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 quarter ended September 27, 1997
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 33-75510-01; 1-12944
JPS AUTOMOTIVE L.P.
JPS AUTOMOTIVE PRODUCTS CORP.
(State or other Jurisdiction of (IRS Employer Identification
incorporation or Organization) No. 57-1060375
Delaware No. 57-0993690)
Delaware
701 McCullough Drive
Charlotte, NC 28262
Telephone (704) 547-8500
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 .
JPS Automotive L.P. and JPS Automotive Products Corp. meet the conditions set
forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore
filing this form with the reduced disclosure format.
As of November 10, 1997, the number of outstanding shares of JPS Automotive
Products Corp. common stock was 100.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
-----------------------------------------------------------------------
Predecessor Predecessor
Company Company
------------- -------------
September 27, September 29, September 27, September 29,
1997 1996 1997 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales.............................. $ 59,430 $ 47,785 $ 179,573 $ 171,826
Cost of goods sold..................... 51,811 41,762 153,863 143,680
------------- -------------- --------------- ----------------
Gross profit........................... 7,619 6,023 25,710 28,146
Selling, general and administrative
expenses............................ 3,715 4,823 12,425 14,266
------------- -------------- --------------- ----------------
Income from operations................. 3,904 1,200 13,285 13,880
Interest expense, net.................. 1,904 5,317 7,513 15,724
Other income, net...................... -- (67) (5) (69)
Minority interest in consolidated
subsidiary.......................... -- (125) -- 447
------------- -------------- --------------- ----------------
Income (loss) before income taxes...... 2,000 (3,925) 5,777 (2,222)
Income tax provision................... 881 96 2,654 271
------------- -------------- --------------- ----------------
Income (loss) from continuing
operations.......................... 1,119 (4,021) 3,123 (2,493)
Income from discontinued operations,
net of income tax of $0, $30,
$1,044 and $76....................... 78 588 1,662 2,633
------------- -------------- --------------- ----------------
Income (loss) before extraordinary loss 1,197 (3,433) 4,785 140
Extraordinary loss, net of income tax
of $442.............................. -- -- (721) --
------------- -------------- --------------- ----------------
Net income (loss)...................... $ 1,197 $ (3,433) $ 4,064 $ 140
============= ============== =============== ================
</TABLE>
See accompanying notes.
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
September 27, December 28,
ASSETS 1997 1996
-------------- -----------
Current assets:
Cash and cash equivalents ......................... $ 54,713 $ 198
Accounts receivable, net .......................... 39,595 26,840
Inventories ....................................... 18,762 14,290
Net assets of discontinued operations ............. -- 50,418
Other current assets .............................. 10,854 9,764
-------------- -----------
Total current assets ............................ 123,924 101,510
-------------- -----------
Property, plant and equipment, net ................... 58,544 59,512
Goodwill, net ........................................ 108,890 114,769
Other assets ......................................... 10,080 10,557
-------------- -----------
$301,438 $286,348
============== ===========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable .................................. $ 20,231 $ 12,014
Accrued expenses .................................. 27,029 21,996
-------------- -----------
Total current liabilities ....................... 47,260 34,010
-------------- -----------
Long-term debt ....................................... 92,126 117,175
Other liabilities .................................... 12,230 12,638
Commitments and contingencies.........................
Owners' equity:
General partner ................................... 48,073 48,073
Limited partner ................................... 101,749 74,452
-------------- -----------
Total owners' equity .......................... 149,822 122,525
-------------- -----------
$301,438 $286,348
============== ===========
See accompanying notes.
