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 March 28, 1998
[ ] 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 May 11, 1998, 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
MARCH 28, MARCH 29,
1998 1997
--------------- ---------------
<S> <C> <C>
Net sales................................................. $ 71,309 $ 58,024
Cost of goods sold........................................ 62,880 50,364
--------------- ---------------
Gross profit.............................................. 8,429 7,660
Selling, general and administrative expenses.............. 2,774 4,452
--------------- ---------------
Income from operations.................................... 5,655 3,208
Interest expense, net..................................... 2,114 3,173
Other income, net......................................... (9) (5)
--------------- ---------------
Income from continuing operations before income taxes..... 3,550 40
Income taxes.............................................. 1,435 157
--------------- ---------------
Income (loss) from continuing operations.................. 2,115 (117)
Income from discontinued operations, net of income tax
of $457................................................ - 671
--------------- ---------------
Net income................................................ $ 2,115 $ 554
=============== ===============
</TABLE>
See accompanying notes.
I-1
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 28, DECEMBER 27,
ASSETS 1998 1997
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents...................................... $ 8,940 $ 9,271
Accounts receivable, net....................................... 40,104 37,038
Inventories.................................................... 19,243 19,275
Revolving loan due from C&A Products........................... 4,500 4,500
Deferred tax assets............................................ 5,338 5,369
Receivables from related parties............................... 3,644 1,974
Other current assets........................................... 4,174 4,269
-------------- --------------
Total current assets......................................... 85,943 81,696
-------------- --------------
Property, plant and equipment, net................................ 54,470 55,470
Goodwill, net..................................................... 102,655 103,310
Demand receivable due from C&A for income taxes................... 4,423 6,548
Other assets...................................................... 3,897 3,583
-------------- --------------
$ 251,388 $ 250,607
============== ==============
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 11,702 $ 12,083
Accrued expenses............................................... 15,406 13,677
-------------- --------------
Total current liabilities.................................... 27,108 25,760
-------------- --------------
Long-term debt.................................................... 91,617 91,843
Other liabilities................................................. 10,849 10,008
Commitments and contingencies.....................................
Owners' equity:
General partner................................................ 48,073 48,073
Limited partner................................................ 73,741 74,923
-------------- --------------
Total owners' equity....................................... 121,814 122,996
-------------- --------------
$ 251,388 $ 250,607
============== ==============
</TABLE>
See accompanying notes.
I-2
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 28, MARCH 29,
1998 1997
OPERATING ACTIVITIES ----------- ----------
<S> <C> <C>
Net income $ 2,115 $ 554
Adjustments to reconcile net income to net cash provided by operating
activities:
Income from discontinued operations................................ - (671)
Deferred income tax expense........................................ 867 -
Depreciation and amortization...................................... 2,198 2,189
Interest accretion and debt issuance cost amortization............. (58) (98)
Other, net ........................................................ (477) (628)
Changes in operating assets and liabilities ....................... (1,591) 1,212
----------- ----------
Net cash provided by continuing operations....................... 3,054 2,558
Net cash provided by discontinued operations, net ................. - 961
----------- ----------
Net cash provided by operating activities........................ 3,054 3,519
----------- ----------
INVESTING ACTIVITIES
Capital expenditures.................................................... (543) (1,682)
----------- ----------
FINANCING ACTIVITIES
Distributions to C&A Products........................................... (6,000) -
Capital contributions from partners..................................... 2,703 -
Change in amounts due C&A Products, net................................. 455 -
Repayments of revolving loans........................................... - (4,099)
Repayment of long-term debt............................................. - 6,450
----------- ----------
Net cash provided by (used in) financing activities.............. (2,842) 2,351
----------- ----------
Net increase (decrease) in cash and cash equivalents................... (331) 4,188
Cash and cash equivalents at beginning of period........................ 9,271 200
----------- ----------
Cash and cash equivalents at end of period.............................. $ 8,940 $ 4,388
=========== ==========
</TABLE>
See accompanying notes.
