<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 0-21496
WESTPOINT STEVENS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3498354
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
507 WEST TENTH STREET
WEST POINT, GEORGIA 31833
(Address of principal executive offices, including Zip Code)
(706) 645-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------- -------
Common shares outstanding at October 29, 1997: 29,823,070 shares of Common
Stock, $.01 par value.
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets:
September 30, 1997 (Unaudited) and
December 31, 1996 3
Condensed Consolidated Statements of
Income (Unaudited); Three and Nine Months
Ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash
Flows (Unaudited); Nine Months
Ended September 30, 1997 and 1996 5
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) (Unaudited);
Nine Months Ended September 30, 1997 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7 - 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 19 - 21
</TABLE>
2
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents....................................... $ 37,995 $ 14,029
Accounts receivable............................................. 122,186 66,949
Inventories..................................................... 353,086 299,651
Prepaid expenses and other current assets....................... 14,770 14,939
------------ -------------
Total current assets................................................. 528,037 395,568
Property, Plant and Equipment, net................................... 679,660 705,968
Other Assets
Deferred financing fees......................................... 20,201 23,108
Prepaid pension and other assets................................ 42,720 32,355
Goodwill........................................................ 31,669 -
------------ -------------
$ 1,302,287 $ 1,156,999
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Senior Credit Facility.......................................... $ 117,788 $ 24,000
Accrued interest payable........................................ 25,976 6,525
Trade accounts payable.......................................... 58,274 73,475
Other accounts payable and accrued liabilities.................. 170,008 150,715
------------ -------------
Total current liabilities............................................ 372,046 254,715
Long-Term Debt....................................................... 1,075,000 1,075,000
Noncurrent Liabilities
Deferred income taxes........................................... 200,522 179,057
Other liabilities............................................... 88,681 98,625
------------ -------------
Total noncurrent liabilities......................................... 289,203 277,682
Stockholders' Equity (Deficit)....................................... (433,962) (450,398)
------------ -------------
$ 1,302,287 $ 1,156,999
============ =============
</TABLE>
See accompanying notes
3
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------------
1997 1996 1997 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales................................................ $458,979 $412,705 $1,211,882 $1,102,679
Cost of goods sold....................................... 336,865 306,185 904,325 827,982
-------- -------- ---------- ----------
Gross earnings...................................... 122,114 106,520 307,557 274,697
Selling, general and administrative expenses............. 52,914 47,252 156,736 138,814
-------- -------- ---------- ----------
Operating earnings.................................. 69,200 59,268 150,821 135,883
Interest expense......................................... 26,312 23,831 75,022 71,344
Other expense, net....................................... 700 704 2,244 2,155
-------- -------- ---------- ----------
Income from continuing operations
before income tax expense...................... 42,188 34,733 73,555 62,384
Income tax expense....................................... 15,668 12,495 27,382 22,790
-------- -------- ---------- ----------
Income from continuing operations................... 26,520 22,238 46,173 39,594
Income (loss) from discontinued operations............... 390 (526) 2,625 (1,192)
Gain on sale of discontinued operations.................. 6,138 - 6,138 -
-------- -------- ---------- ----------
Net income.......................................... $ 33,048 $ 21,712 $ 54,936 $ 38,402
======== ======== ========== ==========
Net income (loss) per common share:
Continuing operations............................... $ .85 $ .70 $ 1.47 $ 1.24
Discontinued operations............................. .01 (.02) .08 (.04)
Gain on sale of discontinued operations............. .20 - .20 -
-------- -------- ---------- ----------
Net income per common share......................... $ 1.06 $ .68 $ 1.75 $ 1.20
======== ======== ========== ==========
Average number of common and common
equivalent shares outstanding....................... 31,125 31,825 31,461 31,882
======== ======== ========== ==========
</TABLE>
See accompanying notes
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------------
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $ 54,936 $ 38,402
Adjustment to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and other amortization............................ 60,734 58,586
Gain on sale of discontinued operations........................ (6,138) -
Deferred income taxes.......................................... 25,487 16,149
Changes in working capital..................................... (108,542) (23,748)
Other - net.................................................... (17,524) (13,474)
----------- ------------
Net cash provided by operating activities................................ 8,953 75,915
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................ (105,983) (50,643)
Net proceeds from sale of business.................................. 120,980 -
Net proceeds from sale of assets.................................... 393 415
Purchase of businesses.............................................. (57,170) -
----------- ------------
Net cash used for investing activities................................... (41,780) (50,228)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Credit Facility:
Borrowings..................................................... 978,799 418,000
Repayments..................................................... (885,011) (443,500)
Net proceeds from Trade Receivables Program......................... 5,399 20,045
Purchase of common stock for treasury............................... (46,709) (24,125)
Proceeds from issuance of common stock.............................. 4,315 1,103
----------- ------------
Net cash provided by (used for) financing activities..................... 56,793 (28,477)
----------- ------------
Net increase (decrease) in cash and cash equivalents..................... 23,966 (2,790)
Cash and cash equivalents at beginning of period......................... 14,029 7,987
----------- ------------
Cash and cash equivalents at end of period............................... $ 37,995 $ 5,197
=========== ============
</TABLE>
See accompanying notes
5
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON
STOCK
AND CAPITAL
IN MINIMUM
EXCESS OF TREASURY STOCK PENSION
COMMON PAR --------------------- ACCUMULATED LIABILITY
SHARES VALUE SHARES AMOUNT DEFICIT ADJUSTMENT TOTAL
-------- ---------- ------- --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997........................ 34,707 $329,394 (3,856) $ (70,316) $(703,068) $(6,408) $(450,398)
Exercise of management stock
options including tax benefit............ 338 5,661 (1) - - - 5,661
Issuance of stock pursuant to Stock
Bonus Plan including tax benefit...... - 308 99 2,240 - - 2,548
Purchase of treasury shares................ - - (1,210) (46,709) - - (46,709)
Net income................................. - - - - 54,936 - 54,936
------ -------- ------- --------- --------- ------- ---------
Balance, September 30, 1997..................... 35,045 $335,363 (4,968) $(114,785) $(648,132) $(6,408) $(433,962)
====== ======== ======= ========= ========= ======= =========
</TABLE>
See accompanying notes
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WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
nine month periods ended September 30, 1997 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1997. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the annual report on Form 10-K/A for WestPoint
Stevens Inc. (the "Company") for the year ended December 31, 1996.
2. INVENTORIES
The Company uses the last-in, first-out ("LIFO") method of accounting for
substantially all inventories for financial reporting purposes. Interim
determinations of LIFO inventories are necessarily based on management's
estimates of year-end inventory levels and costs. Subsequent changes in these
estimates, including the final year-end LIFO determination, and the effect of
such changes on earnings are recorded in the interim periods in which they
occur.
