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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________to _______________
COMMISSION FILE NUMBER 0-21661
THE BIBB COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-2253133
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
100 GALLERIA PARKWAY, 17TH FLOOR 30339
ATLANTA, GEORGIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
Registrant's telephone number, including area code: (770) 644-7000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share, together with Preferred Share Purchase
Rights
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT BASED ON THE CLOSING PRICE ON MARCH 27, 1998: $94,112,000
As of March 27, 1998, 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.
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [_]
Documents Incorporated by Reference: None
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PART I
ITEM 1. BUSINESS
The Bibb Company, a Delaware corporation (the "Company"), is a leading
domestic manufacturer and marketer of textile products, principally sheets,
pillowcases and other bedding accessories for use in the home, hotels,
hospitals, and others serving the hospitality market. The Company also
manufactures specially treated and engineered textile products used primarily
in producing high-pressure automobile hoses and conveyor belts. For a
description of the Company's corporate history and matters concerning the
bankruptcy reorganization (the "Reorganization") of the Company on September
27, 1996 under Chapter 11 of Title 11 of the United States Code,
11 U.S.C.(S)(S) 101 et seq. (the "Bankruptcy Code"), see "Corporate History."
The Company is the successor to The Bibb Company, a Delaware corporation
("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 December 1997, the Company sold it napery business, which consisted of
the manufacture and marketing of damask table linen products serving the
hospitality market (the "Napery Business"), and related inventory, to Mount
Vernon Mills, Inc. In connection therewith, the Company has closed its Roanoke
Rapids, North Carolina manufacturing plant and is actively seeking a buyer for
the property. The Company classified the assets of the Napery Business as of
January 3, 1998, as current net assets of discontinued operations, and the
results of operations of the Napery Business are excluded from the Company's
continuing operations.
In December 1997, the Company announced that it intends to exit its apparel
business, which consists of the manufacture and marketing of apparel fabrics,
principally chambray, which is sold primarily to garment manufacturers (the
"Apparel Business") during the first quarter of 1998. As a result,
manufacturing operations at the Company's Columbus, Georgia facility have been
discontinued and the Company is presently liquidating the remaining inventory.
The assets of the Apparel Business will be liquidated subsequent to cessation
of operations in the first quarter of 1998. The Company classified the assets,
except for real estate, of the Apparel Business as current net assets of
discontinued operations, and the results of operations for the Apparel
Business are excluded from the Company's continuing operations.
The table below sets forth net sales and income (loss), and their respective
percentage of the Company's totals for discontinued Apparel Business and
Napery Business.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE THREE
ENDED JANUARY 3, MONTHS ENDED
1998 DECEMBER 28, 1996
----------------- -----------------
NAPERY APPAREL NAPERY APPAREL
BUSINESS BUSINESS BUSINESS BUSINESS
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales................................ 7,545 23,731 2,766 7,471
% of total............................... 3% 8% 4% 10%
Income (loss) ........................... (2,494) (4,422) 17 (396)
% of total............................... 17% 31% -1% 16%
</TABLE>
In February 1997, the Company sold its terry business, which consisted of
the manufacture and marketing of bath towels and other terry products (the
"Terry Business"), to WestPoint Stevens Inc. In connection therewith,
effective September 28, 1996, the Company classified the net assets of the
Terry Business as assets held for sale, and the results of operations of the
Terry Business are, therefore, excluded from the Company's continuing
operations subsequent to third quarter of 1996.
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CORPORATE HISTORY
The Company was organized as a Delaware corporation in June 1996. The
Company is the successor to Old Bibb as a result of the Merger. Upon
consummation of the Reorganization and Merger, the Company was renamed The
Bibb Company. Unless the context otherwise requires, the "Company" means The
New Bibb Company, Old Bibb (formerly known as The NTC Group, Inc.), and its
predecessor, The Bibb Company, a Georgia corporation. The Company has been
engaged in the manufacturing and marketing of textile products since 1876.
DESCRIPTION OF THE BUSINESS
General
The Company is a vertically integrated textile manufacturer that buys basic
raw materials, such as cotton, synthetic fibers, yarns, chemicals, and dyes,
and converts them primarily into finished textile goods ready for marketing.
The Company's principal products include: sheets and pillowcases; quilted and
non-quilted bedspreads, comforters, slumberbags, draperies and other bedding
accessories; and specially-treated engineered yarns and fabrics for industrial
uses, primarily high-pressure automobile hoses and conveyor belts. Customers
consist primarily of national retail chains, such as J.C. Penney Company, Inc.
("J.C. Penney") and Sears Roebuck and Co. ("Sears"), mass merchants, such as
Wal-Mart, Kmart and Target, and department specialty stores which resell to
consumers at the retail level. In addition, the Company sells to hotels,
hospitals, linen service companies and others serving the hospitality market.
Other customers consist of companies which use the specialty yarns and fabrics
in the production of their own products, such as Goodyear Tire and Rubber
Company ("Goodyear"). The Company operates five manufacturing plants,
excluding the Columbus, Georgia plant, located in Georgia, South Carolina, and
Virginia.
PRODUCTS
The Company's two operating segments are the Home Furnishings Division
("Home Furnishings"), and the Engineered Products Division ("Engineered
Products"). The following table sets forth for the periods indicated financial
information relating to these operating segments.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Net Sales:
Home Furnishings.................................... $190,601 $51,984
Engineered Products................................. 51,935 11,953
Other............................................... 6,300 0
Operating profit or (loss):
Home Furnishings.................................... 2,808 (388)
Engineered Products................................. 3,139 898
Other............................................... (682) 0
Identifiable assets:
Home Furnishings.................................... 103,685 92,676
Engineered Products................................. 16,080 10,596
</TABLE>
Home Furnishings. The Home Furnishings division manufactures sheets,
pillowcases, bedspreads, comforters, draperies, slumberbags and other Home
Furnishings accessories. These products are sold to department stores,
national retail chains, mass merchants and distributors and wholesalers, under
both private and Company labels. The Royalton(TM) product line of high-quality
fully coordinated bed and bath merchandise is being sold to upscale department
and specialty stores as part of the Company's continuing effort to expand its
share of the home fashions market. Certain of the Company's adult bedding
products are sold pursuant to licensing agreements under designer names such
as Jessica McClintock(TM) and Joseph Abboud(TM). In addition, the Company dyes
and prints adult bedding products for non-vertically integrated textile
manufacturers.
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The Company is one of the market leaders in juvenile bedding products. Many
of the Company's juvenile bedding products are sold bearing themes and
characters under licensing agreements and, to a lesser extent, themes and
characters developed internally by the Company. Current popular licensed
themes and characters include Barbie(TM), Batman(TM), Looney Tunes(TM) and
logos of Major League Baseball teams (Major League Baseball(TM)), National
Football League teams (NFL(TM)), NASCAR(TM), Major League Soccer(TM),
Godzilla(TM), Small Soldiers(TM), and Warner Brothers(TM). Third party
licensing agreements are generally for terms of two to three years and may
include renewal options.
The Home Furnishings division also produces sheets, pillowcases and other
bedding accessories for sale to hotels, hospitals, linen service companies and
others serving the hospitality market. The Company concentrates on supplying
hotels and other institutions that require higher quality bedding products,
such as percales and other higher thread-count fabrics, for greater comfort,
longevity and style. The Company believes it is the largest supplier of sheets
to the service intensive hospitality market.
Engineered Products. Engineered Products manufactures and markets specialty
yarns and fabrics used primarily in producing high-pressure hoses and conveyor
belts. The Company's manufacturing process enhances the rubber adhesion
properties of purchased yarn and woven fabric to meet high-performance
customer specifications. The Company generally sells its engineered products
to customers which use the specialty yarns and fabrics in the production of
their own products or further process or include these products in the goods
they sell. The Company believes it is the largest domestic manufacturer of
reinforcing hose yarn and a leading manufacturer of treated belting fabrics.
MARKETING AND CUSTOMERS
The Company principally markets its products throughout North America,
primarily through its own in-house sales force from principal sales offices in
New York City, Chicago, Dallas, Southern California, and Atlanta. The Company
had a salaried sales force (including support personnel) of approximately 80
people as of February 28, 1998. Compensation of the salaried sales force
includes salary and performance-based bonuses.
The Company's customers consist primarily of department stores, national
retail chains and mass merchants as well as hotels, hospitals, linen service
companies and others serving the hospitality market. In fiscal year 1997, net
sales to the Company's ten largest customers were approximately $97 million,
or 39.0% of its net sales (excluding sales from the Terry Business, Apparel
Business and Napery Business), compared to approximately $126 million, or
38.6% of its net sales, for 1996 (excluding sales from the Terry Business,
Apparel Business and Napery Business for the fourth quarter). There was no one
customer that accounted for more than 7% of total continuing net sales for
fiscal year 1997.
The Company supplies a number of diverse product programs to each of its
major customers. The purchasing decisions within a product program are
generally not interdependent and, as is common in the industry, the Company
has no long-term supply agreement with any of its major customers. Product
programs are developed specifically for the customer and are typically carried
for a period of one to three years.
COMPETITION
The textile market is highly competitive, with the degree of competition
varying among the Company's product lines.
The Company competes with many companies for sales of home furnishings. Its
primary competition comes from three of the largest home furnishings textile
companies: WestPoint Stevens, Inc. ("WestPoint"), Springs Industries, Inc.
("Springs"), and Pillowtex, Inc. These competitors are larger than the Company
and market a broader array of textile products than the Company. In marketing
such products for consumer use, the Company competes primarily on the basis of
styling, service and by providing customers with specialized offerings such as
licensed products and various "concept" selling programs. In sales to the
hospitality market, the Company competes by offering timeliness of delivery
and a broad array of styles and fabrics at competitive prices.
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The Company competes with a variety of firms in the manufacture and sale of
engineered yarns and fabrics. Many competitors are divisions of non-textile
manufacturers, such as chemical companies, or end-users, such as tire
companies. Competition for the Engineered Products Division is based on being
able to meet required technical specifications, quality, price and service.
Management of the Company does not believe that competition from foreign
manufacturers has been a significant factor within the Company's principal
lines of business. Foreign textile manufacturers have generally concentrated
their U.S. marketing efforts on finished apparel products rather than on the
types of products manufactured and sold by the Company. However, the Company
does face competition from foreign manufacturers in the sale of lower thread-
count sheets targeted for the hospitality market, especially lower quality
textile products supplied to certain health care institutions and commercial
linen suppliers. In response, the Company has concentrated its sales efforts
on hotels, hospitals and other institutions which require high level
customized quality production, timeliness of delivery and a broad array of
styles and fabrics.
RAW MATERIALS
The Company's operations require substantial quantities of yarns made from
cotton and man-made fibers, both of which have been and are expected to
continue to be available in sufficient supply from a wide variety of sources.
The Company is not dependent on any one supplier as a source of raw materials
or yarns. The Company's general procedure is to match cotton purchases with
anticipated production requirements. However, when management concludes that a
certain grade of cotton may be in short supply or that prices may be
substantially higher in the near term, the Company typically buys additional
cotton for future delivery. It is the Company's policy not to trade in the
futures markets for cotton or any other commodities as a hedge against
potential future cost increases due to the level of risk inherent in such
practices. Although the Company has always been able to acquire sufficient
supplies of cotton for its operations in the past, any shortage in the cotton
supply by reason of weather, disease or other factors could adversely affect
the Company's operations.
The Company manufactures approximately 40% of its yarn needs and sources the
balance from multiple vendors under short term, and to a limited extent,
multi-year agreements.
The price of man-made fibers such as polyester is influenced by demand,
manufacturing capacity and costs, petroleum prices, cotton prices and the
price of polymers used in producing man-made fibers. Any significant prolonged
petrochemical shortages could significantly affect the availability of man-
made fibers and cause a substantial increase in demand for cotton, resulting
in decreased availability and, possibly, increased price. The Company also
utilizes substantial quantities of dyes and chemicals. Dyes and chemicals also
have been and are expected to continue to be available in sufficient supply
from a wide variety of sources.
SEASONALITY
Demand for certain of the Company's products is affected by, among other
things, the relative strength or weakness of the retail sales industry. The
Company's second and third fiscal quarters (April through September) are
generally its strongest sales periods due to increased consumer spending
during these periods, although this seasonal effect is partially offset by the
absence of seasonality in the Company's sales of sheets to the hospitality
market. The seasonal nature of the Company's business requires the Company to
increase its inventory of certain items to meet the seasonal demand.
BACKLOG
The Company's backlog of unfilled customer orders was approximately $25
million at February 28, 1998, (excluding orders relating to the Apparel
Business) as compared with approximately $27 million at March 1, 1997
(excluding orders relating to the Terry Business). The typical lead time
required to fill the backlog of customer orders ranges from one week for most
Home Furnishings goods to three months for certain Engineered Products goods.
4
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EMPLOYEES
The Company employed approximately 2,700 people on February 28, 1998. Of
these employees, approximately 2,400 were employed in manufacturing, 80 in
sales and 170 in administration. These totals include approximately 220 people
who were employed at the Company's Columbus, Georgia manufacturing facility.
None of the Company's employees are represented by a labor union. The Company
believes that its employee relations are satisfactory.
MANUFACTURING FACILITIES
The Company's manufacturing process for Home Furnishings goods primarily
involves the following operations: (i) spinning raw cotton and polyester into
yarn; (ii) weaving yarn into fabric; (iii) finishing the fabric; (iv) cutting
and sewing and (v) packaging and distributing the product.
The Company produces its greige (unfinished) goods for Home Furnishings at
an integrated spinning and weaving plant located in Greenville, South
Carolina. Greige goods for Home Furnishings are bleached, dyed and printed at
the Company's finishing plant located in Brookneal, Virginia. Cut and sew
operations and packaging for Home Furnishings are performed at the Company's
three cut and sew facilities located in Fort Valley and Sargent, Georgia and
Brookneal, Virginia.
All of the Company's Engineered Products goods are manufactured at the
Porterdale, Georgia facility. The manufacturing process consists of twisting
and/or weaving specialty synthetic filament yarn and treating the yarn to
enhance rubber adhesion and other physical property qualities in accordance
with customer specifications.
For more information about the Company's facilities, see "Item 2.
Properties."
ENVIRONMENTAL AND OSHA CONSIDERATIONS
Since 1970, a wide variety of federal, state, local and foreign
environmental laws, regulations and ordinances have been, and continue to be,
adopted and amended.
Some of these laws, regulations and ordinances hold current owners or
operators of land or businesses liable for their own and for previous owners'
or operators' releases of hazardous substances. Because of its operations and
the operations of previous owners or operators of certain of its properties
and by predecessor owners of certain of the businesses, and the use,
production and discharge of certain substances at its facilities, the Company
is affected by these laws and regulations. Various of the Company's facilities
have experienced some level of regulatory scrutiny in the past and are or may
be subject to further regulatory inspections or future requests for
investigation.
At the Abbeville facility in South Carolina (which is now closed), the
Company had previously been working with the South Carolina Department of
Health and Environmental Control to identify the source of low levels of freon
and certain other volatile organic compounds ("VOCs") which were found in a
water supply well located on-site. No active on-site remediation is being
required by the State at this time.
At the Company's graphics and design facility in Macon, Georgia, the State
of Georgia required a groundwater investigation and remediation relating to
the presence of VOCs in the groundwater underlying the facility. Monitoring
wells and a pump and treatment system utilizing an air stripper were
installed. Additional pumping wells were also added to control the migration
off-site of impacted groundwater. The State of Georgia notified the Company
that the facility would not be listed on Georgia's Hazardous Site Inventory.
Therefore, the Company does not believe that material expenditures for this
site will be incurred under the Georgia Hazardous Sites Program. However,
there can be no assurance that the Company will not incur costs under some
other program or law with respect to this matter.
5
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On March 27, 1997, the Company received notice from the Georgia Department
of Natural Resources, Environmental Protection Division ("EPD"), that its
Juliette, Georgia facility has been placed on Georgia's Hazardous Site
Inventory as a result of the recent discovery of tetrachloroethene in
groundwater at the site. The facility was subsequently removed from the list
during 1997.
In November 1993, in connection with the removal of former underground
storage tanks at the Roanoke Rapids, North Carolina facility, the Company
discovered the presence of petroleum constituents in soils and groundwater.
The presence of these constituents in soils and groundwater was reported to
the State of North Carolina. At the State's direction, impacted soils were
taken off-site for treatment. No active on-site remediation is being required
by the State at this time.
In connection with the removal of former underground storage tanks at the
Rockingham, North Carolina plant (which is now closed) in March 1997, the
Company discovered the presence of petroleum constituents in soils and
groundwater. The presence of these constituents in soils and groundwater was
reported to the North Carolina Department of Environment, Health and Natural
Resources ("NCDEHNR"). To date, no investigation or remediation has been
required by NCDEHNR. As both underground storage tanks were registered with
NCDEHNR, the Company anticipates that if any remediation is required, a
portion of the investigation and remediation expenses will be reimbursed by
the North Carolina Leaking Underground Storage Tank trust fund.
The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA") (commonly known as Superfund), provides for responses to and
liability for releases of hazardous substances into the environment. These
obligations are imposed on the current owner or operator of a facility, the
owner or operator of a facility at the time of the disposal of hazardous
substances at the facility, on anyone who arranged for the treatment or
disposal of hazardous substances at the facility, and on any person who
accepted hazardous substances for transport to a facility selected by such
person. Generally, liability to the government under CERCLA is joint and
several.
The Company has been named as one of approximately 180 third-party
defendants in connection with litigation relating to the Keystone Sanitary
Landfill (located in Adams County, Pennsylvania), a federal Superfund matter.
The Company is alleged to have disposed of 1,800 cubic yards of material at
this site. The United States Environmental Protection Agency reportedly has
estimated the total volume of wastes allegedly disposed of at the site by
viable potentially responsible parties to be in excess of 500,000 cubic yards.
The Company disputed its allocated volume, and the toxicity of its waste. On
October 20, 1997, the Company entered into a Consent Decree along with
approximately 140 other defendants. It is anticipated that the Consent Decree
will be entered by the United States District Court for the Middle District of
Pennsylvannia. If entered, the Consent Decree should satisfy any liability
that the Company has in this litigation. The Company believes that its maximum
exposure is less than $5,000.
The Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act, the Safe Drinking Water Act, the Emergency Planning and
Community Right to Know Act, each as amended, and similar state or local
counterparts to these federal laws, regulate air emissions, water discharges,
hazardous substances and wastes and require public disclosure related to the
use of various hazardous substances. The Company's operations are also
governed by laws and regulations relating to workplace safety and worker
health, primarily the Occupational Safety and Health Act and regulations
thereunder. While the Company believes it is in substantial compliance with
these laws and regulations, from time to time the Company receives from
various government agencies notifications or complaints that allege violation
of requirements which the Company then works to resolve. Except with respect
to the Brookneal facility matters described below, no such notice is
outstanding and unresolved for which the Company expects to incur material
costs. Compliance with environmental laws and regulations also may require the
acquisition or modification of permits or other authorizations for certain
activities and compliance with various standards or procedural requirements.
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In February, 1996, the Company entered into a Special Order on Consent
("Order") with the Virginia Water Control Board in connection with its
wastewater discharge permit at the Brookneal, Virginia facility. The Order
requires the Company to undertake certain activities including upgrading its
wastewater treatment facilities. The Company estimates that the cost of
complying with the Order, including the construction of new wastewater
treatment facilities, will be approximately $2,000,000 to be incurred during
fiscal years 1997 through 1999. The Company's capital expenditures under this
Order were approximately $400,000 in 1997. The Company has budgeted
approximately $1,200,000 for environmental capital expenditures in 1998 to
maintain compliance. Pursuant to the Order, the Commonwealth of Virginia also
agreed that the Company could perform closure of the existing wastewater
treatment systems and groundwater remediation relating thereto under the
Virginia Voluntary Remediation Program. In addition, on April 10, 1995, the
Company had entered into a Voluntary Remediation Agreement with Virginia
providing for the investigation and on-site remediation of groundwater and
soils. The Company presently estimates that this remediation will cost less
than $50,000, although further investigation is ongoing.
In addition, while the Company believes that its facilities are in
compliance with current regulatory standards applicable to air emissions,
several of its facilities will be required to obtain new operating permits
under the Clean Air Act Amendments of 1990 ("CAAA"). The Company has submitted
Title V permit applications under the CAAA with respect to the facilities at
Brookneal, Virginia and Porterdale, Georgia. A conditional major permit
application has been submitted for the facility at Greenville, South Carolina.
The Company also has provided information regarding its wastewater discharge
at the Porterdale, Georgia facility. At this time, the Company cannot estimate
when other new air or wastewater standards or permit requirements will be
imposed or what technologies or changes in processes the Company may have to
install or undertake to achieve compliance with any applicable new
requirements at these or its other facilities. However, the Company does not
believe that such expenditures are likely to be material.
NEGOTIATIONS WITH CREDITORS; REORGANIZATION UNDER THE PLAN
Beginning in the second quarter of 1995, following Old Bibb's failure to
meet certain of its interest payment obligations, representatives of Old Bibb
met with representatives of certain holders of Old Bibb's 14% Senior
Subordinated Notes due 1999 and 13.875% Senior Subordinated Notes due 1999
(collectively, the "Old Subordinated Notes"), who had formed a steering
committee (the "Steering Committee") to discuss the possibility of
restructuring Old Bibb's indebtedness.
Beginning in May 1995, Old Bibb entered into a series of forbearance
agreements with the group of creditors (the "Banks") led by Citibank, North
America, Inc., as agent, in which the Banks agreed to, among other things,
forbear from exercising their rights with respect to certain events of default
under Old Bibb's Credit Agreement dated as of August 4, 1993 as amended, (the
"Old Credit Agreement") through the filing of Old Bibb's bankruptcy petition.
Until February 1996, representatives of Old Bibb engaged in extensive
discussions and negotiations regarding the terms and conditions of a
restructuring or reorganization of Old Bibb's outstanding indebtedness with
the Steering Committee.
Old Bibb and each of the specified holders of the Old Subordinated Notes of
the Company and NTC Group, Inc. entered into a Restructuring Agreement dated
as of February 1, 1996 (the "Restructuring Agreement"). The Restructuring
Agreement provided, among other things, that the members of the Steering
Committee: (i) would vote for acceptance of a Plan of Reorganization of Old
Bibb (the "Plan") to be entered into with respect to all Old Subordinated
Notes owned by such member of the Steering Committee and, accordingly, would
tender to Old Bibb an executed and properly-completed ballot in favor of
acceptance of the Plan; (ii) would not withdraw
7
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or otherwise revoke the ballot referred to in clause (i) above; and (iii)
would not vote for or otherwise consent to any action or agreement that would
impede, interfere with, delay, postpone or attempt to discourage consummation
of the Plan, including, but not limited to, any vote for or recommendation in
favor of any alternative plan of reorganization not proposed by Old Bibb under
the Bankruptcy Code.
On July 3, 1996, following receipt of approval by the requisite creditors
and securityholders of Old Bibb for a "prepackaged" bankruptcy reorganization,
Old Bibb filed voluntary petitions for relief under chapter 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). On September 12, 1996, the Bankruptcy Court
issued an order confirming the Plan. The Plan was consummated on September 27,
1996 (the "Effective Date").
PRINCIPAL PROVISIONS OF THE PLAN
On the Effective Date and pursuant to the Plan, the following events, among
other things, occurred:
(i) The Loan and Security Agreement dated as of September 12, 1996, by
and among Congress Financial Corporation (Southern), as agent, ("Congress")
and the lenders party thereto (Congress and the lenders are collectively
referred to herein as the "New Banks") and the Company (the "New Credit
Agreement") became operative, thereby providing the Company with a source
of financing. On the Effective Date, all outstanding indebtedness to the
Banks relating to pre-Effective Date obligations arising under the Old
Credit Agreement was repaid (or, in the case of then-outstanding letters of
credit, cash collateralized) in full.
(ii) Each holder of the Company's outstanding 14% Senior Subordinated
Notes and 13.875% Senior Subordinated Notes became entitled to receive
59.9177745 and 57.5877576 shares, respectively, of the Company's Common
Stock, $.01 par value per share (the "Common Stock") for each $1,000
principal amount of Old Subordinated Notes held by such holder (the
issuances with respect to all Old Subordinated Notes represented in the
aggregate approximately 9,500,000 shares, or 95% of the Common Stock
outstanding as of the Effective Date).
(iii) Each holder of pre-Merger common stock, (the "Old Common Stock" or
"Old Equity Interests") became entitled to receive, in exchange for each
share of Old Common Stock, 50.9511043 shares of Common Stock (the issuances
with respect to all Old Equity Interests represented in the aggregate
approximately 500,000 shares, or 5% of the Common Stock outstanding as of
the Effective Date).
THE NEW CREDIT AGREEMENT
Set forth below is a summary of the terms and provisions of the New Credit
Agreement, as currently in effect, including the results of Amendment Nos. 1-4
to the New Credit Agreement. Such summary does not purport to be complete and
is qualified in its entirety by reference to the New Credit Agreement, as
amended.
A. Available Borrowings
Under the New Credit Agreement, the Company is entitled to borrow up to a
maximum of $81.3 million principal amount. The borrowings under the New Credit
Agreement are in the form of a term loan and revolving loans (including
letters of credit of up to $15 million). Borrowings are in the form of a term
loan, which was originally in the amount of $25 million; however, in
connection with Amendment No. 4 to the New Credit Agreement, the term loan was
increased to $21.3 million, effective March 6, 1998, after having been paid
down to $11.2 million. The remainder of such borrowings are in the form of
revolving loans available to the extent that a sufficient borrowing base is
present up to a maximum of $60 million. The borrowing base for revolving loans
is equal to a specific percentage of eligible receivables and eligible
inventory in which the New Banks have a perfected first priority security
interest subject to applicable reserves.
8
<PAGE>
B. Interest
Borrowings under the New Credit Agreement bear interest at a rate per annum
equal to, either one (1%) percent per annum above the rate announced from time
to time by CoreStates Bank, N.A. as its "prime rate", and increase or decrease
by an amount equal to each increase or decrease in such prime rate, effective
as of the first day of the month after any such change; or, at the Company's
option, a rate of three percent (3%) per annum above the Adjusted Eurodollar
Rate used by the Agent, subject to the Agent's customary terms applicable to
Eurodollar rate-based loans for interest periods of one, two or three months
duration as selected by the Company ("Eurodollar Rate Loans"). The Adjusted
Eurodollar Rate is calculated based on the average of rates of interest per
annum at which CoreStates Bank, N.A. is offered deposits of U.S. dollars in
the London interbank market for the applicable interest period, adjusted by
the reserve percentage prescribed by governmental authorities as determined by
the Agent. The maximum amount of the Eurodollar Rate Loans at any time shall
not exceed eighty percent (80%) of the daily average of the principal amount
of the loans which is anticipated will be outstanding during the applicable
interest period. After maturity or an event of default under the New Credit
Agreement or the termination, interest on all loans shall be increased by two
percent (2%) per annum above the pre-default rates referred to above. Interest
on Eurodollar Rate Loans shall be subject to further reductions based upon
certain financial performance.
C. Maturity
The New Credit Agreement, as amended, will expire on November 1, 2000,
subject to one-year extensions, unless terminated by the New Banks or the
Company. The New Credit Agreement shall be subject to earlier termination upon
an event of default.
