<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (fee required)
For the fiscal year ended October 29, 1994
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ___________ to ____________.
(no fee required)
Commission File Number: 33-58272
JPS TEXTILE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 57-0868166
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER)
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
555 North Pleasantburg Drive, Suite 202, Greenville, SC 29607
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (803) 239-3900
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
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: / X /
----
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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K: / X /
----
As of January 20, 1995, there were 490,000 shares of the registrant's
Class A Common Stock, $.01 par value per share (the "Class A Common Stock"),
held by non-affiliates of the registrant. There is no established public
trading market for such shares.
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: / X /
----
As of the date hereof, 490,000 shares of Class A Common Stock and
510,000 shares of the registrant's Class B Common Stock, $.01 par value per
share, were issued and outstanding.
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JPS TEXTILE GROUP, INC.
Table of Contents
PART I
<TABLE>
<S> <C> <C>
Item 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. . . . . . . . . 9
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . 9
Item 6. SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . . . . 10
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . 12
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . . . . 19
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . 41
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT. . . . . . . . . . . . . . . . . . . . . . . . . 41
Item 11. EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . 42
Item 12. SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT. . . . . 46
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . 48
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K. . . 48
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
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PART I
ITEM 1. BUSINESS.
HISTORICAL BACKGROUND
JPS Textile Group, Inc. ("JPS" or the "Company") is a Delaware corporation,
incorporated in December 1986, with its principal executive offices located at
555 North Pleasantburg Drive, Suite 202, Greenville, South Carolina 29607;
telephone number (803) 239-3900.
On March 14, 1988, the Company executed a merger agreement providing for the
acquisition of J.P. Stevens & Co., Inc. ("J.P. Stevens"). On March 15, 1988,
the Company commenced a tender offer pursuant to such merger agreement for all
of the outstanding stock of J.P. Stevens. Subsequently, the Company terminated
its tender offer and J.P. Stevens agreed to be acquired by another entity.
Simultaneously therewith, J.P. Stevens agreed to sell to the Company the
business and substantially all of the assets of five J.P. Stevens divisions:
the Converter and Yarn division; the Automotive Products division; the
Elastomerics division; the Carpet division; and the Industrial Fabrics division
(the "Predecessor Stevens Divisions"), for approximately $527.0 million (the
"Acquisition").
Subsequent to the Acquisition, due to certain financial concerns, the Company
engaged certain financial advisors in March 1990 to advise the Company
concerning a possible restructuring of its debt and equity capitalization. In
furtherance thereof, the Company, together with its legal and financial
advisors, met with representatives of the Company's senior lenders and with the
respective legal and financial representatives of certain large institutional
holders of the Company's (i) Senior Variable Rate notes due June 1, 1996, (ii)
Senior Subordinated Discount Notes due June 1, 1999, (iii) 15.25% Senior
Subordinated Notes due June 1, 1999, and (iv) 14.25% Subordinated Debentures
due May 15, 2000 (collectively, the "Old Debt Securities"), to discuss the
Company's general business and financial status, and to explore various
financial restructuring alternatives.
In November 1990, the Company and representatives of the holders of the Old
Debt Securities determined that a transaction involving the exchange of the Old
Debt Securities for a significant percentage of "new" common stock and "new"
debt securities with a fixed lower per annum interest rate, together with the
issuance to the holders of the Company's Series A Exchangeable Adjustable Rate
Preferred Stock and Series B Junior Preferred Stock (together, the "Old
Securities") of a significant percentage of the Company's "new" preferred
equity securities, would improve the Company's financial condition and overall
creditworthiness and simplify its capital structure, and that such transaction
would best be accomplished pursuant to a pre-petition solicitation of votes to
accept or reject a voluntary plan of reorganization (the "Plan of
Reorganization") under chapter 11 of title 11 ("Chapter 11") of the United
States Code (the "Bankruptcy Code").
The Company's solicitation was successfully completed and the Chapter 11 case
was commenced in early February 1991 before the United States Bankruptcy Court
for the Southern District of New York (the "Bankruptcy Court"). The Plan of
Reorganization was confirmed by the Bankruptcy Court pursuant to a court order
signed on March 21, 1991 and the Plan of Reorganization became effective on
April 2, 1991. As part of the Plan of Reorganization, the Company, together
with its senior bank lenders, agreed to restructure the then-existing bank
debt of the Company.
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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). Pursuant to 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.
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 Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources".
GENERAL
The Company is one of the largest diversified domestic manufacturers of textile
and textile related products, principally for the apparel fabric, industrial
and home fashion markets. JPS conducts its operations from 15 manufacturing
plants in five states and employs approximately 5,900 people. The Company
competes in three industry segments: apparel fabrics and products, industrial
fabrics and products and home fashion textiles. Certain financial information
about the Company's industry segments is included in Note 11 of the Notes to
Consolidated Financial Statements included in Item 8 herein.
APPAREL FABRICS AND PRODUCTS
The Company is a leading manufacturer of greige goods, fabrics, yarn and
elastic products. The Company's products are used in the manufacture of a
broad range of consumer apparel products including blouses, dresses,
sportswear, undergarments and disposable diapers.
Greige Goods. The Company produces print cloth and filament fabrics that are
used ultimately in the manufacture of apparel such as blouses, dresses and
sportswear. Greige goods are produced from cotton, polyester, rayon and
acetate yarns, and are primarily sold to other textile manufacturers for use in
producing printed and dyed fabrics.
Yarn. The Company produces a variety of rayon and polyester spun yarns for its
own use and for sale to manufacturers of knitted apparel.
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Elastic Products. The Company manufactures a number of elastic products from
natural and synthetic rubber compounds. Elastic thread is sold to
manufacturers of undergarments for use in waistbands and similar applications,
while other elastic products are used in the manufacture of disposable infant
diapers.
INDUSTRIAL FABRICS AND PRODUCTS
Commercial Roofing Products. The Company is a well-established manufacturer of
single-ply membrane roofs that are made from woven synthetic fabrics and
rubber-based or polypropylene specialty polymer compounds which are sold
principally to roofing distributors for use both in the new and replacement
commercial markets.
Other Building Construction Products. The Company is a producer of fabrics
made from glass and synthetic fibers that are used in a number of applications
in the building construction industry. Products include various scrims used
for wallboard tapes and certain roofing applications, and reinforcement
substrates used for the installation of internal and external tiles and
synthetic wall surfaces. The Company produces and sells membrane products
(similar to commercial roofing products) for use in environmental containment
applications such as reservoir liners and covers.
Other Industrial Products. The Company produces a wide variety of other
industrial textile products, including specialty fabrics, that are used in many
industries for many different end uses. These products generally have
characteristics that provide insulation or filtration properties. Other
products are used in the manufacture of a wide variety of end products,
including flame retardant cloth, tarpaulins, awnings, luggage, athletic tapes,
printed circuit boards and military and commercial aircraft.
HOME FASHION TEXTILES
Carpets. The Company manufactures both residential and commercial carpet
products. The Company's tufted carpet for home use is sold under the name
Gulistan(TM) and competes in the moderate price range. The Company is also a
supplier of private label carpets to major retail department stores, to
cooperative retail buying groups and to independent retailers. Residential
carpet products are sold to retailers and distributors on a nationwide basis.
The Company's commercial carpet is sold primarily to builders, contractors and
designers for use in offices, institutions, airports and hotels. In addition,
the Company purchases and resells woven rugs to its carpet customers.
Fabrics. The Company produces a variety of unfinished woven fabrics for use in
the manufacture of draperies, curtains and lampshades and is a major producer
of solution-dyed drapery fabrics.
OPERATIONS
Each operating unit of the Company has individual administrative, manufacturing
and marketing capabilities and all material aspects of operations, including
product design, customer service, purchasing, credit and collection are
coordinated by each operating unit. Corporate support services include
finance, strategic planning, legal, tax and regulatory affairs.
Following the Acquisition and through the date hereof, management's business
plans have included many cost reduction activities aimed at improving return on
assets. These activities included consolidating manufacturing operations,
exiting unprofitable product lines, more aggressive capital spending programs
to improve quality and productivity and reorganizing certain manufacturing
operations. The Company plans to continue its manufacturing modernization
program to improve efficiency and productivity and further reduce its cost
structure.
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The Company's corporate headquarters is located in Greenville, South Carolina.
The Company maintains a sales office in New York City for certain of its
operations. Seven additional regional sales offices and two distribution
centers are maintained by the Company, principally for its carpet and building
construction products. See Item 2, "PROPERTIES."
MANUFACTURING
The Company's experienced work force and wide variety of yarn making, fabric
forming and other manufacturing equipment allow the Company to rapidly and
efficiently change its product mix to meet style and seasonal requirements.
The Company's activities generally encompass all phases of manufacturing its
products.
In the manufacture of woven textile products, the Company purchases synthetic
and natural fibers and spins them into yarn or purchases filament yarn for
processing. In addition, the Company purchases certain spun yarn. Yarns are
then coated, sized or directly woven into unfinished fabric. Upon completion
of the weaving process, fabric is generally shipped to customers who dye,
finish, coat and cut those fabrics for resale.
In the manufacture of tufted carpet, the Company purchases various face fibers
and then spins these fibers into yarn or purchases filement yarn for
processing. Yarn is then shipped to the Company's tufting facility where it is
tufted into primary carpet backing, finished and dyed at a dyeing facility, and
completed with an application of secondary carpet backing.
The Company's elastic products are manufactured from natural and synthetic
rubber compounds that are purchased from outside suppliers and are processed
through a variety of production operations including slitting and calendering.
Single-ply membrane roofing is made by processing a Company-manufactured woven
substrate with specialty polymers. Other industrial fabric products are
produced from either woven fiberglass or synthetic fibers, which fibers are
processed into yarn, woven and finished into fabrics by the Company. Other
specialty industrial products are produced by extrusion of urethane resins.
The Company believes that its manufacturing facilities are sufficient for its
present and reasonably foreseeable future production requirements.
RAW MATERIALS
The Company generally has good relationships with its suppliers and has, where
possible, diversified its supplier base so as to avoid a disruption of supply.
In most cases, the Company's raw materials are staple goods that are readily
available from numerous domestic fiber and chemical manufacturers. For several
products, however, branded goods or other circumstances prevent such a
diversification, and an interruption of the supply of these raw materials could
have a significant negative impact on the Company's ability to produce certain
products. The Company believes that its practice of purchasing such items from
large, stable companies minimizes the risk of such an interruption in supply.
MARKETING AND COMPETITION
The textile industry is highly competitive and includes a number of
participants with aggregate sales and financial resources greater than the
Company's. The Company generally competes on the basis of price, quality,
design and customer service. Many companies compete in limited segments of the
textile market and the Company's operations are relatively broad-based. The
Company is well-positioned due to its ability
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to respond quickly to changing styling and fashion trends. This ability
generally provides advantages for domestic textile manufacturers. Although no
single company dominates the industry, most market segments are dominated by a
small number of competitors. The Company believes it has a significant market
share in the market for rayon and acetate apparel fabrics, rayon yarn,
solution-dyed satin fabrics and quartz fabrics.
The Company's marketing efforts include the development of new product designs
and styles which meet customer needs. Each of the Company's operating units
has been an established supplier to each of its markets for many years and is
taking advantage of well-established customer relationships to increase product
development with its customers. The "J.P. Stevens" trade name, which the
Company has a royalty-free license to use (see "--Patents, Licenses and
Trademarks" below), is widely recognized throughout the textile industry. The
Company believes that its relatively broad base of manufacturing operations
provides it with a competitive advantage in developing new textile products.
In addition to its direct marketing capabilities, the Company markets certain
of its products through distributors.
The following is a discussion of marketing and competitive factors as they
relate to each of the Company's segments.
Apparel Fabrics and Products
Greige Goods. The Company markets its spun and filament fabrics to converters
who finish and/or dye these products prior to shipping to finished apparel
manufacturers. The Company has sought to maintain a relatively high proportion
of such sales in product areas where its manufacturing flexibility can provide
a competitive advantage.
Yarn. The Company competes with a large number of companies which sell yarn to
woven and knit goods manufacturers. Yarns are generally sold on a direct
basis, and the Company believes that quality and price are the primary
competitive factors.
Elastic Products. The Company's elastic products are sold on a direct basis
primarily to diaper and undergarment manufacturers as well as to outerwear
manufacturers. The Company believes that price is the primary competitive
factor in this market. For certain of its elastic products, the Company
believes it has a significant market share.
Industrial Fabrics and Products
Construction Products. The Company markets its single-ply roofing products on
a direct basis to roofing distributors. The Company competes with
manufacturers of this and other types of roofing products. The Company
believes that its product's ease of installation and manufacturer warranty are
important competitive factors.
Other Products. Other industrial fabrics and products are marketed directly to
other manufacturers and distributors. The Company believes that price and its
ability to meet customer technical specifications are important competitive
factors.
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Home Fashion Textiles
The Company's home fashion textile operations compete with a large number of
manufacturers of similar carpet and woven fabric products. In general, product
markets are differentiated on the basis of price and quality. The Company
believes that design and style features are important competitive factors.
CUSTOMERS
No customer accounts for more than 7% of the Company's sales. There are
customers the loss of which could have a material adverse effect on sales.
PRODUCT DEVELOPMENT
In general, the textile industry expends its efforts on design innovation and
capital expenditures for process enhancements rather than on basic research,
relying on fiber suppliers or machinery manufacturers for basic research.
The Company's research and development activities are directed toward the
development of new fabrics and styles which meet specific styling requirements
(in the case of apparel and home furnishing fabrics and products) or other
specific properties such as insulation, weight, strength, filtration or
laminate adherence (in the case of industrial fabrics and products).
Significant time is spent by employees in activities such as meeting with
stylists, designers, customers, suppliers and machinery manufacturers, as well
as producing samples and running trials in order to develop new products and
markets. These activities are performed at various levels and at various
locations, and their specifically identifiable incremental costs are not
material in relation to the Company's total operating costs.
BACKLOG
Unfilled open orders, which the Company believes are firm, were $89.0 million
at October 29, 1994 and $73.9 million at October 30, 1993 (1993 amounts are
adjusted to exclude the discontinued operations of the Automotive Assets sold
in June 1994). The Company generally fills its open orders in the following
fiscal year and the Company expects that all of the open orders as of October
29, 1994 will be filled in the 52 week period ending October 28, 1995 ("Fiscal
1995"). The increase in open orders at October 29, 1994 is due to a general
increase in customer demands across most business lines compared to October 30,
1993. Unfilled open orders, which the Company believes are firm, were $88.9
million at December 31, 1994 compared to $99.4 million at December 25, 1993.
The decrease in open orders at December 31, 1994 as compared to December 25,
1993 is representative of a change in the timing of the acceptance of certain
orders by the Company. The Company believes that the amount of backlog
provides some indication of the sales volume that can be expected in coming
months, although changes in economic conditions may result in deferral or
acceleration of orders which may affect sales volume for a period
No significant portion of the Company's business is subject to renegotiation of
profits, or termination of contracts or subcontracts at the election of the
government.
PATENTS, LICENSES AND TRADEMARKS
Certain of the Company's products are sold under registered trademarks which
have been licensed royalty-free to the Company from J.P. Stevens until May
2013, including trademarks for certain products using the "J.P. Stevens" name.
Patented processes used in the manufacturing process are not a significant part
of the Company's business. The Company does not license its name or products
to others.
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EMPLOYEES
The Company currently has approximately 5,900 employees of which approximately
5,000 are hourly and approximately 900 are salaried. The Company's employees
are not represented by unions. The Company believes its relations with its
employees to be good and has not had any work stoppages or strikes.
ENVIRONMENTAL AND REGULATORY MATTERS
The Company is subject to various federal, state and local environmental laws
and regulations concerning, among other things, wastewater discharges, air
emissions and solid waste disposal. The Company's plants generate small
quantities of hazardous waste that are either recycled or disposed of off-site.
Substantially all of the plants are required to possess one or more discharge
permits.
The Company believes that it is substantially in compliance with all
environmental laws and regulations to which it is subject, and that in those
instances in which it is not in compliance, the costs associated with
correcting any deficiencies are not material. The Company believes that its
monitoring program and its plans for addressing environmental problems are
adequate. No representation can be made, however, that changes in federal,
state or local regulations or the discovery of unknown problems or conditions
will not require substantial additional expenditures.
SEASONALITY
Certain portions of the business of the Company are seasonal (principally
construction products and carpet) and sales of these products tend to decline
during winter months in correlation with construction activity. These
declines, however, do not significantly impact consolidated reported results of
operations.
ITEM 2. PROPERTIES.
The following table sets forth certain information relating to the Company's
principal facilities (segment information relates to principal use). All of
the facilities owned or leased by the Company are used for manufacturing,
except for the facility in New York, New York, which is used for sales offices.
Except as noted, all of the Company's facilities are owned:
<TABLE>
<CAPTION>
Square Square
Location Footage Location Footage
- -------- ------- -------- -------
<S> <C> <C> <C>
Apparel Fabrics and Products Industrial Fabrics and Products
---------------------------- -------------------------------
Greenville, SC 399,000 Kingsport, TN 625,000
Laurens, SC 475,000 Slater, SC 433,000
Greenville, SC 460,000 Westfield, NC 237,000
Stanley, NC 338,000 Easthampton, MA 50,000
S. Boston, VA 286,000
Stuart, VA 133,000 All Segments
Rocky Mount, VA 81,000 ------------
New York, NY(2) 10,000
Home Fashion Textiles
---------------------
Aberdeen, NC 658,000
Lincolnton, NC 387,000
Turnersburg, NC 267,000
Wagram, NC(1) 84,000
</TABLE>
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(1) The Company occupies a portion of the Wagram, North Carolina facility
pursuant to a sharing agreement with J.P. Stevens.
(2) The New York, New York facility is leased by the Company under a lease
agreement which was extended for two years on June 1, 1993 and expires
on May 30, 1995.
The Company also leases certain other warehouse facilities, various regional
sales offices and its corporate headquarters. The Company believes that all of
its facilities are suitable and adequate for the current and anticipated
conduct of its operations.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in various legal proceedings which are routine
litigations incidental to the conduct of its business. Management believes
that none of this litigation, if determined adversely to the Company, would
have a material adverse effect on the financial condition 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 of Fiscal 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
There is currently no established public trading market for the Company's Class
A Common Stock, $.01 par value per share (the "Class A Common Stock"), or the
Company's Class B Common Stock, $.01 par value per share (the "Class B Common
Stock" and together with the Class A Common Stock, the "Common Stock").
As of January 20, 1995, there were 12 holders of record of Class A Common Stock
and 2 holders of record of Class B Common Stock.
As a holding company, the Company's ability to pay cash dividends is dependent
on the earnings and cash flows of its subsidiaries and the ability of its
subsidiaries to make funds available to the Company for such purpose. Under
the terms of its outstanding indebtedness, the Company is currently prohibited
from paying cash dividends on the Common Stock.
The Company presently intends to retain earnings to fund working capital and
for general corporate purposes, and, therefore, does not intend to pay cash
dividends on shares of the Common Stock in the foreseeable future. The payment
of future cash dividends, if any, would be made only from assets legally
available therefor, and would also depend on the Company's financial condition,
results of operations, current and anticipated capital requirements,
restrictions under then existing indebtedness and other factors deemed relevant
by the Company's Board of Directors.
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ITEM 6. SELECTED HISTORICAL FINANCIAL DATA
(Dollars in Thousands Except Per Share Data)
The following table presents selected consolidated historical financial data
for the Company as of the dates and for the fiscal years indicated. The
presentation of certain previously reported amounts have been classified to
conform to the current presentation and to reflect discontinued operations of
the Automotive Assets
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94
INCOME STATEMENT DATA: (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $ 625,855 $ 577,182 $ 610,985 $ 597,753 $ 603,416
Cost of sales 519,973 488,013 515,466 512,188 518,176
--------- --------- ---------- ---------- ---------
Gross profit 105,882 89,169 95,519 85,565 85,240
Selling, general and administrative expenses 62,501 57,356 58,327 59,743 61,147
--------- --------- ---------- ---------- ---------
Income from operations 43,381 31,813 37,192 25,822 24,093
Interest expense 80,880 69,833 60,278 62,196 56,452
Other income (expense), net (3,814) 249 (2,100) (1,221) (2,962)
--------- --------- ---------- ---------- ---------
Loss before reorganization items, income
taxes, income from discontinued operations,
extraordinary gain (loss) and cumulative
effects of accounting changes (1) (41,313) (37,771) (25,186) (37,595) (35,321)
Reorganization items - professional fees and
expenses - 10,878 - - -
--------- --------- ---------- ---------- ---------
Loss before income taxes, income from
discontinued operations, extraordinary gain
(loss) and cumulative effects of accounting
changes (41,313) (48,649) (25,186) (37,595) (35,321)
Income taxes - - 1,446 1,782 2,800
--------- --------- ---------- ---------- ---------
Loss before income from discontinued
operations, extraordinary gain (loss) and
cumulative effects of accounting changes(2) (41,313) (48,649) (26,632) (39,377) (38,121)
Discontinued operations, net of taxes:(2)
Income from discontinued operations 7,709 4,746 15,779 23,262 25,651
Gain on sale of discontinued operations - - - - 132,966
Extraordinary gain (loss)(2) - 35,265 - - (7,410)
Cumulative effects of accounting changes - - - (5,716) (1,000)
--------- --------- ---------- ----------- ---------
Net income (loss) (2) $ (33,604) $ (8,638) $ (10,853) $ (21,831) $ 112,086
========= ========= ========== ========== =========
Income (loss) applicable to common stock $ (38,903) $ (12,407) $ (13,312) $ (24,694) $ 108,753
========= ========= ========== ========== =========
BALANCE SHEET DATA:
Working capital, excluding net assets
held for sale $ 97,799 $ 88,242 $87,535 $ 92,584 $ 95,944
Total assets 578,463 545,906 525,047 548,843 467,990
Total long-term debt, less current portion 532,384 499,452 488,280 522,947 335,472
Senior redeemable preferred stock 35,267 15,685 18,144 21,007 24,340
Shareholders' deficit (98,746) (73,097) (86,409) (111,103) (2,350)
</TABLE>
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(1) The following non-cash charges have been included in the determination
of loss before reorganization items, income taxes, discontinued
operations, extraordinary items and cumulative effects of accounting
changes for the periods shown above.
