<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, 1999
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 30, 1999: 55,676,467 shares of Common Stock,
$.01 par value.
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets:
June 30, 1999 (Unaudited) and
December 31, 1998 3
Condensed Consolidated Statements of
Income (Unaudited); Three and
Six Months Ended June 30, 1999
and June 30, 1998 4
Condensed Consolidated Statements of Cash
Flows (Unaudited); Six Months
Ended June 30, 1999 and
June 30, 1998 5
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) (Unaudited);
Six Months Ended June 30, 1999 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 21
</TABLE>
2
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents .................... $ 182 $ 527
Accounts receivable .......................... 89,260 70,086
Inventories .................................. 461,121 381,022
Prepaid expenses and other current assets .... 15,835 18,051
----------- -----------
Total current assets .............................. 566,398 469,686
Property, Plant and Equipment, net ................ 772,704 776,939
Other Assets
Deferred financing fees ...................... 20,837 21,102
Prepaid pension and other assets ............. 52,464 52,257
Goodwill ..................................... 70,347 71,227
----------- -----------
$ 1,482,750 $ 1,391,211
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Senior Credit Facility ....................... $ 128,296 $ 60,400
Accrued interest payable ..................... 4,177 4,777
Trade accounts payable ....................... 68,578 85,908
Other accounts payable and accrued liabilities 161,791 140,423
----------- -----------
Total current liabilities ......................... 362,842 291,508
Long-Term Debt .................................... 1,275,000 1,275,000
Noncurrent Liabilities
Deferred income taxes ........................ 251,375 236,328
Other liabilities ............................ 72,779 75,827
----------- -----------
Total noncurrent liabilities ...................... 324,154 312,155
Stockholders' Equity (Deficit) .................... (479,246) (487,452)
----------- -----------
$ 1,482,750 $ 1,391,211
=========== ===========
</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,
----------------------- -----------------------
1999 1998 1999 1998
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales ........................................................ $453,520 $ 436,981 $895,037 $ 835,687
Cost of goods sold ............................................... 335,238 323,709 663,276 622,894
-------- --------- -------- ---------
Gross earnings .............................................. 118,282 113,272 231,761 212,793
Selling, general and administrative expenses ..................... 61,907 60,729 126,092 115,817
-------- --------- -------- ---------
Operating earnings .......................................... 56,375 52,543 105,669 96,976
Interest expense ................................................. 25,140 27,535 49,394 53,239
Other expense, net ............................................... 585 331 1,175 732
-------- --------- -------- ---------
Income before income tax expense and
extraordinary item .................................... 30,650 24,677 55,100 43,005
Income tax expense ............................................... 11,075 8,900 19,900 15,525
-------- --------- -------- ---------
Income before extraordinary item ............................ 19,575 15,777 35,200 27,480
Extraordinary item - loss on early extinguishment
of debt (net of tax benefit of $28,474) ..................... -- (50,621) -- (50,621)
-------- --------- -------- ---------
Net income (loss)........................................... $ 19,575 $ (34,844) $ 35,200 $ (23,141)
======== ========= ======== =========
Basic net income (loss) per common share:
Income before extraordinary item ............................ $ .35 $ .27 $ .63 $ .47
Extraordinary item - loss on early
extinguishment of debt ................................ -- (.87) -- (.87)
-------- --------- -------- ---------
Net income (loss) per common share .......................... $ .35 $ (.60) $ .63 $ (.40)
======== ========= ======== =========
Diluted net income (loss) per common share:
Income before extraordinary item ............................ $ .34 $ .26 $ .61 $ .45
Extraordinary item - loss on early
extinguishment of debt ................................ -- (.83) -- (.83)
-------- --------- -------- ---------
Net income (loss) per common share .......................... $ .34 $ (.57) $ .61 $ (.38)
======== ========= ======== =========
Basic average common shares outstanding .......................... 55,737 58,238 55,727 58,571
Dilutive effect of stock options and
stock bonus plan ...................................... 1,919 2,366 1,822 2,217
-------- --------- -------- ---------
Diluted average common shares outstanding ........................ 57,656 60,604 57,549 60,788
======== ========= ======== =========
</TABLE>
See accompanying notes
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $ 35,200 $ (23,141)
Adjustment to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and other amortization................ 44,387 41,464
Deferred income taxes.............................. 17,812 (14,345)
Changes in working capital......................... (90,313) (59,976)
Other - net........................................ (1,947) 2,306
Extraordinary item - loss on early
extinguishment of debt........................ -- 79,095
----------- -----------
Net cash provided by operating activities..................... 5,139 25,403
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................... (39,657) (54,621)
Net proceeds from sale of assets......................... 227 512
----------- -----------
Net cash used for investing activities...................... (39,430) (54,109)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Credit Facility:
Borrowings......................................... 462,810 468,419
