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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999
Commission file numbers: 33-75510-01; 1-12944
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JPS AUTOMOTIVE, INC.
JPS AUTOMOTIVE PRODUCTS CORP.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 57-2001613
Delaware 57-0993690
- ------------------------------- ----------------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or Organization) Identification Number)
5755 New King Court, Troy,
Michigan 48098
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 824-2500
Securities registered pursuant to Section 12(b) of the Act: 11-1/8% Senior
Notes due 2001,
which are traded
on the New York
Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
----
Indicate by check mark whether the registrants (1) have 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 periods that the
registrant was required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days.
YES X NO (See Note in the Index hereto)
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
None of the voting securities of JPS Automotive, Inc. or JPS Automotive
Products Corp. is held by non-affiliates.
As of March 24, 2000 there were 1,500 shares of JPS Automotive, Inc.'s
common stock outstanding.
As of March 24, 2000, there were 100 shares of JPS Automotive Products
Corp. common stock outstanding.
JPS Automotive, Inc. and JPS Automotive Products Corp. meet the conditions
set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and are
therefore filing this form with the reduced disclosure format.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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JPS AUTOMOTIVE, INC.
JPS AUTOMOTIVE PRODUCTS CORP.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999
INDEX
10-K
PAGE
Part I
Item 1. Business (A) 1
Item 2. Properties (A) 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote
of Security Holders (A) 3
PART II
Item 5. Market for Registrants' Common Equity
and Related Stockholder Matters 3
Item 6. Selected Financial Data (A) 4
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations (A) 4
Item 7A. Quantitative and Qualitative Disclosures
about Market Risk 6
Item 8. Financial Statements and Supplementary Data 6
Item 9. Changes In and Disagreements With
Accountants on Accounting and
Financial Disclosure 6
PART III
Item 10. Directors and Executive Officers
of the Registrants (A) 6
Item 11. Executive Compensation (A) 6
Item 12. Security Ownership of Certain Beneficial
Owners and Management (A) 6
Item 13. Certain Relationships and
Related Transactions (A) 6
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 6
(A) Omitted or amended as all of the equity securities of the Registrants are
owned indirectly by Collins & Aikman Corporation and the Registrants
therefore meet the Conditions set forth in General Instructions I(1)(a) and
(b) of Form 10-K and are filing this Form with reduced disclosure format.
The Registrants will furnish a copy of any exhibit to this Form 10-K upon the
request in writing of any holder of 11-1/8% Senior Notes due 2001 and upon the
payment of a fee equal to the Registrants' reasonable expenses in furnishing
such exhibit.
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PART I
Item 1. Business
Response to Item 1 of Form 10-K is in accordance with General Instruction
I(2)(d) to Form 10-K.
GENERAL
JPS Automotive, Inc. ("JPS Automotive") manufactures and supplies a complete
line of automotive textile and specialty textile products to North American
automobile and light truck manufacturers. JPS Automotive's products include
molded floor carpet systems, seating upholstery fabric ("bodycloth"), headliner
fabric, and interior and trunk trim components. JPS Automotive's customers
include domestic original equipment manufacturers, such as General Motors
("GM"), DaimlerChrysler and Ford, as well as the domestic operations of certain
foreign OEMs ("Transplant OEMs" and collectively with domestic OEMs, "OEMs"),
including Honda, Mazda, Mitsubishi, Nissan, NuMMI (a joint venture between GM
and Toyota), Subaru and Toyota. Many of these relationships require JPS
Automotive to provide design and engineering support for new products and new
applications for existing products. JPS Automotive Products Corp. ("Products
Corp.") is a wholly owned subsidiary of JPS Automotive.
On December 11, 1996, Collins & Aikman Corporation ("C&A"), through its
subsidiaries, acquired JPS Automotive L.P. 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 L.P. from
Foamex and a 99% limited partnership interest in JPS Automotive L.P. 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
L.P. from JPSGP Inc. ("JSGP"). Accordingly, 100% of the partnership interests
in JPS Automotive L.P. were 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 also acquired from Seiren Co.
Ltd. and its affiliates a minority interest in Cramerton Automotive Products,
L.P. and Cramerton Management Corporation, which were JPS Automotive
subsidiaries. JPS Automotive subsequently acquired the minority interest held
by C&A Products and now owns 100% of Cramerton. In December 1997, Cramerton
Automotive Products, L.P. was merged into Cramerton Management Corporation and
the surviving entity was renamed Cramerton Automotive Products, Inc.
("Cramerton").
On January 28, 2000, JPS Automotive L.P. merged with and into its general
partner, PACJ, Inc. In the merger, all of the outstanding limited partnership
interests previously owned by C&A Products and the general partnership interests
held by PACJ, Inc. were canceled without any payment being made thereon. As a
result of the merger, PACJ, Inc. has changed its name to JPS Automotive, Inc.
and has assumed all of the obligations under the indenture governing the JPS
Automotive 11-1/8 Senior Notes due 2001 (the "Senior Notes").
The principal executive offices of JPS Automotive are located at 5755 New King
Court, Troy, Michigan, 48098 and its telephone number is (248) 824-2500.
References in this report to JPS Automotive means JPS Automotive, Inc. and,
where relevant, its subsidiaries.
PRODUCTS AND OPERATING SEGMENTS
JPS Automotive has two operating segments: Automotive Carpet and Automotive
Fabric.
AUTOMOTIVE CARPET
JPS Automotive's carpet operations produce complete molded floor systems and cut
and/or molded interior trim and trunk parts. Prior to 1998, JPS Automotive
manufactured rolled carpet goods which were incorporated by JPS Automotive into
its own products as well as sold to other automotive suppliers who then
incorporated these goods into their products. In the second quarter of 1998, JPS
Automotive closed its facility which manufactured roll goods and initiated a
contract manufacturing arrangement with C&A Products to supply its future roll
goods
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requirements. See Note 12 to the Notes to the JPS Automotive Consolidated
Financial Statements.
Molded floor carpet systems include polyethylene or extruded thermo plastic
(mass back) underlay carpet. Truck trim products consist of one piece molded
trunk systems and assemblies.
AUTOMOTIVE FABRICS
JPS Automotive sells bodycloth and headliner fabric to other automotive
suppliers. JPS Automotive's bodycloth fabric is typically specified by the OEM,
though the product normally is shipped and billed directly to other OEM
suppliers. Contract terms often parallel the terms between the OEM and the
primary supplier with respect to certain aspects such as timing, product
specifications and quantity. JPS Automotive's principal upholstery fabric
customers, the Transplant OEMs, demand high-end automotive fabric products with
respect to construction, weight and styling. OEMs typically do not specify a
certain company's headliner fabric, but rather specify fabric type or
construction when awarding headliner system contracts. In 1998, JPS Automotive
relocated its bodycloth manufacturing operations to a C&A Products facility,
which is producing bodycloth for JPS Automotive on a subcontract basis. In 1999,
JPS Automotive completed the sale of its 400,000 square foot facility located in
Cramerton, North Carolina. JPS Automotive is in the process of relocating the
headliner business from the Cramerton (the "Cramerton facility") facility to a
C&A Products facility. See Notes 7 and 12 to the Notes to the JPS Automotive
Consolidated Financial Statements.
MARKETING AND SALES
In conjunction with the elimination of certain redundant sales and
administrative functions following the 1996 Acquisition, C&A Products performs
substantially all of the sales and marketing functions for JPS Automotive. This
allows JPS Automotive to continue to provide its customers, which include both
OEMs and independent OEM suppliers, with integrated product systems and design
and engineering support which management believes reduce costs and enhance
value. See Notes 7 and 12 to the Notes to the JPS Automotive Consolidated
Financial Statements.
MANUFACTURING AND RAW MATERIALS
Manufacturing operations are currently conducted at two facilities with a total
of approximately 1.2 million square feet. In connection with the 1996
Acquisition, JPS closed one manufacturing facility in 1997, a second facility in
January 1998, and a third facility in June 1998. JPS Automotive sold the
Cramerton facility in 1999. As a result, JPS Automotive is in the process of
constructing additional space at a C&A Products facility where bodycloth and
headliner manufacturing processes are being performed by C&A Products on a
subcontract basis for JPS Automotive. See Notes 7 and 12 to the Notes to the JPS
Automotive Consolidated Financial statements. JPS Automotive believes its
facilities, taking into account its arrangements with C&A, are adequate to meet
its current production requirements.
The principal raw materials used by JPS Automotive are carpet fibers (nylon,
polyester and polypropylene), primary carpet backing and extrusion coating
materials and other nylon and polyester fibers for knitting. Many of JPS
Automotive's products contain branded raw materials specified by the customer
and any substitution of such raw materials would have to be made in consultation
with the customer. C&A Products provides purchasing services for JPS Automotive
in accordance with the arrangements between JPS Automotive and C&A Products.
Raw materials are purchased from a few large suppliers; however, management
believes there are readily available substitute sources of supply for raw
materials should the need for alternate sources arise. The price of man-made
fibers, such as nylon and polyester, is influenced principally by demand,
manufacturing capacity and polymer and petroleum prices.
EMPLOYEES
As of December 25, 1999, JPS Automotive employed approximately 1,200 persons.
JPS Automotive considers relations with its employees to be generally good.
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COMPETITION
The market for JPS Automotive's products is highly competitive and is
concentrated amongst a small number of North American based companies.
Competition is based primarily on price, quality of products and service. Some
of JPS Automotive's competitors are larger and have substantially greater
financial resources.
TRANSACTIONS AND ARRANGEMENTS WITH AFFILIATES
For a discussion of certain transactions and arrangements between C&A Products
and JPS Automotive, see Note 12 to the Notes to the JPS Automotive Consolidated
Financial Statements.
YEAR 2000 ISSUES
For a discussion of the impact of Year 2000 compliance issues, see "ITEM 7,
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Impact of Year 2000 Compliance".
ITEM 2. PROPERTIES
Response to Item 2 of Form 10-K is in accordance with General Instruction
I(2)(d) to Form 10-K. JPS Automotive conducts its automotive carpet operations
at a manufacturing facility located in South Carolina. Floor space at the
facility totals approximately 0.8 million square feet. JPS Automotive conducted
its automotive fabrics business at the 0.4 million square foot Cramerton
facility. JPS Automotive constructed additional space at an existing C&A
Products facility, where C&A Products is producing bodycloth for JPS Automotive
on a subcontract basis. JPS Automotive is currently in the process of
relocating its headliner business to the C&A Products facility, which has begun
producing headliner for JPS Automotive on a subcontract basis. JPS Automotive
expects the headliner relocation to be completed during the second quarter of
fiscal 2000.
ITEM 3. LEGAL PROCEEDINGS
From time to time, JPS Automotive is involved in various legal proceedings.
Management believes that such proceedings are routine in nature and incidental
to the conduct of its business, and that none of such proceedings, if determined
adversely to JPS Automotive, would have a material adverse effect on the
consolidated financial condition or results of operations of JPS Automotive.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted pursuant to General Instruction I(2)(c) to Form 10-K
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
JPS Automotive does not have an established public trading market for its equity
securities. The equity securities are held by two wholly-owned subsidiaries of
C&A. Products Corp. is a wholly-owned subsidiary of JPS Automotive, Inc.
The indenture governing the Senior Notes generally prohibits JPS Automotive from
making certain restricted payments and investments (generally, dividends and
distributions on its equity interests; purchases or redemptions of its equity
interests; purchases of any indebtedness subordinated to Senior Notes and
investments other than as permitted) ("Restricted Payment") unless (i) there is
no default under the Senior Notes indenture, (ii) after giving pro forma effect
to the Restricted Payment, JPS Automotive would be permitted to incur at least
$1.00 of additional indebtedness under the indenture's general test for the
incurrence of indebtedness which is a specified ratio (currently 2.5 to 1.0) of
cash flow to interest expense and (iii) the
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aggregate of all Restricted Payments from the issue date is less than a
specified threshold (based, generally, on 50% of cumulative consolidated net
income since the issue date plus 100% of the aggregate net cash proceeds of the
issuance by JPS Automotive of certain equity and convertible debt securities and
cash contributions to JPS Automotive) (the "Restricted Payments Tests"). These
conditions were satisfied as of December 25, 1999. The Restricted Payments Tests
are subject to a number of significant exceptions.
During fiscal year 1999, JPS Automotive made distributions to C&A Products
totaling $3.0 million. During fiscal 1998, JPS Automotive made distributions to
C&A Products totaling $10.0 million.