D. Optional Prepayments; Mandatory Repayments
Under the New Credit Agreement, the Company may repay during the initial
three years of the facility all borrowings in full upon payment of specified
premiums not to exceed 1% of the amount of the then-existing facility. The
prepayment fee if the New Credit Agreement is terminated after September 16,
1998 was reduced from $575,000 to $300,000 in connection with Amendment No. 4
to the New Credit Agreement. The foregoing premiums are subject to specified
reductions in the event of a sale of the Company (by way of all of the
Company's stock or substantially all of the Company's assets). The term loan
under the New Credit Agreement shall amortize monthly in an amount equal to
1/84th of the original amount of the term loan, with the unpaid balance due
upon termination or maturity of such facility.
E. Security
As security for its obligations under the New Credit Agreement, the Company
granted to the New Banks first priority security interests in substantially
all of the assets of the Company, including its fixed assets, receivables and
inventory.
F. Covenants
The New Credit Agreement contains numerous restrictive financial and other
covenants, including: (i) restrictions on the incurrence of indebtedness and
liens; (ii) restrictions on mergers, acquisitions, asset sales and
transactions with affiliates; (iii) restrictions on dividends and
distributions; (iv) restrictions on capital expenditures; and (v) financial
tests, concerning minimum net worth and working capital ratio.
G. Events of Default
The New Credit Agreement contains certain standard events of default which
include: (i) failure to pay any principal of a note or letter of credit
obligation when due or any interest when due; (ii) any representation or
warranty made by the Company to the New Banks being false in any material
respect when made; and (iii) default in the observance of certain post-
confirmation provisions of the New Credit Agreement. If an event of default
occurs, the New Banks may declare all or a portion of the amounts owing under
the New Credit Agreement to be immediately due and payable.
9
<PAGE>
ACCOUNTING FOR RESTRUCTURING
The Company has accounted for the restructuring described herein using the
principles of fresh start reporting as required by SOP No. 90-7. Pursuant to
such principles, the Company's assets and liabilities have been revalued as of
the Effective Date and the assets are stated at their reorganization value
(the "Reorganization Value"), which is defined as the value of the Company
before considering liabilities.
The restatement of the Company's assets and liabilities, referred to as
fresh start reporting, applies the following principles:
(1) The Company's Reorganization Value is allocated to its assets as
though the Company had been acquired in a transaction reported using the
purchase method, under which specific tangible assets and identified
intangible assets of the Company are adjusted to their fair market values.
If any portion of the Reorganization Value cannot be attributed to specific
tangible or identified intangible assets, such portion is reported as an
intangible asset identified as "reorganization value in excess of amounts
allocable to identifiable assets," and such excess would then be amortized
in accordance with applicable financial reporting procedures.
(2) Each liability existing on the Effective Date, other than deferred
taxes, is stated at the present value of the future amounts to be paid
thereon as determined by discounting such payments at an appropriate
current interest rate, if material.
(3) Deferred taxes are reported in conformity with generally accepted
accounting principles. When realized, benefits from pre-confirmation net
operating loss carryforwards reduce the reorganization value in excess of
amounts allocable to identifiable assets and other intangibles until such
excess is exhausted and thereafter are reported as a direct addition to
paid-in capital.
(4) Changes in accounting principles that will be required in the
Company's financial statements within the twelve months following the
adoption of fresh start reporting should be adopted at the time the fresh
start reporting is adopted.
Adopting fresh start reporting in essence results in a new reporting entity
with no beginning retained earnings or deficit.
RECENT DEVELOPMENTS
Exit of Apparel Business
On December 30, 1997, the Company announced its intent to exit its Apparel
Business. As a result, the Company will close its Columbus, Georgia
manufacturing facility during the first quarter of 1998. The Company reflected
in the statement of operations, discontinued operations charges in the amount
of $15.6 million, of which $2.8 million represents future cash outlays.
Sale of Napery Business
On December 29, 1997, the Company completed the sale of the Napery Business
to Mount Vernon Mills, Inc. for consideration of $3.8 million in cash
proceeds. The proceeds from the sale were used to reduce indebtedness under
the New Credit Agreement. As a result of the sale, the Company recorded
discontinued operations charges in the amount of $5.3 million, of which $1.2
million represents future cash outlays.
Common Stock Listing
Effective October 3, 1997, the Company's Common Stock was listed on the
American Stock Exchange ("AMEX"), trading under the symbol (BIB). See Item 5.
" Market for Registrant's Common Equity and Related Stockholder Matters."
10
<PAGE>
Sale of Terry Business
On February 21, 1997, the Company completed the sale of the Terry Business
to WestPoint Stevens Inc., for aggregate consideration of approximately $38.8
million. The net cash proceeds of the sale, approximately $37 million, were
used to reduce indebtedness under the New Credit Agreement.
ITEM 2. PROPERTIES
As of February 1998, the Company operated continuing manufacturing and
distribution facilities and office space with a total area of approximately
2,568,000 square feet. Management believes the Company's facilities and
equipment are in good condition and are adequate for the Company's present and
anticipated operations. For more information about the Company's facilities,
see "Item 1. Business--Manufacturing Facilities."
The location, primary use and size of each principal facility operated by
the Company is as follows:
<TABLE>
<CAPTION>
SQUARE
LOCATION PRIMARY USE OF FACILITY FEET
------------------- ------------------------------------------------ -------
<C> <S> <C>
Macon, GA Corporate administrative offices 78,000
Macon, GA(1) Distribution center for Home Furnishings 110,000
Graphics and design facility for Home
Macon, GA Furnishings 40,000
Atlanta, GA (1) Corporate executive and sales offices 21,000
New York, NY (1) Showroom and sales offices 13,000
Fort Valley, GA (2) Manufacturing facility for Home Furnishings 333,000
Fort Valley, GA (1) Warehouse for Home Furnishings 60,000
Manufacturing and distributing facility for Home
Sargent, GA Furnishings 479,000
Manufacturing facility for finishing and
Porterdale, GA production of Engineered Products 615,000
Manufacturing facility for weaving Home
Greenville, SC Furnishings 489,000
Brookneal, VA Manufacturing facility for finishing, printing,
fabricating and distributing Home Furnishings 330,000
</TABLE>
- --------
(1) All of the Company's facilities are owned except the Company's New York
sales office, which is leased pursuant to a lease and sublease which
expire in December 2000, the Company's Atlanta office, which is leased
pursuant to a lease which expires in July 2003, the Company's Macon
distribution center which is currently on month-to-month terms, and the
Fort Valley warehouse which lease expires in April 2001.
(2) The Fort Valley plant consists of two principal buildings, one of which is
subject to a mortgage note of approximately $430,000 in outstanding
principal as of January 3, 1998.
Substantially all of the Company's property, plant and equipment is
encumbered by a first security interest in favor of the lenders under the New
Credit Agreement.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is a party to various legal actions arising
in the normal course of its business. In the opinion of management, the
Company is not currently party to any litigation which, if adversely
determined, would have a material adverse affect on the financial condition,
liquidity or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter ended January 3, 1998.
11
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Stock Listing
Effective October 3, 1997, the Company's Common Stock was listed on AMEX,
trading under the symbol (BIB). The market for the Company's Common Stock is
limited due to its stockholders primarily consisting of large institutional
investors. The opening sales price of the stock on October 3, 1997 was $8 1/2
. The high and low sales price of the stock during the fourth quarter ending
January 3, 1998, was $8 1/2 and $6 1/2, respectively.
Number of Holders of Record
As of February 28, 1998, there were 18 holders of record of the Company's
Common Stock. This number does not include beneficial owners of the Company's
securities held in the name of nominees or otherwise.
Dividends
The Company does not anticipate having funds available to pay cash dividends
on any shares of the Common Stock in the foreseeable future. The New Credit
Agreement contains restrictive financial and operating covenants and
prohibitions, including provisions that will prohibit the payment of cash
dividends on the Common Stock and will otherwise limit the Company's ability
to make distributions to holders of Common Stock.
Share Purchase Rights
Effective October 1, 1997, the Company adopted a Share Purchase Rights Plan
(the "Rights Plan") that provides for rights to be issued to stockholders of
record on October 15, 1997. Under the Rights Plan, the rights will initially
trade together with the Company's common stock and will not be exercisable. In
the absence 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 Rights 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. These rights will expire on October 15, 2007, unless earlier
redeemed, exchanged or amended by the Board of Directors.
Recent Sales of Unregistered Securities
On December 31, 1996, the Company issued 75,163 shares of Common Stock to
Houlihan Lokey as compensation for advisory services rendered in connection
with the Reorganization. The issuance was made in a private placement in
reliance upon the exemption from the registration provisions of the Securities
Act provided in Section 4(2) thereof.
Effective as of September 27, 1996, the Company issued approximately
10,000,000 shares of Common Stock to holders of claims against and interests
in the Company pursuant to the Plan. All such issuances were made pursuant to
an exemption from the registration requirements of the Securities Act provided
by Section 1145 of the Bankruptcy Code. For details of such issuances, see
"Item 1. Business--Corporate History--Negotiations with Creditors;
Reorganization under the Plan."
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of the Company for the fiscal years
1993 through 1997 have been derived from the audited financial statements of
the Company, except for the three months ended January 3, 1998, which were
derived from unaudited financial statements of the Company. The following data
should be read in conjunction with the Financial Statements of the Company and
the notes thereto provided as Item 8 of this Form 10-K and the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
below. Information for periods subsequent to September 28, 1996 was prepared
under the principles of fresh start reporting (see Note 1 to the Financial
Statements) and is not comparable to information for prior periods. The
Statement of Operations data for the period subsequent to September 28, 1996
excludes the results of the Terry Business, (see Note 1 to the Financial
Statements). Operations for the discontinued Apparel and Napery Businesses
subsequent to September 28, 1996 are shown below results from continuing
operations.
13
<PAGE>
THE BIBB COMPANY
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
TWELVE THREE
MONTHS MONTHS THREE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED YEAR END
JANUARY 3, JANUARY 3, DECEMBER 28, SEPTEMBER 28, ------------------------------
1998 1998 1996 1996 1995 1994 1993
----------- ----------- ------------ ------------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net Sales............... $ 248,836 $ 59,243 $ 63,937 $262,392 $ 389,998 $ 459,192 $487,892
Cost of Sales........... 222,620 53,281 57,252 239,724 366,040 432,235 410,713
----------- ----------- ---------- -------- --------- --------- --------
Gross Profit............ 26,216 5,962 6,685 22,668 23,958 26,957 77,179
Selling and
Administrative
Expenses............... 23,306 6,824 7,428 26,002 34,538 41,765 43,134
Nonrecurring Charges
(h).................... 4,133 4,133 0 0 0 0 0
Financial Restructuring
Advisory Fees.......... 0 0 0 0 1,592 0 0
Management Fee to
NTC(a)................. 0 0 0 1,993 3,368 4,000 4,000
----------- ----------- ---------- -------- --------- --------- --------
Operating (Loss) Profit. (1,223) (4,995) (743) (5,327) (15,540) (18,808) 30,045
Interest Expense........ (4,743) (1,489) (1,074) (16,001) (27,926) (26,379) (25,605)
Loan Fee Amortization
and Expense............ (1,270) (375) (235) (1,928) (2,486) (1,795) (1,847)
Other, net.............. (162) (19) (109) 3,319 (c) (1,639) (934) 2,493 (b)
----------- ----------- ---------- -------- --------- --------- --------
Income (Loss) Before
Discontinued
Operations,
Reorganization and
Extraordinary Items
(d).................... (7,398) (6,878) (2,161) (19,937) (47,591) (47,916) 5,086
----------- ----------- ---------- -------- --------- --------- --------
Net Loss per Common
Share from Continuing
Operations, basic and
diluted................ (0.74) (0.68) (0.22) N/A N/A N/A N/A
Discontinued Operations:
(i)
(Loss) income from
discontinued Napery
Business, net of taxes
of $0................. (2,494) (1,649) 17 N/A N/A N/A N/A
Loss from disposal of
discontinued Napery
Business, net of taxes
of $0................. (2,832) (2,832) 0 N/A N/A N/A N/A
Loss from discontinued
Apparel Business, net
of taxes of $0........ (4,422) (1,434) (396) N/A N/A N/A N/A
Loss from disposal of
discontinued Apparel
Business, net of taxes
of $0................. (11,200) (11,200) 0 N/A N/A N/A N/A
Reorganization and
Extraordinary Items:
(e)(f) 0 0 0 118,148 0 0 (738)
----------- ----------- ---------- -------- --------- --------- --------
Net Income (Loss) ...... $ (28,346) $ (23,993) $ (2,540) $ 98,211 $ (47,591) $ (47,916) $ 4,348
=========== =========== ========== ======== ========= ========= ========
Weighted Average Shares
Outstanding, basic and
diluted................ 10,061,576 10,061,576 9,986,413 N/A N/A N/A N/A
Net Loss per Common
Share basic and
diluted(g)............. $ (2.82) $ (2.38) $ (0.25) $ N/A $ N/A $ N/A $ N/A
Cash Dividends Declared
per Common Share....... 0 0 0 0 0 0 0
Depreciation and
Amortization (exclusive
of loan fee
amortization).......... 6,937 1,779 2,610 9,582 15,644 14,283 12,239
Capital Expenditures
(including capital
leases)................ 28,233 13,198 1,658 2,940 5,489 11,129 13,807
Year End Balance Sheet
Data:
Current Assets (j)..... 104,224 104,224 169,661 98,134 118,921 127,354
Current Liabilities.... 36,356 36,356 62,759 289,265 259,296 57,252
Working Capital........ 67,868 67,868 106,902 (191,131) (140,375) 70,102
Property, Plant and
Equipment, net........ 62,829 62,829 58,642 77,414 85,024 88,064
Total Assets........... 169,351 169,351 232,700 198,638 228,171 238,104
Long Term Debt Less
Current Maturities.... 74,898 74,898 84,093 0 11,000 175,353
Stockholders' Equity
(Deficit)............. 58,097 58,097 85,848 (90,627) (42,125) 5,499
</TABLE>
The following table sets forth certain unaudited quarterly financial
information of the Company for the three months ended March 29, 1997, June 28,
1997, and October 4, 1997, respectively (see above where the three months
ended January 3, 1998 and December 28, 1996, respectively, are noted). The
information below reflects the results of the operations of the Napery
Business and Apparel Business as discontinued operations. This information has
been prepared on the same basis as the Financial Statements contained
elsewhere in this Form 10-K and, in the opinion of management, includes all
adjustments, consisting of normal and recurring adjustments, necessary for the
fair presentation of the information for the periods presented. The financial
data shown below should be read in conjunction with the Financial Statements
and the related Notes
14
<PAGE>
thereto. Results for any previous quarter are not necessarily indicative of
results for the full year or for any future quarter (in thousands, except
share data).
<TABLE>
<CAPTION>
THREE THREE THREE
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
MARCH 29, JUNE 28, OCTOBER 4,
1997 1997 1997
--------- -------- ----------
<S> <C> <C> <C>
Net Sales......................................... $58,932 $63,299 $67,362
Cost of Sales..................................... 54,258 56,311 58,770
------- ------- -------
Gross Profit...................................... 4,674 6,988 8,592
Selling and Administrative expenses............... 5,453 5,391 5,638
Nonrecurring Charges.............................. 0 0 0
------- ------- -------
Operating Profit (Loss)........................... (779) 1,597 2,954
Interest Expense.................................. (974) (1,060) (1,220)
Loan Fee and Amortization......................... (274) (312) (309)
Other, net........................................ (95) (6) (42)
------- ------- -------
Income (loss) Before Discontinued Operations (d).. (2,122) 219 1,383
Discontinued Operations: (i)
(Loss) income from discontinued Napery Business,
net of taxes of $0.............................. 230 (324) (751)
Loss from disposal of discontinued Napery Busi-
ness, net of taxes of $0........................ 0 0 0
Loss from discontinued Apparel Business, net of
taxes of $0..................................... (299) (1,305) (1,384)
Loss from disposal of discontinued Apparel Busi-
ness, net of taxes of $0........................ 0 0 0
------- ------- -------
Net Loss ......................................... $(2,191) $(1,410) $ (752)
======= ======= =======
Net Loss per Common Share, basic and diluted...... $ (0.22) $ (0.14) $ (0.08)
======= ======= =======
</TABLE>
NOTES TO SELECTED FINANCIAL DATA
(a) Prior to February 1, 1996, pursuant to a management services agreement
dated April 1, 1989 (the "Management Services Agreement"), between the
Company and The NTC Group, Inc. ("NTC"), NTC received fees equal to 2% of
the Company's average month-end equity book value plus interest-bearing
debt. Pursuant to the Restructuring Agreement, during the period between
February 1, 1996 and the Effective Date, NTC was entitled to receive
management fees under the Management Services Agreement equal to $141,633
per month. Pursuant to the Plan, $1,830,000 of accrued management fees
were forgiven by NTC as of September 28, 1996, and the Management Services
Agreement was terminated.
(b) Included in Other, net is the Company's sale of its investment in an
unconsolidated subsidiary.
(c) On December 21, 1989, the Company received $11,388,000 in principal amount
under a note receivable owed to the Company by TB Woods Incorporated
("Woods"), which was an affiliate of the Company. In 1991, the Company
readvanced $5,644,000 to Woods under the note receivable. In 1993, Woods
repaid the Company $5,560,000 and the remaining principal was restructured
to include two new notes and a warrant, pursuant to which the Company
acquired 375,000 shares of common stock of Woods' parent corporation. In
August 1994, one of those notes for $2,000,000 was paid in full. During
the first quarter of 1996 the Company sold the shares of stock in an
underwritten public offering in which it received net proceeds of
$4,185,000. Included in Other, net is a gain of $3,685,000 associated with
the sale.
(d) Prior to the Merger, the Company was an "S" Corporation under the Internal
Revenue Code. Because all items of income, expense and credit of an "S"
Corporation generally pass through to its stockholders, the Company did
not pay federal income taxes or certain state and local income taxes
during the period it was an "S" Corporation. Effective September 28, 1996,
the Company became a "C" Corporation under the Internal Revenue Code and
became ineligible to pass through items of income, expense and credit to
its stockholders. For the three months ended December 28, 1996, and fiscal
year ended January 3, 1998, there were no income tax expense nor benefit
recorded.
15
<PAGE>
(e) In connection with the Plan, reorganization items were recorded for
professional fees and expenses in the amount of $1,423,000 and for
adjustments to certain accounts to reflect fair value in the amount of
$7,921,000.
(f) In conjunction with the Restructuring, a gain of $111,650,000 on the
extinguishment of debt was recorded.
(g) Per share amounts for periods prior to September 28, 1996 have not been
presented because the amounts for those periods are not meaningful due to
the implementation of fresh start reporting. See Note 1 to the Financial
Statements.
(h) The Company incurred $4,133,000 in operating charges of a nonrecurring
nature relating to losses to be incurred under a sublease agreement,
severance, impairment of previously closed manufacturing facilities
(Rockingham, North Carolina and Abbeville, South Carolina) and their
equipment, and losses associated with the Terry Business subsequent to its
sale.
(i) Discontinued operations charges of $20,948,000 and $379,000 were recorded
in fiscal year 1997 and the fourth quarter of 1996, respectively, as a
result of the sale of the Napery Business to Mount Vernon Mills, Inc., and
the Company's intent to exit the Apparel Business.
(j) Included in current assets are net assets of discontinued operations of
$12,025,000 as of January 3, 1998 as set forth in the table below (in
thousands):
<TABLE>
<CAPTION>
NAPERY APPAREL TOTAL
------- ------- -------
<S> <C> <C> <C>
Accounts receivable, net.......................... $ 815 $ 4,300 $ 5,115
Inventory......................................... 0 7,486 7,486
Property, plant and equipment, net................ 2,237 6,627 8,864
Accounts payable and accrued liabilities.......... (1,684) (4,700) (6,384)
Reserve for future claims......................... (100) (225) (325)
Reserve for future severance...................... (1,031) (1,150) (2,181)
Reserve for future overhead costs................. (200) (350) (550)
------- ------- -------
$ 37 $11,988 $12,025
======= ======= =======
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF CONTINUING OPERATIONS
General
The Company is a leading domestic manufacturer and marketer of textile
products, principally sheets, pillowcases and other bedding accessories for
use in the home, hotels, hospitals, linen service companies and others serving
the hospitality market. The Company also manufactures specially-treated
engineered textile products used primarily in producing high-pressure hoses
and conveyor belts. 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. Fiscal 1997
was a 53-week year.
In connection with the completion of the Reorganization and the consummation
of the Merger, the Company adopted fresh start reporting, effective as of
September 28, 1996. As a result of Fresh Start reporting, periods subsequent
to September 28, 1996 are reported separately in "Selected Financial Data."
See the notes to the Financial Statements, in which the Plan and fresh start
reporting are described in greater detail. As a result of the implementation
of fresh start reporting, analysis and comparison to prior periods of the
results of operations for all periods that include the period subsequent to
September 28, 1996 are not meaningful. In addition, the Company completed the
sale of the Terry Business 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. In December 1997, the Company completed the sale of the
Napery Business and announced its intent to exit the Apparel Business, and as
a result, the related net assets are classified as current assets under the
caption "Net Assets of Discontinued Operations" and the results of operations
for the Napery Business and the Apparel Business are classified as
discontinued operations in the statements of operations.
16
<PAGE>
The following discussion and analysis of the financial condition and the
results of operations should be read in conjunction with the "Selected
Financial Data" and the Financial Statements of the Company and the notes
thereto provided in Item 8.
RESULTS OF CONTINUING OPERATIONS
(in thousands)
Fiscal 1997 Compared to Fiscal 1996 (Combined New Bibb and Old Bibb)
Net sales for fiscal year 1997 were $248,836 compared to $326,329 for fiscal
year 1996. The decrease was primarily attributable to sales for the Napery
Business, Terry Business and Apparel Business of $80,723 included in fiscal
year 1996, prior to Reorganization which were excluded for fiscal year 1997.
Net sales for the three months ended January 3, 1998 were $59,243 compared to
$63,937 for the three months ended December 28, 1996, a decrease of $4,694 or
7.3%. This decrease is due primarily to the absence of the Space Jam juvenile
program rollout in 1997, such rollout significantly benefiting 1996.
Gross profit for fiscal year 1997 was $26,216 compared to $29,353 for fiscal
year 1996. Gross profit of $3,409 for the Napery Business, Terry Business and
Apparel Business is included in fiscal year 1996, prior to Reorganization.
Gross profit as percentage of net sales was 10.5% and 9.0% for fiscal years
1997 and 1996, respectively. This increase is attributable to a gross profit
percentage of only 4.2% for the Napery Business, Terry Business and Apparel
Business that is included in fiscal year 1996, prior to Reorganization. Gross
profit percentage for the three months ended January 3, 1998 was 10.1%
compared to 10.5% for the three months ended December 28, 1996.
Selling and administrative expenses for fiscal year 1997 were $23,306 or
9.4% of net sales compared to $33,430 or 10.2% of net sales for fiscal year
1996. This decrease is due to the Company's commitment to reduce
administrative expenses through aggressive cost-cutting programs during 1997
and decreases in professional fees associated with the Company's
Reorganization in 1996. Selling and administrative expenses as a percentage of
net sales were 11.5% for the three months ended January 3, 1998 compared to
11.6% for the three months ended December 28, 1996.
Nonrecurring charges in the amount of $4,133 for fiscal year 1997, of which
less than $500 represents future cash outlay, are detailed in the table below:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- ------
<S> <C>
Loss provision on New York sublease................................... $1,050
Impairment of closed facilities at Rockingham, NC and Abbeville, SC... 750
Corporate severance due to reduction in operations.................... 350
Expenses of Terry Business subsequent to sale......................... 1,983
------
$4,133
======
</TABLE>
Loss provision on the New York sublease is as a result of an agreement
between the Company and a subleasee in which the Company leased the unused
portion of their New York sales office at a rate below the Company's lease
payment. The lease and sublease expires in December 2000.
Operating loss for fiscal year 1997 was $1,223 compared to $6,070 for fiscal
year 1996. The decrease is attributable to a $10,124 decrease in selling and
administrative expenses. In addition, management fees of $1,993 are reflected
in fiscal year 1996. However these gains are partially offset by the reduction
of gross profit by $3,137 and nonrecurring charges recorded in 1997 of $4,133.
17
<PAGE>
Total interest expense for fiscal year 1997 was $4,743 compared to $17,075
for fiscal year 1996. Subordinated debt interest expense for fiscal year 1996
was $11,151 compared to $0 for fiscal year 1997, as a result of the
extinguishment of all such subordinated debt in connection with the
Reorganization completed in the third quarter of 1996.
Loss from discontinued Napery Business in fiscal year 1997 was $2,494. This
amount reflects the results from operations during 1997 for the Napery
business.
Loss from disposal of discontinued Napery Business in fiscal year 1997 was
$2,832. This amount consists of the following:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- ------
<S> <C>
Severance............................................................ $1,031
Loss on sale of Napery inventory..................................... 716
Write-down of closed Roanoke Rapids, North Carolina facility......... 700
Other................................................................ 385
------
$2,832
======
</TABLE>
Loss from discontinued Apparel Business in fiscal year 1997 was $4,422. This
amount reflects the results from operations during 1997 for the Apparel
Business.
Loss from disposal of discontinued Apparel Business in fiscal year 1997 was
$11,200. This amount consists of the following:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- -------
<S> <C>
Severance........................................................... $ 1,150
Write-down of Apparel Business inventory............................ 3,000
Write-down of closed Columbus and Camellia, GA facilities........... 4,675
Apparel Business operating losses during phase-out period........... 1,300
Other............................................................... 1,075
-------
$11,200
=======
</TABLE>
The Reorganization item "Professional fees and other expenses" for fiscal
year 1996 represents a reclassification of expenses related to the Plan. The
item "Adjust accounts to fair value" is associated with the implementation of
fresh start reporting (See Note 1 to the Financial Statements and "Accounting
for Restructuring").
Extraordinary Gain of $111,650 for fiscal year 1996 resulted from the gain
on the discharge of long-term debt as a result of the Reorganization, which
represented forgiveness of principal and interest, reduced by the estimated
fair value of the shares of Common Stock issued pursuant to the Plan.
As a result of the above factors, net loss for fiscal year 1997 was $28,346
compared to net income of $95,671 for fiscal year 1996.
Fiscal 1996 (Combined New Bibb and Old Bibb) Compared to Fiscal 1995
Net sales for fiscal year 1996 were $326,329, compared to $389,998 for
fiscal year 1995, a decrease of $63,669 or 16.3%. Sales were lower than the
prior year principally due to (i) the Company's decision in 1995 to down-size
the Terry Business and reduce sales of lower margin terry products which,
through the first nine months of 1995, had accounted for approximately $13,000
in sales, (ii) the exclusion from fourth quarter 1996 sales of $30,219 in
sales from the Napery Business, Terry Business, and Apparel Business as a
result of the reclassification of those product groups, and (iii) the
Company's decision to de-emphasize its marketing and sales of lower-margin
commodity bedding, which had accounted for approximately $19,000 in net sales
during 1995.
Gross profit for fiscal year 1996 was $29,353 compared to $23,958 for fiscal
year 1995, an increase of $5,395. Gross profit as a percentage of net sales
increased to 9.0% for 1996 from 6.1% for the prior year. The increase in 1996
was principally attributable to a shift in product mix toward higher-margin
products, consistent with the Company's decision to de-emphasize commodity
bedding.
