<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, 2000
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 May 3, 2000: 49,431,398 shares of Common Stock,
$.01 par value.
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets:
March 31, 2000 (Unaudited) and
December 31, 1999 3
Condensed Consolidated Statements of
Income (Unaudited); Three
Months Ended March 31, 2000
and March 31, 1999 4
Condensed Consolidated Statements of Cash
Flows (Unaudited); Three
Months Ended March 31, 2000
and March 31, 1999 5
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) (Unaudited);
Three Months Ended March 31, 2000 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 - 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 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,
2000 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ................................... $ 540 $ 162
Accounts receivable ......................................... 115,479 85,419
Inventories ................................................. 479,226 448,887
Prepaid expenses and other current assets ................... 12,247 13,842
----------- -----------
Total current assets ............................................ 607,492 548,310
Property, Plant and Equipment, net .............................. 834,190 840,712
Other Assets
Deferred financing fees ..................................... 18,624 19,362
Prepaid pension and other assets ............................ 69,647 62,857
Goodwill .................................................... 68,977 69,433
----------- -----------
$ 1,598,930 $ 1,540,674
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Senior Credit Facility ...................................... $ 185,195 $ 89,803
Accrued interest payable .................................... 24,432 4,336
Trade accounts payable ...................................... 69,874 94,036
Other accounts payable and accrued liabilities .............. 123,153 127,059
----------- -----------
Total current liabilities ....................................... 402,654 315,234
Long-Term Debt .................................................. 1,375,000 1,375,000
Noncurrent Liabilities
Deferred income taxes ....................................... 291,680 284,003
Other liabilities ........................................... 63,655 64,457
----------- -----------
Total noncurrent liabilities .................................... 355,335 348,460
Stockholders' Equity (Deficit) .................................. (534,059) (498,020)
----------- -----------
$ 1,598,930 $ 1,540,674
=========== ===========
</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,
--------------------------
2000 1999
-------- --------
<S> <C> <C>
Net sales ............................................................ $447,815 $441,517
Cost of goods sold ................................................... 331,385 328,038
-------- --------
Gross earnings ................................................... 116,430 113,479
Selling, general and administrative expenses ......................... 62,549 64,185
-------- --------
Operating earnings ............................................... 53,881 49,294
Interest expense ..................................................... 29,027 24,254
Other expense, net ................................................... 529 590
-------- --------
Income before income tax expense ................................. 24,325 24,450
Income tax expense ................................................... 8,775 8,825
-------- --------
Net income ....................................................... $ 15,550 $ 15,625
======== ========
Basic net income per common share .................................... $ .31 $ .28
======== ========
Diluted net income per common share .................................. $ .31 $ .27
======== ========
Basic average common shares outstanding .............................. 49,633 55,876
Dilutive effect of stock options and stock bonus plan ............ 488 1,677
-------- --------
Diluted average common shares outstanding ............................ 50,121 57,553
======== ========
</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,
-----------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................. $ 15,550 $ 15,625
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and other amortization ............... 21,143 22,973
Deferred income taxes ............................. 7,781 7,458
Changes in working capital ........................ (62,219) (47,334)
Other - net ....................................... (6,446) (537)
--------- ---------
Net cash used for operating activities ..................... (24,191) (1,815)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................... (14,492) (12,799)
Net proceeds from sale of assets ....................... 371 102
--------- ---------
Net cash used for investing activities ..................... (14,121) (12,697)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Credit Facility:
Borrowings ........................................ 371,500 254,000
