<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 OCTOBER 4, 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 NO. 0-21661
THE BIBB COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 58-2253133
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 GALLERIA PARKWAY
SUITE 1750
Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
770-644-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by court. Yes X No
-- --
As of October 4, 1997, there were 10,061,576 outstanding shares of the
Registrant's Common Stock, par value $.01 per share, which is the only class of
common or voting stock of the Registrant.
<PAGE>
THE BIBB COMPANY
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Condensed Financial Statements:
Condensed Balance Sheets - October 4, 1997 and December 28, 1996 3
Condensed Statements of Operations for the three months ended
and the nine months ended October 4, 1997 and September 28, 1996 4
Condensed Statement of Changes in Stockholders' Equity for the
nine months ended October 4, 1997 5
Condensed Statements of Cash Flows for the nine months ended
October 4, 1997 and September 28, 1996 6
Notes to Condensed Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
PART II - OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Stockholders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 17
(b) Reports on Form 8-K 17
Signature Page 18
</TABLE>
2
<PAGE>
THE BIBB COMPANY
CONDENSED BALANCE SHEETS
OCTOBER 4, 1997 AND DECEMBER 28, 1996
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
October 4, December 28,
1997 1996
---------- -----------
<S> <C> <C>
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $128 $3,206
Accounts receivable, net of allowances for doubtful accounts,
discounts, and claims of $1,621 and $1,588 as of
October 4, 1997 and December 28, 1996, respectively 44,143 55,128
Inventories 70,537 72,282
Assets held for sale 0 37,012
Prepaid expenses and other current assets 3,743 2,033
---------- -----------
Total current assets 118,551 169,661
PROPERTY, PLANT AND EQUIPMENT, NET 65,553 58,642
OTHER ASSETS 3,889 4,397
---------- -----------
$187,993 $232,700
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $2,480 $5,237
Accounts payable 28,824 36,466
Accrued payroll and other compensation 8,282 14,607
Other accrued liabilities 2,520 6,449
---------- -----------
Total current liabilities 42,106 62,759
---------- -----------
LONG-TERM DEBT, less current maturities 63,857 84,093
---------- -----------
COMMITMENTS AND CONTINGENCIES --- ---
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized;
0 shares issued and outstanding 0 0
Common stock, $.01 par value, 25,000,000 shares authorized;
10,061,576 and 10,000,000 shares issued and outstanding
as of October 4, 1997 and December 28, 1996, respectively 101 100
Additional paid-in capital 88,882 88,348
Accumulated deficit (6,893) (2,540)
Minimum pension liability adjustment (60) (60)
---------- -----------
Total stockholders' equity 82,030 85,848
---------- -----------
$187,993 $232,700
========= ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements (unaudited).
3
<PAGE>
THE BIBB COMPANY
CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 4, 1997 AND SEPTEMBER 28, 1996,
AND THE NINE MONTHS ENDED OCTOBER 4, 1997 AND SEPTEMBER 28, 1996
(In Thousands, Except Per Share Data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------- --------------------------
October 4, | September 28 October 4, | September 28,
1997 | 1996 1997 | 1996
--------- | ------------ ---------- | -------------
<S> <C> | <C> <C> | <C>
NET SALES $73,384 | $ 93,354 $213,347 | $262,392
COST OF SALES 65,529 | 87,509 192,701 | 239,724
---------- | -------- ---------- | --------
Gross Profit 7,855 | 5,845 20,646 | 22,668
| |
| |
SELLING AND ADMINISTRATIVE EXPENSES 6,791 | 8,680 20,041 | 26,002
MANAGEMENT FEES TO AFFILIATE 0 | 665 0 | 1,993
---------- | -------- ---------- | --------
Operating (loss) profit 1,064 | (3,500) 605 | (5,327)
OTHER (EXPENSE) INCOME: | |
Interest expense (1,774) | (3,733) (4,884)| (17,929)
Interest income from T.B. Wood's Corporation 0 | 73 0 | 659
Other, net (42) | (29) (74)| 2,660
---------- | -------- ---------- | --------
(1,816) | (3,689) (4,958)| (14,610)
---------- | -------- ---------- | --------
LOSS BEFORE REORGANIZATION ITEMS AND | |
EXTRAORDINARY ITEM (752) | (7,189) (4,353)| (19,937)
REORGANIZATION ITEMS (1): | |
Professional fees and other expenses 0 | (1,423) 0 | (1,423)
Adjust accounts to fair value 0 | 7,921 0 | 7,921
EXTRAORDINARY ITEM, gain on discharge of debt 0 | 111,650 0 | 111,650
---------- | -------- ---------- | --------
NET LOSS (INCOME) ($752) | $110,959 ($4,353)| $ 98,211
========== | ======== ========== | ========
NET LOSS PER SHARE OF COMMON STOCK (1) ($0.07) | --- ($0.43)| ---
========== | ======== ========== | ========
WEIGHTED AVERAGE SHARES OUTSTANDING (1) 10,061,576 | --- 10,061,576 | ---
========== | ======== ========== | ========
</TABLE>
_________
(1) Share and per share amounts for the three months and nine months ended
September 28, 1996 have not been presented because they are not meaningful
due to the implementation of fresh start reporting and the substantial
change in the number of shares outstanding subsequent to the consummation of
the Plan (See Note 1 to the Condensed Financial Statements (unaudited)).
The accompanying notes are an integral part of the condensed financial
statements (unaudited).
4
<PAGE>
THE BIBB COMPANY
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED OCTOBER 4, 1997
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
Minimum
Additional Pension
Common Stock Paid-in Accumulated Liability
($.01 Par Value) Capital deficit Adjustment Total
---------------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 28, 1996 $100 $88,348 ($2,540) ($60) $85,848
Stock Issuance 1 534 0 0 535
Net loss 0 0 (4,353) 0 (4,353)
----------- ------- --------- --------- ---------
Balance, October 4, 1997 $101 $88,882 ($6,893) ($60) $82,030
=========== ======= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the condensed financial
statements (unaudited).
5
<PAGE>
THE BIBB COMPANY
CONDENSED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 4, 1997 AND SEPTEMBER 28, 1996
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
October 4, | September 28,
1997 | 1996
----------- | -------------
<S> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES |
Net (loss) income ($4,353) | $98,211
Adjustments to reconcile net (loss) income to net cash provided by |
(used in) operating activities: |
Depreciation and amortization 5,158 | 9,582
Loan fee amortization and related expenses 895 | 1,928
Net (gain) loss on sale and retirement of assets 13 | (377)
Net gain on sale of investment 0 | (3,949)
Interest receivable on note receivable from T.B. Wood's Corporation 0 | (659)
Changes in operating assets and liabilities: |
Restricted cash 0 | 7,966
Accounts receivable 10,985 | (53,108)
Inventories 1,745 | (5,252)
Assets held for sale 37,012 | 0
Prepaid expenses and other current assets (1,710) | (255)
Accounts payable and accrued liabilities (17,896) | 16,952
Reorganization items: |
Professional fees and other expenses 0 | 1,423
Adjust accounts to fair value 0 | (7,921)
Extraordinary gain on discharge of debt 0 | (111,650)
---------- | ----------
Net cash provided by (used in) operating activities 31,849 | (47,109)
---------- | ----------
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
Capital expenditures (12,538) | (2,940)
Proceeds from sale of fixed assets 3,931 | 865
Proceeds from the sale of investment 0 | 4,185
Repayment of note receivable from T.B. Wood's Corporation, net 0 | 10,677
Other, net (827) | (4,493)
---------- | ----------
Net cash (used in) provided by investing activities (9,434) | 8,294
---------- | ----------
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
Repayments of long-term debt (3,083) | (60)
Net (repayments) borrowings of senior debt (21,214) | 25,485
Borrowings of term loan 10,000 | 15,000
Repayments of term loan (11,196) |
Proceeds from exercise of stock options 0 | 24
Loan fees 0 | (1,459)
---------- | ----------
Net cash (used in) provided by financing activities (25,493) | 38,990
---------- | ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,078) | 175
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,206 | 150
---------- | ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $128 | $325
========= | ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE: |
Interest paid $3,981 | $4,624
========= | ==========
</TABLE>
The accompanying notes are an integral part of the condensed financial
statements (unaudited).
