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
(unaudited)
<CAPTION>
Six Months Ended
________________________________
July 2, July 3,
1994 1993
_______ _______
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
<PAGE>
Net income (loss) $ ( 16,841) $ ( 317)
Adjustments to reconcile net
(loss) to net cash provided by
(used for) operating activities:
Depreciation and amortization 4,724 4,718
Loan fee amortization 614 680
Net (gain) loss on sales of assets ( 10) 28
Equity (earnings) loss -- ( 386)
Changes in operating assets and liabilities:
Restricted cash ( 6,236) --
(Increase) in accounts receivable ( 347) ( 1,264)
(Increase) in inventories ( 10,615) ( 16,541)
(Increase) in prepaid expenses and
other current assets ( 1,567) ( 384)
Increase in accounts payable and
accrued expenses 15,291 10,414
Change in operating assets &
liabilities of discontinued
operations ( 1,862) 725
________ ________
Net cash (used for) operating
activities ( 16,849) ( 2,327)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ( 3,978) ( 4,942)
Capital expenditures of
discontinued operations ( 1,655) ( 1,292)
Disposal of fixed assets 27 14
Other, net ( 862) ( 347)
________ ________
Net cash used for investing activities ( 6,468) ( 6,567)
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments from T.B. Wood's
Sons Company, net -- 5,560
Net borrowings under revolving
lines of credit 23,887 3,346
Other, net ( 588) --
________ ________
Net cash provided by financing activities 23,299 8,906
________ ________
NET INCREASE (DECREASE) IN CASH
AND EQUIVALENTS ( 18) 12
CASH AND EQUIVALENTS AT
BEGINNING OF PERIOD 146 102
<PAGE>
CASH AND EQUIVALENTS AT END OF PERIOD $ 128 $ 114
INCOME TAXES PAID IN THE PERIOD, net $ -- $ --
INTEREST PAID IN THE PERIOD $ 13,475 $ 13,932
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
THE BIBB COMPANY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally
included in annual consolidated financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations. It is suggested that
these condensed consolidated financial statements be read in conjunction
with the Company's audited consolidated financial statements and notes thereto
for the year ended January 1, 1994.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the Company's financial
position as of July 2, 1994 and the results of its consolidated operations and
its consolidated cash flows for the six months ended July 2, 1994 and July
3, 1993. Certain prior year amounts have been reclassified to agree with
current year presentation.
Annual results of operations of the Company have been reported for the 52-
or 53-week period ending nearest December 31. Interim results for the six
months ended July 2, 1994 and July 3, 1993 are for 26 weeks each. Interim
results of operations are not necessarily indicative of the results that
may be expected for the full year.
2. SIGNIFICANT ITEMS AFFECTING FINANCIAL STATEMENTS
Following a comprehensive review of the operations of the Company, which
was completed in July 1994, the Company implemented a number of changes to
improve future operating performance. These changes included a) a plan to
reduce overall costs, including restructuring the Company's management
organization and b) a plan to dispose of the Company's terry products
business.
Management Organization and Cost Reduction Program
In July 1994, the Company implemented a cost reduction program, which,
among other things, included restructuring the Company's management
organization and the sales and marketing operation relating to consumer
products, resulting in a significant reduction in management staff and
<PAGE>
other employees. Because this program was not approved and implemented until
the third quarter of 1994, the full benefit of the cost reduction program
will not be realized until the fourth quarter of 1994.
Discontinued Operations - Terry Products Business
In August 1994, the Board of Directors of the Company approved a plan to
dispose of the Company's terry products business, which includes bath
towels and other terry products sold primarily to retail chains, specialty
chains and mass merchants, as well as to hotels, hospitals and others serving
the hospitality market (the "Terry Disposition"), but does not include the
Company's damask table linen products. It would include the sale of the
Company's manufacturing and distribution facilities, and related net
working capital, located in Roanoke Rapids and Goldsboro, North Carolina.
Proceeds from the Terry Disposition are expected to be applied against the
Company's outstanding indebtedness and used for working capital purposes.
The terry products business that is the subject of the Terry Disposition
has been accounted for as a discontinued operation and, accordingly, the
operating results and net assets relating thereto have been segregated and
reported as "Discontinued Operations" in the accompanying financial
statements.
<PAGE>
Summarized results of operations for the terry products business were as
follows:
<TABLE>
<CAPTION>
Three Months Six Months
July 2, July 3, July 2, July 3,
1994 1993 1994 1993
___________ ___________ __________ __________
<S>
<C> <C> <C> <C>
Sales $ 30,557 $ 27,467 $ 52,149 $ 58,110
Total loss related
to discontinued
operations $ 6,643 $ 2,092 $ 9,010 $ 3,357
</TABLE>
Net assets for the terry products business consisted of the following:
<TABLE>
July 2, January 1,
1994 1994
<S> <C> <C>
Net current assets $ 28,095 $ 24,534
Net non-current assets 22,634 22,678
</TABLE>
The total loss related to discontinued operations for the terry products
business includes interest expense of $800,000 and $1,000,000 for the three
months ended July 2, 1994 and July 3, 1993, respectively, and $1,600,000
and $2,000,000 for the six months ended July 2, 1994 and July 3, 1993,
respectively.
The financial statements for the prior periods have been reclassified to
conform to the current periods' presentation.
