<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 JUNE 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 July 24, 1997: 30,490,776 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:
June 30, 1997 (Unaudited) and
December 31, 1996 3
Condensed Consolidated Statements of
Income (Unaudited); Three and Six
Months Ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash
Flows (Unaudited); Six Months
Ended June 30, 1997 and 1996 5
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) (Unaudited);
Six Months Ended June 30, 1997 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
2
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents .................... $ 6,087 $ 14,029
Accounts receivable .......................... 116,559 66,949
Inventories .................................. 368,130 299,651
Net assets of business to be sold ............ 103,538 --
Prepaid expenses and other current assets .... 10,798 14,939
----------- -----------
Total current assets .............................. 605,112 395,568
Property, Plant and Equipment, net ................ 668,843 705,968
Other Assets
Deferred financing fees ...................... 21,170 23,108
Prepaid pension and other assets ............. 36,709 32,355
Goodwill ..................................... 31,868 --
----------- -----------
$ 1,363,702 $ 1,156,999
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Senior Credit Facility ....................... $ 221,824 $ 24,000
Accrued interest payable ..................... 6,827 6,525
Trade accounts payable ....................... 72,192 73,475
Other accounts payable and accrued liabilities 161,547 150,715
----------- -----------
Total current liabilities ......................... 462,390 254,715
Long-Term Debt .................................... 1,075,000 1,075,000
Noncurrent Liabilities
Deferred income taxes ........................ 186,044 179,057
Other liabilities ............................ 90,123 98,625
----------- -----------
Total noncurrent liabilities ...................... 276,167 277,682
Stockholders' Equity (Deficit) .................... (449,855) (450,398)
----------- -----------
$ 1,363,702 $ 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 Six Months Ended
June 30, June 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales .................................. $ 395,802 $ 362,490 $ 752,903 $ 689,974
Cost of goods sold ......................... 299,588 277,078 567,460 521,797
--------- --------- --------- ---------
Gross earnings ........................ 96,214 85,412 185,443 168,177
Selling, general and administrative expenses 53,104 46,424 103,822 91,562
--------- --------- --------- ---------
Operating earnings .................... 43,110 38,988 81,621 76,615
Interest expense ........................... 25,301 23,791 48,710 47,513
Other expense, net ......................... 760 700 1,544 1,451
--------- --------- --------- ---------
Income from continuing operations
before income tax expense ....... 17,049 14,497 31,367 27,651
Income tax expense ......................... 6,371 5,401 11,714 10,295
--------- --------- --------- ---------
Income from continuing operations ..... 10,678 9,096 19,653 17,356
Income (loss) from discontinued operations . 1,102 (382) 2,235 (666)
--------- --------- --------- ---------
Net income ............................ $ 11,780 $ 8,714 $ 21,888 $ 16,690
========= ========= ========= =========
Net income (loss) per common share:
Continuing operations ................. $ .34 $ .28 $ .62 $ .54
Discontinued operations ............... .03 (.01) .07 (.02)
--------- --------- --------- ---------
Net income per common share ........... $ .37 $ .27 $ .69 $ .52
========= ========= ========= =========
Average number of common and common
equivalent shares outstanding ......... 31,637 31,877 31,652 31,913
========= ========= ========= =========
</TABLE>
See accompanying notes
4
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................... $ 21,888 $ 16,690
Adjustment to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and other amortization ...... 40,298 40,055
Deferred income taxes .................... 11,114 6,056
Changes in working capital ............... (105,941) (47,979)
Other - net .............................. (11,003) (9,276)
--------- ---------
Net cash provided by (used for) operating activities (43,644) 5,546
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................... (74,654) (33,163)
Net proceeds from sale of assets ............... 256 316
Purchase of businesses ......................... (57,170) --
--------- ---------
Net cash used for investing activities .............. (131,568) (32,847)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Credit Facility:
Borrowings ............................... 826,129 276,500
Repayments ............................... (628,305) (248,500)
Net proceeds from Trade Receivables Program .... (5,315) 10,055
Purchase of common stock for treasury .......... (28,815) (13,971)
Proceeds from issuance of common stock ......... 3,576 893
--------- ---------
Net cash provided by financing activities ........... 167,270 24,977
--------- ---------
Net decrease in cash and cash equivalents ........... (7,942) (2,324)
Cash and cash equivalents at beginning of period .... 14,029 7,987
--------- ---------
Cash and cash equivalents at end of period .......... $ 6,087 $ 5,663
========= =========
</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, December 31, 1996 ............... 34,707 $ 329,394 (3,856) $ (70,316) $(703,068) $ (6,408) $(450,398)
Exercise of management stock
options including tax benefit .... 286 4,922 (1) -- -- -- 4,922
Issuance of stock pursuant to Stock
Bonus Plan including tax benefit -- 308 99 2,240 -- -- 2,548
Purchase of treasury shares ......... -- -- (757) (28,815) -- -- (28,815)
Net income .......................... -- -- -- -- 21,888 -- 21,888
------ --------- ------ --------- --------- --------- ---------
Balance, June 30, 1997 ................... 34,993 $ 334,624 (4,515) $ (96,891) $(681,180) $ (6,408) $(449,855)
====== ========= ====== ========= ========= ========= =========
</TABLE>
See accompanying notes
6
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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 six month periods ended June
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 June 30, 1997 and December 31, 1996
(in thousands of dollars):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- -----------
<S> <C> <C>
Finished goods $187,227 $134,690
Work in progress 141,457 114,140
Raw materials and supplies 56,048 71,038
LIFO reserve (16,602) (20,217)
-------- --------
$368,130 $299,651
======== ========
</TABLE>
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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>
JUNE 30, DECEMBER 31,
1997 1996
---------- -----------
<S> <C> <C>
Short-term indebtedness
Senior Credit Facility
Revolver $ 221,824 $ 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 June 30, 1997 and December 31, 1996, $127.7 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 six months ended
June 30, 1997 and 1996 of $.01 per share in each period. The impact of Statement
128 on the calculation of fully diluted earnings per share for these quarters is
not expected to be material.
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WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. DISCONTINUED OPERATIONS
On July 16, 1997 the Company announced that it had signed a definitive agreement
pursuant to which WestPoint Stevens will sell 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. Dyersburg has entered into
contractual commitments, subject to normal closing conditions, for the necessary
financing to conclude the Alamac transaction. The transaction is subject to
financing and customary closing conditions, including receipt of applicable
regulatory clearances. It is anticipated that the transaction will be
consummated in early September 1997. As a result, 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.
The condensed consolidated statements of income relating to the discontinued
operations are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ..................... $66,103 $58,441 $127,793 $114,004
Gross earnings ................ 8,627 6,073 16,472 12,565
Operating earnings ............ 3,682 1,250 7,292 2,599
Interest expense .............. 2,140 1,948 4,132 3,861
Income (loss) from discontinued
operations before income
tax expense (benefit) ... 1,706 (658) 3,446 (1,161)
Income tax expense (benefit) .. 604 (276) 1,211 (495)
Income (loss) from discontinued
operations .............. $ 1,102 $ (382) $ 2,235 $ (666)
</TABLE>
The net assets of business to be sold included in the balance sheet are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Inventories .................................. $ 32,290
Prepaid expenses and other current assets .... 1,340
Property, plant and equipment - net .......... 83,971
Trade accounts payable ....................... (6,853)
Other accounts payable and accrued liabilities (7,210)
---------
Net assets ............................. $ 103,538
</TABLE> =========
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
On July 16, 1997 the Company announced that it had signed a definitive agreement
pursuant to which WestPoint Stevens will sell 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 will be transferred by the Company to Home
Fashions to support the previously announced 15% expansion of our sheeting
production. Dyersburg has entered into contractual commitments, subject to
normal closing conditions, for the necessary financing to conclude the Alamac
transaction. The transaction is subject to financing and customary closing
conditions, including receipt of applicable regulatory clearances. It is
anticipated that the transaction will be consummated in early September 1997. As
a result, 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 Six Months Ended June 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 and net income of the Company for the three
and six months ended June 30, 1997 and 1996 (in millions of dollars and as
percentages of net sales). The following discussion is limited to an analysis of
the results of continuing operations. See Note 5 in the Notes to Condensed
Consolidated Financial Statements for information concerning the Company's
discontinued operations.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales .................................. $ 395.8 $ 362.5 $ 752.9 $ 690.0
Gross earnings ............................. $ 96.2 $ 85.4 $ 185.4 $ 168.2
Operating earnings ......................... $ 43.1 $ 39.0 $ 81.6 $ 76.6
Interest expense ........................... $ 25.3 $ 23.8 $ 48.7 $ 47.5
Income from continuing operations .......... $ 10.7 $ 9.1 $ 19.7 $ 17.4
Income (loss) from discontinued operations . 1.1 (0.4) 2.2 (0.7)
-------- -------- -------- --------
Net income ................................. $ 11.8 $ 8.7 $ 21.9 $ 16.7
Gross margins .............................. 24.3% 23.6% 24.6% 24.4%
Operating margins .......................... 10.9% 10.8% 10.8% 11.1%
</TABLE>
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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 JUNE 30, 1997
NET SALES. Net sales for the three months ended June 30, 1997 increased $33.3
million, or 9.2%, to $395.8 million compared with net sales of $362.5 million
for the three months ended June 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 June 30, 1997
of $96.2 million increased $10.8 million, or 12.6%, compared with $85.4 million
for the same period of 1996 and reflect gross margins of 24.3% in the 1997
period compared with 23.6% in the 1996 period. Gross earnings and margins
increased in the second 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 $6.7 million, or 14.4%, in the second quarter of 1997 compared with
the same period last year, and as a percentage of net sales represent 13.4% in
1997 and 12.8% in 1996. The increase in the second quarter of 1997 was due
primarily to acquisitions along with higher advertising and warehousing/shipping
expense.