6
<PAGE>
THE BIBB COMPANY
----------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
---------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the Company's financial
position as of October 4, 1997 and the results of its operations and its cash
flows for the three month periods ended October 4, 1997 and September 28, 1996
and the nine month periods ended October 4, 1997, and September 28, 1996, have
been included. Operating results for the three month and nine month periods
ended October 4, 1997, are not necessarily indicative of the results that may
be expected for the year ending January 3, 1998. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to the Securities and Exchange Commission rules and
regulations. The condensed financial statements should be read in conjunction
with the Company's audited financial statements and notes thereto for the year
ended December 28, 1996. The balance sheet at December 28, 1996, has been
taken from these statements.
Unless the context otherwise requires, the "Company" means The Bibb
Company, a Delaware corporation.
On September 12, 1996, the United States Bankruptcy Court for the District
of Delaware issued an order confirming the reorganization plan (the "Plan" or
the "Reorganization"). The Plan was consummated on September 27, 1996,
(effective September 28, 1996 for financial reporting purposes). The
consummation of the plan resulted in, among other things, (i) the issuance of
9.5 million shares of common stock to the holders of senior subordinated notes
and 500,000 shares to the holders of old common stock.
The Company (formerly known as The New Bibb Company) is the successor to
The Bibb Company ("Old Bibb"), as a result of the merger of Old Bibb with and
into the Company on September 27, 1996 (the "Merger"). Upon consummation of
the Reorganization and Merger, the Company was renamed The Bibb Company.
References herein to the business of the Company for periods prior to
September 27, 1996, refer to the business of Old Bibb as the predecessor to
the business and operations of the Company.
In connection with the completion of the Reorganization and the
consummation of the Merger, the Company adopted fresh start reporting,
effective September 28, 1996. As a result of the implementation of fresh
start reporting, the financial statements of the Company after the
consummation of the Plan are not comparable to the Company's financial
statements for prior periods. Accordingly, a line has been used to separate
the financial statements of the Company after the consummation of the Plan
from those of the Company prior to the consummation of the Plan.
2. SIGNIFICANT ITEMS AFFECTING FINANCIAL STATEMENTS
Two significant items occurred during the nine months ended October 4,
1997, which included (a) implementation of a plan to restructure operations at
the Company's plants to improve efficiency and (b) the completion of the
previously announced sale of the Company's terry products business.
7
<PAGE>
Plant Restructuring
In January 1997, the Company announced plans to reconfigure its
manufacturing activities at several facilities. The changes included, (i)
outsourcing a portion of Consumer Products muslin greige sheeting, (ii)
outsourcing all Apparel yarn, (iii) consolidation of all Consumer Bedding
printing at the Brookneal, Virginia facility, (iv) expansion of automated
sheet sewing at Brookneal and (v) consolidation of Consumer Products retail
bedding distribution at the Sargent, Georgia facility. In conjunction with
these changes, the Company reduced manufacturing activities at the Columbus,
Georgia and Juliette, Georgia facilities and increased the manufacture of
muslin greige sheeting at the Greenville, South Carolina facility. In
addition, on July 23, 1997, the Company announced the closing of its Juliette,
Georgia finishing facility. Manufacturing operations at this facility ceased
on September 6, 1997.
Sale of the Terry Business
In connection with a restructuring plan, in February 1997, the Company sold
its terry products business, which manufactured bath towels and other terry
products sold primarily to retailers and institutional distributors (the
"Terry Business") to WestPoint Stevens Inc. ("WestPoint"). In conjunction
therewith, effective September 28, 1996, the Company classified the assets of
the Terry Business as "assets held for sale" based on the net proceeds of the
sale, including losses related to the Terry Business from December 29, 1996
through February 21, 1997, and the results of operations of the Terry Business
were, therefore, eliminated from the Company's statement of operations in the
nine-month period ended October 4, 1997. In connection with the sale of the
Terry Business, the Company agreed to sell to WestPoint certain yarn and
greige terry cloth at cost, for a period of up to 6 months.
3. INVENTORIES
The major classes of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
October 4, December 28,
1997 1996
---------- ------------
<S> <C> <C>
Raw materials and supplies $ 9,843 $ 9,018
Work-in-process 34,144 33,463
Finished goods 26,129 29,517
------ ------
Total at FIFO cost 70,116 71,998
Excess of LIFO cost over FIFO cost 421 284
------ ------
Total at LIFO cost $ 70,537 $ 72,282
========= =========
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment consisted of the following (in
thousands):
<TABLE>
<CAPTION>
October 4, December 28,
1997 1996
---------- -----------
<S> <C> <C>
Machinery and equipment $ 47,869 $ 36,425
Land, buildings, and improvements 23,895 24,316
--------- ---------
71,764 60,741
Less accumulated depreciation 6,211 2,099
--------- ---------
$ 65,553 $ 58,642
========= =========
</TABLE>
8
<PAGE>
As a result of the adoption of fresh start reporting, plant, and equipment
were adjusted to their estimated fair value as of September 28, 1996 and
historical accumulated depreciation was eliminated. Depreciation is provided
using the straight-line method over the estimated useful asset lives. Upon
implementation of fresh start reporting, the average of the remaining useful
lives of buildings and improvements was approximately seven years, and the
estimated useful life for machinery and equipment was four years. Leasehold
improvements are depreciated over the shorter of the estimated useful asset
life or the term of the related lease.
<TABLE>
<CAPTION>
5. LONG-TERM DEBT
Long-term debt at October 4, 1997, and December 28, 1996, consisted of the
following (in thousands):
October 4, December 28,
1997 1996
---------- -----------
<S> <C> <C>
Revolving loan under Loan and Security Agreement $ 49,940 $ 71,154
Term loan under Loan and Security Agreement 13,448 14,644
Industrial development revenue bonds, variable rate of interest 0 3,000
Obligation under a capital lease 2,500 0
Other 449 532
-------- -----------
66,337 89,330
Less current maturities 2,480 5,237
-------- -----------
$ 63,857 $ 84,093
========= ===========
</TABLE>
The Loan and Security Agreement dated as of September 12, 1996, by and among
Congress Financial Corporation, as agent, and the lenders party thereto and
the Company ("The New Credit Agreement") became operative, thereby providing
the Company with a source of financing. Effective November 1, 1997, the
Company amended the New Credit Agreement as follows: (i) deletion of the
after-tax fixed charge coverage ratio and EBITDA covenant requirements, (ii)
modification of the tangible net worth covenant to provide for minimum
tangible net worth of not less than $70,000,000 at all times (iii) decrease of
the interest rate, (iv) reduction of the revolving loan limit, as defined, to
$75,000,000 and, (v) elimination of the supplemental capital expenditure
reserve.
6. INCOME TAXES
Prior to September 28, 1996, the Company was an S Corporation and was
generally not subject to corporate level taxes. Pursuant to the
Reorganization, the Company became a C Corporation for income tax purposes.
Due to uncertainty with regards to the ultimate realization of any net
operating loss carryforwards generated, the Company has established a
valuation allowance against all such benefits and, accordingly, recognized no
income tax benefit in the current year.
7. EARNINGS PER SHARE
Earnings per share is computed by dividing net income by the weighted
average number of common and dilutive common equivalent shares outstanding
during the period.
9
<PAGE>
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
SFAS 128 replaces primary earnings per share with basic earnings per share.
Basic earnings per share excludes the effect of any potentially dilutive
common equivalent shares. Fully diluted earnings per share, now called
diluted earnings per share, is still required. The Company will adopt SFAS
128 in 1998, and does not expect a material impact to its presently reported
earnings per share amounts upon adoption.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
LIQUIDITY AND CAPITAL RESOURCES
(Dollars in Thousands)
General. The following discussion and analysis of the financial condition
and the results of operations should be read in conjunction with the financial
statements provided in the Company's Form 10 Registration Statement and
subsequent amendments thereto. The Company's fiscal year ends on the Saturday
nearest December 31. References herein to a "fiscal" year mean the Company's
52- or 53-week fiscal year, ending on the Saturday nearest December 31.