3. INVENTORIES
The major classes of inventories were as follows (thousands of dollars):
<TABLE>
July 2, January 1,
1994 1994
<S> <C> <C>
Raw material and supplies $ 9,933 $ 9,516
Work-in-process 35,766 34,463
Finished goods 45,546 36,651
Total at FIFO cost, which approximates
<PAGE>
replacement costs
Excess of FIFO cost over LIFO cost ( 6,704) ( 6,704)
Total at LIFO cost $ 84,541 $ 73,926
</TABLE>
4.INVESTMENT IN AFFILIATE - T.B. WOOD'S SONS COMPANY
On April 2, 1993, T.B. Wood's Sons Company ("Woods") acquired new product
lines and completed a recapitalization. In settlement of amounts owing on
the note payable to the Company ("Woods Note"), the Company received a cash
payment of $5,560,000, two new notes and a warrant exercisable by the
Company to purchase up to 125,000 shares of common stock of Woods at an
exercise price of $.01 per share. The new notes received consist of (i) a
ten-year, $13,218,000 subordinated promissory note, with interest of
$576,000 payable semi-annually, except that until the third anniversary of the
date of said note, the interest due thereunder on any interest payment date
shall be added to the outstanding principal of the note, and (ii) a ten-
year, $2,000,000 non-interest bearing, subordinated promissory note. If
the $2,000,000 note is not repaid within three years, the Company will receive
a second warrant which will be exercisable by the Company for the purchase
of up to an additional 62,500 shares of common stock of Woods at an exercise
price of $.01 per share. The Company believes that the consideration
received from Woods was fair to the Company from a financial point of view.
5.INCOME TAXES
In June 1989, the stockholders of the Company filed elections with the
Internal Revenue Service and certain state taxing authorities to be treated
as an S Corporation beginning April 2, 1989. As an S Corporation, the
Company generally will not be subject to corporate level taxes on its net
income because such income will be attributed to the Company's stockholders
and taxes on such income will be directly payable by them. As a result, the
Company generally intends to make quarterly distributions to its
stockholders in amounts equal to such taxes estimated to be payable by them.
Subsequent to the S Corporation election, the Company remains subject to
state and local income taxes in certain states and municipalities. The
Company has net operating loss carryforwards available to offset future
taxable income in these states and municipalities.
6.LONG-TERM DEBT
Long-term debt consisted of the following (thousands of dollars):
<TABLE>
July 2, January 1,
1994 1994
<S> <C> <C>
14% Senior Subordinated Notes,
due 1999 $127,004 $127,004
13 7/8% Senior Subordinated Notes, due
1999, net ofunamortized discount of
$91 and $101, respectively 32,732 32,722
<PAGE>
Payable under Senior Revolving Credit
Facility 27,825 3,900
Industrial Development Revenue Bonds,
variable rate interest, due in
2003 and 2004 11,000 11,000
Other 765 813
________ ________
199,326 175,439
Less current maturities 86 86
________ _________
$199,240 $175,353
</TABLE>
In 1993, the Company decided to sell certain of its trade accounts
receivable (the "Receivables") in the Trade Receivables Transaction
(described below). Inasmuch as the Receivables served as collateral under
the Company's then outstanding senior credit facility, the Company and its
senior lenders agreed to refinance the senior credit facility to, among
other things, release from collateral the Receivables. Accordingly, at the
same time that it entered into the Trade Receivables Transaction, the Company
and its senior lenders entered into a new revolving credit agreement (the
"Credit Agreement") providing for a new credit facility with a term expiring
in August 1996, under which the Company was permitted to borrow up to
$45,000,000 for working capital purposes (up to $20,000,000 of which could
be issued as letters of credit) ( the "Credit Facility").
On July 25, 1994, the Company and its senior lenders amended the Credit
Agreement (the "Amendment") effective July 2, 1994. Among other things, the
Amendment (i) increased the amount the Company may borrow under the Credit
Facility from $45,000,000 to $60,000,000 subject to certain specified
borrowing base requirements (and increased the amount which may be issued as
letters of credit from $20,000,000 to $25,000,000), which amount is subject
to permanent reduction in the event of certain mandatory prepayments, (ii)
shortened the term of the Credit Agreement to January 1, 1996, (iii) further
restricted the amounts of certain "Restricted Junior Payments" (as defined)
payable under certain circumstances, (iv) revised certain of the financial
tests contained in the restrictive covenants to levels that better reflect
the Company's recent operating results, and (v) added an additional financial
covenant requiring the Company to meet a minimum cash flow test. Under the
Amendment, the Credit Facility will be reduced to $55,000,000 on December
15, 1994. The Amendment also deleted certain financial covenants to be
tested as of July 2, 1994 (with which the Company would not have been in
compliance) and said deletion constituted the senior lenders' waiver of the
Company's failure to comply with those covenants as of that date.
The "Trade Receivables Transaction" involved the sale of the Receivables for
a cash purchase price of $50,000,000. During the term (fifty-seven months)
of the Trade Receivables Transaction, the cash generated by the Receivables
will be used to purchase additional Receivables originated by the Company,
among other things.
7.SUBSEQUENT EVENT - FLOOD DISRUPTION
<PAGE>
During the first week in July 1994, heavy rains and flooding in central
Georgia disrupted the operations at three of the Company's plants and the
Macon administrative headquarters. While there was no material physical
damage to these plants, operations were curtailed. In addition, a minor
amount of inventory at one storage location was water damaged. The Company
carries business interruption insurance and plans to submit a claim for
these losses, subject to the policy deductibles and exclusions.
Item 2. Management's Discussion and Analysis of Results of Operations and
Liquidity and Capital Resources
(a)Results of Operations
As discussed in Note 2 to the Company's financial statements, a
comprehensive review of the operations of the Company was completed in July
1994 which resulted in a number of changes. These changes included the
implementation of a significant cost reduction program in July, and
reorganization of the management structure and the sales and marketing
organization related to consumer products. In connection with this
restructuring, Edgar Davis resigned as President and Chief Operating
Officer and Thomas C. Foley assumed those positions, in addition to his
positions as Chairman and Chief Executive Officer of the Company. In
addition, the decision was made to dispose of the Company's terry products
business. The operating results and net assets related to the terry
products business are reflected in the accompanying financial statements as
"Discontinued Operations." Accordingly, the discussion which follows
addresses the results of operations for the Company's continuing business,
which includes the Company's Engineered products group, the Apparel
products group and the Bedding products group, which includes products for the
consumer and hospitality markets, unless otherwise indicated.