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Certain non-cash charges to income:
Depreciation $ 19,886 $ 21,504 $ 25,170 $ 24,702 $ 27,696
Amortization of goodwill and other 993 975 975 969 964
Other non-cash charges to income 2,812 1,622 1,000 2,253 131
Non-cash interest 24,431 25,111 18,805 12,208 11,450
--------- --------- ---------- ---------- ---------
$ 48,122 $ 49,212 $ 45,950 $ 40,132 $ 40,241
========= ========= ========== ========== =========
</TABLE>
(2) Earnings (loss) per share:
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Weighted average number of
shares outstanding 100 590,700 1,000,000 1,000,000 1,000,000
========= ========= ========== ========== =========
Earnings (loss) per common share:
Loss before income from discontinued
operations, extraordinary items and
effects of accounting changes $ (466,120) $ (88.73) $ (29.09) $ (42.23) $ (41.46)
Discontinued operations, net of taxes:
Income from discontinued operations 77,090 8.03 15.78 23.26 25.65
Gain on sale - - - - 132.97
Extraordinary gain (loss) - 59.70 - - (7.41)
Cumulative effect of accounting changes - - - (5.72) (1.00)
---------- ---------- ---------- ---------- ---------
Net loss $ (389,030) $ (21.00) $ (13.31) $ (24.69) $ 108.75
========== ========== ========== ========== =========
</TABLE>
11
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the Consolidated
Financial Statements of the Company and the Notes thereto included in Item 8
herein.
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------
10/31/92 10/30/93 10/29/94
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
NET SALES
Apparel fabrics and products $ 267,264 $ 262,499 $ 254,810
Industrial fabrics and products 166,957 156,763 169,736
Home fashion textiles 176,764 178,491 178,870
------------ ------------ ------------
$ 610,985 $ 597,753 $ 603,416
============ ============ ============
OPERATING PROFIT
Apparel fabrics and products $ 27,205 $ 21,791 $ 18,487
Industrial fabrics and products 9,014 3,582 7,618
Home fashion textiles 6,488 7,907 2,794
Indirect corporate expenses, net (7,615) (8,679) (7,768)
------------ ------------ ------------
Operating profit 35,092 24,601 21,131
Interest expense (60,278) (62,196) (56,452)
------------ ------------ ------------
Loss before income taxes, discontinued operations,
extraordinary items and cumulative effects of
accounting changes(1) $ (25,186) $ (37,595) $ (35,321)
============ ============ ============
</TABLE>
(1) The following non-cash charges have been included in the determination
of loss for the periods presented:
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Depreciation $ 25,170 $ 24,702 $ 27,696
Amortization of goodwill and other 975 969 964
Other non-cash charges to income 1,000 2,253 131
Interest accretion and debt issuance cost amortization 18,805 12,208 11,450
------------ ------------ ------------
$ 45,950 $ 40,132 $ 40,241
============ ============ ============
</TABLE>
RESULTS OF OPERATIONS
FISCAL 1994 COMPARED TO FISCAL 1993
Consolidated net sales from continuing operations increased $5.6 million (0.9%)
from $597.8 million in Fiscal 1993 to $603.4 million in Fiscal 1994. Operating
profit from continuing operations declined $3.5 million (14.1%) from $24.6
million in Fiscal 1993 to $21.1 million in Fiscal 1994. In general, lower
margins on sales of apparel fabrics and products and home fashion textiles were
partially offset by increases in sales and margins for industrial fabrics and
products.
12
<PAGE> 14
Net sales in Fiscal 1994 in the apparel fabrics and products segment, which
includes unfinished woven apparel fabrics (greige goods) primarily for women's
wear, yarn sales and elastic products for various apparel uses declined by $7.7
million (2.9%) from $262.5 million in Fiscal 1993 to $254.8 million. Increased
foreign competition in the market for commodity apparel fabrics, primarily from
Eastern European and Chinese sources, resulted in lower average selling prices
and lower unit volumes in this market segment. The recent passage of the
General Agreement on Tariffs and Trade (GATT) will likely foster such foreign
competition in the commodity apparel fabrics market in the future. During
1994, the Company responded to these changes in its business environment by
changing its product offering dramatically, emphasizing specialty fabrics with
more fashion and styling characteristics. These changes involve enhancing the
Company's manufacturing capabilities and responsiveness to its customers and
such changes will continue to be made into Fiscal 1995. The markets for such
specialty, styled fabrics, in which quality, product development,
responsiveness and speed of delivery are more critical do not allow foreign
competitors the type of cost advantage which they enjoy in commodity markets.
Operating profit in Fiscal 1994 in the apparel fabrics and products segment
declined by $3.3 million (15.2%) from Fiscal 1993 primarily as a result of the
lower average selling prices for much of the Company's apparel fabrics product
line, as discussed above. In addition, lower volume and a weaker product mix
in sales of apparel elastic products accounted for $1.1 million of the decline
in operating profit. The Company expects its continuing efforts to enhance its
manufacturing capabilities in higher margin, specialty apparel fabrics will
result in improved levels of operating profits in the future.
Net sales in Fiscal 1994 in the industrial fabrics and products segment, which
includes single-ply roofing and environmental membrane, woven synthetic, cotton
and fiberglass fabrics for insulation, filtration, and lamination applications,
and extruded urethane products for industrial uses increased $12.9 million
(8.3%) to $169.7 million from $156.8 million in Fiscal 1993. This increase was
primarily the result of increased demand for fiberglass fabrics used in
commercial construction and electronic circuit boards ($6.6 million) and due to
the introduction in late 1993 of the Company's new product for the single-ply
roofing market ($4.3 million). This new product's competitive price and
improved performance characteristics have fueled its sales growth. The Company
expects that sales of roofing membrane will continue to increase as this
product gains further market acceptance.
Operating profit in Fiscal 1994 in the industrial fabrics and products segment
increased $4.0 million (112.6%) to $7.6 million from $3.6 million in Fiscal
1993 due to the higher sales volume discussed above and improved product mix in
Fiscal 1994. The Company continuously evaluates its manufacturing methods and
capabilities in an effort to improve its processes and performance. These
efforts include modernizing plant and equipment and the optimum utilization of
human resources. Such efforts are expected to result in improved operating
margins and greater value to customers in all segments of the Company's
operations, and particularly in the industrial segment in which a very broad
array of product lines and customers is served.
Net sales in Fiscal 1994 in the home fashion textiles segment which includes
residential and commercial carpeting and woven drapery fabric increased $0.4
million to $178.9 million from $178.5 million in Fiscal 1993. Sales of carpet
remained essentially flat compared with Fiscal 1993, while carpet industry
shipments increased approximately 5% as a result of increases in industry sales
of carpet at lower price points, a segment of the market in which the Company
does not participate to a significant degree. Demand for the Company's drapery
and other home furnishings fabrics, which has declined over the last several
years, appears to have stabilized.
13
<PAGE> 15
Operating profit in Fiscal 1994 in the home fashion textiles segment declined
$5.1 million (64.7%) to $2.8 million from $7.9 million in Fiscal 1993 as a
result of a less profitable product mix in home fashion fabrics, combined with
a number of manufacturing related difficulties in the carpet operations,
including excessive off-quality production and raw material price increases
which, due to market conditions, were not recoverable in price increases. In
addition, sample and promotional expenses associated with the introduction of
woven rugs to the product line detracted from Fiscal 1994 profitability.
Off-quality production declined during the last half of Fiscal 1994 and the
benefits associated with the higher sample costs are expected to be realized in
Fiscal 1995.
Indirect corporate expenses in Fiscal 1994 declined $0.9 million to $7.8
million from $8.7 million in Fiscal 1993 due primarily to lower professional
fees and lower depreciation and amortization expense.
Giving effect to the reduction of debt associated with the use of the net
proceeds from the sale of the Automotive Assets (as discussed below) on a pro
forma basis would reduce interest expense by $23.7 million in Fiscal 1992,
$25.1 million in Fiscal 1993 and $16.2 million in Fiscal 1994. Such pro forma
reductions include $3.5 million, $3.1 million and $1.3 million in Fiscal 1992,
1993 and 1994, respectively, representing interest accretion and debt issuance
cost amortization. After giving effect to the debt reduction described above,
interest expense increased approximately $3.2 million in Fiscal 1994 from
Fiscal 1993 due primarily to higher average interest rates and the compounding
effect of accretion of debt discounts and non-cash interest.
Results of operations of the Company's Automotive Assets are accounted for as
discontinued operations and include twelve months in Fiscal 1992 and Fiscal
1993 and eight months (through the date of sale) in Fiscal 1994. In general,
through the date of sale, net sales and operating income in Fiscal 1994 were
substantially higher than comparable periods in Fiscal 1993 as a result of a
stronger North American automotive market, increased sales of airbag fabric and
improved productivity.
On June 28, 1994, pursuant to the terms of an Asset Purchase Agreement dated
May 25, 1994, the Company consummated the disposition of its Automotive Assets
(primarily the automotive-related businesses of the Company) to JPS Automotive
Products Corp., an indirect, wholly-owned subsidiary of Foamex ("Purchaser").
In addition, the Purchaser agreed to assume substantially all of the
liabilities and obligations associated with the Automotive Assets. 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 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.
Effective October 31, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 112, which requires that the cost of benefits
provided to former or inactive employees after employment but before retirement
be recognized on the accrual basis of accounting instead of when paid, as had
been the Company's practice. Such change resulted in a charge to earnings of
$1.0 million after tax. The effect of adopting SFAS No. 112 on income from
operations in 1994 was not significant.
FISCAL 1993 COMPARED TO FISCAL 1992
Consolidated net sales from continuing operations decreased $13.2 million
(2.2%) from $611.0 million in Fiscal 1992 to $597.8 million in Fiscal 1993.
Operating profit from continuing operations declined $10.5
14
<PAGE> 16
million (29.9%) from $35.1 million in Fiscal 1992 to $24.6 million in Fiscal
1993. In general, increases in sales and operating profits in the home fashion
textiles segment were offset by declines in sales and operating profits in the
apparel fabrics and products segment and the industrial fabrics and products
segment.
Net sales in Fiscal 1993 in the apparel fabrics and products segment declined
by $4.8 million (1.8%) from Fiscal 1992 levels. Increased unit volume of
greige goods of approximately 3%, as the Company sought to maintain or increase
market share in its apparel markets, was offset by a decline of approximately
3% in average selling prices for the Company's greige goods resulting from an
over supply of goods in the market and generally weak North American apparel
markets. Elastic apparel products sales declined by $4.4 million as the
Company redirected certain productive capacity toward industrial elastic
products in response to changing customer requirements for the manufacture of
disposable diapers.
Operating profit in Fiscal 1993 in the apparel fabrics and products segment
declined by $5.4 million (19.9%) primarily as a result of the aforementioned
decline in average selling prices of greige goods and decline in sales volume
of elastic apparel products. Substantially all of the Fiscal 1993 decline in
net sales and operating income from Fiscal 1992 in the apparel fabrics and
products segment occurred during the first two fiscal quarters of Fiscal 1993.
Net sales in Fiscal 1993 in the industrial fabrics and products segment
decreased $10.2 million (6.1%) to $156.8 million from $167.0 million in Fiscal
1992. This sales decrease was attributable primarily to a decline in sales of
roofing and environmental membrane liner by $6.9 million in Fiscal 1993 as a
result of lower sales of its major product line. The Company introduced a new
product for the single-ply roofing market which is expected to increase roofing
sales levels due to its competitive price and improved performance qualities.
Sales of other industrial fabrics and products declined approximately $2.9
million primarily as a result of lower demand and selling prices for certain
cotton fabrics.
Operating profits in Fiscal 1993 in the industrial fabrics and products segment
decreased $5.4 million (60.3%) to $3.6 million from $9.0 million in Fiscal 1992
due to lower sales volume and lower selling prices as described above.
Net sales in Fiscal 1993 in the home fashion textiles segment, which includes
residential and commercial carpeting and woven drapery fabric, increased $1.7
million to $178.5 million from $176.8 million in Fiscal 1992. Sales of carpet
increased $5.5 million to $140.2 million in Fiscal 1993 from $134.7 million in
Fiscal 1992 due to a continued improvement in the domestic carpet industry and
the Company's continued success in new product introductions. Sales of home
furnishings fabrics declined by $4.7 million due to softening market
conditions.
Operating profit in Fiscal 1993 in the home fashion textiles segment increased
by $1.4 million due primarily to increased carpet volume and cost reduction
programs. The Company continued to increase its carpet yarn capacity and
efficiency during Fiscal 1992 and Fiscal 1993 through capital expenditures for
modernization and expansion.
General corporate expenses in Fiscal 1993 increased $1.1 million due primarily
to higher salaries and benefit costs and professional fees. Interest expense
in Fiscal 1993 increased $1.9 million to $62.2 million from $60.3 million in
Fiscal 1992 due primarily to an increase in amortization of debt issuance costs
of $1.2 million and the compounding effect of accretion of debt discounts and
non-cash interest. The effect of higher average borrowings under the
Revolving Credit facility (as hereinafter defined) was entirely offset by lower
average interest rates in Fiscal 1993.
15
<PAGE> 17
Effective November 1, 1992, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions". SFAS No. 106
requires that the projected future cost of providing postretirement benefits,
such as health care and life insurance, be recognized as an expense as
employees render service instead of when claims are incurred, as the Company
historically had done. Such change resulted in a charge to earnings of
approximately $5.7 million after tax. The effect of adopting SFAS No. 106 on
income from operations in Fiscal 1993 was not significant.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity for operations and expansion are
funds generated internally and borrowings under its $135 Revolving Credit
Facility (as defined below). At October 29, 1994, the Company had $82.8
million available for borrowing under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility are made or repaid on a daily
basis in amounts equal to the net cash requirements or proceeds for that
business day.
The Company and its three operating subsidiaries (being hereinafter
collectively referred to as the "Borrowing Subsidiaries") are parties to the
Fourth Amended and Restated Credit Agreement, dated as of June 24, 1994, as
amended (the "Restated Credit Agreement"), by and among the financial
institutions party thereto, Citibank, N.A. ("Citibank"), as administrative
agent and co-agent, and General Electric Capital Corporation ("GECC"), as
collateral agent and co-agent. The Restated Credit Agreement amended and
restated in its entirety the Third Amended and Restated Credit Agreement (the
"Prior Credit Agreement"), by and among the financial institutions party
thereto, Citibank, as administrative agent and co-agent, and GECC, as
collateral agent and co-agent. The Prior Credit Agreement provided for a $150
million senior secured credit facility, maturing on October 31, 1995 (the
"Prior Credit Facility"), consisting of term loans in a principal amount of
$17.7 million and a revolving credit loan facility in a principal amount up to
$132.3 million (the "Prior Revolving Credit Facility"). The Restated Credit
Agreement, among other things, (i) changes the maximum amount of the credit
facility to $135 million consisting of a revolving credit loan facility (the
"Revolving Credit Facility") providing for revolving credit loans in the
maximum principal amount of the lesser of $135 million and a specified
borrowing base, which is based upon eligible receivables and inventory of the
Borrowing Subsidiaries plus an additional fixed amount of $25 million (the
"Borrowing Base"), except that no Borrowing Subsidiary may borrow an amount
greater than the Borrowing Base attributable to it; (ii) extends the final
maturity date of the credit facility to December 1, 1996. Subsequent to
October 29, 1994, the Company's Restated Credit Agreement was amended to permit
expenditures of up to $45 million for purchases of the Company's notes and
debentures in the open market. Through January 4, 1995, approximately $31
million had been expended by the Company to purchase and retire its notes and
debentures at market prices, which were less than the carrying value of the
indebtedness.
Net cash used in operations totalled $4.3 million for Fiscal 1994 compared to
$18.2 million for Fiscal 1993. An increase in other assets resulting from
contributions to the Company's defined benefit pension plan in excess of
recorded expense totalled $3.5 million in Fiscal 1994. In addition, increases
in working capital and payments on long-term roofing liabilities totalled $4.6
million. Net receipts from discontinued operations, which represents net cash
flow from the Company's Automotive Assets, totalled $18.0 million for the
period through June 28, 1994 compared to $15.4 million in Fiscal 1993.
Receipts from discontinued operations, and increased borrowings under the
Revolving Credit Facility funded capital expenditures of approximately $22.0
million.
The sale of the Automotive Assets on June 28, 1994 resulted in aggregate cash
proceeds of approximately $264 million. The net cash proceeds, after
deductions for fees and expenses and amounts designated by management to
satisfy possible contingent tax liabilities, were approximately $213.1 million.
16
<PAGE> 18
In connection with the sale of the Automotive Assets, the Company's outstanding
indebtedness, including accrued interest, was reduced as follows: (i) bank
debt by $71.2 million, (ii) Senior Secured Notes by $94.8 million, (iii) Senior
Subordinated Discount Notes by $25.6 million, and (iv) Senior Subordinated
Notes by $21.5 million. See Note 5 of the Notes to Consolidated Financial
Statements included in Item 8 herein.
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.
Provisions of the Company's indentures governing its debt securities (the
"Indentures") place significant restrictions on certain corporate acts such as
mergers, consolidations, acquisitions, repurchases of stock, the making of
certain restricted payments, including the payment of cash dividends on the
Company's capital stock, transactions with affiliates and the sale of assets.
The Company must maintain minimum levels of "net worth", defined to be total
assets minus liabilities plus the subordinated notes and debentures and other
adjustments. The Indentures place limitations on the Company's ability to
incur additional debt, grant a security interest in its assets and require the
Company to apply the proceeds from the sale of assets, outside the ordinary
course of business, towards reducing outstanding debt. Other customary
covenants, conditions and default provisions are also present. The Company was
in compliance with the restrictions and financial covenants of its debt
agreements at October 29, 1994.
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. The utilization of the Company's
Revolving Credit Facility for purchases of the Company's notes and debentures
in the open market has and will continue to reduce the amounts (up to the
amount of such purchases) that would otherwise be available for borrowing had
such purchases not been made. The Company expects that its planned capital
expenditures in Fiscal 1995 of approximately $26 million will be funded by cash
from operations, bank and other equipment financing sources. Should such
capital resources be inadequate or unavailable, however, management would
defer certain of its planned capital expenditures or take other
appropriate actions to preserve liquidity.
INFLATION AND TAX MATTERS
The Company is subject to the effects of changing prices. It has generally
been able to pass along inflationary increases in its costs by increasing the
prices for its products; however, market conditions sometimes preclude this
practice. The application of purchase accounting in connection with the
acquisition in 1988 mitigates the effects of changing costs on the Company's
Consolidated Financial Statements because assets and liabilities were adjusted
to fair values at the date of the Acquisition, and costs of sales and
depreciation have been adjusted accordingly.
The Company provided $2.8 million for income taxes on continuing operations in
Fiscal 1994. No tax expense resulted from applying the statutory tax rate to
the loss before income taxes. However, the Company was not able to fully
offset subsidiary income in all tax jurisdictions with net operating losses of
the Company or other subsidiaries or operating loss carryovers and, as a
result, a provision for state income taxes was required. During the year, the
Company utilized approximately $141 million of net operating
17
<PAGE> 19
loss carryforwards to offset the gain on sale of the Automotive Assets. Income
tax expense incident to the sale has been reduced by approximately $49 million
as a result of such utilization. Federal alternative minimum and state taxes
of approximately $2.8 million were recognized as a result of the sale. The
Company has provided a 100% valuation allowance of $12 million for its
remaining deferred tax asset, net of existing taxable "temporary differences".
This asset relates primarily to the benefit of the net operating loss
carryforward. In the Company's opinion, the valuation allowance is required as
realization of the tax benefit is not assured based on prior operating history.
In addition, the Company's ability to utilize its net operating losses may be
significantly limited under the income tax laws should there be future changes
in the ownership of the Company's stock which constitute an ownership change
for tax purposes. The effect of such an ownership change would be to
significantly limit the annual utilization of the remaining net operating loss
to an amount equal to the value of the Company immediately prior to the time of
the change (subject to certain adjustments) multiplied by the Federal long-term
tax exempt rate. The Company believes that it is more likely than not that the
net operating loss carryforwards, net of the related valuation allowance,
recorded at October 29, 1994 will be fully realized.
Although the Company believes use of its net operating losses to offset the
gain on the Automotive Assets will more likely than not be sustained under
existing tax laws, uncertainty exists primarily due to the fact that applicable
regulations under Internal Revenue Code Section 382 have not been issued.
Therefore, in accordance with provisions of the Indentures, the Company set
aside, in a special-purpose subsidiary, a portion ($39.5 million) of the net
proceeds from the sale of the Automotive Assets to satisfy, if necessary, these
possible contingent tax liabilities. These funds have been invested in U.S.
Government securities and are classified as other assets in the Company's
Consolidated Financial Statements.
18
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
JPS Textile Group, Inc.:
We have audited the accompanying consolidated balance sheets of JPS Textile
Group, Inc. and subsidiaries (the "Company") as of October 29, 1994 and October
30, 1993, and the related consolidated statements of operations, senior
redeemable preferred stock and shareholders' equity (deficit), and cash flows
for each of the three years in the period ended October 29, 1994. Our audits
also included the financial statement schedule listed in the index at page S-1.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at October 29, 1994
and October 30, 1993, and the results of its operations and its cash flows for
each of the three years in the period ended October 29, 1994 in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
As discussed in Note 9 to the consolidated financial statements, the Company
changed its method of accounting for other postretirement benefits, effective
November 1, 1992, to conform with Statement of Financial Accounting Standards
("SFAS") No. 106 and also changed its method of accounting for other
postemployment benefits, effective October 31, 1993, to conform with SFAS No.
