<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 28, 1995
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 33-27038
JPS TEXTILE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-0868166
---------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
555 North Pleasantburg Drive, Suite 202, Greenville, South Carolina 29607
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (803) 239-3900
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 490,000 shares of the Company's
Class A Common Stock and 510,000 shares of Class B Common Stock were outstanding
as of March 10, 1995.
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JPS TEXTILE GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
Number
<S> <C> <C> <C>
Item 1. Condensed Consolidated Balance Sheets
January 28, 1995 (Unaudited) and October 29, 1994 . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations
Three Months Ended January 28, 1995 and
January 29, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended January 28, 1995 and
January 29, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
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Item 1. Financial Statements
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
January 28, October 29,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 3,576 $ 2,873
Accounts receivable 92,902 102,804
Inventories 77,897 74,966
Prepaid expenses and other 3,267 1,783
-------- --------
Total current assets 177,642 182,426
Property, plant and equipment, net 203,737 204,094
Excess of cost over fair value of net assets acquired, net 32,213 32,454
Other assets 48,615 49,016
-------- --------
Total $462,207 $467,990
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 41,574 $ 41,013
Accrued interest 5,328 12,448
Accrued salaries, benefits and withholdings 13,953 15,271
Other accrued expenses 13,490 15,403
Current portion of long-term debt 2,875 2,347
-------- --------
Total current liabilities 77,220 86,482
Long-term debt 326,365 335,472
Deferred income taxes 4,865 3,565
Other long-term liabilities 19,945 20,481
-------- --------
Total liabilities 428,395 446,000
-------- --------
Senior redeemable preferred stock 25,270 24,340
-------- --------
Shareholders' equity (deficit):
Junior preferred stock 250 250
Common stock 10 10
Additional paid-in capital 32,514 33,444
Deficit (24,232) (36,054)
-------- --------
Total shareholders' equity (deficit) 8,542 (2,350)
-------- --------
Total $462,207 $467,990
======== ========
</TABLE>
Note: The condensed consolidated balance sheet at October 29, 1994 has been
extracted from the audited financial statements.
See notes to condensed consolidated financial statements.
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JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
January 28, January 29,
1995 1994
----------- -----------
<S> <C> <C>
Net sales $ 147,233 $ 134,066
Cost of sales 126,278 116,244
---------- ----------
Gross profit 20,955 17,822
Selling, general and administrative expenses 15,894 15,371
---------- ----------
Income from operations 5,061 2,451
Interest expense 10,065 15,486
Other income (expense), net (394) 17
---------- ----------
Loss before income taxes, income from discontinued
operations, extraordinary gain and cumulative effect of
accounting change (5,398) (13,018)
Income taxes 300 282
---------- ----------
Loss before income from discontinued operations, extraordinary
gain and cumulative effect of accounting change (5,698) (13,300)
Income from discontinued operations, net of taxes - 5,939
Extraordinary gain on early extinguishment of debt, net of taxes 17,520 -
Cumulative effect of accounting change, net of taxes - (1,000)
---------- ----------
Net income (loss) 11,822 (8,361)
Senior redeemable preferred stock in-kind dividends and
discount accretion 930 809
---------- ----------
Income (loss) applicable to common stock $ 10,892 $ (9,170)
========== ==========
Weighted average common shares outstanding 1,000,000 1,000,000
========== ==========
Earnings (loss) per common share:
Loss before income from discontinued operations, extraordinary
gain and cumulative effect of accounting change $ (6.63) $ (14.11)
Income from discontinued operations - 5.94
Extraordinary gain on early extinguishment of debt 17.52 -
Cumulative effect of accounting change - (1.00)
---------- ----------
Net income (loss) $ 10.89 $ (9.17)
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
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JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
January 28, January 29,
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 11,822 $ (8,361)
-------- --------
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Income from discontinued operations - (5,939)
Extraordinary gain on early extinguishment of debt (17,520) -
Cumulative effect of accounting change - 1,000
Depreciation and amortization, except amounts included
in interest expense 6,974 6,595
Interest accretion and debt issuance cost amortization 2,422 2,922
Other, net (282) 1,389
Changes in assets and liabilities:
Accounts receivable 9,902 18,347
Inventory (2,931) (3,912)
Prepaid expenses and other assets (907) (532)
Accounts payable 561 (4,867)
Accrued expenses and other liabilities (9,722) (10,889)
-------- --------
Total adjustments (11,503) 4,114
-------- --------
Net cash provided by (used in) operating activities 319 (4,247)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (6,375) (7,228)
Receipts from discontinued operations, net - 6,006
-------- --------
Net cash used in investing activities (6,375) (1,222)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (25) (61)
Revolving credit facility borrowings, net 44,048 7,194
Proceeds from issuance of long-term debt 5,000 -
Repayment of long-term debt (42,264) (585)
-------- --------
Net cash provided by financing activities 6,759 6,548
-------- --------
Net increase in cash 703 1,079
Cash at beginning of period 2,873 2,080
-------- --------
Cash at end of period $ 3,576 $ 3,159
======== ========
Supplemental cash flow information:
Interest paid $ 15,428 $ 20,435
Income taxes paid 830 421
Non-cash financing activities:
Senior redeemable preferred stock dividends-in-kind 718 676
</TABLE>
See notes to condensed consolidated financial statements.
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JPS TEXTILE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
--------------------------------------------------------------------------------
1. The Company has prepared, without audit, the interim condensed
consolidated financial statements and related notes. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at January 28, 1995 for all
periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the fiscal year ended
October 29, 1994. The results of operations for the interim period are
not necessarily indicative of the operating results of the full year.
During the fourth quarter of fiscal 1994, the Company changed,
effective as of the beginning of fiscal 1994, its accounting policy
with respect to other postemployment benefits to comply with Statement
of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits ". This change is more fully explained in
Note 9 of the Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the fiscal year ended October
29, 1994. The fiscal 1994 amounts included in this report have been
restated, where applicable, to reflect the adoption of these changes
as of October 31, 1993. The effect of the restatement was to increase
the net loss for the three months ended January 29, 1994 from
$7,361,000 to $8,361,000 as a result of the cumulative effect of the
accounting change of $1,000,000. There was no material effect on
income from operations for the three months ended January 29, 1994 as
a result of the accounting change.
