<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 3, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number 33-27038
JPS TEXTILE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-0868166
- ------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
555 North Pleasantburg Drive, Suite 202, Greenville, South Carolina 29607
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (864) 239-3900
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X
---
No
---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 490,000 shares of the Company's
Class A Common Stock and 510,000 shares of Class B Common Stock were outstanding
as of May 30, 1997.
Page 1
<PAGE> 2
JPS TEXTILE GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
<S> <C> <C>
Item 1. Condensed Consolidated Balance Sheets
May 3, 1997 (Unaudited) and November 2, 1996................................. 3
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended May 3, 1997 and
April 27, 1996 (Unaudited)................................................... 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended May 3, 1997 and
April 27, 1996 (Unaudited)................................................... 5
Notes to Condensed Consolidated Financial Statements (Unaudited)............. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................... 10
PART II. OTHER INFORMATION................................................................ 16
</TABLE>
Page 2
<PAGE> 3
Item 1. Financial Statements
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
May 3, November 2,
1997 1996
----------- ----------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 1,284 $ 1,460
Accounts receivable 72,184 75,166
Inventories (Note 2) 45,948 48,374
Prepaid expenses and other 2,268 1,967
--------- ---------
Total current assets 121,684 126,967
Property, plant and equipment, net 119,586 124,004
Excess of cost over fair value of net assets acquired, net 30,023 30,506
Other assets (Note 6) 53,216 54,450
--------- ---------
Total $ 324,509 $ 335,927
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 23,429 $ 24,708
Accrued interest 20,905 9,608
Accrued salaries, benefits and withholdings 11,121 10,440
Other accrued expenses 11,738 13,987
Senior credit facility, revolving line of credit (Note 3) 79,183 85,639
Current portion of long-term debt 244,705 240,451
--------- ---------
Total current liabilities 391,081 384,833
Long-term debt 3,304 4,226
Deferred income taxes 3,665 3,665
Other long-term liabilities 19,819 19,513
--------- ---------
Total liabilities 417,869 412,237
--------- ---------
Senior redeemable preferred stock (Note 7) 35,219 32,676
--------- ---------
Shareholders' equity (deficit):
Junior preferred stock 250 250
Common stock 10 10
Additional paid-in capital 22,565 25,108
Deficit (151,404) (134,354)
--------- ---------
Total shareholders' deficit (128,579) (108,986)
--------- ---------
Total $ 324,509 $ 335,927
========= =========
</TABLE>
Note: The condensed consolidated balance sheet at November 2, 1996 has been
extracted from the audited financial statements.
See notes to condensed consolidated financial statements.
Page 3
<PAGE> 4
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
May 3, April 27, May 3, April 27,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 108,138 $ 124,437 $ 205,305 $ 223,178
Cost of sales 93,038 109,881 177,972 198,727
----------- ----------- ----------- -----------
Gross profit 15,100 14,556 27,333 24,451
Selling, general and administrative expenses 10,293 10,838 19,607 20,713
Other expense, net 377 1,708 383 1,949
----------- ----------- ----------- -----------
Operating profit 4,430 2,010 7,343 1,789
Valuation allowance on Gulistan securities (789) (2,568) (2,088) (4,068)
Interest income 734 693 1,471 1,388
Interest expense (10,049) (9,828) (20,223) (19,565)
Debt restructuring fees and expenses (1,982) (175) (3,144) (175)
----------- ----------- ----------- -----------
Loss before income taxes and discontinued
operations (7,656) (9,868) (16,641) (20,631)
Provision for income taxes 252 138 409 208
----------- ----------- ----------- -----------
Loss before discontinued operations (7,908) (10,006) (17,050) (20,839)
Loss on sale of discontinued operations,
net of taxes -- (1,500) -- (1,500)
----------- ----------- ----------- -----------
Net loss (7,908) (11,506) (17,050) (22,339)
Senior redeemable preferred stock in-kind
dividends and discount accretion 1,277 1,109 2,542 2,192
----------- ----------- ----------- -----------
Loss applicable to common stock $ (9,185) $ (12,615) $ (19,592) $ (24,531)
=========== =========== =========== ===========
Weighted average common shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000
=========== =========== =========== ===========
Loss per common share:
Loss before discontinued operations $ (9.19) $ (11.12) $ (19.59) $ (23.03)
Loss on sale of discontinued operations -- (1.50) -- (1.50)
----------- ----------- ----------- -----------
Net loss $ (9.19) $ (12.62) $ (19.59) $ (24.53)
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
Page 4
<PAGE> 5
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
May 3, April 27,
1997 1996
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (17,050) $ (22,339)
Net loss -------- ---------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Loss on sale of discontinued operations -- 1,500
Depreciation and amortization, except amounts included
in interest expense 9,578 11,846
Interest accretion and debt issuance cost amortization 4,919 4,622
Valuation allowance on Gulistan securities 2,088 4,068
Other, net 959 2,452
Changes in assets and liabilities:
Accounts receivable 2,982 4,737
Inventory 2,426 (1,991)
Prepaid expenses and other assets (1,764) 142
Accounts payable (1,279) (93)
Accrued expenses and other liabilities 9,632 (3,931)
--------- ---------
Total adjustments 29,541 23,352
--------- ---------
Net cash provided by operating activities 12,491 1,013
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (4,702) (4,865)
Receipts from discontinued operations, net -- 364
Proceeds from sales of discontinued operations, net -- 20,161
--------- ---------
Net cash (used in) provided by investing activities (4,702) 15,660
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (100) --
Revolving credit facility repayments, net (6,456) (15,979)
Repayment of long-term debt (1,409) (1,075)
--------- ---------
Net cash used in financing activities (7,965) (17,054)
--------- ---------
Net decrease in cash (176) (381)
Cash at beginning of period 1,460 1,352
--------- ---------
Cash at end of period $ 1,284 $ 971
========= =========
Supplemental cash flow information:
Interest paid $ 4,008 $ 15,124
Income taxes paid 226 557
Non-cash financing activities:
Senior redeemable preferred stock dividends-in-kind -- 1,534
See notes to condensed consolidated financial statements.
</TABLE>
Page 5
<PAGE> 6
JPS TEXTILE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
JPS Textile Group, Inc. (the "Company") has prepared, without audit,
the interim condensed consolidated financial statements and related
notes. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at May 3, 1997
and for all periods presented have been made.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended
November 2, 1996. The results of operations for the interim period are
not necessarily indicative of the operating results for the full year.