18
<PAGE>
Selling and administrative expenses for fiscal year 1996 were $33,430
compared to $36,130 for fiscal year 1995, a decrease of $2,700. As a
percentage of net sales, selling and administrative expenses increased to
10.2% for 1996 from 9.3% for the prior year. The dollar decrease is
attributable to the Company's downsizing of its sales force in connection with
its decision to de-emphasize its marketing and sales of lower-margin commodity
and bedding products, as well as the exclusion of the selling, general and
administrative expenses attributable to the Napery Business, Terry Business
and Apparel Business for the fourth quarter of 1996. The increase as a
percentage of net sales is a function of lower overall sales against which
such expenses are applied.
Operating loss for fiscal year 1996 was $6,070, compared to a loss of
$15,540 in fiscal year 1995, representing an improvement of $9,470. The
improvement is primarily attributable to the increase in gross profit and the
decrease in selling, general and administrative expenses, as well as the
termination of the Management Services Agreement with NTC as of the Effective
Date.
Total interest expense for fiscal year 1996 was $17,075 compared to $27,926
in fiscal year 1995, primarily as a result of the extinguishment of the long-
term debt in the third quarter of 1996 as part of the Reorganization.
The gain on sale of investments of $3,949 for fiscal year 1996, resulted
from the sale by the Company of shares of stock of Woods' parent as part of
the latter company's initial public offering during the first quarter of 1996.
The Reorganization item "Professional fees and other expenses" represents a
reclassification of expenses related to the Plan. The item "Adjust accounts to
fair value" is associated with the implementation of fresh start reporting
(See Note 1 to the Financial Statements and "Accounting for Restructuring").
Extraordinary Gain of $111,650 for fiscal year 1996 resulted from the gain
on the discharge of long-term debt as a result of the Reorganization, which
represented forgiveness of principal and interest, reduced by the estimated
fair value of the shares of Common Stock issued pursuant to the Plan.
As a result of the above factors, net income increased from a net loss of
$47,591 in fiscal year 1995 to net income of $95,671 for fiscal year 1996, an
increase of $143,262.
INFLATION
The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on its sales or profitability.
LIQUIDITY AND CAPITAL RESOURCES
General. Net cash provided by operating activities was $30 million in fiscal
year 1997 compared to net cash used in operating activities of $42 million for
fiscal year 1996 for combined New Bibb and Old Bibb. The increase in cash flow
during 1997 is primarily due to the sale of assets related to the Terry
Business in the first quarter of 1997 of $37 million and a increase in
accounts receivable in fiscal year 1996 due to the Company's repurchase of
receivables in the amount of $50 million. Prior to the Reorganization, the
Company's principal sources of funds were cash flow from operations,
borrowings under various debt agreements and the repayment and sale of certain
securities of Woods and its parent corporation, which were former affiliates
of the Company.
Net cash used in investing activities was $23 million in fiscal year 1997
compared to net cash provided by investing activities of $6 million in fiscal
year 1996. The decrease in cash flow during 1997 is primarily the result of
increased spending in connection with the Company's commitment to the
modernization of its facilities during fiscal year 1997. Capital expenditures
were $28 million in 1997 compared to $5 million in 1996.
Net cash used in financing activities was $10 million in fiscal year 1997
compared to net cash provided by financing activities of $39 million in fiscal
year 1996. The decrease in cash flow during 1997 is primarily attributable to
payments to reduce indebtedness under the New Credit Agreement, as amended, as
a result of the sale of the Terry Business, partially offset by borrowings
under capital lease obligations.
19
<PAGE>
Following the Reorganization, 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. The Company determined that
a sale of the Terry Business, at a favorable price, was consistent with its
approach to de-emphasize its presence in commodity textiles. In December 1997,
the Company sold the Napery Business and related inventory for approximately
$3.8 million, all of which was used to repay outstanding indebtedness.
As part of the amended New Credit Agreement, the Company is entitled to
borrow up to a maximum of approximately $81.3 million principal amount subject
to borrowing base availability and applicable revolving loan reserves. See
"Item 1. Business--Corporate History--The New Credit Agreement."
As of January 3, 1998, the Company had approximately $73 million in
borrowings outstanding under the New Credit Agreement. Of the outstanding
borrowings, approximately $3.6 million are due during the twelve months ending
January 3, 1999. As a result of the Company's sale of the Terry Business, the
Company entered into an amendment to the New Credit Agreement on April 25,
1997 which provides for (i) an increase of the Supplemental Capital
Expenditures Allowance, as defined therein, from $6 million to $16 million,
(ii) a release of the $10 million term loan reserve, (iii) an adjustment in
the formula used to determine the interest rate of the Eurodollar Rate loans,
and (iv) changes in the formulas used in determining loan covenant compliance.
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 to $75,000,000 and, (v) elimination of the supplemental capital
expenditure reserve. Effective March 6, 1998, the Company amended the New
Credit Agreement as follows: (i) increase of the term loan to $21.3 million,
(ii) extension of the renewal date from September 16, 1999 to November 1,
2000, (iii) reduction of the tangible net worth covenant from a minimum of $70
million to a minimum of $50 million, (iv) reduction of the prepayment fees for
replacing the credit agreement after September 16, 1998, from $575,000 to
$300,000, (v) reduction of the revolving loan limit to $60 million,
(vi) consents to the sale of certain previously closed facilities.
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 approximately $3 million. The
Company does not have any other outstanding IRB obligations.
Liquidity. 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 believes that it will generate sufficient
cash flow from operations, as supplemented by its available borrowings under
the New Credit Agreement and operating leases, to meet anticipated working
capital and capital expenditure 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. As of March 9, 1998, the
Company had the ability to borrow an additional $6 million for general
operating requirements under the revolver associated with the New Credit
Agreement. The Company has available lease financing facilities of
approximately $7 million.
Capital Expenditures. The Company has made and expects to make in the
future, significant capital expenditures to modernize its facilities and
reduce operating costs. Capital expenditures were $28 million in fiscal year
1997 and are budgeted to be approximately $19 million in 1998. The Company's
ability to draw advances under the New Credit Agreement for the purpose of
funding capital expenditures, remains subject to compliance with the terms and
conditions of the New Credit Agreement (including its borrowing base
requirements).
20
<PAGE>
Environmental Contingencies. The Company is involved in certain proceedings
governed by environmental laws and regulations, including a proceeding under
CERCLA in which the Company has been named as one of approximately 180 third-
party defendants in connection with litigation relating to the Keystone
Sanitary Landfill (located in Adams County, Pennsylvania), a federal Superfund
matter. See "Item 1. Business-- Environmental and OSHA Considerations."
The Company has not accrued any material environmental liabilities as of
January 3, 1998, due to management's assessment that the likelihood that the
on-going proceedings would have a material adverse outcome is remote. However,
the Company has budgeted and expects to incur approximately $1.2 million in
environmental capital expenditures in fiscal year 1998, for the continuing
construction of new wastewater treatment facilities at the Brookneal plant in
order to comply with a Special Order on Consent with the Virginia Water
Control Board. See "Item 1. Business--Environmental and OSHA Considerations."
YEAR 2000
The Company is currently in the process of performing a review of its
business systems, including its computer systems, and is querying its
customers, vendors and resellers as to their progress in identifying and
addressing problems that their computer systems may face in correctly
interrelating and processing data information as the year 2000 approaches and
is reached. The Company does not expect that the cost to modify its
information technology infrastructure to be Year 2000 compliant will be
material to its financial condition or results of operations. To date, the
expense of upgrading product applications to be Year 2000 compliant has not
been material. Moreover, the Company does not anticipate any material
disruption in its operations as result of any failure by the Company to be in
compliance. In the event that any of the Company's significant suppliers or
customers does not successfully and timely achieve Year 2000 compliance, the
Company's business or operations could be adversely affected.
FORWARD-LOOKING STATEMENTS
A number of the matters and subject areas discussed in "Item 1. Business"
and in "Item 2. Financial Information--Management's Discussion and Analysis of
Financial Condition and Results of Operations" that are not historical or
current facts deal with potential future circumstances and developments. The
discussion of such matters and subject areas is qualified by the inherent
risks and uncertainties surrounding future expectations generally, and such
discussion also may materially differ from the Company's actual future
experience involving any one or more of such matters and subject areas. The
Company has attempted to identify, in context, certain of the factors that it
currently believes may cause actual future experience and results to differ
from the Company's current expectations regarding the relevant matter or
subject area. The operation and results of the Company's textile business may
also be subject to the effect of other risks and uncertainties in addition to
the relevant qualifying factors identified elsewhere in "Item 1. Business" and
in "Item 2. Financial Information-- Management's Discussion and Analysis of
Financial Condition and Results of Operations," including, but not limited to,
general economic conditions in the markets in which the Company operates, the
ability to achieve further market penetration and additional customers, the
cost of raw materials, particularly cotton, and other risks and uncertainties
associated with the textile industry.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed with this report commencing on
page F-1:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants................................ F-2
Balance Sheets.......................................................... F-3
Statements of Operations F-4
Statements of Stockholders' Equity...................................... F-5
Statements of Cash Flows................................................ F-6
Notes to Financial Statements F-7
Financial Statement Schedule II--Valuation and Qualifying Accounts...... F-21
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
21
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
executive officers and directors of the Company as of February 28, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Chairman, President, Chief Executive Officer and
Michael L. Fulbright... 48 Director
Vice-President, Chief Financial Officer and
Charles R. Tutterow.... 32 Secretary
Vice-President of Human Resources and Assistant
L. C. Brown............ 48 Secretary
Jeanne M. Cumiskey..... 40 President, Apparel Fabrics Division
Robert E. Major........ 55 President, Engineered Products Division
C. Scott Bartlett, Jr.. 65 Director
Marvin B. Crow......... 65 Director
Stewart M. Kasen....... 58 Director
George A. Poole, Jr.... 66 Director
James A. Williams...... 55 Director
Irwin N. Gold.......... 41 Director
</TABLE>
The principal occupations and positions for the past five years, and in
certain cases prior years, of each of such directors and executive officers of
the Company are as follows:
Michael L. Fulbright has been the President and Chief Executive Officer of
the Company since August 1996, Director since September 1996 and Chairman
since December 1997. Prior to coming to the Company, Mr. Fulbright was the
President of the Denim Division of Cone Mills, Inc. from December 1994 until
August 1996. From August 1992 through November 1994 Mr. Fulbright was
President of the Greige Manufacturing Division of Springs Industries, Inc.,
where he also served as the President of Wamsutta/Pacific Home Products
Division from January 1990 through August 1992. Mr. Fulbright is also Director
of JPS Textile Group, Inc. since November 1997.
Charles R. Tutterow was appointed Chief Financial Officer of the Company in
February 1998, and was elected to serve as Secretary in December 1997. Since
joining the Company in January 1997, Mr. Tutterow has served as the Director
and Vice-President of Strategic Planning. Prior to joining the Company, Mr.
Tutterow was Controller of the Denim Division of Cone Mills, Inc. from
December 1994 to January 1997. Mr. Tutterow was Manager of Financial
Administration with Kayser-Roth Corporation from 1991-1994, and was a
financial consultant with Deloitte & Touche LLP from 1989-1991.
L. C. Brown has been the Vice-President of Human Resources of the Company
since June 1997. Before joining the Company, Mr. Brown was Director of Human
Resources with the M. A. Hanna Company from June 1995 through May 1997. He
served as Vice-President of Human Resources with The New Cherokee Corporation
from May 1993 until January 1995. Prior to being a founding partner in the
firm of West & Brown Associates, a company that specialized in providing
consulting and training services in quality and human resources management, he
spent 19 years in various human resources positions with Milliken & Company
and Springs Industries.
Jeanne M. Cumiskey, President of the Apparel Fabrics Division since August
1997, was formerly Vice-President of Global Marketing and Product Development
for Cone Denim, a division of Cone Mills, Inc., serving in that position from
April 1991 to July 1997. Prior to joining Cone Mills, Ms. Cumiskey was
Merchandise Manager at Swift Spinning Mills, Inc. and Swift Denim, Inc. from
August 1985 to September 1987 and October 1987 to March 1991, respectively.
Robert E. Major has been with the Company since 1973. Mr. Major has been
President of the Engineered Products Division since 1987. Prior to joining the
Company, he was employed by Goodyear Tire and Rubber Company of Akron, Ohio.
22
<PAGE>
C. Scott Bartlett, Jr. has been a Director since September 1996. Since 1990
Mr. Bartlett has been a self-employed consultant specializing in advising
financial institutions in the areas of credit policy, loan approval and loan
workout. Mr. Bartlett is also a director of Harvard Industries, Inc., NVR
Incorporated, and Janus American Group, Inc. Mr. Bartlett is a member of the
Audit Committee.
Marvin B. Crow has been a Director since September 1996. Since 1989 Mr. Crow
has served as President of KBO Enterprises, Inc. Mr. Crow is also a management
consultant and serves as a director of Dyersburg Corporation, Ithaca
Industries, Ameritex Yarn Corporation, and National Spinning Company, Inc. Mr.
Crow is a member of the Audit Committee.
Stewart M. Kasen has been a Director since September 1996. Mr. Kasen was the
Chief Executive Officer of Best Products Co., Inc., which filed for federal
bankruptcy protection in September 1996, from June 1991 to May 1996. Mr. Kasen
is also chairman and a director of Factory Card Outlet Corporation. In
addition, Mr. Kasen is a director of K2 Inc., O'Sullivan Industries Holdings
Inc., Elder-Beerman Stores Corporation and Markel Corporation. Mr. Kasen is a
member of the Compensation Committee.
George A. Poole, Jr. has been a Director since September 1996. Mr. Poole has
been a private investor for more than five years and also serves as a director
of Anacomp, Inc. and U.S. Home Corporation. Mr. Poole is a member of the
Compensation Committee.
James A. Williams has been a Director since September 1996. Mr. Williams has
been the President and Chief Executive Officer of Great American Knitting
Mills, Inc., a division of Biderman Industries, U.S.A., both of which filed
for federal bankruptcy protection in July 1995. Mr. Williams presently serves
on the board of directors of Ithaca Industries and Maidenform Worldwide, Inc.
where he serves as Chairman of the Board. Mr. Williams also serves on
professional boards of the National Association of Hosiery Manufacturers and
The Fashion Association. Mr. Williams is a member of the Audit Committee.
Irwin N. Gold has been a Director since September 1996. Mr. Gold has been
the Managing Director and Co-Head of the Financial Restructuring Group of
Houlihan Lokey Howard & Zukin, Inc. for more than five years. Mr. Gold is also
a director of Cole National Corporation and Advantica Restaurant Group, Inc.
See "Item 13. Certain Relationships and Related Transactions." Mr. Gold is a
member of the Compensation Committee.
Directors and executive officers are elected annually and hold office until
their successors are elected and qualified. Pursuant to the Restructuring
Agreement and as part of the Reorganization, the Board of Directors was
reconstituted with individuals who were originally designated by the Steering
Committee. There are, however, no continuing arrangements or understandings
with respect to the designation of such Directors, except that the
Restructuring Agreement provided that Mr. Thomas C. Foley was entitled to
serve as a non-voting member of the Board of Directors for a period of one
year from the Effective Date. Mr. Foley resigned his position as a non-voting
member of the Board of Directors in May 1997. Prior to the Reorganization, Mr.
Thomas C. Foley served as Chief Executive Officer and Chairman of the Board of
Directors of the Old Bibb until August 1996. There are no family relationships
between any of the executive officers and directors of the Company. See "Item
13. Certain Relationships and Related Transactions."
ITEM 11. EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth, for the Company's
fiscal years ending January 3, 1998, December 28, 1996, and December 30, 1995,
certain information regarding the cash compensation paid by the Company, as
well as certain other compensation paid or accrued for those years, to the
Company's Chief
23
<PAGE>
Executive Officer and to each of the Company's most highly compensated
executive officers (the "Named Officers") whose salary and bonus exceeded
$100,000 for fiscal year 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------------------------------
LONG TERM COMPENSATION AWARDS
----------------------------------
(A) (B) (C) (D) (E) (G) (I)
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL COMPENSATION UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($)(2) ($)(5) OPTIONS/SARS(#) COMPENSATION($)(3)
- ------------------ ---- --------- ----------- ------------ --------------- ------------------ ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael L. Fulbright.... 1997 579,300(1) -- 135,229 100,000 5,301
Chairman, President 1996 152,535(4) 125,000 17,574 200,000 1,763
and Chief Executive
Officer
Charles R. Tutterow..... 1997 129,161 10,000 16,769 30,000 400
Vice President, Chief
Financial Officer and
Secretary
L. C. Brown............. 1997 69,361(6) -- 5,571 10,000 873
Vice President, Human
Resources
Jeanne Cumiskey......... 1997 69,063(6) -- 6,563 10,000 --
President, Apparel
Fabrics Division
Robert E. Major......... 1997 170,000 77,500 -- 25,000 3,385
President, Engineered 1996 160,000 25,000 -- -- 3,283
Products Division 1995 150,625 11,600 -- -- 3,100
</TABLE>
- --------
(1) The amount shown includes compensation earned in the given fiscal year and
deferred by the named executive officer pursuant to the Company's
Executive Deferred Compensation Plan (described below). The amount also
includes amounts paid by the Company for relocation expenses including
those associated with the sale of the named executive's Greensboro, North
Carolina home, temporary living expenses, expenses associated with the
purchase of Atlanta, Georgia home, and other relocation expenses.
(2) The amounts shown represent bonuses earned in the given fiscal year
pursuant to Old Bibb's bonus plan or discretionary bonuses awarded by the
Board of Directors.
(3)The amounts shown represent life insurance premium payments by the Company.
(4) Reflects compensation for the period after Mr. Fulbright joined the
Company in August 1996. Pursuant to an Employment Agreement, Mr.
Fulbright's annual compensation consists of an initial base salary of
$400,000 plus reimbursement of certain expenses. See "--Employment
Agreements; Termination Provisions."
(5) The amounts shown represent taxes paid by the Company, in connection with
relocation expenses.
(6) Reflects compensation for the period after Mr. Tutterow, Mr. Brown and Ms.
Cumiskey joined the Company in January 1997, June 1997 and August 1997,
respectively.
24
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------------ ------------ -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Fulbright.... 100,000 23% $7.25 09/30/07 $455,948 $1,155,463
Charles R. Tutterow..... 10,000 2% 7.25 09/30/07 45,595 115,546
Charles R. Tutterow..... 20,000 5% 6.81 12/08/07 85,656 217,068
L. C. Brown............. 10,000 2% 7.25 09/30/07 45,595 115,546
Jeanne M. Cumiskey...... 10,000 2% 7.25 09/30/07 45,595 115,546
Robert E. Major......... 25,000 6% 7.25 09/30/07 113,987 288,865
</TABLE>
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR END
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
ON REALIZED OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
NAME EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- -------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Michael L. Fulbright.... -- -- 0/300,000 0/375,000
Charles R. Tutterow..... -- -- 0/30,000 0/46,300
L. C. Brown............. -- -- 0/10,000 0/12,500
Jeanne M. Cumiskey...... -- -- 0/10,000 0/12,500
Robert E. Major......... -- -- 0/25,000 0/31,250
</TABLE>
DEFERRED COMPENSATION PLAN
Since January 1, 1983, the Company has provided to eligible executives the
opportunity of deferring compensation pursuant to the terms of an Executive
Deferred Compensation Plan. As of January 3, 1998, the Company owed
approximately $2,395,000 to participants under such plan.
EMPLOYMENT AGREEMENTS; TERMINATION PROVISIONS
The Company entered into an employment agreement with Michael L. Fulbright
in August, 1996, (as subsequently modified, the "Employment Agreement"),
pursuant to which he was appointed President and Chief Executive Officer. The
Employment Agreement provides for an initial base salary of $400,000 and
reimbursement of certain expenses. His base salary will be increased to
$425,000 after the first year and $450,000 after the second. Mr. Fulbright is
also entitled to an annual bonus of between 50% and 100% of his base salary,
based upon specified performance, with a guaranteed cash bonus of at least 33%
of his base salary in the first year, and certain stock options. In addition,
Mr. Fulbright is entitled to a $125,000 signing bonus, the purchase by the
Company of his Greensboro, North Carolina residence, and certain additional
relocation expenses. The Employment Agreement is for an initial term of three
years, with automatic one year renewals thereafter unless otherwise
terminated.
Pursuant to the terms of the Employment Agreement, the Company agreed to
grant to Mr. Fulbright options (the "Options") to acquire the Company's shares
of Common Stock as follows: (A) the Options would apply to an amount of shares
of Common Stock equal to 2% of the Company's Common Stock as of the date of
grant calculated on a fully-diluted basis; (B) the exercise price of the
Options would be based upon a $100 million aggregate valuation on all of the
Company's shares of Common Stock calculated on a fully-diluted basis;
(C) shares of Common Stock subject to the Options would vest ratably on the
first, second and third anniversary of the date of grant during the employment
period, provided that, in the event of a "Change in Control" or in
25
<PAGE>
the event of a termination of the Employment Period (other than by the Company
for "Cause" or by Mr. Fulbright without "Good Reason"), all shares of Common
Stock subject to the Option would vest immediately; and (D) the Options would
be exercisable commencing immediately upon vesting and ending on the fifth
year after the grant of the Options. Options were subsequently granted for an
aggregate of 200,000 shares of Common Stock, vesting in three annual
increments, at an exercise price of $7.10 per share. Effective September 30,
1997, options were also granted for the purchase of 100,000 shares of Common
Stock in accordance with the 1997 Omnibus Stock Incentive Plan (see below).
Effective January 1, 1998, the Company entered into agreements with the
Named Officers and key employees, as determined by the compensation committee.
These agreements provide certain lump sum payments as determined by the
compensation committee to the employee in the event of termination of
employment on the initiative of the Company for any reason other than for
"Cause" or by the employee with "Good Reason" or within six months following
change of control, as defined.
STOCK INCENTIVE PLAN
Effective July 1, 1997, the Company entered in the 1997 Omnibus Stock
Incentive Plan (the "Stock Plan") with its officers and key employees, as
defined, that provides for, as defined, option rights, appreciation rights,
performance shares, performance units or other stock-based awards in
accordance with the Stock Plan. In accordance with the Stock Plan, 1,000,000
shares were made available, subject to adjustments as noted in the agreement.
Pursuant to the Stock Plan, effective September 30, 1997, options for the
purchase of the Company's Common Stock were issued to officers and key
employees at an option price equal to the market value per share, as defined,
at the time of the grant. These options expire ten years from the grant date,
as defined, and vest ratably over a three-year period (July 1, 1998, July 1,
1999 and July 1, 2000). Approximately 442,000 options for the purchase of
Common Stock under the Stock Plan are outstanding as of February 28, 1998.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid $24,000 annually
for his services as a director, and $1,000 for attendance at each committee
meeting which does not occur in conjunction with a directors meeting and is
reimbursed for reasonable travel expenses for each such meeting he attends.
Effective July 1, 1997, the Company established a Nonemployee Director Stock
Plan ("Nonemployee Director Stock Plan"). Pursuant to the Nonemployee Director
Stock Plan, the maximum number of shares paid out shall be 250,000 shares,
unless otherwise determined by the board of directors. Under the plan, the
Company granted options for the purchase of 20,000 shares of the Company's
Common Stock to Nonemployee directors of the Company, effective September 30,
1997. These options have an exercise price of $7.25. The options shall become
vested at the rate of 6,666 shares on July 1, 1998, 6,666 shares on July 1,
1999, and 6,668 shares on July 1, 2000, provided, however, that upon death,
disability, as defined, or change in control, as defined, all of the options
will vest immediately. Each nonemployee director shall receive options for the
purchase of 5,000 shares of Common Stock, effective the day following the
annual shareholders' meeting, beginning fiscal year 2000. Also under the
Nonemployee Director Stock Plan, each new nonemployee director, as defined,
shall receive an award of options for the purchase of 10,000 shares. These
options vest 100% upon the first anniversary of the grant date, or earlier
upon a change in control, as defined. There were options for the purchase of
120,000 shares granted to nonemployee directors during fiscal year 1997 .
COMPENSATION COMMITTEE
The Board of Directors has designated Messrs. Kasen, Gold, Poole to serve as
the members of the compensation committee. Mr. Kasen serves as chairman of the
compensation committee.
Report of the Compensation Committee on Executive Compensation
26
<PAGE>
The Compensation Committee of the Board of Directors has established salary
and bonus levels for the executive officers of the Company, including the
President and Chief Executive Officer, based on a combination of financial
performance and subjective criteria. With respect to salary levels, such
levels were set subsequent to the Committee's determination of the executive
officers' contribution, progress, and development. Bonuses were based on
attaining pre-established levels of earnings before interest, taxes,
depreciation, and amortization and subjective criteria.
Stewart M. Kasen, Chairman
Irwin N. Gold
George A. Poole, Jr.
PERFORMANCE GRAPH
Set forth below is a graph comparing the percentage change in the cumulative
total return of the Company's Common Stock against the cumulative total return
of the Russell 2000 Index and the Media General Index 561 for the period from
October 3, 1997 to December 31, 1997. It assumes that the value of the
investment in Common Stock and in each index was $100.00 and that all
dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE RETURNS AMONG
THE BIBB COMPANY, RUSSELL 2000 INDEX AND MEDIA GENERAL INDEX 561
Measurement Period Measurement Pt -
(Fiscal Year Covered) FYE 10/3/97 FYE 12/31/97
--------------------- --------------- ------------
THE BIBB COMPANY $100 $108
RUSSELL 2000 $100 $ 97
MEDIA GENERAL INDEX 561 $100 $ 96
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table following sets forth information regarding the beneficial
ownership (as such term is defined under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), of the Company's
Common Stock as of March 16, 1998, except where noted, by (i) each of the
Company's directors or Named Officers, (ii) all directors and officers as a
group and (iii) each person who is known by the Company to beneficially own
more than 5% of the Company's outstanding Common Stock (based upon the Common
Stock issued in the Reorganization). Except as noted below, the persons named
in the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, other than shares deemed
to be beneficially owned by them.
27
<PAGE>
SHARES BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES PERCENT
------------------------------------ --------- -------
<S> <C> <C>
Merrill Lynch & Co., Inc.(2)............................... 2,404,485 23.9%
250 Vesey Street, North Tower
New York, NY 10281
Franklin Custodian Funds, Inc.,............................ 2,097,122 20.8
Income Fund (2)
777 Mariners Island Blvd.
San Mateo, CA 94404
Penn Capital Management Company, Inc....................... 1,315,572 13.1
52 Haddonfield Berlin Road
Suite 1000
Cherry Hill, NJ 08034
Buford H. Ortale and Related Entities...................... 1,081,666 10.8
104 Woodmont Boulevard
Suite 200
Nashville, Tennessee 37205
Romulus Holdings, Inc. and Related Entities................ 695,796 6.9
25 Coligni Avenue
New Rochelle, NY 10801
Michael L. Fulbright....................................... 17,000 *
Charles R. Tutterow........................................ 0 0
L.C. Brown................................................. 0 0
Jeanne Cumiskey............................................ 0 0
Robert E. Major............................................ 0 0
C. Scott Bartlett, Jr...................................... 1,000 *
Marvin B. Crow............................................. 0 0
Stewart M. Kasen........................................... 5,000 *
George Poole, Jr........................................... 0 0
James A. Williams.......................................... 0 0
Irwin N. Gold(3)........................................... 20,305 *
All directors and officers as a group (11 persons)......... 43,305 *
</TABLE>
- --------
* denotes less than 1%
(1) Includes 2,073,779 shares beneficially owned by Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a wholly owned subsidiary of
Merrill Lynch & Co., Inc. ("ML&Co.") and 330,706 shares beneficially owned
by the Merrill Lynch Phoenix Fund, Inc. ("Phoenix Fund"). Phoenix Fund is
an investment company registered under the Investment Company Act of 1940,
the investment adviser of which is a limited partnership of which the
general partner is an indirect, wholly owned subsidiary of ML&Co. ML&Co.
disclaims beneficial ownership of the shares owned by MLPF&S and Phoenix
Fund. MLPF&S disclaims beneficial ownership of any shares of which ML&Co.
or Phoenix Fund may be deemed to be beneficial owners. Phoenix Fund
disclaims beneficial ownership of any shares of which ML&Co. or MLPF&S may
be deemed to be beneficial owners.