Results of Continuing Operations
Net sales for the quarter and six months ended July 2,1994 were $85,382,000
and $165,244,000, respectively. Net sales for the quarter decreased
$11,086,000 or 11.5% from the comparable prior year period, and $11,728,000
or 6.6% for the six month period. The Company's performance in the second
quarter and first half was impacted by a faster than anticipated decline in
sales of juvenile licensed bedding products, particularly licensed bedding
products bearing the Barney (trademark) theme and character, compared with
the prior year period and first quarter of 1994. This decline in juvenile
sales resulted in a decline in overall sales, and high close out and other
inventory related losses. Increased sales of lower margin promotional
consumer products partially offset the decline in juvenile products sales, but
adversely impacted margins and profitability.
Gross profit for the second quarter was $9,666,000 or 11.3% of sales and
for the six months was $23,450,000 or 14.2% of sales. This was a decrease
of $9,592,000 and $9,788,000 from the comparable prior year quarter and six
months, respectively. Gross profit was primarily affected as a result of the
sales mix, with less sales of juvenile bedding products, which carry higher
profit margins, and more sales of promotional adult bedding products at
lower margins. While sales and margins increased in the Company's Royalton
trademark) (line, the increase was not enough to make up for the loss of
margin from juvenile bedding products.
Selling and administrative expenses were $9,264,000 or 10.8% of net sales
for the quarter ended July 2, 1994 as compared with $8,592,000 or 8.9% of
net sales for the comparable prior year period and were $17,689,000 or
10.7% of net sales for the six months ended July 2, 1994 as compared with
$16,175,000 or 9.1% for the comparable prior year period. The increases in
1994 were the result of additional selling and marketing expenses to
develop the Company's Royalton and adult product lines, and included a
$477,000 bad debt charge as a result of terminating a distributor relationship
in Canada.
Operating profit for the quarter from continuing operations was a loss of
$598,000, compared to a profit of $9,666,000 in the prior year period.
Operating profit for the six months ended July 2, 1994 of $3,761,000
compared to $15,063,000 in the prior year period. These decreases primarily
reflect the items discussed above with respect to sales mix and cost.
Interest expense for the quarter and six months was $5,722,000 and
$11,113,000, respectively, which was comparable to the prior year periods.
For the quarter and six months, the Company had a net loss of $13,253,000
and $16,841,000 compared with net income of $1,113,000 and a net loss of
$317,000 in the comparable prior year periods, as a result of the items
discussed above.
For information concerning the results of the discontinued operations see
Note 2 to Consolidated Financial Statements.
(b)Liquidity and Capital Resources
In August 1993, the Company refinanced its senior revolving credit facility
(the "Refinancing"). The Refinancing consisted of the Company's entering into
a new revolving credit agreement with existing lenders (the "Credit
Agreement") and the Trade Receivables Transaction (as described below). The
Credit Agreement initially provided for a three-year revolving credit facility
(the "Credit Facility"), under which the Company may borrow up to an
aggregate of $45,000,000 for working capital purposes (up to $20,000,000 of
which may be issued as letters of credit). The "Trade Receivables Transaction"
involved the sale of certain trade accounts receivable ("Receivables") for a
cash purchase price of $50,000,000. During the term (fifty-seven months) of
the Trade Receivables Transaction, the cash generated by the Receivables will
be used to purchase additional Receivables originated by the Company, among
other things. As a result of the Refinancing, the Company's ability to
finance its working capital needs was increased.
On July 25, 1994, the Company and its senior lenders amended the Credit
Agreement, effective July 2, 1994 (the "Amendment"). Among other things,
the Amendment (i) increased the amount the Company may borrow under the
Credit Facility from $45,000,000 to $60,000,000 (and increased the amount
which may be issued as letters of credit from $20,000,000 to $25,000,000),
which amount is subject to permanent reduction in the event of certain
mandatory prepayments and subject to certain specified borrowing base
requirements, (ii) shortened the term of the Credit Agreement to January 1,
1996, (iii) further restricted the amounts of certain "Restricted Junior
Payments" (as defined), including management fees, payable under certain
circumstances, (iv) revised certain of the financial tests contained in the
restrictive covenants to levels that better reflect the Company's recent
operating results, and (v) added an additional financial covenant requiring
the Company to meet a minimum cash flow test. Under the Amendment, the
Credit Facility will be reduced to $55,000,000 on December 15, 1994. The
Amendment also deleted certain financial covenants to be tested as of July
2, 1994 (with which the Company would not have been in compliance) and said
deletion constituted the senior lenders' waiver of the Company's failure to
comply with those covenants as of that date.
The Company experiences significant fluctuations in its working capital
requirements primarily associated with its retail customers' late summer
and fall inventory purchasing. The Company's primary ongoing cash
requirements will be to fund debt service, make capital expenditures and
finance working capital. The Company expects that its internally generated
funds from operations, supplemented by
borrowings under the Credit Agreement, the Trade Receivables Transaction and
other external sources will be sufficient to meet its debt service
requirements, capital expenditures and working capital needs. In order to
reduce its cost of borrowing, the Company intends to take advantage of
favorable purchase money financing and other types of borrowings.
(c)Subsequent Events
During the first week in July 1994, heavy rains and flooding in central
Georgia disrupted the operations at three of the Company's plants and the
Macon administrative headquarters. While there was no material physical
damage to these plants, operations were curtailed. In addition, a minor
amount of inventory at one storage location was water damaged. The Company
carries business interruption insurance and plans to submit a claim for
these losses, subject to the policy deductibles and exclusions.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits
4. Amendment No. 1 entered into as of July 2, 1994 to Credit Agreement
dated as of August 4, 1993.
