<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 MARCH 31, 1998
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 April 24, 1998: 58,503,965 shares of Common Stock,
$.01 par value.
1
<PAGE> 2
<TABLE>
<CAPTION>
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets:
March 31, 1998 (Unaudited) and
December 31, 1997 3
Condensed Consolidated Statements of
Income (Unaudited); Three Months
Ended March 31, 1998 and Three
Months Ended March 31, 1997 4
Condensed Consolidated Statements of Cash
Flows (Unaudited); Three Months
Ended March 31, 1998 and Three
Months Ended March 31, 1997 5
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) (Unaudited);
Three Months Ended March 31, 1998 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 - 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
2
<PAGE> 3
WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
---------- ------------
(UNAUDITED)
ASSETS
Current Assets
<S> <C> <C>
Cash and cash equivalents ...................................... $ 9,873 $ 17,433
Accounts receivable ............................................ 102,239 92,990
Inventories .................................................... 376,325 340,818
Prepaid expenses and other current assets ...................... 19,337 22,227
---------- ----------
Total current assets ................................................ 507,774 473,468
Property, Plant and Equipment, net .................................. 705,743 707,151
Other Assets
Deferred financing fees ........................................ 18,262 19,231
Prepaid pension and other assets ............................... 47,645 49,033
Goodwill ....................................................... 36,988 37,223
---------- ----------
$1,316,412 $1,286,106
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Senior Credit Facility ......................................... $ 87,714 $ 37,683
Current portion of long-term debt .............................. 3,750 3,750
Accrued interest payable ....................................... 25,734 6,820
Trade accounts payable ......................................... 58,970 75,655
Other accounts payable and accrued liabilities ................. 131,373 137,382
---------- ----------
Total current liabilities ........................................... 307,541 261,290
Long-Term Debt ...................................................... 1,142,500 1,146,250
Noncurrent Liabilities
Deferred income taxes .......................................... 222,318 217,178
Other liabilities .............................................. 81,971 84,402
---------- ----------
Total noncurrent liabilities ........................................ 304,289 301,580
Stockholders' Equity (Deficit) ...................................... (437,918) (423,014)
---------- ----------
$1,316,412 $1,286,106
========== ==========
</TABLE>
See accompanying notes
3
<PAGE> 4
WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Net sales ......................................................... $398,706 $357,101
Cost of goods sold ................................................ 299,185 267,872
-------- --------
Gross earnings ............................................... 99,521 89,229
Selling, general and administrative expenses ...................... 55,088 50,718
-------- --------
Operating earnings ........................................... 44,433 38,511
Interest expense .................................................. 25,704 23,409
Other expense, net ................................................ 401 784
-------- --------
Income from continuing operations before income tax expense .. 18,328 14,318
Income tax expense ................................................ 6,625 5,343
-------- --------
Income from continuing operations ................................. 11,703 8,975
Income from discontinued operations ............................... -- 1,133
-------- --------
Net income ................................................... $ 11,703 $ 10,108
======== ========
Basic net income per common share:
Continuing operations ........................................ $ .20 $ .14
Discontinued operations ...................................... -- .02
-------- --------
Net income per common share .................................. $ .20 $ .16
======== ========
Diluted net income per common share:
Continuing operations ........................................ $ .19 $ .14
Discontinued operations ...................................... -- .02
-------- --------
Net income per common share .................................. $ .19 $ .16
======== ========
Basic average common shares outstanding ........................... 58,919 62,118
Dilutive effect of stock options and stock bonus plan ........ 1,991 1,572
-------- --------
Diluted average common shares outstanding ......................... 60,910 63,690
======== ========
</TABLE>
See accompanying notes
4
<PAGE> 5
WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income ................................................... $ 11,703 $ 10,108
Adjustment to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and other amortization .................... 20,353 19,899
Deferred income taxes .................................. 5,529 5,793
Changes in working capital ............................. (34,539) (55,047)
Other - net ............................................ 389 (15,303)
-------- --------
Net cash provided by (used for) operating activities .............. 3,435 (34,550)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ......................................... (19,382) (35,181)
Net proceeds from sale of assets ............................. 209 73
Purchase of businesses ....................................... -- (57,170)
-------- --------
Net cash used for investing activities ............................ (19,173) (92,278)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Credit Facility:
Borrowings ............................................. 232,500 454,460