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------------
Predecessor
Company
----------------
September 27, September 29,
1997 1996
-------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ............................................... $ 4,064 $ 140
Adjustments to reconcile net income to net cash
provided by operating activities:
Income from discontinued operations ................. (1,662) (2,633)
Extraordinary loss, net ............................. 721 --
Depreciation and amortization ....................... 6,457 8,714
Interest accretion and debt issuance cost
amortization ...................................... (206) 880
Other, net .......................................... 2,718 1,158
Changes in operating assets and liabilities ......... (7,718) 916
-------- --------
Net cash provided by continuing operations ........ 4,374 9,175
-------- --------
Net cash provided by discontinued operations ............. 1,735 5,725
-------- --------
Net cash provided by operating activities ......... 6,109 14,900
-------- --------
INVESTING ACTIVITIES
Capital expenditures ..................................... (5,018) (3,946)
Proceeds from disposition of discontinued operations ..... 55,900 --
Other, net ............................................... (5) 37
-------- --------
Net cash provided by (used in) investing activities 50,877 (3,909)
-------- --------
FINANCING ACTIVITIES
Repayments of long-term debt ............................. (25,704) (474)
Capital contributions from partners ...................... 23,233 --
Repayments of revolving loans ............................ -- (11,710)
-------- --------
Net cash used in financing activities ............. (2,471) (12,184)
-------- --------
Net increase (decrease) in cash and cash equivalents ..... 54,515 (1,193)
Cash and cash equivalents at beginning of period ......... 198 2,837
-------- --------
Cash and cash equivalents at end of period ............... $ 54,713 $ 1,644
======== ==========
</TABLE>
See accompanying notes
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation:
Condensed Consolidated Financial Statement
The condensed consolidated financial statements include the accounts of
JPS Automotive L.P. and its subsidiaries ("JPS Automotive"). In the opinion of
management of JPS Automotive, the accompanying condensed consolidated financial
statements reflect all adjustments considered necessary for a fair presentation
of the consolidated financial position, results of operations and cash flows.
Results of operations for interim periods are not necessarily indicative of
results for the full year. Certain reclassifications have been made to these
condensed consolidated financial statements for the quarter and nine months
ended September 29, 1996 to conform to the fiscal 1997 presentation and are
related to the Air Restraint and Technical Products Division ("Airbag") being
classified as a discontinued operation. See Note 5. For further information,
refer to the consolidated financial statements and notes thereto included in JPS
Automotive's Transition Report on Form 10-K for the transition period from
January 1, 1996 to December 28, 1996.
The 1996 Acquisition
On December 11, 1996, Collins & Aikman Corporation ("C&A"), through its
subsidiaries, acquired JPS Automotive from Foamex International Inc. ("Foamex")
pursuant to an Equity Purchase Agreement dated August 28, 1996, as amended
December 11, 1996 (the "1996 Acquisition"). The purchase price for the 1996
Acquisition was an aggregate of approximately $220 million, subject to
postclosing adjustment, consisting of approximately $195 million of indebtedness
of JPS Automotive and approximately $25 million in cash paid to Foamex.
In the 1996 Acquisition, Collins & Aikman Products Co. ("C&A
Products"), a wholly owned subsidiary of C&A, acquired a .9999% limited
partnership interest in JPS Automotive from Foamex and a 99% limited partnership
interest in JPS Automotive from Foamex - JPS Automotive L.P. ("FJPS"). PACJ,
Inc., a wholly owned subsidiary of C&A Products, acquired a .0001% general
partnership interest in JPS Automotive from JPSGP Inc. ("JPSGP"). Accordingly,
100% of the partnership interests in JPS Automotive are owned by PACJ, Inc. and
C&A Products, which are, respectively, indirect and direct wholly owned
subsidiaries of C&A.
In addition, on December 11, 1996, C&A Products purchased from Seiren
Co. Ltd. and its affiliates for $10 million, the 20% minority interest in
Cramerton Automotive Products, L.P. ("Cramerton") not held by JPS Automotive.
JPS Automotive subsequently acquired the 20% minority interest previously held
by the Seiren entities.
In connection with the 1996 Acquisition, C&A, through its subsidiaries,
acquired approximately $68 million of JPS Automotive's outstanding 11-1/8%
Senior Notes due 2001 (the "Senior Notes"), which were subsequently retired by
JPS Automotive. In addition, at the time of closing, approximately $15 million
of JPS Automotive's outstanding debt was repaid. The Senior Notes formerly held
by C&A and the funds used to repay JPS Automotive's outstanding bank
indebtedness were recorded as capital contributions to JPS Automotive from C&A
and its subsidiaries.
The 1994 Acquisition
JPS Automotive L.P. was formed on May 17, 1994 (JPS Automotive L.P., as
it existed prior to the 1996 Acquisition being hereinafter referred to as the
"Predecessor Company"), for the purpose of acquiring a 100% ownership interest
in JPS Automotive Products Corp. ("Products Corp."), which was purchased for
nominal consideration on May 25, 1994. On June 28, 1994, FJPS and JPSGP, the
owners of a 99% limited partnership interest and a 1% general partnership
interest in the Predecessor Company, respectively, made
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
capital contributions of approximately $90.0 million to the Predecessor Company
which, in turn, made a capital contribution of approximately $90.0 million to
Products Corp. FJPS and JPSGP were indirect wholly owned subsidiaries of Foamex.