2. Inventories (In Thousands):
<TABLE>
<CAPTION>
May 3, November 2,
1997 1996
--------- ------------
<S> <C> <C>
Raw materials and supplies $ 11,925 $ 13,155
Work-in-process 16,768 16,912
Finished goods 17,255 18,307
--------- ---------
Total $ 45,948 $ 48,374
========= =========
</TABLE>
3. Long-Term Debt
As discussed in Note 14 of the Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the fiscal
year ended November 2, 1996, the senior credit facility under the
restated credit agreement (or a similar credit facility) is essential
for the Company's continued operations. The existing senior credit
facility was scheduled to expire on May 1, 1997 unless the Company
commenced a case under chapter 11 of the Bankruptcy Code on or prior to
such date. Accordingly, the Company negotiated an extension of that
facility. Pursuant to amendments, dated as of April 29, 1997 and May
15, 1997, to the restated credit agreement, the senior credit facility
was amended to extend its expiration date to July 16, 1997. If the
Company commences a case under chapter 11 of the Bankruptcy Code on or
prior to such date, the senior credit facility will be extended
automatically to the earlier of November 1, 1997 or the effective date
of a reorganization under chapter 11 of the Bankruptcy Code. The
Company has classified the $79.2 million outstanding under its senior
credit facility as a current liability in the accompanying condensed
consolidated balance sheet. The financial covenants contained in the
restated credit agreement are based upon the activities of the
consolidated operating subsidiaries (JPS Converter & Industrial Corp.
and JPS Elastomerics Corp.) rather than the consolidated Company (i.e.
excludes the assets and liabilities of the parent company and other
non-operating subsidiaries).
Page 6
<PAGE> 7
The restated credit agreement does not permit additional borrowings by
the borrowing subsidiaries for, among other things, loans or dividends
to the Company for the payment of interest on its notes and debentures.
As a result of this restriction on the use of proceeds of revolving
loans, the Company did not make scheduled November 15, 1996 and May 15,
1997 interest payments of approximately $1.9 million each on its
subordinated debentures and did not make scheduled December 1, 1996 and
June 1, 1997 interest payments of approximately $5.4 million each on
its senior subordinated discount notes and approximately $3.6 million
each on its senior subordinated notes. In addition, the Company failed
to mandatorily redeem, on June 1, 1997, approximately $37.8 million in
aggregate principal amount of its senior subordinated discount notes
and approximately $31.2 million in aggregate principal amount of its
senior subordinated notes. The failure to make these scheduled payments
constitutes an event of default under the indentures governing these
debt securities. As a result, the holders of these debt securities are
entitled to accelerate the debt represented thereby. Accordingly, these
debt obligations are classified as current liabilities in the
accompanying condensed consolidated balance sheets. The Company does
not have the ability to repay such indebtedness if the same were to be
accelerated. See discussion under Note 4.
The indentures governing the notes and debentures provide for the
payment of interest on overdue installments of interest, payable on
demand at the rate of 1% per annum in excess of the interest rate then
in effect. In the three months and six months ended May 3, 1997, the
Company accrued approximately $233,000 and $474,000 respectively, under
these provisions, all of which remained unpaid as of May 3, 1997.
4. Financial Restructuring
On May 16, 1997, the Company announced that it had reached an agreement
in principle with an unofficial committee of bondholders, representing
more than 60% of its outstanding public debt, to convert 100% of its
public bond debt to equity. Under the agreement in principle, the
restructuring will be effected through a voluntary prepackaged
bankruptcy filing to be made under chapter 11 of the Bankruptcy Code at
the holding company level. The Company's operating subsidiaries will
not be parties to such filing and will continue to conduct business as
usual.
Under the agreement in principle, all of the Company's notes and
debentures, with a carrying value of $242.4 million on May 3, 1997,
will be exchanged for substantially all of the reorganized company's
new common stock. Specifically, the holders of the Company's 10.25%
senior subordinated notes and 10.85% senior subordinated discount notes
will receive approximately $10-14 million in cash, contingent notes
to be issued by JPS Capital Corp., a wholly-owned subsidiary of the
Company, providing payment of up to $34-38 million plus interest upon
the occurrence of certain events, and approximately 93.30% of the new
common stock. The holders of the 7% subordinated debentures will
receive approximately 5.95% of the new common stock. The Company's
senior management will receive .75% of the new common stock in lieu of
payment under their contractual retention bonus arrangements. The
agreement also provides for the exchange of all of the Company's
existing senior preferred stock for warrants to purchase new common
stock of the reorganized company and cancellation of the Company's
existing junior preferred stock and common stock. Members of the
Company's senior management team are expected to enter into new
employment agreements in connection with the restructuring.
Page 7
<PAGE> 8
The Company anticipates that the necessary documentation will be
completed and the holding company's chapter 11 case will be commenced
prior to the expiration date of the senior credit facility. In such
case, the senior credit facility will be automatically extended to the
earlier of November 1, 1997 or the effective date of the holding
company's chapter 11 reorganization. Accordingly, the Company expects
that the operating subsidiaries will continue to utilize the senior
credit facility during the holding company's chapter 11 case. Following
the restructuring, the Company's operating subsidiaries are expected to
have a new revolving credit facility, with terms no less favorable
than the existing facility.
If the Company is not successful in this regard, the default on the
Company's debt securities and its inability to service such debt as
required raise substantial doubt about the Company's ability to
continue as a going concern.
Professional fees for the Company's financial advisors and the
financial advisors and counsel to the holders of the Company's debt
securities and other fees and expenses incurred by the Company in
connection with the financial restructuring are reflected in the
accompanying condensed consolidated statements of operation as "debt
restructuring fees and expenses."
5. Sale of Certain Operations
Pursuant to an Asset Purchase Agreement dated September 30, 1996
between JPS Elastomerics Corp. ("Elastomerics"), a wholly-owned
subsidiary of the Company, and Elastomer Technologies Group, Inc.
("Elastomer") and a Receivables Purchase Agreement dated September 30,
1996 between Elastomerics and the Bank of New York Commercial
Corporation, Elastomerics sold substantially all the assets of its
rubber products division, a business engaged in the manufacture and
sale of natural and synthetic elastic for use in apparel products,
diaper products and specialty industrial applications (the "Rubber
Products Business"). The Rubber Products Business had accounted for
sales of $16.8 million in Fiscal 1996 (eleven months), of which $5.2
million occurred in the second quarter of 1996. Under the terms of the
agreement, Elastomer agreed to assume substantially all the liabilities
and obligations associated with the Rubber Products Business. The
Company and its subsidiaries have agreed not to compete directly or
indirectly with the business that was sold for a period of two years.
The consideration for the Rubber Products Business consisted of
approximately $5.1 million in cash, and resulted in a loss of
approximately $7.7 million. This loss on sale was charged to operations
in Fiscal 1996. In April 1997, the Company paid $0.3 million to
Elastomer as final settlement for certain post-closing adjustments
based on the audited amount of net assets transferred. This amount is
included in other expense for the second quarter of 1997.
6. Contingencies
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 future costs associated with
these defective roofing products is subject to management's best
estimate, including factors such as expected future claims by
geographic region and roofing compound applied; expected costs to
repair or replace such roofing products; estimated remaining length of
time that such claims will be made by customers; and the estimated
costs to litigate and settle certain claims now in litigation and those
that may result in future litigation. Based on warranties that were
issued on the roofs, the Company estimates that substantially all the
defective roofing product claims will be resolved by 2000. The
liability for such defective products was approximately $5.3 million at
May 3, 1997 and $6.2 million at November 2, 1996. 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 current
Page 8
<PAGE> 9
year operations. Management updates its assessment of the adequacy of
the remaining reserve for defective roofing products quarterly and if
it is deemed that an adjustment to the reserve is required, it will be
charged to operations in the period in which such determination is
made.