In connection with the completion of the Reorganization and the consummation
of the Merger, the Company adopted fresh start reporting, effective September
28, 1996. As a result of the implementation of fresh start reporting, the
financial statements of the Company after the consummation of the Plan are not
comparable to the Company's financial statements for prior periods. In
addition, the Company completed the sale of the Terry Business to WestPoint on
February 21, 1997. In connection therewith, the assets of the Terry Business
have been classified as assets held for sale, effective September 28, 1996,
and therefore, the results of operations of the Terry Business are excluded
from the Company's results of operations from and after such date.
(a) RESULTS OF OPERATIONS
Three Months Ended October 4, 1997 Compared to Three Months Ended
September 28, 1996
Net sales for the three months ended October 4, 1997 were $73,384 compared
to $93,354 for the comparable prior year period, a decrease of $19,970 or
21.4%. The prior year period included sales from the Terry Business of
$18,693.
The Company's gross profit for the three months ended October 4, 1997 was
$7,855 or 10.7% of net sales compared to $5,845 or 6.3% of net sales for the
three months ended September 28, 1996. The increase in gross profit
percentage is primarily attributable to a continuing shift in product mix
toward higher-margin products, consistent with the Company's decision to de-
emphasize commodity bedding.
Selling and administrative expenses for the three months ended October 4,
1997, remained unchanged as a percentage of net sales, at $6,791 or 9.3% of
net sales, compared to $8,680 or 9.3% of net sales for the three months ended
September 28, 1996.
Management fees to affiliate were eliminated for the three months ended
October 4, 1997, compared to $665 in the three months ended September 28,
1996, as a result of the termination during the third quarter of 1996 of the
Management Services Agreement between the Company and the NTC Group, Inc., a
related party, in conjunction with the Reorganization.
As a result of the above factors, operating profit for the three months
ended October 4, 1997, improved to $1,064 from a loss of $3,500 in the three
months ended September 28, 1996, an increase of $4,564.
Total interest expense was $1,774 for the three months ended October 4,
1997, compared to $3,733 for the three months ended September 28, 1996, a
decrease of $1,959 or 52.5%. The decrease was primarily due to the Company's
sale of the Terry Business and subsequent payment of the industrial revenue
bonds, reduction of the term loan during the first quarter of 1997 and
restructuring of the Company's debt in conjunction with the Reorganization.
11
<PAGE>
Reorganization item "Professional fees and other expenses" represents
expenses related to the Plan. The item "Adjusts accounts to fair value" is
associated with the implementation of fresh start reporting. (See Note 1 to
the Condensed Financial Statements (unaudited))
Extraordinary gain of $111,650 resulted from the gain on the discharge of
long-term debt as a result of the Reorganization, which represented the
forgiveness of principal and interest, reduced by the estimated fair value of
the shares of Common Stock issued pursuant to the Plan. (See Note 1 to the
Condensed Financial Statements (unaudited))
As a result of the above factors, the Company had a net loss of $752 for the
three months ended October 4, 1997, compared to net income of $110,959 for the
three months ended September 28, 1996.
Nine Months Ended October 4, 1997 Compared to Nine Months Ended September
28, 1996
Net sales for the nine months ended October 4, 1997, were $213,347, a
decrease of $49,045 or 18.7% compared to $262,392 for the nine months ended
September 28, 1996. The prior year period included sales from the Terry
Business of $53,881.
The Company's gross profit for the nine months ended October 4, 1997 was
$20,646 or 9.7% of net sales compared to $22,668 or 8.6% of net sales for the
nine months ended September 28, 1996. The increase in gross profit percentage
for the nine months ended October 4, 1997 resulted primarily from a continuing
shift in product mix toward higher-margin products, consistent with the
Company's decision to de-emphasize commodity bedding.
Selling and administrative expenses for the nine months ended October 4,
1997, were $20,041 or 9.4% of net sales compared to $26,002 or 9.9% of net
sales for the nine months ended September 28, 1996. The decrease resulted
from the continuing benefits from a cost reduction plan implemented during the
latter part of 1996.
Management fees to affiliate were eliminated for the nine months ended
October 4, 1997, compared to $1,993 in the nine months ended September 28,
1996, as a result of the termination during the third quarter of 1996 of the
Management Services Agreement between the Company and the NTC Group, Inc., a
related party, in conjunction the Reorganization.
As a result of the above factors, operating profit improved from a loss of
$5,327 in the nine months ended September 28, 1996, to income of $605 in the
nine months ended October 4, 1997, an improvement of $5,932.
Interest expense was $4,884 for the nine months ended October 4, 1997,
compared to $17,929 for the nine months ended September 28, 1996, a decrease
of $13,045 or 72.8%. The decrease was primarily due to the Company's sale of
the Terry Business and subsequent payment of the industrial revenue bonds,
reduction of the term loan during the first quarter of 1997 and restructuring
of the Company's debt in conjunction with the Reorganization.
Reorganization item "Professional fees and other expenses" represents
expenses related to the Plan. The item "Adjusts accounts to fair value" is
associated with the implementation of fresh start reporting. (See Note 1 to
the Condensed Financial Statements (unaudited))
Extraordinary gain of $111,650 resulted from the gain on the discharge of
long-term debt as a result of the Reorganization, which represented the
forgiveness of principal and interest, reduced
12
<PAGE>
by the estimated fair value of the shares of Common Stock issued pursuant to
the Plan. (See Note 1 to the Condensed Financial Statements (unaudited))
As a result of the above factors, the Company experienced a net loss of
$4,353 in the nine months ended October 4, 1997, compared to a net income of
$98,211 in the nine months ended September 28, 1996.
13
<PAGE>
(b) Liquidity and Capital Resources
General The Company's principal sources of funds have been, and are
expected to continue to be, cash flow from operations and borrowings under the
New Credit Agreement. In addition, in February 1997, the Company sold the
Terry Business for approximately $38.8 million. The Company received
approximately $37 million in net cash proceeds from that sale, all of which
was used to repay outstanding indebtedness.
As part of the New Credit Agreement, as amended, the Company is entitled to
borrow up to a maximum of $75 million principal amount, subject to borrowing
base availability and applicable loan reserves. The New Credit Agreement
contains covenants which require the maintenance of certain financial ratios
and minimum net worth, as defined.
As of October 4, 1997, the Company had approximately $63.4 million in
borrowings outstanding under the New Credit Agreement. Of the outstanding
borrowings, approximately $2.5 million is due during the twelve months ending
October 4, 1998. Effective November 1, 1997, the Company amended the New
Credit Agreement as follows: (i) deletion of the after-tax fixed charge
coverage ratio and EBITDA covenant requirements, (ii) modification of the
tangible net worth covenant to provide for minimum tangible net worth of not
less than $70,000,000 at all times (iii) decrease of the interest rate, (iv)
reduction of the revolving loan limit, as defined, to $75,000,000 and, (v)
elimination of the supplemental capital expenditure reserve. As of November
12, 1997, the Company had the ability to borrow in excess of $15 million for
general operating requirements under the revolver associated with the New
Credit Agreement, as amended.
In 1991, industrial development revenue bonds (the "IRBs") were issued and
sold to refinance the purchase of certain of the Company's plants. These IRBs
were backed by letters of credit for which the Company was obligated in the
amount of approximately $11 million. The Company repaid one of the IRBs in
December 1996, in an aggregate amount of $8 million, and repaid the remaining
IRB in February 1997, in an aggregate amount of $3 million. The Company does
not have any other outstanding IRB obligations.
Liquidity. The Company experiences fluctuations in its working capital
requirements primarily associated with its retail customers' seasonal
inventory purchasing. The Company's primary ongoing cash requirements will be
to fund debt service, make capital expenditures and finance working capital.
The Company believes that it will generate sufficient cash flow from
operations, as supplemented by its available borrowings under the New Credit
Agreement and leasing, if required, to meet anticipated working capital and
capital expenditures requirements as well as debt service requirements under
the New Credit Agreement, at least until September 1999, the scheduled
maturity of the New Credit Agreement.
