<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____ to ____
Commission file number: 1-11756
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Pillowtex Corporation 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Financial Statements and Supplemental Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1999 and 1998 3
Notes to Financial Statements 4
Schedule
Schedule of Assets Held for Investment Purposes at End of Year -
December 31, 1999 10
<PAGE>
Independent Auditors' Report
The Administrative Committee
Pillowtex Corporation 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of Pillowtex Corporation 401(k) Plan as of December 31, 1999 and 1998, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Pillowtex
Corporation 401(k) Plan as of December 31, 1999 and 1998, and the changes in net
assets available for benefits for the years then ended in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KPMG LLP
June 26, 2000
Dallas, Texas
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Assets:
Investments (note 3):
Mutual funds $ 14,099,349 11,584,188
Common stock - Pillowtex Corporation 934,242 1,097,191
Participants' loans 907,756 572,509
--------------- ---------------
15,941,347 13,253,888
Cash -- 79,098
Dividends receivable 4,610 212,418
Employee contribution receivable 15,970 --
Employer contribution receivable 644,918 1,167,617
--------------- ---------------
Net assets available for benefits $ 16,606,845 14,713,021
=============== ===============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in fair value of
investments (note 3) $ (269,640) 1,161,810
Interest and dividends 1,231,247 1,085,818
--------------- ---------------
Total investment income 961,607 2,247,628
--------------- ---------------
Contributions (note 1):
Participants 2,151,292 1,951,084
Employer 615,281 1,167,617
--------------- ---------------
Total contributions 2,766,573 3,118,701
--------------- ---------------
Total additions 3,728,180 5,366,329
--------------- ---------------
Deductions from net assets attributed to:
Benefits paid to participants 1,819,207 2,222,070
Administrative expenses 15,149 --
--------------- ---------------
Total deductions 1,834,356 2,222,070
--------------- ---------------
Net increase 1,893,824 3,144,259
Net assets available for benefits:
Beginning of year 14,713,021 11,568,762
--------------- ---------------
End of year $ 16,606,845 14,713,021
=============== ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) Description of the Plan
The following brief description of the provisions of the Pillowtex
Corporation (the Company) 401(k) Plan (the Plan) is provided for general
informational purposes only. Participants should refer to the Plan document
for more complete information.
(a) General
The Plan is a defined contribution profit sharing plan available to
all employees of Pillowtex Corporation (Employer and Company) and its
subsidiaries Beacon Manufacturing and Tennessee Woolen Mills who are
at least 18 years of age and have completed a one-year period of
service, as defined in the Plan. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
(b) Plan Amendments
Effective January 1, 1999, the Plan was amended and restated to
increase the maximum employee contribution percentage from 15% to 20%.
Effective November 16, 1999, the Plan appointed a new trustee and
record keeper. Union Bank of California was succeeded by The Charles
Schwab Trust Company (Schwab) as trustee and by Milliman & Robertson,
Inc. as record keeper. Plan assets transferred to Schwab were
transferred into funds comparable to those offered by Union Bank of
California. A new investment fund choice was also added to the Plan.
(c) Contributions
Participants are permitted to contribute from 1% to 20% of their
annual compensation to the Plan on a tax-deferred basis. Participants
may elect to invest their contributions in any of the available
investment funds. Under the Tax Reform Act of 1986, a participating
employee's annual contribution is limited to certain amounts as set
forth by the Internal Revenue Code.
The Plan provides for the Employer to make discretionary
contributions. Discretionary contributions of the Employer are
allocated to participant accounts on the last day of the Plan's fiscal
year equal to a percentage of the amount of the salary reduction
deferred by the participant. The percentage is determined by the
Employer. The Employer made discretionary contributions of $574,405
and $1,142,560 in 1999 and 1998, respectively.
Non-discretionary Employer contributions are required by collective
bargaining agreements covering participants at certain Pillowtex
locations. These contributions were $40,876 and $25,057 in 1999 and
1998, respectively.
(Continued)
4
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(d) Participants' Accounts
Each participant's account is credited with the participant's
contribution and an allocation of the Company's contribution and Plan
earnings and charged with an allocation of administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
(e) Vesting
Participants are immediately vested in their contributions and
earnings thereon. Vesting in the Employer's elective matching
contributions is graduated at 25% per year, beginning at the end of
the first year of service, up to 100% after the earlier of four full
years of service, age 65, death, or total disability. Participants who
separate from service prior to full vesting of their rights forfeit
their share of the Employer's contributions to the extent that vesting
has not occurred. Amounts forfeited are used to reduce the Employer's
matching contributions for the current or future plan years.
Forfeitures were $11,637 and $5,761 in 1999 and 1998, respectively.
(f) Payment of Benefits
Upon normal retirement at age 65, death, disability, early retirement
or termination of employment, the participant's vested benefits are
paid to the member employee or his beneficiary in the form of a lump-
sum distribution.