Certain 1994 amounts have been reclassified to conform to the 1995
presentation. In addition, see Note 3 of the Notes to Consolidated
Financial Statements in the Company's Annual Report on Form 10-K for
the fiscal year ended October 29, 1994 regarding reclassifications of
1994 amounts for discontinued operations.
2. Inventories (In Thousands):
<TABLE>
<CAPTION>
January 28, October 29,
1995 1994
----------- ----------
<S> <C> <C>
Raw materials $16,482 $17,104
Work-in-process 32,113 29,059
Finished goods 29,302 28,803
======= =======
Total $77,897 $74,966
======= =======
</TABLE>
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3. Long-Term Debt and Purchases of Company Debt Securities
During the first quarter of fiscal 1995, the Company expended
$36,607,000 to make open market purchases of certain of its
outstanding notes and debentures with an aggregate face value
of $66,571,000 and a carrying value (including interest due at
maturity) of $59,225,000. The Company recognized a gain from early
extinguishment of debt of $17,520,000, net of expenses of $1,898,000
and income taxes of $3,200,000.
Long-term debt consists of (in thousands):
<TABLE>
<CAPTION>
January 28, October 29,
1995 1994
----------- -----------
<S> <C> <C>
Senior credit facility revolving line of credit $ 93,966 $ 49,918
Senior subordinated discount notes (including interest due
at maturity of $3,277 and $3,395, respectively) 112,525 130,179
Senior subordinated notes (including interest due at maturity of
$3,497 and $4,404, respectively) 80,270 109,283
Subordinated debentures 54,071 75,000
Equipment financing 12,100 7,658
-------- --------
Total 352,932 372,038
Less reorganization discount:
Senior subordinated discount notes (6,388) (8,109)
Senior subordinated notes (5,569) (8,723)
Subordinated debentures (11,735) (17,387)
-------- --------
Total long-term debt 329,240 337,819
Less current portion (2,875) (2,347)
-------- --------
Long-term portion $326,365 $335,472
======== ========
</TABLE>
4. Discontinued Operations
On June 28,1994, pursuant to the terms of an Asset Purchase Agreement
dated May 25, 1994 (the "Asset Purchase Agreement"), by and among the
Company, JPS Auto Inc., a wholly-owned subsidiary of the Company
("Auto"), JPS Converter and Industrial Corp., a wholly-owned
subsidiary of the Company ("C&I"), Foamex International Inc.
("Foamex") and JPS Automotive Products Corp., an indirect,
wholly-owned subsidiary of Foamex ("Purchaser"), the Company
consummated the disposition of its Automotive Assets (as described
below) to the Purchaser.
The Automotive Assets consisted of the businesses and assets of Auto
and the synthetic industrial fabrics division of C&I, and the
Company's investment in common stock of the managing general partner
of Cramerton Automotive Products, L.P. (an 80% owned joint venture).
Net sales from such discontinued operations were $78.1 million in the
first quarter of fiscal 1994. Pursuant to the terms of the Asset
Purchase Agreement, the Purchaser agreed to assume substantially all
of the liabilities and obligations associated with the Automotive
Assets. In addition, the Company and its affiliates agreed, for a
four year period, not to directly or indirectly compete with the sold
businesses in North, Central and South America.
The purchase price for the Automotive Assets was approximately $279
million, consisting of $264 million of cash paid at closing and $15
million of assumed debt as of June 28, 1994, subject to certain
post-closing adjustments which may result in a gain to be recognized
in a future period. The sale of the Automotive Assets resulted in an
approximate gain of $133 million, net of income taxes of $2.8 million,
in the third quarter of fiscal 1994.
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The net cash proceeds from the disposition of the Automotive Assets
(after deductions for fees, other expenses and amounts designated by
management to satisfy possible contingent tax liabilities) were
approximately $213 million and such proceeds were used by the Company
to reduce its outstanding indebtedness. See Note 5 of the Notes to
Consolidated Financial Statements in the Company's Annual Report on
Form 10-K for the fiscal year ended October 29, 1994.
The Company has allocated to the discontinued operations a pro-rata
portion of the interest expense of its senior credit facility, which
pro-rata portion was approximately $0.6 million in the first quarter
of 1994.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
--------------------------------------------------------------------------------
The following should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing in Item 7
of the Company's Annual Report on Form 10-K for the fiscal year ended October
29, 1994.
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended
----------------------------
January 28, January 29,
1995 1994
----------- -----------
<S> <C> <C>
NET SALES
Apparel Fabrics and Products $ 64,713 $ 60,443
Industrial Fabrics and Products 43,460 33,381
Home Fashion Textiles 39,060 40,242
-------- --------
Net Sales $147,233 $134,066
======== ========
OPERATING PROFIT
Apparel Fabrics and Products $ 5,091 $ 4,068
Industrial Fabrics and Products 1,392 (182)
Home Fashion Textiles (420) 651
Indirect Corporate Expenses, net (1,396) (2,069)
-------- --------
Operating Profit 4,667 2,468
Interest expense 10,065 15,486
-------- --------
Loss before income taxes, income from discontinued operations,
extraordinary gain and cumulative effect of accounting change $ (5,398) $(13,018)
======== ========
</TABLE>
RESULTS OF OPERATIONS
1995 First Quarter Compared to 1994 First Quarter
-------------------------------------------------
Consolidated net sales for the 1995 first quarter increased 9.8% to
$147.2 million from $134.1 million in the 1994 first quarter generally due to
increased sales of industrial fabrics, construction products and apparel
fabrics. Apparel Fabrics and Products sales increased 7.1% to $64.7 million for
the 1995 first quarter from $60.4 million for the 1994 first quarter principally
due to the Company's change in its product offering to emphasize specialty
fabrics with more fashion and styling characteristics. These specialty fabrics
command a higher average selling price than commodity type fabrics. The 30.2%
increase in Industrial Fabrics and Products sales to $43.5 million for the 1995
first quarter from $33.4 million for the 1994 first quarter is due to general
increased demand for the Company's various products. Fiberglass insulation and
filtration fabrics and synthetic scrim fabrics increased $2.6 million due to
increased demand for construction related products and due to a supply shortage
in the market for certain filtration fabrics. Single-ply roofing product sales
increased $2.1 million due to the continued increase in demand for a new roofing
product introduced by the Company in late 1993. Cotton industrial fabric sales
increased $2.9 million due to higher selling prices and unit volume driven by
improved product demand, particularly in the book-cloth market, and the pass
through of increases in cotton raw material prices as a result of a worldwide
cotton crop shortfall. Improved demand also caused a $0.9 million increase in
extruded urethane product sales. Home Fashion Textiles sales decreased 2.9% to
$39.1 million for the 1995 first quarter from $40.2 million for the 1994 first
quarter due to a 5% decrease in carpet unit volume
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and average selling prices. Carpet sales decreased $3.0 million to $28.7
million for the 1995 first quarter compared to the 1994 first quarter. Partially
offsetting the decline in carpet sales was a $1.9 million increase in sales of
yarn to home fashion customers for use in the manufacture of carpets and
fabrics.