I-3
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
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 ended March 29, 1997
and are related to the Air Restraint and Technical Products Division ("Airbag")
being classified as a discontinued operation. For further information, refer to
the consolidated financial statements and notes thereto included in JPS
Automotive's Report on Form 10-K for the year ended December 27, 1997.
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"). 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. Additionally, on December 11, 1996, C&A Products
acquired from Seiren Co. Ltd. and its affiliates the 20% minority interest in
Cramerton Automotive Products, L.P. ("Cramerton"). JPS Automotive subsequently
acquired the 20% minority interest previously held by the Seiren entities.
2. 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 a period of forty years. Amortization of goodwill for
the first quarter of 1998 and the first quarter of 1997 was $0.6 million and
$0.8 million, respectively. Accumulated amortization at March 28, 1998 was $3.2
million. The carrying value of goodwill is reviewed periodically based on the
undiscounted 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
March 28, 1998, JPS Automotive believes its goodwill of $102.7 million is fully
recoverable.
3. FACILITY CLOSING COSTS:
In connection with the 1996 Acquisition, JPS Automotive eliminated
certain redundant sales and administrative functions and closed one
manufacturing facility in 1997 and a second facility in January 1998. In 1997,
JPS Automotive also formulated plans to exit an additional manufacturing
facility in the second quarter of 1998 and currently is in the process of
relocating certain manufacturing processes from a JPS Automotive facility to an
existing facility of another C&A Products subsidiary.
These actions affect approximately 640 employees. Total costs accrued
for the shutdown of facilities and severance and other personnel costs were $2.7
million and $7.7 million, respectively.
The components of the reserves for the relocation and facility
closures, which are expected to be completed during fiscal 1998, are as follows
(in thousands):
<TABLE>
<CAPTION>
Original Changes In Remaining
Reserve Reserve Reserve
Anticipated expenditures to close and dispose of ----------------- --------------- -----------------
<S> <C> <C> <C>
idled facilities...............................$ 2,746 $ (1,192) $ 1,554
Anticipated severance benefits..................... 7,655 (3,518) 4,137
----------------- --------------- -----------------
$ 10,401 $ (4,710) $ 5,691
================= =============== =================
</TABLE>
I-4
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
4. RELATED-PARTY TRANSACTIONS AND ALLOCATIONS:
At March 28, 1998, C&A Products has pledged the ownership interests in
its significant subsidiaries, including its partnership interests in the
Company, as security for debt of C&A Products totaling $209.0 million.
Following the 1996 Acquisition, C&A Products began to develop plans to
rationalize certain manufacturing locations as well as marketing and
administrative functions. This rationalization involved transactions and
arrangements between JPS Automotive and C&A Products which were approved by the
Board of Directors of PACJ, Inc., the general partner of JPS Automotive, and
were reviewed by an investment banking firm of national standing, which rendered
an opinion that they were fair to JPS Automotive from a financial point of view.
The transactions and arrangements and proposed transactions and
arrangements include the following: (i) the provision by C&A Products of
additional administrative, management, marketing and program management services
pursuant to a preexisting services agreement assigned to C&A Products by Foamex
(the "Existing Services Agreement"), (ii) the purchase from and sale to C&A
Products and its subsidiaries of certain manufacturing assets, (iii) the
transfer of manufacturing responsibility for certain automotive programs, and
for the manufacturing of automotive carpet roll goods, to C&A Products and its
subsidiaries and from C&A Products to JPS Automotive, and (iv) the transfer of
certain automotive programs from JPS Automotive to C&A Products and its
subsidiaries and from C&A Products to JPS Automotive. For a description of the
compensation to be paid by JPS Automotive to C&A Products and by C&A Products
to JPS Automotive pursuant to the transactions and arrangements described above,
see Note 12 to JPS Automotive's Consolidated Financial Statements included in
JPS Automotive's Annual Report on Form 10-K for the fiscal year ended December
27, 1997 (the "1997 10-K").