112.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
January 4, 1995
19
<PAGE> 21
JPS TEXTILE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
<TABLE>
<CAPTION>
October 30, October 29,
1993 1994
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 2,080 $ 2,873
Accounts receivable, less allowance of $5,759 in 1993 and
$6,223 in 1994 (Note 5) 104,834 102,804
Inventories (Notes 4 and 5) 73,628 74,966
Prepaid expenses and other 1,718 1,783
Net assets held for sale (Note 3) 114,981 -
---------- ----------
Total current assets 297,241 182,426
PROPERTY, PLANT AND EQUIPMENT, net (Notes 4 and 5) 210,784 204,094
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS
ACQUIRED, less accumulated amortization of $4,947 in
1993 and $5,912 in 1994 33,419 32,454
OTHER ASSETS (Notes 4, 8 and 9) 7,399 49,016
---------- ----------
Total $ 548,843 $ 467,990
========== ==========
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
October 30, October 29,
1993 1994
----------- -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 40,477 $ 41,013
Accrued interest 16,258 12,448
Accrued salaries, benefits and withholdings (Note 8) 13,784 15,271
Other accrued expenses (Notes 4, 7, 8 and 10) 10,154 15,403
Current portion of long-term debt (Note 5) 9,003 2,347
---------- ----------
Total current liabilities 89,676 86,482
LONG-TERM DEBT (Note 5) 522,947 335,472
DEFERRED INCOME TAXES (Note 7) 2,585 3,565
OTHER LONG-TERM LIABILITIES (Notes 4, 8 and 9) 23,731 20,481
---------- ----------
Total liabilities 638,939 446,000
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 3, 5, 7 and 8)
SENIOR REDEEMABLE PREFERRED STOCK, redemption
value of $45,567 in 1993 and $48,374 in 1994 (Note 6) 21,007 24,340
---------- ----------
SHAREHOLDERS' EQUITY (DEFICIT) (Note 6):
Junior preferred stock 250 250
Common stock:
Class A, 490,000 shares issued 5 5
Class B, 510,000 shares issued 5 5
Additional paid-in capital 36,777 33,444
Deficit (148,140) (36,054)
---------- ----------
Total shareholders' deficit (111,103) (2,350)
---------- ----------
Total $ 548,843 $ 467,990
========== ==========
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 23
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------
October 31, October 30, October 29,
1992 1993 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 610,985 $ 597,753 $ 603,416
Cost of sales 515,466 512,188 518,176
---------- ---------- ----------
Gross profit 95,519 85,565 85,240
Selling, general and administrative expenses (Note 10) 58,327 59,743 61,147
---------- ---------- ----------
Income from operations 37,192 25,822 24,093
Interest expense (Note 5) 60,278 62,196 56,452
Other income (expense), net (2,100) (1,221) (2,962)
---------- ---------- ----------
Loss before income taxes, income from discontinued
operations, extraordinary loss and cumulative effects
of accounting changes (25,186) (37,595) (35,321)
Income taxes (Note 7) 1,446 1,782 2,800
---------- ---------- ----------
Loss before income from discontinued operations,
extraordinary loss and cumulative effects of
accounting changes (26,632) (39,377) (38,121)
Discontinued operations:
Income from discontinued operations, net of taxes 15,779 23,262 25,651
Gain on sale of discontinued operations,
net of taxes of $2,800 (Note 3) - - 132,966
Extraordinary loss on early extinguishment of debt,
net of taxes (Note 5) - - (7,410)
Cumulative effects of accounting changes,
net of taxes (Note 9) - (5,716) (1,000)
---------- ---------- ----------
Net income (loss) (10,853) (21,831) 112,086
Senior redeemable preferred stock in-kind
dividends and discount accretion (Note 6) (2,459) (2,863) (3,333)
---------- ---------- ----------
Income (loss) applicable to common stock $ (13,312) $ (24,694) $ 108,753
========== ========== ==========
Weighted average number of common shares outstanding 1,000,000 1,000,000 1,000,000
========== ========== ==========
Earnings (loss) per common share:
Loss before income from discontinued operations,
extraordinary loss and cumulative effects of
accounting changes $ (29.09) $ (42.23) $ (41.46)
Discontinued operations, net of taxes:
Income from discontinued operations 15.78 23.26 25.65
Gain on sale of discontinued operations - - 132.97
Extraordinary loss on early extinguishment of debt - - (7.41)
Cumulative effects of accounting changes - (5.72) (1.00)
---------- ---------- ----------
Net income (loss) $ (13.31) $ (24.69) $ 108.75
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 24
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF SENIOR REDEEMABLE PREFERRED STOCK
AND SHAREHOLDERS' EQUITY (DEFICIT)
(In Thousands)
<TABLE>
<CAPTION>
Shareholders' Equity (Deficit)
Senior --------------------------------------------------
Redeemable Junior Additional
Preferred Common Preferred Paid-In
Stock Stock Stock Capital Deficit
---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance - November 2, 1991 $ 15,685 $ 10 $ 250 $ 42,099 $ (115,456)
Net loss for 52 weeks (10,853)
Preferred stock in-kind dividends
and discount accretion 2,459 (2,459)
-------- ---- ------ --------- ----------
Balance - October 31, 1992 18,144 10 250 39,640 (126,309)
Net loss for 52 weeks (21,831)
Preferred stock in-kind dividends
and discount accretion 2,863 (2,863)
-------- ---- ------ --------- ----------
Balance - October 30, 1993 21,007 10 250 36,777 (148,140)
Net income for 52 weeks 112,086
Preferred stock in-kind dividends
and discount accretion 3,333 (3,333)
-------- ---- ------ --------- ----------
Balance - October 29, 1994 $ 24,340 $ 10 $ 250 $ 33,444 $ (36,054)
======== ==== ====== ========= ==========
</TABLE>
See notes to consolidated financial statements.
23
<PAGE> 25
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------
October 31, October 30, October 29,
1992 1993 1994
-------------- -------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (10,853) $ (21,831) $ 112,086
---------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Income from discontinued operations (15,779) (23,262) (25,651)
Gain on sale of discontinued operations - - (132,966)
Extraordinary loss on early extinguishment of debt - - 7,410
Cumulative effects of accounting changes - 5,716 1,000
Depreciation and amortization, except amounts
included in interest expense 26,145 25,671 28,660
Interest accretion and debt issuance cost amortization 18,805 12,208 11,450
Deferred income taxes 846 1,082 1,227
Other, net 1,259 2,701 (2,953)
Changes in assets and liabilities:
Accounts receivable (3,257) (3,389) 2,030
Inventories 942 (10,325) (1,338)
Prepaid expenses and other assets 624 (1,714) (1,220)
Accounts payable (5,660) 459 (1,084)
Accrued expenses and other liabilities 4,766 (5,563) (2,987)
---------- ---------- ----------
Total adjustments 28,691 3,584 (116,422)
---------- ---------- ----------
Net cash provided by (used in) operating activities 17,838 (18,247) (4,336)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (21,063) (24,445) (22,025)
Receipts from discontinued operations, net 30,914 15,362 17,978
Proceeds from sale of discontinued operations, net - - 259,044
Purchase of long-term investments - - (39,500)
---------- ---------- ----------
Net cash provided by (used in) investing activities 9,851 (9,083) 215,497
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (735) (6,016) (2,943)
Proceeds from issuance of long-term debt 3,406 5,898 285
Revolving credit facility borrowings (repayments), net (17,613) 30,463 (41,666)
Repayment of other long-term debt (11,901) (2,569) (166,044)
---------- ---------- ----------
Net cash provided by (used in) financing activities (26,843) 27,776 (210,368)
---------- ---------- ----------
NET INCREASE IN CASH 846 446 793
Cash at beginning of year 788 1,634 2,080
---------- ---------- ----------
Cash at end of year $ 1,634 $ 2,080 $ 2,873
========== ========== ==========
</TABLE>
(Continued)
24
<PAGE> 26
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands)
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------
October 31, October 30, October 29,
1992 1993 1994
------------- ------------- ------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION FROM
CONTINUING OPERATIONS:
Interest paid $ 34,278 $ 50,649 $ 49,783
Income taxes paid 51 480 376
Reorganization items paid 1,636 162 -
Non-cash financing activities:
Senior redeemable preferred stock dividends-in-kind 2,454 2,604 2,765
</TABLE>
See notes to consolidated financial statements.
25
<PAGE> 27
JPS TEXTILE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BUSINESS AND BASIS OF PRESENTATION
JPS Textile Group, Inc. (the "Company") purchased from J.P. Stevens &
Co., Inc. ("J.P. Stevens") substantially all of the property, plant
and equipment, inventories, certain other assets and the business of
five former divisions of J.P. Stevens (the "Predecessor Stevens
Divisions") on May 9, 1988 (the "Acquisition"). The purchase was
financed through long-term borrowings and the sale of preferred and
common stock. The Company operates principally as a manufacturer of
apparel fabrics and products, industrial fabrics and products and home
fashion textiles.
A Plan of Reorganization (the "Plan") which was distributed to the
Company's bondholders and preferred stockholders (the
"Securityholders") on December 21, 1990, was approved by the
securityholders in early February 1991 and in accordance with the
Plan, the Company filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code. Subsequently, in
March 1991, the bankruptcy court confirmed the Plan and it became
effective April 2, 1991. The Plan provided for, among other things,
the cancellation of certain existing debt and preferred stock
securities in exchange for 490,000 shares of new Class A common stock
along with new debt instruments and new preferred stock with lower
interest and dividend rates. Since the Company's reorganization did
not meet the criteria for "fresh-start" accounting, the primary
adjustment to historical carrying values as a result of the
reorganization was to state the new long-term debt and senior
redeemable preferred stock at present values of amounts to be paid
determined at appropriate current interest rates as of April 2, 1991,
the effective date of the Plan. The resulting present value discount
is amortized as interest expense or dividends over the life of the
related debt or senior redeemable preferred stock instrument using the
interest method.
As described in Note 3, on June 28, 1994, the Company sold the
businesses and assets of its wholly-owned subsidiary, JPS Auto Inc.,
and its 80% owned joint venture and the synthetic industrial fabrics
division of JPS Converter & Industrial Corp. (another of the Company's
wholly-owned subsidiaries).
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements
include JPS Textile Group, Inc. and its subsidiaries, all of which are
wholly owned. Significant intercompany transactions and accounts have
been eliminated.
Inventories - Inventories are stated at the lower of cost or market.
Cost, which includes labor, material and factory overhead, is
determined on the first-in, first-out basis.
Property, Plant and Equipment - Property, plant and equipment
is recorded at cost and depreciation is recorded using the
straight-line method for financial reporting purposes. The estimated
useful lives used in the computation of depreciation are as follows:
Land improvements 10 to 45 years
Buildings and improvements 25 to 45 years
Machinery and equipment 3 to 15 years
Furniture, fixtures and other 5 to 10 years
26
<PAGE> 28
For tax reporting purposes, the Company uses the Modified Accelerated
Cost Recovery System to compute depreciation.
Excess of Cost Over Fair Value of Net Assets Acquired - Excess of
cost over fair value of net assets acquired is being amortized on a
straight-line basis over a period of forty years. Periodically, the
Company evaluates the realizability of the excess of cost over fair
value of net assets acquired based upon expectations of nondiscounted
cash flows.
Debt Issuance Costs - Costs incurred in securing and issuing
long-term debt are deferred and amortized over the terms of the related
debt in amounts which approximate the interest method of amortization.
Product Warranties - On certain of its products, the Company provides
a warranty against defects in materials and workmanship under
separately priced extended warranty contracts generally for a period
of ten years. Revenue from such extended warranty contracts is
deferred and recognized as income on a straight-line basis over the
contract period. The cost of servicing such product warranties is
charged to expense as incurred.
Postretirement Benefits - Effective November 1, 1992, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions". SFAS No. 106 requires that the projected future cost of
providing postretirement benefits, such as health care and life
insurance, be recognized as an expense as employees render service
instead of when claims are incurred, as had been the Company's
practice. See Note 9 for a further description of the accounting for
postretirement benefits.
Postemployment Benefits - Effective October 31, 1993, the Company
adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits". SFAS No. 112 requires that the cost of benefits provided
to former or inactive employees after employment but before retirement
be recognized on the accrual basis of accounting instead of when paid,
as had been the Company's practice. See Note 9 for a further
description of the accounting for postemployment benefits.
Revenue Recognition - The Company recognizes revenue from product
sales when it has shipped the goods or ownership has been transferred
to the customer for goods to be held for future shipment at the
customer's request.
Income Taxes - The Company accounts for income taxes using the
principles of SFAS No. 109, "Accounting for Income Taxes". Under SFAS
No. 109, deferred taxes represent the future income tax effect of
temporary differences between the book and tax bases of the Company's
assets and liabilities, assuming they will be realized and settled at
the amount reported in the Company's financial statements.
Earnings Per Share - Earnings per share is computed by dividing
earnings applicable to common stock (net income or loss adjusted by
senior redeemable preferred stock dividends) by the weighted average
number of shares of common stock outstanding during the period.
Cash Flows - For purposes of reporting cash flows, cash includes cash
on hand and in banks. The Company has no investments that are deemed
to be cash equivalents.
27
<PAGE> 29
Fiscal Year - The Company's operations are based on a fifty-two or
fifty-three week fiscal year ending on the Saturday closest to October
31. The 1992, 1993 and 1994 fiscal years each consisted of 52 weeks.
Reclassifications - Certain 1992 and 1993 amounts have been
reclassified to conform to the 1994 presentation. In addition, see
Note 3 regarding reclassifications of 1992 and 1993 amounts for
discontinued operations.
3. SALE OF 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 Consolidated Balance Sheet and
Statements of Operations and Cash Flows for 1992 and 1993 have been
reclassified to reflect the Automotive Assets as discontinued
operations.
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 discontinued operations were $241.3 million and $287.9
million in fiscal years 1992 and 1993, respectively and $224.9 million
for the eight months ended June 28, 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 period of four years, 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.
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 herein.
The Company has allocated to the discontinued operations a pro-rata
portion of the interest expense of its senior credit facility, which
pro-rata portions were approximately $2.5 million, $2.5 million and
$1.8 million for the years 1992, 1993 and 1994, respectively.
28
<PAGE> 30
4. BALANCE SHEET COMPONENTS
The components of certain balance sheets accounts are (in thousands):
<TABLE>
<CAPTION>
October 30, October 29,
1993 1994
----------- -----------
<S> <C> <C>
Inventories:
Raw materials and supplies $ 12,523 $ 17,104
Work-in-process 29,287 29,060
Finished goods 31,818 28,802
----------- -----------
$ 73,628 $ 74,966
=========== ===========
Property, plant and equipment, net:
Land and improvements $ 11,058 $ 11,581
Buildings and improvements 64,107 67,676
Machinery and equipment 224,845 243,366
Furniture, fixtures and other 7,317 7,958
----------- -----------
307,327 330,581
Less accumulated depreciation (111,177) (129,750)
----------- -----------
196,150 200,831
Construction in progress 14,634 3,263
----------- -----------
$ 210,784 $ 204,094
=========== ===========
Other noncurrent assets:
Unamortized debt issuance costs $ 4,779 $ 2,012
Prepaid pension costs 1,233 5,100
Investments (see Note 8) - 40,238
Other 1,387 1,666
----------- -----------
$ 7,399 $ 49,016
=========== ===========
Other accrued expenses:
Roofing product liability costs $ 4,300 $ 4,300
Taxes payable other than income taxes 1,684 1,907
Income taxes 569 4,816
Other 3,601 4,380
----------- -----------
$ 10,154 $ 15,403
=========== ===========
Other long-term liabilities:
Roofing product liability costs and deferred warranty income $ 17,373 $ 13,376
Accrued other postretirement and postemployment benefits 5,936 6,494
Other 422 611
----------- -----------
$ 23,731 $ 20,481
=========== ===========
</TABLE>
29
<PAGE> 31
5. LONG-TERM DEBT
Long-term debt consists of (in thousands):
<TABLE>
<CAPTION>
October 30, October 29,
1993 1994
----------- -----------
<S> <C> <C>
Senior credit facilities:
Bank term loan $ 17,700
Revolving line of credit 91,584 $ 49,918
Senior secured notes 100,000 -
Senior subordinated discount notes (including interest due
at maturity of $2,250 and $3,395, respectively) 153,357 130,179
Senior subordinated notes (including interest due at maturity
of $3,594 and $4,404, respectively) 128,594 109,283
Subordinated debentures 75,000 75,000
Equipment financing 9,847 7,658
---------- ----------
Total 576,082 372,038
Less reorganization discount:
Senior subordinated discount notes (11,764) (8,109)
Senior subordinated notes (12,688) (8,723)
Subordinated debentures (19,680) (17,387)
---------- ----------
Total long-term debt 531,950 337,819
Less current portion (9,003) (2,347)
---------- ----------
Long-term portion $ 522,947 $ 335,472
========== ==========
</TABLE>
Senior Credit Facilities - In connection with the sale of the
Automotive Assets (see Note 3) in June 1994, the Company repaid the
$17.7 million term loan and amended its senior credit facility to
provide for a $135 million revolving line of credit and modify existing
restrictive covenants. The senior credit facility, as amended, is
scheduled to terminate on December 1, 1996. The Company pays a fee of
1/2 of 1% per annum of the average unused line of credit. All senior
borrowings bear interest at a Base Rate (as defined) plus 1-1/2% per
annum (9.25% at October 29, 1994) or at the Eurodollar Rate (as
defined) plus 3.0% per annum (approximately 8.3% at October 29, 1994).
Borrowings under the revolving line of credit are limited to specified
percentages of eligible accounts receivable and inventories, as
defined, plus an additional amount of $25,000,000. As of October 29,
1994, unused letters of credit issued and outstanding totalled
$2,311,000. The outstanding unused letters of credit reduce the funds
available under the revolving line of credit. At October 29, 1994, the
Company had $82,771,000 available for borrowing under the
revolving credit agreement.
The credit agreement also provides that net cash proceeds from the
sale of assets (as defined and excluding the sale of the Automotive
Assets) will be used to permanently repay obligations thereunder to
the extent such proceeds from March 1993 forward cumulatively exceed
$35 million. No such asset sales occurred during fiscal 1994.
Senior Secured Notes - The senior secured notes (the "Notes") bore
interest at 11.75% and were issued in the 1991 reorganization. Notes
totalling $6,530,000 matured on June 1, 1994 and were redeemed on that
date. In connection with the sale of the Automotive Assets, the
Company redeemed the remaining $93,470,000 outstanding balance of the
Notes on July 15, 1994.
Senior Subordinated Discount Notes - The Company issued the discount
notes in the 1991 reorganization. The $151,107,000 of discount notes
began accruing interest on June 1, 1992 at 10.85% with 9.85% paid
semi-annually and 1% payable at maturity. Interest payable at
maturity compounds semi-annually at the annual rate of 10.85%. In
connection with the 1991
30
<PAGE> 32
reorganization, the carrying value of the discount notes was reduced
by $15,182,000 to its estimated net present value using an effective
interest rate of 13%.
Mandatory redemption payments equal to $37,777,000, plus accrued
interest, are due on each of June 1, 1997 and June 1, 1998 prior to
maturity on June 1, 1999 with optional early redemption available on
or after June 1, 1994. On September 15, 1994, the Company redeemed
$24,938,000 of principal and interest due at maturity with a portion
of the proceeds received from the Automotive Assets sale.
Senior Subordinated Notes - The senior subordinated notes bear
interest at 10-1/4% with 9-1/4% paid semi-annually and 1% payable at
maturity and were issued in the 1991 reorganization. Interest payable
at maturity compounds semi-annually at the annual rate of 10.25%. In
connection with the 1991 reorganization, the notes were adjusted to
their estimated net present value by recording a discount of
$16,596,000 resulting in an effective interest rate of 13%. Mandatory
redemption payments equal to $31,250,000, plus accrued interest, are
due on each of June 1, 1997 and June 1, 1998 with optional early
redemption available on or after June 1, 1994. On September 15, 1994,
the Company redeemed $20,932,000 of principal and interest due at
maturity with a portion of the proceeds received from the Automotive
Assets sale.
Subordinated Debentures - The subordinated debentures bear interest at
7%, payable semi-annually, with a mandatory redemption payment of
principal of $37,500,000 due May 15, 1999, prior to maturity on May
15, 2000, with optional early redemption available after May 15, 1993.
The subordinated debentures were issued in the 1991 reorganization.
In connection with the 1991 reorganization, the debentures were
adjusted to an estimated net present value by recording a discount of
$24,390,000 resulting in an effective interest rate of 13.5%.
Equipment Financing - The Company has financed a portion of its
equipment purchases with loans from a finance company and certain
equipment vendors at fixed interest rates ranging from 7.6% to 9.7%.
Monthly principal payments are due in various amounts as determined by
the terms of the loans which have final maturity dates ranging from
July 1995 through December 1998.
Restrictive Covenants - Provisions of the senior credit agreement and
the Company's other debt indentures place significant restrictions on
certain corporate acts such as mergers, consolidations, acquisitions,
repurchases of stock, the making of certain other restricted payments,
transactions with affiliates and the sale of assets and prohibit the
payment of cash dividends. The Company must maintain minimum levels
of "net worth", defined to be total assets (excluding investments
designated by management to satisfy possible contingent tax
liabilities) minus total liabilities plus the subordinated notes and
debentures and other adjustments, which vary quarterly from $268
million at October 29, 1994 to $205 million in the fourth quarter of
1996. In addition, the senior credit agreement contains requirements
to meet certain financial ratios which vary quarterly or annually and
place limitations on the Company's ability to incur additional debt or
grant a security interest in its assets. Other customary covenants,
conditions and default provisions are also present in the agreement
and indentures. The Company was in compliance with the restrictions
and financial covenants of its senior credit agreement and its
long-term debt indentures at October 29, 1994.