Operating profits in the 1995 first quarter increased 89.1% to $4.7 million from
$2.5 million for the 1994 first quarter. Profits from Apparel Fabrics and
Products of $5.1 million for the 1995 first quarter increased $1.0 million, or
25.1%, from the 1994 first quarter due to more favorable margins for the
Company's newer specialty fabrics than on commodity type apparel fabrics.
Operating profits for Industrial Fabrics and Products increased $1.6 million to
$1.4 million in the 1995 first quarter from a $0.2 million loss in the 1994
first quarter as a result of increased sales. Home Fashion Textiles
experienced a $1.1 million decrease in operating profits in the 1995 first
quarter to a loss of $0.4 million from a profit of $0.7 million in the 1994
first quarter due to weak demand for home furnishing fabrics and increased
pricing pressures resulting in lower average selling prices for carpet.
Indirect corporate expenses declined by $0.7 million to $1.4 million for the
1995 first quarter as compared to the 1994 first quarter due to lower employee
compensation, professional fees and amortization expense.
Interest expense decreased 35.0% to $10.1 million for the 1995 first quarter
from $15.5 million for the 1994 first quarter due to the reduction in debt
resulting from the application of a portion of the net proceeds from the sale of
the Automotive Assets. Giving effect to this reduction of debt on a pro forma
basis would reduce interest expense by $5.5 million in the 1994 first quarter to
$10.0 million. Such pro forma reduction includes $0.5 million representing
interest accretion and debt issuance cost amortization. After giving effect to
the debt reduction described above, interest expense increased only $0.1 million
in the 1995 first quarter. Higher average interest rates for the revolving
credit facility were offset by reductions in outstanding principal amounts of
the Company's notes and debentures as the Company purchased a portion of its
debt securities in the 1995 first quarter on the open market. These securities
were purchased at prices less than their carrying values using loan proceeds
from the revolving credit facility (see Note 3 of the Notes to Condensed
Consolidated Financial Statements for the 1995 first quarter).
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased approximately 4.7% to $100.4 million at January 28,
1995 from $95.9 million at October 29, 1994. A decline in accounts receivable
reduced working capital $9.9 million (9.6%) due to the seasonally lower sales in
the first quarter of the fiscal year than in the fourth quarter. Inventories
increased $2.9 million (3.9%) from October 29, 1994 to January 28, 1995
principally due to higher costs associated with the specialty fabrics to which
the Company has changed its focus in the Apparel Fabrics and Products segment
and due to an increase in yarn in work in process in anticipation of increased
production needs during the next quarter. Accrued interest, compensation and
other liabilities decreased $10.4 million during the 1995 first quarter
due to the scheduled timing of interest, annual incentive compensation and
other payments.
The Company's principal sources of liquidity for operations and expansion
are funds generated internally and borrowings under the Company's $135 million
revolving credit facility. Revolving credit facility borrowings were used to
provide funds needed for the working capital increase discussed above, capital
expenditures and financing activities (principally $36.6 million to purchase
and retire certain of the Company's outstanding notes and debentures) to the
extent such funds were not provided for by the net cash flow from operations
during the 1995 first quarter. All senior borrowings bear interest at a Base
Rate, as defined, plus 1 1/2% per annum (10.0% at January 28, 1995) or at the
Eurodollar Rate, as defined, plus 3.0% per annum (approximately 9.2% at January
28, 1995). Borrowings under the senior credit agreement are limited to
specified percentages of eligible accounts receivable and inventories, as
defined, plus an additional fixed amount of $25 million. The Company had $38.7
million available for borrowing under the revolving credit agreement on January
28, 1995. Borrowings under the revolving credit facility are made or repaid on
a daily basis in amounts equal to the net cash requirements for that business
day, thereby reducing net borrowings to the maximum extent possible. During
the 1995 first quarter, the Company obtained a $5 million equipment loan from a
commercial lender to finance certain capital
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<PAGE> 11
expenditures.
As previously discussed, the Company expended $36,607,000 during the first
quarter of fiscal 1995 to purchase and retire certain of its outstanding notes
and debentures with an aggregate face value of $66,571,000 and a carrying value
(including interest due at maturity) of $59,225,000. The Company recognized a
gain from early extinguishment of debt of $17,520,000, net of expenses of
$1,898,000 and income taxes of $3,200,000. The Company has made no further
open market purchases of its debt securities subsequent to January 28, 1995 and
is not currently seeking to make any such purchases.
Management continually reviews various options for enhancing liquidity and its
cash flow to cash requirements coverage, both operationally and financially.
Such options include strategic dispositions and financing and refinancing
activities aimed at increasing cash flow and reducing cash requirements, the
principal items of which are interest and capital expenditures. Management
believes that expected cash flows and capital resources, including any necessary
refinancings will be adequate to meet future debt service requirements and
working capital needs.
11
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JPS TEXTILE GROUP, INC.