Repayments ........................................ (276,108) (209,045)
Purchase of common stock for treasury .................. (61,203) (31,665)
Proceeds from issuance of stock ........................ 5,501 1,163
Cash dividends paid .................................... (1,000) --
--------- ---------
Net cash provided by financing activities .................. 38,690 14,453
--------- ---------
Net increase (decrease) in cash and cash equivalents ....... 378 (59)
Cash and cash equivalents at beginning of period ........... 162 527
--------- ---------
Cash and cash equivalents at end of period ................. $ 540 $ 468
========= =========
</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 ACCUMULATED
EXCESS OF TREASURY STOCK OTHER
COMMON PAR ------------------- ACCUMULATED COMPREHENSIVE UNEARNED
SHARES VALUE SHARES AMOUNT DEFICIT INCOME (LOSS) COMPENSATION TOTAL
------ ---------- ------- ------ ----------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000 ......... 71,100 $ 361,504 (18,859) $(363,972) $(484,378) $(2,112) $(9,062) $(498,020)
Comprehensive income:
Net income .................. -- -- -- -- 15,550 -- -- 15,550
Foreign currency
translation adjustment (16) (16)
-------
Comprehensive income ........... 15,534
-------
Exercise of management
stock options including
tax benefit ............... -- 2,722 434 2,981 -- -- -- 5,703
Issuance of stock pursuant
to Stock Bonus Plan
including tax expense ..... -- 1,859 248 2,602 -- -- -- 4,461
Amortization of
compensation .............. -- -- -- -- -- -- 468 468
Purchase of treasury shares .... -- -- (3,573) (61,203) -- -- -- (61,203)
Cash dividends ................. -- -- -- -- (1,000) -- -- (1,000)
Stock dividends ................ -- -- -- -- (2) -- -- (2)
------- --------- ------- --------- --------- ------- -------- ----------
Balance, March 31, 2000 .......... 71,100 $ 366,085 (21,750) $(419,592) $(469,830) $(2,128) $ (8,594) $ (534,059)
======= ========= ======= ========= ========= ======= ======== ==========
</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
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period ended March 31,
2000 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2000. 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, 1999.
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, 2000 and December 31, 1999
(in thousands of dollars):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- -----------
<S> <C> <C>
Finished goods $229,702 $ 203,364
Work in progress 192,404 188,778
Raw materials and supplies 57,120 60,164
LIFO reserve -- (3,419)
-------- ---------
$479,226 $ 448,887
======== =========
</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,
2000 1999
---------- ------------
<S> <C> <C>
Short-term indebtedness
Senior Credit Facility
Revolver $ 185,195 $ 89,803
========== ==========
Long-term indebtedness
Senior Credit Facility
Revolver $ 375,000 $ 375,000
7 7/8% Senior Notes due 2005 525,000 525,000
7 7/8% Senior Notes due 2008 475,000 475,000
---------- ----------
$1,375,000 $1,375,000
========== ==========
</TABLE>
At March 31, 2000 and December 31, 1999, $154.0 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.
8
<PAGE> 9
WESTPOINT STEVENS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
On February 11, 2000, the Company announced that it received a proposal from
Holcombe T. Green, Jr., Chairman and Chief Executive Officer of the Company, to
acquire the Company in a leveraged buyout transaction. Mr. Green proposed that
all of the outstanding shares of the Company's common stock, other than shares
held by Mr. Green and his affiliates and certain other shareholders to be
identified in the future (which might include certain members of the Company's
management), be acquired for a cash purchase price of $21.00 per share through a
merger of an entity owned by Mr. Green's affiliates with the Company.
On March 24, 2000, the Company announced that its Board of Directors had
approved and adopted a plan of recapitalization pursuant to which shares of
common stock held by all stockholders, other than the Company's Chief Executive
Officer, President, Chief Financial Officer, other senior managers and their
affiliates and certain other stockholders, will be reclassified into a new
series of stock that will be redeemed for $22.00 per share in cash in the
recapitalization. Consummation of the plan of recapitalization is subject to,
among other things, stockholders' approval and the negotiation of agreements
relating to the equity and debt financing necessary to pay the redemption price,
refinance outstanding bank indebtedness, provide for sufficient working capital
and pay all related fees and expenses. The Company's senior notes due 2005 and
2008 will remain outstanding. The Company is in the process of evaluating
commitment letters received from various prospective equity and debt financing
sources. There can be no assurance that a transaction with Mr. Green and his
affiliates or any other party will result from this process.
The following discussion under Liquidity and Capital Resources does not reflect
the impact of the above transaction.