Operating earnings for the three months ended June 30, 1997 were $43.1 million,
or 10.9% of sales, and increased $4.1 million, or 10.6%, compared with operating
earnings of $39 million, or 10.8% 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 June 30, 1997 of
$25.3 million increased $1.5 million compared with interest expense for the
three months ended June 30, 1996. The increase was due primarily to higher
average debt levels in the 1997 second quarter compared with the corresponding
1996 average debt levels offset somewhat by lower interest rates on the
Company's variable rate bank debt.
OTHER EXPENSE, NET. Other expense, net in the second 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 $0.9 million less certain
miscellaneous income items.
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 June 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 second quarter of 1997 was $10.7 million, or $.34 per share,
compared with net income from continuing operations of $9.1 million, or $.28 per
share, for the same period of last year.
Income from discontinued operations for the second quarter of 1997 was $1.1
million, or $.03 per share, compared with a net loss of $0.4 million, or $.01
per share, for the same period of last year.
NET INCOME. The net income for the second quarter of 1997 was $11.8 million, or
$.37 per share, compared with net income of $8.7 million, or $.27 per share, for
the same period of last year.
Per share amounts are based on 31.6 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.
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: SIX MONTHS ENDED JUNE 30, 1997
NET SALES. Net sales for the six months ended June 30, 1997 increased $62.9
million, or 9.1%, to $752.9 million compared with net sales of $690 million for
the six months ended June 30, 1996. The increase in net sales resulted primarily
from higher unit volume (including acquisitions) and a higher priced mix of
products sold in the 1997 period compared with the 1996 period.
GROSS EARNINGS/MARGINS. Gross earnings for the six months ended June 30, 1997 of
$185.4 million increased $17.2 million, or 10.3%, compared with $168.2 million
for the same period of 1996 and reflect gross margins of 24.6% in the 1997
period compared with 24.4% in the 1996 period. Gross earnings and margins
increased in the first six months of 1997 primarily as a result of the increase
in unit volume and higher priced mix of products sold.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
increased by $12.3 million, or 13.4%, in the first six months of 1997 compared
with the same period last year, and as a percentage of net sales represent 13.8%
in 1997 and 13.3% in 1996. The increase in the first six months of 1997 was due
primarily to acquisitions along with higher advertising and warehousing/shipping
expense.
Operating earnings for the six months ended June 30, 1997 were $81.6 million, or
10.8% of sales, and increased $5 million, or 6.5%, compared with operating
earnings of $76.6 million, or 11.1% 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 six months ended June 30, 1997 of
$48.7 million increased $1.2 million compared with interest expense for the six
months ended June 30, 1996. The increase was due primarily to higher average
debt levels in the 1997 first six months compared with the corresponding 1996
average debt levels offset somewhat by lower interest rates on the Company's
variable rate bank debt.
OTHER EXPENSE, NET. Other expense, net in the first six months of 1997 of $1.5
million was unchanged compared with the 1996 period and consists primarily of
the amortization of deferred financing fees of $1.9 million less certain
miscellaneous income items.
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: Six Months Ended June 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 six months of 1997 was $19.7 million, or $.62 per
share, compared with net income from continuing operations of $17.4 million, or
$.54 per share, for the same period of last year.
Income from discontinued operations for the first six months of 1997 was $2.2
million, or $.07 per share, compared with a net loss of $0.7 million, or $.02
per share, for the same period of last year.
NET INCOME. The net income for the first six months of 1997 was $21.9 million,
or $.69 per share, compared with net income of $16.7 million, or $.52 per share,
for the same period of last year.
Per share amounts are based on 31.7 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.
14
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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 July 24,
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 $59 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 six months of 1997 the Company purchased approximately 757,000
shares under its various stock repurchase programs, at an average price of
$38.06 per share. At June 30, 1997, approximately 820,000 shares remained to be
purchased under these programs.
Cash contributions in 1997 to the Company's pension plans are estimated to total
approximately $12.1 million compared with actual contributions in 1996 of $21.3
million, including the effect of the changes in the actuarial assumptions
relating to the Company's pension plans.
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 June 30, 1997 and December 31, 1996, $127.7 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 $8 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.
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 (CONTINUED)
At June 30, 1997, debt outstanding under the Senior Credit Facility was
approximately $272 million and reflects an increase of approximately $198
million since year-end. The increase in the first six months resulted from the
costs of business acquisitions of $57.2 million, capital expenditures of $74.7
million, stock repurchases of $28.8 million, and normal working capital
increases during the first half of the year.
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.
16
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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.
17
<PAGE> 18
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (continued)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1997 Annual Meeting of Stockholders was held on May 14, 1997. At
the 1997 Annual Meeting, the following matters were voted upon by the
stockholders:
1. Election of three directors to serve for a term of three years.
2. Approval of the adoption of the WestPoint Stevens Inc. Omnibus
Stock Incentive Plan.
3. Ratification of appointment of Ernst & Young LLP, independent
certified public accountants, as auditors of the Company for fiscal
1997.
The following is a table setting forth the number of votes cast for, against or
withheld, as well as the number of abstentions and broker non votes, as to each
of the above matters:
1. Election of Directors
<TABLE>
<CAPTION>
Authority
Nominee For Withheld
---------------------- ---------- ---------
<S> <C> <C>
Holcombe T. Green, Jr. 27,685,649 66,632
Charles W. McCall 27,731,428 20,853
John F. Sorte 27,731,580 20,701
</TABLE>
2. Approval of the WestPoint Stevens Inc. Omnibus Stock Incentive Plan
<TABLE>
<CAPTION>
For Against Abstain
---------- --------- -------
<S> <C> <C>
20,152,125 6,258,027 28,637
</TABLE>
3. Appointment of Ernst & Young LLP
<TABLE>
<CAPTION>
For Against Abstain
---------- ------- -------
<S> <C> <C>
27,730,120 10,814 11,347
</TABLE>
18
<PAGE> 19
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ -------------------------------------------------------------------------------------------
<S> <C>
10.46 WestPoint Stevens Inc. Omnibus Stock Incentive Plan, filed as Annex B to the Company's 1997
Proxy Statement (Commission File No. 0-21496) filed by the Company with the Commission
(incorporated by reference).
10.47 Second Amendment Agreement, dated as of May 22, 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.
10.48 Third Amendment Agreement, dated as of May 22, 1997, among the Company, as Borrower,
NationsBank, N.A. (formerly known as NationsBank of North Carolina, N.A.), The Bank of New
York, 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.
11 Statement re: Computation of earnings per share
27 Financial Data Schedule
</TABLE>
b.) No report on Form 8-K was filed by the Company during the quarter ended
June 30, 1997.
19
<PAGE> 20
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
/s/ Morgan M. Schuessler
--------------------------------
Morgan M. Schuessler
Executive Vice President-Finance
and Chief Financial Officer
20
<PAGE> 21
WESTPOINT STEVENS INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- ------ ------
<S> <C> <C>
10.46 WestPoint Stevens Inc. Omnibus Stock Incentive Plan,
filed as Annex B to the Company's 1997 Proxy Statement
(Commission File No. 0-21496) filed by the Company with
the Commission (incorporated by reference).