ITEM 6. SELECTED FINANCIAL DATA
Omitted pursuant to General Instruction (2)(a) to Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Pursuant to General Instruction I(2)(a) to Form 10-K, the following discussion
is 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 presented and the fiscal year immediately preceding
it.
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
International in the 1996 Acquisition. The following discussion should be read
in conjunction with the consolidated financial statements and related notes
thereto of JPS Automotive and Products Corp. included in this report.
1999 COMPARED TO 1998
Net Sales: Net sales for JPS Automotive were $262.8 million in 1999 as compared
to $255.6 million in the comparable 1998 period, which represents an increase of
2.8%. A strike at General Motors during 1998 negatively impacted sales by
approximately $8.3 million in 1998. The sales increase is partially offset by
the decrease in fabric sales due to the continued increase in demand for leather
seating applications.
Gross Profit: Gross profit as a percentage of sales decreased to 9.3% in 1999
from 11.1% in 1998. The primary driver of this decrease was $3.7 million of
income recognized by Automotive Carpet in 1998 for a reversal of previously
established warranty reserves originally recorded for estimated repair and/or
replacement costs, offset by a $1.0 million charge for idle equipment at
Automotive Fabrics. In addition, in 1999, Automotive Carpet incurred a net
charge of $2.2 million, representing the net cumulative impact of a change in
the calculation of amounts owed to C&A Products under the terms of the
intercompany arrangements discussed in Note 12 to the Notes to the JPS
Automotive Consolidated Financial Statements.
Selling, General and Administrative Expenses: Selling, general, and
administrative expenses decreased 4.9% to $11.5 million in 1999 down $0.6
million from the comparable 1998 period. Selling, general and administrative
expenses for fiscal 1998 were reduced by $4.2 million of income recognized by
JPS Automotive related to the collection of a fully reserved receivable balance
due from Enjema. Excluding the impact of the Enjema receivable collection,
selling, general and administrative expenses would have decreased 29.4% from the
comparable 1998 period. This decrease is primarily related to the elimination
of certain redundant sales and administrative functions in connection with the
1996 Acquisition as well as cost-cutting efforts at its fabrics operations.
This decrease is partially offset by an allocation from C&A Products for
administrative services. See Note 12 to the Notes to the JPS Automotive
Consolidated Financial Statements.
Restructuring Charge and Impairment of Long-lived Assets: JPS Automotive
recognized a $8.6 million charge in 1999 for restructuring and impairment of
long-lived assets. See Note 7 to the Notes to the JPS Automotive Consolidated
Financial Statements.
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Interest Expense: Interest expense, net of interest income, was $8.3 million
during 1999 compared to $8.2 million during the comparable 1998 period. During
1999, $0.2 million of interest, related to the construction of additional space
for the production of bodycloth at a C&A Products facility, was capitalized.
Income Taxes: JPS Automotive recognized an income tax benefit of $1.1 million
during 1999 compared to an income tax provision of $3.6 million in the
comparable 1998 period. JPS Automotive's effective tax rates for 1999 was 26.2%
compared to 41.6% in the comparable 1998 period. The percentage decrease is due
to the impact of certain state taxes and nondeductible goodwill, which do not
fluctuate with income.
Cumulative Effect of Change in Accounting Principle: JPS Automotive adopted the
provisions of Statement of Position No. 98-5, "Reporting on the Costs of Start-
Up Activities ("SOP 98-5") at the beginning of the first quarter of 1999. SOP
98-5 provides guidance on the financial reporting of start-up costs and
organization costs and requires that all nongovernmental entities expense the
costs of start-up activities as these costs are incurred instead of being
capitalized and amortized. The initial impact of adopting SOP 98-5 resulted in
a charge of $0.8 million, net of income taxes of $0.5 million.
Net Income:. The combined effect of the foregoing resulted in a net loss of
$3.8 million during 1999, compared to net income of $4.9 million during the
comparable 1998 period.
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 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 12 to the Notes to the JPS Automotive Consolidated Financial
Statements.
IMPACT OF YEAR 2000 COMPLIANCE
In accordance with arrangements between JPS Automotive and C&A Products, C&A
Products provides administrative and management services to JPS Automotive.
These services include business planning and management information systems
services for JPS Automotive. Accordingly, JPS Automotive is part of C&A
Products' comprehensive plan intended to address Year 2000 issues. JPS
Automotive has currently not experienced any significant systems or other Year
2000 problems. C&A Products' comprehensive plan to address Year 2000 issues
(the "Year 2000 Plan") included the acceleration of the Business Systems
Integration Plan (the "BSIP Plan"). The total cost of the JPS Automotive's Year
2000 Plan was $0.7 million. Included in this amount are $0.5 million of
salaries and other payroll costs of Company employees to the extent that they
devoted a portion of their time to the project.
SAFE HARBOR STATEMENT
This Form 10-K 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 the 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-K 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-K
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 preferences, dependence on significant automotive
customers, changes in the popularity of particular car models or particular
interior trim packages, the loss of programs on particular car models, the level
of competition in the automotive supply industry, pricing pressure from
automotive customers, and Year 2000 compliance issues, 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
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important factors which may affect the operations, products and markets of JPS
Automotive, see "ITEM 1. BUSINESS" and the above discussion in this "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," and Notes to JPS Automotive Consolidated Financial Statements and
see also JPS Automotive's other filings with the Securities and Exchange
Commission.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
JPS Automotive does not have any exposure to market risk for changes in interest
rates and foreign exchange rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the Consolidated Financial Statements of JPS Automotive and subsidiaries and
Products Corp. included herein and listed on the indices to the Consolidated
Financial Statements and Financial Statement Schedule as set forth in Item 14 of
this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
Item 10. Directors and Executive Officers of the Registrants
Omitted pursuant to General Instruction I(2)(c) to Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Omitted pursuant to General Instruction I(2)(c) to Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Omitted pursuant to General Instruction I(2)(c) to Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted pursuant to General Instruction I(2)(c) to Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Financial Statements
The financial statements listed in the accompanying Index to Consolidated
Financial Statements are filed as part of this Report on Form 10-K.
(b) Reports on Form 8-K
During the last quarter of the period covered by this Report or Form 10-K,
the Company filed no reports on Form 8-K.
(c) Exhibits
Exhibit
Number Description
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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 PACJ's Certificate of Incorporation.
3.4 Bylaws of PACJ, Inc.
3.5 Agreement and Plan of Merger dated as of January 1, 2000 by and
between PACJ, Inc. and JPS Automotive L.P. is hereby incorporated by
reference to Exhibit 2.1 of the Form 8-K of JPS Automotive and
Products Corp. dated January 28, 2000.
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.
4.3 Second Supplemental Indenture dated January 28, 2000 by and among JPS
Automotive L.P., JPS Automotive Products Corp., PACJ, Inc. and State
Street Bank and Trust Company, as Successor Trustee is hereby
incorporated by reference to Exhibit 4.1 of the Form 8-K of JPS
Automotive and Products Corp. dated January 28, 2000.
Certain instruments defining the rights of security holders have been
excluded herefrom in accordance with Item 601(b)(4)(iii)(A) 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 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.
10.5 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.
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10.6 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.
10.7 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.
10.8 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.
10.9 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.
10.10 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.
10.11 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.
10.12 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
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SIGNATURES
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 24th day of March,
2000.
JPS AUTOMOTIVE, INC.
By: /s/ Rajesh K. Shah
-------------------------------------
Rajesh K. Shah
Executive Vice President and
Chief Financial Officer
JPS AUTOMOTIVE PRODUCTS CORP.
By: /s/ Rajesh K. Shah
------------------------------------
Rajesh K. Shah
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrants and
in the capacities and on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Thomas E. Evans Director and Chief Executive March 24, 2000
- -------------------- Officer of JPS Automotive, Inc.
Thomas E. Evans (Principal Executive Officer)
/s/ Rajesh K. Shah Director and Executive Vice March 24, 2000
- -------------------- President and Chief Financial
Rajesh K. Shah Officer (Principal Financial and
Accounting Officer) of JPS Automotive
Products Corp and JPS Automotive, Inc.
9
<PAGE>
JPS AUTOMOTIVE L.P.
JPS AUTOMOTIVE PRODUCTS CORP.
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
PAGE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1
<S> <C>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES:
Report of Independent Public Accountants F-2
Consolidated Balance Sheets as of December 25, 1999 and December 26, 1998 F-3
Consolidated Statements of Operations for the years ended December 25, 1999, December 26, 1998
and December 27, 1997 F-4
Consolidated Statements of Owners' Equity for the years ended December 25, 1999, December 26,
1998 and December 27, 1997 F-5
Consolidated Statements of Cash Flows for the years ended December 25, 1999, December 26, 1998
and December 27, 1997 F-6
Notes to Consolidated Financial Statements F-7
JPS AUTOMOTIVE PRODUCTS CORP:
Report of Independent Public Accountants F-24
Balance Sheets as of December 25, 1999 and December 26, 1998 F-25
Notes to Financial Statements F-26
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To JPS Automotive, Inc.:
We have audited the accompanying consolidated balance sheets of JPS Automotive
L.P. (a Delaware limited partnership and an indirect subsidiary of Collins &
Aikman Corporation) and subsidiaries as of December 25, 1999, and December 26,
1998, and the related consolidated statements of operations, owners' equity, and
cash flows for each of the three fiscal years in the period ended December 25,
1999. These consolidated financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements and schedule
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of JPS
Automotive L.P. and subsidiaries as of December 25, 1999 and December 26, 1998,
and the results of their operations and their cash flows for each of the three
fiscal years in the period ended December 25, 1999, in conformity with
accounting principles generally accepted in the United States.
As explained in Note 3 to the consolidated financial statements, effective
December 27, 1998, JPS Automotive L.P. changed its method of accounting for
start-up costs and organization costs in accordance with SOP 98-5, "Reporting on
the Costs of Start-up Activities".
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedule II is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not a required part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in our audit 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.
ARTHUR ANDERSEN LLP
Charlotte, North Carolina,
March 1, 2000.
F-2
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 25, 1999 DECEMBER 26, 1998
ASSETS ----------------- -----------------
Current assets:
<S> <C> <C>
Cash and cash equivalents............................................. $ 810 $ 171
Accounts receivable, net of allowance $2,268 and $2,254............... 37,387 36,139
Purchased receivables of affiliate.................................... 4,805 -
Inventories........................................................... 6,912 11,308
Revolving loan due from C&A Products.................................. 4,600 1,500
Receivables from related parties...................................... 11,144 10,403
Deferred tax assets................................................... 1,685 3,203
Other current assets.................................................. 1,085 1,344
-------- --------
Total current assets........................................ 68,428 64,068
Property, plant and equipment:
Land and land improvements............................................ 1,598 4,380
Buildings and leasehold improvements.................................. 11,171 17,292
Machinery, equipment and furnishings.................................. 46,926 43,988
Construction in progress.............................................. 2,395 6,375
-------- --------
Total......................................................... 62,090 72,035
Less - Accumulated depreciation and amortization...................... (13,782) (10,903)
-------- --------
Property, plant and equipment, net............................ 48,308 61,132
Goodwill, net.......................................................... 97,757 100,688
Demand receivable due from C&A for income taxes........................ 10,601 6,887
Debt issuance costs, net............................................... 1,167 1,934
Other assets........................................................... 1,439 3,222
-------- --------
$227,700 $237,931
======== ========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable...................................................... $ 7,241 $ 10,795
Accrued expenses...................................................... 8,612 6,383
-------- --------
Total current liabilities..................................... 15,853 17,178
Long-term debt......................................................... 87,370 88,247
Other liabilities...................................................... 8,924 10,224
Commitments and contingencies..........................................
Owners' equity:
General partner....................................................... 48,073 48,073
Limited partner....................................................... 67,480 74,209
-------- --------
Total owners' equity.......................................... 115,553 122,282
-------- --------
$227,700 $237,931
======== ========
</TABLE>
The Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements.