At May 3, 1997, the Company had net regular operating loss
carryforwards for tax purposes of approximately $92 million. The net
operating losses expire in years 2005 through 2012. The Company's
future ability to utilize its net operating losses may be significantly
limited under the income tax laws should there be 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 net operating loss
carryforwards and certain built-in losses 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 does not believe that this potential
limitation on loss carryforwards currently applies. However, there can
be no assurance that the Internal Revenue Service will not take a
contrary position or that such limitation will not become applicable
for subsequent taxable periods. Due to the Company's operating history,
it is uncertain that it will be able to utilize all deferred tax
assets. Therefore, a valuation allowance has been provided equal to the
deferred tax assets remaining after deducting all deferred tax
liabilities, exclusive of those related to certain deferred state tax
liabilities.
In connection with the sale of its Automotive business 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 May 3, 1997
and November 2, 1996, the aggregate fair value of the United States
Treasury Securities was approximately $47.2 million and $46.2 million,
respectively. As described in Note 4, under the terms of a proposed
financial restructuring plan, the holders of the Company's 10.25%
senior subordinated notes and 10.85% senior subordinated discount notes
would receive $10-14 million in cash from proceeds of these
securities and contingent notes of $34-38 million plus interest,
payable from proceeds of these securities upon the occurrence of
certain events.
7. Senior Preferred Stock
Dividends on the Company's senior preferred stock are cumulative and
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. The
Company did not declare and accordingly has not distributed the
scheduled November 15, 1996, February 15, 1997 and May 15, 1997
preferred stock dividends of 8,079 shares, 8,203 shares and 8,326
shares, respectively. Under the terms of the proposed restructuring
discussed in Note 4, all senior preferred stock would be exchanged for
warrants to purchase new common stock of the reorganized company.
Page 9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing in Item 7
of the Company's Annual Report on Form 10-K for the fiscal year ended November
2, 1996. The statements contained herein that are not historical facts may be
forward-looking statements subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. The Company cautions readers of this
Quarterly Report on Form 10-Q that a number of important factors could cause the
Company's actual results in future periods to differ materially from those
expressed in any such forward-looking statements. These factors include, without
limitation, the general economic and business conditions affecting the textile
industry, competition from other existing or new textile manufacturers and the
Company's ability to complete the proposed financial restructuring and otherwise
meet its debt service obligations and other liquidity needs.
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended Six Months Ended
---------------------------- --------------------------
May 3, April 27, May 3, April 27,
1997 1996 1997 1996
------------ ------------- ------------- -----------
<S> <C> <C> <C> <C>
NET SALES
Apparel Fabrics and Products $ 47,560 $ 67,484 $ 94,880 $ 115,986
Industrial Fabrics and Products 49,974 46,837 90,748 89,456
Home Fashion Textiles 10,604 10,116 19,677 17,736
----------- ----------- ----------- -----------
Net Sales $ 108,138 $ 124,437 $ 205,305 $ 223,178
=========== =========== =========== ===========
OPERATING PROFIT (LOSS)
Apparel Fabrics and Products $ 1,148 $ 561 $ 1,804 $ (1,283)
Industrial Fabrics and Products 3,800 3,597 6,494 6,393
Home Fashion Textiles 541 342 1,269 268
Indirect Corporate Expenses, net (1,059) (2,490) (2,224) (3,589)
----------- ----------- ----------- -----------
Operating Profit 4,430 2,010 7,343 1,789
Valuation allowance on Gulistan securities (789) (2,568) (2,088) (4,068)
Interest income 734 693 1,471 1,388
Interest expense (10,049) (9,828) (20,223) (19,565)
Restructuring fees and expenses (1,982) (175) (3,144) (175)
----------- ----------- ----------- -----------
Loss before income taxes and discontinued
operations $ (7,656) $ (9,868) $ (16,641) $ (20,631)
=========== =========== =========== ===========
</TABLE>
RESULTS OF OPERATIONS
Three Months Ended May 3, 1997 (the "1997 Second Quarter") Compared to the Three
Months Ended April 27, 1996 (the "1996 Second Quarter")
Consolidated net sales in the 1997 second quarter decreased 13.1% to $108.1
million from $124.4 million in the 1996 second quarter. Net sales in the Apparel
Fabrics and Products segment decreased 29.5% to $47.6 million in the 1997 second
quarter from $67.5 million in the 1996 second quarter principally as a result of
the sale of the Company's rubber products business in September 1996 and lower
unit volume especially for
Page 10
<PAGE> 11
certain commodity-type fabrics woven from spun yarns. The rubber products
business, which produced and sold elastic apparel products, generated sales of
$4.0 million in the 1996 second quarter. Because of a generally weak market
environment, increased competition from abroad (particularly in commodity-type
fabrics) and decreasing margins, the Company closed its Dunean facility in
Greenville, South Carolina in October 1996 and curtailed production at other
facilities. The Dunean facility, which produced unfinished woven apparel
fabrics, generated net sales in the 1996 second quarter of $7.1 million.
Net sales in the Industrial Fabrics and Products segment increased 6.7% to $50.0
million in the 1997 second quarter from $46.8 million in the 1996 second quarter
due to a variety of factors affecting the various industrial product lines.
Sales of fiberglass fabrics increased 7.2% to $20.7 million in the 1997 second
quarter from $19.3 million in the 1996 second quarter principally due to the
increase in sales of electrical composite fabrics used in circuit boards. Demand
for these products has increased steadily for the last several years as global
requirements for electronic products has grown. Management expects this demand
to continue in the foreseeable future. Sales of roofing membrane increased 13.3%
to $13.6 million in the 1997 second quarter from $12.0 million in the 1996
second quarter due to the continued success of the Company's "Hi-Tuff/EP" line
of roofing products. Sales of cotton industrial products increased 23.6% to $8.9
million in the 1997 second quarter from $7.2 million in the 1996 second quarter
due to an expanded customer base and introduction of certain new
polyester/cotton blended products. Sales of extruded products increased 17.5% to
$6.7 million in the 1997 second quarter from $5.7 million in the 1996 second
quarter due primarily to higher demand for certain urethane products used in
athletic shoes. Sales of industrial rubber products decreased $1.2 million due
to the sale of the Company's rubber products business in September 1996.
Net sales for the Home Fashion Textile segment increased 4.8% to $10.6 million
in the 1997 second quarter from $10.1 million in the 1996 second quarter
principally due to a stronger retail market, development of new products and
expansion of the Company's customer base.
Operating profit in the 1997 second quarter improved to $4.4 million from $2.0
million in the 1996 second quarter. The Apparel Fabrics and Products segment
operated at a profit of $1.1 million in the 1997 second quarter compared to $0.6
million in the 1996 second quarter. This improvement is attributable to the sale
of the rubber products business which generated a $0.5 million operating loss in
the 1996 second quarter, the closing of the Dunean facility which allowed the
Company to eliminate certain overhead costs while improving its overall
manufacturing efficiency and a more favorable product mix of more higher margin
specialty fabrics and less commodity-type fabrics.
The Industrial Fabrics and Products segment operated at a profit of $3.8 million
in the 1997 second quarter compared to $3.6 million in the 1996 second quarter.
This improvement is primarily attributable to the sale of the rubber products
business, which generated a $0.1 million operating loss in the 1996 second
quarter and to the increase in sales volume in the 1997 second quarter.