10.47 Second Amendment Agreement, dated as of May 22, 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.
10.48 Third Amendment Agreement, dated as of May 22, 1997,
among the Company, as Borrower, NationsBank, N.A.
(formerly known as NationsBank of North Carolina, N.A.),
The Bank of New York, 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.
11 Statement re: Computation of earnings per share
27 Financial Data Schedule
</TABLE>
21
<PAGE> 1
EXHIBIT 10.47
SECOND AMENDMENT AGREEMENT
THIS SECOND AMENDMENT AGREEMENT, dated as of May 22, 1997 (the
"Amendment"), is by and among ALAMAC KNIT FABRICS, INC., a Delaware corporation
(the "Borrower"), Alamac Enterprises, Inc. and AIH, Inc. (each a "Guarantor" and
collectively, the "Guarantors"), the various banks and lending institutions
parties hereto (each a "Lender" and collectively, the "Lenders"), and
NATIONSBANK, N.A., a national banking association, as agent for the Lenders (in
such capacity, the "Agent").
RECITAL
A. Pursuant to that certain Credit Agreement, dated as of December 4,
1995, by and among the Borrower, the Guarantors, the Lenders, and the Agent, as
amended by that certain Amendment Agreement dated as of March 22, 1996 (the
"Existing Credit Agreement"), among the parties hereto, the Lenders have agreed
to make loans to the Borrower.
B. The Borrower, the Guarantors, the Lenders, and the Agent desire to
make certain amendments to the Existing Credit Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment Effective
Date (as hereinafter defined), the Existing Credit Agreement is hereby amended
in accordance with this Part II. Except as so amended, the Existing Credit
Agreement, the Notes, and the other Credit Documents shall continue in full
force and effect.
<PAGE> 2
SUBPART 2.1 Amendments to the Introduction. The first paragraph of the
Existing Credit Agreement is amended to read in its entirety as follows:
This Credit Agreement, dated as of December 4, 1995, as
amended as of March 22, 1996 pursuant to that certain Amendment
Agreement and as further amended as of May 22, 1997 pursuant to that
Second Amendment Agreement, is entered into by and among Alamac Knit
Fabrics, Inc., a Delaware corporation (the "Borrower"), Alamac
Enterprises, Inc., AIH, Inc., Alamac Sub Holdings, Inc. (each a
"Guarantor"), the Lenders (as defined herein) and NationsBank, N.A., as
agent for the Lenders (in such capacity, the "Agent").
SUBPART 2.2 New Definitions Added to Section 1.1. Section 1.1 of the
Existing Credit Agreement is hereby amended by inserting, in the alphabetically
appropriate place, the following definitions:
"Available Cash" means cash or Cash Equivalents owned by and
available to the Borrower which does not constitute the proceeds of the
Revolving Loans.
"Whitmire Facility" means that certain real property, building
and other assets of the Borrower located in Whitmire, South Carolina,
as more particularly described in Schedule 1.1(b).
SUBPART 2.3 Amendment of the Definitions of "Asset Disposition" and
"Permitted Investments". Section 1.1 is further amended by deleting in its
entirety the existing definitions of "Asset Disposition" and "Permitted
Investments" and replacing such terms, in the appropriate alphabetical place,
with the following new definitions:
"Asset Disposition" means the disposition of any or all of the
assets of a Credit Party or any of its Subsidiaries whether by sale,
lease, transfer or otherwise, other than transfers of assets permitted
by Section 9.5 hereof.
"Guarantors" means each of Alamac Enterprises, Inc., AIH,
Inc., Alamac Sub Holdings, Inc., and each Additional Credit Party which
has executed a Joinder Agreement.
"Permitted Investments" means Investments which are (i) cash
or Cash Equivalents, (ii) accounts receivable created, acquired or made
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (iii) Investments in a Guarantor
or the Borrower, (iv) loans to directors, officers, employees, agents,
customers or suppliers in the ordinary course of business for
reasonable business expenses, (v) security deposits delivered by the
Borrower in the ordinary course of its business, (vi) promissory notes
in full or partial payment of the sales price of assets sold as
permitted by Section 9.5 hereof, provided that the maker or makers of
any such promissory notes are reasonably acceptable to the Agent, (vii)
to the extent purchased
<PAGE> 3
with Net Cash Proceeds received from the sale of the Whitmire Facility
not exceeding $25,000,000.00 in the aggregate, Investments in the
capital stock of WestPoint Stevens, Inc., and (viii) to the extent
purchased with Available Cash, Investments in the capital stock of
WestPoint Stevens, Inc., provided that such Investments purchased with
Available Cash shall not exceed in the aggregate $15,000,000.
SUBPART 2.4 Amendment to Section 9.5. Section 9.5 is amended in its
entirety so that such Section now reads as follows:
9.59 Sale or Lease of Assets. None of the Credit Parties will
convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its
business or assets whether now owned or hereafter acquired, including,
without limitation, inventory, receivables, leasehold interests, Real
Properties, and machinery and equipment; provided, however, that this
prohibition shall not apply to (i) any inventory or other assets sold,
leased or disposed of in the ordinary course of business, (ii)
obsolete, idle or worn-out assets no longer used or useful in its
business, (iii) the sale, lease or transfer or other disposal by the
Borrower or another Credit Party of any or all of its assets to the
Borrower or another Credit Party, (iv) other sales of assets not to
exceed $1,000,000 during any fiscal year of the Borrower, (v) the sale
of Program Receivables or (vi) the sale of the Whitmire Facility to
WestPoint Stevens, Inc.
SUBPART 2.5 Amendment to Section 9.7. Section 9.7 is amended in its
entirety so that such Section now reads as follows:
9.7 Stock Redemptions and Dividends. None of the Credit
Parties will, directly or indirectly, (a) purchase, redeem or otherwise
acquire or retire or make any provisions for redemption, acquisition or
retirement of any shares of its capital stock of any class or any
warrants or options to purchase any such shares other than a Permitted
Investment, or (b) pay any Dividends or make any other distribution
upon any shares of its capital stock of any class which would cause
the violation of Section 8.12 hereof or after the occurrence and
during the continuance of any Default or Event of Default.
Notwithstanding the foregoing, any Credit Party may pay Dividends to
the parent corporation of such Credit Party in the form of any capital
stock of WestPoint Stevens, Inc. held by such Credit Party as a
Permitted Investment.
SUBPART 2.6 Addition of Schedule 1.1(b). Schedule 1.1(b) attached
hereto is hereby made a part of the Amended Credit Agreement.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Amendment Effective Date. This Amendment shall be and
become effective (the "Amendment Effective Date") when all of the conditions set
forth in this Subpart 3.1 shall have been satisfied, and thereafter, this
Amendment shall be known, and may be referred to, as the "Second Amendment
Agreement."
<PAGE> 4
SUBPART 3.1.1. Execution of Counterparts. The Agent shall have received
counterparts of this Amendment duly executed on behalf of the Borrower, the
Required Lenders, and the Agent.
SUBPART 3.1.2. Consent. The Agent shall have received, from each person
listed on the signature pages of the Consent attached hereto as Appendix A, an
executed copy of such Consent.
SUBPART 3.1.3. Closing Certificate. The Agent shall have received a
certificate from the Borrower certifying that (i) no Default or Event of Default
exists as of the Amendment Effective Date, and (ii) the representations and
warranties of the Borrower made in or pursuant to the Existing Credit Agreement
shall be true in all material respects on and as of the Amendment Effective
Date.
SUBPART 3.1.4. Joinder Agreement. The Agent shall have received an
executed joinder agreement from Alamac Sub Holdings, Inc. substantially in the
form of Exhibit 3.1.4 hereto, pursuant to which Alamac Sub Holdings, Inc. joins
the Amended Credit Agreement as a Guarantor.
SUBPART 3.1.5. Documentation. The Agent and its counsel shall have
received all information, and such counterpart originals or such certified or
other copies of such originals, as the Agent may reasonably request, and all
legal matters incident to the transactions contemplated by this Amendment shall
be satisfactory to the Agent.
PART IV
MISCELLANEOUS
SUBPART 4.1 Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.2 Instrument Pursuant to Existing Credit Agreement. This
Amendment is a document executed pursuant to the Existing Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Existing Credit
Agreement.