Repayments......................................... (394,914) (386,683)
Principal payments on long-term debt..................... -- (915,523)
Net proceeds from Trade Receivables Program.............. -- (3,490)
Purchase of common stock for treasury.................... (36,515) (59,850)
Proceeds from sale of notes.............................. -- 1,000,000
Proceeds from issuance of stock.......................... 3,706 2,009
Dividends paid........................................... (1,141) --
Fees associated with refinancing......................... -- (84,275)
----------- -----------
Net cash provided by financing activities..................... 33,946 20,607
----------- -----------
Net decrease in cash and cash equivalents..................... (345) (8,099)
Cash and cash equivalents at beginning of period.............. 527 17,433
----------- -----------
Cash and cash equivalents at end of period.................... $ 182 $ 9,334
=========== ===========
</TABLE>
See accompanying notes
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WESTPOINT STEVENS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON
STOCK
AND CAPITAL
IN ACCUMULATED
EXCESS OF TREASURY STOCK OTHER
COMMON PAR -------------------- ACCUMULATED COMPREHENSIVE
SHARES VALUE SHARES AMOUNT DEFICIT INCOME (LOSS) TOTAL
------ ----------- -------- -------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1999 ...................... 70,862 $343,437 (14,577) $(242,844) $(585,115) $(2,930) $(487,452)
Comprehensive income:
Net income ............................ -- -- -- -- 35,200 -- 35,200
Foreign currency translation adjustment 885 885
---------
Comprehensive income ..................... 36,085
---------
Exercise of management stock options
including tax benefit ................. 238 5,199 136 (695) -- -- 4,504
Issuance of stock pursuant to Stock
Bonus Plan including tax benefit .... -- 2,080 295 3,193 -- -- 5,273
Purchase of treasury shares .............. -- -- (1,326) (36,515) -- -- (36,515)
Cash dividends ($.02 per share)........... -- -- -- -- (1,141) -- (1,141)
------ -------- ------- --------- --------- ----------- ---------
Balance, June 30, 1999 ...................... 71,100 $350,716 (15,472) $(276,861) $(551,056) $(2,045) $(479,246)
====== ======== ======= ========= ========= =========== =========
</TABLE>
See accompanying notes
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WESTPOINT STEVENS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only 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, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999. Effective
January 1, 1999, the Company adopted Statement of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use and the
impact on its financial statements was immaterial. 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, 1998.
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, 1999 and December 31, 1998
(in thousands of dollars):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Finished goods $ 222,311 $ 170,896
Work in progress 178,384 160,995
Raw materials and supplies 60,472 59,466
LIFO reserve (46) (10,335)
--------- ---------
$ 461,121 $ 381,022
========= =========
</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,
1999 1998
----------- -----------
<S> <C> <C>
Short-term indebtedness:
Senior Credit Facility
Revolver $ 128,296 $ 60,400
========== ==========
Long-term indebtedness:
Senior Credit Facility
Revolver $ 275,000 $ 275,000
7 7/8% Senior Notes due 2005 525,000 525,000
7 7/8% Senior Notes due 2008 475,000 475,000
---------- ----------
$1,275,000 $1,275,000
========== ==========
</TABLE>
On June 30, 1999 and December 31, 1998, $145.0 million 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.
During the second quarter of 1999, the Company increased the Senior Credit
Facility from $575 million to $800 million. The conditions of the increased
revolver continue as previously stated, including the revolver expiration date
of November 30, 2004. The increased borrowing availability is to support the
Company's growth plans and strategy in the future, if required.
8
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
YEAR 2000
General Description of the Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date- sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities.
In 1994, the Company began a company-wide project to replace all existing
information systems with improved systems launched from a newer technology
infrastructure and, as a by-product, make the new systems Year 2000 compliant.
The Company presently believes that with replacements and modifications of
existing software and certain hardware, the Year 2000 Issue has been mitigated.
System components that are vital to the successful continuance of our core
business activity have been remediated, tested, implemented and confirmed as
Year 2000 compliant.
The Company's plan to resolve the Year 2000 Issue involved the following four
phases: assessment, remediation, testing and implementation. To date, the
Company has completed its assessment of all systems that could be significantly
affected by the Year 2000. The completed assessment indicated that most of the
Company's significant information technology systems were affected. That
assessment also indicated that in some cases software and hardware (embedded
chips) used in production and manufacturing systems (hereafter also referred to
as operating equipment) were also at risk. Affected systems included automated
assembly lines and related robotics technologies used in various aspects of the
manufacturing process. However, based on a review of its product line, the
Company determined that none of the products it has sold and will continue to
sell required remediation to be Year 2000 compliant. Accordingly, the Company
does not believe that the Year 2000 Issue presents a material exposure as it
relates to the Company's products. In addition, the Company has gathered
information about the Year 2000 compliance status of its significant customers,
suppliers and subcontractors and continues to monitor their compliance.