The Home Fashion Textile segment improved to an operating profit of $0.5 million
in the 1997 second quarter up slightly from $0.3 million in the 1996 second
quarter principally due to the increase in sales volume and improving margins
resulting from a more favorable product mix.
Indirect corporate expenses decreased to $1.1 million in the 1997 second quarter
compared to $2.5 million in the 1996 second quarter principally due to a $1.1
million charge to other expense in the 1996 second quarter for an early
retirement offer accepted by certain employees resulting in a corresponding
reduction to prepaid pension costs.
Page 11
<PAGE> 12
In the 1997 second quarter, the Company paid $0.3 million to Elastomer
Technologies Group, Inc., the purchaser of the Company's rubber products
business, as final settlement for certain post-closing adjustments based on the
audited amount of net assets transferred. This amount is included in other
expense for the 1997 second quarter.
The Company holds various securities from the sale, in a prior year, of the
assets and business of JPS Carpet Corp., its wholly-owned subsidiary, to
Gulistan Holdings, Inc. The Company has not recorded interest income on any of
the Gulistan securities and, in accordance with relevant accounting literature,
has recorded a valuation allowance against its investment in the securities with
a corresponding charge to income of $0.8 million as a result of the net loss
incurred by Gulistan in the 1997 second quarter. This valuation allowance of
$0.8 million was less than the $2.6 million allowance recorded by the Company in
the 1996 second quarter.
Interest expense in the 1997 second quarter was $10.0 million or $0.2 million
more than the 1996 second quarter primarily due to the compounding effect of
accretion of debt discounts and non-cash interest and the accrual of interest on
overdue installments of interest calculated in accordance with the provisions of
the indentures governing the Company's notes and debentures.
Debt restructuring fees and expenses totaled $2.0 million in the 1997 second
quarter compared to $0.2 million in the 1996 second quarter. Such expenses
represent fees and expenses of the Company's financial advisor, the financial
advisor for the unofficial committee comprised of holders of approximately 60%
of its outstanding bonds, the Company's legal counsel, the legal counsel to the
unofficial committee comprised of holders of approximately 60% of the Company's
outstanding bonds and other professionals associated with the Company's
financial restructuring.
Six Months Ended May 3, 1997 (the "1997 Six-Month Period") Compared To The Six
Months Ended April 27, 1996 (the "1996 Six-Month Period")
Consolidated net sales for the 1997 six-month period decreased 8.0% to $205.3
million from $223.2 million in the 1996 six-month period with substantially all
the decline occurring in apparel fabrics and products. Net sales in the Apparel
Fabrics and Products segment decreased 18.2% to $94.9 million in the 1997
six-month period from $116.0 million in the 1996 six-month period principally
due to the sale of the Company's rubber products division and a decline in unit
volume especially for certain commodity-type products. The rubber products
division generated sales of $7.2 million in the 1996 six-month period. The
closing of the Dunean facility and the curtailment of certain production at
other facilities accounted for decreased sales of approximately $12.9 million in
the 1997 six-month period.
Net sales in the Industrial Fabrics and Products segment increased 1.6% to $90.8
million in the 1997 six-month period from $89.5 million in the 1996 six-month
period. Sales of fiberglass fabrics increased 2.8% to $37.0 million in the 1997
six-month period from $36.0 million in the 1996 six-month period due to the
strong demand for electrical composite fabrics used in circuit boards. Sales of
roofing membrane increased 12.2% to $25.8 million in the 1997 six-month period
from $23.0 million in the 1996 six-month period due to the growing demand for
the Company's "Hi-Tuff/EP" roofing products. Sales of cotton industrials
increased 7.5% to $15.7 million in the 1997 six-month period from $14.6 million
in the 1996 six-month period due to an expanded customer base and introduction
of new products. Sales of extruded products increased 15.6% to $12.6 million in
the 1997 six-month period from $10.9 million in the 1996 six-month period as a
result of increased demand for certain products used in athletic shoes. Sales of
industrial rubber products decreased $2.1 million in the 1997 six-month period
due to the sale of the Company's rubber products business in 1996.
Page 12
<PAGE> 13
Net sales for the Home Fashion Textile segment increased 11.3% to $19.7 million
in the 1997 six-month period from $17.7 million in the 1996 six-month period due
to the stronger retail market, expanded customer base and enhanced product
offerings.
Consolidated operating profit in the 1997 six-month period improved to $7.3
million from $1.8 million in the 1996 six-month period. The Apparel Fabrics and
Products segment operated at a profit of $1.8 million in the 1997 six-month
period compared to a loss of $1.3 million in the 1996 six-month period. This
improvement is attributable to the sale of the rubber products business which
generated a $1.2 million operating loss in the 1996 six-month period, the
closing of the Dunean facility and a more favorable product mix of higher margin
specialty fabrics.
Operating profit for the Industrial Fabrics and Products segment improved to
$6.5 million in the 1997 six-month period from $6.4 million in the 1996
six-month period principally due to the sale of the rubber products business
which generated an operating loss of $0.2 million in the 1996 six-month period.
Operating profit for the Home Fashion Textile segment improved to $1.3 million
in the 1997 six-month period from $0.3 million in the 1996 six-month period due
to the increase in sales volume and improving margin from a more favorable
product mix.
Indirect corporate expenses decreased to $2.2 million in the 1997 six-month
period from $3.6 million in the 1996 six-month period principally due to the
$1.1 million charge to other expense in the 1996 six-month period for an early
retirement offer accepted by certain employees.
In the 1997 six-month period, Gulistan reported net losses of approximately $2.1
million before interest expense on the promissory note held by the Company.
Accordingly, the Company did not record interest income on any of the Gulistan
securities held by them and recorded a valuation allowance of $2.1 million
against its investment in the 1997 six-month period. This valuation allowance of
$2.1 million was less than the $4.1 million allowance recorded by the Company in
the 1996 six-month period.
Interest expense in the 1997 six-month period was $20.2 million or $0.6 million
higher than the 1996 six-month period due to the compounding effects of
accretion of debt discounts and non-cash interest and the interest on overdue
installments of interest.
Debt restructuring fees and expenses were $3.1 million in the 1997 six-month
period compared to $0.2 million in the 1996 six-month period due to the
increased activity of professionals associated with the Company's financial
restructuring.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity for operations and expansion are
funds generated internally and borrowings under its Revolving Credit Facility
(as defined below). At May 3, 1997, the Company had $20.1 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 working capital deficits at May 3, 1997 and November 2, 1996 of $269.4
million and $257.9 million respectively, reflect the classification of the
amount outstanding under the Revolving Credit Facility ($79.2 million at May 3,
1997 and $85.6 million at November 2, 1996) and the carrying value of notes and
debentures ($242.4 million at May 3, 1997 and $237.7 million at November 2,
1996) as current liabilities. Excluding the effects of the Revolving Credit
Facility and the notes and debentures, working capital decreased $13.2 million
Page 13
<PAGE> 14
from $65.4 million at November 2, 1996 to $52.2 million at May 3, 1997,
principally due to the non-payment of interest accrued on the Company's notes
and debentures as discussed in Note 3 to the condensed consolidated financial
statements. Accounts receivable decreased $3.0 million and inventories decreased
$2.4 million, each resulting from lower sales in April 1997 than in October
1996. Accounts payable and other accrued expenses decreased $2.8 million because
of the lower sales volume and lower inventory levels.