PART II - OTHER INFORMATION
Item
----
1. Legal Proceedings None
2. Changes in Securities None
3. Defaults Upon Senior Securities None
4. Submission of Matters to a Vote of Security Holders None
5. Other Information None
6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
(10.1) Long-term Incentive Plan of the Company effective November
1, 1994.
(11) Statement re: Computation of Per Share Earnings - not
required since such computation can be clearly determined
from the material contained herein.
(27) Financial Data Schedule (for SEC use only)
(b) Current Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JPS TEXTILE GROUP, INC.
Date: 3/14/95 /s/ David H. Taylor
---------------- -------------------------------------
David H. Taylor
Executive Vice President - Finance,
Secretary and Chief Financial Officer
12
<PAGE> 1
EXHIBIT 10.1
JPS TEXTILE GROUP, INC.
LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE I - PURPOSE . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS
2.1 Affiliated Employer . . . . . . . . . . . . . . . . . . 1
2.2 Annual Award . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Award Bank . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Board . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.6 Committee . . . . . . . . . . . . . . . . . . . . . . . 1
2.7 Eligible Employee . . . . . . . . . . . . . . . . . . . 2
2.8 Employer . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Net Assets . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 Operating Income . . . . . . . . . . . . . . . . . . . . 2
2.11 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12 Plan Year . . . . . . . . . . . . . . . . . . . . . . . 2
2.13 RONAE . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.14 Target RONAE Percentages . . . . . . . . . . . . . . . . 2
ARTICLE III - ADMINISTRATION
3.1 Administration by Committee . . . . . . . . . . . . . . 2
3.2 Committee to Make Rules and Interpret Plan . . . . . . . 3
3.3 The Committee . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV - ANNUAL AWARDS MADE BY COMMITTEE . . . . . . . . . . 4
ARTICLE V - ELIGIBILITY OF OFFICERS AND KEY EMPLOYEES . . . . . . 4
ARTICLE VI - DETERMINING ANNUAL AWARDS
6.1 Establishment of Target RONAE Percentages . . . . . . . 4
6.2 Determination of Annual Award . . . . . . . . . . . . . 4
<PAGE> 2
ARTICLE VII - PLAN ACCOUNTING AND PAYMENTS FROM AWARD BANK
7.1 Award Bank Accounting . . . . . . . . . . . . . . . . . 5
7.2 Payments From Award Bank . . . . . . . . . . . . . . . . 5
7.3 Example of Plan Accounting and Payments . . . . . . . . 5
7.4 Termination of Eligible Employee's Employment . . . . . 5
ARTICLE VIII - SALE OF EMPLOYER . . . . . . . . . . . . . . . . . 7
ARTICLE IX - AMENDMENTS AND TERMINATION . . . . . . . . . . . . . 7
ARTICLE X - GENERAL
10.1 Government and Other Regulations . . . . . . . . . . . . 7
10.2 Tax Withholding . . . . . . . . . . . . . . . . . . . . 7
10.3 Claim to Annual Award of Award Bank . . . . . . . . . . 7
10.4 Beneficiaries . . . . . . . . . . . . . . . . . . . . . 7
10.5 Nontransferability . . . . . . . . . . . . . . . . . . . 8
10.6 Indemnification . . . . . . . . . . . . . . . . . . . . 8
10.7 Reliance on Reports . . . . . . . . . . . . . . . . . . 8
10.8 Relationship to Other Benefits . . . . . . . . . . . . . 8
10.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 8
10.10 Construction . . . . . . . . . . . . . . . . . . . . . . 8
10.11 Misconduct . . . . . . . . . . . . . . . . . . . . . . . 8
10.12 Suspension of Redemptions . . . . . . . . . . . . . . . 9
10.13 Governing Law . . . . . . . . . . . . . . . . . . . . . 9
-ii-
<PAGE> 3
JPS TEXTILE GROUP, INC.
LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
This Plan is effective November 1, 1994. The purpose of this
Long-Term Incentive Plan is to provide a means through which JPS Textile Group,
Inc. a Delaware corporation, and its participating Affiliated Employers may
attract able key personnel to enter and remain in their employ and to provide a
means whereby those key personnel upon whom the responsibilities of the
successful administration and management of the Employer rest, and whose
present and potential contributions to the welfare of the Employer are of
importance, will acquire and maintain a long-term interest in their employment
relationship with the Employer, thereby strengthening their commitment to the
welfare of the Employer and their desire to remain in its employ.
A further purpose of the Plan is to provide such key employees with
additional incentive and reward opportunities designed to enhance the
profitable growth of the Employer. So that the appropriate incentive can be
provided, the Plan provides for granting Annual Awards to be paid out over a
period of years, subject to certain conditions herein set forth.
ARTICLE II
DEFINITIONS
2.1 "AFFILIATED EMPLOYER" shall mean any corporation which is or has been
a member of a controlled group of corporations (as defined in Code
Section 414(b)) which includes the Employer; any trade or business
(whether or not incorporated) which is or has been under common
control (as defined in Code Section 414(c)) with the Employer; any
organization (whether or not incorporated) which is or has been a
member of an affiliated service group (as defined in Code Section
414(m)) which includes the Employer; and any other entity which is or
has been required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o).
2.2 "ANNUAL AWARD" shall mean the dollar amount of incentive compensation
determined for an Eligible Employee pursuant to Article VI. An Annual
Award may be a negative dollar amount.
2.3 "AWARD BANK" shall mean the sum total of all Annual Awards made to an
Eligible Employee less the sum total of all disbursements made from
the Award Bank.
2.4 "BOARD" means the Board of Directors of the Employer.
2.5 "CODE" means the Internal Revenue Code of 1986. Reference in the Plan
to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such
section.
2.6 "COMMITTEE" means the Committee appointed by the Board to administer
the Plan in accordance with Article III and other provisions of this
Plan.
2.7 "ELIGIBLE EMPLOYEE" means any person regularly employed by the
Employer or an Affiliated Employer on a full-time salaried basis who
satisfies all of the requirements of Article V.
