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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF
THE SECURITIES EXCHANGE ACT OF 1934
JPS TEXTILE GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 57-0868166
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
555 N. Pleasantburg Drive
Suite 202
Greenville, South Carolina 29607
- ----------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 239-3900
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered each class is to be registered
---------------- ------------------------------
None
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
$.01 PAR VALUE PER SHARE
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(Title of Class)
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NYFS09...:\75\55175\0042\5537\REG8187N.09B
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TABLE OF CONTENTS
Page
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ITEM 1. BUSINESS.......................................................... 1
ITEM 2. SELECTED HISTORICAL FINANCIAL DATA................................ 8
ITEM 3. PROPERTIES........................................................ 27
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT........................................................ 28
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.................................. 32
ITEM 6. EXECUTIVE COMPENSATION............................................ 35
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 40
ITEM 8. LEGAL PROCEEDINGS................................................. 40
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS............................ 40
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.......................... 41
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.......... 41
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS........................ 43
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................... 44
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............................... 44
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS................................ 44
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ITEM 1. BUSINESS.
BACKGROUND
JPS Textile Group, Inc., a Delaware corporation ("JPS"), and its
subsidiaries (collectively with JPS, the "Company") are one of the largest
domestic manufacturers of textile and textile-related products for the apparel,
industrial and home fashion markets. The Company conducts its operations from
ten manufacturing plants in five states and employs approximately 3,700 people.
The Company competes in three industry segments: Apparel Fabrics and Products,
Industrial Fabrics and Products and Home Fashion Textiles.
Apparel Fabrics and Products. The Company is a leading manufacturer
of greige goods (unfinished woven fabrics) and yarn. The Company's
products are used in the manufacture of a broad range of consumer apparel
products including blouses, dresses, sportswear and undergarments. The
Company produces greige fabrics from spun and filament yarns that are used
ultimately in the manufacture of apparel such as blouses, dresses and
sportswear. Greige goods are produced primarily from rayon, acetate,
polyester and cotton and are primarily sold to other textile manufacturers
for use in producing printed and dyed fabrics. The Company also produces a
variety of rayon and polyester spun yarns for its own use and for sale to
manufacturers of knitted apparel.
Industrial Fabrics and Products. The Company manufactures products
used by the building construction industry and a broad range of woven
fabrics with specialty applications. Principal construction products
include single-ply membrane roofing and fiberglass reinforcement fabrics.
In addition, the Company produces membranes for use primarily in
environmental containment systems and specialty urethane products for use
in the manufacture of various products such as athletic shoes,
"bulletproof" glass, disposable intravenous bags, seamless welded drive
belts and tubing. Other fabrics produced in this segment are used in the
manufacture of such products as flame retardant clothing, filtration
products, tarpaulins, awnings, athletic tapes, electronic circuit boards
and advanced composites.
Home Fashion Textiles. The Company produces a variety of unfinished
woven fabrics and yarns for use in the manufacture of draperies, curtains
and lampshades and is a major producer of solution-dyed drapery fabrics.
JPS was organized in December 1986, and its wholly-owned operating
subsidiaries include JPS Elastomerics Corp. ("Elastomerics") and JPS Converter
and Industrial Corp. ("C&I"). JPS's remaining wholly- owned subsidiaries do not
have any significant operations: JPS Capital Corp. ("JPS Capital"),
International Fabrics, Inc. ("Fabrics"), JPS Auto, Inc. ("Auto"), and JPS Carpet
Corp. ("Carpet"). The operating subsidiaries each have independent
administrative, manufacturing, and marketing capabilities for all material
aspects of their operations, including product design, customer service,
purchasing, and collections. JPS provides all finance and strategic planning
services and handles the legal, tax, and regulatory affairs for its
subsidiaries. JPS Capital was formed in 1994 as a special purpose subsidiary to
hold (and invest) $39.5 million, representing a portion of the proceeds received
from the sale of the assets of the Company's automotive division in June 1994,
including the assets of Auto. These funds were set aside to satisfy possible
contingent tax liabilities incurred in connection with that sale. The funds held
by JPS Capital currently aggregate approximately $48.2 million. Auto and Carpet
formerly owned and operated the Company's automotive products and carpet
businesses, respectively. The assets of those businesses were sold in 1994 and
1995, respectively. See "-- Dispositions of Assets; Plant Closing."
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In addition to its direct ownership interest in the foregoing
domestic corporations, JPS has an indirect ownership interest in a foreign
corporation. Specifically, in 1996, JPS's wholly-owned subsidiary, Fabrics,
acquired a 50% ownership interest in the Mexican corporation, Ingeneria Textil
Mexicano, S.A. de C.V. ("ITM"), which is engaged in the manufacture and sale of
textile products for the apparel industry in Mexico.
The principal executive offices of the Company are located at 555
North Pleasantburg Drive, Suite 202, Greenville, South Carolina 29607; telephone
number (864) 239-3900.
The 1988 Acquisition
On May 9, 1988, JPS acquired substantially all the assets of certain
operating divisions (the "Predecessor Stevens Divisions") of J.P. Stevens & Co.,
Inc. ("J.P. Stevens") in exchange for approximately $527 million in cash and
reorganized the newly acquired divisions into wholly-owned direct and indirect
subsidiaries. At that time, the Company issued certain public debt and equity
securities in order to partially finance the acquisition. In June 1989, the
Company raised $323.6 million by issuing certain public debt and equity
securities to refinance certain outstanding notes and a portion of the
indebtedness incurred in connection with the acquisition. Due to prevailing
market conditions, the securities were priced for sale at higher rates than the
Company anticipated would be necessary at the time of the acquisition. As a
result of the high interest rates and a weak business environment for certain of
the subsidiaries, the Company realized lower than expected operating earnings
and cash flow which, in turn, materially impaired its ability to service its
outstanding debt and fund capital expenditures.
The 1991 Restructuring
In 1990, the Company negotiated the terms of a recapitalization
proposal with a steering committee comprised of institutional holders of a
substantial amount of the then-outstanding securities, which culminated in JPS's
prepetition solicitation of votes to accept or reject a chapter 11 plan of
reorganization. The plan was overwhelmingly accepted. On February 7, 1991, JPS
filed a petition for relief under chapter 11 of title 11, United States Code
(the "Bankruptcy Code"), and approximately 42 days thereafter, JPS's plan was
confirmed by the bankruptcy court and JPS emerged from chapter 11. Pursuant to
that plan, in exchange for the Company's outstanding debt securities and JPS's
equity securities, JPS issued (i) $100 million in principal amount of senior
secured notes due June 1, 1995 and June 1, 1996 (all of which were redeemed in
1994), (ii) $151.1 million in principal amount of 10.85% Senior Subordinated
Discount Notes due June 1, 1999 (the "10.85% Notes"), $125 million in principal
amount of 10.25% Senior Subordinated Notes due June 1, 1999 (the "10.25%
Notes"), and $75 million in principal amount of 7% Subordinated Debentures due
May 15, 2000 (the "7% Subordinated Debentures" and, collectively with the 10.85%
Notes and the 10.25% Notes, the "Old Debt Securities"), (iii) 390,719 shares of
Series A Senior Preferred Stock (the "Old Senior Preferred Stock"), (iv) 10,000
shares of Series B Junior Preferred Stock (the "Old Junior Preferred Stock"),
(v) 490,000 shares of class A common stock, par value $0.01 per shares (the
"Class A Common Stock") and (vi) 510,000 shares of class B common stock, par
value $0.01 per shares (the "Class B Common Stock" and, together with the Class
A Common Stock, the "Old Common Stock"). The 1991 restructuring did not
significantly reduce the amount of the Company's outstanding indebtedness.
Dispositions of Assets; Plant Closings
Since the 1991 restructuring, the Company has adopted and
implemented various strategies aimed at improving and realizing value in its
operating subsidiaries. These strategies have included, among
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other things, the exit, through asset sales or otherwise, of certain
unprofitable product lines, including the following:
THE AUTOMOTIVE ASSET SALE. On June 28, 1994, the Company sold 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) to
JPS Automotive Products Corp., an indirect, wholly-owned subsidiary of Foamex
International Inc., for approximately $283 million.
THE CARPET ASSET SALE. On November 16, 1995, JPS and Carpet sold
substantially all the assets of Carpet used in the business of designing and
manufacturing tufted carpets for sale to residential, commercial and hospitality
markets to Gulistan Holdings Inc. and Gulistan Carpet Inc. (a wholly-owned
subsidiary of Gulistan Holdings Inc.) for approximately $19 million in cash and
debt and equity securities of Gulistan Holdings Inc.
PLANT CLOSING. On August 28, 1996, the Company implemented a plan to
close its Dunean plant in Greenville, South Carolina, as a result of
management's determination that a permanent decline in the Company's spun
apparel business had occurred. This plant had been operating on a reduced
schedule due to poor market conditions and financial projections indicated it
would continue to do so. This plant was closed on October 28, 1996 and sold on
August 14, 1997 for approximately $1.2 million in cash.
THE RUBBER PRODUCTS SALE. On September 30, 1996, 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 to Elastomer
Technologies Group for approximately $5.4 million in cash.
The 1997 Restructuring
On May 16, 1997, JPS, JPS Capital, and an informal committee of
institutions that owned, or represented beneficial holders that owned,
approximately 60% of the Company's outstanding Old Debt Securities (the
"Unofficial Bondholder Committee") reached an agreement in principle on the
terms of a restructuring to be accomplished pursuant to a joint plan of
reorganization for JPS proposed by JPS and JPS Capital (the "Plan of
Reorganization") under chapter 11 of the Bankruptcy Code. Pursuant to a
disclosure statement, dated June 25, 1997 (the "Disclosure Statement"), on June
26, 1997, JPS and JPS Capital commenced a prepetition solicitation of votes by
the holders of Old Debt Securities and Old Senior Preferred Stock to accept or
reject the Plan of Reorganization. Under the Plan of Reorganization, the holders
of Old Debt Securities and Old Senior Preferred Stock were the only holders of
impaired claims and impaired equity interests entitled to receive a
distribution, and therefore, pursuant to section 1126 of the Bankruptcy Code,
were the only holders entitled to vote on the Plan of Reorganization. At the
conclusion of the 32-day solicitation period, the Plan of Reorganization had
been accepted by holders of more than 99% of the Old Debt Securities that voted
on the Plan of Reorganization and by holders of 100% of the Old Senior Preferred
Stock that voted on the Plan of Reorganization.
On August 1, 1997, JPS commenced its voluntary reorganization case
under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of New York (the "Bankruptcy Court"), and filed the
Plan of Reorganization and the Disclosure Statement. None of JPS's subsidiaries,
including JPS Capital which is a co-proponent of the Plan of Reorganization, has
commenced a case under the Bankruptcy Code. Pursuant to an order of the
Bankruptcy Court entered on August 1, 1997, a
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hearing before the Bankruptcy Court to consider (i) approval of the Disclosure
Statement and the solicitation of votes on the Plan of Reorganization is
scheduled to be held on September 9, 1997 (the "Disclosure Statement Hearing"),
and (ii) confirmation of the Plan of Reorganization is scheduled to be held
immediately following the conclusion of the Disclosure Statement Hearing. JPS
anticipates (but can give no assurance) that, if the Bankruptcy Court enters an
order confirming the Plan of Reorganization on or about September 9, 1997, the
Plan of Reorganization will become effective before the end of September 1997
(the date of such effectiveness being the "Effective Date").
Through the implementation of the Plan of Reorganization on and
after the Effective Date, JPS's most significant financial obligations will have
been restructured: $240,091,318 in face amount of outstanding Old Debt
Securities will be converted to, among other things, $14 million in cash, 99.25%
of the shares of JPS's new common stock to, be issued on the Effective Date (the
"New Common Stock"), and $34 million in aggregate principal amount (subject to
adjustment on the maturity date) of Contingent Payment Notes to be issued by JPS
Capital on the Effective Date (the "Contingent Notes"); the Old Senior Preferred
Stock, the Old Junior Preferred Stock and the Old Common Stock will be
cancelled; warrants to purchase up to 5% of the New Common Stock (the "New
Warrants") will be issued to holders of Old Senior Preferred Stock; and the
obligations of the Company under its working capital facility will be satisfied
and a new working capital facility will be obtained. JPS's senior management
will receive approximately 0.75% of the New Common Stock in lieu of payment
under the contractual retention bonus agreements described in Note 9 to the
Consolidated Financial Statements. As a result of the restructuring, JPS's only
significant debt obligation will be its guaranty of the obligations of its
operating subsidiaries under the new working capital facility.
OPERATIONS
Each operating subsidiary of JPS has individual administrative,
manufacturing and marketing capabilities for all material aspects of operations,
including product design, customer service, purchasing and credit and
collection. Corporate support services provided by JPS include finance,
strategic planning, legal, tax and regulatory affairs.
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. Five additional regional sales offices and three distribution
centers are maintained by the Company, principally for its roofing and building
construction products.
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 yarns. 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.
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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 cotton 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 maintains 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. In recent years, a large and growing percentage of domestic consumer
apparel demand has been met by foreign competitors whose products, both fabrics
and garments, are imported into the United States. The Company is well
positioned due to its ability 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 rayon and acetate apparel fabrics, rayon
yarn, solution-dyed satin fabrics and quartz fabrics markets.
The Company's marketing efforts include the development of new
product designs and styles which meet customer needs. The Company's operating
units have been established suppliers to each of its markets for many years and
are 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 non-exclusive, royalty-free license to use (see "-- Patents,
Licenses and Trademarks"), 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
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provide a competitive advantage. As a result of Fabric's 50% ownership interest
in ITM, which is involved in dyeing, printing and finishing fabrics primarily
for use in Mexico, the Company expects its sales of greige goods to Mexico to
grow significantly.
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.
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 products' ease of installation and 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.
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. In
addition, the Company believes that design and style features are important
competitive factors.
CUSTOMERS
No customer accounts for more than 10% of the Company's sales.
However, the loss of certain customers 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
$63.2 million at May 3, 1997, $52.6 million at November 2, 1996 and $50.5
million at October 28, 1995 (1995 amount is adjusted to
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exclude the discontinued operations of the carpet business sold in November
1995). The Company generally fills its open orders in the following twelve month
period. Unfilled open orders, which the Company believes are firm, were
approximately $70.2 million at June 30, 1997 compared to approximately $49.7
million at June 30, 1996. The increase in open orders at June 30, 1997 as
compared to June 30, 1996 is primarily due to an increase in customer demand for
certain apparel and cotton industrial fabrics and products and 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 except for the licenses of certain tradenames
granted royalty free to operations that the Company has sold.
EMPLOYEES
The Company currently has approximately 3,700 employees, of which
approximately 3,200 are hourly and approximately 500 are salaried. Of these
employees, eight are employed directly by JPS. The Company's employees are not
represented by unions. The Company believes its relations with its employees are
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, the
discharge, storage, handling and disposal of a variety of hazardous and
non-hazardous substances and wastes. The Company's plants generate small
quantities of hazardous waste that are either recycled or disposed of off-site
by or at licensed disposal or treatment facilities.
The Company believes that it is in substantial compliance with all
existing environmental laws and regulations to which it is subject. In addition,
the Company is subject to liability under environmental laws relating to the
past release or disposal of hazardous materials. To date, and in management's
belief for the foreseeable future, the Company's liability under and compliance
with existing environmental laws has not had and will not have a material
adverse effect on the Company's financial or competitive positions. No
representation or assurance can be made, however, that any change in federal,
state or local requirements or the discovery of unknown problems or conditions
will not require substantial expenditures by the Company.
SEASONALITY
Certain portions of the business of the Company are seasonal
(principally construction products) and sales of these products tend to decline
during winter months in correlation with the decline in
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construction activity. These declines have historically tended to result in
lower sales and operating profits in the first and second quarters than in the
third and fourth quarters of the Company's fiscal year.
ITEM 2. 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 periods
indicated. The selected financial data for each of the five years ended November
2, 1996 has been derived from the Consolidated Financial Statements of the
Company for such periods, which have been audited. The presentation of certain
previously reported amounts have been reclassified to conform to the current
presentation and to reflect discontinued operations of the Automotive Assets
(sold in 1994) and the Carpet Business (sold on November 16, 1995) as discussed
in Note 3 to the financial statements at Item 15 in this Registration Statement.
The selected financial data for the six months ended May 3, 1997 has been
derived from the unaudited Consolidated Financial Statements of the Company and,
in the opinion of management, include all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the financial
condition and results of operations of the Company for such periods. The
selected unaudited pro forma financial data for the fiscal year ended November
2, 1996 and the six months ended May 3, 1997 give effect to the reorganization
and adoption of fresh start reporting as if they had occured on October 29, 1995
and November 3, 1997, respectively. The pro forma selected financial data for
the fiscal year ended November 2, 1996 and the six months ended May 3, 1997 has
been derived from the pro forma financial statements for the respective periods
included herein. The following information should be read in conjunction with
the Consolidated Financial Statements of the Company and Notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Pro Forma Financial Statements" presented elsewhere herein.
<TABLE>
<CAPTION>
Fiscal Year Ended
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10/31/92 10/30/93 10/29/94 10/28/95 11/2/96 11/2/96
INCOME STATEMENT DATA: (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (53 Weeks) Pro Forma
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 476,326 $ 457,552 $ 461,871 $ 472,565 $ 448,824 $ 448,824
Cost of sales 404,547 396,160 397,921 406,070 397,804 384,767
--------- --------- --------- --------- --------- ---------
Gross profit 71,779 61,392 63,950 66,495 51,020 64,057
Selling, general and administrative expenses 37,391 39,023 39,805 39,586 40,579 42,261
Other expense, net 1,372 1,236 2,914 6,248 2,498 2,498
Charges for plant closing, loss on sale of
certain operations and writedown of certain
long-lived assets - - - - 30,028 30,028
--------- --------- --------- --------- --------- ---------
Operating profit (loss) 33,016 21,133 21,231 20,661 (22,085) (10,730)
Valuation allowance on Gulistan securities - - - - (4,242) -
Interest income 1 48 749 2,821 2,856 1,974
Interest expense (58,513) (60,407) (55,570) (39,946) (40,510) (9,592)
--------- --------- --------- --------- --------- ---------
Income (loss) before reorganization items,
income taxes, discontinued operations,
extraordinary items and cumulative effects
of accounting changes (25,496) (39,226) (33,590) (16,464) (63,981) (18,348)
Reorganization items - professional fees and
expenses - - - - (2,255) -
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes, discontinued
operations, extraordinary items and
cumulative effects of accounting changes (25,496) (39,226) (33,590) (16,464) (66,236) (18,348)
Income taxes (benefit) 1,446 1,782 2,800 1,200 (300) (300)
--------- --------- --------- --------- --------- ---------
Income (loss) before discontinued operations,
extraordinary items and cumulative effects
of accounting changes (26,942) (41,008) (36,390) (17,664) (65,936) (18,048)
Discontinued operations, net of taxes:
Income (loss) from discontinued operations 16,089 24,165 23,628 (7,079) - -
Net gain (loss) on sale of discontinued
operations - - 132,966 (26,241) (1,500) (1,500)
Extraordinary gain (loss), net of taxes - - (7,410) 20,120 - -
Cumulative effects of accounting changes,
net of taxes - - (4,988) (708) - -
--------- --------- --------- --------- --------- ---------
Net income (loss) $ (10,853) $ (21,831) $ 112,086 $ (30,864) $ (67,436) $ (19,548)
========= ========= ========= ========= ========= =========
Income (loss) applicable to common stock $ (13,312) $ (24,694) $ 108,753 $ (34,695) $ (71,941) $ (19,548)
========= ========= ========= ========= ========= =========
</TABLE>
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<TABLE>
<CAPTION>
Six Months Ended
----------------------------------
4/27/96 5/3/97 5/3/97
INCOME STATEMENT DATA: (26 Weeks) (26 Weeks) Pro Forma
--------- --------- ---------
<S> <C> <C> <C>
Net sales $ 223,178 $ 205,305 $ 205,305
Cost of sales 198,727 177,972 172,684
--------- --------- ---------
Gross profit 24,451 27,333 32,621
Selling, general and administrative expenses 20,713 19,607 20,448
Other expense, net 1,949 383 383
Charges for plant closing, loss on sale of
certain operations and writedown of certain
long-lived assets - - -
--------- --------- ---------
Operating profit (loss) 1,789 7,343 11,790
Valuation allowance on Gulistan securities (4,068) (2,088) -
Interest income 1,388 1,471 1,030
Interest expense (19,565) (20,223) (4,409)
--------- --------- ---------
Income (loss) before reorganization items,
income taxes, discontinued operations,
extraordinary items and cumulative effects
of accounting changes (20,456) (13,497) 8,411
Reorganization items - professional fees and
expenses (175) (3,144) -
--------- --------- ---------
Income (loss) before income taxes, discontinued
operations, extraordinary items and
cumulative effects of accounting changes (20,631) (16,641) 8,411
Income taxes (benefit) 208 409 3,652
--------- --------- ---------
Income (loss) before discontinued operations,
extraordinary items and cumulative effects
of accounting changes (20,839) (17,050) 4,759
Discontinued operations, net of taxes:
Income (loss) from discontinued operations - - -
Net gain (loss) on sale of discontinued
operations (1,500) - -
Extraordinary gain (loss), net of taxes - - -
Cumulative effects of accounting changes,
net of taxes - - -
--------- --------- ---------
Net income (loss) $ (22,339) $ (17,050) $ 4,759
========= ========= =========
Income (loss) applicable to common stock $ (24,531) $ (19,592) $ 4,759
========= ========= =========
</TABLE>
8-b
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------------------------------
10/31/92 10/30/93 10/29/94 10/28/95 11/2/96 11/2/96
INCOME STATEMENT DATA: (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) Pro Forma
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Weighted average number of shares
outstanding 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 10,000,000
========= ========= ========= ========= ========= =========
Earnings (loss) per common share:
Loss before discontinued operations,
extraordinary items and effects
of accounting changes $(29.40) $ (43.87) $ (39.73) $ (21.50) $ (70.44) $ (1.83)
Discontinued operations, net of taxes:
Income (loss) from discontinued
operations 16.09 24.17 23.63 (7.08) - -
Net gain (loss) on sale of
discontinued operations - - 132.97 (26.24) (1.50) (.15)
Extraordinary gain (loss), net of taxes - - (7.41) 20.12 - -
Cumulative effects of accounting
changes, net of taxes - (4.99) (0.71) - - -
--------- --------- --------- --------- --------- ---------
Net income (loss) $ (13.31) $(24.69) $ 108.75 $(34.70) $ (71.94) $ (1.98)
========= ========= ========= ========= ========= =========
BALANCE SHEET DATA:
Working capital, excluding net assets
held for sale $ 61,431 $63,821 $ 65,855 $72,670 $(257,866)(2)
Total assets 511,535 532,608 452,811 412,822 335,927
Total long-term debt, less current
portion 488,280 522,947 335,472 327,668 4,226 (2)
Senior redeemable preferred stock 18,144 21,007 24,340 28,171 32,676
Shareholders' (deficit) equity (86,409) (111,103) (2,350) (37,045) (108,986)
Certain non-cash charges to income:
Depreciation $ 19,736 $19,799 $ 22,242 $20,820 $ 21,756 $8,976
Amortization of goodwill and other 975 969 964 965 983 2,641
Product liability charge - - - 5,000 - -
Writedown of certain long-lived assets - - - - 17,554 17,554
Valuation allowance on Gulistan
securities - - - - 4,242 -
Other non-cash charges to income 888 1,957 131 371 - -
Non-cash interest 18,502 11,729 11,161 8,818 10,088 646
--------- --------- --------- --------- --------- ---------
$ 40,101 $ 34,454 $ 34,498 $ 35,974 $ 54,623 $ 29,817
========= ========= ========= ========= ========= =========
</TABLE>
9-a
TABLE CONTINUED ON FOLLOWING PAGE
<PAGE>
TABLE CONTINUED FROM PREVIOUS PAGE
<TABLE>
<CAPTION>
Six Months Ended
---------------------------------------
4/27/96 5/3/97 5/3/97
INCOME STATEMENT DATA: (26 Weeks) (26 Weeks) Pro Forma
--------- --------- ---------
<S> <C> <C> <C>
Weighted average number of shares
outstanding 1,000,000 1,000,000 10,000,000
========= ========= ==========
Earnings (loss) per common share:
Loss before discontinued operations,
extraordinary items and effects
of accounting changes $ (23.03) $ (19.59) $ 0.46
Discontinued operations, net of taxes:
Income (loss) from discontinued
operations - - -
Net gain (loss) on sale of
discontinued operations (1.50) - -
Extraordinary gain (loss), net of taxes - - -
Cumulative effects of accounting
changes, net of taxes - - -
--------- --------- ---------
Net income (loss) $ (24.53) $ (19.59) $ 0.46
========= ========= =========
BALANCE SHEET DATA:
Working capital, excluding net assets
held for sale $ (9,709)(2) $(269,397)(2) $ 74,478 (3)
Total assets 377,237 324,509 302,954
Total long-term debt, less current
portion 239,019 3,304 87,075
Senior redeemable preferred stock 30,363 35,219 -
Shareholders' (deficit) equity (61,576) (128,579) 123,330
(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. The following non-cash charges
are not intended to represent net income or cash flows from operations
in accordance with generally accepted accounting principles.
