<PAGE>
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Initial Report (Date of earliest event reported)
to which this Form 8-K/A is an amendment:
December 10, 1996
COLLINS & AIKMAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-10218 13-3489233
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
701 McCullough Drive
Charlotte, North Carolina 28262
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 547-8500
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COLLINS & AIKMAN CORPORATION
AMENDMENT No. 1 on Form 8-K/A
to
Current Report on Form 8-K
INTRODUCTION
This Amendment No. 1 on Form 8-K/A (this "Amendment") is being filed by
Collins & Aikman Corporation (the "Company") to amend Item 7 of the Company's
Current Report on Form 8-K dated December 10, 1996 (the "Initial Report")
relating to, among other things, the acquisition on December 11, 1996 of JPS
Automotive L.P. (the "JPS Automotive Acquisition"). Pursuant to the
instructions to Item 7 of Form 8-K, the Company is filing this Amendment (not
later than 60 days after the date that the Initial Report was required to be
filed) in order to include the financial statements and pro forma financial
information required with respect to the JPS Automotive Acquisition. The
Perstorp Acquisition described in the Initial Report did not meet the
significant subsidiary requirements of Rule 1.02 (w) of Regulation S-X of the
Rules and Regulations under the Securities and Exchange Act of 1934 (the "SEC
Rules"). Accordingly, financial statements and pro forma financial data for the
Perstorp Acquisition are not required. Pursuant to Rule 12b-15 of the SEC
Rules, the complete text of Item 7, as amended, is set forth herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired.
Page Number
Report of Independent Accountants.............. F-1
Consolidated Balance Sheets
of JPS Automotive L.P.
and Subsidiaries as of
December 31, 1995 and
January 1, 1995
(Audited).................................... F-2
Consolidated
Statement of Operations
of JPS Automotive L.P.
and Subsidiaries for
for the year ended
December 31, 1995 and
the period from June 29, 1994
to January 1, 1995
(Audited)................................... F-4
Consolidated
Statements of Cash
Flows of JPS Automotive
L.P. and Subsidiaries
for the year ended
December 31, 1995 and
the period from
June 29, 1994 to
January 1, 1995
1
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Page Number
(Audited).................................... F-5
Consolidated
Statements of Owners'
Equity of JPS Automotive
L.P. and Subsidiaries
(Audited).................................... F-6
Notes to Consolidated
Financial Statements......................... F-7
Consolidated Statements
of Operations of
JPS Automotive L.P.
and Subsidiaries
for the Nine Months
Ended September 29, 1996
(Unaudited).................................. F-20
Consolidated Balance
Sheets of JPS Automotive
L.P. and Subsidiaries
As of September 29, 1996
(Unaudited).................................. F-21
Consolidated Statements
of Cash Flows of JPS Automotive L.P.
and Subsidiaries for the Nine Months
Ended September 29, 1996
(Unaudited).................................. F-22
Notes to Condensed Consolidated
Financial Statements of
JPS Automotve L.P.
and Subsidiaries............................. F-23
(b) The pro forma financial information furnished herein reflects the
effect of the acquisition of JPS Automotive L.P. on the consolidated financial
statements of Collins & Aikman Corporation.
Page Number
Pro Forma Consolidated
Statement of Operations
For the Nine Months
Ended October 26,1996........................ F-26
Pro Forma Consolidated
Statement of Operations
2
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Page Number
For the Fiscal Year
Ended January 27, 1996....................... F-29
Pro Forma Consolidated
Balance Sheet
at October 26, 1996.......................... F-34
1
(c) The exhibits furnished in connection with this Report are as follows:
Exhibit
Number Description
2.1 Equity Purchase Agreement by and among JPSGP, Inc., Foamex -
JPS Automotive L.P. and Collins & Aikman Products Co. dated
August 28, 1996 is hereby incorporated by reference to
Exhibit 2.1 of Collins & Aikman Corporation's Report on Form
10-Q for the fiscal quarter ended July 27, 1996.
2.2 Amendment No. 1 to Equity Purchase Agreement by and among
JPSGP, Inc., Foamex - JPS Automotive L.P., Foamex
International Inc. and Collins & Aikman Products Co. dated
as of December 11, 1996.
2.3 Equity Purchase Agreement by and among Seiren U.S.A.
Corporation, Seiren Automotive Textile Corporation, Seiren
Co., Ltd. and Collins & Aikman Products Co. dated December
11, 1996
2.4 Acquisition Agreement between Perstorp A.B. and Collins &
Aikman Products Co. dated December 11, 1996.
2.5 Agreement among Perstorp A.B., Perstorp GmbH, Perstorp
Biotec A.B. and Collins & Aikman Products Co. dated December
11, 1996.
2.6 Shareholders Agreement among Collins & Aikman Products Co.,
Collins & Aikman Europe, Inc., Perstorp GmbH, Perstorp A.B.,
Perstorp Biotec A.B., Perstorp Components N.V. and Perstorp
Components A.B., dated December 11, 1996.
2.7 Acquisition Agreement dated as of December 9, 1996 among
Collins & Aikman Products Co., Collins & Aikman Floor
Coverings Group, Inc., Collins & Aikman Floor Coverings,
Inc., CAF Holdings, Inc. and CAF Acquisition Corp.
1 Except as footnoted, all exhibits not incorporated by reference were filed
with the Initial Form 8-K to which this Form 8-K/A is an amendment and are not
filed with this Amendment on Form 8-K/A.
3
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4.1 Amended and Restated Credit Agreement, dated as of June 3,
1996, among Collins & Aikman Products Co., as Borrower,
Collins & Aikman Canada Inc., as Canadian Borrower, Collins
& Aikman Corporation, as Guarantor, the lenders named
therein, Bank of America N.T.S.A. and NationsBank, N.A., as
Managing Agents, and Chemical Bank, as Administrative Agent,
is hereby incorporated by Reference to Exhibit 4.1 of
Collins & Aikman Corporation's Current Report on Form 8-K
dated June 7, 1996.
4.2. Amendment, dated as of December 5, 1996, to the Amended
and Restated Credit Agreement, dated as of June 3, 1996,
among Collins & Aikman Products Co., as Borrower, Collins &
Aikman Canada Inc., as Canadian Borrower, Collins & Aikman
Corporation, as Guarantor, the Lenders parties thereto, and
The Chase Manhattan Bank, as Administrative Agent, is hereby
incorporated by reference to Exhibit 4.5 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter
ended October 26, 1996.
4.3. Credit Agreement, dated as of December 5, 1996, among
Collins & Aikman Products Co., as Borrower, Collins & Aikman
Corporation, as Guarantor, the Lenders named therein and The
Chase Manhattan Bank, as Administrative Agent, is hereby
incorporated by reference to Exhibit 4.6 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter
ended October 26, 1996.
4.4 Indenture dated as of June 28, 1994, between JPS
Automotive Products Corp. and Shawmut Bank Connecticut,
N.A., as trustee, is hereby incorporated by reference to
Exhibit 4.2 to JPS Automotive Products Corp.'s Registration
Statement on Form S-1, Registration No. 33-75510.
4.5 First Supplemental Indenture, dated as of October 5, 1994,
by and among JPS Automotive Products Corp., JPS Automotive
L.P., and Shawmut Bank Connecticut, N.A., is hereby
incorporated herein by reference to Exhibit 4.48A to JPS
Automotive L.P.'s and JPS Automotive Products Corp.'s Report
on Form 10-Q for the fiscal quarter ended October 2, 1994.
2
23.1 Consent of Coopers & Lybrand L.L.P.
99.1 Press Release dated December 10, 1996
99.2 Press Release dated December 11, 1996
99.3 Press Release dated December 11, 1996
2
This exhibit is filed with this Amendment on Form 8-K/A.
4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLLINS & AIKMAN CORPORATION
(Registrant)
Date: February 24, 1997 By:/S/ J. Michael Stepp
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of JPS AUTOMOTIVE L.P.:
We have audited the accompanying consolidated balance sheets of JPS Automotive
L.P. and subsidiaries (successor to JPS Auto, Inc. and subsidiaries and
Synthetic Industrial Fabrics, a division of JPS Converter and Industrial Corp.)
(collectively, "JPS Automotive") as of December 31, 1995 and January 1, 1995,
and the related consolidated statements of operations, owners'equity, and cash
flows for the year ended December 31, 1995, the period from June 29, 1994 to
January 1, 1995. These consolidated financial statements are the responsibility
of JPS Automotive's management. Our responsibility is to express an opinion on
these consolidated financial statements and consolidated financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of JPS
Automotive as of December 31, 1995 and January 1, 1995, and the consolidated
results of their operations and their cash flows for the year ended December 31,
1995, the period from June 29, 1994 to January 1, 1995 in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Spartanburg, South Carolina
February 9, 1996
F-1
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JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS December 31, 1995 January 1, 1995
(thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 2,840 $ 8,272
Accounts receivable, net of
allowance for doubtful
accounts of $6,288 and
$3,583 37,824 41,777
Inventories 24,148 25,880
Other current assets 3,837 2,048
Total current assets 68,649 77,977
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 9,451 9,040
Buildings and leasehold
improvements 23,035 16,582
Machinery, equipment and
furnishings 92,583 87,969
Construction in progress 7,364 9,759
Total 132,433 123,350
Less accumulated depreciation
and amortization 12,188 4,047
Property, plant and equipment,
net 120,245 119,303
COST IN EXCESS OF ASSETS
ACQUIRED, NET 161,687 157,173
DEBT ISSUANCE COSTS, NET 7,228 8,319
OTHER ASSETS 2,141 1,718
TOTAL ASSETS $359,950 $364,490
The accompanying notes are an integral part of the consolidated
financial statements.