On June 28, 1994, Products Corp. acquired the assets of the automotive
products and industrial fabrics divisions of JPS Textile Group, Inc. ("JPS
Textile") (the "1994 Acquisition"). Effective October 3, 1994, Products Corp.
transferred and assigned substantially all of its assets, subject to
substantially all of its liabilities, to the Predecessor Company, which agreed
to assume such liabilities.
2. Inventories:
The components of inventories consist of:
September 27, December 28,
1997 1996
------------- ---------------
Raw materials and supplies ................... $ 5,338 $ 4,210
Work-in-process .............................. 9,233 7,323
Finished goods................................ 4,191 2,757
------------- ---------------
Total ............................... $18,762 $14,290
============ ==============
3. Goodwill:
Goodwill, representing the excess of purchase price over the fair value
of net assets acquired in the 1996 Acquisition, is being amortized on a
straight-line basis over the period of forty years. Amortization of goodwill for
the quarter and nine months ended September 27, 1997 was $.6 million and $1.9
million, respectively. Accumulated amortization at September 27, 1997 was $2.3
million. The carrying value of goodwill will be reviewed periodically based on
the nondiscounted cash flows and pretax income over the remaining amortization
periods. Should this review indicate that the goodwill balance will not be
recoverable, JPS Automotive's carrying value of the goodwill will be reduced. At
September 27, 1997, JPS Automotive believes its goodwill of $108.9 million is
fully recoverable.
4. Facility Closing Costs:
In connection with the 1996 Acquisition, C&A has developed preliminary
plans for JPS Automotive to rationalize certain manufacturing locations, as well
as marketing and administrative functions. These plans have not been finalized.
Costs accrued during the December 28, 1996 period, for the shutdown of
facilities and severance and other personnel costs were $2.2 million and $7.0
million, respectively. During the quarter and nine months ended September 27,
1997, JPS Automotive expended approximately $.5 million and $1.8 million,
respectively, for the shutdown of facilities and severance and other personnel
costs.
5. Discontinued Operations:
On July 24, 1997, JPS Automotive completed its sale of Airbag to Safety
Components International, Inc. for a purchase price of $56.3 million, subject to
adjustment. Pursuant to the indenture governing the Senior Notes, in connection
with the sale of Airbag, C&A caused JPS Automotive to make an offer to purchase
(up to the amount of the net proceeds from the sale) the Senior Notes at 100% of
their principal amount. Pursuant
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
to such offer (which expired September 16, 1997), JPS Automotive repurchased and
retired $23 thousand principal amount of Senior Notes. During October 1997, C&A
caused JPS Automotive to use a portion of the proceeds remaining from the sale
of Airbag to make a distribution of $35 million to C&A Products, as permitted
under the restricted payments provisions of the Senior Notes indenture. JPS
Automotive has accounted for the financial results and net assets of Airbag as a
discontinued operation. Accordingly, previously reported financial results for
all periods presented have been restated to reflect Airbag as a discontinued
operation. Airbag reported income of $.1 million and $1.7 million for the
quarter and nine months ended September 27, 1997, respectively, and reported
income of $.6 million and $2.6 million for the quarter and nine months ended
September 29, 1996, respectively. No gain or loss was recorded on the sale since
the sales price approximated the acquisition fair value of Airbag.
6. Related Party Transactions:
At September 27, 1997, C&A Products has pledged the ownership interests
in its significant subsidiaries, including its partnership interest in JPS
Automotive, as security for debt of C&A Products totaling $335.6 million. C&A
Products currently provides general administrative services to JPS Automotive
pursuant to a preexisting Services Agreement assigned to C&A Products by Foamex
(the "Existing Services Agreement"). In addition, in connection with the 1996
Acquisition, C&A has developed preliminary plans for JPS Automotive to
rationalize certain manufacturing locations as well as marketing and
administrative functions. In effecting these plans, C&A and its affiliates
currently contemplate entering into certain arrangements with JPS Automotive and
its affiliates, including (i) the provision by C&A Products pursuant to the
Existing Services Agreement of certain administrative and management functions
previously conducted by JPS Automotive, (ii) the provision by C&A Products of
certain marketing and program management functions to JPS Automotive, (iii) the
purchase from and the sale to C&A Products of certain manufacturing assets, (iv)
the transfer of certain automotive programs, or manufacturing responsibility for
them, from JPS Automotive and Cramerton to C&A Products and its subsidiaries and
from C&A Products to JPS Automotive and (v) a guarantee by C&A Products in favor
of JPS Automotive of the value to be received by JPS Automotive for certain
idled assets of JPS Automotive.