SUBPART 4.3 Notes and Credit Documents. The Borrower hereby confirms
and agrees that the Notes and the other Credit Documents are, and shall continue
to be, in full force and effect, and hereby ratifies and confirms in all
respects its obligations thereunder, except that, upon the effectiveness of, and
on and after the date of, this Amendment, all references in each Note and each
Credit Document to the "Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Existing Credit Agreement shall mean the Amended
Credit Agreement.
<PAGE> 5
SUBPART 4.4 Representations and Warranties. Each Credit Party hereby
represents and warrants that (i) each Credit Party that is party to this
Amendment: (a) has the requisite corporate power and authority to execute,
deliver and perform this Amendment, as applicable and (b) is duly authorized to,
and has been authorized by all necessary corporate action, to execute, deliver
and perform this Amendment, (ii) the Borrower has no claims, counterclaims,
offsets, or defenses to the Credit Documents and the performance of its
obligations thereunder, or if the Borrower has any such claims, counterclaims,
offsets, or defenses to the Credit Documents or any transaction related to the
Credit Documents, the same are hereby waived, relinquished and released in
consideration of the Lenders' execution and delivery of this Amendment, (iii)
the representations and warranties contained in Section 7 of the Existing Credit
Agreement are, subject to the limitations set forth therein, true and correct in
all material respects on and as of the date hereof as though made on and as of
such date (except for those which expressly relate to an earlier date) and (iv)
no Default or Event of Default exists under the Existing Credit Agreement on and
as of the date hereof or will occur as a result of the transactions contemplated
hereby.
SUBPART 4.5 Acknowledgment of Guarantors. The Guarantors acknowledge
and consent to all of the terms and conditions of this Amendment and agree that
this Amendment and all documents executed in connection herewith do not operate
to reduce or discharge the Guarantors' obligations under the Amended Credit
Agreement or the other Credit Documents. The Guarantors further acknowledge and
agree that the Guarantors have no claims, counterclaims, offsets, or defenses to
the Credit Documents and the performance of the Guarantors' obligations
thereunder or if the Guarantors did have any such claims, counterclaims, offsets
or defenses to the Credit Documents or any transaction related to the Credit
Documents, the same are hereby waived, relinquished and released in
consideration of the Lenders' execution and delivery of this Amendment.
SUBPART 4.6 Counterparts, Effectiveness, Etc. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SUBPART 4.7 Governing Law; Entire Agreement. THIS AMENDMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
SUBPART 4.8 Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the day and year
first above written.
ALAMAC KNIT FABRICS, INC.
ATTEST:
By:/s/ Christopher N. Zodorov By: /s/ Morgan M. Schuessler
-------------------------- -------------------------
Morgan M. Schuessler
Title: Vice President &
Title: V.P. & Secretary Treasurer
----------------------- ----------------------
(Corporate Seal)
ALAMAC ENTERPRISES INC.
By: /s/ Edward J. Jones
-------------------------
Edward J. Jones
Title: Vice President &
Assistant Treasurer
----------------------
AIH INC.
By: /s/ Edward J. Jones
-------------------------
Edward J. Jones
Title: Vice President &
Assistant Treasurer
----------------------
[Signatures Continue]
<PAGE> 7
NATIONSBANK, N.A., as Agent for the Lenders
and individually as a Lender
By: /s/ Joesph R. Netzel
----------------------------------------
Title: JOESPH R. NETZEL
Vice President
------------------------------------
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/ Courtenay R. Wood
----------------------------------------
Title: Vice President
-------------------------------------
SCOTIABANC INC.
By: /s/ William E. Zarrett
----------------------------------------
Title: William E. Zarrett
Senior Relationship Manager
------------------------------------
[Signatures Continue]
<PAGE> 8
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Douglas L. Strickland
---------------------------
Title: Vice President
------------------------
SUNTRUST BANK, ATLANTA
By: /s/ C. Wes Burton
---------------------------
Title: C. Wes Burton, Jr.
Vice President
------------------------
By: /s/ Bradley J. Staples
---------------------------
Title: Bradley J. Staples
Assistant Vice
President
-------------------------
AMSOUTH BANK OF ALABAMA
By: /s/ Alan D. Lott
---------------------------
Title: Vice President
------------------------
ABN AMRO BANK, N.V., Atlanta
Agency
By: /s/ Steven L. Hissman
---------------------------
Title: VICE PRESIDENT
------------------------
By: /s/ L.K. Kelly
---------------------------
Title: GROUP VICE PRESIDENT
------------------------
<PAGE> 9
CONSENT
This Consent (the "Consent"), dated as of May 22, 1997, is delivered
in connection with the Amendment to Credit Agreement dated as of the date hereof
(the "Amendment"), executed by Alamac Knit Fabrics, Inc., the Guarantors party
thereto, the banking institutions parties thereto (the "Lenders"), and
NATIONSBANK, N.A., as Agent (the "Agent"). Unless otherwise defined, terms used
herein have the meanings provided in the Amended Credit Agreement (as defined in
the Amendment).
Each of the undersigned, as a party to one or more Credit Documents
hereby acknowledges the execution and delivery of the Amendment, and hereby
confirms and agrees that each Credit Document to which it is a party is, and
shall continue to be, in full force and effect, and hereby ratifies and confirms
in all respects its obligations thereunder.
This Consent may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original and all of which shall
constitute together but one and the same instrument.
ALAMAC ENTERPRISES INC.
By: /s/ Edward J. Jones
------------------------
Title: Edward J. Jones
Vice President &
Assistant Treasurer
---------------------
AIH INC.
By: /s/ Edward J. Jones
------------------------
Title: Edward J. Jones
Vice President &
Assistant Treasurer
---------------------
<PAGE> 10
EXHIBIT 3.1.4
JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of this ____ day of
May, 1997, by and between ALAMAC SUB HOLDINGS, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Guarantor"), and
NATIONSBANK, N.A., in its capacity as agent (the "Agent") under that certain
Credit Agreement (as it may be amended, modified, extended or restated from time
to time, the "Credit Agreement"), dated as of December 4, 1995, and amended as
of March 22, 1996 and as of even date herewith, by and among Alamac Knit Fabrics
Inc. (the "Borrower"), AIH Inc. and Alamac Enterprises Inc. as other Credit
Parties, the Agent, and the financial institutions appearing on the signature
pages thereof (the "Lenders"). All of the defined terms in the Credit Agreement
are incorporated herein by reference.
The Guarantor owns all of the outstanding capital stock of AIH Inc. and
desires to become a Credit Party to the Credit Agreement and to guaranty the
Credit Party Obligations.
Accordingly, the Guarantor hereby agrees as follows with the Agent, for
the benefit of the Lenders:
1. The Guarantor hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Guarantor will be deemed to be a party to the
Credit Agreement and a "Guarantor" for all purposes of the Credit Agreement, and
shall have all of the obligations of a Guarantor thereunder as if it had
executed the Credit Agreement. The Guarantor hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Credit Agreement, including without limitation (i) all of the
representations and warranties of the Credit Parties set forth therein, (ii) all
of the affirmative and negative covenants set forth therein and (iii) all of the
other undertakings and waivers by Credit Parties set forth therein.
2. The Guarantor represents and warrants that Schedule A attached
hereto identifies the Subsidiary's principal place of business and each location
where it maintains any assets. The Guarantor represents and warrants that it
owns no assets other than its capital stock in AIH Inc.
3. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
<PAGE> 11
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be duly
executed by its authorized officers, and the Agent, for the benefit of itself
and the Lenders, has caused the same to be accepted by its authorized officer,
as of the day and year first above written.
ALAMAC SUB HOLDINGS, INC.
By:
-----------------------
Title:
--------------------
ATTEST:
By
----------------------------
Title
-------------------------
(Corporate Seal)
Acknowledged and accepted:
NATIONSBANK, N.A., as Agent
By
-------------------------
Title
----------------------
<PAGE> 12
SCHEDULE 1.1 B
All those tracts or parcels of land, together with all improvements located
thereon, lying and being in the City of Whitmire, Newberry County, South
Carolina, and being more particularly described as follows.