F-2
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JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND OWNERS' EQUITY December 31, 1995 January 1, 1995
(thousands)
CURRENT LIABILITIES:
Current portion of
long-term debt $ 1,464 $ 785
Accounts payable 12,327 24,904
Accounts payable to related
parties 8,707 5,200
Accrued employee compensation 5,321 6,329
Accrued interest 1,400 1,494
Other accrued liabilities 8,907 12,680
Total current liabilities 38,126 51,392
LONG-TERM DEBT 204,463 203,406
OTHER LIABILITIES 3,999 5,202
MINORITY INTEREST 7,247 6,904
COMMITMENTS AND CONTINGENCIES - -
OWNERS' EQUITY:
General partner 1,061 976
Limited partner 105,054 96,610
Total owners' equity 106,115 97,586
TOTAL LIABILITIES AND OWNERS'
EQUITY $359,950 $364,490
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
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JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Period from
Year Ended June 29,
December 31, 1994 to
1995 January 1, 1995
(thousands)
NET SALES $ 312,096 $ 161,205
COST OF GOODS SOLD 257,231 128,928
GROSS PROFIT 54,865 32,277
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 23,797 12,421
ALLOCATED PARENT COMPANY
CHARGES - -
INCOME FROM OPERATIONS 31,068 19,856
INTEREST AND DEBT
ISSUANCE EXPENSE 22,396 12,039
OTHER INCOME (EXPENSE), NET 290 89
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARY (403) (216)
INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 8,559 7,690
INCOME TAX PROVISION 30 107
INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING
CHANGE 8,529 7,583
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE,
NET OF INCOME TAX
BENEFIT OF $362 - -
NET INCOME $ 8,529 $ 7,583
The accompanying notes are an integral part of the consolidated
financial statements.
F-4
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JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period from
Year Ended June 29,
December 31, 1994 to
1995 January 1, 1995
(thousands)
OPERATING ACTIVITIES
Net income $ 8,529 $ 7,583
Adjustments to reconcile net
income to net cash provided by
(used for) operating activities:
Depreciation and amortization 12,736 6,318
Interest accretion and debt
issuance cost amortization 1,081 518
Other, net (6) -
Changes in operating assets
and liabilities, net of
acquisition:
Accounts receivable 2,709 4,999
Inventories 1,866 1,778
Accounts payable (9,070) 1,746
Other assets and liabilities (3,268) (9,151)
Net cash provided by (used for)
operating activities 14,577 13,791
INVESTING ACTIVITIES
Capital expenditures (17,110) (5,299)
Acquisition, net of cash acquired (4,653) (270,683)
Other 80 -
Net cash used for investing activities (21,683) (275,982)
FINANCING ACTIVITIES
Net cash provided from (to) JPS
Textile - -
Net proceeds from (repayments of)
revolving loans 2,521 (824)
Proceeds from long-term debt - 190,000
Repayment of long-term debt (785) (567)
Debt issuance costs - (8,830)
Capital contributions from partners - 90,003
Distributions to minority interest (62) (124)
Net cash provided by (used for)
financing activities 1,674 269,658
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (5,432) 7,467
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 8,272 805
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 2,840 $ 8,272
The accompanying notes are an integral part of the consolidated
financial statements.
F-5
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<TABLE>
<CAPTION>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OWNERS' EQUITY
Limited General
Partner Partner Total
(thousands)
<S> <C> <C> <C>
Balances at June 28, 1994 $ - $ - $ -
Contributions by partners 89,103 900 90,003
Net income 7,507 76 7,583
Balances at January 1, 1995 96,610 976 97,586
Net income 8,444 85 8,529
Balances at December 31, 1995 $105,054 $1,061 $106,115
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
F-6
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1. ORGANIZATION AND BASIS OF PRESENTATION
JPS Automotive L.P. and subsidiaries ("JPS Automotive") operate in the
industrial fabrics and automotive products segment, including the design,
manufacture and sale of carpet components and interior fabrics for passenger
cars and light trucks and other specialty industrial fabrics. In October 1995,
the Board of Directors of Foamex International Inc. ("Foamex International")
approved a plan to evaluate the potential reduction of long-term debt with
substantially all of the proceeds from the possible sale of the automotive
carpet, trim and/or textile businesses of JPS Automotive (which together
comprise substantially all of the assets of JPS Automotive). Foamex
International is continuing to evaluate the possible sale of these businesses;
however, no definitive commitment has been reached. The consolidated statements
of JPS Automotive do not include any adjustments that might result from any
sale (See Note 15).
JPS Automotive L.P. was formed on May 17, 1994 for the purpose of acquiring a
100% ownership interest in JPS Automotive Products Corp. ("Products Corp."),
which was purchased for nominal consideration on May 25, 1994. On June 28,
1994, Foamex-JPS Automotive L.P. ("FJPS") and JPSGP Inc.("JPSGP"), the owners
of a 99% limited partnership interest and a 1% general partnership interest in
JPS Automotive L.P., respectively, made capital contributions of approximately
$90.0 million. JPS Automotive L.P., in turn, made a capital contribution of
approximately $90.0 million to Products Corp. FJPS and JPSGP are indirect
wholly-owned subsidiaries of Foamex International Inc.
On June 28, 1994, Products Corp. acquired the assets of the automotive
products and industrial fabrics divisions of JPS Textile Group, Inc. ("JPS
Textile") (the "JPS Automotive Acquisition"). Effective October 3, 1994,
Products Corp. transferred and assigned substantially all of its assets, subject
to substantially all of its liabilities, to JPS Automotive, which agreed to
assume such liabilities.
JPS Automotive is the beneficial owner of an 80.0% interest in Cramerton
Automotive Products, L.P. ("Cramerton"). JPS Automotive owns a 79.5% limited
partnership interest in Cramerton and, through Cramerton Management Corporation
("CMC"), beneficially owns a 0.5% general partnership interest.
The consolidated balance sheets as of December 31, 1995 and January 1, 1995
and the consolidated statements of operations, cash flows and owners' equity for
the year ended December 31, 1995 and for the period from June 29, 1994 to
January 1, 1995 pertain to JPS Automotive.
2. JPS AUTOMOTIVE ACQUISITION
On June 28, 1994, JPS Automotive acquired the businesses and assets of the
automotive products and industrial fabrics divisions of JPS Textile. The
acquired assets included property, plant and equipment, inventories and certain
contract rights, as well as certain stock and limited and general partnership
interests in joint ventures. As a part of the JPS Automotive Acquisition,
agreements were reached relating to the purchase of assets, the granting of a
reciprocal easement, a provision for certain services, the supply of certain
materials and the sharing of taxes. The JPS Automotive Acquisition was made
pursuant to the terms of an asset purchase agreement, dated as of May 25, 1994
(the "Asset Purchase Agreement"), by and among JPS Textile, JPS Auto, C&I,
Products Corp., and Foamex International. The aggregate consideration for the
JPS Automotive Acquisition was $290.3 million which includes acquisition costs
of $8.3 million and the assumption of long-term debt of $15.6 million. The cost
of the acquisition has been allocated on the estimated basis of the fair value
of the assets acquired and the liabilities assumed. The excess of the purchase
price over the estimated fair value of the net assets acquired is being
amortized over forty years. The acquisition was funded by (i) the net proceeds
from the sale by JPS Automotive of $180.0 million principal amount of 11 1/8%
senior notes due 2001 (the "JPS Automotive Senior Notes"), (ii) $90.0 million in
cash received by JPS Automotive from its partners in the form of capital
contributions and (iii) the net proceeds of $10.0 million in term loan
borrowings by JPS Automotive. The excess of the purchase price over the
estimated fair value of the net assets acquired was approximately $168.0
million, which includes 1995 payments of approximately $4.5 million in
settlement of certain matters contained in the Asset Purchase Agreement and a
1995 adjustment of $5.6 million to adjust the original estimated appraised
values of property, plant and equipment.
F-7
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of JPS Automotive
and all subsidiaries that JPS Automotive directly or indirectly controls, either
through majority ownership or otherwise. Minority interest represents the
minority partners' proportionate shares of the equity in certain of JPS
Automotive's consolidated subsidiaries, primarily Cramerton, as of December 31,
1995. Intercompany accounts and transactions have been eliminated in
consolidation. Investments in 20% to 50% controlled companies are accounted for
on the equity method.
Fiscal Year
JPS Automotive's fiscal year ends on the Sunday closest to the thirty-first
day of December. The fiscal year was composed of fifty-two weeks.
Accounting 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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
Cash and Cash Equivalents
JPS Automotive considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. The cost of the
inventories is determined on a first-in, first-out basis.