Where automotive programs are transferred from C&A Products or JPS
Automotive to the other party, the manufacturer is expected to pay a royalty to
the party that originally obtained the transferred contract or, where
manufacturing responsibility for an automotive program is transferred, the
manufacturer is expected to receive a manufacturing fee based on its costs plus
a predetermined fee. It is expected that any payments made by JPS Automotive in
the case of outsourcing of manufacturing will not exceed JPS Automotive's
current cost to produce such product.
For the quarter and nine months ended September 27, 1997, JPS
Automotive was charged $.6 million and $2.1 million, respectively, by C&A
Products for certain administrative and management services in accordance with
the Existing Services Agreement. No amounts were paid or accrued by JPS
Automotive for any other current or proposed arrangements during the third
quarter or first nine months of 1997.
During the first half of 1997, C&A Products and JPS Automotive entered into
a revolving credit arrangement whereby JPS Automotive may borrow up to $5
million from C&A Products. JPS Automotive is charged interest on any outstanding
balance at a rate equal to the rate charged to C&A Products under its revolving
credit agreement with The Chase Manhattan Bank. During the nine months ended
September 27, 1997, JPS Automotive recorded $.1 million in interest related to
this revolving credit arrangement, reflecting an average interest rate of 7.7%.
At September 27, 1997 there were no amounts outstanding under the revolving
credit arrangement.
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(Unaudited)
As a result of the 1996 Acquisition, holders of the Senior Notes had
the right to put their notes to JPS Automotive at a price of 101% of their
principal amount plus accrued interest. Approximately $3.9 million principal
amount of Senior Notes were so put to JPS Automotive and then purchased and
retired by JPS Automotive in the first quarter of 1997. During the second
quarter of 1997, approximately $19.4 million principal amount of Senior Notes
were purchased by JPS Automotive on the open market and retired. No open market
purchases were made during the third quarter of 1997. In addition, in the third
quarter, JPS Automotive repurchased and retired $23 thousand principal amount of
Senior Notes pursuant to an offer to purchase related to the sale of Airbag. See
Note 5. To fund these purchases (including premium and interest paid), C&A
Products made capital contributions of approximately $23.2 million as well as
loaned funds in accordance with the revolving credit arrangement previously
discussed.
Predecessor Company
The Predecessor Company regularly entered into transactions with its
affiliates in the ordinary course of business.
JPS Automotive had a supply agreement (the "Supply Agreement") with
Foamex. Pursuant to the terms of the Supply Agreement, at the option of JPS
Automotive, Foamex purchased certain raw materials which are necessary for the
manufacture of JPS Automotive's products, and would resell such raw materials to
JPS Automotive at a price equal to net cost plus reasonable out of pocket
expenses. During the quarter and nine months ended September 29, 1996, JPS
Automotive purchased approximately $17.8 million and $64.9 million,
respectively, of raw materials under the Supply Agreement.
7. Commitments and Contingencies:
See "PART II - OTHER INFORMATION, Item 1. Legal Proceedings." The
ultimate outcome of the legal proceedings to which JPS Automotive is a party
will not, in the opinion of JPS Automotive's management based on the facts
presently known to it, have a material adverse effect on the consolidated
financial condition or result of operations of JPS Automotive.
JPS Automotive is subject to various federal, state and local
environmental laws and regulations that (i) affect ongoing operations and may
increase capital costs and operating expenses and (ii) impose liability for the
costs of investigation and remediation and certain other damages related to
on-site and off-site soil and groundwater contamination. JPS Automotive believes
it has obtained or applied for the material permits necessary to conduct its
business. To date, compliance with applicable environmental laws has not had
and, in the opinion of management, based on the facts presently known to it, is
not expected to have a material adverse effect on JPS Automotive's consolidated
financial condition or results of operations.
Although not named as a potentially responsible party for any
environmentally contaminated sites, JPS Automotive has accrued environmental
costs at September 27, 1997, of $4.6 million, $.7 million of which is included
in current liabilities.
Although it is possible that new information or future events could
require JPS Automotive to reassess its potential exposure relating to pending
environmental matters, management believes that, based on the facts presently
known to it, the resolution of such environmental matters will not have a
material adverse effect on JPS Automotive's consolidated financial condition or
results of operations. The possibility exists, however, that new environmental
legislation may be passed or environmental regulations may be adopted, or other
environmental conditions may be found to exist that may require expenditures not
currently anticipated which may be material, and there can be no assurance that
JPS Automotive has identified or properly assessed all potential environmental
liability arising from its activities or properties.