During the first quarter of 1998, pursuant to the rationalization
process, JPS Automotive transferred to Collins & Aikman Canada Inc. ("C&A
Canada") and C&A Products two contracts for the production of automotive carpet
products for aggregate consideration of $4.3 million. One of these contracts was
manufactured by C&A Canada for JPS Automotive during a portion of 1997 on a
royalty basis. Due to the related party nature of the transfer, the $4.3 million
received by JPS Automotive, net of the related tax provision of $1.6 milllion,
has been treated as a capital contribution from C&A Products in the accompanying
financial statements. During the remainder of 1998, C&A Products has agreed to
transfer to JPS Automotive as an equity contribution all but one of the
automotive soft trim programs formerly produced by C&A Products at its
Salisbury, North Carolina, facility. C&A Products has also agreed to make
additional cash equity contributions to JPS Automotive if JPS Automotive is
unable to earn a specified level of operating profit on the contracts
transferred from the Salisbury plant.
JPS Automotive paid or accrued the following amounts in connection with
the transactions and arrangements described above and related transactions for
the quarter ended March 28, 1998: (i) $1.5 million for administrative and other
services, and (ii) $13.3 million for contract manufacturing services (including
the purchase of roll goods) provided to JPS Automotive by C&A Products and its
subsidiaries. In addition, during the first quarter of 1998, JPS Automotive
recorded sales of $10.6 million relating to contract manufacturing services
(including the sale of roll goods) provided to C&A Products and its
subsidiaries.
For the quarter ended March 29, 1997, JPS Automotive was charged $1.3
million by C&A Products for certain administrative and management services in
accordance with the Existing Services Agreement.
C&A Products and JPS Automotive entered into several additional
arrangements during 1997 including, among others, those described below.
During the year ended December 27, 1997, C&A Products and JPS
Automotive entered into reciprocal revolving credit arrangements whereby JPS
Automotive may borrow up to $5 million from C&A Products and C&A Products may
borrow up to $5 million from JPS Automotive. The borrower is charged interest on
any outstanding balance at a rate equal to the rate charged to C&A Products
under its revolving credit agreement. During the quarter ended March 28, 1998,
C&A Products was charged $95 thousand in net interest related to these revolving
credit arrangements. At March 28, 1998, there was an outstanding balance of $4.5
million owed to JPS Automotive under this arrangement.
I-5
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
In connection with certain manufacturing activities conducted by C&A
Products for Cramerton during the first quarter of 1998, Cramerton resold to C&A
Products at cost approximately $0.3 million in yarn that had been purchased by
Cramerton for use in the manufacturing activities conducted for Cramerton. In
addition, in accordance with C&A Products' normal practice, C&A Products
developed tooling for JPS Automotive, for which JPS Automotive reimbursed C&A
Products its costs. The development of tooling was managed by JPS Automotive
prior to the 1996 Acquisition.
C&A Products and JPS Automotive are also parties to a tax sharing
agreement (the "Tax Sharing Agreement") that was assigned to C&A Products by
Foamex in connection with the 1996 Acquisition. The Tax Sharing Agreement
provides that JPS Automotive will make certain payments to its partners
(principally C&A Products) in amounts equal to the taxes JPS Automotive would be
required to pay if it were separately taxed. JPS Automotive and C&A Products
maintain the Tax Sharing Agreement in lieu of adding JPS Automotive as a party
to C&A's tax sharing arrangement. For the first quarter of 1998, JPS Automotive
has recorded $2.1 million as an estimated amount due to C&A Products under the
terms of the Tax-Sharing Agreement. In addition, because JPS Automotive is part
of C&A's consolidated tax return, C&A effectively utilized the tax benefits
generated by JPS Automotive in its consolidated tax return, which resulted in
benefits totaling $6.2 million for 1997. C&A Products has agreed to reimburse
JPS Automotive for these benefits on demand by JPS Automotive.