F-3
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 25, DECEMBER 26, DECEMBER 27,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................. $ 262,847 $ 255,627 $ 247,271
Cost of goods sold.................... 238,462 227,254 210,281
------------ ------------ -------------
Gross profit.......................... 24,385 28,373 36,990
Selling, general and administrative
expenses............................. 11,527 12,122 15,478
Restructuring charge and impairment
of long-lived assets................. 8,553 - -
------------ ------------ -------------
Income from operations................ 4,305 16,251 21,512
Interest expense...................... 8,309 8,159 9,530
Other expense (income), net........... 8 (616) (313)
------------ ------------ -------------
Income (loss) before income taxes..... (4,012) 8,708 12,295
Income tax provision (benefit)........ (1,052) 3,626 5,199
------------ ------------ -------------
Income (loss) from continuing
operations........................... (2,960) 5,082 7,096
Income from discontinued operations,
net of income taxes of $1,044........ - - 1,662
------------ ------------ -------------
Income (loss) before extraordinary
loss and cumulative effect of a
change in accounting principle....... (2,960) 5,082 8,758
Extraordinary loss on extinguishment
of debt, net of income taxes of $90
and $442............................. - (132) (721)
Cumulative effect of a change in
accounting principle, net of income
taxes of $528........................ (791) - -
------------ ------------ -------------
Net income (loss)..................... $ (3,751) $ 4,950 $ 8,037
============ ============ =============
</TABLE>
The Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements.
F-4
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OWNERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNER PARTNER TOTAL
----------- ----------- ----------
<S> <C> <C> <C>
Balance, December 28, 1996.................................... $ 74,452 $ 48,073 $ 122,525
Contributions by partners-
Cash........................................................ 32,369 - 32,369
Other....................................................... 5,142 - 5,142
Distributions to partners..................................... (44,625) - (44,625)
True-up of pushdown acquisition basis......................... (452) - (452)
Net income.................................................... 8,037 - 8,037
--------- --------- ---------
Balance, December 27, 1997.................................... 74,923 48,073 122,996
Distributions to partners..................................... (10,000) - (10,000)
Contributions from partners - Other........................... 4,336 - 4,336
Net income.................................................... 4,950 - 4,950
--------- --------- ---------
Balance, December 26, 1998.................................... 74,209 48,073 122,282
Distributions to partners..................................... (3,000) - (3,000)
Contributions from partners - Other........................... 22 - 22
Net loss...................................................... (3,751) - (3,751)
--------- --------- ---------
Balance, December 25, 1999.................................... $ 67,480 $ 48,073 $ 115,553
========= ========= =========
</TABLE>
The Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements
F-5
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 25, DECEMBER 26, DECEMBER 27,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income (loss) from continuing operations....................... $(2,960) $ 5,082 $ 7,096
Adjustments to derive cash flow
from continuing operating activities:
Impairment of long-lived assets.............................. 6,803 - -
Deferred income tax expense.................................. 2,834 6,307 11,190
Depreciation and amortization................................ 9,661 9,221 7,868
Interest accretion and debt issuance cost amortization....... (110) (217) (322)
Other, net................................................... - (616) 215
Changes in operating assets and liabilities:
Accounts receivable......................................... (998) 899 (10,414)
Inventories................................................. 4,396 7,967 (4,986)
Accounts payable............................................ (3,554) (1,288) 69
Other assets and liabilities................................ 810 (9,517) (6,401)
------- -------- --------
Net cash provided by continuing operating activities........ 16,882 17,838 4,315
Net cash provided by discontinued operations, net........... - - 478
------- -------- --------
Net cash provided by operating activities................... 16,882 17,838 4,793
INVESTING ACTIVITIES:
Capital expenditures, net...................................... (8,925) (12,007) (3,692)
Sales of property, plant and equipment......................... 5,548 - -
Proceeds from disposition of discontinued
operation..................................................... - - 55,900
Purchased receivables.......................................... (4,805) - -
Payment to related party for assumption of environmental
liabilities................................................... - - (4,136)
Other, net..................................................... 141 - 1,391
------- -------- --------
Net cash provided by (used in) investing activities......... (8,041) (12,007) 49,463
------- -------- --------
FINANCING ACTIVITIES:
Net proceeds (repayments) from revolving loans................. (3,100) 3,000 (4,500)
Repayment of long-term debt.................................... - (2,707) (25,627)
Capital contributions from partners............................ 22 4,336 32,369
Distributions to C&A Products.................................. (3,000) (10,000) (44,625)
Changes in amounts due C&A Products, net....................... (2,124) (9,406) (2,800)
Other.......................................................... - (154) -
------- -------- --------
Net cash used in financing activities....................... (8,202) (14,931) (45,183)
------- -------- --------
Net increase (decrease) in cash and cash equivalents............ 639 (9,100) 9,073
Cash and cash equivalents at beginning of period................ 171 9,271 198
------- -------- --------
Cash and cash equivalents at end of period...................... $ 810 $ 171 $ 9,271
======= ======== ========
</TABLE>
The Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements
F-6
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
JPS Automotive L.P. and subsidiaries ("JPS Automotive" or the "Company")
operate in the automotive products segment in North America, including the
design, manufacture and sale of carpet components and interior fabrics for
passenger cars and light trucks.
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
also acquired from Seiren Co. Ltd. and its affiliates a minority interest in
Cramerton Automotive Products, L.P. and Cramerton Management Corporation, which
are JPS Automotive subsidiaries that were merged in December 1997 under the name
Cramerton Automotive Products, Inc. ("Cramerton"). JPS Automotive subsequently
acquired the minority interest previously held by C&A Products and now owns 100%
of Cramerton.
On January 28, 2000, JPS Automotive merged into and with its general
partner, PACJ, Inc. See Note 18.
2. JPS AUTOMOTIVE ACQUISITION:
As discussed in Note 1, on December 11, 1996, C&A, through its
subsidiaries, acquired JPS Automotive from Foamex pursuant to an Equity Purchase
Agreement dated August 28, 1996, as amended December 11, 1996. The purchase
price for the 1996 Acquisition was an aggregate of approximately $220 million,
consisting of approximately $195 million of indebtedness of JPS Automotive and
$25 million in cash paid to Foamex. During 1997, C&A finalized the purchase
price and received approximately $11.2 million from the seller as a reduction of
the purchase price.
In connection with the 1996 Acquisition, C&A, through its subsidiaries,
acquired approximately $68 million of the Company's outstanding 11-1/8% Senior
Notes due 2001 (the "Senior Notes"), which were subsequently retired by the
Company. In addition, at the time of closing, approximately $15 million of the
Company's outstanding debt was repaid. See Note 6. The Senior Notes formerly
held by C&A and the funds used to repay the Company's outstanding bank
indebtedness were recorded as capital contributions to the Company from C&A and
its subsidiaries.
The aggregate investment of approximately $119 million in connection with
the acquisition of JPS Automotive by C&A and its subsidiaries was funded by
borrowings under C&A's credit facilities.
The 1996 Acquisition has been accounted for as a purchase and, pursuant to
the provisions of Staff Accounting Bulletin No. 54 ("SAB No. 54") and the rules
of pushdown accounting, the 1996 Acquisition gave rise to a new basis of
accounting. The purchase price and related acquisition expenses exceeded the
fair value of the net assets acquired. The purchase price in excess of the net
assets acquired has been pushed down and recorded in the accompanying
consolidated balance sheet as goodwill. The excess of the purchase price over
the estimated fair value of the net assets acquired (goodwill) is being
amortized over 40 years.
Following the acquisition by C&A Products of JPS Automotive in December
1996, C&A Products began to develop plans to rationalize certain manufacturing
locations as well as marketing and administrative functions. These transactions
and arrangements and proposed transactions and
F-7
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
arrangements 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 issued an opinion confirming they are fair to JPS
Automotive from a financial point of view. See Note 12 for further discussion.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION - The consolidated financial statements include the accounts
of JPS Automotive and all subsidiaries that JPS Automotive directly or
indirectly controls, either through majority ownership or otherwise.
Intercompany accounts and transactions have been eliminated in consolidation.
FISCAL YEAR - JPS Automotive's fiscal year ends on the last Saturday of
December.
ACCOUNTING ESTIMATES - The preparation of consolidated financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
investments with an original maturity of three months or less when purchased to
be cash equivalents.
INVENTORIES - Inventories are stated at the lower of cost or market. The
cost of the inventories is determined on a first-in, first-out basis.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at
cost and are depreciated using the straight-line method over the estimated
useful lives of the assets. The range of useful lives estimated for buildings
is generally 25 to 40 years and the range for machinery, equipment and
furnishings is 3 to 15 years. Leasehold improvements are amortized over the
shorter of the terms for the respective leases or the estimated lives of the
leasehold improvements. It is the Company's policy to capitalize interest on
ongoing projects. During 1999, $0.2 million of interest, related to the
construction of additional space for the production of bodycloth and headliner
at a C&A Products facility, was capitalized. See Note 12.
LONG-LIVED ASSETS - Statement of Financial Accounting Standard ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", establishes accounting standards for the impairment
of long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS No. 121 requires that long-
lived assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable, and that
certain long-lived assets and identifiable intangibles to be disposed of be
reported at the lower of carrying amount or fair value less cost to sell. In
conjunction with the Reorganization, hereinafter defined, JPS Automotive
recorded an asset impairment of $2.0 million.
DEBT ISSUANCE COSTS - Debt issuance costs consist of amounts incurred in
obtaining long-term financing. These costs are amortized over the term of the
related debt using the interest method. Accumulated amortization as of December
25, 1999, was approximately $2.2 million.
GOODWILL - As discussed in Note 2, the acquisition of JPS Automotive by C&A
has been accounted for as a purchase and, pursuant to SAB No. 54 and the rules
of pushdown accounting, gave rise to a new basis of accounting. As a result,
the amount by which the purchase price and related acquisition expenses exceeded
the fair value of the net assets acquired has been recorded by JPS Automotive as
goodwill in the accompanying December 25, 1999 and December 26, 1998
consolidated balance sheets and is being amortized over a 40-year period.
Accumulated amortization as of
F-8
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 25, 1999 and December 26, 1998 was approximately $8.0 million and $5.3
million, respectively. The carrying value of goodwill is reviewed periodically
based on the undiscounted cash flows and pretax income over the remaining
amortization period. Should this review indicate that the goodwill balance will
not be recoverable, the Company's carrying value of goodwill will be reduced. At
December 25, 1999, the Company believes the goodwill is fully recoverable.
ENVIRONMENTAL MATTERS - The Company records its best estimate when it
believes it is probable that an environmental liability has been incurred and
the amount of loss can be reasonably estimated. The Company also considers
estimates of certain reasonably possible environmental liabilities in
determining the aggregate amount of environmental reserves. See Note 13.
REVENUE RECOGNITION - JPS Automotive recognizes revenue from product sales
when it has shipped the goods. JPS Automotive generally allows its customers
the right of return only in the case of defective products. JPS Automotive
provides a reserve for estimated defective product costs at the time of the sale
of the products.
INCOME TAXES - Income taxes for all periods are determined in accordance
with SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use
of the asset and liability method in which deferred income taxes are provided
for temporary differences between the financial reporting and income tax basis
of assets and liabilities using the income tax rates, under existing
legislation, expected to be in effect at the date such temporary differences are
expected to reverse.
Immediately prior to the 1996 Acquisition, JPS Automotive was converted
from a Delaware limited partnership into an association which is taxable as a
corporation for federal, state and local income tax purposes. The Company is
included in the consolidated federal income tax return of C&A. Income taxes for
periods subsequent to the 1996 Acquisition reflect the pushdown of JPS
Automotive's impact on the consolidated tax position of C&A.
JPS Automotive has a tax-sharing agreement that provides for payment to the
partners of amounts that would be required to be paid if JPS Automotive were a
corporation filing separate income tax returns. At the time of the 1996
Acquisition, Foamex assigned to C&A Products the tax-sharing agreement.
NEWLY ISSUED ACCOUNTING STANDARDS - In April 1998, the American Institute
of Certified Public Accountants 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 and
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, and the initial application of this
pronouncement was reported as a cumulative effect of a change in accounting
principle. JPS Automotive adopted SOP 98-5 on December 27, 1998. The initial
impact of the adoption of SOP 98-5 at the beginning of fiscal 1999 was $0.8
million, net of income taxes of $0.5 million.
In September 1999, the FASB's Emerging Issues Task Force ("EITF") reached a
consensus regarding EITF Issue No. 99-5, "Accounting for Pre-Production Costs
Related to Long-Term Supply Arrangements" ("EITF No. 99-5"). EITF No. 99-5
requires that design and development costs for products to be sold under long-
term supply arrangements be expensed as incurred, and costs incurred for molds,
dies and other tools that will be used in producing the products under long-term
supply agreements be capitalized and amortized over the shorter of the expected
useful life of the assets or the term of the supply arrangement. The consensus
can be applied prospectively to costs incurred after December 31, 1999 or as a
cumulative effect of a change in accounting principle as of the beginning of a
company's fiscal year. JPS Automotive is currently analyzing the impact of EITF
No. 99-5.