Property, Plant and Equipment
Property, plant and equipment are stated at cost and are depreciated using
the straight-line method over the estimated useful lives of the assets. The
range of useful lives estimated for buildings is generally twenty-five to
forty-five years and the range for machinery, equipment and furnishings is
three to fifteen years. Leasehold improvements are amortized over the
shorter of the terms for the respective leases or the estimated lives of
the leasehold improvements. For income tax purposes, JPS Automotive uses
accelerated depreciation methods.
Cost of maintenance and repairs is charged to expense as incurred. Renewals
and improvements are capitalized. Upon retirement or other disposition of items
of plant and equipment, cost of items and related accumulated depreciation are
removed from the accounts and any gain or loss is included in operations.
Debt Issuance Costs
Debt issuance costs consist of amounts incurred in obtaining long -term
financing. These costs are amortized over the term of the related debt using
the interest method. Accumulated amortization as of December 31, 1995 and
January 1, 1995 was approximately $1.6 million and $0.5 million, respectively.
Cost in Excess of Net Assets Acquired
The excess of the acquisition cost over the fair value of net assets acquired
in business combinations accounted for as purchases is amortized using the
straight-line method over a forty year period. At each balance
F-8
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sheet date, JPS Automotive evaluates the recoverability of cost in excess of
net assets acquired using certain financial indicators such as historical
and future ability to generate income from operations. Accumulated
amortization as of December 31, 1995 and January 1, 1995 was
approximately $6.3 million and $2.1 million, respectively.
Computer Software Costs
Costs to purchase software and outside costs to put it in place are
capitalized and amortized over the estimated useful life of five years.
Environmental Matters
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities will be
recorded when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated.
Postretirement and Postemployment Benefits
JPS Automotive follows SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions". The standard requires
companies to accrue postretirement benefits throughout the employees'
active service periods until they obtain full eligibility for those
benefits. Effective June 29, 1994, JPS Automotive adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits". Under this method of
accounting, JPS Automotive accrues the benefits when it becomes probable that
such benefits will be paid and when sufficient information exists to make
reasonable estimates of the amounts to be paid.
Revenue Recognition
JPS Automotive 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. JPS Automotive generally allows its
customers the right of return only in the case of defective products. JPS
Automotive provides a reserve for estimated defective product costs at the time
of the sale of the products.
Research and Development
JPS Automotive incurred research and development costs of approximately $4.4
million for the year ended December 31, 1995 and $2.6 million for the period
from June 29, 1994 to January 1, 1995.
Interest Rate Swap Agreement
The differential to be paid or received under an interest rate swap agreement
is recognized in the current period as interest rates change as an adjustment to
interest and debt issuance expense.
Income Taxes
JPS Automotive as a limited partnership is not subject to federal income
taxes and, therefore, no current or deferred income tax provision has been
provided for such taxes. However, the limited partnership has provided
for the income taxes of certain states for which it is subject and federal
and state income taxes associated with the operations of Products Corp.
The partners will include their respective shares of income or loss
of JPS Automotive on their federal and applicable state income
tax returns. JPS Automotive has a tax sharing agreement that provides for
payment to the partners of amounts that would be required to be paid
if JPS Automotive were a corporation filing separate income tax returns.
F-9
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Reclassification
Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the current year's presentation.
4. INVENTORIES
The components of inventories consist of:
December 31, January 1,
1995 1995
(thousands)
Raw materials and supplies $ 7,168 $ 7,060
Work-in-process 10,303 10,041
Finished goods 6,677 8,779
Total $ 24,148 $25,880
5. LONG-TERM DEBT
Long-term debt consists of:
December 31, January 1,
1995 1995
(thousands)
11 1/8% senior notes due 2001 $180,000 $180,000
Term loan due 1999 10,000 10,000
JPS Automotive revolving loan 4,419 -
Cramerton revolving loan 9,923 11,821
Other 1,585 2,370
Total 205,927 204,191
Less current portion 1,464 785
Long-term debt $204,463 $203,406
11 1/8% Senior Notes ("JPS Automotive Senior Notes")
The JPS Automotive Senior Notes were issued on June 28, 1994. Interest on the
JPS Automotive Senior Notes is payable semiannually on June 15 and December 15
of each year, commencing on December 15, 1994. The JPS Automotive Senior Notes
mature on June 15, 2001.
JPS Automotive is not required to make mandatory redemption or sinking fund
payments except in the case of certain asset sales or a change of control (as
defined in the indenture for the JPS Automotive Senior Notes). In addition, the
JPS Automotive Senior Notes are not subject to optional redemption, except in
connection with certain public offerings of common stock.
The JPS Automotive Senior Notes rank senior in right of payment to all
existing or future subordinated indebtedness of JPS Automotive and on an equal
basis in right of payment with all existing or future senior indebtedness of JPS
Automotive, including the borrowings under the JPS Automotive Credit Agreement
(as defined below). The obligations under the JPS Automotive Credit Agreement
are collateralized by all accounts
F-10
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receivable, inventories and certain intangibles of JPS Automotive. Thus,the
claims of the lenders under the JPS Automotive Credit Agreement will
effectively be prior to the claims of the holders of the JPS Automotive Senior
Notes with respect to such assets and proceeds.
Term and Revolving Loans
On June 28, 1994, as amended October 5, 1994, JPS Automotive entered into a
revolving credit agreement which provides for loans of up to $35.0 million of
which $10.0 million was available as a term loan payable in 12 equal quarterly
installments commencing October 1996 and a revolving line of credit of up to
$25.0 million which expires in June 1999 (the "JPS Automotive Credit
Agreement"). On June 28, 1994, JPS Automotive entered into a $10.0 million term
loan under the JPS Automotive Credit Agreement; no further term loan borrowings
are available thereunder. Borrowings under the JPS Automotive Credit Agreement
are collateralized by substantially all of JPS Automotive's accounts receivable,
inventories, patents, trademarks, other intellectual property rights and general
intangibles. Pursuant to the terms of the JPS Automotive Credit 5. Agreement,
borrowed funds will bear interest at a floating rate equal to 1.0% per annum
plus the highest of (i) the base rate of The Bank of Nova Scotia, as in effect
from time to time, (ii) a rate that is, generally, 0.5% per annum plus
a fluctuating rate generally equal to the rate on three-month certificates of
deposit, subject to certain adjustments, plus a fluctuating rate generally equal
to the annual assessment rate paid by The Bank of Nova Scotia to the Federal
Deposit Insurance Corporation or (iii) 0.5% per annum plus the federal funds
rate in effect from time to time. At the option of JPS Automotive, portions of
outstanding loans under the JPS Automotive Credit Agreement will be convertible
into Eurodollar rate loans bearing interest at a rate generally equal to 3.0%
per annum above the average LIBOR rate of Citibank, N.A. and The Bank of Nova
Scotia. At December 31, 1995, the interest rates in effect related to the
revolving credit borrowings and the term loan were 9.5% and 8.3125%,
respectively. As of December 31, 1995, $4.4 million of revolving credit
borrowings were outstanding under the JPS Automotive Credit Agreement with
unused availability of approximately $20.6 million.
Cramerton has a $15.0 million revolving line of credit (the "Cramerton Credit
Facility"), with recourse only to Cramerton, and which expires in April 1997.
Interest on the Cramerton Credit Facility is based on fixed or floating interest
rate options selected by Cramerton. As of December 31, 1995, borrowings under
the Cramerton Credit Facility were $9.9 million with a weighted average interest
rate of approximately 8 1/4% with unused availability of $5.1 million. The
maximum amount available at any time under the Cramerton Credit Facility is
based upon a specific percentage of eligible accounts receivable and eligible
inventories and is reduced by any outstanding letters of credit and any
outstanding revolving loans.
Interest Rate Swap Agreement
JPS Automotive enters into interest rate swaps to lower funding costs and/or
to manage interest costs and exposure to changing interest rates. JPS
Automotive does not hold or issue financial instruments for trading purposes.
In June 1994, as amended in May 1995, JPS Automotive entered into an interest
rate swap agreement for a notional amount of $150.0 million for five years.
Under this swap agreement, JPS Automotive has paid fixed payments at 6.04% on a
notional amount of $90.0 million and 7.0% on a notional amount of $60.0 million
for the six months ended June 1995 and is obligated to make variable rate
payments based on LIBOR, capped at 8.5% per annum, on a $150.0 million notional
amount for the remainder of the agreement in exchange for fixed payments at a
rate of 6.89% per annum by the swap partner payable semiannually in arrears.
The swap partner has the ability to terminate the swap agreement in December
1998. Interest expense will be subject to fluctuations in LIBOR. JPS
Automotive is exposed to credit loss in the event of nonperformance by the swap
partner; however, the occurrence of this event is not anticipated. During 1995,
the effect of the interest rate swap described above was a favorable adjustment
to interest expense of $1.0 million. For the period from June 29, 1994 to
January 1, 1995, the effect of the interest rate swap was to increase interest
expense by $0.2 million.
F-11
<PAGE>
Debt Restrictions and Covenants
The JPS Automotive Senior Notes and JPS Automotive Credit Agreement contain
various covenants, including, but not limited to, restrictions on the payment of
distributions, incurring additional indebtedness or issuing preferred stock,
creating liens on assets, entering into mergers, consolidations or sales of all
or substantially all of its assets and entering into transactions with
affiliates and engaging in other lines of business.