Being at an iron pin (P.O.B.#3) at the southwest intersection of Central Avenue
(S-36-395) and Washington Street (S-36-469); thence leaving said intersection
and running with the western right of way of Washington Street South 26 degrees
24 minutes 08 seconds East, 254.39 feet to an iron pin at the northwest
intersection of Washington Street and Herron Avenue (S-36-216), thence leaving
said intersection and running with the northern right of way of Herron Avenue
South 63 degrees 37 minutes 52 seconds West, 367.62 feet to an iron pin at the
northwestern intersection with Spring Street; thence leaving said intersection
and running with the western right of way of Spring Street South 27 degrees 38
minutes 05 seconds East, 365.28 feet to an iron pin at the northwestern
intersection with Sinclair Avenue (S-36-324); thence leaving said intersection
and running with the northern right of way of Sinclair Avenue South 57 degrees
15 minutes 54 seconds West, 241.96 feet to an iron pin and being the
termination of said Sinclair Avenue; thence crossing said termination of right
of way of Sinclair Avenue South 27 degrees 38 minutes 05 seconds East, 42.28
feet to an iron pin on line of other property of West Point-Pepperell, Inc.,
and corner Lot 1, Village Subdivision; thence running along line of other
property of West Point-Pepperell, Inc., South 56 degrees 54 minutes 05 seconds
West, 292.40 feet to an old iron pin at the rear corner of Lot 7, Village
Subdivision; thence running along the line of said Lot 7 South 63 degrees 40
minutes 50 seconds West, 145.17 feet to an old iron pin on the eastern right
of way of Grant Street (S-36-323); thence running with the eastern right of way
of said Grant Street North 26 degrees 26 minutes 49 seconds West, 210.44 feet
to an old iron pin corner of Lot 6, Village Subdivision; thence leaving said
eastern right of way of Grant Street and running along lines of Lots 6, 5, 4,
3, 2 and 1, Village Subdivision, the following courses and distances; North 63
degrees 09 minutes 14 seconds East, 145.10 feet to an old iron pin; thence
North 26 degrees 28 minutes 03 seconds West, 519.07 feet to an old iron pin on
the southern right of way of Central Avenue (S.C. Highway No. 66); thence
running along the southern right of way of Central Avenue the following courses
and distances: North 63 degrees 20 minutes 57 seconds East, 270.00 feet to an
iron pin; thence South 26 degrees 24 minutes 08 seconds East, 12.28 feet to an
iron pin; thence North 63 degrees 20 minutes 57 seconds East, 620.59 feet to
the point of beginning, containing 10.996 acres or 478,980 square feet.
ALSO
Beginning at an iron pin (P.O.B.#4) at the southeast intersection of the rights
of way of Herron Avenue (S-36-216) and Spring Street; thence leaving said
intersection and running with the southern right of way of Herron Avenue North
63 degrees 37 minutes 52 seconds East, 183.52 feet to an old iron pin corner of
Lot 38, Village Subdivision; thence leaving said southern right of way of Herron
Avenue and running along line of said Lot 38, South 26 degrees 29 minutes 07
seconds East, 147.80 feet to an old iron pin on rear line of Lot 34, Village
Subdivision; thence running along lines of Lots 34, 33 and 31 the following
courses and distances: South 57 degrees 19 minutes 40 seconds West, 67.40 feet
to an old iron pin; thence South 26 degrees 28 minutes 57 seconds East, 4.82
feet to an old iron pin; thence South
<PAGE> 13
63 degrees 36 minutes 00 seconds West, 113.30 feet to an old iron pin on the
eastern right of way of Spring Street; thence running with the eastern right of
way of Spring Street North 27 degrees 38 minutes 05 seconds West, 160.12 feet to
the point of beginning, containing 0.655 acres or 28,542 square feet.
ALSO
Beginning at an iron pin (P.O.B. #1) at the northwest intersection of the
rights of way of Central Avenue (S.C. Highway No. 66) and Park Street (S.C.
Highway No. 66); thence leaving said intersection and running with the northern
right of way of Central Avenue the following courses and distances: South 63
degrees 41 minutes 23 seconds West, 170.0 feet to an iron pin; thence South 21
degrees 34 minutes 18 seconds West, 32.15 feet to an iron pin; thence South 63
degrees 00 minutes 56 seconds West, 150.0 feet to an iron pin corner of other
property of West, Point-Pepperrell, Inc.: thence leaving said northern right of
way of Central Avenue and running along line of other property of West
Point-Pepperell, Inc., North 26 degrees 25 minutes 37 seconds West, 373.30 feet
to an iron pin; thence continue along property lines of West Point-Pepperell,
Inc. and Lot 91, Village Subdivision, North 63 degrees 34 minutes 46 seconds
East, 343.90 feet to an old iron pin on the western right of way of Park Street
(S.C. Highway No. 66); thence running with the western right of way of said Park
Street South 26 degrees 23 minutes 05 seconds East, 19.91 feet to an old iron
pin corner of Lot 90, Village Subdivision; thence leaving said western right of
way of Park Street and running with the property lines of said Lot 90 the
following courses and distances: South 63 degrees 34 minutes 23 seconds West,
119.87 feet to an old iron pin; thence South 28 degrees 46 minutes 35 seconds
East, 93.08 feet to an old iron pin; thence North 63 degrees 34 minutes 23
East, 116.05 feet to an iron pin on the right of way of Park Street
(S.C. Highway No. 66); thence running with the western right of way of Park
Street South 26 degrees 25 minutes 37 seconds East, 237.73 feet to the point of
beginning, containing 2.597 acres or 113,118 square feet.
ALSO
Beginning at an iron pin (P.O.B. #2) at the northeast intersection of the
rights of way of Central Avenue (S-36-395) and Park Street (S.C. Highway No.
66); thence leaving said intersection and running with the eastern right of way
of said Park Street North 26 degrees 25 minutes 37 seconds West, 187.35 feet to
an iron pin at the southeast intersection of said Park Street and Highway
S-36-913; thence leaving said intersection and running with the southern right
of way of Highway S-36-913 North 53 28 minutes 39 seconds East, 131.88 feet to
an old iron pin corner of Lot 83, Village Subdivision; thence leaving said
Highway S-36-913 and running along lines of said Lot 83 and other property of
West Point-Pepperell, Inc. South 39 degrees 23 minutes 21 seconds East, 248.77
feet to an iron pin on the northern right of way of Central Avenue (S-36-395);
thence running with the northern right of way of Central Avenue the following
courses and distances: South 66 degrees 53 minutes 51 seconds West, 46.07 feet
to an iron pin; thence South 81 degrees 17 minutes 42 seconds West, 95.92 feet
to an iron pin; thence South 63 degrees 41 minutes 23 seconds West, 48.28 feet
to the point of beginning, containing 0.770 acres or 33,560 square feet.
The above described parcels are more fully shown on three plats entitled
"Survey for West Point-Pepperell, Inc.," prepared by Dalton & Neves Company,
Inc., Engineers, Greenville, South Carolina, dated June 1993.
<PAGE> 14
This being part of that property conveyed to J.P. Stevens & Co., Inc., by
Aragon-Baldwin Mills by deed dated August 1946 and recorded in the office of
the Clerk of Court of Newberry County, South Carolina, in Deed Book 47 at Page
66 on September 11, 1946; and part of that property conveyed to West
Point-Pepperell, Inc. (predecessor to WestPoint Stevens Inc.) by J.P. Stevens &
Co., Inc. by General Warranty Deed dated June 30, 1993, and recorded in the
office of the Clerk of Court of Newberry County, South Carolina in Deed Book
378 at Page 224, on July 7, 1993; and all of that property Alamac Knit Fabrics,
Inc. by WestPoint Stevens Inc. by deed dated December 5, 1994, and recorded in
the office of the Clerk of Court of Newberry County, South Carolina, in Deed
Book 412 at Page 225 on April 7, 1995.
<PAGE> 1
EXHIBIT 10.48
THIRD AMENDMENT AGREEMENT
THIS THIRD AMENDMENT AGREEMENT, dated as of May 22,1997 (the
"Amendment"), is among WestPoint Stevens Inc., a Delaware corporation (the
"Borrower"), NationsBank, N.A. (formerly known as NationsBank of North Carolina,
N.A. and referred to herein as "NationsBank"), The Bank of New York, 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. (collectively, the "Banks"), and NationsBank in its
capacities as the administrative agent for the Banks (the "Administrative Agent"
or the "Agent") and as trustee ("Trustee") for the Secured Parties (as hereafter
defined).