F-9
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. INVENTORIES:
The components of inventories consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
1999 1998
------------ ------------
<S> <C> <C>
Raw materials and supplies............... $ 2,492 $ 4,359
Work-in-process.......................... 2,752 5,183
Finished goods........................... 1,668 1,766
----------- ----------
$ 6,912 $ 11,308
=========== ==========
</TABLE>
5. ACCRUED EXPENSES:
Accrued expenses are summarized below (in thousands):
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
1999 1998
------------ ------------
<S> <C> <C>
Payroll, severance and employee benefits.. $ 7,108 $ 4,258
Other.................................... 1,504 2,125
----------- -----------
$ 8,612 $ 6,383
=========== ===========
</TABLE>
6. LONG-TERM DEBT:
Long-term debt consists of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
1999 1998
------------ ------------
<S> <C> <C>
11-1/8% senior notes due 2001............ $ 86,043 $ 86,043
Premium on senior notes.................. 1,327 2,204
----------- -----------
$ 87,370 $ 88,247
=========== ===========
</TABLE>
The Senior Notes were issued on June 28, 1994. Interest on the Senior
Notes is payable semiannually on June 15 and December 15 of each year. The
Senior Notes mature on June 15, 2001.
On the 1996 Acquisition date, $180 million principal amount of the Senior
Notes were outstanding. As discussed in Note 12, of this amount, approximately
$68 million had been purchased by C&A prior to the 1996 Acquisition on the open
market and were subsequently retired by JPS Automotive. The total capital
contribution resulting in the retirement of these Senior Notes was approximately
$70.2 million. In addition, in connection with the purchase accounting for the
1996 Acquisition, the remaining approximately $112 million in face value of
Senior Notes were recorded at a market value of $117.2 million on the date of
the 1996 Acquisition. The bond premium is being amortized as a reduction of
interest expense over the remaining term of the Senior Notes and will result in
an effective interest rate of approximately 10% for periods after the 1996
Acquisition.
The Company is not required to make mandatory redemption or sinking fund
payments except in the case of certain asset sales or a change of control (as
defined in the indenture for the Senior Notes). In addition, the Senior Notes
are not subject to optional redemption, except in connection with certain public
offerings of common stock or following a change of control (as so defined). The
1996 Acquisition resulted in a change of control which, under the terms of the
indenture for the Senior Notes, gave holders of the Senior Notes 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
F-10
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the Company and then repurchased on March 10, 1997. In addition, JPS Automotive
repurchased $23 thousand principal amount of Senior Notes in conjunction with an
offer to purchase as a result of the 1997 sale of its airbag industrial fabric
operation ("Airbag"). See Note 11. In addition, during 1997, JPS Automotive
repurchased $19.4 million of Senior Notes in the open market. These notes were
subsequently retired. In conjunction with the 1997 repurchases, JPS Automotive
recognized an extraordinary loss of $721 thousand, net of income taxes of $442
thousand. To fund these purchases (including premium and interest paid), C&A
Products made capital contributions as well as loaned funds in accordance with
the revolving credit arrangement discussed in Note 12. During 1998, JPS
Automotive repurchased on the open market and retired $2.6 million principal
amount of Senior Notes. In conjunction with the 1998 repurchases, JPS Automotive
recognized an extraordinary loss of $132 thousand, net of income taxes of $90
thousand. There were no repurchases for JPS Automotive during 1999.
The indenture governing the Senior Notes generally prohibits JPS Automotive
from making certain payments and investments (generally, dividends and
distributions on its equity interests, purchases or redemptions of its equity
interests, purchases of any indebtedness subordinated to the Senior Notes and
investments other than as permitted) (the "Restricted Payments") unless (i)
there is no default under the Senior Notes indenture; (ii) after giving pro
forma effect to the Restricted Payment, JPS Automotive would be permitted to
incur at least $1.00 of additional indebtedness under the indenture's general
test for the incurrence of indebtedness which is a specified ratio (currently
2.5 to 1.0) of cashflow to interest expense, and (iii) the aggregate of all
Restricted Payments from the issue date is less than a specified threshold
(based, generally, on 50% of JPS Automotive's cumulative consolidated net
income, since the issue date, plus 100% of the aggregate net cash proceeds of
the issuance by JPS Automotive of certain equity and convertible debt securities
and cash contributions to JPS Automotive) (the "Restricted Payments Tests").
These conditions were satisfied immediately following the 1996 Acquisition, and
as of December 25, 1999. The Restricted Payments Tests are subject to a number
of significant exceptions. The indenture governing the Senior Notes also
contains other restrictive covenants (including, among others, limitations on
the incurrence of indebtedness and preferred stock, asset dispositions and
transactions with affiliates including C&A and C&A Products) which are customary
for such securities. These covenants are also subject to a number of
significant exceptions.
The Senior Notes rank senior in right of payment to all existing or future
subordinated indebtedness of JPS Automotive and on an equal basis in right of
payment with all existing or future senior indebtedness of JPS Automotive.
Total interest paid by JPS Automotive on all indebtedness was $9.6 million,
$9.5 million and $10.9 million for the years ended December 25, 1999, December
26, 1998 and December 27, 1997, respectively.
7. RESTRUCTURING:
On February 10, 1999, C&A Products announced a comprehensive plan (the
"Reorganization") to reorganize its global automotive carpet, acoustics,
plastics and accessory floormats businesses. During 1999, JPS Automotive
recognized a restructuring charge related to the Reorganization of $0.3 million.
The restructuring charge of $0.3 million represents severance costs associated
with the reduction of administrative personnel at JPS Automotive's carpet
facility. As of December 25, 1999, approximately $0.1 million had been spent in
severance and related costs.
On September 22, 1999, JPS Automotive completed the sale of its facility
located in Cramerton, North Carolina for a sales price of $6 million,
resulting in a loss on the sale of $4.9 million, and additional asset
impairments, of certain machinery and equipment used in production, of $2.0
million. In addition, JPS Automotive established a reserve of $1.4 million for
severance costs to be paid to the approximately 150 employees affected by the
sale. At December 25, 1999, approximately 100 employees had been terminated.
As of December 25, 1999, approximately $0.4 million had been spent in severance
and related costs. JPS Automotive and C&A Products are in the process of
relocating the headliner business from the Cramerton, North Carolina facility to
a C&A Products facility where C&A Products has begun producing headliner for JPS
Automotive on a subcontract basis.
F-11
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In connection with the 1996 Acquisition, JPS Automotive eliminated certain
redundant sales and administrative functions and closed one manufacturing
facility in 1997, a second facility in January 1998, and a third facility in
June 1998. In June 1999, JPS Automotive completed the process of relocating
bodycloth production from a JPS Automotive facility to an existing C&A Products
facility. These actions affected 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 remaining reserve of $0.1
million will be used for severance benefits.
8. EMPLOYEE BENEFIT PLANS:
The 1996 Acquisition did not significantly affect the employee benefit
plans offered to the employees of JPS Automotive. Effective December 31, 1997,
the defined benefit, defined contribution and postretirement benefit plans of
JPS Automotive were merged into the plans of C&A. Under the provisions of these
plan mergers, the accounts established in the C&A plans for the active plan
participants were credited for benefits earned in the JPS Automotive plans
through December 31, 1997. These plan mergers did not significantly affect the
benefits provided to retired, fully vested or active plan participants.
DEFINED PENSION AND POSTRETIREMENT BENEFIT PLANS - Salaried and certain
hourly employees of JPS Automotive participate in a plan sponsored by C&A
products. Benefits are based on the employees' final average compensation,
years of benefit service, the covered compensation in effect at retirement and
the employees' ages when payment begins. The funding policy is to contribute
annually an amount that both satisfies the minimum funding requirements of the
Employee Retirement Income Security Act of 1974 and does not exceed the full
funding limitations of the Internal Revenue Code of 1986, as amended. Plan
investments consist primarily of equity and fixed income securities.
JPS Automotive also provides postretirement health care and life insurance
benefits for eligible employees and retirees of the Company and retirees of the
Predecessor Company. These plans are unfunded and JPS Automotive retains the
right to modify or eliminate these benefits.
In December 1997, another subsidiary of C&A Products assumed the
postretirement benefit liabilities of certain participants who, as of January 1,
1997, were either active and fully eligible or retired. As a result,
postretirement benefit liabilities totaling $1.3 million and related deferred
tax assets of $0.5 million were eliminated and a gain of $0.8 million was
recorded as a fiscal 1997 net capital contribution from C&A Products due to the
related party nature of this transaction. JPS Automotive will remain
contingently liable for these postretirement liabilities.
The following tables provide a reconciliation of the projected benefit
obligation, a reconciliation of plan assets, the funded status of the plans, and
amounts recognized in the JPS Automotive's consolidated balance sheets, at
December 25, 1999 and December 26, 1998 (in thousands):
F-12
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
---------------------------- ------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 25, DECEMBER 26, DECEMBER 25, DECEMBER 26,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year ...... $ 3,788 $ 3,697 $ 1,547 $ 1,980
Service cost ................................. 1,332 1,300 104 218
Interest cost ................................ 345 266 103 139
Actuarial gain ............................... (1,805) (1,041) (604) (784)
Benefits paid ................................ (24) (434) (11) (6)
------------ ------------ ------------ ------------
Benefit obligation at end of year ............ $ 3,636 $ 3,788 $ 1,139 $ 1,547
============ ============ ============ ============
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year 2,615 $ 2,377 -- --
Actual return on plan assets ................. 453 435 -- --
Employer contributions ....................... -- 237 11 6
Benefits paid ................................ (24) (434) (11) (6)
------------ ------------ ------------ ------------
Fair value of plan assets at end of year ..... $ 3,044 $ 2,615 $ -- $ --
============ ============ ============ ============
FUNDED STATUS:
Funded status ................................ $ (592) $ (1,173) $ (1,139) $ (1,547)
Unrecognized net gain ........................ (3,189) (1,221) (1,477) (919)
------------ ------------ ------------ ------------
Accrued benefit liability .................... $ (3,781) $ (2,394) $ (2,616) $ (2,466)
============ ============ ============ ============
</TABLE>
As of December 25, 1999, there were no pension plans with accumulated
benefit obligation in excess of plan assets. As of December 26, 1998, the
projected benefit obligation, accumulated benefit obligation, and fair value of
plan assets for the pension plans with accumulated benefit obligations in excess
of plan assets were $3.8 million, $3.5 million and $2.6 million, respectively.
The net periodic benefit cost of continuing operations for 1999, 1998, and
1997 includes the following components (in thousands):
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
------------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
------------------------------------- -------------------------------
1999 1998 1997 1999 1998 1997
--------- ---------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost ................. $ 1,332 $ 1,300 $ 901 $ 104 $ 218 $ 194
Interest cost ................ 345 266 267 103 139 236
Expected return on plan assets (234) (225) (65) - - -
Recognized net actuarial gain (56) - - (46) - -
--------- ---------- ---------- --------- -------- --------
Net periodic benefit cost .... $ 1,387 $ 1,341 $ 1,103 $ 161 $ 357 $ 430
========= ========== ========== ========= ======== ========
</TABLE>
F-13
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Weighted average assumptions used in the above actuarial computations are
summarized as follows:
<TABLE>
<CAPTION>
PENSION POSTRETIREMENT
BENEFITS BENEFITS
------------ --------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER:
Discount rate 7.8% 6.8% 7.8% 7.0%
Expected return on plan assets 9.0% 9.0% n/a n/a
Rate of compensation increase 4.5% 4.5% n/a n/a
</TABLE>
Since JPS Automotive has capped its annual liability per person and all
future cost increases will be passed on to retirees, the annual rate of increase
in health care costs does not affect the postretirement benefit obligation.
DEFINED CONTRIBUTION PLAN - JPS Automotive participates in the C&A Products
defined contribution plan qualified under Section 401(k) of the Internal Revenue
Code that covers eligible nonunion employees. Employee contributions are
voluntary and subject to certain limitations as imposed by the Internal Revenue
Code. JPS Automotive's contributions for the years ended December 25, 1999,
December 26, 1998 and December 27, 1997 were approximately $0.2 million, $0.1
million and $0.3 million, respectively.