Status of Progress in Becoming Year 2000 Compliant
The Company has completed its original plan for addressing the Year 2000 Issue.
By August 1, 1999, the Company has determined that all of its impacted system
components that are vital to the successful continuance of its core business
activity are Year 2000 compliant having completed the assessment, remediation,
testing and implementation phases of its plan.
9
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
YEAR 2000 (CONTINUED)
Status of Progress in Becoming Year 2000 Compliant (continued)
Embedded chip technology in our manufacturing facilities has been remediated,
tested and implemented as required. WestPoint Stevens Year 2000 efforts will
continue through 1999, with an emphasis on quality assurance and further
testing. Even though our extensive Year 2000 preparedness activities have
decreased the likelihood of business interruptions, we are expanding our
existing business impact analysis to include additional business units and
potential hazards and contingencies regarding the Year 2000.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000 Issue
The Company has surveyed key production, non-production, service, utility and
communication suppliers to determine their state of readiness. Responses
indicate key vendors are Year 2000 compliant or will be in a timely manner. EDI
interfaces with major suppliers have been tested, implemented and confirmed as
Year 2000 compliant. However, there can be no assurance that all suppliers'
systems, or their suppliers' systems, upon which the Company relies, will be
ready in a timely manner and will not have a material effect on the Company.
The Company has surveyed key customers who electronically interface with the
Company via EDI to determine their state of readiness and plan for testing
compliant interfaces. Responses received from a majority of key customers
indicate that they expect to be compliant in a timely manner and some have been
able to test compliant interfaces. The Company supports Year 2000 compliant EDI
versions and has successfully completed Year 2000 EDI tests with customers.
However, there can be no assurance that all customers' systems, upon which the
Company relies, will be ready in a timely manner and will not have a material
effect on the Company.
To date, the Company is not aware of any third party with a Year 2000 Issue
that will materially impact the Company's results of operations, liquidity or
capital resources. However, the Company has no means of ensuring that third
parties will be Year 2000 ready. The inability of third parties to complete
their Year 2000 resolution process in a timely fashion could materially impact
the Company.
Costs, Risks and Contingency Plans for the Year 2000 Issue
The Company has utilized both internal and external resources to reprogram, or
replace, test and implement the software and operating equipment for Year 2000
modifications. The total cost of the Year 2000 project to date has been
approximately $750,000 and has been funded through operating
10
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
YEAR 2000 (CONTINUED)
Costs, Risks and Contingency Plans for the Year 2000 Issue (continued)
cash flows. The remaining expenditures through 1999 relating to Year 2000 are
expected to be immaterial.
The Company has a high dependence on computer processes such as electronic
order and shipment information that automatically drive business processes, bar
codes that cannot be reproduced manually, and machinery containing advanced
technology requiring computerized controls. The Company's business transaction
volume is concentrated among a few customers who also have a high dependence
upon computers.
Management of the Company believes it has effectively mitigated the Year 2000
risk in its information technology systems and operating systems. However,
disruptions in the economy generally resulting from Year 2000 Issues could have
a material effect upon the Company.
The Company has developed initial contingency plans that address potential
needs during the actual transition of operations on January 1, 2000.
The Company completed a business impact analysis in 1995 which established
critical processes, inventoried resources, assessed the risk and mitigation
plans relative to potential business disruptions resulting from natural
disasters, system outages and other occurrences. By adding other business units
and Year 2000 specific hazards and contingencies, the Company is finalizing its
Year 2000 business continuity plan.
The costs of the Year 2000 project and its effective completion are based on
management's best estimates, which are derived utilizing numerous assumptions
of future events, including the continued availability of certain resources and
other factors. However, there can be no assurance that these estimates will be
achieved and actual results could differ materially from those anticipated.
11
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: THREE AND SIX MONTHS ENDED JUNE 30, 1999
The table below is a summary of the Company's operating results for the three
and six months ended June 30, 1999 and June 30, 1998 (in millions of dollars
and as percentages of net sales).
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ........................... $ 453.5 $ 437.0 $ 895.0 $ 835.7
Gross earnings ...................... $ 118.3 $ 113.3 $ 231.8 $ 212.8
Operating earnings .................. $ 56.4 $ 52.6 $ 105.7 $ 97.0
Interest expense .................... $ 25.1 $ 27.5 $ 49.4 $ 53.2
Income before extraordinary item .... $ 19.6 $ 15.8 $ 35.2 $ 27.5
Extraordinary item - loss on early
extinguishment of debt ......... -- (50.6) -- (50.6)
--------- -------- --------- --------
Net income (loss) ................... $ 19.6 $ (34.8) $ 35.2 $ (23.1)
Gross margins ....................... 26.1% 25.9% 25.9% 25.5%
Operating margins ................... 12.4% 12.0% 11.8% 11.6%
</TABLE>
12
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: THREE MONTHS ENDED JUNE 30, 1999
NET SALES. Net sales for the three months ended June 30, 1999 increased $16.5
million, or 3.8%, to $453.5 million compared with net sales of $437 million for
the three months ended June 30, 1998. Excluding the sales of Liebhardt Mills,
which was acquired during the fourth quarter of 1998, net sales increased
approximately 1%. The increase in net sales resulted primarily from higher unit
volume in the 1999 period compared with the 1998 period and the acquisition of
Liebhardt Mills.