<PAGE> 4
2.8 "EMPLOYER" means JPS Textile Group, Inc. and Affiliated Employers
that, with the proper authority of JPS Textile Group, Inc., adopt this
Plan.
2.9 "NET ASSETS" means the average net assets, minus average current
liabilities plus average the accrued interest expense, and plus the
average current portion of long term debt. In addition, for Eligible
Employees of JPS Elastomerics Corp., an Affiliated Employer, the
average current portion of charges for defective product liability
shall be added back to determine Net Assets. Further, the averages
used to determine Net Assets shall be determined separately for JPS
Textile Group, Inc. and any Affiliated Employer and separately applied
for purposes of determining the Annual Award of an Eligible Employee
employed by JPS Textile Group, Inc. or the Affiliated Employer. The
averages of the financial data used in determining the Net Assets of
JPS Textile Group, Inc. or an Affiliated Employer shall be determined
by adding the beginning balances and the balances at the end of each
month during the Plan Year and dividing by thirteen. The Committee,
in its sole and absolute discretion, may include or exclude any item
of asset or liability in determining Net Assets for a Plan Year.
2.10 "OPERATING INCOME" means net income before income taxes and interest,
plus any incentive award expense, plus any losses on the disposal of
fixed assets, and minus any gains on the disposal of fixed assets.
The Operating Income shall be determined separately for JPS Textile
Group, Inc. and any Affiliated Employer and separately applied for
purposes of determining the Annual Award of an Eligible Employee
employed by JPS Textile Group, Inc. or the Affiliated Employer. The
Committee, in its sole and absolute discretion, may include or exclude
any item of income or expense in determining Operating Income for a
Plan Year.
2.11 "PLAN" means the JPS Textile Group, Inc. Long-Term Incentive Plan.
2.12 "PLAN YEAR" means the period from November 1 through October 31.
2.13 "RONAE" means Operating Income for the Plan Year divided by Net Assets
determined for the Plan Year. RONAE shall be determined separately
for JPS Textile Group, Inc. and any Affiliated Employer.
2.14 "TARGET RONAE PERCENTAGES" means the percentages of RONAE established
for JPS Textile Group, Inc. and each Affiliated Employer under Section
6.1 of the Plan.
ARTICLE III
ADMINISTRATION
3.1 ADMINISTRATION BY COMMITTEE. The Committee shall administer the Plan.
The acts of a majority of the members present at any meeting at which
a quorum is present or acts approved in writing by a majority of the
Committee shall be deemed the acts of the Committee.
-2-
<PAGE> 5
Subject to the provisions of the Plan, the Committee shall have
exclusive power to:
a. Recommend for Board approval the employees to participate in the
Plan;
b. Determine each Plan Year the method for determining the Annual
Award made to each employee selected;
c. Determine the time or times when the Annual Award will be made;
and
d. Determine the conditions (including performance requirements) to
which the payment of Annual Awards may be subject.
3.2 COMMITTEE TO MAKE RULES AND INTERPRET PLAN. The Committee shall have
the authority and maximum legal discretion, subject to the provisions
of the Plan, to establish, adopt, or revise such rules and regulations
and to make all such determinations relating to the Plan as it may
deem necessary or advisable for the administration of the Plan. The
Committee shall have the maximum legal discretion to interpret the
Plan or any Annual Award made pursuant thereto. All decisions and
determinations by the Committee with respect to the Plan shall be
final, binding, and conclusive on all parties unless otherwise
determined by the Committee.
3.3 THE COMMITTEE.
(a) GENERAL. The Committee shall be generally responsible for all
duties associated with the administration and operation of the
Plan.
(b) MEMBERSHIP: APPOINTMENT, REMOVAL, AND RESIGNATION. The Employer
shall, from time to time, designate members of the Committee by
duly adopted resolution of the Board. The Committee shall
consist of such number of individuals as may be determined by
the Employer. Each person named as a member of the Committee
shall acknowledge acceptance of such responsibilities in
writing. The members of the Committee shall be selected by the
Board and shall remain in office at the will of the Employer and
may be removed at any time, with or without cause, by the Board.
Such removal shall be effective upon the delivery of written
notice thereof to the member of the Committee being removed, or
at such later time as may be designated in the notice; a copy of
such notice shall be delivered simultaneously therewith or as
soon as practicable thereafter to the other members of the
Committee. Any member of the Committee may resign at any time
by giving written notice of their resignation to the Employer.
Such resignation shall be effective upon delivery of such
written notice, or at such later time as may be designated in
the notice of resignation; a copy of such notice shall be
delivered simultaneously therewith or as soon as practicable
thereafter to the other members of the Committee. The Employer
shall appoint a successor member when there are less than two
members of the Committee from any cause.
(c) ADMINISTRATIVE RULES. A majority of the members of the
Committee at the time in office shall constitute a quorum for
the transaction of business. All resolutions and other actions
of the Committee shall be by vote of a majority of the members
of the Committee present at a meeting (conference telephone call
in which all comments can be heard by all parties shall
constitute presence) and entitled to vote or by unanimous
written consent if action is taken without a meeting. The
Committee shall elect one of its members to act as its chairman,
may elect one of its members to act as its vice chairman, may
appoint a secretary who need not be a member of the Committee,
and shall designate the person or persons who shall be
authorized to sign for the Committee. The Committee shall have
the power to adopt bylaws or other administrative rules
-3-
<PAGE> 6
consistent with the foregoing, including bylaws or rules for the
time and place of its meetings, the notice to be given of such
meetings, the procedures to be followed in taking action by
unanimous consent without a meeting, and all similar matters
governing the conduct of the Committee's business.
ARTICLE IV
ANNUAL AWARDS MADE BY COMMITTEE
The Committee may, from time to time, make an Annual Award to one or
more employees determined by it to be eligible for participation in the Plan,
in accordance with the provisions of this Plan.
ARTICLE V
ELIGIBILITY OF OFFICERS AND KEY EMPLOYEES
Officers and key employees of the Employer (including officers or
employees who are members of the Board, but excluding directors who are not
officers or employees) who, in the opinion of the Committee, are mainly
responsible for the continued growth and development and financial success of
the business of the Employer shall be eligible for Annual Awards under the
Plan. Subject to the provisions of the Plan, the Committee shall, from time to
time, select from such eligible persons those to whom Annual Awards shall be
made and determine the method for determining the amount of the Annual Awards
to be made.