9
<PAGE> 10
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, 2000
The table below is a summary of the Company's operating results for the three
months ended March 31, 2000 and March 31, 1999 (in millions of dollars and as
percentages of net sales).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2000 1999
-------- --------
<S> <C> <C>
Net sales ................................... $ 447.8 $ 441.5
Gross earnings .............................. $ 116.4 $ 113.5
Operating earnings .......................... $ 53.9 $ 49.3
Interest expense ............................ $ 29.0 $ 24.3
Net income .................................. $ 15.6 $ 15.6
Gross margins ............................... 26.0% 25.7%
Operating margins ........................... 12.0% 11.2%
</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, 2000 (CONTINUED)
NET SALES. Net sales for the three months ended March 31, 2000 increased $6.3
million, or 1.4%, to $447.8 million compared with net sales of $441.5 million
for the three months ended March 31, 1999. The increase in net sales resulted
primarily from higher unit volume in the 2000 period compared with the 1999
period and was driven primarily by the Company's increases in sales from
accessories, blankets and its retail store business offset somewhat by decreases
in towel sales.
GROSS EARNINGS/MARGINS. Gross earnings for the three months ended March 31, 2000
of $116.4 million increased $2.9 million, or 2.6%, compared with $113.5 million
for the same period of 1999 and reflect gross margins of 26% in the 2000 period
and 25.7% in the 1999 period. Gross earnings and margins increased in the first
quarter of 2000 primarily as a result of lower raw materials costs and continued
growth of the Company's accessory, blanket and retail store business.
OPERATING EARNINGS/MARGINS. Selling, general and administrative expenses
decreased by $1.7 million, or 2.5%, in the first quarter of 2000 compared with
the same period last year, and as a percentage of net sales represent 14% in the
2000 period and 14.5% in the 1999 period. The decrease in selling, general and
administrative expenses in the first quarter of 2000 was due primarily to lower
selling expense offset somewhat by higher warehousing/shipping expense related
to the higher unit volume.
Operating earnings for the three months ended March 31, 2000 were $53.9 million,
or 12% of sales, and increased $4.6 million, or 9.3%, compared with operating
earnings of $49.3 million, or 11.2% of sales, for the same period of 1999. The
increase in operating earnings resulted from the increase in gross earnings and
the decrease in selling, general and administrative expenses discussed above.
INTEREST EXPENSE. Interest expense for the three months ended March 31, 2000 of
$29 million increased $4.7 million compared with interest expense for the three
months ended March 31, 1999. The increase was due primarily to higher interest
rates on the Company's variable rate bank debt and higher average debt levels in
the 2000 first quarter compared with the corresponding 1999 average debt levels.
OTHER EXPENSE, NET. Other expense, net in the first quarter of 2000 consisted
primarily of the amortization of deferred financing fees of $0.7 million in both
the 2000 and 1999 periods less certain miscellaneous income items in both years.
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, 2000 (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.
NET INCOME. Net income for the first quarter of 2000 was $15.6 million, or $.31
per share diluted, compared with net income of $15.6 million, or $.27 per share
diluted, for the same period of last year.
Diluted per share amounts are based on 50.1 million and 57.6 million average
shares outstanding for the 2000 and 1999 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 May 3, 2000,
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 $246 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, stock repurchases and debt service
requirements related primarily to interest payments. The Company spent
approximately $148.6 million in 1999 on capital expenditures and intends to
invest approximately $75 million in 2000. The Board of Directors approved the
payment of a quarterly cash dividend of $.02 per share which was paid on March
1, 2000 totaling approximately $1 million.
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 2000, the Company purchased approximately 3.6
million shares under its various stock repurchase programs, at an average price
of $17.13 per share. The Board of Directors has approved the purchase of up to
twenty-seven million shares of the Company's common stock, subject to the
Company's debt limitations. At March 31, 2000, approximately 3.9 million shares
remained to be purchased under these programs. At the present time, the Company
has suspended its stock repurchases.
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, 2000 and December 31, 1999, $154 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 2000 is estimated to total approximately
$8.7 million, compared with $8.8 million in 1999, and will be charged to
selling, general and administrative expenses.
Debt service requirements for interest payments in 2000 are estimated to total
approximately $113.9 million (excluding amounts related to the Trade Receivables
Program) compared with interest payments of $104.1 million in 1999. The
Company's long-term indebtedness has no scheduled principal payment requirement
during 2000.
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, operating expenses and stock
repurchases 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
On February 14, 2000, seven individual suits, entitled Matthew Lubrano v.