The Company and its 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. as administrative agent and co-agent, and General
Electric Capital Corporation, as collateral agent and co-agent. The Restated
Credit Agreement, as amended, provides for a revolving credit loan facility and
letters of credit (the "Revolving Credit Facility") in a maximum principal
amount equal to the lesser of (a) $118 million and (b) a specified borrowing
base, which is based upon eligible receivables and inventory of the Borrowing
Subsidiaries (the "Borrowing Base"), except that (i) no Borrowing Subsidiary may
borrow an amount greater than the Borrowing Base attributable to it, (ii)
letters of credit may not exceed $15 million in the aggregate, and (iii) $20
million of the Revolving Credit Facility is available, not subject to the
Borrowing Base, to purchase property, plant and equipment or to finance or
refinance such purchases ("Capex Loans"), provided that the aggregate of all
revolving credit loans, including Capex Loans, and letters of credit may not
exceed the lesser of (A) $118 million and (B) the sum of the Borrowing Base plus
$25 million (subject to certain reductions).
As discussed in Note 14 of the Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the fiscal year ended November 2, 1996,
the senior credit facility under the restated credit agreement (or a similar
credit facility) is essential for the Company's continued operations. The
existing senior credit facility was scheduled to expire on May 1, 1997 unless
the Company commenced a case under chapter 11 of the Bankruptcy Code on or prior
to such date. Accordingly, the Company negotiated an extension of that facility.
Pursuant to amendments, dated as of April 29, 1997 and May 15, 1997, to the
restated credit agreement, the senior credit facility was amended to extend its
expiration date to July 16, 1997. If the Company commences a case under chapter
11 of the Bankruptcy Code on or prior to such date, the senior credit facility
will be extended automatically to the earlier of November 1, 1997 or the
effective date of a reorganization under chapter 11 of the Bankruptcy Code. The
Company has classified the $79.2 million outstanding under its senior credit
facility as a current liability in the accompanying condensed consolidated
balance sheet. The financial covenants contained in the restated credit
agreement are based upon the activities of the consolidated operating
subsidiaries (JPS Converter & Industrial Corp. and JPS Elastomerics Corp.)
rather than the consolidated Company (i.e. excludes the assets and liabilities
of the parent company and other non-operating subsidiaries). The restated credit
agreement does not permit additional borrowings by the borrowing subsidiaries
for, among other things, loans or dividends to the Company for the payment of
interest on its notes and debentures. As a result of this restriction on the use
of proceeds of revolving loans, the Company did not make scheduled November 15,
1996 and May 15, 1997 interest payments of approximately $1.9 million each on
its subordinated debentures and did not make scheduled December 1, 1996 and June
1, 1997 interest payments of approximately $5.4 million each on its senior
subordinated discount notes and approximately $3.6 million each on its senior
subordinated notes. In addition, the Company failed to mandatorily redeem, on
June 1, 1997, approximately $37.8 million in aggregate principal amount of its
senior subordinated discount notes and approximately $31.2 million in aggregate
principal amount of its senior subordinated notes. The failure to make these
scheduled payments constitutes an event of default under the indentures
governing these debt securities. As a result, the holders of these debt
securities are entitled to accelerate the debt represented thereby. Accordingly,
these debt obligations are classified as current liabilities in the accompanying
condensed consolidated balance sheets. The Company does not have the ability to
repay such indebtedness if the same were to be accelerated.
Page 14
<PAGE> 15
On May 16, 1997, the Company announced that it had reached an agreement in
principle with an unofficial committee of bondholders, representing more than
60% of its outstanding public debt, to convert 100% of its public bond debt to
equity. Under the agreement in principle, the restructuring will be effected
through a voluntary prepackaged bankruptcy filing to be made under chapter 11 of
the Bankruptcy Code at the holding company level. The Company's operating
subsidiaries will not be parties to such filing and will continue to conduct
business as usual.
Under the agreement in principle, all of the Company's notes and debentures,
with a carrying value of $242.4 million on May 3, 1997, will be exchanged for
substantially all of the reorganized company's new common stock. Specifically,
the holders of the Company's 10.25% senior subordinated notes and 10.85% senior
subordinated discount notes will receive approximately $10-14 million in cash,
contingent notes to be issued by JPS Capital Corp., a wholly-owned subsidiary of
the Company, providing payment of up to $34-38 million plus interest upon the
occurrence of certain events, and approximately 93.30% of the new common stock.
The holders of the 7% subordinated debentures will receive approximately 5.95%
of the new common stock. The Company's senior management will receive .75% of
the new common stock in lieu of payment under their contractual retention bonus
arrangements. The agreement also provides for the exchange of all of the
Company's existing senior preferred stock for warrants to purchase new common
stock of the reorganized company and cancellation of the Company's existing
junior preferred stock and common stock. Members of the Company's senior
management team are expected to enter into new employment agreements in
connection with the restructuring.
The Company anticipates that the necessary documentation will be completed and
the holding company's chapter 11 case will be commenced prior to the expiration
date of the senior credit facility. In such case, the senior credit facility
will be automatically extended to the earlier of November 1, 1997 or the
effective date of the holding company's chapter 11 reorganization. Accordingly,
the Company expects that the operating subsidiaries will continue to utilize the
senior credit facility during the holding company's chapter 11 case. Following
the restructuring, the Company's operating subsidiaries are expected to have a
new revolving credit facility, with terms no less favorable than the existing
facility.
If the Company is not successful in this regard, the default on the Company's
debt securities and its inability to service such debt as required raise
substantial doubt about the Company's ability to continue as a going concern.
Page 15
<PAGE> 16
JPS TEXTILE GROUP, INC.
PART II - OTHER INFORMATION
Item
1. Legal Proceedings None
2. Changes in Securities None
3. Defaults Upon Senior Securities
(a) The Company did not make scheduled November 15, 1996 and May 15,
1997 interest payments of approximately $1.9 million each on its
subordinated debentures and did not make scheduled December 1, 1996
and June 1, 1997 interest payments of approximately $5.4 million
each on its senior subordinated discount notes and approximately
$3.6 million each on its senior subordinated notes. In addition, the
Company failed to mandatorily redeem, on June 1, 1997, approximately
$37.8 million in aggregate principal amount of its senior
subordinated discount notes and approximately $31.2 million in
aggregate principal amount of its senior subordinated notes. The
failure to make these scheduled payments constitutes an event of
default under the indentures governing these debt securities. As a
result, the holders of these debt securities are entitled to
accelerate the debt represented thereby. On May 16, 1997, the
Company announced it had reached an agreement in principle with an
unofficial committee of bondholders, representing more than 60% of
its outstanding public debt, to convert 100% of its public bond debt
to equity.
(b) Dividends on the Company's senior preferred stock are
cumulative and 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. The Company did not declare and
accordingly has not distributed the scheduled November 15, 1996,
February 15, 1997 and May 15, 1997 senior preferred stock dividends
of 8,079 shares, 8,203 shares and 8,326 shares, respectively.