Inventories consisted of the following at September 30, 1997 and December 31,
1996 (in thousands of dollars):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Finished goods $ 164,293 $ 134,690
Work in progress 145,770 114,140
Raw materials and supplies 57,035 71,038
LIFO reserve (14,012) (20,217)
------------- ------------
$ 353,086 $ 299,651
============= ============
</TABLE>
7
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WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. INDEBTEDNESS AND FINANCIAL ARRANGEMENTS
Indebtedness is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Short-term indebtedness
Senior Credit Facility
Revolver $ 117,788 $ 24,000
============= ============
Long-term indebtedness
Senior Credit Facility
Revolver $ 50,000 $ 50,000
8-3/4% Senior Notes due 2001 400,000 400,000
9-3/8% Senior Subordinated Debentures
due 2005 550,000 550,000
9% Sinking Fund Debentures due 2017 75,000 75,000
------------- ------------
$ 1,075,000 $ 1,075,000
============= ============
</TABLE>
At September 30, 1997 and December 31, 1996, $138.4 million and $133 million,
respectively, of accounts receivable had been sold pursuant to a trade
receivables program (the "Trade Receivables Program") and the sale is reflected
as a reduction of accounts receivable in the accompanying Condensed
Consolidated Balance Sheets.
4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact will result in an increase in
primary earnings per share from continuing operations for the first nine months
ended September 30, 1997 and 1996 of $.03 per share and $.02 per share,
respectively. The impact of Statement 128 on the calculation of fully diluted
earnings per share for these quarters is not expected to be material.
8
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WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED)
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, Reporting Comprehensive Income and Statement No. 131, Disclosures About
Segments of an Enterprise and Related Information. Statement No. 130
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general purpose financial statements.
Statement No. 131 generally requires that companies report segment information
for operating segments which are revenue producing components for which
separate financial information is produced internally.
The Company plans to adopt Statement No. 130 and Statement No. 131 in 1998, but
has not yet completed its analysis of the impact, if any, that Statement No.
130 and Statement No. 131 may have on its financial statements.
5. DISCONTINUED OPERATIONS
On August 27, 1997 the Company closed a transaction pursuant to which WestPoint
Stevens sold its subsidiaries AIH Inc., Alamac Knit Fabrics, Inc. and Alamac
Enterprises Inc. (collectively, "Alamac Knit Fabrics subsidiary" or "Alamac"),
other than cash, accounts receivable of approximately $42.5 million and a yarn
mill located in Whitmire, S.C., to Dyersburg Corporation for approximately $126
million. The Whitmire facility was transferred by the Company to Home Fashions
to support the Company's expansion of its sheeting production capacity. As a
result of the transaction, the Company now accounts for the Alamac Knit Fabrics
subsidiary as a discontinued operation and the accompanying financial
statements have been adjusted and restated accordingly.
9
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WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. DISCONTINUED OPERATIONS (CONTINUED)
The condensed consolidated statements of income relating to the discontinued
operations are as follows (1997 amounts are through August 27, 1997, the date
of sale) (in thousands of dollars):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- --------------------------
1997 1996 1997 1996
------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales......................................... $ 34,635 $ 52,080 $ 162,428 $ 166,084
Gross earnings.................................... 3,479 5,706 19,951 18,271
Operating earnings................................ 1,897 1,027 9,189 3,626
Interest expense.................................. 1,401 1,966 5,533 5,827
Income (loss) from discontinued
operations before income
tax expense (benefit)........................ 547 (896) 3,993 (2,057)
Income tax expense (benefit)...................... 157 (370) 1,368 (865)
Income (loss) from discontinued
operations................................... $ 390 $ (526) $ 2,625 $ (1,192)
Gain on sale of discontinued operations,
net of taxes of $3,605....................... $ 6,138 $ - $ 6,138 $ -
</TABLE>
10
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
On August 27, 1997 the Company closed a transaction pursuant to which WestPoint
Stevens sold its Alamac Knit Fabrics subsidiary (other than cash, accounts
receivable of approximately $42.5 million and a yarn mill located in Whitmire,
S.C.) to Dyersburg Corporation for approximately $126 million. The Whitmire
facility was transferred by the Company to Home Fashions to support the
Company's expansion of its sheeting production capacity. As a result of the
transaction, the Company now accounts for the Alamac Knit Fabrics subsidiary as
a discontinued operation and the accompanying financial statements have been
adjusted and restated accordingly.
RESULTS OF OPERATIONS: THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
The table below sets forth continuing operations net sales, gross earnings,
operating earnings, interest expense, income from continuing operations, income
(loss) from discontinued operations, gain on sale of discontinued operations
and net income of the Company for the three and nine months ended September 30,
1997 and 1996. See Note 5 in the Notes to Condensed Consolidated Financial
Statements for information concerning the Company's discontinued operations.
The following discussion is limited to an analysis of the results of continuing
operations (in millions of dollars and as percentages of net sales).
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ------------------------
1997 1996 1997 1996
--------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales............................................ $ 459.0 $ 412.7 $ 1,211.9 $ 1,102.7
Gross earnings....................................... $ 122.1 $ 106.5 $ 307.5 $ 274.7
Operating earnings................................... $ 69.2 $ 59.3 $ 150.8 $ 135.9
Interest expense..................................... $ 26.3 $ 23.9 $ 75.0 $ 71.4
Income from continuing operations.................... $ 26.5 $ 22.2 $ 46.2 $ 39.6
Income (loss) from discontinued operations........... 0.4 (0.5) 2.6 (1.2)
Gain on sale of discontinued operations.............. 6.1 - 6.1 -
-------- -------- ---------- ----------
Net income........................................... $ 33.0 $ 21.7 $ 54.9 $ 38.4
Gross margins........................................ 26.6% 25.8% 25.4% 24.9%
Operating margins.................................... 15.1% 14.4% 12.4% 12.3%
</TABLE>
11
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: THREE MONTHS ENDED SEPTEMBER 30, 1997
NET SALES. Net sales for the three months ended September 30, 1997 increased
$46.3 million, or 11.2%, to $459 million compared with net sales of $412.7
million for the three months ended September 30, 1996. The increase in net
sales resulted primarily from higher unit volume (including acquisitions) in
the 1997 period compared with the 1996 period.
GROSS EARNINGS/MARGINS. Gross earnings for the three months ended September
30, 1997 of $122.1 million increased $15.6 million, or 14.6%, compared with
$106.5 million for the same period of 1996 and reflect gross margins of 26.6%
in the 1997 period compared with 25.8% in the 1996 period. Gross earnings and
margins increased in the third quarter of 1997 primarily as a result of the
increase in unit volume and lower raw material costs.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
increased by $5.7 million, or 12%, in the third quarter of 1997 compared with
the same period last year, and as a percentage of net sales represent 11.5% in
1997 and 11.4% in 1996. The increase in selling, general and administrative
expenses in the third quarter of 1997 was due primarily to acquisitions along
with higher advertising and warehousing/shipping expense.