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<PAGE>
JPS AUTOMOTIVE PRODUCTS CORP.
(A Wholly-Owned Subsidiary of JPS Automotive L.P.)
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 27, December 28,
1997 1996
------------ -------------
(in thousands)
ASSETS
<S> <C> <C>
Current Assets - Cash ........................................ $1 $1
============ =========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities .................................................. $- $--
----------- --------
Shareholder's equity:
Common stock, par value $0.01 per share;
10,000,000 shares authorized,
100 shares issued and outstanding ................... - --
Additional paid-in capital .............................. 1 1
------------ ---------
Total shareholder's equity .......................... 1 1
------------ ---------
$1 $1
============ =========
</TABLE>
See accompanying notes
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<PAGE>
JPS AUTOMOTIVE PRODUCTS CORP.
(A Wholly-Owned Subsidiary of JPS Automotive L.P.)
NOTE TO BALANCE SHEETS (Unaudited)
1. Commitments and Contingencies
JPS Automotive Products Corp. ("Products Corp.") is a joint obligor
(and co-registrant) with JPS Automotive L.P. of 11 1/8% senior notes due 2001
with an outstanding principal balance of $88.6 million as of September 27, 1997.
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<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Pursuant to General Instruction H(2)(a) to Form 10-Q, the following
discussion is a management's narrative analysis of the results of operations
explaining the reasons for material changes in the amount of revenue and expense
items between the most recent fiscal year-to-date period presented and the
corresponding year-to-date period in the preceding fiscal year.
JPS Automotive manufactures and supplies textiles and specialty textile
products for passenger car and light truck production in North America. On June
28, 1994, JPS Automotive acquired the assets of the automotive products and
industrial fabrics divisions of JPS Textile in the 1994 Acquisition. On December
11, 1996, C&A, through its subsidiaries, acquired JPS Automotive from Foamex in
the 1996 Acquisition. The following discussion should be read in conjunction
with the condensed consolidated financial statements and related notes thereto
of JPS Automotive and Products Corp. included in this report.
On July 24, 1997, JPS Automotive completed its sale of Airbag to Safety
Components International, Inc. for a purchase price of $56.3 million, subject to
adjustment. Pursuant to the indenture governing the Senior Notes, in connection
with the sale of Airbag, C&A caused JPS Automotive to make an offer to purchase
(up to the amount of the net proceeds from the sale) the Senior Notes at 100% of
their principal amount. Pursuant to such offer (which expired September 16,
1997), JPS Automotive repurchased and retired $23 thousand principal amount of
Senior Notes. During October 1997, C&A caused JPS Automotive to use a portion of
the proceeds remaining from the sale of Airbag to make a distribution of $35
million to C&A Products, as permitted under the restricted payments provisions
of the Senior Notes indenture.
The consolidated balance sheets as of September 27, 1997 and December
28, 1996, the consolidated statements of operations for the quarter and nine
months ended September 27, 1997 and the statement of cash flows for the nine
months ended September 27, 1997, pertain to JPS Automotive. The consolidated
statements of operations for the quarter and nine months ended September 29,
1996 and the statement of cash flows for the nine months ended September 29,
1996, pertain to the Predecessor Company.
Following the 1994 Acquisition, Foamex and its affiliates provided JPS
Automotive with certain legal, accounting, auditing and other administrative
services pursuant to the Existing Services Agreement between Foamex and its
affiliates and JPS Automotive. The Existing Services Agreement was transferred
to and assumed by C&A in connection with the 1996 Acquisition. In addition, C&A
is expected to provide a greater level of services than were provided by Foamex.
Therefore, historical amounts for selling, general and administrative expenses
may not be directly comparable to amounts reported by JPS Automotive after the
1996 Acquisition.
NINE MONTHS ENDED SEPTEMBER 27, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 29,
1996.
CONSOLIDATED RESULTS OF OPERATIONS
Net sales for the nine months ended September 27, 1997 were $179.6 million
as compared to $171.8 million for the nine months ended September 29, 1996. The
approximately $7.7 million increase in net sales was primarily due to higher
sales levels of automotive carpet products in the first nine months of 1997 as a
result of increased production of the automotive and light truck programs which
JPS Automotive supplies.
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<PAGE>
Gross profit as a percentage of net sales decreased to 14.3% for the
nine months ended September 27, 1997 from 16.4% in the comparable period of 1996
primarily due to a shift towards lower margin automobile and light truck
programs that began in the second half of 1996 and continued through the first
half of 1997.