Certain non-cash charges to income:
Depreciation $ 11,364 $ 9,096 $ 3,942
Amortization of goodwill and other 482 482 1,321
Product liability charge - - -
Writedown of certain long-lived assets - - -
Valuation allowance on Gulistan
securities 4,068 2,088 -
Other non-cash charges to income 241 402 402
Non-cash interest 4,622 4,919 320
--------- --------- ---------
$20,777 $16,987 $ 5,985
========= ========= =========
</TABLE>
(2) As discussed in Note 6 of the Notes to Consolidated Financial
Statements included in Item 15 herein, all of the Company's senior
credit facility revolving line of credit ($85,639) and all of JPS's
subordinated notes and debentures ($237,661) are classified as current
liabilities as of November 2, 1996.
(3) The amounts to be outstanding under the Company's new credit facility
are classified as long-term liabilities in the pro forma presentation.
9-b
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
The unaudited pro forma capitalization table, unaudited pro forma condensed
consolidated balance sheet and unaudited pro forma condensed consolidated
statements of operations presented on the following pages are based upon the
historical results of operations of the Company for the year ended November 2,
1996 and the historical financial position and results of operations of the
Company as of and for the six months ended May 3, 1997. The pro forma
adjustments made to the historical results of operations give effect to the Plan
of Reorganization as if the transactions had occurred on October 29, 1995. In
addition, since the reorganization is to be effectuated pursuant to chapter 11
of the Bankruptcy Code, the provisions of Statement of Position (SOP) 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code",
which require the application of fresh start reporting, have been reflected in
the statements of operations for the fiscal year ended November 2, 1996. The
unaudited pro forma capitalization table and unaudited pro forma condensed
consolidated balance sheet as of May 3, 1997 presented below are based upon the
historical balance sheet as of May 3, 1997, and include pro forma adjustments as
if the reorganization and adoption of fresh start reporting had been completed
on that date. The pro forma condensed consolidated statements of operations,
condensed consolidated balance sheet and pro forma capitalization table are
unaudited and were derived by adjusting the historical financial statements of
the Company for certain transactions as described in the respective notes
thereto. These pro forma financial statements are provided for informational
purposes only and should not be construed to be indicative of the financial
conditions or results of operations of the Company had the transactions
described therein been consummated on the respective dates indicated and are not
intended to be predictive of the financial condition or results of operations of
the Company at any future date or for any future period.
The pro forma adjustments are based on available information and upon certain
assumptions that the Company believes are reasonable under the circumstances.
The pro forma financial data and accompanying notes should be read in
conjunction with the historical Consolidated Financial Statements of the
Company, including the Notes thereto, and the other information pertaining to
the Company appearing elsewhere in this Registration Statement.
10
<PAGE>
PRO FORMA CAPITALIZATION
MAY 3, 1997
(Unaudited)
(Dollars in thousands except par value)
As Adjusted for
the Reorganization
and Fresh
Historical Start Reporting
---------- ---------------
Long-term debt:
Borrowings under existing credit facility $ 79,183
Borrowings under new credit facility $ 83,771
10.25% Senior Subordinated Notes 81,315
10.85% Senior Subordinated Discount Notes 113,836
7% Subordinated Debentures 47,252
Equipment financing 5,606 5,606
-------- ---------
Total long-term debt 327,192 89,377
-------- ---------
Senior redeemable preferred stock 35,219
Shareholders' equity (deficit):
Junior preferred stock 250
Common stock (historical):
Class A, $.01 par value, 490,000 shares issued and
outstanding 5
Class B, $.01 par value, 510,000 shares issued and
outstanding 5
Common stock (pro forma):
$.01 par value 22,000,000 shares authorized,
10,000,000 shares issued and outstanding 100
Additional paid-in capital 22,565 123,230
Deficit (151,404)
--------- ---------
Total shareholders' equity (deficit) (128,579) 123,330
--------- ---------
Total capitalization $233,832 $ 212,707
======== =========
11
<PAGE>
JPS TEXTILE GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
May 3, 1997
---------------------------------------------------
Reorganization Fresh Start
Historical Adjustments Adjustments(e) Pro Forma
---------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Assets
Cash $ 1,284 $ 1,284
Receivables 72,184 72,184
Inventory 45,948 45,948
Sundry current assets 2,268 2,268
-------- -------- --------- --------
Total current assets 121,684 121,684
-------- -------- --------- --------
Property, plant and equipment, net 119,586 $ (19,357)(f) 100,229
Deferred financing costs 274 $1,570 (b) 1,844
Prepaid (accrued) pension cost 581 (7,584)(g) (7,003)
Existing goodwill of net assets
acquired, net 30,023 (30,023)
Other assets 52,361 (18,982)(c) 33,379
Excess reorganization value 52,821 52,821
-------- -------- --------- --------
Total assets $324,509 $(17,412) $ (4,143) $302,954
======== ======== ========= ========
Liabilities and Shareholders' Equity
Accounts payable $ 23,429 $ 23,429
Accrued interest 20,905 $(20,659)(a) 246
Accrued salaries, benefits and withholdings 11,121 (1,037)(a) 10,084
Other accrued expenses 11,738 (593)(b) 11,145
Senior credit facility, revolving line of
credit 79,183 4,588 (a)(b) 83,771
Current portion of long-term debt 244,705 (242,403)(a) 2,302
-------- -------- --------- --------
Total current liabilities 391,081 (260,104) 130,977
-------- -------- --------- --------
Long-term debt 3,304 3,304
Contingent notes payable 33,185 (a) 33,185
Deferred income tax liability (asset) 3,665 (9,745)(d) (6,080)
Other long-term liabilities 19,819 $(1,581)(h) 18,238
Senior redeemable preferred stock 35,219 (35,219)(a)
Capital stock 22,825 100,505 (a) 123,330
Retained earnings (deficit) (151,404) 153,966 (a)(b) (2,562)
(c)(d)
-------- -------- --------- --------
Total (128,579) 254,471 (2,562) 123,330
-------- -------- --------- --------
Total liabilities & equity $324,509 $(17,412) $ (4,143) $302,954
======== ======== ========= ========
</TABLE>
12
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands unless otherwise noted)
(a) The Plan provides for a deleveraging of JPS through an exchange of the
10.25% Notes, the 10.85% Notes, and the 7% Subordinated Debentures for, among
other things, $14 million in cash, 9,924,623 shares of New Common Stock, and $34
million in aggregate principal amount (subject to adjustment on the maturity
date) of Contingent Payment Notes. In addition, the Old Senior Preferred Stock
is expected to be exchanged for warrants to purchase 526,316 shares of New
Common Stock (the "New Warrants"), and the Old Senior Preferred Stock, the Old
Junior Preferred Stock and the Old Common Stock are to be canceled. The
Contingent Notes are payable out of the assets of JPS Capital. The amount shown
on the pro forma consolidated balance sheet reflects the assets of JPS Capital
as they exist on May 3, 1997. As part of the reorganization, retention bonuses
payable to members of the Management Group will, pursuant to the amended and
restated agreements set forth in Exhibit H to the Plan, be paid in a combination
of cash and New Common Stock. The impact of the foregoing on the Company's
balance sheet as of May 3, 1997 is as follows:
<TABLE>
<CAPTION>
Accrued Current
Salaries, Revolving Portion of Contingent Senior
Accrued Benefits & Line of Long-Term Notes Preferred Capital Retained
Interest Withholdings Credit Debt Payable Stock Stock Earnings
---------- ---------- ------ ---- ------- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(1) $(20,659) $(242,403) $ 33,185 $122,400 $107,477
(2) $(35,219) 35,219
(3) (22,825) 22,825
(4) $ (1,037) $ 588 930 (481)
--------- -------- ----- --------- -------- -------- -------- --------
$(20,659) $ (1,037) $ 588 $(242,403) $ 33,185 $(35,219) $100,505 $165,040
========= ======== ===== ========= ======== ======== ======== ========
</TABLE>
(1) Reflects the exchange of the 10.25% Notes, the 10.85% Notes, and the 7%
Subordinated Debentures for, among other things, $14 million in cash,
9,924,623 shares of New Common Stock and Contingent Notes. Such
reorganization value is based upon the following valuation methodologies:
(i) a comparison of the Company and its projected performance to how the
market values companies in comparable lines of business, and (ii) a
calculation of the present value of the free cash flows under the
projections, including an assumption for a terminal value.
The market-based approach involves identifying a group of publicly traded
companies whose businesses or product lines are comparable to the Company
as a whole or significant portions of the Company's operations, and then
calculating ratios of various financial results to the public market values
of the companies. The ranges of ratios derived are then applied to the
Company's projected financial results (on a consolidated basis) to derive a
range of implied values. The discounted cash flow approach involves
deriving the unleveraged free cash flows that the Company (on a
consolidated basis) would generate assuming the projections were realized.
These cash flows and an estimated value of the Company (on a consolidated
basis) at the end of the projected period are discounted to the present at
the Company's estimated post-restructuring weighted average cost of capital
to determine the Company's enterprise value (on a consolidated basis). In
addition, the Company estimates that it will retain certain net operating
loss carryforwards through the restructuring. Subject to certain
limitations, the Comany believes that it will be able to offset taxable
income in determining its cash tax liability. The value of these cash tax
savings has been added to the Company's estimated enterprise value. In
addition, prepaid trustee fees will be expensed. The accrued interest and
carrying values of the various note issues are expected to be as follows on
the Effective Date:
<TABLE>
<CAPTION>
Interest
Face Due at Reorganization Carrying Accrued
Value Maturity Discount Value Interest
----- -------- -------- ----- --------
<S> <C> <C> <C> <C> <C>
10.25% Notes $76,773 $6,280 $(1,737) $81,316 $ 6,731
10.85% Notes 109,247 6,873 (2,285) 113,835 10,213
7% Subordinated Debentures 54,071 (6,819) 47,252 3,752
Prepaid agency fee (37)
-------- ------- -------- -------- -------
Total $240,091 $13,153 $(10,841) $242,403 $20,659
======== ======= ======== ======== =======
</TABLE>
(2) Reflects the cancellation of Old Senior Preferred Stock. For purposes of
this Registration Statement, the New Warrants have not been assigned a
value.
(3) Reflects the cancellation of the Old Junior Preferred Stock and the Old
Common Stock.
(4) Reflects payment of management retention bonuses pursuant to new employment
agreements in a combination of cash and 75,377 shares of New Common Stock.
(b) On the Effective Date, reorganized JPS is expected to obtain a new
working capital facility, pay fees and expenses related thereto and pay fees and
expenses of professionals for services rendered during the pendency of the
chapter 11 case. The impact of such costs on the Company's balance sheet is as
follows:
13
<PAGE>
Other Revolving
Deferred Accrued Line Retained
Financing Costs Expenses of Credit Earnings
--------------- -------- --------- --------
(1) $ (230) $ (230)
(2) 1,800 $ 1,800
(3) $ (593) 2,200 (1,607)
--------- -------- --------- --------
$1,570 $ (593) $4,000 $(1,837)
========= ======== ========= ========
(1) Reflects the write-off of deferred financing fees related to the existing
credit agreement (the "Credit Agreement").
(2) Reflects the payment of new financing fees in connection with the Company
obtaining a post- reorganization working capital facility. The Company
expects to amortize such fees over the term of the facility, which is
expected to be five years.
(3) Reflects the Effective Date payment of fees and expenses to professionals
retained in the chapter 11 case with borrowings under the
post-reorganization working capital facility.
(c) Pursuant to the Plan, as a condition to the occurrence of the Effective
Date, JPS or its subsidiaries will have sold all the securities of Gulistan
Holdings Inc. received as part of the consideration for the sale of the assets
of the Company's former carpet business in 1995 (the "Gulistan Securities"). Due
to uncertainties regarding valuation, no estimate of proceeds from such sale has
been made. This adjustment reflects the elimination of these assets from the
Company's balance sheet and the $14 million cash distribution to the holders of
Old Debt Securities. Proceeds from the sale of the Gulistan Securities,
constituting the Secured Lenders' collateral under the Credit Agreement, will be
applied to reduce the amounts outstanding under the Credit Agreement, unless
otherwise agreed by the Secured Lenders.
(d) The Plan is expected to substantially deleverage reorganized JPS.
Accordingly, the reserve established against the Company's deferred tax assets
that was required due to the Company's operating history will be significantly
reduced. However, the deferred tax asset attributable to the Company's net
operating loss carryforwards will also be reduced as a result of the reduction
in net operating loss carryforwards that is required for reorganizations such as
the one outlined in the Plan. The reduction in reserves is estimated to exceed
the reduction in the gross deferred tax asset by a net amount of $9,745.
(e) The Company proposes to account for the reorganization and the related
transactions using the principles of fresh start accounting as required by
Statement of Position 90-7 ("SOP 90-7") issued by the American Institute of
Certified Public Accountants (the "AICPA"). The Company has estimated a range of
reorganization value, excluding any amounts related to the assets or liabilities
of JPS Capital, between $194 million and $238 million. For purposes of
determining reorganization value, the Company used the midpoint of that range
($216 million), $123.3 million of which value is attributable to shareholders'
equity. The timing and amount of payments due pursuant to the Contingent Notes
will depend upon the amount of cash on hand at JPS Capital at maturity, which in
turn will depend on the ultimate resolution of certain possible contingent tax
liabilities of the Company. The Contingent notes will be issued in an aggregate
principal amount of $34 million, subject to adjustment in the following
circumstances: In the event the aggregate funds held by JPS Capital is less than
$34 million following the date on which the possible contingent tax liability in
respest of the Company's 1994 fiscal year is finally resolved, and to the extent
of any such liability, satisfied, the aggregate principal amount of the
Contingent Notes will be reduced to equal the aggregate funds held by JPS
Capital. Interest will be payable under the Contingent Notes to the extent the
aggregate funds held by JPS Capital on the date of the principal payment (if
any) thereon as provided above exceeds $34 million. If, on such date, the
aggregate principal amount, reduced as provided above is $0 or less, the
Contingent Notes will be deemed automatically cancelled and no longer an
obligation of JPS Capital.
In accordance with SOP 90-7, the reorganization value has been allocated
to specific tangible and identifiable intangible assets and liabilities. The
unallocated portion of the reorganization value is classified as Excess
Reorganization Value and is amortized over a specified period. Based upon
preliminary discussions, the Company expects to amortize the Excess
Reorganization Value over 20 years. For the purposes of this presentation, book
values have been assumed to equal fair values except for specific items in which
quantifiable data is currently available. Such differences are detailed in
footnotes (f), (g) and (h) below. The Company is currently performing
independent appraisals of various assets, which could lead to additional pro
forma adjustments to book values and result in a different Excess Reorganization
Value as of the Effective Date. The amount of shareholders' equity in the fresh
start balance sheet is not an estimate of the trading value of the New Common
Stock and the New Warrants after confirmation of the Plan, which value is
subject to many uncertainties and cannot be reasonably estimated
14
<PAGE>
at this time. The Company does not make any representation as to the trading
value of shares or warrants to be issued pursuant to the Plan.
(f) The Company has engaged an independent appraisal firm to value its
property, plant and equipment and has received a preliminary report from such
appraisers. The value shown here as a pro forma adjustment could change once the
appraisal is finalized resulting in additional pro forma adjustments to book
values and a different Excess Reorganization Value.
(g) As of the Effective Date, unamortized gains and losses related to the
Company's pension plan will be fully recognized.
(h) As of the Effective Date, unamortized gains and losses related to the
Company's non-pension post-retirement employee benefit plans will be fully
recognized.
15
<PAGE>
JPS TEXTILE GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended November 2, 1996
----------------------------------------------------------
Reorganization Fresh Start
Historical Adjustments Adjustments Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales $444,824 $444,824
Cost of sales 397,804 $(13,037)(g) 384,767
---------- ----------- ----------- ---------
Gross profit 51,020 13,037 64,057
Selling general & administrative 40,579 1,682 (h) 42,261
Other expenses, net 2,498 2,498
Charges for plant closing loss on sale of
certain operations and writedown of
certain long-lived assets 30,028 30,028
---------- ----------- ----------- ---------
Operating profit (loss) (22,085) 11,355 (10,730)
Valuation allowance on Gulistan
securities (4,242) 4,242 (a)
Interest income 2,856 (882)(b) 1,974
Interest expense (40,510) 30,918 (c) (9,592)
---------- ----------- ----------- ---------
Income (loss) before reorganization
items, income taxes and discontinued
operations (63,981) 34,278 11,355 (18,348)
Reorganization items - professional
fees and expenses (2,255) 2,255 (d)
---------- ----------- ----------- ---------
Income (loss) before income taxes and
discontinued operations (66,236) 36,533 11,355 (18,348)
Provision (benefit) for income taxes (300) (300)
---------- ----------- ----------- ---------
Income (loss) from continuing
operations (65,936) 36,533 11,355 (18,048)
Loss on sale of discontinued
operations, net of taxes (1,500) (1,500)
---------- ----------- ----------- ---------
Net income (loss) (67,436) 36,533 11,355 (19,548)
Senior redeemable preferred
stock dividends (4,505) 4,505 (e)
---------- ----------- ----------- ---------
Income (loss) applicable to
common stock $(71,941) $ 41,038 $ 11,355 $ (19,548)
========== =========== =========== =========
Other data:
Income (loss) per share applicable to
common shareholders $(71.94) $ (1.95)
Average outstanding and
equivalent shares 1,000 10,000
EBITDA $29,552 $ 2,255 $ 262 $32,069
</TABLE>
16-a
TABLE CONTINUED ON FOLLOWING PAGE
<PAGE>
TABLE CONTINUED FROM PREVIOUS PAGE
<TABLE>
<CAPTION>
Six Months Ended May 3, 1997
--------------------------------------------------------
Reorganization Fresh Start
Historical Adjustments Adjustments Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales $205,305 $205,305
Cost of sales 177,972 $(5,288)(g) 172,684
---------- ----------- ----------- ---------
Gross profit 27,333 5,288 32,621
Selling general & administrative 19,607 841 (h) 20,448
Other expenses, net 383 383
Charges for plant closing loss on sale of
certain operations and writedown of
certain long-lived assets
---------- ----------- ----------- ---------
Operating profit (loss) 7,343 4,447 11,790
Valuation allowance on Gulistan
securities (2,088) 2,088 (a)
Interest income 1,471 (441)(b) 1,030
Interest expense (20,223) 15,814 (c) (4,409)
---------- ----------- ----------- ---------
Income (loss) before reorganization
items, income taxes and discontinued
operations (13,497) 17,461 4,447 8,411
Reorganization items - professional
fees and expenses (3,144) 3,144 (d)
---------- ----------- ----------- ---------
Income (loss) before income taxes and
discontinued operations (16,641) 20,605 4,447 8,411
Provision (benefit) for income taxes 409 3,243 (f) 3,652
---------- ----------- ----------- ---------
Income (loss) from continuing
operations (17,050) 17,362 4,447 4,759
Loss on sale of discontinued
operations, net of taxes
---------- ----------- ----------- ---------
Net income (loss) (17,050) 17,362 4,447 4,759
Senior redeemable preferred
stock dividends (2,542) 2,542 (e)
---------- ----------- ----------- ---------
Income (loss) applicable to
common stock $ (19,592) $ 19,904 $ 4,447 $ 4,759
========== =========== =========== =========
Other data:
Income (loss) per share applicable to
common shareholders $(19.59) $ 0.47
Average outstanding and
equivalent shares 1,000 10,000
EBITDA $14,000 $ 3,144 $ 132 $ 17,276
</TABLE>
16-b
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands unless otherwise noted)
(a) Reflects the elimination of the valuation allowance on Gulistan Securities
since these assets are eliminated from the Company's balance sheet as a
result of their sale in connection with the reorganization.