4. Submission of Matters to a Vote of Security Holders None
5. Other Information None
6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
(10.1) Tenth amendment to the Fourth Amended & Restated Credit
Agreement, dated as of April 29, 1997, by and among the
Company, JPS Elastomerics Corp., JPS Converter &
Industrial Corp., JPS Auto Inc., JPS Carpet Corp.,
International Fabrics, Inc., the financial institutions
listed on the signature pages thereof, Citibank, N.A. as
agent and Administrative Agent and General Electric
Capital Corporation as Co-Agent and Collateral Agent.
(10.2) Eleventh amendment to the Fourth Amended & Restated
Credit Agreement, dated as of May 15, 1997, by and among
the Company, JPS Elastomerics Corp., JPS Converter &
Industrial Corp., JPS Auto Inc., JPS Carpet Corp.,
International Fabrics, Inc., the financial institutions
listed on the signature pages thereof, Citibank, N.A. as
agent and Administrative Agent and General Electric
Capital Corporation as Co-Agent and Collateral Agent.
(11) Statement re: Computation of Per Share Earnings -
not required since such computation can be clearly
determined from the material contained herein.
(27) Financial Data Schedule
Page 16
<PAGE> 17
6. Exhibits and Reports on Form 8-K: (Continued)
(b) Current Reports on Form 8-K:
Report on Form 8-K dated May 16, 1997, containing disclosure
of the Company's agreement in principle with an unofficial
committee of bondholders, representing more than 60% of its
outstanding public debt, to convert 100% of its public bond
debt to equity.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JPS TEXTILE GROUP, INC.
Date: June 6, 1997 /s/ David H. Taylor
--------------------- --------------------------------------
David H. Taylor
Executive Vice President - Finance,
Secretary and Chief Financial Officer
Page 17
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
TENTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This Tenth Amendment to Fourth Amended and Restated Credit
Agreement dated as of April 29, 1997 (this "Amendment"), is entered into among
JPS TEXTILE GROUP, INC., a Delaware corporation (the "Company"), JPS
ELASTOMERICS CORP., a Delaware corporation ("JEC"), and JPS CONVERTER AND
INDUSTRIAL CORP., a Delaware corporation ("JCIC" and, together with JEC, the
"Borrowing Subsidiaries"), JPS AUTO INC., a Delaware corporation ("JPS Auto"),
JPS CARPET CORP., a Delaware corporation ("JCC"), INTERNATIONAL FABRICS, INC., a
Delaware corporation ("International Fabrics"), 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 capacity as
agent for the Senior Lenders hereunder (in such capacity, the "Agent"), and
GENERAL ELECTRIC CAPITAL CORPORATION, in its separate capacity as co- agent and
collateral agent for the Senior Lenders (in such capacity, 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, the Second Amendment to Fourth
Amended and Restated Credit Agreement dated as of December 21, 1994, the Third
Amendment to Fourth Amended and Restated Credit Agreement dated as of May 31,
1995, the Fourth Amendment to Fourth Amended and Restated Credit Agreement dated
as of October 28, 1995, the Fifth Amendment to Fourth Amended and Restated
Credit Agreement dated as of May 6, 1996, the Sixth Amendment to Fourth Amended
and Restated Credit Agreement dated as of May 15, 1996, the Seventh Amendment to
Fourth Amended and Restated Credit Agreement dated as of July 22, 1996, the
Eighth Amendment to Fourth Amended and Restated Credit Agreement dated as of
September 6, 1996 and the Ninth Amendment to Fourth Amended and Restated Credit
Agreement dated as of February 21, 1997 (as so amended, 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 shall have the meanings ascribed to them in the Credit
Agreement.
W I T N E S S E T H:
WHEREAS, the Company and the Borrowing Subsidiaries have
requested the Agent, the Collateral Agent and the Senior Lenders to amend the
definition of "Revolving Credit Termination Date" to extend the Revolving Credit
Termination Date (in the absence of a commencement of the Case or a termination
of the
<PAGE> 2
Commitments pursuant to Sections 9.02(a) or 11.13 of the Credit Agreement) from
May 1, 1997 to May 16, 1997;
NOW, THEREFORE, in consideration of the above premises, the
Company, the Borrowing Subsidiaries, the other Subsidiaries of the Company party
hereto, the Senior Lenders party hereto, 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 3 hereof, hereby amended as follows:
1.011 Section 1.01 of the Credit Agreement is amended by
deleting the definition of "Revolving Credit Termination Date" in its entirety
and substituting the following definition therefor:
"Revolving Credit Termination Date" shall mean the
earlier of (i) May 16, 1997 and (ii) the date of termination of the
Commitments pursuant to Section 9.02(a) or Section 11.13; provided,
however, that in the event the Company commences the Case, the
"Revolving Credit Termination Date" shall mean the earliest to occur of
(x) November 1, 1997, (y) the Effective Date of Reorganization and (z)
the date of termination of the Commitments pursuant to Section 9.02(a)
or Section 11.13.
1.012 Section 8.06 of the Credit Agreement is amended by (i)
deleting the amendment to such section made pursuant to the Ninth Amendment to
Fourth Amended and Restated Credit Agreement dated as of February 21, 1997, (ii)
deleting the word "and" following the second proviso contained in such section
and (iii) adding the following proviso immediately prior to the period at the
end of the third proviso contained in such section:
; and provided, further, that Capital Expenditures made or incurred by
the Company and its Subsidiaries on a consolidated basis for the period
beginning on the first day of Fiscal Year 1997 through May 16, 1997
shall not exceed $10,000,000
SECTION 2. Conditions Precedent to the Effectiveness of this
Amendment. This Amendment shall become effective as of the date hereof on the
date (the "Tenth Amendment Effective Date") when following conditions precedent
have been satisfied:
1.021 The Agent shall have received this Amendment (executed
by the Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and
the Collateral Agent), and such other notices, documents and agreements as are
reasonably requested by the Agent or any of the Senior Lenders relating to the
transactions contemplated by this Amendment.
-2-
<PAGE> 3
1.022 Each of the representations and warranties made by the
Company or any of the Borrowing Subsidiaries in or pursuant to the Credit
Agreement, as amended by this Amendment, 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 Tenth Amendment Effective Date (except for (i) any
such representations and warranties which expressly speak only as of a different
date, (ii) changes permitted or contemplated by the Credit Agreement and (iii)
those representations and warranties applicable to the Company contained in
clauses (e), (k), (l) and (o) of Section 4.01 of the Credit Agreement solely as
a result of the Company's inability to make any payments under the Subordinated
Indebtedness when due).
1.023 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the Tenth Amendment Effective Date (other
than an Extension Event of Default).
1.024 The Borrowing Subsidiaries shall have paid any fees due
and payable to the Agent, the Collateral Agent and/or the Senior Lenders on or
prior to the Tenth Amendment Effective Date, including, without limitation, the
Amendment Fees (as defined below).
SECTION 3. 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 (other than an
Extension Event of Default) 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
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 (except for (i) any
such representations and warranties which expressly speak only as of a different
date, (ii) changes permitted or contemplated by the Credit Agreement and (iii)
those representations and warranties referred to in clause (iii) of Section 2.02
hereof).
SECTION 4. Reference to and Effect on the Loan Documents.
1.041 Upon the effectiveness of this Amendment, on and after
the date hereof, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" 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.
-3-
<PAGE> 4
1.042 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.