WestPoint Stevens Inc., et al., Crandon Capital Partners v. Holcombe T. Green,
et al., John McMullen v. WestPoint Stevens Inc., et al., David Frankel v. M.
Katherine Dwyer, et al., Norman Geller v. WestPoint Stevens Inc., et al., Pal
Green v. WestPoint Stevens Inc., et al., and Whitney Smith v. WestPoint Stevens
Inc., et al. were filed against the Company and certain of its directors in the
Court of Chancery of the State of Delaware in and for New Castle County. The
plaintiffs in these cases allege, among other things, that the $21 offer is
unfair and inadequate; was not negotiated at arms length; that members of the
Company's management including certain defendants violated their duty of fair
dealing by timing the Transaction to cap the market price for the Company's
stock before the market reacted to the announcement of the Company's excellent
results in 1999; and the management group with the acquiescence of the Company's
Board of Directors will continue to breach their fiduciary duties owed to the
plaintiffs unless injunctive relief is granted. The Complainants seek class
action status, preliminary and permanent injunctive relief against the
consummation of the Transaction, to rescind the Transaction if consummated or
the award of an unspecified amount of class rescissory damages, an order for the
defendants to account to the plaintiffs and other class members for all damages
suffered as the result of alleged wrongdoing, costs, disbursements and
attorneys' and experts' fees in an unspecified amount. The Company believes that
the allegations contained in the complaints are without merit and intends to
contest the action vigorously on behalf of itself and its directors.
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, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2.1 Plan of Recapitalization dated as of March 24,
2000, incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K (Commission
File No. 0-21496) filed by the Company with the
Commission on March 27, 2000.
10.1 Letter Agreement dated March 21, 2000, between
the Company and William F. Crumley.
10.2 Amendments to Securitization Agreements, dated
January 11, 2000, among the Company, WPS
Receivables Corporation, Blue Ridge Asset Funding
Corporation and Wachovia Bank, N.A.
27.1 Financial Data Schedule for the period ended March
31, 2000 (for SEC use only).
</TABLE>
b.) The Company filed Current Reports on Form 8-K on February 15, 2000
and March 27, 2000. The item reported in both was "Item 5. Other Events."
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/ David C. Meek
------------------------------------
David C. Meek
Executive Vice President-Finance
and Chief Financial Officer
Date: May 12, 2000
16
<PAGE> 17
WESTPOINT STEVENS INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- ------- ------
<S> <C> <C>
2.1 Plan of Recapitalization dated as of March 24,
2000, incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K (Commission
File No. 0-21496) filed by the Company with the
Commission on March 27, 2000.
10.1 Letter Agreement dated March 21, 2000, between
the Company and William F. Crumley.
10.2 Amendments to Securitization Agreements, dated
January 11, 2000, among the Company, WPS
Receivables Corporation, Blue Ridge Asset Funding
Corporation and Wachovia Bank, N.A.
27.1 Financial Data Schedule for the period ended March
31, 2000 (for SEC use only).
</TABLE>
17
<PAGE> 1
EXHIBIT 10.1
[WESTPOINT STEVENS LOGO]
Thomas J. Ward
President and Chief Operating Officer
March 21, 2000
PERSONAL AND CONFIDENTIAL
Mr. William F. Crumley
WestPoint Stevens Inc.
Post Office Box 71
West Point, Georgia 31833
Dear Bill:
You have indicated that you would like to avoid the daily
responsibilities associated with your present position as Executive Vice
President-Operations of WestPoint Stevens Inc., and in response thereto, I have
proposed the following arrangement with respect to your employment by the
Company until you retire January 1, 2001.
1. Effective May 1, 2000, you will serve as a special advisor to
the President, reporting directly to me, however, you will no longer be an
executive officer of the Company. As such, you will have no daily
responsibilities but will be available, as needed, to assist me with special
projects.
2. From May 1, 2000, through December 31, 2000, you will be paid
your regular base salary and you will be eligible for all your current benefits.
Your cash bonus and stock bonus for 2000, if earned, will be prorated through
April 30, 2000.
3. In recognition of your faithful service and many contributions
to the Company the unvested portion of all of your stock options and earned
stock bonus awards shall become fully vested and non forfeitable effective
January 1, 2001.