31
<PAGE> 33
Fair Value - The fair value of the Company's long-term debt based on
estimated quoted prices, compared to the carrying values (at
discounted amounts), is as follows (in thousands):
<TABLE>
<CAPTION>
October 30, 1993 October 29, 1994
--------------------- --------------------
Carrying Fair Carrying Fair
Value Value Value Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
11.75% Senior Secured Notes $ 100,000 $ 100,500
10.85% Senior Subordinated Discount Notes 141,593 144,922 $ 122,070 $ 93,186
10.25% Senior Subordinated Notes 115,906 120,235 100,560 77,086
7% Subordinated Debentures 55,320 56,250 57,613 33,750
</TABLE>
Other - Substantially all of the Company's assets are pledged as
collateral for the senior credit facilities or the equipment
financing.
Interest expense includes $18,805,000 in 1992, $12,208,000 in 1993,
and $11,450,000 in 1994 representing amortization of debt issuance
expenses and accretion of interest on the discounted notes and accrued
product liability costs (see Note 8).
The Company recorded a $7,410,000 loss on early extinguishment of debt
in connection with the retirement of certain debt with a portion of
the proceeds of the Automotive Assets sale as discussed above. The
loss represents deferred financing fees and reorganization discounts
associated with the retired debt along with expenses of the
transactions.
Subsequent Events - Subsequent to October 29, 1994, the Company's bank
credit agreement was amended to permit expenditures of up to $45
million for purchases of the Company's notes and debentures in the
open market. Through January 4, 1995, $31 million had been expended
by the Company to purchase and retire its notes and debentures at
market prices, which were less than the carrying value of the
indebtedness. The effect of such transactions on the debt maturities
is to increase the bank debt which matures in December 1996 and reduce
note and debenture indebtedness due in 1999 and thereafter.
Maturities - Aggregate principal maturities of all long-term debt are
as follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ending
------------------
<S> <C>
1995 $ 2,352
1996 2,138
1997 123,467
1998 72,269
1999 134,312
Thereafter 37,500
-----------
$ 372,038
===========
</TABLE>
32
<PAGE> 34
6. SENIOR REDEEMABLE PREFERRED STOCK AND EQUITY SECURITIES
Certain information on senior redeemable preferred stock and equity
securities at October 29, 1994 is as follows:
<TABLE>
<CAPTION>
Shares
Par Shares Issued and
Value Authorized Outstanding
----------- ---------- -----------
<S> <C> <C> <C>
Series A Senior Redeemable Preferred Stock $.01 700,000(1) 477,673
Series B Junior Preferred Stock .01 700,000(1) 10,000
Class A Common Stock .01 700,000 490,000
Class B Common Stock .01 700,000 510,000
</TABLE>
(1) The aggregate number of authorized shares of preferred stock is
700,000, including both the senior redeemable preferred stock and
the junior preferred stock.
The senior redeemable preferred stock must be redeemed on May 15,
2003. Its holders vote with the junior preferred stockholders as a
single class to elect two directors, otherwise, except in the event of
default, the senior redeemable preferred stock is non-voting. The
senior redeemable preferred stock is redeemable at the option of the
Company prior to maturity at 103% of the liquidation preference of
$100 per share. Dividends are cumulative and are calculated based on
an annual rate of 6% of the liquidation preference and are paid
quarterly. Under the terms of various credit agreements, dividends
must be in the form of additional shares until 1998. In connection
with the 1991 reorganization, the senior redeemable preferred stock
was discounted to its estimated net present value with the net
discount of $23,351,000 reflected as an adjustment of additional
paid-in capital. The difference between the net carrying value of the
senior redeemable preferred stock and its mandatory redemption value
is being amortized using the interest method of amortization over the
life of the shares by charges to additional paid-in capital or, if
available, by charges to retained earnings. The effective dividend
rate on the senior redeemable preferred stock is 15.0%. The
unamortized discount was approximately $24,560,000 at October 30, 1993
and $24,034,000 at October 29, 1994. The estimated fair value of
senior redeemable preferred stock was $42.50 per share, or
approximately $19,126,000, at October 30, 1993 based on trading
information available as of that date. Because of the lack of recent
trading activity and disparities in potential valuation methodologies,
determination of the fair value of the Company's senior redeemable
preferred stock is impractical at October 29, 1994.
The junior preferred stock has a liquidation preference of $25 per
share. Its holders vote with the senior redeemable preferred
stockholders as a single class to elect two directors, otherwise,
except in the event of default, the junior preferred stock is
non-voting. The liquidation preference increases $15 per share for
each year that the Company attains certain specified earnings levels
for each of the first five fiscal years ending after April 2, 1991.
No increase in the liquidation preference has yet occurred because
actual earnings have been less than the specified earnings levels in
each of the years. Dividends are non-cumulative and are payable at
the same rate as is paid on the common stock, if any. As of October
29, 1994, no dividends had been paid. The Company's senior credit
agreement prohibits the payment of cash dividends.
The Class A and Class B common stocks have substantially the same
voting rights except in the election of directors. The Class A common
stockholders, voting separately as a class, have the right to elect
three out of the seven Company directors.
33
<PAGE> 35
7. INCOME TAXES
The 1992, 1993 and 1994 provision for income taxes on continuing
operations included in the consolidated statements of operations
consists of the following (in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 79 $ 34
State 521 666 $ 1,573
Deferred state 846 1,082 1,227
--------- -------- --------
Provision for income taxes $ 1,446 $ 1,782 $ 2,800
========= ======== ========
</TABLE>
The 1992 and 1993 current Federal income tax provisions relate to
alternative minimum taxes and these amounts can be carried forward
indefinitely and be claimed as credits against Federal income taxes in
subsequent years.
A reconciliation between income taxes at the statutory Federal income
tax rate (34% for 1992, 34.83% for 1993 and 35% for 1994) and the
provision for income taxes for the years ended 1992, 1993 and 1994 is
as follows (in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Income tax benefit at Federal statutory rate $ (8,563) $ (13,096) $ (12,362)
Increase in income taxes arising from effect of:
State and local income taxes 1,367 1,748 2,800
Amortization of goodwill 328 314 316
Other 138 308 250
Losses not resulting in tax benefits 8,176 12,508 11,796
---------- --------- ---------
Provision for income taxes $ 1,446 $ 1,782 $ 2,800
========== ========= =========
</TABLE>
Presented below are the elements which comprise deferred tax assets
and liabilities (in thousands):
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Gross deferred assets:
Estimated allowance for doubtful accounts $ 1,051 $ 1,505
Excess of tax over financial statement basis of inventory 1,210 1,197
Accruals deductible for tax purposes when paid 2,724 2,910
Deferred compensation deductible for tax purposes when paid 575 178
Postretirement benefits deductible for tax purposes when paid 2,121 1,927
Miscellaneous 22 50
Alternative minimum tax credit carryforward available - 2,100
Deferred financial statement income recognized for tax purposes
when received 7,063 6,757
Excess of tax basis of intangibles over financial statement basis 10,570 9,372
Net operating loss carryover 79,164 22,928
Less valuation allowance (58,346) (12,097)
---------- ---------
Gross deferred assets 46,154 36,827
---------- ---------
</TABLE>
34
<PAGE> 36
<TABLE>
<S> <C> <C>
Gross deferred liabilities:
Pension asset recognized for book purposes (450) (1,641)
Excess of financial statement over tax basis of property, plant,
and equipment (28,298) (29,105)
Excess of tax over financial statement basis of debt instruments
(net of deferred financing fees) (13,087) (6,266)
Excess of financial statement over tax basis of discontinued operations (4,304) -
Alternative minimum tax deferred (400) -
Deferred state taxes resulting from filing separate subsidiary
returns in some jurisdictions (2,200) (3,165)
Miscellaneous - (215)
---------- ---------
Gross deferred liabilities (48,739) (40,392)
---------- ---------
Net deferred tax liability $ (2,585) $ (3,565)
========== =========
</TABLE>
The net deferred tax liability is included in the accompanying
consolidated balance sheet as a non-current liability.
At October 29, 1994, the Company had net operating loss carryforwards
for tax purposes of approximately $62,000,000. The net operating
losses expire $27,000,000 in 2006, $25,400,000 in 2007 and $9,600,000
in 2008. The Company also has alternative minimum tax net operating
losses of approximately $10,500,000 which expire in 2006. During the
year, the Company utilized approximately $141,000,000 and $95,500,000
of regular tax and alternative minimum tax net operating loss
carryovers, respectively, to offset income from the disposition of
discontinued operations. The Company incurred approximately
$2,800,000 in Federal alternative minimum and state taxes on the sale.
As previously noted, alternative minimum taxes can be carried forward
indefinitely and used as a credit against regular federal taxes. Due
to the Company's operating history, it is uncertain that it will be
able to utilize all deferred tax benefits. Therefore, a valuation
allowance has been provided.
The Company's ability to utilize its net operating losses may be
significantly limited under the income tax laws should there be future
changes in the ownership of the Company's stock which constitute an
ownership change for tax purposes. Transactions in the Company's
stock have significantly increased the possibility that there could be
an ownership change for tax purposes if certain future transactions in
the Company's stock occur. The effect of such an ownership change
would be to significantly limit the annual utilization of the net
operating loss carryforwards to an amount equal to the value of the
Company immediately prior to the time of the change (subject to
certain adjustments) multiplied by the Federal long-term tax exempt
rate. Despite this potential restriction on utilization of the net
operating loss carryforwards, the Company believes that it is more
likely than not that the net operating loss carryforwards, net of the
related valuation allowance, recorded at October 29, 1994 will be
fully realized.
8. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities, machinery and computer equipment
under noncancellable operating leases. Rent expense was approximately
$3,961,000 in 1992, $3,593,000 in 1993 and $4,040,000 in 1994.
35
<PAGE> 37
Future minimum payments, by year and in the aggregate, under the
noncancellable operating leases with terms of one year or more consist
of the following at October 29, 1994 (in thousands):
<TABLE>
<S> <C>
1995 $ 2,452
1996 1,623
1997 742
1998 349
1999 5
--------
$ 5,171
========
</TABLE>
The Company has planned expenditures of approximately $26 million for
property, plant and equipment additions in fiscal 1995.
The Company has established incentive compensation plans for certain
of its key executives. One plan provides for payments to participants
at retirement or termination based on the increase of the fair value,
as defined, of the common stock of the Company over certain
established levels, as determined by the Company's Board of Directors.
No amounts have been earned under the provisions of this plan, except
for termination and death benefits accrued and paid of $99,000 and
$203,000 in fiscal 1993 and 1994, respectively. A second plan
provides for payments to participants, who are not covered by the
previously described plan, based on the achievement of specified
levels of cumulative operating earnings for the three years ending in
1994. The Company's policy is to accrue the cost of the plans as the
fair value of the common stock increases over the established levels
or as actual earnings occur if the earnings for the three year period
are expected to reach the specified levels. At October 30, 1993,
approximately $1,556,000 was accrued for this plan. No amount has
been earned or accrued under this plan for employees of the Company's
continuing operations as of October 29, 1994 .
The Company has provided for all estimated future costs associated
with certain defective roofing products sold by the Predecessor
Stevens Division operations. The liability for such defective
products was $11,743,000 at October 30, 1993 and $8,207,000 at October
29, 1994, which represents the estimated future costs. The estimated
future costs include providing services and materials over a period
extending into 1997. The Company records the costs of meeting these
obligations as a reduction of the balance of the recorded liability
and, accordingly, such costs are not reflected in results of
operations. Payments on accrued product liability claims were
$4,429,000, $5,240,000 and $3,870,000 in the fiscal years 1992, 1993
and 1994, respectively. The Company periodically reevaluates the
estimates used to determine the liability based on recent experience.
Variances from the current estimates, which may occur, will be
considered in determining if an adjustment of the liability is
necessary in the future.
In connection with the sale of the Automotive Assets in June 1994, the
Company invested $39.5 million of the sale proceeds in long-term
securities (principally United States Treasury Securities maturing in
1997) designated by management to be available to satisfy possible
contingent tax liabilities. The investments are classified as
"held-to-maturity" and recorded at amortized cost. As of October 29,
1994, their aggregate fair value was approximately $39,600,000 and
gross unrealized holding losses were approximately $600,000.
The Company is exposed to a number of asserted and unasserted
potential claims encountered in the normal course of business. In the
opinion of management, the resolution of these matters will not have a
material adverse effect on the Company's financial position or future
results of operations.
36
<PAGE> 38
9. RETIREMENT PLANS
Defined Benefit Pension Plan - Substantially all of the Company's
employees are covered by a company-sponsored defined benefit pension
plan. The plan also provides benefits to individuals employed by the
Automotive businesses which were sold by the Company on June 28, 1994.
The benefits of these former employees were "frozen" at the date of
sale. Accordingly, these former employees will retain benefits earned
through June 28, 1994; however, they will not accrue additional
benefits. The plan provides pension benefits that are based on the
employees' compensation during the last ten years of employment. The
Company's policy is to fund the annual contribution required by
applicable regulations.
Assets of the pension plan are invested in common and preferred
stocks, government and corporate bonds, real estate and various
short-term investments.
A reconciliation as of the most recent measurement date (November 1,
1993) of the funded status of the plan with amounts reported in the
Company's consolidated balance sheets follows (in thousands):
<TABLE>
<CAPTION>
October 30, October 29,
1993 1994
----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $ 79,803 $ 79,185
Non-vested 1,003 710
-------- --------
Accumulated benefit obligation 80,806 79,895
Provision for future pay increases 7,763 8,926
-------- --------
Total projected benefit obligation 88,569 88,821
Plan assets at fair value 83,729 80,072
-------- --------
Projected benefit obligation greater than plan assets (4,840) (8,749)
Unrecognized net loss 1,860 7,611
Prior service cost not yet recognized in net periodic
pension cost 4,213 6,238
-------- --------
Pension asset in accompanying financial statements $ 1,233 $ 5,100
======== ========
</TABLE>
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Components of net periodic pension cost:
Service cost-benefits earned during the period $ 1,620 $ 2,123 $ 2,925
Interest cost on projected benefit obligation 6,874 7,135 6,987
Return on plan assets (7,403) (9,998) 3,802
Net amortization and deferral 549 3,317 (10,291)
-------- -------- --------
Net periodic pension cost 1,640 2,577 3,423
Cost allocated to discontinued operations 191 484 664
-------- -------- --------
Net periodic pension cost for continuing operations $ 1,449 $ 2,093 $ 2,759
======== ======== ========
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation at October 30, 1993
was 7.8% and at October 29, 1994 was 8.4%. The expected long-term
rate of return on assets was 9% at October 30, 1993 and October 29,
1994. The assumed rate of increase in compensation levels was based
on an age-related table at October 30, 1993 and October 29, 1994.
Effective November 1, 1993, the Company amended the benefit formula
for salaried employees to provide for an additional benefit on
compensation in excess of the average social security wage base.
37
<PAGE> 39
401(k) Savings Plan - The Company also has a savings, investment and
profit-sharing plan available to employees meeting eligibility
requirements. Effective January 1, 1994, the Company amended the plan
to include coverage of hourly wage employees (previously the plan
covered substantially only salaried employees). The plan is a tax
qualified plan under Section 401(k) of the Internal Revenue Code. The
Company makes a matching contribution of 25% of each participant's
contribution with a maximum matching contribution of 1-1/2% of the
participant's base compensation. Company contributions were
approximately $329,000 in 1992, $332,000 in 1993 and $705,000 in 1994.
Postretirement Benefits - Effective November 1, 1992, the Company
adopted SFAS No. 106, which requires that the projected future cost of
providing postretirement benefits, such as health care and life
insurance, be recognized as an expense as employees render service
instead of when claims are incurred, as had been the Company's
practice. The cumulative effects as of November 1, 1992 of adopting
SFAS No. 106 were to increase accrued postretirement benefit costs by
approximately $5,936,000 and charge income in 1993 for approximately
$5,716,000 after income taxes. The effect of adopting SFAS No. 106
on income from operations in 1993 was not significant.
The Company has several unfunded defined benefit postretirement plans
that provide certain health care and life insurance benefits to
eligible retirees. The plans are contributory, with retiree
contributions adjusted periodically, and contain cost-sharing features
such as deductibles and coinsurance. The Company's life insurance
plan provides benefits to both active employees and retirees. Active
employee contributions in excess of the cost of providing active
employee benefits are applied to reduce the cost of retirees' life
insurance benefits. The following table sets forth the status of the
company's postretirement plans as recorded in the accompanying
financial statements (in thousands):
Accumulated postretirement benefit obligation (APBO):
<TABLE>
<CAPTION>
October 30, October 29,
1993 1994
----------- -----------
<S> <C> <C>
Retirees $ 3,452 $ 3,160
Fully eligible active plan participants 1,897 1,703
Other active plan participants 445 743
Unrecognized gain 609 579
------- -------
Accrued postretirement benefit plan cost $ 6,403 $ 6,185
======= =======
</TABLE>
Net periodic postretirement benefit expense included the following
components (in thousands):
<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Service cost for benefits earned $ (15) $ 6
Interest cost on APBO 413 420
------ ------
Net periodic postretirement cost $ 398 $ 426
====== ======
</TABLE>
Since the Company has capped its annual liability per person and all
future cost increases will be passed on to retirees, the annual rate
of increase in health care costs does not affect the postretirement
benefit obligation.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.2% and 8.0% as of October 30,
1993 and October 29, 1994, respectively.
38
<PAGE> 40
Prior to November 1, 1992, the net cost of providing health care and
life insurance benefits to retired employees was recognized as costs
were paid. These costs totalled approximately $550,000 in 1992.
Postemployment Benefits - Effective October 31, 1993, the Company
adopted SFAS No. 112, which requires that the cost of benefits
provided to former or inactive employees after employment but before
retirement be recognized on the accrual basis of accounting instead of
when paid, as had been the Company's practice.
The cumulative effects as of October 31, 1993 of adopting SFAS No. 112
were to increase accrued postemployment benefit costs by approximately
$1,000,000 and charge income for approximately $1,000,000 after income
taxes. The effect of adopting SFAS No. 112 on income from operations
in 1994 was not significant.
10. RELATED PARTIES
The Company incurred fees of $1,500,000 in 1992 and $1,250,000 each
year in 1993 and 1994 for management services provided by certain
shareholders pursuant to a management services agreement. The balance
sheets as of October 30, 1993 and October 29, 1994 include accrued
fees of $1,250,000 in other accrued expenses. The agreement provides
for payments of fees to a shareholder of $1,000,000 in 1995 and
annually thereafter through the year 2001.
An investment banking company that owns common stock of the Company
charged the Company approximately $361,000 in 1993 for various
services.
11. BUSINESS SEGMENTS
The Company competes in three industry segments: Apparel Fabrics and
Products, Industrial Fabrics and Products and Home Fashion Textiles.
The apparel fabrics and products segment manufactures a broad range of
apparel fabrics and apparel related products, including unfinished
woven apparel fabrics (greige goods) for men's, women's and children's
wear, and spun yarns for use in apparel and elastic products for use
in undergarments and diapers. The industrial fabrics and products
segment manufactures commercial roofing products made from woven
synthetic fabrics and rubber-based specialty polymer compounds, other
building construction products made from glass and synthetic fibers,
various industrial products which generally have insulation or
filtration characteristics, and other rubber products and various
extruded polyurethane products. The home fashion textiles segment
manufactures both residential and commercial carpet products and a
variety of unfinished woven fabrics for use in the manufacturing of
draperies, curtains and lampshades and is a major producer of
solution-dyed drapery fabrics.
Export sales are an immaterial percentage of net sales and the Company
has no significant foreign operations. Earnings by business segment
represent operating profit, excluding net unallocated corporate
operating expenses. Identifiable segment assets are those assets used
in the operations of the segment. Corporate assets are cash and other
assets.
39
<PAGE> 41
Industry segment information (in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Net sales:
Apparel fabrics and products $ 267,264 $ 262,499 $ 254,810
Industrial fabrics and products 166,957 156,763 169,736
Home fashion textiles 176,764 178,491 178,870
----------- ----------- ----------
$ 610,985 $ 597,753 $ 603,416
=========== =========== ==========
Operating profit:
Apparel fabrics and products $ 27,205 $ 21,791 $ 18,487
Industrial fabrics and products 9,014 3,582 7,618
Home fashion textiles 6,488 7,907 2,794
----------- ---------- ----------
Total operating profit of segments 42,707 33,280 28,899
Interest expense 60,278 62,196 56,452
Indirect corporate expenses and other 7,615 8,679 7,768
----------- ---------- ----------
Loss before income taxes, discontinued operations,
extraordinary items, and cumulative effects of
accounting changes $ (25,186) $ (37,595) $ (35,321)
=========== =========== ==========
Identifiable assets:
Apparel fabrics and products $ 165,543 $ 173,304 $ 171,164
Industrial fabrics and products 103,197 103,323 106,124
Home fashion textiles 108,298 117,127 109,615
----------- ----------- ----------
Total segments 377,038 393,754 386,903
Corporate and other 42,834 40,108 81,087
----------- ---------- ----------
419,872 433,862 467,990
Net assets held for sale 105,175 114,981 -
----------- ----------- ----------
$ 525,047 $ 548,843 $ 467,990
=========== =========== ==========
Depreciation and amortization expense:
Apparel fabrics and products $ 10,951 $ 11,357 $ 13,329
Industrial fabrics and products 5,339 4,939 6,103
Home fashion textiles 7,734 7,270 7,813
----------- ---------- ----------
Total segments 24,024 23,566 27,245
Corporate and other 2,121 2,105 1,415
----------- ---------- ----------
$ 26,145 $ 25,671 $ 28,660
=========== ========== ==========
Capital expenditures:
Apparel fabrics and products $ 10,720 $ 9,966 $ 8,120
Industrial fabrics and products 3,082 5,556 6,171
Home fashion textiles 7,255 8,904 7,724
----------- ---------- ----------
Total segments 21,057 24,426 22,015
Corporate and other 6 19 10
----------- ---------- ----------
$ 21,063 $ 24,445 $ 22,025
=========== ========== ==========
</TABLE>
40
<PAGE> 42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information with respect to the persons
who are members of the Board of Directors or executive officers of the Company.