ARTICLE VI
DETERMINING ANNUAL AWARDS
6.1 ESTABLISHMENT OF TARGET RONAE PERCENTAGES. For each Plan Year, the
Committee will establish Target RONAE Percentages for the Employer and
participating Affiliated Employers to be approved by the Board. The
Target RONAE Percentages established by the Committee and approved by
the Board will be communicated each Plan Year to Eligible Employees.
The Target RONAE Percentages will be established on a rolling 3-year
basis, with the Target RONAE Percentages for the two Plan Years
following the then current Plan Year subject to change by the Board as
circumstances require.
6.2 DETERMINATION OF ANNUAL AWARD. Each Eligible Employee shall be
assigned a target percentage of his or her salary in effect on the
first day of the Plan Year. The Annual Award will be made to the
Eligible Employee based upon the relationship between the Eligible
Employee's target percentage and the Employer's financial performance
for the Plan Year. The calculation will be performed in a manner
similar to the calculation of annual performance bonuses under the
Management Incentive Bonus Plan. However, the Annual Award may be a
positive or negative dollar amount. A positive Annual Award will
increase an Eligible Employee's Award Bank balance and a negative
Annual Award will reduce an Eligible Employee's Award Bank balance.
-4-
<PAGE> 7
ARTICLE VII
PLAN ACCOUNTING AND PAYMENT FROM AWARD BANK
7.1 AWARD BANK ACCOUNTING. As soon as administratively feasible after the
end of each Plan Year, the Annual Awards made to each Eligible
Employee shall be added to or subtracted from his Award Bank. In no
event will an Eligible Employee's Award Bank balance be less than
zero. There will be no interest earned on an Eligible Employee's
Award Bank because the Award Bank balance is an accounting balance
only and does not represent assets maintained under this Plan.
7.2 PAYMENTS FROM AWARD BANK. Each Plan Year after the first Plan Year,
payments from an Eligible Employee's Award Bank will be made after the
addition or subtraction of the prior Plan Year's Annual Award in
Section 7.1. Following a transition period of the first three Plan
Years, an Eligible Employee's Award Bank will be paid out in
increments of one-third of the Eligible Employee's Award Bank. The
payments from the Award Bank over the first three Plan Years will be
paid in the following percentages of the Eligible Employee's Award
Bank:
Plan Year Ended 10/31/95 0%
Plan Year Ended 10/31/96 33%
Plan Year Ended 10/31/97 50%
Plan Years Thereafter 33%
7.3 EXAMPLE OF PLAN ACCOUNTING AND PAYMENTS. For example, the Award Bank
for an Eligible Employee who receives a $100 Annual Award over the
first seven Plan Years will be accounted for as follows:
<TABLE>
<CAPTION>
YEAR 1 2 3 4 5 6 7
---- ----- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Beg. Award Bank Bal. $ 0 $ 100 $ 133 $ 116 $ 145 $ 64 $ 110
Annual Award 100 100 100 100 <50> 100 100
----- ------ ------ ------ ------ ------ ------
Award Bank Bal. Before 100 200 233 216 95 164 210
Plan Payments 0 <67> <117> <71> <31> <54> <69>
(Payment Percentage) (0%) (33%) (50%) (33%) (33%) (33%) (33%)
----- ------ ------ ------ ------ ------ ------
End. Award Bank Bal. $ 100 $ 133 $ 116 $ 145 $ 64 $ 110 $ 141
===== ====== ====== ====== ====== ====== ======
</TABLE>
7.4 TERMINATION OF ELIGIBLE EMPLOYEE'S EMPLOYMENT. In the event the
Eligible Employee's employment is terminated during the period an
Eligible Employee has an Award Bank balance, the following rules shall
apply:
a. VOLUNTARY TERMINATIONS AND FOR CAUSE TERMINATION. In the
event an Eligible Employee voluntarily terminates his
employment prior to retirement, death, or disability or the
Eligible Employee's employment is terminated by the Employer
or an Affiliated Employer for cause, all rights to any unpaid
balance from his Award Bank shall be immediately forfeited.
The Employer or Affiliated Employer shall have complete
discretion to determine whether an Eligible Employee's
termination of employment was "for cause". For the purposes
hereof, the term "for cause" shall mean any of the following:
(i) Failure to perform any material obligations of
employment which the Eligible Employee shall have
failed to cure within ten (10) days after receiving
written notice thereof from the Employer; or
-5-
<PAGE> 8
(ii) The Employer shall reasonably believe that the
Eligible Employee has committed an act of fraud,
embezzlement, theft, or dishonesty against the
Employer; or
(iii) The Eligible Employee shall have been convicted of
(or plead nolo contendere to) any felony or any
misdemeanor involving moral turpitude or which might,
in the reasonable opinion of the Employer, cause
embarrassment to the Employer.
b. INVOLUNTARY TERMINATION NOT FOR CAUSE. In the event an
eligible Employee's employment is involuntarily terminated
other than for cause under Section 7.4 a. above, the Eligible
Employee will be paid amounts from his award bank under the
same terms and conditions as applicable to Eligible Employees
who are actively employed; provided, however, the Committee
shall have the complete discretion to accelerate payments of
amounts remaining in the Eligible Employee's award Bank. The
payout of an Eligible Employee whose employment is
involuntarily terminated not for cause shall be adjusted
pro-rata to reflect the partial year of participation for the
year during which such involuntary termination occurs.
c. RETIREMENT. An Eligible Employee shall be paid his or her
Award Bank balance upon retirement from the Employer or an
Affiliated Employer if all of the following conditions are
met:
(i) The Eligible Employee is also eligible for and
retires under the Retirement Pension Plan for
Employees of JPS Textile Group, Inc.
(ii) The Eligible Employee provides the Employer or
Affiliated Employer with six months advance written
notice of his or her intention to retire.