(b)Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended July 2, 1994.
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.
THE BIBB COMPANY
By: /s/ Thomas C. Foley
Thomas C. Foley
President, Chairman of the
Board, Chief Executive
Officer and Chief Operating
Officer (Principal
Executive Officer)
By: /s/ Dennis L. Wolfarth
Dennis L. Wolfarth
Executive Vice President
(Principal Financial
Officer)
DATE: August 16, 1994
<PAGE>
AMENDMENT NO. 1
to
CREDIT AGREEMENT
Dated as of August 4, 1993
THIS AMENDMENT NO. 1 ("Amendment") is entered into
as of July 2, 1994 by and among The Bibb Company, a Delaware
corporation, and the institutions identified on the signature
pages hereof as Lenders. Capitalized terms used herein but not
defined herein shall have the meanings provided in the Credit
Agreement (as defined below).
<PAGE>
W I T N E S S E T H:
WHEREAS, the Borrower and the Lenders are parties to
that certain Credit Agreement dated as of August 4, 1993 (the
"Credit Agreement"), pursuant to which the Lenders have agreed
to provide certain financial accommodations to the Borrower;
and
WHEREAS, the Borrower has requested that certain
terms of the Credit Agreement be amended and the Lenders have
agreed to the requested amendments on certain conditions;
NOW, THEREFORE, in consideration of the premises set
forth above, the terms and conditions contained herein, and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. Amendment to Credit Agreement. Effective as of
the date first written above upon satisfaction of the
conditions precedent set forth in Section 2 below, the Credit
Agreement is hereby amended as follows:
1.1 Section 1.01 is amended to:
(a) delete the definition of "Annual Loan Reduction
Period" in its entirety;
(b) delete the definition of "Borrowing Base" in
its entirety and substitute the following therefor:
"Borrowing Base" means, as of any date of
determination, the sum of (i) up to (a) seventy
percent (70%) of the value of Borrower's Eligible
Inventory consisting of raw materials as described
on Exhibit B attached hereto and made a part hereof
which are not goods in transit and (b) thirty-five
percent (35%) of the value of Borrower's Eligible
Inventory consisting of raw materials as described
on Exhibit B which are goods in transit plus (ii) up
to (a) twenty-five percent (25%) of the value of
Borrower's Eligible Inventory consisting of work-in-
process as described on Exhibit B which is not goods
in transit and (b) ten percent (10%) of the value of
Borrower's Eligible Inventory consisting of work-in-
process as described on Exhibit B which is goods in
transit plus (iii) up to (a) fifty percent (50%) of
the value of Borrower's Eligible Inventory
consisting of finished goods as described on Exhibit
B which are not goods in transit and (b) twenty-five
percent (25%) of the value of Borrower's Eligible
Inventory consisting of finished goods as described
on Exhibit B which are goods in transit plus (iv)
fifteen percent (15%) of the value of Borrower's
Eligible Inventory consisting of supplies described
on Exhibit C attached hereto and made a part hereof
plus (v) the lesser of (a) $15,000,000 and (b) the
sum of (1) up to sixty percent (60%) of the orderly
liquidation value of Equipment plus (2) up to sixty
percent (60%) of the fair market value of the Real
<PAGE>
Property, in each case as reflected in the
Appraisals. For purposes of this definition, (1)
Eligible Inventory as of any date of determination
shall be determined after deduction of such reserves
as the Agent deems proper and necessary, including,
without limitation, reserves attributable to the
Borrower's non-first-quality goods, (2) the value
referenced in each of the foregoing clauses shall be
determined at the lower of Borrower's cost on a
first-in-first-out basis or market value, (3) goods
in transit shall be deemed to be Eligible Inventory
only if supported by Commercial Letters of Credit
and (4) the applicability of clause (v) above shall
be subject to deduction of a reserve equal to the
amount by which the Revolving Credit Commitments are
reduced as provided in Section 3.01(c) by
application of Net Proceeds of Sale as provided in
Section 3.01(d) and until such time as Lenders
deliver to Borrower written confirmation of
withdrawal of such reserve; provided, however, that
such reserve shall in no event exceed $15,000,000.
(c) delete the definition of "Capital Expenditure
Adjustment Amount" in its entirety;
(d) add the following definition of "Cash Flow":
"Cash Flow" means, for any period, an amount equal
to (i) EBITDA for such period minus (ii) Capital
Expenditures made or incurred during such period
minus (iii) Cash Interest Expense paid or accrued
(without duplication) for such period.
(e) delete the definition of "Cash Interest
Expense" in its entirety and substitute the following
therefor:
"Cash Interest Expense" means, for any period, (i)
total interest expense (including the interest
component of Capital Leases and interest component
of other expenses associated with the Receivables
Purchase Documents), whether paid or accrued, but
without duplication, of the Borrower and its
Subsidiaries, which is payable in cash minus (ii)
total interest income (including the interest
component of Capital Leases), whether paid or
accrued, but without duplication, which is payable
to Borrower or any Subsidiary in cash, all as
determined in conformity with GAAP (with the
exception of the interest component of other
expenses associated with the Receivables Purchase
Documents).
(f) delete the definition of "Clean-up Prepayment"
in its entirety;
(g) add the following definition of "Commitment
Reduction Prepayment":
"Commitment Reduction Prepayment" is defined in
<PAGE>
Section 3.01(d)(vii).