9. INCOME TAXES:
Immediately prior to the 1996 Acquisition, JPS Automotive was converted
from a Delaware limited partnership into an association which is taxable as a
corporation for federal, state and local income tax purposes. The purchase of
the entire equity interest in JPS Automotive has been treated as a stock
acquisition for federal, state and local income tax purposes. JPS Automotive
remains a Delaware limited partnership for all purposes other than federal and
state income taxes.
The acquisition of Cramerton resulted in a termination of the partnership's
tax status, resulting in a step-up to fair market value for the underlying
assets of Cramerton. Cramerton, a Delaware limited partnership, was recognized
as a partnership for tax purposes subsequent to the acquisition. In December
1997, Cramerton was merged into its managing general partner and became taxable
as a corporation.
The Company is included in the consolidated federal income tax return of
C&A. Income taxes for periods subsequent to the 1996 Acquisition reflect the
pushdown of JPS Automotive's impact on the consolidated tax position of C&A.
F-14
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision (benefit) for income taxes of continuing operations includes
the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 25, DECEMBER 26, DECEMBER 27,
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Federal-
Current...................... $ (3,879) $ (2,860) $ (5,840)
Deferred..................... 2,618 5,902 10,194
------------ ------------ --------------
(1,261) 3,042 4,354
------------ ------------ --------------
State-
Current...................... (7) 179 (151)
Deferred..................... 216 405 996
------------ ------------ --------------
209 584 845
------------ ------------ --------------
$ (1,052) $ 3,626 $ 5,199
============ ============ ==============
</TABLE>
For the periods prior to the 1996 Acquisition, no amounts were payable by
JPS Automotive under the provisions of its tax-sharing agreement. For the
periods subsequent to the 1996 Acquisition, no amounts were payable by or due to
JPS Automotive under the terms of the tax-sharing agreement assumed by C&A
Products in the 1996 Acquisition. However, as discussed in Note 12, C&A has
agreed to reimburse JPS Automotive for tax benefits utilized in its consolidated
tax return totaling $3.7 million for fiscal 1999 and $0.3 million for fiscal
1998.
A reconciliation of the statutory federal income taxes (based on 35% rate)
of continuing operations to the effective income tax is as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 25, DECEMBER 26, DECEMBER 27,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Statutory income tax...... $ (1,404) $ 3,048 $ 4,303
State income taxes, net
of federal............... 135 380 549
Permanent difference on
goodwill and partnership
income................... 210 210 268
Other..................... 7 (12) 79
--------- --------- ---------
$ (1,052) $ 3,626 $ 5,199
========= ========= =========
</TABLE>
F-15
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As a result of the change in the Company's tax status that resulted from
the 1996 Acquisition, deferred tax assets and liabilities of JPS Automotive and
Cramerton are provided on the temporary differences between the financial
reporting and tax bases of the Company's assets and liabilities. While the
equity purchase of JPS Automotive results in carryover tax basis in the assets,
such carryover basis reflects the fair market value as a result of the deemed
taxable sale and revaluation to fair market value in the hands of the seller
just prior to the purchase by C&A and its subsidiaries. The components of the
net deferred tax assets as of December 25, 1999 and December 26, 1998, were as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
1999 1998
-------------- ------------
<S> <C> <C>
Deferred tax assets-
Employee pension and insurance benefits...................... $ 1,640 $ 1,513
Other employee benefits...................................... 604 565
Premium on Senior Notes...................................... 944 1,297
Other liabilities and reserves............................... 2,851 3,848
------------ ----------
6,039 7,223
Deferred tax liabilities-
Goodwill amortization........................................ (3,693) (2,638)
Fixed assets................................................. (6,618) (6,720)
------------ ----------
(10,311) (9,358)
------------ ----------
Net deferred tax liabilities.................................. $ (4,272) $ (2,135)
============ ==========
</TABLE>
The above amounts have been classified in the consolidated December 25,
1999, and December 26, 1998, balance sheets as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
1999 1998
------------ ------------
Deferred tax assets (liabilities)-
<S> <C> <C>
Current...................................................... $ 1,685 $ 3,203
Noncurrent, included in other noncurrent liabilities......... (5,957) (5,338)
----------- -----------
$ (4,272) $ (2,135)
=========== ===========
</TABLE>
No income taxes were paid for the years ended December 25, 1999, December
26, 1998 and December 27, 1997.
10. COMMITMENTS AND CONTINGENCIES:
Operating Leases - JPS Automotive is obligated under various noncancellable
lease agreements for rental of facilities, machinery and computer equipment
which remained outstanding following the 1996 Acquisition. Total minimum rental
commitments required under operating leases at December 25, 1999, are (in
thousands):
<TABLE>
<S> <C>
2000............................ $ 133
2001............................ 57
2002............................ 2
-----
$ 192
=====
</TABLE>
F-16
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Rental expense charged to continuing operations under operating leases by
the Company approximated $0.8 million, $1.0 million and $1.2 million for the
years ended December 25, 1999, December 26, 1998 and December 27, 1997,
respectively. Rental expense includes the minimum rental payments under
operating leases and other short-term rentals.
11. DISCONTINUED OPERATIONS:
On July 24, 1997, JPS Automotive completed the sale of Airbag to Safety
Components International, Inc. for a purchase price of approximately $56.3
million. No gain or loss was recorded on the sale since the sales price
approximated the acquisition fair value of Airbag. Pursuant to the indenture
governing the Senior Notes, in connection with the sale of Airbag, the Company
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, JPS Automotive repurchased and retired $23 thousand
principal amount of Senior Notes. During October 1997, the Company caused JPS
Automotive to use a portion of the proceeds remaining from the sale of Airbag to
make a distribution of $35.0 million to C&A Products, as permitted under the
restricted payments provision of the Senior Notes indenture. See Note 6.
JPS Automotive has accounted for the financial results and net assets of
Airbag as a discontinued operation. Net sales and net income of Airbag prior to
its sale were approximately $41.0 million and $1.7 million for the year ended
December 27, 1997.
12. RELATED-PARTY TRANSACTIONS AND ALLOCATIONS:
At December 25, 1999, 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 $418.6 million.
Following the acquisition by C&A Products of JPS Automotive in December
1996, 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.
The compensation paid by JPS Automotive to C&A Products for the services
provided by C&A Products under the Existing Services Agreement, including the
additional services described above, includes all reasonable expenses of C&A
Products employees assigned to perform the services, all reasonable out-of-
pocket expenses incurred by C&A Products and an amount to cover C&A Products'
overhead, not to exceed the lesser of (x) C&A Products' budgeted estimate for
such costs for 1997, as adjusted annually for changes in general producer price
levels for the carpet industry and (y) the actual annual cost savings achieved
from the elimination of managerial, marketing and program management functions
at JPS Automotive. Assets sold by JPS Automotive to C&A Products in connection
with the rationalization process are generally sold for a purchase price equal
to the greater of the book value of the assets sold or their appraised fair
market value. Assets sold by C&A Products to JPS Automotive
F-17
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
generally are sold for a purchase price equal to the lesser of their book value
or fair market value, as determined by an independent appraisal in the case of
assets having book values in excess of $100,000 at the time of the sale. Where
manufacturing responsibility for a program is transferred, the manufacturer
receives a fee equal to its costs of production, including management overhead,
plus a 10% fee. In addition, a party for whom carpet roll goods are manufactured
pays for the goods at the manufacturer's standard cost, subject to certain
exceptions, including that in no event will JPS Automotive pay to C&A Products
an amount greater than JPS Automotive's standard cost to produce carpet roll
goods. During 1999, JPS Automotive and C&A Products evaluated the terms of the
transactions and determined that certain costs had been excluded from the fee
calculations. As a result, C&A Products billed JPS Automotive approximately $3.9
million in December 1999, representing the cumulative amount owed C&A Products
for 1997, 1998 and 1999, under the terms of the intercompany arrangements. In
addition, JPS Automotive billed C&A Products approximately $1.7 million in
December 1999, representing the cumulative amount owed JPS Automotive for 1997,
1998 and 1999, under the terms of the intercompany arrangements.
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 programs 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, and the related tax provision of $1.6 million, was treated as a
capital contribution from C&A Products in the accompanying financial statements.
At December 26, 1998, uncollected capital contributions are included in the
balance of receivables from related parties. During 1998, C&A Products
transferred 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. Twenty-seven programs relating to the
closure of the Salisbury facility were transferred to JPS Automotive during the
second quarter of 1998 in accordance with the arrangements between JPS
Automotive and C&A Products. JPS Automotive did not pay any amounts to C&A
Products for these contracts. C&A Products also agreed to make additional cash
equity contributions to JPS Automotive if JPS Automotive was unable to earn a
specified level of operating profit on the contracts transferred from the
Salisbury plant. JPS Automotive did not earn the specified level of operating
profit and C&A Products made an additional equity contribution of $1.4 million
to JPS Automotive in the fourth quarter of 1998. During 1999, JPS Automotive
earned the specified level of operating profit on these contracts.
JPS Automotive paid or accrued the following amounts in connection with the
transactions described above and related transactions for the years ended
December 25, 1999, December 26, 1998, and December 27, 1997 respectively: (i)
$7.5 million, $7.8 million and $5.5 million for administrative and other
services, (ii) $112.1 million, $62.5 million and $7.3 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 1999, 1998
and 1997, respectively, JPS Automotive recorded sales of $23.1 million and $33.2
million and 7.9 million relating to contract manufacturing services (including
the sale of roll goods) provided to C&A Products and its subsidiaries.
During 1998, machinery and equipment was sold to C&A Products for an
aggregate sales price of $0.9 million with the resulting gain of $244 thousand,
net of income taxes of $145 thousand, recorded as a capital contribution from
C&A Products due to the related-party nature of the transactions. At December
26, 1998, uncollected capital contributions are included in the balance of
receivables from related parties. Finally, during 1997, machinery and equipment
was sold to C&A Products for an aggregate sales price of $6.0 million with the
resulting gain of $3.8 million and the related income taxes recorded as a
capital contribution from C&A Products due to the related-party nature of the
transactions.
C&A Products and JPS Automotive have entered into several additional
arrangements including, among others, those described below.
F-18
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 years ended December 25, 1999, December 26, 1998
and December 27, 1997, C&A Products was charged $0.1 million, $0.3 million and
$0.1 million, respectively, in net interest. At December 25, 1999, there was an
outstanding balance of $4.6 million owed to JPS Automotive under this
arrangement.
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.
During December 1999, as permitted by the indenture governing the Senior
Notes, JPS Automotive purchased accounts receivable from a subsidiary of C&A
Products located in Mexico for $4.8 million, representing a gross balance of
$5.1 million, discounted at 5%. The purchased receivables have terms similar to
JPS Automotive's trade accounts receivable.
JPS Automotive and C&A Products generally settle intercompany balances
within ten days after a period end. In December 1999, C&A Products began
offering a two percent discount for early payment of intercompany balances. As a
result, JPS Automotive paid intercompany payable balances with C&A Products of
$9.8 million, prior to December 25, 1999, and received a discount of $0.2
million.
During the years ended December 25, 1999 and December 26, 1998, Cramerton
capitalized costs of approximately $1.2 million and $9.1 million, respectively,
related to the construction of additional space at a C&A Products facility and
the purchase of additional machinery and equipment for the production of
bodycloth. C&A Products is manufacturing bodycloth for JPS Automotive on a
subcontract basis at this location.
On September 22, 1999, JPS Automotive completed the sale of its facility in
Cramerton, North Carolina. JPS Automotive and C&A Products are relocating
Cramerton's headliner business to a C&A Products facility where C&A Products has
begun producing headliner for JPS Automotive on a subcontract basis. In
connection with this move, during 1999, Cramerton capitalized costs of $1.8
million related to the purchase of additional machinery and equipment for the
production of headliner.
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 years ended December 25, 1999, December 26, 1998
and December 27, 1997, JPS Automotive recorded $3.7 million, $0.3 million and
$6.2 million, respectively, as an estimated amount due to C&A Products under the
terms of the Tax Sharing Agreement.
In September 1998, JPS Automotive distributed its 50% ownership in
Industrias Enjema S.A. de C.V. ("Enjema") to C&A Products. C&A Products acquired
from a third party the other 50% interest in Enjema in August 1998 for
approximately $1.0 million. No book value was assigned to JPS Automotive's 50%
interest. In addition, in September 1998, JPS Automotive received payment from
Enjema for receivables generated when Enjema was managed by third parties. JPS
Automotive had previously fully reserved these receivables. As a result of the
payment, JPS Automotive reversed this reserve, resulting in a reduction of
selling, general and administrative expenses.