Capital Expenditures. The Company anticipates that it will make significant
capital expenditures in the near term to modernize its facilities and reduce
operating costs. Capital expenditures for the nine months ended October 4,
1997, have been $12.5 million. The Company intends to pursue significant
additional projects. The Company's ability to draw advances under the New
Credit Agreement for the purpose of funding capital expenditures, however,
remains subject to compliance with the terms and conditions of the New Credit
Agreement (including its borrowing base requirements), as amended.
14
<PAGE>
(c) FORWARD LOOKING STATEMENTS
Statements contained in this 10-Q quarterly report are forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve unknown uncertainties and risks which may
cause the Company's results in the future to differ materially from expected
results. These risks and uncertainties include, among others, economic or
competitive conditions, the availability of financing at satisfactory terms,
the demand for the Company's products, the ability of the Company to
successfully implement its strategic plans, and the risks and uncertainties
identified in the Company's other filings with the Securities and Exchange
Commission.
15
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The Company's Annual Meeting of the Stockholders was held on September 30,
1997 in Atlanta, Georgia for the following purposes:
(1) To elect seven (7) members of the Board of Directors to serve for a one
year term expiring at the 1998 Annual Meeting of Stockholders:
For Withheld
--------- --------
Michael L. Fulbright 8,679,314 12,538
C. Scott Bartlett, Jr. 8,679,314 12,538
Marvin B. Crow 8,679,314 12,538
Stewart M. Kasen 8,579,314 112,538
George A. Poole 8,579,314 112,538
James A. Williams 8,579,314 112,538
Irwin N. Gold 8,579,314 112,538
(2) To consider and act upon a proposal to amend the Company's Certificate
of Incorporation to increase the number of authorized shares of common
stock of the Company from 12,000,000 shares to 25,000,000 shares:
For Against Abstain
--- ------- -------
5,188,342 3,503,510 0
(3) To consider and act upon a proposal to amend the Company's Certificate
of Incorporation to provide for indemnification of the directors and
officers of the Company to the fullest extent permitted by law:
For Against Abstain
--- ------- -------
8,413,437 204,227 1,888
(4) To consider and act upon a proposal to approve the adoption of the
Company's 1997 Omnibus Stock Incentive Plan:
For Against Abstain
--- ------- -------
4,240,841 3,408,226 864
(5) To consider and act upon a proposal to approve the adoption of the
Company's Nonemployee Director Stock Plan:
For Against Abstain
--- ------- -------
4,151,531 3,517,087 1,888
ITEM 5. OTHER INFORMATION
(a) Effective October 1, 1997, the Company adopted a Share Purchase Rights
Plan that provides for rights to be issued to stockholders of record on
October 15, 1997. Under the plan, the rights will initially trade together
with the Company's common stock and will not be exercisable. In the absence
16
<PAGE>
of further board of directors' action, the rights will become
exercisable and allow the holder to acquire the Company's common stock at a
discounted price if a person or group acquires 15 percent or more of the
outstanding shares of the Company's common stock. Rights held by persons who
exceed the applicable threshold will be void. Under certain circumstances,
the rights will entitle the holder to buy shares in an acquiring entity at a
discounted price.
The plan also includes an exchange option. In general, after the rights
become exercisable, the board of directors may, at its option, effect an
exchange of part or all of the rights, other than rights that have become
void, for shares of the Company's common stock. Under this option, the
Company would issue one share of common stock for each right, subject to
adjustment in certain circumstances.
The Company's board of directors may, at its option, redeem all rights for
$.01 per right, generally at any time prior to the rights becoming
exercisable. The rights will expire on October 15, 2007, unless earlier
redeemed, exchanged or amended by the board of directors.
(b) Effective October 3, 1997, the Company's Common Stock was listed on the
American Stock Exchange, trading under the symbol (BIB).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit 1. Amendment No. 3 to Loan and Security
Agreement, dated November 11, 1997
Exhibit 3(i)(a). Certificate of Amendment of Certificate of
Incorporation of The Bibb Company
Exhibit 3(i)(b). Restated Certificate of Incorporation of The
Bibb Company
Exhibit 4(i). Certificate of Designation of Series A Junior
Participating Preferred Stock of The Bibb
Company
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
On October 2, 1997, the Company filed a Form 8-K relating to the
declaration of a dividend distribution of one right for each share of
outstanding common stock of the Company at the close of business on October 15,
1997, pursuant to the adoption of the Company's Share Purchase Rights Plan.
17
<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.
THE BIBB COMPANY
Date: November 18, 1997 By: /s/ Charles R. Tutterow
------------------------
Charles R. Tutterow
Vice President of Finance
18
<PAGE>
EXHIBIT 1
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
----------------------------------------------
November 11, 1997
The Bibb Company
237 Coliseum Avenue
Macon, Georgia 31201
Gentlemen:
Reference is made to the Loan and Security Agreement (as heretofore
amended, the "Loan Agreement"), dated as of September 12, 1996, by and among
Congress Financial Corporation (Southern), as agent (the "Agent"), the Lenders
parties thereto and The Bibb Company ("Borrower"), together with all other
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto (as the same now exist, are being
amended hereby and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, collectively, the "Financing Agreements"). All
capitalized terms used herein and not herein defined shall have the meanings
given to them in the Loan Agreement.
Borrower has requested that Agent and Lenders agree to (a) amend certain
provisions of the Loan Agreement, the Revolving Notes and the Term Notes,
including, among other things, provisions with respect to the Revolving Loan
Limit, the Maximum Credit, the Interest Rate, certain Availability Reserves and
financial covenants, and (b) to waive Borrower's non-compliance with certain of
the financial covenants contained in the Loan Agreement for the Measurement
Periods ended August 31, 1997, September 30, 1997, and October 31, 1997. Agent
and Lenders or Required Lenders, as applicable, are willing to agree to such
amendments and such waivers, subject to the terms and conditions set forth
herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Amendments to Definitions.
--------------------------
(a) After-Tax Fixed Charge Coverage Ratio. Effective as of November
-------------------------------------
1, 1997, Section 1.3 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: "1.3 [Intentionally Omitted.]"
(b) Commitments.
-----------
(i) Effective as of November 1, 1997, the Commitment of Congress,
as set forth on the signature page of the Loan Agreement, is hereby amended
by replacing the figure "$78,000,000" and replacing it with "$67,826,090".
<PAGE>
(ii) Effective as of November 1, 1997, the Commitment of
Transamerica, as set forth on the signature page of the Loan Agreement, is
hereby amended by replacing the figure "$37,000,000" with "$32,173,910".
(c) Interest Rate. Effective as of November 1, 1997, with respect to
-------------
interest accruing on and after such date, the definition of "Interest Rate"
contained in Section 1.54 of the Loan Agreement with respect to Eurodollar Rate
Loans is hereby amended by deleting the reference to "three and one-quarter
(3 1/4%) percent" and replacing that reference with the following: "three (3%)
percent".
(d) Maximum Credit. Effective as of November 1, 1997, Section 1.61 of
--------------
the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.61 "Maximum Credit" shall mean the amount equal to (a)
$100,000,000 less (b) the aggregate amount of payments and prepayments
----
applied to the Term Loan after the Closing Date."
(e) Pre-Tax Profit. Effective as of November 1, 1997, Section 1.77 of
--------------
the Loan Agreement is hereby deleted in its entirety and replaced with the
following: "1.77 [Intentionally Omitted.]"
(f) Revolving Loan Limit. Effective as of November 1, 1997, Section
--------------------
1.87 of the Loan Agreement is hereby deleted in its entirety and replaced with
the following:
"1.87 "Revolving Loan Limit" shall mean the amount of
$75,000,000."
(g) Supplemental Capital Expenditure Reserve. Effective as of
-----------------------------------------
November 1, 1997, Section 1.94 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: "1.94 [Intentionally Omitted.]"