(b) Reflects the elimination of interest income on the $14 million cash
distribution to the holders of Old Debt Securities.
(c) The following table details the net adjustment to interest expense related
to the reorganization.
<TABLE>
<CAPTION>
Year Ended Six Months Ended
November 2, 1996 May 3, 1997
---------------- -----------
<S> <C> <C>
Decrease in interest expense due to exchange of the
Company's 10.25% Notes, 10.85% Notes and
7% Subordinated Debentures $32,301 $17,085
Elimination of amortization of deferred financing
costs of the existing Credit Facility 1,314 157
Amortization of deferred financing costs of a new
Credit Facility (360) (180)
Increase in interest expense resulting from additional
borrowings under a new Credit Facility (390) (218)
Interest expense on the Contingent Notes (1,947) (1,030)
------ ------
Net decrease in interest expense $30,918 $15,814
======= =======
</TABLE>
(d) Reflects the elimination of debt restructuring fees and expenses.
(e) Reflects the elimination of stock dividends on the Old Senior Preferred
Stock which is canceled as a result of the reorganization.
(f) Records the estimated income tax effects reflecting the reorganization and
the application of fresh start accounting. Pro forma income tax expense is
calculated using a 38% effective tax rate times taxable income before
amortization of excess reorganization value. Cash tax expense is calculated
after giving effect to certain differences in taxable income for tax
purposes including the amortization of excess reorganization value and
differences in depreciation expense and pension expense. In addition, the
Company anticipates utilizing its NOL carryforward, subject to limitation
under Section 382 of the Tax Code and any adjustments required by reason of
examination by any taxing authority, to partially offset its tax liability.
It should be noted that the historical deferred tax asset will be
significantly reduced as a result of the reorganization due to the
required reduction in net operating loss carryforwards.
(g) The following table details the net adjustment to cost of goods sold
related to fresh start reporting:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
November 2, 1996 May 3, 1997
---------------- -----------
<S> <C> <C>
Decrease in depreciation expense reflecting
revaluation of the Company's property,
plant and equipment $(12,774) $(5,156)
Decrease in pension costs reflecting the full
recognition of unamortized gains and
losses on the Effective Date (352) (176)
Increase in post-retirement costs reflecting
the full recognition of amortized gains and
losses on the Effective Date 89 44
-------- -------
Net decrease in cost of goods sold $(13,037) $(5,288)
======== =======
</TABLE>
(h) Reflects the elimination of the amortization of goodwill ($1.0 million in
the year ended November 2, 1996 and $0.5 million in the six months ended
May 3, 1997) and the addition of the amortization of reorganization value
in excess of amounts allocable to identifiable assets assuming a 20-year
life ($2.6 million in the year ended November 2, 1996 and $1.3 million in
the six months ended May 3, 1997).
17
<PAGE>
Certain Non-Recurring Charges (Gains) Not Reflected in the Pro Forma Condensed
Consolidated Statements of Operations
- --------------------------------------------------------------------------------
Certain material non-recurring charges (gains) related to the reorganization are
not reflected in the Pro Forma Condensed Consolidated Statements of Operations
as they are not expected to have a continuing impact on the Company's
operations. These charges (gains) will be included in the Company's operating
results prior to its emergence from the reorganization and are summarized below
(in millions).
Extraordinary gains on exchange of debt for equity
(including the elimination of accrued interest
through the estimated petition date) $93.5
Reorganization costs 1.6
Write-off of deferred financing costs related to the
terminated credit facility 0.2
Retention bonus accrual 0.6
Tax benefit resulting from reduction of valuation
allowance against Federal deferred tax assets 9.7
Loss on disposition of securities of Gulistan Holdings Inc. 5.0
Fresh Start Accounting Adjustments (2.6)
18
<PAGE>
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 15 herein.
<TABLE>
<CAPTION>
Fiscal Year Ended Six Months Ended
----------------- ----------------
10/29/94 10/28/95 11/2/96 4/27/96 5/3/97
--------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
NET SALES
Apparel fabrics and products $254,810 $247,846 $221,799 $ 115,986 $ 94,880
Industrial fabrics and products 169,736 191,985 193,001 89,456 90,748
Home fashion textiles 37,325 32,734 34,024 17,736 19,677
------- ------- ------- ------- -------
$461,871 $472,565 $448,824 $ 223,178 $205,305
======== ======== ======== ========= ========
OPERATING PROFIT (LOSS)
Apparel fabrics and products $18,487 $16,667 $(22,422)(1) $ (1,283) $ 1,804
Industrial fabrics and products 7,618 7,590 5,947 (2) 6,393 6,494
Home fashion textiles 2,564 1,749 647 268 1,269
Indirect corporate expenses, net (7,438) (5,345) (6,257) (3,589) (2,224)
-------- ------- ------- ---------- ---------
Operating Profit (Loss) 21,231 20,661 (22,085) 1,789 7,343
Valuation allowance on Gulistan securities - - (4,242) (4,068) (2,088)
Interest income 749 2,821 2,856 1,388 1,471
Interest expense (55,570) (39,946) (40,510) (19,565) (20,223)
Restructuring fees and expenses - - (2,255) (175) (3,144)
--------- ------- ------- ------ ---------
Loss before income taxes, discontinued
operations, extraordinary items and
cumulative effects of accounting changes $(33,590) $(16,464) $(66,236) $(20,631) $(16,641)
========= ========= ========= ========= =========
</TABLE>
(1) The Fiscal 1996 operating loss for apparel fabrics and products includes
charges of approximately $14.2 million for plant closing and $6.2 million
for loss on sale of certain operations.
(2) The Fiscal 1996 operating profit for industrial fabrics and products
includes charges of approximately $8.1 million for writedown of certain
long-lived assets and $1.5 million for loss on sale of certain operations.
RESULTS OF OPERATIONS
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 (as
discussed under the caption "Fiscal 1996 Compared to Fiscal 1995") 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
19
<PAGE>
curtailment of certain production at other facilities (as discussed under the
caption "Fiscal 1996 Compared to Fiscal 1995") 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.
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 a 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 JPS. 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.
20
<PAGE>
FISCAL 1996 COMPARED TO FISCAL 1995
Consolidated net sales from continuing operations declined $23.8
million (5.0%) from $472.6 million in Fiscal 1995 to $448.8 million in Fiscal
1996. Operating profit (loss) from continuing operations decreased $42.8 million
from an operating profit of $20.7 million in Fiscal 1995 to an operating loss of
$22.1 million in Fiscal 1996. Excluding charges for plant closings, loss on sale
of certain operations, and charges for writedown of certain long-lived assets,
operating profit would have been $7.9 million, compared to $25.7 million in
Fiscal 1995 (excluding the product liability charge). Substantially all of the
declines in sales and operating profits are attributable to the apparel fabrics
segment which has been severely impacted by lower unit volumes and margins.
Net sales in Fiscal 1996 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 $26.0 million (10.5%) from $247.8 million in Fiscal 1995 to
$221.8 million in Fiscal 1996. Fiscal 1996 saw the continuation of the trend of
weakened demand for apparel fabrics which began during the second half of Fiscal
1995.
Apparel fabric sales declined $22.3 million in Fiscal 1996 as a
result of lower unit volume combined with lower average selling prices. Fiscal
1996 has been marked by generally poor retail women's apparel sales, increased
competitive pressures from abroad (particularly in commodity-type fabrics), and
falling margins. As a result of this weaker demand, the Company curtailed
production for most of its apparel fabrics, and experienced a less favorable
product mix with a higher ratio of commodity-type fabrics than was experienced
in Fiscal 1995. These and other conditions led management to conclude in the
third fiscal quarter of 1996 that one of its facilities in Greenville, South
Carolina should be closed. The plant, which was closed on October 28, 1996, had
been operating on a significantly reduced production schedule and was not
cost-effective. The accompanying consolidated statement of operations for Fiscal
1996 includes a "charge for plant closing" of approximately $14.2 million
related principally to the loss on impairment of the plant in accordance with
SFAS No. 121, employee severance costs and estimated costs of equipment
relocation. The Company expects that the plant closure will result in improved
earnings and cash flow from operations in the future.
Many participants in the domestic women's apparel industry have
suffered from falling margins in recent years as a result of a number of
factors, including increased imports of both fabric and garments, generally
relaxed consumer attitudes regarding fashion, and price pressures from a
troubled retail industry. Many of the Company's customers for apparel fabric
(converters) have seen their importance to the industry diminish and their
volumes decline. The Company has taken steps to broaden its sales distribution
in its apparel fabrics segment to include export sales to Mexico, Europe and
other continents. Exports have not comprised a significant portion of the
Company's sales in the past. In addition, the Company expects to increase its
level of capital investment in this segment, with such investments focused
primarily on cost reduction and productivity improvements.
Sales of elastic apparel products declined $4.6 million to $12.8
million in Fiscal 1996 from $17.4 million in Fiscal 1995. As discussed below,
the Company sold its rubber products business, which produced these elastic
products, in September 1996. Discontinuation in Fiscal 1996 of certain
unprofitable product lines, changes in customer requirements to non- rubber
elastomers, and less than a full year's sales in Fiscal 1996 caused the decline
in elastic sales from Fiscal 1995.
Operating loss in Fiscal 1996 for the apparel fabrics and products
segment decreased by $39.1 million to a $22.4 million loss from a $16.7 million
profit. Included in the Fiscal 1996 operating loss are charges of approximately
$14.2 million for plant closing and $6.2 million for loss on sale of certain
operations. Operating profit (loss) in Fiscal 1996 for the apparel fabrics and
products segment before the charges for plant closing and loss on sale of
certain operations declined by $18.7 million to a $2.0 million loss from a $16.7
million profit in Fiscal 1995. Such decline results from the significantly lower
unit volume and the lower margins associated with the Fiscal 1996 product mix.
21
<PAGE>
Net sales in Fiscal 1996 in the industrial fabrics and products
segment, which includes single-ply roofing and environmental membrane, woven
fabrics constructed of cotton, synthetics and fiberglass for insulation,
filtration, and lamination applications, and extruded urethane products,
increased $1.0 million (0.5%) to $193.0 million from $192.0 million in Fiscal
1995. Sales of fiberglass fabrics increased $7.7 million from Fiscal 1995 as a
result of the continued growth in demand for fabrics used in the manufacture of
electrical circuit boards. The growing global demand for electronic products has
fueled significant increases in sales of fiberglass fabric for the last several
years. The Company expects this demand to continue in the foreseeable future.
The Company has expanded and enhanced its productive capacity in the fiberglass
weaving area in order to satisfy this demand and improve product quality. Sales
of roofing membrane increased $8.8 million from Fiscal 1995, as a result of the
continued success of the Company's "Hi-Tuff/EP" line of roofing products, which
was introduced in late 1993. This product's competitive price and improved
performance characteristics have driven its sales growth, and the product now
accounts for 75% of the Company's roofing sales. The Company expects roofing
sales to continue to grow as the Company capitalizes on the market acceptance of
its roofing products to gain market share. Sales of extruded urethane products
increased $1.9 million from Fiscal 1995 as a result of the Company's expanded
productive capacity and success in developing and satisfying the
specification-driven customer requirements for urethane products. Sales of
cotton industrial fabrics declined $12.8 million as a result of weak markets and
intense foreign competition, particularly from China. Sales of other industrial
fabrics and products declined $4.6 million primarily as a result of exiting
certain industrial fabric markets during late 1995.
Operating profit in Fiscal 1996 for the industrial fabrics and
products segment decreased by $1.7 million from $7.6 million in 1995 to $5.9
million in 1996. Included in the Fiscal 1996 operating profit are charges of
approximately $8.1 million for writedown of certain long-lived assets and $1.5
million for loss on sale of certain operations. Operating profit in Fiscal 1996
for the industrial fabrics and products segment before the charge for the
writedown of certain long-lived assets and loss on sale of certain operations
increased $8.0 million (105%) to $15.6 million from $7.6 million in Fiscal 1995.
Fiscal 1995 operating profit reflects a charge of $5 million related to product
liability costs. No such charge occurred in Fiscal 1996. The aforementioned
sales volume increases in roofing, fiberglass, and extruded urethane products,
combined with improved manufacturing and operating efficiencies, increased
operating profits. Partially offsetting these improvements, however, are the
effects of lower sales volumes of cotton industrial fabrics and other synthetic
industrial fabrics. Curtailed production schedules in the Company's cotton
manufacturing facility and the resulting under-absorption of costs were negative
influences on operating profit. The Company does not expect the demand for its
cotton industrial fabric to rebound from Fiscal 1996 levels and has adjusted its
operating schedule accordingly.
As a result of the Company's assessment of the market conditions for
its cotton industrial fabrics, management concluded that its plant in Kingsport,
Tennessee, which manufactures such fabrics, is impaired under the criteria of
Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
SFAS No. 121 requires a writedown to fair value in circumstances in which the
expected future net cash flows from the operation of the plant are less than its
carrying value. The consolidated statement of operations for Fiscal 1996
includes a charge, "writedown of certain long-lived assets", of $8.1 million
for the excess of the carrying amount of this plant over its estimated fair
value.
Pursuant to the terms of an Asset Purchase Agreement dated September
30, 1996, between Elastomerics and Elastomer Technologies Group, Inc. and a
Receivables Purchase Agreement dated September 30, 1996 between Elastomerics and
the Bank of New York Commercial Corporation, Elastomerics consummated the sale
of substantially all of the assets of its rubber products division, a business
engaged in the manufacture and sale of natural and synthetic elastics for use in
apparel products, diaper products, and specialty industrial applications (the
"Rubber Products Business"). Pursuant to the Asset Purchase Agreement, Elastomer
Technologies Group, Inc. agreed to assume substantially all of the liabilities
and obligations associated with the Rubber Products Business.
The consideration for the sale of the Rubber Products Business
consisted of approximately $5.1 million in cash, subject to certain post-closing
adjustments based on the amount of working capital transferred. The net cash
proceeds of
22
<PAGE>
approximately $4.8 million were used by the Company to reduce outstanding
borrowings under its senior credit facility. Revenues of the Rubber Products
Business for Fiscal 1994, Fiscal 1995 and Fiscal 1996 were $22.6 million, $20.7
million and $16.8 million, respectively.
Net sales in Fiscal 1996 in the home fashion textiles segment, which
includes woven drapery fabrics and yarns for the home furnishings industry
increased $1.3 million (3.9%) to $34.0 million from $32.7 million in Fiscal 1995
due primarily to an increase in yarn sales. Sales of home furnishings fabrics in
Fiscal 1996 were approximately flat with Fiscal 1995. Demand for the Company's
woven fabrics used in home decoration has been in decline for several years.
Operating profit in Fiscal 1996 in the home fashion textile segment
declined by $1.1 million (64%) to $0.6 million from $1.7 million in Fiscal 1995
primarily as a result of lower margins on fabric sales.
Indirect corporate expenses in Fiscal 1996 increased $1.0 million
from $5.3 million in Fiscal 1995 to $6.3 million in Fiscal 1996 primarily as a
result of the $1.1 million cost of an early retirement offer extended to certain
salaried employees. Lower corporate employee compensation costs in Fiscal 1996
partially offset this increase.
Debt restructuring fees and expenses totaled $2.3 million in Fiscal
1996. There were no comparable charges in Fiscal 1995. Such expenses represent
fees and expenses of the Company's financial advisor, the financial advisor for
the holders of a substantial majority of its outstanding bonds, the Company's
legal counsel and other professionals associated with the Company's financial
restructuring.
During Fiscal 1996, Gulistan reported net losses of approximately
$4.5 million before interest expense on the promissory note held by JPS.
Accordingly, the Company did not record interest income on any of the Gulistan
securities held by the Company. Also, in accordance with relevant accounting
literature, the Company has recorded a valuation allowance against its
investment in the Gulistan securities and a corresponding charge to income of
$4.2 million as a result of the net loss ($4.5 million reduced by the $0.3
million of common equity held by Gulistan management) incurred by Gulistan
during Fiscal 1996.
Interest expense in Fiscal 1996 was $40.5 million, or $0.6 million
more than Fiscal 1995 due primarily to the compounding effect of accretion of
debt discounts and non-cash interest.
FISCAL 1995 COMPARED TO FISCAL 1994 (RESTATED FOR EFFECT OF CLASSIFYING CARPET
BUSINESS AS DISCONTINUED OPERATIONS)
Consolidated net sales from continuing operations increased $10.7
million (2.3%) from $461.9 million in Fiscal 1994 to $472.6 million in Fiscal
1995. Operating profit from continuing operations decreased $0.5 million (2.4%)
from $21.2 million in Fiscal 1994 to $20.7 million in Fiscal 1995. Excluding a
$5 million charge to income in Fiscal 1995 for product liability costs
(discussed below), operating income would have increased $4.5 million in Fiscal
1995 over Fiscal 1994. Substantially all of these increases in consolidated net
sales and operating profits occurred in the first two fiscal quarters of 1995.
The last two fiscal quarters of 1995 saw declines in operating results from
comparable prior year levels.
Net sales in Fiscal 1995 in the apparel fabrics and products segment
declined $7.0 million (2.7%) from $254.8 million in Fiscal 1994 to $247.8
million in Fiscal 1995. Fiscal 1995 results in the apparel fabrics and products
segment were marked by two distinct halves. During the first two fiscal quarters
of 1995, the Company reported results which were stronger than the comparable
1994 quarters primarily as a result of the Company's change in its product
offering to emphasize specialty fabrics with more fashion and styling
characteristics. Although overall apparel market conditions were not strong,
these fabrics commanded higher average selling prices and margins than commodity
type fabrics and allowed the Company to improve its margins in the face of the
continued flood of imported commodity apparel fabrics, primarily from Chinese
and Eastern European sources. The passage of the General Agreement on Tariffs
and Trade (GATT) is expected to foster such foreign competition in the commodity
apparel fabrics market in the future. During the second half of Fiscal 1995,
consumer demand for apparel
23
<PAGE>
products weakened significantly which in turn has led to a much weaker market
for the Company's fabrics. As a result of this lower unit demand for all fabric
styles, the impact of the aforementioned change in product offering was much
less apparent in the second half.
Operating profit in the apparel fabrics and products segment
declined by $1.8 million (9.8%) from $18.5 million in Fiscal 1994 to $16.7
million in Fiscal 1995. This decrease is primarily the result of lower unit
volume and poor average selling prices for the Company's apparel fabrics and
products. In addition to the weak market conditions, the Company has experienced
significant price increases for many of its most important raw materials,
including rayon and polyester fiber.
Net sales in Fiscal 1995 in the industrial fabrics and products
segment increased $22.3 million (13.1%) to $192.0 million from $169.7 million in
Fiscal 1994. Sales of fiberglass fabrics for electrical circuit boards and
construction-related scrims increased $7.0 million. The market for fiberglass
fabrics, particularly those used in the manufacture of electronic circuit boards
has been growing in connection with the rapidly expanding worldwide consumer
demand for electronic products. Sales of cotton industrial fabrics increased
$6.7 million as a result of higher unit volume in the first fiscal quarter and
the pass-through of relatively higher cotton costs in Fiscal 1995. Sales of
roofing membrane increased $4.9 million primarily as a result of the continued
success of the Company's new line of roofing products introduced in late 1993.
Operating profit in Fiscal 1995 for the industrial fabrics and
products segment was level with Fiscal 1994 at $7.6 million. The operating
profit in Fiscal 1995 was reduced as a result of a $5 million charge for product
liability costs for which there was no comparable charge to income in Fiscal
1994.
During the fourth quarter of Fiscal 1995, management determined that
the estimate of the future costs associated with providing services and
materials to repair or replace certain defective roofing products sold by the
Company's predecessor prior to 1987 required revision. In 1988, the Company
estimated the aggregate future costs to repair or replace those defective
roofing products to be approximately $34.1 million. This estimate was based on a
number of factors, including assumed claim rates and costs to repair or replace.
Through October 28, 1995, approximately $29.8 million has been incurred and
charged to this liability. The Company reevaluated the exposure based on recent
experience and claims in process. 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 experience 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 the defective roofing
product claims will be substantially settled by 2000. Based on management's
estimate of a range of future costs of approximately $9.3 million to $11.4
million, the Company recorded a $5.0 million addition to the liability for such
defective products increasing such liability to $9.3 million at October 28,
1995.
Operating profit in Fiscal 1995 in the industrial fabrics and
products segment, excluding the aforementioned charge for product liability
costs, increased $5.0 million (65.3%) to $12.6 million from $7.6 million in
Fiscal 1994. The increase in operating profit is primarily a result of the
higher sales volumes described above combined with the effects of improved
manufacturing and operating efficiencies.
Net sales in Fiscal 1995 in the home fashion textiles segment
declined by $4.6 million (12.3%) to $32.7 million from $37.3 million in Fiscal
1994. The decline in volume results from weak demand for the Company's woven
fabrics used in home decoration, a continuation of a trend in home fashion
textile use for several years, combined with the weak soft goods market in 1995.
Operating profit in Fiscal 1995 in the home fashion textile segment
declined by $0.8 million (31.8%) to $1.7 million primarily as a result of the
lower sales volume described above and lower average selling prices for the
Company's fabrics.