1.043 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 5. Releases. In further consideration of the Senior
Lenders' execution of this Amendment, each of the Company, the Borrowing
Subsidiaries and each of the other Subsidiaries of the Company party hereto
hereby releases the Agent, the Collateral Agent and the Senior Lenders and their
respective affiliates, officers, employees, directors, agents and attorneys
(collectively, the "Releasees") from any and all claims, demands, liabilities,
responsibilities, disputes, causes of action (whether at law or equity) and
obligations of every nature whatsoever, whether liquidated or unliquidated,
known or unknown, matured or unmatured, fixed or contingent, that the Company or
any of the Borrowing Subsidiaries may have against the Releasees which arise
from or relate to any actions or inactions that the Releasees may have taken
prior to the date hereof with respect to the Obligations, any Collateral, the
Credit Agreement, any Loan Document and any third parties liable in whole or in
part for the Obligations. For purposes of the release contained in this section,
the terms "Company," and "Borrowing Subsidiary" shall mean and include the
Company's and each Borrowing Subsidiary's respective successors and assigns,
including, without limitation, any trustees acting on behalf of such parties.
SECTION 6. Fees, Costs and Expenses.
1.061 Each Borrowing Subsidiary 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 and the Collateral Agent in connection with the
preparation, reproduction, execution and delivery of this Amendment, including
the reasonable fees and out-of-pocket expenses of Sidley & Austin, counsel for
the Agent with respect thereto.
1.062 On the Tenth Amendment Effective Date the Borrowing
Subsidiaries shall pay $20,000 to each Senior Lender as an amendment fee (the
"Amendment Fees").
SECTION 7. 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 to be an
-4-
<PAGE> 5
original and all of which taken together shall constitute one and the same
original agreement.
SECTION 8. Consent. By its signature below, each of JPS Auto,
JCC and International Fabrics consents to this Amendment in its capacity as a
guarantor under the JPS Auto Guaranty, the Carpet Guaranty and the International
Fabrics Guaranty, respectively, and each hereby affirms its obligations under
such guaranties and under each of the other Loan Documents to which it is a
party.
SECTION 9. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the State of New
York.
-5-
<PAGE> 6
SECTION 10. Headings. Section headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
JPS TEXTILE GROUP, INC.
By: /s/ David H. Taylor
--------------------------------
Title: EVP-Finance & Secretary
JPS ELASTOMERICS CORP.
By: /s/ David H. Taylor
--------------------------------
Title: Vice President
JPS CONVERTER AND INDUSTRIAL CORP.
By: /s/ David H. Taylor
--------------------------------
Title: Vice President
JPS AUTO INC.
By: /s/ David H. Taylor
--------------------------------
Title: Vice President
JPS CARPET CORP.
By: /s/ David H. Taylor
--------------------------------
Title: Vice President
INTERNATIONAL FABRICS, INC.
By:/s/ David H. Taylor
--------------------------------
Title: Vice President
-6-
<PAGE> 7
Senior Lenders:
CITIBANK, N.A., as Agent and as a
Senior Lender
By: /s/ Brenda Cotsen
-----------------------------
Attorney-in-Fact
GENERAL ELECTRIC CAPITAL
CORPORATION, as Collateral Agent
and as a Senior Lender
By: /s/ Rick Luck
-----------------------------
Vice President, being duly
authorized
HELLER FINANCIAL, INC.
By: /s/ John D. Calabrese
----------------------------
Title:
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: /s/ Ryan D. Peak
---------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By: /s/ David J. Sapp
---------------------------
Title:
-7-
<PAGE> 1
EXHIBIT 10.2
EXECUTION COPY
ELEVENTH AMENDMENT TO FOURTH AMENDED
AND RESTATED CREDIT AGREEMENT
This Eleventh Amendment to Fourth Amended and Restated Credit
Agreement dated as of May 15, 1997 (this "Amendment"), is entered into among JPS
TEXTILE GROUP, INC., a Delaware corporation (the "Company"), JPS ELASTOMERICS
CORP., a Delaware corporation ("JEC"), and JPS CONVERTER AND INDUSTRIAL CORP., a
Delaware corporation ("JCIC" and, together with JEC, the "Borrowing
Subsidiaries"), JPS AUTO INC., a Delaware corporation ("JPS Auto"), JPS CARPET
CORP., a Delaware corporation ("JCC"), INTERNATIONAL FABRICS, INC., a Delaware
corporation ("International Fabrics"), 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 capacity as agent for the
Senior Lenders hereunder (in such capacity, the "Agent"), and GENERAL ELECTRIC
CAPITAL CORPORATION, in its separate capacity as co- agent and collateral agent
for the Senior Lenders (in such capacity, 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, the Second Amendment to Fourth Amended and
Restated Credit Agreement dated as of December 21, 1994, the Third Amendment to
Fourth Amended and Restated Credit Agreement dated as of May 31, 1995, the
Fourth Amendment to Fourth Amended and Restated Credit Agreement dated as of
October 28, 1995, the Fifth Amendment to Fourth Amended and Restated Credit
Agreement dated as of May 6, 1996, the Sixth Amendment to Fourth Amended and
Restated Credit Agreement dated as of May 15, 1996, the Seventh Amendment to
Fourth Amended and Restated Credit Agreement dated as of July 22, 1996, the
Eighth Amendment to Fourth Amended and Restated Credit Agreement dated as of
September 6, 1996, the Ninth Amendment to Fourth Amended and Restated Credit
Agreement dated as of February 21, 1997 and the Tenth Amendment to Fourth
Amended and Restated Credit Agreement dated as of April 29, 1997 (as so amended,
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 shall have the meanings
ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Company and the Borrowing Subsidiaries have
requested the Agent, the Collateral Agent and the Senior Lenders (i) to amend
the definition of "Revolving Credit Termination Date" to extend the Revolving
Credit Termination Date
<PAGE> 2
(in the absence of a commencement of the Case or a termination of the
Commitments pursuant to Sections 9.02(a) or 11.13 of the Credit Agreement) from
May 16, 1997 to July 16, 1997 and (ii) to amend Section 7.05 of the Credit
Agreement to change the limitation on the amount of dividends or loans that may
be made by the Borrowing Subsidiaries to the Company for the purposes specified
in such section;
NOW, THEREFORE, in consideration of the above premises, the
Company, the Borrowing Subsidiaries, the other Subsidiaries of the Company party
hereto, the Senior Lenders party hereto, 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 3 hereof, hereby amended as follows:
1.011 Section 1.01 of the Credit Agreement is amended by
deleting the definition of "Revolving Credit Termination Date" in its entirety
and substituting the following definition therefor:
"Revolving Credit Termination Date" shall mean the
earlier of (i) July 16, 1997 and (ii) the date of termination of the
Commitments pursuant to Section 9.02(a) or Section 11.13; provided,
however, that in the event the Company commences the Case, the
"Revolving Credit Termination Date" shall mean the earliest to occur of
(x) November 1, 1997, (y) the Effective Date of Reorganization and (z)
the date of termination of the Commitments pursuant to Section 9.02(a)
or Section 11.13.
1.012 Section 7.05 of the Credit Agreement is amended by
deleting the proviso at the end of such section and replacing it with the
following:
provided, however, that in no event shall the aggregate amount of
dividends or distributions made pursuant to clauses (b), (c), (d), (e)
and, solely after the commencement of the Case, (g) of this Section
7.05, together with any loans for the purposes specified in such
clauses made by the Borrowing Subsidiaries to the Company pursuant to
Section 7.01(ix), exceed $5,000,000 during the term of the Revolving
Credit Facility.