13. ENVIRONMENTAL:
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
F-19
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
existing as of October 1, 1997 in exchange for a payment of approximately $4.1
million. As a result, environmental liabilities totaling $4.6 million were
eliminated and a gain of $0.5 million was recorded as a 1997 capital
contribution from C&A Products due to the related party nature of this
transaction. JPS Automotive will remain contingently liable for these
environmental liabilities.
Although it is possible that new information or future events could require
JPS Automotive to reassess its potential exposure relating to its exposure for
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 position 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.
14. LITIGATION:
From time to time, JPS Automotive has been involved in various legal
proceedings. Management believes that such litigation is routine in nature and
incidental to the conduct of its business, and that none of such litigation, if
determined adversely to JPS Automotive, would have a material adverse effect on
the consolidated financial position or results of operations of JPS Automotive.
15. FINANCIAL INSTRUMENTS:
Disclosure About Fair Value of Financial Instruments - The following
disclosures of the estimated fair value amounts have been determined based on
JPS Automotive's assessment of available market information and appropriate
valuation methodologies.
The estimated fair values of JPS Automotive's financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 25, 1999 DECEMBER 26, 1998
---------------------------- ----------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT OF VALUE OF AMOUNT OF VALUE OF
LIABILITIES LIABILITIES LIABILITIES LIABILITIES
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Liabilities - Long-term debt $ 87,370 $ 89,915 $ 88,247 $ 91,584
=========== =========== =========== ===========
</TABLE>
Carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, accounts receivable, accounts payable and accrued liabilities
approximate fair value due to the short-term nature of these instruments.
The fair value of long-term debt is estimated using quoted market prices.
Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instruments. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment and therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
F-20
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. INFORMATION ABOUT THE COMPANY'S OPERATIONS
JPS Automotive's customers primarily produce automobiles and light trucks
in North America. JPS Automotive performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.
Receivables generally are due within 45 days, and credit losses have
consistently been within management's expectations and are provided for in the
consolidated financial statements.
Direct and indirect sales to significant third party customers in excess of
ten percent of consolidated net sales from continuing operations are as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 25, DECEMBER 26, DECEMBER 27,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
General Motors Corporation 44% 42% 46%
DaimlerChrysler AG 17% 11% 10%
Toyota Tsusho 13% 11% 16%
Nissan Motor Co., Ltd. 8% 13% 6%
</TABLE>
JPS Automotive's two reportable segments are Automotive Carpet and
Automotive Fabric. JPS Automotive's reportable segments are considered to be
strategic business units by management. Each business segment utilizes different
technology and focuses on specific vehicle interior systems. The Automotive
Carpet segment produces molded floor carpet and luggage compartment trim. The
Automotive Fabric segment produces seating upholstery fabric ("bodycloth") and
headliner fabric.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. JPS Automotive evaluates
performance based on profit or loss from operations before interest expense,
other income and expense, income taxes and before adjustments made pursuant to
the transactions and arrangements made between C&A Products and JPS Automotive.
See Note 12.
Information about JPS Automotive's reportable segments is presented below
(in thousands).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 25, 1999
-------------------------------------------------
CARPET AUTOMOTIVE FABRIC OTHER (1) TOTAL
-------- ----------------- --------- --------
<S> <C> <C> <C> <C>
External revenues..................... $167,522 $ 38,926 $ 56,399 $262,847
Depreciation and amortization......... 5,646 4,015 - 9,661
Operating income...................... 6,980 (4,222) 1,547 4,305
Total assets.......................... 150,054 73,039 4,607 227,700
Capital expenditures.................. 5,513 3,412 - 8,925
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 26, 1998
-------------------------------------------------
CARPET AUTOMOTIVE FABRIC OTHER (1) TOTAL
-------- ----------------- --------- --------
<S> <C> <C> <C> <C>
External revenues..................... $168,945 $ 67,801 $ 18,881 $255,627
Depreciation and amortization......... 5,148 4,073 - 9,221
Operating income...................... 9,531 (1,714) 8,434 16,251
Total assets.......................... 156,475 76,826 4,630 237,931
Capital expenditures.................. 2,550 9,457 - 12,007
</TABLE>
F-21
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 27, 1997
-------------------------------------------------
CARPET AUTOMOTIVE FABRIC OTHER (1) TOTAL
-------- ----------------- --------- --------
<S> <C> <C> <C> <C>
External revenues..................... $158,312 $ 87,356 $ 1,603 $247,271
Depreciation and amortization......... 4,460 3,408 - 7,868
Operating income (loss)............... 15,880 4,296 1,336 21,512
Total assets.......................... 168,456 77,747 4,404 250,607
Capital expenditures.................. (14) 3,706 - 3,692
</TABLE>
(1) Other includes restructuring charges and impairment of long-lived assets of
$8.6 million as well as adjustments made pursuant to the transactions and
arrangements between JPS Automotive and C&A Products. See Note 12.
F-22
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. QUARTERLY FINANCIAL DATA (UNAUDITED):
The quarterly financial data of JPS Automotive is as follows (in
thousands):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
Fiscal 1999-
<S> <C> <C> <C> <C>
Net sales $ 65,565 $ 70,336 $ 60,066 $ 66,880
Gross profit 6,861 7,767 4,913 4,844
Income (loss) from continuing
operations (1) 988 1,447 (4,198) (1,197)
Income (loss) before extraordinary
item (2) 988 1,447 (4,198) (1,197)
Net income (loss) 197 1,447 (4,198) (1,197)
Fiscal 1998-
Net sales $ 71,309 $ 64,396 $ 51,103 $ 68,819
Gross profit 9,755 5,752 2,969 9,897
Income (loss) from continuing
operations 2,115 (461) 573 2,855
Income (loss) before extraordinary
item (3) 2,115 (461) 573 2,855
Net income (loss) 2,115 (547) 573 2,809
</TABLE>
(1) During 1999, the Company incurred restructuring charges and impairment of
long-lived assets of $6.6 million in the third quarter and $2.0 million in
the fourth quarter.
(2) The adoption of a new accounting standard resulted in a cumulative effect
of change in accounting principle in the amount of $0.8 million, net of
income taxes of $0.5 million for the year ended December 25, 1999.
(3) The repurchase of $2.6 million principal amount of Senior Notes at prices
in excess of carrying value during 1998 resulted in an extraordinary loss
of $132 thousand, net of income taxes of $90 thousand for the year ended
December 26, 1998.
18. SUBSEQUENT EVENT:
On January 28, 2000, JPS Automotive merged with and into its general
partner PACJ, Inc. In the merger, all of the outstanding limited partnership
interests previously owned by C&A Products and the general partnership interests
held by PACJ, Inc. were canceled without any payment being made thereon. As a
result of the merger, PACJ, Inc. has changed its name to JPS Automotive, Inc.
and has assumed all of the obligations under the indenture governing the Senior
Notes.
F-23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholder of
JPS Automotive Products Corp.:
We have audited the accompanying balance sheets of JPS Automotive Products Corp.
(a Delaware corporation and subsidiary of JPS Automotive L.P.) as of December
25, 1999 and December 26, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these balance sheets based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. 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 balance sheets referred to above present fairly, in all
material respects, the financial position of JPS Automotive Products Corp. as of
December 25, 1999 and December 26, 1998, in comformity with accounting
principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Charlotte, North Carolina
March 1, 2000.
F-24
<PAGE>
JPS AUTOMOTIVE PRODUCTS CORP.
BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
ASSETS 1999 1998
------ ------------ ------------
<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>
The accompanying Notes to Financial Statements are
an integral part of these balance sheets.
F-25
<PAGE>
JPS AUTOMOTIVE PRODUCTS CORP.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
JPS Automotive Products Corp. ("Products Corp.") operated in the industrial
fabrics and products segment, including the design, manufacture and sale of
carpet components and interior fabrics for passenger cars and light trucks and
other specialty industrial fabrics.
Products Corp., a newly formed entity, was acquired by JPS Automotive L.P.
("JPS Automotive"), a partnership in which Foamex-JPS Automotive L.P. ("FJPS")
owned a 99% limited partnership interest and JPSGP Inc. owned a 1% general
partnership, for nominal consideration on May 25, 1994. FJPS and JPSGP Inc. were
wholly owned subsidiaries of Foamex International Inc. ("Foamex"). On June 28,
1994, FJPS and JPSGP Inc. invested $90.0 million in JPS Automotive which, in
turn, invested a like amount in Products Corp.
On June 28, 1994, Products Corp. acquired the assets of the automotive
products and industrial fabrics divisions of JPS Textile Group, Inc. Effective
October 3, 1994, Products Corp. transferred and assigned substantially all of
its assets, subject to substantially all of its liabilities, to JPS Automotive,
which agreed to assume such liabilities. Subsequently, Products Corp. did not
have any operations and, accordingly, no statement of operations or cash flows
has been presented for 1999, 1998 or 1997.
Prior to October 3, 1994, Products Corp. was the beneficial owner of an 80%
interest in Cramerton Automotive Products, L.P. Products Corp. owned a 79.5%
limited partnership interest and, through Cramerton Management Corporation,
beneficially owned a 0.5% general partnership interest. These interests were
transferred to JPS Automotive on October 3, 1994.
On December 11, 1996, Collins & Aikman Corporation ("C&A"), through its
subsidiaries, acquired JPS Automotive, including its ownership interest in
Products Corp., from 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, consisting of approximately $195 million of indebtedness of JPS
Automotive and approximately $25 million in cash paid to Foamex. During 1997,
C&A finalized the purchase price and received approximately $11.2 million from
the seller as a reduction of the purchase price. The 1996 Acquisition has been
accounted for as a purchase; however, adjustment was not required because the
historical value of the assets and liabilities of Products Corp. reflected fair
value at the time of the 1996 Acquisition.
As a result of the 1996 Acquisition, Products Corp.'s fiscal year ends on
the last Saturday of December.
2. COMMITMENTS AND CONTINGENCIES:
11-1/8% SENIOR NOTES OF JPS AUTOMOTIVE DUE 2001 (SENIOR NOTES)
Products Corp. is the co-obligor (and co-registrant) for the Senior Notes.
The Senior Notes were issued on June 28, 1994. Interest on the Senior Notes is
payable semiannually on June 15 and December 15 of each year, commencing on
December 15, 1994. The Senior Notes mature on June 15, 2001.
At the time of the 1996 Acquisition, $180 million principal amount of the Senior
Notes were outstanding. Of this amount, $68 million had been purchased by C&A
prior to the 1996 Acquisition on the open market and were subsequently retired.
JPS Automotive is not required to make mandatory redemption or sinking fund
payments except in the case of certain asset sales or a change of control (as
defined in the
F-26
<PAGE>
indenture for the Senior Notes). In addition, the Senior Notes are not subject
to optional redemption, except in connection with certain public offerings of
common stock or following a change of control (as so defined). The 1996
Acquisition resulted in a change of control which, under the terms of the
indenture for the Senior Notes, gave holders of the Senior Notes 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 repurchased on March 10, 1997. In
conjunction with an offer to purchase as a result of the 1997 sale of Airbag,
JPS Automotive repurchased $23 thousand principal amount of Senior Notes.
Additionally, for the twelve months ended December 26, 1998, JPS Automotive
repurchased, in the open market, $2.6 million principal amount of Senior Notes.
There were no repurchases for JPS Automotive during 1999. At December 25, 1999,
approximately $87.3 million of Senior Notes (including a premium of $1.3
million) were outstanding.
The indenture governing the Senior Notes generally prohibits JPS Automotive
from making certain payments and investments (generally, dividends and
distributions on its equity interests, purchases or redemptions of its equity
interests, purchases of any indebtedness subordinated to the Senior Notes and
investments other than as permitted) (the "Restricted Payments") unless (i)
there is no default under the Senior Notes indenture; (ii) after giving pro
forma effect to the Restricted Payment, JPS Automotive would be permitted to
incur at least $1.00 of additional indebtedness under the indenture's general
test for the incurrence of indebtedness which is a specified ratio (currently
2.5 to 1.0) of cashflow to interest expense, and (iii) the aggregate of all
Restricted Payments from the issue date is less than a specified threshold
(based, generally, on 50% of JPS Automotive's cumulative consolidated net
income, since the issue date plus 100% of the aggregate net cash proceeds of the
issuance by JPS Automotive of certain equity and convertible debt securities and
cash contributions to JPS Automotive) (the "Restricted Payments Tests"). These
conditions were satisfied immediately following the 1996 Acquisition, and as of
December 25, 1999. The Restricted Payments Tests are subject to a number of
significant exceptions. The indenture governing the Senior Notes also contains
other restrictive covenants (including, among others, limitations on the
incurrence of indebtedness and preferred stock, asset dispositions and
transactions with affiliates including C&A and C&A Products Co.) which are
customary for such securities. These covenants are also subject to a number of
significant exceptions.