Repayments ............................................. (186,219) (322,412)
Net proceeds from Trade Receivables Program .................. (7,835) (4,977)
Purchase of common stock for treasury ........................ (31,549) (2,315)
Proceeds from issuance of stock .............................. 1,281 3,044
-------- --------
Net cash provided by financing activities ......................... 8,178 127,800
-------- --------
Net increase (decrease) in cash and cash equivalents .............. (7,560) 972
Cash and cash equivalents at beginning of period .................. 17,433 14,029
-------- --------
Cash and cash equivalents at end of period ........................ $ 9,873 $ 15,001
======== ========
</TABLE>
See accompanying notes
5
<PAGE> 6
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, 1997 ..................... 70,296 $337,069 (10,895) $(134,223) $(625,047) $ (813) $(423,014)
Exercise of management stock
options including tax benefit ........... 169 1,670 (7) -- -- -- 1,670
Issuance of stock pursuant to Stock
Bonus Plan including tax benefit ........ -- 851 212 2,421 -- -- 3,272
Purchase of treasury shares ............... -- -- (1,319) (31,549) -- -- (31,549)
Net income ................................ -- -- -- -- 11,703 -- 11,703
------ -------- ------- --------- --------- ---------- ---------
Balance, March 31, 1998 ........................ 70,465 $339,590 (12,009) $(163,351) $(613,344) $ (813) $(437,918)
====== ======== ======= ========= ========= ========== =========
</TABLE>
See accompanying notes
6
<PAGE> 7
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 month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. The Company adopted Statement No. 130, Reporting
Comprehensive Income, effective January 1, 1998. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
annual report on Form 10-K for WestPoint Stevens Inc. (the "Company") for the
year ended December 31, 1997.
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 March 31, 1998 and December 31, 1997
(in thousands of dollars):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- ------------
<S> <C> <C>
Finished goods $ 189,872 $ 154,539
Work in progress 141,928 139,410
Raw materials and supplies 55,245 58,876
LIFO reserve (10,720) (12,007)
--------- ---------
$ 376,325 $ 340,818
========= =========
</TABLE>
7
<PAGE> 8
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>
MARCH 31, DECEMBER 31,
1998 1997
---------- -------------
Short-term indebtedness
<S> <C> <C>
Senior Credit Facility
Revolver $ 87,714 $ 37,683
9% Sinking Fund Debentures due 2017 3,750 3,750
---------- ----------
$ 91,464 $ 41,433
========== ==========
Long-term indebtedness
Senior Credit Facility
Revolver $ 125,000 $ 125,000
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 67,500 71,250
---------- ----------
$1,142,500 $1,146,250
========== ==========
</TABLE>
At March 31, 1998 and December 31, 1997, $103.9 million and $111.8 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. DISCONTINUED OPERATIONS
On August 27, 1997 the Company closed a transaction pursuant to which WestPoint
Stevens sold its subsidiaries AIH Inc., Alamac Knit Fabrics, Inc. and Alamac
Enterprises Inc. (collectively, "Alamac Knit Fabrics subsidiary"or "Alamac"),
other than cash, accounts receivable of approximately $42.5 million and a yarn
mill located in Whitmire, S.C., to Dyersburg Corporation for approximately $126
million. The Whitmire facility was transferred by the Company to Home Fashions
to support the Company's expansion of its sheeting production capacity. As a
result of the transaction, the Company now reports the Alamac Knit Fabrics
subsidiary as a discontinued operation and the accompanying financial statements
have been adjusted and restated accordingly.
8
<PAGE> 9
WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. DISCONTINUED OPERATIONS (CONTINUED)
The condensed consolidated statements of income relating to the discontinued
operations are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,1997
-------------
<S> <C>
Net sales....................................................................... $ 61,690
Gross earnings.................................................................. 7,845
Operating earnings.............................................................. 3,610
Interest expense................................................................ 1,992
Income from discontinued operations before income
tax expense............................................................... 1,740
Income tax expense.............................................................. 607
Income from discontinued operations............................................. $ 1,133
</TABLE>
5. SUBSEQUENT EVENT
On April 29, 1998, the Company announced cash tender offers and consent
solicitations for all of its outstanding 8 3/4% Senior Notes due 2001 (the
"Notes") and its 9 3/8% Senior Subordinated Debentures due 2005 (the
"Debentures"). The purchase price for the Notes and Debentures will be based on
a fixed spread of 37.5 basis points and 50 basis points, respectively, over the
yield of the 5 5/8% U.S. Treasury Notes due November 30, 1998, on the second
business day prior to the expiration date. The tender offers are expected to
remain open until 12:00 midnight New York City time on May 27, 1998, unless they
are extended. WestPoint Stevens expects to purchase the tendered notes with the
proceeds from one or more series of newly issued debt securities. The tender
offer for each series of notes is contingent, among other things, upon the
holders of a majority of each series of notes tendering their notes and
consenting to the indenture amendments and upon the Company's ability to issue
new debt, at acceptable terms and conditions, to raise financing to pay for the
tender offers. The tender offer for each series of notes is also conditioned
upon the satisfaction of the conditions of the other offer.