Operating earnings for the three months ended September 30, 1997 were $69.2
million, or 15.1% of sales, and increased $9.9 million, or 16.8%, compared with
operating earnings of $59.3 million, or 14.4% of sales, for the same period of
1996. The increase resulted from the increase in gross earnings offset
somewhat by the increase in selling, general and administrative expenses
discussed above.
INTEREST EXPENSE. Interest expense for the three months ended September 30,
1997 of $26.3 million increased $2.4 million compared with interest expense for
the three months ended September 30, 1996. The increase was due primarily to
higher average debt levels in the 1997 third quarter compared with the
corresponding 1996 average debt levels.
OTHER EXPENSE, NET. Other expense, net in the third quarter of 1997 of $0.7
million was unchanged compared with the 1996 period and consists primarily of
the amortization of deferred financing fees of $1 million less certain
miscellaneous income items.
12
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WESTPOINT STEVENS INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: THREE MONTHS ENDED SEPTEMBER 30, 1997 (CONTINUED)
INCOME TAX EXPENSE. The Company's effective tax rate differed from the federal
statutory rate primarily due to state income taxes and nondeductible items.
INCOME FROM CONTINUING/DISCONTINUED OPERATIONS. Income from continuing
operations for the third quarter of 1997 was $26.5 million, or $.85 per share,
compared with net income from continuing operations of $22.2 million, or $.70
per share, for the same period of last year.
Income from discontinued operations for the third quarter of 1997 was $0.4
million, or $.01 per share, compared with a net loss of $0.5 million, or $.02
per share, for the same period of last year.
GAIN ON SALE OF DISCONTINUED OPERATIONS. During the third quarter of 1997 the
Company recorded a gain on the sale of its Alamac Knit Fabrics subsidiary of
$6.1 million, or $.20 per share.
NET INCOME. The net income for the third quarter of 1997 was $33 million, or
$1.06 per share, compared with net income of $21.7 million, or $.68 per share,
for the same period of last year.
Per share amounts are based on 31.1 million and 31.8 million average common and
common equivalent shares outstanding for the 1997 and 1996 periods,
respectively. The decrease in the average shares outstanding was primarily the
result of the purchase by the Company of shares under the stock repurchase
programs.
13
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: NINE MONTHS ENDED SEPTEMBER 30, 1997
NET SALES. Net sales for the nine months ended September 30, 1997 increased
$109.2 million, or 9.9%, to $1,211.9 million compared with net sales of
$1,102.7 million for the nine months ended September 30, 1996. The increase in
net sales resulted primarily from higher unit volume (including acquisitions)
in the 1997 period compared with the 1996 period.
GROSS EARNINGS/MARGINS. Gross earnings for the nine months ended September 30,
1997 of $307.5 million increased $32.8 million, or 12%, compared with $274.7
million for the same period of 1996 and reflect gross margins of 25.4% in the
1997 period compared with 24.9% in the 1996 period. Gross earnings and margins
increased in the first nine months of 1997 primarily as a result of the
increase in unit volume and lower raw material costs.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
increased by $17.9 million, or 12.9%, in the first nine months of 1997 compared
with the same period last year, and as a percentage of net sales represent
12.9% in 1997 and 12.6% in 1996. The increase in selling, general and
administrative expenses in the first nine months of 1997 was due primarily to
acquisitions along with higher advertising and warehousing/shipping expense.
Operating earnings for the nine months ended September 30, 1997 were $150.8
million, or 12.4% of sales, and increased $14.9 million, or 11%, compared with
operating earnings of $135.9 million, or 12.3% of sales, for the same period of
1996. The increase resulted from the increase in gross earnings offset
somewhat by the increase in selling, general and administrative expenses
discussed above.
INTEREST EXPENSE. Interest expense for the nine months ended September 30,
1997 of $75 million increased $3.6 million compared with interest expense for
the nine months ended September 30, 1996. The increase was due primarily to
higher average debt levels in the 1997 first nine months compared with the
corresponding 1996 average debt levels.
OTHER EXPENSE, NET. Other expense, net in the first nine months of 1997 of
$2.2 million was unchanged compared with the 1996 period and consists primarily
of the amortization of deferred financing fees of $2.9 million less certain
miscellaneous income items.
14
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: NINE MONTHS ENDED SEPTEMBER 30, 1997 (CONTINUED)
INCOME TAX EXPENSE. The Company's effective tax rate differed from the federal
statutory rate primarily due to state income taxes and nondeductible items.
INCOME FROM CONTINUING/DISCONTINUED OPERATIONS. Income from continuing
operations for the first nine months of 1997 was $46.2 million, or $1.47 per
share, compared with net income from continuing operations of $39.6 million, or
$1.24 per share, for the same period of last year.
Income from discontinued operations for the first nine months of 1997 was $2.6
million, or $.08 per share, compared with a net loss of $1.2 million, or $.04
per share, for the same period of last year.
GAIN ON SALE OF DISCONTINUED OPERATIONS. During the third quarter of 1997 the
Company recorded a gain on the sale of its Alamac Knit Fabrics subsidiary of
$6.1 million, or $.20 per share.
NET INCOME. The net income for the first nine months of 1997 was $54.9
million, or $1.75 per share, compared with net income of $38.4 million, or
$1.20 per share, for the same period of last year.
Per share amounts are based on 31.5 million and 31.9 million average common and
common equivalent shares outstanding for the 1997 and 1996 periods,
respectively. The decrease in the average shares outstanding was primarily the
result of the purchase by the Company of shares under the stock repurchase
programs.
EFFECTS OF INFLATION
The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on its sales or profitability.
15
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are expected to be cash from its
operations and funds available under the Senior Credit Facility. At October
29, 1997, the maximum commitment under the Senior Credit Facility was
approximately $350 million and the Company had unused borrowing availability
under the Senior Credit Facility totaling approximately $173 million. The
Senior Credit Facility contains covenants which, among other things, limit
indebtedness and require the maintenance of certain financial ratios and
minimum net worth as defined.
The Company's principal uses of cash for the next several years will be
operating expenses, capital expenditures and debt service requirements related
primarily to interest payments. The Company spent approximately $100 million
in 1996 on capital expenditures and intends to invest approximately $155
million in 1997.
During the first nine months of 1997 the Company purchased approximately 1.2
million shares under its various stock repurchase programs, at an average price
of $38.60 per share. In August 1997 the Board of Directors approved the
purchase of up to three million additional shares of the Company's common
stock, subject to the Company's debt limitations, which brings the total shares
that have been approved for purchase to eight million shares. At September 30,
1997, approximately 3.4 million shares remained to be purchased under these
programs.
Cash contributions in 1997 to the Company's pension plans are estimated to
total approximately $17.3 million compared with actual contributions in 1996 of
$21.3 million.