(h) delete the definition of "EBITDA" in its
entirety and substitute the following therefor:
"EBITDA" means, for any period, the sum of the
amounts for such period of (i) Net Income, plus (ii)
depreciation and amortization expense and fees
accrued (but unpaid) under the Management Agreement,
plus (iii) Cash Interest Expense, plus (iv) federal,
state, and local income taxes deducted in
determining Net Income in accordance with GAAP, plus
(v) extraordinary losses determined in accordance
with GAAP which have been deducted in the
determination of Net Income, plus (vi) net expense
recorded by the Borrower in accordance with GAAP in
connection with the sale of accounts to Bibb Funding
pursuant to the Receivables Purchase Documents,
minus (vii) extraordinary gains, including, without
limitation, any unusual gains arising in or outside
of the ordinary course of business of the Borrower
not included in extraordinary gains determined in
accordance with GAAP which have been included in the
determination of Net Income; provided, however, that
$8,500,000 in the aggregate, allocated by Borrower
in the Fiscal Year ending December 31, 1994 among
(a) the fees accrued or paid to the Lenders in
connection with Amendment No. 1 to this Agreement,
(b) writedowns in the value of Borrower's Inventory
(whether expensed or actual), (c) severance expenses
incurred or accrued (without duplication) by
Borrower, (d) expenses incurred or accrued (without
duplication) by Borrower in connection with fixed
asset upgrades, and (e) losses incurred or accrued
(without duplication) by Borrower attributable to
the interruption of Borrower's business as a result
of the floods occurring in Macon, Georgia, shall not
be included in the calculation of "EBITDA".
(i) delete the definition of "Interest Coverage
Ratio" in its entirety and substitute the following therefor:
"Interest Coverage Ratio" means, for any period, the
ratio of (i) EBITDA for such period to (ii) Cash
Interest Expense for such period.
(j) delete the amount "$45,000,000" in the
definition of "Revolving Credit Commitment" and substitute
therefor the amount "$60,000,000";
and
(k) delete the date "August 12, 1996" in clause (i)
of the definition of "Revolving Credit Termination Date" and
substitute therefor the date "January 1, 1996".
1.2 Section 2.05(a)(ii) is amended to delete the
amount "$20,000,000" in clause (A)(I) thereof and substitute
the amount "$25,000,000" therefor.
<PAGE>
1.3 Section 3.01(c) is amended to delete the second
sentence thereof in its entirety and to substitute the
following therefor:
"The applicable Commitments shall be reduced as and
when mandatory prepayments consisting of Designated
Prepayments are due as provided in Section 3.01(d),
whereupon, with respect to Revolving Credit
Commitments, the Revolving Credit Commitment of each
of Citicorp USA, Inc. and Transamerica Business
Credit Corporation will be reduced by one-half of
the amount of such Designated Prepayment applicable
to the Revolving Loans until such Revolving Credit
Commitments equal $16,500,000 and, thereafter, the
Revolving Credit Commitments of each Lender shall be
reduced proportionately in accordance with its Pro
Rata Share of such Designated Prepayment. The
Revolving Credit Commitments shall be reduced by the
Commitment Reduction Prepayment as of December 15,
1995, whereupon, (i) in the event the Revolving
Credit Commitment of each of Citicorp USA, Inc. and
Transamerica Business Credit Corporation then
exceeds $16,500,000, the Revolving Credit Commitment
of each such Lender shall be reduced by the lesser
of (A) $2,500,000 or (B) the amount required to
reduce the Revolving Credit Commitment of each such
Lender to $16,500,000 and (ii) in the event the
Revolving Credit Commitment of each of Citicorp USA,
Inc. and Transamerica Business Credit Corporation
then equals or is less than $16,500,000, the
Revolving Credit Commitments of each Lender shall be
reduced proportionately in accordance with its Pro
Rata Share of the Commitment Reduction Prepayment.
1.4 Section 3.01(d) is amended to:
delete clause (i) thereof in its entirety and to substitute
the following therefor:
(i) Upon the Borrower's receipt of any Net Proceeds
of Sale (A) from the sale of Equipment in a single
transaction or series of related transactions which
Net Proceeds of Sale or Equipment aggregate at least
$2,500,000 and/or (B) from the sale of Real Property
other than the Real Property identified on Schedule
3.01-D, in each instance, other than in the ordinary
course of Borrower's business, the Borrower shall
make a mandatory prepayment of the Obligations in an
amount equal to (C) one hundred percent (100%) of
such Net Proceeds of Sale until the aggregate
Revolving Credit Commitments equal $45,000,000 and
(D) fifty percent (50%) of such Net Proceeds of Sale
thereafter.
to delete clause (iii) thereof in its entirety and to
substitute the following therefor:
"(iii) Borrower shall make a mandatory prepayment
on December 15, 1994 in the amount of $5,000,000."
<PAGE>
to delete clause (vii) in its entirety and to substitute the
following therefor:
"(vii) Each mandatory prepayment required by
clauses (i), (ii) and (iv) of this Section 3.01(d)
shall be referred to herein as a "Designated
Prepayment"; the mandatory prepayment required by
clause (iii) of this Section 3.01(d) shall be
referred to herein as a "Commitment Reduction
Prepayment"; and each mandatory prepayment required
by clause (v) of this Section 3.01(d) shall be
referred to herein as a "Receivables Prepayment".
The Borrower shall give the Agent not less than one
(1) Business Day's prior written notice or
telephonic notice promptly confirmed in writing
(each of which the Agent shall promptly transmit to
each Lender), of the date on which each such
Designated Prepayment or Receivables Prepayment will
be made (which date of prepayment shall be no later
than the date on which such Designated Prepayment or
Receivables Prepayment becomes due and payable
pursuant to this Section 3.01(d))."
to delete clause (viii)(A) in its entirety and to substitute
the following therefor:
"(A) the amount of each Designated Prepayment shall
be applied to the outstanding Revolving Loans until
paid in full and shall permanently reduce the
Revolving Credit Commitments by the amount of such
Designated Prepayment so applied in accordance with
the provisions of Section 3.01(c);"
and to delete clause (ix) in its entirety and to substitute
the following therefor:
"(ix) The Commitment Reduction Prepayment shall be
allocated and applied to the outstanding Revolving
Loans and shall correspondingly reduce the Revolving
Credit Commitment of each Lender in accordance with
the provisions of Section 3.01(c)."