24
<PAGE>
Indirect corporate expenses in Fiscal 1995 declined $2.1 million
from $7.4 million in Fiscal 1994 to $5.3 million in Fiscal 1995, primarily as a
result of lower professional fees and lower depreciation and amortization.
Interest expense in Fiscal 1995 was $15.6 million lower than it was
for Fiscal 1994. Giving effect to the reduction of debt associated with the use
of the net proceeds from the sale of the Automotive Assets in Fiscal 1994 on a
pro forma basis would reduce interest expense by $14.1 million in Fiscal 1994.
Such pro forma reduction includes $1.3 million representing interest accretion
and debt issuance cost amortization. After giving pro forma effect to the debt
reduction described above, interest expense decreased approximately $1.5 million
in Fiscal 1995 from Fiscal 1994. In Fiscal 1995, a $3.4 million decrease in
interest expense as a result of the lower debt balances caused by JPS's open
market purchases of certain of its previously outstanding notes and debentures
(as discussed below) was offset to the extent of $1.9 million due primarily to
higher average interest rates and the compounding effect of accretion of debt
discounts and non-cash interest.
During the first quarter of Fiscal 1995, JPS expended $36.6 million
to make open market purchases of certain of its outstanding notes and debentures
with an aggregate face value of $66.6 million and a carrying value (including
interest due at maturity) of $59.2 million. The Company recognized a gain from
early extinguishment of debt of $20.1 million, net of expenses of $1.9 million
and income taxes of $0.6 million. JPS has made no further open market purchases
and is not currently seeking to make any such purchases.
The terms of the Asset Purchase Agreement dated May 25, 1994, as
amended, regarding the sale of the Automotive Assets on June 28, 1994, provided
that the selling price be adjusted based on the net assets sold. During Fiscal
1995, such amount was finalized and resulted in additional cash proceeds to the
Company of $4.5 million. Such amount, net of $0.1 million of tax, has been
included as gain on sale of discontinued operations in Fiscal 1995.
On November 16, 1995, pursuant to the terms of an Asset Transfer
Agreement dated as of November 16, 1995, by and among the Company, Carpet,
Gulistan Holdings Inc., and Gulistan Carpet Inc., a wholly-owned subsidiary of
Gulistan Holdings Inc. (collectively, "Gulistan"), the Company and Carpet
consummated the sale of substantially all of the assets of Carpet used in the
business of designing and manufacturing tufted carpets for sale to residential,
commercial and hospitality markets (the "Carpet Business"). Pursuant to the
Asset Transfer Agreement, Gulistan agreed to assume substantially all of the
liabilities and obligations associated with the Carpet Business.
The consideration for the sale of the Carpet Business consisted of
approximately $19.0 million in cash, as adjusted, and other debt and equity
securities of Gulistan as follows: a $10 million Promissory Note due in November
2001, $5 million of preferred stock redeemable in November 2005, and warrants to
purchase 25% of the common stock of Gulistan. Based on an independent valuation,
the Company has determined the fair value of these debt and equity securities to
be approximately $11.3 million. The net assets of the Carpet Business (adjusted
to net realizable value) have been classified as "net assets held for sale" on
the October 28, 1995 Consolidated Balance Sheet. As of October 28, 1995, the
Company adjusted the net assets of the Carpet Business to their net realizable
value, which resulted in a charge to the 1995 Consolidated Statement of
Operations of $30.7 million, classified as loss on sale of discontinued
operations. The cash consideration was adjusted in Fiscal 1996 pursuant to the
terms of the Asset Transfer Agreement based on the audited amount of working
capital transferred, which adjustment resulted in a reduction of $3.5 million in
the cash consideration and an additional charge to income in Fiscal 1996 of $1.5
million. The fiscal amount of net cash proceeds (net of fees, expenses and the
post-closing adjustment) of $16.7 million was applied by the Company to reduce
outstanding borrowings under the credit agreement for the senior credit
facility. The loss on the sale is not currently recognizable for tax purposes
and the Company has recorded no net tax benefit as a result of this loss due to
uncertainties regarding the ability to utilize these losses in future years.
25
<PAGE>
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.
JPS 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. ("Citibank"), as administrative agent and co- agent, and
General Electric Capital Corporation ("GECC"), 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).
Based on the downturn in the apparel fabrics market, increased
foreign competition and falling margins, the Company determined that its
financial resources would be insufficient to satisfy mandatory redemption
requirements of certain of its debt securities due on June 1, 1997. Accordingly,
on May 8,1996, the Company engaged The Blackstone Group L.P. to act as its
financial advisor in connection with a potential financial restructuring of its
debt obligations. In addition, at the request of the Unofficial Bondholder
Committee, the Company agreed to finance the retention of financial and legal
advisors to advise the Unofficial Bondholder Committee in connection with such a
financial restructuring.
The Company also had discussions with its bank lenders regarding the
extension of the term of its Revolving Credit Facility, which had been scheduled
to expire on November 1, 1996. In 1996 and 1997, the Company obtained several
amendments to its existing credit agreement, which extended the expiration date
to August 8, 1997 if the Company had not commenced a case under chapter 11 of
the Bankruptcy Code or to the earlier of November 1, 1997 or the effective date
of a reorganization under chapter 11 if a case under chapter 11 had been filed
prior to August 8, 1997. These amendments also restricted capital expenditures,
eased certain financial covenants, and prohibited additional borrowings for,
among other things, dividends or advances to the Company to pay interest on its
notes and debentures. Accordingly, the Company did not make scheduled November
15, 1996 and May 15, 1997 interest payments of approximately $1.9 million each
on its 7% Subordinated Debentures and did not make scheduled December 1, 1996
and June 1, 1997 interest payments of approximately $5.4 million each on its
10.85% Notes and approximately $3.6 million each on its 10.25% Notes. In
addition, the Company failed to mandatorily redeem, on June 1, 1997,
approximately $37.8 million in aggregate principal amount of its 10.85% Notes
and approximately $31.2 million in aggregate principal amount of its 10.25%
Notes. The failure to make these scheduled payments constituted an event of
default under the indentures governing these debt securities.
On May 16, 1997, JPS and JPS Capital reached an agreement in
principle with the Unofficial Bondholder Committee on the terms of a proposed
restructuring to be accomplished pursuant to a joint plan of reorganization for
JPS under chapter 11 of the
26
<PAGE>
Bankruptcy Code. Pursuant to a disclosure statement dated June 25, 1997, on June
26, 1997, JPS and JPS Capital commenced the solicitation of votes from holders
of Old Debt Securities and Old Senior Preferred Stock for the acceptance or
rejection of the Plan of Reorganization. This solicitation was conducted prior
to the filing by JPS of a case under chapter 11 of the Bankruptcy Code so as to
significantly shorten the pendency of the case and to simplify its
administration. The solicitation was successfully completed on July 28, 1997 and
JPS commenced its chapter 11 case on August 1, 1997. JPS' operating subsidiaries
have not commenced chapter 11 cases.
Under the proposed Plan of Reorganization, JPS's Old Debt
Securities, with a carrying value of $242.4 million on May 3, 1997, will be
exchanged as follows: holders of JPS 10.25% Notes and 10.85% Notes will receive
$14 million in cash, contingent notes issued by JPS Capital, providing payment
of up to $34 million (subject to adjustment) on the occurrence of certain
events, and approximately 93.30% of the New Common Stock and holders of the 7%
Subordinated Debentures will receive approximately 5.95% of the New Common
Stock. JPS's senior management will receive approximately 0.75% of the New
Common Stock in lieu of payment under the contractual retention bonus agreements
described in Note 9 to the Consolidated Financial Statements. The Plan of
Reorganization also provides for the exchange of all of JPS's Old Senior
Preferred Stock for warrants to purchase New Common Stock of reorganized JPS and
cancellation of JPS's existing Old Senior Preferred Stock, Old Junior Preferred
Stock and Old Common Stock. Members of JPS's senior management team are expected
to enter into new employment agreements in connection with the restructuring.
A revolving credit facility similar to the existing senior credit
facility under the restated credit agreement is essential for the Company's
continued operations. On the effective date of the reorganization, the Company
expects to obtain a new revolving credit facility. On August 11, 1997, the
Company accepted a proposal submitted by Citicorp for a $135 million secured
revolving credit facility with a five-year term. Availability under the new
facility would be subject to a borrowing base comprised of eligible receivables
and inventory and a portion of fixed assets. A letter of credit
sub-facility in an amount of $20 million would be available as part of the new
facility with undrawn face amount of outstanding letters of credit reserved
against the total availability under the new facility.
The new credit facility, which is subject to, among other things,
completion of Citicorp's collateral review and confirmation of the Plan of
Reorganization, is subject to final documentation and terms reasonably
satisfactory to the Unofficial Bondholder Committee.
ITEM 3. 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 in fee and
substantially all owned facilities are pledged as collateral for the Company's
bank financing arrangement.
Apparel Fabrics and Industrial Fabrics
Products and Products
Square Square
Location Footage Location Footage
- -------- ------- -------- -------
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
Rocky Mount, VA 81,000
27
<PAGE>
Home Fashion Textiles All Segments
- --------------------- ------------
Lincolnton, NC 387,000 New York, NY(1) 10,000
- --------------------
(1) The New York, NY facility is leased by the Company under a lease agreement
which expires on May
30, 1999.
The Company also leases certain other warehouse facilities, various
regional sales offices, a subsidiary's corporate office 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 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
OWNERSHIP OF EXISTING EQUITY SECURITIES
The following table sets forth information as of June 20, 1997 with
respect to the beneficial ownership of shares of Old Senior Preferred Stock, Old
Junior Preferred Stock, Class A Common Stock and 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 on such date.
28
<PAGE>
<TABLE>
<CAPTION>
Old Old
Senior Preferred Stock Junior Preferred Stock Class A Common Stock Class B Common Stock
---------------------- ---------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number Percent Number Percent Number Percent Number Percent
Name of 5% of of of of of of of of
Beneficial Owner Shares Class Shares Class Shares Class (1) Shares Class (1)
- ---------------- ------ ----- ------ ----- ------ --------- ------ ---------
Bear Stearns Securities Corp. (4) 124,280 23.09%
% ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Presidential Life 53,813 10.00%
Insurance Company
c/o The Bank of New York
Post Office Box 16203
New York, NY 10249
Romulus Holdings Inc. (7) 58,930 10.95%
20 Rockridge Circle
New Rochelle, NY 10804
Citibank, N.A. (4) 28,436 5.28%
P.O. Box 1530, Grand Central
111 Wall Street
20th Fl., Zone 9
New York, NY 10043
Lehman Brothers (6) 73,847 7.38%
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
BT Securities Corp (4) 26,904 5.00%
130 Liberty Street
New York, NY 10015
Dabney Resnick Imperial LLC 31,658 5.88% 63,600 6.36%
Trading Account (4)
150 S. Rodeo Dr., #100
Beverly Hills, CA 90212
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
111 Pond Street
Cohasset, MA 02025
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Old Old
Senior Preferred Stock Junior Preferred Stock Class A Common Stock Class B Common Stock
---------------------- ---------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number Percent Number Percent Number Percent Number Percent
Name of 5% of of of of of of of of
Beneficial Owner Shares Class Shares Class Shares Class (1) Shares Class (1)
- ---------------- ------ ----- ------ ----- ------ --------- ------ ---------
Lewco Securities Corp. (4) 33,935 6.31% 90,748 9.07%
34 Exchange Pl. Plaza, 4th Floor
Jersey City, NY 07311-3988
SSB-Custodian (4) 73,745 7.37%
Global Proxy Unit, ASNW
P.O. Box 1631
Boston, MA 02105-1631
Lutheran Brotherhood Research 70,180 7.02%
Corp.
625 Fourth Avenue South
Minneapolis, MN 55415
Everest Capital Fund, L.P. (7) 62,475 6.25%
c/o Morgan Stanley & Co., Inc.
One Pierpont Plaza
Brooklyn, NY 11201
Jefferies & Company, Inc. (4) 73,011 13.56%
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
PNC National Association (4) 27,501 5.11%
1835 Market Street
11 Penn Center, 15th Floor
Philadelphia, PA 19103
Directors and executive officers 510,000 51.0%
as a group (5)
(6 persons)
</TABLE>
(1) Percentages represented hereunder are based on the combined Class A Common
Stock and Class B Common Stock issued and outstanding.
(2) Represents shares of Class B Common Stock and Old Junior Preferred Stock
owned by Odyssey Partners, L.P. In addition, Odyssey Partners, L.P. has
voting control with respect to the 5,000 shares of Old Junior Preferred
Stock held by Grant M. Wilson, William J. DeBrule and Yehochai Schneider.
The Class B Common Stock shares are subject to a Stockholder's 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, the Nash Family Partnership and Brian Wruble, by virtue of being
general partners of Odyssey Partners, L.P., share voting and dispositive
power with respect to the Class B Common Stock and Old Junior Preferred
Stock owned by Odyssey Partners, L.P. and, accordingly, may each be deemed
to own beneficially such stock owned by Odyssey Partners, L.P. Each of
such persons has expressly disclaimed any such beneficial ownership
(within the meaning of Rule 13d-3(a) 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 Old Junior Preferred Stock which
he or it may be deemed to own as a general partner of Odyssey Partners,
L.P. Mr. Friedman has an indirect fractional financial interest in the
shares of Class B Common Stock owned by Odyssey Partners, L.P.; however,
he has no voting or dispositive power over any shares owned by Odyssey
Partners, L.P.
(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 on behalf of participants in certain DLJ incentive compensation
plans.
(4) It is not known if these shares are held beneficially or as nominee for
one or more beneficial owners.
30
<PAGE>
(5) None of Jerry E. Hunter, Carl Rosen, David H. Taylor, Monnie L. Broome,
Bruce R. Wilby or Heyward D. Maddox, the executive officers listed below
in Item 6, "-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.
(6) Disclaims beneficial ownership.
(7) The Company believes that the party shown is the beneficial owner of all
of the referenced shares.
31
<PAGE>
PRO FORMA OWNERSHIP OF NEW EQUITY SECURITIES
Based upon information known to the Company as of August 18, 1997,
the following table projects the beneficial ownership of the shares of New
Common Stock to be issued and outstanding on the Effective Date by (a) each
person or group that is projected by JPS to become the beneficial owner
of more than 5% of such shares on such date, (b) each director of JPS on such
date and (c) all directors of JPS as a group on such date.
Common Stock (1)
----------------
Name of 5% Number of Percent of
Beneficial Owner Shares Class
- ---------------- ------ -----
As the new Common Stock will not be issued until the Effective Date, JPS will be
unable to determine, prior to such time, the information required to be
disclosed herein, other than as set forth below. JPS will make such information
publicly available through an appropriate filing with the Securities and
Exchange Commission once such information becomes available.
Directors
- ---------
Robert J. Capozzi(2) 0 0%
Jeffrey S. Deutschman 5,000 0.05%
Nicholas P. DiPaolo 5,000 0.05%
Michael L. Fulbright 5,000 0.05%
Jerry E. Hunter 32,852 0.31%
John M. Sullivan 5,000 0.05%
David H. Taylor 20,984 0.20%
Directors and executive 75,836 0.70%
officers as a group
- ---------------------------
1. After giving effect to (i) the exercise in full of the New Warrants to be
issued on the Effective Date and (ii) the exercise in full of all options to
purchase New Common Stock which will have vested on the Effective Date (if any).
2. Mr. Capozzi has informed JPS that he will waive his entitlement to receive
any options to purchase shares of New Common Stock under the Incentive and
Capital Accumulation Plan (the "Incentive Plan").
32
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
EXISTING DIRECTORS AND OFFICERS
The following table sets forth certain information with respect to
the persons who are members of the Board of Directors or executive officers of
JPS. Each director will serve until the Effective Date.
Directors receive no compensation for their services.
Name Age Position(s) Held
- ---- --- ----------------
Jerry E. Hunter 60 Director, Chairman of the Board,
President and Chief Executive Officer
David H. Taylor 42 Director, Executive Vice President-
Finance and Secretary
Steven M. Friedman 42 Director
Muzzafar Mirza 38 Director
Alain M. Oberrotman 45 Director
Marc C. Particelli 51 Director
The business experience of each of the directors and executive
officers during the past five years is as follows:
Jerry E. Hunter was appointed as a director of JPS on April 6, 1993
and as Chief Executive Officer of JPS on November 29, 1994. Mr. Hunter has
served as President of JPS 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 JPS,
and he also serves as a Vice President of each of JPS'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 21 years.
David H. Taylor was appointed as a director of JPS on April 15,
1993. Mr. Taylor has served as Executive Vice President - Finance and Secretary
of JPS since June 1991, and prior thereto he was Controller and Assistant
Secretary of JPS 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 JPS's subsidiaries.
Steven M. Friedman has served as a director of JPS since May 1988.
He was Chief Executive Officer of JPS from April 1991 to November 1994. Mr.
Friedman became a general partner of Eos Partners, L.P. ("EOS") (a private
investment firm) on January 1, 1994. Prior thereto, he was a general partner of
Odyssey Partners, L.P., a private investment partnership with substantial
capital invested in marketable securities and closely held businesses, since
July 1988. He is also a director of Forstmann & Company, Inc., a manufacturer of
textiles and textile-related products, Eagle Food Centers, Inc., a chain of
grocery stores, The
33
<PAGE>
Leslie Fay Companies, Inc., a women's wear designer and manufacturer, Rickel
Home Centers, Inc., a chain of home center retain stores, and The Caldor
Corporation, a chain of discount retail stores.
Muzzafar Mirza was appointed as a director of JPS on October 25,
1993. He has been a principal of Odyssey Partners, L.P. 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. and its parent, Scotsman Holdings,
Inc., a lessor of mobile office units.
Alain M. Oberrotman was appointed as a director of JPS on January
25, 1994. He has been a principal of Odyssey Partners, L.P. since October 1,
1992. From September 1990 to October 1992, he was a principal of Hambro
International Equity Partners, a venture capital firm.
Marc C. Particelli was appointed as a director of JPS on November
29, 1994. He has been a principal of Odyssey Partners, L.P. since October 1,
1994. Prior thereto, he was a 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.
None of the directors or executive officers listed herein is related
to any other director or executive officer.
DIRECTORS AND OFFICERS AS OF THE EFFECTIVE DATE
The following table sets forth certain information with respect to
the persons who are expected to serve as members of the Board of Directors or
executive officers of JPS as of the Effective Date. Each director will serve
until a successor is elected and qualified.
Name Age Position(s) Held
- ---- --- ----------------
Robert J. Capozzi 33 Director
Jeffrey S. Deutschman 40 Director
Nicholas P. DiPaolo 56 Director
Michael L. Fulbright 47 Director
Jerry E. Hunter 60 Chairman of the Board, Director,
Chief Executive Officer
and President
John M. Sullivan, Jr. 51 Director
David H. Taylor 42 Director, Executive Vice President -
Finance and Secretary
Directors will be compensated as follows:
34
<PAGE>
Each director who is not an employee of JPS will be paid $20,000
annually for his services as a director, $1,200 for attendance at each meeting
of the Board of Directors and each committee meeting which does not occur in
conjunction with a directors' meeting, and $1,000 annually for his or her
services as the chairman of any committee. In addition, in accordance with the
Incentive Plan, each non-employee director will be entitled to receive on the
Effective Date a grant of options to purchase 25,000 shares of Common Stock at
an exercise price based on the per share price of the Common Stock as of the
Effective Date. With respect to the options granted to each non-employee
director on the Effective Date, options to purchase 5,000 shares of Common Stock
will vest on the Effective Date and with respect to the balance of the options
so granted, options to purchase 5,000 shares of Common Stock will vest on each
of the first, second, third and fourth anniversaries of the Effective Date. In
addition, in accordance with the Incentive Plan, each non-employee director
appointed subsequent to the Effective Date will be entitled to receive on the
date such director is appointed (the "Appointment Date") a grant of options to
purchase 25,000 shares of Common Stock at an exercise price based on the per
share price of the Common Stock as of the Appointment Date. With respect to the
options granted to each non-employee director appointed subsequent to the
Effective Date, options to purchase 5,000 shares of Common Stock will vest on
the applicable Appointment Date and with respect to the balance of the options
so granted, options to purchase 5,000 shares of Common Stock will vest on each
of the first, second, third and fourth anniversaries of such Appointment Date.
In addition, non-employee directors are eligible to receive other
benefits under, and in accordance with, the Incentive Plan. Under the terms of
the Incentive Plan, no grants may be made until the Effective Date has occurred.
The business experience of each of the directors and executive
officers as of the Effective Date (other than those whose experience is
described above) during the past five years is as follows:
Robert J. Capozzi is a Managing Director of Magten Asset Management
Corp., an investment advisory firm established in 1978. Mr. Capozzi has been
with Magten since 1986. Currently, Mr. Capozzi serves as a member of the Board
of Directors of Magten Offshore Fund Ltd.
Jeffrey S. Deutschman is a private investor and merchant banker.
From 1992 to 1995, he was a Managing Director with Aurora Capital Partners, L.P.
Prior to that, he was a Managing Director and principal of Deutschman Clayton &
Company. Mr. Deutschman has been Co-Chairman of the Board of Directors of The
Cherokee Group, a designer, manufacturer, and marketer of casual apparel, and an
officer and director of Fair Holdings Corporation and Fair Lanes, Inc., a
manager and operator of bowling centers.
Nicholas P. DiPaolo was Chairman of the Board, President and Chief
Executive Officer of Salant Corporation, a diversified apparel company listed on
the New York Stock Exchange, from March 1991 until his retirement in May 1997.
Prior to that, Mr. DiPaolo served as President and Chief Operating Officer of
Salant Corporation since June 1988. From 1985 to 1988, Mr. DiPaolo served as
President and Chief Operating Officer of Manhattan Industries, which was merged
into Salant Corporation in 1988. Prior to that he was Chairman and Chief
Executive Officer of the Villager, a women's sportswear company, from 1979 to
1985. Mr. DiPaolo has served on the Board of Directors of Manhattan Far East, a
trading company based in Hong Kong. He is also a member of the Board of
Directors of the American Apparel Manufacturers Association and other industry
associations.