9
<PAGE> 10
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: THREE MONTHS ENDED MARCH 31, 1998
The table below sets forth net sales, gross earnings, operating earnings,
interest expense, income from continuing operations, income from discontinued
operations and net income of the Company for the three months ended March 31,
1998 and 1997. See Note 4 in the Notes to Condensed Consolidated Financial
Statements for information concerning the Company's discontinued operations. The
following discussion is limited to an analysis of the results of continuing
operations (in millions of dollars and as percentages of net sales).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net sales ........................................................... $398.7 $357.1
Gross earnings ...................................................... $ 99.5 $ 89.2
Operating earnings .................................................. $ 44.4 $ 38.5
Interest expense .................................................... $ 25.7 $ 23.4
Income from continuing operations ................................... $ 11.7 $ 9.0
Income from discontinued operations ................................. -- 1.1
------ ------
Net income .......................................................... $ 11.7 $ 10.1
Gross margins ....................................................... 25.0% 25.0%
Operating margins ................................................... 11.1% 10.8%
</TABLE>
10
<PAGE> 11
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: THREE MONTHS ENDED MARCH 31, 1998 (CONTINUED)
NET SALES. Net sales for the three months ended March 31, 1998 increased $41.6
million, or 11.7%, to $398.7 million compared with net sales of $357.1 million
for the three months ended March 31, 1997. The increase in net sales resulted
primarily from higher unit volume in the 1998 period compared with the 1997
period.
GROSS EARNINGS/MARGINS. Gross earnings for the three months ended March 31, 1998
of $99.5 million increased $10.3 million, or 11.5%, compared with $89.2 million
for the same period of 1997 and reflect gross margins of 25% in both the 1998
and 1997 periods. Gross earnings increased in the first quarter of 1998
primarily as a result of the increase in unit volume. Gross margins of 25% were
unchanged from last year primarily as a result of lower raw material costs
offsetting cost increases related to depreciation expense and wages.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
increased by $4.4 million, or 8.6%, in the first quarter of 1998 compared with
the same period last year, and as a percentage of net sales represent 13.8% in
1998 and 14.2% in 1997. The increase in selling, general and administrative
expenses in the first quarter of 1998 was due primarily to acquisitions along
with higher warehousing and shipping expense.
Operating earnings for the three months ended March 31, 1998 were $44.4 million,
or 11.1% of sales, and increased $5.9 million, or 15.4%, compared with operating
earnings of $38.5 million, or 10.8% of sales, for the same period of 1997. 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 March 31, 1998 of
$25.7 million increased $2.3 million compared with interest expense for the
three months ended March 31, 1997. The increase was due primarily to higher
average debt levels in the 1998 first quarter compared with the corresponding
1997 average debt levels.
OTHER EXPENSE, NET. Other expense, net in the first quarter of 1998 of $0.4
million decreased $0.4 million compared with the 1997 period and consists
primarily of the amortization of deferred financing fees of $1 million in both
periods less certain miscellaneous income items.
INCOME TAX EXPENSE. The Company's effective tax rate differed from the federal
statutory rate primarily due to state income taxes and nondeductible items.
11
<PAGE> 12
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: THREE MONTHS ENDED MARCH 31, 1998 (CONTINUED)
INCOME FROM CONTINUING/DISCONTINUED OPERATIONS. Income from continuing
operations for the first quarter of 1998 was $11.7 million, or $.19 per share
diluted, compared with net income from continuing operations of $9 million, or
$.14 per share diluted, for the same period of last year.
Income from discontinued operations for the first quarter of 1997 was $1.1
million, or $.02 per share diluted.
NET INCOME. Net income for the first quarter of 1998 was $11.7 million, or $.19
per share diluted, compared with net income of $10.1 million, or $.16 per share
diluted, for the same period of last year.
Diluted per share amounts are based on 60.9 million and 63.7 million average
shares outstanding for the 1998 and 1997 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.