(2) Excludes 419,424 shares of Common Stock owned by Franklin ValueMark Funds,
Income Securities Fund, as to which shares Franklin Custodian Funds, Inc.,
Income Series, disclaims beneficial ownership. The share information was
obtained from Schedule 13(d) filed with the Securities and Exchange
Commission dated January 26, 1998.
(3) Irwin N. Gold may be deemed to be the beneficial owner of 17,791 shares of
Common Stock held of record by Houlihan Lokey Howard & Zukin ("Houlihan
Lokey") with respect to which Mr. Gold has been granted an undivided
interest. Mr. Gold is a managing director of Houlihan Lokey and may be
deemed to be the beneficial owner of an additional 2,514 shares of Common
Stock held of record by Houlihan Lokey to the extent of Mr. Gold's
pecuniary interest therein. Houlihan Lokey retains sole voting and
dispositive power with respect to all such shares of Common Stock
beneficially owned by Mr. Gold.
28
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RESTRUCTURING AGREEMENT
The Restructuring Agreement includes the following provisions and covenants:
Co-Sale
Each of Franklin Custodian Fund, Income Series, and Franklin Value Mark
Funds, Income Securities Fund (collectively referred to as the "Franklin
Holder") agreed that, in the event any such Franklin Holder grants to any
other member of the Steering Committee (which would include Merrill Lynch,
Pierce, Fenner & Smith Inc., Showa Leasing (U.S.A.) Inc. and Romulus Holdings,
Inc. and certain of its affiliates) any "co-sale," "tag-along" or other
similar right or other opportunity to sell such other member of the Steering
Committee's equity securities of the Company (or any securities or other
property exchanged therefor) on substantially the same terms and conditions as
any Franklin Holder may sell, each such Franklin Holder shall grant the same
right or other opportunity to each former holder of Old Common Stock as of
February 1, 1996, with respect to equity securities of the Company (or any
securities or other property exchanged therefor).
Non-Voting Director
For a period through and including one year after the effective date of the
Merger, the Company and the members of the Steering Committee have agreed as
follows: (i) Mr. Foley shall be a member of the board of directors of the
Company with full opportunity to attend, participate in and be heard at all
meetings of the board of directors, whether regular, special, telephonic or
otherwise; provided, however, that Mr. Foley shall have no vote as a member of
the board of directors, nor shall he receive any fee for his service on the
board of directors; (ii) the Company shall provide Mr. Foley with as much
advance notice of all meetings as is provided to any other director; (iii) the
Company shall provide Mr. Foley with all other information with respect to
such meetings as is provided to members of the board of directors at the same
time as so provided to such persons; and (iv) the Company shall provide Mr.
Foley with advance notice of, and an opportunity to be heard with respect to,
any action contemplated to be taken by written consent of its board of
directors in lieu of a meeting thereof and, as soon as reasonably practicable
thereafter, shall notify Mr. Foley of any action so taken. Mr. Foley resigned
his position as a non-voting member of the Board of Directors in May 1997.
FINANCIAL ADVISORY SERVICES
The Steering Committee, with the Company's consent, engaged Houlihan Lokey
at the Company's expense, to act as the Steering Committee's financial advisor
in connection with the Reorganization and to provide certain services to the
Company in connection with the Reorganization. Pursuant to an Agreement
between the Company and Houlihan Lokey, Houlihan Lokey received $390,000
during 1995, for services performed on behalf of the Steering Committee, plus
the reimbursement of reasonable and documented out-of-pocket expenses incurred
by Houlihan Lokey in connection therewith. In addition, the Company agreed to
pay Houlihan Lokey a fee, payable in shares of Common Stock, equal to seventy-
five basis points (0.75%) of the aggregate value of the Common Stock issued to
the holders of the Old Subordinated Notes pursuant to the Plan, based upon a
specified calculated value of the Company. The number of shares of Common
Stock to be issued was to be based on the average closing trading price of the
Common Stock for the 20 days prior to October 15, 1996. On December 31, 1996,
the Company issued an aggregate of 75,163 shares of Common Stock, calculated
on the basis of $7.10 per share, to Houlihan Lokey in full payment of such
fee. Irwin N. Gold, who was appointed a Director of the Company in September
1996, is a Managing Director of Houlihan Lokey.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of Financial Statements.
An Index to Financial Statements appears at Page F-1 hereof.
(b) No reports on Form 8-K were filed for the fourth quarter ended January
3, 1998.
29
<PAGE>
(c) The following financial statement schedule is filed as part of this
report on page F-21:
Schedule II--Valuation and Qualifying Accounts
Supplemental schedules other than those listed above are omitted for
the reason that they are not required or are not applicable, or the
information is included in the notes to the financial statements.
(d) Exhibits Index follows:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2(a)** Plan of Reorganization of The Bibb Company.
2(b)** Restructuring Agreement dated as of February 1, 1996, as amended,
among The Bibb Company and each of the specified holders of 13
7/8% Senior Subordinated Notes Due 1999 and 14% Senior
Subordinated Notes Due 1999 of The Bibb Company and NTC Group,
Inc.
3(a)** Restated Certificate of Incorporation of The Bibb Company,
(Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended October 4, 1997. File
No. 0-21661)
3(b)** Bylaws of The Bibb Company, as amended.
4(a)*** Certificate of Designation of Series A Junior Participating
Preferred Stock of The Bibb Company.
10(a)** Loan and Security Agreement dated as of September 12, 1996 by and
among The Bibb Company and Congress Financial Corporation
(Southern), as agent, and the lenders parties thereto.
10(b)** Amendment No. 1 to the Loan and Security Agreement, dated October
31, 1996.
10(c)** Amendment No. 2 to the Loan and Security Agreement, dated April
25, 1997.
10(d)*** Amendment No. 3 to Loan and Security Agreement, dated November
11, 1997.
10(e)++ Amendment No. 4 to the Loan and Security Agreement, dated March
6, 1998.
10(f)(*)** Management Services Agreement dated as of April 1, 1989 between
The Bibb Company and NTC Group, Inc.
10(g)(*)** The Bibb Company Executives Deferred Compensation Plan originally
effective January 1, 1983, and as revised through January 1,
1992.
10(h)** Agreement between TB Woods Incorporated and The Bibb Company
dated as of July 3, 1996.
10(i)(*)** Employment Agreement between The Bibb Company and Michael L.
Fulbright dated as of August 26, 1996, and Amendment to
Employment Agreement dated April 1, 1997.
10(j)** Asset Purchase Agreement between The Bibb Company and WestPoint
Stevens Inc. dated as of February 13, 1997.
10(k)(*)** Non-Qualified Stock Option Agreement, dated as of September 27,
1996, between Michael L. Fulbright and The Bibb Company.
10(l)*++ 1997 Omnibus Stock Incentive Plan.
10(m)*++ Nonemployee Director Stock Plan.
10(n)*++ Severance and Change in Control Policies for Executive Officers.
10(o)*++ Severance Policy for Key Management.
10(p) Rights Agreement (including a Form of Certificate of Designation
of Series A Junior Participating Preferred Stock as Exhibit A
thereto, a Form of Right Certificate as Exhibit B thereto and a
Summary of Rights to Purchase Preferred Stock as Exhibit C
thereto (Incorporated by reference to the Company's Registration
Statement on Form
8-A, as amended, dated October 15, 1997, File No. 0-21661).
27++ Financial Data Schedule.
</TABLE>
- --------
++ Filed herewith.
* Identifies each exhibit that is a management contract or compensatory plan
or arrangement required to be included as an exhibit hereto.
** Incorporated by reference to the Company's Registration Statement on Form
10, as amended, File No. 0-21661.
*** Incorporated by reference to the Company's Quarterly Report on Form 10-Q,
for the quarterly period ended October 4, 1997, File No. 0-21661.
30
<PAGE>
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, The Bibb Company has duly caused this Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE BIBB COMPANY
/s/ Michael L. Fulbright
---------------------------------------
BY: MICHAEL L. FULBRIGHT
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
/s/ Charles R. Tutterow
---------------------------------------
BY: CHARLES R. TUTTEROW
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER,
SECRETARY, AND
PRINCIPAL ACCOUNTING OFFICER
Pursuant to the requirements of the Securities Act of 1934, this Form 10-K
has been signed below by the following persons on behalf of the Company in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael L. Fulbright Chairman of the Board, March 30, 1998
_________________________________ President and Chief
MICHAEL L. FULBRIGHT Executive Officer
/s/ Charles R. Tutterow Vice President--Chief March 30, 1998
_________________________________ Financial Officer and
CHARLES R. TUTTEROW Secretary
/s/ C. Scott Bartlett, Jr. Director March 30, 1998
_________________________________
C. SCOTT BARTLETT, JR.
/s/ Marvin B. Crow Director March 30, 1998
_________________________________
MARVIN B. CROW
/s/ Stewart M. Kasen Director March 30, 1998
_________________________________
STEWART M. KASEN
/s/ George A. Poole, Jr. Director March 30, 1998
_________________________________
GEORGE A. POOLE, JR.
/s/ James A. Williams Director March 30, 1998
_________________________________
JAMES A. WILLIAMs
/s/ Irwin N. Gold Director March 30, 1998
_________________________________
IRWIN N. GOLD
</TABLE>
31
<PAGE>
THE BIBB COMPANY
FINANCIAL STATEMENTS AND SCHEDULE
AS OF JANUARY 3, 1998, DECEMBER 28, 1996,
AND DECEMBER 30, 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE>
THE BIBB COMPANY
FINANCIAL STATEMENTS AND SCHEDULE
JANUARY 3, 1998, DECEMBER 28, 1996,
AND DECEMBER 30, 1995
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Balance Sheets--January 3, 1998 and December 28, 1996
Statements of Operations for the Year Ended January 3, 1998, the Three
Months Ended December 28, 1996, the Nine Months Ended September 28, 1996,
and the Year Ended December 30, 1995
Statements of Changes in Stockholders' Equity (Deficit) for the Year Ended
January 3, 1998, the Three Months Ended December 28, 1996, the Nine Months
Ended September 28, 1996, and the Year Ended December 30, 1995
Statements of Cash Flows for the Year Ended January 3, 1998, the Three
Months Ended December 28, 1996, the Nine Months Ended September 28, 1996,
and the Year Ended December 30, 1995
NOTES TO FINANCIAL STATEMENTS
SUPPLEMENTAL SCHEDULE
Schedule II: Valuation and Qualifying Accounts for the Year Ended January
3, 1998, the Three Months Ended December 28, 1996, the Nine
Months Ended September 28, 1996, and the Year Ended
December 30, 1995
Supplemental schedules other than that listed above are omitted because
they are not required or are not applicable, or the information is included
in the notes to financial statements.
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
The Bibb Company:
We have audited the accompanying balance sheets of THE BIBB COMPANY (a
Delaware corporation) as of January 3, 1998 and December 28, 1996 and the
related statements of operations, changes in stockholders' equity (deficit),
and cash flows for the year ended January 3, 1998, the three months ended
December 28, 1996, the nine months ended September 28, 1996, and the year
ended December 30, 1995. These financial statements and the schedule referred
to below, are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
schedule referred to below, based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Bibb Company as of
January 3, 1998 and December 28, 1996 and the results of its operations and
its cash flows for the year ended January 3, 1998, the three months ended
December 28, 1996, the nine months ended September 28, 1996, and the year
ended December 30, 1995 in conformity with generally accepted accounting
principles.
As discussed in Note 1, the Company's reorganization plan was confirmed by
the U.S. Bankruptcy Court on September 12, 1996 and became effective September
27, 1996 (effective September 28, 1996 for financial reporting purposes). In
accordance with Statement of Position 90-7 of the American Institute of
Certified Public Accountants, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code," the Company was required to account
for the reorganization using fresh start reporting. Accordingly, all financial
statements prior to September 28, 1996 are not comparable to the financial
statements for periods after the implementation of fresh start reporting.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule included in the index to
financial statements is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a required part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 9, 1998
F-2
<PAGE>
THE BIBB COMPANY
BALANCE SHEETS
JANUARY 3, 1998 AND DECEMBER 28, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JANUARY DECEMBER 28,
3, 1998 1996
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 114 $ 3,206
Accounts receivable, net of allowances for doubtful
accounts, discounts, and claims of $2,686 and $1,588
as of January 3, 1998 and December 28, 1996,
respectively.......................................... 34,761 55,128
Inventories............................................ 54,305 72,282
Assets held for sale................................... 0 37,012
Net assets of discontinued operations.................. 12,025 0
Prepaid expenses and other current assets.............. 3,019 2,033
-------- --------
Total current assets................................ 104,224 169,661
PROPERTY, PLANT, AND EQUIPMENT, NET..................... 62,829 58,642
OTHER ASSETS............................................ 2,298 4,397
-------- --------
$169,351 $232,700
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt................... $ 3,617 $ 5,237
Accounts payable....................................... 17,830 36,466
Accrued payroll and other compensation................. 5,806 14,607
Accrued interest....................................... 54 681
Other accrued liabilities.............................. 9,049 5,768
-------- --------
Total current liabilities........................... 36,356 62,759
-------- --------
LONG-TERM DEBT, less current maturities................. 74,898 84,093
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 11)
STOCKHOLDERS' EQUITY (DEFICIT):
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 9,986,413 shares issued and
outstanding as of January 3, 1998 and December 28,
1996, respectively.................................... 101 100
Additional paid-in capital............................. 88,882 88,348
Accumulated deficit.................................... (30,886) (2,540)
Minimum pension liability adjustment................... 0 (60)
-------- --------
Total stockholders' equity.......................... 58,097 85,848
-------- --------
$169,351 $232,700
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE>
THE BIBB COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 3, 1998,
THE THREE MONTHS ENDED DECEMBER 28, 1996,
THE NINE MONTHS ENDED SEPTEMBER 28, 1996,
AND THE YEAR ENDED DECEMBER 30, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
POST-REORGANIZATION PRE-REORGANIZATION
------------------------ --------------------------
THREE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
JANUARY 3, DECEMBER 28, SEPTEMBER 28, DECEMBER 30,
1998 1996 1996 1995
---------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
NET SALES................................................................ $ 248,836 $ 63,937 $262,392 $ 389,998
COST OF SALES............................................................ 222,620 57,252 239,724 366,040
---------- --------- -------- ---------
Gross profit.......................................................... 26,216 6,685 22,668 23,958
SELLING AND ADMINISTRATIVE EXPENSES...................................... 23,306 7,428 26,002 36,130
NONRECURRING CHARGES..................................................... 4,133 0 0 0
MANAGEMENT FEES TO AFFILIATE............................................. 0 0 1,993 3,368
---------- --------- -------- ---------
Operating loss........................................................ (1,223) (743) (5,327) (15,540)
---------- --------- -------- ---------
OTHER (EXPENSE) INCOME:
Interest expense:
Senior and other debt................................................... (4,743) (1,074) (4,850) (5,627)
Subordinated bonds...................................................... 0 0 (11,151) (22,299)
---------- --------- -------- ---------
(4,743) (1,074) (16,001) (27,926)
Interest income from T.B. Wood's Corporation............................ 0 0 659 1,172
Loan fee amortization and related expenses.............................. (1,270) (235) (1,928) (2,486)
Other, net.............................................................. (162) (109) 2,660 (2,811)
---------- --------- -------- ---------
(6,175) (1,418) (14,610) (32,051)
---------- --------- -------- ---------
LOSS BEFORE DISCONTINUED OPERATIONS, REORGANIZATION ITEMS, AND
EXTRAORDINARY ITEM...................................................... (7,398) (2,161) (19,937) (47,591)
DISCONTINUED OPERATIONS (NET OF TAXES):
Income (loss) from discontinued napery business......................... (2,494) 17 N/A N/A
Loss from disposal of discontinued napery business...................... (2,832) 0 N/A N/A
Loss from discontinued apparel business................................. (4,422) (396) N/A N/A
Loss from disposal of discontinued apparel business..................... (11,200) 0 N/A N/A
REORGANIZATION ITEMS:
Professional fees and other expenses.................................... 0 0 (1,423) 0
Adjust accounts to fair value........................................... 0 0 7,921 0
EXTRAORDINARY ITEM, gain on discharge of debt.. 0 0 111,650 0
---------- --------- -------- ---------
NET (LOSS) INCOME........................................................ $ (28,346) $ (2,540) $ 98,211 $ (47,591)
========== ========= ======== =========
PER SHARE INFORMATION (1):
Net loss from continuing operations:
Basic and diluted....................................................... $ (0.74) $ (0.22) N/A N/A
========== ========= ======== =========
Net loss of discontinued operations:
Basic and diluted....................................................... $ (0.69) $ (0.04) N/A N/A
========== ========= ======== =========
Loss from disposal of discontinued operations:
Basic and diluted....................................................... $ (1.39) $ 0.00 N/A N/A
========== ========= ======== =========
Net loss:
Basic and diluted....................................................... $ (2.82) $ (0.25) N/A N/A
========== ========= ======== =========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted....................................................... 10,061,576 9,986,413 N/A N/A
- --------------------------------------------------
========== ========= ======== =========
</TABLE>
- --------
(1) Share and per share amounts for the nine months ended September 28, 1996
and the year ended December 30, 1995 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 (Note 1).
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
THE BIBB COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED JANUARY 3, 1998,
THE THREE MONTHS ENDED DECEMBER 28, 1996,
THE NINE MONTHS ENDED SEPTEMBER 28, 1996,
AND THE YEAR ENDED DECEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON COMMON MINIMUM
STOCK STOCK ADDITIONAL PENSION
($.01 PAR ($.10 PAR PAID-IN ACCUMULATED LIABILITY
VALUE) VALUE) CAPITAL DEFICIT ADJUSTMENT TOTAL
--------- --------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
PRE-REORGANIZATION
BALANCE, January 1,
1995................... $ 0 $ 1 $ 3,427 $(45,514) $ (39) $(42,125)
Net loss............... 0 0 0 (47,591) 0 (47,591)
Net pension liability
adjustment............ 0 0 0 0 (911) (911)
---- --- ------- -------- ----- --------
BALANCE, December 30,
1995................... 0 1 3,427 (93,105) (950) (90,627)
Net income............. 0 0 0 98,211 0 98,211
Exercise of options.... 0 0 24 0 0 24
Loss on related party
transaction (Note 9).. 0 0 (5,016) 0 0 (5,016)
Consummation of the re-
structuring........... 100 (1) 85,757 0 0 85,856
Fresh start equity re-
classifications....... 0 0 4,156 (5,106) 950 0
---- --- ------- -------- ----- --------
BALANCE, September 28,
1996................... 100 0 88,348 0 0 88,448
- ----------------------------------------------------------------------------------------
POST-REORGANIZATION
Net loss............... 0 0 0 (2,540) 0 (2,540)
Net pension liability
adjustment............ 0 0 0 0 (60) (60)
---- --- ------- -------- ----- --------
BALANCE, December 28,
1996................... 100 0 88,348 (2,540) (60) 85,848
Stock issuance......... 1 0 534 0 0 535
Net loss............... 0 0 0 (28,346) 0 (28,346)
Net pension liability
adjustment............ 0 0 0 0 60 60
---- --- ------- -------- ----- --------
BALANCE, January 3,
1998................... $101 $ 0 $88,882 $(30,886) $ 0 $ 58,097
==== === ======= ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
THE BIBB COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 3, 1998,
THE THREE MONTHS ENDED DECEMBER 28, 1996,
THE NINE MONTHS ENDED SEPTEMBER 28, 1996,
AND THE YEAR ENDED DECEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
POST-REORGANIZATION PRE-REORGANIZATION
----------------------- --------------------------
THREE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED
JANUARY 3, DECEMBER 28, SEPTEMBER 28, DECEMBER 30,
1998 1996 1996 1995
---------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income........................................................ $(28,346) $(2,540) $ 98,211 $(47,591)
Adjustments to reconcile net (loss) income to net cash provided by (used
in) operating activities:
Depreciation and amortization........................................... 6,937 2,610 9,582 15,644
Loan fee amortization and related expenses.............................. 1,270 235 1,928 2,486
Net gain on sale and retirement of assets............................... (810) (42) (377) (50)
Net gain on sale of investment.......................................... 0 0 (3,949) 0
Fixed asset valuation adjustments....................................... 4,950 0 0 0
Interest receivable on note receivable from T.B. Wood's Corporation..... 0 0 (659) (1,172)
Changes in operating assets and liabilities, net of reorganization
items:
Restricted cash....................................................... 0 0 7,966 (1,064)
Accounts receivable................................................... 15,252 5,906 (53,108) 17,148
Inventories........................................................... 10,491 2,621 (5,252) 6,512
Assets held for sale.................................................. 37,012 (1,383) 0 0
2
Prepaid expenses and other current assets............................. (2,343) 129 (255) (1,772)
Other noncurrent assets............................................... 735 0 0 0
Accounts payable and accrued liabilities.............................. (15,283) (2,491) 16,952 17,215
Reorganization items:
Professional fees and other expenses................................... 0 0 1,423 0
Adjust accounts to fair value.......................................... 0 0 (7,921) 0
Extraordinary gain on discharge of debt................................ 0 0 (111,650) 0
-------- ------- --------- --------
Net cash provided by (used in) operating activities.................. 29,865 5,045 (47,109) 7,356
-------- ------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................................... (28,233) (1,658) (2,940) (5,489)
Proceeds from sale of fixed assets....................................... 5,556 583 865 249
Proceeds from the sale of investment..................................... 0 0 4,185 0
Repayment of note receivable from T.B. Wood's Corporation, net........... 0 0 10,677 0
Other, net............................................................... 0 (804) (4,493) (2,922)
-------- ------- --------- --------
Net cash (used in) provided by investing activities.................. (22,677) (1,879) 8,294 (8,162)
-------- ------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt and capital lease obligations............... $ (3,581) $(8,035) $ (60) $ (64)
Net (repayments) borrowings of senior debt............................... (14,873) 7,750 40,485 907
Borrowings under capital lease obligations............................... 7,639 0 0 0
Stock issuance........................................................... 535 0 0 0
Proceeds from exercise of stock options.................................. 0 0 24 0
Loan fees................................................................ 0 0 (1,459) 0
-------- ------- --------- --------
Net cash (used in) provided by financing activities.................. (10,280) (285) 38,990 843
-------- ------- --------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS...................... (3,092) 2,881 175 37
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......................... 3,206 325 150 113
-------- ------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................ $ 114 $ 3,206 $ 325 $ 150
======== ======= ========= ========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid............................................................ $ 6,459 $ 1,497 $ 4,624 $ 10,538
- --------------------------------------------------
======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
THE BIBB COMPANY
NOTES TO FINANCIAL STATEMENTS
JANUARY 3, 1998, DECEMBER 28, 1996, AND DECEMBER 30, 1995
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
The Bibb Company (the "Company") is engaged in the manufacturing and
marketing of consumer products for the home, principally sheets, pillowcases,
and other bedding accessories, as well as apparel fabrics and other specialty
engineered textile products used in making high-pressure hoses and other
industrial products. The Company operates manufacturing plants in Georgia,
South Carolina, and Virginia and has been engaged in the manufacturing and
marketing of textile products since 1876. The Company's major customers are
primarily retailers and hose manufacturers located throughout the United
States.
In 1993, the Company entered into an agreement of limited partnership with
an affiliate whereby the Company agreed to contribute receivables to BF
Funding, L.P. ("BF Funding" or the "Partnership"), a Georgia limited
partnership, in exchange for limited partnership interests representing 98.5%
of the total capital of BF Funding. The primary purpose of BF Funding was to
acquire receivables of the Company which were transferred to a trust and sold
to third-party investors. Under the agreement, the profits and losses of BF
Funding were allocated in proportion to each partner's share of capital
contributions. On July 5, 1996, the Company repurchased the receivables from
BF Funding for par plus accrued interest, in the total amount of $50,155,000.
The repurchase liquidated the limited partnership interests. The financial
statements for the year ended December 30, 1995 include the accounts of the
Company and the Partnership.
CONSUMMATION OF THE RESTRUCTURING
On July 3, 1996, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Court.
On September 12, 1996, the United States Bankruptcy Court for the District
of Delaware issued an order confirming the reorganization plan (the "Plan").
The Plan was consummated on September 27, 1996 (the "Effective Date")
(effective September 28, 1996 for financial reporting purposes).
The consummation of the Plan resulted in, among other things, (i) the
discharge of approximately $197 million in long-term debt, including accrued
interest, and (ii) the issuance of 9,500,000 shares of common stock to the
holders of the 14% and 13 7/8% senior subordinated notes and 500,000 shares to
the holders of old common stock. The Plan did not alter, adjust, or reduce the
Company's obligations to its other creditors.
Upon consummation of the Plan, the Company recognized an extraordinary gain
on the discharge of debt of approximately $112 million, which represented
forgiveness of debt principal and interest, reduced by the estimated fair
value of common stock issued to the holders of the 14% and 13 7/8% senior
subordinated notes.
Pursuant to the Plan, the Company obtained financing from lending
institutions to repay its senior revolving credit facility (Note 6) and
finance additional capital expenditures (the "Loan and Security Agreement").
Under the Loan and Security Agreement, the Company is entitled to make
borrowings in the form of a term loan and revolving loans available to the
extent that a sufficient borrowing base, calculated based on eligible
receivables and inventory, exists.
As of the Effective Date, in accordance with the American Institute of
Certified Public Accountants' Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code," the Company adopted
fresh start reporting (see discussion below).
F-7
<PAGE>
SALE OF THE TERRY PRODUCTS BUSINESS
In connection with the restructuring, management approved a plan to sell the
Company's terry products business (the "Terry Sale"), which designs and
manufactures 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.
On February 21, 1997, the Company sold the business to WestPoint Stevens,
Inc. for approximately $38.8 million.
Assets included in the Terry Sale are recorded in the balance sheet as of
December 28, 1996 as "assets held for sale" based on the net proceeds of the
sale, including losses related to the terry products business from
December 29, 1996 through February 21, 1997. Terry products business losses
for this period have been eliminated from the statement of operations.
Net sales of the terry products business for the three months ended December
28, 1996 were approximately $20 million. Net losses of the terry products
business for the three months ended December 28, 1996 were approximately $1.8
million.
FRESH START REPORTING
For accounting purposes, the Company assumed that the Plan was consummated
on September 28, 1996. Under the principles of fresh start reporting, the
Company's reorganization value was allocated to identifiable assets on the
basis of their estimated fair values. The total reorganization value assigned
to the Company's assets was estimated by calculating projected cash flows
before debt service requirements for a four-year period, plus an estimated
terminal value of the Company (calculated using a multiple of approximately
six on projected earnings before interest, taxes, depreciation, and
amortization ("EBITDA")), each discounted back to its present value using a
discount rate of 14% (representing the estimated after-tax weighted cost of
capital). The above calculations resulted in an estimated reorganization value
of approximately $238 million and a resulting $88.4 million of stockholders'
equity after deducting current liabilities of approximately $60 million and
long-term debt of approximately $90 million.