5. 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 results 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 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.
In December 1997, another subsidiary of C&A Products assumed
substantially all of the environmental liabilities of JPS Automotive and its
subsidiaries in exchange for a payment from JPS Automotive of approximately $4.1
million. JPS Automotive will remain contingently liable for these environmental
liabilities.
In the opinion of management, based on the facts presently known to it,
the environmental costs and contingencies will not have a material adverse
effect on JPS Automotive's consolidated financial condition or results of
operations. However, there can be no assurance that JPS Automotive has
identified or properly assessed all potential environmental liabilities arising
from the activities or properties of JPS Automotive, its present and former
subsidiaries and their corporate predecessors.
6. DISCONTINUED OPERATIONS:
On July 24, 1997, JPS Automotive completed the sale of Airbag to Safety
Components International, Inc. for a purchase price of approximately $56
million. No gain or loss was recorded on the sale since the sales price
approximated the acquisition fair value of Airbag. Airbag reported income of
$0.7 million in the first quarter of 1997.
I-6
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded)
(UNAUDITED)
7. NEWLY ISSUED ACCOUNTING STANDARDS:
In April 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position No. 98-5, "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5"). SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. It requires that all
nongovernmental entities expense the costs of start-up activities as these costs
are incurred instead of being capitalized and amortized. SOP 98-5 is effective
for financial statements for fiscal years beginning after December 15, 1998. JPS
Automotive currently estimates that the impact of adoption of SOP 98-5 at the
beginning of fiscal 1999 will be immaterial.
8. SUBSEQUENT EVENT:
JPS Automotive repurchased and retired $2.0 million principal amount of
JPS Automotive's 11-1/8% Senior Notes due 2001 (the "Senior Notes") in April
1998. JPS Automotive will record an extraordinary loss of approximately $86
thousand, net of income taxes, as a result of purchasing the Senior Notes at
prices in excess of carrying values.
I-7
<PAGE>
JPS AUTOMOTIVE PRODUCTS CORP.
(A WHOLLY-OWNED SUBSIDIARY OF JPS AUTOMOTIVE L.P.)
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
March 28, December 27
1998 1997
------------- -------------
(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.
I-8
<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 the 11-1/8% Senior Notes, which
had an outstanding principal balance of $88.7 million as of March 28, 1998.
I-9
<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
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.
QUARTER ENDED MARCH 28, 1998 COMPARED TO QUARTER ENDED MARCH 29, 1997.
CONSOLIDATED RESULTS OF OPERATIONS
NET SALES: Net sales for the quarter ended March 28, 1998 were $71.3 million as
compared to $58.0 million for the quarter ended March 29, 1997. The $13.3
million increase in sales was primarily due to new bodycloth business on the
Nissan Altima and the Mazda 626 and higher sales levels of automotive carpet
products. Molded floor carpet sales were positively impacted by increased sales
to the Mercedes M-class and the GM APV.
GROSS PROFIT: For the first quarter of 1998, gross profit as a percentage of net
sales was 11.8%, down from 13.2% in the comparable period in 1997. The decrease
in gross margin is due in part to lower volume and unfavorable product mix in
automotive bodycloth and inefficiencies associated with relocation and closing
of certain manufacturing facilities.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses decreased 37.7% to $2.8 million in the first quarter of
1998, down $1.7 million from the comparable period in 1997. This decrease is a
result of lower administrative costs resulting from the elimination of certain
redundant sales and administrative functions in connection with the 1996
Acquisition.