Selling, general and administrative expenses decreased to $12.4 million
for the nine months ended September 27, 1997 from $14.3 million in the
comparable 1996 period. This decrease is the result of lower administrative
costs resulting from the 1996 Acquisition.
Interest and debt issuance expense decreased to $7.5 million for the
nine months ended September 27, 1997 from $15.7 million in the comparable period
of 1996 primarily due to the lower overall outstanding debt levels following the
1996 Acquisition. In connection with the 1996 Acquisition, JPS Automotive's
revolving facilities were repaid and terminated and $68.0 million in Senior
Notes were retired. As a result of the 1996 Acquisition, holders of the Senior
Notes had a right to put their notes to JPS Automotive. Approximately $3.9
million principal amount of Senior Notes were so put to JPS Automotive and then
purchased and retired by JPS Automotive in the first quarter of 1997. During the
second quarter of 1997, approximately $19.4 million principal amount of Senior
Notes were purchased by JPS Automotive on the open market and retired. No open
market purchases were made during the third quarter of 1997, although $23
thousand principal amount of Senior Notes were repurchased and retired pursuant
to an offer to purchase due to the sale of Airbag. During 1997, C&A Products and
JPS Automotive entered into a revolving credit arrangement whereby JPS
Automotive may borrow up to $5 million from C&A Products at interest rates equal
to those charged to C&A Products under its revolving credit facility with The
Chase Manhattan Bank. During the nine months ended September 27, 1997, JPS
Automotive was charged $.1 million in interest in connection with this revolving
credit arrangement, reflecting an average interest rate of 7.7%.
Other (income) expense, net, for the nine months ended September 27,
1997 and September 29, 1996, related to sales of fixed assets.
Minority interest expense of $.4 million in the nine months ended
September 29, 1996 related to the minority ownership interest in Cramerton. In
connection with the 1996 Acquisition, this minority interest was acquired by C&A
Products, and Cramerton is now 100% owned by JPS Automotive.
Income tax provision for the nine months ended September 27, 1997
increased to $2.7 million from $.3 million in the comparable period of 1996. The
increase resulted from the 1996 Acquisition whereby JPS Automotive was converted
into an association that is taxable as a corporation.
Income from discontinued operations for the nine months ended September
27, 1997 decreased to $1.7 million from $2.6 million in the comparable prior
year period. This decrease resulted from an increase in the effective tax rate
as a result of the 1996 Acquisition as well as the closing of the sale of Airbag
on July 24, 1997.
Extraordinary loss of $.7 million, net of income taxes of $.4 million,
for the nine months ended September 27, 1997 relates to the purchase of $19.4
million principal amount of Senior Notes at prices in excess of carrying values.
Net income increased to $4.1 million for the nine months ended
September 27, 1997 from $.1 million in the comparable period in 1996 primarily
due to the reasons cited above.
Liquidity and Capital Resources
JPS Automotive's operating cash requirements consist principally of
working capital requirements, scheduled payments of principal and interest on
its outstanding indebtedness and capital expenditures. JPS Automotive believes
the cash flow from operating activities, cash on hand and periodic capital
contributions and borrowings, if necessary, will be adequate to meet operating
cash requirements. For a discussion of
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<PAGE>
certain arrangements between C&A Products and JPS Automotive, see Note 6 to the
Notes to JPS Automotive's Condensed Consolidated Financial Statements.
Safe Harbor Statement
This Form 10-Q contains statements which, to the extent they are not
historical fact, constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of Securities Exchange
Act of 1934 (the "Safe Harbor Acts"). All forward-looking statements involve
risks and uncertainties. The forward-looking statements in this Form 10-Q are
intended to be subject to the safe harbor protection provided by the Safe Harbor
Acts.
Risks and uncertainties that could cause actual results to vary
materially from those anticipated in the forward-looking statements included in
this Form 10-Q include industry-based factors such as possible declines in the
North American automobile and light truck build, labor strikes at JPS
Automotive's major customers, changes in consumer taste, dependence on
significant automotive customers, changes in the popularity of particular car
models, the loss of programs on particular car models and the level of
competition in the automotive supply industry, as well as factors more specific
to JPS Automotive, such as the substantial leverage of JPS Automotive and
limitations imposed by the Senior Notes. For a discussion of certain of these
and other important factors which may affect the operations, products and
markets of JPS Automotive, see JPS Automotive's Transition Report on Form 10-K
for the transition period from January 1, 1996 to December 28, 1996, including
without limitation, "Item 1. Business" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations," and Notes to
Condensed Consolidated Financial Statements contained therein, and see also JPS
Automotive's other filings with the Securities and Exchange Commission.