GROSS EARNINGS/MARGINS. Gross earnings for the three months ended June 30, 1999
of $118.3 million increased $5 million, or 4.4%, compared with $113.3 million
for the same period of 1998 and reflect gross margins of 26.1% in the 1999
period and 25.9% in the 1998 period. Gross earnings and margins increased in
the second quarter of 1999 primarily as a result of the increase in unit volume
and a better mix of products sold.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
increased $1.2 million, or 1.9%, in the second quarter of 1999 compared with
the same period last year, and as a percentage of net sales represent 13.7% in
the 1999 period and 13.9% in the 1998 period. The increase in selling, general
and administrative expenses in the second quarter of 1999 was due primarily to
the acquisition of Liebhardt Mills along with higher warehousing/shipping
expense related to the higher unit volume.
Operating earnings for the three months ended June 30, 1999 were $56.4 million,
or 12.4% of sales, and increased $3.8 million, or 7.3%, compared with operating
earnings of $52.6 million, or 12% of sales, for the same period of 1998. The
increase in operating earnings 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, 1999 of
$25.1 million decreased $2.4 million compared with interest expense for the
three months ended June 30, 1998. The decrease in interest expense was due
primarily to lower interest rates as a result of the refinancing transactions
in the second quarter of 1998 offset somewhat by higher average debt levels in
the 1999 second quarter compared with the corresponding 1998 average debt
levels.
OTHER EXPENSE, NET. Other expense, net in the second quarter of 1999 of $0.6
million increased $0.3 million compared with the 1998 period and consists
primarily of the amortization of deferred financing fees of $0.7 million in the
1999 period and $0.8 million in the 1998 period less certain miscellaneous
income items in both periods.
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: THREE MONTHS ENDED JUNE 30, 1999 (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 BEFORE EXTRAORDINARY ITEM. Income before extraordinary item for the
second quarter of 1999 was $19.6 million, or $.34 per share diluted, compared
with income before extraordinary item of $15.8 million, or $.26 per share
diluted, for the same period of last year.
EXTRAORDINARY ITEM - LOSS ON EARLY EXTINGUISHMENT OF DEBT. During the second
quarter of 1998, the Company entered into a series of financing transactions
pursuant to which the Company reduced interest expense, extended debt
maturities and improved financial flexibility. As a result of the financing
transactions, the Company recorded an extraordinary charge of $50.6 million
after taxes of $28.5 million in the second quarter of 1998 related to the early
extinguishment of debt and consisted primarily of tender premiums and the
write-off of deferred debt fees.
NET INCOME (LOSS). Net income for the second quarter of 1999 was $19.6 million,
or $.34 per share diluted, compared with a net loss of $34.8 million, or $.57
per share diluted, for the same period of last year.
Diluted per share amounts are based on 57.6 million and 60.6 million average
shares outstanding for the 1999 and 1998 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.
14
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WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: SIX MONTHS ENDED JUNE 30, 1999
NET SALES. Net sales for the six months ended June 30, 1999 increased $59.3
million, or 7.1%, to $895 million compared with net sales of $835.7 million for
the six months ended June 30, 1998. Excluding the sales of Liebhardt Mills,
which was acquired during the fourth quarter of 1998, net sales increased
approximately 4%. The increase in net sales resulted primarily from higher unit
volume in the 1999 period compared with the 1998 period and the acquisition of
Liebhardt Mills.
GROSS EARNINGS/MARGINS. Gross earnings for the six months ended June 30, 1999
of $231.8 million increased $19 million, or 8.9%, compared with $212.8 million
for the same period of 1998 and reflect gross margins of 25.9% in the 1999
period and 25.5% in the 1998 period. Gross earnings and margins increased in
the first six months of 1999 primarily as a result of the increase in unit
volume and a better mix of products sold.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
increased $10.3 million, or 8.9%, in the first six months of 1999 compared with
the same period last year, and as a percentage of net sales represent 14.1% in
the 1999 period and 13.9% in the 1998 period. The increase in selling, general
and administrative expenses in the first six months of 1999 was due primarily
to the acquisition of Liebhardt Mills along with higher warehousing/shipping
expense related to the higher unit volume.