1.5 Section 4.01(e) is amended to add the following
provision at the end thereof:
Provided no Event of Default shall have occurred or
then be continuing unwaived, the Base Rate Margin
shall be reduced to one and three-quarters percent
(1.75%) per annum and the Eurodollar Rate Margin
shall be reduced to three percent (3.00%) per annum
as of the date the Agent first receives the
Financial Statements of the Borrower and its
Subsidiaries required by the terms of Section
7.01(b) confirming that EBITDA, as determined as of
the last day of the then immediately preceding two
consecutive fiscal quarters of the Borrower for each
of the twelve-month periods ending on the last day
of each such fiscal quarter, equals at least
$40,000,000, which reduction shall continue in
effect until EBITDA, as determined on the last day
<PAGE>
of any succeeding fiscal quarter of the Borrower for
the twelve-month period ending on such day, is less
than $40,000,000.
1.6 Section 9.05 to add the following provision at
the end thereof:
provided, however, that until the Revolving Credit
Commitments are reduced by an aggregate of
$15,000,000 as provided in Section 3.01(c) by
application of Net Proceeds of Sale as provided in
Section 3.01(d), the permitted Restricted Junior
Payments referenced in clause 9.05(a) shall be
calculated quarterly, as of the last day of each
fiscal quarter of Borrower for the fiscal quarters
of Borrower then ending after July 2, 1994, based on
a comparison (on a cumulative basis) of (i) the
actual EBITDA of the Borrower as reflected in the
financial reports delivered to the Agent and the
Lenders with respect to such fiscal quarters
("Actual EBITDA") to (ii) the projected EBITDA of
the Borrower as reflected in Borrower's management
plan dated June 21, 1994 delivered to the Agent and
the Lenders ("Projected EBITDA") for such fiscal
quarters and, (A) in the event the Actual EBITDA for
the period of determination is equal to (or, with
respect to the first such period of determination,
is equal to or exceeds) the Projected EBITDA for
such period, the amount of the permitted Restricted
Junior Payment shall equal $1,000,000 per fiscal
quarter in such period of determination, (B) in the
event the Actual EBITDA for the period of
determination is less than the Projected EBITDA for
such period, the amount of the permitted Restricted
Junior Payment per fiscal quarter in such period of
determination shall equal $1,000,000 minus the
difference (up to $250,000 per fiscal quarter)
between the Actual EBITDA and the Projected EBITDA
for such period, and (C) in the event the Actual
EBITDA for the period of determination is greater
than the Projected EBITDA for such period, the
amount of the permitted Restricted Junior Payment as
of the end of such period of determination shall
equal (1) $1,000,000 times the number of fiscal
quarters in such period of determination minus (2)
the aggregate amount of such Restricted Junior
Payments actually made for the fiscal quarters in
such period of determination. Unless and until the
aggregate amount of such permitted Restricted Junior
Payments as of a given date of determination equals
a negative number, Borrower shall be permitted to
make up to $750,000 in such Restricted Junior
Payments in any fiscal quarter of the Borrower. From
and after such date of determination on which the
aggregate amount of such permitted Restricted Junior
Payments equals a negative number, Borrower shall
make no further such Restricted Junior Payments
until such aggregate amount equals or exceeds zero,
whereupon the provisions of clauses (A), (B), and
(C) shall be applicable. Any amount of such
Restricted Junior Payments in excess of $750,000
<PAGE>
paid for any fiscal quarter of the Borrower shall be
payable only upon delivery of the required
supporting financial reports to the Agent and the
Lenders.
1.7 Section 9.17 is deleted in its entirety.
1.8 Section 10.01 is amended to delete the
provisions thereof in their entirety and substitute the
following therefor:
Minimum EBITDA. The Borrower shall maintain EBITDA,
as determined as of the last day of (i) each fiscal
quarter of the Borrower, for the period specified
below ending on such day, of at least the amount set
out below opposite the fiscal quarter set out below:
Period Fiscal Quarter Minimum EBITDA
12-Month October 2, 1993 $32,000,000
12-Month January 1, 1994 $38,000,000
12-Month April 2, 1994 $38,000,000
3-Month October 1, 1994 $10,000,000
6-Month December 31, 1994 $20,000,000
9-Month April 1, 1995 $28,700,000
12-Month July 1, 1995 $40,000,000
and each fiscal
quarter thereafter
and (ii) September 3, 1994 for the two fiscal months
ending on such day, of at least $5,000,000.