Item 3: Quantitative and Qualitative Disclosures About Market Risk.
Omitted pursuant to General Instruction H(2)(c) to Form 10-Q.
I-12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments in legal proceedings
involving JPS Automotive or its subsidiaries since those reported in JPS
Automotive's Transition Report on Form 10-K for the transition period from
January 1, 1996 to December 28, 1996.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
2.1 Asset Purchase Agreement dated as of June 30, 1997 by and among JPS
Automotive L.P. and Safety Components International, Inc. is hereby
incorporated by reference to Exhibit 2.1 of the Current Report on Form
8-K of JPS Automotive and Products Corp. dated July 24, 1997.
2.2 Closing Agreement dated as of July 24, 1997 by and among JPS Automotive
L.P., Safety Components International, Inc. and Safety Components
Fabric Technologies, Inc. is hereby incorporated by reference to
Exhibit 2.2 of the Current Report on Form 8-K of JPS Automotive and
Products Corp. dated July 24, 1997.
3.1 Certificate of Incorporation of Products Corp. is hereby incorporated
by reference to Exhibit 3.1 of Products Corp.'s Registration Statement
on Form S-1, Registration No. 33-75510.
3.2 By-laws of Products Corp. are hereby incorporated by reference to
Exhibit 3.2 of Products Corp.'s Registration Statement on Form S-1,
Registration No. 33-75510.
3.3 Certificate of Limited Partnership of JPS Automotive is hereby
incorporated by reference to Exhibit 3.3 of Products Corp.'s
Registration Statement on Form S-1, Registration No. 33-75510.
3.4 First Amended and Restated Agreement of Limited Partnership of JPS
Automotive, dated as of June 27, 1994, is hereby incorporated by
reference to Exhibit 3.4 of the Form 10-K of JPS Automotive and
Products Corp. for fiscal 1994.
3.5 Certificate of Amendment of Certificate of Limited Partnership of JPS
Automotive dated December 11, 1996 is hereby incorporated by reference
to Exhibit 3.5 of the Form 10-K of JPS Automotive and Products Corp.
for the transition period from January 1, 1996 to December 28, 1996.
3.6 First Amendment to First Amended and Restated Agreement of Limited
Partnership of JPS Automotive dated as of December 11, 1996 is hereby
incorporated by reference to Exhibit 3.6 of the Form 10-K of JPS
Automotive and Products Corp. for the transition period from January 1,
1996 to December 28, 1996.
3.7 Second Amendment to First Amended and Restated Agreement of Limited
Partnership of JPS Automotive dated as of December 11, 1996, is hereby
incorporated by reference to Exhibit 3.7 of the Form 10-K of JPS
Automotive and Products Corp. for the transition period from January 1,
1996 to December 28, 1996.
4.1 Indenture, between Products Corp. and Shawmut Connecticut, as Trustee,
relating to $180,000,000 principal amount of 11-1/8% Senior Notes due
2001 (the "JPS Automotive Senior Notes"), including form of the JPS
Automotive Senior Note is hereby incorporated by reference to Exhibit
4.2 of Products Corp.'s Registration Statement on Form S-1,
Registration No.
33-75510.
4.2 First Supplemental Indenture, dated as of October 5, 1994, between
Products Corp., JPS Automotive and Shawmut Connecticut, as Trustee,
relating to the JPS Automotive Senior Notes is hereby
II-1
<PAGE>
incorporated by reference to Exhibit 4.48A of Form 10-Q of JPS
Automotive and Products Corp. for the fiscal quarter ended October 2,
1994.
Certain instruments defining the rights of security holders have been
excluded herefrom in accordance with Item 601(b)(4)(iii) of Regulation
S-K. The Registrants hereby agree to furnish a copy of any such
instrument to the Commission upon request.
10.1 Services Agreement, by and between JPS Automotive and Foamex
International is hereby incorporated by reference to Exhibit 10.2 of
Products Corp.'s Registration Statement on Form S-1, Registration No.
33-75510.
10.2 Supply Agreement, by and among Foamex International and certain of its
affiliates and JPS Automotive is incorporated by reference to Exhibit
10.8 of Products Corp.'s Registration Statement on Form S-1,
Registration No. 33-75510.
10.3 Tax-sharing Agreement, by and among JPS Automotive and its partners is
incorporated by reference to Exhibit 10.9 of Products Corp.'s
Registration Statement on Form S-1, Registration No. 33-75510.