The Company, through a "bankruptcy remote" receivables subsidiary, has a Trade
Receivables Program which provides for the sale of accounts receivable, on a
revolving basis. At September 30, 1997 and December 31, 1996, $138.4 million
and $133 million, respectively, had been sold under this program and the sale
is reflected as a reduction of accounts receivable in the accompanying
Condensed Consolidated Balance Sheets. The cost of the Trade Receivables
Program in 1997 is estimated to total approximately $7.5 million, compared with
$7.4 million in 1996, and will be charged to selling, general and
administrative expenses.
Debt service requirements for interest payments in 1997 are estimated to total
approximately $108 million (excluding amounts related to the Trade Receivables
Program) compared with interest payments of $102.6 million in 1996. There are
no debt service requirements in 1997 related to scheduled principal
amortization.
16
<PAGE> 17
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
In August 1997 the Company sold its Alamac Knit Fabrics subsidiary for
approximately $126 million. The proceeds from the sale have initially been
used primarily to reduce outstanding bank debt, but on a long-term basis will
be reinvested in the Home Fashions business, plus pay certain costs associated
with the sale as well as purchase shares under the Company's stock repurchase
programs.
Management believes that cash from the Company's operations and borrowings
under its credit agreement will provide the funding necessary to meet the
Company's anticipated requirements for capital expenditures and operating
expenses and to enable it to meet its anticipated debt service requirements.
17
<PAGE> 18
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company 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
used in or resulting from its operations and potential remediation obligations
thereunder. Certain of the Company's facilities (including certain facilities
no longer owned or utilized by the Company) have been cited or are being
investigated with respect to alleged violations of such laws and regulations.
The Company believes that it has adequately provided in its financial
statements for any expenses and liabilities that may result from such matters.
The Company also is insured with respect to certain of such matters. The
Company's operations are governed by laws and regulations relating to employee
safety and health which, among other things, establish exposure limitations for
cotton dust, formaldehyde, asbestos and noise, and regulate chemical and
ergonomic hazards in the workplace. Although the Company does not expect that
compliance with any such laws and regulations will adversely affect the
Company's operations, there can be no assurance such regulatory requirements
will not become more stringent in the future or that the Company will not incur
significant costs in the future to comply with such requirements.
The Company and its subsidiaries are involved in various other legal
proceedings, both as plaintiff and as defendant, which are normal to its
business.
It is the opinion of management that the aforementioned actions and claims, if
determined adversely to the Company, will not have a material adverse effect on
the financial condition or operations of the Company taken as a whole.
18
<PAGE> 19
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (continued)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter ended September 30, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------------------------------------
2.2 Stock Purchase Agreement by and among Dyersburg
Corporation, as Purchaser, Alamac Sub Holdings Inc.,
as Seller, AIH Inc. and WestPoint Stevens Inc. dated
as of July 15, 1997 incorporated by reference to the
Current Report on Form 8-K (Commission File
No.0-21496) filed by the Company with the Commission
on September 11, 1997.
2.3 Supplemental Agreement relating to Phase II
Environmental Investigation among Alamac Sub Holdings
Inc., AIH Inc., WestPoint Stevens Inc. and Dyersburg
Corporation dated as of July 15, 1997 incorporated by
reference to the Current Report on Form 8-K
(Commission File No. 0-21496) filed by the Company
with the Commission on September 11, 1997.
2.4 Amendment to Stock Purchase Agreement among Alamac Sub
Holdings Inc., AIH Inc., WestPoint Stevens Inc. and
Dyersburg Corporation dated as of August 15, 1997
incorporated by reference to the Current Report on
Form 8-K (Commission File No. 0-21496) filed by the
Company with the Commission on September 11, 1997.
2.5 Supplemental Environmental Indemnity among Alamac Sub
Holdings Inc., AIH Inc., WestPoint Stevens Inc. and
Dyersburg Corporation dated as of August 20, 1997
incorporated by reference to the Current Report on
Form 8-K (Commission File No. 0-21496) filed by the
Company with the Commission on September 11, 1997.
19
<PAGE> 20
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
a.) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------------------------------------
2.6 Second Supplemental Environmental Indemnity among
Alamac Sub Holdings Inc., AIH Inc., WestPoint Stevens
Inc. and Dyersburg Corporation dated as of August 27,
1997 incorporated by reference to the Current Report
on Form 8-K (Commission File No. 0-21496) filed by the
Company with the Commission on September 11, 1997.
2.7 Assignment and Assumption Agreement among WestPoint
Stevens Inc. (the "Assignor"), Alamac Knit Fabrics,
Inc. (the "Assignee") and Dyersburg Corporation dated
as of August 27, 1997 incorporated by reference to
the Current Report on Form 8-K (Commission File No.
0-21496) filed by the Company with the Commission on
September 11, 1997.
10.49 Letter Amendment Agreement, dated as of July 18,
1997, by and among Alamac Knit Fabrics, Inc., as
Borrower, Alamac Enterprises Inc. and AIH Inc., as
Guarantors, the Lenders identified therein and
NationsBank, N.A., as Agent.
10.50 Letter Amendment Agreement, dated as of July 22,
1997, among the Company, as Borrower, NationsBank,
N.A. (formerly known as NationsBank of North
Carolina, N.A.), The Bank of New York, BankBoston,
N.A. (formerly known as The First National Bank of
Boston), The First National Bank of Chicago,
Scotiabank Inc., Wachovia Bank of Georgia, N.A.,
SunTrust Bank, Atlanta, AmSouth Bank of Alabama, and
ABN AMRO Bank, N.V.
10.51 Letter Amendment Agreement, dated as of August 5,
1997, among the Company, as Borrower, NationsBank,
N.A. (formerly known as NationsBank of North Carolina,
N.A.), The Bank of New York, BankBoston, N.A.
(formerly known as The First National Bank of Boston),
The First National Bank of Chicago, Scotiabank Inc.,
Wachovia Bank of Georgia, N.A., SunTrust Bank,
Atlanta, AmSouth Bank of Alabama, and ABN AMRO Bank,
N.V.
20
<PAGE> 21
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
a.) Exhibits
Exhibit
Number Description of Exhibit
------ -----------------------------------------------------
10.52 Termination of Commitments and Release of Liens dated
August 27, 1997, by and among Alamac Knit Fabrics,
Inc., as Borrower, Alamac Enterprises Inc. and AIH
Inc., as Guarantors, the Lenders identified therein
and NationsBank N.A., as Agent.
11 Statement re: Computation of earnings per share
27 Financial Data Schedule
b.) The Company filed a Current Report on Form 8-K dated July 16, 1997,
announcing an agreement with Dyersburg Corporation to sell the Company's
Alamac Knit Fabrics subsidiary.
The Company filed a Current Report on Form 8-K dated August 27, 1997,
announcing the completion of the sale of its Alamac Knit Fabrics
subsidiary to Dyersburg Corporation.