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 April 24,
1998, 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 $115 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 $152 million in
1997 on capital expenditures and intends to invest approximately $145 million in
1998.
12
<PAGE> 13
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
During the first three months of 1998, the Company purchased approximately 1.3
million shares under its various stock repurchase programs, at an average price
of $23.92 per share. The Board of Directors has approved the purchase of up to
sixteen million shares of the Company's common stock, subject to the Company's
debt limitations. At March 31, 1998, approximately 4.5 million shares remained
to be purchased under these programs.
Cash contributions to the Company's pension plans in 1998 are estimated to total
approximately $3 million, compared with actual cash contributions in 1997 of
$17.3 million.
The Company, through a "bankruptcy remote" receivables subsidiary, has a Trade
Receivables Program which provides for the sale of accounts receivable, on a
revolving basis. At March 31, 1998 and December 31, 1997, $103.9 million and
$111.8 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 1998
is estimated to total approximately $7 million, compared with $7.6 million in
1997, and will be charged to selling, general and administrative expenses.
Debt service requirements for interest payments in 1998 are estimated to total
approximately $108 million (excluding amounts related to the Trade Receivables
Program) compared with interest payments of $107.4 million in 1997. Debt service
requirements in 1998 related to required principal amortization total
approximately $3.8 million.
On April 29, 1998, the Company announced cash tender offers and consent
solicitations for all of its outstanding Notes and Debentures. The purchase
price for the Notes and Debentures will be based on a fixed spread of 37.5 basis
points and 50 basis points, respectively, over the yield of the 5 5/8% U.S.
Treasury Notes due November 30, 1998, on the second business day prior to the
expiration date. The tender offers are expected to remain open until 12:00
midnight New York City time on May 27, 1998, unless they are extended. WestPoint
Stevens expects to purchase the tendered notes with the proceeds from one or
more series of newly issued debt securities. The tender offer for each series of
notes is contingent, among other things, upon the holders of a majority of each
series of notes tendering their notes and consenting to the indenture amendments
and upon the Company's ability to issue new debt, at acceptable terms and
conditions, to raise financing to pay for the tender offers. The tender offer
for each series of notes is also conditioned upon the satisfaction of the
conditions of the other offer.
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.
13
<PAGE> 14
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.
14
<PAGE> 15
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (CONTINUED)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter
ended March 31, 1998.
ITEM 5. OTHER INFORMATION
On April 29, 1998, the Company announced cash tender offers and consent
solicitations for all of its outstanding Notes and Debentures. The purchase
price for the Notes and Debentures will be based on a fixed spread of 37.5 basis
points and 50 basis points, respectively, over the yield of the 5 5/8% U.S.
Treasury Notes due November 30, 1998, on the second business day prior to the
expiration date. The tender offers are expected to remain open until 12:00
midnight New York City time on May 27, 1998, unless they are extended. WestPoint
Stevens expects to purchase the tendered notes with the proceeds from one or
more series of newly issued debt securities. The tender offer for each series of
notes is contingent, among other things, upon the holders of a majority of each
series of notes tendering their notes and consenting to the indenture amendments
and upon the Company's ability to issue new debt, at acceptable terms and
conditions, to raise financing to pay for the tender offers. The tender offer
for each series of notes is also conditioned upon the satisfaction of the
conditions of the other offer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ -----------------------------------------
<S> <C>
27 Financial Data Schedule (for SEC use only)
99.1 Press Release dated April 29, 1998
</TABLE>
b.) No report on Form 8-K was filed by the Company during the quarter ended
March 31, 1998.
15
<PAGE> 16
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
Date: May 7, 1998
16
<PAGE> 17
WESTPOINT STEVENS INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- ------ -------
<S> <C>
27 Financial Data Schedule 18
99.1 Press Release dated April 29, 1998 19 - 20
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONDENSED
CONSOLIDATED BALANCE SHEET OF WESTPOINT STEVENS INC. AS OF MARCH 31, 1998 AND
THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH
31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,873
<SECURITIES> 0
<RECEIVABLES> 124,096
<ALLOWANCES> 21,857
<INVENTORY> 376,325
<CURRENT-ASSETS> 507,774
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<PAGE> 1
(WESTPOINT STEVENS LETTERHEAD)
NEWS RELEASE
Investor Contact: Morgan M. Schuessler
Executive Vice President/Finance
and Chief Financial Officer
(706) 645-4230
Media Contact: Toni Cauble
(706) 645-4879
WESTPOINT STEVENS INC. LAUNCHES CASH TENDER OFFER
AND CONSENT SOLICITATIONS FOR TWO SERIES OF NOTES
WEST POINT, Georgia (April 29, 1998) - WestPoint Stevens Inc. (Nasdaq/NM:WPSN)
today announced that it has launched cash tender offers and consent
solicitations for two series of notes.