Michael L. Fulbright has served as President and Chief Executive
Officer of The Bibb Company, a diversified textile company, since August 1996.
From December 1994 to August 1996, he served as President of the Denim Division
of Cone Mills, Inc. from December 1994 to August 1996. Prior to that,
35
<PAGE>
Mr. Fulbright was employed with Springs Industries, serving as President of the
Greige Manufacturing Division from August 1992 to November 1994, as President of
Wamsutta/Pacific Home Products from July 1986 to July 1992, and as Executive
Vice President of Wamsutta/Pacific Home Products from December 1985 to July
1986. Prior to that, Mr. Fulbright was employed by M. Lowenstein Corporation and
WestPoint Pepperell.
John M. Sullivan, Jr. has served as President of American Silk Mills
Corp. since 1985, as President and Chief Executive Officer of Gerli & Co., Inc.
since 1987, as President of International Silk Association (USA), N.Y., N.Y.
since 1988, and as Co-Chairman of the Home Furnishings Committee, I.S.A., Lyons
France, since 1995. From 1987 to 1991, Mr. Sullivan served as President of
Cheney Brothers Inc. Prior to that, he served as Executive Vice President
(Merchandising, Marketing & Sales) of Gerli & Co., Inc. from 1984 to 1987. Prior
to that, Mr. Sullivan served as President of A.H. Rice Company Inc., Pittsfield,
Massachusetts from 1982 to 1989, as Vice President of Marketing and Sales for
Gerli & Co., Inc. from 1979- 1982, and as Sales Manager of American Silk Mills
Corp. from 1974 to 1979.
JPS's directors will serve until the next annual meeting of
stockholders or until their successors have been elected and qualified.
None of the directors or executive officers listed herein is related
to any other director or executive officer.
ITEM 6. EXECUTIVE COMPENSATION.
Summary of 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 JPS's Chief Executive Officer and the five
other most highly compensated executive officers of JPS (or its subsidiaries)
during Fiscal 1996.
SUMMARY COMPENSATION TABLE
--------------------------
Name and Annual Compensation All Other
Principal Position Year Salary Bonus Compensation(2)
- ------------------ ---- ------ ----- ---------------
Jerry E. Hunter 1996 $332,025 $ - $3,371
Chairman of the Board, 1995 306,075 195,902 3,228
President and Chief 1994 291,500 292,793 5,219
Executive Officer
Carl Rosen 1996 251,875 - 3,131
President, JPS Converter 1995 243,750 83,000 3,046
& Industrial Corp.(1) 1994 217,708 60,000 4,354
David H. Taylor 1996 204,783 - 2,291
Executive Vice 1995 196,350 118,139 2,238
President- 1994 187,000 162,631 3,271
Finance and Secretary
Monnie L. Broome 1996 162,775 - 2,295
Vice President-Human 1995 155,925 91,822 2,250
Resources 1994 148,500 122,590 3,029
36
<PAGE>
Bruce R. Wilby 1996 161,474 57,761 6,040
President, JPS 1995 140,359 - 5,591
Elastomerics Corp.(1) 1994 139,669 75,000 6,173
Heyward D. Maddox 1996 124,813 93,249 2,258
Vice President- 1995 119,242 - 1,724
Sales and Marketing, 1994 114,321 54,000 1,530
JPS Converter &
Industrial Corp.(1)
- ----------------------------
(1) Such executive officers of JPS's subsidiaries perform certain
policy-making functions for JPS and are therefore included herein pursuant
to Item 402(a)(3) of Regulation S-K and Rule 36-7 under the Exchange Act.
(2) Employer-matching 401(k) plan contribution, employer-provided life
insurance premiums and imputed lease value of Company provided
automobiles.
JPS is a party to Retention Bonus Agreements with each of Jerry E.
Hunter, David H. Taylor, and Monnie L. Broome, dated July 12, 1996. No payments
have been made pursuant to these agreements. On the Effective Date, pursuant to
the Plan of Reorganization, such agreements will be superseded by the employment
agreements described in "Agreements with Executive Officers," below.
LONG-TERM INCENTIVE PLAN
JPS and certain of its subsidiaries (the "Subsidiary Participants")
have adopted a Long-Term Incentive Plan for certain officers and key employees
effective November 1, 1994. The plan provides for annual awards which are
accumulated in individual award banks. Awards may be either positive or negative
in any given year and are added or subtracted each year from each participant's
respective award bank. A percentage of each participant's award bank balance
will be paid out annually beginning after Fiscal 1996. Awards are based on the
achievement of certain financial performance targets by JPS and the Subsidiary
Participants. Such financial performance targets are established on a rolling
three-year basis and are subject to change at the discretion of the Boards of
Directors of JPS and the Subsidiary Participants. As of January 31, 1997, there
have been no awards granted under this plan. The Long-Term Incentive Plan will
be terminated on the Effective Date.
The following employees named in the Summary Compensation Table are
currently employee participants in the Long-Term Incentive Plan: Jerry E.
Hunter, Carl Rosen, David H. Taylor and Monnie L. Broome.
AGREEMENTS WITH EXECUTIVE OFFICERS
On the Effective Date, JPS will enter into an employment agreement
with Jerry E. Hunter. The agreement provides that Mr. Hunter will serve as
President and Chief Executive Officer of JPS until the third anniversary of the
Effective Date (the "Termination Date"), which agreement shall automatically be
extended on an annual basis following the Termination Date unless either party
elects in advance not to extend the employment period. The initial base salary
under the agreement will be $380,000 and may be increased but not reduced over
the term of the agreement. In addition, under the new employment agreement, Mr.
Hunter
37
<PAGE>
will be entitled to receive a retention grant cash payment of $256,274 and
32,852 shares of Common Stock. Mr. Hunter will be eligible for an annual bonus
in an amount based upon the attainment of certain performance goals specified in
the 1997 Management Incentive Bonus Plan. If JPS terminates Mr. Hunter's
employment for reasons other than for cause (as defined in the agreement), he
will be entitled to severance benefits equal to (i) his annual base salary
continued through the Termination Date or for one year from the date of
termination, if later, (ii) his target annual bonus continued through the
Termination Date or for one year, if greater and (iii) continuation of all
health and life insurance benefits for up to twenty-four months following the
termination of employment. In the event JPS reduces Mr. Hunter's base salary or
bonus, materially changes the requirements of his position or requires that he
relocate his principal residence, or he elects to terminate his employment no
earlier than six months following a change in control (as defined in the
agreement), Mr. Hunter may voluntarily terminate his employment with JPS with
such termination being treated, for purposes of severance benefits, as a
termination by JPS.
On the Effective Date, JPS will enter into substantially similar
employment agreements with David H. Taylor and Monnie L. Broome, with Mr. Taylor
serving as Executive Vice President-Finance and Secretary of JPS and Mr. Broome
serving as Vice President-Human Resources of JPS. Under the agreements, base
salary for Mr. Taylor is $225,000 and for Mr. Broome is $180,000. In addition,
under the new employment agreements, Mr. Taylor will be entitled to receive a
retention grant cash payment of $163,694 and 20,984 shares of New Common Stock
and Mr. Broome will be entitled to receive a retention grant cash payment of
$115,531 and 14,810 shares of New Common Stock. Unlike the employment agreement
of Mr. Hunter, the new employment agreements of Mr. Taylor and Mr. Broome will
not provide that within six months following a change in control, Mr. Taylor
or Mr. Broome (as the case may be) may voluntarily terminate his employment
with JPS, with such termination being treated, for purposes of severance
benefits, as a termination by JPS.
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.
38
<PAGE>
PENSION PLAN TABLE*
Years of Service
------------ ------------------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
------------
$125,000 $20,018 $26,691 $33,364 $40,036 $46,709
$150,000 and 24,518 32,691 40,864 49,036 57,209
above
*Assumes individual retires at age 65 in 1996 with the indicated years
of service and compensation. The social security integration level of such
individuals would be $27,576. The social security integration level is adjusted
annually.
Credited years of service for benefit accrual under the Pension Plan as
of November 2, 1996 for the following executive officers are:
Jerry E. Hunter................10 years
Carl Rosen......................5 years
David H. Taylor.................8 years
Monnie L. Broome................8 years
Bruce R. Wilby.................21 years
Heyward D. Maddox..............28 years
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 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 $27,576 in 1996) multiplied by the
participant's years of benefit service. The Pension Plan provides that each
participant's benefits fully vest after five years of service or the attainment
of age 55.
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. In addition, as noted below, the table
assumes that covered compensation was limited to the current allowable amount
for all years while benefits may have been accrued in years when limitations
were higher.
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. In accordance with the
Revenue Reconciliation Act of 1993 with respect to salaried employees, plan
compensation covers up to a maximum of
39
<PAGE>
$150,000 as adjusted per individual for the plan year beginning November 1,
1994. Plan compensation was subject to substantially higher limits in previous
years ($235,840 for 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"), and are subject to possible reduction for amounts payable
under other Company qualified plans.
1997 MANAGEMENT INCENTIVE BONUS PLAN
The Company's Management Incentive Bonus Plan provides incentives
for key management employees of the Company based upon the financial performance
of the Company. The plan is designed to provide incentives to maximize operating
earnings while minimizing the net assets required to generate those earnings.
Targets are set annually for operating earnings (defined as EBITDA before bonus
expense and restructuring and reorganization expenses) and net assets employed
(defined as average total assets less average current liabilities other than
debt-related liabilities such as accrued interest) for each fiscal year and for
each operating subsidiary. If actual operating earnings and net assets employed
are equal to the targets, a targeted bonus is paid to each participant. To the
extent actual operating earnings are greater than the target, amounts in excess
of the targeted bonuses are paid to each participant. Likewise, operating
earnings lower than target result in a bonus payment that is less then the
targeted bonus. A participant's bonus is reduced to zero if actual operating
earnings are 80% of target or less. The operating earnings target is adjusted up
or down by 12.5% of the excess or deficiency of actual net assets employed
compared to the target for net assets employed. Targeted bonus amounts expressed
as a percentage of salary for participants in the plan range from 15% to 50%.
Individuals listed on the Summary Compensation Table have targeted bonus amounts
equal to 50% of salary.
1997 INCENTIVE AND CAPITAL ACCUMULATION PLAN
The Company's Incentive Plan is intended to provide incentives that
will attract, retain, and motivate highly competent individuals as key employees
of reorganized JPS and its subsidiaries, by providing them with opportunities to
acquire shares of New Common Stock or monetary payments based on the value of
such shares. Pursuant to the Incentive Plan, on the Effective Date, reorganized
JPS will reserve approximately 853,485 shares of the New Common Stock for
issuance to salaried key employees and non-employee directors of the Company
pursuant to benefits in the form of stock options, stock appreciation rights,
stock awards, performance awards, and stock units that may be granted by the
compensation committee comprised of disinterested members of reorganized JPS's
Board of Directors. The Incentive Plan will terminate on the tenth anniversary
of its adoption.
Options to acquire approximately 586,990 of the shares reserved
pursuant to the Incentive Plan shall be granted to members of senior management
of the Company prior to the last day of JPS's 1997 fiscal year. There may be
different types of stock options, including among other types, performance
options, which vest upon achievement of specified corporate performance goals,
time vesting options, which vest solely on the lapse of time, or a combination
of the two. The options will be exercisable according to the vesting schedule
set forth in the individual grant letters approved by the compensation
committee.
In the event the employment of any of Jerry E. Hunter, David H.
Taylor, Monnie L. Broome, W. Ellis Jackson or L. Allen Ollis is terminated by
JPS without "Cause" or by such employee for "Good Reason," such employee's
rights immediately will be fully vested in 100% of the shares granted to him.
"Cause" and "Good Reason" are defined in the employment agreements to be entered
into by JPS and each of the above-mentioned employees.
40
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 8. LEGAL PROCEEDINGS.
JPS is currently a debtor in possession in a chapter 11
reorganization case (no. 97-45133) pending in the Bankruptcy Court and has been
involved in routine proceedings attendant thereto. Although JPS believes that
the Plan of Reorganization will satisfy all requirements necessary for
confirmation by the Bankruptcy Court, there can be no assurance that the
Bankruptcy Court will reach the same conclusion.
In addition, 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 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
Pursuant to the Plan of Reorganization, the Old Debt Securities will
be converted into, among other things, $14 million in cash, 99.25% of JPS's New
Common Stock and $34 million in aggregate principal amount (subject to
adjustment on the maturity date) of JPS Capital's Contingent Notes. In addition,
holders of JPS's Old Senior Preferred Stock will receive New Warrants to
purchase up to 5% of JPS's New Common Stock in place of the Old Senior Preferred
Stock, and JPS's Old Senior Preferred Stock, Old Junior Preferred Stock and Old
Common Stock will be cancelled.
JPS will apply for inclusion of the New Common Stock in the NASDAQ
National Market System.
On the Effective Date, 10,000,000 shares of New Common Stock, and
New Warrants to purchase up to 526,316 shares of New Common Stock, will be
issued by JPS and distributed pursuant to the Plan of Reorganization.
HOLDERS
As of August 18, 1997, there were approximately 19 record holders of
JPS's Old Senior Preferred Stock, 4 record holders of the Old Junior Preferred
Stock, 13 record holders of Class A Common Stock and 3 record holders of Class B
Common Stock.
The number of record holders of New Common Stock as of the Effective
Date is expected to approximate 628.
41
<PAGE>
DIVIDENDS
Dividends on the Old Senior Preferred Stock, which accrue quarterly,
are cumulative and are calculated based on an annual rate of 6% of the
liquidation preference of the Old Senior Preferred Stock. Under the terms of
various credit agreements, dividends on the Old Senior Preferred Stock must be
in the form of additional shares until 1998. Dividends on the Old Junior
Preferred Stock are non-cumulative and are payable at the same rate as is paid
on the Old Common Stock, if any. Through August 18, 1997, no dividends have been
paid on the Old Junior Preferred Stock or the Old Common Stock.
As of the Effective Date, each share of New Common Stock will be
entitled to participate equally in any dividend declared by the Board of
Directors and paid by JPS. The Company's new working capital facility following
the Effective Date may contain restrictions on JPS's ability, under specific
circumstances, to declare dividends.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
Other than the securities referred to below, JPS did not have any
recent sales of unregistered securities.
The New Common Stock, the Contingent Notes and the New Warrants will
be issued pursuant to the Plan of Reorganization on the Effective Date in
satisfaction of certain allowed claims against, or interests in, JPS. Based upon
the exemptions provided by Section 1145 of the Bankruptcy Code, JPS believes
that none of such securities are required to be registered under the Securities
Act of 1933, as amended (the "Securities Act") in connection with their issuance
and distribution pursuant to the Plan of Reorganization.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
AUTHORIZED CAPITAL STOCK
Prior to the Effective Date
JPS's Restated Certificate of Incorporation (the "Charter") provides
that the total number of all classes of stock which JPS shall have authority to
issue is (i) Seven Hundred Thousand (700,000) shares of Class A Common Stock,
(ii) Seven Hundred Thousand (700,000) shares of Class B Common Stock and (iii)
Seven Hundred Thousand (700,000) shares of preferred stock. Of such shares,
there were outstanding at August 18, 1997, 490,000 shares of Class A Common
Stock, 510,000 shares of Class B Common Stock, 538,176 shares of Old Senior
Preferred Stock and 10,000 shares of Old Junior Preferred Stock. All of such
outstanding shares will be cancelled on the Effective Date.
As of the Effective Date
JPS's Amended and Restated Certificate of Incorporation as of the
Effective Date (the "New Charter") will provide that the total number of all
classes of stock which JPS shall have authority to issue is Twenty-Five Million
(25,000,000) shares, of which Twenty-Two Million (22,000,000) will be shares of
New Common Stock and Three Million (3,000,000) will be shares of preferred
stock, having a par value of $0.01 per share.
NEW COMMON STOCK
42
<PAGE>
Ten million (10,000,000) shares of New Common Stock will be issued
on the Effective Date. Each share of New Common Stock will entitle its holder to
one vote. The holders of record of the New Common Stock will be entitled to
participate equally in any dividend declared by the Board of Directors of JPS.
Each share of New Common Stock will be entitled to share ratably in the net
worth of JPS upon dissolution.
Subject to the provisions of the General Corporation Law of the
State of Delaware (the "General Corporation Law"), JPS may issue New Common
Stock from time to time for such consideration (not less than the par value
thereof) as may be fixed by the Board of Directors, which is expressly
authorized to fix the same at its discretion. Shares so issued for which the
consideration has been paid or delivered to JPS shall be deemed fully paid stock
and shall not be liable to any further call or assessment thereon, and the
holders of such shares shall not be liable for any further payments in respect
of such shares. Notwithstanding anything to the contrary set forth in the New
Charter, JPS shall not issue any non-voting equity securities; provided,
however, that this provision, included in the New Charter in compliance with
Section 1123(a)(6) of the Bankruptcy Code, shall have no force and effect beyond
that required by Section 1123(a)(6) of the Bankruptcy Code and shall be
effective only for so long as Section 1123(a)(6) of the Bankruptcy Code is in
effect and applicable to JPS.
Subject to certain restrictions specified in the New Charter,
without the approval of the Board of Directors and the approval, given by
written consent or by vote at any regular or special meeting of stockholders, of
the holders of record of not less than 100% of the shares of New Common Stock at
the time outstanding, voting together as a single class, JPS may not enter into
any single transaction or series of related transactions, or take any other
action that would have the effect of, whether directly or indirectly,
prohibiting, restricting, delaying or otherwise hindering the payment of any and
all amounts due under the Contingent Notes.
CERTAIN CORPORATE GOVERNANCE MATTERS
Prior to the Effective Date
Except as the General Corporation Law, the By-Laws of JPS (the
"By-Laws") or the Charter may otherwise provide, the holders of one-third of the
outstanding shares of stock entitled to vote constitute a quorum at a meeting of
stockholders for the transaction of any business other than the election of
directors, which requires the presence in person or by proxy of (i) the holders
of one-third of the then outstanding shares of Class A Common Stock and Class B
Common Stock, respectively or, (ii) the holders of one-third of the then
outstanding shares of Old Senior Preferred Stock and Old Junior Preferred Stock,
respectively or, under certain circumstances, (iii) the holders of one-half of
the then outstanding shares of Class A Common Stock. The stockholders present
may adjourn the meeting despite the absence of a quorum.
Each stockholder entitled to vote in accordance with the terms of
the Charter and By-Laws shall be entitled to one vote, in person or by proxy,
for each share of stock entitled to vote held by such stockholder. In the
election of Directors, a plurality of the votes present at the meeting shall
elect. Election of Directors, and for any other action, need not be by written
ballot. Any other action shall be authorized by a majority of the votes cast
except where the General Corporation Law prescribes a different percentage of
votes and/or a different exercise of voting power. Action taken shall be taken
by stockholders of JPS at a duly called annual or special meeting of
stockholders of JPS.
Subject to the provisions of the Charter and the General Corporation
Law, the Board of Directors and the stockholders of JPS are expressly authorized
to adopt, amend, alter or repeal By-Laws.
43
<PAGE>
As of the Effective Date
As of the Effective Date, except as the General Corporation Law or
the New Charter may otherwise provide, the holders of a majority in voting power
of the issued and outstanding shares of capital stock of JPS entitled to vote
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum. When a quorum is once present to organize a meeting, it is
not broken by the subsequent withdrawal of any stockholder.
Each stockholder entitled to vote in accordance with the terms of
the New Charter and the Amended and Restated By-Laws of JPS as of the Effective
Date (the "New By-Laws"), shall be entitled to one vote, in person or by proxy,
for each share of stock entitled to vote held by such stockholder. In the
election of Directors, a plurality of the votes present at the meeting shall
elect. Election of Directors need not be by written ballot. Any other action
shall be authorized by a majority of the votes cast except where the New Charter
or the General Corporation Law prescribes a different percentage of votes and/or
a different exercise of voting power. Action taken shall be taken by
stockholders of JPS at a duly called annual or special meeting of stockholders
of JPS. Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law.
In furtherance and not in limitation of the powers conferred under
the General Corporation Law, the Board of Directors of JPS is expressly
authorized to adopt, amend or repeal By-Laws not inconsistent with law or with
the New Charter. By-Laws adopted by the Board of Directors may be repealed or
changed, and new By-Laws made, by the stockholders.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Prior to the Effective Date
JPS's current Charter provisions with regard to indemnification of
directors and officers are substantially similar to the provisions described
below under the New Charter.
As of the Effective Date
The New Charter will provide for the indemnification of, to the
fullest extent permitted by the General Corporation Law, all persons who may be
indemnified by JPS under the General Corporation Law, which would include the
directors, officers, employees and agents of JPS. The indemnification provided
by JPS's New Charter will not limit or exclude any rights, indemnities or
limitations of liability to which any person may be entitled, whether as a
matter of law, under the New By-Laws of JPS, by agreement, vote of the
stockholders or disinterested directors of JPS or otherwise. JPS's New Charter
also will not absolve directors of liability for (1) any breach of the
directors' duty of loyalty to JPS or its stockholders, (2) acts or omissions
which are not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) any matter in respect of which such director shall be
liable under Section 174 of the General Corporation Law or any amendment thereto
or successor provision thereto, which makes directors personally liable for
unlawful dividends or unlawful stock repurchases or redemptions in certain
circumstance and expressly sets forth a negligence standard with respect to such
liability, or (4) any transaction from which the director derived an improper
personal benefit.
Under Delaware law, directors, officers, employees and other
individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with
44
<PAGE>
specified actions, suits or proceedings, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation (a
"derivative action")) if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of JPS and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. A similar standard of care is applicable in
the case of a derivative action, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with defense or
settlement of such an action and Delaware law requires court approval before
there can be any indemnification of expenses where the person seeking
indemnification has been found liable to JPS.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See "Item 15. Financial Statements and Exhibits" and the
Consolidated Financial Statement which begin on page F-1.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
--------------------
See Index to Consolidated Financial Statement and Schedules which
appears on page F-1 hereof.