21
<PAGE> 22
WESTPOINT STEVENS INC.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTPOINT STEVENS INC.
----------------------
Registrant
November 6, 1997 /s/ Morgan M. Schuessler
- ---------------- --------------------------------
Morgan M. Schuessler
Executive Vice President-Finance
and Chief Financial Officer
22
<PAGE> 23
WESTPOINT STEVENS INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- ------ ------
<S> <C> <C>
2.2 Stock Purchase Agreement by and among Dyersburg -
Corporation, as Purchaser, Alamac Sub Holdings Inc.,
as Seller, AIH Inc. and WestPoint Stevens Inc. dated
as of July 15, 1997 incorporated by reference to the
Current Report on Form 8-K (Commission File No.0-21496)
filed by the Company with the Commission on September
11, 1997.
2.3 Supplemental Agreement relating to Phase II Environmental -
Investigation among Alamac Sub Holdings Inc., AIH Inc.,
WestPoint Stevens Inc. and Dyersburg Corporation dated as of
July 15, 1997 incorporated by reference to the Current
Report on Form 8-K (Commission File No. 0-21496) filed by the
Company with the Commission on September 11, 1997.
2.4 Amendment to Stock Purchase Agreement among Alamac Sub -
Holdings Inc., AIH Inc., WestPoint Stevens Inc. and
Dyersburg Corporation dated as of August 15, 1997 incorporated
by reference to the Current Report on Form 8-K (Commission
File No. 0-21496) filed by the Company with the Commission
on September 11, 1997.
2.5 Supplemental Environmental Indemnity among Alamac Sub -
Holdings Inc., AIH Inc., WestPoint Stevens Inc. and
Dyersburg Corporation dated as of August 20, 1997 incorporated
by reference to the Current Report on Form 8-K (Commission
File No. 0-21496) filed by the Company with the Commission on
September 11, 1997.
2.6 Second Supplemental Environmental Indemnity among Alamac -
Sub Holdings Inc., AIH Inc., WestPoint Stevens Inc. and
Dyersburg Corporation dated as of August 27, 1997 incorporated
by reference to the Current Report on Form 8-K (Commission
File No. 0-21496) filed by the Company with the Commission on
September 11, 1997.
</TABLE>
23
<PAGE> 24
WESTPOINT STEVENS INC.
EXHIBIT INDEX
(CONTINUED)
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- ------ ------
<S> <C> <C>
2.7 Assignment and Assumption Agreement among -
WestPoint Stevens Inc. (the "Assignor"), Alamac
Knit Fabrics, Inc. (the "Assignee") and Dyersburg
Corporation dated as of August 27, 1997 incorporated
by reference to the Current Report on Form 8-K
(Commission File No. 0-21496) filed by the Company
with the Commission on September 11, 1997.
10.49 Letter Amendment Agreement, dated as of July 18, 1997, 26 - 29
by and among Alamac Knit Fabrics, Inc., as Borrower,
Alamac Enterprises Inc. and AIH Inc., as Guarantors,
the Lenders identified therein and NationsBank, N.A.,
as Agent.
10.50 Letter Amendment Agreement, dated as of July 22, 1997, 30 - 34
among the Company, as Borrower, NationsBank, N.A.
(formerly known as NationsBank of North Carolina, N.A.),
The Bank of New York, BankBoston, N.A. (formerly known
as The First National Bank of Boston), The First National
Bank of Chicago, Scotiabank Inc., Wachovia Bank of Georgia,
N.A., SunTrust Bank, Atlanta, AmSouth Bank of Alabama,
and ABN AMRO Bank, N.V.
10.51 Letter Amendment Agreement, dated as of August 5, 1997, 35 - 39
among the Company, as Borrower, NationsBank, N.A.
(formerly known as NationsBank of North Carolina, N.A.),
The Bank of New York, BankBoston, N.A. (formerly known as The
First National Bank of Boston), The First National
Bank of Chicago, Scotiabank Inc., Wachovia Bank of Georgia,
N.A., SunTrust Bank, Atlanta, AmSouth Bank of Alabama,
and ABN AMRO Bank, N.V.
10.52 Termination of Commitments and Release of Liens dated 40 - 42
August 27, 1997, by and among Alamac Knit Fabrics, Inc., as
Borrower, Alamac Enterprises Inc. and AIH Inc., as Guarantors,
the Lenders identified therein and NationsBank N.A., as Agent.
</TABLE>
24
<PAGE> 25
WESTPOINT STEVENS INC.
EXHIBIT INDEX
(CONTINUED)
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- ------ ------
<S> <C> <C>
11 Statement re: Computation of earnings per share 43
27 Financial Data Schedule 44
</TABLE>
25
<PAGE> 1
EXHIBIT 10.49
[NATIONSBANK LOGO]
July 18, 1997
ALAMAC KNIT FABRICS, INC.
507 West Tenth Street
West Point, Georgia 31833
Attention: Mr. Morgan M. Schuessler
Re: Revision of Definition of "Permitted Investments"
Dear Sirs:
Reference is made to that certain credit agreement, dated as of December 4,
1995, among Alamac Knit Fabrics, Inc. as the borrower ("Borrower"), Alamac
Enterprises, Inc. and AIH, Inc. as guarantors, the various banks and lending
institutions party thereto (the "Lenders"), and NationsBank, N.A. as agent (the
"Agent") for the Lenders, as amended by that certain Amendment Agreement dated
as of March 22, 1996 and by that certain Second Amendment Agreement dated as of
May 22, 1997 (as amended, the "Credit Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.
By their signatures below, the Borrower and Required Lenders agree that the
reference to the amount $15,000,000 in clause (viii) of the existing definition
of "Permitted Investments" in the Credit Agreement shall be amended to refer to
"18,500,000."
By their signatures below, each of the Guarantors acknowledges and consents to
this revision in the definition of Permitted Investments and each Guarantor
agrees that this revision does not operate to reduce or discharge such
Guarantor's obligations under the Credit Documents.
Until this letter agreement shall have been executed by the Borrower, the
Guarantors, and the Required Lenders, it shall not be effective in amending or
revising the Credit Agreement. Except for the revision to the definition of
"Permitted Investments" effected hereby upon the execution of this letter
agreement by the Borrower, the Guarantors and the Required Lenders, the Credit
Agreement shall remain in full force and effect.
26
<PAGE> 2
Alamac Knit Fabrics, Inc.
July 18, 1997
Page 2
Please execute this letter agreement, and cause each of the Guarantors to
execute this letter agreement, and return such completed signature pages to the
Agent at your earliest convenience.
Sincerely,
/s/ John R. Clemens
------------------------
John R. Clemens
Senior Vice President
NationsBank, N.A., as Agent
ACKNOWLEDGED AND AGREED:
ALAMAC KNIT FABRICS, INC.