1.9 Section 10.02 is amended to delete the
provisions thereof in their entirety and substitute the
following therefor:
Minimum Interest Coverage Ratio. The Borrower shall
maintain an Interest Coverage Ratio, as determined
as of the last day of each fiscal quarter of the
Borrower, (i) for the twelve-month period ending on
such day, of at least the ratio set out below
opposite the fiscal quarter set out below:
Fiscal Quarter Minimum Ratio
October 2, 1993 1.10 to 1.00
January 1, 1994 0.90 to 1.00
April 2, 1994 1.00 to 1.00
and (ii) for the period specified below ending on
such date, of at least the ratio set out below
opposite the fiscal quarter set out below:
Period Fiscal Quarter Minimum Ratio
<PAGE>
3-month October 1, 1994 1.3 to 1.00
6-month December 31, 1994 1.3 to 1.00
9-month April 1, 1995 1.3 to 1.00
12-month July 1, 1995 1.4 to 1.00
12-month September 1, 1995 1.5 to 1.00
and each fiscal
quarter thereafter
1.10 Section 10.03 is amended to delete the
provisions thereof in their entirety and substitute the
following therefor:
Minimum Fixed Charge Coverage Ratio. The Borrower
shall maintain a ratio of (i) EBITDA plus the
aggregate amount of financing fees payable by the
Borrower (other than the fees accrued or paid to the
Lenders in connection with Amendment No. 1 to this
Agreement) plus the aggregate amount of other non-
cash charges payable by the Borrower to (ii) Cash
Interest Expenses plus the amount of Tax
Distributions plus the amount of Borrower's income
tax expense plus Capital Expenditures, as determined
as of the last day of each fiscal quarter of the
Borrower for (a) the twelve-month period ending on
such day of at least the ratio set out below
opposite the fiscal quarter set out below:
Fiscal Quarter Minimum Ratio
October 2, 1993 0.80 to 1.00
January 1, 1994 1.01 to 1.00
April 2, 1994 1.01 to 1.00
and (b) the period specified below ending on such
day of at least the ratio set out below opposite the
fiscal quarter set out below:
Period Fiscal Quarter Minimum Ratio
3-month October 1, 1994 0.95 to 1.00
6-month December 31, 1994 0.95 to 1.00
9-month April 1, 1995 0.95 to 1.00
12-month July 1, 1995 1.10 to 1.00
and each fiscal
quarter thereafter
1.11 Section 10.05 is amended to delete the
provisions thereof in their entirety and substitute the
following therefor:
Capital Expenditures. The Borrower shall not make
or incur Capital Expenditures in the aggregate in
(a) its fiscal quarter ending October 1, 1994 in
excess of $4,000,000, (b) its fiscal quarter ending
December 31, 1994 in excess of $4,000,000, or (c)
any of its fiscal quarters ending after 1994 in
excess of the sum of (1) $3,000,000 plus (2) fifty
percent (50%) of the amount by which Borrower's
<PAGE>
EBITDA earned in the immediately prior fiscal
quarter exceeds $10,000,000.
1.12 Article X is amended to add the following
provision thereto:
10.06 Minimum Cash Flow. The Borrower shall
maintain Cash Flow greater than zero, as determined as of the
last day of each fiscal quarter of the Borrower (a) commencing
on October 1, 1994 and ending on July 1, 1995, for the period
elapsed since July 2, 1994 through July 1, 1995, and (b)
commencing on July 1, 1995 and thereafter, for the twelve-
month period ending on July 1, 1995 and the twelve-month
period ending on such last day of such fiscal quarter
thereafter.
1.13 Section 11.01 is amended to add the following
provision thereto as clause (q):
(q) Environmental Audit. Borrower shall have
failed to commence, by September 15, 1994, through
an environmental consultant satisfactory to
Transamerica Business Credit Corporation, a Phase I
environmental audit consistent with ASTM standards
with respect to three (3) owned Real Property sites
on which Borrower has material plant operations,
which sites Transamerica Business Credit Corporation
shall have approved, in its sole determination.
1.14 Exhibit B is amended to delete the provisions
thereof in their entirety and substitute therefor the Exhibit
B attached hereto.
1.15 The respective Revolving Credit Commitments
for each of Citicorp USA, Inc. and Transamerica Business
Credit Corporation set forth on the signature pages of the
Credit Agreement are deleted in their entirety and the
following substituted therefor:
Citicorp USA, Inc. Revolving Credit Commitment:
$24,000,000
Transamerica Business Credit Corporation Revolving Credit
Commitment:
$24,000,000
and the respective Revolving Credit Pro Rata Share for each
Lender set forth on the signature pages of the Credit
Agreement are deleted in their entirety and reference is made
to the definition of "Pro Rata Share" for a determination as
to the percentage representation thereof from time to time.
1.16 Deletion of the financial covenants heretofore
set forth in Sections 10.01, 10.02, and 10.03 to be tested on
and as of July 2, 1994 constitutes Lenders' waiver of any
Potential Event of Default or Event of Default that may have
arisen due to Borrower's anticipated or actual failure to
<PAGE>
comply with such financial covenants.
2. Conditions to Effectiveness. This Amendment
shall become effective as of the date first written above
provided that on or before July 25, 1994:
2.1 Borrower shall have paid to the Agent (a) a fee
in consideration of the execution and delivery of this
Amendment for the account of (i) National Bank of Canada in
the amount of $133,333.34, (ii) Transamerica Business Credit
Corporation in the amount of $183,333.33, and (iii) Citicorp
USA, Inc. in the amount of $183,333.33, and (b) a fee in
consideration of the increase in their respective Revolving
Credit Commitments for the account of (i) Transamerica
Business Credit Corporation in the amount of $250,000 and (ii)
Citicorp USA, Inc. in the amount of $250,000; and
2.2 Agent shall have received by facsimile
transmission one counterpart of this Amendment executed by the
Borrower and each of the Lenders.
3. Representations, Warranties and Covenants.
3.1 The Borrower hereby represents and warrants
that this Amendment and the Credit Agreement, as amended
hereby, constitute the legal, valid and binding obligations of
the Borrower and are enforceable against the Borrower in
accordance with their terms.
3.2 The Borrower hereby represents and warrants
that, before and after giving effect to this Amendment, no
Event of Default or Potential Event of Default has occurred
which is continuing or unwaived, except as may have occurred
with respect to the financial covenants described and
referenced in Section 1.14 of this Amendment.
3.3 The Borrower hereby reaffirms all agreements,
covenants, representations and warranties made in the Credit
Agreement, to the extent the same are not amended hereby, and
made in the other Loan Documents to which it is a party; and
agrees that all such agreements, covenants, representations
and warranties shall be deemed to have been remade as of the
effective date of this Amendment.