WITNESSETH:
WHEREAS, pursuant to that certain Amended and Restated Credit
Agreement, dated as of November 23, 1994, as amended by that certain Amendment
Agreement dated as of December 4, 1995 and that certain Second Amendment and
Waiver Agreement dated as of January 23, 1997 (the "Existing Credit Agreement"),
among the parties hereto, the Banks have agreed to make loans to the Borrower;
WHEREAS, the Borrower, the Banks and the Agent desire to make certain
additional amendments to the Existing Credit Agreement;
NOW, THEREFORE, based upon the foregoing, and for good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.
1
<PAGE> 2
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment Effective
Date, the Existing Credit Agreement is hereby amended in accordance with this
Part II. Except as so amended, the Existing Credit Agreement shall continue in
full force and effect.
SUBPART 2.1 Amendments to the Introduction. The first paragraph of the
Existing Credit Agreement is amended to read in its entirety as follows:
This Amended and Restated Credit Agreement, dated as of
November 23, 1994, as amended as of December 4, 1995 pursuant to that
certain Amendment Agreement, as further amended as of January 23, 1997
pursuant to that certain Second Amendment and Waiver Agreement, and as
further amended as of May 22, 1997 pursuant to that Third Amendment
Agreement, is entered into by and among WestPoint Stevens Inc., a
Delaware corporation (the "Borrower"), NationsBank, N.A. (formerly
known as NationsBank of North Carolina, N.A. and referred to herein as
"NationsBank"), The Bank of New York, The First National Bank of
Boston, The First National Bank of Chicago, Scotiabank Inc., Wachovia
Bank of Georgia, N.A., and SunTrust Bank, Atlanta (collectively, other
than NationsBank, the "Co-Agent Banks"), AmSouth Bank of Alabama, ABN
AMRO Bank, N.V. and any other lending institutions, if any, listed on
the signature pages hereof (together with NationsBank, the Co-Agent
Banks and any Assignee (as hereinafter defined) pursuant to the terms
of this Agreement, collectively, "Banks" and each individually, a
"Bank"), and NationsBank, as the administrative agent for the Banks
(the "Administrative Agent" or the "Agent").
SUBPART 2.2 New Definitions Added to Article I. Article I of the
Existing Credit Agreement is hereby amended by inserting, in the alphabetically
appropriate places, the following definitions:
"Alamac Sub Holdings" means Alamac Sub Holdings, Inc., a
Delaware corporation, the owner of all of the outstanding capital stock
of AIH, Inc., and a wholly-owned subsidiary of Alamac Holdings.
"Whitmire Facility" means that certain real property, building
and other assets of Alamac located in Whitmire, South Carolina, as more
particularly described in Schedule 1.1(c).
"Alamac Amendment" means that certain Second Amendment
Agreement to the Alamac Credit Agreement, dated as of May 22, 1997.
SUBPART 2.3 Amendment of Existing Definitions. Article I is further
amended by deleting in its entirety the existing definitions of the following
terms and replacing such terms, in the appropriate alphabetical places, with the
following new definitions:
2
<PAGE> 3
"Alamac Entities" means collectively, Alamac, Alamac
Holdings, Alamac Sub Holdings, AIH and Alamac Enterprises.
"Maximum Restricted Payment Amount" means the sum of (i)
$15,000,000, plus (ii) 25% of Consolidated Net Income (Consolidated
Subsidiaries) during the period from January 1, 1994 through December
31, 1996, plus (iii) 50% of Consolidated Net Income (Consolidated
Subsidiaries) during the period from January 1, 1997 through December
31, 2000, plus (iv) the Net Cash Proceeds received from the sale of
assets described on Schedule 5.2(m) hereto (including without
limitation Net Cash Proceeds from the sale of the Whitmire Facility not
exceeding an aggregate amount of $25,000,000.00), plus (v) the Net Cash
Proceeds received from the exercise of stock warrants or options by
employees or former employees of the Borrower in respect of the Capital
Stock of the Borrower from and after January 1, 1997, plus (vi) the
amount, not to exceed in the aggregate $15,000,000, of Available Cash
(as such term is defined in the Alamac Credit Agreement, as amended by
the Alamac Amendment) used by Alamac to purchase the Capital Stock of
the Borrower.
SUBPART 2.4 Amendment to Section 4.1(g). Section 4.1(g) is amended in
its entirety so that such Section now reads as follows:
(g) Ownership of Property. Each Representation Party has good
and marketable title to, or a subsisting leasehold interest in, all
material items of real and personal property used in its operations
(except as to leasehold interests) free and clear of all Liens, except
Permitted Liens. Substantially all items of real and material personal
property owned by, leased to or used by each Representation Party are
in adequate operating condition and repair, ordinary wear and tear
excepted, are free and clear of any known defects except such defects
as do not substantially interfere with the continued use thereof in the
conduct of normal operations, and are able to serve the function for
which they are currently being used. The items of real and personal
property owned by, leased to or used by each Representation Party
constitute all of the assets used in the conduct of such Representation
Party's business as presently conducted, and neither this Agreement nor
any other Basic Agreement, nor any transaction contemplated under any
such agreement, will affect any right, title or interest of any
Representation Party in and to any of such assets in a manner that
would have or is reasonably likely to have a material adverse effect on
the condition (financial or otherwise), properties, business or results
of operations of the Representation Parties taken as a whole. To the
knowledge of the Borrower, there are no actual, threatened or alleged
defaults of a material nature with respect to any leases of real
property under which any Representation Party is lessee or lessor. The
Borrower and its Subsidiaries have granted mortgages to secure the
Obligations on all parcels of real estate material to the operations of
the Borrower or any Material Borrower Subsidiary, except for (i) the
Excluded Real Property and (ii) the property listed on Schedule 5.2 (m)
other than the Whitmire Facility.
SUBPART 2.5 Amendment to Section 5.2(h). Section 5.2(h) is amended in
its entirety so that such Section now reads as follows:
3
<PAGE> 4
(h) Mergers; Consolidations. Merge or consolidate with or into
any Person, except that (i) any Primary Subsidiary of the Borrower may
merge into or consolidate with the Borrower so long as the Borrower is
the surviving corporation (ii) any Primary Subsidiary may merge with or
into or consolidate with any direct or indirect wholly-owned Primary
Subsidiary of the Borrower so long as such wholly-owned Primary
Subsidiary is the surviving corporation, and (iii) any Restricted
Acquisition Subsidiary may merge with or into or consolidate with any
other Restricted Acquisition Subsidiary; provided, however, Alamac
shall not be merged with the Borrower or any other Subsidiary of the
Borrower unless the Borrower or a Primary Subsidiary of the Borrower is
the surviving corporation.
SUBPART 2.6 Amendment to Section 5.2(m). Section 5.2(m) is amended in
its entirety so that such Section now reads as follows:
(m) Asset Sales. Sell, lease, assign, transfer or otherwise
dispose of (i) any Capital Stock of any Material Borrower Subsidiary or
(ii) any other asset or assets (including Capital Stock of another
Person or any Subsidiary of the Borrower); provided, however, that the
Borrower and its Subsidiaries may (x) dispose of (i) such other assets
in the ordinary course of business consistent with past practices, (ii)
the power distribution system located in West Point, Georgia, (iii) the
Excluded Real Property, (iv) the assets described on Schedule 5.2(m)
except for the Whitmire Facility, and (v) such other assets in other
transactions provided that the aggregate consideration received in all
such other transactions does not exceed $100,000,000 in the aggregate
and (y) sell, assign, transfer, contribute or otherwise dispose of,
Program Receivables to Finco pursuant to the Receivables Securitization
Facility.
SUBPART 2.7 Amendments to Section 5.2(y). Section 5.2(y) is amended in
its entirety so that such Section now reads as follows:
(y) Inactive Subsidiaries; Clupak, Inc.; Alamac. (i) Transfer
any asset or assets (including Capital Stock) with an aggregate value
in excess of $10,000 to any Inactive Subsidiary or permit any Inactive
Subsidiary to engage in any business activity unless such Inactive
Subsidiary is then a Grantor under the Collateral Trust Agreement, (ii)
transfer any asset or assets (including Capital Stock) with an
aggregate value in excess of $250,000 to Clupak, Inc., a Delaware
corporation, (iii) transfer any asset or assets (including Capital
Stock) to Alamac except for sales or transfers of assets in the
ordinary course of business on terms no less favorable than those which
would have been obtained in a comparable transaction with an
unaffiliated third party, or (iv) transfer any asset or assets from the
Borrower or any Primary Subsidiary to any Restricted Acquisition
Subsidiary except for (A) sales of assets in the ordinary course of
business on terms no less favorable than those which would have been
obtained in a comparable transaction with an unaffiliated third party,
and (B) transfers otherwise permitted by this Agreement.