(b) Exhibits
--------
The exhibits listed on the Exhibit Index following the Consolidated
Financial Statements hereof are filed herewith in response to this Item.
45
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: August 25, 1997
JPS TEXTILE GROUP, INC.
By: /s/ David H. Taylor
------------------------------------------
Name: David H. Taylor
Title: Executive Vice President - Finance
and Secretary
46
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
JPS TEXTILE GROUP, INC.
Page
Independent Auditors' Report...............................................F-2
Consolidated Balance Sheets as of October 28, 1995, November 2, 1996,
and May 3, 1997 (unaudited)..............................................F-3
Consolidated Statements of Operations for the fiscal years ended
October 29, 1994, October 28, 1995 and November 2, 1996 and the
six months ended April 27, 1996 and May 3, 1997 (unaudited)..............F-5
Consolidated Statements of Senior Redeemable Preferred
Stock and Shareholders' Equity (Deficit) for October 30, 1993,
October 29, 1994, October 28, 1995, November 2, 1996 and
May 3, 1997 (unaudited)..................................................F-6
Consolidated Statements of Cash Flows for fiscal years ended October
29, 1994, October 28, 1995 and November 2, 1996 and Six Months ended
April 27, 1996 and May 3, 1997 (unaudited)...............................F-7
Notes to Consolidated Financial Statements.................................F-8
F-1
<PAGE>
ITEM 15. 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 November 2, 1996 and October
28, 1995, 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 November 2, 1996. 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 November 2, 1996 and
October 28, 1995, and the results of its operations and its cash flows for each
of the three years in the period ended November 2, 1996 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.
The accompanying consolidated financial statements for the years ended November
2, 1996 and October 28, 1995 have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 14 to the consolidated
financial statements, the Company has had recurring net losses from continuing
operations since inception, has a net shareholders' deficiency, is in default on
its senior subordinated discount notes, the senior subordinated notes and the
subordinated debentures and, under certain conditions, the Company's senior
revolving credit facility expires on March 1, 1997. The events of default
entitle the holders of these debt securities to accelerate payment on such debt.
JPS's default on its notes and debentures, its inability to service its debt
without a restructuring thereof, the uncertainty of JPS's ability to restructure
its notes and debentures and to meet the requirements for extension of its
senior revolving credit facility or to obtain alternative sources of financing
as described in Note 14 raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 14. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
January 17, 1997
F-2
<PAGE>
JPS TEXTILE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
10/28/95 11/2/96 5/3/97
-------- ------- ------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 1,352 $ 1,460 $1,284
Accounts receivable, less allowance of
$2,131 in 1995 and $2,511 in 1996 (Note 6) 88,186 75,166 72,184
Inventories (Notes 5 and 6) 48,729 48,374 45,948
Prepaid expenses and other 2,545 1,967 2,268
Net assets held for sale (Note 3) 28,932 - -
------- ------- -------
Total current assets 169,744 126,967 121,684
PROPERTY, PLANT AND EQUIPMENT,
net (Notes 5 and 6) 161,436 124,004 119,586
EXCESS OF COST OVER FAIR VALUE OF
NET ASSETS ACQUIRED, less
accumulated amortization of $6,877
in 1995 and $7,860 in 1996 31,489 30,506 30,023
OTHER ASSETS (Notes 5, 9, 10 and 13) 50,153 54,450 53,216
------- ------ ------
Total assets $412,822 $335,927 $324,509
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $29,754 $24,708 $23,429
Accrued interest 9,895 9,608 20,905
Accrued salaries, benefits
and withholdings (Note 9) 11,503 10,440 11,121
Other accrued expenses
(Notes 5, 9 and 11) 12,699 13,987 11,738
Senior credit facility, revolving
line of credit (Note 6) - 85,639 79,183
Current portion of long-term debt (Note 6) 2,770 240,451 244,705
------- ------- -------
Total current liabilities 66,621 384,833 391,081
LONG-TERM DEBT (Note 6) 327,668 4,226 3,304
DEFERRED INCOME TAXES (Note 8) 4,165 3,665 3,665
OTHER LONG-TERM LIABILITIES
(Notes 5, 9 and 10) 23,242 19,513 19,819
------ ------ ------
Total liabilities 421,696 412,237 417,869
------- ------- -------
COMMITMENTS AND CONTINGENCIES (Notes 4, 6, 8 and 9)
SENIOR REDEEMABLE PREFERRED STOCK,
redemption value of $51,324 in 1995
and $54,520 in 1996 (Note 7) 28,171 32,676 35,219
------- ------ ------
F-3
<PAGE>
JPS TEXTILE GROUP, INC.
SHAREHOLDERS' EQUITY (DEFICIT) (Note 7)
Junior preferred stock 250 250 250
Common stock:
Class A, 490,000 shares
issued and outstanding 5 5 5
Class B, 510,000 shares
issued and outstanding 5 5 5
Additional paid-in capital 29,613 25,108 22,565
Deficit (66,918) (134,354) (151,404)
-------- --------- ---------
Total shareholders' deficit (37,045) (108,986) (128,579)
------- --------- ---------
Total $412,822 $335,927 $324,509
======== ========= ========
See notes to Consolidated Financial Statements.
F-4
<PAGE>
JPS TEXTILE GROUP, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
Fiscal Year Ended Six Months Ended
---------------------------- ----------------
10/29/94 10/28/95 11/2/96 4/27/96 5/3/97
-------- -------- ------- ------- ------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net sales $461,871 $472,565 $448,824 $223,178 $205,305
Cost of sales 397,921 406,070 397,804 198,727 177,972
------- ------- ------- -------- --------
Gross profit 63,950 66,495 51,020 24,451 27,333
Selling, general and administrative
expenses (Note 11) 39,805 39,586 40,579 20,713 19,607
Other expense, net (Notes 9 and 10) 2,914 6,248 2,498 1,949 383
Charges for plant closing, loss on
sale of certain operations
and writedown of certain
long-lived assets (Note 4) - - 30,028 - -
-------- -------- ------- ------- -------
Operating profit (loss) 21,231 20,661 (22,085) 1,789 7,343
Valuation allowance on Gulistan
securities (Note 3) - - (4,242) (4,068) (2,088)
Interest income 749 2,821 2,856 1,388 1,471
Interest expense (Note 6) (55,570) (39,946) (40,510) (19,565) (20,223)
Debt restructuring fees and
expenses (Note 1) - - (2,255) (175) (3,144)
-------- -------- ------- ----- ------
Loss before income taxes, discontinue
operations, extraordinary items and
cumulative effects
of accounting changes (33,590) (16,464) (66,236) (20,631) (16,641)
Provision (benefit) for income taxes
(Note 8) 2,800 1,200 (300) 208 409
------- ------- ------- ------- -------
Loss before discontinued operations,
extraordinary items and cumulative
effects of accounting changes (36,390) (17,664) (65,936) (20,839) (17,050)
Discontinued operations:
Income (loss) from discontinued
operations 23,628 (7,079) - - -
Net gain (loss) on sales of
discontinued operations, net of
taxes of $2,800 in 1994 and $100
in 1995 (Note 3) 132,966 (26,241) (1,500) (1,500) -
------- ------- ------- ------ -------
Income (loss) before extraordinary
items and cumulative effects
of accounting changes 120,204 (50,984) (67,436) (22,339) (17,050)
Extraordinary gain (loss) on early
extinguishment of debt, net of taxes
of $600 in 1995 (Note 6) (7,410) 20,120 - - -
Cumulative effects of accounting
changes (Note 10) (708) - - - -
------- ------- ------- ------- ------
Net income (loss) 112,086 (30,864) (67,436) - -
Senior redeemable preferred stock in-kind
dividends and discount accretion
(Note 7) (3,333) (3,831) (4,505) 2,192 2,542
------- ------- -------- ------ ------
Income (loss) applicable to
common stock $108,753 $(34,695) $(71,941)$(24,531) $(19,592)
======== ======== ======== ======== ========
Weighted average number of common
shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
========= ========= ========= ========= =========
Earnings (loss) per common share:
Loss before discontinued operations,
extraordinary items and cumulative
effects of accounting changes $(39.73) $(21.50) $(70.44)$ (23.03)$(19.59)
Discontinued operations:
Income (loss) from discontinued
operations 23.63 (7.08) - (1.50) -
Net gain (loss) on sales of
discontinued operations 132.97 (26.24) (1.50) - -
-------- -------- ------- ------ -------
Income (loss) before extraordinary items
and cumulative effects of accounting
changes 116.87 (54.82) (71.94) - -
Extraordinary gain (loss) on early
extinguishment of debt (7.41) 20.12 - - -
Cumulative effects of accounting changes (0.71) - - - -
------ ---------------- -------- -------
Net income (loss) $108.75 $(34.70) $(71.94) $(24.53) $(19.59)
======= ======= ======= ======== =======
</TABLE>
F-5
<PAGE>
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF SENIOR REDEEMABLE PREFERRED STOCK
AND SHAREHOLDERS' EQUITY (DEFICIT)
(In Thousands)
Senior Shareholders' Equity (Deficit)
-----------------------------------
Redeemable Junior Additional
Preferred Common Preferred Paid-In
Stock Stock Stock Capital Deficit
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)
Net loss for 52 weeks (30,864)
Preferred stock-in-kind dividends
and discount accretion 3,831 (3,831)
------ ---- ---- ------ -------
Balance - October 28, 1995 28,171 10 250 29,613 (66,918)
Net loss for 53 weeks (67,436)
Preferred stock-in-kind dividends
and discount accretion 4,505 (4,505)
------ ---- ---- ------ -------
Balance - November 2, 1996 32,676 10 250 25,108 (134,354)
Net loss for 26 weeks (Unaudited) (17,050)
Preferred stock-in-kind
dividends and discount
accretion (Unaudited) 2,543 (2,543)
------ ---- ---- ------ ------
Balance - May 3, 1997
(Unaudited) $35,219 $10 $250 $22,565 $(151,404)
======== ==== ===== ======= =========
F-6
<PAGE>
JPS TEXTILE GROUP, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands Except Share Data)
Fiscal Year Ended Six Months Ended
--------------------------- -----------------
10/29/94 10/28/95 11/2/96 4/27/96 5/3/97
<S> <C> <C> <C> <C> <C>
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $112,086 $(30,864) $(67,436) $(22,339) $(17,050)
-------- -------- -------- -------- --------
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating activities:
Charges for plant closing, loss on sale
of certain operations and writedown of
certain long-lived assets - - 30,028 - -
Loss (income) from discounted
operations (23,628) 7,079 - 1,500 -
Loss (gain) on sales of discontinued
operations (132,966) 26,241 1,500 - -
Extraordinary loss (gain) on early
extinguishment of debt 7,410 (20,120) - - -
Cumulative effects of accounting changes 708 - - - -
Depreciation and amortization,
except amounts included
in interest expense 23,206 21,785 22,739 11,846 9,578
Interest accretion and debt
issuance cost amortization 11,161 8,818 10,088 4,622 4,919
Product liability charge - 5,000 - - -
Deferred income tax provision (benefit) 1,227 - (500) - -
Financing costs incurred (2,943) (25) (614) - -
Valuation allowance on Gulistan
securities - - 4,242 4,068 2,088
Other, net (2,970) (498) (3,163) 2,452 959
Changes in assets and liabilities:
Accounts receivable 426 (1,086) 10,372 4,737 2,982
Inventories (179) (685) (2,635) (1,991) 2,426
Prepaid expenses and other assets (1,248) (2,505) (2,348) 148 (1,764)
Accounts payable 228 (911) (3,983) (93) (1,279)
Accrued expenses and other liabilities (2,951) (7,202) (1,688) (3,931) 9,632
Total adjustments (122,519) 35,891 64,038 23,352 29,541
Net cash provided by (used in)
operating activities (10,433) 5,027 (3,398) 1,013 12,491
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (18,423) (18,811) (9,834) (4,865) (4,702)
Receipts from discontinued operations, net 17,115 3,453 - 364 -
Proceeds from sale of discontinued
operations, net 259,044 4,415 17,077 20,161 -
Proceeds from sale of certain operations - - 5,113 -
Purchase of long-term investments (39,500) - - - -
Net cash provided by (used in)
investing activities 218,236 (10,943) 12,356 15,660 (4,702)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 285 5,000 29 - (100)
Revolving credit facility borrowings
(repayments), net (41,666) 41,808 (6,087) (15,979) (6,456)
Purchases and repayment of other
long-term debt (166,044) (41,384) (2,792) (1,075) (1,409)
Net cash provided by (used in)
financing activities (207,425) 5,424 (8,850) (17,054) (7,965)
NET INCREASE (DECREASE) IN CASH 378 (492) 108 (381) (176)
Cash at beginning of year 1,466 1,844 1,352 1,352 1,460
--------------------------------------------------
Cash at end of year $1,844 $1,352 $1,352 $ 971 $1,284
==================== =============================
SUPPLEMENTAL INFORMATION ON CASH FLOWS
FROM CONTINUING OPERATIONS:
Interest paid $48,219 $33,681 $30,709 $15,124 $4,008
Income taxes paid 376 3,314 693 557 226
Non-cash financing activities:
Senior redeemable preferred stock
dividends-in-kind 2,765 2,936 3,114 1,534 -
</TABLE>
F-7
<PAGE>
JPS TEXTILE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
1. BUSINESS AND BASIS OF PRESENTATION
JPS purchased from 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. These
products are sold primarily to the domestic clothing manufacturing and
construction industries. As described in Notes 3 and 4, certain of the
acquired businesses and operations have been subsequently sold.
A plan of reorganization which was distributed to JPS's bondholders and
preferred stockholders (the "Securityholders") on December 21, 1990, was
approved by the securityholders in early February 1991 and in accordance
with JPS's plan, JPS filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code. Subsequently, in March
1991, the bankruptcy court confirmed JPS's plan and it became effective
April 2, 1991. JPS's 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 JPS'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 JPS's 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.
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.
The equity method of accounting is used to account for JPS's 50% interest
in a joint venture with a Mexican company (see Note 13). Under the equity
method, JPS's original investment is recorded at cost and is adjusted by
JPS's share of undistributed earnings or loss of the investee.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company's most significant
financial statement estimates include the estimate of the allowance for
doubtful accounts, reserve for self-insurance liabilities and the reserve
for certain defective roofing products sold by the Predecessor Stevens
Division operations (discussed in Note 9). Management determines its
estimate of the allowance for doubtful accounts considering a number of
factors, including historical experience, aging of the accounts and the
current creditworthiness of its customers.
F-8
<PAGE>
The Company self-insures, with various insured stop-loss limitations, its
workers' compensation, general liability and health claims. Management
determines its estimate of the reserve for self-insurance considering a
number of factors, including historical experience and third party claims
administrator and actuarial assessment of the liabilities for reported
claims and claims incurred but not reported. Management believes that its
estimates provided in the financial statements, including those for the
above-described items, are reasonable and adequate. However, actual
results could differ from those estimates.
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
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 undiscounted future cash
flows and comparing such future cash flows to the carrying amount of the
related asset.
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 - The Company accounts for postretirement benefits
other than pensions using the principles of 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. See Note 10 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 10 for a further description of the
accounting for postemployment benefits.
F-9
<PAGE>
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.
Advertising Costs - The Company defers advertising related costs until the
advertising is first run in magazines or other publications or in the case
of brochures, until the brochures are printed and available for
distribution. Advertising costs were approximately $708,000, $1,225,000
and $1,856,000 in Fiscal 1994, 1995 and 1996, respectively.
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.
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 1994 and 1995 fiscal years each consisted of fifty-two weeks and
Fiscal 1996 had fifty-three weeks.
Reclassifications - Certain Fiscal 1995 and 1994 amounts have been
reclassified to conform to the 1996 presentation. In addition, see Note 3
regarding reclassifications of Fiscal 1994 amounts for discontinued
operations.
Unaudited Interim Financial Data - The interim financial data relating to
the six months ended April 27, 1996 and May 3, 1997 are unaudited;
however, in the opinion of the Company's management, the interim data
including all adjustments consisting only of normal recurring adjustments,
is necessary for a fair statement of the results for the interim periods.
The results for the six months ended May 3, 1997 are not necessarily
indicative of the results to be expected for the full fiscal year or any
other interim period.
3. SALE OF DISCONTINUED OPERATIONS
Carpet Business - On November 16, 1995, pursuant to the terms of an Asset
Transfer Agreement dated as of November 16, 1995, by and among JPS,
Carpet, Gulistan Holdings Inc. and Gulistan Carpet Inc., a wholly-owned
subsidiary of Gulistan Holdings Inc. (collectively, "Gulistan"), JPS and
Carpet consummated the sale of substantially all of the assets of Carpet
used in the business of designing and manufacturing tufted carpets for
sale to residential, commercial and hospitality markets (the "Carpet
Business"). Pursuant to the Asset Transfer Agreement, Gulistan agreed to
assume substantially all of the liabilities and obligations associated
with the Carpet Business. Gulistan was formed and its common stock is
owned by certain members of the former management team at Carpet. The
Company has agreed, for a three-year period, not to compete directly or
indirectly with the business that was
F-10
<PAGE>
sold. The Consolidated Statements of Operations and Cash Flows for Fiscal
1994 have been reclassified to reflect the Carpet Business as discontinued
operations.
The consideration for the sale of the Carpet Business consisted of
approximately $22.5 million in cash, subject to certain post-closing
adjustments based on the audited amount of working capital transferred on
November 16, 1995, and other debt and equity securities of Gulistan as
follows: a $10 million Promissory Note due in November 2001, $5 million of
preferred stock redeemable in November 2005, and warrants to purchase 25%
of the common stock of Gulistan. Based on an independent valuation at the
asset transfer date, the Company determined the fair value of these debt
and equity securities to be approximately $11.3 million. These debt and
equity securities are included in other non-current assets on the November
2, 1996 balance sheet. Since the disposal of the Carpet Business occurred
subsequent to the end of Fiscal 1995, the net assets of the Carpet
Business (adjusted to net realizable value) were classified as "net assets
held for sale" on the October 28, 1995 Consolidated Balance Sheet. As of
October 28, 1995, the Company adjusted the net assets of the Carpet
Business to their net realizable value, which resulted in a charge to the
1995 Consolidated Statement of Operations of $30.7 million (net of tax),
classified as loss on sale of discontinued operations. The loss on the
sale is not currently recognizable for tax purposes and the Company has
recorded no net tax benefit as a result of this loss due to uncertainties
regarding the ability to utilize these losses in future years. Net sales
from the discontinued operations of the Carpet Business were $141.6
million and $120.1 million in Fiscal years 1994 and 1995, respectively.
In May 1996, the Company and Gulistan agreed on the amount of the
post-closing adjustment. As a result, the Company paid a post-closing
adjustment of $3.5 million (an estimated post-closing adjustment of $2.0
million was included in the Fiscal 1995 loss on sale of discontinued
operations) and has recognized in Fiscal 1996 an additional loss of $1.5
million on the sale of discontinued operations. The final amount of net
cash proceeds applied by the Company to reduce outstanding borrowings
under its senior credit facility was approximately $16.7 million (net of
fees, expenses, and the post-closing adjustment resulting from the level
of working capital transferred at the closing date).
In Fiscal 1996, Gulistan reported a net loss of approximately $4.5 million
before interest expense on the promissory note held by JPS. Accordingly,
the Company did not record interest income on any of the Gulistan
securities held by JPS. Also, in accordance with relevant accounting
literature, the Company has recorded a valuation allowance against its
investment in the Gulistan securities and a corresponding charge to income
of $4.2 million as a result of the net loss ($4.5 million reduced by the
$0.3 million of common equity held by Gulistan management) incurred by
Gulistan during the 1996 fiscal year. The valuation allowance will be
increased or decreased (but not below zero) with a corresponding charge or
credit to income to give effect to future losses or earnings of Gulistan
as those losses or earnings occur.
Automotive Businesses - On June 28, 1994, pursuant to the terms of an
Asset Purchase Agreement dated May 25, 1995 (the "Asset Purchase
Agreement"), by and among JPS, Auto, C&I, Foamex International Inc.
("Foamex") and JPS Automotive Products Corp., an indirect, wholly-owned
subsidiary of Foamex ("Purchaser"), the Company consummated the
disposition of its Automotive Assets (as described below) to the
Purchaser.
The Automotive Assets consisted of the businesses and assets of Auto and
the synthetic industrial fabrics division of C&I, and the Company's
investment in common stock of the managing general partner of Cramerton
Automotive Products, L.P. (an 80% owned joint venture). Net sales from the
F-11
<PAGE>
discontinued operations of the Automotive Assets were $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 agreed, for a period of four years, not to directly
or indirectly compete in North, Central and South America with the
businesses that were sold.
The sale price for the Automotive Assets was approximately $283 million,
consisting of $264 million of cash paid at closing, $15 million of assumed
debt as of June 28, 1994 and certain post-closing adjustments which
resulted in a gain of $4.4 million, net of $0.1 million of taxes,
recognized in Fiscal 1995. The sale of the Automotive Assets resulted in
an approximate total gain of $137.4 million, net of income taxes of $2.9
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 $217
million and such proceeds were used by the Company to reduce its
outstanding indebtedness.
The Company has allocated to the discontinued operations of the Automotive
Assets and the Carpet Business a pro-rata portion of the interest expense
of its senior credit facility, which pro-rata portions were approximately
$3.4 million and $1.6 million in Fiscal 1994 and 1995, respectively.
4. SALE OF CERTAIN OPERATIONS, PLANT CLOSING AND WRITEDOWN OF CERTAIN
LONG-LIVED ASSETS
Pursuant to an Asset Purchase Agreement dated September 30, 1996 between
Elastomerics 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 $22.6 million, $20.7 million
and $16.8 million in Fiscal 1994, 1995 and 1996 (eleven months),
respectively. Under the terms of the agreement, Elastomer agreed to assume
substantially all the liabilities and obligations associated with the
Rubber Products Business. The Company has 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, subject to certain post-closing
adjustments based on the audited amount of working capital transferred on
the closing date, and resulted in a loss of approximately $7.7 million.