Each director serves until a successor is elected and qualified. Directors
receive no compensation for their services.
<TABLE>
<CAPTION>
Name Age Position(s) Held
---- --- ----------------
<S> <C> <C>
Steven M. Friedman 40 Director and Chairman of the Board
(Resigned as Chief Executive Officer effective November 29, 1994)
Jerry E. Hunter 57 Director and President (Appointed Chief Executive Officer effective
November 29, 1994)
David H. Taylor 39 Director, Executive Vice President -- Finance and Secretary
Michael E. Barker 47 Director and Treasurer (Resigned each position effective November
22, 1994)
Muzzafar Mirza 36 Director
Alain M. Oberrotman 43 Director
Marc C. Particelli 49 Director (Appointed Effective November 29, 1994)
</TABLE>
The business experience of each of the directors and executive officers during
the past five years is as follows:
Steven M. Friedman was elected as the Chairman of the Board and Chief Executive
Officer of the Company in April 1991. He has been a director of the Company
since May 1988. Mr. Friedman became a general partner of EOS Partners, L.P.
("EOS Partners") (a private investment firm) on January 1, 1994. Prior
thereto, he was a general partner of Odyssey Partners, a private investment
partnership with substantial capital invested in marketable securities and
closely-held businesses, since April 1988. He is also a director of Forstmann
& Company, Inc., a manufacturer of textiles and textile-related products, Micom
Communications, Corp., a supplier of data communications and networking
products, Gundle Environmental Systems, Inc., Eagle Food Centers, Inc., a chain
of grocery stores, The Leslie Fay Companies, Inc., a women's wear designer and
manufacturer, Black Box Corp., a supplier of data communications products, and
The Caldor Corporation, a chain of discount retail stores.
Jerry E. Hunter was appointed as a director of the Company on April 6, 1993.
Mr. Hunter has served as President of the Company since September 1988. Prior
to that time, from May 1988 to September 1988, he was Executive Vice-President
- - Operations. In addition, on January 18, 1994, Mr. Hunter was appointed as
Chief Operating Officer of JPS Converter and Industrial Corp., a wholly owned
subsidiary of the Company,
41
<PAGE> 43
and he also serves as a Vice-President of each of the Company's subsidiaries.
From April 1986 to May 1988 he was Vice-President - Technical Services at J.P.
Stevens. From March 1983 to March 1986, he was Senior Vice-President at Cannon
Mills, Inc., a textile manufacturer. Prior to March 1983, he was employed by
Springs Industries, a textile manufacturer, for twenty-one years.
David H. Taylor was appointed as a director of the Company on April 15, 1993.
Mr. Taylor has served as Executive Vice-President - Finance and Secretary of
the Company since June 1991, and prior thereto he was Controller and Assistant
Secretary of the Company since May 1988. Prior to that time, he was a Senior
Manager at Deloitte Haskins & Sells, a public accounting firm, by which he was
employed from June 1977 through May 1988. In addition, Mr. Taylor serves as a
Vice-President and Assistant Secretary of each of the Company's subsidiaries.
Michael E. Barker was elected as a director and the Treasurer of the Company in
April 1991. He has been a principal of Odyssey Partners since July 1989.
Prior thereto, he served as Executive Vice President of Avon-Brazil, S.A. from
1988 to 1989, and as President of Interlan, Inc., a manufacturer of data
communications products, from 1986 to 1988. Mr. Barker is currently a director
and the Chairman of the Board, Chief Executive Officer and President of Black
Box Corp. and Micom Communications Corp. He is also a director of Forstmann &
Company, Inc., The Caldor Corporation and Gundle Environmental Systems, Inc.
Alain M. Oberrotman was appointed as a director of the Company on January 25,
1994. He has been a principal of Odyssey Partners since October 1992. From
September 1990 to October 1992, he was a principal of Hambro International
Equity Partners, a venture capital firm. Prior thereto, Mr. Oberrotman was the
President of TVI Group, Inc., an interim management and consulting firm.
Muzzafar Mirza was appointed as a director of the Company on October 25, 1993.
He has been a principal of Odyssey Partners since July 1993. From May 1988 to
June 1993, he was employed by General Electric Capital Corporation, as head of
Merchant Banking for the GE Capital Corporate Finance Group. From 1983 to
1988, he was a Vice President of Marine Midland Bank, N.A. Mr. Mirza is also a
director of The Scotsman Group, Inc., a lessor of mobile office units.
Marc C. Particelli was appointed as a director of the Company on November 29,
1994. He has been a principal of Odyssey Partners since October 1, 1994.
Prior thereto, he was worldwide Practice Leader for the Consumer Products group
at Booz, Allen & Hamilton, an international management consulting firm by which
he was employed from 1974 to 1994.
The Company's directors are elected annually to serve until the next annual
meeting of stockholders and until their successors have been elected and
qualified.
None of the directors or executive officers listed herein is related to any
other such director or executive officer.
ITEM 11. EXECUTIVE COMPENSATION.
The following summary compensation table sets forth information concerning
compensation for the last three years for services in all capacities awarded
to, earned by or paid to (i) the Company's Chief Executive Officer, (ii) the
four other most highly compensated executive officers of the Company during
Fiscal 1994 and (iii) two additional executive officers who departed during
1994 but whose compensation would place them in the group of four highest paid
executive officers.
42
<PAGE> 44
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Name and ------------------- Incentive All Other
Principal Position Year Salary Bonus Plan Payouts(2) Compensation(3)
- ------------------ ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Steven M. Friedman, 1994 $ 0 $ 0 $ 0 $ 0
Chairman of the Board and 1993 0 0 0 0
Chief Executive Officer (1) 1992 0 0 0 0
Jerry E. Hunter, 1994 291,500 292,793 0 5,219
President (and Chief Executive 1993 265,000 108,942 0 8,823
Officer effective 1992 265,000 138,423 0 8,585
November 29, 1994)
David H. Taylor, 1994 187,000 162,631 0 3,271
Executive Vice President - 1993 170,000 48,921 0 6,704
Finance and Secretary 1992 170,000 62,160 0 6,609
Carl Rosen, 1994 217,708 60,000 0 4,354
President of JPS Converter and 1993 175,500 50,000 0 7,076
Industrial Corp. 1992 116,917 35,000 0 351
Bruce R. Wilby, 1994 136,250 75,000 0 2,500
President of 1993 123,369 15,000 0 5,184
JPS Elastomerics Corp. 1992 103,226 4,500 0 18
Jerry A. Burns, 1994 156,667 260,116 1,275,155 3,299
Chief Executive Officer of 1993 191,250 370,000 0 7,693
JPS Auto Inc. (4) 1992 170,000 184,374 0 7,101
Robert B. Sparks, 1994 120,833 230,541 900,109 2,289
President of 1993 175,000 350,000 0 6,833
JPS Auto Inc.(4) 1992 160,000 173,528 0 6,405
</TABLE>
- ---------------------
(1) Steven M. Friedman resigned as Chief Executive Officer on November
29, 1994. He does not receive, and has no arrangement with
respect to, compensation from the Company for services rendered by
him for or on behalf of the Company.
(2) Payouts under the Company's long-term incentive plan (see below).
(3) Employer matching 401(k) plan contribution and employer provided
life insurance premiums.
(4) Jerry A. Burns and Robert B. Sparks terminated their employment
with the Company on June 28, 1994 in connection with the Company's
sale of the Automotive Assets.
43
<PAGE> 45
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN FISCAL 1994
In 1994, the Company made payouts to Jerry A. Burns and Robert B. Sparks under
its Long-Term Incentive Plan. No other employees earned an award under the
plan which expired in 1994. Payouts of awards were tied to the Company's
subsidiaries achieving specified aggregate earnings levels during the period
from Fiscal 1992 through its fiscal year ending in 1994.
RETIREMENT PENSION PLAN
The Company maintains a Retirement Pension Plan for all employees (the "Pension
Plan"), including its salaried employees. The Pension Plan is a defined
benefit pension plan providing a formula benefit with contributions determined
on an actuarial basis. The Pension Plan generally covers all employees 21
years of age or older who have completed one year of service with the Company.
The Pension Plan generally takes into account annual compensation earned under
certain predecessor plans of J.P. Stevens.
The following table indicates the approximate amounts of annual retirement
income that would be payable to a salaried employee under the Pension Plan
based on the compensation levels and years of credited service shown. There
would be no social security or other offset deducted from the amounts shown.
PENSION PLAN TABLE*
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $20,456 $27,274 $34,093 $40,911 $47,730
150,000 24,956 33,274 41,593 49,911 58,230
175,000 29,456 39,274 49,093 58,911 68,730
200,000 33,956 45,274 56,593 67,911 79,230
225,000 38,456 51,274 64,093 76,911 89,730
250,000 40,407 53,876 67,345 80,814 94,282
300,000 40,407 53,876 67,345 80,814 94,282
400,000 40,407 53,876 67,345 80,814 94,282
450,000 40,407 53,876 67,345 80,814 94,282
500,000 40,407 53,876 67,345 80,814 94,282
</TABLE>
- -----------
* Assumes individual retires at age 65 in 1994 with the indicated years of
service and compensation. The social security integration level of such
individuals would be $24,312. The social security integration level is
adjusted annually.
Credited years of service for benefit accrual under the Pension Plan, as of
October 29, 1994, for the following executive officers are:
<TABLE>
<S> <C>
Steven M. Friedman . . . . . . . . . . . . . . . . . . 0 years
Jerry E. Hunter . . . . . . . . . . . . . . . . . . . 8 years
David H. Taylor . . . . . . . . . . . . . . . . . . . 5 years
Carl Rosen . . . . . . . . . . . . . . . . . . . . . . 3 years
Bruce R. Wilby . . . . . . . . . . . . . . . . . . . . 19 years
Jerry A. Burns . . . . . . . . . . . . . . . . . . . . 5 years
Robert B. Sparks . . . . . . . . . . . . . . . . . . . 19 years
</TABLE>
Annual retirement benefits for salaried employees are generally computed as the
sum of 0.6% of a participant's average compensation (the annual average of five
consecutive, complete plan years of highest
44
<PAGE> 46
compensation during the last 10 plan years of service) multiplied by the years
of benefit service plus 0.6% of a participant's compensation which exceeds the
Participant's Social Security Integration Level (equal to $24,312 in 1994)
multiplied by the participant's years of benefit service. The Pension Plan
provides that participants' benefits fully vest after five years of service or
the attainment of age 65.
This table may understate the benefits available to certain participants
because salaried employees who were covered by the Pension Plan before July 1,
1989 are entitled to the greater of the benefit formula noted above or the
prior benefit formula, plus additional accrued benefits under the new formula
since July 1, 1989. Under the prior formula, a participant's annual pension
payable as of normal retirement age was equal to 1% of the portion of "final
average compensation" which was equal to the "social security integration
level" in effect for the year of retirement, plus 1.5% of the portion of the
participant's final average compensation in excess of the social security
integration level, the sum of which was multiplied by the number of years of
credited service not exceeding 35.
Compensation covered by the Pension Plan consists of all payments made to a
participant for personal services rendered as an employee of the Company which
are subject to federal income tax withholding, excluding imputed income
attributable to certain fringe benefit programs. With respect to salaried
employees, plan compensation covers up to a maximum of $235,840 per individual
for the plan year beginning November 1, 1993. In accordance with the Revenue
Reconciliation Act of 1993, plan compensation will be limited to $150,000, as
adjusted effective November 1, 1994. The amounts shown are also subject to
possible maximum limitations under Section 415 of the Internal Revenue Code of
1986, as amended (the "Code") are subject to possible reduction for amounts
payable under other JPS qualified plans.
COMPENSATION OF DIRECTORS
Members of the Board of Directors receive no compensation for their services.
MANAGEMENT AGREEMENT
Pursuant to a management agreement (the "Management Agreement"), dated as of
April 2, 1991, between the Company and Odyssey Investors, Inc., a Delaware
corporation and an affiliate of Odyssey Partners ("Odyssey Investors"), the
Company agreed to pay Odyssey Investors a $1.25 million fee for Fiscal 1994 and
$1.0 million annually for Fiscal 1995 and for each fiscal year thereafter
through April 2, 2001, in exchange for certain management services provided by
Odyssey Investors. Such services include continual financial advisory and
business management services in order to maximize the efficiency of operations
and enhance profitability.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a compensation committee or other board committee
performing equivalent functions thereto. However, Odyssey Investors, as part
of its duties under the Management Agreement, from time to time during the past
fiscal year has participated in certain discussions with Jerry E. Hunter, the
President, Chief Executive Officer and a Director of the Company, and David H.
Taylor, Executive Vice President-Finance, Secretary and a Director of the
Company in determining certain business and financial objectives and other
criteria to enable the Company to set compensation awards for the Company's
executive officers.
45
<PAGE> 47
ITEM 12. SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT.
The following table sets forth information as of January 20, 1995 with respect
to the beneficial ownership of shares of (i) Senior Preferred Stock; (ii)
Junior Preferred Stock; (iii) Class A Common Stock; and (iv) Class B Common
Stock by (a) each person or group that is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares, (b) each director
of the Company, and (c) all directors and executive officers of the Company as
a group.
<TABLE>
<CAPTION>
Senior Preferred Stock Junior Preferred Stock Class A Common Stock Class B Common Stock
------------------------ ------------------------- ------------------------ ------------------------
Number of 5% Number of Percent of Number of Percent of Number of Percent of Number of Percent of
Beneficial Owner Shares Class Shares Class Shares Class(1) Shares Class(1)
- ---------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Presidential Life 48,483 10.00%
Insurance Company
c/o The Bank of New York
Post Office Box 16203
New York, NY 10249
Franklin Funds 48,483 10.00%
c/o Smog & Co.
P.O. Box 910
Wall Street Station
New York, NY 10005
Executive Life Ins. Co. 48,483 10.00% 73,606 7.36%
Base Assets Trust
11444 Olympic Blvd.
Los Angeles, CA 90064
Bear Stearns Securities
Corp.(4) 38,926 8.03%
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Odyssey Partners, L.P.(2) 5,000 50.00% 340,000 34.00%
31 West 52nd Street
New York, NY 10019
DLJ Capital Corp.(3) 170,000 17.00%
140 Broadway
New York, NY 10005-1285
Messrs. Grant M. Wilson, 5,000 50.00%
William J. DeBrule
and Yehochai Schneider
Everest Capital Fund, L.P. 67,144 6.71%
c/o Morgan Stanley & Co., Inc.
One Pierpont Plaza
Brooklyn, NY 11201
Lutheran Brotherhood Research Corp.
625 Fourth Avenue South
Minneapolis, MN 55415 70,180 7.02%
Crescent Shared
Opportunity Fund, L.P. 35,314 7.28%
c/o State Street Bank
PO Box 2136
Boston, MA 02106
</TABLE>
46
<PAGE> 48
<TABLE>
<CAPTION>
Senior Preferred Stock Junior Preferred Stock Class A Common Stock Class B Common Stock
------------------------ ------------------------- ------------------------ -----------------------
Number of 5% Number of Percent of Number of Percent of Number of Percent of Number of Percent of
Beneficial Owner Shares Class Shares Class Shares Class Shares Class
- ---------------- ----------- ------------ ------------ ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Citibank, N.A. (4) 53,867 11.11%
PO Box 1530, Grand Central
111 Wall Street,
20th FL, Zone 9
New York, NY 10043
Jefferies & Company,
Inc. 69,463 14.33%
c\o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
State Street
Bank-Custodian 48,194 9.94%
c\o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Directors and executive 510,000 51.00%
officers as a group(5)
(7 persons)
</TABLE>
- -------------------
(1) Percentages represented hereunder are based on the combined Class A and
Class B Common Stock issued and outstanding.
(2) Represents shares of Class B Common Stock and Junior Preferred Stock owned
by Odyssey Partners. In addition, Odyssey Partners has voting control with
respect to the 5,000 shares of Junior Preferred Stock held by Grant M.
Wilson, William J. DeBrule and Yehochai Schneider. The Class B Common
Stock shares are subject to a Stockholders' Agreement, which provides,
among other things, for certain restrictions on the voting and transfer of
such shares. Leon Levy, Jack Nash, Stephen Berger, Joshua Nash and the
Nash Family Partnership, by virtue of being general partners of Odyssey
Partners, share voting and dispositive power with respect to the Class B
Common Stock and Junior Preferred Stock owned by Odyssey Partners and,
accordingly, may each be deemed to own beneficially such stock owned by
Odyssey Partners. Each of such persons has expressly disclaimed any such
beneficial ownership (within the meaning of Rule 13d-3(d)(1) under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act")) which
exceeds the proportionate interest in the Class B Common Stock and Junior
Preferred Stock which he or it may be deemed to own as a general partner of
Odyssey Partners. Mr. Friedman has an indirect fractional financial
interest in the shares of Class B Common Stock owned by Odyssey Partners;
however, he has no voting or dispositive power over any shares owned by
Odyssey Partners.
(3) Such shares are subject to the Stockholders' Agreement, which provides,
among other things, for certain restrictions on the voting and transfer of
such shares. In addition, pursuant to the Voting Trust Agreement, dated as
of April 2, 1991, between DLJ and Lincoln National, DLJ conferred the right
to vote 120,000 of such shares of Class B Common Stock to Lincoln National,
as voting trustee. Such shares include shares held by DLJ First ESC L.L.C.
which is an "employee securities corporation" formed to hold securities in
behalf of participants in certain DLJ incentive compensation plans.
(4) Shown is the nominee recordholder of such shares. It is not known if all
shares are held for one beneficial owner, as the nominee has not provided
ownership information.
(5) None of Jerry E. Hunter, David H. Taylor, Carl Rosen, Bruce Wilby, Jerry A.
Burns or Robert B. Sparks, the executive officers listed above in Item 11,
" -- Executive Compensation -- Summary Compensation Table," beneficially
own, or may be deemed to own, any shares of capital stock of the Company,
and therefore are not listed in this table.
47
<PAGE> 49
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
FORM 8-K.
(a) (1) The following financial statements are included in Item 8:
(i) Independent Auditors' Report
(ii) Consolidated Balance Sheets as of October 29, 1994 and October 30,
1993.
(iii) Consolidated Statements of Operations for the fiscal years ended
October 29, 1994, October 30, 1993 and October 31, 1992.
(iv) Consolidated Statements of Senior Redeemable Preferred Stock and
Shareholders' Equity (Deficit) for the fiscal years ended October
29, 1994, October 30, 1993 and October 31, 1992 .
(v) Consolidated Statements of Cash Flows for the fiscal years ended
October 29, 1994, October 30, 1993 and October 31, 1992.
(vi) Notes to Consolidated Financial Statements.
The registrant is primarily a holding company and all subsidiaries are totally
held.
(2) The financial statement schedule required by Item 8 is listed on
Index to Financial Statement Schedule, starting at page S-1 of this report.
(3) The exhibits required by Item 601 of Regulation S-K are listed in
the accompanying Index to Exhibits. Registrant will furnish to any
securityholder, upon written request, any exhibit listed in the accompanying
Index to Exhibits upon payment by such securityholder of registrant's
reasonable expenses in furnishing any such exhibit.
(b) No reports on Form 8-K have been filed by registrant during the
last quarter of the period covered by this report.
(c) Reference is made to Item 14(a)(3) above.
(d) Reference is made to Item 14(a)(2) above.