(iii) The Eligible Employee executes a covenant not to
compete substantially in the form attached as Exhibit
A which is incorporated herein by reference.
An Eligible Employee who retires from employment without
meeting the above requirements shall immediately forfeit his
or her unpaid Award Bank balance. The payout of an Eligible
Employee who retires and meets the above requirements shall be
adjusted pro-rata to reflect the partial year of participation
for the year during which the Eligible Employee's retirement
occurs. Any payment under this Section 7.4 b shall be in a
single lump sum as soon as reasonably possible after the end
of the Plan Year during which the retirement occurs.
d. DISABILITY. In the event an Eligible Employee becomes
disabled, the Eligible Employee will be paid amounts from his
Award Bank under the same terms and conditions as applicable
to Eligible Employees who are actively employed; provided,
however the Committee shall have the complete discretion to
accelerate payments of amounts remaining in the Eligible
Employee's Award Bank. The payout of an Eligible Employee who
becomes disabled shall be adjusted pro-rata to reflect the
partial year of participation for the year during which the
Eligible Employee's disability occurs.
-6-
<PAGE> 9
e. DEATH. In the event of the death of the Eligible Employee,
the Eligible Employee's beneficiary will be paid, in a lump
sum, the amount to the credit of the then deceased Eligible
Employee. The payout of an Eligible Employee who dies shall
be adjusted pro-rata to reflect the partial year of
participation for the year of the Eligible Employee's death.
ARTICLE VIII
SALE OF EMPLOYER
In the event of the sale or transfer of more than 50% of the issued
and outstanding shares of stock of the JPS Textile Group, Inc. or in the event
of the sale or transfer of substantially all the assets of JPS Textile Group,
Inc., the entire Award Bank balance of each Eligible Employee shall be paid as
soon as reasonably possible after such sale or transfer. Such payout shall be
adjusted pro-rata to reflect the partial year of participation for the year
during which such sale or transfer occurs.
ARTICLE IX
AMENDMENTS AND TERMINATION
The Board may, by majority vote, at any time terminate the Plan. Upon
such termination, the Award Bank balance of each Eligible Employee shall be
paid out in a single lump sum as soon as administratively feasible following
such termination. The Board may at any time, or from time to time, amend or
suspend and, if suspended, reinstate, the Plan in whole or in part. In
addition, the Plan Committee may, with the express written consent of an
individual Eligible Employee, cancel or reduce or otherwise alter the Eligible
Employee's outstanding Annual Award or Award Account thereunder if, in his
judgment, the tax, accounting, or other effects of the Plan or potential
payments thereunder would not be in the best interest of the Eligible Employee
or the Employer.
ARTICLE X
GENERAL
10.1 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Employer to
make Annual Awards shall be subject to all applicable laws, rules, and
regulations, and to such approvals by government agencies as may be
required.
10.2 TAX WITHHOLDING. The Employer and any Affiliated Employer, as
appropriate, shall deduct from all amounts paid from this Plan any
federal, state, or local taxes as required by law to be withheld with
respect to such payments.
10.3 CLAIM TO ANNUAL AWARD AND EMPLOYMENT RIGHTS. No employee or other
person shall have any claim or right to be granted an Annual Award
under the Plan. Neither this Plan, nor any action taken hereunder,
shall be construed as giving any employee any right to be retained in
the employ of the Employer or any Affiliated Employer.
10.4 BENEFICIARIES. Any payment pursuant to an Annual Award due under this
Plan to a deceased participant shall be paid to the Beneficiary
designated by the participant and filed with the Committee on the form
attached as Exhibit B. If no such beneficiary has been designated or
survives the participant, payment shall be made to the participant's
legal representative. A beneficiary designation may be changed or
revoked by a participant at any time provided the change or revocation
is filed with the Committee.
-7-
<PAGE> 10
10.5 NONTRANSFERABILITY. A person's rights and interests under the Plan,
including amounts payable, may not be assigned, pledged, or
transferred, except in the event of an employee's death to a
designated beneficiary as provided in the Plan, or in the absence of
such designation, by will or the laws of descent and distribution.
10.6 INDEMNIFICATION. Each person who is or was a member of the Committee
shall be indemnified and held harmless by the Employer against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any
claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action or failure to act
under the Plan and against and from any and all amounts paid by him in
satisfaction of judgment in any such action, suit, or proceeding
against him. He shall give the Employer an opportunity, at its own
expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Employer's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Employer may have to indemnify them
or hold them harmless.
10.7 RELIANCE ON REPORTS. Each member of the Committee shall be fully
justified in relying or acting in good faith upon any report made by
the independent public accountants of the Employer and any Affiliated
Employer and upon any other information furnished in connection with
the Plan by any person or persons other than himself. In no event
shall any person who is or has been a member of the Committee be
liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for
any action taken, including the furnishing of information, or failure
to act, if in good faith.
10.8 RELATIONSHIP TO OTHER BENEFITS. No payment under this Plan shall be
taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance, or other benefit plan of
the Employer or any Affiliated Employer unless the type of payments
made under this Plan are specifically taken into account under the
terms of such other plan.
10.9 EXPENSES. The expenses of administering the Plan shall be paid by the
Employer or an Affiliated Employer.
10.10 CONSTRUCTION. Masculine pronouns and other words of masculine gender
shall refer to both men and women. The titles and headings of
sections of the Plan are for convenience of reference only; and in the
event of any conflict, the text of the Plan, rather than such titles
or heading, shall control.
10.11 MISCONDUCT. In the event that an executive has (a) used for profit or
disclosed to an unauthorized person confidential information or trade
secrets of the Employer or any Affiliated Employer; (b) breached any
contract with or violated any fiduciary obligation of the Employer or
any Affiliated Employer; or (c) engaged in unlawful trading in the
securities of the Employer or an Affiliated Employer based on
information gained as a result of that executive's employment with the
Employer or any Affiliated Employer and has been dismissed for just
cause therefore, then the executive shall forfeit all rights to any
Annual Awards made under the Plan and all of that executive's
outstanding Award Account shall automatically terminate and lapse
unless the Committee shall determine otherwise.