By: /s/ Morgan M. Schuessler
---------------------------------------
Title: Vice President & Treasurer
------------------------------------
ALAMAC ENTERPRISES INC.
By: /s/ Edward J. Jones
---------------------------------------
Title: Vice President & Asst. Treasurer
------------------------------------
AIH INC.
By: /s/Edward J. Jones
---------------------------------------
Title: Vice President & Asst. Treasurer
------------------------------------
[Signatures Continued]
27
<PAGE> 3
Alamac Knit Fabrics, Inc.
July 18, 1997
Page 3
NATIONSBANK, N.A., as Agent and
individually as a Lender
By: /s/ John R. Clemens
---------------------------------------
Title: SVP
------------------------------------
THE BANK OF NEW YORK
By: /s/ Gregory L. Batson
---------------------------------------
Gregory L. Batson
Title: Vice President
------------------------------------
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston)
By: /s/ Stephen Y. McGehee
---------------------------------------
Stephen Y. McGehee
Title: Director
------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
---------------------------------------
Title: Vice President
------------------------------------
SCOTIABANK INC.
By:
---------------------------------------
Title:
------------------------------------
[Signatures Continued]
28
<PAGE> 4
Alamac Knit Fabrics, Inc.
July 18, 1997
Page 4
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/
-----------------------------------------
Title: V.P.
--------------------------------------
SUNTRUST BANK, ATLANTA
By: /s/
-----------------------------------------
Title: V.P.
--------------------------------------
AMSOUTH BANK OF ALABAMA
By:
-----------------------------------------
Title:
--------------------------------------
ABN AMRO BANK, N.V., Atlanta Agency
By: /s/
-----------------------------------------
Title: VP
--------------------------------------
29
<PAGE> 1
EXHIBIT 10.50
NATIONS BANK
July 22,1997
WESTPOINT STEVENS INC.
507 West Tenth Street
West Point, Georgia 31833
Attention: Mr. Morgan M. Schuessler
Re: Revision of Definition of "Maximum Restricted Payment Amount"
Dear Sirs:
Reference is made to that certain credit agreement, dated as of November 23,
1994, among WestPoint Stevens Inc. as the borrower ("Borrower"), the various
banks and lending institutions party thereto (the "Lenders"), and NationsBank,
N.A. as agent (the "Agent") for the Lenders, as amended and restated from time
to time (as amended, the "Credit Agreement"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement.
By their signatures below, the Borrower and the Required Banks hereby agree
that the reference to the amount $15,000,000 in clause (vi) of the existing
definition of "Maximum Restricted Payment Amount" in the Credit Agreement shall
be amended to refer to "$18,500,000".
By their signatures below, each of the Borrower Subsidiaries acknowledges and
consents to this revision in the definition of "Maximum Restricted Payment
Amount" and each Borrower Subsidiary agrees that this revision does not operate
to reduce or discharge any of such Subsidiary's obligations under the Restated
Guaranties or the Collateral Documents.
Until this letter agreement shall have been executed by the Borrower, the
Borrower Subsidiaries, and the Required Banks, it shall not be effective in
revising the definition of "Maximum Restricted Payment Amount" effected hereby
upon the execution of this letter agreement by the Borrower, the Borrower
Subsidiaries, and the Required Banks, the Credit Agreement shall remain in full
force and effect.
30
<PAGE> 2
WestPoint Stevens Inc.
July 22, 1997
Page 2
Please execute this letter agreement, and cause each of the Borrower
Subsidiaries to execute this letter agreement, and return such completed
signature pages to the Agent at your earliest convenience.
Sincerely,
/s/ J. Timothy Martin
J. Timothy Martin
Vice President
NationsBank, N.A., as Agent
ACKNOWLEDGED AND AGREED:
WESTPOINT STEVENS INC.
By: /s/ Morgan M. Schuessler
----------------------------------
Exec. V.P.-Finance &
Title: Chief Financial Officer
----------------------------------
ALAMAC KNIT FABRICS, INC.
By: /s/ Morgan M. Schuessler
----------------------------------
Title: Vice President & Treasurer
----------------------------------
WESTPOINT STEVENS STORES, INC.
By: /s/ Morgan M. Schuessler
----------------------------------
Title: Vice President & Treasurer
----------------------------------
J.P. STEVENS & CO., INC.
By: /s/ Morgan M. Schuessler
----------------------------------
Title: Vice President & Treasurer
----------------------------------
[Signatures Continued]
31
<PAGE> 3
Westpoint Stevens Inc.
July 22, 1997
Page 3
WESTPOINT-PEPPERELL ENTERPRISES, INC.
By: /s/ Edward J. Jones
----------------------------------
Title: Vice President & Asst. Treasurer
----------------------------------
J.P. STEVENS ENTERPRISES, INC.
By: /s/ Edward J. Jones
----------------------------------
Title: Vice President & Asst. Treasurer
----------------------------------
WESTPOINT STEVENS (CANADA) INC.
By: /s/ Morgan M. Schuessler
----------------------------------
Title: Treasurer
----------------------------------
ALAMAC HOLDINGS INC.
By: /s/ Edward J. Jones
----------------------------------
Title: Vice President & Asst. Treasurer
----------------------------------
AIH INC.
By: /s/ Edward J. Jones
----------------------------------
Title: Vice President & Asst. Treasurer
----------------------------------
ALAMAC ENTERPRISES INC.
By: /s/ Edward J. Jones
----------------------------------
Title: Vice President & Asst. Treasurer
----------------------------------
[Signatures Continued]
32
<PAGE> 4
WestPoint Stevens Inc.
July 22, 1997
Page 4
NATIONSBANK, N.A., as Agent and
individually as a Lender
By: /s/
----------------------
Title: S V P
----------------------
THE BANK OF NEW YORK
By: /s/ Gregory L. Batson
----------------------
Gregory L. Batson
Title: Vice President
----------------------
BANKBOSTON, N.A.
By: /s/ Stephen Y. McGehee
----------------------
Stephen Y. McGehee
Title: Director
----------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Courtenay R. Wood
----------------------
Title: Vice President
----------------------
SCOTIABANK INC.
By:
----------------------
Title:
----------------------
[Signatures Continued]
33
<PAGE> 5
WestPoint Stevens Inc.
July 22, 1997
Page 5
WACHOVIA BANK. N.A.
By: /s/ Douglas L. Strictland
-------------------------
Title: V.P.
-------------------------
SUNTRUST BANK. ATLANTA
By: /s/
-------------------------
Title: GVP
-------------------------
AMSOUTH BANK OF ALABAMA
By:
-------------------------
Title:
-------------------------
ABN AMRO BANK, N.V., Atlanta Agency
By: /s/
-------------------------
Title: VICE PRESIDENT
-------------------------
By: /s/ Steven L. Hissman
-------------------------
Title: VICE PRESIDENT
-------------------------
34
<PAGE> 1
EXHIBIT 10.51
NationsBank, N.A.