Other
Other debt is comprised primarily of financing associated with machinery and
equipment.
Future Obligations on Long-Term Debt
Scheduled maturities of all long-term debt are shown below:
Year Ended (thousands)
1996 $ 1,464
1997 13,875
1998 3,669
1999 6,919
2000 -
Thereafter 180,000
$ 205,927
6. EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plan
Effective January 1, 1995, JPS Automotive adopted the Retirement Pension Plan
for Employees of JPS Automotive L.P. (the "Plan") for salaried and certain
hourly employees. Benefits are based on the employees' final average
compensation, years of benefit service, the covered compensation in effect at
retirement and the employees' ages when payment begins.
Net periodic pension cost included the following:
1995
(thousands)
Service cost $675
Interest cost 48
Actual return on plan assets (2)
Net amortization and deferral 35
Total $756
JPS Automotive's funding policy is to contribute annually an amount that both
satisfies the minimum funding requirements of the Employee Retirement Income
Security Act of 1974 and does not exceed the full funding limitations of the
Internal Revenue Code of 1986, as amended (the "Code"). Plan investments
consist primarily of cash equivalents.
F-12
<PAGE>
The following table sets forth the funded status of the Plan and the amounts
recognized in the accompanying balance sheet as of December 31, 1995:
December 31, 1995
(thousands)
Actual present value of accumulated benefit obligations:
Vested benefits $ (842)
Nonvested benefits (133)
Accumulated benefit obligations $ (975)
Total projected benefit obligations $(1,372)
Fair value of plan assets 91
Plan assets less than projected benefit obligations $(1,281)
Unrecognized prior service cost $ 538
Unrecognized net loss 38
Additional minimum liability (180)
Accrued pension cost $ (885)
Significant assumptions used in determining the plan's unfunded status are as
follows:
December 31, 1995
Expected long-term rate of return on plan assets 8.00%
Discount rate on projected benefit obligations 7.75%
Rates of increase in compensation levels (where applicable) 5.00%
Defined Contribution Plan
JPS Automotive maintains a defined contribution plan qualified under Section
401(k) of the Internal Revenue Code that covers eligible nonunion employees.
Employee contributions are voluntary and subject to certain limitations as
imposed by the Internal Revenue Code. JPS Automotive makes a matching
contribution of 25% of each employee's contribution with a maximum
matching contribution of 1 1/2% of each employee's base compensation. JPS
Automotive also provides an additional 25% match of each employee's contribution
to a fund which invests in Foamex International common stock with a maximum
contribution of 3% of each employee's base compensation. JPS Automotive's
contributions were approximately $0.3 million for the year ended December 31,
1995 and $0.1 million for the period from June 29, 1994 to January 1, 1995.
F-13
<PAGE>
Postretirement Benefits
JPS Automotive provides postretirement health care and life insurance for
eligible employees of JPS Automotive and retirees of the Predecessor Company.
These plans are unfunded and JPS Automotive retains the right to modify or
eliminate these benefits.
The components of the expense for postretirement benefits are:
Year Ended June 29, 1994
December 31, 1995 to January 1, 1995
(thousands)
Service cost for
benefits earned $ (8) $ (4)
Interest cost on liability 104 54
Net periodic postretirement
benefit cost $ 96 $ 50
The accumulated postretirement benefit at December 31, 1995 and January 1,
1995 resulted in unfunded obligations of $1.3 million for each period.
Since JPS Automotive 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 as of December 31, 1995 and
January 1, 1995 was 8%.
Postemployment Benefits
JPS Automotive provides certain postemployment benefits to former or inactive
employees and their dependents during the time period following employment but
before retirement. On June 29, 1994, JPS Automotive adopted SFAS No. 112
"Employers' Accounting for Postemployment Benefits." Prior to June 29, 1994,
postemployment benefit expenses were recognized primarily as they were paid.
JPS Automotive's adoption of SFAS No. 112 did not have a significant impact on
the consolidated statements of operations. As of December 31, 1995 and January
1, 1995, JPS Automotive's liability for postemployment benefits was $0.4 million
for each period and is included in other noncurrent liabilities and includes the
liability assumed in the JPS Automotive Acquisition.
Other
In December 1994, JPS Automotive changed its method of compensating certain
employees for vacation, which increased income from operations by $1.3 million
for the period June 29, 1994 to January 1, 1995.
7. INCOME TAXES
As of December 31, 1995, the assets and liabilities that relate to JPS
Automotive, which are not subject to tax, have a difference between the
financial reporting and income tax basis of approximately $37.3 million.
F-14
<PAGE>
The provision (benefit) for income taxes includes the following:
Period from
Year Ended June 29, 1994 to
December 31, 1995 January 1, 1995
(thousands)
Federal:
Current $ - $ -
Deferred - -
- -
State:
Current 30 107
Deferred - -
30 107
$ 30 $ 107
A reconciliation of the statutory federal income tax to the effective
income tax is as follows:
Period from
Year Ended June 29, 1994 to
December 31, 1995 January 1, 1995
(thousands)
Statutory income tax $ 2,996 $ 2,615
State income taxes,
net of federal 30 73
Permanent difference
on partnership income (2,996) (1,099)
Benefit associated with
transfer of net assets
from Products Corp. - (1,482)
$ 30 $ 107
8. COMMITMENTS AND CONTINGENCIES
Operating Leases
JPS Automotive is obligated under various noncancellable lease agreements for
rental of facilities, machinery and computer equipment. Many of the leases
contain renewal options with varying terms and escalation clauses that provide
for increased rentals based upon increases in the Consumer Price Index, real
estate taxes and lessors' operating expenses. Total minimum rental commitments
required under operating leases at December 31, 1995 are:
(thousands)
1996 $1,150
1997 721
1998 194
1999 45
2000 and thereafter 22
$2,132
Rental expense charged to operations under operating leases by JPS Automotive
approximated $1.7 million for the year ended December 31, 1995 and $0.9 million
for the period from June 29, 1994 to January 1, 1995. Substantially all such
rental expense represented the minimum rental payments under operating leases.
F-15
<PAGE>
Guarantees
JPS Automotive has pledged all of the outstanding common stock of Products
Corp. and FJPS has pledged its 99% limited partnership interest in JPS
Automotive to collateralize the repayment by FJPS of a note payable to Foamex
L.P.
9. RELATED PARTY TRANSACTIONS AND ALLOCATIONS
JPS Automotive
JPS Automotive regularly enters into transactions with its affiliates in the
ordinary course of business.
In connection with the JPS Automotive Acquisition, JPS Automotive entered
into a supply agreement (the "Supply Agreement") and a services agreement (the
"Services Agreement") with Foamex International, the limited partner of FJPS and
the sole shareholder of JPSGP. Pursuant to the terms of the Supply Agreement,
at the option of JPS Automotive, Foamex International will purchase certain raw
materials which are necessary for the manufacture of JPS Automotive's products,
and resell such materials to JPS Automotive at a price equal to net cost plus
reasonable out of pocket expenses. During the year ended December 31, 1995 and
the period June 29, 1994 to January 1, 1995, JPS Automotive purchased $92.9
million and $5.2 million, respectively, of raw materials under the Supply
Agreement with Foamex International. Pursuant to the terms of the Services
Agreement, Foamex International will supply JPS Automotive with certain
managerial services on an as needed basis. JPS Automotive will pay Foamex
International's and its affiliates' costs plus allocated overhead for the
services provided pursuant to the Services Agreement. During the year ended
December 31, 1995 and the period from June 29, 1994 to January 1, 1995, JPS
Automotive did not incur significant costs under the Services Agreement.
Management believes that the terms of the Services Agreement and Supply
Agreement are no less favorable to JPS Automotive than those which could have
obtained from an unaffiliated third party.
JPS Automotive has a tax sharing agreement with its partners pursuant to
which JPS Automotive will make quarterly distributions to its partners, which
in the aggregate, will equal the tax liability that JPS Automotive would have
paid if it had been a Delaware corporation filing a separate tax return
rather than a partnership. During the year ended December 31, 1995 and
the period from June 29, 1994 to January 1, 1995, JPS Automotive made no
tax sharing distributions to its partners.
Cramerton
Cramerton has an agreement whereby Seiren U.S.A. Corporation
("Seiren U.S.A."), minority shareholder of Cramerton, is paid marketing
assistance fees annually. These fees are equal to 1% of the
first $30.0 million of Cramerton's sales of bodycloth material to
Japanese automakers with U.S. assembly operations and 1 1/2% of
such sales exceeding $30.0 million. These fees amounted to $0.5 million
for the year ended December 31, 1995 and $0.2 million for the period from
June 29, 1994 to January 1, 1995.
Cramerton previously incurred costs with Seiren Co., Ltd., parent
company of Seiren U.S.A., and Seiren U.S.A. for the annual consulting
fees, technical personnel, fabric, and processing. As of January 1, 1995,
Cramerton owed Sieren Co., Ltd. and Sieren U.S.A. approximately $0.3 million.