The tenders are for:
1. all $400 million of the 8-3/4% Senior Notes due 2001. The purchase
price to be paid for each $1,000 principal amount tendered will be
based on a fixed spread of 37.5 basis points over the yield of the
5-5/8% U.S. Treasury Notes due November 30, 1998, minus the consent
payment described below. The yield will be calculated at 11:00 a.m.
New York City time on the second business day prior to the
expiration date.
2. all $550 million of the 9-3/8% Senior Subordinated Debentures due
2005. The purchase price to be paid for each $1,000 principal amount
tendered will be based on a fixed spread of 50 basis points over the
yield of the 5-5/8% U.S. Treasury Notes due November 30, 1998, minus
the consent payment described below. The yield will be calculated at
11:00 a.m. New York City time on the second business day prior to
the expiration date.
The tender offers are expected to remain open until 12:00 midnight New
York City time on May 27, 1998, unless they are extended. Concurrent with the
tender offers, WestPoint Stevens is soliciting consents to eliminate or modify
substantially all of the covenants in the indenture governing each series of
notes. Holders who tender their Notes and Debentures will be required to consent
to the proposed amendments.
The Company will pay consent payments of $25 per $1,000 principal amount
to the holders of each of the 8-3/4% Notes and 9-3/8% Debentures who tender
their notes and deliver their consents at or prior to 5:00 p.m. New York City
time on the relevant consent date.
-MORE-
19
<PAGE> 2
WPSN Announces Tender Offers and Consent Solicitations
Page 2
April 29, 1998
The consent achievement date for each series of notes is the later of May
12, 1998, or the date the Company receives consents from holders representing a
majority of such series of notes. Once sufficient consents to amend the
indentures have been received, an announcement of that result will be made.
WestPoint Stevens expects to purchase the tendered notes with the proceeds
from one or more series of newly issued debt securities. The Company also is
considering the redemption of the outstanding J.P. Stevens & Co., Inc. 9%
Sinking Fund Debentures due March 1, 2017, after the issuance of the new debt
securities. The proposed new debt will be issued in transactions exempt from the
registration requirements of the Securities Act of 1933, as amended.
The tender offer for each series of notes is contingent, among other
things, upon the holders of a majority of each series of notes tendering their
notes and consenting to the indenture amendments and upon the Company's ability
to issue new debt to raise financing to pay for the tender offers. Each offer is
conditioned upon the satisfaction of the conditions of the other offer.
Information regarding the pricing, tender and delivery procedures and
conditions of the tender offers and consent solicitations are contained in the
Offer to Purchase and Consent Solicitation dated April 29, 1998, and related
documents. Documents can be obtained by contacting Beacon Hill Partners, Inc. at
(212) 843-8500 or (800) 755-5001.
The tender offers and consent solicitations are being managed by Merrill
Lynch & Co. Any questions may be directed to the Liability Management Group of
Merrill Lynch at (888) ML4-TNDR or (212) 449-4914.
WestPoint Stevens Inc. is a home fashions consumer products company, with
a comprehensive line of branded and licensed products for the bedroom and
bathroom. The Company is vertically integrated, and is the nation's leading
manufacturer and marketer of bed linens, towels, comforters, and other
accessories that are sold in retail outlets throughout the world. WestPoint
Stevens' home fashions consumer products are marketed under the well-known brand
names of ATELIER MARTEX, MARTEX, UTICA, STEVENS, LADY PEPPERELL, and VELLUX, and
under licensed brands, including RALPH LAUREN HOME COLLECTION, SANDERSON,
HALSTON, STAR WARS and ESPRIT. WestPoint Stevens can be found on the World Wide
Web at www.westpointstevens.com
This press release contains statements which are forward-looking
statements within the meaning of applicable federal securities laws and are
based upon the Company's current expectations and assumptions which are subject
to a number of risks and uncertainties which could cause actual results to
materially differ from those anticipated. Primary factors that could cause
actual results to differ are discussed in the Company's form 10-K for the year
ended December 31, 1997.
This news release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The offer and consent solicitations are made only by
the Offer to Purchase and Consent Solicitation dated April 29, 1998.
-END-
20