Charlotte, NC 28255
Tel 704 386-5000
NATIONSBANK
August 5, 1997
WESTPOINT STEVENS INC.
507 West Tenth Street
West Point, Georgia 31833
Attention: Mr. Morgan M. Schuessler
Re: Revision of Amount of Letter of Credit Sublimit
Dear Sirs:
Reference is made to that certain agreement, dated as of November 23, 1994,
among WestPoint Stevens Inc. as the borrower ("Borrower"), the various banks and
lending institutions party thereto (the "Lenders"), and NationsBank, N.A. as
agent (the "Agent) for the Lenders, as amended and restated from time to time
(as amended, the "Credit Agreement"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.
By their signatures below, the Borrower and the Required Banks hereby agree that
the reference to the amount $25,000,000 in section 2.12(a) in the Credit
Agreement shall be amended to refer to "$35,000,000". This revision has the
effect of increasing the amount of the sub-limit for Letters of Credit that may
be requested and issued under the Credit Agreement. This revision does not
alter or amend the amount of the Revolving Loan Commitments, any Bank's Revolver
Pro Rata Share of outstanding Letters of Credit, or any other term, condition,
or provision of the Credit Agreement.
By their signatures below, each of the Borrower Subsidiaries acknowledges and
consents to this revision and each Borrower Subsidiary agrees that this revision
does not operate to reduce or discharge any of such Subsidiary's obligations
under the Restated Guaranties or the Collateral Documents.
Until this letter agreement shall have been executed by the Borrower, the
Borrower Subsidiaries, and the Required Banks, it shall not be effective in
revising the referenced amount in section 2.12(a) of the Credit Agreement.
Except for the revision to the referenced amount in section 2.12(a) effected
hereby upon the execution of this letter agreement by the Borrower, the Borrower
Subsidiaries, and the Required Banks, the Credit Agreement shall remain in full
force and effect.
35
<PAGE> 2
WestPoint Sevens Inc.
August 5, 1997
Page 2
Please execute this letter agreement, and cause each of the Borrower
Subsidiaries to execute this letter agreement, and return such completed
signature pages to the Agent at your earliest convenience.
Sincerely,
/s/ John R. Clemens
Senior Vice President
NationsBank, N.A., as Agent
ACKNOWLEDGED AND AGREED:
WESTPOINT STEVENS INC.
By: /s/ Morgan M. Schuessler
-------------------------------------
Exec. V.P.-Finance &
Title: Chief Financial Officer
----------------------------------
ALAMAC KNIT FABRICS, INC.
By: /s/ Morgan M. Schuessler
-------------------------------------
Title: Vice President & Treasurer
----------------------------------
WESTPOINT STEVENS STORES, INC.
By: /s/ Morgan M. Schuessler
-------------------------------------
Title: Vice President & Treasurer
----------------------------------
J.P. STEVENS & CO., INC.
By: /s/ Morgan M. Schuessler
-------------------------------------
Title: Vice President & Treasurer
----------------------------------
[Signatures Continued]
36
<PAGE> 3
WestPoint Sevens Inc.
August 5, 1997
Page 3
WESTPOINT-PEPPERELL ENTERPRISES, INC.
By: /s/ Edward J. Jones
------------------------------------
Title: Vice President & Asst. Treasurer
---------------------------------
J.P. STEVENS ENTERPRISES, INC.
By: /s/ Edward J. Jones
------------------------------------
Title: Vice President & Asst. Treasurer
---------------------------------
WESTPOINT STEVENS (CANADA) INC.
By: /s/ Morgan M. Schuessler
------------------------------------
Title: Vice President & Asst. Treasurer
---------------------------------
ALAMAC HOLDINGS INC.
By: /s/ Edward J. Jones
------------------------------------
Title: Vice President & Asst. Treasurer
---------------------------------
AIH INC.
By: /s/ Edward J. Jones
------------------------------------
Title: Vice President & Asst. Treasurer
---------------------------------
ALAMAC ENTERPRISES INC.
By: /s/ Edward J. Jones
------------------------------------
Title: Vice President & Asst. Treasurer
---------------------------------
[Signatures Continued]
37
<PAGE> 4
WestPoint Sevens Inc.
August 5, 1997
Page 4
NATIONSBANK, N.A., as Agent and
individually as a Lender
By: /s/ Joe R. Clemens
------------------------------------
Title: S.V.P.
---------------------------------
THE BANK OF NEW YORK
By: /s/ James Yancey
------------------------------------
Title: Vice President
---------------------------------
BANKBOSTON, N.A.
By: /s/
------------------------------------
Title:
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
------------------------------------
Title: Vice President
---------------------------------
SCOTIABANC INC.
By: /s/ W. E Zarrett
------------------------------------
Title: Senior Relationship Manager
---------------------------------
[Signatures Continued]
38
<PAGE> 5
WestPoint Sevens Inc.
August 5, 1997
Page 5
WACHOVIA BANK, N.A.
By: /s/
------------------------------------
Title: V. Pres.
---------------------------------
SUNTRUST BANK, ATLANTA
By: /s/ Jeffrey D. Drucker /s/ Donald W. Parker
------------------------------------ -----------------------------
Title: Banking Officer Group Vice President
--------------------------------- -----------------------------
AMSOUTH BANK OF ALABAMA
By: /s/
------------------------------------
Title: Vice President
---------------------------------
ABN AMRO BANK, N.V., ATLANTA AGENCY
By: /s/ /s/ L. K. Kelley
------------------------------------ -----------------------------
Title: Senior Vice President Group Vice President
--------------------------------- -----------------------------
[Signatures Continued]
39
<PAGE> 1
EXHIBIT 10.52
NationsBank, N.A.
Charlotte, NC 28255
Tel 704 386-5000
August 27, 1997
ALAMAC KNIT FABRICS, INC.
507 West Tenth Street
West Point, Georgia 31833
Termination of Commitments and Release of Liens
Gentlemen:
Reference is made to (i) that certain Credit Agreement, dated as of December 4,
1995, by and among Alamac Knit Fabrics, Inc. (the "Borrower"), AIH Inc. and
Alamac Enterprises, Inc. as guarantors (the "Guarantors"), NationsBank, N.A. as
agent (the "Agent"), and the various financial institutions parties thereto
from time to time, as amended from time to time (the "Alamac Credit
Agreement"), and (ii) that certain Amended and Restated Credit Agreement among
WestPoint Stevens Inc. (the "Borrower"), NationsBank of North Carolina, N.A.
(now known as NationsBank, N.A.) as administrative agent (the "Administrative
Agent"), and the various financial institutions parties thereto from time to
time (the "Lenders"), as amended from time to time (the "WestPoint Credit
Agreement"). The Alamac Credit Agreement and the WestPoint Credit Agreement
shall be referred to together as the "Loan Agreements".