2. Amendments to Revolving Notes.
-----------------------------
(a) Congress Revolving Note. Effective as of November 1, 1997, the
-----------------------
Revolving Loan Note, dated September 27, 1996, by Borrower payable to the order
of Congress, in the original principal amount of $61,043,481, is hereby amended
as follows:
(i) The reference to "$61,043,481" appearing at the top of page 1
of such note is hereby deleted and replaced with the following:
"$50,869,568".
(ii) Clause (a) contained in the first paragraph appearing on
page 1 of such note is hereby deleted in its entirety and replaced with the
following: "(a) FIFTY MILLION EIGHT HUNDRED SIXTY-NINE THOUSAND FIVE
HUNDRED SIXTY-EIGHT AND 00/100 DOLLARS ($50,869,568)".
2
<PAGE>
(iii) The term "Interest Rate" applicable to Eurodollar Rate
Loans, as defined in the third paragraph appearing on page 1 of such note,
is hereby amended, with respect to interest accruing on and after November
1, 1997, by deleting the reference to "three and one-quarter (3 1/4%)
percent" and replacing that reference with the following: "three (3%)
percent".
(b) Transamerica Revolving Note. Effective as of November 1, 1997,
---------------------------
the Revolving Loan Note, dated September 27, 1996, by Borrower payable to the
order of Transamerica in the original principal amount of $28,956,519, is hereby
amended as follows:
(i) The reference to "$28,956,519" appearing at the top of page 1
of such note is hereby deleted and replaced with the following:
"$24,130,432".
(ii) Clause (a) contained in the first paragraph appearing on
page 1 of such note is hereby deleted in its entirety and replaced with the
following: "(a) TWENTY-FOUR MILLION ONE HUNDRED THIRTY THOUSAND FOUR
HUNDRED THIRTY-TWO AND 00/100 DOLLARS ($24,130,432)".
(iii) The term "Interest Rate" applicable to Eurodollar Rate
Loans, as defined in the third paragraph appearing on page 1 of such note,
is hereby amended, with respect to interest accruing on and after November
1, 1997, by deleting the reference to "three and one-quarter (3 1/4%)
percent" and replacing that reference with the following: "three (3%)
percent".
(c) Revolving Note References. Effective as of November 1, 1997, all
-------------------------
references to the term "Revolving Notes" contained in the Loan Agreement, the
Mortgages and the other Financing Agreements are hereby amended to mean the
Revolving Notes as amended hereby.
3. Amendments to Term Notes.
------------------------
(a) Interest Rate. Effective as of November 1, 1997, with respect to
-------------
interest accruing on or after such date, the term "Interest Rate" applicable to
Eurodollar Rate Loans, as defined in each third paragraph appearing on each page
one of each Term Note is hereby amended by deleting the reference to "three and
one-quarter (3 1/4%) percent" and replacing each such reference in each Term
Note with the following: "three (3%) percent".
(b) Term Note References. Effective as of November 1, 1997, all
--------------------
references to the term "Term Notes" contained in the Loan Agreement, the
Mortgages and the other Financing Agreements are hereby amended to mean the Term
Notes as amended hereby.
4. Supplemental Capital Expenditures Reserve. Upon the effectiveness of
-----------------------------------------
this Amendment, the Supplemental Capital Expenditures Reserve shall be released
by Agent and Section 2.4(c) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: "(c) Intentionally Omitted.]"
3
<PAGE>
5. Interest Rate. Effective as of November 1, 1997, Section 3.1(f) of
-------------
the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"(f) The Interest Rate with respect to Eurodollar Rate Loans is
subject to adjustment as follows:
(i) if Borrower shall have achieved EBITDA of not less than
$25,000,000 for its fiscal year ending December 31, 1998, then the
pre-default Interest Rate for Eurodollar Rate Loans will be reduced to
two and one-half (2 1/2%) percent per annum above the Adjusted
Eurodollar Rate.
(ii) If the term of this Agreement is extended beyond December
31, 1999, and if Borrower shall have achieved EBITDA of not less than
$30,000,000 for its fiscal year ending December 31, 1999, and Borrower
previously became entitled to the reduction in the pre-default
Interest Rate for Eurodollar Rate Loans as described in Section
3.1(f)(i) hereof, then the pre-default Interest Rate for Eurodollar
Rate Loans will be further reduced to two and one-quarter (2 1/4%)
percent per annum above the Adjusted Eurodollar Rate.
(iii) If the term of this Agreement extended beyond December 31,
1999, and if Borrower shall not have achieved EBITDA of at least
$25,000,000 for its fiscal year ending December 31, 1998, but Borrower
shall have achieved EBITDA of $30,000,000 or more for its fiscal year
ending December 31, 1999, then the pre-default Interest Rate for
Eurodollar Rate Loans will be reduced to two and one-half (2 1/2%)
percent per annum above the Adjusted Eurodollar Rate.
(iv) Each adjustment in the Interest Rate for Eurodollar Rate
Loans shall be effective as to each Interest Period that commences on
or after the tenth (10th) day after the delivery to Agent of audited
financial statements of the Borrower for the applicable fiscal year
showing that the required financial results were achieved and
accompanied by the unqualified audit report and opinion thereon of
independent certified public accountants acceptable to Agent.
(v) No adjustments in the pre-default Interest Rate for
Eurodollar Rate Loans as described in this Section 3.1(f) shall become
effective if, at the time an adjustment would otherwise be made under
this Section 3.1(f), a Default or Event of Default exists or has
occurred and is continuing."
6. Waivers. Agent and Lenders hereby waive any failure of Borrower to
-------
comply with the financial covenants set forth in the Loan Agreement described in
Section 9.14 regarding Changes in Tangible Net Worth, Section 9.16 regarding
EBITDA and Section 9.17 regarding After-Tax Fixed Charge Coverage Ratio with
respect to the Measurement Periods consisting of the eight (8) month period
through August 31, 1997, the nine (9) month period through September 30, 1997,
and the ten (10) month period through October 31, 1997.
4
<PAGE>
7. Amendments to Certain Financial Covenants.
-----------------------------------------
(a) Effective as of November 1, 1997, Section 9.14 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:
"9.14 Tangible Net Worth. Borrower shall, at all times,
------------------
maintain Tangible Net Worth of not less than $70,000,000."
(b) Effective as of November 1, 1997, Section 9.16 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:
"9.16 EBITDA. [Intentionally Omitted.]"
------
(c) Effective as of November 1, 1997, Section 9.17 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:
"9.17 After-Tax Fixed Charge Coverage Ratio. [Intentionally Omitted.]"
-------------------------------------
8. Financial Reporting.
-------------------
(a) Financial Covenants Schedule. Effective as of November 1, 1997,
----------------------------
the Financial Covenants Schedule to the Loan Agreement is hereby amended by
deleting the first three columns set forth thereon entitled: "Minimum FIFO
Basis EBITDA", "Minimum After-Tax Fixed Charge Coverage to 1.00" and "Minimum
Increase (Maximum Decrease) in Tangible Net Worth."
(b) Covenants Compliance Certificate. Effective as of November 1,
--------------------------------
1997, the reference to "Sections 9.13 through 9.17" contained in Section 9.6(e)
of the Loan Agreement is hereby deleted in its entirety and replaced with the
following: "Sections 9.13 through 9.15".
9. Amendment Fee. In addition to all other fees, charges, interest and
-------------
expenses payable by Borrower to Agent under the Financing Agreements, Borrower
shall pay to Agent, for the ratable benefit of Lenders, based on their Pro Rata
--- ----
Shares, a fee for entering into this Amendment in the amount of $50,000, which
amount is fully earned and payable as of the date hereof and may, at Agent's
option, be charged directly to Borrower's Revolving Loan account maintained by
Agent.
10. Condition Precedent. The effectiveness of the amendments contained
-------------------
herein shall be subject to the satisfaction of the following condition: the
receipt by Agent of an original of this Amendment, duly authorized, executed and
delivered by Borrower and each of the Lenders.
11. Effect of this Amendment.
------------------------
(a) Entire Agreement; Ratification and Confirmation of the Financing
----------------------------------------------------------------
Agreements. This Amendment contains the entire agreement of the parties with
- ----------
respect to the subject matter hereof and supersedes all prior or contemporaneous
term sheets, proposals,
5
<PAGE>
discussions, negotiations, correspondence, commitments and communications
between or among the parties concerning the subject matter hereof. This
Amendment may not be modified or any provision waived, except in writing signed
by the party against whom such modification or waiver is sought to be enforced.