Operating earnings for the six months ended June 30, 1999 were $105.7 million,
or 11.8% of sales, and increased $8.7 million, or 9%, compared with operating
earnings of $97 million, or 11.6% of sales, for the same period of 1998. The
increase in operating earnings 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, 1999 of
$49.4 million decreased $3.8 million compared with interest expense for the six
months ended June 30, 1998. The decrease in interest expense was due primarily
to lower interest rates as a result of the refinancing transactions in the
second quarter of 1998 offset somewhat by higher average debt levels in the
1999 first six months compared with the corresponding 1998 average debt levels.
OTHER EXPENSE, NET. Other expense, net in the first six months of 1999 of $1.2
million increased $0.5 million compared with the 1998 period and consists
primarily of the amortization of deferred financing fees of $1.4 million in the
1999 period and $1.8 million in the 1998 period less certain miscellaneous
income items in both periods.
15
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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, 1999 (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 BEFORE EXTRAORDINARY ITEM. Income before extraordinary item for the
first six months of 1999 was $35.2 million, or $.61 per share diluted, compared
with income before extraordinary item of $27.5 million, or $.45 per share
diluted, for the same period of last year.
EXTRAORDINARY ITEM - LOSS ON EARLY EXTINGUISHMENT OF DEBT. During the second
quarter of 1998, the Company entered into a series of financing transactions
pursuant to which the Company reduced interest expense, extended debt
maturities and improved financial flexibility. As a result of the financing
transactions, the Company recorded an extraordinary charge of $50.6 million
after taxes of $28.5 million in the second quarter of 1998 related to the early
extinguishment of debt and consisted primarily of tender premiums and the
write-off of deferred debt fees.
NET INCOME (LOSS). Net income for the first six months of 1999 was $35.2
million, or $.61 per share diluted, compared with a net loss of $23.1 million,
or $.38 per share diluted, for the same period of last year.
Diluted per share amounts are based on 57.5 million and 60.8 million average
shares outstanding for the 1999 and 1998 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.
16
<PAGE> 17
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
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 30,
1999, the maximum commitment under the Senior Credit Facility was $800 million
and the Company had unused borrowing availability under the Senior Credit
Facility totaling approximately $360 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.
During the second quarter of 1999, the Company increased the Senior Credit
Facility from $575 million to $800 million. The conditions of the increased
revolver continue as previously stated, including the revolver expiration date
of November 30, 2004. The increased borrowing availability is to support the
Company's growth plans and strategy in the future, if required.
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 $147.5 million
in 1998 on capital expenditures and intends to invest approximately $152
million in 1999. The Board of Directors approved the payment of an initial
quarterly cash dividend of $.02 per share, which was paid on June 1, 1999 to
shareholders of record as of May 24, 1999 in the amount of $1.1 million.
During the first six months of 1999 the Company purchased approximately 1.3
million shares under its various stock repurchase programs, at an average price
of $27.54 per share. The Board of Directors has approved the purchase of up to
nineteen million shares of the Company's common stock, subject to the Company's
debt limitations. At June 30, 1999, approximately 3.6 million shares remained
to be purchased under these programs.
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, 1999 and December 31, 1998, $145 million 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 1999 is estimated to total approximately
$7.6 million, compared with $6.5 million in 1998, and will be charged to
selling, general and administrative expenses.
17
<PAGE> 18
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Debt service requirements for interest payments in 1999 are estimated to total
approximately $102.5 million (excluding amounts related to the Trade
Receivables Program) compared with interest payments of $107.7 million in 1998.
The Company's long-term indebtedness has no scheduled principal payment
requirement during 1999.
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.
18
<PAGE> 19
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.
19
<PAGE> 20
WESTPOINT STEVENS INC.
PART II - OTHER INFORMATION (CONTINUED)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1999 Annual Meeting of Stockholders was held on May 12, 1999. At
the 1999 Annual Meeting, the following matters were voted upon by the
stockholders:
1. Election of two directors to serve for a term of three years.
2. Approval of the WestPoint Stevens Inc. Omnibus Stock Incentive Plan
(as amended).
3. Ratification of appointment of Ernst & Young LLP, independent
certified public accountants, as auditors of the Company for fiscal
1999.
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>
M. Katherine Dwyer 46,106,644 5,576,090
Gerald B. Mitchell 51,351,798 330,936
</TABLE>
2. Approval of the WestPoint Stevens Inc. Omnibus Stock Incentive Plan
(as amended)
<TABLE>
<CAPTION>
For Against Abstain
------------------- ----------- -----------
<S> <C> <C>
36,652,527 12,902,533 1,933,033
</TABLE>
3. Appointment of Ernst & Young LLP
<TABLE>
<CAPTION>
For Against Abstain
------------------- ----------- -----------
<C> <C> <C>
51,612,477 34,831 35,426
</TABLE>
20
<PAGE> 21
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>
10.1 Second Amendment Agreement dated May 20, 1999, among the
Company, WestPoint Stevens (UK) Limited, WestPoint Stevens
(Europe) Limited, NationsBank, N.A. as agent and the other
financial institutions party thereto.