10. ENVIRONMENTAL
JPS Automotive is subject to various federal, state and local environmental
laws and regulations governing, among other things, the discharge, storage,
handling and disposal of a variety of hazardous and non-hazardous substances and
wastes. JPS Automotive believes it is in substantial compliance with all
existing laws and regulations and has obtained or applied for the necessary
permits to conduct its business. To date, compliance with applicable
environmental laws has not had and, in conjunction with the indemnifications
from JPS Textile relating to the Asset Purchase Agreement, is not expected to
have a material adverse effect on JPS Automotive's financial position. Pursuant
to the terms of the Asset Purchase Agreement, JPS Textile has agreed to
indemnify
F-16
<PAGE>
JPS Automotive against certain environmental liabilities as follows:
(i) one-half of the first $1.0 million of cost in excess of $2.0 million and
(ii) all cost in excess of $3.0 million.
Although not named as a potential responsible party for any environmental
contaminated sites, JPS Automotive has accrued environmental costs at December
31, 1995 of $2.5 million, $0.5 million of which is included in current
liabilities. In addition, as of December 31, 1995, JPS Automotive has a
receivable of $0.5 million for indemnification of environmental liabilities from
JPS Textile, former owner of JPS Automotive, which is included in noncurrent
assets. JPS Automotive believes that realization of the receivable established
for indemnification is probable.
Although it is possible that new information or future events could require
JPS Automotive to reassess its potential exposure relating to all pending
environmental matters, management believes that, based upon all currently
available information, the resolution of such environmental matters will not
have a material adverse effect on JPS Automotive's earnings, financial position,
capital expenditures or competitive position. The possibility exists, however,
that new environmental legislation and/or environmental regulations may be
adopted, or other environmental conditions may be found to exist, that may
require expenditures not currently anticipated which may be material.
11. LITIGATION
From time to time, JPS Automotive has been involved in various legal
proceedings. Management believes that all such litigation is routine in nature
and incidental to the conduct of its business, and that none of such litigation,
if determined adversely to JPS Automotive, would have a material adverse effect
on the financial condition or results of operations of JPS Automotive.
12. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Interest Rate Swap Agreement
JPS Automotive has an interest rate swap agreement involving the exchange of
fixed and floating interest payment obligations without the exchange of the
underlying principal amounts. At December 31, 1995, the total notional
principal amount of the interest rate swap agreement was $150.0 million. The
counterparty to the agreement is a large international financial institution.
The interest rate swap agreement subjects JPS Automotive to financial risk that
will vary during the life of the agreement in relation to market interest rates.
Concentration of Credit Risk
Financial instruments which potentially subject JPS Automotive to
significant concentrations of credit risk consist primarily of cash and
cash equivalents and trade accounts receivable. JPS Automotive
maintains cash and cash equivalents with various large financial
institutions. JPS Automotive's periodic evaluation of these financial
institutions are considered in JPS Automotive's investment strategy.
JPS Automotive's customers operate primarily in the automotive industry.
JPS Automotive performs ongoing credit evaluations of its customers and
generally does not require collateral. JPS Automotive maintains allowance
accounts for potential losses and such losses have been within
management's expectations. The percentage of consolidated and combined
sales to the three principal customers were as follows:
Period from
Year Ended June 29, 1994 to
December 31, 1995 January 1, 1995
CUSTOMER
General Motors 23% 21%
Chrysler 15 15
Toyota Tsusho 11 11
F-17
<PAGE>
Trade receivables are the principal financial instrument which subjects JPS
Automotive to concentrations of credit risk. Accounts receivable due from the
three principal customers as a percentage of total accounts receivable are as
follows:
December 31, January 1,
1995 1995
General Motors 12.2% 15.0%
Chrysler 23.5 22.0
Toyota Tsusho 8.2 8.0
Although JPS Automotive's exposure to credit risk associated with nonpayment
by these automotive manufacturers is affected by conditions or occurrences
within the automotive industry, trade receivables from these three customers
were current at December 31, 1995.
Disclosure about Fair Value of Financial Instruments
The following disclosures of the estimated fair value amounts have been
determined based on JPS Automotive's assessment of available market information
and appropriate valuation methodologies.
The estimated fair values of JPS Automotive's financial instruments are as
follows:
Carrying amount Fair value
of liabilities of liabilities
(thousands)
Assets:
Interest rate swaps $ - $ 3,200
Liabilities:
Long-term debt 205,927 205,927
Carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, accounts receivable, accounts payable and accrued liabilities
approximate fair value due to the short-term nature of these instruments.
The fair value of long-term debt is estimated using quoted market prices,
where available, or discounted cash flows.
The fair value of interest rate swaps are based on the amount at which JPS
Automotive could receive if the swaps were settled, determined on estimates
obtained from dealers.
Fair value estimates are made at a specific point in time, based on relevant
market information about the financial instruments. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgement and therefore, cannot be determined with precision. Changes in
assumption could significantly affect the estimates.
F-18
<PAGE>
13. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Period from
Year Ended June 29, 1994 to
December 31, January 1,
1995 1995
(thousands)
Cash paid for interest $ 21,397 $ 10,043
Income taxes paid/deemed to be paid $ - $ 102
Capital expenditures included
in accounts payable $ 1,623 $ 3,951
Equipment transfers
from (to) JPS Textile $ - -
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
The quarterly financial data of JPS Automotive subsequent to its initial
public offering of the JPS Automotive Senior Notes in June 1994 is as follows:
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
(thousands)
Net sales $87,624 $80,169 $69,439 $74,864
Gross profit 15,778 14,872 12,198 12,017
Net income 3,955 3,829 621 124
Third Fourth
1994 Quarter Quarter
(thousands)
Net sales $80,423 $80,782
Gross profit 16,076 16,201
Net income 4,359 3,224
Net income for the fourth quarter of 1994 was increased by $1.3 million
relating to a change in JPS Automotive's method of compensating certain
employees for vacation.
15. SUBSEQUENT EVENT (UNAUDITED)
On December 11, 1996, Foamex International Inc. completed the sale of
JPS Automotive to Collins & Aikman for a total consideration of $220 million
including the assumption of indebtedness of $194 million. The accompanying
financial statements do not include any adjustments related to the sale of
JPS Automotive.
F-19
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended
September 29,
1996
(thousands)
<S> <C>
NET SALES $ 220,433
COST OF GOODS SOLD 186,439
---------
GROSS PROFIT 33,994
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 16,814
---------
INCOME FROM OPERATIONS 17,180
INTEREST AND DEBT ISSUANCE EXPENSE 16,117
OTHER INCOME (EXPENSE), NET (129)
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY (447)
---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 487
PROVISION FOR INCOME TAXES 347
---------
NET INCOME (LOSS) $ 140
=========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
F-20
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
September 29,
ASSETS 1996
CURRENT ASSETS: (thousands)
<S> <C>
Cash and cash equivalents $ 1,648
Accounts receivable, net 42,546
Inventories 23,302
Other current assets 4,906
--------
Total current assets 72,402
PROPERTY, PLANT AND EQUIPMENT, NET 114,757
COST IN EXCESS OF ASSETS ACQUIRED, NET 158,537
DEBT ISSUANCE COSTS, NET 6,348
OTHER ASSETS 1,741
--------
TOTAL ASSETS $353,785
========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,964
Accounts payable 18,975
Accounts payable to related parties 2,445
Accrued interest 6,052
Other accrued liabilities 14,620
--------
Total current liabilities 46,056
--------
LONG-TERM DEBT 189,781
--------
OTHER LIABILITIES 3,999
--------
MINORITY INTEREST 7,694
--------
COMMITMENTS AND CONTINGENCIES -
--------
PARTNERS' EQUITY:
General partner 1,063
Limited partner 105,192
--------
Total Partners' Equity 106,255
--------
TOTAL LIABILITIES AND PARTNERS' EQUITY $353,785
========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
F-21
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 29,
1996
(thousands)
OPERATING ACTIVITIES:
<S> <C>
Net income $ 140
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 11,287
Amortization of debt issuance costs 880
Other operating activities 258
Changes in operating assets and liabilities 2,336
--------
Net cash provided by operating activities 14,901
--------
INVESTING ACTIVITIES:
Capital expenditures (3,946)
Other investing activities 37
--------
Net cash used for investing activities (3,909)
--------
FINANCING ACTIVITIES:
Net repayments of revolving loans (11,710)
Repayments of long-term debt (474)
Other -
--------
Net cash used for financing activities (12,184)
--------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (1,192)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,840
--------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,648
========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
F-22
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of September 29, 1996, the
condensed consolidated statements of operations for the nine months ended
September 29, 1996 and the condensed consolidated statements of cash flows for
the nine months ended September 29, 1996 have been prepared by JPS Automotive
L.P. and subsidiaries ("JPS Automotive") and have not been audited by JPS
Automotive's independent accountants. In the opinion of the management of
JPS Automotive, all adjustments considered necessary for a fair presentation
of the consolidated financial position, results of operations and cash flows
for those periods have been included.