(g) Participants' Loans
The Plan allows participants to borrow amounts from the vested portion
of their accounts. Such loans are generally limited to the lesser of
50% of the vested account balance or $50,000. Plan loans must be
repaid within five years; however, if the loan is used to acquire the
principal residence of the participant, the loan may be repaid over a
period determined by the Plan Committee. Interest rates for 1999
ranged from 8.75% to 9.50%.
(h) Investment Options
Effective November 16, 1999, the investments of the Plan were
transferred from Union Bank of California to The Charles Schwab Trust
Company. This transaction resulted in a change in investment options
during 1999.
Effective November 16, 1999 a participant had the following investment
options:
Schwab Institutional Advantage Money Market Fund - The fund seeks
maximum current income by investing primarily in a diversified
portfolio of high quality short-term debt securities of major U.S.
banks and corporations.
Strong Government Securities Fund - The fund seeks current income with
moderate share-price fluctuation by investing primarily in U.S.
government obligations.
(Continued)
5
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
Gabelli Westwood Balanced Fund - The fund seeks capital appreciation
and current income by investing between 30% and 70% of assets in
common stocks or convertible securities issued by seasoned companies
with above-average historical earnings growth, or by smaller companies
with outstanding potential for capital appreciation. It may invest the
balance in investment-grade U.S. dollar or foreign currency-
denominated debt. The fund invests at least 25% in fixed income senior
securities and up to 25% in foreign securities.
Vanguard Windsor II Fund - The fund seeks long-term growth of capital
by investing primarily in undervalued stocks of medium and large
companies, characterized by above-average dividend yields and below-
average price/earnings ratios relative to the stock market.
Neuberger Berman Partners Fund - The fund seeks capital growth by
investing primarily in common stocks of established companies with
management focusing on securities that it believes are undervalued
based on low P/E ratios, consistent cash flow, and support from asset
values.
INVESCO Dynamics Fund - The fund seeks capital appreciation by
investing primarily in common stocks of domestic companies with
management emphasizing short-term factors when selecting securities,
including current information about a company, investor interest,
price movements of the company's securities, general market and
monetary conditions.
GAM International Fund - The fund seeks long-term capital appreciation
by investing at least 65% of assets in securities issued in at least
three foreign countries. It invests primarily in equity securities but
may also invest up to 5% of assets in debt securities.
Pillowtex Corporation Common Stock - Pillowtex common stock is
publicly traded on the New York Stock Exchange.
From January 1, 1999 through November 15, 1999 and for the year ended
December 31, 1998, the participant had the following investment
options: Union Bank of California Mutual Funds (Highmark Money Market
Fund, Highmark Government Securities Fund, and Highmark Balanced
Fund), Vanguard S&P Index Fund, Fidelity Contrafund, American Century
Ultra Fund, and Pillowtex common stock.
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared using the accrual
basis of accounting.
(Continued)
6
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(b) Investment Valuation and Income Recognition
Effective November 16, 1999, the assets of the Plan are held in the
custody of The Charles Schwab Trust Company (Trustee) in conjunction
with the assets of the Pillowtex Fieldcrest Cannon 401(k) Plans for
Hourly and Salaried Employees. A separate account for each Plan is
maintained which reflects the pro rata ownership of the Plan in the
respective investments held by the Trustee. All benefits paid to
participants are disbursed by the Trustee as instructed and approved
by the Plan administrator.
The Plan's investments in mutual funds and common stock are stated at
fair value. The mutual fund investments are valued at quoted market
prices which represent the asset values of shares held by the Plan at
year end. Capital gain distributions are recorded as dividends in the
accompanying financial statements.
The participant loans are valued at their outstanding balances, which
approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
(c) Administrative Expenses
Administrative expenses include trustee and investment manager fees
which are distributed from plan assets by the Trustee. Certain other
administrative expenses of the Plan are paid by the Company including
accounting, legal and audit fees and other administrative services.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of net assets
available for benefits and changes therein. Actual results could
differ from those estimates.
(e) Benefit Payments
Benefits are recorded when paid.
(3) Investments
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters (SOP 99-
3). SOP 99-3 simplifies the disclosure for certain investments and is
effective for plan years ending December 15, 1999. The Plan adopted SOP 99-
3 during the Plan year ending December 31, 1999. Accordingly, information
previously required to be disclosed about participant directed fund
investment programs is not presented in the Plan's 1999 financial
statements. The Plan's 1998 financial statements have been reclassified to
conform with the current year's presentation.