10.2 WestPoint Stevens Inc. Omnibus Stock Incentive Plan (As
Amended), incorporated by reference to the Company's 1999
Proxy Statement (Commission File No. 0-21496) filed by the
Company with the Commission.
27 Financial Data Schedule (for SEC use only)
</TABLE>
b.) No report on Form 8-K was filed by the Company during the quarter ended
June 30, 1999.
21
<PAGE> 22
WESTPOINT STEVENS INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 11, 1999 WESTPOINT STEVENS INC.
-----------------------------------
Registrant
/s/ Morgan M. Schuessler
-----------------------------------
Morgan M. Schuessler
Executive Vice President-Finance
and Chief Financial Officer
22
<PAGE> 23
WESTPOINT STEVENS INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- ------ ------
<S> <C> <C>
10.1 Second Amendment Agreement dated May 20, 1999, among the
Company, WestPoint Stevens (UK) Limited, WestPoint Stevens
(Europe) Limited, NationsBank, N.A. as agent and the other
financial institutions party thereto.
10.2 WestPoint Stevens Inc. Omnibus Stock Incentive Plan (As
Amended), incorporated by reference to the Company's 1999
Proxy Statement (Commission File No. 0-21496) filed by the
Company with the Commission.
27 Financial Data Schedule (for SEC use only)
</TABLE>
23
<PAGE> 1
SECOND AMENDMENT AGREEMENT
This Second Amendment Agreement, dated as of May 20, 1999 (this
"Agreement"), is among WESTPOINT STEVENS INC., a Delaware corporation (the
"Borrower"), WESTPOINT STEVENS (UK) LIMITED, WESTPOINT STEVENS (EUROPE)
LIMITED, each of the Banks signatories hereto, and NATIONSBANK, N.A., as
Administrative Agent (the "Agent").
RECITALS:
A. Pursuant to that certain Second Amended and Restated Credit Agreement,
dated as of June 9, 1998 among the Borrower, WestPoint Stevens (UK) Limited
and WestPoint Stevens (Europe) Limited (collectively, the "Foreign Borrowers"),
the lending and financial institutions party thereto (the "Original Banks"),
and the Agent, as amended by that certain letter agreement dated as of June 10,
1998 among the Borrower, the Foreign Borrowers, the Existing Banks, and the
Agent (as amended, the "Original Credit Agreement"), the Original Banks agreed
to make revolving loan and letter of credit facilities available to the
Borrower and the Foreign Borrowers.
B. Pursuant to that certain Amendment Agreement (the "First Amendment"),
dated as of July 31, 1998, by and among the Borrower, the Foreign Borrowers,
the Original Banks parties thereto, the Agent, and National Westminster Bank
PLC ("Natwest"), the Original Credit Agreement was amended to increase the
aggregate Revolving Committed amount from $550,000,000 to $575,000,000, and to
add Natwest as a Bank under the Original Credit Agreement (as amended by the
First Amendment, the "Existing Credit Agreement").
C. By separate letter agreements dated October 7, 1998 and March 16,
1999, the Borrower, the Foreign Borrowers, the Required Banks, and the Agent
have twice amended the definitions of the terms "Maximum Restricted Payment
Amount" and "Minimum Consolidated Net Worth". The Existing Credit Agreement is
deemed to include the amendments effected by these letter agreements.
D. The Borrower and the Foreign Borrowers have requested that the Banks
agree to amend further the Existing Credit Agreement to increase the aggregate
Revolving Committed Amount to $800,000,000 by increasing the Revolving
Commitment of certain consenting Banks.
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 Agreement, including its
preamble and recitals, have the following meanings:
<PAGE> 2
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Effective Date" shall have the meaning ascribed to such term in
Subpart 3.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, 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 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 Amendment to Section 2.1(a). Section 2.1(a) of the Existing
Credit Agreement is amended to read in its entirety as follows:
2.1 REVOLVING LOANS.
(a) Revolving Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set
forth herein, each Bank severally agrees to make available to the
Borrower such Bank's Revolving Commitment Percentage (as set forth on
Schedule 2.1(a)) of revolving credit loans requested by the Borrower in
Dollars ("Revolving Loans") from time to time from the Closing Date
until the Maturity Date, or such earlier date as the Revolving
Commitments shall have been terminated as provided herein; provided,
however, that the sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed EIGHT HUNDRED MILLION DOLLARS
($800,000,000) (as such aggregate maximum amount may be reduced form
time to time as provided in Section 3.4, the "Revolving Committed
Amount"); provided, further, (i) with regard to each Bank individually,
such Bank's outstanding Revolving Loans shall not exceed such Bank's
Revolving Commitment, (ii) with regard to the Banks collectively, the
aggregate principal amount of outstanding Revolving Loans plus the
aggregate principal amount of Competitive Loans plus the Dollar Amount
of the aggregate outstanding principal amount of Foreign Currency
Loans, plus the aggregate principal amount of outstanding Swingline
Loans plus the Dollar Amount of LOC Obligations outstanding shall not
exceed the Revolving Committed Amount. Revolving Loans may consist of
Base Rate Loans or Eurocurrency Loans, or a combination thereof, as the
Borrower may request; provided, however, that no more than eight (8)
Eurocurrency Loans shall be outstanding under this Section 2.1 at any
time (it being understood that, for purposes hereof, Eurocurrency Loans
with different Interest Periods shall be considered as separate
Eurocurrency Loans, even if they begin on the same date,
2
<PAGE> 3
although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurocurrency Loan
with a single Interest Period). Revolving Loans may be repaid and
reborrowed in accordance with the provisions hereof.
SUBPART 2.2 Amendment to Schedule 2.1. Schedule 2.1 of the
Existing Credit Agreement is replaced in its entirety with a new Schedule 2.1 in
the form and content of Exhibit "A" attached to this Agreement and incorporated
herein by reference.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Effective Date. The amendments effected by this Agreement shall
be and become effective as of the date hereof when (i) all of the conditions set
forth in this Subpart 3.1 shall have been satisfied, (ii) the Required Banks,
the Borrower, and the Foreign Borrowers shall have duly executed counterparts of
this Agreement and provided original copies thereof to the Agent, and (iii) each
of the Banks whose Revolving Commitment has increased pursuant to the terms of
this Agreement shall have duly executed counterparts of this Agreement and
provided original copies thereof to the Agent.
SUBPART 3.1.1. Closing Certificate. The Agent shall have received
a certificate from the Borrower and the Foreign Borrowers certifying that
(i) no Default or Event of Default exists as of the Effective Date, and
(ii) the representations and warranties of the Borrower and the Foreign
Borrowers made in or pursuant to the Credit Documents are true in all
material respects on and as of the Effective Date.
SUBPART 3.1.2. Guarantors Consent. Each of the Guarantors shall
have executed the Consent included in the signature pages of this
Agreement, and the Agent shall have received such Consent executed by each
Guarantor.
SUBPART 3.1.3. Corporate Action. The Borrower shall deliver to
the Agent certified copies of all corporate action taken by each Credit
Party approving this Agreement and each of the documents executed and
delivered in connection herewith (including, without limitation, a
certificate setting forth the resolutions of the Board of Directors of each
Credit Party adopted in respect of the transactions contemplated by this
Agreement.)
SUBPART 3.1.4. Documentation. The Existing Bank and the Agent
shall have received all information, and such counterpart originals or such
certified or other copies of such originals, as they may reasonably
request, together with the legal opinion of counsel to the Borrower in form
and content reasonably satisfactory to the Agent and its counsel. All legal
matters incident to the transactions contemplated by this Agreement shall
be satisfactory to the counsel for the Agent.
3
<PAGE> 4
SUBPART 3.1.5. Amendment Fee. The Borrower shall pay to those Banks
increasing their respective Revolving Commitments pursuant to the Agreement
a fee equal to 1/2% of the increase in the amount of each such Bank's
Revolving Commitment.
PART IV
MISCELLANEOUS
SUBPART 4.1 Cross-References. References in this Agreement to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Agreement.
SUBPART 4.2 Instrument Pursuant to Existing Credit Agreement. This
Agreement 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 Credit Documents. Each of the Borrower and the Foreign
Borrowers hereby confirms and agrees that the Credit Documents are, and shall
continue to be, in full force and effect, except as amended hereby, except
that, on and after the Effective Date, references in 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.
SUBPART 4.4. Representations and Warranties. Each of the Borrower and the
Foreign Borrowers hereby represents and warrants that (i) it has the requisite
corporate power and authority to execute, deliver and perform this Agreement,
(ii) it is duly authorized to, and has been authorized by all necessary
corporate action, to execute, deliver and perform this Agreement, (iii) it has
no claims, counterclaims, offsets, or defenses to the Credit Documents and the
performance of its obligations thereunder, (iv) the representations and
warranties contained in Section 6 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 or those which relate to
specific schedules, the changes to which do not represent a Material Adverse
Effect), (v) no event of default under any other agreement, document or
instrument to which it is a party will occur as a result of the transactions
contemplated hereby, and (vi) as of the date of this Agreement, no Event of
Default or Defaults exists.