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 of prior periods. The effect
of the Plan, the reclassification of assets associated with the Terry Sale,
and the implementation of fresh start reporting on the Company's balance sheet
as of September 28, 1996 was as follows (in thousands) (unaudited):
<TABLE>
<CAPTION>
PRE-FRESH ADJUSTMENTS
START TO RECORD ASSETS FRESH START
BALANCE SHEET PLAN HELD FAIR VALUE BALANCE SHEET
SEPTEMBER 28, CONFIRMATION FOR SALE ADJUSTMENTS SEPTEMBER 28,
1996 (A) (B) (C) 1996
------------- ------------ -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Cash.................... $ 325 $ 0 $ $ 0 $ 0 $ 325
Other current assets.... 148,633 0 (18,646) 8,112 138,099
Assets held for sale.... 0 0 27,574 8,055 35,629
Property, plant, and
equipment.............. 72,129 0 (8,928) (3,577) 59,624
Other long-term assets.. 9,915 (1,628) 0 (3,888) 4,399
Current liabilities,
excluding current
maturities of long-term
debt................... 58,829 403 0 781 60,013
Long-term debt,
including current
maturities............. 286,919 (197,304) 0 0 89,615
Stockholders' equity
(deficit).............. (114,746) 195,273 0 7,921 88,448
</TABLE>
- --------
(a) To record the forgiveness of debt, the exchange of old subordinated notes,
and the issuance of common stock pursuant to the Plan.
(b) To reclassify assets associated with the Terry Sale.
(c) To record the adjustments to state assets and liabilities at their
estimated fair value.
F-8
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company's annual reporting period is the 52 or 53-week period ending on
the Saturday nearest December 31. The Company's results of operations and cash
flows are presented for the year ended January 3, 1998 (53 weeks), the three
months ended December 28, 1996 (13 weeks), the nine months ended September 28,
1996 (39 weeks), and the year ended December 30, 1995 (52 weeks).
For accounting purposes, the Company treated the consummation of the Plan as
if it occurred on September 28, 1996. The financial statements as of and for
the three months ended December 28, 1996 and the year ended January 3, 1998
are presented for the Company after the consummation of the Plan. As discussed
previously, these statements were prepared under the principles of fresh start
reporting and are not comparable to the statements of 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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all short-term deposits with an original maturity of
three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method except for certain supplies, for
which cost is determined using the first-in, first-out ("FIFO") method. Market
is defined as net realizable value. Cost includes raw materials, direct labor,
and manufacturing overhead. Approximately 96% of total inventories were valued
using the LIFO method at January 3, 1998 and December 28, 1996.
PROPERTY, PLANT, AND EQUIPMENT
As a result of the adoption of fresh start reporting, property, plant, and
equipment were adjusted to their estimated fair values 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, existing buildings and
improvements are depreciated over a remaining life of 20 years, and existing
machinery and equipment is depreciated over a remaining life of 5 years.
Buildings and machinery and equipment placed in service subsequent to the
implementation of fresh start reporting are depreciated over estimated useful
lives of 30 and 15 years, respectively. Leasehold improvements are depreciated
over the shorter of the estimated useful asset life or the term of the related
lease.
During 1997, the Company entered into three equipment leases which qualify
as capital leases under Statement of Financial Accounting Standards ("SFAS")
No. 13, "Accounting for Leases." Accordingly, the equipment under capital
lease obligations has been recorded at the net present value of the estimated
minimum required lease payments at the inception of the lease using the
Company's incremental borrowing rate.
F-9
<PAGE>
Maintenance and repair costs are expensed as incurred, and major renewals
and betterments are capitalized. Construction in progress is transferred to
machinery and equipment when the asset is complete and placed in service. When
property or equipment is retired or otherwise disposed of, the related
carrying value and accumulated depreciation are removed from the accounts and
any resulting gain or loss is recorded in the statement of operations.
IMPAIRMENT OF LONG-LIVED ASSETS
SFAS No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of," requires that long-lived assets and certain
identifiable intangibles held and used by a Company be reviewed for possible
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121 also requires
that long-lived assets and certain identifiable assets held for sale, be
reported at the lower of carrying amount or fair value, less cost to sell. The
Company adopted SFAS No. 121 during 1996. Impairment losses of $750 were
recorded in 1997 related to closed facilities, and no impairment losses were
recorded in 1996 (See Note 3).
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
SFAS No. 87, "Employers' Accounting for Pensions," requires that a company
record an additional minimum pension liability to the extent that a company's
accumulated pension benefit obligation exceeds the fair value of pension plan
assets and accrued pension liabilities. This additional minimum pension
liability is offset by an intangible asset, not to exceed prior service costs
of the pension plan. Amounts in excess of prior service costs are reflected as
a reduction in stockholders' equity. As a result of the adoption of fresh
start reporting, all previously unrecognized amounts relating to the projected
benefit obligation as of September 28, 1996 were recognized in the nine months
ended September 28, 1996.
Prior to 1993, the Company accounted for retiree health care and life
insurance benefits on a pay-as-you-go basis. Effective January 2, 1993, the
Company adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." As a result of the adoption of fresh start
reporting, all previously unrecognized amounts relating to the projected
benefit obligation as of September 28, 1996 were recognized in the nine months
ended September 28, 1996.
STOCK OPTIONS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." This new standard defines a
fair value-based method of accounting for an employee stock option or similar
equity instrument. This statement gives entities a choice of recognizing
related compensation expense by adopting the new fair value method or to
continue to measure compensation using the intrinsic value approach under
Accounting Principles Board ("APB") Opinion No. 25. Although Opinion No. 25
has been elected for measurement purposes, SFAS No. 123 requires supplemental
disclosure to show the effects of using the new measurement criteria (See Note
8).
EXTRAORDINARY ITEM
In connection with the restructuring, as described in Note 1, during the
nine months ended September 28, 1996, the Company recorded an extraordinary
gain of approximately $111,650,000 on the discharge of debt.
NET LOSS PER SHARE
Basic loss per share is based on the weighted average number of shares of
common stock outstanding, which was 10,061,576 and 9,986,413 for the year
ended January 3, 1998 and the three months ended December 28, 1996,
respectively. Diluted loss per share is calculated treating all potentially
dilutive securities such as stock options as outstanding during the entire
period, or from grant date if granted during the period. All such options
(744,000 at January 3, 1998 and 200,000 at December 28, 1996) were anti-
dilutive for the year ended January 3, 1998, and for the three months ended
December 28, 1996, and therefore, were excluded from the earnings per share
calculation for such periods.
F-10
<PAGE>
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summarizes the major methods and assumptions used in
estimating the fair values of financial instruments:
CASH, CASH EQUIVALENTS, AND ACCOUNTS RECEIVABLE
The carrying amounts approximate fair value due to the short maturity
period of these instruments.
DEBT
The carrying amounts of the debt under the Loan and Security Agreement
and the industrial development revenue bonds approximate fair value based
on current interest rates for similar financial instruments.
CERTAIN RISKS
The Company is subject to certain risks in the ordinary course of business.
Among those is the risk of an increase in cotton prices that significantly
affects the cost of production and cash flows. Historically, the Company has
been able to pass on a portion of any such price increases to its customers.
The Company is self-insured for worker's compensation liability in the state
of Georgia, and was previously self-insured in North Carolina, through
November 1997. Provisions for losses expected under these self-insurance
programs are recorded based on the Company's estimates of the aggregate
liability for claims incurred. These estimates utilize the Company's prior
experience. The total estimated liability for these losses at January 3, 1998
and December 28, 1996 was approximately $1,646,000 and $2,300,000,
respectively, and is included in other accrued liabilities in the accompanying
balance sheets.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income ("SFAS No. 130"), which establishes
standards for reporting and display of "comprehensive income," which is the
total of net income and all other non-owner changes in stockholder's equity,
and its components. The Company is in the process of evaluating SFAS No. 130
and its impact and will adopt the standard in the first quarter of its 1998
fiscal year.
In July 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131, which
supersedes SFAS No. 14, 18, 24, and 30, establishes new standards for segment
reporting, using the "management approach," in which reportable segments are
based on the same criteria on which management disaggregates a business for
making operating decisions and assessing performance. The Company is in the
process of evaluating SFAS No. 131 and its impact and will adopt the standard
for its 1998 fiscal year.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified in order to conform to the
current year presentation.
3. DISCONTINUED OPERATIONS
In December 1997, the Company sold its napery business, which consisted of
the manufacturing and marketing of damask table linen products serving the
hospitality market (the "Napery Business"), and related inventory, to Mount
Vernon Mills, Inc. In connection therewith, the Company has closed its Roanoke
Rapids, North Carolina napery manufacturing plant and will actively seek a
buyer. The Company classified the assets of the Napery Business as of January
3, 1998 as net assets of discontinued operations, and the results of
operations of the Napery Business are excluded from the Company's continuing
operations.
F-11
<PAGE>
In December 1997, the Company announced that it intends to exit the apparel
business, which consisted of the manufacturing and marketing of apparel
fabrics, principally chambray, sold primarily to converters (the "Apparel
Business") during the first quarter of 1998. As a result, the Company
announced that its Columbus, Georgia apparel manufacturing facility will be
closed during the first quarter of 1998. The assets of the Apparel Business
will be liquidated subsequent to cessation of operations. The Company
classified the assets, except for real estate, of the Apparel Business as net
current assets of discontinued operations, and the results of operations for
the Apparel Business are excluded from the Company's continuing operations.
The table below sets forth net sales and income (loss) of the discontinued
Apparel Business and the discontinued Napery Business (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE THREE
ENDED JANUARY 3, MONTHS ENDED
1998 DECEMBER 28, 1996
----------------- -----------------
NAPERY APPAREL NAPERY APPAREL
BUSINESS BUSINESS BUSINESS BUSINESS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales................................ $7,545 $23,731 $2,766 $7,471
Income (loss)............................ (2,494) (4,422) 17 (396)
</TABLE>
Income (loss) reflected above includes interest expense of $320 and $704 for
Napery and Apparel, respectively, for the year ended January 3, 1998, and $75
and $170 for Napery and Apparel, respectively, for the three months ended
December 28, 1996. Such interest expense has been allocated based on the net
assets of the respective discontinued businesses, applying the Company's
incremental borrowing rate. Estimated losses on disposal of discontinued
businesses exclude an interest allocation.
Net assets of discontinued operations at January 3, 1998 are set forth below
(in thousands):
<TABLE>
<CAPTION>
NAPERY APPAREL TOTAL
------- ------- -------
<S> <C> <C> <C>
Accounts receivable, net.......................... $ 815 $ 4,300 $ 5,115
Inventory......................................... 0 7,486 7,486
Property, plant and equipment, net................ 2,237 6,627 8,864
Accounts payable and accrued liabilities.......... (1,684) (4,700) (6,384)
Reserve for future claims......................... (100) (225) (325)
Reserve for future severance...................... (1,031) (1,150) (2,181)
Reserve for future overhead costs................. (200) (350) (550)
------- ------- -------
$ 37 $11,988 $12,025
======= ======= =======
</TABLE>
4. INVENTORIES
The major categories of inventories, exclusive of apparel inventory
discussed above, as of January 3, 1998 and December 28, 1996 are as follows
(in thousands):
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Raw materials and supplies........................... $ 7,713 $ 9,018
Work in process...................................... 24,308 33,463
Finished goods....................................... 22,238 29,517
------- -------
Total at FIFO cost............................... 54,259 71,998
Excess of LIFO cost over FIFO cost................... 46 284
------- -------
Total at LIFO cost............................... $54,305 $72,282
======= =======
</TABLE>
Substantially all inventories are pledged as collateral under the Loan and
Security Agreement (Note 6).
F-12
<PAGE>
5. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment, exclusive of items related to the
discontinued apparel and napery businesses discussed above, as of January 3,
1998 and December 28, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Machinery and equipment.............................. $27,853 $33,987
Land, buildings, and improvements.................... 22,348 24,316
Construction in progress............................. 18,609 2,438
------- -------
68,810 60,741
Less accumulated depreciation........................ 5,981 2,099
------- -------
$62,829 $58,642
======= =======
</TABLE>
Substantially all property, plant, and equipment are pledged as collateral
under the Loan and Security Agreement (Note 6).
6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations as of January 3, 1998 and
December 28, 1996 consisted of the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Line of credit under Loan and Security Agreement.... $58,615 $71,154
Term loan under Loan and Security Agreement......... 12,308 14,644
Capital lease obligations........................... 7,162 0
Industrial development revenue bonds................ 0 3,000
Other............................................... 430 532
------- -------
78,515 89,330
Less current maturities............................. 3,617 5,237
------- -------
$74,898 $84,093
======= =======
</TABLE>
Annual maturities of long-term debt and capital lease obligations are as
follows (in thousands):
<TABLE>
<S> <C>
1998................................................................ $ 3,617
1999................................................................ 70,509
2000................................................................ 1,867
2001................................................................ 2,070
Thereafter.......................................................... 2,086
-------
80,149
Less amounts representing interest.................................. (1,634)
-------
Total........................................................... $78,515
=======
</TABLE>
LOAN AND SECURITY AGREEMENT
As part of the Plan, the Company obtained financing from lending
institutions to repay the old senior revolving credit facility and finance
additional capital expenditures. Under the Loan and Security Agreement, as
amended, the Company is entitled to borrow up to a maximum of $75 million.
Borrowings in the form of a term loan of $25 million and in the form of
revolving loans are only available to the extent that a sufficient borrowing
base, calculated on eligible receivables and inventory, exists. Borrowings
under this credit facility bear interest at prime rate, as defined, (8.5% at
January 3, 1998) plus 1%, or, at the Company's option, the Adjusted Eurodollar
Rate, as defined, (5.9% at January 3, 1998) plus 3%. This credit agreement is
for a minimum of three years, subject to one-year extensions unless terminated
by the lenders or the Company. Substantially all of the Company's assets are
pledged as collateral under the Loan and Security Agreement.
F-13
<PAGE>
The agreement contains restrictive financial and other covenants, including
maintaining certain levels of tangible net worth and working capital, as
defined, as well as restrictions on the incurrence of indebtedness, liens,
mergers, acquisitions, asset sales, capital expenditures, and dividends, among
others. The annual interest rate will be reduced by up to a maximum of one-
half of 1% if certain financial performance requirements in the Loan and
Security Agreement are met. In addition, the Company pays an annual service
fee of $100,000, a monthly facility fee of one-half of 1% per annum of the
average daily unused portion of the facility and a monthly letter of credit
fee of 2.5% per annum of the daily outstanding balance of each letter of
credit.
Financing fees incurred associated with the Loan and Security Agreement, as
amended, were approximately $3,668,000, and are being amortized over the term
of the agreement.
AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT
Effective March 6, 1998, the Company entered into a new amendment to the
Loan and Security Agreement, significant provisions of the new amendment are
as follows:
(i) increase of the term loan to $21.3 million, (ii) extension of the
renewal date from September 16, 1999 to November 1, 2000, (iii) reduction
of the tangible net worth covenant from a minimum of $70 million to a
minimum of $50 million, (iv) reduction of the prepayment fees for replacing
the credit agreement after September 16, 1998, from $575,000 to $300,000,
and (v) reduction of the revolving loan limit to $60 million.
As of March 9, 1998, the Company had the ability to borrow an additional $6
million under the revolver associated with the Loan and Security Agreement, as
amended.
INDUSTRIAL DEVELOPMENT REVENUE BONDS
Industrial development revenue bonds were issued and sold to refinance the
purchase of certain plants from WestPoint Stevens, Inc. These bonds were
backed by letters of credit issued under the old senior revolving credit
facility in the amount of approximately $11,141,000, including interest. The
bonds' maturity dates were December 2003 and October 2004.
In January 1996, the Company closed the plants that were purchased in
connection with the issuance of the industrial development revenue bonds. On
December 10, 1996 and February 3, 1997, the Company redeemed the bonds for
$8,000,000 and $3,000,000, respectively.
7. INCOME TAXES
Prior to September 28, 1996, the Company was an S corporation and was
generally not subject to corporate-level taxes on its net income because such
income was attributed to the Company's stockholders and taxes on such income
was directly payable by them. Effective and pursuant to the Plan, the Company
became a C corporation for income tax purposes.
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the use of the liability method
in accounting for income taxes. Under SFAS No. 109, deferred tax assets and
liabilities are determined based on the difference between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. Deferred
income taxes also reflect the value of net operating losses and an offsetting
valuation
F-14
<PAGE>
allowance. There was no net income tax expense or benefit recorded in the year
ended January 3, 1998 or the three months ended December 28, 1996.
A reconciliation of differences between the statutory U.S. federal income
tax rate and the Company's effective tax rate for the year ended January 3,
1998 and the three months ended December 28, 1996 are as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Income tax benefit at federal statutory income tax
rate.............................................. $ 9,638 $ 864
State income taxes, net of federal income tax bene-
fit............................................... 1,134 101
Other, net......................................... 0 2
Change in valuation allowance...................... (10,772) (967)
-------- -----
Income tax benefit................................. $ 0 $ 0
======== =====
</TABLE>
Under federal income tax laws, the Company was not required to include in
its federal taxable income any gain on the discharge of debt pursuant to the
Plan. Accordingly, no income taxes have been provided on the $112 million
extraordinary gain on discharge of debt in the statement of operations for the
nine months ended September 28, 1996.
SFAS No. 109 requires that a valuation allowance be recorded against
deferred tax assets which are not likely to be realized. The Company's
utilization of net operating losses carried forward may be limited to specific
amounts each year. However, due to the uncertain nature of their ultimate
realization based upon past performance, the Company has established a
valuation allowance against these carryforward benefits and will recognize the
benefits only when a reassessment demonstrates they are realizable.
Realization is entirely dependent upon future earnings. While the need for
this valuation allowance is subject to periodic review, if the allowance is
reduced, the tax benefits of the carryforwards will be recorded in future
operations as a reduction of the Company's income tax expense.
Components of the net deferred income tax asset at January 3, 1998 and
December 28, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Deferred tax liabilities:
Property and depreciation........................... $ 0 $ 927
Inventory valuation................................. 2,367 1,808
Other............................................... 2,126 495
------- -------
Total deferred tax liabilities................... 4,493 3,230
------- -------
Deferred tax assets:
Property and depreciation........................... 9,089 0
Operating loss carryforwards........................ 4,825 2,222
Allowance for doubtful accounts..................... 1,545 3,109
Self-insurance reserves............................. 3,734 1,820
Salary-related accruals............................. 1,447 2,003
Other............................................... 0 2,542
------- -------
Total deferred tax assets........................ 20,640 11,696
------- -------
Net deferred tax asset............................... 16,147 8,466
Less valuation allowance............................. 16,147 8,466
------- -------
$ 0 $ 0
======= =======
</TABLE>
F-15
<PAGE>
8. BENEFIT PLANS
Pursuant to the Plan, all stock option agreements related to the old common
stock of the Company were effectively terminated.
The Company maintains an incentive compensation plan for its salaried
employees, which provides for incentive awards based on certain levels of
earnings. The amounts awarded under the plan and charged to expense in the
accompanying statements of operations were $350,000 for the year ended January
3, 1998 and $0 for the three months ended December 28, 1996, the nine months
ended September 28, 1996 and the year ended December 30, 1995.
The Company maintains a separate defined contribution 401(k) profit-sharing
plan covering substantially all hourly and salaried employees. Under this
plan, the Company contributes a specified percentage of each eligible
employee's contributions. Amounts contributed under the plan were
approximately $586,000 for the year ended January 3, 1998, $196,000 for the
three months ended December 28, 1996, $506,000 for the nine months ended
September 28, 1996, and $786,000 for the year ended December 30, 1995.
The Company also maintains an executive deferred compensation plan under
which eligible executives may elect to defer up to 50% of their compensation.
Amounts deferred are paid to the executives or their beneficiaries following
retirement, termination, or death. A liability for amounts deferred under this
plan of approximately $2,395,000 and $2,814,000 at January 3, 1998 and
December 28, 1996, respectively, is included in accrued payroll and other
compensation in the accompanying balance sheets.
On September 27, 1996, September 30, 1997, and December 8, 1997, the Company
granted 200,000, 404,000, and 20,000 stock options, respectively, related to
the new common stock to employees of the Company. The option prices of $7.10,
$7.25, and $6.81 per share represented the Board's estimates of the
approximate fair values of the common stock at these times. The shares are
exercisable beginning one year after the date granted.
On September 30, 1997, the Company granted 120,000 stock options related to
the new common stock to nonemployee directors of the Company at an option
price of $7.25 per share. The shares are exercisable beginning one year after
the date granted.
During 1996 and 1997, no options related to the new common stock were
exercised, cancelled, or forfeited.
The Company has adopted the disclosure-only provisions of SFAS No. 123.
Accordingly, no compensation cost has been recognized for the stock options
granted. Had compensation cost for the Company's stock options granted been
determined consistent with the provisions of SFAS No. 123, the Company's net
loss and loss per share would have been increased to the pro forma amounts
indicated below for the year ended January 3, 1998, and the three months ended
December 28, 1996 (in thousands, except share data):
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Net loss, as reported................................ $(28,346) $(2,540)
Net loss, pro forma.................................. (28,737) (2,608)
Net loss per share, as reported:
Basic and diluted................................... $ (2.82) $ (0.25)
Net loss per share, pro forma:
Basic and diluted................................... (2.86) (0.26)
</TABLE>
F-16
<PAGE>
The assumption for the stock options issued to employees on September 27,
1996 and December 8, 1997 was that 33% of the options vested each year over a
three-year period from the dates of the grants. The assumption for the stock
options issued on September 30, 1997 was that 33% of the options vested over
the first nine months from the date of grant, and 33% each year thereafter.
The fair values of options granted are estimated on the dates of the grants
using the Black-Scholes option-pricing model with the following assumptions
for 1997 and 1996: dividend yield and forfeiture rate of 0%; expected
volatility of 30% and 35%, respectively; risk free interest rate of 5.88% and
6.58%, respectively; and expected life of three years and five years,
respectively.
POSTRETIREMENT BENEFITS
The Company provides reduced life insurance benefits to retired employees
who were employed prior to January 1, 1974. On January 3, 1993, the Company
adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." This standard requires that the expected cost of these
benefits be charged to expense during the years that the employees render
service. This was a change from the Company's prior policy of recognizing
postretirement benefits on a cash basis. Based on actuarial estimates using
currently available data, the postretirement benefit obligation at January 3,
1993, measured in accordance with SFAS No. 106, was approximately $2,400,000.
The Company elected to amortize the obligation over a 10.5-year period, the
average remaining life expectancy of the participants, beginning January 3,
1993. The Company recognized the unamortized transition obligation associated
with the adoption of SFAS No. 106 in the nine months ended September 28, 1996
as a result of the implementation of fresh start reporting.
Components of the net periodic postretirement benefit cost for the year
ended January 3, 1998, the three months ended December 28, 1996, the nine
months ended September 28, 1996, and the year ended December 30, 1995, are as
follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
JANUARY 3, DECEMBER 28, SEPTEMBER 28, DECEMBER 30,
1998 1996 1996 1995
---------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Interest cost on accumulated postretirement benefit obligation......... $109 $32 $ 96 $146
Amortization of transition benefit..................................... 0 0 172 229
Recognition of transition obligation................................... 0 0 1,543 0
---- --- ------ ----
$109 $32 $1,811 $375
--------------------------------------------------
==== === ====== ====
</TABLE>
The accumulated postretirement benefit obligation was determined using a
discount rate of 7.5%.
PENSION PLAN
The Company maintains a noncontributory defined benefit pension plan
covering substantially all of its hourly employees. The benefits under the
plan are based on years of service during which the employees participate in
the plan. The Company's funding policy is to contribute an amount based on
actuarially determined values required to sustain the plan on a sound
financial basis.
The Company recognized previously unrecognized and deferred items such as
the net transition obligation, prior service cost, and (gains) losses in the
nine months ended September 28, 1996 as a result of the implementation of
fresh start reporting.
F-17
<PAGE>
Components of the net periodic pension cost for the year ended January 3,
1998, the three months ended December 28, 1996, the nine months ended
September 28, 1996, and the year ended December 30, 1995 are as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS YEAR
YEAR ENDED ENDED ENDED ENDED
JANUARY 3, DECEMBER 28, SEPTEMBER 28, DECEMBER 30,
1998 1996 1996 1995
---------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Service cost--benefits earned during the period........................ $856 $284 $ 853 $1,358
Actual return on plan assets........................................... (720) (66) (200) (423)
Interest cost on projected benefit obligation.......................... 721 156 468 419
Net amortization and deferral.......................................... 0 0 17 73
Recognition of deferred items.......................................... 0 0 985 0
---- ---- ------ ------
Net periodic pension cost.............................................. $857 $374 $2,123 $1,427
--------------------------------------------------
==== ==== ====== ======
</TABLE>
The plan's funded status and amounts recognized in the accompanying balance
sheets are as follows (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
Accrued pension cost:
Accumulated and projected benefit obligation, in-
cluding vested benefits of $9,071 and $7,323 for
fiscal years 1997 and 1996, respectively.......... $9,767 $7,969
Less plan assets at fair value................... (9,781) (7,015)
------ ------
Projected benefit obligation (less than) in excess
of plan assets..................................... (14) 954
Unrecognized net loss............................... (714) (60)
Adjustment required to recognize minimum liability.. 0 60
------ ------
(Prepaid) accrued pension........................... $ (728) $ 954
====== ======
</TABLE>
The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligation in fiscal years 1997 and 1996 was
7.5% and 8.25%, respectively. The expected long-term rate of return on assets
used for the year ended January 3, 1998, the three months ended December 28,
1996, the nine months ended September 28, 1996, and the year ended December
30, 1995 was 9%.
9. TRANSACTIONS WITH AFFILIATES
In 1996, the Company received approximately $10,700,000 in consideration for
a related party subordinated promissory note and recorded a loss, reflected in
additional paid-in capital, of $5,016,000.
Pursuant to a management services agreement dated April 1, 1989, The NTC
Group, Inc. ("NTC") provided certain management, corporate development, and
financial consulting services to the Company. The management services
agreement provided that NTC receive a management fee equal to the lesser of 2%
of the Company's average equity book value plus interest-bearing debt, as
defined, or $4,000,000. The Company incurred expenses of $1,993,000 and
$3,368,000 for the nine months ended September 28, 1996 and for the year ended
December 30, 1995, respectively, which is shown as management fees to
affiliate in the accompanying statements of operations. Pursuant to the Plan,
$1,830,000 of accrued management fees were forgiven by NTC as of September 28,
1996, and the management services agreement was terminated.
10. SIGNIFICANT CUSTOMERS
The Company's ten largest customers accounted for less than 40% of net sales
for the year ended January 3, 1998, the three months ended December 28, 1996,
the nine months ended September 28, 1996, and the year ended December 30,
1995. Of these, one customer accounted for approximately 12.3% of total net
sales for the three
F-18
<PAGE>
months ended December 28, 1996, 12.3% for the nine months ended September 28,
1996, and 11.5% for the year ended December 30, 1995. For the year ended
January 3, 1998, no single customer accounted for more than 7% of total net
sales.
11. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is subject to certain legal actions arising in the ordinary
course of its business. In management's opinion, the outcome of these actions
will not have a material adverse effect on the Company's financial position or
results of operations.
ENVIRONMENTAL MATTERS
The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by Superfund Amendments and Reauthorization Act of 1986
("CERCLA") (commonly known as Superfund), provides for responses to and
liability for releases of hazardous substances into the environment. These
obligations are imposed on the current owner or operator of a facility, the
owner or operator of a facility at the time of the disposal of hazardous
substances at the facility, on anyone who arranged for the treatment or
disposal of hazardous substances at the facility, and on any person who
accepted hazardous substances for transport to a facility selected by such
person. Generally, liability to the government under CERCLA is joint and
several.
The Company has been named as one of approximately 180 third-party
defendants in connection with litigation relating to the Keystone Sanitary
Landfill (located in Adams County, Pennsylvania), a federal Superfund matter.
The Company is alleged to have disposed of 1,800 cubic yards of material at
this site. The United States Environmental Protection Agency reportedly has
estimated the total volume of wastes allegedly disposed of at the site by
viable potentially responsible parties to be in excess of a half a million
cubic yards. The Company disputed its allocated volume, and the toxicity of
its waste. On October 20, 1997, the Company entered into a Consent Decree
along with approximately 140 other defendants. It is anticipated that the
Consent Decree will be entered by the United States District Court for the
Middle District of Pennsylvania. If entered, the Consent Decree should satisfy
any liability that the Company has in this litigation. The Company believes
that its maximum exposure is less than $5,000.
The Company has not accrued for any material environmental liabilities as of
January 3, 1998, due to management's belief that an unfavorable outcome from
the ongoing proceedings would not have a material adverse effect on the
Company's financial position or results of operations. However, the Company
has budgeted and expects to incur approximately $1.2 million in environmental
capital expenditures in fiscal year 1998 for the continued construction of new
wastewater treatment facilities at the Brookneal, Virginia plant to comply
with a Special Order on Consent with the Virginia Water Control Board.
LEASES
The Company leases office space, office equipment, and other items under
noncancelable operating leases. Rental expense under these noncancelable
operating leases was approximately $6,194,000 for the year ended January 3,
1998, $2,426,000 for the three months ended December 28, 1996, $7,279,000 for
the nine months ended September 28, 1996, and $9,407,000 for the year ended
December 30, 1995.
At January 3, 1998, future minimum lease payments under noncancelable
operating leases are as follows (in thousands):
<TABLE>
<S> <C>
1998.................................................................. $3,088
1999.................................................................. 2,214
2000.................................................................. 1,341
2001.................................................................. 306
2002.................................................................. 176
------
$7,125
======
</TABLE>
F-19
<PAGE>
OTHER
The Company had contractual commitments to make minimum guaranteed payments
under various product licensing agreements expiring through December 31, 2000
of approximately $2,864,000. These commitments are not expected to result in
future losses.
12. NONRECURRING CHARGES
During 1997, the Company incurred $4.1 million in operating charges of a
nonrecurring nature relating to losses to be incurred under a sublease
agreement, severance, impairment of previously closed manufacturing facilities
(Rockingham, North Carolina and Abbeville, South Carolina) and losses
associated with the Terry Division, subsequent to its sale.
F-20
<PAGE>
THE BIBB COMPANY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED JANUARY 3, 1998,
THE THREE MONTHS ENDED DECEMBER 28, 1996,
THE NINE MONTHS ENDED SEPTEMBER 28, 1996,
AND THE YEAR ENDED DECEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS* OF PERIOD
---------- ---------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 3,
1998:
Allowance for doubtful
accounts, discounts, and
claims.................. $1,588 $ 465 $2,288 $ (1,655) $2,686
THREE MONTHS ENDED DECEM-
BER 28, 1996:
Allowance for doubtful
accounts, discounts, and
claims.................. 0 191 1,397 0 1,588
NINE MONTHS ENDED SEPTEM-
BER 28, 1996:
Allowance for doubtful
accounts, discounts, and
claims.................. 5,134 2,388 2,785 (10,307) 0
YEAR ENDED DECEMBER 30,
1995:
Allowance for doubtful
accounts, discounts, and
claims.................. 4,667 491 8,363 (8,387) 5,134
</TABLE>
- --------
* Deductions represent the write-off of uncollectable receivables, net of
recoveries, and for the nine months ended September 28, 1996, the write-off
of the allowance account in order to state accounts receivable at fair value
in accordance with fresh start reporting.
F-21
<PAGE>
EXHIBIT 10(E)
AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT
March 6, 1998
The Bibb Company
100 Galleria Parkway
Suite 1750
Atlanta, Georgia 30339
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) make an additional
term loan to Borrower in the principal amount of $9,344,137.17, consolidate the
principal amount of that term loan with the presently outstanding balance of
$11,913,862.83 of the existing Term Loan, and amend and restate the terms of
the Term Loan as so consolidated, (b) permit up to $4,000,000 of the proceeds
of the $9,344,137.17 additional term loan to be used for Capital Expenditures,
(c) reduce the Revolving Loan Limit from $75,000,000 to $60,000,000, (d) reduce
the amount of Tangible Net Worth required to be maintained by Borrower, (e)
consent to the proposed sale of certain Real Property of Borrower, (f) consent
to a sale and leaseback transaction with respect to certain Equipment of
Borrower, (g) reduce the Maximum Credit in connection with the amendments
referred to in clauses (a) and (c) above, and (h) extend the Renewal Date to
November 1, 2000. Agent and Lenders or Required Lenders, as applicable, are
willing to agree to such amendments and provide such consent, 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. Definitions.
(a)Additional Definitions.
(i) "Original Congress Revolving Note" shall mean the Revolving Loan Note,
dated September 27, 1996, made by Borrower payable to the order of Congress in
the original principal amount of $61,043,481, as in effect on the date hereof
immediately prior to the effectiveness hereof.
(ii) "Original Congress Term Note" shall mean the Term Loan Note, dated
September 27, 1996, made by Borrower payable to the order of Congress in the
original principal amount of $16,956,522.50, as in effect on the date hereof
immediately prior to the effectiveness hereof.
(iii) "Original Transamerica Revolving Note" shall mean the Revolving Loan
Note, dated September 27, 1996, made by Borrower payable to the order of
Transamerica in the original principal amount of $28,956,519, as in effect on
the date hereof immediately prior to the effectiveness hereof.
<PAGE>
(iv) "Original Transamerica Term Note" shall mean the Term Loan Note, dated
September 27, 1996, made by Borrower payable to the order of Transamerica in
the original principal amount of $8,043,477.50, as in effect on the date
hereof immediately prior to the effectiveness hereof.
(v) "Restated Congress Revolving Note" shall mean the Amended and Restated
Revolving Loan Note, dated of even date herewith, made by Borrower payable to
the order of Congress in the original principal amount of $40,695,654, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(vi) "Restated Congress Term Note" shall mean the Amended and Restated Term
Loan Note, dated of even date herewith, made by Borrower payable to the order
of Congress in the original principal amount of $14,418,470.21, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(vii) "Restated Revolving Notes" shall mean, individually and collectively,
the Restated Congress Revolving Note and the Restated Transamerica Revolving
Note.
(viii) "Restated Term Notes" shall mean, individually and collectively, the
Restated Congress Term Note and the Restated Transamerica Term Note.
(ix) "Restated Transamerica Revolving Note" shall mean the Amended and
Restated Revolving Loan Note, dated of even date herewith, made by Borrower
payable to the order of Transamerica in the original principal amount of
$19,304,346, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(x) "Restated Transamerica Term Note" shall mean the Amended and Restated Term
Loan Note, dated of even date herewith, made by Borrower payable to the order
of Transamerica in the original principal amount of $6,839,529.79, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(b) Amendments to Definitions.
(i) Commitments.
(A) Effective as of the date hereof, the Commitment of Congress, as set forth
on the signature page of the Loan Agreement, is hereby amended by replacing
the figure $67,826,090" and replacing it with "$55,114,124.21".
(B) Effective as of the date hereof, the Commitment of Transamerica, as set
forth on the signature page of the Loan Agreement, is hereby amended by
replacing the figure "$32,173,910" with "$26,143,875.79".
(ii) Maximum Credit. Effective as of the date hereof, 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) $81,258,000 less
(b) the aggregate amount of payments and prepayments applied to the Term
Loan after the Closing Date."
(ii) Revolving Loan Limit. Effective as of the date hereof, 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 $60,000,000."
(iv) Revolving Notes. All references to the "Revolving Notes" in the Loan
Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to mean, individually and collectively, the
Restated Congress Revolving Note and the Restated Transamerica Revolving Note.
2
<PAGE>
(v) Term Notes. All references to the "Term Notes" in the Loan Agreement and
the other Financing Agreements shall be deemed and each such reference is
hereby amended to mean, individually and collectively, the Restated Congress
Term Note and the Restated Transamerica Term Note.
(vi) Term Loans. All references to the "Term Loans" herein and in the Loan
Agreement and the other Financing Agreements shall mean, individually and
collectively, the Obligations evidenced by the Restated Congress Term Note and
the Restated Transamerica Term Note.
2. Term Loan.
(a) Borrower hereby acknowledges, confirms and agrees that, as of the date
hereof and immediately before giving effect to this Amendment, the unpaid
balance of the Obligations evidenced by the Original Term Notes is the
principal amount of $11,913,862.83 (such principal amount, the "Existing Term
Loan Principal Balance"), plus interest accrued and accruing thereon and the
other costs and expenses payable under such note. On the date hereof, subject
to the terms and conditions contained herein, Agent, for the ratable account
of Lenders, is making an additional term loan to Borrower in the amount of
$9,344,137.17 (the "Additional Term Advance"), which (i) shall be consolidated
with the Existing Term Loan Principal Balance, and (ii) as so consolidated,
shall be evidenced by and, together with interest accrued and accruing thereon
and other costs and expenses, be payable pursuant to the terms of the Restated
Term Notes, the Loan Agreement and the other Financing Agreements, and shall
be secured by all of the Collateral.
(b) Neither the execution and delivery hereof, nor the consolidation of the
Existing Term Loan Principal Balance with the Additional Term Advance, nor the
amendment and restatement of the Original Term Notes pursuant to the
respective Restated Term Notes shall, in any manner, be construed to
constitute payment of, or impair, limit, cancel or extinguish, or constitute a
novation in respect of, any of the Obligations evidenced by or arising under
the Original Term Notes or any other Financing Agreements, and the liens and
security interests securing such Obligations shall not in any manner be
impaired, limited, terminated, waived or released.
(c) Borrower hereby requests that Lender credit the proceeds of the Additional
Term Advance to the Revolving Loan account of Borrower. Revolving Loans
hereafter made to Borrower by virtue of the availability arising from so
crediting such proceeds of the Additional Term Advance may, to the extent of
$4,000,000 thereof, be used by Borrower for Capital Expenditures, in addition
to any other amounts that may be used by Borrower to make Capital Expenditures
pursuant to the Loan Agreement. The balance of such Revolving Loan
availability so created with the proceeds of the Additional Term Advance shall
be used for working capital of Borrower or other proper corporate purposes of
Borrower not prohibited by the terms of the Financing Agreements.
3. Revolving Notes. In connection with the amendment reducing the Revolving
Loan Limit set forth in Section 1(b)(iii) hereof, Borrower shall execute and
deliver to the Lenders the Restated Revolving Notes. Neither the execution and
delivery hereof, nor the execution and delivery of the Restated Revolving
Notes, nor the amendment and restatement of the Original Revolving Notes
pursuant to the respective Restated Revolving Notes shall, in any manner, be
construed to constitute payment of, or impair, limit, cancel, or extinguish,
or constitute a novation in respect of, any of the Obligations evidenced by or
arising under the Original Revolving Notes or any other Financing Agreements,
and the liens and security interests securing such Obligations shall not in
any manner be impaired, limited, terminated, waived or released.
4. Tangible Net Worth Amendment. Effective as of December 31, 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 $50,000,000."
3
<PAGE>
5. Term.
(a) The first sentence of Section 13.1(a) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"(a) This Agreement and the other Financing Agreements shall become
effective as of the date hereof and shall continue in full force and effect
for a term ending on November 1, 2000 (the "Renewal Date"), and from year-
to-year thereafter, unless sooner terminated in accordance with the terms
hereof."
(b) The first sentence of Section 13.1(c) of the Loan Agreement is hereby
amended by replacing the table appearing in such sentence with the following
table:
<TABLE>
<S> <C>
"Amount Period
------- ------
$862,500 September 13, 1997 to and
including September 12, 1998
$300,000 September 13, 1998 to and
including September 12, 1999
$150,000 September 13, 1999 to but not
including November 1, 2000"
</TABLE>
6. Consents to Proposed Sales of Certain Real Property.
(a) Borrower has informed Agent and Lenders that it proposes to sell certain
of its Real Property as follows: Borrower's Real Property located in
Abbeville, South Carolina as described in Exhibit A hereto (the "Abbeville
Property"), Borrower's Real Property located in Juliette, Georgia as described
on Exhibit B hereto (the "Camellia Property"), and Borrower's Real Property
located in Rockingham, North Carolina as described on Exhibit C hereto (the
"Hannah Pickett Property"; and together with the Abbeville Property and the
Camellia Property, the "Subject Properties") pursuant to purchase contracts to
be entered into between Borrower and the purchaser (each a "Proposed Property
Sale").
(b) Agent and Lenders hereby consent to the Proposed Property Sales and agree
that, upon the closing of each such Proposed Property Sale, Agent shall
execute and deliver release or termination instruments or documents to
evidence the release of the lien and security interest in the Real Property
with respect to the respective Real Property so sold; provided, that:
(i) notwithstanding anything to the contrary set forth herein or in the Loan
Agreement or any of the other Financing Agreements,
(A) all of the net proceeds of the sale of the Abbeville Property and of the
sale of the Camellia Property shall be remitted to Agent for application to
the Obligations as follows: (1) in the case of the Abbeville Property, the
first $1,200,000 thereof, and, in the case of the Camellia Property, the first
$5,000,000 thereof, shall be applied to the unpaid principal installments
under the Term Loan in the inverse order of the maturities thereof, and (2)
the balance of the net proceeds of the sale of each of the Abbeville Property
and Camellia Property shall be applied to the Obligations in respect of
Revolving Loans of Borrower; and
(B) all of the net proceeds of the sale of the Hannah Pickett Property shall
be remitted to Agent for application to the Obligations in respect of
Revolving Loans of Borrower;
(ii) the net proceeds of the sale of the Subject Properties shall be not less
than the following amounts: (A) in the case of the Abbeville Property, an
amount not less than $600,000, (B) in the case of the Camellia Property, an
amount not less than $5,000,000 , and (C) in the case of the Hannah Pickett
Property, an amount not less than $350,000;
(iii) contemporaneously with the delivery of the release instruments for each
Proposed Property Sale, arrangements satisfactory to Agent shall be made for
all of the net proceeds of each Proposed Property Sale to be paid to Agent by
wire transfer of immediately available funds to the Payment Account;
4
<PAGE>
(iv) the closing of each of the Proposed Property Sales shall occur by no
later than December 31, 1998, and no Event of Default, or event or condition
that would with notice or passage of time, or both, constitute an Event of
Default, shall exist or have occurred and be continuing, as of the date of
each such closing;
(v) the security interests in and the liens upon the Subject Property held by
Agent for itself and the ratable benefit of Lenders shall, upon closing of
each respective Proposed Property Sale, and notwithstanding the execution and
delivery by Agent of any release instruments or documents, continue in the net
proceeds of such Proposed Property Sale, until their application to the
Obligations as provided herein;
(vi) Agent shall have received, at least fifteen (15) days prior to the
applicable proposed closing date, written notice thereof, together with true,
correct and complete copies of all agreements, documents and instruments to be
executed and/or delivered in connection with each Proposed Property Sale, each
in form and substance satisfactory to Agent, and, upon the closing, copies
each of such agreements, documents and instruments duly authorized, executed
and delivered by the parties thereto; and
(vii) Arrangements satisfactory to Agent shall be made prior to the closing of
each Proposed Property Sale with respect to any Inventory, Equipment or other
personal Property of Borrower ("Personal Property") proposed to remain on the
respective Subject Property after the closing of the sale of such Subject
Property, and also with respect to any Personal Property that is proposed,
subject to Agent's prior written consent, to be removed therefrom or otherwise
disposed of in connection with such Proposed Property Sale; such arrangements
shall, at Agent's option, include, without limitation, the delivery to Agent
of written acknowledgments, access agreements and lien waivers in favor of
Agent and Lenders, duly authorized and executed by the buyers, lessees,
mortgagees, any warehouseman or other third parties having an interest in or
possession of the Subject Property or having possession of any of the Personal
Property, as may be required by Agent or Lenders to ensure that Agent will
have access to the Personal Property (and the Subject Property or other
premises while the Personal Property is located thereon), to protect and
preserve the security interests and liens of Agent and Lenders in the Personal
Property and to facilitate the exercise by Agent and Lenders of their rights
and remedies against the Personal Property.
7. Sale and Leaseback Equipment; Equipment Use Agreement.
(a) Borrower has informed Agent and Lenders that it proposes to enter into a
sale and leaseback transaction with MDFC Equipment Leasing Corporation
("MDFC") with respect to certain Equipment presently owned by Borrower, as
more fully described on Exhibit D annexed hereto. Agent and Lenders hereby
consent to such sale and leaseback, subject to the agreement by MDFC to permit
Agent and Lender access to, and the right to use and/or permit Borrower to use
the subject leased Equipment for a period of at least sixty (60) days
following (and notwithstanding) termination of the lease after notice to
Agent, upon such payment and other terms and conditions and in such form as
shall be satisfactory to Agent and Lenders.
(b) With respect to all Equipment used in the operations of Borrower and first
leased by Borrower after the date hereof, whether by MDFC as lessor or any
other lessor, whether in the form of a true lease or a Capital Lease or
otherwise, and also with respect to all Equipment used in the operations of
Borrower that is acquired after the date hereof and financed through a
purchase money security interest (in each case, to the extent otherwise
permitted under the Loan Agreement), Borrower agrees to cause the Equipment
lessor or holder of such purchase money security interest to enter into an
equipment use agreement in favor of Agent and Lenders as described in Section
7(a) hereof, upon such payment and other terms and conditions and in such form
as shall be satisfactory to Agent and Lenders.
8. Change of Chief Executive Office. Borrower's chief executive office has
been changed, and the address for giving notices to Borrower pursuant to
Section 13.2 of the Loan Agreement or any similar provision of any of the
other Financing Agreements is hereby amended to be the following:
The Bibb Company
100 Galleria Parkway
Suite 1750
Atlanta, Georgia 30339
5
<PAGE>
Notwithstanding the foregoing, the giving of any notice to Borrower at 237
Coliseum Avenue, Macon, Georgia 31201, as previously specified for notices in
the Loan Agreement or any other Financing Agreement, shall nevertheless
constitute an alternative means of giving sufficient notice to Borrower so
long as Borrower maintains an office or facility at such other address.
9. Representations, Warranties and Covenants. Borrower represents, warrants
and covenants with and to Lender as follows, which representations, warranties
and covenants are continuing and shall survive the execution and delivery
hereof, the truth and accuracy of, or compliance with each, together with the
representations, warranties and covenants in the other Financing Agreements,
being a condition of the effectiveness of this Amendment and a continuing
condition of making or providing the Additional Term Advance and any Revolving
Loans or Letter of Credit Accommodations by Agent on behalf of Lenders as
provided in the Loan Agreement:
(a) This Amendment and each other agreement or instrument to be executed and
delivered by Borrower hereunder has been duly authorized, executed and
delivered by all necessary action on the part of Borrower, and is in full
force and effect as of the date hereof, and the agreements and obligations of
Borrower contained herein and therein constitute legal, valid and binding
obligations of Borrower enforceable against it in accordance with their terms.
(b) Neither the execution and delivery of this Amendment or any of the
agreements, documents or instruments to be delivered pursuant to this
Agreement (i) has violated or shall violate any law or regulation or any order
or decree of any court or governmental instrumentality in any respect, or (ii)
does or shall conflict with or result in the breach of, or constitute a
default in any respect under any mortgage, deed to secure debt, deed of trust,
security agreement, agreement or instrument to which Borrower is a party or
may be bound, or (iii) shall violate any provision of the Certificate of
Incorporation or By-Laws of Borrower.
(c) No action of, or filing with, or consent of any governmental or public
body or authority, other than the recording of the Mortgages executed and
delivered to Agent pursuant to this Amendment, and no approval or consent of
any other party, is required to authorize, or is otherwise required in
connection with, the execution, delivery and performance of this Amendment and
each other agreement or instrument to be executed and delivered pursuant to
this Amendment.
(d) All of the representations and warranties set forth in the Loan Agreement,
as amended hereby, and in the other Financing Agreements, are true and correct
in all material respects after giving effect to the provisions of this
Amendment, except to the extent any such representation or warranty is made as
of a specified date, in which case such representation or warranty shall have
been true and correct as of such date.
(e) After giving effect to the provisions of this Amendment, no Event of
Default, or event or condition that would with notice or passage of time, or
both, constitute an Event of Default, exists or has occurred and is
continuing.
10. Conditions Precedent. The effectiveness of the amendments and consent
contained herein shall be subject to the satisfaction of each of the following
conditions:
(a) the receipt by Agent of an original of this Amendment, duly authorized,
executed and delivered by Borrower and each of Lenders:
(b) Borrower shall have delivered to Agent, in form and substance satisfactory
to Lenders, each of the following agreements, duly authorized, executed and
delivered by the parties thereto:
(i) an original of each of the Restated Congress Term Note, the Restated
Transamerica Term Note, the Restated Congress Revolving Note and the Restated
Transamerica Revolving Note;
6
<PAGE>
(ii) an original Mortgage Modification Agreement, dated of even date herewith,
between Borrower and Agent with respect to the Mortgages covering the Real
Property of Borrower located in the State of South Carolina;
(iii) an original Amendment No. 1 to Deed of Trust, Assignment of Rents and
Leases and Security Agreement, dated of even date herewith, between Borrower
and Agent with respect to each of the Mortgage covering the Real Property of
Borrower located in the Commonwealth of Virginia;
(iv) an original Amendment No. 1 to Deed of Trust and Security Agreement,
dated of even date herewith, among Borrower, Kenneth M. Greene, as trustee,
and Agent with respect to the Mortgages covering the Real Property located in
the State of North Carolina; and
(v) an original Amendment No. 1 to Deed to Secure Debt and Security Agreement,
dated of even date herewith, between Borrower and Agent with resect to
Mortgages covering the Real Property of Borrower located in the State of
Georgia;
(c) Agent shall have received, in form and substance satisfactory to Agent,
Secretary's Certificates of Directors' Resolutions evidencing the adoption and
subsistence of corporate resolutions approving the execution, delivery and
performance by Borrower of this Amendment and the agreements, documents and
instruments to be delivered pursuant to this Amendment;
(d) Agent shall have received, in form and substance satisfactory to Agent, at
Borrower's expense, updated endorsements to the existing title insurance
policies or new title insurance policies issued by Lawyers Title Insurance
Corporation or other title insurance company acceptable to Agent and Lenders
(i) insuring the priority, amount and sufficiency of the Mortgages made by
Borrower, as amended, and (ii) containing any legally available endorsements,
assurances or affirmative coverage requested by Agent or Lenders for
protection of the interests of Agent and Lenders; and
(e) Borrower and Guarantors shall deliver, or cause to be delivered, to
Lenders a true and correct copy of each consent, waiver or approval with
respect to this Amendment or any of the instruments or agreements executed and
delivered pursuant to this Amendment, that Borrower obtains from any other
Person, and which such consent, approval or waiver shall be in form and
substance acceptable to 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, 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 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.
7
<PAGE>
(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
/s/ Morris P. Holloway
By: ________________________________________
Morris P. Holloway
Title: First Vice President
TRANSAMERICA BUSINESS CREDIT CORPORATION,
as Lender
/s/ Ari Kaplan
By: ________________________________________
Ari Kaplan
Title: Senior Account Executive
AGREED AND ACCEPTED:
THE BIBB COMPANY
/s/ Charles R.Tutterow
By: _____________________________
Charles R. Tutterow
Title: Vice President
8
<PAGE>
EXHIBIT 10(l)
THE BIBB COMPANY
1997 OMNIBUS STOCK INCENTIVE PLAN
EFFECTIVE JULY 1, 1997
<PAGE>
THE BIBB COMPANY
1997 Omnibus Stock Incentive Plan
1. PURPOSE. The purpose of the 1997 Omnibus Stock Incentive Plan (the
"Plan") is to attract and retain officers and key employees for The Bibb Company
(the "Corporation") and its Subsidiaries and to provide to such persons
incentives and rewards for superior performance.
2. DEFINITIONS. As used in this Plan,
"Annual Meeting" means the annual meeting of shareholders of the
Corporation.
"Appreciation Right" means a right granted pursuant to Section 5 of
this Plan, including a Free-Standing Appreciation Right or a Tandem Appreciation
Right.
"Base Price" means the price to be used as the basis for determining
the Spread upon the exercise of a Free-standing Appreciation Right.
"Board" means the Board of Directors of the Corporation.
"Change in Control" shall have the meaning provided in Section 12 of
this Plan.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means the committee (or a subcommittee) described in
Section 17 of this Plan.
"Common Shares" means shares of common stock, $.01 par value per
share, of the Corporation or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in Section
11 of this Plan.
"Covered Employee" means a Participant who is, or is determined by the
Committee to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).
<PAGE>
"Date of Grant" means the date specified by the Committee on which a
grant of Option Rights, Appreciation Rights, Performance Shares, Performance
Units, or Other Stock-Based Awards, or a grant or sale of Restricted Shares or
Deferred Shares shall become effective.
"Deferral Period" means the period of time during which Deferred
Shares are subject to deferral limitations under Section 7 of this Plan.
"Deferred Shares" means an award made pursuant to Section 7 of this
Plan of the right to receive Common Shares at the end of a specified Deferral
Period.
"Designated Subsidiary" means a Subsidiary that is (i) not a
corporation or (ii) a corporation in which at the time the Corporation owns or
controls, directly or indirectly, less than eighty (80) percent of the total
combined voting power represented by all classes of stock issued by such
corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules and regulations may
be amended from time to time.
"Free-standing Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right or similar right.
"Incentive Stock Options" means Option Rights that are intended to
qualify as "incentive stock options" under Section 422 of the Code or any
successor provision.
"Management Objectives" means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Shares or Performance Units or, when so determined by the
Committee, Option Rights, Appreciation Rights, Restricted Shares and dividend
credits, or Other Stock-Based Awards pursuant to this Plan. Management
Objectives may be described in terms of Corporation-wide objectives or
objectives that are related to the performance of the individual Participant or
of the Subsidiary, division, department, region or function within the
Corporation or Subsidiary in which the Participant is employed. The Management
Objectives may be made relative to the performance of other corporations. The
Management Objectives applicable to any award to a Covered Employee shall be
based on specified levels of growth or improvement in one or more of the
following criteria:
1. earnings;
2. earnings per share (earnings per share will be calculated without
regard to any change in accounting standards that may be required
by the Financial Accounting Standards Board after the goal is
established);
3. share price;
4. shareholder return;
5. return on invested capital, equity, or assets;
2
<PAGE>
6. operating earnings;
7. sales;
8. productivity;
9. cash flow;
10. market share;
11. profit margin;
12. customer service; and/or
13. economic value added.