4. Reference to and Effect on the Credit Agreement.
4.1 Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import shall
mean and be a reference to the Credit Agreement as amended
hereby and each reference to the Credit Agreement in any other
document, instrument or agreement executed and/or delivered in
connection with the Credit Agreement shall mean and be a
reference to the Credit Agreement, as amended hereby.
4.2 Except as specifically amended above, the
Credit Agreement shall remain in full force and effect, and is
hereby ratified and confirmed.
<PAGE>
4.3 The execution, delivery, and effectiveness of
this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of the Agent
or Lenders, nor constitute a waiver of any provision of any of
the Loan Documents.
5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
6. Headings. Section headings in this Amendment
are included herein for convenience of reference only and
shall not constitute a part of this Amendment for any other
purpose.
7. Counterparts. This Amendment may be executed by
one or more of the parties hereto on any number of separate
counterparts, each of which shall be deemed an original and
all of which, taken together, shall be deemed to constitute
one and the same instrument. Delivery of an executed
counterpart of this Amendment by facsimile transmission shall
be effective as delivery of a manually executed counterpart
hereof. Each Lender and the Borrower agree to deliver to the
Agent as soon as practicable following delivery of the
facsimile counterpart referenced in Section 2.2 above, seven
(7) original counterparts of this Amendment, executed by such
party.
IN WITNESS WHEREOF, this Amendment has been duly
executed as of the day and year first above written.
THE BIBB COMPANY
By_________________________
Dennis L. Wolfarth
Executive Vice President
CITICORP USA, INC.
By_________________________
John H. Rexford
Authorized Representative
NATIONAL BANK OF CANADA
By_________________________
<PAGE>
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By_________________________
Susan M. Hall
Vice President
EXHIBIT B
to
Credit Agreement dated as of August 4, 1993
(as amended as of July 2, 1994)
FORM OF BORROWING BASE CERTIFICATE
<PAGE>
------------------------------------------------------------
THE BIBB COMPANY
BORROWING BASE CERTIFICATE
[Calendar Week ended ________, 199_]
[Calendar Month ended ________, 199_]1
Borrowing Base Calculation
Eligible Less
Inventory Value2 at Inel. & % of Borrowing
Categories 3 FIFO/Market as of Reserves Value Base Value
Raw Materials $__________ ______ $_______ 65% $_________
(other than
raw cotton)
Raw Materials $__________ ______ $_______ 70% $_________
(raw cotton)
Raw Materials $__________ ______ $_______ 35% $_________
(goods in
transit)
Work-in- $__________ ______ $_______ 15% $_________
Process
1 Weekly Certificate required for Eligible Inventory consisting
of finished goods and raw materials; Monthly Certificate required
for Eligible Inventory consisting of work-in-process.
2 After adjustment to perpetual inventory.
3 See attached detailed description of inventory categories.
B-1
<PAGE>
(select)
Work-in- $__________ ______ $_______ 25% $_________
Process
(fin. plants)
Work-in- $__________ ______ $_______ 15% $_________
Process(other)
Work-in- $__________ ______ $_______ 10% $_________
Process (goods
in transit)
Finished Goods $__________ ______ $_______ 50% $_________
(first quality)
Finished Goods $__________ ______ $_______ 45% $_________
(select/1st ROM)
Finished Goods $__________ ______ $_______ 45% $_________
(ROM)
Finished Goods $__________ ______ $_______ 30% $_________
& Select
(2nds;O/C;closeouts)
Finished Goods $__________ ______ $_______ 50% $_________
(Outlet Stores)
Finished Goods $__________ ______ $_______ 40% $_________
Aged
Finished Goods $__________ ______ $_______ 25% $_________
(goods in
transit)
Supplies $__________ ______ $_______ 15% $_________
Inventory
B-22
<PAGE>
Subtotal: $_________
plus Fixed Asset Borrowing Base4 $_________
calculated as the lesser of:
(i) $15,000,000 and
(ii) the sum of:
Equipment Orderly Liq. Val. times 60% $_________
plus
Real Property Fair Market Value times 60% $_________
Borrowing Base $_________
CERTIFICATE
The undersigned is the duly elected, qualified and acting
_______ of The Bibb Company. To the knowledge and belief of
the undersigned, the information contained herein is true and
correct in all material respects as of the date hereof.
THE BIBB COMPANY
By________________ Date: ____________, 199_
Title:
4 Subject to a reserve as and when provided in the definition of
"Borrowing Base" in the Credit Agreement.
B-3
<PAGE>
INVENTORY CATEGORY DESCRIPTIONS
Raw Material - Cotton raw cotton bales purchased on long
term contracts; this category has a
reserve to reflect cotton costs lower
than standard
Raw Material - Other synthetic fibers, filament, some
purchased yarn, and some secondary
fibers (noile); this category has a
reserve to reflect lower than
standard costs
WIP - Select in process products
WIP - Finishing Plants material carried on the perpetual
inventory which includes some amount
of finished greige goods rolls
WIP - Other some amount of roll goods and
finished goods
Finished Goods Select
(1st/ROM) finished goods; 1st means inspected,
first quality goods; ROM means run of
the mill (uninspected) finished goods
Finished Goods 1st
Quality prime finished goods; includes
finished roll cloth; material at
outside converters is ineligible;
institutional products are included
Finished Goods ROM run of the mill finished goods which
has not been given a final inspection
Finished Goods &
Select (2nds, O/O,
close-outs) small amount of off-quality select
finished goods, other quality
finished goods, close outs, and
seconds; items at outside converters
is ineligible
Finished Goods Outlet
Stores inventory at the company outlet
stores in Reading, Pa. and Destin,
Fla.; it is valued the same as 1st
quality finished goods
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Finished Goods Aged inventory in excess of 3 months
supply and inventory items which have
had no sales in the last 3 months;
includes apparel cloth like chambray
Supplies See Exhibit C to Credit Agreement
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