The Senior Notes rank senior in right of payment to all existing or future
subordinated indebtedness of JPS Automotive and on an equal basis in right of
payment with all existing or future senior indebtedness of JPS Automotive.
F-27
<PAGE>
JPS AUTOMOTIVE L.P.
JPS AUTOMOTIVE PRODUCTS CORP.
INDEX TO FINANCIAL STATEMENT SCHEDULE
PAGE
Index to Financial Statement Schedule S-1
Schedule II - Valuation and Qualifying Accounts and
Reserves - JPS Automotive L.P. S-2
All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated financial
statements and notes thereto.
S-1
<PAGE>
JPS AUTOMOTIVE L.P. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE BALANCE
AT CHARGED TO CHARGED AT END
BEGINNING COSTS AND TO OTHER OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(3) PERIOD
---------- ---------- -------- ------------- -------
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 25, 1999
Allowances for doubtful accounts............. $ 2,254 $ 497 $ - $ (483) $ 2,268
Restructuring reserves....................... $ 1,940 $ 1,658 $ (286) $ (2,125) $ 1,187
FISCAL YEAR ENDED DECEMBER 26, 1998
Allowances for doubtful accounts............. $ 6,018 $ (3,559)(2) $ - $ (205) $ 2,254
Restructuring reserves....................... $ 7,182 $ - $ - $ (5,242) $ 1,940
FISCAL YEAR ENDED DECEMBER 27, 1997
Allowances for doubtful accounts............. $ 5,896 $ 156 $ - $ (34) $ 6,018
Restructuring reserves....................... $ 9,200 $ - $ 1,201 $ (3,219) $ 7,182
</TABLE>
(1) Amounts for all periods have been restated to exclude amounts related to
the discontinued operations.
(2) Includes elimination of amounts included in the allowance for doubtful
accounts for receivable from Enjema which was repaid subsequent to C&A
Product's acquisition of the remaining 50% interest.
(3) Uncollected receivables written off, net of recoveries, reclassifications
to other accounts, and usage of restructuring reserves.
S-2
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
PACJ, Inc.
----------------------------
FIRST. The name of this corporation shall be:
PACJ, Inc.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, Count of New Castle and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Thousand Five Hundred (1,500) shares without par value.
FIFTH. The name and address of the incorporator is as follows:
Amy C. Sparks
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
<PAGE>
SEVENTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this certificate of incorporation
this tenth day of September, A.D., 1996
/s/ Amy C. Sparks
--------------------------
Amy C. Sparks
Incorporator
<PAGE>
EXHIBIT 3.4
=================================================================
BY-LAWS
OF
PACJ, INC.
A Delaware Corporation
=================================================================
<PAGE>
BY-LAWS
OF
PACJ, INC.
(a Delaware corporation)
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be 1013 Centre Road, City of
Wilmington, County of New Castle. The name of the registered agent is
Corporation Service Company or such other office or agent as the Board of
Directors shall from time to time select.
SECTION 2. Other Offices. The Corporation may also have offices at
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
Meeting of Stockholders
SECTION 1. Annual Meetings. The annual meeting of the stockholders
for the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held at such place (within or
without the State of Delaware), date and hour as shall be designated in the
notice thereof, except that no annual meeting need be held if all actions,
including the election of directors, required by the General Corporation Law of
the State of Delaware to be taken at a stockholders' annual meeting are taken by
written consent in lieu of a meeting pursuant to Section 9 of this Article II.
SECTION 2. Special Meetings. Special meetings of the stockholders
for any purpose or purposes may be called by the Board, the President, the Chief
Executive Officer or a stockholder or stockholders holding of record at least
25% of all shares of the Corporation entitled to vote thereat to be held at such
place (within or without the State of Delaware), date and hour as shall be
designated in the notice thereof.
<PAGE>
SECTION 3. Notice of Meetings. Except as otherwise expressly
required by law, notice of each meeting of the stockholders shall be given not
less than 10 or more than 60 days before the date of the meeting to each
stockholder entitled to vote at such meeting by mailing such notice, postage
prepaid, directed to each stockholder at the address of such stockholder as
appears on the records of the Corporation. Every such notice shall state the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Except as provided in the
next immediate sentence or as otherwise expressly required by law, notice of any
adjourned meeting of the stockholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken. If the
adjournment is for more than 30 calendar days, or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given to each stockholder entitled to vote at such adjourned meeting.
A written waiver of notice, signed by a stockholder entitled to
notice, whether signed before or after the time set for a given meeting, shall
be deemed equivalent to notice of such meeting. Attendance of a stockholder in
person or by proxy at a stockholders' meeting shall constitute a waiver of
notice to such stockholder of such meeting, except when such stockholder attends
the meeting for the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 4. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its stock
ledger to prepare and make, at least 10 days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 calendar days prior to the meeting either at a place specified in the notice
of the meeting within the city where the meeting is to be held or, if not so
specified, at the place where the meeting is to be held. Such list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 5. Quorum. At each meeting of the stockholders, except as
otherwise expressly required by law, stockholders holding a majority of the
shares of stock of the Corporation issued, outstanding and entitled to be voted
at the meeting shall be present in person or by proxy in order to constitute a
quorum for the transaction of business. In the absence of a
2
<PAGE>
quorum at any such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or by proxy and entitled
to vote thereat may adjourn such meeting from time to time until stockholders
holding the amount of stock requisite for a quorum shall be present in person or
by proxy. At any such adjourned meeting at which a quorum may be present, any
business may be transacted that might have been transacted at the meeting as
originally called.
SECTION 6. Organization. At each meeting of the stockholders, one of
the following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) the Chief Executive Officer;
(b) if there is no Chief Executive Officer or if the Chief Executive
Officer shall be absent from such meeting, the President;
(c) if the Chief Executive Officer and the President shall be absent
from such meeting, any other officer or director of the Corporation
designated by the Board to act as chairman of such meeting and to preside
thereat; or
(d) a stockholder of record of the Corporation who shall be chosen
chairman of such meeting by a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat.
The Secretary or, if the Secretary shall be presiding over the meeting or absent
from such meeting, the person whom the chairman of such meeting shall appoint,
shall act as secretary of such meeting and keep the minutes thereof.
SECTION 7. Order of Business. The order of business at each meeting
of the stockholders shall be determined by the chairman of such meeting.
SECTION 8. Voting. Each holder of voting stock of the Corporation
shall, at each meeting of the stockholders, be entitled to one vote in person or
by proxy for each share of stock of the Corporation held by him and registered
in his name on the books of the Corporation on the date fixed pursuant to the
provisions of Section 4 of Article VIII of these By-laws as the record date for
the determination of stockholders who shall be entitled to receive notice of and
to vote at such meeting.
3
<PAGE>
At all meetings of the stockholders, all matters, except as otherwise provided
by law or in these By-Laws, shall be decided by the vote of a majority of the
votes cast by stockholders present in person or by proxy and entitled to vote
thereat, a quorum being present. Except as otherwise expressly required by law,
the vote at any meeting of the stockholders on any question need not be by
ballot, unless so directed by the chairman of the meeting. On a vote by ballot,
each ballot shall be signed by the stockholder voting, or by his proxy, if there
be such proxy, and shall state the number of shares voted.
SECTION 9. Action by Written Consent. Except as otherwise provided
by law or by the Certificate of Incorporation, any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock of the Corporation having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares of stock of the Corporation entitled to vote thereon
were present and voted, and delivered to the Corporation in the manner provided
in Section 4 of Article VIII of these By-laws.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors.
SECTION 2. Number and Term of Office. The Board of Directors shall
initially consist of three members, but the number of members constituting the
Board of Directors may be increased or decreased from time to time by resolution
adopted by a majority of the whole Board. Directors need not be stockholders.
Each of the directors of the Corporation shall hold office until his term
expires and until his successor is elected and qualified or until his earlier
death or until his earlier resignation or removal in the manner hereinafter
provided.
SECTION 3. Election. At each meeting of the stockholders for the
election of directors at which a quorum is present, the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
4
<PAGE>
SECTION 4. Resignation, Removal and Vacancies. Any director may
resign at any time by giving written notice of his resignation to the Board, the
Chief Executive Officer, President or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, when accepted by
action of the Board. Except as aforesaid, the acceptance of such resignation
shall not be necessary to make it effective.
A director may be removed, either with or without cause, at any time
by a vote of a majority in voting interest of the stockholders.
Any vacancy or newly created directorship occurring on the Board for
any reason may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director. The director elected to
fill such vacancy or newly created directorship shall hold office for the
unexpired term in respect of which such vacancy occurred or such newly created
directorship was created.
SECTION 5. Meetings. (a) Annual Meetings. As soon as practicable
after each annual election of directors, the Board shall meet for the purpose of
organization and the transaction of other business.
(b) Regular Meetings. Regular meetings of the Board shall be held at
such times and places as the Board shall from time to time determine.
(c) Special Meetings. Special meetings of the Board shall be held
whenever called by the Chief Executive Officer or the President or a majority of
the directors at the time in office. Any and all business may be transacted at
a special meeting that may be transacted at a regular meeting of the Board.
(d) Place of Meeting. The Board may hold its meeting at such place
or places within or without the State of Delaware as the Board may from time to
time by resolution determine or as shall be designated in the respective notices
or waivers of notice thereof.
(e) Notice of Meetings. Notices of regular meetings of the Board or
of any adjourned meeting need not be given.
Notices of special meetings of the Board, or of any meeting of any
committee of the Board that has not been fixed in advance as to time and place
by such committee, shall be mailed by the Secretary or an Assistant Secretary to
each director or member of such committee, addressed to him at his residence or
usual place of business, so as to be received at least one calendar day before
the day on which such meeting is to be held, or shall be sent to him
5
<PAGE>
by telecopy, cable or other form of recorded communication or be delivered
personally or by telephone not later than one calendar day before the day on
which such meeting is to be held. Such notice shall include the time and place
of such meeting. However, notice of any such meeting need not be given to any
director or member of any committee if such notice is waived by him in writing
or by telecopy, cable or other form of recorded communication, whether before or
after such meeting shall be held, or if he shall be present at such meeting.
(f) Quorum and Manner of Acting. Except as otherwise provided by
law, the Certificate of Incorporation or these By-Laws, one-half of the total
number of directors (rounded up to the nearest whole number, if necessary) shall
be present in person at any meeting of the Board in order to constitute a quorum
for the transaction of business at such meeting. In each case the vote of a
majority of those directors present at any such meeting at which a quorum is
present shall be necessary for the passage of any resolution or any act of the
Board, except as otherwise expressly required by law or these By-laws. In the
absence of a quorum for any such meeting, a majority of the directors present
thereat may adjourn such meeting from time to time until a quorum shall be
present thereat.
(g) Action by Communication Equipment. The directors, or the members
of any committee of the Board, may participate in a meeting of the Board, or of
such committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation shall constitute presence in person at such
meeting.
(h) Action by Consent. Any action required or permitted to be taken
at any meeting of the Board, or of any committee thereof, may be taken without a
meeting if all members of the Board or committee, as the case may be, consent
thereto in writing and such writing is filed with the minutes of the proceedings
of the Board or such committee.
(i) Organization. At each meeting of the Board, the Chief Executive
Officer shall act as chairman of the meeting and preside thereat, or in his
absence, the President or any director chosen by a majority of the directors
present thereat. The Secretary or, in case of his absence, any person (who
shall be an Assistant Secretary, if an Assistant Secretary shall be present
thereat) whom the chairman shall appoint, shall act as secretary of such meeting
and keep the minutes thereof.
6
<PAGE>
SECTION 6. Compensation. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board may receive a
fixed sum and expenses incurred in performing the functions of director and
member of any committee of the Board. Nothing herein contained shall be
construed so as to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
Committees
SECTION 1. (a) Designation and Membership. The Board may, by
resolution passed by a majority of the whole Board, designate one or more
committees consisting of such number of directors, not less than one, as the
Board shall appoint. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Vacancies occurring on any committee for any
reason may be filled by the Board at any time. Any member of any committee
shall be subject to removal, with or without cause, at any time by the Board or
by a majority in voting interest of the stockholders.