If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Corporation, or the manner in
which it conducts its business, or other events or circumstances render the
Management Objectives unsuitable, the Committee may in its discretion modify
such Management Objectives or the related minimum acceptable level of
achievement, in whole or in part, as the Committee deems appropriate and
equitable, except in the case of a Covered Employee where such action would
result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code. In such case, the Committee shall not make any
modification of the Management Objectives or minimum acceptable level of
achievement.
"Market Value per Share" means, as of any particular date, the average
of the highest and lowest quoted selling prices for Common Shares on the
relevant date, or (if there were no sales on such date) the weighted average of
the means between the highest and lowest quoted selling prices on the nearest
day before and the nearest day after the relevant date; provided, however, that
if the Shares are not traded on a national securities exchange in the United
States, the Committee shall determine "Market Value per Share" in its
discretion.
"Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.
"Option Price" means the purchase price payable on exercise of an Option
Right.
"Option Right" means the right to purchase Common Shares upon exercise
of an option granted pursuant to Section 4 or Section 9 of this Plan.
"Other Stock-Based Awards" means those awards referred to in Section 9
of this Plan.
"Participant" means a person who is selected by the Committee to
receive benefits under this Plan and who is at the time an officer, or other key
employee of the Corporation or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 90 days of the Date
of Grant.
"Performance Period" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.
3
<PAGE>
"Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"Reload Option Rights" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(f) of this Plan.
"Restricted Shares" means Common Shares granted or sold pursuant to
Section 6 or Section 9 of this Plan as to which neither the substantial risk of
forfeiture nor the prohibition on transfers referred to in such Section 6 has
expired.
"Rule l6b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from time to
time.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
"Spread" means the excess of the Market Value per Share of the Common
Shares on the date when an Appreciation Right is exercised, or on the date when
Option Rights are surrendered in payment of the Option Price of other Option
Rights, over the Option Price provided for in the related Option Right.
"Subsidiary" means a corporation, company or other entity
(i) more than 50 percent of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may
be the case in a partnership, joint venture or unincorporated
association), but more than 50 percent of whose ownership interest
representing the right generally to make decisions for such other
entity is,
now or hereafter, owned or controlled, directly or indirectly, by the
Corporation except that for purposes of determining whether any person may be a
Participant for purposes of any grant of Incentive Stock Options, "Subsidiary"
means any corporation in which at the time the Corporation owns or controls,
directly or indirectly, more than 50 percent of the total combined voting power
represented by all classes of stock issued by such corporation.
4
<PAGE>
"Tandem Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is granted in tandem with an Option
Right or any similar right granted under any other plan of the Corporation.
"Voting Shares" means at any time, the then-outstanding securities
entitled to vote generally in the election of directors of the Corporation.
3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as provided
in Section 11 of this Plan, the number of Common Shares that may be issued or
transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii)
as Restricted Shares and released from substantial risks of forfeiture thereof,
(iii) as Deferred Shares, (iv) in payment of Performance Shares or Performance
Units that have been earned, (v) as Other Stock-Based Awards, (vi) in payment of
dividend equivalents paid with respect to awards made under the Plan shall not
exceed in the aggregate 1,000,000 shares plus any shares specified in paragraph
(b) of this Section 3. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. Upon the payment of any
Option Price by the transfer to the Corporation of Common Shares or upon
satisfaction of any withholding amount by means of transfer or relinquishment of
Common Shares, there shall be deemed to have been issued or transferred under
this Plan only the net number of Common Shares actually issued or transferred by
the Corporation.
(b) Total shares available under the plan shall also include (i) any
shares relating to awards that expire or are forfeited or cancelled and (ii) the
number of shares repurchased by the Corporation after July 1, 1997 in the open
market or otherwise and having an aggregate purchase price no greater than the
amount of cash proceeds received by the Corporation from the sale of Common
Shares under the Plan.
(c) Upon payment in cash of the benefit provided by any award granted
under this Plan, any shares that were covered by that award shall again be
available for issue or transfer hereunder.
(d) Notwithstanding anything in this Section 3, or elsewhere in this
Plan, to the contrary, the aggregate number of Common Shares actually issued or
transferred by the Corporation upon the exercise of Incentive Stock Options
shall not exceed 1,000,000 shares, subject to adjustments as provided in Section
11 of this Plan.
(e) Notwithstanding any other provision of this Plan to the contrary,
no Participant shall be granted Option Rights for more than 200,000 Common
Shares during any calendar year, subject to adjustments as provided in Section
11 of this Plan. Further, in no event shall any Participant in any calendar
year receive more than 200,000 Appreciation Rights, subject to adjustments as
provided in Section 11 of this plan.
(f) Notwithstanding any other provision of this Plan to the contrary,
in no event shall any Participant in any calendar year receive an award of
Performance Shares, Performance Units, Restricted Shares or Other Stock-Based
Awards that specify Management Objectives having an aggregate maximum value as
of their respective Dates of Grant in excess of $1,000,000.
5
<PAGE>
4. OPTION RIGHTS. The Committee may, from time to time and upon such
terms and conditions as it may determine, authorize the granting to Participants
of options to purchase Common Shares. Each such grant may utilize any or all of
the authorizations, and shall be subject to all of the requirements, contained
in the following provisions:
(a) Each grant shall specify the number of Common Shares to which it
pertains subject to the limitations set forth in Section 3 of this plan.
(b) Each grant shall specify an Option Price per share, which shall
not be less than 100 percent of the Market Value per Share on the Date of Grant.
(c) Each grant shall specify whether the Option Price shall be payable
(i) in cash or by check acceptable to the Corporation, (ii) by the actual or
constructive transfer to the Corporation of nonforfeitable, unrestricted Common
Shares owned by the Optionee (or other consideration authorized pursuant to
subsection (d) below) having a value at the time of exercise equal to the total
Option Price, or (iii) by a combination of such methods of payment.
(d) The Committee may determine, at or after the Date of Grant, that
payment of the Option Price of any option (other than an Incentive Stock Option)
may also be made in whole or in part in the form of Restricted Shares or other
Common Shares that are forfeitable or subject to restrictions on transfer,
Deferred Shares, Performance Shares (based, in each case, on the Market Value
per Share on the date of exercise), other Option Rights (based on the Spread on
the date of exercise) or Performance Units. Unless otherwise determined by the
Committee at or after the Date of Grant, whenever any Option Price is paid in
whole or in part by means of any of the forms of consideration specified in this
paragraph, the Common Shares received upon the exercise of the Option Rights
shall be subject to such risks of forfeiture or restrictions on transfer as may
correspond to any that apply to the consideration surrendered, but only to the
extent of (i) the number of shares or Performance Shares, (ii) the Spread of any
unexercisable portion of Option Rights, or (iii) the stated value of Performance
Units surrendered.
(e) Any grant may provide for deferred payment of the Option Price
from the proceeds of sale through a broker on a date satisfactory to the
Corporation of some or all of the shares to which such exercise relates.
(f) Any grant may, at or after the Date of Grant, provide for the
automatic grant of Reload Option Rights to an Optionee upon the exercise of
Option Rights (including Reload Option Rights) using Common Shares or other
consideration specified in paragraph (d) above. Reload Option Rights shall
cover up to the number of Common Shares, Deferred Shares, Option Rights or
Performance Shares (or the number of Common Shares having a value equal to the
value of any Performance Units) surrendered to the Corporation upon any such
exercise in payment of the Option Price or to meet any withholding obligations.
6
<PAGE>
Reload Options shall specify an Option Price per share, which shall not be less
than 100 percent of the Market Value per Share on the Date of Grant of the
Reload Option Right, and shall be on such other terms as may be specified by the
Committee, which may be the same as or different from those of the original
Option Rights.
(g) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain unexercised.
(h) Each grant shall specify the period or periods of continuous
service by the Optionee with the Corporation or any Subsidiary which is
necessary before the Option Rights or installments thereof will become
exercisable and may provide for the earlier exercise of such Option Rights in
the event of a Change in Control, retirement, death or disability of the
Optionee or other similar transaction or event.
(i) Any grant of Option Rights may specify Management Objectives that
must be achieved as a condition to the exercise of such rights.
(j) Option Rights granted under this Plan may be (i) options,
including, without limitation, Incentive Stock Options, that are intended to
qualify under particular provisions of the Code, (ii) options that are not
intended so to qualify, or (iii) combinations of the foregoing.
(k) The Committee may, at or after the Date of Grant of any Option
Rights (other than Incentive Stock Options), provide for the payment of dividend
equivalents to the Optionee on either a current or deferred or contingent basis
or may provide that such equivalents shall be credited against the Option Price.
(l) The exercise of an Option Right shall result in the cancellation
on a share-for-share basis of any related Appreciation Right authorized under
Section 5 of this Plan.
(m) Each grant shall specify the term of the Option Right; provided,
--------
however, that no Option Right shall be exercisable more than 10 years from the
- -------
Date of Grant.
(n) Each grant of Option Rights shall be evidenced by an agreement
executed on behalf of the Corporation by an officer and delivered to the
Optionee and containing such terms and provisions, consistent with this Plan, as
the Committee may approve.
5. APPRECIATION RIGHTS. The Committee may also authorize grants to
Participants of Appreciation Rights. An Appreciation Right shall be a right of
the Participant to receive from the Corporation an amount, which shall be
determined by the Committee and shall be expressed as a percentage (not
exceeding 100 percent) of the Spread at the time of the exercise of such right.
Any grant of Appreciation Rights under this Plan shall be upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
7
<PAGE>
(a) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Corporation in cash, in Common Shares or
in any combination thereof and may either grant to the Optionee or retain in the
Committee the right to elect among those alternatives.
(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at the
Date of Grant.
(c) Any grant may specify waiting periods before exercise and
permissible exercise dates or periods and shall provide that no Appreciation
Right may be exercised except at a time when the related Option Right is also
exercisable and at a time when the Spread is positive.
(d) Any grant may specify that such Appreciation Right may be
exercised only in the event of a Change in Control or other similar transaction
or event.
(e) Each grant of Appreciation Rights shall be evidenced by a
notification executed on behalf of the Corporation by an officer and delivered
to and accepted by the Optionee, which notification shall describe such
Appreciation Rights, identify the related Option Rights, state that such
Appreciation Rights are subject to all the terms and conditions of this Plan,
and contain such other terms and provisions, consistent with this Plan, as the
Committee may approve.
(f) Any grant of Appreciation Rights may specify Management
Objectives that must be achieved as a condition of the exercise of such rights.
(g) Regarding Tandem Appreciation Rights only: Each grant shall
provide that a Tandem Appreciation Right may be exercised only (i) at a time
when the related Option Right (or any similar right granted under any other plan
of the Corporation) is also exercisable and the Spread is positive and (ii) by
surrender of the related Option Right (or such other right) for cancellation.
In addition, a Tandem Appreciation Right awarded in relation to an Incentive
Stock Option must be granted concurrently with such Incentive Stock Option.
(h) Regarding Free-standing Appreciation Rights only:
(i) Each grant shall specify in respect of each Free-standing
Appreciation Right a Base Price per Common Share, which
shall be equal to or greater than the Market Value per Share
on the Date of Grant;
(ii) Successive grants may be made to the same Participant
regardless of whether any Free-standing Appreciation Rights
previously granted to such Participant remain unexercised;
8
<PAGE>
(iii) Each grant shall specify the period or periods of
continuous service by the Participant with the Corporation
or any Subsidiary that is necessary before the Free-
standing Appreciation Rights or installments thereof shall
become exercisable, and any grant may provide for the
earlier exercise of such rights in the event of a Change in
Control, retirement, death or disability of the Participant
or other similar transaction or event as approved by the
Committee; and
(iv) No Free-standing Appreciation Right granted under this Plan
may be exercised more than 10 years from the Date of Grant.
6. RESTRICTED SHARES. The Committee may also authorize the grant or sale
to Participants of Restricted Shares. Each such grant or sale may utilize any
or all of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate transfer of
the ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall provide that the Restricted Shares
covered by such grant or sale shall be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a period of not
less than one (1) year to be determined by the Committee at the Date of Grant,
and any grant or sale may provide for the earlier termination of such period in
the event of a Change in Control, retirement, or death or disability of the
Optionee or other similar transaction or event as approved by the Committee.
(d) Each such grant or sale shall provide that during the period for
which such substantial risk of forfeiture is to continue, the transferability of
the Restricted Shares shall be prohibited or restricted in the manner and to the
extent prescribed by the Committee at the Date of Grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Corporation or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Shares may specify Management Objectives
which, if achieved, will result in termination or early termination of the
restrictions applicable to such shares and each grant may specify in respect of
such specified Management Objectives, a minimum acceptable level of achievement
and may set forth a formula for determining the number of Restricted Shares on
which restrictions will terminate if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives.
9
<PAGE>
(f) Any such grant or sale of Restricted Shares may require that any
or all dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional Restricted
Shares, which may be subject to the same restrictions as the underlying award.
(g) Each grant or sale of Restricted Shares shall be evidenced by an
agreement executed on behalf of the Corporation by any officer and delivered to
and accepted by the Participant and shall contain such terms and provisions,
consistent with this Plan, as the Committee may approve. Unless otherwise
directed by the Committee, all certificates representing Restricted Shares shall
be held in custody by the Corporation until all restrictions thereon shall have
lapsed, together with a stock power executed by the Participant in whose name
such certificates are registered, endorsed in blank and covering such Shares.
7. DEFERRED SHARES. The Committee may also authorize the granting or sale
of Deferred Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the requirements
contained in the following provisions:
(a) Each such grant or sale shall constitute the agreement by the
Corporation to deliver Common Shares to the Participant in the future in
consideration of the performance of services, but subject to the fulfillment of
such conditions during the Deferral Period as the Committee may specify.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than the Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall be subject, except (if the Committee
shall so determine) in the event of a Change in Control or other similar
transaction or event, to a Deferral Period of not less than 1 year, as
determined by the Committee at the Date of Grant.
(d) During the Deferral Period, the Participant shall have no right to
transfer any rights under his or her award and shall have no rights of ownership
in the Deferred Shares and shall have no right to vote them, but the Committee
may, at or after the Date of Grant, authorize the payment of dividend
equivalents on such Shares on either a current or deferred or contingent basis,
either in cash or in additional Common Shares.
(e) Each grant or sale of Deferred Shares shall be evidenced by an
agreement executed on behalf of the Corporation by any officer and delivered to
and accepted by the Participant and shall contain such terms and provisions,
consistent with this Plan, as the Committee may approve.
10
<PAGE>
8. PERFORMANCE SHARES OR PERFORMANCE UNITS. The Committee may also
authorize the granting of Performance Shares or Performance Units that will
become payable to a Participant upon achievement of specified Management
Objectives. Each such grant may utilize any or all of the authorizations, and
shall be subject to all of the requirements, contained in the following
provisions:
(a) Each grant shall specify the number of Performance Shares or
Performance Units to which it pertains, which number may be subject to
adjustment to reflect changes in compensation or other factors; provided,
--------
however, that no such adjustment shall be made in the case of a Covered Employee
- -------
where such action would result in the loss of the otherwise available exemption
of the award under Section 162(m) of the Code.
(b) The Performance Period with respect to each Performance Share or
Performance Unit shall be such period of time not less than 1 year, (except in
the event of a Change in Control or other similar transaction or event, if the
Committee shall so determine) commencing with the Date of Grant and ending on
the last date of the Performance Period (as shall be determined by the Committee
at the time of grant).
(c) Any grant of Performance Shares or Performance Units shall specify
Management Objectives which, if achieved, will result in payment or early
payment of the award, and each grant shall specify in respect of such specified
one or more Management Objectives a minimum acceptable level of achievement and
shall set forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives. The grant of Performance Shares or Performance Units shall specify
that, before the Performance Shares or Performance Units shall be earned and
paid, the Committee must certify that the Management Objectives have been
satisfied.
(d) Each grant shall specify a minimum acceptable level of achievement
in respect of the specified Management Objectives below which no payment will be
made and shall set forth a formula for determining the amount of payment to be
made if performance is at or above such minimum but short of full achievement of
the Management Objectives.
(e) Each grant shall specify the time and manner of payment of
Performance Shares or Performance Units which have been earned. Any grant may
specify that the amount payable with respect thereto may be paid by the
Corporation in cash, in Common Shares or in any combination thereof and may
either grant to the Participant or retain in the Committee the right to elect
among those alternatives.
(f) Any grant of Performance Shares may specify that the amount
payable with respect thereto may not exceed a maximum specified by the Committee
at the Date of Grant. Any grant of Performance Units may specify that the
amount payable or the number of Common Shares issued with respect thereto may
not exceed maximums specified by the Committee at the Date of Grant.
11
<PAGE>
(g) The Committee may, at or after the Date of Grant of Performance
Shares, provide for the payment of dividend equivalents to the holder thereof on
either a current or deferred or contingent basis, either in cash or in
additional Common Shares.
(h) Each grant of Performance Shares or Performance Units shall be
evidenced by a notification executed on behalf of the Corporation by any officer
and delivered to and accepted by the Participant, which notification shall state
that such Performance Shares or Performance Units are subject to all the terms
and conditions of this Plan, and contain such other terms and provisions,
consistent with this Plan, as the Committee may approve.
9. OTHER STOCK-BASED AWARDS. Other awards of Common Shares and other
awards that are valued in whole or in part by reference to, or are otherwise
based on, Common Shares ("Other Stock-Based Awards"), including, without
limitation, performance shares, convertible preferred stock (if authorized by
the Company's articles of incorporation), convertible debentures (if authorized
by the Company's articles of incorporation), exchangeable securities and awards,
Common Shares or options valued by reference to book value or subsidiary
performance, may be granted either along with or in addition to or in tandem
with Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock
or Stock Purchase Rights granted under the Plan and/or cash awards made outside
of the Plan.
(a) Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of Common Shares to be awarded pursuant to such
awards, and all other conditions of the awards. The Committee may also provide
for the grant of Common Shares upon the completion of a specified performance
period.
The provisions of Other Stock Based Awards need not be the same with
respect to each recipient.
(b) Other Stock Based Awards made pursuant to this Section 9 shall be
subject to the following terms and conditions and to such additional conditions
as the Committee in its sole discretion may provide for in the award agreement:
(i) Subject to the provisions of this Plan and the award agreement
referred to in Section 9(b)(v) below, shares subject to awards made under
this Section 9 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares covered thereby are issued
to the recipient, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award agreement
and unless otherwise determined by the Committee on the Date of Grant, the
recipient of an award under this Section 9 shall be entitled to receive,
currently or on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of shares covered by the
award, as determined at the time of the award by the Committee, in its sole
discretion, and the Committee may provide that such amounts (if any) shall
be deemed to have been reinvested in additional Stock or otherwise
reinvested.
12
<PAGE>
(iii) Any award under Section 9 and any Stock covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of an
award under this Section 9.
(v) Each award under this Section 9 shall be confirmed by, and
subject to the terms of, an agreement or other instrument executed by the
Corporation and by the participant, the form of which has been approved by
the Committee.
(vi) Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 9 may be issued for no cash consideration.
Stock (including securities convertible into Stock) purchased pursuant to a
purchase right awarded under this Section 9 shall be priced at least 50% of
the Fair Market Value per Share of the Stock on the date of grant.
10. TRANSFERABILITY. (a) Except as otherwise determined by the Committee,
no Option Right, Appreciation Right or other derivative security granted under
the Plan shall be transferable by an Optionee other than by will or the laws of
descent and distribution. Except as otherwise determined by the Committee,
Option Rights and Appreciation Rights shall be exercisable during the Optionee's
lifetime only by him or her or by his or her guardian or legal representative.
(b) The Committee may specify at the Date of Grant that part or all of
the Common Shares that are (i) to be issued or transferred by the Corporation
upon the exercise of Option Rights or Appreciation Rights, upon the termination
of the Deferral Period applicable to Deferred Shares or upon payment under any
grant of Performance Shares, Performance Units or Other Stock-Based Awards or
(ii) no longer subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 6 of this Plan, shall be subject to further
restrictions on transfer.
11. ADJUSTMENTS. The Committee may make or provide for such adjustments
in the numbers of Common Shares covered by outstanding Option Rights,
Appreciation Rights, Deferred Shares, Performance Shares and Other Stock-Based
Awards granted hereunder, in the prices per share applicable to such Option
Rights and Appreciation Rights and in the kind of shares covered thereby, as the
Committee, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants or Optionees that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization or other change
13
<PAGE>
in the capital structure of the Corporation, or (b) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
awards so replaced. The Committee may also make or provide for such adjustments
in the numbers of shares specified in Section 3 of this Plan as the Committee in
its sole discretion, exercised in good faith, may determine is appropriate to
reflect any transaction or event described in this Section 11.
12. CHANGE IN CONTROL. For purposes of this Plan, a "Change in Control"
shall mean if at any time any of the following events shall have occurred:
(a) Any sale of all or substantially all of the Corporation's assets
to any person or entity (a "Person");
(b) Any sale or series of related sales which, in the aggregate,
transfer fifty percent (50%) or more of the voting shares of the Corporation to
any Person or group of Persons (as the term "group" is defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended); or
(c) Any merger of the Corporation with any other Person following
which the Corporation is not the surviving entity.
(d) Notwithstanding the foregoing, "Change in Control" shall not
include any sale, merger or consolidation with or to any Person in which the
shareholders of the Corporation immediately prior to such sale, merger or
consolidation own or obtain controlling voting power of such Person immediately
following such transaction.
13. FRACTIONAL SHARES. The Corporation shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement of fractions in cash based on
Market Value per Share on the date of settlement.
14. WITHHOLDING TAXES. To the extent that the Corporation is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization of
such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such taxes
required to be withheld, which arrangements (in the discretion of the Committee)
may include relinquishment of a portion of such benefit. The Corporation and a
14
<PAGE>
Participant or such other person may also make similar arrangements with respect
to the payment of any taxes with respect to which withholding is not required.
15. PARTICIPATION BY EMPLOYEES OF DESIGNATED SUBSIDIARIES. As a condition
to the effectiveness of any grant or award to be made hereunder to a Participant
who is an employee of a Designated Subsidiary, whether or not such Participant
is also employed by the Corporation or another Subsidiary, the Committee may
require such Designated Subsidiary to agree to transfer to such employee (when,
as and if provided for under this Plan and any applicable agreement entered into
with any such employee pursuant to this Plan) the Common Shares that would
otherwise be delivered by the Corporation, upon receipt by such Designated
Subsidiary of any consideration then otherwise payable by such Participant to
the Corporation. Any such award shall be evidenced by an agreement between the
Participant and the Designated Subsidiary, in lieu of the Corporation, on terms
consistent with this Plan and approved by the Committee and such Designated
Subsidiary. All such Common Shares so delivered by or to a Designated
Subsidiary shall be treated as if they had been delivered by or to the
Corporation for purposes of Section 3 of this Plan, and all references to the
Corporation in this Plan shall be deemed to refer to such Designated Subsidiary,
except for purposes of the definition of "Board" and except in other cases where
the context otherwise requires.
16. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Corporation or any Subsidiary outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions
of this Plan as it may consider necessary or appropriate for such purposes,
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Secretary or other appropriate officer of the Corporation may
certify any such document as having been approved and adopted in the same manner
as this Plan. No such special terms, supplements, amendments or restatements,
however, shall include any provisions that are inconsistent with the terms of
this Plan as then in effect unless this Plan could have been amended to
eliminate such inconsistency without further approval by the shareholders of the
Corporation.
17. ADMINISTRATION OF THE PLAN. (a) This Plan shall be administered by a
Committee of the Board (or subcommittee thereof), consisting of not less than
three Non-Employee Directors appointed by the Board. To the extent of such
delegation, references in the Plan to the Board shall also refer to the
appropriate committee. A majority of the Committee (or subcommittee thereof)
shall constitute a quorum, and the action of the members of the Committee (or
subcommittee thereof) present at any meeting at which a quorum is present, or
acts unanimously approved in writing, shall be the acts of the committee (or
subcommittee thereof). Until subsequent action of the Board, the Committee
shall be the Compensation Committee of the Board.
15
<PAGE>
(b) The interpretation and construction by the Committee of any
provision of this Plan or of any agreement, notification or document evidencing
the grant of Option Rights, Appreciation Rights, Restricted Shares, Deferred
Shares, Performance Shares or Performance Units and any determination by the
Committee pursuant to any provision of this Plan or of any such agreement,
notification or document shall be final and conclusive. No member of the
Committee shall be liable for any such action or determination made in good
faith.
18. AMENDMENTS, ETC. (a) The Committee may at any time and from time to
time amend the Plan in whole or in part; provided, however, that any amendment
-------- -------
which must be approved by the shareholders of the Corporation in order to comply
with applicable law or the rules of the principal national securities exchange
upon which the Common Shares are traded or quoted shall not be effective unless
and until such approval has been obtained. Presentation of this Plan or any
amendment hereof for shareholder approval shall not be construed to limit the
Corporation's authority to offer similar or dissimilar benefits under plans that
do not require shareholder approval.
(b) The Committee may, with the concurrence of affected Optionee,
cancel any agreement evidencing Option Rights or any other award granted under
this Plan. In the event of such cancellation, the Committee may authorize the
granting of new Option Rights or other awards hereunder (which may or may not
cover the same number of Common Shares which had been the subject of the prior
award) in such manner, at such option price, and subject to such other terms,
conditions and discretion as would have been applicable under this Plan had the
cancelled Option Rights or other award not been granted.
(c) The Committee also may permit Participants to elect to defer the
issuance of Common Shares or the settlement of awards in cash under the Plan
pursuant to such rules, procedures or programs as it may establish for purposes
of this Plan. The Committee also may provide that deferred settlements include
the payment or crediting of dividend equivalents or interest on the deferral
amounts.
(d) The Committee may condition the grant of any award or combination
of awards authorized under this Plan on the surrender or deferral by the
Participant of his or her right to receive a cash bonus or other compensation
otherwise payable by the Corporation or a Subsidiary to the Participant.
(e) In case of termination of employment by reason of death,
disability or normal or early retirement, or in the case of hardship or other
special circumstances, of a Participant who holds an Option Right or
Appreciation Right not immediately exercisable in full, or any Restricted Shares
as to which the substantial risk of forfeiture or the prohibition or restriction
on transfer has not lapsed, or any Deferred Shares as to which the Deferral
Period has not been completed, or any Performance Shares or Performance Units or
Other Stock-Based Awards which have not been fully earned, or who holds Common
Shares subject to any transfer restriction imposed pursuant to Section 10(b) of
this Plan, the Committee may, in its sole discretion, accelerate the time at
16
<PAGE>
which such Option Right or Appreciation Right may be exercised or the time at
which such substantial risk of forfeiture or prohibition or restriction on
transfer will lapse or the time when such Deferral Period will end or the time
at which such Performance Shares or Performance Units will be deemed to have
been fully earned or the time when such transfer restriction will terminate or
may waive any other limitation or requirement under any such award.
(f) This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Corporation or
any Subsidiary, nor shall it interfere in any way with any right the Corporation
or any Subsidiary would otherwise have to terminate such Participant's
employment or other service at any time.
(g) To the extent that any provision of this Plan would prevent any
Option Right that was intended to qualify as an Incentive Stock Option from
qualifying as such, that provision shall be null and void with respect to such
Option Right. Such provision, however, shall remain in effect for other Option
Rights and there shall be no further effect on any provision of this Plan.