On August 28, 1996, Foamex International Inc. ("Foamex International")
entered into an agreement to sell its partnership interests in JPS Automotive to
a subsidiary of Collins & Aikman Corporation for $220.0 million, subject to
final adjustments, which includes the assumption of JPS Automotive's long-term
debt. Foamex International expects the sale of JPS Automotive to be consummated
prior to December 29, 1996. The condensed consolidated financial statements of
JPS Automotive do not include any adjustments that would result from the sale.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in accordance with the rules and regulations of
the Securities and Exchange Commission. These condensed consolidated financial
statements should be read in conjunction with JPS Automotive's 1995 consolidated
financial statements and notes thereto as set forth in JPS Automotive's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
2. INVENTORIES
The components of inventories consist of:
September 29,
1996
(thousands)
Raw materials and supplies $ 6,805
Work-in-process 10,974
Finished goods 5,523
-------
Total $23,302
=======
3. RELATED PARTY TRANSACTIONS
JPS Automotive has a supply agreement (the "Supply Agreement") with Foamex
International. Pursuant to the terms of the Supply Agreement, at the option of
JPS Automotive, Foamex International will purchase certain raw materials which
are necessary for the manufacture of JPS Automotive's products, and resell such
raw materials to JPS Automotive at a price equal to net cost plus reasonable out
of pocket expenses. Management believes that the terms of the Supply Agreement
are no less favorable to JPS Automotive than those that could be obtained from
an unaffiliated third party. During the nine months ended September 29, 1996,
JPS Automotive purchased approximately $64.9 million of raw materials under
the Supply Agreement.
F-23
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. RELATED PARTY TRANSACTIONS (continued)
As of September 29, 1996, JPS Automotive had accounts payable to
Foamex International of approximately $2.4 million associated with
the Supply Agreement.
4. ENVIRONMENTAL MATTERS
JPS Automotive is subject to various federal, state and local environmental
laws and regulations governing, among other things, the discharge, storage,
handling and disposal of a variety of hazardous and non-hazardous substances and
wastes. JPS Automotive believes it is in substantial compliance with all
existing laws and regulations and has obtained or applied for the necessary
permits to conduct its business. To date, compliance with applicable
environmental laws has not had and, in conjunction with the indemnifications
from JPS Textile Group, Inc. ("JPS Textile") relating to the asset purchase
agreement associated with the acquisition of JPS Automotive, is not expected to
have a material adverse effect on JPS Automotive's financial position. Pursuant
to the terms of the asset purchase agreement, JPS Textile has agreed to
indemnify JPS Automotive against certain environmental liabilities as follows:
(i) one-half of the first $1.0 million of cost in excess of $2.0 million and
(ii) all cost in excess of $3.0 million.
JPS Automotive has accrued environmental costs at September 29, 1996 of
approximately $2.2 million, $0.2 million of which is included in current
liabilities. In addition, as of September 29, 1996, JPS Automotive has a
receivable of $0.5 million for indemnification of environmental liabilities from
JPS Textile, the former owner of JPS Automotive, which is included in noncurrent
assets. JPS Automotive believes that realization of the receivable established
for indemnification is probable.
Although it is possible that new information or future events could require
JPS Automotive to reassess its potential exposure relating to all pending
environmental matters, management believes that, based upon all currently
available information, the resolution of such environmental matters will not
have a material adverse effect on JPS Automotive's results of operations,
financial position, capital expenditures or competitive position. The
possibility exists, however, that new environmental legislation and/or
environmental regulations may be adopted, or other environmental conditions may
be found to exist, that may require expenditures not currently anticipated which
may be material.
F-24
<PAGE>
PRO FORMA CONSOLIDATED
FINANCIAL DATA
The following Unaudited Pro Forma Consolidated Statement of Operations
of the Company for the 9 months ended October 26, 1996 reflects (i) the issuance
by Collins & Aikman Products Co. in June 1996 of $400 million aggregate
principal amount of its 11-1/2% Senior Subordinated Notes due 2006 (the
"Notes"), the application of the estimated net proceeds therefrom to pay down
indebtedness under the Company's Credit Agreement Facilities (consisting of a
Term Loan Facility and Revolving Facility entered into in July 1994), (ii) the
reclassification of the Company's Mastercraft Group as a discontinued
operation, (iii) the application of the proceeds of the sale by the Company in
February 1997 of its Collins & Aikman Floor Coverings, Inc. subsidiary ("Floor
Coverings") and (iv) the December 1996 acquisition of JPS Automotive L.P.
("JPS Automotive") as if the relevant transactions had occurred at the
beginning of the nine months ended October 26, 1996.
The following Unaudited Pro Forma Consolidated Statement of Operations
of the Company for the year ended January 27, 1996 reflects (i) the issuance by
Collins & Aikman Products Co. of the Notes, the application of the estimated net
proceeds therefrom to pay down indebtedness and the amendment to the Company's
Credit Agreement Facilities and a Term Loan B Facility entered into to finance
the January 1996 purchase of Manchester Plastics, Inc. ("Manchester Plastics")
(together the "Bank Credit Facilities"), (ii) The October 1995 acquisition of
the business of Amco Manufacturing Corporation and its Mexican affiliate
(together "Amco") and the January 1996 acquisition of Manchester Plastics
(together with the Amco acquisition, the "1995 Acquisitions"), (iii) the
reclassification of the Company's Floor Coverings subsidiary as a discontinued
operation, (iv) the reclassification of the Mastercraft Group as a discontinued
operation, (v) the application of the proceeds of the sale of Floor Coverings
and (vi) the December 1996 acquisition of JPS Automotive as if the relevant
transactions had occurred at the beginning of the year ending January 27, 1996.
The following Unaudited Pro Forma Consolidated Balance Sheet of the
Company as of October 26, 1996 reflects (i) the reclassification of the
Mastercraft Group as a discontinued operation, (ii) the sale of Floor Coverings
and (iii) the acquisition of JPS Automotive as if they had occurred on that
date.
The pro forma statements do not purport to represent what the Company's
financial position or results of operations would actually have been if the
relevant transactions had occurred at the beginning of each period presented or
on October 26, 1996, or to project the Company's consolidated results of
operations or financial position at any future date or for any future period.
F-25
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED OCTOBER 26, 1996
(In thousands except per share amounts)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR THE AS ADJUSTED FOR THE AS FURTHER ADJUSTED
1996 SUBORDINATED 1996 SUBORDINATED RECLASSIFY FOR THE
DEBT DEBT OFFERING AND MASTERCRAFT RECLASSIFICATION OF
OFFERING AND THE 1996 THE 1996 AMENDMENT OF GROUP AS THE MASTERCRAFT GROUP
AMENDMENT OF THE THE BANK CREDIT DISCONTINUED SALE OF AS DISCONTINUED
BANK CREDIT FACILITIES OPERATIONS FLOOR OPERATIONS AND THE
ACTUAL FACILITIES COVERINGS SALE OF FLOOR COVERINGS
<S> <C> <C> <C> <C> <C> <C>
Net sales........................$1,065,380 $ - $ 1,065,380 $ (213,546) $ - $ 851,834
-
Cost of goods sold............... 855,852 - 855,852 (161,876) - 693,976
Selling, general and
administrative expenses....... 94,493 - 94,493 (27,694) - 66,799
Operating income................. 115,035 - 115,035 (23,976) - 91,059
Interest expense................. 44,611 5,914 (1) (2) 50,525 (17,479) (1,554) (4) 31,492
Loss on the sale of Receivables.. 4,800 - 4,800 (1,154) - 3,646
Other income (expense), net...... 1,584 - 1,584 - - 1,584
Minority interest in consolidated
subsidiary..................... - - - - - -
Income from continuing operations
before income taxes........... 67,208 (5,914) 61,294 (5,343) 1,554 57,505
Income taxes expense............. 27,372 (2,407) (3) 24,965 (2,124) 632 (5) 23,473
Income from continuing operations$ 39,836 $ (3,507) $ 36,329 $ (3,219) $ 922 $ 34,032
Average common shares outstanding 69,986 69,986
Income from continuing operations
per share of common stock .....$ 0.57 $ 0.49
</TABLE>
F-26
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED OCTOBER 26, 1996
(continued)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
AS FURTHER ADJUSTED
FOR THE JPS
RECLASSIFICATION OF AUTOMOTIVE
THE MASTERCRAFT GROUP L.P. FOR THE
AS DISCONTINUED NINE MONTHS JPS
OPERATIONS AND THE ENDED AUTOMOTIVE
SALE OF FLOOR SEPTEMBER 29, ACQUISITION PRO FORMA AS
COVERINGS 1996 ADJUSTMENTS ADJUSTED
<S> <C> <C> <C> <C>
Net sales........................................ $ 851,834 $ 220,433 $ - $1,072,267
Cost of goods sold............................... 693,976 186,439 (2,250) (6) 878,165
Selling, general and administrative expenses..... 66,799 16,814 (2,100) (7) 81,513
Operating income................................. 91,059 17,180 4,350 112,589
Interest expense................................. 31,492 16,117 (375) (8) 47,234
Loss on the sale of Receivables.................. 3,646 - - 3,646
Other income (expense), net...................... 1,584 (129) - 1,455
Minority interest in consolidated subsidiary..... - (447) 447 (9) -
Income from continuing operations before income 57,505 487 5,172 63,164
taxes
Income taxes expense............................. 23,473 347 1,956 (10) 25,776
Income from continuing operations................ $ 34,032 $ 140 $ 3,216 $ 37,388
Average common shares outstanding................ 69,986 69,986
Income from continuing operations per share of common
stock ......................................... $ 0.49 $ 0.53
</TABLE>
F-27
<PAGE>
(1) Represents interest of $17.3 million on the Notes at an interest rate
of 11.50% and $.5 million in amortization of deferred financing fees on
the Notes, partially offset by interest savings of $9.7 million on the
repayment of $339.0 million of indebtedness, interest income of $.7
million at an assumed rate of 5.3% on the remaining proceeds and an
allocation of $1.2 million related to the Floor Coverings sale.