No Events of Default have been or are being waived hereby and, except as
specifically amended or waived pursuant hereto, the Financing Agreements are
hereby ratified, restated and confirmed by the parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment shall
control.
(b) Governing Law. This Amendment and the rights and obligations
-------------
hereunder of each of the parties hereto shall be governed by and interpreted and
determined in accordance with the laws of the State of Georgia.
(c) Binding Effect. This Amendment shall be binding upon and inure to
--------------
the benefit of each of the parties hereto and their respective successors and
assigns.
(d) Counterparts. This Amendment may be executed in any number of
------------
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
By the signatures hereto of their duly authorized officers, each of the
parties hereto covenants and agrees as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(SOUTHERN), as Agent and Lender
By: /s/ David Stair
-------------------
Title: Vice President
----------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Lender
By: /s/ Robert L. Heinz
---------------------
Title: Senior Vice President
-----------------------
6
<PAGE>
AGREED AND ACCEPTED:
THE BIBB COMPANY
By: /s/ Charles R. Tutterow
-------------------------
Title: Vice President - Finance
--------------------------
7
<PAGE>
EXHIBIT 3(i)(a)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE BIBB COMPANY
The Bibb Company (hereinafter called the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
1. The name of the Corporation is THE BIBB COMPANY.
2. The Certificate of Incorporation of the Corporation is hereby amended
by striking out Article 4 thereof in its entirety and by substituting in lieu of
said Article the following new Article 4:
"4. Authorized Capital. The aggregate number of shares of stock which
------------------
the Corporation shall have authority to issue is 30,000,000 shares, divided
into two (2) classes consisting of 5,000,000 shares of Preferred Stock, par
value $.01 per share ("Preferred Stock"), and 25,000,000 shares of Common
Stock, par value $.01 per share ("Common Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative
rights granted to or imposed upon the shares of each such class.
A. PREFERRED STOCK
---------------
1. Issue in Series. Preferred Stock may be issued from time to
---------------
time in one or more series, each such series to have the terms stated
herein and in the resolution of the Board of Directors of the Corporation
providing for its issue. All shares of any one series of Preferred Stock
will be identical, but shares of different series of Preferred Stock need
not be identical or rank equally except insofar as provided by law or
herein.
2. Creation of Series. The Board of Directors will have
------------------
authority by resolution to cause to be created one or more series of
Preferred Stock, and to determine and fix with respect to each series prior
to
<PAGE>
the issuance of any shares of the series to which such resolution relates:
(a) the distinctive designation of the series and the number of
shares which will constitute the series, and whether or not such number may
be increased or decreased (but not below the number of shares then
outstanding) from time to time by action of the Board of Directors;
(b) the dividend rate and the times of payment of dividends, if
any, on the shares of the series, whether dividends will be cumulative, and
if so, from what date or dates;
(c) whether or not the shares of the series are redeemable and,
if so, the price or prices at which, and the terms and conditions on which,
the shares of the series may be redeemed at the option of the Corporation;
(d) whether or not the shares of the series will be entitled to
the benefit of a retirement or sinking fund to be applied to the purchase
or redemption of such shares and, if so entitled, the amount of such fund
and the terms and provisions relative to the operation thereof;
(e) whether or not the shares of the series will be convertible
into, or exchangeable for, any other shares of stock of the Corporation or
other securities, and if so convertible or exchangeable, the conversion
price or prices, or the rates of exchange, and any adjustments thereof, at
which such conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(f) the rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(g) whether or not the shares of the series will have priority
over or be on a parity with or be junior to the shares of any other series
or class in any respect or will be entitled to the benefit of limitations
restricting the issuance of shares of any other series or class having
priority over or being on a parity with the shares of such series in any
respect, or restricting the
2
<PAGE>
payment of dividends on or the making of other distributions in respect of
shares of any other series or class ranking junior to the shares of the
series as to dividends or assets, or restricting the purchase or redemption
of the shares of any such junior series or class, and the terms of any such
restriction;
(h) whether or not the series will have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights; and
(i) any other preferences, qualifications, privileges, options
and other relative or special rights and limitations of that series.
B. COMMON STOCK
------------
1. Dividends. Holders of Common Stock will be entitled to
---------
receive such dividends as may be declared by the Board of Directors.
2. Voting Rights. The holders of Common Stock shall have the
-------------
general right to vote for all purposes, including the election of
Directors, as provided by law. Subject to the terms of the Preferred Stock
Designation, each holder of Common Stock shall be entitled to one vote for
each share thereof held.
The Corporation will not issue any non-voting equity securities;
provided, however, that this provision, included in this Amended and
-------- -------
Restated Certificate of Incorporation in compliance with section 1123(a)(6)
of title 11 of the United States Code, as amended (the "Bankruptcy Code"),
will have no force and effect beyond that required by section 1123(a)(6) of
the Bankruptcy Code and will be effective only for so long as section
1123(a)(6) of the Bankruptcy Code is in effect and applicable to the
Corporation."
3. The Certificate of Incorporation of the Corporation is hereby amended
by adding the following paragraph as a new Article 10 and renumbering the
existing Article 10 as Article 11:
"10. Indemnification. Each person who is or was or has agreed to
---------------
become a Director or officer of the Corporation, and each such person who
is or was serving or who had agreed to serve at the request of the Board or
an officer of the Corporation as an employee or agent of the Corporation or
as a director, officer,
3
<PAGE>
employee, or agent of another corporation, partnership, joint venture,
trust, or other entity, whether for profit or not for profit (including the
heirs, executors, administrators, or estate of such person), will be
indemnified by the Corporation to the fullest extent permitted by the
Delaware General Corporation Law or any other applicable law as currently
or hereafter in effect and will be entitled to advancement of expenses in
connection therewith. The right of indemnification and of advancement of
expenses provided in this Article 10 (i) will not be exclusive of any other
rights to which any person seeking indemnification or advancement of
expenses may otherwise be entitled, including without limitation pursuant
to any contract approved by a majority of the Whole Board (whether or not
the Directors approving such contract are or are to be parties to such
contract or similar contracts), and (ii) will be applicable to matters
otherwise within its scope whether or not such matters arose or arise
before or after the adoption of this Article 10. Without limiting the
generality or the effect of the foregoing, the Corporation may adopt By-
laws, or enter into one or more agreements with any person, which provides
for indemnification and/or advancement of expenses greater or different
than that provided in this Article 10 or the Delaware General Corporation
Law. Any amendment or repeal of, or adoption of any provision inconsistent
with, this Article 10 will not adversely affect any right or protection
existing hereunder, or arising out of facts occurring, prior to such
amendment, repeal, or adoption and no such amendment, repeal, or adoption,
will affect the legality, validity, or enforceability of any contract
entered into or right granted prior to the effective date of such
amendment, repeal, or adoption."
4. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by its duly authorized officer as of the 10th day of
October, 1997.
/s/ Charles R. Tutterow
------------------------------------
Name: Charles R. Tutterow
Title: Vice President
5
<PAGE>
EXHIBIT 3(i)(b)
RESTATED CERTIFICATE OF INCORPORATION
OF
THE BIBB COMPANY
THE BIBB COMPANY (the "Corporation"), a corporation incorporated under and
by virtue of the General Corporation Law of the State of Delaware, which was
originally incorporated under the name The New Bibb Company and its Certificate
of Incorporation was originally filed with the Secretary of State of Delaware on
June 7, 1996, does hereby certify as follows:
1. Name. The name of the Corporation is The Bibb Company.
----
2. Registered Office and Agent. The address of the Corporation's
---------------------------
registered office in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to
-------
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware and to possess and
exercise all of the powers and privileges granted by such law and any other law
of the State of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the
------------------
Corporation shall have authority to issue is 30,000,000 shares, divided into two
(2) classes consisting of 5,000,000 shares of Preferred Stock, par value $.01
per share ("Preferred Stock"), and 25,000,000 shares of Common Stock, par value
$.01 per share ("Common Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class.