This loss on sale was charged to operations in Fiscal 1996. The net
proceeds from the sale, after fees and expenses, was approximately $4.8
million and was used to reduce the Company's outstanding indebtedness.
On August 28, 1996, the Company implemented a plan to close its Dunean
plant in Greenville, South Carolina, as a result of management's
determination that a permanent decline in the Company's spun apparel
business had occurred. This plant had been operating on a reduced schedule
due to poor market conditions and financial projections indicated it would
continue to do so. As a result of the plant closing, the accompanying
Consolidated Statement of Operations includes a "charge for plant closing"
of approximately $14.2 for Fiscal 1996 related principally to the
estimated loss on the impairment of long-lived assets in accordance with
SFAS No. 121, "Accounting for the Impairment of
F-12
<PAGE>
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", employee
severance costs and estimated costs for equipment relocation. As of
November 2, 1996, this plant closing was substantially complete. Of the
approximately $4.8 million in exit costs recognized in association with
the plant closing, approximately $2.3 million related to equipment
relocation and employee severance was not paid at November 2, 1996.
Also, in connection with the Company's review of present and expected
conditions in the markets it serves, management determined that its plant
in Kingsport, Tennessee, which manufactures cotton fabrics, is impaired
under the criteria of SFAS No. 121 because expected future cash flows from
the operation of the plant are less than the carrying value of the plant
assets. The accompanying Consolidated Statement of Operations for Fiscal
1996 includes a "writedown of certain long-lived assets" of $8.1 million
for the excess of the carrying value of the plant over its estimated fair
value. Estimated fair value was determined based on an independent
appraisal of the plant's property, plant and equipment.
F-13
<PAGE>
5. BALANCE SHEET COMPONENTS
The components of certain balance sheet accounts are (in thousands):
October 28, November 2, May 3,
1995 1996 1997
---------- ---------- ----------
(unaudited)
Inventories:
Raw materials and supplies $ 13,909 $13,155 $11,925
Work-in-process 18,334 16,912 16,768
Finished goods 16,486 18,307 17,255
-------- ------- -------
$ 48,729 $48,374 $45,948
======== ======= =======
Property, plant and equipment, net:
Land and improvements $ 7,349 $ 5,921 $ 5,921
Buildings and improvements 53,649 42,775 42,780
Machinery and equipment 205,345 183,320 182,799
Furniture, fixtures and other 7,725 8,116 8,091
-------- ------- -------
274,068 240,132 239,591
Less accumulated depreciation (118,866) (117,642) (125,820)
-------- -------- --------
155,202 122,490 113,771
Construction in progress 6,234 1,514 5,815
-------- ------- --------
$161,436 $124,004 $119,586
======== ======== ========
Other noncurrent assets:
Unamortized debt issuance costs $ 1,092 $ 351 $ 274
Prepaid pension costs 5,973 1,055 581
Investments (Notes 3 and 9) 42,885 52,986 52,361
Other 203 58 -
-------- ------- -------
$ 50,153 $54,450 $53,216
======== ======= =======
Other accrued expenses:
Roofing product liability costs $ 4,000 $ 3,000 $ 2,124
Taxes payable other than income taxes 1,433 1,250 520
Income taxes 2,753 2,150 2,334
Other 4,513 7,587 6,760
-------- ------- -------
$ 12,699 $13,987 $11,738
======== ======= =======
Other long-term liabilities:
Roofing product liability costs
and deferred warranty income $ 15,700 $14,361 $14,804
Accrued postretirement benefit
plan liability 5,249 4,808 4,400
Other 2,293 344 615
-------- ------- -------
$ 23,242 $19,513 $19,819
======== ======= =======
F-14
<PAGE>
6. LONG-TERM DEBT
Long-term debt consists of (in thousands):
October 28, November 2, May 3,
1995 1996 1997
----------- ----------- -----------
(unaudited)
Senior credit facility, revolving
line of credit $91,726 $85,639 $79,183
Senior subordinated discount notes
(including interest due at
maturity of $4,370, $6,002
and $6,873, respectively) 113,617 115,249 116,120
Senior subordinated notes
(including interest
due at maturity of $4,347, $5,609 and
$6,280, respectively) 81,120 82,382 83,053
Subordinated debentures 54,071 54,071 54,071
Equipment financing 9,780 7,016 5,607
-------- ------- -------
Total 350,314 344,357 338,034
Less reorganization discount:
Senior subordinated discount notes (5,171) (3,308) (2,285)
Senior subordinated notes (4,435) (2,694) (1,737)
Subordinated debentures (10,270) (8,039) (6,819)
-------- ------- -------
Total long-term debt 330,438 330,316 327,193
Less current portion (2,770) (326,090) 323,889
-------- -------- -------
Long-term portion $327,668 $ 4,226 $ 3,304
======== ======= =======
Senior Credit Facility - On September 6, 1996, the senior credit facility
was amended to, among other things, extend its expiration date and reduce
the interest rate by 0.25%. Under the terms of the amended credit
agreement, the senior credit facility expires on March 1, 1997 (unless
otherwise extended) if JPS has not commenced a case under chapter 11 of
the Bankruptcy Code. If such a case is commenced on or prior to March 1,
1997 (or any extended date), the senior credit facility will be extended
automatically until 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 $85.6 million outstanding under its senior credit
facility revolving line of credit as a current liability in the
accompanying Consolidated Balance Sheet. In addition, the loan covenants
were amended to be based upon the activities of the consolidated operating
subsidiaries (JPS Converter and 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 amended credit agreement does not permit additional borrowings by the
operating subsidiaries for, among other things, loans or dividends to JPS
for the payment of interest on its notes and debentures. As a result of
this restriction, JPS did not make interest payments of approximately $1.9
million on its subordinated debentures due November 15, 1996, and did not
make interest payments of approximately $5.4 million and $3.6 million on
its senior subordinated discount notes and senior subordinated notes,
respectively, due December 1, 1996. The terms of the indentures governing
JPS's subordinated debt provide that such a failure to pay interest when
due results in an event of default on such indebtedness and as a result,
the holders of these debt securities are entitled to accelerate the debt
represented thereby. Accordingly, all of JPS's notes and debentures have
been classified as current liabilities as of November 2, 1996. As
discussed in Note 14, JPS has engaged financial advisors regarding
extension, replacement or refinancing of its debt securities.
F-15
<PAGE>
The senior credit facility provides for a $118 million revolving line of
credit. 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 1.0% per annum (9.25% at November 2, 1996) or at the
Eurodollar Rate (as defined) plus 2.50% per annum (approximately 7.88% at
November 2, 1996). Borrowings under the revolving line of credit (other
than for loans used to purchase property, plant and equipment or to
finance or refinance such purchases ("Capex Loans")) are limited to
specified percentages of eligible accounts receivable and inventories, as
defined, and such borrowings plus letters of credit outstanding and Capex
Loans may not exceed the lesser of $118 million and the borrowing base
plus an additional amount of $25,000,000. As of November 2, 1996, unused
letters of credit issued and outstanding totaled $2,385,000. The
outstanding unused letters of credit reduce the funds available under the
revolving line of credit. At November 2, 1996, the Company had $18,656,000
available for borrowing under the revolving credit agreement.
The senior credit facility also permits, subject to certain conditions,
the sale of fixed assets to the extent the net cash proceeds of all such
sales made from March 1994 forward do not cumulatively exceed $35 million
(excluding the proceeds from the sale or transfer of the Automotive Assets
and the Carpet Business). As of November 2, 1996, such limit has not been
exceeded.
During the first quarter of Fiscal 1995, the Company borrowed $36,607,000
under the revolving line of credit and made open market purchases of
certain of its outstanding notes and debentures with an aggregate face
value (including interest due at maturity) of $68,318,000 and a carrying
value of $59,225,000. The Company recognized an extraordinary gain from
early extinguishment of debt of $20,120,000, net of expenses of $1,898,000
and income taxes of $600,000.
Senior Subordinated Discount Notes - JPS issued the discount notes in the
1991 reorganization. The 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 reorganization, the carrying value of
the discount notes was reduced to its estimated net present value using an
effective interest rate of 13%. Under the terms of the indenture,
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. However, due to the
event of default discussed above, all of the discount notes are classified
as current liabilities as of November 2, 1996.
Senior Subordinated Notes - The senior subordinated notes bear interest at
10.25% with 9.25% 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 resulting in an effective interest rate of
13%. Under the terms of the indenture, 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. However, due to the
event of default discussed above, all of the senior subordinated notes are
classified as current liabilities as of November 2, 1996.
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. In connection with the 1991
reorganization, the debentures were adjusted to an estimated net present
value by recording a discount
F-16
<PAGE>
of $24,390,000 resulting in an effective interest rate of 13.5%. Due to
the event of default discussed above, the subordinated debentures are
classified as current liabilities as of November 2, 1996.
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 October 1997 through
December 2001.
Restrictive Covenants - Provisions of the senior credit agreement and
JPS'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 $100 million at November 2, 1996 to $105 million in
the fourth quarter of 1997. 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 November 2, 1996. However, as discussed
above, subsequent to November 2, 1996, the Company did not make the
scheduled interest payments on its debt securities which constituted a
default under the indentures.
Fair Value - The fair value of JPS's long-term debt based on estimated
quoted prices, compared to the carrying values (at discounted amounts), is
as follows (in thousands):
October 28, 1995 November 2, 1996
---------------- ----------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
10.85% Senior Subordinated Discount
Notes $108,446 $96,138 $111,941 $63,364
10.25% Senior Subordinated Notes 76,685 66,025 79,688 44,544
7% Subordinated Debentures 43,081 32,443 46,032 10,820
Because of the lack of significant trading activity of JPS's notes and
debentures, estimated quoted prices vary.
Other - Substantially all of the Company's assets are pledged as
collateral for the senior credit facility and the equipment financing.
Interest expense includes $11,161,000 in Fiscal 1994, $8,818,000 in Fiscal
1995 and $10,088,000 in Fiscal 1996 representing amortization of debt
issuance expenses and accretion of interest on the discounted notes and
accrued product liability costs (see Note 9).
In 1994, 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.
F-17
<PAGE>
Maturities - Aggregate principal maturities of all long-term debt are as
follows (in thousands):
Fiscal Year Ending
------------------
1997 $340,132
1998 1,580
1999 689
2000 638
2001 638
Thereafter 680
--------
$344,357
7. SENIOR REDEEMABLE PREFERRED STOCK AND EQUITY SECURITIES
Certain information on senior redeemable preferred stock and equity
securities at October 28, 1995 and November 2, 1996 is as follows:
Shares Issued and Outstanding
-----------------------------
Par Value October 28, November 2,
Per Share Authorized 1995 1996
--------- ---------- ----------- -----------
Series A Senior Redeemable
Preferred Stock $.01 700,000(1) 507,031 538,176
Series B Junior
Preferred Stock .01 700,000(1) 10,000 10,000
Class A Common Stock .01 700,000 490,000 490,000
Class B Common Stock .01 700,000 510,000 510,000
(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 JPS 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 $23,153,000 at October 28, 1995 and $21,844,000 at
November 2, 1996. Because of the lack of recent trading activity and
disparities in potential valuation methodologies, determination of the
fair value of JPS's senior redeemable preferred stock is impractical.
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
ended after April 2, 1991. No increase in the liquidation preference
occurred because
F-18
<PAGE>
actual earnings were 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 November 2, 1996, no
dividends had been paid. JPS'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 JPS directors.
8. INCOME TAXES
The Fiscal 1994, 1995 and 1996 provision (benefit) for income taxes on
continuing operations included in the consolidated statements of
operations consists of the following (in thousands):
Fiscal Fiscal Fiscal
1994 1995 1996
------ ------ ------
Current state $1,573 $1,200 $ 200
Deferred state provision (benefit) 1,227 - (500)
----- ------- -----
Provision (benefit) for income taxes $2,800 $1,200 $(300)
====== ====== ======
There is no provision for Federal income taxes.
A reconciliation between income taxes at the 35% statutory Federal income
tax rate and the provision (benefit) for income taxes for the fiscal years
ended 1994, 1995 and 1996 is as follows (in thousands):
Fiscal Fiscal Fiscal
1994 1995 1996
------ ------ -------
Income tax benefit at Federal
statutory rate $(11,757) $(5,762) $(23,183)
Increase (decrease) in income taxes arising
from effect of:
State and local income taxes 2,800 1,200 (300)
Amortization of goodwill 316 316 344
Other 250 212 109
Losses not resulting in tax benefits 11,191 5,234 22,730
------- ------ -------
Provision (benefit) for income taxes $ 2,800 $1,200 $ (300)
======= ====== ========
F-19
<PAGE>
Presented below are the elements which comprise deferred tax assets and
liabilities (in thousands):
<TABLE>
<CAPTION>
October 28, November 2,
1995 1996
----------- -----------
<S> <C> <C>
Gross deferred assets:
Estimated allowance for doubtful accounts $ 476 $ 412
Excess of tax over financial statement
basis of inventory 634 647
Accruals deductible for tax purposes when paid 2,263 2,497
Deferred compensation deductible for tax
purposes when paid 39 157
Postretirement benefits deductible for tax
purposes when paid 2,177 2,141
Miscellaneous 56 83
Alternative minimum tax credit carryforward
available 2,300 2,564
Deferred financial statement income recognized
for tax purposes when received 5,432 6,489
Excess of tax over financial statement
carrying value of investment in discontinued
operation 11,231 13,474
Excess of tax basis of intangibles over
financial statement basis 8,004 8,817
Net operating loss carryforward 23,519 33,291
Less valuation allowance (26,020) (53,578)
------- -------
Gross deferred assets 30,111 16,994
------- ------
Gross deferred liabilities:
Pension asset recognized for book purposes (2,208) (411)
Excess of financial statement over tax basis
of property, plant, and equipment (21,550) (11,898)
Excess of tax over financial statement basis
of debt instruments
(net of deferred financing fees) (6,353) (4,685)
Deferred state taxes resulting from filing
separate subsidiary
returns in some jurisdictions (4,165) (3,665)
------- -------
Gross deferred liabilities (34,276) (20,659)
------- -------
Net deferred noncurrent tax liability $(4,165) $(3,665)
======= =======
</TABLE>
At November 2, 1996, the Company had regular federal net operating loss
carryforwards for tax purposes of approximately $90,000,000. The net
operating losses expire in years 2005 through 2011. The Company also has
federal alternative minimum tax net operating losses of approximately
$45,000,000 which expire in 2007 and 2011. During 1995, the Company
utilized approximately $6,000,000 of alternative minimum tax net operating
loss carryovers to offset income from the extraordinary gain on early
extinguishment of debt. As previously noted, alternative minimum taxes can
be carried forward indefinitely and used as a credit against regular
federal taxes.
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 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 this potential limitation on utilization of the net operating loss
carryforwards currently applies. However, there is 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
F-20
<PAGE>
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.
9. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities, machinery and computer equipment
under noncancellable operating leases. Rent expense was approximately,
$2,810,000 in Fiscal 1994, $3,411,000 in Fiscal 1995 and $5,158,000 in
Fiscal 1996.
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 November 2, 1996 (in thousands):
1997 $4,235
1998 3,816
1999 3,239
2000 2,581
2001 907
------
$14,778
=======
The Company has planned expenditures of approximately $23.5 million for
property, plant and equipment additions in Fiscal 1997.
The Company has established long-term 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 JPS's Board of Directors. No amounts
have been earned under the provisions of this plan, except for a
termination and death benefit of $203,000 which was paid in Fiscal 1994.
Another plan, effective November 1, 1994, provides for payments to covered
participants from amounts accumulated in individual award banks. Awards
are determined based on the achievement of specified returns on net assets
employed. No awards are expected to be paid out under this plan for
operating results through November 2, 1996. 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
cumulative earnings for the periods included under the plan are expected
to reach the specified levels necessary for bonuses to be payable.
As required by the September 6, 1996 amendment to the senior credit
facility, JPS entered into retention bonus agreements with certain of its
executives and key employees during Fiscal 1996. The retention bonus
agreements provide specific individual awards if the participants continue
active employment with JPS for at least six months following the
completion of the proposed financial restructuring discussed in Note 14.
Under the terms of the agreements, an aggregate of approximately $675,000
will be paid out on the effective date of a restructuring and an aggregate
of approximately $1,200,000 will be paid out six months after the
effective date of a restructuring. No amounts are considered earned until
the effective date of a restructuring. In Fiscal 1996, approximately
$363,000 was accrued and included in restructuring fees and expenses in
the accompanying Consolidated Statements of Operations.
F-21
<PAGE>
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 the defective roofing product claims will be substantially settled by
2000. 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. Based on management's
estimate of a range of future costs, the Company recorded a $5,000,000
addition to the liability for such defective products, charged to other
expense in the accompanying Fiscal 1995 Consolidated Statement of
Operations. No additional amounts were accrued in Fiscal 1996. The Company
charges the costs of settling these defective material obligations as a
reduction of the recorded liability balance and, accordingly, such costs
are not charged against the results of operations. Payments on the
defective product liability claims were $3,870,000, $4,040,000 and
$3,111,000 in fiscal years 1994, 1995 and 1996, respectively.
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 28, 1995
and November 2, 1996, the aggregate fair value of the United States
Treasury Securities was approximately $43,400,000 and $46,200,000,
respectively, with gross unrealized holding gains of approximately
$500,000 and $400,000 in Fiscal 1995 and 1996, respectively.
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.
10. 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 Carpet
Business sold on November 16, 1995 and the Rubber Products Business sold
on September 30, 1996. The benefits of these former employees were
"frozen" at the respective dates of sale of the businesses. Accordingly,
these former employees will retain benefits earned through the respective
disposal dates, however, they will not accrue additional benefits. In
addition, the plan provides benefits to individuals employed by the Dunean
plant which was closed effective October 28, 1996. Benefits for employees
who were terminated as a result of the plant closing were also "frozen" as
of October 28, 1996 and no additional benefits will accrue subsequent to
that date. 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.
F-22
<PAGE>
A reconciliation as of the most recent measurement date (November 1, 1995)
of the funded status of the plan with amounts reported in the Company's
Consolidated Balance Sheets follows (in thousands):
October 28, November 2,
1995 1996
---------- ----------
Actuarial present value of benefit obligations:
Vested $89,236 $88,983
Non-vested 613 377
------ ------
Accumulated benefit obligation 89,849 89,360
Provision for future pay increases 6,232 6,755
------ ------
Total projected benefit obligation 96,081 96,115
Plan assets at fair value 91,996 89,410
------ ------
Projected benefit obligation greater than plan assets (4,085) (6,705)
Unrecognized net loss 4,460 4,212
Prior service cost not yet recognized in net
periodic pension cost 5,598 3,548
----- -----
Pension asset in accompanying Consolidated
Balance Sheets $5,973 $1,055
====== ======
Fiscal Fiscal Fiscal
Components of net periodic pension cost: 1994 1995 1996
---------------------------
Service cost-benefits earned during
the period $2,925 $2,483 $2,378
Interest cost on projected benefit
obligation 6,987 7,131 7,048
Return on plan assets 3,802 (15,628) (7,674)
Net amortization and deferral (10,291) 8,478 451
------- ------ ------
Net periodic pension cost 3,423 2,464 2,203
Cost allocated to discontinued operations 1,051 444 -
------ ------ -
Net periodic pension cost for continuing
operations $2,372 $2,020 $2,203
====== ====== =======
On February 15, 1996, the Company offered special early retirement
benefits to approximately fifty salaried employees who met certain
criteria. Approximately $2.2 million of pension benefits were paid in
lump-sums by the plan to twenty-eight employees who accepted the offer. In
Fiscal 1996 a charge of $1,125,000 representing the actuarial cost to the
plan of the early retirement offer as accepted by the employees is
included in other expense in the accompanying Consolidated Statement of
Operations.
In Fiscal 1996 the Company recognized losses of approximately $632,000 for
pension curtailment and special termination benefits in accordance with
SFAS No. 88, "Employees' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits", which related
primarily to the sale of the Rubber Products Business and the Dunean plant
closing and related termination of participation in the plan of these
employees.
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation at October 28, 1995 and
November 2, 1996 was 7.8%. The expected long-term rate of return on assets
was 9% at October 28, 1995 and November 2, 1996. The assumed rate of
increase in compensation levels was based on age-related tables at October
28, 1995 and November 2, 1996. 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.
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
F-23
<PAGE>
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 $536,000 in Fiscal
1994, $589,000 in Fiscal 1995 and $587,000 in Fiscal 1996.
Postretirement Benefits - The Company has several unfunded 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 Consolidated Balance Sheets (in
thousands):
Accumulated postretirement benefit obligation (APBO):
October 28, November 2,
1995 1996
---------- -----------
Retirees $2,974 $1,721
Fully eligible active plan participants 1,242 1,075
Other active plan participants 551 914
Unrecognized gain 482 1,098
------ ------
Accrued postretirement benefit plan liability $5,249 $4,808
====== ======
Net periodic postretirement benefit expense included the following
components (in thousands):
Fiscal Fiscal Fiscal
1994 1995 1996
---- ---- ----
Service cost for benefits earned $ 7 $ 1 $ 5
Interest cost on APBO 352 357 297
--- ---- ----
Net periodic postretirement cost $359 $358 $302
==== ==== ====
In Fiscal 1996, the Company recognized a curtailment gain of approximately
$347,000 related to the sale of the Rubber Products Business and the
Dunean plant closing, and related termination of participation in the
plans of these employees.
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 7.8% as of October 28, 1995 and
November 2, 1996.
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.
F-24
<PAGE>
The cumulative effects as of October 31, 1993 of adopting SFAS No. 112
were to increase accrued postemployment benefit costs by approximately
$708,000 and charge income for approximately $708,000. Income taxes were
not applicable. The effect of adopting SFAS No. 112 on income from
operations in 1994 was not significant. The liability for postemployment
benefits at October 28, 1995 and November 2, 1996 is included in other
long-term liabilities in the accompanying Consolidated Balance Sheets.