10.4 Amended and Restated Agreement of Limited Partnership of Cramerton
Automotive Products, L.P., dated as of December 2, 1994, is
incorporated by reference to Exhibit 10.13 of Product Corp.'s
Registration Statement on Form S-1, Registration No. 33-75510.
10.5 First Amendment to Amended and Restated Agreement of Limited
Partnership of Cramerton Automotive Products, L.P., dated as of June
28, 1994, is hereby incorporated by reference to Exhibit 10.85 of the
Form 10-K of Foamex International Inc. for fiscal 1994.
10.6 Second Amendment to Amended and Restated Agreement of Limited
Partnership of Cramerton Automotive Products, L.P., dated as of October
5, 1994, is hereby incorporated by reference to Exhibit 10.86 of the
Form 10-K of Foamex International Inc.
for fiscal 1994.
10.7 Third Amendment to the Amended and Restated Agreement of Limited
Partnership of Cramerton Automotive Products, L.P., dated as of
December 11, 1996, is hereby incorporated by reference to Exhibit 10.8
of the Form 10-K of JPS Automotive and Products Corp. for the
transition period from January 1, 1996 to December 28, 1996.
10.8 Certificate of Amendment of Certificate of Limited Partnership of
Cramerton dated December 12, 1996, is hereby incorporated by reference
to Exhibit 10.9 of the Form 10-K of JPS Automotive and Products Corp.
for the transition period from January 1, 1996 to December 28, 1996.
10.9 Assignment dated as of December 11, 1996, from Foamex to C&A Products
relating to Services Agreement, is hereby incorporated by reference to
Exhibit 10.10 of the Form 10-K of JPS Automotive and Products Corp. for
the transition period from January 1, 1996 to December 28, 1996.
10.10 Assignment dated as of December 11, 1996, from Foamex-JPS Automotive
L.P. to C&A Products relating to Tax-Sharing Agreement, is hereby
incorporated by reference to Exhibit 10.11 of the Form 10-K of JPS
Automotive and Products Corp. for the transition period from January 1,
1996 to December 28, 1996.
10.11 Assignment dated as of December 11, 1996, from JPSGP, Inc. to C&A
Products relating to Tax-Sharing Agreement, is hereby incorporated by
reference to Exhibit 10.12 of the Form 10-K of JPS Automotive and
Products Corp. for the transition period from January 1, 1996 to
December 28, 1996.
II-2
<PAGE>
10.12 Assignment dated as of December 11, 1996, from Foamex to C&A Products
relating to Supply Agreement, is hereby incorporated by reference to
Exhibit 10.13 of the Form 10-K of JPS Automotive and Products Corp. for
the transition period from January 1, 1996 to December 28, 1996.
10.13 Equity Purchase Agreement by and among JPSGP, Inc., Foamex - JPS
Automotive L.P. and Collins & Aikman Products Co. dated August 28,
1996, is hereby incorporated by reference to Exhibit 2.1 of Collins &
Aikman Corporation's Report on Form 10-Q for the fiscal quarter ended
July 27, 1996.
10.14 Amendment No. 1 to Equity Purchase Agreement by and among JPSGP, Inc.,
Foamex - JPS Automotive L.P., Foamex International Inc. and Collins &
Aikman Products Co. dated as of December 11, 1996, is hereby
incorporated by reference to Exhibit 2.2 of Collins & Aikman
Corporation's Current Report on Form 8-K dated December 10, 1996.
27 Financial Data Schedules
(b) Reports on Form 8-K.
During the quarter for which this Report on Form 10-Q is filed, JPS Automotive
and Products Corp. filed a current report on Form 8-K dated July 24, 1997
reporting under Item 2 thereof the disposition of Airbag and filing the
following financial statements under Item 7:
Unaudited Pro Forma Consolidated Statement of Operations for the Fiscal
Year Ended December 28, 1996.
Unaudited Pro Forma Consolidated Statement of Operations for the
Quarter Ended March 29, 1997.
Unaudited Pro Forma Consolidated Balance Sheet at March 29, 1997.
II-3
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly
authorized on the 10th day of November, 1997.
JPS AUTOMOTIVE L.P.
By: PACJ, Inc.
General Partner
By: /s/ J. Michael Stepp
J. Michael Stepp
Executive Vice President and
Chief Financial Officer
JPS AUTOMOTIVE PRODUCTS CORP.
By: /s/ J. Michael Stepp
J. Michael Stepp
Executive Vice President and
Chief Financial Officer
<PAGE>
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SUCH IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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