INTEREST EXPENSE: Interest and debt issuance expense decreased to $2.1 million
for the quarter ended March 28, 1998 from $3.2 million in the comparable period
of 1997 primarily due to lower overall outstanding debt levels following the
1996 Acquisition. From the first quarter of 1997 through the first quarter of
1998, $23.0 million principal amount of Senior Notes have been repurchased, on
the open market or otherwise, by JPS Automotive and retired. During the second
quarter of 1997, C&A Products and JPS Automotive entered into reciprocal
revolving credit arrangements whereby JPS Automotive may borrow up to $5 million
from C&A Products, and C&A Products may borrow up to $5 million from JPS
Automotive, at interest rates equal to those charged to C&A Products under its
revolving credit facility with The Chase Manhattan Bank. During the first
quarter of 1998, $95 thousand in net interest was charged to C&A Products in
connection with these revolving credit arrangements.
INCOME TAXES: The income tax provision for the first quarter of 1998 increased
to $1.4 million from $0.2 million in the first quarter of 1997.
INCOME FROM DISCONTINUED OPERATIONS: Income from Airbag was $0.7 million for the
first quarter of 1997. Airbag was sold in July 1997.
NET INCOME: Net income increased to $2.1 million in the first quarter of 1998
from $0.6 million in the comparable period in 1997 primarily due to the reasons
cited above.
I-10
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (concluded)
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 borrowings,
if necessary, will be adequate to meet operating cash requirements. For a
discussion of certain transactions and arrangements and proposed transactions
and arrangements between C&A Products and JPS Automotive, see Note 4 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 "Item 1. Business" in the 1997 10-K and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations," in the 1997 10-K and above in this Form 10-Q and also see 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-11
<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, if any, in
JPS Automotive's Annual Report on Form 10-K for the fiscal year ended December
27, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit
Number Description
- ------ -----------
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 dated as of June 28, 1994, between Products Corp., as
Issuer, JPS Automotive, as Guarantor, and Shawmut Bank
Connecticut, N.A., as Trustee, relating to $180,000,000
principal amount of 11-1/8% Senior Notes due 2001 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. and JPS Automotive, as Co-Obligors, and
Shawmut Bank Connecticut, N.A., as Trustee, relating to the JPS
Automotive Senior Notes is hereby 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.
II-1
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
Exhibit
Number Description
- ------- -----------
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
International 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.
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.
II-2
<PAGE>
Exhibit
Number Description
- ------- -----------
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.
10.15 Post 1996 Acquisition Arrangements Under JPS Automotive Services
Agreement is hereby incorporated by reference to Exhibit 10.15
of the Form 10-K of JPS Automotive and Products Corp. for the
fiscal year ended December 27, 1997.
10.16 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.
10.17 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.
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. did not file any reports on Form 8-K.
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 12th day of
May, 1998.
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from JPS
Automotive Products Corp. balance sheet at March 28, 1998, and such is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000919233
<NAME> JPS AUTOMOTIVE PRODUCTS CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-28-1998
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1
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<SALES> 0
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<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated balance sheet and consolidated statements of operations
for the quarter ended March 28, 1998, and such is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000924902
<NAME> JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-28-1998
<CASH> 8,940
<SECURITIES> 0
<RECEIVABLES> 45,298
<ALLOWANCES> 5,194
<INVENTORY> 19,243
<CURRENT-ASSETS> 85,943
<PP&E> 61,385
<DEPRECIATION> 6,915
<TOTAL-ASSETS> 251,388
<CURRENT-LIABILITIES> 27,108
<BONDS> 91,617
0
0
<COMMON> 0
<OTHER-SE> 121,814
<TOTAL-LIABILITY-AND-EQUITY> 251,388
<SALES> 71,309
<TOTAL-REVENUES> 71,309
<CGS> 62,880
<TOTAL-COSTS> 62,880
<OTHER-EXPENSES> 2,523
<LOSS-PROVISION> 251
<INTEREST-EXPENSE> 2,114
<INCOME-PRETAX> 3,550
<INCOME-TAX> 1,435
<INCOME-CONTINUING> 2,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,115
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