11.RELATED PARTIES
The Company incurred fees of $1,250,000 in Fiscal 1994 and $1,000,000 in
each of Fiscal 1995 and 1996 for management services provided by a certain
shareholder pursuant to a management services agreement. The balance
sheets as of October 28, 1995 and November 2, 1996 include accrued fees of
$1,000,000 each in other accrued expenses. The agreement provides for
payments of $1,000,000 to the shareholder annually through the year 2001.
Payment of the Fiscal 1996 accrued management fee is limited to $450,000
by the Company's senior credit facility, as amended on September 6, 1996,
with the balance to be paid upon the earlier of the consummation of a
financial restructuring as discussed in Note 14 or completion of the
Company's 1997 second fiscal quarter.
12.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. 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 a variety of unfinished woven
fabrics and yarns for use in the manufacturing of draperies, curtains and
lampshades and is a major producer of solution-dyed drapery fabrics.
Export sales are approximately 4% 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.
F-25
<PAGE>
Industry segment information (in thousands):
Fiscal Fiscal Fiscal
1994 1995 1996
---- ---- ----
Net sales:
Apparel fabrics and products $254,810 $247,846 $221,799
Industrial fabrics and products 169,736 191,985 193,001
Home fashion textiles 37,325 32,734 34,024
------- ------ -------
$461,871 $472,565 $448,824
======== ======== ========
Operating profit (loss):
Apparel fabrics and products $18,487 $16,667 $(22,422)
Industrial fabrics and products 7,618 7,590 5,947
Home fashion textiles 2,564 1,749 647
Indirect corporate expenses, net (7,438) (5,345) (6,257)
-------- -------- --------
Operating profit (loss) 21,231 20,661 (22,085)
Valuation allowance on Gulistan Securities - - (4,242)
Interest income 749 2,821 2,856
Interest expense (55,570) (39,946) (40,510)
Restructuring fees and expenses - - (2,255)
-------- -------- -------
Loss before income taxes, discontinued
operations, extraordinary items and
cumulative effects on accounting
changes $(33,590) $(16,464) $(66,236)
======== ======== ========
Depreciation and amortization expense:
Apparel fabrics and products $13,329 $12,722 $12,946
Industrial fabrics and products 6,103 5,690 6,282
Home fashion textiles 2,359 2,394 2,517
------- ------ -------
Total segments 21,791 20,806 21,745
Corporate and other 1,415 979 994
------- -------- --------
$23,206 $21,785 $22,739
======= ======== ========
Capital expenditures:
Apparel fabrics and products $ 8,120 $8,852 $ 4,389
Industrial fabrics and products 6,171 9,312 4,545
Home fashion textiles 4,122 643 899
------- ------ -------
Total segments 18,413 18,807 9,833
Corporate and other 10 4 1
------- ------- -------
$18,423 $18,811 $ 9,834
======= ======= =======
F-26
<PAGE>
Industry segment information (in thousands):
October 29, October 28, November 2,
1994 1995 1996
---------- ---------- -----------
Identifiable assets:
Apparel fabrics and products $171,164 $165,622 $127,909
Industrial fabrics and products 106,124 115,710 101,376
Home fashion textiles 24,752 20,731 21,333
------- -------- -------
Total segments 302,040 302,063 250,618
Corporate and other 81,087 81,827 85,309
------- -------- -------
383,127 383,890 335,927
Net assets held for sale 69,684 28,932 -
------- -------- -------
$452,811 $412,822 $335,927
======== ======== ========
13. JOINT VENTURE
In May 1996, JPS purchased a 50% ownership interest in a Mexican
corporation engaged in the manufacture and sale of textile products for
the apparel industry in Mexico. The investment is accounted for on the
equity method of accounting. As of November 2, 1996, the carrying value of
the investment was approximately $146,000. The effect of the joint venture
on Fiscal 1996 results of operations was not significant.
In 1996, the Company had sales to the joint venture of approximately $2.0
million. As of November 2, 1996, the Company's accounts receivable from
the joint venture was approximately $1.8 million.
14. LIQUIDITY AND GOING CONCERN
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern which
contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. The Company has had
recurring net losses from continuing operations since its inception, has a
net shareholder's deficiency of approximately $108,986,000 at November 2,
1996, is in default on its senior subordinated discount notes, senior
subordinated notes and subordinated debentures, and, under the
circumstances discussed below, the Company's senior revolving credit
facility expires on March 1, 1997. The Company's senior revolving credit
facility (or a similar credit facility) is essential for the Company's
continued operations. On September 6, 1996, the senior credit agreement
was amended to, among other things, extend its expiration date and reduce
the interest rate by 0.25%. Under the terms of the amended credit
agreement, the senior credit facility expires on March 1, 1997 (unless
otherwise extended) if JPS has not commenced a case under chapter 11 of
the Bankruptcy Code. If such a case is commenced on or prior to March 1,
1997, 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 (see Note 15). In addition, the
loan covenants were amended to be based upon the activities of the
consolidated operating subsidiaries (C&I Elastomerics) rather than the
consolidated Company (i.e., excludes the assets and liabilities of the
parent company and other non-operating subsidiaries). The amended credit
agreement does not permit additional borrowings by the borrowing
subsidiaries for, among other things, loans or dividends to JPS for the
payment of interest on its notes and debentures. As a result of the
aforementioned restriction on the use of proceeds of revolving loans, JPS
did not make scheduled
F-27
<PAGE>
November 15, 1996 interest payments of approximately $1.9 million on its
subordinated debentures and did not make scheduled December 1, 1996
interest payments of approximately $5.4 million on its senior subordinated
discount notes and approximately $3.6 million on its senior subordinated
notes. The failure to make these scheduled interest 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, among other things. JPS does not
have the ability to repay such indebtedness if the same were to be
accelerated.
On May 8, 1996, JPS engaged The Blackstone Group, L.P. to act as its
financial advisor in connection with a potential financial restructuring
of its debt obligations. In addition, at the request of the holders of a
substantial majority of its outstanding bonds, JPS engaged Houlihan,
Lokey, Howard & Zukin, Inc., effective April 10, 1996 to act as financial
advisors to the holders of JPS's debt securities in connection with such a
financial restructuring. JPS has provided substantial information to these
financial advisors on a confidential basis regarding the Company's
business, strategies, plans and prospects. In addition, JPS is discussing
the terms of a potential financial restructuring with these advisors and
the holders of a substantial majority of its outstanding bonds. JPS's
ability to accomplish a restructuring of the terms of its debt securities
or any refinancing thereof will depend on a number of factors, including
its operating performance, market conditions and the ability of JPS and
its bondholders to come to an agreement as to the appropriate terms of any
such restructuring. Although no agreement, formal or informal, has been
reached between JPS and its bondholders regarding the terms of a potential
financial restructuring, management is optimistic that a restructuring
will be accomplished. Management is unable to predict the impact of any
such restructuring on the accompanying financial statements. If JPS is not
successful in this regard, the default on JPS's debt securities and its
inability to service such debt as required raise substantial doubt about
JPS's ability to continue as a going concern.
15. SUBSEQUENT EVENTS (UNAUDITED)
On May 16, 1997, JPS and JPS Capital reached an agreement in principle on
the terms of a financial restructuring plan with an unofficial committee
of bondholders representing more than 60% of its outstanding public debt
to convert 100% of such debt to equity. Pursuant to a disclosure statement
dated June 25, 1997, on June 26, 1997, JPS and JPS Capital solicited votes
from its security holders for the acceptance or rejection of the
restructuring plan. This solicitation was conducted prior to the filing by
JPS of a case under the Bankruptcy Code so as to significantly shorten the
pendency of the bankruptcy proceeding and to simplify its administration.
JPS and JPS Capital's solicitation was successfully completed on July 28,
1997 and the prepackaged chapter 11 case was commenced on August 1, 1997.
JPS's operating subsidiaries are not parties to this chapter 11 case.
Under the proposed restructuring plan, all of JPS'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, holders of JPS's 10.25% senior subordinated notes and 10.85%
senior subordinated discount notes will receive, among other things, $14
million in cash, contingent notes issued by JPS Capital, providing payment
of up to $34 million plus interest on the occurrence of certain events,
and approximately 93.30% of the New Common Stock of reorganized JPS. The
holders of the 7% subordinated debentures will receive approximately 5.95%
of the New Common Stock. JPS's senior management will receive
approximately 0.75% of the New Common Stock in lieu of payment under the
contractual retention bonus agreements described in Note 9. The plan also
provides for the exchange of all of JPS's senior preferred stock for
warrants to purchase New Common Stock of the
F-28
<PAGE>
reorganized company and cancellation of JPS's existing junior preferred
stock and common stock. Members of JPS's senior management team are
expected to enter into new employment agreements in connection with the
restructuring.
The Company's existing senior credit facility, which was scheduled to
expire on March 1, 1997, was amended to extend its expiration date to
August 8, 1997 if JPS had not commenced a case under Chapter 11 of the
Bankruptcy Code on or prior to such date. Since the chapter 11 case was
commenced prior to that date, the expiration date was automatically
extended to the earlier of November 1, 1997 or the effective date of the
reorganization under Chapter 11 of the Bankruptcy Code.
Because of the restrictions on the use of borrowings under the existing
credit facility as described in Note 6, JPS did not make a scheduled May
15, 1997 interest payment of approximately $1.9 million on its
subordinated debentures and did not make scheduled June 1, 1997 interest
payments of approximately $5.4 million on its senior subordinated discount
notes and approximately $3.6 million on its senior subordinated notes. In
addition, JPS 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 indentures governing the notes and debentures provide for the payment
of interest on overdue installments of interest and principal, payable on
demand at the rate of 1% per annum in excess of the interest rate then in
effect. In the six months ended May 3, 1997, the Company accrued
approximately $474,000 under these provisions, all of which remained
unpaid as of May 3, 1997.
Dividends on JPS'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. JPS 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, all senior preferred stock would be exchanged for warrants
to purchase new common stock of the reorganized company.
A revolving credit facility similar to the existing senior credit facility
under the restated credit agreement is essential for the Company's
continued operations. On the effective date of the reorganization, the
Company expects to obtain a new revolving credit facility. On August 11,
1997, the Company accepted a proposal submitted by Citicorp for a $135
million secured revolving credit facility with a five-year term.
Availability under the new facility would be subject to a borrowing base
comprised of eligible receivables and inventory and a portion of fixed
assets. A letter of credit sub-facility in an amount of $20 million would
be available as part of the new facility with undrawn face amount of
outstanding letters of credit reserved against the total availability
under the new facility.
The new credit facility is subject to completion of Citicorp's collateral
review and confirmation of the Company's chapter 11 reorganization plan
and the approval of the terms and conditions thereof by the Unofficial
Bondholder Committee.
As a result of the consummation of the Plan of Reorganization and the
transactions contemplated thereby, the Company will adopt the fresh start
principles of Statement of Position 90-7 ("SOP 90-7") issued by the
American Institute of Certified Public Accountants. The Company's
reorganization value will be allocated to specific tangibles and
identifiable intangible assets. Any unallocated portion of the
reorganization value will be amortized over a specific period, currently
estimated to be 20 years. As a result of the application of SOP 90- 7, the
financial condition and results of operations of the reorganized company
from and after the effective date may not be comparable to the financial
condition or results of operations reflected in the historical financial
statements set forth elsewhere herein.
F-29
<PAGE>
JPS TEXTILE GROUP, INC. INDEX TO SCHEDULE
INDEX TO FINANCIAL STATEMENT SCHEDULE
For the Fiscal Years Ended October 29, 1994,
October 28, 1995 and November 2, 1996
FINANCIAL STATEMENT SCHEDULE
II. 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>
JPS TEXTILE GROUP, INC. SCHEDULE II
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>
(a) (b)
Allowances Deducted from Asset
to Which They Apply:
Fiscal Year Ended
October 29, 1994 (52 Weeks)
Allowance for doubtful
accounts $1,938 $748 $ 847 $1,606 $1,927
Claims, returns and other
allowances 777 (73) 369 423 650
------ ---- ----- ------ ------
$2,715 $675 $1,216 $2,029 $2,577
====== ==== ====== ====== ======
Fiscal Year Ended
October 28, 1995 (52 Weeks)
Allowance for doubtful
accounts $1,927 $(114) $ 206 $ 69 $1,950
Claims, returns and other
allowances 650 ---- 175 644 181
------ ---- ----- ------ ------
$2,577 $(114) $ 381 $ 713 $2,131
====== ====== ===== ===== ======
Fiscal Year Ended
November 2, 1996 (53 Weeks)
Allowance for doubtful
accounts $1,950 $ 72 $ 563 $ 237 $2,348
Claims, returns and other
allowances 181 - 338 356 163
---- ---- ---- ---- ----
$2,131 $ 72 $ 901 $ 593 $2,511
====== ==== ===== ===== ======
<FN>
(a) Change in various reserves charged to net sales.
(b) Uncollected receivables written off, net of recoveries.
</FN>
</TABLE>
S-2
<PAGE>
Exhibit
Number Description
- ------ -----------
2.1(i) Plan of Reorganization of JPS Textile Group, Inc., a Delaware
corporation ("JPS"), filed pursuant to Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code"), dated February 7,
1991 (the
"Plan").(2)
2.1(ii) Revised Technical and Conforming Amendment to the Plan, dated March
20, 1991.(2)
2.2 Plan of Reorganization of JPS, filed pursuant to the Bankruptcy
Code, dated August 1, 1997, including the exhibits thereto.(1)
3.1 Restated Certificate of Incorporation of JPS, filed with the
Secretary of State of the State of Delaware on April 1, 1991.(2)
3.2 By-laws of JPS.(2)
3.3 Certificate of Designations of JPS's Series A Senior Preferred Stock
(the "Senior Preferred Stock").(2)
3.4 Certificate of Designations of JPS's Series B Junior Preferred
Stock.(2)
4.1 Indenture, dated as of April 2, 1991 (the "Discount Note
Indenture"), between JPS and First Trust National Association
("First Trust"), as Trustee, relating to JPS's Senior Subordinated
Discount Notes due June 1, 1999 (the "Discount Notes").(2)
4.2 Form of Discount Note, incorporated by reference to Exhibit A to the
Discount Note Indenture.(2)
4.3 Indenture, dated as of April 2, 1991 (the "Subordinated Note
Indenture"), between JPS and First Trust, as Trustee, relating to
JPS's 10.25% Senior Subordinated Notes due June 1, 1999 (the
"Subordinated Notes").(2)
4.4 Form of Subordinated Note, incorporated by reference to Exhibit A to
the Subordinated Note Indenture.(2)
4.5 Indenture, dated as of April 2, 1991 (the "Debenture Indenture"),
between JPS and First Bank National Association, as Trustee,
relating to JPS's 7% Subordinated Debentures due May 15, 2000 (the
"Debentures").(2)
<PAGE>
Exhibit
Number Description
- ------ -----------
4.6 Form of Debenture, incorporated by reference to Exhibit A to the
Debenture Indenture.(2)
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").(2)
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 JPS's Class A Common Stock.(2)
4.9 Letter Agreement, dated April 2, 1991, among Odyssey Partners, Grant
M. Wilson, William J. DeBrule and Yehochai Schneider.(2)
9.1 Voting Trust Agreement, dated as of April 2, 1991, between DLJ
Capital and Lincoln National.(2)
10.1 Management Agreement, dated as of April 2, 1991, between JPS and
Odyssey Investors, Inc.(2)
10.2 Registration Rights Agreement, dated as of April 2, 1991, by and
among JPS and the holders of JPS's Senior Notes, Discount Notes,
Subordinated Notes, Senior Preferred Stock and Class A Common Stock
(collectively, the "Securities").(2)
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").(2)
10.4 First Amendment to the CIT Loan Agreement, dated as of June 26,
1992, by and between JCIC and CIT.(2)
10.5 Second Amendment to the CIT Loan Agreement, dated as of December 22,
1992, by and between JCIC and CIT.(2)
10.6 Agreement of Lease, dated as of June 1, 1988, by and between 1185
Avenue of the Americas Associates ("1185 Associates") and JCIC.(2)
<PAGE>
Exhibit
Number Description
- ------ -----------
10.7 Lease Modification and Extension Agreement, dated as of April 2,
1991, by and between 1185 Associates and JCIC.(2)
10.8 Third Amendment to the CIT Loan Agreement, dated as of August 6,
1993, by and between JCIC and CIT.(4)
10.9 Trademark License Agreement, dated as of May 9, 1988, by and between
J.P. Stevens and JPS Acquisition Corp. (predecessor to JPS).(4)
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.(4)
10.11 Purchase Agreement, dated as of April 24, 1988, by and among JPS
Holding Corp., JPS, Odyssey Partners, West Point-Pepperell, Inc.,
STN Holdings Inc., Magnolia Partners, L.P. and J.P. Stevens.(4)
10.12 Asset Purchase Agreement, dated as of May 25, 1994, by and among
JPS, JPS Automotive Products Corp., a Delaware corporation, JCIC,
JPS Auto Inc., a Delaware corporation, and Foamex International
Inc., a Delaware corporation.(5)
10.13 Fourth Amended and Restated Credit Agreement (the "Existing Credit
Agreement"), dated as of June 24, 1994, by and among JPS, 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.(6)
10.14 First Amendment to the Existing Credit Agreement, dated as of
November 4, 1994, by and among JPS, 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.(7)
10.15 Second Amendment to the Existing Credit Agreement, dated as of
December 21, 1994, by and among JPS, 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.(7)
<PAGE>
Exhibit
Number Description
- ------ -----------
10.16 Fourth Amendment to CIT Loan Agreement, dated as of December 29,
1994, by and between JCIC and CIT.(6)
10.17 Lease Modification and Extension Agreement, dated as of April 30,
1993, by and between 1585 Associates and JCIC.(7)
10.18 Long-Term Incentive Plan of JPS effective November 1, 1994.(9)
10.19 Third Amendment to the Existing Credit Agreement, dated as of May
31, 1995 by and among JPS, 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.(8)
10.20 Fourth Amendment to the Existing Credit Agreement, dated as of
October 28, 1995 by and among JPS, 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.(12)
10.21 Lease Modification and Extension Agreement, dated as of November 17,
1994, by and between 1185 Associates and JCIC.(13)
10.22 Asset Transfer Agreement, dated as of November 16, 1995, by and
among JPS, JPS Carpet Corp., a Delaware corporation, Gulistan
Holdings Inc. ("GHI"), a Delaware corporation, and Gulistan Carpet
Inc., a Delaware corporation and wholly-owned subsidiary of GHI.(10)
10.23 Fifth Amendment to the Existing Credit Agreement, dated as of May 6,
1996, by and among JPS, 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.(11)
10.24 Sixth Amendment to the Existing Credit Agreement, dated as of May
15, 1996, by and among JPS, 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.(11)
<PAGE>
Exhibit
Number Description
- ------ -----------
10.25 Seventh Amendment to the Existing Credit Agreement, dated as of July
22, 1996, by and among JPS, 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.(12)
10.26 Eighth Amendment to the Existing Credit Agreement, dated as of
September 6, 1996, by and among JPS, 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.(12)
10.27 Retention Bonus Agreement, dated July 12, 1996, between JPS and
Jerry E. Hunter.(12)
10.28 Retention Bonus Agreement, dated July 12, 1996, between JPS and
David H. Taylor.(12)
10.29 Retention Bonus Agreement, dated July 12, 1996, between JPS and
Monnie L. Broome.(12)
10.30 Employment Agreement, dated October 30, 1995, between JPS and Jerry
E. Hunter.(12)
10.31 Employment Agreement, dated October 30, 1995, between JPS and David
H. Taylor.(12)
10.32 Employment Agreement, dated October 30, 1995, between JPS and Monnie
L. Broome.(12)
10.33 Employment Agreement, dated May 1, 1993 and amended September 11,
1995 between JPS and Carl Rosen.(12)
10.34 Employment Agreement, dated December 23, 1991 and amended August 20,
1996 and December 23, 1996 between JPS and Bruce Wilby.(13)
10.35 Asset Purchase Agreement, dated as of September 30, 1996 between
Elastomer Technologies Group, Inc., a Delaware corporation, and
JEC.(13)
10.36 Receivables Purchase Agreement dated as of September 30, 1996
between The Bank of New York Commercial Corporation, a New York
corporation, and JEC.(13)
10.37 Ninth Amendment to Existing Credit Agreement, dated as of February
21, 1997, by and among JPS, 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.(14)
<PAGE>
Exhibit
Number Description
- ------ -----------
10.38 Tenth Amendment to the Existing Credit Agreement, dated as of April
29, 1997, by and among JPS, 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.(15)
10.39 Eleventh Amendment to the Existing Credit Agreement, dated as of May
15, 1997, by and among JPS, 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.(15)
10.40 Credit Facility Agreement, dated as of September __, 1997, by and
among JPS, C&I, Elastomerics, the financial institutions listed on
the signature pages thereto, and the agent and co-agent party
thereto.(3)
24.1 Power of Attorney relating to JPS (included as part of the signature
page hereof).
27.1 Financial data schedule.(10)
- -------------------------------
(1) Previously filed as an exhibit to JPS's Current Report on
Form 8-K dated July 2, 1997.
(2) Previously filed as an exhibit to JPS's Registration
Statement No. 33-58272 on Form S-1, declared effective by
the SEC on July 26, 1993.
(3) To be filed by amendment hereto.
(4) Previously filed as an exhibit to JPS's Annual Report on
Form 10-K for the year ended October 30, 1993.
(5) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1994.
(6) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended July 30, 1994.
(7) Previously filed as an exhibit to JPS's Annual Report on
Form 10-K for the year ended October 29, 1994.
(8) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended April 29, 1995.
<PAGE>
Exhibit
Number Description
- ------ -----------
(9) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended January 28, 1995.
(10) Previously filed as an exhibit to JPS's Current Report on
Form 8-K dated December 1, 1995.
(11) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended April 27, 1996.
(12) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended July 27, 1996.
(13) Previously filed as an exhibit to JPS's Annual Report on
Form 10-K for the year ended November 2, 1996.
(14) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended February 1, 1997.
(15) Previously filed as an exhibit to JPS's Quarterly Report on
Form 10-Q for the quarter ended May 3, 1997.