48
<PAGE> 50
INDEX TO EXHIBITS
The following is a complete list of Exhibits filed as part of this report,
which are incorporated herein:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1(i) Plan of Reorganization of JPS Textile Group, Inc., a Delaware corporation (the "Company"), filed pursuant to Chapter 11
of the United States Bankruptcy Code, dated February 7, 1991 (the "Plan").*
2.1(ii) Revised Technical and Conforming Amendment to the Company's Plan, dated March 20, 1991.*
3.1 Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on
April 1, 1991.*
3.2 By-laws of the Company.*
3.3 Certificate of Designations of the Company's Series A Senior Preferred Stock (the "Senior Preferred Stock").*
3.4 Certificate of Designations of the Company's Series B Junior Preferred Stock.*
4.1 Indenture, dated as of April 2, 1991 (the "Discount Note Indenture"), between the Company and First Trust National
Association ("First Trust"), as Trustee, relating to the Company's Senior Subordinated Discount Notes due June 1, 1999
(the "Discount Notes").*
4.2 Form of Discount Note, incorporated by reference to Exhibit A to the Discount Note Indenture filed herewith as Exhibit
4.7.*
4.3 Indenture, dated as of April 2, 1991 (the "Subordinated Note Indenture"), between the Company and First Trust, as
Trustee, relating to the Company's 10.25% Senior Subordinated Notes due June 1, 1999 (the "Subordinated Notes").*
4.4 Form of Subordinated Note, incorporated by reference to Exhibit A to the Subordinated Note Indenture filed herewith as
Exhibit 4.9.*
4.5 Indenture, dated as of April 2, 1991 (the "Debenture Indenture"), between the Company and First Bank National
Association, as Trustee, relating to the Company's 7% Subordinated Debentures due May 15, 2000 (the "Debentures").*
4.6 Form of Debenture, incorporated by reference to Exhibit A to the Debenture Indenture filed herewith as Exhibit 4.11.*
4.7 Stockholders' Agreement, dated as of April 2, 1991, among Odyssey Partners, L.P. ("Odyssey Partners"), DLJ Capital
Corp. ("DLJ Capital") and Lincoln National Bank and Trust Company of Fort Wayne ("Lincoln National").*
</TABLE>
49
<PAGE> 51
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
4.8 Letter Agreement, dated April 2, 1991, regarding certain rights of "co-sale" granted by Odyssey Partners, DLJ Capital
and Lincoln National to the holders of the Company's Class A Common Stock.*
4.9 Letter Agreement, dated March 21, 1991, among Odyssey Partners, Grant M. Wilson, William J. DeBrule and Yehochai
Schneider.*
9.1 Voting Trust Agreement, dated as of April 2, 1991, between DLJ Capital and Lincoln National.*
10.1 Management Agreement, dated as of April 2, 1991, by and between the Company and Odyssey Investors, Inc.*
10.2 Registration Rights Agreement, dated as of April 2, 1991, by and among the Company and the holders of the Company's
Senior Notes, Discount Notes, Subordinated Notes, Senior Preferred Stock and Class A Common Stock (collectively, the
"Securities").*
10.3 Loan and Security Agreement, dated as of October 30, 1991 (the "CIT Loan Agreement"), between JPS Converter and
Industrial Corp., a Delaware corporation ("JCIC") and The CIT Group/Equipment Financing, Inc. ("CIT").*
10.4 First Amendment to the CIT Loan Agreement, dated as of June 26, 1992, by and between JCIC and CIT.*
10.5 Second Amendment to the CIT Loan Agreement, dated as of December 22, 1992, by and between JCIC and CIT.*
10.6 Agreement of Lease, dated as of June 1, 1988, by and between 1185 Avenue of the Americas Associates ("1185 Associates")
and JCIC.*
10.7 Lease Modification and Extension Agreement, dated as of April 2, 1991, by and between 1185 Associates and JCIC.*
10.8 Third Amendment to the CIT Loan Agreement, dated as of August 6, 1993, by and between JCIC and CIT.**
10.9 Trademark License Agreement, dated as of May 9, 1988, by and between J.P. Stevens and JPS Acquisition Corp.
(predecessor to the Company.)**
10.10 Omnibus Real Estate Closing Agreement, dated as of May 9, 1988, by and among J.P. Stevens, JPS Acquisition Corp., JPS
Acquisition Automotive Products Corp., JPS Acquisition Carpet Corp., JPS Acquisition Industrial Fabrics Corp., JPS
Acquisition Converter and Yarn Corp. and JPS Acquisition Elastomerics Corp.**
</TABLE>
50
<PAGE> 52
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.11 Purchase Agreement, dated as of April 24, 1988, by and among JPS Holding Corp., the Company, Odyssey Partners, West
Point-Pepperell, Inc., STN Holdings Inc., Magnolia Partners, L.P. and J.P. Stevens.**
10.12 Asset Purchase Agreement, dated as of May 25, 1994, by and among the Company, JAPC, JCIC, JPS Auto Inc., a Delaware
corporation, and Foamex International Inc., a Delaware corporation.***
10.13 Fourth Amended and Restated Credit Agreement (the "Existing Credit Agreement"), dated as of June 24, 1994, by and among
the Company, JCIC, JPS Elastomerics Corp., a Delaware corporation ("JEC"), JPS Carpet Corp., a Delaware corporation
("JCC"), the financial institutions listed on the signature pages thereof, Citibank, N.A. ("Citibank"), as Agent and
Administrative Agent, and General Electric Capital Corporation ("GECC"), as Co-Agent and Collateral Agent. ****
10.14 First Amendment to the Existing Credit Agreement, dated as of November 4, 1994, by and among the Company, JCIC, JEC,
JCC, the financial institutions listed on the signature pages thereof, Citibank, as Agent and Administrative Agent, and
GECC, as Co-Agent and Collateral Agent. *****
10.15 Second Amendment to the Existing Credit Agreement, dated as of December 21, 1994, by and among the Company, JCIC, JEC,
JCC, the financial institutions listed on the signature pages thereof, Citibank, as Agent and Administrative Agent, and
GECC, as Co-Agent and Collateral Agent. *****
10.16 Fourth Amendment to CIT Loan Agreement, dated as of December 29, 1994, by and between JCIC and CIT.*****
10.17 Lease Modification and Extension Agreement, dated as of April 30, 1993, by and between 1585 Associates and JCIC.*****
21.1 List of Subsidiaries of the Company.*****
27.1 Financial data schedule.*****
</TABLE>
--------------
* Previously filed as an exhibit to Registration Statement No.
33-58272 on Form S-1, declared effective by the SEC on July 26,
1993, and incorporated herein by reference.
** Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended October 30, 1993.
*** Previously filed as an exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended April 30, 1994.
**** Previously filed as an exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended July 30, 1994.
***** Filed herewith.
51
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: January 27, 1995 By: /s/ Jerry E. Hunter
-----------------------
JERRY E. HUNTER
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Steven M. Friedman Director and Chairman January 27, 1995
- -------------------------- of the Board
STEVEN M. FRIEDMAN
/s/ Jerry E. Hunter Director, President and January 27, 1995
- -------------------------- Chief Executive Officer
JERRY E. HUNTER
/s/ David H. Taylor Director, Executive January 27, 1995
- -------------------------- Vice President -Finance,
DAVID H. TAYLOR Principal Financial Officer and
Secretary
/s/ Muzzafar Mirza Director January 27, 1995
- --------------------------
MUZZAFAR MIRZA
/s/ Alain M. Oberrotman Director January 27, 1995
- --------------------------
ALAIN M. OBERROTMAN
/s/ Marc C. Particelli Director January 27, 1995
- --------------------------
MARC C. PARTICELLI
/s/ Allen A. Hodges Controller January 27, 1995
- --------------------------
ALLEN A. HODGES
</TABLE>
52
<PAGE> 54
JPS TEXTILE GROUP, INC. INDEX TO SCHEDULE
INDEX TO FINANCIAL STATEMENT SCHEDULE
For the Years Ended October 31, 1992, October 30, 1993 and October 29, 1994
FINANCIAL STATEMENT SCHEDULE
VIII. Valuation and Qualifying Accounts and Reserves S-2
Note: All other schedules are omitted because they are not applicable or not
required, or because the required information is shown either in the
consolidated financial statements or in the notes thereto.
S-1
<PAGE> 55
JPS TEXTILE GROUP, INC. SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------ ----------- ------------------------ ---------- ----------
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts Deductions End of
Classification of Period Expenses Describe Describe Period
- ------------------------------ ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowances Deducted from Asset to Which They Apply: (a) (b)
Year Ended October 31, 1992 (52 Weeks)
Allowance for doubtful accounts $ 1,694 $ 727 $ 365 $ 2,056
Claims, returns and other allowances 2,126 $ 802 2,928
------- ------- ------- --------- -------
$ 3,820 $ 727 $ 802 $ 365 $ 4,984
======= ======= ======= ========= =======
Year Ended October 30, 1993 (52 Weeks)
Allowance for doubtful accounts $ 2,056 $ 1,107 $ (93) $ 740 $ 2,330
Claims, returns and other allowances 2,928 501 3,429
------- ------- ------- --------- -------
$ 4,984 $ 1,107 $ 408 $ 740 $ 5,759
======= ======= ======= ========= =======
Year Ended October 29, 1994 (52 Weeks)
Allowance for doubtful accounts $ 2,330 $ 1,313 $ 846 $ (1,965) $ 2,524
Claims, returns and other allowances 3,429 (73) 4,138 (3,795) 3,699
------- ------- ------- --------- -------
$ 5,759 $ 1,240 $ 4,984 $ (5,760) $ 6,223
======= ======= ======= ========= =======
</TABLE>
(a) Change in various reserves charged to net sales.
(b) Uncollected receivables written off, net of recoveries.
S-2
<PAGE> 1
EXHIBIT 10.14
EXECUTION COPY
FIRST AMENDMENT TO
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This First Amendment to Fourth Amended and Restated Credit
Agreement dated as of November 4, 1994 (this "Amendment"), is entered into
among JPS TEXTILE GROUP, INC., a Delaware corporation (the "Company"), JPS
CARPET CORP., a Delaware corporation ("JCC"), JPS ELASTOMERICS CORP., a
Delaware corporation ("JEC"), and JPS CONVERTER AND INDUSTRIAL CORP., a
Delaware corporation ("JCIC", and together with JCC and JEC, the "Borrowing
Subsidiaries"), the FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(collectively referred to herein, together with their respective successors and
assigns, as the "Senior Lenders" and individually as a "Senior Lender"),
CITIBANK, N.A., in its separate capacities as agent and administrative agent
for the Senior Lenders (in such capacities, the "Agent") and General Electric
Capital Corporation, in its separate capacities as co- agent and collateral
agent for the Senior Lenders (in such capacities, the "Collateral Agent"), and
amends the Fourth Amended and Restated Credit Agreement dated as of June 24,
1994 (as amended hereby, the "Credit Agreement"), entered into among the
Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and the
Collateral Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Company has proposed to purchase from time to
time a portion of its outstanding Senior Subordinated Notes, Senior
Subordinated Discount Notes and/or Subordinated Debentures (individually, a
"Bond" and collectively, the "Bonds");
WHEREAS, the Company has requested that the Senior Lenders
permit the Borrowing Subsidiaries to use up to $25,000,000 in proceeds of the
Revolving Loans to fund the purchase from time to time of the Bonds at a
purchase price per Bond not to exceed (i) 75% of the outstanding principal
amount of each such Bond that is a Subordinated Debenture and (ii) 85% of the
outstanding principal amount of each such Bond that is a Senior Subordinated
Discount Note or a Senior Subordinated Note (the "Bond Purchases");
NOW, THEREFORE, in consideration of the above premises, the
Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and the
Collateral Agent agree as follows:
SECTION 1. Amendment to the Credit Agreement. The Credit
Agreement is, effective as determined pursuant to Section 4 hereof, hereby
amended as follows:
<PAGE> 2
1.01 The definition of "Fixed Asset Portion" in Section
1.01 of the Credit Agreement is hereby deleted in its entirety and the
following definition is substituted therefor:
"Fixed Asset Portion" shall mean at any time of determination
in any period, the amount of the Fixed Asset Portion set forth below opposite
such period:
<TABLE>
<CAPTION>
Period Fixed Asset Portion
------ -------------------
<S> <C>
Effective Date through $20,000,000
June 30, 1995
July 1, 1995 through $15,000,000
the Revolving Credit
Termination Date
</TABLE>
Notwithstanding the foregoing, the amount of the Fixed Asset Portion in effect
at any time shall be reduced by the aggregate amount of each of the following:
(i) the amount of any cash proceeds from sales of assets (other than Inventory)
sold in the ordinary course of business that exceed Two Million Dollars
($2,000,000) in the aggregate in any Fiscal Year, net of (A) the costs of sale,
lease, assignment or other disposition, (B) any income, franchise, transfer or
other tax liability arising from such transaction and (C) amounts applied to
the repayment of Indebtedness (other than the Obligations) secured by a Lien on
the asset disposed of; (ii) in the event of the sale of all or substantially
all of the capital stock or assets of any Borrowing Subsidiary (to the extent
otherwise permitted hereunder) (other than in connection with the Auto Sale),
the amount of the Fixed Asset Value of such Borrowing Subsidiary plus fifty
percent (50%) of the amount, if any, by which the Net Cash Proceeds from such
sale exceed such Fixed Asset Value; (iii) in the event of a Permitted
Disposition, an amount equal to fifty percent (50%) of the Net Cash Proceeds
from such disposition; and (iv) the amount of Net Cash Proceeds from sales of
assets (other than in connection with a Permitted Disposition or the Auto
Sale).
1.02 Section 8.01 of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
8.01. Minimum Net Worth. The Net Worth of the Company and
its Subsidiaries on a consolidated basis on the last day of each month of each
fiscal quarter set forth below shall not be less than the minimum amount set
forth opposite such fiscal quarter:
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Amount
-------------- --------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 $310,000,000
The fourth fiscal quarter
of Fiscal Year 1994 268,000,000
The first fiscal quarter
of Fiscal Year 1995 232,000,000
The second fiscal quarter
of Fiscal Year 1995 232,000,000
The third fiscal quarter
of Fiscal Year 1995 232,000,000
The fourth fiscal quarter
of Fiscal Year 1995 230,000,000
The first fiscal quarter
of Fiscal Year 1996 230,000,000
The second fiscal quarter
of Fiscal Year 1996 230,000,000
The third fiscal quarter
of Fiscal Year 1996 230,000,000
The fourth fiscal quarter
of Fiscal Year 1996 230,000,000
</TABLE>
1.03 Section 8.02(B) of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
(B) Total Operating Company Interest Coverage Ratio of the
Borrowing Subsidiaries on a consolidated basis, as determined as of the last
day of each fiscal quarter set forth below for the twelve month period ending
on such day (it being understood and agreed that the Total Operating Company
Interest Coverage Ratio for the fourth fiscal quarter of 1993 and for the first
and second fiscal quarters of 1994 shall mean the "Total Operating Company
Interest Coverage Ratio" under and as defined in the Existing Credit
Agreement), shall not be less than the minimum ratio set forth opposite such
fiscal quarter:
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 8.80:1
The fourth fiscal quarter
of Fiscal Year 1994 10.00:1
The first fiscal quarter
of Fiscal Year 1995 9.32:1
The second fiscal quarter
of Fiscal Year 1995 7.92:1
The third fiscal quarter
of Fiscal Year 1995 6.32:1
The fourth fiscal quarter
of Fiscal Year 1995 5.30:1
The first fiscal quarter
of Fiscal Year 1996 5.00:1
The second fiscal quarter
of Fiscal Year 1996 5.00:1
The third fiscal quarter
of Fiscal Year 1996 5.00:1
The fourth fiscal quarter
of Fiscal Year 1996 5.00:1
</TABLE>
1.04 Section 8.03(B) of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
(B) The Operating Company Fixed Charge Coverage Ratio of the
Borrowing Subsidiaries on a consolidated basis, as determined as of the last
day of each fiscal quarter set forth below for the twelve month period ending
on such day (it being understood and agreed that the Operating Company Fixed
Charge Coverage Ratio for the fourth fiscal quarter of 1993 and for the first
and second fiscal quarters of 1994 shall mean the "Operating Company Fixed
Charge Coverage Ratio" under and as defined in the Existing Credit Agreement),
shall not be less than the minimum ratio set forth opposite such fiscal
quarter:
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 1.50:1
The fourth fiscal quarter
of Fiscal Year 1994 1.70:1
The first fiscal quarter
of Fiscal Year 1995 1.73:1
The second fiscal quarter
of Fiscal Year 1995 1.61:1
The third fiscal quarter
of Fiscal Year 1995 1.79:1
The fourth fiscal quarter
of Fiscal Year 1995 1.75:1
The first fiscal quarter
of Fiscal Year 1996 1.74:1
The second fiscal quarter
of Fiscal Year 1996 1.65:1
The third fiscal quarter
of Fiscal Year 1996 1.60:1
The fourth fiscal quarter
of Fiscal Year 1996 1.54:1
</TABLE>
1.05 Section 8.05 of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
8.05. Minimum Current Ratio. The Current Ratio of the
Company and its Subsidiaries on a consolidated basis shall not be less than
1.00 to 1 on the last day of each month of each fiscal quarter through and
including the fourth fiscal quarter of Fiscal Year 1996.
SECTION 2. Consent of the Senior Lenders.
The Senior Lenders hereby consent, pursuant to Sections 7.05
and 7.17 of the Credit Agreement, to the Bond Purchases; provided, however,
such consent shall cease to be effective if any of the following conditions
shall not be true at the time of the purchase of any Bond: (A) the purchase
price (including reasonable commission and expenses) of such Bond to be
purchased pursuant to the Bond Purchase shall not exceed (i) seventy-five
-5-
<PAGE> 6
percent (75%) of the outstanding principal amount of each such Bond that is a
Subordinated Debenture and (ii) eighty-five percent (85%) of the outstanding
principal amount of each such Bond that is a Senior Subordinated Discount Note
or a Senior Subordinated Note, (B) the aggregate purchase price of all Bonds
purchased pursuant to the Bond Purchases shall not exceed $25,000,000 and (C)
no Event of Default or Potential Event of Default shall have occurred and be
continuing at the time of purchase of such Bond or would result after giving
effect to the purchase of such Bond. The consummation by the Company of any
purchase of a Bond pursuant to a Bond Purchase shall be deemed to be a
representation from the Company to the Agent, the Collateral Agent and the
Senior Lenders that the above conditions set forth in clauses (A), (B) and (C)
above have been satisfied. The Company shall deliver or cause to be delivered
to the Agent and the Collateral Agent, contemporaneously with the delivery of
each Compliance Certificate delivered pursuant to Section 5.01(d)(ii) of the
Credit Agreement, reports of any and all Bonds purchased pursuant to the Bond
Purchases setting forth the type of Bond purchased and the purchase price
thereof.
SECTION 3. Fees.
Each Loan Party hereby agrees, jointly and severally, to pay
or cause to be paid (i) to the Agent, for the account of each Senior Lender
that delivers an executed signature page prior to November 11, 1994, an
amendment fee equal to three-eighths of one percent (.00375) of the Commitments
provided by each such Senior Lender and (ii) to the Agent and the Collateral
Agent, for their respective accounts, an amount agreed to between the Loan
Parties and the Agent and the Collateral Agent, in each case payable on the
First Amendment Effective Date (as defined herein). Each Senior Lender shall
receive from the Agent the percentage of the Amendment Fee that is equal to
such Senior Lender's Pro Rata Share.
SECTION 4. Conditions Precedent to the Effectiveness of this
Amendment and Consent. This Amendment shall become effective as of the date
hereof on the date (the "First Amendment Effective Date") when the following
conditions precedent have been satisfied (unless waived by the Requisite Senior
Lenders or unless the deadline for delivery has been extended by the Agent);
4.01 The Agent shall have received a copy of this Amendment
duly executed by each Loan Party and by the Requisite Senior Lenders.
4.02 Each of the representations and warranties made by the
Company or the Borrowing Subsidiaries in or pursuant to the Credit Agreement,
as amended by this Amendment, the Collateral Documents and the other Loan
Documents to which the Company or any of the Borrowing Subsidiaries is a party
or by which the Company or any of the Borrowing Subsidiaries is bound, shall be
true and correct in all material respects on and as of
-6-
<PAGE> 7
the First Amendment Effective Date (except any such representations and
warranties stated to be given as of a specific date other than the First
Amendment Effective Date).
4.03 All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in form
and substance to the Agent, the Collateral Agent and the Requisite Senior
Lenders.
4.04 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the First Amendment Effective Date.
4.05 All fees and expenses payable on or prior to the
First Amendment Effective Date, including, without limitation, the fees payable
pursuant to Section 3 hereof, shall have been paid to the Agent.
SECTION 5. Representations and Warranties. Each Loan
Party hereby represents and warrants to the Senior Lenders that (a) as of the
date hereof no Event of Default or Potential Event of Default under the Credit
Agreement shall have occurred and be continuing and (b) all of the
representations and warranties of the Loan Parties contained in subsections
4.01(a) through (dd) of the Credit Agreement and in any other Loan Document (as
defined under the Credit Agreement) continue to be true and correct as of the
date of execution hereof in all material respects, as though made on and as of
such date (unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct as of such
earlier date).
SECTION 6. Reference to and Effect on the Loan Documents.
6.01 Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import, and each reference
in the other Loan Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.
6.02 Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall remain
unchanged and in full force and effect.
6.03 The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of any Senior Lender, the Agent or the Collateral
Agent under the Credit Agreement or any of the Loan Documents, nor constitute a
waiver of any provision of the Credit Agreement or any of the Loan Documents.
-7-
<PAGE> 8
SECTION 7. Costs and Expenses. Each Loan Party agrees to pay
on demand in accordance with the terms of Section 11.03 of the Credit Agreement
all costs and expenses of the Agent in connection with the preparation,
reproduction, execution and delivery of this Amendment and all other Loan
Documents entered into in connection herewith, including the reasonable fees
and out-of-pocket expenses of Sidley & Austin, counsel for the Agent with
respect thereof.
SECTION 8. Execution in Counterparts. This Amendment may be
executed and delivered in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original and all of which taken together shall constitute
one and the same original agreement.
SECTION 9. Governing Law. This Amendment shall be governed
by and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
JPS TEXTILE GROUP, INC.
By:
-------------------------------
Title:
JPS CARPET CORP.
By:
-------------------------------
Title:
JPS ELASTOMERICS CORP.
By:
-------------------------------
Title:
JPS CONVERTER AND INDUSTRIAL CORP.
By:
-------------------------------
Title:
-8-
<PAGE> 9
Senior Lenders:
--------------
CITIBANK, N.A., as Agent and as a
Senior Lender
By:
--------------------------
Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, as Collateral Agent and as a Senior Lender
By:
-----------------------
Title:
HELLER FINANCIAL, INC.