(b) Functions and Powers. Any such committee, subject to any
limitations prescribed by the Board, shall possess and may exercise, during the
intervals between meetings of the Board, all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers that may
require it; provided, however, that no such committee shall have such power or
authority in reference to amending the Certificate of Incorporation of the
Corporation (except that a committee may, to the extent authorized in
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation), adopting an agreement of merger or
consolidation under Section 251 or Section 252 of the General Corporation Law of
the State of Delaware, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, filling vacancies on the Board, changing the
membership or filling vacancies on any committee of the Board or amending these
By-laws. No such committee shall have the power and authority to declare
dividends, to authorize the issuance of stock of the Corporation or to adopt a
certificate of ownership
7
<PAGE>
and merger pursuant to Section 253 of the General Corporation Law of the State
of Delaware unless such power and authority shall be expressly delegated to it
by a resolution passed by a majority of the whole Board.
(c) Meetings, Quorum and Manner of Acting. Each committee shall meet
at such times and as often as may be deemed necessary and expedient and at such
places as shall be determined by such committee. A majority of each such
committee shall constitute a quorum, and the vote of a majority of those members
of each such committee present at any meeting thereof at which a quorum is
present shall be necessary for the passage of any resolution or act of such
committee. The Board may designate a chairman for each such committee, who
shall preside at meetings thereof, and a vice chairman, who shall preside at
such meetings in the absence of the chairman.
ARTICLE V
Officers
SECTION 1. Election, Appointment and Term of Office. The officers of
the Corporation shall be a Chief Executive Officer, and/or a President, such
number of Vice Presidents (including Executive, Senior and/or First Vice
Presidents) as the Board may determine from time to time, a Treasurer, one or
more Assistant Treasurers, if any, as the Board may determine, a Secretary and
one or more Assistant Secretaries, if any, as the Board may determine. Any two
or more offices may be held by the same person. Officers need not be
stockholders of the Corporation. The officers may be elected by the Board at
its annual meeting, and each such officer shall hold office until the next
annual meeting of the Board and until his successor is elected or until his
earlier death or until his earlier resignation or removal in the manner
hereinafter provided.
The Board may elect or appoint such other officers as it deems
necessary, including one or more Assistant Vice Presidents, Assistant Treasurers
and Assistant Secretaries. Each such officer shall have such authority and shall
perform such duties as may be provided herein or as the Board may prescribe.
If additional officers are elected or appointed during the year, each
of them shall hold office until the next annual meeting of the Board at which
officers are regularly elected or appointed and until his successor is elected
or appointed or until his earlier death or until his earlier resignation or
removal in the manner hereinafter provided.
8
<PAGE>
SECTION 2. Resignation, Removal and Vacancies. Any officer may
resign at any time by giving written notice to the Chief Executive Officer, the
President or the Secretary of the Corporation, and such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, when accepted by action of the Board.
Except as aforesaid, the acceptance of such resignation shall not be necessary
to make it effective.
All officers and agents elected or appointed by the Board shall be
subject to removal at any time by the Board, with or without cause.
A vacancy in any office may be filled for the unexpired portion of the
term in the same manner as provided for election or appointment to such office.
SECTION 3. Duties and Functions. (a) Chief Executive Officer. The
Chief Executive Officer shall be the principal executive officer of the
Corporation, shall preside at all meetings of the Board and of the stockholders
at which he shall be present and shall perform such other duties and exercise
such powers as may from time to time be prescribed by the Board of Directors or
as shall normally be incident to the office of Chief Executive Officer.
(b) President. The President shall be the chief operating officer of
the Corporation and shall perform such duties and exercise such powers as are
incident to the office of President, and shall perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board
or the Chief Executive Officer. If there is no Chief Executive Officer, the
President shall also assume the duties of the Chief Executive Officer as
described above or elsewhere herein.
(c) Vice Presidents. Each Vice President shall have such powers and
duties as shall be prescribed by the Board.
(d) Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds and securities of the Corporation and shall
deposit all such funds to the credit of the Corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of these By-laws; he shall disburse the funds of the Corporation as
may be ordered by the Board, making proper vouchers for such disbursements; and,
in general, he shall perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board
or the Chief Executive Officer. To such extent as the Board shall deem proper,
the duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
9
<PAGE>
(e) Secretary. The Secretary shall keep the records of all meetings
of the stockholders and of the Board and committees of the Board. He shall
affix the seal of the Corporation to all instruments requiring the corporate
seal when the same shall have been signed on behalf of the Corporation by a duly
authorized officer. The Secretary shall be the custodian of all contracts,
deeds, documents and all other indicia of title to properties owned by the
Corporation and of its other corporate records and in general shall perform all
duties and have all powers incident to the office of Secretary. To such extent
as the Board shall deem proper, the duties of Secretary may be performed by one
or more assistants, to be appointed by the Board.
(f) Assistant Secretaries and Assistant Treasurers. Each Assistant
Secretary and each Assistant Treasurer shall perform the duties of and exercise
the powers of the Secretary and the Treasurer, respectively, in the absence of
the Secretary and the Treasurer, respectively.
ARTICLE VI
Contracts, Checks, Drafts,
Bank Accounts, Proxies, etc.
SECTION 1. Execution of Documents. The Chief Executive Officer, the
President, each Vice President or any other officer, employee or agent of the
Corporation designated by the Board, or designated in accordance with corporate
policy as approved by the Board, shall have power to execute and deliver deeds,
leases, contracts, mortgages, bonds, debentures, checks, drafts and other orders
for the payment of money and other documents for and in the name of the
Corporation, and such power may be delegated (including power to redelegate) by
written instrument to other officers, employees or agents of the Corporation.
SECTION 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise in accordance with corporate policy as approved by the Board.
SECTION 3. Proxies in Respect of Stock or Other Securities of Other
Corporations. The Chief Executive Officer, the President, any Vice President or
any other officer of the Corporation designated by the Board shall have the
authority (a) to appoint from time to time an agent or agents of the Corporation
to exercise in the name and on behalf of the Corporation the powers and rights
which the Corporation may have as the holder of stock or other securities in any
other corporation, (b) to vote or consent in respect of such stock or securities
and (c) to execute or cause to be executed in the name
10
<PAGE>
and on behalf of the Corporation and under its corporate seal, or otherwise,
such written proxies, powers of attorney or other instruments as he may deem
necessary or proper in order that the Corporation may exercise such powers and
rights. The Chief Executive Officer, the President or any such designated
officer may instruct any person or persons appointed as aforesaid as to the
manner of exercising such powers and rights.
ARTICLE VII
Books and Records
The books and records of the Corporation may be kept at such places
within or without the State of Delaware as the Board may from time to time
determine.
ARTICLE VIII
Shares and Their Transfer; Fixing Record Date
SECTION 1. Certificate for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate certifying the number of
shares owned by him in the Corporation and designating the class of stock to
which such shares belong, which shall otherwise be in such form as the Board
shall prescribe. Each such certificate shall be signed by, or in the name of
the Corporation by, the Chief Executive Officer, the President or a Vice
President and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Corporation. In case any officer who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer before such certificate is issued, it may nevertheless be
issued by the Corporation with the same effect as if he were such officer at the
date of issue.
SECTION 2. Record. A record shall be kept of the name of the person,
firm or corporation owning the stock represented by each certificate for stock
of the Corporation issued, the number of shares represented by each such
certificate and the date thereof, and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in
whose name shares of stock stand on the books of the Corporation shall be deemed
the owner thereof for all purposes as regards the Corporation.
11
<PAGE>
SECTION 3. Lost, Stolen, Destroyed or Mutilated Certificates. The
holder of any stock of the Corporation shall immediately notify the Corporation
of any loss, theft, destruction or mutilation of the certificate therefor. The
Corporation may issue a new certificate for stock in the place of any
certificate theretofore issued by it and alleged to have been lost, stolen,
destroyed or mutilated, and the Board or the Chief Executive Officer, the
President or Secretary may, in its or his discretion, require the owner of the
lost, stolen, mutilated or destroyed certificate or his legal representatives to
give the Corporation a bond in such sum, limited or unlimited, in such form and
with such surety or sureties as the Board shall in its discretion determine, to
indemnify the Corporation against any claim that may be made against it on
account of the alleged loss, theft, mutilation or destruction of any such
certificate or the issuance of any such new certificate.
SECTION 4. Fixing Date for Determination of Stockholders of Record.
(a) In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which shall not
be more than 60 or less than 10 days before the date of such meeting. If no
record date is fixed by the Board, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given, or
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; providing, however, that the Board may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board and which date shall
not be more than 10 days after the date upon which the resolution fixing the
record date is adopted by the Board. If no record date has been fixed by the
Board, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
is otherwise required, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the registered office of the Corporation shall be by
hand or by certified or registered mail, return receipt requested. If no record
12
<PAGE>
date has been fixed by the Board and prior action by the Board is required, the
record date for determining stockholder entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for any other lawful purpose, the
Board may fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted, and which record date
shall be not more than 60 days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the Board adopts the resolution
relating thereto.
ARTICLE IX
Seal
The Board shall provide a corporate seal, which shall be in the form
of a circle and shall bear the full name of the Corporation, the words
"Corporate Seal Delaware" and in figures the year of its incorporation.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall end on the last Saturday in
January of each following year, or on such other date as the Board of Directors
shall determine.
ARTICLE XI
Indemnification of Directors and Officers
SECTION 1. Right to Indemnification. Each person who was or is made
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or an officer of the Corporation or is or was serving at
the
13
<PAGE>
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith; provided, however, that, except as provided in Section 3 of this
ARTICLE XI with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
SECTION 2. Right to Advancement of Expenses. The right to
indemnification conferred in Section 1 of this Article XI shall include the
right to be paid by the Corporation the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section 2 or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of this ARTICLE XI shall
be contract rights and such rights shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
SECTION 3. Right of Indemnitee to Bring Suit. If a claim under
Section 1 or 2 of this ARTICLE XI is not paid in full by the Corporation within
sixty (60) days after a written claim has been received by the Corporation,
except in the case of a claim for an advancement of expenses, in which case
14
<PAGE>
the applicable period shall be twenty (20) days, the indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
ARTICLE XI or otherwise shall be on the Corporation.
SECTION 4. Non-Exclusivity of Rights. The rights to indemnification
and to the advancement of expenses conferred in this ARTICLE XI shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of Incorporation, By-laws,
agreement, vote of stockholders or disinterested directors or otherwise.
SECTION 5. Insurance. The Corporation may maintain insurance, at
its expenses, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
15
<PAGE>
SECTION 6. Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
ARTICLE XII
Amendments
These By-laws may be amended or repealed by the Board at any regular
or special meeting thereof, subject to the power of the holders of a majority of
the outstanding stock of the Corporation entitled to vote in respect thereof, by
their vote at an annual meeting or at any special meeting, to amend or repeal
any By-law.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 25, 1999, AND SUCH IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924902
<NAME> JPS AUTOMOTIVE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-26-1998
<PERIOD-END> DEC-25-1999
<CASH> 810
<SECURITIES> 0
<RECEIVABLES> 39,655
<ALLOWANCES> 2,268
<INVENTORY> 6,912
<CURRENT-ASSETS> 68,428
<PP&E> 62,090
<DEPRECIATION> 13,782
<TOTAL-ASSETS> 227,700
<CURRENT-LIABILITIES> 15,853
<BONDS> 87,370
0
0
<COMMON> 0
<OTHER-SE> 115,553
<TOTAL-LIABILITY-AND-EQUITY> 227,700
<SALES> 262,847
<TOTAL-REVENUES> 262,847
<CGS> 238,462
<TOTAL-COSTS> 11,527
<OTHER-EXPENSES> 8
<LOSS-PROVISION> 497
<INTEREST-EXPENSE> 8,309
<INCOME-PRETAX> (4,012)
<INCOME-TAX> (1,052)
<INCOME-CONTINUING> (2,960)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (791)
<NET-INCOME> (3,751)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JPS
AUTOMOTIVE PRODUCTS CORP. BALANCE SHEET AT DECEMBER 25, 1999, AND SUCH IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000919233
<NAME> JPS AUTOMOTIVE PRODUCTS CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-27-1998
<PERIOD-END> DEC-25-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
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<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
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<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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