A. PREFERRED STOCK
---------------
1. Issue in Series. Preferred Stock may be issued from time to
---------------
time in one or more series, each such series to have the terms stated
herein and in the resolution of the Board of Directors of the
Corporation providing for its issue. All shares of any one series of
Preferred Stock will be identical, but shares of different series of
<PAGE>
Preferred Stock need not be identical or rank equally except insofar
as provided by law or herein.
2. Creation of Series. The Board of Directors will have
------------------
authority by resolution to cause to be created one or more series of
Preferred Stock, and to determine and fix with respect to each series
prior to the issuance of any shares of the series to which such
resolution relates:
(a) the distinctive designation of the series and the
number of shares which will constitute the series, and whether or
not such number may be increased or decreased (but not below the
number of shares then outstanding) from time to time by action of
the Board of Directors;
(b) the dividend rate and the times of payment of
dividends, if any, on the shares of the series, whether dividends
will be cumulative, and if so, from what date or dates;
(c) whether or not the shares of the series are redeemable
and, if so, the price or prices at which, and the terms and
conditions on which, the shares of the series may be redeemed at
the option of the Corporation;
(d) whether or not the shares of the series will be
entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and provisions
relative to the operation thereof;
(e) whether or not the shares of the series will be
convertible into, or exchangeable for, any other shares of stock
of the Corporation or other securities, and if so convertible or
exchangeable, the conversion price or prices, or the rates of
exchange, and any adjustments thereof, at which such conversion
or exchange may be made, and any other terms and conditions of
such conversion or exchange;
(f) the rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation;
2
<PAGE>
(g) whether or not the shares of the series will have
priority over or be on a parity with or be junior to the shares
of any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of shares
of any other series or class having priority over or being on a
parity with the shares of such series in any respect, or
restricting the payment of dividends on or the making of other
distributions in respect of shares of any other series or class
ranking junior to the shares of the series as to dividends or
assets, or restricting the purchase or redemption of the shares
of any such junior series or class, and the terms of any such
restriction;
(h) whether or not the series will have voting rights, in
addition to any voting rights provided by law, and, if so, the
terms of such voting rights; and
(i) any other preferences, qualifications, privileges,
options and other relative or special rights and limitations of
that series.
B. COMMON STOCK
------------
1. Dividends. Holders of Common Stock will be entitled to
---------
receive such dividends as may be declared by the Board of Directors.
2. Voting Rights. The holders of Common Stock shall have the
-------------
general right to vote for all purposes, including the election of
Directors, as provided by law. Subject to the terms of the Preferred
Stock Designation, each holder of Common Stock shall be entitled to
one vote for each share thereof held.
The Corporation will not issue any non-voting equity securities;
provided, however, that this provision, included in this Amended and Restated
- -------- -------
Certificate of Incorporation in compliance with section 1123(a)(6) of title 11
of the United States Code, as amended (the "Bankruptcy Code"), will have no
force and effect beyond that required by section 1123(a)(6) of the Bankruptcy
Code and will be effective only for so long as section 1123(a)(6) of the
Bankruptcy Code is in effect and applicable to the Corporation.
5. Bylaws. The Board may make, amend, and repeal the Bylaws of the
------
Corporation. Any Bylaw made by the Board under the powers conferred hereby may
3
<PAGE>
be amended or repealed by the Board (except as specified in any such Bylaw so
made or amended) or by the stockholders in the manner provided in the Bylaws of
the Corporation.
6. Directors.
---------
(a) Number, Election, and Terms of Directors. Subject to the rights,
----------------------------------------
if any, of the holders of any series of Preferred Stock to elect additional
Directors, the number of the Directors of the Corporation will not be less than
three nor more than nine and will be fixed from time to time in the manner
described in the Bylaws of the Corporation.
(b) Newly Created Directorships and Vacancies. Subject to the
-----------------------------------------
rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors, newly created Directorships resulting from any increase in
the number of Directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal, or other cause will be filled solely by
the affirmative vote of a majority of the remaining Directors then in office,
even though less than a quorum of the Board, by a sole remaining Director, or,
if there is no remaining Director, by the stockholders. Any Director elected in
accordance with the preceding sentence will hold office for the remainder of the
full term of the class of Directors in which the new Directorship was created or
the vacancy occurred and until such Director's successor has been elected and
qualified. No decrease in the number of Directors constituting the Board may
shorten the term of any incumbent Director.
7. Right to Amend. The Corporation reserves the right to amend any
--------------
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
8. Limitation on Liability. The Directors of the Corporation shall be
-----------------------
entitled to the benefits of all limitations on the liability of Directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware.
Without limiting the generality of the foregoing, no Director of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director, except for liability (i) for
any breach of the Director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
4
<PAGE>
the Delaware General Corporation Law, or (iv) for any transaction from which the
Director derived an improper personal benefit. Any repeal or modification of
this Article 8 shall be prospective only, and shall not affect, to the detriment
of any director, any limitation on the personal liability of a Director of the
Corporation existing at the time of such repeal or modification.
9. Indemnification. Each person who is or was or has agreed to become
---------------
a Director or officer of the Corporation, and each such person who is or was
serving or who had agreed to serve at the request of the Board or an officer of
the Corporation as an employee or agent of the Corporation or as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other entity, whether for profit or not for profit (including the
heirs, executors, administrators, or estate of such person), will be indemnified
by the Corporation to the fullest extent permitted by the Delaware General
Corporation Law or any other applicable law as currently or hereafter in effect
and will be entitled to advancement of expenses in connection therewith. The
right of indemnification and of advancement of expenses provided in this Article
9 (i) will not be exclusive of any other rights to which any person seeking
indemnification or advancement of expenses may otherwise be entitled, including
without limitation pursuant to any contract approved by a majority of the Whole
Board (whether or not the Directors approving such contract are or are to be
parties to such contract or similar contracts), and (ii) will be applicable to
matters otherwise within its scope whether or not such matters arose or arise
before or after the adoption of this Article 9. Without limiting the generality
or the effect of the foregoing, the Corporation may adopt By-laws, or enter into
one or more agreements with any person, which provides for indemnification
and/or advancement of expenses greater or different than that provided in this
Article 9 or the Delaware General Corporation Law. Any amendment or repeal of,
or adoption of any provision inconsistent with, this Article 9 will not
adversely affect any right or protection existing hereunder, or arising out of
facts occurring, prior to such amendment, repeal, or adoption and no such
amendment, repeal, or adoption, will affect the legality, validity, or
enforceability of any contract entered into or right granted prior to the
effective date of such amendment, repeal, or adoption.
10. Meetings. Subject to the rights of the holders of any series of
--------
Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing of such stockholders.
5
<PAGE>
This Restated Certificate of Incorporation has been duly adopted in
accordance with (S) 245 of the General Corporation Law of the State
of Delaware and restates and integrates and does not further amend the
provisions of the Certificate of Incorporation, has heretofore amended, of the
Corporation.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned does hereby execute this Restated
Certificate of Incorporation this 13th day of October, 1997.
/s/ Charles R. Tutterow
-----------------------------
Name: Charles R. Tutterow
Title: Vice President
7
<PAGE>
EXHIBIT 4(i)
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
of
THE BIBB COMPANY
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
The Bibb Company, a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
DOES HEREBY CERTIFY:
That, pursuant to authority vested in the Board of Directors of the
Corporation by its Certificate of Incorporation, and pursuant to the provisions
of Section 151 of the General Corporation Law, the Board of Directors of the
Corporation has adopted the following resolution providing for the issuance of a
series of Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") by the Certificate of Incorporation of the
Corporation, a series of Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Corporation be, and it hereby is, created, and that
the designation and amount thereof and the powers, designations, preferences and
relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
I. Designation and Amount
----------------------
The shares of such series will be designated as Series A Junior
Participating Preferred Stock (the "Series A Preferred") and the number of
shares constituting the Series A Preferred is 250,000. Such number of shares
may be increased or decreased by resolution of the Board; provided, however,
-------- -------
that no decrease will reduce the number of shares of Series A Preferred to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred.