You will enter into your retirement from the Company on January 1, 2001
and no other obligation shall exist between you or the Company.
If this is agreeable to you, please so indicate by signing this letter
below.
Sincerely,
/s/ THOMAS J. WARD
Thomas J. Ward
/psb
Agreed:
/s/ William F. Crumley
- -------------------------------
William F. Crumley
<PAGE> 1
EXHIBIT 10.2
AMENDMENTS TO SECURITIZATION AGREEMENTS
AMENDMENTS TO SECURITIZATION AGREEMENTS, dated as of January 11, 2000,
among WESTPOINT STEVENS, INC. ("WestPoint Stevens"), WPS RECEIVABLES
CORPORATION ("WPS Finco"), BLUE RIDGE ASSET FUNDING CORPORATION ("Blue Ridge")
and WACHOVIA BANK, N.A. ("Wachovia").
WHEREAS, WestPoint Stevens, as seller (in such capacity, the "Seller")
and WPS Finco are parties to a Receivables Purchase Agreement, dated as of
December 18, 1998, (the "Purchase Agreement").
WHEREAS, WPS Finco, as transferor (in such capacity, the
"Transferor"), Blue Ridge, as transferee (in such capacity, the "Transferee"),
Wachovia, as administrator (in such capacity, the "Administrator") and
WestPoint Stevens, as initial servicer (in such capacity, the "Servicer") are
parties to an Asset Interest Transfer Agreement, dated as of December 18, 1998
as amended by the First Amendment thereto, dated as of December 17, 1999 (the
"Transfer Agreement").
WHEREAS, subject to the terms and conditions hereof, the parties
hereto desire to amend the Purchase Agreement and the Transfer Agreement (such
amendments collectively referred to herein as these "Amendments").
FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH
ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO, INTENDING TO BE LEGALLY BOUND
HEREBY, AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
All capitalized terms used herein, unless otherwise defined, are used
as defined in Appendix A to the Purchase Agreement and Transfer Agreement.
ARTICLE II
AMENDMENT NO. 1 TO PURCHASE AGREEMENT
SECTION 2.1 AMENDMENTS TO SECTION 2.2 OF THE PURCHASE AGREEMENT.
(a) The definition of "Purchase Price Percentage" is hereby
amended and restated to read as follows:
<PAGE> 2
(a) "Purchase Price Percentage" for the Receivables to be sold by
Seller on any day shall mean the percentage determined in accordance with the
following formula:
<TABLE>
<S> <C> <C>
PPP = 100%-PD
where:
PPP = the Purchase Price Percentage in effect on such day
PD = the Purchase Discount (expressed as a percentage) shall
mean for any day, an amount, calculated in good
faith by the Purchaser, equal to the Product of
(A) the sum of (x) the A1-P1 asset backed commercial
paper rate for a maturity most closely corresponding
to the estimated maturity period of the Receivables,
and (y) the greater of (1) 0.25% or (2) the Loss
Reserve, and (B) a fraction the numerator of which
is the estimated maturity period of the Receivables
and the denominator of which is 360, determined
pursuant to paragraph (b) below.
(b) The Purchase Price Percentage and the Purchase Discount shall
be recomputed by the Servicer on each Reporting Date, in each case for
the then most recent ended Reporting Period, and such recomputed
amounts shall be used for purposes of calculating the Purchase Price
payable to Seller for Receivables sold to WPS Finco through the next
Reporting Date.
ARTICLE III
AMENDMENT NO. 2 TO THE TRANSFER AGREEMENT
(a) The definition of "Receivable" in Appendix A is hereby amended
by adding the phrase "and Receivables of Other Excluded Obligors in an aggregate
amount not to exceed $10 million" at the end thereof.
(b) A new definition is hereby added to Appendix A to read as
follows:
"Other Excluded Obligors" means any Person
designated from time to time by the Seller and approved by the
Administrator as an Other Excluded Obligor; provided, that such
approval shall be deemed to have been given if after five Business
Days' notice of such designation by the Seller, the Administrator
has not disapproved such designation.