19. TERMINATION. No grant (other than an automatic grant of Reload Option
Rights) shall be made under this Plan more than 10 years after the date on which
this Plan is first approved by the shareholders of the Corporation, but all
grants made on or prior to such date shall continue in effect thereafter subject
to the terms thereof and of this Plan.
17
<PAGE>
EXHIBIT 10(m)
THE BIBB COMPANY
NONEMPLOYEE DIRECTOR STOCK PLAN
EFFECTIVE JULY 1, 1997
<PAGE>
CONTENTS
--------
Page
----
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION................... 1
1.1. Establishment of the Plan.............................. 1
1.2. Purpose of the Plan.................................... 1
1.3. Duration of the Plan................................... 1
ARTICLE 2. DEFINITIONS............................................ 1
ARTICLE 3. ADMINISTRATION......................................... 3
3.1. The Compensation Committee............................. 3
3.2. Administration by the Committee........................ 3
3.3. Decisions Binding...................................... 3
3.4. Adjustment of Awards and Accounts...................... 4
ARTICLE 4. ELIGIBILITY AND PARTICIPATION.......................... 4
4.1. Eligibility............................................ 4
4.2. Actual Participation................................... 4
ARTICLE 5. AWARDS FOR EXISTING NONEMPLOYEE DIRECTORS.............. 4
5.1. Grant of Options....................................... 4
5.2. Vesting of Options..................................... 4
ARTICLE 6. ADDITIONAL OPTIONS FOR DIRECTORS....................... 4
6.1. Initial Grant of Options for New Nonemployee Directors. 4
6.2. Annual Awards of Options............................... 5
6.3. Vesting of Options..................................... 5
ARTICLE 7. DEFERRAL OF RETAINERS, COMMITTEE FEES, AND MEETING FEES 5
7.1. Deferral of Retainers, Committee Fees, and Meeting Fees 5
7.2. Election............................................... 5
7.3. Number of Deferred Stock Units......................... 5
7.4. Vesting of Deferred Stock Units........................ 5
ARTICLE 8. DEFERRED STOCK UNITS................................... 6
8.1. Deferred Stock Unit Account............................ 6
8.2. Dividend Equivalents................................... 6
8.3. Amount of Payout....................................... 6
8.4. Timing and Method of Payout............................ 6
8.5. Funding Mechanism for Deferred Stock Units............. 7
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION............... 7
9.1. Amendment, Modification, and Termination............... 7
9.2. Awards Previously Granted.............................. 7
ARTICLE 10. MISCELLANEOUS.......................................... 7
10.1. Gender and Number...................................... 7
10.2. Severability........................................... 7
10.3. Beneficiary Designation................................ 7
10.4. Nonalienation of Interest.............................. 7
10.5. Interest of Participant................................ 8
10.6. No Right of Nomination................................. 8
10.7. Shares Available....................................... 8
10.8. Successors............................................. 8
10.9. Requirements of Law.................................... 8
10.10. Governing Law.......................................... 8
<PAGE>
THE BIBB COMPANY
NONEMPLOYEE DIRECTOR STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. The Bibb Company hereby establishes an
incentive compensation plan to be known as the "The Bibb Company Nonemployee
Director Stock Plan" (the "Plan"), as set forth in this document. The Plan
provides for the acquisition of Options and of Deferred Stock Units by
Nonemployee Directors, subject to the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, the Plan shall
become effective as of July 1, 1997 (the "Effective Date"), and shall remain in
effect as provided in Section 1.3 herein.
1.2. PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of the Company's shareholders and to
attract and retain Nonemployee Directors of outstanding competence.
1.3. DURATION OF THE PLAN. The Plan shall commence on the Effective Date
and shall remain in effect subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 9. However, in no event may
an Award be granted under the Plan on or after July 1, 2007. The maximum number
of Shares paid out under the Plan shall be 250,000 (as adjusted pursuant to
Section 3.4) unless otherwise determined by the Board of Directors.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below when the initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, an award under this Plan
of Options or of Deferred Stock Units, as indicated.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(c) "Board" or "Board or Directors" means the Board of Directors of the
Company.
(d) "Change in Control" means any of the following events:
(1) Any sale of all or substantially all of the Company's assets to
any person or entity (a "Person");
<PAGE>
(2) Any sale or series of related sales which, in the aggregate,
transfer fifty percent (50%) or more of the voting shares of the
Company to any Person or group of Persons (as the term "group" is
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended);
(3) Any merger of the Company with any other Person following which
the Company is not the surviving entity; or
(4) Notwithstanding the foregoing, "Change in Control" shall not
include any sale, merger or consolidation with or to any Person
in which the shareholders of the Corporation immediately prior to
such sale, merger or consolidation own or obtain controlling
voting power of such Person immediately following such
transaction.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(f) "Committee" means the Compensation Committee of the Board of Directors
of the Company.
(g) "Company" means The Bibb Company, a Delaware corporation, together
with any and all Subsidiaries, and any successor thereto as provided
in Section 10.8.
(h) "Director" means any individual who is a member of the Board of
Directors of the Company.
(i) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3).
(j) "Employee" means any full-time, nonunion, salaried employee of the
Company or of the Company's Subsidiaries. For purposes of the Plan,
an individual whose only employment relationship with the Company is
as a Director, shall not be deemed to be an Employee.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto.
(l) "Existing Nonemployee Director" means a Nonemployee Director whose
original election to the Board occurred prior to the Effective Date.
(m) "Fair Market Value" shall mean the average of the highest and lowest
quoted selling prices for Shares on the relevant date, or (if there
were no sales on such date) the weighted average of the means between
the highest and lowest quoted selling prices on the nearest day before
and the nearest day after the relevant date; provided, however, that
if the Shares are not traded on a national securities exchange in the
United States, the Committee shall determine "Fair Market Value" in
its discretion.
2
<PAGE>
(n) "New Nonemployee Director" means a Nonemployee Director whose original
election to the Board occurred after the Effective Date.
(o) "Nonemployee Director" means any individual who is a member of the
Board of Directors of the Company, but who is neither a current nor a
retired Employee of the Company.
(p) "Option" means a right to acquire Shares for consideration and upon
terms stated therein.
(q) "Participant" means a Nonemployee Director of the Company who has an
outstanding Award granted under the Plan.
(r) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(s) "Retirement" means any termination of services on the Board at a time
when the Director has served on the Board for at least five (5) years.
(t) "Shares" means the Common Shares of the Company, $0.01 par value, or
such other securities as may have been substituted for such Shares
pursuant to any adjustment of Accounts under Section 3.4 of the Plan.
(u) "Subsidiary" means a corporation, company or other entity
(i) more than 50 percent of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may
be the case in a partnership, joint venture or unincorporated
association), but more than 50 percent of whose ownership interest
representing the right generally to make decisions for such other
entity is,
now or hereafter, owned or controlled, directly or indirectly, by the Company.
ARTICLE 3. ADMINISTRATION
3.1. THE COMPENSATION COMMITTEE. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company, subject to the
restrictions set forth in the Plan.
3.2. ADMINISTRATION BY THE COMMITTEE. The Committee shall have the full
power, discretion, and authority to interpret and administer the Plan in a
manner which is consistent with the Plan's provisions. However, in no event
shall the Committee have the power to determine Plan eligibility, or to
determine the number, the value, the vesting period, or the timing of Awards to
be made under the Plan (all such determinations being automatic pursuant to the
provisions of the Plan).
3
<PAGE>
3.3. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the Plan, and all related orders or resolutions of the
Committee shall be final, conclusive, and binding on all persons, including the
Company, its shareholders, Employees, Participants, and their estates and
beneficiaries.
3.4. ADJUSTMENT OF AWARDS AND ACCOUNTS.
The Board shall make or provide for such adjustments in the number and kind
of Shares in each Director's Deferred Stock Unit Account or subject to
outstanding Options as the Board, in its sole discretion, exercised in good
faith, shall determine is equitably required to prevent dilution or enlargement
of the rights of the Nonemployee Directors that would otherwise result from (a)
any stock dividend, stock split, combination of shares, recapitalization or any
other change in the capital structure of the Company, (b) any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities, or (c) any other corporate transaction or event
having an effect similar to any of the foregoing.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1. ELIGIBILITY. Persons eligible to participate in the Plan are limited
to Nonemployee Directors who are serving on the Board on the date of each
scheduled Award under the Plan.
4.2. ACTUAL PARTICIPATION. All Nonemployee Directors are eligible to
participate as follows:
(a) All Existing Nonemployee Directors shall receive Awards of
Options pursuant to Article 5 and Section 6.2;
(b) All New Nonemployee Directors herein shall receive Awards of
Options pursuant to Article 6; and
(c) All Nonemployee Directors shall be eligible to acquire Deferred
Stock Units in connection with deferrals pursuant to Article 7.
ARTICLE 5. AWARDS FOR EXISTING NONEMPLOYEE DIRECTORS
5.1. GRANT OF OPTIONS. Each Existing Nonemployee Director shall receive a
one-time Award of Options for Twenty Thousand (20,000) Shares effective as on
the date of the Company's 1997 Stockholders Meeting of said date.
5.2. VESTING OF OPTIONS. Said Options shall become vested at the rate of
6,666 Shares on July 1, 1998, 6,666 Shares on July 1, 1999, and 6,668 Shares on
July 1, 2000, if the Director continues to serve in said capacity as of said
dates; provided, however, that upon death, Disability, or a Change in Control,
-------- -------
all of a Participant's outstanding Options shall vest immediately. Any Options
not vested at the time of termination of service as a Director shall be
forfeited.
4
<PAGE>
ARTICLE 6. ADDITIONAL OPTIONS FOR DIRECTORS
6.1. INITIAL GRANT OF OPTIONS FOR NEW NONEMPLOYEE DIRECTORS. Each
individual who is a New Nonemployee Director, shall receive an Award of Options
for Ten Thousand (10,000) Shares on the date of his or her original election to
the Board. The said Award shall vest as to the first 5,000 Shares on the first
anniversary thereof and as to the remaining 5,000 Shares on the second
anniversary thereof, if the Director continues to serve in said capacity on said
dates; provided, however, that upon death, Disability, or a Change in Control,
-------- -------
all of a Participant's outstanding Options shall vest immediately. Any Options
not vested at the time of termination of service as a Director shall be
forfeited.
6.2. ANNUAL AWARDS OF OPTIONS. Each Nonemployee Director shall receive
Options for Five Thousand (5,000) Shares, effective as of the day following each
annual shareholders' meeting; as to Existing Nonemployee Directors, the first
such annual Award shall occur as of the annual Shareholders' meeting in 2000,
and as to each New Nonemployee Director, the first such annual Award shall occur
as of the second annual Shareholders' meeting after his initial election as a
Director.
6.3. VESTING OF OPTIONS. All Options awarded under Section 6.2 shall vest
one hundred percent (100%) upon the first anniversary of the award of such
Option, or if earlier, upon a Change in Control. If a Director ceases to serve
prior to said first anniversary (other than for death or Disability, in which
event said Options shall become fully vested), he or she shall be entitled, upon
said anniversary to exercise the Option with respect to a percentage of the
Shares subject to said Option equal to the number of days since the grant in
which he did serve as a Director divided by 365, and shall forfeit the Option
with respect to the remaining number of Shares.
ARTICLE 7. DEFERRAL OF RETAINERS, COMMITTEE FEES, AND MEETING FEES
7.1. DEFERRAL OF RETAINERS, COMMITTEE FEES, AND MEETING FEES. During the
term of this Plan, any Nonemployee Director may elect to receive all, none or
fifty percent (50%) of the cash portion of his or her annual retainer, committee
fees, and meeting fees in the form of Deferred Stock Units. Such election to
receive Deferred Stock Units shall be subject to the provisions of this Article
7.
7.2. ELECTION. Any election to receive all or fifty percent (50%) of a
Nonemployee Director's annual retainer, committee fees, and meeting fees in the
form of Deferred Stock Units shall be made before the first day of the calendar
year for which such compensation would otherwise be paid, or before July 1,
1997, as to amounts otherwise payable in 1997. New Nonemployee Directors,
however, may make such election with respect to their retainer payable during
the first calendar year of their service upon their original election to the
Board. Each such election may pertain to subsequent scheduled fees and retainer
payments, and will continue in effect as to subsequent years unless changed in
writing prior to any January 1.
7.3. NUMBER OF DEFERRED STOCK UNITS. The number of Deferred Stock Units
to be granted in connection with an election pursuant to Section 7.2 shall equal
the cash portion of the retainer and fees being deferred into Deferred Stock
Units, divided by the Fair Market Value of a Share on the date of the scheduled
payment of the amount deferred.
5
<PAGE>
7.4. VESTING OF DEFERRED STOCK UNITS. Subject to the terms of this Plan,
all Deferred Stock Units acquired under this Article 7 shall vest one hundred
percent (100%) upon the acquisition of such Deferred Stock Units.
ARTICLE 8. DEFERRED STOCK UNITS
8.1. DEFERRED STOCK UNIT ACCOUNT. A Deferred Stock Unit Account (the
"Account") shall be established and maintained by the Company for each
Participant who elects a Deferral pursuant to Article 7 under the Plan. Each
Account shall be the record of the Deferred Stock Units acquired by the
Participant under Article 7 of the Plan on each applicable date, shall be
maintained solely for accounting purposes, and shall not require a segregation
of any Company assets.
8.2. DIVIDEND EQUIVALENTS. Dividend equivalents shall be earned on
Deferred Stock Units provided under this Plan. Such dividend equivalents shall
be converted into equivalent amounts of Deferred Stock Units based on the Fair
Market Value of a Share on the day on which the dividend would be paid and added
to a Participant's Accounts. Deferred Stock Units resulting from dividend
equivalents shall be fully vested.
8.3. AMOUNT OF PAYOUT. Except as provided otherwise in this Plan, the
total amount payable to a Participant shall be one Share for each Deferred Stock
Unit, if any, in said Participant's Accounts at the date of payout as determined
in accordance with Section 8.4.
8.4. TIMING AND METHOD OF PAYOUT. Except as otherwise provided herein,
vested Deferred Stock Units shall be paid to Participants, in Shares, within
thirty (30) days following each Participant's termination of service on the
Board. Payout of a Participant's Account shall be made in one of the following
forms as elected by the Participant:
(a) By payment in Shares in a single distribution;
(b) By payment in Shares in not greater than ten annual installments;
or
(c) A combination of (a) and (b) above. The Participant shall
designate the percentage payable under each option.
Fractional Shares shall be rounded down to the nearest whole Share, and such
fractional amount shall be paid in cash.
The Participant's election of the form of payout shall be made by written
notice filed with the Committee at least one year prior to the Participant's
voluntary termination as a Director. Any such election may be changed by the
Participant at any time or from time to time; provided that any election made
less than one year prior to the Director's voluntary termination as a Director
shall not be valid, and in such case payment shall be made in accordance with
the Participant's prior election, except that the Participant's initial election
shall nonetheless be effective during the first year following. Absent an
election from the Participant, the payment shall be made in Shares in a single
distribution. In the event of a Director's death, the balance of his or her
Account shall be distributed to his or her beneficiary in shares in a single
distribution, even if the Participant had elected distribution in installments.
6
<PAGE>
Each Participant shall have the right to require the Company to retain so
much of any distribution as may be necessary to provide for the payment of
applicable taxes, which shall be converted into cash based on the Fair Market
Value of the Shares on the date five (5) days prior to the distribution, and the
Company will cause the amount so retained to be paid or deposited on behalf of
the Participant.
8.5. FUNDING MECHANISM FOR DEFERRED STOCK UNITS. The Company shall be
entitled, but not obligated, to establish a grantor trust or similar funding
mechanism to fund the Company's obligations under this Plan; provided, however,
-------- -------
that any funds contained therein shall remain subject to the claims of the
Company's general creditors. The funding mechanism shall constitute an unfunded
arrangement. This mechanism may be funded through the acquisition of Shares and
in that event, Participants shall be given the right to direct the exercise of
voting rights with respect to their respective interests in those Shares.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms set
forth in this Article 9, the Board may terminate, amend, or modify the Plan at
any time and from time to time.
9.2. AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment, or modification of the Plan shall in any material manner adversely
affect any Award previously provided under the Plan, without the written consent
of the Participant holding the Award.
ARTICLE 10. MISCELLANEOUS
10.1. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
10.2. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
10.3. BENEFICIARY DESIGNATION. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Board, and will be effective only when filed by the Participant in writing with
the Board during his or her lifetime. In the absence of any such designation or
if no designated beneficiary survives the Participant, benefits remaining unpaid
at the Participant's death shall be paid to the Participant's estate in Shares
in a single distribution.
10.4. NONALIENATION OF INTEREST. Except as permitted by this Plan, no
right or interest under this Plan of any Participant or beneficiary shall,
without the written consent of the Company, be (i) assignable or transferable in
any manner, (ii) subject to alienation, anticipation, sale, pledge, encumbrance,
attachment, garnishment, or other legal process, or (iii) in any manner liable
for or subject to the debts or liabilities of the Participant or beneficiary.
7
<PAGE>
10.5. INTEREST OF PARTICIPANT. The obligation of the Company under the
Plan to make payment under this Plan merely constitutes the unsecured promise of
the Company to make payments in the form of its Shares, as provided herein, and
no Participant or beneficiary shall have any interest in, or lien or prior claim
upon, any property of the Company. It is the intention of the Company that the
Plan be unfunded for tax purposes.
10.6. NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any Director for
reelection by the Company's shareholders.
10.7. SHARES AVAILABLE. Shares delivered by the Company under the Plan
shall be treasury shares, or Shares which have been or may be reacquired by the
Company. Any funding mechanism as described in Section 8.5 of this Plan may
acquire treasury shares from the Company or purchase Shares on the open market.
10.8. SUCCESSORS. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
10.9. REQUIREMENTS OF LAW. The granting of Awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
10.10. GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the internal, substantive laws of
the State of Georgia.
8
<PAGE>
EXHIBIT 10(N)
THE BIBB COMPANY
SEVERANCE AND CHANGE IN CONTROL
-------------------------------
POLICIES FOR EXECUTIVE OFFICERS
-------------------------------
SEVERANCE POLICY
----------------
This policy is effective January 1, 1998, for those executive officers of
The Bibb Company who are identified on Schedule A attached hereto. In the event
of termination of employment of any of said persons, who are referred to as
"Executive Officers," under circumstances described below, the Company will pay
to said Executive Officer an amount equal to his or her monthly base
compensation in effect immediately prior to said termination multiplied by the
number of months indicated for him or her on Schedule A, plus the target
incentive payment (indicated as a percentage of base compensation) on said
Schedule A for either this 12 month or 24 month period, as appropriate,
reflected on Schedule A. Said payment will be made in a lump sum in cash no
later than thirty days after the effective date of his or her termination.
The payment described above will be made in the event of termination of
employment on the initiative of the Company for any reason other than for Cause,
as defined below. It will not be made if the Executive Officer voluntarily
resigns. Termination will be deemed to be made on the initiative of the
Company, however, if the Executive Officer resigns for Good Reason as defined
below.
A termination is for "Cause" if it is made because (1) the Executive
Officer is convicted of, or pleads nolo contendere to a crime (either a felony
or a misdemeanor) against the Company, or crime which materially adversely
affects the reputation of the Company, as determined in the sole discretion of
the Compensation Committee of the Company's Board of Directors, or (2) the
Executive Officer has received written notice of unacceptable performance of his
or her responsibilities and duties to the Company and has failed to correct said
performance within thirty days of said notice.
An Executive Officer will be deemed to have terminated for "Good Reason" if
(1) his or her duties are substantially reduced or (2) his or her base
compensation is reduced by more than 10% or (3) he or she is required to perform
substantially all services for the Company at a location which is more than
fifty miles from the location of performance of said services at January 1,
1998, or at such later date as said Executive Officer may first be listed on
Schedule A.
CHANGE IN CONTROL POLICY
------------------------
In the event of a Change in Control of the Company the Executive Officer
will be paid the lump sum cash amount described in the Severance Policy upon the
closing of any transaction which is defined in paragraph 1 or 3 of the
definition of Change in Control described below, or no later than thirty days
after the last purchase required to effect a Change in Control as defined in
paragraph 2 of the definition described below said Change in Control. Said
payment shall be made whether or not this employment has terminated and
regardless of the reason for any such termination. Only one payment shall be
made, even though the provisions of the Severance Policy and of this Change in
Control Policy may both apply, it being the intention of the Company that there
be no duplication of payments under these policies.
<PAGE>
For the purposes of this Plan, a "Change in Control" shall mean if at any
time any of the following events shall have occurred:
1. Any sale of all or substantially all of the Corporation's assets to any
person or entity (a "Person");
2. Any sale or series of related sales which, in aggregate, transfer fifty
percent (50%) or more of the voting shares of the Corporation to any Person
or group of Persons (as the term "group" is defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended); or
3. Any merger of the Corporation with any other Person following which the
Corporation is not the surviving entity.
4. Notwithstanding the foregoing, "Change in Control" shall not include any
sale, merger or consolidation with or to any Person in which the
shareholders of the Corporation immediately prior to such sale, merger or
consolidation own or obtain controlling voting power of such Person
immediately following such transaction.
If the Executive Officer is a Disqualified Individual (as the term
"Disqualified Individual" is defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision thereto) and
if any payment by the Corporation to the Executive Officer under this Agreement
or otherwise would be an excess Parachute Payment (as the term "Excess Parachute
Payment" is defined in Section 280G of the Code or any successor provision
thereto), then the Executive Officer shall be entitled to receive an additional
payment or payments (collectively, a "Gross-Up Payment"). The Gross-up Payment
shall be in an amount such that, after payment by the Executive Officer of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any excise tax imposed upon the Gross-Up Payment pursuant to Section
4999 of the Code, or any successor provision thereto and any tax imposed by any
comparable provision of state law, the Executive Officer retains an amount of
the Gross-Up Payment equal to the excise tax imposed upon the payment. All
determinations and calculations required to be made under this paragraph shall
be made by a nationally-recognized accounting firm (the "Accounting Firm")
selected by the Executive Officer. The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations made
under this paragraph shall be borne by the Corporation.
AMENDMENT OF POLICIES
---------------------
These policies may be amended by the Compensation Committee at any time
provided that the effective date of any amendment which is adverse to the
interest of the Executive Officers shall be no earlier than one year from
written notice thereof to the Executive Officer. The Compensation Committee may
add Executive Officers to Schedule A at any time.
NONDUPLICATION OF PAYMENTS
--------------------------
In the event that the Executive Officer is also a party to an individual
agreement with the Company which provides for a continuation of compensation
under the same circumstances described in either the Severance Policy or Change
in Control Policy described above, any payments due under said agreement will be
offset against payments due under said policy(ies).
<PAGE>
EXHIBIT 10(o)
THE BIBB COMPANY
SEVERANCE POLICY FOR KEY MANAGEMENT
-----------------------------------
This policy is effective January 1, 1998, for those key management
personnel of The Bibb Company who are identified on Schedule A attached hereto.
In the event of termination of employment of any of said persons, who are
referred to as "Key Managers," under circumstances described below, the Company
will pay to said Key Manager an amount equal to his or her monthly base
compensation in effect immediately prior to said termination multiplied by the
number of months indicated for him or her on Schedule A. Said payment will be
made in a lump sum in cash no later than thirty days after the effective date of
his or her termination.
The payment described above will be made in the event of termination
of employment on the initiative of the Company for any reason other than for
Cause, as defined below. It will not be made if the Key Manager voluntarily
resigns unless the Key Manager resigns for Good Reason as defined below, or
within six months following a change of control, as described below.
A termination is for "Cause" if it is made because (1) the Key Manager
is convicted of, or pleads nolo contendere to a crime (either a felony or a
misdemeanor) against the Company, or crime which materially adversely affects
the reputation of the Company, as determined in the sole discretion of the
Compensation Committee of the Company's Board of Directors, or (2) the Key
Manager has received written notice of unacceptable performance of his or her
responsibilities and duties to the Company and has failed to correct said
performance within thirty days of said notice.
A Key Manager will be deemed to have terminated for "Good Reason" if
(1) his or her duties are substantially reduced or (2) his or her base
compensation is reduced by more than 10% or (3) he or she is required to perform
substantially all services for the Company at a location which is more than
fifty miles from the location of performance of said services at January 1,
1998, or at such later date as said Key Manager may first be listed on Schedule
A.
In the event of a Change in Control of the Company, as defined below, a Key
Manager may voluntarily resign from the Company at any time within the six-month
period beginning on the effective date of said Change in Control, for any
reason, and shall receive the payment described in the first paragraph of this
policy. The effective date of the Change in Control shall be the date of the
closing of any transaction which is defined in paragraph 1 or 3 of the
definition of Change in Control described below, or date of the last purchase
required to effect a Change in Control as defined in paragraph 2 of said
definition.
For the purposes of this policy, a "Change in Control" shall mean if at any time
any of the following events shall have occurred:
1. Any sale of all or substantially all of the Corporation's assets to any
person or entity (a "Person");
2. Any sale or series of related sales which, in aggregate, transfer fifty
percent (50%) or more of the voting shares of the Corporation to any Person
or group of Persons (as the term "group" is defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended); or
3. Any merger of the Corporation with any other Person following which the
Corporation is not the surviving entity.
<PAGE>
4. Notwithstanding the foregoing, "Change in Control" shall not include any
sale, merger or consolidation with or to any Person in which the
shareholders of the Corporation immediately prior to such sale, merger or
consolidation own or obtain controlling voting power of such Person
immediately following such transaction.
This policy may be amended by the Compensation Committee at any time
provided that the effective date of any amendment which is adverse to the
interest of the Key Managers shall be no earlier than one year from written
notice thereof to the Key Manager. The Compensation Committee may add Key
Managers to Schedule A at any time.
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JAN-03-1998 DEC-28-1996
<PERIOD-START> DEC-29-1996 SEP-29-1996
<PERIOD-END> JAN-03-1998 DEC-28-1996
<CASH> 114,000 3,206,000
<SECURITIES> 0 0
<RECEIVABLES> 37,447,000 56,716,000
<ALLOWANCES> 2,686,000 1,588,000
<INVENTORY> 54,305,000 72,282,000
<CURRENT-ASSETS> 104,224,000 169,661,000
<PP&E> 68,810,000 60,741,000
<DEPRECIATION> 5,981,000 2,099,000
<TOTAL-ASSETS> 169,351,000 232,700,000
<CURRENT-LIABILITIES> 36,356,000 62,759,000
<BONDS> 0 0
0 0
0 0
<COMMON> 101,000 100,000
<OTHER-SE> 88,882,000 88,348,000
<TOTAL-LIABILITY-AND-EQUITY> 169,351,000 232,700,000
<SALES> 248,836,000 63,937,000
<TOTAL-REVENUES> 248,836,000 63,937,000
<CGS> 222,620,000 57,252,000
<TOTAL-COSTS> 222,620,000 57,252,000
<OTHER-EXPENSES> 27,439,000 7,428,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (6,175,000) (1,418,000)
<INCOME-PRETAX> (7,398,000) (2,161,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (7,398,000) (2,161,000)
<DISCONTINUED> (20,948,000) (379,000)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (28,346,000) (2,540,000)
<EPS-PRIMARY> (2.82) (0.25)
<EPS-DILUTED> (2.82) (0.25)
</TABLE>