(2) Includes the amortization of (i) the deferred financing fees related to
the partial repayment and amendment of the Bank Credit Facilities and
(ii) a portion of the previously incurred deferred financing fees
related to such facilities prior to their partial repayment and
amendment. Excludes the write-off of $11.3 million of previously
incurred deferred financing fees.
(3) Represents a reduction of income taxes related to the pro forma net
increase in interest expense at a 40.7% effective rate.
(4) Represents a reduction of interest expense of $1.6 million net of
amounts previously allocated to the Floor Coverings discontinued
operations related to the application of estimated net proceeds of
$179.1 million.
(5) Represents income taxes related to the pro forma net decrease in
interest expense at a 40.7% effective rate.
(6) Represents a reduction in depreciation expense related to the adjusted
fixed asset values and anticipated reductions in operating costs.
(7) Represents (i) a reduction of $1.5 million related to the removal of
duplicative selling and administrative costs, and (ii) a net reduction
of $.6 million in goodwill amortization relating to the reversal of JPS
Automotive's previous goodwill amortization of $3.2 million and the
establishment of goodwill amortization of $2.6 million based on a forty
year life.
(8) Reflects a net adjustment for (i) a net reduction of $1.7 million in
interest expense related to $68 million of JPS Automotive 11.125%
Senior Notes due 2001 ("the JPS Automotive Notes") repurchased and
retired with amounts under the Company's Term Loan Facility and the
$200 million Delayed Draw Term Loan Facility entered into in connection
with the JPS Automotive acquisition ("Delayed Draw Facility").
Interest on these facilities is based on an interest rate of LIBOR plus
1.75. Average LIBOR in effect during the period was 5.51%. (ii) The
removal of $.8 million in amortization of JPS Automotive deferred
financing fees, (iii) amortization of $.9 million in income
related to the excess of market value of JPS Automotive Notes over face
value on the acquisition date, (iv) additional interest expense of $2.5
million related to the financing of $43 million in purchased equity of
JPS Automotive and related expenses under the Company's Credit
Agreement Facilities and (v) nine months amortization of deferred
financing fees related to the Company's Delayed Draw
Facility.
(9) Reflects the acquisition of the 20% minority interest in JPS
Automotive's Cramerton Automotive Products, L.P. subsidiary
("Cramerton").
(10) Represents income taxes related to the historical JPS Automotive
results and pro forma adjustments at a 40.7% effective rate less
amounts previously reported in the historical JPS Automotive results.
F-28
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 27, 1996
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR THE
1996 SUBORDINATED DEBT
OFFERING AND THE 1996 AS ADJUSTED FOR THE 1996
PRO FORMA FOR AMENDMENT OF THE SUBORDINATED DEBT OFFERING AND
1995 THE 1995 BANK CREDIT THE 1996 AMENDMENT OF THE BANK
ACTUAL ACQUISITIONS ACQUISITIONS FACILITIES CREDIT FACILITIES
<S> <C> <C> <C> <C> <C>
Net sales............................. $1,291,466 $182,063 (1) $1,473,529 $ - $1,473,529
Cost of goods sold.................... 1,012,358 156,226 (1) 1,168,584 - 1,168,584
Selling, general and
administrative expenses.............. 131,280 21,549 (1)(2) 152,829 - 152,829
Operating income...................... 147,828 4,288 152,116 - 152,116
Interest expense...................... 47,938 14,900 (3) 62,838 19,185 (5) (6) 82,023
Loss on the sale of Receivables....... 8,688 - 8,688 - 8,688
Other income (expense), net........... - - - - -
Minority interest in
consolidated subsidiary............. - - - - -
Income from continuing operations
before income taxes................. 91,202 (10,612) 80,590 (19,185) 61,405
Income taxes expense (benefit)........ (138,520) 248 (4) (138,272) (7,482) (7) (145,754)
Income from continuing
operations.......................... $229,722 $(10,860) $218,862 $ (11,703) $207,159
Average common shares
outstanding......................... 71,194 71,194
Income from continuing operations
per share of common stock............ $ 3.23 $ 2.91
</TABLE>
F-29
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 27, 1996
(CONTINUED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
AS FURTHER ADJUSTED
AS ADJUSTED FOR THE FOR THE
1996 RECLASSIFICATION OF
SUBORDINATED DEBT FLOOR COVERINGS AND
OFFERING AND THE RECLASS RECLASS THE MASTERCRAFT GROUP
1996 AMENDMENT OF FLOOR COVERINGS MASTERCRAFT GROUP AS DISCONTINUED
THE BANK CREDIT AS DISCONTINUED AS DISCONTINUED SALE OF OPERATIONS AND THE
FACILITIES OPERATIONS (8) OPERATIONS (9) FLOOR COVERINGS SALE OF FLOOR COVERINGS
<S> <C> <C> <C> <C> <C>
Net sales............................. $1,473,529 $ (122,169) $ (267,280) $ - $ 1,084,080
Cost of goods sold.................... 1,168,584 (71,915) (200,351) - 896,318
Selling, general and administrative
expenses.............................. 152,829 (27,300) (37,714) - 87,815
Operating income...................... 152,116 (22,954) (29,215) - 99,947
Interest expense...................... 82,023 (10,139) (26,087) (3,688) (10) 42,109
Loss on the sale of Receivables....... 8,688 (816) (1,626) - 6,246
Other income (expense), net........... - - - - -
Minority interest in consolidated
subsidiary............................ - - - - -
Income from continuing operations
before income taxes................... 61,405 (11,999) (1,502) (3,688) 51,592
Income taxes expense (benefit)........ (145,754) 291 2,341 1,438 (11) (141,684)
Income from continuing operations..... $207,159 $(12,290) $ (3,843) $ 2,250 $ 193,276
Average common shares outstanding..... 71,194 71,194
Income from continuing operations per
share of common stock................. $ 2.91 $ 2.71
</TABLE>
F-30
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 27, 1996
(CONCLUDED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
AS FURTHER ADJUSTED
FOR THE
RECLASSIFICATION OF JPS AUTOMOTIVE
FLOOR COVERINGS AND L.P. AS
THE MASTERCRAFT GROUP REPORTED FOR JPS
AS DISCONTINUED THE YEAR ENDED AUTOMOTIVE
OPERATIONS AND THE DECEMBER 31, ACQUISITION PRO FORMA AS
SALE OF FLOOR COVERINGS 1995 ADJUSTMENTS ADJUSTED
<S> <C> <C> <C> <C>
Net sales............................. $ 1,084,080 $312,096 $ $1,396,176
-
Cost of goods sold.................... 896,318 257,231 (3,000) (12) 1,150,549
Selling, general and administrative
expenses............................. 87,815 23,797 (2,800) (13) 108,812
Operating income...................... 99,947 31,068 5,800 136,815
Interest expense...................... 42,109 22,396 (500) (14) 64,005
Loss on the sale of Receivables....... 6,246 - - 6,246
Other income (expense), net........... - 290 - 290
Minority interest in consolidated
subsidiary............................ - (403) 403 (15) -
Income from continuing operations
before income taxes ................... 51,592 8,559 6,703 66,854
Income taxes expense (benefit)........ (141,684) 30 5,922 (16) (135,732)
Income from continuing operations..... $ 193,276 $8,529 $ 781 $ 202,586
Average common shares outstanding..... 71,194 71,194
Income from continuing operations per
share of common stock ................. $ 2.71 $2.85
</TABLE>
F-31
<PAGE>
(1) Represents the adjustment to add the 1995 operating results for
Manchester Plastics and Amco prior to their respective dates of
acquisitions. In the case of Amco, sales have been adjusted to
eliminate intercompany sales to the Company.
(2) Includes an additional $3.7 million in annual goodwill amortization for
the periods prior to each acquisition (based on an assumed forty year
life).
(3) Represents interest expense of $14.8 million on the $197 million Term
Loan B Facility for the period prior to the acquisition of Manchester
Plastics plus interest expense on $7.2 million of borrowings on the
Revolving Facility for the period prior to the acquisition of Amco.
Interest on the Term Loan B Facility is based on an interest rate of
LIBOR plus 2.25%. Average LIBOR in effect during the period was 5.97%.
(4) Represents income taxes related to the pro forma operating results
offset by tax benefits relating to the increase in pro forma net
interest expense.
(5) Represents annual interest of $46 million on the Notes and $1.3 million
in amortization of deferred financing fees partially offset by interest
savings of $25.8 million on the repayment of $339 million of
indebtedness and interest income of $2.0 million at an assumed rate of
5.3% on remaining proceeds.
(6) Includes the amortization of (i) the deferred financing fees related to
the partial repayment and restatement of the Company's Bank Credit
Facilities and (ii) a portion of the previously incurred deferred
financing fees related to such facilities prior to their partial
repayment and restatement. Excludes the write-off of $11.3 million of
previously incurred deferred financing fees.
(7) Includes a net reduction of income taxes related to the pro forma net
increase in interest expense at a 39% effective rate.