SECTION 2.8 Addition of Schedule 1.1(c). Schedule 1.1(c) attached
hereto is hereby made a part of the Amended Credit Agreement.
4
<PAGE> 5
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Amendment Effective Date. This shall be and become
effective on such date (the "Amendment Effective Date") when all of the
conditions set forth in this Subpart 3.1 shall have been satisfied, and
thereafter, this Amendment shall be known, and may be referred to, as the "Third
Amendment Agreement."
SUBPART 3.1.1 Execution of Counterparts. The Agent shall have received
counterparts of this Amendment, each of which shall have been duly executed on
behalf of the Borrower, the Required Banks and the Agent.
SUBPART 3.1.2. Closing Certificate. The Agent shall have received a
certificate from the Borrower certifying that (i) no Default or Event of Default
exists as of the Amendment Effective Date, and (ii) the representations and
warranties of the Borrower made in or pursuant to the Loan Documents are true in
all material respects on and as of the Amendment Effective Date.
SUBPART 3.1.3. Documentation. The Agent and its counsel shall have
received all information, and such counterpart originals or such certified or
other copies of such originals, as the Agent may reasonably request, and all
legal matters incident to the transactions contemplated by this Amendment shall
be satisfactory to the Agent.
PART IV
MISCELLANEOUS
SUBPART 4.1 Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.2 Instrument Pursuant to Existing Credit Agreement. This
Amendment is a document executed pursuant to the Existing Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Existing Credit
Agreement.
SUBPART 4.3 Notes and Loan Documents. The Borrower hereby confirms and
agrees that the Notes and the other Loan Documents are, and shall continue to
be, in full force and effect, and hereby ratifies and confirms in all respects
its obligations thereunder, except that, upon the effectiveness of, and on and
after the date of, this Amendment, all references in each Note and each other
Loan Document to the "Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Existing Credit Agreement shall mean the Amended
Credit Agreement.
SUBPART 4.4. Representations and Warranties. The Borrower hereby
represents and warrants that (i) it has the requisite corporate power and
authority to execute, deliver and perform this Amendment, (ii) it is duly
authorized to, and has been authorized by all necessary
5
<PAGE> 6
corporate action, to execute, deliver and perform this Amendment, (iii) it has
no claims, counterclaims, offsets, or defenses to the Loan Documents and the
performance of its obligations thereunder, or if the Borrower has any such
claims, counterclaims, offsets, or defenses to the Loan Documents or any
transaction related to the Loan Documents, the same are hereby waived,
relinquished and released in consideration of the Banks' execution and delivery
of this Amendment, (iv) the representations and warranties contained in Article
IV of the Existing Credit Agreement are, subject to the limitations set forth
therein, true and correct in all material respects on and as of the date hereof
as though made on and as of such date (except for those which expressly relate
to an earlier date) and (v) no Event of Default or Unmatured Event of Default
exists under the Existing Credit Agreement on and as of the date hereof or will
occur as a result of the transactions contemplated hereby.
SUBPART 4.5. Acknowledgment of Borrower Subsidiaries. Each of the
undersigned Borrower Subsidiaries, as parties to the Restated Guaranties and the
Collateral Documents, hereby (a) acknowledges, agrees to, and joins in the
execution and delivery of this Amendment; (b) ratifies and confirms in all
respects its respective obligations thereunder, except that, upon the
effectiveness of, and on and after the date of, the Amendment, all references in
the Collateral Documents and the Restated Guaranties to the "Restated Credit
Agreement," "thereunder," "thereof" or words of like import referring to the
Existing Credit Agreement (as defined in this Amendment) shall mean the Amended
Credit Agreement (as defined in this Agreement); and (c) agrees that it has no
claims, counterclaims, offsets, or defenses to the Restated Guaranties, the
Collateral Documents and the performance of its obligations thereunder (or if
such Borrower Subsidiary did have any such claims, counterclaims, offsets or
defenses to the Restated Guaranties, the Collateral Documents or any transaction
related thereto, the same are hereby waived, relinquished and released in
consideration of the Banks' execution and delivery of this Amendment.
SUBPART 4.6 Counterparts, Effectiveness, Etc. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SUBPART 4.7 Governing Law; Entire Agreement. THIS AMENDMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
SUBPART 4.8 Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the day and year
first above written.
WESTPOINT STEVENS INC.
ATTEST:
By: /s/ Christopher N. Zodrow By: /s/ Morgan M. Scheussler
------------------------------ -------------------------
Title: Exec. V.P.-Finance
Title: Vice President & Secretary & CFO
--------------------------- ---------------------
(Corporate Seal)
NATIONSBANK, N.A.,
in its individual capacity,
as Agent and as Trustee
By: /s/ Joesph R. Netzel
-------------------------
Title: JOESPH R. NETZEL
----------------------
Vice President
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
-------------------------
Title: STEPHEN Y. McGEHEE
----------------------
Director
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Courtenay R. Wood
-------------------------
Title: Vice President
----------------------
7
<PAGE> 8
SCOTIABANC INC.
By: /s/ William E. Zarrett
---------------------------
Title: William E. Zarrett
------------------------
Senior Relationship
Manager
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Douglas L. Strickland
---------------------------
Title: Vice President
------------------------
SUNTRUST BANK, ATLANTA
By: /s/ C. Wes Burton
---------------------------
Title: C. Wes Burton, Jr.
Vice President
------------------------
By: /s/ Bradley J. Staples
---------------------------
Title: Bradley J. Staples
Assistant Vice
President
------------------------
AMSOUTH BANK OF ALABAMA
By: /s/ Alan D. Lott
---------------------------
Title: Vice President
------------------------
ABN AMRO BANK, N.V.
By: /s/ Steven J. Hissman
---------------------------
Title: VICE PRESIDENT
------------------------
By: /s/ L.K. Kelley
---------------------------
Title: GROUP VICE PRESIDENT
------------------------
8
<PAGE> 9
BORROWER SUBSIDIARIES: 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
------------------------
WESTPOINT-PEPPERELL
ENTERPRISES, INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: Treasurer
------------------------
J.P. STEVENS ENTERPRISES, INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: Treasurer
------------------------
9
<PAGE> 10
WESTPOINT STEVENS (CANADA)INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: Treasurer
------------------------
ALAMAC HOLDINGS INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: President
------------------------
AIH INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: President
------------------------
ALAMAC ENTERPRISES INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: President
------------------------
ALAMAC SUB HOLDINGS INC.
By: /s/ Morgan M. Schuessler
---------------------------
Title: President
------------------------
10
<PAGE> 11
SCHEDULE 1.1 C
All those tracts or parcels of land, together with all improvements located
thereon, lying and being in the City of Whitmire, Newberry County, South
Carolina, and being more particularly described as follows:
Begin at an iron pin (P.O.B.#3) at the southwest intersection of Central Avenue
(S-36-395) and Washington Street (S-36-469); thence leaving said intersection
and running with the western right of way of Washington Street South 26 degrees
24 minutes 08 seconds East, 254.39 feet to an iron pin at the northwest
intersection of Washington Street and Herron Avenue (S-36-216); thence leaving
said intersection and running with the northern right of way of Herron Avenue
South 63 degrees 37 minutes 52 seconds West, 367.62 feet to an iron pin at the
northwestern intersection with Spring Street; thence leaving said intersection
and running with the western right of way of Spring Street South 27 degrees 38
minutes 05 seconds East, 365.28 feet to an iron pin at the northwestern
intersection with Sinclair Avenue (S-36-324); thence leaving said intersection
and running with the northern right of way of Sinclair Avenue South 57 degrees
15 minutes 54 seconds West, 241.96 feet to an iron pin and being the
termination of said Sinclair Avenue; thence crossing said termination of right
of way of Sinclair Avenue South 27 degrees 38 minutes 05 seconds East, 42.28
feet to an iron pin on line of other property of West Point-Pepperell, Inc.,
and corner Lot 1, Village Subdivision; thence running along line of other
property of West Point-Pepperell, Inc., South 56 degrees 54 minutes 05 seconds
West, 292.40 feet to an old iron pin at the rear corner of Lot 7, Village
Subdivsion; thence running along the line of said Lot 7 South 63 degrees 40
minutes 50 seconds West, 145.17 feet to an old iron pin on the eastern right of
way of Grant Street (S-36-323); thence running with the eastern right of way of
said Grant Street North 26 degrees 26 minutes 49 seconds West, 210.44 feet to
an old iron pin corner of Lot 6, Village Subdivision; thence leaving said
eastern right of way of Grant Street and running along lines of Lots 6, 5, 4,
3, 2, and 1, Village Subdivision, the following courses and distances; North 63
degrees 09 minutes 14 seconds East, 145.10 feet to an old iron pin; thence North
26 degrees 28 minutes 03 seconds West on the southern right of 519.07 feet to
an old iron pin on the southern right of way Central Avenue (S.C. Highway No.