SUBPART 4.5. Costs and Expenses. The Borrower hereby agrees to pay on
demand all costs and expenses (including without limitation the reasonable fees
and expenses of counsel to the Agent) incurred by the Agent in connection with
the negotiation, preparation, execution, and delivery of this Agreement and the
enforcement or preservation of any rights and remedies of the Banks and the
Agent hereunder.
SUBPART 4.6. Counterparts, Effectiveness, Etc. This Agreement 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.
4
<PAGE> 5
SUBPART 4.7. Captions. The captions in this Agreement are inserted only as
a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or any provision hereof.
SUBPART 4.8. Governing Law. THIS AGREEMENT 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 4.9. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
[Remainder of this page intentionally left blank.]
5
<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.
THE BORROWER: WESTPOINT STEVENS INC.,
a Delaware corporation
By: /s/ Morgan M. Schuessler
------------------------------------
Name: Morgan M. Schuessler
----------------------------------
Title: Executive Vice President-Finance
and Chief Financial Officer
--------------------------------
THE FOREIGN BORROWERS: WESTPOINT STEVENS (UK) LIMITED
By: /s/ Morgan M. Schuessler
------------------------------------
Name: Morgan M. Schuessler
----------------------------------
Title: Director, Vice President &
Treasurer
--------------------------------
WESTPOINT STEVENS (EUROPE)
LIMITED
By: /s/ Morgan M. Schuessler
------------------------------------
Name: Morgan M. Schuessler
----------------------------------
Title: Director, Vice President &
Treasurer
--------------------------------
THE BANKS: NATIONSBANK, N.A.,
individually in its capacity as a
Bank and in its capacity as
Agent and Trustee
By: /s/ David H. Dinkins
------------------------------------
Name: David H. Dinkins
----------------------------------
Title: Vice President
--------------------------------
[Signatures Continued]
<PAGE> 7
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ James F. Gable
------------------------------------
Name: James F. Gable
Title: Customer Service Officer
THE BANK OF NEW YORK
By: /s/ Ronald R. Reedy
------------------------------------
Name: Ronald R. Reedy
Title: Vice President
SCOTIABANC INC.
By: /s/ William E. Zarrett
------------------------------------
Name: William E. Zarrett
Title: Senior Relationship Manager
WACHOVIA BANK, N.A.
By: /s/ Reginald T. Dawson
------------------------------------
Name: Reginald T. Dawson
Title: Senior Vice President
[Signatures Continued]
<PAGE> 8
SOCIETE GENERALE
By: /s/ Christopher J. Speltz
--------------------------
Name: Christopher J. Speltz
------------------------
Title: Director
Head of SG - Dallas
-----------------------
ABN AMRO BANK, N.V.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
By:
--------------------------
Name:
------------------------
Title:
-----------------------
SUNTRUST BANK, ATLANTA
By: /s/ Laura Kahn
--------------------------
Name: Laura Kahn
------------------------
Title: Senior Vice President
-----------------------
FIRST UNION NATIONAL BANK
By: /s/ Roger Pelz
--------------------------
Name: Roger Pelz
------------------------
Title: Senior Vice President
----------------------
FLEET BANK, N.A.
By: /s/ Steven L. Navarro
--------------------------
Name: Steven L. Navarro
------------------------
Title: SVP
-----------------------
[Signatures Continued]
Second Amendment Agmt.
WestPoint Stevens Inc.
<PAGE> 9
AMSOUTH BANK
By: /s/ Mary Anna Raburn
----------------------------
Name: Mary Anna Raburn
--------------------------
Title: Vice President
-------------------------
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"Rabobank Nederland", New York Branch
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
NATIONAL WESTMINSTER BANK
PLC
By: /s/ Richard Roach
----------------------------
Name: Richard Roach
--------------------------
Title: Senior Corporate Manager
-------------------------
[Signatures Continued]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONDENSED
CONSOLIDATED BALANCE SHEET OF WESTPOINT STEVENS INC. AS OF JUNE 30, 1999 AND THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,
1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 182
<SECURITIES> 0
<RECEIVABLES> 108,732
<ALLOWANCES> 19,472
<INVENTORY> 461,121
<CURRENT-ASSETS> 566,398
<PP&E> 1,246,020
<DEPRECIATION> 473,316
<TOTAL-ASSETS> 1,482,750
<CURRENT-LIABILITIES> 362,842
<BONDS> 1,275,000
0
0
<COMMON> 711
<OTHER-SE> (479,957)
<TOTAL-LIABILITY-AND-EQUITY> 1,482,750
<SALES> 895,037
<TOTAL-REVENUES> 895,037
<CGS> 663,276
<TOTAL-COSTS> 663,276
<OTHER-EXPENSES> 1,175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,394
<INCOME-PRETAX> 55,100
<INCOME-TAX> 19,900
<INCOME-CONTINUING> 35,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,200
<EPS-BASIC> .63
<EPS-DILUTED> .61
</TABLE>