The Agent and the Lenders understand that the Borrower desires to terminate,
and hereby terminates, all Commitments under the Alamac Credit Agreement, that
the Borrower requests that all liens and other encumbrances upon the property
of the Borrower and the Guarantors be released, and that the Borrower and the
Guarantors be released from their respective guaranties of payment with respect
to the WestPoint Credit Agreement. In connection therewith:
1. The Agent, on behalf of itself and the Banks, and the Borrower hereby
acknowledge and agree as follows:
A. Upon the Agent's receipt of this letter duly executed by the Borrower
and the Guarantors (the time and date at which the Agent has received such
executed counterpart being referred to as the "Effective Time"):
(i) any and all liens and security interests in favor of the Agent,
the Administrative Agent, or any Lender created under or in connection with
the Loan Agreements or any other credit document in any of the assets of
any of the Borrower or the Guarantor shall automatically be released and
terminated without any further action on the part of the Agent, the
Administrative Agent, or any Lender;
40
<PAGE> 2
(ii) the Agent and the Administrative Agent shall, at the cost of the
Borrower, promptly execute and deliver to the Borrower any and all
necessary release documents (including, without limitation, UCC-3 financing
statements in connection with the UCC-1 financing statements), each in form
and substance reasonably satisfactory to the Borrower, to evidence the
release and termination of the liens and security interests in favor of the
Agent, the Administrative Agent and the Lenders created under or in
connection with the Loan Agreements in any and all assets of the Borrower
or the Guarantors and to effect such release of record;
(iii) the Borrower and the Guarantors are released and discharged of
any and all claims, demands, obligations, liabilities, costs and expenses,
now existing or hereafter arising, under or in respect of the Loan
Agreements, except for: (a) indemnification obligations owing to the Agent,
the Administrative Agent, or any of the Lenders which pursuant to the Loan
Agreements survive repayment of the loans or the termination of
commitments, (b) claims against the Borrower or the Guarantors in
connection with any bankruptcy or insolvency proceeding of the Borrower or
the Guarantors, if and to the extent any payment or other transfer made by
the Borrower or the Guarantors to the Lenders, the Administrative Agent, or
the Agent on or prior to the Effective Time is avoided or otherwise
rescinded, so that such Lender(s), the Administrative Agent, or the Agent
is required pursuant to any final order of a court of competent
jurisdiction to repay such payment or transfer, and (c) any costs,
expenses, claims or liabilities arising hereunder or in connection
herewith, including without limitation the reasonable attorneys' fees and
expenses of the Agent, the Administrative Agent and the Lenders; and
(iv) the Agent and the Administrative Agent shall, at the cost of the
borrower, promptly execute and deliver or cause to be executed and
delivered such documents and agreements and take or cause to be taken such
action, in each instance, as the Borrower shall reasonably request to
effectuate the agreements and purposes of this letter agreement.
5. By their signatures below, the Borrower and the Guarantors hereby agree
that upon the Effective Time, each of the Lenders, the Agent, and the
Administrative Agent is irrevocably and unconditionally released and discharged
of any and all claims, demands, obligations, liabilities, costs and expenses,
now existing or hereafter arising, under or in connection with the Loan
Agreements or any other documents related thereto (including, without
limitation, any obligation or Commitment of any Lender to provide any financial
accommodations to the Borrower or the Guarantors under the Alamac Credit
Agreements).
6. The release herein is being made without any representation or warranty
of any kind, express or implied, to the Borrower, the Guarantors, or any other
person and is without recourse to the Agent, the Administrative Agent, or any
of the Lenders.
41
<PAGE> 3
7. This letter agreement:
(i) shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State, without reference to principles of
conflicts of laws;
(ii) sets forth the entire agreement between the parties hereto
relating to the subject matter hereof, and no term or provision of this letter
agreement may be amended, changed, waived, discharged or terminated orally or
otherwise, except in a writing signed by each such party;
(iii) may be executed in one or more counterparts, each of which
shall be an original and all of which, taken together, shall constitute one and
the same instrument; and
(iv) shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
Very truly yours,
NATIONSBANK, N.A., as Agent and
Administrative Agent
By: /s/ J. Timothy Martin
----------------------------
Name: J. TIMOTHY MARTIN
----------------------------
Title: Senior Vice-President
---------------------------
ACKNOWLEDGED AND AGREED on
this ____ day of August, 1997:
ALAMAC KNIT FABRICS, INC.
By: /s/ M. Clayton Humphrey Jr.
----------------------------
Title: V.P.
----------------------------
AIH, INC.
By: /s/
----------------------------
Title: Treasurer
----------------------------
ALAMAC ENTERPRISES INC.
By: /s/
----------------------------
Title: Treasurer
----------------------------
42
<PAGE> 1
WESTPOINT STEVENS INC.
Exhibit (11) - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ----------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 30,309 31,285 30,727 31,392
Shares issuable under 1995
Key Employee Stock Bonus Plan 61 43 49 57
Net effect of dilutive stock options
- based on the treasury stock
method using average market price 755 497 685 433
-------- ------- -------- --------
Total 31,125 31,825 31,461 31,882
======= ======= ======== ========
Income from continuing operations $26,520 $22,238 $ 46,173 $ 39,594
Income (loss) from discontinued operations 390 (526) 2,625 (1,192)
Gain on sale of discontinued operations 6,138 - 6,138 -
------- ------- -------- --------
Net income $33,048 $21,712 $ 54,936 $ 38,402
======= ======= ======== ========
Net income (loss) per common share:
Continuing operations $ .85 $ .70 $ 1.47 $1.24
Discontinued operations .01 (.02) .08 (.04)
Gain on sale of discontinued operations .20 - .20 -
------- ------- -------- --------
Net income per common share $ 1.06 $ .68 $ 1.75 $ 1.20
======= ======= ======== ========
</TABLE>
43
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONDENSED
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 37,995
<SECURITIES> 0
<RECEIVABLES> 145,466
<ALLOWANCES> 23,280
<INVENTORY> 353,086
<CURRENT-ASSETS> 528,037
<PP&E> 1,023,170
<DEPRECIATION> 343,510
<TOTAL-ASSETS> 1,302,287
<CURRENT-LIABILITIES> 372,046
<BONDS> 1,075,000
0
0
<COMMON> 350
<OTHER-SE> (434,312)
<TOTAL-LIABILITY-AND-EQUITY> 1,302,287
<SALES> 1,211,882
<TOTAL-REVENUES> 1,211,882
<CGS> 904,325
<TOTAL-COSTS> 904,325
<OTHER-EXPENSES> 2,244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,022
<INCOME-PRETAX> 73,555
<INCOME-TAX> 27,382
<INCOME-CONTINUING> 46,173
<DISCONTINUED> 8,763
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,936
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.75
</TABLE>