(8) Reflects the reclassification of Floor Coverings as a discontinued
operation. Included in the reclassification is an allocated portion of
the incremental pro forma interest expense related to the Notes. Income
tax expense has been adjusted to reflect the pro forma net reduction in
interest expense at a 39% effective rate.
(9) Reflects the reclassification of the Mastercraft Group as a
discontinued operation. Included in the reclassification is an
allocated portion of the incremental pro forma interest expense related
to the Notes. Income tax expense has been adjusted to reflect the pro
forma net reduction in interest expense at a 39% effective rate.
(10) Represents a reduction of interest expense of $3.7 million, net of
amounts previously allocated to the Floor Coverings discontinued
operation, resulting from the application of estimated net proceeds of
sale of $179.1 million.
(11) Represents income taxes related to the pro forma net decrease in
interest at a 39% effective rate.
(12) Represents a reduction in depreciation expense related to the adjusted
fixed asset values.
(13) Represents a reduction of (i) $2 million related to the removal of
duplicative selling and administrative costs, and (ii) a net reduction
of $.8 million in goodwill amortization relating to the reversal of JPS
Automotive's previous goodwill amortization of $4.2 million and the
establishment of an annual goodwill amortization of $3.4 million based
on a forty year life.
F-32
<PAGE>
(14) Reflects a net adjustment for (i) a net reduction of $2.3 million in
interest expense related to $68 million of JPS Notes repurchased and
retired with amounts under the Company's Term Loan Facility and the
Delayed Draw Facility. Interest on these facilities is based on an
interest rate of LIBOR plus 1.75%. Average LIBOR in effect during the
period was 5.97%, (ii) the removal of $1.1 million in amortization of
JPS Automotive deferred financing fees, (iii) annual amortization of
$1.2 million in income related to the excess of market value of JPS
Automotive bonds over face value on the acquisition date, (iv)
additional interest expense of $3.3 million related to the financing of
$43 million in purchased equity of JPS Automotive and related expenses
under the Company's Credit Agreement Facilities at an average interest
rate of 7.72% and (v) annual amortization of deferred financial fees
related to the Company's Delayed Draw Facility.
(15) Reflects the acquisition of the 20% minority interest in JPS
Automotive's Cramerton Automotive Products.
(16) Represents income taxes related to the total of the historical JPS
Automotive results and pro forma adjustments at a 39% effective rate
less amounts previously reported in JPS Automotive historical results.
F-33
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS ADJUSTED FOR (I)
THE RECLASSIFICATION
RECLASSIFY OF MASTERCRAFT JPS
MASTERCRAFT SALE OF AS A DISCONTINUED AUTOMOTIVE JPS AUTOMOTIVE
ACTUAL AS OF GROUP AS FLOOR OPERATION AND L.P. AS OF ACQUISITION
OCTOBER 26, DISCONTINUED COVERINGS (II) THE SALE SEPTEMBER 29, ADJUSTMENTS PRO FORMA
1996 OPERATION (1) OF FLOOR COVERINGS 1996 AS ADJUSTED
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents... $2,541 $2,541 $1,648 $ 4,189
Accounts and notes
receivable, net........... 149,130 (84) 149,046 42,546 (48) (8) 191,544
Inventories................. 146,101 (40,540) 105,561 23,302 (164) (8) 128,699
Net assets of discontinued
operations................ 136,358 79,107 (23,278) (2) 192,187 - 192,187
Other....................... 119,594 (1,883) 117,711 4,906 (45,980)(8)(9) 76,637
Total current assets...... 553,724 36,600 (23,278) 567,046 72,402 (46,192) 593,256
Property, plant & equipment,
net......................... 288,100 (85,685) 202,415 114,757 (29,379) (8) 287,793
Deferred tax assets............ 120,635 6,326 (45,835) (3) 81,126 - 5,038 (10) 86,164
Goodwill, net.................. 158,763 (2,423) 156,340 158,537 (23,072)(11) 291,805
Other assets................... 54,595 (2) 54,593 8,089 (7,437)(8)(12) 55,245
$1,175,817 $ (45,184) $ (69,113) $1,061,520 $ 353,785 $(101,042) $ 1,314,263
Liabilities and Common
Stockholders' Deficit
Current Liabilities:
Notes payable............... $1,813 $ 1,813 - $ 1,813
Current maturities of
long-term debt ........... 32,147 (1,995) 30,152 3,964 (3,964) (13) 30,152
Accounts payable............ 115,834 (16,211) 17,978 (4) 117,601 21,420 139,021
Accrued expenses............ 129,984 (9,902) 1,500 (5) 121,582 20,672 9,968 (8) 152,222
Total current liabilities. 279,778 (28,108) 19,478 271,148 46,056 6,004 323,208
Long-term debt................. 812,711 (1,616) (179,100) (6) 631,995 189,781 (2,286) (14) 819,490
Other.......................... 266,542 (15,460) 251,082 3,999 9,189 (8) 264,270
Minority interest.............. - - - 7,694 (7,694) (8) -
Common Stockholders' Deficit:
Common stock................ 705 705 705
Other paid in capital....... 585,212 585,212 585,212
Accumulated deficit......... (730,164) 90,509 (7) (639,655) (639,655)
Foreign currency
translation adjustments..... (18,721) (18,721) (18,721)
Pension equity adjustment... (9,090) (9,090) (9,090)
Treasury stock, at cost..... (11,156) (11,156) (11,156)
General partner............. - - 1,063 (1,063) (8) -
Limited partner............. - - 105,192 (105,192) (8) -
Total common
stockholders'
deficit................. (183,214) - 90,509 (92,705) 106,255 (106,255) (92,705)
$1,175,817 $ (45,184) $ (69,113) $1,061,520 $ 353,785 $ (101,042) $1,314,263
</TABLE>
(1) Reflects the reclassification of the Mastercraft Group as a
discontinued operation.
(2) Reflects the removal of net assets associated with the sale of Floor
Coverings.
(3) Reflects the utilization of deferred tax assets related to the federal
tax gain on the sale of Floor Coverings.
(4) Reflects the amount due to the purchaser to be paid as the Company
receives amounts attributable to the collection of Floor Coverings
accounts receivable previously sold to and owned by the Company's
Carcorp subsidiary.
F-34
<PAGE>
(5) Reflects the accrual of certain transaction expenses.
(6) Reflects the application of net cash proceeds to repay amounts
outstanding under the Company's Revolving Credit Facility.
(7) Reflects the anticipated net gain on the disposition of Floor Coverings
after income taxes.
(8) The purchase price of $230 million consists of $31.8 million to acquire
the equity interest in JPS Automotive and the minority interest in
Cramerton and the assumption of $198.2 million in net indebtedness
consisting of (i) $13.7 million in JPS Automotive and Cramerton bank
financing (the "JPS Automotive Credit Facilities"), (ii) $180.0 million
in JPS Automotive Notes, and (iii) $6.1 million in accrued interest on
(i) and (ii) above less cash on hand.
The Company (i) previously acquired as of October 26, 1996 $52.6
million of JPS Automotive 11.125% Notes including a premium of $1.4
million, (ii) previously paid $.4 million related to the transaction,
and accrued $4.7 million in current liabilities expenses related to the
transaction, (iii) recorded costs to assimilate JPS Automotive
operations, recognize employee liabilities and recognize environmental
liabilities of $12.0 million and (iv) adjusted the carrying value of
current assets on realizable value and fixed assets based on appraised
fair value based on planned use.
The JPS Automotive Acquisition was accounted for using the purchase
method of accounting and the total purchase cost was allocated first to
assets and liabilities based on their respective fair values, with the
remainder allocated to goodwill. The allocation of the purchase price
above is based on historical costs and management's estimates which may
differ from the final allocation.
(9) Reflects the repurchase of $52.6 million of JPS Automotive Notes which
includes $1.4 million in premiums. This amount was partially offset by
the creation of current deferred tax assets related to the purchase.
(10) Reflects the creation of non current deferred tax assets related to the
purchase.
(11) Reflects the net adjustment to goodwill after recording the fair value
of assets and liabilities. Resulting goodwill to be amortized on an
assumed 40 year life.
(12) Includes the write-off of $6.3 million in deferred financing fees
related to JPS Automotive indebtedness.
(13) Reflects the repayment of the JPS Automotive Credit Facilities.
(14) Reflects (i) the repayment of the long term portion of the JPS
Automotive Credit Facilities (ii) the repurchase of $51.2 million of
JPS Automotive Notes offset by (i) borrowings under the Company's Bank
Credit Facilities to fund the $31.8 million purchase of equity and the
repayment of $13.7 million of the JPS Automotive Credit Facilities,
$3.4 million related to transaction expenses and (ii) financing fees
as well as the adjustment to reflect the fair value of JPS Automotive
Notes outstanding after the transaction.
F-35
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Current Report on Form 8- K/A, of Collins &
Aikman Corporation (File No. 1-10218) of our report dated February 9, 1996, on
our audits of the financial statements of JPS Automotive L.P. and subsidiaries
as of December 31, 1995 and January 1, 1995 and for the year ended December 31,
1995 and for the period June 29, 1994 to January 1, 1995.
Spartanburg, South Carolina /s/ COOPERS & LYBRAND L.L.P.
February 24, 1997