By:
---------------------
Title:
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By:
---------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By:
---------------------
Title:
SUN LIFE INSURANCE COMPANY OF AMERICA
By:
---------------------
Title:
-9-
<PAGE> 1
EXHIBIT 10.15
EXECUTION COPY
SECOND AMENDMENT TO
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amendment to Fourth Amended and Restated Credit
Agreement dated as of December 21, 1994 (this "Amendment"), is entered into
among JPS TEXTILE GROUP, INC., a Delaware corporation (the "Company"), JPS
CARPET CORP., a Delaware corporation ("JCC"), JPS ELASTOMERICS CORP., a
Delaware corporation ("JEC"), and JPS CONVERTER AND INDUSTRIAL CORP., a
Delaware corporation ("JCIC", and together with JCC and JEC, the "Borrowing
Subsidiaries"), the FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(collectively referred to herein, together with their respective successors and
assigns, as the "Senior Lenders" and individually as a "Senior Lender"),
CITIBANK, N.A., in its separate capacities as agent and administrative agent
for the Senior Lenders (in such capacities, the "Agent") and General Electric
Capital Corporation, in its separate capacities as co- agent and collateral
agent for the Senior Lenders (in such capacities, the "Collateral Agent"), and
amends the Fourth Amended and Restated Credit Agreement dated as of June 24,
1994, as amended by the First Amendment to Fourth Amended and Restated Credit
Agreement dated as of November 4, 1994 (as so amended and as further amended
hereby, the "Credit Agreement"), entered into among the Company, the Borrowing
Subsidiaries, the Senior Lenders, the Agent and the Collateral Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Company has proposed to purchase from time to
time a portion of its outstanding Senior Subordinated Notes, Senior
Subordinated Discount Notes and/or Subordinated Debentures (individually, a
"Bond" and collectively, the "Bonds");
WHEREAS, the Borrowing Subsidiaries are currently permitted,
pursuant to the First Amendment to Fourth Amended and Restated Credit Agreement
dated as of November 4, 1994 (the "First Amendment"), to use up to $25,000,000
in proceeds of the Revolving Loans to fund the purchase of the Bonds from time
to time (the "Bond Purchases");
WHEREAS, the Company has requested that the Senior Lenders
permit the Borrowing Subsidiaries to increase the amount of proceeds of the
Revolving Loans that may be used to fund the Bond Purchases from $25,000,000 to
$45,000,000 (the "Increased Bond Purchase Amount");
<PAGE> 2
NOW, THEREFORE, in consideration of the above premises, the
Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and the
Collateral Agent agree as follows:
SECTION 1. Amendment to the Credit Agreement. The Credit
Agreement is, effective as determined pursuant to Section 4 hereof, hereby
amended as follows:
1.01 The definition of "Fixed Asset Portion" in Section
1.01 of the Credit Agreement is hereby deleted in its entirety and the
following definition is substituted therefor:
"Fixed Asset Portion" shall mean $25,000,000; provided,
however, the amount of the Fixed Asset Portion shall be reduced by the
aggregate amount of each of the following: (i) the amount of any cash
proceeds from sales of assets (other than Inventory) sold in the
ordinary course of business that exceed Two Million Dollars
($2,000,000) in the aggregate in any Fiscal Year, net of (A) the costs
of sale, lease, assignment or other disposition, (B) any income,
franchise, transfer or other tax liability arising from such
transaction and (C) amounts applied to the repayment of Indebtedness
(other than the Obligations) secured by a Lien on the asset disposed
of; (ii) in the event of the sale of all or substantially all of the
capital stock or assets of any Borrowing Subsidiary (to the extent
otherwise permitted hereunder) (other than in connection with the Auto
Sale), the amount of the Fixed Asset Value of such Borrowing
Subsidiary plus fifty percent (50%) of the amount, if any, by which
the Net Cash Proceeds from such sale exceed such Fixed Asset Value;
(iii) in the event of a Permitted Disposition, an amount equal to
fifty percent (50%) of the Net Cash Proceeds from such disposition;
and (iv) the amount of Net Cash Proceeds from sales of assets (other
than in connection with a Permitted Disposition or the Auto Sale).
1.02 Article VI of the Credit Agreement is hereby amended to
add a new Section 6.14 thereto as follows:
6.14. Updated Appraisals. Each Loan Party shall, or shall
cause any of its Subsidiaries to, no later than June 30, 1995, provide
the Agent, the Collateral Agent and the Senior Lenders with a desktop
appraisal, including (i) an orderly liquidation valuation and an
auction valuation of all Equipment of each such Loan Party or
Subsidiary, as the case may be and (ii) a fair market valuation of all
real property of each such Loan Party or Subsidiary, as the case may
be, in each case prepared by an outside appraiser selected by the
Agent and the Collateral Agent.
1.03 Section 8.01 of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
-2-
<PAGE> 3
8.01. Minimum Net Worth. The Net Worth of the Company and
its Subsidiaries on a consolidated basis on the last day of each month
of each fiscal quarter set forth below shall not be less than the
minimum amount set forth opposite such fiscal quarter:
<TABLE>
Fiscal Quarter Minimum Amount
-------------- --------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 $310,000,000
The fourth fiscal quarter
of Fiscal Year 1994 268,000,000
The first fiscal quarter
of Fiscal Year 1995 210,000,000
The second fiscal quarter
of Fiscal Year 1995 209,000,000
The third fiscal quarter
of Fiscal Year 1995 208,000,000
The fourth fiscal quarter
of Fiscal Year 1995 205,000,000
The first fiscal quarter
of Fiscal Year 1996 205,000,000
The second fiscal quarter
of Fiscal Year 1996 205,000,000
The third fiscal quarter
of Fiscal Year 1996 205,000,000
The fourth fiscal quarter
of Fiscal Year 1996 205,000,000
</TABLE>
1.04 Section 8.02(B) of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
(B) Total Operating Company Interest Coverage Ratio of the
Borrowing Subsidiaries on a consolidated basis, as determined as of
the last day of each fiscal quarter set forth below for the twelve
month period ending on such day (it being understood and agreed that
the Total Operating Company Interest Coverage Ratio for the fourth
fiscal quarter of 1993 and for the first and second fiscal quarters of
1994 shall mean the "Total Operating Company Interest Coverage Ratio"
under and as defined in the Existing Credit Agreement), shall not be
less than the minimum ratio set
-3-
<PAGE> 4
forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 8.80:1
The fourth fiscal quarter
of Fiscal Year 1994 10.00:1
The first fiscal quarter
of Fiscal Year 1995 8.50:1
The second fiscal quarter
of Fiscal Year 1995 6.70:1
The third fiscal quarter
of Fiscal Year 1995 5.50:1
The fourth fiscal quarter
of Fiscal Year 1995 5.00:1
The first fiscal quarter
of Fiscal Year 1996 5.00:1
The second fiscal quarter
of Fiscal Year 1996 5.00:1
The third fiscal quarter
of Fiscal Year 1996 5.00:1
The fourth fiscal quarter
of Fiscal Year 1996 5.00:1
</TABLE>
1.05 Section 8.03 of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
8.03 Minimum Fixed Charge Coverage Ratio. (A) The Minimum
Fixed Charge Coverage Ratio of the Company and its Subsidiaries on a
consolidated basis, as determined as of the last day of each fiscal
quarter set forth below for the twelve month period ending on such day
(it being understood and agreed that the Fixed Charge Coverage Ratio
for the fourth fiscal quarter of 1993 and for the first and second
fiscal quarters of 1994 shall mean the "Fixed Charge Coverage Ratio"
under and as defined in the Existing Credit Agreement), shall not be
less than the minimum ratio set
-4-
<PAGE> 5
forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 0.80:1
The fourth fiscal quarter
of Fiscal Year 1994 0.85:1
The first fiscal quarter
of Fiscal Year 1995 0.85:1
The second fiscal quarter
of Fiscal Year 1995 0.77:1
The third fiscal quarter
of Fiscal Year 1995 0.90:1
The fourth fiscal quarter
of Fiscal Year 1995 0.93:1
The first fiscal quarter
of Fiscal Year 1996 0.93:1
The second fiscal quarter
of Fiscal Year 1996 0.96:1
The third fiscal quarter
of Fiscal Year 1996 1.00:1
The fourth fiscal quarter
of Fiscal Year 1996 1.00:1
</TABLE>
(B) The Operating Company Fixed Charge Coverage Ratio of the
Borrowing Subsidiaries on a consolidated basis, as determined as of
the last day of each fiscal quarter set forth below for the twelve
month period ending on such day (it being understood and agreed that
the Operating Company Fixed Charge Coverage Ratio for the fourth
fiscal quarter of 1993 and for the first and second fiscal quarters of
1994 shall mean the "Operating Company Fixed Charge Coverage Ratio"
under and as defined in the Existing Credit Agreement), shall not be
less than the minimum ratio set
-5-
<PAGE> 6
forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 1.50:1
The fourth fiscal quarter
of Fiscal Year 1994 1.70:1
The first fiscal quarter
of Fiscal Year 1995 1.71:1
The second fiscal quarter
of Fiscal Year 1995 1.46:1
The third fiscal quarter
of Fiscal Year 1995 1.46:1
The fourth fiscal quarter
of Fiscal Year 1995 1.40:1
The first fiscal quarter
of Fiscal Year 1996 1.40:1
The second fiscal quarter
of Fiscal Year 1996 1.45:1
The third fiscal quarter
of Fiscal Year 1996 1.50:1
The fourth fiscal quarter
of Fiscal Year 1996 1.50:1
</TABLE>
1.06 Section 8.05 of the Credit Agreement is hereby
deleted in its entirety and the following paragraph is substituted therefor:
8.05. Minimum Current Ratio. The Current Ratio of the
Company and its Subsidiaries on a consolidated basis shall not be less
than the minimum ratio set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
Effective Date through
the third fiscal quarter
of Fiscal Year 1994 1.00:1
</TABLE>
-6-
<PAGE> 7
<TABLE>
<S> <C>
The fourth fiscal quarter
of Fiscal Year 1994 1.00:1
The first fiscal quarter
of Fiscal Year 1995 0.85:1
The second fiscal quarter
of Fiscal Year 1995 0.86:1
The third fiscal quarter
of Fiscal Year 1995 0.87:1
The fourth fiscal quarter
of Fiscal Year 1995 0.85:1
The first fiscal quarter
of Fiscal Year 1996 0.85:1
The second fiscal quarter
of Fiscal Year 1996 0.86:1
The third fiscal quarter
of Fiscal Year 1996 0.88:1
The fourth fiscal quarter
of Fiscal Year 1996 0.90:1
</TABLE>
SECTION 2. Consent of the Senior Lenders.
The Senior Lenders hereby consent, pursuant to Sections 7.05
and 7.17 of the Credit Agreement, to the Bond Purchases in the Increased Bond
Purchase Amount; provided, however, notwithstanding anything to the contrary
set forth in the First Amendment, such consent shall cease to be effective if
any of the following conditions shall not be true at the time of the purchase
of any Bond on or after the Second Amendment Effective Date (as defined
herein): (A) the aggregate purchase price of all Bonds purchased pursuant to
the Bond Purchases shall not exceed $45,000,000, (B) no Event of Default or
Potential Event of Default shall have occurred and be continuing at the time of
purchase of such Bond or would result after giving effect to the purchase of
such Bond and (C) such other conditions to the purchase of Bonds as may be
imposed from time to time by the Agent and the Collateral Agent. The
consummation by the Company of any purchase of a Bond pursuant to a Bond
Purchase shall be deemed to be a representation from the Company to the Agent,
the Collateral Agent and the Senior Lenders that the above conditions set forth
in clauses (A), (B) and (C) above have been satisfied. The Company shall
deliver or cause to be delivered to the Agent and the Collateral Agent,
contemporaneously with the delivery of each Compliance Certificate delivered
pursuant to Section 5.01(d)(ii) of the Credit Agreement, reports of any and all
Bonds purchased pursuant to the Bond Purchases setting forth the type of Bond
purchased and the purchase price thereof.
-7-
<PAGE> 8
SECTION 3. Fees.
Each Loan Party hereby agrees, jointly and severally, to pay
or cause to be paid (i) to the Agent, for the account of each Senior Lender
that delivers an executed signature page prior to Jaunuary 6, 1994, an
amendment fee equal to one-half of one percent (.005) of the Commitments
provided by each such Senior Lender (the "Amendment Fee"), with one-half of the
Amendment Fee payable on the Second Amendment Effective Date (as defined below)
and one-half of the Amendment Fee payable upon the purchase by the Company,
pursuant to one or more Bond Purchases, of Bonds with an aggregate purchase
price greater than or equal to $25,000,000 and (ii) to the Agent and the
Collateral Agent, for their respective accounts, an amount agreed to between
the Loan Parties and the Agent and the Collateral Agent, payable, in the case
of the Agent, on the earlier of January 16, 1995 and the delivery of an
executed signature page by each of the Senior Lenders and, in the case of the
Collateral Agent, on the Second Amendment Effective Date (as defined herein).
Each Senior Lender shall receive from the Agent the percentage of the Amendment
Fee that is equal to such Senior Lender's Pro Rata Share.
SECTION 4. Conditions Precedent to the Effectiveness of this
Amendment and Consent. This Amendment shall become effective as of the date
hereof on the date (the "Second Amendment Effective Date") when the following
conditions precedent have been satisfied (unless waived by the Requisite Senior
Lenders or unless the deadline for delivery has been extended by the Agent);
4.01 The Agent shall have received a copy of this Amendment
duly executed by each Loan Party and by the Requisite Senior Lenders.
4.02 Each of the representations and warranties made by the
Company or the Borrowing Subsidiaries in or pursuant to the Credit Agreement,
as amended by this Amendment, the Collateral Documents and the other Loan
Documents to which the Company or any of the Borrowing Subsidiaries is a party
or by which the Company or any of the Borrowing Subsidiaries is bound, shall be
true and correct in all material respects on and as of the Second Amendment
Effective Date (except any such representations and warranties stated to be
given as of a specific date other than the Second Amendment Effective Date).
4.03 All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in form
and substance to the Agent, the Collateral Agent and the Requisite Senior
Lenders.
4.04 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the Second Amendment Effective Date.
-8-
<PAGE> 9
4.05 All fees and expenses payable on or prior to the
Second Amendment Effective Date, including, without limitation, the fees
payable pursuant to Section 3 hereof, shall have been paid to the Agent.
SECTION 5. Representations and Warranties. Each Loan
Party hereby represents and warrants to the Senior Lenders that (a) as of the
date hereof no Event of Default or Potential Event of Default under the Credit
Agreement shall have occurred and be continuing and (b) all of the
representations and warranties of the Loan Parties contained in subsections
4.01(a) through (dd) of the Credit Agreement and in any other Loan Document (as
defined under the Credit Agreement) continue to be true and correct as of the
date of execution hereof in all material respects, as though made on and as of
such date (unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct as of such
earlier date).
SECTION 6. Reference to and Effect on the Loan Documents.
6.01 Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import, and each reference
in the other Loan Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.
6.02 Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall remain
unchanged and in full force and effect.
6.03 The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of any Senior Lender, the Agent or the Collateral
Agent under the Credit Agreement or any of the Loan Documents, nor constitute a
waiver of any provision of the Credit Agreement or any of the Loan Documents.
SECTION 7. Costs and Expenses. Each Loan Party agrees to pay
on demand in accordance with the terms of Section 11.03 of the Credit Agreement
all costs and expenses of the Agent in connection with the preparation,
reproduction, execution and delivery of this Amendment and all other Loan
Documents entered into in connection herewith, including the reasonable fees
and out- of-pocket expenses of Sidley & Austin, counsel for the Agent with
respect thereof.
SECTION 8. Execution in Counterparts. This Amendment may be
executed and delivered in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original
-9-
<PAGE> 10
and all of which taken together shall constitute one and the same original
agreement.
SECTION 9. Governing Law. This Amendment shall be governed
by and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
JPS TEXTILE GROUP, INC.
By:
-------------------------
Title:
JPS CARPET CORP.
By:
---------------------------
Title:
JPS ELASTOMERICS CORP.
By:
---------------------------
Title:
JPS CONVERTER AND INDUSTRIAL CORP.
By:
---------------------------
Title:
Senior Lenders:
--------------
CITIBANK, N.A., as Agent and as a Senior Lender
By:
---------------------------
Vice President
GENERAL ELECTRIC CAPITAL CORPORATION, as
Collateral Agent and as a Senior Lender
By:
----------------------------
Title:
-10-
<PAGE> 11
HELLER FINANCIAL, INC.
By:
---------------------------
Title:
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By:
---------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By:
---------------------------
Title:
SUN LIFE INSURANCE COMPANY OF
AMERICA
By:
---------------------------
Title:
-11-
<PAGE> 1
EXHIBIT 10.16
FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Fourth Amendment ("Fourth Amendment"), dated as of this
29th day of December, 1994 to a Loan and Security Agreement originally dated
October 30, 1991 and thereafter amended by amendments dated June 26, 1992,
December 22, 1992 and August 6, 1993, is entered into by and between THE CIT
GROUP/EQUIPMENT FINANCING, INC. ("CIT"), a New York corporation, having an
address at 1211 Avenue of the Americas, New York, New York 10036 and JPS
CONVERTER AND INDUSTRIAL CORP. ("Debtor"), a Delaware corporation, having its
principal executive offices at 555 N. Pleasantburg Drive, Greenville, South
Carolina 29607.
RECITALS
A. CIT and Debtor first entered into a Loan and Security
Agreement (the "Original Loan Agreement"), dated October 30, 1991 and pursuant
thereto made an initial loan to Debtor in the amount of $3,900,000.
B. CIT and Debtor thereafter entered into a First
Amendment (the "First Amendment"), on June 26, 1992, amending the Original Loan
Agreement in certain respects, and on the same date, CIT made a second loan to
Debtor in the amount of $3,060,549.60.
C. Pursuant to a Second Amendment to Loan and Security
Agreement dated as of December 22, 1992 (the "Second Amendment"), CIT made a
third loan to Debtor in the amount of $2,419,934.
D. The Original Loan Agreement was thereafter further
amended by a Third Amendment dated August 6, 1993, under the terms of which,
CIT agreed to make up to $5,000,000 in additional loans to Debtor (the Original
Loan Agreement, as amended to date by each of the foregoing amendments, is
sometimes referred to herein as the "Amended Loan Agreement").
E. Debtor has requested that CIT make up to $5,000,000
in additional Loans to Debtor and CIT has agreed to make such Loans, subject to
the terms of the Original Loan Agreement, as amended by each of the prior
amendments, and as further amended by this Fourth Amendment.
NOW THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the parties hereto hereby agree as
follows:
SECTION 1. DEFINED TERMS
1.1 Terms Defined in Original Loan Agreement.
Terms used herein which are not otherwise defined or modified herein, shall be
used herein with the meanings set forth in the Amended Loan Agreement. Without
limiting the generality of the foregoing, the term "Equipment" shall include,
in addition to all items of Equipment previously financed by CIT, all Equipment
financed with the proceeds of any of the Fourth Amendment Loans made pursuant
to this Fourth Amendment; the term "Collateral" shall include, in addition to
all Collateral in which Debtor has previously granted a security interest to
Debtor, all additional Collateral in which Debtor has granted or will grant a
security interest to CIT pursuant to this Fourth Amendment; and the term
"Obligations" shall include, in addition to all Obligations of Debtor existing
on the date hereof, all Obligations evidenced by the Further Notes or otherwise
created or arising pursuant to this Fourth Amendment.
1.2 Additional Defined Terms. The following
additional terms shall be added to the Amended Loan Agreement and inserted in
their proper alphabetical sequence:
"Amended Loan Agreement" shall mean the Original Loan
Agreement, as amended by Amendments dated June 26, 1992, December 22, 1992 and
August 6, 1993.
<PAGE> 2
"Commitment Period for Fourth Amendment Loans" shall mean the
period commencing on the Fourth Amendment Closing Date and ending on April 30,
1995.
"Fixed Rate Loan" means a Fourth Amendment Loan which bears
interest at the Fixed Rate Option.
"Fixed Rate Option" means a Fourth Amendment Loan which bears
interest at a rate which is fixed for the term of the Loan, as described in
Section 2.2(b) of the Fourth Amendment.
"Floating Rate Loan" means a Fourth Amendment Loan which bears
interest at the Floating Rate Option.
"Floating Rate Option" means a Fourth Amendment Loan which
bears interest at a rate which is adjusted at the beginning of each Interest
Period, as provided in Section 2.2(b) of the Fourth Amendment.
"Fourth Amendment" shall mean the Fourth Amendment to Loan and
Security Agreement.
"Fourth Amendment Closing Date" shall mean the date on which
the Fourth Amendment is executed and delivered by the parties.
"Fourth Amendment Loan Commitment" shall mean the obligation
of CIT described in Section 2.1 of the Fourth Amendment to make up to Five
Million ($5,000,000) Dollars in Fourth Amendment Loans to Debtor during the
Commitment Period for Fourth Amendment Loans.
"Fourth Amendment Loan Documents" shall mean the Fourth
Amendment and the other agreements, instruments and certificates executed in
connection with the making of the Fourth Amendment Loans, including each
Further Note and Supplement, as any of the foregoing may be modified, amended,
restated or extended.
"Fourth Amendment Loans" shall mean one or more of the
additional loans made by CIT to Debtor pursuant to subsection 2.1 of the Fourth
Amendment.
"Further Notes" shall mean the promissory notes of Debtor
executed and delivered by Debtor to evidence the Fourth Amendment Loans,
substantially in the form of Exhibit B, annexed to the Fourth Amendment, as the
same may, from time to time, be modified, amended, restated or extended.
"Interest Period" means, with respect to any Loan, (i) the
period from and including the date on which such Loan is made, to (but not
including) the initial Installment Payment Date, and (ii) thereafter, each
subsequent period shall commence on such initial Installment Payment Date (or,
in the case of any Interest Period other than the first Interest Period, the
Installment Payment Date immediately following the preceding Interest Period)
and end on the day prior to the next succeeding Installment Payment Date.
Notwithstanding the foregoing, any Interest Period which would otherwise end on
a day which is not a Business Day shall extend to the next succeeding Business
Day and interest shall accrue during such extension. Any Interest Period which
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period shall end on the last day of
a calendar month. Interest shall be charged for each day of each Interest
Period.
"LIBOR" means, with respect to any Interest Period, the
one-month rate of interest per annum at which deposits in U.S. dollars are
offered to major banks in the London interbank market at approximately 11:00
a.m. (London time), as reported by the Telerate System page 3750 (or such other
page as may replace page 3750 on such system for the purpose of reporting
London Interbank Offered Rates of major banks) under the heading for British
Bankers Association Interest Settlement Rates in the column designated "USD"
(U.S. Dollar) two (2) Business Days before the first day of an Interest Period.
"Original Loan Agreement" shall mean the Loan and Security
Agreement, as originally executed by Debtor and CIT on October 30, 1991.