(Continued)
7
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
Investments as of December 31, 1999 are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1999
-----------------------------------------
Units/ Fair
shares value
------------------- -----------------
<S> <C> <C>
Mutual funds:
Schwab Institutional Advantage Money
Market Fund $ 2,009,416 2,026,705*
Strong Government Securities Fund 86,865 886,621*
Gabelli Westwood Balanced Fund 98,098 1,163,540*
Vanguard Windsor II Fund 124,009 3,151,539*
Neuberger Berman Partners Fund 129,056 3,124,010*
INVESCO Dynamics Fund 139,763 3,665,786*
GAM International Fund 2,481 81,148
-----------------
14,099,349
Common Stock - Pillowtex Corporation 151,085 934,242*
Participant loans 907,756*
-----------------
Total $ 15,941,347
=================
</TABLE>
Investments as of December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------------------------------
Units/ Fair
shares value
------------------- -----------------
<S> <C> <C>
Mutual funds:
Union Bank of California:
Highmark Money Market Fund 2,005,018 $ 2,005,018*
Highmark Government Securities Fund 100,524 1,009,259*
Highmark Balanced Fund 69,079 1,158,463*
Vanguard S&P Index Fund 22,826 2,601,053*
Fidelity Contrafund 42,517 2,414,528*
American Century Ultra Fund 71,678 2,394,766*
Pillowtex-Liq Pillowtex Company 1,101 1,101
-----------------
11,584,188*
Common Stock - Pillowtex Corporation 41,016 1,097,191*
Participant loans 572,509
-----------------
Total $ 13,253,888
=================
</TABLE>
*Represents 5% or more of total net assets available for benefits.
(Continued)
8
<PAGE>
PILLOWTEX CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
The Plan's investments (including investments bought, sold and held during
the year) appreciated (depreciated) as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------
1999 1998
---------- ----------
<S> <C> <C>
Investments at fair value as determined by
quoted market price:
Mutual funds $ (564,041) 1,471,734
Company stock 294,401 (309,924)
---------- ----------
$ (269,640) 1,161,810
========== ==========
</TABLE>
(4) Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time, and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become vested to the extent of the balance
in their account.
(5) Income Tax Status
The Internal Revenue Service has determined and informed the Company by
letter dated May 17, 1997 that the Plan and related trust are designed in
accordance with applicable requirements of the Internal Revenue Code (IRC).
The Plan has been amended since receiving the determination letter.
However, the Plan administrator and Plan's management believe that the Plan
is designed and is currently being operated in compliance with the
applicable requirements of the IRC.
(6) Related Party Transactions
Certain Plan investments are shares of common stock of Pillowtex
Corporation and units of a money market fund managed by The Charles Schwab
Trust Company. The Charles Schwab Trust Company is the trustee as defined
by the Plan. Therefore, these transactions qualify as party-in-interest.
(7) Subsequent Event
On January 1, 2000, the salaried participants of the Plan were merged with
the participants of the Pillowtex Fieldcrest Cannon 401(k) Plan for
Salaried Employees. The name of the new plan was changed to the Pillowtex
Corporation 401(k) Plan for Salaried Employees. In addition, the hourly
participants of the Plan were merged with the participants of the Pillowtex
Fieldcrest Cannon 401(k) Plan for Hourly Employees and the name of the new
plan was changed to the Pillowtex Corporation 401(k) Plan for Hourly
Employees.
9
<PAGE>
Schedule
PILLOWTEX CORPORATION
401(k) PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
Description of Units/ Current
Identity of issue investment shares value
------------------------------------------------------ ------------------ ---------- -----------
<S> <C> <C> <C>
Schwab Institutional Advantage Money Market Fund* Mutual funds 2,009,416 $ 2,026,705
Strong Government Securities Fund Mutual funds 86,865 886,621
Gabelli Westwood Balanced Fund Mutual funds 98,098 1,163,540
Vanguard Windsor II Fund Mutual funds 124,009 3,151,539
Neuberger Berman Partners Fund Mutual funds 129,056 3,124,010
INVESCO Dynamics Fund Mutual funds 139,763 3,665,786
GAM International Fund Mutual funds 2,481 81,148
Common stock - Pillowtex Corporation* Common stock 151,085 934,242
Participant loans* Loans to participants 907,756
-------------
Total investments $ 15,941,347
=============
</TABLE>
* Party-in-interest
See accompanying independent auditors' report.
10
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Employee Benefits Committee which administers the Plan has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
PILLOWTEX CORPORATION 401(K) PLAN
By Employee Benefits Committee Appointed
Pursuant to the Plan:
Date: June 28, 2000 /s/ Anthony T. Williams
-----------------------------------------
Anthony T. Williams, Committee Member and
Chairman
Date: June 28, 2000 /s/ Janet F. Earnhardt
-----------------------------------------
Janet F. Earnhardt, Committee Member
Date: June 28, 2000 /s/ Pat Ruiz
-----------------------------------------
Pat Ruiz, Committee Member
Date: June 28, 2000 /s/ Jaime Vasquez
-----------------------------------------
Jaime Vasquez, Committee Member
<PAGE>
Exhibit Index
Exhibit
Number Document Description
------- --------------------
23.1 Consent of Independent Auditors