1.013 Section 7.06 of the Credit Agreement is amended by
deleting the proviso at the end of clause (i) of the proviso to such section and
replacing it with the following:
provided, however, after the effective date of the Extension Amendment,
the Company shall be only permitted to pay up to $450,000 of the
management fee payable in respect of Fiscal Year 1996 when such fee
becomes due and payable and shall
-2-
<PAGE> 3
not be permitted to pay any remaining portion of such fee
during the term of the Revolving Credit Facility
1.014 Section 8.06 of the Credit Agreement is amended by
deleting the date "May 16, 1997" contained in the proviso to such section added
pursuant to the Tenth Amendment to Fourth Amended and Restated Credit Agreement
dated as of April 30, 1997 and replacing it with the date "July 16, 1997".
SECTION 2. Conditions Precedent to the Effectiveness of this
Amendment. This Amendment shall become effective as of the date hereof on the
date (the "Eleventh Amendment Effective Date") when following conditions
precedent have been satisfied:
1.021 The Agent shall have received this Amendment (executed
by the Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and
the Collateral Agent), and such other notices, documents and agreements as are
reasonably requested by the Agent or any of the Senior Lenders relating to the
transactions contemplated by this Amendment.
1.022 Each of the representations and warranties made by the
Company or any of the Borrowing Subsidiaries in or pursuant to the Credit
Agreement, as amended by this Amendment, 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 Eleventh Amendment Effective Date (except for (i) any
such representations and warranties which expressly speak only as of a different
date, (ii) changes permitted or contemplated by the Credit Agreement and (iii)
those representations and warranties applicable to the Company contained in
clauses (e), (k), (l) and (o) of Section 4.01 of the Credit Agreement solely as
a result of the Company's inability to make any payments under the Subordinated
Indebtedness when due).
1.023 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the Eleventh Amendment Effective Date (other
than an Extension Event of Default).
1.024 The Borrowing Subsidiaries shall have paid any fees due
and payable to the Agent, the Collateral Agent and/or the Senior Lenders on or
prior to the Eleventh Amendment Effective Date.
SECTION 3. 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 (other than an
Extension Event of Default) shall have occurred and be continuing and (b) all of
the representations and warranties of the Loan Parties contained in subsections
4.01(a)
-3-
<PAGE> 4
through (dd) of the Credit Agreement and in any other Loan Document 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 (except for (i) any such representations
and warranties which expressly speak only as of a different date, (ii) changes
permitted or contemplated by the Credit Agreement and (iii) those
representations and warranties referred to in clause (iii) of Section 2.02
hereof).
SECTION 4. Reference to and Effect on the Loan
Documents.
1.041 Upon the effectiveness of this Amendment, on and after
the date hereof, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" 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.
1.042 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.
1.043 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 5. Releases. In further consideration of the Senior
Lenders' execution of this Amendment, each of the Company, the Borrowing
Subsidiaries and each of the other Subsidiaries of the Company party hereto
hereby releases the Agent, the Collateral Agent and the Senior Lenders and their
respective affiliates, officers, employees, directors, agents and attorneys
(collectively, the "Releasees") from any and all claims, demands, liabilities,
responsibilities, disputes, causes of action (whether at law or equity) and
obligations of every nature whatsoever, whether liquidated or unliquidated,
known or unknown, matured or unmatured, fixed or contingent, that the Company or
any of the Borrowing Subsidiaries may have against the Releasees which arise
from or relate to any actions or inactions that the Releasees may have taken
prior to the date hereof with respect to the Obligations, any Collateral, the
Credit Agreement, any Loan Document and any third parties liable in whole or in
part for the Obligations. For purposes of the release contained in this section,
the terms "Company," and "Borrowing Subsidiary" shall mean and include the
Company's and each Borrowing Subsidiary's respective successors and assigns,
including, without limitation, any trustees acting on behalf of such parties.
-4-
<PAGE> 5
SECTION 6. Costs and Expenses. Each Borrowing Subsidiary
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 and the Collateral Agent in
connection with the preparation, reproduction, execution and delivery of this
Amendment, including the reasonable fees and out-of-pocket expenses of Sidley &
Austin, counsel for the Agent with respect thereto.
SECTION 7. 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 to be an original and all of which taken together shall
constitute one and the same original agreement.
SECTION 8. Consent. By its signature below, each of JPS Auto,
JCC and International Fabrics consents to this Amendment in its capacity as a
guarantor under the JPS Auto Guaranty, the Carpet Guaranty and the International
Fabrics Guaranty, respectively, and each hereby affirms its obligations under
such guaranties and under each of the other Loan Documents to which it is a
party.
SECTION 9. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the
State of New York.
-5-
<PAGE> 6
SECTION 10. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
JPS TEXTILE GROUP, INC.
By: /s/ David H. Taylor
-------------------------------
Title: EVP-Finance & Secretary
JPS ELASTOMERICS CORP.
By: /s/ David H. Taylor
-------------------------------
Title: Vice President
JPS CONVERTER AND INDUSTRIAL CORP.
By: /s/ David H. Taylor
-------------------------------
Title: Vice President
JPS AUTO INC.
By: /s/ David H. Taylor
-----------------------------
Title: Vice President
JPS CARPET CORP.
By: /s/ David H. Taylor
-----------------------------
Title: Vice President
INTERNATIONAL FABRICS, INC.
By: /s/ David H. Taylor
-----------------------------
Title: Vice President
-6-
<PAGE> 7
Senior Lenders:
--------------
CITIBANK, N.A., as Agent and as a
Senior Lender
By: /s/ Brenda J. Cotsen
--------------------------------
Attorney-in-Fact
GENERAL ELECTRIC CAPITAL
CORPORATION, as Collateral Agent
and as a Senior Lender
By: /s/ Rick Luck
--------------------------------
Vice President, being duly
authorized
HELLER FINANCIAL, INC.
By: /s/ Frank J. Ross
------------------------------
Title:
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: /s/ Frank Imperato
------------------------------
Title:
NATIONSBANK OF GEORGIA, N.A.
By: /s/ David J. Sapp
-------------------------------
Title:
-7-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-END> MAY-03-1997
<CASH> 1,284
<SECURITIES> 0
<RECEIVABLES> 73,702
<ALLOWANCES> 1,518
<INVENTORY> 45,948
<CURRENT-ASSETS> 121,684
<PP&E> 245,406
<DEPRECIATION> 125,820
<TOTAL-ASSETS> 324,509
<CURRENT-LIABILITIES> 391,081
<BONDS> 3,304
35,219
250
<COMMON> 10
<OTHER-SE> (128,839)
<TOTAL-LIABILITY-AND-EQUITY> 324,509
<SALES> 205,305
<TOTAL-REVENUES> 205,305
<CGS> 177,972
<TOTAL-COSTS> 177,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,223
<INCOME-PRETAX> (16,641)
<INCOME-TAX> 409
<INCOME-CONTINUING> (17,050)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,050)
<EPS-PRIMARY> (19.59)
<EPS-DILUTED> (19.59)
</TABLE>