"Subsection 2.3(a)(iii) Prepayment Percentage" shall mean, on
the date of any prepayment of any of the
-2-
<PAGE> 3
Further Notes pursuant to Subsection 2.3(a)(iii) of the Amended Loan Agreement,
as further amended by the Fourth Amendment, the product obtained by multiplying
(x) 4%, in the case of a Fixed Rate Loan, or (y) 2%, in the case of a Floating
Rate Loan, by a fraction, the numerator of which is the number of Installment
Payment Dates under the terms of such Note remaining after the date of
prepayment (including the Installment Payment Date, if any, on which such
prepayment is made) and the denominator of which shall be (x) 60, in the case
of a Fixed Rate Loan, or (y) 72, in the case of a Floating Rate Loan.
"Treasury Rate for Fourth Amendment Loans" shall mean a rate
per annum equal to the yield to maturity for the United States Treasury
obligation having a remaining term to maturity closest to four years as at the
close of business on the third Business Day prior to the making of a Fourth
Amendment Loan pursuant to the Fourth Amendment, as reported on page 5 ("U.S.
Treasury and Money Markets") of the information ordinarily provided by Telerate
Systems, Inc. If at any time such service shall no longer publish such rates,
or shall publish the rate information in a different format, CIT shall select
an alternative source which then publishes the yields on United States Treasury
securities.
1.3 Modifications to Existing Definitions. The
definitions of the following terms, which have been previously defined, shall
be modified as follows:
(a) The definition of "Loan" or "Loans" is hereby
amended by deleting the modification made by the Third Amendment and
adding to the end of such definition, before the period, the
following: "including, without limitation, all Third Amendment Loans
and Fourth Amendment Loans."
SECTION 2. AMOUNT AND TERMS OF FOURTH AMENDMENT LOANS
2.1 Commitment. Subject to the terms and conditions
of this Fourth Amendment and the Amended Loan Agreement, CIT agrees to make up
to two (2) additional Loans to Debtor, from time to time during the Commitment
Period for Fourth Amendment Loans, in accordance with the limitations described
in this section, in an aggregate amount not to exceed Five Million ($5,000,000)
Dollars; provided, that none of the Fourth Amendment Loans shall exceed seventy
five (75%) percent of the Eligible Equipment Cost of the Equipment designated
by Debtor on a Supplement with respect to such Fourth Amendment Loan; and
provided, further, that the first of the Fourth Amendment Loans made hereunder
shall be in a minimum amount of Four Million ($4,000,000) Dollars. The
Equipment acquired by Debtor and financed by CIT in connection with any Fourth
Amendment Loan shall consist of textile equipment which is satisfactory to CIT
and which is selected from the Schedule annexed hereto as Exhibit A. Debtor
shall give CIT at least ten Business Days' prior written notice of the date and
amount of each proposed Fourth Amendment Loan, except in the case of the
initial Fourth Amendment Loan, which may be made on at least two Business Days'
notice. All Fourth Amendment Loans shall be funded by wire transfer of
immediately available funds.
2.2 The Notes. (a) Each Fourth Amendment Loan shall
be evidenced by a Note of Debtor, substantially in the form of Exhibit B
hereto, with appropriate insertions therein as to amounts and dates. Each
Further Note shall (i) be dated the date on which the Fourth Amendment Loan
evidenced thereby is made; (ii) be for a term of seven (7) years from the date
such Further Loan is made; and (iii) be stated to be repaid in eighty three
consecutive equal monthly installments of principal, plus interest, which
installments will be payable on the dates and in the amounts set forth in the
respective Further Note. The sum of the scheduled principal payments for the
first 83 installments of each such Note shall be sufficient to amortize 87.5%
of the principal amount of the Loan, with a final installment due on the 84th
month in an amount equal to the remaining principal balance, plus accrued
interest thereon.
(b) Each of the Fourth Amendment Loans shall bear interest at
either (i) a rate equal to the Treasury Rate for Fourth Amendment Loans plus
three and seven one-hundredths (3.07%) percent per annum (the "Fixed Rate
Option"), or (ii) LIBOR plus three and twenty-five one-hundredths (3.25%)
percent per annum (the "Floating Rate Option"). Debtor shall select the
interest rate option no later than three Business Days prior to the date on
which a Fourth Amendment Loan is made. Once selected, the interest rate option
selected shall remain in effect for the term of the applicable loan. If the
Floating Rate Option is selected, the interest rate shall be adjusted upward or
downward on the first day of each Interest Period to reflect the applicable
LIBOR rate in effect on the first day of such Interest Period.
(c) Any amount not paid when due under a Further Note shall
bear late charges thereon, calculated at the Late Charge Rate, from the due
date thereof until such amount shall be paid in full.
-3-
<PAGE> 4
(d) Each Further Note shall be identified with the Equipment
financed by the Fourth Amendment Loan it evidences by reference to the
Supplement covering that Equipment. That identification of each Further Note
is for convenience of reference only and is not intended to imply that any Note
(including any Further Note) is collateralized only by the Equipment identified
with it; all Notes being equally secured by all Equipment.
2.3 Prepayment. Subsection 2.3(a) of the Amended
Loan Agreement is amended by adding the following new paragraph:
"(iii) A Note evidencing a Fourth
Amendment Loan may not be prepaid (x) during the
first twenty-four (24) months of the term in the case
of a Fixed Rate Loan, and (y) during the first twelve
(12) months of the term, in the case of a Floating
Rate Loan. Commencing on the twenty-fifth
Installment Payment Date (for a Fixed Rate Loan) and
on the thirteenth (13) Installment Payment Date (for
a Floating Rate Loan), a Loan may be prepaid in full,
together with all interest accrued thereon, all other
amounts due and owing hereunder and a prepayment
premium determined by multiplying (A) the unpaid
principal amount of the applicable Note by (B) the
applicable Subsection 2.3(a)(iii) Prepayment
Percentage."
2.4 Other Provisions. The remaining provisions of
Section 2 of the Original Loan Agreement, including Section 2.4 ("Use of
Proceeds"), Section 2.5 ("Manner of Payment"), Section 2.6 ("Payment on
Non-Business Days"), Section 2.7 ("Interest Limits"), and Section 2.8
("Liability for Returned Payments"), shall be equally applicable to each and
all of the Fourth Amendment Loans to the same extent as if set forth at length
herein.
SECTION 3. CONDITIONS PRECEDENT TO THE
FOURTH AMENDMENT LOANS.
3.1 Conditions Precedent to the First of the Fourth
Amendment Loans. CIT shall not be required to make the first of the Fourth
Amendment Loans hereunder unless on the Closing Date of such Fourth Amendment
Loan:
(a) Certificate of Incumbency of Debtor.
CIT shall have received a certificate of incumbency of Debtor,
signed by the Secretary or Assistant Secretary of Debtor,
which certificate shall certify the names of the officers of
Debtor authorized to execute any documents hereunder or under
any other related document on behalf of Debtor, together with
specimen signatures of such officers, and CIT may conclusively
rely on such certificate until receipt of a further
certificate of the Secretary or Assistant Secretary of Debtor
canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(b) Good Standing Certificates. CIT shall
have received a good standing certificate for Debtor issued by
the Secretary of State of Delaware and by the Secretary of
State of each other state in which Debtor is qualified to do
business.
(c) Charter Documents. CIT shall have
received a copy of the certificate of incorporation of Debtor,
duly certified by the Secretary of State of Delaware, as of a
recent date acceptable to CIT, or a certificate of the
Secretary or Assistant Secretary certifying that since October
30, 1991, there has been no amendment adopted or other change
made with respect to Debtor's certificate of incorporation,
together with a copy of the by-laws of Debtor, duly certified
by the Secretary or Assistant Secretary, or a certificate of
such person certifying that there has been no modification,
amendment or change to such by-laws since the last date on
which Debtor's by-laws were submitted and certified to CIT.
(d) Resolutions. CIT shall have received a
certified copy of all corporate proceedings of Debtor
evidencing that all actions required to be taken in connection
with the authorization, execution, delivery and performance of
this Fourth Amendment, the Further Notes, the other Fourth
Amendment Loan Documents and the consummation of the
transactions contemplated hereby and thereby, have been
-4-
<PAGE> 5
duly taken.
(e) Opinion of Debtor's Counsel. CIT shall
have received the written opinion addressed to it of Weil,
Gotshal & Manges, substantially in the form annexed hereto as
Exhibit C.
(f) Execution of Fourth Amendment. Debtor
and CIT shall have executed and delivered this Fourth
Amendment.
(g) Inspection of Collateral. CIT shall
have had an opportunity to physically inspect all Equipment
(including Equipment previously financed by CIT and Equipment
being financed by the Fourth Amendment Loans), and shall have
(i) verified that the Equipment is at the location designated
by Debtor with respect to each such item of Equipment, and
(ii) found the condition by the Equipment to be satisfactory.
The costs of any such inspections performed by CIT, or its
agents, shall be paid by Debtor.
(h) Certificate Regarding Collateral. CIT
shall have received a certificate of the chief financial
officer of Debtor, which shall have annexed to it a list of
all Equipment previously financed by CIT, indicating the
serial number and location of each such item of Equipment,
and which shall certify to CIT that (i) each item of Equipment
on the list is at the location appearing opposite such item of
Equipment, and (ii) each such item is in good repair,
condition and working order, in compliance with the
requirements of Section 5.11(c) of the Original Loan
Agreement.
3.2 Conditions of Each Fourth Amendment Loan. CIT
shall not be required to make any Fourth Amendment Loan under this Fourth
Amendment (including the first of the Fourth Amendment Loans) unless on the
closing date of each Loan, each of the further conditions set forth in Section
3.2 of the Original Loan Agreement, to the extent applicable, shall be
satisfied, or waived, except that (i) the representations and warranties
referred to in subsection 3.2(h) of the Original Loan Agreement shall include,
in addition to the representations and warranties contained in the Original
Loan Agreement, or to the extent not applicable, be superseded by, the
representations and warranties contained in this Fourth Amendment, (ii) the
measurement date contained in subsection 3.2(i) of the Original Loan Agreement
for determining the occurrence of a material adverse change shall be deleted
and October 29, 1994 shall be substituted in its place, and (iii) the letters
of credit previously provided by Debtor shall remain in effect and shall secure
the payment of the Fourth Amendment Loans, as well as all prior Loans made by
CIT, but no additional letter of credit shall be required.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.1 Reaffirmation. In order to induce CIT to enter
into this Fourth Amendment and to make the Fourth Amendment Loans, Debtor
hereby repeats each of the representations and warranties set forth in Section
4 of the Original Loan Agreement, except as modified or otherwise amended by
this Fourth Amendment, as if set forth at length herein.
4.2 Power and Authority. Debtor has full power,
authority and legal right to execute and deliver this Fourth Amendment, the
Further Notes and each of the other Fourth Amendment Loan Documents, to perform
its obligations hereunder and under the Fourth Amendment Loan Documents, to
borrow hereunder and to grant the security interests created by the Original
Loan Agreement or any other Loan Document.
4.3 Consents and Permits. No consent of any other
party (including any stockholders, trustees or holders of any indebtedness of
Debtor), and no consent, license, approval or authorization of, exemption by,
or registration or declaration with, any Governmental Authority is required in
connection with the execution, delivery or performance by Debtor of this Fourth
Amendment, the Further Notes or any other Fourth Amendment Loan Documents, or
the validity or enforceability of this Fourth Amendment, the Further Notes or
any other Fourth Amendment Loan Document, including the enforcement by CIT of
its rights and remedies hereunder or thereunder, other than those previously
obtained or made or which will be obtained or made prior to the making of the
first of the Fourth Amendment Loans.
4.4 No Legal Bar. The execution, delivery and
performance by Debtor of this Fourth Amendment, the Further Notes and the other
Fourth Amendment Loan Documents do not and will not violate any provision
-5-
<PAGE> 6
of any Applicable Laws or of any judgment, award, order, writ or decree of any
court or Governmental Authority, will not violate any provision of the charter
or by-laws of Debtor, and will not violate any provision of or cause a default
under any mortgage, indenture, contract, agreement or other undertaking to
which Debtor is a party or which purports to be binding upon Debtor or upon any
of its assets, except any such violation or default, the consequences of which
would not have a Material Adverse Effect, and will not result in the creation
or imposition of any Lien on any of the assets of Debtor, other than the
security interest created by the Original Loan Agreement.
4.5 Enforceability. This Fourth Amendment and the
other Fourth Amendment Loan Documents have been duly authorized, executed and
delivered by Debtor and constitute the legal, valid and binding obligations of
Debtor, enforceable in accordance with their respective terms, except to the
extent the enforcement of remedies provided for herein may be limited under
applicable bankruptcy and insolvency laws and by applicable equitable
principles. When executed and delivered, each Further Note will have been duly
authorized, executed and delivered by Debtor and shall constitute a legal,
valid and binding obligation of Debtor, enforceable in accordance with its
terms.
4.6 Financial Condition of Debtor. The consolidated
and consolidating financial statements of JPS Group and each of the JPS Group
Subsidiaries (i) as at and for the fiscal year ended October 30, 1993, audited
by Deloitte & Touche, and (ii) as at and for the fiscal year ended October 29,
1994, prepared internally by the Debtor, copies of which have heretofore been
delivered to CIT, are complete and correct, have been prepared in accordance
with GAAP (except in the case of interim financial statements, subject to
normal year-end audit adjustments), and present fairly the financial position
of JPS Group and each of the JPS Group Subsidiaries as at said dates and the
results of its operations for the period ended on said dates. As of the date
hereof, Debtor has no reason to believe that there will be any material
variation between the Debtor's internally prepared financial statements for its
fiscal year ended October 29, 1994 (in the form previously provided to CIT) and
its audited financial statements for such fiscal year. There are no known
material contingent liabilities or material liabilities for taxes which are not
reflected in said financial statements or the notes thereto and there has been
no material adverse change in the financial condition, business or operations
of JPS Group or any of the JPS Group Subsidiaries since the dates of such
statements.
4.7 Environmental Liabilities. There have been no
material adverse changes or developments with respect to Debtor's environmental
liabilities since the date of the Environmental Report.
SECTION 5. GRANT OF SECURITY INTEREST
Debtor expressly acknowledges and agrees that the security
interest granted pursuant to Section 6.1 of the Original Loan Agreement extends
to and includes all of the Equipment financed by CIT pursuant to the terms of
this Fourth Amendment and described in exhibits attached to Supplements
delivered pursuant to this Fourth Amendment. Debtor further agrees that all of
the Collateral previously granted to CIT pursuant to the terms of the Amended
Loan Agreement, expressly including all letters of credit previously provided
by Debtor, shall also serve as Collateral for the Fourth Amendment Loans,
securing the payment and performance by Debtor of the Fourth Amendment Loans
and the obligations of Debtor under the Amended Loan Agreement, as further
amended by this Fourth Amendment. Debtor further agrees and confirms that all
of the Collateral granted to CIT pursuant to this Fourth Amendment shall secure
the payment and performance by Debtor of all prior Loans made pursuant to the
terms of the Amended Loan Agreement, it being the intention of the parties that
all Loans made pursuant to the Loan Agreement shall be cross-collateralized to
the fullest extent permitted by law.
SECTION 6. MISCELLANEOUS
6.1 Expenses. Debtor agrees that the provisions of
Section 9.3 of the Original Loan Agreement shall apply equally to the
negotiation, preparation, execution and delivery of this Fourth Amendment and
the other Fourth Amendment Loan Documents, except that CIT shall be responsible
for the payment of the first $5,000 of the legal fees of its counsel.
6.2 Commitment Fee. CIT acknowledges receipt from
Debtor of a commitment fee in the amount of $25,000. Such amount shall be
non-refundable under all circumstances and may be retained by CIT regardless of
whether or not the transactions contemplated by this Fourth Amendment are
consummated.
-6-
<PAGE> 7
6.3 Ratification. Other than as specifically set
forth herein, Debtor hereby ratifies and confirms the Original Loan Agreement
and all instruments and agreements relating thereto, as modified by all prior
amendments through the date hereof, confirms that all of the foregoing remain
in full force and effect, subject to the terms of this Fourth Amendment, and
confirms that each of the foregoing is enforceable against Debtor in accordance
with its terms, except to the extent the enforcement of the remedies provided
for herein may be limited under applicable bankruptcy and insolvency laws and
by applicable equitable principles.
6.4 Other Provisions. Except as modified hereby,
the provisions of Section 9 of the Loan Agreement, captioned "Miscellaneous",
are incorporated herein by reference as if set forth at length herein and apply
equally to the terms of this Fourth Amendment.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
JPS CONVERTER AND INDUSTRIAL CORP.
By:
Name:
Title:
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By:
Name:
Title:
-7-
<PAGE> 1
EXHIBIT 10.17
LEASE MODIFICATION AND EXTENSION AGREEMENT
AGREEMENT made as of this 30th day of April, 1993, by and between 1185
AVENUE OF THE AMERICAS ASSOCIATES, a New York limited partnership having an
office at 60 East 42nd Street, New York, New York 10165 (hereinafter referred
to as "Sublessor"), and JPS CONVERTER AND INDUSTRIAL CORP., a Delaware
corporation having an office at 555 North Pleasantburg Drive, Greenville, South
Carolina 29607 (hereinafter referred to as "Sublessee").
W I T N E S S E T H:
WHEREAS, the parties hereto are Sublessor and Sublessee, respectively,
under that certain Agreement of Sublease, dated as of June 1, 1988, as modified
and extended pursuant to Lease Modification and Extension Agreement, dated as
of April 8, 1991, (which sublease, as modified and extended, is hereinafter
called the "Sublease") covering approximately 12,454 rentable square feet on
the 14th floor (the "Subleased Premises") in the building located at 1185
Avenue of the Americas, New York, New York, (the "Building"); and
WHEREAS, the parties hereto wish to extend further the term of the
Sublease and to modify the terms thereof in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed as follows:
1. The term of the Sublease is hereby extended for a period of
two years (less one (1) day), commencing June 1, 1993 and expiring on May 30,
1995 (unless sooner terminated pursuant to the terms hereof), upon all of the
terms, covenants and conditions as are now provided in the Sublease (except as
provided in Paragraph 2 hereof), unless any such terms, covenants or conditions
shall hereafter be modified by agreement of the parties prior to May 30, 1995,
it being expressly understood and agreed that the fixed
1
<PAGE> 2
annual rent (together with the base tax year set forth in Article 42 for Tax
Escalation rent and the base year set forth in Article 43 for Operating Expense
Escalation rent) referred to in the Sublease shall continue unchanged during
the extended term except as otherwise expressly provided in the Sublease.
2. A. Provided that Sublessee is not in default under any
of the terms, covenants and conditions of the Sublease, Sublessee shall be
granted a rent credit against the fixed annual rent payable under the Sublease
(excluding the ERIF portion thereof referred to in Article 44) in the total
amount of $66,421.22 to be applied against the first two (2) monthly
installments of fixed annual rent due under the Sublease.
If the term of this Sublease is terminated by virtue
of default of Sublessee hereunder, then in such event, in addition to all other
damages and remedies herein provided and provided by law for Sublessor,
Sublessor shall also be entitled to the return of the total dollar amount of
the aforedescribed rent credit heretofore enjoyed by Sublessee hereunder, which
sum shall be deemed additional rent due and owing prior to such termination of
this Sublease. The obligation of Sublessee to pay such additional rent (or
damages) to Sublessor shall survive the expiration or sooner termination of the
term of this Sublease.
B. The provisions of Articles 51 and 53 shall not apply
to this Agreement or to the extended term of the Sublease.
3. Sublessee understands and agrees that it will accept
possession of the Subleased Premises for the extended term of the Sublease in
its then "as is" condition, and Sublessor shall have no obligation to do any
work in and to the Subleased Premises in connection with this Agreement or the
extended term of the Sublease.
4. Sublessor and Sublessee each represents and warrants to the
other that it has neither consulted or negotiated with any broker or finder
with regard to the Subleased Premises, and Sublessor and Sublessee each agrees
to indemnify, defend and save harmless the other from and against any claims
for fees or commissions from anyone with whom it has dealt in connection with
the Subleased Premises or the Sublease.
5. Except as herein modified, all of the other terms, covenants
and conditions of the Sublease are and shall remain in full force and effect
and are hereby ratified and confirmed.
6. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their
2
<PAGE> 3
respective legal representatives, successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
1185 AVENUE OF THE AMERICAS ASSOCIATES
(Sublessor)
By: W&M Properties, Inc., as Agent
By:
--------------------------------
Executive Vice-President
JPS CONVERTER AND INDUSTRIAL CORP.
(Sublessee)
By:
--------------------------------
President
3
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF THE COMPANY
JPS Auto Inc.
JPS Carpet Corp.
JPS Converter and Industrial Corp.
JPS Elastomerics Corp.
International Fabrics, Inc.
JPS Capital Corp.
All of the above-listed subsidiaries are Delaware corporations.
<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-K and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-29-1994
<PERIOD-END> OCT-29-1994
<CASH> 2,873
<SECURITIES> 0
<RECEIVABLES> 109,027
<ALLOWANCES> 6,223
<INVENTORY> 74,966
<CURRENT-ASSETS> 182,426
<PP&E> 333,844
<DEPRECIATION> 129,750
<TOTAL-ASSETS> 467,990
<CURRENT-LIABILITIES> 86,482
<BONDS> 280,243
<COMMON> 10
24,340
250
<OTHER-SE> (2,610)
<TOTAL-LIABILITY-AND-EQUITY> 467,990
<SALES> 603,416
<TOTAL-REVENUES> 603,416
<CGS> 518,176
<TOTAL-COSTS> 61,147
<OTHER-EXPENSES> 2,962
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,452
<INCOME-PRETAX> (35,321)
<INCOME-TAX> 2,800
<INCOME-CONTINUING> (38,121)
<DISCONTINUED> 158,617
<EXTRAORDINARY> (7,410)
<CHANGES> (1,000)
<NET-INCOME> 112,086
<EPS-PRIMARY> 108.75
<EPS-DILUTED> 108.75
</TABLE>