66); thence running along the southern right of way of Central Avenue the
following courses and distances; North 63 degrees 20 minutes 57 seconds East,
270.00 feet to an iron pin; thence South 26 degrees 24 minutes 08 seconds
East, 12.12 feet to an iron pin; thence North 63 degrees 20 minutes 57
seconds East, 620.59 feet to the point of beginning, containing 10.996
acres or 478,980 square feet.
ALSO
Beginning at an iron pin (P.O.B. #4) at the southeast intersection of the
rights of way of Herron Avenue (S-36-216) and Spring Street; thence leaving
said intersection and running with the southern right of way of Herron Avenue
North 63 degrees 37 minutes 52 seconds East, 183.52 feet to an old iron pin
corner of Lot 38, Village Subdivision; thence leaving said southern right of
way of Herron Avenue and running along line of said Lot 38, South 26 degrees 29
minutes 07 seconds East, 147.80 feet to an old iron pin on rear line of Lot 34,
Village Subdivision; thence running along lines of Lots 34, 33 and 31 the
following courses and distances: South 57 degrees 19 minutes 40 seconds West,
67.40 feet to an old iron pin; thence South 26 degrees 28 feet 57 inches East,
4.82 feet to an old iron pin; thence South
<PAGE> 12
63 degrees 36 minutes 00 seconds West, 113.30 feet to an old iron pin on the
eastern right of way of Spring Street; thence running with the eastern right of
way of Spring Street Street North 27 degrees 38 minutes 05 seconds West, 160.12
feet to the point of beginning, containing 0.655 acres or 28,542 square feet.
ALSO
Beginning at an iron pin (P.O.B. #1 ) at the northwest intersection of the
rights of way of Central Avenue (S.C. Highway No. 66) and Park Street (S.C.
Highway No. 66); thence leaving said intersection and running with the northern
right of way of Central Avenue the following courses and distances: South 63
degrees 41 minutes 23 seconds West, 170.0 feet to an iron pin; thence South 21
degrees 34 minutes 18 seconds West, 32.15 feet to an iron pin; thence South 63
degrees 00 minutes 56 seconds West, 150.0 feet to an iron pin corner of other
property of West Point-Pepperell, Inc.; thence leaving said northern right of
way of Central Avenue and running along line of other property of West
Point-Pepperrell, Inc., North 26 degrees 25 minutes 37 seconds West, 373.30
feet to an iron pin; thence continue along property lines of West
Point-Pepperell, Inc. and Lot 91, Village Subdivision, North 63 degrees 34
minutes 46 seconds East, 343.90 feet to an old iron pin on the western right of
way of Park Street (S.C. Highway No. 66); thence running with the western right
of way of said Park Street South 26 degrees 23 minutes 05 seconds East, 19.91
feet to an old iron pin corner of Lot 90, Village Subdivision; thence leaving
said western right of way of Park Street and running with the property lines of
said Lot 90 the following courses and distances: South 63 degrees 34 minutes 23
seconds West, 119.87 feet to an old iron pin; thence South 28 degrees 46
seconds 35 minutes East, 93.08 feet to an old iron pin; thence North 63 degrees
34 minutes 23 seconds East, 116.05 feet to an iron pin on the right of way of
Park Street (S.C.Highway No. 66); thence running with the western right of way
of Park Street South 26 degrees 25 minutes 37 seconds East, 237.73 feet to the
point of beginning, containing 2.597 acres or 113,118 square feet.
ALSO
Beginning at an iron pin (P.O.B. #2) at the northeast intersection of the
rights of way of Central Avenue (S-36-395) and Park Street (S.C. Highway No.
66); thence leaving said intersection and running with the eastern right of way
of said Park Street North 26 degrees 25 feet 37 seconds West, 187.35 feet to an
iron pin at the southeast intersection of said Park Street and Highway
S-36-913; thence leaving said intersection and running with the southern right
of way of Highway S-36-913 North 53 degrees 28 minutes 39 seconds East, 131.88
feet to an old iron pin corner of Lot 83, Village Subdivision; thence leaving
said Highway S-36-913 and running along lines of said Lot 83 and other property
of West Point-Pepperell, Inc. South 39 degrees 23 minutes 21 seconds East,
248.77 feet to an iron pin on the northern right of way of Central Avenue
(S-36-395); thence running with the northern right of way of Central Avenue the
following courses and distances: South 66 degrees 53 minutes 51 seconds West,
46.07 feet to an iron pin; thence South 81 degrees 17 minutes 42 seconds West,
95.92 feet to an iron pin; thence South 63 degrees 41 minutes 23 seconds West,
48.28 feet to the point of beginning, containing 0.770 acres or 33,560 square
feet.
The above described parcels are more fully shown on three plats entitled
"Survey for West Point-Pepperell, Inc." prepared by Dalton & Neves Company,
Inc., Engineers, Greenville, South Carolina, dated June 1993.
<PAGE> 13
This being part of that property conveyed to J.P. Stevens & Co., Inc., by
Aragon-Baldwin Mills by deed dated August 1946 and recorded in the office of
the Clerk of Court of Newberry County, South Carolina, in Deed Book 47 at Page
66 on September 11, 1946; and part of that property conveyed to West
Point-Pepperell, Inc. (predecessor to WestPoint Stevens Inc.) by J.P. Stevens &
Co., Inc. by General Warranty Deed dated June 30, 1993, and recorded in the
office of the Clerk of Court of Newberry County, South Carolina, in Deed Book
378 at Page 224, on July 7, 1993; and all of that property Alamac Knit Fabrics,
Inc. by WestPoint Stevens Inc. by deed dated December 5, 1994, and recorded in
the office of the Clerk of Court of Newberry County, South Carolina, in Deed
Book 412 at Page 225 on April 7, 1995.
<PAGE> 1
EXHIBIT 11
WESTPOINT STEVENS INC.
EXHIBIT (11) - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ------------------
1997 1996 1997 1996
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 30,865 31,380 30,932 31,446
Shares issuable under 1995
Key Employee Stock Bonus Plan 36 50 42 64
Net effect of dilutive stock options
- based on the treasury stock
method using average market price 736 447 678 403
-------- -------- -------- --------
Total 31,637 31,877 31,652 31,913
======== ======== ======== ========
Income from continuing operations $ 10,678 $ 9,096 $ 19,653 $ 17,356
Income (loss) from discontinued operations 1,102 (382) 2,235 (666)
-------- -------- -------- --------
Net income $ 11,780 $ 8,714 $ 21,888 $ 16,690
======== ======== ======== ========
Net income (loss) per common share:
Continuing operations $ .34 $ .28 $ .62 $ .54
Discontinued operations .03 (.01) .07 (.02)
-------- -------- -------- --------
Net income per common share $ .37 $ .27 $ .69 $ .52
======== ======== ======== ========
</TABLE>
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONDENSED
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,087
<SECURITIES> 0
<RECEIVABLES> 141,820
<ALLOWANCES> 25,261
<INVENTORY> 368,130
<CURRENT-ASSETS> 605,112
<PP&E> 1,038,219
<DEPRECIATION> 369,376
<TOTAL-ASSETS> 1,363,702
<CURRENT-LIABILITIES> 462,390
<BONDS> 1,075,000
0
0
<COMMON> 350
<OTHER-SE> (450,205)
<TOTAL-LIABILITY-AND-EQUITY> 1,363,702
<SALES> 752,903
<TOTAL-REVENUES> 752,903
<CGS> 567,460
<TOTAL-COSTS> 567,460
<OTHER-EXPENSES> 1,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,710
<INCOME-PRETAX> 31,367
<INCOME-TAX> 11,714
<INCOME-CONTINUING> 19,653
<DISCONTINUED> 2,235
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,888
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
</TABLE>