</TABLE>
2
<PAGE> 3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of WestPoint Stevens and WPS Finco represents and warrants that:
(a) these Amendments have been duly authorized, executed and delivered
pursuant to its corporation power; and
(b) these Amendments constitute its legal, valid and binding obligation
subject to the effect of bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Confirmation of Purchase Agreement and Transfer Agreement.
Each of the parties hereto agrees that, except for the specific amendments set
forth herein, nothing herein shall be deemed to be a waiver or amendment of any
covenant or agreement contained in the Purchase Agreement or the Transfer
Agreement and each of the other documents executed in connection therewith are
ratified and confirmed in all respects and shall remain in full force and effect
in accordance with its terms. Each reference in the Purchase Agreement to "this
Agreement" or "this Purchase Agreement" and in each of the other documents to be
executed in connection therewith to the "Purchase Agreement," shall mean the
Purchase Agreement as amended by these Amendments and as each such agreement may
be hereafter amended or restated. Each reference in the Transfer Agreement to
"this Agreement" or "this Transfer Agreement" and in each of the other documents
to be executed in connection therewith to the "Transfer Agreement", shall mean
the Transfer Agreement as amended by these Amendments and as each such agreement
may be hereafter amended or restated. Nothing herein shall obligate the parties
hereto, to enter into any future amendment (whether similar or dissimilar).
SECTION 5.2 Counterparts. Delivery of an executed counterpart of a
signature page to these Amendments by facsimile shall be effective as delivery
of a manually executed counterpart of these Amendments. These Amendments may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 5.3 Governing Law. These Amendments shall be governed by, and
construed in accordance with, New York law.
SECTION 5.4 Effective Date of Amendments. Upon the execution and
delivery of these Amendments by the parties hereto, the Purchase Agreement, the
3
<PAGE> 4
Transfer Agreement and Appendix A shall be amended by these Amendments,
effective as of the date hereof.
* * *
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused these Amendments to
be duly executed by their respective authorized officers as of the date and
year first above written.
WESTPOINT STEVENS, INC.,
as Seller and Servicer
By:
-------------------------
Title:
Name:
WPS RECEIVABLES CORPORATION,
as Purchaser and Transferor
By:
-------------------------
Title:
Name:
BLUE RIDGE ASSET FUNDING CORPORATION
As Transferee
By: /s/ Frances W. Josephic
-------------------------
Title: Vice President
Name: Frances W. Josephic
WACHOVIA BANK, N.A.
as Administrator
By: /s/ Kevin T. McConnell
-------------------------
Title: Kevin T. McConnell
Name: Senior Vice President
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused these Amendments to
be duly executed by their respective authorized officers as of the date and year
first above written.
WESTPOINT STEVENS, INC.,
as Seller and Servicer
By: /s/ Nelson Griffith
----------------------------------------
Title: Controller - Corporate Accounting
Name: Nelson Griffith
WPS RECEIVABLES CORPORATION,
as Purchaser and Transferor
By: /s/ Nelson Griffith
--------------------------------------
Title: Vice President/Assistant Treasurer
Name: Nelson Griffith
BLUE RIDGE ASSET FUNDING CORPORATION
as Transferee
By:
--------------------------------------
Title:
Name:
WACHOVIA BANK, N.A.
as Administrator
By:
--------------------------------------
Title:
Name:
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 AND THE CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 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-31-2000
<PERIOD-START> JAN-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 540
<SECURITIES> 0
<RECEIVABLES> 133,894
<ALLOWANCES> 18,415
<INVENTORY> 479,226
<CURRENT-ASSETS> 607,492
<PP&E> 1,356,381
<DEPRECIATION> 522,191
<TOTAL-ASSETS> 1,598,930
<CURRENT-LIABILITIES> 402,654
<BONDS> 1,375,000
0
0
<COMMON> 711
<OTHER-SE> (534,770)
<TOTAL-LIABILITY-AND-EQUITY> 1,598,930
<SALES> 447,815
<TOTAL-REVENUES> 447,815
<CGS> 331,385
<TOTAL-COSTS> 331,385
<OTHER-EXPENSES> 529
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,027
<INCOME-PRETAX> 24,325
<INCOME-TAX> 8,775
<INCOME-CONTINUING> 15,550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,550
<EPS-BASIC> .31
<EPS-DILUTED> .31
</TABLE>