II. Dividends and Distributions
---------------------------
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior to the Series A Preferred with respect to
dividends, the holders of shares of Series A Preferred, in preference to the
holders of Common Stock, par value $.01 per share (the "Common Stock"), of the
Corporation, and of any other junior stock, will be entitled to receive, when,
as
<PAGE>
and if declared by the Board out of funds legally available for the purpose,
dividends payable in cash (except as otherwise provided below) on such dates as
are from time to time established for the payment of dividends on the Common
Stock (each such date being referred to herein as a "Dividend Payment Date"),
commencing on the first Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred (the "First Dividend Payment
Date"), in an amount per share (rounded to the nearest cent) equal to the
greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter
set forth, one hundred times the aggregate per share amount of all cash
dividends, and one hundred times the aggregate per share amount (payable in
kind) of all non-cash dividends, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the First
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred. In the event that the Corporation at any time (i)
declares a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii)
combines the outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues any shares of its capital stock in a reclassification of the
outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then, in each such case and regardless of
whether any shares of Series A Preferred are then issued or outstanding, the
amount to which holders of shares of Series A Preferred would otherwise be
entitled immediately prior to such event under clause (ii) of the preceding
sentence will be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation will declare a dividend on the Series A Preferred as
provided in the immediately preceding paragraph immediately after it declares a
dividend on the Common Stock (other than a dividend payable in shares of Common
Stock). Each such dividend on the Series A Preferred will be payable
immediately prior to the time at which the related dividend on the Common Stock
is payable.
(c) Dividends will accrue on outstanding shares of Series A Preferred from
the Dividend Payment Date next preceding the date of issue of such shares,
unless (i) the date of issue of such shares is prior to the record date for the
First Dividend Payment Date, in which case dividends on such shares will accrue
from the date of the first issuance of a share of Series A Preferred or (ii) the
date of issue is a Dividend Payment Date or is a date after the record date for
the determination of holders of shares of Series A Preferred entitled to receive
a dividend and before such Dividend Payment Date, in either of which events such
dividends will accrue from such Dividend Payment Date. Accrued but unpaid
dividends will cumulate from the applicable Dividend Payment Date but will not
bear interest. Dividends paid on the shares of Series A Preferred in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares will be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board may fix a record date for the
determination of holders of shares of Series A Preferred entitled to receive
payment of a dividend or distribution declared thereon, which record date will
be not more than 60 calendar days prior to the date fixed for the payment
thereof.
2
<PAGE>
III. Voting Rights
-------------
The holders of shares of Series A Preferred will have the following voting
rights:
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred will entitle the holder thereof to one
hundred votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation at any time (i) declares a
dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii)
combines the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any
such reclassification in connection with a consolidation or merger in which
the Corporation is the continuing or surviving corporation), then, in each
such case and regardless of whether any shares of Series A Preferred are
then issued or outstanding, the number of votes per share to which holders
of shares of Series A Preferred would otherwise be entitled immediately
prior to such event will be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) Except as otherwise provided herein, in any other Preferred Stock
Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred and the holders of
shares of Common Stock and any other capital stock of the Corporation
having general voting rights will vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(c) Except as set forth in the Certificate of Incorporation or herein,
or as otherwise provided by law, holders of shares of Series A Preferred
will have no voting rights.
IV. Certain Restrictions
--------------------
(a) Whenever dividends or other dividends or distributions payable on the
Series A Preferred are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred outstanding have been paid in full, the Corporation will not:
(i) Declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the shares of Series A Preferred;
(ii) Declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution, or winding up) with the shares of Series A
Preferred, except dividends paid ratably on the shares of Series A
Preferred and all such parity stock on which dividends are payable or in
3
<PAGE>
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) Redeem, purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the shares of Series A Preferred; provided,
--------
however, that the Corporation may at any time redeem, purchase or otherwise
-------
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the shares of Series A
Preferred; or
(iv) Redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred, or any shares of stock ranking on a parity
with the shares of Series A Preferred, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board, after consideration of
the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, may determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation will not permit any majority-owned subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Article IV, purchase or otherwise acquire such shares at such time and in
such manner.
V. Reacquired Shares
-----------------
Any shares of Series A Preferred purchased or otherwise acquired by the
Corporation in any manner whatsoever will be retired and canceled promptly after
the acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation of the
Corporation, or in any other Preferred Stock Designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
--------------------------------------
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution will be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution, or winding up) to the
shares of Series A Preferred unless, prior thereto, the holders of shares of
Series A Preferred have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided, however, that the holders of shares of Series A
-------- -------
Preferred will be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to one hundred times
the aggregate amount to be distributed per share to holders of shares of Common
Stock or (b) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution, or winding up) with the shares of
Series A Preferred, except distributions made ratably on the shares of Series A
Preferred and all such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such
4
<PAGE>
liquidation, dissolution, or winding up. In the event the Corporation at any
time (i) declares a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivides the outstanding shares of Common
Stock, (iii) combines the outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, in each such case
and regardless of whether any shares of Series A Preferred are then issued or
outstanding, the aggregate amount to which each holder of shares of Series A
Preferred would otherwise be entitled immediately prior to such event under the
proviso in clause (a) of the preceding sentence will be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
VII. Consolidation, Merger, Etc.
---------------------------
In the event that the Corporation enters into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then, in each such case, each share of Series A Preferred will at the
same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
hundred times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation at
any time (a) declares a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (b) subdivides the outstanding shares of
Common Stock, (c) combines the outstanding shares of Common Stock in a smaller
number of shares, or (d) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, in each such case
and regardless of whether any shares of Series A Preferred are then issued or
outstanding, the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred will be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
VIII. Redemption
----------
The shares of Series A Preferred are not redeemable.
IX. Rank
----
The Series A Preferred rank, with respect to the payment of dividends and the
distribution of assets, junior to all other series of the Corporation's
Preferred Stock.
5
<PAGE>
X. Amendment
---------
Notwithstanding anything contained in the Certificate of Incorporation
of the Corporation to the contrary and in addition to any other vote required by
applicable law, the Certificate of Incorporation of the Corporation may not be
amended in any manner that would materially alter or change the powers,
preferences or special rights of the Series A Preferred so as to affect them
adversely without the affirmative vote of the holders of at least 80% of the
outstanding shares of Series A Preferred, voting together as a single series.
6
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation is executed and
attested on behalf of the Corporation this 13th day of October, 1997.
/s/ Charles R. Tutterow
-----------------------------------------
Name: Charles R. Tutterow
Title: Vice President
/s/ Neal J. McGrail
- -------------------------------
Neal J. McGrail
Assistant Secretary
7
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<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> JAN-3-1998 DEC-28-1996
<PERIOD-START> DEC-29-1996 DEC-31-1995
<PERIOD-END> OCT-4-1997 SEP-28-1996
<CASH> 128,000 0
<SECURITIES> 0 0
<RECEIVABLES> 45,764,000 0
<ALLOWANCES> 1,621,000 0
<INVENTORY> 70,537,000 0
<CURRENT-ASSETS> 118,551,000 0
<PP&E> 65,553,000 0
<DEPRECIATION> 5,158,000 0
<TOTAL-ASSETS> 187,993,000 0
<CURRENT-LIABILITIES> 42,106,000 0
<BONDS> 0 0
0 0
0 0
<COMMON> 101,000 0
<OTHER-SE> 81,929,000 0
<TOTAL-LIABILITY-AND-EQUITY> 187,993,000 0
<SALES> 213,347,000 262,397,000
<TOTAL-REVENUES> 213,347,000 262,397,000
<CGS> 192,701,000 239,724,000
<TOTAL-COSTS> 192,701,000 239,724,000
<OTHER-EXPENSES> 20,041,000 22,668,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (4,884,000) (17,929,000)
<INCOME-PRETAX> (4,353,000) (19,937,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (4,353,000) (19,937,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 111,650,000
<CHANGES> 0 0
<NET-INCOME> (4,353,000) 98,211,000
<EPS-PRIMARY> (0.43) 0
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