10.12 SUSPENSION OF REDEMPTIONS. The Committee shall have the right and
complete discretion to temporarily suspend the payments under the
Plan, but in no event shall such temporary suspension exceed 24
calendar months.
-8-
<PAGE> 11
10.13 GOVERNING LAW. The Plan shall be construed, administered, and
governed in all respects under and by the laws of the State of South
Carolina.
JPS TEXTILE GROUP, INC.
WITNESS:
By:
------------------------------ ---------------------------------
Title:
------------------------------ ------------------------------
-9-
<PAGE> 12
EXHIBIT A
NONCOMPETITION AGREEMENT
THIS AGREEMENT made this _____ day of _______________, 199__, by and
between ___________________________ ("Employee) and __________________________
a Corporation organized under the laws of the State of _______________________
("Company").
RECITALS
WHEREAS, Employee is a participant in the JPS Textile Group, Inc.
Long-Term Incentive Plan ("Plan"), which Plan is incorporated herein by
reference;
WHEREAS, Employee desires to enter into this Agreement in order to be
eligible for a payout from the Plan upon retirement;
WHEREAS, the payment of a benefit upon retirement under Section 7.4 c.
of the Plan is contingent upon Employee's agreement to the terms of this
Agreement;
WHEREAS, the Company has established a valuable and extensive
reputation, manufacturing processes, customer lists and other information of
which, by virtue of Employee's employment with the Company, Employee has full
knowledge;
WHEREAS, the Company has a necessary and legitimate business interest
in protecting such information from disclosure to third parties which
disclosure may damage the business of the Company;
WHEREAS, Employee recognizes that the benefits payable under the Plan
are in part being paid as consideration for this Agreement;
NOW, THEREFORE, for the reasons and consideration stated above and for
other good and valuable consideration stated herein, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
-10-
<PAGE> 13
1. NONCOMPETITION. During Employee's employment with the Company
and for one year beginning on the date of Employee's retirement, Employee
agrees that Employee shall not, without the prior written approval of the
Company, directly or indirectly through any other person, firm or corporation,
(i) engage or participate in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in connection with any
business enterprise, which is, directly or indirectly, in competition with any
of the business operations or activities of the Company, (ii) hire, solicit,
raid, entice or induce any person or organization who on the date of
termination of employment is, or within the last six (6) months of my
employment was a customer of the Company, to become a customer of any person,
firm or corporation, and Employee shall not approach any such customer for such
purpose or knowingly approve the taking of such actions by other persons, or
(iii) solicit, raid, entice or induce any such person who on the date of
termination of my employment is, or within the last six (6) months of my
employment by the Company was, an employee of the Company, to become employed
by any person, firm or corporation, and Employee shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of such
actions by any other person; provided, however, that Employee shall not be
bound by the restrictions contained in clause (i) of this Paragraph 1 if the
Company terminates my employment other than for "cause" (as defined in Section
7.4 a. of the Plan). For the purposes hereof, a person, firm, corporation or
other business enterprise shall be deemed to be in competition with the Company
if it is a textile manufacturer or seller which sells or manufacturers, as the
case may be, products of the kind manufactured and sold by the Company, within
any geographic area in which the Company operates or sells its products. The
parties to this Agreement agree that the above limitations are reasonable given
Employee's responsibilities with the Company and the geographic scope of the
Company's customer base and product distribution.
- 11 -
<PAGE> 14
2. CONSIDERATION. In return for such noncompetition agreement,
Company agrees to pay Employee the balance in his Award Bank under the Plan.
3. MERGER. This Agreement and the Plan constitute the entire
understanding of the parties hereto with regard to the subject matter addressed
herein and all prior agreements and negotiations, both oral and written are
merged herein.
4. REMEDIES. In addition to all other remedies available at law
or in equity, in the event of a breach of this Agreement, Company may terminate
the compensation and benefits otherwise payable to Employee under the Plan.
Company will have all other rights and remedies available under the Plan.
5. ENFORCEMENT. If any provision or provisions of this Agreement
are found by a court of competent jurisdiction to be overbroad or unlawful in
any respect, Employee and the Company desire that such provision or provisions
be amended by the court in order to meet legal requirements. If the court
should decline to make the necessary amendments, it is the desire of Employee
and the Company that the offending provision or provisions be excised from the
Agreement and that the remaining provisions continue in full force and effect.
6. ATTORNEYS' FEES. In the event that any action is filed in
relation to this Agreement, the unsuccessful party in the action shall pay to
the successful party, in addition to all of the sums that either party may be
called upon to pay, a reasonable sum for the successful party's attorneys'
fees.
7. BONDING REQUIREMENTS. Employee excuses the Company from any
bonding requirements should the Company seek injunctive relief to enforce any
provision of this Agreement.
8. CHOICE OF LAW. This Agreement shall be governed by and
construed according to the laws of the State of New York.
- 12 -
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
EMPLOYER:
-----------------------------
WITNESS:
By:
----------------------------- --------------------------
President
WITNESS: Employee:
----------------------------- -----------------------------
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JAN-28-1995
<CASH> 3,576
<SECURITIES> 0
<RECEIVABLES> 98,984
<ALLOWANCES> 6,082
<INVENTORY> 77,897
<CURRENT-ASSETS> 117,642
<PP&E> 339,247
<DEPRECIATION> 135,510
<TOTAL-ASSETS> 462,207
<CURRENT-LIABILITIES> 77,220
<BONDS> 326,365
<COMMON> 10
25,270
250
<OTHER-SE> 8,282
<TOTAL-LIABILITY-AND-EQUITY> 462,207
<SALES> 147,233
<TOTAL-REVENUES> 147,233
<CGS> 126,278
<TOTAL-COSTS> 15,894
<OTHER-EXPENSES> 394
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,065
<INCOME-PRETAX> (5,398)
<INCOME-TAX> 300
<INCOME-CONTINUING> (5,698)
<DISCONTINUED> 0
<EXTRAORDINARY> 17,520
<CHANGES> 0
<NET-INCOME> 11,822
<EPS-PRIMARY> 10.89
<EPS-DILUTED> 10.89
</TABLE>
